Civil Law Review- Property (Case Digests)

BOARD OF ASSESSMENT APPEALS VS MERALCO, G.R NO . L-15334, JANUARY 31, 1964

FACTS OF THE CASE: On 20 October 1902, the Philippine Commission enacted Act 484 which authorized the Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were embodied in Ordinance 44 approved on 24 March 1903. Meralco became the transferee and owner of the franchise. Meralco’s electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydroelectric plant in the province of Laguna to the City of Manila. Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it.

On 15 November 1955, City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax Declaration 31992 and 15549. After denying Meralco’s petition to cancel these declarations an appeal was taken by Meralco to the Board of Assessment Appeals of Quezon City, which required Meralco to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Meralco paid the amount under protest, and filed a petition for review in the Court of Tax Appeals which rendered a decision on 29 December 1958, ordering the cancellation of the said tax declarations and the City Treasurer of Quezon City to refund to Meralco the sum of P11,651.86. The motion for reconsideration having been denied, on 22 April 1959, the petition for review was filed. ISSUE: Whether or not the steel towers of an electric company constitute real property for the purposes of real property tax. HELD AND RATIO: The steel towers of an electric company don’t constitute real property for the purposes of real property tax. Steel towers are not immovable property under paragraph 1, 3 and 5 of Article 415. The steel towers or supports do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not constructions analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place. They cannot be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are not machineries or receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not engaged in an industry or works on the land in which the steel supports or towers are constructed. The Supreme Court affirmed the decision appealed from, with costs against the petitioners. PRUDENTIAL BANK V. PANIS, G.R. No. L-50008 August 31, 1987, 153 SCRA 390 This is a petition for review on certiorari of the November 13, 1978 Decision * of the then Court of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in favor of petitioner bank are null and void.

1

FACTS OF THE CASE: Spouses Magcale secured a loan from Prudential Bank. To ecure 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. ISSUE: Whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another. HELD AND RATIO: YES. In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, "it is obvious that the inclusion of "building" separate and distinct from the land, in said provision of law can only mean that a building is by itself an immovable property." (Lopez vs. Orosa, Jr., et al., L10817-18, Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958). 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 as 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. Any new transaction, however, would be subject to whatever steps the Government may take for the reversion of the land in its favor. It was declared that the Deed of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20,000.00 is null and void, without prejudice to any appropriate action the Government may take against private respondents. LEON SIBAL VS EMILIANO VALDEZ, G.R. NO. L-26278

AUGUST 4, 1927, 50 PHIL 512

FACTS OF THE CASE: The Deputy Sheriff, through a writ of execution, attached the personal properties of Sibal, including the sugar cane in question in the 7 parcels of land described in the plaintiff’s complaint. The personal properties were then sold in public auction, including the sugar canes. Included in the attachment were real properties consisting of 8 out of the 11 parcels of land, house and camarin. All of these were bought by Valdez through the said public auction. Valdez also bought the sugar cane in question. Sibal sought the redemption of the said property from Valdez. ISSUE: whether the sugar cane in question is personal or real property. HELD: It is personal property for purposes of chattel mortgage. Generally, sugar cane comes under the classification of “ungathered products” under real properties in the CC. However, under certain conditions, it may be considered as personal property. We may, therefore, conclude with respect to the case at bar that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. The lower court, therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not subject to redemption. DAVAO SAW MILL CO., INC vs APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC , G.R. No. L-40411 August 7, 1935, 61 Phil 709

2

FACTS OF THE CASE: Petitioner is the holder of a lumber concession granted by the Government. It operated a sawmill on a land belonging to another person. On the land, the sawmill company erected a building which housed the machinery used by it. Some of the implements used were clearly personal property. petitioner had in its sawmill, machineries and other equipment which were placed and mounted in foundations of cement. Part of the lease agreement was a stipulation in which after the lease agreement, all buildings and improvements would pass to the ownership of the lessor, which would not include machineries and accessories. ISSUE: Whether or not these machineries and equipment are personal property HELD AND RATIO: The machinery must be classified as personal property. Davao Saw Mill Co., Inc., has on a number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third persons. One of such persons is the appellee by assignment from the original mortgages. The lessee placed the machinery in the building erected on land belonging to another, with the understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration of the lease agreement. The lessee also treated the machinery as personal property in executing chattel mortgages in favor of third persons. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. Furthermore, machinery only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, usufructuary, or any person having temporary right, unless such person acted as the agent of the owner. REPUBLIC OF THE PHILIPPINES, petitioner, vs. ALEXANDRA LAO, respondent. [G.R. No. 150413. July 1, 2003]405 scra 291 FACTS OF THE CASE: Lao filed before the RTC of Tagaytay City application for registration of a parcel of land. She allegedly acquired the land by purchase from the siblings Raymundo Noguera and Ma. Victoria Valenzuela who inherited it from Generosa Medina. The latter, in turn, inherited the land from her father, Jose Medina, who acquired the same from Edilberto Perido by transfer. She prayed that the land be registered in her name under Commonwealth Act 141 (Public Land Act) based on her and her predecessor-in-interests’ open, public, actual, continuous, exclusive, notorious and adverse possession and occupancy under bona fide claim of ownership for more than thirty (30) years. She presented witnesses and evidence constituting of deed of sale, survey plan, the technical description of property and tax declarations in her and her predecessors’ names. The court approved the application. The petitioner represented by the Solicitor General appealed the decision before the CA which re-affirmed the lower court decision, hence this petition for review before the SC. The petitioner contends that there is no sufficient evidence to warrant the issuance of the title to the respondent as she fails to comply with the required periods and acts of possession(a) mandated by law and her failure to prove that the land is alienable and disposable land of the public domain. ISSUES: (a) whether or not respondent was able to prove, by the quantum of evidence mandated by law, that she met the required period of open, exclusive, continuous and notorious possession, in the concept of an owner, of the subject parcel of land; and (b) whether or not respondent was able to show that the land subject of her application was disposable and alienable land of the public domain

HELD AND RATIO: (a) NO. Under CA 141 before one can register his title over a parcel of land, the applicant must show that (a) he, by himself or through his predecessors-in-interest, has been in open, continuous, exclusive

3

and notorious possession and occupation of the subject land under a bona fide claim of ownership since June 12, 1945 or earlier; and (b) the land subject of the application is alienable and disposable land of the public domain

Respondent was not able to prove by incontrovertible evidence that she had been in open, continuous, exclusive and notorious possession and occupation of the subject land, in the concept of an owner, since June 12, 1945 or earlier. Respondent’s witnesses failed to state the exact period when respondents predecessors-in-interest started occupying the subject land. They only made sweeping statements to the effect that respondent had been in possession of the property for more than thirty years. Hence, it cannot be conclusively determined whether respondent and her predecessors-in-interest have truly been in possession of the property since June 12, 1945 or earlier. Furthermore, respondent failed to show how the property was transferred from Generosa Medina to Raymundo Noguera and Ma. Victoria A. Valenzuela. No extrajudicial settlement of property was established. She only presented the deed of sale between her and the latter, where it was stated that Raymundo and Ma. Victoria inherited the property from Generosa. Hence, respondent cannot tack her possession with those of Generosa and her predecessors-in-interest.

(b) No. Respondent failed to show that the land subject of her application is classified as alienable and disposable land of the public domain. Under the Regalian doctrine which is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Unless public land is shown to have been reclassified or alienated to a private person by the State, it remains part of the inalienable public domain. To overcome this presumption, incontrovertible evidence must be established that the land subject of the application is alienable or disposable. Petition granted. CA’s decision was reversed and set aside and the application in the RTC was denied. RACHEL C. CELESTIAL VS JESSE CACHOPERO Gr. No. 142595. October 15, 2003 413 SCRA 469

FACTS OF THE CASE: Respondent, brother of petitioner, filed an MSA (Miscellaneous Sales Application) with the Bureau of Lands. He alleged that he had, since 1968, been occupying the land whereon he built a residential house and introduced other improvements. Petitioner filed a protest, claiming preferential right over the land. On an ocular inspection, the Bureau found that the subject land was outside the commerce of man and thus, denied the petitioner’s protest. (The subject land was formerly a part of Salunayan Creek that became dry as a result of the construction of an irrigation canal by the National Irrigation Administration.) Petitioner thereafter filed an ejectment case against the respondent. Subsequently, respondent filed another MSA which the petitioner once again protested against. The DENR Regional Executive Director declared that the land is suitable for residential purposes and in the light of the conflicting interest of the parties, ordered that the land be sold at public auction. Respondent filed a Motion for Reconsideration of the said order but was denied by the OIC Regional Executive Director of Region XII. Respondent filed a petition for certiorari, prohibition and mandamus with preliminary mandatory injunction and temporary restraining order. Petitioner then moved for the dismissal for lack of jurisdiction and non-exhaustion of administrative remedies. The RTC denied respondent’s petition. The CA on the other hand, reversed and set aside the decision of the CA and ordered the DENR to process the MSA of the respondent. Petitioner contends that the RTC had no jurisdiction over the respondent’s petition for certiorari. ISSUES: (a) whether or not the DENR Regional Executive Director and OIC Regional Director acted with grave abuse of discretion amounting to lack or excess of jurisdiction for ordering the public auction of the property (b) Whether or not the petitioner has a claim of ownership over the land based on her alleged long time adverse possession and right to accession HELD AND RATIO: (a) YES. Said officials issued the order pursuant to Commonwealth Act No. 141, otherwise known as "The Public Land Act," provides the procedure for the disposition of lands of the public domain which are

