Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
MARGARITA F. CASTRO,
Petitioner,

G.R. No. 183719

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

- versus -

Promulgated:
NAPOLEON A. MONSOD,
Respondent.

February 2, 2011

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court, assailing the Decision[1] dated May 25, 2007 and the Resolution[2] dated
July 14, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 83973.
The antecedents of the case are as follows:

Petitioner is the registered owner of a parcel of land located on Garnet

Street, Manuela Homes, Pamplona, Las Pias City, and covered by Transfer
Certificate of Title (TCT) No. T-36071, with an area of one hundred thirty (130)
square meters (sq.m.). Respondent, on the other hand, is the owner of the property
adjoining the lot of petitioner, located on Lyra Street, Moonwalk Village, Phase 2,
Las Pias City. There is a concrete fence, more or less two (2) meters high,
dividing Manuela Homes from Moonwalk Village.[3]
On February 29, 2000, respondent caused the annotation of an adverse claim
against sixty-five (65) sq.m. of the property of petitioner covered by TCT No. T36071. The adverse claim was filed without any claim of ownership over the
property. Respondent was merely asserting the existing legal easement of lateral
and subjacent support at the rear portion of his estate to prevent the property from
collapsing, since his property is located at an elevated plateau of fifteen (15) feet,
more or less, above the level of petitioners property.[4] Respondent also filed a
complaint for malicious mischief and malicious destruction before the office of
the barangay chairman.[5]
In defiance, petitioner filed a complaint for damages with temporary restraining
order/writ of preliminary injunction before the Regional Trial Court (RTC) of Las
Pias City. Petitioner also prayed that the Register of Deeds of Las Pias City be
ordered to cancel the annotation of the adverse claim on TCT No. T-36071.[6]
Prior to the filing of the case before the RTC, there were deposits of soil and rocks
about two (2) meters away from the front door of the house of
petitioner. As such, petitioner was not able to park her vehicle at the dead-end
portion of Garnet Street. When petitioner noticed a leak that caused the front
portion of her house to be slippery, she hired construction workers to see where the
leak was coming from. The workers had already started digging when police
officers sent by respondent came and stopped the workers from finishing their job.
[7]

Petitioner averred that when she bought the property from Manuela Homes in
1994, there was no annotation or existence of any easement over the property.
Respondent neither asked permission nor talked to her with regard to the use of 65
sq.m. of her property as easement. Upon learning of the adverse claim, she felt
disturbed and experienced sleepless nights for fear that she would not be able to

sell her property.Petitioner admitted that TCT No. 36071 does not cover the open
space at the dead-end portion of Garnet Street.[8]
For his part, respondent claimed that he and his family had been residing
in Moonwalk Village since June 1984. Adjacent to his property is the land of
petitioner in Manuela Homes. When he bought the property in 1983, the land
elevation of Moonwalk Village was almost on the same level as Manuela Homes.
However, sometime in 1985 and 1986, Pilar Development Corporation, the
developer of Manuela Homes, bulldozed, excavated, and transferred portions of the
elevated
land
to
the
lower
portions
of Manuela Homes.
[9]
Thus, Manuela Homes became lower than Moonwalk Village.
Before the said excavation, respondent personally complained to Pilar
Development Corporation and was assured that, as provided by the National
Building Code, an embankment will be retained at the boundary of Manuela
Homes and Moonwalk Village, which is more or less fifteen (15) feet higher than
Manuela Homes.[10]
Manuela Homes retained the embankment consisting of soil and rocks. Respondent
had the open space riprapped with stones as reinforcement against any potential
soil erosion, earthquake, and possible digging by any person.
Respondent asserted that the affidavit of adverse claim was for the annotation of
the lateral and subjacent easement of his property over the property of petitioner, in
view of the latters manifest determination to remove the embankment left by the
developer of Manuela Homes.
On October 11, 2004, the RTC rendered a decision, [11] the dispositive portion of
which reads:
WHEREFORE, premises considered, this court hereby renders judgment: (1)
ordering the cancellation of [respondents] adverse claim at the back of Transfer
Certificate of Title No. T-36071 at the expense of [respondent] Napoleon Monsod;
(2) ordering the said [respondent] to pay the herein [petitioner] the amount of
Php50,000.00 as moral damages; and (3) dismissing [petitioners] claim for actual
damages, attorneys fees, litigation costs and costs of suit and [respondents]
compulsory counterclaim for lack of merit.
SO ORDERED.[12]

The trial court ratiocinated that the adverse claim of respondent was nonregistrable considering that the basis of his claim was an easement and not an
interest adverse to the registered owner, and neither did he contest the title of
petitioner. Furthermore, the adverse claim of respondent failed to comply with the
requisites provided under Section 70 of Presidential Decree No. 1529.[13]
On appeal, the CA reversed the decision of the trial court in a Decision [14] dated
May 25, 2007, the fallo of which reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The
Decision of the Regional Trial Court, Branch 198, Las Pias City dated October 11,
2004 is REVERSED and SET ASIDE. The Court hereby orders the retention of
the annotation at the back of Transfer Certificate of Title No. T-36071, not as an
adverse claim, but a recognition of the existence of a legal easement of subjacent
and lateral support constituted on the lengthwise or horizontal land
support/embankment area of sixty-five (65) square meters, more or less, of the
property of [petitioner] Margarita Castro. The writ of preliminary injunction
issued by this Court on April 18, 2006 is hereby made permanent. [Petitioners]
claim for damages is likewiseDISMISSED.
SO ORDERED.[15]

The CA ruled that while respondents adverse claim could not be sanctioned
because it did not fall under the requisites for registering an adverse claim, the
same might be duly annotated in the title as recognition of the existence of a legal
easement of subjacent and lateral support. The purpose of the annotation was to
prevent petitioner from making injurious excavations on the subject embankment
as to deprive the residential house and lot of respondent of its natural support and
cause it to collapse. Respondent only asked that petitioner respect the legal
easement already existing thereon.[16]
On June 15, 2007, petitioner filed a motion for reconsideration. However, the CA
denied the same in a Resolution[17] dated July 14, 2008.
Hence, this petition.

The issue in this case is whether the easement of lateral and subjacent support
exists on the subject adjacent properties and, if it does, whether the same may be
annotated at the back of the title of the servient estate.
Article 437 of the Civil Code provides that the owner of a parcel of land is the
owner of its surface and of everything under it, and he can construct thereon any
works, or make any plantations and excavations which he may deem proper.
However, such right of the owner is not absolute and is subject to the following
limitations: (1) servitudes or easements,[18] (2) special laws,[19] (3) ordinances,[20] (4)
reasonable requirements of aerial navigation,[21] and (5) rights of third persons.[22]
Respondent filed before the RTC an affidavit of adverse claim, the pertinent
portions of which read:
5. That our adverse claim consists of rights of legal or compulsory easement of
lateral and subjacent support (under the Civil Code) over a portion of the abovedescribed property of owner Margarita F. Castro, that is, covering the lengthwise
or horizontal land support/embankment area of sixty-five (65) square meters,
more or less.
6. That said registered owner has attempted to destroy and/or remove portions of
the existing lateral/subjacent land and cement supports adjoining the said two
properties. In fact, a portion of the easement was already destroyed/removed, to
the continuing prejudice of herein adverse claimant, and that a formal complaint
against said registered owner was filed by the herein adverse claimant before the
Office of the Barangay Chairman of Talon V, Las Pias City and the same proved
futile.[23]

Respondents assertion that he has an adverse claim over the 65 sq.m. property of
petitioner is misplaced since he does not have a claim over the ownership of the
land. The annotation of an adverse claim over registered land under Section 70 of
Presidential Decree 1529[24] requires a claim on the title of the disputed land.
Annotation is done to apprise third persons that there is a controversy over the
ownership of the land and to preserve and protect the right of the adverse claimant
during the pendency of the controversy. It is a notice to third persons that any
transaction regarding the disputed land is subject to the outcome of the dispute.[25]

In reality, what respondent is claiming is a judicial recognition of the existence of

the easement of subjacent and lateral support over the 65 sq. m. portion of
petitioners property covering the land support/embankment area. His reason for the
annotation is only to prevent petitioner from removing the embankment or from
digging on the property for fear of soil erosion that might weaken the foundation of
the rear portion of his property which is adjacent to the property of petitioner.
An easement or servitude is an encumbrance imposed upon an immovable for the
benefit of another immovable belonging to a different owner.[26] There are two
kinds of easements according to source. An easement is established either by law
or by will of the owners.[27] The courts cannot impose or constitute any servitude
where none existed. They can only declare its existence if in reality it exists by law
or by the will of the owners. There are therefore no judicial easements.[28]
Article 684 of the Civil Code provides that no proprietor shall make such
excavations upon his land as to deprive any adjacent land or building of sufficient
lateral or subjacent support. An owner, by virtue of his surface right, may make
excavations on his land, but his right is subject to the limitation that he shall not
deprive any adjacent land or building of sufficient lateral or subjacent support.
Between two adjacent landowners, each has an absolute property right to have his
land laterally supported by the soil of his neighbor, and if either, in excavating on
his own premises, he so disturbs the lateral support of his neighbors land as to
cause it, or, in its natural state, by the pressure of its own weight, to fall away or
slide from its position, the one so excavating is liable.[29]
In the instant case, an easement of subjacent and lateral support exists in favor of
respondent. It was established that the properties of petitioner and respondent
adjoin each other. The residential house and lot of respondent is located on an
elevated plateau of fifteen (15) feet above the level of petitioners property. The
embankment and the riprapped stones have been in existence even before
petitioner became the owner of the property. It was proven that petitioner has been
making excavations and diggings on the subject embankment and, unless
restrained, the continued excavation of the embankment could cause the foundation
of the rear portion of the house of respondent to collapse, resulting in the
destruction of a huge part of the family dwelling.[30]

We sustain the CA in declaring that a permanent injunction on the part of petitioner

from making injurious excavations is necessary in order to protect the interest of
respondent. However, an annotation of the existence of the subjacent and lateral
support is no longer necessary. It exists whether or not it is annotated or registered
in the registry of property. A judicial recognition of the same already binds the
property and the owner of the same, including her successors-in-interest.
Otherwise, every adjoining landowner would come to court or have the easement
of subjacent and lateral support registered in order for it to be recognized and
respected.
WHEREFORE, in view of the foregoing, the Decision dated May 25, 2007 and
the Resolution dated July 14, 2008 of the Court of Appeals in CA-G.R. CV No.
83973 are hereby AFFIRMED WITH MODIFICATION that the annotation at
the back of Transfer Certificate of Title No. T-36071, recognizing the existence of
the legal easement of subjacent and lateral support constituted on the lengthwise or
horizontal land support/embankment area of sixty-five (65) square meters, more or
less, of the property of petitioner Margarita F. Castro, is hereby ordered removed.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

AT T E S TAT I O N
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

[1]

Penned by Associate Justice Rosmari D. Carandang, with Associate Justices Jose C. Reyes, Jr. and Mariflor P.
Punzalan Castillo, concurring; rollo, pp. 68-79.
[2]
Id. at 81-83.
[3]
Id. at 69.
[4]
Id. at 125.
[5]
Id.
[6]
Id.
[7]
Id. at 127-128.
[8]
Id. at 127, 134.

[9]

Id. at 127-128.
Id. at 128.
[11]
Penned by Judge Erlinda Nicolas-Alvaro, Regional Trial Court, Branch 198, Las Pias City; id. at 125- 134.
[12]
Id. at 134.
[13]
Id. at 131.
[14]
Supra note 1.
[15]
Id. at 78-79.
[16]
Id. at 75-76.
[17]
Supra note 2.
[18]
CIVIL CODE, Art. 437.
[19]
Id.
[20]
Id.
[21]
Id.
[22]
CIVIL CODE, Art. 431.
[23]
Rollo, p. 131.
[24]
Section 70 of Presidential Decree 1529 provides:
Section 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner,
arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for
registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under
whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the
registered owner, and a description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at
which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the
certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After
the lapse of said period, the annotation of adverse claim may be canceled upon filing of a verified petition therefor
by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same
ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First
Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy
hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and
equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled. If, in any
case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine
the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion.
Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a
sworn petition to that effect.
[25]
Arrazola v. Bernas, 175 Phil. 452, 456-457 (1978).
[26]
CIVIL CODE, Art. 613.
[27]
CIVIL CODE, Art. 619.
[28]
De Leon, Hector S., COMMENTS AND CASES ON PROPERTY (5th ed.), p. 476.
[29]
Id. at 544.
[30]
Rollo, pp. 76-77.
[10]

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION

PHILIPPINE NATIONAL BANK, G.R. No. 170325

Petitioner,
Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

ERLANDO T. RODRIGUEZ Promulgated:

and NORMA RODRIGUEZ,

Respondents. September 26, 2008

x--------------------------------------------------x

DECISION

REYES, R.T., J.:

WHEN the payee of the check is not intended to be the true

recipient of its proceeds, is it payable to order or bearer? What is
the fictitious-payee rule and who is liable under it? Is there any
exception?

These questions seek answers in this petition for review

on certiorari of the Amended Decision[1] of the Court of Appeals
(CA) which affirmed with modification that of the Regional Trial
Court (RTC).[2]

The Facts

The facts as borne by the records are as follows:

Respondents-Spouses Erlando and Norma Rodriguez were

clients of petitioner Philippine National Bank (PNB), Amelia
Avenue
Branch, Cebu City. They
maintained
savings
and
demand/checking accounts, namely, PNBig Demand Deposits
(Checking/Current Account No. 810624-6 under the account name
Erlando and/or Norma Rodriguez), and PNBig Demand Deposit
(Checking/Current Account No. 810480-4 under the account name
Erlando T. Rodriguez).

The spouses were engaged in the informal lending

business. In
line
with
their
business,
they
had
a
[3]
discounting arrangement with the Philnabank Employees
Savings and Loan Association (PEMSLA), an association
of PNB employees. Naturally, PEMSLA was likewise a client
of PNB Amelia Avenue Branch. The association maintained current
and savings accounts with petitioner bank.

PEMSLA regularly granted loans to its members. Spouses

Rodriguez would rediscount the postdated checks issued to
members whenever the association was short of funds. As was
customary, the spouses would replace the postdated checks with
their own checks issued in the name of the members.

It was PEMSLAs policy not to approve applications for loans

of members with outstanding debts. To subvert this policy, some
PEMSLA officers devised a scheme to obtain additional loans
despite their outstanding loan accounts. They took out loans in
the names of unknowing members, without the knowledge or
consent of the latter. The PEMSLA checks issued for these loans
were then given to the spouses for rediscounting. The officers
carried this out by forging the indorsement of the named payees
in the checks.

In return, the spouses issued their personal checks

(Rodriguez checks) in the name of the members and delivered the
checks to an officer of PEMSLA. The PEMSLA checks, on the other
hand, were deposited by the spouses to their account.

Meanwhile, the Rodriguez checks were deposited directly by

PEMSLA to its savings account without any indorsement from
the named payees. This was an irregular procedure made possible
through the facilitation of Edmundo Palermo, Jr., treasurer of
PEMSLA and bank teller in the PNB Branch. It appears that this
became the usual practice for the parties.

For the period November 1998 to February 1999, the

spouses issued sixty nine (69) checks, in the total amount
of P2,345,804.00.These were payable to forty seven (47)
individual payees who were all members of PEMSLA. [4]

Petitioner PNB eventually found out about these fraudulent

acts. To put a stop to this scheme, PNB closed the current account
of PEMSLA. As a result, the PEMSLA checks deposited by the
spouses were returned or dishonored for the reason Account
Closed. The corresponding Rodriguez checks, however, were
deposited as usual to the PEMSLA savings account. The amounts
were duly debited from the Rodriguez account. Thus, because
the PEMSLA checks given as payment were returned, spouses
Rodriguez incurred losses from the rediscounting transactions.

RTC Disposition

Alarmed over the unexpected turn of events, the spouses

Rodriguez filed a civil complaint for damages against PEMSLA, the
Multi-Purpose Cooperative of Philnabankers (MCP), and petitioner
PNB. They sought to recover the value of their checks that were
deposited to the PEMSLA savings account amounting
to P2,345,804.00. The
spouses
contended
that
because PNB credited the checks to the PEMSLA account
even without indorsements, PNB violated its contractual
obligation to them as depositors. PNB paid the wrong payees,
hence, it should bear the loss.

PNB moved to dismiss the complaint on the ground of lack of

cause of action. PNB argued that the claim for damages should
come from the payees of the checks, and not from spouses
Rodriguez. Since there was no demand from the said payees, the
obligation should be considered as discharged.

In an Order dated January 12, 2000, the RTC denied PNBs motion
to dismiss.

In its Answer,[5] PNB claimed it is not liable for the checks

which it paid to the PEMSLA account without any indorsement
from the payees. The bank contended that spouses Rodriguez, the
makers, actually did not intend for the named payees to
receive the proceeds of the checks. Consequently, the payees
were considered as fictitious payees as defined under the
Negotiable Instruments Law (NIL). Being checks made to fictitious
payees which are bearer instruments, the checks were negotiable
by mere delivery. PNBs Answer included its cross-claim against its
co-defendants PEMSLA and the MCP, praying that in the event
that judgment is rendered against the bank, the cross-defendants
should be ordered to reimburse PNB the amount it shall pay.

After trial, the RTC rendered judgment in favor of spouses

Rodriguez (plaintiffs). It ruled that PNB (defendant) is liable to
return the value of the checks. All counterclaims and cross-claims
were dismissed. The dispositive portion of the RTC decision reads:
WHEREFORE, in view of the foregoing, the Court hereby renders
judgment, as follows:

1. Defendant is hereby ordered to pay the plaintiffs the total amount

of P2,345,804.00 or reinstate or restore the amount
of P775,337.00 in the PNBig Demand Deposit Checking/Current
Account No. 810480-4 of Erlando T. Rodriguez, and the amount
of P1,570,467.00
in
the
PNBig
Demand
Deposit,
Checking/Current Account No. 810624-6 of Erlando T. Rodriguez
and/or Norma Rodriguez, plus legal rate of interest thereon to be
computed from the filing of this complaint until fully paid;

2. The defendant PNB is hereby ordered to pay the plaintiffs the

following reasonable amount of damages suffered by them
taking into consideration the standing of the plaintiffs being
sugarcane planters, realtors, residential subdivision owners, and
other businesses:

(a) Consequential damages, unearned income in the

amount of P4,000,000.00, as a result of their having
incurred great dificulty (sic) especially in the
residential subdivision business, which was not
pushed through and the contractor even threatened
to file a case against the plaintiffs;

(b) Moral damages in the amount of P1,000,000.00;

(c) Exemplary damages in the amount of P500,000.00;

(d) Attorneys fees in the amount of P150,000.00

considering that this case does not involve very
complicated issues; and for the

(e) Costs of suit.

3. Other claims and counterclaims are hereby dismissed. [6]

CA Disposition

PNB appealed the decision of the trial court to the CA on the

principal ground that the disputed checks should be considered as
payable to bearer and not to order.

In a Decision[7] dated July 22, 2004, the CA reversed and set

aside the RTC disposition. The CA concluded that the checks were
obviously meant by the spouses to be really paid to PEMSLA. The
court a quo declared:
We are not swayed by the contention of the plaintiffs-appellees
(Spouses Rodriguez) that their cause of action arose from the alleged
breach of contract by the defendant-appellant (PNB) when it paid the
value of the checks to PEMSLA despite the checks being payable to
order. Rather, we are more convinced by the strong and credible
evidence for the defendant-appellant with regard to the plaintiffsappellees and PEMSLAs business arrangement that the value of the
rediscounted checks of the plaintiffs-appellees would be deposited in
PEMSLAs account for payment of the loans it has approved in
exchange for PEMSLAs checks with the full value of the said loans. This
is the only obvious explanation as to why all the disputed sixty-nine
(69) checks were in the possession of PEMSLAs errand boy for
presentment to the defendant-appellant that led to this present
controversy.It also appears that the teller who accepted the said
checks was PEMSLAs officer, and that such was a regular practice by

the parties until the defendant-appellant discovered the scam. The

logical conclusion, therefore, is that the checks were never meant to
be paid to order, but instead, to PEMSLA. We thus find no breach of
contract on the part of the defendant-appellant.

According to plaintiff-appellee Erlando Rodriguez testimony,

PEMSLA allegedly issued post-dated checks to its qualified members
who had applied for loans. However, because of PEMSLAs insufficiency
of funds, PEMSLA approached the plaintiffs-appellees for the latter to
issue rediscounted checks in favor of said applicant members. Based
on the investigation of the defendant-appellant, meanwhile, this
arrangement allowed the plaintiffs-appellees to make a profit by
issuing rediscounted checks, while the officers of PEMSLA and other
members would be able to claim their loans, despite the fact that they
were disqualified for one reason or another. They were able to achieve
this conspiracy by using other members who had loaned lesser
amounts of money or had not applied at all. x x x.[8] (Emphasis added)

The CA found that the checks were bearer instruments, thus they
do not require indorsement for negotiation; and that spouses
Rodriguez and PEMSLA conspired with each other to accomplish
this money-making scheme. The payees in the checks were
fictitious payees because they were not the intended payees at
all.

The spouses Rodriguez moved for reconsideration. They

argued, inter alia, that the checks on their faces were
unquestionably payable to order; and that PNB committed a
breach of contract when it paid the value of the checks to PEMSLA
without indorsement from the payees.They also argued that their
cause of action is not only against PEMSLA but also
against PNB to recover the value of the checks.

On October 11, 2005, the CA reversed itself via an

Amended Decision, the last paragraph and fallo of which read:
In sum, we rule that the defendant-appellant PNB is liable to the
plaintiffs-appellees Sps. Rodriguez for the following:

1.

Actual damages in the amount of P2,345,804 with

interest at 6% per annum from 14 May 1999 until fully
paid;

2.

Moral damages in the amount of P200,000;

3.

Attorneys fees in the amount of P100,000; and

4.

Costs of suit.

WHEREFORE, in view of the foregoing premises, judgment is

hereby rendered by Us AFFIRMING WITH MODIFICATION the assailed
decision rendered in Civil Case No. 99-10892, as set forth in the
immediately next preceding paragraph hereof, and SETTING ASIDE Our
original decision promulgated in this case on 22 July 2004.

SO ORDERED.[9]

The CA ruled that the checks were payable to

order. According to the appellate court, PNB failed to present
sufficient proof to defeat the claim of the spouses Rodriguez that
they really intended the checks to be received by the specified
payees. Thus, PNB is liable for the value of the checks which it
paid to PEMSLA without indorsements from the named
payees. The award for damages was deemed appropriate in view
of the failure of PNB to treat the Rodriguez account with the
highest degree of care considering the fiduciary nature of

their relationship, which constrained respondents to seek legal

action.

Hence, the present recourse under Rule 45.

Issues

The issues may be compressed to whether the subject

checks are payable to order or to bearer and who bears the loss?

PNB argues anew that when the spouses Rodriguez issued

the disputed checks, they did not intend for the named payees to
receive the proceeds. Thus, they are bearer instruments that
could be validly negotiated by mere delivery. Further,
testimonial and documentary evidence presented during trial
amply proved that spouses Rodriguez and the officers of PEMSLA
conspired with each other to defraud the bank.

Our Ruling

Prefatorily, amendment of decisions is more acceptable than

an erroneous judgment attaining finality to the prejudice of
innocent parties. A court discovering an erroneous judgment
before it becomes final may, motu proprio or upon motion of the
parties, correct its judgment with the singular objective of
achieving justice for the litigants. [10]

However, a word of caution to lower courts, the CA

in Cebu in this particular case, is in order. The Court does not

sanction careless disposition of cases by courts of justice. The

highest degree of diligence must go into the study of every
controversy submitted for decision by litigants. Every issue and
factual detail must be closely scrutinized and analyzed, and all
the applicable laws judiciously studied, before the promulgation of
every judgment by the court. Only in this manner will errors in
judgments be avoided.

Now to the core of the petition.

As a rule, when the payee is fictitious or not intended

to be the true recipient of the proceeds, the check is
considered as a bearer instrument. A check is a bill of
exchange drawn on a bank payable on demand. [11] It is either an
order or a bearer instrument.Sections 8 and 9 of the NIL states:
SEC. 8. When payable to order. The instrument is payable to
order where it is drawn payable to the order of a specified person or to
him or his order. It may be drawn payable to the order of

(a) A payee who is not maker, drawer, or drawee; or

(b) The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f)

The holder of an office for the time being.

Where the instrument is payable to order, the payee must be

named or otherwise indicated therein with reasonable certainty.

SEC. 9. When payable to bearer. The instrument is payable to

bearer

(a)

When it is expressed to be so payable; or

(b)

When it is payable to a person named therein or bearer; or

(c)

When it is payable to the order of a fictitious or nonexisting person, and such fact is known to the person
making it so payable; or

(d)

When the name of the payee does not purport to be the

name of any person; or

(e)

Where the only or last indorsement is an indorsement in

blank.[12] (Underscoring supplied)

The distinction between bearer and order instruments lies

in their manner of negotiation. Under Section 30 of the NIL, an
order instrument requires an indorsement from the payee or
holder before it may be validly negotiated. A bearer instrument,
on the other hand, does not require an indorsement to be validly
negotiated. It is negotiable by mere delivery. The provision reads:
SEC. 30. What constitutes negotiation. An instrument is
negotiated when it is transferred from one person to another in such
manner as to constitute the transferee the holder thereof. If payable to
bearer, it is negotiated by delivery; if payable to order, it is negotiated
by the indorsement of the holder completed by delivery.

A check that is payable to a specified payee is an order

instrument. However, under Section 9(c) of the NIL, a check
payable to a specified payee may nevertheless be considered as
a bearer instrument if it is payable to the order of a fictitious or
non-existing person, and such fact is known to the person making
it so payable. Thus, checks issued to Prinsipe Abante or Si
Malakas at si Maganda, who are well-known characters in
Philippine mythology, are bearer instruments because the named
payees are fictitious and non-existent.

We have yet to discuss a broader meaning of the term

fictitious as used in the NIL. It is for this reason that We look
elsewhere for guidance. Court rulings in the United States are a
logical starting point since our law on negotiable instruments was
directly lifted from the Uniform Negotiable Instruments Law of
the United States.[13]

A review of US jurisprudence yields that an actual, existing,

and living payee may also be fictitious if the maker of the check
did not intend for the payee to in fact receive the proceeds of the
check. This usually occurs when the maker places a name of an
existing payee on the check for convenience or to cover up an
illegal activity.[14] Thus, a check made expressly payable to a nonfictitious and existing person is not necessarily an order
instrument. If the payee is not the intended recipient of the
proceeds of the check, the payee is considered a fictitious
payee and the check is a bearer instrument.

In a fictitious-payee situation, the drawee bank is absolved

from liability and the drawer bears the loss. When faced with a
check payable to a fictitious payee, it is treated as a bearer
instrument that can be negotiated by delivery. The underlying
theory is that one cannot expect a fictitious payee to negotiate
the check by placing his indorsement thereon. And since the
maker knew this limitation, he must have intended for the
instrument to be negotiated by mere delivery. Thus, in case of
controversy, the drawer of the check will bear the loss. This rule is
justified for otherwise, it will be most convenient for the maker
who desires to escape payment of the check to always deny the
validity of the indorsement. This despite the fact that the fictitious
payee was purposely named without any intention that the payee
should receive the proceeds of the check.[15]

The fictitious-payee rule is best illustrated in Mueller &

Martin v. Liberty Insurance Bank.[16] In the said case, the
corporation Mueller & Martin was defrauded by George L. Martin,
one of its authorized signatories. Martin drew seven checks
payable to the German Savings Fund Company Building
Association (GSFCBA) amounting to $2,972.50 against the
account of the corporation without authority from the
latter. Martin was also an officer of the GSFCBA but did not have
signing authority. At the back of the checks, Martin placed the
rubber stamp of the GSFCBA and signed his own name as
indorsement. He then successfully drew the funds from Liberty
Insurance Bank for his own personal profit. When the corporation
filed an action against the bank to recover the amount of the
checks, the claim was denied.

The US Supreme Court held in Mueller that when the person

making the check so payable did not intend for the specified
payee to have any part in the transactions, the payee is
considered as a fictitious payee. The check is then considered as
a bearer instrument to be validly negotiated by mere
delivery. Thus, the US Supreme Court held that Liberty Insurance
Bank, as drawee, was authorized to make payment to the bearer
of the check, regardless of whether prior indorsements were
genuine or not.[17]

The more recent Getty Petroleum Corp. v. American Express

Travel Related Services Company, Inc. [18] upheld the fictitiouspayee rule. The rule protects the depositary bank and assigns the
loss to the drawer of the check who was in a better position to
prevent the loss in the first place. Due care is not even required
from the drawee or depositary bank in accepting and paying the
checks. The effect is that a showing of negligence on the part of
the depositary bank will not defeat the protection that is derived
from this rule.

However, there is a commercial bad faith exception to

the fictitious-payee rule. A showing of commercial bad
faith on the part of the drawee bank, or any transferee of the
check for that matter, will work to strip it of this defense. The
exception will cause it to bear the loss. Commercial bad faith is
present if the transferee of the check acts dishonestly, and is a
party to the fraudulent scheme. Said the USSupreme Court
in Getty:
Consequently, a transferees lapse of wary vigilance, disregard of
suspicious circumstances which might have well induced a prudent
banker to investigate and other permutations of negligence are not
relevant considerations under Section 3-405 x x x. Rather, there is a
commercial bad faith exception to UCC 3-405, applicable when the
transferee acts dishonestly where it has actual knowledge of facts and
circumstances that amount to bad faith, thus itself becoming a
participant in a fraudulent scheme. x x x Such a test finds support in
the text of the Code, which omits a standard of care requirement from
UCC 3-405 but imposes on all parties an obligation to act with honesty
in fact. x x x[19] (Emphasis added)

Getty also laid the principle that the fictitious-payee rule extends
protection even to non-bank transferees of the checks.

In the case under review, the Rodriguez checks were payable

to specified payees. It is unrefuted that the 69 checks were
payable to specific persons. Likewise, it is uncontroverted that the
payees were actual, existing, and living persons who were
members of PEMSLA that had a rediscounting arrangement with
spouses Rodriguez.

What remains to be determined is if the payees, though

existing persons, were fictitious in its broader context.

For the fictitious-payee rule to be available as a

defense, PNB must show that the makers did not intend for the
named payees to be part of the transaction involving the
checks. At most, the banks thesis shows that the payees did not
have knowledge of the existence of the checks. This lack of
knowledge on the part of the payees, however, was not
tantamount to a lack of intention on the part of
respondents-spouses that the payees would not receive
the checks proceeds. Considering that respondents-spouses
were transacting with PEMSLA and not the individual payees, it is
understandable that they relied on the information given by the
officers of PEMSLA that the payees would be receiving the checks.

Verily,
the
subject
checks
are presumed
order
instruments. This is because, as found by both lower
courts, PNB failed to present sufficient evidence to defeat the
claim of respondents-spouses that the named payees were the
intended recipients of the checks proceeds. The bank failed to
satisfy a requisite condition of a fictitious-payee situation that the
maker of the check intended for the payee to have no interest in
the transaction.

Because of a failure to show that the payees were fictitious

in
its
broader
sense,
the
fictitious-payee
rule
does not apply. Thus, the checks are to be deemed payable to
order. Consequently, the drawee bank bears the loss. [20]

PNB was remiss in its duty as the drawee bank. It does

not dispute the fact that its teller or tellers accepted the 69
checks for deposit to the PEMSLA account even without any

indorsement from the named payees. It bears stressing that order

instruments can only be negotiated with a valid indorsement.

A bank that regularly processes checks that are neither

payable to the customer nor duly indorsed by the payee is
apparently grossly negligent in its operations. [21] This Court has
recognized the unique public interest possessed by the banking
industry and the need for the people to have full trust and
confidence in their banks.[22] For this reason, banks are minded to
treat their customers accounts with utmost care, confidence, and
honesty.[23]

In a checking transaction, the drawee bank has the duty to

verify the genuineness of the signature of the drawer and to pay
the
check
strictly
in
accordance with the drawers instructions, i.e., to the named
payee in the check. It should charge to the drawers accounts only
the payables authorized by the latter. Otherwise, the drawee will
be violating the instructions of the drawer and it shall be liable
for the amount charged to the drawers account.[24]

In the case at bar, respondents-spouses were the banks

depositors. The checks were drawn against respondents-spouses
accounts. PNB, as the drawee bank, had the responsibility to
ascertain the regularity of the indorsements, and the genuineness
of the signatures on the checks before accepting them for
deposit. Lastly, PNB was obligated to pay the checks in strict
accordance with the instructions of the drawers.Petitioner
miserably failed to discharge this burden.

The checks were presented to PNB for deposit by a

representative of PEMSLA absent any type of indorsement, forged

or otherwise.The facts clearly show that the bank did not pay the
checks in strict accordance with the instructions of the drawers,
respondents-spouses.Instead, it paid the values of the checks not
to the named payees or their order, but to PEMSLA, a third party
to the transaction between the drawers and the payees.

Moreover, PNB was

negligent
in
the
selection
and
supervision of its employees. The trustworthiness of bank
employees is indispensable to maintain the stability of the
banking industry. Thus, banks are enjoined to be extra vigilant in
the management and supervision of their employees. In Bank of
the Philippine Islands v. Court of Appeals,[25] this Court cautioned
thus:
Banks handle daily transactions involving millions of pesos. By
the very nature of their work the degree of responsibility, care and
trustworthiness expected of their employees and officials is far greater
than those of ordinary clerks and employees. For obvious reasons, the
banks are expected to exercise the highest degree of diligence in the
selection and supervision of their employees. [26]

PNBs tellers and officers, in violation of banking rules of

procedure, permitted the invalid deposits of checks to the PEMSLA
account.Indeed, when it is the gross negligence of the bank
employees that caused the loss, the bank should be held liable. [27]

PNBs argument that there is no loss to compensate since no

demand for payment has been made by the payees must also
fail. Damage was caused to respondents-spouses when the
PEMSLA checks they deposited were returned for the reason
Account Closed. These PEMSLA checks were the corresponding
payments to the Rodriguez checks. Since they could not encash

the PEMSLA checks, respondents-spouses were unable to collect

payments for the amounts they had advanced.

A bank that has been remiss in its duty must suffer the
consequences of its negligence. Being issued to named
payees, PNB was duty-bound by law and by banking rules and
procedure to require that the checks be properly indorsed before
accepting them for deposit and payment. In fine, PNB should be
held liable for the amounts of the checks.

One Last Note

We note that the RTC failed to thresh out the merits of PNBs
cross-claim against its co-defendants PEMSLA and MPC. The
records are bereft of any pleading filed by these two defendants
in answer to the complaint of respondents-spouses and crossclaim of PNB. The Rules expressly provide that failure to file an
answer is a ground for a declaration that defendant
is in default.[28] Yet, the RTC failed to sanction the failure of both
PEMSLA and MPC to file responsive pleadings. Verily,
the RTC dismissal of PNBs cross-claim has no basis. Thus, this
judgment shall be without prejudice to whatever action the bank
might take against its co-defendants in the trial court.

To PNBs credit, it became involved in the controversial transaction

not of its own volition but due to the actions of some of its
employees.Considering that moral damages must be understood
to be in concept of grants, not punitive or corrective in nature, We
resolve to reduce the award of moral damages to P50,000.00.[29]

WHEREFORE,
the
appealed
Amended
Decision
is AFFIRMED with the MODIFICATION that the award for moral
damages is reduced to P50,000.00, and that this is without
prejudice to whatever civil, criminal, or administrative action PNB
might take against PEMSLA, MPC, and the employees involved.
SO ORDERED.

RUBEN T. REYES
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been

reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13,

the Division Chairpersons
conclusions in the above
consultation before the case
opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

Article VIII of the Constitution and

Attestation, I certify that the
Decision had been reached in
was assigned to the writer of the

[1]

CA-G.R. CV No. 76645 dated October 11, 2005. Penned by Associate Justice Isaias P. Dicdican, with Associate
Justices Pampio A. Abarintos and Ramon M. Bato, Jr., concurring; rollo, pp. 29-42.
[2]

Civil Case No. 99-10892, Regional Trial Court in Negros Occidental, Branch 51, Bacolod City, dated May 10,
2002; CA rollo, pp. 63-72.
[3]

[4]

A financing scheme where a postdated check is exchanged for a current check with a discounted face value.
Current Account No. 810480-4 in the name of Erlando T. Rodriguez
Name of Payees

Check No.

Date Issued

Amount

01. Simon Carmelo B. Libo-on

0001110

11.27.98

40,934.00

02. Simon Carmelo Libo-on

0000011589

02.01.99

29,877.00

03. Simon Libo-on

0000011567

01.25.99

50,350.00

04. Pacifico Castillo

0000011565

01.22.99

39,995.00

05. Jose Bago-od

0000011587

02.01.99

38,000.00

06. Dioleto Delcano

0000011594

02.02.99

28,500.00

07. Antonio Maravilla

0000011593

02.02.99

37,715.00

08. Josel Juguan

0000011595

02.02.99

45,002.00

09. Domingo Roa, Jr.

0000011591

02.01.99

35,373.00

10. Antonio Maravilla

0001657

02.05.99

39,900.00

11. Christy Mae Berden

0001655

02.05.99

28,595.00

12. Nelson Guadalupe

0000011588

02.01.99

34,819.00

13. Antonio Londres

0000011596

02.05.99

32,851.00

14. Arnel Navarosa

0000011597

02.05.99

28,785.00

15. Estrella Alunan

0000011600

02.05.99

32,509.00

16. Dennis Montemayor

0000011598

02.05.99

43,691.00

17. Mickle Argusar

0000011599

02.05.99

31,498.00

18. Perlita Gallego

0000011564

01.21.99

38,000.00

19. Sheila Arcobillas

0000011563

01.19.99

38,000.00

20. Danilo Villarosa

0001656

02.05.99

32,006.00

21. Almie Borce

0000011583

02.01.99

20,093.00

22. Ronie Aragon

0000011566

01.20.99

28,844.00

Total:

775,337.00

Current Account No. 810624-6 in the name of Erlando and/or Norma Rodriguez

Name of Payees

Check No.

Date Issued

Amount

01. Elma Bacarro

0001944

01.15.99

37,449.00

02. Delfin Recarder

0001927

01.14.99

30,020.00

03. Elma Bacarro

0001926

01.14.99

34,884.00

04. Perlita Gallego

0001924

01.14.99

35,502.00

05. Jose Weber

0001932

01.14.99

38,323.00

06. Rogelio Alfonso

0001922

01.14.99

43,852.00

07. Gianni Amantillo

0001928

01.14.99

32,414.00

08. Eddie Bago-od

0001929

01.14.99

38,361.00

09. Manuel Longero

0001933

01.14.99

38,285.00

10. Anavic Lorenzo

0001923

01.14.99

29,982.00

11. Corazon Salva

0001945

01.15.99

37,449.00

12. Arlene Diamante

0001951

01.18.99

39,995.00

13. Joselin Laurilla

0001955

01.18.99

37,221.00

14. Andy Javellana

0001960

01.22.99

30,923.00

15. Erdelinda Porras

0001958

01.22.99

40,679.00

16. Nelson Guadalupe

0001956

01.18.99

24,700.00

17. Barnard Escano

0001969

01/22/99

38,304.00

18. Buena Coscolluela

0001968

01/22/99

37,706.00

19. Erdelinda Porras

0002021

02/01/99

36,727.00

20. Neda Algara

0002023

02/01/99

38,000.00

21. Eddie Bago-od

0002030

02/02/99

26,600.00

22. Gianni Amantillo

0002032

02/02/99

19,000.00

23. Alfredo Llena

0002020

02/01/99

32,282.00

24. Emmanuel Fermo

0001972

01/22/99

36,376.00

25. Yvonne Ano-os

0001967

01/22/99

36,566.00

26. Joel Abibuag

0002022

02/01/99

37,981.00

27. Ma. Corazon Salva

0002029

02/02/99

25,270.00

28. Jose Bago-od

0001957

01/18/99

34,656.00

29. Avelino Brion

0001965

01/22/99

31,882.00

30. Mickle Algusar

0001962

01/22/99

25,004.00

31. Jose Weber

0001959

01/22/99

37,001.00

32. Joel Velasco

0002028

02/02/99

9,500.00

Name of Payees

Check No.

Date Issued

Amount

33. Elma Bacarro

0002031

02/02/99

23,750.00

34. Grace Tambis

0001952

01/18/99

39,995.00

35. Proceso Mailim

0001980

01/21/99

37,193.00

36. Ronnie Aragon

0001983

01/22/99

30,324.00

37. Danilo Villarosa

0001931

01/14/99

31,008.00

38. Joel Abibuag

0001954

01/18/99

26,600.00

39. Danilo Villarosa

0001984

01/22/99

26,790.00

40. Reynard Guia

0001985

01/22/99

42,959.00

41. Estrella Alunan

0001925

01/14/99

39,596.00

42. Eddie Bago-od

0001982

01/22/99

31,018.00

43. Jose Bago-od

0001982

01/22/99

37,240.00

44. Nicandro Aguilar

0001964

01/22/99

52,250.00

45. Guandencia Banaston

0001963

01/22/99

38,000.00

46. Dennis Montemayor

0001961

01/22/99

26,600.00

47. Eduardo Buglosa

0002027

01/02/99

14,250.00

Total 1,570,467.00
Grand Total . 2,345,804.00

[5]

Rollo, pp. 64-69.

[6]

CA rollo, pp. 71-72.

[7]

Rollo, pp. 44-49. Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Elvi John S. Asuncion
and Ramon M. Bato, Jr., concurring.
[8]

Id. at 47.

[9]

Id. at 41.

[10]

[11]

Veluz v. Justice of the Peace of Sariaga, 42 Phil. 557 (1921).

Negotiable Instruments Law, Sec. 185. Check defined. A check is a bill of exchange drawn on a bank payable on
demand. Except as herein otherwise provided, the provisions of this Act applicable to a bill of exchange payable on
demand apply to a check.

Section 126. Bill of exchange defined. A bill of exchange is an unconditional order in writing addressed by one
person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or
at a fixed or determinable future time a sum certain in money to order or to bearer.
[12]

Id.

[13]

Campos, J.C., Jr. and Lopez-Campos, M.C., Notes and Selected Cases on Negotiable Instruments Law (1994),
5th ed., pp. 8-9.
[14]

Bourne v. Maryland Casualty, 192 SE 605 (1937); Norton v. City Bank & Trust Co., 294 F. 839 (1923); United
States v. Chase Nat. Bank, 250 F. 105 (1918).
[15]

Mueller & Martin v. Liberty Insurance Bank, 187 Ky. 44, 218 SW 465 (1920).

[16]

Id.

[17]

Mueller & Martin v. Liberty Insurance Bank, id.

[18]

90 NY 2d 322 (1997), citing the Uniform Commercial Code, Sec. 3-405.

[19]

Getty Petroleum Corp. v. American Express Travel Related Services Company, Inc., id., citing Peck v. Chase
Manhattan Bank, 190 AD 2d 547, 548-549 (1993); Touro Coll. v. Bank Leumi Trust Co., 186 AD 2d 425, 427
(1992); Prudential-Bache Sec. v. Citibank, N.A., 73 NY 2d 276 (1989); Merrill Lynch, Pierce, Fenner & Smith v.
Chemical Bank, 57 NY 2d 447 (1982).
[20]

See Traders Royal Bank v. Radio Philippines Network, Inc., G.R. No. 138510, October 10, 2002, 390 SCRA 608.

[21]

Id.

[22]

Metropolitan Bank and Trust Company v. Cabilzo, G.R. No. 154469, December 6, 2006, 510 SCRA 259.

[23]

Citytrust Banking Corporation v. Intermediate Appellate Court, G.R. No. 84281, May 27, 1994, 232 SCRA
559; Bank of the Philippine Islands v. Intermediate Appellate Court, G.R. No. 69162,February 21, 1992, 206 SCRA
408.
[24]

Associated Bank v. Court of Appeals, G.R. Nos. 107382 & 107612, January 31, 1996, 252 SCRA 620, 631.

[25]

G.R. No. 102383, November 26, 1992, 216 SCRA 51.

[26]

Bank of the Philippine Islands v. Court of Appeals, id. at 71.

[27]

Id. at 77.

[28]

Rules of Civil Procedure, Rule 9, Sec. 3. Default: declaration of. If the defending party fails to answer within the
time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant
to submit evidence. Such reception of evidence may be delegated to the clerk of court.
[29]

Morales v. Court of Appeals, G.R. No. 117228, June 19, 1997, 274 SCRA 282.

SECOND DIVISION

[G.R. No. 142406. May 16, 2005]

SPOUSES CONRADO and MA. CORONA ROMERO, petitioners, vs.

COURT OF APPEALS and SATURNINO S. ORDEN,respondents.
DECISION
AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari filed under Rule 65 of the Rules of Court,
seeking the nullification of the Decision promulgated by the Court of Appeals (CA) on
September 30, 1999 in CA-G.R. Sp. No. 49608 and the Resolution promulgated on
January 26, 2000, denying the motion for reconsideration.
[1]

[2]

The facts are as follows:

On April 23, 1996, petitioner Ma. Corona Romero and her siblings executed a lettercontract to sell with private respondent Saturnino Orden. In said contract, private
respondent proposed to purchase from Romero and her siblings a property located at
Denver cor. New York Sts., Cubao, Quezon City, covered by Transfer Certificate of Title
(TCT) No. 145269, for the total amount of P17M. The contract stipulated that private
respondent shall pay petitioner the amount of P7M upon the execution of the deed of
absolute sale, the balance of P10M not later than December 19, 1996 and that private
respondent shall shoulder the expenses to evict the squatters on the property.
[3]

When private respondent failed to pay the down payment, petitioner Corona told
him that she was rescinding the contract to sell. Private respondent then filed a
complaint for specific performance and damages against petitioners before the Regional
Trial Court (RTC) of Quezon City, docketed as Civil Case No. Q-97-31114 alleging that
[4]

he has complied with his obligation to evict the squatters on the property and is entitled
to demand from petitioners the performance of their obligation under the contract.
[5]

Simultaneous with the filing of the complaint, private respondent caused the
annotation of a notice of lis pendens on TCT No. 145269.
[6]

On August 11, 1997, Manuel Y. Limsico, Jr. and Aloysius R. Santos, subsequent
buyers of the subject property sold by petitioner Corona and her siblings, filed a motion
for leave to intervene with the RTC and were admitted as defendants-intervenors. They
filed a motion for the cancellation of lis pendens which the RTC granted in its Resolution
dated November 26, 1997. The RTC reasoned that:

In the instant case, the evidence so far presented by the plaintiff do[es] not bear out
the main allegations in the complaint. While the filing of the notice may not have been
for the purpose of molesting the defendants and the defendants-in-intervenors, still the
inscription is not necessary to protect the alleged right of the plaintiff over the subject
property. The plaintiff is not entitled to the inscription of the notice on TCT No.
145269 in the name of the defendants and others because he does not have any
actionable right over the subject property there being no deed of sale executed
between him and the defendants over the subject real properties as offered in the
alleged agreement dated April 23, 1996. The alleged agreement dated April 23, 1996
although with the conformity of Maria Corona S. Romero cannot serve as sufficient
basis for the inscription of the notice on TCT No. 145269. Therefore said notice
should be cancelled.
[7]

The motion for reconsideration filed by private respondent was denied by the RTC in its
Resolution dated August 28, 1998.
[8]

On November 16, 1998, private respondent filed a petition for certiorari before the
CA seeking the nullification of the resolutions of the RTC and asked for the reannotation of the notice of lis pendens on the TCT. The CA granted the petition in its
Decision dated September 30, 1999, portions of which read:
[9]

First, the general rule is that a notice of lis pendens cannot be cancelled while the
action is pending and undetermined except in cases expressly provided by statute.
Section 77, P.D. 1529 (Property Registration Decree) provides:
SEC. 77. Cancellation of lis pendens. Before final judgment, a notice
of lis pendens may be cancelled upon order of the court, after proper showing that the
notice is for the purpose of molesting the adverse party, or that it is not necessary to
protect the rights of the party who caused it to be registered. It may also be cancelled
by the Register of Deeds upon verified petition of the party who caused the
registration thereof.

At any time after final judgment in favor of the defendant, or other disposition of the
action such as to terminate finally all rights of the plaintiff in and to the land and/or
buildings involved, in any case in which a memorandum or notice of lis pendens has
been registered as provided in the preceding section, the notice of lis pendens shall be
deemed cancelled upon the registration of certificate of the clerk of court in which the
action or proceeding was pending stating the manner of disposal thereof.
In the instant case, there was not even a hearing upon which could be predicated a
proper showing that any of the grounds provided by law exists. The cited case of
Victoriano presupposes that there must be a hearing where the evidence of the party
who sought the annotation of the notice of lis pendens must be considered.
Second, as shown in the above cited provisions, there are only two grounds for the
court to order the cancellation of a notice of lis pendens during the pendency of an
action, and they are: (1) if the annotation was for the purpose of molesting the title of
the adverse party, or (2) when the annotation is not necessary to protect the title of the
party who caused it to be recorded. While the parties are locked up in legal battle and
until it becomes convincingly shown that either of the two grounds exists, the court
should not allow the cancellation.
Third, the Doctrine of Lis Pendens is founded upon reasons of public policy and
necessity, the purpose of which is to keep the properties in litigation within the power
of the court until the litigation is terminated, and to prevent the defeat of the judgment
or decree by subsequent alienation. This purpose would be rendered meaningless if
the private respondents are allowed to file a bond regardless of the amount, in
substitution of said notice. Moreover, the law does not authorize a judge to cancel a
notice of lis pendens pending litigation, upon the mere filing of a sufficient bond by
the party on whose title said notice is annotated.
In the case at bench, the judgment is even defective, in that the same does not specify
who among the private respondents whether the defendants-vendors or intervenorsvendeesshould file a bond.
Fourth, if there was indeed an agreement to sell between the petitioner and the
private respondents-owners (which question of fact is not for this court to determine
in this petition), then the said parties are bound by the provisions of Article 1475 of
the Civil Code, to wit:
ART. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contract.
As a matter of fact, there would have been no need for a notarial rescission if there
was no actionable contract at all.
Without ruling on the merits of the case below, we are constrained to remind the
public respondent that when a case is commenced involving any right to land
registered under the Land Registration Law, any decision therein will bind the parties
only, unless a notice of the pendency of such action is registered on the title of said
land, in order to bind the whole world as well. Therefore, in order that a notice
of lis pendens may affect the right of a subsequent purchaser, such notice should be
annotated on the back of the certificate of title.
In any case, a notation of lis pendens does not create a non-existent right or lien. It
serves merely as a warning to a person who purchases or contracts on the subject
property that he does so at his peril and subject to the result of the pending litigation.
It is not even required that the applying party must prove his right or interest over the
property sought to be annotated.
Thus, it was legally erroneous for the respondent court to order the cancellation of the
notice.
Finally, when a judge improperly orders the cancellation of a notice of lis pendens, he
is said to have acted with grave abuse of discretion, as held in the case ofSarmiento
vs. Ortiz.
WHEREFORE, the petition is GRANTED. The challenged resolutions of the public
respondent dated 26 November 1997 and 28 August 1998 are SET ASIDE for
being NULL AND VOID. The public respondent is directed to issue an order for the
Register of Deeds to restore the annotation of the notice of lis pendens upon the
affected title. (Citations omitted)
[10]

[11]

The motion for reconsideration filed by petitioners was denied on January 26, 2000.
Hence the present petition alleging that:

THE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE

REANNOTATION OF THE NOTICE OF LIS PENDENS ON THE SUBJECT TITLE
DESPITE THE FACT THAT THE COMPLAINT FILED BY THE PRIVATE
RESPONENT AFFECTED NEITHER THE TITLE TO NOR THE POSSESSION OF
THE SUBJECT PROPERTY.
[12]

Petitioners contend that: the notice of lis pendens is not necessary in this case
since the complaint does not pray for an express award of ownership or possession;
what is involved in this case is a contract to sell and not a contract of sale, thus, no title
has passed to private respondent yet which needs to be protected by a notice of lis
pendens; by ordering the re-annotation of the notice of lis pendens, when private
respondent did not even assert a claim of possession or title over the subject property,
the CA went against the doctrine in Villanueva vs. Court of Appeals, where this Court
held that the applicant must, in the complaint or answer filed in the subject litigation,
assert a claim of possession or title over the subject property in order to give due course
to his application; the CA, in concluding that there was no hearing before the annotation
was cancelled, overlooked the fact that the motion for cancellation was set for hearing
on November 12, 1997, that private respondent was duly notified but failed to appear,
and that he was able to file his opposition to the motion to cancel lis pendens which the
RTC considered before promulgating its Resolution dated November 26, 1997.
[13]

[14]

Private respondent, on the other hand, contends that: the court a quo cancelled the
notice of lis pendens even before it has been apprised of all the relevant facts of the
case; the CA was correct in ruling that while the parties are locked in legal battle and
until it becomes manifest that the grounds set forth in Sec. 77, P.D. No. 1529 exist, the
trial court should not allow the cancellation of the lis pendens; the RTC ruling in this
case is proscribed by the case of Tan vs. Lantin which held that the law does not
authorize a judge to cancel lis pendens pending litigation, upon the mere filing of a
bond; the danger sought to be prevented by the Tan ruling, i.e., the defeat of the
judgment or decree by subsequent alienation, already happened in this case because
the subject property was sold on July 28, 1999 by petitioners to Mueller Trading
Corporation; said sale was made with evident bad faith by petitioners because they
had full knowledge of the pendency of private respondents petition for certiorari before
the CA; and the sale of the property in favor of private respondent verily affects the title
to or possession of the real properties making it the subject of the law of lis pendens.
[15]

[16]

[17]

In their Reply, petitioners reiterate their arguments and cited AFP Mutual Benefit
Association, Inc. vs. Court of Appeals where it was held that a notice of lis
pendens may be annotated only where there is an action or proceeding in court which
affects title to or possession of real property. They further maintain that the requirement
of prior hearing was sufficiently complied with in this case and petitioners did not act in
bad faith when she sold the subject property pending the outcome of this case since
there was no outstanding injunction or restraining order which would have prevented
her from doing so.
[18]

[19]

Clearly, the only issue that needs to be addressed in the present petition is whether
or not the CA committed grave abuse of discretion in ordering the re-annotation of
the lis pendens.
We rule in the negative.
Lis pendens, which literally means pending suit, refers to the jurisdiction, power or
control which a court acquires over property involved in a suit, pending the continuance
of the action, and until final judgment. Founded upon public policy and necessity, lis
pendens is intended to keep the properties in litigation within the power of the court until
[20]

the litigation is terminated, and to prevent the defeat of the judgment or decree by
subsequent alienation. Its notice is an announcement to the whole world that a
particular property is in litigation and serves as a warning that one who acquires an
interest over said property does so at his own risk or that he gambles on the result of
the litigation over said property.
[21]

[22]

The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject
matter of the litigation within the power of the court until the entry of the final judgment
to prevent the defeat of the final judgment by successive alienations; and (2) to bind a
purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree
that the court will promulgate subsequently.
[23]

While the trial court has inherent power to cancel a notice of lis pendens, such
power, meanwhile, is exercised under express provisions of law. As provided for by
Sec. 14, Rule 13 of the 1997 Rules of Civil Procedure, a notice of lis pendens may be
cancelled on two grounds: (1) if the annotation was for the purpose of molesting the title
of the adverse party, or (2) when the annotation is not necessary to protect the title of
the party who caused it to be recorded.
[24]

[25]

In Magdalena Homeowners Association, Inc. vs. Court of Appeals, we held that a

notice of lis pendens is appropriate in the following:
[26]

(a) an action to recover possession of real estate;

(b) an action to quiet title thereto;
(c) an action to remove clouds thereon;
(d) an action for partition; and
(e) any other proceedings of any kind in Court directly affecting the
title to the land or the use or occupation thereof or the buildings
thereon. (Emphasis supplied)
[27]

In Atlantic Erectors, Inc. vs. Herbal Cove Realty Corp., we further held that
resorting to lis pendens is not necessarily confined to cases that involve title to or
possession of real property but also applies to suits seeking to establish a right to, or an
equitable estate or interest in, a specific real property; or to enforce a lien, a charge or
an encumbrance against it. We clarified however that the doctrine of lis pendens has no
application to a proceeding in which the only object sought is the recovery of a money
judgment, though the title or right of possession to property be incidentallyaffected. It is
essential that the property be directly affected such as when the relief sought in the
action or suit includes the recovery of possession, or the enforcement of a lien, or an
adjudication between conflicting claims of title, possession, or the right of possession to
specific property, or requiring its transfer or sale. Even if a party initially avails of a
notice of lis pendens upon the filing of a case in court, such notice is rendered nugatory
if the case turns out to be a purely personal action. In such event, the notice of lis
pendens becomes functus officio.
[28]

[29]

To put the property under the coverage of the rule on lis pendens, all a party has to
do is to assert a claim of possession or title over the subject property. It is not necessary
that ownership or interest over the property is proved.
[30]

We disagree with petitioners claim that lis pendens is not proper since private
respondent has no title over the property neither did he pray specifically in his complaint
for the ownership or possession thereof.
The complaint for specific performance and damages filed by private respondent
specifically prayed that petitioners, as defendants thereat, be bound by the terms and
conditions of their letter-contract. By praying thus, private respondent in effect asks the
court to order petitioners to fulfill their promise to sell the property covered by TCT No.
145269 for the amount of P17M. While private respondent did not explicitly state that
he was running after the ownership of the property, a simple reading of the complaint
would show that such was his intent. This is sufficient for purposes of annotating lis
pendens.
[31]

Whether or not the claim of private respondent has merit is of no moment and
should not affect the annotation of lis pendens on the title of the subject property. There
is nothing in the rules which requires a party seeking annotation of lis pendens to show
that the land belongs to him. There is no requirement that the party applying for the
annotation must prove his right or interest over the property sought to be annotated.
Thus, we have held that even on the basis of an unregistered deed of sale, a notice
of lis pendens may be annotated on the title. Said annotation cannot be considered as a
collateral attack against the certificate of title based on the principle that the registration
of a notice of lis pendens does not produce a legal effect similar to a lien. The rules
merely require that an affirmative relief be claimed since a notation of lis
pendens neither affects the merits of a case nor creates a right or a lien. It only protects
the applicants rights which will be determined during trial.
[32]

[33]

In fine, petitioners failed to show that the CA committed grave abuse of discretion in
ordering the re-annotation of the notice of lis pendens.
WHEREFORE, the petition for certiorari is DISMISSED for lack of merit.
Costs against petitioners.
SO ORDERED.
Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

[1]

Per Associate Justice Delilah Vidallon-Magtolis and concurred in by Associate Justices Jesus M.
Elbinias and Rodrigo Cosico, Rollo, pp.19-24.

[2]

Rollo, p. 26.

[3]

Rollo, p. 33.

[4]

Id., p. 5.

[5]

Id., pp. 29-30.

[6]

Id., p. 6.

[7]

Rollo, p. 35.

[8]

Id., p. 7.

[9]

Id., pp. 5-7.

[10]

Rollo, pp. 21-23.

[11]

Id., p. 26.

[12]

Id., p. 8.

[13]

G.R. No. 117108, November 5, 1997, 281 SCRA 298, 311.

[14]

Rollo, pp. 9-14.

[15]

No. L-28526, 142 SCRA 423, July 7, 1986.

[16]

Also Manuel Limsico, Jr. and Aloysius R. Santos, p. 77.

[17]

Rollo, pp. 53-56.

[18]

G.R. No. 104769, 327 SCRA 203, March 3, 2000.

[19]

Rollo, pp. 69-70.

[20]

Heirs of Eugenio Lopez, Sr. vs. Enriquez, G.R. No. 146262, January 21, 2005.

[21]

Lim vs. Vera Cruz, G.R. No. 143646, April 4, 2001, 356 SCRA 386, 393.

[22]

Yared vs. Ilarde, G.R. No. 114732, August 1, 2000, 337 SCRA 53, 58.

[23]

Heirs of Eugenio Lopez, Sr. vs. Enriquez, supra.

[24]

Fernandez, et al. vs. Court of Appeals, G.R. No. 115813, October 16, 2000, 343 SCRA 184, 194.

[25]

Yared case, supra at p. 60.

[26]

G.R. No. 60323, April 17, 1990, 184 SCRA 325, 330.

[27]

Id., p. 330.

[28]

G.R. No. 148568, March 20, 2003, 399 SCRA 409, 416.

[29]

Id., pp. 416, 419-420.

[30]

Yared case, supra at p. 60.

[31]

Rollo, pp. 31-33.

[32]

Lim case, supra at p. 392.

[33]

Viewmaster Construction Corp. vs. Maulit, G.R. No. 136283, February 29, 2000, 326 SCRA 821, 833.

THIRD DIVISION
ANITA REYESMESUGAS, G.R. No. 174835
Petitioner,
Present:
CORONA, J., Chairperson,
VELASCO, JR.,
- v e r s u s - NACHURA,
PERALTA and
ABAD, JJ.
ALEJANDRO AQUINO REYES,
Respondent. Promulgated:
March 22, 2010

x-------------------------------------------------x

DECISION
CORONA, J.:

This is a petition for review on certiorari [1] seeking to reverse

the June 23, 2006 and September 21, 2006 orders [2] of the
Regional Trial Court of Makati (RTC), Branch 62 denying the
petitioners motion to cancel a notice of lis pendens.

Petitioner Anita Reyes-Mesugas and respondent Alejandro A.

Reyes are the children of Lourdes Aquino Reyes and Pedro N.
Reyes. Lourdes died intestate, leaving to her heirs, among others,
three parcels of land, including a lot covered by Transfer
Certificate of Title (TCT) No. 24475.

On February 3, 2000, respondent filed a petition for

settlement of the estate of Lourdes, [3] praying for his appointment
as administrator due to alleged irregularities and fraudulent
transactions by the other heirs. Petitioner, her father Pedro and
Arturo, a sibling of the petitioner, opposed the petition.

On August 30, 2000, a compromise agreement [4] was entered into

by the parties whereby the estate of Lourdes was partitioned. A

decision[5]dated September 13, 2000 was rendered by the RTC

pursuant to the said compromise agreement. The compromise
agreement with respect to TCT No. 24475 is reproduced below:
5. That the parties hereto hereby agree to recognize, acknowledge and
respect:

5.1. the improvements found on the parcel of land covered

under TCT No. 24475 of the Registry of Deeds of Rizal
consisting of two lots namely Lot 4-A and Lot 4-B of the
new survey with two (2) residential houses presently
occupied and possessed as owners thereof by Antonio
Reyes and Anita Reyes-Mesugas to constitute part of their
shares in the estate of Lourdes Aquino Reyes;

5.2 further, the improvement consisting of a bakery-store under

lease to a third party. The proceeds thereof shall be
shared by Antonio Reyes and Pedro N. Reyes;

5.3 that the expenses for the partition and titling of the property
between Antonio Reyes and Anita Reyes-Mesugas shall be
equally shared by them.

On

December

7,

2004,

petitioner

filed

motion

to

cancel lis pendens annotation for TCT No. 24475[6] in the RTC in
view of the finality of judgment in the settlement of the estate.
Petitioner argued that the settlement of the estate proceeding
had

terminated;

hence,

the

annotation

oflis pendens could

already be cancelled since it had served its purpose.

Respondent opposed the motion and claimed that the

parties, in addition to the compromise agreement, executed side
agreements which had yet to be fulfilled. One such agreement
was executed between petitioner[7] and respondent granting
respondent a one-meter right of way on the lot covered by TCT
No. 24475. However, petitioner refused to give the right of way
and threatened to build a concrete structure to prevent access.
He argued that, unless petitioner permitted the inscription of the
right of way on the certificate of title pursuant to their agreement,
the notice of lis pendens in TCT No. 24475 must remain.

In its order[8] dated January 26, 2006, the RTC denied the motion
to cancel the notice of lis pendens annotation for lack of sufficient
merit.

It

found

of lis pendens was

that

the

unnecessary

cancellation
as

there

of
were

the

notice

reasons

for

maintaining it in view of petitioner's non-compliance with the

alleged right of way agreement between the parties. It stated
that:

A careful perusal of the compromise agreement dated September 13,

2000 revealed that one of the properties mentioned is a parcel of land
with improvements consisting [of] two hundred nine (209) square
meters situated in Makati covered under TCT No. 24475 of the Registry
of Deeds [of] Rizal in the name of Pedro N. Reyes married to Lourdes
Aquino Reyes and form[s] part of the notarized right of way agreement
on TCT No. 24475, considering that the movant Anita Reyes is still
bound by the right of way agreement, the same should be complied
with before the cancellation of the subject annotation. [9] (Citations
omitted)

Petitioner filed a notice of appeal. [10] Because the denial of a

motion to cancel the notice of lis pendens annotation was an
interlocutory order, the RTC denied the notice of appeal as it could
not be appealed until the judgment on the main case was
rendered.[11] A motion for reconsideration was filed by petitioner
but the same was also denied.[12]

Hence, this petition.

We find for petitioner.

A compromise is a contract whereby the parties, by making

reciprocal concessions, avoid litigation or put an end to one
already commenced.[13] Once submitted to the court and stamped
with judicial approval, it becomes more than a mere private
contract binding upon the parties; having the sanction of the
court and entered as its determination of the controversy, it has
the force and effect of any judgment.[14]

Consequently, a judgment rendered in accordance with a

compromise agreement is immediately executory as there is no
appeal from such judgment.[15] When both parties enter into an
agreement to end a pending litigation and request that a decision
be rendered approving said agreement, such action constitutes an
implied waiver of the right to appeal against the said decision. [16]

In this instance, the case filed with the RTC was a special
proceeding for the settlement of the estate of Lourdes. The RTC
therefore took cognizance of the case as a probate court.

Settled is the rule that a probate court is a tribunal of limited

jurisdiction. It acts on matters pertaining to the estate but never
on the rights to property arising from the contract. [17] It approves
contracts entered into for and on behalf of the estate or the heirs
to it but this is by fiat of the Rules of Court. [18] It is apparent
therefore that when the RTC approved the compromise agreement
on September 13, 2000, the settlement of the estate proceeding
came to an end.

Moreover, a notice of lis pendens may be cancelled when the

annotation is not necessary to protect the title of the party who
caused it to be recorded. [19] The compromise agreement did not
mention the grant of a right of way to respondent. Any agreement
other

than

the

judicially

approved

compromise

agreement

between the parties was outside the limited jurisdiction of the

probate court. Thus, any other agreement entered into by the
petitioner and respondent with regard to a grant of a right of way
was not within the jurisdiction of the RTC acting as a probate
court. Therefore, there was no reason for the RTC not to cancel
the notice of lis pendens on TCT No. 24475 as respondent had no
right which needed to be protected. Any alleged right arising from
the side agreement on the right of way can be fully protected by

filing an ordinary action for specific performance in a court of

general jurisdiction.

More importantly, the order of the probate court approving

the compromise had the effect of directing the delivery of the
residue of the estate of Lourdes to the persons entitled thereto
under the compromise agreement. As such, it brought to a close
the intestate proceedings[20]and the probate court lost jurisdiction
over the case, except only as regards to the compliance and the
fulfillment by the parties of their respective obligations under the
compromise agreement.

Having established that the proceedings for the settlement

of the estate of Lourdes came to an end upon the RTCs
promulgation of a decision based on the compromise agreement,
Section 4, Rule 90 of the Rules of Court provides:
Sec. 4. Recording the order of partition of estate. - Certified copies of
final orders and judgments of the court relating to the real estate or
the partition thereof shall be recorded in the registry of deeds of the
province where the property is situated.

In line with the recording of the order for the partition of the
estate, paragraph 2, Section 77 of Presidential Decree (PD) No.
1529[21]provides:
Section 77. Cancellation of Lis Pendens xxx xxx xxx
xxx xxx

At any time after final judgment in favor of the

defendant, or other disposition of the action such as to
terminate finally all rights of the plaintiff in and to the land
and/or buildings involved, in any case in which a memorandum or
notice of lis pendens has been registered as provided in the preceding
section, the
notice
of lis pendens shall
be
deemed
cancelled upon the registration of a certificate of the clerk of court in
which the action or proceeding was pending stating the manner of
disposal thereof. (emphasis supplied)

Thus, when the September 13, 2000 decision was recorded

in the Registry of Deeds of Rizal pursuant to Section 4, Rule 90 of
the Rules of Court, the notice of lis pendens inscribed on TCT No.
24475 was deemed cancelled by virtue of Section 77 of PD No.
1529.
WHEREFORE, the petition is hereby GRANTED. The Orders
of the Regional Trial Court of Makati, Branch 62 dated June 23,
2006 and September 21, 2006 are SET ASIDE. The notice
of lis pendens annotated

on

TCT

No.

24475

is

hereby

declared CANCELLED pursuant to Section 77 of the PD No. 1529

in relation to Section 4, Rule 90 of the Rules of Court.

SO ORDERED.

RENATO C. CORONA
Associate Justice
Chairperson

WE CONCUR:

PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

RENATO C. CORONA
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I
certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

Additional member per raffle dated March 17, 2010 in lieu of Justice Jose Catral Mendoza.

[1]

Under Rule 45 of the Rules of Court.

[2]

Penned by Judge Selma Palacio Alaras. Rollo, pp. 25-26.

[3]

Docketed as SP No. M-4984.

[4]

Dated August 30, 2000. Id., pp. 50-56.

[5]

Penned by Judge Roberto C. Diokno. Id., pp. 57-62.

[6]

Two hundred nine (209) sq. m. situated in Makati.

[7]

With sibling Antonio.

[8]

Id., pp. 27-28.

[9]

Id., p. 27.

[10]

Dated March 9, 2006. Id., p. 29.

[11]

Order dated July 26, 2006. Id., p. 25.

[12]

Order dated September 21, 2006. Id., p. 26.

[13]

Article 2028, NEW CIVIL CODE.

[14]

Domingo v. Court of Appeals, 325 Phil. 469 (1996).

[15]

Id.

[16]

Id.

[17]

Pio Baretto Realty Dev., Inc. v. Court of Appeals, No. L-62432, 3 August 1984, 131 SCRA 606.

[18]

Rule 89 of the RULES OF COURT. See also Article 2032, NEW CIVIL CODE.

[19]

Section 14, Rule 13 of the RULES OF COURT.

[20]

Santiesteban v. Santiesteban, 68 Phil. 367 (1939); Philippine Commercial and Industrial Bank v. Escolin, G.R.
No. L-27860, 29 March 1974, 50 SCRA 266.

[21]

PROPERTY REGISTRATION DECREE. PRESIDENTIAL DECREE NO. 1529.