G.R. No. L-40880 - Cruz vs. Court of Appeals

The controversy involves a parcel of residential land in Poblacion, Pulilan, Bulacan with an area of 1,637 square meters, originally covered by Tax Declaration No. 388 in the name of Eustaquio Arceo.
The boundaries of the property are defined as follows: north by Juan Maniego and Dominga Santos; south by a provincial road; east by Emiliano Santos; and west by Rufino Arceo.

Plaintiffs-Appellants: Catalina Arceo and Ildefonso Santos (spouses), who claim the property by virtue of inheritance from Eustaquio Arceo and Angelina Dizon.
Defendants-Petitioners: Asuncion Cruz (widow of the deceased Juan Andan) and the children of Juan Andan—Alberto, Cesar, Angel, Roman, and Marina Andan—alleging that they acquired the property by operation of law as heirs of Juan Andan.
The original complaint (filed on April 22, 1964) sought the recovery of possession of the land, payment of back rentals totaling P1,750.00 (with legal interest on subsequent rentals), as well as damages.

Plaintiffs contended that late in 1952, they had agreed with Juan Andan that he could build a house on the property, pay the property taxes, and allow Catalina Arceo to live with Juan Andan’s family.
It was further alleged that, pursuant to this oral lease agreement, the plaintiffs shared in the rentals at P50.00 per month from 1958 to May 1961.
Defendants, however, denied the existence of such an oral lease and maintained that their possession was as true owners under a claim of title derived from their predecessor-in-interest, Juan Andan, who in turn allegedly acquired the land from his mother, Julia Dizon.

The record includes several tax receipts (Exhibits 1, 1-A to 1-C) evidencing payment of taxes in the years 1947 to 1950 by the predecessors of the petitioners.
It is admitted that petitioners paid taxes for the years 1961 and 1962, while the private respondents did not pay any tax on the property.
During the pre-trial, both parties agreed that the land had previously been declared in the name of Eustaquio Arceo and that Catalina Arceo was the sole heir.
Counsel for the private respondents, during pre-trial, conceded that petitioners’ actual possession commenced in 1938 when Catalina Arceo left the premises upon her marriage.
Petitioners objected to the introduction of parol evidence intended to prove the alleged 1952 oral lease, a motion sustained by the trial court.

At trial, the court rendered a judgment in favor of the defendants (petitioners), dismissing the complaint, declaring them the rightful owners, and awarding damages (attorney’s fees and costs) against the plaintiffs.
On appeal, the Court of Appeals reversed the trial court’s decision by ordering the property be returned to the plaintiffs and requiring the petitioners to pay back and subsequent rentals at P50.00 per month (with interest).
A motion for reconsideration by the petitioners was denied, despite the appellate court’s observation that petitioners’ possession had “became adverse” to the plaintiffs’ rights as of 1953, after the new Civil Code took effect.
The present case is a petition for review on certiorari questioning the reversal and the evidentiary basis for the appellate ruling.

Whether there was a binding oral lease agreement between Catalina Arceo and Juan Andan, which purportedly allowed Juan Andan to occupy the land and share the rental receipts.
Whether the alleged lease was evidenced by any document, receipt, written memorandum, or corroborative testimony.

Whether the petitioners’ long-standing possession of the property since at least 1938, characterized as actual, open, public, continuous, and adverse, qualifies as possession under a claim of ownership.
Whether such possession gives rise to ownership by acquisitive prescription under Section 41 of the Code of Civil Procedure (CCP) or Article 1116 of the New Civil Code.

Whether the series of tax receipts—spanning from 1947 to 1950 (and later years)—serve as conclusive evidence supporting the petitioners’ claim under their predecessors’ consistent payment of taxes.
Whether the practice of paying taxes, even prior to the alleged lease agreement of 1952, negates support for the existence of the lease and implies an owner-like possession.

Whether the recovery action for possession initiated by the plaintiffs in 1964 is barred by the statute of limitations, considering that the cause of action may have accrued as early as 1938.
Whether the petitioners’ delay—exceeding the ten-year period set by Section 40 of Act No. 190—discharges any claim the private respondents might have in recovering possession.

Whether ordering the petitioners to pay monthly rentals from 1961 until the premises are vacated is consistent with established jurisprudence, notably when a possessor in good faith is not ordinarily held liable for such damages.
Whether the appellate court erred in basing its decision on the unsubstantiated existence of an oral lease, rather than on the substantive evidence of adverse possession.