TITLE V- PRESCRIPTION Prescription is deemed to have been tacitly renounced when the renunciation

results from acts which imply the abandonment of the right acquired. (1935)
CHAPTER 1
General Provisions 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
Article 1106. By prescription, one acquires ownership and other real rights subdivisions not patrimonial in character shall not be the object of prescription.
through the lapse of time in the manner and under the conditions laid down by (1936a)
law.
Article 1114. Creditors and all other persons interested in making the
In the same way, rights and conditions are lost by prescription. (1930a) prescription effective may avail themselves thereof notwithstanding the express
or tacit renunciation by the debtor or proprietor. (1937)
Article 1107. Persons who are capable of acquiring property or rights by the
other legal modes may acquire the same by means of prescription. 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
Minors and other incapacitated persons may acquire property or rights by specific cases of prescription. (1938)
prescription, either personally or through their parents, guardians or legal
representatives. (1931a) 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
Article 1108. Prescription, both acquisitive and extinctive, runs against: 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)
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.
CASES: (3) Julian Caiña had a brother, Justo Caiña. The latter had three children,
namely, Emeteria Caiña Buenaventura, Lorenzo Caiña and Francisca Caiña.
1. NARCISO BUENAVENTURA & MARIA BUENAVENTURA V. CA & Emeteria Caiña Buenaventura died as early as July 11, 1937 and was survived
MANOTOK REALTY, INC ( GR 50837, DEC 28, 1992) by Maria Buenaventura and Narciso Buenaventura, the Private Respondents in
this case;
G.R. No. 50837 December 28, 1992
(4) However the Gonzales Estate still had to be sub-divided into lots; but before
NARCISO BUENAVENTURA and MARIA BUENAVENTURA, Petitioners, the subdivision of the property and the subdivision plan thereof could be
vs. approved and said lot transferred to Julian Caiña, the latter died on December
HON. COURT OF APPEALS and MANOTOK REALTY, INC. Respondents. 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
MELO, J.:
and Maria Buenaventura, the children of Emeteria Buenaventura who died
earlier in 1937;
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
(6) On November 4, 1965, the People Homesite and Housing Corporation
CA-G.R. No. 08249-SP (Reyes, Sundiam [P], and Cortez, JJ; Rollo, [pp. 22-28)
executed a 'Deed of Absolutes Sale' over the said lot to Lorenzo Caiña and
ordering the dismissal of the complaint in Civil Case No. C-6095 filed by herein
Francisca Caiña-Rivera, as the sole heirs and successor-in-interest of Julian
petitioners against Lorenzo Caiña. Francisco Caiña-Rivera, the National
Caiña for and in consideration of the purchase price of P96,048.80 (a certified
Housing Authority (formerly PHHC). Francisco M. Custodio, and respondent
xerox copy of the aforesaid Deed is hereto attached as Annex 'A' hereof):
Manotok Realty, Inc., before then Court of First Instance of Rizal, Branch XXXIII,
Caloocan City.
(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
The relevant antecedents, as narrated by respondent court, are as follows:
said lot by the Registry of Deeds of Caloocan City (certified xerox copy of the
aforesaid title is hereto attached as Annex "B" hereof);
(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
(8) On January 26, 1966, Lorenzo Caiña and Francisca Caiña-Rivera executed
then Rural Progress Administration and later by the Peoples Homesite and
a 'Deed of Absolutes Sale' over the said lot in favor of Francisco M. Custodio
Housing Corporation (PHHC) described as Lot 20 of Consolidated Sub-division
after which the latter was issued on January 26, 1966. Transfer Certificate of
plan LRC Pcs-1828, and in Transfer Certificate of Title No. 365557 of the
Title No. 21484 of the Registry of Deeds of Caloocan City (a certified xerox copy
Registry of Deeds of Caloocan City, with an area of 25,776 square meters;
of the aforesaid Deed of Absolute Sale and Transfer Certificate of tile are hereto
attached as Annexes "C" and ''D" hereof respectively);
(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
(9) On January 26, 1966, Francisco Custodio executed a 'Deed of Absolute
bonafide tenants-occupants and, to achieve this end, the President of the
Sale' over the said lot in favor of the Petitioner for which the latter was issued on
Philippines, on August 30, 1961, designated the PHHC with the task of selling
January 26, 1966. Transfer Certificate of Title No. 2145 of the Registry of Deeds
and transferring the said lots to qualified tenants concerned and/or their lawful
of Caloocan City (a certified xerox copy of the said Deed of Absolute Sale and
heirs;
Title are hereto attached as Annexes "E" and "F" hereof respectively);
(10) On December 24, 1976, Private Respondents [now petitioners] filed a The Court of Appeals, in directing the dismissal of the complaint filed by they
complaint with the respondent court docketed as Civil Case No. C-6095 entitled petitioners in the court of origin, held that Article 1410 of the Civil Code on
'Narciso Buenaventura and Maria Buenaventura vs. Lorenzo Caiña, Francisca imprescriptibility of actions is not applicable because fraud in the transfer of the
Caiña, National Housing Authority (formerly PHHC). Francisco M. Custodio. property was alleged in petitioner's complaint. The Court of Appeals was, of
Manotok Realty, Inc.' for Annulment of Titles, Contracts and/or Sales. course, referring to paragraph 20 of the Complaint which reads:
Reconveyance and Damages (a copy of the aforesaid complaint attached hereto
as Annex "G" hereof); 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
(11) The Petitioner [now private respondent Manotok Realty] subsequently filed with evident bad faith, gross negligence and carelessness, while defendants
with the Respondent Court a 'Motion to Dismiss' the aforesaid complaint on the Lorenzo Caiña and Francisca Caiña acted with false representations, fraud and
ground of, inter alia, prescription (a copy of the aforesaid motion is hereto deceit and the three defendants connived, conspired and schemed to deprive
attached as Annex "H" hereof); 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
(12) The Private Respondents, however filed their Opposition to the aforesaid plaintiffs; (Rollo, p. 17).
motion of the Petitioner (a copy of the aforesaid opposition is hereto attached as
Annex "'1"' hereof); 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
(13) On July 28, 1977, the Respondent Court issued an Order denying the issuance of Transfer Certificate of Title No. 21484, there was created in favor of
aforesaid Motion of the Petitioner (a certified xerox copy of the aforesaid order is then private respondents, now petitioners, an implied or constructive trust, such
hereto attached as Annex "J" hereof); 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
(14) The Petitioner thereafter filed a 'Motion for Reconsideration' of the aforesaid action prescribed. Consequently, respondent court held that because the
Order, to which the private respondents filed their opposition. The petitioner complaint in Civil Case No. C-6095 was filed only on December 28, 1976 or
however, filed its Reply to the aforesaid opposition of the private respondents after more than ten years from the issuance of the transfer certificate of title on
despite which the respondent court, on July 21, 1978 issued an order denying January 26, 1966, the assertion for recovery of property based on fraudulent
the aforesaid motion of the petitioner (a copy of each aforesaid motion, transfer and registration can no longer be entertained (Rollo, pp. 27-28).
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 Petitioners, on the other hand, argue otherwise. They claim that the action for
attached as Annex 'N' hereof). Decision, pp. 1-3: rollo, pp. 22-24.). 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.
Aggrieved by the rules of the trial court, herein private respondents filed a 15).
petitioner with the Court of Appeals which later granted the petitioner and
ordered the dismissal of the complaint of then private respondents, now herein We agree with respondent court.
petitioners, on the ground that their action has already prescribed. A subsequent
motion for reconsideration was to no avail. 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
Hence, the instant petition. 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
Both sides offer conflicting opinions on the applicability of Article 1410 of the bends backwards and considers the circumstances alleged as having created
Civil Code of the Philippines. 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. the defendant that the complainant would assert the right on which he bases his
Considering that the deed of sale executed by the Philippine Homesite and suit; and (4) injury or prejudice to the defendant in the event relief is accorded to
Housing Corporation in favor of Lorenzo Caiña and Francisca Caiña-Rivera was the complainant or the suit is not held barred. (Yusingco vs. Ong Hing Lian, 42
executed on November 4, 1965 and on the following day, Transfer Certificate of SCRA 589.)
Title No. 21484 was issued in favor of the vendees (private respondents), the
party allegedly defrauded in the transaction, herein petitioners, had only 10 The defendant-appellee purchased the parcel of land in question giving rise to
years or until September 5, 1975 within which to file the appropriate action. In the complaint of herein plaintiffs-appellants. The latter delayed the assertion of
the instant case, the action was filed only on December 28, 1976, which was their supposed right to annul the sale for a period of over fifteen (15) years
beyond the prescribed period set by law. 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. Defendant-
Verily, the principle on prescription of actions is designed to cover situations appellee was never apprised of any intention on the part of plaintiffs-appellants
such as the case at bar, where there have been a series of transfers to innocent to annul the sale until this action was filed. Finally, the defendant-appellee
purchasers for value. To set aside these transactions only to accommodate a stands to lose the property in question if the suit filed against him by plaintiffs-
party who has slept on his rights is anathema to good order. appellants shall be deemed barred. (at pp. 154-155.)

Independently of the principal of prescription of actions working against WHEREFORE, premises considered,. the judgment appealed from is hereby
petitioners, the doctrine of laches may further be counted against them, which AFFIRMED in toto.
latter tenet finds application even to imprescriptible actions. Thus, in Rafols vs.
Barba (199 SCRA 146 [1982]), We find the following words of wisdom: SO ORDERED.

In the least, plaintiffs-appellants are already guilty of laches as would effectively Gutierrez, Jr., (Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.
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., L-
21601. December 17, 1966, 18 SCRA [1040]:

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
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)

G.R. No. 191475               December 11, 2013

PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC On March 15, 2004, Tagyamon,  Luna,  Badayos,  Dela
5 6 7
Cruz,  and 8

CARPET MANUFACTURING CORPORATION, MR. PATRICIO LIM and MR. Comandao  received a uniformly worded Memorandum of dismissal, to wit:
9

DAVID LIM, Petitioners,
vs. This is to inform you that in view of a slump in the market demand for our
IGNACIO B. TAGYAMON,PABLITO L. LUNA, FE B. BADA YOS, GRACE B. products due to the un-competitiveness of our price, the company is constrained
MARCOS, ROGELIO C. NEMIS, ROBERTO B. ILAO, ANICIA D. DELA CRUZ to reduce the number of its workforce. The long-term effects of September 11
and CYNTHIA L. COMANDAO, Respondents. 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
DECISION organizational structure.

PERALTA, J.: 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,
The Case and its implementing rules and regulations.

This is a petition for review on certiorari under Rule 45 of the Rules of Court In this connection, we regret to advise you that you are one of those affected by
assailing the Court of Appeals (CA) Decision  dated July 7, 2009 and
1 the said exercise, and your employment shall be terminated effective at the
Resolution  dated February 26, 2010 in CA-G.R. SP No. 105236. The assailed
2 close of working hours on April 15, 2004.
decision granted the petition for certiorari filed by respondents Ignacio B.
Tagyamon (Tagyamon), Pablito I. Luna (Luna), Fe B. Badayos (Badayos), Accordingly, you shall be paid your separation pay as mandated by law. You will
Grace B. Marcos (Marcos), Rogelio C. Nemis (Nemis), Roberto B. Ilao (Ilao), no longer be required to report for work during the 30-day notice period in order
Anicia D. Dela Cruz (Dela Cruz), and Cynthia L. Comandao (Comandao), the to give you more time to look for alternative employment. However, you will be
dispositive portion of which reads: 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
WHEREFORE, the petition is GRANTED. The private respondent is hereby March 31, 2004.
ordered to reinstate the petitioners with full backwages less the amounts they
received as separation pays. In case reinstatement would no longer be feasible Thank you for your services and good luck to your future endeavors. 10

because the positions previously held no longer exist, the private respondent
shall pay them backwages plus, in lieu of reinstatement, separation pays equal As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective
to one (1) month pay, or one-half (1/2) month pay for every year of service, March 31, 2004, together with fifteen (15) other employees on the ground of lack
whichever is higher. In addition, the private respondent is hereby ordered to pay of market/slump in demand.  PCMC, however, claimed that they availed of the
11

the petitioners moral damages in the amount of ₱20,000.00 each. company’s voluntary retirement program and, in fact, voluntarily executed their
respective Deeds of Release, Waiver, and Quitclaim. 12

SO ORDERED. 3

Claiming that they were aggrieved by PCMC’s decision to terminate their

The Facts employment, respondents filed separate complaints for illegal dismissal against
PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and Mr.
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation David Lim. These cases were later consolidated. Respondents primarily relied
registered in the Philippines engaged in the business of manufacturing wool and on the Supreme Court’s decision in Philippine Carpet Employees Association
yarn carpets and rugs.  Respondents were its regular and permanent
4 (PHILCEA) v. Hon. Sto. Tomas (Philcea case),  as to the validity of the
13

employees, but were affected by petitioner’s retrenchment and voluntary company’s retrenchment program. They further explained that PCMC did not, in
retirement programs. fact, suffer losses shown by its acts prior to and subsequent to their
termination.  They also insisted that their acceptance of separation pay and
14
backwages less the amounts they received as separation pay. In case of
signing of quitclaim is not a bar to the pursuit of illegal dismissal case.
15
impossibility of reinstatement, the CA ordered PCMC to pay respondents
backwages and in lieu of reinstatement, separation pay equal to one month pay
PCMC, for its part, defended its decision to terminate the services of or ½ month pay for every year of service whichever is higher, plus moral
respondents being a necessary management prerogative. It pointed out that as damages. 23

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 The Issues
cause for dismissal. Petitioners also stressed that respondents belatedly filed
their complaint as they allowed almost three years to pass making the principle Aggrieved, petitioners come before the Court in this petition for review
of laches applicable. Considering that respondents accepted their separation on certiorari based on this ground, to wit:
pay and voluntarily executed deeds of release, waiver and quitclaim, PCMC
invoked the principle of estoppel on the part of respondents to question their IN RENDERING ITS DISPUTED DECISION AND RESOLUTION, THE
separation from the service. Finally, as to Marcos, Ilao and Nemis, PCMC COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE NOT IN
emphasized that they were not dismissed from employment, but in fact they ACCORD WITH LAW AND/OR ESTABLISHED JURISPRUDENCE.
voluntarily retired from employment to take advantage of the company’s
program. 16

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).
On August 23, 2007, Labor Arbiter (LA) Donato G. Quinto, Jr. rendered a The (Supreme) Court is not precluded from rectifying errors of judgment if blind
Decision dismissing the complaint for lack of merit.  The LA found no flaw in
17
and stubborn adherence to the doctrine of immutability of final judgments would
respondents’ termination as they voluntarily opted to retire and were involve the sacrifice of justice for technicality (Heirs of Maura So vs.
subsequently re-employed on a contractual basis then regularized, terminated Obliosca, G.R. No. 147082, January 28, 2008, 542 SCRA 406)
from employment and were paid separation benefits.  In view of respondents’
18

belated filing of the complaint, the LA concluded that such action is a mere
b) Not all waivers and quitclaims are invalid as against public policy. Waivers
afterthought designed primarily for respondents to collect more money, taking
that represent a voluntary and reasonable settlement of the laborer’s claims are
advantage of the 2006 Supreme Court decision. 19

