TITLE V- PRESCRIPTION
CHAPTER 1
General Provisions
Article 1106. By prescription, one acquires ownership and other real rights
through the lapse of time in the manner and under the conditions laid down by
law.
In the same way, rights and conditions are lost by prescription. (1930a)
Article 1107. Persons who are capable of acquiring property or rights by the
other legal modes may acquire the same by means of prescription.
Minors and other incapacitated persons may acquire property or rights by
prescription, either personally or through their parents, guardians or legal
representatives. (1931a)
Article 1108. Prescription, both acquisitive and extinctive, runs against:
Persons who are disqualified from administering their property have a right to
claim damages from their legal representatives whose negligence has been the
cause of prescription. (1932a)
Article 1109. Prescription does not run between husband and wife, even
though there be a separation of property agreed upon in the marriage
settlements or by judicial decree.
Neither does prescription run between parents and children, during the minority
or insanity of the latter, and between guardian and ward during the continuance
of the guardianship. (n)
Article 1110. Prescription, acquisitive and extinctive, runs in favor of, or
against a married woman. (n)
Article 1111. Prescription obtained by a co-proprietor or a co-owner shall
benefit the others. (1933)
Article 1112. Persons with capacity to alienate property may renounce
prescription already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation
results from acts which imply the abandonment of the right acquired. (1935)
Article 1113. All things which are within the commerce of men are susceptible
of prescription, unless otherwise provided. Property of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription.
(1936a)
Article 1114. Creditors and all other persons interested in making the
prescription effective may avail themselves thereof notwithstanding the express
or tacit renunciation by the debtor or proprietor. (1937)
Article 1115. The provisions of the present Title are understood to be without
prejudice to what in this Code or in special laws is established with respect to
specific cases of prescription. (1938)
Article 1116. Prescription already running before the effectivity of this Code
shall be governed by laws previously in force; but if since the time this Code took
effect the entire period herein required for prescription should elapse, the
present Code shall be applicable, even though by the former laws a longer period
might be required. (1939)
CASES:
1. NARCISO BUENAVENTURA & MARIA BUENAVENTURA V. CA &
MANOTOK REALTY, INC ( GR 50837, DEC 28, 1992)
(3) Julian Caiña had a brother, Justo Caiña. The latter had three children,
namely, Emeteria Caiña Buenaventura, Lorenzo Caiña and Francisca Caiña.
Emeteria Caiña Buenaventura died as early as July 11, 1937 and was survived
by Maria Buenaventura and Narciso Buenaventura, the Private Respondents in
this case;
G.R. No. 50837 December 28, 1992
NARCISO BUENAVENTURA and MARIA BUENAVENTURA, Petitioners,
vs.
HON. COURT OF APPEALS and MANOTOK REALTY, INC. Respondents.
MELO, J.:
Before Us is a petition for review on certiorari of a Decision of the Special
Former Ninth Division of the Court of Appeals rendered on February 19, 1979, in
CA-G.R. No. 08249-SP (Reyes, Sundiam [P], and Cortez, JJ; Rollo, [pp. 22-28)
ordering the dismissal of the complaint in Civil Case No. C-6095 filed by herein
petitioners against Lorenzo Caiña. Francisco Caiña-Rivera, the National
Housing Authority (formerly PHHC). Francisco M. Custodio, and respondent
Manotok Realty, Inc., before then Court of First Instance of Rizal, Branch XXXIII,
Caloocan City.
The relevant antecedents, as narrated by respondent court, are as follows:
(1) During his lifetime, Julian Caiña, was the occupant and tenant of a parcel of
land, owned by the Republic of the Philippines but administered at first by the
then Rural Progress Administration and later by the Peoples Homesite and
Housing Corporation (PHHC) described as Lot 20 of Consolidated Sub-division
plan LRC Pcs-1828, and in Transfer Certificate of Title No. 365557 of the
Registry of Deeds of Caloocan City, with an area of 25,776 square meters;
(2) The Republic of the Philippines acquired the aforesaid lot, together with other
lots in the Gonzales Estate by Expropriation to be resold to qualified and
bonafide tenants-occupants and, to achieve this end, the President of the
Philippines, on August 30, 1961, designated the PHHC with the task of selling
and transferring the said lots to qualified tenants concerned and/or their lawful
heirs;
(4) However the Gonzales Estate still had to be sub-divided into lots; but before
the subdivision of the property and the subdivision plan thereof could be
approved and said lot transferred to Julian Caiña, the latter died on December
17, 1961. Justo Caiña, the brother, died later on May 3, 1962;
(5) Thus, at the time Julian Caiña died, he was survived as his sole heirs, by his
brother, Justo Caiña and the latter's children, Lorenzo Caiña and Francisca
Caiña: also surviving him were the private respondents Narciso Buenaventura
and Maria Buenaventura, the children of Emeteria Buenaventura who died
earlier in 1937;
(6) On November 4, 1965, the People Homesite and Housing Corporation
executed a 'Deed of Absolutes Sale' over the said lot to Lorenzo Caiña and
Francisca Caiña-Rivera, as the sole heirs and successor-in-interest of Julian
Caiña for and in consideration of the purchase price of P96,048.80 (a certified
xerox copy of the aforesaid Deed is hereto attached as Annex 'A' hereof):
(7) By virtue of the said sale, Lorenzo Caiña and Francisca Caiña-Rivera were
issued, on November 5, 1965. Transfer Certificate of Title No. 21013 over the
said lot by the Registry of Deeds of Caloocan City (certified xerox copy of the
aforesaid title is hereto attached as Annex "B" hereof);
(8) On January 26, 1966, Lorenzo Caiña and Francisca Caiña-Rivera executed
a 'Deed of Absolutes Sale' over the said lot in favor of Francisco M. Custodio
after which the latter was issued on January 26, 1966. Transfer Certificate of
Title No. 21484 of the Registry of Deeds of Caloocan City (a certified xerox copy
of the aforesaid Deed of Absolute Sale and Transfer Certificate of tile are hereto
attached as Annexes "C" and ''D" hereof respectively);
(9) On January 26, 1966, Francisco Custodio executed a 'Deed of Absolute
Sale' over the said lot in favor of the Petitioner for which the latter was issued on
January 26, 1966. Transfer Certificate of Title No. 2145 of the Registry of Deeds
of Caloocan City (a certified xerox copy of the said Deed of Absolute Sale and
Title are hereto attached as Annexes "E" and "F" hereof respectively);
(10) On December 24, 1976, Private Respondents [now petitioners] filed a
complaint with the respondent court docketed as Civil Case No. C-6095 entitled
'Narciso Buenaventura and Maria Buenaventura vs. Lorenzo Caiña, Francisca
Caiña, National Housing Authority (formerly PHHC). Francisco M. Custodio.
Manotok Realty, Inc.' for Annulment of Titles, Contracts and/or Sales.
Reconveyance and Damages (a copy of the aforesaid complaint attached hereto
as Annex "G" hereof);
(11) The Petitioner [now private respondent Manotok Realty] subsequently filed
with the Respondent Court a 'Motion to Dismiss' the aforesaid complaint on the
ground of, inter alia, prescription (a copy of the aforesaid motion is hereto
attached as Annex "H" hereof);
(12) The Private Respondents, however filed their Opposition to the aforesaid
motion of the Petitioner (a copy of the aforesaid opposition is hereto attached as
Annex "'1"' hereof);
(13) On July 28, 1977, the Respondent Court issued an Order denying the
aforesaid Motion of the Petitioner (a certified xerox copy of the aforesaid order is
hereto attached as Annex "J" hereof);
(14) The Petitioner thereafter filed a 'Motion for Reconsideration' of the aforesaid
Order, to which the private respondents filed their opposition. The petitioner
however, filed its Reply to the aforesaid opposition of the private respondents
despite which the respondent court, on July 21, 1978 issued an order denying
the aforesaid motion of the petitioner (a copy of each aforesaid motion,
opposition and reply are hereto attached as Annexes "K","'L" and "M", hereof
respectively; while a certified xerox copy of the aforesaid Order is hereto
attached as Annex 'N' hereof). Decision, pp. 1-3: rollo, pp. 22-24.).
Aggrieved by the rules of the trial court, herein private respondents filed a
petitioner with the Court of Appeals which later granted the petitioner and
ordered the dismissal of the complaint of then private respondents, now herein
petitioners, on the ground that their action has already prescribed. A subsequent
motion for reconsideration was to no avail.
Hence, the instant petition.
Both sides offer conflicting opinions on the applicability of Article 1410 of the
Civil Code of the Philippines.
The Court of Appeals, in directing the dismissal of the complaint filed by they
petitioners in the court of origin, held that Article 1410 of the Civil Code on
imprescriptibility of actions is not applicable because fraud in the transfer of the
property was alleged in petitioner's complaint. The Court of Appeals was, of
course, referring to paragraph 20 of the Complaint which reads:
20. That in executing the said 'Deed of Absolute Sale' over Lot 20 in favor of
defendants Lorenzo Caiña and Francisca Caiña-Rivera, defendant NHA acted
with evident bad faith, gross negligence and carelessness, while defendants
Lorenzo Caiña and Francisca Caiña acted with false representations, fraud and
deceit and the three defendants connived, conspired and schemed to deprive
the plaintiffs of their rights over 1/3 portion of Lot 20 of the Gonzales Estate
administered by defendant NHA, to the damage and prejudice of the herein
plaintiffs; (Rollo, p. 17).
Respondent court further stated that due to the allegation that fraud was
supposedly employed in the execution of the deed of sale and thereafter in the
issuance of Transfer Certificate of Title No. 21484, there was created in favor of
then private respondents, now petitioners, an implied or constructive trust, such
that the action for reconveyance must be filed by the defrauded party within the
a period of ten (10) years from the date of issuance of the title, otherwise, the
action prescribed. Consequently, respondent court held that because the
complaint in Civil Case No. C-6095 was filed only on December 28, 1976 or
after more than ten years from the issuance of the transfer certificate of title on
January 26, 1966, the assertion for recovery of property based on fraudulent
transfer and registration can no longer be entertained (Rollo, pp. 27-28).
Petitioners, on the other hand, argue otherwise. They claim that the action for
reconveyance is based both on the grounds of fraud and simulation of contracts,
hence, it cannot be made subject to the rule on prescription of action. (Rollo, p.
15).
We agree with respondent court.
Petitioners' allegation in their complaint filed in the court of origin, that fraud was
employed in the execution of a deed of sale and subsequently, in the issuance
of a transfer certificate of title, renders their action for reconveyance susceptible
to prescription either within 4 years or 10 years. In the present case, even if one
bends backwards and considers the circumstances alleged as having created
an implied or constructive trust, such that the action for reconveyance would
prescribed in the longer period of 10 years (Duque vs. Doming, 80 SCRA 654
[1977]; Cerantes vs. Court of Appeals, 76 SCRA 514 [1977]; Jaramil vs. Court of
Appeals 78 SCRA 420 [1977]), still petitioners' action is plainly time-barred.
Considering that the deed of sale executed by the Philippine Homesite and
Housing Corporation in favor of Lorenzo Caiña and Francisca Caiña-Rivera was
executed on November 4, 1965 and on the following day, Transfer Certificate of
Title No. 21484 was issued in favor of the vendees (private respondents), the
party allegedly defrauded in the transaction, herein petitioners, had only 10
years or until September 5, 1975 within which to file the appropriate action. In
the instant case, the action was filed only on December 28, 1976, which was
beyond the prescribed period set by law.
Verily, the principle on prescription of actions is designed to cover situations
such as the case at bar, where there have been a series of transfers to innocent
purchasers for value. To set aside these transactions only to accommodate a
party who has slept on his rights is anathema to good order.
the defendant that the complainant would assert the right on which he bases his
suit; and (4) injury or prejudice to the defendant in the event relief is accorded to
the complainant or the suit is not held barred. (Yusingco vs. Ong Hing Lian, 42
SCRA 589.)
The defendant-appellee purchased the parcel of land in question giving rise to
the complaint of herein plaintiffs-appellants. The latter delayed the assertion of
their supposed right to annul the sale for a period of over fifteen (15) years
despite knowledge or notice of such sale. They had all the opportunity within
that period of time to take action to set aside or annul the sale. Defendantappellee was never apprised of any intention on the part of plaintiffs-appellants
to annul the sale until this action was filed. Finally, the defendant-appellee
stands to lose the property in question if the suit filed against him by plaintiffsappellants shall be deemed barred. (at pp. 154-155.)
Independently of the principal of prescription of actions working against
petitioners, the doctrine of laches may further be counted against them, which
latter tenet finds application even to imprescriptible actions. Thus, in Rafols vs.
Barba (199 SCRA 146 [1982]), We find the following words of wisdom:
WHEREFORE, premises considered,. the judgment appealed from is hereby
AFFIRMED in toto.
In the least, plaintiffs-appellants are already guilty of laches as would effectively
derail there cause of action. While it is true that technically, the action to annul a
void or inexistent contract does not prescribe, it may nonetheless be barred by
laches. As was stated in Nielson & Co. v. Lepanto Consolidated Mining Co., L21601. December 17, 1966, 18 SCRA [1040]:
Gutierrez, Jr., (Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.
The defense of laches applied independently of prescription. Laches is different
from the statute of limitations. Prescription is concerned with the fact of delay,
whereas laches is concerned with the effect of delay. Prescription is a matter of
time; laches is principally a question of inequity of permitting a claim to be
enforced, this inequity being founded on the same change in the condition of the
property or the relation of the parties. Prescription is statutory; laches is not.
Laches applies in equity, whereas prescription is based on fixed time; laches is
not.
The essential elements of the principle of laches are all present herein, to wit:
... (1) conduct on the part of the defendant, or one under whom he claims, giving
rise to the situation that led to the complaint for which the complaint seeks a
remedy: (2) delay in asserting the complainant's rights, the complainant having
had knowledge or notice of the defendant's conduct and having been afforded
an opportunity to institute a suit; (3) lack of knowledge or notice on the part of
SO ORDERED.
DIGEST
The defense of laches applies independently of prescription.
Laches is different from the statute of limitations. Prescription
is concerned with the fact of delay, whereas laches is concerned
with the effect of delay. Prescription is a matter of time; laches
is principally a question of inequity of permitting a claim to be
enforced, this inequity being founded on the same change in the
condition of the property or the relation of the parties. Prescrip
tion is statutory; laches is not. Laches applies in equity, whereas
prescription applies at law. Prescription is based on fifi xed time;
laches is not.
2. Philippine Carpet Manufacturing Corporation vs. Tagyamon ( GR 191475, DEC 11, 2013)
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation
registered in the Philippines engaged in the business of manufacturing wool and
yarn carpets and rugs. Respondents were its regular and permanent employees,
but were affected by petitioner’s retrenchment and voluntary retirement
programs.
4
G.R. No. 191475
December 11, 2013
PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC
CARPET MANUFACTURING CORPORATION, MR. PATRICIO LIM and MR.
DAVID LIM, Petitioners,
vs.
IGNACIO B. TAGYAMON,PABLITO L. LUNA, FE B. BADA YOS, GRACE B.
MARCOS, ROGELIO C. NEMIS, ROBERTO B. ILAO, ANICIA D. DELA CRUZ
and CYNTHIA L. COMANDAO, Respondents.
On
March
15,
2004,
Tagyamon, Luna, Badayos, Dela
Cruz, and
Comandao received a uniformly worded Memorandum of dismissal, to wit:
5
6
7
8
9
DECISION
This is to inform you that in view of a slump in the market demand for our
products due to the un-competitiveness of our price, the company is constrained
to reduce the number of its workforce. The long-term effects of September 11
and the war in the Middle East have greatly affected the viability of our business
and we are left with no recourse but to reorganize and downsize our
organizational structure.
The Case
We wish to inform you that we are implementing a retrenchment program in
accordance with Article 283 of the Labor Code of the Philippines, as amended,
and its implementing rules and regulations.
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the Court of Appeals (CA) Decision dated July 7, 2009 and
Resolution dated February 26, 2010 in CA-G.R. SP No. 105236. The assailed
decision granted the petition for certiorari filed by respondents Ignacio B.
Tagyamon (Tagyamon), Pablito I. Luna (Luna), Fe B. Badayos (Badayos),
Grace B. Marcos (Marcos), Rogelio C. Nemis (Nemis), Roberto B. Ilao (Ilao),
Anicia D. Dela Cruz (Dela Cruz), and Cynthia L. Comandao (Comandao), the
dispositive portion of which reads:
1
2
WHEREFORE, the petition is GRANTED. The private respondent is hereby
ordered to reinstate the petitioners with full backwages less the amounts they
received as separation pays. In case reinstatement would no longer be feasible
because the positions previously held no longer exist, the private respondent
shall pay them backwages plus, in lieu of reinstatement, separation pays equal
to one (1) month pay, or one-half (1/2) month pay for every year of service,
whichever is higher. In addition, the private respondent is hereby ordered to pay
the petitioners moral damages in the amount of ₱20,000.00 each.
In this connection, we regret to advise you that you are one of those affected by
the said exercise, and your employment shall be terminated effective at the
close of working hours on April 15, 2004.
Accordingly, you shall be paid your separation pay as mandated by law. You will
no longer be required to report for work during the 30-day notice period in order
to give you more time to look for alternative employment. However, you will be
paid the salary corresponding to the said period. We shall process your
clearance and other documents and you may claim the payables due you on
March 31, 2004.
Thank you for your services and good luck to your future endeavors.
10
As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective
March 31, 2004, together with fifteen (15) other employees on the ground of lack
of market/slump in demand. PCMC, however, claimed that they availed of the
company’s voluntary retirement program and, in fact, voluntarily executed their
respective Deeds of Release, Waiver, and Quitclaim.
11
12
SO ORDERED.
3
The Facts
Claiming that they were aggrieved by PCMC’s decision to terminate their
employment, respondents filed separate complaints for illegal dismissal against
PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and Mr.
David Lim. These cases were later consolidated. Respondents primarily relied
on the Supreme Court’s decision in Philippine Carpet Employees Association
(PHILCEA) v. Hon. Sto. Tomas (Philcea case), as to the validity of the
company’s retrenchment program. They further explained that PCMC did not, in
fact, suffer losses shown by its acts prior to and subsequent to their
termination. They also insisted that their acceptance of separation pay and
signing of quitclaim is not a bar to the pursuit of illegal dismissal case.
13
14
15
PCMC, for its part, defended its decision to terminate the services of
respondents being a necessary management prerogative. It pointed out that as
an employer, it had no obligation to keep in its employ more workers than are
necessary for the operation of his business. Thus, there was an authorized
cause for dismissal. Petitioners also stressed that respondents belatedly filed
their complaint as they allowed almost three years to pass making the principle
of laches applicable. Considering that respondents accepted their separation
pay and voluntarily executed deeds of release, waiver and quitclaim, PCMC
invoked the principle of estoppel on the part of respondents to question their
separation from the service. Finally, as to Marcos, Ilao and Nemis, PCMC
emphasized that they were not dismissed from employment, but in fact they
voluntarily retired from employment to take advantage of the company’s
program.
16
On August 23, 2007, Labor Arbiter (LA) Donato G. Quinto, Jr. rendered a
Decision dismissing the complaint for lack of merit. The LA found no flaw in
respondents’ termination as they voluntarily opted to retire and were
subsequently re-employed on a contractual basis then regularized, terminated
from employment and were paid separation benefits. In view of respondents’
belated filing of the complaint, the LA concluded that such action is a mere
afterthought designed primarily for respondents to collect more money, taking
advantage of the 2006 Supreme Court decision.
