Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 35223

September 17, 1931

THE BACHRACH MOTOR CO., INC., plaintiff-appellee,

vs.
TALISAY-SILAY MILLING CO., ET AL., defendants-appellees.
THE PHILIPPINE NATIONAL BANK, intervenor-appellant.
Roman J. Lacson for intervenor-appellant.
Mariano Ezpeleta for plaintiff-appellee.
Nolan and Hernaez for defendants-appellees Talisay-Silay Milling Co. and Cesar Ledesma.
ROMUALDEZ, J.:
This proceeding originated in a complaint filed by the Bachrach Motor Co., Inc., against the
Talisay-Silay Milling Co., Inc., for the delivery of the amount P13,850 or promissory notes or
other instruments or credit for that sum payable on June 30, 1930, as bonus in favor of Mariano
Lacson Ledesma; the complaint further prays that the sugar central be ordered to render an
accounting of the amounts it owes Mariano Lacson Ledesma by way of bonus, dividends, or
otherwise, and to pay the plaintiff a sum sufficient to satisfy the judgment mentioned in the
complaint, and that the sale made by said Mariano Lacson Ledesma be declared null and void.
The Philippine National Bank filed a third party claim alleging a preferential right to receive any
amount which Mariano Lacson Ledesma might be entitled to from the Talisay-Silay Milling Co.
as bonus, because that would be civil fruits of the land mortgaged to said bank by said debtor for
the benefit of the central referred to, and by virtue of a deed of assignment, and praying that said
central be ordered to delivered directly to the intervening bank said sum on account of the latter's
credit against the aforesaid Mariano Lacson Ledesma.
The corporation Talisay-Silay Milling Co., Inc., answered the complaint stating that of Mariano
Lacson Ledesma's credit, P7,500 belonged to Cesar Ledesma because he had purchased it, and
praying that it be absolved from the complaint and that the proper party be named so that the
remainder might be delivered.
Cesar Ledesma, in turn, claiming to be the owner by purchase in good faith an for a
reconsideration of the P7,500 which is a part of the credit referred to above, answered praying
that he be absolved from the complaint.

The plaintiff Bachrach Motor Co., Inc., answered the third party claim alleging that its credit
against Mariano Lacson Ledesma was prior and preferential to that of the intervening bank, and
praying that the latter's complaint be dismissed.
At the trial all the parties agreed to recognize and respect the sale made in favor of Cesar
Ledesma of the P7,500 part of the credit in question, for which reason the trial court dismissed
the complaint and cross-complaint against Cesar Ledesma authorizing the defendant central to
deliver to him the aforementioned sum of P7,500. And upon conclusion of the hearing, the court
held that the Bachrach Motor Co., Inc., had a preferred right to receive the amount of P11,076.02
which was Mariano Lacson Ledesma's bonus, and it ordered the defendant central to deliver said
sum to the plaintiff.
The Philippine National Bank appeals, assigning the following alleged errors as committed by
the trial court:
1. In holding that the bonus which the Talisay-Silay Milling Co., Inc., bound itself to pay
the planters who had mortgaged their land to the Philippine National Bank to secure the
payment of the debt of said central to said bank is not civil fruits of said land.
2. In not holding that said bonus became subject to the mortgage executed by the
defendant Mariano Lacson Ledesma to the Philippine National Bank to secure the
payment of his personal debt to said bank when it fell due.
3. In holding that the assignment (Exhibit 9, P.N.B.) of said bonus made on March 7,
1930, by Mariano Lacson Ledesma to the Philippine National Bank to be applied to the
payment of his debt to said Philippine National Bank is fraudulent.
4. In holding that the Bachrach Motor Co. Inc., in civil case No. 31597 of the Court of
First Instance of Manila levied a valid attachment upon the bonus in question.
5. In admitting and considering the supplementary complaint filed by the Bachrach Motor
Co., Inc., alleging as a cause of action the attachment of the bonus in question which said
Bachrach Motor Co., Inc., in civil case No. 31821 of the Court of First Instance of Manila
levied after the filing of the original complaint in this case, and after Mariano Lacson
Ledesma in this case had been declared in default.
6. In holding that the Bachrach Motor Co., Inc., has a preferential right to receive from
the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 which is in the possession
of said corporation as the bonus to be paid to Mariano Lacson Ledesma, and in ordering
the Talisay-Silay Milling Co., Inc., to deliver said amount to the Bachrach Motor Co.,
Inc.

