Cases in Property Batch 3 (Case Digest)

CASES IN PROPERTY BATCH 3 (DIGEST) 1) Felicidad Javier vs. Regino Veridiano and Reino Rosete G.R. No. L-48050. October 10, 1994 (237 SCRA 565) Doctrine: A judgment in forcible entry or detainer case disposes of no other issue than possession and declares only who has the right of possession, but by no means constitutes a bar to an action for determination of who has the right or title of ownership. Facts: On January 1963, Javier filed a Miscellaneous Sales Application for Lot No. 1641, Ts 308 of Olongapo Townsite Subdivision in Olongapo City. On December 1970, Javier filed Civil Case no. 926 (CC 926) for forcible entry against Ben Babol for entering a portion of the southwestern part of Lot 1641, Ts 308. The case was dismissed since the court considered the portion outside Lot 1461. The case became final and executory on April 1973. Subsequently, Javier was granted Miscellaneous Sales Patent and an Original Certificate of Title was issued in her favor. Meanwhile, Babol who was the defendant in CC 926 had sold the portion he was occupying to Rosete. 4 years after the finality of CC 926, Javier instituted a Civil Case No. 2203-0 (CC 2203-0) for quieting of title and recovery of possession. Rosete moved to dismiss on the ground of res judicata. The CFI of Zambales dismissed the case. Issue: Whether res judicata is applicable in the case. Held: No. The following are the requisites of res judicata: a) there is final judgment or order; b) the court have jurisdiction over the subject matter; c) former judgment is a judgment on merits; and d) identity of parties, of subject matter, and of causes of action. The first three are present. There is identity of parties in the case. What is required is not absolute but substantial identity of parties. In the case, Rosete is a successor in interest of Babol by title. Nevertheless, there is no identity of cause of action. CC 926 is a complaint of forcible entry or accion interdictal where the issue is physical or material possession of real property. In this case, Javier merely claimed a better right or prior possession over the land without asserting title. CC 2203-0 is an action to recover a parcel of land or accion reivindicatori. In this case, Javier expressly alleged ownership (by virtue of the Original Certificate of Title issued) and specifically prayed that she be declared the rightful owner and be given possession of the disputed portion. A judgement in forcible entry or detainer case disposes of no other issue than possession and declares only who has the right of possession, but by no means constitutes a bar to an action for determination of who has the right or title of ownership.

2) Abejaron vs. Nabasa G.R. No. 84831, June 20, 2001 (359 SCRA 47) Doctrine: For an action for reconveyance based on fraud to prosper, it is essential for the party seeking reconveyance to prove by clear and convincing evidence his title to the property and the fact of fraud. Facts: Petitioner Abejaron avers that he is the actual and lawful possessor and claimant of a 118square meter portion of a 175-square meter residential lot in Silway, General Santos City. In 1945, petitioner Abejaron and his family started occupying the 118-square meter land. At that time, the land had not yet been surveyed. They fenced the area and built thereon a family home with nipa roofing and a small store. In 1949, petitioner improved their abode to become a twostorey house made of round wood and nipa roofing. Abejaron also introduced several improvements on the land including a store, 5 coconut trees on the property of controversy, and avocado and banana trees. All this time that the Abejarons introduced these improvements on the land in controversy, respondent Nabasa did not oppose or complain about the improvements. Knowing that the disputed land was public in character, petitioner declared only his house, and not the disputed land, for taxation purposes. Petitioner stated that beginning 1955, respondent Nabasa resided on the remaining 57square meter portion of Lot 1, Block 5, Psu-154953. Nabasa built his house about four (4) meters away from petitioner Abejaron’s house. Before 1974, employees of the Bureau of Lands surveyed the area in controversy. Abejaron merely watched them do the survey and did not thereafter apply for title of the land on the belief that he could not secure title over it as it was government property. Without his (Abejaron) knowledge and consent, however, Nabasa “clandestinely, willfully, fraudulently, and unlawfully applied for and caused the titling in his name” of the entire Lot 1, Block 5, Psu-154953, including petitioner Abejaron’s 118-square meter portion. Petitioner imputes bad faith and fraud on the part of Nabasa because in applying for and causing the titling in his name of Lot 1, Block 5, Psu154953, Nabasa represented himself to be the actual and lawful possessor of the entire Lot 1, Block 5, including petitioner Abejaron’s 118-square meter portion despite knowledge of Abejaron’s actual occupation and possession of said portion. On September 24, 1974, Nabasa was issued Original Certificate of Title No. P-4140 pursuant to Free Patent No. (XI-4) 2877 covering Lot 1, Block 5, Psu-154953 including therein the lot occupied by the petitioner. On March 12, 1982 an action for reconveyance with damages against respondent Nabasa before Branch 22, Regional Trial Court of General Santos City.