4

open to disposition or concession and intended to be used for residential purposes (or other purposes than agricultural). However, with the enactment of Republic Act No. 730 , an exception to the foregoing procedure was created by authorizing disposition of lands of the public domain by private sale, instead of bidding, provided that: (1) the applicant has in his favor the conditions specified therein and (2) the area applied for is not more than 1,000 square meters. It was therefore incumbent upon the DENR Director to determine whether the provisions of R.A. 730 were applicable to respondent’s MSA, and to ascertain, particularly in the light of petitioner’s protest, whether respondent was qualified to purchase the subject land at a private sale pursuant to RA 370. He cannot rely on equity as his basis for ordering the public auction which is tantamount to GAD amounting to excess of jurisdiction. (b) NO. As to the claim of ADVERSE POSSESSION: A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb and flow of the sea. 43 As such, under Articles 420(1) 44 and 502(1) 45 of the Civil Code, the Salunayan Creek, including its natural bed, is property of the public domain which is not susceptible to private appropriation and acquisitive prescription. 46 And, absent any declaration by the government, that a portion of the creek has dried-up does not, by itself, alter its inalienable character. Despite the fact that the municipal government subsequently certified that the subject land was suitable for residential purposes and no longer needed by the municipal government that it became alienable and disposable, the Court in the case of Bracewell v. Court of Appeals held that: “ Petitioner (in this case) cannot claim title thereto by virtue of such possession since the subject parcels of land were not yet alienable land at that time nor capable of private appropriation. The adverse possession which may be the basis of a grant of title or confirmation of an imperfect title refers only to alienable or disposable portions of the public domain.” Furthermore, as to petitioner’s claim by ACCESSION: the principle of accession under either Article 370 of the Spanish Civil Code of 1889 or Article 461 of the Civil Code, the same does not apply to vest her with ownership over subject land. She claimed that when she purchased the property adjoining the subject land from Marcelina Basadre, the said subject land was already a dried-up river bed such that "almost one-half portion of the residential house . . . was so already built and is still now situated at the said dried-up portion of the Salunayan Creek bed . . ." She failed to allege, however, when the subject portion of the Salunayan Creek dried up, a fact essential to determining whether the applicable law is Article 370 of the Spanish Civil Code of 1889 or Article 461 of the Civil Code. The Court explained that the rule in Art. 370 (‘ the beds of rivers which remain abandoned because the course of the water has naturally changed belong to the owners of the riparian lands throughout their respective lengths. ‘) has been abandoned with the adoption of Art. 461. Had the disputed portion of the Salunayan Creek dried up after the present Civil Code took effect, the subject land would clearly not belong to petitioner or her predecessor-in-interest since under the aforementioned provision of Article 461, "river beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners of the land occupied by the new course," but in her case, the subject land became dry as a result of the construction of an irrigation canal. Both Article 370 of the Old Code and Article 461 of the present Civil Code are applicable only when" river beds are abandoned through the natural change in the course of the waters” and not where the river simply dries up. In the instant petition, it was not even alleged that the Salunayan creek changed its course. Petition denied. Doctrine: ART. 461. River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost. However, the owners of the lands adjoining the old bed shall have the right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed. (Emphasis supplied) Article 461 provides for compensation for the loss of the land occupied by the new bed since it is believed more equitable to compensate the actual losers than to add land to those who have lost nothing. 55 Thus, the abandoned river bed is given to the owner(s) of the land(s) onto which the river changed its course instead of the riparian owner(s).

5

both Article 370 of the Old Code and Article 461 of the present Civil Code are applicable only when" [r]iver beds are abandoned through the natural change in the course of the waters." The rules on alluvion do not apply to manmade or artificial accretions nor to accretions to lands that adjoin canals or esteros or artificial drainage systems. HILARIO V. CITY OF MANILA [GR NO. L-19570 APRIL 27, 1967] FACTS OF THE CASE: 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. 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-incharge 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-incharge 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. ISSUE: Whether a river, leaving its old bed and changed its original course by opening a new one through private property, would the new riverbanks lining said course be of public ownership? HELD AND RATIO: The new riverbanks are of public ownership. 1)The old Civil Code and the Law of Waters of August 3, 1866 are the controlling law which states that all riverbanks, as part of the riverbeds, are of public ownership including those formed when a river leaves its old bed and opens a new course through a private estate. The change in the course of the River took place in 1937 and under Art. 339 of the old Civil Code: “Property of public ownership is 1. that devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar character”

6

2)Furthermore, riverbank is part of the riverbed. Article 73 of the Law of Waters which provides that the phrase “banks of a river” is understood those lateral strips of zones of its beds which are washed by the stream only during such high floods as do not cause inundations. The use of the words “of its bed [de sus alveos] “clearly indicates the intent of the law to consider the banks for all legal purposes, as part of the riverbed. Since undeniably all beds of river are of public ownership, it follows that the banks, which form part of them, are also of public ownership. 3) New bed, when river changes course, is of public ownership; Means to recover. As defined, the natural bed or channel of a creek or river is the ground covered by its waters during the highest [ordinary] floods (Article 70 of the Law of the Waters). Article 372 of the old Civil Code which provides that “whenever a navigable or floatable river changes its course from natural causes and opens a new bed through a private estate, the new bed shall be of public ownership, but the owner of the estate shall recover it in the event that the waters leave it dry again either naturally or as the result of any work legally authorized for this purpose.” Banks are not mentioned in the provision, as the nature of banks follows that of the bed and the running water of the river. 4)A river is a compound concept consisting of running waters, bed, and banks. All these constitute the river., These several parts constitute the whole river. It is a compound idea; it cannot exist without all its parts. 5)River is of public ownership as it is implicit that all three elements follow the same nature of ownership acquired by the river. Thus, riverbanks and beds are public under Art. 339 and 407, respectively, of the Code, while the flowing waters are declared so under Articles 33, par. 2 of the Law of Waters of 1866. 6)Natural is not synonymous to original or prior condition. The law must have used the word “natural” only because it is in keeping with the ordinary nature and concept of a river always to have a bed and banks. Article 553 of the old Civil Code does not intend to authorize private acquisition of river banks but recognizes vested rights of riparian owners. In the present case, since the new banks were formed when the river changed its course in 1937, the banks cannot be subjected to the provisions of the Siete Partidas, to claim private ownership of the banks, as such was already superseded by applicable laws stating the riverbanks are of public ownership. TEN FORTY REALTY V. CRUZ| PANGANIBANG.R. NO. 151212 | SEPTEMBER 10, 2003, 410 SCRA 484 In an ejectment suit, the question of ownership may be provisionally ruled upon for the sole purpose of determining who is entitled to possession de facto. In the present case, both parties base their alleged right to possess on their right to own. Hence, the Court of Appeals did not err in passing upon the question of ownership to be able to decide who was entitled to physical possession of the disputed land.

FACTS OF THE CASE: Petitioner filed an ejectment complaint against Marina Cruz (respondent) before the MTC. Petitioner alleges that the land in dispute was purchased from Barbara Galino on December 1996, and that said land was again sold to respondent on April 1998. On the other hand, respondent answered with a counterclaim that never was there an occasion when petitioner occupied a portion of the premises. In addition, respondent alleges that said land was a public land (respondent filed a miscellaneous sales application with the Community Environment and Natural Resources Office) and the action for ejectment cannot succeed where it appears that respondent had been in possession of the property prior to the petitioner; On October 2000, MTC ordered respondent to vacate the land and surrender to petitioner possession thereof. On appeal, the RTC reversed the decision. CA sustained the trial court’s decision. ISSUES: (a) Whether or not the action filed by the petitioner was proper (b) Whether or not respondent is entitled to possession de facto HELD: (a) No. The action filed by the petitioner, which was an action for “unlawful detainer”, is improper. As the bare allegation of petitioner’s tolerance of respondent’s occupation of the premises has not been proven, the possession should be deemed illegal from the beginning. Thus, the CA correctly ruled that the ejectment

7

case should have been for forcible entry and not unlawful detainer. However, the action had already prescribed because the complaint was filed on May 12, 1999 – a month after the last day for filing. (b) YES. [However, such ruling is only provisional in nature. Well-settled is the rule that finding of possession de facto is not res judicata as to ownership.] In a contract of sale, the buyer acquires the thing sold only upon its delivery 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. With respect to incorporeal property, Article 1498 lays down the general rule: the execution of a public instrument shall be equivalent to the delivery of the thing that is the object of the contract if, from the deed, the contrary does not appear or cannot be clearly inferred. However, ownership is transferred not by contract but by tradition or delivery. Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a conclusive presumption of delivery of possession of a piece of real estate. This Court has held that the execution of a public instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected because of a legal impediment. It is undisputed that petitioner did not occupy the property from the time it was allegedly sold to it on December 5, 1996 or at any time thereafter. Nonetheless, it maintains that Galinos continued stay in the premises from the time of the sale up to the time respondents occupation of the same on April 24, 1998, was possession held on its behalf and had the effect of delivery under the law. Both the RTC and the CA disagreed. According to the RTC, petitioner did not gain control and possession of the property, because Galino had continued to exercise ownership rights over the realty. That is, she had remained in possession, continued to declare it as her property for tax purposes and sold it to respondent in 1998. For its part, the CA found it highly unbelievable that petitioner -- which claims to be the owner of the disputed property -- would tolerate possession of the property by respondent from April 24, 1998 up to October 16, 1998. How could it have been so tolerant despite its knowledge that the property had been sold to her, and that it was by virtue of that sale that she had undertaken major repairs and improvements on it? Petitioner should have likewise been put on guard by respondent’s declaration of the property for tax purposes on April 23, 1998, as annotated in the tax certificate filed seven months later. Verily, the tax declaration represented an adverse claim over the unregistered property and was inimical to the right of petitioner. Indeed, the above circumstances derogated its claim of control and possession of the property. The subject property had not been delivered to petitioner; hence, it did not acquire possession either materially or symbolically. As between the two buyers, therefore, respondent was first in actual possession of the property. Petitioner has not proven that respondent was aware that her mode of acquiring the property was defective at the time she acquired it from Galino. At the time, the property -- which was public land -- had not been registered in the name of Galino; thus, respondent relied on the tax declarations thereon. As shown, the formers name appeared on the tax declarations for the property until its sale to the latter in 1998. Galino was in fact occupying the realty when respondent took over possession. Thus, there was no circumstance that could have placed the latter upon inquiry or required her to further investigate petitioner’s right of ownership.

DOCTRINE/S: Execution of Deed of Sale; Not sufficient as delivery. Ownership is transferred not by contract but by tradition or delivery. Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a conclusive presumption of delivery of possession of a piece of real estate. The execution of a public instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected, because of a legal impediment. Such constructive or symbolic delivery, being merely presumptive, was deemed negated by the failure of the vendee to take actual possession of the land sold. Disqualification from Ownership of Alienable Public Land.

8

Private corporations are disqualified from acquiring lands of the public domain, as provided under Section 3 of Article XII of the Constitution. While corporations cannot acquire land of the public domain, they can however acquire private land. However, petitioner has not presented proof that, at the time it purchased the property from Galino, the property had ceased to be of the public domain and was already private land. The established rule is that alienable and disposable land of the public domain held and occupied by a possessor — personally or through predecessors-in-interest, openly, continuously, and exclusively for 30 years — is ipso jure converted to private property by the mere lapse of time. While corporations cannot acquire land of the public domain, they can however acquire private land. Hence, the next issue that needs to be resolved is the determination of whether the disputed property is private land or of the public domain. According to the certification by the City Planning and Development Office of Olongapo City, the contested property in this case is alienable and disposable public land. It was for this reason that respondent filed a miscellaneous sales application to acquire it. In view of the foregoing, we affirm the appellate court’s ruling that respondent is entitled to possession de facto. This determination, however, is only provisional in nature. Well-settled is the rule that an award of possession de facto over a piece of property does not constitute res judicata as to the issue of its ownership. The Supreme Court DENIED the petition.

DE LA CRUZ V. COURT OF APPEALS AND CRISTINA VILLANUEVA, G.R No. 120652, February 11, 1998, 442 SCRA 492

FACTS OF THE CASE: In 1973, the subject lot, a 407 sq. m. residential lot was the subject of an application under the Land Registration Act by the Ramos brothers. Eugenio de la Cruz [petitioner] opposed. After trial, the application was dismissed on the ground that the land was not yet reclassified and remains part of the forest reserve. The Ramos brothers pursued the reclassification of the land and were subsequently awarded ownership of it. Cristina Villanueva, the private respondent, subsequently purchased the same lot from the brothers. Upon learning of the said sale, petitioner filed a complaint for reconveyance claiming to be the owner and actual possessor of the lot, having possessed and occupied it openly, publicly, notoriously, adversely against the whole world, and in the concept of an owner, for more than thirty years. His complaint was dismissed. The CA affirmed in toto the decision of the trial court thus the case at bar. ISSUE: Whether or not petitioner is vested with a better right over the residential lot to which he possessed and devoted time, effort and resources in fencing and cultivating the same.

HELD AND RATIO: NO. Petitioner possessed and occupied the land after it was declared by the Government as part of the forest zone. In fact, the land remained part of the forest reserve until such time that it was reclassified into alienable or disposable land at the behest of the Ramoses. “A positive act of the Government is needed to declassify land which is classified as forest, and to convert it into alienable or disposable land for other purposes. Until such lands have been properly declared to be available for other purposes, there is no disposable land to speak of. Absent the fact of declassification prior to the possession and cultivation in good faith by petitioner, the property occupied by him remained classified as forest or timberland, which he could not have acquired by prescription.” (Director of Lands vs CA) Furthermore, petitioner could not have acquired said land by prescription. Prescription can never lie against the Government. The lengthy occupation of the disputed land by petitioner cannot be counted in his favor, as it

9

remained part of the patrimonial property of the State, which property, as stated earlier, is inalienable and indisposable. Under Article 1113 of the Civil Code: All things which are within the commerce of men are susceptible of prescription, unless otherwise provided. Property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription.

CONCORDIA LALUAN, et.al VS. APOLINARIO MALPAYA, et.al G.R No. L-21231, July 30, 1975, 65 SCRA 494 FACTS OF THE CASE: In 1950 the Laluans, the Laguits and the Sorianos (hereinafter referred to as the petitioners) filed with the Court of First Instance of Pangasinan a complaint against Apolinario Malpaya, Melecio Tambot and Bernardino Jasmin (hereinafter referred to as the respondents) for recovery of ownership and possession of two parcels of land. The petitioners seek a declaration that they are the owners pro indiviso of A PARCEL OF RICELAND, situated in the barrio of Inoman, Pozorrubio, Pangasinan, Philippines and the owners pro indiviso of one-half of A PARCEL OF RICELAND AND CORNLAND, situated in the barrio of Inoman, Pozorrubio, Pangasinan. They base their claim on their alleged right to inherit, by legal succession, from Marciana Laluan (the respondent Malpaya’s wife) who died intestate on July 17, 1948 and without any children. The first parcel of land they allege as paraphernal property of the late Marciana Laluan. They claim that the respondent Malpaya, taking advantage of the senility of his wife, sold the land to the respondent Tambot, as evidenced by the “Deed of Absolute Sale of Real Property” dated June 26, 1948. The second parcel of land they allege as conjugal property of the spouses Malpaya and Laluan, and charge that the respondent Malpaya, with right to sell only one-half thereof, sold the whole property, four days after the death of his wife, to the respondents Tambot and Jasmin, as evidenced by the “Absolute Deed of Sale” dated July 21, 1948. The respondents filed their answer, denying the allegations of the complaint and claiming that the parcels of land belonged to the respondent Malpaya as his exclusive property. The respondents Tambot and Jasmin further aver that the respondent Malpaya had the “perfect legal right” to dispose of the said parcels of land and that they bought the properties in good faith, unaware of any flaw in the title of their vendor. There were marked variance between the respective areas of those parcels described in the deed of donation and the parcel subject of the “Deed of Absolute Sale of Real Property. The parcels of land contiguous to those described in the deed of donation passed in ownership from one hand to another, or changes in the man-made or natural boundaries used to indicate the confines of the parcels set forth in the said document occurred. This could very well explain the discrepancies between the names of the boundary owners of the piece of land described in the “Deed of Absolute Sale of Real Property” and the names of the adjacent owners of the parcels subject of the deed of donation as well as the absence of any mention of the payas and colos in the later “Deed of Absolute Sale of Real Property.” In addition, the variance between the location of the land described in the “Deed of Absolute Sale of Real Property” and those of the parcels set forth in the deed of donation could reasonably be due to the creation of new barrios in the municipality of Pozorrubio Pangasinan, or the alteration of the boundaries of the barrios therein. However, the apparent difference between the area of the land described in the “Deed of Absolute Sale of Real Property” and the areas of the parcels included in the deed of donation propter nuptias should be fully and properly explained. The record shows that the petitioners neither offered nor attempted to offer any evidence indicating that the land sold by the respondent Malpaya to his co-respondent Tambot corresponds with any of the three parcels described in the deed of donation. The petitioners failed to specify precisely which of the three parcels — its location, area, and contiguous owners — subject of the deed of donation constitutes the very land delimited in the “Deed of Absolute Sale of Real Property.” All these give rise to a grave doubt as to the specific identity of one of the parcels of land in dispute which the court a quo neither noticed nor considered notwithstanding the obvious fact that the location, area and boundaries of the land covered by the “Deed of Absolute Sale of Real Property” do not coincide with those of any of the parcels described in the deed of donation propter nuptias.

10

ISSUE: Can petitioners recover ownership of the said land? HELD AND RATIO: NO. The case should be remanded to the lower court to determine, with absolute certainty, the identity of the land. There arises the possibility that in the interim of fifty six years from February 15, 1892 (the date of the deed of donation propter nuptias) to June 26, 1948 (the date of the "Deed of Absolute Sale of Real Property"), the parcels of land contiguous to those described in the deed of donation passed in ownership from one hand to another, or changes in the man-made or natural boundaries used to indicate the confines of the parcels set forth in the said document occurred. This could very well explain the discrepancies between the names of the boundary owners of the piece of land described in the "Deed of Absolute Sale of Real Property" and the names of the adjacent owners of the parcels subject of the deed of donation as well as the absence of any mention of the payas and colos in the later "Deed of Absolute Sale of Real Property." In addition, the variance between the location of the land described in the "Deed of Absolute Sale of Real Property" and those of the parcels set forth in the deed of donation could reasonably be due to the creation of new barrios in the municipality of Pozorrubio Pangasinan, or the alteration of the boundaries of the barrios therein. However, the apparent difference between the area of the land described in the "Deed of Absolute Sale of Real Property" and the areas of the parcels included in the deed of donation propter nuptias should be fully and properly explained. The record shows that the petitioners neither offered nor attempted to offer any evidence indicating that the land sold by the respondent Malpaya to his co-respondent Tambot corresponds with any of the three parcels described in the deed of donation. The petitioners failed to specify precisely which of the three parcels — its location, area, and contiguous owners — subject of the deed of donation constitutes the very land delimited in the "Deed of Absolute Sale of Real Property." All these give rise to a grave doubt as to the specific identity of one of the parcels of land in dispute which the court a quo neither noticed nor considered notwithstanding the obvious fact that the location, area and boundaries of the land covered by the "Deed of Absolute Sale of Real Property" do not coincide with those of any of the parcels described in the deed of donation propter nuptias. The invariable applicable rule is to the effect that in order to maintain an action to recover ownership, the person who claims that he has a better right to the property must prove not only his ownership of the property claimed but also the identity thereof. The party who desires to recover must fix the identity of the land he claims. And where doubt and uncertainty exist as to the identity of the land claimed, a court should resolve the question by recourse to the pleadings and the record as well as to extrinsic evidence, oral or written. (In cases of doubt as to the land’s identity, the court may conduct an investigation in the form of hearing or an ocular inspection, or both, to enable it to know positively the land in litigation.) Absent, therefore, any indicium in the record to show and identify with absolute certainty any of the three parcels of land included in the deed of donation propter nuptias as the land described in the "Deed of Absolute Sale of Real Property," the prudent course open obviously consists in an investigation by the court a quo, either in the form of a hearing or an ocular inspection, or both, to enable it to know positively the land in litigation. If, indeed, the "Deed of Absolute Sale of Real Property" treats of a piece of land entirely different and distinct from the parcels described in the deed of donation propter nuptias, and considering that the court a quo, in its decision dated September 23, 1957, relied mainly on the said deed of donation in declaring the land subject of the "Deed of Absolute Sale of Real Property" as the paraphernal property of the late Marciana Laluan and in nullifying the latter document, then there exists sufficient ground to remand the case to the court a quo for a new trial on the matter. All contrary to the basic rule that in an action to recover, the person who claims that he has a better right to the property must prove both ownership and identity (Laluan vs. Malpaya, L-21231, July 30,1975, 65 SCRA 494; Article 434, Civil Code) Article 434 which states : “In an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant’s claim.

HEIRS OF CLEMENTE ERMAC, vs. HEIRS OF VICENTE ERMAC, G.R No. 149679, May 30, 2003, 403 SCRA 291

11

Ownership should not be confused with a certificate of title. Registering land under the Torrens System does not create or vest title, because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. FACTS OF THE CASE: Lot No. 666 was originally owned by Claudio Ermac and, after his death, was inherited by his children — Esteban, Balbina and Pedro. Clemente Ermac registered the said Lot to his name alone without regards to the other predecessors-in-interests. The respondents were able to prove consistently and corroboratively that they — as well as their predecessors-in-interests — had been in open, continuous and undisturbed possession and occupation thereof in the concept of owners. According to the appellate court, “[t]he fact that [petitioners] have in their possession certificates of title which apparently bear out that it [was] Clemente Ermac alone who claimed the entire property described therein [has] no discrediting effect upon plaintiffs’ claim, it appearing that such titles were acquired in derogation of the existing valid and adverse interests of the plaintiffs whose title by succession were effectively disregarded.” ISSUES: (a) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat the title over the property in the names of petitioner’s predecessors-in-interest Spouses Clemente Ermac and Anunciacion Suyco (b) Whether or not laches has set in on the claims by the respondents on portions of Lot No. 666 HELD AND RATIO: (a) YES. While tax declarations and realty tax receipts do not conclusively prove ownership, they may constitute strong evidence of ownership when accompanied by possession for a period sufficient for prescription. Considering that respondents have been in possession of the property for a long period of time, there is legal basis for their use of tax declarations and realty tax receipts as additional evidence to support their claim of ownership. (b) NO. Petitioners assert that the ownership claimed by respondents is barred by prescription and laches because it took them 57 years to bring the present action. The Court disagreed. When a party uses fraud or concealment to obtain a certificate of title to property, a constructive trust is created in favor of the defrauded party. Since Claudio Ermac has already been established in the present case as the original owner of the land, the registration in the name of Clemente Ermac meant that the latter held the land in trust for all the heirs of the former. Since respondents were in actual possession of the property, the action to enforce the trust, and recover the property, and thereby quiet title thereto, does not prescribe. Because laches is an equitable doctrine, its application is controlled by equitable considerations. It cannot be used to defeat justice or to perpetuate fraud and injustice. Its application should not prevent the rightful owners of a property to recover what has been fraudulently registered in the name of another. Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. GERMAN MANAGEMENT & SERVICES, INC. VS. COURT OF APPEALS, ERNESTO VILLEZA, ORLANDO GERNALE, G.R Nos. 76216-76217 September 14, 1989 FACTS OF THE CASE: Spouses Jose are residents of Pennsylvania, Philadelphia, USA are owners of the land situated in sitio Inarawan, San Isidro, Antipolo, Rizal (the land being disputed in the case at bar.) The spouses Jose executed a special power of attorney authorizing petitioner German Management Services to develop their property. They have already acquired the proper permits to do so but they discovered that the land was occupied by the respondent with 20 other farmers (members of the Concerned of Farmer’s Association.) These farmers have occupied the land for the last twelve to fifteen years prior to the issuance of the permits and they already have their crops all over the property. In short, they are in actual possession of the land. Petitioners tried to forcibly drive the farmers away and; demolish and bulldoze their crops and property. The respondents filed in CFI because they were deprived of their property without due process of law by trespassing, demolishing and bulldozing their crops and property situated in the land. CFI and RTC denied it but CA reversed the decision. Petitioners tried to appeal the decision in CA but were denied thus this appeal ISSUE: Whether or not private respondents are entitled to file a forcible entry case against petitioner HELD AND RATIO: YES, they are entitled to file a forcible entry case. Since private respondents were in actual possession of the property at the time they were forcibly ejected by petitioner, private respondents have a right to commence an action for forcible entry regardless of the legality or illegality of possession.

12

Private respondents, as actual possessors, can commence a forcible entry case against petitioner because ownership is not in issue. Forcible entry is merely a quieting process and never determines the actual title to an estate. Title is not involved, only actual possession. It is undisputed that private respondents were in possession of the property and not the petitioners nor the spouses Jose. Although the petitioners have a valid claim over ownership this does not in any way justify their act of ―forcible entry. It must be stated that regardless of the actual condition of the title to the property the party in peaceable quiet possession shall not be turned out by a strong hand, violence or terror. Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor priority in time, he has the security that entitles him to remain on the property until he is lawfully ejected by a person having a better right by accion publiciana or accion reivindicatoria. Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioner's drastic action of bulldozing and destroying the crops of private respondents on the basis of the doctrine of self-help enunciated in Article 429 of the New Civil Code. The doctrine of self-help, which the petitioners were using to justify their actions, are not applicable in the case because it can only be exercised at the time of actual or threatened dispossession which is absent in the case at bar (in fact they are the ones who are threatening to remove the respondents with the use of force.) Article 536 basically tells us that the owner or a person who has a better right over the land must resort to judicial means to recover the property from another person who possesses the land. When possession has already been lost, the owner must resort to judicial process for the recovery of property. As clearly stated in Article 536- ―In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or right to deprive another of the holding of a thing must invoke the aid of the competent court, if holder should refuse to deliver the thing. Petition denied and decision of CA affirmed. ANECO REALTY AND DEVELOPMENT CORPORATION CORPORATION, G.R NO. 165952, JULY 28, 2008

VS

LANDEX

DEVELOPMENT

THIS is a simple case of a neighbor seeking to restrain the landowner from fencing his own property. The right to fence flows from the right of ownership. Absent a clear legal and enforceable right, We will not unduly restrain the landowner from exercising an inherent proprietary right. FACTS OF THE CASE: Fernandez Hermanos Development, Inc. (FHDI) is the original owner of a tract of land in San Francisco Del Monte, Quezon City and it subdivided the land into 39 lots. It sold 22 lots to Aneco and the remaining 17 to Landex. Landex started the construction of a concrete wall on one of its lots. To stop the construction, Aneco filed a complaint for injunction with the RTC in Quezon City. Landex, in its Answer, alleged that Aneco was not deprived access to its lots due to the construction of the concrete wall. Aneco has its own entrance to its property. The Resthaven Street access, however, was rendered inaccessible when Aneco constructed a building on said street. Also, Landex claimed that FHDI sold ordinary lots, not subdivision lots, to Aneco based on the express stipulation in the deed of sale that FHDI was not interested in pursuing its own subdivision project. RTC granted the complaint for injunction. Landex filed a Motion for Reconsideration. RTC granted the motion for reconsideration of Landex. RTC Decision: The property in question never did exist as a subdivision, the limitations imposed by Section 1 of Republic Act No. 440, that no portion of a subdivision road lot shall be closed without the approval of the Court is clearly inappropriate to the case at bar. That plaintiff’s property is not isolated as it is bounded by Miller St. and Resthaven St. Plaintiff could easily make an access to a public road within the bounds and limits of its own property ; and that the defendant has not yet been indemnified whatsoever for the use of his property, as mandated by the Bill of rights. The foregoing circumstances, negates the alleged plaintiffs right of way. CA affirmed RTC Decision: The subject property ceased to be a road lot when its former owner (Fernandez Hermanos, Inc.) sold it to appellant Aneco not as subdivision lots and without the intention of pursuing the subdivision project.

13

The law in point is Article 624 of the New Civil Code. This provision allows the continued use of an apparent easement should the owner alienate the property to different persons. The easement that used to exist on the subject lot ceased when appellant Aneco and the former owner agreed that the lots would be consolidated and would no longer be intended as a subdivision project. Re compulsory easement of right of way: Aneco failed to prove the essential requisites to avail such right: The essential requisites are: 1) that the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; 2) that proper indemnity has been paid; 3) that the isolation was not due to acts of the proprietor of the dominant estate; 4) that the right of way claimed is at a point least prejudicial to the servient estate and in so far as consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest ISSUE: Whether or not Aneco may enjoin Landex from constructing a concrete wall on its own property (W/N Aneco should be given the right of way – NO) HELD AND RATIO: Court dismissed the complaint for injunction. What is involved here is an undue interference on the property rights of a landowner to build a concrete wall on his own property. It is a simple case of a neighbor, petitioner Aneco, seeking to restrain a landowner, respondent Landex, from fencing his own land. Article 430 of the Civil Code gives every owner the right to enclose or fence his land or tenement by means of walls, ditches, hedges or any other means. The right to fence flows from the right of ownership. As owner of the land, Landex may fence his property subject only to the limitations and restrictions provided by law. Absent a clear legal and enforceable right, as here, We will not interfere with the exercise of an essential attribute of ownership. Aneco cannot rely on the road lot under the old subdivision project of FHDI because it knew at the time of the sale that it was buying ordinary lots, not subdivision lots, from FHDI. If Aneco wants to transform its own lots into a subdivision project, it must make its own provision for road lots. Petition denied, decision affirmed. NICANOR JACINTO V. DIRECTOR OF LANDS [G.R. NO. 26374. DECEMBER 31, 1926.] 49 PHIL 583 In the case of Jacinto vs. Director of Lands (1926) 49 Phil. 853, the Supreme Court held that the acused friar lands, to which the government of the Philippines holds title, are not public lands but private or patrimonial property of the government. FACTS OF THE CASE: During the period from 1911 to 1913, sales certificates were issued by the Bureau of Lands to Frank W. Carpenter for more than 100 lots of the Tala and Piedad Friar Lands states located in Novaliches, Caloocan, Rizal. The total area of the land covered by the sales certificates being over 1,490 hectares and the purchase price amounting to about P56,600, of which amount Carpenter up to the year 1923, had paid in installments the sum of P16,272. Under a judgment rendered against Carpenter in the CFI of Manila (Civil Case 24607), execution was levied upon all of his right, title and interest in the lots purchased together with the improvements thereon, and on 16 November 1923, the sheriff of Rizal sold the property to Nicanor Jacinto. The sheriff’s sale was registered in the Bureau of Lands, assignments of the Bureau of Lands’ sales certificates were duly recorded, and certificates of assignment were issued and delivered to Nicanor Jacinto in September 1924. On 31 March 1925, the Metropolitan Water District instituted proceedings in the CFI Rizal for the condemnation of certain parcels of land situated in the municipality of Caloocan for the construction of an earth dam and a first-class highway 3 kilometers long, in connection with the so-called Angat Water Works Project. The lots included in the land sought to be expropriated and Nicanor Jacinto was made a party defendant in the proceedings. Nicanor demanded the sum of P64,839.33 as indemnity for the expropriation. As the actual purchase

14

price to be paid by the purchaser from the Government only amounts to P13,725, including interest, the Metropolitan Water District considered Jacinto’s demand excessive and declined to pay the claim. In the month of July 1926, the applicant tendered payment to the Director of Lands of the sum of P4,650 to cover the remaining balance of the sales price of the lots in question and demanded a corresponding deed of conveyance for said lots. The Director of Lands, upon the advice of the Attorney-General, rejected the tender and refused to execute and deliver the instrument of conveyance demanded from him. Applicant filed a petition for a writ of mandamus to compel the Director of Lands to execute a deed of conveyance in favor of the applicant for the lots enumerated belonging to the Tala Friar Lands Estate in Novaliches. ISSUE: Whether petitioner is entitled to conveyance of the land through mandamus HELD AND RATIO: No. The Supreme Court ordered the Director of Lands to receive the balance of the purchase money for any or all of the lots in question if and when payment thereof is tendered by Jacinto, and denied the petition as to the execution of deeds of conveyance; without costs. Petition for a writ of mandamus not proper remedy to compel a conveyance as it involves purely contract rights. (18 R. C. L., 121; Quiogue vs. Romualdez, 46 Phil., 337.) The writ cannot issue in the present case unless it appears that the Director of Lands “unlawfully neglects the performance of an act which the law specially enjoins as a duty resulting from an office, trust, or station.” (Section 222, Code of Civil Procedure.) The land in question is private or patrimonial property of the Philippine Government and we can find no law specially enjoining upon the Director of Lands the duty to execute deeds of conveyance to purchasers of such lands; on the contrary, that duty, under section 567 of the Administrative Code, appears to devolve upon the Governor-General. Moreover, by section 14 of Act No. 1120 the Director of Lands is charged with the duty of receiving the purchase money payable under that Act and may therefore be compelled by mandamus to receive, as a purely ministerial act, such purchase money when tendered.

CITY OF MANILA VS. GERARDO GARCIA ET.AL, G.R NO. L-26053, FEBRUARY 21, 1967 FACTS OF THE CASE: Plaintiff is the owner of certain parcels of land. Without the knowledge and consent of plaintiff, defendants occupied the property and built their houses. Having discovered, plaintiff through its mayor gave each defendant written permits, each labeled as “lease contract” to occupy specific areas. For their occupancy, defendants were charged nominal rentals. Sometime in 1961, The City of Manila, through its treasurer, demanded payment of their rentals and ordered defendants to vacate the premises for the expansion of the Epifanio de los Santos Elementary School. Despite the demand, defendants refused to vacate the said property. Hence, this case was filed for recovery of possession. ISSUE: Whether or not the trial court properly found that the city needs the premises for school purposes HELD AND RATIO: YES. The trial judge took judicial notice of Ordinance 4566 . The reason being that the city charter of Manila requires all courts sitting therein to take judicial notice of all ordinances passed by the municipal board of Manila. Ordinance 4566 itself confirms the certification aforesaid that an appropriation of P100,000.00 was set aside for the “construction of additional building” of the Epifanio de los Santos Elementary School. Defendants insistence that they have acquired the legal status of tenants is untenable. They entered the land, built houses of second-class materials thereon without the knowledge and consent of the city. Their homes were erected without city permits. These constructions are illegal. In a language familiar to all, defendants are squatters We, accordingly, rule that the Manila mayors did not have authority to give permits, written or oral, to defendants, and that the permits herein granted are null and void.

15

Moreover, the houses and constructions planted by defendants on the premises clearly hinder and impair the use of that property for school purposes. The selfish interests of defendants must have to yield to the general good. The public purpose of constructing the school building annex is paramount. The houses and constructions aforesaid constitute public nuisance per se. They shackle the hands of the government and thus obstruct performance of its constitutionally ordained obligation to establish and maintain a complete and adequate system of public education, and more, to "provide at least free public primary instruction". The public nuisance could well have been summarily abated by the city authorities themselves, even without the aid of the courts. FRANCISCO DEPRA VS. AGUSTIN DUMLAO, G.R No. L-57348, May 16, 1985 136 SCRA 475

FACTS OF THE CASE: Francisco Depra, is the owner of a parcel of land registered, situated in the municipality of Dumangas, Iloilo. Agustin Dumlao, defendant-appellant, owns an adjoining lot. When DUMLAO constructed his house on his lot, the kitchen thereof had encroached on an area of thirty four (34) square meters of DEPRA’s property, After the encroachment was discovered in a relocation survey of DEPRA’s lot made on November 2,1972, his mother, Beatriz Depra after writing a demand letter asking DUMLAO to move back from his encroachment, filed an action for Unlawful Detainer. Said complaint was later amended to include DEPRA as a party plaintiff. After trial, the Municipal Court found that DUMLAO was a builder in good faith, and applying Article 448 of the Civil Code. DEPRA did not accept payment of rentals so that DUMLAO deposited such rentals with the Municipal Court. In this case, the Municipal Court, acted without jurisdiction, its Decision was null and void and cannot operate as res judicata to the subject complaint for Queting of Title. The court conceded in the MCs decision that Dumlao is a builder in good faith. ISSUES: (a) Whether or not the order of forced lease decreed in the unlawful detainer case is valid. (c) Whether or not the subsequent case of res judicata is barred by prescription due to the prior case of unlawful detainer.

HELD AND RATIO: 1. No. The judgment of forced lease is improper. A forced lease, just like co-ownership is not favored. It should be considered that the parties themselves stipulated that Dumlao, the builder, was in good faith and it was later found that Depra, the owner, was also in good faith. Hence, what applies is the provisions of Article 448 of the Civil Code, which provides in sum that: a. Builder in good faith – entitled to retain the possession of the land on which he built in good faith until he is paid the value of the building he built in good faith; b. Owner in good faith – has the option to either (i) pay for the building OR (ii) sell his land to the builder in good faith but builder cannot be forced to buy said land if the same is considerably more than the value of the building. Forced rent only comes in if the owner exercises his right to sell the land but the builder rejects it by reason of the price thereof being considerably more than the value of the building – in such case, the parties shall agree to the terms of the lease, if they can’t agree then they may bring the issue to court.

(ART. 448. The owner of the land on which anything has been built sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent.) However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

16

2. No. The action for quieting of title is not barred by reason of res judicata. The cause of action in the unlawful detainer case involves possession while the cause of action in the quieting of title case involves ownership. Furthermore, the Rules of Court explicitly provides that judgment in a detainer case shall not bar an action between the same parties respecting title to the land. Res judicata doesn’t apply wherein the first case was for ejectment and the other was for quieting of title.

SPOUSES CONCEPCION AND ESTANISLAO DEL CAMPO V. BERNARDA ABESIA, G.R No. L-49219, April 15, 1988, 160 SCRA 379 When land is co-owned by two parties, but the co-ownership is terminated, Article 448 governs in case real property (like a house) encroaches the land of another. This is provided that good faith exists. FACTS OF THE CASE: This case involves a parcel of land, situated at the corner of F. Flores and Cavan Streets, Cebu City. An action for partition was filed by plaintiffs in the CFI of Cebu. Plaintiffs and defendants are coowners pro indiviso of this lot in the proportion of and 1/3 share each, respectively. The trial court appointed a commissioner in accordance with the agreement of the parties. ,the Id commissioner conducted a survey, prepared a sketch plan and submitted a report to the trial court on May 29, 1976, recommending that the property be divided into two lots: Lot 1161-A with an area of 30 square meters for plaintiffs and Lot No. 1161-B with an area of 15 square meters for the defendants. The houses of plaintiffs and defendants were surveyed and shown on the sketch plan. The house of defendants occupied the portion with an area of 5 square meters of Lot 1161-A of plaintiffs. The parties manifested their conformity to the report and asked the trial court to finally settle and adjudicate who among the parties should take possession of the 5 square meters of the land in question. ISSUE: Whether or Not Article 448 of the Civil Code is applicable to a builder in good faith when the property involved is owned in common. HELD AND RATIO: YES. When the co-ownership is terminated by the partition and it appears that the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when there was co-ownership if good faith has been established. Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said portion of the house of defendants upon payment of indemnity to defendants as provided for in Article 546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the house of defendants built thereon, then the latter cannot be obliged to buy the land. The defendants shall then pay the reasonable rent to the plaintiff upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, defendants may demolish or remove the said portion of their house, at their own expense, if they so decide. Article 448 of the New Civil Code provides as follows: Art. 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. PAZ MERCADO, et.al V. CA [G.R. NO. L-44001. JUNE 10, 1988.] FACTS OF THE CASE: The private respondents Bulaong Group, from 1956-1972, had been individual lessees of stalls in the public market of Baliuag, Bulacan. The market was destroyed by fire on February 17, 1956; the members of the Bulaong Group constructed new stalls therein at their expense; and they thereafter paid rentals thereon to the Municipality of Baliuag.

17

In 1972, the members of the group sub-leased their individual stalls to other persons, referred to as the Mercado Group. After the Mercado Group had been in possession of the market stalls for some months, as sub-lessees of the Bulaong Group, the municipal officials of Baliuag cancelled the long standing leases of the Bulaong Group and declared the persons comprising the Mercado Group as the rightful lessees of the stalls in question, in substitution of the former. The members of the Bulaong Group sued seeking recovery of ownership of the stalls constructed by them at their own expense, and their resulting right, as such owners, to sub-lease the stalls, and necessarily, to recover them from any person withholding possession thereof from them. On October 24,1975, respondent Judge rendered a summary judgment in all the cases. It rejected the claim of the Municipality of Baliuag that it had automatically acquired ownership of the new stalls constructed after the old stalls had been razed by fire, declaring the members of the Bulaong Group to be builders in good faith, entitled to retain possession of the stalls respectively put up by them until and unless indemnified for the value thereof. The decision also declared that the Bulaong and Mercado Groups had executed the sub-letting agreements with full awareness that they were thereby violating Ordinance No. 14; they were thus in pari delicto, and hence had no cause of action one against the other and no right to recover whatever had been given or demand performance of anything undertaken. The judgment therefore decreed (1) the annulment of the leases between the Municipality and the individuals comprising the Mercado Group (the defendants who had taken over the original leases of the Bulaong Group); and (2) the payment to the individual members of the Bulaong Group (the plaintiffs) of the stated, adjudicated value of the stalls, with interest. The members of the Mercado Group are now before this Court on an appeal by certiorari, this time timely taken, assailing the above rulings of the Court of Appeals. Their appeal must fail for lack of merit. No error can be ascribed to the judgment of the Court of Appeals which is hereby affirmed in toto. ISSUE: Whether the trial court erred in declaring the members of the Bulaong group builders in good faith entitling them to retain possession of the stalls and whether such error may be remedied by a certiorari HELD AND RATIO: YES, the Court erred in declaring the Bulaong group builders in good faith. The members of this group were admittedly lessees of space in the public market; they therefore could not, and in truth never did make the claim, that they were owners of any part of the land occupied by the market so that in respect of any new structure put up by them thereon, they could be deemed builders in good faith. The Court held that “to be deemed a builder in good faith, it is essential that a person assert title to the land on which he builds; i.e., that he be a possessor in concept of owner, and that he be unaware ‘that there exists in his title or mode of acquisition any flaw which invalidates it.’ It is such a builder in good faith who is given the right to retain the thing, even as against the real owner, until he has been reimbursed in full not only for the necessary expenses but also for useful expenses. On the other hand, unlike the builder in good faith, a lessee who “makes in good faith useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased,” can only claim payment of “one-half of the value of the improvements” or, “should the lessor refuse to reimburse said amount, remove the improvements, even though the principal thing may suffer damage thereby.” But this error does not go to the Trial Court's jurisdiction. It is an error in the exercise of jurisdiction, which may be corrected by the ordinary recourse of appeal, not by the extraordinary remedy of certiorari. It is an error that in the premises can no longer be set aright. In the case at bar, the petitioners lost their right to appeal by failing to avail of it seasonably. To remedy that loss, they have resorted to the extraordinary remedy of certiorari, as a mode of obtaining reversal of the judgment from which they failed to appeal. This cannot be done. The judgment was not in any sense null and void ab initio, incapable of producing any legal effects whatever, which could never become final, and execution of which could be resisted at any time and in any court it was attempted.

JESUS GABOYA V. ANTONIO CUI, G.R No. L-19614, March 27, 1971, 28 SCRA 85

FACTS: Don Mariano Cui, widower, as owner of 3 lots situated in the City of Cebu, sold said three lots to three of his children named Rosario C. de Encarnacion, Mercedes C. de Ramas and Antonio Ma. Cui, pro indiviso for the

18

sum of P64, 000. However one-third of the property corresponding to Rosario C. de Encarnacion was returned to the vendor because she was not able to pay for the purchase price which resulted to the cancellation of the 1/3 sale. Because of the sale of these lots pro indiviso and because of the cancellation of the sale to one of the three original vendees, Don Mariano and his children Mercedes and Antonio became co-owners of the whole mass in equal portions. In the deed of sale vendor Don Mariano retained for himself the usufruct of the property. Subsequently, a building was erected on a portion of this mass facing Calderon street and was occupied by a Chinese businessman for which he paid Don Mariano P600 a month as rental. The date when the building, was constructed and by whom do not appear in the record. Sometime after the sale to Mercedes and Antonio the two applied to the Rehabilitation Finance Corporation (RFC) for a loan of P130,000 with which to construct a 12-door commercial building presumably on a portion of the entire parcel corresponding to their share. On January 7, 1947 Don Mariano, executed an authority to mortgage authorizing his two children co-owners to mortgage his share. The loan was eventually granted and was secured by a mortgage on the three lots in question, Don Mariano being included as one of the three mortgagors and signing the corresponding promissory note with his two co-owners. He did not however, join in the construction of the 12-door commercial building. The 12-door commercial building was eventually constructed and the builder-owners thereof Mercedes and Antonio received and continued to receive the rents thereof amounting to P4,800 a month and paying therefrom the installments due for payment on the loan to the Rehabilitation Finance Corporation. The complaint alleges that the usufructuary right reserved in favor of Don Mariano Cui extends to and includes the rentals of the building constructed by Antonio Cui and Mercedes Cui on the land sold to them by their father; that the defendants retained those rentals for themselves; that the usufructuary rights of the vendor were of the essence of the sale, and their violation entitled him to rescind (or resolve) the sale. It prayed either for rescission with accounting, or for delivery of the rentals of the building with interests, attorneys’ fees and costs. ISSUES: (a) Whether or not the usufruct reserved by the vendor in the deed of sale, over the lots in question that were at the time vacant and unoccupied, gave the usufructuary the right to receive the rentals of the commercial building constructed by the vendees with funds borrowed from the Rehabilitation and Finance Corporation, the loan being secured by a mortgage over the lots sold. (b) Whether or not the failure of the vendees to pay over its rentals to the usufructuary entitled the latter to rescind, or more properly, resolve the contract of sale. (c) Whether the action for rescission due to breach of the contract could still be enforced and was not yet barred. HELD AND RATIO: Under the articles of the Civil Code on industrial accession by modification on the principal land (Articles 445 to 456 of the Civil Code) such accession is limited either to buildings erected on the land of another, or buildings constructed by the owner of the land with materials owned by someone else. Thus, Article 445, establishing the basic rule of industrial accession, prescribes that — Whatever is built, planted or sown on the land of another, and the improvements or repairs made thereon, belong to the owner of the land subject to the provisions of the following articles. while Article 449 states: He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. (Emphasis supplied) Articles 447 and 445, in turn, treat of accession produced by the landowner’s building, planting and sowing “with the materials of another” and when “the materials, plants or seeds belong to a third person other than the landowner or the builder, planter or sower. Nowhere in these articles on industrial accession is there any mention of the case of landowner building on his own land with materials owned by himself (which is the case of appellees Mercedes and Antonio Cui).

The Civil Code itself limits the cases of industrial accession to those involving land and materials belonging to different owners. The usufruct over the land did not entitle the usufructuary to either the gross or the net income of the building erected by the vendees, but only to the rental value of the portion of the land occupied by the structure (in so far as the usufructuary was prevented from utilizing said portion), and that rental value was not liquidated when the complaints were filed in the court below, hence, there was no default in its payment. Actually, this theory of appellants fails to take into account that Don Mariano could not retain ownership of the land and, at the same

19

time, be the usufructuary thereof. His intention of the usufructuary rights in itself imports that he was no longer its owner. For usufruct is essentially jus in re aliena; and to be a usufructuary of one’s own property is in law a contradiction in terms, and a conceptual absurdity. IN THE MATTER OF THE TESTATE ESTATE OF EMIL BACHRACH V. SOPHIE SEIFERT [G.R. NO. L2659. OCTOBER 12, 1950.] 87 PHIL 483 FACTS: The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald Bachrach, in his last will and testament made various legacies in cash and willed the remainder of his estate. The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge Mining Co., Inc., received from the latter 54,000 shares representing 50 per cent stock dividend on the said 108,000 shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant of the estate, petitioned the lower court to authorize the Peoples Bank and Trust Company, as administrator of the estate of E. M. Bachrach, to transfer to her the said 54,000 shares of stock dividend by indorsing and delivering to her the corresponding certificate of stock, claiming that said dividend, although paid out in the form of stock, is fruit or income and therefore belonged to her as usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the ground that the stock dividend in question was not income but formed part of the capital and therefore belonged not to the usufructuary but to the remainderman. While appellants admit that a cash dividend is an income, they contend that a stock dividend is not, but merely represents an addition to the invested capital. ISSUE: Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or part of the corpus of the estate, which pertains to the remainderman? HELD AND RATIO: The usufructuary shall be entitled to receive all the natural, industrial, and civil fruits of the property in usufruct. The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares of stock dividend are civil fruits of the original investment. They represent profits, and the delivery of the certificate of stock covering said dividend is equivalent to the payment of said profits. Said shares may be sold independently of the original shares, just as the offspring of a domestic animal may be sold independently of its mother. If the dividend be in fact a profit, although declared in stock, it should be held to be income. A dividend, whether in the form of cash or stock, is income and, consequently, should go to the usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be declared only out of profits of the corporation, for if it were declared out of the capital it would be a serious violation of the law. Under the Massachusetts rule, a stock dividend is considered part of the capital and belongs to the remainderman; while under the Pennsylvania rule, all earnings of a corporation, when declared as dividends in whatever form, made during the lifetime of the usufructuary, belong to the latter. The Pennsylvania rule is more in accord with our statutory laws than the Massachusetts rule. BACHRACH MOTORS CO. INC V. TALISAY-SILAY MILLING CO., ET. AL, PNB [G.R. NO. 35223. SEPTEMBER 17, 1931.] 56 PHIL 117 FACTS: On 22 December 1923, the Talisay-Silay Milling Co., Inc., was indebted to the PNB. To secure the payment of its debt, it succeeded in inducing its planters, among whom was Mariano Lacson Ledesma, to mortgage their land to the bank. And in order to compensate those planters for the risk they were running with their property under that mortgage, the aforesaid central, by a resolution passed on the same date, and amended on 23 March 1928, undertook to credit the owners of the plantation thus mortgaged every year with a sum equal to 2% of the debt secured according to the yearly balance, the payment of the bonus being made at once, or in part from time to time, as soon as the central became free of its obligations to the bank, and of those contracted by virtue of the contract of supervision, and had funds which might be so used, or as soon as it obtained from said bank authority to make such payment.

Bachrach Motor Co., Inc. filed a complaint against the Talisay-Silay Milling Co., Inc., for the delivery of the amount of P13,850 or promissory notes or other instruments of credit for that sum payable on 30 June 1930, as bonus in favor of Mariano Lacson Ledesma. The complaint further prays that the sugar central be ordered to render an accounting of the amounts it owes Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to pay Bachrach Motors a sum sufficient to satisfy the judgment mentioned in the complaint, and that the sale made by said Mariano Lacson Ledesma be declared null and void. The PNB filed a third party claim alleging a preferential right to receive any amount which Mariano Lacson Ledesma might be entitled from Talisay-Silay Milling as bonus. Talisay-Silay answered the complaint that Mariano Lacson Ledesma’s credit (P7,500) belonged to Cesar Ledesma because he had purchase it. Cesar Ledesma claimed to be an owner by purchase in good faith. At the trial all the

20

parties agreed to recognize and respect the sale made in favor of Cesar Ledesma of the P7,500 part of the credit in question, for which reason the trial court dismissed the complaint and cross-complaint against Cesar Ledesma authorizing the central to deliver to him the sum of P7,500. And upon conclusion of the hearing, the court held that the Bachrach Motor Co., Inc., had a preferred right to receive the amount of P11,076.02 which was Mariano Lacson Ledesma’s bonus, and it ordered the central to deliver said sum to Bachrach Motors. PNB appealed. ISSUE: Whether or not the bonus in question is civil fruits HELD AND RATIO: NO. Under Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings; second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities, or other similar sources of revenue. According to the context of the law, the phrase “u otras analogas” refers only to rents or income, for the adjectives “otras” and “analogas” agree with the noun “rentas,” as do also the other adjectives “perpetuas” and “vitalicias.” The “civil fruits” the Civil Code understands one of three and only three things, to wit: the rent of a building, the rent of land, and certain kinds of income.

The amount of the bonus, according to the resolution of the central granting it, is not based upon the value, importance or any other circumstance of the mortgaged property, but upon the total value of the debt thereby secured, according to the annual balance, which is something quite distinct from and independent of the property referred to. As the bonus is not obtained from the land, it is not civil fruits of that land. It is neither rent of buildings, proceeds from lease of lands, or income under Article 355 of the Civil Code. SPOUSES RAFAEL AND AVELINA BENITEZ V. CA, G.R No. 104828, January 16, 1997 266 SCRA 242

FACTS: On January 22, 1986, petitioners Rafael and Avelina Benitez purchased a parcel of land with improvement from the Cavite Development Bank. Subsequently, private respondents Renato and Elizabeth Macapagal bought a lot adjacent to the petitioner wherein a Civil Case was filed with the Regional Trial Court of Pasig, against petitioners for the recovery of possession of an encroached portion of the lot they purchased. The parties were able to reach a compromise in which private respondents sold the encroached portion to petitioners at the acquisition cost of One Thousand Pesos (P1,000.00) per square meter. On July 17, 1989, private respondents purchased still another property, a lot adjacent to that of petitioners. After a relocation survey was conducted, private respondents discovered that some 46.50 square meters of their property was occupied by petitioners’ house. Despite verbal and written demands, petitioners refused to vacate. A last notice to vacate was sent to petitioners on October 26, 1989. On January 18, 1990, private respondents filed with the Metropolitan Trial Court of San Juan, Civil Case for ejectment against petitioners. The MeTC of San Juan decided in favor of the former, with the following disposition: [i][3] On appeal, the Regional Trial Court of Pasig, affirmed said decision. “The controversy in this case is not an encroachment or overlapping of two (2) adjacent properties owned by the parties. It is a case where a part of the house of the defendants is constructed on a portion of the property of the plaintiffs. So that as new owner of the real property, who has a right to the full enjoyment and possession of the entire parcel covered by Transfer Certificate of Title No. 41961, plaintiffs have the right to demand that defendants remove the portion of the house standing on plaintiff’s realty. . . .” On further appeal, the respondent Court found no merit in petitioners’ plea. The CA ruled that “Petitioners were fully aware that part of their house encroached on their neighbor’s property, while respondents became aware of it only after purchasing said property. Petitioners cannot claim good faith as against the respondents. Since petitioners are not builders in good faith, they cannot demand that respondents sell the disputed portion; what the law provides is that the builders in bad faith can be ordered to dismantle said structure at their own expense. In the interim period that petitioners’ structure remains, they should pay reasonable rent until they remove the structure.” ISSUE: Whether the possession of the portion of the private respondents' land encroached by petitioners' house can be recovered through an action of ejectment, not accion publiciana.

21

HELD AND RATIO: No. Petitioners erroneously construed the order of the MeTC to pay private respondents Nine Hundred Thirty Pesos (P930.00) a month starting July 17, 1989 until they (petitioners) finally vacate the subject premises as “rentals”. Technically, such award is not rental, but damages. Damages are recoverable in ejectment cases under Section 8, Rule 70 of the Revised Rules of Court. These damages arise from the loss of the use and occupation of the property, and not the damages which private respondents may have suffered but which have no direct relation to their loss of material possession. Damages in the context of Section 8, Rule 70 is limited to “rent” or “fair rental value” for the use and occupation of the property. There is no question that petitioners benefited from their occupation of a portion of private respondents’ property. Such benefit justifies the award of the damages of this kind. Nemo cum alterius, detrimenti locupletari potest. No one shall enrich himself at the expense of another. Third Issue: Option To Sell Belongs To Owner Article 448 of the Civil Code is unequivocal that the option to sell the land on which another in good faith builds, plants or sows on, belongs to the landowner. The option is to sell, not to buy, and it is the landowner’s choice. Not even a declaration of the builder, planter, or sower’s bad faith shifts this option to him per Article 450 of the Civil Code. This advantage in Article 448 is accorded the landowner because “his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.” There can be no pre-emptive right to buy even as a compromise, as this prerogative belongs solely to the landowner. No compulsion can be legally forced on him, contrary to what petitioners asks from this Court. Such an order would certainly be invalid and illegal. Thus, the lower courts were correct in rejecting the petitioners’ offer to buy the encroached land. FILIPINAS COLLEGES INC. vs. MARIA GARCIA TIMBANG, ET AL. [G.R. No. L-12812, September 29, 1959] 106 PHIL 247 FACTS: This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring the Sheriff’s certificate of sale covering a school building sold at public auction null and void unless within 15 days from notice of said order the successful bidders, defendants-appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas directly or through the Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the building at the Sheriff’s sale; (b) declaring the other appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which the building sold in the auction sale is situated; and(c) ordering the sale in public auction of the said undivided interest of theFilipinas Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in the amount of P8,200.00 minus the sum of P5,750.00mentioned in (a) above. The order appealed from is the result of three motions filed in the court a quo in the course of the execution of a final judgment of the Court of Appeals rendered in 2 cases appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the parties. The Timbang spouses presented their opposition to each and all of this motion. In assailing the order of the court a quo directing the appellants to pay appellee Blas the amount of their bid (P5,750.00) made atthe public auction, appellants’ counsel has presented a novel, albeit ingenious, argument. They contend that since the builder in good faith has failed to pay the price of the land after the owners thereof exercised theiroption under Article 448 of the Civil Code, the builder has lost his right andthe appellants as owners of the land automatically became the owners ipso facto. ISSUE/S: 1.Whether or not the contention of the appellants is valid. If not, what are the remedies left to the owner of the land if the builder fails to pay? 2.Whether or not the appellants, as owner of the land, may seek recovery of the value of their land by a writ of execution; levy the house of the builder and sell it in public auction. HELD AND RATIO: NO, THE APPELLANTS CONTENTION IS SUPERFLUOUS. There is nothing in the language of these two articles, 448 and 546, which would justify the conclusion of appellants that, upon the failure of the builder to pay the value of the land, when such is demanded by the land-owner, the latter becomes automatically the owner of the improvement under Article 445. Although it is true, it was declared therein that in the event of the failure of the builder to pay the land after the owner thereof has chosen this alternative, the builder’s right of retention provided in Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder loses entirely all rights over his own building. The remedy left to the parties in such eventuality

22

where the builder fails to pay the value of the land, though the Code is silent on this Court, a builder in good faith not be required to pay rentals. He has right to retain the land on which he has built in good faith until he is reimbursed the expenses incurred by him. Possibly he might be made to pay rental only when the owner of the land chooses not to appropriate the improvement and requires the builder in good faith to pay for the land but that the builder is unwilling or unable to pay the land, and then they decide to leave things as they are and assume the relation of lessor and lessee, and should they disagree as to the amount of rental then they can go to the court to fix that amount. This was ruled in the case of Miranda vs. Fadullon, et al ., 97 Phil.,801. A further remedy is indicated in the case of Bernardo vs. Bataclan, supra , where this Court approved the sale of the land and the improvement in a public auction applying the proceeds thereof first to the payment of the value of the land and the excess, if any, to be delivered to the owner of the house in payment thereof. The second contention was without merit. In the instant case, the Court of Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid balance of the purchase price of the school building. With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of the land to the extent of the value of its personal properties sold at public auction in favor of the Timbang, this Court likewise finds the same as justified, for such amount represents, in effect, a partial payment of the value of the land. Failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within fifteen (15) days from notice of the final judgment, an order of execution shall issue in favor of Maria Gervasio Blas to be levied upon all properties of the Timbang spouses not exempt from execution for the satisfaction of the said amount. VICENTE STO. DOMINGO BERNARDO V. CATALINO BATACLAN, G.R. NO. L-44606, NOVEMBER 28, 1938, 66 PHIL 598 FACTS: A contract of sale was executed from Pastor Samonte and others ownership of a parcel of land of about 90 hectares. To secure possession of the land from the vendors the said plaintiff, on July 20, 1929, instituted a civil case. The trial court found for the plaintiff in a decision which was affirmed by this Supreme Court on appeal (G.R. No. 33017). When plaintiff entered upon the premises, however, he found the defendant herein, Catalino Bataclan, who appears to have been authorized by former owners, as far back as 1922, to clear the land and make improvements thereon. As Bataclan was not a party in the civil case, plaintiff, on June 11, 1931, instituted against him a civil case. In this case, plaintiff was declared owner but the defendant was held to be a possessor in good faith, entitled for reimbursement for work done and improvements made. ISSUE: Whether or not the defendant is a possessor in good faith, hence, entitled to retain the land and be paid the amount for improvements made on the land HELD AND RATIO: No. The defendant has lost his right of retention. In obedience to the decision of this court in G.R. No. 37319, the plaintiff expressed his desire to require the defendant to pay for the value of the land. The said defendant could have become owner of both land and improvements and continued in possession thereof. But he said he could not pay and the land was sold at public auction to Toribio Teodoro (third person). The law, as we have already said, requires no more than that the owner of the land should choose between indemnifying the owner of the improvements or requiring the latter to pay for the land. When he failed to pay for the land, the defendant herein lost his right of retention.

LEONILA SARMIENTO V. HON. ENRIQUE AGANA, Sps. ERNESTO AND REBECCA VALENTINO [G.R. NO. 57288. APRIL 30, 1984.] 129 SCRA 122

FACTS: Mother of the wife offered a lot for the construction of house by the spouses. However, the land was not own by the mother and had been titled in the name of Mr. & Mrs. Jose Santo, Jr. and was sold to petitioner Sarmiento. Petitioner filed an ejectment suit against spouses Valentino. CFI Pasay ordered Sarmiento within 60 days, to exercise the option to reimburse ERNESTO and wife the sum of 40,000.00 as the value of the RESIDENTIAL HOUSE, or the option to allow them to purchase the LAND for P25,000.00. SARMIENTO did not exercise any of the two options within the indicated period, and ERNESTO was then allowed to deposit the sum of P25,000.00 with the Court as the purchase price for the LAND.

23

ISSUE: Can the owner compel the owner of the building to remove the improvement from the land where it is erected and to refuse to pay for the building and/or to sell the land? HELD AND RATIO: NO. ERNESTO and wife were builders in good faith in view of the peculiar circumstances under which they had constructed the RESIDENTIAL HOUSE. As far as they knew, the LAND was owned by ERNESTO's mother-in-law who, having stated they could build on the property, could reasonably be expected to later on give them the LAND. In regards to builders in good faith, Article 448 of the Code provides:têñ.£îhqw⣠ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (Paragraphing supplied) As correctly held by the lower court: “The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is paid the value of his building, under article 453 (now Article 546). The owner, of the land. upon, the other hand, has the option, under article 361 (now Article 448), either to pay for the building or to sell his land to the owner of the building. But he cannot, as respondents here did, refuse both to pay for the building and to sell the land and compel the owner of the building to remove it from the land where it is erected. He is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.” JOSEFINA S. DE LAUREANO vs. HON. MIDPANTAO L. ADIL, in his capacity as Presiding Judge, G.R No. L-43345, July 29, 1976, 72 SCRA 148

FACTS: Mrs. Laureano is the registered owner of Lots 996 and 1004-B with a total area of 3,107 square meters located at the corner of Iznart and Solis Streets, Iloilo City. The lots were leased to Ong Cu for fifteen year period which allegedly expired on August 31, 1974. In view of Ong Cu’s failure to vacate the lots and remove his improvements thereon. Mrs. Laureano filed against him an ejectment suit in October, 1974 in the city court of Iloilo City. After trial, the city court on September 23, 1975 rendered a judgment ordering Ong Cu to vacate the lots, to restore their possession to Mrs. Laureano, to remove his buildings and other improvements thereon and to pay P12,428 monthly as compensation for the use and occupation of the lots from September 1, 1974 up to the time he vacates them, with interest at twelve percent per annum from the date of accrual plus P10,000 as moral and exemplary damages and attorney’s fees. ISSUE: Whether Ong Cu is a possessor in good faith entitled to reimbursement of the necessary and useful expenses incurred by him and with a right of retention HELD AND RATIO: NO. As a lessee, who constructed a building on the leased land, Ong Cu cannot be characterized as a builder in good faith. Under article 448 of the Civil Code the owner of the land on which anything has been built in good faith may appropriate the building after payment of the indemnity provided in articles 546 and 548 of the Civil Code. Article 448 applies to a case where one builds on land of which he honestly claims to be the owner and not to lands wherein one’s only interest is that of a lessee under a rental contract. A contrary rule would place it within the power of the lessee “to improve his landlord out of his property” (Alburo vs. Villanueva, 7 Phil. 277, 280; Cortes vs. Ramos, 46 Phil. 184; Fojas vs. Velasco, 51 Phil. 520; Bantug vs. Montinola, 73 Phil. 13). In other words, article 448 refers to a possessor who occupied the land in the belief that he was the owner thereof. It does not apply to the lessee because the lessee knows at the outset that he is not the owner of the land (Lopez, Inc.

24

vs. Philippine & Eastern Traiding Co., Inc., 98 Phil. 348). The tenant has no pretension to being the owner of the land (Rivera vs. Trinidad, 48 Phil. 396, 401). ROSENDO BALUCANAG VS. HON. JUDGE FRANCISCO AND RICHARD STOHNER, G.R No. L-33422, MAY 30, 1983, 122 SCRA 344 (265?) FACTS: The petitioner bought a lot owned by Mrs. Charvet which was previously leased by Charvet to one Richard Stohner. The said lease contract provided that the lessee may erect structures and improvements which shall remain as lessee’s property and he may remove them at any time. It further provided that should the lessee fail to remove the same structures or improvements within two months after the expiration of the lease, the lessor may remove them or cause them to be removed at the expense of the lessee. Stohner made fillings on the land and constructed a house. When he failed to pay the rent, the petitioner, through counsel, sent Stohner a demand letter ordering him to vacate the lot. The lessee contended that he is a ‘builder in good faith.’ ISSUE: Whether Stohner was a builder in good faith HELD AND RATIO: NO, the lessee cannot be considered a builder in good faith. The provision under Art. 448 of the New Civil Code (Philippine) on a builder of good faith applies only to the owner of the land who believes he is the rightful owner thereof, but not to a lessee who’s interest in the land is derived only from a rental contract. Neither can Stohner be considered a ‘possessor in good faith’. A possessor in good faith is a party who possesses property believing that he is its rightful owner but discovers later on a flaw in his title that could indicate that he might not be its legal owner. It cannot apply to a lessee because he knows right from the start that he is merely a lessee and not the owner of the premises. As a mere lessee, he introduces improvements to the property at his own risk such that he cannot recover from the owner the reimbursements nor he has any right to retain the premises until reimbursements. What applies in this case is Art. 1678 (NCC) which provides that, ” if the lessee, makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee 1/2 of the value of the improvements at the time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.” PERSHING TAN QUETO V. CA [G.R. NO. L-35648. FEBRUARY 27, 1987.], 122 SCRA 206 FACTS: Restituta Tagalinar Guangco de Pombuena received the questioned lot (Lot 304-B of the Cadastre Survey of the Municipality of Centro, Misamis Occidental) either as a purported donation or by way of purchase on 11 February 1927 for P50.00 as the alleged consideration thereof. The transaction took place during her mother’s lifetime (her father having predeceased the mother) and consummated while Restituta was already married to her husband Juan Pombuena. On 22 January 1935, Juan filed an application of Torrens title over the land for himself and his supposed co-owner Restituta. On 22 November 1938, a decision was promulgated (GLRC 1638, Cadastral Case 12) pronouncing Juan (married to Restituto) as the owner of the land. On 22 September 1949 a contract of lease over the lot was entered into between Pershing Tan Queto and Restituta (with the consent of her husband) for a period of 10 years.

Meanwhile, On 27 December 1960 Restituta sued Tan Queto for unlawful detainer (the lease contract having expired) before the Municipal Court of Ozamis City. On 22 April 1962, as a consequence of the cadastral case, an OCT was issued in Juan’s name. On 10 October 1962, Tan Queto and Juan entered into a barter agreement whereby Tan Queto became the owner of the disputed lot, and the spouses in turn became the owners of a parcel of land with the house constructed thereon previously owned (that is, before the barter) by Tan Queto. Thereafter, Tan Queto constructed on the disputed land a concrete building, without any objection on the part of Restituta. The Municipal court ruled in favor of the spouses in the unlawful detainer case; but on appeal in the CFI, the entire case was dismissed because of an understanding (barter) entered into by Juan and Tan Queto. Restituta sued both Juan and Tan Queto for reconveyance of the title over the registered but disputed lot, for annulment of the barter, and for recovery of the land with damages. The CFI and the Court of Appeals found the disputed lot as paraphernal and that Tan Queto was a builder in bad faith. These findings were regarded by the Supreme Court as findings of facts and thus ordinarily conclusive upon the Court. Tan Queto filed for a motion for reconsideration of the Supreme Court decision dated 16 May 1983.

25

ISSUE: In having constructed the building on the lot, should TAN QUETO be regarded as a builder in good faith (and hence entitled to reimbursement) or a builder in bad faith (with no right to reimbursement)? HELD AND RATIO: Tan Queto is neither both. In the case, there is no admission of Restituta’s exclusive ownership. Tan Queto nursed the belief that the lot was actually Restituta’s (making him in bad faith), still Restituta’s failure to prohibit him from building despite her knowledge that construction was actually being done, makes her also in bad faith. The net resultant of mutual bad faith would entitle Tan Queto to the rights of a builder in good faith (Art. 448, Civil Code), ergo, reimbursement should be given him if Restituta decides to appropriate the building for herself (Art. 448, Civil Code). However, Tan Queto bartered his own lot and small house with the questioned lot with Juan (who has been adverted to by a court decision and by the OCT a conjugal owner) who may be said to be the owner-possessor of the lot. Certainly he is not merely a possessor or builder in good faith (this phrase presupposes ownership in another); much less is he a builder in bad faith. Tan Queto is a builder-possessor (jus possidendi) because he is the owner himself. The Chapter on Possession (jus possessionis, not jus possidendi) in the Civil Code refers to a possessor other than the owner. The difference between a builder (or possessor) in good faith and one in bad faith is that the former is not aware of the defect or flaw in his title or mode of acquisition while the latter is aware of such defect or flaw (Art. 526, Civil Code). But in either case there is a flaw or defect. In the present case, there is no such flaw or defect because it is Tan Queto himself (not somebody else) who is the owner of the property.

MANOTOK REALTY, INC. V COURT OF APPEALSGR No. L-45038, April 30, 1987, 134 SCRA 325

FACTS: Felipe Madlangawa, respondent claims that he has been occupying a parcel of land in the Clara de Tambunting de Legarda Subdivision since 1949 upon permission being obtained from Andres Ladores, then an overseer of the subdivision, with the understanding that the respondent would eventually buy the lot. •April 2, 1950- The owner of the lot, Clara Tambunting, died and her entire estate, including her paraphernal properties covering the lot occupied by the respondent were placed under custodia legis. •April 22, 1950- Vicente Legarda, husband of Tambunting received the deposit of respondent amounting to P1,500 for the lot. Respondent had a remaining balance of P5,700 which he did not pay or was unable to pay because the heirs of Tambunting could not settle their differences. •April 28, 1950- Don Vicente Legarda was appointed as a special administrator of the estate and the respondent remained in possession of the lot in question. •March 13 and 20, 1959- Petitioner Manotok Realty, Inc. became the successful and vendee of the Tambunting de Legarda Subdivision pursuant to the deeds of sale executed in its favor by the Philippine Trust Company, as administrator of the Testate Estate of Clara Tambunting de Legarda. The lot in dispute was one of those covered by the sale. The Deed of Sale provided for terms and conditions. Petitioner caused the publication of several notices in the Manila Times and the Taliba advising the occupants to vacate their respective premises, otherwise, court action with damages would follow. This includes respondent among others who refused to vacate the lots Trial Court dismissed the petitioner’s action. CA ruled that the only right remaining to the petitioner is to enforce the collection of the balance because accordingly, it stepped into the shoes of its predecessor (Don Vicente Legarda). ISSUE: Whether Don Vicente Legarda could validly dispose of the paraphernal property? HELD AND RATIO: NO. The record does not show that Don Vicente Legarda was the administrator of the paraphernal properties of Dona Clara Tambunting during the lifetime of the latter. Thus, it cannot be said that the sale which was entered into by the private respondent and Don Vicente Legarda had its inception before the death of Clara Tambunting and was entered into by the Don Vicente on behalf of Clara Tambunting but was only consummated after her death. Don Vicente Legarda, therefore, could not have validly disposed of the lot in dispute as a continuing administrator of the paraphernal properties of Dona Clara Tambunting. Art. 136 NCC. The wife retains the ownership of the paraphernal property.

26

Art. 137 NCC. The wife shall have the administration of the paraphernal property, unless she delivers the same to the husband by means of a public instrument empowering him to administer it. In this case, the public instrument shall be recorded in the Registry of Property. As for the movables, the husband shall give adequate security. The Court concluded that the sale between Don Vicente Legarda and the private respondent is void ab initio, the former being neither an owner nor administrator of the subject property. Such being the case, the sale cannot be the subject of the ratification by the Philippine Trust Company or the probate court. After the appointment of Don Vicente Legarda as administrator of the estate of Dona Clara Tambunting, he should have applied before the probate court for authority to sell the disputed property in favor of the private respondent. If the probate court approved the request, then Don Vicente Legarda would have been able to execute a valid deed of sale in favor of the respondent. But Don Vicente Legarda had no effort to comply with the above-quoted rule of procedure nor on that of the respondent to protect his interests or to pay the balance of the instalments to the court appointed administrator.

27