Republic of the PhilippinesSUPREME 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. Talisay-Silay answered the complaint that Mariano Lacson Ledesma’s 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 Ledesma’s 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, Talisay-Silay Milling Co., Inc., and the Philippine National BankG.R. No. 42462, August 31, 1937

Republic of the PhilippinesSUPREME 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, created—according 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 PhilippinesSUPREME COURT

Manila

SECOND DIVISION

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

HEIRS OF NICOLAS Y. OROSA, (Represented herein by their Attorney-in-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 Piñas, 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 Psu-11411 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.

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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. 134-136.

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.

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(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).