Issue: Whether the allegation of fraud has been proven for the action for reconveyance to prosper.

Held:

No. An action for reconveyance of a property is the sole remedy of a landowner whose property has been wrongfully or erroneously registered in another’s name after one year from the date of the decree so long as the property has not passed to an innocent purchaser for value. The action does not seek to reopen the registration proceeding and set aside the decree of registration but only purports to show that the person who secured the registration of the property in controversy is not the real owner thereof. Fraud is a ground for reconveyance. For an action for reconveyance based on fraud to prosper, it is essential for the party seeking reconveyance to prove by clear and convincing evidence his title to the property and the fact of fraud. Such was not performed by the petitioner.

Abejaron’s 30-year period of possession and occupation required by the Public Land Act, as amended by R.A. 1942 ran from 1945 to 1975, prior to the effectivity of P.D. No. 1073 in 1977, the requirement of said P.D. that occupation and possession should have started on June 12, 1945 or earlier, does not apply to him. Petitioner claims that he started occupying the disputed land in 1945. At that time, he built a nipa house, a small store, and a fence made of wood to delineate his area. This nipa house was improved in 1949 into a two-storey house. The small store was also made bigger in 1950. The wooden fence was also changed to a fence made of hollow blocks. The two-storey house, bigger store, and hollow-block fence all stand to this day. In 1951, petitioner planted coconut trees near his house. While the petitioner has shown continued existence of these improvements on the disputed land, they were introduced later than January 24, 1947. He has failed to establish the portion of the disputed land that his original nipa house, small store and wooden fence actually occupied as of January 24, 1947. In the absence of this proof, we cannot determine the land he actually possessed and occupied for thirty years which he may acquire under Sec. 48(b) of the Public Land Act. Worthy of notice is the fact that the disputed land was surveyed, subdivided into and identified by lots only in the 1970’s. Therefore, prior to the survey, it would be difficult to determine the metes and bounds of the land petitioner claims to have occupied since 1947 in the absence of specific and incontrovertible proof. Also, as admitted by the petitioner, he has never declared the disputed land for taxation purposes. While tax receipts and tax declarations are not incontrovertible evidence of ownership, they become strong evidence of ownership acquired by prescription when accompanied by proof of actual possession of the property or supported by other effective proof. Even the tax declarations and receipts covering his house do not bolster his case as the earliest of these was dated 1950. Petitioner’s evidence does not constitute the “well-nigh incontrovertible” evidence necessary to acquire title through possession and occupation of the disputed land at least since January 24, 1947 as required by Sec. 48(b) of the Public Land Act, as amended by R.A. 1942. The basic presumption is that lands of whatever classification belong to the State and evidence of a land grant must be “well-nigh incontrovertible.” As petitioner Abejaron has not adduced any evidence of title to the land in controversy, whether by judicial confirmation of title, or homestead, sale, or free patent, he cannot maintain an action for reconveyance.