17
applied the doctrine of stare decisis, in view of the similar factual circumstances
of the cases. As to Ilao, Nemis and Marcos, while acknowledging their voluntary
resignation, the CA found the same not a bar to the illegal dismissal case
because they did so on the mistaken belief that PCMC was losing money. With
the foregoing findings, the CA ordered that respondents be reinstated with full
backwages less the amounts they received as separation pay. In case of
impossibility of reinstatement, the CA ordered PCMC to pay respondents
backwages and in lieu of reinstatement, separation pay equal to one month pay
or ½ month pay for every year of service whichever is higher, plus moral
damages.
22
23
The Issues
Aggrieved, petitioners come before the Court in this petition for review
on certiorari based on this ground, to wit:
IN RENDERING ITS DISPUTED DECISION AND RESOLUTION, THE
COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND/OR ESTABLISHED JURISPRUDENCE.
a) Res Judicata should not be followed if to follow it is to perpetuate error
(Philippine Trust Co., and Smith Bell & Co. vs. Mitchell, 59 Phil. 30, 36 (1933).
The (Supreme) Court is not precluded from rectifying errors of judgment if blind
and stubborn adherence to the doctrine of immutability of final judgments would
involve the sacrifice of justice for technicality (Heirs of Maura So vs.
Obliosca, G.R. No. 147082, January 28, 2008, 542 SCRA 406)
18
19
On appeal, the National Labor Relations Commission (NLRC) sustained the LA
decision. In addition to the LA ratiocination, the NLRC emphasized the
application of the principle of laches for respondents’ inaction for an
unreasonable period.
20
Still undaunted, respondents elevated the matter to the CA in a petition
for certiorari. In reversing the earlier decisions of the LA and the NLRC, the CA
refused to apply the principle of laches, because the case was instituted prior to
the expiration of the prescriptive period set by law which is four years. It
stressed that said principle cannot be invoked earlier than the expiration of the
prescriptive period. Citing the Court’s decision in the Philcea case, the CA
21
b) Not all waivers and quitclaims are invalid as against public policy. Waivers
that represent a voluntary and reasonable settlement of the laborer’s claims are
legitimate and should be respected by the Court as the law between the parties
(Gamogamo vs. PNOC Shipping and Transport Corp., G.R. No. 141707, May 2,
2002; Alcasero vs. NLRC, 288 SCRA 129) Where the persons making the
waiver has done so voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable, the transaction must
be recognized as valid and binding undertaking (Periquet vs. NLRC, 186 SCRA
724 [1990]; Magsalin vs. Coca Cola Bottlers Phils., Inc. vs. National
Organization of Working Men (N.O.W.M.], G.R. No. 148492, May 2, 2003).
24
Petitioners contend that the Philcea case decided by this Court and relied upon
by the CA in the assailed decision was based on erroneous factual findings,
inapplicable financial statement, as well as erroneous analysis of such financial
statements. They, thus, implore the Court to revisit the cited case in order to
25
dispense with substantial justice. They explain that the Court made conclusions
based on erroneous information. Petitioners also insist that the doctrines of res
judicata and law of the case are not applicable, considering that this case does
not involve the same parties as the Philcea case. They likewise point out that
not all respondents were involuntarily separated on the ground of redundancy as
some of them voluntarily availed of the company’s Voluntary Separation
Program. They further contend that respondents are guilty not only of laches
but also of estoppel in view of their inaction for an unreasonable length of time to
assail the alleged illegal dismissal and in voluntarily executing a release,
quitclaim and waiver.
26
27
Respondents’ complaint filed almost 3 years after their alleged illegal dismissal
was still well within the prescriptive period. Laches cannot, therefore, be invoked
yet. To be sure, laches may be applied only upon the most convincing evidence
of deliberate inaction, for the rights of laborers are protected under the social
justice provisions of the Constitution and under the Civil Code.
34
35
Stare Decisis
28
29
The Court’s Ruling
Laches
Laches has been defined as the failure or neglect for an unreasonable and
unexplained length of time to do that which by exercising due diligence, could or
should have been done earlier, thus, giving rise to a presumption that the party
entitled to assert it either has abandoned or declined to assert it. It has been
repeatedly held by the Court that:
30
31
x x x Laches is a doctrine in equity while prescription is based on law. Our courts
are basically courts of law not courts of equity. Thus, laches cannot be invoked
to resist the enforcement of an existing legal right. x x x Courts exercising equity
jurisdiction are bound by rules of law and have no arbitrary discretion to
disregard them. In Zabat Jr. v. Court of Appeals x x x, this Court was more
emphatic in upholding the rules of procedure. We said therein:
As for equity which has been aptly described as a "justice outside legality," this
is applied only in the absence of, and never against, statutory law or, as in this
case, judicial rules of procedure. Aequetas nunguam contravenit legis. The
pertinent positive rules being present here, they should preempt and prevail over
all abstract arguments based only on equity.
Thus, where the claim was filed within the [four-year] statutory period, recovery
therefore cannot be barred by laches. Courts should never apply the doctrine of
laches earlier than the expiration of time limited for the commencement of
actions at law."
The main issue sought to be determined in this case is the validity of
respondents’ dismissal from employment. Petitioners contend that they either
voluntarily retired from the service or terminated from employment based on an
authorized cause. The LA and the NLRC are one in saying that the dismissal
was legal. The CA, however, no longer discussed the validity of the ground of
termination. Rather, it applied the Court’s decision in the Philcea case where the
same ground was thoroughly discussed. In other words, the appellate court
applied the doctrine of stare decisis and reached the same conclusion as the
earlier case.
Under the doctrine of stare decisis, when a court has laid down a principle of law
as applicable to a certain state of facts, it will adhere to that principle and apply it
to all future cases in which the facts are substantially the same, even though the
parties may be different. Where the facts are essentially different,
however, stare decisis does not apply, for a perfectly sound principle as applied
to one set of facts might be entirely inappropriate when a factual variant is
introduced.
36
37
The question, therefore, is whether the factual circumstances of this present
case are substantially the same as the Philcea case.
We answer in the affirmative.
This case and the Philcea case involve the same period which is March to April
2004; the issuance of Memorandum to employees informing them of the
implementation of the cost reduction program; the implementation of the
voluntary retirement program and retrenchment program, except that this case
involves different employees; the execution of deeds of release, waiver, and
quitclaim, and the acceptance of separation pay by the affected employees.
32
An action for reinstatement by reason of illegal dismissal is one based on an
injury to the complainants’ rights which should be brought within four years from
the time of their dismissal pursuant to Article 1146 of the Civil Code.
33
The illegality of the basis of the implementation of both voluntary retirement and
retrenchment programs of petitioners had been thoroughly ruled upon by the
Court in the Philcea case. It discussed the requisites of both retrenchment and
redundancy as authorized causes of termination and that petitioners failed to
substantiate them. In ascertaining the bases of the termination of employees, it
took into consideration petitioners’ claim of business losses; the purchase of
machinery and equipment after the termination, the declaration of cash
dividends to stockholders, the hiring of 100 new employees after the
retrenchment, and the authorization of full blast overtime work for six hours daily.
These, said the Court, are inconsistent with petitioners’ claim that there was a
slump in the demand for its products which compelled them to implement the
termination programs. In arriving at its conclusions, the Court took note of
petitioners’ net sales, gross and net profits, as well as net income. The Court,
thus, reached the conclusion that the retrenchment effected by PCMC is invalid
due to a substantive defect. We quote hereunder the Court’s pronouncement in
the Philcea case, to wit:
Respondents failed to adduce clear and convincing evidence to prove the
confluence of the essential requisites for a valid retrenchment of its employees.
We believe that respondents acted in bad faith in terminating the employment of
the members of petitioner Union.
Contrary to the claim of respondents that the Corporation was experiencing
business losses, respondent Corporation, in fact, amassed substantial earnings
from 1999 to 2003. It found no need to appropriate its retained earnings except
on March 23, 2001, when it appropriated ₱60,000,000.00 to increase production
capacity. x x x
losses, how could it justify the purchase of ₱20,000,000.00 worth of machinery
and equipment? There is likewise no justification for the hiring of more than 100
new employees, more than the number of those who were retrenched, as well
as the order authorizing full blast overtime work for six hours daily. All these are
inconsistent with the intransigent claim that respondent Corporation was
impelled to retrench its employees precisely because of low demand for its
products and other external causes.
xxxx
That respondents acted in bad faith in retrenching the 77 members of petitioner
is buttressed by the fact that Diaz issued his Memorandum announcing the costreduction program on March 9, 2004, after receipt of the February 10, 2004
letter of the Union president which included the proposal for additional benefits
and wage increases to be incorporated in the CBA for the ensuing year.
Petitioner and its members had no inkling, before February 10, 2004, that
respondent Corporation would terminate their employment. Moreover,
respondent Corporation failed to exhaust all other means to avoid further losses
without retrenching its employees, such as utilizing the latter's respective forced
vacation leaves. Respondents also failed to use fair and reasonable criteria in
implementing the retrenchment program, and instead chose to retrench 77 of
the members of petitioner out of the dismissed 88 employees. Worse,
respondent Corporation hired new employees and even rehired the others who
had been "retrenched."
xxxx
The evidence on record belies the ₱22,820,151.00 net income loss in 2004 as
projected by the SOLE. On March 29, 2004, the Board of Directors approved the
appropriation of ₱20,000,000.00 to purchase machinery to improve its facilities,
and declared cash dividends to stockholders at ₱30.00 per share. x x x
xxxx
It bears stressing that the appropriation of ₱20,000,000.00 by the respondent
Corporation on September 16, 2004 was made barely five months after the 77
Union members were dismissed on the ground that respondent Corporation was
suffering from "chronic depression." Cash dividends were likewise declared on
March 29, 2004, barely two weeks after it implemented its "retrenchment
program."
If respondent Corporation were to be believed that it had to retrench employees
due to the debilitating slump in demand for its products resulting in severe
As shown by the SGV & Co. Audit Report, as of year end December 31, 2003,
respondent Corporation increased its net sales by more than ₱8,000,000.00.
Respondents failed to prove that there was a drastic or severe decrease in the
product sales or that it suffered severe business losses within an interval of
three (3) months from January 2004 to March 9, 2004 when Diaz issued said
Memorandum. Such claim of a depressed market as of March 9, 2004 was only
a pretext to retaliate against petitioner Union and thereby frustrate its demands
for more monetary benefits and, at the same time, justify the dismissal of the 77
Union members.
xxxx
In contrast, in this case, the retrenchment effected by respondent Corporation is
invalid due to a substantive defect, non-compliance with the substantial
requirements to effect a valid retrenchment; it necessarily follows that the
termination of the employment of petitioner Union's members on such ground is,
likewise, illegal. As such, they (petitioner Union's members) are entitled to
reinstatement with full backwages.
38
We find no reason to depart from the above conclusions which are based on the
Court’s examination of the evidence presented by the parties therein. As the
respondents here were similarly situated as the union members in
the Philcea case, and considering that the questioned dismissal from the service
was based on the same grounds under the same circumstances, there is no
need to relitigate the issues presented herein. In short, we adopt the Court’s
earlier findings that there was no valid ground to terminate the employees.
in all aspects as the union members. With respect to respondents Marcos,
Nemis and Ilao, although they applied for voluntary retirement, the same was
not accepted by petitioner. Instead, it issued notice of termination dated March 6,
2004 to these same employees. And while it is true that petitioner paid them
separation pay, the payment was in the nature of separation and not retirement
pay. In other words, payment was made because of the implementation of the
retrenchment program and not because of retirement. As their application for
availing of the company’s voluntary retirement program was based on the wrong
premise, the intent to retire was not clearly established, or rather that the
retirement is involuntary. Thus, they shall be considered discharged from
employment. Consequently, they shall be treated as if they are in the same
footing as the other respondents herein and the union members in the Philcea
case.
42
43
44
A closer look at petitioners’ arguments would show that they want the Court to
re-examine our decision in the Philcea case allegedly on the ground that the
conclusions therein were based on erroneous interpretation of the evidence
presented.
Indeed, in Abaria v. National Labor Relations Commission, although the Court
was confronted with the same issue of the legality of a strike that has already
been determined in a previous case, the Court refused to apply the doctrine
of stare decisis insofar as the award of backwages was concerned because of
the clear erroneous application of the law. We held therein that the Court
abandons or overrules precedents whenever it realizes that it erred in the prior
decision. The Court’s pronouncement in that case is instructive:
39
40
The doctrine though is not cast in stone for upon a showing that circumstances
attendant in a particular case override the great benefits derived by our judicial
system from the doctrine of stare decisis, the Court is justified in setting it aside.
For the Court, as the highest court of the land, may be guided but is not
controlled by precedent. Thus, the Court, especially with a new membership, is
not obliged to follow blindly a particular decision that it determines, after reexamination, to call for a rectification.
41
Waivers, Releases and Quitclaims
"As a rule, deeds of release and quitclaim cannot bar employees from
demanding benefits to which they are legally entitled or from contesting the
legality of their dismissal. The acceptance of those benefits would not amount to
estoppel." To excuse respondents from complying with the terms of their
waivers, they must locate their case within any of three narrow grounds: (1) the
employer used fraud or deceit in obtaining the waivers; (2) the consideration the
employer paid is incredible and unreasonable; or (3) the terms of the waiver are
contrary to law, public order, public policy, morals, or good customs or
prejudicial to a third person with a right recognized by law. The instant case
falls under the first situation.
45
46
As the ground for termination of employment was illegal, the quitclaims are
deemed illegal as the employees’ consent had been vitiated by mistake or fraud.
The law looks with disfavor upon quitclaims and releases by employees
pressured into signing by unscrupulous employers minded to evade legal
responsibilities. The circumstances show that petitioner’s misrepresentation led
its employees, specifically respondents herein, to believe that the company was
suffering losses which necessitated the implementation of the voluntary
retirement and retrenchment programs, and eventually the execution of the
deeds of release, waiver and quitclaim.
47
The Abaria case, however, is not applicable in this case. There is no reason to
abandon the Court’s ruling in the Philcea case.
1âwphi1
Do we apply the aforesaid decision to all the respondents herein? Again, we
answer in the affirmative.
Just like the union members in the Philcea case, respondents Tagyamon, Luna,
Badayos, Dela Cruz, and Comandao received similarly worded memorandum of
dismissal effective April 15, 2004 based on the same ground of slump in the
market demand for the company’s products. As such, they are similarly situated
48
It can safely be concluded that economic necessity constrained respondents to
accept petitioners’ monetary offer and sign the deeds of release, waiver and
quitclaim. That respondents are supervisors and not rank-and-file employees
does not make them less susceptible to financial offers, faced as they were with
the prospect of unemployment. The Court has allowed supervisory employees to
seek payment of benefits and a manager to sue for illegal dismissal even though,
for a consideration, they executed deeds of quitclaims releasing their employers
from liability.
CASTRO
Associate Justice
*
Associate Justice
49
x x x There is no nexus between intelligence, or even the position which the
employee held in the company when it concerns the pressure which the
employer may exert upon the free will of the employee who is asked to sign a
release and quitclaim. A lowly employee or a sales manager, as in the present
case, who is confronted with the same dilemma of whether [to sign] a release
and quitclaim and accept what the company offers them, or [to refuse] to sign
and walk out without receiving anything, may do succumb to the same pressure,
being very well aware that it is going to take quite a while before he can recover
whatever he is entitled to, because it is only after a protracted legal battle
starting from the labor arbiter level, all the way to this Court, can he receive
anything at all. The Court understands that such a risk of not receiving anything
whatsoever, coupled with the probability of not immediately getting any gainful
employment or means of livelihood in the meantime, constitutes enough
pressure upon anyone who is asked to sign a release and quitclaim in exchange
of some amount of money which may be way below what he may be entitled to
based on company practice and policy or by law.
50
The amounts already received by respondents as consideration for signing the
releases and quitclaims should be deducted from their respective monetary
awards.
MARVIC MARIO VICTOR F. LEONEN
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in theabove Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court's Division.
51
WHEREFORE, premises considered, the petition is hereby DENIED. The Court
of Appeals Decision dated July 7, 2009 and Resolution dated February 26, 2010
in CA-G.R. SP No. 105236 are AFFIRMED.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Chief Justice
Footnotes
DIOSDADO M. PERALTA
Associate Justice
Designated Acting Member in lieu of Associate Justice Jose Catral Mendoza,
per Raffle dated February 16, 2011.
*
WE CONCUR:
Penned by Associate Justice Jose Catral Mendoza, with Associate Justices
Sesinando E. Villon and Marlene Gonzales-Sison, concurring, rol/o, pp. 50-59.
1
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
TERESITA J. LEONARDO-DE
ROBERTO A. ABAD
Penned by.Associate Justice Marlene Gonzales-Sison, with Associate Justices
Sesinando E. Villon and Ramon R. Garcia, concurring; rollo, pp. 61-62.
2
3
Rollo, p. 58.
Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas, 518
Phil. 299 (2006).
4
5
Id. at 83.
7
Id. at 84.
9
Id. at 28-29.
25
Id. at 29.
26
Id.
27
Id. at 38.
28
Id. at 39.
29
Id. at 40-42.
Rollo, p. 82.
6
8
24
Id. at 85.
Id. at 86.
GF Equity, Inc. v. Valenzona, G.R. No. 156841, June 30, 2005, 462 SCRA 466,
480.
30
10
Id. at 82.
11
CA rollo, p. 73.
12
Rollo, pp. 73-81.
13
Supra note 4.
32
Mendoza v. NLRC, 350 Phil. 486, 495 (1998).
14
CA rollo, pp. 74-93.
33
Art. 1146. The following actions must be instituted within four years:
15
Id. at 93-96.
(1) Upon an injury to the rights of the plaintiff;
16
Id. at 235-239.
(2) Upon a quai-delict.
17
Id. at 151-160.
34
18
Id. at 158.
See: GF Equity, Inc. v. Valenzona, supra; Mendoza v. NLRC, 350 Phil. 486
(1998); Reno Foods, Inc. v. National Labor Relations Commission, 319 Phil. 500
(1995).
31
Reno Foods, Inc. v. National Labor Relations Commission, supra note 31, at
509.
35
19
Id.
Id. at 159.
Abaria v. National Labor Relations Commission, G.R. No. 154113, December
7, 2011, 661 SCRA 686, 712.
36
20
Id. at 161-164.
Id. at 55-56.
37
21
Id. at 58.
38
22
23
Id.
Hacienda Bino/Hortencia Starke, Inc. v. Cuenca, 496 Phil. 198, 207 (2005).
Philippine Carpet Employees
Tomas, supra note 4, at 317- 323.
Association
(PHILCEA)
v.
Hon.
Sto.
DIGEST
Facts:
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a
corporation registered in the Philippines engaged in the business of
manufacturing wool and yarn carpets and rugs. Respondents were its regular
and permanent employees, but were affected by petitioner's retrenchment and
voluntary retirement programs.
On March 15, 2004, Tagyamon, Luna, Badayos, Dela Cruz, and
Comandao received a uniformly worded Memorandum of dismissal, to wit:
This is to inform you that in view of a slump in the market demand
for our products due to the un-competitiveness of our price, the
company is constrained to reduce the number of its workforce. The
long-term effects of September 11 and the war in the Middle East
have greatly affected the viability of our business and we are left with
no recourse but to reorganize and downsize our organizational
structure.
We wish to inform you that we are implementing a retrenchment
program in accordance with Article 283 of the Labor Code of the
Philippines, as amended, and its implementing rules and regulations.
