Cruz vs. Court of Appeals

Ten years of actual adverse possession of unregistered land under a claim of ownership, uninterrupted and continuous, vests in the possessor a full and complete title under Section 41 of the Code of Civil Procedure, regardless of good faith or just title.

The dispute involves a 1,637-square-meter residential lot in Poblacion, Pulilan, Bulacan, originally covered by Tax Declaration No. 388 in the name of Eustaquio Arceo, who died on September 18, 1917. Catalina Arceo is the only heir of Eustaquio Arceo. The petitioners are Asuncion Cruz, the widow of Juan Andan, and their children Alberto, Cesar, Angel, Roman, and Marina, all surnamed Andan. Juan Andan was the only son and heir of Julia Dizon and Angel Andan, and died on June 19, 1961. The property is unregistered land. The old Code of Civil Procedure (Act No. 190) was in force when petitioners' possession commenced in 1938, while the New Civil Code took effect on August 30, 1950. Article 1116 of the New Civil Code provides that prescription already running before the Code's effectivity shall be governed by the laws previously in force.

The property in question is a 1,637-square-meter residential lot in Poblacion, Pulilan, Bulacan, originally declared for taxation purposes under Tax Declaration No. 388 in the name of Eustaquio Arceo, assessed at P830.00. Eustaquio Arceo died on September 18, 1917, leaving his daughter Catalina Arceo as his only heir. Catalina married Ildefonso Santos. The petitioners are Asuncion Cruz, the widow of Juan Andan, and their children Alberto, Cesar, Angel, Roman, and Marina, all surnamed Andan. Juan Andan was the only son and heir of Julia Dizon and Angel Andan, and died on June 19, 1961.

According to respondents Catalina Arceo and Ildefonso Santos, sometime in the later part of 1952, Catalina agreed with Juan Andan that he could build a house on the property, pay the corresponding taxes, and allow her to live with his family without any other obligation. They further agreed that Juan Andan could build accessories on the property and that Catalina would share in the rentals at P50.00 per month from 1958 to May 1961. This alleged lease agreement was entered into orally, with no written document executed between them. Petitioners, for their part, denied the existence of any oral lease agreement. They claimed that their predecessor-in-interest Juan Andan acquired the land from his mother Julia Dizon, and upon his death, they acquired the same by operation of law. They asserted that they had been in actual possession of the land publicly, openly, peacefully, continuously, under a claim of title and in the concept of owner, exclusively and adversely against the whole world.

At the pre-trial, the parties admitted that the tax declaration in the name of Eustaquio Arceo was cancelled and transferred to Juan Andan on May 29, 1953, and after his death, to his heirs. They also admitted that defendants had been and were in possession of the property with buildings for residential and rental purposes, and had consistently paid the corresponding taxes. Respondents' counsel further admitted that petitioners' possession of the property started in 1938, when Catalina Arceo married and left the premises. Tax receipts (Exhibits 1, 1-A to 1-C) showed that petitioners' predecessors-in-interest paid taxes on the property for the years 1947 to 1950, which was before the alleged 1952 oral lease agreement. Juan Andan paid taxes not only on the lot in question but also on other lots declared in the names of Julia Dizon and other persons. Private respondents never paid any tax on the property.

After Juan Andan's death on June 19, 1961, Asuncion Cruz began refusing to share rentals with the respondents, insisting the land belonged to them because it was sold by Eustaquio Arceo to her husband. Despite demands for the rentals and for the return of possession, defendants refused. On April 22, 1964, respondents filed a complaint for recovery of possession, payment of back rentals totaling P1,750.00 plus subsequent rentals with legal interest, and damages. The trial court found for the defendants, dismissing the complaint and declaring them the real owners. The Court of Appeals reversed, ordering the return of the property to respondents and payment of back rentals at P50.00 per month from June 1961. The appellate court found that petitioners' possession became adverse in 1953 when Juan Andan caused the cancellation of Tax Declaration No. 388 and transferred it to his name.

• Misappreciation of Facts: Petitioners argued that the Court of Appeals grossly misappreciated admitted and stipulated facts in not affirming the trial court's declaration that they were the rightful owners entitled to possession.
• Acquisitive Prescription: Petitioners maintained that they had acquired the property through acquisitive prescription, having possessed it adversely for more than ten years since 1938, and that respondents' cause of action had been extinguished by prescription.
• Statute of Frauds and Parol Evidence: Petitioners contended that the Court of Appeals erred in disregarding the statute of frauds, parol evidence rule, and dead man's statute, as well as the timely objection raised during trial against the introduction of parol evidence to prove the alleged oral lease.
• Good Faith Possessor: Petitioners argued that the Court of Appeals erred in ordering them to pay monthly rentals, radically departing from the established jurisprudence that a possessor in good faith is not liable for any damage.
• Untimely Appeal: Petitioners claimed the Court of Appeals should have dismissed respondents' appeal because the brief was submitted six months after the death of the real party in interest.

• Oral Lease Agreement: Respondents contended that petitioners' possession was pursuant to an oral lease agreement entered into in 1952 between Catalina Arceo and Juan Andan, under which Juan Andan was allowed to build a house and accessories on the property in exchange for paying taxes and sharing rentals at P50.00 per month.
• Tax Declaration Annotation: Respondents relied on the annotation in Julia Dizon's Tax Declaration No. 5775 that her house was "Erected on the Solar of Eustaquio Arceo Tax No. 388" as proof of recognition of Catalina Arceo's property right by Julia Dizon and Juan Andan.
• Adverse Possession Began in 1953: Respondents maintained that petitioners' possession became adverse only in 1953 when Juan Andan caused the cancellation of Tax Declaration No. 388 and transferred it to his name, thus prescription had not yet accrued.
• Tax Receipts Show E. Arceo as Owner: Respondents argued that although Juan Andan paid the taxes, the tax receipts indicated that the declared owner of the land was E. Arceo, making Juan Andan merely the payor and not the owner.

• Existence of Oral Lease: Whether the alleged oral lease agreement between Catalina Arceo and Juan Andan was validly established by competent evidence.
• Acquisitive Prescription: Whether petitioners acquired ownership of the property through acquisitive prescription under Section 41 of the Code of Civil Procedure.
• Prescription of Cause of Action: Whether respondents' cause of action for recovery of possession had prescribed.
• Evidentiary Issues: Whether the Court of Appeals erred in disregarding the statute of frauds, parol evidence rule, and dead man's statute.
• Rental Award: Whether petitioners should be ordered to pay monthly rentals from 1961.

• Existence of Oral Lease: No. The alleged oral lease agreement was not proven by competent evidence; no receipt, writing, or memorandum of the lease existed, and the trial court properly sustained the objection to parol evidence under the statute of frauds.
• Acquisitive Prescription: Yes. Petitioners acquired full and complete title through adverse possession for more than ten years since 1938 under Section 41 of the Code of Civil Procedure, good faith and just title being immaterial.
• Prescription of Cause of Action: Yes. Respondents' cause of action had prescribed, the complaint having been filed 26 years after the cause of action accrued in 1938, well beyond the ten-year prescriptive period under Section 40 of Act No. 190.
• Evidentiary Issues: Yes, the Court of Appeals erred. The statute of frauds applied, and parol evidence was properly excluded by the trial court; without such evidence, the appellate court's upholding of the lease was without legal or factual basis.
• Rental Award: No. Petitioners, having acquired ownership by acquisitive prescription, were not liable for rentals.

• Existence of Oral Lease: The Court found that the alleged oral lease agreement entered into in 1952 was nonexistent and spurious. Tax receipts for 1947 to 1950 (Exhibits 1, 1-A to 1-C) showed that petitioners' predecessors paid taxes on the property years before the supposed 1952 agreement, making it improbable that a lessee would pay taxes five years before occupancy. Respondents' counsel admitted at pre-trial that petitioners' possession started in 1938, directly contradicting the claim that possession began under a 1952 lease. Catalina Arceo's testimony was uncorroborated by any document, receipt, or memorandum despite her claim that Juan Andan religiously paid monthly rentals for nearly ten years. The complete absence of any receipt or writing, without explanation for the failure to produce one, rendered the claim beyond belief and contrary to human experience. The trial court properly sustained petitioners' objection to parol evidence under the statute of frauds, as no writing subscribed by Juan Andan or his agent existed to prove the lease. The Court also rejected the Court of Appeals' reliance on the annotation in Julia Dizon's Tax Declaration No. 5775 that her house was "Erected on the Solar of Eustaquio Arceo," finding no evidence that Julia Dizon consented to the annotation or even participated in it; she had long died when the case was filed, and there was no proof when or by whom the annotation was made. The annotation was merely routinary, as the land bore Tax Declaration No. 388 at the time.

• Acquisitive Prescription: Petitioners' possession commenced in 1938, when Catalina Arceo married and left the property, as admitted by respondents' counsel at pre-trial. Since possession began before the New Civil Code took effect on August 30, 1950, Article 1116 of the New Civil Code directed application of the prior law — Section 41 of the Code of Civil Procedure (Act No. 190). Under Section 41, ten years of actual adverse possession by any person claiming to be owner, uninterrupted and continuous, vests full and complete title regardless of good faith or just title. The Court found clear, competent, and substantial evidence that petitioners exercised acts of dominion in derogation of respondents' interest: constructing permanent buildings, collecting rentals, granting permission for others to build a drug store and bakery, collecting fruits of fruit-bearing trees, and being consulted on boundary questions. These acts were unrebutted. Petitioners religiously paid taxes on the property. Juan Andan paid taxes not only on the lot in question but also on other lots declared in the names of Julia Dizon and other persons, supporting the conclusion that he paid under a claim of ownership as the only son and heir of Julia Dizon. The Court rejected the Court of Appeals' conclusion that Juan Andan was merely a payor, finding it weak, flimsy, and unrealistic. The complaint was filed in 1964, 26 years after possession commenced, well beyond the ten-year prescriptive period. The Court also noted that the affidavit of Juan Andan claiming purchase of the lot from Eustaquio Arceo was not improbable despite Juan Andan being only ten years old at the time of Eustaquio's death in 1917, because under Article 161 of the old Civil Code, whatever a child acquires with the capital or property of the parents belongs to the latter in ownership and in usufruct.

• Prescription of Cause of Action: Under Section 40 of Act No. 190, an action for recovery of title to or possession of real property can only be brought within ten years after the cause of action accrues. Since respondents abandoned the property in 1938 and petitioners took possession from that time, the ten-year period expired in 1948. The complaint filed in 1964 was barred by prescription. Whether treated as accion publiciana or accion reivindicatoria, the action had prescribed after the lapse of ten years. The essence of the statute of limitations is that whether or not the party had a right to possession, if he entered under a claim of such right and remained in possession for the statutory period, the right of action of the plaintiff with better title is barred. The right given by the statute does not depend on the validity of the claim under which possession is held. The law aids the vigilant, not those who slumber on their rights — vigilantibus sed non dormientibus jura subveniunt. After respondents had abandoned the property for 26 years, the law, justice, and equity would not allow them to dispossess petitioners who had made valuable improvements thereon.

• Evidentiary Issues: The Court of Appeals erred in disregarding the statute of frauds, parol evidence rule, and dead man's statute. The trial court properly sustained petitioners' objection to the introduction of parol evidence to prove the oral lease agreement. Without such parol evidence, the appellate court's upholding of the lease was without legal or factual basis. There being no competent proof of the oral lease, the nature of petitioners' possession could not be characterized as that of a lessee.

• Rental Award: Since petitioners were declared owners by acquisitive prescription, the award of back rentals was without basis. The Court of Appeals' ruling that petitioners should pay P50.00 per month from 1961 was reversed, as petitioners' possession was in the concept of owner, not pursuant to any lease.

• Acquisitive Prescription under Section 41, Code of Civil Procedure — Ten years of actual adverse possession by any person claiming to be owner of land, uninterruptedly and continuously, by occupancy, descent, grants, or otherwise, vests in the possessor a full and complete title. Good faith and just title are immaterial. The Court applied this doctrine because petitioners' possession commenced in 1938, before the New Civil Code took effect, and Article 1116 of the New Civil Code provides that prescription already running before the Code's effectivity shall be governed by laws previously in force. The Court emphasized that it suffices that there be a claim as owner for the requisite period, and that exclusive possession does not require excluding everyone from entry on the land.

• Prescription of Actions under Section 40, Code of Civil Procedure — An action for recovery of title to or possession of real property, or an interest therein, can only be brought within ten years after the cause of action accrues. The right given by the statute of limitations does not depend on the validity of the claim under which possession is held; it is sufficient that the possessor asserts ownership and that such assertion is accompanied by uninterrupted possession for the statutory period. The Court applied this to bar respondents' action filed 26 years after their cause of action accrued in 1938.

• Vigilantibus sed non dormientibus jura subveniunt — The laws aid the vigilant, not those who slumber on their rights. The Court invoked this maxim to emphasize that respondents who abandoned the property for 26 years could not later dispossess petitioners who had made valuable improvements thereon and enjoyed the fruits thereof.

• "Under the Code of Civil Procedure formerly in force, good or bad faith was immaterial for purposes of acquisitive prescription. Adverse possession in either character ripened into ownership after the lapse of ten years." — This passage, quoting Ongsiaco vs. Dallo, articulates the controlling rule on acquisitive prescription under the old Code of Civil Procedure and is the doctrinal foundation for the Court's ruling that petitioners acquired title regardless of the good faith or just title of their possession.

• "It is the essence of the statute of limitations that, whether the party had a right to the possession or not, if he entered under the claim of such right and remained in possession for the period (ten years) named in the statute of limitations, the right of action of the plaintiff who had the better title is barred by that adverse possession." — This passage, quoting Conspecto vs. Fruto, defines the essence and purpose of the statute of limitations in adverse possession cases and explains why respondents' better title, if any, was lost through delay in asserting it.

• "The laws aid the vigilant, not those who slumber on their rights." — This maxim encapsulates the equitable basis for barring respondents' stale claim after 26 years of abandonment and is frequently cited in Philippine jurisprudence on prescription and laches.

• Ongsiaco vs. Dallo, 27 SCRA 161 — Controlling precedent cited for the proposition that under the Code of Civil Procedure, good or bad faith is immaterial for acquisitive prescription, and adverse possession ripens into ownership after ten years.
• Narag vs. Cecilia, 48 SCRA 11 — Followed; traced Supreme Court rulings from 1908 (Altman vs. Commanding Officer) through Ongsiaco vs. Dallo on the ten-year prescriptive period under Section 41 of the Code of Civil Procedure.
• Conspecto vs. Fruto, 31 Phil. 144 — Followed; cited for the essence of the statute of limitations — that adverse possession for the statutory period bars the action of the plaintiff with better title, regardless of the validity of the defendant's claim.
• Corporacion de PP. Agustinos Recoletos vs. Crisostomo, 32 Phil. 427 (1915) — Followed; cited for the proposition that Section 41 vests in the adverse possessor a full and complete title after ten years.
• Santos vs. Heirs of Crisostomo, 41 Phil. 342 (1921) — Followed; cited for the rule that adverse possession begins with occupancy and that no just title is necessary.
• Development Bank of the Philippines vs. Ozarraga, 14 SCRA 653 — Followed; cited for the application of Article 1116 of the New Civil Code, directing that prescription already running before the Code's effectivity be governed by prior laws.
• Vda. de Delima vs. Tio, 32 SCRA 516 — Followed; cited for the rule that under the C.C.P., an action for recovery of real property can only be brought within ten years after the cause of action accrues.

• Section 41, Code of Civil Procedure (Act No. 190) — Provides that ten years of actual adverse possession by any person claiming to be owner, uninterrupted and continuous, vests in the possessor a full and complete title. Applied because petitioners' possession commenced in 1938, before the New Civil Code took effect, and more than ten years had elapsed before the complaint was filed in 1964.
• Section 40, Code of Civil Procedure (Act No. 190) — Provides that an action for recovery of title to or possession of real property can only be brought within ten years after the cause of action accrues. Applied to bar respondents' action filed 26 years after the cause of action accrued.
• Article 1116, New Civil Code — Provides that prescription already running before the effectivity of the New Civil Code (August 30, 1950) shall be governed by laws previously in force. Applied to determine that the old Code of Civil Procedure governs the prescriptive period since petitioners' possession commenced in 1938.
• Article 161, Old Civil Code / Article 324, New Civil Code — Provides that whatever a child acquires with the capital or property of the parents belongs to the latter in ownership and in usufruct. Cited to explain that Juan Andan's acquisition of the property as a minor using his mother Julia Dizon's capital was not improbable under the law.

Teehankee (Chairman), Makasiar, Fernandez, De Castro, and Melencio-Herrera, JJ., concurred.