3) Garcia vs. Court of Appeals G.R. No. 133140, August 10, 1999 (312 SCRA 180)

Doctrine: Possession and ownership are distinct legal concepts. Ownership exists when a thing pertaining to one person is completely subjected to his will in a manner not prohibited by law and consistent with the rights of others. Ownership confers certain rights to the owner, one of which is the right to dispose of the thing by way of sale. Literally, to possess means to actually and physically occupy a thing with or without right. Possession may be had in one of two ways: possession in the concept of an owner and possession of a holder. A possessor in the concept of an owner may be the owner himself or one who claims to be so. On the other hand, one who possesses as a mere holder acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong. Facts: Atty. Pedro V. Garcia, in whose name TCT No. S-31269 covering a parcel of land identified as Lot 17 situated at Bel Air II Village, Makati, was registered, sold with the consent of his wife Remedios T. Garcia, the same to their daughter Ma. Luisa Magpayo and her husband Luisito Magpayo (the Magpayos). On March 5, 1981, the Magpayos mortgaged the land to the Philippine Bank of Communications (PBCom) to secure a loan. On March 9, 1981, Atty. Garcia’s Title was cancelled and in its stead Transfer Certificate of Title No. S-108412/545 was issued in the name of the Magpayos. The Deed of Real Estate Mortgage was registered at the Makati Register of Deeds and annotated on the Magpayos title. The redemption period of the foreclosed mortgage expired without the Magpayos redeeming the same, hence, title over the land was consolidated in favor of PBCom which cancelled the Magpayo’s title and Transfer Certificate of Title No. 138233 was issued in its name. The Magpayos failed to pay their loan upon its maturity, hence, the mortgage was extrajudicially foreclosed and at the public auction sale, PBCom which was the highest bidder bought the land. On October 4, 1985, the Magpayos filed at the RTC of Makati a complaint seeking the nullification of the extrajudicial foreclosure of mortgage, public auction sale, and PBCom’s title docketed as Civil Case No. 11891. This complaint was dismissed for failure to prosecute. On October 15, 1985, PBCom filed at the Regional Trial Court (RTC) of Makati a petition for the issuance of a writ of possession over the land which was granted. Upon service of the writ of possession, Mrs. Magpayo’s brother, Jose Ma. T. Garcia (Garcia), who was in possession of the land, refused to honor it and filed a motion for Intervention in the above-said PBCom petition, which motion was denied. Garcia thereupon filed against PBCom, the Magpayos, and the RTC Sheriff the instant suit for recovery of realty and damages wherein he alleged, inter alia, that he inherited the land as one of the heirs of his mother Remedios T. Garcia, and that PBCom acquired no right thereover. In

its summary judgment, the lower court held that the mortgage executed by the Magpayo spouses in favor of PBCom was void. The Magpayo spouses could not have acquired the said property merely by the execution of the Deed of Sale because the property was in the possession of the plaintiff. The vendor, Pedro V. Garcia, was not in possession and hence could not deliver the property merely by the execution of the document. On appeal, CA held that Garcia’s assertion that ownership over the disputed property was not transmitted to his sister and her husband-Magpayo spouses at the time of the execution of the Deed of Sale as he was still in actual and adverse possession thereof does not lie. Since the execution of the deed of sale by Atty. Pedro V. Garcia in favor of the Magpayos took place earlier or on August 1, 1980, then contrary to his claim, Garcia was not in possession of the property at the time of the execution of said public instrument. Furthermore, it appearing that the vendor Atty. Garcia had control of the property which was registered in his name and that the deed of sale was likewise registered, then the sale was consummated and the Magpayos were free to exercise the attributes of ownership including the right to mortgage the land. When the land is registered in the vendor’s name, and the public instrument of sale is also registered, the sale may be considered consummated and the buyer may exercise the actions of an owner. That the Magpayos’ title, TCT No. S-108412, was issued four (4) days following the execution of the deed of real estate mortgage is of no moment, for registration under the Torrens system does not vest ownership but is intended merely to confirm and register the title which one may already have on the land. Issue: Whether Garcia’s possession is in a concept of an owner.