In this connection, we regret to advise you that you are one of those
affected by the said exercise, and your employment shall be
terminated effective at the close of working hours on April 15, 2004.
Accordingly, you shall be paid your separation pay as mandated by
law. You will no longer be required to report for work during the 30day notice period in order to give you more time to look for
alternative employment. However, you will be paid the salary
corresponding to the said period. We shall process your clearance and
other documents and you may claim the payables due you on March
31, 2004.
Thank you for your services and good luck to your future endeavors.
Claiming that they were aggrieved by PCMC's decision to terminate their
employment, respondents filed separate complaints for illegal dismissal
against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim
and Mr. David Lim.
PCMC, for its part, defended its decision to terminate the services of
respondents being a necessary management prerogative. It pointed out that as
an employer, it had no obligation to keep in its employ more workers than are
necessary for the operation of his business. Thus, there was an authorized
cause for dismissal.
Citing the Court's decision in the Philcea case, the CA applied the doctrine of
stare decisis, in view of the similar factual circumstances of the cases. As to
Ilao, Nemis and Marcos, while acknowledging their voluntary resignation,
the CA found the same not a bar to the illegal dismissal case because they did
so on the mistaken belief that PCMC was losing money. With the foregoing
findings, the CA ordered that respondents be reinstated with full backwages
less the amounts they received as separation pay. In case of impossibility of
reinstatement, the CA ordered PCMC to pay respondents backwages and in
lieu of reinstatement, separation pay equal to one month pay or 1⁄2 month pay
for every year of service whichever is higher, plus moral damages.
Ruling:
Laches
Laches has been defined as the failure or neglect for an unreasonable and
unexplained length of time to do that which by exercising due diligence,
could or should have been done earlier, thus, giving rise to a presumption that
the party entitled to assert it either has abandoned or declined to assert it. It
has been repeatedly held by the Court that:
x x x Laches is a doctrine in equity while prescription is based on law.
Our courts are basically courts of law not courts of equity. Thus,
laches cannot be invoked to resist the enforcement of an existing legal
right. x x x Courts exercising equity jurisdiction are bound by rules of
law and have no arbitrary discretion to disregard them. In Zabat Jr. v.
Court of Appeals x x x, this Court was more emphatic in upholding
the rules of procedure. We said therein:
As for equity which has been aptly described as a "justice outside
legality," this is applied only in the absence of, and never against,
statutory law or, as in this case, judicial rules of procedure. Aequetas
nunguam contravenit legis. The pertinent positive rules being present
here, they should preempt and prevail over all abstract arguments
based only on equity.
Thus, where the claim was filed within the [four-year] statutory
period, recovery therefore cannot be barred by laches. Courts should
never apply the doctrine of laches earlier than the expiration of time
limited for the commencement of actions at law."
An action for reinstatement by reason of illegal dismissal is one based on an
injury to the complainants' rights which should be brought within four years
from the time of their dismissal pursuant to Article 1146[33] of the Civil
Code. Respondents' complaint filed almost 3 years after their alleged illegal
dismissal was still well within the prescriptive period. Laches cannot,
therefore, be invoked yet. To be sure, laches may be applied only upon the
most convincing evidence of deliberate inaction, for the rights of laborers are
protected under the social justice provisions of the Constitution and under the
Civil Code.
Stare Decisis
The main issue sought to be determined in this case is the validity of
respondents' dismissal from employment. Petitioners contend that they either
voluntarily retired from the service or terminated from employment based on
an authorized cause. The LA and the NLRC are one in saying that the
dismissal was legal. The CA, however, no longer discussed the validity of the
ground of termination. Rather, it applied the Court's decision in the Philcea
case where the same ground was thoroughly discussed. In other words, the
appellate court applied the doctrine of stare decisis and reached the same
conclusion as the earlier case.
Under the doctrine of stare decisis, when a court has laid down a principle of
law as applicable to a certain state of facts, it will adhere to that principle and
apply it to all future cases in which the facts are substantially the same, even
though the parties may be different.[36] Where the facts are essentially
different, however, stare decisis does not apply, for a perfectly sound
principle as applied to one set of facts might be entirely inappropriate when a
factual variant is introduced.
The question, therefore, is whether the factual circumstances of this present
case are substantially the same as the Philcea case.
We answer in the affirmative.
This case and the Philcea case involve the same period which is March to
April 2004; the issuance of Memorandum to employees informing them of
the implementation of the cost reduction program; the implementation of the
voluntary retirement program and retrenchment program, except that this
case involves different employees; the execution of deeds of release, waiver,
and quitclaim, and the acceptance of separation pay by the affected
employees.
The illegality of the basis of the implementation of both voluntary retirement
and retrenchment programs of petitioners had been thoroughly ruled upon by
the Court in the Philcea case. It discussed the requisites of both retrenchment
and redundancy as authorized causes of termination and that petitioners failed
to substantiate them. In ascertaining the bases of the termination of
employees, it took into consideration petitioners' claim of business losses; the
purchase of machinery and equipment after the termination, the declaration of
cash dividends to stockholders, the hiring of 100 new employees after the
retrenchment, and the authorization of full blast overtime work for six hours
daily. These, said the Court, are inconsistent with petitioners' claim that there
was a slump in the demand for its products which compelled them to
implement the termination programs. In arriving at its conclusions, the Court
took note of petitioners' net sales, gross and net profits, as well as net income.
The Court, thus, reached the conclusion that the retrenchment effected by
PCMC is invalid due to a substantive defect. We quote hereunder the Court's
pronouncement in the Philcea case, to wit:
Respondents failed to adduce clear and convincing evidence to prove
the confluence of the essential requisites for a valid retrenchment of
its employees. We believe that respondents acted in bad faith in
terminating the employment of the members of petitioner Union.
In contrast, in this case, the retrenchment effected by respondent Corporation
is invalid due to a substantive defect, non-compliance with the substantial
requirements to effect a valid retrenchment; it necessarily follows that the
termination of the employment of petitioner Union's members on such
ground is, likewise, illegal. As such, they (petitioner Union's members) are
entitled to reinstatement with full backwages.
The Abaria case, however, is not applicable in this case. There is no reason to
abandon the Court's ruling in the Philcea case.
WHEREFORE, premises considered, the petition is hereby DENIED. The
Court of Appeals Decision dated July 7, 2009 and Resolution dated February
26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.
We find no reason to depart from the above conclusions which are based on
the Court's examination of the evidence presented by the parties therein. As
the respondents here were similarly situated as the union members in the
Philcea case, and considering that the questioned dismissal from the service
was based on the same grounds under the same circumstances, there is no
need to relitigate the issues presented herein. In short, we adopt the Court's
earlier findings that there was no valid ground to terminate the employees.
Indeed, in Abaria v. National Labor Relations Commission, although the
Court was confronted with the same issue of the legality of a strike that has
already been determined in a previous case, the Court refused to apply the
doctrine of stare decisis insofar as the award of backwages was concerned
because of the clear erroneous application of the law. We held therein that the
Court abandons or overrules precedents whenever it realizes that it erred in
the prior decision. The Court's pronouncement in that case is instructive:
The doctrine though is not cast in stone for upon a showing that
circumstances attendant in a particular case override the great benefits
derived by our judicial system from the doctrine of stare decisis, the
Court is justified in setting it aside. For the Court, as the highest court
of the land, may be guided but is not controlled by precedent. Thus,
the Court, especially with a new membership, is not obliged to follow
blindly a particular decision that it determines, after re-examination,
to call for a rectification.
3. PHIL-AIR CONDITIONING CENTER VS. RCJ LINES (GR 193827, NOV. 23, 2015)
DECISION
BRION, J.:
RCJ Lines issued three post-dated checks in favor of Phil-Air to partly
cover the unpaid balance:
chanRoblesvi rtua lLawl ibra ry
Phil-Air Conditioning Center (Phil-Air) filed this petition for review on
certiorari1 to assail the September 15, 2010 decision2 of the Court of
Appeals (CA) in CA-G.R. CV No. 85866.
The CA affirmed the September 8, 2004 decision of the Regional Trial
Court (RTC), Branch 119 of Pasay City, dismissing Phil-Air's complaint
for sum of money with prayer for a writ of preliminary attachment.3
Designated as Acting Member in lieu of Associate Justice Antonio T.
Carpio, per Special Order No. 2282 dated November 13, 2015.
Designated as Acting Chairperson in lieu of Associate Justice Antonio T.
Carpio, per Special Order No. 2281 dated November 13, 2015.
Antecedents
On various dates between March 5, 1990, and August 29, 1990,
petitioner Phil-Air sold to respondent RCJ Lines four Carrier Paris 240
air-conditioning units for buses (units). The units included
compressors, condensers, evaporators, switches, wiring, circuit
boards, brackets, and fittings.4
The total purchases amounted to P1,240,000.00 as shown on a sales
invoice dated November 5, 1990.5 RCJ Lines paid P400,000.00,
leaving a balance of P840,000.00.6
RCJ Lines accepted the delivery of the units, which Phil-Air then
installed after they were inspected by RCJ Lines president Rolando
Abadilla, Sr.7
Phil-Air allegedly performed regular maintenance checks on the units
pursuant to the one-year warranty on parts and labor. After some
months from installation, Phil-Air supposedly boosted the capacity of
the units by upgrading them to the Carrier Paris 280 model. 8 It also
purportedly repaired the control switch panel of one of the units for an
additional cost of P60,000.00.9
Check No.
Amount
Post-dated
479759
Php 244,998.00
February 28, 1992
479760
Php 244,998.00
March 31, 1992
479761
Php 244,998.00
April 30, 1992
TOTAL
Php 734,994.00
cralawla wlibra ry
All the post-dated checks were dishonored when Phil-Air subsequently
presented them for payment. Check No. 479759 was returned
because it was drawn against insufficient funds, while Check Nos.
479760 and 479761 were returned because payments were
stopped.10
Before presenting the third check for payment, Phil-Air sent a demand
letter11 to Rolando Abadilla, Sr. on April 7, 1992, asking him to fund
the post-dated checks.
On July 17, 1996, Phil-Air demanded payment from Rolando Abadilla,
Jr., for the total amount of P734,994.00 plus interest, and attorney's
fees equivalent to 25% of the amount due. Phil-Air warned that it
would take court action if payment is not made within five days from
demand.12
In view of the failure of RCJ Lines to pay the balance despite demand,
Phil-Air filed on April 1, 1998 the complaint13 for sum of money with
prayer for the issuance of a writ of preliminary attachment.14 Phil-Air
sought to recover from RCJ Lines:
chanRoblesvirt ual Lawlib rary
a)
The total amount of P840,000.00 exclusive of interest for
the unpaid delivered air-conditioning units;
b) The amount of P60,000.00 for the unpaid repair services;
The total interest in the amount of P756,000.00
c) (P840,000.00 x 12% x 7 years + P60,000.00 x 12% x 7
years);
d)
The sum equivalent to 25% of the total amount due as
attorney's fees, plus P3,000.00 per court appearance; and
e) Costs of the suit.
In its answer with compulsory counterclaim,15RCJ Lines admitted that
it purchased the units in the total amount of PI,240,000.00 and that it
had only paid P400,000.00. It refused to pay the balance because
Phil-Air allegedly breached its warranty.16
RCJ Lines averred that the units did not sufficiently cool the buses
despite repeated repairs. Phil-Air purportedly represented that the
units were in accord with RCJ Lines' cooling requirements as shown in
Phil-Air's price quotation17 dated August 4, 1989. The price quotation
provided that full payment should be made upon the units' complete
installation. Complete installation, according to RCJ Lines, is
equivalent to being in operational condition.
As it turned out, the Carrier Paris 240 model was not suited to the 45
to 49-seater buses operated by RCJ Lines. The units, according to RCJ
Lines, were defective and did not attain full operational condition.18
Further, RCJ Lines claimed that it was also entitled to be reimbursed
for costs and damages occasioned by the enforcement of the writ of
attachment.
RCJ Lines thus urged the RTC to order Phil-Air to pay (1) the
replacement costs of the units; (2) lost profits for nine days from April
22 to April 30, 1999, resulting from the attachment of its two buses
amounting to P207,000.00;19 and (3) P64,390.00 for the counterbond premium, moral damages, exemplary damages and attorney's
fees.
The RTC Ruling
The RTC granted the application for the issuance of a writ of
preliminary attachment after Phil-Air posted an attachment bond in
the amount of P1,656,000.00.20 Two buses of RCJ Lines were
attached pursuant to the writ dated December 18, 1998.21 The writ
was executed on April 21, 1999.22 The attachment, however, was
later lifted when the RTC granted RCJ Lines' urgent motion to
discharge the writ of attachment.23 RCJ Lines posted a counter-bond
in the same amount as the attachment bond.24
Ruling on the merits after trial, the RTC found that Phil-Air was guilty
of laches and estopped from pursuing its claim. It also sustained the
allegation that Phil-Air had breached its warranty.
The dispositive portion of the RTC judgment reads:
chanRoblesvirtua lLawl ibra ry
WHEREFORE, judgment is hereby rendered as follows:
1. Dismissing the complaint of plaintiff for
lack of merit.
2. Directing
the
plaintiff
to
pay
the
defendants the amount of PI00,000.00 as
attorney's fees as they were forced to spend
and hire a lawyer to litigate for seven (7)
years in this Court the unfounded and
invalid cause of action of plaintiff.
3. Directing the plaintiff to pay P82,274.00 as
refund of the premium xxx for defendant's
counter-bond for the release of the two
buses which were attached per Writ of
Attachment of this Court.
4. Directing the plaintiff to pay P216,000.00
for the lost profits of defendants for the
attachment of their two buses as there was
no fraud in the transaction of the parties
and plaintiff had no sufficient cause of
action for the issuance of the writ of
attachment.
5. Dismissing all other claims of defendants as
stated in their counter-claims.
6. Costs against plaintiff. SO ORDERED.25
cralawla wlibra ry
The CA Ruling
The CA affirmed the RTC decision in toto.26
First, the CA held that Phil-Air's cause of action was barred by
laches.27
The CA concluded that "Phil-Air's inaction on RCJ Lines' repeated
demands and inexplicable failure to comply with its obligations had
certainly led the latter to believe [Phil-Air] was no longer interested in
pursuing any claim" and that "[Phil-Air] had been conspicuously silent
for so long a time which is disturbingly unusual for one claiming to
have been aggrieved by another."28
meet the cooling requirements of RCJ Lines.32
Third, the CA ordered Phil-Air to reimburse the premium on the
counter-bond amounting to P82,274.00 since the writ was
improvidently issued.
Fourth, the CA affirmed the finding of the RTC that RCJ Lines suffered
losses when the RTC attached two of its buses.
The RTC and the CA relied on the testimony of Rolando Abadilla, Jr.,
who claimed to be in charge of the daily operations of RCJ Lines. He
testified that they suffered losses for nine days as a result of the
enforcement of the writ of preliminary attachment. The lost profits
purportedly amounted to P227,280.00. To support this claim, RCJ
Lines adduced as evidence the summary of the daily cash
collections33 from the buses that were not attached, on various dates
in August and September 2000.34
Finally, the CA sustained the award of attorney's fees for PI 00,000.00
in favor of RCJ lines for having been compelled to litigate.
The Petition
First, Phil-Air argues that the doctrine of laches is not applicable when
the action is filed within the prescriptive period. Laches, being a
doctrine of equity, should only be applied to fill a void in the law.35
Second, the CA held that Phil-Air breached its warranty. The price
quotation supposedly warranted that the Carrier Paris 240 model was
suitable for 50-60-passenger coaches and especially recommended for
operation in the tropics.29
Phil-Air asserts that it filed the complaint on April 1, 1998, or less
than eight years from the execution of the sales invoice dated
November 5, 1990. The complaint was thus filed within the ten-year
prescriptive period for actions based upon a written contract.
The CA gave credence to the testimony of the country manager of
Carrier Refrigeration Philippines Inc. (Carrier Philippines) who testified
that the Carrier Paris 240 model is suited for buses with a maximum
seating capacity of up to 35 persons; beyond that, the units would not
function properly.30 The CA also found convincing the testimonies of
two RCJ Lines employees who testified that they experienced firsthand
the inefficient cooling of the Carrier Paris 240.31
Second, Phil-Air denies that it breached its warranty.
Relying on these testimonies, the CA found that the four units did not
Phil-Air further avers that it was not notified of the alleged breach of
It maintains that all the units were brand new and were accepted by
RCJ Lines in good, working, and operational condition. The units were
inspected, tested, and approved by then RCJ Lines president, Rolando
Abadilla, Sr., as proved by the delivery receipts in which he affixed his
signature.36
warranty. Assuming it breached its warranty, Phil-Air submits that the
action to enforce the warranty had already prescribed.
written contract of sale. The ten-year prescriptive period under Article
1144 of the Civil Code thus applies.39
Third, Phil-Air rejects the CA's order that it must reimburse the
premium payment for the counter-bond and the alleged losses
suffered by RCJ Lines. The attachment bond should be answerable for
damages, if any.
In the present case, both parties admit the existence and validity of
the contract of sale. They recognize that the price quotation dated
August 4, 1989, contained the terms and conditions of the sale
contract. They also agree that the price and description of the units
were indicated on the sales invoice dated November 5, 1990. The
sales were in fact consummated on various dates between March 5,
1990 and August 29, 1990, as proved by several delivery receipts.
Respondent's Comment
RCJ Lines reiterates all the arguments it raised in its counterclaim. It
admits that it did not pay the balance of the purchase price.37 It
maintains, however, that it was justified in doing so because Phil-Air
breached its warranty. It insists that Phil-Air was guilty of laches
because it waited for eight years to file the collection case.38
Issues
Based on the foregoing, the Court resolves the following issues:
chanRoblesvi rtual Lawli bra ry
(1)Whether the claim of Phil-Air was barred by laches;
Whether Phil-Air should reimburse RCJ Lines for the
(2)
counter- bond premium and its alleged unrealized profits;
Whether RCJ Lines proved its alleged unrealized profits
(3)arising from the enforcement of the preliminary writ of
attachment; and
Whether RCJ Lines proved that Phil-Air breached its
(4)
warranty.
Our Ruling
We grant the petition.
Phil-Air's claim is not
barred by laches.
In general, there is no room to apply the concept of laches when the
law provides the period within which to enforce a claim or file an
action in court. Phil-Air's complaint for sum of money is based on a
The Court therefore can resolve whether Phil-Air's action to enforce
the contract was timely filed even in the apparent absence of a formal
or notarized deed of sale.40 More significantly, Rolando Abadilla, Jr.,
admitted under oath that the sale was in writing.41
We note that Phil-Air filed the complaint with the RTC on April 1, 1998.
Counting from the date of the sales invoice, or from the date of the
delivery receipts, or even from the date of the price quotation, it is
clear that the complaint was filed within the ten-year prescriptive
period. Contrary to the CA's ruling, laches does not apply.
Laches is defined as the failure or neglect for an unreasonable and
unexplained length of time, to do that which by exercising due
diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned
it or declined to assert it.42
While the CA correctly held that prescription and estoppel by laches
are two different concepts, it failed to appreciate the marked
distinctions between the two concepts.
On the one hand, the question of laches is addressed to the sound
discretion of the court.43 The court resolves whether the claimant
asserted its claim within a reasonable time and whether its failure
to do so warrants the presumption that it either has abandoned it or
declined to assert it. The court determines the claimant's intent to
assert its claim based on its past actions or lack of action. After all,
what is invoked in instances where a party raises laches as a defense
is the equity jurisdiction of the court.44
On the other hand, if the law gives the period within which to enforce
a claim or file an action in court, the court confirms whether the claim
is asserted or the action is filed in court within the prescriptive
period. The court determines the claimant's intent to assert its claim
by simply measuring the time elapsed from the proper reckoning
point (e.g., the date of the written contract) to the filing of the action
or assertion of the claim.
In sum, where the law provides the period within which to assert a
claim or file an action in court, the assertion of the claim or the
filing of the action in court at any time within the prescriptive
period is generally deemed reasonable, and thus, does not call
for the application of laches. As we held in one case, unless reasons
of inequitable proportions are adduced, any imputed delay within
the prescriptive period is not delay in law that would bar relief.45
In Agra, et al. v. Philippine National Bank,46 we held that "[l]aches is
a recourse in equity [and] is applied only in the absence, never in
contravention, of statutory law. Thus, laches cannot, as a rule, abate
a collection suit filed within the prescriptive period mandated by the
Civil Code."
Agra involved an action for collection of a sum of money arising from
an unpaid loan. In resisting payment, the sureties invoked laches and
maintained that the creditor-bank with full knowledge of the
deteriorating financial condition of the principal debtor did not take
steps to collect from the latter while still solvent. The sureties thus
argued that the creditor-bank's action was barred by laches.
We found that the sureties failed to prove all the elements of laches,
namely:
conduct on the part of the defendant or one under whom he
(1) claims, giving rise to the situation of which complaint
is made and for which the complainant seeks a remedy;
(2)
delay in asserting the complainant's right, the
complainant having had knowledge or notice of defendant's
conduct and having
institute a suit;
been
afforded
an
opportunity
to
lack of knowledge or notice on the part of the defendant
(3) that the complainant would assert the right on which he
bases his claim; and
injury or prejudice to the defendant in the event relief
(4) is accorded to the complainant, or the suit is not held
barred.47
cralawla wlibra ry
Examining these elements, we found that only the first element was
present. There was no delay (second element) because the creditorbank filed the action within the ten-year prescriptive period. Since the
claim was timely filed, the defendants did not lack notice that the
creditor-bank would assert its claim (third element). Nor was the
assertion of the right deemed injurious to the defendants (fourth
element); the creditor-bank could assert its claim at any time within
the prescriptive period.
The same conclusion holds true in the present case; not all the
elements of laches are present. To repeat, Phil-Air filed the complaint
with the RTC on April 1, 1998. The time elapsed from August 4, 1989
(the date of the price quotation, which is the earliest possible
reckoning point), is eight years and eight months, well within the tenyear prescriptive period. There was simply no delay (second element
of laches) where Phil-Air can be said to have negligently slept on its
rights.
More significantly, there is no basis for laches as the facts of the
present case do not give rise to an inequitable situation that calls for
the application of equity and the principle of laches.48
Phil-Air is not directly liable
for the counter-bond premium and
RCJ Lines' alleged unrealized profits.
The CA and the RTC erred when it held Phil-Air directly liable for the
counter-bond premium and RCJ Lines' alleged unrealized profits.
Granting that RCJ Lines suffered losses, the judgment award should
have been first executed on the attachment bond. Only if the
attachment bond is insufficient to cover the judgment award can PhilAir be held liable.49
We explain below the purpose of a preliminary attachment, the
procedure in obtaining it, and the manner of having it lifted.
A writ of preliminary attachment is a provisional remedy issued by the
court where an action is pending to be levied upon the property or
properties of the defendant. The property is held by the sheriff as
security for the satisfaction of whatever judgment that might be
secured by the attaching party against the defendant.50
The grant of the writ is conditioned not only on the finding of the
court that there exists a valid ground for its issuance.51 The Rules also
require the applicant to post a bond.
Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides
that "the party applying for the order must...give a bond executed to
the adverse party in the amount fixed by the court, in its order
granting the issuance of the writ, conditioned that the latter will
pay all the costs that may be adjudged to the adverse party
and all damages that he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant
was not entitled thereto."
The enforcement of the writ notwithstanding, the party whose
property is attached is afforded relief to have the attachment lifted.
There are various modes of discharging an attachment under Rule
57, viz.: (1) by depositing cash or posting a counter-bond under
Section 12;52 (2) by proving that the attachment bond was improperly
or irregularly issued or enforced, or that the bond is insufficient under
Section 13;53 (3) by showing that the attachment is excessive under
Section 13; and (4) by claiming that the property is exempt from
execution under Section 2.54
Under the first mode, the court will order the discharge of the
attachment after (1) the movant makes a cash deposit or posts a
counter-bond and (2) the court hears the motion to discharge the
attachment with due notice to the adverse party.55
The amount of the cash deposit or counter-bond must be equal to
that fixed by the court in the order of attachment, exclusive of costs.
The cash deposit or counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action.56
The filing of a counter-bond to discharge the attachment applies when
there has already been a seizure of property by the sheriff and all that
is entailed is the presentation of a motion to the proper court, seeking
approval of a cash or surety bond in an amount equivalent to the
value of the property seized and the lifting of the attachment on the
basis thereof. The counter-bond stands in place of the property
so released.57
To be clear, the discharge of the attachment by depositing cash or
posting a counter-bond under Section 12 should not be confused with
the discharge sanctioned under Section 13. Section 13 speaks of
discharge on the ground that the writ was improperly or irregularly
issued or enforced, or that the attachment bond is insufficient, or that
the attachment is excessive.
To reiterate, the discharge under Section 12 takes effect upon posting
of a counter-bond or depositing cash, and after hearing to determine
the sufficiency of the cash deposit or counter-bond. On the other hand,
the discharge under Section 13 takes effect only upon showing that
the plaintiffs attachment bond was improperly or irregularly issued, or
that the bond is insufficient. The discharge of the attachment under
Section 13 must be made only after hearing.58
These differences notwithstanding, the discharge of the preliminary
attachment either through Section 12 or Section 13 has no effect on
and does not discharge the attachment bond. The dissolution of the
preliminary attachment does not result in the dissolution of
the attachment bond. Justice Narvasa, writing his separate opinion
in one case, explained:
chanRoble svirtual Lawlib ra ry
RCJ Lines availed of the first mode by posting a counter-bond.
The dissolution of the preliminary attachment
upon security given [Section 12], or a showing of
its irregular or improper issuance [Section
13], does not of course operate to discharge the
sureties on plaintiffs own attachment bond. The
reason is simple. That bond is executed to the
adverse party,. . . conditioned that the ...
(applicant) will pay all the costs which may be
adjudged to the adverse party and all damages
which he may sustain by reason of the attachment,
if the court shall finally adjudge that the
applicant was not entitled thereto." Hence, until
that determination is made, as to the applicant's
entitlement to the attachment, his bond must
stand and cannot be withdrawn.59 [emphasis and
underscoring supplied, citations omitted]
cralawla wlibra ry
In the present case, the RTC lifted the preliminary attachment after it
heard RCJ Lines' urgent motion to discharge attachment and the latter
posted a counter-bond. The RTC found that there was no fraud and
Phil-Air had no sufficient cause of action for the issuance of the writ of
the attachment. As a consequence, it ordered Phil-Air to refund the
premium payment for the counter-bond and the losses suffered by
RCJ Lines resulting from the enforcement of the writ. The CA affirmed
the RTC ruling in toto.
We reverse the CA and RTC rulings.
As discussed above, it is patent that under the Rules, the attachment
bond answers for all damages incurred by the party against whom the
attachment was issued.60
Thus, Phil-Air cannot be held directly liable for the costs adjudged to
and the damages sustained by RCJ Lines because of the attachment.
Section 4 of Rule 57 positively lays down the rule that the attachment
bond will pay "all the costs which may be adjudged to the
adverse party and all damages which he may sustain by reason
of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto."
The RTC, instead of declaring Phil-Air liable for the alleged unrealized
profits and counter-bond premium, should have ordered the execution
of the judgment award on the attachment bond. To impose direct
liability to Phil-Air would defeat the purpose of the attachment bond,
which was not dissolved despite the lifting of the writ of preliminary
attachment.
The order to refund the counter-bond premium is likewise erroneous.
The premium payment may be deemed a cost incurred by RCJ Lines
to lift the attachment. Such cost may be charged against the
attachment bond.
RCJ Lines failed to prove its
alleged unrealized profits.
In finding that RCJ Lines suffered damages because of the attachment,
the RTC and the CA gave complete credence to the testimony of
Rolando Abadilla, Jr. He claimed that RCJ Lines lost P216,000.00 in
unrealized profits for nine days when the buses were wrongfully
seized.
To arrive at this amount, RCJ Lines alleged that a bus travelling from
Manila to Ilocos and vice versa earned an average daily income of
P12,000.00. To back this claim, RCJ Lines prepared a summary of the
daily cash collections of its nine buses on certain days of August and
September 2000.
The summary of daily cash collections apparently prepared by one
RCJ Lines employee was in turn based on the reports of the
dispatchers indicating the number of passengers and the amount of
fare collected on a particular trip. Except for one bus which travelled
round-trip on August 22-23, 2000, the daily cash collections all
pertained to the round-trip of eight buses on September 2-3, 2000.
These documents are insufficient to prove actual damages.
In Spouses Yu v. Ngo Yet Te,61 we held that if the claim for actual
damages covers unrealized profits, the amount of unrealized profits
must be established and supported by independent evidence of the
mean income of the business undertaking interrupted by the illegal
seizure.
We explained in Spouses Yu that to merit an award of actual damages
arising from a wrongful attachment, the attachment defendant must
prove, with the best evidence obtainable, the fact of loss or injury
suffered and the amount thereof. Such loss or injury must be of the
kind which is not only capable of proof but must actually be proved
with a reasonable degree of certainty. As to its amount, the same
must be measurable based on specific facts, and not on guesswork or
speculation.62
Spouses Yu is on all fours with the present dispute because it also
involved a claim for actual damages arising from the illegal
attachment of the claimant's properties, one of which was a
passenger bus.
The claimants in that case attempted to prove actual damages by
computing the daily average income of its bus operation based on the
value of three ticket stubs sold over five separate days. The claimants
likewise cited unused ticket stubs as proof of income foregone when
the bus was wrongfully seized.
We found the claimant's evidence insufficient to prove actual damages.
While we recognized that they suffered some damages, we held that
"[b]y no stretch of the imagination can we consider ticket sales for
five days sufficient evidence of the average daily income of the
passenger bus, much less its mean income. Not even the unrebutted
testimony of [the claimant] can add credence to such evidence for the
testimony itself lacks corroboration."63
Similarly, the evidence adduced by RCJ Lines to show actual damages
fell short of the required proof. Its average daily income cannot be
derived from the summary of daily cash collections from only two
separate occasions, i.e., August 22-23 and September 2-3, 2000. The
data submitted is too meager and insignificant to conclude that the
buses were indeed earning an average daily income of P12,000.00.
More significant, the person who prepared the unsigned summary of
daily cash collections was not presented before the RTC to verify and
explain how she arrived at the computation. The dispatchers who
prepared the collection reports were likewise not presented; some of
the reports were also unsigned. While the summary was approved by
Rolando Abadilla, Jr., his testimony on the alleged unrealized profits
was uncorroborated and self-serving.
Nonetheless, we recognize that RCJ Lines suffered some form of
pecuniary loss when two of its buses were wrongfully seized, although
the amount cannot be determined with certainty.
We note that in its prayer for the issuance of the writ of preliminary
attachment, Phil-Air alleged that RCJ Lines was guilty of fraud in
entering into the sale transaction. A perusal of the record, however,
would show that Phil-Air failed to prove this bare assertion. This
justifies an award of temperate or moderate damages in the amount
of Php 50,000.00.64
The allegation of breach
of express warranty was
notproved.
We are not convinced that Phil-Air breached its express warranty. RCJ
Lines had no right to recoupment in diminution of the price.65
The Civil Code defines an express warranty as any affirmation of fact
or any promise by the seller relating to the thing if the natural
tendency of such affirmation or promise is to induce the buyer to
purchase the same, and if the buyer purchases the thing relying
thereon.66
The question whether there was a breach of warranty is factual.
Consequently, the Court should rely on the factual findings of the CA
and RTC, which are generally deemed binding and conclusive to the
Court. More so in a Rule 45 petition where only questions of law can
be raised. Further, factual findings of the RTC, when affirmed by the
CA, are conclusive on the Court when supported by the evidence on
record.67
The evidence on record does not support the findings of the CA and
RTC.
We emphasize that there are recognized cases where the Court can
disregard the factual findings of the RTC and CA. In these cases, the
Court draws its own conclusion based on the evidence on record.68
In this case, Phil-Air denies that it breached its express warranty and
strongly argues that the CA and RTC completely ignored its evidence
while it sustained the bare allegations of Rolando Abadilla, Jr.
We agree with Phil-Air. Our examination of the record reveals that the
RTC and CA manifestly overlooked certain relevant facts not disputed
by the parties which, if properly considered, would justify a different
conclusion.
To prove that Phil-Air breached its express warranty, RCJ Lines
presented the following testimonial and documentary evidence:
chanRoblesvirtual Lawlib rary
Rolando Abadilla, Jr. who claimed that their employees
reported the defect of the units to him and to his late
father. His late father allegedly demanded Phil-Air to
1)
repair the defects. But despite repeated verbal demands,
Phil-Air purportedly failed to comply with its one-year
warranty on parts and labor.
P208,132.00
Commercial invoice for the $68,780.00 US Dollars worth of
5) new units bought from another supplier after the lapse of
warranty to replace the units supplied by Phil-Air.69
In defense, Phil-Air claimed that it regularly checked the units and
that during the effectivity of the one-year warranty, RCJ Lines never
once complained of defects; if there were defects, the latter should
have demanded Phil-Air to perform its warranty in writing; the reason
it had no proof it made repairs and delivered spare parts was
precisely because it was not apprised of any defect; and that the
testimonies of the RCJ Lines witnesses were self-serving.70
The RTC noted that Phil-Air did not present evidence to rebut the
allegation of breach.71 Phil-Air instead opposed the admission of the
documentary evidence of RCJ Lines for failing to comply with the best
evidence rule.72
We hold that the evidence that RCJ Lines submitted failed to prove
breach of express warranty.
As to the testimonial evidence
Two RCJ Lines employees who claimed that they experienced firsthand
2)
the inefficient cooling of the units.
The general manager of Carrier Philippines who testified
that the Carrier 240 model was not suitable for buses with
3)
a capacity of more than 35 passengers, like those operated
by RCJ Lines.
Summary of expenses, sales invoices, provisional receipts,
and statements of accounts issued by other suppliers and
4) shops (Car Cool Philippines, Inc. and Sta. Rosa Motor
Works, Inc.) engaged by RCJ Lines during the period of
warranty to repair the defective units, amounting to
The testimonies of the RCJ Lines witnesses were self-serving and
uncorroborated.
The claim of Rolando Abadilla, Jr. that his late father verbally
communicated the defects of the units to Phil-Air was hearsay and not
admissible.73 He admitted that he was not around when his father
phoned Phil-Air to demand the repair of the units. He likewise
admitted that they did not attempt to personally meet with nor send a
letter to Phil-Air to demand the repairs.74
More tellingly, Rolando Abadilla, Jr. admitted that they issued the
post-dated checks to Phil-Air to cover the balance of the purchase
price sometime in 1992, viz-
Q.
Mr. Witness is it not in this case that you personally
issued three (3) checks draws against the name Rolando
Abadilla and Susan or Rolando Abadilla, and this was some
time in 1992?
A.
Yes, Sir.
Q.
And you confirm that these were all dated March 31, April
30 and February 29, 1992?
A.
Yes, Sir.
Q.
Despite your claim that these air-conditioning units were
defective and despite your claim that these airconditioning units were not repaired by plaintiff, hence
you referred them for repair to other companies who are
not authorized, do you still affirm the fact that you
issued the postdated checks, the total of which is
exactly the balance of the purchase price as quoted in
the price quotation, yes or no? [Emphasis supplied]
A.
Yes, Sir.75
xxx
other suppliers were expressly excluded from the list of parts/items
that Phil-Air was supposed to supply, again, a fact admitted by
Rolando Abadilla, Jr.78 It was likewise unclear that the repairs made
by the other service providers were done on the same buses on which
the subject units were installed.79
We also find glaring the fact that RCJ Lines did not respond to the
April 7, 1992 demand letter sent by Phil-Air, viz. -
Dear Mr. Abadilla,
I have been trying to get in touch with you and
Junjun the past several weeks but have been
unsuccessful xxx The two checks that you used to
partly pay for the four units bus air conditions
[sic] were all dishonored by the bank [because
they were drawn against insufficient funds].
We are but a small company and our cash flow was
adversely affected by the return of the checks,
xxx It would mean so much if you could somehow
help us replenished these checks, xxx We look
forward to hearing from you Respectfully, we
remain.
Yours truly,
Ricardo Cokieng
cralawla wlibra ry
We note that the alleged repairs made by Car Cool Philippines, Inc.
and Sta. Rosa Motor Works, Inc. started in 1991.76 If RCJ Lines knew
as early as 1991 that the units were defective and that Phil-Air
refused to perform its warranty despite repeated demands, we
wonder why RCJ Lines still issued the post-dated checks in 1992 to
cover the balance of the purchase price.
The record also reveals that Car Cool Philippines, Inc. and Sta. Rosa
Motor Works, Inc. were not authorized by the Carrier brand to repair
the units, a fact not denied by Rolando Abadilla, Jr.77 It was likewise
established that some of the parts/items purportedly provided by the
cralawla wlibra ry
If RCJ Lines was aware all along that the units were defective and that
Phil-Air refused to heed its verbal demands to make repairs, we do
not understand why it ignored Phil-Air's written demand to replenish
the returned checks. We also find it unthinkable that RCJ Lines would
spend for parts and services from other suppliers and
providers, during the period of warranty, without demanding first in
writing that Phil-Air make good its express warranty.
In this regard, we note that the right of the buyer to the recoupment
in the diminution of the price under Article 1599 (1) should be read
together with Article 1586 of the Civil Code,80 which provides that:
Q:
Have you seen RCJ Bus?
A:
I did see.
chanRoblesvirtua lLawl ibra ry
Art. 1586. In the absence of express or implied
agreement of the parties, acceptance of the goods
by the buyer shall not discharge the seller from
liability in damages or other legal remedy for
breach of any promise or warranty in the contract
of sale. But, if, after acceptance of the goods,
the buyer fails to give notice to the seller of
the breach in any promise of warranty within a
reasonable time after the buyer knows, or ought
to know of such breach, the seller shall not be
liable therefor.
xxx
Q:
With respect to car aircon Paris 240 installed, have you
seen this bus?
A:
No, I did not.
Q:
Mr. Witness, this case involves a particular product a
brand of the product that you did not try [sic] but
specifically Paris 240. Have you seen it personally, the
four units installed?
A:
No I did not.
Q:
Even one unit?
A:
No Sir.
cralawlawlibr ary
The obvious purpose of the notice is to protect the seller against
belated claims. If the seller is not duly notified, he is prevented from
making prompt investigation to determine the cause and extent of his
liability.81 Consequently, he is barred from repairing or rectifying
whatever defects the goods sold had.
RCJ Lines failed to convince us that it notified Phil-Air of the breach of
warranty within a reasonable time. In truth, we are not convinced at
all that it had even notified Phil-Air. Although Article 1586 does not
require that the notice to the seller be in writing, we cannot accept
the claim of Rolando Abadilla, Jr. that his late father verbally notified
Phil-Air of the defects, without violating the rule on hearsay.
Also, the testimonies of the two RCJ Lines employees that they
experienced firsthand the insufficient cooling of the units were selfserving and uncorroborated by a disinterested party.
Further, the reliance of the CA and the RTC on the testimony82 of the
general manager of Carrier Philippines was misplaced and
unwarranted. It appears that the computation of the cooling efficiency
of the Carrier 240 model was merely theoretical, based only on the
specifications of the model and not on actual test, viz. —
cralawla wlibra ry
The meat of his testimony centered not on the subject units but on
the cooling capacity of the product that Carrier Philippines was then
selling in the market. In fact, he admitted that his role in the
company had nothing to do with repairs of air-conditioning units.
On this basis, we do not find his testimony conclusive as to the
alleged breach of express warranty. It was too tangential and
speculative. We note that he was not even presented as an expert
witness. Even if we assume that the computation of the cooling
capacity of the Carrier 240 was accurate, RCJ Lines still failed to prove
that it duly and promptly informed Phil-Air of the alleged breach.
On the documentary evidence
The pieces of documentary evidence submitted by RCJ Lines to prove
breach of express warranty failed to comply with the best evidence
rule. It is established on record that the sales invoices and provisional
receipts issued by the other suppliers and service providers were
mere photocopies.83 The counsel of Phil-Air objected to the admission
of the secondary evidence without proof that the originals were
indeed lost. The counsel for RCJ Lines requested that the evidence be
conditionally accepted and marked, which the trial court granted.
The total amount to be recovered shall further be subject to the legal
interest rate of six percent (6 %) per annum from the finality of this
decision until fully paid.89
Nowhere on record, however, was it ever established that the
originals were later submitted. It was also not shown that the
originals were indeed lost, which could have justified the submission
of secondary evidence.84 The RTC simply ignored this fact when it
finally decided the case.
SO ORDERED.
Conclusion
Based on the foregoing analysis, we find- that RCJ Lines failed to
prove its allegation that Phil-Air breached its express warranty. RCJ
Lines is thus held liable to pay the balance of the purchase price plus
interest and attorney's fees.85 RCJ Lines, however, is entitled to
temperate damages as a result of the wrongful attachment of its
buses and to the refund of the premium payment for the counterbond.
4. Attorney's fees in the fixed amount of P30,000.00.88
The attachment bond posted by Phil-Air shall be levied upon to satisfy
the P50,000.00 temperate damages awarded to RCJ Lines and the
P82,274.00 refund of the counter-bond premium.
chanroblesv irtuallaw lib rary
Velasco,* Del Castillo, Mendoza, and Leonen, JJ., concur.
Brion,** J., (Acting Chairperson)
Endnotes:
1
Rollo, pp. 9-26. The petition is
filed under Rule 45 of the Rules of
Court.
2
WHEREFORE, in view of the foregoing, we hereby GRANT the
petition. The September 15, 2010 decision of the Court of Appeals in
CA-G.R. CV No. 85866 is REVERSED and SET ASIDE.
ACCORDINGLY, RCJ Lines is DIRECTED to pay:
1. Eight
Hundred
Forty
Thousand
Pesos
(P840,000.00)
representing the unpaid balance of the purchase price;
2. Interest of twelve percent (12%) per annum on the unpaid
balance to be computed from November 5, 199086 until June
30, 2013;
Id. at 74-86. The assailed decision
is penned by Associate Justice Amy C.
Lazaro-Javier, and concurred in by
Associate Justices Rebecca De GuiaSalvador and Sesinado E. Villon.
3
Civil Case No. 98-067, penned by
Presiding
Judge
Pedro
De
Leon
Gutierrez.
Court of Appeals, id. at
22-40; RTC record, pp. 433-452.
4
Rollo, pp. 11 and 75.
3. Interest of six percent (6%) per annum on the unpaid balance
to be computed from July 1, 2013,87 until fully paid;
5
Id. at 30.
17
6
RTC Record, pp. 109-110.
Id. at 11 and 75.
18
Rollo, p. 77.
7
The complaint in the RTC was filed
against RCJ Lines and Rolando Abadilla,
Jr.
Rolando Abadilla, Sr. died on
June 13, 1996.
19
Id. at 85.
20
CA
rollo,
p. 22 and RTC record, p.
21.
8
Rollo, p. 11. Phil-Air does not
disclose when it allegedly upgraded
the units.
9
Id.
at
72.
The
apparently made after
warranty had lapsed.
10
11
repair
was
the one-year
Id. at 67-69.
Id. at 70.
21
RTC record, p. 44.
22
Id. at 49.
23
Rollo, pp. 76-78.
The writ of
attachment was dated December 18, 1998
while
the
motion
to
discharge
attachment was dated April 14, 1999.
24
CA
rollo, p. 23 and RTC record, p.
62.
12
Id. at 71.
25
Rollo, pp. 14 and 74.
13
RTC Record, pp. 1-7.
26
14
Rollo, p. 13.
Phil-Air allegedly
also filed a criminal case against
Rolando Abadilla, Sr. but the case was
dismissed due to prescription.
15
16
Id. at 86. The dispositive portion
of the CA decision reads: "ACCORDINGLY,
the appeal is DISMISSED for lack of
merit
Costs against the appellant"
27
Id. at 80.
28
Id. at 81.
29
Id. at 81-82.
Id. at 76.
Id. at 189-193.
30
Id. at 82.
31
Id. at 83.
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment. (n)
40
See
Asian
Construction
and
Development Corp. v. Cathay Pacific
Steel Corporation, 636 Phil. 127
(2010)
and Mackay
v.
Spouses
Caswell, G.R. No. 183872, November 17,
2014, where the Court allowed the
enforcement of claims based on sales
invoices.
32
Id. at 82-84.
33
RTC record, pp. 362-380.
34
Id. at 85.
35
Id. at 16.
36
Id. at 30-72.
41
37
Id. at 89.
42
38
Id. at 189-193. RCJ Lines argue:
"[Phil-Air] could have instituted an
action for non-payment when the. . .
balance was not paid instead of
waiting for eight (8) years to file
its collection case. Respondents, by
this was [sic] made to feel secure in
the belief that no action would be
filed
against
them
by
such
passivity..."
CA
rollo,
p. 25.
Municipality of Carcar v. CFI of
Cebu, 204 Phil. 719,723 (1982) cited
in Metrobank v. Centro Development
Corp. G.R. No. 180974, June 13, 2012,
672 SCRA 325.
43
See Jimenez v. Fernandez, 263 Phil.
72, 81 (1990).
44
Agra, et al v. Philippine National
Bank, 368 Phil. 829, 833 (1999).
45
Id.
46
id.
39
Art. 1144. The following actions
must be brought within ten years from
the
time
the
right
of
action
accrues:
chanRobl esvirt ualLaw librar y
47
Id. at 843 citing Catholic Bishop
of Balanga v. CA, G.R. No. 112519,
November 14, 1996, 264 SCRA 181, 183,
per Hermosisima Jr., J.; Go Chi Gun,
et al. v. Co Cho, et al., 96 Phil.
622, 623 (1955); Mejia de Lucas v.
Gamponia, 100 Phil. 277, 280-281,
(1956); Z.E. Lotho, Inc. v. Ice &
Cold Storage Industries, Inc., G.R.
No. L-16563, December 28, 1961, 3 SCRA
744-745; Abraham
v.
RectoKasten, G.R. No. L-16741, January 31,
1962,
4
SCRA
298; Custodio
v.
Casiano, G.R. No. L-18977, December
27, 1963, 9 SCRA 841; Nielson & Co.,
Inc. v. Lepanto Consolidated Mining
Co., G.R. No. L-21601, December 17,
1966,
18
SCRA
1040; Miguel
v.
Catalino, G.R. No. L-23022, November
29, 1968, 26 SCRA 234; Yusingco v.
Ong Hing Lian, G.R. No. L-26523,
December
24,
1971,'
42
SCRA
589; Perez v. Ong Chua, G.R. No.,
116732, September 23, 1982, 116 SCRA
732; Rafols v. Barba, G.R. No. L28446, December 13, 1982, 119 SCRA 146,
148; Chung Ka Bio v. Intermediate
Appellate
Court, 246
Phil.
556
(1988); Claverias v. Quingco, G.R. No.
77744, March 6, 1992, 207 SCRA 66,
83; Buenaventura
v.
Court
of
Appeals, G.R. No. L-50837, December
28, 1992, 216 SCRA 818, 824.
48
Supra
note
44,
at
844
citing Chavez v. Bonto-Perez, G.R.
No. 109808, March 1, 1995, 242 SCRA 81.
49
Section 20 (last paragraph), Rule
57, RULES OF CIVIL PROCEDURE.
50
See Torres v. Satsatin,
166759, November 25, 2009,
453, citing Cuartero v.
Appeals, G.R. No. 102448,
1992, 212 SCRA 260.
51
G.R. No.
605 SCRA
Court of
August 5,
RULE 57. Preliminary Attachment.
Section 1. Grounds upon
which attachment may issue.
At the commencement of the
action or at any time
before entry of judgment,
a plaintiff or any proper
party
may
have
the
property of the adverse
party attached as security
for the satisfaction of
any judgment that may be
recovered in the following
cases:
chanRobl esvirt ualLaw librar y
(a) In an action for the
recovery of a specified
amount of money or damages,
other
than
moral
and
exemplary, on a cause of
action arising from law,
contract, quasi-contract,
delict
or
quasi-delict
against a party who is
about to depart from the
Philippines which intent
to defraud his creditors;
(b) In an action for money
or property embezzled or
fraudulently misapplied or
converted to his own use
by a public officer, or an
officer of a corporation,
or an attorney, factor,
broker agent, or clerk, in
the
course
of
his
employment as such, or by
other
person
in
a
fiduciary capacity, or for
a willful violation of
duty;
(c) In an action to
recover the possession of
property
unjustly
or
fraudulently
taken,
detained
or
converted,
when the property, or any
part thereof, has been
concealed,
removed,
or
disposed of to prevent its
being found or taken by
the
applicant
or
an
authorized person;
(d) In an action against a
party who has been guilty
of a fraud in contracting
the debt or incurring the
obligation upon which the
action is brought, or in
the performance thereof;
(e) In an action against a
party who has removed or
disposed of his property,
or is about to do so, with
intent to defraud his
creditors; or
(f)
In an action against
a party who does not
reside and is not found in
the Philippines, or on
whom summons may be served
by publication.
52
Sec. 12. Discharge of attachment
upon giving counter-bond.
After a writ of attachment
has been enforced, the
party whose property has
been attached, or the
person appearing on his
behalf, may move for the
discharge
of
the
attachment wholly or in
part on the security given.
The court shall, after due
notice and hearing, order
the
discharge
of
the
attachment if the movant
makes a cash deposit, or
files
a
counter-bond
executed to the attaching
party with the clerk of
the
court
where
the
application is made, in an
amount equal to that fixed
by the court in the order
of attachment, exclusive
of costs. But if the
attachment is sought to be
discharged with respect to
a particular property, the
counter-bond
shall
be
equal to the value of that
property as determined by
the court. In either case,
the cash deposit or the
counter-bond shall secure
the
payment
of
any
judgment
that
the
attaching
party
may
recover in the action. A
notice of the deposit
shall forthwith be served
on the attaching party.
Upon the discharge of an
attachment in accordance
with the provisions of
this section, the property
attached, or the proceeds
of any sale thereof, shall
be delivered to the party
making the deposit or
giving the counter-bond,
or to the person appearing
on his behalf, the deposit
or counter-bond aforesaid
standing in place of the
property
so
released.
Should such counter-bond
for any reason to be found
to
be
or
become
insufficient,
and
the
party furnishing the same
fail to file an additional
counter-bond,
the
attaching party may apply
for
a
new
order
of
attachment.
53
Sec. 13. Discharge of attachment on
other grounds.
The party whose property
has been ordered attached
may file a motion with the
court in which the action
is pending, before or
after levy or even after
the
release
of
the
attached property, for an
order to set aside or
discharge the attachment
on the ground that the
same was improperly or
irregularly
issued
or
enforced, or that the bond
is insufficient. If the
attachment is excessive,
the discharge shall be
limited to the excess. If
the motion be made on
affidavits on the part of
the
movant
but
not
otherwise, the attaching
party
may
oppose
the
motion
by
counteraffidavits
or
other
evidence in addition to
that
on
which
the
attachment was made. After
due notice and hearing,
the court shall order the
setting
aside
or
the
corresponding discharge of
the
attachment
if
it
appears
that
it
was
improperly or irregularly
issued or enforced, or
that
the
bond
is
insufficient, or that the
attachment is excessive,
and the defect is not
cured forthwith.
54
WILLARD B. RIANO, CIVIL PROCEDURE A Restatement for the Bar (2007), p.
456.
55
SECTION 12, RULE 57, RULES OF CIVIL
PROCEDURE, See K.O. Glass v.
Valemuela, 202 Phil. 141, 143
(1985), Belisle Investment & Finance
Co., Inc. v. State Investment House,
Inc., 235 Phil. 633, 634 (1987),
cited in Herrera, Remedial Law, Vol.
Ill (2006), p. 41.
56
SECTION 12, RULE 57, RULES OF CIVIL
PROCEDURE.
57
Justice Narvasa, writing his
separate opinion in Mindanao Savings
and Loans Association, Inc. v. Court
of Appeals, 254 PHIL. 480, 485-488
(1989).
58
Peroxide Philippines Corporation v.
Court of Appeals, 276 Phil. 980
(1991).
59
60
Id.
See Carlos v. Sandoval,
260, 263 (2005).
61
508 Phil.
543 Phil. 389, 400 (2007),
citing Public Estates Authority v.
Chu, G.R. No. 145291, September 21,
2005, 470 SCRA 495, 503
and Villafuerte v. Court of
Appeals, G.R. No.
134239, May 26,
2005, 459 SCRA 58, 59.
62
Id. Citations omitted.
63
Id. at 402.
64
Id. at 403.
65
Article 1599 (1), CIVIL CODE,
provides:
chanRobl esvirt ualLaw librar y
Art. 1599. Where there is a breach of
warranty by the seller, the buyer may,
at his election:
chanRobl esvirt ualLaw librar y
(1) Accept or keep the goods and set
up against the seller, the breach of
warranty by way of recoupment in
diminution or extinction of the price;
xxx
66
Art. 1546, CIVIL CODE. -
Any affirmation of fact or any promise
by the seller relating to the thing is
an express warranty. No affirmation of
the value of the thing, nor any
statement purporting to be a statement
of the seller's opinion only, shall be
construed as a warranty, unless the
seller made such affirmation or
statement as an expert and it was
relied upon by the buyer.
67
First United Constructors Corporation
v. Bayanihan Automotive
Corporation, G.R. No. 164985, January
15, 2014, 713 SCRA 354,
citing Dimaranan v. Heirs of Spouses
Hermogenes Arayata and Flaviana
Arayata, G.R. No. 184193, March 29,
2010, 617 SCRA 101.
68
The exceptions to the general rule
that the findings of facts of the RTC
and the CA are deemed conclusive and
binding to this Court are the
following: (1) when the findings are
grounded entirely on speculation,
surmises or conjectures; (2) when the
inference made is manifestly mistaken,
absurd or impossible; (3) when there
is grave abuse of discretion; (4) when
the judgment is based on a
misapprehension of facts; (5) when the
findings of facts are conflicting; (6)
when in making its findings the Court
of Appeals went beyond the issues of
the case, or its findings are contrary
to the admissions of both the
appellant and the appellee; (7) when
the findings are contrary to .the
trial court; (8) when the findings are
conclusions without citation of
specific evidence on which they are
based; (9) when the facts set forth in
the petition as well as in the
petitioner's main and reply briefs are
not disputed by the respondent; (10)
when the findings of facts are
premised on the supposed absence of
evidence and contradicted by the
evidence on record; and (11) when the
Court of Appeals manifestly overlooked
certain relevant facts not disputed by
the parties, which, if properly
considered, would justify a different
conclusion. See Pilipinas Shell
Petroleum Corporation v. Gobonseng,
Jr., 528 Phil. 724, 735 (2006).
admitted that the units were installed
sometime in January 1991. Thus, the
one-year warranty.
77
RTC-TSN dated August 9, 2001, p.
573.
78
Id. at 575.
79
Id. at 574. It was only shown that
the buses had the same plate numbers
but not the same motor or chassis
number.
80
69
RTC-TSN dated August 9, 2001, p.
581.
De Leon, Comments and Cases on
Sales and Lease, p. 377 (2005).
81
Id. at 350.
70
Rollo, pp. 15-25.
82
71
RTC Record, p. 412.
72
Id. at 538-542.
RTC-TSN dated March 6,2003, pp.
638-656.
83
RTC-TSN dated March 26, 2001 pp.
538-541.
73
Section 36 of Rule 130, REVISED
RULES ON EVIDENCE.
84
Section 3, Rule 130, REVISED RULES
ON EVIDENCE.
74
RTC-TSN dated August 9, 2001, pp.
560-586.
75
Id. at 576.
76
RTC record, pp. 346-360. RCJ Lines
85
The payment of attorney's fees is
justified under Article 2208 (2) of
the Civil Code.
86
Per the price quotation, full
payment shall be made upon complete
installation of the units. RCJ Lines
claimed that units were finally
installed sometime in January 1991
without any proof, while Phil-Air
claimed that all parts were delivered
on November 5, 1990, as proved by the
sales invoice. Thus, the installation
shall be deemed to have been done on
November 5, 1990.
87
The interest on forbearance of
money was reduced to six percent (6%)
by the Bangko Sentral ng Pilipinas
through BSP Circular No. 799 which
amended Central Bank Circular No. 905.
BSP Circular No 799, which took effect
on July 1, 2013.
88
Supra note 60.
89
Section 1 of BSP Circular No. 799
dated July 1, 2013.
DIGEST
Phil-Air Conditioning Center (Phil-Air) filed this petition for review on certiorari
On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air
sold to respondent RCJ Lines four Carrier Paris 240 air conditioning units for buses
(units). The units included compressors, condensers, evaporators, switches, wiring,
circuit boards, brackets, and fittings.
Phil-Air allegedly performed regular maintenance checks on the units pursuant to
the one-year warranty on parts and labor. RCJ Lines issued three post-dated checks
in favor of Phil-Air to partly cover the unpaid balance.
All the post-dated checks were dishonored when Phil-Air subsequently presented
them for payment. Check No. 479759 was returned because it was drawn against
insufficient funds, while Check Nos. 479760 and 479761 were returned because
payments were stopped.
Before presenting the third check for payment, Phil-Air sent a demand letter to
Rolando Abadilla, Sr. asking him to fund the post-dated checks. In view of the failure
of RCJ Lines to pay the balance despite demand, Phil-Air filed on April 1, 1998 the
complaint for sum of money with prayer for the issuance of a writ of preliminary
attachment.
contract of sale. The ten-year prescriptive period under Article 1144 of the Civil
Code thus applies.
In the present case, both parties admit the existence and validity of the contract of
sale. They recognize that the price quotation dated August 4, 1989, contained the
terms and conditions of the sale contract. They also agree that the price and
description of the units were indicated on the sales invoice.
Laches is defined as the failure or neglect for an unreasonable and unexplained
length of time, to do that which by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.
While the CA correctly held that prescription and estoppel by laches are two different
concepts, it failed to appreciate the marked distinctions between the two concepts.
In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased
the units in the total amount of P1,240,000.00 and that it had only paid P400,000.00.
It refused to pay the balance because Phil-Air allegedly breached its warranty.
The court resolves whether the claimant asserted its claim within a reasonable
time and whether its failure to do so warrants the presumption that it either has
abandoned it or declined to assert it. The court determines the claimant’s intent to
assert its claim based on its past actions or lack of action. After all, what is invoked
in instances where a party raises laches as a defense is the equity jurisdiction of the
court.
RCJ Lines averred that the units did not sufficiently cool the buses despite repeated
repairs. Phil-Air purportedly represented that the units were in accord with RCJ
Lines’ cooling requirements as shown in Phil-Air’s price quotation. The price
quotation provided that full payment should be made upon the units’ complete
installation. Complete installation, according to RCJ Lines, is equivalent to being in
operational condition.
On the other hand, if the law gives the period within which to enforce a claim or file
an action in court, the court confirms whether the claim is asserted or the action is
filed in court within the prescriptive period. The court determines the claimant’s
intent to assert its claim by simply measuring the time elapsed from the proper
reckoning point (e.g., the date of the written contract) to the filing of the action or
assertion of the claim.
RCJ Lines claimed that it was also entitled to be reimbursed for costs and damages
occasioned by the enforcement of the writ of attachment.
In sum, where the law provides the period within which to assert a claim or file an
action in court, the assertion of the claim or the filing of the action in court
at any time within the prescriptive period is generally deemed reasonable, and
thus, does not call for the application of laches. As we held in one case, unless
reasons of inequitable proportions are adduced, any imputed delay within the
prescriptive period is not delay in law that would bar relief.
Issues:
(1) Whether the claim of Phil-Air was barred by laches;
(2) Whether Phil-Air should reimburse RCJ Lines for the counterbond premium and
its alleged unrealized profits;
(3) Whether RCJ Lines proved its alleged unrealized profits arising from the
enforcement of the preliminary writ of attachment.
Held:
1. Phil-Air’s claim is not barred by laches. In general, there is no room to apply the
concept of laches when the law provides the period within which to enforce a claim
or file an action in court. Phil-Air’s complaint for sum of money is based on a written
Not all the elements of laches are present. To repeat, Phil-Air filed the complaint
with the RTC on April 1, 1998. The time elapsed from August 4, 1989 (the date of
the price quotation, which is the earliest possible reckoning point), is eight years and
eight months, well within the ten-year prescriptive period. There was simply no delay
(second element of laches) where Phil-Air can be said to have negligently slept on
its rights. there is no basis for laches as the facts of the present case do not give rise
to an inequitable situation that calls for the application of equity and the principle of
laches.
2. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines’
alleged unrealized profits.
A writ of preliminary attachment is a provisional remedy issued by the court where
an action is pending to be levied upon the property or properties of the defendant.
The property is held by the sheriff as security for the satisfaction of whatever
judgment that might be secured by the attaching party against the defendant.
The grant of the writ is conditioned not only on the finding of the court that there
exists a valid ground for its issuance. The Rules also require the applicant to post a
bond.
Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides that “the party
applying for the order must…give a bond executed to the adverse party in the
amount fixed by the court in its order granting the issuance of the writ, conditioned
that the latter will pay all the costs that may be adjudged to the adverse party
and all damages that he may sustain by reason of the attachment, if the court
shall finally adjudge that the applicant was not entitled thereto.”
The enforcement of the writ notwithstanding, the party whose property is attached is
afforded relief to have the attachment lifted. There are various modes of discharging
an attachment under Rule 57, viz.:
(1) by depositing cash or posting a counter-bond under Section 12;
(2) by proving that the attachment bond was improperly or irregularly issued or
enforced, or that the bond is insufficient under Section 13;
(3) by showing that the attachment is excessive under Section 13; and (4) by
claiming that the property is exempt from execution under Section 2.
RCJ Lines availed of the first mode by posting a counter-bond.
Under the first mode, the court will order the discharge of the attachment after (1)
the movant makes a cash deposit or posts a counterbond and (2) the court hears
the motion to discharge the attachment with due notice to the adverse party.
The amount of the cash deposit or counter-bond must be equal to that fixed by the
court in the order of attachment, exclusive of costs. The cash deposit or counterbond shall secure the payment of any judgment that the attaching party may recover
in the action.
The discharge under Section 12 takes effect upon posting of a counter-bond or
depositing cash, and after hearing to determine the sufficiency of the cash deposit or
counter-bond. On the other hand, the discharge under Section 13 takes effect only
upon showing that the plaintiff’s attachment bond was improperly or irregularly
issued, or that the bond is insufficient. The discharge of the attachment under
Section 13 must be made only after hearing.
As discussed above, it is patent that under the Rules, the attachment bond answers
for all damages incurred by the party against whom the attachment was issued.
Thus, Phil-Air cannot be held directly liable for the costs adjudged to and the
damages sustained by RCJ Lines because of the attachment. Section 4 of Rule 57
positively lays down the rule that the attachment bond will pay “all the costs which
may be adjudged to the adverse party and all damages which he may sustain
by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.”
The RTC, instead of declaring Phil-Air liable for the alleged unrealized profits and
counter-bond premium, should have ordered the execution of the judgment award
on the attachment bond. To impose direct liability to Phil-Air would defeat the
purpose of the attachment bond, which was not dissolved despite the lifting of the
writ of preliminary attachment.
The order to refund the counter-bond premium is likewise erroneous. The premium
payment may be deemed a cost incurred by RCJ Lines to lift the attachment. Such
cost may be charged against the attachment bond.
3. RCJ Lines failed to prove its alleged unrealized profits.
In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual damages covers
unrealized profits, the amount of unrealized profits must be established and
supported by independent evidence of the mean income of the business undertaking
interrupted by the illegal seizure.
We explained in Spouses Yu that to merit an award of actual damages arising from
a wrongful attachment, the attachment defendant must prove, with the best evidence
obtainable, the fact of loss or injury suffered and the amount thereof. Such loss or
injury must be of the kind which is not only capable of proof but must actually be
proved with a reasonable degree of certainty. As to its amount, the same must be
measurable based on specific facts, and not on guesswork or speculation.
Similarly, the evidence adduced by RCJ Lines to show actual damages fell short of
the required proof. Its average daily income cannot be derived from the summary of
daily cash collections from only two separate occasions, i.e., August 22-23 and
September 2-3, 2000. The data submitted is too meager and insignificant to
conclude that the buses were indeed earning an average daily income of
P12,000.00.
More significant, the person who prepared the unsigned summary of daily cash
collections was not presented before the RTC to verify and explain how she arrived
at the computation. The dispatchers who prepared the collection reports were
likewise not presented; some of the reports were also unsigned. While the summary
was approved by Rolando Abadilla, Jr., in his testimony on the alleged unrealized
profits was uncorroborated and self-serving.
Nonetheless, we recognize that RCJ Lines suffered some form of pecuniary loss
when two of its buses were wrongfully seized, although the amount cannot be
determined with certainty.
We note that in its prayer for the issuance of the writ of preliminary attachment, PhilAir alleged that RCJ Lines was guilty of fraud in entering into the sale transaction. A
perusal of the record, however, would show that Phil-Air failed to prove this bare
assertion. This justifies an award of temperate or moderate damages in the amount
of Php 50,000.00.
CHAPTER 2
Prescription of Ownership and Other Real Rights
Article 1117. Acquisitive prescription of dominion and other real rights may be
ordinary or extraordinary.
Ordinary acquisitive prescription requires possession of things in good faith and
with just title for the time fixed by law. (1940a)
Article 1126. Against a title recorded in the Registry of Property, ordinary
prescription of ownership or real rights shall not take place to the prejudice of a
third person, except in virtue of another title also recorded; and the time shall
begin to run from the recording of the latter.
As to lands registered under the Land Registration Act, the provisions of that
special law shall govern. (1949a)
Article 1118. Possession has to be in the concept of an owner, public, peaceful
and uninterrupted. (1941)
Article 1127. The good faith of the possessor consists in the reasonable belief
that the person from whom he received the thing was the owner thereof, and
could transmit his ownership. (1950a)
Article 1119. Acts of possessory character executed in virtue of license or by
mere tolerance of the owner shall not be available for the purposes of possession.
(1942)
Article 1128. The conditions of good faith required for possession in articles
526, 527, 528, and 529 of this Code are likewise necessary for the determination
of good faith in the prescription of ownership and other real rights. (1951)
Article 1120. Possession is interrupted for the purposes of prescription,
naturally or civilly. (1943)
Article 1129. For the purposes of prescription, there is just title when the
adverse claimant came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights, but the
grantor was not the owner or could not transmit any right. (n)
Article 1121. Possession is naturally interrupted when through any cause it
should cease for more than one year.
The old possession is not revived if a new possession should be exercised by the
same adverse claimant. (1944a)
Article 1122. If the natural interruption is for only one year or less, the time
elapsed shall be counted in favor of the prescription. (n)
Article 1123. Civil interruption is produced by judicial summons to the
possessor. (1945a)
Article 1124. Judicial summons shall be deemed not to have been issued and
shall not give rise to interruption:
Article 1130. The title for prescription must be true and valid. (1953)
Article 1131. For the purposes of prescription, just title must be proved; it is
never presumed. (1954a)
Article 1132. The ownership of movables prescribes through uninterrupted
possession for four years in good faith.
The ownership of personal property also prescribes through uninterrupted
possession for eight years, without need of any other condition.
In all these cases, the period of the interruption shall be counted for the
prescription. (1946a)
With regard to the right of the owner to recover personal property lost or of
which he has been illegally deprived, as well as with respect to movables
acquired in a public sale, fair, or market, or from a merchant’s store the
provisions of articles 559 and 1505 of this Code shall be observed. (1955a)
Article 1125. Any express or tacit recognition which the possessor may make of
the owner’s right also interrupts possession. (1948)
Article 1133. Movables possessed through a crime can never be acquired
through prescription by the offender. (1956a)
Article 1134. Ownership and other real rights over immovable property are
acquired by ordinary prescription through possession of ten years. (1957a)
Article 1135. In case the adverse claimant possesses by mistake an area greater,
or less than that expressed in his title, prescription shall be based on the
possession. (n)
Article 1136. Possession in wartime, when the civil courts are not open, shall
not be counted in favor of the adverse claimant. (n)
Article 1137. Ownership and other real rights over immovables also prescribe
through uninterrupted adverse possession thereof for thirty years, without need
of title or of good faith. (1959a)
Article 1138. In the computation of time necessary for prescription the
following rules shall be observed:
CASES
1. ABALOS VS. HEIRS OF TORIO GR. 175444, DECEMBER 14, 2011
THIRD DIVISION
G.R. No. 175444
December 14, 2011
JAIME ABALOS and SPOUSES FELIX SALAZAR and CONSUELO
SALAZAR, GLICERIO ABALOS, HEIRS OF AQUILINO ABALOS, namely:
SEGUNDA BAUTISTA, ROGELIO ABALOS, DOLORES A. ROSARIO,
FELICIDAD ABALOS, ROBERTO ABALOS, JUANITO ABALOS, TITA
ABALOS, LITA A. DELA CRUZ AND HEIRS OF AQUILINA ABALOS, namely:
ARTURO BRAVO, PURITA B. MENDOZA, LOURDES B. AGANON,
CONSUELO B. SALAZAR, PRIMA B. DELOS SANTOS, THELMA APOSTOL
and GLECERIO ABALOS, Petitioners,
vs.
HEIRS OF VICENTE TORIO, namely: PUBLIO TORIO, LIBORIO TORIO,
VICTORINA TORIO, ANGEL TORIO, LADISLAO TORIO, PRIMO TORIO and
NORBERTO TORIO, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to set aside the
Decision1 dated June 30, 2006 and Resolution2 dated November 13, 2006 by
the Court of Appeals (CA) in CA-G.R. SP No. 91887. The assailed Decision
reversed and set aside the Decision3 dated June 14, 2005 of the Regional Trial
Court (RTC) of Lingayen, Pangasinan, Branch 69, while the questioned
Resolution denied petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On July 24, 1996, herein respondents filed a Complaint for Recovery of
Possession and Damages with the Municipal Trial Court (MTC) of Binmaley,
Pangasinan against Jaime Abalos (Jaime) and the spouses Felix and Consuelo
Salazar. Respondents contended that: they are the children and heirs of one
Vicente Torio (Vicente) who died intestate on September 11, 1973; at the time of
the death of Vicente, he left behind a parcel of land measuring 2,950 square
meters, more or less, which is located at San Isidro Norte, Binmaley,
Pangasinan; during the lifetime of Vicente and through his tolerance, Jaime and
the Spouses Salazar were allowed to stay and build their respective houses on
the subject parcel of land; even after the death of Vicente, herein respondents
allowed Jaime and the Spouses Salazar to remain on the disputed lot; however,
in 1985, respondents asked Jaime and the Spouses Salazar to vacate the
subject lot, but they refused to heed the demand of respondents forcing
respondents to file the complaint.4
Jaime and the Spouses Salazar filed their Answer with Counterclaim, denying
the material allegations in the Complaint and asserting in their Special and
Affirmative Defenses that: respondents' cause of action is barred by acquisitive
prescription; the court a quo has no jurisdiction over the nature of the action and
the persons of the defendants; the absolute and exclusive owners and
possessors of the disputed lot are the deceased predecessors of defendants;
defendants and their predecessors-in-interest had been in actual, continuous
and peaceful possession of the subject lot as owners since time immemorial;
defendants are faithfully and religiously paying real property taxes on the
disputed lot as evidenced by Real Property Tax Receipts; they have
continuously introduced improvements on the said land, such as houses, trees
and other kinds of ornamental plants which are in existence up to the time of the
filing of their Answer.5
On the same date as the filing of defendants' Answer with Counterclaim, herein
petitioners filed their Answer in Intervention with Counterclaim. Like the
defendants, herein petitioners claimed that their predecessors-in-interest were
the absolute and exclusive owners of the land in question; that petitioners and
their predecessors had been in possession of the subject lot since time
immemorial up to the present; they have paid real property taxes and introduced
improvements thereon.6
After the issues were joined, trial ensued.
On December 10, 2003, the MTC issued a Decision, the dispositive portion of
which reads as follows:
WHEREFORE, in view of the foregoing consideration[s], the Court adjudged the
case in favor of the plaintiffs and against the defendants and defendantsintervenors are ordered to turn over the land in question to the plaintiffs (Lot Nos.
869 and 870, Cad. 467-D. Binmaley Cadastre located in Brgy. San Isidro Norte,
Binmaley, Pangasinan with an area of 2,950 sq. m., more or less, bounded and
described in paragraph 3 of the Complaint[)]; ordering the defendants and
defendants-intervenors to remove their respective houses standing on the land
in dispute; further ordering the defendants and defendants-intervenors, either
singly or jointly to pay the plaintiffs land rent in the amount of ₱12,000.00 per
year to be reckoned starting the year 1996 until defendants and defendantsintervenors will finally vacate the premises; furthermore, defendants and
defendants-intervenors are also ordered to pay, either singly or jointly, the
amount of ₱10,000.00 as and by way of attorney's fees and costs of suit.
OWNERS OF THE LAND IN QUESTION BY VIRTUE OF ACQUISITIVE
PRESCRIPTION.10
SO ORDERED.7
The petition lacks merit.
Jaime and the Spouses Salazar appealed the Decision of the MTC with the RTC
of Lingayen, Pangasinan.8 Herein petitioners, who were intervenors, did not file
an appeal.
Preliminarily, the Court agrees with the observation of respondents that some of
the petitioners in the instant petition were the intervenors11 when the case was
filed with the MTC. Records would show that they did not appeal the Decision of
the MTC.12 The settled rule is that failure to perfect an appeal renders the
judgment final and executory.13 Hence, insofar as the intervenors in the MTC are
concerned, the judgment of the MTC had already become final and executory.
In its Decision dated June 14, 2005, the RTC ruled in favor of Jaime and the
Spouses Salazar, holding that they have acquired the subject property through
prescription. Accordingly, the RTC dismissed herein respondents' complaint.
Aggrieved, herein respondents filed a petition for review with the CA assailing
the Decision of the RTC.
On June 30, 2006, the CA promulgated its questioned Decision, the dispositive
portion of which reads, thus:
WHEREFORE, the petition is GRANTED. The Decision dated June 14, 2005 of
the Regional Trial Court, Branch 69, Lingayen, Pangasinan is hereby
REVERSED and SET ASIDE. In its stead, a new one is entered reinstating the
Decision dated December 10, 2003 of the Municipal Trial Court of Binmaley,
Pangasinan.
SO ORDERED.9
Jaime and the Spouses Salazar filed a Motion for Reconsideration, but the same
was denied by the CA in its Resolution dated November 13, 2006.
The main issue raised by petitioners is whether they and their predecessors-ininterest possessed the disputed lot in the concept of an owner, or whether their
possession is by mere tolerance of respondents and their predecessors-ininterest. Corollarily, petitioners claim that the due execution and authenticity of
the deed of sale upon which respondents' predecessors-in-interest derived their
ownership were not proven during trial.
It also bears to point out that the main issue raised in the instant petition, which
is the character or nature of petitioners' possession of the subject parcel of land,
is factual in nature.
Settled is the rule that questions of fact are not reviewable in petitions for review
on certiorari under Rule 45 of the Rules of Court.14 Section 1 of Rule 45 states
that petitions for review on certiorari "shall raise only questions of law which
must be distinctly set forth."
Doubtless, the issue of whether petitioners possess the subject property as
owners, or whether they occupy the same by mere tolerance of respondents, is
a question of fact. Thus, it is not reviewable.
Nonetheless, the Court has, at times, allowed exceptions from the
abovementioned restriction. Among the recognized exceptions are the following:
(a) When the findings are grounded entirely on speculation, surmises, or
conjectures;
Hence, the instant petition based on a sole assignment of error, to wit:
(b) When the inference made is manifestly mistaken, absurd, or impossible;
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THAT THE
PETITIONERS HEREIN ARE NOW THE ABSOLUTE AND EXCLUSIVE
(c) When there is grave abuse of discretion;
(d) When the judgment is based on a misapprehension of facts;
acquisition of ownership or other real rights, but the grantor was not the owner
or could not transmit any right.20
(e) When the findings of facts are conflicting;
(f) When in making its findings the CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee;
(g) When the CA’s findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on
which they are based;
(i) When the facts set forth in the petition as well as in the petitioner’s main and
reply briefs are not disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record; or
(k) When the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion.15
In the present case, the findings of fact of the MTC and the CA are in conflict
with those of the RTC.
After a review of the records, however, the Court finds that the petition must fail
as it finds no error in the findings of fact and conclusions of law of the CA and
the MTC.
Petitioners claim that they have acquired ownership over the disputed lot
through ordinary acquisitive prescription.
Acquisitive prescription of dominion and other real rights may be ordinary or
extraordinary.16 Ordinary acquisitive prescription requires possession in good
faith and with just title for ten (10) years.17 Without good faith and just title,
acquisitive prescription can only be extraordinary in character which requires
uninterrupted adverse possession for thirty (30) years.18
Possession "in good faith" consists in the reasonable belief that the person from
whom the thing is received has been the owner thereof, and could transmit his
ownership.19 There is "just title" when the adverse claimant came into
possession of the property through one of the modes recognized by law for the
In the instant case, it is clear that during their possession of the property in
question, petitioners acknowledged ownership thereof by the immediate
predecessor-in-interest of respondents. This is clearly shown by the Tax
Declaration in the name of Jaime for the year 1984 wherein it contains a
statement admitting that Jaime's house was built on the land of Vicente,
respondents' immediate predecessor-in-interest.21 Petitioners never disputed
such an acknowledgment. Thus, having knowledge that they nor their
predecessors-in-interest are not the owners of the disputed lot, petitioners'
possession could not be deemed as possession in good faith as to enable them
to acquire the subject land by ordinary prescription. In this respect, the Court
agrees with the CA that petitioners' possession of the lot in question was by
mere tolerance of respondents and their predecessors-in-interest. Acts of
possessory character executed due to license or by mere tolerance of the owner
are inadequate for purposes of acquisitive prescription.22 Possession, to
constitute the foundation of a prescriptive right, must be en concepto de dueño,
or, to use the common law equivalent of the term, that possession should be
adverse, if not, such possessory acts, no matter how long, do not start the
running of the period of prescription.23
Moreover, the CA correctly held that even if the character of petitioners'
possession of the subject property had become adverse, as evidenced by their
declaration of the same for tax purposes under the names of their predecessorsin-interest, their possession still falls short of the required period of thirty (30)
years in cases of extraordinary acquisitive prescription. Records show that the
earliest Tax Declaration in the name of petitioners was in 1974. Reckoned from
such date, the thirty-year period was completed in 2004. However, herein
respondents' complaint was filed in 1996, effectively interrupting petitioners'
possession upon service of summons on them.24 Thus, petitioners’ possession
also did not ripen into ownership, because they failed to meet the required
statutory period of extraordinary prescription.
This Court has held that the evidence relative to the possession upon which the
alleged prescription is based, must be clear, complete and conclusive in order to
establish the prescription.25 In the present case, the Court finds no error on the
part of the CA in holding that petitioners failed to present competent evidence to
prove their alleged good faith in neither possessing the subject lot nor their
adverse claim thereon. Instead, the records would show that petitioners'
possession was by mere tolerance of respondents and their predecessors-ininterest.
1avvphi1
Finally, as to the issue of whether the due execution and authenticity of the deed
of sale upon which respondents anchor their ownership were not proven, the
Court notes that petitioners did not raise this matter in their Answer as well as in
their Pre-Trial Brief. It was only in their Comment to respondents' Petition for
Review filed with the CA that they raised this issue. Settled is the rule that points
of law, theories, issues, and arguments not adequately brought to the attention
of the trial court need not be, and ordinarily will not be, considered by a
reviewing court.26 They cannot be raised for the first time on appeal. To allow
this would be offensive to the basic rules of fair play, justice and due process.27
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
ROBERTO A. ABAD
Associate Justice
Even granting that the issue of due execution and authenticity was properly
raised, the Court finds no cogent reason to depart from the findings of the CA, to
wit:
ESTELA M. PERLAS-BERNABE
Associate Justice
xxxx
Based on the foregoing, respondents [Jaime Abalos and the Spouses Felix and
Consuelo Salazar] have not inherited the disputed land because the same was
shown to have already been validly sold to Marcos Torio, who, thereupon,
assigned the same to his son Vicente, the father of petitioners [herein
respondents]. A valid sale was amply established and the said validity subsists
because the deed evidencing the same was duly notarized.
There is no doubt that the deed of sale was duly acknowledged before a notary
public. As a notarized document, it has in its favor the presumption of regularity
and it carries the evidentiary weight conferred upon it with respect to its due
execution. It is admissible in evidence without further proof of its authenticity and
is entitled to full faith and credit upon its face.28
Indeed, settled is the rule in our jurisdiction that a notarized document has in its
favor the presumption of regularity, and to overcome the same, there must be
evidence that is clear, convincing and more than merely preponderant;
otherwise, the document should be upheld.29 In the instant case, petitioners'
bare denials will not suffice to overcome the presumption of regularity of the
assailed deed of sale.
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Third Division, Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson’s Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 91887 are AFFIRMED.
Footnotes
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
Penned by Associate Justice Magdangal M. de Leon, with Associate Justices
Godardo A. Jacinto and Rosalinda Asuncion-Vicente, concurring ; Annex "J" to
Petition, rollo, pp. 87-98.
1
Penned by Associate Justice Magdangal M. de Leon, with Associate Justices
Asuncion-Vicente and Vicente S.E. Veloso, concurring; Annex "L" to Petition, id.
at 107-109.
2
17
Civil Code, Art. 1134.
Civil Code, Art. 1137; Tan v. Ramirez, G.R. No. 158929, August 3, 2010, 626
SCRA 327, 336; Aguirre v. Heirs of Lucas Villanueva, G.R. No. 169898, October
27, 2006, 505 SCRA 855, 860.
18
Villanueva v. Branoco, G.R. No. 172804, January 24, 2011, 640 SCRA 308,
320; Imuan v. Cereno, G.R. No. 167995, September 11, 2009, 599 SCRA 423,
433.
19
3
Records, pp. 316-324.
4
Id. at 1-3.
20
Id.
5
Id. at 34-39.
21
Exhibit "K," records, p. 264.
6
Id. at 10-16.
22
Lamsis v. Donge-e, G.R. No. 173021, October 20, 2010, 634 SCRA 154, 172.
7
Id. at 273.
23
8
See Notice of Appeal, id. at 274.
9
CA rollo, p. 94
10
Rollo, p. 8.
Except for Jaime Abalos and the spouses Felix and Consuelo Salazar, all
petitioners in the instant petition were intervenors in the case filed with the MTC.
Esguerra v. Manantan, G.R. No. 158328, February 23, 2007, 516 SCRA 561,
573; Marcelo v. Court of Appeals, G.R. No. 131803, April 14, 1999, 305 SCRA
800, 807-808.
Article 1120 of the Civil Code provides that "[p]ossession is interrupted for the
purposes of prescription, naturally or civilly." Article 1123 of the same Code
further provides that "[c]ivil interruption is produced by judicial summons to the
possessor."
24
11
12
See Notice of Appeal, records, p. 274.
Province of Camarines Sur v. Heirs of Agustin Pato, G.R. No. 151084, July 2,
2010, 622 SCRA 644, 652, citing M.A. Santander Construction, Inc. v.
Villanueva, G.R. No. 136477, November 10, 2004, 441 SCRA 525, 530.
13
Heirs of Felicidad Vda. de Dela Cruz v. Heirs of Pedro T. Fajardo, G.R. No.
184966, May 30, 2011, 649 SCRA 463, 470.
14
Heirs of Juanita Padilla v. Magdua, G.R. No. 176858, September 15, 2010,
630 SCRA 573, 584.
25
American Home Insurance Co. of New York v. F.F. Cruz & Co., Inc., G.R. No.
174926, August 10, 2011.
26
27
Id.
28
CA rollo, pp. 91-92.
Spouses Palada v. Solidbank Corporation, G.R. No. 172227, June 29,
2011; Emilio v. Rapal, G.R. No. 181855, March 30, 2010, 617 SCRA 199, 202203; Heirs of the Deceased Spouses Vicente S. Arcilla and Josefa Asuncion
Arcilla v. Teodoro, G.R. No. 162886, August 11, 2008, 561 SCRA 545, 564.
29
Spouses. Andrada v. Pilhino Sales Corporation, G.R. No. 156448, February
23, 2011, 644 SCRA 1, 10.
15
16
Civil Code, Art. 1117.
DIGEST
Facts:
On July 24, 1996, herein respondents filed a Complaint for Recovery of Possession and
Damages. Respondents contended that: they are the children and heirs of one Vicente Torio
(Vicente) who died intestate on September 11, 1973; at the time of the death of Vicente, he
left behind a parcel of land. During the lifetime of Vicente and through his tolerance, Jaime
and the Spouses Salazar were allowed to stay build their respective houses on the subject
parcel of land; even after the death of Vicente, herein respondents allowed Jaime and the
Spouses Salazar to remain on the disputed lot; however, in 1985, respondents asked Jaime
and the Spouses Salazar to vacate the subject lot, but they refused to heed the demand of
respondents forcing respondents to file the complaint.
MTC: Court adjudged the case in favor of the plaintiffs (Heirs of Vicente Torio) and against the
defendants and defendants-intervenors (Abalos and Salazar) are ordered to turn over the
land in question to the plaintiffs.
RTC: ruled in favor of Jaime and the Spouses Salazar, holding that they have acquired the
subject property through prescription.
CA: Reinstated the Decision of the MTC
Issue:
WON the CA erred in not appreciating that the petitioners herein are now the absolute and
exclusive owners of the land in question by virtue of acquisitive prescription.
Held:
No. Petitioners failed to present competent evidence to prove their alleged good faith in
neither possessing the subject lot nor their adverse claim thereon. Petitioners claim that they
have acquired ownership over the disputed lot through ordinary acquisitive prescription.
Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.
Ordinary acquisitive prescription requires possession in good faith and with just title for ten
(10) years. Without good faith and just title, acquisitive prescription can only be extraordinary
in character which requires uninterrupted adverse possession for thirty (30) years.
Shown by the Tax Declaration in the name of Jaime for the year 1984 wherein it contains a
statement admitting that Jaime's house was built on the land of Vicente, respondents'
immediate predecessor-in-interest. Petitioners never disputed such an acknowledgment.
Possession, to constitute the foundation of a prescriptive right, must be en concepto de dueo,
or, to use the common law equivalent of the term, that possession should be adverse, if not,
such possessory acts, no matter how long, do not start the running of the period of
prescription.
Moreover, the CA correctly held that even if the character of petitioners' possession of the
subject property had become adverse, as evidenced by their declaration of the same for tax
purposes under the names of their predecessors-in-interest, their possession still falls short of
the required period of thirty (30) years in cases of extraordinary acquisitive prescription.
Records show that the earliest Tax Declaration in the name of petitioners was in 1974.
Reckoned from such date, the thirty-year period was completed in 2004. However, herein
respondents' complaint was filed in 1996, effectively interrupting petitioners' possession upon
service of summons on them.
2. PABALAN VS. HEIRS OF MAAM, SR GR. 174844, MARCH 20, 2013
G.R. No. 174844
Trial Judge Patricio S. de los Reyes Sr., it appears that the 24 December 1934
writ of execution issued in the case was later returned duly served.9
March 20, 2013
VEVENCIA ECHIN PABALAN, ET AL., Petitioner,
vs.
THE HEIRS OF SIMEON A.B. MAAMO, SR., Respondents.
DECISION
PEREZ, J.:
Filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, the petition for
review at bench primarily assails the Decision1 dated 22 May 2006 rendered by
the Twentieth Division of the Court of Appeals (CA) in CA-G.R. CV No.
60769,2 reversing the Decision dated 20 August 1997 in turn rendered by the
Regional Trial Court, Branch 26, Southern Leyte (RTC) in Civil Case No. R-263.3
On 9 December 1981, Simeon Sr., Fabian Sr., Juliana, Olivo, Silvestre Sr.,
Angela, Bonifacia and Estelita, all surnamed Maamo (plaintiffs Maamo),
commenced the instant suit with the filing of their complaint for recovery of real
property and damages against Simplecio’s children, Crispiniano, Juanito Sr.,
Arsenia and Roberto, all surnamed Palapo (defendants Palapo).10 In their
amended complaint, plaintiffs Maamo alleged that, as children and heirs of the
Spouses Miguel and Antonia, they were the co-owners of the parcel of land sold
by Placido which, while reported in tax declarations to contain an area of 1,612
square meters, actually measured 13,813 square meters. Invoking the decision
redeemed in favor of Antonia in Civil Case No. 298, plaintiffs Maamo maintained
that their parents later relented to Simplecio’s entreaty to be allowed to stay on
the property as administrator. Plaintiffs Maamo further averred that, having
illegally claimed ownership over the western portion of the property after
Simplecio’s death in 1971, defendants Palapo unjustifiably refused to heed their
demands for the return of the litigated section measuring 7,055 square meters.11
On 31 December 1910, Onofre Palapo sold in favor of Placido Sy-Cansoy a
parcel of land situated in the then Barrio Calapian (now Barangay Estela), Liloan,
Leyte (now Southern), for the stated consideration of ₱86.00. Drawn in Spanish,
the notarized Leyte Deed of Sale the former executed in favor of the latter
identified the property as enclosed by the following boundaries: on the North, by
the Barrio Church; on the South and East, by the property of Matias Simagala;
and, on the West, by the property of Miguel Maamo.4 On 29 October 1934,
Placido, in turn, executed a notarized deed in Spanish, affirming a 12 October
1912 sale of the same parcel for the sum of ₱100.00 in favor of Miguel’s wife,
Antonia Bayon.5 Faulting Simplecio Palapo with forcible entry into the property
on 17 October 1934, Antonia, represented by Simeon Maamo, later filed the 4
December 1934 ejectment complaint which was docketed as Civil Case No. 298
before the then Court of the Justice of the Peace of Liloan, Leyte.6
On 10 February 1982, defendants Palapo filed their answer, specifically denying
the material allegations of plaintiffs Maamo’s complaint. Maintaining that they
inherited the litigated portion from Simplecio, defendants Palapo asserted that
their father, in turn, inherited the same from his brother, Crispiniano Palapo, who
also succeeded to the rights of Concepcion, the tax declarant as early as 1906.
By themselves and thru their said predecessors-in-interest, defendants Palapo
insisted that they had been in open, continuous and adverse possession of the
litigated portion in the concept of owner since 1906, paying the realty taxes due
thereon long before the Second World War. Even assuming that Antonia
prevailed in the ejectment suit she filed against Simplecio in 1934, defendants
Palapo argued that the causes of action of plaintiffs Maamo’s were already
barred by prescription, estoppel and laches.12
Served with summons, Simplecio filed an answer dated 6 December 1934,
asserting that, as one of the heirs of Concepcion Palapo, he had been in legal
possession of the property for many years without once being disturbed by
anyone.7 On the strength of the aforesaid documents of transfer as well as the
evidence of prior possession adduced by Antonia, however, the Court of the
Justice of the Peace of Liloan, Leyte went on to render a Decision dated 17
December 1934, brushing aside Simplecio’s defense for lack of evidentiary
basis and ordering him to vacate the parcel in litigation.8 As may be gleaned
from the 5 December 1983 certification later issued by Liloan, Leyte Municipal
At pre-trial, a commissioner was appointed to conduct an ocular inspection of
the litigated portion and to submit a sketch showing, among other matters, the
metes and bounds thereof. On 15 August 1982, the court-appointed
commissioner submitted a report and sketch, mapping out the 7,055 square
meter portion in litigation and identifying its boundaries as follows: on the North,
by Maamo St.; on South by Peter Burset St.; on the East, by the Provincial Road;
and, on the West, by Ang Bayon St.13 As noted in the 29 November 1983 pretrial order issued in the case, the identity of the portion in litigation was admitted
by the parties.14 At the trial of the case on the merits, Simeon Sr. took the
witness stand15 and submitted the deeds executed by Onofre and Placido, the
documents pertaining to Civil Case No. 298, the tax declarations (TDs) and
receipts pertaining to the property dating back to the year 1918 and the
certification to file action by the Barangay Estela Lupon secretary.16 By way of
defense evidence, defendants Palapo presented the testimonies of Juanito
Palapo and Balbina Galgaw Madlos,17 together with the TDs and receipts which
they traced to the TD filed by Concepcion in 1906.18
On 20 August 1997, the RTC rendered a decision, declaring defendants Palapo
to be the legal owners and possessors of the litigated portion. Finding that
Simplecio’s supposed 17 October 1934 forcible entry into the property preceded
the 29 October 1934 deed Placido executed in favor of Antonia, the RTC
brushed aside plaintiffs Maamo’s claim on the further ground that the 7,055
square meter area of the litigated portion far exceeded the 1,612 square meters
declared in their TDs which, as a rule, cannot prevail over defendants Palapo’s
actual possession of the property. Having possessed the litigated portion in the
concept of owner for more than thirty years, defendants Palapo were also
declared to have acquired the property by means of prescription, without need of
title or good faith. Ordered to respect defendants Palapo’s ownership and
possession of the portion in litigation, the RTC held plaintiffs Maamo liable to
pay the former the total sum of ₱50,000.00 by way of actual and moral damages
as well attorney’s fees and litigation expenses.19
On appeal, the foregoing Decision was reversed and set aside in the herein
assailed 22 May 2006 Decision rendered by the CA’s Twentieth Division in CAG.R. CV No. 60769. The CA ruled that plaintiffs Maamo were the true and lawful
owners of the litigated portion, upon the following findings and conclusions: (a)
the 29 October 1934 deed Placido executed in favor of Antonia was a mere
affirmation of an earlier sale made on 12 October 1912, hence, the acquisition of
the litigated portion by plaintiffs Maamo’s predecessor-in-interest predated
Simplecio’s 17 October 1934 entry thereon; (b) defendants Palapo traced their
claim to Concepcion’s 1906 TD which pertained to a different parcel situated in
Barrio Pandan, Liloan, Leyte; (c) the claim that the litigated portion was inherited
from Concepcion had been rejected in the 17 December 1934 Decision
rendered in Civil Case No. 298 which appears to have been returned duly
served and executed; and, (e) since the possessory rights of plaintiffs Maamo’s
predecessor-in-interest had been affirmed and restored, Simplecio’s continued
possession of the portion in litigation was by mere tolerance and could not,
therefore, ripen into ownership acquired by prescription, laches or estoppel.20
In the meantime, the death of some of the original parties to the case resulted in
their substitution by their respective heirs. Simeon, Sr. was substituted by his
wife and children, respondents Crispina, Simeon, Jr., Aselita, Remedios,
Evansueda, Carmelita, Manuel, Elizabeth, Adelaida and
Miguel II, all surnamed Maamo. As a consequence, they were joined in the case
with the surviving plaintiffs Maamo, (now respondents) Fabian Sr., Juliana, Olivo,
Silvestre Sr., Angela, Bonifacia and Estelita, all surnamed Maamo. On
defendants Palapo’s side, Roberto was substituted by petitioners Lydia Veronica,
Alily, Beverly and Maricar, all surnamed Palapo.21 Juanito was, likewise,
substituted by petitioners Generoso, Perla, Juanito Jr., Delia, Raul, Editha and
Elvira, all surnamed Palapo. Arsenia was, in turn, substituted by her children,
petitioners V[e]vencia, Rogelio, Elizabeth, Josefina, Eusebio, Gavina and
Amelita, all surnamed Enchin.
Crispiniano was, finally, substituted by his children, petitioners Angelita, Normita,
Apolonia, Bining and Inday, all surnamed Palapo.22
On 7 September 2006, the CA issued the second assailed resolution of the
same date, denying for lack of merit petitioners’ motion for reconsideration of its
22 May 2006 Decision. Aggrieved, petitioners filed the petition at bench, on the
following grounds:
1. THE CA SERIOUSLY ERRED IN REVERSING THE RTC’S DECISION AND
IN DECLARING THE RESPONDENTS IN CONTINUED POSSESSION OF THE
PROPERTY IN DISPUTE FROM 1918 TO 1980, NOTWITHSTANDING
PETITIONERS’ EVIDENCE TO THE CONTRARY WHICH PREPONDERANTLY
ESTABLISHED
THAT,
BY
THEMSELVES
AND
THRU
THEIR
PREDECESSORS-IN-INTEREST, THEY HAVE BEEN IN OPEN, PUBLIC,
ADVERSE AND CONTINUOUS POSSESSION THEREOF IN THE CONCEPT
OF OWNERS SINCE 20 JULY 1906.
2. THE CA GRAVELY ERRED IN DISREGARDING SIMEON SR.’S
ADMISSION IN OPEN COURT THAT RESPONDENTS HAVE NOT BEEN IN
POSSESSION OF THE PROPERTY FROM 1935 UNTIL THE FILING OF
THEIR COMPLAINT IN 1981, SAID ADMISSION BEING A CLEAR
INDICATION THAT THEIR COMPLAINT IS BARRED BY ESTOPPEL AND
LACHES.
3. THE CA GRAVELY ERRED IN DECLARING RESPONDENTS AS OWNERS
OF THE PROPERTY BY VIRTUE OF PRESCRIPTION UNDER THE CIVIL
CODE.
4. THE CA SERIOUSLY ERRED IN RELYING ON THE JUDGMENT
RENDERED IN CIVIL CASE NO. 298 AS BASIS FOR RESPONDENTS’
POSSESSION.
5. THE CA ALSO ERRED IN DECLARING THAT SIMPLECIO’S POSSESSION
WAS UPON THE TOLERANCE OF RESPONDENTS’ PREDECESSORS-ININTEREST.23
We find the petition bereft of merit.
For the most part, petitioners raise questions of fact which, as a general rule, are
not proper subjects of appeal by certiorari under Rule 45 of the Rules of Court
as this mode of appeal is confined to questions of law.24 This Court is not a trier
of facts and cannot, therefore, be tasked to go over the proofs presented by the
parties in the lower courts and analyze, assess and weigh them to ascertain if
the court a quo and the appellate court were correct in their appreciation of the
evidence.25 Among the recognized exceptions to this rule, however is when the
factual findings of the trial court are, as here, different from those of the
CA.26 Even then, a re-evaluation of factual issues would only be warranted when
the assailed findings are totally bereft of support in the records or are so patently
erroneous as to amount to grave abuse of discretion. So long as such findings
are supported by the record, the findings of the Court of Appeals are conclusive
and binding on this Court, even if contrary to those of the trial court.27
Our perusal of the record shows that the CA correctly ruled that the land to
which the litigated portion pertains was purchased from Placido by respondents’
predecessor-in-interest, Antonia, on 12 October 1912 and not on 29 October
1934, the date of the document in which the former acknowledged the
transaction in writing.28 Contrary to the RTC’s finding, therefore, Antonia already
owned the property when petitioners’ own predecessor-in-interest, Simplecio,
was alleged to have forcibly entered into the property on 17 October 1934.
Considering that Placido was, in turn, established to have purchased the
property from Onofre on 31 December 1910,29 it was from the latter date that
respondents rightfully traced their ownership and possession thereof. Reference
to the aforesaid transactions in the body of the 4 December 1934 ejectment
complaint Antonia filed against Simplecio before the Court of the Justice of the
Peace of Liloan, Leyte30 also leave no doubt that the same property was the
subject matter of Civil Case No. 298.
The area of the property that Antonia acquired in 1912 was, of course, not
specified but was simply identified by the following boundaries: on the North, by
the Barrio Church; on the South and East, by the property of Matias Simagala;
and, on the West, by the property of Miguel Maamo. By the time that the
property was declared for taxation purposes in the name of Antonia’s husband,
Miguel, for the years 1918, 1948, 1971, 1974, 1976 and 1980, the boundaries
enclosing the same were, however, already stated as follows: on the North, by
Maamo St.; on the South, by Peter Burset St.; on the East, by Union St.; and, on
the West, by Ang Bayon St.31 These apparent variances in the boundaries of the
property were, however, elucidated during the direct examination of Simeon Sr.
who explained the permutations said boundaries underwent over the years.
These included the destruction of the Barrio church in 1912 and its subsequent
relocation, the construction of Maamo St., Peter Burset St. and Ang Bayon St.
and the donation made by his parents, Miguel and Antonia, of portions of the
property for street construction.32
On the other hand, petitioners trace their claim of ownership and possession to
Concepcion who declared a two-hectare parcel of land for taxation purposes in
1906 under TD 832 and from whom her brother, Crispiniano, was alleged in the
answer to have inherited the same. Contradicting their initial claim that
Simplecio, in turn, inherited the property from Crispiniano,33 petitioners later
asserted that Simplecio directly inherited the property from Concepcion who was
unmarried and died with issue.34 As a perusal thereof would readily reveal,
however, TD 832 was filed by Concepcion on 20 July 1906 with respect to a
parcel of land situated in Barrio of Pandan and identified by the following
boundaries: on the North, by la Playa (the seashore); on the South, by Patrecio
Lanog; on the East, by Simeon Bajan; and on the West, by Placido
Cimagala.35 According to the testimony of Juanito, said property was eventually
subdivided into three parcels which were all eventually declared for taxation
purposes in the name of Simplecio.36
Instead of Barrio Pandan which was stated as the location of Concepcion’s
property in TD 832, our perusal of the TDs that petitioners adduced a quo shows
that the three parcels into which said property was supposedly divided are,
however, situated in Barrio Estela. The first parcel was declared in the names of
Concepcion and Justiniano Palapo under TDs 4173 and 5401 in the years 1922
and 1958, respectively, and was identified by the following boundaries: on the
North, by Cuares St.; on the South, by Bahan St.; on the East, by Palapo St.;
and on the West by Union St.37 The foregoing boundaries were reproduced in
TDs 16670 and 1997 in the name of Concepcion for the years 1971 and 1974,
respectively.38 It was only in 1975 and 1980, when the property was declared in
the name of Simplecio under TDs 5125 and 4202, respectively, that the
boundaries of the property were stated as follows: on the North, by the Church
Site; on the South, by Cuares St.; on the East, by the Provincial Road; and on
the West, by the School Site.39
Declared for taxation purposes in the name of Concepcion under TDs 4175,
5411, 16667 and 1994 in the years 1922, 1948, 1971 and 1974, respectively,
the second parcel was, on the other hand, described as delimited by the
following boundaries: on the North by Sarvida St.; on the South, by Cuares St.;
on the East, by Union St.; and on the West, by the property of Antonia
Bayon.40 When the same parcel was, however, declared in Simplecio’s name in
1975 and 1980 under TDs 5123 and 4204, the boundaries were inexplicably
altered in the following wise: on the North, by Cuares and Sarvida St.; on the
South, by the property of Demetrio Palapo; on the East, by the Seashore; and
on the West, by the Provincial Road.41
meters are, in turn, claimed by petitioners.46 In deciding against respondents, the
RTC ruled that the areas of said parcel and, for that matter, the portion in
litigation, were disproportionately larger than the 1,612 square meters stated in
the TDs adduced by respondents. It must be borne in mind, however, that what
defines the land is not the numerical data indicated as its size or area but, rather,
the boundaries or "metes and bounds" specified in its description as enclosing
the land and indicating its limits.47 To repeat, the evidence adduced a quo shows
that the boundaries of the parcel of land purchased by Antonia are consistent
with the boundaries of the parcel of land in Miguel’s TDs and the sketch
submitted by the court-appointed commissioner.
The third parcel was, finally, declared in the names of Concepcion and
Justiniano in the years 1922, 1948, 1971 and 1974 under TDs 4179, 5410,
16664 and 1993, respectively. Its boundaries were identified as follows: on the
North, by the property of Concepcion Palapo; on the South, by the property of
Simeon Bajan; on the East, by Palapo St.; and on the West, by Union St.42 By
the time this parcel was declared for taxation purposes in Simplecio’s name in
1975 and 1980 under TDs 5121 and 4205, the boundaries were once again
altered in the following wise: on the North, by the Barrio Road and the property
of Miguel Maamo; on the South, by the Church Site; on the East, by the
Provincial Road; and on the West, by the School Site and Barrio Road.43
Petitioners next fault the CA for supposedly disregarding their evidence to the
effect that Simplecio had been in possession of the property since 1912 as well
as Simeon Sr.’s admission that respondents have not been in possession
thereof since 1935. Aside from the fact that the TDs they presented pertain to a
different property, however, petitioners conveniently overlook Antonia’s filing of
an ejectment complaint against Simplecio in 1934 with respect to the property
herein litigated. In the 17 December 1934 Decision rendered in the case, the
Court of the Justice of the Peace of Liloan Leyte significantly determined
Antonia’s prior possession of the property and upheld her right to take
possession thereof.48 While it is true that a judgment rendered in a forcible entry
case will not bar an action between the same parties respecting title or
ownership,49 the rule is settled that such a judgment is conclusive with respect to
the issue of material possession.50 Although it does not have the same effect as
res judicata in the form of bar by former judgment which prohibits the
prosecution of a second action upon the same claim, demand, or cause of
action, the rule on conclusiveness of judgment bars the relitigation of particular
facts or issues in another litigation between the same parties and their privies on
a different claim or cause of action.51
As noted, the provenance of the foregoing TDs were all traced to TD 832 which
pertained to a property situated in Barrio Pandan and not Barrio Estela, the
location of the property in litigation. Since both Simeon, Sr. and Juanito testified
that Barrio Pandan is more than one kilometer to about two kilometers away
from Barrio Estela,44 we find that the CA correctly ruled that petitioners cannot
trace their claim of possession and ownership to TD 832 that Concepcion
obtained in 1906. In contrast, respondents were able to trace their claim to
Onofre’s 31 December 1910 sale of the property to Placido who, in turn, sold the
same to Antonia on 12 October 1912. The TDs Miguel filed with respect to the
property also date back to 191845 or four years ahead of the TD’s filed in 1922 in
the names of Concepcion and Justiniano, over the three parcels into which the
property was purportedly subdivided. Even more importantly, the stated
boundaries of the property declared in Miguel’s name are identical to the
boundaries of the property identified in the sketch submitted by the courtappointed commissioner. This cannot be said of the properties declared in the
names of Concepcion and Justiniano, the boundaries of which were further
altered when they were declared in Simplecio’s name in 1975 and 1980.
1âwphi1
As determined by the court-appointed commissioner, the total area of the parcel
claimed by respondents measures 14,433 square meters, of which 7,055 square
To Our mind, the fact that the writ of execution issued in Civil Case No. 298 was
returned duly served52 also lends credence to respondents’ claim that
Simplecio’s possession of the property was upon Miguel’s tolerance.53 Since
acts of a possessory character executed due to license or by mere tolerance of
the owner are inadequate for purposes of acquisitive prescription,54 petitioners
cannot claim to have acquired ownership of the property by virtue of their
possession thereof since 1935. Under Articles 44455 and 194256 of the old Civil
Code, possession of real property is not affected by acts of a possessory
character which are merely tolerated by the possessor, or which are due to his
license.57 Granted that long, continued occupation, accompanied by acts of a
possessory character, affords some evidence that possession has been exerted
in the character of owner and under claim of right,58 this inference is unavailing
to petitioners since Simplecio’s continued possession of the property after his
defeat in the ejectment suit was clearly upon the tolerance of respondents’
predecessors-in-interest.
JOSE PORTUGAL PEREZ
Associate Justice
Viewed in the light of the foregoing considerations, petitioners’ reliance on
Sections 4059 and 4160 of Act No. 190 or the Code of Civil Procedure is, at the
very least, misplaced. Inasmuch as possession must be adverse, public,
peaceful and uninterrupted in order to consolidate prescription, it stands to
reason that acts of a possessory character done by virtue of a license or mere
tolerance on the part of the real owner are not sufficient.61 It has been ruled that
this principle is applicable not only with respect to the prescription of the
dominium as a whole, but, to the prescription of right in rem.62 Considering that
Article 1119 of the present
WE CONCUR:
Civil Code also provides that "(a)cts of possessory character executed in virtue
of license or by mere tolerance of the owner shall not be available for the
purposes of possession," the error petitioners impute against the CA for
applying the new Civil Code provisions on prescription is more apparent than
real. Then as now, possession must be en concepto de dueño or adverse in
order to constitute the foundation of a prescriptive right. If not, such possessory
acts, no matter how long, do not start the running of the period of prescription.63
As for the supposed fact that possession by tolerance was not among the issues
simplified during the pre-trial of the case, suffice it to say that the same is
subsumed in the second issue identified in the RTC’s 29 November 1983 pretrial order, i.e., "(w)hether or not petitioners and their predecessors-in-interest
had been in the actual, physical possession of the land in question in the
concept of owners since 1906 up to the present."64 Since Simplecio's possession
of the subject parcel was by mere tolerance, we find that the CA correctly
brushed aside petitioners' reliance on estoppel which cannot be sustained by
mere argument or doubtful inference.65 The same may be said of the CA' s
rejection of laches, an equitable doctrine the application of which is controlled by
equitable considerations.66 It operates not really to penalize neglect or sleeping
on one's rights, but rather to avoid recognizing a right when to do so would
result in a clearly inequitable situation.67 Unfortunately for petitioners' cause, no
such situation obtains in the case.
WHEREFORE, premises considered, the instant petition for review on certiorari
is DENIED for lack of merit.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
ARTURO D. BRION
Associate Justice
MARIANO C. DEL CASTILLO
Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached m consultation
before the case was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice
Footnotes
Penned by CA Associate Justice Pampio A. Abarintos and concurred in by
Associate Justices Enrico A. Lanzanas and Apolinario D. Brusclas, Jr.
1
2
CA rollo, 22 May 2006 Decision in CA-G.R. CV No. 60769, pp. 205-219.
22
CA rollo, (CA-G.R. CV No. 60769), pp. 142-143; 165-166; 169-170.
3
Records, pp. 825-834, (Civil Case No. R-263), 20 August 1997 RTC Decision.
23
Rollo, pp. 13-14.
4
Exhibit "B" and submarkings, folder of exhibits, pp. 2-3.
24
Goyena v. Ledesma-Gustilo, 443 Phil. 150, 158 (2003).
5
Exhibit "A," id. at 1.
25
6
Exhibits "E" and submarkings, id. at 46-47.
7
8
9
JMM Promotions and Management, Inc. v. Court of Appeals, G.R. No. 139401,
2 October 2002, 390 SCRA 223, 229-230.
26
Manila Electric Company v. Court of Appeals, 413 Phil. 338, 354 (2001).
27
Gonzales v. Court of Appeals, 411 Phil. 232, 242 (2001).
28
Exhibit "A," folder of exhibits, p. 1.
29
Exhibt "B," and submarkings, id. at 2-3.
30
Exhibits "C," and submarkings, id. at 46-47.
31
Exhibits "C," "C-1," "C-2," "C-3," "C-4" and "C-5," id. at 4-9.
32
TSN, 3 July 1984, pp. 22-38.
33
Records, p. 17, (Civil Case No. R-263).
34
TSN, 28 May 1985, p. 10; TSN, 18 July 1996, p. 3.
35
Exhibit "1-F," folder of exhibits, p. 59.
36
TSN, 13 June 1986; TSN, 18 July 1996, p. 24.
37
Exhibits "1-D" and "1-E," folder of exhibits, pp. 57-58.
38
Exhibits "1-B" and "1-C," id. at 55-56.
39
Exhibits "1" and "1-A," id. at 53-54.
Exhibit "F," id. at 48
Exhibit "G," id. at 49.
Exhibit "H" and submarkings, id. at 50.
10
11
12
13
14
15
16
17
18
Records, pp. 1-6, (Civil Case No. R-263), 3 December 1981 Complaint.
22 July 1983 Amended Complaint, id. at 146-150.
29 January 1982 Answer, id. at 15-20.
15 August 1982 Commissioner’s Report and Sketch, id. at 61-64.
29 November 1983 Pre-Trial Order, id. at 173-175.
TSN, 3 July 1984.
Exhibits "A" to "K" and submarkings, folder of exhibits, pp. 1-52; 91-93.
TSNs, 28 May 1985, 18 November 1986, 22 August 1996.
Exhibits "1" to "6" and submarkings, folder of exhibits, pp. 53-90.
Records, pp. 825-834, (Civil Case No. R-263), RTC Decision dated 20 August
1990.
19
20
CA rollo, (CA-G.R. No. 60769), pp. 205-219.
40
Exhibits "3-B," "3-C," "3-D" and "3-E," id. at 70-73.
21
Records, pp. 735-736; 740; 773-774, (Civil Case No. R-263).
41
Exhibits "3" and "3-A," id. at 68-69.
42
Exhibits "4-B," "4-C," "4-D," "4-E," id. at 80-83.
43
Exhibits "4" and "4-A," id. at 78-79.
44
TSN, 24 September 1984, p. 5, TSN, 18 July 1996, p. 7.
45
Exhibits "C," "C-1," "C-2," "C-3," "C-4" and "C-5," folder of exhibits, pp. 4-9.
Records, pp. 61-64, (Civil Case No. R-263), 15 August 1982 Commissioner’s
Report and Sketch.
46
47
Tabuso v. Court of Appeals, 411 Phil. 775, 787 (2001).
48
Exhibit "G," folder of exhibits, p. 49.
49
S.J.Vda. De Villanueva v. Court of Appeals, 403 Phil. 721, 730 (2001).
Buazon v. Court of Appeals, G.R. No. 97749, 19 March 1993, 220 SCRA 182,
190.
SECTION 40. Period of Prescription as to Real Estate. — An action for
recovery of the title to, or possession of, real property, or an interest therein, can
only be brought within ten years after the cause of such action accrues.
59
SECTION 41. Title to Land by Prescription. — Ten years actual adverse
possession by any person claiming to be the owner for that time of any land or
interest in land, uninterruptedly continued for ten years by occupancy, descent,
grants, or otherwise, in whatever way such occupancy may have commenced or
continued, shall vest in every actual occupant or possessor of such land a full
and complete title, saving to the persons under disabilities the rights secured by
the next section. In order to constitute such title by prescription or adverse
possession, the possession by the claimant or by the person under or through
whom he claims must have been actual, open, public, continuous, under a claim
of title exclusive of any other right and adverse to all other claimants. But failure
to occupy or cultivate land solely by reason of war shall not be deemed to
constitute an interruption of possession of the claimant, and his title by
prescription shall be complete, if in other respects perfect, notwithstanding such
failure to occupy or cultivate the land during the continuance of war.
60
50
61
Seminary of San Carlos v. Municipality of Cebu, 19 Phil. 32, 42 (1911).
Cuaycong v. Benedicto, supra, note 57 at 792-793.
51
Heirs of Abadilla v. Galarosa, 527 Phil. 264, 278 (2006).
62
52
Exhibit "H" and submarkings, folder of exhibits, p. 50.
63
53
TSN, 3 July 1984, p. 34.
Esguerra v. Manantan, G.R. No. 158328, 23 February 2007, 516 SCRA 561,
573.
64
54
Records, (Civil Case No. R-263), p. 175.
Lamsis v. Dong-e, G.R. No. 173021, 20 October 2010, 634 SCRA 154, 172.
Liga v. Allegro Resources Corp., G.R. No. 175554, 23 December 2008, 575
SCRA 310, 320-321.
65
Art. 444. Acts which are merely tolerated and those clandestinely executed,
without knowledge of the possessors of a thing, or by force, do not affect the
possession.
55
Art. 1942. Acts of a possessory character, performed by virtue of the license,
or by mere tolerance on the part of the owner, are of no effect for establishing
possession.
56
57
Cuayong v. Benedicto, 37 Phil. 781, 793 (1918).
58
Corporacion de PP. Dominicos v. Lazaro, 42 Phil. 119, 127 (1921).
66
Heirs of Clemente Ermac v. Heirs of Vicente Ermac, 451 Phil. 368,379 (2003).
67
Maestrado v. Court of Appeals, 384 Phil. 418, 430 (2000).
DIGEST