ARTICLE 414 -417

G.R. No. L-30173 September 30, 1971

GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs
appellees, vs ALBERTA VICENCIO and EMILIANO SIMEON,
defendants-appellants.
Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants.
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No.
27824-R) for the reason that only questions of law are involved.
This case was originally commenced by defendants-appellants in the
municipal court of Manila in Civil Case No. 43073, for ejectment.
Having lost therein, defendants-appellants appealed to the court a
quo (Civil Case No. 30993) which also rendered a decision against
them, the dispositive portion of which follows:
WHEREFORE, the court hereby renders
judgment in favor of the plaintiffs and
against the defendants, ordering the latter to
pay jointly and severally the former a
monthly rent of P200.00 on the house,
subject-matter of this action, from March 27,
1956, to January 14, 1967, with interest at
the legal rate from April 18, 1956, the filing
of the complaint, until fully paid, plus
attorney's fees in the sum of P300.00 and to
pay the costs.
It appears on the records that on 1 September 1955 defendantsappellants executed a chattel mortgage in favor of plaintiffsappellees over their house of strong materials located at No. 550 Int.
3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B,
Block No. 2554, which were being rented from Madrigal & Company,
Inc. The mortgage was registered in the Registry of Deeds of Manila
on 2 September 1955. The herein mortgage was executed to
guarantee a loan of P4,800.00 received from plaintiffs-appellees,
payable within one year at 12% per annum. The mode of payment

was P150.00 monthly, starting September, 1955, up to July 1956,

and the lump sum of P3,150 was payable on or before August, 1956.
It was also agreed that default in the payment of any of the
amortizations, would cause the remaining unpaid balance to
becomeimmediately due and Payable and
the Chattel Mortgage will be enforceable in
accordance with the provisions of Special
Act No. 3135, and for this purpose, the
Sheriff of the City of Manila or any of his
deputies is hereby empowered and
authorized to sell all the Mortgagor's
property after the necessary publication in
order to settle the financial debts of
P4,800.00, plus 12% yearly interest, and
attorney's fees... 2
When defendants-appellants defaulted in paying, the mortgage was
extrajudicially foreclosed, and on 27 March 1956, the house was sold
at public auction pursuant to the said contract. As highest bidder,
plaintiffs-appellees were issued the corresponding certificate of sale.
3
Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil
Case No. 43073 in the municipal court of Manila, praying, among
other things, that the house be vacated and its possession
surrendered to them, and for defendants-appellants to pay rent of
P200.00 monthly from 27 March 1956 up to the time the possession
is surrendered. 4 On 21 September 1956, the municipal court
rendered its decision
... ordering the defendants to vacate the
premises described in the complaint;
ordering further to pay monthly the amount
of P200.00 from March 27, 1956, until such
(time that) the premises is (sic) completely
vacated; plus attorney's fees of P100.00 and
the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court
and court a quo impugned the legality of the chattel mortgage,
claiming that they are still the owners of the house; but they waived
the right to introduce evidence, oral or documentary. Instead, they
relied on their memoranda in support of their motion to dismiss,
predicated mainly on the grounds that: (a) the municipal court did not
have jurisdiction to try and decide the case because (1) the issue
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involved, is ownership, and (2) there was no allegation of prior

possession; and (b) failure to prove prior demand pursuant to
Section 2, Rule 72, of the Rules of Court. 6
During the pendency of the appeal to the Court of First Instance,
defendants-appellants failed to deposit the rent for November, 1956
within the first 10 days of December, 1956 as ordered in the decision
of the municipal court. As a result, the court granted plaintiffsappellees' motion for execution, and it was actually issued on 24
January 1957. However, the judgment regarding the surrender of
possession to plaintiffs-appellees could not be executed because the
subject house had been already demolished on 14 January 1957
pursuant to the order of the court in a separate civil case (No. 25816)
for ejectment against the present defendants for non-payment of
rentals on the land on which the house was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the
supersedeas bond and withdrawal of deposited rentals was denied
for the reason that the liability therefor was disclaimed and was still
being litigated, and under Section 8, Rule 72, rentals deposited had
to be held until final disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance rendered its
decision, the dispositive portion of which is quoted earlier. The said
decision was appealed by defendants to the Court of Appeals which,
in turn, certified the appeal to this Court. Plaintiffs-appellees failed to
file a brief and this appeal was submitted for decision without it.
Defendants-appellants submitted numerous assignments of error
which can be condensed into two questions, namely: .
(a) Whether the municipal court from which
the case originated had jurisdiction to
adjudicate the same;
(b) Whether the defendants are, under the
law, legally bound to pay rentals to the
plaintiffs during the period of one (1) year
provided by law for the redemption of the
extrajudicially foreclosed house.
We will consider these questions seriatim.

(a) Defendants-appellants mortgagors question the jurisdiction of the

municipal court from which the case originated, and consequently,
the appellate jurisdiction of the Court of First Instance a quo, on the
theory that the chattel mortgage is void ab initio; whence it would
follow that the extrajudicial foreclosure, and necessarily the
consequent auction sale, are also void. Thus, the ownership of the
house still remained with defendants-appellants who are entitled to
possession and not plaintiffs-appellees. Therefore, it is argued by
defendants-appellants, the issue of ownership will have to be
adjudicated first in order to determine possession. lt is contended
further that ownership being in issue, it is the Court of First Instance
which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel
mortgage on two grounds, which are: (a) that, their signatures on the
chattel mortgage were obtained through fraud, deceit, or trickery;
and (b) that the subject matter of the mortgage is a house of strong
materials, and, being an immovable, it can only be the subject of a
real estate mortgage and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance
found defendants-appellants' contentions as not supported by
evidence and accordingly dismissed the charge, 8 confirming the
earlier finding of the municipal court that "the defense of ownership
as well as the allegations of fraud and deceit ... are mere
allegations." 9
It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that
"the answer is a mere statement of the facts which the party filing it
expects to prove, but it is not evidence; 11 and further, that when the
question to be determined is one of title, the Court is given the
authority to proceed with the hearing of the cause until this fact is
clearly established. In the case of Sy vs. Dalman, 12 wherein the
defendant was also a successful bidder in an auction sale, it was
likewise held by this Court that in detainer cases the aim of
ownership "is a matter of defense and raises an issue of fact which
should be determined from the evidence at the trial." What
determines jurisdiction are the allegations or averments in the
complaint and the relief asked for. 13
Moreover, even granting that the charge is true, fraud or deceit does
not render a contract void ab initio, and can only be a ground for
rendering the contract voidable or annullable pursuant to Article 1390
of the New Civil Code, by a proper action in court. 14 There is nothing
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on record to show that the mortgage has been annulled. Neither is it

disclosed that steps were taken to nullify the same. Hence,
defendants-appellants' claim of ownership on the basis of a voidable
contract which has not been voided fails.
It is claimed in the alternative by defendants-appellants that even if
there was no fraud, deceit or trickery, the chattel mortgage was still
null and void ab initio because only personal properties can be
subject of a chattel mortgage. The rule about the status of buildings
as immovable property is stated in Lopez vs. Orosa, Jr. and Plaza
Theatre Inc., 15 cited in Associated Insurance Surety Co., Inc. vs. Iya,
et al. 16 to the effect that
... it is obvious that the inclusion of the
building, separate and distinct from the land,
in the enumeration of what may constitute
real properties (art. 415, New Civil Code)
could only mean one thing that a building
is by itself an immovable property
irrespective of whether or not said structure
and the land on which it is adhered to
belong to the same owner.
Certain deviations, however, have been allowed for various reasons.
In the case of Manarang and Manarang vs. Ofilada, 17 this Court
stated that "it is undeniable that the parties to a contract may by
agreement treat as personal property that which by nature would be
real property", citing Standard Oil Company of New York vs.
Jaramillo. 18 In the latter case, the mortgagor conveyed and
transferred to the mortgagee by way of mortgage "the following
described personal property." 19 The "personal property" consisted of
leasehold rights and a building. Again, in the case of Luna vs.
Encarnacion, 20 the subject of the contract designated as Chattel
Mortgage was a house of mixed materials, and this Court hold
therein that it was a valid Chattel mortgage because it was so
expressly designated and specifically that the property given as
security "is a house of mixed materials, which by its very nature is
considered personal property." In the later case of Navarro vs.
Pineda, 21 this Court stated that
The view that parties to a deed of chattel
mortgage may agree to consider a house as
personal property for the purposes of said
contract, "is good only insofar as the

contracting parties are concerned. It is

based, partly, upon the principle of estoppel"
(Evangelista vs. Alto Surety, No. L-11139, 23
April 1958). In a case, a mortgaged house
built on a rented land was held to be a
personal property, not only because the
deed of mortgage considered it as such, but
also because it did not form part of the land
(Evangelists vs. Abad, [CA]; 36 O.G. 2913),
for it is now settled that an object placed on
land by one who had only a temporary right
to the same, such as the lessee or
usufructuary, does not become immobilized
by attachment (Valdez vs. Central
Altagracia, 222 U.S. 58, cited in Davao
Sawmill Co., Inc. vs. Castillo, et al., 61 Phil.
709). Hence, if a house belonging to a
person stands on a rented land belonging to
another person, it may be mortgaged as a
personal property as so stipulated in the
document of mortgage. (Evangelista vs.
Abad, Supra.) It should be noted, however
that the principle is predicated on
statements by the owner declaring his
house to be a chattel, a conduct that may
conceivably estop him from subsequently
claiming otherwise. (Ladera vs. C.N.
Hodges, [CA] 48 O.G. 5374): 22
In the contract now before Us, the house on rented land is not only
expressly designated as Chattel Mortgage; it specifically provides
that "the mortgagor ... voluntarily CEDES, SELLS and TRANSFERS
by way of Chattel Mortgage 23 the property together with its leasehold
rights over the lot on which it is constructed and participation ..." 24
Although there is no specific statement referring to the subject house
as personal property, yet by ceding, selling or transferring a property
by way of chattel mortgage defendants-appellants could only have
meant to convey the house as chattel, or at least, intended to treat
the same as such, so that they should not now be allowed to make
an inconsistent stand by claiming otherwise. Moreover, the subject
house stood on a rented lot to which defendats-appellants merely
had a temporary right as lessee, and although this can not in itself
alone determine the status of the property, it does so when combined
with other factors to sustain the interpretation that the parties,
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particularly the mortgagors, intended to treat the house as

personalty. Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and
Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Strong Machinery and
Williamson, 26 wherein third persons assailed the validity of the
chattel mortgage, 27 it is the defendants-appellants themselves, as
debtors-mortgagors, who are attacking the validity of the chattel
mortgage in this case. The doctrine of estoppel therefore applies to
the herein defendants-appellants, having treated the subject house
as personalty.
(b) Turning to the question of possession and rentals of the premises
in question. The Court of First Instance noted in its decision that
nearly a year after the foreclosure sale the mortgaged house had
been demolished on 14 and 15 January 1957 by virtue of a decision
obtained by the lessor of the land on which the house stood. For this
reason, the said court limited itself to sentencing the erstwhile
mortgagors to pay plaintiffs a monthly rent of P200.00 from 27 March
1956 (when the chattel mortgage was foreclosed and the house
sold) until 14 January 1957 (when it was torn down by the Sheriff),
plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were
entitled to remain in possession without any obligation to pay rent
during the one year redemption period after the foreclosure sale, i.e.,
until 27 March 1957. On this issue, We must rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel
Mortgage Law, Act No. 1508. 28 Section 14 of this Act allows the
mortgagee to have the property mortgaged sold at public auction
through a public officer in almost the same manner as that allowed
by Act No. 3135, as amended by Act No. 4118, provided that the
requirements of the law relative to notice and registration are
complied with. 29 In the instant case, the parties specifically stipulated
that "the chattel mortgage will be enforceable in accordance with the
provisions of Special Act No. 3135 ... ." 30 (Emphasis supplied).
Section 6 of the Act referred to 31 provides that the debtor-mortgagor
(defendants-appellants herein) may, at any time within one year from
and after the date of the auction sale, redeem the property sold at
the extra judicial foreclosure sale. Section 7 of the same Act 32 allows
the purchaser of the property to obtain from the court the possession
during the period of redemption: but the same provision expressly
requires the filing of a petition with the proper Court of First Instance
and the furnishing of a bond. It is only upon filing of the proper

motion and the approval of the corresponding bond that the order for
a writ of possession issues as a matter of course. No discretion is left
to the court. 33 In the absence of such a compliance, as in the instant
case, the purchaser can not claim possession during the period of
redemption as a matter of right. In such a case, the governing
provision is Section 34, Rule 39, of the Revised Rules of Court 34
which also applies to properties purchased in extrajudicial
foreclosure proceedings. 35 Construing the said section, this Court
stated in the aforestated case of Reyes vs. Hamada.
In other words, before the expiration of the
1-year period within which the judgmentdebtor or mortgagor may redeem the
property, the purchaser thereof is not
entitled, as a matter of right, to possession
of the same. Thus, while it is true that the
Rules of Court allow the purchaser to
receive the rentals if the purchased property
is occupied by tenants, he is, nevertheless,
accountable to the judgment-debtor or
mortgagor as the case may be, for the
amount so received and the same will be
duly credited against the redemption price
when the said debtor or mortgagor effects
the redemption. Differently stated, the
rentals receivable from tenants, although
they may be collected by the purchaser
during the redemption period, do not belong
to the latter but still pertain to the debtor of
mortgagor. The rationale for the Rule, it
seems, is to secure for the benefit of the
debtor or mortgagor, the payment of the
redemption amount and the consequent
return to him of his properties sold at public
auction. (Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan vs. Espe. 36
Since the defendants-appellants were occupying the house at the
time of the auction sale, they are entitled to remain in possession
during the period of redemption or within one year from and after 27
March 1956, the date of the auction sale, and to collect the rents or
profits during the said period.
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It will be noted further that in the case at bar the period of redemption
had not yet expired when action was instituted in the court of origin,
and that plaintiffs-appellees did not choose to take possession under
Section 7, Act No. 3135, as amended, which is the law selected by
the parties to govern the extrajudicial foreclosure of the chattel
mortgage. Neither was there an allegation to that effect. Since
plaintiffs-appellees' right to possess was not yet born at the filing of
the complaint, there could be no violation or breach thereof.
Wherefore, the original complaint stated no cause of action and was
prematurely filed. For this reason, the same should be ordered
dismissed, even if there was no assignment of error to that effect.
The Supreme Court is clothed with ample authority to review
palpable errors not assigned as such if it finds that their
consideration is necessary in arriving at a just decision of the cases.

On 18 April 1956, the Tumalads commenced case in the municipal court of Manila,
praying that the house be vacated and its possession surrendered to them, and for
Vicencio and Simeon to pay rent of P200.00 monthly up to the time the possession
is surrendered. The municipal court rendered its decision in favor of the Tumalads.
Defendant-appellants impugned the legality of the chattel mortgage claiming that
they are still the owner of the house but waived their rights to introduce evidence.
Nearly a year after the foreclosure sale the mortgaged house had been demolished
on 14 and 15 January 1957 by virtue of a decision obtained by the lessor of the land
on which the house stood for non-payment of rentals.
Issues:

37

1.
It follows that the court below erred in requiring the mortgagors to
pay rents for the year following the foreclosure sale, as well as
attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed from is
reversed and another one entered, dismissing the complaint. With
costs against plaintiffs-appellees.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando,
Teehankee, Barredo, Villamor and Makasiar, JJ., concur.
Case digestTumalad vs Vicencio41 SCRA 143
Facts:On 1 September 1955 Vicencio and Simeon, defendants-appellants, executed
a chattel mortgage in favor of the Tumalads, plaintiff-appellees over their house of
strong materials over a lot in Quiapo, which were being rented from Madrigal &
Company, Inc. The mortgage was executed to guarantee a loan of P4,800.00
received from the Tumalads, payable within one year at 12% per annum. The mode
of payment was P150.00 monthly, It was also agreed that default in the payment of
any of the amortizations would cause the remaining unpaid balance to become
immediately due and payable, the Chattel Mortgage enforceable, and the Sheriff of
Manila authorized to sell the Mortgagors property after necessary publication.
When Vicencio and Simeon defaulted in paying, the mortgage was extrajudicially
foreclosed, and on 27 March 1956, the house was sold at public auction pursuant to
the said contract. As highest bidder, the Tumalads were issued the corresponding
certificate of sale.

2.

WON the subject matter of the mortgage which is a house of strong

material can be subject of real estate mortgage or a chattel mortgage.
Whether or not the defendants are legally bound to pay rentals to the
plaintiffs during the period of 1 year provided by law for the redemption of
the extrajudicially foreclosed house.

Held:
The inclusion of the building separate and distinct from the land in the enumeration
of what may constitute real property, that the building is by itself an immovable
property. However deviations have been allowed for various reasons specially if it is
stipulated in the subject of contract. In the case at bar, although there is no specific
statement referring to the subject house as a personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage, defendants-appellants
could only have meant to convey the house as a chattel.
Hence if a house belonging to a person stands on a rented land belonging to
another person, it may be mortgaged as a personal property as so stipulated in the
document of mortgage. It should be noted that the principle is predicated on
statements by the owner declaring his house to be chattel. Party in a chattel
mortgage cannot question the validity of the chattel mortgage entered into. The
doctrine of estoppels therefore applies to the defendant-appellants.
Since the defendant-appellants were occupying the house at the time the auction of
sale, they are entitled to remain in possession during the period of redemption or
within one year from the date of auction sale and to collect the rents or profits during
the said period.

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And since the plaintiff-appellees right to posses was not yet born at the filing of the
complaint, there could be no violation or breach thereof.
The Supreme Court reversed the decision appealed from and entered another
dismissing the complaint, with costs against plaintiffs-appellees.

2. G.R. No. L-11658

February 15, 1918

LEUNG YEE, plaintiff-appellant,

vs.
FRANK L. STRONG MACHINERY COMPANY and J. G.
WILLIAMSON, defendants-appellees.
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.
CARSON, J.:
The "Compaia Agricola Filipina" bought a considerable quantity of
rice-cleaning machinery company from the defendant machinery
company, and executed a chattel mortgage thereon to secure
payment of the purchase price. It included in the mortgage deed the
building of strong materials in which the machinery was installed,
without any reference to the land on which it stood. The
indebtedness secured by this instrument not having been paid when
it fell due, the mortgaged property was sold by the sheriff, in
pursuance of the terms of the mortgage instrument, and was bought
in by the machinery company. The mortgage was registered in the
chattel mortgage registry, and the sale of the property to the
machinery company in satisfaction of the mortgage was annotated in
the same registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the
"Compaia Agricola Filipina" executed a deed of sale of the land
upon which the building stood to the machinery company, but this
deed of sale, although executed in a public document, was not
registered. This deed makes no reference to the building erected on
the land and would appear to have been executed for the purpose of
curing any defects which might be found to exist in the machinery
company's title to the building under the sheriff's certificate of sale.

The machinery company went into possession of the building at or

about the time when this sale took place, that is to say, the month of
December, 1913, and it has continued in possession ever since.
At or about the time when the chattel mortgage was executed in
favor of the machinery company, the mortgagor, the "Compaia
Agricola Filipina" executed another mortgage to the plaintiff upon the
building, separate and apart from the land on which it stood, to
secure payment of the balance of its indebtedness to the plaintiff
under a contract for the construction of the building. Upon the failure
of the mortgagor to pay the amount of the indebtedness secured by
the mortgage, the plaintiff secured judgment for that amount, levied
execution upon the building, bought it in at the sheriff's sale on or
about the 18th of December, 1914, and had the sheriff's certificate of
the sale duly registered in the land registry of the Province of Cavite.
At the time when the execution was levied upon the building, the
defendant machinery company, which was in possession, filed with
the sheriff a sworn statement setting up its claim of title and
demanding the release of the property from the levy. Thereafter,
upon demand of the sheriff, the plaintiff executed an indemnity bond
in favor of the sheriff in the sum of P12,000, in reliance upon which
the sheriff sold the property at public auction to the plaintiff, who was
the highest bidder at the sheriff's sale.
This action was instituted by the plaintiff to recover possession of the
building from the machinery company.
The trial judge, relying upon the terms of article 1473 of the Civil
Code, gave judgment in favor of the machinery company, on the
ground that the company had its title to the building registered prior
to the date of registry of the plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different
vendees, the ownership shall be transfer to the
person who may have the first taken possession
thereof in good faith, if it should be personal
property.

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Should it be real property, it shall belong to the

person acquiring it who first recorded it in the
registry.
Should there be no entry, the property shall belong
to the person who first took possession of it in good
faith, and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property,
and it must be apparent that the annotation or inscription of a deed of
sale of real property in a chattel mortgage registry cannot be given
the legal effect of an inscription in the registry of real property. By its
express terms, the Chattel Mortgage Law contemplates and makes
provision for mortgages of personal property; and the sole purpose
and object of the chattel mortgage registry is to provide for the
registry of "Chattel mortgages," that is to say, mortgages of personal
property executed in the manner and form prescribed in the statute.
The building of strong materials in which the rice-cleaning machinery
was installed by the "Compaia Agricola Filipina" was real property,
and the mere fact that the parties seem to have dealt with it separate
and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry
in the chattel mortgage of the building and the machinery installed
therein, not the annotation in that registry of the sale of the
mortgaged property, had any effect whatever so far as the building
was concerned.
We conclude that the ruling in favor of the machinery company
cannot be sustained on the ground assigned by the trial judge. We
are of opinion, however, that the judgment must be sustained on the
ground that the agreed statement of facts in the court below
discloses that neither the purchase of the building by the plaintiff nor
his inscription of the sheriff's certificate of sale in his favor was made
in good faith, and that the machinery company must be held to be
the owner of the property under the third paragraph of the above
cited article of the code, it appearing that the company first took
possession of the property; and further, that the building and the land
were sold to the machinery company long prior to the date of the
sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the
Civil Code require "good faith," in express terms, in relation to
"possession" and "title," but contain no express requirement as to

"good faith" in relation to the "inscription" of the property on the

registry, it must be presumed that good faith is not an essential
requisite of registration in order that it may have the effect
contemplated in this article. We cannot agree with this contention. It
could not have been the intention of the legislator to base the
preferential right secured under this article of the code upon an
inscription of title in bad faith. Such an interpretation placed upon the
language of this section would open wide the door to fraud and
collusion. The public records cannot be converted into instruments of
fraud and oppression by one who secures an inscription therein in
bad faith. The force and effect given by law to an inscription in a
public record presupposes the good faith of him who enters such
inscription; and rights created by statute, which are predicated upon
an inscription in a public registry, do not and cannot accrue under an
inscription "in bad faith," to the benefit of the person who thus makes
the inscription.
Construing the second paragraph of this article of the code, the
supreme court of Spain held in its sentencia of the 13th of May,
1908, that:
This rule is always to be understood on the basis of
the good faith mentioned in the first paragraph;
therefore, it having been found that the second
purchasers who record their purchase had
knowledge of the previous sale, the question is to be
decided in accordance with the following paragraph.
(Note 2, art. 1473, Civ. Code, Medina and Maranon
[1911] edition.)
Although article 1473, in its second paragraph,
provides that the title of conveyance of ownership of
the real property that is first recorded in the registry
shall have preference, this provision must always be
understood on the basis of the good faith mentioned
in the first paragraph; the legislator could not have
wished to strike it out and to sanction bad faith, just
to comply with a mere formality which, in given
cases, does not obtain even in real disputes
between third persons. (Note 2, art. 1473, Civ. Code,
issued by the publishers of the La Revista de los
Tribunales, 13th edition.)

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The agreed statement of facts clearly discloses that the plaintiff,

when he bought the building at the sheriff's sale and inscribed his
title in the land registry, was duly notified that the machinery
company had bought the building from plaintiff's judgment debtor;
that it had gone into possession long prior to the sheriff's sale; and
that it was in possession at the time when the sheriff executed his
levy. The execution of an indemnity bond by the plaintiff in favor of
the sheriff, after the machinery company had filed its sworn claim of
ownership, leaves no room for doubt in this regard. Having bought in
the building at the sheriff's sale with full knowledge that at the time of
the levy and sale the building had already been sold to the
machinery company by the judgment debtor, the plaintiff cannot be
said to have been a purchaser in good faith; and of course, the
subsequent inscription of the sheriff's certificate of title must be held
to have been tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of
the sheriff's certificate of sale to the plaintiff was not made in good
faith, we should not be understood as questioning, in any way, the
good faith and genuineness of the plaintiff's claim against the
"Compaia Agricola Filipina." The truth is that both the plaintiff and
the defendant company appear to have had just and righteous
claims against their common debtor. No criticism can properly be
made of the exercise of the utmost diligence by the plaintiff in
asserting and exercising his right to recover the amount of his claim
from the estate of the common debtor. We are strongly inclined to
believe that in procuring the levy of execution upon the factory
building and in buying it at the sheriff's sale, he considered that he
was doing no more than he had a right to do under all the
circumstances, and it is highly possible and even probable that he
thought at that time that he would be able to maintain his position in
a contest with the machinery company. There was no collusion on
his part with the common debtor, and no thought of the perpetration
of a fraud upon the rights of another, in the ordinary sense of the
word. He may have hoped, and doubtless he did hope, that the title
of the machinery company would not stand the test of an action in a
court of law; and if later developments had confirmed his unfounded
hopes, no one could question the legality of the propriety of the
course he adopted.
But it appearing that he had full knowledge of the machinery
company's claim of ownership when he executed the indemnity bond
and bought in the property at the sheriff's sale, and it appearing
further that the machinery company's claim of ownership was well

founded, he cannot be said to have been an innocent purchaser for

value. He took the risk and must stand by the consequences; and it
is in this sense that we find that he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of
title in his vendor cannot claim that he has acquired title thereto in
good faith as against the true owner of the land or of an interest
therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects
in the title of his vendor. A purchaser cannot close his eyes to facts
which should put a reasonable man upon his guard, and then claim
that he acted in good faith under the belief that there was no defect
in the title of the vendor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the
existence of a defect in his vendor's title, will not make him an
innocent purchaser for value, if afterwards develops that the title was
in fact defective, and it appears that he had such notice of the
defects as would have led to its discovery had he acted with that
measure of precaution which may reasonably be acquired of a
prudent man in a like situation. Good faith, or lack of it, is in its
analysis a question of intention; but in ascertaining the intention by
which one is actuated on a given occasion, we are necessarily
controlled by the evidence as to the conduct and outward acts by
which alone the inward motive may, with safety, be determined. So it
is that "the honesty of intention," "the honest lawful intent," which
constitutes good faith implies a "freedom from knowledge and
circumstances which ought to put a person on inquiry," and so it is
that proof of such knowledge overcomes the presumption of good
faith in which the courts always indulge in the absence of proof to the
contrary. "Good faith, or the want of it, is not a visible, tangible fact
that can be seen or touched, but rather a state or condition of mind
which can only be judged of by actual or fancied tokens or signs."
(Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber Co. vs.
Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley,
119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing
part of the decision and judgment entered in the court below should
be affirmed with costs of this instance against the appellant. So
ordered.
Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.
Torres, Avancea and Fisher, JJ., took no part.
Page 8 of 404

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3.
G.R. No. 101083 July 30, 1993
JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all
surnamed OPOSA, minors, and represented by their parents
ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE SADIUA,
minor, represented by her parents CALVIN and ROBERTA
SADIUA, CARLO, AMANDA SALUD and PATRISHA, all
surnamed FLORES, minors and represented by their parents
ENRICO and NIDA FLORES, GIANINA DITA R. FORTUN, minor,
represented by her parents SIGRID and DOLORES FORTUN,
GEORGE II and MA. CONCEPCION, all surnamed MISA, minors
and represented by their parents GEORGE and MYRA MISA,
BENJAMIN ALAN V. PESIGAN, minor, represented by his
parents ANTONIO and ALICE PESIGAN, JOVIE MARIE ALFARO,
minor, represented by her parents JOSE and MARIA VIOLETA
ALFARO, MARIA CONCEPCION T. CASTRO, minor, represented
by her parents FREDENIL and JANE CASTRO, JOHANNA
DESAMPARADO,
minor, represented by her parents JOSE and ANGELA
DESAMPRADO, CARLO JOAQUIN T. NARVASA, minor,
represented by his parents GREGORIO II and CRISTINE
CHARITY NARVASA, MA. MARGARITA, JESUS IGNACIO, MA.
ANGELA and MARIE GABRIELLE, all surnamed SAENZ,
minors, represented by their parents ROBERTO and AURORA
SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and
DAVID IAN, all surnamed KING, minors, represented by their
parents MARIO and HAYDEE KING, DAVID, FRANCISCO and
THERESE VICTORIA, all surnamed ENDRIGA, minors,
represented by their parents BALTAZAR and TERESITA
ENDRIGA, JOSE MA. and REGINA MA., all surnamed ABAYA,
minors, represented by their parents ANTONIO and MARICA
ABAYA, MARILIN, MARIO, JR. and MARIETTE, all surnamed
CARDAMA, minors, represented by their parents MARIO and
LINA CARDAMA, CLARISSA, ANN MARIE, NAGEL, and IMEE
LYN, all surnamed OPOSA, minors and represented by their
parents RICARDO and MARISSA OPOSA, PHILIP JOSEPH,
STEPHEN JOHN and ISAIAH JAMES, all surnamed QUIPIT,
minors, represented by their parents JOSE MAX and VILMI
QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and
FRANCISCO, all surnamed BIBAL, minors, represented by

their parents FRANCISCO, JR. and MILAGROS BIBAL, and THE

PHILIPPINE ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his
capacity as the Secretary of the Department of Environment
and Natural Resources, and THE HONORABLE ERIBERTO U.
ROSARIO, Presiding Judge of the RTC, Makati, Branch 66,
respondents.
Oposa Law Office for petitioners.
The Solicitor General for respondents.

DAVIDE, JR., J.:

In a broader sense, this petition bears upon the right of
Filipinos to a balanced and healthful ecology which the
petitioners dramatically associate with the twin concepts of
"inter-generational responsibility" and "inter-generational
justice." Specifically, it touches on the issue of whether the
said petitioners have a cause of action to "prevent the
misappropriation or impairment" of Philippine rainforests
and "arrest the unabated hemorrhage of the country's vital
life support systems and continued rape of Mother Earth."

The controversy has its genesis in Civil Case No. 90-77

which was filed before Branch 66 (Makati, Metro Manila) of
the Regional Trial Court (RTC), National Capital Judicial
Region. The principal plaintiffs therein, now the principal
petitioners, are all minors duly represented and joined by
their respective parents. Impleaded as an additional plaintiff
is the Philippine Ecological Network, Inc. (PENI), a domestic,
non-stock and non-profit corporation organized for the
purpose of, inter alia, engaging in concerted action geared
for the protection of our environment and natural resources.
The original defendant was the Honorable Fulgencio S.
Factoran, Jr., then Secretary of the Department of
Environment and Natural Resources (DENR). His substitution
in this petition by the new Secretary, the Honorable Angel C.
Page 9 of 404

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Alcala, was subsequently ordered upon proper motion by

the petitioners. 1 The complaint 2 was instituted as a
taxpayers' class suit 3 and alleges that the plaintiffs "are all
citizens of the Republic of the Philippines, taxpayers, and
entitled to the full benefit, use and enjoyment of the natural
resource treasure that is the country's virgin tropical
forests." The same was filed for themselves and others who
are equally concerned about the preservation of said
resource but are "so numerous that it is impracticable to
bring them all before the Court." The minors further
asseverate that they "represent their generation as well as
generations yet unborn." 4 Consequently, it is prayed for
that judgment be rendered:
. . . ordering defendant, his agents, representatives and
other persons acting in his behalf to
(1) Cancel all existing timber license agreements in the
country;
(2) Cease and desist from receiving, accepting, processing,
renewing or approving new timber license agreements.
and granting the plaintiffs ". . . such other reliefs just and
equitable under the premises." 5
The complaint starts off with the general averments that the
Philippine archipelago of 7,100 islands has a land area of
thirty million (30,000,000) hectares and is endowed with
rich, lush and verdant rainforests in which varied, rare and
unique species of flora and fauna may be found; these
rainforests contain a genetic, biological and chemical pool
which is irreplaceable; they are also the habitat of
indigenous Philippine cultures which have existed, endured
and flourished since time immemorial; scientific evidence
reveals that in order to maintain a balanced and healthful
ecology, the country's land area should be utilized on the
basis of a ratio of fifty-four per cent (54%) for forest cover
and forty-six per cent (46%) for agricultural, residential,
industrial, commercial and other uses; the distortion and
disturbance of this balance as a consequence of
deforestation have resulted in a host of environmental
tragedies, such as (a) water shortages resulting from drying
up of the water table, otherwise known as the "aquifer," as

well as of rivers, brooks and streams, (b) salinization of the

water table as a result of the intrusion therein of salt water,
incontrovertible examples of which may be found in the
island of Cebu and the Municipality of Bacoor, Cavite, (c)
massive erosion and the consequential loss of soil fertility
and agricultural productivity, with the volume of soil eroded
estimated at one billion (1,000,000,000) cubic meters per
annum approximately the size of the entire island of
Catanduanes, (d) the endangering and extinction of the
country's unique, rare and varied flora and fauna, (e) the
disturbance and dislocation of cultural communities,
including the disappearance of the Filipino's indigenous
cultures, (f) the siltation of rivers and seabeds and
consequential destruction of corals and other aquatic life
leading to a critical reduction in marine resource
productivity, (g) recurrent spells of drought as is presently
experienced by the entire country, (h) increasing velocity of
typhoon winds which result from the absence of
windbreakers, (i) the floodings of lowlands and agricultural
plains arising from the absence of the absorbent mechanism
of forests (j) the siltation and shortening of the lifespan of
multi-billion peso dams constructed and operated for the
purpose of supplying water for domestic uses, irrigation and
the generation of electric power, and (k) the reduction of the
earth's capacity to process carbon dioxide gases which has
led to perplexing and catastrophic climatic changes such as
the phenomenon of global warming, otherwise known as the
"greenhouse effect."

Plaintiffs further assert that the adverse and detrimental

consequences of continued and deforestation are so capable
of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. This
notwithstanding, they expressed their intention to present
expert witnesses as well as documentary, photographic and
film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
Page 10 of 404

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8. Twenty-five (25) years ago, the Philippines had some

sixteen (16) million hectares of rainforests constituting
roughly 53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained
no more than 1.2 million hectares of said rainforests or four
per cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000
hectares of virgin old-growth rainforests are left, barely 2.8%
of the entire land mass of the Philippine archipelago and
about 3.0 million hectares of immature and uneconomical
secondary growth forests.

11. Public records reveal that the defendant's, predecessors

have granted timber license agreements ('TLA's') to various
corporations to cut the aggregate area of 3.89 million
hectares for commercial logging purposes.
A copy of the TLA holders and the corresponding areas
covered is hereto attached as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000
hectares per annum or 25 hectares per hour nighttime,
Saturdays, Sundays and holidays included the Philippines
will be bereft of forest resources after the end of this
ensuing decade, if not earlier.

use, benefit from and enjoy this rare and unique natural
resource treasure.
This act of defendant constitutes a misappropriation and/or
impairment of the natural resource property he holds in
trust for the benefit of plaintiff minors and succeeding
generations.
15. Plaintiffs have a clear and constitutional right to a
balanced and healthful ecology and are entitled to
protection by the State in its capacity as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with
the defendant's office. On March 2, 1990, plaintiffs served
upon defendant a final demand to cancel all logging permits
in the country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto
attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the
existing TLA's to the continuing serious damage and
extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel
the TLA's is an act violative of the rights of plaintiffs,
especially plaintiff minors who may be left with a country
that is desertified (sic), bare, barren and devoid of the
wonderful flora, fauna and indigenous cultures which the
Philippines had been abundantly blessed with.

13. The adverse effects, disastrous consequences, serious

injury and irreparable damage of this continued trend of
deforestation to the plaintiff minor's generation and to
generations yet unborn are evident and incontrovertible. As
a matter of fact, the environmental damages enumerated in
paragraph 6 hereof are already being felt, experienced and
suffered by the generation of plaintiff adults.

19. Defendant's refusal to cancel the aforementioned TLA's

is manifestly contrary to the public policy enunciated in the
Philippine Environmental Policy which, in pertinent part,
states that it is the policy of the State

14. The continued allowance by defendant of TLA holders to

cut and deforest the remaining forest stands will work great
damage and irreparable injury to plaintiffs especially
plaintiff minors and their successors who may never see,

(b) to fulfill the social, economic and other requirements of

present and future generations of Filipinos and;

(a) to create, develop, maintain and improve conditions

under which man and nature can thrive in productive and
enjoyable harmony with each other;

Page 11 of 404
LAW ON PROPERTY

(c) to ensure the attainment of an environmental quality

that is conductive to a life of dignity and well-being. (P.D.
1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the
aforementioned TLA's is contradictory to the Constitutional
policy of the State to
a. effect "a more equitable distribution of opportunities,
income and wealth" and "make full and efficient use of
natural resources (sic)." (Section 1, Article XII of the
Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and
resources (sic)" (Section 14, Article XIV, id.);
d. "protect and advance the right of the people to a
balanced and healthful ecology in accord with the rhythm
and harmony of nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of
humankind the natural law and violative of plaintiffs'
right to self-preservation and perpetuation.

22. There is no other plain, speedy and adequate remedy in

law other than the instant action to arrest the unabated
hemorrhage of the country's vital life support systems and
continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran,
Jr., filed a Motion to Dismiss the complaint based on two (2)
grounds, namely: (1) the plaintiffs have no cause of action
against him and (2) the issue raised by the plaintiffs is a
political question which properly pertains to the legislative
or executive branches of Government. In their 12 July 1990
Opposition to the Motion, the petitioners maintain that (1)
the complaint shows a clear and unmistakable cause of
action, (2) the motion is dilatory and (3) the action presents
a justiciable question as it involves the defendant's abuse of
discretion.

On 18 July 1991, respondent Judge issued an order granting

the aforementioned motion to dismiss. 7 In the said order,
not only was the defendant's claim that the complaint
states no cause of action against him and that it raises a
political question sustained, the respondent Judge further
ruled that the granting of the relief prayed for would result
in the impairment of contracts which is prohibited by the
fundamental law of the land.
Plaintiffs thus filed the instant special civil action for
certiorari under Rule 65 of the Revised Rules of Court and
ask this Court to rescind and set aside the dismissal order
on the ground that the respondent Judge gravely abused his
discretion in dismissing the action. Again, the parents of the
plaintiffs-minors not only represent their children, but have
also joined the latter in this case. 8
On 14 May 1992, We resolved to give due course to the
petition and required the parties to submit their respective
Memoranda after the Office of the Solicitor General (OSG)
filed a Comment in behalf of the respondents and the
petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and
unmistakably states a cause of action as it contains
sufficient allegations concerning their right to a sound
environment based on Articles 19, 20 and 21 of the Civil
Code (Human Relations), Section 4 of Executive Order (E.O.)
No. 192 creating the DENR, Section 3 of Presidential Decree
(P.D.) No. 1151 (Philippine Environmental Policy), Section 16,
Article II of the 1987 Constitution recognizing the right of the
people to a balanced and healthful ecology, the concept of
generational genocide in Criminal Law and the concept of
man's inalienable right to self-preservation and selfperpetuation embodied in natural law. Petitioners likewise
rely on the respondent's correlative obligation per Section 4
of E.O. No. 192, to safeguard the people's right to a healthful
environment.
It is further claimed that the issue of the respondent
Secretary's alleged grave abuse of discretion in granting
Timber License Agreements (TLAs) to cover more areas for
logging than what is available involves a judicial question.
Page 12 of 404

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Anent the invocation by the respondent Judge of the

Constitution's non-impairment clause, petitioners maintain
that the same does not apply in this case because TLAs are
not contracts. They likewise submit that even if TLAs may be
considered protected by the said clause, it is well settled
that they may still be revoked by the State when the public
interest so requires.
On the other hand, the respondents aver that the petitioners
failed to allege in their complaint a specific legal right
violated by the respondent Secretary for which any relief is
provided by law. They see nothing in the complaint but
vague and nebulous allegations concerning an
"environmental right" which supposedly entitles the
petitioners to the "protection by the state in its capacity as
parens patriae." Such allegations, according to them, do not
reveal a valid cause of action. They then reiterate the theory
that the question of whether logging should be permitted in
the country is a political question which should be properly
addressed to the executive or legislative branches of
Government. They therefore assert that the petitioners'
resources is not to file an action to court, but to lobby before
Congress for the passage of a bill that would ban logging
totally.
As to the matter of the cancellation of the TLAs, respondents
submit that the same cannot be done by the State without
due process of law. Once issued, a TLA remains effective for
a certain period of time usually for twenty-five (25) years.
During its effectivity, the same can neither be revised nor
cancelled unless the holder has been found, after due notice
and hearing, to have violated the terms of the agreement or
other forestry laws and regulations. Petitioners' proposition
to have all the TLAs indiscriminately cancelled without the
requisite hearing would be violative of the requirements of
due process.
Before going any further, We must first focus on some
procedural matters. Petitioners instituted Civil Case No. 90777 as a class suit. The original defendant and the present
respondents did not take issue with this matter.
Nevertheless, We hereby rule that the said civil case is
indeed a class suit. The subject matter of the complaint is of
common and general interest not just to several, but to all

citizens of the Philippines. Consequently, since the parties

are so numerous, it, becomes impracticable, if not totally
impossible, to bring all of them before the court. We likewise
declare that the plaintiffs therein are numerous and
representative enough to ensure the full protection of all
concerned interests. Hence, all the requisites for the filing of
a valid class suit under Section 12, Rule 3 of the Revised
Rules of Court are present both in the said civil case and in
the instant petition, the latter being but an incident to the
former.
This case, however, has a special and novel element.
Petitioners minors assert that they represent their
generation as well as generations yet unborn. We find no
difficulty in ruling that they can, for themselves, for others
of their generation and for the succeeding generations, file a
class suit. Their personality to sue in behalf of the
succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a
balanced and healthful ecology is concerned. Such a right,
as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the
created world in its entirety. 9 Such rhythm and harmony
indispensably include, inter alia, the judicious disposition,
utilization, management, renewal and conservation of the
country's forest, mineral, land, waters, fisheries, wildlife, offshore areas and other natural resources to the end that their
exploration, development and utilization be equitably
accessible to the present as well as future generations. 10
Needless to say, every generation has a responsibility to the
next to preserve that rhythm and harmony for the full
enjoyment of a balanced and healthful ecology. Put a little
differently, the minors' assertion of their right to a sound
environment constitutes, at the same time, the performance
of their obligation to ensure the protection of that right for
the generations to come.
The locus standi of the petitioners having thus been
addressed, We shall now proceed to the merits of the
petition.
After a careful perusal of the complaint in question and a
meticulous consideration and evaluation of the issues raised
Page 13 of 404

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and arguments adduced by the parties, We do not hesitate

to find for the petitioners and rule against the respondent
Judge's challenged order for having been issued with grave
abuse of discretion amounting to lack of jurisdiction. The
pertinent portions of the said order reads as follows:

for the first time in our nation's constitutional history, is

solemnly incorporated in the fundamental law. Section 16,
Article II of the 1987 Constitution explicitly provides:

xxx xxx xxx

Sec. 16. The State shall protect and advance the right of the
people to a balanced and healthful ecology in accord with
the rhythm and harmony of nature.

After a careful and circumspect evaluation of the Complaint,

the Court cannot help but agree with the defendant. For
although we believe that plaintiffs have but the noblest of all
intentions, it (sic) fell short of alleging, with sufficient
definiteness, a specific legal right they are seeking to
enforce and protect, or a specific legal wrong they are
seeking to prevent and redress (Sec. 1, Rule 2, RRC).
Furthermore, the Court notes that the Complaint is replete
with vague assumptions and vague conclusions based on
unverified data. In fine, plaintiffs fail to state a cause of
action in its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter
before it, being impressed with political color and involving a
matter of public policy, may not be taken cognizance of by
this Court without doing violence to the sacred principle of
"Separation of Powers" of the three (3) co-equal branches of
the Government.
The Court is likewise of the impression that it cannot, no
matter how we stretch our jurisdiction, grant the reliefs
prayed for by the plaintiffs, i.e., to cancel all existing timber
license agreements in the country and to cease and desist
from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do
otherwise would amount to "impairment of contracts"
abhored (sic) by the fundamental law. 11
We do not agree with the trial court's conclusions that the
plaintiffs failed to allege with sufficient definiteness a
specific legal right involved or a specific legal wrong
committed, and that the complaint is replete with vague
assumptions and conclusions based on unverified data. A
reading of the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal
right the right to a balanced and healthful ecology which,

This right unites with the right to health which is provided

for in the preceding section of the same article:
Sec. 15. The State shall protect and promote the right to
health of the people and instill health consciousness among
them.
While the right to a balanced and healthful ecology is to be
found under the Declaration of Principles and State Policies
and not under the Bill of Rights, it does not follow that it is
less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different
category of rights altogether for it concerns nothing less
than self-preservation and self-perpetuation aptly and
fittingly stressed by the petitioners the advancement of
which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need
not even be written in the Constitution for they are assumed
to exist from the inception of humankind. If they are now
explicitly mentioned in the fundamental charter, it is
because of the well-founded fear of its framers that unless
the rights to a balanced and healthful ecology and to health
are mandated as state policies by the Constitution itself,
thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the
first and protect and advance the second, the day would not
be too far when all else would be lost not only for the
present generation, but also for those to come
generations which stand to inherit nothing but parched
earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it
the correlative duty to refrain from impairing the
environment. During the debates on this right in one of the
plenary sessions of the 1986 Constitutional Commission, the
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LAW ON PROPERTY

following exchange transpired between Commissioner

Wilfrido Villacorta and Commissioner Adolfo Azcuna who
sponsored the section in question:

MR. VILLACORTA:
Does this section mandate the State to provide sanctions
against all forms of pollution air, water and noise
pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic)
environment necessarily carries with it the correlative duty
of not impairing the same and, therefore, sanctions may be
provided for impairment of environmental balance. 12
The said right implies, among many other things, the
judicious management and conservation of the country's
forests.
Without such forests, the ecological or environmental
balance would be irreversiby disrupted.
Conformably with the enunciated right to a balanced and
healthful ecology and the right to health, as well as the
other related provisions of the Constitution concerning the
conservation, development and utilization of the country's
natural resources, 13 then President Corazon C. Aquino
promulgated on 10 June 1987 E.O. No. 192, 14 Section 4 of
which expressly mandates that the Department of
Environment and Natural Resources "shall be the primary
government agency responsible for the conservation,
management, development and proper use of the country's
environment and natural resources, specifically forest and
grazing lands, mineral, resources, including those in
reservation and watershed areas, and lands of the public
domain, as well as the licensing and regulation of all natural
resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the
welfare of the present and future generations of Filipinos."
Section 3 thereof makes the following statement of policy:

Sec. 3. Declaration of Policy. It is hereby declared the

policy of the State to ensure the sustainable use,
development, management, renewal, and conservation of
the country's forest, mineral, land, off-shore areas and other
natural resources, including the protection and
enhancement of the quality of the environment, and
equitable access of the different segments of the population
to the development and the use of the country's natural
resources, not only for the present generation but for future
generations as well. It is also the policy of the state to
recognize and apply a true value system including social
and environmental cost implications relative to their
utilization, development and conservation of our natural
resources.

This policy declaration is substantially re-stated it Title XIV,

Book IV of the Administrative Code of 1987, 15 specifically
in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. (1) The State shall ensure,
for the benefit of the Filipino people, the full exploration and
development as well as the judicious disposition, utilization,
management, renewal and conservation of the country's
forest, mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources, consistent with the
necessity of maintaining a sound ecological balance and
protecting and enhancing the quality of the environment
and the objective of making the exploration, development
and utilization of such natural resources equitably accessible
to the different segments of the present as well as future
generations.
(2) The State shall likewise recognize and apply a true value
system that takes into account social and environmental
cost implications relative to the utilization, development and
conservation of our natural resources.
The above provision stresses "the necessity of maintaining a
sound ecological balance and protecting and enhancing the
quality of the environment." Section 2 of the same Title, on
the other hand, specifically speaks of the mandate of the
DENR; however, it makes particular reference to the fact of
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the agency's being subject to law and higher authority. Said

section provides:
Sec. 2. Mandate. (1) The Department of Environment and
Natural Resources shall be primarily responsible for the
implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge
of carrying out the State's constitutional mandate to control
and supervise the exploration, development, utilization, and
conservation of the country's natural resources. Both E.O.
NO. 192 and the Administrative Code of 1987 have set the
objectives which will serve as the bases for policy
formulation, and have defined the powers and functions of
the DENR.
It may, however, be recalled that even before the
ratification of the 1987 Constitution, specific statutes
already paid special attention to the "environmental right"
of the present and future generations. On 6 June 1977, P.D.
No. 1151 (Philippine Environmental Policy) and P.D. No. 1152
(Philippine Environment Code) were issued. The former
"declared a continuing policy of the State (a) to create,
develop, maintain and improve conditions under which man
and nature can thrive in productive and enjoyable harmony
with each other, (b) to fulfill the social, economic and other
requirements of present and future generations of Filipinos,
and (c) to insure the attainment of an environmental quality
that is conducive to a life of dignity and well-being." 16 As
its goal, it speaks of the "responsibilities of each generation
as trustee and guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave
flesh to the said policy.
Thus, the right of the petitioners (and all those they
represent) to a balanced and healthful ecology is as clear as
the DENR's duty under its mandate and by virtue of its
powers and functions under E.O. No. 192 and the
Administrative Code of 1987 to protect and advance the
said right.
A denial or violation of that right by the other who has the
corelative duty or obligation to respect or protect the same
gives rise to a cause of action. Petitioners maintain that the
granting of the TLAs, which they claim was done with grave

abuse of discretion, violated their right to a balanced and

healthful ecology; hence, the full protection thereof requires
that no further TLAs should be renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal
right or rights of the other; and its essential elements are
legal right of the plaintiff, correlative obligation of the
defendant, and act or omission of the defendant in violation
of said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss
based on the ground that the complaint fails to state a
cause of action, 19 the question submitted to the court for
resolution involves the sufficiency of the facts alleged in the
complaint itself. No other matter should be considered;
furthermore, the truth of falsity of the said allegations is
beside the point for the truth thereof is deemed
hypothetically admitted. The only issue to be resolved in
such a case is: admitting such alleged facts to be true, may
the court render a valid judgment in accordance with the
prayer in the complaint? 20 In Militante vs. Edrosolano, 21
this Court laid down the rule that the judiciary should
"exercise the utmost care and circumspection in passing
upon a motion to dismiss on the ground of the absence
thereof [cause of action] lest, by its failure to manifest a
correct appreciation of the facts alleged and deemed
hypothetically admitted, what the law grants or recognizes
is effectively nullified. If that happens, there is a blot on the
legal order. The law itself stands in disrepute."

After careful examination of the petitioners' complaint, We

find the statements under the introductory affirmative
allegations, as well as the specific averments under the subheading CAUSE OF ACTION, to be adequate enough to show,
prima facie, the claimed violation of their rights. On the
basis thereof, they may thus be granted, wholly or partly,
the reliefs prayed for. It bears stressing, however, that
insofar as the cancellation of the TLAs is concerned, there is
the need to implead, as party defendants, the grantees
thereof for they are indispensable parties.
Page 16 of 404

LAW ON PROPERTY

The foregoing considered, Civil Case No. 90-777 be said to

raise a political question. Policy formulation or determination
by the executive or legislative branches of Government is
not squarely put in issue. What is principally involved is the
enforcement of a right vis-a-vis policies already formulated
and expressed in legislation. It must, nonetheless, be
emphasized that the political question doctrine is no longer,
the insurmountable obstacle to the exercise of judicial
power or the impenetrable shield that protects executive
and legislative actions from judicial inquiry or review. The
second paragraph of section 1, Article VIII of the Constitution
states that:

In the case now before us, the jurisdictional objection

becomes even less tenable and decisive. The reason is that,
even if we were to assume that the issue presented before
us was political in nature, we would still not be precluded
from revolving it under the expanded jurisdiction conferred
upon us that now covers, in proper cases, even the political
question. Article VII, Section 1, of the Constitution clearly
provides: . . .

Judicial power includes the duty of the courts of justice to

settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.

The Court is likewise of the impression that it cannot, no

matter how we stretch our jurisdiction, grant the reliefs
prayed for by the plaintiffs, i.e., to cancel all existing timber
license agreements in the country and to cease and desist
from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do
otherwise would amount to "impairment of contracts"
abhored (sic) by the fundamental law. 24

Commenting on this provision in his book, Philippine Political

Law, 22 Mr. Justice Isagani A. Cruz, a distinguished member
of this Court, says:
The first part of the authority represents the traditional
concept of judicial power, involving the settlement of
conflicting rights as conferred as law. The second part of the
authority represents a broadening of judicial power to
enable the courts of justice to review what was before
forbidden territory, to wit, the discretion of the political
departments of the government.
As worded, the new provision vests in the judiciary, and
particularly the Supreme Court, the power to rule upon even
the wisdom of the decisions of the executive and the
legislature and to declare their acts invalid for lack or excess
of jurisdiction because tainted with grave abuse of
discretion. The catch, of course, is the meaning of "grave
abuse of discretion," which is a very elastic phrase that can
expand or contract according to the disposition of the
judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for
this Court, noted:

The last ground invoked by the trial court in dismissing the

complaint is the non-impairment of contracts clause found in
the Constitution. The court a quo declared that:

We are not persuaded at all; on the contrary, We are

amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary
did not, for obvious reasons, even invoke in his motion to
dismiss the non-impairment clause. If he had done so, he
would have acted with utmost infidelity to the Government
by providing undue and unwarranted benefits and
advantages to the timber license holders because he would
have forever bound the Government to strictly respect the
said licenses according to their terms and conditions
regardless of changes in policy and the demands of public
interest and welfare. He was aware that as correctly pointed
out by the petitioners, into every timber license must be
read Section 20 of the Forestry Reform Code (P.D. No. 705)
which provides:
. . . Provided, That when the national interest so requires,
the President may amend, modify, replace or rescind any
contract, concession, permit, licenses or any other form of
privilege granted herein . . .

Page 17 of 404
LAW ON PROPERTY

Needless to say, all licenses may thus be revoked or

rescinded by executive action. It is not a contract, property
or a property right protested by the due process clause of
the Constitution. In Tan vs. Director of Forestry, 25 this
Court held:
. . . A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources
to the end that public welfare is promoted. A timber license
is not a contract within the purview of the due process
clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public
welfare as in this case.
A license is merely a permit or privilege to do what
otherwise would be unlawful, and is not a contract between
the authority, federal, state, or municipal, granting it and
the person to whom it is granted; neither is it property or a
property right, nor does it create a vested right; nor is it
taxation (37 C.J. 168). Thus, this Court held that the granting
of license does not create irrevocable rights, neither is it
property or property rights (People vs. Ong Tin, 54 O.G.
7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co.,
Inc. vs. Deputy Executive Secretary: 26
. . . Timber licenses, permits and license agreements are the
principal instruments by which the State regulates the
utilization and disposition of forest resources to the end that
public welfare is promoted. And it can hardly be gainsaid
that they merely evidence a privilege granted by the State
to qualified entities, and do not vest in the latter a
permanent or irrevocable right to the particular concession
area and the forest products therein. They may be validly
amended, modified, replaced or rescinded by the Chief
Executive when national interests so require. Thus, they are
not deemed contracts within the purview of the due process
of law clause [See Sections 3(ee) and 20 of Pres. Decree No.
705, as amended. Also, Tan v. Director of Forestry, G.R. No.
L-24548, October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment
clause, which reads:

Sec. 10. No law impairing, the obligation of contracts shall

be passed. 27
cannot be invoked.
In the second place, even if it is to be assumed that the
same are contracts, the instant case does not involve a law
or even an executive issuance declaring the cancellation or
modification of existing timber licenses. Hence, the nonimpairment clause cannot as yet be invoked. Nevertheless,
granting further that a law has actually been passed
mandating cancellations or modifications, the same cannot
still be stigmatized as a violation of the non-impairment
clause. This is because by its very nature and purpose, such
as law could have only been passed in the exercise of the
police power of the state for the purpose of advancing the
right of the people to a balanced and healthful ecology,
promoting their health and enhancing the general welfare.
In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government,
is not meant to be absolute. The same is understood to be
subject to reasonable legislative regulation aimed at the
promotion of public health, moral, safety and welfare. In
other words, the constitutional guaranty of non-impairment
of obligations of contract is limited by the exercise of the
police power of the State, in the interest of public health,
safety, moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New
York, 29 quoted in Philippine American Life Insurance Co.
vs. Auditor General, 30 to wit:
Under our form of government the use of property and the
making of contracts are normally matters of private and not
of public concern. The general rule is that both shall be free
of governmental interference. But neither property rights
nor contract rights are absolute; for government cannot
exist if the citizen may at will use his property to the
detriment of his fellows, or exercise his freedom of contract
to work them harm. Equally fundamental with the private
right is that of the public to regulate it in the common
interest.
Page 18 of 404

LAW ON PROPERTY

In short, the non-impairment clause must yield to the police

power of the state. 31

have therefore sought to clarify, basically to myself, what

the Court appears to be saying.

Finally, it is difficult to imagine, as the trial court did, how

the non-impairment clause could apply with respect to the
prayer to enjoin the respondent Secretary from receiving,
accepting, processing, renewing or approving new timber
licenses for, save in cases of renewal, no contract would
have as of yet existed in the other instances. Moreover, with
respect to renewal, the holder is not entitled to it as a
matter of right.

The Court explicitly states that petitioners have the locus

standi necessary to sustain the bringing and, maintenance
of this suit (Decision, pp. 11-12). Locus standi is not a
function of petitioners' claim that their suit is properly
regarded as a class suit. I understand locus standi to refer to
the legal interest which a plaintiff must have in the subject
matter of the suit. Because of the very broadness of the
concept of "class" here involved membership in this
"class" appears to embrace everyone living in the country
whether now or in the

WHEREFORE, being impressed with merit, the instant

Petition is hereby GRANTED, and the challenged Order of
respondent Judge of 18 July 1991 dismissing Civil Case No.
90-777 is hereby set aside. The petitioners may therefore
amend their complaint to implead as defendants the holders
or grantees of the questioned timber license agreements.

future it appears to me that everyone who may be

expected to benefit from the course of action petitioners
seek to require public respondents to take, is vested with
the necessary locus standi. The Court may be seen therefore
to be recognizing a beneficiaries' right of action in the field
of environmental protection, as against both the public
administrative agency directly concerned and the private
persons or entities operating in the field or sector of activity
involved. Whether such beneficiaries' right of action may be
found under any and all circumstances, or whether some
failure to act, in the first instance, on the part of the
governmental agency concerned must be shown ("prior
exhaustion of administrative remedies"), is not discussed in
the decision and presumably is left for future determination
in an appropriate case.

No pronouncement as to costs.
SO ORDERED.
Cruz, Padilla, Bidin, Grio-Aquino, Regalado, Romero, Nocon,
Bellosillo, Melo and Quiason, JJ., concur.

Narvasa, C.J., Puno and Vitug, JJ., took no part.

Separate Opinions
FELICIANO, J., concurring
I join in the result reached by my distinguished brother in
the Court, Davide, Jr., J., in this case which, to my mind, is
one of the most important cases decided by this Court in the
last few years. The seminal principles laid down in this
decision are likely to influence profoundly the direction and
course of the protection and management of the
environment, which of course embraces the utilization of all
the natural resources in the territorial base of our polity. I

The Court has also declared that the complaint has alleged
and focused upon "one specific fundamental legal right
the right to a balanced and healthful ecology" (Decision, p.
14). There is no question that "the right to a balanced and
healthful ecology" is "fundamental" and that, accordingly, it
has been "constitutionalized." But although it is fundamental
in character, I suggest, with very great respect, that it
cannot be characterized as "specific," without doing
excessive violence to language. It is in fact very difficult to
fashion language more comprehensive in scope and
generalized in character than a right to "a balanced and
healthful ecology." The list of particular claims which can be
subsumed under this rubic appears to be entirely openended: prevention and control of emission of toxic fumes
Page 19 of 404

LAW ON PROPERTY

and smoke from factories and motor vehicles; of discharge

of oil, chemical effluents, garbage and raw sewage into
rivers, inland and coastal waters by vessels, oil rigs,
factories, mines and whole communities; of dumping of
organic and inorganic wastes on open land, streets and
thoroughfares; failure to rehabilitate land after strip-mining
or open-pit mining; kaingin or slash-and-burn farming;
destruction of fisheries, coral reefs and other living sea
resources through the use of dynamite or cyanide and other
chemicals; contamination of ground water resources; loss of
certain species of fauna and flora; and so on. The other
statements pointed out by the Court: Section 3, Executive
Order No. 192 dated 10 June 1987; Section 1, Title XIV, Book
IV of the 1987 Administrative Code; and P.D. No. 1151,
dated 6 June 1977 all appear to be formulations of policy,
as general and abstract as the constitutional statements of
basic policy in Article II, Section 16 ("the right to a
balanced and healthful ecology") and 15 ("the right to
health").
P.D. No. 1152, also dated 6 June 1977, entitled "The
Philippine Environment Code," is, upon the other hand, a
compendious collection of more "specific environment
management policies" and "environment quality standards"
(fourth "Whereas" clause, Preamble) relating to an
extremely wide range of topics:
(a) air quality management;

(v) energy development;

(vi) conservation and utilization of surface and ground
water
(vii) mineral resources
Two (2) points are worth making in this connection. Firstly,
neither petitioners nor the Court has identified the particular
provision or provisions (if any) of the Philippine Environment
Code which give rise to a specific legal right which
petitioners are seeking to enforce. Secondly, the Philippine
Environment Code identifies with notable care the particular
government agency charged with the formulation and
implementation of guidelines and programs dealing with
each of the headings and sub-headings mentioned above.
The Philippine Environment Code does not, in other words,
appear to contemplate action on the part of private persons
who are beneficiaries of implementation of that Code.
As a matter of logic, by finding petitioners' cause of action
as anchored on a legal right comprised in the constitutional
statements above noted, the Court is in effect saying that
Section 15 (and Section 16) of Article II of the Constitution
are self-executing and judicially enforceable even in their
present form. The implications of this doctrine will have to
be explored in future cases; those implications are too large
and far-reaching in nature even to be hinted at here.

(b) water quality management;

(c) land use management;
(d) natural resources management and conservation
embracing:
(i) fisheries and aquatic resources;
(ii) wild life;
(iii) forestry and soil conservation;
(iv) flood control and natural calamities;

My suggestion is simply that petitioners must, before the

trial court, show a more specific legal right a right cast in
language of a significantly lower order of generality than
Article II (15) of the Constitution that is or may be
violated by the actions, or failures to act, imputed to the
public respondent by petitioners so that the trial court can
validly render judgment granting all or part of the relief
prayed for. To my mind, the Court should be understood as
simply saying that such a more specific legal right or rights
may well exist in our corpus of law, considering the general
policy principles found in the Constitution and the existence
of the Philippine Environment Code, and that the trial court
should have given petitioners an effective opportunity so to
Page 20 of 404

LAW ON PROPERTY

demonstrate, instead of aborting the proceedings on a

motion to dismiss.
It seems to me important that the legal right which is an
essential component of a cause of action be a specific,
operable legal right, rather than a constitutional or statutory
policy, for at least two (2) reasons. One is that unless the
legal right claimed to have been violated or disregarded is
given specification in operational terms, defendants may
well be unable to defend themselves intelligently and
effectively; in other words, there are due process
dimensions to this matter.
The second is a broader-gauge consideration where a
specific violation of law or applicable regulation is not
alleged or proved, petitioners can be expected to fall back
on the expanded conception of judicial power in the second
paragraph of Section 1 of Article VIII of the Constitution
which reads:
Section 1. . . .
Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
When substantive standards as general as "the right to a
balanced and healthy ecology" and "the right to health" are
combined with remedial standards as broad ranging as "a
grave abuse of discretion amounting to lack or excess of
jurisdiction," the result will be, it is respectfully submitted, to
propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area
of environmental protection and management, our courts
have no claim to special technical competence and
experience and professional qualification. Where no specific,
operable norms and standards are shown to exist, then the
policy making departments the legislative and executive
departments must be given a real and effective
opportunity to fashion and promulgate those norms and
standards, and to implement them before the courts should
intervene.