Held: No. Garcia’s possession which started only in 1986 could not ripen into ownership. He has no valid title thereto. His possession in fact was that of an intruder, one done in bad faith (to defeat PBCom’s Writ of Possession). His possession is certainly not in the concept of an owner. This is so because as early as 1981, title thereto was registered in the name of the Magpayo Spouses which title was subsequently cancelled when the property was purchased by PBCom in a public auction sale resulting in the issuance of title in favor of the latter in 1985. The Court stressed that possession and ownership are distinct legal concepts. Ownership exists when a thing pertaining to one person is completely subjected to his will in a manner not prohibited by law and consistent with the rights of others. Ownership confers certain rights to the owner, one of which is the right to dispose of the thing by way of sale. Atty. Pedro Garcia and his wife Remedios exercised their right to dispose of what they owned when they sold the subject property to the Magpayo spouses. On the other hand, possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or without right. Possession may be had in one of two ways: possession in the concept of an owner and possession of a holder. A possessor in the concept of an owner may be the owner himself or one who claims to be so. On the other hand, one who possesses as a mere holder acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong. The records show that petitioner occupied the property not in the concept of an owner for his stay was merely tolerated by his parents. Consequently, it is of no moment that petitioner was in possession of the property at the time of the sale to the Magpayo spouses. It was not a hindrance to a valid transfer of ownership. On the other hand, petitioner’s subsequent claim of ownership as successor to his mother’s share in the conjugal asset is belied by the fact that the

property was not included in the inventory of the estate submitted by his father to the intestate court. This buttresses the ruling that indeed the property was no longer considered owned by petitioner’s parents. The Court upheld the Court of Appeals in holding that the mortgage to PBCom by the Magpayo spouses is valid notwithstanding that the transfer certificate of title over the property was issued to them after the mortgage contract was entered into. Registration does not confer ownership, it is merely evidence of such ownership over a particular property. The deed of sale operates as a formal or symbolic delivery of the property sold and authorizes the buyer to use the document as proof of ownership. All said, the Magpayo spouses were already the owners when they mortgaged the property to PBCom.

4) Rodil Enterprises, Inc. VS CA (371 SCRA 7) Doctrine: The owner has a right to enjoy and dispose of a thing, without other limitations than those established by law. Every owner has the freedom of disposition over his property. This is an attribute of ownership. In an action for unlawful detainer, the plaintiff need not have been in prior physical possession. FACTS: Petitioner Rodil Enterprises is the lessee of the Ides O’Racca building (ORACCA) since 1959. It was a former alien property over which the Republic acquired ownership by virtue of RA 477. Rodil entered into a sublease contract with respondents Bondoc, Bondoc-Esto, Divisoria Footware and Chua Huay Soon, members of Oracca Building Tenants Association, Inc. (ASSOCIAION). On January 8, 1987, Rodil offered to purchase the property. On July 22, 1998, the Association also offered to lease the same building through DGSREPM. Pending action on the purchase offer of Rodil, the Republic granted Rodil’s request for the renewal of the lease contract on Sept. 23, 1987 for 5 more years. The renewal contract however was disapproved by the DGSREPM secretary. On October 1987, Rodil filed an action to enjoin the Association from collecting rentals from the occupants of Oracca. This was granted by the trial court and upheld by CA. On May 18, 1992 Rodil signed a renewal contract for 10 more years of lease, which was approved by the DENR Secretary. The Association filed a case to set aside the renewal contract, but the same was denied by the trial court. Rodil then filed an action for unlawful detainer against herein respondents. The MTC upheld Rodil’s right to eject, which was then upheld by the RTC. While the consolidated appeals were pending, the CA 2nd Division declared the renewal contract between Rodil and the Republic as null and void. Rodil moved for reconsideration but the same was denied which prompted it to file an action for certiorari. The CA 4th division likewise set aside the MTC and the RTC’s decision and dismissed the action of Rodil for unlawful detainer.