7. In not holding that the Philippine National Bank has a preferential right to receive from
the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 held by said corporation as
Mariano Lacson Ledesma's bonus, and in not ordering said Talisay-Silay Milling Co.,
Inc., to deliver said amount to the Philippine National Bank.
8. In not holding that the amended complaint and the supplementary complaint of the
Bachrach Motor Co., Inc., do not state facts sufficient to constitute a cause of action in
favor of the Bachrach Motor Co., Inc., and against the Talisay-Silay Milling Co., Inc., or
against the Philippine National Bank.
The appellant bank bases its preferential right upon the contention that the bonus in question is
civil fruits of the lands which the owners had mortgaged for the benefit of the central giving the
bonus, and that, as civil fruits of said land, said bonus was assigned by Mariano Lacson Ledesma
on March 7, 1930, by virtue of the document Exhibit 9 of said intervening institution, which
admitted in its brief that "if the bonus in question is not civil fruits or rent which became subject
to the mortgage in favor of the Philippine National Bank when Mariano Lacson Ledesma's
personal obligation fell due, the assignment of March 7, 1930 (Exhibit 9, P.N.B.), is null and
void, not because it is fraudulent, for there was no intent of fraud in executing the deed, but that
the cause or consideration of the assignment was erroneous, for it was based upon the
proposition that the bonus was civil fruits of the land mortgaged to the Philippine National
Bank." (P. 31.)
The fundamental question, then, submitted to our consideration is whether or not the bonus in
question is civil fruits.
This is how the bonus came to be granted: On December 22, 1923, the Talisay-Silay Milling Co.,
Inc., was indebted to the Philippine National Bank. To secure the payment of its debt, it
succeeded in inducing its planters, among whom was Mariano Lacson Ledesma, to mortgage
their land to the creditor bank. And in order to compensate those planters for the risk they were
running with their property under the mortgage, the aforesaid central, by a resolution passed on
that same date, i.e., December 22, 1923, undertook to credit the owners of the plantation thus
mortgaged every year with a sum equal to two per centum of the debt secured according to
yearly balance, the payment of the bonus being made at once, or in part from time to time, as
soon as the central became free of its obligations to the aforesaid bank, and of those contracted
by virtue of the contract of supervision, and had funds which might be so used, or as soon as it
obtained from said bank authority to make such payment. (Exhibits 5, 6; P.N.B.)
Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings;
second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities,
or other similar sources of revenue. It may be noted that according to the context of the law, the
phrase "u otras analogas" refers only to rent or income, for the adjectives "otras" and

"analogas" agree with the noun "rentas," as do also the other adjectives "perpetuas" and
"vitalicias." That is why we say that by "civil fruits" the Civil Code understands one of three and
only three things, to wit: the rent of a building, the rent of land, and certain kinds of income.
As the bonus in question is not rent of a building or of land, the only meaning of "civil fruits" left
to be examined is that of "income."
Assuming that in broad juridical sense of the word "income" it might be said that the bonus in
question is "income" under article 355 of the Civil Code, it is obvious to inquire whether it is
derived from the land mortgaged by Mariano Lacson Ledesma to the appellant bank for the
benefit of the central; for it is not obtained from that land but from something else, it is not civil
fruits of that land, and the bank's contention is untenable.
It is to be noted that the said bonus bears no immediate, but only a remote accidental relation to
the land mentioned, having been granted as compensation for the risk of having subjected one's
land to a lien in favor of the bank, for the benefit of the entity granting said bonus. If this bonus
be income or civil fruits of anything, it is income arising from said risk, or, if one chooses, from
Mariano Lacson Ledesma's generosity in facing the danger for the protection of the central, but
certainly it is not civil fruits or income from the mortgaged property, which, as far as this case is
concerned, has nothing to do with it. Hence, the amount of the bonus, according to the resolution
of the central granting it, is not based upon the value, importance or any other circumstance of
the mortgaged property, but upon the total value of the debt thereby secured, according to the
annual balance, which is something quite distinct from and independent of the property referred
to.
Finding no merit in this appeal, the judgment appealed from is affirmed, without express finding
as to costs. So ordered.
Johnson, Street, Malcolm, Villamor, Ostrand, Villa-Real, and Imperial, JJ., concur.

Bachrach Motors v. Talisay-Silay Milling [G.R. No. 35223. September

17, 1931.]

En Banc, Romualdez (J): 7 concurring

Facts: On 22 December 1923, the Talisay-Silay Milling Co., Inc., was
indebted to the PNB. To secure the payment of its debt, it succeeded in
inducing its planters, among whom was Mariano Lacson Ledesma, to
mortgage their land to the bank. And in order to compensate those planters

for the risk they were running with their property under that mortgage, the
aforesaid central, by a resolution passed on the same date, and amended on
23 March 1928, undertook to credit the owners of the plantation thus
mortgaged every year with a sum equal to 2% of the debt secured according
to the yearly balance, the payment of the bonus being made at once, or in
part from time to time, as soon as the central became free of its obligations
to the bank, and of those contracted by virtue of the contract of supervision,
and had funds which might be so used, or as soon as it obtained from said
bank authority to make such payment.
<It seems Mariano Lacson Ledesma is indebted from Bachrach Motor; the
circumstance of which is not found in the case facts.>
Bachrach Motor Co., Inc. filed a complaint against the Talisay-Silay Milling
Co., Inc., for the delivery of the amount of P13,850 or promissory notes or
other instruments of credit for that sum payable on 30 June 1930, as bonus
in favor of Mariano Lacson Ledesma. The complaint further prays that the
sugar central be ordered to render an accounting of the amounts it owes
Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to
pay Bachrach Motors a sum sufficient to satisfy the judgment mentioned in
the complaint, and that the sale made by said Mariano Lacson Ledesma be
declared null and void. The PNB filed a third
party claim alleging a preferential right to receive any amount which Mariano
Lacson Ledesma might be entitled from Talisay-Silay Milling as bonus. TalisaySilay answered the complaint that Mariano Lacson Ledesmas credit (P7,500)
belonged to Cesar Ledesma because he had purchase it. Cesar Ledesma
claimed to be an owner by purchase in good faith. At the trial all the parties
agreed to recognize and respect the sale made in favor of Cesar Ledesma of
the P7,500 part of the credit in question, for which reason the trial court
dismissed the complaint and cross-complaint against Cesar Ledesma
authorizing the central to deliver to him the sum of P7,500. And upon
conclusion of the hearing, the court held that the Bachrach Motor Co., Inc.,
had a preferred right to receive the amount of P11,076.02 which was
Mariano Lacson Ledesmas bonus, and it ordered the central to deliver said
sum to Bachrach Motors. PNB appealed.
The Supreme Court affirmed the judgment appealed from, as it found no
merit in the appeal;, without express finding as to costs.
1. Civil Fruits under Article 355 of the Civil Code
Article 355 of the Civil Code considers three things as civil fruits: First, the
rents of buildings;

second, the proceeds from leases of lands; and, third, the income from
perpetual or life annuities, or other similar sources of revenue. According to
the context of the law, the phrase u otras analogas refers only to rents or
income, for the adjectives otras and analogas agree with the noun
rentas, as do also the other adjectives perpetuas and vitalicias. The
civil fruits the Civil Code understands one of three and only three things, to
wit: the rent of a building, the rent of land, and certain kinds of income.
2. Bonus not a civil fruit; not an income of the land
The amount of the bonus, according to the resolution of the central granting
it, is not based upon the value, importance or any other circumstance of the
mortgaged property, but upon the total value of the debt thereby secured,
according to the annual balance, which is something quite distinct from and
independent of the property referred to. As the bonus is not obtained from
the land, it is not civil fruits of that land. It is neither rent of buildings,
proceeds from lease of lands, or income under Article 355 of the Civil Code.
Bachrach Motor vs. Ledesma
The Bachrach Motor Co., Inc., vs. Mariano Lacson Ledesma, TalisaySilay Milling Co., Inc., and the Philippine National Bank
G.R. No. 42462, August 31, 1937

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-7915

July 30, 1955

In the Matter of the Voluntary Insolvency of the COMMERCIAL

AIRLINES, INC.; ALFREDO M. VELAYO, assignee-appellant,
vs.
REPUBLIC OF THE PHILIPPINES, claimant-creditor-appellee.
Quisumbing, Sycip, Quisumbing and Salazar for appellant.
First Assistant Solicitor General Ruperto Kapunan, Jr., Assistant Solicitor
General Guillermo E. Torres, Solicitor Esmeraldo Umali, Special Attorney of
the Solicitor General Pedro S. Reyes and Special Attorneys Remedios Mijares
Austria and Conrado R. Manalansan of appellee.
REYES, A., J.:

For unpaid charges for the use of Government airports and air navigation
facilities by the Commercial Airlines, Inc., the Republic of the Philippines filed
its proof of debt in the proceedings for the involuntary insolvency of said
corporation, and the claim having been approved and declared preferred by
the insolvency court, the assignee in insolvency brought the matter here on
appeal, the amount involved being P153,756.63, minus assignee's
counterclaim for P561.65, which was also approved by the court.
Both amounts are not in dispute. The only question in this appeal is whether
the claim enjoys preference under Section 50 (e) of the Insolvency Law as a
debt due the National Government.
There appears to be no question, and in fact it is admitted, that the airports
and air navigation facilities in question belong to the National Government.
Such being the case, compensation for the use thereof, that is, their civil
fruits, must also belong to the said Government. (Art. 354, old Civil code,
now Art. 441, New Civil Code.)
It is contended, however, that the debts owing from the insolvent corporation
was due, not to the National Government, but to a distinct entity known as
the National Airports Corporation, so that on the authority of Government of
the P. I. vs. China Banking Corporation et al., 54 Phil., 845, it cannot be
considered a preferred claim under the cited provision of the Insolvency Law.
We find no merit in this contention.
The establishment, operation, and maintenance of airfields are air navigation
facilities have been undertaken by the Government as a governmental
function since 1931 following the approval of Act No. 3990. Intrusted at first
to the Division of Aeronautics in the Department of Commerce and
Communications, the function was later turned over successively to the
following agencies, to wit: (1) Bureau of Aeronautics, by virtue of
Commonwealth Act No. 168; (2) Civil Aeronautics Administration, by virtue of
Execution Order No. 94; (3) National Airports Corporation, by virtue of
Republic Act No. 224; and (4) Civil Aeronautics Administration, again, by
virtue of Execution Order No. 365, promulgated November 10, 1950. It would
appear from the decision below and the agreed statement of facts that the
Government's claim against the insolvent is split into three items as follows:
(a) P68, 715.00 for the period from September 2, 1947 to June 4, 1948
when the airports were under the administration of the Civil
Aeronautics Administration;
(b) P39,382.04 for the period from October 21, 1947 to June 4, 1948
when the airports were under the administration of the Administrator
of the Civil Aeronautics Administration; and

(c) P45,658.59 when the airports were under the administration of the
National Airport Corporation.
Now, with respect to items (a) and (b) covering debts incurred when the
airports were under the administration of the Civil Aeronautics Administration
and the Administrator of the Civil Aeronautics Administration, respectively, it
cannot be seriously questioned that the civil fruits of those properties should
belong to their owner, the National Government, and not to the agencies that
had been set up to administer or manage them. As a matter of fact, Republic
Act No. 125, approved June 14, 1947, which directs the collection of charges
for the use of the Government's air navigation facilities, at the same time
provides that those charges "shall accrue to the general fund of the national,
provincial or municipal government financing said facilities." The fact that
the charges were to be collected by, or made payable to the Civil
Aeronautics Administration and the Administrator of Civil Aeronautics
Administration and not to the National Government directly is immaterial
since the former were mere instrumentalities of the latter. It is true that upon
the approval of Republic Act No. 224 on June 5, 1948, all the assets of the
Office of the Administrator of the Manila International Airport were
transferred to the National Airports Corporation, a public corporation created
by said Act. But as correctly held by the lower court, the transfer did not
divest the debt owing from the insolvent to the Government of its character
as a preferred claim under section 50 (e) of the Insolvency Law. (Woodlife &
Co. vs. Bush et al., 204 U. S. 186, 51 L. ed. 436, cited in II Tolentino Code of
Commerce, 1952 ed., p. 590.)
With respect to item (c), which covers charges totalling P45,658.59 for the
use of the government air navigation facilities during their administration by
the National Airports Corporation, we find that this indebtedness stands
essentially on the same footing as those in items (a) and (b). The airfields
were still owned by the national government. And though their
administration has been entrusted to a separate corporate entity known as
the National Airports Corporation, we must not lose sight of the fact that the
said corporation, which is managed and controlled by officers appointed by
the President of the Philippines with the consent of the Commission on
Appointments and which remains subject at all times to the control of the
National Government, is nothing more than an instrumentality of
government, createdaccording to the very wording of its charter"to serve
as an agency of the Republic of the Philippines for the development,
administration, operation, and management of government-owned landing
fields in the Philippines."(Section 1, Republic Act 224.)
This view does not run counter to the ruling in Government of the P. I. vs.
China Banking Corporation, supra. There the Government's claim was for a
mortgage debt to the Postal Savings Bank, contracted in favor of the latter in
its ordinary operation as a lender of money for purposes of profit. The claim

could not, therefore, be considered as coming under section 50 (e) of the

Insolvency Law, which, as interpreted in that case, has reference to "those
that pertain to the Insular Government in its function as such Government,
and not those relating to or contracted in favor of said Government by virtue
of commercial transactions or private contracts." The debt involved in the
present case pertains to the Government "in its function as such
Government." For the establishment and maintenance of public airfields are
a recognized function of a modern state, and to show that our Government
did not mean to derive profit from the exercise of such function it has placed
its airfields under the administration of the National Airports Corporation, an
entity created not for profit but for a definite government purpose. (See
Opinion No. 16, of the Secretary of Justice, 1950.)
In view of the foregoing, the order appealed from is hereby affirmed, with
costs against the assignee-appellant.
Bengzon, Acting C. J., Padilla, Montemayor, Jugo, Bautista Angelo, Labrador,
Concepcion, and Reyes, J. B. L., JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. Nos. 99338-40 February 1, 1993

HEIRS OF NICOLAS Y. OROSA, (Represented herein by their Attorneyin-Fact, RICARDO Q. OROSA), petitioners,
vs.
THE HON. EUTROPIO MIGRINO, Presiding Judge, Regional Trial Court
of Pasig, M.M. Branch 151 and GOLDENROD, INC., respondents.
Romero, Lagman, Valdecantos & Arreza Law Offices for petitioner
Eliseo M. Cruz for Heirs of F. Alma Sr.
Adoracion J. Mirandilla for Goldenrod, Inc.

FELICIANO, J.:

In Maria Mayug Vda. de Cailles v. Dominador Mayuga, et. al., 1 the Court
affirmed the decision of the Court of Appeals in C.A.-G.R. No. 31887-R,
confirming ownership over a fifty-three (53) hectare parcel of land located in
Las Pias, Rizal, more particularly referred to as Lot 9 Psu-11411 Amd-2, in
favor of one Dominador Mayuga. The Court also extended the benefit of such
confirmation to the latter's successor-in-interest, the late Nicolas Orosa.
After the case was remanded to Branch 151 of theRegional Trial Court, Pasig,
where it was originally docketed in 1958 as Land Registration Case ("LRC")
No. 2839, the heirs of Nicolas Orosa (petitioners herein) moved for execution
of judgment. This motion was granted by the lower court in its Order dated
25 October 1989, directing the Land Registration Authority ("LRA") to submit
the property's amended technical description for approval. 2
However, the LRA did not comply with said order because, among others, its
records indicated that the property had previously been decreed in favor of
one Jose T. Velasquez, to whom was issued Original Certificate of Title No.
6122. 3
On 10 September 1990, Goldenrod, Inc. ("Goldenrod") filed a motion for
leave to intervene in the execution proceeding, alleging an interest in the
property which is the subject matter of LRC No. 2839. 4
Petitioners opposed Goldenrod's motion, without success. The lower court
permitted Goldenrod to file its pleading in intervention through its Order
dated 7 December 1990. Petitioners' motion for reconsideration therefrom
was likewise denied in an Order dated 11 April 1991. 5
Hence this Petition for Certiorari and Prohibition.
After reviewing the comment required of private respondent Goldenrod, the
Court resolved to give due course to the petition and to issue a temporary
restraining order to enjoin the public respondent lower court from taking
further action in LRC No. 2839. Upon filing of petitioner's reply to said
comment, the case was submitted for decision.
Two (2) ultimate issues are posed for the Court's consideration in this case:
1) whether Goldenrod has shown in its pleadings in intervention a sufficient
legal interest in the land which is the subject matter of LRC No. 2839; and 2)
whether the legal interest actually shown by Goldenrod over the land can be
protected in a Proceeding separate from LRC No. 2839.

In respect of the first issue, the Court must observe that the lower court had
evaded resolving this matter before permitting Goldenrod's intervention:
The Orosa heirs also contend that the purported intervenor failed
to establish its alleged legal interest in these proceedings to the
subject parcel of land. Precisely, this case has to be set for
hearing to enable Goldenrod to prove its claim to the land in
question. 6 (Emphasis supplied).
As the Court understands it, Goldenrod attempts to augment the ruling of the
lower court by showing in its pleadings in intervention, as well as in its
comment before the Court, the existence of a legal interest in the land
sufficient to justify its intervention.
Goldenrod claims that in 1977, during the pendency of this case before the
Court in G.R. No. L-30859, Delta Motors Corporation (Delta) acquired for
value the contingent rights of Nicolas Orosa over the property, as well as the
conflicting claims thereto of one Jose Velasquez. 7 In 1980, the land
registration court trying Jose Velasquez' claims in LRC No. N-5416 excluded
therefrom the land referred to as Lot 9 Psu-11411 Amd-2 in G.R. No. L-30859.
8
Meanwhile, Delta somehow managed to obtain transfer certificates of titles
over the land and sold this acquisition to Goldenrod in 1987. 9 The latter then
succeeded in obtaining issuance in its favor of Transfer Certificates of Title
Nos. 4893 and 4901, whose technical descriptions overlapped "big portions"
of the land referred to as Lot 9 Psu-11411 Amd-2 in G.R. No. L-30859. 10 In
February 1989, Goldenrod sold the land covered by said transfer certificates
of title to a consortium composed of Fil Estate Management Inc., Arturo Y. Dy,
Megatop Realty Development Inc., Peaksun Enterprises and Export
Corporation, and Elena D. Jao ("Consortium"). 11 The contract of sale
contained an undertaking on Goldenrod's part to "defend the title of the
VENDEES to the property against claims of any third person whatsoever." 12 It
is on the basis of this stipulation that Goldenrod seeks to intervene in the
execution Proceedings of LRC
No. 2839.
Taking Goldenrod's own admissions at their face value, it is quite apparent
that whatever direct and actual legal interest it may have had over the land
had been disposed of by it for value in favor of the consortium in 1989 and
that whatever residual legal interest in the property can be premised on
Goldenrod's contractual undertaking, actually an express warranty against

eviction, is expectant or contingent in nature. Presently, Goldenrod has no

legal interest in the property and its warranty can only be enforced by the
consortium if the latter is dispossessed of the land by virtue of a proper
action instituted by the Orosa heirs as registered owners thereof. 13
But, the legal interest which entitles a person to intervene in a suit must be
actual and material, direct and immediate. A party seeking to intervene in a
pending case must show that he will either gain or lose by the direct legal
operation and effect of a judgment. 14
In the present case, Goldenrod has failed to meet this criteria and the lower
court gravely abused its discretion in permitting intervention after having
overlooked this matter.
One of the other reasons invoked by the public respondent in permitting
intervention at the execution stage of LRC No. 2839 follows:
The Orosa heirs contend that intervention can not be allowed at
this stage of the proceedings in this case. They forget that in a
land registration case even when the decree has been issued,
the case can be re-opened within (1) year from issuance of said
decree to enable any prejudiced party to present evidence in
support of his claim. 15
It appears that the lower court cited Section 32 of P.D. 1529. 16 permitting the
reopening of a decree of registration within one year after its entry, if the
same was procured through actual fraud and a person is thereby deprived of
any interest over the affected land.
The difficulty with this view is that, as earlier noted, Goldenrod had not
shown any actual interest in the land of which it could have been deprived,
on the basis of an actual or extrinsic fraud perpetrated by petitioners in the
course of procuring their decree of confirmation. Goldenrod had merely
alleged, rather ambiguously, a cause of action against petitioners in that
they "suddenly breached and disregarded the 1977 Agreement" (the sale
between Nicolas Orosa and Delta). 17 Even the public respondent made no
finding that Goldenrod was the apparent victim of an actual fraud. Hence its
invocation of the remedy provided in Section 32 of P.D. 1529 was bereft of
basis.

The action of the lower court in permitting Goldenrod's intervention at this

late stage of the proceedings in LRC No. 2839 is also flawed by another,
more serious defect. It must be remembered that upon entry of the Court's
judgment in G.R. No. L-30859, the confirmation of a registerable title, and the
consequent adjudication of ownership over Lot 9 Psu-11411 Amd-2, in favor
of petitioners' predecessors-in-interest became a final and settled matter. 18
Such entry of judgment operated, ipso facto to divest the lower court of its
general jurisdiction to act in LRC No. 2839, save for the limited matter of
supervising the process of executing the Court's decision. The public
respondent simply cannot, as it appears to be trying to do in this case,
interpret or reverse the implication of this Court's ruling that petitioners are
entitled to a Torrens title over Lot 9 Psu-11411 Amd-2, just because
Goldenrod seeks to recall execution by making a supervening allegation that
petitioners are no longer the owners thereof. 19
Goldenrod attempted to broaden the jurisdiction of the lower court, so as to
enable the latter to take cognizance of its motion for intervention, by
invoking the Court's ruling in Suson v. Court of Appeals: 20
It cannot be overlooked that the hearing before the respondent
court on the motion for demolition (emphasis supplied by the
Court) was in connection with the implementation or execution of
a final judgment in Civil Case No. R-14351. Petitioner was
precisely given an opportunity to intervene in order to guide the
court in disposing of private respondent's motion for demolition
in the light of petitioner's claim that his house was erected on
the disputed lot (emphasis supplied by the Court), and yet, he
was not an original party to the action. Petitioner was thus given
a chance to raise and prove his claim of ownership over a part of
the lot in question (emphasis supplied by the Court), but he
ignored such opportunity. He cannot now complain that he was
denied due process. "A case in which an execution has been
issued is regarded as still pending so that all proceedings on the
execution are proceedings in the suit. There is no question that
the court which rendered the judgment has a general
supervisory control over its process of execution, and this power
carries with it the right to determine every question of fact and
law which may be involved in the execution." (Emphasis supplied
by Goldenrod).

But it is evident that Goldenrod's reliance upon the Suson case is misplaced
because the intervenor therein had a direct and actual legal interest in the
property sought to be recovered by the prevailing party at execution.
Consequently, the executing court thereat had to accord the intervenor a full
hearing on whatever claim he might seek to make, disregarding the rules of
procedure limiting intervention to the period before or during a trial of a
case, 21 in the interest of observing due process as an aspect of substantial
justice.
Here, these considerations do not obtain and the lower court, in permitting
intervention, caused needless complication, expense and delay in the
execution proceedings of LRC No-2839, to the prejudice of petitioners' right
to a speedy disposition thereof.
Turning to the second issue posed in this case, given the remote and
contingent nature of Goldenrod's legal interest over the real property which
is the subject matter of LRC No. 2839, the Court believes that Goldenrod can
and should protect such interest in a separate proceeding.
The public respondent invoked the following to support its view that the
execution stage of the land registration proceeding was the proper venue
within which Goldenrod can protect its interest in the property. 22
Movants also contend that the granting of leave to intervene will
unduly delay the disposition of this case. The adjudication of
Goldenrod, Inc.'s interest in the subject parcel of land in the
instant case would be for the benefit not only of Goldenrod, Inc.
itself, (but) also of the Orosa heirs, because thereafter there will
be no cloud in the title of the party to whom the ownership of
said parcel of land may be adjudicated.
Finally, the movants contend that the intervenor's interest can be
protected in a separate proceedings (sic). The Court doubts if
this is true. In any event, as above adverted to, everybody will
be benefited by this Court adjudicating in this case the claim of
the intervenor. (Emphasis supplied).
It would appear that the public respondent premised its ruling solely on the
belief that a cloud had descended on the title over the real property which is
the subject matter of LRC No. 2839 and that this cloud had to be removed.

This justification does not persuade. Under Article 447 of the Civil Code, 23
the plaintiff in an action for quieting of title must at least have equitable title
to or an interest in the real property which is the subject matter of the action.
Evidence of Goldenrod's capacity on this point is inexistent because
Goldenrod is not asserting a claim to the property. 24 On the contrary, it had
admitted having alienated its interest in the land referred to as Lot 9 Psu11411 Amd-2 to the consortium. Thus, Goldenrod is not an interested party
capable of instituting an action to quiet title, either by intervening in LRC No.
2839 or by instituting a separate action. The right to commence such a
separate action pertains to its Vendee, if the latter wishes to defend the
validity of its 1987 purchase from Golderrod and to hold the Vendor
Goldenrod liable on its warranty of title.
WHEREFORE. the Petition for Certiorari and Prohibition is hereby GRANTED.
The Orders of the public respondent dated 7 December 1990 and 11 April
1991, being issued with grave abuse of discretion amounting to excess of
jurisdiction, are hereby ANNULLED and SET ASIDE. The public respondent's
Order dated 25 October 1989 is hereby REINSTATED and the Temporary
Restraining Order issued by the Court in this case is correspondingly LIFTED.
In view of the long pendency of LRC No. 2839, the public respondent is
hereby enjoined to terminate the proceeding as soon as possible by
completing the execution of the Court's Decision in G.R. No. L-30859 with all
deliberate speed. This Decision is immediately executory. No costs.
SO ORDERED.
Narvasa, C.J., Regalado, Nocon and Campos, Jr., JJ., concur.

# Footnotes
1 G.R. No. L-30859, 20 February 1989, 170 SCRA 347.
2 Rollo, pp. 39-40.
3 Id., 144-146.
4 Id., p. 41.
5 Id., pp. 26-28 and 43.

6 Order, pp. 1-2; Rollo, pp. 26-27.

7 Rollo, pp. 117-118 and 157.
8 Id., pp. 79-80, 83 and 87-88.
9 Id., p. 118.
10 Id., pp. 118-119, and 138.
11 Id., p. 119.
12 Rollo, pp. 119 and 195. The contractual stipulations relevant
to Goldenrod's motion in intervention appear to be the following:
6. That the VENDOR shall defend the title of the VENDEES to the
property against claims of any third persons whatsoever and that
in the event of suits filed concerning the ownership of the
property, the VENDEES shall have the right to suspend the
payment of any amount provided herein, and any and all period
(sic) under this agreement shall be deemed automatically
suspended and shall only commence to run upon final settlement
of said suits or claims, and if by reason of said suits the VENDEES
is compelled to litigate all expenses for the same and the
damages occasioned thereby shall be for the VENDOR's account.
xxx xxx xxx
9. It is hereby emphasized that the VENDEES has (sic) entered
into this transaction on the representation and commitments by
the VENDOR that all pending claims, liens, litigations involving
the subject property hereof have all been finalized, settled,
terminated or otherwise dismissed and that the property shall be
delivered cleared of any claims whatsoever. (Emphasis supplied).
13 Articles 1557 and 1558, Civil Code.
Article 1557. The warranty cannot be enforced until a final
judgment has been rendered whereby the vendee loses the thing
acquired or part thereof.

Article 1558. The vendor shall not be obliged to make good the
proper warranty, unless he is summoned in the suit for eviction
at the instance of the vendee.
14 See Garcia v. David, 67 Phil. 279, 284-285 (1939); see also
Philippine National Construction Corporation v. Republic, 188
SCRA 785-787 (1990) and Saw v. Court of Appeals, 195 SCRA
740, 744-745 (1991).
15 Rollo, p. 26.
16 Sec. 32. Review of decree of registration; Innocent purchaser
for value.
The decree of registration shall not be reopened or revised by
reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court
reversing judgments, subject, however, to the right of any
person, including the government and the branches thereof,
deprived of land or of any estate or interest therein by such
adjudication or confirmation or title obtained by actual fraud, to
file in the proper Court of First Instance [now Regional Trial
Court] a petition for reopening or review of the decree of
registration not later than one year from and after the date of
the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser
for value has acquired the land or an interest therein, whose
rights may be prejudiced. Whenever the phrase "innocent
purchaser for value" or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee,
mortgagee, or other encumbrancer for value.
Upon expiration of said period of one year, the decree of
registration and the certificate of title issued shall become
incontrovertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for
damages against the applicant or any other persons responsible
for the fraud. (Emphasis supplied).
17 Rollo, p. 137.

18 See Chua Huat v. Court of Appeals, 199 SCRA 1, 14 (1991).

19 See Tan v. Court of Appeals, 199 SCRA 212, 222-223 (1991),
Shell Company of the Phils., Ltd. v. Presiding Judge of the
Regional Trial Court of Agusan del Norte, 198 SCRA 254, 265
(1991) and Cruz v. Nicholas, 194 SCRA 639, 643 (1991).
20 172 SCRA 70, 75 (1989); Comment, pp. 20-22; Rollo, pp. 134136.
21 Sec. 2, Rule 12.
Sec. 2. Intervention. A person may, before or during a trial, be
permitted by the court, in its discretion, to intervene in an action,
if he has a legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against both, or
when he is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the
court or of an officer thereof.
xxx xxx xxx
(Emphasis supplied.)
22 Rollo, pp. 27.
23 Art. 477. The plaintiff must have legal or equitable title to, or
an interest in the real property which is the subject matter of the
action. He need not be in possession of said property. (Emphasis
supplied).
24 See Binalay v. Manalo, 195 SCRA 374, 387 (1991).