My learned brother Davide, Jr., J., rightly insists that the

timber companies, whose concession agreements or TLA's
petitioners demand public respondents should cancel, must
be impleaded in the proceedings below. It might be asked
that, if petitioners' entitlement to the relief demanded is not
dependent upon proof of breach by the timber companies of
one or more of the specific terms and conditions of their
concession agreements (and this, petitioners implicitly
assume), what will those companies litigate about? The
answer I suggest is that they may seek to dispute the
existence of the specific legal right petitioners should allege,
as well as the reality of the claimed factual nexus between
petitioners' specific legal rights and the claimed wrongful
acts or failures to act of public respondent administrative
agency. They may also controvert the appropriateness of the
remedy or remedies demanded by petitioners, under all the
circumstances which exist.
I vote to grant the Petition for Certiorari because the
protection of the environment, including the forest cover of
our territory, is of extreme importance for the country. The
doctrines set out in the Court's decision issued today should,
however, be subjected to closer examination.
# Separate Opinions
FELICIANO, J., concurring
I join in the result reached by my distinguished brother in
the Court, Davide, Jr., J., in this case which, to my mind, is
one of the most important cases decided by this Court in the
last few years. The seminal principles laid down in this
decision are likely to influence profoundly the direction and
course of the protection and management of the
environment, which of course embraces the utilization of all
the natural resources in the territorial base of our polity. I
have therefore sought to clarify, basically to myself, what
the Court appears to be saying.
The Court explicitly states that petitioners have the locus
standi necessary to sustain the bringing and, maintenance
of this suit (Decision, pp. 11-12). Locus standi is not a
function of petitioners' claim that their suit is properly
regarded as a class suit. I understand locus standi to refer to
the legal interest which a plaintiff must have in the subject
Page 21 of 404

LAW ON PROPERTY

matter of the suit. Because of the very broadness of the

concept of "class" here involved membership in this
"class" appears to embrace everyone living in the country
whether now or in the
future it appears to me that everyone who may be
expected to benefit from the course of action petitioners
seek to require public respondents to take, is vested with
the necessary locus standi. The Court may be seen therefore
to be recognizing a beneficiaries' right of action in the field
of environmental protection, as against both the public
administrative agency directly concerned and the private
persons or entities operating in the field or sector of activity
involved. Whether such beneficiaries' right of action may be
found under any and all circumstances, or whether some
failure to act, in the first instance, on the part of the
governmental agency concerned must be shown ("prior
exhaustion of administrative remedies"), is not discussed in
the decision and presumably is left for future determination
in an appropriate case.
The Court has also declared that the complaint has alleged
and focused upon "one specific fundamental legal right
the right to a balanced and healthful ecology" (Decision, p.
14). There is no question that "the right to a balanced and
healthful ecology" is "fundamental" and that, accordingly, it
has been "constitutionalized." But although it is fundamental
in character, I suggest, with very great respect, that it
cannot be characterized as "specific," without doing
excessive violence to language. It is in fact very difficult to
fashion language more comprehensive in scope and
generalized in character than a right to "a balanced and
healthful ecology." The list of particular claims which can be
subsumed under this rubic appears to be entirely openended: prevention and control of emission of toxic fumes
and smoke from factories and motor vehicles; of discharge
of oil, chemical effluents, garbage and raw sewage into
rivers, inland and coastal waters by vessels, oil rigs,
factories, mines and whole communities; of dumping of
organic and inorganic wastes on open land, streets and
thoroughfares; failure to rehabilitate land after strip-mining
or open-pit mining; kaingin or slash-and-burn farming;
destruction of fisheries, coral reefs and other living sea
resources through the use of dynamite or cyanide and other

chemicals; contamination of ground water resources; loss of

certain species of fauna and flora; and so on. The other
statements pointed out by the Court: Section 3, Executive
Order No. 192 dated 10 June 1987; Section 1, Title XIV, Book
IV of the 1987 Administrative Code; and P.D. No. 1151,
dated 6 June 1977 all appear to be formulations of policy,
as general and abstract as the constitutional statements of
basic policy in Article II, Section 16 ("the right to a
balanced and healthful ecology") and 15 ("the right to
health").
P.D. No. 1152, also dated 6 June 1977, entitled "The
Philippine Environment Code," is, upon the other hand, a
compendious collection of more "specific environment
management policies" and "environment quality standards"
(fourth "Whereas" clause, Preamble) relating to an
extremely wide range of topics:
(a) air quality management;
(b) water quality management;
(c) land use management;
(d) natural resources management and conservation
embracing:
(i) fisheries and aquatic resources;
(ii) wild life;
(iii) forestry and soil conservation;
(iv) flood control and natural calamities;
(v) energy development;
(vi) conservation and utilization of surface and ground
water
(vii) mineral resources
Two (2) points are worth making in this connection. Firstly,
neither petitioners nor the Court has identified the particular
provision or provisions (if any) of the Philippine Environment
Page 22 of 404

LAW ON PROPERTY

Code which give rise to a specific legal right which

petitioners are seeking to enforce. Secondly, the Philippine
Environment Code identifies with notable care the particular
government agency charged with the formulation and
implementation of guidelines and programs dealing with
each of the headings and sub-headings mentioned above.
The Philippine Environment Code does not, in other words,
appear to contemplate action on the part of private persons
who are beneficiaries of implementation of that Code.
As a matter of logic, by finding petitioners' cause of action
as anchored on a legal right comprised in the constitutional
statements above noted, the Court is in effect saying that
Section 15 (and Section 16) of Article II of the Constitution
are self-executing and judicially enforceable even in their
present form. The implications of this doctrine will have to
be explored in future cases; those implications are too large
and far-reaching in nature even to be hinted at here.
My suggestion is simply that petitioners must, before the
trial court, show a more specific legal right a right cast in
language of a significantly lower order of generality than
Article II (15) of the Constitution that is or may be
violated by the actions, or failures to act, imputed to the
public respondent by petitioners so that the trial court can
validly render judgment granting all or part of the relief
prayed for. To my mind, the Court should be understood as
simply saying that such a more specific legal right or rights
may well exist in our corpus of law, considering the general
policy principles found in the Constitution and the existence
of the Philippine Environment Code, and that the trial court
should have given petitioners an effective opportunity so to
demonstrate, instead of aborting the proceedings on a
motion to dismiss.
It seems to me important that the legal right which is an
essential component of a cause of action be a specific,
operable legal right, rather than a constitutional or statutory
policy, for at least two (2) reasons. One is that unless the
legal right claimed to have been violated or disregarded is
given specification in operational terms, defendants may
well be unable to defend themselves intelligently and
effectively; in other words, there are due process
dimensions to this matter.

The second is a broader-gauge consideration where a

specific violation of law or applicable regulation is not
alleged or proved, petitioners can be expected to fall back
on the expanded conception of judicial power in the second
paragraph of Section 1 of Article VIII of the Constitution
which reads:
Section 1. . . .
Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)

When substantive standards as general as "the right to a

balanced and healthy ecology" and "the right to health" are
combined with remedial standards as broad ranging as "a
grave abuse of discretion amounting to lack or excess of
jurisdiction," the result will be, it is respectfully submitted, to
propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area
of environmental protection and management, our courts
have no claim to special technical competence and
experience and professional qualification. Where no specific,
operable norms and standards are shown to exist, then the
policy making departments the legislative and executive
departments must be given a real and effective
opportunity to fashion and promulgate those norms and
standards, and to implement them before the courts should
intervene.
My learned brother Davide, Jr., J., rightly insists that the
timber companies, whose concession agreements or TLA's
petitioners demand public respondents should cancel, must
be impleaded in the proceedings below. It might be asked
that, if petitioners' entitlement to the relief demanded is not
dependent upon proof of breach by the timber companies of
one or more of the specific terms and conditions of their
Page 23 of 404

LAW ON PROPERTY

concession agreements (and this, petitioners implicitly

assume), what will those companies litigate about? The
answer I suggest is that they may seek to dispute the
existence of the specific legal right petitioners should allege,
as well as the reality of the claimed factual nexus between
petitioners' specific legal rights and the claimed wrongful
acts or failures to act of public respondent administrative
agency. They may also controvert the appropriateness of the
remedy or remedies demanded by petitioners, under all the
circumstances which exist.
I vote to grant the Petition for Certiorari because the
protection of the environment, including the forest cover of
our territory, is of extreme importance for the country. The
doctrines set out in the Court's decision issued today should,
however, be subjected to closer examination.
4. G.R. No. L-20329

March 16, 1923

THE STANDARD OIL COMPANY OF NEW YORK, petitioner,

vs.
JOAQUIN JARAMILLO, as register of deeds of the City of
Manila, respondent.
Ross, Lawrence and Selph for petitioner.
City Fiscal Revilla and Assistant City Fiscal Rodas for
respondent.
STREET, J.:
This cause is before us upon demurrer interposed by the
respondent, Joaquin Jaramillo, register of deeds of the City of
Manila, to an original petition of the Standard Oil Company
of New York, seeking a peremptory mandamus to compel
the respondent to record in the proper register a document
purporting to be a chattel mortgage executed in the City of
Manila by Gervasia de la Rosa, Vda. de Vera, in favor of the
Standard Oil Company of New York.
It appears from the petition that on November 27, 1922,
Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel
of land situated in the City of Manila and owner of the house
of strong materials built thereon, upon which date she
executed a document in the form of a chattel mortgage,
purporting to convey to the petitioner by way of mortgage

both the leasehold interest in said lot and the building which
stands thereon.
The clauses in said document describing the property
intended to be thus mortgage are expressed in the following
words:
Now, therefore, the mortgagor hereby conveys and transfer
to the mortgage, by way of mortgage, the following
described personal property, situated in the City of Manila,
and now in possession of the mortgagor, to wit:
(1) All of the right, title, and interest of the mortgagor in and
to the contract of lease hereinabove referred to, and in and
to the premises the subject of the said lease;
(2) The building, property of the mortgagor, situated on the
aforesaid leased premises.
After said document had been duly acknowledge and
delivered, the petitioner caused the same to be presented to
the respondent, Joaquin Jaramillo, as register of deeds of the
City of Manila, for the purpose of having the same recorded
in the book of record of chattel mortgages. Upon
examination of the instrument, the respondent was of the
opinion that it was not a chattel mortgage, for the reason
that the interest therein mortgaged did not appear to be
personal property, within the meaning of the Chattel
Mortgage Law, and registration was refused on this ground
only.
We are of the opinion that the position taken by the
respondent is untenable; and it is his duty to accept the
proper fee and place the instrument on record. The duties of
a register of deeds in respect to the registration of chattel
mortgage are of a purely ministerial character; and no
provision of law can be cited which confers upon him any
judicial or quasi-judicial power to determine the nature of
any document of which registration is sought as a chattel
mortgage.
The original provisions touching this matter are contained in
section 15 of the Chattel Mortgage Law (Act No. 1508), as
amended by Act No. 2496; but these have been transferred
to section 198 of the Administrative Code, where they are
Page 24 of 404

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now found. There is nothing in any of these provisions

conferring upon the register of deeds any authority
whatever in respect to the "qualification," as the term is
used in Spanish law, of chattel mortgage. His duties in
respect to such instruments are ministerial only. The efficacy
of the act of recording a chattel mortgage consists in the
fact that it operates as constructive notice of the existence
of the contract, and the legal effects of the contract must be
discovered in the instrument itself in relation with the fact of
notice. Registration adds nothing to the instrument,
considered as a source of title, and affects nobody's rights
except as a specifies of notice.
Articles 334 and 335 of the Civil Code supply no absolute
criterion for discriminating between real property and
personal property for purpose of the application of the
Chattel Mortgage Law. Those articles state rules which,
considered as a general doctrine, are law in this jurisdiction;
but it must not be forgotten that under given conditions
property may have character different from that imputed to
it in said articles. It is undeniable that the parties to a
contract may by agreement treat as personal property that
which by nature would be real property; and it is a familiar
phenomenon to see things classed as real property for
purposes of taxation which on general principle might be
considered personal property. Other situations are
constantly arising, and from time to time are presented to
this court, in which the proper classification of one thing or
another as real or personal property may be said to be
doubtful.

The point submitted to us in this case was determined on

September 8, 1914, in an administrative ruling promulgated
by the Honorable James A. Ostrand, now a Justice of this
Court, but acting at that time in the capacity of Judge of the
fourth branch of the Court of First Instance of the Ninth
Judicial District, in the City of Manila; and little of value can
be here added to the observations contained in said ruling.
We accordingly quote therefrom as follows:
It is unnecessary here to determine whether or not the
property described in the document in question is real or

personal; the discussion may be confined to the point as to

whether a register of deeds has authority to deny the
registration of a document purporting to be a chattel
mortgage and executed in the manner and form prescribed
by the Chattel Mortgage Law.
Then, after quoting section 5 of the Chattel Mortgage Law
(Act No. 1508), his Honor continued:
Based principally upon the provisions of section quoted the
Attorney-General of the Philippine Islands, in an opinion
dated August 11, 1909, held that a register of deeds has no
authority to pass upon the capacity of the parties to a
chattel mortgage which is presented to him for record. A
fortiori a register of deeds can have no authority to pass
upon the character of the property sought to be
encumbered by a chattel mortgage. Of course, if the
mortgaged property is real instead of personal the chattel
mortgage would no doubt be held ineffective as against
third parties, but this is a question to be determined by the
courts of justice and not by the register of deeds.
In Leung Yee vs. Frank L. Strong Machinery Co. and
Williamson (37 Phil., 644), this court held that where the
interest conveyed is of the nature of real, property, the
placing of the document on record in the chattel mortgage
register is a futile act; but that decision is not decisive of the
question now before us, which has reference to the function
of the register of deeds in placing the document on record.
In the light of what has been said it becomes unnecessary
for us to pass upon the point whether the interests
conveyed in the instrument now in question are real or
personal; and we declare it to be the duty of the register of
deeds to accept the estimate placed upon the document by
the petitioner and to register it, upon payment of the proper
fee.

The demurrer is overruled; and unless within the period of

five days from the date of the notification hereof, the
respondent shall interpose a sufficient answer to the
petition, the writ of mandamus will be issued, as prayed, but
without costs. So ordered.
Page 25 of 404

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Araullo, C.J., Malcolm, Avancea, Ostrand, Johns, and

Romualdez, JJ., concur.
5. G.R. No. 106041 January 29, 1993
BENGUET CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF
ASSESSMENT APPEALS OF ZAMBALES, PROVINCIAL
ASSESSOR OF ZAMBALES, PROVINCE OF ZAMBALES, and
MUNICIPALITY OF SAN MARCELINO, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles
for petitioner.
CRUZ, J.:
The realty tax assessment involved in this case amounts to
P11,319,304.00. It has been imposed on the petitioner's
tailings dam and the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor
of Zambales assessed the said properties as taxable
improvements. The assessment was appealed to the Board
of Assessment Appeals of the Province of Zambales. On
August 24, 1988, the appeal was dismissed mainly on the
ground of the petitioner's "failure to pay the realty taxes
that fell due during the pendency of the appeal."
The petitioner seasonably elevated the matter to the Central
Board of Assessment Appeals, 1 one of the herein
respondents. In its decision dated March 22, 1990, the Board
reversed the dismissal of the appeal but, on the merits,
agreed that "the tailings dam and the lands submerged
thereunder (were) subject to realty tax."
For purposes of taxation the dam is considered as real
property as it comes within the object mentioned in
paragraphs (a) and (b) of Article 415 of the New Civil Code.
It is a construction adhered to the soil which cannot be
separated or detached without breaking the material or
causing destruction on the land upon which it is attached.
The immovable nature of the dam as an improvement
determines its character as real property, hence taxable
under Section 38 of the Real Property Tax Code. (P.D. 464).

Although the dam is partly used as an anti-pollution device,

this Board cannot accede to the request for tax exemption in
the absence of a law authorizing the same.
xxx xxx xxx
We find the appraisal on the land submerged as a result of
the construction of the tailings dam, covered by Tax
Declaration Nos.
002-0260 and 002-0266, to be in accordance with the
Schedule of Market Values for Zambales which was reviewed
and allowed for use by the Ministry (Department) of Finance
in the 1981-1982 general revision. No serious attempt was
made by Petitioner-Appellant Benguet Corporation to
impugn its reasonableness, i.e., that the P50.00 per square
meter applied by Respondent-Appellee Provincial Assessor is
indeed excessive and unconscionable. Hence, we find no
cause to disturb the market value applied by Respondent
Appellee Provincial Assessor of Zambales on the properties
of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
This petition for certiorari now seeks to reverse the above
ruling.
The principal contention of the petitioner is that the tailings
dam is not subject to realty tax because it is not an
"improvement" upon the land within the meaning of the
Real Property Tax Code. More particularly, it is claimed
(1) as regards the tailings dam as an "improvement":
(a) that the tailings dam has no value separate from and
independent of the mine; hence, by itself it cannot be
considered an improvement separately assessable;
(b) that it is an integral part of the mine;
(c) that at the end of the mining operation of the petitioner
corporation in the area, the tailings dam will benefit the
local community by serving as an irrigation facility;

Page 26 of 404
LAW ON PROPERTY

(d) that the building of the dam has stripped the property of
any commercial value as the property is submerged under
water wastes from the mine;
(e) that the tailings dam is an environmental pollution
control device for which petitioner must be commended
rather than penalized with a realty tax assessment;
(f) that the installation and utilization of the tailings dam as
a pollution control device is a requirement imposed by law;
(2) as regards the valuation of the tailings dam and the
submerged lands:
(a) that the subject properties have no market value as they
cannot be sold independently of the mine;
(b) that the valuation of the tailings dam should be based on
its incidental use by petitioner as a water reservoir and not
on the alleged cost of construction of the dam and the
annual build-up expense;
(c) that the "residual value formula" used by the Provincial
Assessor and adopted by respondent CBAA is arbitrary and
erroneous; and
(3) as regards the petitioner's liability for penalties for
non-declaration of the tailings dam and the submerged
lands for realty tax purposes:
(a) that where a tax is not paid in an honest belief that it is
not due, no penalty shall be collected in addition to the
basic tax;
(b) that no other mining companies in the Philippines
operating a tailings dam have been made to declare the
dam for realty tax purposes.
The petitioner does not dispute that the tailings dam may be
considered realty within the meaning of Article 415. It
insists, however, that the dam cannot be subjected to realty
tax as a separate and independent property because it does
not constitute an "assessable improvement" on the mine

although a considerable sum may have been spent in

constructing and maintaining it.
To support its theory, the petitioner cites the following
cases:
1. Municipality of Cotabato v. Santos (105 Phil. 963), where
this Court considered the dikes and gates constructed by
the taxpayer in connection with a fishpond operation as
integral parts of the fishpond.
2. Bislig Bay Lumber Co. v. Provincial Government of Surigao
(100 Phil. 303), involving a road constructed by the timber
concessionaire in the area, where this Court did not impose
a realty tax on the road primarily for two reasons:
In the first place, it cannot be disputed that the ownership of
the road that was constructed by appellee belongs to the
government by right of accession not only because it is
inherently incorporated or attached to the timber land . . .
but also because upon the expiration of the concession said
road would ultimately pass to the national government. . . .
In the second place, while the road was constructed by
appellee primarily for its use and benefit, the privilege is not
exclusive, for . . . appellee cannot prevent the use of
portions of the concession for homesteading purposes. It is
also duty bound to allow the free use of forest products
within the concession for the personal use of individuals
residing in or within the vicinity of the land. . . . In other
words, the government has practically reserved the rights to
use the road to promote its varied activities. Since, as above
shown, the road in question cannot be considered as an
improvement which belongs to appellee, although in part is
for its benefit, it is clear that the same cannot be the subject
of assessment within the meaning of Section 2 of C.A.
No. 470.
Apparently, the realty tax was not imposed not because the
road was an integral part of the lumber concession but
because the government had the right to use the road to
promote its varied activities.
3. Kendrick v. Twin Lakes Reservoir Co. (144 Pacific 884), an
American case, where it was declared that the reservoir dam
Page 27 of 404

LAW ON PROPERTY

went with and formed part of the reservoir and that the dam
would be "worthless and useless except in connection with
the outlet canal, and the water rights in the reservoir
represent and include whatever utility or value there is in
the dam and headgates."

4. Ontario Silver Mining Co. v. Hixon (164 Pacific 498), also

from the United States. This case involved drain tunnels
constructed by plaintiff when it expanded its mining
operations downward, resulting in a constantly increasing
flow of water in the said mine. It was held that:
Whatever value they have is connected with and in fact is
an integral part of the mine itself. Just as much so as any
shaft which descends into the earth or an underground
incline, tunnel, or drift would be which was used in
connection with the mine.
On the other hand, the Solicitor General argues that the
dam is an assessable improvement because it enhances the
value and utility of the mine. The primary function of the
dam is to receive, retain and hold the water coming from the
operations of the mine, and it also enables the petitioner to
impound water, which is then recycled for use in the plant.
There is also ample jurisprudence to support this view, thus:
. . . The said equipment and machinery, as appurtenances to
the gas station building or shed owned by Caltex (as to
which it is subject to realty tax) and which fixtures are
necessary to the operation of the gas station, for without
them the gas station would be useless and which have been
attached or affixed permanently to the gas station site or
embedded therein, are taxable improvements and
machinery within the meaning of the Assessment Law and
the Real Property Tax Code. (Caltex [Phil.] Inc. v. CBAA, 114
SCRA 296).
We hold that while the two storage tanks are not embedded
in the land, they may, nevertheless, be considered as
improvements on the land, enhancing its utility and
rendering it useful to the oil industry. It is undeniable that
the two tanks have been installed with some degree of

permanence as receptacles for the considerable quantities

of oil needed by MERALCO for its operations. (Manila Electric
Co. v. CBAA, 114 SCRA 273).
The pipeline system in question is indubitably a construction
adhering to the soil. It is attached to the land in such a way
that it cannot be separated therefrom without dismantling
the steel pipes which were welded to form the pipeline.
(MERALCO Securities Industrial Corp. v. CBAA, 114 SCRA
261).
The tax upon the dam was properly assessed to the plaintiff
as a tax upon real estate. (Flax-Pond Water Co. v. City of
Lynn, 16 N.E. 742).
The oil tanks are structures within the statute, that they are
designed and used by the owner as permanent
improvement of the free hold, and that for such reasons
they were properly assessed by the respondent taxing
district as improvements. (Standard Oil Co. of New Jersey v.
Atlantic City, 15 A 2d. 271)
The Real Property Tax Code does not carry a definition of
"real property" and simply says that the realty tax is
imposed on "real property, such as lands, buildings,
machinery and other improvements affixed or attached to
real property." In the absence of such a definition, we apply
Article 415 of the Civil Code, the pertinent portions of which
state:
Art. 415. The following are immovable property.
(1) Lands, buildings and constructions of all kinds adhered
to the soil;
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner,
in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object.
Section 2 of C.A. No. 470, otherwise known as the
Assessment Law, provides that the realty tax is due "on the
real property, including land, buildings, machinery and other
improvements" not specifically exempted in Section 3
Page 28 of 404

LAW ON PROPERTY

thereof. A reading of that section shows that the tailings

dam of the petitioner does not fall under any of the classes
of exempt real properties therein enumerated.
Is the tailings dam an improvement on the mine? Section
3(k) of the Real Property Tax Code defines improvement as
follows:
(k) Improvements is a valuable addition made to property
or an amelioration in its condition, amounting to more than
mere repairs or replacement of waste, costing labor or
capital and intended to enhance its value, beauty or utility
or to adopt it for new or further purposes.
The term has also been interpreted as "artificial alterations
of the physical condition of the ground that are reasonably
permanent in character." 2

Curiously, the petitioner, while vigorously arguing that the

tailings dam has no separate existence, just as vigorously
contends that at the end of the mining operation the tailings
dam will serve the local community as an irrigation facility,
thereby implying that it can exist independently of the mine.
From the definitions and the cases cited above, it would
appear that whether a structure constitutes an improvement
so as to partake of the status of realty would depend upon
the degree of permanence intended in its construction and
use. The expression "permanent" as applied to an
improvement does not imply that the improvement must be
used perpetually but only until the purpose to which the
principal realty is devoted has been accomplished. It is
sufficient that the improvement is intended to remain as
long as the land to which it is annexed is still used for the
said purpose.

The Court notes that in the Ontario case the plaintiff

admitted that the mine involved therein could not be
operated without the aid of the drain tunnels, which were
indispensable to the successful development and extraction
of the minerals therein. This is not true in the present case.

The Court is convinced that the subject dam falls within the
definition of an "improvement" because it is permanent in
character and it enhances both the value and utility of
petitioner's mine. Moreover, the immovable nature of the
dam defines its character as real property under Article 415
of the Civil Code and thus makes it taxable under Section 38
of the Real Property Tax Code.

Even without the tailings dam, the petitioner's mining

operation can still be carried out because the primary
function of the dam is merely to receive and retain the
wastes and water coming from the mine. There is no
allegation that the water coming from the dam is the sole
source of water for the mining operation so as to make the
dam an integral part of the mine. In fact, as a result of the
construction of the dam, the petitioner can now impound
and recycle water without having to spend for the building
of a water reservoir. And as the petitioner itself points out,
even if the petitioner's mine is shut down or ceases
operation, the dam may still be used for irrigation of the
surrounding areas, again unlike in the Ontario case.

The Court will also reject the contention that the appraisal at
P50.00 per square meter made by the Provincial Assessor is
excessive and that his use of the "residual value formula" is
arbitrary and erroneous.

As correctly observed by the CBAA, the Kendrick case is also

not applicable because it involved water reservoir dams
used for different purposes and for the benefit of the
surrounding areas. By contrast, the tailings dam in question
is being used exclusively for the benefit of the petitioner.

In sustaining this formula, the CBAA gave the following

justification:

Respondent Provincial Assessor explained the use of the

"residual value formula" as follows:
A 50% residual value is applied in the computation because,
while it is true that when slime fills the dike, it will then be
covered by another dike or stage, the stage covered is still
there and still exists and since only one face of the dike is
filled, 50% or the other face is unutilized.

Page 29 of 404
LAW ON PROPERTY

We find the appraisal on the land submerged as a result of

the construction of the tailings dam, covered by Tax
Declaration Nos.
002-0260 and 002-0266, to be in accordance with the
Schedule of Market Values for San Marcelino, Zambales,
which is fifty (50.00) pesos per square meter for third class
industrial land (TSN, page 17, July 5, 1989) and Schedule of
Market Values for Zambales which was reviewed and
allowed for use by the Ministry (Department) of Finance in
the 1981-1982 general revision. No serious attempt was
made by Petitioner-Appellant Benguet Corporation to
impugn its reasonableness, i.e, that the P50.00 per square
meter applied by Respondent-Appellee Provincial Assessor is
indeed excessive and unconscionable. Hence, we find no
cause to disturb the market value applied by RespondentAppellee Provincial Assessor of Zambales on the properties
of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
It has been the long-standing policy of this Court to respect
the conclusions of quasi-judicial agencies like the CBAA,
which, because of the nature of its functions and its frequent
exercise thereof, has developed expertise in the resolution
of assessment problems. The only exception to this rule is
where it is clearly shown that the administrative body has
committed grave abuse of discretion calling for the
intervention of this Court in the exercise of its own powers of
review. There is no such showing in the case at bar.
We disagree, however, with the ruling of respondent CBAA
that it cannot take cognizance of the issue of the propriety
of the penalties imposed upon it, which was raised by the
petitioner for the first time only on appeal. The CBAA held
that this "is an entirely new matter that petitioner can take
up with the Provincial Assessor (and) can be the subject of
another protest before the Local Board or a negotiation with
the local sanggunian . . ., and in case of an adverse decision
by either the Local Board or the local sanggunian, (it can)
elevate the same to this Board for appropriate action."

There is no need for this time-wasting procedure. The Court

may resolve the issue in this petition instead of referring it

back to the local authorities. We have studied the facts and

circumstances of this case as above discussed and find that
the petitioner has acted in good faith in questioning the
assessment on the tailings dam and the land submerged
thereunder. It is clear that it has not done so for the purpose
of evading or delaying the payment of the questioned tax.
Hence, we hold that the petitioner is not subject to penalty
for its
non-declaration of the tailings dam and the submerged
lands for realty tax purposes.
WHEREFORE, the petition is DISMISSED for failure to show
that the questioned decision of respondent Central Board of
Assessment Appeals is tainted with grave abuse of
discretion except as to the imposition of penalties upon the
petitioner which is hereby SET ASIDE. Costs against the
petitioner. It is so ordered.
Narvasa, C.J., Gutierrez, Jr., Padilla, Bidin, Grio-Aquino,
Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo and
Campos, Jr., JJ., concur.
6. DAVAO SAWMILL CO. V. CASTILLO
61 PHIL. 709
Facts:
The Davao Saw Mill Co., Inc., is the holder of a lumber
concession from the Governmentof the Philippine Islands. It
has operated a sawmill in the
Sitio of Maa, barrio of Tigatu, municipality of Davao,
Province of Davao. However, the land upon which the
business was conducted belonged to another person. On the
land the sawmill company erected a building
which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the
conflict concerning machines which were placed and
mounted on foundations of
cement. In the contract of lease between the sawmill
company and the owner of the land there appeared the
following provision:
That on the expiration of the period agreed upon, all the
improvements and buildings introduced and erected by the
Page 30 of 404

LAW ON PROPERTY

party of the second part shall pass to the exclusive

ownership of the party of the first part without any
obligation on its part to pay any amount for said
improvements and buildings; also, in the event the party of
the second part should leave or abandon the land leased
before the time herein stipulated, the
improvements and buildings shall likewise pass to the
ownership of the party of the first part as though the time
agreed upon had expired: Provided, however, That the
machineries and accessories are not included in the
improvements which will pass to the party of the first part
on the expiration or abandonment of the land leased.
The trial judge found that those properties were personal in
nature and as a consequenceabsolved the defendants from
the complaint.
Issue:
Whether or not the trial judge erred in finding that the
subject properties are personal in nature.
Held:
As connecting up with the facts, it should further be
explained that the Davao Saw MillCo., Inc., has on a number
of occasions treated the machinery as personal property by
executing
chattel mortgages in favor of third persons. One of such
persons is the appellee by assignment from the original
mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in
point. According to the Code, realproperty consists of
1. Land, buildings, roads and constructions of all kinds
adhering to the soil;
5. Machinery, liquid containers, instruments or implements
intended by the owner of any building or land for use in
connection with any industry or trade being carried on
therein and which are expressly adapted to meet the
requirements of such trade of industry. Appellant
emphasizes the first paragraph, and appellees the last
mentioned paragraph.
We entertain no doubt that the trial judge and appellees are
right in their appreciation of the legal doctrines flowing from
the facts. The judgment appealed from is hereby affirmed.
7. G.R. No. L-17870

MINDANAO BUS COMPANY, petitioner,

vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX
APPEALS of Cagayan de Oro City, respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.
LABRADOR, J.:
This is a petition for the review of the decision of the
Court of Tax Appeals in C.T.A. Case No. 710 holding that the
petitioner Mindanao Bus Company is liable to the payment
of the realty tax on its maintenance and repair equipment
hereunder referred to.
Respondent City Assessor of Cagayan de Oro City
assessed at P4,400 petitioner's above-mentioned
equipment. Petitioner appealed the assessment to the
respondent Board of Tax Appeals on the ground that the
same are not realty. The Board of Tax Appeals of the City
sustained the city assessor, so petitioner herein filed with
the Court of Tax Appeals a petition for the review of the
assessment.
In the Court of Tax Appeals the parties submitted the
following stipulation of facts:
Petitioner and respondents, thru their respective
counsels agreed to the following stipulation of facts:
1. That petitioner is a public utility solely engaged in
transporting passengers and cargoes by motor trucks, over
its authorized lines in the Island of Mindanao, collecting
rates approved by the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan
de Oro City. It maintains Branch Offices and/or stations at
Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City
and Kibawe, Bukidnon Province;

September 29, 1962

Page 31 of 404

LAW ON PROPERTY

3. That the machineries sought to be assessed by the

respondent as real properties are the following:
(a) Hobart Electric Welder Machine, appearing in the
attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached
photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached
photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached
photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached
photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine) appearing in
the attached photograph, marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached
photograph, marked Annex "G".
4. That these machineries are sitting on cement or wooden
platforms as may be seen in the attached photographs
which form part of this agreed stipulation of facts;
5. That petitioner is the owner of the land where it maintains
and operates a garage for its TPU motor trucks; a repair
shop; blacksmith and carpentry shops, and with these
machineries which are placed therein, its TPU trucks are
made; body constructed; and same are repaired in a
condition to be serviceable in the TPU land transportation
business it operates;
6. That these machineries have never been or were never
used as industrial equipments to produce finished products
for sale, nor to repair machineries, parts and the like offered
to the general public indiscriminately for business or
commercial purposes for which petitioner has never
engaged in, to date.1awphl.nt

The Court of Tax Appeals having sustained the

respondent city assessor's ruling, and having denied a
motion for reconsideration, petitioner brought the case to
this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding
respondents' contention that the questioned assessments
are valid; and that said tools, equipments or machineries are
immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of
Article 415 of the New Civil Code, and holding that pursuant
thereto the movable equipments are taxable realties, by
reason of their being intended or destined for use in an
industry.
3. The Court of Tax Appeals erred in denying petitioner's
contention that the respondent City Assessor's power to
assess and levy real estate taxes on machineries is further
restricted by section 31, paragraph (c) of Republic Act No.
521; and
4. The Tax Court erred in denying petitioner's motion for
reconsideration.
Respondents contend that said equipments, tho
movable, are immobilized by destination, in accordance with
paragraph 5 of Article 415 of the New Civil Code which
provides:
Art. 415. The following are immovable properties:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements

intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said
industry or works. (Emphasis ours.)
Note that the stipulation expressly states that the
equipment are placed on wooden or cement platforms. They
can be moved around and about in petitioner's repair shop.
Page 32 of 404

LAW ON PROPERTY

In the case of B. H. Berkenkotter vs. Cu Unjieng, 61 Phil.

663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil
Code, gives the character of real property to "machinery,
liquid containers, instruments or implements intended by
the owner of any building or land for use in connection with
any industry or trade being carried on therein and which are
expressly adapted to meet the requirements of such trade
or industry."
If the installation of the machinery and equipment in
question in the central of the Mabalacat Sugar Co., Inc., in
lieu of the other of less capacity existing therein, for its
sugar and industry, converted them into real property by
reason of their purpose, it cannot be said that their
incorporation therewith was not permanent in character
because, as essential and principle elements of a sugar
central, without them the sugar central would be unable to
function or carry on the industrial purpose for which it was
established. Inasmuch as the central is permanent in
character, the necessary machinery and equipment installed
for carrying on the sugar industry for which it has been
established must necessarily be permanent. (Emphasis
ours.)
So that movable equipments to be immobilized in
contemplation of the law must first be "essential and
principal elements" of an industry or works without which
such industry or works would be "unable to function or carry
on the industrial purpose for which it was established." We
may here distinguish, therefore, those movable which
become immobilized by destination because they are
essential and principal elements in the industry for those
which may not be so considered immobilized because they
are merely incidental, not essential and principal. Thus, cash
registers, typewriters, etc., usually found and used in hotels,
restaurants, theaters, etc. are merely incidentals and are
not and should not be considered immobilized by
destination, for these businesses can continue or carry on
their functions without these equity comments. Airline
companies use forklifts, jeep-wagons, pressure pumps, IBM
machines, etc. which are incidentals, not essentials, and
thus retain their movable nature. On the other hand,

machineries of breweries used in the manufacture of liquor

and soft drinks, though movable in nature, are immobilized
because they are essential to said industries; but the
delivery trucks and adding machines which they usually own
and use and are found within their industrial compounds are
merely incidental and retain their movable nature.
Similarly, the tools and equipments in question in this
instant case are, by their nature, not essential and principle
municipal elements of petitioner's business of transporting
passengers and cargoes by motor trucks. They are merely
incidentals acquired as movables and used only for
expediency to facilitate and/or improve its service. Even
without such tools and equipments, its business may be
carried on, as petitioner has carried on, without such
equipments, before the war. The transportation business
could be carried on without the repair or service shop if its
rolling equipment is repaired or serviced in another shop
belonging to another.
The law that governs the determination of the
question at issue is as follows:
Art. 415. The following are immovable property:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements

intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said
industry or works; (Civil Code of the Phil.)
Aside from the element of essentiality the abovequoted provision also requires that the industry or works be
carried on in a building or on a piece of land. Thus in the
case of Berkenkotter vs. Cu Unjieng, supra, the "machinery,
liquid containers, and instruments or implements" are found
in a building constructed on the land. A sawmill would also
be installed in a building on land more or less permanently,
and the sawing is conducted in the land or building.
But in the case at bar the equipments in question are
destined only to repair or service the transportation
Page 33 of 404

LAW ON PROPERTY

business, which is not carried on in a building or

permanently on a piece of land, as demanded by the law.
Said equipments may not, therefore, be deemed real
property.
Resuming what we have set forth above, we hold that
the equipments in question are not absolutely essential to
the petitioner's transportation business, and petitioner's
business is not carried on in a building, tenement or on a
specified land, so said equipment may not be considered
real estate within the meaning of Article 415 (c) of the Civil
Code.
WHEREFORE, the decision subject of the petition for
review is hereby set aside and the equipment in question
declared not subject to assessment as real estate for the
purposes of the real estate tax. Without costs.
So ordered.
8. G.R. No. L-41643

July 31, 1935

B.H. BERKENKOTTER, plaintiff-appellant,

vs.
CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE
INSURANCE COMPANY, MABALACAT SUGAR COMPANY and
THE PROVINCE SHERIFF OF PAMPANGA, defendantsappellees.
Briones and Martinez for appellant.
Araneta, Zaragoza and Araneta for appellees Cu Unjieng e
Hijos.
No appearance for the other appellees.
VILLA-REAL, J.:
This is an appeal taken by the plaintiff, B.H. Berkenkotter,
from the judgment of the Court of First Instance of Manila,
dismissing said plaintiff's complaint against Cu Unjiengs e
Hijos et al., with costs.
In support of his appeal, the appellant assigns six alleged
errors as committed by the trial court in its decision in

question which will be discussed in the course of this

decision.
The first question to be decided in this appeal, which is
raised in the first assignment of alleged error, is whether or
not the lower court erred in declaring that the additional
machinery and equipment, as improvement incorporated
with the central are subject to the mortgage deed executed
in favor of the defendants Cu Unjieng e Hijos.
It is admitted by the parties that on April 26, 1926, the
Mabalacat Sugar Co., Inc., owner of the sugar central
situated in Mabalacat, Pampanga, obtained from the
defendants, Cu Unjieng e Hijos, a loan secured by a first
mortgage constituted on two parcels and land "with all its
buildings, improvements, sugar-cane mill, steel railway,
telephone line, apparatus, utensils and whatever forms part
or is necessary complement of said sugar-cane mill, steel
railway, telephone line, now existing or that may in the
future exist is said lots."
On October 5, 1926, shortly after said mortgage had been
constituted, the Mabalacat Sugar Co., Inc., decided to
increase the capacity of its sugar central by buying
additional machinery and equipment, so that instead of
milling 150 tons daily, it could produce 250. The estimated
cost of said additional machinery and equipment was
approximately P100,000. In order to carry out this plan, B.A.
Green, president of said corporation, proposed to the
plaintiff, B.H. Berkenkotter, to advance the necessary
amount for the purchase of said machinery and equipment,
promising to reimburse him as soon as he could obtain an
additional loan from the mortgagees, the herein defendants
Cu Unjieng e Hijos. Having agreed to said proposition made
in a letter dated October 5, 1926 (Exhibit E), B.H.
Berkenkotter, on October 9th of the same year, delivered
the sum of P1,710 to B.A. Green, president of the Mabalacat
Sugar Co., Inc., the total amount supplied by him to said
B.A. Green having been P25,750. Furthermore, B.H.
Berkenkotter had a credit of P22,000 against said
corporation for unpaid salary. With the loan of P25,750 and
said credit of P22,000, the Mabalacat Sugar Co., Inc.,
purchased the additional machinery and equipment now in
litigation.
Page 34 of 404

LAW ON PROPERTY

On June 10, 1927, B.A. Green, president of the Mabalacat

Sugar Co., Inc., applied to Cu Unjieng e Hijos for an
additional loan of P75,000 offering as security the additional
machinery and equipment acquired by said B.A. Green and
installed in the sugar central after the execution of the
original mortgage deed, on April 27, 1927, together with
whatever additional equipment acquired with said loan. B.A.
Green failed to obtain said loan.
Article 1877 of the Civil Code provides as follows.
ART. 1877. A mortgage includes all natural accessions,
improvements, growing fruits, and rents not collected when
the obligation falls due, and the amount of any indemnities
paid or due the owner by the insurers of the mortgaged
property or by virtue of the exercise of the power of eminent
domain, with the declarations, amplifications, and
limitations established by law, whether the estate continues
in the possession of the person who mortgaged it or
whether it passes into the hands of a third person.
In the case of Bischoff vs. Pomar and Compaia General de
Tabacos (12 Phil., 690), cited with approval in the case of
Cea vs. Villanueva (18 Phil., 538), this court laid shown the
following doctrine:
1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES
IMPROVEMENTS AND FIXTURES. It is a rule, established by
the Civil Code and also by the Mortgage Law, with which the
decisions of the courts of the United States are in accord,
that in a mortgage of real estate, the improvements on the
same are included; therefore, all objects permanently
attached to a mortgaged building or land, although they
may have been placed there after the mortgage was
constituted, are also included. (Arts. 110 and 111 of the
Mortgage Law, and 1877 of the Civil Code; decision of U.S.
Supreme Court in the matter of Royal Insurance Co. vs. R.
Miller, liquidator, and Amadeo [26 Sup. Ct. Rep., 46; 199
U.S., 353].)
2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC.
In order that it may be understood that the machinery and
other objects placed upon and used in connection with a

mortgaged estate are excluded from the mortgage, when it

was stated in the mortgage that the improvements,
buildings, and machinery that existed thereon were also
comprehended, it is indispensable that the exclusion thereof
be stipulated between the contracting parties.
The appellant contends that the installation of the
machinery and equipment claimed by him in the sugar
central of the Mabalacat Sugar Company, Inc., was not
permanent in character inasmuch as B.A. Green, in
proposing to him to advance the money for the purchase
thereof, made it appear in the letter, Exhibit E, that in case
B.A. Green should fail to obtain an additional loan from the
defendants Cu Unjieng e Hijos, said machinery and
equipment would become security therefor, said B.A. Green
binding himself not to mortgage nor encumber them to
anybody until said plaintiff be fully reimbursed for the
corporation's indebtedness to him.
Upon acquiring the machinery and equipment in question
with money obtained as loan from the plaintiff-appellant by
B.A. Green, as president of the Mabalacat Sugar Co., Inc.,
the latter became owner of said machinery and equipment,
otherwise B.A. Green, as such president, could not have
offered them to the plaintiff as security for the payment of
his credit.
Article 334, paragraph 5, of the Civil Code gives the
character of real property to "machinery, liquid containers,
instruments or implements intended by the owner of any
building or land for use in connection with any industry or
trade being carried on therein and which are expressly
adapted to meet the requirements of such trade or industry.
If the installation of the machinery and equipment in
question in the central of the Mabalacat Sugar Co., Inc., in
lieu of the other of less capacity existing therein, for its
sugar industry, converted them into real property by reason
of their purpose, it cannot be said that their incorporation
therewith was not permanent in character because, as
essential and principal elements of a sugar central, without
them the sugar central would be unable to function or carry
on the industrial purpose for which it was established.
Inasmuch as the central is permanent in character, the
Page 35 of 404

LAW ON PROPERTY

necessary machinery and equipment installed for carrying

on the sugar industry for which it has been established must
necessarily be permanent.

incorporation thereof with the mortgaged sugar central,

does not vest the creditor with ownership of said machinery
and equipment but simply with the right of redemption.

Furthermore, the fact that B.A. Green bound himself to the

plaintiff B.H. Berkenkotter to hold said machinery and
equipment as security for the payment of the latter's credit
and to refrain from mortgaging or otherwise encumbering
them until Berkenkotter has been fully reimbursed therefor,
is not incompatible with the permanent character of the
incorporation of said machinery and equipment with the
sugar central of the Mabalacat Sugar Co., Inc., as nothing
could prevent B.A. Green from giving them as security at
least under a second mortgage.

Wherefore, finding no error in the appealed judgment, it is

affirmed in all its parts, with costs to the appellant. So
ordered.

As to the alleged sale of said machinery and equipment to

the plaintiff and appellant after they had been permanently
incorporated with sugar central of the Mabalacat Sugar Co.,
Inc., and while the mortgage constituted on said sugar
central to Cu Unjieng e Hijos remained in force, only the
right of redemption of the vendor Mabalacat Sugar Co., Inc.,
in the sugar central with which said machinery and
equipment had been incorporated, was transferred thereby,
subject to the right of the defendants Cu Unjieng e Hijos
under the first mortgage.
For the foregoing considerations, we are of the opinion and
so hold: (1) That the installation of a machinery and
equipment in a mortgaged sugar central, in lieu of another
of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production,
constitutes a permanent improvement on said sugar central
and subjects said machinery and equipment to the
mortgage constituted thereon (article 1877, Civil Code); (2)
that the fact that the purchaser of the new machinery and
equipment has bound himself to the person supplying him
the purchase money to hold them as security for the
payment of the latter's credit, and to refrain from
mortgaging or otherwise encumbering them does not alter
the permanent character of the incorporation of said
machinery and equipment with the central; and (3) that the
sale of the machinery and equipment in question by the
purchaser who was supplied the purchase money, as a loan,
to the person who supplied the money, after the

DIGESTED VERSION BH Berkenkotter vs Cu Unjieng

61 Phil 663
Facts:
The Mabalacat Sugar Co., Inc., owner of the sugar central situated in Mabalacat,
Pampanga, obtained from Cu Unjieng e Hijos, a loan secured by a first mortgage
constituted on two parcels and land "with all its buildings, improvements, sugar-cane
mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is
necessary complement of said sugar-cane mill, steel railway, telephone line, now
existing or that may in the future exist is said lots.
Shortly after said mortgage had been constituted, the Mabalacat Sugar Co., Inc.,
decided to increase the capacity of its sugar central by buying additional machinery
and equipment, so that instead of milling 150 tons daily, it could produce 250. The
estimated cost of said additional machinery and equipment was approximately
P100,000. In order to carry out this plan, A. Green, president of said corporation,
proposed to the plaintiff, B.H. Berkenkotter, to advance the necessary amount for
the purchase of said machinery and equipment.
The president of the Mabalacat Sugar Co., Inc., applied to Cu Unjieng e Hijos for an
additional loan of P75,000 offering as security the additional machinery and
equipment acquired by said B.A. Green and installed in the sugar central after the
execution of the original mortgage deed, on April 27, 1927, together with whatever
additional equipment acquired with said loan. B.A. Green failed to obtain said loan.
Issues:
Whether or not, the lower court erred in declaring that the additional machinery and
equipment as improvement can be permanently attached to a mortgage of the sugar
central.
Held:

Page 36 of 404
LAW ON PROPERTY

That the installation of a machinery and equipment in a mortgaged sugar central, in

lieu of another of less capacity, for the purpose of carrying out the industrial
functions of the latter and increasing production, constitutes a permanent
improvement on said sugar central and subjects said machinery and equipment to
the mortgage constituted thereon.

9. G.R. No. L-17898

October 31, 1962

PASTOR D. AGO, petitioner,

vs.
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ,
Judge of the Court of First Instance of Agusan, THE
PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK
ENGINEERING, INC., respondents.
Jose M. Luison for petitioner.
Norberto J. Quisumbing for respondent Grace Park
Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of
Surigao.
LABRABOR, J.:
Appeal by certiorari to review the decision of respondent
Court of Appeals in CA-G.R. No. 26723-R entitled "Pastor D.
Ago vs. The Provincial Sheriff of Surigao, et al." which in part
reads:
In this case for certiorari and prohibition with preliminary
injunction, it appears from the records that the respondent
Judge of the Court of First Instance of Agusan rendered
judgment (Annex "A") in open court on January 28, 1959,
basing said judgment on a compromise agreement between
the parties.

reconsideration was denied by the court below in the order

of November 14, 1959.
Petitioner now contends that the respondent Judge
exceeded in his jurisdiction in rendering the execution
without valid and formal notice of the decision.
A compromise agreement is binding between the parties
and becomes the law between them. (Gonzales vs. Gonzales
G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs.
Martin, G.R. No. L-12439, May 22, 1959) .
It is a general rule in this jurisdiction that a judgment based
on a compromise agreement is not appealable and is
immediately executory, unless a motion is filed on the
ground fraud, mistake or duress. (De los Reyes vs. Ugarte,
75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31,
1957)
Petitioner's claim that he was not notified or served notice of
the decision is untenable. The judgment on the compromise
agreement rendered by the court below dated January 28,
1959, was given in open court. This alone is a substantial
compliance as to notice. (De los Reyes vs. Ugarte, supra)
IN VIEW THEREOF, we believe that the lower court did not
exceed nor abuse its jurisdiction in ordering the execution of
the judgment. The petition for certiorari is hereby dismissed
and the writ of preliminary injunction heretofore dissolved,
with costs against the petitioner.
IT IS SO ORDERED.

On August 15, 1959, upon petition, the Court of First

Instance issued a writ of execution.

The facts of the case may be briefly stated as follows: In

1957, petitioner Pastor D. Ago bought sawmill machineries
and equipments from respondent Grace Park Engineer
domineering, Inc., executing a chattel mortgage over said
machineries and equipments to secure the payment of
balance of the price remaining unpaid of P32,000.00, which
petitioner agreed to pay on installment basis.

Petitioner's motion for reconsideration dated October 12,

1959 alleges that he, or his counsel, did not receive a formal
and valid notice of said decision, which motion for

Petitioner Ago defaulted in his payment and so, in 1958

respondent Grace Park Engineering, Inc. instituted extrajudicial foreclosure proceedings of the mortgage. To enjoin
Page 37 of 404

LAW ON PROPERTY

said foreclosure, petitioner herein instituted Special Civil

Case No. 53 in the Court of First Instance of Agusan. The
parties to the case arrived at a compromise agreement and
submitted the same in court in writing, signed by Pastor D.
Ago and the Grace Park Engineering, Inc. The Hon. Montano
A. Ortiz, Judge of the Court of First Instance of Agusan, then
presiding, dictated a decision in open court on January 28,
1959.
Petitioner continued to default in his payments as provided
in the judgment by compromise, so Grace Park Engineering,
Inc. filed with the lower court a motion for execution, which
was granted by the court on August 15, 1959. A writ of
execution, dated September 23, 1959, later followed.
The herein respondent, Provincial Sheriff of Surigao, acting
upon the writ of execution issued by the lower court, levied
upon and ordered the sale of the sawmill machineries and
equipments in question. These machineries and equipments
had been taken to and installed in a sawmill building located
in Lianga, Surigao del Sur, and owned by the Golden Pacific
Sawmill, Inc., to whom, petitioner alleges, he had sold them
on February 16, 1959 (a date after the decision of the lower
court but before levy by the Sheriff).
Having been advised by the sheriff that the public auction
sale was set for December 4, 1959, petitioner, on December
1, 1959, filed the petition for certiorari and prohibition with
preliminary injunction with respondent Court of Appeals,
alleging that a copy of the aforementioned judgment given
in open court on January 28, 1959 was served upon counsel
for petitioner only on September 25, 1959 (writ of execution
is dated September 23, 1959); that the order and writ of
execution having been issued by the lower court before
counsel for petitioner received a copy of the judgment, its
resultant last order that the "sheriff may now proceed with
the sale of the properties levied constituted a grave abuse
of discretion and was in excess of its jurisdiction; and that
the respondent Provincial Sheriff of Surigao was acting
illegally upon the allegedly void writ of execution by levying
the same upon the sawmill machineries and equipments
which have become real properties of the Golden Pacific
sawmill, Inc., and is about to proceed in selling the same
without prior publication of the notice of sale thereof in

some newspaper of general circulation as required by the

Rules of Court.
The Court of Appeals, on December 8, 1959, issued a writ of
preliminary injunction against the sheriff but it turned out
that the latter had already sold at public auction the
machineries in question, on December 4, 1959, as
scheduled. The respondent Grace Park Engineering, Inc. was
the only bidder for P15,000.00, although the certificate sale
was not yet executed. The Court of Appeals constructed the
sheriff to suspend the issuance of a certificate of sale of the
said sawmill machineries and equipment sold by him on
December 4, 1959 until the final decision of the case. On
November 9, 1960 the Court of Appeals rendered the
aforequoted decision.
Before this Court, petitioner alleges that the Court of
Appeals erred (1) in holding that the rendition of judgment
on compromise in open court on January 1959 was a
sufficient notice; and (2) in not resolving the other issues
raised before it, namely, (a) the legality of the public auction
sale made by the sheriff, and (b) the nature of the
machineries in question, whether they are movables or
immovables.
The Court of Appeals held that as a judgment was entered
by the court below in open court upon the submission of the
compromise agreement, the parties may be considered as
having been notified of said judgment and this fact
constitutes due notice of said judgment. This raises the
following legal question: Is the order dictated in open court
of the judgment of the court, and is the fact the petitioner
herein was present in open court was the judgment was
dictated, sufficient notice thereof? The provisions of the
Rules of Court decree otherwise. Section 1 of Rule 35
describes the manner in which judgment shall be rendered,
thus:
SECTION 1. How judgment rendered. All judgments
determining the merits of cases shall be in writing
personally and directly prepared by the judge, and signed by
him, stating clearly and distinctly the facts and the law on
which it is based, filed with the clerk of the court.
Page 38 of 404

LAW ON PROPERTY

The court of first instance being a court of record, in order

that a judgment may be considered as rendered, must not
only be in writing, signed by the judge, but it must also be
filed with the clerk of court. The mere pronouncement of the
judgment in open court with the stenographer taking note
thereof does not, therefore, constitute a rendition of the
judgment. It is the filing of the signed decision with the clerk
of court that constitutes rendition. While it is to be
presumed that the judgment that was dictated in open court
will be the judgment of the court, the court may still modify
said order as the same is being put into writing. And even if
the order or judgment has already been put into writing and
signed, while it has not yet been delivered to the clerk for
filing it is still subject to amendment or change by the judge.
It is only when the judgment signed by the judge is actually
filed with the clerk of court that it becomes a valid and
binding judgment. Prior thereto, it could still be subject to
amendment and change and may not, therefore, constitute
the real judgment of the court.
Regarding the notice of judgment, the mere fact that a party
heard the judge dictating the judgment in open court, is not
a valid notice of said judgment. If rendition thereof is
constituted by the filing with the clerk of court of a signed
copy (of the judgment), it is evident that the fact that a
party or an attorney heard the order or judgment being
dictated in court cannot be considered as notice of the real
judgment. No judgment can be notified to the parties unless
it has previously been rendered. The notice, therefore, that
a party has of a judgment that was being dictated is of no
effect because at the time no judgment has as yet been
signed by the judge and filed with the clerk.

court; it is necessary that he be served with a copy of the

signed judgment that has been filed with the clerk in order
that he may legally be considered as having been served
with the judgment.
For all the foregoing, the fact that the petitioner herein
heard the trial judge dictating the judgment in open court, is
not sufficient to constitute the service of judgement as
required by the above-quoted section 7 of Rule 2 the signed
judgment not having been served upon the petitioner, said
judgment could not be effective upon him (petitioner) who
had not received it. It follows as a consequence that the
issuance of the writ of execution null and void, having been
issued before petitioner her was served, personally or by
registered mail, a copy of the decision.
The second question raised in this appeal, which has been
passed upon by the Court of Appeals, concerns the validity
of the proceedings of the sheriff in selling the sawmill
machineries and equipments at public auction with a notice
of the sale having been previously published.
The record shows that after petitioner herein Pastor D. Ago
had purchased the sawmill machineries and equipments he
assigned the same to the Golden Pacific Sawmill, Inc. in
payment of his subscription to the shares of stock of said
corporation. Thereafter the sawmill machinery and
equipments were installed in a building and permanently
attached to the ground. By reason of such installment in a
building, the said sawmill machineries and equipment
became real estate properties in accordance with the
provision of Art. 415 (5) of the Civil Code, thus:

Besides, the Rules expressly require that final orders or

judgments be served personally or by registered mail.
Section 7 of Rule 27 provides as follows:

ART. 415. The following are immovable property:

SEC. 7. Service of final orders or judgments. Final orders

or judgments shall be served either personally or by
registered mail.

(5) Machinery, receptacles, instruments or implements

tended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said
industry or works;

In accordance with this provision, a party is not considered

as having been served with the judgment merely because
he heard the judgment dictating the said judgment in open

xxx

xxx

xxx

Page 39 of 404
LAW ON PROPERTY

This Court in interpreting a similar question raised before it

in the case of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil.
683, held that the installation of the machine and
equipment in the central of the Mabalacat Sugar Co., Inc. for
use in connection with the industry carried by the company,
converted the said machinery and equipment into real
estate by reason of their purpose. Paraphrasing language of
said decision we hold that by the installment of the sawmill
machineries in the building of the Gold Pacific Sawmill, Inc.,
for use in the sawing of logs carried on in said building, the
same became a necessary and permanent part of the
building or real estate on which the same was constructed,
converting the said machineries and equipments into real
estate within the meaning of Article 415(5) above-quoted of
the Civil Code of the Philippines.
Considering that the machineries and equipments in
question valued at more than P15,000.00 appear to have
been sold without the necessary advertisement of sale by
publication in a newspaper, as required in Sec. 16 of Rule 39
of the Rules of Court, which is as follows:
SEC. 16. Notice of sale of property on execution. Before
the sale of property on execution, notice thereof must be
given as follows:
xxx

xxx

xxx

(c) In case of real property, by posting a similar notice

particularly describing the property for twenty days in three
public places in the municipality or city where the property
is situated, and also where the property is to be sold, and, if
the assessed value of the property exceeds four hundred
pesos, by publishing a copy of the notice once a week, for
the same period, in some newspaper published or having
general circulation in the province, if there be one. If there
are newspapers published in the province in both the
English and Spanish languages, then a like publication for a
like period shall be made in one newspaper published in the
English language, and in one published in the Spanish
language.
the sale made by the sheriff must be declared null and void.

WHEREFORE, the decision of the Court of Appeals sought to

be reviewed is hereby set aside and We declare that the
issuance of the writ of execution in this case against the
sawmill machineries and equipments purchased by
petitioner Pastor D. Ago from the Grace Park Engineering,
Inc., as well as the sale of the same by the Sheriff of
Surigao, are null and void. Costs shall be against the
respondent Grace Park Engineering, Inc.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L.,
Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Padilla, J., took no part.
10. G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF
APPEALS, respondents.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for
petitioner.
Jose V. Mancella for respondent.

DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court
of Appeals (now Intermediate Appellate Court) promulgated
on August 27, 1981 in CA-G.R. No. SP-12731, setting aside
certain Orders later specified herein, of Judge Ricardo J.
Francisco, as Presiding Judge of the Court of First instance of
Rizal Branch VI, issued in Civil Case No. 36040, as wen as
the resolution dated September 22, 1981 of the said
appellate court, denying petitioner's motion for
reconsideration.
It appears that in order to obtain financial accommodations
from herein petitioner Makati Leasing and Finance
Corporation, the private respondent Wearever Textile Mills,
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LAW ON PROPERTY

Inc., discounted and assigned several receivables with the

former under a Receivable Purchase Agreement. To secure
the collection of the receivables assigned, private
respondent executed a Chattel Mortgage over certain raw
materials inventory as well as a machinery described as an
Artos Aero Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition
for extrajudicial foreclosure of the properties mortgage to it.
However, the Deputy Sheriff assigned to implement the
foreclosure failed to gain entry into private respondent's
premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a
complaint for judicial foreclosure with the Court of First
Instance of Rizal, Branch VI, docketed as Civil Case No.
36040, the case before the lower court.
Acting on petitioner's application for replevin, the lower
court issued a writ of seizure, the enforcement of which was
however subsequently restrained upon private respondent's
filing of a motion for reconsideration. After several incidents,
the lower court finally issued on February 11, 1981, an order
lifting the restraining order for the enforcement of the writ of
seizure and an order to break open the premises of private
respondent to enforce said writ. The lower court reaffirmed
its stand upon private respondent's filing of a further motion
for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order,
repaired to the premises of private respondent and removed
the main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition
proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court and
ordered the return of the drive motor seized by the sheriff
pursuant to said Orders, after ruling that the machinery in
suit cannot be the subject of replevin, much less of a chattel
mortgage, because it is a real property pursuant to Article
415 of the new Civil Code, the same being attached to the
ground by means of bolts and the only way to remove it
from respondent's plant would be to drill out or destroy the
concrete floor, the reason why all that the sheriff could do to
enfore the writ was to take the main drive motor of said

machinery. The appellate court rejected petitioner's

argument that private respondent is estopped from claiming
that the machine is real property by constituting a chattel
mortgage thereon.
A motion for reconsideration of this decision of the Court of
Appeals having been denied, petitioner has brought the
case to this Court for review by writ of certiorari. It is
contended by private respondent, however, that the instant
petition was rendered moot and academic by petitioner's act
of returning the subject motor drive of respondent's
machinery after the Court of Appeals' decision was
promulgated.
The contention of private respondent is without merit. When
petitioner returned the subject motor drive, it made itself
unequivocably clear that said action was without prejudice
to a motion for reconsideration of the Court of Appeals
decision, as shown by the receipt duly signed by
respondent's representative. 1 Considering that petitioner
has reserved its right to question the propriety of the Court
of Appeals' decision, the contention of private respondent
that this petition has been mooted by such return may not
be sustained.
The next and the more crucial question to be resolved in this
Petition is whether the machinery in suit is real or personal
property from the point of view of the parties, with
petitioner arguing that it is a personality, while the
respondent claiming the contrary, and was sustained by the
appellate court, which accordingly held that the chattel
mortgage constituted thereon is null and void, as contended
by said respondent.
A similar, if not Identical issue was raised in Tumalad v.
Vicencio, 41 SCRA 143 where this Court, speaking through
Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the
subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage
defendants-appellants could only have meant to convey the
house as chattel, or at least, intended to treat the same as
such, so that they should not now be allowed to make an
Page 41 of 404

LAW ON PROPERTY

inconsistent stand by claiming otherwise. Moreover, the

subject house stood on a rented lot to which defendantsappellants merely had a temporary right as lessee, and
although this can not in itself alone determine the status of
the property, it does so when combined with other factors to
sustain the interpretation that the parties, particularly the
mortgagors, intended to treat the house as personality.
Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza
Theatre, Inc. & Leung Yee vs. F.L. Strong Machinery &
Williamson, wherein third persons assailed the validity of the
chattel mortgage, it is the defendants-appellants
themselves, as debtors-mortgagors, who are attacking the
validity of the chattel mortgage in this case. The doctrine of
estoppel therefore applies to the herein defendantsappellants, having treated the subject house as personality.
Examining the records of the instant case, We find no logical
justification to exclude the rule out, as the appellate court
did, the present case from the application of the
abovequoted pronouncement. If a house of strong materials,
like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a
chattel mortgage thereon as long as the parties to the
contract so agree and no innocent third party will be
prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes
immobilized only by destination or purpose, may not be
likewise treated as such. This is really because one who has
so agreed is estopped from denying the existence of the
chattel mortgage.
In rejecting petitioner's assertion on the applicability of the
Tumalad doctrine, the Court of Appeals lays stress on the
fact that the house involved therein was built on a land that
did not belong to the owner of such house. But the law
makes no distinction with respect to the ownership of the
land on which the house is built and We should not lay down
distinctions not contemplated by law.
It must be pointed out that the characterization of the
subject machinery as chattel by the private respondent is
indicative of intention and impresses upon the property the
character determined by the parties. As stated in Standard
Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable

that the parties to a contract may by agreement treat as

personal property that which by nature would be real
property, as long as no interest of third parties would be
prejudiced thereby.
Private respondent contends that estoppel cannot apply
against it because it had never represented nor agreed that
the machinery in suit be considered as personal property
but was merely required and dictated on by herein
petitioner to sign a printed form of chattel mortgage which
was in a blank form at the time of signing. This contention
lacks persuasiveness. As aptly pointed out by petitioner and
not denied by the respondent, the status of the subject
machinery as movable or immovable was never placed in
issue before the lower court and the Court of Appeals except
in a supplemental memorandum in support of the petition
filed in the appellate court. Moreover, even granting that the
charge is true, such fact alone does not render a contract
void ab initio, but can only be a ground for rendering said
contract voidable, or annullable pursuant to Article 1390 of
the new Civil Code, by a proper action in court. There is
nothing on record to show that the mortgage has been
annulled. Neither is it disclosed that steps were taken to
nullify the same. On the other hand, as pointed out by
petitioner and again not refuted by respondent, the latter
has indubitably benefited from said contract. Equity dictates
that one should not benefit at the expense of another.
Private respondent could not now therefore, be allowed to
impugn the efficacy of the chattel mortgage after it has
benefited therefrom,
From what has been said above, the error of the appellate
court in ruling that the questioned machinery is real, not
personal property, becomes very apparent. Moreover, the
case of Machinery and Engineering Supplies, Inc. v. CA, 96
Phil. 70, heavily relied upon by said court is not applicable to
the case at bar, the nature of the machinery and equipment
involved therein as real properties never having been
disputed nor in issue, and they were not the subject of a
Chattel Mortgage. Undoubtedly, the Tumalad case bears
more nearly perfect parity with the instant case to be the
more controlling jurisprudential authority.

Page 42 of 404
LAW ON PROPERTY

WHEREFORE, the questioned decision and resolution of the

Court of Appeals are hereby reversed and set aside, and the
Orders of the lower court are hereby reinstated, with costs
against the private respondent.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and
Escolin JJ., concur.
Abad Santos, J., concurs in the result.
DIGESTED VERSION Makati Leasing v. Wearever Textiles
[G.R. No. L-58469. May 16, 1983.]
Second Division, de Castro (J): 5 concur, 1 concur in result
Facts: To obtain financial accommodations from Makati Leasing and
Finance Corporation, Wearever Textile Mills, discounted and assigned
several receivables with the former under a Receivable Purchase
Agreement. To secure the collection of the receivables assigned, Wearever
Textile executed a Chattel Mortgage over certain raw materials inventory as
well as a machinery described as an Artos Aero Dryer Stentering Range.
Upon Wearever's default, Makati Leasing filed a petition for extrajudicial
foreclosure of the properties mortgage to it. However, the Deputy Sheriff
assigned to implement the foreclosure failed to gain entry into Wearever's
premises and was not able to effect the seizure of the machinery. Makati
Leasing thereafter filed a complaint for judicial foreclosure with the CFI
Rizal (Branch VI, Civil Case 36040).
Acting on petitioner's application for replevin, the lower court issued a writ
of seizure, the enforcement of which was restrained upon Wearever's filing
of a motion for reconsideration. The lower court finally issued on 11
February 1981, an order lifting the restraining order for the enforcement of
the writ of seizure and an order to break open the premises of Wearever to
enforce said writ. The lower court reaffirmed its stand upon Wearever's
filing of a further motion for reconsideration. On 13 July 1981, the sheriff
enforcing the seizure order, repaired to the premises of Wearever and
removed the main drive motor of the subject machinery.

On 27 August 1981, the Court of Appeals, in certiorari and prohibition

proceedings filed by Wearever, set aside the Orders of the lower court and
ordered the return of the drive motor seized by the sheriff pursuant to said
Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property
pursuant to Article 415 of the new Civil Code. The appellate court also
rejected the argument that Wearever is estopped from claiming that the
machine is real property by constituting a chattel mortgage thereon. A
motion for reconsideration was filed by Makati Leasing, which was later
denied. Makati Leasing brought the case to the Supreme Court by review by
writ of certiorari.
The Supreme Court reversed and set aside the decision and resolution of the
Court of Appeals, and reinstated the orders of the lower court, with costs
against Wearever Textiles.
1. Case not moot and academic with the return of the seized motor
When the subject motor drive was returned, it was made unequivocably
clear that said action was without prejudice to a motion for reconsideration
of the Court of Appeals decision, as shown by the receipt duly signed by
Wearever's representative. Considering that Makati Leasing has reserved its
right to question the propriety of the CA' decision, the contention of
Wearever that the petition has been mooted by such return may not be
sustained.
2. Similar case; Estoppel applies to parties as having treated the house as
personalty
Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by way
of chattel mortgage defendants-appellants could only have meant to convey
the house as chattel, or at least, intended to treat the same as such, so that
they should not now be allowed to make an inconsistent stand by claiming
otherwise. Unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre,
Inc. & Leung Yee vs. F.L. Strong Machinery & Williamson, wherein third
persons assailed the validity of the chattel mortgage, it is the defendantsappellants themselves, as debtors mortgagors, who are attacking the validity
of the chattel mortgage in this case. The doctrine of estoppel therefore
applies to the herein defendants appellants, having treated the subject house
Page 43 of 404

LAW ON PROPERTY

as personalty" (Tumalad v. Vicencio). One who has so agreed is estopped

from denying the existence of the chattel mortgage.
3. Pronouncement on estoppel involving chattel mortgage applies to
machinery
There is no logical justification to exclude the rule out the present case from
the application of the pronouncement in Tumalad v. Vicencio. If a house of
strong materials may be considered as personal property for purposes of
executing a chattel mortgage thereon as long as the parties to the contract so
agree and no innocent third party will be prejudiced thereby, there is
absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise
treated as such.
4. Chattel mortgage treating real property as personal property valid, as long
as third parties are not prejudiced
The characterization of the subject machinery as chattel is indicative of
intention and impresses upon the property the character determined by the
parties. As stated in Standard Oil v. Jaramillo, , it is undeniable that the
parties to a contract may by agreement treat as personal property that which
by nature would be real property, as long as no interest of third parties
would be prejudiced thereby.
5. Equity prevents respondent to impugn the efficacy of the chattel
mortgage
Equity dictates that one should not benefit at the expense of another.
Weareverf could not be allowed to impugn the efficacy of the chattel
mortgage after it has benefited therefrom.
6. Machinery and Engineering Supplies v. CA not applicable; Tumalad case
more in parity with case
The case of Machinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70,
heavily relied upon by the Court of Appeals, is not applicable to the present
case as the nature of the machinery and equipment involved therein as real
properties never having been disputed nor in issue, and they were not the
subject of a Chattel Mortgage. Undoubtedly, the Tumalad case bears more
nearly perfect parity with the present case to be the more controlling
jurisprudential authority.

11. Peoples Bank v. Dahican Lumber

[G.R. No. L-17500. May 16, 1967.]
En Banc, Dizon (J): 8 concur.
Facts: On 8 September 1948, Atlantic Gulf & Pacific Company of Manila
(ATLANTIC) sold and assigned all its right in the Dahican lumber
concession to Dahican Lumber Company (DALCO) for P500,000.00 of
which only the amount of $50,000.00 was paid. Thereafter, to develop the
concession, DALCO obtained various loans from the People's Bank
(P200,000.00, as of 13 July 1950). DALCO also obtained, through the
Bank, a loan of $250,000.00 from the Export-Import Bank of Washington
D.C. (through 5 promissory notes of $50,000.00 each, maturing on different
dates), executed by both DALCO and the Dahican American Lumber
Corporation (DAMCO), a foreign corporation and a stockholder of
DALCO, all payable to the BANK. As security, DALCO executed on 13
July 1950 a deed of mortgage covering live parcels of land situated in the
province of Camarines Norte, together with all the buildings and other
improvements existing thereon and all the personal properties of the
mortgagor located in its place of business in the municipalities of
Mambulao and Capalonga, Camarines Norte in favor of the BANK. On the
same date, DALCO executed a second mortgage on the same properties in
favor of ATLANTIC to secure payment of the unpaid balance of the sale
price of the lumber concession amounting to the sum of $450,000.00. Both
deeds contained a provision extending the mortgage lien to properties to be
subsequently acquired by the mortgagor. Both mortgages were registered in
the Office of the Register of Deeds of Camarines Norte. In addition thereto
DALCO and DAMCO pledged to the BANK 7,296 shares of stock of
DALCO and 9,286 shares of DAMCO to secure the same obligations. Upon
DALCO's and DAMCO's failure to pay the fifth promissory note upon its
maturity, the BANK paid the same to the Export-Import Bank of
Washington D.C. and the latter assigned to the former its credit and the first
mortgage securing it. Subsequently, the BANK gave DALCO and DAMCO
up to 1 April 1953 to pay the overdue promissory note.
After 13 July 1950, DALCO purchased various machineries, equipment,
spare parts and supplies in addition to, or in replacement of some of those
already owned and used by it. Pursuant to the provision of the mortgage
deeds quoted heretofore regarding "after acquired properties", the BANK
requested DALCO to submit complete lists of said properties but the latter
Page 44 of 404

LAW ON PROPERTY

failed to do so. In connection with these purchases, there appeared in the

books of DALCO the sum of P452,860.55 as due to Connell Bros.
Company (CONNEL) and the sum of P2,151,678.34 to DAMCO. On 16
December 1952, the Board of Directors of DALCO passed a resolution
agreeing to rescind the alleged sales of equipment, spare parts and supplies
by CONNELL and DAMCO to it. Thereafter, the corresponding agreements
of rescission of sale were executed.
On 23 January 1953, the BANK, in its own behalf and that of ATLANTIC,
demanded that the agreements be cancelled but CONNELL and DAMCO
refused to do so. As a result, on 12 February 1953, ATLANTIC and the
BANK, commenced foreclosure proceedings in the CFI Camarines Norte
against DALCO and DAMCO. Upon motion of the parties, the Court, on 30
September 1953, issued an order transferring the venue of the action to the
CFI Manila (Civil Case 20987). On 30 August 1958, upon motion of all the
parties, the Court ordered the sale of all the machineries, equipment and
supplies of DALCO, and the same were subsequently sold for a total
consideration of P175,000.00 which was deposited in court pending final
determination of the action. By a similar agreement one half (P87,500.00)
of this amount was considered as representing the proceeds obtained from
the sale of the "undebated properties" (those not claimed by DAMCO and
CONNELL), and the other half as representing those obtained from the sale
of the "after acquired properties".
After due trial, the Court, on 15 July 1960, rendered Judgment against
Dahican Lumber Co, ordering it to pay the bank, ATLANTIC, CONNEL
and DAMCO; and adjudicating the half of the sum realized from sale of the
properties unto the plaintiffs; and the other half to both the plaintiffs and
defendant DAMCO and CONNELL. The Court further ordered that the cost
of the receivership shall be borne by the Bank, Atlantic, Connell and
DAMCO. On the following day, the Court issued a supplementary decision
ordering the sale at public auction of lands object to the mortgages if
DALCO fails to pay the bank and Atlantic. Therafter, all the parties
appealed.
The Supreme Court modified the appealed judgment and affirmed in all
other respects. With costs.

1. On after acquired properties, stipulation is clear and valid

The stipulation in the Deed of Mortgage states that all property of every
nature, buildings, machinery, etc. taken in exchange or replacement by the
mortgagor "shall immediately be and become subject to the lien of this
mortgage in the same manner and to the same extent as if now included
therein". No clearer language could have been chosen. Further, such
stipulation is common is neither unlawful nor immoral, its obvious purpose
being to maintain, to the extent allowed by circumstances, the original value
of the properties given as security. It is only logical in all cases where the
properties given as collateral are perishable or subject to inevitable wear
and tear or were intended to be sold, or to be used (thus subject to wear and
tear); they shall be replaced with others to be thereafter acquired by the
mortgagor, such understanding either express or implied. If such properties
were of the nature already referred to, it would be poor judgment on the part
of the creditor who does not see to it that a similar provision is included in
the contract.
2. Registry of chattel mortgage as to affect third party does not apply to the
case
Though it is the law in this jurisdiction that, to affect third persons, a chattel
mortgage must be registered and must describe the mortgaged chattels or
personal properties sufficiently to enable the parties and any other person to
identify them, such law does not apply to the present case (?reason).
3. Whether old or new civil code to be used as guide irrelevant in this case
The mortgages in question were executed on 13 July 1950 with the old Civil
Code still in force. There can be no doubt that the provisions of said code
must govern their interpretation and the question of their validity. It
happens, however, that Articles 334 and 1877 of the old Civil Code are
substantially reproduced in Article 415 and 2127, respectively, of the new
Civil Code. It is, therefore, immaterial in this case whether we take the
former or the latter as guide in deciding the point under consideration.
4. Civil code does not define real property but enumerates them
Article 415 does not define real property but enumerates what are
considered as such, among them being machinery, receptacles, instruments
or replacements intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of land, and shall
tend directly to meet the needs of the said industry or works.
Page 45 of 404

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5. Chattels place in real properties mortgaged within the operation of Art

415 (5), and 2127 of the New Civil Code; Illustrative cases: Berkenkotter v.
Cu Unjieng and Cu Unjieng Hijos v. Mabalacat Sugar
The chattels, placed in the real properties mortgaged to plaintiffs, came
within the operation of Art. 415, paragraph 5 and Art. 2127 of the new Civil
Code. This is consistent with previous rulings of the court. (1) In
Berkenkotter vs. Cu Unjieng (61 Phil. 663), Article 334 [5] of the old Civil
Code gives the character of real property to machinery, liquid containers,
instruments or replacements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and
which are expressly adapted to meet the requirements of such trade or
industry; and (2) In Cu Unjieng Hijos vs. Mabalacat Sugar Co. (58 Phil.
439), a mortgage constituted on a sugar central includes not only the land
on which it is built but also the buildings, machinery and accessories
installed at the time the mortgage was constituted as well as the buildings,
machinery and accessories belonging to the mortgagor, installed after the
constitution thereof.
6. After acquired properties immobilized; No need for second registration
as Chattel Mortgage in light of existing real estate mortgage
The "after acquired properties" were purchased in connection with, and for
use in the development of its lumber concession and that they were
purchased in addition to, or in replacement of those already existing in the
premises on 13 July 1950. In law, they must be deemed to have been
immobilized, with the result that the real estate mortgages involved therein,
which were registered as such, did not have to be registered a second time
as chattel mortgages in order to bind the "after acquired properties" and
affect third parties.
7. Davao Sawmill case not on all fours; Intent of parties relevant
The facts in the Davao Sawmill case are not on all fours with the current
case. In the former, Davao Sawmill had repeatedly treated the machinery
therein involved as personal property by executing chattel mortgages
thereon in favor of third parties, while in the present case the parties had
treated the "after acquired properties" as real properties by expressly and
unequivocally agreeing that they shall automatically become subject to the
lien of the real estate mortgages executed by them. In the Davao Sawmill
decision it was stated that the characterization of the property as chattels by
the appellant is indicative of intention and impresses upon the property the

character determined by the parties. In the present case, the characterization

of the "after acquired properties" as real property was made not only by one
but by both interested parties. There is, therefore, more reason to hold that
such consensus impresses upon the properties the character determined by
the parties who must now be held in estoppel to question it.
8. Valdez v. Central Altagracia relevant; Knowledge of suppliers of real
mortgage stipulations
Valdez vs. Central Altagracia Inc. (225 U.S. 58) was quoted in the Davao
Sawmill case, holding that machinery placed on property by a tenant does
not become immobilized, yet, when the tenant places it there pursuant to
contract that it shall belong to the owner, it then becomes immobilized as to
that tenant and even as against his assignees and creditors who had
sufficient notice of such stipulation. In the present case, the "after acquired
properties" are not disputed to be placed on and be used in the development
of its lumber concession, and agreed further that the same shall become
immediately subject to the lien constituted by the questioned mortgages.
DAMCO and CONNELL, having full notice of such stipulation, must be
deemed barred from denying that the properties in question had become
immobilized.
9. Connell and Damco not unpaid suppliers; They do not have superior
right to lien
DAMCO was a stockholder and CONNELL was not only a stockholder but
the general agent of DALCO. Further, the report of the auditors and its
annexes show that neither DAMCO nor CONNELL had supplied any of the
goods of which they respectively claimed to be the unpaid seller; that all
items were supplied by different parties. If DALCO still owes them any
amount in this connection, as financiers, they can not claim any right over
the "after acquired properties" superior to the lien constituted thereon by
virtue of the deeds of mortgage under foreclosure.
10. Defense of prematurity does not hold if debtor is insolvent
When the law permits the debtor to enjoy the benefits of the period
notwithstanding that he is insolvent by his giving a guaranty for the debt,
that must mean a new and efficient guaranty, must concede that the causes
of action for collection of the notes were not premature. In the present case,
plaintiffs, as a matter of grace, conceded an extension of time to pay up to 1
April 1953, months after the action to foreclose was filed 12 February 1953;
Page 46 of 404

LAW ON PROPERTY

without debate that DALCO was already insolvent at the date of the time of
filing.g
11. Proceeds from the sale of after acquired properties and the undebated
properties awarded exclusively to plaintiff
In view of the Courts opinion sustaining the validity of the mortgages in
relation thereto, that proceeds obtained from the sale of the "after acquired
properties" and the "undebated properties" should be awarded exclusively to
the plaintiffs in payment of the money obligations secured by the mortgages
under foreclosure.
12. Claims for damages supported
The law (Articles 1313 and 1314 of the New Civil Code) provides that
creditors are protected in cases of contracts intended to defraud them, and
that any third person who induces another to violate his contract shall be
liable for damages to the other contracting party. Similar liability is
demandable under Arts. 20 and 21 which may be given retroactive effect
(Arts. 2252-53) or under Arts. 1902 and 2176 of the Old Civil Code. In
the present case, the facts clearly show that DALCO and DAMCO, after
failing to pay the fifth promissory note upon its maturity, conspired jointly
with CONNELL to violate the provisions of the fourth paragraph of the
mortgages under foreclosure by attempting to defeat plaintiffs' mortgage
lien on the "after acquired properties".
13. Expenses of receivership considered; other damages cannot be
computed
Considering that the sale of the real properties subject to the mortgages
under foreclosure has not been effected, and considering further the lack of
evidence showing that the true value of all the properties already sold was
not realized because their sale was under stress, The true elements or factors
that should determine the amount of damages that plaintiffs are entitled to
recover from defendants are not present. However, all the expenses of the
Receivership, which was deemed necessary to safeguard the rights of the
plaintiffs, should be borne by all the defendants, jointly and severally, in the
same manner that all of them should pay to the plaintiffs, jointly and
severally, the attorney's fees awarded in the appealed judgment.

12.) Burgos v. Chief of Staff, AFP

[G.R. No. 64261. December 26, 1984.]
En Banc, Escolin (J): 10 concur, 1 took no part
Facts: On 7 December 1982, Judge Ernani Cruz-Pao, Executive Judge of
the then CFI Rizal [Quezon City], issued 2 search warrants where the
premises at 19, Road 3, Project 6, Quezon City, and 784 Units C & D, RMS
Building, Quezon Avenue, Quezon City, business addresses of the
"Metropolitan Mail" and "We Forum" newspapers, respectively, were
searched, and office and printing machines, equipment, paraphernalia,
motor vehicles and other articles used in the printing, publication and
distribution of the said newspapers, as well as numerous papers, documents,
books and other written literature alleged to be in the possession and control
of Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper, were
seized.
A petition for certiorari, prohibition and mandamus with preliminary
mandatory and prohibitory injunction was filed after 6 months following the
raid to question the validity of said search warrants, and to enjoin the Judge
Advocate General of the AFP, the city fiscal of Quezon City, et.al. from
using the articles seized as evidence in Criminal Case Q-022782 of the RTC
Quezon City (People v. Burgos). The prayer of preliminary prohibitory
injunction was rendered moot and academic when, on 7 July 1983, the
Solicitor General manifested that said articles would not be used until final
resolution of the legality of the seizure of said articles.
The Supreme Court declared the search warrants 20-82(a,b) issued on 7
December 1982 null and void, and granted the writ of mandatory injunction
for the return of the seized articles, such articles seized ordered released to
the petitioners; without costs.
1. Urgency of constitutional issue raised overrides procedural flaw; Failure
to file motion to quash
Petitioners, before impugning the validity of the warrants before the Court,
should have filed a motion to quash said warrants in the court that issued
them. But this procedural flaw notwithstanding, the Court take cognizance
of this petition in view of the seriousness and urgency of the constitutional
issues raised, not to mention the public interest generated by the search of
the "We Forum" offices, which was televised and widely publicized in all
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metropolitan dailies. The existence of this special circumstance justifies this

Court to exercise its inherent power to suspend its rules. In Vda. de
Ordoveza v. Raymundo, it was said that "it is always in the power of the
court [Supreme Court] to suspend its rules or to except a particular case
from its operation, whenever the purposes of justice require it . . . "
2. Laches defined
Laches is failure or negligence for an unreasonable and unexplained length
of time to do that which, by exercising due diligence, could or should have
been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it
either has abandoned or declined to assert it.
3. Extrajudicial effort negates presumption of abandonment of right to the
possession of property
Extrajudicial efforts exerted by petitioners negate the presumption that they
had abandoned their right to the possession of the seized property, thereby
refuting the charge of laches against them. Although the reason given by
petitioners may not be flattering to the judicial system, The Court finds no
ground to punish or chastise them for an error in judgment in pursuing other
remedies, relying on the so-called executive benevolence or largesse (e.g.
Letter of presidential friend Fiscal Flaminiano to Col. Balbino Diego, Chief
Intelligence and Legal Officer of the PSG).
4. Documents marked as evidence in criminal case do not affect issue on the
validity of the warrants
The documents seized lawfully belong to Jose Burgos, Jr. and he can do
whatever he pleases with them, within legal bounds; such as marking them
as evidence in the criminal case. The fact that he has used them as evidence
does not and cannot in any way affect the validity or invalidity of the search
warrants assailed in the petition.
5. Examination conducted
Petitioners objection that there is an alleged failure to conduct an
examination under oath or affirmation of the applicant and his witnesses, as
mandated by the Constitution as well as Sec. 4, Rule 126 of the Rules of
Court, may properly be considered moot and academic, as petitioners
themselves conceded during the hearing on 9 August 1983, that an

examination had indeed been conducted by the judge of Col. Abadilla and
his witnesses.
6. Defect on the address where items are to be seized is typographical error
Search Warrants No. 20-82[a] and No. 20-82[b] were used to search two
distinct places: No. 19, Road 3, Project 6, Quezon City and 784 Units C &
D, RMS Building, Quezon Avenue, Quezon City, respectively. Objection is
interposed to the execution of Search Warrant No. 20-82[b] at the latter
address on the ground that the two search warrants pinpointed only one
place where petitioner Jose Burgos, Jr. was allegedly keeping and
concealing the articles listed therein, i.e., No. 19, Road 3, Project 6, Quezon
City. The defect pointed out is obviously a typographical error. Precisely,
two search warrants were applied for and issued because the purpose and
intent were to search two distinct premises. It would be quite absurd and
illogical for respondent judge to have issued two warrants intended for one
and the same place.
7. Determination whether warrant describes premises to be search with
sufficient particularity
In the determination of whether a search warrant describes the premises to
be searched with sufficient particularity, the executing officer's prior
knowledge as to the place intended in the warrant is relevant. This would
seem to be especially true where the executing officer is the affiant on
whose affidavit the warrant had issued, and when he knows that the judge
who issued the warrant intended the building described in the affidavit. And
it has also been said that the executing officer may look to the affidavit in
the official court file to resolve an ambiguity in the warrant as to the place
to be searched.
8. Property seized need not be owned by person against whom the warrant
is directed
Section 2, Rule 126 of the Rules of Court, enumerates the personal
properties that may be seized under a search warrant, such as [a] Property
subject of the offense; [b] Property stolen or embezzled and other proceeds
or fruits of the offense; and [c] Property used or intended to be used as the
means of committing an offense. The rule does not require that the property
to be seized should be owned by the person against whom the search
warrant is directed. It may or may not be owned by him. Ownership is of no
consequence, and it is sufficient that the person against whom the warrant is
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directed has control or possession of the property sought to be seized was

alleged to have in relation to the articles and property seized under the
warrants.
9. Machineries remain to be movable property; owner should place the
machinery to be immovable
Under Article 415[5] of the Civil Code of the Philippines, "machinery,
receptables, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or
on a piece of land and which tend directly to meet the needs of the said
industry or works" are considered immovable property. In Davao Sawmill
Co. v. Castillo, it was said that machinery which is movable by nature
becomes immobilized when placed by the owner of the tenement, property
or plant, but not so when placed by a tenant, usufructuary, or any other
person having only a temporary right, unless such person acted as the agent
of the owner. In the present case, petitioners do not claim to be the owners
of the land and/or building on which the machineries were placed. The
machineries, while in fact bolted to the ground, remain movable property
susceptible to seizure under a search warrant.
10. Article IV, Section 3 of the 1973 Constitution; Finding of probable cause
required to issue warrant
Section 3 provides that no search warrant or warrant of arrest shall issue
except upon probable cause to be determined by the judge, or such other
responsible officer as may be authorized by law, after examination under
oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or
things to be seized. In the present case, a statement in the effect that the
petitioner "is in possession or has in his control printing equipment and
other paraphernalia, news publications and other documents which were
used and are all continuously being used as a means of committing the
offense of subversion punishable under PD 885, as amended" is a mere
conclusion of law and does not satisfy the requirements of probable cause.
Bereft of such particulars as would justify a finding of the existence of
probable cause, said allegation cannot serve as basis for the issuance of a
search warrant.
11. Probable cause for search defined; Application to searches against
newspaper publisher/editor

Probable cause for a search is defined as such facts and circumstances

which would lead a reasonably discreet and prudent man to believe that an
offense has been committed and that the objects sought in connection with
the offense are in the place sought to be searched. When the search warrant
applied for is directed against a newspaper publisher or editor in connection
with the publication of subversive materials, the application and/or its
supporting affidavits must contain a specification, stating with particularity
the alleged subversive material he has published or is intending to publish.
Mere generalization will not suffice.
12. Constitution requires personal knowledge of complainant / witnesses to
justify issuance of warrant
In mandating that "no warrant shall issue except upon probable cause to be
determined by the judge, after examination under oath or affirmation of the
complainant and the witnesses he may produce; the Constitution requires
no less than personal knowledge by the complainant or his witnesses of the
facts upon which the issuance of a search warrant may be justified. In
Alvarez v. CFI, it was ruled that "the oath required must refer to the truth of
the facts within the personal knowledge of the petitioner or his witnesses,
because the purpose thereof is to convince the committing magistrate, not
the individual making the affidavit and seeking the issuance of the warrant,
of the existence of probable cause."
13. General warrants invalid
In Standford v. State of Texas, the search warrant which authorized the
search for 'books, records, pamphlets, cards, receipts, lists, memoranda,
pictures, recordings and other written instruments concerning the
Communist Parties of Texas, and the operations of the Communist Party in
Texas," was declared void by the U.S. Supreme Court for being too general.
It is that it is not the policy of the government to suppress any newspaper or
publication that speaks with "the voice of non-conformity" but poses no
clear and imminent danger to state security.
14. Closure of publications in the nature of censorship abhorrent to the
freedom of the press
As a consequence of the search and seizure, these premises of the
Metropolitan Mail and We Forum were padlocked and sealed, with the
further result that the printing and publication of said newspapers were
discontinued. Such closure is in the nature of previous restraint or
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censorship abhorrent to the freedom of the press guaranteed under the

fundamental law, and constitutes a virtual denial of petitioners' freedom to
express themselves in print. Thus state of being is patently anathematic to a
democratic framework where a free, alert and even militant press is
essential for the political enlightenment and growth of the citizenry.
15. Machines not sequestered under PD 885; Lack of IRR, contrary claim
by Marcos and Romulo
Sequestration under Section 8 of PD 885, as amended, which authorizes
"the sequestration of the property of any person, natural or artificial,
engaged in subversive activities against the government and its duly
constituted authorities in accordance with implementing rules and
regulations as may be issued by the Secretary of National Defense" could
not validly be effected in view of the absence of any implementing rules
and regulations promulgated by the Minister of National Defense. Further,
no less than President Marcos himself denied the request of the military
authorities to sequester the property seized as reported in the 10 December
1982 issue of the Daily Express. This was confirmed by Foreign Minister
Carlos P. Romulo on 10 February 1982, reiterating Marcos claims, in his
letter to US Congressman Tony P. Hall.
Sergs Products v. PCI Leasing
[G.R. No. 137705. August 22, 2000.]
Third division, Panganiban (J): 3 concur
Facts: On 13 February 1998, PCI Leasing and Finance, Inc. filed a
complaint for sum of money, with an application for a writ of replevin
(Civil Case Q-98-33500). On 6 March 1998, upon an ex-parte application of
PCI Leasing, judge issued a writ of replevin directing its sheriff to seize and
deliver the machineries and equipment to PCI Leasing after 5 days and
upon the payment of the necessary expenses. On 24 March 1998, the sheriff
proceeded to petitioner's factory, seized one machinery with word that the
return for the other machineries. On 25 March 1998, petitioners filed a
motion for special protective order, invoking the power of the court to
control the conduct of its officers and amend and control its processes,
praying for a directive for the sheriff to defer enforcement of the writ of
replevin. On 6 April 1998, the sheriff again sought to enforce the writ of
seizure and take possession of the remaining properties. He was able to take

two more, but was prevented by the workers from taking the rest. On 7
April 1998, they went to the CA via an original action for certiorari.
Citing the Agreement of the parties, the appellate court held that the subject
machines were personal property, and that they had only been leased, not
owned, by petitioners; and ruled that the "words of the contract are clear
and leave no doubt upon the true intention of the contracting parties." It thus
affirmed the 18 February 1998 Order, and the 31 March 1998 Resolution of
the lower court, and lifted the preliminary injunction issued on 15 June
1998. A subsequent motion for reconsideration was denied on 26 February
1999. Hence, the petition for review on certiorari.
The Supreme Court denied the petition and affirmed the decision of the
Court of Appeals; with costs against petitioners.
1. Petition for review on certiorari is clearly under Rule 45
The petition need not expressly indicate if it is being filed under Rule 45 or
Rule 65 of the Rules of Court, as it is clear that the present recourse is under
Rule 45; the conclusion of such supported by the title of the Petition, which
is "Petition for Review on Certiorari."
2. Error in impleading the Judge as respondent not ground to dismiss the
case
While the judge should not have been impleaded as a respondent,
substantial justice requires that such lapse by itself should not warrant the
dismissal of the present Petition. The Court may deems it proper to remove,
motu proprio, the name of the Judge from the caption of the case.
3. Writ of replevin issued for recovery of personal property
Rule 60 of the Rules of Court provides that writs of replevin are issued for
the recovery of personal property only. Section 3 provides that upon the
filing of such affidavit and approval of the bonds the court shall issue an
order and the corresponding writ of replevin describing the personal
property alleged to be wrongfully detained and requiring the sheriff
forthwith to take such property into his custody.
4. Machinery immovable properties by incorporation
The machinery were essential and principal elements of their chocolatePage 50 of 404

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making industry. Hence, although each of them was movable or personal

property on its own, all of them have become "immobilized by destination
because they are essential and principal elements in the industry." The
machines are thus, real, not personal, property pursuant to Article 415 (5) of
the Civil Code.
5. Parties estopped when parties stipulated properties as personal; property
thus subject to writ of seizure
Contracting parties may validly stipulate that a real property be considered
as personal. After agreeing to such stipulation, they are consequently
estopped from claiming otherwise. Under the principle of estoppel, a party
to a contract is ordinarily precluded from denying the truth of any material
fact found therein. Thus, said machines are proper subjects of the Writ of
Seizure (compare Tumalad v. Vicencio).
6. Similar cases
In Trinidad v. Vicencio, the Court upheld the intention of the parties to treat
a house of strong materials as a personal property because it had been made
the subject of a chattel mortgage. Applying Tumalad, the Court in Makati
Leasing and Finance Corp. v. Wearever Textile Mills also held that the
machinery used in a factory and essential to the industry was a proper
subject of a writ of replevin because it was treated as personal property in a
contract.
7. Third parties acting in good faith not affected by stipulation to consider
real property as personal
The holding that the machines should be deemed personal property pursuant
to the Lease Agreement is good only insofar as the contracting parties are
concerned. Hence, while the parties are bound by the Agreement, third
persons acting in good faith are not affected by its stipulation characterizing
the subject machinery as personal. In the present case, however, there is no
showing that any specific third party would be adversely affected.
8. Title to property should be determined at trial; Remedies under Rule 60
either to post a counter-bond or to question the sufficiency of the plaintiffs
bond
The validity and the nature of the contract are the lis mota of the civil action
pending before the RTC. A resolution of the questions whether the
Agreement is a loan and not a lease, or whether the Agreement is invalid,

therefore, is effectively a resolution of the merits of the case. Hence, they

should be threshed out in the trial, not in the proceedings involving the
issuance of the Writ of Seizure. As held in La Tondea Distillers v. CA, the
Court explained that the policy under Rule 60 was that questions involving
title to the subject property should be determined in the trial. In that case,
the Court noted that the remedy of defendants under Rule 60 was either to
post a counter-bond or to question the sufficiency of the plaintiff's bond.
They were not allowed, however, to invoke the title to the subject property.
9. Title to property should be determined at trial; no place in a petition for
certiorari under Rule 65 or in a petition for review under Rule 45.
The questions whether the Agreement is a loan and not a lease, or whether
the Agreement is invalid require a determination of facts and a presentation
of evidence, both of which have no place in a petition for certiorari in the
CA under Rule 65 or in a petition for review in the Court under Rule 45.
10. Agreement presumed to be valid and binding
The Agreement must be presumed to be valid and binding as the law
between the parties; as there is nothing on record to show that it has been
nullified or annulled. In the present case, petitioners assailed it first only in
the RTC proceedings, which had ironically been instituted by respondent.
As in the Makati Leasing and Finance case, even granting that he charge is
true, such fact alone does not render a contract void ab initio, but can only
be a ground for rendering said contract voidable, or annullable pursuant to
Article 1390 of the new Civil Code, by a proper action in court.
11. Consequences cannot be blamed on the Court for the petitioners failure
to avail of remedies under Section 5, Rule 60 of the Rules of Court
Petitioners' arguments, that the seizure will lead to the unemployment of
their workers and nullify all efforts to rehabilitate the corporation, do not
preclude the implementation of the Writ. Law and jurisprudence support its
propriety. Such consequences should not be blamed on this Court, but on
the petitioners for failing to avail themselves of the remedy under Section 5
of Rule 60, which allows the filing of a counter-bond.
Caltex vs CBAA
114 SCRA 296
Facts:
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installations and appurtenant service facilities, together with all

other equipment designed for or essential to its manufacturing,
industrial or agricultural purposes.

This case is about the realty tax on machinery and equipment installed by Caltex
(Philippines) Inc. in its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank,
elevated water tanks, water tanks, gasoline pumps, computing pumps, water
pumps, car washer, car hoists, truck hoists, air compressors and tireflators.
The building or shed, the elevated water tank, the car hoist under a separate shed,
the air compressor, the underground gasoline tank, neon lights signboard, concrete
fence and pavement and the lot where they are all placed or erected, all of them
used in the pursuance of the gasoline service station business formed the entire
gasoline service-station.
The lessor of the land, where the gas station is located, does not become the owner
of the machines and equipment installed therein. Caltex retains the ownership
thereof during the term of the lease.
Issue:
Whether or not the pieces of gas station equipment and machinery enumerated are
subject to realty tax.
Held:
The Assessment Law provides that the realty tax is due "on real property, including
land, buildings, machinery, and other improvements".
SC hold that the said equipment and machinery, as appurtenances to the gas
station building or shed owned by Caltex (as to which it is subject to realty tax) and
which fixtures are necessary to the operation of the gas station, for without them the
gas station would be useless, and which have been attached or affixed permanently
to the gas station site or embedded therein, are taxable improvements and
machinery within the meaning of the Assessment Law and the Real Property Tax
Code.
Note:
Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of
waste, costing labor or capital and intended to enhance its value,
beauty or utility or to adapt it for new or further purposes.
Machinery shall embrace machines, mechanical contrivances, instruments,
appliances and apparatus attached to the real estate. It includes
the physical facilities available for production, as well as the

G.R. No. L-15334

January 31, 1964

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY

TREASURER OF QUEZON CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Assistant City Attorney Jaime R. Agloro for petitioners.
Ross, Selph and Carrascoso for respondent.
PAREDES, J.:
From the stipulation of facts and evidence adduced during
the hearing, the following appear:
On October 20, 1902, the Philippine Commission enacted
Act No. 484 which authorized the Municipal Board of Manila
to grant a franchise to construct, maintain and operate an
electric street railway and electric light, heat and power
system in the City of Manila and its suburbs to the person or
persons making the most favorable bid. Charles M. Swift was
awarded the said franchise on March 1903, the terms and
conditions of which were embodied in Ordinance No. 44
approved on March 24, 1903. Respondent Manila Electric Co.
(Meralco for short), became the transferee and owner of the
franchise.
Meralco's electric power is generated by its hydro-electric
plant located at Botocan Falls, Laguna and is transmitted to
the City of Manila by means of electric transmission wires,
running from the province of Laguna to the said City. These
electric transmission wires which carry high voltage current,
are fastened to insulators attached on steel towers
constructed by respondent at intervals, from its hydroelectric plant in the province of Laguna to the City of Manila.
The respondent Meralco has constructed 40 of these steel
towers within Quezon City, on land belonging to it. A
photograph of one of these steel towers is attached to the
petition for review, marked Annex A. Three steel towers
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were inspected by the lower court and parties and the

following were the descriptions given there of by said court:

the square metal frame supporting the legs were not

attached to any material or foundation.

The first steel tower is located in South Tatalon, Espaa

Extension, Quezon City. The findings were as follows: the
ground around one of the four posts was excavated to a
depth of about eight (8) feet, with an opening of about one
(1) meter in diameter, decreased to about a quarter of a
meter as it we deeper until it reached the bottom of the
post; at the bottom of the post were two parallel steel bars
attached to the leg means of bolts; the tower proper was
attached to the leg three bolts; with two cross metals to
prevent mobility; there was no concrete foundation but
there was adobe stone underneath; as the bottom of the
excavation was covered with water about three inches high,
it could not be determined with certainty to whether said
adobe stone was placed purposely or not, as the place
abounds with this kind of stone; and the tower carried five
high voltage wires without cover or any insulating materials.

On November 15, 1955, petitioner City Assessor of Quezon

City declared the aforesaid steel towers for real property tax
under Tax declaration Nos. 31992 and 15549. After denying
respondent's petition to cancel these declarations, an
appeal was taken by respondent to the Board of Assessment
Appeals of Quezon City, which required respondent to pay
the amount of P11,651.86 as real property tax on the said
steel towers for the years 1952 to 1956. Respondent paid
the amount under protest, and filed a petition for review in
the Court of Tax Appeals (CTA for short) which rendered a
decision on December 29, 1958, ordering the cancellation of
the said tax declarations and the petitioner City Treasurer of
Quezon City to refund to the respondent the sum of
P11,651.86. The motion for reconsideration having been
denied, on April 22, 1959, the instant petition for review was
filed.

The second tower inspected was located in Kamuning Road,

K-F, Quezon City, on land owned by the petitioner
approximate more than one kilometer from the first tower.
As in the first tower, the ground around one of the four legs
was excavate from seven to eight (8) feet deep and one and
a half (1-) meters wide. There being very little water at the
bottom, it was seen that there was no concrete foundation,
but there soft adobe beneath. The leg was likewise provided
with two parallel steel bars bolted to a square metal frame
also bolted to each corner. Like the first one, the second
tower is made up of metal rods joined together by means of
bolts, so that by unscrewing the bolts, the tower could be
dismantled and reassembled.

In upholding the cause of respondents, the CTA held that:

(1) the steel towers come within the term "poles" which are
declared exempt from taxes under part II paragraph 9 of
respondent's franchise; (2) the steel towers are personal
properties and are not subject to real property tax; and (3)
the City Treasurer of Quezon City is held responsible for the
refund of the amount paid. These are assigned as errors by
the petitioner in the brief.

The third tower examined is located along Kamias Road,

Quezon City. As in the first two towers given above, the
ground around the two legs of the third tower was
excavated to a depth about two or three inches beyond the
outside level of the steel bar foundation. It was found that
there was no concrete foundation. Like the two previous
ones, the bottom arrangement of the legs thereof were
found to be resting on soft adobe, which, probably due to
high humidity, looks like mud or clay. It was also found that

The tax exemption privilege of the petitioner is quoted

hereunder:
PAR 9. The grantee shall be liable to pay the same taxes
upon its real estate, buildings, plant (not including poles,
wires, transformers, and insulators), machinery and personal
property as other persons are or may be hereafter required
by law to pay ... Said percentage shall be due and payable
at the time stated in paragraph nineteen of Part One hereof,
... and shall be in lieu of all taxes and assessments of
whatsoever nature and by whatsoever authority upon the
privileges, earnings, income, franchise, and poles, wires,
transformers, and insulators of the grantee from which taxes
and assessments the grantee is hereby expressly exempted.
Page 53 of 404

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(Par. 9, Part Two, Act No. 484 Respondent's Franchise;

emphasis supplied.)
The word "pole" means "a long, comparatively slender
usually cylindrical piece of wood or timber, as typically the
stem of a small tree stripped of its branches; also by
extension, a similar typically cylindrical piece or object of
metal or the like". The term also refers to "an upright
standard to the top of which something is affixed or by
which something is supported; as a dovecote set on a pole;
telegraph poles; a tent pole; sometimes, specifically a
vessel's master (Webster's New International Dictionary 2nd
Ed., p. 1907.) Along the streets, in the City of Manila, may
be seen cylindrical metal poles, cubical concrete poles, and
poles of the PLDT Co. which are made of two steel bars
joined together by an interlacing metal rod. They are called
"poles" notwithstanding the fact that they are no made of
wood. It must be noted from paragraph 9, above quoted,
that the concept of the "poles" for which exemption is
granted, is not determined by their place or location, nor by
the character of the electric current it carries, nor the
material or form of which it is made, but the use to which
they are dedicated. In accordance with the definitions, pole
is not restricted to a long cylindrical piece of wood or metal,
but includes "upright standards to the top of which
something is affixed or by which something is supported. As
heretofore described, respondent's steel supports consists of
a framework of four steel bars or strips which are bound by
steel cross-arms atop of which are cross-arms supporting
five high voltage transmission wires (See Annex A) and their
sole function is to support or carry such wires.
The conclusion of the CTA that the steel supports in question
are embraced in the term "poles" is not a novelty. Several
courts of last resort in the United States have called these
steel supports "steel towers", and they denominated these
supports or towers, as electric poles. In their decisions the
words "towers" and "poles" were used interchangeably, and
it is well understood in that jurisdiction that a transmission
tower or pole means the same thing.
In a proceeding to condemn land for the use of electric
power wires, in which the law provided that wires shall be
constructed upon suitable poles, this term was construed to

mean either wood or metal poles and in view of the land

being subject to overflow, and the necessary carrying of
numerous wires and the distance between poles, the statute
was interpreted to include towers or poles. (Stemmons and
Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and
Phrases, p. 365.)
The term "poles" was also used to denominate the steel
supports or towers used by an association used to convey
its electric power furnished to subscribers and members,
constructed for the purpose of fastening high voltage and
dangerous electric wires alongside public highways. The
steel supports or towers were made of iron or other metals
consisting of two pieces running from the ground up some
thirty feet high, being wider at the bottom than at the top,
the said two metal pieces being connected with criss-cross
iron running from the bottom to the top, constructed like
ladders and loaded with high voltage electricity. In form and
structure, they are like the steel towers in question. (Salt
River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an
electric company engaged in the generation of hydroelectric power generated from its plant to the Tower of
Oxford and City of Waterbury. These steel towers are about
15 feet square at the base and extended to a height of
about 35 feet to a point, and are embedded in the cement
foundations sunk in the earth, the top of which extends
above the surface of the soil in the tower of Oxford, and to
the towers are attached insulators, arms, and other
equipment capable of carrying wires for the transmission of
electric power (Connecticut Light and Power Co. v. Oxford,
101 Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on
which a certain person met his death was built for the
purpose of supporting a transmission wire used for carrying
high-tension electric power, but claimed that the steel
towers on which it is carried were so large that their wire
took their structure out of the definition of a pole line. It was
held that in defining the word pole, one should not be
governed by the wire or material of the support used, but
was considering the danger from any elevated wire carrying
electric current, and that regardless of the size or material
Page 54 of 404

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wire of its individual members, any continuous series of

structures intended and used solely or primarily for the
purpose of supporting wires carrying electric currents is a
pole line (Inspiration Consolidation Cooper Co. v. Bryan 252
P. 1016).
It is evident, therefore, that the word "poles", as used in Act
No. 484 and incorporated in the petitioner's franchise,
should not be given a restrictive and narrow interpretation,
as to defeat the very object for which the franchise was
granted. The poles as contemplated thereon, should be
understood and taken as a part of the electric power system
of the respondent Meralco, for the conveyance of electric
current from the source thereof to its consumers. If the
respondent would be required to employ "wooden poles", or
"rounded poles" as it used to do fifty years back, then one
should admit that the Philippines is one century behind the
age of space. It should also be conceded by now that steel
towers, like the ones in question, for obvious reasons, can
better effectuate the purpose for which the respondent's
franchise was granted.
Granting for the purpose of argument that the steel
supports or towers in question are not embraced within the
term poles, the logical question posited is whether they
constitute real properties, so that they can be subject to a
real property tax. The tax law does not provide for a
definition of real property; but Article 415 of the Civil Code
does, by stating the following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds
adhered to the soil;
xxx

xxx

xxx

(3) Everything attached to an immovable in a fixed manner,

in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object;
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements

intended by the owner of the tenement for an industry or
works which may be carried in a building or on a piece of

land, and which tends directly to meet the needs of the said
industry or works;
xxx

xxx

xxx

The steel towers or supports in question, do not come within

the objects mentioned in paragraph 1, because they do not
constitute buildings or constructions adhered to the soil.
They are not construction analogous to buildings nor
adhering to the soil. As per description, given by the lower
court, they are removable and merely attached to a square
metal frame by means of bolts, which when unscrewed
could easily be dismantled and moved from place to place.
They can not be included under paragraph 3, as they are not
attached to an immovable in a fixed manner, and they can
be separated without breaking the material or causing
deterioration upon the object to which they are attached.
Each of these steel towers or supports consists of steel bars
or metal strips, joined together by means of bolts, which can
be disassembled by unscrewing the bolts and reassembled
by screwing the same. These steel towers or supports do not
also fall under paragraph 5, for they are not machineries,
receptacles, instruments or implements, and even if they
were, they are not intended for industry or works on the
land. Petitioner is not engaged in an industry or works in the
land in which the steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City
Treasurer of Quezon City to refund the sum of P11,651.86,
despite the fact that Quezon City is not a party to the case.
It is argued that as the City Treasurer is not the real party in
interest, but Quezon City, which was not a party to the suit,
notwithstanding its capacity to sue and be sued, he should
not be ordered to effect the refund. This question has not
been raised in the court below, and, therefore, it cannot be
properly raised for the first time on appeal. The herein
petitioner is indulging in legal technicalities and niceties
which do not help him any; for factually, it was he (City
Treasurer) whom had insisted that respondent herein pay
the real estate taxes, which respondent paid under protest.
Having acted in his official capacity as City Treasurer of
Quezon City, he would surely know what to do, under the
circumstances.
Page 55 of 404

LAW ON PROPERTY

IN VIEW HEREOF, the decision appealed from is hereby

affirmed, with costs against the petitioners
DIGESTED VERSION:
Facts: On 20 October 1902, the Philippine Commission
enacted Act 484 which authorized the Municipal Board of
Manila to grant a franchise to construct, maintain and
operate an electric street railway and electric light, heat and
power system in the City of Manila and its suburbs to the
person or persons making the most favorable bid. Charles
M. Swift was awarded the said franchise on March 1903, the
terms and conditions of which were embodied in Ordinance
44 approved on 24 March 1903. Meralco became the
transferee and owner of the franchise. Meralcos electric
power is generated by its hydro-electric plant located at
Botocan Falls, Laguna and is transmitted to the City of
Manila by means of electric transmission wires, running from
the province of Laguna to the said City. These electric
transmission wires which carry high voltage current, are
fastened to insulators attached on steel towers constructed
by respondent at intervals, from its hydroelectric plant in the
province of Laguna to the City of Manila. Meralco has
constructed 40 of these steel towers within Quezon City, on
land belonging to it.
On 15 November 1955, City Assessor of Quezon City
declared the aforesaid steel towers for real property tax
under Tax Declaration 31992 and 15549. After denying
Meralcos petition to cancel these declarations an appeal
was taken by Meralco to the Board of Assessment Appeals of
Quezon City, which required Meralco to pay the amount of
P11,651.86 as real property tax on the said steel towers for
the years 1952 to 1956. Meralco paid the amount under
protest, and filed a petition for review in the Court of Tax
Appeals which rendered a decision on 29 December 1958,
ordering the cancellation of the said tax declarations and
the City Treasurer of Quezon City to refund to Meralco the
sum of P11,651.86. The motion for reconsideration having
been denied, on 22 April 1959, the petition for review was
filed.
Issue: Whether or not the steel towers of an electric
company constitute real property for the purposes of real
property tax.

Held: The steel towers of an electric company dont

constitute real property for the purposes of real property
tax.
Steel towers are not immovable property under paragraph
1, 3 and 5 of Article 415.
The steel towers or supports do not come within the objects
mentioned in paragraph 1, because they do not constitute
buildings or constructions adhered to the soil. They are not
constructions analogous to buildings nor adhering to the
soil. As per description, given by the lower court, they are
removable and merely attached to a square metal frame by
means of bolts, which when unscrewed could easily be
dismantled and moved from place to place.
They cannot be included under paragraph 3, as they are not
attached to an immovable in a fixed manner, and they can
be separated without breaking the material or causing
deterioration upon the object to which they are attached.
Each of these steel towers or supports consists of steel bars
or metal strips, joined together by means of bolts, which can
be disassembled by unscrewing the bolts and reassembled
by screwing the same.
These steel towers or supports do not also fall under
paragraph 5, for they are not machineries or receptacles,
instruments or implements, and even if they were, they are
not intended for industry or works on the land.
Petitioner is not engaged in an industry or works on the land
in which the steel supports or towers are constructed.
The Supreme Court affirmed the decision appealed from,
with costs against the petitioners.
G.R. No. L-47943 May 31, 1982
MANILA ELECTRIC COMPANY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF
ASSESSMENT APPEALS OF BATANGAS and PROVINCIAL
ASSESSOR OF BATANGAS, respondents.
Page 56 of 404

LAW ON PROPERTY

AQUINO, J.:
This case is about the imposition of the realty tax on two oil
storage tanks installed in 1969 by Manila Electric Company
on a lot in San Pascual, Batangas which it leased in 1968
from Caltex (Phil.), Inc. The tanks are within the Caltex
refinery compound. They have a total capacity of 566,000
barrels. They are used for storing fuel oil for Meralco's power
plants.
According to Meralco, the storage tanks are made of steel
plates welded and assembled on the spot. Their bottoms
rest on a foundation consisting of compacted earth as the
outermost layer, a sand pad as the intermediate layer and a
two-inch thick bituminous asphalt stratum as the top layer.
The bottom of each tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported
underneath by a circular wall made of concrete, eighteen
inches thick, to prevent the tank from sliding. Hence,
according to Meralco, the tank is not attached to its
foundation. It is not anchored or welded to the concrete
circular wall. Its bottom plate is not attached to any part of
the foundation by bolts, screws or similar devices. The tank
merely sits on its foundation. Each empty tank can be
floated by flooding its dike-inclosed location with water four
feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners
of the Central Board of Assessment Appeals, the area where
the two tanks are located is enclosed with earthen dikes
with electric steel poles on top thereof and is divided into
two parts as the site of each tank. The foundation of the
tanks is elevated from the remaining area. On both sides of
the earthen dikes are two separate concrete steps leading to
the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an
asphalt lining about an inch thick. Pipelines were installed
on the sides of each tank and are connected to the pipelines
of the Manila Enterprises Industrial Corporation whose
buildings and pumping station are near Tank No. 2.

The Board concludes that while the tanks rest or sit on their
foundation, the foundation itself and the walls, dikes and
steps, which are integral parts of the tanks, are affixed to
the land while the pipelines are attached to the tanks. (pp.
60-61, Rollo.) In 1970, the municipal treasurer of Bauan,
Batangas, on the basis of an assessment made by the
provincial assessor, required Meralco to pay realty taxes on
the two tanks. For the five-year period from 1970 to 1974,
the tax and penalties amounted to P431,703.96 (p. 27,
Rollo). The Board required Meralco to pay the tax and
penalties as a condition for entertaining its appeal from the
adverse decision of the Batangas board of assessment
appeals.
The Central Board of Assessment Appeals (composed of
Acting Secretary of Finance Pedro M. Almanzor as chairman
and Secretary of Justice Vicente Abad Santos and Secretary
of Local Government and Community Development Jose
Roo as members) in its decision dated November 5, 1976
ruled that the tanks together with the foundation, walls,
dikes, steps, pipelines and other appurtenances constitute
taxable improvements.
Meralco received a copy of that decision on February 28,
1977. On the fifteenth day, it filed a motion for
reconsideration which the Board denied in its resolution of
November 25, 1977, a copy of which was received by
Meralco on February 28, 1978.
On March 15, 1978, Meralco filed this special civil action of
certiorari to annul the Board's decision and resolution. It
contends that the Board acted without jurisdiction and
committed a grave error of law in holding that its storage
tanks are taxable real property.
Meralco contends that the said oil storage tanks do not fall
within any of the kinds of real property enumerated in
article 415 of the Civil Code and, therefore, they cannot be
categorized as realty by nature, by incorporation, by
destination nor by analogy. Stress is laid on the fact that the
tanks are not attached to the land and that they were
placed on leased land, not on the land owned by Meralco.
Page 57 of 404

LAW ON PROPERTY

This is one of those highly controversial, borderline or

penumbral cases on the classification of property where
strong divergent opinions are inevitable. The issue raised by
Meralco has to be resolved in the light of the provisions of
the Assessment Law, Commonwealth Act No. 470, and the
Real Property Tax Code, Presidential Decree No. 464 which
took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax
is due "on real property, including land, buildings,
machinery, and other improvements" not specifically
exempted in section 3 thereof. This provision is reproduced
with some modification in the Real Property Tax Code which
provides:
Sec. 38. Incidence of Real Property Tax. They shall be
levied, assessed and collected in all provinces, cities and
municipalities an annual ad valorem tax on real property,
such as land, buildings, machinery and other improvements
affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definition in its section 3:
k) Improvements is a valuable addition made to property
or an amelioration in its condition, amounting to more than
mere repairs or replacement of waste, costing labor or
capital and intended to enhance its value, beauty or utility
or to adapt it for new or further purposes.
We hold that while the two storage tanks are not embedded
in the land, they may, nevertheless, be considered as
improvements on the land, enhancing its utility and
rendering it useful to the oil industry. It is undeniable that
the two tanks have been installed with some degree of
permanence as receptacles for the considerable quantities
of oil needed by Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard
Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271.
For purposes of taxation, the term "real property" may
include things which should generally be regarded as
personal property(84 C.J.S. 171, Note 8). It is a familiar

phenomenon to see things classed as real property for

purposes of taxation which on general principle might be
considered personal property (Standard Oil Co. of New York
vs. Jaramillo, 44 Phil. 630, 633).
The case of Board of Assessment Appeals vs. Manila Electric
Company, 119 Phil. 328, wherein Meralco's steel towers
were held not to be subject to realty tax, is not in point
because in that case the steel towers were regarded as
poles and under its franchise Meralco's poles are exempt
from taxation. Moreover, the steel towers were not attached
to any land or building. They were removable from their
metal frames.
Nor is there any parallelism between this case and
Mindanao Bus Co. vs. City Assessor, 116 Phil. 501, where the
tools and equipment in the repair, carpentry and blacksmith
shops of a transportation company were held not subject to
realty tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's
questioned decision and resolution are affirmed. No costs.
SO ORDERED.
G.R. No. L-11407

October 30, 1917

FAUSTO RUBISO and BONIFACIO GELITO, plaintiff-appellee,

vs.
FLORENTINO E. RIVERA, defendant-appellant.
Francisco Sevilla for appellant.
Salvador Q. Araullo for appellee.

TORRES, J.:
This appeal by bill of exceptions was filed by counsel
for Florentino E. Rivera against the judgment of September
6, 1915, in which the defendant and appellant was ordered
to place at the disposal of the plaintiff Fausto Rubiso the
Page 58 of 404

LAW ON PROPERTY

pilot boat in litigation. No special finding was made for

costs.
On April 10, 1915, counsel for plaintiff brought suit in
the Court of the First Instance of this city and alleged in the
complaint that his clients were the owners of the pilot boat
named Valentina, which had been in bad condition since the
year 1914 and, on the date of the complaint, was stranded
in the place called Tingloy, of the municipality of Bauan,
Batangas; that the defendant Florentino E. Rivera took
charge or possession of said vessel without the knowledge
or consent of the plaintiff and refused to deliver it to them,
under claim that he was the owner thereof; and that such
procedure on the defendant's part caused the plaintiffs to
suffer damages, not only because they could not proceed to
repair the vessel, but also because they were unable to
derive profit from the voyages for which said pilot boat was
customarily used; and that the net amount of such
uncollected profit was P1,750. The complaint terminated
with a petition that judgment be rendered by ordering the
defendant to deliver said pilot boat to the plaintiffs and
indemnify them in the amount aforementioned or in such
amount as should be proven at trial, and to pay the costs.
Counsel for the defendant entered a general and
specific denial of all the facts set forth in the complaint, with
the exception of those admitted in the special defense and
consisting in that said pilot boat belonged to the concern
named "Gelito and Co.," Bonifacio Gelito being a copartner
thereof to the extent of two-thirds, and the Chinaman Sy
Qui, to that of the one-third, of the value of said vessel; the
subsequently Bonifacio Gelito sold his share to his copartner
Sy Qui, as attested by the instrument Exhibit A, registered in
the office of the Collector of Customs and made a part of his
answer; that later said Chinaman, the absolute owner of the
vessel, sold it in turn to the defendant Rivera, according to
the public instrument, also attached to his answer as Exhibit
B; and that, for the reason, Rivera took possession of said
pilot boat Valentina, as its sole owner. He therefore
petitioned that the defendant be absolved from the
complaint, with the costs against the plaintiff.
After the hearing of the case and introduction of
documentary evidence, the judgment of September 6, 1915,

was rendered, from which counsel for the defendant

appealed and moved for a new trial. This motion was denied
and the appellant excepted.
The record shows it to have been fully proven that
Bonifacio Gelito sold his share in the pilot boat Valentina,
consisting of a two-thirds interest therein, to the Chinaman
Sy Qui, the coowner of the other one-third interest in said
vessel; wherefore this vendor is no longer entitled to
exercise any action whatever in respect to the boat in
question. Gelito was one of the partnership owners of the
Valentina, as in fact his name appears in the certificate of
protection issued by the Bureau of Customs, and the rights
he held are evidenced by the articles of partnership; but, the
whole ownership in the vessel having been consolidated in
behalf of the Chinaman Sy Qui, this latter, in the use of his
right as the sole owner of the Valentina, sold this boat to
Florentino E. Rivera for P2,500, on January 4, 1915, which
facts, are set forth in a deed ratified on the same date
before a notary. This document was registered in the Bureau
of Customs on March 17th of the same year.
On the 23d of January of that year, that is, after the
sale of the boat to the defendant Rivera, suit having been
brought in the justice of the peace court against the
Chinaman Sy Qui to enforce payment of a certain sum of
money, the latter's creditor Fausto Rubiso, the herein
plaintiff, acquired said vessel at a public auction sale and for
the sum of P55.45. The certificate of sale and adjudication of
the boat in question was issued by the sheriff on behalf of
Fausto Rubiso, in the office of the Collector of Customs, on
January 27 of the same year and was also entered in the
commercial registry on the 14th of March, following.
So that the pilot boat Valentina was twice sold: first
privately by its owner Sy Qui to the defendant Florentino E.
Rivera, on January 4, 1915, and afterwards by the sheriff at
public auction in conformity with the order contained in the
judgment rendered by the justice of the peace, court, on
January 23 of the same year, against the Chinaman Sy Qui
and in behalf of the plaintiff, Fausto Rubiso.

Page 59 of 404
LAW ON PROPERTY

It is undeniable that the defendant Rivera acquired by

purchase the pilot boat Valentina on a date prior to that of
the purchase and adjudication made at public auction, by
and on behalf of the plaintiff Rubiso; but it is no less true
that the sale of the vessel by Sy Qui to Florentino E. Rivera,
on January 4, 1915, was entered in the customs registry only
on March 17, 1915, while its sale at public auction to Fausto
Rubiso on the 23d of January of the same year, 1915, was
recorded in the office of the Collector of Customs on the
27th of the same month, and in the commercial registry on
the 4th of March, following; that is, the sale on behalf of the
defendant Rivera was prior to that made at public auction to
Rubiso, but the registration of this latter sale was prior by
many days to the sale made to the defendant.
Article 573 of the Code of Commerce provides, in its
first paragraph:
Merchant vessels constitute property which may be
acquired and transferred by any of the means recognized by
law. The acquisition of a vessel must be included in a written
instrument, which shall not produce any effect with regard
to third persons if not recorded in the commercial registry.
So that, pursuany to the above-quoted article,
inscription in the commercial registry was indispensable, in
order that said acquisition might affect, and produce
consequences with respect to third persons.
However, since the enactment of Act No. 1900, on
May 18, 1909, said article of the Code of Commerce was
amended, as appears by section 2 of that Act, here below
transcribed.
The documenting, registering, enrolling, and licensing
of vessels in accordance with the Customs Administrative
Act and customs rules and regulations shall be deemed to
be a registry of vessels within the meaning of the title two of
the Code of Commerce, unless otherwise provided in said
Customs Administrative Act or in said customs rules and
regulations, and the Insular Collector of Customs shall
perform the duties of commercial register concerning the
registering of vessels, as defined in title two of the Code of
Commerce.

The requisite of registration in the registry, of the

purchase of a vessel, is necessary and indispensable in
order that the purchaser's rights may be maintained against
a claim filed by a third person. Such registration is required
both by the Code of Commerce and by Act No. 1900. The
amendment solely consisted in charging the Insular
Collector of Customs, as at present, with the fulfillment of
the duties of the commercial register concerning the
registering of vessels; so that the registration of a bill of sale
of a vessel shall be made in the office of the insular
Collector of Customs, who, since May 18, 1909, has been
performing the duties of the commercial register in place of
this latter official.
In view of said legal provisions, it is undeniable that
the defendant Florentino E. Rivera's rights cannot prevail
over those acquired by Fausto Rubiso in the ownership of
the pilot boat Valentina, inasmuch as, though the latter's
acquisition of the vessel at public auction, on January 23,
1915, was subsequent to its purchase by the defendant
Rivera, nevertheless said sale at public auction was
antecedently recorded in the office of the Collector of
Customs, on January 27, and entered in the commercial
registry an unnecessary proceeding on March 4th;
while the private and voluntary purchase made by Rivera on
a prior date was not recorded in the office of the Collector of
Customs until many days afterwards, that is, not until March
17, 1915.
The legal rule set down in the Mercantile Code
subsists, inasmuch as the amendment solely refers to the
official who shall make the entry; but, with respect to the
rights of the two purchasers, whichever of them first
registered his acquisition of the vessel is the one entitled to
enjoy the protection of the law, which considers him the
absolute owner of the purchased boat, and this latter to be
free of all encumbrance and all claims by strangers for,
pursuant to article 582 of the said code, after the bill of the
judicial sale at auction has been executed and recorded in
the commercial registry, all the other liabilities of the vessel
in favor of the creditors shall be considered canceled.
1awphil.net
Page 60 of 404

LAW ON PROPERTY

The purchaser at public auction, Fausto Rubiso, who

was careful to record his acquisition, opportunely and on a
prior date, has, according to the law, a better right than the
defendant Rivera who subsequently recorded his purchase.
The latter is a third person, who was directly affected by the
registration which the plaintiff made of his acquisition.
Ships or vessels, whether moved by steam or by sail,
partake, to a certain extent, of the nature and conditions of
real property, on account of their value and importance in
the world commerce; and for this reason the provisions of
article 573 of the Code of Commerce are nearly identical
with those of article 1473 of the Civil Code.
With respect to the indemnity for losses and
damages, requested by the plaintiff, aside from the fact, as
shown by the evidence, that, subsequent to the date when
the judgment appealed from was rendered, the vessel in
question emerged unharmed from the place where it was
stranded, and was, at the time of the trial, anchored in the
port of Maricaban, the record certainly does not furnish any
positive evidence of the losses and damages alleged to have
been occasioned. On the other hand, it cannot be affirmed
that the defendant acted in bad faith specifically because he
acquired the vessel on a date prior to that of its acquisition
at public auction by the plaintiff Rubiso, who, for the reason
aforestated, is the true and sole owner of said pilot boat.
For the foregoing considerations, whereby the errors
assigned to the judgment appealed from are deemed to
have been refuted, it is our opinion that said judgment
should be, as it is hereby, affirmed, with costs against the
appellant. So ordered.
Sibal v. Valdez
[G.R. No. 26278. August 4, 1927.]
Second Division, Johnson (J): 5 concur
Facts: On 11 May 1923, the deputy-sheriff of the Province of Tarlac, by
virtue of a writ of execution in civil case 20203 of the CFI Manila
(Macondray & Co., Inc. vs. Leon Sibal), levied an attachment on Leon
Sibals 8 parcels of land for the sum of P4,273.93. 2 months later, or on 30
July 1923, Macondray & Co., Inc., bought said parcels of land, at the
auction held by the sheriff of the Province of Tarlac. Within 1 year from the

sale of said parcels of land, or on 24 September 1923, Sibal paid P2,000 to

Macondray for the account of the redemption price of said parcels of land,
without specifying which said amount was to be applied. The redemption
price of the parcels was reduced to P2,579.97 including interest.
On 29 April 1924, the deputy sheriff of the Province of Tarlac, by virtue of a
writ of execution in civil case 1301 of the Province of Pampanga (Emiliano
J. Valdez vs. Leon Sibal 1.), attached the personal property of Sibal located
in Tarlac, among which was included the sugar cane in question in the 7
parcels of land described in the complaint. He also attached Sibals real
property in Tarlac, including rights, interest and participation therein, which
consists of 11 parcels of land and a house and camarin situated in one of
said parcels. On 9-10 May 1924, the deputy sheriff sold at public auction
said personal properties to Emiliano J. Valdez, who paid therefor the sum of
P1,550, of which P600 was for the sugar cane. On 25 June 1924, 8 of the 11
parcels, including the camarin and the house were bought by Valdez at the
auction held by the sheriff for the sum of P12,200. The 3 remaining parcels
were released from attachment by virtue of claims presented by Cayugan
and Tizon. On the same date, Macondray sold and conveyed to Valdez for
P2,579.97 all of its rights and interest in the 8 parcels of land acquired by it
in connection with civil case 20203 of the CFI Manila.
On 14 December 1924, action was commenced in the CFI of the Province
of Tarlac. The plaintiff alleged that the deputy sheriff of Tarlac Province
attached and sold to Valdez the sugar cane planted by the plaintiff and his
tenants on 7 parcels of land, and that within 1 year from the date of the
attachment and sale the plaintiff ordered to redeem said sugar cane and
tendered to Valdez the amount sufficient to cover the price paid by the latter,
with taxes and interests, and that Valdez refused to accept the money and
return the sugar cane to the plaintiff. After hearing and on 28 April 1926, the
judge (Lukban) rendered judgment in favor of the defendant holding that
the sugar cane in question was personal property and, as such, was not
subject to redemption; among others. Hence, the appeal.
1. Paragraph 2, Article 334 of the Civil Code interpreted by the Tribunal
Supremo de Espana as that growing crops may be considered as personal
property
Sugar cane may come under the classification of real property as
"ungathered products" in paragraph 2 of article 334 of the Civil Code,
Page 61 of 404

LAW ON PROPERTY

which enumerates as real property as "Trees, plants, and ungathered

products, while they are annexed to the land or form an integral part of any
immovable property." That article, however, has received in recent years an
interpretation by the Tribunal Supremo de Espaa, which holds that, under
certain conditions, growing crops may be considered as personal property.
(Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Spain.) Thus,
under Spanish authorities, pending fruits and ungathered products may be
sold and transferred as personal property. Also, the Supreme Court of Spain,
in a case of ejectment of a lessee of an agricultural land, held that the lessee
was entitled to gather the Products corresponding to the agricultural year
because said fruits did not go with the land but belonged separately to the
lessee. And further, under the Spanish Mortgage Law of 1909, as amended,
the mortgage of a piece of land does not include the fruits and products
existing thereon, unless the contract expressly provides otherwise.
2. Manresa admits growing crops as personal property
Manresa, the eminent commentator of the Spanish Civil Code, in discussing
section 334 of the Civil Code, in view of the recent decisions of the
Supreme Court of Spain, admits that growing crops are sometimes
considered and treated as personal property.
3. Paragraph 2, Article 344 of the Civil Code corresponds to Article 465 of
the Civil Code of Louisiana
Article 465 of the Civil Code of Louisiana, which corresponds to paragraph
2 of article 334 of the Civil Code, provides: "Standing crops and the fruits
of trees not gathered, and trees before they are cut down, are likewise
immovable, and are considered as part of the land to which they are
attached."
4. Louisiana jurisprudence: Growing crops mobilization by anticipation
Standing crops and the fruits of trees not gathered and trees before they are
cut down are considered as part of the land to which they are attached,' but
the immovability provided for is only one in abstracto and without reference
to rights on or to the crop acquired by others than the owners of the property
to which the crop is attached. The existence of a right on the growing crop
is a mobilization by anticipation, a gathering as it were in advance,
rendering the crop movable quoad the right acquired therein. Jurisprudence
recognizes the possible mobilization of the growing crop. (Citizens' Bank
vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 La. Ann., 761; Sandel vs.

Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.; as cited in
Lumber Co. vs. Sheriff and Tax Collector [106 La., 418], c.f. Citizens Bank
v. Wiltz [31 La. Ann., 244])
5. Louisiana jurisprudence: Standing crops as immovable or movable based
on owned and leased premises; seizure by creditors
Standing crops are considered as immovable and as part of the land to
which they are attached, and the fruits of an immovable gathered or
produced while it is under seizure are considered as making part thereof,
and inure to the benefit of the person making the seizure. But the evident
meaning of these articles is, where the crops belong to the owner of the
plantation, they form part of the immovable, and where it is seized, the
fruits gathered or produced inure to the benefit of the seizing creditor. A
crop raised on leased premises in no sense forms part of the immovable. It
belongs to the lessee, and may be sold by him, whether it be gathered or
not, and it may be sold by his judgment creditors. (Porche vs. Bodin [28 La.
An., 761])
6. Louisiana jurisprudence: Law cannot be interpreted result in absurd
consequences
If crop necessarily forms part of the leased premises the result would be that
it could not be sold under execution separate and apart from the land. If a
lessee obtain supplies to make his crop, the factor's lien would not attach to
the crop as a separate thing belonging to his debtor, but the land belonging
to the lessor would be affected with the recorded privilege. The law cannot
be construed so as to result in such absurd consequences.
7. American jurisprudence: growing crops by yearly labor and cultivation
personal property
The settled doctrine followed in the State of California and other states in
connection with the attachment of property and execution of judgment is,
that growing crops raised by yearly labor and cultivation are considered
personal property. All annual crops which are raised by yearly manurance
and labor, and essentially owe their annual existence to cultivation by man,
may be levied on as personal property. Crops, whether growing or standing
in the field ready to be harvested, are, when produced by annual cultivation,
no part of the realty. They are, therefore, liable to voluntary transfer as
chattels. It is equally well settled that they may be seized and sold under
execution.
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8. Valid sale of a thing not yet in existence; thing must be owned by the
vendor
A valid sale may be made of a thing, which though not yet actually in
existence, is reasonably certain to come into existence as the natural
increment or usual incident of something already in existence, and then
belonging to the vendor, and the title will vest in the buyer the moment the
thing comes into existence. (Emerson vs. European Railway Co., 67 Me.,
387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) The thing sold,
however, must be specific and identified. They must be also owned at the
time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
9. Source of provisions on execution of judgment in Code of Civil
Procedure (Act 190); Growing crops are personal property
Section 450 and most of the other sections of the Code of Civil Procedure
relating to the execution of judgments were taken from the Code of Civil
Procedure of California. Section 450 of the Code of Civil Procedure
enumerates the property of a judgment debtor which may be subjected to
execution, and reads as "All goods, chattels, moneys, and other property,
both real and personal, shall be liable to execution." The Supreme Court of
California, under section 688 of the Code of Civil Procedure of that state, to
which the Code of Civil Procedure was pattered, has held, without
variation, that growing crops were personal property and subject to
execution.

products" as mentioned in said article of the Civil Code have the nature of
personal property; or that in the sense that, for the purposes of attachment
and execution, and for the purposes of the Chattel Mortgage Law,
"ungathered products" have the nature of personal property. In other words,
the phrase "personal property" should be understood to include "ungathered
products." In the case at bar, the sugar cane in question was personal
property and was not subject to redemption.
12. Absence from trial and failure to cross-examine lend weight to the
evidence presented by the other party
The absence of the plaintiff from the trial and his failure to cross-examine
the defendant have lent considerable weight to the evidence then presented
for the defense. The court has been inclined to to give more weight to the
evidence adduced by him than to the evidence adduced by the plaintiff, with
respect to the ownership of parcels of land.
13. Lack of evidence of bad faith in planting palay in questioned parcels
entitles plaintiff to of the crop
There being no evidence of bad faith on the plaintiffs part, in planting the
palay in the disputed parcels of land and harvested therefrom 190 cavans, he
is therefore entitled to one-half of the crop, or 95 cavans, not 190 cavans as
ordered by the lower court.
G.R. No. L-19527

10. Chattel Mortgage Law recognizes growing crops as personal property

Act 1508, the Chattel Mortgage Law, fully recognizes that growing crops
are personal property. Section 2 of said Act provides that "All personal
property shall be subject to mortgage, agreeably to the provisions of this
Act, and a mortgage executed in pursuance thereof shall be termed a chattel
mortgage." Section 7 in part provides that "If growing crops be mortgaged
the mortgage may contain an agreement stipulating that the mortgagor binds
himself properly to tend. care for and protect the crop while growing." The
above provisions of Act 1508 were enacted on the assumption that "growing
crops" are personal property.
11. Personal property includes ungathered products; Paragraph 2, Article
334 of the Civil Code modified by Act 190 and 1508
Paragraph 2 of article 334 of the Civil Code has been modified by section
450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered

March 30, 1963

RICARDO PRESBITERO, in his capacity as Executor of the

Testate Estate of EPERIDION PRESBITERO, petitioner,
vs.
THE HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the
PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL,
respondents.
San Juan, Africa and Benedicto and Hilado and Hilado for
petitioner.
Paredes, Poblador, Cruz and Nazareno and Manuel Soriano
for respondents.
REYES, J.B.L., J.:
Petition for a writ of certiorari against the Court of First
Instance of Negros Occidental.
Page 63 of 404

LAW ON PROPERTY

It appears that during the lifetime of Esperidion Presbitero,

judgment was rendered against him by the Court of Appeals
on October 14, 1959, in CA-G.R. No. 20879,
... to execute in favor of the plaintiff, within 30 days from the
time this judgment becomes final, a deed of reconveyance
of Lot No. 788 of the cadastral survey of Valladolid, free from
all liens and encumbrances, and another deed of
reconveyance of a 7-hectare portion of Lot No. 608 of the
same cadastral survey, also free from all liens and
encumbrances, or, upon failure to do so, to pay to the
plaintiff the value of each of the said properties, as may be
determined by the Court a quo upon evidence to be
presented by the parties before it. The defendant is further
adjudged to pay to the plaintiff the value of the products
received by him from the 5-hectare portion equivalent to 20
cavans of palay per hectare every year, or 125 cavans
yearly, at the rate of P10.00 per cavan, from 1951 until
possession of the said 5-hectare portion is finally delivered
to the plaintiff with legal interest thereon from the time the
complaint was filed; and to pay to the plaintiff the sum of
P1,000.00 by way of attorney's fees, plus costs.
This judgment, which became final, was a modification of a
decision of the Court of First Instance of Negros Occidental,
in its Civil Case No. 3492, entitled "Helen Caram Nava,
plaintiff, versus Esperidion Presbitero, defendant."
Thereafter, plaintiff's counsel, in a letter dated December 8,
1959, sought in vain to amicably settle the case through
petitioner's son, Ricardo Presbitero. When no response was
forthcoming, said counsel asked for, and the court a quo
ordered on June 9, 1960, the issuance of a partial writ of
execution for the sum of P12,250.00. On the following day,
June 10, 1960, said counsel, in another friendly letter,
reiterated his previous suggestion for an amicable
settlement, but the same produced no fruitful result.
Thereupon, on June 21, 1960, the sheriff levied upon and
garnished the sugar quotas allotted to plantation audit Nos.
26-237, 26-238, 26-239, 26-240 and 26-241 adhered to the
Ma-ao Mill District and "registered in the name of Esperidion
Presbitero as the original plantation-owner", furnishing
copies of the writ of execution and the notice of

garnishment to the manager of the Ma-ao Sugar Central

Company, Bago, Negros Occidental, and the Sugar Quota
Administration at Bacolod City, but without presenting for
registration copies thereof to the Register of Deeds.
Plaintiff Helen Caram Nava (herein respondent) then moved
the court, on June 22, 1960, to hear evidence on the market
value of the lots; and after some hearings, occasionally
protracted by postponements, the trial court, on
manifestation of defendant's willingness to cede the
properties in litigation, suspended the proceedings and
ordered him to segregate the portion of Lot 608 pertaining
to the plaintiff from the mass of properties belonging to the
defendant within a period to expire on August 24, 1960, and
to effect the final conveyance of the said portion of Lot 608
and the whole of Lot 788 free from any lien and
encumbrance whatsoever. Because of Presbitero's failure to
comply with this order within the time set forth by the court,
the plaintiff again moved on August 25, 1960 to declare the
market value of the lots in question to be P2,500.00 per
hectare, based on uncontradicted evidence previously
adduced. But the court, acting on a prayer of defendant
Presbitero, in an order dated August 27, 1960, granted him
twenty (20) days to finalize the survey of Lot 608, and
ordered him to execute a reconveyance of Lot 788 not later
than August 31, 1960. Defendant again defaulted; and so
plaintiff, on September 21, 1960, moved the court for
payment by the defendant of the sum of P35,000.00 for the
14 hectares of land at P2,500.00 to the hectare, and the
court, in its order dated September 24, 1960, gave the
defendant until October 15, 1960 either to pay the value of
the 14 hectares at the rate given or to deliver the clean
titles of the lots. On October 15, 1960, the defendant finally
delivered Certificate of Title No. T-28046 covering Lot 788,
but not the title covering Lot 608 because of an existing
encumbrance in favor of the Philippine National Bank. In
view thereof, Helen Caram Nava moved for, and secured on
October 19, 1960, a writ of execution for P17,500.00, and on
the day following wrote the sheriff to proceed with the
auction sale of the sugar quotas previously scheduled for
November 5, 1960. The sheriff issued the notice of auction
sale on October 20, 1960.

Page 64 of 404
LAW ON PROPERTY

On October 22, 1960, death overtook the defendant

Esperidion Presbitero.
Proceedings for the settlement of his estate were
commenced in Special Proceedings No. 2936 of the Court of
First Instance of Negros Occidental; and on November 4,
1960, the special administrator, Ricardo Presbitero, filed an
urgent motion, in Case No. 3492, to set aside the writs of
execution, and to order the sheriff to desist from holding the
auction sale on the grounds that the levy on the sugar
quotas was invalid because the notice thereof was not
registered with the Register of Deeds, as for real property,
and that the writs, being for sums of money, are
unenforceable since Esperidion Presbitero died on October
22, 1960, and, therefore, could only be enforced as a money
claim against his estate.
This urgent motion was heard on November 5, 1960, but the
auction sale proceeded on the same date, ending in the
plaintiff's putting up the highest bid for P34,970.11; thus,
the sheriff sold 21,640 piculs of sugar quota to her.
On November 10, 1960, plaintiff Nava filed her opposition to
Presbitero's urgent motion of November 4, 1960; the latter
filed on May 4, 1961 a supplement to his urgent motion; and
on May 8 and 23, 1961, the court continued hearings on the
motion, and ultimately denied it on November 18, 1961.
On January 11, 1962, plaintiff Nava also filed an urgent
motion to order the Ma-ao Sugar Central to register the
sugar quotas in her name and to deliver the rentals of these
quotas corresponding to the crop year 1960-61 and
succeeding years to her. The court granted this motion in its
order dated February 3, 1962. A motion for reconsideration
by Presbitero was denied in a subsequent order under date
of March 5, 1962. Wherefore, Presbitero instituted the
present proceedings for certiorari.
A preliminary restraining writ was thereafter issued by the
court against the respondents from implementing the
aforesaid orders of the respondent Judge, dated February 3,
1960 and March 5, 1962, respectively. The petition further
seeks the setting aside of the sheriff's certificate of sale of
the sugar quotas made out in favor of Helen Caram Nava,

and that she be directed to file the judgment credit in her

favor in Civil Case No. 3492 as a money claim in the
proceedings to settle the Estate of Esperidion Presbitero.
The petitioner denies having been personally served with
notice of the garnishment of the sugar quotas, but this
disclaimer cannot be seriously considered since it appears
that he was sent a copy of the notice through the chief of
police of Valladolid on June 21, 1960, as certified to by the
sheriff, and that he had actual knowledge of the
garnishment, as shown by his motion of November 4, 1960
to set aside the writs of execution and to order the sheriff to
desist from holding the auction sale.
Squarely at issue in this case is whether sugar quotas are
real (immovable) or personal properties. If they be realty,
then the levy upon them by the sheriff is null and void for
lack of compliance with the procedure prescribed in Section
14, Rule 39, in relation with Section 7, Rule 59, of the Rules
of Court requiring "the filing with the register of deeds a
copy of the orders together with a description of the
property . . . ."
In contending that sugar quotas are personal property, the
respondent, Helen Caram Nava, invoked the test formulated
by Manresa (3 Manresa, 6th Ed. 43), and opined that sugar
quotas can be carried from place to place without injury to
the land to which they are attached, and are not one of
those included in Article 415 of the Civil Code; and not being
thus included, they fall under the category of personal
properties:
ART. 416. The following are deemed to be personal property:
xxx

xxx

xxx

4. In general, all things which can be transported from place

to place without impairment of the real property to which
they are fixed.
Wherefore, the parties respectfully pray that the foregoing
stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing
Page 65 of 404

LAW ON PROPERTY

other evidence to prove their case not covered by this

stipulation of facts. 1wph1.t
Respondent likewise points to evidence she submitted that
sugar quotas are, in fact, transferred apart from the
plantations to which they are attached, without impairing,
destroying, or diminishing the potentiality of either quota or
plantation. She was sustained by the lower court when it
stated that "it is a matter of public knowledge and it is
universal practice in this province, whose principal industry
is sugar, to transfer by sale, lease, or otherwise, sugar quota
allocations from one plantation to any other" and that it is
"specious to insist that quotas are improvements attaching
to one plantation when in truth and in fact they are no
longer attached thereto for having been sold or leased away
to be used in another plantation". Respondent would add
weight to her argument by invoking the role that sugar
quotas play in our modern social and economic life, and
cites that the Sugar Office does not require any registration
with the Register of Deeds for the validity of the sale of
these quotas; and, in fact, those here in question were not
noted down in the certificate of title of the land to which
they pertain; and that Ricardo Presbitero had leased sugar
quotas independently of the land. The respondent cites
further that the U.S.-Philippine Trade Relations Act, approved
by the United States Congress in 1946, limiting the
production of unrefined sugar in the Philippines did not
allocate the quotas for said unrefined sugar among lands
planted to sugarcane but among "the sugar producing mills
and plantation OWNERS", and for this reason Section 3 of
Executive Order No. 873, issued by Governor General
Murphy, authorizes the lifting of sugar allotments from one
land to another by means only of notarized deeds.
While respondent's arguments are thought-provoking, they
cannot stand against the positive mandate of the pertinent
statute. The Sugar Limitation Law (Act 4166, as amended)
provides
SEC. 9. The allotment corresponding to each piece of land
under the provisions of this Act shall be deemed to be an
improvement attaching to the land entitled thereto ....
and Republic Act No. 1825 similarly provides

SEC. 4. The production allowance or quotas corresponding to

each piece of land under the provisions of this Act shall be
deemed to be an improvement attaching to the land entitled
thereto ....
And Executive Order No. 873 defines "plantation" as follows:
(a) The term 'plantation' means any specific area of land
under sole or undivided ownership to which is attached an
allotment of centrifugal sugar.
Thus, under express provisions of law, the sugar quota
allocations are accessories to land, and can not have
independent existence away from a plantation, although the
latter may vary. Indeed, this Court held in the case of
Abelarde vs. Lopez, 74 Phil. 344, that even if a contract of
sale of haciendas omitted "the right, title, interest,
participation, action (and) rent" which the grantors had or
might have in relation to the parcels of land sold, the sale
would include the quotas, it being provided in Section 9, Act
4166, that the allotment is deemed an improvement
attached to the land, and that at the time the contract of
sale was signed the land devoted to sugar were practically
of no use without the sugar allotment.
As an improvement attached to land, by express provision of
law, though not physically so united, the sugar quotas are
inseparable therefrom, just like servitudes and other real
rights over an immovable. Article 415 of the Civil Code, in
enumerating what are immovable properties, names
10. Contracts for public works, and servitudes and other real
rights over immovable property. (Emphasis supplied)
It is by law, therefore, that these properties are immovable
or real, Article 416 of the Civil Code being made to apply
only when the thing (res) sought to be classified is not
included in Article 415.
The fact that the Philippine Trade Act of 1946 (U.S. Public
Law 371-79th Congress) allows transfers of sugar quotas
does not militate against their immovability. Neither does
the fact that the Sugar Quota Office does not require
Page 66 of 404

LAW ON PROPERTY

registration of sales of quotas with the Register of Deeds for

their validity, nor the fact that allocation of unrefined sugar
quotas is not made among lands planted to sugarcane but
among "the sugar producing mills and plantation OWNERS",
since the lease or sale of quotas are voluntary transactions,
the regime of which, is not necessarily identical to
involuntary transfers or levies; and there cannot be a sugar
plantation owner without land to which the quota is
attached; and there can exist no quota without there being
first a corresponding plantation.
Since the levy is invalid for non-compliance with law, it is
impertinent to discuss the survival or non-survival of claims
after the death of the judgment debtor, gauged from the
moment of actual levy. Suffice it to state that, as the case
presently stands, the writs of execution are not in question,
but the levy on the quotas, and, because of its invalidity, the
levy amount to no levy at all. Neither is it necessary, or
desirable, to pass upon the conscionableness or
unconscionableness of the amount produced in the auction
sale as compared with the actual value of the quotas
inasmuch as the sale must necessarily be also illegal.
As to the remedial issue that the respondents have
presented: that certiorari does not lie in this case because
the petitioner had a remedy in the lower court to "suspend"
the auction sale, but did not avail thereof, it may be stated
that the latter's urgent motion of November 4, 1960, a day
before the scheduled sale (though unresolved by the court
on time), did ask for desistance from holding the sale.
WHEREFORE, the preliminary injunction heretofore granted
is hereby made permanent, and the sheriff's certificate of
sale of the sugar quotas in question declared null and void.
Costs against respondent Nava.
U.S. v. Carlos 21 Phil. 543
FACTS: The defendant used a jumper and was thus able to
divert the flow of electricity, causing loss to the Meralco of
over 2000 kilowatts of current. Accused of theft, his defense
was that electricity was an unknown force, not a fluid, and
being intangible, could not be the object of theft.

HELD: While electric current is not a fluid, still its

manifestations and effects like those of gas may be seen
and felt. The true test of what may be stolen is not whether
it is corporeal or incorporeal, but whether, being possessed
of value, a person other than the owner, may appropriate
the same. Electricity, like gas, is a valuable merchandise,
and may thus be stolen. (See also U.S. v. Tambunting, 41
Phil. 364).
A promissory note is personal property; the right to collect it
is also personal property; but a mortgage on real estate is
real property by analogy. (Par. 10, Art. 415; see also Hilado
v. Register of Deeds, 49 Phil. 542; Hongkong and Shanghai
Bank v. Aldecoa and Co., 30 Phil. 255).
Paragraph 10: Contracts for public works, and servitudes
and other real rights over immovable property.
(a) Compared with the Old Law Under the old Civil Code, the
words administrative concessions for public works were
used instead of contracts for public works.
(b) Rights
The properties referred to in paragraph 10 are not material
things but rights, which are necessarily intangible. (See 3
Manresa 11). The piece of paper on which the contract for
public works has been written is necessarily personal
property, but the contract itself, or rather, the right to the
contract, is real property. A servitude or easement is an
encumbrance imposed on an immovable for the benefi t of
another immovable belonging to another owner, or for the
benefi t of a person, group of persons, or a community (like
the easement of right of way). (Arts. 613-614). Other real
rights over real property include real mortgage (see
Hongkong and Shanghai Bank v. Aldecoa and Co., 30 Phil.
255), antichresis, possessory retention, usufruct and leases
of real property, when the leases have been registered in
the Registry of Property; or even if not registered, if their
duration is for more than a year. Upon the other hand, the
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LAW ON PROPERTY

usufruct of personal property or a lease of personal

property, should be considered personal property.
G.R. No. 73246 March 2, 1993
DIRECTOR OF LANDS AND DIRECTOR OF FOREST
DEVELOPMENT, petitioners,
vs.
INTERMEDIATE APPELLATE COURT AND J. ANTONIO
ARANETA, respondents.
The Solicitor General for petitioners.
Jimenez, Leynes & Associates for private respondent.

NOCON, J.:

The Director of Forest Development also entered its

opposition alleging that the land is within the unclassified
public land and, hence, inalienable. Other private parties
also filed their oppositions, but were subsequently
withdrawn.
In an amended application, Pacific Farms, Inc. filed a
manifestation-motion to change the applicant from Pacific
Farms, Inc. to J. Antonio Araneta. Despite the supposed
amendment, there was no republication.
Evidence presented by the applicant include the testimony
of Placido Orlando, fishery guard of Pacific Farms, Inc., who
said he has known the disputed land since he attained the
age of reason for some forty (40) years now; that when he
first came to know the property it was then owned by and in
the possession of Paulino Castelo, Juan Ambrosio and Julio
Castelo, and later on the whole island was bought by Atty.
Vicente Castelo who in turn sold it to J. Antonio Araneta.

For review before Us is the decision of the Court of Appeals

in the land registration case entitled J. Antonio Araneta v.
The Director of Lands and Director of Forest Development,
AC-G.R. CV. No. 00636, 1 affirming the lower court's
approval of the application for registration of a parcel of land
in favor of applicant therein, J. Antonio Araneta.

Deposition by oral examination of Araneta was also

presented, together with documents of sale, tax
declarations and receipts, and survey of property. Applicant,
however, failed to present the tracing cloth plan and instead
submitted to the court certified copies thereof.

Evidence show that the land involved is actually an island

known as Tambac Island in Lingayen Gulf. Situated in the
Municipality of Bani, Pangasinan, the area consists of
187,288 square meters, more or less. The initial application
for registration was filed for Pacific Farms, Inc. under the
provisions of the Land Registration Act, Act No. 496, as
amended.

While this case is pending here in Court, respondent filed an

Omnibus Motion for Substitution of private respondent. 3
Apparently, Antonio Araneta had assigned his rights to and
interest in Tambac Island to Amancio R. Garcia 4 who in turn
assigned his rights and interest in the same property to
Johnny A. Khonghun whose nationality was not alleged in
the pleadings.

The Republic of the Philippines, thru the Director of Lands

opposed the application alleging that the applicant, Pacific
Farms, Inc. does not possess a fee simple title to the land
nor did its predecessors possess the land for at least thirty
(30) years immediately preceding the filing of application.
The opposition likewise specifically alleged that the
applicant is a private corporation disqualified under the
(1973) new Philippine Constitution from acquiring alienable
lands of the public domain citing Section 11, Article 14. 2

On October 4, 1979, the trial court rendered a decision

adjudicating the subject property to J. Antonio Araneta. On
appeal to the then Intermediate Appellate Court, the
decision of the lower court was affirmed on December 12,
1985.
Petitioners raised the following errors:
I. The lower court erred in adjudicating the lands subject of
registration to applicant-appellee despite his failure to
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LAW ON PROPERTY

present the original tracing cloth plan the submission of

which is a statutory requirement of mandatory character.
II. The lower court erred in not denying registration in favor
of J. Antonio Araneta since the amendment of the
application was simply an attempt to avoid the application
of the constitutional provision disqualifying a private
corporation the Pacific Farms, Inc. in this case from
acquiring lands of public domain.
III. The lower court erred in not declaring the land known as
the "Tambac Island" not subject of registration it being an
island formed on the seas.
IV. The lower court erred in adjudicating the land to the
applicant under the provisions of Presidential Decree No.
1529, otherwise known as the Property Registration Decree,
despite absence of any specific invocation of this law in the
original and amended application.
V. The lower court erred in not granting the government's
motion for reconsideration at least to enable it to present
proof of the status of the land as within the unclassified
public forest, and hence beyond the court's jurisdiction to
adjudicate as private property.
VI. The lower court erred in not declaring that the applicant
has failed to overthrow the presumption that the land is a
portion of the public domain belonging to the Republic of the
Philippines.
From the foregoing it appears that the more important
issues are: 1) whether the presentation of the tracing cloth
plan is necessary; and 2) whether the land known as
"Tambac Island" can be subject to registration.
By mere consideration of the first assignment of error, We
can right away glean the merit of the petition.
Respondent claims that the tracing cloth plan is with the
files of the Land Registration Commission, and the only
evidence that can be presented to that fact is the request
for the issuance of a certified copy thereof and the certified
copy issued pursuant to the request. 5 Respondent further

argues that failure of the petitioners to object to the

presentation of the certified copy of the tracing cloth plan
was the basis of the trial court's denial of petitioner's motion
for reconsideration.
In a very recent decision of this Court, entitled The Director
of Lands v. The Honorable Intermediate Appellate Court and
Lino Anit, 6 We have ruled that the submission of the tracing
cloth plan is a mandatory requirement for registration.
Reiterating Our ruling in Director of Lands v. Reyes, 7 We
asserted that failure to submit in evidence the original
tracing cloth plan is fatal it being a statutory requirement of
mandatory character.
It is of no import that petitioner failed to object to the
presentation of the certified copy of the said plan. What is
required is the original tracing cloth plan of the land applied
for and objection to such requirement cannot be waived
either expressly or impliedly. 8 This case is no different from
the case of Director of Lands v. Reyes, supra wherein We
said that if the original tracing cloth plan was indeed with
the Land Registration Commission, there is no reason why
the applicant cannot easily retrieve the same and submit it
in evidence, it being an essential requirement for
registration.
As to the second assignment of error, We are inclined to
agree with petitioners that the amendment of the
application from the name of Pacific Farms Inc., as applicant,
to the name of J. Antonio Araneta Inc., was a mere attempt
to evade disqualification. Our Constitution, whether the
1973 9 or
1987, 10 prohibits private corporations or associations
from holding alienable lands of the public domain except by
lease. Apparently realizing such prohibition, respondent
amended its application to conform with the mandates of
the law.
However, We cannot go along with petitioners' position that
the absence of republication of an amended application for
registration is a jurisdictional flaw. We should distinguish.
Amendments to the application may be due to change in
parties or substantial change in the boundaries or increase
in the area of the land applied for.
Page 69 of 404

LAW ON PROPERTY

In the former case, neither the Land Registration Act, as

amended, nor Presidential Decree No. 1529, otherwise
known as the Property Registration Decree, requires
republication and registration may be allowed by the court
at any stage of the proceeding upon just and reasonable
terms. 11 On the other hand, republication is required if the
amendment is due to substantial change in the boundaries
or increase in the area of the land applied for.
As to the fourth assignment of error. We do not see any
relevant dispute in the lower court's application of
Presidential Decree No. 1529, instead of Act No. 496, in
adjudicating the land to the then applicant, assuming that
the land involved is registrable. Both laws are existing and
can stand together. P.D. 1529 was enacted to codify the
various laws relative to registration of property, in order to
facilitate effective implementation of said laws. 12
The third, fifth and sixth assignment of errors are likewise
meritorious and shall be discussed forthwith together.
Respondent asserts that contrary to the allegation of
petitioners, the reports of the District Land Officer of
Dagupan City, Land Inspector Perfecto Daroy and
Supervising Land Examiner Teodoro P. Nieva show that the
subject property is an unclassified public land, not forest
land. This claim is rather misleading. The report of
Supervising Land Examiner Nieva specifically states that the
"land is within the unclassified forest land" under the
administrative jurisdiction of the then Bureau of Forest
Development. 13 This was based on the reports of Land
Inspector Daroy and District Land Officer Feliciano Liggayu.
Lands of the public domain are classified under three main
categories, namely: Mineral, Forest and Disposable or
Alienable Lands. 14 Under the Commonwealth Constitution,
only agricultural lands were allowed to be alienated. Their
disposition was provided for under Commonwealth Act No.
141 (Secs. 6-7), which states that it is only the President,
upon the recommendation of the proper department head,
who has the authority to classify the lands of the public
domain into alienable or disposable, timber and mineral
lands. Mineral and Timber or forest lands are not subject to

private ownership unless they are first reclassified as

agricultural lands and so released for alienation. 15 In the
absence of such classification, the land remains as
unclassified land until released therefrom and rendered
open to disposition. Courts have no authority to do so. 16
This is in consonance with the Regalian doctrine that all
lands of the public domain belong to the State, and that the
State is the source of any asserted right to ownership in
land and charged with the conservation of such patrimony.
Under the Regalian Doctrine, all lands not otherwise
appearing to be clearly within private ownership are
presumed to belong to the State. Hence, a positive act of
the government is needed to declassify a forest land into
alienable or disposable land for agricultural or other
purposes. 17
The burden of proof in overcoming the presumption of state
ownership of the lands of the public domain is on the person
applying for registration that the land subject of the
application is alienable or disposable. 18
Unless the applicant succeeds in showing by convincing
evidence that the property involved was acquired by him or
his ancestors either by composition title from the Spanish
Government or by possessory information title, or any other
means for the proper acquisition of public lands, the
property must be held to be part of the public domain. The
applicant must present evidence and persuasive proof to
substantiate his claim. 19
In this particular case, respondent presented proof that as
early as 1921, the subject property has been declared for
tax purposes with receipts attached, in the names of
respondent's predecessors-in-interest. Nevertheless, in that
span of time there had been no attempt to register the
same either under Act 496 or under the Spanish Mortgage
Law. It is also rather intriguing that Vicente Castelo who
acquired almost 90% of the property from Alejo Ambrosia, et
al. on June 18, 1958 and from Julio Castelo on June 19, 1958
immediately sold the same to applicant J. Antonio Araneta
on 3 July 1958.

Page 70 of 404
LAW ON PROPERTY

According to the report of Land Investigator Daroy, the land

was declared for taxation purposes in the name of Vicente
Castelo only in 1958 and the purported old tax declarations
are not on file with the Provincial Assessor's Office.

of the Executive Department of the Government and not of

the Courts. In the absence of such classification, the land
remains unclassified until released therefrom and rendered
open to disposition. 24

In any case tax declarations and receipts are not conclusive

evidence of ownership or of the right to possess land when
not supported by evidence. 20 The fact that the disputed
property may have been declared for taxation purposes in
the names of the applicants or of their predecessors-ininterest way back in 1921 does not necessarily prove
ownership. They are merely indicia of a claim of ownership.
21

In fairness to respondent, the petitioners should seriously

consider the matter of the reclassification of the land in
question. The attempt of people to have disposable lands
they have been tilling for generations titled in their name
should not only be viewed with understanding attitude, but
as a matter of policy encouraged. 25

Respondent's contention that the BFD, LC Map No. 681,

certified on August 8, 1927 which was the basis of the report
and recommendation of the Land Examiner, is too
antiquated; that it cannot be conclusively relied upon and
was not even presented in evidence, is not well taken. As
We have said in the case of Director of Lands v. CA: 22
And the fact that BF Map LC No. 673 dated March 1, 1927
showing subject property to be within unclassified region
was not presented in evidence will not operate against the
State considering the stipulation between the parties and
under the well-settled rule that the State cannot be
estopped by the omission, mistake or error of its officials or
agents, if omission there was, in fact.
Respondent even admitted that Tambac Island is still an
unclassified public land as of 1927 and remains to be
unclassified.
Since the subject property is still unclassified, whatever
possession
the applicant may have had and however long, cannot
ripen into private ownership. 23 The conversion of subject
property does not automatically render the property as
alienable and disposable.
In effect what the courts a quo have done is to release the
subject property from the unclassified category, which is
beyond their competence and jurisdiction. We reiterate that
the classification of public lands is an exclusive prerogative

WHEREFORE, the petition is hereby GRANTED and the

decisions of the courts a quo are REVERSED.
SO ORDERED.
ARTICLE 420
G.R. No. 152115

January 26, 2005

NIMFA USERO, petitioner,

vs.
COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA
POLINAR, respondents.
x--------------------------------x
G.R. No. 155055

January 26, 2005

LUTGARDA R. SAMELA, petitioner,

vs.
COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA
POLINAR, respondents.
DECISION
CORONA, J.:
Before this Court are two consolidated petitions for review
on certiorari under Rule 45 of the Rules of Court. The first
petition, docketed as G.R. No. 152115, filed by Nimfa Usero,
assails the September 19, 2001 decision1 of the Court of
Appeals in CA-GR SP No. 64718. The second petition,
docketed as G.R. No. 155055, filed by Lutgarda R. Samela,
Page 71 of 404

LAW ON PROPERTY

assails the January 11, 2002 decision2 of the Court of

Appeals in CA-GR SP NO. 64181.
The undisputed facts follow.
Petitioners Lutgarda R. Samela and Nimfa Usero are the
owners respectively of lots 1 and 2, Block 5, Golden Acres
Subdivision, Barrio Almanza, Las Pias City.
Private respondent spouses Polinar are the registered
owners of a parcel of land at no. 18 Anahaw St., Pilar Village,
Las Pias City, behind the lots of petitioners Samela and
Usero.
Situated between the lots of the parties is a low-level strip of
land, with a stagnant body of water filled with floating water
lilies; abutting and perpendicular to the lot of petitioner
Samela, the lot of the Polinars and the low-level strip of land
is the perimeter wall of Pilar Village Subdivision.

In Civil Case No. 5242, petitioner Samela adduced in

evidence a copy of her Transfer Certificate of Title, plan of
consolidation, subdivision survey, the tax declaration in her
name, and affidavits of petitioner Usero and a certain Justino
Gamela whose property was located beside the perimeter
wall of Pilar Village.
The spouses Polinar, on the other hand, presented in
evidence their own TCT; a barangay certification as to the
existence of the creek; a certification from the district
engineer that the western portion of Pilar Village is bound by
a tributary of Talon Creek throughout its entire length;
boundary and index map of Pilar Village showing that the
village is surrounded by a creek and that the Polinar
property is situated at the edge of said creek; and pictures
of the subject strip of land filled with water lilies.
On March 22, 1999, the trial court rendered a decision in
favor of petitioner Samela:

Apparently, every time a storm or heavy rains occur, the

water in said strip of land rises and the strong current
passing through it causes considerable damage to the house
of respondent Polinars. Frustrated by their predicament,
private respondent spouses, on July 30, 1998, erected a
concrete wall on the bank of the low-level strip of land about
three meters from their house and rip-rapped the soil on
that portion of the strip of land.

WHEREFORE, the Court hereby renders judgment ordering

the defendants to vacate and remove at their expense the
improvements made on the subject lot; ordering the
defendants to pay the plaintiff P1,000.00 a month as
reasonable compensation for the use of the portion
encroached from the filing of the complaint until the same is
finally vacated; and to pay plaintiff P10,000.00 as
reasonable attorneys fees plus costs of suit.31vvphi1.nt

Claiming ownership of the subject strip of land, petitioners

Samela and Usero demanded that the spouses Apolinar stop
their construction but the spouses paid no heed, believing
the strip to be part of a creek. Nevertheless, for the sake of
peace, the Polinars offered to pay for the land being claimed
by petitioners Samela and Usero. However, the parties failed
to settle their differences.

In a parallel development, the Metropolitan Trial Court, in

Civil Case No. 5243, issued an order on February 29, 2000,
directing petitioner Usero and the Polinar spouses to
commission a professional geodetic engineer to conduct a
relocation survey and to submit the report to the trial court.

On November 9, 1998, petitioners filed separate complaints

for forcible entry against the Polinars at the Metropolitan
Trial Court of Las Pias City. The case filed by petitioner
Samela was docketed as Civil Case No. 5242, while that of
petitioner Usero was docketed as Civil Case No. 5243.

On April 24, 2000, Mariano Flotilde, a licensed geodetic

engineer, conducted a relocation survey of Useros property
covered by TCT No. T- 29545. The result of the said
relocation survey, as stated in his affidavit, was as follows:
1. That I executed a relocation survey of Lot 2, Block 5,
(LRC) PCS-4463 covered by TCT No. T-29545 registered in
the name of Nimfa O. Usero;
Page 72 of 404

LAW ON PROPERTY

2. That according to my survey, I found out that there is no

existing creek on the boundary of the said lot;
3. That based on the relocation plan surveyed by the
undersigned, attached herewith, appearing is the
encroachment on the above-mentioned lot by Spouses
Herminigildo and Cecilia Polinar with an area of FORTY
THREE (43) SQUARE METERS;
4. That this affidavit was made in compliance with Court
Order dated February 23, 2000 of Metropolitan Trial Court,
Las Pias City, Branch LXXIX.4
On August 25, 2000, the Metropolitan Trial Court decided in
favor of petitioner Usero:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering them:
a) To vacate and remove at their expense the improvement
made on the subject lot;
b) To pay the plaintiff P1,000.00 a month as reasonable
compensation for the portion encroached from the time of
the filing of the complaint until the same is finally vacated;
c) To pay plaintiff P10,000.00 as reasonable attorneys fees
plus costs of suit.
SO ORDERED.5
The Polinar spouses appealed the decisions of the two
Municipal Trial Courts to the Regional Trial Court of Las Pias,
Branch 253 which heard the appeals separately.
On December 20, 2000, the Regional Trial Court, deciding
Civil Case No. 5242, reversed the decision of the trial court
and ordered the dismissal of the complaint. It confirmed the
existence of the creek between the northwestern portion of
the lot of petitioner Samela and the southwestern portion of
the lot of the spouses Polinar:
Finding the existence of a creek between the respective
properties of the parties, plaintiff-appellee cannot therefore

lay claim of lawful ownership of that portion because the

same forms part of public dominion.1a\^/phi1.net
Consequently, she cannot legally stop the defendantsappellants from rip-rapping the bank of the creek to protect
the latters property from soil erosion thereby avoiding
danger to their lives and damage to property.
Absent a lawful claim by the plaintiff-appellee over the
subject portion of that lot, defendants-appellants are not
duty bound to pay the former compensation for the use of
the same. As a result, they may maintain the said
improvements introduced thereon subject to existing laws,
rules and regulations and/or ordinances appurtenant
thereto.
WHEREFORE, premises considered, the Decision rendered
by Branch 79 of the Metropolitan Trial Court, Las Pias is
REVERSED. Accordingly, the instant complaint is DISMISSED.
SO ORDERED.6
On March 16, 2001, the Regional Trial Court, in Civil Case
No. 5243, also reversed the finding of the Municipal Trial
Court:
From the foregoing, defendants-appellants may maintain the
improvements introduced on the subject portion of the lot
subject to existing laws, rules and regulations and/or
ordinances pertaining thereto. Consequently, no
compensation may be awarded in favor of the plaintiffappellee.
WHEREFORE, premises considered, the above-mentioned
Decision rendered by Branch 79 of the Las Pias City
Metropolitan Trial Court is REVERSED. Accordingly, the
instant complaint is DISMISSED.
From the adverse decisions of the Regional Trial Court,
petitioners filed their respective petitions for review on
certiorari to the Court of Appeals. Petitioner Samelas case
was docketed as CA-G.R. SP 64181 while that of petitioner
Usero was docketed as CA-G.R. SP 64718.1awphi1.nt

Page 73 of 404
LAW ON PROPERTY

Both petitions failed in the CA. Thus the instant consolidated

petitions.
The pivotal issue in the case at bar is whether or not the
disputed strip of land, allegedly encroached upon by the
spouses Polinar, is the private property of petitioners or part
of the creek and therefore part of the public domain. Clearly
this an issue which calls for a review of facts already
determined by the Court of Appeals.
The jurisdiction of the Court in petitions for review on
certiorari under Rule 45 of the Rules of Court is limited to
reviewing only errors of law, not of fact, unless the factual
findings complained of are devoid of support by the
evidence on record or the assailed judgment is based on a
misapprehension of facts.7 This is obviously not the case
here.
A careful scrutiny of the records reveals that the assailed
decisions are founded on sufficient evidence. That the
subject strip of land is a creek is evidenced by: (1) a
barangay certification that a creek exists in the disputed
strip of land; (2) a certification from the Second Manila
Engineering District, NCR-DPWH, that the western portion of
Pilar Village where the subject strip of land is located is
bounded by a tributary of Talon Creek and (3) photographs
showing the abundance of water lilies in the subject strip of
land. The Court of Appeals was correct: the fact that water
lilies thrive in that strip of land can only mean that there is a
permanent stream of water or creek there.
In contrast, petitioners failed to present proof sufficient to
support their claim. Petitioners presented the TCTs of their
respective lots to prove that there is no creek between their
properties and that of the Polinars. However, an examination
of said TCTs reveals that the descriptions thereon are
incomplete. In petitioner Samelas TCT No. T-30088, there is
no boundary description relative to the northwest portion of
the property pertaining to the site of the creek. Likewise in
TCT No. T-22329-A of the spouses Polinar, the southeast
portion which pertains to the site of the creek has no
described boundary. Moreover the tax declaration presented
by petitioner is devoid of any entry on the "west boundary"
vis-a-vis the location of the creek. All the pieces of evidence

taken together, we can only conclude that the adjoining

portion of these boundaries is in fact a creek and belongs to
no one but the state.
Property is either of public dominion or of private
ownership.8 Concomitantly, Article 420 of the Civil Code
provides:
ART. 420. The following things are property of public
dominion:
(1) Those intended for public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads, and others of similar character;
The phrase "others of similar character" includes a creek
which is a recess or an arm of a river. It is property
belonging to the public domain which is not susceptible to
private ownership.9 Being public water, a creek cannot be
registered under the Torrens System in the name of any
individual10 .
Accordingly, the Polinar spouses may utilize the rip-rapped
portion of the creek to prevent the erosion of their property.
WHEREFORE, the consolidated petitions are hereby denied.
The assailed decisions of the Court of Appeals in CA-G.R. SP
64181 and CA-G.R. SP 64718 are affirmed in toto.
G.R. No. 92161 March 18, 1991
SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR
MACUTAY, DOMINGO ROSALES, GREGORIO ARGONZA,
EUSTAQUIO BAUA, FLORENTINO ROSALES, TEODORO
MABBORANG, PATRICIO MABBORANG and FULGENCIO MORA,
petitioners
vs.
GUILLERMO MANALO and COURT OF APPEALS, respondents.
Josefin De Alban Law Office for Petitioners.

FELICIANO, J.:p
Page 74 of 404

LAW ON PROPERTY

The late Judge Taccad originally owned a parcel of land

situated in Tumauini, Isabela having an estimated area of
twenty (20) hectares. The western portion of this land
bordering on the Cagayan River has an elevation lower than
that of the eastern portion which borders on the national
road. Through the years, the western portion would
periodically go under the waters of the Cagayan River as
those waters swelled with the coming of the rains. The
submerged portion, however, would re-appear during the
dry season from January to August. It would remain under
water for the rest of the year, that is, from September to
December during the rainy season.
The ownership of the landholding eventually moved from
one person to another. On 9 May 1959, respondent
Guillermo Manalo acquired 8.65 hectares thereof from
Faustina Taccad, daughter of Judge Juan Taccad. The land
sold was described in the Deed of Absolute Sale 1 as
follows:
. . . a parcel of agricultural land in Balug, Tumauini, Isabela,
containing an area of 8.6500 hectares, more or less;
bounded on the North by Francisco Forto on the East by
National Road; on South by Julian Tumolva and on the West
by Cagayan River; declared for taxation under Tax
Declaration No. 12681 in the name of Faustina Taccad, and
assessed at P 750.00. . . .
Later in 1964, respondent Manalo purchased another 1.80
hectares from Gregorio Taguba who had earlier acquired the
same from Judge Juan Taccad. The second purchase brought
the total acquisition of respondent Manalo to 10.45
hectares. The second piece of property was more
particularly described as follows:
. . . a piece of agricultural land consisting of tobacco land,
and containing an area of 18,000 square meters, more or
less, bounded on the North by Balug Creek; on the South, by
Faustina Taccad (now Guillermo R. Manalo); on the East, by a
Provincial Road; and on the West, by Cagayan River
assessed at P 440.00, as tax Declaration No. 3152. . . . 2

During the cadastral survey conducted at Balug, Tumauini,

Isabela on 21 October 1969, the two (2) parcels of land
belonging to respondent Manalo were surveyed and
consolidated into one lot, designated as Lot No. 307, Pls964. Lot 307 which contains 4.6489 hectares includes: (a)
the whole of the 1.80 hectares acquired from Gregorio
Taguba; and (b) 2.8489 hectares out of the 8.65 hectares
purchased from Faustina Taccad. As the survey was
conducted on a rainy month, a portion of the land bought
from Faustina Taccad then under water was left unsurveyed
and was not included in Lot 307.
The Sketch Plan 3 submitted during the trial of this case
and which was identified by respondent Manalo shows that
the Cagayan River running from south to north, forks at a
certain point to form two (2) branchesthe western and the
eastern branchesand then unites at the other end, further
north, to form a narrow strip of land. The eastern branch of
the river cuts through the land of respondent Manalo and is
inundated with water only during the rainy season. The bed
of the eastern branch is the submerged or the unsurveyed
portion of the land belonging to respondent Manalo. For
about eight (8) months of the year when the level of water
at the point where the Cagayan River forks is at its ordinary
depth, river water does not flow into the eastern branch.
While this condition persists, the eastern bed is dry and is
susceptible to cultivation.
Considering that water flowed through the eastern branch of
the Cagayan River when the cadastral survey was
conducted, the elongated strip of land formed by the
western and the eastern branches of the Cagayan River
looked very much like an island. This strip of land was
surveyed on 12 December 1969. 4 It was found to have a
total area of 22.7209 hectares and was designated as Lot
821 and Lot 822. The area of Lot 822 is 10.8122 hectares
while Lot 821 has an area of 11.9087 hectares. Lot 821 is
located directly opposite Lot 307 and is separated from the
latter only by the eastern branch of the Cagayan River
during the rainy season and, during the dry season, by the
exposed, dry river bed, being a portion of the land bought
from Faustina Taccad. Respondent Manalo claims that Lot
821 also belongs to him by way of accretion to the
submerged portion of the property to which it is adjacent.
Page 75 of 404

LAW ON PROPERTY

Petitioners who are in possession of Lot 821, upon the other

hand, insist that they own Lot 821. They occupy the outer
edges of Lot 821 along the river banks, i.e., the fertile
portions on which they plant tobacco and other agricultural
products. They also cultivate the western strip of the
unsurveyed portion during summer. 5 This situation
compelled respondent Manalo to file a case for forcible entry
against petitioners on 20 May 1969. The case was dismissed
by the Municipal Court of Tumauini, Isabela for failure of
both parties to appear. On 15 December 1972, respondent
Manalo again filed a case for forcible entry against
petitioners. The latter case was similarly dismissed for lack
of jurisdiction by the Municipal Court of Tumauini, Isabela.
On 24 July 1974, respondent Manalo filed a complaints 6
before the then Court of First Instance of Isabela, Branch 3
for quieting of title, possession and damages against
petitioners. He alleged ownership of the two (2) parcels of
land he bought separately from Faustina Taccad and
Gregorio Taguba for which reason he prayed that judgment
be entered ordering petitioners to vacate the western strip
of the unsurveyed portion. Respondent Manalo likewise
prayed that judgment be entered declaring him as owner of
Lot 821 on which he had laid his claim during the survey.
Petitioners filed their answer denying the material
allegations of the complaint. The case was then set for trial
for failure of the parties to reach an amicable agreement or
to enter into a stipulation of facts. 7 On 10 November 1982,
the trial court rendered a decision with the following
dispositive portion:

Tumauini Cadastre, and which is more particularly described

in paragraph 2-b of the Complaint;
3. That the defendants are being restrained from entering
the premises of the land in question, Lot No. 821, Pls-964 of
Tumauini Cadastre, and which is more particularly described
in paragraph 2-b of the Complaint; and
4. That there is no pronouncement as to attorney's fees and
costs.
SO ORDERED. 8
Petitioners appealed to the Court of Appeals which,
however, affirmed the decision of the trial court. They filed a
motion for reconsideration, without success.
While petitioners insist that Lot 821 is part of an island
surrounded by the two (2) branches of the Cagayan River,
the Court of Appeals found otherwise. The Court of Appeals
concurred with the finding of the trial court that Lot 821
cannot be considered separate and distinct from Lot 307
since the eastern branch of the Cagayan River substantially
dries up for the most part of the year such that when this
happens, Lot 821 becomes physically (i.e., by land)
connected with the dried up bed owned by respondent
Manalo. Both courts below in effect rejected the assertion of
petitioners that the depression on the earth's surface which
separates Lot 307 and Lot 821 is, during part of the year,
the bed of the eastern branch of the Cagayan River.

1. That plaintiff, Guillermo Manalo, is declared the lawful

owner of the land in question, Lot No. 821, Pls-964 of
Tumauini Cadastre, and which is more particularly described
in paragraph 2-b of the Complaint;

It is a familiar rule that the findings of facts of the trial court

are entitled to great respect, and that they carry even more
weight when affirmed by the Court of Appeals. 9 This is in
recognition of the peculiar advantage on the part of the trial
court of being able to observe first-hand the deportment of
the witnesses while testifying. Jurisprudence is likewise
settled that the Court of Appeals is the final arbiter of
questions of fact. 10 But whether a conclusion drawn from
such findings of facts is correct, is a question of law
cognizable by this Court. 11

2. That the defendants are hereby ordered to vacate the

premises of the land in question, Lot No. 821, Pls-964 of

In the instant case, the conclusion reached by both courts

below apparently collides with their findings that periodically

WHEREFORE, in the light of the foregoing premises, the

Court renders judgment against the defendants and in favor
of the plaintiff and orders:

Page 76 of 404
LAW ON PROPERTY

at the onset of and during the rainy season, river water

flows through the eastern bed of the Cagayan River. The
trial court held:
The Court believes that the land in controversy is of the
nature and character of alluvion (Accretion), for it appears
that during the dry season, the body of water separating the
same land in controversy (Lot No. 821, Pls-964) and the two
(2) parcels of land which the plaintiff purchased from
Gregorio Taguba and Justina Taccad Cayaba becomes a
marshy land and is only six (6) inches deep and twelve (12)
meters in width at its widest in the northern tip (Exhs. "W",
"W-l", "W-2", "W-3" and "W-4"), It has been held by our
Supreme Court that "the owner of the riparian land which
receives the gradual deposits of alluvion, does not have to
make an express act of possession. The law does not require
it, and the deposit created by the current of the water
becomes manifest" (Roxas vs. Tuazon, 6 Phil. 408). 12
The Court of Appeals adhered substantially to the conclusion
reached by the trial court, thus:
As found by the trial court, the disputed property is not an
island in the strict sense of the word since the eastern
portion of the said property claimed by appellants to be part
of the Cagayan River dries up during summer. Admittedly, it
is the action of the heavy rains which comes during rainy
season especially from September to November which
increases the water level of the Cagayan river. As the river
becomes swollen due to heavy rains, the lower portion of
the said strip of land located at its southernmost point would
be inundated with water. This is where the water of the
Cagayan river gains its entry. Consequently, if the water
level is high the whole strip of land would be under water.
In Government of the Philippine Islands vs. Colegio de San
Jose, it was held that
According to the foregoing definition of the words "ordinary"
and "extra-ordinary," the highest depth of the waters of
Laguna de Bay during the dry season is the ordinary one,
and the highest depth they attain during the extra-ordinary
one (sic); inasmuch as the former is the one which is
regular, common, natural, which occurs always or most of

the time during the year, while the latter is uncommon,

transcends the general rule, order and measure, and goes
beyond that which is the ordinary depth. If according to the
definition given by Article 74 of the Law of Waters quoted
above, the natural bed or basin of the lakes is the ground
covered by their waters when at their highest ordinary
depth, the natural bed or basin of Laguna de Bay is the
ground covered by its waters when at their highest depth
during the dry season, that is up to the northeastern
boundary of the two parcels of land in question.
We find the foregoing ruling to be analogous to the case at
bar. The highest ordinary level of the waters of the Cagayan
River is that attained during the dry season which is
confined only on the west side of Lot [821] and Lot [822].
This is the natural Cagayan river itself. The small residual of
water between Lot [821] and 307 is part of the small stream
already in existence when the whole of the late Judge Juan
Taccad's property was still susceptible to cultivation and
uneroded. 13
The Court is unable to agree with the Court of Appeals that
Government of the Philippine Islands vs. Colegio de San Jose
14 is applicable to the present case. That case involved
Laguna de Bay; since Laguna de Bay is a lake, the Court
applied the legal provisions governing the ownership and
use of lakes and their beds and shores, in order to
determine the character and ownership of the disputed
property. Specifically, the Court applied the definition of the
natural bed or basin of lakes found in Article 74 of the Law
of Waters of 3 August 1866. Upon the other hand, what is
involved in the instant case is the eastern bed of the
Cagayan River.
We believe and so hold that Article 70 of the Law of Waters
of 3 August 1866 is the law applicable to the case at bar:
Art. 70. The natural bed or channel of a creek or river is the
ground covered by its waters during the highest floods.
(Emphasis supplied)
We note that Article 70 defines the natural bed or channel of
a creek or river as the ground covered by its waters during
the highest floods. The highest floods in the eastern branch
Page 77 of 404

LAW ON PROPERTY

of the Cagayan River occur with the annual coming of the

rains as the river waters in their onward course cover the
entire depressed portion. Though the eastern bed
substantially dries up for the most part of the year (i.e., from
January to August), we cannot ignore the periodical swelling
of the waters ( i.e., from September to December) causing
the eastern bed to be covered with flowing river waters.
The conclusion of this Court that the depressed portion is a
river bed rests upon evidence of record. Firstly, respondent
Manalo admitted in open court that the entire area he
bought from Gregorio Taguba was included in Lot 307. 15 If
the 1.80 hectares purchased from Gregorio Taguba was
included in Lot 307, then the Cagayan River referred to as
the western boundary in the Deed of Sale transferring the
land from Gregorio Taguba to respondent Manalo as well as
the Deed of Sale signed by Faustina Taccad, must refer to
the dried up bed (during the dry months) or the eastern
branch of the river (during the rainy months). In the Sketch
Plan attached to the records of the case, Lot 307 is
separated from the western branch of the Cagayan River by
a large tract of land which includes not only Lot 821 but also
what this Court characterizes as the eastern branch of the
Cagayan River.
Secondly, the pictures identified by respondent Manalo
during his direct examination depict the depressed portion
as a river bed. The pictures, marked as Exhibits "W" to "W4", were taken in July 1973 or at a time when the eastern
bed becomes visible. 16 Thus, Exhibit "W-2" which
according to respondent Manalo was taken facing the east
and Exhibit "W-3" which was taken facing the west both
show that the visible, dried up portion has a markedly lower
elevation than Lot 307 and Lot 821. It has dike-like slopes on
both sides connecting it to Lot 307 and Lot 821 that are
vertical upward and very prominent. This topographic
feature is compatible with the fact that a huge volume of
water passes through the eastern bed regularly during the
rainy season. In addition, petitioner Ponciano Gannaban
testified that one had to go down what he called a "cliff"
from the surveyed portion of the land of respondent Manalo
to the depressed portion. The cliff, as related by petitioner
Gannaban, has a height of eight (8) meters. 17

The records do not show when the Cagayan River began to

carve its eastern channel on the surface of the earth.
However, Exhibit "E" 18 for the prosecution which was the
Declaration of Real Property standing in the name of
Faustina Taccad indicates that the eastern bed already
existed even before the sale to respondent Manalo. The
words "old bed" enclosed in parenthesesperhaps written
to make legitimate the claim of private ownership over the
submerged portionis an implied admission of the
existence of the river bed. In the Declaration of Real
Property made by respondent Manalo, the depressed portion
assumed the name Rio Muerte de Cagayan. Indeed, the
steep dike-like slopes on either side of the eastern bed could
have been formed only after a prolonged period of time.
Now, then, pursuant to Article 420 of the Civil Code,
respondent Manalo did not acquire private ownership of the
bed of the eastern branch of the river even if it was included
in the deeds of absolute sale executed by Gregorio Taguba
and Faustina Taccad in his favor. These vendors could not
have validly sold land that constituted property of public
dominion. Article 420 of the Civil Code states:
The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public
use, and are intended for some public service or for the
development of the national wealth. (Emphasis supplied)
Although Article 420 speaks only of rivers and banks,
"rivers" is a composite term which includes: (1) the running
waters, (2) the bed, and (3) the banks. 19 Manresa, in
commenting upon Article 339 of the Spanish Civil Code of
1889 from which Article 420 of the Philippine Civil Code was
taken, stressed the public ownership of river beds:
La naturaleza especial de los rios, en punto a su disfrute
general, hace que sea necesario considerar en su relacion
de dominio algo mas que sus aguas corrientes. En efecto en
todo rio es preciso distinguir 1. esta agua corriente; 2. el
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LAW ON PROPERTY

alveo o cauce, y 3. las riberas. Ahora bien: son estas dos

ultimas cosas siempre de dominio publico, como las aguas?
Realmente no puede imaginarse un rio sin alveo y sin ribera;
de suerte que al decir el Codigo civil que los rios son de
dominio publico, parece que debe ir implicito el dominio
publico de aquellos tres elementos que integran el rio. Por
otra parte, en cuanto a los alveos o cauces tenemos la
declaracion del art. 407, num 1, donde dice: son de
dominion publico . . . los rios y sus cauces naturales;
declaracion que concuerda con lo que dispone el art. 34 de
la ley de [Aguas], segun el cual, son de dominion publico: 1.
los alveos o cauces de los arroyos que no se hallen
comprendidos en el art. 33, y 2. los alveos o cauces
naturales de los rios en la extension que cubran sus aguas
en las mayores crecidas ordinarias. 20 (Emphasis supplied)
The claim of ownership of respondent Manalo over the
submerged portion is bereft of basis even if it were alleged
and proved that the Cagayan River first began to encroach
on his property after the purchase from Gregorio Taguba and
Faustina Taccad. Article 462 of the Civil Code would then
apply divesting, by operation of law, respondent Manalo of
private ownership over the new river bed. The intrusion of
the eastern branch of the Cagayan River into his landholding
obviously prejudiced respondent Manalo but this is a
common occurrence since estates bordering on rivers are
exposed to floods and other evils produced by the
destructive force of the waters. That loss is compensated
by, inter alia, the right of accretion acknowledged by Article
457 of the Civil Code. 21 It so happened that instead of
increasing the size of Lot 307, the eastern branch of the
Cagayan River had carved a channel on it.
We turn next to the issue of accretion. After examining the
records of the case, the Court considers that there was no
evidence to prove that Lot 821 is an increment to Lot 307
and the bed of the eastern branch of the river. Accretion as
a mode of acquiring property under Article 457 of the Civil
Code requires the concurrence of three (3) requisites: (a)
that the deposition of soil or sediment be gradual and
imperceptible; (b) that it be the result of the action of the
waters of the river (or sea); and (c) that the land where
accretion takes place is adjacent to the banks of rivers (or

the sea coast). 22 The Court notes that the parcels of land
bought by respondent Manalo border on the eastern branch
of the Cagayan River. Any accretion formed by this eastern
branch which respondent Manalo may claim must be
deposited on or attached to Lot 307. As it is, the claimed
accretion (Lot 821) lies on the bank of the river not adjacent
to Lot 307 but directly opposite Lot 307 across the river.
Assuming (arguendo only) that the Cagayan River referred
to in the Deeds of Sale transferring ownership of the land to
respondent Manalo is the western branch, the decision of
the Court of Appeals and of the trial court are bare of factual
findings to the effect that the land purchased by respondent
Manalo received alluvium from the action of the aver in a
slow and gradual manner. On the contrary, the decision of
the lower court made mention of several floods that caused
the land to reappear making it susceptible to cultivation. A
sudden and forceful action like that of flooding is hardly the
alluvial process contemplated under Article 457 of the Civil
Code. It is the slow and hardly perceptible accumulation of
soil deposits that the law grants to the riparian owner.
Besides, it is important to note that Lot 821 has an area of
11.91 hectares. Lot 821 is the northern portion of the strip of
land having a total area of 22.72 hectares. We find it difficult
to suppose that such a sizable area as Lot 821 resulted from
slow accretion to another lot of almost equal size. The total
landholding purchased by respondent Manalo is 10.45
hectares (8.65 hectares from Faustina Taccad and 1.80
hectares from Gregorio Taguba in 1959 and 1964,
respectively), in fact even smaller than Lot 821 which he
claims by way of accretion. The cadastral survey showing
that Lot 821 has an area of 11.91 hectares was conducted in
1969. If respondent Manalo's contention were accepted, it
would mean that in a span of only ten (10) years, he had
more than doubled his landholding by what the Court of
Appeals and the trial court considered as accretion. As
already noted, there are steep vertical dike-like slopes
separating the depressed portion or river bed and Lot 821
and Lot 307. This topography of the land, among other
things, precludes a reasonable conclusion that Lot 821 is an
increment to the depressed portion by reason of the slow
and constant action of the waters of either the western or
the eastern branches of the Cagayan River.
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LAW ON PROPERTY

We turn finally to the issue of ownership of Lot 821.

Respondent Manalo's claim over Lot 821 rests on accretion
coupled with alleged prior possession. He alleged that the
parcels of land he bought separately from Gregorio Taguba
and Faustina Taccad were formerly owned by Judge Juan
Taccad who was in possession thereof through his (Judge
Taccad's) tenants. When ownership was transferred to him,
respondent Manalo took over the cultivation of the property
and had it declared for taxation purposes in his name. When
petitioners forcibly entered into his property, he twice
instituted the appropriate action before the Municipal Trial
Court of Tumauini, Isabela. Against respondent Manalo's
allegation of prior possession, petitioners presented tax
declarations standing in their respective names. They
claimed lawful, peaceful and adverse possession of Lot 821
since 1955.
If respondent Manalo had proved prior possession, it was
limited physically to Lot 307 and the depressed portion or
the eastern river bed. The testimony of Dominga Malana
who was a tenant for Justina Taccad did not indicate that she
was also cultivating Lot 821. In fact, the complaints for
forcible entry lodged before the Municipal Trial Court of
Tumauini, Isabela pertained only to Lot 307 and the
depressed portion or river bed and not to Lot 821. In the
same manner, the tax declarations presented by petitioners
conflict with those of respondent Manalo. Under Article 477
of the Civil Code, the plaintiff in an action for quieting of title
must at least have equitable title to or interest in the real
property which is the subject matter of the action. The
evidence of record on this point is less than satisfactory and
the Court feels compelled to refrain from determining the
ownership and possession of Lot 821, adjudging neither
petitioners nor respondent Manalo as owner(s) thereof.
WHEREFORE, the Decision and Resolution of the Court of
Appeals in CA-GR CV No. 04892 are hereby SET ASIDE.
Respondent Manalo is hereby declared the owner of Lot 307.
The regularly submerged portion or the eastern bed of the
Cagayan River is hereby DECLARED to be property of public
dominion. The ownership of Lot 821 shall be determined in
an appropriate action that may be instituted by the
interested parties inter se. No pronouncement as to costs.

G.R. No. 52159 December 22, 1989

JOSE PILAPIL, petitioner,
vs.
HON. COURT OF APPEALS and ALATCO TRANSPORTATION
COMPANY, INC., respondents.
Martin Badong, Jr. for petitioner.
Eufronio K. Maristela for private respondent.

PADILLA, J.:
This is a petition to review on certiorari the decision*
rendered by the Court of Appeals dated 19 October 1979 in
CA-G.R. No. 57354-R entitled "Jose Pilapil, plaintiff-appellee
versus Alatco Transportation Co., Inc., defendant-appellant,"
which reversed and set aside the judgment of the Court of
First Instance of Camarines Sur in Civil Case No. 7230
ordering respondent transportation company to pay to
petitioner damages in the total sum of sixteen thousand
three hundred pesos (P 16,300.00).
The record discloses the following facts:
Petitioner-plaintiff Jose Pilapil, a paying passenger, boarded
respondent-defendant's bus bearing No. 409 at San Nicolas,
Iriga City on 16 September 1971 at about 6:00 P.M. While
said bus No. 409 was in due course negotiating the distance
between Iriga City and Naga City, upon reaching the vicinity
of the cemetery of the Municipality of Baao, Camarines Sur,
on the way to Naga City, an unidentified man, a bystander
along said national highway, hurled a stone at the left side
of the bus, which hit petitioner above his left eye. Private
respondent's personnel lost no time in bringing the
petitioner to the provincial hospital in Naga City where he
was confined and treated.
Considering that the sight of his left eye was impaired,
petitioner was taken to Dr. Malabanan of Iriga City where he
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LAW ON PROPERTY

was treated for another week. Since there was no

improvement in his left eye's vision, petitioner went to V.
Luna Hospital, Quezon City where he was treated by Dr.
Capulong. Despite the treatment accorded to him by Dr.
Capulong, petitioner lost partially his left eye's vision and
sustained a permanent scar above the left eye.

in accord with law. Specifically, petitioner argues that the

nature of the business of a transportation company requires
the assumption of certain risks, and the stoning of the bus
by a stranger resulting in injury to petitioner-passenger is
one such risk from which the common carrier may not
exempt itself from liability.

Thereupon, petitioner instituted before the Court of First

Instance of Camarines Sur, Branch I an action for recovery
of damages sustained as a result of the stone-throwing
incident. After trial, the court a quo rendered judgment with
the following dispositive part:

We do not agree.

Wherefore, judgment is hereby entered:

1. Ordering defendant transportation company to pay
plaintiff Jose Pilapil the sum of P 10,000.00, Philippine
Currency, representing actual and material damages for
causing a permanent scar on the face and injuring the eyesight of the plaintiff;
2. Ordering further defendant transportation company to
pay the sum of P 5,000.00, Philippine Currency, to the
plaintiff as moral and exemplary damages;
3. Ordering furthermore, defendant transportation company
to reimburse plaintiff the sum of P 300.00 for his medical
expenses and attorney's fees in the sum of P 1,000.00,
Philippine Currency; and
4. To pay the costs.
SO ORDERED 1
From the judgment, private respondent appealed to the
Court of Appeals where the appeal was docketed as CA-G.R.
No. 57354R. On 19 October 1979, the Court of Appeals, in a
Special Division of Five, rendered judgment reversing and
setting aside the judgment of the court a quo.
Hence the present petition.
In seeking a reversal of the decision of the Court of Appeals,
petitioner contends that said court has decided the issue not

In consideration of the right granted to it by the public to

engage in the business of transporting passengers and
goods, a common carrier does not give its consent to
become an insurer of any and all risks to passengers and
goods. It merely undertakes to perform certain duties to the
public as the law imposes, and holds itself liable for any
breach thereof.
Under Article 1733 of the Civil Code, common carriers are
required to observe extraordinary diligence for the safety of
the passenger transported by them, according to all the
circumstances of each case. The requirement of
extraordinary diligence imposed upon common carriers is
restated in Article 1755: "A common carrier is bound to
carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances."
Further, in case of death of or injuries to passengers, the law
presumes said common carriers to be at fault or to have
acted negligently. 2
While the law requires the highest degree of diligence from
common carriers in the safe transport of their passengers
and creates a presumption of negligence against them, it
does not, however, make the carrier an insurer of the
absolute safety of its passengers. 3
Article 1755 of the Civil Code qualifies the duty of
extraordinary care, vigilance and precaution in the carriage
of passengers by common carriers to only such as human
care and foresight can provide. what constitutes compliance
with said duty is adjudged with due regard to all the
circumstances.

Page 81 of 404
LAW ON PROPERTY

Article 1756 of the Civil Code, in creating a presumption of

fault or negligence on the part of the common carrier when
its passenger is injured, merely relieves the latter, for the
time being, from introducing evidence to fasten the
negligence on the former, because the presumption stands
in the place of evidence. Being a mere presumption,
however, the same is rebuttable by proof that the common
carrier had exercised extraordinary diligence as required by
law in the performance of its contractual obligation, or that
the injury suffered by the passenger was solely due to a
fortuitous event. 4
In fine, we can only infer from the law the intention of the
Code Commission and Congress to curb the recklessness of
drivers and operators of common carriers in the conduct of
their business.
Thus, it is clear that neither the law nor the nature of the
business of a transportation company makes it an insurer of
the passenger's safety, but that its liability for personal
injuries sustained by its passenger rests upon its negligence,
its failure to exercise the degree of diligence that the law
requires. 5
Petitioner contends that respondent common carrier failed
to rebut the presumption of negligence against it by proof
on its part that it exercised extraordinary diligence for the
safety of its passengers.
We do not agree.
First, as stated earlier, the presumption of fault or
negligence against the carrier is only a disputable
presumption. It gives in where contrary facts are established
proving either that the carrier had exercised the degree of
diligence required by law or the injury suffered by the
passenger was due to a fortuitous event. Where, as in the
instant case, the injury sustained by the petitioner was in no
way due to any defect in the means of transport or in the
method of transporting or to the negligent or willful acts of
private respondent's employees, and therefore involving no
issue of negligence in its duty to provide safe and suitable
cars as well as competent employees, with the injury arising
wholly from causes created by strangers over which the

carrier had no control or even knowledge or could not have

prevented, the presumption is rebutted and the carrier is not
and ought not to be held liable. To rule otherwise would
make the common carrier the insurer of the absolute safety
of its passengers which is not the intention of the
lawmakers.
Second, while as a general rule, common carriers are bound
to exercise extraordinary diligence in the safe transport of
their passengers, it would seem that this is not the standard
by which its liability is to be determined when intervening
acts of strangers is to be determined directly cause the
injury, while the contract of carriage Article 1763 governs:
Article 1763. A common carrier is responsible for injuries
suffered by a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented
or stopped the act or omission.
Clearly under the above provision, a tort committed by a
stranger which causes injury to a passenger does not accord
the latter a cause of action against the carrier. The
negligence for which a common carrier is held responsible is
the negligent omission by the carrier's employees to prevent
the tort from being committed when the same could have
been foreseen and prevented by them. Further, under the
same provision, it is to be noted that when the violation of
the contract is due to the willful acts of strangers, as in the
instant case, the degree of care essential to be exercised by
the common carrier for the protection of its passenger is
only that of a good father of a family.
Petitioner has charged respondent carrier of negligence on
the ground that the injury complained of could have been
prevented by the common carrier if something like meshwork grills had covered the windows of its bus.
We do not agree.
Although the suggested precaution could have prevented
the injury complained of, the rule of ordinary care and
prudence is not so exacting as to require one charged with
Page 82 of 404

LAW ON PROPERTY

its exercise to take doubtful or unreasonable precautions to

guard against unlawful acts of strangers. The carrier is not
charged with the duty of providing or maintaining vehicles
as to absolutely prevent any and all injuries to passengers.
Where the carrier uses cars of the most approved type, in
general use by others engaged in the same occupation, and
exercises a high degree of care in maintaining them in
suitable condition, the carrier cannot be charged with
negligence in this respect. 6
Finally, petitioner contends that it is to the greater interest
of the State if a carrier were made liable for such stonethrowing incidents rather than have the bus riding public
lose confidence in the transportation system.
Sad to say, we are not in a position to so hold; such a policy
would be better left to the consideration of Congress which
is empowered to enact laws to protect the public from the
increasing risks and dangers of lawlessness in society.
WHEREFORE, the judgment appealed from is hereby
AFFIRMED.
SO ORDERED.
G.R. No. L-6098

August 12, 1911

THE INSULAR GOVERNMENT, plaintiff-appellee,

vs.
ALDECOA AND COMPANY, defendant-appellant.
Emilio Pineda for appellant.
Attorney-General Villamor for appellee.
TORRES, J.:
On April 20, 1907, the Attorney-General filed a written
complaint in the Court of First Instance of Surigao against
the firm of Aldecoa & Co., alleging that the defendant, a
mercantile copartnership company organized under the laws
in force in these Islands and domiciled in this city of Manila
with a branch office in Surigao, continues to operate as such
mercantile copartnership company under the name of
Aldecoa & Co.,; that the said defendant, knowing that it had

no title or right whatever to two adjoining parcels of land,

which belong to the domain of the Government of the
United States and were placed under the administration and
control of the Government of these Islands, has been
occupying them illegally for the past seventeen years, more
or less, having constructed on the land a wharf, located
along the railroad, and built warehouses of light material for
the storage of coal all for its exclusive use and benefit;
that of the said two parcels of land, the parcel B has an area
of 11 centares, approximately, and the parcel A, 84
centares, more or less, and their situation, metes and
bounds, together with other details thereunto pertaining,
are set out in the judgment of the court; that these lands,
situated in Bilang-bilang, in the pueblo of Surigao and the
province of the same name, belonged to the late Spanish
Government in the Philippines and are now the property of
the Government of the United States and were placed under
the control of the Insular Government, which, by virtue of
the treaty of Paris, has succeeded the former in all its rights;
that, since the year 1901, the defendant has been
requested repeatedly by the Attorney-General, in
representation of the Insular Government, to recognize the
latter's right of dominion over the same and to deliver to it
the said property, and that, by reason of such demands,
Aldecoa & Co., on February 25, 1903, recognizing the Insular
Government's ownership, agreed to return the land, but that
later, after several delays, it concluded by persisting in its
attempt illegally to continue occupying the said land and
refused to return it to the Insular Government; wherefore
the Attorney-General asked the court to enter judgment
declaring the Insular Government to be the owner of the
land claimed, and to order that the plaintiff be placed in
possession of the same, together with the fruits collected by
the defendants since it took such possession, and those
awaiting collection, and to sentence the defendant to pay
the costs.
Counsel for the defendant, Aldecoa & Co., in liquidation,
answering the preceding complaint, set forth that it denied
each and all of the allegations of the complaint, with the
exception of those which it expressly admitted in its answer;
and that it admitted paragraph 2 of the complaint, that is,
the fact of the defendant's being a mercantile copartnership
company, organized under the laws in force in these Islands.
Page 83 of 404

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As a special defense, it alleged that it held and possessed,

as owner, and had full and absolute dominion over, the
lands claimed by the plaintiff in paragraph 1 of the
complaint. The defendant therefore prayed that judgment
be rendered in its favor, by absolving it from the complaint,
with the costs against the plaintiff, together with the other
relief solicited.
The provincial fiscal of Surigao presented a motion on
November 3, 1908, for the purpose of amending the
preceding complaint, with the permission of the court, by
inserting, between paragraphs 4 and 5 of the complaint, a
separate paragraph, as follows: "that Aldecoa and
Company's possession of the lands here in question, was in
fact interrupted during the years 1900, 1901, and 1902;"
but, in view of the ruling of the court by an order of
November 5, 1908, directing the plaintiff, within three days
to specify the facts that constituted the alleged interruption
of the defendant's possession of the lands in question, the
provincial fiscal presented, on the 6th of the same month, a
new written motion whereby be requested permission to
amend the previous complaint by inserting between the said
paragraphs 4 and 5 of the original complaint, a separate
paragraph, as follows. "That the municipality of Surigao, in
the year 1900, and through the mediation of Captain
Kendrick, removed the posts and wire which enclosed the
property here in question, the sole sign of possession that
the defendant then had to the said lands." Inasmuch as no
objection whatever was raised to the amendment
requested, the court granted the same by an order of
December 7, 1908.
The case came up for hearing on the 1st of December of
that year and, after the presentation of testimony by both
parties, the documents exhibited being attached to the
record, the court, on December 10, 1909, rendered
judgment and found that the land in question was public
land and belonged to the State, and ordered the defendant
to return it to the plaintiff might have the crops and the
buildings on the land, upon the payment of an indemnity
therefor, or might compel the defendant to pay him the
value of the land, as provided by article 361 of the Civil
Code. Counsel for the defendant excepted to this judgment,
and by a written motion of the 4th of January asked for a

rehearing of the case on the grounds that the said judgment

was unwarranted by the evidence and was contrary to law.
This motion was disallowed, exception thereto was taken by
the appellant and, the required bill of exceptions being filed,
in which was set out, at the request of the provincial fiscal,
the latter's exception to the order issued by the judge on
January 24, while in Cagayan, Province of Misamis, granting
an extension of time for the presentation of the bill of
exceptions, it was certified and transmitted to the clerk of
this court.
The demand of the representative of the Government is for
the recovery of possession of two united parcels of land,
belonging to the public use and domain, which are at
present occupied by the defendant Aldecoa & Co. The latter
claims to have the full and absolute ownership of the said
land and to have held it as owner since 1889, by virtue of a
verbal permit from the politico-military governor of Surigao.
From the proceedings had and by the testimony of a large
number of competent witnesses, one of whom was
introduced by the defendant party itself, it was clearly
proved that, in 1889, the land in litigation, as well as Bates
Avenue, was, during the extraordinary high tides, usually
covered by sea water that would extend to the other side of
the said avenue, as far as the warehouse of Aldecoa & Co.
that was erected there, and, at the ordinary low tides, as far
as the wall built along the shore by the aforesaid firm and
designated by the numbers 5, 6, and 7 in the plan, Exhibit A.
This plan, according to the agreement between the parties,
exactly represents the land in litigation.
It was likewise proved that nearly all the land in question
was low land and swampy in certain places, with aquatic
bushes growing upon it; that it had been gradually raised by
the action of the sea, which in its ebb and flow left sand and
other sediment on the low ground; that the retaining wall
erected to prevent the sea water from reaching the said
warehouse, that is on the opposite side of Bates Avenue,
contributed in a large measure toward raising the level of
the land; and that, furthermore, between the years 1889
and 1890, there were two piers on the said land, one named
Carloto, alongside of which the vessels used to lie that
called at Surigao during their voyages.
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It is, then, incontrovertible that the land in question is of the

public domain and belongs to the State, inasmuch as at the
present time it is partly shore land and in part, was such
formerly, and now is land formed by the action of the sea.
Treating of the sea coasts and shores as property of the
public use and domain, partida 3, title 28, law 3, says:
The things which belong in common to all the living
creatures of this world, are; The air, rain water, the sea and
its shores; for every living creature may use them, according
to its needs, etc.
Law 4 of the same title and partida says, among other
things:
And by the seashore is understood all that space of ground
covered by the waters of the sea, in their highest annual
tides, whether in winter or summer.
The Law of Waters of August 3, 1866, extended to these
Islands by the royal decree of the 8th of the same month
and year and, together with the decree ordering its
enforcement, issued by the Gobierno General on September
21, 1871, was published in the Official Gazette of the 24th of
the same month, which law was not substituted nor
repealed by that of June 13, 1879, promulgated in Spain and
not extended to these Islands, provides, in article 1, that:
The following are part of the national domain open to public
use:
xxx

xxx

xxx

2. The coast sea, that is, the maritime zone encircling the
coasts, to the full width recognized by international law. . . .
3. The shores. By the shore is understood that space
alternately covered and uncovered by the movement of the
tide. Its interior or terrestial limit is the line reached by the
highest equinoctial tides. Where the tides are not
appreciable, the shore begins on the land side at the line
reached by the sea during ordinary storms or tempests.

ART. 4. Lands added to the shores by accretions and

alluvium deposits caused by the action of the sea, form part
of the public domain. When they are no longer washed by
the waters of the sea, and are not necessary for the
purposes of public utility, or for the establishment of special
industries, or for the coast-guard service, the Government
shall declare them to be the property of the owners of the
estates adjacent thereto and as increment thereof.
ART. 5. Lands reclaimed from the sea in consequence of
works constructed by the State, or by the provinces,
pueblos, pr private persons, with proper permission, shall
become the property of the party constructing such works,
unless otherwise provided by the terms of the grant of
authority.
ART. 17. The use of the shores also belongs to the public
under the police supervision of the civil authorities; all
persons may fish thereon, wash, bathe, embark and
disembark on pleasure trips, spread and dry clothes and
nets bathe cattle, remove sand, and collect stones, shells,
plants, shellfish, and other products of the sea, and do other
things of a like nature. these rights may be restricted by
virtue of the regulations necessary for the coast defense or
police supervision, or in the interest of public utility or
decency.
ART. 18. In no place on the coasts, shores, ports, or
entrances of rivers, nor on the islands referred to in article
3, shall new works of any kind whatever be constructed, nor
any building be erected, without proper permission, in
accordance with the provisions of this law and with those of
the law regarding ports.
On the supposition that Aldecoa & Co. commenced to
occupy the land and shore herein concerned, prior to the
enforcement of the Civil Code in these Islands, it is
unquestionable that the issue pending decision must be
determined in accordance with the provisions of the said
Law of Waters of August 3, 1866, inasmuch as the shores, as
well as the lands united thereto by the accretions and
alluvium deposits produced by the action of the sea, are of
the public use and domain.
Page 85 of 404

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Excluding the space occupied by Bates Avenue, that lies

between the defendant's buildings and the shore and the
lands added to the latter by the action of the sea in the sitio
called Bilang-bilang, all this said land, together with the
adjacent shore, belongs to the public domain and is
intended for public uses. So that the defendant, in
construction on the two aforementioned parcels of land a
retaining wall, a pier or wharf, a railway, and warehouses for
the storage of coal, for its exclusive use and benefit, did all
this without due and competent authority and has been
illegally occupying the land since 1901 by the
representative of the Insular Government, Aldecoa & Co., by
a letter of February 25, 1903, acknowledged that the land
belonged to the Government and consented to vacate it,
although it afterwards persisted in its claim that it was the
owner of the land and refused to vacate and place it at the
disposal of the Insular Government, whose representative, in
view of the defendant's changed attitude in the matter, was
forced to bring this action to recover its possession.
Aldecoa & Co. endeavored to prove that the land, consisting
of the two united parcels A and B, belonged to them in fee
simple, on account of their having begun to occupy it
through a verbal permit from the then politico-military
governor of Surigao. Although the record does not show the
nature of the permit obtained, yet it is inferred from the
document Exhibit C I that the said permit was a verbal
authorization to occupy the land on condition that the
defendant should later on prepare title deeds thereto, and
that this authorization was granted for the purpose of
furnishing facilities to, and benefiting the merchants of
Surigao, in view of the backward condition of things in those
regions at the time. It is certain, however, that Aldecoa &
Co. did not obtain or solicit permission from the Government
to establish themselves there and erect thereon their
buildings and works, nor did they endeavor to obtain any
title of ownership to the said land, as one of their witnesses,
Juan Y. Aldecoa, testified. Furthermore, in the said letter or
document Exhibit C I, the attorney then representing the
defendant prayed that in case of sale or total or partial lease
thereof Aldecoa & Co. should be given preference to any
other party, on account of the important improvements they
had made on the land.

It is true that, notwithstanding the fact that the lands which

become an adjacent part of the shores through the
accretions occasioned by the action of the sea, when they
are no longer covered by such waters, or are not necessary
for the purposes of public utility, for the establishment of
special industries, or for the coast-guard service, may be
declared by the Government to be the property of the
owners of the estates adjacent thereto; but the defendant
has not proven that it obtained for itself, in conformity with
the provisions of article 4 of the said Law of Waters, such
declaration of ownership, and competent authorization
obtained from the Insular Government is indispensible in
order that private person may construct works on the
seashore and thereby secure lands for his profit and benefit,
pursuant to article 5 of the same law, inasmuch as article 18
strictly prohibits the construction of any works or the
erection of any building at any place on the coasts and
shores, without proper authorization.
Aside from the verbal permission alleged, but not duly
proven, and leaving aside the fact that the same is not
admissible in official and administrative proceedings, it has
in no wise been proved that Aldecoa & Co. obtained from
the Insular Government any authorization whatever to erect
a retaining wall, to construct a pier and warehouses, and to
lay a railway wall, to construct a pier and warehouses, and
to lay a railway on the land in question, which belonged to
the state and was destined to public uses, as the defendant
must have very well known; nor could any right whatever be
created in its favor, and to the prejudice of the State, by its
having filled in, without the proper permission, the
aforementioned land for the purpose of raising the level
thereof.
The Civil Code, which went into effect in these Islands on
December 7, 1889, the twentieth day of its publication in
the Gaceta de Manila of the 17th of November of the same
year, confirms the provisions of the said Law of Waters,
since, in its article 339, it prescribes that:
Property of public ownership is

Page 86 of 404
LAW ON PROPERTY

1. That destined to the public use, such as roads, canals,

rivers, torrents, ports, and bridges constructed by the State,
and banks, shores, roadsteads, and that of a similar
character.
Article 341 of the same code provides:
Property of public ownership, when no longer devoted to
general uses or to the requirement of the defense of the
territory, shall become a part of the State property.
The shores and the lands reclaimed from the sea, while they
continue to be devoted to public uses and no grant
whatever has been made of any portion of them to private
persons, remain a part of the public domain and are for
public uses, and, until they are converted into patrimonial
property of the State, such lands, thrown up by the action of
the sea, and the shores adjacent thereto, are not
susceptible of prescription, inasmuch as, being dedicated to
the public uses, they are not subject of commerce among
men, in accordance with the provision of article 1936 of the
Civil Code.
The occupation or material possession of any land formed
upon the shore by accretions and alluvium deposits
occasioned by the sea, where the occupant or possessor is a
private person and holds without previous permission or
authorization from the Government, granted in due form,
although he may have had the intention to hold it for the
purpose of making it his own, is illegal possession on his
part and amounts to nothing more than a mere detainer of
the land, which is out of the sphere of the commerce of
men, as belonging to the public domain and being allotted
to public uses and for the use of all persons who live at the
place where it is situated.
The record does not disclose that Aldecoa & Co. had
obtained from the Spanish Government of the Philippines
the requisite authorization legally to occupy the said two
parcels of land of which they now claim to be the owners;
wherefore, the occupation or possession which the allege
they hold is a mere detainer that can merit from the law no
protection such as is afforded only to the person legally in
possession.

The politico-military governor of Surigao having had no

authority or power to grant the possession or ownership of
the said two parcels of land, could not have authorized their
occupancy under a title of ownership. At the most, he may
have, as alleged, verbally authorized the defendant to
construct a pier, to fill in with earth the passageway
necessary to enable the same to be reached from Bates
Avenue, to erect a retaining wall to prevent the sea water,
which used to inundate the said avenue, from flowing
inward as far as the defendant's warehouses, and to build
warehouses on the high land, raised by the action of the
water near the shore; but such verbal authorization, even
admitting that it was actually given, and the material
occupation enjoyed by the defendant during more than ten
years, have not created rights such as could legitimize a
detention to the prejudice of the public, and of the State
which represents the community, the sole entity entitled to
the use and enjoyment of the land and shore usurped, for
the very reason that such shores and lands belong to the
national domain, are intended for public uses and are not
susceptible of prescription, as they do not pertain to the
commerce of men.
The subject of this suit, as has been seen, is a tract of land
that is a continuation of the shore at the sitio of Bilangbilang and was formed on that shore by alluvium deposits
occasioned by the action of the waters of the sea, that is,
was land reclaimed from the sea, as fully proven by the
record in this case; therefore the present issue is identical
with that decided in the case of Ker & Co. vs. Cauden (6 Phil.
Rep., 732) relative to a tract of land formed by the action of
the sea and which has become a part of the so-called
Sangley Point, in the Province of Cavite, and consequently
the findings and doctrine established in that decision are
properly applicable to this action, as may be seen by a
perusal of that case.
The land in question, together with the shore of which it
forms a part, is not, considering its conditions, comprised
within the provisions of section 54 of Act No. 926, for the
reason that it can not be deemed to be agricultural public
lands, nor mangrove-swamp land, inasmuch as it is
unquestionable, as the record shows it to have been proven,
Page 87 of 404

LAW ON PROPERTY

that the disputed property is land which was reclaimed from

the sea through accretions produced by the action of the
water upon a high part of the shore, and is, therefore, land
intended for public uses. This classification loses none of its
force from the fact that a part of the land is swampy,
because this circumstance does not divest it of its true
character as land gained from the sea by accretion.
Mangrove-swamp land, which is generally situated inland at
a certain distance from the seashore, although it is usually
inundated by the waters of the sea, especially at high tide,
can not be confounded with the land formed by the action of
the sea and which forms the shore line thereof; and for this
reason, the decisions rendered in the cases of Montano vs.
Insular Government (12 Phil. Rep., 572), and Mapa vs.
Insular Government (10 Phil. Rep., 175), wherein due
consideration was given to the provisions of section 54 of
Act No. 926, have no application to the present action,
which solely concerns land formed by the action of the sea,
and the shore that is a part of it, both intended for public
uses, while the references made by the appellant party
apply to building lots, fisheries and nipa lands that were
inundated by sea water and which, though covered with a
good deal of water, could not be said to be navigable ways.
The land in question, on the contrary, together with its
adjacent shore, borders on water of great depth, the Pacific
Ocean, for, besides the pier constructed at the place by the
defendant and appellant, there were two others, and all
intended for the service of the steamships that plied the
high seas and were accustomed to enter the said port and
there anchor alongside of these piers.
Under no consideration could the land herein concerned,
together with the shore upon which it is formed, be classed
as agricultural land susceptible of appropriation, and as such
form the basis for the allegation of the possession of an
imperfect or prescriptive title thereto, because, as
aforestated, so long as the land in litigation belongs to the
national domain and is reserved for public uses, it is not
capable of being appropriated by any private person, except
through express authorization granted in due form by a
competent authority a requisite which the defendant and
appellant was unable to prove for the purpose of legalizing
his possession.

However, on the supposition that the defendant, Aldecoa &

Co., began to occupy the said land and shore after first
obtaining verbal permission from a politico-military
governor, constructing thereon a pier, warehouse, and
retaining wall, it is right to hold, as did the lower court in his
judgment, that it acted in good faith, and under such a
supposition, the provisions of article 361 of the Civil Code
must be complied with.
For the foregoing reasons, in the course of the explanation
of which the errors attributed to the judgment appealed
from have been disposed of, it is our opinion that such
judgment should be fully affirmed, as it is in accordance with
the law. The costs shall be assessed against the appellant.
So ordered.
G.R. No. L-28379

March 27, 1929

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicantappellant,

vs.
CONSORCIA CABANGIS, ET AL., claimants-appellees.
Attorney-General Jaranilla for appellant.
Abad Santos, Camus & Delgado for appellees.
VILLA-REAL, J.:
The Government of the Philippine Islands appeals to this
court from the judgment of the Court of First Instance of
Manila in cadastral proceeding No. 373 of the Court of First
Instance of Manila, G. L. R. O. Cadastral Record No. 373,
adjudicating the title and decreeing the registration of lots
Nos. 36, 39 and 40, block 3055 of the cadastral survey of
the City of Manila in favor of Consuelo, Consorcia, Elvira and
Tomas, surnamed Cabangis, in equal parts, and dismissing
the claims presented by the Government of the Philippine
Islands and the City of Manila.
In support of its appeal, the appellant assigns the following
alleged errors as committed by the trial court in its
judgment, to wit:
Page 88 of 404

LAW ON PROPERTY

1. The lower court erred in not holding that the lots in

question are of the public domain, the same having been
gained from the sea (Manila Bay) by accession, by fillings
made by the Bureau of Public Works and by the construction
of the break-water (built by the Bureau of Navigation) near
the mouth of Vitas Estero.
2. The lower court erred in holding that the lots in question
formed part of the big parcel of land belonging to the
spouses Maximo Cabangis and Tita Andres, and in holding
that these spouses and their successors in interest have
been in continuous, public, peaceful and uninterrupted
possession of said lots up to the time this case came up.
3. The lower court erred in holding that said lots existed
before, but that due to the current of the Pasig River and to
the action of the big waves in Manila Bay during the southwest monsoons, the same disappeared.
4. The lower court erred in adjudicating the registration of
the lands in question in the name of the appellees, and in
denying the appellant's motion for a new trial.
A preponderance of the evidence in the record which may
properly be taken into consideration in deciding the case,
proves the following facts:
Lots 36, 39 and 40, block 3035 of cadastral proceeding No.
71 of the City of Manila, G. L. R. O. Record No. 373, were
formerly a part of a large parcel of land belonging to the
predecessor of the herein claimants and appellees. From the
year 1896 said land began to wear away, due to the action
of the waves of Manila Bay, until the year 1901 when the
said lots became completely submerged in water in ordinary
tides, and remained in such a state until 1912 when the
Government undertook the dredging of Vitas Estuary in
order to facilitate navigation, depositing all the sand and silt
taken from the bed of the estuary on the low lands which
were completely covered with water, surrounding that
belonging to the Philippine Manufacturing Company, thereby
slowly and gradually forming the lots, the subject matter of
this proceeding.

Up to the month of February, 1927 nobody had declared lot

39 for the purposes of taxation, and it was only in the year
1926 that Dr. Pedro Gil, in behalf of the claimants and
appellees, declared lot No. 40 for such purpose.
In view of the facts just stated, as proved by a
preponderance of the evidence, the question arises: Who
owns lots 36, 39 and 40 in question?
The claimants-appellees contend that inasmuch as the said
lots once formed a part of a large parcel of land belonging to
their predecessors, whom they succeeded, and their
immediate predecessor in interest, Tomas Cabangis, having
taken possession thereof as soon as they were reclaimed,
giving his permission to some fishermen to dry their fishing
nets and deposit their bancas thereon, said lots belong to
them.
Article 339, subsection 1, of the Civil Code, reads:
Article 339. Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State,
riverbanks, shorts, roadsteads, and that of a similar
character.
xxx

xxx

xxx

Article 1, case 3, of the Law of Waters of August 3, 1866,

provides as follows:
ARTICLE 1. The following are part of the national domain
open to public use:
xxx

xxx

xxx

3. The Shores. By the shore is understood that space

covered and uncovered by the movement of the tide. Its
interior or terrestrial limit is the line reached by the highest
equinoctial tides. Where the tides are not appreciable, the
shore begins on the land side at the line reached by the sea
during ordinary storms or tempests.
Page 89 of 404

LAW ON PROPERTY

In the case of Aragon vs. Insular Government (19 Phil., 223),

with reference to article 339 of the Civil Code just quoted,
this court said:
We should not be understood, by this decision, to hold that
in a case of gradual encroachment or erosion by the ebb
and flow of the tide, private property may not become
'property of public ownership,' as defined in article 339 of
the code, where it appears that the owner has to all intents
and purposes abandoned it and permitted it to be totally
destroyed, so as to become a part of the 'playa' (shore of
the seas), 'rada' (roadstead), or the like. . . .
In the Enciclopedia Juridica Espanola, volume XII, page 558,
we read the following:
With relative frequency the opposite phenomenon occurs;
that is, the sea advances and private properties are
permanently invaded by the waves, and in this case they
become part of the shore or beach. They then pass to the
public domain, but the owner thus dispossessed does not
retain any right to the natural products resulting from their
new nature; it is a de facto case of eminent domain, and not
subject to indemnity.
Now then , when said land was reclaimed, did the claimantsappellees or their predecessors recover it as their original
property?
As we have seen, the land belonging to the predecessors of
the herein claimants-appellees began to wear way in 1896,
owing to the gradual erosion caused by the ebb and flow of
the tide, until the year 1901, when the waters of Manila Bay
completely submerged a portion of it, included within lots
36, 39 and 40 here in question, remaining thus under water
until reclaimed as a result of certain work done by the
Government in 1912. According to the above-cited
authorities said portion of land, that is, lots 36, 39 and 40,
which was private property, became a part of the public
domain. The predecessors of the herein claimants-appellees
could have protected their land by building a retaining wall,
with the consent of competent authority, in 1896 when the
waters of the sea began to wear it away, in accordance with
the provisions of Article 29 of the aforecited Law of Waters

of August 3, 1866, and their failure to do so until 1901,

when a portion of the same became completely covered by
said waters, remaining thus submerged until 1912,
constitutes abandonment.
Now then: The lots under discussion having been reclaimed
from the seas as a result of certain work done by the
Government, to whom do they belong?
The answer to this question is found in article 5 of the
aforementioned Law of Waters, which is as follows:
ART. 5. Lands reclaimed from the sea in consequence of
works constructed by the State, or by the provinces, pueblos
or private persons, with proper permission, shall become the
property of the party constructing such works, unless
otherwise provided by the terms of the grant of authority.
The fact that from 1912 some fishermen had been drying
their fishing nets and depositing their bancas on lots 36, 39
and 40, by permission of Tomas Cabangis, does not confer
on the latter or his successors the ownership of said lots,
because, as they were converted into public land, no private
person could acquire title thereto except in the form and
manner established by the law.
In the case of Buzon vs. Insular Government and City of
Manila (13 Phil., 324), cited by the claimants-appellees, this
court, admitting the findings and holdings of the lower court,
said the following:
If we heed the parol evidence, we find that the seashore was
formerly about one hundred brazas distant from the land in
question; that, in the course of time, and by the removal of
a considerable quantity of sand from the shore at the back
of the land for the use of the street car company in filling in
Calle Cervantes, the sea water in ordinary tides now covers
part of the land described in the petition.
The fact that certain land, not the bed of a river or of the
sea, is covered by sea water during the period of ordinary
high tide, is not a reason established by any law to cause
the loss thereof, especially when, as in the present case, it
Page 90 of 404

LAW ON PROPERTY

becomes covered by water owing to circumstances entirely

independent of the will of the owner.

question were not excluded from the application presented

in said proceeding.

In the case of Director of Lands vs. Aguilar (G.R. No.

22034),1 also cited by the claimants-appellees, wherein the
Government adduced no evidence in support of its
contention, the lower court said in part:

It will be seen that in the case of Buzon vs. Insular

Government and City of Manila, cited above, the rise of the
waters of the sea that covered the lands there in dispute,
was due not to the action of the tide but to the fact that a
large quantity of sand was taken from the sea at the side of
said land in order to fill in Cervantes Street, and this court
properly held that because of this act, entirely independent
of the will of the owner of said land, the latter could not lose
the ownership thereof, and the mere fact that the waters of
the sea covered it as a result of said act, is not sufficient to
convert it into public land, especially, as the land was high
and appropriate for building purposes.

The contention of the claimants Cabangis is to the effect

that said lots are a part of the adjoining land adjudicated to
their deceased father, Don Tomas Cabangis, which, for over
fifty years had belonged to their deceased grandmother,
Tita Andres, and that, due to certain improvements made in
Manila Bay, the waters of the sea covered a large part of the
lots herein claimed.
The Government of the Philippine Islands also claims the
ownership of said lots, because, at ordinary high tide, they
are covered by the sea.
Upon petition of the parties, the lower court made an ocular
inspection of said lots on September 12, 1923, and on said
inspection found some light material houses built thereon,
and that on that occasion the waters of the sea did not
reach the aforesaid lots.
From the evidence adduced at the trial of this cause, it may
be inferred that Tita Andres, during her lifetime was the
owner of a rather large parcel of land which was adjudicated
by a decree to her son Tomas Cabangis; the lots now in
question are contiguous to that land and are covered by the
waters of the sea at extraordinary high tide; some 50 years
before the sea did not reach said strip of land, and on it
were constructed, for the most part, light material houses,
occupied by the tenants of Tita Andres, to whom they paid
rent. Upon her death, her son Tomas Cabangis succeeded to
the possession, and his children succeeded him, they being
the present claimants, Consuelo, Jesus, Tomas, and
Consorcia Cabangis.
The Government of the Philippine Islands did not adduce
any evidence in support of its contention, with the exception
of registry record No. 8147, to show that the lots here in

In the case of the Director of Lands vs. Aguilar also cited by

the claimants-appellees, the Insular Government did not
present any evidence in support of its contention, thus
leaving uncontradicted the evidence adduced by the
claimants Aguilar et al., as to the ownership, possession and
occupation of said lots.
In the instant case the evidence shows that from 1896, the
waves of Manila Bay had been gradually and constantly
washing away the sand that formed the lots here in
question, until 1901, when the sea water completely
covered them, and thus they remained until the year 1912.
In the latter year they were reclaimed from the sea by filling
in with sand and silt extracted from the bed of Vitas Estuary
when the Government dredged said estuary in order to
facilitate navigation. Neither the herein claimants-appellees
nor their predecessors did anything to prevent their
destruction.
In conclusion, then, we hold that the lots in question having
disappeared on account of the gradual erosion due to the
ebb and flow of the tide, and having remained in such a
state until they were reclaimed from the sea by the filling in
done by the Government, they are public land. (Aragon vs.
Insular Government, 19 Phil., 223; Francisco vs. Government
of the Philippine Islands, 28 Phil., 505).

Page 91 of 404
LAW ON PROPERTY

By virtue whereof, the judgment appealed from is reversed

and lots Nos. 36, 39 and 40 of cadastral proceeding No. 373
of the City of Manila are held to be public land belonging to
the Government of the United States under the
administration and control of the Government of the
Philippine Islands. So ordered.
ARTICLE 424
G.R. No. 97764 August 10, 1992
LEVY D. MACASIANO, Brigadier General/PNP Superintendent,
Metropolitan Traffic Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch
62, Regional Trial Court of Makati, Metro Manila,
MUNICIPALITY OF PARAAQUE, METRO MANILA, PALANYAG
KILUSANG BAYAN FOR SERVICE, respondents.

and/or municipal streets, roads and open spaces within

Metropolitan Manila as sites for flea market and/or vending
areas, under certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority
approved Ordinance No. 86, s. 1990 of the municipal council
of respondent municipality subject to the following
conditions:
1. That the aforenamed streets are not used for vehicular
traffic, and that the majority of the residents do not oppose
the establishment of the flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and that the
2 meters on both sides of the road shall be used by
pedestrians;

Ceferino, Padua Law Office for Palanyag Kilusang Bayan for

service.

3. That the time during which the vending area is to be used

shall be clearly designated;

Manuel de Guia for Municipality of Paraaque.

4. That the use of the vending areas shall be temporary and

shall be closed once the reclaimed areas are developed and
donated by the Public Estate Authority.

MEDIALDEA, J.:

On June 20, 1990, the municipal council of Paraaque issued

a resolution authorizing Paraaque Mayor Walfrido N. Ferrer
to enter into contract with any service cooperative for the
establishment, operation, maintenance and management of
flea markets and/or vending areas.

This is a petition for certiorari under Rule 65 of the Rules of

Court seeking the annulment of the decision of the Regional
Trial Court of Makati, Branch 62, which granted the writ of
preliminary injunction applied for by respondents
Municipality of Paraaque and Palanyag Kilusang Bayan for
Service (Palanyag for brevity) against petitioner herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed
Ordinance No. 86, Series of 1990 which authorized the
closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena Streets located at Baclaran,
Paraaque, Metro Manila and the establishment of a flea
market thereon. The said ordinance was approved by the
municipal council pursuant to MMC Ordinance No. 2, Series
of 1979, authorizing and regulating the use of certain city

On August 8, 1990, respondent municipality and respondent

Palanyag, a service cooperative, entered into an agreement
whereby the latter shall operate, maintain and manage the
flea market in the aforementioned streets with the
obligation to remit dues to the treasury of the municipal
government of Paraaque. Consequently, market stalls were
put up by respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano,
PNP Superintendent of the Metropolitan Traffic Command,
ordered the destruction and confiscation of stalls along G.G.
Cruz and J. Gabriel St. in Baclaran. These stalls were later
returned to respondent Palanyag.
Page 92 of 404

LAW ON PROPERTY

On October 16, 1990, petitioner Brig. General Macasiano

wrote a letter to respondent Palanyag giving the latter ten
(10) days to discontinue the flea market; otherwise, the
market stalls shall be dismantled.
Hence, on October 23, 1990, respondents municipality and
Palanyag filed with the trial court a joint petition for
prohibition and mandamus with damages and prayer for
preliminary injunction, to which the petitioner filed his
memorandum/opposition to the issuance of the writ of
preliminary injunction.
On October 24, 1990, the trial court issued a temporary
restraining order to enjoin petitioner from enforcing his
letter-order of October 16, 1990 pending the hearing on the
motion for writ of preliminary injunction.
On December 17, 1990, the trial court issued an order
upholding the validity of Ordinance No. 86 s. 1990 of the
Municipality' of Paraaque and enjoining petitioner Brig.
Gen. Macasiano from enforcing his letter-order against
respondent Palanyag.
Hence, this petition was filed by the petitioner thru the
Office of the Solicitor General alleging grave abuse of
discretion tantamount to lack or excess of jurisdiction on the
part of the trial judge in issuing the assailed order.
The sole issue to be resolved in this case is whether or not
an ordinance or resolution issued by the municipal council of
Paraaque authorizing the lease and use of public streets or
thoroughfares as sites for flea markets is valid.
The Solicitor General, in behalf of petitioner, contends that
municipal roads are used for public service and are therefore
public properties; that as such, they cannot be subject to
private appropriation or private contract by any person,
even by the respondent Municipality of Paraaque.
Petitioner submits that a property already dedicated to
public use cannot be used for another public purpose and
that absent a clear showing that the Municipality of
Paraaque has been granted by the legislature specific
authority to convert a property already in public use to

another public use, respondent municipality is, therefore,

bereft of any authority to close municipal roads for the
establishment of a flea market. Petitioner also submits that
assuming that the respondent municipality is authorized to
close streets, it failed to comply with the conditions set forth
by the Metropolitan Manila Authority for the approval of the
ordinance providing for the establishment of flea markets on
public streets. Lastly, petitioner contends that by allowing
the municipal streets to be used by market vendors the
municipal council of respondent municipality violated its
duty under the Local Government Code to promote the
general welfare of the residents of the municipality.
In upholding the legality of the disputed ordinance, the trial
court ruled:
. . . that Chanter II Section 10 of the Local Government Code
is a statutory grant of power given to local government
units, the Municipality of Paraaque as such, is empowered
under that law to close its roads, streets or alley subject to
limitations stated therein (i.e., that it is in accordance with
existing laws and the provisions of this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi Macasiano,
though apparently within its power is in fact an
encroachment of power legally vested to the municipality,
precisely because when the municipality enacted the
ordinance in question the authority of the respondent as
Police Superintendent ceases to be operative on the ground
that the streets covered by the ordinance ceases to be a
public thoroughfare. (pp. 33-34, Rollo)
We find the petition meritorious. In resolving the question of
whether the disputed municipal ordinance authorizing the
flea market on the public streets is valid, it is necessary to
examine the laws in force during the time the said ordinance
was enacted, namely, Batas Pambansa Blg. 337, otherwise
known as Local Government Code, in connection with
established principles embodied in the Civil Code an
property and settled jurisprudence on the matter.

Page 93 of 404
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The property of provinces, cities and municipalities is

divided into property for public use and patrimonial property
(Art. 423, Civil Code). As to what consists of property for
public use, Article 424 of Civil Code states:
Art. 424. Property for public use, in the provinces, cities and
municipalities, consists of the provincial roads, city streets,
the squares, fountains, public waters, promenades, and
public works for public service paid for by said provinces,
cities or municipalities.
All other property possessed by any of them is patrimonial
and shall be governed by this Code, without prejudice to the
provisions of special laws.
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets are local roads used for
public service and are therefore considered public properties
of respondent municipality. Properties of the local
government which are devoted to public service are deemed
public and are under the absolute control of Congress
(Province of Zamboanga del Norte v. City of Zamboanga, L24440, March 28, 1968, 22 SCRA 1334). Hence, local
governments have no authority whatsoever to control or
regulate the use of public properties unless specific
authority is vested upon them by Congress. One such
example of this authority given by Congress to the local
governments is the power to close roads as provided in
Section 10, Chapter II of the Local Government Code, which
states:
Sec. 10. Closure of roads. A local government unit may
likewise, through its head acting pursuant to a resolution of
its sangguniang and in accordance with existing law and the
provisions of this Code, close any barangay, municipal, city
or provincial road, street, alley, park or square. No such way
or place or any part of thereof shall be close without
indemnifying any person prejudiced thereby. A property thus
withdrawn from public use may be used or conveyed for any
purpose for which other real property belonging to the local
unit concerned might be lawfully used or conveyed.
(Emphasis ours).

However, the aforestated legal provision which gives

authority to local government units to close roads and other
similar public places should be read and interpreted in
accordance with basic principles already established by law.
These basic principles have the effect of limiting such
authority of the province, city or municipality to close a
public street or thoroughfare. Article 424 of the Civil Code
lays down the basic principle that properties of public
dominion devoted to public use and made available to the
public in general are outside the commerce of man and
cannot be disposed of or leased by the local government
unit to private persons. Aside from the requirement of due
process which should be complied with before closing a
road, street or park, the closure should be for the sole
purpose of withdrawing the road or other public property
from public use when circumstances show that such
property is no longer intended or necessary for public use or
public service. When it is already withdrawn from public use,
the property then becomes patrimonial property of the local
government unit concerned (Article 422, Civil Code; Cebu
Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474,
August 29, 1975, 66 SCRA 481). It is only then that the
respondent municipality can "use or convey them for any
purpose for which other real property belonging to the local
unit concerned might be lawfully used or conveyed" in
accordance with the last sentence of Section 10, Chapter II
of Blg. 337, known as Local Government Code. In one case,
the City Council of Cebu, through a resolution, declared the
terminal road of M. Borces Street, Mabolo, Cebu City as an
abandoned road, the same not being included in the City
Development Plan. Thereafter, the City Council passes
another resolution authorizing the sale of the said
abandoned road through public bidding. We held therein
that the City of Cebu is empowered to close a city street and
to vacate or withdraw the same from public use. Such
withdrawn portion becomes patrimonial property which can
be the object of an ordinary contract (Cebu Oxygen and
Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those
roads and streets which are available to the public in
general and ordinarily used for vehicular traffic are still
considered public property devoted to public use. In such
case, the local government has no power to use it for
another purpose or to dispose of or lease it to private
Page 94 of 404

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persons. This limitation on the authority of the local

government over public properties has been discussed and
settled by this Court en banc in "Francisco V. Dacanay,
petitioner v. Mayor Macaria Asistio, Jr., et al., respondents,
G.R. No. 93654, May 6, 1992." This Court ruled:
There is no doubt that the disputed areas from which the
private respondents' market stalls are sought to be evicted
are public streets, as found by the trial court in Civil Case
No. C-12921. A public street is property for public use hence
outside the commerce of man (Arts. 420, 424, Civil Code).
Being outside the commerce of man, it may not be the
subject of lease or others contract (Villanueva, et al. v.
Castaeda and Macalino, 15 SCRA 142 citing the
Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v.
Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot v.
De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the
right to occupy portions of the public street, the City
Government, contrary to law, has been leasing portions of
the streets to them. Such leases or licenses are null and
void for being contrary to law. The right of the public to use
the city streets may not be bargained away through
contract. The interests of a few should not prevail over the
good of the greater number in the community whose health,
peace, safety, good order and general welfare, the
respondent city officials are under legal obligation to
protect.
The Executive Order issued by acting Mayor Robles
authorizing the use of Heroes del '96 Street as a vending
area for stallholders who were granted licenses by the city
government contravenes the general law that reserves city
streets and roads for public use. Mayor Robles' Executive
Order may not infringe upon the vested right of the public to
use city streets for the purpose they were intended to serve:
i.e., as arteries of travel for vehicles and pedestrians.
Even assuming, in gratia argumenti, that respondent
municipality has the authority to pass the disputed
ordinance, the same cannot be validly implemented
because it cannot be considered approved by the
Metropolitan Manila Authority due to non-compliance by

respondent municipality of the conditions imposed by the

former for the approval of the ordinance, to wit:
1. That the aforenamed streets are not used for vehicular
traffic, and that the majority of the residents do(es) not
oppose the establishment of the flea market/vending areas
thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and that the
2 meters on both sides of the road shall be used by
pedestrians;
3. That the time during which the vending area is to be used
shall be clearly designated;
4. That the use of the vending areas shall be temporary and
shall be closed once the reclaimed areas are developed and
donated by the Public Estate Authority. (p. 38, Rollo)
Respondent municipality has not shown any iota of proof
that it has complied with the foregoing conditions precedent
to the approval of the ordinance. The allegations of
respondent municipality that the closed streets were not
used for vehicular traffic and that the majority of the
residents do not oppose the establishment of a flea market
on said streets are unsupported by any evidence that will
show that this first condition has been met. Likewise, the
designation by respondents of a time schedule during which
the flea market shall operate is absent.
Further, it is of public notice that the streets along Baclaran
area are congested with people, houses and traffic brought
about by the proliferation of vendors occupying the streets.
To license and allow the establishment of a flea market
along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension
and Opena streets in Baclaran would not help in solving the
problem of congestion. We take note of the other
observations of the Solicitor General when he said:
. . . There have been many instances of emergencies and
fires where ambulances and fire engines, instead of using
the roads for a more direct access to the fire area, have to
maneuver and look for other streets which are not occupied
Page 95 of 404

LAW ON PROPERTY

by stalls and vendors thereby losing valuable time which

could, otherwise, have been spent in saving properties and
lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital.
However, its ambulances and the people rushing their
patients to the hospital cannot pass through G.G. Cruz
because of the stalls and the vendors. One can only imagine
the tragedy of losing a life just because of a few seconds
delay brought about by the inaccessibility of the streets
leading to the hospital.
The children, too, suffer. In view of the occupancy of the
roads by stalls and vendors, normal transportation flow is
disrupted and school children have to get off at a distance
still far from their schools and walk, rain or shine.
Indeed one can only imagine the garbage and litter left by
vendors on the streets at the end of the day. Needless to
say, these cause further pollution, sickness and
deterioration of health of the residents therein. (pp. 21-22,
Rollo)
Respondents do not refute the truth of the foregoing
findings and observations of petitioners. Instead,
respondents want this Court to focus its attention solely on
the argument that the use of public spaces for the
establishment of a flea market is well within the powers
granted by law to a local government which should not be
interfered with by the courts.
Verily, the powers of a local government unit are not
absolute. They are subject to limitations laid down by toe
Constitution and the laws such as our Civil Code. Moreover,
the exercise of such powers should be subservient to
paramount considerations of health and well-being of the
members of the community. Every local government unit
has the sworn obligation to enact measures that will
enhance the public health, safety and convenience,
maintain peace and order, and promote the general
prosperity of the inhabitants of the local units. Based on this
objective, the local government should refrain from acting
towards that which might prejudice or adversely affect the
general welfare.

As what we have said in the Dacanay case, the general

public have a legal right to demand the demolition of the
illegally constructed stalls in public roads and streets and
the officials of respondent municipality have the
corresponding duty arising from public office to clear the
city streets and restore them to their specific public
purpose.
The instant case as well as the Dacanay case, involves an
ordinance which is void and illegal for lack of basis and
authority in laws applicable during its time. However, at this
point, We find it worthy to note that Batas Pambansa Blg.
337, known as Local Government Lode, has already been
repealed by Republic Act No. 7160 known as Local
Government Code of 1991 which took effect on January 1,
1992. Section 5(d) of the new Code provides that rights and
obligations existing on the date of effectivity of the new
Code and arising out of contracts or any other source of
prestation involving a local government unit shall be
governed by the original terms and conditions of the said
contracts or the law in force at the time such rights were
vested.
ACCORDINGLY, the petition is GRANTED and the decision of
the respondent Regional Trial Court dated December 17,
1990 which granted the writ of preliminary injunction
enjoining petitioner as PNP Superintendent, Metropolitan
Traffic Command from enforcing the demolition of market
stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena streets is hereby RESERVED and SET
ASIDE.
G.R. No. L-24440

March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiffappellee,

vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and
COMMISSIONER OF INTERNAL REVENUE, defendantsappellants.
Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for
plaintiff-appellee.
Page 96 of 404

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Office of the Solicitor General for defendants-appellants.

BENGZON, J.P., J.:
Prior to its incorporation as a chartered city, the
Municipality of Zamboanga used to be the provincial capital
of the then Zamboanga Province. On October 12, 1936,
Commonwealth Act 39 was approved converting the
Municipality of Zamboanga into Zamboanga City. Sec. 50 of
the Act also provided that
Buildings and properties which the province shall
abandon upon the transfer of the capital to another place
will be acquired and paid for by the City of Zamboanga at a
price to be fixed by the Auditor General.
The properties and buildings referred to consisted of
50 lots and some buildings constructed thereon, located in
the City of Zamboanga and covered individually by Torrens
certificates of title in the name of Zamboanga Province. As
far as can be gleaned from the records, 1 said properties
were being utilized as follows No. of Lots Use
1
................................................ Capitol Site
3
................................................ School Site
3
................................................ Hospital Site
3
................................................ Leprosarium
1
................................................ Curuan School
1
................................................ Trade School
2
................................................ Burleigh School
2
................................................ High School
Playground
9
................................................ Burleighs
1
................................................ Hydro-Electric Site
(Magay)
1
................................................ San Roque
23
................................................ vacant
It appears that in 1945, the capital of Zamboanga
Province was transferred to Dipolog. 2 Subsequently, or on
June 16, 1948, Republic Act 286 was approved creating the
municipality of Molave and making it the capital of
Zamboanga Province.

On May 26, 1949, the Appraisal Committee formed by

the Auditor General, pursuant to Commonwealth Act 39,
fixed the value of the properties and buildings in question
left by Zamboanga Province in Zamboanga City at
P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved
dividing the province of Zamboanga into two (2):
Zamboanga del Norte and Zamboanga del Sur. As to how
the assets and obligations of the old province were to be
divided between the two new ones, Sec. 6 of that law
provided:
Upon the approval of this Act, the funds, assets and
other properties and the obligations of the province of
Zamboanga shall be divided equitably between the Province
of Zamboanga del Norte and the Province of Zamboanga del
Sur by the President of the Philippines, upon the
recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11,
1955, apportioned the assets and obligations of the defunct
Province of Zamboanga as follows: 54.39% for Zamboanga
del Norte and 45.61% for Zamboanga del Sur. Zamboanga
del Norte therefore became entitled to 54.39% of
P1,294,244.00, the total value of the lots and buildings in
question, or P704,220.05 payable by Zamboanga City.
On March 17, 1959, the Executive Secretary, by order
of the President, issued a ruling 4 holding that Zamboanga
del Norte had a vested right as owner (should be co-owner
pro-indiviso) of the properties mentioned in Sec. 50 of
Commonwealth Act 39, and is entitled to the price thereof,
payable by Zamboanga City. This ruling revoked the
previous Cabinet Resolution of July 13, 1951 conveying all
the said 50 lots and buildings thereon to Zamboanga City for
P1.00, effective as of 1945, when the provincial capital of
the then Zamboanga Province was transferred to Dipolog.
The Secretary of Finance then authorized the
Commissioner of Internal Revenue to deduct an amount
equal to 25% of the regular internal revenue allotment for
the City of Zamboanga for the quarter ending March 31,
1960, then for the quarter ending June 30, 1960, and again
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LAW ON PROPERTY

for the first quarter of the fiscal year 1960-1961. The

deductions, all aggregating P57,373.46, was credited to the
province of Zamboanga del Norte, in partial payment of the
P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was
approved amending Sec. 50 of Commonwealth Act 39 by
providing that
All buildings, properties and assets belonging to the
former province of Zamboanga and located within the City
of Zamboanga are hereby transferred, free of charge, in
favor of the said City of Zamboanga. (Stressed for
emphasis).
Consequently, the Secretary of Finance, on July 12,
1961, ordered the Commissioner of Internal Revenue to stop
from effecting further payments to Zamboanga del Norte
and to return to Zamboanga City the sum of P57,373.46
taken from it out of the internal revenue allotment of
Zamboanga del Norte. Zamboanga City admits that since
the enactment of Republic Act 3039, P43,030.11 of the
P57,373.46 has already been returned to it.
This constrained plaintiff-appellee Zamboanga del
Norte to file on March 5, 1962, a complaint entitled
"Declaratory Relief with Preliminary Mandatory Injunction" in
the Court of First Instance of Zamboanga del Norte against
defendants-appellants Zamboanga City, the Secretary of
Finance and the Commissioner of Internal Revenue. It was
prayed that: (a) Republic Act 3039 be declared
unconstitutional for depriving plaintiff province of property
without due process and just compensation; (b) Plaintiff's
rights and obligations under said law be declared; (c) The
Secretary of Finance and the Internal Revenue
Commissioner be enjoined from reimbursing the sum of
P57,373.46 to defendant City; and (d) The latter be ordered
to continue paying the balance of P704,220.05 in quarterly
installments of 25% of its internal revenue allotments.
On June 4, 1962, the lower court ordered the issuance
of preliminary injunction as prayed for. After defendants filed
their respective answers, trial was held. On August 12,

1963, judgment was rendered, the dispositive portion of

which reads:
WHEREFORE, judgment is hereby rendered declaring
Republic Act No. 3039 unconstitutional insofar as it deprives
plaintiff Zamboanga del Norte of its private properties,
consisting of 50 parcels of land and the improvements
thereon under certificates of title (Exhibits "A" to "A-49") in
the name of the defunct province of Zamboanga; ordering
defendant City of Zamboanga to pay to the plaintiff the sum
of P704,220.05 payment thereof to be deducted from its
regular quarterly internal revenue allotment equivalent to
25% thereof every quarter until said amount shall have
been fully paid; ordering defendant Secretary of Finance to
direct defendant Commissioner of Internal Revenue to
deduct 25% from the regular quarterly internal revenue
allotment for defendant City of Zamboanga and to remit the
same to plaintiff Zamboanga del Norte until said sum of
P704,220.05 shall have been fully paid; ordering plaintiff
Zamboanga del Norte to execute through its proper officials
the corresponding public instrument deeding to defendant
City of Zamboanga the 50 parcels of land and the
improvements thereon under the certificates of title
(Exhibits "A" to "A-49") upon payment by the latter of the
aforesaid sum of P704,220.05 in full; dismissing the
counterclaim of defendant City of Zamboanga; and
declaring permanent the preliminary mandatory injunction
issued on June 8, 1962, pursuant to the order of the Court
dated June 4, 1962. No costs are assessed against the
defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of
defendants' appeal, plaintiff province filed a motion to
reconsider praying that Zamboanga City be ordered instead
to pay the P704,220.05 in lump sum with 6% interest per
annum. Over defendants' opposition, the lower court
granted plaintiff province's motion.
The defendants then brought the case before Us on
appeal.

Page 98 of 404
LAW ON PROPERTY

Brushing aside the procedural point concerning the

property of declaratory relief filed in the lower court on the
assertion that the law had already been violated and that
plaintiff sought to give it coercive effect, since assuming the
same to be true, the Rules anyway authorize the conversion
of the proceedings to an ordinary action, 5 We proceed to
the more important and principal question of the validity of
Republic Act 3039.
The validity of the law ultimately depends on the
nature of the 50 lots and buildings thereon in question. For,
the matter involved here is the extent of legislative control
over the properties of a municipal corporation, of which a
province is one. The principle itself is simple: If the property
is owned by the municipality (meaning municipal
corporation) in its public and governmental capacity, the
property is public and Congress has absolute control over it.
But if the property is owned in its private or proprietary
capacity, then it is patrimonial and Congress has no
absolute control. The municipality cannot be deprived of it
without due process and payment of just compensation. 6
The capacity in which the property is held is, however,
dependent on the use to which it is intended and devoted.
Now, which of two norms, i.e., that of the Civil Code or that
obtaining under the law of Municipal Corporations, must be
used in classifying the properties in question?
The Civil Code classification is embodied in its Arts.
423 and 424 which provide:1wph1.t
ART. 423. The property of provinces, cities, and
municipalities is divided into property for public use and
patrimonial property.
ART. 424. Property for public use, in the provinces,
cities, and municipalities, consists of the provincial roads,
city streets, municipal streets, the squares, fountains, public
waters, promenades, and public works for public service
paid for by said provinces, cities, or municipalities.
All other property possessed by any of them is patrimonial
and shall be governed by this Code, without prejudice to the
provisions of special laws. (Stressed for emphasis).

Applying the above cited norm, all the properties in

question, except the two (2) lots used as High School
playgrounds, could be considered as patrimonial properties
of the former Zamboanga province. Even the capital site,
the hospital and leprosarium sites, and the school sites will
be considered patrimonial for they are not for public use.
They would fall under the phrase "public works for public
service" for it has been held that under the ejusdem generis
rule, such public works must be for free and indiscriminate
use by anyone, just like the preceding enumerated
properties in the first paragraph of Art 424. 7 The
playgrounds, however, would fit into this category.
This was the norm applied by the lower court. And it
cannot be said that its actuation was without jurisprudential
precedent for in Municipality of Catbalogan v. Director of
Lands, 8 and in Municipality of Tacloban v. Director of Lands,
9 it was held that the capitol site and the school sites in
municipalities constitute their patrimonial properties. This
result is understandable because, unlike in the classification
regarding State properties, properties for public service in
the municipalities are not classified as public. Assuming
then the Civil Code classification to be the chosen norm, the
lower court must be affirmed except with regard to the two
(2) lots used as playgrounds.
On the other hand, applying the norm obtaining under
the principles constituting the law of Municipal Corporations,
all those of the 50 properties in question which are devoted
to public service are deemed public; the rest remain
patrimonial. Under this norm, to be considered public, it is
enough that the property be held and, devoted for
governmental purposes like local administration, public
education, public health, etc. 10
Supporting jurisprudence are found in the following
cases: (1) HINUNANGAN V. DIRECTOR OF LANDS, 11 where it
was stated that "... where the municipality has occupied
lands distinctly for public purposes, such as for the
municipal court house, the public school, the public market,
or other necessary municipal building, we will, in the
absence of proof to the contrary, presume a grant from the
States in favor of the municipality; but, as indicated by the
Page 99 of 404

LAW ON PROPERTY

wording, that rule may be invoked only as to property which

is used distinctly for public purposes...." (2) VIUDA DE
TANTOCO V. MUNICIPAL COUNCIL OF ILOILO 12 held that
municipal properties necessary for governmental purposes
are public in nature. Thus, the auto trucks used by the
municipality for street sprinkling, the police patrol
automobile, police stations and concrete structures with the
corresponding lots used as markets were declared exempt
from execution and attachment since they were not
patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS.
CANTOS 13 held squarely that a municipal lot which had
always been devoted to school purposes is one dedicated to
public use and is not patrimonial property of a municipality.
Following this classification, Republic Act 3039 is valid
insofar as it affects the lots used as capitol site, school sites
and its grounds, hospital and leprosarium sites and the high
school playground sites a total of 24 lots since these
were held by the former Zamboanga province in its
governmental capacity and therefore are subject to the
absolute control of Congress. Said lots considered as public
property are the following: TCT Number
Lot Number U s
e
2200 ......................................
4-B
......................................
Capitol Site
2816 ......................................
149
......................................
School Site
3281 ......................................
1224
......................................
Hospital Site
3282 ......................................
1226
......................................
Hospital Site
3283 ......................................
1225
......................................
Hospital Site
3748 ......................................
434-A-1
......................................
School Site
5406 ......................................
171
......................................
School Site
5564 ......................................
168
......................................
High School Play-ground
5567 ......................................
157 & 158
......................................
Trade School
5583 ......................................
167
......................................
High School Play-ground

6181

......................................
......................................
11942 ......................................
......................................
11943 ......................................
......................................
11944 ......................................
......................................
5557 ......................................
......................................
5562 ......................................
......................................
5565 ......................................
......................................
5570 ......................................
......................................
5571 ......................................
......................................
5572 ......................................
......................................
5573 ......................................
......................................
5585 ......................................
......................................
5586 ......................................
......................................
5587 ......................................
......................................

(O.C.T.)
Curuan School
926
Leprosarium
927
Leprosarium
925
Leprosarium
170
Burleigh School
180
Burleigh School
172-B
Burleigh
171-A
Burleigh
172-C
Burleigh
174
Burleigh
178
Burleigh
171-B
Burleigh
173
Burleigh
172-A
Burleigh

We noticed that the eight Burleigh lots above

described are adjoining each other and in turn are between
the two lots wherein the Burleigh schools are built, as per
records appearing herein and in the Bureau of Lands. Hence,
there is sufficient basis for holding that said eight lots
constitute the appurtenant grounds of the Burleigh schools,
and partake of the nature of the same.
Regarding the several buildings existing on the lots
above-mentioned, the records do not disclose whether they
were constructed at the expense of the former Province of
Zamboanga. Considering however the fact that said
buildings must have been erected even before 1936 when
Commonwealth Act 39 was enacted and the further fact that
Page 100 of 404

LAW ON PROPERTY

provinces then had no power to authorize construction of

buildings such as those in the case at bar at their own
expense, 14 it can be assumed that said buildings were
erected by the National Government, using national funds.
Hence, Congress could very well dispose of said buildings in
the same manner that it did with the lots in question.
But even assuming that provincial funds were used,
still the buildings constitute mere accessories to the lands,
which are public in nature, and so, they follow the nature of
said lands, i.e., public. Moreover, said buildings, though
located in the city, will not be for the exclusive use and
benefit of city residents for they could be availed of also by
the provincial residents. The province then and its
successors-in-interest are not really deprived of the
benefits thereof.
But Republic Act 3039 cannot be applied to deprive
Zamboanga del Norte of its share in the value of the rest of
the 26 remaining lots which are patrimonial properties since
they are not being utilized for distinctly, governmental
purposes. Said lots are:TCT NumberLot Number U s e
5577 ......................................
177
......................................
Mydro, Magay
13198 ......................................
127-0
......................................
San Roque
5569 ......................................
169
......................................
Burleigh 15
5558 ......................................
175
......................................
Vacant
5559 ......................................
188
......................................
"
5560 ......................................
183
......................................
"
5561 ......................................
186
......................................
"
5563 ......................................
191
......................................
"
5566 ......................................
176
......................................
"
5568 ......................................
179
......................................
"
5574 ......................................
196
......................................
"

5575
5576
5578
5579
5580
5581
5582
5584
5588
5589
5590
5591
5592
5593
7379

......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................

181-A
"
181-B
"
182
"
197
"
195
"
159-B
"
194
"
190
"
184
"
187
"
189
"
192
"
193
"
185
"
4147
"

Moreover, the fact that these 26 lots are registered

strengthens the proposition that they are truly private in
nature. On the other hand, that the 24 lots used for
governmental purposes are also registered is of no
significance since registration cannot convert public
property to private. 16
We are more inclined to uphold this latter view. The
controversy here is more along the domains of the Law of
Municipal Corporations State vs. Province than along
that of Civil Law. Moreover, this Court is not inclined to hold
that municipal property held and devoted to public service is
Page 101 of 404

LAW ON PROPERTY

in the same category as ordinary private property. The

consequences are dire. As ordinary private properties, they
can be levied upon and attached. They can even be
acquired thru adverse possession all these to the
detriment of the local community. Lastly, the classification of
properties other than those for public use in the
municipalities as patrimonial under Art. 424 of the Civil Code
is "... without prejudice to the provisions of special laws."
For purpose of this article, the principles, obtaining under
the Law of Municipal Corporations can be considered as
"special laws". Hence, the classification of municipal
property devoted for distinctly governmental purposes as
public should prevail over the Civil Code classification in this
particular case.
Defendants' claim that plaintiff and its predecessor-ininterest are "guilty of laches is without merit. Under
Commonwealth Act 39, Sec. 50, the cause of action in favor
of the defunct Zamboanga Province arose only in 1949 after
the Auditor General fixed the value of the properties in
question. While in 1951, the Cabinet resolved transfer said
properties practically for free to Zamboanga City, a
reconsideration thereof was seasonably sought. In 1952, the
old province was dissolved. As successor-in-interest to more
than half of the properties involved, Zamboanga del Norte
was able to get a reconsideration of the Cabinet Resolution
in 1959. In fact, partial payments were effected
subsequently and it was only after the passage of Republic
Act 3039 in 1961 that the present controversy arose.
Plaintiff brought suit in 1962. All the foregoing, negative
laches.
It results then that Zamboanga del Norte is still
entitled to collect from the City of Zamboanga the former's
54.39% share in the 26 properties which are patrimonial in
nature, said share to computed on the basis of the valuation
of said 26 properties as contained in Resolution No. 7, dated
March 26, 1949, of the Appraisal Committee formed by the
Auditor General.
Plaintiff's share, however, cannot be paid in lump
sum, except as to the P43,030.11 already returned to
defendant City. The return of said amount to defendant was
without legal basis. Republic Act 3039 took effect only on

June 17, 1961 after a partial payment of P57,373.46 had

already been made. Since the law did not provide for
retroactivity, it could not have validly affected a completed
act. Hence, the amount of P43,030.11 should be
immediately returned by defendant City to plaintiff province.
The remaining balance, if any, in the amount of plaintiff's
54.39% share in the 26 lots should then be paid by
defendant City in the same manner originally adopted by
the Secretary of Finance and the Commissioner of Internal
Revenue, and not in lump sum. Plaintiff's prayer, particularly
pars. 5 and 6, read together with pars. 10 and 11 of the first
cause of action recited in the complaint 17 clearly shows
that the relief sought was merely the continuance of the
quarterly payments from the internal revenue allotments of
defendant City. Art. 1169 of the Civil Code on reciprocal
obligations invoked by plaintiff to justify lump sum payment
is inapplicable since there has been so far in legal
contemplation no complete delivery of the lots in question.
The titles to the registered lots are not yet in the name of
defendant Zamboanga City.
WHEREFORE, the decision appealed from is hereby
set aside and another judgment is hereby entered as
follows:.
(1) Defendant Zamboanga City is hereby ordered to
return to plaintiff Zamboanga del Norte in lump sum the
amount of P43,030.11 which the former took back from the
latter out of the sum of P57,373.46 previously paid to the
latter; and
(2) Defendants are hereby ordered to effect payments
in favor of plaintiff of whatever balance remains of plaintiff's
54.39% share in the 26 patrimonial properties, after
deducting therefrom the sum of P57,373.46, on the basis of
Resolution No. 7 dated March 26, 1949 of the Appraisal
Committee formed by the Auditor General, by way of
quarterly payments from the allotments of defendant City,
in the manner originally adopted by the Secretary of Finance
and the Commissioner of Internal Revenue. No costs. So
ordered.
ARTICLE 428
G.R. No. 161028

January 31, 2005

Page 102 of 404

LAW ON PROPERTY

TERESITA V. IDOLOR, petitioner,

vs.
HON. COURT OF APPEALS, SPOUSES GUMERSINDO DE
GUZMAN and ILUMINADA DE GUZMAN and HON. JOSE G.
PINEDA, Presiding Judge of Regional Trial Court, National
Capital Judicial Region, Branch 220, Quezon City,
respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the September
1, 2003 decision1 of the Court of Appeals in CA-G.R. SP No.
72494 which reversed the May 27, 2002 order of the
Regional Trial Court of Quezon City, Branch 220, in Civil Case
No. Q-98-34728, denying respondent-spouses Motion for
Immediate Issuance of Writ of Possession.
Petitioner Teresita V. Idolor obtained a loan from respondentspouses Gumersindo and Iluminada De Guzman secured by
a real estate mortgage over a property covered by Transfer
Certificate of Title No. 25659.2
Upon default by petitioner in the payment of her obligation,
respondent-spouses instituted extra-judicial foreclosure
proceedings against the real estate mortgage. During the
auction sale, respondent-spouses emerged as the highest
bidder and were issued a Certificate of Sale.3
On June 25, 1998, petitioner filed with the Regional Trial
Court of Quezon City, Branch 220, a complaint for
annulment of the Certificate of Sale with prayer for the
issuance of a temporary restraining order and a writ of
preliminary injunction. The case was docketed as Civil Case
No. Q-98-34728.
The trial court issued a writ of preliminary injunction,
however, the Court of Appeals in a petition for certiorari filed
by respondent-spouses, annulled the same for having been
issued with grave abuse of discretion. We affirmed said
decision of the appellate court in Idolor v. Court of Appeals .
4

The ownership over the subject property having been

consolidated in their name, respondent-spouses De Guzman
moved for the issuance of a writ of possession with the
Regional Trial Court where the case for the annulment of the
Certificate of Sale was pending.5 On May 27, 2002, the trial
court denied the motion, ruling that the "the lifting of the
writ of preliminary injunction does not ipso facto entitle
defendant De Guzman to the issuance of a writ of
possession over the property in question. It only allows the
defendant Sheriff to issue a final deed of sale and
confirmation sale and the defendant De Guzman to
consolidate the ownership/title over the subject property in
his name."61awphi1.nt
In a petition for certiorari before the Court of Appeals, the
appellate court found that the trial court gravely abused its
discretion in denying the motion for the issuance of the "writ
of possession to the mortgagee or the winning bidder is a
ministerial function of the court and that the pendency of an
action questioning the validity of a mortgage cannot bar the
issuance of the writ of possession after title to the property
has been consolidated in the mortgagee."7 Hence, it
reversed and set aside the May 27, 2002 order of the trial
court.
The following issues are raised for our consideration:
A. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION
ON THE MOTION OF THE MORTGAGEE TO APPLY FOR A WRIT
OF POSSESSION NOTWITHSTANDING NON-PAYMENT OF
DOCKET FEES;
B. WHETHER OR NOT THE MORTGAGEE, BY MERE MOTION,
NOT BY A PETITION, MAY APPLY FOR A WRIT OF POSSESSION
IN THE SAME CASE FOR ANNULMENT OF THE SHERIFFS
CERTIFICATE OF SALE OF WHICH HE IS A DEFENDANT.8
A writ of possession is an order whereby the sheriff is
commanded to place a person in possession of a real or
personal property.9 It may be issued under the following
instances: (1) land registration proceedings under Sec. 17 of
Act 496; (2) judicial foreclosure, provided the debtor is in
possession of the mortgaged realty and no third person, not
Page 103 of 404

LAW ON PROPERTY

a party to the foreclosure suit, had intervened; and (3)

extrajudicial foreclosure of a real estate mortgage under
Sec. 7 of Act 3135 as amended by Act 4118,10 to which the
present case falls.
Section 7, Act 3135, as amended by Act 4118, provides:
SECTION 7. In any sale made under the provisions of this
Act, the purchaser may petition the Court of First Instance of
the province or place where the property or any part thereof
is situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent
to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was
made without violating the mortgage or without complying
with the requirements of this Act. Such petition shall be
made under oath and filed in form of an ex parte motion in
the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property
registered under the Mortgage Law or under section one
hundred and ninety-four of the Administrative Code, or of
any other real property encumbered with a mortgage duly
registered in the office of any register of deeds in
accordance with any existing law, and in each case the clerk
of the court shall, upon the filing of such petition, collect the
fees specified in paragraph eleven of section one hundred
and fourteen of Act Numbered Four hundred and ninety-six,
as amended by Act Numbered Twenty-eight hundred and
sixty-six, and the court shall, upon approval of the bond,
order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who
shall execute said order immediately.
Under the provision cited above, the purchaser in a
foreclosure sale may apply for a writ of possession during
the redemption period by filing for that purpose an ex parte
motion under oath, in the corresponding registration or
cadastral proceeding in the case of a property with torrens
title. Upon the filing of such motion and the approval of the
corresponding bond, the court is expressly directed to issue
the writ.11
Upon the expiration of the redemption period, the right of
the purchaser to the possession of the foreclosed property

becomes absolute. The basis of this right to possession is

the purchasers ownership of the property. Mere filing of an
ex parte motion for the issuance of the writ of possession
would suffice, and the bond required is no longer necessary,
since possession becomes an absolute right of the
purchaser as the confirmed owner.12
In this case, respondent-spouses acquired an absolute right
over the property upon the failure of petitioner to exercise
her right of redemption and upon the consolidation of the
title in their name.
The pendency of the case for the annulment of the
Certificate of Sale is not a bar to the issuance of the writ of
possession. Upon the filing of the motion, the trial court has
no discretion to deny the same, thus:
This Court has consistently held that the duty of the trial
court to grant a writ of possession is ministerial. Such writ
issues as a matter of course upon the filing of the proper
motion and the approval of the corresponding bond. No
discretion is left to the trial court. Any question regarding
the regularity and validity of the sale, as well as the
consequent cancellation of the writ, is to be determined in a
subsequent proceeding as outlined in Section 8 of Act 3135.
Such question cannot be raised to oppose the issuance of
the writ, since the proceeding is ex parte. The recourse is
available even before the expiration of the redemption
period provided by law and the Rules of Court.13
The judge to whom an application for writ of possession is
filed need not look into the validity of the mortgage or the
manner of its foreclosure. As a rule, after the consolidation
of title in the buyers name, for failure of the mortgagor to
redeem, the writ of possession becomes a matter of right.
Its issuance to a purchaser in an extrajudicial foreclosure is
merely a ministerial function. As such, the court neither
exercises its official discretion nor judgment.14 Any question
regarding the validity of the mortgage or its foreclosure
cannot be a legal ground for refusing the issuance of a writ
of possession. Regardless of whether or not there is a
pending suit for annulment of the mortgage or the
foreclosure itself, the purchaser is entitled to a writ of
Page 104 of 404

LAW ON PROPERTY

possession, without prejudice of course to the eventual

outcome of said case.15
Contrary to petitioners assertion, the Regional Trial Court of
Quezon City has jurisdiction to act on respondents motion
for writ of possession. Section 7, Act 3135, as amended, is
clear that in any sale made under its provisions, "the
purchaser may petition the Court of the province or place
where the property or any part thereof is situated" Since
the property subject of this controversy is in Quezon City,
then the citys Regional Trial Court should rightly take
cognizance of the case.
The Court of Appeals correctly observed:
Thus, it is clear under the aforesaid law that the RTC of the
place where the property is situated has the appropriate
authority to issue the writ of possession and, specifically in
the instant case, it is the RTC of Quezon City. And when
jurisdiction pertains to the RTC of Quezon City, it includes all
branches thereof including the court a quo where a related
proceeding is being conducted.16
Further, in Bacalso, et al. v. Ramolete, et al.,17 we held:
The various branches of the Court of First Instance of
Cebu under the Fourteenth Judicial District, are a coordinate
and co-equal courts, and the totality of which is only one
Court of First Instance. The jurisdiction is vested in the court,
not in the judges. And when a case is filed in one branch,
jurisdiction over the case does not attach to the branch or
judge alone, to the exclusion of the other branches. Trial
may be held or proceedings continue by and before another
branch or judge. It is for this reason that Section 57 of the
Judiciary Act expressly grants to the Secretary of Justice, the
administrative right or power to apportion the cases among
the different branches, both for the convenience of the
parties and for the coordination of the work by the different
branches of the same court. The apportionment and
distribution of cases does not involve a grant or limitation of
jurisdiction; the jurisdiction attaches and continues to be
vested in the Court of First Instance of the province, and the
trials may be held by any branch or judge of the court.

Necessarily, therefore, Branch 220 of the Regional Trial

Court of Quezon City has jurisdiction over respondentspouses application for writ of possession over a property in
Quezon City.
The Court of Appeals properly debunked petitioners claim
that the Regional Trial Court acquired no jurisdiction over the
case due to alleged non-payment of docket fees by the
respondent. This allegation, having been raised for the first
time on appeal, should be disallowed. Besides, the fees
mentioned in Section 7, Act 3135 in relation to Section 114,
Act 496, pertain to fees payable upon registration of land
titles, and not to court or docket fees, as erroneously
claimed by petitioner.
An ex-parte petition for issuance of possessory writ under
Section 7 of Act No. 3135 is not, strictly speaking, a "judicial
process". Even if the same may be considered a judicial
proceeding for the enforcement of ones right of possession
as purchaser in a foreclosure sale, it is not an ordinary suit
filed in court, by which one party "sues another for the
enforcement or protection of a right, or the prevention or
redress of a wrong."18 It is a non-litigious proceeding and
summary in nature as well. As such, the rigid and technical
application of the rules on legal fees may be relaxed in order
to avoid manifest injustice to the respondent. After all, rules
of procedure are used to help secure and not override
substantial justice. Even the Rules of Court mandates a
liberal construction in order to promote their objective of
securing a just, speedy and inexpensive disposition of every
action and proceeding. Since rules of procedure are mere
tools designed to facilitate the attainment of justice, their
strict and rigid application which would result in
technicalities that tend to frustrate rather than promote
substantial justice must always be avoided.191awphi1.nt
This rule is applicable in the present case. Although
respondent- spouses have been declared as the highest
bidder and despite having consolidated the title in their
name, they still failed to take possession of the property
through numerous legal maneuverings of the petitioner. A
simple ex parte application for the issuance of a writ of
possession has become a litigious and protracted
proceeding.
Page 105 of 404

LAW ON PROPERTY

Thus, if we strictly apply the Rules, justice long been denied

to respondent would be effectively defeated.l^vvphi1.net At
any rate, should there be fees and costs relative to the
issuance and implementation of the writ of possession, the
same may be assessed and collected from the respondentspouses De Guzman.
WHEREFORE, in view of the foregoing, the petition for
review on certiorari is DENIED and the decision of the Court
of Appeals in CA-G.R. SP No. 72494 is AFFIRMED. The
Regional Trial Court of Quezon City, Branch 220 is ordered to
issue a writ of possession in favor of respondent-spouses
Gumersindo and Iluminada De Guzman
ARTICLE 431
G.R. No. 74761 November 6, 1990
NATIVIDAD V. ANDAMO and EMMANUEL R. ANDAMO,
petitioners,
vs.
INTERMEDIATE APPELLATE COURT (First Civil Cases Division)
and MISSIONARIES OF OUR LADY OF LA SALETTE, INC.,
respondents.
Lope E. Adriano for petitioners.
Padilla Law Office for private respondent.

FERNAN, C.J.:
The pivotal issue in this petition for certiorari, prohibition
and mandamus is whether a corporation, which has built
through its agents, waterpaths, water conductors and
contrivances within its land, thereby causing inundation and
damage to an adjacent land, can be held civilly liable for
damages under Articles 2176 and 2177 of the Civil Code on
quasi-delicts such that the resulting civil case can proceed
independently of the criminal case.
The antecedent facts are as follows:

Petitioner spouses Emmanuel and Natividad Andamo are the

owners of a parcel of land situated in Biga (Biluso) Silang,
Cavite which is adjacent to that of private respondent,
Missionaries of Our Lady of La Salette, Inc., a religious
corporation.
Within the land of respondent corporation, waterpaths and
contrivances, including an artificial lake, were constructed,
which allegedly inundated and eroded petitioners' land,
caused a young man to drown, damaged petitioners' crops
and plants, washed away costly fences, endangered the
lives of petitioners and their laborers during rainy and
stormy seasons, and exposed plants and other
improvements to destruction.
In July 1982, petitioners instituted a criminal action,
docketed as Criminal Case No. TG-907-82, before the
Regional Trial Court of Cavite, Branch 4 (Tagaytay City),
against Efren Musngi, Orlando Sapuay and Rutillo Mallillin,
officers and directors of herein respondent corporation, for
destruction by means of inundation under Article 324 of the
Revised Penal Code.
Subsequently, on February 22, 1983, petitioners filed
another action against respondent corporation, this time a
civil case, docketed as Civil Case No. TG-748, for damages
with prayer for the issuance of a writ of preliminary
injunction before the same court. 1
On March 11, 1983, respondent corporation filed its answer
to the complaint and opposition to the issuance of a writ of
preliminary injunction. Hearings were conducted including
ocular inspections on the land. However, on April 26, 1984,
the trial court, acting on respondent corporation's motion to
dismiss or suspend the civil action, issued an order
suspending further hearings in Civil Case No, TG-748 until
after judgment in the related Criminal Case No. TG-907-82.
Resolving respondent corporation's motion to dismiss filed
on June 22, 1984, the trial court issued on August 27, 1984
the disputed order dismissing Civil Case No. TG-748 for lack
of jurisdiction, as the criminal case which was instituted
ahead of the civil case was still unresolved. Said order was
anchored on the provision of Section 3 (a), Rule III of the
Page 106 of 404

LAW ON PROPERTY

Rules of Court which provides that "criminal and civil actions

arising from the same offense may be instituted separately,
but after the criminal action has been commenced the civil
action cannot be instituted until final judgment has been
rendered in the criminal action." 2
Petitioners appealed from that order to the Intermediate
Appellate Court. 3
On February 17, 1986, respondent Appellate Court, First Civil
Cases Division, promulgated a decision 4 affirming the
questioned order of the trial court. 5 A motion for
reconsideration filed by petitioners was denied by the
Appellate Court in its resolution dated May 19, 1986. 6
Directly at issue is the propriety of the dismissal of Civil
Case No. TG-748 in accordance with Section 3 (a) of Rule
111 of the Rules of Court. Petitioners contend that the trial
court and the Appellate Court erred in dismissing Civil Case
No. TG-748 since it is predicated on a quasi-delict.
Petitioners have raised a valid point.
It is axiomatic that the nature of an action filed in court is
determined by the facts alleged in the complaint as
constituting the cause of action. 7 The purpose of an action
or suit and the law to govern it, including the period of
prescription, is to be determined not by the claim of the
party filing the action, made in his argument or brief, but
rather by the complaint itself, its allegations and prayer for
relief. 8 The nature of an action is not necessarily
determined or controlled by its title or heading but the body
of the pleading or complaint itself. To avoid possible denial
of substantial justice due to legal technicalities, pleadings as
well as remedial laws should be liberally construed so that
the litigants may have ample opportunity to prove their
respective claims. 9
Quoted hereunder are the pertinent portions of petitioners'
complaint in Civil Case No. TG-748:
4) That within defendant's land, likewise located at Biga
(Biluso), Silang, Cavite, adjacent on the right side of the
aforesaid land of plaintiffs, defendant constructed
waterpaths starting from the middle-right portion thereof

leading to a big hole or opening, also constructed by

defendant, thru the lower portion of its concrete hollowblocks fence situated on the right side of its cemented gate
fronting the provincial highway, and connected by
defendant to a man height inter-connected cement culverts
which were also constructed and lain by defendant crosswise beneath the tip of the said cemented gate, the left-end
of the said inter-connected culverts again connected by
defendant to a big hole or opening thru the lower portion of
the same concrete hollowblocks fence on the left side of the
said cemented gate, which hole or opening is likewise
connected by defendant to the cemented mouth of a big
canal, also constructed by defendant, which runs northward
towards a big hole or opening which was also built by
defendant thru the lower portion of its concrete hollowblocks fence which separates the land of plaintiffs from that
of defendant (and which serves as the exit-point of the
floodwater coming from the land of defendant, and at the
same time, the entrance-point of the same floodwater to the
land of plaintiffs, year after year, during rainy or stormy
seasons.
5) That moreover, on the middle-left portion of its land just
beside the land of plaintiffs, defendant also constructed an
artificial lake, the base of which is soil, which utilizes the
water being channeled thereto from its water system thru
inter-connected galvanized iron pipes (No. 2) and
complimented by rain water during rainy or stormy seasons,
so much so that the water below it seeps into, and the
excess water above it inundates, portions of the adjoining
land of plaintiffs.
6) That as a result of the inundation brought about by
defendant's aforementioned water conductors, contrivances
and manipulators, a young man was drowned to death,
while herein plaintiffs suffered and will continue to suffer, as
follows:
a) Portions of the land of plaintiffs were eroded and
converted to deep, wide and long canals, such that the
same can no longer be planted to any crop or plant.
b) Costly fences constructed by plaintiffs were, on several
occasions, washed away.
Page 107 of 404

LAW ON PROPERTY

c) During rainy and stormy seasons the lives of plaintiffs and

their laborers are always in danger.
d) Plants and other improvements on other portions of the
land of plaintiffs are exposed to destruction. ... 10
A careful examination of the aforequoted complaint shows
that the civil action is one under Articles 2176 and 2177 of
the Civil Code on quasi-delicts. All the elements of a quasidelict are present, to wit: (a) damages suffered by the
plaintiff, (b) fault or negligence of the defendant, or some
other person for whose acts he must respond; and (c) the
connection of cause and effect between the fault or
negligence of the defendant and the damages incurred by
the plaintiff. 11
Clearly, from petitioner's complaint, the waterpaths and
contrivances built by respondent corporation are alleged to
have inundated the land of petitioners. There is therefore,
an assertion of a causal connection between the act of
building these waterpaths and the damage sustained by
petitioners. Such action if proven constitutes fault or
negligence which may be the basis for the recovery of
damages.
In the case of Samson vs. Dionisio, 12 the Court applied
Article 1902, now Article 2176 of the Civil Code and held
that "any person who without due authority constructs a
bank or dike, stopping the flow or communication between a
creek or a lake and a river, thereby causing loss and
damages to a third party who, like the rest of the residents,
is entitled to the use and enjoyment of the stream or lake,
shall be liable to the payment of an indemnity for loss and
damages to the injured party.
While the property involved in the cited case belonged to
the public domain and the property subject of the instant
case is privately owned, the fact remains that petitioners'
complaint sufficiently alleges that petitioners have sustained
and will continue to sustain damage due to the waterpaths
and contrivances built by respondent corporation. Indeed,
the recitals of the complaint, the alleged presence of
damage to the petitioners, the act or omission of respondent

corporation supposedly constituting fault or negligence, and

the causal connection between the act and the damage,
with no pre-existing contractual obligation between the
parties make a clear case of a quasi delict or culpa
aquiliana.
It must be stressed that the use of one's property is not
without limitations. Article 431 of the Civil Code provides
that "the owner of a thing cannot make use thereof in such
a manner as to injure the rights of a third person." SIC
UTERE TUO UT ALIENUM NON LAEDAS. Moreover, adjoining
landowners have mutual and reciprocal duties which require
that each must use his own land in a reasonable manner so
as not to infringe upon the rights and interests of others.
Although we recognize the right of an owner to build
structures on his land, such structures must be so
constructed and maintained using all reasonable care so
that they cannot be dangerous to adjoining landowners and
can withstand the usual and expected forces of nature. If
the structures cause injury or damage to an adjoining
landowner or a third person, the latter can claim
indemnification for the injury or damage suffered.
Article 2176 of the Civil Code imposes a civil liability on a
person for damage caused by his act or omission
constituting fault or negligence, thus:
Article 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of
this chapter.
Article 2176, whenever it refers to "fault or negligence",
covers not only acts "not punishable by law" but also acts
criminal in character, whether intentional and voluntary or
negligent. Consequently, a separate civil action lies against
the offender in a criminal act, whether or not he is criminally
prosecuted and found guilty or acquitted, provided that the
offended party is not allowed, (if the tortfeasor is actually
charged also criminally), to recover damages on both
scores, and would be entitled in such eventuality only to the
Page 108 of 404

LAW ON PROPERTY

bigger award of the two, assuming the awards made in the

two cases vary. 13
The distinctness of quasi-delicta is shown in Article 2177 of
the Civil Code, which states:
Article 2177. Responsibility for fault or negligence under the
preceding article is entirely separate and distinct from the
civil liability arising from negligence under the Penal Code.
But the plaintiff cannot recover damages twice for the same
act or omission of the defendant.
According to the Report of the Code Commission "the
foregoing provision though at first sight startling, is not so
novel or extraordinary when we consider the exact nature of
criminal and civil negligence. The former is a violation of the
criminal law, while the latter is a distinct and independent
negligence, which is a "culpa aquiliana" or quasi-delict, of
ancient origin, having always had its own foundation and
individuality, separate from criminal negligence. Such
distinction between criminal negligence and "culpa extracontractual" or "cuasi-delito" has been sustained by
decisions of the Supreme Court of Spain ... 14
In the case of Castillo vs. Court of Appeals, 15 this Court
held that a quasi-delict or culpa aquiliana is a separate legal
institution under the Civil Code with a substantivity all its
own, and individuality that is entirely apart and independent
from a delict or crime a distinction exists between the
civil liability arising from a crime and the responsibility for
quasi-delicts or culpa extra-contractual. The same
negligence causing damages may produce civil liability
arising from a crime under the Penal Code, or create an
action for quasi-delicts or culpa extra-contractual under the
Civil Code. Therefore, the acquittal or conviction in the
criminal case is entirely irrelevant in the civil case, unless, of
course, in the event of an acquittal where the court has
declared that the fact from which the civil action arose did
not exist, in which case the extinction of the criminal liability
would carry with it the extinction of the civil liability.
In Azucena vs. Potenciano, 16 the Court declared that in
quasi-delicts, "(t)he civil action is entirely independent of
the criminal case according to Articles 33 and 2177 of the

Civil Code. There can be no logical conclusion than this, for

to subordinate the civil action contemplated in the said
articles to the result of the criminal prosecution whether it
be conviction or acquittal would render meaningless the
independent character of the civil action and the clear
injunction in Article 31, that his action may proceed
independently of the criminal proceedings and regardless of
the result of the latter."
WHEREFORE, the assailed decision dated February 17, 1986
of the then Intermediate Appellate Court affirming the order
of dismissal of the Regional Trial Court of Cavite, Branch 18
(Tagaytay City) dated August 17, 1984 is hereby REVERSED
and SET ASIDE. The trial court is ordered to reinstate Civil
Case No. TG-748 entitled "Natividad V. Andamo and
Emmanuel R. Andamo vs. Missionaries of Our Lady of La
Salette Inc." and to proceed with the hearing of the case
with dispatch. This decision is immediately executory. Costs
against respondent corporation.
ARTICLE 448
G.R. No. L-175

April 30, 1946

DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO,

petitioners,
vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE
NATIVIDAD, Judge of First Instance of Pangasinan,
respondents.
Leoncio R. Esliza for petitioners.
Mauricio M. Monta for respondents.
MORAN, C.J.:
This is a petition for certiorari arising from a case in the
Court of First Instance of Pangasinan between the herein
respondents Elias Hilario and his wife Dionisia Dres as
plaintiffs, and the herein petitioners Damian, Francisco and
Luis, surnamed Ignacio, as defendants, concerning the
ownership of a parcel of land, partly rice-land and partly
residential. After the trial of the case, the lower court,
presided over by Hon. Alfonso Felix, rendered judgment
holding plaintiffs as the legal owners of the whole property
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but conceding to defendants the ownership of the houses

and granaries built by them on the residential portion with
the rights of a possessor in good faith, in accordance with
article 361 of the Civil Code. The dispositive part of the
decision, hub of this controversy, follows:
Wherefore, judgment is hereby rendered declaring:
(1) That the plaintiffs are the owners of the whole property
described in transfer certificate of title No. 12872 (Exhibit A)
issued in their name, and entitled to the possession of the
same;
(2) That the defendants are entitled to hold the position of
the residential lot until after they are paid the actual market
value of their houses and granaries erected thereon, unless
the plaintiffs prefer to sell them said residential lot, in which
case defendants shall pay the plaintiffs the proportionate
value of said residential lot taking as a basis the price paid
for the whole land according to Exhibit B; and
(3) That upon defendant's failure to purchase the residential
lot in question, said defendants shall remove their houses
and granaries after this decision becomes final and within
the period of sixty (60) days from the date that the court is
informed in writing of the attitude of the parties in this
respect.
No pronouncement is made as to damages and costs.
Once this decision becomes final, the plaintiffs and
defendants may appear again before this court for the
purpose of determining their respective rights under article
361 of the Civil Code, if they cannot come to an extrajudicial settlement with regard to said rights.
Subsequently, in a motion filed in the same Court of First
Instance but now presided over by the herein respondent
Judge Hon. Felipe Natividad, the plaintiffs prayed for an
order of execution alleging that since they chose neither to
pay defendants for the buildings nor to sell to them the
residential lot, said defendants should be ordered to remove
the structure at their own expense and to restore plaintiffs
in the possession of said lot. Defendants objected to this

motion which, after hearing, was granted by Judge

Natividad. Hence, this petition by defendants praying for (a)
a restraint and annulment of the order of execution issued
by Judge Natividad; (b) an order to compel plaintiffs to pay
them the sum of P2,000 for the buildings, or sell to them the
residential lot for P45; or (c), a rehearing of the case for a
determination of the rights of the parties upon failure of
extra-judicial settlement.
The judgment rendered by Judge Felix is founded on articles
361 and 453 of the Civil Code which are as follows:
ART. 361. The owner of land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the work, sowing or planting, after
the payment of the indemnity stated in articles 453 and
454, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent.
ART. 453. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain
the thing until such expenses are made good to him.
Useful expenses shall be refunded to the possessor in good
faith with the same right of retention, the person who has
defeated him in the possession having the option of
refunding the amount of the expenses or paying the
increase in value which the thing may have acquired in
consequence thereof.
The owner of the building erected in good faith on a land
owned by another, is entitled to retain the possession of the
land until he is paid the value of his building, under article
453. The owner of the land, upon the other hand, has the
option, under article 361, either to pay for the building or to
sell his land to the owner of the building. But he cannot, as
respondents here did, refuse both to pay for the building
and to sell the land and compel the owner of the building to
remove it from the land where it is erected. He is entitled to
such remotion only when, after having chosen to sell his
land, the other party fails to pay for the same. But this is not
the case before us.

Page 110 of 404

LAW ON PROPERTY

We hold, therefore, that the order of Judge Natividad

compelling defendants-petitioners to remove their buildings
from the land belonging to plaintiffs-respondents only
because the latter chose neither to pay for such buildings
not to sell the land, is null and void, for it amends
substantially the judgment sought to be executed and is,
furthermore, offensive to articles 361 and 453 of the Civil
Code.
There is, however, in the decision of Judge Felix a question
of procedure which calls for the clarification, to avoid
uncertainty and delay in the disposition of cases. In that
decision, the rights of both parties are well defined under
articles 361 and 453 of the Civil Code, but it fails to
determine the value of the buildings and of the lot where
they are erected as well as the periods of time within which
the option may be exercised and payment should be made,
these particulars having been left for determination
apparently after the judgment has become final. This
procedure is erroneous, for after the judgment has become
final, no additions can be made thereto and nothing can be
done therewith except its execution. And execution cannot
be had, the sheriff being ignorant as to how, for how much,
and within what time may the option be exercised, and
certainly no authority is vested in him to settle these
matters which involve exercise of judicial discretion. Thus
the judgment rendered by Judge Felix has never become
final, it having left matters to be settled for its completion in
a subsequent proceeding, matters which remained unsettled
up to the time the petition is filed in the instant case.
For all the foregoing, the writ of execution issued by Judge
Natividad is hereby set aside and the lower court ordered to
hold a hearing in the principal case wherein it must
determine the prices of the buildings and of the residential
lot where they are erected, as well as the period of time
within which the plaintiffs-respondents may exercise their
option either to pay for the buildings or to sell their land,
and, in the last instance, the period of time within which the
defendants-petitioners may pay for the land, all these
periods to be counted from the date the judgment becomes
executory or unappealable. After such hearing, the court
shall render a final judgment according to the evidence
presented by the parties.

The costs shall be paid by plaintiffs-respondents.

G.R. No. L-8139

October 24, 1955

BELEN UY TAYAG and JESUS B. TAYAG, petitioners,

vs.
ROSARIO YUSECO, JOAQUIN C. YUSECO and THE COURT OF
APPEALS, respondents.
Pelaez and Jalandoni for petitioners.
Yuseco, Abdon, Yuseco and Narvasa for respondents.
MONTEMAYOR, J.:
This is an appeal by certiorari by petitioners Belen Uy Tayag
and her husband Jesus B. Tayag from the decision of the
Court of Appeals of April 23, 1954, affirming the decision of
the Court of First Instance of Manila. The facts in this case as
may be gathered from the records and as found by the
Court of Appeals may be briefly stated as follows. In and
prior to the year 1930 Atty. Joaquin C. Yuseco had been
rendering professional services to Maria Lim, owner of lots
11-A and 11-B, block 2251 of the Government Subdivision
known as Hacienda de San Lazaro covered by transfer
certificates of title Nos. 36400 and 36401 of the Register of
Deeds of Manila. To show her appreciation of the service
rendered to her Maria offered the two lots to Atty. Yuseco
and his wife Rosario Yuseco for them to build on, and
accepting the offer, the Yusecos built a house and an annex
for servants quarters on the two lots which improvements at
present may be reasonably valued at P50,000. Although
Atty. Yuseco claims that the two lots were donated to him,
he could exhibit no evidence of said donation and the
certificates of title already mentioned remained in the name
of Maria. There is reason to believe that at least during her
lifetime and while she remained owner of the two lots, it was
her desire to have the Yusecos occupy the land free. But to
go through the formalities and to legalize the possession of
the two lots, after the house and the annex were built, there
was executed a lease contract to the effect that the lease
was to run for a period of five years, with a rental of P120 a
year; that the owner of the lots was to pay all land taxes,
and that failure to pay the rent when due would be sufficient
Page 111 of 404

LAW ON PROPERTY

cause for the recission of the contract. This agreement was

noted on the certificates of title.
On November 29, 1945, a few days before her death, Maria
sold the two lots to her daughter Belen Uy married to Jesus
B. Tayag for and in consideration of the sum of P4,000. The
new owners in 1946 asked the Yusecos to remove their
houses from the land because Belen and her husband
planned to build their own house on the two lots, or else pay
a monthly rent of P120. Because of the failure of the Yusecos
to comply with the demand, Belen assisted by her husband
filed an action of ejectment in the Municipal Court of Manila
which later rendered judgment for the plaintiffs and against
the defendants "for the restitution of the premises described
in the complaint and for the recovery of a monthly rental of
P100 from November 30, 1945, up to the date of restitution,
and for cost." On appeal by the defendants to the Court of
First Instance of Manila, the latter rendered judgment, the
dispositive part of which reads as follows:
Wherefore judgment is hereby rendered declaring the
plaintiff, Belen Uy Tayag, to be entitled to the possession of
the two parcels of land described in the complaint upon
payment by her to the defendants of the sum of P50,000,
which is the value of the two houses they had built thereon;
but in the event said plaintiff shall not be in a position to pay
said amount within 90 days from the date this decision shall
become final, the defendants are hereby declared to be
entitled to purchase the two parcels of land in question for
the sum P10,000, within 90 days from the date the
defendants shall have failed to buy the house. In the
meantime, the two parcels of land without any obligation
thereof. No pronouncement is hereby made as to costs.
On appeal by the plaintiffs to the Court of Appeals said court
found that the Yusecos were builders in good faith under
article 448 of the new Civil Code; and that as such builders
in good faith, they cannot be required to remove their house
and the annex unless they were paid the value thereof. The
Court of Appeals further approved P50,000 and P10,000 as
the reasonable values of the house and the two lots,
respectively, as found by the Court of First Instance and that
the Yusecos as builders in good faith will begin to pay rent
only when the plaintiffs as owners of the land are unable or

choose not to exercise their right to purchase the land, but

in the present case, neither partly has expressed his
willingness or inability to exercise the right corresponding to
him under article 448 of the new Civil Code, hence the
payment of rent is not in order. The Court of Appeals
affirmed the decision of the Court of First Instance.
Appellants Belen and her husband Jesus Tayag filed the
present petition for review of the decision of the Court of
Appeals, and in their brief assign the following errors:
I
The Court of Appeals committed a grave error of law when it
decided an issue foreign to that raised in an ejectment case,
for in so doing it acted without jurisdiction over the subject
matter.
II
Granting, arguendo, that there was jurisdiction to determine
an issue other than that raised in an ejectment case, the
Court of Appeals committed a grave error of law in holding
that the rights of Belen Uy Tayag and Jesus B. Tayag, owners
of the land, and those of Rosario Yuseco and Joaquin C.
Yuseco, owner of the building, should be resolved in
accordance with the provisions of Article 448 (formerly
Article 361) of the Civil Code of the Philippines.
III
Granting, further, for the sake of argument only, that Article
448 of the Civil Code of the Philippines should govern the
rights of the parties herein, the Court of Appeals gravely
abused its discretion and committed a serious error of law
when it affirmed the judgment of the trial court which, in
effect, compels the owner of the land to sell it to the owner
of the building.
IV
The Court of Appeals gravely erred in holding that the
petitioners Belen Uy Tayag and Jesus B. Tayag shall be
entitled to the possession of the land described in the
Page 112 of 404

LAW ON PROPERTY

complaint upon payment of the sum of P50,000 but in the

event that they are not in a position to pay said amount
within 90 days from the date the decision shall have
become final, the respondents Rosario Yuseco and Joaquin C.
Yuseco shall be entitled to purchase the land in question for
the sum of P10,000.
Petitioners claim that the Court of First Instance and the
Court of Appeals lacked jurisdiction to decide the case as
they did for the reason that the only issue involved in an
ejectment case is actual possession and that under Rule 72,
section 6, the only judgment that may be rendered in such a
case is for the defendant to recover costs in the event that
the court find that the complaint is not true, or if it finds the
complaint to be true to render judgment for the plaintiff for
the restitution of the premises, for the sum justly due as
arrears of rent or as reasonable compensation for the use
and occupation of the premises, and for costs. But according
to petitioners, in spite of this legal provision both courts
went further and applied the provision of article 448 of the
new Civil Code.
In theory, and speaking of ordinary ejectment cases,
petitioners may be right; that is to say, if the lessee or
occupant has not built anything on the premises, payment
of rent would be a valid and satisfactory solution of the
problem; but where the occupant has built on the land,
especially where said building is substantial and valuable,
the courts even in ejectment cases are bound to take
cognizance of said fact and when they find that the
construction or planting had been effected in good faith,
instead of dismissing the complaint and suggesting to the
parties to observe and follow the provisions of article 361 or
article 448 of the old and the new Civil Code of the
Philippines, respectively, and if they cannot agree, to file a
new action, not only to enforce or defend the respective
rights of the parties but to assess the value of the land and
of the improvement as well, the courts in order to avoid
multiplicity of actions and to administer practical and
speedy justice may, as was done in this case, apply the
provisions of the Civil Code relative to builders specially
since there is no question as to the ownership of the land as
shown by the certificates of title, and the ownership of the
buildings.

Petitioners insist that the relation between them and the

respondents is that of lessor and lessee and in support of
their contention they point to the contract of lease between
Maria Lim and the Yusecos executed in 1930. As already
stated, the Court of Appeals found respondents to be
builders in good faith and that finding is conclusive. In
connection with said finding, we are of the opinion that the
Yusecos in the mistaken belief that the two lots were being
given to them free constructed the improvements in
question, and that as already stated, the execution and
registration of the contract of lease was a mere formality to
legalize the occupation of the lots. Despite the belief of the
Yusecos about the lots being donated to them, there is every
reason to believe that what Maria Lim intended was to keep
the title to the land but allow the Yusecos to occupy the
same free, at least as long as she kept said title. This
arrangement would appear to have been known to Belen,
Maria's daughter, when the two lots were transferred to her
a few days before Maria died, because as observed by the
Court of Appeals although the Yusecos had paid no rent
since the year 1930 when they constructed the two
buildings, Belen in 1946, one year after the land was
transferred to her, demanded rents not for the period of 15
or 16 years but only from 1946. This action of hers neither
supports nor strengthens her theory that the Yusecos since
1930 were mere lessees and continued to be such after
Belen acquired the lots in question.
It will be remembered that the construction in good faith
was effected in 1930 and that good faith of the builders may
be considered as ended in 1946 when the demand for rent
was made. It is, therefore, clear that Art. 361 of the old Civil
Code instead of article 448 of the new Civil Code is
applicable for the reason that the new Civil Code did not go
into effect until 1950. Article 361 of the old Civil Code reads
as follows:
Art. 361. The owner of land on which anything has been
built, sown, or planted in good faith, shall be entitled to
appropriate the things so built, sown or planted, upon
paying the compensation mentioned in Article 453 and 454,
or to compel the person who has built or planted to pay him
Page 113 of 404

LAW ON PROPERTY

the value of the land, and the person who sowed thereon to
pay the proper rent therefor.
The above-quoted legal provision is clear and it is now up to
the parties, particularly the petitioners to act and make their
choice. Since the Court of Appeals has found that neither
party has expressed its desire or willingness to do the thing
or things which by law they are authorized or compelled to
perform, the courts cannot disturb their present status and
naturally, payment of rent by respondent for the present, is
not in order.
Petitioners question the correctness of the amount of
P50,000 fixed by the trial court and approved by the Court
of Appeals, as the value of the improvements, claiming that
under article 546 of the new Civil Code (taken from article
453 of the old Civil Code) they (petitioners) as owners of the
land have the option of either refunding the amount spent
for the construction of the two buildings, said to be only
P18,000 or "paying him the increase in value which the
thing has acquired by reason thereof." The contention of
petitioners is well taken.
Affirming the decision of the Court of Appeals in so far as it
finds and declares respondents to be possessors in good
faith, let this case be remanded to the trial court for further
proceedings, particularly to give an opportunity to plaintiffspetitioners to exercise their choice and option; and for
purposes of said choice and option the trial court will admit
evidence and make a finding as to the amount of the useful
expenditures or "the increase in value which the thing has
acquired by reason thereof", under article 453 of the old
Civil Code, to be refunded or paid by the petitioners should
they choose to appropriate the buildings; "the value of the
land" under article 361 of the same Code, to be paid by the
defendants-respondents in case plaintiffs-petitioner elect to
compel them to buy the land. No costs.
G.R. No. L-14043

April 16, 1959

BELEN UY TAYAG, ET AL., petitioners,

vs.
ROSARIO YUSECO, ET AL., and HON. ANTONIO CAIZARES,
ETC., respondents.

Uy, Artiaga and Zaragosa for petitioners.

Yuseco, Abdon and Yuseco for respondents.
MONTEMAYOR, J.:
This is a long drawn out litigation that has lasted many
years; in its first phase, it has involved a long decision by
the Court of Appeals and a resolution of this Tribunal
dismissing a petition for certiorari to review said last
decision of the Court of Appeals. The third phase of the
litigation is the present petition for mandamus to compel
the lower court to approve the record on appeal filed by
petitioners, wherein they tried to appeal the order of
execution of the trial court to implement the last decision of
the Court of Appeals.
For a clear and comprehensive of the first part of the history
of this case, as well as the issues involved therein and the
determination thereof, we can do no better than reproduce a
pertinent portion of the well written second decision of the
Court of Appeals, penned by Justice Felipe Natividad, based
in part on our aforementioned decision in the first phase of
the litigation:
This case is once more before this Court on the appeal taken
by the plaintiff from an order of the Court of First Instance of
Manila fixing the value of the two buildings involved therein
at P50,000 and providing that the plaintiffs, should pay that
amount to the defendants if they desire to appropriate said
buildings.
The records disclose that prior to the year 1930 defendant
Joaquin C. Yuseco, an attorney-at-law, had been rendering
without compensation professional services to Maria Lim. To
show her appreciation of such services, Maria Lim offered to
Joaquin C. Yuseco, for them to build a house thereon, Lots
11-A and 11-B, Block 2215, of the Hacienda de San Lazaro,
registered in her name under Transfer Certificate of Nos.
3640 and 36401, Office of the Register of Deeds of the City
of Manila. The Yuseco accepted the offer, and in the middle
part of that year they built a dwelling house and an annex
for garage and servant quarters on said lots. To legalize the
possession of said lots by the Yuseco, Maria Lim and the
Page 114 of 404

LAW ON PROPERTY

Yuseco executed a contract of lease them, which was to run

for a period of five years, with a yearly rental of P120.
On November 29, 1945, a few days before her death, Maria
Lim sold the two lots above referred to her daughter,
plaintiff Belen Uy Tayag, married to Jesus B. Tayag, for the
sum of P4,000. In the year 1946, the Tayags asked the
Yusecos to remove their house from the lots, or else pay to
them a monthly rent of P120 thereof. The latter refused.
Because of this attitude of the Yusecos, the Tayags brought
against the latter in the Municipal Court of the City of Manila
an action of ejection for the restitution of the lots to them
and the recovery of a monthly rental of P500 from
November 30, 1945, up to the date of the restitution.
Judgment was rendered in that court in favor of the
plaintiffs. The defendants appealed.
The case was duly tried in the Court of First Instance of
Manila. After such trial, that court rendered judgment
adjudicating to the plaintiff Belen Uy Tayag the possession of
the two lots involved in the action, with right to appropriate
the two buildings existing thereon upon payment to the
defendants of their value which it assessed fail to pay this
amount within 90 days after the right decision shall have
become final, the defendants shall have the right to
purchase said lots for the sum of P10,000 to be paid within
90 days from the date the plaintiffs shall have failed to buy
the buildings. From this judgment, the plaintiffs appealed.
The Court of Appeals, finding that the defendants were
possessors of the lots in good faith, affirmed the judgment
of the Court of first Instance of Manila. Not satisfied with this
judgment, the plaintiffs appealed therefrom by certiorari to
the Supreme Court. The latter, after due hearing, rendered
judgment, the dispositive part of which reads as follows:
Affirming the decisions of the Court of Appeals in so far as it
finds and declares respondents to be possessor in good
faith, let this case be remanded to the trial court for further
proceedings, particularly to give an opportunity to plaintiffspetitioners to exercise their choice and option; and for
purpose of said choice and option the trial court will admit
evidence and make a finding as to the amount of the useful
expenditures or "the increase in value which the things has

acquired by reason thereof", under Art. 453 of the old Civil

Code, to be refunded or paid by the petitioners should they
choose to appropriate the buildings; "the value of the land"
under Art. 361 of the same Code, to be paid by the
defendants-respondents in the case plaintiffs-petitioners
elect to compel them to buy the land.
Upon the case being remanded to the Court of First
Instance, of Manila, the latter, in consonance with the
Directive of the Supreme Court, issued on July 11, 1956, an
order requiring the plaintiffs to make their choice in writing
within 10 days whether they would purchase the buildings
erected on the lots, or allow the defendants to buy said lots,
and set the case for hearing on August 3, 1956, for the
reception of the evidence of the parties regarding the value
of said lots and buildings. Complying with this order, on July
20, 1956, the plaintiffs, through counsel, filed a
manifestation stating that
they are willing to sell the lot involved in this case, but that
they are willing to appropriate the building erected thereon
if its value is as it should be and is properly and fairly
determined pursuant to, and in accordance with the
evidence and the law.
On August 3, 1956, when the case was called for hearing,
the trial court, in open court, issued the following order:
"Considering that choice made by the plaintiffs, the Court is
of the opinion that the next step now is to adduce evidence
in connection with the value of the buildings erected on the
land pursuant to the dispositive part of the decision of the
Supreme Court. And the Court believes that under the
circumstances since the defendants will be the sellers, they
have the burden of proving the value of the buildings which
belong to them, giving the plaintiffs opportunity to offer
their own evidence as rebuttal. That is the ruling of the
Court."
The plaintiffs asked for a reconsideration of this order, and
for the issuance of another allowing them to adduce
evidence on the value of the buildings as well as the lots.
This motion was denied.
Page 115 of 404

LAW ON PROPERTY

The case was finally heard in the Court of First Instance of

Manila on August 23 and 24, 1956. Evidence of the plaintiffs
tends to show that the value of the two buildings erected on
the lots in question cannot be more than P40,000. That of
the defendants, on the other hand, establishes that the
value of the chalet erected on the lots was from P45,000 to
P50,000, and of the garage and dwelling house, from P5,000
to P6,000. Upon the evidence thus submitted, the trial court,
in its order of August 28, 1956, fixed the reasonable value of
the two buildings on the lots at P50,000, and ordered that
the amount should be paid by the plaintiffs to the
defendants if they desire to appropriate said buildings. This
is the order appealed from.
Appellants concede that the fact that the appellees were
possessors in good faith of the lots in question is res
judicata between the parties. They contend, however, first,
that the trial court erred in limiting the reception of the
evidence to the value of the buildings erected on the lots in
question, instead of admitting evidence to the value of the
buildings; and, second, that the trial court erred in assessing
at P50,000 the value of the two buildings on said lots.
1. Appellants contend under the first proposition that the
decision of the Supreme Court of October 24, 1955,
affirming the finding of the Court of Appeals that the
appellees were possessors of the lots in question in good
faith and ordering the remand of the case to the court of
origin, contemplates the reception of evidence as to the
values of both said lots and the buildings existing thereon
irrespective of the choice and option the appellants may
exercise in the premises, and, consequently, the trial court,
in limiting the reception of evidence on the value of the
buildings, failed to fully implement the instructions of the
Supreme Court.
"We do not share appellants' view. The pertinent part of the
decision of the Supreme court of October 24, 1955, reads as
follows:
". . . and for purposes for said choice and option the trial
court will admit evidence and make a finding as to the
amount of the useful expenditures or "the increase in value
which the thing has acquired by reason thereof", under Art.

453 of the old Civil Code, to be refunded or paid by the

petitioners should they choose to appropriate the buildings;
"the value of the land" under Art. 361 of the same Code, to
be paid by the defendants-respondents in case plaintiffspetitioners elect to compel them to buy the land.
It will be noted that the directive made in the above decision
is in alternative. The clause having reference to the
admission of evidence regarding the value of the buildings is
separated by a semi-colon from the clause referring to the
value of the lots on which said buildings are ]erected; and
the first clause ends with the phrase to be refunded or paid
to the petitioners should they choose to appropriate the
buildings', while the second clause terminates with the
phrase "to be paid by the defendants respondents in case
plaintiffs-petitioners elect to compel them to buy the land."
It would seem clear, therefore, from the language of the
decision that evidence as to the value of said buildings
should be admitted only if the appellants choose to
appropriate the buildings, and that, in case the appellants
should elect to compel the appellees to buy the lots, then
the evidence concerning the value of said lots must be
admitted. This, in our opinion, is the most sensible
construction that could be given to the decision above
referred to. Any other construction would bring about
unnecessary confusion in the evidence, to say nothing of the
valuable time of Court that will necessarily be wasted. For, it
stands to reason, that if the appellants chose not to sell the
lots to the appellees and to appropriate the buildings, which
cannot be ordered removed by the builders, the thing in
order would be the reception of evidence having reference
to the value of said buildings only. Evidence as to the value
of the lots would be superflous, impertinent and immaterial.
This was what the trial court did. We, therefore, find the
action of the trial court complained of in accordance with
law. . . .
Under the second decision of the court of Appeals, the value
of the two buildings in question fixed by the trial court at
P50,000 was reduced to P47,500. With that modification, the
decision of the trial court was affirmed. As already stated,
petitioners herein filed with us a petition for certiorari to
review said decision of the Court of Appeals, but we missed
Page 116 of 404

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said petition for lack of merit. In other words, we found said

decision to be correct.
When said decision finally reached the trial court, the latter
issued the corresponding writ of execution to collect from
petitioners the sum of P47,500 for the buildings in litigation.
Petitioners protested the writ of execution, claiming that it
varied the terms of the final decision, and upon the denial of
their petition for reconsideration, tried to appeal therefrom
by preparing the corresponding record on appeal. The trial
court refused to approve the record on appeal, saying that
the order for the writ of execution issued by it was fully in
accordance with the terms of the decision. Hence, the
present petition for mandamus to compel the trial court to
elevate the case to us on appeal.
We are satisfied that the trial court acted correctly in
ordering the writ of execution to issue. The main contention
of herein petitioners is that they still retain the right of
option, that is to say, to make a choice of either buying the
house or compelling the owners thereof to buy the land; and
that furthermore, even if they already had made that choice
nevertheless, they cannot be compelled to pay the price
fixed by the courts for the purchase of the said house,
because of their inability to pay the said price. We find both
arguments untenable. The question of whether petitioners
had finally made their choice, namely, to buy houses
because they were unwilling to sell the land, was directly in
issue before the Court of Appeals which definitely decided
that petitioners had made their choice not to sell their land
but to buy the houses built thereon. As we have already
said, by our refusal to review said decision of the Court of
Appeals, we agreed with the said Court on its stand on this
point; consequently, the trial court was fully warranted in
limiting the presentation of the evidence to the value of said
houses, not of the land.
As regards the alleged inability fixed by the courts at
P47,500, claimed by them to be a good reason for not
compelling them to buy the buildings, we cannot sanction
said theory. Otherwise, were that claim or contention to be
sustained, and if petitioners were allowed to change their
mind, repudiate their choice made in court not to sell the
land but to buy the buildings, and then compel the owners

of the houses, respondents herein, instead to buy land, then

what if respondents also claimed inability to pay the price of
the land, claiming that it is also a good and valid reason for
not compelling them, to make the purchase? How would this
litigation end, if it ever would end?
We hold that once a party, in conformity with a court
decision, has made his choice, and is accordingly ordered to
comply with the same by buying the building erected on his
land and pay the value thereof fixed by the courts, that the
duty is converted into a money obligation which can be
enforced by execution, regardless of the unwillingness and
alleged inability of the party concerned to pay and alleged
inability of the party concerned to pay the amount. Here
there is a final decision of the petitioners to buy the houses
and pay the value thereof. If petitioners were ready, willing
and able to pay the amount, there would be no need for
execution. It is precisely because they are unwilling and
allegedly unready and unable to pay the sum, that
execution issues. That is part of the judicial machinery of
due process in action, and we find nothing wrong in it.
As to the alleged absence in the order of execution for the
homeowners to make the transfer of the houses to the
petitioners, that is to be understood, that upon payment of
the price of the houses, the respondents herein will make
and execute the corresponding deed of transfer.
In view of the foregoing, the petition for mandamus is
hereby denied, with costs. The writ of preliminary injunction
heretofore issued is hereby ordered dissolved.
G.R. No. L-12486

August 31, 1960

LEONOR GRANA and JULIETA TORRALBA, petitioners,

vs.
THE COURT OF APPEALS, AURORA BONGATO and JARDENIO
SANCHEZ, respondents.
Tranquilino O. Calo, Jr. for petitioners.
E.D. Mercado, J.V. Ong and J.T. Gonzales for respondents.
GUTIERREZ DAVID, J.:
Page 117 of 404

LAW ON PROPERTY

This is a petition to review on certiorari a decision of the

Court of Appeals.

question is part of the adjoining land, Lot No. 310, which

belonged to their predecessor in interest.

Leonor Grana and Julieta Torralba, defendants below and

herein petitioners, were on April 13, 1951 sued by Aurora
Bongato and Jardenio Sanchez, respondents herein, before
the Court of First Instance of Agusan, for the recovery of 87
square meters of residential land. After trial, the court
rendered judgment declaring the plaintiffs, herein
respondents, owners of the land in controversy and ordering
petitioners to vacate and deliver it to said respondents and
to pay a monthly rental of P10.00 from the filing of the
complaint until they actually vacate the same, plus
attorney's fees and costs. The decision, on appeal, having
been affirmed by the Court of Appeals with the only
modification of disallowing the award for attorney's fees,
petitioners brought the case to this Court through the
present petition for review.

Petitioners' stand is untenable. No proof was presented to

show that the first survey was erroneous or that it included
part of the contigous land of petitioners' predecessor in
interest as part of the lot now covered by Original Certificate
of Title No. RO-72 (138). Note that the difference in area
between the land covered by said title and Lot No. 311 of
the resurvey plan is 65 square meters while the area of the
land in dispute if 87 square meters. And what is more, the
alleged sketch plan of the resurvey was not presented in
evidence.

The record discloses that sometime in 1909 a cadastral

survey of Butuan, Agusan, was made by the Bureau of
Lands. In that survey, the parcel of land here in question
was included as part of the lot belonging to Gregorio
Bongato and Clara Botcon for which Original Certificate of
Title No. RO-72 (138) was issued in their favor on February
12, 1923. On November 25, 1933, this lot was purchased by
the spouses Marcos Bongato and Eusebia More, and upon
their death, the land was inherited by the respondents
Aurora Bongato and Jardenio Sanchez, the former being the
daughter of Marcos Bongato by his first marriage while the
latter is the son of Eusebia More also by her first marriage.
Petitioners claim that the lands in Butuan were subsequently
resurveyed due to conflicts and overlapping of boundaries.
In that resurvey (TS-65 Butuan Cadastre), Gregorio
Bongato's lot, according to petitioners, was identified as Lot
No. 311 and that of Isidaria Trillo, their predecessor in
interest, as Lot No. 310. Citing the fact that Original
Certificate of Title No. RO-72 (138) covers 295 square
meters of land, while the sketch plan of the second
cadastral survey of Butuan shows that Lot No. 311 has only
230 square meters, petitioners maintain that it is the latter
area properly belongs to respondents and that the land in

Upon the other hand, it is not disputed that the land in

question is part of the lot covered by the Torrens title issued
way back in 1923 in the name of respondents' predecessor
in interest. Said title has not been contested up to the
present, and, therefore, has become inconvertible evidence
of the ownership of the land covered by it. Well settled is the
rule that a Torrens certificate of title becomes conclusive
and indefeasible after the lapse of the period within which it
may be impugned (Reyes, et al. vs. Borbon, et al., 50 Phil.,
791; Yumul vs. Rivera, et al., 64 Phil., 13).
Petitioners' contention that the Court of Appeals erred in not
granting their motion for new trial on the ground of newly
discovered evidence, likewise, cannot be sustained. The new
evidence sought to be introduced was the sketch plan of the
second survey, which, with the employment of reasonable
diligence would have easily been discovered and produced
at the trial. Anyway, even if presented at the result of the
case. If a subsequent certificate of title cannot be permitted
to prevail over a previous Torrens title (Reyes, et al, vs.
Borbon, et al., supra) with more reason should a resurvey
plan not to be allowed to alter or modify such title so as to
make the area of the land therein described agree with that
given in the plan. (See Government of the Philippines vs.
Arias, 36 Phil., 195).
Although without any legal and valid claim over the land in
question, petitioners, however, were found by the Court of
Appeals to have constructed a portion of their house
thereon in good faith. Under Article 361 of the old Civil Code
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(Article 448 of the new), the owner of the land on which

anything has been built in good faith shall have the right to
appropriate as his own faith shall have the right to
appropriate as his own the building, after payment to the
builder of necessary and useful expenses, and in the proper
case, expenses for pure luxury or mere pleasure, or to
oblige the builder to pay the price of the land. Respondents,
as owners of the land, have therefore the choice of either
appropriating the portion of petitioners' house which is on
their land upon payment of the proper indemnity to
petitioners, or selling to petitioners that part of their land on
which stands the improvement. It may here be pointed out
that it would be impractical for respondents to choose to
exercise the first alternative, i.e., buy that portion of the
house standing on their land, for in that event the whole
building might be rendered useless. The more workable
solution, it would seem, is for respondents to sell to
petitioners that part of their land on which was constructed
a portion of the latter's house. If petitioners are unwilling or
unable to buy, then they must vacate the land and must pay
rentals until they do so. Of course, respondents cannot
oblige petitioners to buy the land if its value is considerably
more than that of the aforementioned portion of the house.
If such be the case, then petitioners must pay reasonable
rent. The parties must come to an agreement as to the
conditions of the lease, and should they fail to do so, then
the court shall fix the same. (Article 361, old Civil Code;
Article 448 of the new).
In this connection, the appellate court erred in ordering
petitioners to pay monthly rentals of P10.00 from the date of
filing of the complaint until they actually vacate said land. A
builder in good faith may not be required to pay rentals. He
has a right to retain the land on which he has built in good
faith until he is reimbursed the expenses incurred by him.
(Miranda vs. Fadullon, et al., 97 Phil., 801; 51 Off. Gaz.,
6226, see also Martinez vs. Baganus, 28 Phil., 500; De
Guzman vs. De la Fuente, 55 Phil., 501; Kasilag vs.
Rodriguez, Off. Gaz., Supp., August 16, 1941, p. 247).
Petitioners further contend that he complaint should have
been dismissed for nonjoinder of an indispensable party, it
being alleged that their mother Maria Cupin, who owns the
land in question as part of her Lot No. 310, has not been

made a party defendant in the case. This contention, which

was not raised in the trial court, deserves scant
consideration. Petitioners clearly asserted ownership over
the land in dispute as well as over Lot No. 310 in their
answer to the complaint. They are consequently estopped
from alleging otherwise.
As to petitioners' assertion that they should have been
awarded damages alleged to have been suffered by them in
their counterclaim, suffice it to say that petitioners failed to
prove that they suffered any damage at all by reason of the
filing of the complaint. Indeed, in the light of the view we
have taken of the case, they could not have substantiated
their claim for damages.
In view of the foregoing, the appealed decision is modified in
the sense that respondents are hereby directed to exercise
within 30 days from this decision their option to either buy
the portion of the petitioners' house on their land or sell to
said petitioners the portion of their land and petitioners are
unwilling or unable to buy, then they must vacate the same
and must pay reasonable rent of P10.00 monthly from the
time respondents made their choice up to the time they
actually vacate the premises. But if the value of the eland is
considerably more than the value of the improvement, then
petitioners may elect to rent the land, in which case the
parties shall agree upon the terms of a lease. Should they
disagree, the court of origin is hereby instructed to
intervene and fix the terms thereof. Petitioners shall pay
reasonable rent of P10.00 monthly up to the time the parties
agree on the terms of the lease or until the curt fixes such
terms.
So ordered without pronouncement as to costs.
G.R. No. L-57348 May 16, 1985
FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.
Roberto D. Dineros for plaintiff-appellee.
Veil D. Hechanova for defendant-appellant.
Page 119 of 404

LAW ON PROPERTY

MELENCIO-HERRERA, J.:
This is an appeal from the Order of the former Court of First
Instance of Iloilo to the then Court of Appeals, which the
latter certified to this instance as involving pure questions of
law
Plaintiff-appellee, Francisco Depra, is the owner of a parcel
of land registered under Transfer Certificate of Title No.
T3087, known as Lot No. 685, situated in the municipality of
Dumangas, Iloilo, with an area of approximately 8,870
square meters. Agustin Dumlao, defendant-appellant, owns
an adjoining lot, designated as Lot No. 683, with an
approximate area of 231 sq. ms.
Sometime in 1972, when DUMLAO constructed his house on
his lot, the kitchen thereof had encroached on an area of
thirty four (34) square meters of DEPRA's property, After the
encroachment was discovered in a relocation survey of
DEPRA's lot made on November 2,1972, his mother, Beatriz
Depra after writing a demand letter asking DUMLAO to move
back from his encroachment, filed an action for Unlawful
Detainer on February 6,1973 against DUMLAO in the
Municipal Court of of Dumangas, docketed as Civil Case No
1, Said complaint was later amended to include DEPRA as a
party plain. plaintiff.
After trial, the Municipal Court found that DUMLAO was a
builder in good faith, and applying Article 448 of the Civil
Code, rendered judgment on September 29, 1973, the
dispositive portion of which reads:
Ordering that a forced lease is created between the parties
with the plaintiffs, as lessors, and the defendants as lessees,
over the disputed portion with an area of thirty four (34)
square meters, the rent to be paid is five (P5.00) pesos a
month, payable by the lessee to the lessors within the first
five (5) days of the month the rent is due; and the lease
shall commence on the day that this decision shall have
become final.

From the foregoing judgment, neither party appeal so that,

ff it were a valid judgment, it would have ordinarily lapsed
into finality, but even then, DEPRA did not accept payment
of rentals so that DUMLAO deposited such rentals with the
Municipal Court.
On July 15,1974, DEPRA filed a Complaint for Quieting of
Title against DUMLAO before the then Court of First Instance
of Iloilo, Branch IV (Trial Court), involving the very same 34
square meters, which was the bone of contention in the
Municipal Court. DUMLAO, in his Answer, admitted the
encroachment but alleged, in the main, that the present suit
is barred by res judicata by virtue of the Decision of the
Municipal Court, which had become final and executory.
After the case had been set for pre-trial, the parties
submitted a Joint Motion for Judgment based on the
Stipulation of Facts attached thereto. Premised thereon, the
Trial Court on October 31, 1974, issued the assailed Order,
decreeing:
WHEREFORE, the Court finds and so holds that the thirty
four (34) square meters subject of this litigation is part and
parcel of Lot 685 of the Cadastral Survey of Dumangas of
which the plaintiff is owner as evidenced by Transfer
Certificate of Title No. 3087 and such plaintiff is entitled to
possess the same.
Without pronouncement as to costs.
SO ORDERED.
Rebutting the argument of res judicata relied upon by
DUMLAO, DEPRA claims that the Decision of the Municipal
Court was null and void ab initio because its jurisdiction is
limited to the sole issue of possession, whereas decisions
affecting lease, which is an encumbrance on real property,
may only be rendered by Courts of First Instance.
Addressing out selves to the issue of validity of the Decision
of the Municipal Court, we hold the same to be null and void.
The judgment in a detainer case is effective in respect of
possession only (Sec. 7, Rule 70, Rules of Court). 1 The
Municipal Court over-stepped its bounds when it imposed
Page 120 of 404

LAW ON PROPERTY

upon the parties a situation of "forced lease", which like

"forced co-ownership" is not favored in law. Furthermore, a
lease is an interest in real property, jurisdiction over which
belongs to Courts of First Instance (now Regional Trial
Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2)
Batas Pambansa Blg. 129). 3 Since the Municipal Court,
acted without jurisdiction, its Decision was null and void and
cannot operate as res judicata to the subject complaint for
Queting of Title. Besides, even if the Decision were valid, the
rule on res judicata would not apply due to difference in
cause of action. In the Municipal Court, the cause of action
was the deprivation of possession, while in the action to
quiet title, the cause of action was based on ownership.
Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly
provides that judgment in a detainer case "shall not bar an
action between the same parties respecting title to the land.
" 4
Conceded in the Stipulation of Facts between the parties is
that DUMLAO was a builder in good faith. Thus,
8. That the subject matter in the unlawful detainer case,
Civil Case No. 1, before the Municipal Court of Dumangas,
Iloilo involves the same subject matter in the present case,
the Thirty-four (34) square meters portion of land and built
thereon in good faith is a portion of defendant's kitchen and
has been in the possession of the defendant since 1952
continuously up to the present; ... (Emphasis ours)
Consistent with the principle that our Court system, like any
other, must be a dispute resolving mechanism, we accord
legal effect to the agreement of the parties, within the
context of their mutual concession and stipulation. They
have, thereby, chosen a legal formula to resolve their
dispute to appeal ply to DUMLAO the rights of a "builder in
good faith" and to DEPRA those of a "landowner in good
faith" as prescribed in Article 448. Hence, we shall refrain
from further examining whether the factual situations of
DUMLAO and DEPRA conform to the juridical positions
respectively defined by law, for a "builder in good faith"
under Article 448, a "possessor in good faith" under Article
526 and a "landowner in good faith' under Article 448.

In regards to builders in good faith, Article 448 of the Civil

Code provides:
ART. 448. The owner of the land on which anything has been
built sown or planted in good faith,
shall have the right
to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546
and 548, or
to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof
(Paragraphing supplied)
Pursuant to the foregoing provision, DEPRA has the option
either to pay for the encroaching part of DUMLAO's kitchen,
or to sell the encroached 34 square meters of his lot to
DUMLAO. He cannot refuse to pay for the encroaching part
of the building, and to sell the encroached part of his land,
5 as he had manifested before the Municipal Court. But that
manifestation is not binding because it was made in a void
proceeding.
However, the good faith of DUMLAO is part of the Stipulation
of Facts in the Court of First Instance. It was thus error for
the Trial Court to have ruled that DEPRA is "entitled to
possession," without more, of the disputed portion implying
thereby that he is entitled to have the kitchen removed. He
is entitled to such removal only when, after having chosen
to sell his encroached land, DUMLAO fails to pay for the
same. 6 In this case, DUMLAO had expressed his willingness
to pay for the land, but DEPRA refused to sell.

Page 121 of 404

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The owner of the building erected in good faith on a land

owned by another, is entitled to retain the possession of the
land until he is paid the value of his building, under article
453 (now Article 546). The owner of the land, upon the other
hand, has the option, under article 361 (now Article 448),
either to pay for the building or to sell his land to the owner
of the building. But he cannot as respondents here did
refuse both to pay for the building and to sell the land and
compel the owner of the building to remove it from the land
where it erected. He is entitled to such remotion only when,
after having chosen to sell his land. the other party fails to
pay for the same (italics ours).
We hold, therefore, that the order of Judge Natividad
compelling defendants-petitioners to remove their buildings
from the land belonging to plaintiffs-respondents only
because the latter chose neither to pay for such buildings
nor to sell the land, is null and void, for it amends
substantially the judgment sought to be executed and is.
furthermore, offensive to articles 361 (now Article 448) and
453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario,
76 Phil. 605, 608[1946]).
A word anent the philosophy behind Article 448 of the Civil
rode.
The original provision was found in Article 361 of the
Spanish Civil Code; which provided:
ART. 361. The owner of land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the work, sowing or planting, after
the payment of the indemnity stated in Articles 453 and
454, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent.
As will be seen, the Article favors the owner of the land, by
giving him one of the two options mentioned in the Article.
Some commentators have questioned the preference in
favor of the owner of the land, but Manresa's opinion is that
the Article is just and fair.
. . . es justa la facultad que el codigo da al dueno del suelo
en el articulo 361, en el caso de edificacion o plantacion?

Algunos comentaristas la conceptuan injusta, y como un

extraordinario privilegio en favor de la propiedad territorial.
Entienden que impone el Codigo una pena al poseedor de
buena fe y como advierte uno de los comentaristas aludidos
'no se ve claro el por que de tal pena . . . al obligar al que
obro de buena fe a quedarse con el edificio o plantacion,
previo el pago del terreno que ocupa, porque si bien es
verdad que cuando edifico o planto demostro con este
hecho, que queria para si el edificio o plantio tambien lo es
que el que edifico o planto de buena fe lo hizo en la erronea
inteligencia de creerse dueno del terreno Posible es que, de
saber lo contrario, y de tener noticia de que habia que
comprar y pagar el terreno, no se hubiera decidido a plantar
ni a edificar. La ley obligandole a hacerlo fuerza su voluntad,
y la fuerza por un hecho inocente de que no debe ser
responsable'. Asi podra suceder pero la realidad es que con
ese hecho voluntario, aunque sea inocente, se ha
enriquecido torticeramente con perjuicio de otro a quien es
justo indemnizarle,
En nuestra opinion, el Codigo ha resuelto el conflicto de la
manera mas justa y equitativa y respetando en lo possible el
principio que para la accesion se establece en el art. 358. 7
Our own Code Commission must have taken account of the
objections to Article 361 of the Spanish Civil Code. Hence,
the Commission provided a modification thereof, and Article
448 of our Code has been made to provide:
ART. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and
548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.

Page 122 of 404

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Additional benefits were extended to the builder but the

landowner retained his options.
The fairness of the rules in Article 448 has also been
explained as follows:
Where the builder, planter or sower has acted in good faith,
a conflict of rights arises between the owners, and it
becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the
land. In view of the impracticability of creating a state of
forced co-ownership, the law has provided a just solution by
giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity, or to
oblige the builder or planter to pay for the land and the
sower to pay for the proper rent. It is the owner of the land
who is authorized to exercise the option, because his right is
older, and because, by the principle of accession, he is
entitled to the ownership of the accessory thing. (3 Manresa
213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs.
Chan Chico, G.R. No. 49167, April 30, 1949; Article applied:
see Cabral, et al vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori
vs. Velasco, [C.A.] 52 Off. Gaz. 2050). 8
WHEREFORE, the judgment of the trial Court is hereby set
aside, and this case is hereby ordered remanded to the
Regional Trial Court of Iloilo for further proceedings
consistent with Articles 448 and 546 of the Civil Code, as
follows:
1. The trial Court shall determine
a) the present fair price of DEPRA's 34 square meter area of
land;
b) the amount of the expenses spent by DUMLAO for the
building of the kitchen;
c) the increase in value ("plus value") which the said area of
34 square meters may have acquired by reason thereof, and
d) whether the value of said area of land is considerably
more than that of the kitchen built thereon.

2. After said amounts shall have been determined by

competent evidence, the Regional, Trial Court shall render
judgment, as follows:
a) The trial Court shall grant DEPRA a period of fifteen (15)
days within which to exercise his option under the law
(Article 448, Civil Code), whether to appropriate the kitchen
as his own by paying to DUMLAO either the amount of tile
expenses spent by DUMLAO f or the building of the kitchen,
or the increase in value ("plus value") which the said area of
34 square meters may have acquired by reason thereof, or
to oblige DUMLAO to pay the price of said area. The
amounts to be respectively paid by DUMLAO and DEPRA, in
accordance with the option thus exercised by written notice
of the other party and to the Court, shall be paid by the
obligor within fifteen (15) days from such notice of the
option by tendering the amount to the Court in favor of the
party entitled to receive it;
b) The trial Court shall further order that if DEPRA exercises
the option to oblige DUMLAO to pay the price of the land but
the latter rejects such purchase because, as found by the
trial Court, the value of the land is considerably more than
that of the kitchen, DUMLAO shall give written notice of such
rejection to DEPRA and to the Court within fifteen (15) days
from notice of DEPRA's option to sell the land. In that event,
the parties shall be given a period of fifteen (15) days from
such notice of rejection within which to agree upon the
terms of the lease, and give the Court formal written notice
of such agreement and its provisos. If no agreement is
reached by the parties, the trial Court, within fifteen (15)
days from and after the termination of the said period fixed
for negotiation, shall then fix the terms of the lease,
provided that the monthly rental to be fixed by the Court
shall not be less than Ten Pesos (P10.00) per month, payable
within the first five (5) days of each calendar month. The
period for the forced lease shall not be more than two (2)
years, counted from the finality of the judgment, considering
the long period of time since 1952 that DUMLAO has
occupied the subject area. The rental thus fixed shall be
increased by ten percent (10%) for the second year of the
forced lease. DUMLAO shall not make any further
constructions or improvements on the kitchen. Upon
expiration of the two-year period, or upon default by
Page 123 of 404

LAW ON PROPERTY

DUMLAO in the payment of rentals for two (2) consecutive

months, DEPRA shall be entitled to terminate the forced
lease, to recover his land, and to have the kitchen removed
by DUMLAO or at the latter's expense. The rentals herein
provided shall be tendered by DUMLAO to the Court for
payment to DEPRA, and such tender shall constitute
evidence of whether or not compliance was made within the
period fixed by the Court.
c) In any event, DUMLAO shall pay DEPRA an amount
computed at Ten Pesos (P10.00) per month as reasonable
compensation for the occupancy of DEPRA's land for the
period counted from 1952, the year DUMLAO occupied the
subject area, up to the commencement date of the forced
lease referred to in the preceding paragraph;
d) The periods to be fixed by the trial Court in its Precision
shall be inextendible, and upon failure of the party obliged
to tender to the trial Court the amount due to the obligee,
the party entitled to such payment shall be entitled to an
order of execution for the enforcement of payment of the
amount due and for compliance with such other acts as may
be required by the prestation due the obligee.
No costs,
ARTICLE 493
G.R. No. L-14429

June 30, 1962

RAMON MERCADO, BASILIA MERCADO joined by her

husband,
FRANCISCO RONQUILLO, plaintiffs-appellants,
vs.
PIO D. LIWANAG, defendant-appellee.
Patricio D. Senador and Ricardo D. Galano for plaintiffsappellants.
D. B. Melliza and D. M. Gangoso for defendant-appellee.
MAKALINTAL, J.:
The present appeal, taken by the plaintiff from the decision
of the Court of First Instance of Rizal (Quezon City), is before
us on a certification by the Court of Appeals, the questions

involved being purely legal. The case was submitted to the

trial court upon the following stipulation of facts:
1. That the complaint filed by the plaintiffs against the
defendant seeks to annul a Deed of Sale on the ground of
fraud and on the provisions of Article 493 of the Civil Code.
2. That on July 14, 1956, in the City of Manila, Philippines,
the plaintiff Ramon Mercado and the defendant Pio D.
Liwanag executed a Deed of Sale, photostat copy of which is
attached hereto marked as Annex "A" and forming an
integral hereof, covering a divided half and described in
meter and bounds, or an area of 2,196 square meters at
P7.00 per square meter or for a total amount of P15,372.00,
of a parcel of land situated at Kangkong, Quezon City,
covered Transfer Certificate of Title No. 20805 of the
Register of Deeds for the province of Rizal, now Quezon City:
3. That the said T.C.T. No. 20805 containing an area of 4,392
square meters, is issued in the name of the plaintiffs Ramon
Mercado and Basilia Mercado as co-owners PRO-INDIVISO,
and the sale was without the knowledge and consent of
plaintiff Basilia Mercado;
4. That out of the total area of 4,392 square meters, an area
consisting of 391 square meters was expropriated by the
National Power Corporation sometime in December 1953 at
a price of P10.00 per square meter, Civil Case No. Q-829
(Eminent Domain) of the Court of First Instance of Rizal,
Quezon City Branch, entitled "National Power Corporation,
plaintiff, versus Brigido Almodoban, et als., defendants," but
this fact of expropriation came to the knowledge of the
defendant Pio D. Liwanag upon the registration of the Deed
of Sale Annex "A". .
5. That pursuant to the Deed of Sale Annex "A" T.C.T. No.
32757 was issued in the name of Pio Liwanag and Basilia
photostat copy of which is hereto attached and marked as
Annex "B".
6. That defendant submits the receipt signed by plaintiff
Ramon Mercado dated July 14, 1956 photostat copy of which
is attached hereto and marked as Annex "C" and promissory
note of the same date for P10,000.00, photostat copy of
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which is attached hereto and marked is Annex "D" which are

both self-explanatory, but plaintiff Ramon Mercado disclaims
payment and receipt of such check and promissory note, the
check being uncashed and is still in the possession of Atty.
Eugenio de Garcia;
7. That plaintiffs and defendant respectfully submit for
resolution of this Honorable Court the issue of whether or
not the Deed of Sale Annex "A" court be annulled based in
the foregoing facts in relation to Article 493 of the Civil
Code, setting aside all other issues in the pleadings.
Upon the issue thus presented the trial court held that under
Article 493 of the Civil Code the sale in question was valid
and so dismissed the complaint, without costs. This ruling is
now assailed as erroneous.
Article 493 provides:
Each co-owner shall have the full ownership of his part and
of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation
or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be alloted to him in the
division upon the termination of the co-ownership.

I hereby sell, transfer and convey absolutely and irrevocably

unto said Pio D. Liwanag, his heirs, successors, and assigns
my rights, title and interest on my chosen portion of the
above described property which consist of one-half of
aforesaid ownership bounded on the West by Pacifico
Gahudo, on the North by Hacienda de Piedad and on the
South by Circumferential Road, consisting of 50 meters more
or less frontal length along Circumferential Road, and with a
total area of 2,196 square meters as indicated in Co-owners
Transfer Certificate of Title No. 20805.
Nevertheless, upon registration of the sale and cancellation
of transfer certificate of title No. 20805 in the names of the
previous co-owners, the new transfer certificate that was
issued (No. 32757) did not reproduce the description in the
instrument but carried the names of appellee Pio D. Liwanag
and Basilia Mercado as "co-owners pro-indiviso." There is no
suggestion by any of the parties that this new certificate of
title is invalid, irregular or inaccurate. There is no prayer
that it be canceled. As far as Basilia Mercado is concerned
she retains in all their integrity her rights as co-owner which
she had before the sale, and consequently, she has no
cause to complain. Much less has Ramon Mercado, for it was
he who was responsible for whatever indicia there may be in
the deed of sale that a determinate portion of the property
was being sold, as shown by the second paragraph thereof,
quoted without contradiction in appellee's brief as follows:

Appellants except to the application of this provision in this

case for the reason that in the deed of sale sought to be
annulled the vendor disposed of a divided and determinate
half of the land under co-ownership. The argument, as far as
it goes, seems to be tenable. What a co-owner may dispose
of under Article 493 is only his undivided aliquot share,
which shall be limited to the portion which may be allotted
to him upon the termination of the co-ownership. He has no
right to divide the property into parts and then convey one
part by metes and bounds. Lopez vs. Ilustre, 5 Phil. 567;
Gonzales, et al. vs. Itchon, et al., 47 O.G. 6290; Manresa,
Vol. 3, 7th ed. p. 630.

That the aforesaid Transfer Certificate of Title was originally

in my name, but was split into two equal parts by virtue of
my desire to donate to my sister-in-law Juana Gregorio an
equal half thereof with the understanding that I as donor
would have the absolute power to choose from the property
owned in common that part which I would like to segregate
for myself or my heir and assigns.

The pertinent recitals in the disputed deed of sale read:

The title is the final and conclusive repository of the rights of

the new co-owners. The question of whether or not the deed
of sale should be annulled must be considered in

And of course appellee himself not only does not challenge

the new certificate of title, wherein he appears as co-owner
of an undivided one-half share, but precisely relies upon it
for his defense in this action.

Page 125 of 404

LAW ON PROPERTY

conjunction with the title issued pursuant thereto. Since,

according to this title, what appellee acquired by virtue of
the sale is only an undivided half-share of the property,
which under the law the vendor Ramon Mercado had the
absolute right to dispose of, the trial court committed no
error in dismissing the action. The end-result of the
transaction is in accordance with Article 493 of the Civil
Code.1wph1.t
The other point raised by appellants refers to the statement
in the dispositive portion of the decision appealed from that
"the stipulation with regards to the deed of sale based on
the ground of fraud is insufficient for all purposes and
besides, no proof showing the allegation of such fraud exists
in the accord." It is contended that the trial court erred in
making such statement, the same being contrary to the
stipulation in which the parties expressly eliminated the
issue of fraud. From the entire context of the decision,
however, it can be gathered that the case was not decided
on the basis of the said issue. In any event, even if the court
did err in considering the question of fraud in spite of the
stipulation, the error is not a prejudicial one. As far as the
dismissal of the actions concerned, it makes no difference
whether fraud has not been proven or fraud has been
abandoned as an issue by express agreement.
WHEREFORE, the decision appealed from is affirmed, with
costs against appellants in this instance.
G.R. No. L-20136

June 23, 1965

IN RE: PETITION FOR ISSUANCE OF SEPARATE CERTIFICATE

OF TITLE.
JOSE A. SANTOS Y Diaz, petitioner-appellant,
vs.
ANATOLIO BUENCONSEJO, ET AL., respondents-appellees.
Segundo C. Mastrili for petitioner-appellant.
Manuel Calleja Rafael S. Lucila and Jose T. Rubio for
respondents-appellees.
CONCEPCION, J.:

Petitioner Jose A. Santos y Diaz seeks the reversal of an

order of the Court of First Instance of Albay, denying his
petition, filed in Cadastral Case No. M-2197, LRC Cad. Rec.
No. 1035, for the cancellation of original certificate of title
No. RO-3848 (25322), issued in the name of Anatolio
Buenconsejo, Lorenzo Bon and Santiago Bon, and covering
Lot No. 1917 of the Cadastral Survey of Tabaco, Albay, and
the issuance in lieu thereof, of a separate transfer certificate
of title in his name, covering part of said Lot No. 1917,
namely Lot No. 1917-A of Subdivision Plan PSD-63379.
The main facts are not disputed. They are set forth in the
order appealed from, from which we quote:
It appears that the aforementioned Lot No. 1917 covered by
Original Certificate of Title No. RO-3848 (25322) was
originally owned in common by Anatolio Buenconsejo to the
extent of undivided portion and Lorenzo Bon and Santiago
Bon to the extent of the other (Exh. B); that Anatolio
Buenconsejo's rights, interests and participation over the
portion abovementioned were on January 3, 1961 and by a
Certificate of Sale executed by the Provincial Sheriff of
Albay, transferred and conveyed to Atty. Tecla San Andres
Ziga, awardee in the corresponding auction sale conducted
by said Sheriff in connection with the execution of the
decision of the Juvenile Delinquency and Domestic Relations
Court in Civil Case No. 25267, entitled "Yolanda
Buenconsejo, et al. vs. Anatolio Buenconsejo"; that on
December 26, 1961 and by a certificate of redemption
issued by the Provincial Sheriff of Albay, the rights, interest,
claim and/or or participation which Atty. Tecla San Andres
Ziga may have acquired over the property in question by
reason of the aforementioned auction sale award, were
transferred and conveyed to the herein petitioner in his
capacity as Attorney-in-fact of the children of Anatolio
Buenconsejo, namely, Anastacio Buenconsejo, Elena
Buenconsejo and Azucena Buenconsejo (Exh. C).
It would appear, also, that petitioner Santos had redeemed
the aforementioned share of Anatolio Buenconsejo, upon the
authority of a special power of attorney executed in his
favor by the children of Anatolio Buenconsejo; that relying
upon this power of attorney and redemption made by him,
Santos now claims to have acquired the share of Anatolio
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LAW ON PROPERTY

Buenconsejo in the aforementioned Lot No. 1917; that as

the alleged present owner of said share, Santos caused a
subdivision plan of said Lot No. 1917 to be made, in which
the portion he claims as his share thereof has been marked
as Lot No. 1917-A; and that he wants said subdivision at No.
1917-A to be segregated from Lot No. 1917 and a certificate
of title issued in his name exclusively for said subdivision Lot
No. 1917-A.
As correctly held by the lower court, petitioner's claim is
clearly untenable, for: (1) said special power of attorney
authorized him to act on behalf of the children of Anatolio
Buenconsejo, and, hence, it could not have possibly vested
in him any property right in his own name; (2) the children
of Anatolio Buenconsejo had no authority to execute said
power of attorney, because their father is still alive and, in
fact, he and his wife opposed the petition of Santos; (3) in
consequence of said power of attorney (if valid) and
redemption, Santos could have acquired no more than the
share pro indiviso of Anatolio Buenconsejo in Lot No. 1917,
so that petitioner cannot without the conformity of the
other co-owners (Lorenzo and Santiago Bon), or a judicial
decree of partition issued pursuant to the provisions of Rule
69 of the new Rules of Court (Rule 71 of the old Rules of
Court) which have not been followed By Santos
adjudicate to himself in fee simple a determinate portion of
said Lot No. 1917, as his share therein, to the exclusion of
the other co-owners.
Inasmuch as the appeal is patently devoid of merit, the
order appealed from is hereby affirmed, with treble cost
against petitioner-appellant Jose A. Santos y Diaz. It is so
ordered.
G.R. No. L-24419

July 15, 1968

LEONORA ESTOQUE, plaintiff-appellant,

vs.
ELENA M. PAJIMULA, assisted by her husband CIRIACO
PAJIMULA, defendants-appellees.
Jesus P. Mapanao for plaintiff-appellant.
Vergara and Dayot for defendants-appellees.

REYES, J.B.L., J.:

Direct appeal from an order of the Court of First Instance of
La Union, in its Civil Case No. 1990, granting a motion to
dismiss the complaint for legal redemption by a co-owner
(retracto legal de comuneros) on account of failure to state
a cause of action.
The basic facts and issues are stated in the decision
appealed from, as follows:
Plaintiff based her complaint for legal redemption on a claim
that she is a co-owner of Lot No. 802, for having purchased
1/3 portion thereof, containing an area of 640 square meters
as evidenced by a deed of sale, Annex "A", which was
executed on October 28, 1951 by Crispina Perez de
Aquitania, one of the co-owners, in her favor.
On the other hand, the defendant, who on December 30,
1959 acquired the other 2/3 portion of Lot No. 802 from
Crispina Aquitania and her children, claimed that the
plaintiff bought the 1/3 southeastern portion, which is
definitely identified and segregated, hence there existed no
co-ownership at the time and after said plaintiff bought the
aforesaid portion, upon which right of legal redemption can
be exercised or taken advantage of.
From the complaint, it would appear that Lot No. 802 of the
Cadastral survey of Rosario, covered by original certificate
of title No. RO-2720 (N.A.) was originally owned by the late
spouses, Rosendo Perez and Fortunata Bernal, who were
survived by her children, namely, Crispina Perez, Lorenzo
Perez and Ricardo Perez. Ricardo Perez is also now dead. On
October 28, 1951, Crispina P. Vda. de Aquitania sold her
right and participation in Lot No. 802 consisting of 1/3
portion with an area of 640 square meters to Leonora
Estoque (Annex A of the complaint). On October 29, 1951,
Lorenzo Perez, Crispina Perez and Emilia P. Posadas, widow
of her deceased husband, Ricardo Perez for herself and in
behalf of her minor children, Gumersindo, Raquel, Emilio
and Ricardo, Jr., executed a deed of extrajudicial settlement
wherein Lorenzo Perez, Emilia P. Posadas and her minor
children assigned all their right, interest and participation in
Lot No. 802 to Crispina Perez (Annex B of the complaint). On
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December 30, 1959, Crispina Perez and her children Rosita

Aquitania Belmonte, Remedios Aquitania Misa, Manuel
Aquitania, Sergio Aquitania and Aurora Aquitania sold to
Elena Pajimula, the remaining 2/3 western portion of Lot No.
802 with an area of 958 square meters (Annex C of the
complaint).
The action of the plaintiff is premised on the claim of coownership. From the deed of sale executed in favor of the
plaintiff, it can be seen that the 1/3 portion sold to plaintiff is
definitely identified as the 1/3 portion located on the
southeastern part of Lot No. 802 and specifically bounded
on the north by De Guzman Street, on the east by Posadas
Street, on the south by Perez Street, and on the west by
remaining portion of the same lot, which contained an area
of 640 square meters. And in the deed of sale executed by
Crispina Perez and her children in favor of defendant Elena
Pajimula over the remaining 2/3 portion of Lot No. 802, said
portion is identified as the western portion of Lot No. 802
which is bounded on the north by De Guzman Street, on the
east by properties of Leonarda Estoque, on the south by the
national road and on the west by Lots Nos. 799 and 801,
containing an area of 598 square meters.
The appellant's stand is that the deed in her favor was
inoperative to convey the southeastern third of Lot 802 of
the Rosario Cadastre notwithstanding the description in the
deed itself, for the reason that the vendor, being a mere coowner, had no right to sell any definite portion of the land
held in common but could only transmit her undivided
share, since the specific portion corresponding to the selling
co-owner is not known until partition takes place (Lopez vs.
Ilustre, 5 Phil. 567; Ramirez vs. Bautista, 14 Phil. 528). From
this premise, the appellant argues that the sale in her favor,
although describing a definite area, should be construed as
having conveyed only the undivided 1/3 interest in Lot 802
owned at the time by the vendor, Crispina Perez Vda. de
Aquitania. Wherefore, when the next day said vendor
acquired the 2/3 interest of her two other co-owners, Lot
802 became the common property of appellant and Crispina
Perez. Therefore, appellant argues, when Crispina sold the
rest of the property to appellee Pajimula spouses, the former
was selling an undivided 2/3 that appellant, as co-owner,

was entitled to redeem, pursuant to Article 1620 of the New

Civil Code.
ART. 1620. A co-owner of a thing may exercise the right of
redemption in case the shares of all the other co-owners or
of any of them, are sold to a third person. If the price of the
alienation is grossly excessive the redemptioner shall pay
only a reasonable one.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share
they may respectively have in the thing owned in common.
The lower court, upon motion of defendant, dismissed the
complaint, holding that the deeds of sale show that the lot
acquired by plaintiff Estoque was different from that of the
defendants Pajimula; hence they never became co-owners,
and the alleged right of legal redemption was not proper.
Estoque appealed.
We find no error in the order of dismissal, for the facts
pleaded negate the claim that appellant Estoque ever
became a co-owner of appellees Pajimula.
(1) The deed of sale to Estoque (Annex A of the complaint)
clearly specifies the object sold as the southeastern third
portion of Lot 802 of the Rosario Cadastre, with an area of
840 square meters, more or less. Granting that the seller,
Crispina Perez Vda. de Aquitania could not have sold this
particular portion of the lot owned in common by her and
her two brothers, Lorenzo and Ricardo Perez, by no means
does it follow that she intended to sell to appellant Estoque
her 1/3 undivided interest in the lot forementioned. There is
nothing in the deed of sale to justify such inference. That
the seller could have validly sold her one-third undivided
interest to appellant is no proof that she did choose to sell
the same. Ab posse ad actu non valet illatio.
(2) While on the date of the sale to Estoque (Annex A) said
contract may have been ineffective, for lack of power in the
vendor to sell the specific portion described in the deed, the
transaction was validated and became fully effective when
the next day (October 29, 1951) the vendor, Crispina Perez,
acquired the entire interest of her remaining co-owners
Page 128 of 404

LAW ON PROPERTY

(Annex B) and thereby became the sole owner of Lot No.

802 of the Rosario Cadastral survey (Llacer vs. Muoz, 12
Phil. 328). Article 1434 of the Civil Code of the Philippines
clearly prescribes that .
When a person who is not the owner of a thing sells or
alienates and delivers it, and later the seller or grantor
acquires title thereto, such title passes by operation of law
to the buyer or grantee."
Pursuant to this rule, appellant Estoque became the actual
owner of the southeastern third of lot 802 on October 29,
1951. Wherefore, she never acquired an undivided interest
in lot 802. And when eight years later Crispina Perez sold to
the appellees Pajimula the western two-thirds of the same
lot, appellant did not acquire a right to redeem the property
thus sold, since their respective portions were distinct and
separate.
IN VIEW OF THE FOREGOING, the appealed order of
dismissal is affirmed. Costs against appellant Estoque.
G.R. No. 122047

October 12, 2000

SPOUSES SERAFIN SI AND ANITA BONODE SI, petitioners,

vs.
COURT OF APPEALS, SPOUSES JOSE ARMADA and REMEDIOS
ALMANZOR (deceased, and substituted by heirs: Cynthia
Armada, Danilo Armada and Vicente Armada) respondents.

"WHEREFORE, in view of the foregoing, the decision

appealed from is hereby REVERSED, and a new one is
rendered:
1) Annulling and declaring as invalid the registration of the
Deed of Absolute Sale dated March 27, 1979 executed by
Cresenciana V. Alejo in favor of Anita Bonode Si.
2) Ordering the Register of Deeds of Pasay City to annul and
cancel Transfer Certificate of Title No. 24751, issued in the
name of Anita Bonode Si, married to Serafin D. Si., Jose R.
Armada, married to Remedios Almanzor and Dr. Severo R.
Armada Jr., single.
3) Ordering the Register of Deeds of Pasay City to
reconstitute and revive Transfer Certificate of Title No.
16007 in the names of Jose, Crisostomo and Severo, Jr.
4) That plaintiffs be allowed to repurchase or redeem the
share corresponding to the share of Crisostomo Armada
within thirty (30) days from notice in writing by Crisostomo
Armada.
5) The defendants-appellees are jointly and severally
ordered to pay the plaintiffs-appellants the sum of
P10,000.00 as moral damages.

DECISION

6) The defendants-appellees are jointly and severally

ordered to pay the plaintiff-appellants the sum of
P10,000.00 as attorney's fees and litigation expenses and
costs of suit.

QUISUMBING, J.:

SO ORDERED."3

This petition for certiorari under Rule 45 assails the

Decision1 dated March 25, 1994, of the Court of Appeals
and its Resolutions2 dated March 24, 1995 and September
6, 1995 in CA-G.R. CV No. 30727. The Court of Appeals
reversed the decision of the Regional Trial Court of Pasig
City, Branch 113, and nullified the sale of the subject lot by
the spouses Crisostomo and Cresenciana Armada to spouses
Serafin and Anita Si. The dispositive portion of the
respondent court's decision reads:

The factual background of the case is as follows:

The 340 square meters of land, situated in San Jose District,
Pasay City, the property in dispute, originally belonged to
Escolastica, wife of Severo Armada, Sr. This was covered by
Transfer Certificate of Title (TCT) No. (17345) 2460. During
the lifetime of the spouses, the property was transferred to
their children and the Registry of Deeds, Pasay City, issued
TCT No. 16007 in the names of the three sons, as follows :
"DR. CRISOSTOMO R. ARMADA, married to Cresenciana V.
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Alejo, 113.34 Square Meters; JOSE R. ARMADA, married to

Remedios Almanzor, 113.33 Square Meters; and DR.
SEVERO R. ARMADA, Jr., single, all of legal age, Filipinos."4
Annotated also in the title is the total cancellation of said
title "... by virtue of the Deed of Sale, (P.E. 77952/T-24751),
dated March 28, 1979, executed by CRESENCIANA V. ALEJO,
as attorney-in-fact of CRISOSTOMO R. ARMADA, conveying
113.34 square meters of the property herein, in favor of
ANITA BONODE SI, married to Serafin D. Si, for the sum of
P75,000.00, issuing in lieu thereof Transfer Certificate of
Title No. 24751, Reg. Book T-102. (Doc. No. 17, Page No. 5,
Book No. 253 of Notary Public of Pasay City, Manila, Julian
Florentino)."5

conveyed to each son in metes and bounds. Petitioners

contend that since the property was already three distinct
parcels of land, there was no longer co-ownership among
the brothers. Hence, Jose and Severo, Jr. had no right of
redemption when Crisostomo sold his share to the spouses
Si. Petitioners point out that it was only because the Armada
brothers failed to submit the necessary subdivision plan to
the Office of the Register of Deeds in Pasay City that
separate titles were not issued and TCT No. 16007 was
issued and registered in the names of Jose, Crisostomo, and
Severo, Jr.

On April 15, 1980, herein spouses Jose Armada and

Remedios Almanzor, filed a complaint for Annulment of
Deed of Sale and Reconveyance of Title with Damages,
against herein petitioners Anita and Serafin Si and Conrado
Isada, brother-in-law of Cresenciana. Isada brokered the
sale.

"IN VIEW OF ALL THE FOREGOING, the complaint is hereby

DISMISSED. With costs against the plaintiffs."7

The complaint alleged that Conrado Isada sold Crisostomo's

share by making it appear that Cresenciana, the attorney-infact of her husband, is a Filipino citizen, residing with Isada
at No. 13-4th Camarilla Street, Murphy, Cubao, Quezon City.
By this time, Crisostomo and Cresenciana had migrated and
were already citizens of the United States of America. It also
stated that when petitioners registered the deed of absolute
sale they inserted the phrase "... and that the co-owners are
not interested in buying the same in spite of notice to
them.", and that petitioners knew of the misrepresentations
of Conrado. Further, the complaint alleged that the other
owners, Jose and Severo, Jr., had no written notice of the
sale; and that all upon learning of the sale to the spouses Si,
private respondents filed a complaint for annulment of sale
and reconveyance of title with damages, claiming they had
a right of redemption.
Petitioners, on the other hand, alleged that on October 2,
1954, Escolastica, with the consent of her husband executed
three separate deeds of sale (Exhibits 1, 2, and 3)6
conveying 113.34 square meters of the property to Severo,
and 113.33 square meters each to Crisostomo and Jose. The
three deeds of sale particularly described the portion

After trial on the merits, the court ruled for petitioners:

Private respondents appealed to the Court of Appeals. On

March 25, 1994, the appellate court issued the decision now
assailed by petitioners. In reversing the decision of the trial
court and ruling for private respondents, the Court of
Appeals found that:
"A careful examination of TCT No. 16007 (Exh. 'A') shows
that the portion sold by virtue of the Deeds of Sale (Exh. 1,
2, & 3) to the Armada brothers do not appear in the said
title, neither does it indicate the particular area sold.
Moreover, no evidence was presented to show that the
Register of Deeds issued TCT No. 16007 (Exh. 'A') on the
basis of the said deeds of Sale. In fact, TCT No. 16007 (Exh.
'A') shows that the lot is co-owned by Jose, Crisostomo and
Severo, Jr. in the proportion of 113.33, 113.34 and 113.33
sq. m. respectively.
Furthermore, the evidence on record shows that the Deed of
Absolute Sale (Exh. 'B'), executed by Cresencia Armada in
favor of defendants Si, stated that the portion sold was the
'undivided one hundred thirteen & 34/100 (113.34) square
meters' of the parcel of land covered by TCT NO. 16007 of
the Registry of Deeds for Pasay City, which means that what
was sold to defendants are still undetermined and
unidentifiable, as the area sold remains a portion of the
whole.
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LAW ON PROPERTY

Moreover, plaintiff Remedi[o]s Armada testified that on

March 27, 1979, Crisostomo Armada, thru his attorney-infact and co-defendant, Cresenciana Alejo, sold his undivided
113.34 share to defendants, Sps. Si as evidenced by a Deed
of Absolute Sale (Exh. 'B'), and presented for registration
with the Register of Deeds (Exh. 'B-1') without notifying
plaintiffs of the sale (TSN, pp. 6-8, December 20, 1988).
Instead, it appears that the phrase 'and that the co-owners
are not interested in buying the same inspite of notice to
them', was inserted in the Deed of Sale (Exh. 'B').
xxx
Otherwise stated, the sale by a (sic) co-owner of his share in
the undivided property is not invalid, but shall not be
recorded in the Registry Property, unless accompanied by an
affidavit of the Vendor that he has given written notice
thereof to all possible redemptioners."8
On August 29, 1994, petitioners' counsel on record, Atty.
Roberto B. Yam received a copy of the CA decision. On
October 14, 1994, he filed a motion for reconsideration, but
it was denied by the Court of Appeals on November 21,
1994, for being filed out of time.
On December 5, 1994, petitioners filed their motion for new
trial under Section 1, Rule 53 of the Revised Rules of Court.9
Petitioners presented new evidence, TCT No. (17345) 2460,
registered in the name of Escolastica de la Rosa, married to
Severo Armada, Sr., with annotation at the back stating that
the cancellation was by virtue of three deeds of sale in favor
of Escolastica's sons. On March 24, 1995, respondent court
denied the motion, reasoning that when the motion was
filed, the reglementary period had lapsed and the decision
had become final and executory. Petitioners' motion for
reconsideration of said resolution was denied.
Hence, the present petition, alleging that:
"1. Respondent Court of Appeals committed a reversible
error in ruling that a co-ownership still existed.

"2. Respondent Court of Appeals committed a reversible

error in denying the Motion for Reconsideration of its
Decision of 25 March 1994 on purely technical grounds.
"3. Respondent Court of Appeals committed a reversible
error in denying the Motion for New Trial.
"4. Respondent Court of Appeals committed a reversible
error in ordering petitioners to pay moral damages,
attorney's fees, litigation expenses and the costs of the
suit."10
In essence, this Court is asked to resolve: (1) whether
respondent court erred in denying petitioners' motion for
reconsideration and/or the Motion for New Trial; (2) whether
private respondents are co-owners who are legally entitled
to redeem the lot under Article 1623 of the Civil Code;11
and (3) whether the award of moral damages, attorney's
fees and costs of suit is correct.
The pivotal issue is whether private respondents may claim
the right of redemption under Art. 1623 of the Civil Code.
The trial court found that the disputed land was not part of
an undivided estate. It held that the three deeds of absolute
sale12 technically described the portion sold to each son.
The portions belonging to the three sons were separately
declared for taxation purposes with the Assessor's Office of
Pasay City on September 21, 1970.13 Jose's testimony that
the land was undivided was contradicted by his wife when
she said they had been receiving rent from the property
specifically allotted to Jose.14 More significantly, on January
9, 1995, the Registry of Deeds of Pasay City cancelled TCT
24751 and issued three new titles as follows: (1) TCT
13459415 in favor of Severo Armada, Jr.; (2) TCT 13459516
under the name of Anita Bonode Si, married to Serafin Si;
and (3) TCT 13459617 owned by Jose Armada, married to
Remedios Almanzor. All these are on record.
However, the Court of Appeals' decision contradicted the
trial court's findings.18
In instances when the findings of fact of the Court of
Appeals are at variance with those of the trial court, or when
the inference drawn by the Court of Appeals from the facts
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is manifestly mistaken, this Court will not hesitate to review

the evidence in order to arrive at the correct factual
conclusion.19 This we have done in this case. It is our
considered view now, that the trial court is correct when it
found that:
"Rightfully, as early as October 2, 1954, the lot in question
had already been partitioned when their parents executed
three (3) deed of sales (sic) in favor of Jose, Crisostomo and
Severo, all surnamed Armada (Exh. 1, 2, & 3), which
documents purports to have been registered with the
Register of Deeds of Pasay City, on September 18, 1970,
and as a consequence TCT No. 16007 (Exh. A) was issued.
Notably, every portion conveyed and transferred to the
three sons was definitely described and segregated and with
the corresponding technical description (sic). In short, this is
what we call extrajudicial partition. Moreover, every portion
belonging to the three sons has been declared for taxation
purposes with the Assessor's Office of Pasay City on
September 21, 1970. These are the unblinkable facts that
the portion sold to defendant spouses Si by defendants
Crisostomo Armada and Cresenciana Armada was concretely
determined and identifiable. The fact that the three portions
are embraced in one certificate of title does not make said
portions less determinable or identifiable or distinguishable,
one from the other, nor that dominion over each portion less
exclusive, in their respective owners. Hence, no right of
redemption among co-owners exists."20 (citation omitted)
". . . [T]he herein plaintiffs cannot deny the fact that they
did not have knowledge about the impending sale of this
portion. The truth of the matter is that they were properly
notified. Reacting to such knowledge and notification they
wrote defendant Dr. Crisostomo Armada on February 22,
1979, a portion of said letter is revealing: 'Well you are the
king of yourselves, and you can sell your share of
Levereza."21 (emphasis omitted)
After the physical division of the lot among the brothers, the
community ownership terminated, and the right of
preemption or redemption for each brother was no longer
available.22

Under Art. 484 of the Civil Code,23 there is co-ownership

whenever the ownership of an undivided thing or right
belongs to different persons. There is no co-ownership when
the different portions owned by different people are already
concretely determined and separately identifiable, even if
not yet technically described.24 This situation makes
inapplicable the provision on the right of redemption of a coowner in the Civil Code, as follows:
"Art. 1623. The right of legal pre-emption or redemption
shall not be exercised except within thirty days from the
notice in writing by the prospective vendor, or by the
vendor, as the case may be. The deed of sale shall not be
recorded in the Registry of Property, unless accompanied by
an affidavit of the vendor that he has given written notice
thereof to all possible redemptioners.
The right of redemption of co-owners excludes that of
adjoining owners."
Moreover, we note that private respondent Jose Armada was
well informed of the impending sale of Crisostomo's share in
the land. In a letter dated February 22, 1979, Jose told his
brother Crisostomo: "Well you are the king of yourselves,
and you can sell your share of Leveriza."25 Co-owners with
actual notice of the sale are not entitled to written notice. A
written notice is a formal requisite to make certain that the
co-owners have actual notice of the sale to enable them to
exercise their right of redemption within the limited period
of thirty days. But where the co-owners had actual notice of
the sale at the time thereof and/or afterwards, a written
notice of a fact already known to them, would be
superfluous. The statute does not demand what is
unnecessary.26
Considering that respondent Court of Appeals erred in
holding that herein private respondent could redeem the lot
bought by petitioners, the issue of whether the appellate
court erred in denying petitioners' motions for
reconsideration and new trial need not be delved
into.1wphi1 The same is true with respect to the
questioned award of damages and attorney's fees.
Petitioners filed their complaint in good faith and as
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repeatedly held, we cannot put a premium on the right to

litigate.
WHEREFORE, the petition is GRANTED, the Decision of the
Court of Appeals dated March 25, 1994 and its Resolutions
dated March 24, 1995 and September 6, 1995 in CA-G.R. CV
No. 30727 are ANNULLED and SET ASIDE. Civil Case No.
8023-P is DISMISSED for lack of merit. The decision of the
Regional Trial Court of Pasay City, Branch 113, promulgated
on August 29, 1989, is REINSTATED.
SO ORDERED.
G.R. No. 78178 April 15, 1988
DELIA BAILON-CASILAO, LUZ PAULINO-ANG, EMMA PAULINOYBANEZ, NILDA PAULINO-TOLENTINO, and SABINA BAILON,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS and CELESTINO
AFABLE, respondents.
Veronico E. Rubio for petitioners.
Mario G. Fortes for private-respondent.

CORTES, J.:
The fate of petitioners' claim over a parcel of land rests
ultimately on a determination of whether or not said
petitioners are chargeable with such laches as may
effectively bar their present action.
The petitioners herein filed a case for recovery of property
and damages with notice of lis pendens on March 13, 1981
against the defendant and herein private respondent,
Celestino Afable. The parcel of land involved in this case,
with an area of 48,849 square meters, is covered by Original
Certificate of Title No. 1771 issued on June 12, 1931, in the
names of Rosalia, Gaudencio, Sabina Bernabe, Nenita and
Delia, all surnamed Bailon, as co-owners, each with a 1/6
share. Gaudencio and Nenita are now dead, the latter being

represented in this case by her children. Luz, Emma and

Nilda. Bernabe went to China in 1931 and had not been
heard from since then [Decision of the Court of Appeals,
Rollo, p. 39].
It appears that on August 23, 1948, Rosalia Bailon and
Gaudencio Bailon sold a portion of the said land consisting
of 16,283 square meters to Donato Delgado. On May 13,
1949, Rosalia Bailon alone sold the remainder of the land
consisting of 32,566 square meters to Ponciana V. Aresgado
de Lanuza. On the same date, Lanuza acquired from
Delgado the 16,283 square meters of land which the latter
had earlier acquired from Rosalia and Gaudencio. On
December 3, 1975, John Lanuza, acting under a special
power of attorney given by his wife, Ponciana V. Aresgado de
Lanuza, sold the two parcels of land to Celestino Afable, Sr.
In all these transfers, it was stated in the deeds of sale that
the land was not registered under the provisions of Act No.
496 when the fact is that it is. It appears that said land had
been successively declared for taxation first, in the name of
Ciriaca Dellamas, mother of the registered co-owners, then
in the name of Rosalia Bailon in 1924, then in that of Donato
Delgado in 1936, then in Ponciana de Lanuza's name in
1962 and finally in the name of Celestino Afable, Sr. in 1983.
In his answer to the complaint filed by the herein
petitioners, Afable claimed that he had acquired the land in
question through prescription and contended that the
petitioners were guilty of laches.He later filed a third-party
complaint against Rosalia Bailon for damages allegedly
suffered as a result of the sale to him of the land.
After trial, the lower court rendered a decision:
1. Finding and declaring Celestino Afable, a co-owner of the
land described in paragraph III of the complaint having
validly bought the two-sixth (2/6) respective undivided
shares of Rosalia Bailon and Gaudencio Bailon;
2. Finding and declaring the following as pro-indiviso coowners, having 1/6 share each, of the property described in
paragraph III of the complaint, to wit:
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a. Sabina Bailon
b. Bernabe Bailon
c. Heirs of Nenita Bailon-Paulino
d. Delia Bailon-Casilao;
3. Ordering the segregation of the undivided interests in the
property in order to terminate co-ownership to be conducted
by any Geodetic Engineer selected by the parties to
delineate the specific part of each of the co-owners.
4. Ordering the defendant to restore the possession of the
plaintiffs respective shares as well as all attributes of
absolute dominion;
5. Ordering the defendant to pay the following:
a. P5,000.00 as damages;
b. P2,000.00 as attorney's fees and;
c. to pay the costs.
[Decision of the Trial Court, Rollo, p. 37-38].
On appeal, the respondent Court of Appeals affirmed the
decision of the lower court insofar as it held that prescription
does not he against plaintiffs-appellees because they are coowners of the original vendors. However, the appellate court
declared that, although registered property cannot be lost
by prescription, nevertheless, an action to recover it may be
barred by laches, citing the ruling in Mejia de Lucaz v.
Gamponia [100 Phil. 277 (1956)]. Accordingly, it held the
petitioners guilty of laches and dismissed their complaint.
Hence, this petition for review on certiorari of the decision of
the Court of Appeals.
The principal issue to be resolved in this case concerns the
applicability of the equitable doctrine of laches. Initially
though, a determination of the effect of a sale by one or
more co-owners of the entire property held in common

without the consent of all the co-owners and of the

appropriate remedy of the aggrieved co-owners is required.
The rights of a co-owner of a certain property are clearly
specified in Article 493 of the Civil Code.Thus:
Art. 493. Each co-owner shall have the full ownership of his
part and of the acts and benefits pertaining thereto, and he
may therefore alienate assign or mortgage it and even
substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation
or mortgage, with respect to the co-owners, shall be limited
to the portion which may be allotted to him in the division
upon the termination of the co-ownership. [Emphasis
supplied.]
As early as 1923, this Court has ruled that even if a coowner sells the whole property as his, the sale will affect
only his own share but not those of the other co-owners who
did not consent to the sale [Punsalan v. Boon Liat 44 Phil.
320 (1923)]. This is because under the aforementioned
codal provision, the sale or other disposition affects only his
undivided share and the transferee gets only what would
correspond to his grantor in the partition of the thing owned
in common.[Ramirez v. Bautista, 14 Phil. 528 (1909)].
Consequently, by virtue of the sales made by Rosalia and
Gaudencio Bailon which are valid with respect to their
proportionate shares, and the subsequent transfers which
culminated in the sale to private respondent Celestino
Afable, the said Afable thereby became a co-owner of the
disputed parcel of land as correctly held by the lower court
since the sales produced the effect of substituting the
buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil.
730 (1910)].
From the foregoing, it may be deduced that since a coowner is entitled to sell his undivided share, a sale of the
entire property by one co-owner without the consent of the
other co-owners is not null and void. However, only the
rights of the co-owner-seller are transferred, thereby making
the buyer a co-owner of the property.
The proper action in cases like this is not for the nullification
of the sale or for the recovery of possession of the thing
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owned in common from the third person who substituted the

co-owner or co-owners who alienated their shares, but the
DIVISION of the common property as if it continued to
remain in the possession of the co-owners who possessed
and administered it [Mainit v. Bandoy, supra.]
Thus, it is now settled that the appropriate recourse of coowners in cases where their consent were not secured in a
sale of the entire property as well as in a sale merely of the
undivided shares of some of the co-owners is an action. for
PARTITION under Rule 69 of the Revised Rules of Court.
Neither recovery of possession nor restitution can be
granted since the defendant buyers are legitimate
proprietors and possessors in joint ownership of the
common property claimed [Ramirez v. Bautista, supra].
As to the action for petition, neither prescription nor laches
can be invoked.
In the light of the attendant circumstances, defendantappellee's defense of prescription is a vain proposition.
Pursuant to Article 494 of the Civil Code, '(n)o co-owner shall
be obliged to remain in the co-ownership. Such co-owner
may demand at anytime the partition of the thing owned in
common, insofar as his share is concerned.' [Emphasis
supplied.] In Budiong v. Bondoc [G.R. No. L-27702,
September 9, 1977, 79 SCRA 241, this Court has interpreted
said provision of law to mean that the action for partition is
imprescriptible or cannot be barred by prescription. For
Article 494 of the Civil Code explicitly declares: "No
prescription shall lie in favor of a co-owner or co- heir so
long as he expressly or impliedly recognizes the coownership."
Furthermore, the disputed parcel of land being registered
under the Torrens System, the express provision of Act No.
496 that '(n)o title to registered land in derogation to that of
the registered owner shall be acquired by prescription or
adverse possession' is squarely applicable. Consequently,
prescription will not lie in favor of Afable as against the
petitioners who remain the registered owners of the
disputed parcel of land.

It is argued however, that as to the petitioners Emma, Luz

and Nelda who are not the registered co-owners but merely
represented their deceased mother, the late Nenita Bailon,
prescription lies.Respondents bolster their argument by
citing a decision of this Court in Pasion v. Pasion [G.R.No. L15757, May 31, 1961, 2 SCRA 486, 489] holding that "the
imprescriptibility of a Torrens title can only be invoked by
the person in whose name the title is registered" and that
'one who is not the registered owner of a parcel of land
cannot invoke imprescriptibility of action to claim the same.'
Reliance on the aforesaid Pasion case is futile. The ruling
therein applies only against transferees other than direct
issues or heirs or to complete strangers. The rational is
clear:
If prescription is unavailing against the registered owner, it
must be equally unavailing against the latter's hereditary
successors, because they merely step into the shoes of the
decedent by operation of law (New Civil Code, Article 777;
Old Civil Code, Article 657), the title or right undergoing no
change by its transmission mortis causa [Atus, et al., v.
Nunez, et al., 97 Phil. 762, 764].
The latest pronouncement of this Court in Umbay v. Alecha
[G. R. No. 67284, March 18, 1985, 135 SCRA 427, 429],
which was promulgated subsequent to the Pasion case
reiterated the Atus doctrine. Thus:
Prescription is unavailing not only against the registered
owner but also against his hereditary successors, because
they merely step into the shoes of the decedent by
operation of law and are merely the continuation of the
personality of their predecessor-in-interest. [Barcelona v.
Barcelona, 100 Phil. 251, 257].
Laches is likewise unavailing as a shield against the action
of herein petitioners.
Well-stated in this jurisdiction are the four basic elements of
laches, namely: (1) conduct on the part of the defendant or
of one under whom he claims, giving rise to the situation of
which complaint is made and for which the complainant
seeks a remedy; (2) delay in asserting the corporations
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complainant's rights, the complainant having had

knowledge or notice of the defendant's conduct and having
been afforded an opportunity to institute suit; (3) lack of
knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his
suit; and, (4) injury or prejudice to the defendant in the
event relief is accorded to the complainant, or the suit is not
held to be barred [Go China Gun, et al. v. Co Cho et al., 96
Phil. 622 (1955)].
While the first and last elements are present in this case,
the second and third elements are missing.
The second element speaks of delay in asserting the
complainant's rights. However, the mere fact of delay is
insufficient to constitute, laches. It is required that (1)
complainant must have had knowledge of the conduct of
defendant or of one under whom he claims and (2) he must
have been afforded an opportunity to institute suit. This
court has pointed out that laches is not concerned with the
mere lapse of time. Thus:
Laches has been defined as the failure or neglect, for an
unreasonable length of time to do that which by exercising
due diligence could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable
time warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.
Tijam, et al., v. Sibonghanoy, G.R. No. L-21450, April 25,
1968, 23 SCRA 29,35; Tendo v. Zamacoma, G.R. No. L63048, August 7, 1985, 138 SCRA 78, 90].
The doctrine of "laches" or of "stale demands" is based upon
grounds of public policy which requires for the peace of
society, the discouragement of stale claims and unlike the
statute of limitations, is not a mere question of time but is
principally a question of inequity or unfairness of permitting
a right or claim to be enforced or asserted," [Tijam v.
Sibonghanoy, supra, p. 35]. [Emphasis supplied.]
It must be noted that while there was delay in asserting
petitioners' rights, such delay was not attended with any
knowledge of the sale nor with any opportunity to bring suit.
In the first place, petitioners had no notice of the sale made

by their eldest sister. It is undisputed that the petitioner coowners had entrusted the care and management of the
parcel of land to Rosalia Bailon who was the oldest among
them [TSN, July 27, 1983, p. 14]. In fact, Nicanor Lee, a son
of Rosalia, who was presented as a witness by the plaintiffspetitioners, testified on cross-examination that his mother
was only the administrator of the land as she is the eldest
and her brothers and sisters were away [TSN, October 5,
1983, p. 15]. Indeed, when Delia Bailon-Casilao left
Sorsogon in 1942 after she got married, it was only in 1983
that she returned. Sabina on the other hand, is said to be
living in Zamboanga while Bernabe who left for China in
1931 has not been heard from since then. Consequently,
when Rosalia, from whom the private respondent derived his
title, made the disputed sales covering the entire property,
the herein petitioners were unaware thereof.
In the second place, they were not afforded an opportunity
to bring suit inasmuch as until 1981, they were kept in the
dark about the transactions entered into by their sister. It
was only when Delia Bailon-Casilao returned to Sorsogon in
1981 that she found out about the sales and immediately,
she and her co-petitioners filed the present action for
recovery of property. The appellate court thus erred in
holding that 'the petitioners did nothing to show interest in
the land." For the administration of the parcel of land was
entrusted to the oldest co-owner who was then in
possession thereof precisely because the other co-owners
cannot attend to such a task as they reside outside of
Sorsogon where the land is situated. Her co-owners also
allowed her to appropriate the entire produce for herself
because it was not even enough for her daily consumption
[TSN, October 5, 1983, pp. 17-18]. And since petitioner was
the one receiving the produce, it is but natural that she was
the one to take charge of paying the real estate taxes. Now,
if knowledge of the sale by Rosalia was conveyed to the
petitioners only later, they cannot be faulted for the acts of
their co-owner who failed to live up to the trust and
confidence expected of her. In view of the lack of knowledge
by the petitioners of the conduct of Rosalia in selling the
land without their consent in 1975 and the absence of any
opportunity to institute the proper action until 1981, laches
may not be asserted against the petitioners.
Page 136 of 404

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The third element of laches is likewise absent. There was no

lack of knowledge or notice on the part of the defendant
that the complainants would assert the right on which they
base the suit. On the contrary, private respondent is guilty
of bad faith in purchasing the property as he knew that the
property was co-owned by six persons and yet, there were
only two signatories to the deeds of sale and no special
authorization to self was granted to the two sellers by the
other co-owners.
Even as the land here was misrepresented in the deeds of
sale as "unregistered," the truth was that Afable already had
notice that the land was titled in the name of six persons by
virtue of the Certificate of Title which was already in his
possession even before the sale. Such fact is apparent from
his testimony before the court a quo:
COURT:
Q: From whom did you get the certificate of Title?
A: When it was mortgaged by Ponciana Aresgado.
Q: It was mortgaged to you before you bought it?
A: Yes, Your Honor. (TSN, March 5, 1984, p. 12) When crossexamined, he stated:
Q: Mr. Witness, the original Certificate of Title was given to
you in the year 1974, was it not?
A: 1975.
Q: In 1975, you already discovered that the title was in the
name of several persons, is it not?
A: Yes, sir.
Q: When you discovered that it is in the name of several
persons, you filed a case in court for authority to cancel the
title to be transferred in your name, is it not?
A: Yes, sir.

Q: And that was denied by the Court of First Instance of

Sorsogon because there was ordinary one signatory to the
deed of sale instead of six, was it not?
A: Not one but two signatories.
[Decision of the Regional Trial Court of Sorsogon, Rollo, p.
35]
Such actual knowledge of the existence of other co-owners
in whose names the lot subject of the sale was registered
should have prompted a searching inquiry by Afable
considering the well- known rule in this jurisdiction that:
... a person dealing with a registered land has a right to rely
upon the face of the Torrens certificate of title and to
dispense with the need of inquiring further, except when the
party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautions man
to make such inquiry. [Gonzales v. IAC and Rural Bank of
Pavia, Inc., G.R. No. 69622, January 29, 1988).
Moreover, the undisputed fact is that petitioners are
relatives of his wife. As a genuine gesture of good faith, he
should have contacted the petitioners who were still listed
as co-owners in the certificate of title which was already in
his possession even before the sale. In failing to exercise
even a minimum degree of ordinary prudence required by
the situation, he is deemed to have bought the lot at his
own risk. Hence any prejudice or injury that may be
occasioned to him by such sale must be borne by him.
Indeed, aware of the flaws impairing his title, Afable went to
the herein petitioner Delia Bailon-Casilao, asking the latter
to sign a document obviously to cure the flaw [TSN, July 27,
1983, p.6]. Later, he even filed a petition in the Court of First
Instance to register the title in his name which was denied
as aforesaid.
It may be gleaned from the foregoing examination of the
facts that Celestino Afable is not a buyer in good faith.
Laches being an equitable defense, he who invokes it must
come to the court with clean hands.
Page 137 of 404

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WHEREFORE, the petition for certiorari is hereby GRANTED,

the challenged decision of the Court of Appeals is SET
ASIDE, and the decision of the trial court is REINSTATED.
SO ORDERED.
G.R. No. 108228

February 1, 2001

SPOUSES MANUEL and SALVACION DEL CAMPO, petitioners,

vs.
HON. COURT OF APPEALS and HEIRS OF JOSE REGALADO,
SR., respondents.
QUISUMBING, J.:
This is a petition for review on certiorari of a decision of the
Court of Appeals which affirmed the judgment of the
Regional Trial Court of Roxas City, Branch 15 in Civil Case
No. V-5369, ordering the dismissal of the action for
repartition, resurvey and reconveyance filed by petitioners.
Pure questions of law are raised in this appeal as the
following factual antecedents are undisputed:
Salome, Consorcia, Alfredo, Maria, Rosalia, Jose, Quirico and
Julita, all surnamed Bornales, were the original co-owners of
Lot 162 of the Cadastral Survey of Pontevedra, Capiz under
Original Certificate of Title No. 18047. As appearing therein,
the lot, which consisted of a total area of 27,179 square
meters was divided in aliquot shares among the eight (8)
co-owners as follows:
Salome Bornales
4/16
Consorcia Bornales
4/16
Alfredo Bornales
2/16
Maria Bornales
2/16
Jose Bornales

1/16
Quirico Bornales
1/16
Rosalia Bornales
1/16
Julita Bornales
1/16
On July 14, 1940, Salome sold part of her 4/16 share in Lot
162 for P200.00 to Soledad Daynolo. In the Deed of Absolute
Sale signed by Salome and two other co-owners, Consorcia
and Alfredo, the portion of Lot 162 sold to Soledad was
described as having more or less the following
measurements:
63-1/2 meters from point "9" to "10", 35 meters from point
"10" to point "11", 30 meters from point "11" to a certain
point parallel to a line drawn from points "9" to "10"; and
then from this "Certain Point" to point "9" and as shown in
the accompanying sketch, and made an integral part of this
deed, to SOLEDAD DAYNOLO, her heirs and assigns.1
Thereafter, Soledad Daynolo immediately took possession of
the land described above and built a house thereon. A few
years later, Soledad and her husband, Simplicio Distajo,
mortgaged the subject portion of Lot 162 as security for a
P400.00 debt to Jose Regalado, Sr. This transaction was
evidenced by a Deed of Mortgage2 dated May 1, 1947.
On April 14, 1948, three of the eight co-owners of Lot 162,
specifically, Salome, Consorcia and Alfredo, sold 24,993
square meters of said lot to Jose Regalado, Sr.
On May 4, 1951, Simplicio Distajo, heir of Soledad Daynolo
who had since died, paid the mortgage debt and redeemed
the mortgaged portion of Lot 162 from Jose Regalado, Sr.
The latter, in turn, executed a Deed of Discharge of
Mortgage3 in favor of Soledads heirs, namely: Simplicio
Distajo, Rafael Distajo and Teresita Distajo-Regalado. On
same date, the said heirs sold the redeemed portion of Lot
Page 138 of 404

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162 for P1,500.00 to herein petitioners, the spouses Manuel

Del Campo and Salvacion Quiachon.1wphi1.nt
Meanwhile, Jose Regalado, Sr. caused the reconstitution of
Original Certificate of Title No. 18047. The reconstituted OCT
No. RO-4541 initially reflected the shares of the original coowners in Lot 162. However, title was transferred later to
Jose Regalado, Sr. who subdivided the entire property into
smaller lots, each covered by a respective title in his name.
One of these small lots is Lot No. 162-C-6 with an area of
11,732 square meters which was registered on February 24,
1977 under TCT No. 14566.
In 1987, petitioners Manuel and Salvacion del Campo
brought this complaint for "repartition, resurvey and
reconveyance" against the heirs of the now deceased Jose
Regalado, Sr. Petitioners claimed that they owned an area of
1,544 square meters located within Lot 162-C-6 which was
erroneously included in TCT No. 14566 in the name of
Regalado. Petitioners alleged that they occupied the
disputed area as residential dwelling ever since they
purchased the property from the Distajos way back in 1951.
They also declared the land for taxation purposes and paid
the corresponding taxes.
On April 1, 1987, summons were served on Regalados
widow, Josefina Buenvenida, and two of her children,
Rosemarie and Antonio. Josefina and Rosemarie were
declared in default on May 10, 1989 because only Antonio
filed an answer to the complaint.
During trial, petitioners presented the Deed of Absolute
Sale4 executed between Soledad Daynolo and Salome
Bornales as well as the Deed of Mortgage5 and Deed of
Discharge6 signed by Jose Regalado, Sr. The Deed of
Absolute Sale7 showing the purchase by the Del Campos of
the property from the Distajos was likewise given in
evidence.
Despite the filing of an answer, Antonio failed to present any
evidence to refute the claim of petitioners. Thus, after
considering Antonio to have waived his opportunity to
present evidence, the trial court deemed the case submitted
for decision.

On November 20, 1990, the trial court rendered judgment

dismissing the complaint. It held that while Salome could
alienate her pro-indiviso share in Lot 162, she could not
validly sell an undivided part thereof by meters and bounds
to Soledad, from whom petitioners derived their title. The
trial court also reasoned that petitioners could not have a
better right to the property even if they were in physical
possession of the same and declared the property for
taxation purposes, because mere possession cannot defeat
the right of the Regalados who had a Torrens title over the
land.
On appeal, the Court of Appeals affirmed the trial courts
judgment, with no pronouncement as to costs.8
Petitioners now seek relief from this Court and maintain
that:
I.
THE FACT THAT THE SALE OF THE SUBJECT PORTION
CONSTITUTES A SALE OF A CONCRETE OR DEFINITE
PORTION OF LAND OWNED IN COMMON DOES NOT
ABSOLUTELY DEPRIVE HEREIN PETITIONERS OF ANY RIGHT
OR TITLE THERETO;
II.
IN ANY EVENT, HEREIN PRIVATE RESPONDENTS ARE ALL
ESTOPPED FROM DENYING THE RIGHT AND TITLE OF HEREIN
PETITIONERS.9
In resolving petitioners appeal, we must answer the
following questions: Would the sale by a co-owner of a
physical portion of an undivided property held in common
be valid? Is respondent estopped from denying petitioners
right and title over the disputed area? Under the facts and
circumstances duly established by the evidence, are
petitioners entitled to repartition, resurvey and
reconveyance of the property in question?
On the first issue, it seems plain to us that the trial court
concluded that petitioners could not have acquired
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ownership of the subject land which originally formed part of

Lot 162, on the ground that their alleged right springs from
a void sale transaction between Salome and Soledad. The
mere fact that Salome purportedly transferred a definite
portion of the co-owned lot by metes and bounds to
Soledad, however, does not per se render the sale a nullity.
This much is evident under Article 49310 of the Civil Code
and pertinent jurisprudence on the matter. More particularly
in Lopez vs. Vda. De Cuaycong, et. al.11 which we find
relevant, the Court, speaking through Mr. Justice Bocobo,
held that:
The fact that the agreement in question purported to sell
a concrete portion of the hacienda does not render the sale
void, for it is a well-established principle that the binding
force of a contract must be recognized as far as it is legally
possible to do so. "Quando res non valet ut ago, valeat
quantum valere potest." (When a thing is of no force as I do
it, it shall have as much force as it can have.)12
Applying this principle to the instant case, there can be no
doubt that the transaction entered into by Salome and
Soledad could be legally recognized in its entirety since the
object of the sale did not even exceed the ideal shares held
by the former in the co-ownership. As a matter of fact, the
deed of sale executed between the parties expressly
stipulated that the portion of Lot 162 sold to Soledad would
be taken from Salomes 4/16 undivided interest in said lot,
which the latter could validly transfer in whole or in part
even without the consent of the other co-owners. Salomes
right to sell part of her undivided interest in the co-owned
property is absolute in accordance with the well-settled
doctrine that a co-owner has full ownership of his proindiviso share and has the right to alienate, assign or
mortgage it, and substitute another person in its
enjoyment13 Since Salomes clear intention was to sell
merely part of her aliquot share in Lot 162, in our view no
valid objection can be made against it and the sale can be
given effect to the full extent.
We are not unaware of the principle that a co-owner cannot
rightfully dispose of a particular portion of a co-owned
property prior to partition among all the co-owners.
However, this should not signify that the vendee does not

acquire anything at all in case a physically segregated area

of the co-owned lot is in fact sold to him. Since the coowner/vendors undivided interest could properly be the
object of the contract of sale between the parties, what the
vendee obtains by virtue of such a sale are the same rights
as the vendor had as co-owner, in an ideal share equivalent
to the consideration given under their transaction. In other
words, the vendee steps into the shoes of the vendor as coowner and acquires a proportionate abstract share in the
property held in common.
Resultantly, Soledad became a co-owner of Lot 162 as of the
year 1940 when the sale was made in her favor. It follows
that Salome, Consorcia and Alfredo could not have sold the
entire Lot 162 to Jose Regalado, Sr. on April 14, 1948
because at that time, the ideal shares held by the three coowners/vendors were equivalent to only 10/16 of the
undivided property less the aliquot share previously sold by
Salome to Soledad. Based on the principle that "no one can
give what he does not have,"14 Salome, Consorcia and
Alfredo could not legally sell the shares pertaining to
Soledad since a co-owner cannot alienate more than his
share in the co-ownership. We have ruled many times that
even if a co-owner sells the whole property as his, the sale
will affect only his own share but not those of the other coowners who did not consent to the sale. Since a co-owner is
entitled to sell his undivided share, a sale of the entire
property by one co-owner will only transfer the rights of said
co-owner to the buyer, thereby making the buyer a coowner of the property.15
In this case, Regalado merely became a new co-owner of Lot
162 to the extent of the shares which Salome, Consorcia and
Alfredo could validly convey. Soledad retained her rights as
co-owner and could validly transfer her share to petitioners
in 1951. The logical effect on the second disposition is to
substitute petitioners in the rights of Soledad as co-owner of
the land. Needless to say, these rights are preserved
notwithstanding the issuance of TCT No. 14566 in
Regalados name in 1977.
Be that as it may, we find that the area subject matter of
this petition had already been effectively segregated from
the mother lot even before title was issued in favor of
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Regalado. It must be noted that 26 years had lapsed from

the time petitioners bought and took possession of the
property in 1951 until Regalado procured the issuance of
TCT No. 14566. Additionally, the intervening years between
the date of petitioners purchase of the property and 1987
when petitioners filed the instant complaint, comprise all of
36 years. However, at no instance during this time did
respondents or Regalado, for that matter, question
petitioners right over the land in dispute. In the case of Vda.
De Cabrera vs. Court of Appeals,16 we had occasion to hold
that where the transferees of an undivided portion of the
land allowed a co-owner of the property to occupy a definite
portion thereof and had not disturbed the same for a period
too long to be ignored, the possessor is in a better condition
or right than said transferees. (Potior est condition
possidentis). Such undisturbed possession had the effect of
a partial partition of the co-owner property which entitles
the possessor to the definite portion which he occupies.
Conformably, petitioners are entitled to the disputed land,
having enjoyed uninterrupted possession thereof for a total
of 49 years up to the present.
The lower courts reliance on the doctrine that mere
possession cannot defeat the right of a holder of a
registered Torrens title over property is misplaced,
considering that petitioners were deprived of their dominical
rights over the said lot through fraud and with evident bad
faith on the part of Regalado. Failure and intentional
omission to disclose the fact of actual physical possession
by another person during registration proceedings
constitutes actual fraud. Likewise, it is fraud to knowingly
omit or conceal a fact, upon which benefit is obtained to the
prejudice of a third person.17 In this case, we are convinced
that Regalado knew of the fact that he did not have a title to
the entire lot and could not, therefore, have validly
registered the same in his name alone because he was
aware of petitioners possession of the subject portion as
well as the sale between Salome and Soledad.
That Regalado had notice of the fact that the disputed
portion of Lot 162 was under claim of ownership by
petitioners and the latters predecessor is beyond question.
Records show that the particular area subject of this case
was mortgaged by Soledad and her husband to Jose

Regalado, Sr. as early as May 1, 1947 or one year prior to

the alienation of the whole lot in favor of the latter. Regalado
never questioned the ownership of the lot given by Soledad
as security for the P400.00 debt and he must have at least
known that Soledad bought the subject portion from Salome
since he could not have reasonably accepted the lot as
security for the mortgage debt if such were not the case. By
accepting the said portion of Lot 162 as security for the
mortgage obligation, Regalado had in fact recognized
Soledads ownership of this definite portion of Lot 162.
Regalado could not have been ignorant of the fact that the
disputed portion is being claimed by Soledad and
subsequently, by petitioners, since Regalado even executed
a Release of Mortgage on May 4, 1951, three years after the
entire property was supposedly sold to him. It would
certainly be illogical for any mortgagee to accept property
as security, purchase the mortgaged property and,
thereafter, claim the very same property as his own while
the mortgage was still subsisting.
Consequently, respondents are estopped from asserting that
they own the subject land in view of the Deed of Mortgage
and Discharge of Mortgage executed between Regalado and
petitioners predecessor-in-interest. As petitioners correctly
contend, respondents are barred from making this assertion
under the equitable principle of estoppel by deed, whereby
a party to a deed and his privies are precluded from
asserting as against the other and his privies any right or
title in derogation of the deed, or from denying the truth of
any material fact asserted in it.18 A perusal of the
documents evidencing the mortgage would readily reveal
that Soledad, as mortgagor, had declared herself absolute
owner of the piece of land now being litigated. This
declaration of fact was accepted by Regalado as mortgagee
and accordingly, his heirs cannot now be permitted to deny
it.
Although Regalados certificate of title became indefeasible
after the lapse of one year from the date of the decree of
registration, the attendance of fraud in its issuance created
an implied trust in favor of petitioners and gave them the
right to seek reconveyance of the parcel wrongfully obtained
by the former. An action for reconveyance based on an
implied trust ordinarily prescribes in ten years. But when the
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LAW ON PROPERTY

right of the true and real owner is recognized, expressly or

implicitly such as when he remains undisturbed in his
possession, the said action is imprescriptible, it being in the
nature of a suit for quieting of title.19 Having established by
clear and convincing evidence that they are the legal
owners of the litigated portion included in TCT NO. 14566, it
is only proper that reconveyance of the property be ordered
in favor of petitioners. The alleged incontrovertibility of
Regalados title cannot be successfully invoked by
respondents because certificates of title merely confirm or
record title already existing and cannot be used to protect a
usurper from the true owner or be used as a shield for the
commission of fraud.20
WHEREFORE, the petition is GRANTED. The assailed decision
of the Court of Appeals in CA-G.R. CV No. 30438 is
REVERSED and SET ASIDE. The parties are directed to cause
a SURVEY for exact determination of their respective
portions in Lot 162-C-6. Transfer Certificate of Title No.
14566 is declared CANCELLED and the Register of Deeds of
Capiz is ordered to ISSUE a new title in accordance with said
survey, upon finality of this decision.
Costs against respondents.1wphi1.nt
SO ORDERED.
G.R. No. 102037 July 17, 1996
MELANIO IMPERIAL, petitioner,
vs.
HON. COURT OF APPEALS and GUILLERMO SOLLEZA, ET.AL.,
respondents.

PANGANIBAN, J.:p
Where an heir who owns one-half undivided share of the
area of two lots sells one of the lots without giving to his coheir the latter's share of the proceeds, may be the latter lay
exclusive claim to the remaining lot as his own?

This Court answers the question in resolving the instant

petition, which seeks to set aside the Decision 1 in CA-G.R.
CV No. 22557 promulgated September 13, 1990 by the
respondent Court, 2 reversing/modifying the judgment of
the trial court.
The Antecedent Facts
The facts as found by the respondent Court are as follows:
. . . Lot No. 1052, with an area of 4,630 square meters; and
Lot No. 1091, with an are of 4,633 square meters both
situated in Barangay Culapi, Lucban, Quezon, were originally
owned by Maria Cuvinar Imperial who died on June 12, 1979.
Maria Cuvinar Imperial was survived by her two children:
Adela and defendant, Melanio. Adela died on May 4, 1986
and is survived by plaintiffs Guillermo Solleza, the husband,
and, children Ernest, Rosa(,) Victoria, Virgilio and Guillermo,
Jr., all surnamed Solleza.
On May 1, 1979, Adela and defendant Melanio agreed to
register lots No. 1091 and 1052 in the name of Melanio in
order to expedite the titling of the said parcels of land. For
this purpose, Adela executed a document captioned
"Kasulatan ng Pagtalikod Sa Karapatan" dated May 1, 1979.
(Exh. B) whereby she waived her rights over lots No. 1091
and 1052. On the same date, defendant Melanio, in turn,
executed by Adela was a simulated one in order to expedite
the registration of the lots in his name.
By virtue of the document of waiver (Exh. B), defendant
Melanio was able to obtain OCT No. P-27941 for lot No.
1052; and OCT No. P-26596 for lot No. 1091, in his name.
Aside from Exhibit C, defendant Melanio executed another
document entitled "Sa Sino Mang Dapat Makatalastas Nito"
(Exh. E) wherein he acknowledged the one-half share of his
sister Adela in lot Nos. 1091 and 1052 and that Adela is also
entitled to one-half share in the proceeds of the sale of
subdivision lots in the said lots.
On May 4, 1985, defendant Melanio sold lot No. 1052
covered by OCT No. 27941 in favor of spouses Efren Rosas
and Leticia Cabisuelas (Exh. B-1 and H) for the sum of
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LAW ON PROPERTY

P20,000.00. The sale was discovered by plaintiff Rosa

Solleza, when she paid the realty taxes for the two parcels
of land at the Lucban Treasurer's office. Rosa Solleza wanted
to confront defendant Melanio Imperial relative to the sale
but could not find the latter. Attempts were made to
amicably settle the problem between uncle and nephews
and nieces, but to not avail. Thus, plaintiffs filed this case,
wherein defendant Melanio without giving any share of the
proceeds, to Adela Imperial, lot No. 1091 should be
reconveyed or returned to Adela Imperial and/or the estates
of Adela Imperial.
After trial on the merits, the Regional Trial Court of Lucena
City, Branch 60 3, rendered its decision, the dispositive
portion of which reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
(a) Ordering Melanio Imperial to pay the plaintiffs the sum of
P10,000.00 plus 16% interest thereon commencing on May
4, 1985 until fully paid;
(b) Ordering Melanio Imperial to pay the plaintiffs the sum of
P7,500.00 attorney's fee and litigation expenses;
(c) Ordering Melanio Imperial to pay the plaintiff(s) the sum
of P5,000.00 as exemplary damages; and
(d) Declaring Melanio Imperial as the true and rightful owner
of Lot No. 1091. (Original Records, pp. 131-132)
Plaintiffs (private respondents) and defendant (petitioner
herein) interposed separate appeals with the respondent
Court, which upheld herein private respondents and
affirmed the findings of the trial court that "the document
(Exh. B) executed by Adela Imperial, (was) simulated."
Respondent Court quoted the trial court thus:
Defendant Melanio argues that he is the owner of Lot No.
1052 by way of a waiver of the right executed by Adela in a
document captioned as "Pagtalikod sa Karapatan" (Exh. B).
Examination of the evidence, however, shows that said
document (Exh. B) was a simulated contract as may be seen
in another document also executed by Adela and Melanio

entitled "Pagwalang Bisa sa Pagtalikod sa Karapatan" (see

Exhibit C).
The appellate Court noted that the purpose of the simulated
document was to facilitate the registration of the two lots in
the name of herein petitioner Melanio, who however
breached the trust reposed upon him by his sister Adela.
The respondent Court agreed that "(beyond doubt,
therefore, lot Nos. 1052 and 1091 were owned in common
by defendant-appellee Melanio and Adela Imperial, mother
of plaintiffs-appellants." The respondent Court also ruled
that, contrary to the claim of herein petitioner and
contrary to the finding of the trial court Adela Imperial
never sold her 1/2 share of lot 1091 to herein petitioner.
Thus, when herein petitioner Melanio appropriated for
himself the entire proceeds from the sale of lot 1052, he was
"deemed to have waived his share in lot 1091 in favor of
Adela Imperial and/or her heirs . . . Lot No. 1091 should now
be solely owned by (the herein private respondents)",
otherwise "Melanio would be enriching himself at the
expense of his sister, Adela" and/or her heirs. Thus, the
respondent Court ruled:
WHEREFORE, the appealed decision is REVERSED and SET
ASIDE, and judgment is hereby rendered in favor of
plaintiffs:
1. Declaring lot No. 1091, covered by Original Certificate of
Title No. P-26596, is owned by plaintiffs as heirs of Adela
Imperial;
2. Ordering the cancellation of Original Certificate of Title
No. P-26596 in the name of defendant Melanio Imperial and
in lieu thereof, another title be issued in the name of
plaintiffs as the heirs of Adela Imperial;
3. Ordering Melanio Imperial to pay plaintiffs the sum of
P10,000.00 as moral damages and the sum of P5,000.00 as
exemplary damages;
4. Ordering Melanio Imperial to pay plaintiff the sum of
P10,000.00 as litigation expenses and attorney's fees.
The Issues
Page 143 of 404

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On appeal, petitioner alleged the following generalities:

1. The respondent Court of Appeals abused its discretion in
deciding this case not in accordance with the evidence on
record, amounting to excess in jurisdiction, thereby
departing from the accepted and usual course of judicial
proceedings.
2. The respondent Court of Appeals decided questions of
substance in a way not in accord with law or with the
applicable decisions of the Supreme Court and the petitioner
have (sic) no other plain, speedy and adequate remedy in
the course of law.
Simply put, petitioner challenges the findings of fact of the
respondent Court that he appropriated for himself the entire
proceeds from the sale of Lot 1052 and failed to give onehalf of the proceeds to Adela Imperial or her heirs, the
private respondents in this appeal. Petitioner, on the
strength of the reversed findings of the trial court, claims
that he had already paid Adela Imperial the amounts of
"P4,575.00 on June 16, 1979; P200.00 on November 8, 1979
and another P200.00 on May 7, 1980 as shown in Exhibits
'4', '4-A' and '4-B'." He further alleges that the sum of these
amount represent one-half () of the price of Lot No. 1091
during the time the sale was transacted. And if Lot 1091
would be solely owned by the private respondents to the
exclusion of himself, he would be deprived of his share of
the inheritance which would be unjust and contrary to law. 4
The Court's Ruling
Petitioner would like this Court to re-appreciate and reevaluate the evidence all over again and make findings
contrary to those of the respondent Court. Generally
speaking, factual findings of the Court of Appeals are final
and conclusive on the Supreme Court. 5 In this particular
case, we see no cogent or sufficient reason to depart from
the above rule absent any clear showing that the findings
complained of are totally devoid of support in the record, or
that they are so glaringly erroneous as to constitute serious
abuse of discretion. Such findings must stand, for this Court

is not expected or required to examine or contrast the oral

and documentary evidence submitted by the parties. 6
The disputed portion of the Decision reads thus:
However, the trial court said that Adela Imperial "sold her
share to Melanio on lot No. 1091." This conclusion was
based on three receipts (Exhs. 4, 4-A and 4-B) which show
that on June 16, 1989, November 8, 1979, and May 7, 1980,
defendant-appellee Melanio Imperial paid to Adela Imperial
the amounts of P4,575.00, P200.00, respectively. The court
a quo erred. The last receipts is dated May 7, 1980 (Exh. 4B). Adela Imperial died on May 4, 1986, six years thereafter.
No deed of sale was executed by Adela Imperial in favor of
defendant-appellee Melanio Imperial ceding lot 1091.
Furthermore, the receipts do not show it is in payment of
Adela Imperial's one-half share of the lot. If this was the
intention of the parties, then the purchase price and the
balance after each payment should have been reflected in
the receipts. The only logical conclusion is that the amounts
remitted by defendant-appellee Melanio were the shares
Adela Imperial for the sale of subdivision lots in lot NO.
1091. This is so since the document executed by defendantappellee Melanio Imperial entitled "Sa Sino Mang Dapat
Makatalastas Nito" (Exh. E) states in part:
". . . aking pinatutunay na bukod sa ang aking kapatid na si
Adela Imperial ay may 1/2 bahagi sa naulit na mga lupain na
nababanggit sa naulit na documento, ay 1/2 rin siya sa lahat
ng maaring mapagbilhan ng mga lote ng naulit na
pangagari matapos na ito ay mapalagyan ng subdivision."
which in English means: "I hereby attest that aside from the
share of my sister Adela Imperial in the lots mentioned in
the aforementioned documents, she will also receive
share in the proceeds of the sale in the said lots, after they
are subdivided."
Therefore, Adela Imperial never sold her 1/2 share of lot
1091 to defendant Melanio Imperial, contrary to the finding
of the court a quo.

Page 144 of 404

LAW ON PROPERTY

Still, in order to satisfy ourselves, we examined the three

receipts aforesaid, which are critical to petitioner's
contention, and we agree with respondent Court that the
amounts mentioned therein as having been paid by herein
petitioner to Adela Imperial were not intended to be part of
the purchase price of Lot 1091. The three receipts bear the
following contents:
1. Receipt dated June 16, 1979:
Tinanggap ko sa aking kapatid na si Melanio Imperial ang
halagang Four Thousand Five Hundred seventy five
P4,575.00 bilang kabahagi ng lote no. 1091 sa Lucban,
Quezon.
Received by
(sgd.)
Adela Imperial
2. Receipt dated November 8, 1979:
(sgd.) Adela Imperial
Received from Brother Melanio Imperial the sum of Two
Hundred P200.00 as partial for lot 1091.
3. Receipt dated May 7, 1980:
Tinanggap ko kay Melanio Imperial ang halagang dalawang
daang P200. bilang kabahagi sa lote 1091.
Received by
(sgd.)
Adela I. Solleza
It is clear to this Court that the amounts covered by the
receipts, considered in relation to the agreement between
petitioner and Adela Imperial Solleza entitled "Sa Sino Mang
Dapat Makatalastas Nito", constituted the latter's share in
the proceeds of the sales of subdivision lots which were part
of Lot No. 1091. 7 For if the sale of Lot 1091 to the petitioner
was what was indeed intended by the parties, then it is most

unusual and surprising as the Court of Appeals correctly

observed that the petitioner did not ask for the execution
of a Deed of Sale ceding to him the share of Adela in Lot No.
1091 within the period of six (6) years from the date of the
last receipt, considering that Adela died on May 4, 1986.
Only when he was sued for annulment of OCT No. 26596
covering Lot No. 1091 did he raise as a defense the
allegation that he had already acquired the share of this
sister in said lot.
Inasmuch as the terms of the agreement between Adela and
Melanio provide for one-half undivided share for petitioner
over Lots 1091 and 1052, and the petitioner in effect waived
his rights over one-half of the remaining Lot 1091 when he
sold and appropriated solely as his own the entire proceeds
from the sale of Lot 1052, law 8 and equity dictate that Lot
1091 9 should now belong to the estate of the late Adela
Imperial Solleza, represented by her heirs, private
respondents in this case. 10
On the other hand, the award of moral and exemplary
damages is appropriate in this case, for the petitioner acted
in bad faith 11 and breached the trust reposed in him by
virtue of his contract with his late sister. This was clearly
manifested when he sold Lot 1052 without informing Adela
or her heirs and giving a share of the sales proceeds to
them. Additionally, he even avoided talking to private
respondent Rosa Solleza (now Arquiza) when she tried to
ask why he sold Lot 1052 in spite of the co-ownership
existing with between her mother and the petitioner over
said Lot. 12 Additionally, attorney's fees are also
recoverable when exemplary damages are awarded. 13
WHEREFORE, premises considered, the herein petition is
hereby DENIED for lack of merit, no reversible error having
been committed by respondent Court. The assailed Decision
is AFFIRMED in toto. No costs.
SO ORDERED.
ARTICLE 494
G.R. No. 72694 December 1, 1987
Page 145 of 404

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AURORA DEL BANCO, EVELYN DEL BANCO, FEDERICO TAINO,

SOLEDAD TAINO, JOVENCIO TAINO, SAMSON TAINO, NOE
TAINO, SOCORRO TAINO and CLEOFAS TAINO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Second Civil Cases
Division), ALEJANDRA PANSACOLA, LEONILA ENCALLADO,
VEDASTO ENCALLADO, JOSE YEPES, et al., respondents.

For this purpose, this case is hereby remanded to the Court

of origin so that a final partition shall be made in accordance
with Sections 2, 3, et. seq., Rule 69 of the Rules of Court.
Let a copy of this decision be furnished to the Register of
Deeds for the Province of Quezon.
The facts of the case are taken from the decision of the
Appellate Court (Rollo, p. 39) as follows:

PARAS, J.:
This is a petition for review on certiorari by way of appeal
from: (a) the decision of respondent Court of Appeals
(Intermediate Appellate Court) * promulgated on May 17,
1985 in AC-G.R. CV No. 70460, entitled "Alejandra
Pansacola, et al. vs. Domen Villabona del Banco, et al."
which reversed and set aside the judgment ** of the trial
court; and (b) its resolution ** of October 15, 1985 in the
same case, denying petitioners' motion for reconsideration
of the aforementioned decision and their supplement to
motion for reconsideration.
The dispositive portion of the questioned decision (Rollo, p.
97) reads, as follows:
ACCORDINGLY, the decision appealed from is hereby SET
ASIDE insofar as it dismisses the complaint, and another one
entered
(1) Declaring plaintiffs-appellants and defendants-appellees,
in their respective capacities as described in par. V of the
complaint, as co-owners of the property in dispute, but
subject to the four-part pro-indiviso division already made
by said property;
(2) Ordering the cancellation of all certificates of title that
may have been issued to any of the parties hereto; and
(3) Ordering the complete and final partition of the subject
property in conformity with law.

In a document executed in the Municipality of San Rafael,

Bulacan, on February 11, 1859, three brothers, Benedicto
Pansacola, Jose Pansacola and Manuel Pansacola (known as
Fr. Manuel Pena) entered into an agreement which provided,
among others:
(1) That they will purchase from the Spanish Government
the lands comprising the Island of Cagbalite which is located
within the boundaries of the Municipality of Mauban,
Province of Tayabas (now Quezon) and has an approximate
area of 1,600 hectares;
(2) That the lands shall be considered after the purchase as
their common property;
(3) That the co-ownership includes Domingo Arce and
Baldomera Angulo, minors at that time represented by their
father, Manuel Pansacola (Fr. Manuel Pena) who will
contribute for them in the proposed purchase of the
Cagbalite Island;
(4) That whatever benefits may be derived from the Island
shall be shared equally by the co-owners in the following
proportion: Benedicto Pansacola-1/4 share; Jose Pansacola1/4 share; and, Domingo Arce and Baldomera Angulo-2/4
shares which shall be placed under the care of their father,
Manuel Pansacola (Fr. Manuel Pena).
On August 14, 1866, co-owners entered into the actual
possession and enjoyment of the Island purchased by them
from the Spanish Government. On April 11, 1868 they
agreed to modify the terms and conditions of the agreement
entered into by them on February 11, 1859. The new
agreement provided for a new sharing and distribution of
Page 146 of 404

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the lands, comprising the Island of Cagbalite and whatever

benefits may be derived therefrom, as follows:
(a) The first one-fourth (1/4) portion shall belong to Don
Benedicto Pansacola;
(b) The second one-fourth (1/4) portion shall belong to Don
Jose Pansacola;
(c) The third one-fourth(1/4) portion shall henceforth belong
to the children of their deceased brother, Don Eustaquio
Pansacola, namely: Don Mariano Pansacola,- Maria
Pansacola and Don Hipolito Pansacola;
(d) The fourth and last one-fourth (1/4) portion shall belong
to their nephews and nieces (1) Domingo Arce, (2)
Baldomera Angulo, (3) Marcelina Flores, (4) Francisca Flores,
(5) Candelaria dela Cruz, and (6) Gervasio Pansacola who,
being all minors, are still under the care of their brother,
Manuel Pansacola (Fr. Manuel Pena). The latter is the real
father of said minors.
About one hundred years later, on November 18, 1968,
private respondents brought a special action for partition in
the Court of First Instance of Quezon, under the provisions of
Rule 69 of the Rules of Court, including as parties the heirs
and successors-in-interest of the co-owners of the Cagbalite
Island in the second contract of co-ownership dated April 11,
1968. In their answer some of the defendants, petitioners
herein, interposed such defenses as prescription, res
judicata, exclusive ownership, estoppel and laches.
After trial on the merits, the trial court rendered a decision
*** dated November 6, 1981 dismissing the complaint, the
dispositive portion of which reads as follows:
WHEREFORE, and in the fight of all the foregoing this Court
finds and so holds that the Cagbalite Island has already
been partitioned into four (4) parts among the original coowners or their successors-in-interest.
Judgment is therefore rendered for the defendants against
the plaintiffs dismissing the complaint in the above entitled
case.

Considering that the cross claims filed in the above entitled

civil case are not compulsory cross claims and in order that
they may be litigated individually the same are hereby
dismissed without prejudice.
IT IS SO ORDERED.
The motion for reconsideration filed by the plaintiffs, private
respondents herein, was denied by the trial court in an order
dated February 25, 1982 (Record on Appeal, p. 241).
On appeal, respondent Court reversed and set aside the
decision of the lower court (Rollo, p. 117). It also denied the
motion for reconsideration and the supplement to motion for
reconsideration filed by private respondents, in its resolution
dated October 15, 1983 (Rollo, p. 86).
Instant petition was filed with the Court on December 5,
1985 (Rollo, p. 12). Petitioners Josefina Pansacola, et al.
having filed a separate petition (G.R. No. 72620) on the
same subject matter and issues raised in the instant
'petition, the counsel for private respondents filed a
consolidated comment on the separate petitions for review
on February 24, 1986 with the First Division of the Court
(Rollo, p. 119). It appears that counsel for petitioners also
filed a consolidated reply to the consolidated comment of
private respondents as required by the Second Division of
the Court (Rollo, p. 151). However, petitioners filed a
separate reply in the instant case on February 18,1987
(Rollo, p. 168)as required by the Court in a Resolution of the
Second Division dated November 24, 1986 (Rollo, p. 160).
On May 19, 1987, private respondents in the instant petition
filed a manifestation praying for the denial of the instant
petition in the same manner that G.R. No. 72620 was denied
by the Court in its Resolution dated July 23, 1986 (Rollo, p.
151). Their rejoinder to the reply of petitioners was filed on
May 25,1987 (Rollo, p. 179).
On June 8, 1987, the Court resolved to give due course to
the petition (Rollo, p. 192). The memorandum of private
respondents was mailed on July 18, 1987 and received in
the Court on July 29, 1987 (Rollo, p. 112); the memorandum
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for petitioners was mailed on August 18, 1987 and received

in the Court on September 7, 1987 (Rollo, p. 177).
The sole issue to be resolved by the Court is the question of
whether or not Cagbalite Island is still undivided property
owned in common by the heirs and successors-in-interest of
the brothers, Benedicto, Jose and Manuel Pansacola.
The Pansacola brothers purchased the Island in 1859 as
common property and agreed on how they would share in
the benefits to be derived from the Island. On April 11,
1868, they modified the terms and conditions of the
agreement so as to include in the co-ownership of the island
the children of their deceased brothers Eustaquio and the
other children of Manuel Pansacola (Fr. Manuel Pena) who
were committed in the agreement of February 11, 1859. The
new agreement provided for a new sharing proportion and
distribution of the Island among the co-owners.
On January 20, 1907, the representative of the heirs of all
the original owners of Cagbalite Island entered into an
agreement to partition the Island, supplemented by another
agreement dated April 18, 1908. The contract dated January
20, 1907 provides as follows:
Sa Mauban, Tayabas, ika 20 ng Enero ng 1907 caming mga
quinatawan ng mga ibang co-herederos na hindi caharap, sa
pulong na ito, sa nasa naming lahat na magcaroon na ng
catahimikan ang aming-aming cabahagui sa Pulong
Kagbalete sumacatuid upang mapagtoos ang hangahan ng
apat na sapul na pagcacabahagui nitong manang ito,
pagcacausap na naming lahat at maihanay at mapagtalonan
ang saysay ng isa't isa, ay cusa naming pinagcasunduan at
pinasiya ang nangasosonod:
Una: Ang malaquing calupaan, alis ang lahat na pacatan ay
babahaguin alinsunod sa pagcabaki na guinawa sa croquis
na niyari ng practico agrimensor Don Jose Garcia.
Icalawa: Ang Lomingoy, doon ang tuid na guhit sa ilong ng
Pait ay pagaapatin ding sinlaqui ayon sa dating
pagkakabaki.

Icatlo: Cung magawa na ang tunay na piano at icapit na sa

lupa, paglalagay ng nadarapat na mojon, ang masacupan ng
guhit, sumacatuid ang caingin at pananim ng isa na
nasacupan ng pucto na noocol sa iba, ay mapapasulit sa
dapat mag-ari, na pagbabayaran nito ang nagtanim sa
halagang:- bawat caponong niog na nabunga, P 1.00 'un
peso); cung ang bias ay abot sa isang vara, P 0.50; cung
bagong tanim o locloc P 0. 50 ang capono.
Icapat: Ang lahat na pacatan ay bacod na pagaapatin at
bawat bahagui ay noocol sa isat-isa sa apat na sanga ng
paganacang nagmana.
Icalima: Upang ang naipatanim ng bawat isa ay matama sa
canya ng mailagan ang hirap ng loob ng nagatikha; ay
pagtotolong-tolongan ng lahat naiba na mahusay ang
dalawang partes na magcalapit na mapa ayong tumama,
hangang may pagluluaran, sa nagsikap at maoyanam,
maidaco sa lugar na walang cailangang pagusapan.
Icanim: Ang casulatang ito, cung mapermahan na na
magcacaharap sampong ng mga ibang co-herederos na
notipicahan nitong lahat na pinagcasundoan ay mahahabilin
sa camay ng agrimensor, Amadeo Pansacola, upang
canyang mapanusugan ang maipaganap ang dito'y naootos.
Na sa catunayan at catibayan ng lahat na nalalagda dito, sa
pag galang at pag ganap dito sa paingacaisahan ay
pumirma sampo ng mga sacsing caharap at catanto
ngayong fecha ayon sa itaas.
The contract dated April 18, 1908 provides as follows:
Sa Mauban, ika 18 ng Abril ng 1908, sa pagcacatipon ng
lahat na firmantes nito ay pinagcaisahan itong
nangasosonod:
Una Pinagtitibay ang mga pinagcasundoan sa itaas noong
20 ng Enero ng 1907, liban na lamang sa mga pangcat na
una at icapat at tongcol doon pinasiya naming bahaguinin
ng halohalo at paparejo ang calupaan at pacatan.
Ycalawa Sa pagsucat ng agrimensor na si Amadeo at
paggawa ng piano at descripcion ay pagbabayaran siya ng
Page 148 of 404

LAW ON PROPERTY

sa bawat isa naoocol sa halagang isang piso sa bawat

hectares.
Icatlo Ang counting pucto sa 'Mayanibulong' na may
caingin ni G. Isidro Altamarino, asawa ni Restitute ay
tutumbasan naman cay G. Norberto Pansacola sa lugar ng
Dapo calapit ng Pinangalo ng gasing sucat.
Icapat Sa inilahad na piano ay pinasiya nang itoloy at
upang maca pagparehistro ang isa't isa ay pinagcaisahang
magcacagastos na parepareho para sa tablang pangmohon
at ibat iba pang cagastusan.
Sa catunayan at catibayan ay cami, pumirma. (Record on
Appeal, p. 224)
There is nothing in all four agreements that suggests that
actual or physical partition of the Island had really been
made by either the original owners or their heirs or
successors-in-interest. The agreement entered into in 1859
simply provides for the sharing of whatever benefits can be
derived from the island. The agreement, in fact, states that
the Island to be purchased shall be considered as their
common property. In the second agreement entered in 1868
the co-owners agreed not only on the sharing proportion of
the benefits derived from the Island but also on the
distribution of the Island each of the brothers was allocated
a 1/4 portion of the Island with the children of the deceased
brother, Eustaquio Pansacola allocated a 1/4 portion and the
children of Manuel Pansacola (Fr. Manuel Pena) also
allocated a 1/4 portion of the Island. With the distribution
agreed upon each of the co-owner is a co-owner of the
whole, and in this sense, over the whole he exercises the
right of dominion, but he is at the same time the sole owner
of a portion, in the instant case, a 1/4 portion (for each
group of co-owners) of the Island which is truly abstract,
because until physical division is effected such portion is
merely an Ideal share, not concretely determined (3
Manresa, Codigo Civil, 3rd Ed., page 486, cited in Lopez vs.
Cuaycong, 74 Phil. 601; De la Cruz vs. Cruz, 32 SCRA 307
[1970]; Felices vs. Colegado, 35 SCRA 173 [1970],; Dultra
vs. CFl 70 SCRA 465 [1976]; Gatchalian vs. Arlegui, 75 SCRA
234 [1977].)

In the agreement of January 20, 1907, the heirs that were

represented agreed on how the Island was to be partitioned.
The agreement of April 18, 1908 which supplements that of
January 20, 1907 reveals that as of the signing of the 1908
agreement no actual partition of the Island had as yet been
done. The second and fourth paragraphs of the agreement
speaks of a survey yet to be conducted by a certain Amadeo
and a plan and description yet to be made. Virgilio
Pansacola, a son of the surveyor named Amadeo who is
referred to in the contract dated April 18, 1908 as the
surveyor to whom the task of surveying Cagbalite Island
pursuant to said agreement was entrusted, however,
testified that said contracts were never implemented
because nobody defrayed the expenses for surveying the
same (Record on Appeal, p. 225).
Petitioners invoke res judicata to bar this action for partition
in view of the decision of the Court in G.R. No. 21033,
"Domingo Arce vs. Maria Villabona, et al.," 21034, "Domingo
Arce vs. Francisco Pansacola, et al.," and 21035, "Domingo
Arce vs. Emiliano Pansacola, et al." promulgated on February
20, 1958 (Rollo, p. 141) and Brief for Defendants-Appellees,
p. 87 Appendix 1), wherein the Court said:
Considering the facts that he waited for a period of nearly
23 years after the return from his deportation before taking
any positive action to recover his pretended right in the
property in question, gives great credit, in our opinion, to
the declaration of the witnesses for the defense (a) that the
original parcel of land was partitioned as they claim, and (b)
that the plaintiff had disposed of all the right and interest
which he had in the portion which had been given to him.
The issue in the aforementioned case which were tried
together is not whether there has already been a partition of
the Cagbalite Island. The actions were brought by the
plaintiff to recover possession of three distinct parcels of
land, together with damages. In fact the word partition was
used in the metaphysical or Ideal sense (not in its physical
sense).
Commenting on the above ruling of the Court in connection
with the instant case, the respondent Court said:
Page 149 of 404

LAW ON PROPERTY

Concededly, the Supreme Court decision in G.R. Nos. 2103335 (Exh. X) did use or employ the word "partition." A careful
reading of the said decision will, however, reveal, and we so
hold, that the employment or use of the word "partition"
therein was made not in its technical and legal meaning or
sense adverted to above, but, rather in its Ideal, abstract
and spiritual sense, this is (at) once evident from the bare
statement in said decision to the effect that the property
was divided into four parts, without any reference to the
specific parts of the property that may have been
adjudicated to each owner. There being no such reference in
the decision and in the judgment affirmed therein to the
adjudication of specific and definite portions of the property
to each co-owner, there is a clear and logical inference that
there was indeed no adjudication of specific and definite
portions of the property made to each co-owner.
It must be admitted that the word "partition" is not
infrequently used both in popular and technical parlance
(Fule vs. Fule, 52 Phil. 750 [1929]). For purposes of the
aforementioned case, evidently the Court used the word
"partition" to refer to the distribution of the Cagbalite Island
agreed upon by the original owners and in the later
agreements, by the heirs and their subsequent successorsin-interest. There need not be a physical partition; a
distribution of the Island even in a state of indiviso or was
sufficient in order that a co-owner may validly sell his
portion of the co-owned property. The sale of part of a
particular lot thus co-owned by one co-owner was within his
right pro-indiviso is valid in its entirety (Pamplona vs.
Moreto, 96 SCRA 775 [1980]) but he may not convey a
physical portion with boundaries of the land owned in
common (Mercado vs. Liwanag, 5 SCRA 472 [1962]).
Definitely, there was no physical partition of the Island in
1859. Neither could there have been one in 1894 because
the manner of subdividing the Island was only provided for
in the later agreements entered into by the heirs in 1907
and 1908. There was a distribution of the Island in 1868 as
agreed upon by the original co-owners in their agreement of
April 11, 1868. Any agreement entered into by the parties in
1894 could be no more than another agreement as to the
distribution of the Island among the heirs of the original coowners and the preparation of a tentative plan by a practical
surveyor, a Mr. Jose Garcia, mentioned in the first paragraph

of the 1907 agreement, preparatory to the preparation of

the real plan to be prepared by the surveyor Amadeo,
mentioned in the agreement of April 18, 1908.
What is important in the Court's ruling in the three
aforementioned cases is that, the fact that there was a
distribution of the Island among the co-owners made the
sale of Domingo Arce of the portion allocated to him though
pro-indiviso, valid. He thus disposed of all his rights and
interests in the portion given to him.
It is not disputed that some of the private respondents and
some of the petitioners at the time the action for partition
was filed in the trial court have been in actual possession
and enjoyment of several portions of the property in
question (Rollo, p. 148). This does not provide any proof that
the Island in question has already been actually partitioned
and co-ownership terminated. A co-owner cannot, without
the conformity of the other co-owners or a judicial decree of
partition issued pursuant to the provision of Rule 69 of the
Rules of Court (Rule 71 of the Old Rules), adjudicate to
himself in fee simple a determinate portion of the lot owned
in common, as his share therein, to the exclusion of other
co-owners (Santos, Jr. vs. Buenconsejo, 14 SCRA 407 [1965];
Carvajal vs. Court of Appeals, 112 SCRA 237 [1982]). It is a
basic principle in the law of co-ownership both under the
present Civil Code as in the Code of 1889 that no individual
co- owner can claim any definite portion thereof (Diversified
Credit Corporation vs. Rosada 26 SCRA 470 [1968]). lt is
therefore of no moment that some of the co-owners have
succeeded in securing cadastral titles in their names to
some portions of the Island occupied by them (Rollo, p. 10).
It is not enough that the co-owners agree to subdivide the
property. They must have a subdivision plan drawn in
accordance with which they take actual and exclusive
possession of their respective portions in the plan and titles
issued to each of them accordingly (Caro vs. Court of
Appeals, 113 SCRA 10 [1982]). The mechanics of actual
partition should follow the procedure laid down in Rule 69 of
the Rules of Court. Maganon vs. Montejo, 146 SCRA 282
[1986]).

Page 150 of 404

LAW ON PROPERTY

Neither can such actual possession and enjoyment of some

portions of the Island by some of the petitioners herein be
considered a repudiation of the co-ownership. It is
undisputed that the Cagbalite Island was purchased by the
original co-owners as a common property and it has not
been proven that the Island had been partitioned among
them or among their heirs. While there is co-ownership, a
co-owner's possession of his share is co-possession which is
linked to the possession of the other co-owners (Gatchalian
vs. Arlegui, 75 SCRA 234 [1977]).

MARIA BICARME assisted by her husband JOSE BALUBAR,

petitioner,
vs.
COURT OF APPEALS and CRISTINA BICARME, respondents.

Furthermore, no prescription shall run in favor of a co-owner

against his co-owners or co-heirs so long as he expressly or
impliedly recognizes the co-ownership (Valdez vs. Olonga,
51 SCRA 71 [1973], Tero vs. Tero, 131 SCRA 100 [1984]). Coowners cannot acquire by prescription the share of the other
co-owners, absent a clear repudiation of the co-ownership
clearly communicated to the other co-owners (Mariano vs.
De Vega, 148 SCRA 342 [1987]).

MEDIALDEA, J.:

An action for partition does not prescribe. Article 403 of the

Old Civil Code, now Article 497, provides that the assignees
of the co-owners may take part in the partition of the
common property, and Article 400 of the Old Code, now
Article 494 provides that each co-owner may demand at any
time the partition of the common property, a provision
which implies that the action to demand partition is
imprescriptible or cannot be barred by laches (Budlong vs.
Pondoc, 79 SCRA 24 [1977]). An action for partition does not
lie except when the co-ownership is properly repudiated by
the co- owner (Jardin vs. Hollasco, 117 SCRA 532 [1982]).
On July 23, 1986, the Court through its Second Division
denied the petition for the review of G.R. No. 72620, the
petition for review on certiorari separately filed by Josefina
Pansacola (Rollo, p. 151).
PREMISES CONSIDERED, the instant petition is likewise
DENIED for lack of merit.
SO ORDERED.
G.R. No. L-51914 June 6, 1990

Paterno Aquiao for petitioner.

Demetrio V. Pre for private respondent.

This petition seeks to set aside the appealed decision of the

lower court 1 as affirmed by the appellate court on August
28, 1979, directing the amicable partition of two parcels of
land between Cristina Bicarme (private respondent) and her
aunt Maria Bicarme (petitioner), as well as the Resolution,
dated October 5, 1979, denying petitioner's motion for
reconsideration.
The affirmed decision of the lower court, rendered on
December 22, 1975, disposes as follows:
(a) That Maria Bicarme and Cristina Bicarme are the only
surviving co-heirs and co-owners and entitled in equal
shares over the parcel of land in litigation and described
under paragraph 3 of the complaint;
(b) That the alleged deeds of Sale executed by Maria
Bicarme covering and affecting the two parcels of land in
suit are declared null and void in so far (sic) as they affect
and/or cover the one-half undivided share and inheritance of
plaintiff Cristina Bicarme;
(c) Maria Bicarme is ordered to account and/or pay the value
corresponding to the one-half () undivided shares of
Cristina Bicarme in the yearly fruits of the land and to
commence from the filing of this complaint; that is seventy
five bundles of palay valued at P375.00 with legal interest
fully paid;
(d) That the parties are hereby ordered within (15) days
from receipt of this decision to amicably agree upon a
Page 151 of 404

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written partition and to submit the same for approval,

parties shall appoint a Commissioner to effect and carry out
effectively the partition of the 2 parcels of land in equal
parts between the plaintiff and the defendant;
(e) Defendant and her hirelings and representatives are
forever ordered to refrain from molesting the Commissioner
in the discharge of his duty to partition said two (2) parcels
of land in suit;
(f) And, Defendant to pay Attorney's fee and cost of this suit.
SO ORDERED. (pp. 40-41, Record on Appeal)
Petitioner-defendant Maria Bicarme appealed.
The Court of Appeals affirmed the decision; hence, this
petition.
The main issue in this case dwells on ownership rights over
the litigated parcels of land.
As established by the trial court, Sps. Juan Bicarme and
Florencia Bidaya were the original co-owners of two parcels
of land described as follows:
1. Cornland in Palao, Bangued, Abra, bounded on the NorthHill, on the East-Brono Barbers, on the South-Casimiro Palos,
and on the West-Clemente Baldozan, of about 8,721 sq. m.,
assessed at P400.00 under Tax Dee. No. 7764;
2. Riceland in Palao, Bangued, Abra, bounded on the NorthMacario Bolos, East- Roberto Bicarme, South-Juliana
Baldozan, and West-Telesporo, about 1,539 sq. m., assessed
at P 60.00, under Tax Dec. No. 7765;
.... (P. 10, Record on Appeal)
The spouses died intestate and were survived by three
children-Victorina Bicarme, Sebastian Bicarme and Maria
Bicarme. Sebastian Bicarme died when he was a little boy
and without any issue. Later, Victorina Bicarme died
intestate, survived by her only daughter, Cristina Bicarme.

Cristina claims that upon the death of her grandparents,

Sps. Juan and Florencia, her mother Victorina and her aunt,
Maria, became co-owners or co-heirs of the litigated parcels
of land. Upon the death of her mother, Victorina, Cristina
became co-heirs with Maria, having inherited the share and
interest of her mother corresponding to one-half of the two
parcels of land.
Cristina instituted this action for partition, because her aunt,
Maria, refused to share with her the yearly fruits of the
disputed parcels of land. Maria, however, maintains that
"she acquired these two parcels of land in 1925 (cornland)
and 1926 (riceland) from the deceased spouses Placido
Bidaya and Margarita Bose and since then until the present,
had been in open, public, peaceful, continuous, adverse
possession and enjoyment and in the concept of absolute
owner thereof Maria further claims that Cristina, her niece,
never shared or contributed to the payment of taxes of said
two parcels of land; and, finally, that Cristina Bicarme was
presumed already dead" (p. 35, Record on Appeal).
In ruling Maria and Cristina to be co-heirs, the trial court
relied on a provision separately stated in three deeds of sale
executed by Maria as follows:
That I am the sole and absolute owner over the above
described cornland having acquired the same by inheritance
from my late father Juan Bicarme;" (See Exhibits '4', '5', '6',
and '7' or Exhibits 'A-1,' 'B-1,' 'C-1', and 'D-1'; (p. 37, Record
on Appeal, emphasis supplied)
The trial court stated that the provision was in the nature of
a trust provision in favor of Cristina as a co-owner/co-heir.
We agree. By admitting that the cornland is inherited
property, Maria, in effect, recognized Cristina's lights thereto
as a co-heir/co-owner. As the trial court theorized:
xxx xxx xxx
(6) That Victorina Bicarme and Maria Bicarme never
partitioned even orally the two parcels of lands which were
then owned in common by them;
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LAW ON PROPERTY

(7) . That even after the death of Victorina Bicarme, the land
in suit remained undivided and were therefore in the
possession of Maria Bicarme because her niece Cristina
Bicarme went to Manila and now married and presently
residing at No. 22, 11th Avenue, Grace Park, Caloocan City.
(8) That without the knowledge and consent of Cristina
Bicarme who was then of legal age, her aunt Maria Bicarme
executed on April 27, 1973 a Deed of absolute Sale (Exhibit
'A') in favor of Marina Pizarro who acquired portion No. 3 of
the cornland; on the same date she also executed another
Deed of Sale (Exhibit 'B') in favor of Saturnino Pacopia, who
acquired portion No. 2 of the cornland; and, in June 16, 1965
again Maria Bicarme executed a third Deed of Sale (Exhibit
'C') in favor of Casimira Pacopia, who acquired portion No. 1
of the cornland;
(9) That these three (3) separated (sic) Deeds of Sale all
executed by Maria Bicarme over the cornland have a
respective total area of 740 square meters, more or less, for
portion No. 3; 1,836 square meters, more or less for portion
No. 2; and 1,265 square meters, more or less for portion No.
1, or a total area of 3,481 square meters more or less;
(10) That in these three separate Deeds of Sale, Maria
Bicarme expressly provided the aforesaid trust provision.
(pp. 36-37, Record on Appeal, emphasis ours)
Despite admission during the hearing on the Identity of the
land in question (see p. 21, Record on Appeal), Maria's
counsel, on appeal, re-emphasized her original claim that
the two parcels of land in her possession were acquired from
the Sps. Placido Biduya and Margarita Bose. However, the
private document relative to the purchase, was not
produced at the trial, allegedly because "they were placed in
a trunk in their house which were burned during the
Japanese Occupation." In 1945, Maria sold the riceland. No
written evidence was submitted. For all legal intents
therefore, the riceland remained inherited property. The
Identity of the cornland as inherited property can no longer
be disputed, in view of Maria's admission in the deeds of
sale she had executed, containing the trust provisions.

Having established Cristina's co-ownership rights, Maria

nonetheless insists that Cristina's rights are barred by
prescription under Secs. 40 and 41 of Act 190 (Code of Civil
Procedure, Article 1116, Civil Code) then the applicable law,
where the longest period of both acquisitive and extinctive
prescription was only ten years (Diaz v. Garricho, 103 Phil.
261, 266). In the present case, Cristina, it is alleged,
asserted her claims 34 years after her right of action
accrued, as follows:
... After Cristina left barrio Palao at the age of eleven (11),
she never returned until she was twenty two (22) years old
and married (pp. 32-34, tsn., Nov. 4, 1974). Upon her return
her grandmother Florencia Bidaya was already dead (p. 33,
Id). At that time, Cristina claimed her hereditary share in the
lands in question but her demands were ignored and
repudiated by her aunt Maria, Cristina admitted that ever
since the Japanese occupation when she was already of age,
her aunt Maria refused to recognize her rights to said lands
(pp. 41-42, Id.). From that moment when Maria ignored and
repudiated Cristina's hereditary rights, Cristina's right of
action already accrued and the period of prescription began
to run.
The instant action was filed only in 1974 (p. 1, Record on
Appeal), or some 34 years after it accrued. If she had any
rights at all, Cristina slept on her rights. The present action
is unquestionably barred by prescription. (pp. 27-28,
Appellants' Brief)
Against Maria's claims of acquisitive prescription, the lower
court ruled that Maria was as trustee with respect to
Cristina's share. As such, prescription, as a mode of
acquiring title, could not apply:
A co-owner is a trustee for the other co-owner. No one of the
co-owners may acquire exclusive ownership of the common
property thru prescription for possession by one trustee
alone is not deemed adverse to the rest (Castrillo vs. Court
of Appeals, 10 SCRA 549; Custodio vs. Casiano, 9 SCRA 841
and, Pascual vs. Meneses, 20 SCRA 219). (p. 6, Rollo)

Page 153 of 404

LAW ON PROPERTY

While We agree with the trial court that Maria and Cristina
are co-heirs, and that with respect to them prescription, as a
mode of acquisition, cannot apply, We hasten to elaborate
on certain aspects, which need clarification.
It is correct to say that possession by one co-owner (trustee)
is not deemed adverse to the others. In this sense, an action
to compel partition will lie at any time and does not
prescribe. It is, however, not legally correct to say that by
virtue of the imprescriptibility of an action for partition,
prescription as a mode of acquiring title, can never be
invoked, or in the present case, that Maria, as a co-owner
can never acquire the property by prescription.
An action for partition implies that the thing is still owned in
common. If a co-owner or co-heir holds the property in
exclusive adverse possession as owner, asserting sole and
exclusive dominion for the required period, he can acquire
sole title to it as against the co-heirs or co-owners. The
imprescriptibility of an action for partition cannot thus be
invoked when one of the co-owners has possessed the
property as exclusive owner, and for a period sufficient to
acquire it by prescription. From the moment one of the coowners claims that he is the absolute and exclusive owner of
the properties and denies the others any share therein, the
question involved is no longer one of partition, but of
ownership. (A. Tolentino, Civil Code of the Phil., Ann., Vol. II,
pp. 192-193; Bargayo v. Comumot, 40 Phil. 856, at p. 870).
In this sense, the trial court erred in saying that there can be
no prescription (as a mode of acquiring title) in favor of a coowner/trustee.
Having clarified this issue, the main question to be resolved
is whether or not Maria has been in possession of the lands
in question under the conditions required by Section 41 of
the Code of Civil Procedure, as to uphold acquisitive
prescription in her favor.
One of the conditions imposed by said section is th