ISSUE: Was the renewal contract between Rodil and the Republic is valid? May Rodil validly eject herein respondents even though the former is not in actual possession of the property?

HELD: Yes. The Owner has a right to enjoy and dispose of a thing, without other limitations than those established by law. Every owner has the freedom of disposition over his property. This is an attribute of ownership. The Republic being the owner of the disputed property enjoys the prerogative to enter into a lease contract with Rodil in the exercise of its jus disponendi.

Yes. In an action for unlawful detainer, the plaintiff need not have been in prior physical possession. Respondents have admitted that they have not entered into any lease contract with the Republic and that their continued occupation of the subject property was merely by virtue of acquiescence. Since the occupation of respondents was merely tolerated by the Republic, the right of possession of the latter remained uninterrupted. It could therefore alienate the same to anyone it choose. Unfortunately for respondents, the Republic chose to alienate the subject premises to Rodil by virtue of a contract of lease entered into on May 18, 1992. Resultantly, the petitioner had the right to file the action for unlawful detainer against respondents as one from whom possession of property has been unlawfully withheld.

5) Ruben Santos VS Spouses Tony Ayon (GR No. 137013) FACTS: Davao City: Ruben Santos filed a complaint for illegal detainer against sps. Ayon. Santos is the registered owner of 3 lots situated at Lanzona Subd, Ayons are registered owners of adjacent land. Previous occupant of the property built a building which straddled both the lots. Ayons using the building as a warehouse. Santos informed respondents that the building occupies portion of his lot, but he let them use it. HELD: A complaint for unlawful detainer is sufficient if it alleges that the withholding of the possession or the refusal to vacate is unlawful without necessarily employing the terminology of the law. Possession by tolerance is lawful, but such possession becomes unlawful when the possessor by tolerance refuses tp vacate upon demand made by the owner.

6) Bustos VS CA (350 SCRA 155) Doctrine: One of the essential attributes of ownership is possession. It follows that as owners of the subject property, petitioners are entitled to possession of the same. “An owner who cannot exercise the seven (7) “juses” or attributes of ownership–the right to possess, to use and enjoy, to abuse or consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits–is a crippled owner.”

FACTS: Paulino Fajardo died intestate in April 2, 1957. He had four children, Manuela, Trinidad, Beatriz and Marcial. Subsequently, they instituted an extra-judicial partition of the estate of the deceased. On the same day, Manuela sold her share to Moses G. Mendoza, husband of Beatriz, by way of Deed of Absolute Sale. At the time of the sale, there was no cadastral survey in Masantol, Pampanga. Later, the cadastre was conducted, and the property involved in the partition case were specified as Lots 280, 283, 284, 1000-A and 1000-B. The share of Manuela, which was sold to Moses, includes Lot 284 of the Masantol Cadastre and Lot 284 was subdivided into Lots 284-A and 284-B. Trinidad was in physical possession of the land. She refused to surrender the land to her brother-in-law Moses G. Mendoza, despite several demands. Mendoza then filed a complaint. During the hearing, Trinidad died, and her heirs parted with her estate, including the lot claiming by Mendoza. Lot 284-B was then sold to Spouses Viray, herein private respondents. The trial court ruled in favor of Mendoza. He then sold the subject land to Spouses Bustos, herein petitioners, who were actually lessees of the husband of Trinidad on the land in question. Since Spouses Bustos were in actual possession of the land, Spouses Viray filed an action for unlawful detainer against the Spouses Bustos. ISSUE: Could the petitioners be ejected from what is now their own land? HELD: No. Petitioners cannot be ejected from the subject land. The stay of execution is warranted by the fact that petitioners are now legal owners of the land in question and are occupants thereof. To execute the judgment by ejecting petitioners from the land that they owned would certainly result in grave injustice. The issue of possession was rendered moot when the court adjudicated ownership to the Spouses Bustos by virtue of a valid deed of sale. Placing petitioners in possession of the land in question is the necessary and logical consequence of the decision declaring them as the rightful owners of the property.

