PROPERTY MIDTERM CASES

PHILIPPINE REFINING COMPANY V. JARQUE

FACTS:
Plaintiff Philippine Refining Co. and defendant Jarque executed three mortgages on the motor vessels Pandan and
Zargazo. The documents were recorded as transfer and encumbrances of the vessels for the port of Cebu and each was
denominated a chattel mortgage.

The first two mortgages did not have an affidavit of good faith. A fourth mortgage was executed by Jarque and Ramon
Aboitiz over motorship Zaragoza and was entered in the Chattel Mortgage Registry on May 12, 1932, within the period of
30 days prior to the foreclosure/institution of the insolvency proceedings.

Jose Curaminas filed with the CFI of Cebu a petition praying that Francisco Jarque be declared an insolvent debtor. This
was granted and Jarque’s properties were then assigned to Curaminas.

A problem arose when Judge Jose Hontiveros declined to order the foreclosure of the mortgages, and instead, ruled that
they were defective because they did not have affidavits of good faith.

ISSUE:
1. Whether or not the mortgages of the vessels are governed by the Chattel Mortgage Law
2. Whether or not an affidavit of good faith is needed to enforce achattel mortgage on a vessel

RULING:
Yes. “Personal property” includes vessels. They are subject to the provisions of the Chattel Mortgage Law. The Chattel
Mortgage Law says that a good chattel mortgage includes an affidavit of good faith. The absence of such affidavit makes
mortgage unenforceable against creditors and subsequent encumbrances. The judge was correct.

Note: A mortgage on a vessel is generally like other chattel mortgages. The only difference between a chattel mortgage
of a vessel and a chattel mortgage of other personalty is that the first must be noted in the registry of the register of
deeds.

Mindanao Bus Co. v. City Assessor Digest

G.R. No. L-17870 29 September 1962

Facts: Petitioner is a public utility company engaged in the transport of passengers and cargo by motor vehicles in
Mindanao with main offices in Cagayan de Oro (CDO). Petitioner likewise owned a land where it maintains a garage, a
repair shop and blacksmith or carpentry shops. The machineries are placed thereon in wooden and cement platforms.
The City Assessor of CDO then assessed a P4,400 realty tax on said machineries and repair equipment. Petitioner
appealed to the Board of Tax Appeals but it sustained the City Assessor's decision, while the Court of Tax Appeals (CTA)
sustained the same.
Note: This is merely a case digest to aid in remembering the important points of a case. It is still advisable for any student
of law to read the full text of assigned cases.
Issue: Whether or not the machineries and equipments are considered immobilized and thus subject to a realty tax
Held: The Supreme Court decided otherwise and held that said machineries and equipments are not subject to the
assessment of real estate tax.
Said equipments are not considered immobilized as they are merely incidental, not esential and principal to the business
of the petitioner. The transportation business could be carried on without repair or service shops of its rolling equipment
as they can be repaired or services in another shop belonging to another

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No. L-40411 August 7, 1935

Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. 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 party of the second part
shall pass to the exclusive ownership of the lessor without any obligation on its part to pay any amount for said
improvements and buildings; which do not include the machineries and accessories in the improvements.

In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the
defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant; a writ of execution
issued thereon, and the properties now in question were levied upon as personalty by the sheriff. No third party claim
was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein

It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal property by
executing chattel mortgages in favor of third persons. One of such is the appellee by assignment from the original
mortgages.

The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.

Issue:
whether or not the machineries and equipments were personal in nature.

Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.

Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property
or plant, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such
person acted as the agent of the owner.

PRUDENTIAL BANK V. PANIS

153 SCRA 390

FACTS:
Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed a real estate mortgage
over a residential building. The mortgage included also the right to occupy the lot and the information about the sales
patent applied for by the spouses for the lot to which the building stood. After securing the first loan, the spouses
secured another from the same bank. To secure payment, another real estate mortgage was executed over the
same properties.
The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was later on mortgaged to the
bank.

The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold in public auction despite
opposition from the spouses. The respondent court held that the REM was null and void.

HELD:
A real estate mortgage can be constituted on the building erected on the land belonging to another.

The inclusion of building distinct and separate from the land in the Civil Code can only mean that the building
itself is an immovable property.

While it is true that a mortgage of land necessarily includes in the absence of stipulation of the improvements
thereon, buildings, still a building in itself may be mortgaged by itself apart from the land on which it is built. Such a
mortgage would still be considered as a REM for the building would
still be considered as immovable property even if dealt with separately and apart from the land.

The original mortgage on the building and right to occupancy of the land was executed before the issuance of the
sales patent and before the government was divested of title to the land. Under the foregoing, it is evident
that the mortgage executed by private respondent on his own
building was a valid mortgage.

As to the second mortgage, it was done after the sales patent was issued and thus prohibits pertinent provisions of the
Public Land Act.

Caltex (Philippines) Inc., vs. Central Board of Assessment Appeals and City Assessor of Pasay

Facts:
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 city assessor of Pasay City characterized the said items of gas station equipment and machinery as
taxable realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax
appeals ruled that they are personalty. The assessor appealed to the Central Board of Assessment Appeals. The Board,
which was in its decision of June 3, 1977 that the said machines and equipment are real property under the Real
Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974. The decision was reiterated by the
Board in its resolution of January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was received by
its lawyer on April 2, 1979.On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of
the Board's decision and for a declaration that t he said machines and equipment are personal property not subject to
realty tax. We 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. Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized
when placed in a plant by the owner of the property or plant but not when so placed by a tenant, a usufructuary, or any
person having only a temporary right, unless such person acted as the agent of the owner (Davao Saw Mill Co. vs.
Castillo, 61 Phil 709).

Issue:
Whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax

Held:
Yes. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code.
Under, Sec. 38 of the said law: “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
installations and appurtenant service facilities, together with all other equipment designed for or essential to its
manufacturing, industrial or agricultural purposes.” The equipment and machinery, are considered 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. Improvements on land are commonly taxed as realty
even though for some purposes they might be considered personalty. "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"

BENGUET CORPORATION VS. CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA) GR NO. 106041 January 29, 1993
July 31, 2017
FACTS:

The realty tax assessment involved in this case amounts to Php 11, 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 Assessments Appeals of the Province of Zambales. The
appeal was dismissed.

The petitioner seasonably elevated the matter to the CBAA which 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.

ISSUE:

Whether the tailings dam is subject to realty tax because it is an improvement upon the land.

RULING:

Yes. 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: Par (1) and
(3).

Sec. 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, buidings, machinery and other improvements" not specifically exempted in Sec. 3 thereof. A reading of
that section shows that the tailings dam of the petitioner does not fall under any of the classes exempt real properties
therein enumerated.
Is the tailings dam an improvement on the mine?

Under Section 3 of the Real Property Tax Code:

Improvement - 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 future purposes.

The term has also been interpreted as "artificial alterations of the physical condition of the ground that are reasonably
permanent in character.

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 is convinced that the subject dam falls within the definition of an "improvement" because it is permanent in
character and it enhances 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.

TUMALAD V. VICENCIO

Although a building is an immovable; the parties to a contract may by agreement treat as personal property that
which by nature is a real property however they are estopped from subsequently claiming otherwise.

FACTS:
Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino and Generosa Tumalad. To guaranty said
loan, Vicencio executed a chattel mortgage in favor of Tumalad over their house of strong materials which stood on a
land which was rented from the Madrigal & Company, Inc. When Vicencio defaulted in paying, the house was
extrajudicially foreclosed, pursuant to their contract. It was sold to Tumalad and they instituted a Civil case in the
Municipal Court of Manila to have Vicencio vacate the house and pay rent.

The MTC decided in favor of Tumalad ordering Vicencio to vacate the house and pay rent until they have completely
vacated the house. Vicencio is questioning the legality of the chattel mortgage on the ground that 1) the signature on it
was obtained thru fraud and 2) the mortgage is a house of strong materials which is an immovable therefore can only be
the subject of a REM. On appeal, the CFI found in favor of Tumalad, and since the Vicencio failed to deposit the rent
ordered, it issued a writ of execution, however the house was already demolished pursuant to an order of the court in an
ejectment suit against Vicencio for non-payment of rentals. Thus the case at bar.

ISSUE:
Whether or not the chattel mortgage is void since its subject is an immovable

HELD:
NO.
Although a building is by itself an immovable property, parties to a contract may treat as personal property that which by
nature would be real property and it would be valid and good only insofar as the contracting parties are concerned. By
principle of estoppel, the owner declaring his house to be a chattel may no longer subsequently claim otherwise.

When Vicencio executed the Chattel Mortgage, it specifically provides that the mortgagor cedes, sells and transfers by
way of Chattel mortgage. They intended to treat it as chattel therefore are now estopped from claiming otherwise. Also
the house stood on rented land which was held in previous jurisprudence to be personalty since it was placed on the
land by one who had only temporary right over the property thus it does not become immobilized by attachment.

[Vicencio though was not made to pay rent since the action was instituted during the period of redemption therefore
Vicencio still had a right to remain in possession of the property]

Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000

FACTS:

 PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of replevin.
 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.
 The sheriff proceeded to petitioner's factory, seized one machinery, with word that he would return for other
machineries.
 Petitioner (Serg’s Products) filed a motion for special protective order to defer enforcement of the writ of
replevin.
 PCI Leasing opposed the motion on the ground that the properties were still personal and therefore can still be
subjected to seizure and writ of replevin.
 Petitioner asserted that properties sought to be seized were immovable as defined in Article 415 of the Civil
Code.
 Sheriff was still able to take possession of two more machineries
In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the Agreement of the
parties, 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."

ISSUE: Whether or not the machineries became real property by virtue of immobilization.

Ruling:
Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the
RTC, because they were in fact real property.

Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal
property only.

Article 415 (5) of the Civil Code provides that 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

In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory
built on their own land.They were essential and principal elements of their chocolate-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.”

However, 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.

Section 12.1 of the Agreement between the parties provides “The PROPERTY is, and shall at all times be and remain,
personal property notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in any
manner affixed or attached to or embedded in, or permanently resting upon, real property or any building thereon, or
attached in any manner to what is permanent.”

The machines are personal property and they are proper subjects of the Writ of Replevin

G.R. No. L-17645 October 30, 1962

JULIANA ZAPATA, applicant-appellee,
vs.
DIRECTOR OF LANDS, opponent-appellant.
Abel de Ocera for applicant-appellee.
Office of the Solicitor General for opponent-appellant.
PADILLA, J.:
It appears that Juliana Zapata owns two parcels of land situated in the municipality of Santo Tomas, province of
Pampanga, adjoining a non-navigable and non-floatable river called the Candalaga Creek. The two parcels are designated
as Lot No. 25 and the northern part of Lot No. 16 of the Cadastral Survey of San Fernando, Pampanga. 1The first lot
contains a superficial area of 6,592 square meters and is registered in her name, as show by transfer certificate of title
No. 12907 issued by the Register of Deeds in and for the province of Pampanga (Exhibit A). Her ownership or title to a
part of Lot No. 16 was confirmed by a decree entered on 21 November 1955 by the Court of First Instance of Pampanga
ordering that the "remaining portion of Lot No. 16 with an area of 474 square meters" be registered "in the name of
Juliana Zapata" [(Exhibit A-1]; Cad. case No. 1, G.L. R.O. Cad. Record No. 137).
In 1915, when the cadastral survey of San Fernando was begun, the width of the Candalaga Creek adjoining the two
parcels of land owned by Juliana Zapata was about 90 or to 100 meters. At present, the width is 15 meters because soil
had been accumulated by the water current of the river on the banks of Lot No. 25 and of that part of Lot No. 16 owned
by Juliana Zapata. The accreted land is delimited in plan Psu-140515 and designated as Lot 1, 2 and 3, the first containing
an area of 6,260 square meters, the second, 449 and the third, 2,238 (Exhibit B) and described in the technical
descriptions (Exhibit C).
In a verified petition filed on 16 June 1956 in the Court of First Instance of Pampanga, Juliana Zapata claims that the
aforesaid three lots belong to her by accretion, was provided for in article 457 of the Civil Code, and prays that the same
be registered in her name under the Land Registration Act (Land Reg. Case No. N-273, L. R. C. rec. No. 1167). On 19
October 1956 on her motion the court entered an order of general default against all persons except the Director of
Lands. On 24 October 1956 the Director of Lands objected to the petition and prayed that the registration of the three
lots in the name of Jualiana Zapata be denied and that they be declared to form part of the public domain.
After trial, on 26 December 1956 the court rendered judgment, as follows:
WHEREFORE, the Court, overruling the opposition of the Director of Lands, and confirming the order of general default
herein entered, and the applicant's title to the aforesaid Lots Nos. 1, 2 and 3, referred to in plan Psu-140515, aforecited,
hereby orders that the same be registered in the name of Juliana Zapata, the herein applicant . . . . Once this decision
becomes final, let the corresponding decree issue.
The Court of Appeals certified to this Court the appeal taken by the Director of Lands because only questions of law are
involved.
The appellant contends that article 457 of the Civil Code providing that —
To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of
the current of the waters,
cannot apply and does not support the appellee's claim that the accretion or deposit of alluvial soil, which is delimited in
plan Psu-140515 and designated as Lots 1, 2 and 3, belongs to her as riparian owner, because such accretion it "was not
due to the natural effect of the current but was artificially induced on account of the erection of the fish traps on the
creek." The contention cannot be sustained. The appellant does not dispute that the accreted land delimited in plan Psu-
140515 and designated as Lots 1, 2 and 3 adjoining Lot No. 25 and that part of Lot No. 16. both owned by the appellee,
had been formed gradually due to the effect of the water current of the Candalaga Creek, but claims that the accretion
was artificially brought about by the setting up of fish traps, such as salag net, bunuan (Bamboo trap), sabat (cutting of
channels) and fencing that the fishermen had built in the stream. True, those fish traps might have slowed down the
current of the Candalaga Creek and might have brought about or caused the accretion, but as there is no evidence to
show that the setting up or erection of the fish trap was expressly intended or designed to cause or bring about the
accretion, the appellee may still invoke the benefit of the provisions of Article 457 of the Civil Code to supper her claim
of title thereto. Moreover, the fishermen who since 1894 used to set up fish traps in the creek (P. 7 t.s.n.), later on
secured permit from the Government that auctioned off the right or license to set up fish traps in the creek (p. 6, t.s.n.),
and the setting up of such fish traps stopped or was discontinued even before 1926 (p. 7 t.s.n.), all go to show that the
alluvial accretion was no entirely due to the setting up of such fish traps.
The decree appealed from is affirmed, without pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Reyes, J.B.L. and Barrera, JJ., took no part.

G.R. No. 126083 July 12, 2006

ANTONIO R. CORTES (in his capacity as Administrator of the estate of Claro S. Cortes), petitioner,
vs.
HON. COURT OF APPEALS and VILLA ESPERANZA DEVELOPMENT CORPORATION, respondents.
DECISION
YNARES-SANTIAGO, J.:
The instant petition for review seeks the reversal of the June 13, 1996 Decision 1 of the Court of Appeals in CA-G.R. CV No.
47856, setting aside the June 24, 1993 Decision 2 of the Regional Trial Court of Makati, Branch 138, which rescinded the
contract of sale entered into by petitioner Antonio Cortes (Cortes) and private respondent Villa Esperanza Development
Corporation (Corporation).
The antecedents show that for the purchase price of P3,700,000.00, the Corporation as buyer, and Cortes as seller,
entered into a contract of sale over the lots covered by Transfer Certificate of Title (TCT) No. 31113-A, TCT No. 31913-A
and TCT No. 32013-A, located at Baclaran, Parañaque, Metro Manila. On various dates in 1983, the Corporation
advanced to Cortes the total sum of P1,213,000.00. Sometime in September 1983, the parties executed a deed of
absolute sale containing the following terms: 3
1. Upon execution of this instrument, the Vendee shall pay unto the Vendor sum of TWO MILLION AND TWO HUNDRED
THOUSAND (P2,200,000.00) PESOS, Philippine Currency, less all advances paid by the Vendee to the Vendor in
connection with the sale;
2. The balance of ONE MILLION AND FIVE HUNDRED THOUSAND [P1,500,000.00] PESOS, Phil. Currency shall be payable
within ONE (1) YEAR from date of execution of this instrument, payment of which shall be secured by an irrevocable
standby letter of credit to be issued by any reputable local banking institution acceptable to the Vendor.
xxxx
4. All expense for the registration of this document with the Register of Deeds concerned, including the transfer tax, shall
be divided equally between the Vendor and the Vendee. Payment of the capital gains shall be exclusively for the account
of the Vendor; 5% commission of Marcosa Sanchez to be deducted upon signing of sale. 4
Said Deed was retained by Cortes for notarization.
On January 14, 1985, the Corporation filed the instant case 5 for specific performance seeking to compel Cortes to deliver
the TCTs and the original copy of the Deed of Absolute Sale. According to the Corporation, despite its readiness and
ability to pay the purchase price, Cortes refused delivery of the sought documents. It thus prayed for the award of
damages, attorney's fees and litigation expenses arising from Cortes' refusal to deliver the same documents.
In his Answer with counterclaim,6 Cortes claimed that the owner's duplicate copy of the three TCTs were surrendered to
the Corporation and it is the latter which refused to pay in full the agreed down payment. He added that portion of the
subject property is occupied by his lessee who agreed to vacate the premises upon payment of disturbance fee.
However, due to the Corporation's failure to pay in full the sum of P2,200,000.00, he in turn failed to fully pay the
disturbance fee of the lessee who now refused to pay monthly rentals. He thus prayed that the Corporation be ordered
to pay the outstanding balance plus interest and in the alternative, to cancel the sale and forfeit the P1,213,000.00
partial down payment, with damages in either case.
On June 24, 1993, the trial court rendered a decision rescinding the sale and directed Cortes to return to the Corporation
the amount of P1,213,000.00, plus interest. It ruled that pursuant to the contract of the parties, the Corporation should
have fully paid the amount of P2,200,000.00 upon the execution of the contract. It stressed that such is the law between
the parties because the Corporation failed to present evidence that there was another agreement that modified the
terms of payment as stated in the contract. And, having failed to pay in full the amount of P2,200,000.00 despite Cortes'
delivery of the Deed of Absolute Sale and the TCTs, rescission of the contract is proper.
In its motion for reconsideration, the Corporation contended that the trial court failed to consider their agreement that it
would pay the balance of the down payment when Cortes delivers the TCTs. The motion was, however, denied by the
trial court holding that the rescission should stand because the Corporation did not act on the offer of Cortes' counsel to
deliver the TCTs upon payment of the balance of the down payment. Thus:
The Court finds no merit in the [Corporation's] Motion for Reconsideration. As stated in the decision sought to be
reconsidered, [Cortes'] counsel at the pre-trial of this case, proposed that if [the Corporation] completes the down
payment agreed upon and make arrangement for the payment of the balances of the purchase price, [Cortes] would sign
the Deed of Sale and turn over the certificate of title to the [Corporation]. [The Corporation] did nothing to comply with
its undertaking under the agreement between the parties.
WHEREFORE, in view of the foregoing considerations, the Motion for Reconsideration is hereby DENIED.
SO ORDERED.7
On appeal, the Court of Appeals reversed the decision of the trial court and directed Cortes to execute a Deed of
Absolute Sale conveying the properties and to deliver the same to the Corporation together with the TCTs, simultaneous
with the Corporation's payment of the balance of the purchase price of P2,487,000.00. It found that the parties agreed
that the Corporation will fully pay the balance of the down payment upon Cortes' delivery of the three TCTs to the
Corporation. The records show that no such delivery was made, hence, the Corporation was not remiss in the
performance of its obligation and therefore justified in not paying the balance. The decretal portion thereof, provides:
WHEREFORE, premises considered, [the Corporation's] appeal is GRANTED. The decision appealed from is hereby
REVERSED and SET ASIDE and a new judgment rendered ordering [Cortes] to execute a deed of absolute sale conveying
to [the Corporation] the parcels of land subject of and described in the deed of absolute sale, Exhibit D. Simultaneously
with the execution of the deed of absolute sale and the delivery of the corresponding owner's duplicate copies of TCT
Nos. 31113-A, 31931-A and 32013-A of the Registry of Deeds for the Province of Rizal, Metro Manila, District IV, [the
Corporation] shall pay [Cortes] the balance of the purchase price of P2,487,000.00. As agreed upon in paragraph 4 of the
Deed of Absolute Sale, Exhibit D, under terms and conditions, "All expenses for the registration of this document (the
deed of sale) with the Register of Deeds concerned, including the transfer tax, shall be divided equally between [Cortes
and the Corporation]. Payment of the capital gains shall be exclusively for the account of the Vendor; 5% commission of
Marcosa Sanchez to be deducted upon signing of sale." There is no pronouncement as to costs.
SO ORDERED.8
Cortes filed the instant petition praying that the decision of the trial court rescinding the sale be reinstated.
There is no doubt that the contract of sale in question gave rise to a reciprocal obligation of the parties. Reciprocal
obligations are those which arise from the same cause, and which each party is a debtor and a creditor of the other, such
that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously, so
that the performance of one is conditioned upon the simultaneous fulfillment of the other. 9
Article 1191 of the Civil Code, states:
ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.
xxxx
As to when said failure or delay in performance arise, Article 1169 of the same Code provides that –
ART. 1169
xxxx
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the
other begins. (Emphasis supplied)
The issue therefore is whether there is delay in the performance of the parties' obligation that would justify the
rescission of the contract of sale. To resolve this issue, we must first determine the true agreement of the parties.
The settled rule is that the decisive factor in evaluating an agreement is the intention of the parties, as shown not
necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and
immediately after executing the agreement. As such, therefore, documentary and parol evidence may be submitted and
admitted to prove such intention.10
In the case at bar, the stipulation in the Deed of Absolute Sale was that the Corporation shall pay in full the
P2,200,000.00 down payment upon execution of the contract. However, as correctly noted by the Court of Appeals, the
transcript of stenographic notes reveal Cortes' admission that he agreed that the Corporation's full payment of the sum
of P2,200,000.00 would depend upon his delivery of the TCTs of the three lots. In fact, his main defense in the Answer is
that, he performed what is incumbent upon him by delivering to the Corporation the TCTs and the carbon duplicate of
the Deed of Absolute Sale, but the latter refused to pay in full the down payment. 11 Pertinent portion of the transcript,
reads:
[Q] Now, why did you deliver these three titles to the plaintiff despite the fact that it has not been paid in full the agreed
down payment?
A Well, the broker told me that the down payment will be given if I surrender the titles.
Q Do you mean to say that the plaintiff agreed to pay in full the down payment of P2,200,000.00 provided you surrender
or entrust to the plaintiff the titles?
A Yes, sir.12
What further confirmed the agreement to deliver the TCTs is the testimony of Cortes that the title of the lots will be
transferred in the name of the Corporation upon full payment of the P2,200,000.00 down payment. Thus –
ATTY. ANTARAN
Q Of course, you have it transferred in the name of the plaintiff, the title?
A Upon full payment.
xxxx
ATTY. SARTE
Q When you said upon full payment, are you referring to the agreed down payment of P2,200,000.00?
A Yes, sir.13
By agreeing to transfer title upon full payment of P2,200,000.00, Cortes' impliedly agreed to deliver the TCTs to the
Corporation in order to effect said transfer. Hence, the phrase "execution of this instrument" 14 as appearing in the Deed
of Absolute Sale, and which event would give rise to the Corporation's obligation to pay in full the amount of
P2,200,000.00, can not be construed as referring solely to the signing of the deed. The meaning of "execution" in the
instant case is not limited to the signing of a contract but includes as well the performance or implementation or
accomplishment of the parties' agreement. 15 With the transfer of titles as the corresponding reciprocal obligation of
payment, Cortes' obligation is not only to affix his signature in the Deed, but to set into motion the process that would
facilitate the transfer of title of the lots, i.e., to have the Deed notarized and to surrender the original copy thereof to the
Corporation together with the TCTs.
Having established the true agreement of the parties, the Court must now determine whether Cortes delivered the TCTs
and the original Deed to the Corporation. The Court of Appeals found that Cortes never surrendered said documents to
the Corporation. Cortes testified that he delivered the same to Manny Sanchez, the son of the broker, and that Manny
told him that her mother, Marcosa Sanchez, delivered the same to the Corporation.
Q Do you have any proof to show that you have indeed surrendered these titles to the plaintiff?
A Yes, sir.
Q I am showing to you a receipt dated October 29, 1983, what relation has this receipt with that receipt that you have
mentioned?
A That is the receipt of the real estate broker when she received the titles.
Q On top of the printed name is Manny Sanchez, there is a signature, do you know who is that Manny Sanchez?
A That is the son of the broker.
xxxx
Q May we know the full name of the real estate broker?
A Marcosa Sanchez
xxxx
Q Do you know if the broker or Marcosa Sanchez indeed delivered the titles to the plaintiff?
A That is what [s]he told me. She gave them to the plaintiff.
x x x x.16
ATTY. ANTARAN
Q Are you really sure that the title is in the hands of the plaintiff?
xxxx
Q It is in the hands of the broker but there is no showing that it is in the hands of the plaintiff?
A Yes, sir.
COURT
Q How do you know that it was delivered to the plaintiff by the son of the broker?
A The broker told me that she delivered the title to the plaintiff.
ATTY. ANTARAN
Q Did she not show you any receipt that she delivered to [Mr.] Dragon 17 the title without any receipt?
A I have not seen any receipt.
Q So, therefore, you are not sure whether the title has been delivered to the plaintiff or not. It is only upon the allegation
of the broker?
A Yes, sir.18
However, Marcosa Sanchez's unrebutted testimony is that, she did not receive the TCTs. She also denied knowledge of
delivery thereof to her son, Manny, thus:
Q The defendant, Antonio Cortes testified during the hearing on March 11, 1986 that he allegedly gave you the title to
the property in question, is it true?
A I did not receive the title.
Q He likewise said that the title was delivered to your son, do you know about that?
A I do not know anything about that. 19
What further strengthened the findings of the Court of Appeals that Cortes did not surrender the subject documents was
the offer of Cortes' counsel at the pre-trial to deliver the TCTs and the Deed of Absolute Sale if the Corporation will pay
the balance of the down payment. Indeed, if the said documents were already in the hands of the Corporation, there
was no need for Cortes' counsel to make such offer.
Since Cortes did not perform his obligation to have the Deed notarized and to surrender the same together with the
TCTs, the trial court erred in concluding that he performed his part in the contract of sale and that it is the Corporation
alone that was remiss in the performance of its obligation. Actually, both parties were in delay. Considering that their
obligation was reciprocal, performance thereof must be simultaneous. The mutual inaction of Cortes and the
Corporation therefore gave rise to a compensation morae or default on the part of both parties because neither has
completed their part in their reciprocal obligation. 20 Cortes is yet to deliver the original copy of the notarized Deed and
the TCTs, while the Corporation is yet to pay in full the agreed down payment of P2,200,000.00. This mutual delay of the
parties cancels out the effects of default, 21 such that it is as if no one is guilty of delay. 22
We find no merit in Cortes' contention that the failure of the Corporation to act on the proposed settlement at the pre-
trial must be construed against the latter. Cortes argued that with his counsel's offer to surrender the original Deed and
the TCTs, the Corporation should have consigned the balance of the down payment. This argument would have been
correct if Cortes actually surrendered the Deed and the TCTs to the Corporation. With such delivery, the Corporation
would have been placed in default if it chose not to pay in full the required down payment. Under Article 1169 of the
Civil Code, from the moment one of the parties fulfills his obligation, delay by the other begins. Since Cortes did not
perform his part, the provision of the contract requiring the Corporation to pay in full the down payment never acquired
obligatory force. Moreover, the Corporation could not be faulted for not automatically heeding to the offer of Cortes. For
one, its complaint has a prayer for damages which it may not want to waive by agreeing to the offer of Cortes' counsel.
For another, the previous representation of Cortes that the TCTs were already delivered to the Corporation when no such
delivery was in fact made, is enough reason for the Corporation to be more cautious in dealing with him.
The Court of Appeals therefore correctly ordered the parties to perform their respective obligation in the contract of
sale, i.e., for Cortes to, among others, deliver the necessary documents to the Corporation and for the latter to pay in
full, not only the down payment, but the entire purchase price. And since the Corporation did not question the Court of
Appeal's decision and even prayed for its affirmance, its payment should rightfully consist not only of the amount of
P987,000.00, representing the balance of the P2,200,000.00 down payment, but the total amount of P2,487,000.00, the
remaining balance in the P3,700,000.00 purchase price.
WHEREFORE, the petition is DENIED and the June 13, 1996 Decision of the Court of Appeals in CA-G.R. CV No. 47856,
is AFFIRMED.
SO ORDERED.

Hilario v. City of Manila [GR No. L-19570 April 27, 1967]

Jun28
Bengzon JP (J): 8 concur
Facts: Dr. Jose Hilario was the registered owner of a large tract of land around 49 hectares in area (Barrio Guinayang, San
Mateo, Rizal). Upon his death this property was inherited by his son, Jose Hilario, Jr., to whom a new certificate of title
was issued. During the lifetime of plaintiff’s father, the Hilario estate was bounded on the western side by the San Mateo
River.3 To prevent its entry into the land, a bamboo and lumber post dike or ditch was constructed on the northwestern
side. This was further fortified by a stonewall built on the northern side. For years, these safeguards served their
purpose. However, in 1937, a great and extraordinary flood occurred which inundated the entire place including the
neighboring barrios and municipalities. The River destroyed the dike on the northwest, left its original bed and
meandered into the Hilario estate, segregating from the rest thereof a lenticular piece of land. The disputed area is on
the eastern side of this lenticular strip which now stands between the old riverbed site and the new course. In 1945, the
US Army opened a sand and gravel plant within the premises, and started scraping, excavating and extracting soil, gravel
and sand from the nearby areas along the River. The operations eventually extended northward into the strip of land.
Consequently, a claim for damages was filed with the US War Department by Luis Hidalgo, the then administrator of Dr.
Hilario’s estate. The US Army paid. In 1947, the plant was turned over to herein defendants-appellants and appellee who
took over its operations.
On 22 October 22, 1949, plaintiff filed his complaint for injunction and damages against the defendants City Engineer of
Manila, District Engineer of Rizal, the Director of Public Works, and Engr. Busuego, the Engineer-in-charge of the plant.
Subsequently, the Bureau of Mines and Atty. Maximo Calalang were respectively allowed to join the litigation as
intervenors; as per issue of fees and penalties for materials (sand and gravel) extracted. On 14 March 1954, defendants
filed a petition for injunction against plaintiff and intervenor Calalang in the same case, alleging that the latter have
fenced off the disputed area in contravention of an agreement had between the latter and the Director of Public Works
wherein the defendants were allowed to continue their operations but subject to the final outcome of the pending suit.
On 13 May 1954, plaintiff amended his complaint and impleaded as additional defendants the City of Manila, the
Provincial Treasurer of Rizal, and Engr. Eulogio Sese, the new Engineer-in-charge of the plant. Plaintiff also converted his
claim to one purely for damages directed against the City of Manila and the Director of Public Works, solidarily, in the
amount of P1,000,000.00, as the cost of materials taken since 1949, as well as those to be extracted therefrom until
defendants stop their operations. On 21 December 1956, the lower court rendered its decision, ordering the City of
Manila and Director of Public Works to pay Hilario in solidum the sum of P376,989.60 as cost of gravel and sand
extracted from the plaintiff’s land, plus costs; and ordering the Provincial Treasurer of Rizal to reimburse intervenor
Calalang of P36.80 representing gravel fees illegally collected. None of the parties litigants seemed satisfied with this
decision and they all sought a reconsideration of the same. On August 30, 1957, the lower court resolved the motions to
reconsider with an order, holding that the 2/5 portion of the area in controversy to Hilario, and dismissing the case
against the Bureau of Public Works insofar as money claims are concerned without prejudice to Hilario taking action
against proper party in such claim. Hilario and Calalang filed a second motion for reconsideration, which the lower court
denied. Hence, the appeal.
The Supreme Court set aside the decision and orders appealed from, and entered another judgment to the effect that
the City of Manila and the Director of Public Works, and his agent and employees, are absolved of liability from
extracting materials from subject property (of public domain); and the portion within the strip of land question declared
not part of public domain and confirmed as part of Hilario’s private property. No Costs.
12. Ordinary and extraordinary flood
There are two types of floods in the area during the rainy season. One is the so-called “ordinary” flood, when the river is
swollen but the flowing water is kept within the confines of the “primary” and “secondary” banks.
This occurs annually, about three to four times during the period. Then there is the “extraordinary” flood, when the
waters overflow beyond the said banks, and even inundate the surrounding areas. However, this flood does not happen
regularly. From 1947 to 1955, there were only three such floods.
13. Movement of the river, west bank, from 1945-1955
From 1945 to 1949, the west bank of the River extended westward up to the “secondary bank” line; from 1950 to 1952,
this bank had moved, with the River, to the east, its lateral borders running along a line just 20 meters west of the
camachile tree; and from 1953 to 1955, the extremities of the west bank further receded eastward beyond the
camachile tree, until they lay just about 20 meters east of said tree.
14. Floodings not accidental as they are annual; Government v. Colegio de San Jose does not apply
Evidence shows that the River floods with annual regularity during the rainy season. These floods can hardly be called
“accidental”. The Colegio de San Jose case is not exactly in point. What was mainly considered there was Article 74 of the
Law of Waters relating to lakes, ponds and pools. In the present case, none of these is involved.
15. Movement of the river not due to excavation and extraction of materials
The excavations and extractions of materials, even from the American period, have been made only on the strip of land
west of the River. Under the “following-the nature-of-things” argument advanced by plaintiff, the River should have
moved westward, where the level of the ground had been lowered. But the movement has been in the opposite
direction instead. Therefore, it cannot be attributed to defendants’ operations. Moreover, Hilario’s own evidence
indicates that the movement eastward was all due to natural causes. The movement eastward of the channel by as much
as 31 meters, from 1950 to 1953, was due to two typhoons which caused the erosion of the east bank and the depositing
of materials on the west side which increased its level from as much as .93 to 2 meters.
16. River of different width; claim of unnatural widening unfounded
Reliance is made on the finding by the lower court that in 1943, the river was only 60 meters wide, whereas in 1950, it
was already 140 meters wide. Such area sampled shows only the width of the River near the southwestern boundary of
the Hilario estate. It does not indicate how wide it was in the other parts, especially up north.
17. Extraction confined on the banks of the river and not beyond limits of the west bank to invade his private estate;
Hilario cannot recover damages from defendants
From 1947 to the early part of 1949, the defendants conducted their operations only in the New Accretion Area along a
narrow longitudinal zone contiguous to the watercourse then. This zone, City Engineer Manila, is about 1 km. long and
extends northward up to pt. 50.35. However, no extractions nor excavations were undertaken west of this zone, i.e.,
above the “temporary bank” line. This line is located east of the “secondary bank” line, the lateral extremity of the west
bank then. In the latter part of 1949, plaintiff prohibited the defendants from extracting along the New Accretion Area
and constructed a fence across the same. This forced the defendants to go southeast of the “Excavated Area”. From 1954
to 1955, defendants’ area of operation was still farther east of the New Accretion Area. They were. working within a
confined area along the west waterline, the northern and western boundaries of which were 20 meters away east from
the camachile tree. It appears sufficiently established, therefore, that defendants have not gone beyond the receding
western extremities of the west riverbank. They have confined their extraction of gravel and sand only from which the
banks of the River, which constitute part of the public domain wherein they had the right to operate. Plaintiff has not
presented sufficient evidence that defendants have gone beyond the limits of the west bank, as previously established,
and have invaded his private estate. He cannot, therefore, recover from
them.
18. Plaintiff not denied of property without just compensation
The Court does not declare that the entire channel, i.e., all that space between the “secondary bank” line and the
“primary bank” line, has permanently become part of the riverbed. What is held is that at the time the defendants made
their extractions, the excavations were within the confines of the riverbanks then. All that space to the west of said
receding line” would still be part of plaintiff’s property and also whatever portion adjoining the river is, at present, no
longer reached by the non-inundating ordinary floods. Further, it is not correct to say that plaintiff would be deprived of
his property without any compensation at all. Under Article 370 of the old Civil Code, the abandoned bed of the old river
belongs to the riparian owners either fully or in part with the other riparian owners. And had the change occurred under
the Civil Code of the Philippines, plaintiff would even be entitled to all of the old bed in proportion to the area he has
lost.
19. Defendants did not unjustly profit at plaintiff’s expense as they are not responsible for the shifting of the river
Defendants cannot be accused of unjustly profiting at plaintiff’s expense. They were not responsible for the shifting of
the river. It was due to natural causes for which no one can be blamed. Further, defendants were extracting from public
property then, under proper authorization. The government, through the defendants, may have been enriched by
chance, but not unjustly.

GRANDE v. CA

FACTS:
The Grandes are owners of a parcel of land in Isabela, by inheritance from their deceased mother, Patricia Angui, who
likewise, inherited it from her parents. In the early 1930’s, the Grandes decided to have their land surveyed for
registration purposes. The land was described to have Cagayan River as the northeastern boundary, as stated in the title.
By 1958, a gradual accretion took place due to the action of the current of the river, and an alluvial deposit of almost
20,000 sq.m. was added to the registered area. The Grandes filed an action for quieting of title against the Calalungs,
stating that they were in peaceful and continuous possession of the land created by the alluvial deposit until 1948, when
the Calalungs allegedly trespassed into their property. The Calalungs, however, stated that they were the rightful owners
since prior to 1933.

The CFI found for the Grandes and ordered the Calalungs to vacate the premises and pay for damages. Upon appeal to
the CA, however, the decision was reversed.

ISSUE:
Whether or not the alluvium deposited land automatically belongs to the riparian owners?

HELD:
Art. 457 dictates that alluvium deposits on land belong to the owners of the adjacent land. However, this does not ipso
jure become theirs merely believing that said land have become imprescriptible. The land of the Grandes only specifies a
specific portion, of which the alluvial deposits are not included, and are thus, subject to acquisition by prescription. Since
the Calalungs proved that they have been in possession of the land since 1934 via two credible witnesses, as opposed to
the Grande’s single witness who claims that the Calalungs only entered the land in 1948, the Calalungs have been held to
have acquired the land created by the alluvial deposits by prescription. This is because the possession took place in 1934,
when the law to be followed was Act 190, and not the New Civil Code, which only took effect in 1950.

IGNACIO V. DIRECTOR OF LANDS AND VALERIANO

108 SCRA 335

FACTS
Faustino Ignacio filed an application to register a parcel of land (mangrove) which he alleged he acquired by right of
accretion since it adjoins a parcel of land owned by the Ignacio. His application is opposed by the Director of Lands,
Laureano Valeriano, contending that said land forms part of the public domain. The Trial Court dismissed the application
holding that said land formed part of the public domain. Thus the case at bar.

ISSUE:
Whether or not the land forms part of the public domain
HELD: YES

1. The law on accretion cited by Ignacio in inapplicable in the present case because it refers to accretion or deposits on
the banks of rivers while this refers to action in the Manila Bay, which is held to be part of the sea

2. Although it is provided for by the Law of Waters that lands added to shores by accretions caused by actions of the sea
form part of the pubic domain when they are no longer necessary for purposes of public utility, only the executive and
the legislative departments have the authority and the power to make the declaration that any said land is no longer
necessary for public use. Until such declaration is made by said departments, the lot in question forms part of the public
domain, not available for private appropriation or ownership.

G.R. No. 82220 July 14, 1995

PABLITO MENESES and LORENZO MENESES, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO
QUISUMBING (Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING (Perla,
Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING,
SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO
QUISUMBING (Fe, Johnny, Ma. Luisa, Norberto, Jimmy, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), all
represented by Atty. Galileo Brion, respondents.
G.R. No. 82251 July 14, 1995
CESAR ALMENDRAL, petitioner,
vs.
EDUARDO QUISUMBING, respondent.
G.R. No. 83059 July 14, 1995
EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all
surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios and
Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores
and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and Oscar,
all surnamed Quisumbing), petitioners,
vs.
HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and BRAULIO C. DARUM, respondents.

QUIASON, J.:
For review in these consolidated petitions is the Decision dated August 31, 1987 of the Court of Appeals in CA-G.R. CV
No. 07049 affirming the Decision dated March 26, 1984 of the Regional Trial Court, Branch 37, Calamba, Laguna, in Civil
Case No. 474-83-C which declared as null and void the original certificates of title and free patents issued to Pablito
Meneses over lots found by the court to be accretion lands forming parts of the bigger accretion land owned by Ciriaca
Arguelles Vda. de Quisumbing.
I
On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baños, Laguna, issued to Pablito Meneses Free
Patent No. (IV-5) P-12807 and Original Certificate of Title No. P-1268 covering Lot 1585 with an area of 417 square
meters, and Free Patent No (IV-5) 12808 and Original Certificate of Title No P-1269 for Lot 190 with an area of 515 square
meters. Both lots are located in Los Baños, Laguna.
Pablito Meneses acquired said property from Silverio Bautista through a Deed of Waiver and Transfer of Rights executed
on May 5, 1975 in consideration of Bautista's "love and affection" for and "some monetary obligations" in favor of Pablito
Meneses (Rollo, p. 45). After the execution of said document, Pablito Meneses took possession of the land, introduced
improvements thereon, declared the land as his own for tax purposes and paid the corresponding realty taxes. In turn,
Bautista acquired the 900-square-meter land from his aunt, Sergia (Gliceria) M. Almeda. He had been occupying the land
since 1956.
On the other hand, the Quisumbing family traces ownership of the land as far back as September 6, 1919 when their
matriarch, Ciriaca Arguelles Vda. de Quisumbing was issued Original Certificate of Title No. 989 covering a lot with an
area of 859 square meters located in Los Baños, Laguna with the Laguna de Bay as its northwestern boundary. The same
parcel of land was registered on August 14, 1973 under Transfer Certificate of Title No. T-33393 in the names of Ciriaca's
heirs: Emilio, Manuel, Eduardo, Norberto, Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed
Quisumbing.
In 1962, the Quisumbing instituted and accion publiciana in the then Court of First Instance of Biñan, Laguna to recover
possession over a portion of the property from Dominga Villamor and Lorenzo Lanuzo docketed as Civil Case No. B-350.
On January 3, 1966, the case was decided in favor of the Quisumbings. On appeal, the Court of Appeals sustained the
Quisumbings' right over the property.
In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of title over an additional area of 2,387
square meters which had gradually accrued to their property by the natural action of the waters of Laguna de Bay. In its
Decision of September 28, 1978, the Court of First Instance of Biñan confirmed the Quisumbings' title thereto which,
after it was duly surveyed, was identified as Psu-208327. The additional area was divided into two lots in the survey plan
approved by the Director of Lands on November 16, 1964. In ordering the confirmation and registration of title on favor
of the Quisumbings, the land registration court said:
. . . There is no doubt that the applicants' right to the property was bolstered by the unappealed decision of the Court of
Appeals in Civil Case No. B-350 of this Court when the properties applied for were classified as accretions made by the
waters of the Laguna Lake. . . . (G.R. No. 82229, Rollo, p. 20).
On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of First Instance of Laguna, Branch VI,
Calamba against Lorenzo and Pablito Meneses, Braulio C. Darum and Cesar B. Almendral for nullification of the free
patents and titles issued to Pablito Meneses. They alleged that Lorenzo Menesis, then the Mayor of Los Baños, using his
brother Pablito as a "tool and dummy," illegally occupied their "private accretion land" an August 6, 1976, and,
confederating with District Land Officer Darum and Land Inspector Cesar Almendral, obtained free patents and original
certificates of title to the land.
On March 26, 1984, the trial court rendered the decision finding that the lands registered by the Meneses brothers are
accretion lands to which the Quisumbings have a valid right as owners of the riparian land to which nature had gradually
deposited the disputed lots. In so holding, the trial court relied heavily on the decision of the Court of Appeals in Civil
Case No. B-350, and quoted the following portions of the appellate court's decision:
Plaintiffs-appellees are titled owners of a (sic) 859 square meters of land under TCT No. 25978 of the Laguna Land
Registry, the northwest boundary of which is the Laguna de Bay.
It is ascertained that the northwest portion of Quisumbing's lot is bounded by the Laguna de Bay. The nature of the
Laguna de Bay has long been settled in the case of Government of the Philippines v. Colegio de San Jose (55 Phil. 423)
when it held that:
Laguna de Bay is a body of water formed in depression of the earth; it contains fresh water coming from rivers and
brooks and springs, and is connected with Manila Bay by the Pasig River. According to the definition first quoted, Laguna
de Bay is a lake.
Consequently, since Laguna de Bay is a lake, the authorities cited by the appellants referring to seashore would not
apply. The provision of the law on waters will govern in determining the natural bed or basin of the lake. And accordingly,
to Art. 84 of the Law of Waters of August 3, 1866:
Accretions deposited gradually upon land contiguous to creeks, streams, rivers and lakesby accessions or sediments from
the waters thereof, belong to the owners of such lands.
Since the title indicate(s) that the northwest portion of the property is bounded by Laguna de Bay, which is a lake, even if
the area where Lanuza's house and Villamor's house for that matter is located is not included within the title, it must
necessarily be an accretion upon appellees' land by accessions or sediments from the waters thereof which should
belong to the owner of the adjacent land. The authorities cited by the appellants treat of the ownership of accretions by
water of the sea under Title I. Lakewaters being terrestrial waters, their ownership is governed by Title II of the Law of
Waters. As held in the Colegio de San Jose case, the provisions of the Law of Waters regulating the ownership and use of
sea water are not applicable to the ownership and use of lakes which are governed by different provisions. As pointed
out by the lower court, no act of appropriation is necessary in order to acquire ownership of the alluvial formation as the
law does not require the same (Ignacio Grande, et al. vs. Hon. Court of Appeals, et al., G.R. No. L-17652, June 30, 1962
citing Roxas vs. Tuazon, 9 Phil. 408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C. pp. 321-326, pp. 4-5)
(Records, pp. 80-84).
The trial court also found that the free patents issued to Pablito Meneses had been procured through fraud, deceit and
bad faith, citing the following facts as bases for its conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly
executed by Silverio Bautista in favor of Pablito Meneses was a simulated contract for lack of consideration; (2) The said
instrument was sworn to before Mayor Lorenzo Meneses who had no authority to notarize deeds of conveyances; (3)
Although the lots subject of the deed of conveyance were placed in his brother's name, Mayor Meneses actually
exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral admitted having anomalously prepared the
documents to support the free patent applications of Pablito Meneses and, having personally filled up the blank forms,
signed them in the absence of the persons concerned; (5) Almendral kept the documents in his possession from 1979 to
1980 despite orders from the Director of Lands to produce and surrender the same; (6) District Land Officer Braulio
Darum approved the free patent applications and issued the questioned titles without the required cadastral survey duly
approved by the Director of Lands and despite the pendency of LRC Case No. B-327 involving the contested lots; (7)
Darum represented the Bureau of Lands in LRC Case No. B-327 without authority from the Director of Lands and after he
had withdrawn his appearance in said case, persisted in filing a motion to set aside the order for the issuance of a decree
in favor of the Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing original records of the
free patent applications and their supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No.
B-327, he admitted in his letter to the Land Registration Commission that the contested lots are portions of the land
being claimed by the Quisumbings contrary to his later representation in the joint answer to the petition that the subject
lots are not portions of Lots 1 and 2, Psu-208327 owned by the Quisumbings. Accordingly, the trial court disposed of the
case as follows:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the lands covered by Pablito Meneses' Original Certificate of Title No. P-1268/Free Patent No. 12807
(Exh. "J"), covering Lot No. 1585, consisting of 417 square meters and Original Certificate of Title No. P-1269/Free Patent
No. 12808 (Exh. "H"), covering Lot No. 190, consisting of 515 square meters, both located at Los Baños, Laguna, as
accretion lands forming parts of a bigger accretion land owned by plaintiffs as declared in a final judgment (Exh. "A"),
rendered by the Court of First Instance of Biñan, Laguna, in LRC Case No. B-327, which bigger accretion land is directly
adjacent to or at the back of plaintiffs' riparian land, and consequently, declaring as null and void and cancelled Original
Certificate of Title No. P-1268/Free Patent No. 12807 and Original Certificate of Title No. P-1269/Free Patent No. 12808;
2. Directing that the Register of Deeds of Laguna or his Deputy at Calamba, Laguna, to make the corresponding entries of
cancellation in his Registry of the above mentioned Original Certificate of Titles/Free Patents;
3. Directing defendants Lorenzo Meneses and Pablito Meneses and all persons acting in their behalves to vacate the
subject lands and surrender the possession thereof to the plaintiffs immediately; and
4. Directing the defendants to pay jointly and severally, the plaintiffs the sums of:
a) P20,000.00, plus P500.00 per month from January, 1977, until the subject property is completely vacated, as actual
and compensatory damages;
b) P350,000.00, as moral damages;
c) P70,000.00 as exemplary damages;
d) P40,000.00, as attorney's fees; and
e) the costs (Rollo, pp. 41-42).
Thereafter, the Quisumbings filed a motion for execution pending appeal which the trial court granted in its Order of
September 7, 1984 subject to the posting by the Quisumbings of a bond in the amount of P500,000.00. The defendants
unsuccessfully moved for the reconsideration of said order.
The Quisumbings also filed before the Sandiganbayan a complaint against Pablito Meneses, Silverio Bautista, Pablo Silva,
Virgilio Cruz and Cesar Almendral for violation of paragraphs (e) and (j), Section 3 of Republic Act No. 3019, for
conspiring in the approval and grant of the free patents over portions of Lots 1 & 2 of Psu-208327 owned by the heirs of
Ciriaca Arguelles Vda. de Quisumbing. In due course, the Sandiganbayan rendered a decision finding the defendants
guilty as charged. The case was elevated to this Court but on August 27, 1987, the judgment of conviction was affirmed
(Meneses v. People, 153 SCRA 303 [1987]).
Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case No. 07049 to the Court of Appeals. On
August 31, 1987, the Court of Appeals found the appeal to be without merit and affirmed in toto the lower court's
decision.
The defendants-appellants filed two motions for the reconsideration of the appellate court's decision but it was denied
in the Resolution of February 23, 1988 which in pertinent part stated:
However, for humanitarian considerations, and considering the appeal of the defendants-appellants for a reduction of
the moral and exemplary damages, We favor the reduction of the moral damages from P350,000.00 to P50,000.00 and
the exemplary damages from P70,000.00 to P5,000.00. In all other respects, We find no justification for modifying the
dispositive portion of the decision of the lower court (G.R. No. 82220, Rollo, p. 67).
Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which was docketed as G.R. No. 82220.
Cesar Almendral filed a motion in G.R. No. 82251 for a 45-day extension within which to file a petition for review
on certiorari. After this Court had granted them a 30-day extension, Almendral still failed to file any petition. The
Quisumbings also filed a petition for review on certiorari, docketed as G.R. No. 83059, solely on the issue of the propriety
of the reduction of the amount of damages in the Court of Appeals' Resolution of February 23, 1988. Upon motion of
petitioners in G.R. No. 83059, the three petitions were consolidated in the Resolution of August 1, 1988.
Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court of Appeals, contending in the main:
(1) that the lands in question were not accretion lands but lands of the public domain; (2) that no conspiracy to commit
fraud, deceit and bad faith attended the issuance of the free patent and titles to Pablito Meneses; and (3) that the Deed
of Waiver and Transfer of Rights was founded on a valid consideration.
As regards the issue of whether the lands in question are accretion lands, petitioners relied on the Decision of the Court
of Appeals in Republic of the Philippines v. Braga, CA-G.R. No. 55390-R, October 23, 1980, holding that the property
involved therein was part of the natural bed of the Laguna de Bay and therefore what had to be determined was
whether said property was covered by water when the lake was at its highest depth.
Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been thoroughly passed upon and
settled both by the trial court and the appellate court. Factual findings of the Court of Appeals are conclusive on the
parties and not reviewable by this Court (Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 229 SCRA 533 [1994])
and they carry even more weight when the Court of Appeals affirms the factual findings of the trial court (Binalay v.
Manalo, 195 SCRA 374 [1991]). The jurisdiction of this Court is thus limited to reviewing errors of law unless there is a
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 (BA Finance Corporation v. Court of Appeals, 229 SCRA 566
[1941]). We find no such showing in this case.
Petitioners' protestations notwithstanding the final decision of the Court of Appeals in Civil Case No. B-350 has a bearing
in the resolution of this case for while the lots occupied by Villamor and Lanuzo may not be the very same lots
petitioners are claiming here, the two cases refer to the same accretion lands northwest of the original land owned by
the Quisumbings.
In the same vein, the decision of the land registration court in LRC Case No. B-327 ordering the confirmation and
registration of title in favor of the Quisumbings over 2,387 square meters of accretion land is binding on petitioners in
G.R. No. 82220. As correctly pointed out by the Court of Appeals, said decision, being the result of a proceeding in rem,
binds the whole world, more so because it became final and executory upon the Bureau of Lands' failure to interpose an
appeal.
Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190 and 1585 are part of Laguna de
Bay" and therefore the Quisumbings "have no legal right to claim the same as accretion land," we quote the following
pertinent portions of the decision in Republic v. Court of Appeals, 131 SCRA 532 (1984) which, although the case deals
with the registration of a reclaimed land along the Laguna de Bay, is nonetheless enlightening:
Laguna de Bay is a lake. While the waters of a lake are also subject to the same gravitational forces that cause the
formation of tides in seas and oceans, this phenomenon is not a regular daily occurrence in the case of lakes. Thus, the
alternation of high tides and low tides, which is an ordinary occurrence, could hardly account for the rise in the water
level of the Laguna de Bay as observed four to five months a year during the rainy season. Rather, it is the rains which
bring about the inundation of a portion of the land in question. Since the rise in the water level which causes the
submersion of the land occurs during a shorter period (four to five months a year) than the level of the water at which
the land is completely dry, the latter should be considered as the "highest ordinary depth" of Laguna de Bay. Therefore,
the land sought to be registered is not part of the bed or basin of Laguna de Bay. Neither can it be considered as
foreshore land. The Brief for the Petitioner Director of Lands cites an accurate definition of a foreshore land, to wit:
. . . . that part of (the land) which is between high and low water and left dry by the flux and reflux of the tides.
The strip of land that lies between the high and low water marks and that is alternately wet and dry according to the
flow of the tide.
As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains "falling
directly on or flowing into Laguna de Bay from different sources." Since the inundation of a portion of the land is not due
to "flux and reflux of tides" it cannot be considered a foreshore land within the meaning of the authorities cited by
petitioner Director of Lands. The land sought to be registered not being part of the bed or basin of Laguna de Bay, nor a
foreshore land as claimed by the Director of Lands, it is not a public land and therefore capable of registration as private
property provided that the applicant proves that he has a registerable title (at pp. 538-539).
Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the concurrence of these
requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action
of the waters of the river (or sea); and (3) that the land where accretion takes place is adjacent to the banks of rivers (or
the sea coast). While the trial court mainly relied on the findings in Civil Case No. B-350 that the lands in controversy are
accretion lands and it has not determined on its own the presence of said requisites, it is too late now for petitioners in
G.R. No. 82220 to claim otherwise. Consequently, the lands held to be accretion lands could only benefit the
Quisumbings, who own the property adjacent to the lands in controversy (Cruz v. Court of Appeals, 216 SCRA 350
[1992]).
Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title should favor them as the one-year
period provided for by law to impugn their title had elapsed. They also urged that, having been granted by the state,
their title is superior to that of the Quisumbings. We hold, however, that in the light of the fraud attending the issuance
of the free patents and titles of Pablito Meneses, said assertions crumble. Such fraud was confirmed by this Court
in Meneses v. People, 153 SCRA 303 (1987) which held the petitioners therein liable for violation of the Anti-Graft and
Corrupt Practices Act in the issuance of the same free patents and titles.
Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the reduction of the damages awarded
to the Quisumbings by the Court of Appeals in the Resolution of February 23, 1988) is meritorious. The task of fixing the
amount of damages is primarily with the trial court (Air France v. Carrascoso, 18 SCRA 155 [1966]). While it is the
appellate court's duty to review the same, a reduction of the award of damages must pass the test of reasonableness.
The Court of Appeals can only modify or change the amount awarded as damages when they are palpably or
scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of Appeals, 226 SCRA 423 [1993]; Prudenciano v.
Alliance Transport System, Inc., 148 SCRA 440 [1987]).
There is no justification for the radical reduction by the Court of Appeals of the damages awarded by the trial court. Its
action was premise merely on "humanitarian considerations" and the plea of the defendants-appellants. We may agree
with the Court of Appeals in reducing the award after scrutinizing its factual findings only if such findings are
diametrically opposed to that of the trial court (Prudenciado v. Alliance Transport System, Inc., supra). But as it is, the
Court of Appeals affirmed point by point the factual findings if the lower court upon which the award of damages had
been based.
We, therefore, see no reason to modify the award of damages made by the trial court. Respondent Braulio C. Darum in
G.R. No. 83059 must also be solidarily liable for said damages in his capacity as a public officer. A public official is by law
not immune from damages in his personal capacity for acts done in bad faith which, being outside the scope of his
authority, are no longer protected by the mantle of immunity for official actions (Vidad v. RTC of Negros, Br. 42, 227 SCRA
271 [1993]).
WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R. No. 83059 is GRANTED. The Decision
dated August 31, 1987 of the Court of Appeals is AFFIRMED while its Resolution of February 23, 1988 insofar as it
reduces the amount of damages awarded to the Quisumbing family is SET ASIDE. Costs against petitioners in G.R. No.
82220 and respondent Braulio Darum in G.R. No. 83059.

REPUBLIC V. CA
132 SCRA 514(G.R. No. 82220 July 14, 1995)

FACTS:
Respondents sought the registration of land adjacent to their fishpond. They are the registered owners of
parcel of lot bordering on the Bocaue and Meycauyan rivers. The lower and appellate court allowed registration but
this was opposed by the government.

HELD:
There is no accretion if by man-made causes.

BINALAY VS. MANALO

A sudden and forceful action like that of flooding is not the alluvial process contemplated in Art. 457. The accumulation
of the soil deposits must be slow and hardly imperceptible in order for the riparian owner to acquire ownership thereof.
Also, the land where the accretion takes place is adjacent to the banks of the rivers (or the sea coast).
FACTS
Manalo acquired 2 lots which were originally owned by Judge Taccad from 2 different people (the latter’s daughter and
from an earlier purchaser). These lots were later consolidated into Lot 307, a total of 10.45 hectares. The lot was beside
the Cagayan River, which, due to flooding, would place a portion of the land underwater during the rainy season
(September to December). On sunny days, however, the land would be dried up for the entire dry season (January to
August). When a survey of the land was conducted on a rainy month, a portion of the land that Manalo bought was then
underwater and was thus left unsurveyed and excluded from Lot 307.
The big picture is this: Cagayan River running from south to north, forks at a certain point to form two braches (western
and eastern) and then unites at the other end, further north, to form a narrower strip of land. The eastern branch of the
river cuts through Lot 307, and is flooded during the rainy season. The unsurveyed portion, on the other hand, is the bed
of the eastern branch. Note that the fork exists only during the rainy season while the “island”/elongated strip of land
formed in the middle of the forks becomes dry and perfect for cultivation when the Cagayan river is at its ordinary depth.
The strip of land in the middle of the fork totaled 22.7 hectares and was labeled Lot 821-822. Lot 821 is directly opposite
Lot 307 and is separated by the eastern branch of the river’s fork.

Manalo claims that Lot 821 belongs to him by way of accretion to the submerged portion of the land to which it is
adjacent. Petitioners (Binalay, et al) who possess the Lot 821, on the other hand, insist that they own it. They occupy the
other edges of the lot along the river bank (i.e. the fertile portions on which they plant tobacco and other agricultural
products) and also cultivate the western strip during the summer.

Manalo filed 2 cases for forcible entry which were both dismissed. Later on, he filed a complaint for quieting of title,
possession, and damages against petitioner. The trial court and the CA ruled in favor of Manalo, saying that Lot 821 and
Lot 307 cannot be considered separate and distinct from each other. They reasoned that when the land dries up for the
most part of the year, the two are connected. [Note: The CA applied the ruling in Gov’t of the Phil Islands vs. Colegio de
San Jose, which was actually inappropriate because the subject matter in this case was a lake so that the definition of a
“bed” was different.]

ISSUE:
Whether or not Manalo owns Lot 821 by way of accretion

RULING: No.
The disputed property is not an accretion. It is the action of the heavy rains that cause the highest ordinary level of
waters of the Cagayan River during the rainy season. The depressed portion is a river bed and is thus considered property
of public domain.
The SC observed the following:
a) The pictures identified by Manalo during his direct examination depict the depressed portion as a river bed. The dried
up portion had dike-like slopes (around 8m) on both sides connecting it to Lot 307 and Lot 821 that are vertical and very
prominent.
b) The eastern bed already existed even before Manalo bought the land. It was called “Rio Muerte de Cagayan.”
c) Manalo could not have acquire ownership of the land because article 420 of the civil code states that rivers are
property of public dominion. The word “river” includes the running waters, the bed, and the banks. [The seller never
actually owned that part of the land since it was public property]
d) The submerged area (22.72 ha) is twice the area of the land he actually bought. It is difficult to suppose that such a
sizable area could have been brought about by accretion.
More importantly, the requisites of accretion in article 457 were not satisfied. These are: 1) that the deposition of the soil
or sediment be gradual and imperceptible; 2) that it be the result of the action of the waters of the river (or sea); and 3)
the land where the accretion takes place is adjacent to the banks of the rivers (or the sea coast). The accretion should’ve
been attached to Lot 307 for Manalo to acquire its ownership. BUT, the claimed accretion lies on the bank of the river;
not adjacent to Lot 307 but directly opposite it – across the river. Aside from that, the dike-like slopes which were very
steep may only be formed by a sudden and forceful action like flooding. The steep slopes could not have been formed by
the river in a slow and gradual manner.

BAES V. COURT OF APPEALS

The rules on alluvion do not apply to man-made or artificial accretions nor to accretions to lands that adjoin canals or
esteros or artificial drainage systems. If the riparian owner is entitled to compensation for the damage to or loss of his
property due to natural causes, there is all the more reason to compensate him when the change in the course of the
river is effected through artificial means.
FACTS:
In 1962, the Government dug up a canal on a private estate in order to streamline the Tripa de Gallina creek (in other
words, there was a mand-made change of river course). Said private estate was acquired by petitioner Baes, and was
subdivided in to three lots. It was lot 2958-C which was totally occupied by the canal so the Government in exchange
granted him a lot near but not contiguous to C. The old river bed was filled up by soil from Lot C. Petitioner now claims
ownership over the old river bed on the basis of Article 461 which says that abandoned river beds belong to the riparian
owners whose land is occupied by the new course of water.

ISSUE: Whether or not Article 461 applies

RULING: YES!
If the riparian owner is entitled to compensation for the damage to or loss of his property due to natural causes, there is
all the more reason to compensate him when the change in the course of the river is effected through artificial means.
The loss to the petitioners of the land covered by the canal was the result of a deliberate act on the part of the
government when it sought to improve the flow of the Tripa de Gallina creek. It was therefore obligated to compensate
the Baeses for their loss.

We find, however, that the petitioners have already been so compensated. Felix Baes was given Lot 3271-A in exchange
for the affected Lot 2958-B through the Deed of Exchange of Real Property dated June 20, 1970. This was a fair exchange
because the two lots were of the same area and value and the agreement was freely entered into by the parties.


ACCRETIONVda. De Nazareno vs. Court of Appeals, Salasalan, Rabaya, Labis

GR No. 98045June 26, 1996
FACTS:
Antonio Nazareno is an owner of a titled property situated beside an accretion area along the banks ofCagayan River.
Jose Salasalan & Leo Rabaya leased parcels of land from Nazareno. When Salsalan & Rabayastopped paying rentals,
Nazareno filed an ejectment suit. The Municipal Trial Court ruled in favor of Nazareno; theRTC affirmed the decision.
Thus, Nazareno filed an application with the Bureau of Lands to perfect his title over theaccretion area being claimed by
him.
ISSUE:
Whether or not the subject land is a public land?
ARGUMENTS:VDA. DE NAZARENO SALASALAN AND RABAYA
The subject land is a private land being anaccretion to Antoni Nazareno’s titledproperty.
Art. 457 of the Civil Code which provides that“ To the owners of lands adjoining the banks ofrivers belong the accretion
which theygradually receive from the effects of thecurrent of the waters”. The accumulation was gradual
andimperceptible, resulting from the action of thewaters or current of the Balacanas Creek andCagayan River. They
contend the public character of thesubject land.
Mere application of the Miscellaneous SalesPatent by Nazareno is an admission that theland being applied is a public
land.
RULING:
The Court ruled that the subject land is part of the public domain since the accretion was man-made or artificial.
Under Article 457 of the Civil Code. “To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effectsof the current of the waters.” But the Court provides the following requisites of
accretion (Rules of Alluvion):1. That the deposition of soil or sediment be gradual and imperceptible;2. That it be the
result of the action of the waters of the river (or sea); and3. That the land where the accretion takes place is adjacent
to the banks of rivers (or sea coast).In Republic v. CA. “the requirement that the deposit should be due to the effect of
the current of the river is indispensable”. In Hilario v. City of Manila,“the word“current” indicates the participation of the
body of water in the ebband flow of waters due to high and lowtide.

EQUATORIAL V. MAYFAIR- Sale of Land

While execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery is merely presumptive. It is nullified by the failure of the vendee to take actual
possession of the land sold.

FACTS:
Carmelo & Bauermann, Inc. owned a land, together with two 2-storey buildings at Claro M. Recto Avenue, Manila, and
covered by TCT No. 18529.

On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. fpr 20 years. The lease covered a
portion of the second floor and mezzanine of a two-storey building with about 1,610 square meters of floor area, which
respondent used as Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Lease with Carmelo for another portion of the latter’s
property this time, a part of the second floor of the two-storey building, and two store spaces on the ground floor. In that
space, Mayfair put up another movie house known as Miramar Theater. The Contract of Lease was likewise for a period
of 20 years.

Both leases contained a clause giving Mayfair a right of first refusal to purchase the subject properties. Sadly, on July 30,
1978 - within the 20-year-lease term -- the subject properties were sold by Carmelo to Equatorial Realty Development,
Inc. for eleven million smackers, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the Regional Trial Court of
Manila for the recission of the Deed of Absolute Sale between Carmelo and Equatorial, specific performance, and
damages. RTC decided for Carmelo and Equatorial. Tsk tsk.
CA reversed and ruled for Mayfair. The SC denied a petition questioning the CA decision. What happened is that the
contract did get rescinded, Equatorial got its money back and asserted that Mayfair have the right to purchase the lots
for 11 million bucks.

Decision became final and executory, so Mayfair deposited with the clerk the 11M (less 847grand withholding) payment
for the properties (Carmelo somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after Mayfair submitted its Motion for Execution, Equatorial demanded
from Mayfair backrentals and reasonable compensation for the Mayfair’s continued use of the subject premises after its
lease contracts expired. Remember that Mayfair was still occupying the premises during all this hullabaloo.

ISSUE:
Whether or not Equatorial was the owner of the subject property and could thus enjoy the fruits and rentals.

HELD:NO.
Nor right of ownership was transferred from Carmelo to Equatorial since there was failure to deliver the property to the
buyer. Compound this with the fact that the sale was even rescinded.

The court went on to assert that rent is a civil fruit that belonged to the owner of the property producing it by right of
accession. Hence, the rentals that fell due from the time of the perfection of the sale to petitioner until its rescission by
final judgment should belong to the owner of the property during that period.

We remember from SALES that in a contract of sale, “one of the contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent.”

Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him “in any of the
ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred
from the vendor to the vendee.” This right is transferred, not by contract alone, but by tradition or delivery. There is
delivery if and when the thing sold “is placed in the control and possession of the vendee.”

While execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery is merely presumptive. It is nullified by the failure of the vendee to take actual
possession of the land sold.

For property to be delivered, we need two things. Delivery of property or title, and transfer of control or custody to the
buyer.

Possession was never acquired by the petitioner. It therefore had no rights to rent.

LIWANAG v YU-SONGQUIAN
FACTS: Yu-Chiocco leased a land on Calle Lemery, Tondo in 1901. The property, however, was later claimed by Leoncia
Liuanag, on behalf of the estate of Yu-Chingco, who had died in China on Oct. 30 1901. Yu-Chiocco himself died in August
1902.
The lower court found that Yu-Chiocco contributed the labor, while the materials used belonged to the estate of Yu-
Chingco, and ruled that the estate of Yu-Chingco owned half of the buildings.

The Supreme Court overturned the ruling, saying that even if the materials belonged to Yu-Chingco, “it does not follow,
as a conclusion of law, that the owner of the material thereby became the owner of any part of the buildings.”
Instead, Liuanag should be paid for the materials that were used to construct the building.
It cited Art. 360 of the Civil Code, which says that a landowner who builds on his land using the materials of another is
obliged to pay for the value of the material. Saying that the provision would also apply to a leasehold in real estate, the
Court said Liuanag has a claim for the value of the materials that were used in the construction of the building.

Judgment: Ruling REVERSED. Case remanded to lower court with directions to enter judgment in favor of defendant,
without prejudice to present claim against the person or estate bound to pay it.

J.M. TUASON and CO., INC. V ESTRELLA VDA. DE LUMANLAN J and CAG.R. No: L-23497Petitioner/s: J.M. Tuason and Co.,
Inc.Respondent/s: Estrella Vda. De Lumanlan and the Court of Appeals (Fifth Division)Ponente: Acting C.J. JBL
ReyesAction: Petition for review by certiorariDate: April 26, 1968

FACTS1. J.M. Tuason & Co Inc (Tuason) filed a case against Lumanlan after the latter unlawfully entered into its property
known as Santa Mesa HeightsSubdivision (situated at Barrio North Tatalon, Quezon City). Lumanlan took possession of
800 sq m land and constructed her house on the said land. Tuason prays for ejectment and damages for occupancy.2.
Lumanlan argues that she had brought the property from one Pedro Deudor and that there is a Compromise Agreement
between Deudor and Tuason stating that she was one of the buyers recognized therein.3. CFI: Lower Court ruled in favor
of Tuason, holding that it is the registered owner and the question being purely one of possession. Lumanlan’s evidence
(Compromise Agreement) was completely immaterial.4. Upon appeal, CA ruled in favor of Lumanlan, holding that the
Compromise Agreement was a valid defense against the possessory action filed by Tuason. Under paragraph 7 of the said
agreement, Tuason bound and committed itself to sell to Lumanlan the lot occupied by her at a reasonable price.
Lumanlan has the right to compel Tuason to accept payment for the lot in question and that the agreement legalized the
possession of Lumanlan.

ISSUEWhether or not J.M. Tuason and Co., Inc is the rightful owner of the said land? – YES

HELD1. A careful analysis of the compromise agreement will show that in no way did it obligate Tuason to sell to those
buyers the lots occupied by them at the price stipulated by the Deudors, but at “the current prices and terms specified
by the OWNERS (Tuason) in their sales of lots. (See notes for paragraph 7 of compromise agreement)

2. Paragraph 7 also imports that these buyers of the Deudors must (1) “recognize the title of the OWNERS (Tuason) over
the property purportedly bought by them” and from the Deudors, and (2) “sign, whenever possible, new contracts of
purchase for said property.” Theagreement also states that “the sums paid by them to the Deudors...shall be credited to
the buyers.”

3. All that Tuason agreed to was to grant the Deudor buyers preferential right to purchase “at current prices and terms”
upon recognizing the title of Tuason and signing new contracts and to credit to them for the amountsthey had paid to
the Deudors.

4. Lumanlan never claimed that she had signed a new contract with Tuason for the puchase of the lot occupied. Instead
of recognizing the title of Tuason as required by the agreement, she used paragraph 6 of the agreement for her special
defense, arguing that Deudorand Tuason entered into the compromise agreement where Deudor and hisco-owners
renouced, ceded, waived, and quitclaimed all their rights in the property in favor of Tuason without her knowledge and
consent. Now she does not rely on the compromise agreement but she assails it. -_-

5. Without the compromise agreement, Lumanlan must justify her possession on the basis of a pretended superiority of
the Deudors’ old THE DIGEST GROUP | B2018 | AY 2015-2016 I UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW

GABOYA V. CUI- Usufruct

FACTS:

Don Mariano sold his 2 lots to two of his children. Later on, he and his children became co-owners of the property. Don
Mariano executed a deed authorizing the children to apply for a loan w/ mortgage with a stipulation reserving his right
to the fruits of the land. The children then constructed a building on the land and collected rent from the lessee thereof.
Much later, when Don Mariano died, his estate was claiming the fruits of the building.

ISSUE:
Whether or not Don Mariano had a right to fruits of the building?

RULING: NO.
The deed expressly reserved only to his right to the fruits of the land. He only owned the rent for the portion of land
occupied by the building; thus, the estate could only claim the rent on that piece of land and not on the entire parcel of
land. The children are entitled to the rents of the building. (A usufruct on the land may be separate from the building.

There should be no rescission of the contract coz the exact amount of rent due and owing to the Don Mariano’s estate is
still unliquidated and undetermined. The trial court has the discretion to grant the debtor (children) a period within
which to pay the rental income from the portion of land owned by the building because the same has not yet been
determined. Article 1191 of the Civil Code grants the right to rescind but subject to the period that the court will grant.

Moreover, on the issue of co-ownership, the court held that a co-owner cannot simultaneously be a usufructuary of the
same land owned.

FLOREZA v EVANGELISTA [96 SCRA 130 (February 21, 1980)]

Nature: Petition for review on certiorari of the decision of the CA.
Ponente: J. Melencio-Herrera
Facts:
 The Evangelistas were the owner of a residential lot in Rizal with an area of 204.08 sq. m. assessed at P410.
 May 1945: Evangelistas borrowed P100 from Floreza.
 November 1945: Floreza occupied the residential lot and built a house of light material (barong-barong) with the
consent of the Evangelistas.
 Additional Loans made by the Evangelistas: Sept. 1946 – P100, August 1947 – P200, January 1949 – P200, April
1949 – P140. TOTAL = P740 (including first loan)
 January 1949: Floreza demolished the house of light material and constructed one of strong material assessed at
P1400. Floreza has not been paying any rentals since the beginning of their transactions.
 August 1949: Evangelistas sold, with a right to repurchase within 6 years, their land to Floreza for P1000.
 Seven months before the expiry of the repurchase period, the Evangelistas were able to pay in full.
 Floreza refused to vacate the lot unless he was first reimbursed for the value of the house he built.
 Evangelistas filed a complaint. CFI ruled based on Art, 448 of the Civil Code saying that Evangelistas have the
choice between purchasing the house or selling the land to Floreza.
 CA ruled that Art. 448 was inapplicable and that Floreza was not entiled to the reimbursement of his house and
could remove the same at his own expense.

Issue:
1. WON Floreza was entitled to reimbursement of the cost of his house. NO.
2. WON he (his heirs who replaced him) should pay rental of the land. YES.

Held/Ratio:
1. Issue of reimbursement is not moot because if Floreza has no right of retention, then he must pay damages in
the form of rentals.

Agree with CA that Art. 448 is inapplicable because it applies only when the builder is in good faith (he believed he had a
right to build).Art. 453 is also not applicable because it requires both of the parties to be in bad faith. Neither is Art. 1616
applicable because Floreza is not a vendee a retro. The house was already constructed in 1945 (light materials) even
before the pacto de retro was entered into in 1949.

Floreza cannot be classified as a builder in good faith nor a vendee a retro, who made useful improvements during the
pacto de retro, he has no right to reimbursement of the value of the house, much less to the retention of the premises
until he is paid.
His rights are more akin to a usufructury under Art. 579, who may make on the property useful improvements but with
no right to be indemnified thereof, He may, however, remove such improvements should it be possible to do so without
damage to the property.

2. From the time the redemption price was paid in January 3, 1955, Floreza’s right to use the residential lot without
rent ceased. He should be held liable for damages in the form of rentals for the continued use of the lot for P10
monthly from January 3, 1955 until the house was removed and the property vacated by Floreza or his heirs.

Judgment affirmed with modification.

MANOTOK REALTY INC v. TECSON

FACTS
In a complaint filed by the petitioner for recovery of possession against defendants, CFI ruled declaring respondent Nilo
Madlangawa a builder in good faith. CA affirmed and SC dismissed for lack of merit.

Petitioner filed with the trial court motion for the approval of the petitioner's exercise of option and for satisfaction of
judgment(that is final and executory) which was dismissed. Hence this petition for mandamus. However, since there is a
pending case (Manotok v. NHA) involving the expropriation of the land in question it is better to suspend the current
case til after the outcome of the expropriation proceedings is done. Moreover, a fire engulfed the Tambunting estate
covering the disputed area of the land.The expropriation case was not granted and the law that provided for such was
declared unconstitutional.

Due to the fire, petitioner is contending that the execution of the decision must now involve the delivery of possession.
ISSUE
Whether or not there should be a delivery of possession by the respondent to the petitioner

RULING
When the decision of the trial court became final and executory, it becomes incumbent upon the respondent judge to
issue the necessary writ for the execution of the same. Since the improvements have been gutted by fire, and therefore,
the basis for private respondent's right to retain the premises has already been extinguished without the fault of the
petitioner, there is no other recourse for the private respondent but to vacate the premises and deliver the same to the
petitioner.

MWSS V. CA
143 SCRA 20

FACTS:
MWSS had an account from PNB. Its treasurer, auditor, and General Manager are the ones authorized to sign
checks. During a period of time, 23 checks were drawn and debited against the account of petitioner. Bearing the
same check numbers, the amounts stated therein were again
debited from the account of petitioner. The amounts drawn were deposited in the accounts of the payees in PCIB. It
was found out though that the names stated in the drawn checks were all fictitious. Petitioner demanded the return of
the amounts debited but the bank refused to do so. Thus, it filed a complaint.
HELD:
There was no categorical finding that the 23 checks were signed by persons other than those authorized to
sign. On the contrary, the NBI reports shows that the fraud was an “inside job” and that the delay in the
reconciliation of the bank statements and the laxity and loss of records
control in the printing of the personalized checks facilitated the fraud. It further doesn’t provide that the signatures
were forgeries.

Forgery cannot be presumed. It should be proven by clear, convincing and positive evidence. This wasn’t done in the
present case.
The petitioner cannot invoke Section 23 because it was guilty of negligence not only before the questioned checks but
even after the same had already been negotiated.

G.R. No. 79688 February 1, 1996

PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner,
vs.
COURT OF APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED JARDINICO, respondents.
DECISION
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the owner's agent, a builder
in good faith? This is the main issue resolved in this petition for review on certiorari to reverse the Decision1of the Court
of Appeals2 in CA-G.R. No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court resolved to transfer this case (along with several
others) to the Third Division. After due deliberation and consultation, the Court assigned the writing of this Decision to
the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at Taculing Road,
Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the rights to the lot from Robillo. At
that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on December 19, 1978
Transfer Certificate of Title No. 106367 in his name. It was then that he discovered that improvements had been
introduced on Lot 9 by respondent Wilson Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres Enterprises,
Inc. (CTTEI), the exclusive real estate agent of petitioner. Under the Contract to Sell on Installment, Kee could possess the
lot even before the completion of all installment payments. On January 20, 1975, Kee paid CTTEI the relocation fee of
P50.00 and another P50.00 on January 27, 1975, for the preparation of the lot plan. These amounts were paid prior to
Kee's taking actual possession of Lot 8. After the preparation of the lot plan and a copy thereof given to Kee, CTTEI
through its employee, Zenaida Octaviano, accompanied Kee's wife, Donabelle Kee, to inspect Lot 8. Unfortunately, the
parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store, an auto
repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach an amicable
settlement, but failed.
On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the latter remove all improvements and vacate Lot 9.
When Kee refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC),
a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. It further ruled that petitioner and
CTTEI could not successfully invoke as a defense the failure of Kee to give notice of his intention to begin construction
required under paragraph 22 of the Contract to Sell on Installment and his having built a sari-sari store without the prior
approval of petitioner required under paragraph 26 of said contract, saying that the purpose of these requirements was
merely to regulate the type of improvements to be constructed on the Lot. 3
However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8 for the latter's failure to
pay the installments due, and that Kee had not contested the rescission. The rescission was effected in 1979, before the
complaint was instituted. The MTCC concluded that Kee no longer had any right over the lot subject of the contract
between him and petitioner. Consequently, Kee must pay reasonable rentals for the use of Lot 9, and, furthermore, he
cannot claim reimbursement for the improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate the premises of Lot 9, covered by TCT No. 106367 and to remove all
structures and improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P15.00 a day computed from the time this
suit was filed on March 12, 1981 until he actually vacates the premises. This amount shall bear interests ( sic) at the rate
of 12 per cent (sic) per annum.
3. Third-Party Defendant C.T. Torres Enterprises, Inc. and Pleasantville Subdivision are ordered to pay the plaintiff jointly
and severally the sum of P3,000.00 as attorney's fees and P700.00 as cost and litigation expenses. 4
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were not at fault or
were not negligent, there being no preponderant evidence to show that they directly participated in the delivery of Lot 9
to Kee5 . It found Kee a builder in bad faith. It further ruled that even assuming arguendo that Kee was acting in good
faith, he was, nonetheless, guilty of unlawfully usurping the possessory right of Jardinico over Lot 9 from the time he was
served with notice to vacate said lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to the order against the defendant to vacate the
premises of Lot No. 9 covered by Transfer Certificate of Title No. T-106367 of the land records of Bacolod City; the
removal of all structures and improvements introduced thereon at his expense and the payment to plaintiff ( sic) the sum
of Fifteen (P15.00) Pesos a day as reasonable rental to be computed from January 30, 1981, the date of the demand, and
not from the date of the filing of the complaint, until he had vacated (sic) the premises, with interest thereon at 12% per
annum. This Court further renders judgment against the defendant to pay the plaintiff the sum of Three Thousand
(P3,000.00) Pesos as attorney's fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants Pleasantville Development Corporation and C.T. Torres
Enterprises, Inc. is dismissed. The order against Third-Party Defendants to pay attorney's fees to plaintiff and costs of
litigation is reversed.6
Following the denial of his motion for reconsideration on October 20, 1986, Kee appealed directly to the Supreme Court,
which referred the matter to the Court of Appeals.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of the "mix-up" when he began
construction of the improvements on Lot 8. It further ruled that the erroneous delivery was due to the negligence of
CTTEI, and that such wrong delivery was likewise imputable to its principal, petitioner herein. The appellate court also
ruled that the award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to the improvements he introduced on Lot 9, and is entitled
to the rights granted him under Articles 448, 546 and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable
under the following circumstances:
A. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-
party defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or
rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the
value of Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for the determination of the actual value of the
improvements and the property (Lot 9), as well as for further proceedings in conformity with Article 448 of the New Civil
Code.7
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the respondent Court's Decision, as follows:
1. The Court of Appeals has decided the case in a way probably not in accord with law or the the ( sic) applicable
decisions of the Supreme Court on third-party complaints, by ordering third-party defendants to pay the demolition
expenses and/or price of the land;
2. The Court of Appeals has so far departed from the accepted course of judicial proceedings, by granting to private
respondent-Kee the rights of a builder in good faith in excess of what the law provides, thus enriching private respondent
Kee at the expense of the petitioner;
3. In the light of the subsequent events or circumstances which changed the rights of the parties, it becomes imperative
to set aside or at least modify the judgment of the Court of Appeals to harmonize with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts of the lower court is clearly a builder in bad faith,
having violated several provisions of the contract to sell on installments;
5. The decision of the Court of Appeals, holding the principal, Pleasantville Development Corporation (liable) for the acts
made by the agent in excess of its authority is clearly in violation of the provision of the law;
6. The award of attorney's fees is clearly without basis and is equivalent to putting a premium in (sic) court litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.? and
(3) Is the award of attorney's fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTC's ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals that Kee was a
builder in good faith. We agree with the following observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed the wrong
property to Wilson Kee and his wife. It is highly improbable that a purchaser of a lot would knowingly and willingly build
his residence on a lot owned by another, deliberately exposing himself and his family to the risk of being ejected from
the land and losing all improvements thereon, not to mention the social humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of his property. Lot
8 is covered by Transfer Certificate of Title No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-
106367. Hence, under the Torrens system of land registration, Kee is presumed to have knowledge of the metes and
bounds of the property with which he is dealing. . . .
xxx xxx xxx
But as Kee is a layman not versed in the technical description of his property, he had to find a way to ascertain that what
was described in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision developer's agent and applied and paid
for the relocation of the lot, as well as for the production of a lot plan by CTTEI's geodetic engineer. Upon Kee's receipt of
the map, his wife went to the subdivision site accompanied by CTTEI's employee, Octaviano, who authoritatively
declared that the land she was pointing to was indeed Lot 8. Having full faith and confidence in the reputation of CTTEI,
and because of the company's positive identification of the property, Kee saw no reason to suspect that there had been a
misdelivery. The steps Kee had taken to protect his interests were reasonable. There was no need for him to have
acted ex-abundantia cautela, such as being present during the geodetic engineer's relocation survey or hiring an
independent geodetic engineer to countercheck for errors, for the final delivery of subdivision lots to their owners is part
of the regular course of everyday business of CTTEI. Because of CTTEI's blunder, what Kee had hoped to forestall did in
fact transpire. Kee's efforts all went to naught. 8
Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw
in his title 9 . And as good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee 10 .
At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from petitioner. He was not
aware that the lot delivered to him was not Lot 8. Thus, Kee's good faith. Petitioner failed to prove otherwise.
To demonstrate Kee's bad faith, petitioner points to Kee's violation of paragraphs 22 and 26 of the Contract of Sale on
Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee was a builder in good faith, that is, on his state
of mind at the time he built the improvements on Lot 9. These alleged violations may give rise to petitioner's cause of
action against Kee under the said contract (contractual breach), but may not be bases to negate the presumption that
Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on Installment covering Lot 8 between it
and Kee was rescinded long before the present action was instituted. This has no relevance on the liability of petitioner,
as such fact does not negate the negligence of its agent in pointing out the wrong lot. to Kee. Such circumstance is
relevant only as it gives Jardinico a cause of action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot "claim that another lot was erroneously pointed out to him" because the latter
agreed to the following provision in the Contract of Sale on installment, to wit:
13. The Vendee hereby declares that prior to the execution of his contract he/she has personally examined or inspected
the property made subject-matter hereof, as to its location, contours, as well as the natural condition of the lots and
from the date hereof whatever consequential change therein made due to erosion, the said Vendee shall bear the
expenses of the necessary fillings, when the same is so desired by him/her. 11
The subject matter of this provision of the contract is the change of the location, contour and condition of the lot due to
erosion. It merely provides that the vendee, having examined the property prior to the execution of the contract, agrees
to shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted away his right to recover damages resulting
from petitioner's negligence. Such waiver would be contrary to public policy and cannot be allowed. "Rights may be
waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third
person with a right recognized by law." 12
The Second Issue: Petitioner's Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC after ruling that there was
no evidence from which fault or negligence on the part of petitioner and CTTEI can be inferred. The Court of Appeals
disagreed and found CTTEI negligent for the erroneous delivery of the lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the erroneous delivery of Lot 9 to Kee
was an act which was clearly outside the scope of its authority, and consequently, CTTEI I alone should be liable. It
asserts that "while [CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was never authorized to
deliver the wrong lot to Kee" 13 .
Petitioner's contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within the scope of his authority, and should
bear the damage caused to third persons 14 . On the other hand, the agent who exceeds his authority is personally liable
for the damage 15
CTTEI was acting within its authority as the sole real estate representative of petitioner when it made the delivery to Kee.
In acting within its scope of authority, it was, however, negligent. It is this negligence that is the basis of petitioner's
liability, as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July 24, 1987 entered into a deed of
sale, wherein the former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of such deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is now pending appeal with the Court of Appeals, regardless
of the outcome of the decision shall be mutually disregarded and shall not be pursued by the parties herein and shall be
considered dismissed and without effect whatso-ever; 16
Kee asserts though that the "terms and conditions in said deed of sale are strictly for the parties thereto" and that
"(t)here is no waiver made by either of the parties in said deed of whatever favorable judgment or award the honorable
respondent Court of Appeals may make in their favor against herein petitioner Pleasantville Development Corporation
and/or private respondent C.T. Torres Enterprises; Inc." 17
Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier stated, petitioner's liability
is grounded on the negligence of its agent. On the other hand, what the deed of sale regulates are the reciprocal rights
of Kee and Jardinico; it stressed that they had reached an agreement independent of the outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable
under the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party
defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered
useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the
value of Lot 9 that Kee should pay to Jardinico. 18

Petitioner contends that if the above holding would be carried out, Kee would be unjustly enriched at its expense. In
other words, Kee would be able to own the lot, as buyer, without having to pay anything on it, because the aforequoted
portion of respondent Court's Decision would require petitioner and CTTEI jointly and solidarily to "answer" or reimburse
Kee therefor.
We agree with petitioner.
Petitioner' s liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner should be held liable for
damages. Now, the extent and/or amount of damages to be awarded is a factual issue which should be determined after
evidence is adduced. However, there is no showing that such evidence was actually presented in the trial court; hence no
damages could flow be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good faith, respectively, are
regulated by law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for the Court of Appeals to make a "slight
modification" in the application of such law, on the ground of "equity". At any rate, as it stands now, Kee and Jardinico
have amicably settled through their deed of sale their rights and obligations with regards to Lot 9. Thus, we delete items
2 (a) and (b) of the dispositive portion of the Court of Appeals' Decision [as reproduced above] holding petitioner and
CTTEI solidarily liable.
The Third Issue: Attorney's Fees
The MTCC awarded Jardinico attorney's fees and costs in the amount of P3,000.00 and P700.00, respectively, as prayed
for in his complaint. The RTC deleted the award, consistent with its ruling that petitioner was without fault or negligence.
The Court of Appeals, however, reinstated the award of attorney's fees after ruling that petitioner was liable for its
agent's negligence.

The award of attorney's fees lies within the discretion of the court and depends upon the circumstances of each case 19 .
We shall not interfere with the discretion of the Court of Appeals. Jardinico was compelled to litigate for the protection
of his interests and for the recovery of damages sustained as a result of the negligence of petitioner's agent 20 .
In sum, we rule that Kee is a builder in good faith. The disposition of the Court of Appeals that Kee "is entitled to the
rights granted him under Articles 448, 546 and 548 of the New Civil Code" is deleted, in view of the deed of sale entered
into by Kee and Jardinico, which deed now governs the rights of Jardinico and Kee as to each other. There is also no
further need, as ruled by the appellate Court, to remand the case to the court of origin "for determination of the actual
value of the improvements and the property (Lot 9), as well as for further proceedings in conformity with Article 448 of
the New Civil Code."
WHEREFORE , the petition is partially GRANTED. The Decision of the Court of Appeals is hereby MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are declared solidarily
liable for damages due to negligence; however, since the amount and/or extent of such damages was not proven during
the trial, the same cannot now be quantified and awarded;
(3) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.

G.R. No. 117642 April 24, 1998EDITHA ALVIOLA and PORFERIO ALVIOLA,
petitioners,vs.
HONORABLE COURT OF APPEALS, FORENCIA BULING Vda de TINAGAN, DEMOSTHENES TINAGAN, JESUS
TINAGAN,ZENAIDA T., JOSEP and JOSEPHINE TINAGAN,
respondents.
Facts:
In this petition for review on
certiorari
, petitioners assail the decision
1

of the Court of Appeals dated April 8, 1994 whichaffirmed the decision of the lower court ordering petitioners to
peacefully vacate and surrender the possession of thedisputed properties to the private respondents.On April 1, 1950,
Victoria Tinagan purchased from Mauro Tinagan 2 parcels of land. One parcel of land contains an areaof 5,704 square
meters, more or less; while the other contains 10,860 square meters. Thereafter, Victoria and her sonAgustin, took
possession of said parcels of land.Sometime in 1960, petitioners occupied portions thereof whereat they built a copra
dryer and put up a store whereinthey engaged in the business of buying and selling copra.On June 23, 1975,
Victoria died. On October 26, 1975, Agustin died, survived by herein private respondents.On December 24,
1976, petitioner Editha assisted by her husband filed a complaint for partition and damages, claimingto be an
acknowledged natural child of deceased Agustin Tinagan and demanding the delivery of her shares in theproperties left
by the deceased.

This case was dismissed by the trial court on the ground that recognition of naturalchildren may be brought only during
the lifetime of the presumed parent and petitioner Editha did not fall in any of theexceptions enumerated in Article 285
of the Civil Code.

On March 29, 1988, private respondents filed a complaint for recovery of possession against Editha and her
husbandPorferio, praying, among others, that they be declared absolute owners of the said parcels of land, and that
petitionersbe ordered to vacate the same, to remove their copra dryer and store, to pay actual damages (in the form of
rentals),moral and punitive damages, litigation expenses and attorney's fees.In their answer, petitioners contend
that they own the improvements in the disputed properties which are still publicland; that they are qualified to be
beneficiaries of the comprehensive agrarian reform program and that they are rightfulpossessors by occupation of the
said properties for more than twenty years.After trial, the lower court rendered judgment in favor of the private
respondents. CA affirmed. Hence, this petition.
Issue:
W/N the lands in question are public lands and W/N the petitioners are rightful possessors by occupation formore than
20 year.
Held:
No
Ratio:
Petitioners aver that respondent court erred in declaring private respondents the owners of the disputed properties.They
contend that ownership of a public land cannot be declared by the courts but by the Executive Department; andthat the
respondent court erred in not considering that private respondents' predecessor-in-interest, Victoria Tinagan,during her
lifetime, ceded her right to the disputed properties in favor of petitioners.

G.R. No. 117642 April 24, 1998

EDITHA ALVIOLA and PORFERIO ALVIOLA, Petitioners, vs. HONORABLE COURT OF APPEALS, FORENCIA BULING Vda de
TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T., JOSEP and JOSEPHINE TINAGAN, Respondents.

MARTINEZ, J.:
In this petition for review on certiorari, petitioners assail the decision 1 of the Court of Appeals dated April 8, 1994 which
affirmed the decision of the lower court ordering petitioners to peacefully vacate and surrender the possession of the
disputed properties to the private respondents.
Culled from the record are the following antecedent facts of this case to wit:
On April 1, 1950, Victoria Sonjaconda Tinagan purchased from Mauro Tinagan two (2) parcels of land situated at
Barangay Bongbong, Valencia, Negros Oriental. 2 One parcel of land contains an area of 5,704 square meters, more or
less; 3 while the other contains 10,860 square meters. 4 Thereafter, Victoria and her son Agustin Tinagan, took possession
of said parcels of land.
Sometime in 1960, petitioners occupied portions thereof whereat they built a copra dryer and put up a store wherein
they engaged in the business of buying and selling copra.
On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by herein private respondents, namely his
wife, Florencia Buling Vda. de Tinagan and their children Demosthenes, Jesus, Zenaida and Josephine, all surnamed
Tinagan.
On December 24, 1976, petitioner Editha assisted by her husband filed a complaint for partition and damages before the
then Court of First Instance of Negros Oriental, Branch 1, Dumaguete City, docketed as Civil Case No. 6634, claiming to be
an acknowledged natural child of deceased Agustin Tinagan and demanding the delivery of her shares in the properties
left by the deceased. 5
On October 4, 1979, the aforesaid case was dismissed by the trial court on the ground that recognition of natural
children may be brought only during the lifetime of the presumed parent and petitioner Editha did not fall in any of the
exceptions enumerated in Article 285 of the Civil Code. 6
Petitioners assailed the order of dismissal by filing a petition for certiorari and mandamusbefore this Court. 7 On August
9, 1982, this Court dismissed the petition for lack of merit. 8Petitioners filed a motion for reconsideration but the same
was denied on October 19, 1982.9
On March 29, 1988, private respondents filed a complaint for recovery of possession against Editha and her husband
Porferio Alviola before the Regional Trial Court of Negros Oriental, Branch 35, Dumaguete City, docketed as Civil Case No.
9148, praying, among others, that they be declared absolute owners of the said parcels of land, and that petitioners be
ordered to vacate the same, to remove their copra dryer and store, to pay actual damages (in the form of rentals), moral
and punitive damages, litigation expenses and attorney's fees. 10
In their answer, petitioners contend that they own the improvements in the disputed properties which are still public
land; that they are qualified to be beneficiaries of the comprehensive agrarian reform program and that they are rightful
possessors by occupation of the said properties for more than twenty years. 11
After trial, the lower court rendered judgment in favor of the private respondents, the dispositive portion of which reads:
WHEREFORE, premises considered, in Civil Case No. 9148, for Recovery of Property, the court hereby renders judgment:
a) Declaring plaintiffs as the absolute owners of the land in question including the portion claimed and occupied by
defendants;
b) Ordering defendants Editha Alviola and her husband Porfirio Alviola to peacefully vacate and to surrender the
possession of the premises in question to plaintiffs; Defendants may remove their store and dryer on the premises
without injury and prejudice to the plaintiffs;
c) Ordering defendants to pay the following amounts to the plaintiffs:
1. P150.00 monthly rentals from April 1988 up to the time the improvements in the questioned portions are removed;
2. P5,000.00 for attorney's fees;
3. P3,000.00 for litigation expenses and to pay the costs.
SO ORDERED. 12
Petitioners appealed to the Court of Appeals. On April 8, 1994, the respondent court rendered its decision, 13 affirming
the judgment of the lower court. Petitioners filed a motion for reconsideration 14 but the same was denied by the
respondent court in an order dated October 6, 1994. 15
Hence, this petition.
Petitioners aver that respondent court erred in declaring private respondents the owners of the disputed properties.
They contend that ownership of a public land cannot be declared by the courts but by the Executive Department of the
Government, citing the case of Busante vs. Hon. Court of Appeals, Oct. 20, 1992, 214 SCRA 774; and that the respondent
court erred in not considering that private respondents' predecessor-in-interest, Victoria Sonjaco Tinagan, during her
lifetime, ceded her right to the disputed properties in favor of petitioners.
Moreover, petitioners maintain that the respondent court erred in holding that they were in bad faith in possessing the
disputed properties and in ruling that the improvements thereon are transferable. They claim that the copra dryer and
the store are permanent structures, the walls thereof being made of hollow-blocks and the floors made of cement.
Private respondents counter that the question of whether or not the disputed properties are public land has been
resolved by overwhelming evidence showing ownership and possession by the Tinagans and their predecessors-in-
interest prior to 1949. They further aver that they merely tolerated petitioners' possession of the disputed properties for
a period which was less than that required for extraordinary prescription.
The petition must fail.
Petitioners claim that the disputed properties are public lands. This is a factual issue. The private respondents adduced
overwhelming evidence to prove their ownership and possession of the two (2) parcels of land on portions of which
petitioners built the copra dryer and a store. Private respondents' tax declarations and receipts of payment of real estate
taxes, as well as other related documents, prove their ownership of the disputed properties. As stated previously in the
narration of facts, these two (2) parcels of land were originally owned by Mauro Tinagan, who sold the same to Victoria
S. Tinagan on April 1, 1950, as evidenced by a Deed of Sale, 16 wherein the two (2) lots, Parcels 1 and 2, are
described. 17 Anent Parcel 1, tax declarations indicate that the property has always been declared in the name of the
Tinagans. The first, Tax Declaration No. 3335 18 is in the name of Mauro Tinagan. It was thereafter cancelled by Tax
Declaration No. 19534 effective 1968, 19 still in the name of Mauro. This declaration was cancelled by Tax Declaration No.
016740 now in the name of Agustin Tinagan, 20 effective 1974, followed by Tax Declaration No. 08-421 in the name of
Jesus Tinagan, effective 1980; 21 and finally by Tax Declaration No. 08-816 in the name of Jesus Tinagan, effective 1985. 22
With regard to Parcel 2, private respondents presented Tax Declaration No. 20973 in the name of Mauro Tinagan,
effective 1959, 23 Tax Declaration No. 016757, effective 1974; 24Tax Declaration No. 08-405-C in the name of Agustin
Tinagan, effective 1980 25 and Tax Declaration No. 08-794 in the name of Agustin Tinagan, effective 1985. 26 Moreover,
the realty taxes on the two lots have always been paid by the private respondents. 27 There can be no doubt, therefore,
that the two parcels of land are owned by the private respondents.
The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan, took possession of the said properties
in 1950, introduced improvements thereon, and for more than 40 years, have been in open, continuous, exclusive and
notorious occupation thereof in the concept of owners.
Petitioners' own evidence recognized the ownership of the land in favor of Victoria Tinagan. In their tax
declarations, 28 petitioners stated that the house and copra dryer are located on the land of Victoria S. Tinagan/Agustin
Tinagan. By acknowledging that the disputed portions belong to Victoria/Agustin Tinagan in their tax declarations,
petitioners' claim as owners thereof must fail.
The assailed decision of the respondent court states that "Appellants do not dispute that the two parcels of land subject
matter of the present complaint for recovery of possession belonged to Victoria S. Tinagan, the grandmother of herein
plaintiffs-appellees; that Agustin Tinagan inherited the parcels of land from his mother Victoria; and that plaintiffs-
appellees, in turn, inherited the same from Agustin." 29
Taking exception to the aforequoted finding, petitioners contend that while the 2 parcels of land are owned by private
respondents, the portions wherein the copra dryers and store stand were ceded to them by Victoria S. Tinagan in
exchange for an alleged indebtedness of Agustin Tinagan in the sum of P7,602.04. 30
This claim of the petitioners was brushed aside by the respondent court as merely an afterthought, thus -
Appellants' claim that they have acquired ownership over the floor areas of the store and dryer "in consideration of the
account of Agustin Tinagan in the sum of P7,602.04" is not plausible. It is more of an "after-thought" defense which was
not alleged in their answer. Although the evidence presented by them in support of this particular claim was not duly
objected to by counsel for appellees at the proper time and therefore deemed admissible in evidence, an examination of
the oral and documentary evidence submitted in support thereof, reveals the weakness of their claim.
Appellant testified that the areas on which their store and dryer were located were exchanged for the amount of
P7,602.04 owed to them by Agustin in 1967 (TSN, Hearing of April 14, 1989, p. 9); that he did not bother to execute a
document reflecting such agreement "because they were our parents and we had used the land for quite sometime
already they had also sold their copra to us for a long time." ( id.) Yet, as earlier discussed, the tax declarations in
appellants' answer show that even after 1967, they expressly declared that the parcels of land on which their store and
dryer were constructed, belonged to Victoria and Agustin (Exhs. 2-A, 2-B, 2-C, 3-A, 3-B). If appellants really believed that
they were in possession of the said particular areas in the concept of owners, they could have easily declared it in said
tax declarations. 31
Concededly, petitioners have been on the disputed portions since 1961. However, their stay thereon was merely by
tolerance on the part of the private respondents and their predecessor-in-interest. The evidence shows that the
petitioners were permitted by Victoria Sanjoco Tinagan to build a copra dryer on the land when they got married.
Subsequently, petitioner Editha Alviola, claiming to be the illegitimate daughter of Agustin Tinagan, filed a petition for
partition demanding her share in the estate of the deceased Agustin Tinagan on December 6, 1976. However, the
petition was dismissed since it was brought only after the death of Agustin Tinagan. This Court dismissed the petition
for certiorari and mandamusfiled by petitioner Editha Alviola on August 9, 1982. It was on March 29, 1988, when private
respondents filed this complaint for recovery of possession against petitioners. Considering that the petitioners'
occupation of the properties in dispute was merely tolerated by private respondents, their posture that they have
acquired the property by "occupation" for 20 years does not have any factual or legal foundation.
As correctly ruled by the respondent court, there was bad faith on the part of the petitioners when they constructed the
copra dryer and store on the disputed portions since they were fully aware that the parcels of land belonged to Victoria
Tinagan. And, there was likewise bad faith on the part of the private respondents, having knowledge of the arrangement
between petitioners and Victoria Tinagan relative to the construction of the copra dryer and store. Thus, for purposes of
indemnity, Article 448 of the New Civil Code should be applied. 32 However, the copra dryer and the store, as determined
by the trial court and respondent court, are transferable in nature. Thus, it would not fall within the coverage of Article
448. As the noted civil law authority, Senator Arturo Tolentino, aptly explains: "To fall within the provision of this Article,
the construction must be of permanent character, attached to the soil with an idea of perpetuity; but if it is of a
transitory character or is transferable, there is no accession, and the builder must remove the construction. The proper
remedy of the landowner is an action to eject the builder from the land." 33
The private respondents' action for recovery of possession was the suitable solution to eject petitioners from the
premises.
WHEREFORE, this petition should be, as it is hereby, DISMISSED.
The assailed decision is hereby AFFIRMED.
SO ORDERED.

Heirs of Durano Sr. vs Spouses Uy

344 SCRA 238 [GR No. 136456 October 24, 2000]
Facts: As far back as August 1970, a 128 hectare of land located in the barrios of Dunga and Cahumayhumayan, Danao
City. On December 27, 1973, the late Congressman Ramon Durano Sr. together with his son Ramon Durano III, and the
latter’s wide Elizabeth Hotchkins-Durano, instituted an action for damages against spouses Angeles Sepulveda Uy and
Emigdio Beng Sing Uy, Spouses Faustino Alatan and Valeriana Garro, Spouses Rufino Lavador and Aurelia Mata, Silvestre
Ramos, Hermogenes Tito, Teotimo Gonzales, Primitiva Garro, Julian Garro, Ismael Garro, Bienvido Castro, Glicerio Alcala,
Felemon Lavador, Candelario Lumantao, Garino Quimbo, Justino Tito, Marcelino Gonzales, Salvador Duyday, Venancia
Repaso, Leodegracia Gonzales, Jose dela Calzada, Restituta Gonzales, and Cosme Ramos before branch XVII of the then
Court of First Instance of Cebu, Danao City.. Herein respondents are the possessors of the subject parcel of land which
they are cultivating, it was used to be owned by CEPCO who later sold the same to Durano & Co. On September 15, 1990,
Durano & Co sold the disputed property to petitioner Ramon Durano III, who procured the registration of these lands in
his name under TCT no. T-103 and T-104. The different parts of the entire land was bulldozed by the petitioner’s company
resulting to the destruction of plants and other products that were placed by the respondents. Hence, a claim for
damages was lodged against herein petitioner. The respondents presented tax declaration covering the different areas of
the parcel of land that is titled in each of them as proof that they are entitled for the said damages.
Issue: Whether or not the doctrine of piercing the veil of corporate entity can be applied in order to make Durano & Co
liable for damages.
Held: Yes. The court of appeals applied the well-recognized principle of piercing the corporate veil, i.e. the law will regard
the act of the corporation as the ac of its individual stockholders, when it is shown that the corporation was used merely
as an alter ego by those persons in the commission of fraud or other illegal acts.
That the test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows:
1. Control, not mere majority or complete stock control, but complete domination, not only of finances but of
policy and business practice in respect to the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its own.
2. Such control must, have been used by the defendant to commit fraud or wrong, to perpetrate the violation of
statutory or other positive legal duty, on dishonest and unjust acts in contravention of plaintiff’s legal right; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
The absence of any one of these elements prevents the piercing the corporate veil. In applying the instrumentality or
alter ego doctrine, the courts are concerned with reality not form, with how the corporation operated and the individual
defendants relationship to that operation.

PARDELL VS. BARTOLOME [L-4656 NOVEMBER 18, 1912]

Facts: Petitioner Vicenta Ortiz y Felin de Pardell andrespondent Matilde Ortiz y Felin Bartolome were theexisting heirs of
the late Miguel Ortiz and Calixta Felin. On1888, Matilde and co-defendant Gaspar de Bartolome yEscribano took it upon
themselves without an judicialauthorization or even extra judicial agreement theadministration of the properties of the
late Calixta andMiguel. These properties included a house in Escolta Street,Vigan, Ilocos Sur; a house in Washington
Street, Vigan,Ilocos Sur; a lot in Magallanes Street, Vigan, IlocosSur; parcels of rice land in San Julian and Sta. Lucia;and
parcels of land in Candon, Ilocos Sur. Vicenta filed an action in court asking that thejudgement be rendered in restoring
and returning to themone half of the total value of the fruits and rents, pluslosses and damages from the
aforementioned properties.However, respondent Matilde asserted that she neverrefused to give the plaintiff her share
of the said properties.Vicenta also argued that Matilde and her husband, Gasparare obliged to pay rent to the former for
their occupation ofthe upper story of the house in Escolta Street.
Issue: Whether or not Matilde and Gaspar are obliged topay rent for their occupation of the said property

Held: No. The Court ruled that the spouses are not liable topay rent. Their occupation of the said property was a
mereexercise of their right to use the same as a co-owner. One ofthe limitations on a co-owner’s right of use is that he
mustuse it in such a way so as not to injure the interest of theother co-owners. In the case at bar, the other party failed
toprovide proof that by the occupation of the spousesBartolome, they prevented Vicenta from utilizing the same

G.R. No. L-30994 September 30, 1982

OLIMPIA BASA, ARSENIO BASA, NEMESIO BASA, RICARDO BASA, ATANACIA BASA, JULIANA BASA, and FELICIANO
BASA, petitioners,
vs.
HON. ANDRES C. AGUILAR, Judge Presiding Branch II of the Court of First Instance of Pampanga, GENARO PUYAT,
BRIGIDA MESINA, PRIMO TIONGSON, and MACARIA PUYAT, respondents.

VASQUEZ, J:

This is an appeal by certiorari from the decision of the Court of First Instance of Pampanga in Civil Case No. 2513, entitled
"Olimpia Basa, et al., Plaintiffs, versus Genaro Puyat, et al., Defendants. "

The seven (7) petitioners are owners co-pro-indiviso of an undivided ONE-HALF (1/2) share of a parcel of land located in
Barrio San Mateo, Arayat, Pampanga, with an area of 32,383 square meters, more or less. Private respondents Genaro
Puyat and Brigida Mesina were the owners of the other undivided half of the same parcel of land.

On March 6, 1964, Genaro Puyat, with the marital consent of Brigida Mesina, sold his ONE-HALF (1/2) share of the parcel
of land in question for the price of ONE THOUSAND (P1,000.00) PESOS in favor of private respondents Primo Tiongson
and Macaria Puyat. Primo Tiongson is a son-in-law of Genaro Puyat who is married to Macaria Puyat, a daughter of
Genaro Puyat.

Seven (7) days later, on or March 13, 1964, the herein petitioners filed Civil Case No. 2513, praying that they be allowed
to exercise the right of redemption under Article 1620 of the Civil Code, for which purpose they deposited with the court
the sum of ONE THOUSAND PESOS (P1,000.00) as redemption money.

The trial court rendered the judgment dismissing the case. It ruled that the petitioners are not entitled to exercise the
right of redemption under Article 1620 of the Civil Code, reasoning out as follows:

There is nothing repugnant, from the point of view of public policy, for parents to sell to their children. It could not,
therefore, have been intended by the framers of the Civil Code of the Philippines to include within the purview of the
term 'third person' the children of a co-owner of a thing. For after all, these children have an inchoate right to succession
to the same property. To hold otherwise, is to stretch the meaning of the law into ludicrious (sic) situations.

The logic of His Honor, the trial judge, carries more sentiment than law. It disregards the express letter of the law invoked
by the petitioners and ignores the pelosophy of the same. Article 1620 of the Civil Code reads:

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,
Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the
benefit and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or inconvenient
association into which he has been thrust. (10 Manresa, 4th Ed., 317.) It is intended to minimized co-ownership. The law
grants a co-owner the exercise of the said right of redemption when the shares of the of her owners are sold to "a third
person." A third person, within the meaning of this Article, is anyone who is not a co-owner. (Sentencia of February 7,
1944 as cited in Tolentino, Comments on the Civil Code, Vol. V, p. 160.)

Private respondent Primo Tiongson is definitely not a co-owner of the land in question. He is not even an heir of private
respondents Genaro Puyat and Brigida Mesina, nor included in the "family relations" of the said spouses as defined in
Article 217 of the Civil Code. The circumstance that he is married to Macaria Puyat, a daughter of Genaro Puyat and
Brigida Mesina, is of no moment. The conveyance to the Tiongson spouses was by onerous title, made during the lifetime
of Genaro Puyat and Brigida Mesina. The alleged inchoate right of succession from Genaro Puyat and Brigida Mesina,
which pertained only to Macaria Puyat. is thus out of the question. To deny to the petitioners the right of redemption
recognized in Article 1620 of the Civil Code is to defeat the purpose of minimizing co-ownership and to contravene the
public policy in this regard. Moreover, it would result in disallowing the petitioners a way out of what, in the words of
Manresa, " might be a disagreeable or inconvenient association into which they have been thrust."

WHEREFORE, the judgment appealed from is hereby REVERSED, and in lieu thereof, a new one is rendered declaring the
petitioners to be entitled to exercise the right of legal redemption under Article 1620 of the Civil Code with respect to
the ONE-HALF (1/2) share sold by private respondent Genaro Puyat and Brigida Mesina in favor of their corespondents
Primo Tiongson and Macaria Puyat. The private respondents shall pay the costs.

SO ORDERED.

Bailon-Casilao v. CA (1988)Petitioners: Delia Bailon-Casilao, Luz Paulino-Ang, Emma Paulino-Ybanez, Nilda Paulino-
Tolentino, and Sabina BailonRespondents: CA and Celestino AfablePonente: Cortes, J.

The fate of petitioners' claim over a parcel of land rests ultimately on a determination of whether or not said petitioners
arechargeable with such laches as may effectively bar their present action. There is a parcel of land in the names of the
Bailons (Rosalia, Gaudencio, Sabina Bernabe, Nenita and Delia) as co-owners, each with a 1/6 share. Gaudencio and
Nenita are now dead, (Nenita being represented in this case by her children) Bernabe went to China and had not been
heard from since.It appears that Rosalia and Gaudencio sold a portion of the land to Donato Delgado. Rosalia alone, then
sold the remainder of the land to Ponciana Aresgado de Lanuza. On the same date, Lanuza acquired from Delgado land
which the Delgado had earlier acquired from Rosaliaand Gaudencio. Husband John Lanuza, acting under a special power
of attorney given by his wife, Ponciana, sold the two parcels of landto 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 the land had been successively declared for taxation first, in the name of Ciriaca Dellamas,mother of the
co-owners, then in the name of Rosalia Bailon, then in that of Donato Delgado, then in Poncianade Lanuza's name, and
finally in the name of Celestino Afable, Sr. The petitioners in this case, the Bailons, filed a case for recovery of property
against Celestino Afable. In his answer, Afable claimed that he had acquired the land in question through prescription
and said that the Bailons areguilty of laches. LC declared Afable co-owner because he validly bought 2/6 of the land (the
shares of Rosalia and Gaudencio)

CA affirmed. Prescription does not apply against the Bailons because they are co-owners of the original sellers. But,
anaction to recover may be barred by laches. CA held the Bailons guilty of laches and dismissed their complaint

Issue: Applicability of the doctrine of laches

Ratio: Initially, a determination of the effect of a sale by one or more co-owners of the entire property held in common
without theconsent 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 NCC 493: Art. 493. Each co-owner shall have the full
ownership of his part and of the acts and benefits pertaining thereto, and hemay therefore alienate assign or mortgage it
and even substitute another person in its enjoyment, except when personalrights 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. SC has already ruled in other cases that even if
a co-owner sells the whole property as his, the sale will affect only hisown share but not those of the other co-owners
who did not consent to the sale. By virtue of the sales made by Rosalia and Gaudencio, which are valid with respect to
their proportionateshares, and the subsequent transfers which culminated in the sale to private respondent Celestino
Afable, Afable thereby became a co-owner of the disputed parcel of land Since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the consentof 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
theproperty.Re: Proper action The proper action in cases like this is not for the nullification of the sale or for the recovery
of possession but the divisionof the common property Neither recovery of possession nor restitution can be granted
since the buyers are legitimate possessors in jointownership of the common property claimedRe: Prescription Here,
prescription cannot be invoked. Pursuant to NCC 494, no 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.

Oliveros v. Lopez

168 SCRA 431

DOCTRINE: Under Article 494 and 1083 of the Civil Code, co-ownership of an estate should not exceed twenty years,
while the agreement to keep a thing undivided should not exceed ten years. When parties stipulated a definite period to
keep a thing undivided which exceeds the maximum allowed by law, said stipulation shall be void only as to the period
beyond such maximum. Thus, co-ownership of an estate cannot exceed twenty years so property should be divided after
twenty years. Each co-owner may demand at any time the partition of the thing owned in common insofar as his share is
concerned.

Article 494 specifically mandates that each co-owner may demand at any time the partition of the thing owned in
common insofar as his share is concerned.

FACTS:

Upon his death, Lopez left the lot he owned to his widow and six children; the heirs did not initiate any move to legally
partition the property. After many years, the widow and the eldest son, Candido, executed a deed of absolute sale of the
undivided eastern portion of their interests in favor of spouses Oliveras & Minor; another deed of absolute sale of the
undivided eastern part in favor of spouses Oliveras & Gaspar. The two Oliveras spouses had since possessed the
properties.

After many years, the counsel of the two Oliveras spouses wrote to the remaining heirs of Lopez reminding them of the
Oliveras spouses’ demand to partition the property so they could acquire their titles without court action. The heirs
didn’t answer so the Oliveras spouses filed a complaint for partition and damages.
According to the Oliveras spouses, possession of the disputed properties was delivered to them with the knowledge and
consent of the heirs; however, according to the heirs, no sale transpired as the vendors, the widow and Candido, could
not sold specific portions of the property making Oliveras spouses’ possession and occupation of specific portions of the
properties illegal. Trial court ruled that the deeds of absolute sale are valid and ordered the segregation of the lot.

ISSUES:

1. Whether or not the two deeds of absolute sale were null and void since the lot had not yet been partitioned. --
NO

2. Whether or not the action for partition has prescribed. -- NO

HELD:

1. Under Article 494 and 1083 of the Civil Code, co-ownership of an estate should not exceed twenty years, while
the agreement to keep a thing undivided should not exceed ten years. When parties stipulated a definite period to keep
a thing undivided which exceeds the maximum allowed by law, said stipulation shall be void only as to the period beyond
such maximum. Thus, co-ownership of an estate cannot exceed twenty years so property should be divided after twenty
years. Each co-owner may demand at any time the partition of the thing owned in common insofar as his share is
concerned.

In this case, the heirs maintained the co-ownership beyond 20 years so when the widow and Candido sold definite
portions of the lot, they validly exercised dominion over them because, by operation of law, the co-ownership had
ceased. The filing of the complaint for partition by the Oliveras spouses who are legally considered as subrogated to the
rights over the partitions of lot in their possession merely served as formality on the widow and Candido’s act of
terminating co-ownership.

2. Prescription may have barred the filing of complaint under Article 1144 (a) of the Civil Code; however, Article 494
specifically mandates that each co-owner may demand at any time the partition of the thing owned in common insofar
as his share is concerned. In this case, although the complaint was filed after thirteen years from the execution of the
deeds of sale, the Oliveras spouses’ action for partition was timely and properly filed.

G.R. No. L-40064 December 4, 1934

RESURRECCION TAGARAO, BUENAVENTURA TAGARAO and SERAFIN TAGARAO, plaintiffs-appellees,

vs.
MARCOS GARCIA, ET AL., defendants.
MARGARITA GARCIA, ROSARIO GARCIA, DOLORES RUFINO, and ELUETERIO RUFINO, appellants.

Oceeño and Alba for appellants M. Garcia, R. Garcia and D. Rufino.

Vicente T. Remitio for appellant E. Rufino.
Rafael P. Guerrero for appellees.
DIAZ, J.:

This action was brought by the brothers and sisters Resurreccion Tagarao, Buenaventura Tagarao, and Serafin Tagarao,
children of the deceased Merced Garcia, daughter of the deceased Buenaventura Garcia who was a brother of the
defendant Marcos Garcia, against the latter and the other defendants named Paula Tabifranca, Margarita Garcia, Rosario
Garcia, Dolores Rufino and Eleuterio Rufino, praying that judgment be rendered against the defendants ordering them to
deliver to the plaintiffs, after executing the necessary deeds of transfer, one-fourth of the land known as lot No. 510 of
cadastral case No. 11 of the municipality of Isabela, Occidental Negros (G. L. R. O. Cad. Record No. 100), which was
formerly covered, first by original certificate of title No. 10009 (Exhibit M), later by transfer certificate of title No. 3001
(Exhibit 3), and at present by transfer certificate of title No. 8782 (Exhibit 7), all of the office of the register of deeds of
said Province of Occidental Negros.

In their amended complaint of July 29, 1931, which was reamended on March 8, 1932, said plaintiffs prayed that should
the defendants fail to deliver to them the required portion of the land in question, the latter be ordered to pay them the
value thereof based on the assessed value of the whole property, and that they furthermore be indemnified for the value
of 1,407 cavans of palay at the rate of P4 a cavan, alleging that said 1,407 cavans represented their share in the products
of said land from the time the defendants took exclusive possession thereof.

Before the plaintiffs filed their amended complaint on the date above stated, the defendants Marcos Garcia, Paula
Tabifranca, Margarita Garcia, Rosario Garcia and Dolores Rufino filed a demurrer to said plaintiffs' original complaint,
alleging that it did not state sufficient facts to constitute a cause of action and was furthermore ambiguous, unintelligible
and uncertain. The lower court sustained said demurrer and ordered the plaintiffs to amend their complaint within the
reglementary period.

When the plaintiffs amended their complaint in the sense expressed in their pleading of February 13, 1929, said five
defendants again filed another demurrer alleging this time that the lower court lack jurisdiction to try the case by reason
of the subject matter involved and the lower court overruled said demurrer ordering them to answer within the
reglementary period. In compliance therewith, the defendants on October 28, 1929, filed their answer wherein the first
two defendants, or the spouses Marcos Garcia and Paula Tabifranca, alleged that although they formerly were the
absolute and exclusive owners of the land in question they already ceased to be so at that time, having sold the half
belonging to Paula Tabifranca to the defendants Margarita Garcia, Rosario Garcia and Dolores Rufino, and the other half
belonging to Marcos Garcia to Eleuterio Rufino. On June 9, 1931, said two defendants filed a petition of even date stating
that they had no more interest in the case, having sold their respective participations to the two Garcias and two Rufinos
and praying in succession that they be absolved from the complaint.

A few days later, or on July 15, 1931, said two defendants Marcos Garcia and Paula Tabifranca filed a motion to include
Eleuterio Rufino among the defendants and on the following day the lower court, granting the motion, ordered the
inclusion of Eleuterio Rufino in the case as one of the defendants. For this purpose the plaintiffs filed their said amended
complaint of July 29, 1931, which they reamended with a slight addition on March 8, 1932.

The defendants Marcos Garcia and Paula Tabifranca did not answer the plaintiffs' last amended complaint but Margarita
Garcia, Rosario Garcia and Dolores Rufino jointly entered a general denial of all the allegations contained therein,
alleging as a special defense (1) that they are the exclusive owners of one-half of the land in question; (2) that the
plaintiffs have already lost their right of action because such right, if they ever had any, has already prescribed; and (3)
said plaintiffs cannot invoke the decision rendered in civil case No. 4091 because with respect to them it does not
constitute res judicata.

The defendant Eleuterio Rufino, answering said plaintiffs' last amended complaint, stated in his pleading of November
19, 1931, that he denied each and every allegation contained therein, alleging as a special defense that one half of the
land in question was sold by Marcos Garcia and purchased by him in good faith, paying the corresponding price therefor.

After due trial the lower court rendered judgment ordering the defendants to deliver to the plaintiffs one fourth of the
land in question after executing the necessary deeds of transfer in favor of said plaintiffs or, in lieu thereof, to indemnify
them in the sum of P3,882 plus the value of 1,000 cavans of palay at P3 a cavan, with costs. In said judgment said court
"declared the deeds of sale executed by Marcos Garcia in favor of the defendant Eleuterio Rufino and by Paula Tabifranca
in favor of the defendants Margarita Garcia, Rosario Garcia and Dolores Rufino, null and void." The defendants Margarita
Garcia, Rosario Garcia, Dolores Rufino and Elueterio Rufino appealed but Marcos Garcia and Paula Tabifranca did
not.1awphi1.net

In support of their appeal, the defendants Margarita Garcia, Rosario Garcia, and Dolores Rufino contend that the lower
court committed the eight alleged errors assigned in their brief as follows:

1. The lower court erred in not sustaining the demurrer of the defendants-appellants Margarita Garcia, Rosario Garcia
and Dolores Rufino to the second amended complaint of the plaintiffs.

2. The lower court erred in admitting, under objections of the defendants-appellants, oral and documentary evidence
tending to attack original certificate of title No. 10009 in the name of the spouses Marcos Garcia and Paula Tabifranca
issued on May 17, 1918.

3. The lower court erred in holding that the deed of sale made and executed by Paula Tabifranca with respect to her
undivided one-half (½) share of lot No. 510 of the cadastral survey of Isabela in favor of Margarita Garcia, Rosario Garcia
and Dolores Rufino, was made without consideration and declaring same null and void being fictitious.

4. The lower court erred in holding that the transaction made by Paula Tabifranca in favor of Margarita Garcia, Rosario
Garcia and Dolores Rufino had no other purpose than to deprive the plaintiffs of their shares in lot No. 510, as legitimate
heirs of Ventura Garcia and Merced Garcia.

5. The lower court erred in condemning the defendants-appellants Margarita Garcia, Rosario Garcia and Dolores Rufino,
jointly and severally with the other defendants to return to the plaintiffs one-fourth (¼) of lot No. 510 of the cadastral
survey of Isabela, or in its place, to indemnify the plaintiffs the sum of P3,882, value of said portion.

6. The lower court erred in condemning the defendants-appellants Margarita Garcia, Rosario Garcia and Dolores Rufino,
jointly and severally with the other defendants, to pay the plaintiffs one thousand cavanes of palay or its value at P3 per
cavan.

7. The lower court erred in holding that the right of the plaintiffs to present this action to recover a portion of lot No. 510
of the cadastral survey of Isabela has not prescribed.lawphil.net

8. The lower court erred in denying the petition for a new trial of the defendants-appellants Margarita Garcia, Rosario
Garcia and Dolores Rufino.

The appellant Eleuterio Rufino also contends that said court in rendering its judgment in question committed the four
alleged errors relied upon in his brief, which read as follows:

1. The lower court erred in admitting over the defendant's objection oral as well as documentary evidence of the
plaintiffs tending to attack the stability of original certificate of title No. 10009 (Exhibit 5) in the name of the defendants
Marcos Garcia and Paula Tabifranca, relative to alleged facts that took place prior to the issuance of said title.

2. The lower court erred in ordering the defendant Eleuterio Rufino, jointly with his codefendants, to deliver to the
plaintiffs one-fourth (¼) of said lot No. 510, or in lieu thereof to indemnify them in the sum of P3,882 representing the
value of said portion.

3. The lower court erred in holding in its judgment that the deed (Exhibit 8) is fictitious and fraudulent and declaring it
null and void.

4. The lower court erred in not absolving the defendant and appellant Eleuterio Rufino from the complaint and in
denying his motion for a new trial.
Without losing sight of the purpose of the complaint of the plaintiffs and appellees as expressed in the prayer of their
pleadings or last amended complaints, it is clear that the first assignment of alleged error attributed to the lower court
by the appellants is unfounded on the ground that its purpose is not to attack the validity of the decree by virtue of
which original certificate of title No. 10009 was issued in favor of Marcos Garcia and Paula Tabifranca, or that under
which transfer certificates of title Nos. 3001 and 8782, were issued later, but to compel the defendants to give them one-
fourth of the land described in said certificates and to pay them the indemnity referred to therein.

The facts which have been clearly established at the trial, according to the record and the evidence before us, may be
briefly stated as follows:

The land in question has an area of 31 hectares, 3 ares and 65 centares. It was originally purchased with pacto de
retro by the defendant Marcos Garcia and his brother Ventura Garcia from Vidal Saravia on July 20, 1900. As the latter
failed to exercise his right of repurchase the two brothers became the absolute owners of said land and it was so held by
the Court of First Instance of Occidental Negros in case No. 274 which was instituted by Pedro Saravia, as administrator
of the intestate estate of Vidal Saravia, against said two brothers to compel the latter to resell it to him (Exhibit L). When
the two brothers purchased said land, the defendant Marcos Garcia was yet single because he had not even been
married to his former wife, as the defendant Paula Tabifranca is only his wife by a second marriage. Marcos Garcia had by
his first wife three children who are the defendants Margarita Garcia, Rosario Garcia and the deceased Catalina Garcia,
mother of the defendant Dolores Rufino. Ventura Garcia, now deceased, also had two children: Merced Garcia who was
married to Rafael Ragarao, and Claro Garcia.

While Merced Garcia was still living, or at least until June, 1914, the defendant Marcos Garcia had been delivering to her
and her brother Claro Garcia their share of the products harvested from the land in question. Merced Garcia who, as
stated, died about the year 1914 and was followed years later by her husband Rafael Tagarao, had three children, the
herein plaintiffs Resurreccion Tagarao, Serafin Tagarao and Buenaventura Tagarao. When this action was brought on
October 14, 1928, Resurreccion Tagarao was more than 24 years of age; Serafin was then only 23 years, 1 month and 1
day, and Buenaventura, 18 years, 4 months and 3 days.

With the plaintiffs' grandfather, Ventura Garcia, and their mother, Merced Garcia, already dead, the defendant Marcos
Garcia claimed the lands in question in cadastral case No. 11 of the municipality of Isabela of the Province of Occidental
Negros (G. L. R. O. Cadastral Record No. 100), known in said case as lot No. 510, alleging in the pleading presented by
him to that effect (Exhibit I) that he had acquired it on July 20, 1904, when he was yet unmarried to his codefendant
Paula Tabifranca. Before the original certificate of title acknowledging him to be the owner of the land in question was
issued to him, and during the period within which any person could ask for the revision of the decree issued to that
effect, Marcos Garcia, fearing that Claro Garcia, brother of the plaintiffs' mother, might frustrate his designs by asking for
said revision, executed in favor of Claro Garcia a document binding himself to give to the latter four hectares of said land
upon the issuance to him of the corresponding certificate of title. In view thereof, Claro did not ask for the revision of the
decree but he later brought an action, case No. 4091 of the Court of First Instance of Occidental Negros, against Marcos
Garcia to recover from him four hectares of said land, lot No. 510 of the cadastre of Isabela, basing his claim on the
document which Marcos Garcia executed in his favor in order to promise and bind himself to give Claro said four
hectares, because after Marcos Garcia had obtained his certificate of title he refused to comply with his promise; and as
a result said court, on October 10, 1927, rendered judgment against Marcos Garcia ordering him to segregate four
hectares of said land to be delivered to Claro Garcia and furthermore to pay to the latter as indemnity 90 cavans of palay,
or the value thereof in the sum of P360.

In the certificate of title which was issued in favor of Marcos Garcia on May 17, 1918 (original certificate of title No.
10009), by virtue of his claim presented in said cadastral case No. 11 of the municipality of Isabela. Occidental Negros, it
was stated, as in the decree ordering the issuance thereof, that one-half of the land therein described belonged to him,
and that the other half to his wife by a second marriage, Paula Tabifranca.

A few years after the issuance of said certificate of title the defendant Paula Tabifranca, second wife of the defendant
Marcos Garcia, sold her rights to the defendants Margarita Garcia, Rosario Garcia and Dolores Rufino, her husband's
daughters and granddaughter, respectively, by his first marriage, executing the deed Exhibit N dated December 31, 1921,
while the alleged purchaser Dolores Rufino was yet a minor. This was agreed upon between her and her husband Marcos
Garcia to prevent the land, part of which belonged to her under said certificate of title, from ever passing to her son by
her first marriage named Juan Tabigui, as she was already a widow when she contracted marriage with said Marcos
Garcia.

In the meantime the plaintiff Resurreccion Tagarao was informed that her uncle Claro Garcia had succeeded in obtaining
his share of the land in question and, desiring to protect her rights and those of her brothers and coplaintiffs, she
negotiated with Marcos Garcia so that he might give them their corresponding share. Marcos Garcia at first entertained
her with promises that he would see to it that she got what she wanted but later, at her back, he sold his share of the
land to the defendant Eleuterio Rufino, brother of his son-in-law Lope Rufino, husband of the defendant Rosario Garcia,
executing in favor of Eleuterio Rufino the deed Exhibit 8 wherein it was made to appear that the price paid to him for
only one-half of the land, lot No. 510, was P6,567.

Twelve days after Paula Tabifranca had executed said deed of transfer Exhibit N in favor of her stepdaughters Margarita
Garcia and Rosario Garcia and of her husband Marcos Garcia's granddaughter named Dolores Rufino, said three
defendants together with Marcos Garcia obtained transfer certificate of title No. 3001, after the cancellation of original
certificate of title No. 10009, and two days after Marcos Garcia had executed in favor of the defendant Eleuterio Rufino
the deed of sale Exhibit 8 whereby he sold to the latter his half of the land described in the above stated certificate of
title No. 10009 (Exhibit M), he and his daughters and granddaughter jointly with the defendant Eleuterio Rufino
succeeded in having said transfer certificate of title No. 3001 (Exhibit 3) cancelled to be substituted, as it was in fact
substituted, by transfer certificate of title No. 8782 (Exhibit 7).

The transfer made by Paula Tabifranca in favor of her stepdaughters Margarita and Rosario Garcia and her husband's
granddaughter Dolores Rufino, and that made by Marcos Garcia in favor of Eleuterio Rufino, stated in said deeds Exhibits
N and 8, are fictitious and feigned in view of the following reasons inferable from the evidence of record:

Notwithstanding the fact that in the original certificate of title No. 10009 Paula Tabifranca's right to one half of the
property therein described has been acknowledged, she was conscious that she was not entitled thereto because it
belonged exclusively to her husband or, at least, he had acquired it long before he married her. This explains the ease
with which she parted with her alleged right for a sum disproportionate to the true value of the land sold by her. The
alleged purchasers Margarita Garcia, Rosario Garcia and Dolores Rufino were not in a financial position to pay her the
alleged purchase price which, according to Exhibit N, amounted to P1,500; and Dolores Rufino, being then of tender age,
could not have taken part in said contract that she was represented by her father Lope Rufino, because it does not
appear that the latter was then the guardian of her property and it is a fact that minors cannot give consent to any
contract.

Neither was Eleuterio Rufino in a financial position to pay what he allegedly paid to the defendant Marcos Garcia for the
latter's share in the land in question on the ground that the amount of six thousand five hundred sixty-seven pesos
(P6,567) which is the price allegedly paid by him to Marcos Garcia is a fortune greater than the income he could have
had for several years, because his means of livelihood, according to his own testimony, consisted simply of
extracting tuba from about 200 coconut trees leased from different persons and in retailing fresh fish bought by him for a
lump sum in order to obtain a small profit. He is a brother of the defendant Rosario Garcia's husband, and
notwithstanding that the deed Exhibit 8 was executed in his favor, the land continues until now to be registered for
taxation purposes in the name of Marcos Garcia; and notwithstanding the alleged deed of transfer Exhibit 8 the land in
question continues to be under the Isabela Sugar Company Inc., of Occidental Negros, as property of named "THREE
SISTERS — A," "THREE SISTERS — B," and "HACIENDA GARCIA," the first portion being under the management of
Macario Torilla, husband of the defendant Margarita Garcia; the second under the management of Lope Rufino, husband
of the defendant Rosario Garcia; and the third under that of Claro Garcia, uncle of the plaintiffs (Exhibit D). In addition to
these reasons, it may and should be stated that Elueterio Rufino's testimony explaining how the transaction between
him and Marcos Garcia was effected, does not agree with the text of the deed of transfer Exhibit 8. It is expressly stated
in said document that the price paid by him for the land in question was P6,567 and that he also assumed the lien in the
form of a mortgage constituted on said land to secure the payment of Candido Montilla of a loan in the sum of P4,675
from which it may be inferred that the total price paid by him for said land was really P11,242. Notwithstanding this, he
testified that he paid only P1,892 to the defendant Marcos Garcia. It should be stated furthermore that on December 1,
1928, or scarcely two and a half months from the time he bought said land from Marcos Garcia, Eleuterio Rufino leased
it, according to Exhibit 9, to Marcos Garcia's sons-in-law and husbands of the defendants Margarita Garcia and Rosario
Garcia, when it is natural that as he was poor and his business of tapping tuba and reselling fishes was not lucrative, he
should have personally taken charge of the cultivation and exploitation of the land bought by him. Furthermore, on
January 10, 1930, long after the alleged transfer of said land, Exhibit 8, Macario Torilla and Lope Rufino, as Marcos
Garcia's attorneys-in-fact, the latter having executed in their favor the power of attorney, Exhibit O-1, by virtue of which
they mortgaged the land in question in the name of their principal to Candido Montilla on July 7, 1928, Exhibit O, paid to
Montilla the sum of P514.25 as interest on the loan secured by the mortgage above stated (Exhibit 4). This last fact
convinces us more that said deed of transfer Exhibit 8 is fictitious because if it were genuine, there being as in fact there
is in said document a stipulation that the purchaser Eleuterio Rufino assumed all the lien on said property, Eleuterio
Rufino, not Marcos Garcia, personally, nor through his sons-in-law Macario Torilla and Lope Rufino, should have paid said
interest.

The foregoing proves to our satisfaction that errors 2, 3 and 4 relied upon by the appellants Margarita Garcia, Rosario
Garcia and Dolores Rufino in their brief are absolutely unfounded, and so is alleged error No. 3 attributed to the lower
court by the appellant Eleuterio Rufino.

It follows from the foregoing conclusions and considerations that errors 5 and 2 attributed to said court by the
defendants Garcia and Eleuterio Rufino, respectively, are likewise unfounded. If the transfers made under the deeds
which later made possible the issuance to the interested parties of certificates of title Nos. 3001 and 8782 (Exhibits 3 and
7) are fraudulent, it is but proper, being in accordance with law, that the defendants execute the deeds of transfer prayed
for by the plaintiffs in their complaint in order to give them what is theirs; and this is undoubtedly one fourth of the
entire land because if one half belonged to the plaintiffs' grandfather who, as already stated, had only two children: Claro
Garcia, the plaintiffs' uncle, and Merced Garcia, their mother.

But the question now arises whether or not the three plaintiffs are entitled to what they jointly pray for in their
complaint. There is no doubt but that the plaintiffs Serafin Tagarao and Buenaventura Tagarao are entitled thereto on the
ground that the former was only 23 years, 1 month and 1 day, when this action was brought, and therefore the three
years exception granted by the provisions of section 42 of Act No. 190 had not yet elapsed as to him, and because
Buenaventura Tagarao, then being only 18 years, 4 months and 3 days of age, was yet a minor and the period of
prescription as to him is extended to three years after he was attained majority.

The plaintiff Resurreccion Tagarao, notwithstanding that she was of legal age when this action was brought, contends
that neither has her right to seek the same relief prayed for by her brothers and coplaintiffs prescribed, and cites in
support of her contention the ruling laid down in the case of Velazquez vs. Teodoro (46 Phil., 757). It was truly stated in
said case, citing with approval a doctrine laid down by the Supreme Court of the State of Ohio in the case of Sturges and
Anderson vs. Longworth and Horne (1 Ohio St., 545), that:

Where the interests of two defendants are joint and inseparable, and the rights of one are saved under the provision of
the statute of limitations, on account of his disability, such saving inures to the benefit of the other defendant, although
laboring under no disability.

As may be seen, this ruling refers to cases in which the rights of the defendants are joint and inseparable because when
they are not so, that is, when they are joint and several at the same time, as is the case of the plaintiffs whose rights are
joint and several, the rule according to said court, interpreting the section from which section 42 of Act No. 190 was
copied, is different; and said court stated that in said cases the disability which protects an heir from the effects of
prescription is no protection to coheirs, or in other words, using the same language of the author of the footnotes on the
decision rendered in the case of Moore vs. Armstrong, reported in 36 Am. Dec., 63, 78, wherein the same Supreme Court
of the State of Ohio sustained the latter point of view, "where the rights of the parties are not joint, the cases are
uniform, and hold that the disability of one will prevent the operation of the statute as to him, but that those who are
not under a disability will be barred."

The case of Moore vs. Armstrong, supra, has more points in common with the case at bar than those of Sturges and
Anderson vs. Longworth and Horne, and Wilkins vs. Philips cited in said case of Velazquez vs. Teodoro, supra. The
question for determination in the former case was whether or not the period of prescription runs not only against the
heir who is laboring under disability but also against his coheirs who are sui juris. The plaintiffs, to all appearances, were
the heirs of one Furgus Moore and the heiress who seemed to be laboring under disability was a married woman named
Mrs. Fleming. The Supreme Court of Ohio decided the question in the negative with the remark that whatever doubt
might once have been entertained on this subject, it was conclusively settled both in Great Britain and in the United
States that the statute is saved in favor only of the person laboring under the alleged disability, adding in succession that
this is precisely the rule with respect both to coparceners and tenants in common.

It cannot be argued that the separation of rights among the plaintiffs was not practicable in the sense that one of them
could not have disposed of or alienate his legal portion of the thing possessed in common without the consent of the
others, because the law provides otherwise. It says:

Every part owner shall have the absolute ownership of his part, and of the fruits and benefits derived therefrom, and he
may, therefore, sell, assign, or mortgage it, and even substitute another person in its enjoyment, unless personal rights
are involved, but the effect of the sale or mortgage, with respect to the other participants, shall be limited to the share
which may be allotted him in the partition upon the dissolution of the community.

Furthermore, whosoever among said plaintiffs should have desired the partition of the property of which he was a
coowner, could have demanded such partition inasmuch as the law then allowed and still allows such act (article 400,
Civil Code; and section 181, Act No. 190). What particularly distinguishes the case at bar from that of Sturges and
Anderson vs. Longworth and Horne, supra, and the other cases wherein it was established that when the rights and joint
the exception which saves one of the interested parties also inures to the benefit of the others, is that it was assumed in
the latter cases that the rights and interests involved therein pertained to joint tenancy, not tenancy in common, which
are two distinct relations, each having its own juridical meaning. The distinguishing feature between the one and the
other, as stated in the case of Mette vs. Feltgen (148 Ill., 357, 371), is that the surviving coowner in joint tenancy is
subrogated in the rights of the deceased coowner immediately upon the death of the latter, by the mere fact of said
death, but this does not take place in cases of tenancy in common which corresponds to what is known in our law as
community of property (articles 392 et seq. of the Civil Code). For this reason, according to American jurisprudence, a
coowner in joint tenancy can not dispose of his share or interest in the property which is the subject matter of the joint
tenancy, without the consent of the other coowner because in so doing he prejudices the other's rights and interests.

That the separation of rights and interests among the plaintiffs was practicable is further evidenced by the fact that Claro
Garcia with whom they were entitled to one-half of the land in question could recover his legal portion thereof from
Marcos Garcia, although certainly not in its entirety, having failed to assert his rights. This being so, and it being known as
it is in fact known that the purpose of the statute of limitations is no other than to protect the diligent and vigilant, not
the person who sleeps on his rights, forgetting them and taking no trouble of exercising them one way or another to
show that he truly has such rights, it is logical to conclude that the right of action of the plaintiff Resurreccion Tagarao is
barred, and the fact that that of her brothers and coplaintiffs Serafin and Buenaventura Tagarao still subsists does not
inure to her benefit.

Although Resurreccion Tagarao could have enforced the right which she exercised in this case on May 17, 1918, when
Marcos Garcia and Paula Tabifranca obtained original certificate of title No. 10009 (Exhibit M) or shortly afterwards, or
long before, that is, from the death of her mother Merced Garcia in 1914 or 1915, she did nothing to protect her rights.
On the contrary, she allowed said spouses to perform acts of ownership on the land covered by said certificate, publicly,
peacefully, uninterrupted and adversely to the whole world including herself, and from that time until the filing of her
first complaint more than ten years had elapsed. It is for this reason why it cannot be sustained that the defendants
Marcos Garcia and Paula Tabifranca, after it has been shown that the transfers made by them are null and void, being
fictitious and false, hold the land in question in trust, because if they ever held it in said capacity it had been during the
lifetime of the plaintiffs' mother to whom said defendants used to give part of the fruits thereof. But after she had died,
their possession was under the circumstances above stated and the law provides that in whatever way the occupancy by
a person claiming to be the owner of a real property may have commenced, if said occupancy is under claim of title and
is furthermore open, continuous for ten years and adverse, it constitutes sufficient title for the occupant thereof
(sections 40 and 41 of Act No. 190), and there can be no other exception to this rule than the disability of persons who
are entitled to said property, by reason of age, some mental defect, or imprisonment, for whom the same law provides
the exceptions contained in its section 42.

It having been established by the evidence for both the plaintiffs and the defendants that Candido Montilla holds a lien
on the land in question, which is noted at the back of transfer certificates of title Nos. 3001 and 8782 (Exhibits 3 and 7)
for a loan in the sum of P4,675 which he granted to Marcos Garcia in the honest belief that the latter was the true owner
of the land described in certificates of title Nos. 10009 (Exhibit M), 3001 (Exhibit 3), and 8782 (Exhibit 7), it is but just
that said lien be acknowledged by the plaintiffs Serafin Tagarao and Buenaventura Tagarao, with the necessary
reservations in favor of said two plaintiffs.

It should be stated in passing that the land in question, lot No. 510 of cadastral case No. 11 of Isabela, Occidental Negros,
is assessed at P15,530, and therefore one-twelfth (1/12) thereof is worth P1,294.17 on that basis.

As to the indemnity which the plaintiffs claim for the defendants, the conclusion arrived at by the lower court in its
decision and judgment is supported by the evidence, that is, the plaintiffs' share of the crops from 1918 to 1929,
including that of Resurreccion Tagarao, should be 1,000 cavans of palay. However, it being clear that Resurreccion
Tagarao's action is barred, it should be understood that only the plaintiffs Serafin Tagarao and Buenaventura Tagarao are
entitled to compel the defendants to pay to them the value of two-thirds of the 1,000 cavans of palay at the rate of P3 a
cavan.

For all the foregoing, the judgment appealed from is affirmed in so far as it favors the plaintiffs Serafin Tagarao and
Buenaventura Tagarao, and said defendants are hereby ordered to execute in favor of said Tagarao brothers and deed or
deeds necessary to transfer to them, by virtue of this judgment, two-twelfths (2/12) of the entire lot No. 510 of the
cadastre of Isabela, Occidental Negros, including the portion transferred to Claro Garcia (G. L. R. O. Cad. Record No. 100);
to indemnify each of them in a sum equal to what he may pay to the mortgage creditor Candido Montilla to free his said
portion from the lien thereof in favor of said Montilla; or likewise to pay to each of them, upon failure of the defendants
to deliver said portion and execute the necessary deed of transfer, the sum of P1,294.17; and furthermore to pay, as
indemnity, the value of two-thirds of 1,000 cavans of palay, at the rate of P3 a cavan, with costs against the defendants.
Said judgment is reversed as to the plaintiff Resurreccion Tagarao. So ordered.

Street, Abad Santos, Hull, Vickers, Imperial, and Butte, JJ., concur.

Separate Opinions

MALCOLM, J., concurring in part and dissenting in part:

I concur with the opinion of Justice Villa-Real, but in addition desire to append the following observations: The case at
bar is permeated with fraud. To do justice to the parties, all three of the plaintiffs should be permitted to enforce their
equitable rights. This can be done if the rule announced in the case of Velazquez vs. Teodoro ( [1923], 46 Phil., 757), be
accepted as stating a rule of property and practice which should be followed. The judgment of the trial court should be
affirmed.

Goddard, J., concur.

VILLA-REAL, J., concurring in part and dissenting in part:

I agree with the majority opinion in so far as it favors the plaintiffs Serafin Tagarao and Buenaventura Tagarao, but I
regret having to dissent therefrom in so far as it declares that Resurreccion Tagarao's right of action is barred.

After a lengthy disquisition during which American and English jurisprudence was examined, the majority lays down the
general rule that in all actions involving community of property or tenancy in common, the disability of a cotenant or a
coowner to bring an action does not benefit those who are sui juris.

The rulings in the various supreme courts of the American Union on this point are stated in 37 Corpus Juris, page 1031,
paragraph 441, as follows:

Disability of one of several parties. — The authorities are not in harmony upon the question of the effect of the disability
of one or more of several parties when one or more are sui juris. Thus it has been held that if one cotenant is a minor the
disability will save the interests of his cotenant from the operation of limitations in actions for land, and this rule is
extended to tenants in common as well as joint
tenants, — the latter being a somewhat anomalous doctrine, — although in personal actions it is held otherwise, and
one plaintiff may be barred while another is saved. On the other hand it is held that, where the right is joint so that all
must sue, all must have the right to sue when the suit is brought, and if one is barred at that time all are barred, although
some may have labored under disability. Perhaps the rule which is best supported by the authorities is that if the right is
joint and several the disability of one will save him but will not avail another who is not under disability, and that if the
right is joint so that the suit cannot be brought except by the parties jointly then the rights of all are saved if any under
disability; and one of coheirs or tenants in common is saved by his own disability notwithstanding his cotenant is sui
juris and barred, and the saving as to the former will not save the latter, upon the principle that each may sue for his own
share severally. This general rule is subject to qualifications, however, and while it is held that if the cause accrues to two
jointly who are under disability, the statute will not run until the disability is removed as to both, the application of the
rule is confined to cases where all the parties are under disability when the cause accrues and if one is not under
disability the statute will run against all; and this latter branch of the rule is confined in some cases to actions other than
for the recovery of land in which the rule is applied that as each may sue for is own share, even though all may join, the
bar as to one will not operate against the other who is under disability.

It is inferred from the foregoing that one of the best rules laid down by the authorities on the matter is that if the right is
joint so that the suit cannot be brought except by the parties jointly, the rights of all are saved if any is under disability. It
will be seen that the rule that when a cotenant or coowner is sui juris, the fact that his cotenants or coowners are
laboring under disability does not save him from the prescription of the right of action if it is not exercised in due time, is
not absolute. The rule is applicable only when a cotenant or coowner may exercise his right of action independently of
his coowners or cotenants; but not when the action necessarily has to be brought jointly by all the coowners or
cotenants.

In the case of Palarca vs. Baguisi (38 Phil., 177, 180, 181), this court through Justice Fisher, interpreting section 114 of
the Code of Civil Procedure, stated as follows:

. . . We hold that a coowner cannot maintain an action in ejectment without joining all other persons interested. Section
114 of the Code of Civil Procedure requires that every action must be prosecuted in the name of the real party in
interest, and that any person who has an interest in this subject matter and who is a necessary party to a complete
determination of the questions involved should be made a party to the proceeding. The same article provides, in its last
paragraph, that if any person having an interest in the subject of the action, and in obtaining the relief demanded,
refuses to join as plaintiff with those having alike interest, he may be made a defendant, the fact of his interest and
refusal to join being stated in the complaint. Were the courts to permit an action in ejectment to be maintained by a
person owning merely an undivided interest in any given tract of land, a judgment in favor of the defendant would not be
conclusive as against the other coowners not parties to the suit, and thus the defendant in possession of the property
might be harassed by as many succeeding actions of ejectment, as there might be coowners of the title asserted against
him. The evidence purpose of section 114 is to prevent the multiplicity of suits by requiring the person asserting a right
against the defendant to include with him, either as coplaintiffs or as codefendants, all persons standing in the same
position, so that the whole matter in dispute may be determined once and for all in one litigation.

We have not examined, nor do we need to do so, the procedural laws of the State of Ohio to the doctrine of the Supreme
Court of which the majority unconditionally adheres, inasmuch as we have our own civil procedural law section 114 of
which, taken from the Code of Civil Procedure of California, enumerates those who should be joined as plaintiffs as well
as those who should be joined as defendants in an action. I agree that American jurisprudence should be followed as
persuasive authority in all that which is in accord with our laws, customs and social condition, particularly if the legal
provision to be interpreted or construed has been copied from some law of the State the Supreme Court of which has
rendered the decision invoked. But in the case at bar we have our own law on civil procedure regulating the form and
manner of bringing actions and the persons who should bring them and against whom they should be brought. If section
114 of our Code of Civil Procedure, as interpreted by this court, does not allow the bringing of an action for the recovery
of a common property, as the one in question, by any cotenant or coowner without the consent of the others, and if
under the American decision on which the majority opinion is based "if the right is joint so that the suit cannot be
brought except by the parties jointly then the rights of all are saved if any is under disability," then the appealed
judgment should be affirmed in all its parts.

For the foregoing considerations, I am of the humble opinion that inasmuch as Resurreccion Tagarao, independently of
her coowners Buenaventura Tagarao and Serafin Tagarao, could not bring the present action for the recovery of their
undivided portion of lot No. 510 of cadastral case No. 11 of Isabela, Occidental Negros, G. L. R. O. Cadastral Record No.
100, in question, which belongs to the plaintiffs and defendants in common and undivided shares, the disability of her
minor brothers saves her, and her fate follows theirs.

73 Phil. 546

OZAETA, J.:

The question raised in this appeal is the validity of the survivorship agreement made by and between Edgar Stephenson,
now deceased, and Ana Rivera, appellant herein which reads as follows:

"SURVIVORSHIP AGREEMENT

"Know All Men by These Presents:

"That we hereby agree with each other and with the PEOPLES BANK AND TBUST COMPANY, Manila, Philippine Islands
(hereinafter called the Bank), that all moneys now or hereafter deposited by us or either of us with the Bank in our
savings account shall be deposited in and received by the Bank with the understanding and upon the conditions that said
money be deposited without consideration of its previous ownership, and that said money and all interest thereon, if any
there be, shall be the property of both of us as joint tenants, and shall be payable to and collectible by either of us during
our joint lives, and after the death of one of us shall belong to and be the sole property of the survivor, and shall be
payable to and collectible by such survivor.
"And we further covenant and agree with each other and the Bank, its successors or assigns, that the receipt or check of
either of us during our joint lives, or the receipt or check of the survivor, for any payment made from this account, shall
be valid and sufficient release and discharge to the Bank for such payment.

"The Bank is hereby authorized to accept and deposit to this account all checks made payable to either or both of us,
when endorsed by either or both of us or one for the other.

"This is a joint and several agreement and is binding upon each of us, our heirs, executors, administrators, and assigns.

"In witness whereof we have signed our names hereto this 17th day of October, 1931.

"Witnesses:

"(Sgd.) EDGAR STEPHENSON

"(Sgd.) ANA RIVERA
"Address: 799 Sta. Mesa, Manila

"Witnesses:
"(Sgd.) FRED W. BOHLER
"(Sgd.) Y. E. Cox
"S. A. #4l46"

Ana Rivera was employed by Edgar Stephenson as housekeeper from the year 1920 until his death on June 8, 1939. On
December 24, 1929, Stephenson opened an account in his name with the defendant Peoples Bank by depositing therein
the sum of P1,000. On October 17, 1931, when there was a balance of P2,072 in said account, the survivorship
agreement in question was executed and the said account was transferred to the name of "Edgar Stephenson and/or Ana
Rivera." At the time of Stephenson's death Ana Rivera held the deposit book, and there was a balance in said account of
P701.43, which Ana Rivera claimed but which the bank refused to pay to her upon advice of its attorneys, who gave the
opinion that the survivorship agreement was of doubtful validity. Thereupon Ana Rivera instituted the present action
against the bank, and Minnie Stephenson, administratrix of the estate of the deceased, intervened and claimed the
amount for the estate, alleging that the money deposited in said account was and is the exclusive property of the
deceased.

The trial court held that the agreement in question, viewed from its effect during the lives of the parties, was a mere
power of attorney authorizing Ana Rivera to withdraw the deposit, which power terminated upon the death of the
principal, Edgar Stephenson; but that, viewed from its effect after the death of either of the parties, the agreement was a
donation mortis causa with reference to the balance remaining at the death of one of them, which, not having been
executed with the formalities of a testamentary disposition as required by article 620 of the Civil Code, was of no legal
effect.

The defendant bank did not appear in this Court Counsel for the intervenor-appellee in his brief contends that the
survivorship agreement was a donation mortis causa from Stephenson to Ana Rivera of the bank account in question and
that, since it was not executed with the formalities of a will, it can have no legal effect.

We find no basis for the conclusion that the survivorship agreement was a mere power of attorney from Stephenson to
Ana Rivera, or that it is a gift mortis causa of the bank account in question from him to her. Such conclusion is evidently
predicated exclusive owner of the funds deposited in the bank, which assumption was in turn based on the facts (1) that
the account was originally opened in the name of Stephenson alone and (2) that Ana Rivera "served only as housemaid
of the deceased." But it not infrequently happens that a person deposits money in the bank in the name of another; and
in the instant case it also appears that Ana Rivera served her master for about nineteen years without actually receiving
her salary from him. The fact that subsequently Stephenson transferred the account to the name of himself and/or
Ana Rivera and executed with the latter the survivorship agreement in question although there was no relation Of
kinship between them but only that of master and servant, nullifies the assumption that Stephenson was the exclusive
owner of the bank account. In the absence, then, of clear proof to the contrary, we must give full faith and credit to the
certificate of deposit, which recites in effect that the funds in question belonged to Edgar Stephenson and Ana Rivera;
that they were joint owners thereof; and that either of them could withdraw any part or the whole of said account
during the lifetime of both, and the balance, if any, upon the death of either, belonged to the survivor.

Is the survivorship agreement valid? Prima facie, we think it is valid. It is an aleatory contract supported by a lawful
consideration the mutual agreement of the joint depositors permitting either of them to withdraw the whole deposit
during their lifetime, and transferring the balance to the survivor upon the death of one of them. The trial court said
that the Civil Code "contains no provisions sanctioning such an agreement." We think it is covered by article 1790 of the
Civil Code, which provides as follows:

"ART. 1790. By an aleatory contract one of the parties binds himself, or both reciprocally bind themselves, to give or to
do something as an equivalent for that which the other party is to give or do in case of the occurrence of an event which
is uncertain or will happen at an indeterminate time."
(See also article 1255)

The case of Macam vs. Gatmaitan (decided March 11, 1937), 36 Off. Gaz., 2175, is in point. Two friends, Juana
Gatmaitan and Leonarda Macam, who had lived together for some time, agreed in writing that the house of strong
materials which they bought with the money belonging to Leonarda Macam and the Buick automobile and certain
furniture which belonged to Juana Gatmaitan shall belong to the survivor upon the death of one of them and that "this
agreement shall be equivalent to a transfer of the rights of the one who dies first and shall be kept by the survivor." After
the death of Leonarda Macam, her executrix assailed that document on the ground that with respect to the house the
same constituted a donation mostis causa by Leonarda Macam in favor of Juana Gatmaitan. In affirming the judgment of
the trial court absolving the defendants from the complaint this Court speaking through Chief Justice Avanceña, said:

"This court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790 of the Civil Code,
one of the parties or both reciprocally bind themselves to give or do something as an equivalent for that which the other
party is to give or do in case of the occurrence of an event which is uncertain or will happen at an indeterminate time.
As already stated, Leonarda was the owner of the house and Juana of the Buick automobile and most of the furniture.
By virtue of Exhibit C, Juana would become the owner of the house in case Leonarda died first, and Leonarda would
become the owner of the automobile and the furniture if Juana were to die first. In this manner Leonarda and Juana
reciprocally assigned their respective property to one another conditioned upon who might die first, the time of death
determining the event upon which the acquisition of such right by the one or the other depended. This contract, as any
other contract, is binding upon the parties thereto. Inasmuch as Leonarda had died before Juana, the latter thereupon
acquired the ownership of the house, in the same manner as Leonarda would have acquired the ownership of the
automobile and of the furniture if Juana had died first." (36 Off. Gat, 2176.)

Furthermore "it is well established that a bank account may be so created that two persons shall be joint owners thereof
during their mutual lives, and the survivor take the whole on the death of the other. The right to make such joint
deposits has generally been held not to be done away with by statutes abolishing joint tenancy and survivorship
generally as they existed at common law." (7 Am. Jur., 299.)

But although the survivorship agreement is per se not contrary to law, its operation or effect may be violative of the
law. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation, to
transfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled upon
such grounds. No such vice has been imputed and established against the agreement involved in this case.

The judgment appealed from is reversed and another judgment will be entered in favor of the plaintiff ordering the
defendant bank to pay to her the sum of P701.43, with legal interest thereon from the date of the complainti and the
costs in both instances.

So ordered

JOSE GATCHALIAN ET AL. v. COLLECTOR OF INTERNAL REVENUE, GR No. 45425, 1939-04-29

Facts:

plaintiffs are all residents of the municipality of Pulilan, Bulacan, and that defendant is the Collector of Internal Revenue
of the Philippines;... plaintiffs, in order to enable them to purchase one sweepstakes ticket valued at two pesos (P2),
subscribed and paid therefor the amounts as follows:... immediately thereafter... plaintiffs purchased... from... ne of the
duly authorized agents of the National Charity Sweepstakes Office one ticket bearing No. 178637... and that the said
ticket was registered in the name of Jose Gatchalian and Company... as a result

, the above-mentioned ticket bearing No. 178637 won one of the third prizes in the amount of P50,000... and... which
check was cashed... by Jose Gatchalian & Company

Gatchalian was required by income tax examiner Alfredo David to file the corresponding income tax return covering the
prize won by Jose Gatchalian & Company and that... the said return was signed by

Gatchalian... efendant made an assessment against... requesting the payment of the sum of P1,499.94 to the deputy
provincial treasurer of Pulilan, Bulacan... plaintiffs, through their attorney, sent to defendant a reply... requesting
exemption from the payment of the income tax to which reply there were enclosed fifteen (15)... separate individual
income tax returns filed separately by each one of the plaintiffs... defendant... denied plaintiffs' request... for exemption
from the payment of tax... in view of the failure of the plaintiffs to pay the amount of tax demanded by the defendant,
notwithstanding subsequent demand... issued a warrant of distraint and levy against the property of the plaintiffs...
plaintiffs,... through Gregoria Cristobal, Maria C. Legaspi and Jesus Legaspi,... paid under protest the sum of P601.51... as
part of the tax... and requested defendant that plaintiffs be allowed to pay under protest the balance... plaintiffs
demanded upon defendant the refund of the total sum of

P1,863.44... paid under protest by them but that defendant refused and still refuses to refund the said amount...
notwithstanding the plaintiffs' demands.

Issues:

Whether the plaintiffs formed a partnership, or merely a community of property without a personality of its own

Ruling:

There is no doubt that if the plaintiffs merely formed a community of property the latter is exempt from the payment of
income tax under the law. But according to the stipulated facts the plaintiffs organized a partnership of a civil nature
because each of them put up money... to buy a sweepstakes ticket for the sole purpose of dividing equally the prize
which they may win, as they did in fact in the amount of P50,000 (article 1665, Civil Code). The partnership was not only
formed, but upon the organization thereof and the winning of... the prize, Jose Gatchalian personally appeared in the
office of the Philippine Charity Sweepstakes, in his capacity as co-partner, as such collected the prize, the office issued
the check for P50,000 in favor of Jose Gatchalian and company, and the said partner,... in the same capacity, collected the
said check. All these circumstances repel the idea that the plaintiffs organized and formed a community of property only.
Having organized and constituted a partnership of a civil nature, the said entity is the one bound to pay the income tax
which the defendant collecte

There is no merit in... plaintiffs' contention that the tax should be prorated among them and paid individually, resulting in
their exemption from the tax.

Principles:

55 Phil. 99

OSTRAND, J.:

On August 1, 1927, the plaintiffs, Manuel, Mariano, Pura and Caridad Melencio, brought the present action against the
defendant-appellee, Dy Tiao Lay, for the recovery of the possession of a parcel of land situated in the town of
Cabanatuan, Nueva Ecija, and containing an area of 4,628.25 square meters. The plaintiffs further demand a monthly
rental of P300 for the use and occupation of the parcel from May, 1926, until the date of the surrender to them of the
possession thereof; and that if it is found that the said appellee was occupying the said parcel of land by virtue of a
contract of lease, such contract should be declared null and void for lack of consent, concurrence, and ratification by the
owners thereof.

In his answer, the defendant pleaded the general issue, and as special defenses, he alleged in substance that he was
occupying the said tract of land by virtue of a contract of lease executed on July 24, 1905, in favor of his predecessor in
interest, by Ruperta Garcia, Pedro Melencio, Juliana Melencio, and Ruperta Melencio under the terms specified therein,
and which contract is still in force; that Liberata Macapagal, the mother of the plaintiffs, in her capacity as judicial
administratrix of the estate of Ramon Melencio, one of the original coowners of the parcel of land in question, actually
recognized and ratified the existence and validity of the contract aforesaid by virtue of the execution of a public
document by her on or about November 27, 1920, and by collecting from the assignees of the original lessee the
monthly rent for the premises until April 30, 1926; and that said defendant deposits with the clerk of court the sum of
P20.20 every month as rent thereof and that as a counterclaim, he seeks the recovery of P272 for goods and money
delivered by him to the plaintiffs.

The plaintiffs filed a reply to the answer alleging, among other things, that Ruperta Garcia was not one of the co-owners
of the land in question; that the persons who signed the alleged contract of lease never represented themselves as being
the sole and exclusive owners of the land subject to the lease as alleged by the defendant in his answer; that the said
contract of lease of July 24, 1905, is null and void for being executed without the intervention and consent of two
coowners, Ramon Melencio and Jose P. Melencio, and without the marital consent of the husbands of Juliana and
Ruperta Melencio; that the lessee has repeatedly violated the terms and conditions of the said contract; and that
Liberata Macapagal, in her capacity as administratrix of the property of her deceased husband, could not lawfully and
legally execute a contract of lease with the conditions and terms similar to that of the one under consideration, and that
from this it follows that she could not ratify the said lease as claimed by the defendant.

On January 21, 1928, Liberata Macapagal Viuda de Melencio, duly appointed and qualified as administratrix of the estate
of her deceased husband, Ramon Melencio, filed a petition praying to be allowed to join the plaintiffs as party to the
present case, which petition was granted in open court on January 31, 1928. Her amended complaint of intervention of
February 14, 1928, contains allegations similar to those alleged in the complaint of the original plaintiffs, and she further
alleges that the defendant-appellee has occupied the land in question ever since November, 1920, under and by virtue of
a verbal contract of lease for a term from month to month. To this complaint of intervention, the defendant-appellee
filed an answer reproducing the allegations contained in his answer to the complaint of the original plaintiffs and setting
up prescription as a further special defense.

It appears from the evidence that the land in question was originally owned by one Julian Melencio. He died prior to the
year 1905 leaving his widow, Ruperta Garcia, and his five children, Juliana, Ramon, Ruperta, Pedro R., and Emilio
Melencio. Emilio Melencio also died before 1905, his son Jose P. Melencio, then a minor, succeeding to his interest in the
said parcel of land by representation. A question has been raised as to whether the land was community property of the
marriage of Julian Melencio and Ruperta Garcia, but the evidence is practically undisputed that Ruperta Garcia in reality
held nothing but a widow's usufruct in the land.

On July 24, 1905, Ruperta Garcia, Pedro R. Melencio, Juliana Melencio, and Ruperta Melencio executed a contract of
lease of the land in favor of one Yap Kui Chin, but neither Jose P. Melencio nor Ramon Melencio were mentioned in the
lease. The term of the lease was for twenty years, extendible for a like period at the option of the lessee. The purpose of
the lessee was to establish a rice mill on the land, with the necessary buildings for warehouses and for quarters for the
employees, and it was further stipulated that at the termination of the original period of the lease, or the extension
thereof, the lessors might purchase all the buildings and improvements on the land at a price to be fixed by experts
appointed by the parties, but that if the lessors should fail to take advantage of that privilege, the lease would continue
for another and further period of twenty years. The document was duly acknowledged but was never recorded with the
register of deeds. The original rent agreed upon was P25 per month, but by reason of the construction of a street
through the land, the monthly rent was reduced to P20.20.

Shortly after the execution of the lease, the lessee took possession of the parcel in question and erected the mill as well
as the necessary- buildings, and it appears that in matters pertaining to the lease, he dealt with Pedro R. Meleneio, who
from 1905 until his death in 1920, acted as manager of the property held in common by the heirs of Julian Meleneio and
Ruperta Garcia. The original lessee, Yap Kui Chin, died in 1912, and the lease, as well as the other property, was
transferred to Uy Eng Jui who again transferred it to Uy Eng Jui & Co., an unregistered partnership. Finally the lease came
into the hands of Dy Tiao Lay, the herein defendant-appellee.

Ramon Meleneio died in 1914, and his widow, Liberata Macapagal, was appointed administratrix of his estate. In 1913
the land which includes the parcel in question was registered under the Torrens system. The lease was not mentioned in
the certificate of title, but it was stated that one house and three warehouses on the land were the property of Yap Kui
Chin.

In 1920 the heirs of Julian Meleneio made an extra judicial partition of parts of the inheritance, and among other things,
the land here in question fell to the share of the children of Ramon Meleneio, who are the original plaintiffs in the
present case. Their mother, Liberata Macapagal, as administratrix of the estate of her deceased husband, Ramon,
collected the rent for the lease at the rate of P20.20 per month until the month of May, 1926, when she demanded of
the lessee that the rent should be increased to P300 per month, and she was then informed by the defendant that a
written lease existed and that according to the terms thereof, the defendant was entitled to an extension of the lease at
the original rental. The plaintiffs insisted that they never had any knowledge of the existence of such a contract of lease
and maintained that in such case the lease was executed without their consent and was void. It may be noted that upon
careful search, a copy of the contract of lease was found among the papers of the deceased Pedro R. Melencio.
Thereafter the present action was brought to set aside the lease and to recover possession of the land. Upon trial, the
court below rendered judgment in favor of the defendant declaring the lease valid and ordering the plaintiffs to pay the
P272 demanded by the defendant in his counterclaim. From this judgment the plaintiffs appealed.

The contention of the appellants is that the aforesaid contract of lease (Exhibit C) is null and void for the following
reasons:

"1. That Exhibit C calls for an alteration of the property in question and therefore ought to have been signed by all the
coowners as by law required in the premises.
"2. That the validity and fulfillment of the said agreement of lease were made to depend upon the will of the lessee
exclusively.

"3. That the said contract of lease being for a term of over six years, the same is null and void pursuant to the provision
of article 1548 of the Civil Code.

"4. That the duration of the, same is unreasonably long, thus being against public policy.

"5. That the defendant-appellee and his predecessors in interest repeatedly violated the provisions of the agreement."

The first proposition is based on article 397 of the Civil Code which provides that "none of the owners shall, without the
consent of the others, make any alterations in the common property even though such alterations might be
advantageous to all." We do not think that the alterations are of sufficient importance to nullify the lease, especially so
since none of the coowners objected to such alterations until over twenty years after the execution of the contract of
lease. The decision of this court in the case of Enriquez vs. A. S. Watson & Co. (22 Phil., 623), contains a full discussion of
the effect of alterations of leased community property, and no further discussion upon that point need here be
considered.

The second proposition is likewise of little merit. Under the circumstances, the provision in the contract that the lessee,
at any time before he erected any building on the land, might rescind the lease, can hardly be regarded as a violation of
article 1256 of the Civil Code.

The third and fourth propositions are, in our opinion, determinative of the controversy. The court below based its
decision principally on the case of Enriquez vs. A. S. Watson & Co. (22 Phil., 623), and on the resolution of the Direction
General de los Registros dated April 26, 1907. (Jurisprudencia Civil, vol. 107, p. 222.) An examination of the Enriquez case
will show that it differs materially from the present. In that case all of the coowners of a lot and building executed a
contract of lease of the property for the term of eighteen years in favor of A. S. Watson & Co.; one of the owners was a
minor, but he was represented by his legally appointed guardian, and the action of the latter in signing the lease on
behalf of the minor was formally approved by the Court of First Instance. In the present case only a small majority of the
coowners executed the lease here in question, and according to the terms of the contract the lease might be given a
duration of sixty years; that is widely different from a lease granted by all of the coowners for a term of only eighteen
years.

The resolution of April 26, 1907, is more in point. It relates to the inscription or registration of a contract of lease of some
pasture grounds. The majority of the co-owners of the property executed the lease for the term of twelve years, but
when the lessees presented the lease for inscription in the registry of property, the registrar denied the inscription on
the ground that the term of the lease exceeded six years and that therefore the majority of the coowners lacked
authority to grant the lease. The Direccion General de los Registros held that the contract of lease for a period exceeding
six years, constitutes a real right subject to registry and that the lease in question was valid.

The conclusions reached by the Direccion General led to considerable criticism and have been overruled by a decision of
the Supreme Court of Spain dated June 1, 1909. In that decision the court made the following statement of the case
(translation) :

"The joint owners of 511 out of 1,000 parts of the realty denominated El Mortero, leased out the whole property for
twelve years to Dona Josef a de la Rosa; whereupon the Count and Countess Trespalacios together with other co-owners
brought this suit to annul the lease and, in view of the fact that the land was indivisible, prayed for its sale by public
auction and the distribution of the price so obtained; they alleged that they neither took part nor consented to the lease;
that the decision of the majority of part owners referred to in article 398 of the Code, implies a common deliberation on
the step to be taken, for to do without it, would, even more than to do without the minority, be nothing less than
plunder; and that, even if this deliberation were not absolutely necessary, the power of the majority would still be
confined to decisions touching the management and enjoyment of the common property, and would not include acts of
ownership, such as a lease for twelve years, which according to the Mortgage Law gives rise to a real right, which must
be recorded, and which can be performed only by the owners of the property leased.

"The part owners who had executed the contract prayed in reconvention that it be held valid for all the owners in
common, and if this could not be, then for all those who had signed it, and for the rest, for the period of six years; and
the Avdiencia of Caceres having rendered judgment holding the contract null and void, and ordering the sale of the realty
and the distribution of the price, the defendants appealed alleging under the third and fourth assignments of error, that
the judgment was a violation of article 398 of the Civil Code, which is absolute and sets no limit of time for the efficacy of
the decisions arrived at by the majority of the part owners for the enjoyment of the common property, citing the
decisions of June 30th, 1897, of July 8th, 1902, and of October 30th, 1907; under the fifth assignment of error the
appellants contended that in including joint owners among those referred to in said article, which sets certain limits to
the power of leasing, in the course of the management of another's property, the court applied article 1548 unduly; and
by the seventh assignment of error, they maintained the judgment appealed from also violated article 1727, providing
that the principal is not bound where his agent has acted beyond his authority; whence it may be inferred, that if in
order to hold the contract null and void, the majority of the part owners are looked upon as managers or agents
exercising limited powers, it must at least be conceded that in so far as the act in question lies within the scope of their
powers, it is valid; the contract cannot be annulled in toto."

The Supreme Court held that the appeal from the decision of the Audiencia of Caceres was not well taken and expressed
the following consideranda:

"Considering that, although as a rule the contract of lease constitutes an act of management, as this court has several
times held, cases may yet arise, either owing to the nature of the subject matter, or to the period of duration, which may
render it imperative to record the contract in the registry of property, in pursuance of the Mortgage Law, where the
contract of lease may give rise to a real right in favor of the lessee, and it would then constitute such a sundering of the
ownership as transcends mere management; in such cases it must of necessity be recognized that the part owners
representing the greater portion of the property held in common have no power to lease said property for a longer
period than six years without the consent of all the coowners, whose proprietary rights, expressly recognized by the law,
would by contracts of long duration be restricted or annulled; and as under article 1548 of the Civil Code such contracts
cannot be entered into by the husband with respect to his wife's property, by the parent or guardian with respect to that
of the child or ward, and by the manager in default of special power, since the contract of lease only produces personal
obligations, and cannot without the consent of all persons interested or express authority from the owner, be extended
to include stipulations which may alter its character, changing it into a contract of partial alienation of the property
leased;

"Considering that, applying this doctrine to the case before us, one of the grounds upon which the judgment appealed
from, denying the validity of the lease made by the majority of the part owners of the pasture land El Mortero is based,
must be upheld; to wit, that the period of duration is twelve years and the consent of all the coowners has not been
obtained; hence, the third, fourth, and fifth assignments of error are without merit; firstly, because article 398 of the Civil
Code, alleged to have been violated, refers to acts decided upon by the majority of the part owners, touching the
management and enjoyment of the common property, and does not contradict what we have stated in the foregoing
paragraph; secondly, because although the cases cited were such as arose upon leases for more than six years, yet this
point was not raised on appeal, and could not therefore be passed upon; and thirdly, because it cannot be denied that
there is an analogy between a manager without special authority, who is forbidden by article 1548 of the Code to give a
lease for a period of over six years, and the joint owners constituting a legal majority, who may decide to lease out the
indivisible property, with respect to the shares of the other coowners; and having come to the conclusion that the
contract is null and void, there is no need to discuss the first two assignments of error which refer to another of the
bases adopted, however erroneously, by the trial court;

"Considering that the sixth assignment of error is without merit, inasmuch as the joint ownership of property is not a
sort of agency and cannot be governed by the provisions relating to the latter contract; whence, article 1727 of the Code
alleged to have been violated, can no more be applied, than, the question of the validity or nullity of the lease being
raised, upon the contract as celebrated, it would be allowable to modify a posteriori some one or other of the main
conditions stipulated, like that regarding the duration of the lease, for this would amount to a novation; still less
allowable would it be to authorize diverse periods for the different persons unequally interested in the fulfillment."

Taking into consideration articles 398, 1548, and 1713 of the Civil Code and following the aforesaid decision of June 1,
1909, we hold that the contract of lease here in question is null and void.

It has been suggested that by reason of prescription and by acceptance of benefits under the lease, the plaintiffs are
estopped to question the authority for making the lease. To this we may answer that the burden of proof of prescription
devolved upon the defendant and that as far as we can find, there is no proof that Ramon Melencio and his successors
ever had knowledge of the existence of the lease in question prior to 1926. We cannot by mere suspicion conclude that
they were informed of the existence of the document and its terms; it must be remembered that under a strict
interpretation of the terms of the lease, the lessees could remain indefinitely in their tenancy unless the lessors could
purchase the mill and the buildings on the land. In such circumstances, better evidence than that presented by the
defendant in regard to the plaintiffs' knowledge of the lease must be required.

The fact that Ramon during his lifetime received his share of the products of land owned in common with his coheirs is
not sufficient proof of knowledge of the existence of the contract of lease when it is considered that the land in question
was only a small portion of a large tract which Pedro R. Melencio was administering in connection with other community
property.

The appealed judgment as to the validity of the lease is therefore reversed, and it is ordered that the possession of the
land in controversy be delivered to the intervenor Liber ata Macapagal in her capacity as administratrix of the estate of
the deceased Ramon Melencio. It is further ordered that the defendant pay to said administratrix a monthly rent of P50
for the occupation of the land from May 1st, 1926, until the land is delivered to the administratrix. The sum of P272
demanded by the defendant in his counterclaim may be deducted from the total amount of the rent due and unpaid. The
buildings erected on the land by the defendant and his predecessors in interest may be removed by him, or otherwise
disposed of, within six months from the promulgation of this decision. Without costs. So ordered.

Avanceña, C. J., Malcolm, Johns, Romualdez and Villa-Real, JJ., concur.

Johnson, J., reserves his vote.

DISSENTING

Street and Villamor, JJ.:

Although the name of Ramon Melencio, father of the plaintiffs in this action, was not in fact signed to the lease in
question, and the lease did not even so much as mention him as one of the coowners, the undersigned are nevertheless
of the opinion that Ramon Melencio, and his children

after him, are estopped from questioning said lease, for the reason that, from 1905 to the time of his death in 1914,
Ramon Melencio enjoyed the benefits of the lease, as did his widow and children after him, until May, 1926, when the
widow repudiated the lease, as a preliminary to the bringing of this action by the plaintiffs. By their acceptance of the
benefits of the lease over so long a period, the persons now questioning the lease and their father, their predecessor in
interest, are estopped to question the authority for making the lease. This estoppel cures the want of the special power
contemplated in article 1548 of the Civil Code.
In addition to the estoppel arising from the acceptance of benefits under the lease, an estoppel further arises from the
fact that Ramon Melencio, during the years following the execution of the lease, stood by and saw the lessees place
upon the property improvements of a value of more than P100,000, for which reason, also, equity will not permit the
lease to be disturbed to the prejudice of the lessee.

To exhibit the foregoing proposition fully, it is necessary to understand the facts relative, to the controversy. These are
substantially as follows:

The land covered by the original lease, having an area of some 6,000 square meters, is located in the town of
Cabanatuan and was formerly the property of one Julian Melencio, married to Ruperta Garcia. After the death of Julian
Melencio, his widow, Ruperta Garcia, united, in 1905, with three of their children, namely, Pedro R., Juliana, and Ruperta,
in executing, in favor of Yap Kui Chin, as lessee, the lease which is the subject of this controversy. The consideration
mentioned in the lease was the sum of P25 per month. On August 2, 1907, at the request of Pedro R. Melencio, another
document was drawn changing the superficial configuration of the leased land but preserving its original extension of
6,000 square meters. This change was made for the purpose of giving Pedro R. Melencio space upon which to construct a
house on the part segregated from the original mass. In 1915 a new street, passing through the leased property, was
opened in Cabanatuan; and Pedro R. Melencio, acting for the lessors, reduced the monthly rent from P25 to P20, to
correspond with the reduction in the area of the leased land resulting from the occupation of part of it by the street.

At the time the lease was made there was living one Ramon Melencio, son of Julian Melencio and Ruperta Garcia and
brother of the heirs who signed the- lease. Also before this time there had been another brother named Emilio
Melencio. But Emilio was dead and his only surviving son, Jose P. Melencio, was a small boy then under the tutelage of
his uncle Pedro R. Melencio. The lease referred to is not and never has been questioned by any of the persons, or
descendants of the persons, who signed the instrument. Neither has it been questioned by Jose P. Melencio, son of
Emilio. Nor was the lease questioned in life by Ramon Melencio, who died in 1914; and the only persons raising a
question as to its validity are four of the five children of Ramon, the same being the plaintiffs in this case.

By a series of changes, not necessary to be here recounted, the rights of the original lessee became vested in the
defendant, Dy Tiao Lay. At the time of the institution of the present action the defendant, Dy Tiao Lay, had a rice mill,
consisting of valuable buildings and improvements, constructed on the land, and valued, it is alleged, at P160,000; but
during the time of the pendency of this action a fire occurred which seems to have destroyed the mill and improvements
with the exception of a camarin valued at some P15,000,

In November, 1920, the children of Julian Melencio and Ruperta Garcia executed a partial extraudicial partition of the
properties belonging to their father's estate; and the land covered by this lease was assigned to Liberata Macapagal,
widow of Ramon Melencio, in right of her deceased husband Ramon and as representative of the children. It will be
noted that the land encumbered by the lease was thus assigned precisely to the family of the deceased brother, Ramon
Melencio, who at the same time was the sole living brother whose name was not signed to the lease.

At the time the lease was executed, Pedro R. Melencio was in fact the manager of the common ancestral estate
belonging to himself and his brothers and sisters; and he continued as such until 1920. After the partition, or partial
partition, of the fraternal estate in 1920, Liberata Macapagal Viuda de Ramon Melencio succeeded to the office of
manager, or guardian, of the estate of her children, at least with respect to the parcel now in question.

It will be noted as an important fact that every dollar due as rent from the leased land was paid by the lessee, from the
time when rent first became due, and these payments were made first to Pedro R. Melencio as manager of the common
estate pertaining to himself and his brothers and sisters, until 1920, when the rents began to be paid to Liberata
Macapagal in the right of herself and children. In April, 1926, Liberata ceased to collect the rent, and in May, thereafter,
she refused to accept payment of the monthly installment of rent then due. For this reason the defendant has been
making a consignation of the corresponding rent for the benefit of the lessors in the office of the provincial treasurer. No
question is made that during the life of Ramon Melencio he received his share of the monthly rental from the property in
question; nor is there any question that thereafter his widow and children received their share of the same until the
property was assigned in partition to Liberata Macapagal and her children, after which they received all of the rent, until
Liberata refused longer to accept it.

The undersigned concur in the proposition that the lease signed in 1905 was not per se binding on Ramon Melencio,
first, because he; was not a party to that lease; and, secondly, because the making of a lease for twenty years, extendible
under certain circumstances for a second and third period of equal duration, was an act of rigorous alienation and not a
mere act of management and enjoyment such as is contemplated in article 398 of the Civil Code. (Sentencia, June 1,
1909; Ruiz, Cod. Civ., vol. 4, p. 502.) Neither do we pause to argue that the contract might have been considered valid
under the doctrine of this court stated in Eleizegui vs. Manila Lawn Tennis Club (2 Phil., 309). At any rate the lease did not
purport to bind Ramon, and he was not even mentioned therein as one of the coowners.

But it is to be noted that none of the parties signatory to the lease have at any time sought to abrogate the contract; and
some of the children of Ramon Melencio only are before the court as actors in this case seeking to set the contract aside.
Under these circumstances the undersigned are of the opinion that Ramon Melencio was at the time of his death bound
by the lease, from his having participated for years in the benefits derived from the contract, and that his children, who
derive their rights from him, are likewise bound.

It is well established that an estate in land may be virtually transferred from one man to another without a writing, by
the failure of the owner to give notice of his title to the purchaser under circumstances where the omission to do so
would operate as a fraud (Kirk vs. Hamilton, 102 U. S., 68, 77; 26 Law. ed., 79). This doctrine is so universally accepted
that a bare reference to general treatises on the subject of estoppel is necessary (10 R. C, L., p. 694; 21 C. J., pp. 1154,
1160, 1206, 1207, 1209) ; and the estoppel is as effective with respect to a lease as it is with respect to a deed of
absolute conveyance (21 C. J., 1213).

In the case before us Ramon Melencio lived in the town where the land covered by this lease was located, and every
time he went abroad lie must have seen the valuable improvements which the original lessee, or his successors in
interest, were erecting and had erected upon part of the common ancestral estate. But from the date the lease was
executed until his death Ramon Melencio did nothing except to receive such portion of the rent as pertained to him.
Under these circumstances, even if his brother Pedro R. Melencio had conveyed the property away by deed of absolute
alienation, Ramon would have been legally bound.

It is but natural that so long as he lived after the lease was made, no complaint was ever registered by him against its
validity.

And if Ramon Melencio was estopped, of course his children are estopped, for their rights are of a purely derivative
character. In the case before us a period of more than twenty-one years elapsed between the time the lease was made
and the date when it was first called in question by the widow.

But Manuel Melencio, the oldest of the heirs who are suing in this case, says that he did not know the terms of the lease
until a short while before this action was instituted, when he called upon the widow of his uncle Pedro and found a copy
of the lease after searching among his uncle's papers. It is not surprising that this plaintiff, who was hardly more than a
baby when the lease was made, should not have known about the terms of the contract. But it was all the time safely
kept among the papers of his uncle Pedro, who, as already stated, was manager of the common estate of the brothers
and sisters. Ramon Melencio is now dead and of course cannot speak as to whether he knew the terms of the
agreement. But he should be presumed to have known its terms, because he was enjoying benefits from month to
month under it, and he had the means of knowledge immediately at hand, namely by recourse to a trusted brother in
whose custody the contract was preserved. In addition to this, we note that when partition was effected about the year
1920 the fact that the property in question was subject to a lease in favor of the defendant was noted in the document
by which the property was assigned to Liberata Macapagal and her children. The suggestion that the terms of the lease
were unknown to the plaintiffs is of little weight and of no legal merit. We note that the lease was never registered, but
this fact makes no difference in a lawsuit between the parties to the lease, or their successors in interest.

We are of the opinion that the judgment should be affirmed.

Lavadia vs Mendoza, GR L – 47996, 9 May 1941
1
Engracia Lavadia, et. al., plaintiffs-appellees
vs.
Rosario Cosme de Mendoza,et al., defendants-appellants.
Counsels: L. Fernandez Lavadia y Aurelio Palileo for the appellees, and Ortega y Ortega for the
appellants.
Ponente: Justice Diaz

Facts: This is an appeal of the Court of First Instance Laguna's decision about possession and
custody
of the jewelry adorning image of Pagsanjan's patroness Our Lady of Guadalupe consisting of a
diamond-encrusted golden crown, a necklace with diamond and precious stones, a belt
encrusted with
precious stones and diamonds, a golden collar completely encrusted with precious stones, a
golden
bracelet encrusted with precious stones and diamonds, etc.
In 1880, six pious (6) ladies from (then municipality of) Pagsanjan, Laguna named Martina,
Matea,
Isabel, Paula, Pia and Engracia all surnamed Lavadia, agreed that with their own money, to
contribute
the abovementioned jewelries.
Except for the plaintiff Engracia, the defendants are the legal heirs of her late sisters Isabel,
Matea and
Martina. Meanwhile, defendant Rosario Cosme de Mendoza and her co-defendants are legal heirs
and
descendants of her late sister Paula.
Also, the original owners (Engracia and her sisters) agreed that these gems would be left with Pia
Lavadia. Pia had the jewels' custody until her death in 1882 after which her sister Paula
succeeded her.
On Paula's death, the preservation and custody of such jewelry was given to her husband Pedro
Rosales
and after him, their daughter Paz Rosales took custody, preservation and care of the jewelry.
After Paz death, the custody, preservation and management of the jewels and the crown passed
to her
husband Baldomero Cosme, then to Manuel Soriano and eventually succeeded by the
defendant
Rosario Cosme de Mendoza. In fact, from 1880 up to the present time, the jewels were used to
decorate
the image of Our Lady of Guadalupe in Pagsanjan every year and none of them who keep or
guard
these jewels claimed to possess as the sole owner. Defendant Rosario Cosme de Mendoza and
her co-
defendants stated that they did not intend to (solely) own the jewelries.
Rosario, who was the latest custodian of the jewelries, entrusted those jewels to the Catholic
bishop of
Lipa, subject to the condition that the deposited things be used to adorn of Our Lady of
Guadalupe's
image but according to the will of their owners. All these jewels are now locked and deposited in
the
Bank of the Philippine Islands because Rosario Cosme de Mendoza deposited those things there.
The
descendants of the Isabel, Martina and Matea Lavadia as well as the plaintiff Engracia Lavadia
filed a
case in CFI Laguna to claim possession and custody of the jewels.
1 Note to the readers, the original text of the case is in Spanish. The digest's author cannot
guarantee accuracy of the
digest herein.
The lower trial court ruled against the defendants, stating that the plaintiffs are entitled to
fourth-sixths'
(4/6) pro indiviso share and the defendants are entitled to the two sixths' pro indiviso share of
the
jewelry. It ruled that Rosario Cosme de Mendoza has to deliver the jewelries to the plaintiff and
one of
the previous owners Engracia. Dissatisfied with the trial court’s decision, the defendants
appealed the
decision to the Supreme Court.

Issues: These issues were raised by Rosario Cosme de Mendoza and her co-defendants,
1. Whether or not the CFI erred in ordering the defendants the jewelry’s delivery to the plaintiffs,
even if they did not intend to have the sole ownership and custodianship of the said items?
2. Whether or not that the CFI erred to declare that plaintiffs are entitled to fourth-sixths' (4/6)
and
the defendants, only entitled to the two sixths' share of the said jewelries?
3. Whether or not that CFI erred in its failure to declare that defendant-appellant Rosario Cosme
de Mendoza, cannot be deprived of jewels’ custody and administration except only when she is
incapacitated, when she executed acts contrary to the will of previous owners?
4. Whether or not that Rosario Cosme de Mendoza, being the jewelry’s possessor and custodian,
faithfully performed her duties?
5. Whether or not the CFI erred in denying her petition for a new trial?

Held by the Supreme Court:

The Court affirmed a quo the CFI Laguna’s decision on appeal, seeing that it did not commit any
error
in its judgment, and the defendant-appellants are to pay the costs of suit.
It is uncontested that in proportion to each one's interest, all of the parties has ownership and
need to
contribute equally a share in the costs of the administration and preservation of the jewelries, as
required by Article 393 of the Old Civil Code. Therefore, the CFI was right in concluding that the
appellees have fourth-sixths’ (4/6) and appellants two-sixths (2/6) share.
The Court ruled that based on the facts above, there was clearly a contract of deposit among the
parties,
including Rosario Cosme de Mendoza, as deemed in Article 1758 of the Old Civil Code. Moreover,
it
was ruled that even among common owners of a thing, one of them may have its custody (as
depositary), and the depositary is subjected to the same obligations under the law with respect
to the
conservation of the thing with the care, diligence and interest of a good father. Thus, Rosario’s
argument was rejected in proposition that the deposited jewelries cannot be withdrawn from her
administration and custody by the plaintiffs, since in a contract of deposit, a depositor can
withdraw the
thing deposited from its depositary like in circumstances when the depositary performed acts
against
the orders of the depositor and his/her heirs.
SO ORDERED.
88 Phil. 428

MONTEMAYOR, J.:

In 1941 the sisters Angela I. Tuason and Nieves Tuason de Barreto and their brother Antonio Tuason Jr., held a parcel of
land with an area of 64,928.6 sq. m. covered byCertificate of Title No. 60911 in Sampaloc, Manila, in common, each
owning an undivided 1/3 portion. Nieves wanted and asked for a partition of the common property, but failing in this,
she offered to sell her 1/3 portion. It seems that the objection to dividing the property was that it would lose in value by
the proposed partition. The share of Nieves was offered for sale to her sister and her brother but iboth declined to buy it.
The offer was later made to their mother but the old lady also declined to buy, saying that if the property later increased
in value, she might be suspected of having taken advantage of her daughter. Finally, the share of Nieves was sold to
Gregorio Araneta Inc., a domestic corporation, and a new Certificate of Title No. 61721 was issued in lieu of the old title
No. 60911 covering the same property. The three co-owners agreed to have the whole parcel subdivided into small lots
and then sold, the proceeds of the sale to be later divided among them. This agreement is embodied in a document (Exh.
6) entitled "Memorandum of Agreement" consisting of ten pages, dated June 30, 1941.

Before, during and after the execution of this contract (Exh. 6), Atty. J. Antonio Araneta was acting as the attorney-in-fact
and lawyer of the two co-owners, Angela I. Tuason and her brother Antonio Tuason Jr. At the same time he was a
member of the Board of Directors of the third co-owner, Araneta, Inc.

The pertinent terms of the contract (Exh. 6) may be briefly stated as follows: The three co-owners agreed to improve the
property by filling" it and constructing roads and curbs on the same and then subdivide it into small lots for sale. Araneta
Inc. was to finance the whole development and subdivision; it was to prepare a schedule of prices and conditions of sale,
subject to the approval of the two other co-owners; it was invested with authority to sell the lots into which the property
was to be subdivided, and execute the corresponding contracts and deeds of sale; it was also to pay the real estate taxes
due on the property or of any portion thereof that remained unsold, the expenses of surveying, improvements, etc., all
advertising expenses, salaries of personnel, commissions, office and legal expenses, including expenses in instituting all
actions to eject all tenants or occupants on the property; and it undertook the duty to furnish each of the two co-
owners, Angela and Antonio Tuason, copies of the subdivision plans and the monthly sales and rents and collections
made thereon. In return for all this undertaking and obligation assumed by Araneta Inc., particularly the financial burden,
it was to receive 50 per cent of the gross selling price of the lots, and any rents that may be collected from the property,
while in the process of sale, the remaining 50 per cent to be divided in equal portions among the three co-owners so that
each will receive 16.33 per cent of the gross receipts.

Because of the importance of paragraphs 9, 11 and 15 of the contract (Exh. 6), for purposes of reference we are
reproducing them below:

"(9) This contract shall remain in full force and effect during all the time that it may be necessary for the Party op the
Second Part to fully sell the said property in small and subdivided lots and to fully collect the purchase prices due
thereon; it being understood and agreed that said lots may be rented while there are no purchasers thereof;

"(11) The Party of the Second Part (meaning Araneta Inc.) is hereby given full power and authority to sign for and in
behalf of all the said co-owners of said property all contracts of sale and deeds of sale of the lots into which this property
might be subdivided; the powers herein vested to the Party of the Second Past may not be revoked until the purposes of
this contract have been fulfilled and carried out, and the Party of the Second Part may, under its own responsibility and
risk, delegate any of its powers under this contract to any of its officers, employees or to third persons;

"(15) No co-owner of the property subject-natter of this contract shall sell, alienate or dispose of his ownership, interest
or participation tiierein without first giving preference to the other co-owners to purchase and acquire the same under
the same terms and conditions as those offered by any other prospective purchaser. Should none of the co-owners of the
property subject-matter of this contract exercise the said preference to acquire or purchase the same, then such sale to a
third party shall be made subject to all the conditions, terms, and dispositions of this contract; provided, the Parties of
the First Part (meaning Angela and Antonio) shall be bound by this contract as long as the Party of the Second Part,
namely, the Gregorio Araneta, Inc. is controlled by the members of the Araneta family, who are stockholders of the said
corporation at the time of the signing of this contract and/or their lawful heirs;"

On September 16, 1944, Angela I. Tuason revoked the powers conferred on her attorney-in-fact and lawyer, J. Antonio
Araneta. Then in a letter dated October 19,1946, Angela notified Araneta, Inc. that because of alleged breach of the
terms of the "Memorandum of Agreement" (Exh. 6) and abuse of powers granted to it in the document, she had decided
to rescind said contract and she asked that the property held in common be partitioned. Later, on November 20,1946,
Angela filed a complaint in the Court of First Instance of Manila asking the court to order the partition of the property in
question and that she be given 1/3 of the same including rents collected during the time that Araneta Inc., administered
said property.

The suit was directed principally against Araneta, Inc. Plaintiff's brother, Antonio Tuason Jr., one of the co-owners
evidently did not agree to the suit and its purpose, for he joined Araneta, Inc. as a co-defendant After hearing and after
considering the extensive evidence introduced, oral and documentary, the trial court presided over by Judge Emilio Pefia
in a long and considered decision dismissed the complaint without pronouncement as to costs. The plaintiff appealed
from that decision, and because the property is valued at more than P50,000, the appeal came directly to this Court.

Some of the reasons advanced by appellant to have the memorandum contract (Exh. 6) declared null and void or
rescinded are that she had been tricked into signing it; that she was given to understand by Antonio Araneta acting as
her attorney-in-fact and legal adviser that said contract would be similar to another contract of subdivision of a parcel
into lots and the sale thereof entered into by Gregorio Araneta Inc., and the heirs of D. Tuason, Exhibit "L", but it turned
out that the two contracts widely differed from each other, the terms of contract Exh. "L" being relatively much more
favorable to the owners therein and less favorable to Araneta Inc.; that Atty. Antonio Araneta was more or less
disqualified to act as her legal adviser as he did because he was one of the officials of Araneta Inc., and finally, that the
defendant company has violated the terms of the contract (Exh. 6) by not previously showing her the plans of the
subdivision, the schedule of prices and conditions of the sale, in not introducing the necessary improvements into the
land and in not delivering to her her share of the proceeds of the rents and sales.

We have examined Exh. "L" and compared the same with the contract (Exh. 6) and we agree with the trial court that in
the main the terms of both contracts are similar and practically the same. Moreover, as correctly found by the trial court,
the copies of both contracts were shown to the plaintiff Angela and her husband, a broker, and both had every
opportunity to go over and compare them and decide on the advisability of or disadvantage in entering into the contract
(Exh. 6); that although Atty. Antonio Araneta was an official of the Araneta Inc.; being a member of the Board of Directors
of the Company at the time that Exhibit "6" was executed, he was not the party with which Angela contracted, and that
he committed no breach of trust. According to the evidence Araneta, Inc. showed to her the plans of the subdivision and
all the pertinent papers, and sent to her checks covering her share of the proceeds of the sale but that she refused to
receive the same; and that as a matter of fact, at the time of the trial, Araneta Inc., had spent about P117,000 in
improvement and had received as proceeds on the sale of the lots the respectable sum of Pl,265,538.48. We quote with
approval that portion of the decision appealed from on these points:
"The evidence in this case points to the fact that the actuations of J. Antonio Araneta in connection with the execution of
exhibit 6 by the parties, are above board. He committed nothing that is violative of the fiduciary relationship existing
between him and the plaintiff. The act of J. Antonio Araneta in giving the plaintiff a copy of exhibit 6 before the same was
executed, constitutes a full disclosure of the facts, for said copy contains all that appears now in exhibit 6.

"Plaintiff charges the defendant Gregorio Aran«ta, Inc. with infringing the terms of the contract in that the defendant
corporation has failed (1) to make the necessary improvements on the property as required by paragraphs 1 and 3 of the
contract; (2) to submit to the plaintiff from time to time schedule of prices and conditions under which the subdivided
lots are to be sold; and to furnish the plaintiff a copy of the subdivision plans, a copy of the monthly statement of the
sales and rents of the subdivided lots, and a statement of the monthly gross collections from the sale of the property.

"The Court finds from the evidence that the defendant Gregorio Araneta, Incorporated has substantially complied with
the obligation imposed by the contract exhibit 6 in its paragraph 1, and that for improvements alone, it has disbursed the
amount of P117,167.09. It has likewise paid taxes, commissions and other expenses incidental to its obligations as
defined in the agreement.

"With respect to the charge that Gregorio Araneta, Incorporated has failed to submit to plaintiff a copy of the subdivision
plans, list of prices and the conditions governing the sale of subdivided lots, and monthly statement of collections from
the sale of tie lots, the Court is of the opinion that it has no basis. The evidence shows that the defendant corporation
submitted to the plaintiff periodically all the data relative to prices and conditions of the sale of the subdivided lots,
together with the amount corresponding to her. But without any justifiable reason, she refused to accept them. With the
indifferent attitude adopted by the plaintiff, it was thought useless for Gregorio Araneta, Incorporated to continue
sending her statement of accounts, checks and other things. She had shown on various occasions that she did not want
to have any further dealings with the said corporation. So, if the defendant corporation proceeded with the sale of the
subdivided lots without the approval of the plaintiff, it was because it was under the correct impression that under the
contract exhibit 6 the decision of the majority co-owners is binding upon all the three.

"The Court feels that rescission of the contract exhibit 6 is not in order. Even granting that the defendant corporation
committed minor violations of the terms of the agreement, the general rule is that 'rescission will not be permitted for a
slight or casual breach of the contract, but only for such breaches as are so substantial and fundamental as to defeat the
object of the parties in making the agreement' (Song Fo & Co. vs. Hawaiian-Philippine Co., 47 Phil. 821)."

As regards improvements, the evidence shows that during the Japanese occupation from 1942 and up to 1946, the
Araneta Inc. although willing to fill the land, was unable to obtain the equipment and gasoline necessary for filling the
low places within the parcel. As to sales, the evidence shows that Araneta Inc. purposely stopped selling the lots during
the Japanese occupantion, knowing that the purchase price would be paid in Japanese military notes; and Atty. Araneta
claims that for this, plaintiff should be thankfull because otherwise she would have received these notes as her share of
the receipts, which currency later became valueless.

But the main contention of the appellant is that the contract (Exh. 6) should be declared null and void because its terms,
particularly paragraphs 9, 11 and 15 which we have reproduced, violate the provisions of Art. 400 of the Civil Code,
which for the purposes of reference we quote below:

"ART. 400. No co-owner shall be obliged to remain a party to the community. Each may, at any time, demand the
partition of the thing held in common.

"Nevertheless, an agreement to keep the thing undivided for a specified length of time, not exceeding ten years, shall be
valid. This period may be a new agreement."
We agree with the trial court that the provisions of Art. 400 of the Civil Code are not applicable. The contract (Exh.. 6) far
from violating the legal provision that forbids a co-owner being obliged to remain a party to the community, precisely has
for its purpose and object the dissolution of the co-ownership and of the community by selling the parcel held in
common and dividing the proceeds of the sale among the co-owners. The obligation imposed in the contract to preserve
the co-ownership until all the lots shall have been sold, is a mere incident to the main object of dissolving the co-
ownership. By virtue of the document Exh. 6, the parties thereto practically and substantially entered into a contract of
partnership as the best and most expedient means of eventually dissolving the co-ownership, the life of said partnership
to end when the object of its creation shall have been attained.

This aspect of the contract is very similar to and was perhaps based on the other agreement or contract (Exh. "L")
referred to by appellant where the parties thereto in express terms entered into a partnership, although this object is not
expressed in so many words in Exh. 6. We repeat that we see no violation of Art. 400 of the Civil Code in the parties
entering into the contract (Exh. 6) for the very reason that Art. 400 is not applicable.

Looking at the case from a practical standpoint as did the trial court, we find no valid ground for the partition insisted
upon the appellant. We find from the evidence as was done by the trial court that of the 64,928.6 sq. m. which is the
total area of the parcel held in common, only 1,600 sq. m. or 2.5 per cent of the entire area remained unsold at the time
of the trial in the year 1947, while the great bulk of 97.5 per cent had already been sold. As well observed by the court
below, the partnership is in the process of being dissolved and is about to be dissolved, and even assuming that Art. 400
of the Civil Code were applicable, under which the parties by agreement may agree to keep the thing undivided for a
period not exceeding 10 years, there should be no fear that the remaining 1,600 sq. m. could not be disposed of within
the four years left of the ten-year period fixed by Art. 400.

We deem it unnecessary to discuss and pass upon the other points raised in the appeal and which counsel for appellant
has extensively and ably discussed, citing numerous authorities. As we have already said, we have viewed the case from
a practical standpoint, brushing aside technicalities and disregarding any minor violations of the contract, and in deciding
the case as we do, we are fully convinced that the trial court and this Tribunal are carrying out in a practical and
expeditious way the intentions and the agreement of the parties contained in the contract (Exh. 6), namely, to dissolve
the community and co-ownership, in a manner most profitable to the said parties.

In view of the foregoing, the decision appealed from is hereby affirmed. There is no pronouncement as to costs. So
ordered.

Paras, C. J., Pablo, Bengzon, Padilla, Tuason, Reyes, Jugo and Bautista Angelo, JJ., concur.

PARAS, C. J.:

I certify that Mr. Justice Feria voted to affirm.

MARIANO v. COURT OF APPEALS

September 26, 2012 § Leave a comment

MARIANO v. COURT OF APPEALS

June 7, 1989 (174 SCRA 335)

FACTS:
The proceedings at bar concern (1) an attempt by a married man to prevent execution against conjugal property of a
judgment rendered against his wife, for obligations incurred by the latter while engaged in a business that had
admittedly redounded to the benefit of the family, and (2) the interference by a court with the proceedings on execution
of a co-equal or coordinate court. Both acts being proscribed by law, correction is called for and will hereby be effected.

The proceedings originated from a suit filed by Esther Sanchez against Lourdes Mariano in the Court of First Instance at
Caloocan City, for recovery of the value of ladies’ ready made dresses allegedly purchased by and delivered to the latter.

Daniel Sanchez, Esther’s husband, now made his move. He filed a complaint for annulment of the execution in the Court
of First Instance at Quezon City in his capacity as administrator of the conjugal partnership. He alleged that the conjugal
assets could not validly be made to answer for obligations exclusively contracted by his wife, and that, moreover, some of
the personal property levied on, such as household appliances and utensils necessarily used in the conjugal dwelling,
were exempt from execution.

ISSUE: WON the claim that property levied on in execution of a judgment is not property of the judgment debtor, Daniel
Sanchez’s wife, but of the conjugal partnership of the Sanchez Spouses

HELD:
In the case at bar, the husband of the judgment debtor cannot be deemed a “stranger” to the case prosecuted and
adjudged against his wife. In any case, whether by intervention in the court issuing the writ, or by separate action, it is
unavailing for either Esther Sanchez or her husband, Daniel, to seek preclusion of the enforcement of the writ of
possession against their conjugal assets. For it being established, as aforestated, that Esther had engaged in business
with her husband’s consent, and the income derived therefrom had been expended, in part at least, for the support of
her family, the liability of the conjugal assets to respond for the wife’s obligations in the premises cannot be disputed.

Arcelona Et.Al. Vs. Court Of Appeals G.R. No. G.R. No. 102900. October 2, 1997

Doctrine: A co-owner cannot maintain an action in ejectment without joining all the other co-owners. Allco-owners in an
action for security of tenure of a tenant must be impleaded. Failure of such will bar thecourt from making a final
adjudication.

Facts: Farnacio filed an action for peaceful possession, maintenance of security of tenure and damagesagainst three
fishpond co-owners Pacita Arcelona-Olanday, Maria Arcelona-Arellano and NatividadArcelona-Cruz. The case was
intended to maintain him as tenant of the fishpond. 3 other co-owners,petitioners herein, are naturalized Americans,
residing in California, USA. Judgment was rendered by thetrial declaring Farnacio as tenant-caretaker, which was affirmed
by the IAC and the Supreme Court.Subsequently, petitioners filed a petition for annulment of said judgment with
the Court of Appealsclaiming that the lower court did not acquire jurisdiction over their persons. They claimed that being
co-owners, they should all be impleaded as indispensable parties. The CA rendered judgment dismissingthe petition on
the ground of petitioners' failure to allege the sole and only ground of extrinsic fraud intheir petition for annulment of
judgment.

Issue: WON the final judgment may be annulled for lack of jurisdiction (over the subject matter and/orover the person of
indispensable parties) and denial of due process?

Ruling: YES. Formerly, Article 487 of the old Civil Code provided that "any one of the co-owners maybring an action in
ejectment." It was subsequently held, however, that a co-owner could not maintain anaction in ejectment without
joining all the other co-owners. Rule 3, Section 7 of the Rules of Court,defines indispensable parties as parties-in-interest
without whom there can be no final determination ofan action. It is logical that a tenant, in an action to establish his
status as such, must implead all the pro-indiviso co-owners; in failing to do so, there can be no final determination of the
action. In other words,a tenant who fails to implead all the co-owners cannot establish with finality his tenancy over the
entireco-owned land. Co-owners in an action for the security of tenure of a tenant are encompassed withinthe definition
of indispensable parties; thus, all of them must be impleaded.In the case at bar, petitioners are co-owners of a fishpond.
It is impossible to pinpoint which specificportion of the property is owned by Olanday, et al. and which portion belongs
to petitioners. Thus, it isnot possible to show over which portion the tenancy relation of Farnacio has been established.
Indeed,petitioners should have been properly impleaded as indispensable parties. Obviously, the failure toimplead
petitioners barred the lower court from making a final adjudication. Without the presence ofindispensable parties to a
suit or proceeding, a judgment therein cannot attain finality. The Court,through former Chief Justice Marcelo B. Fernan,
held that a person who was not impleaded in thecomplaint cannot be bound by the decision rendered therein, for no
man shall be affected by aproceeding in which he is a stranger.

ADLAWAN V. ADLAWAN- Co-ownership & Ejectment

A co-owner by virtue of Art. 487 is allowed to bring an action without necessity of including all the co-owners as plaintiffs
for it is presumed to be for the benefit of all BUT if the action of the plaintiff alone, the action should be dismissed.

FACTS:

A house and lot (lot 7226) was registered in the name of Dominador Adlawan, the father of (petitioner) Arnelito
Adlawan. He is the acknowledged illegitimate child of Dominador who is claiming that he is the sole heir. He then
adjudicated to himself the said house and lot to himself and out of generosity allowed the siblings of his father to occupy
the property provided that they vacate when asked. Time came when he demanded that they vacate and when they
refused he filed an ejectment suit against them.

His aunt and uncle on the other hand, Narcisa (70) and Emeterio (59) denied his allegations claiming that the said lot was
registered in their parents name and they had been living in the said house and lot since birth. The only reason why the
said house and lot was transferred in Dominador’s name was when their parents were in need of money for renovating
their house, their parents were not qualified to obtain a loan and since Dominador was the only one who had a college
education, they executed a simulated deed of sale in favor of Dominador.

The MTC dismissed the complaint holding that Arnelito’s filiation and the settlement of the estate are conditions
precedent for the accrual of the suit. And since Dominador was survived by his wife, Graciana, her legal heirs are entitled
to their share in the lot. The RTC ordered Narcisa and Emeterio to turn over the possession of the lot to Arnelito. It also
granted the motion of execution which was opposed by the nephew and nieces of Graciana who claim that they have a
share in the lot.

The CA reinstated the decision of the MTC holding that Arnelito and the heirs of Graciana are co-heirs thus he cannot
eject them from the property via unlawful detainer. Thus the case at bar.

ISSUE:

Whether or not Arnelito can validly maintain the ejectment suit

HELD:
NO. The theory of succession invoked by Arnelito would prove that he is not the sole heir of Dominador. Since he was
survived was his wife, upon his death, Arnelito and Graciana became co-owners of the lot. Upon her death, her share
passed on to her relatives by consanguinity thus making them co-owners as well.

Petitioner contends that Art. 487 allows him to file the instant petition. (Art. 487. Any one of the co-owners may bring an
action in ejectment.) It is true that a co-owner may bring such an action w/o necessity of joining all the co-owners as
plaintiffs because it is presumed to be instituted for the benefit of all BUT if the action is for the benefit of the plaintiff
alone, the action should be dismissed.
Since petitioner brought the suit in his name and for his benefit alone and his repudiation of the ownership of the other
heirs, the instant petition should be dismissed.

HEIRS OF VENCILAO V. CA

One may not acquire property by prescription when that property is titled to another under the Torrens System. It does
not even matter whether occupation by the adverse claimant was open, notorious and continuous. As long as the TCT is
in someone else’s name, the property belongs to person who holds the TCT

FACTS:

On Feb 12, 1990, the heirs of Vencilao filed a complaint to quiet the title and recover a piece of land against spouses
Gepalgo.

Said heirs asserted that they acquired the land from their father who was in open, peaceful and notorious enjoyment of
the same. They presented tax declarations to prove said ownership
On the other hand, the Gepalgo spouses denied the claim and for proof as registered owners, presented TCT No. 16042
which they acquired on public auction from the PNB.

RTC ruled in favor of Vencilao because the latter had been in possession, cultivation and enjoyment for more than 30
years- long before a title was ever issued to the Gepalgos.

Upon appeal, the CA reversed and awared the property to Gepalgos because the latter were buyers in good faith and
holders in due course. Furthermore, they held a Torrens Title. That was the gold standard of ownership for registered
land.

Naturally, the heirs of Vencilao trooped to the Supreme Court.

ISSUE:

Whether or not the Gepalgos had better right to the land.

HELD:
No.The RTC erroneously found for the petitioners. True, the Vencilaos enjoyed the property for more than 30 years.
However, prescription does not run against registered land. No one may acquire by prescription or adverse possession
land that is titled and registered even if occupation is adverse, open and notorious. A Certificate of Title is absolute and
unbeatable evidence of ownership in favor of the person whose name appears upon it. It binds the whole world.

PINGOL V. COURT OF APPEALS

A vendee in an oral contract to convey land who had made part payment thereof, entered upon the land and had made
valuable improvements thereon is entitled to bring suit to clear his title against the vendor who had refused to transfer
the title to him. It is not necessary that the vendee should have an absolute title, an equitable title being sufficient to
clothe him with personality to bring an action to quiet title.

FACTS:

In 1969, Pingol, the owner of a lot (Lot No. 3223) in Caloocan City, executed a DEED OF ABSOLUTE SALE OF ONE-HALF OF
AN UNDIVIDED PORTION OF [his] PARCEL OF LAND in favor of Donasco (private respondent), payable in 6 years.

In 1984, Donasco died and was only able to pay P8,369 plus P2,000 downpayment, leaving a balance of P10,161. The
heirs of Donasco remained in possession of such lot and offered to settle the balance with Pingol. However, Pingol
refused to accept the offer and demanded a larger amount. Thus, the heirs of Donasco filed an action for specific
performance (with Prayer for Writ of Prelim. Injunction, because Pingol were encroaching upon Donasco’s lot). Pingol
averred that the sale and transfer of title was conditional upon the full payment of Donasco (contract to sell, not contract
of sale). With Donasco’s breach of the contract in 1976 and death in 1984, the sale was deemed cancelled, and the heirs’
continuous occupancy was only being tolerated by Pingol.

ISSUES:

(1) Whether or not Pingol can refuse to transfer title to Donasco

(2) Whether or not Donasco has the right to quiet title

RULING:

(1) No. The contract between Pingol and Donasco is a contract of sale and not a contract to sell. The acts of the parties,
contemporaneous and subsequent to the contract, clearly show that the parties intended an absolute deed of sale; the
ownership of the lot was transferred to the Donasco upon its actual (upon Donasco’s possession and construction of the
house) and constructive delivery (upon execution of the contract). The delivery of the lot divested Pingol of his
ownership and he cannot recover the title unless the contract is resolved or rescinded under Art. 1592 of NCC. It states
that the vendee may pay even after the expiration of the period stipulated as long as no demand for rescission has been
made upon him either judicially or by notarial act. Pingol neither did so. Hence, Donasco has equitable title over the
property.

(2) Although the complaint filed by the Donascos was an action for specific performance, it was actually an action to
quiet title. A cloud has been cast on the title, since despite the fact that the title had been transferred to them by the
execution of the deed of sale and the delivery of the object of the contract, Pingol adamantly refused to accept the
payment by Donascos and insisted that they no longer had the obligation to transfer the title.

Donasco, who had made partial payments and improvements upon the property, is entitled to bring suit to clear his title
against Pingol who refused to transfer title to him. It is not necessary that Donasco should have an absolute title, an
equitable title being sufficient to clothe him with personality to bring an action to quiet title.

Prescription cannot also be invoked against the Donascos because an action to quiet title to property in ONE’s
POSSESSION is imprescriptible.

TITONG v. CA

For one to file an action to quiet title to a parcel of land, the requisites in Art 476 of the NCC must be complied with
meaning there should be an instrument, record, claim, encumbrance setting forth the cloud or doubt over the title.
Otherwise, the action to be filed can either be ejectment, forcible entry, unlawful detainer, accion reivindicatoria or
accion publiciana.

FACTS:

A 20,592 square meter parcel of land located at Barrio Titiong, Masbate is the subject property being disputed in this
case. The property is being claimed by 2 contestants, however legal title over the property can only be given to one of
them.

The case originated from an action for quieting of title filed by petitioner Mario Titong. The RTC of Masbate decided in
favor of private respondents, Vicente Laurio and Angeles Laurio as the true and lawful owners of the disputed land. The
CA affirmed the decision of the RTC.

Titong asserts that he is the owner of an unregistered parcel of land with an area of 3.2800 hectares and declared for
taxation purposes. He claims that on three separate occasions, private resps, with their hired laborers, forcibly entered a
portion of the land containing an approximate area of 2 hectares and began plowing the same under pretext of
ownership. On the other hand, private resps denied the claim and said that the subject land formed part of the 5.5
hectare agricultural land which they had purchased from their predecessor-in-interest, Pablo Espinosa.

Titong identified Espinosa as the his adjoining owner asserting that no controversy had sprouted between them for 20
years until the latter sold lot 3749 to V. Laurio. The boundary between the land sold to Espinosa and what remained of
Titong’s property was the old Bugsayon river. When Titong employed Lerit as his tenant, he instructed the latter to
change the course of the old river and direct the flow of water to the lowland at the southern portion of Titong’s
property, thus converting the old river into a Riceland.

Private resps, on the other hand, denied claim of Titong’s, saying that the area and boundaries of disputed land
remained unaltered during the series of conveyances prior to its coming into his hands. Accdg to him, Titong first
declared land for taxation purposes which showed that the land had an area of 5.5 hectares and was bounded on the
north by the B. River; on the east by property under ownership by Zaragoza, and on the west by property owned by De la
Cruz. He also alleges that Titong sold property to Verano. The latter reacquired the property pursuant to mutual
agreement to repurchase the same.
However, the property remained in Titong’s hands only for 4 days because he sold it to Espinosa. It then became a part
of the estate of Espinosa’s wife, late Segundina Espinosa. Later on, her heirs executed an “Extrajudicial Settlement of
Estate with Simultaneous Sale” whereby the 5.5 hectares was sold to Laurio for 5,000 pesos. In all these conveyances,
the area and boundaries of the property remained exactly the same as those appearing in the name of Titong’s.

The court found out that 2 surveys were made of the property. First survey was made by Titong, while the second was
the relocation survey ordered by the lower court. Because of which, certain discrepancies surfaced. Contrary to Titong’s
allegation, he was actually claiming 5.9789 hectares, the total areas of lot nos 3918, 3918-A and 3606. The lot 3479
pertaining to Espinosa’s was left with only an area of 4.1841 hectares instead of the 5.5 hectares sold by Titong to him.

Apprised of the discrepancy, private resps filed a protest before Bureau of Lands against 1st survey, and filing a case for
alteration of boundaries before the MTC, proceedings of which were suspended because of instant case.

Private resps. Avers that Titong is one of the four heirs of his mother, Leonida Zaragoza. In the Extrajudicial Settlement
with Sale of Estate of late Zaragoza, the heirs adjudicated unto themselves the 3.6 hectares property of the deceased.
The property was bounded by the north by Verano, on the east by Bernardo Titong, on the south by the Bugsayon River
and on the west by Benigno Titong.
Instead of reflecting only .9000 hectares as his rightful share in the extrajud settlement, Titong’s share bloated to 2.4
hectares. It then appeared to Laurio that Titong encroached upon his property and declared it as part of his inheritance.

The boundaries were likewise altered so that it was bounded on the north by Verano, on the east by B. Titong, on the
south by Espinosa and on the west by Adolfo Titong. Laurio also denied that Titong diverted course of the B. river after
he had repurchased the land from Verano because land was immediately sold to Espinosa thereafter.

ISSUE:

Whether or not Titong is the rightful owner of the subject property

RULING: NO

The remedy for quieting of title may be availed of under the circumstances mentioned in Art 476 of the NCC wherein it
says that action to quiet title may be made as a remedial or preventive measure. Under 476, a claimant must show that
there is an instrument, record, claim, encumbrance or proceeding which casts a cloud, doubt, question or shadow upon
owner’s title to or interest in real property. The ground for filing a complaint for quieting title must be “instrument,
record, claim, encumbrance or proceeding.”
In the case at bar, Titong failed to allege that there was an instrument, claim etc be clouded over his property. Through
his allegations, what Titong imagined as clouds cast on his title were Laurio’s alleged acts of physical intrusion into his
purported property. The grounds mentioned are for action for forcible entry and not quieting title.

In addition, the case was considered to be a boundary dispute. The RTC and CA correctly held that when Titong sold the
5.5 hectare land to Espinosa, his rights and possession ceased and were transferred to Laurio upon its sale to the latter.

Thus, it is now a contract of sale wherein it is a contract transferring dominion and other real rights in the thing sold.
Titong also cannot rely on the claim of prescription as ordinary acquisitive prescription requires possession in good faith
and with just title for the time fixed by law.

Portic v. Cristobal 456 SCRA 577, April 22, 2005

FACTS:

In 1968, spouses Ricardo and FermaPortic acquired a parcel of land with a 3 door apartment from spouses Alcantara
even though they’re aware that the land was mortgaged to the SSS. Portic defaulted in paying SSS. The Portics then
executed a contract with Anastacia Cristobal and the latter agreed to buy the said property for P200k. Cristobal’s down
payment was P45k and she also agreed to pay SSS.

Thereafter, a transfer Certificate of Title was executed in favor of Cristobal. However, on May 20, 1996, petitioners
demanded from respondent the alleged unpaid balance of P55, 000.00, but the latter refused to pay. This prompted the
petitioners to file this instant civil case against respondent to remove the cloud on the title. Petitioners claimed that they
sold the subject property to respondent on the condition that respondent shall pay the balance on or before May 22,
1985; that in case of failure to pay, the sale shall be considered void and petitioners shall reimburse respondent of the
amounts already paid; that respondent failed to fully pay the purchase price within the period; that on account of this
failure, the sale of the subject property by petitioners to respondent is void.

Respondent on her part claimed that her title over the subject property is already indefeasible; that the true agreement
of the parties is that embodied in the Deed of Absolute Sale with Assumption of Mortgage; that respondent had fully
paid the purchase price; that respondent is the true owner of the subject property; that petitioners claim is already
barred by laches.

ISSUE:

Whether or not there was a contract of sale in this case.

RULING:

NO. What transpired between the parties was a contract to sell. The provision of the contract characterizes the
agreement between the parties as a contract to sell, not a contract of sale. Ownership is retained by the vendors, the
Portics; it will not be passed to the vendee, the Cristobals, until the full payment of the purchase price. Such payment is
a positive suspensive condition, and failure to comply with it is not a breach of obligation; it is merely an event that
prevents the effectivity of the obligation of the vendor to convey the title. In short, until the full price is paid, the vendor
retains ownership. Also, the mere issuance of the Certificate of Title in favor of Cristobal did not vest ownership in her.
Neither did it validate the alleged absolute purchase of the lot. Registration does not vest, but merely serves as evidence
of title.