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,
On appeal, the National Labor Relations Commission (NLRC) sustained the LA 2002; Alcasero vs. NLRC, 288 SCRA 129) Where the persons making the
decision.  In addition to the LA ratiocination, the NLRC emphasized the
20
waiver has done so voluntarily, with a full understanding thereof, and the
application of the principle of laches for respondents’ inaction for an consideration for the quitclaim is credible and reasonable, the transaction must
unreasonable period. be recognized as valid and binding undertaking (Periquet vs. NLRC, 186 SCRA
724 [1990]; Magsalin vs. Coca Cola Bottlers Phils., Inc. vs. National
Still undaunted, respondents elevated the matter to the CA in a petition Organization of Working Men (N.O.W.M.], G.R. No. 148492, May 2, 2003). 24

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 Petitioners contend that the Philcea case decided by this Court and relied upon
the expiration of the prescriptive period set by law which is four years. It by the CA in the assailed decision was based on erroneous factual findings,
stressed that said principle cannot be invoked earlier than the expiration of the inapplicable financial statement, as well as erroneous analysis of such financial
prescriptive period.  Citing the Court’s decision in the Philcea case, the CA
21
statements.  They, thus, implore the Court to revisit the cited case in order to
25

applied the doctrine of stare decisis, in view of the similar factual circumstances dispense with substantial justice.  They explain that the Court made conclusions
26

of the cases. As to Ilao, Nemis and Marcos, while acknowledging their voluntary based on erroneous information. Petitioners also insist that the doctrines of res
resignation, the CA found the same not a bar to the illegal dismissal case judicata and law of the case are not applicable, considering that this case does
because they did so on the mistaken belief that PCMC was losing money.  With22
not involve the same parties as the Philcea case.  They likewise point out that
27

the foregoing findings, the CA ordered that respondents be reinstated with full not all respondents were involuntarily separated on the ground of redundancy as
some of them voluntarily availed of the company’s Voluntary Separation Stare Decisis
Program.  They further contend that respondents are guilty not only of laches
28

but also of estoppel in view of their inaction for an unreasonable length of time to The main issue sought to be determined in this case is the validity of
assail the alleged illegal dismissal and in voluntarily executing a release, respondents’ dismissal from employment. Petitioners contend that they either
quitclaim and waiver. 29
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
The Court’s Ruling 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
Laches same ground was thoroughly discussed. In other words, the appellate court
applied the doctrine of stare decisis and reached the same conclusion as the
Laches has been defined as the failure or neglect for an unreasonable and earlier case.
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 Under the doctrine of stare decisis, when a court has laid down a principle of law
entitled to assert it either has abandoned or declined to assert it.  It has been
30 as applicable to a certain state of facts, it will adhere to that principle and apply it
repeatedly  held by the Court that:
31 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,
36

x x x Laches is a doctrine in equity while prescription is based on law. Our courts however, stare decisis does not apply, for a perfectly sound principle as applied
are basically courts of law not courts of equity. Thus, laches cannot be invoked to one set of facts might be entirely inappropriate when a factual variant is
to resist the enforcement of an existing legal right. x x x Courts exercising equity introduced. 37

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 The question, therefore, is whether the factual circumstances of this present
emphatic in upholding the rules of procedure. We said therein: case are substantially the same as the Philcea case.

As for equity which has been aptly described as a "justice outside legality," this We answer in the affirmative.
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 This case and the Philcea case involve the same period which is March to April
pertinent positive rules being present here, they should preempt and prevail over 2004; the issuance of Memorandum to employees informing them of the
all abstract arguments based only on equity. implementation of the cost reduction program; the implementation of the
voluntary retirement program and retrenchment program, except that this case
Thus, where the claim was filed within the [four-year] statutory period, recovery involves different employees; the execution of deeds of release, waiver, and
therefore cannot be barred by laches. Courts should never apply the doctrine of quitclaim, and the acceptance of separation pay by the affected employees.
laches earlier than the expiration of time limited for the commencement of
actions at law." 32
The illegality of the basis of the implementation of both voluntary retirement and
retrenchment programs of petitioners had been thoroughly ruled upon by the
An action for reinstatement by reason of illegal dismissal is one based on an Court in the Philcea case. It discussed the requisites of both retrenchment and
injury to the complainants’ rights which should be brought within four years from redundancy as authorized causes of termination and that petitioners failed to
the time of their dismissal pursuant to Article 1146  of the Civil Code.
33 substantiate them. In ascertaining the bases of the termination of employees, it
Respondents’ complaint filed almost 3 years after their alleged illegal dismissal took into consideration petitioners’ claim of business losses; the purchase of
was still well within the prescriptive period. Laches cannot, therefore, be invoked machinery and equipment after the termination, the declaration of cash
yet.  To be sure, laches may be applied only upon the most convincing evidence
34 dividends to stockholders, the hiring of 100 new employees after the
of deliberate inaction, for the rights of laborers are protected under the social retrenchment, and the authorization of full blast overtime work for six hours
justice provisions of the Constitution and under the Civil Code. 35 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 impelled to retrench its employees precisely because of low demand for its
the termination programs. In arriving at its conclusions, the Court took note of products and other external causes.
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 xxxx
due to a substantive defect. We quote hereunder the Court’s pronouncement in
the Philcea case, to wit: 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 cost-
Respondents failed to adduce clear and convincing evidence to prove the reduction program on March 9, 2004, after receipt of the February 10, 2004
confluence of the essential requisites for a valid retrenchment of its employees. letter of the Union president which included the proposal for additional benefits
We believe that respondents acted in bad faith in terminating the employment of and wage increases to be incorporated in the CBA for the ensuing year.
the members of petitioner Union. Petitioner and its members had no inkling, before February 10, 2004, that
respondent Corporation would terminate their employment. Moreover,
Contrary to the claim of respondents that the Corporation was experiencing respondent Corporation failed to exhaust all other means to avoid further losses
business losses, respondent Corporation, in fact, amassed substantial earnings without retrenching its employees, such as utilizing the latter's respective forced
from 1999 to 2003. It found no need to appropriate its retained earnings except vacation leaves. Respondents also failed to use fair and reasonable criteria in
on March 23, 2001, when it appropriated ₱60,000,000.00 to increase production implementing the retrenchment program, and instead chose to retrench 77 of
capacity. x x x the members of petitioner out of the dismissed 88 employees. Worse,
respondent Corporation hired new employees and even rehired the others who
xxxx had been "retrenched."

The evidence on record belies the ₱22,820,151.00 net income loss in 2004 as As shown by the SGV & Co. Audit Report, as of year end December 31, 2003,
projected by the SOLE. On March 29, 2004, the Board of Directors approved the respondent Corporation increased its net sales by more than ₱8,000,000.00.
appropriation of ₱20,000,000.00 to purchase machinery to improve its facilities, Respondents failed to prove that there was a drastic or severe decrease in the
and declared cash dividends to stockholders at ₱30.00 per share. x x x 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
xxxx 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
It bears stressing that the appropriation of ₱20,000,000.00 by the respondent
Union members.
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 xxxx
March 29, 2004, barely two weeks after it implemented its "retrenchment
program." In contrast, in this case, the retrenchment effected by respondent Corporation is
invalid due to a substantive defect, non-compliance with the substantial
If respondent Corporation were to be believed that it had to retrench employees requirements to effect a valid retrenchment; it necessarily follows that the
due to the debilitating slump in demand for its products resulting in severe termination of the employment of petitioner Union's members on such ground is,
losses, how could it justify the purchase of ₱20,000,000.00 worth of machinery likewise, illegal. As such, they (petitioner Union's members) are entitled to
and equipment? There is likewise no justification for the hiring of more than 100 reinstatement with full backwages. 38

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 We find no reason to depart from the above conclusions which are based on the
inconsistent with the intransigent claim that respondent Corporation was 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 retrenchment program and not because of retirement.  As their application for
43

was based on the same grounds under the same circumstances, there is no availing of the company’s voluntary retirement program was based on the wrong
need to relitigate the issues presented herein. In short, we adopt the Court’s premise, the intent to retire was not clearly established, or rather that the
earlier findings that there was no valid ground to terminate the employees. retirement is involuntary. Thus, they shall be considered discharged from
employment.  Consequently, they shall be treated as if they are in the same
44

A closer look at petitioners’ arguments would show that they want the Court to footing as the other respondents herein and the union members in the Philcea
re-examine our decision in the Philcea case allegedly on the ground that the case.
conclusions therein were based on erroneous interpretation of the evidence
presented. Waivers, Releases and Quitclaims

Indeed, in Abaria v. National Labor Relations Commission,  although the Court

39
"As a rule, deeds of release and quitclaim cannot bar employees from
was confronted with the same issue of the legality of a strike that has already demanding benefits to which they are legally entitled or from contesting the
been determined in a previous case, the Court refused to apply the doctrine legality of their dismissal. The acceptance of those benefits would not amount to
of stare decisis insofar as the award of backwages was concerned because of estoppel."  To excuse respondents from complying with the terms of their
45

the clear erroneous application of the law. We held therein that the Court waivers, they must locate their case within any of three narrow grounds: (1) the
abandons or overrules precedents whenever it realizes that it erred in the prior employer used fraud or deceit in obtaining the waivers; (2) the consideration the
decision.  The Court’s pronouncement in that case is instructive:
40
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
The doctrine though is not cast in stone for upon a showing that circumstances prejudicial to a third person with a right recognized by law.  The instant case
46

attendant in a particular case override the great benefits derived by our judicial falls under the first situation.
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 As the ground for termination of employment was illegal, the quitclaims are
controlled by precedent. Thus, the Court, especially with a new membership, is deemed illegal as the employees’ consent had been vitiated by mistake or fraud.
not obliged to follow blindly a particular decision that it determines, after re- The law looks with disfavor upon quitclaims and releases by employees
examination, to call for a rectification. 41
pressured into signing by unscrupulous employers minded to evade legal
responsibilities.  The circumstances show that petitioner’s misrepresentation led
47

The Abaria case, however, is not applicable in this case.  There is no reason to

1âwphi1
its employees, specifically respondents herein, to believe that the company was
abandon the Court’s ruling in the Philcea case. suffering losses which necessitated the implementation of the voluntary
retirement and retrenchment programs, and eventually the execution of the
Do we apply the aforesaid decision to all the respondents herein? Again, we deeds of release, waiver and quitclaim.48

answer in the affirmative.

It can safely be concluded that economic necessity constrained respondents to
Just like the union members in the Philcea case, respondents Tagyamon, Luna, accept petitioners’ monetary offer and sign the deeds of release, waiver and
Badayos, Dela Cruz, and Comandao received similarly worded memorandum of quitclaim. That respondents are supervisors and not rank-and-file employees
dismissal effective April 15, 2004 based on the same ground of slump in the does not make them less susceptible to financial offers, faced as they were with
market demand for the company’s products. As such, they are similarly situated the prospect of unemployment. The Court has allowed supervisory employees to
in all aspects as the union members. With respect to respondents Marcos, seek payment of benefits and a manager to sue for illegal dismissal even
Nemis and Ilao, although they applied for voluntary retirement, the same was though, for a consideration, they executed deeds of quitclaims releasing their
not accepted by petitioner. Instead, it issued notice of termination dated March employers from liability.49

6, 2004 to these same employees.  And while it is true that petitioner paid them
42

separation pay, the payment was in the nature of separation and not retirement x x x There is no nexus between intelligence, or even the position which the
pay. In other words, payment was made because of the implementation of 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 ATTESTATION
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 I attest that the conclusions in the above Decision had been reached in
and quitclaim and accept what the company offers them, or [to refuse] to sign consultation before the case was assigned to the writer of the opinion of the
and walk out without receiving anything, may do succumb to the same pressure, Court's Division.
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 PRESBITERO J. VELASCO, JR.
starting from the labor arbiter level, all the way to this Court, can he receive Associate Justice
anything at all. The Court understands that such a risk of not receiving anything Chairperson, Third Division
whatsoever, coupled with the probability of not immediately getting any gainful
employment or means of livelihood in the meantime, constitutes enough
CERTIFICATION
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
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
The amounts already received by respondents as consideration for signing the
opinion of the Court's Division.
releases and quitclaims should be deducted from their respective monetary
awards. 51

MARIA LOURDES P. A. SERENO

Chief Justice
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. Footnotes

DIOSDADO M. PERALTA  Designated Acting Member in lieu of Associate Justice Jose Catral Mendoza,
*

Associate Justice per Raffle dated February 16, 2011.

WE CONCUR:  Penned by Associate Justice Jose Catral Mendoza, with Associate Justices
1

Sesinando E. Villon and Marlene Gonzales-Sison, concurring, rol/o, pp. 50-59.

PRESBITERO J. VELASCO, JR.
Associate Justice  Penned by.Associate Justice Marlene Gonzales-Sison, with Associate Justices
2

Chairperson Sesinando E. Villon and Ramon R. Garcia, concurring; rollo, pp. 61-62.

TERESITA J. LEONARDO-DE
3
 Rollo, p. 58.
ROBERTO A. ABAD
CASTRO *

Associate Justice  Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas, 518
Associate Justice
4

Phil. 299 (2006).

MARVIC MARIO VICTOR F. LEONEN
Associate Justice
5
 Rollo, p. 82.

6
 Id. at 83.
 Id. at 84.
7
 Id. at 38.
27

 Id. at 85.
8
 Id. at 39.
28

 Id. at 86.
9
 Id. at 40-42.
29

10
 Id. at 82.  GF Equity, Inc. v. Valenzona, G.R. No. 156841, June 30, 2005, 462 SCRA
30

466, 480.
11
 CA rollo, p. 73.
 See: GF Equity, Inc. v. Valenzona, supra; Mendoza v. NLRC, 350 Phil. 486
31

12
 Rollo, pp. 73-81. (1998); Reno Foods, Inc. v. National Labor Relations Commission, 319 Phil. 500
(1995).
13
 Supra note 4.
 Mendoza v. NLRC, 350 Phil. 486, 495 (1998).
32

14
 CA rollo, pp. 74-93.
 Art. 1146. The following actions must be instituted within four years:
33

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.
 Reno Foods, Inc. v. National Labor Relations Commission, supra note 31, at
34

18
 Id. at 158. 509.

19
 Id. at 159.  Id.
35

20
 Id. at 161-164.  Abaria v. National Labor Relations Commission, G.R. No. 154113, December
36

7, 2011, 661 SCRA 686, 712.

21
 Id. at 55-56.
 Hacienda Bino/Hortencia Starke, Inc. v. Cuenca, 496 Phil. 198, 207 (2005).
37

22
 Id. at 58.
 Philippine Carpet Employees
38
Association (PHILCEA) v. Hon. Sto.
Tomas, supra note 4, at 317- 323.
23
 Id.
DIGEST
24
 Id. at 28-29.
Facts:
25
 Id. at 29.
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a
26
 Id. 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 PCMC, for its part, defended its decision to terminate the services of
voluntary retirement programs. 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
On March 15, 2004, Tagyamon, Luna, Badayos, Dela Cruz, and necessary for the operation of his business. Thus, there was an authorized
Comandao received a uniformly worded Memorandum of dismissal, to wit: cause for dismissal.

This is to inform you that in view of a slump in the market demand Citing the Court's decision in the Philcea case, the CA applied the doctrine of
for our products due to the un-competitiveness of our price, the stare decisis, in view of the similar factual circumstances of the cases. As to
company is constrained to reduce the number of its workforce. The Ilao, Nemis and Marcos, while acknowledging their voluntary resignation,
long-term effects of September 11 and the war in the Middle East the CA found the same not a bar to the illegal dismissal case because they did
have greatly affected the viability of our business and we are left with so on the mistaken belief that PCMC was losing money. With the foregoing
no recourse but to reorganize and downsize our organizational findings, the CA ordered that respondents be reinstated with full backwages
structure. less the amounts they received as separation pay. In case of impossibility of
reinstatement, the CA ordered PCMC to pay respondents backwages and in
We wish to inform you that we are implementing a retrenchment lieu of reinstatement, separation pay equal to one month pay or 1⁄2 month pay
program in accordance with Article 283 of the Labor Code of the for every year of service whichever is higher, plus moral damages.
Philippines, as amended, and its implementing rules and regulations.
Ruling:
In this connection, we regret to advise you that you are one of those
affected by the said exercise, and your employment shall be Laches
terminated effective at the close of working hours on April 15, 2004.
Laches has been defined as the failure or neglect for an unreasonable and
Accordingly, you shall be paid your separation pay as mandated by unexplained length of time to do that which by exercising due diligence,
law. You will no longer be required to report for work during the 30- could or should have been done earlier, thus, giving rise to a presumption that
day notice period in order to give you more time to look for the party entitled to assert it either has abandoned or declined to assert it. It
alternative employment. However, you will be paid the salary has been repeatedly held by the Court that:
corresponding to the said period. We shall process your clearance and
other documents and you may claim the payables due you on March x x x Laches is a doctrine in equity while prescription is based on law.
31, 2004. Our courts are basically courts of law not courts of equity. Thus,
laches cannot be invoked to resist the enforcement of an existing legal
Thank you for your services and good luck to your future endeavors. 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.
Claiming that they were aggrieved by PCMC's decision to terminate their Court of Appeals x x x, this Court was more emphatic in upholding
employment, respondents filed separate complaints for illegal dismissal the rules of procedure. We said therein:
against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim
and Mr. David Lim. 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 principle as applied to one set of facts might be entirely inappropriate when a
nunguam contravenit legis. The pertinent positive rules being present factual variant is introduced.
here, they should preempt and prevail over all abstract arguments
based only on equity. The question, therefore, is whether the factual circumstances of this present
Thus, where the claim was filed within the [four-year] statutory case are substantially the same as the Philcea case.
period, recovery therefore cannot be barred by laches. Courts should
never apply the doctrine of laches earlier than the expiration of time We answer in the affirmative.
limited for the commencement of actions at law."
This case and the Philcea case involve the same period which is March to
An action for reinstatement by reason of illegal dismissal is one based on an April 2004; the issuance of Memorandum to employees informing them of
injury to the complainants' rights which should be brought within four years the implementation of the cost reduction program; the implementation of the
from the time of their dismissal pursuant to Article 1146[33] of the Civil voluntary retirement program and retrenchment program, except that this
Code. Respondents' complaint filed almost 3 years after their alleged illegal case involves different employees; the execution of deeds of release, waiver,
dismissal was still well within the prescriptive period. Laches cannot, and quitclaim, and the acceptance of separation pay by the affected
therefore, be invoked yet. To be sure, laches may be applied only upon the employees.
most convincing evidence of deliberate inaction, for the rights of laborers are
protected under the social justice provisions of the Constitution and under the The illegality of the basis of the implementation of both voluntary retirement
Civil Code. and retrenchment programs of petitioners had been thoroughly ruled upon by
the Court in the Philcea case. It discussed the requisites of both retrenchment
Stare Decisis and redundancy as authorized causes of termination and that petitioners failed
to substantiate them. In ascertaining the bases of the termination of
The main issue sought to be determined in this case is the validity of employees, it took into consideration petitioners' claim of business losses; the
respondents' dismissal from employment. Petitioners contend that they either purchase of machinery and equipment after the termination, the declaration of
voluntarily retired from the service or terminated from employment based on cash dividends to stockholders, the hiring of 100 new employees after the
an authorized cause. The LA and the NLRC are one in saying that the retrenchment, and the authorization of full blast overtime work for six hours
dismissal was legal. The CA, however, no longer discussed the validity of the daily. These, said the Court, are inconsistent with petitioners' claim that there
ground of termination. Rather, it applied the Court's decision in the Philcea was a slump in the demand for its products which compelled them to
case where the same ground was thoroughly discussed. In other words, the implement the termination programs. In arriving at its conclusions, the Court
appellate court applied the doctrine of stare decisis and reached the same took note of petitioners' net sales, gross and net profits, as well as net income.
conclusion as the earlier case. 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
Under the doctrine of stare decisis, when a court has laid down a principle of pronouncement in the Philcea case, to wit:
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 Respondents failed to adduce clear and convincing evidence to prove
though the parties may be different.[36] Where the facts are essentially the confluence of the essential requisites for a valid retrenchment of
different, however, stare decisis does not apply, for a perfectly sound its employees. We believe that respondents acted in bad faith in
terminating the employment of the members of petitioner Union.
WHEREFORE, premises considered, the petition is hereby DENIED. The
In contrast, in this case, the retrenchment effected by respondent Corporation Court of Appeals Decision dated July 7, 2009 and Resolution dated February
is invalid due to a substantive defect, non-compliance with the substantial 26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.
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.

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 3. PHIL-AIR CONDITIONING CENTER VS. RCJ LINES (GR 193827, NOV. 23, 2015)
blindly a particular decision that it determines, after re-examination,
to call for a rectification.
DECISION
The Abaria case, however, is not applicable in this case. There is no reason to
abandon the Court's ruling in the Philcea case. BRION, J.:
Phil-Air Conditioning Center (Phil-Air) filed this petition for review on Check No. Amount Post-dated
certiorari1 to assail the September 15, 2010 decision 2 of the Court of
Appeals (CA) in CA-G.R. CV No. 85866. 479759 Php 244,998.00 February 28, 1992

The CA affirmed the September 8, 2004 decision of the Regional Trial 479760 Php 244,998.00 March 31, 1992
Court (RTC), Branch 119 of Pasay City, dismissing Phil-Air's complaint 479761 Php 244,998.00 April 30, 1992
for sum of money with prayer for a writ of preliminary attachment. 3
TOTAL Php 734,994.00
Designated as Acting Member in lieu of Associate Justice Antonio T.
cralawlawlibrary

Carpio, per Special Order No. 2282 dated November 13, 2015. All the post-dated checks were dishonored when Phil-Air subsequently
presented them for payment. Check No. 479759 was returned
Designated as Acting Chairperson in lieu of Associate Justice Antonio because it was drawn against insufficient funds, while Check Nos.
T. Carpio, per Special Order No. 2281 dated November 13, 2015. 479760 and 479761 were returned because payments were stopped. 10
Antecedents
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 various dates between March 5, 1990, and August 29, 1990,
petitioner Phil-Air sold to respondent RCJ Lines four Carrier Paris 240
On July 17, 1996, Phil-Air demanded payment from Rolando Abadilla,
air-conditioning units for buses (units). The units included
Jr., for the total amount of P734,994.00 plus interest, and attorney's
compressors, condensers, evaporators, switches, wiring, circuit
fees equivalent to 25% of the amount due. Phil-Air warned that it
boards, brackets, and fittings.4
would take court action if payment is not made within five days from
demand.12
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,
In view of the failure of RCJ Lines to pay the balance despite demand,
leaving a balance of P840,000.00.6
Phil-Air filed on April 1, 1998 the complaint 13 for sum of money with
prayer for the issuance of a writ of preliminary attachment. 14 Phil-Air
RCJ Lines accepted the delivery of the units, which Phil-Air then
sought to recover from RCJ Lines:
installed after they were inspected by RCJ Lines president Rolando
chanRoblesvirtualLawlibrary

Abadilla, Sr.7
The total amount of P840,000.00 exclusive of interest for
a)
Phil-Air allegedly performed regular maintenance checks on the units the unpaid delivered air-conditioning units;
pursuant to the one-year warranty on parts and labor. After some
months from installation, Phil-Air supposedly boosted the capacity of
b) The amount of P60,000.00 for the unpaid repair services;
the units by upgrading them to the Carrier Paris 280 model. 8 It also The total interest in the amount of P756,000.00
purportedly repaired the control switch panel of one of the units for an c)
(P840,000.00 x 12% x 7 years + P60,000.00 x 12% x 7 years);
additional cost of P60,000.00.9
The sum equivalent to 25% of the total amount due as
d)
RCJ Lines issued three post-dated checks in favor of Phil-Air to partly attorney's fees, plus P3,000.00 per court appearance; and
cover the unpaid balance:
e) Costs of the suit.
chanRoblesvirtualLawlibrary
of laches and estopped from pursuing its claim. It also sustained the
In its answer with compulsory counterclaim, 15RCJ Lines admitted that allegation that Phil-Air had breached its warranty.
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 The dispositive portion of the RTC judgment reads: chanRoblesvirtualLawlibrary

Phil-Air allegedly breached its warranty. 16

WHEREFORE, judgment is hereby rendered as follows:
RCJ Lines averred that the units did not sufficiently cool the buses
despite repeated repairs. Phil-Air purportedly represented that the 1. Dismissing the complaint of plaintiff for
units were in accord with RCJ Lines' cooling requirements as shown in lack of merit.
Phil-Air's price quotation17 dated August 4, 1989. The price quotation
2. Directing the plaintiff to pay the
provided that full payment should be made upon the units' complete
installation. Complete installation, according to RCJ Lines, is defendants the amount of PI00,000.00 as
equivalent to being in operational condition. attorney's fees as they were forced to spend
and hire a lawyer to litigate for seven (7)
As it turned out, the Carrier Paris 240 model was not suited to the 45 years in this Court the unfounded and
to 49-seater buses operated by RCJ Lines. The units, according to RCJ invalid cause of action of plaintiff.
Lines, were defective and did not attain full operational condition. 18 3. Directing the plaintiff to pay P82,274.00 as
refund of the premium xxx for defendant's
Further, RCJ Lines claimed that it was also entitled to be reimbursed counter-bond for the release of the two
for costs and damages occasioned by the enforcement of the writ of buses which were attached per Writ of
attachment.
Attachment of this Court.
4. Directing the plaintiff to pay P216,000.00
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 for the lost profits of defendants for the
22 to April 30, 1999, resulting from the attachment of its two buses attachment of their two buses as there was
amounting to P207,000.00;19 and (3) P64,390.00 for the counter- no fraud in the transaction of the parties
bond premium, moral damages, exemplary damages and attorney's and plaintiff had no sufficient cause of
fees. action for the issuance of the writ of
attachment.
The RTC Ruling 5. Dismissing all other claims of defendants as
stated in their counter-claims.
The RTC granted the application for the issuance of a writ of
6. Costs against plaintiff. SO ORDERED.25
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 cralawlawlibrary

pursuant to the writ dated December 18, 1998.21 The writ was

executed on April 21, 1999.22 The attachment, however, was later The CA Ruling
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 The CA affirmed the RTC decision in toto.26
amount as the attachment bond.24
First, the CA held that Phil-Air's cause of action was barred by
Ruling on the merits after trial, the RTC found that Phil-Air was guilty laches.27
Finally, the CA sustained the award of attorney's fees for PI 00,000.00
The CA concluded that "Phil-Air's inaction on RCJ Lines' repeated in favor of RCJ lines for having been compelled to litigate.
demands and inexplicable failure to comply with its obligations had
certainly led the latter to believe [Phil-Air] was no longer interested in The Petition
pursuing any claim" and that "[Phil-Air] had been conspicuously silent
for so long a time which is disturbingly unusual for one claiming to First, Phil-Air argues that the doctrine of laches is not applicable when
have been aggrieved by another."28 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 Phil-Air asserts that it filed the complaint on April 1, 1998, or less
suitable for 50-60-passenger coaches and especially recommended for than eight years from the execution of the sales invoice dated
operation in the tropics.29 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 Second, Phil-Air denies that it breached its warranty.
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 It maintains that all the units were brand new and were accepted by
function properly.30 The CA also found convincing the testimonies of RCJ Lines in good, working, and operational condition. The units were
two RCJ Lines employees who testified that they experienced firsthand inspected, tested, and approved by then RCJ Lines president, Rolando
the inefficient cooling of the Carrier Paris 240. 31 Abadilla, Sr., as proved by the delivery receipts in which he affixed his
signature.36
Relying on these testimonies, the CA found that the four units did not
meet the cooling requirements of RCJ Lines.32 Phil-Air further avers that it was not notified of the alleged breach of
warranty. Assuming it breached its warranty, Phil-Air submits that the
Third, the CA ordered Phil-Air to reimburse the premium on the action to enforce the warranty had already prescribed.
counter-bond amounting to P82,274.00 since the writ was
improvidently issued. Third, Phil-Air rejects the CA's order that it must reimburse the
premium payment for the counter-bond and the alleged losses
Fourth, the CA affirmed the finding of the RTC that RCJ Lines suffered suffered by RCJ Lines. The attachment bond should be answerable for
losses when the RTC attached two of its buses. damages, if any.

The RTC and the CA relied on the testimony of Rolando Abadilla, Jr., Respondent's Comment
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 RCJ Lines reiterates all the arguments it raised in its counterclaim. It
enforcement of the writ of preliminary attachment. The lost profits admits that it did not pay the balance of the purchase price. 37 It
purportedly amounted to P227,280.00. To support this claim, RCJ maintains, however, that it was justified in doing so because Phil-Air
Lines adduced as evidence the summary of the daily cash breached its warranty. It insists that Phil-Air was guilty of laches
collections33 from the buses that were not attached, on various dates because it waited for eight years to file the collection case. 38
in August and September 2000.34
Issues
the delivery receipts, or even from the date of the price quotation, it
Based on the foregoing, the Court resolves the following issues: chanRoblesvirtualLawlibrary is clear that the complaint was filed within the ten-year prescriptive
period. Contrary to the CA's ruling, laches does not apply.
(1)Whether the claim of Phil-Air was barred by laches;
Whether Phil-Air should reimburse RCJ Lines for the Laches is defined as the failure or neglect for an unreasonable and
(2) unexplained length of time, to do that which by exercising due
counter- bond premium and its alleged unrealized profits;
Whether RCJ Lines proved its alleged unrealized profits diligence, could or should have been done earlier; it is negligence or
(3)arising from the enforcement of the preliminary writ of omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned
attachment; and
it or declined to assert it.42
Whether RCJ Lines proved that Phil-Air breached its
(4)
warranty. While the CA correctly held that prescription and estoppel by laches
are two different concepts, it failed to appreciate the marked
Our Ruling
distinctions between the two concepts.
We grant the petition.
On the one hand, the question of laches is addressed to the sound
discretion of the court.43 The court resolves whether the claimant
Phil-Air's claim is not
asserted its claim within a reasonable time and whether its failure
barred by laches.
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
In general, there is no room to apply the concept of laches when the
assert its claim based on its past actions or lack of action. After all,
law provides the period within which to enforce a claim or file an
what is invoked in instances where a party raises laches as a defense
action in court. Phil-Air's complaint for sum of money is based on a
is the equity jurisdiction of the court.44
written contract of sale. The ten-year prescriptive period under Article
1144 of the Civil Code thus applies.39
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
In the present case, both parties admit the existence and validity of
is asserted or the action is filed in court within the prescriptive
the contract of sale. They recognize that the price quotation dated
period. The court determines the claimant's intent to assert its claim
August 4, 1989, contained the terms and conditions of the sale
by simply measuring the time elapsed from the proper reckoning
contract. They also agree that the price and description of the units
point (e.g., the date of the written contract) to the filing of the action
were indicated on the sales invoice dated November 5, 1990. The
or assertion of the claim.
sales were in fact consummated on various dates between March 5,
1990 and August 29, 1990, as proved by several delivery receipts.
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
The Court therefore can resolve whether Phil-Air's action to enforce
filing of the action in court at any time within the prescriptive
the contract was timely filed even in the apparent absence of a formal
period is generally deemed reasonable, and thus, does not call
or notarized deed of sale.40 More significantly, Rolando Abadilla, Jr.,
for the application of laches. As we held in one case, unless reasons
admitted under oath that the sale was in writing. 41
of inequitable proportions are adduced, any imputed delay within
the prescriptive period is not delay in law that would bar relief. 45
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
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 The same conclusion holds true in the present case; not all the
contravention, of statutory law. Thus, laches cannot, as a rule, abate elements of laches are present. To repeat, Phil-Air filed the complaint
a collection suit filed within the prescriptive period mandated by the with the RTC on April 1, 1998. The time elapsed from August 4, 1989
Civil Code." (the date of the price quotation, which is the earliest possible
reckoning point), is eight years and eight months, well within the ten-
Agra involved an action for collection of a sum of money arising from year prescriptive period. There was simply no delay (second element
an unpaid loan. In resisting payment, the sureties invoked laches and of laches) where Phil-Air can be said to have negligently slept on its
maintained that the creditor-bank with full knowledge of the rights.
deteriorating financial condition of the principal debtor did not take
steps to collect from the latter while still solvent. The sureties thus More significantly, there is no basis for laches as the facts of the
argued that the creditor-bank's action was barred by laches. present case do not give rise to an inequitable situation that calls for
the application of equity and the principle of laches. 48
We found that the sureties failed to prove all the elements of laches,
namely: Phil-Air is not directly liable
conduct on the part of the defendant or one under whom he for the counter-bond premium and
RCJ Lines' alleged unrealized profits.
(1) claims, giving rise to the situation of which complaint is
made and for which the complainant seeks a remedy; The CA and the RTC erred when it held Phil-Air directly liable for the
delay in asserting the complainant's right, the counter-bond premium and RCJ Lines' alleged unrealized profits.
complainant having had knowledge or notice of defendant's Granting that RCJ Lines suffered losses, the judgment award should
(2) have been first executed on the attachment bond. Only if the
conduct and having been afforded an opportunity to
attachment bond is insufficient to cover the judgment award can Phil-
institute a suit;
Air be held liable.49
lack of knowledge or notice on the part of the defendant
(3) that the complainant would assert the right on which he We explain below the purpose of a preliminary attachment, the
bases his claim; and procedure in obtaining it, and the manner of having it lifted.

injury or prejudice to the defendant in the event relief A writ of preliminary attachment is a provisional remedy issued by the
(4) is accorded to the complainant, or the suit is not held court where an action is pending to be levied upon the property or
barred.47 properties of the defendant. The property is held by the sheriff as
security for the satisfaction of whatever judgment that might be
cralawlawlibrary

secured by the attaching party against the defendant. 50

Examining these elements, we found that only the first element was
present. There was no delay (second element) because the creditor-
The grant of the writ is conditioned not only on the finding of the
bank filed the action within the ten-year prescriptive period. Since the
claim was timely filed, the defendants did not lack notice that the court that there exists a valid ground for its issuance. 51 The Rules also
require the applicant to post a bond.
creditor-bank would assert its claim (third element). Nor was the
assertion of the right deemed injurious to the defendants (fourth
Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides
element); the creditor-bank could assert its claim at any time within
the prescriptive period. 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 the attachment is excessive.
and all damages that he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant To reiterate, the discharge under Section 12 takes effect upon posting
was not entitled thereto." of a counter-bond or depositing cash, and after hearing to determine
the sufficiency of the cash deposit or counter-bond. On the other
The enforcement of the writ notwithstanding, the party whose hand, the discharge under Section 13 takes effect only upon showing
property is attached is afforded relief to have the attachment lifted. that the plaintiffs attachment bond was improperly or irregularly
issued, or that the bond is insufficient. The discharge of the
There are various modes of discharging an attachment under Rule attachment under Section 13 must be made only after hearing. 58
57, viz.: (1) by depositing cash or posting a counter-bond under
Section 12;52 (2) by proving that the attachment bond was improperly These differences notwithstanding, the discharge of the preliminary
or irregularly issued or enforced, or that the bond is insufficient under attachment either through Section 12 or Section 13 has no effect on
Section 13;53 (3) by showing that the attachment is excessive under and does not discharge the attachment bond. The dissolution of the
Section 13; and (4) by claiming that the property is exempt from preliminary attachment does not result in the dissolution of
execution under Section 2.54 the attachment bond. Justice Narvasa, writing his separate opinion
in one case, explained: chanRoblesvirtualLawlibrary

RCJ Lines availed of the first mode by posting a counter-bond.

The dissolution of the preliminary attachment upon
Under the first mode, the court will order the discharge of the security given [Section 12], or a showing of its
attachment after (1) the movant makes a cash deposit or posts a irregular or improper issuance [Section 13], does
counter-bond and (2) the court hears the motion to discharge the not of course operate to discharge the sureties on
attachment with due notice to the adverse party. 55 plaintiffs own attachment bond. The reason is
simple. That bond is executed to the adverse
The amount of the cash deposit or counter-bond must be equal to
party,. . . conditioned that the ... (applicant)
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
will pay all the costs which may be adjudged to
judgment that the attaching party may recover in the action. 56 the adverse party and all damages which he may
sustain by reason of the attachment, if the court
The filing of a counter-bond to discharge the attachment applies when shall finally adjudge that the applicant was not
there has already been a seizure of property by the sheriff and all that entitled thereto." Hence, until that determination
is entailed is the presentation of a motion to the proper court, seeking is made, as to the applicant's entitlement to the
approval of a cash or surety bond in an amount equivalent to the attachment, his bond must stand and cannot be
value of the property seized and the lifting of the attachment on the withdrawn.59 [emphasis and underscoring supplied,
basis thereof. The counter-bond stands in place of the property citations omitted] cralawlawlibrary

so released.57
In the present case, the RTC lifted the preliminary attachment after it
To be clear, the discharge of the attachment by depositing cash or heard RCJ Lines' urgent motion to discharge attachment and the latter
posting a counter-bond under Section 12 should not be confused with posted a counter-bond. The RTC found that there was no fraud and
the discharge sanctioned under Section 13. Section 13 speaks of Phil-Air had no sufficient cause of action for the issuance of the writ of
discharge on the ground that the writ was improperly or irregularly the attachment. As a consequence, it ordered Phil-Air to refund the
issued or enforced, or that the attachment bond is insufficient, or that
premium payment for the counter-bond and the losses suffered by P12,000.00. To back this claim, RCJ Lines prepared a summary of the
RCJ Lines resulting from the enforcement of the writ. The CA affirmed daily cash collections of its nine buses on certain days of August and
the RTC ruling in toto. September 2000.

We reverse the CA and RTC rulings. The summary of daily cash collections apparently prepared by one
RCJ Lines employee was in turn based on the reports of the
As discussed above, it is patent that under the Rules, the attachment dispatchers indicating the number of passengers and the amount of
bond answers for all damages incurred by the party against whom the fare collected on a particular trip. Except for one bus which travelled
attachment was issued.60 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.
Thus, Phil-Air cannot be held directly liable for the costs adjudged to
and the damages sustained by RCJ Lines because of the attachment. These documents are insufficient to prove actual damages.
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 In Spouses Yu v. Ngo Yet Te,61 we held that if the claim for actual
adverse party and all damages which he may sustain by damages covers unrealized profits, the amount of unrealized profits
reason of the attachment, if the court shall finally adjudge that must be established and supported by independent evidence of the
the applicant was not entitled thereto." mean income of the business undertaking interrupted by the illegal
seizure.
The RTC, instead of declaring Phil-Air liable for the alleged unrealized
profits and counter-bond premium, should have ordered the execution We explained in Spouses Yu that to merit an award of actual damages
of the judgment award on the attachment bond. To impose direct arising from a wrongful attachment, the attachment defendant must
liability to Phil-Air would defeat the purpose of the attachment bond, prove, with the best evidence obtainable, the fact of loss or injury
which was not dissolved despite the lifting of the writ of preliminary suffered and the amount thereof. Such loss or injury must be of the
attachment. 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
The order to refund the counter-bond premium is likewise erroneous. must be measurable based on specific facts, and not on guesswork or
The premium payment may be deemed a cost incurred by RCJ Lines speculation.62
to lift the attachment. Such cost may be charged against the
attachment bond. Spouses Yu is on all fours with the present dispute because it also
involved a claim for actual damages arising from the illegal
RCJ Lines failed to prove its attachment of the claimant's properties, one of which was a
alleged unrealized profits. passenger bus.

In finding that RCJ Lines suffered damages because of the The claimants in that case attempted to prove actual damages by
attachment, the RTC and the CA gave complete credence to the computing the daily average income of its bus operation based on the
testimony of Rolando Abadilla, Jr. He claimed that RCJ Lines lost value of three ticket stubs sold over five separate days. The claimants
P216,000.00 in unrealized profits for nine days when the buses were likewise cited unused ticket stubs as proof of income foregone when
wrongfully seized. the bus was wrongfully seized.

To arrive at this amount, RCJ Lines alleged that a bus travelling from We found the claimant's evidence insufficient to prove actual
Manila to Ilocos and vice versa earned an average daily income of damages. While we recognized that they suffered some damages, we
held that "[b]y no stretch of the imagination can we consider ticket tendency of such affirmation or promise is to induce the buyer to
sales for five days sufficient evidence of the average daily income of purchase the same, and if the buyer purchases the thing relying
the passenger bus, much less its mean income. Not even the thereon.66
unrebutted testimony of [the claimant] can add credence to such
evidence for the testimony itself lacks corroboration." 63 The question whether there was a breach of warranty is factual.
Consequently, the Court should rely on the factual findings of the CA
Similarly, the evidence adduced by RCJ Lines to show actual damages and RTC, which are generally deemed binding and conclusive to the
fell short of the required proof. Its average daily income cannot be Court. More so in a Rule 45 petition where only questions of law can
derived from the summary of daily cash collections from only two be raised. Further, factual findings of the RTC, when affirmed by the
separate occasions, i.e., August 22-23 and September 2-3, 2000. The CA, are conclusive on the Court when supported by the evidence on
data submitted is too meager and insignificant to conclude that the record.67
buses were indeed earning an average daily income of P12,000.00.
The evidence on record does not support the findings of the CA and
More significant, the person who prepared the unsigned summary of RTC.
daily cash collections was not presented before the RTC to verify and
explain how she arrived at the computation. The dispatchers who We emphasize that there are recognized cases where the Court can
prepared the collection reports were likewise not presented; some of disregard the factual findings of the RTC and CA. In these cases, the
the reports were also unsigned. While the summary was approved by Court draws its own conclusion based on the evidence on record. 68
Rolando Abadilla, Jr., his testimony on the alleged unrealized profits
was uncorroborated and self-serving. In this case, Phil-Air denies that it breached its express warranty and
strongly argues that the CA and RTC completely ignored its evidence
Nonetheless, we recognize that RCJ Lines suffered some form of while it sustained the bare allegations of Rolando Abadilla, Jr.
pecuniary loss when two of its buses were wrongfully seized, although
the amount cannot be determined with certainty. We agree with Phil-Air. Our examination of the record reveals that the
RTC and CA manifestly overlooked certain relevant facts not disputed
We note that in its prayer for the issuance of the writ of preliminary by the parties which, if properly considered, would justify a different
attachment, Phil-Air alleged that RCJ Lines was guilty of fraud in conclusion.
entering into the sale transaction. A perusal of the record, however,
would show that Phil-Air failed to prove this bare assertion. This To prove that Phil-Air breached its express warranty, RCJ Lines
justifies an award of temperate or moderate damages in the amount presented the following testimonial and documentary evidence: chanRoblesvirtualLawlibrary

of Php 50,000.00.64
Rolando Abadilla, Jr. who claimed that their employees
The allegation of breach
reported the defect of the units to him and to his late
of express warranty was
father. His late father allegedly demanded Phil-Air to
notproved. 1)
repair the defects. But despite repeated verbal demands,
We are not convinced that Phil-Air breached its express warranty. RCJ Phil-Air purportedly failed to comply with its one-year
Lines had no right to recoupment in diminution of the price. 65 warranty on parts and labor.
Two RCJ Lines employees who claimed that they experienced firsthand
The Civil Code defines an express warranty as any affirmation of fact 2)
the inefficient cooling of the units.
or any promise by the seller relating to the thing if the natural
The general manager of Carrier Philippines who testified 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
that the Carrier 240 model was not suitable for buses with
3) letter to Phil-Air to demand the repairs.74
a capacity of more than 35 passengers, like those operated
by RCJ Lines. More tellingly, Rolando Abadilla, Jr. admitted that they issued the
Summary of expenses, sales invoices, provisional receipts, post-dated checks to Phil-Air to cover the balance of the purchase
and statements of accounts issued by other suppliers and price sometime in 1992, viz-
shops (Car Cool Philippines, Inc. and Sta. Rosa Motor
4) Mr. Witness is it not in this case that you personally
Works, Inc.) engaged by RCJ Lines during the period of
warranty to repair the defective units, amounting to issued three (3) checks draws against the name Rolando
Q.
P208,132.00 Abadilla and Susan or Rolando Abadilla, and this was some
time in 1992?
Commercial invoice for the $68,780.00 US Dollars worth of
5) new units bought from another supplier after the lapse of A. Yes, Sir.
warranty to replace the units supplied by Phil-Air.69 And you confirm that these were all dated March 31, April
Q.
30 and February 29, 1992?
In defense, Phil-Air claimed that it regularly checked the units and
that during the effectivity of the one-year warranty, RCJ Lines never A. Yes, Sir.
once complained of defects; if there were defects, the latter should
have demanded Phil-Air to perform its warranty in writing; the reason
Despite your claim that these air-conditioning units were
it had no proof it made repairs and delivered spare parts was defective and despite your claim that these air-
precisely because it was not apprised of any defect; and that the conditioning units were not repaired by plaintiff, hence
testimonies of the RCJ Lines witnesses were self-serving. 70 you referred them for repair to other companies who are
Q.
not authorized, do you still affirm the fact that you
The RTC noted that Phil-Air did not present evidence to rebut the issued the postdated checks, the total of which is exactly
allegation of breach.71 Phil-Air instead opposed the admission of the the balance of the purchase price as quoted in the price
documentary evidence of RCJ Lines for failing to comply with the best quotation, yes or no? [Emphasis supplied]
evidence rule.72
A. Yes, Sir.75
We hold that the evidence that RCJ Lines submitted failed to prove xxx
breach of express warranty. cralawlawlibrary

As to the testimonial evidence 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
The testimonies of the RCJ Lines witnesses were self-serving and as early as 1991 that the units were defective and that Phil-Air
uncorroborated. refused to perform its warranty despite repeated demands, we
wonder why RCJ Lines still issued the post-dated checks in 1992 to
The claim of Rolando Abadilla, Jr. that his late father verbally cover the balance of the purchase price.
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 The record also reveals that Car Cool Philippines, Inc. and Sta. Rosa
Motor Works, Inc. were not authorized by the Carrier brand to repair In this regard, we note that the right of the buyer to the recoupment
the units, a fact not denied by Rolando Abadilla, Jr. 77 It was likewise in the diminution of the price under Article 1599 (1) should be read
established that some of the parts/items purportedly provided by the together with Article 1586 of the Civil Code, 80 which provides that: chanRoblesvirtualLawlibrary

other suppliers were expressly excluded from the list of parts/items

that Phil-Air was supposed to supply, again, a fact admitted by Art. 1586. In the absence of express or implied
Rolando Abadilla, Jr.78 It was likewise unclear that the repairs made agreement of the parties, acceptance of the goods
by the other service providers were done on the same buses on which by the buyer shall not discharge the seller from
the subject units were installed.79 liability in damages or other legal remedy for
breach of any promise or warranty in the contract
We also find glaring the fact that RCJ Lines did not respond to the
of sale. But, if, after acceptance of the goods,
April 7, 1992 demand letter sent by Phil-Air, viz. -
the buyer fails to give notice to the seller of
the breach in any promise of warranty within a
Dear Mr. Abadilla,
reasonable time after the buyer knows, or ought to
know of such breach, the seller shall not be
I have been trying to get in touch with you and
liable therefor.
Junjun the past several weeks but have been
cralawlawlibrary

unsuccessful xxx The two checks that you used to The obvious purpose of the notice is to protect the seller against
partly pay for the four units bus air conditions belated claims. If the seller is not duly notified, he is prevented from
[sic] were all dishonored by the bank [because making prompt investigation to determine the cause and extent of his
they were drawn against insufficient funds]. liability.81 Consequently, he is barred from repairing or rectifying
whatever defects the goods sold had.
We are but a small company and our cash flow was
adversely affected by the return of the checks, RCJ Lines failed to convince us that it notified Phil-Air of the breach of
xxx It would mean so much if you could somehow warranty within a reasonable time. In truth, we are not convinced at
help us replenished these checks, xxx We look all that it had even notified Phil-Air. Although Article 1586 does not
forward to hearing from you Respectfully, we require that the notice to the seller be in writing, we cannot accept
remain. the claim of Rolando Abadilla, Jr. that his late father verbally notified
Phil-Air of the defects, without violating the rule on hearsay.
Yours truly,
Also, the testimonies of the two RCJ Lines employees that they
Ricardo Cokieng
cralawlawlibrary

experienced firsthand the insufficient cooling of the units were self-

serving and uncorroborated by a disinterested party.
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
Further, the reliance of the CA and the RTC on the testimony 82 of the
not understand why it ignored Phil-Air's written demand to replenish
general manager of Carrier Philippines was misplaced and
the returned checks. We also find it unthinkable that RCJ Lines would
unwarranted. It appears that the computation of the cooling efficiency
spend for parts and services from other suppliers and
of the Carrier 240 model was merely theoretical, based only on the
providers, during the period of warranty, without demanding first in
specifications of the model and not on actual test, viz. —
writing that Phil-Air make good its express warranty.
Q: Have you seen RCJ Bus? indeed lost. The counsel for RCJ Lines requested that the evidence be
conditionally accepted and marked, which the trial court granted.
A: I did see.
Nowhere on record, however, was it ever established that the
xxx originals were later submitted. It was also not shown that the
With respect to car aircon Paris 240 installed, have you originals were indeed lost, which could have justified the submission
Q: of secondary evidence.84 The RTC simply ignored this fact when it
seen this bus?
finally decided the case.
A: No, I did not.
Conclusion
Mr. Witness, this case involves a particular product a
brand of the product that you did not try [sic] but Based on the foregoing analysis, we find- that RCJ Lines failed to
Q:
specifically Paris 240. Have you seen it personally, the prove its allegation that Phil-Air breached its express warranty. RCJ
four units installed? 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
A: No I did not. temperate damages as a result of the wrongful attachment of its
Q: Even one unit? buses and to the refund of the premium payment for the counter-
bond.
A: No Sir.
WHEREFORE, in view of the foregoing, we hereby GRANT the
cralawlawlibrary

The meat of his testimony centered not on the subject units but on petition. The September 15, 2010 decision of the Court of Appeals in
the cooling capacity of the product that Carrier Philippines was then CA-G.R. CV No. 85866 is REVERSED and SET ASIDE.
selling in the market. In fact, he admitted that his role in the
company had nothing to do with repairs of air-conditioning units. ACCORDINGLY, RCJ Lines is DIRECTED to pay:

On this basis, we do not find his testimony conclusive as to the 1. Eight Hundred Forty Thousand Pesos (P840,000.00)
alleged breach of express warranty. It was too tangential and representing the unpaid balance of the purchase price;
speculative. We note that he was not even presented as an expert 2. Interest of twelve percent (12%) per annum on the unpaid
witness. Even if we assume that the computation of the cooling balance to be computed from November 5, 1990 86 until June
capacity of the Carrier 240 was accurate, RCJ Lines still failed to prove 30, 2013;
that it duly and promptly informed Phil-Air of the alleged breach. 3. Interest of six percent (6%) per annum on the unpaid balance
to be computed from July 1, 2013,87 until fully paid;
On the documentary evidence 4. Attorney's fees in the fixed amount of P30,000.00.88
The pieces of documentary evidence submitted by RCJ Lines to prove
The total amount to be recovered shall further be subject to the legal
breach of express warranty failed to comply with the best evidence
interest rate of six percent (6 %) per annum from the finality of this
rule. It is established on record that the sales invoices and provisional
decision until fully paid.89
receipts issued by the other suppliers and service providers were
mere photocopies.83 The counsel of Phil-Air objected to the admission
The attachment bond posted by Phil-Air shall be levied upon to satisfy
of the secondary evidence without proof that the originals were
the P50,000.00 temperate damages awarded to RCJ Lines and the
P82,274.00 refund of the counter-bond premium. the units.

SO ORDERED. chanroblesvirtuallawlibrary
9
 Id. at 72. The repair was
apparently made after the one-year
Velasco,* Del Castillo, Mendoza, and Leonen, JJ., concur. warranty had lapsed.
Brion,** J., (Acting Chairperson)
10
 Id. at 67-69.
Endnotes:
11
  Id. at 70.
1
Rollo, pp. 9-26. The petition is 12
 Id. at 71.
filed under Rule 45 of the Rules of
Court. 13
 RTC Record, pp. 1-7.
2
 Id. at 74-86. The assailed decision 14
Rollo, p. 13.  Phil-Air allegedly
is penned by Associate Justice Amy C.
also filed a criminal case against
Lazaro-Javier, and concurred in by
Rolando Abadilla, Sr. but the case was
Associate Justices Rebecca De Guia-
dismissed due to prescription.
Salvador and Sesinado E. Villon.
15
3  Id. at 76.
 Civil Case No. 98-067, penned by
Presiding Judge Pedro De Leon 16
 Id. at 189-193.
Gutierrez.  Court of Appeals, id. at
22-40; RTC record, pp. 433-452. 17
 RTC Record, pp. 109-110.
4
Rollo, pp. 11 and 75. 18
Rollo, p. 77.
5
 Id. at 30. 19
 Id. at 85.
6
 Id. at 11 and 75. 20
 CA rollo, p. 22 and RTC record,
7 p. 21.
 The complaint in the RTC was filed
against RCJ Lines and Rolando 21
 RTC record, p. 44.
Abadilla, Jr.   Rolando Abadilla,
Sr. died on June 13, 1996. 22
 Id. at 49.
8
Rollo, p. 11. Phil-Air does not 23
Rollo, pp. 76-78.  The writ of
disclose when it allegedly upgraded
attachment was dated December 18, 1998
while the motion to discharge action for non-payment when the. . .
attachment was dated April 14, 1999. balance was not paid instead of
waiting for eight (8) years to file
24
 CA rollo, p. 23 and RTC record, p. its collection case. Respondents, by
62. this was [sic] made to feel secure in
the belief that no action would be
25
Rollo, pp. 14 and 74. filed against them by such
passivity..."
26
 Id. at 86. The dispositive portion
39
of the CA decision reads:  Art. 1144. The following actions
"ACCORDINGLY, the appeal must be brought within ten years from
is DISMISSED for lack of merit  the time the right of action
Costs against the appellant" accrues:chanRoblesvirtualLawlibrary

27
 Id. at 80. (1) Upon a written contract;
(2) Upon an obligation created by law;
28
 Id. at 81. (3) Upon a judgment. (n)
29 40
 Id. at 81-82. See Asian Construction and
Development Corp. v. Cathay Pacific
30
 Id. at 82. Steel Corporation, 636 Phil. 127
(2010) and Mackay v. Spouses
31
 Id. at 83. Caswell, G.R. No. 183872, November
17, 2014, where the Court allowed the
32
 Id. at 82-84. enforcement of claims based on sales
invoices.
33
 RTC record, pp. 362-380.
41
 CA rollo, p. 25.
34
 Id. at 85.
42
Municipality of Carcar v. CFI of
35
 Id. at 16. Cebu, 204 Phil. 719,723 (1982) cited
in Metrobank v. Centro Development
36
 Id. at 30-72. Corp. G.R. No. 180974, June 13, 2012,
672 SCRA 325.
37
 Id. at 89.
43
See Jimenez v. Fernandez, 263 Phil.
38
 Id. at 189-193. RCJ Lines argue: 72, 81 (1990).
"[Phil-Air] could have instituted an
44
Agra, et al v. Philippine National v. Court of Appeals, G.R. No. L-
Bank, 368 Phil. 829, 833 (1999). 50837, December 28, 1992, 216 SCRA
818, 824.
45
 Id.
48
 Supra note 44, at 844
46
 id. citing Chavez v. Bonto-Perez, G.R.
No. 109808, March 1, 1995, 242 SCRA
47
 Id. at 843 citing Catholic Bishop 81.
of Balanga v. CA, G.R. No. 112519,
49
November 14, 1996, 264 SCRA 181, 183,  Section 20 (last paragraph), Rule
per Hermosisima Jr., J.; Go Chi Gun, 57, RULES OF CIVIL PROCEDURE.
et al. v. Co Cho, et al., 96 Phil.
50
622, 623 (1955); Mejia de Lucas v. See Torres v. Satsatin, G.R. No.
Gamponia, 100 Phil. 277, 280-281, 166759, November 25, 2009, 605 SCRA
(1956); Z.E. Lotho, Inc. v. Ice & 453, citing Cuartero v. Court of
Cold Storage Industries, Inc., G.R. Appeals, G.R. No. 102448, August 5,
No. L-16563, December 28, 1961, 3 SCRA 1992, 212 SCRA 260.
744-745; Abraham v. Recto-
51
Kasten, G.R. No. L-16741, January 31,  RULE 57. Preliminary Attachment.
1962, 4 SCRA 298; Custodio v. Section 1. Grounds upon
Casiano, G.R. No. L-18977, December which attachment may
27, 1963, 9 SCRA 841; Nielson & Co., issue.
Inc. v. Lepanto Consolidated Mining
Co., G.R. No. L-21601, December 17, At the commencement of the
1966, 18 SCRA 1040; Miguel v. action or at any time
Catalino, G.R. No. L-23022, November before entry of judgment,
29, 1968, 26 SCRA 234; Yusingco v. a plaintiff or any proper
Ong Hing Lian, G.R. No. L-26523, party may have the
December 24, 1971,' 42 SCRA property of the adverse
589; Perez v. Ong Chua, G.R. No., party attached as security
116732, September 23, 1982, 116 SCRA for the satisfaction of
732; Rafols v. Barba, G.R. No. L- any judgment that may be
28446, December 13, 1982, 119 SCRA recovered in the following
146, 148; Chung Ka Bio v. cases:chanRoblesvirtualLawlibrary

Intermediate Appellate Court, 246

Phil. 556 (1988); Claverias v. (a) In an action for the
Quingco, G.R. No. 77744, March 6, recovery of a specified
1992, 207 SCRA 66, 83; Buenaventura amount of money or
damages, other than moral of a fraud in contracting
and exemplary, on a cause the debt or incurring the
of action arising from obligation upon which the
law, contract, quasi- action is brought, or in
contract, delict or quasi- the performance thereof;
delict against a party who (e) In an action against a
is about to depart from party who has removed or
the Philippines which disposed of his property,
intent to defraud his or is about to do so, with
creditors; intent to defraud his
(b) In an action for money creditors; or
or property embezzled or (f)  In an action against
fraudulently misapplied or a party who does not
converted to his own use reside and is not found in
by a public officer, or an the Philippines, or on
officer of a corporation, whom summons may be served
or an attorney, factor, by publication.
52
broker agent, or clerk, in  Sec. 12. Discharge of attachment
the course of his upon giving counter-bond.
employment as such, or by After a writ of attachment
other person in a has been enforced, the
fiduciary capacity, or for party whose property has
a willful violation of been attached, or the
duty; person appearing on his
(c) In an action to behalf, may move for the
recover the possession of discharge of the
property unjustly or attachment wholly or in
fraudulently taken, part on the security
detained or converted, given. The court shall,
when the property, or any after due notice and
part thereof, has been hearing, order the
concealed, removed, or discharge of the
disposed of to prevent its attachment if the movant
being found or taken by makes a cash deposit, or
the applicant or an files a counter-bond
authorized person; executed to the attaching
(d) In an action against a party with the clerk of
party who has been guilty the court where the
application is made, in an insufficient, and the
amount equal to that fixed party furnishing the same
by the court in the order fail to file an additional
of attachment, exclusive counter-bond, the
of costs. But if the attaching party may apply
attachment is sought to be for a new order of
discharged with respect to attachment.
53
a particular property, the Sec. 13. Discharge of attachment on
counter-bond shall be other grounds.
equal to the value of that The party whose property
property as determined by has been ordered attached
the court. In either case, may file a motion with the
the cash deposit or the court in which the action
counter-bond shall secure is pending, before or
the payment of any after levy or even after
judgment that the the release of the
attaching party may attached property, for an
recover in the action. A order to set aside or
notice of the deposit discharge the attachment
shall forthwith be served on the ground that the
on the attaching party. same was improperly or
Upon the discharge of an irregularly issued or
attachment in accordance enforced, or that the bond
with the provisions of is insufficient. If the
this section, the property attachment is excessive,
attached, or the proceeds the discharge shall be
of any sale thereof, shall limited to the excess. If
be delivered to the party the motion be made on
making the deposit or affidavits on the part of
giving the counter-bond, the movant but not
or to the person appearing otherwise, the attaching
on his behalf, the deposit party may oppose the
or counter-bond aforesaid motion by counter-
standing in place of the affidavits or other
property so released. evidence in addition to
Should such counter-bond that on which the
for any reason to be found attachment was made. After
to be or become due notice and hearing,
59
the court shall order the  Id.
setting aside or the
60
corresponding discharge of See Carlos v. Sandoval, 508 Phil.
the attachment if it 260, 263 (2005).
appears that it was
61
improperly or irregularly  543 Phil. 389, 400 (2007),
issued or enforced, or citing Public Estates Authority v.
that the bond is Chu, G.R. No. 145291, September 21,
insufficient, or that the 2005, 470 SCRA 495, 503
attachment is excessive, and Villafuerte v. Court of
and the defect is not Appeals, G.R. No.  134239, May 26,
cured forthwith. 2005, 459 SCRA 58, 59.
54
 WILLARD B. RIANO, CIVIL PROCEDURE -
62
A Restatement for the Bar (2007), p.  Id. Citations omitted.
456.
63
 Id. at 402.
55
 SECTION 12, RULE 57, RULES OF CIVIL
64
PROCEDURE, See K.O. Glass v.  Id. at 403.
Valemuela, 202 Phil. 141, 143
65
(1985), Belisle Investment & Finance  Article 1599 (1), CIVIL CODE,
Co., Inc. v. State Investment House, provides:chanRoblesvirtualLawlibrary

Inc., 235 Phil. 633, 634 (1987),

cited in Herrera, Remedial Law, Vol. Art. 1599. Where there is a breach of
Ill (2006), p. 41. warranty by the seller, the buyer may,
at his election: chanRoblesvirtualLawlibrary

56
 SECTION 12, RULE 57, RULES OF CIVIL
PROCEDURE. (1) Accept or keep the goods and set
up against the seller, the breach of
57
 Justice Narvasa, writing his warranty by way of recoupment in
separate opinion in Mindanao Savings diminution or extinction of the price;
and Loans Association, Inc. v. Court
of Appeals, 254 PHIL. 480, 485-488 xxx
(1989).
66
 Art. 1546, CIVIL CODE. -
58
 Peroxide Philippines Corporation v.
Court of Appeals, 276 Phil. 980 Any affirmation of fact or any promise
(1991). by the seller relating to the thing is
an express warranty. No affirmation of
the value of the thing, nor any specific evidence on which they are
statement purporting to be a statement based; (9) when the facts set forth in
of the seller's opinion only, shall be the petition as well as in the
construed as a warranty, unless the petitioner's main and reply briefs are
seller made such affirmation or not disputed by the respondent; (10)
statement as an expert and it was when the findings of facts are
relied upon by the buyer. premised on the supposed absence of
evidence and contradicted by the
67
First United Constructors Corporation evidence on record; and (11) when the
v. Bayanihan Automotive Court of Appeals manifestly overlooked
Corporation, G.R. No. 164985, January certain relevant facts not disputed by
15, 2014, 713 SCRA 354, the parties, which, if properly
citing Dimaranan v. Heirs of Spouses considered, would justify a different
Hermogenes Arayata and Flaviana conclusion. See Pilipinas Shell
Arayata, G.R. No. 184193, March 29, Petroleum Corporation v. Gobonseng,
2010, 617 SCRA 101. Jr., 528 Phil. 724, 735 (2006).
68 69
 The exceptions to the general rule  RTC-TSN dated August 9, 2001, p.
that the findings of facts of the RTC 581.
and the CA are deemed conclusive and
70
binding to this Court are the Rollo, pp. 15-25.
following: (1) when the findings are
71
grounded entirely on speculation,  RTC Record, p. 412.
surmises or conjectures; (2) when the
72
inference made is manifestly mistaken,  Id. at 538-542.
absurd or impossible; (3) when there
73
is grave abuse of discretion; (4) when  Section 36 of Rule 130, REVISED
the judgment is based on a RULES ON EVIDENCE.
misapprehension of facts; (5) when the
74
findings of facts are conflicting; (6)  RTC-TSN dated August 9, 2001, pp.
when in making its findings the Court 560-586.
of Appeals went beyond the issues of
75
the case, or its findings are contrary  Id. at 576.
to the admissions of both the
76
appellant and the appellee; (7) when  RTC record, pp. 346-360. RCJ Lines
the findings are contrary to .the admitted that the units were installed
trial court; (8) when the findings are sometime in January 1991. Thus, the
conclusions without citation of one-year warranty.
shall be deemed to have been done on
77
 RTC-TSN dated August 9, 2001, p. November 5, 1990.
573.
87
 The interest on forbearance of
78
 Id. at 575. money was reduced to six percent (6%)
by the Bangko Sentral ng Pilipinas
79
 Id. at 574. It was only shown that through BSP Circular No. 799 which
the buses had the same plate numbers amended Central Bank Circular No. 905.
but not the same motor or chassis BSP Circular No 799, which took effect
number. on July 1, 2013.
80 88
 De Leon, Comments and Cases on  Supra note 60.
Sales and Lease, p. 377 (2005).
89
 Section 1 of BSP Circular No. 799
81
 Id. at 350. dated July 1, 2013.
82
 RTC-TSN dated March 6,2003, pp.
638-656.
83
 RTC-TSN dated March 26, 2001 pp.
538-541.
84
 Section 3, Rule 130, REVISED RULES
ON EVIDENCE.
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
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.

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.

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.

RCJ Lines claimed that it was also entitled to be reimbursed for costs and damages
occasioned by the enforcement of the writ of attachment.

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:
DIGEST 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
Phil-Air Conditioning Center (Phil-Air) filed this petition for review on certiorari or file an action in court. Phil-Air’s complaint for sum of money is based on a written
contract of sale. The ten-year prescriptive period under Article 1144 of the Civil
On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air Code thus applies.
sold to respondent RCJ Lines four Carrier Paris 240 air conditioning units for buses
(units). The units included compressors, condensers, evaporators, switches, wiring, In the present case, both parties admit the existence and validity of the contract of
circuit boards, brackets, and fittings. 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
Phil-Air allegedly performed regular maintenance checks on the units pursuant to description of the units were indicated on the sales invoice.
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. 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
All the post-dated checks were dishonored when Phil-Air subsequently presented been done earlier; it is negligence or omission to assert a right within a reasonable
them for payment. Check No. 479759 was returned because it was drawn against time, warranting a presumption that the party entitled to assert it either has
insufficient funds, while Check Nos. 479760 and 479761 were returned because abandoned it or declined to assert it.
payments were stopped.
While the CA correctly held that prescription and estoppel by laches are two different Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides that “the party
concepts, it failed to appreciate the marked distinctions between the two concepts. 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
The court resolves whether the claimant asserted its claim within a reasonable that the latter will pay all the costs that may be adjudged to the adverse party
time and whether its failure to do so warrants the presumption that it either has and all damages that he may sustain by reason of the attachment, if the court
abandoned it or declined to assert it. The court determines the claimant’s intent to shall finally adjudge that the applicant was not entitled thereto.”
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 The enforcement of the writ notwithstanding, the party whose property is attached is
court. afforded relief to have the attachment lifted. There are various modes of discharging
an attachment under Rule 57, viz.:
On the other hand, if the law gives the period within which to enforce a claim or file (1) by depositing cash or posting a counter-bond under Section 12;
an action in court, the court confirms whether the claim is asserted or the action is (2) by proving that the attachment bond was improperly or irregularly issued or
filed in court within the prescriptive period. The court determines the claimant’s enforced, or that the bond is insufficient under Section 13;
intent to assert its claim by simply measuring the time elapsed from the proper  (3) by showing that the attachment is excessive under Section 13; and (4) by
reckoning point (e.g., the date of the written contract) to the filing of the action or claiming that the property is exempt from execution under Section 2.
assertion of the claim.
RCJ Lines availed of the first mode by posting a counter-bond.
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 Under the first mode, the court will order the discharge of the attachment after (1)
at any time within the prescriptive period is generally deemed reasonable, and the movant makes a cash deposit or posts a counterbond and (2) the court hears
thus, does not call for the application of laches. As we held in one case, unless the motion to discharge the attachment with due notice to the adverse party.
reasons of inequitable proportions are adduced, any imputed delay within the
prescriptive period is not delay in law that would bar relief. 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-
Not all the elements of laches are present. To repeat, Phil-Air filed the complaint bond shall secure the payment of any judgment that the attaching party may recover
with the RTC on April 1, 1998. The time elapsed from August 4, 1989 (the date of in the action.
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 The discharge under Section 12 takes effect upon posting of a counter-bond or
(second element of laches) where Phil-Air can be said to have negligently slept on depositing cash, and after hearing to determine the sufficiency of the cash deposit or
its rights. there is no basis for laches as the facts of the present case do not give rise counter-bond. On the other hand, the discharge under Section 13 takes effect only
to an inequitable situation that calls for the application of equity and the principle of upon showing that the plaintiff’s attachment bond was improperly or irregularly
laches. issued, or that the bond is insufficient. The discharge of the attachment under
Section 13 must be made only after hearing.
2. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines’
alleged unrealized profits. 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.
A writ of preliminary attachment is a provisional remedy issued by the court where Thus, Phil-Air cannot be held directly liable for the costs adjudged to and the
an action is pending to be levied upon the property or properties of the defendant. damages sustained by RCJ Lines because of the attachment. Section 4 of Rule 57
The property is held by the sheriff as security for the satisfaction of whatever positively lays down the rule that the attachment bond will pay “all the costs which
judgment that might be secured by the attaching party against the defendant. 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
The grant of the writ is conditioned not only on the finding of the court that there applicant was not entitled thereto.”
exists a valid ground for its issuance. The Rules also require the applicant to post a
bond. 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, 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.
Article 1120. Possession is interrupted for the purposes of prescription,
naturally or civilly. (1943)

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:

In all these cases, the period of the interruption shall be counted for the
prescription. (1946a)

Article 1125. Any express or tacit recognition which the possessor may make of
the owner’s right also interrupts possession. (1948)

Article 1126. Against a title recorded in the Registry of Property, ordinary

CHAPTER 2 prescription of ownership or real rights shall not take place to the prejudice of a
Prescription of Ownership and Other Real Rights third person, except in virtue of another title also recorded; and the time shall
begin to run from the recording of the latter.
Article 1117. Acquisitive prescription of dominion and other real rights may be
ordinary or extraordinary. As to lands registered under the Land Registration Act, the provisions of that
special law shall govern. (1949a)
Ordinary acquisitive prescription requires possession of things in good faith and
with just title for the time fixed by law. (1940a) 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 1118. Possession has to be in the concept of an owner, public, peaceful
and uninterrupted. (1941)
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
Article 1119. Acts of possessory character executed in virtue of license or by
of good faith in the prescription of ownership and other real rights. (1951)
mere tolerance of the owner shall not be available for the purposes of possession.
(1942)
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 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.

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 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:
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 Resolution 2 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 Decision 3 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
CASES 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,
1. ABALOS VS. HEIRS OF TORIO GR. 175444, DECEMBER 14, 2011
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
THIRD DIVISION subject lot, but they refused to heed the demand of respondents forcing
respondents to file the complaint.4
G.R. No. 175444               December 14, 2011
Jaime and the Spouses Salazar filed their Answer with Counterclaim, denying
JAIME ABALOS and SPOUSES FELIX SALAZAR and CONSUELO the material allegations in the Complaint and asserting in their Special and
SALAZAR, GLICERIO ABALOS, HEIRS OF AQUILINO ABALOS, namely: Affirmative Defenses that: respondents' cause of action is barred by acquisitive
SEGUNDA BAUTISTA, ROGELIO ABALOS, DOLORES A. ROSARIO, prescription; the court a quo has no jurisdiction over the nature of the action and
FELICIDAD ABALOS, ROBERTO ABALOS, JUANITO ABALOS, TITA the persons of the defendants; the absolute and exclusive owners and
ABALOS, LITA A. DELA CRUZ AND HEIRS OF AQUILINA ABALOS, possessors of the disputed lot are the deceased predecessors of defendants;
namely: ARTURO BRAVO, PURITA B. MENDOZA, LOURDES B. AGANON, defendants and their predecessors-in-interest had been in actual, continuous
and peaceful possession of the subject lot as owners since time immemorial; In its Decision dated June 14, 2005, the RTC ruled in favor of Jaime and the
defendants are faithfully and religiously paying real property taxes on the Spouses Salazar, holding that they have acquired the subject property through
disputed lot as evidenced by Real Property Tax Receipts; they have prescription. Accordingly, the RTC dismissed herein respondents' complaint.
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 Aggrieved, herein respondents filed a petition for review with the CA assailing
filing of their Answer.5 the Decision of the RTC.

On the same date as the filing of defendants' Answer with Counterclaim, herein On June 30, 2006, the CA promulgated its questioned Decision, the dispositive
petitioners filed their Answer in Intervention with Counterclaim. Like the portion of which reads, thus:
defendants, herein petitioners claimed that their predecessors-in-interest were
the absolute and exclusive owners of the land in question; that petitioners and WHEREFORE, the petition is GRANTED. The Decision dated June 14, 2005 of
their predecessors had been in possession of the subject lot since time the Regional Trial Court, Branch 69, Lingayen, Pangasinan is hereby
immemorial up to the present; they have paid real property taxes and introduced REVERSED and SET ASIDE. In its stead, a new one is entered reinstating the
improvements thereon.6 Decision dated December 10, 2003 of the Municipal Trial Court of Binmaley,
Pangasinan.
After the issues were joined, trial ensued.
SO ORDERED.9
On December 10, 2003, the MTC issued a Decision, the dispositive portion of
which reads as follows: 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.
WHEREFORE, in view of the foregoing consideration[s], the Court adjudged the
case in favor of the plaintiffs and against the defendants and defendants- Hence, the instant petition based on a sole assignment of error, to wit:
intervenors 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
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THAT THE
Norte, Binmaley, Pangasinan with an area of 2,950 sq. m., more or less,
PETITIONERS HEREIN ARE NOW THE ABSOLUTE AND EXCLUSIVE
bounded and described in paragraph 3 of the Complaint[)]; ordering the
OWNERS OF THE LAND IN QUESTION BY VIRTUE OF ACQUISITIVE
defendants and defendants-intervenors to remove their respective houses
PRESCRIPTION.10
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 The main issue raised by petitioners is whether they and their predecessors-in-
defendants-intervenors will finally vacate the premises; furthermore, defendants interest possessed the disputed lot in the concept of an owner, or whether their
and defendants-intervenors are also ordered to pay, either singly or jointly, the possession is by mere tolerance of respondents and their predecessors-in-
amount of ₱10,000.00 as and by way of attorney's fees and costs of suit. interest. 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.
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 intervenors 11 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 (j) When the findings of fact are premised on the supposed absence of evidence
concerned, the judgment of the MTC had already become final and executory. and contradicted by the evidence on record; or

It also bears to point out that the main issue raised in the instant petition, which (k) When the CA manifestly overlooked certain relevant facts not disputed by the
is the character or nature of petitioners' possession of the subject parcel of land, parties, which, if properly considered, would justify a different conclusion. 15
is factual in nature.
In the present case, the findings of fact of the MTC and the CA are in conflict
Settled is the rule that questions of fact are not reviewable in petitions for review with those of the RTC.
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 After a review of the records, however, the Court finds that the petition must fail
must be distinctly set forth." as it finds no error in the findings of fact and conclusions of law of the CA and
the MTC.
Doubtless, the issue of whether petitioners possess the subject property as
owners, or whether they occupy the same by mere tolerance of respondents, is Petitioners claim that they have acquired ownership over the disputed lot
a question of fact. Thus, it is not reviewable. through ordinary acquisitive prescription.

Nonetheless, the Court has, at times, allowed exceptions from the Acquisitive prescription of dominion and other real rights may be ordinary or
abovementioned restriction. Among the recognized exceptions are the following: 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,
(a) When the findings are grounded entirely on speculation, surmises, or acquisitive prescription can only be extraordinary in character which requires
conjectures; uninterrupted adverse possession for thirty (30) years.18

(b) When the inference made is manifestly mistaken, absurd, or impossible; 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
(c) When there is grave abuse of discretion; 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
(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;
In the instant case, it is clear that during their possession of the property in
question, petitioners acknowledged ownership thereof by the immediate
(f) When in making its findings the CA went beyond the issues of the case, or its
predecessor-in-interest of respondents. This is clearly shown by the Tax
findings are contrary to the admissions of both the appellant and the appellee;
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,
(g) When the CA’s findings are contrary to those by the trial court; respondents' immediate predecessor-in-interest.21 Petitioners never disputed
such an acknowledgment. Thus, having knowledge that they nor their
(h) When the findings are conclusions without citation of specific evidence on predecessors-in-interest are not the owners of the disputed lot, petitioners'
which they are based; 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
(i) When the facts set forth in the petition as well as in the petitioner’s main and agrees with the CA that petitioners' possession of the lot in question was by
reply briefs are not disputed by the respondent; 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 Based on the foregoing, respondents [Jaime Abalos and the Spouses Felix and
constitute the foundation of a prescriptive right, must be en concepto de dueño, Consuelo Salazar] have not inherited the disputed land because the same was
or, to use the common law equivalent of the term, that possession should be shown to have already been validly sold to Marcos Torio, who, thereupon,
adverse, if not, such possessory acts, no matter how long, do not start the assigned the same to his son Vicente, the father of petitioners [herein
running of the period of prescription. 23 respondents]. A valid sale was amply established and the said validity subsists
because the deed evidencing the same was duly notarized.
Moreover, the CA correctly held that even if the character of petitioners'
possession of the subject property had become adverse, as evidenced by their There is no doubt that the deed of sale was duly acknowledged before a notary
declaration of the same for tax purposes under the names of their predecessors- public. As a notarized document, it has in its favor the presumption of regularity
in-interest, their possession still falls short of the required period of thirty (30) and it carries the evidentiary weight conferred upon it with respect to its due
years in cases of extraordinary acquisitive prescription. Records show that the execution. It is admissible in evidence without further proof of its authenticity and
earliest Tax Declaration in the name of petitioners was in 1974. Reckoned from is entitled to full faith and credit upon its face.28
such date, the thirty-year period was completed in 2004. However, herein
respondents' complaint was filed in 1996, effectively interrupting petitioners' Indeed, settled is the rule in our jurisdiction that a notarized document has in its
possession upon service of summons on them. 24 Thus, petitioners’ possession favor the presumption of regularity, and to overcome the same, there must be
also did not ripen into ownership, because they failed to meet the required evidence that is clear, convincing and more than merely preponderant;
statutory period of extraordinary prescription. 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
This Court has held that the evidence relative to the possession upon which the assailed deed of sale.
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 WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of
part of the CA in holding that petitioners failed to present competent evidence to the Court of Appeals in CA-G.R. SP No. 91887 are AFFIRMED.
prove their alleged good faith in neither possessing the subject lot nor their
adverse claim thereon. Instead, the records would show that petitioners' SO ORDERED.
possession was by mere tolerance of respondents and their predecessors-in-
interest.
DIOSDADO M. PERALTA
1avvphi1

Associate Justice
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
WE CONCUR:
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 PRESBITERO J. VELASCO, JR.
of law, theories, issues, and arguments not adequately brought to the attention Associate Justice
of the trial court need not be, and ordinarily will not be, considered by a Chairperson
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 ROBERTO A. ABAD JOSE CATRAL MENDOZA
Associate Justice 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 ESTELA M. PERLAS-BERNABE
wit: Associate Justice

xxxx ATTESTATION
I attest that the conclusions in the above Decision had been reached in 9
 CA rollo, p. 94
consultation before the case was assigned to the writer of the opinion of the
Court’s Division. 10
 Rollo, p. 8.

PRESBITERO J. VELASCO, JR.  Except for Jaime Abalos and the spouses Felix and Consuelo Salazar, all
11

Associate Justice petitioners in the instant petition were intervenors in the case filed with the MTC.
Third Division, Chairperson
12
 See Notice of Appeal, records, p. 274.
CERTIFICATION
 Province of Camarines Sur v. Heirs of Agustin Pato, G.R. No. 151084, July 2,
13

Pursuant to Section 13, Article VIII of the Constitution and the Division 2010, 622 SCRA 644, 652, citing M.A. Santander Construction, Inc. v.
Chairperson’s Attestation, I certify that the conclusions in the above Decision Villanueva, G.R. No. 136477, November 10, 2004, 441 SCRA 525, 530.
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.  Heirs of Felicidad Vda. de Dela Cruz v. Heirs of Pedro T. Fajardo, G.R. No.
14

184966, May 30, 2011, 649 SCRA 463, 470.

RENATO C. CORONA
Chief Justice  Spouses. Andrada v. Pilhino Sales Corporation, G.R. No. 156448, February
15

23, 2011, 644 SCRA 1, 10.

16
 Civil Code, Art. 1117.
Footnotes
17
 Civil Code, Art. 1134.
 Penned by Associate Justice Magdangal M. de Leon, with Associate Justices
1

Godardo A. Jacinto and Rosalinda Asuncion-Vicente, concurring ; Annex "J" to  Civil Code, Art. 1137; Tan v. Ramirez, G.R. No. 158929, August 3, 2010, 626
18

Petition, rollo, pp. 87-98. SCRA 327, 336; Aguirre v. Heirs of Lucas Villanueva, G.R. No. 169898, October
27, 2006, 505 SCRA 855, 860.
2
 Penned by Associate Justice Magdangal M. de Leon, with Associate Justices
Asuncion-Vicente and Vicente S.E. Veloso, concurring; Annex "L" to Petition, id.  Villanueva v. Branoco, G.R. No. 172804, January 24, 2011, 640 SCRA 308,
19

at 107-109. 320; Imuan v. Cereno, G.R. No. 167995, September 11, 2009, 599 SCRA 423,
433.
3
 Records, pp. 316-324.
20
 Id.
4
 Id. at 1-3.
21
 Exhibit "K," records, p. 264.
5
 Id. at 34-39.
22
 Lamsis v. Donge-e, G.R. No. 173021, October 20, 2010, 634 SCRA 154, 172.
6
 Id. at 10-16.
 Esguerra v. Manantan, G.R. No. 158328, February 23, 2007, 516 SCRA 561,
23
7
 Id. at 273. 573; Marcelo v. Court of Appeals, G.R. No. 131803, April 14, 1999, 305 SCRA
800, 807-808.
8
 See Notice of Appeal, id. at 274.
24
 Article 1120 of the Civil Code provides that "[p]ossession is interrupted for the WON the CA erred in not appreciating that the petitioners herein are now the absolute and
purposes of prescription, naturally or civilly." Article 1123 of the same Code exclusive owners of the land in question by virtue of acquisitive prescription.
further provides that "[c]ivil interruption is produced by judicial summons to the
Held:
possessor."
No. Petitioners failed to present competent evidence to prove their alleged good faith in
 Heirs of Juanita Padilla v. Magdua, G.R. No. 176858, September 15, 2010,
25 neither possessing the subject lot nor their adverse claim thereon. Petitioners claim that they
630 SCRA 573, 584. 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
 American Home Insurance Co. of New York v. F.F. Cruz & Co., Inc., G.R. No.
26
(10) years. Without good faith and just title, acquisitive prescription can only be extraordinary
174926, August 10, 2011. 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
27
 Id. statement admitting that Jaime's house was built on the land of Vicente, respondents'
immediate predecessor-in-interest. Petitioners never disputed such an acknowledgment.
28
 CA rollo, pp. 91-92. 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
 Spouses Palada v. Solidbank Corporation, G.R. No. 172227, June 29,
29
prescription.
2011; Emilio v. Rapal, G.R. No. 181855, March 30, 2010, 617 SCRA 199, 202-
203; Heirs of the Deceased Spouses Vicente S. Arcilla and Josefa Asuncion Moreover, the CA correctly held that even if the character of petitioners' possession of the
Arcilla v. Teodoro, G.R. No. 162886, August 11, 2008, 561 SCRA 545, 564. 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.
DIGEST 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
Facts: service of summons on them.

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:
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

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
Trial Judge Patricio S. de los Reyes Sr., it appears that the 24 December 1934
2. PABALAN VS. HEIRS OF MAAM, SR GR. 174844, MARCH 20, 2013 writ of execution issued in the case was later returned duly served. 9

G.R. No. 174844               March 20, 2013 On 9 December 1981, Simeon Sr., Fabian Sr., Juliana, Olivo, Silvestre Sr.,
Angela, Bonifacia and Estelita, all surnamed Maamo (plaintiffs Maamo),
VEVENCIA ECHIN PABALAN, ET AL., Petitioner, commenced the instant suit with the filing of their complaint for recovery of real
vs. property and damages against Simplecio’s children, Crispiniano, Juanito Sr.,
THE HEIRS OF SIMEON A.B. MAAMO, SR., Respondents. Arsenia and Roberto, all surnamed Palapo (defendants Palapo). 10 In their
amended complaint, plaintiffs Maamo alleged that, as children and heirs of the
DECISION 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
PEREZ, J.:
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
Filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, the petition for the property as administrator. Plaintiffs Maamo further averred that, having
review at bench primarily assails the Decision 1 dated 22 May 2006 rendered by illegally claimed ownership over the western portion of the property after
the Twentieth Division of the Court of Appeals (CA) in CA-G.R. CV No. Simplecio’s death in 1971, defendants Palapo unjustifiably refused to heed their
60769,2 reversing the Decision dated 20 August 1997 in turn rendered by the demands for the return of the litigated section measuring 7,055 square meters. 11
Regional Trial Court, Branch 26, Southern Leyte (RTC) in Civil Case No. R-263. 3
On 10 February 1982, defendants Palapo filed their answer, specifically denying
On 31 December 1910, Onofre Palapo sold in favor of Placido Sy-Cansoy a the material allegations of plaintiffs Maamo’s complaint. Maintaining that they
parcel of land situated in the then Barrio Calapian (now Barangay Estela), inherited the litigated portion from Simplecio, defendants Palapo asserted that
Liloan, Leyte (now Southern), for the stated consideration of ₱86.00. Drawn in
their father, in turn, inherited the same from his brother, Crispiniano Palapo, who On appeal, the foregoing Decision was reversed and set aside in the herein
also succeeded to the rights of Concepcion, the tax declarant as early as 1906. assailed 22 May 2006 Decision rendered by the CA’s Twentieth Division in CA-
By themselves and thru their said predecessors-in-interest, defendants Palapo G.R. CV No. 60769. The CA ruled that plaintiffs Maamo were the true and lawful
insisted that they had been in open, continuous and adverse possession of the owners of the litigated portion, upon the following findings and conclusions: (a)
litigated portion in the concept of owner since 1906, paying the realty taxes due the 29 October 1934 deed Placido executed in favor of Antonia was a mere
thereon long before the Second World War. Even assuming that Antonia affirmation of an earlier sale made on 12 October 1912, hence, the acquisition of
prevailed in the ejectment suit she filed against Simplecio in 1934, defendants the litigated portion by plaintiffs Maamo’s predecessor-in-interest predated
Palapo argued that the causes of action of plaintiffs Maamo’s were already Simplecio’s 17 October 1934 entry thereon; (b) defendants Palapo traced their
barred by prescription, estoppel and laches.12 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
At pre-trial, a commissioner was appointed to conduct an ocular inspection of from Concepcion had been rejected in the 17 December 1934 Decision
the litigated portion and to submit a sketch showing, among other matters, the rendered in Civil Case No. 298 which appears to have been returned duly
metes and bounds thereof. On 15 August 1982, the court-appointed served and executed; and, (e) since the possessory rights of plaintiffs Maamo’s
commissioner submitted a report and sketch, mapping out the 7,055 square predecessor-in-interest had been affirmed and restored, Simplecio’s continued
meter portion in litigation and identifying its boundaries as follows: on the North, possession of the portion in litigation was by mere tolerance and could not,
by Maamo St.; on South by Peter Burset St.; on the East, by the Provincial therefore, ripen into ownership acquired by prescription, laches or estoppel. 20
Road; and, on the West, by Ang Bayon St. 13 As noted in the 29 November 1983
pre-trial order issued in the case, the identity of the portion in litigation was In the meantime, the death of some of the original parties to the case resulted in
admitted by the parties.14 At the trial of the case on the merits, Simeon Sr. took their substitution by their respective heirs. Simeon, Sr. was substituted by his
the witness stand15 and submitted the deeds executed by Onofre and Placido, wife and children, respondents Crispina, Simeon, Jr., Aselita, Remedios,
the documents pertaining to Civil Case No. 298, the tax declarations (TDs) and Evansueda, Carmelita, Manuel, Elizabeth, Adelaida 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 Miguel II, all surnamed Maamo. As a consequence, they were joined in the case
defense evidence, defendants Palapo presented the testimonies of Juanito with the surviving plaintiffs Maamo, (now respondents) Fabian Sr., Juliana,
Palapo and Balbina Galgaw Madlos,17 together with the TDs and receipts which Olivo, Silvestre Sr., Angela, Bonifacia and Estelita, all surnamed Maamo. On
they traced to the TD filed by Concepcion in 1906. 18 defendants Palapo’s side, Roberto was substituted by petitioners Lydia
Veronica, Alily, Beverly and Maricar, all surnamed Palapo. 21 Juanito was,
On 20 August 1997, the RTC rendered a decision, declaring defendants Palapo likewise, substituted by petitioners Generoso, Perla, Juanito Jr., Delia, Raul,
to be the legal owners and possessors of the litigated portion. Finding that Editha and Elvira, all surnamed Palapo. Arsenia was, in turn, substituted by her
Simplecio’s supposed 17 October 1934 forcible entry into the property preceded children, petitioners V[e]vencia, Rogelio, Elizabeth, Josefina, Eusebio, Gavina
the 29 October 1934 deed Placido executed in favor of Antonia, the RTC and Amelita, all surnamed Enchin.
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 Crispiniano was, finally, substituted by his children, petitioners Angelita, Normita,
declared in their TDs which, as a rule, cannot prevail over defendants Palapo’s Apolonia, Bining and Inday, all surnamed Palapo.22
actual possession of the property. Having possessed the litigated portion in the
concept of owner for more than thirty years, defendants Palapo were also On 7 September 2006, the CA issued the second assailed resolution of the
declared to have acquired the property by means of prescription, without need of same date, denying for lack of merit petitioners’ motion for reconsideration of its
title or good faith. Ordered to respect defendants Palapo’s ownership and 22 May 2006 Decision. Aggrieved, petitioners filed the petition at bench, on the
possession of the portion in litigation, the RTC held plaintiffs Maamo liable to following grounds:
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
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 Our perusal of the record shows that the CA correctly ruled that the land to
PETITIONERS’ EVIDENCE TO THE CONTRARY WHICH PREPONDERANTLY which the litigated portion pertains was purchased from Placido by respondents’
ESTABLISHED THAT, BY THEMSELVES AND THRU THEIR predecessor-in-interest, Antonia, on 12 October 1912 and not on 29 October
PREDECESSORS-IN-INTEREST, THEY HAVE BEEN IN OPEN, PUBLIC, 1934, the date of the document in which the former acknowledged the
ADVERSE AND CONTINUOUS POSSESSION THEREOF IN THE CONCEPT transaction in writing.28 Contrary to the RTC’s finding, therefore, Antonia already
OF OWNERS SINCE 20 JULY 1906. owned the property when petitioners’ own predecessor-in-interest, Simplecio,
was alleged to have forcibly entered into the property on 17 October 1934.
2. THE CA GRAVELY ERRED IN DISREGARDING SIMEON SR.’S Considering that Placido was, in turn, established to have purchased the
ADMISSION IN OPEN COURT THAT RESPONDENTS HAVE NOT BEEN IN property from Onofre on 31 December 1910, 29 it was from the latter date that
POSSESSION OF THE PROPERTY FROM 1935 UNTIL THE FILING OF respondents rightfully traced their ownership and possession thereof. Reference
THEIR COMPLAINT IN 1981, SAID ADMISSION BEING A CLEAR to the aforesaid transactions in the body of the 4 December 1934 ejectment
INDICATION THAT THEIR COMPLAINT IS BARRED BY ESTOPPEL AND complaint Antonia filed against Simplecio before the Court of the Justice of the
LACHES. Peace of Liloan, Leyte30 also leave no doubt that the same property was the
subject matter of Civil Case No. 298.
3. THE CA GRAVELY ERRED IN DECLARING RESPONDENTS AS OWNERS
OF THE PROPERTY BY VIRTUE OF PRESCRIPTION UNDER THE CIVIL The area of the property that Antonia acquired in 1912 was, of course, not
CODE. 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;
4. THE CA SERIOUSLY ERRED IN RELYING ON THE JUDGMENT and, on the West, by the property of Miguel Maamo. By the time that the
RENDERED IN CIVIL CASE NO. 298 AS BASIS FOR RESPONDENTS’ property was declared for taxation purposes in the name of Antonia’s husband,
POSSESSION. 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
5. THE CA ALSO ERRED IN DECLARING THAT SIMPLECIO’S POSSESSION
the West, by Ang Bayon St.31 These apparent variances in the boundaries of the
WAS UPON THE TOLERANCE OF RESPONDENTS’ PREDECESSORS-IN-
property were, however, elucidated during the direct examination of Simeon Sr.
INTEREST.23
who explained the permutations said boundaries underwent over the years.
These included the destruction of the Barrio church in 1912 and its subsequent
We find the petition bereft of merit. 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
For the most part, petitioners raise questions of fact which, as a general rule, are property for street construction.32
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 On the other hand, petitioners trace their claim of ownership and possession to
of facts and cannot, therefore, be tasked to go over the proofs presented by the Concepcion who declared a two-hectare parcel of land for taxation purposes in
parties in the lower courts and analyze, assess and weigh them to ascertain if 1906 under TD 832 and from whom her brother, Crispiniano, was alleged in the
the court a quo and the appellate court were correct in their appreciation of the answer to have inherited the same. Contradicting their initial claim that
evidence.25 Among the recognized exceptions to this rule, however is when the Simplecio, in turn, inherited the property from Crispiniano, 33 petitioners later
factual findings of the trial court are, as here, different from those of the asserted that Simplecio directly inherited the property from Concepcion who was
CA.26 Even then, a re-evaluation of factual issues would only be warranted when unmarried and died with issue.34 As a perusal thereof would readily reveal,
the assailed findings are totally bereft of support in the records or are so patently however, TD 832 was filed by Concepcion on 20 July 1906 with respect to a
erroneous as to amount to grave abuse of discretion. So long as such findings parcel of land situated in Barrio of Pandan and identified by the following
are supported by the record, the findings of the Court of Appeals are conclusive boundaries: on the North, by la Playa (the seashore); on the South, by Patrecio
and binding on this Court, even if contrary to those of the trial court.27 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 As noted, the provenance of the foregoing TDs were all traced to TD 832 which
subdivided into three parcels which were all eventually declared for taxation pertained to a property situated in Barrio Pandan and not Barrio Estela, the
purposes in the name of Simplecio. 36 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
Instead of Barrio Pandan which was stated as the location of Concepcion’s from Barrio Estela,44 we find that the CA correctly ruled that petitioners cannot
property in TD 832, our perusal of the TDs that petitioners adduced a quo shows trace their claim of possession and ownership to TD 832 that Concepcion
that the three parcels into which said property was supposedly divided are, obtained in 1906. In contrast, respondents were able to trace their claim to
however, situated in Barrio Estela. The first parcel was declared in the names of Onofre’s 31 December 1910 sale of the property to Placido who, in turn, sold the
Concepcion and Justiniano Palapo under TDs 4173 and 5401 in the years 1922 same to Antonia on 12 October 1912. The TDs Miguel filed with respect to the
and 1958, respectively, and was identified by the following boundaries: on the property also date back to 191845 or four years ahead of the TD’s filed in 1922 in
North, by Cuares St.; on the South, by Bahan St.; on the East, by Palapo St.; the names of Concepcion and Justiniano, over the three parcels into which the
and on the West by Union St. 37 The foregoing boundaries were reproduced in property was purportedly subdivided.  Even more importantly, the stated
1âwphi1

TDs 16670 and 1997 in the name of Concepcion for the years 1971 and 1974, boundaries of the property declared in Miguel’s name are identical to the
respectively.38 It was only in 1975 and 1980, when the property was declared in boundaries of the property identified in the sketch submitted by the court-
the name of Simplecio under TDs 5125 and 4202, respectively, that the appointed commissioner. This cannot be said of the properties declared in the
boundaries of the property were stated as follows: on the North, by the Church names of Concepcion and Justiniano, the boundaries of which were further
Site; on the South, by Cuares St.; on the East, by the Provincial Road; and on altered when they were declared in Simplecio’s name in 1975 and 1980.
the West, by the School Site.39
As determined by the court-appointed commissioner, the total area of the parcel
Declared for taxation purposes in the name of Concepcion under TDs 4175, claimed by respondents measures 14,433 square meters, of which 7,055 square
5411, 16667 and 1994 in the years 1922, 1948, 1971 and 1974, respectively, meters are, in turn, claimed by petitioners. 46 In deciding against respondents, the
the second parcel was, on the other hand, described as delimited by the RTC ruled that the areas of said parcel and, for that matter, the portion in
following boundaries: on the North by Sarvida St.; on the South, by Cuares St.; litigation, were disproportionately larger than the 1,612 square meters stated in
on the East, by Union St.; and on the West, by the property of Antonia the TDs adduced by respondents. It must be borne in mind, however, that what
Bayon.40 When the same parcel was, however, declared in Simplecio’s name in defines the land is not the numerical data indicated as its size or area but,
1975 and 1980 under TDs 5123 and 4204, the boundaries were inexplicably rather, the boundaries or "metes and bounds" specified in its description as
altered in the following wise: on the North, by Cuares and Sarvida St.; on the enclosing the land and indicating its limits. 47 To repeat, the evidence adduced a
South, by the property of Demetrio Palapo; on the East, by the Seashore; and quo shows that the boundaries of the parcel of land purchased by Antonia are
on the West, by the Provincial Road.41 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, Petitioners next fault the CA for supposedly disregarding their evidence to the
16664 and 1993, respectively. Its boundaries were identified as follows: on the effect that Simplecio had been in possession of the property since 1912 as well
North, by the property of Concepcion Palapo; on the South, by the property of as Simeon Sr.’s admission that respondents have not been in possession
Simeon Bajan; on the East, by Palapo St.; and on the West, by Union St. 42 By thereof since 1935. Aside from the fact that the TDs they presented pertain to a
the time this parcel was declared for taxation purposes in Simplecio’s name in different property, however, petitioners conveniently overlook Antonia’s filing of
1975 and 1980 under TDs 5121 and 4205, the boundaries were once again an ejectment complaint against Simplecio in 1934 with respect to the property
altered in the following wise: on the North, by the Barrio Road and the property herein litigated. In the 17 December 1934 Decision rendered in the case, the
of Miguel Maamo; on the South, by the Church Site; on the East, by the Court of the Justice of the Peace of Liloan Leyte significantly determined
Provincial Road; and on the West, by the School Site and Barrio Road. 43 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 As for the supposed fact that possession by tolerance was not among the issues
the issue of material possession.50 Although it does not have the same effect as simplified during the pre-trial of the case, suffice it to say that the same is
res judicata in the form of bar by former judgment which prohibits the subsumed in the second issue identified in the RTC’s 29 November 1983 pre-
prosecution of a second action upon the same claim, demand, or cause of trial order, i.e., "(w)hether or not petitioners and their predecessors-in-interest
action, the rule on conclusiveness of judgment bars the relitigation of particular had been in the actual, physical possession of the land in question in the
facts or issues in another litigation between the same parties and their privies on concept of owners since 1906 up to the present." 64 Since Simplecio's possession
a different claim or cause of action. 51 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
To Our mind, the fact that the writ of execution issued in Civil Case No. 298 was mere argument or doubtful inference. 65 The same may be said of the CA' s
returned duly served52 also lends credence to respondents’ claim that rejection of laches, an equitable doctrine the application of which is controlled by
Simplecio’s possession of the property was upon Miguel’s tolerance. 53 Since equitable considerations.66 It operates not really to penalize neglect or sleeping
acts of a possessory character executed due to license or by mere tolerance of on one's rights, but rather to avoid recognizing a right when to do so would
the owner are inadequate for purposes of acquisitive prescription, 54 petitioners result in a clearly inequitable situation. 67 Unfortunately for petitioners' cause, no
cannot claim to have acquired ownership of the property by virtue of their such situation obtains in the case.
possession thereof since 1935. Under Articles 444 55 and 194256 of the old Civil
Code, possession of real property is not affected by acts of a possessory WHEREFORE, premises considered, the instant petition for review on certiorari
character which are merely tolerated by the possessor, or which are due to his is DENIED for lack of merit.
license.57 Granted that long, continued occupation, accompanied by acts of a
possessory character, affords some evidence that possession has been exerted SO ORDERED.
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 JOSE PORTUGAL PEREZ
defeat in the ejectment suit was clearly upon the tolerance of respondents’ Associate Justice
predecessors-in-interest.
WE CONCUR:
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
ANTONIO T. CARPIO
very least, misplaced. Inasmuch as possession must be adverse, public,
Associate Justice
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 ARTURO D. BRION MARIANO C. DEL CASTILLO
this principle is applicable not only with respect to the prescription of the Associate Justice Associate Justice
dominium as a whole, but, to the prescription of right in rem. 62 Considering that
Article 1119 of the present ESTELA M. PERLAS-BERNABE
Associate Justice
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 ATTESTATION
purposes of possession," the error petitioners impute against the CA for
applying the new Civil Code provisions on prescription is more apparent than I attest that the conclusions in the above Decision were reached m consultation
real. Then as now, possession must be en concepto de dueño or adverse in before the case was assigned to the writer of the opinion of the Court's Division.
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
ANTONIO T. CARPIO 12
 29 January 1982 Answer, id. at 15-20.
Associate Justice
Chairperson, Second Division 13
 15 August 1982 Commissioner’s Report and Sketch, id. at 61-64.

CERTIFICATION 14
 29 November 1983 Pre-Trial Order, id. at 173-175.

Pursuant to Section 13, Article VIII of the Constitution and the Division 15
 TSN, 3 July 1984.
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 16
 Exhibits "A" to "K" and submarkings, folder of exhibits, pp. 1-52; 91-93.
writer of the opinion of the Court's Division.
17
 TSNs, 28 May 1985, 18 November 1986, 22 August 1996.
MARIA LOURDES P. A. SERENO
Chief Justice 18
 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
19

1990.
Footnotes
20
 CA rollo, (CA-G.R. No. 60769), pp. 205-219.
 Penned by CA Associate Justice Pampio A. Abarintos and concurred in by
1

Associate Justices Enrico A. Lanzanas and Apolinario D. Brusclas, Jr. 21

 Records, pp. 735-736; 740; 773-774, (Civil Case No. R-263).
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.
 JMM Promotions and Management, Inc. v. Court of Appeals, G.R. No.
25

139401, 2 October 2002, 390 SCRA 223, 229-230.

6
 Exhibits "E" and submarkings, id. at 46-47.
26
 Manila Electric Company v. Court of Appeals, 413 Phil. 338, 354 (2001).
7
 Exhibit "F," id. at 48
27
 Gonzales v. Court of Appeals, 411 Phil. 232, 242 (2001).
8
 Exhibit "G," id. at 49.
28
 Exhibit "A," folder of exhibits, p. 1.
9
 Exhibit "H" and submarkings, id. at 50.
29
 Exhibt "B," and submarkings, id. at 2-3.
10
 Records, pp. 1-6, (Civil Case No. R-263), 3 December 1981 Complaint.
30
 Exhibits "C," and submarkings, id. at 46-47.
11
 22 July 1983 Amended Complaint, id. at 146-150.
31
 Exhibits "C," "C-1," "C-2," "C-3," "C-4" and "C-5," id. at 4-9.  Buazon v. Court of Appeals, G.R. No. 97749, 19 March 1993, 220 SCRA 182,
50

190.
32
 TSN, 3 July 1984, pp. 22-38.
51
 Heirs of Abadilla v. Galarosa, 527 Phil. 264, 278 (2006).
33
 Records, p. 17, (Civil Case No. R-263).
52
 Exhibit "H" and submarkings, folder of exhibits, p. 50.
34
 TSN, 28 May 1985, p. 10; TSN, 18 July 1996, p. 3.
53
 TSN, 3 July 1984, p. 34.
35
 Exhibit "1-F," folder of exhibits, p. 59.
54
 Lamsis v. Dong-e, G.R. No. 173021, 20 October 2010, 634 SCRA 154, 172.
36
 TSN, 13 June 1986; TSN, 18 July 1996, p. 24.
 Art. 444. Acts which are merely tolerated and those clandestinely executed,
55

37
 Exhibits "1-D" and "1-E," folder of exhibits, pp. 57-58. without knowledge of the possessors of a thing, or by force, do not affect the
possession.
38
 Exhibits "1-B" and "1-C," id. at 55-56.
 Art. 1942. Acts of a possessory character, performed by virtue of the license,
56

39
 Exhibits "1" and "1-A," id. at 53-54. or by mere tolerance on the part of the owner, are of no effect for establishing
possession.
40
 Exhibits "3-B," "3-C," "3-D" and "3-E," id. at 70-73. 57
 Cuayong v. Benedicto, 37 Phil. 781, 793 (1918).
41
 Exhibits "3" and "3-A," id. at 68-69. 58
 Corporacion de PP. Dominicos v. Lazaro, 42 Phil. 119, 127 (1921).
42
 Exhibits "4-B," "4-C," "4-D," "4-E," id. at 80-83.
 SECTION 40. Period of Prescription as to Real Estate. — An action for
59

recovery of the title to, or possession of, real property, or an interest therein, can
43
 Exhibits "4" and "4-A," id. at 78-79.
only be brought within ten years after the cause of such action accrues.
44
 TSN, 24 September 1984, p. 5, TSN, 18 July 1996, p. 7. 60
 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
45
 Exhibits "C," "C-1," "C-2," "C-3," "C-4" and "C-5," folder of exhibits, pp. 4-9. interest in land, uninterruptedly continued for ten years by occupancy, descent,
grants, or otherwise, in whatever way such occupancy may have commenced or
 Records, pp. 61-64, (Civil Case No. R-263), 15 August 1982 Commissioner’s
46
continued, shall vest in every actual occupant or possessor of such land a full
Report and Sketch. 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
47
 Tabuso v. Court of Appeals, 411 Phil. 775, 787 (2001). 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
48
 Exhibit "G," folder of exhibits, p. 49. 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
49
 S.J.Vda. De Villanueva v. Court of Appeals, 403 Phil. 721, 730 (2001). 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.
61
 Seminary of San Carlos v. Municipality of Cebu, 19 Phil. 32, 42 (1911).

62
 Cuaycong v. Benedicto, supra, note 57 at 792-793.

 Esguerra v. Manantan, G.R. No. 158328, 23 February 2007, 516 SCRA 561,
63

573.

64
 Records, (Civil Case No. R-263), p. 175.

 Liga v. Allegro Resources Corp., G.R. No. 175554, 23 December 2008, 575
65

SCRA 310, 320-321.

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