7) Custodio VS CA (253 SCRA 483) FACTS: Mabasa owns a parcel of land with a 2 door apartment. The property is surrounded by other immovables. When Mabasa bought the land, there were tenants who were occupying the property. One of the tenants vacated the land. Mabasa saw that there had been built an adobe fence in the apartment in the first passageway that made it narrower. The fence was constructed by the Santoses. Morato constructed her fence and extended it to the entire passageway, therefore, the passageway was enclosed. The case was brought to the trial court and ordered the Custodios and the Santoses to give Mabasa a permanent ingress and eggress to the public street and asked Mabasa to pay Custodios and Santoses for damages. ISSUE: Does Mabasa has the right to demand for a right of way? HELD: Yes, Mabasa has the right to demand for a right of way. A person has a right to the natural use and enjoyment of his own property, according to his pleasure, for all the purposes to which such property is usually applied. As a general rule, therefore, there is no cause of action for acts

done by one person upon his own property in a lawful and proper manner, although such acts incidentally cause damage or an unavoidable loss to another, as such damage or loss is damnum absque injuria. When the owner of property makes use thereof in the general and ordinary manner in which the property is used, such as fencing or enclosing the same as in this case, nobody can complain of having been injured, because the inconvenience arising from said use can be considered as a mere consequence of community life.

8) Andamo VS IAC (191 SCRA195) Doctrine: It must be stressed that the use of one’s property is not without limitations. Article 431 of the Civil Code provides that “the owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person.” SIC UTERE TUO UT ALIENUM NON LAEDAS. FACTS: Petitioner spouses Andamo owned a parcel of land situated in Biga Silang, Cavite which is adjacent to that of private respondent corporation, Missionaries of Our lady of La Salette, Inc. Within the land of the latter, water paths and contrivances, including an artificial lake, were constructed, which allegedly inundated and eroded petitioner’s land, caused a young man to drown, damaged petitioner’s crops and plants, washed away costly fences, endangered the lives of the petitioners and their laborers and some other destructions. This prompted petitioner spouses to file a criminal action for destruction by means of inundation under Article 324 of the RPC and a civil action for damages. ISSUE: Does spouses Andamo can claim damages for destruction caused by respondent’s water paths and contrivances on the basis of Articles 2176 and 2177 of the Civil Code on quasi-delicts?

HELD: Yes. A careful examination of the afore quoted complaint shows that the civil action is one under Articles 2176 and 2177 of the Civil Code on quasi-delicts. All the elements of a quasi-delict are present, to wit: (a) damages suffered by the plaintiff, (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff.

Clearly, from petitioner’s complaint, the water paths and contrivances built by respondent corporation are alleged to have inundated the land of petitioners. There is therefore, an assertion of a causal connection between the act of building these water paths and the damage sustained by petitioners. Such action if proven constitutes fault or negligence which may be the basis for the recovery of damages. It must be stressed that the use of one’s property is not without limitations. Article 431 of the Civil Code provides that “the owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person.” SIC UTERE TUO UT ALIENUM NON LAEDAS. Moreover, adjoining landowners have mutual and reciprocal duties which require that each must use his own land in a reasonable manner so as not to infringe upon the rights and interests of others. Although we recognize the right of an owner to build structures on his land, such structures must be so constructed and maintained using all reasonable care so that they cannot be dangerous to adjoining landowners and can withstand the usual and expected forces of nature. If the structures cause injury or damage to an adjoining landowner or a third person, the latter can claim indemnification for the injury or damage suffered.

9) Isaguirre VS De Lara (332 SCRA 803) FACTS: Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application over a parcel of land identified as a portion of Lot 502, Guianga Cadastre, with an area of 2,342 square meters filed with the Bureau of Lands. Felicitas, his wife, succeeded Alejandro as claimant after the latter’s death. By virtue of a subdivision survey, the area was reduced to 1,000 square meters on which a two-story residential-commercial apartment stands, in the name of Felicitas’ sons, Apolonio and Rodolfo de Lara. While encountering financial difficulties in 1953, Felicitas approached Cornelio M. Isaguirre (who was married to her niece) and executed a document denominated as "Deed of Sale and Special Cession of Rights and Interests" where she sold a 250 meter portion of Lot 502 with the two-story commercial-residential structure standing thereon, for and in consideration of the sum of P5,000.00. On August 21, 1969, Cornelio filed a sales application over the property based on the deed of sale, resulting in the issuance of an Original Certificate of Title (OCT), in his name. Meanwhile, the sales application of Felicitas over the entire 1,000 square meter property (including the 250 meter portion claimed by Cornelio) was also

approved, and an OCT was issued in her name as well. Because of the overlap, Cornelio filed an action for quieting of title in RTC Davao against Felicitas on May 1990. The trial court decided in favor of Cornelio, which declared him as the lawful owner of the property. However, the Court of Appeals reversed the decision holding that the transaction entered into by the parties was an equitable mortgage, not a sale, due to the inadequacy of the consideration and because the payment thereof was made in several installments of minimal amounts. The OCT in Cornelio’s name was thereby declared null and void. Such decision was affirmed by the Supreme Court in GR. No. 120823. Felicitas, then, sought for a writ of possession from the trial court. This was opposed by Cornelio stating that he had the right of retention over the property until payment of the loan and the value of the improvements he had introduced on the property. RTC Davao granted the motion for writ of possession in favor of Felicitas. Upon appeal, the Court of Appeals held that petitioner was not entitled to retain possession of the subject property, because the agreement entered into by the parties was an equitable mortgage; as such, there is no necessity for Cornelio to actually possess the property because, as the mortgagee, he only has to annotate his claim at the back of the certificate of title in order to protect his rights against third persons and secure the debt. Furthermore, the Court of Appeals remanded the case to RTC Davao for its failure to specify the period within which the mortgagor (Felicitas) must pay the indebtedness and the total amount thereof with interest, plus necessary expenses incurred by Cornelio over the property. Cornelio appeals to the Supreme Court. ISSUE: Whether or not petitioner is entitled to retain possession of the property until the payment of the loan and the value of necessary and useful improvements he made upon the property HELD: No. As a rule, mortgagor retains possession of the mortgaged property since a mortgage is merely a lien and title to the property does not pass to the mortgagee. Even if a mortgagee does not have the possession over the property, there is no impairment of his security since the mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted. The mortgage creditor may institute an action to foreclose the mortgage, if the debtor is unable to pay, whether judicially or extrajudicially, through which the mortgaged property will be sold at a public auction and the proceeds therefrom given to the creditor to the extent necessary to discharge the mortgage loan. Furthermore, the Supreme Court cited Alvano v. Batoon, where it was held that “[a] simple mortgage does not give the mortgagee a right to the possession of the property unless the mortgage should contain some special provision to that effect.” Cornelio had not presented any evidence to that effect. Also, the Court held that Cornelio was a possessor in bad faith; thereby, he may only claim reimbursement for necessary expenses because he knew from the very beginning that he held Felicitas’ property as mere security for the loan obligation.

10) Republic VS CA (160 SCRA 228) Doctrine: The owner of a piece of land has rights not only to its surface but also to everything underneath and the airspace above it up to a reasonable height. The rights over the land are indivisible and the land itself cannot be half agricultural and half mineral. The classification must be categorical; the land must be either completely mineral or completely agricultural. FACTS:

These cases arose from the application for registration of a parcel of land filed on February 11, 1965, by Jose de la Rosa on his own behalf and on behalf of his three children, Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was divided into 9 lots and covered by plan Psu-225009. According to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to his children by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the Philippines, through the Bureau of Forestry Development, as to lots 1-9. In support of the application, both Balbalio and Alberto testified that they had acquired the subject land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father shortly after the Liberation. Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it on September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet had been in actual, continuous and exclusive possession of the land in concept of owner, as evidenced by its construction of adits, its affidavits of annual assessment, its geological mappings, geological samplings and trench side cuts, and its payment of taxes on the land. For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930, and recorded on January 2, 1931, in the office of the mining recorder of Baguio. These claims were purchased from these locators on November 2, 1931, by Atok, which has since then been in open, continuous and exclusive possession of the said lots as evidenced by its annual assessment work on the claims, such as the boring of tunnels, and its payment of annual taxes thereon. The Bureau of Forestry Development also interposed its objection, arguing that the land sought to be registered was covered by the Central Cordillera Forest Reserve under Proclamation No. 217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation under the Constitutions of 1935 and 1973. The trial court denied the application, holding that the applicants had failed to prove their claim of possession and ownership of the land sought to be registered. The applicants appealed to the respondent court, which reversed the trial court and recognized the claims of the applicant, but subject to the rights of Benguet and Atok respecting their mining claims. In other words, the Court of Appeals affirmed the surface rights of the de la Rosas over the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of their mining claims. Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership.

ISSUE: Whether respondent court’s decision, i.e. “the surface rights of the de la Rosas over the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of their mining claim,” is correct.

HELD:

No. Our holding is that Benguet and Atok have exclusive rights to the property in question by virtue of their respective mining claims which they validly acquired before the Constitution of 1935 prohibited the alienation of all lands of the public domain except agricultural lands, subject to vested rights existing at the time of its adoption. The land was not and could not have been transferred to the private respondents by virtue of acquisitive prescription, nor could its use be shared simultaneously by them and the mining companies for agricultural and mineral purposes. It is true that the subject property was considered forest land and included in the Central Cordillera Forest Reserve, but this did not impair the rights already vested in Benguet and Atok at that time. Such rights were not affected either by the stricture in the Commonwealth Constitution against the alienation of all lands of the public domain except those agricultural in nature for this was made subject to existing rights. The perfection of the mining claim converted the property to mineral land and under the laws then in force removed it from the public domain. By such act, the locators acquired exclusive rights over the land, against even the government, without need of any further act such as the purchase of the land or the obtention of a patent over it. As the land had become the private property of the locators, they had the right to transfer the same, as they did, to Benguet and Atok. The Court of Appeals justified this by saying there is “no conflict of interest” between the owners of the surface rights and the owners of the sub-surface rights. This is rather doctrine, for it is a well-known principle that the owner of piece of land has rights not only to its surface but also to everything underneath and the airspace above it up to a reasonable height. Under the aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface, subject to separate claims of title. This is also difficult to understand, especially in its practical application. The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. The classification must be categorical; the land must be either completely mineral or completely agricultural. In the instant case, as already observed, the land which was originally classified as forest land ceased to be so and became mineral — and completely mineral — once the mining claims were perfected. As long as mining operations were being undertaken thereon, or underneath, it did not cease to be so and become agricultural, even if only partly so, because it was enclosed with a fence and was cultivated by those who were unlawfully occupying the surface. This is an application of the Regalian doctrine which, as its name implies, is intended for the benefit of the State, not of private persons. The rule simply reserves to the State all minerals that may be found in public and even private land devoted to “agricultural, industrial, commercial, residential or (for) any purpose other than mining.” Thus, if a person is the owner of agricultural land in which minerals are discovered, his ownership of such land does not give him the right to extract or utilize the said minerals without the permission of the State to which such minerals belong. The flaw in the reasoning of the respondent court is in supposing that the rights over the land could be used for both mining and non-mining purposes simultaneously. The correct interpretation is that once minerals are discovered in the land, whatever the use to which it is being devoted at the time, such use may be discontinued by the State to enable it to extract the minerals therein in the exercise of its sovereign prerogative. The land is thus converted to mineral land and may not be used by any private party, including the registered owner thereof, for any other purpose that will impede the mining operations to be undertaken therein, For the loss sustained by such owner, he is of course entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings.