Civ Rev Digest (Property)

4D CIVIL LAW REVIEW DIGEST | JUSTICE HERNANDO

IV.A Nature of Property

1. Haselm v. Lockwood

37 Conn. 500; 1871 Conn. LEXIS 85 February 1871Plaintiff: THOMAS HASLEM Defendeant: WILLIAM A. LOCKWOOD. SUPREME COURT OF ERRORS OF CONNECTICUT, FAIRFIELD COUNTYPonente: PARK, J.

Summary: Plaintiff employed men to gather horse manure into heaps found in a public street with the intention of hauling it to his land. The next day, defendant found the heaps and hauled them to his own land. Plaintiff sued defendant demanding payment. The defendant argued that the manure is real property belonging to the government and thus, plaintiff could not maintain his action. The Court ruled that the manure is personal property and that the cases relied upon by the defendant applies to agriculture and not to the case at bar. While the manure originally belongs to the first owner (horse-owners), abandonment resulted to the transfer of the possession to the State. But since the State claims no ownership, plaintiff is the rightful owner. Comparing manure to seaweed and laws in the 19th century having to do with the scraping into piles of natural things of this sort, the court held that 24 hours was a reasonable time for the defendant to wait to take the manure.

Facts

Plaintiff employed two men to gather into heaps some manure that lay scattered along the side of a public highway intending to haul the same to his own land.

The men began to scrape the manure into heaps and after gathering eighteen heaps, or about six cart-loads, left the same at 8 pm in the street.

o The heaps consisted chiefly of manure made by horses hitched to the railing of the public park.

The next morning, the defendant saw the heaps and endeavored without success to ascertain who had made them, and asked the warden of the borough if he had given permission to any one to remove them, and ascertained from him that he had not.

Defendant thereafter removed the heaps, and also the rest of the manure scattered along the side of the highway adjacent to the park, to his own land.

The borough of Stamford was the sole adjoining proprietor of the land on which the manure lay scattered before it was gathered by the plaintiff.

The plaintiff, on ascertaining that the defendant had removed the manure, demanded payment for the same, which the defendant refused.

Plaintiff’s contention: The manure was personal property which had been abandoned by its owners and became by such abandonment the property of the first person who should take possession of the same, which the plaintiff had done by gathering it into heaps, and that it was not and never had been

a part of the real estate of the borough or of any one else who might be regarded as owning the fee of the soil.

Defendant’s contention: The manure being dropped upon and spread out over the surface of the earth was a part of the real estate, and belonged to the owner of the fee, subject to the public easement; that the fee was either in the borough of Stamford or the town of Stamford, or in the parties who owned the lands adjacent; that therefore the scraping up of the manure, mixed with the soil, if real estate, did not change its nature to that of personal estate, unless it was removed and that, unless the heaps became personal property, the plaintiff could not maintain his action.

The court ruled adversely to the claims of the plaintiff and held that on the facts proved the plaintiff had not made out a sufficient interest in, or right of possession to, the subject matter in dispute, to authorize a recovery in the suit, and rendered judgment for the defendant. The plaintiff moved for a new trial for error in this ruling of the court.

Issues:

1.Is the manure personal or real property?2. Who is the rightful owner of the manure?

Held:

1. Personal Property2. Plaintiff

Ratio:

1. The cases referred to by the defendant to show that it was real estate are not in point. The principle of those cases is, that manure made in the usual course of husbandry upon a farm is so attached to and connected with the realty that, in the absence of any express stipulation to the contrary, it becomes appurtenant to it. The principle was established for the benefit of agriculture. But this principle does not apply to the droppings of animals driven by travelers upon the highway. The highway is not used, and cannot be used, for the purpose of agriculture. The manure is of no benefit whatsoever to it, but on the contrary is a detriment; and in cities and large villages it becomes a nuisance, and is removed by public officers at public expense. The finding in this case is, "that the removal of the manure and scrapings was calculated to improve the appearance and health of the borough."

2.The manure originally belonged to the travelers whose animals dropped it, but it being worthless to them was immediately abandoned; and whether it then became the property of the borough of Stamford which owned the fee of the land on which the manure lay, it is unnecessary to determine; for, if it did, the case finds that the removal of the filth would be an improvement to the borough, and no objection was made by any one to the use that the plaintiff attempted to make of it. At all events, the facts of the case show a sufficient right in the plaintiff to the immediate possession of the property as against a mere wrong doer.The defendant appears before the court in

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no enviable light. He does not pretend that he had a right to the manure, even when scattered upon the highway, superior to that of the plaintiff; but after the plaintiff had changed its original condition and greatly enhanced its value by his labor, he seized and appropriated to his own use the fruits of the plaintiff's outlay, and now seeks immunity from responsibility on the ground that the plaintiff was a wrong doer as well as himself. A reasonable time for the removal of this manure had not elapsed when the defendant seized and converted it to his own use. The statute regulating the rights of parties in the gathering of sea-weed, gives the party who heaps it upon a public beach twenty-four hours in which to remove it, and that length of time for the removal of the property we think would not be unreasonable in most cases like the present one.

Disposition: We therefore advise the Court of Common Pleas to grant a new trial.

2. Divinagracia v. CBS

Petitioner: Santiago DivinagraciaRespondent: Consolidated Broadcasting SystemPonente: Tinga

Short Facts and Doctrine/s:

Divinagracia filed a complaint before the NTC seeking to cancel the Provisional Authorities and Certificates of Public Convenience granted to CBS and PBS. Divinagracia alleged that the two broadcasting companies failed to comply with the public ownership requirement of 30%.

The issue in this case is the jurisdiction of the NTC to cancel Provisional Authorities and Certificates of Public Convenience. The court held that:

1. Airwaves are not susceptible to private appropriation/ownership. As provided in the doctrine of scarcity of resources, airwaves must be regulated as they are a scarce resource and as a necessary means to protect the freedom of speech and freedom of the press.

2. NTC has no jurisdiction to effect such cancellation. The authority to grant franchises is vested with the Congress. Congress merely delegated the implementation of the regulation of broadcast to the NTC. NTC cannot go against the will of the Congress to grant a privilege to CBS and PBS. There is no law providing NTC with jurisdiction to cancel PAs and CPCs.

Facts:

Respondents Consolidated Broadcasting System, Inc. (CBS) and Peoples Broadcasting Service, Inc. (PBS) are involved in the operation of radio broadcasting services in the Philippines, they being the grantees of legislative franchises by virtue of two laws, Republic Act (R.A.) No. 7477 and R.A. No. 7582.

o R.A. No. 7477 granted PBS a legislative franchise to construct, install, maintain and operate radio and television stations within the Philippines for a period of 25 years.

o R.A. No. 7582 extended CBSs previous legislative franchise to operate radio stations for another 25 years.

o The CBS and PBS radio networks are two of the three networks that comprise the well-known Bombo Radyo Philippines.

Section 9 of R.A. No. 7477 and Section 3 of R.A. No. 7582 contain a common provision predicated on the constitutional mandate to democratize ownership of public utilities. The common provision states:

o SEC. 9. Democratization of ownership.― In compliance with the constitutional mandate to democratize ownership of public utilities, the herein grantee shall make public offering through the stock exchanges of at least thirty percent (30%) of its common stocks within a period of three (3) years from the date of effectivity of this Act: Provided, That no single person or entity shall be allowed to own more than five percent (5%) of the stock offerings.

It further appears that following the enactment of these franchise laws, the NTC issued four (4) Provisional Authorities to PBS and six (6) Provisional Authorities to CBS, allowing them to install, operate and maintain various AM and FM broadcast stations in various locations throughout the nation. These Provisional Authorities were issued between 1993 to 1998, or after the enactment of R.A. No. 7477 and R.A. No. 7582.

Petitioner Santiago C. Divinagracia filed two complaints with the NTC, respectively lodged against PBS and CBS.

o He alleged that he was the actual and beneficial owner of Twelve percent (12%) of the shares of stock of PBS and CBS separately, and that despite the provisions in R.A. No. 7477 and R.A. No. 7582 mandating the public offering of at least 30% of the common stocks of PBS and CBS, both entities had failed to make such offering.

o Thus, Divinagracia commonly argued in his complaints that the failure on the part of PBS and CBS to comply with the mandate of their legislative franchise is a misuse of the franchise conferred upon it by law and it continues to exercise its franchise in contravention of the law to the detriment of the general public and of complainant who are unable to enjoy the benefits being offered by a publicly listed company.

o He thus prayed for the cancellation of all the Provisional Authorities or CPCs of PBS and CBS on account of the alleged violation of the conditions set therein, as well as in its legislative franchises.

The NTC issued a consolidated decision dismissing both complaints.o While the NTC posited that it had full jurisdiction to revoke or cancel a

Provisional Authority or CPC for violations or infractions of the terms and conditions embodied therein, it held that the complaints actually constituted collateral attacks on the legislative franchises of PBS and CBS since the sole issue for determination was whether the franchisees


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had violated the mandate to democratize ownership in their respective legislative franchises.

o The NTC ruled that it was not competent to render a ruling on that issue, the same being more properly the subject of an action for quo warranto to be commenced by the Solicitor General in the name of the Republic of the Philippines, pursuant to Rule 66 of the Rules of Court.

On certiorari, the Court of Appeals upheld the NTC. The appellate court agreed with the earlier conclusion that the complaints were indeed a collateral attack on the legislative franchises of CBS and PBS and that a quo warranto action was the proper mode to thresh out the issues raised in the complaints.

Divinagracias case rotates on the singular thesis that the NTC has the power to cancel Provisional Authorities and CPCs, or in effect, the power to cancel the licenses that allow broadcast stations to operate.

The NTC, in its assailed Decision, expressly admits that it has such power even as it refrained from exercising the same.

Issues:

1. Whether airwaves are susceptible to appropriation/ownership. NO.2. Whether the NTC is powerless to cancel Provisional Authorities and

Certificates of Public Convenience it issued to legislative franchise-holders. No. The proper remedy is a petition for quo warranto.

Ratio:

Any person or enterprise which wishes to operate a broadcast radio or television station in the Philippines has to secure a legislative franchise in the form of a law passed by Congress, and thereafter a license to operate from the NTC.

The franchise requirement traces its genesis to Act No. 3846, otherwise known as the Radio Control Act, enacted in 1931.1

This pre-regulation history of radio broadcast stations illustrates the continuing necessity of a government role in overseeing the broadcast media industry, as opposed to other industries such as print media and the Internet.

Without regulation, the result would be a free-for-all market with rival broadcasters able with impunity to sabotage the use by others of the airwaves.

Moreover, the airwaves themselves the very medium utilized by broadcast―are by their very nature NOT susceptible to appropriation, much less be the object of any claim of private or exclusive ownership.

1 Section 1 thereof provided that [n]o person, firm, company, association or corporation shall construct, install, establish, or operate x x x a radio broadcasting station, without having first obtained a franchise therefor from the National Assembly x x x Section 2 of the law prohibited the construction or installation of any station without a permit granted by the Secretary of Public Works and Communication, and the operation of such station without a license issued by the same Department Secretary. The law likewise empowered the Secretary of Public Works and Communication to regulate the establishment, use, and operation of all radio stations and of all forms of radio communications and transmissions within the Philippine Islands and to issue such rules and regulations as may be necessary.

o No private individual or enterprise has the physical means, acting alone to actualize exclusive ownership and use of a particular frequency. That end, desirable as it is among broadcasters, can only be accomplished if the industry itself is subjected to a regime of government regulation whereby broadcasters receive entitlement to exclusive use of their respective or particular frequencies, with the State correspondingly able by force of law to confine all broadcasters to the use of the frequencies assigned to them.

The key basis for regulation is rooted in empiricism that broadcast frequencies are a scarce resource whose use could be regulated and rationalized only by the Government. This concept was first introduced in jurisprudence in the U.S. case of Red Lion v. Federal Communications Commission:

o Where there are substantially more individuals who want to broadcast than there are frequencies to allocate, it is idle to posit an unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish. If 100 persons want broadcast licenses but there are only 10 frequencies to allocate, all of them may have the same "right" to a license; but if there is to be any effective communication by radio, only a few can be licensed and the rest must be barred from the airwaves.

It would be strange if the First Amendment, aimed at protecting and furthering communications, prevented the Government from making radio communication possible by requiring licenses to broadcast and by limiting the number of licenses so as not to overcrowd the spectrum.

o Congress unquestionably has the power to grant and deny licenses and to eliminate existing stations. No one has a First Amendment right to a license or to monopolize a radio frequency; to deny a station license because "the public interest" requires it "is not a denial of free speech."

As made clear in Red Lion, the scarcity of radio frequencies made it necessary for the government to step in and allocate frequencies to competing broadcasters.

o In undertaking that function, the government is impelled to adjudge which of the competing applicants are worthy of frequency allocation.

o As the government is put in a position to determine who should be worthy to be accorded the privilege to broadcast from a finite and limited spectrum, it may impose regulations to see to it that broadcasters promote the public good deemed important by the State, and to withdraw that privilege from those who fall short of the standards set in favor of other worthy applicants.

Such conditions are peculiar to broadcast media because of the scarcity of the airwaves. Indeed, any attempt to impose such a regulatory regime on a medium that is not belabored under similar physical conditions, such as print media, will be clearly antithetical to democratic values and the free expression clause.


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Other rationales may have emerged as well validating state regulation of broadcast media, but the reality of scarce airwaves remains the primary, indisputable and indispensable justification for the government regulatory role. Without government regulation of the broadcast spectrum, the ability of broadcasters to clearly express their views would be inhibited by the anarchy of competition. Since the airwaves themselves are not susceptible to physical appropriation and private ownership, it is but indispensable that the government step in as the guardian of the spectrum..

Presently broadcast stations are still required to obtain a legislative franchise, as they have been so since the passage of the Radio Control Act in 1931. By virtue of this requirement, the broadcast industry falls within the ambit of Section 11, Article XII of the 1987 Constitution, the one constitutional provision concerned with the grant of franchises in the Philippines.

o The requirement of a legislative franchise likewise differentiates the Philippine broadcast industry from that in America, where there is no need to secure a franchise from the U.S. Congress.

The Radio Control Act had also obliged radio broadcast stations to secure a permit from the Secretary of Commerce and Industry prior to the construction or installation of any station. Among the specific powers granted to the Secretary over radio stations are the approval or disapproval of any application for the construction, installation, establishment or operation of a radio station and the approval or disapproval of any application for renewal of station or operation license.

This much thus is clear. Broadcast and television stations are required to obtain a legislative franchise, a requirement imposed by the Radio Control Act and affirmed by our ruling in Associated Broadcasting . After securing their legislative franchises, stations are required to obtain CPCs from the NTC before they can operate their radio or television broadcasting systems. Such requirement while traceable also to the Radio Control Act, currently finds its basis in E.O. No. 546, the law establishing the NTC.

Jurisdiction of NTC

The right of a particular entity to broadcast over the airwaves is established by law i.e., the legislative franchise and determined by Congress, the branch of government tasked with the creation of rights and obligations.

As with all other laws passed by Congress, the function of the executive branch of government, to which the NTC belongs, is the implementation of the law.

Since the public administration of the airwaves is a requisite for the operation of a franchise and is moreover a highly technical function, Congress has delegated to the NTC the task of administration over the broadcast spectrum, including the determination of available bandwidths and the allocation of such available bandwidths among the various legislative franchisees. The licensing power of the NTC thus arises from the necessary delegation by Congress of legislative power

geared towards the orderly exercise by franchisees of the rights granted them by Congress.

Congress may very well in its wisdom impose additional obligations on the various franchisees and accordingly delegate to the NTC the power to ensure that the broadcast stations comply with their obligations under the law. Because broadcast media enjoys a lesser degree of free expression protection as compared to their counterparts in print, these legislative restrictions are generally permissible under the Constitution. Yet no enactment of Congress may contravene the Constitution and its Bill of Rights; hence, whatever restrictions are imposed by Congress on broadcast media franchisees remain susceptible to judicial review and analysis under the jurisprudential framework for scrutiny of free expression cases involving the broadcast media.

Even as the NTC is vested with the power to issue CPCs to broadcast stations, it is not expressly vested with the power to cancel such CPCs, or otherwise empowered to prevent broadcast stations with duly issued franchises and CPCs from operating radio or television stations.o Petitioner fails to point to any provision of E.O. No. 546 authorizing the NTC

to cancel licenses. Instead, petitioner relies on the power granted to the Public Service Commission to revoke CPCs or CPCNs under Section 16(m) of the Public Service Act.

At no time did radio companies fall under the jurisdiction of the Public Service Commission as they were expressly excluded from its mandate under Section 14..

The fact that state regulation of broadcast media is constitutionally justified does not mean that its practitioners are precluded from invoking Section 3, Article III of the Constitution in their behalf. As with print media, free expression through broadcast media is protected from prior restraint or subsequent punishment.

Should petitioners position that the NTC has the power to cancel CPCs or licenses it has issued to broadcast stations although they are in the first place empowered by their respective franchise to exercise their rights to free expression and as members of a free press, be adopted broadcast media would be encumbered by another layer of state restrictions. As things stand, they are already required to secure a franchise from Congress and a CPC from the NTC in order to operate. Upon operation, they are obliged to comply with the various regulatory issuances of the NTC, which has the power to impose fees and fines and other mandates it may deem fit to prescribe in the exercise of its rule-making power.

Allowing the NTC to countermand State policy by revoking respondents vested legal right to operate broadcast stations unduly gives to a mere administrative agency veto power over the implementation of the law and the enforcement of especially vested legal rights. That concern would not arise if Congress had similarly empowered the NTC with the power to revoke a franchisees right to operate broadcast stations. But as earlier stated, there is no such expression in the law, and by presuming such right the Court will be acting contrary to the stated State interest as expressed in respondents legislative franchises.


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3.Saludo, Jr. v. CA

DISCLAIMER: Transpo and torts yung case. I’m guessing the property part is how they treated the remains/body as a “good” or “property” shipped.

RecitReady: The remains of Crispina was shipped from Chicago by Pomierski Funeral Homes. Pomierski hired CMAS to arrange for the shipment of the remains, which was supposed to be shipped by TWA and PAL. However the remains were not shipped on time because it was switched with another casket. The remains of Crispina were mistakenly shipped to Mexico. The children of Crispina sued PAL and TWA for damages. The SC absolved them because the negligence was solely on the part of CMAS.

Petitioners: ANICETO, MARIA SALVACION, LEOPOLDO, and SATURNINO (all surnamed SALUDORespondents: CA, TRANS WORLD AIRLINES, INC., PHILIPPINE AIRLINESMarch 23, 1992

Facts

The mother of petitioners, Crispina, died in Chicago. Pomierski and Son Funeral Home of Chicago, made arrangements for the shipment of her remains to the Philippines. The Continental Mortuary Air Services (CMAS) booked the shipment with PAL with Maria Saludo was the consignee. On the PAL Airway Bill, the routing was from Chicago-San Francisco on board TW, then San Francisco-Manila on board PAL, and Manila-Cebu on board PAL.

Petitioners Maria Salvacion and Saturnino were booked with United Airlines. However Maria was told by the Funeral Homes director that the remains were booked with TWA so they changed reservations from UA to the TWA flight after she confirmed by phone that her mother's remains should be on that TWA flight. However, no body was brought to the airport. She went to the TWA counter, and was told there was no body on that flight. Reluctantly, they took the TWA flight upon assurance of her cousin that he would look into the matter and inform her about it on the plane or have it radioed to her. But no confirmation was made.

Upon arrival at San Francisco she inquired about the remains of Crispina but was told at the TWA counter that they did not know anything about it.

She called Pomierski that her mother's remains were not at the West Coast terminal, and Pomierski immediately called C.M.A.S., which within 10 minutes informed him that the remains were on a plane to Mexico City, that there were two bodies at the terminal, and somehow they were switched. Pomiersko relayed this information to Maria. C.M.A.S. called to say they were sending the remains back to California via Texas.

The following day the remains of Crispina arrived in San Francisco then received by PAL. The casket was opened in Mexico and resealed by Crispin F. Patagas

for shipment to the Philippines. It was shipped to the Philippines on the same day.

Petitioners’ counsel wrote to TWA of the misshipment and delay in the delivery of the cargo, and of the discourtesy of its employees. They also wrote to PAL saying that they were holding PAL liable for said delay in delivery and would commence judicial action should no favorable explanation be given.

Petitioners filed a case for damages against TWA and PAL. The RTC absolved them. The CA affirmed. Petitioners’ MR was denied.

ISSUES:

WON PAL must be held liable. NO. (TRANSPO)

WON there was a breach of contract. NO (STILL TRANSPO)

RATIO:

1. The body intended to be shipped was really placed in the possession and control of PAL on October 28 when it was received form Mexico and it was from that date that they became responsible for the agreed cargo under their undertakings in PAL Airway Bill. The switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, they cannot be held liable.

Pomierski F.H., the shipper of Mrs. Saludo's remains, hired CMAS which is engaged in the business of transporting and forwarding human remains. The remains were taken to C.M.A.S. at the airport. These people made all the necessary arrangements, such as flights, transfers, etc. This is a national service used by undertakers throughout the nation. They furnished the air pouch which the casket is enclosed in, and they see that the remains are taken to the proper air freight terminal. Thus, under said circumstances, no fault and/or negligence can be attributed to PAL (even if Air Care International should be considered as an agent of PAL) and/or TWA, the entire fault or negligence being exclusively with C.M.A.S.

While the actual participation of CMAS has been sufficiently and correctly established, to hold that it acted as agent for private respondents would be both an inaccurate appraisal and an unwarranted categorization of the legal position it held in the entire transaction.

2. The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract, a carrier is not an insurer against delay in transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery. But where a carrier has made an express contract to transport and deliver property within a specified time, it is bound to fulfill its contract and is liable for any delay, no matter from what cause it may have arisen.


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There is no showing by plaintiffs that such a special or specific contract had been entered into between them and the defendant airline companies.

A common carrier undertaking to transport property has the implicit duty to carry and deliver it within reasonable time, absent any particular stipulation regarding time of delivery, and to guard against delay. In case of any unreasonable delay, the carrier shall be liable for damages immediately and proximately resulting from such neglect of duty. As found by the trial court, the delay in the delivery of the remains of Crispina Saludo, undeniable and regrettable as it was, cannot be attributed to the fault, negligence or malice of private respondents, a conclusion concurred in by respondent court and which we are not inclined to disturb.

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IV.B.1 Classification of Property: Immovable Property

4. Villasi v. Garcia

Petitioner: Magdalena VillasiRespondent: Spouses GarciaPonente: Perez

Short Version:

Villasi contracted FCGI for the construction of a condominium. For Villasi’s failure to pay, FCGI filed a collection case. RTC ruled in favour of FCGI but the CA and SC finally resolved that there was overpayment by Villasi, hence, FCGI should return the excess amount.

Villasi moved for the execution of the judgment. A writ of execution was issued. The sheriff levied on a building which was, under declaration for tax purposes, in the name of FCGI. The lots on which the building stood, however, was in the name of Spouses Garcia. The spouses sought to forestall the execution proceedings claiming that they are the lawful owners of the property which was erroneously levied upon by the sheriff. The issue is whether the Spouses Garcia are the owners of the building. The SC answered in the negative. FCGI owns the building. Aside from their postulation that as title holders of the land, the law presumes them to be owners of the improvements built thereon, the Spouses Garcia were unable to adduce credible evidence to prove their ownership of the property

Facts:

Petitioner Magdalena T. Villasi (Villasi) engaged the services of respondent Fil-Garcia Construction, Inc. (FGCI) to construct a seven-storey condominium building in Quezon City.

For failure of Villasi to fully pay the contract price despite several demands, FGCI initiated a suit for collection of sum of money.

The RTC ruled in favour of FCGI saying that the latter was able to preponderantly establish by evidence its right to the unpaid accomplishment billings. The CA reversed the decision and ruled that an overpayment was made by Villasi and thereby directed FGCI to return the amount that was paid in excess. The case was elevated to the SC which affirmed the decision of the CA. Hence, Entry of Judgment was made.

To enforce her right as prevailing party, Villasi filed a Motion for Execution. A Writ of Execution was issued commanding the Sheriff to execute and make effective the decision of the CA.

To satisfy the judgment, the sheriff levied on a building located at No. 140 Kalayaan Avenue, Quezon City and built in parcels of land. While the building was declared for taxation purposes in the name of FGCI, the lots in which it was erected were registered in the names of the Spouses Filomeno Garcia and Ermelinda Halili-Garcia (Spouses Garcia). After the mandatory posting and publication of notice of sale on execution of real property were complied with, a public auction was scheduled.

To forestall the sale on execution, the Spouses Garcia filed an Affidavit of Third Party Claim and a Motion to Set Aside Notice of Sale on Execution, claiming that they are the lawful owners of the property which was erroneously levied upon by the sheriff.

Spouses Garcia’s Argument: The building covered by the levy was mistakenly assessed by the City Assessor in the name of FGCI. The Spouses Garcia asserted that as the owners of the land, they would be deemed under the law as owners of the building standing thereon. Hence, it may not be levied upon.

Villasi’s Argument: Its ownership belongs to FGCI and not to the Spouses Garcia as shown by the tax declaration. Hence, it may be levied upon.

The conduct of the sale on execution was thus held in abeyance.

Issue: Who is the owner of the building to be levied upon?

Held:

FCGI is the owner of the building. Thus, it may be levied upon by the sheriff to execute the judgment in favor of Villasi.

Money judgments are enforceable only against the property incontrovertibly belonging to the judgment debtor, and if the property belonging to any third person is mistakenly levied upon to answer for another man’s indebtedness, such person has all the right to challenge the levy through any of the remedies provided for under the Rules of Court.


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Villasi’s Contention: The levy effected by the sheriff was proper since the subject property belongs to the judgment debtor and not to third persons. To dispute the ownership of the Spouses Garcia, Villasi pointed out that the levied property was declared for tax purposes in the name of FGCI. A Certification issued by the Office of the City Engineering of Quezon City likewise showed that the building permit of the subject property was likewise issued in the name of FGCI

Court: The right of a third-party claimant to file a terceria is founded on his title or right of possession.1avvphi1 Corollary thereto, before the court can exercise its supervisory power to direct the release of the property mistakenly levied and the restoration thereof to its rightful owner, the claimant must first unmistakably establish his ownership or right of possession thereon.

The Spouses Garcia failed to prove that they have a bona fide title to the building in question. Aside from their postulation that as title holders of the land, the law presumes them to be owners of the improvements built thereon, the Spouses Garcia were unable to adduce credible evidence to prove their ownership of the property. In contrast, Villasi was able to satisfactorily establish the ownership of FGCI thru the pieces of evidence she appended to her opposition. Worthy to note is the fact that the building in litigation was declared for taxation purposes in the name of FGCI and not in the Spouses Garcias’. While it is true that tax receipts and tax declarations are not incontrovertible evidence of ownership, they constitute credible proof of claim of title over the property

Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. They constitute at least proof that the holder has a claim of title over the property.

FGCI is in actual possession of the building and as the payment of taxes coupled with actual possession of the land covered by tax declaration strongly supports a claim of ownership. Quite significantly, all the court processes in an earlier collection suit between FGCI and Villasi were served, thru the former’s representative Filomeno Garcia, at No. 140 Kalayaan Avenue, Quezon City, where the subject property is located. This circumstance is consistent with the tax declaration in the name of FGCI.

While it is a hornbook doctrine that the accessory follows the principal that is, the ownership of the property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially, such rule is not without exception. In cases where there is a clear and convincing evidence to prove that the principal and the accessory are not owned by one and the same person or entity, the presumption shall not be applied and the actual ownership shall be upheld. In a number of cases, we recognized the separate ownership of the land from the building and brushed aside the rule that accessory follows the principal.

The rule on accession is not an iron-clad dictum. On instances where this Court was confronted with cases requiring judicial determination of the ownership of the building separate from the lot, it never hesitated to disregard such rule. The case at bar is of similar import. When there are factual and evidentiary evidence to prove that the building and the lot on which it stands are owned by different persons, they shall be treated separately. As such, the building or the lot, as the case may be, can be made liable to answer for the obligation of its respective owner.

5. Midway Marine v. Castro

6. Prudential Bank v. Panis

Gr No. L50008. August 31, 1987.Petitioners: PRUDENTIAL BANKRespondents: HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT MAGCALEPonente: PARAS, J.

Short Facts and Held:

Plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale secured a loan from the defendant Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of defendant a deed of Real Estate Mortgage over a 2-storey, semi-concrete residential building with warehouse space and granting upon the mortgagee the right of occupancy on the lot where the property is erected. A rider is also included in the deed that, in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or issued by the Bureau of Lands, the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is cancelled, or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources, which title with annotation, shall be released in favor of the herein Mortgage. Subsequently, the plaintiffs secured an additional loan from Prudential Bank, secured by another deed of Real Estate Mortgage. The Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over the parcel of land, possessory rights over which were mortgaged to defendant Prudential Bank, in favor of plaintiffs. For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon application of said defendant, the deeds of Real Estate Mortgage were extrajudicially foreclosed. Consequent to the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public auction sale. The Supreme Court held that a valid real estate mortgage can be constituted on the building erected on the land belonging to another. Under Art 415, Civil Code, the inclusion of a building separate and distinct from the land means that a building is by itself an immovable property. While a mortgage of land necessarily includes buildings, a building by itself may be mortgaged apart from the land on which it has been


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built. Mortgage is still a real estate mortgage for the building would still be considered immovable property even if dealt with separately from the land. A mortgage executed by a private respondent on his own building erected on the land belonging to the government is a valid mortgage. The original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land and thus, not within the prohibition of the Public Land Act and Republic Act 730. The second mortgage was struck down as null and void because it was executed after the issuance of the sales patent and of the original certificate of title, falling squarely under the prohibition of the Public Land Act and Republic Act 730.

Facts:

Plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from the defendant Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of defendant on a deed of Real Estate Mortgage over the following described properties:

I. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces containing a total floor area of 263 sq. meters.

II. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above property is erected.

Apart from the stipulations in the printed portion of the aforestated deed of mortgage, there appears a rider typed at the bottom of the reverse side of the document under the lists of the properties mortgaged which reads, as follows: AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or issued by the Bureau of Lands, the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is cancelled, or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources, which title with annotation, shall be released in favor of the herein Mortgage.

From the aforequoted stipulation, it is obvious that the mortgagee (defendant Prudential Bank) was at the outset aware of the fact that the mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot, possessory rights over which, were mortgaged to it. Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of Zambales.

Plaintiffs secured an additional loan from defendant Prudential Bank in the sum of P20,000.00. To secure payment of this additional loan, plaintiffs executed in favor of the said defendant another deed of Real Estate Mortgage over the same properties previously mortgaged in Exhibit "A." This second deed of Real Estate Mortgage was likewise registered with the Registry of Deeds, this time in Olongapo City.

The Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over the parcel of land, possessory rights over which were mortgaged to defendant Prudential

Bank, in favor of plaintiffs. On the basis of the aforesaid Patent, and upon its transcription in the Registration Book of the Province of Zambales, Original Certificate of Title No. P-2554 was issued in the name of Plaintiff Fernando Magcale.

For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon application of said defendant, the deeds of Real Estate Mortgage were extrajudicially foreclosed. Consequent to the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant City Sheriff. The auction sale aforesaid was held despite written request from plaintiffs through counsel, for the defendant City Sheriff to desist from going with the scheduled public auction sale. Respondent Court, in a Decision, declared the deeds of Real Estate Mortgage as null and void.

Petitioner filed a Motion for Reconsideration. In an Order, the Motion for Reconsideration was denied for lack of merit. Hence, the instant petition for certiorari to review the decision of the Court of First Instance of Zambales and Olongapo City, Br. III. Panis, J.

Issue: Whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another. (YES)

Held:

Under Art 415, Civil Code, the inclusion of a building separate and distinct from the land means that a building is by itself an immovable property

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."

While a mortgage of land necessarily includes buildings, a building by itself may be mortgaged apart from the land on which it has been built; Mortgage is still a real estate mortgage for the building would still be considered immovable property even if dealt with separately from the land; Possessory rights over property before title is vested on the grantee may be validly transferred as in a deed of mortgage.

Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such a mortgage would be still a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land. In the same manner, this Court has also established that possessory rights over said properties before title is vested on the grantee, may be validly transferred or conveyed as in a deed of mortgage.


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A mortgage executed by a private respondent on his own building erected on the land belonging to the government is a valid mortgage; The original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land.

Coming back to the case at bar, the records show, as aforestated that the original mortgage deed on the 2storey semiconcrete residential building with warehouse and on the right of occupancy on the lot where the building was erected, was executed and registered under the provisions of Act 3344 with the Register of Deeds of Zambales before the Miscellaneous Sales Patent No. 4776 on the land was issued, on the basis of which OCT No. 2554 was issued in the name of private respondent Fernando Magcale.

It is therefore without question that the original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land, an event which takes effect only on the issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds.

Under the foregoing considerations, it is evident that the mortgage executed by private respondent on his own building which was erected on the land belonging to the government is to all intents and purposes a valid mortgage.

Restrictions expressly mentioned on the face of the respondents' title, are valid, as under the Public Land Act what are referred to are lands or any improvements thereon, and have no application to the assailed mortgage which was executed before such eventuality.

As to restrictions expressly mentioned on the face of respondents' OCT No. P2554, it will be noted that Sections 121,122 and 124 of the Public Land Act, refer to land already acquired under the Public Land Act, or any improvement thereon and therefore have no application to the assailed mortgage in the case at bar which was executed before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction appearing on the face of private respondent's title has likewise no application in the instant case, despite its reference to encumbrance or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does not mention anything regarding the improvements existing thereon.

A mortgage executed after the issuance of the sales patent and of the original certificate of title falls squarely under the prohibition of the Public Land Act and Republic Act 730, and is null and void.

But it is a different matter, as regards the second mortgage executed over the same properties for an additional loan, which was registered with the

Registry of Deeds of Olongapo City. Relative thereto, it is evident that such mortgage executed after the issuance of the sales patent and of the Original Certificate of Title, falls squarely under the prohibitions stated in Sections 121, 122 and 124 of the Public Land Act and Section 2 of Republic Act 730, and is therefore null and void.

As between parties to a contract validity cannot be given to it by estoppel if it is prohibited by law or is against public policy.

Petitioner points out that private respondents, after physically possessing the title for five years, voluntarily surrendered the same to the bank in order that the mortgaged may be annotated, without requiring the bank to get the prior approval of the Ministry of Natural Resources beforehand, thereby implicitly authorizing Prudential Bank to cause the annotation of said mortgage on their title. However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118,120, 122 and 123 of Commonwealth Act 141, has held: "x x x Nonetheless, we apply our earlier rulings because we believe that as in pari delicto may not be invoked to defeat the policy of the State neither may the doctrine of estoppel give a validating effect to a void contract. Indeed, it is generally considered that as between parties to a contract, validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19 Am. Jur. 802). It is not within the competence of any citizen to barter away what public policy by law seeks to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino, supra). x x x" (Arsenal vs. IAC, 143 SCRA 54 [1986]).

7. Makati Leasing v. Wearever

Petitioner: Makati Leasing and Finance CorporationRespondents: Wearever Textile Mills, Inc. and Court of Appeals

Summary:Wearever executed a Chattel Mortgage covering inventory and machinery in favour of Makati Leasing. Upon default, foreclosure of the properties was sought. Due to initial failure of the sheriff to seize the machinery, an application for replevin was filed. It is disputed whether the machinery involved is a personal or real property (which determines whether it is a proper subject of replevin). Court said that it is a personal property as between the parties. If a house of strong materials may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby (as held in Tumalad case), there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. One who has so agreed is estopped from denying the existence of the chattel mortgage.

Facts:


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Wearever Textile executed a Chattel Mortgage in favour or Makati Leasing in order to obtain financial accommodations. Mortgaged items include certain raw materials inventory and machinery described as an Artos Aero Dryer Stentering Range. Wearever defaulted; hence, petitioner filed a petition for extrajudicial foreclosure of the properties. However, the sheriff failed to gain entry into the premises and was not able to effect the seizure of the machinery. Makati Leasing then filed a complaint for judicial foreclosure.

Acting on Makati Leasing’s application for replevin, the lower court issued a writ of seizure. This was set aside by the CA after ruling that the machinery in suit cannot be subject of replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of NCC. It is attached to the ground by means of bolts and the only way to remove it from the plant would be to drill out or destroy the concrete floor.

Issue:Whether the machinery subject of the chattel mortgage is real or personal property from the point of view of the parties? (NOTE: Makati Leasing is claiming that it is a personal property; Wearever claims that it is a real property)

Held:PERSONAL PROPETY.

The Court relied on the ruling in Tumalad v. Vicencio:

“[B]y ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise.”

In such case, the court likewise noted that the lot was rented, combined with the fact that the parties, particularly mortgagors, intended to treat the house as a personalty. The doctrine of estoppel was also applied.

Examining the records in the instant case, the Court said that there is no logical justification to deviate from the ruling in Tumalad. If a house of strong materials, like what was involved in Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage.

Moreover, in Tumalad case, the law makes no distinction with respect to the ownership of the land on which the house is built. Hence, the case at hand cannot be differentiated from the Tumalad case because of the fact that the latter involved a rented lot.

The characterization of the subject machinery as chattel by Wearever is indicative of its intention and impresses upon the property the character determined by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property, as long as no interest of third parties would be prejudiced thereby.

8. Star Two v. Paper City

Petitioner: Star Two (SPV-AMC), Inc.,Respondent: Paper City Corporation of the PhilippinesPonente: Perez, J.

Short Facts and Doctrine/s: Paper City obtained loans from RCBC (substituted by Star Two) secured by a chattel mortgage over Paper City’s machineries and equipment. This CM was unilaterally cancelled by RCBC. Subsequently, Paper City entered into a Mortgage Trust Indenture with RCBC and 2 other banks. In the MTI, Paper City obtained additional loans secured by a deed of real estate mortgage plus real and personal property which was annexed. This necessarily included the machineries and equipment of Paper City. Defaulted. Foreclosed. They were arguing over whether the machineries and equipment are to be considered as real property and thus included in the foreclosure. RCBC poses that Paper City gave its consent to consider the disputed machineries and equipment as real properties. Paper City contends that the machineries and equipment are chattels by agreement thru the deeds of CM Held: SC said that the parties stipulated in the MTI that the properties mortgaged are various parcels of land including buildings and existing improvements thereon as well as the machineries and equipment. The real estate mortgage over the machineries and equipment is even in full accord with the classification of such properties by the NCC as immovable property (Art. 415. Par 5. Machinery, receptacles, instruments or implements…).

Facts:

Paper City was granted loans and credit accommodations by RCBC. The loans were secured by Deeds of Continuing Chattel Mortgages on Paper City's machineries and equipment. However, RCBC unilaterally cancelled the deeds.

Subsequently, RCBC, together with Metrobank and Union Bank, entered into a Mortgage Trust Indenture with Paper City. In the said MTI, Paper City acquired additional loans secured by Deeds of Real Estate Mortgage, plus real and personal properties in an annex to the MTI, which covered the machineries and equipment of Paper City.

Paper City defaulted. RCBC filed a petition for extra-judicial foreclosure against the real estate executed by Paper City – including all the improvements. As highest bidders, the three banks were issued a Certificate of Sale.


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Paper City filed with the trial court a motion to remove machinery out of the foreclosed land and building, saying that the same were not included in the foreclosure of the real estate mortgage.

RCBC contends that 1.)That Paper City gave its consent to consider the disputed machineries and equipment as real properties when they signed the MTI.

Paper City argued: 1.) The machineries and equipment are chattels by agreement thru the Deeds of Continuing Chattel Mortgages and they did not consent to consider the disputed machineries and equipment as real property. 2) They also contend that the cancellation of the chattel mortgage was invalid because it was done unilaterally hence such chattel mortgage remains subsisting.

Issues: 1. Whether the subject machineries and equipment were considered real properties and should therefore be included in the extra-judicial foreclosure which in turn were sold to the banks.

Ruling:

1. Yes

Ratio:

1. Explanation of Answer to Issue 1 The SC said that repeatedly in the MTI's, the parties stipulated that the

properties mortgaged by Paper City to RCBC are various parcels of land including buildings and existing improvements thereon as well as the machineries and equipment.

The MTI is clear. The plain language and literal interpretation of the MTI's must be applied. The petitioner, other creditor banks, and Paper City intended from the very first indenture that the machineries and equipment in the annex in the MTI's are included.

Considering that the MTI which is the instrument of the mortgage that was foreclosed exactly states through the Deed of Amendment that the machineries and equipments listed in Annexes "A" and "B" form part of the improvements listed and located on the parcels of land subject of the mortgage, such machineries and equipments are surely part of the foreclosure of the "real estate properties, including all improvements thereon" as prayed for in the petition.

The real estate mortgages which specifically included the machineries and equipments were subsequent to the chattel mortgages. Without doubt, the real estate mortgages superseded the earlier chattel mortgages.

The real estate mortgage over the machineries and equipment are even in full accord with the classification of such properties by the Civil Code of the Philippines as immovable property. Thus:

Article 415. The following are immovable property:

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;

Disposition: WHEREFORE, the petition is GRANTED. Accordingly, the Decision and Resolution of the Court of Appeals dated 8 March 2005 and 8 August 2005 upholding the 15 August 2003 and 1 December 2003 Orders of the Valenzuela Regional Trial Court are hereby REVERSED and SET ASIDE and the original Order of the trial court dated 28 February 2003 denying the motion of respondent to remove or dispose of machinery is hereby REINSTATED.

9. Yap v. Tanada

Recitation Ready Digest. Spouses Yap were the judgement obligors in a case decided by Judge Tañada. The Judge thereafter ordered a writ of execution; accordingly, the Sheriff levied on the subject property an installed water pump and subsequently auctioned it off. On appeal, the Spouses argued that the sale should be annulled because the notice of the scheduled sale was not done by publication as required by the Rules of Court in cases of sale of immovables. In short, the Spouses were saying that since the water pump was installed or attached to the ground already it became an immovable. The Court said that an immovable property, among others, refers to anything "attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. Obviously, the water pump here can be easily detached by unscrewing bolts alone. Hence it is not an immovable. (Nice try, Spouses Yap).

Ponente: Narvasa J.Facts: Goulds Pumps supplied and installed a water pump in the Spouses’ Yap’s

premises. However, the Spouses failed to pay the balance. Hence, Goulds Pumps filed a complaint for recovery of the balance price. Judge Tañada ruled in favor of Goulds Pumps.

Eventually, the Judge ordered the Issuance of a Writ of Execution. Spouses Yap thus moved for a reconsideration of the Order.

In the meantime, the Sheriff levied on the water pump in question, and subsequently scheduled the execution sale thereof on November 14, 1969.

But in view of the pendency of the Spouses’ Motion for Reconsideration, the Judge directed the suspension of the sale.

However, it appears that the Sheriff did not receive a copy or the Order for Suspension. The Sheriff thereafter submitted the requisite report, which stated that execution had been "partially satisfied."

Once again, the Spouses filed another motion, now a Motion to Set Aside the Execution Sale. However, the same was denied.


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Hence, the Spouses filed this petition for review. The Spouses alleged that the sale was made without the notice required by the Rules of Court," i.e., notice by publication is required in case of execution sale of real property. To support their stance, Spouses contended that the pump and its accessories are immovables because they were attached to the ground with character of permanency.

Issue: Should the pump be treated as an immovable?

Held: No. The Civil Code considers as immovable property, among others, anything "attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. The pump does not fit this description. It could be, and was in fact separated from Yap's premises without being broken or suffering deterioration. Obviously the separation or removal of the pump involved nothing more complicated than the loosening of bolts or dismantling of other fasteners.

The notice by publication prescribed for sale of real property therefore does not apply.==========================================================

IV.B.2 Classification of Property: Movable Property

10.Laurel v. Abrogar

G.R. No. 155076 | January 13, 2009

Petitioner: LUIS MARCOS P. LAURELRespondents: HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial Court, Makati City, Branch 150, PEOPLE OF THE PHILIPPINES & PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

Short facts/Doctrine: Laurel and his co-accused were charged with the crime of theft for allegedly using international long distance calls belonging to PLDT by routing and completing calls using lines and cables which connect directly to the facilities of the destined country, effectively stealing PLDT’s business. Laurel contends that international phone calls and the business or service of providing such calls are not personal property capable of being the subject of theft.

The only requirement for a personal property to be the object of theft under the penal code is that it be capable of appropriation. It need not be capable of "asportation," which is defined as "carrying away." The term “personal property” in the RPC should be interpreted in the context of the Civil Code, which provides (1) that forces of nature which may be brought under control by science, and (2) that all property which are not real property, are personal property. While international phone calls are electrical energy which may be brought under control by science, it cannot be said that such calls were personal properties belonging to PLDT since the latter could not have acquired ownership over such calls. The subject of theft in this case was the business of PLDT, which was likewise held to be personal

property as it is not among those enumerated as real property. The theft consists of the use of PLDT’s communications facilities without its consent. Thus, the Information should be amended.

FACTS:Laurel is one of the accused in a criminal case for theft. The Information provided that the accused unlawfully stole and used the international long distance calls belonging to PLDT by conducting International Simple Resale (ISR), which is a method of routing and completing international long distance calls using lines, cables, antenae, and/or air wave frequency which connect directly to the local or domestic exchange facilities of the country where the call is destined, effectively stealing this business from PLDT while using its facilities in the estimated amount of 20M. Laurel filed a Motion to Quash on the ground that the allegations did not constitute the crime of theft, as “international phone calls and the business or service of providing international phone calls” are not personal property capable of being taken.

ISSUE:Whether international phone calls and the business or service of providing them are personal property

HELD2:YES, BUT THE SUBJECT OF THEFT IN THIS CASE WAS THE BUSINESS OWNED BY PLDT, NOT THE INTERNATIONAL PHONE CALLS. Prior to the passage of the RPC, jurisprudence has provided that “any personal property, tangible or intangible, corporeal or incorporeal, capable of appropriation can be the object of theft.” As per the Civil Code of Spain and as a generally accepted definition in civil law, personal property is anything susceptible of appropriation and not [real property]. Thus, the term “personal property” in the RPC should be interpreted in the context of the Civil Code in accordance with the rule on statutory construction that where words have been long used in a technical sense and have been judicially construed to have a certain meaning, and have been adopted by the legislature as having a certain meaning prior to a particular statute, in which they are used, the words used in such statute should be construed according to the sense in which they have been previously used.

When the Civil Code was enacted, the legislature did not limit or qualify the definition of "personal property" in the RPC. Consequently, any property not included in the enumeration of real properties under the Civil Code and capable of appropriation can be the subject of theft under the RPC. The only requirement for a personal property to be the object of theft under the penal code is that it be capable of

2 The elements of theft under Art. 308 of the RPC are as follows: (1) that there be taking of personal property; (2) that said property belongs to another; (3) that the taking be done with intent to gain; (4) that the taking be done without the consent of the owner; and (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon things.


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appropriation. It need not be capable of "asportation," which is defined as "carrying away."

To appropriate means to deprive the lawful owner of the thing. The word "take" in the RPC includes any act intended to transfer possession which may be committed through the use of the offenders’ own hands, as well as any mechanical device, such as an access device or card as in the instant case. Appropriation of forces of nature which are brought under control by science such as electrical energy can be achieved by tampering with any apparatus used for generating or measuring such forces of nature, wrongfully redirecting such forces of nature from such apparatus, or using any device to fraudulently obtain such forces of nature.

In the instant case, petitioner was charged with engaging in International Simple Resale or the unauthorized routing and completing of international long distance calls using lines, cables, antennae, and/or air wave frequency and connecting these calls directly to the local or domestic exchange facilities of the country where destined.

As adopted from the Penal Code and jurisprudence of Spain, the acts of "subtraction" punishable by law include: (a) tampering with any wire, meter, or other apparatus installed or used for generating, containing, conducting, or measuring electricity, telegraph or telephone service; (b) tapping or otherwise wrongfully deflecting or taking any electric current from such wire, meter, or other apparatus; and (c) using or enjoying the benefits of any device by means of which one may fraudulently obtain any current of electricity or any telegraph or telephone service. All three acts of subtraction are present in the instant case.

Theft of PLDT’s business. The business of providing telecommunication or telephone service is likewise personal property which can be the object of theft under Article 308 RPC, as under the Bulk Sales Law, business may be appropriated. Article 414 of the Civil Code provides that all things which are or may be the object of appropriation are considered either real property or personal property. Because it is not included in the exclusive enumeration of real properties under Article 415, it is therefore personal property.

In this case, Laurel’s acts constitute theft of respondent PLDT’s business and service, committed by means of the unlawful use of the latter’s facilities. In this regard, the Amended Information inaccurately describes the offense by making it appear that what petitioner took were the international long distance telephone calls, rather than respondent PLDT’s business.

In the assailed Decision, it was conceded that in making the international phone calls, the human voice is converted into electrical impulses or electric current which are transmitted to the party called. A telephone call, therefore, is electrical energy. It was also held in the assailed Decision that intangible property such as electrical energy is capable of appropriation because it may be taken and carried away.

Electricity is personal property under Article 416 (3) of the Civil Code, which enumerates "forces of nature which are brought under control by science."

Indeed, while it may be conceded that "international long distance calls," the matter alleged to be stolen in the instant case, take the form of electrical energy, it cannot be said that such international long distance calls were personal properties belonging to PLDT since the latter could not have acquired ownership over such calls. PLDT merely encodes, augments, enhances, decodes and transmits said calls using its complex communications infrastructure and facilities. PLDT not being the owner of said telephone calls, then it could not validly claim that such telephone calls were taken without its consent. It is the use of these communications facilities without the consent of PLDT that constitutes the crime of theft, which is the unlawful taking of the telephone services and business.

Therefore, the business of providing telecommunication and the telephone service are personal property under Article 308 of the Revised Penal Code, and the act of engaging in ISR is an act of "subtraction" penalized under said article. However, the Amended Information describes the thing taken as, "international long distance calls," and only later mentions "stealing the business from PLDT" as the manner by which the gain was derived by the accused. In order to correct this inaccuracy of description, this case must be remanded to the trial court and the prosecution directed to amend the Amended Information, to clearly state that the property subject of the theft are the services and business of respondent PLDT.

11. PNB v. Aznar

G.R. 171805 May 30, 2011PETITIONER: PHILIPPINE NATIONAL BANKRESPONDENT: MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased), represented by his heirs; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased), represented by his heirs; and RICARDO GABUYA (deceased), represented by his heirs

SHORT FACTS AND HELD: RIS Corp. ceased business due to business reverses. In order to rehabilitate such Corporation, Aznar et al. (Stockholders) contributed an amount which was used to purchase 3 parcels of land. The titles were issued in the name of the Corporation, and in the minutes of the special meeting of BOD, the contributions constituted as liens and encumbrances of the properties purchased. Eventually, a notice of attachment and writ of execution was issued to these properties in favor of PNB. Aznar et al. then filed a complaint for quieting of title. They contended that the language of the special minutes of meeting of BOD created an express trust and not a loan. Hence, they have a right of the ownership of the property. PNB however contended that Aznar et al. do not have any legal right over the properties of the corporation.


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The issue is whether Aznar et al. has the right to ask the quieting of title of the properties in issue?

No. The money contributed by Aznar et al. was in the nature of a loan, secured by their liens and interests duly annotated on the titles. The annotation of their lien serves only as collateral and does not in any way vest ownership of property to plaintiffs. No express trust was created. Express trusts are intentionally created by the direct and positive acts of the settlor or the trustor - by some writing, deed, or will or oral declaration. It is created not necessarily by some written words, but by the direct and positive acts of the parties. The creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations. No such reasonable certitude in the creation of an express trust obtains in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes does not offer any indication that the parties thereto intended that Aznar, et al., become beneficiaries under an express trust and that RISCO serve as trustor. Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties at issue because they have no legal and/or equitable rights over the properties that are derived from the previous registered owner which is RISCO (which has personality separate and distinct from those of its stockholders and other corporations to which it may be connected.)

FACTS:

This case is consolidated with G.R. 172021, Merelo and Matias Aznar v. PNB

Rural Insurance and Surety Company, Inc. (RISCO) ceased operation due to business reverses. Anzar et al. desire to rehabilitate RISCO, they contributed a total amount of P212,720.00. This was used to purchase 3 parcels of land in Cebu, 2 in the Minicipality of Talisay and 1 in the District of Lahug, Cebu City.

After the purchase of the lots, titles were issued in the name of RISCO. The amount contributed by Aznar et al. constituted as liens and

encumbrances on the properties as annotated in the titles of said lots. Such annotation was made pursuant to the Minutes of the Special Meeting of the Board of Directors of RISCO on March 14, 1961, and a part of it says:

“And that the respective contributions above-mentioned (Aznar et al.) shall constitute as their lien or interest on the property described above, if and when said property are titled in the name of RISCO, subject to registration as their adverse claim in pursuance of the Provision of Land Registration Act, until such time their respective contributions are refunded to them completely”

Thereafter, various subsequent annotations were made on the same titles, including the Notice of Attachment and Writ of Execution both dated August 3,1962 in favour of Philippine National Bank (PNB).

As a result, a Certificate of Sale was issued in favor of PNB, being the lone and highest bidder of the 3 parcels of land. This prompted Aznar et al. to file the instant case seeking the quieting of their supposed title to the subject properties.

Trial court ruled against PNB on the basis that there was an express trust created over the subject properties whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries.

Court of Appeals opined that the monetary contributions made by Aznar, et al. to RISCO can only be characterized as a load secured by a lien on the subjected lots, rather than an expressed trust.

ISSUE:

Whether or not there was a trust contract between RISCO and Aznar, et al.

HELD:

NO. At the outset, the Court agrees with the Court of Appeals that the agreement contained in the Minutes of the Special Meeting of the RISCO Board of Directors held on March 14, 1961 was a loan by the therein named stockholders to RISCO. Careful perusal of the Minutes relied upon by Aznar et al. in their claim, showed that their contributions shall constitute as “lien or interest on the property.” The term lien as used in the Minutes is defined as "a discharge on property usually for the payment of some debt or obligation. Hence, from the use of the word "lien" in the Minutes, We find that the money contributed by Aznar et al. was in the nature of a loan, secured by their liens and interests duly annotated on the titles. The annotation of their lien serves only as collateral and does not in any way vest ownership of property to plaintiffs.

We are not persuaded by the contention of Aznar, et al., that the language of the subject Minutes created an express trust.

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Express trusts are intentionally created by the direct and positive acts of the settlor or the trustor - by some writing, deed, or will or oral declaration. It is created not necessarily by some written words, but by the direct and positive acts of the parties. The creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations. No such reasonable certitude in the creation of an express trust obtains in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes does not offer any indication that the parties thereto intended that


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Aznar, et al., become beneficiaries under an express trust and that RISCO serve as trustor. Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties at issue because they have no legal and/or equitable rights over the properties that are derived from the previous registered owner which is RISCO.

At most, what Aznar, et al. had was merely a right to be repaid the amount loaned to RISCO. Unfortunately, the right to seek repayment or reimbursement of their contributions used to purchase the subject properties is already barred by prescription

10 Years because it was based on a written contract (the minutes by the Board of Directors) in 1961 and the quieting of the title suit was brought only in 1998

WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED for lack of merit. The petition of PNB in G.R. No. 171805 is GRANTED. The Complaint, docketed as Civil Case No. CEB-21511, filed by Aznar, et al., is hereby DISMISSED. No costs.

Note: Unlike in express trusts and resulting implied trusts where a trustee cannot acquire by prescription any property entrusted to him unless he repudiates the trust, in constructive implied trusts, the trustee may acquire the property through prescription even if he does not repudiate the relationship. It is then incumbent upon the beneficiary to bring an action for reconveyance before prescription bars the same. An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed or the date of the issuance of the certificate of title over the property.

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IV.B.3 Classification of Property: According to Ownership

12. Republic v. East Silverlane

G.R. No. 186961 | February 20, 2012

SUMMARY:

East Silverlane filed with the RTC an application for land registration covering a parcel of land situated in El Salvador, Misamis Oriental. Petitioner assails the registration alleging that East Silverlane failed to prove that its predecessors-in-interest possessed the subject property in the manner and for the length of time required under Sec. 48 (b) of PLA and Sec. 14 of P.D. No. 1529. The Court set aside the registration. (1) The random 23 Tax Declarations do not qualify as competent

evidence of actual possession and occupation. This type of intermittent and sporadic assertion of alleged ownership does not prove open, continuous, exclusive and notorious possession and occupation. Further, the claim of ownership will not prosper on the basis of the tax declarations alone. It must be coupled with proof of actual possession. (2) In the absence of evidence that the 4 y/o trees at the time the predecessor filed the Tax. Dec. on 1948 were planted and cultivated by the predecessor herself, they will not suffice as evidence that her possession commenced prior to June 12, 1945. Alternatively, assuming they were planted and maintained, such can only be considered casual cultivation considering the size of Area A. (3) Witness Vicente Ocos lacks personal knowledge as to when the predecessors-in-interest of the respondent started to occupy the subject property and admitted that his testimony was based on what he allegedly gathered from East Silverlane’s predecessors-in-interest and the owners of adjoining lot. Moreover, he did not testify as to what specific acts of dominion or ownership were performed by the predecessors-in-interest. (4) It is jurisprudentially clear that the 30-year period of prescription for purposes of acquiring ownership and registration of public land under Sec. 14(2) of P.D. No. 1529 only begins from the moment the State expressly declares that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial.

FACTS:

The respondent East Silverlane Realty Development Corporation filed with the RTC an application for land registration, covering a parcel of land situated in El Salvador, Misamis Oriental and with an area of 9,794 square meters. East Silverlane purchased the portion of the subject property consisting of 4,708 square meters (Area A) from Francisca Oco pursuant to a Deed of Absolute Sale dated November 27, 1990 and the remaining portion consisting of 5,086 square meters (Area B) from Rosario U. Tan Lim, et al. pursuant to a Deed of Partial Partition with Deed of Absolute Sale dated April 11, 1991. It was claimed that East Silverlane’s predecessors-in-interest had been in open, notorious, continuous and exclusive possession of the subject property since June 12, 1945. RTC granted the petition for registration of the land. On appeal by the petitioner Republic of the Philippines, the CA affirmed the decision.

The petitioner assails the CA decision, alleging that East Silverlane failed to prove that its predecessors-in-interest possessed the subject property in the manner and for the length of time required under Sec. 48 (b) of C.A. No. 141, or the Public Land Act (PLA), and Sec. 14 of P.D. No. 1529, or the Property Registration Decree (P.D. No. 1529). Further, East Silverlane did not present a credible and competent witness to testify on the specific acts of ownership performed by its predecessors-in-interest on the subject property. Its sole witness, Vicente Oco, can hardly be considered a credible and competent witness as he is its liaison officer and he is not related in any way to East Silverlane’s predecessors-in-interest. That coconut trees were planted on the subject property only shows casual or occasional cultivation and does not qualify as possession under a claim of ownership.


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ISSUE:

Whether East Silverlane has proven itself entitled to the benefits of the PLA and P.D. No. 1529 on confirmation of imperfect or incomplete titles

HELD:

No. P.D. No. 1529, which was enacted on June 11, 1978, codified all the laws relative to the registration of property. Section 14 thereof partially provides:

Section 14. Who may apply. The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

(2) Those who have acquired ownership of private lands by prescription under the provision of existing laws.

x x

Sec. 14(1) and Sec. 14(2) are clearly different. Sec. 14(1) covers alienable and disposable land while Sec. 14(2) covers private property. The distinction between the two provisions lies with the inapplicability of prescription to alienable and disposable lands. Sec. 14(2) puts into operation the entire regime of prescription under the Civil Code, a fact which does not hold true with respect to Sec. 14(1).

Property is either part of the public domain or privately owned. Under Article 420 of the Civil Code, the following properties are of public dominion : (a) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads and others of similar character; and (b) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth. All other properties of the State, which is not of the character mentioned in Article 420 is patrimonial property, hence, susceptible to acquisitive prescription.

In Heirs of Malabanan, this Court ruled that Article 422 of the Civil Code states that [p]roperty of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State. It is this provision that controls how public dominion property may be converted into patrimonial property susceptible to acquisition by prescription. After all, Article 420 (2) makes clear that those property which belong to the State, without being for public use, and are intended for some public service or for the development of the

national wealth are public dominion property. For as long as the property belongs to the State, although already classified as alienable or disposable, it remains property of the public dominion if when it is intended for some public service or for the development of the national wealth.

Accordingly, It is only when such alienable and disposable lands are expressly declared by the State to be no longer intended for public service or for the development of the national wealth that the period of acquisitive prescription can begin to run. Without such express declaration, the property, even if classified as alienable or disposable, remains property of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by prescription. Such declaration shall be in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is duly authorized by law.

In other words, for one to invoke the provisions of Sec. 14(2) and set up acquisitive prescription against the State, it is primordial that the status of the property as patrimonial be first established. Furthermore, the period of possession preceding the classification of the property as patrimonial cannot be considered in determining the completion of the prescriptive period.

It is explicit under Sec. 14(1) that the possession and occupation required to acquire an imperfect title over an alienable and disposable public land must be open, continuous, exclusive and notorious in character. The law speaks of possession and occupation. Since these words are separated by the conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation , it seeks to delimit the all encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property.

On the other hand, Sec. 14(2) is silent as to the required nature of possession and occupation, thus, requiring a reference to the relevant provisions of the Civil Code on prescription. And under Article 1118 thereof, possession for purposes of prescription must be in the concept of an owner, public, peaceful and uninterrupted. In Heirs of Marcelina Arzadon-Crisologo v. Raon, the Court expounded that possession is open when it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted, unbroken and not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people in the neighborhood. The party who asserts


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ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.

In the case at bar, the Court is not satisfied with the evidence presented to prove compliance with the possession required either under Sec. 14(1) or 14(2). First, the 23 Tax Declarations covering Area B for a claimed possession of more than 46 years (1948-1994) do not qualify as competent evidence of actual possession and occupation. They covered random years (1948, 1957, 1963, 1969, etc.). This type of intermittent and sporadic assertion of alleged ownership does not prove open, continuous, exclusive and notorious possession and occupation. In any event, in the absence of other competent evidence, tax declarations do not conclusively establish either possession or declarants right to registration of title. Moreover, the claim of ownership will not prosper on the basis of the tax declarations alone. It is only when these tax declarations are coupled with proof of actual possession of the property that they may become the basis of a claim of ownership. In the absence of actual public and adverse possession, the declaration of the land for tax purposes does not prove ownership. A person who seeks the registration of title to a piece of land on the basis of possession by himself and his predecessors-in-interest must prove his claim by clear and convincing evidence, i.e. he must prove his title and should not rely on the absence or weakness of the evidence of the oppositors.

Second, that the coconut trees were 4 y/o at the time Agapita Claudel filed a Tax Declaration in 1948 will not suffice as evidence that her possession commenced prior to June 12, 1945, in the absence of evidence that she planted and cultivated them. Alternatively, assuming that Agapita Claudel planted and maintained these trees, such can only be considered casual cultivation considering the size of Area A. On the other hand, that Jacinto Tan Lay Cho possessed Area B in the concept of an owner on or prior to June 12, 1945 cannot be assumed from his 1948 Tax Declaration.

Third, that plants were on the subject property without any evidence that it was East Silverlane’s predecessors-in-interest who planted them and that actual cultivation or harvesting was made does not constitute well-nigh incontrovertible evidence of actual possession and occupation.

Fourth, witness Vicente Ocos lacks personal knowledge as to when the predecessors-in-interest of the respondent started to occupy the subject property and admitted that his testimony was based on what he allegedly gathered from East Silverlane’s predecessors-in-interest and the owners of adjoining lot. Moreover, he did not testify as to what specific acts of dominion or ownership were performed by the predecessors-in-interest and if indeed they did. He merely made a general claim that they came into possession before World War II, which is a mere conclusion of law and not factual proof of possession, and therefore unavailing and cannot suffice.

Finally, that East Silverlane’s application was filed after only four years from the time the subject property may be considered patrimonial by reason of the DARs October

26, 1990 Order shows lack of possession whether for ordinary or extraordinary prescriptive period. It is jurisprudentially clear that the 30-year period of prescription for purposes of acquiring ownership and registration of public land under Sec. 14(2) of P.D. No. 1529 only begins from the moment the State expressly declares that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial.

While the subject land was supposedly declared alienable and disposable on December 31, 1925 per the April 18, 1997 Certification and July 1, 1997 Report of the CENRO, the DAR converted the same from agricultural to industrial only on October 16, 1990. Also, it was only in 2000 that the Municipality of El Salvador passed a Zoning Ordinance, including the subject property in the industrial zone. Therefore, it was only in 1990 that the subject property had been declared patrimonial and it is only then that the prescriptive period began to run.

13. Diaz v. Sec. of Finance

Petitioner: Renato V. Diaz; Aurora Ma. F. TimbolRespondent: Secretary of Finance; Commissioner of Internal Revenue

Short Facts:Diaz and Timbol filed this petition for declaratory relief assailing the validity of the impending imposition of VAT by the BIR on the collections of tollway operators. The government avers that the NIRC imposes VAT on all kinds of services of franchise grantees, including tollway operations, except where the law provides otherwise. Petitioners alleged that a toll fee is a "user’s tax," not a sale of services and that to impose VAT on toll fees would amount to a tax on public service. They base this argument in MIAA v. Court of Appeals wherein it was alleged that:

The operation by the government of a tollway does not change the character of the road as one for public use. Someone must pay for the maintenance of the road, either the public indirectly through the taxes they pay the government, or only those among the public who actually use the road through the toll fees they pay upon using the road. The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public roads.

The charging of fees to the public does not determine the character of the property whether it is for public dominion or not. Article 420 of the Civil Code defines property of public dominion as "one intended for public use." Even if the government collects toll fees, the road is still "intended for public use" if anyone can use the road under the same terms and conditions as the rest of the public. The charging of fees, the limitation on the kind of vehicles that can use the road, the speed restrictions and other conditions for the use of the road do not affect the public character of the road.

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the operations of


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MIAA. The collection of such fees does not change the character of MIAA as an airport for public use. Such fees are often termed user’s tax. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the particular public facility. A user’s tax is more equitable – a principle of taxation mandated in the 1987 Constitution.

As can be seen, the discussion in the MIAA case on toll roads and toll fees was made, not to establish a rule that tollway fees are user’s tax, but to make the point that airport lands and buildings are properties of public dominion and that the collection of terminal fees for their use does not make them private properties. Tollway fees are not taxes. Indeed, they are not assessed and collected by the BIR and do not go to the general coffers of the government.

It would of course be another matter if Congress enacts a law imposing a user’s tax, collectible from motorists, for the construction and maintenance of certain roadways. The tax in such a case goes directly to the government for the replenishment of resources it spends for the roadways. This is not the case here. What the government seeks to tax here are fees collected from tollways that are constructed, maintained, and operated by private tollway operators at their own expense under the build, operate, and transfer scheme that the government has adopted for expressways. Except for a fraction given to the government, the toll fees essentially end up as earnings of the tollway operators. Court ruled in favor of government. Toll Fees are subject to VAT.Facts:Petitioners Renato V. Diaz and Aurora Ma. F. Timbol filed this petition for declaratory relief assailing the validity of the impending imposition of VAT by the BIR on the collections of tollway operators.

Petitioners allege that the BIR attempted during the administration of President Gloria Macapagal-Arroyo to impose VAT on toll fees. The imposition was deferred, however, in view of the consistent opposition of Diaz and other sectors to such move. But, upon President Benigno C. Aquino III’s assumption of office in 2010, the BIR revived the idea and would impose the challenged tax on toll fees beginning August 16, 2010 unless judicially enjoined.

Petitioners hold the view that Congress did not, when it enacted the NIRC, intend to include toll fees within the meaning of "sale of services" that are subject to VAT; that a toll fee is a "user’s tax," not a sale of services; that to impose VAT on toll fees would amount to a tax on public service; and that, since VAT was never factored into the formula for computing toll fees, its imposition would violate the non-impairment clause of the constitution.

On August 13, 2010 the Court issued a temporary restraining order (TRO), enjoining the implementation of the VAT. The Court required the government, represented by respondents Cesar V. Purisima, Secretary of the Department of Finance, and Kim S. Jacinto-Henares, Commissioner of Internal Revenue, to comment on the petition within 10 days from notice.

The government avers that the NIRC imposes VAT on all kinds of services of franchise grantees, including tollway operations, except where the law provides otherwise; that the Court should seek the meaning and intent of the law from the words used in the statute; and that the imposition of VAT on tollway operations has been the subject as early as 2003 of several BIR rulings and circulars.

In their reply to the government’s comment, petitioners point out that tollway operators cannot be regarded as franchise grantees under the NIRC since they do not hold legislative franchises.

Issue: May toll fees collected by tollway operators be subject to VAT? YES.

Held:(1) VAT is imposed on “all kinds of services” and tollway operators who are engaged in constructing, maintaining, and operating expressways are no different from lessors of property, transportation contractors, etc. Not only do they fall under the broad term “all kinds of services” but also come under those described as “all other franchise grantees” which is not confined only to legislative franchise grantees since the law does not distinguish. They are also not a franchise grantee under Section 119 which would have made them subject to percentage tax and not VAT. Neither are the services part of the enumeration under Section 109 on VAT-exempt transactions.

(2) The toll fee is not a user’s tax and thus it is permissible to impose a VAT on the said fee. The MIAA case does not apply wherein it has been provided therein that:

The operation by the government of a tollway does not change the character of the road as one for public use. Someone must pay for the maintenance of the road, either the public indirectly through the taxes they pay the government, or only those among the public who actually use the road through the toll fees they pay upon using the road. The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public roads.

The charging of fees to the public does not determine the character of the property whether it is for public dominion or not. Article 420 of the Civil Code defines property of public dominion as "one intended for public use." Even if the government collects toll fees, the road is still "intended for public use" if anyone can use the road under the same terms and conditions as the rest of the public. The charging of fees, the limitation on the kind of vehicles that can use the road, the speed restrictions and other conditions for the use of the road do not affect the public character of the road.

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public use. Such fees are often termed user’s tax. This means taxing those among the public who actually use a public facility instead of taxing all the public


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including those who never use the particular public facility. A user’s tax is more equitable – a principle of taxation mandated in the 1987 Constitution.

Petitioners assume that what the Court said above, equating terminal fees to a "user’s tax" must also pertain to tollway fees. But the main issue in the MIAA case was whether or not Parañaque City could sell airport lands and buildings under MIAA administration at public auction to satisfy unpaid real estate taxes. Since local governments have no power to tax the national government, the Court held that the City could not proceed with the auction sale. MIAA forms part of the national government although not integrated in the department framework." Thus, its airport lands and buildings are properties of public dominion beyond the commerce of man under Article 420(1) of the Civil Code and could not be sold at public auction.

As can be seen, the discussion in the MIAA case on toll roads and toll fees was made, not to establish a rule that tollway fees are user’s tax, but to make the point that airport lands and buildings are properties of public dominion and that the collection of terminal fees for their use does not make them private properties. Tollway fees are not taxes. Indeed, they are not assessed and collected by the BIR and do not go to the general coffers of the government.

It would of course be another matter if Congress enacts a law imposing a user’s tax, collectible from motorists, for the construction and maintenance of certain roadways. The tax in such a case goes directly to the government for the replenishment of resources it spends for the roadways. This is not the case here. What the government seeks to tax here are fees collected from tollways that are constructed, maintained, and operated by private tollway operators at their own expense under the build, operate, and transfer scheme that the government has adopted for expressways. Except for a fraction given to the government, the toll fees essentially end up as earnings of the tollway operators.

In sum, fees paid by the public to tollway operators for use of the tollways, are not taxes in any sense. A tax is imposed under the taxing power of the government principally for the purpose of raising revenues to fund public expenditures. Toll fees, on the other hand, are collected by private tollway operators as reimbursement for the costs and expenses incurred in the construction, maintenance and operation of the tollways, as well as to assure them a reasonable margin of income. Although toll fees are charged for the use of public facilities, therefore, they are not government exactions that can be properly treated as a tax. Taxes may be imposed only by the government under its sovereign authority, toll fees may be demanded by either the government or private individuals or entities, as an attribute of ownership.

Parenthetically, VAT on tollway operations cannot be deemed a tax on tax due to the nature of VAT as an indirect tax. In indirect taxation, a distinction is made between the liability for the tax and burden of the tax. The seller who is liable for the VAT may shift or pass on the amount of VAT it paid on goods, properties or services to the buyer. In such a case, what is transferred is not the seller’s liability but merely the burden of the VAT.

Thus, the seller remains directly and legally liable for payment of the VAT, but the buyer bears its burden since the amount of VAT paid by the former is added to the selling price. Once shifted, the VAT ceases to be a tax and simply becomes part of the cost that the buyer must pay in order to purchase the good, property or service.

Consequently, VAT on tollway operations is not really a tax on the tollway user, but on the tollway operator. Under Section 105 of the Code, VAT is imposed on any person who, in the course of trade or business, sells or renders services for a fee. In other words, the seller of services, who in this case is the tollway operator, is the person liable for VAT. The latter merely shifts the burden of VAT to the tollway user as part of the toll fees.

For this reason, VAT on tollway operations cannot be a tax on tax even if toll fees were deemed as a "user’s tax." VAT is assessed against the tollway operator’s gross receipts and not necessarily on the toll fees. Although the tollway operator may shift the VAT burden to the tollway user, it will not make the latter directly liable for the VAT. The shifted VAT burden simply becomes part of the toll fees that one has to pay in order to use the tollways.

14. City of Pasig v. Republic

August 24, 2011Petitioners: City of Pasig by the City Treasurer and City AssessorRespondent: Republic of the Philippines represented by the PCGGPonente: CARPIO, J.

Short Facts/Doctrines:Mid-Pasig Land Development Corporation (MPLDC) owned 2 parcels of land in Pasig City. In 1986, Jose Y. Campos, the registered owner of MPLDC, voluntarily surrendered MPLDC to the government since it was admitted as part of the ill-gotten wealth of the Marcoses. Then from 2002-2005, Pasig City sent notices of assessment to MPLDC to demand payment of real property taxes from the said properties. PCGG filed with the RTC a petition for prohibition with a prayer for issuance of a TRO to enjoin petitioner Pasig City from auctioning the properties and from collecting real property tax. PCGG is claiming that the subject properties were exempt from taxes because they are owned by the government. Both the RTC and the CA (after reversing its initial decision) ruled in favor of the PCGG. But the SC ultimately held that:

Article 420 of the Civil Code classifies as properties of public dominion those that are intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads and those that are intended for some public service or for the development of the national wealth. Properties of public dominion are not only exempt from real estate tax, they are exempt from sale at public auction. In Heirs of Mario Malabanan v. Republic, the Court held that, It is clear that property of


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public dominion, which generally includes property belonging to the State, cannot be x x x subject of the commerce of man.

In the present case, the parcels of land are not properties of public dominion because they are not intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads. Neither are they intended for some public service or for the development of the national wealth. MPLDC leases portions of the properties to different business establishments. Thus, the portions of the properties leased to taxable entities are not only subject to real estate tax, they can also be sold at public auction to satisfy the tax delinquency.

In sum, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of such leases. Pasig City must, therefore, issue to respondent new real property tax assessments covering the portions of the properties leased to taxable entities. If the Republic of the Philippines fails to pay the real property tax on the portions of the properties leased to taxable entities, then such portions may be sold at public auction to satisfy the tax delinquency.

Facts Mid-Pasig Land Development Corporation (MPLDC) owned two parcels of

land in Pasig City. In 1986, the registered owner of MPLDC, Jose Y. Campos (Campos), voluntarily surrendered MPLDC to the Republic of the Philippines.

From 2002-2005 the Pasig City Assessor Office sent notices of delinquency and final demand of payment for real property taxes due from the said properties. However, the MPLDC alleged that it was exempt from paying taxes from 1987 onwards (as it was already surrendered to the government at that time).

Nevertheless, MPLDC still received 2 warrants of levy on the properties. Hence, respondent Republic of the Philippines, through the PCGG, filed with the RTC a petition for prohibition with prayer for issuance of a TRO or writ of preliminary injunction to enjoin petitioner Pasig City from auctioning the properties and from collecting real property tax.

Issue:Whether the parcels of land owned by the government are exempted from real property taxes?

Ruling: It depends. If the properties are classified as part of the public dominion, then such properties are exempt from RPT. If not, or the beneficial use of the properties belong to a taxable person, then the property is subject to RPT.

Ratio:Article 420 of the Civil Code classifies as properties of public dominion those that are intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads and those that are intended for some public service or for the development of the national

wealth. Properties of public dominion are not only exempt from real estate tax, they are exempt from sale at public auction. In Heirs of Mario Malabanan v. Republic, the Court held that, It is clear that property of public dominion, which generally includes property belonging to the State, cannot be x x x subject of the commerce of man.

In the present case, the parcels of land are not properties of public dominion because they are not intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads. Neither are they intended for some public service or for the development of the national wealth. MPLDC leases portions of the properties to different business establishments. Thus, the portions of the properties leased to taxable entities are not only subject to real estate tax, they can also be sold at public auction to satisfy the tax delinquency.

Therefore, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of such leases. Pasig City must, therefore, issue to respondent new real property tax assessments covering the portions of the properties leased to taxable entities. If the Republic of the Philippines fails to pay the real property tax on the portions of the properties leased to taxable entities, then such portions may be sold at public auction to satisfy the tax delinquency.

In short, only those portions of the properties leased to taxable entities are subject to real estate taxes for the period of such leases and may also be sold at public auctioned to satisfy the tax delinquency. While it was established that the owner of the properties is now clearly the Republic of the Philippines given the voluntary surrender, the Local Government Code clearly states that the exemption will not apply “when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person”. The Court cited several cases to support the decision such as Philippine Fisheries, GSIS, MIAA, and Lung Center.

Disposition:Petition partly granted and declares VOID the real property tax assessment issued by Pasig City on the subject properties of MPLDC, the warrants of levy on the properties, and the auction sale. Pasig City is DIRECTED to issue to respondent new real property tax assessments covering only the portions of the properties actually leased to taxable entities, and only for the period of such leases.

15. Dream Village v. BCDA

Summary:

Dream Village asserts ownership over a large tract of land in Taguig City (Fort Bonifacio), on the basis of acquisitive prescription. BCDA, however, alleges that it has title over the subject land as the same is part of grant provided under RA 7227. Dream Village filed letter-complaint before the COSLAP. BCDA questions COSLAP’s jurisdiction. Issue: Whether the area occupied by Dream Village is susceptible of acquisition by prescription. Held: NO. Fort Bonifacio remains property of public


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dominion of the State, because although declared alienable and disposable, it is reserved for some public service or for the development of the national wealth, in this case, for the conversion of military reservations in the country to productive civilian

uses. Needless to say, the acquisitive prescription asserted by Dream Village has not

even begun to run.

Facts:

Petitioner Dream Village Neighborhood Association, Inc. (Dream Village) claims to represent more than 2,000 families who have been occupying a 78,466square meter lot in Western Bicutan, Taguig City since 1985 “in the concept of owners continuously, exclusively and notoriously.” The lot used to be part of the Hacienda de Maricaban (Maricaban), owned by Dolores Casal y Ochoa, covered by an OCT.

Following the purchase of Maricaban by the government of the USA early in the American colonial period, to be converted into the military reservation known as Fort William Mckinley, TCT was issued in the name of the USA. The US government later transferred 30 has. of Maricaban to the Manila Railroad Company. 2 TCTs were issued – (1) covering 30 has. under name of MRC (2) remaining portion of Maricaban under name of USA.

The USA the formally ceded Fort William Mckinley to the Republic of the Philippines (Republic), and almost 2 years later, TCT was issued in the name of the Republic. President Carlos P. Garcia issued Proclamation No. 423 withdrawing from sale or settlement the tracts of land within Fort William Mckinley, now renamed Fort Bonifacio, and reserving them for military purposes.

In 1986, President Ferdinand E. Marcos issued Proclamation No. 2476 declaring certain portions of Fort Bonifacio alienable and disposable, thus allowing the sale to the settlers of home lots in Upper Bicutan, Lower Bicutan, Signal Village, and Western Bicutan. President Corazon C. Aquino issued Proclamation No. 172 by limiting to the areas in Western Bicutan open for disposition.

In 1992, R.A. No. 7227 was passed creating the Bases Conversion and Development

Authority (BCDA) to oversee and accelerate the conversion of Clark and Subic

military reservations and their extension camps to productive civilian uses. Section 8 of the said law provides that the capital of the BCDA will be provided from sales proceeds or transfers of lots in nine (9) military camps in Metro Manila, including 723 has. of Fort Bonifacio. Titles to the camps were transferred to the BCDA for this purpose.

Now charging the BCDA of wrongfully asserting title to Dream Village and unlawfully subjecting its members to summary demolition, resulting in unrest and tensions among the residents, in 1999, the latter filed a lettercomplaint with the COSLAP to seek its assistance in the verification survey of the subject 78,466 sq m property. They claim that they have been occupying the area for thirty (30) years “in the

concept of owners continuously, exclusively and notoriously for several years.” Dream Village, thus, asserts that the lot is not among those transferred to the BCDA under R.A. No. 7227, and therefore patent applications by the occupants should be processed by the Land Management Bureau (LMB).

Respondent BCDA in its Answer questioned the jurisdiction of the COSLAP to hear Dream Village’s complaint, while asserting its title to the subject property pursuant to R.A. No. 7227.

The COSLAP received the final report Regional Technical Director for Lands of DENR, stating that area occupied by Dream Village is actually outside the lot of BCDA. The COSLAP resolved that Dream Village lies outside of BCDA.

On Petition for Review to the CA, the BCDA argued that the dispute is outside the

jurisdiction of the COSLAP because of the land’s history of private ownership and because it is registered under an indefeasible Torrens title; that the land occupied by Dream Village belongs to BCDA. The COSLAP, on the other hand, maintained that Section 3(2)(e) of E.O. No. 561 provides that it may assume jurisdiction and resolve land problems or disputes in “other similar land problems of grave urgency and

magnitude,” and the present case is one such problem.

The CA in its Decision ruled that the COSLAP has no jurisdiction over the complaint

because the question of whether Dream Village is within the areas declared as available for disposition in Proclamation No. 172 is beyond its competence to determine.

Hence, this petition for review on certiorari.

Issue:

Whether the area occupied by Dream Village is susceptible of acquisition by prescription

Held: NO

While property of the State or any of its subdivisions patrimonial in character may be the object of prescription, those “intended for some public service or for the development of the national wealth” are considered property of public dominion and therefore not susceptible to acquisition by prescription.

Article 1113 of the Civil Code provides that “property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription.” Articles 420 and 421 identify what is property of public dominion and what is patrimonial property.

Heirs of Mario Malabanan v. Republic, it was pointed out that from the moment R.A.


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No. 7227 was enacted, the subject military lands in Metro Manila became alienable and disposable. The Court noted that the purpose of the law can be tied to either “public service” or “the development of national wealth” under Article 420(2) of the Civil Code, such that the lands remain property of the public dominion, albeit their status is now alienable and disposable. The Court then explained that it is only upon their sale to a private person or entity as authorized by the BCDA law that they become private property and cease to be property of the public dominion.

Thus, under Article 422 of the Civil Code, public domain lands become patrimonial property only if there is a declaration that these are alienable or disposable, together with an express government manifestation that the property is already patrimonial or no longer retained for public service or the development of national wealth. Only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run. Also under Section 14(2) of Presidential Decree (P.D.) No. 1529, it is provided that before acquisitive prescription can commence, the property sought to be registered must not only be classified as alienable and disposable, it must also be expressly declared by the State that it is no longer intended for public service or the development of the national wealth, or that the property has been converted into patrimonial. Absent such an express declaration by the State, the land remains to be property of public dominion.

Fort Bonifacio remains property of public dominion of the State, because although declared alienable and disposable, it is reserved for some public service or for the development of the national wealth, in this case, for the conversion of military

reservations in the country to productive civilian uses. Needless to say, the acquisitive

prescription asserted by Dream Village has not even begun to run.

Pronouncement on Other Matters:

1. The BCDA holds title to Fort Bonifacio.

The Court ruled that the BCDA’s aforesaid titles over Fort Bonifacio are valid, indefeasible and beyond question, since TCT was cancelled in favor of BCDA pursuant to an explicit authority under R.A. No. 7227, the legal basis for BCDA’s takeover and management of the subject lots.

2. Dream Village sits on the abandoned C5 Road, which lies outside the area declared in Proclamation Nos. 2476 and 172 as alienable and disposable.

3. Ownership of a land registered under a Torrens title cannot be lost by prescription or adverse possession.

Section 47 of P.D. No. 1529, the Property Registration Decree, expressly provides that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. And, although the registered landowner may still lose his right to recover the possession of his registered property

by reason of laches, nowhere has Dream Village alleged or proved laches.

4. The subject property having been expressly reserved for a specific public purpose, the COSLAP cannot exercise jurisdiction over the complaint of the Dream Village settlers.

In contrast, the present petition involves land titled to and managed by a government agency which has been expressly reserved by law for a specific public purpose other than for settlement. Thus, the law does not vest jurisdiction on the COSLAP over any land dispute or problem, but it has to consider the nature or classification of the land involved, the parties to the case, the nature of the questions raised, and the need for immediate and urgent action thereon to prevent injuries to persons and damage or destruction to property.

Petition denied.

16. Director of Lands v. Meralco

Petitioner: THE DIRECTOR OF LANDSRespondent: MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERAPonente: Gutierrez J.


This is a very short case. Meralco applied for a registration of a parcel of land which it acquired by purchase from a private citizen vendor. The latter previously acquired the land from his predecessors-in-interest who claimed open, exclusive, adverse possession of such land for 30 years. The Director of Lands challenged this application claiming that a corporation like Meralco cannot apply for registration of title to land without circumventing the Constitution. The Court applied stare decisis through its previous decisions and ruled in favor of Meralco. Accordingly, registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private land, but only confirm such a conversion already affected from the moment the required period of possession became complete.

Facts:

Manila Electric Company filed an amended application for registration of a parcel of land located in Taguig, Metro Manila on December 4, 1979.

On August 17, 1976, applicant acquired the land applied for registration by purchase from Ricardo Natividad who in turn acquired the same from his father Gregorio Natividad as evidenced by a Deed of Original Absolute Sale executed on December 28, 1970.


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Applicant's predecessors-in-interest have possessed the property under the concept of an owner for more than 30 years. The property was declared for taxation purposes under the name of the applicant.

On May 29, 1981 respondent Judge rendered a decision ordering the registration of the property in the name of the private respondent. The Director of Lands interposed this petition raising the issue of whether or not a corporation may apply for registration of title to land. The Court gave the petition due course.

Issue: W/N MERALCO may apply for registration of title to land which has been acquired through “open, exclusive and undisputed possession”.

Ratio: YES.

Held:

The legal issue raised by the petitioner Director of Lands has been squarely dealt with in two recent cases The Director of Lands v. Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc. and The Director of Lands v. Hon. Bengzon and Dynamarine Corporation. There can be no different answer in the case at bar.

In the Acme decision, this Court upheld the doctrine that "open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite period ipso jure and without the need of judicial or other sanction, ceases to be public land and becomes private property." As the Court said in that case: Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and duration prescribed by statute as the equivalent of an express grant from the State than the dictum of the statute itself that the possessor(s) "x x x shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title x x x." No proof being admissible to overcome a conclusive presumption, confirmation proceedings would in truth be little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character and length of time. Registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private land, but only confirm such a conversion already affected from the moment the required period of possession became complete. Coming to the case at bar, if the land was already private at the time Meralco bought it from Natividad, then the prohibition in the 1973 Constitution against corporations holding alienable lands of the public domain except by lease (1973 Const., Art. XIV, Sec. 11) does not apply.

Petitioner, however, contends that a corporation is not among those that may apply for confirmation of title under Section 48 of Commonwealth Act No. 141, the Public Land Act. As ruled in the Acme case, the fact that the confirmation proceedings were instituted by a corporation is simply another accidental circumstance, "productive of a

defect hardly more than procedural and in nowise affecting the substance and merits of the right of ownership sought to be confirmed in said proceedings." Considering that it is not disputed that the Natividads could have had their title confirmed, only a rigid subservience to the letter of the law would deny private respondent the right to register its property which was validly acquired.

Disposition: WHEREFORE, the petition is DENIED. The questioned decision of the respondent Judge is AFFIRMED. SO ORDERED.

GUTIERREZ, JR., J.: DISSENTING OPINION

It is my view that Article XII, Section 3 of the Constitution which prohibits private corporations or associations from holding alienable lands of the public domain except by lease is circumvented when we allow corporations to apply for judicial confirmation of imperfect titles to public land. I, therefore, reiterate my vote in Meralco v. Castro Bartolome,(114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA 875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and accordingly, dissent from the majority opinion in this case.

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IV.C.1 Ownership: Rights of Ownership/Limitations

17. Gabriel JR. v. Crisologo

Petitioners: Paul P. Gabriel, Jr., Ireneo C. Calwag, Thomas L. Tingga-An, and the Heirs Of Juliet B. PulkeraRespondent: Carmeling Crisologo

Summary:

Respondent Crisologo filed a complaint for Recovery of Possession and/or Ownership with Damages against petitioners. Crisologo prayed that she be declared in prior actual possession of the properties in dispute and that petitioners vacate the same and demolish their houses therein. She alleged, among others, that she was the registered owner of the subject parcels of land and that petitioners unlawfully entered her properties by stealth, force and without her prior consent and knowledge. Petitioners, on the other hand, raised the issue of ownership in their pleadings. They mainly argue that Crisologo’s titles on the subject properties are void due to the Supreme Court ruling in Republic v. Marcos (said case was later enacted into law, P.D. No. 1271), and that they have been in open, actual, exclusive, notorious, uninterrupted and continuous possession over the subject properties in good faith. Issue: Who between petitioners and respondent Crisologo have a better right of possession over the subject parcels of land? Held: Crisologo. Although Section 1 of P.D. No. 127113 invalidated decrees of registration and certificates of title within the Baguio Town site Reservation Case No. 1, GLRO Record No. 211, the nullity, however, is not that sweeping. The said provision expressly states that "all certificates


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of titles issued on or before July 31, 1973shall be considered valid and the lands covered by them shall be deemed to have been conveyed in fee simple to the registered owners" upon 1) showing proof that the land covered by the subject title is not within any government, public or quasi-public reservation, forest, military or otherwise, as certified by appropriating government agencies; and 2) compliance by the titleholder with the payment to the Republic of the Philippines of the correct assessed value of the land within the required period. In the case at bench, the records show that the subject parcels of land were registered on August 24, 1967. The titles are, thus, considered valid although subject to the conditions set. But whether or not Crisologo complied with the said conditions would not matter because, this would be a collateral attack on her registered titles.

Facts:

Records show that Carmeling Crisologo (Crisologo), represented by her attorney-in-fact, Pedro Isican (Isican), filed her complaint for Recovery of Possession and/or Ownership with Damages against Juliet B. Pulkera, Paul P. Gabriel, Ireneo C. Calwag, and Thomas L. Tingga-an (petitioners) before the MTCC.

Crisologo alleged that:

1. She was the registered owner of two parcels of land with a total area of approximately 2,000 square meters, described in, and covered by, two (2) certificates of title – TCT Nos. T-13935 and T-13936;

2. The properties were covered by an Assessment of Real Property; 3. The payments of realty taxes on the said properties were updated; 4. Sometime in 2006, she discovered that petitioners unlawfully entered,

occupied her properties by stealth, by force and without her prior consent and knowledge, and constructed their houses thereon;

5. Upon discovery of their illegal occupation, her daughter, Atty. Carmelita Crisologo, and Isican personally went to the properties and verbally demanded that petitioners vacate the premises and remove their structures thereon;

6. Petitioners begged and promised to buy the said properties for 3,500.00 per square meter;

7. She gave petitioners time to produce the said amount, but they reneged on their promise to buy them;

8. Petitioners refused to vacate the subject properties despite several demands; that the petitioners knew full well that the subject premises they were occupying were titled properties but they insisted on unlawfully holding the same; and

9. She was unlawfully dispossessed and displaced from the subject properties due to petitioners’ illegal occupation.

Petitioners countered that:

1. Titles of Crisologo were products of Civil Registration Case No. 1, Record 211, which were declared void by the Supreme Court in Republic v. Marcos, and reiterated in Republic v. Marcos;

2. Said case was later enacted into law, P.D. No. 1271, entitled "An Act Nullifying Decrees of Registration and Certificates of Title within the Baguio Town site Reservation Case No.1, GLRO Record No. 211, pursuant to Act No. 931, as amended, but Considering as Valid Certain Titles of Lands that are Alienable and Disposable Under Certain Conditions and For Other Purposes" which took effect on December 22, 1977;

3. Crisologo failed to comply with the conditions provided in Section 1 of P.D. No. 1271 for the validation of said titles, hence, the titles were void;

4. Petitioners had been in open, actual, exclusive, notorious, uninterrupted, and continuous possession of the subject land, in good faith; and

5. Crisologo was never in prior possession and had no valid title over the subject land.

MTCC ruled in favor of Crisologo.

1. Petitioners could not question Crisologo’s titles over the subject parcels of land in an ordinary civil action for recovery of possession because such defense was a collateral attack which was prohibited under P.D. No. 1529, otherwise known as the Property Registration Decree. Thus, it could not inquire into the intrinsic validity of Crisologo’s titles.

RTC reversed MTCC.

1. Petitioners’ assertion of the TCTs’ invalidity was not a collateral attack. It cited the rulings in Republic v. Marcos, and Republic v. Marcos, which perpetually prohibited the reopening of Civil Reservation Case No. 1, LRC Rec. No. 211, and, therefore, the registration of parcels of lands. For said reason, the titles of Crisologo were products of illegal proceedings nullified by this Court.

CA reinstated MTCC.

1. Crisologo was entitled to the possession of the subject parcels of land. Her possession was established when she acquired the same by sale sometime in 1967 and when the certificates of title covering the properties were subsequently issued. Her payment of realty taxes due on the said properties since 1969 further strengthened her claim of possession. Moreover, her appointment of Isican as administrator of the subject properties and her offer to sell the lots to the petitioners showed that she had control over the same.

Issue: Who between petitioners and respondent Crisologo have a better right of possession over the subject parcels of land? – Crisologo.

1. Preliminary Discussion: Accion Publiciana: its nature and purpose


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Also known as accion plenaria de posesion, accion publiciana is an ordinary civil proceeding to determine the better right of possession of realty independently of title. It refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty.

The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership. When parties, however, raise the issue of ownership, the court may pass upon the issue to determine who between the parties has the right to possess the property. This adjudication, nonetheless, is not a final and binding determination of the issue of ownership; it is only for the purpose of resolving the issue of possession, where the issue of ownership is inseparably linked to the issue of possession. The adjudication of the issue of ownership, being provisional, is not a bar to an action between the same parties involving title to the property. The adjudication, in short, is not conclusive on the issue of ownership.12

2. The Case is an accion publiciana.

In her complaint, Crisologo prayed that she be declared in prior actual possession of the properties in dispute and that petitioners vacate the same and demolish their houses therein. She alleged, among others, that she was the registered owner of the subject parcels of land and that petitioners unlawfully entered her properties by stealth, force and without her prior consent and knowledge. Clearly, she primarily wanted to recover possession of the subject parcels of land from petitioners. Hence, the case is an accion publiciana.

Nonetheless, the petitioners have raised the issue of ownership in their pleadings. They mainly argue that Crisologo’s titles on the subject properties are void and that they have been in open, actual, exclusive, notorious, uninterrupted and continuous possession over the subject properties in good faith.

3. The nullity of the decrees of registration and certificates of titles in Section 1 of P.D. No. 1271 is not absolute.

Although Section 1 of P.D. No. 127113 invalidated decrees of registration and certificates of title within the Baguio Town site Reservation Case No. 1, GLRO Record No. 211, the nullity, however, is not that sweeping. The said provision expressly states that "all certificates of titles issued on or before July 31, 1973shall be considered valid and the lands covered by them shall be deemed to have been conveyed in fee simple to the registered owners" upon 1) showing proof that the land covered by the subject title is not within any government, public or quasi-public reservation, forest, military or otherwise, as certified by appropriating government agencies; and 2) compliance by the titleholder with the payment to the Republic of the Philippines of the correct assessed value of the land within the required period.

In the case at bench, the records show that the subject parcels of land were registered on August 24, 1967. The titles are, thus, considered valid although subject

to the conditions set. But whether or not Crisologo complied with the said conditions would not matter because, this would be a collateral attack on her registered titles, as would be discussed later.

At any rate, petitioners, as private individuals, are not the proper parties to question the status of the respondent’s registered titles. Section 6 of P.D. No. 127114 expressly states that the "Solicitor General shall institute such actions or suits as may be necessary to recover possession of lands covered by all void titles not validated under this Decree."

4. The respondent’s certificates of title give her the better right to possess the subject parcels of land.

It is settled that a Torrens title is evidence of indefeasible title to property in favor of the person in whose name the title appears. It is conclusive evidence with respect to the ownership of the land described therein. It is also settled that the titleholder is entitled to all the attributes of ownership of the property, including possession. Thus, in Arambulo v. Gungab, this Court declared that the "age-old rule is that the person who has a Torrens title over a land is entitled to possession thereof."

The records show that TCT No. T-1393517 and TCT No. T-1393618 bear the name of Carmeling P. Crisologo, as the registered owner. Petitioners do not dispute the fact that she has a Torrens title over the subject parcels of land.

5. The respondent’s Torrens certificates of title are immune from a collateral attack.

As a holder of a Torrens certificate of title, the law protects Crisologo from a collateral attack on the same. Section 48 of P.D. No. 1529, otherwise known as the Property Registration Decree, provides that a certificate of title cannot be the subject of a collateral attack. Thus: “SEC. 48. Certificate not subject to collateral attack. – A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law.”

Registration of land under the Torrens system, aside from perfecting the title and rendering it indefeasible after the lapse of the period allowed by law, also renders the title immune from collateral attack. A collateral attack transpires when, in another action to obtain a different relief and as an incident of the present action, an attack is made against the judgment granting the title.

This manner of attack is to be distinguished from a direct attack against a judgment granting the title, through an action whose main objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if the property titled under the judgment had been disposed of. To permit a collateral attack on respondents-plaintiffs' title is to water down the integrity and guaranteed legal indefeasibility of a Torrens title.


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The petitioners-defendants' attack on the validity of respondents-plaintiffs' title, by claiming that fraud attended its acquisition, is a collateral attack on the title. It is an attack incidental to their quest to defend their possession of the properties in an "accion publiciana," not in a direct action whose main objective is to impugn the validity of the judgment granting the title. This is the attack that possession of a Torrens Title specifically guards against; hence, we cannot entertain, much less accord credit to, the petitioners-defendants' claim of fraud to impugn the validity of the respondents-plaintiffs' title to their property.

6. As the lawful possessor, the respondent has the right to eject the petitioners.

The Court agrees with the CA that the only question that needs to be resolved in this suit to recover possession is who between the parties is entitled to the physical or material possession of the subject parcels of land. Therefore, the foremost relevant issue that needs to be determined here is simply possession, not ownership.

The testimonial and documentary evidence on record prove that Crisologo has a preferred claim of possession over that of petitioners. It cannot be denied that she bought the subject properties from the previous owner in 1967, which was why the transfer certificates of title were subsequently issued in her name. Records further show that she has been paying the realty taxes on the said properties since 1969. She likewise appointed Isican as administrator of the disputed lands. More importantly, there is no question that she offered to sell to petitioners the portions of the subject properties occupied by them. Hence, she deserves to be respected and restored to her lawful possession as provided in Article 539 of the New Civil Code.

18. Leal v. IAC

Gr No. L- 65425 Nov, 5 1987

Petitioners: IRENEO LEAL, JOSE LEAL, CATALINA LEAL, BERNABELA LEAL, VICENTE LEAL EUIOGIA LEAL PATERNO RAMOS, MACARIO DEL ROSARIO, MARGARITA ALBERTO, VICTORIA TORRES, JUSTINA MANUEL, JULIAN MANUEL, MELANIA SANTOS, CLEMENTE SAMARIO, MARIKINA VALLEY, INC., MIGUELA MENDOZA, and REGISTER OF DEEDS OF RIZAL

Respondents: THE HONORABLE INTERMEDIATE APPELLATE COURT (4th Civil Cases Division), and VICENTE SANTIAGO (Substituted by SALUD M. SANTIAGO)

Ponente: SARMIENTO, J


A document entitled “Compraventa” was executed between the predecessor of petitioners Leal and private respondent Vicente Santiago wherein the title of 3 lots

were transferred to the name of Circulo Leal (Petitioners inherited the 3 lots after Circulo’s death). Paragraph (b) of the document stated that “they shall not sell to others these three lots but only to the seller Vicente Santiago or to his heirs or successors”. Pursuant to this paragraph, Vicente Santiago sought to repurchase the lots. However after petitioners refused to accept payment and convey the lots, Santiago instituted a complaint for specific performance. The CFI of QC denied this petition claiming that the petitioners never sold nor intend to sell the lots to 3 rd persons therefore the complaint of Santiago is premature. The CA upheld the lower court’s decision, however on the MFR of Santiago, the IAC reversed the lower court rulings and ruled in favor of Santiago, ordering the petitioners to accept payment and convey the properties. The petitioner filed a petition for certiorari in the SC.

The SC held that the prohibition of sale to 3 rd parties is a perpetual restriction on the right of ownership, specifically, the owner’s right to freely dispose his properties, and therefore is contrary to public policy. This, we hold that any such prohibition, indefinite and stated as to time, so much so that is shall continue to be applicable even beyond the lifetime of the original parties to the contract, is, without doubt, a nullity. Also “Paragraph (b) is does not grant a right of repurchase. The right to redeem must be expressly stipulated or at least clearly expressed in the contract of sale. In this case, there was no express or implied grant of a right to repurchase, neither can it be inferred from Par. (b). But even assuming that such a right of repurchase is granted under the Compraventa, the petitioner is correct in asserting that the right has already prescribed under Art. 1508 of the Civil Code of Spain (Art. 1606 of the Civil Code of the Philippines: the right to redeem or repurchase, in the absence of an express agreement as to time, shall last four years from the date of the contract). In this case then, the right to repurchase should have been exercised within 4 years from March 221, 1941, or at the latest in 1945.

Facts:

March 21, 1941, a document entitled “Compraventa” which was written entirely in Spanish was executed. It involved 3 parcels of land and was executed by Private respondent, Vicente Santiago and his brother, Luis Santiago, in favor of Cirilio Leal the deceased father of some of the petitioners. Pursuant to this document, the title of the properties was transferred to the name of Cirilio Leal, who immediately took possession and exercised ownership over the lands. After his death in 1959, his children, who are among the petitioners in this case, inherited the lands and caused the subdivision of the properties among themselves.

During the years 1960-1965- properties were either mortgaged or leased by the heirs to their co-petitioners.

1966-1967- Respondent Vicente Santiago approached the petitioners and offered to re-repurchase the subject properties. In accordance with paragraph (b) of the “Compraventa” which stated that “they shall not sell to others these three lots but only


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to the seller Vicente Santiago or to his heirs or successors”. Petitioner refused. Santiago instituted a complaint for specific performance before the CFI of Quezon City in Aug 2 1967.

The Trial Court dismissed the complaint on the ground that it was still premature considering that there was, as yet, no sale or any alienation equivalent to a sale. Santiago appealed however the CA acting through Justice Edgardo Paras, affirmed the decision of the Trial Court.

The petitioners filed a motion to amend the dispositive portion of the decision of the CA to include an order for the cancellation of the annotations at the back of the TCTs issued in their favor. Private respondent, filed a MFR of the CA decision and an opposition to petitioner’s motion to amend.

(Not so important facts. While the above motions were pending, the CA was abolished and in lieu of which, the Intermediate Appellate Court was established. The case was reassigned to the 4th Civil division of the IAC)

Justice Sison then promulgated a decision in favor of Santiago. Ordering petitioners Leal to accept the sum of P5,600.00 from Santiago as repurchase price of the lots described in the “Compraventa” of March 21, 1941 and thereafter to execute a deed of repurchase to transfer the ownership of the properties to Santiago. Justice Sison also ordered that the sum of 3, 087.50 be paid as rentals for the years 1967-1968 and for the Register of Deeds of Rizal to cancel the current TCT and issue a new one under the name of Santiago.

In this petition for Certiorari to the SC, the Controversy sprung from the conflicting interpretations of paragraph (b) of the “Compraventa”.Private respondent claims that this provision creates a right person other than the vendor should not exceed 20 years, otherwise this would to repurchase and is still valid and enforceable. Petitioners on the other hand invoke the decision by Justice Paras which states that this prohibition to sell the lots to amount to a subversion of public policy which frowns upon unwarranted restriction on the right of ownership.

Issue:

1. W/N the provision prohibiting the petitioners from selling the lots to other persons is still valid (NO)

2. W/N Santiago Paragraph (b) creates a right of repurchase in favor of Santiago? (NO)

Held:

1. Contracts are generally binding between the parties, their assigns and heirs, however, under Art. 1255 of the Civil Code of Spain, pacts, clauses and conditions which are contrary to public order are null and void, and thus, do

not have any binding effect. (The equivalent provision in the Civil Code of the Philippines is Art. 13063) Public order signifies the public weal- public policy. Essentially, therefore, public order and public policy mean one and the same thing.

“The prohibition of sale to 3rd parties is a perpetual restriction on the right of ownership, specifically, the owner’s right to freely dispose his properties, and therefore is contrary to public policy. This, we hold that any such prohibition, indefinite and stated as to time, so much so that is shall continue to be applicable even beyond the lifetime of the original parties to the contract, is, without doubt, a nullity. “

The court granted the petitioners’ prayer for the cancellation of the annotations of this prohibition at the back of their TCTs.

2. Paragraph (b) is does not grant a right of repurchase.

The law provides that for conventional redemption to take place, the vendor should reserve, in clear and certain terms, the right to repurchase the thing sold. The right to redeem must be expressly stipulated in the contract of sale. In this case, there was no express or implied grant of a right to repurchase, neither can it be inferred from Par. (b). The phrase should be construed to mean “should the buyers wish to sell” which is the plain and simple import of the words, and not “the buyers should sell”. Since the phrase is patent and unambiguous, the resort to Art. 1373 of the Civil Code is erroneous.

But even assuming that such a right of repurchase is granted under the Compraventa, the petitioner is correct in asserting that the right has already prescribed under Art. 1508 of the Civil Code of Spain (Art. 1606 of the Civil Code of the Philippines: the right to redeem or repurchase, in the absence of an express agreement as to time, shall last four years from the date of the contract). In this case then, the right to repurchase should have been exercised within 4 years from March 221, 1941, or at the latest in 1945.

(Mej related but unimportant fact) In the respondent court’s resolution, it is further ruled that the right to repurchase was given birth by the condition precedent provided for in the phrase “When the buyer has money to buy”. In other words, it is the respondent court’s contention that the right may be exercise only when the buyer has money to buy. If this were so, the 2nd par of Art 1508 would apply- there is agreement as to time, although it is indefinite, therefore the right should be exercised within 10 years, because the law does not favor suspended ownership. Since the alleged right to repurchase was attempted to be exercised by Santiago only in 1966, or 25 years from the date of the contract, the said right has undoubtedly expired.

3 That contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided that they are not contrary to law, morals, goof customs, public order, or public policy.


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Dispositive Order: WHEREFORE, in view of the foregoing, the Resolution dated September 27, 1983, of the respondent court is SET ASIDE and the Decision promulgated on June 28, 1978 is hereby REINSTATED. The annotations of the prohibition to sell at the back of TCT Nos. 138837, 138838, 138839, 138840, 138841, and 138842 are hereby ordered CANCELLED. Costs against the private respondent.

19. Rep. v. Rural Bank

G.R. No. 185121, 25 January 2012 Petitioner: Republic of the Philippines, National Irrigation AdministrationRespondents: Rural Bank of Cabacan, et al.,

Recit-Ready (Long case): The National Irrigation Administration (NIA) filed with the Regional Trial Court of Kabacan (RTC) a complaint for expropriation of a portion of three parcels of land covering a total of 14,497.91 square meters for its Malitubog-Marigadao irrigation project. The committee formed by the RTC pegged the fair market value of the land at Php 65.00 per square meter. It also added to its computation the value of soil excavated from portions of two lots. RTC adopted the findings of the committee despite the objections of NIA to the inclusion of the value of the excavated soil in the computation of the value of the land. NIA, through the Office of the Solicitor General, appealed to the Court of Appeals (CA) which affirmed with modification the RTC’s decision. CA deleted the value of the soil in determination of compensation but affirmed RTC’s valuation of the improvements made on the properties. HELD: There is no legal basis to separate the value of the excavated soil from that of the expropriated properties, contrary to what the trial court did. In the context of expropriation proceedings, the soil has no value separate from that of the expropriated land. Just compensation ordinarily refers to the value of the land to compensate for what the owner actually loses. Such value could only be that which prevailed at the time of the taking.

In National Power Corporation v. Ibrahim, et al. The SC held that rights over lands are indivisible. This conclusion is drawn from Article 437 of the Civil Code which provides: “The owner of a parcel of land is the owner of its surface and of everything under it, and he can construct thereon any works or make any plantations and excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation.” Thus, the ownership of land extends to the surface as well as to the subsoil under it.

Hence, the CA correctly modified the trial court’s Decision when it ruled it is preposterous that NIA will be made to pay not only for the value of the land but also for the soil excavated from such land when such excavation is a necessary phase in the building of irrigation projects. That NIA will make use of the excavated soil is of no moment and is of no concern to the landowner who has been paid the fair market value of his land. As pointed out by the OSG, the law does not limit the use of the expropriated land to the surface area only. To sanction the payment of the excavated soil is to allow the landowners to recover more than the value of the land at the time

when it was taken, which is the true measure of the damages, or just compensation, and would discourage the construction of important public improvements.

Facts:

National Irrigation Administration (NIA) is a government owned and controlled corporation primarily responsible and management in the country.

NIA needed some parcels of land for the purpose of constructing the Malitubog-Marigadao Irrigation Project. On 08 September 1994, it filed with the RTC of Kabacan, Cotabato a Complaint for the expropriation of a portion of three (3) parcels of land covering a total of 14,497.91 square meters

NIA filed an Amended Complaint to include Leosa Nanette A. Agdeppa and Marcelino Viernes as registered owners of Lot No. 3039. NIA filed a Second Amended Complaint to allege properly the area sought to be expropriated, the exact address of the expropriated properties and the owners thereof.

Respondent allege that NIA had no authority to expropriate portions of their land, because it was not a sovereign political entity; That it was not necessary to expropriate their properties, because there was an abandoned government property adjacent to theirs, where the project could pass through; That Lot No. 3080 was no longer owned by the Rural Bank of Kabacan; That NIAs valuation of their expropriated properties was inaccurate because of the improvements on the land that should have placed its value at ₱5 million; and that NIA never negotiated with the landowners before taking their properties for the project, causing permanent and irreparable damages to their properties valued at ₱250,000.

The RTC issued an Order forming a committee tasked to determine the fair market value of the expropriated properties to establish the just compensation to be paid to the owners.

On 15 October 1996, the committee submitted a Commissioners Report. The report, however, stated that the committee members could not agree on the market value of the subject properties and recommended the appointment of new independent commissioners to replace the ones coming from the parties only.

A new committee was ordered to be formed. On 25 November 1996, the new committee submitted its Commissioners Report to the lower court. The committee had agreed that the fair market value of the land to be expropriated should be ₱65 per square meter based on the zonal valuation of the Bureau of Internal Revenue (BIR).

The committee submitted to the RTC another report. The committee added to its computation the value of the earth-fill excavated from portions of Lot Nos. 3039 and 3080. Petitioner objected to the inclusion of the value of the excavated soil in the computation of the value of the land.

RTC ruled in favor of respondents and ordered the payment of just compensation according to the report of the new committee.


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NIA assailed the trial court’s adoption of the Commissioners Report, which had determined the just compensation to be awarded to the owners of the lands expropriated. NIA also impugned as error the RTC’s inclusion for compensation of the excavated soil from the expropriated properties.

CA ruled that the committee tasked to determine the fair market value of the properties and improvements for the purpose of arriving at the just compensation, properly performed its function.

The assailed CA Decision deleted the inclusion of the value of the soil excavated from the properties in the just compensation. It ruled that the property owner was entitled to compensation only for the value of the property at the time of the taking. In the construction of irrigation projects, excavations are necessary to build the canals, and the excavated soil cannot be valued separately from the land expropriated . Thus, it concluded that NIA, as the new owner of the affected properties, had the right to enjoy and make use of the property, including the excavated soil, pursuant to the latter’s objectives.

The CA affirmed the trial court’s ruling that recognized defendants-intervenors Margarita Tabaoda and Portia Charisma Ruth Ortiz as the new owners of Lot No. 3080 and held that they were thus entitled to just compensation by the Rural Bank of Kabacan in the expropriation proceedings and the latter’s Manifestation that it no longer owned Lot No. 3080.

ISSUE: WON there should be separate just compensation for the excavated land?

Held: No

Ratio:

The Court affirms the appellate court’s ruling that the commissioners properly determined the just compensation to be awarded to the landowners whose properties were expropriated by petitioner.

The records show that the trial court dutifully followed the procedure under Rule 67 of the 1997 Rules of Civil Procedure when it formed a committee that was tasked to determine the just compensation for the expropriated properties. The first set of committee members made an ocular inspection of the properties, subject of the expropriation. They also determined the exact areas affected, as well as the kinds and the number of improvements on the properties. When the members were unable to agree on the valuation of the land and the improvements thereon, the trial court selected another batch of disinterested members to carry out the task of determining the value of the land and the improvements.

In the instant case, the committee members based their recommendations on reliable data and, as aptly noted by the appellate court, considered various factors that affected the value of the land and the improvements.

The Court also uphold the CA ruling, which deleted the inclusion of the value of the excavated soil in the payment for just compensation. There is no legal basis to separate the value of the excavated soil from that of the expropriated properties. In the context of expropriation proceedings, the soil has no value separate from that of the expropriated land. Just compensation ordinarily refers to the value of the land to compensate for what the owner actually loses. Such value could only be that which prevailed at the time of the taking.

In National Power Corporation v. Ibrahim, et al., we held that rights over lands are indivisible. According to the Civil Code: ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can construct thereon any works or make any plantations and excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation. Thus, the ownership of land extends to the surface as well as to the subsoil under it.

Moreover, the landowners right extends to the subsoil insofar as necessary for their practical interests serves only to further weaken its case. The theory would limit the right to the subsoil upon the economic utility which such area offers to the surface owners. Presumably, the landowner’s right extends to such height or depth where it is possible for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there would be no more interest protected by law.

IMPORTANT: In the construction of irrigation projects, NIA must necessarily make excavations in order to build the canals. Indeed it is preposterous that NIA will be made to pay not only for the value of the land but also for the soil excavated from such land when such excavation is a necessary phase in the building of irrigation projects. That NIA will make use of the excavated soil is of no moment and is of no concern to the landowner who has been paid the fair market value of his land. As pointed out by the OSG, the law does not limit the use of the expropriated land to the surface area only. Further, NIA, now being the owner of the expropriated property, has the right to enjoy and make use of the property in accordance with its mandate and objectives as provided by law. To sanction the payment of the excavated soil is to allow the landowners to recover more than the value of the land at the time when it was taken, which is the true measure of the damages, or just compensation, and would discourage the construction of important public improvements.

As to the issue of ownership: The appellate court erred in affirming the trial courts Order to award payment of just compensation to the defendants-


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intervenors. There is doubt as to the real owner of Lot No. 3080. Despite the fact that the lot was covered by TCT No. T61963 and was registered under its name, the Rural Bank of Kabacan manifested that the owner of the lot was no longer the bank, but the defendants-intervenors; However, it presented no proof as to the conveyance thereof. In this regard, we deem it proper to remand this case to the trial court for the reception of evidence to establish the present owner of Lot No. 3080 who will be entitled to receive the payment of just compensation.

20. Land Bank v. Perez

Petitioners: LAND BANK OF THE PHILIPPINES (LBP)Respondents: LAMBERTO C. PEREZ, NESTOR C. KUN, MA. ESTELITA P. ANGELES-PANLILIO, and NAPOLEON O. GARCIA

Short facts (recit ready) & held:

LPB extended a credit accommodation to ACDC, a construction company, for the latter to buy construction materials. Since ACDC failed to pay LBP, LBP sued ACDC’s officers and representatives (Perez et al) for estafa, for allegedly misappropriating the materials. LBP argued that the transaction between LBP and ACDC was in a form of trust receipts and consequently, ownership of the materials obtained by ACDC vests in LBP. The court held that the transaction was actually a loan (thus, the ownership of the materials vests in ACDC) and not trust receipts, and therefore there can be no misappropriation, and thus, the estafa case must be dismissed.

Facts:

LBP is a government financial institution and the official depositary of the Phils.

Perez et al are officers and representatives of Asian Construction and Development Corporation (ACDC), a Phil corporation engaged in construction business.

LBP filed a complaint for estafa against Perez et al. It was alleged that LBP extended a credit accommodation to ACDC through

the execution of an Omnibus Credit Line Agreement. ACDC used the Letters of Credit/Trust Receipts Facility of the Agreement to buy construction materials.

Perez et al executed trust receipts in connection with the construction materials with a total principal amount of P52,344,096.32.

The trust receipts matured, but ACDC failed to return to LBP the proceeds of the construction projects or the construction materials subject of the trust receipts. LBP sent ACDC a demand letter, but still ACDC failed to pay. Thus, this suit.

Perez et al, in defense, stated that they signed the trust receipt documents on or about the same time LBP and ACDC executed the loan documents;

their signatures were required by LBP for the release of the loans. The trust receipts in this case do not contain (1) a description of the goods placed in trust, (2) their invoice values, and (3) their maturity dates, in violation of Section 5(a) of P.D. 115. Moreover, they alleged that ACDC acted as a subcontractor for government projects such as the Metro Rail Transit, the Clark Centennial Exposition and the Quezon Power Plant in Mauban, Quezon. Its clients for the construction projects, which were the general contractors of these projects, have not yet paid them; thus, ACDC had yet to receive the proceeds of the materials that were the subject of the trust receipts and were allegedly used for these constructions. As there were no proceeds received from these clients, no misappropriation thereof could have taken place.

Secretary of Justice said that Colinares v CA does not apply in this case. He explained that in Colinares, the building materials were delivered to the accused before they applied to the bank for a loan to pay for the merchandise; thus, the ownership of the merchandise had already been transferred to the entrustees before the trust receipts agreements were entered into. In the present case, the parties have already entered into the Agreement before the construction materials were delivered to ACDC.

Issue/s:

1. Did the transactions involve trust receipts and therefore the owner of the goods was LBP? (Coz if the answer is NO, they cannot be held liable for estafa)

Held/Ratio:

1. NO. The transactions were not in the form of trust receipts, and thus, the owner of the goods was ACDC. (Consequently, they are not liable for estafa)

Section 4 of P.D. 115 defines a trust receipt transaction in this manner:

Section 4. What constitutes a trust receipt transaction. A trust receipt transaction, within the meaning of this Decree, is any transaction by and between a person referred to in this Decree as the entruster, and another person referred to in this Decree as entrustee, whereby the entruster, who owns or holds absolute title or security interests over certain specified goods, documents or instruments, releases the same to the possession of the entrustee upon the latter's execution and delivery to the entruster of a signed document called a "trust receipt" wherein the entrustee binds himself to hold the designated goods, documents or instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if they are unsold or not otherwise disposed of…


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The fact that LBP had knowingly authorized the delivery of construction materials to a construction site of two government projects, as well as unspecified construction sites, repudiates the idea that LBP intended to be the owner of those construction materials. As a government financial institution, LBP should have been aware that the materials were to be used for the construction of an immovable property, as well as a property of the public domain. As an immovable property, the ownership of whatever was constructed with those materials would presumably belong to the owner of the land, under Article 445 of the Civil Code which provides:

Article 445. 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.

Arguendo that the materials, consisting of cement, bolts and reinforcing steel bars, would be used for the construction of a movable property, the ownership of these properties would still pertain to the government and not remain with the bank as they would be classified as property of the public domain, which is defined by the Civil Code as:

Article 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

Since these transactions are not trust receipts, an action for estafa should not be brought against the respondents, who are liable only for a loan.

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IV.D.2 Accession: Accession Continua

21. Dept. of Ed v. Tuliao

G.R. No. 205664 June 9, 2014Petitioner: Department of EducationRespondent: Mariano Tuliao

Recit Ready: Tuliao is the registered owner of a parcel of land located in Tuguegarao. A portion of the said property was allowed by his predecessors in interest to be used by Atulayan Elementary School (AES).as access road for the schoolchildren. Upon discovering that a gymnasium is being constructed on the subject property, Tuliao demanded that DepEd cease and desist and vacate the property. DepEd refused invoking ownership through prescription for being in

adverse, continuous and peaceful possession of the said property for over fifty (50) years. The issue in this case is whether or not DepEd has a right over the property. The Court held that Tuliao is the registered owner of the property. To prove the same, he presented not only his certificate of title but tax declaration over the same property. There are sufficient to prove Tuliao’s ownership over the property in question. Because Tuliao’s ownership was sufficiently proved, DepEd’s defense of laches and prescription must necessarily fail. Accordingly, the DepEd 's possession can only be considered as adverse from the time the gymnasium was being constructed in 1999 on the subject portion of Tuliao's property. In March 2000, Tuliao discovered the construction and demanded that the DepEd cease and desist from continuing the same. When DepEd refused, Tuliao filed a complaint for recovery of possession of the subject lot in 2002. Thus, only two (2) years had elapsed from the time the DepEd resisted Tuliao's claims. Clearly, he did not sleep on his rights. There was no prolonged inaction that barred him from prosecuting his claims.

Facts:

Mariano Tuliao (Tuliao) filed an action for recovery of possession and removal of structure with damages against the Department of Education (DepEd).

He alleged that he was the registered owner of the subject parcel of land and that a portion of the said property was allowed by his predecessors-in-interest to be used by the Atulayan Elementary School (AES) as an access road for the schoolchildren in going to and from the school. In March 2000, upon discovering that a structure was being constructed on the land, he demanded that the DepED cease and desist and vacate the property.

In its defense, the DepEd denied the material allegations of the complaint and averred that it did not state a cause of action. Even if there was, the same was already barred by prescription and/or laches. Its occupation of the subject land was adverse, peaceful, continuous, and in the concept of an owner for more than fifty (50) years.

MTCC rendered its decision, ruling that Tuliao was the registered owner of the subject property and, thus, had a right of action against the holder and possessor of the said property.

As to the structures, the MTCC stated that it could not allow the immediate removal thereof in view of the provisions of Article 448.4

4 The MTCC gave Tuliao the following options to exercise:a.) If in case the plaintiff exercises the option to appropriate the structures built on the lot in suit, the defendant is hereby directed to submit to this court the amount of the expenses spent for the structures within 15 days from receipt of the notice of the plaintiff of his desired option.b.) If the plaintiff decides to oblige the defendant to pay the price of the land, the current market value of the land including its improvements as determined by the City Assessor’s Office shall be the basis for the price thereof.c.) In case the plaintiff exercises the option to oblige the defendant to pay the price of the land but the latter rejects such purchase because the value of the land is considerably more than that of the structures, the parties shall agree upon the terms of a forced lease, and give the court a


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The RTC dismissed the appeal and affirmed the MTCC decision. CA affirmed the RTC.

Issues:

1. W/N there was sufficient description of the property in question.2. W/N DepEd’s possession was merely pursuant to the registered owner or

the property, hence prescription cannot be invoked

Held:

1. Here, Tuliao, as the registered owner, filed a complaint for recovery of possession and removal of structure.1âwphi1 To support his claim, he presented not only tax declarations and tax receipts, but also a certificate of title. The Court agrees with the CA that the said pieces of evidence were sufficient to resolve the issue of who had the better right of possession. That being the case, the burden was shifted to the DepEd to prove otherwise. Unfortunately, the DepEd only presented testimonial evidence and nothing more to prove its defense and refute Tuliao’s claim. Its lone witness was all that the DepEd had to prove its right of possession. As between a certificate of title, which is an incontrovertible proof of ownership,19 accompanied with a tax declaration and a tax receipt on one hand, and a testimony of a lone witness who is a retired teacher on the other, the former prevails in establishing who has a better right of possession over the property, following the rule that testimonial evidence cannot prevail over documentary evidence.

2. As regards the DepEd 's defense of ]aches, it has no merit either. The Court once ruled that mere material possession of the land was not adverse as against the owner and was insufficient to vest title, unless such possession was accompanied by the intent to possess as an owner. Accordingly, the DepEd 's possession can only be considered as adverse from the time the gymnasium was being constructed in 1999 on the subject portion of Tuliao's property. In March 2000, Tuliao discovered the construction and demanded that the DepEd cease and desist from continuing the same. When DepEd refused, Tuliao filed a complaint for recovery of possession of the subject lot in 2002. Thus, only two (2) years had elapsed from the time the DepEd resisted Tuliao's claims. Clearly, he did not sleep on his rights. There was no prolonged inaction that barred him from prosecuting his claims.

22. Communities Cagayan v. Spouses Nanol

Petitioners COMMUNITIES CAGAYAN, INC

formal written notice of such agreement and its provisos.d.) If no formal agreement shall be entered into within a reasonable period, the court shall fix the terms of the forced lease.

Respondents SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS UNDER THEM


Spouses Arsenio and Angeles Nanol entered into a Contract to Sell with Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to spouses a house and Lots. They obtained a loan from Capitol Development Bank, using the property as collateral. To facilitate the loan, a simulated sale over the property was executed by CCI in favor of spouses. The bank collapsed and closed before it could release the loan. Spouses entered into another Contract to Sell with petitioner over the same property for the same price. This time, they, undertook to pay the loan over four years. Arsenio demolished the original house and constructed a three-story house. CCI sent spouses a Notice of Cancellation of Contract to Sell due to the latter’s failure to pay the monthly amortizations. Petitioner filed an action for unlawful detainer against spouses. Issue: Whether petitioner is obliged to reimburse respondent-spouses the value of the new house minus the cost of the original house. Held: The petition is partly meritorious. In view of the special circumstances obtaining in this case, we are constrained to rely on the presumption of good faith on the part of the spouses which the petitioner failed to rebut. Thus, spouses being presumed builders in good faith, we now rule on the applicability of Article 448 of the Civil Code. Article 448 on builders in good faith does not apply where there is a contractual relation between the parties, such as in the instant case. The parties failed to attach a copy of the Contract to Sell. As such, we apply Article 448 of the Civil Code. The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land. CCI, as landowner, has two options. It may appropriate the new house by reimbursing respondent Angeles the current market value thereof minus the cost of the old house. In the alternative, petitioner may sell the lots to respondent Angeles at a price equivalent to the current fair value thereof. However, if the value of the lots is considerably more than the value of the improvement, respondent Angeles cannot be compelled to purchase the lots. She can only be obliged to pay petitioner reasonable rent.

Facts:

Sometime in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to respondent-spouses a house and Lots 17 and 19 located at Block 16, Camella Homes Subdivision, Cagayan de Oro City, for P368,000.00.


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They obtained a loan from Capitol Development Bank (CDB), using the property as collateral.

To facilitate the loan, a simulated sale over the property was executed by petitioner in favor of respondent-spouses.

Accordingly, titles were transferred in the names of respondent-spouses and submitted to CDB for loan processing. The bank collapsed and closed before it could release the loan.

On November 30, 1997, respondent-spouses entered into another Contract to Sell with petitioner over the same property for the same price.

This time, they availed of petitioner’s in-house financing thus, undertaking to pay the loan over four years, from 1997 to 2001.

Respondent Arsenio demolished the original house and constructed a three-story house allegedly valued at P3.5 million, more or less. (Respondent Arsenio died, leaving his wife, herein respondent Angeles, to pay for the monthly amortizations.)

On September 10, 2003, petitioner sent respondent-spouses a notarized Notice of Delinquency and Cancellation of Contract to Sell due to the latter’s failure to pay the monthly amortizations.

Petitioner filed before the Municipal Trial Court in Cities, an action for unlawful detainer against respondent-spouses.

In her Answer, respondent Angeles averred that the Deed of Absolute Sale is valid.

Issues:

1. Whether petitioner is obliged to refund to respondent-spouses all the monthly installments paid; and

2. Whether petitioner is obliged to reimburse respondent-spouses the value of the new house minus the cost of the original house.

Held: The petition is partly meritorious.

1. Respondent-spouses are entitled to the cash surrender value of the payments on the property equivalent to 50% of the total payments made under the Maceda Law.

2. Respondent-spouses are entitled to reimbursement of the improvements made on the property.

3. In view of the special circumstances obtaining in this case, we are constrained to rely on the presumption of good faith on the part of the respondent-spouses which the petitioner failed to rebut.

4. Thus, respondent-spouses being presumed builders in good faith, we now rule on the applicability of Article 448 of the Civil Code.

5. Article 448 on builders in good faith does not apply where there is a contractual relation between the parties, such as in the instant case.

6. We went over the records of this case and we note that the parties failed to attach a copy of the Contract to Sell.

7. As such, we are constrained to apply Article 448 of the Civil Code, which provides viz:

8. 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.

9. The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around.

10. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.

11. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.

12. The raison d’etre for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land.

13. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent.

14. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.

15. In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has two options.

16. It may appropriate the new house by reimbursing respondent Angeles the current market value thereof minus the cost of the old house. Under this option, respondent Angeles would have "a right of retention which negates the obligation to pay rent."

17. In the alternative, petitioner may sell the lots to respondent Angeles at a price equivalent to the current fair value thereof. However, if the value of the lots is considerably more than the value of the improvement, respondent Angeles cannot be compelled to purchase the lots.

18. She can only be obliged to pay petitioner reasonable rent.19. WHEREFORE, the petition is hereby PARTIALLY GRANTED. The assailed

Decision dated December 29, 2006 and the Order dated February 12, 2007


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of the Regional Trial Court, Cagayan de Oro City, Branch 18, in Civil Case No. 2005-158 are hereby AFFIRMED with MODIFICATION that petitioner Communities Cagayan, Inc. is hereby ordered to RETURN the cash surrender value of the payments made by respondent-spouses on the properties, which is equivalent to 50% of the total payments made, in ccordance with Section 3(b) of Republic Act No. 6552, otherwise known as the Maceda Law.

23. SulongNayon v. Nayong Filipino

Petitioner: Sulo Sa Nayon, Inc. and/or Philippine Village Hotel, Inc. and Jose Marcel E. PanlilioRespondent: Nayong Pilipino FoundationPonente: PUNO, C.J.

Short Facts/Doctrine:Nayong Pilipino leased a portion of its complex to Sulo sa Nayon for the building of a hotel (PVH). The lease was renewed but petitioners defaulted on the payment of their monthly rental and so respondent filed a complaint of unlawful detainer against them. SC ruled that:

Doctrine 1: The introduction of valuable improvements on the leased premises does not give the petitioners the right of retention and reimbursement which rightfully belongs to a builder in good faith. Otherwise, such a situation would allow the lessee to easily improve the lessor out of its property.

A lessee is neither a builder in good faith nor in bad faith that would call for the application of Articles 448 and 546 of the Civil Code. His rights are governed by Article 1678 of the Civil Code.

Doctrine 2: Under Article 1678, the lessor has the option of paying one-half of the value of the improvements which the lessee made in good faith, which are suitable for the use for which the lease is intended, and which have not altered the form and substance of the land. On the other hand, the lessee may remove the improvements should the lessor refuse to reimburse.

Facts:

On June 1, 1975, Nayong Pilipino leased a portion of the Nayong Pilipino Complex, to petitioner Sulo sa Nayon for the construction and operation of a hotel building, to be known as the Philippine Village Hotel. The lease was for an initial period of 21 years (May 1996). It is renewable for a period of 25 years under the same terms and conditions upon due notice in writing at least 6 months before its expiration.

On March 7, 1995, petitioners sent respondent a letter notifying the latter of their intention to renew the contract for another 25 years.

The parties executed a Voluntary Addendum to the Lease Agreement. They agreed to the renewal of the contract until 2021.

Beginning January 2001, petitioners defaulted in the payment of their monthly rental. Respondent repeatedly demanded petitioners to pay the arrears and vacate the premises. The last demand letter was sent on March 26, 2001.

On September 5, 2001, respondent filed a complaint for unlawful detainer before the MeTC of Pasay City. The arrears amounted to P26,183,225.14 as of July 31, 2001.

MeTC rendered its decision in favor of respondent ruling that upon the failure of the lessee to pay the stipulated rentals, the lessor may eject (sic) and treat the lease as rescinded and sue to eject the lessee. For non-payment of rentals, the lessor may rescind the lease, recover the back rentals and recover possession of the leased premises.

o Improvements made by a lessee such as the defendants herein on leased premises are not valid reasons for their retention thereof. The fact that petitioners allegedly made repairs on the premises in question is not a reason for them to retain the possession of the premises. There is no provision of law which grants the lessee a right of retention over the leased premises on that ground. Article 448 of the Civil Code, in relation to Article 546, which provides for full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on a land in the belief that he is the owner thereof. This right of retention does not apply to a mere lessee, like the petitioners, otherwise, it would always be in his power to improve his landlord out of the latters property (Chua v. CA, G.R. No. 109840, January 21, 1999).

o Although the Contract of Lease stipulates that the building and all the improvements in the leased premises belong to the defendants herein, such will not defeat the right of the plaintiff to its property as the defendants failed to pay their rentals in violation of the terms of the contract. At most, defendants can only invoke [their] right under Article 1678 of the New Civil Code which grants them the right to be reimbursed one-half of the value of the building upon the termination of the lease, or, in the alternative, to remove the improvements if the lessor refuses to make reimbursement.

Petitioners appealed to the RTC which modified the ruling of the MeTC. It ruled that considering the elements of permanency of the construction and substantial value of the improvements as well as the undispute[d] ownership over the land improvements, Art. 448 of the Civil Code should be applied. The only remaining and most crucial issue to be resolved is whether or not the appellants as builders have acted in good faith in order for Art. 448 in relation to Art. 546 of the Civil Code may apply with respect to their rights over improvements.

o The improvement of the hotel building of PVHI was constructed with the written consent and knowledge of Nayong Pilipino. In fact, it was precisely the primary purpose for which they entered into an


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agreement. Thus, it could not be denied that PVHI is a builder in good faith .

o Pursuant to Article 448 in relation to Art. 546 of the Civil Code, Nayong Pilipino has the sole option or choice, either to appropriate the building, upon payment of proper indemnity consonant to Art. 546 or compel the appellants to purchase the land whereon the building was erected.

o Until such time that plaintiff-appellee has elected an option or choice, it has no right of removal or demolition against appellants unless after having selected a compulsory sale, appellants fail to pay for the land. This is without prejudice from the parties agreeing to adjust their rights in some other way as they may mutually deem fit and proper.

CA held that the RTC erroneously applied the rules on accession, as found in Articles 448 and 546 of the Civil Code. The CA held that respondents are admittedly mere lessees of the subject premises and as such, cannot validly claim that they are builders in good faith in order to solicit the application of Articles 448 and 546 of the Civil Code in their favor.

o Introduction of valuable improvements on the leased premises does not strip the petitioner of its right to avail of recourses under the law and the lease contract itself in case of breach thereof. Neither does it deprive the petitioner of its right under Article 1678 to exercise its option to acquire the improvements or to let the respondents remove the same.

Issue: Whether PVHI is a builder in good faith which merits the application of Articles 448 and 546 in their favor.

Held: No, PVHI is NOT a builder in good faith (SC upholds CA ruling).

Ratio:

Pertinent Provisions:

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.

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

Art. 448 is manifestly intended to apply only to a case where one builds, plants, or sows on land in which he believes himself to have a claim of title, and not to lands where the only interest of the builder, planter or sower is that of a holder, such as a tenant (Tolentino).

In the case at bar, PVHI has no adverse claim or title to the land. PVHI’s contention 1: What petitioners insist is that because of the substantial

improvements they have introduced on the leased premises with the permission of respondent, they should be considered builders in good faith who have the right to retain possession of the property until reimbursement by respondent.

o SC: The introduction of valuable improvements on the leased premises does not give the petitioners the right of retention and reimbursement which rightfully belongs to a builder in good faith. Otherwise, such a situation would allow the lessee to easily improve the lessor out of its property.

o A lessee is neither a builder in good faith nor in bad faith that would call for the application of Articles 448 and 546 of the Civil Code. His rights are governed by Article 1678 of the Civil Code.

Art. 1678. 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 one-half of the value of the improvements at that 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.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.


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o Under Article 1678, the lessor has the option of paying one-half of the value of the improvements which the lessee made in good faith, which are suitable for the use for which the lease is intended, and which have not altered the form and substance of the land. On the other hand, the lessee may remove the improvements should the lessor refuse to reimburse.

PVHI’s contention 2: To apply Article 1678 to their case would amount to giving away the hotel and its other structures at virtually bargain prices. They allege that the value of the hotel and its appurtenant facilities amounts to more than two billion pesos, while the monetary claim of respondent against them only amounts to a little more than twenty six-million pesos. Thus, it is the lease contract that governs the relationship of the parties, and consequently, the parties may be considered to have impliedly waived the application of Article 1678.

o Petitioners maintain that the lease contract contains a default provision which does not give respondent the right to appropriate the improvements nor evict petitioners in cases of cancellation or termination of the contract due to default or breach of its terms. Petitioners assert that respondent committed a breach of the lease contract when it filed the ejectment suit against them.

o SC: Basic is the doctrine that laws are deemed incorporated in each and every contract. Existing laws always form part of any contract. Further, the lease contract in the case at bar shows no special kind of agreement between the parties as to how to proceed in cases of default or breach of the contract. .

o However, we find nothing in the default provision that prohibits respondent to proceed the way it did in enforcing its rights as lessor. It can rightfully file for ejectment to evict petitioners, as it did before the court a quo.

Disposition: Petitioners appeal is DENIED. CA decision affirmed.

24. Heirs of Limense v. De Ramos

Petitioner: HEIRS OF THE LATE JOAQUIN LIMENSE, namely: CONCESA LIMENSE, Surviving Spouse; and DANILO and JOSELITO, both surnamed Limense, childrenRespondent: RITA VDA. DE RAMOS, RESTITUTO RAMOS, VIRGILIO DIAZ, IRENEO RAMOS, BENJAMIN RAMOS, WALDYTRUDES RAMOS-BASILIO, TRINIDAD RAMOS-BRAVO, PAZ RAMOS-PASCUA, FELICISIMA RAMOS-REYES, and JACINTA RAMOS,Ponente: PERALTA, J.

Facts:

Dalmacio Lozada was the registered owner of a land in Manila. He subdivided his property into five lots (Lot Nos. 12-A, 12-B, 12-C,12-D and 12-E)and gave the divided lots to his daughters through a deed of donation.

TCT No. 40043, which covered Lot 12-C, was issued to Catalina, Isabel, and Salud Lozada. Meanwhile, the predecessors-in-interest of the respondents (De Ramos et al.) constructed their residential building on Lot 12-D, adjacent to Lot 12-C. On May 1969, a TCT was issued in the name of Joaquin Limense covering Lot 12-C.

Joaquin Limense wanted to build a hollow block fence on the boundary line between Lot 12-C and Lot 12-D. The fence, however, could not be constructed because a substantial portion of respondents' residential building in Lot 12-D encroached upon portions of Joaquin Limense's property in Lot No. 12-C.

Limense demanded the removal of the encroached area. However, respondent ignored both oral and written demands, forcing Limense to file a complaint against the respondents for removal of obstruction and damages with the RTC.

In the RTC, the respondents averred that they are daughters of on of the Lozada daughters. After subdividing the said lot, Dalmacio Lozada donated Lot No. 12-C in favor of his daughters Catalina, married to Sotero Natividad; Isabel, married to Isaac Limense; and Salud, married to Francisco Ramos. Being the surviving heirs of Francisco Ramos, respondents later became co-owners of Lot 12-C. Lot 12-C has served as right of way or common alley of all the heirs of Dalmacio Lozada since 1932 up to the present. As a common alley, it could not be closed or fenced by Joaquin Limense without causing damage and prejudice to respondents.

RTC: dismissed the complaint of Limense ruling that an apparent easement of right of way existed in favor of respondents. The Court also found that when plaintiff acquired the Lot 12-C which forms the alley, he knew that said lot could serve no other purpose than as an alley.

Joaquin filed a notice of appeal but during the pendency of the appeal with the CA, Joaquin died. His heirs then elevated the case to the SC via petition for review on certiorari.

Petitioners contend that respondents are not entitled to an easement of right of way over Lot 12-C, because their Lot 12-D is not duly annotated at the back of the TCT which would entitle them to enjoy the easement. Respondents, on the other hand, allege that they are entitled to an easement of right of way over Lot 12-C, which has been continuously used as an alley by the heirs of Dalmacio Lozada, the residents in the area and the public in general from 1932 up to the present. Since petitioners are fully aware of the long existence of the said alley or easement of right of way, they are bound to respect the same.

Issues:

1. WON respondents are entitled to an easement of right of way.2. WON the respondents are builders in good faith.3. What

Ruling:

YES.


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Ratio:

2. FIRST ISSUE: Joaquin Limense, as the registered owner of Lot 12-C, and his successors- in-interest, may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon. However, although the owner of the property has the right to enclose or fence his property, he must respect servitudes constituted thereon. Easement is a real right on another's property, corporeal and immovable,

whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement. It may be continuous or discontinuous, apparent or non-apparent.

Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man.

Discontinuous easements are those which are used at intervals and depend upon the acts of man.

Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same.

Non-apparent easements are those which show no external indication of their existence.

In the present case, the easement of right of way is discontinuous and apparent. It is discontinuous, as the use depends upon the acts of respondents and other persons passing through the property. Being an alley that shows a permanent path going to and from Beata Street, the same is apparent.

Being a discontinuous and apparent easement, the same can be acquired only by virtue of a title.

In the case at bar, TCT No. 96886, issued in the name of Joaquin Limense, does not contain any annotation that Lot No. 12-D was given an easement of right of way over Lot No. 12-C. However, Joaquin Limense and his successors-in-interests are fully aware that Lot No. 12-C has been continuously used and utilized as an alley by respondents and residents in the area for a long period of time.

Mendoza v. Rosel - The existence of the easement of right of way was therefore known to petitioners who must respect the same, in spite of the fact that their transfer certificates of title do not mention any burden or easement. It is an established principle that actual notice or knowledge is as binding as registration. In the case at bar, Lot No. 12-C has been used as an alley ever since it was donated by Dalmacio Lozada to his heirs. It is undisputed that prior to and after the registration of TCT No. 96886, Lot No. 12-C has served as a right of way in favor of respondents and the public in general. Thus, petitioners are bound by the easement of right of way over Lot No. 12-C, even though no registration of the servitude has been made on TCT No. 96886.

3. SECOND ISSUE: However, respondents right to have access to the property of petitioners does not include the right to continually encroach upon the latters property. It is not disputed that portions of respondents' house on Lot No. 12-D encroach upon Lot No. 12-C. In order to settle the rights of the parties relative to the encroachment, we should determine whether respondents were builders in good faith. Good faith is an intangible and abstract quality with no technical meaning or

statutory definition; and it encompasses, among other things, an honest belief, the absence of malice and the absence of a design to defraud or to seek an unconscionable advantage. It is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of proof.

The portions of Lot 12-D, particularly the overhang, covering 1 meter in width and 17 meters in length; the stairs; and the concrete structures are all within the 1/3 share alloted to them by their donor Dalmacio Lozada and, hence, there was absence of a showing that respondents acted in bad faith when they built portions of their house on Lot 12-C. The Court was convinced that respondents' predecessors-in-interest acted in good faith when they built portions of their house on Lot 12-C.

Using the above parameters, we are convinced that respondents' predecessors-in-interest acted in good faith when they built portions of their house on Lot 12-C.

4. THIRD ISSUE: Respondents being builders in good faith, we shall now discuss the respective rights of the parties relative to the portions encroaching upon respondents' house. Articles 448 and 546 of the New Civil Code provide:

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

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the


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possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

In other words, when the co-ownership is terminated by a partition, and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner, but the encroachment was in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties. In this case, the co-ownership was terminated due to the transfer of the title of the whole property in favor of Joaquin Limense.

Under the foregoing provision, petitioners have the right to appropriate said portion of the house of respondents upon payment of indemnity to respondents, as provided for in Article 546 of the Civil Code. Otherwise, petitioners may oblige respondents 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 respondents built thereon, then the latter cannot be obliged to buy the land. Respondents shall then pay the reasonable rent to petitioners upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, respondents may demolish or remove the said portion of their house, at their own expense, if they so decide.

The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land, he can compel the landowner to make a choice between two options: (1) to appropriate the building by paying the indemnity required by law, or (2) to sell the land to the builder.

Disposition:

WHEREFORE, the petition is DENIED, the Decision of the Court of Appeals dated December 20, 2001 in CA-G.R. CV No. 33589 is AFFIRMED with the following MODIFICATIONS:

1. No co-ownership exists over Lot No. 12-C, covered by TCT No. 96886, between petitioners and respondents.

2. The case is REMANDED to the Regional Trial Court, Branch 15, Manila, for further proceedings without further delay to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code.

25. Briones v. Macabagdal

Petitioners: Briones (2-S lot owners)Respondents: Macabagdal Spouses (2-R lot owners)

Short facts: Petitioners constructed a house on lot 2-R, which they thought was lot 2-S. After being informed of the mix up, petitioner refused to demolish the house and vacate the property. The respondents, owners of lot 2-R, filed a complaint. RTC ruled in favour of the respondents and ordered petitioners to either demolish their house or to pay respondents for the value of the land.

Court held that the petitioners are presumed to be in good faith. There being no evidence to the contrary, such presumption should be upheld. As builders in good faith, the land owner is constrained to choose between:

(a) Appropriating the building by paying the proper indemnity; or(b) Obliging the builder to pay the price of the land.

It is only if the owner chooses to sell the land, and that the builder fails to purchase it (where its value is not more than the value of the improvements) that the owner may remove the improvements from the land.

Facts: Macabagdals purchased from Vergon Realty Investments Corporation (Vergon) Lot No. 2-R. On the other hand, petitioners are the owners of Lot No. 2-S, which is adjacent to Lot No. 2-R.

After obtaining the necessary building permit and the approval of Vergon, petitioners constructed a house on Lot No. 2-R which they thought was Lot No. 2-S. After being informed of the mix up by Vergon’s manager, Macabagdal immediately demanded petitioners to demolish the house and vacate the property. Petitioners, however, refused to heed their demand. Thus, Macabagdal filed an action to recover ownership and possession of the said parcel of land with the RTC of Makati City.

Petitioners insisted that the lot on which they constructed their house was the lot which was consistently pointed to them as theirs by Vergon’s agents over the seven (7)-year period they were paying for the lot. They interposed the defense of being buyers in good faith and impleaded Vergon as third-party defendant claiming that because of the warranty against eviction, they were entitled to indemnity from Vergon in case the suit is decided against them.

RTC: Ruled in favor of Macabagdals. RTC ordered the petitioners to demolish their house and vacate the premises, and return the possession to Macabagdals within 30 days from the receipt of the decision. In the alternative, the RTC ruled that the Macabagdals be compensated by petitioners by the payment of the prevailing price of the lot involved which should not be less than 1,500 per square meters. Furthermore, RTC awarded moral damages to Macabagdals.

CA: Affirmed RTC’s ruling, stating that the petitioners cannot use the defense of allegedly being a purchaser in good faith for wrongful occupation of land.


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Petitioners contend that they are builders in good faith, having relied with full faith and confidence in the reputation of Vergon’s agents when they pointed the wrong property to them.

Issue: Whether the RTC’s ruling is correct? NO

Held: Case remanded to TC.

Ratio: The trial court erred in outrightly ordering petitioners to vacate the subject property or to pay respondent spouses the prevailing price of the land as compensation.

Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the mistake was done by petitioners in bad faith, the latter should be presumed to have built the house in good faith.

When a person builds in good faith on the land of another, Article 448 5 of the Civil Code governs. Article 448 covers cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, to have a claim of title thereto.

The builder in good faith can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land.

The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. However, even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option.

It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.

5 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.

Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may have made on the subject property as provided under Articles 5466 and 5487 of the Civil Code.Consequently, the Macabagdals have the option to appropriate the house on the subject land after payment to petitioners of the appropriate indemnity or to oblige petitioners to pay the price of the land, unless its value is considerably more than the value of the structures, in which case petitioners shall pay reasonable rent.

In accordance with Depra v. Dumlao, this case must be remanded to the RTC which shall conduct the appropriate proceedings to assess the respective values of the improvement and of the land, as well as the amounts of reasonable rentals and indemnity, fix the terms of the lease if the parties so agree, and to determine other matters necessary for the proper application of Article 448, in relation to Articles 546 and 548, of the Civil Code.

Considering that petitioners acted in good faith in building their house on the subject property of the respondent-spouses, there is no basis for the award of moral damages to respondent-spouses.

26. Metropolitan Wawterworks v. CA

Petitioner: METROPOLITAN WATERWORKS AND SEWERAGE SYSTEMRespondent: THE COURT OF APPEALS and THE CITY OF DAGUPAN

Short facts: NAWASA/MWSS loss in a case for recovery of ownership and possession against the City of Dagupan, regarding its waterworks system and was found to be a possessor in bad faith. NAWASA/MWSS wanted to take the useful improvements it made and request for reimbursement on its expenses, but the City appealed. Issue is w/n NAWASA can take the improvements. Court ruled that it cannot since it was a possessor in bad faith. Article 449 of the Civil Code of the Philippines provides that "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."

Facts:

The City of Dagupan filed a complaint against NAWASA, now known as MWSS, for

6 ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.7 ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.


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recovery of the ownership and possession of the Dagupan Waterworks System. NAWASA raised R.A. 1383 which vested upon it the ownership, possession and control of all waterworks systems throughout the Philippines and as one of its counterclaims the reimbursement of the expenses it had incurred for necessary and useful improvements amounting to P255,000.00.

Trial court ruled in favor of the CITY and found NAWASA to be a possessor in bad faith and hence not entitled to the reimbursement claimed by it.

Issue:

Whether or not MWSS has the right to remove all the useful improvements introduced by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was found to be a possessor in bad faith?

Held:

No

Ratio:

Article 449 of the Civil Code of the Philippines provides that "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." As a builder in bad faith, NAWASA lost whatever useful improvements it had made without right to indemnity

Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for useful expenses with the right of retention until reimbursed; and under Article 547 thereof, only a possessor in good faith may remove useful improvements if this can be done without damage to the principal thing and if the person who recovers the possession does not exercise the option of reimbursing the useful expenses. The right given a possessor in bad faith is to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time he enters into possession (Article 549, Id.).

The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by petitioner does not support its stand. On the contrary, this Court ruled in said case that "if the defendant constructed a new building, as he alleges, he cannot recover its value because the construction was done after the filing of the action for annulment, thus rendering him a builder in bad faith who is denied by law any right of reimbursement." What this Court allowed appellant Yap to remove were the equipment, books, furniture and fixtures brought in by him, because they were outside of the scope of the judgment and may be retained by him.

27. Alviola v. CA

EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,

HONORABLE COURT OF APPEALS, FLORENCIA BULING VDA DE TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T. JOSEP AND JOSEPHINE TINAGAN, respondents.

Recit ready:

The petitioners built a copra dryer and a store on the subject property. They claim ownership over the property on the ground that it is public land and that they are qualified to be beneficiaries of the comprehensive agrarian reform program. The private respondents claim ownership over the property on the ground that they inherited the property from their parents. The Supreme Court ruled in favor of the private respondents. Considering that the petitioners’ occupation of the properties in dispute was merely tolerated by private respondents, their argument that they acquired the property by occupation for 20 years does not have any factual or legal foundation. Petitioners’ own evidence recognized the ownership of the land in favor of the private respondents. In their tax declarations, petitioners stated that the house and copra dryer are located on the land of the private respondents.

Facts:

Victoria Sonjaconda Tinagan purchased from Mauro Tinagan two (2) parcels of land situated at Negros Oriental. Victoria and her son Agustin Tinagan, took possession of said parcels of land.

Sometime later, petitioners Editha and Porfera Alviola occupied portions thereof whereat they built a copra dryer and put up a store wherein they engaged in the business of buying and selling copra.

In 1975, Victoria died. In the same year, Agustin died, survived by herein private respondents, namely his wife, Florencia Buling Vda. de Tinagan and their children Demosthenes, Jesus, Zenaida and Josephine, all surnamed Tinagan.

The following year, petitioner Editha assisted by her husband filed a complaint for partition and damages before the CFI. She claimed to be an acknowledged natural child of deceased Agustin Tinagan. She demanded the delivery of her shares in the properties left by the deceased.

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

Despite the ruling, the petitioners Alviola remained in possession of the property.

The private respondents filed a complaint for recovery of possession against Editha and her husband Porferio Alviola before the RTC. They prayed that they be declared absolute owners of the said parcels of land, and that petitioners be ordered to vacate the same, to remove their copra dryer and


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store, to pay actual damages (in the form of rentals), moral and punitive damages, litigation expenses and attorneys fees.

Petitioners contend that they own the improvements in the disputed properties which are still public land; that they are qualified to be beneficiaries of the comprehensive agrarian reform program and that they are rightful possessors by occupation of the said properties for more than twenty years.

Issue:

Who has better right over the property?

Held: Private respondents (Wife and children of Agustin)

Ratio

Petitioners’ own evidence recognized the ownership of the land in favor of Victoria Tinagan. In their tax declarations, petitioners stated that the house and copra dryer are located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging that the disputed portions belong to Victoria/Agustin Tinagan in their tax declarations, petitioners claim as owners thereof must fail.

Considering that the petitioners’ occupation of the properties in dispute was merely tolerated by private respondents, their posture that they have acquired the property by occupation for 20 years does not have any factual or legal foundation. There was bad faith on the part of the petitioners when they constructed the copra dryer and store on the disputed portions since they were fully aware that the parcels of land belonged to Victoria Tinagan.

There was likewise bad faith on the part of the private respondents, having knowledge of the arrangement between petitioners and Victoria Tinagan relative to the construction of the copra dryer and store. Thus, for purposes of indemnity, Article 448 of the New Civil Code should be applied. However, the copra dryer and the store, as determined by the trial court and respondent court, are transferable in nature. Thus, it would not fall within the coverage of Article 448. As the noted civil law authority, Senator Arturo Tolentino, aptly explains: To fall within the provision of this Article, the construction must be of permanent character, attached to the soil with an idea of perpetuity; but if it is of a transitory character or is transferable, there is no accession, and the builder must remove the construction. The proper remedy of the landowner is an action to eject the builder from the land.

28. Arangote v. Maglunob

ELVIRA T. ARANGOTE,Petitioner,

SPS. MARTIN MAGLUNOB and LOURDES S. MAGLUNOB, and ROMEO SALIDO,

Respondents.

Recit Ready: Elvira and her husband filed a complaint for Quieting of Title against respondents. The respondents are the heirs of Esperanza from whom Elvira obtained title to the land. Elvira contends that she is the registered owner of the land, and Esperanza has relinquished all her rights over it already. Elvira has also built a house over said parcel. The respondents, on the other hand, contend that they are co-owners of the land and that Elvira, thru fraud, was able to obtain the land from Esperanza. Elvira claims that she is a possessor in good faith and is thus entitled to the protection given by the Civil Code. SC held that she is not a possessor in good faith. In the present case, when respondents came to know that an OCT over the subject property was issued and registered in Elvira’s name, they brought a Complaint before the Lupon of Barangay challenging the title of Elvira to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the petitioner had ceased. In the present case, when respondents came to know that an OCT over the subject property was issued and registered in Elvira’s name, they brought a Complaint before the Lupon of Barangay challenging the title of Elvira to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the petitioner had ceased.

Facts:

Elvira T. Arangote is the registered owner of a land covered by an Original Certificate of Title. She is petitioner.

Respondents Martin III and Romeo are first cousins and the grandnephews of Esperanza, from whom petitioner acquired the subject property.

Elvira and her husband filed a complaint against the respondents for Quieting of Title, Declaration of Ownership and Possession.

They alleged that Esperanza inherited the subject property from her uncle by virtue of a Partition Agreement. Complaint further stated that Esperanza executed a Last Will and Testament bequeathing the subject property to Elvira and her husband, but it was never probated. It also alleged that Esperanza renounced, relinquished, waived and quitclaimed all her rights, share, interest and participation whatsoever in the subject property in favor of Elvira and her husband.

Elvira and her husband constructed a house on the subject property. Respondents, however, together with some hired persons, entered the subject property and built a hollow block wall behind and in front of petitioners house, which effectively blocked the entrance to its main door.

Respondents averred that they co-owned the subject property with Esperanza. They alleged that Elvira and her husband, by means of fraud, undue influence and deceit were able to make Esperanza, who was already


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old and illiterate, affix her thumbmark to the Affidavit wherein she renounced all her rights and interest over the subject property

MCTC ruled in favor of Elvira and her husband. RTC reversed. Elvira contends that the OCT was issued under her name and was

registered in the Registry of Deeds of Aklan, on 20 April 1993. From 20 April 1993 until the institution of Civil Case No. 156 more than one year had already elapsed. Therefore her title cannot be attacked already.

Elvira claims that she is a possessor in good faith and, thus, entitled to the rights provided for under Articles 448 and 546 of the Civil Code.

Issue: W/N Elvira is protected by the Civil Code, being a possessor in good faith. NO

Ratio:

Possessor in good faith

Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner. Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so.

In the present case, when respondents came to know that an OCT over the subject property was issued and registered in Elvira’s name, they brought a Complaint before the Lupon of Barangay challenging the title of Elvira to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the petitioner had ceased.

Elvira cannot be entitled to the rights under Articles 448 and 546 of the Civil Code, because the rights mentioned therein are applicable only to builders in good faith and not to possessors in good faith.

Moreover, she cannot be considered a builder in good faith of the house on the subject property. In the context that such term is used in particular reference to Article 448 of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land, believing himself to be its owner and unaware of any defect in his title or mode of acquisition.

The builder in good faith, then, can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. In order, however, that the builder can invoke that accruing benefit and enjoy his corresponding right to

demand that a choice be made by the landowner, he should be able to prove good faith on his part.

Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

In this case, the subject property waived and quitclaimed by Esperanza to the petitioner and her husband in the Affidavit was only covered by a tax declaration in the name of Esperanza. Petitioner did not even bother to look into the origin of the subject property and to probe into the right of Esperanza to relinquish the same. Thus, when petitioner and her husband built a house thereon in 1989 they cannot be considered to have acted in good faith as they were fully aware that when Esperanza executed an Affidavit relinquishing in their favor the subject property the only proof of Esperanzas ownership over the same was a mere tax declaration. This fact or circumstance alone was enough to put the petitioner and her husband under inquiry. Settled is the rule that a tax declaration does not prove ownership. It is merely an indicium of a claim of ownership. Payment of taxes is not proof of ownership; it is, at best, an indicium of possession in the concept of ownership. Neither tax receipts nor a declaration of ownership for taxation purposes is evidence of ownership or of a right to possess realty when not supported by other effective proofs.

Passing of title of an immovable (other issue)

Title to immovable property does not pass from the donor to the donee by virtue of a Deed of Donation until and unless it has been accepted in a public instrument and the donor duly notified thereof. The acceptance may be made in the very same instrument of donation. If the acceptance does not appear in the same document, it must be made in another. Where the Deed of Donation fails to show the acceptance, or where the formal notice of the acceptance, made in a separate instrument, is either not given to the donor or else not noted in the Deed of Donation and in the separate acceptance, the donation is null and void.

In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first requisite, as it was notarized; thus, it became a public instrument. Nevertheless, it failed to meet the aforesaid second and third requisites. The acceptance of the said donation was not made


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by the petitioner and her husband either in the same Affidavit or in a separate public instrument. As there was no acceptance made of the said donation, there was also no notice of the said acceptance given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor of petitioner and her husband is null and void.

It is true that the acceptance of a donation may be made at any time during the lifetime of the donor. And granting arguendo that such acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the donor and noted in both the Deed of Donation and the separate instrument embodying the acceptance.

29. Mores v. Yu-go

G.R. No. 172292| July 23, 2010Petitioner:ALIDA MORESRespondents: SHIRLEY M. YU-GO, MA. VICTORIA M. YU-LIM, and MA. ESTRELLA M. YU,Ponente: CARPIO, J.

Summary: The Yu siblings allege that the Sps. Mores were allowed to live on the subject property subject to the condition that when the former needs it, the latter will vacate. When the Yu siblings demanded the spouses to vacate, the latter asked for extensions and after the final demand the spouses still refused. It was also said that the spouses demolished the improvements found in the property. So, the Yu siblings filed a case for injuction against the spouses asking for the value of the demolished improvement plus damages. The TC ruled in favor of the spouses saying that they were in good faith. The CA disagreed with the TC’s ruling and said that the relationship between the parties is that of a lessor-lessee. Thus, the lessor has the right to remove the improvements made after reimbursing the lessee of 50% of the value of the improvement. It also granted damages in favor of the Yu Siblings. The SC agreed with the CA saying that the spouses cannot be considered to be in good faith because they have no pretension to be owners of the property. But the grant of damages was disallowed because the Sps. Mores removed only the improvements they introduced without destroying the principal building, after the Yu siblings refused to pay them the reasonable value of the improvements.

Facts:

On January 21, 1998, Shirley M. Yu-Go, Ma. Victoria M. Yu-Lim and Ma. Estrella M. Yu (Yu siblings) filed a Complaint for Injunction and Damages with Prayer for Issuance of a TRO and Preliminary Injunction before the RTC-Naga City against spouses Antonio and Alida Mores (Sps. Mores).

Yu siblings alleged that they co-owned a parcel of land located in Sto. Tomas, Camarines Sur on which a building of strong materials (subject property) was built.

In March 1983, Sps. Mores pleaded to the Yu siblings that they be allowed to

stay in the subject property in the meantime that they did not own a house yet.

Since appellee Antonio Mores used to be an errand boy of Yu siblings family, they readily agreed without asking for any rental but subject only to the condition that the said stay would last until anyone of the Yu siblings would need the subject property.

In November 1997, the Yu siblings informed the Sps. Mores that they were already in need of the subject property and, besides, Sps. Mores already have their own house in Villa Grande Homes, Naga City.

Despite repeated demand to vacate, the Sps. Mores refused and spouses even hired some laborers and started demolishing the improvements on the subject property.

Yu siblings protest fell on deaf ears because Sps. Mores continued their demolition and even took away and appropriated for themselves the materials derived from such unlawful demolition.

Consequently, Yu siblings instituted the said action for injunction where they also prayed for the reimbursement of the value of the residential building illegally demolished and damages.

Sps. Mores claimed that appellee Antonio Mores, who was Yu siblings’ uncle, used to be the assistant manager and cashier of Yu siblings’ father at their Caltex Service Station until the latter’s death. The Caltex Filling Station had stopped operation and was just rented out to Herce Trucking Service. Upon the expiration of such lease contract, Sps. Mores were allowed to occupy the subject property as their dwelling places. They were the ones who caused its renovation consisting of a 3-bedroom annex, a covered veranda and a concrete hollow block fence, at their own expense, and with Yu siblings consent, which renovation was made without altering the form and substance of the subject property. They denied that Yu siblings made a demand for them to vacate the subject property, insisting that it was merely a sort of reminder that sooner or later Sps. Mores should yield possession thereof since, after all, they had already bought a second-hand house which was undergoing repair. Sps. Mores argued that what they removed was merely the improvements made on the subject property, which removal had not caused any substantial damage thereto as, in fact, it remained intact. By way of counterclaims, they demanded payment of actual damages, attorneys fees and litigation expenses.

The trial court ruled in favor of the Sps. Mores saying that there are builders in good faith. The CA disagreed with the trial court saying that the relationship between the parties partake of the nature of a lessor and lessee making Art. 1678 applicable to the present case. Thus, the right of appropriating the useful improvements after reimbursing 50% of its value or the right of removal of useful improvements are given to the lessor. It awarded moral damages in favor of the Yu siblings.

Issue: W/N the Sps. Mores were builders in good faith

Held: NO


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Ratio:

The good faith referred to by Alida Mores was about the building of the improvements on the leased subject property. However, tenants like the spouses Mores cannot be said to be builders in good faith as they have no pretension to be owners of the property. Indeed, full reimbursement of useful improvements and retention of the premises until reimbursement is made applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to improve his landlord out of his property. The appellate court is correct in ruling that Article 16788 of the Civil Code should apply in the present case.

There is no reason for the appellate court’s award of moral damages to the Yu siblings. The Sps. Mores removed only the improvements they introduced without destroying the principal building, after the [Yu siblings] refused to pay them the reasonable value of the improvements. When the spouses Mores demanded reimbursement, the Yu siblings should have offered to pay the spouses Mores one-half of the value of the improvements. Since the Yu siblings failed to make such offer, the spouses Mores had the right to remove the improvements.

Disposition: WHEREFORE, we GRANT the petition. We AFFIRM with MODIFICATION the Decision of the Court of Appeals promulgated on 26 August 2005 as well as the Resolution promulgated on 14 March 2006 in CA-G.R. CV No. 76076. Article 1678 of the Civil Code is applicable to the present case. The award of moral damages worth P100,000 to the Yu siblings is deleted.

30. Reynante v. CA

Petitioner: Jose ReynanteRespondent: Court of Appeals and Heirs of Gorgonio Carlos and Concepcion CarlosPonente: Paras


8 Article 1678. 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 one-half of the value of the improvements at that 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.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished. (n)

Reynante was the caretaker of a certain fishpond owned by Don Cosme Carlos. The fishpond was covered by a TCT. Don Cosme allowed Reynante to construct a nipa hut near the fishpond. After Don Cosme died, Reynante and Don Cosme executed an agreement whereby Reynante will turnover possession of the fishpond to the heirs. Reynante did not leave. The heirs filed an action for forcible entry.

1. The action cannot prosper as the action for forcible entry merely involves the issue of prior possession, not ownership. It was proved that Reynante had prior possession.

2. The land in dispute is not covered by the TCT but was merely an alluvial formation. An accretion does not automatically become registered land just because the lot which receives such accretion is covered by a Torrens Title. Such accretion to registered land does not preclude acquisition of the additional area by another person through prescription. Because petitioners have been occupying the land for more than 50 years, they acquired ownership over it by virtue of prescription.

Facts:

More than 50 years ago, petitioner Jose Reynante was taken as tenant by the late Don Cosme Carlos, owner and father-in-law of herein private respondents, over a fishpond located at Barrio Liputan, Meycauayan, Bulacan with an area of 188.711 square meters, more or less and covered by Transfer Certificate of Title No. 25618, Land Registry of Bulacan.

During the tenancy, petitioner Jose Reynante constructed a nipa hut where he and his family lived and took care of the nipa palms (sasahan) he had planted on lots 1 and 2 covering an area of 5,096 square meters and 6,011 square meters respectively. These lots are located between the fishpond covered by TCT No. 25618 and the Liputan (formerly Meycauayan) River.

Petitioner harvested and sold said nipa palms without interference and prohibition from anybody. Neither did the late Don Cosme Carlos question his right to plant the nipa palms near the fishpond or to harvest and appropriate them as his own.

After the death of Don Cosme Carlos, his heirs (private respondents' predecessors-in-interest) entered into a written agreement denominated as "SINUMPAANG SALAYSAY NG PAGSASAULI NG KARAPATAN" with petitioner Jose Reynante whereby the latter for and in consideration of the sum of P200,000.00 turned over the fishpond he was tenanting to the heirs of Don Cosme Carlos and surrendered all his rights therein as caretaker or "bantay-kasama at tagapamahala"

o Pursuant to the said written agreement, petitioner surrendered the fishpond and the two huts located therein to private respondents.

Private respondents thereafter leased the said fishpond to one Carlos de la Cruz. Petitioner continued to live in the nipa hut constructed by him on lots 1 and 2 and

to take care of the nipa palms he had planted therein. Private respondents formally demanded that the petitioner vacate said portion

since according to them petitioner had already been indemnified for the surrender of his rights as a tenant.


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o Despite receipt thereof, petitioner refused and failed to relinquish possession of lots 1 and 2.

Private respondents filed a complaint for forcible entry with preliminary mandatory injunction against petitioner alleging that the latter by means of strategy and stealth, took over the physical, actual and material possession of lots 1 and 2 by residing in one of the kubos or huts bordering the Liputan River and cutting off and/or disposing of the sasa or nipa palms adjacent thereto.

o The trial court rendered its decision dismissing the complaint and finding that petitioner had been in prior possession of lots 1 and 2.

Private respondents appealed to the Regional Trial Court which reversed the earlier decision. CA affirmed.

Issues:

1. Who between the petitioner and private respondents has prior physical possession of lots 1 and 2; Petitioner

2. Whether or not the disputed lots belong to private respondents as a result of accretion.

Held/Ratio:

1st issue:

An action for forcible entry is merely a quieting process and actual title to the property is never determined. A party who can prove prior possession can recover such possession even against the owner himself.

Whatever may be the character of his prior 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. On the other hand, if a plaintiff cannot prove prior physical possession, he has no right of action for forcible entry and detainer even if he should be the owner of the property.

Hence, the Court of Appeals could not legally restore private respondents' possession over lots 1 and 2 simply because petitioner has clearly proven that he had prior possession over lots 1 and 2.

o The evidence on record shows that petitioner was in possession of the questioned lots for more than 50 years. It is undisputed that he was the caretaker of the fishpond owned by the late Don Cosme Carlos for more than 50 years and that he constructed a nipa hut adjacent to the fishpond and planted nipa palms therein.

o An examination of the document signed by the defendant shows that what was surrendered to the plaintiffs was the fishpond and not the "sasahan" or the land on which he constructed his hut where he now lives. That is a completely different agreement in which a tenant would return a farm or a fishpond to his landlord in return for the

amount that the landlord would pay to him as a disturbance compensation.

o Moreover, when the plaintiffs leased the fishpond to Mr. Carlos de La Cruz there was no mention that the lease included the hut constructed by the defendant and the nipa palms planted by him, a circumstance that gives the impression that the nipa hut and the nipa palms were not included in the lease to Mr. de la Cruz, which may not belong to the plaintiffs.

2nd issue:

With regard to the second issue, it must be noted that the disputed lots involved in this case are not included in Transfer Certificate of Title No. 25618 as per verification made by the Forest Management Bureau, Department of Environment and Natural Resources.

The respondent Court of Appeals ruled that lots 1 and 2 were created by alluvial formation and hence the property of private respondents pursuant to Article 457 of the New Civil Code.9

Accretion benefits a riparian owner when the following requisites are present:(1) that the deposit be gradual and imperceptible;(2) that it resulted from the effects of the current of the water; and(3) that the land where accretion takes place is adjacent to the bank of a river.

Granting without conceding that lots 1 and 2 were created by alluvial formation and while it is true that accretions which the banks of rivers may gradually receive from the effect of the current become the property of the owner of the banks, such accretion to registered land does not preclude acquisition of the additional area by another person through prescription.

This Court ruled in the case of Ignacio Grande, et al. v. Hon. Court of Appeals, et al., G.R. No. L-17652, June 30, 1962, 115 Phil. 521 that:

o An accretion does not automatically become registered land just because the lot which receives such accretion is covered by a Torrens Title. Ownership of a piece of land is one thing; registration under the Torrens system of that ownership is another. Ownership over the accretion received by the land adjoining a river is governed by the Civil Code. Imprescriptibility of registered land is provided in the registration law. Registration under the Land Registration and Cadastral Act does not vest or give title to the land, but merely confirms and, thereafter, protects the title already possessed by the owner, making it imprescriptible by occupation of third parties. But to obtain this protection, the land must be placed under the operation of the registration laws, wherein certain judicial procedures have been provided .

Assuming private respondents had acquired the alluvial deposit (the lot in question), by accretion, still their failure to register said accretion for a

9 Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters.


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period of fifty (50) years subjected said accretion to acquisition through prescription by third persons.

It is undisputed that petitioner has been in possession of the subject lots for more than fifty (50) years and unless private respondents can show a better title over the subject lots, petitioner's possession over the property must be respected.

Disposition: PREMISES CONSIDERED, the decision of the respondent Court of Appeals dated February 28, 1990 is REVERSED and SET ASIDE and the decision of the Municipal Trial Court of Meycauayan, Bulacan, Branch I, is hereby REINSTATED.

SO ORDERED.

31. Vda. de Nazareno v. CA

Petitioners: DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO Respondents: Spouses SALASALAN, Spouses RABAYA, AVELINO LABIS, HON. HILARIO, ROLLEO I. IGNACIO, ALBERTO M. GILLERA and HON. PALAD, JR.

Recitready: Private respondents were lessors of land allegedly owned by petitioners’ predecessor-in-interest. When private respondents stopped paying rentals, they were sued by petitioners. Private respondents were ejected. Petitioners moved for execution of judgment however their ownership over the lot was contested by private respondents before the Bureau of Lands. The Bureau of Lands ruled that the accretion formed PUBLIC land, not private land under Art 457 of the civil code. The SC ruled that it cannot accrue to petitioners because it was formed not through gradual or imperceptible deposition of soil nor through the action of the waters of the river. The land was formed because of the dumping of sawdust by the milling operations of a lumber company.

Facts:

A parcel of land in Telegrapo, Puntod, CDO was formed as a result of sawdust dumped into the dried-up Balacanas Creek and along the banks of the Cagayan river.

Private respondents Salasalan and Rabaya leased the lots on which their houses stood from Antonio Nazareno, petitioners' predecessor-in-interest. Private respondents allegedly stopped paying rentals. Antonio Nazareno and petitioners filed a case for ejectment against them. The MTC ruled against private respondents. RTC affirmed.

Private respondents filed a case for annulment of judgment but was dismissed by the RTC. Petitioners moved for execution but private respondents filed another case for certiorari with prayer for RO and writ of PI, but was again dismissed.

Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey plan to perfect his title over the accretion area. However, before it could be approved private respondents protested before the Bureau.

Land Investigator recommended that the survey plan in the name of Antonio Nazareno, be cancelled and that private respondents be directed to file

appropriate public land applications. Consequently, the Bureau Regional Director ordered the amendment of the survey plan by segregating the areas occupied by the private respondents who, if qualified, may file public land applications. Decision affirmed by the OIC of the Bureau. Antonio moved for reconsideration but the MR was denied.

Petitioners filed a case for annulment of order of investigation, recommendation of the land investigator, decision of Bureau director. Dismissed for failure to exhaust administrative remedies. CA affirmed saying the MR cannot be considered as an appeal to the Office of the Secretary of Agriculture and Natural Resources, as mandated by C.A. No. 141 since it had been acted upon by respondent Undersecretary Ignacio in his capacity as Officer-in-Charge of the Bureau of Lands and not as Undersecretary acting for the Secretary of Agriculture and Natural Resources. Hence this petition.

ISSUE: WON the subject land is public land. YES IT IS PUBLIC LAND. Petitioners cannot claim the rights of a riparian owner.

Petitioners: the subject land is private land being an accretion to his titled property, applying Article 457 "To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters."

RATIO:

Accretion, as a mode of acquiring property requires:

(1) that the deposition of soil or sediment be gradual and imperceptible;

(2) that it be the result of the action of the waters of the river (or sea); and

(3) that the land where accretion takes place is adjacent to the banks or rivers (or the sea coast).

However, the first 2 requisites are not met. They admit that the accretion was formed by the dumping of boulders, soil and other filling materials on portions of the Balacanas Creek and the Cagayan River bounding their land. It cannot be claimed that the accumulation of such boulders, soil and other filling materials was gradual and imperceptible, resulting from the action of the waters or the current of the Balacanas Creek and the Cagayan River. "current" indicates the participation of the body of water in the ebb and flow of waters due to high and low tide.

Petitioners are estopped from denying the public character of the subject land, as well as the jurisdiction of the Bureau of Lands. Nazareno’s mere filing of said Application constituted an admission that the land being applied for was public land.

It is this Court's irresistible conclusion, therefore, that the accretion was man-made or artificial. The requirement that the deposit should be due to the effect of


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the current of the river is indispensable. This excludes from Art. 457 of the Civil Code all deposits caused by human intervention. Alluvion must be the exclusive work of nature. Where the land was not formed solely by the natural effect of the water current of the river bordering said land but is also the consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such, part of the public domain. Here, the subject land was the direct result of the dumping of sawdust by the Sun Valley Lumber Co. consequent to its sawmill operations.

32. Bagaipo v. CA

G.R. No. 116290. December 8, 2000PETITIONER: DIONISIA P. BAGAIPORESPONDENT: LEONOR LOZANOPONENTE: QUISUMBING

SHORT VERSION: Bagaipo owns a parcel of land. Lozano owns a parcel of land located across and opposite the southeast portion of Bagaipo’s land facing the Davao River. Bagaipo filed a case claiming that as a result of a change in course of the said river, her property became divided into three lots, namely: Lots 415-A, the area presently occupied by Bagaipo, 415-B, which cut across Bagaipo’s land was taken up by the new course of the Davao River and 415-C, the land presently located across the river and parallel to Bagaipo’s property. The issue is whether Bagaipo may lay claim over such parcels of land pursuant to Article 461. The SC answered in the negative. Article 461 is not applicable. The decrease in petitioner’s land area and the corresponding expansion of respondent’s property were the combined effect of erosion and accretion respectively. Art. 461 of the Civil Code is inapplicable.

FACTS:

Petitioner Dionisia P. Bagaipo is the registered owner of Lot No. 415, a 146,900 square meter agricultural land situated in Ma-a, Davao City while Respondent Leonor Lozano is the owner of a registered parcel of land located across and opposite the southeast portion of petitioner’s lot facing the Davao River.

On May 26, 1989, Bagaipo filed a complaint for Recovery of Possession with Mandatory Writ of Preliminary Injunction and Damages against Lozano for:

(1) the surrender of possession by Lozano of a certain portion of land measuring 29,162 square meters which is supposedly included in the area belonging to Bagaipo under TCT No. T-15757; and

(2) the recovery of a land area measuring 37,901 square meters which Bagaipo allegedly lost when the Davao River traversed her property.

Bagaipo’s Contention: As a result of a change in course of the said river, her property became divided into three lots, namely: Lots 415-A, the area presently occupied by Bagaipo, 415-B, which cut across Bagaipo’s land was taken up by the

new course of the Davao River and 415-C, the land presently located across the river and parallel to Bagaipo’s property.

Lozano’s Contention: The land claimed by Bagaipo is actually an accretion to their titled property. He asserted that the Davao River did not change its course and that the reduction in Bagaipo’s domain was caused by gradual erosion due to the current of the Davao River. Lozano added that it is also because of the river’s natural action that silt slowly deposited and added to his land over a long period of time. He further averred that this accretion continues up to the present and that registration proceedings instituted by him over the alluvial formation could not be concluded precisely because it continued to increase in size.

The trial court concluded that the applicable law is Article 457 of the New Civil Code and not Art. 461and dismissed the complaint. On appeal, the Court of Appeals affirmed the decision of the trial court, hence the present case.

ISSUE:

a) Whether or not there was a change in course of the Davao River such that petitioner owns the abandoned river bed pursuant to Article 461 of the Civil Code? NO.

b) Whether private respondent owns Lot 415-C in accordance with the principle of accretion under Article 457? YES.

HELD:

A) The decrease in petitioner’s land area and the corresponding expansion of respondent’s property were the combined effect of erosion and accretion respectively. Art. 461 of the Civil Code is inapplicable. Petitioner cannot claim ownership over the old abandoned riverbed because the same is inexistent. The riverbed’s former location cannot even be pinpointed with particularity since the movement of the Davao River took place gradually over an unspecified period of time, up to the present.

B) The rule is well-settled that accretion benefits a riparian owner when the following requisites are present: 1) That the deposit be gradual and imperceptible; 2) That it resulted from the effects of the current of the water; and 3) That the land where accretion takes place is adjacent to the bank of the river. These requisites were sufficiently proven in favor of respondents. In the absence of evidence that the change in the course of the river was sudden or that it occurred through avulsion, the presumption is that the change was gradual and was caused by alluvium and erosion.

As to Lot 415-C, which petitioner insists forms part of her property under TCT No. T-15757, it is well to recall our holding in C.N. Hodges vs. Garcia, 109 Phil. 133, 135:


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… The fact that the accretion to his land used to pertain to plaintiff’s estate, which is covered by a Torrens certificate of title, cannot preclude him (defendant) from being the owner thereof. Registration does not protect the riparian owner against the diminution of the area of his land through gradual changes in the course of the adjoining stream. Accretions which the banks of rivers may gradually receive from the effect of the current become the property of the owners of the banks (Art. 366 of the old Civil Code; Art. 457 of the new). Such accretions are natural incidents to land bordering on running streams and the provisions of the Civil Code in that respect are not affected by the Land Registration Act.

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IV.F.1 Co-ownership: Elements

33. Robles v. CA

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IV.F.2 Co-ownership: How Created

34. Ining v. Vega

Petitioners: Antipolo Ining (Deceased), Survived By Manuel Villanueva, Teodora Villanueva-Francisco, Camilo Francisco, Adolfo Francisco, Lucimo Francisco, Jr., Milagros Francisco,* Celedonio Francisco, Herminigildo Francisco; Ramon Tresvalles, Roberto Tajonera, Natividad Ining-Ibea (Deceased) Survived By Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz And Pastor Ruiz; Dolores Ining-Rimon (Deceased) Survived By Jesus Rimon, Cesaria Rimon Gonzales And Remedios Rimon Cordero; And Pedro Ining (Deceased) Survived By Elisa Tan Ining (Wife) And Pedro Ining, Jr.Respondents: Leonardo R. Vega, Substituted By Lourdes Vega, Restonilo I. Vega, Crispulo M. Vega, Milbuena Vega-Restituto, And Lenard VegaPonente: J. Del Castillo

Short facts:Leon died without issue. His heirs are his siblings, Romana and Gregoria, who thus inherited the property in equal shares. The heirs of Romana are herein respondents, while the heirs of Gregoria are the petitioners. Leonardo (ROMANA SIDE) filed a case for partition, recovery of ownership and possession, with damages, against GREGORIA’s heirs. Leonardo mentioned that he kept asking for partition but this was unheeded. It was in 1979, Lucimo Sr (Antipolo, who is a kid of Gregoria was survived by this man and others) claimed absolute ownership and deprived Leonardo of the benefits of the land. Lucimo argues that Enriquez already bought the land from Leon, and that Lucimo side had bought the property from Enriquez. RTC held that there was never any sale to an Enriquez but GREGORIA HEIRS but because off adverse possession for 30 years, the action of Leonardo had already prescribed. CA held that prescription began to run not from Leon’s death in 1962, but from Lucimo Sr.’s

execution of the Affidavit of Ownership of Land in 1979, which amounted to a repudiation of his co-ownership of the property with Leonardo.

SC held that no prescription shall run in favor of one of the co-heirs against the others so long as he expressly or impliedly recognizes the co-ownership. The act of making the affidavit equated to a repudiation. ) For prescription to set in, the repudiation must be done by a co-owner. HOWEVER, Lucimo Sr. is not a co-owner of the property. Indeed, he is not an heir of Gregoria; he is merely Antipolo’s son-in-law, being married to Antipolo’s daughter Teodora. One who is merely related by affinity to the decedent does not inherit from the latter and cannot become a co-owner of the decedent’s property. Consequently, he cannot effect a repudiation of the co-ownership of the estate that was formed among the decedent’s heirs.

Facts: Leon Roldan (Leon), married to Rafaela Menez (Rafaela), is the owner of a

parcel of land in Kalibo, Aklan covered by OCT RO-630. Leon and Rafaela died without issue. Leon was survived by his siblings Romana Roldan (Romana) and Gregoria Roldan Ining (Gregoria), who are now both deceased.

RESPONDENTS are the heirs of ROMANA. PETITIONERS are the heirs of GREGORIA.

In 1997, acting on the claim that one-half of subject property belonged to him as Romana’s surviving heir, Leonardo filed with the RTC of Kalibo a case for partition, recovery of ownership and possession, with damages, against Gregoria’s heirs. Leonardo alleged that on several occasions, he demanded the partition of the property but Gregoria’s heirs refused to heed his demands; that the matter reached the level of the Lupon Tagapamayapa, which issued a certification to file a court action sometime in 1980; that Gregoria’s heirs claimed sole ownership of the property; that portions of the property were sold to Tresvalles and Tajonera, which portions must be collated and included as part of the portion to be awarded to Gregoria’s heirs. Leonardo thus prayed that he be declared the owner of half of the subject property.

In their Answer, herein petitioners claimed that Leonardo had no cause of action against them; that they have become the sole owners of the subject property; that they were in continuous, actual, adverse, notorious and exclusive possession of the property with a just title; that they have been paying the taxes on the property; that Leonardo’s claim is barred by estoppel and laches.

The trial court dismissed the complaint of Leonardo on the ground that his right right of action has long prescribed under Article 1141 of the New Civil Code. Declaring Lot 1786 covered by OCT No. RO-630 (24071) to be the common property of the heirs of Gregoria Roldan Ining and by virtue whereof, OCT No. RO-630 (24071) is ordered cancelled and the Register of


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Deeds of the Province of Aklan is directed to issue a transfer certificate of title to the heirs of Gregoria. It also found that the April 4, 1943 and November 25, 1943 deeds of sale to be spurious. It concluded that Leon never sold the property to Enriquez, and in turn, Enriquez never sold the property to Lucimo Sr., hence, the subject property remained part of Leon’s estate at the time of his death in 1962. Leon’s siblings, Romana and Gregoria, thus inherited the subject property in equal shares. Leonardo and the respondents are entitled to Romana’s share as the latter’s successors.

However, the trial court held that Leonardo had only 30 years from Leon’s death in 1962 – or up to 1992 – within which to file the partition case. Since Leonardo instituted the partition suit only in 1997, the same was already barred by prescription. It held that under Article 1141 of the Civil Code, an action for partition and recovery of ownership and possession of a parcel of land is a real action over immovable property which prescribes in 30 years. In addition, the trial court held that for his long inaction, Leonardo was guilty of laches as well. Consequently, the property should go to Gregoria’s heirs exclusively.

The CA did not agree with the trial court’s pronouncement that Leonardo’s action for partition was barred by prescription. The CA declared that prescription began to run not from Leon’s death in 1962, but from Lucimo Sr.’s execution of the Affidavit of Ownership of Land in 1979, which amounted to a repudiation of his co-ownership of the property with Leonardo. Applying the fifth paragraph of Article 494 of the Civil Code, which provides that "[n]o prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership," the CA held that it was only when Lucimo Sr. executed the Affidavit of Ownership of Land in 1979 and obtained a new tax declaration over the property (TD 16414) solely in his name that a repudiation of his co-ownership with Leonardo was made, which repudiation effectively commenced the running of the 30-year prescriptive period under Article 1141.

Issue:W/N case should be dismissed on the ground of prescription/laches. NO

Ratio:Since Leon died without issue, his heirs are his siblings, Romana and Gregoria, who thus inherited the property in equal shares. In turn, Romana’s and Gregoria’s heirs – the parties herein – became entitled to the property upon the sisters’ passing. Under Article 777 of the Civil Code, the rights to the succession are transmitted from the moment of death.

Gregoria’s and Romana’s heirs are co-owners of the subject property.Thus, having succeeded to the property as heirs of Gregoria and Romana, petitioners and respondents became co-owners thereof. As co-owners, they may use the property owned in common, provided they do so in accordance with the purpose for which it is

intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights. They have the full ownership of their parts and of the fruits and benefits pertaining thereto, and may alienate, assign or mortgage them, and even substitute another person in their enjoyment, except when personal rights are involved. Each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned. Finally, no prescription shall run in favor of one of the co-heirs against the others so long as he expressly or impliedly recognizes the co-ownership.

For prescription to set in, the repudiation must be done by a co-owner.Time and again, it has been held that "a co-owner cannot acquire by prescription the share of the other co-owners, absent any clear repudiation of the co-ownership. In order that the title may prescribe in favor of a co-owner, the following requisites must concur: (1) the co-owner has performed unequivocal acts of repudiation amounting to an ouster of the other co-owners; (2) such positive acts of repudiation have been made known to the other co-owners; and (3) the evidence thereof is clear and convincing." From the foregoing pronouncements, it is clear that the trial court erred in reckoning the prescriptive period within which Leonardo may seek partition from the death of Leon in 1962. Article 1141 and Article 494 (fifth paragraph) provide that prescription shall begin to run in favor of a co-owner and against the other co-owners only from the time he positively renounces the co-ownership and makes known his repudiation to the other co-owners.

Lucimo Sr. challenged Leonardo’s co-ownership of the property only sometime in 1979 and 1980, when the former executed the Affidavit of Ownership of Land, obtained a new tax declaration exclusively in his name, and informed the latter – before the Lupon Tagapamayapa – of his 1943 purchase of the property. These apparent acts of repudiation were followed later on by Lucimo Sr.’s act of withholding Leonardo’s share in the fruits of the property, beginning in 1988, as Leonardo himself claims in his Amended Complaint. Considering these facts, the CA held that prescription began to run against Leonardo only in 1979 – or even in 1980 – when it has been made sufficiently clear to him that Lucimo Sr. has renounced the co-ownership and has claimed sole ownership over the property. The CA thus concluded that the filing of Civil Case No. 5275 in 1997, or just under 20 years counted from 1979, is clearly within the period prescribed under Article 1141.

What escaped the trial and appellate courts’ notice, however, is that while it may be argued that Lucimo Sr. performed acts that may be characterized as a repudiation of the co-ownership, the fact is, he is not a co-owner of the property. Indeed, he is not an heir of Gregoria; he is merely Antipolo’s son-in-law, being married to Antipolo’s daughter Teodora. Under the Family Code, family relations, which is the primary basis for succession, exclude relations by affinity.

Art. 150. Family relations include those:(1) Between husband and wife;


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(2) Between parents and children;(3) Among other ascendants and descendants; and(4) Among brothers and sisters, whether of the full or half blood.

In point of law, therefore, Lucimo Sr. is not a co-owner of the property; Teodora is. Consequently, he cannot validly effect a repudiation of the co-ownership, which he was never part of. For this reason, prescription did not run adversely against Leonardo, and his right to seek a partition of the property has not been lost.In fine, since none of the co-owners made a valid repudiation of the existing co-ownership, Leonardo could seek partition of the property at any time.

Disposition:WHEREFORE, the Petition is DENIED. The assailed March 14, 2006 Decision and the September 7, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 74687are AFFIRMED.

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IV.F.3 Co-ownership: Rights of Co-owners

35. Paulmitan v. CA

215 SCRA 866 , November 25, 1992Petitioner: Donato S. Paulitan, Juliana P. Fanesa and Rodolfo FanesaRespondents: CA, Alicio Paulmitan, Elena Paulmitan, Abelino Paulmitan, Anita Paulmitan, Baking Paulmitan, Adelina Paulmitan and Anito Paulmitan

Summary:

Agatona died leaving 2 sons: Pascual and Donato. Pascual died shortly after leaving 7 children. Donato executed a deed of sale of a lot left by Agatona in favour of his daughter, Juliana. The same property was forfeited by the provincial government due to non-payment of taxes, but was subsequently redeemed by Juliana. The heirs of Pascual claims to be co-owners of the subject lot. However, Juliana alleged that she is the sole owner of the same lot due to (1) the deed of sale executed in her favour by her father Donato and (2) her redemption of the same property from the provincial government. Court held that the respondents (heirs of Pascual) and Juliana are coowners of the property. (1) Even if a coowner sells the whole property as his, the sale will affect only his own share but not those of the other coowners who did not consent to the sale. This is because under Art. 493 of the Civil Code, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. (2) Also, the redemption of the land made by Fanesa did not terminate the coownership nor give her title to the entire land subject of the coownership. Nevertheless, she did acquire the right to be reimbursed for half of the redemption price she paid to the provincial governmentl on behalf of her coowners.

Facts:

Agatona Paulmitan died leaving two parcels of land: Lot No. 757 (herein referred as Lot A) and Lot No. 1091 (Lot B). She was survived by her two legitimate children Pascual and Donato. Pascual died shortly after Agatona and was survived by his children (herein respondents): Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito. Donato, on the other hand, is one of the petitioners herein, together with his daughter Juliana Fanesa and her husband Roldolfo Fanesa.

Donato executed an Affidavit of Declaration of Heirship extrajudicially adjudicating unto himself Lot A based on the claim that he is the only surviving heir of Agatona. It was duly registered with the Registry of Deeds, and a TCT was accordingly issued. As regards Lot B, Donato executed a Deed of Sale over the same in favour of his daughter Juliana Fanesa.

Meanwhile, Lot B was forfeited and sold at a public auction due to non-payment of taxes. The same lot was redeemed by Juliana Fanesa from the Provincial Government of Negros.

Upon learning of these transactions, the children of Pascual filed a complaint to partition the properties plus damages.

Lot A: The petition was dismissed by the lower court due to prescription. The complaint was filed more than 11 years after the issuance of a TCT to Donato. Such order has become final after the respondents’ failure to appeal therefrom.

Lot B: The lower court rules that the sale by Donato to his daughter Juliana did not prejudice the rights of the heirs of Pascual. And the repurchase by Juliana of the land from the provincial government did not vest in Juliana exclusive ownership over the entire land but only gave her the right to be reimbursed for the amount paid to redeem the property.

Issue:

WON Juliana became the sole owner of Lot B due to

1. Deed of Sale executed by Donato in her favour. NO2. Redemption of said property from the Provincial Government of Negros. NO

Held:

1. From the time of the death of Agatona to the subsequent passing away of her son Pascual, the estate remained unpartitioned. Article 1078 of the Civil Code provides: “Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to


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the payment of debts of the deceased.” Donato and Pascual Paulmitan were therefore, coowners of the estate left by their mother as no partition was ever made. When Pascual Paulmitan died intestate, his children, the respondents, succeeded him in the coownership of the disputed property. Pascual Paulmitan’s right of ownership over an undivided portion of the property passed on to his children, who, from the time of Pascual’s death, became coowners with their uncle Donato over the disputed decedent estate.

When Donato Paulmitan sold Lot B to his daughter Juliana Fanesa, he was only a coowner with respondents and as such, he could only sell that portion which may be allotted to him upon termination of the coownership. The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller’s proindiviso share in the property and consequently made the buyer a coowner of the land until it is partitioned.

As early as 1923, it has already been ruled that even if a coowner sells the whole property as his, the sale will affect only his own share but not those of the other coowners who did not consent to the sale. This is because under Art. 493 of the Civil Code, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common.

2. The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the entire land subject of the coownership.

Under the Civil Code: Art 488.Each coowner shall have a right to compel the other coowners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the coownership.

The result is that the property remains to be in a condition of coownership. While a vendee a retro, under Article 1613 of the Code, “may not be compelled to consent to a partial redemption,” the redemption by one coheir or coowner of the property in its totality does not vest in him ownership over it. The provision does not give to the redeeming coowner the right to the entire property. It does not provide for a mode of terminating a coownership.

Although Juliana Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she did acquire the right to be reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental on behalf of her coowners. Until

reimbursed, Fanesa holds a lien upon the subject property for the amount due her.

36. Del Campo v. CA

Petitioner: Spouses Manuel and Salvacion Del CampoRespondent: Hon. Court of Appeals and Heirs of Jose RegaladoPonente: Quisumbing J.

Short Facts and Doctrine/s: Salome, a co-owner, sold her pro-indiviso share in a lot to Daynolo. Daynolo’s heirs sold the same portion of land to herein petitioners, Sps Manuel and Del Campo. Another sale was made by the original co-owners to Regalado. Regalado had the title reconstituted and subdivided which necessarily included the portion earlier sold to petitioners. TC said the sale was void as Salome could not alienate her pro-indiviso share. Held: Salome’s right to sell part of her undivided interest in the co-owned property is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another person in its enjoyment. The vendee (Petitioners) of an undivided interest steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the property held in common. In this case, Regalado merely became a new co-owner of Lot 162 to the extent of the shares which original co-owners could validly convey.

Facts:

Salome, Consorcia, Alfredo, Maria, Rosalia, Jose, Quirico and Julita, all surnamed Bornales, were the original co-owners of a lot.

Salome sold part of her share to Soledad Daynolo. The land was specified in the deed of sale. Thereafter, Daynolo immediately took possession of the land. A few years later, Daynolo and her husband, mortgaged this portion to Jose Regalado. Daynolo died. The husband was able to redeem the mortgaged portion of land. He then executed a Deed of Discharge of Mortgage in favor of Soledad’s heirs. The heirs subsequently sold this to herein petitioners, the spouses Manuel Del Campo and Salvacion Quiachon.

Another sale by the co-owners of the entire lot: Later on, three of the eight co-owners (Salome, Consorcia and Alfredo) sold a large part of said lot to Jose Regalado. Meanwhile, Jose Regalado was able to obtain a title in his name of the whole lot previously co-owned. The whole was subdivided and covered in further titles in his name.

Thus, petitioners Manuel and Salvacion del Campo brought a complaint. They claim that they owned an area located within Lot 162-C-6 which was erroneously included in TCT in the name of Regalado.

TC held that while Salome could alienate her pro-indiviso share in Lot 162, she could not validly sell an undivided part thereof by metes and bounds to Daynolo, from whom petitioners derived their title.


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Issues: 1. Is the sale by a co-owner (Salome) of a physical portion of an undivided property held in common be valid?

Ruling: 1. YES. Sale valid up to portion of entitlement.

Ratio:

There can be no doubt that the transaction entered into by Salome and Soledad could be legally recognized in its entirety since the object of the sale did not even exceed the ideal shares held by the former in the co-ownership. As a matter of fact, the deed of sale executed between the parties expressly stipulated that the portion of Lot 162 sold to Soledad would be taken from Salomes 4/16 undivided interest in said lot, which the latter could validly transfer in whole or in part even without the consent of the other co-owners.

Salomes right to sell part of her undivided interest in the co-owned property is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another person in its enjoyment.

The vendee of an undivided interest steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the property held in common.

Resultantly, Soledad became a co-owner of Lot 162 when the sale was made in her favor. Consequently, Salome, Consorcia and Alfredo could not legally sell the shares pertaining to Soledad since a co-owner cannot alienate more than his share in the co-ownership.

Even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner will only transfer the rights of said co-owner to the buyer, thereby making the buyer a co-owner of the property.

In this case, Regalado merely became a new co-owner of Lot 162 to the extent of the shares which Salome, Consorcia and Alfredo could validly convey. Soledad retained her rights as co-owner and could validly transfer her share to petitioners. The logical effect of the second disposition is to substitute petitioners in the rights of Soledad as co-owner of the land. These rights are preserved notwithstanding the issuance of TCT in Regalados name.

Be that as it may, we find that the area subject matter of this petition had already been effectively segregated from the mother lot even before title was issued in favor of Regalado. During the intervening years, in no instance during this time did respondents or Regalado, for that matter, question petitioners right over the land in dispute.

Where the transferees of an undivided portion of the land allowed a co-owner of the property to occupy a definite portion thereof and had not disturbed the same for a period too long to be ignored, the possessor is in a better condition or right than said transferees. Such undisturbed possession had the effect of a partial partition of the co-owned property which entitles

the possessor to the definite portion which he occupies. Conformably, petitioners are entitled to the disputed land, having enjoyed uninterrupted possession thereof for a total of 49 years up to the present.

Disposition: WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals in CA-G.R. CV No. 30438 is REVERSED and SET ASIDE. The parties are directed to cause a SURVEY for exact determination of their respective portions in Lot 162-C-6. Transfer Certificate of Title No. 14566 is declared CANCELLED and the Register of Deeds of Capiz is ordered to ISSUE a new title in accordance with said survey, upon finality of this decision.Costs against respondents.SO ORDERED.

37. Arambulo v. nolasco

Recitation Ready Digests: The parties here co-owner 2 parcels of land. Petitioners were authorized by some co-owners (their siblings and their mother) to sell the land, while respondents (their brother-in-law and their nephews and their nieces) withhold their consent to sell the land. Thus, petitioners filed this petition for relief under Art. 491 which authorizes court to grant reliefs in case a co-owner withholds consents in making alterations to the property. Correct? No. The Court ruled that Art. 491 does not apply. Art. 493 does, which in effect states that each co-owner has the full ownership of his share. In case he alienates the property, the effect of the portion shall be limited to the portion which may be allotted to him. The co-owners cannot be ordered to sell their portion of the co–owned properties. In other words, the co-owners cannot be ordered to sell their portion of the co–owned properties. What is the remedy of the co-owners, partition the property.

Ponente: Perez J.

Facts: Petitioners and their mother, and their 6 siblings (the Arambulos) were co-owners

of 2 parcels of land. Upon the death of one of their siblings (Iraida Arambulo Nolasco).

Her heirs (the respondents/petitioners’ brother-in-law and 4 nephews and nieces) became co-owners of the property.

Sometime after all the Arambulo siblings and their mother authorized petitioners to sell the parcel of land. But the respondents withheld their consent to sell their respective shares.

Thus, petitioners filed a petition for relief under Article 491, alleging that the sale of subject properties constitutes alteration; and under Article 491 of the Civil Code, if one or more co–owners shall withhold their consent to the alterations in the thing owned in common, the courts may afford adequate relief.

Eventually, the trial court ruled in favor of petitioners and ordered respondents to give their consent to the sale.

On appeal, the CA reversed the trial court’s decision and held that under Article 493, the respondents had the full ownership of their undivided interest in the


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subject properties, thus, they cannot be compelled to sell their undivided shares in the properties.

But CA also implied applicability of Article 491 by observing that petitioners failed to show how respondents’ withholding of their consent would prejudice the common interest over the subject properties.

Hence, this instant petition.

Issue: May co–owners be compelled by the court to give their consent to the sale of their shares in the co–owned properties.

Held: Art. 491 clearly does not apply in cases of sale of the properties. It states –

Art. 491. None of the co–owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits for all would result therefrom. However, if the withholding of the consent by one or more of the co–owners is clearly prejudicial to the common interest, the courts may afford adequate relief.

Upon the other hand, The rights of a co–owner of a certain property are clearly specified in Article 493 –

Art. 493. Each co–owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co–owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co–ownership.

Authorities agree that co–owners (such as respondents) have over their part, the right of full and absolute ownership. Such right is the same as that of individual owners which is not diminished by the fact that the entire property is co–owned with others. That part which ideally belongs to them, or their mental portion, may be disposed of as they please, independent of the decision of their co–owners.

So we rule in this case. The co-owners cannot be ordered to sell their portion of the co–owned properties.

Further, insofar as the sale of co–owned properties is concerned, there is no common interest that may be prejudiced should one or more of the co–owners refuse to sell the co–owned property as each co-owner is an absolute owner of his respective share.

Obiter:What is the remedy for petitioners? File a suit for partition. Under article 494, no co–owner shall be obliged to remain in the co–ownership, and that each co–owner may demand at any time partition of the thing owned in common insofar as his share

is concerned. Corollary to this rule, Article 498 of the Civil Code states that whenever the thing is essentially indivisible and the co–owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds accordingly distributed.

Partition is resorted to (a) when the right to partition the property is invoked by any of the co–owners

but because of the nature of the property, it cannot be subdivided or its subdivision would prejudice the interests of the co–owners, and

(b) the co–owners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement of the co–owners.

38. Extraordinary Dev't v. Samson-Bico

G.R. No. 191090 | October 13, 2014

Petitioner: EXTRAORDINARY DEVELOPMENT CORPORATIONRespondents: HERMINIA F. SAMSON-BICO and ELY B. FLESTADO

Short Facts/Doctrines: Apolonio owned a parcel of land, which was inherited by his grandchildren, heirs of Juan and respondents, upon his death and the death of his wife and children. The grandchildren held the property in coownership, but without the consent of respondents, the heirs of Juan sold the entire property to petitioner EDC. The SC affirmed the existence of a co-ownership and validated the DoAS, but only to the extent of the half of the heirs of Juan. Article 493 of the Civil Code recognizes the absolute right of a coowner to freely dispose of his pro indiviso share as well as the fruits and other benefits arising from that share, independently of the other coowners. Since the coowner/vendor’s undivided interest could properly be the object of the contract of sale between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given under their transaction.

FACTS:Apolonio Ballesteros and Maria Membrebe were married. They had 2 children –Juan, who married Leonarda and had 6 children, and Irenea, who married Santiago and had 2 children, Herminia Samson-Bico (respondent) and Merlita Flestado, who married Ely Flestado (respondent). During Apolonio’s lifetime, he owned a parcel of land in Rizal, covered by Tax Declaration. When he and Maria died, the property was inherited by Juan and Irenea, which was then passed on to their heirs who held the property in co-ownership, upon the latter’s deaths. In 2002, the heirs of Juan, without the consent of respondents, executed in favor of EDC a Deed of Absolute Sale covering the subject property. When it was still a contract to sell, respondents wrote to EDC informing them about the existence of coownership over the property. EDC was able to cause the registration of the DoAS with the Office of the Provincial Assessor Rizal and transfer the tax declaration in its name. This prompted the respondents to


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file the Complaint for annulment of the contract and the TC and the reconveyance of possession with damages.

ISSUE:1. Whether a co-ownership exists2. Whether EDC is entitled to the entire property

HELD:1. YES. Respondents were able to convincingly establish their co-ownership over one-half of the subject property. Herminia has successfully established her successional rights over the subject property through her clear testimony and admitted by the opposing counsel. We also took into consideration the admissions made by the heirs of Juan in their Answer to the Complaint filed by respondents before the trial court. Furthermore, Juan Ballesteros testified that respondents are co-owners of the subject property. (When asked why despite his knowledge of the co-ownership, the DoAS was not signed by respondents, Juan replied, “Nakalimutan ko.”)

The Answer submitted by the heirs of Juan, as well as the testimony of Juan constitute judicial admissions which conclusively binds the party making it. He cannot thereafter take a position contradictory to, or inconsistent with his pleadings.

2. NO. EDC avers that said judicial admission should not bind it because it was an innocent purchaser in good faith. In a contract of sale, it is essential that the seller is the owner of the property he is selling. As correctly held by the CA, under Article 1458 of the Civil Code, the principal obligation of a seller is to transfer the ownership of the property sold. Also, Article 1459 of the Civil Code provides that the thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. The execution by appellants Ballesteros of the Deed of Absolute Sale over the subject property which they do not exclusively own but is admittedly co-owned by them together with the [respondents], was valid only to the extent of the former’s undivided one-half share thereof, as they had no title or interest to transfer the other one-half portion which pertains to the [respondents] without the latter’s consent. It is an established principle that no one can give what one does not have – nemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally. Thus, since appellant EDC’s rights over the subject property originated from sellers-appellants Ballesteros, said corporation merely stepped into the shoes of its sellers and cannot have a better right than what its sellers have.

Having established respondents’ co-ownership rights over the subject property, CA’s ruling sustaining the validity of the Deed of Absolute Sale with respect to the rights of the heirs of Juan over one-half of the property was correct. Article 493 of the Civil Code recognizes the absolute right of a coowner to freely dispose of his pro indiviso

share as well as the fruits and other benefits arising from that share, independently of the other coowners.10

We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular portion of a co-owned property prior to partition among all the co-owners. However, this should not signify that the vendee does not acquire anything at all in case a physically segregated area of the co-owned lot is in fact sold to him. Since the coowner/vendor’s undivided interest could properly be the object of the contract of sale between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given under their transaction. In other words, the vendee steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the property held in common.

Petition denied. The sale is valid but only to the extent of the half pertaining to the heirs of Juan. Under the doctrine of unjust enrichment, the heirs are ordered to return the amount paid by EDC representing half of the purchase price.

39. Adille v. CA

G.R. No. L-44546 January 29, 1988

PETITIONER: RUSTICO ADILLE

RESPONDENT: THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO ASEJO, JOSEFA ASEJO and SANTIAGO ASEJO

SHORT FACTS AND HELD: There was a woman who had two husbands. With the first husband, she produced the Petitioner. The second husband, the Respondents. Meanwhile, this woman owned a land and sold the same to a third person with right of repurchase. However, when the woman died, it was Petitioner who by himself repurchased the land and later on he executed an affidavit of sole ownership and registered the land unto himself alone. Eventually, the other heirs (Respondents) learned of the registration so they filed an action to cancel the title. Now Petitioner claims prescription almost on similar grounds with the previous case, i.e. the registration constituted constructive notice to the other heirs, if not to the world.

The issues are (1) whether or not a co-owner may acquire exclusive ownership over the property held in common and (2) whether or nor Rustico had constituted himself a negotiorum gestor.

10 Art. 493. Each co-owner shall have the full ownership of his part of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.


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(1) No. The right to repurchase may be exercised by a co-owner with respect to his share alone. Although Rustico Adille redeemed the property in its entirety, shouldering the expenses did not make him the owner of all of it. (2) Yes. The petitioner, in taking over the property, did so on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under Art 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the respondents being the beneficiaries, pursuant to Art 1456.

FACTS:

The property in dispute was originally owned by Felisa Alzul who got married twice. Her child in the first marriage was petitioner Rustico Adile and her children in the second marriage were respondents Emetria Asejo et al.

During her lifetime, Felisa Alzul sold the property in pacto de retro with a three-year repurchase period.

Felisa died before she could repurchase the property. During the redemption period, Rustico Adille repurchased the property by

himself alone at his own expense, and after that, he executed a deed of extra-judicial partition representing himself to be the only heir and child of his mother Felisa. Consequently, he was able to secure title in his name alone.

His half-siblings, herein respondents, filed a case for partition and accounting claiming that Rustico was only a trustee on an implied trust when he redeemed the property, and thus, he cannot claim exclusive ownership of the entire property.

It is the petitioner's contention that the property subject of dispute devolved upon him upon the failure of his co-heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the old Civil Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire property.

ISSUE:

May a co-owner acquire exclusive ownership over the property held in common?

HELD:

The right of repurchase may be exercised by a co-owner with aspect to his share alone. While the records show that the petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining co-owners. There is no doubt that redemption of property entails a necessary expense. Under the Civil Code:

ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name. But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership.

Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name terminate the existing co-ownership. While his half-brothers and sisters are liable to him for reimbursement as and for their shares in redemption expenses, he cannot claim exclusive right to the property owned in common. Registration of property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private respondents. The Civil Code states:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

Fraud attended the registration of the property. The petitioner's pretension that he was the sole heir to the land in the affidavit of extrajudicial settlement he executed preliminary to the registration thereof betrays a clear effort on his part to defraud his brothers and sisters and to exercise sole dominion over the property. The aforequoted provision therefore applies.

It is the view of the respondent Court that the petitioner, in taking over the property, did so either on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the private respondents being the beneficiaries, under the Article 1456. The evidence, of course, points to the second alternative the petitioner having asserted claims of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot therefore be said to have assume the mere management of the property abandoned by his co-heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court


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itself affirms, the result would be the same whether it is one or the other. The petitioner would remain liable to the Private respondents, his co-heirs.

This Court is not unaware of the well-established principle that prescription bars any demand on property (owned in common) held by another (co-owner) following the required number of years. In that event, the party in possession acquires title to the property and the state of co-ownership is ended . In the case at bar, the property was registered in 1955 by the petitioner, solely in his name, while the claim of the private respondents was presented in 1974. Has prescription then, set in?

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive, and (4) he has been in possession through open, continuous, exclusive, and notorious possession of the property for the period required by law.

The instant case shows that the petitioner had not complied with these requisites. We are not convinced that he had repudiated the co-ownership; on the contrary, he had deliberately kept the private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot therefore be said to have "made known" his efforts to deny the co-ownership. Moreover, one of the private respondents, Emeteria Asejo, is occupying a portion of the land up to the present, yet, the petitioner has not taken pains to eject her therefrom. As a matter of fact, he sought to recover possession of that portion Emeteria is occupying only as a counterclaim, and only after the private respondents had first sought judicial relief.

It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title.

For the same reason, we cannot dismiss the private respondents' claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from such a date in this case. We note the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother Feliza with the consequence that he was able to secure title in his name also." Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. According to the respondent Court of

Appeals, they "came to know [of it] apparently only during the progress of the litigation." Hence, prescription is not a bar.

Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a motion to dismiss or in the answer otherwise it is deemed waived, and here, the petitioner never raised that defense. There are recognized exceptions to this rule, but the petitioner has not shown why they apply.

40. Cabales v. CA

G.R. NO. 162421 | August 31, 2007Petitioners: NELSON CABALES and RITO CABALESRespondents: COURT OF APPEALS, JESUS FELIANO and ANUNCIACION FELIANO

SUMMARY:

Cabales died leaving a parcel of land to his heirs, which includes his wife Saturnina and sons Alberto and Rito (minor). Alberto and 2 other sons sold the land but was later redeemed by them with Saturnina paying for Alberto’s share, the latter dying prior to redemption. All the heirs sold the property again this time to respondents, with Saturnina acting on behalf of Alberto’s heirs (wife and son Nelson) and Rito. Nelson wanted to redeem the property years later. The SC held that Rito and Nelson are still co-owners of the land sold because Saturnina did not have authority to sell their pro-indiviso shares. As to Rito, the power of alienation is not included in Saturnina’s plenary power of administration. As to Nelson, Saturnina is not the proper legal guardian rather, Nelson’s mother. The SC also held that Nelson can no longer exercise his right of legal redemption, this being available only within 30 days from notification of the sale in writing.

FACTS:

Rufino Cabales died in 1966 leaving a parcel of land in Southern Leyte, covered by tax declaration, to his wife, Saturnina, and children, Bonifacio, Albino, Francisco, Leonora, Alberto and Rito. Three out of six children, brothers Bonifacio, Albino and Alberto, as co-owners, sold the property to Dr. Cayetano Corrompido for P2,000 with right to repurchase within 8 years. The proceeds were divided among the three. In 1972, Alberto died, leaving his wife and son, petitioner Nelson.

Within the redemption period, Bonifacio and Albino tendered their payment of P666.66 each to Corrompido. The latter released the document of sale with pacto de retro after Saturnina paid for Alberto’s share. Saturnina and four children then sold the parcel of land to Jesus and Anunciacion Feliano. The Deed of Sale provided that the shares of the heirs of Alberto, and Rito, who are all still minors, on the property were to be held in trust by the vendee to be delivered to them upon reaching the age of 21. The Register of Deeds then issued OCT in the name of the Felianos. Saturnina


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and her 4 children executed an affidavit to the effect that Nelson would receive the amount of P176.34 only considering that Saturnina paid the late Alberto’s obligation to Corrompido. Rito, then 24-years old, acknowledged receipt of P1143.00 from Feliano, representing his share in the proceeds of the sale.

In 1988, Saturnina died. Nelson, upon learning from his uncle Rito of the sale of the property, signified his intention to redeem the subject land. He filed before the RTC of Maasin, Southern Leyte, a complaint for redemption of the subject land plus damages.

ISSUE:

1. Whether Rito and Nelson Cabales are co-owners of the subject land

2. Whether Nelson has the right of legal redemption

HELD:

1. Yes. When Rufino Cabales died intestate, his wife Saturnina and his 6 children, including Alberto, Nelson’s father, and Rito, inherited equally on subject property in accordance to Article 996 of the NCC.11 However, before partition of the subject land was effected, Alberto died. By operation of law, his rights and obligations to 1/7 of subject land were transferred to his legal heirs—his wife and his son petitioner Nelson.

The first sale with pacto de retro to Dr. Corrompido by the brothers and co-owners Bonifacio, Albino and Alberto was valid but only as to their pro-indiviso shares to the land. When Alberto died prior to repurchasing his share, his rights and obligations were transferred to and assumed by his heirs. But the records show that it was Saturnina, Alberto's mother, and not his heirs, who repurchased for him. Saturnina was not subrogated to Alberto's or his heirs' rights to the property when she repurchased the share.

In Paulmitan v. Court of Appeals, the SC held that a co-owner who redeemed the property in its entirety did not make her the owner of all of it. The property remained in a condition of co-ownership as the redemption did not provide for a mode of terminating a co-ownership. But the one who redeemed had the right to be reimbursed for the redemption price and until reimbursed, holds a lien upon the subject property for the amount due. Necessarily, such is the case of Saturnina. The result is that the heirs of Alberto, i.e., his wife and his son petitioner Nelson, retained ownership over their pro-indiviso share.

Upon redemption from Dr. Corrompido, the subject property was resold to respondents-spouses by the co-owners. However, as to Rito, this contract of sale was

11 "[i]f a widow or widower and legitimate children or descendants are left, the surviving spouse has in the succession the same share as that of each of the children."

unenforceable. As per articles 320 and 326 of the NCC, the father, or, in his absence, the mother, is considered legal administrator of the property pertaining to the child under his or her parental authority without need of giving a bond in case the amount of the property of the child does not exceed two thousand pesos. Corollary to this, Rule 93, Section 7 of the Revised Rules of Court of 1964, applicable to this case, automatically designates the parent as legal guardian of the child without need of any judicial appointment in case the latter’s property does not exceed two thousand pesos. In this case, Saturnina was Rito’s legal guardian without necessity of court appointment, considering that the amount of his property was P1143.00 which is less than P2000. However, Rule 96, Sec. 1 provides that the legal guardian only has the plenary power of administration of the minor’s property. It does not include the power of alienation which needs judicial authority. Thus, when Saturnina, as legal guardian of Rito, sold the latter’s pro-indiviso share in subject land, she did not have the legal authority to do so.

With respect to Nelson, on the other hand, the contract of sale was void. He was a minor at the time of the sale. Saturnina or any and all the other co-owners were not his legal guardians with judicial authority to alienate or encumber his property. It was his mother who was his legal guardian and, if duly authorized by the courts, could validly sell his undivided share to the property. She did not. Necessarily, when Saturnina and the others sold the subject property in its entirety to respondents-spouses, they only sold and transferred title to their pro-indiviso shares. Consequently, Nelson and his mother retained ownership over their undivided share.

2. No. As provided under Articles 1088 and 1623 of the New Civil Code, 12 legal redemption may only be exercised by the co-owner or co-owners who did not part with his or their pro-indiviso share in the property held in common. As demonstrated, the sale as to the undivided share of petitioner Rito became valid and binding upon his ratification on July 24, 1986. As a result, he lost his right to redeem subject property.

However, as likewise established, the sale as to the undivided share of petitioner Nelson and his mother was not valid such that they were not divested of their ownership thereto. Necessarily, they may redeem the subject property from respondents-spouses. But they must do so within thirty days from notice in writing of the sale by their co-owners vendors. In reckoning this period, the written notice seeks to ensure that the redemptioner is properly notified of the sale and to

12 Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition,

any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.

Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners.


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indicate the date of such notice as the starting time of the 30-day period of redemption. Considering the shortness of the period, it is really necessary, as a general rule, to pinpoint the precise date it is supposed to begin, to obviate the problem of alleged delays, sometimes consisting of only a day or two.

In the instant case, the right of redemption was invoked not days but years after the sale was made in 1978. Although Nelson was a minor when the sale was perfected, in 1988, Nelson, then of majority age, was informed of the sale of subject property. Likewise, in 1993 he signified his intention to redeem subject property during a barangay conciliation process. But he only filed the complaint for legal redemption and damages in 1995.

In the face of the established facts, Nelson cannot feign ignorance and to require strict proof of written notice of the sale would be to countenance an obvious false claim of lack of knowledge thereof, thus commending the letter of the law over its purpose, i.e., the notification of redemptioners. The Court is satisfied that there was sufficient notice of the sale to petitioner Nelson. The thirty-day redemption period commenced in 1993, after petitioner Nelson sought the barangay conciliation process to redeem his property. Nelson, can no longer redeem subject property. But he and his mother remain co-owners thereof with respondents-spouses.

41. Figuracion v. Gerilla

Petitioners: Carolina (Carlina) Vda. De Figuracion, Heirs Of Elena Figuracion-Ancheta, Namely: Leoncio Ancheta, Jr., And Romulo Ancheta, Heirs Of Hilaria A. Figuracion, Namely: Felipa Figuracion-Manuel, Mary Figuracion-Ginez, And Emilia Figuracion-Gerilla, And Heirs Of Quintin Figuracion, Namely: Linda M. Figuracion, Leandro M. Figuracion, Ii, And Allan M. FiguracionRespondents: Emilia Figuracion-Gerilla

Recit Ready:The main debacle of this case is Lot No. 707 (the antecedent facts refers to other properties which the SC ruled would be inappropriate to partition considering that the ownership of Lot No. 705 is still in dispute and there are still unresolved issues as to the expenses chargeable to the estate of Leandro). Emilia relying on the Deed of Quitclaim which her aunt Agripina executed in favor of her built a house on Lot No. 707. Afterwards, petitioner Hilaria and her agents threatened to demolish the house of Emilia who, in retaliation, was prompted to seek the partition of Lot No. 707 as well as Lot Nos. 2299 and 705. The relevant question here is can the respondent, a co-owner, compel the partition of Lot No. 707? The respondent can compel the partition of Lot No. 707. The first stage in an action for partition is the settlement of the issue of ownership. The respondent traces her ownership over the eastern half of Lot No. 707 from the Deed of Quitclaim executed by Agripina, who in turn, was the co-owner thereof being one of the legitimate heirs of Eulalio.

FACTS:Petition

Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision dated December 11, 2001 of the Court of Appeals (CA) which reversed and set aside the Decision dated June 26, 1997 of the Regional Trial Court (RTC) of Urdaneta, Pangasinan, Branch 49.

The RTC decision:1. Dismissed respondent Emilia Figuracion-Gerilla’s (Emilia) complaint

for partition, annulment of documents, reconveyance, quieting of title and damages, and

2. Annulled the Affidavit of Self-Adjudication executed by petitioner Carolina (Carlina) Vda. De Figuracion (Carolina).

Antecedent Facts The parties are the heirs of Leandro Figuracion (Leandro) who died intestate

in May 1958. Subject of the dispute are two parcels of land both situated in Urdaneta,

Pangasinan, which were acquired by Leandro during his lifetime. These properties were: (1) Lot No. 2299 and (2) Lot No. 705.

Also involved in the controversy is Lot No. 707 originally owned by Eulalio Adviento (Eulalio),

Eulalio begot Agripina Adviento (Agripina) with his first wife Marcela Estioko (Marcela), whom Eulalio survived. When he remarried, Eulalio had another daughter, herein petitioner Carolina, with his second wife, Faustina Escabesa (Faustina).

On November 28, 1961, Agripina executed a Deed of Quitclaim over the eastern half of Lot No. 707 in favor of her niece, herein respondent Emilia.

On December 11, 1962, petitioner Carolina executed an Affidavit of Self-Adjudication adjudicating unto herself the entire Lot No. 707 as the sole and exclusive heir of her deceased parents, Eulalio and Faustina. Carolina also executed a Deed of Absolute Sale over Lot No. 707 in favor of petitioners Hilaria and Felipa, who in turn immediately caused the cancellation of OCT No. 15867 and the issuance of TCT No. 42244 in their names.

In 1971, Emilia and her family went to the United States and returned to the Philippines only in 1981. Upon her return and relying on the Deed of Quitclaim, she built a house on the eastern half of Lot No. 707

The legal debacle of the Figuracions started in 1994 when Hilaria and her agents threatened to demolish the house of Emilia who, in retaliation, was prompted to seek the partition of Lot No. 707 as well as Lot Nos. 2299 and 705.

During pre-trial conference, the issues were simplified into:o W/N Lot Nos. 2299 and 705 are the exclusive properties of Leandroo W/N respondent Emilia is the owner of the eastern half of Lot No.

707 RTC rendered its Decision dated June 26, 1997:

o RTC ruled that a partition of Lot Nos. 2299 and 705 will be premature since their ownership is yet to be transmitted from Leandro to his heirs


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o RTC held that petitioner Carolina transferred only her one-half (½) share to Felipa and Hilaria and any conveyance of the other half pertaining to Agripina was void.

o RTC refused to adjudicate the ownership of the lot’s eastern half portion in favor of respondent Emilia since a settlement of the estate of Eulalio is yet to be undertaken.

Respondent Emilia appealed to the CA, which, in its Decision dated December 11, 2001, ruled that the RTC erred in refusing to partition Lot No. 707.

o The CA agreed with the RTC that a partition of Lot Nos. 2299 and 705 is indeed premature considering that there is a pending legal controversy with respect to Lot No. 705 and Lot No. 2299

o The CA explained that there is no necessity for placing Lot No. 707 under judicial administration since Carolina had long sold her ½ pro indiviso share to Felipa and Hilaria.

o The proper action in such case is for a division or partition of the entire lot.

o A new judgment is hereby rendered declaring Lot No. 707 to be owned by:

appellant Emilia Figuracion-Gerilla [herein respondent], ½ pro indiviso share

appellee Felipa Figuracion [herein petitioner], ¼ pro indiviso share,

appellee Hilaria Figuracion [herein petitioner], ¼ pro indiviso share

Respondent Emilia appealed the CA’s decision to the Court In a Decision promulgated on August 22, 2006, the Court denied the appeal,

concurring with the CA’s ruling that a partition of Lot Nos. 2299 and 705 would be inappropriate considering that: (1) the ownership of Lot No. 705 is still in dispute; and (2) there are still unresolved issues as to the expenses chargeable to the estate of Leandro.

The present petition involves the appeal of the petitioners who attribute this sole error committed by the CA.

Position of Petitioner The petitioners argue that respondent Emilia has no valid basis for her claim

of ownership because the Deed of Quitclaim executed in her favor by Agripina was in fact a deed of donation that contained no acceptance

Position of Respondent Respondent Emilia contends that the Deed of Quitclaim should be

considered an onerous donation that requires no acceptance as it is governed by the rules on contracts and not by the formalities for a simple donation.

ISSUE: W/N the decision rendered by the CA is contrary to law and existing

jurisprudential dicta laid down by the honorable SC.

HELD/RATIO:No, CA committed no reversible error in holding that the respondent is entitled to have Lot No. 707 partitioned. The CA judgment must, however, be modified to conform to the below-discussed apportionment of the lot among Carolina, Hilaria, Felipa and Emilia.

The respondent can compel the partition of Lot No. 707o The first stage in an action for partition is the settlement of the issue of

ownership. Such an action will not lie if the claimant has no rightful interest in the subject property. In fact, the parties filing the action are required by the Rules of Court to set forth in their complaint the nature and the extent of their title to the property. It would be premature to effect a partition until and unless the question of ownership is first definitely resolved.

o Here, the respondent traces her ownership over the eastern half of Lot No. 707 from the Deed of Quitclaim executed by Agripina, who in turn, was the co-owner thereof being one of the legitimate heirs of Eulalio. It is well to recall that the petitioners failed to categorically dispute the existence of the Deed of Quitclaim. Instead, they averred that it has been rendered ineffective by TCT No. 42244 in the name of Felipa and Hilaria―this contention is, of course, flawed.

o Mere issuance of a certificate of title in the name of any person does not foreclose the possibility that the real property may be under coownership with persons not named in the certificate, or that the registrant may only be a trustee, or that other parties may have acquired interest over the property subsequent to the issuance of the certificate of title. Stated differently, placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. The certificate cannot always be considered as conclusive evidence of ownership. In this case, co-ownership of Lot No. 707 was precisely what respondent Emilia was able to successfully establish, as correctly found by the RTC and affirmed by the CA.

o The status of Agripina and Carolina as the legitimate heirs of Eulalio is an undisputed fact. As such heirs, they became co-owners of Lot No. 707 upon the death of Eulalio on July 20, 1930. Since Faustina was predeceased by Eulalio, she likewise became a co-owner of the lot upon Eulalio’s death. Faustina’s share, however, passed on to her daughter Carolina when the former died on October 18, 1949. The Affidavit of Self-Adjudication executed by Carolina did not prejudice the share of Agripina because it is not legally possible for one to adjudicate unto himself an entire property he was not the sole owner of. A co-owner cannot alienate the shares of her other co-owners – nemo dat qui non habet.

o Hence, Lot No. 707 was a co-owned property of Agripina and Carolina. As co-owners, each of them had full ownership of her part and of the


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fruits and benefits pertaining thereto. Each of them also had the right to alienate the lot but only in so far as the extent of her portion was affected.

o Thus, when Carolina sold the entire Lot No. 707 on December 11, 1962 to Hilaria and Felipa without the consent of her co-owner Agripina, the disposition affected only Carolina’s pro indiviso share, and the vendees, Hilaria and Felipa, acquired only what corresponds to Carolina’s share. A co-owner is entitled to sell his undivided share; hence, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void and only the rights of the co-owner/seller are transferred, thereby making the buyer a co-owner of the property.

o Accordingly, the deed of sale executed by Carolina in favor of Hilaria and Felipa was a valid conveyance but only insofar as the share of Carolina in the co-ownership is concerned. As Carolina’s successors-in-interest to the property, Hilaria and Felipa could not acquire any superior right in the property than what Carolina is entitled to or could transfer or alienate after partition.

o In a contract of sale of co-owned property, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner, and the vendee merely steps into the shoes of the vendor as co-owner. Hilaria and Felipa did not acquire the undivided portion pertaining to Agripina, which has already been effectively bequeathed to respondent Emilia as early as November 28, 1961 thru the Deed of Quitclaim. In turn, being the successor-in-interest of Agripina’s share in Lot No. 707, respondent Emilia took the former’s place in the co-ownership and as such co-owner, has the right to compel partition at any time.

The respondent’s right to demand for partition is not barred by acquisitive prescription or laches.

o The Court finds it unavailing in this case in view of the proximity of the period when the co-ownership was expressly repudiated and when the herein complaint was filed.

o Laches is the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has abandoned it or declined to assert it.

o More so, laches is a creation of equity and its application is controlled by equitable considerations. It cannot be used to defeat justice or perpetrate fraud and injustice. Neither should its application be used to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of another.

Partition of Lot No. 707o Under the Old Civil Code which was then in force at the time of

Eulalio and Marcela’s marriage, Lot No. 707 was their conjugal property.

o When Marcela died, one-half of the lot was automatically reserved to Eulalio, the surviving spouse, as his share in the conjugal

partnership. Marcela’s rights to the other half, in turn, were transmitted to her legitimate child, Agripina and surviving spouse Eulalio.

o When he remarried, Eulalio’s one half portion of the lot representing his share in the conjugal partnership and his usufructuary right over the other half were brought into his second marriage with Faustina.

o When Eulalio died on July 20, 1930, ¼ portion of the lot was reserved for Faustina as her share in the conjugal partnership. The remaining ¼ were transmitted equally to the widow Faustina and Eulalio’s children, Carolina and Agripina.

o Upon the death of Faustina, the shares in Lot No. 707 were in turn inherited by Carolina.

o Consequently, Agripina is entitled to 5/8 portion of Lot No. 707 while the remaining 3/8 pertains to Carolina.

o Thus, when Carolina sold Lot No. 707 to Hilaria and Felipa, the sale affected only 3/8 portion of the subject lot. Since the Deed of Quitclaim, bequeathed only the ½ eastern portion of Lot No. 707 in favor of Emilia instead of Agripina’s entire 5/8 share thereof, the remaining 1/8 portion shall be inherited by Agripina’s nearest collateral relative, who, records show, is her sister Carolina.

42. Estreller v Ysmael

GR no. 170264, March 13, 2009Petitioners: James Estreller etc.Respondents: Luis Miguel Ysmael and Cristeta Santos-AlvarezPonente: AUSTRIA-MARTINEZ, J.

Facts Respondents filed with the RTC a case for Recovery of Possession against

petitioners, claiming ownership of the property subject of dispute located in Quezon City, by virtue of Transfer Certificate of Title (TCT) No. 41698 issued by the Register of Deeds of Quezon City on June 10, 1958. Respondents alleged that on various dates in 1973, petitioners entered the property through stealth and strategy and had since occupied the same; and despite demands made in March 1993, petitioners refused to vacate the premises, prompting respondents to file the action.

Petitioners denied respondents' allegations. According to them, respondent Luis Miguel Ysmael (Ysmael) had no personality to file the suit since he only owned a small portion of the property, while respondent Cristeta Santos-Alvarez (Alvarez) did not appear to be a registered owner thereof. Petitioners also contended that their occupation of the property was lawful, having leased the same from the Magdalena Estate, and later on from Alvarez. Lastly, petitioners asserted that the property has already been proclaimed by the Quezon City Government as an Area for Priority Development under P.


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D. Nos. 1517 and 2016, which prohibits the eviction of lawful tenants and demolition of their homes.

Issue:Whether the court of appeals erred in concluding that respondents Ysmael and Alvarez are both real parties in interest who would be benefited or injured by the judgment or the party entitled to the avails of the suit?

Ruling: NO. Respondents are real parties-in-interest in the suit below and may, therefore, commence the complaint for accion publiciana. On the part of Ysmael, he is a named co-owner of the subject property under TCT No. 41698, together with Julian Felipe Ysmael, Teresa Ysmael, and Ramon Ysmael. For her part, Alvarez was a buyer of a portion of the property, as confirmed in several documents, namely: (1) Decision dated August 30, 1974 rendered by the Regional Trial Court of Quezon City, Branch 9 (IX), in Civil Case No. Q-8426, which was based on a Compromise Agreement between Alvarez and the Magdalena Estate; (2) an unnotarized Deed of Absolute Sale dated May 1985 executed between the Ysmael Heirs and Alvarez; and (3) a notarized Memorandum of Agreement between the Ysmael Heirs and Alvarez executed on May 2, 1991.

Ratio:Recently, in Wee v. De Castro, the Court, citing Article 487 of the Civil Code, reasserted the rule that any one of the co-owners may bring any kind of action for the recovery of co-owned properties since the suit is presumed to have been filed for the benefit of all co-owners. The Court also stressed that Article 487 covers all kinds of action for the recovery of possession, i.e., forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion), thus:

In the more recent case of Carandang v. Heirs of De Guzman,this Court declared that a co-owner is not even a necessary party to an action for ejectment, for complete relief can be afforded even in his absence, thus:

In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be afforded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.

Disposition:Petition is denied. Decision of CA affirmed.==========================================================

IV.F.4 Co-ownership: Partition

43. Pada-Kilario v. CA

Summary:

Jacinto Pada had 6 children. He died intestate. His estate included a parcel of land of residential and coconut land located in Leyte. It is the northern portion of the lot which is the subject of the instant controversy. Some distant relatives of Jacinto occupied the northern portion of the lot by mere tolerance of Jacinto. When Jacinto died, his heirs extra-judicially settled his estate, without registering the deed. Two of Jacinto’s heirs sold their shares to Engr. Paredes and to Silverio Pada. Silverio demanded that the occupants (Kilarios) of the northern part of the lot vacate the property. Ejectment suit was filed against them. In the interim, the other heirs of Jacinto executed deed of donation in favor of the Kilarios of their share over the lot. HELD: Extrajudicial settlement of estate, VALID. The subsequent sale of divided portion to Paredes and Silverio Pada, VALID. The deed of donation in favor of the Kilarios, VOID. The Kilarios were NOT builders in GF.

Facts:

Jacinto Pada had six (6) children. He died intestate. His estate included a parcel of land of residential and coconut land located in Leyte. It is the northern portion of the lot which is the subject of the instant controversy (“subject property” = northern portion of the lot).

During the lifetime of Jacinto Pada, his halfbrother, Feliciano Pada, obtained permission from him to build a house on the subject property. When Feliciano died, his son, Pastor (Jacinto’s nephew), continued living in the house together with his eight children. Petitioner Verona PadaKilario, one of Pastor’s children, has been living in that house since 1960.

Sometime in May, 1951, the heirs of Jacinto Pada entered into an extrajudicial partition of his estate. For this purpose, they executed a private document which was never registered with the RD.

The 2 of the heirs of Jacinto sold their respective shares on the lot to Engr. Ernesto Paredes and to the private respondent Silverio Pada.

Silverio Pada demanded that petitioner-spouses (the “Kilarios”) vacate the subject property. Barangay conciliation failed. Silverio filed in the MCTC of Leyte a complaint for ejectment with damages against the Kilarios.


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The other heirs of Jacinto Pada executed a Deed of Donation transferring to the Kilarios their respective shares on the lot.

Spouses Kilario filed their Answer averring that the subject property (northern portion) had already been donated to them by the other heirs of Jacinto Pada and that the extra-judicial settlement of estate was invalid.

MCTC rendered judgment in favor of the Kilarios. Extra-judicial settlement of estate was invalid. The whole lot remained undivided.

Silverio Pada appealed to RTC. RTC reversed MCTC’s decision. Donation made in favor of the Kilarios was illegal and invalid; right of purported donors was extinguished by laches, estoppel, or prescription. RTC ordered the Kilarios to vacate the subject property and pay rentals (in arrears).

The Kilarios filed a petition for review with the CA. CA dismissed petition. Hence, this petition before the SC.

Issues:

1) Whether it was an undivided share in the whole lot that was sold to Silverio Pada 2) Whether the Kilarios, as co-owners, cannot be ejected from the premises

considering that the heirs of Jacinto Pada donated to them their undivided interest in the property in dispute

3) Whether the Kilarios were builders in good faith

Held:

1) NO, divided share

We hold that the extrajudicial partition of the estate of Jacinto Pada among his heirs made in 1951 is valid, albeit executed in an unregistered private document. No law requires partition among heirs to be in writing and be registered in order to be valid. The requirement in Sec. 1, Rule 74 of the Revised Rules of Court that a partition be put in a public document and registered, has for its purpose the protection of creditors

and the heirs themselves against tardy claims.

The object of registration is to serve as constructive notice to others. It follows then that the intrinsic validity of partition not executed with the prescribed formalities is not undermined when no creditors are involved. The partition of inherited property need not be embodied in a public document so as to be effective as regards the heirs that participated therein. The requirement of Article 1358 of the Civil Code that acts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property, must appear in a public instrument, is only for convenience, noncompliance with which does not affect the validity or enforceability of the acts of the parties as among themselves. And neither does the Statute of Frauds under Article 1403 of the

New Civil Code apply because partition among heirs is not legally deemed a conveyance of real property, considering that it involves not a transfer of property from one to the other but rather, a confirmation or ratification of title or right of property that an heir is renouncing in favor of another heir who accepts and receives the inheritance. The 1951 extrajudicial partition of Jacinto Pada’s estate being legal and effective as among his heirs, the 2 concerned heirs validly transferred their ownership rights over the lot to Engr. Paderes and private respondent Silverio Pada, respectively.

2) NO, donation void, Kilarios NOT co-owners

The belated act of the other heirs of donating the subject property to the Kilarios after 44 years of never having disputed the validity of the 1951 extrajudicial partition produced no legal effect. The heirs who executed the deed of donation were not even owners of the whole subject lot. Hence, the donation made was void. At any rate it is too late in the day for the heirs of Amador Pada to repudiate the legal effects of the 1951 extrajudicial partition as prescription and laches have equally set in.

3) NO, not builders in GF

Considering that petitioners were in possession of the subject property by sheer tolerance of its owners, they knew that their occupation of the premises may be terminated any time. Persons who occupy the land of another at the latter’s tolerance or permission, without any contract between them, is necessarily bound by an implied promise that they will vacate the same upon demand, failing in which a summary

action for ejectment is the proper remedy against them.

Thus, they cannot be considered possessors nor builders in good faith.

It is well settled that both Article 448

and Article 546

of the New Civil Code which allow full reimbursement of useful improvements and retention of the premises until reimbursement is made, apply only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. Verily, persons whose occupation of a realty is by sheer tolerance of its owners are not possessors in good faith. As such, petitioners cannot be said to be entitled to the value of the improvements that they built on the said lot.

44. Maestrado v. CA

Petitioner: JOSEFA CH. MAESTRADO, as substituted by her daughter LOURDES MAESTRADO-LAVIA and CARMEN CH. ABAYARespondent: HE HONORABLE COURT OF APPEALPonente: De Leon Jr., J.



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To settle the estate of deceased spouse, Angel Chaves, one of the heirs, initiated intestate proceedings and was appointed as administrator of said estates in the process. The heirs agreed on a project partition. The court approved the partition but a copy of said decision was missing. Significantly, Lot No.5872 was not included in a number of documents. Parties offered different explanations as to the omission of said lot in the documents. Petitioners maintain the existence of an oral partition agreement entered into by all heirs after the death of their parents. Respondents dispute voluntariness of their consent to such quitclaim. Held: Lot No. 5872 is no longer common property of the heirs of the deceased spouses. Petitioners’ ownership over said lot was acquired by reason of the oral partition agreed upon by the deceased spouses’ heirs sometime before 1956. That oral agreement was confirmed by the notarized quitclaims executed by the said heirs. There was indeed an oral agreement of partition entered into by the heirs/parties. A possessor of real estate property is presumed to have title thereto unless the adverse claimant establishes a better right. In the instant case it is the petitioners, being the possessors of Lot No. 5872, who have established a superior right thereto by virtue of the oral partition which was also confirmed by the notarized quitclaims of the heirs. Partition is the separation, division and assignment of a thing held in common among those to whom it may belong. It may be effected extra-judicially by the heirs themselves through a public instrument filed before the register of deeds. However, as between the parties, a public instrument is neither constitutive nor an inherent element of a contract of partition. Since registration serves as constructive notice to third persons, an oral partition by the heirs is valid if no creditors are affected. Moreover, even the requirement of a written memorandum under the statute of frauds does not apply to partitions effected by the heirs where no creditors are involved considering that such transaction is not a conveyance of property resulting in change of ownership but merely a designation and segregation of that part which belongs to each heir.

Facts:

The spouses Ramon and Rosario died intestate in 1943 and 1944, respectively. They were survived by the following heirs, namely: Carmen Chaves-Abaya, Josefa Chaves-Maestrado, Angel Chaves, Amparo Chaves-Roa, Concepcion Chaves-Sanvictores and Salvador Chaves.

To settle the estate, Angel Chaves initiated intestate proceedings in CFI Manila and was appointed administrator in the process. An inventory of the estates was made and thereafter, the heirs agreed on a project of partition. Thus, they filed an action for partition before the CFI of Misamis Oriental. The court appointed Hernando Roa, husband of Amparo Chaves-Roa, as receiver. On June 6, 1956, the court rendered a decision approving the project of partition. However, the records of said case are missing and although respondents claimed otherwise, they failed to present a copy of said decision.

In 1956, the year the partition case was decided and effected, receiver Hernando Roa delivered the respective shares of said heirs in accordance with the above scheme.

Significantly, Lot No. 5872 was not included in any of the documents of partition. It was thereafter delivered to petitioners during the actual partition in 1956, and petitioners have been in possession of the same since then.

Respondents claim that due to the series of transactions involving the said lot, the heirs were unsure if it belonged to the decedent’s estate at all. As a result, they deferred its inclusion in the inventory of the properties of the estate and its distribution pending the investigation of its status. Petitioners insist that the omission was inadvertent and the inaction of the court on the motion was due to the compromise agreement entered into by the heirs.

Petitioner’s thesis consists of the existence of an oral partition agreement entered into by all heirs soon after the death of their parents. The proposed project of partition was allegedly based on it but the courts order of partition failed to embody such oral agreement due to the omission of Lot No. 5872. For some reason, however, the actual partition of the estate conformed to the alleged oral agreement.

In an effort to set things right, petitioners prepared a quitclaim to confirm the alleged oral agreement. On August 16, 1977, Angel, Concepcion and Ramon signed a notarized quitclaim in favor of petitioners. Amparo was unable to sign because she had an accident and had passed away on the following day.

Respondents dispute the voluntariness of their consent or the consent of their predecessors-in-interest to the quitclaims. On the other hand, Angel signed the quitclaim "out of respect" for petitioners. On the other hand, Concepcion signed because she was misled by alleged misrepresentations in the "Whereas Clauses" of the quitclaim to the effect that the lot was inadvertently omitted and not deliberately omitted due to doubts on its status.

In response, petitioners filed, on December 22, 1983, an action for Quieting of Title against respondents in the RTC. On April 10, 1995, the trial court rendered its Decision in favor of respondents.

Issue/s:

1. W/N the action for quieting of title has prescribed.


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2. W/N the petitioners acquired ownership over the lot by virtue of the oral partition executed by the heirs in 1956.

Ratio:

1. NO. It is imprescriptible in this case.

2. YES. The subject lot is no longer the common property of the heirs.

Held:

1. If the plaintiff in an action for quieting of title is in possession of the property being litigated, such action is imprescriptible. One who is in actual possession of a land, claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right because his undisturbed possession gives him a continuing right to seek the aid of the courts to ascertain the nature of the adverse claim and its effects on his title. Although prescription and laches are distinct concepts, the doctrine of laches is inapplicable where the action was filed within the prescriptive period provided by law. Thus, laches does not apply in this case because petitioners possession of the subject lot has rendered their right to bring an action for quieting of title imprescriptible and, hence, not barred by laches. Moreover, since laches is a creation of equity, acts or conduct alleged to constitute the same must be intentional and unequivocal so as to avoid injustice. Laches operates not really to penalize neglect or sleeping on ones rights, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation.

In this case at bench, the cloud on petitioner’s title to the subject property came about only on December 1, 1983 when Angel Chaves transmitted respondents letters to petitioners, while petitioners action was filed on December 22, 1983. Clearly, no laches could set in under the circumstances since petitioners were prompt and vigilant in protecting their rights.

2. Lot No. 5872 is no longer common property of the heirs of the deceased spouses Ramon and Rosario Chaves. Petitioner’s ownership over said lot was acquired by reason of the oral partition agreed upon by the deceased spouses heirs sometime before 1956. That oral agreement was confirmed by the notarized quitclaims executed by the said heirs.

We are convinced, however, that there was indeed an oral agreement of partition entered into by the heirs/parties. This is the only way we can make sense out of the actual partition of the properties of the estate despite claims that a court order provided otherwise. Prior to the actual partition, petitioners

were not in possession of Lot No. 5872 but for some reason or another, it was delivered to them. From 1956, the year of the actual partition of the estate of the deceased Chaves spouses, until 1983, no one among the heirs questioned petitioner’s possession of or ownership over said Lot No. 5872. Hence, we are convinced that there was indeed an oral agreement of partition among the said heirs and the distribution of the properties was consistent with such oral agreement. In any event, the parties had plenty of time to rectify the situation but no such move was done until 1983.

A possessor of real estate property is presumed to have title thereto unless the adverse claimant establishes a better right. In the instant case it is the petitioners, being the possessors of Lot No. 5872, who have established a superior right thereto by virtue of the oral partition which was also confirmed by the notarized quitclaims of the heirs. Partition is the separation, division and assignment of a thing held in common among those to whom it may belong. It may be effected extra-judicially by the heirs themselves through a public instrument filed before the register of deeds. -m

However, as between the parties, a public instrument is neither constitutive nor an inherent element of a contract of partition. Since registration serves as constructive notice to third persons, an oral partition by the heirs is valid if no creditors are affected. Moreover, even the requirement of a written memorandum under the statute of frauds does not apply to partitions effected by the heirs where no creditors are involved considering that such transaction is not a conveyance of property resulting in change of ownership but merely a designation and segregation of that part which belongs to each heir.

Nevertheless, respondent court was convinced that Lot No. 5872 is still common property of the heirs of the deceased spouses Ramon and Rosario Chaves because the TCT covering the said property is still registered in the name of the said deceased spouses. Unfortunately, respondent court was oblivious to the doctrine that the act of registration of a voluntary instrument is the operative act which conveys or affects registered land insofar as third persons are concerned. Hence, even without registration, the contract is still valid as between the parties. In fact, it has been recently held and reiterated by this Court that neither a Transfer Certificate of Title nor a subdivision plan is essential to the validity of an oral partition.

In sum, the most persuasive circumstance pointing to the existence of the oral partition is the fact that the terms of the actual partition and distribution of the estate are identical to the sharing scheme in the oral partition. No one among the heirs disturbed this status quo for a period of twenty-seven (27) years.


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Disposition: WHEREFORE, the instant consolidated petitions are GRANTED. The Decision of the Court of Appeals, dated November 28, 1997, is hereby REVERSED and SET ASIDE. The petitioner’s action praying for the quieting of their title of ownership over Lot No. 5872, located in Kauswagan, Cagayan de Oro, is granted. Cost against respondents.

45. Pilapil v. Briones(on Motion for Reconsideration)

Petitioners: Erlinda Pilapil and Heirs Of Donata Ortiz Briones, Namely: Estela, Eriberto and Virgilio Santos, Ana Santos Cultura, Elvira Santos Inocentes, Ernesto Mendoza, Rizalina Santos, Adolfo Mendoza and Pacita Mendoza Respondents: Heirs Of Maximino R. Briones, namely: Silverio S. Briones, Petra Briones, Bonifacio Cabahug, Jr., Anita Trasmonte, Cirilita Fortuna, Cresencia Briones, Fuguracion Medalle and Mercedes Lagbas

Summary:

Maximino and Donata were married, but had no children. When Maximo died in 1952, Donata instituted intestate proceedings to settle her husband’s estate in CFI Cebu City. CFI awarded ownership of the real properties to Donata, which Donata subsequently registered in her own name. Donata died in 1977. Erlinda, one of Donata’s nieces, instituted with the RTC a petition for the administration of the intestate estate of Donata. Erlinda and her husband, Gregorio, were appointed by the RTC as administrators of Donata’s intestate estate. In 1985, Silverio, a nephew of Maximino, filed a Petition with the RTC for Letters of Administration for the intestate estate of Maximino, which was initially granted by the RTC. But then, Gregorio filed with the RTC a Motion to Set Aside the Order, claiming that the said properties were already under his and his wife’s administration as part of the intestate estate of Donata. Silverio’s Letters of Administration for the intestate estate of Maximino was subsequently set aside by the RTC. In 1987, the heirs of Maximino filed a Complaint (later amended in 1992) with the RTC against the heirs of Donata for the partition, annulment, and recovery of possession of real property. They alleged that Donata, as administratrix of the estate of Maximino, through fraud and misrepresentation, in breach of trust, and without the knowledge of the other heirs, succeeded in registering in her name the real properties belonging to the intestate estate of Maximino. Issue: Did Donata commit fraud? Held: There is insufficient evidence to establish that Donata committed fraud in registering the parcels of land in her own name as a result of the CFI Order awarding her ownership of the same. A review of the records fails to show any allegation or concrete proof that the CFI also failed to order the publication in newspapers of the notice of the intestate proceedings and to require proof from Donata of compliance therewith. Neither can this Court find any reason or explanation as to why Maximino’s siblings could have missed the published notice of the intestate proceedings of their brother. Assuming, for the sake of argument, that Donata’s misrepresentation constitutes fraud that would impose upon her the implied trust provided in Article 1456 of the Civil Code, this Court still cannot sustain respondents’ contention that their right to recover their shares in Maximino’s estate is imprescriptible. The general rule is that an action for reconveyance of real

property based on implied trust prescribes ten years from registration and/or issuance of the title to the property, not only because registration under the Torrens system is a constructive notice of title, but also because by registering the disputed properties exclusively in her name, Donata had already unequivocally repudiated any other claim to the same. By virtue of the CFI Order, dated 15 January 1960, in Special Proceedings No. 928-R, Donata was able to register and secure certificates of title over the disputed properties in her name on 27 June 1960. The respondents filed with the RTC their Complaint for partition, annulment, and recovery of possession of the disputed real properties, docketed as Civil Case No. CEB-5794, only on 3 March 1987, almost 27 years after the registration of the said properties in the name of Donata. Therefore, respondents’ action for recovery of possession of the disputed properties had clearly prescribed.

Facts:

Petitioners are the heirs of the late Donata Ortiz-Briones (Donata), consisting of her surviving sister, Rizalina Ortiz-Aguila (Rizalina); Rizalina’s daughter, Erlinda Pilapil (Erlinda); and the other nephews and nieces of Donata, in representation of her two other sisters who had also passed away. Respondents, on the other hand, are the heirs of the late Maximino Briones (Maximino), composed of his nephews and nieces, and grandnephews and grandnieces, in representation of the deceased siblings of Maximino.

Maximino was married to Donata but their union did not produce any children. When Maximino died on 1 May 1952, Donata instituted intestate proceedings to settle her husband’s estate with the CFI Cebu City. On 8 July 1952, the CFI issued Letters of Administration appointing Donata as the administratrix of Maximino’s estate.

On 2 October 1952, the CFI would subsequently awarded ownership of the aforementioned real properties to Donata. On 27 June 1960, Donata had the said CFI Order recorded in the Primary Entry Book of the Register of Deeds, and by virtue thereof, received new TCTs, covering the said properties, now in her name.

Donata died on 1 November 1977. Erlinda, one of Donata’s nieces, instituted with the RTC a petition for the administration of the intestate estate of Donata. Erlinda and her husband, Gregorio, were appointed by the RTC as administrators of Donata’s intestate estate.

On 21 January 1985, Silverio Briones (Silverio), a nephew of Maximino, filed a Petition with the RTC for Letters of Administration for the intestate estate of Maximino, which was initially granted by the RTC. The RTC also issued an Order, dated 5 December 1985, allowing Silverio to collect rentals from Maximino’s properties. But then, Gregorio filed with the RTC a Motion to Set Aside the Order, dated 5 December 1985, claiming that the said properties were already under his and his wife’s administration as part of the intestate estate of Donata. Silverio’s Letters of Administration for the intestate estate of Maximino was subsequently set aside by the RTC.


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On 3 March 1987, the heirs of Maximino filed a Complaint with the RTC against the heirs of Donata for the partition, annulment, and recovery of possession of real property, later amended on 11 December 1992. They alleged that Donata, as administratrix of the estate of Maximino, through fraud and misrepresentation, in breach of trust, and without the knowledge of the other heirs, succeeded in registering in her name the real properties belonging to the intestate estate of Maximino.

RTC ruled for Heirs of Maximino and declared that they were entitled to ½ of the real properties covered by TCTs No. 21542, 21543, 21544, 21545, 21546, and 58684. It also ordered Erlinda to reconvey to the heirs of Maximino the said properties and to render an accounting of the fruits thereof.

Court of Appeals affirmed the RTC Decision.

Issue: Whether an implied trust under Article 1456 of the New Civil Code had been sufficiently established in the present case.

Held:

1. SC’s Origininal Decision

In its Decision, dated 10 March 2006, the SC found the Petition meritorious and, reversing the CA and RTC, dismissed the Complaint for partition, annulment, and recovery of possession of real property filed by the heirs of Maximino. This Court summed up its findings.

In summary, the heirs of Maximino failed to prove by clear and convincing evidence that Donata managed, through fraud, to have the real properties, belonging to the intestate estate of Maximino, registered in her name. In the absence of fraud, no implied trust was established between Donata and the heirs of Maximino under Article 1456 of the New Civil Code. Donata was able to register the real properties in her name, not through fraud or mistake, but pursuant to an Order, dated 2 October 1952, issued by the CFI in Special Proceedings No. 928-R. The CFI Order, presumed to be fairly and regularly issued, declared Donata as the sole, absolute, and exclusive heir of Maximino; hence, making Donata the singular owner of the entire estate of Maximino, including the real properties, and not merely a co-owner with the other heirs of her deceased husband. There being no basis for the Complaint of the heirs of Maximino in Civil Case No. CEB-5794, the same should have been dismissed.

2. On Motion for Reconsideration:

Respondents basically raised the same arguments, with only a fresh contention that the CFI Order, being based on the fraudulent misrepresentation of Donata that she was Maximino’s sole heir, was a void order, which produced no legal effect. SC, however, does not find any new evidence or argument that would adequately justify a change in its previous position.

3. On the finding of fraud

There was insufficient evidence to establish that Donata committed fraud. It should be remembered that Donata was able to secure certificates of title to the disputed properties by virtue of the CFI Order in Special Proceedings No. 928-R (the proceedings she instituted to settle Maximino’s intestate estate), which declared her as Maximino’s sole heir. In the absence of proof to the contrary, the Court accorded to Special Proceedings No. 928-R the presumptions of regularity and validity.

The petitioners, heirs of Donata, were unable to present a copy of the CFI Order, but this is not surprising considering that it was issued 35 years prior to the filing by the heirs of Maximino of their Complaint in Civil Case No. CEB-5794 on 3 March 1987. The existence of such CFI Order, nonetheless, cannot be denied. It was recorded in the Primary Entry Book of the Register of Deeds on 27 June 1960, at 1:10 p.m., as Entry No. 1714. It was annotated on the TCTs covering the real properties as having declared Donata the sole, absolute, and exclusive heir of Maximino. The non-presentation of the actual CFI Order was not fatal to the cause of the heirs of Donata considering that its authenticity and contents were never questioned. The allegation of fraud by the heirs of Maximino did not pertain to the CFI Order, but to the manner or procedure by which it was issued in favor of Donata. Moreover, the non-presentation of the CFI Order, contrary to the declaration by the RTC, does not amount to a willful suppression of evidence that would give rise to the presumption that it would be adverse to the heirs of Donata if produced.

The CFI Order effectively settled the intestate estate of Maximino by declaring Donata as the sole, absolute, and exclusive heir of her deceased husband. It enjoys the presumption of validity pursuant to the Section 3(m) and (n) of Rule 131 of the Revised Rules of Court.

First of all, the Petition filed by Donata for Letters of Administration in Special Proceedings No. 928-R before the CFI was not even referred to nor presented during the course of the trial of Civil Case No. CEB-5794 before the RTC. How then could the Court of Appeals make a finding that Donata willfully excluded from the said Petition the names, ages, and residences of the other heirs of Maximino?

Second, there was also no evidence showing that the CFI actually failed to send notices of Special Proceedings No. 928-R to the heirs of Maximino or that it did not require presentation of proof of service of such notices. It should be remembered that there stands a presumption that the CFI Judge had regularly performed his duties in Special Proceedings No. 928-R, which included sending out of notices and requiring the presentation of proof of service of such notices; and, the heirs of Maximino did not propound sufficient evidence to debunk such presumption. They only made a general denial of knowledge of Special Proceedings No. 928-R, at least until 1985. There was no testimony or document presented in which the heirs of Maximino categorically denied receipt of notice from the CFI of the pendency of Special Proceedings No. 928-R. The only evidence on record in reference to the absence of notice of such proceedings was the testimony of Aurelia Briones (Aurelia), one of the heirs of


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Maximino. Aurelia’s testimony deserves scant credit considering that she was not testifying on matters within her personal knowledge. The phrase "I don’t think" is a clear indication that she is merely voicing out her opinion on how she believed her uncles and aunts would have acted had they received notice of Special Proceedings No. 928-R.

It is worth noting that, in its foregoing ratiocination, the Court was proceeding from an evaluation of the evidence on record, which did not include an actual copy of the CFI Order in Special Proceedings No. 928-R. Respondents only submitted a certified true copy thereof on 15 June 2006, annexed to their Supplemental Reply to petitioners’ opposition to their motion for reconsideration of this Court’s Decision. Respondents did not offer any explanation as to why they belatedly produced a copy of the said Order, but merely claimed to have been "fortunate enough to obtain a copy" thereof from the Register of Deeds of Cebu.

Respondents should be taken to task for springing new evidence so late into the proceedings of this case. Parties should present all their available evidence at the courts below so as to give the opposing party the opportunity to scrutinize and challenge such evidence during the course of the trial. However, given that the existence of the CFI Order in Special Proceedings No. 928-R was never in issue and was, in fact, admitted by the petitioners; that the copy submitted is a certified true copy of the said Order; and that the said Order may provide new information vital to a just resolution of the present case, this Court is compelled to consider the same as part of the evidence on record.

A review of the records fails to show any allegation or concrete proof that the CFI also failed to order the publication in newspapers of the notice of the intestate proceedings and to require proof from Donata of compliance therewith. Neither can this Court find any reason or explanation as to why Maximino’s siblings could have missed the published notice of the intestate proceedings of their brother.

In relying on the presumptions of the regular performance of official duty and lawful exercise of jurisdiction by the CFI in rendering the questioned Order, dated 15 January 1960, this Court is not, as counsel for respondents allege, sacrificing the substantive right of respondents to their share in the inheritance in favor of mere procedural fiats. There is a rationale for the establishment of rules of procedure: Procedural rules are designed to insure the orderly and expeditious administration of justice by providing for a practical system by which the parties to a litigation may be accorded a full and fair opportunity to present their respective positions and refute each other's submissions under the prescribed requirements, conditions and limitations. Adjective law is not the counterfoil of substantive law. In fact, there is a symbiotic relationship between them. By complying faithfully with the Rules of Court, the bench and the bar are better able to discuss, analyze and understand substantive rights and duties and consequently to more effectively protect and enforce them. The other alternative is judicial anarchy.

Although Donata may have alleged before the CFI that she was her husband’s sole heir, it was not established that she did so knowingly, maliciously and in bad faith, so as for this Court to conclude that she indeed committed fraud. This Court again brings to the fore the delay by which respondents filed the present case, when the principal actors involved, particularly, Donata and Maximino’s siblings, have already passed away and their lips forever sealed as to what truly transpired between them. On the other hand, Special Proceedings No. 928-R took place when all these principal actors were still alive and each would have been capable to act to protect his or her own right to Maximino’s estate. Letters of Administration of Maximino’s estate were issued in favor of Donata as early as 8 July 1952, and the CFI Order in question was issued only on 15 January 1960. The intestate proceedings for the settlement of Maximino’s estate were thus pending for almost eight years, and it is the burden of the respondents to establish that their parents or grandparents, Maximino’s surviving siblings, had absolutely no knowledge of the said proceedings all these years. As established in Ramos v. Ramos, the degree of proof to establish fraud in a case where the principal actors to the transaction have already passed away is proof beyond reasonable doubt, to wit –

"x x x But length of time necessarily obscures all human evidence; and as it thus removes from the parties all the immediate means to verify the nature of the original transactions, it operates by way of presumption, in favor of innocence, and against imputation of fraud. It would be unreasonable, after a great length of time, to require exact proof of all the minute circumstances of any transaction, or to expect a satisfactory explanation of every difficulty, real or apparent, with which it may be encumbered. The most that can fairly be expected, in such cases, if the parties are living, from the frailty of memory, and human infirmity, is, that the material facts can be given with certainty to a common intent; and, if the parties are dead, and the cases rest in confidence, and in parol agreements, the most that we can hope is to arrive at probable conjectures, and to substitute general presumptions of law, for exact knowledge. Fraud, or breach of trust, ought not lightly to be imputed to the living; for, the legal presumption is the other way; as to the dead, who are not here to answer for themselves, it would be the height of injustice and cruelty, to disturb their ashes, and violate the sanctity of the grave, unless the evidence of fraud be clear, beyond a reasonable doubt (Prevost vs. Gratz, 6 Wheat. [U.S.], 481, 498).

Moreover, even if Donata’s allegation that she was Maximino’s sole heir does constitute fraud, it is insufficient to justify abandonment of the CFI Order, dated 15 January 1960,22 considering the nature of intestate proceedings as being in rem and the disputable presumptions of the regular performance of official duty and lawful exercise of jurisdiction by the CFI in rendering the questioned Order, dated 15 January 1960, in Special Proceedings No. 928-R.

4. On prescription of the right to recover based on implied trust

Assuming, for the sake of argument, that Donata’s misrepresentation constitutes fraud that would impose upon her the implied trust provided in Article 1456 of the Civil Code, this Court still cannot sustain respondents’ contention that their right to recover


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their shares in Maximino’s estate is imprescriptible. It is already settled in jurisprudence that an implied trust, as opposed to an express trust, is subject to prescription and laches.

TRUSTSEXPRESS IMPLIED

Express trusts are created by the intention of the trustor or of the parties.

No express trusts concerning an immovable or any interest therein may be proven by oral evidence.

No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended.

Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust.

Implied trusts come into being by operation of law.

An implied trust may be proven by oral evidence.

Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent, or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties. They are ordinarily subdivided into resulting and constructive trusts

RESULTING CONSTRUCTIVEA resulting trust is broadly defined as a trust which is raised or created by the act or construction of law, but in its more restricted sense it is a trust raised by implication of law and presumed always to have been contemplated by the parties, the intention as to which is to be found in the nature of their transaction, but not expressed in the deed or instrument of conveyance.

A constructive trust is a trust "raised by construction of law, or arising by operation of law." In a more restricted sense and as contradistinguished from a resulting trust, a constructive trust is "a trust not created by any words, either expressly or impliedly evincing a direct intention to create a trust, but by the construction of equity in order to satisfy the demands of justice. It does not arise by agreement or intention but by

operation of law.” "If a person obtains legal title to property by fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party." A constructive trust is not a trust in the technical sense.

Examples of resulting trusts are found in Article 1448 to 1455 of the Civil Code.

KOIMPRESCRIPTIBILITY

There is a rule that a trustee cannot acquire by prescription the ownership of property entrusted to him, or that an action to compel a trustee to convey property registered in his name in trust for the benefit of the cestui qui trust does not prescribe, or that the defense of prescription cannot be set up in an action to recover property held by a person in trust for the benefit of another, or that property held in trust can be recovered by the beneficiary regardless of the lapse of time.That rule applies squarely to express trusts. The basis of the rule is that the possession of a trustee is not adverse. Not being adverse, he does not acquire by prescription the property held in trust.

The rule of imprescriptibility of the action to recover property held in trust may possibly apply to resulting trusts as long as the trustee has not repudiated the trust.

The rule of imprescriptibility was misapplied to constructive trusts.

Acquisitive prescription may bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust where (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust and (c) the evidence thereon is clear and conclusive.

A present reading of the cases, invoked by respondents, must be made in conjunction with and guided accordingly by the principles established in the afore-quoted case. Thus, while respondents’ right to inheritance was transferred or vested upon them at


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the time of Maximino’s death, their enforcement of said right by appropriate legal action may be barred by the prescription of the action.

Prescription of the action for reconveyance of the disputed properties based on implied trust is governed by Article 1144 of the New Civil Code, which reads –

ART. 1144. The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;(2) Upon an obligation created by law;(3) Upon a judgment.

Since an implied trust is an obligation created by law (specifically, in this case, by Article 1456 of the New Civil Code), then respondents had 10 years within which to bring an action for reconveyance of their shares in Maximino’s properties. The next question now is when should the ten-year prescriptive period be reckoned from. The general rule is that an action for reconveyance of real property based on implied trust prescribes ten years from registration and/or issuance of the title to the property, not only because registration under the Torrens system is a constructive notice of title, but also because by registering the disputed properties exclusively in her name, Donata had already unequivocally repudiated any other claim to the same.

By virtue of the CFI Order, dated 15 January 1960, in Special Proceedings No. 928-R, Donata was able to register and secure certificates of title over the disputed properties in her name on 27 June 1960. The respondents filed with the RTC their Complaint for partition, annulment, and recovery of possession of the disputed real properties, docketed as Civil Case No. CEB-5794, only on 3 March 1987, almost 27 years after the registration of the said properties in the name of Donata. Therefore, respondents’ action for recovery of possession of the disputed properties had clearly prescribed.

Moreover, even though respondents’ Complaint before the RTC in Civil Case No. CEB-5794 also prays for partition of the disputed properties, it does not make their action to enforce their right to the said properties imprescriptible. While as a general rule, the action for partition among co-owners does not prescribe so long as the co-ownership is expressly or impliedly recognized, as provided for in Article 494, of the New Civil Code, it bears to emphasize that Donata had never recognized respondents as co-owners or co-heirs, either expressly or impliedly. Her assertion before the CFI in Special Proceedings No. 928-R that she was Maximino’s sole heir necessarily excludes recognition of some other co-owner or co-heir to the inherited properties; Consequently, the rule on non-prescription of action for partition of property owned in common does not apply to the case at bar.

5. On laches as bar to recovery

Other than prescription of action, respondents’ right to recover possession of the disputed properties, based on implied trust, is also barred by laches. The defense of laches, which is a question of inequity in permitting a claim to be enforced, applies independently of prescription, which is a question of time. Prescription is statutory; laches is equitable. Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. This equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of society.

In further support of their contention of fraud by Donata, the heirs of Maximino even emphasized that Donata lived along the same street as some of the siblings of Maximino and, yet, she failed to inform them of the CFI Order, dated [15 January 1960], in Special Proceedings No. 928-R, and the issuance in her name of new TCTs covering the real properties which belonged to the estate of Maximino. This Court, however, appreciates such information differently. It actually works against the heirs of Maximino. Since they only lived nearby, Maximino’s siblings had ample opportunity to inquire or discuss with Donata the status of the estate of their deceased brother. Some of the real properties, which belonged to the estate of Maximino, were also located within the same area as their residences in Cebu City, and Maximino’s siblings could have regularly observed the actions and behavior of Donata with regard to the said real properties. It is uncontested that from the time of Maximino’s death on 1 May 1952, Donata had possession of the real properties. She managed the real properties and even collected rental fees on some of them until her own death on 1 November 1977. After Donata’s death, Erlinda took possession of the real properties, and continued to manage the same and collect the rental fees thereon. Donata and, subsequently, Erlinda, were so obviously exercising rights of ownership over the real properties, in exclusion of all others, which must have already put the heirs of Maximino on guard if they truly believed that they still had rights thereto.

The heirs of Maximino knew he died on 1 May 1952. They even attended his wake. They did not offer any explanation as to why they had waited 33 years from Maximino’s death before one of them, Silverio, filed a Petition for Letters of Administration for the intestate estate of Maximino on 21 January 1985. After learning that the intestate estate of Maximino was already settled in Special Proceedings No. 928-R, they waited another two years, before instituting, on 3 March 1987, Civil Case No. CEB-5794, the Complaint for partition, annulment and recovery of the real property belonging to the estate of Maximino.

Considering the circumstances in the afore-quoted paragraphs, as well as respondents’ conduct before this Court, particularly the belated submission of evidence and argument of new issues, respondents are consistently displaying a penchant for delayed action, without any proffered reason or justification for such delay. It is well established that the law serves those who are vigilant and diligent and not those who sleep when the law requires them to act. The law does not encourage laches, indifference, negligence or ignorance. On the contrary, for a party to deserve


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the considerations of the courts, he must show that he is not guilty of any of the aforesaid failings.

6. On void judgment or order (YOU CAN SKIP THIS.)Respondents presented only in their Reply and Supplemental Reply to the petitioners’ Opposition to their Motion for Reconsideration the argument that the CFI Order, dated 15 January 1960, in Special Proceedings No. 928-R is void and, thus, it cannot have any legal effect. Consequently, the registration of the disputed properties in the name of Donata pursuant to such Order was likewise void.

In the jurisprudence referred to by the respondents, an order or judgment is considered void when rendered by the court without or in excess of its jurisdiction or in violation of a mandatory duty, circumstances which are not present in the case at bar.

Distinction must be made between a void judgment and a voidable one, thus –

"* * * A voidable judgment is one which, though not a mere nullity, is liable to be made void when a person who has a right to proceed in the matter takes the proper steps to have its invalidity declared. It always contains some defect which may become fatal. It carries within it the means of its own overthrow. But unless and until it is duly annulled, it is attended with all the ordinary consequences of a legal judgment. The party against whom it is given may escape its effect as a bar or an obligation, but only by a proper application to have it vacated or reversed. Until that is done, it will be efficacious as a claim, an estoppel, or a source of title. If no proceedings are ever taken against it, it will continue throughout its life to all intents a valid sentence. If emanating from a court of general jurisdiction, it will be sustained by the ordinary presumptions of regularity, and it is not open to impeachment in any collateral action. * * *"

But it is otherwise when the judgment is void. "A void judgment is in legal effect no judgment. By it no rights are divested. From it no rights can be obtained. Being worthless in itself, all proceedings founded upon it are equally worthless. It neither binds nor bars any one. All acts performed under it and all claims flowing out of it are void. The parties attempting to enforce it may be responsible as trespassers. The purchaser at a sale by virtue of its authority finds himself without title and without redress."

The fraud and misrepresentation fostered by Donata on the CFI in Special Proceedings No. 928-R did not deprive the trial court of jurisdiction over the subject-matter of the case, namely, the intestate estate of Maximino. Donata’s fraud and misrepresentation may have rendered the CFI Order, dated 15 January 1960, voidable, but not void on its face. Hence, the said Order, which already became final and executory, can only be set aside by direct action to annul and enjoin its enforcement. It cannot be the subject of a collateral attack as is being done in this case. Note that respondents’ Complaint before the RTC in Civil Case No. CEB-5794 was one for partition, annulment, and recovery of possession of the disputed

properties. The annulment sought in the Complaint was not that of the CFI Order, dated 15 January 1960, but of the certificates of title over the properties issued in Donata’s name. So until and unless respondents bring a direct action to nullify the CFI Order, dated 15 January 1960, in Special Proceedings No. 928-R, and attain a favorable judgment therein, the assailed Order remains valid and binding.

Nonetheless, this Court also points out that an action to annul an order or judgment based on fraud must be brought within four years from the discovery of the fraud. If it is conceded that the respondents came to know of Donata’s fraudulent acts only in 1985, during the course of the RTC proceedings which they instituted for the settlement of Maximino’s estate, then their right to file an action to annul the CFI Order, dated 15 January 1960, in Special Proceedings No. 928-R (earlier instituted by Donata for the settlement of Maximino’s estate), has likewise prescribed by present time.

46. Casilang v. Dizon

Gr No. 180269, Feb 20, 2013 Petitioners: JOSE Z. CASILANG, SR., substituted by his heirs, namely: FELICIDAD CUDIAMAT VDA. DE CASILANG, JOSE C. CASILANG, JR., RICARDO C. CASILANG, MARIA LOURDES C. CASILANG, CHRISTOPHER C. CASILANG, BEN C. CASILANG, DANTE C. CASILANG, GREGORIO C. CASILANG, HERALD C. CASILANG; and FELICIDAD Z. CASILANG, MARCELINA Z. CASILANG, JACINTA Z. CASILANG, BONIFACIO Z. CASILANG, LEONORA Z. CASILANG, and FLORA Z. CASILANG,

Respondents: ROSARIO Z. CASILANG-DIZON, MARIO A. CASILANG, ANGELO A. CASILANG, RODOLFO A. CASILANG, and ATTY. ALICIA B. FABIA, in her capacity as Clerk of Court and Ex-Officio Sheriff of Pangasisnan and/or her duly authorized representative

Ponente: SERENO, C.J.


Late spouses Liborio and Francisca had 8 children, 2 of which were Ireneo and Jose (herein petitioner). Ireneo passed away and left 4 children (herein respondents). Respo. Upon the dissolution of the estate of Liborio, the ownership of Lot 4618 was being contested. Respondents claim that their father, Ireneo, inherited the land and therefore the land was rightfully theirs (evidence presented was tax certificates). Jose on the other hand claims that he was assigned the land right before his father Liborio passed away, as Jose was the one who took in his father and mother and took care of them before they passed away. This was corroborated by other evidence. He claims that an oral partition was entered into by all the children and grandchildren which assigned another lot- Lot 4676 to the heirs of Ireneo. According to Jose, this indicated that he did not claim any ownership over Lot 4676 because he believed that he was already assigned his share of the properties- which is Lot 4618. The issue is


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who rightfully owns the land. The SC ruled it was Jose who was the rightful owner. (see issues and held)

Facts:

Late spouses Liborio Casilang and Francisca Zacarias had 8 Children. Liboro died intestate in 1982 at the age of 83, his wife died soon after during the same year. One of their children, Bonifacio, also died in 1986 leaving his child Bernabe, another child of Liborio and Francisca- Ireneo, died in 1992 survived by his 4 children who are herein respondents.

LIBORIO & FRACISCA

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Felicidad Irineo(+) Marecelina Jacinta Bonifacio(+) Leonora Jose Flora

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------------------------------------------- Bernabe

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Mario Angelo Rosario Rodolfo

The estate of Liborio, left no debts, consisted of 3 parcels of land located in Pangasisnan. Lots 4676, 4704 and 4618

In May 1997 respondent Rosario filed with the MTC of Calasio, Pangasinan a complaint for unlawful detainer to evict her uncle, petitioner Jose from one of the lots- Lot 4618. Rosario claimed that such land was owned by her father Ireneo (evidence presented was tax declaration under her fathers name.)

She claims that on April 1997, respondents executed a Deed of Extrajudicial Partition with Quitclaim whereby the said lot was adjudicated to themselves. In the same instrument all Rosario’s other siblings renounced their rights in her favor.

Jose, on the other hand raised the defense that he was the “lawful, absolute, exclusive owner and in actual possession” of the said lot, and that he acquired the same “through intestate succession from his late father.” He and his lawyer failed,

however to attend the pre-trial conference and an adverse judgement was entered against him.

Jose was ordered to remove his house and vacate the lot and pay monthly rentals to Rosario from the date of the filing of the complaint until she was place in possession. A writ of execution and a writ of demolition was issued.

On June 2 1998, the petitioners who are the 7 other children of Liborio and Francisca filed with the RTC of Dagupan City a complaint for “annulment of documents, ownership and peaceful possession with damages against the respondents. One of such documents sought to be annulled was the Extrajudicial Partition which Ireneo’s children over the disputed lot.

Peitioner aver that all 8 children of Liborio entered into a verbal partition of his estate. Jose was allotted Lot No. 4618 and Ireneo’s allotted land was a portion of Lot 4676. Ireneo however, never claimed ownership nor took possession of the disputed lot. Petitioners also claim that Jose has always had possession and resided in Lot 4618, and that in such lot he built his family’s home in which he took in and cared for his aged parents until their deaths.

Jose claims that his parents’ bamboo house in Lot No. 4618 disintegrated due to wear and tear so he took them in his home within the same lot and cared for them until they died. Shortly before Liborio’s death and in the presence of his siblimfs, Liborio assigned the lot to him as his inheritance.

In pursuance of the oral partition of the estate a Deed of Extrajudicial Partition with Quitclaim dated 1998 was executed by all 8 siblings (the deceased siblings represented by their corresponding heirs).

Since Lot 4618 was already given to him, and the other lot was also assigned to the other siblings, in a Deed of Extrajudicial Partition dated Jan 8 1998, the only lot divided was Lot 4676. It was expressed in such that Jose, Felcidad, Jacinta and Bernabe have received their respective shares of inheritance in advance and therefore their claims to the lot 4676 were renounced in favor of their co-heirs (including Ireneo).

RTC ruled in favor of petitioners and declared null and void the Deed of Extrajudicial Partition with Quitclaim executed by the children of Ireneo.

We can see from this that Jose renounced his share in Lot 4676 believing that Lot 4618 was his and that this formed part of his inheritance.

RTC found baseless the claim of Rosario that Lot No. 4618 was an inheritance of her father considering that a tax declaration is not conclusive proof of ownership. It was also noted that the tax declarations started only in 1994 when Ireneo passed away in 1992.


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The CA reversed the ruling of the RTC based on the ruling of the MTC- that since the MTC found that Ireneo was the owner of the said lot, it is proper that the lot belongs to Rosario. It also noted that the decision in the MTC case was issued on Feb. 18 1998 while petitioners filed their complaint in June 1998. The CA concluded that the latter case was merely an afterthought. It ruled that Jose should have questioned the Deed of Extranudicial Partition with Quitclaim was executed in 1997 however it was only when he was being evicted that he decided to institute a case.

Issue:

1) W/N an ejectment suit is the proper avenue to thresh out the issue of ownership (NO)2) W/N the ruling of the CA was valid as it was based only on the ruling of the MTC (NO)3) W/N the verbal partition was valid (YES) 4) To whom does the disputed lot belong? (JOSE) 5) W/N tax declarations and tax receipts are conclusive evidence of ownership (NO)

Held:

1) Inferior courts are empowered to rule on the question of ownership raised by the defendant in an ejectment suit, but only to resolve the issue of possession; its determination is not conclusive on the issue of ownership.

There is a settled distinction between a summary action of ejectment and a plenary action for recovery of possession and/or ownership of the land. What really distinguishes an action for unlawful detainer from a possessory action (accion publiciana) and from a reinvindicatory action (accion reinvindicatoria) is that the first is limited to the question of possession de facto. Unlawful detainer suits (accion interdictal) together with forcible entry are the two forms of ejectment suit that may be filed to recover possession of real property. Aside from the summary action of ejectment, accion publiciana or the plenary action to recover the right of possession and accion reinvindicatoria or the action to recover ownership which also includes recovery of possession, make up the three kinds of actions to judicially recover possession.

Under Section 3 of Rule 70 of the Rules of Court, the Summary Procedure governs the two forms of ejectment suit, the purpose being to provide an expeditious means of protecting actual possession or right to possession of the property. They are not processes to determine the actual title to an estate. If at all, inferior courts are empowered to rule on the question of ownership raised by the defendant in such suits, only to resolve the issue of possession and its determination on the ownership issue is not conclusive.

We should then not that the case in the MTC was an ejectment case however the case in the RTC was a case of “Annulment of Documents, Ownership and Peaceful

possession” which is an accion reinvindicatoru, or action to recover ownership, which necessarily includes recovery of possession as an incident thereof.

2. The SC also found that it was necessary to review the CA’s factual conclusions since they were entire contrary to those of the RTC and have no citation of specific supporting evidence.

3. The SC upheld the validity of the verbal partition. The validity of an oral partition is well-settled in our jurisdiction as upheld in the cases of Vda. De Espina v. Abaya13 and in Maestrado v. CA14

4. The SC also found that, from the evidence it is clear that the oral partition gave Lot 4618 to Jose, whereas Rosario presented no proof whatsoever that her father inherited the same lot. Jose’s possession of the lot under a claim of ownership is well borne out of the records and is consistent with the claimed verbal partition with his siblings, and fully corroborated by his sisters who further testified that they each had taken possession of their own shares and built their houses thereon.

A possessor of real estate property is presumed to have title thereto unless the adverse claimant established a better right. Moreover, under Article 541 of the Civil Code, one who possesses in the concept of owner has in his favor the legal presumption that he possesses with a just title, and he cannot be obliged to show or prove it. Similarly, Article 433 of the Civil Code provides that actual possession under a claim of ownership raises a disputable presumption of ownership. Thus, actual possession and exercise of dominion over definite portions of the property in accordance with an alleged partition are considered strong proof of an oral partition which the Court will not hesitate to uphold.

5. Tax declarations and tax receipts are not conclusive evidence of ownership. It is settled that tax declarations and tax receipts alone are not conclusive evidence of

13 Anent the issue of oral partition, We sustain the validity of said partition. “An agreement of partition may be made orally or in writing. An oral agreement for the partition of the property owned in common is valid and enforceable upon the parties. The Statute of Frauds has no operation in this kind of agreements, for partition is not a conveyance of property but simply a segregation and designation of the part of the property which belong to the co-owners.14 In numerous cases it has been held or stated that parol partition may be sustained on the ground of estoppel of the parties to assert the rights of a tenant in common as to parts of land divided by parol partition as to which possession in severalty was taken and acts of individual ownership were exercised. And a court of equity will recognize the agreement and decree it to be valid and effectual for the purpose of concluding the right of the parties as between each other to hold their respective parts in severalty. A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the partition by taking possession in severalty, exercising acts of ownership with respect thereto, or otherwise recognizing the existence of the partition. A number of cases have specifically applied the doctrine of part performance, or have stated that a part performance is necessary, to take a parol partition out of the operation of the statute of frauds. It has been held that where there was a partition in fact between tenants in common, and a part performance, a court of equity would have regard to and enforce such partition agreed to by the parties


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ownership. They are merely indicia of a claim of ownership, but when coupled with proof of actual possession of the property, they can be the basis of claim of ownership through prescription. In the absence of actual, public and adverse possession, the declaration of the land for tax purposes does not prove ownership.

Dispositive Portion: WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated July 19, 2007 of the Court of Appeals in CA-G.R. CV No. 79619 is hereby REVERSED and SET ASIDE, and the Decision dated April 21, 2003 of the Regional Trial Court of Dagupan City, Branch 41 in Civil Case No. 98-02371-D is REINSTATED.

SO ORDERED.

47. Quintos v. Nicolas

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IV.H Waters

48. Initiatives for Dialogue v. PSALM

Petitioners: INITIATIVES FOR DIALOGUE AND EMPOWERMENT THROUGH ALTERNATIVE LEGAL SERVICES, INC. (IDEALS)

Respondents: POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION (PSALM), METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS), NATIONAL IRRIGATION ADMINISTRATION (NIA), KOREA WATER RESOURCES CORPORATION, FIRST GEN NORTHERN ENERGY CORP., SAN MIGUEL CORP., SNABOITIZ POWER-PANGASINAN INC., TRANS-ASIA OIL AND ENERGY DEVELOPMENT CORPORATION, DMCI POWER CORP.


K-Power, a foreign corporation, won the bidding conducted by PSALM and was awarded the generation of electric power of the Angat Hydro-Electric Power Plant (AHEPP). The petitioners question the validity of this, saying that under the Water Code of the Philippines, only corporations which are at least 60% Filipino-owned may appropriate the waters and operate dams. The SC upheld the validity of the award to K-Power, saying that since the NPC remains in control of the operation of the dam by virtue of water rights granted to it, there is no legal impediment to foreign-owned companies undertaking the generation of electric power using waters already appropriated by NPC, the holder of water permit.

Facts:

PSALM is a GOCC created by Electric Power Industry Reform Act of 2001 (EPIRA).

PSALM commenced the privatization of the 246-megawatt (MW) AHEPP in Bulacan.

PSALM’s Board of Directors approved the Bidding Procedures for the privatization of the AHEPP.

Subject of the bid was the AHEPP consisting of 4 main units and 3 auxiliary units with an aggregate installed capacity of 218 MW. The two auxiliary units owned by MWSS were excluded from the bid.

[CONDITIONS] PSALM’s Board of Directors approved and confirmed the issuance of a

Notice of Award to the highest bidder, K-Water. IDEALS, FDC, AKBAYAN and APL filed for TRO. The petitioners alleged, among others, that PSALM clearly violated the

constitutional provisions on the appropriation and utilization of water as a natural resource, as implemented by the Water Code of the Philippines limiting water rights to Filipino citizens and corporations which are at least 60% Filipino-owned.

Issue/s (relevant to topic about Water Code):

1. Whether the bidding conducted and the Notice of Award issued by PSALM in favor of the winning bidder, K-WATER (a foreign corporation) are valid.

Held/Ratio:

1. YES (VALID).

The sale of government-owned AHEPP to a foreign corporation not prohibited but only Filipino citizens and corporations 60% of whose capital is owned by Filipinos may be granted water rights.

The State’s policy on the management of water resources is implemented through the regulation of water rights. Presidential Decree No. 1067, otherwise known as "The Water Code of the Philippines" is the basic law governing the ownership, appropriation utilization, exploitation, development, conservation and protection of water resources and rights to land related thereto.

The pertinent provisions of Art. 3, P.D. No. 1067 provide:

Art. 3. The underlying principles of this code are:

a. All waters belong to the State.

b. All waters that belong to the State can not be the subject to acquisitive prescription.

c. The State may allow the use or development of waters by administrative concession.


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d. The utilization, exploitation, development, conservation and protection of water resources shall be subject to the control and regulation of the government through the National Water Resources Council x xx

e. Preference in the use and development of waters shall consider current usages and be responsive to the changing needs of the country.

x xxx

Art. 9. Waters may be appropriated and used in accordance with the provisions of this Code.

Appropriation of water, as used in this Code, is the acquisition of rights over the use of waters or the taking or diverting of waters from a natural source in the manner and for any purpose allowed by law.

Art. 10. Water may be appropriated for the following purposes:

x xxx

(d) Power generation

x xxx

Art. 13. Except as otherwise herein provided, no person including government instrumentalities or government-owned or controlled corporations, shall appropriate water without a water right, which shall be evidenced by a document known as a water permit.

Water right is the privilege granted by the government to appropriate and use water.

x xxx

Art. 15. Only citizens of the Philippines, of legal age, as well as juridical persons, who are duly qualified by law to exploit and develop water resources, may apply for water permits.

It is clear that the law limits the grant of water rights only to Filipino citizens and juridical entities duly qualified by law to exploit and develop water resources, including private corporations with sixty percent of their capital owned by Filipinos. In the case of Angat River, the NWRB has issued separate water permits to MWSS, NPC and NIA.

Under the Water Code concept of appropriation, a foreign company may not be said to be “appropriating” our natural resources if it utilizes the waters collected in the dam and converts the same into electricity through artificial devices. Since the NPC remains in control of the operation of the dam by virtue of water rights granted to it, as

determined under DOJ Opinion No. 122, s. 1998, there is no legal impediment to foreign-owned companies undertaking the generation of electric power using waters already appropriated by NPC, the holder of water permit. Such was the situation of hydropower projects under the BOT contractual arrangements whereby foreign investors are allowed to finance or undertake construction and rehabilitation of infrastructure projects and/or own and operate the facility constructed. However, in case the facility requires a public utility franchise, the facility operator must be a Filipino corporation or at least 60% owned by Filipino.

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IV.I.1 Possession: Elements

49. Yu v. Pacleb

G.R. No. 130316 January 24, 2007Petitioner: Ernesto and Elsie YuRespondent: Baltazar Pacleb

Recit Ready: (Brief background: Javier allegedly bought the land from one Del Rosario. Del Rosario acquired the land from Pacleb. However, despite the transfer of the property, the TCT remained in the name of Baltazar Pacleb and his wife. The same property is the subject matter of the sale). Javier offered to sell a parcel of land to Ernesto and Elsie. Ernesto and Elsie accepted the offer and gave Php200 00 down payment for the purchase price. At the time of the turn-over of the land to the petitioners, Ramon Pacleb (son of Baltazar) was occupying the land as tenants. Later on, Ramon was appointed by Ernesto and Elsie as their trustee over the subject lot. The petitioners were also able to annotate the fact of a concluded sale in the TCT over the property. Upon respondent’s return to the Philippines, he allegedly entered the property by means of force, threat, intimidation, strategy and stealth thereby ousting petitioners and their trustee, Ramon, hence this action for forcible entry. In this case, the Court ruled that Ernesto and Elsie Yu did not have prior possession of the land in question. Without this, no action for forcible entry will be successful in court. The title of the land in question remained in the name of respondent. As the registered owner, petitioner had a right to the possession of the property, which is one of the attributes of ownership.

Facts:

Ruperto Javier allegedly offered to sell Lot No. 6853-D to petitioners for P75 per sq.m.

Javier supposedly purchased the lot from one Rebecca del Rosario who, in turn, acquired it from respondent and his wife. The title of the property (Transfer Certificate of Title [TCT] No. T-118375), however, remained in the names of respondent and his wife. The instruments in support of the series of alleged sales were not registered.


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Petitioners accepted the offer and gave Javier P200,000 as downpayment for the lot. Javier then delivered his supposed muniments of title to petitioners. After the execution of a contract to sell, he formally turned over the property to petitioners.

At the time of the turn-over, a portion of the lot was occupied by Ramon C. Pacleb, respondent’s son, and his wife as tenants. He was later appointed as trustee of petitioner over the property.

Aside from taking possession of the property, petitioners also caused the annotation on TCT No. T-118375 of a decision rendered in their favor in Civil Case No. 741-93 ordering Javier to deliver the subject of the concluded sale.

Upon respondent’s return to the Philippines in May 1995, he allegedly entered the property by means of force, threat, intimidation, strategy and stealth thereby ousting petitioners and their trustee, Ramon.

Despite repeated demands, respondent, asserting his rights as registered owner of the property, refused to vacate the premises and surrender its possession to petitioners.

Petitioner then filed this current action for forcible entry. MTC: Respondent was ordered to surrender the possession of the property

to the petitioners. RTC affirmed in toto. Upon appeal to the CA, the respondent’s petition was granted. The decision

of the RTC in favor of Ernesto and Elsie.

Issue: W/N petitioners had prior physical possession of the property (NO)

Held:

In an action for forcible entry, the plaintiff must prove that he was in prior possession of the land or building and that he was deprived thereof by means of force, intimidation, threat, strategy or stealth. The plaintiff, however, cannot prevail where it appears that, as between himself and the defendant, the latter had possession antedating his own.

Two things are paramount in possession. First, there must be occupancy, apprehension or taking. Second, there must be intent to possess (animus possidendi). Here, petitioners failed to establish that they had prior physical possession to justify a ruling in their favor in the complaint for forcible entry against respondent.

The claim that the lot was turned over to petitioners in 1992 was self-serving in the face of this factual finding. On the other hand, the tax declarations and receipts in the name of respondent in 1994 and 1995 established the possession of respondent. The payment of real estate tax is one of the most persuasive and positive indications showing the will of a person to possess in concepto de dueño or with claim of ownership.

Possession in the eyes of the law does not mean that a man has to have his feet on every square meter of the ground before he is deemed in possession. In this case, Ramon, as respondent’s son, was named caretaker when respondent left for the United States in 1983. Due to the eventual loss of trust and confidence in Ramon, however, respondent transferred the administration of the land to his other son, Oscar, in January 1995 until his return in May 1995. In other words, the subject land was in the possession of the respondent’s sons during the contested period.

Most important, the title of the land in question remained in the name of respondent. As the registered owner, petitioner had a right to the possession of the property, which is one of the attributes of ownership. Where a dispute over possession arises between two persons, the person first having actual possession is the one who is entitled to maintain the action granted by law.

The Civil Code states:

Art. 538. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings.

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IV.I.3 Possession: Requirements to ripen into ownership

50. SMPSM v. BCDA

51. Julita Imuan v. Juanito Cereno

Petitioners: Julita V. Imuan, Rodolfo Velasquez, Arturo Velasquez, Arcadio Velasquez, Betty Velasquez, Rosa V. Petuya, Felicidad Velasquez, Raymundo Imuan, Gerardo Imuan, Jr., And Andong VelasquezRespondents: Juanito Cereno, Febelinda G. Cereno, Gemma C. Gabarda, Ledesma G. Cereno, Bleceria C. Sula And Sally G. CerenoPonente: Peralta, J.

Short Facts/Doctrine:

Pablo died intestate leaving 2 parcels of land. Second wife Juana remained in possession of one parcel of land which Juana sold to respondents-spouses. The lot was originally one whole lot which became divided into two (Lots 1 and 2). Respondents built their home planted fruit-bearing trees in Lot 2 while etitioners entered Lot 1 and took possession of it by building a nipa hut. Respondents filed an ejectment case against the petitioners which was dismissed because the latter


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eventually left Lot 1. Petitioners then filed a complaint for annulment of document, reconveyance against respondents. The SC ruled that respondents acquired the disputed property by acquisitive prescription.

The party who asserts ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.

1. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years.

2. Extraordinary prescription , ownership and other real rights over immovable property are acquired through uninterrupted adverse possession for thirty years without need of title or of good faith.

Good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership.

For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.

When petitioners filed the instant case, more than 29 years had already elapsed, thus, the ten-year period for acquisitive prescription has already been satisfied. Petitioners are guilty of laches that would bar them from belatedly asserting their claim.

Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. This equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of society.

Facts:

During his lifetime, Pablo de Guzman (Pablo) contracted two marriages. His first marriage was with Teodora Soriano (Teodora), with whom he had three children, namely, Alfredo, Cristita, and Inday. His second marriage was in 1919 with Juana Velasquez (Juana), with whom he also had three children, namely: Nena, Teodora, and Soledad. All these children are now dead.

Petitioners are Pablo's grandchildren by his first marriage, while respondent Juanito Cereno (Juanito) is Soledad's husband and the other respondents are their children.

Pablo died intestate leaving two parcels of land, to wit: (1) a parcel of coconut land located at Salaan Mangaldan, Pangasinan; and (2) a parcel of corn land located at (Inlambo) Palua, Mangaldan, Pangasinan.

After Pablo's death in 1936, his second wife Juana and their children continued to be in possession of the parcel of land located at Salaan, Mangaldan, Pangasinan (the disputed property), where they lived since they were married in 1919.

On January 24, 1970, Juana executed a Deed of Absolute Sale in favor of respondents-spouses, Soledad, Juana and Pablo's daughter, and her husband Juanito conveying the subject property. The deed was duly registered with the Register of Deeds of Lingayen, Pangasinan.

On January 26, 1970, a Joint Affidavit was executed by Alfredo de Guzman and Teofilo Cendana attesting to the fact that Pablo ceded the property in favor of Juana on the occasion of their marriage, but the document was lost.

Tax declarations were issued to the respondents-spouses and thereafter, they enjoyed exclusive, open and uninterrupted possession of the property. Later, the disputed property which originally consisted of one whole lot was traversed by a barangay road dividing it into two (2) lots, namely, Lot 3533 and Lot 3559.

Respondents-spouses Cereno built their house on Lot 3559 and had planted fruit-bearing trees on Lot 3533. Meanwhile, the parcel of cornland in Palua, Mangaldan, Pangasinan has never been in possession of any of the parties since it eroded and was submerged under water, eventually forming part of the riverbed.

Sometime in January 1999, petitioners entered and took possession of Lot 3533 by building a small nipa hut thereon. Respondents then filed before the MTC of Mangaldan, Pangasinan an ejectment case against petitioners. MTC dismissed the case as both parties prayed for its dismissal considering that petitioners had already left Lot 3533 immediately after the filing of the complaint.

Petitioners then filed with the RTC of Dagupan City a Complaint for annulment of document, reconveyance and damages against respondents.

RTC decided in favor of the petitioners: o Declaring as null and void the Deed of Absolute Sale; Tax Declaration

Nos. 21268 for Lot 3533 & 21269 for Lot 3559 in the names of Juanito Cereno and Soledad de Guzman;

o Ordering the defendants (1) to reconvey the property in question to the plaintiffs and to peacefully surrender the possession of the premises to the plaintiffs; and (2) to pay plaintiffs litigation expenses in the amount of P10,000.00.

On appeal by respondents, the CA reversed the RTC decision. Petitioners’ motion for reconsideration was denied.

Petitioners’ contention: o Since the CA and the RTC found that there was no partition of the

property and no valid donation propter nuptias was made by Pablo to Juana, the rule on co-ownership among Pablos heirs should govern the property.

o When Juana sold the property to respondents Cerenos, the rights of petitioners as co-owners should not have been affected.

o The CAs finding that the joint affidavit attesting to the donation propter nuptias can be the basis of a belief in good faith that Juana was the


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owner of the disputed property is erroneous, since Juana had knowledge from the time she got married to Pablo that the property was acquired during the latter's first marriage.

o Respondents Spouses Cereno could not be considered in good faith since Soledad is the daughter of Juana with her marriage to Pablo and could not be considered a third party to the dispute without knowledge of the nature of the property.

o Being co-owners, neither prescription nor laches can be used against them to divest them of their property rights.

Respondents’ contention:o Juana in her own right had acquired the property by prescription.o The CA correctly considered respondents 29 years of actual and

peaceful possession of the property aside from their purchase of the property from Juana in finding them as the true owners.

Issue: Whether the respondents have acquired the disputed property by acquisitive prescription.

Held: YES.

Ratio:

Prescription is another mode of acquiring ownership and other real rights over immovable property.

o It is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse.

o Open when it is patent, visible, apparent, notorious and not clandestine;o Continuous when uninterrupted, unbroken and not intermittent or

occasional; o Exclusive when the adverse possessor can show exclusive dominion

over the land and an appropriation of it to his own use and benefit; and o Notorious when it is so conspicuous that it is generally known and talked

of by the public or the people in the neighborhood.

The party who asserts ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.

o Ordinary acquisitive prescription requires possession in good faith and with just title for ten years.

o Extraordinary prescription , ownership and other real rights over immovable property are acquired through uninterrupted adverse possession for thirty years without need of title or of good faith.

Good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership.

For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.

In this case, records show that as early as 1970, when the property was sold by Juana to respondents Spouses Cereno, the latter immediately took possession of the property. Since then, respondents possessed the property continuously, openly, peacefully, in the concept of an owner, exclusively and in good faith with just title, to the exclusion of the petitioners and their predecessors-in-interest until the filing of the complaint in 1999 which is the subject of this present petition.

Notably, the property was traversed by a barangay road, thus, it was divided into two lots. The house of respondents is located on the eastern part of the road, while the lot on the western part of the road was planted with fruit- bearing trees by respondents. It was admitted by petitioners that they saw the house of respondents constructed on the lot and yet never questioned the same. It was also established that respondents are the ones gathering the fruits of the land and enjoying the same to the exclusion of petitioners and yet the latter never prevented them from doing so. In fact, while petitioners learned of the sale of the property by Juana to the Spouses Cereno in 1980, they never took any action to protect whatever rights they have over the property nor raised any objection on respondents' possession of the property. Petitioners' inaction is aggravated by the fact that petitioners just live a mere 100 meters away from the property.

Also, immediately after the sale of the property to the Spouses Cereno, they declared the property in their names for taxation purposes and since then religiously paid the taxes due on the property. Petitioners never challenged the same for a long period of time which clearly establishes respondents' claim as owners of the property. As is well known, the payment of taxes, coupled with actual possession of the land covered by the tax declaration, strongly supports a claim of ownership.

Respondent Juanito also exercised dominion over the property by mortgaging the same to Manaoag Rural Bank in 1994 and the mortgage was cancelled only in January 1999.

T requirement of just title and good faith are also satisfied in this case by the joint affidavit that the defendants-appellants presented, attesting to the donation propter nuptias of the disputed property by Pablo to Juana. It is undisputed that Pablo and Juana had lived in the disputed property from the time of their marriage in 1919, and Juana continued to live and to possess this property in the concept of an owner from the time of Pablo's death in 1936 up to the time she sold it to spouses Cereno in 1970. These circumstances are sufficient bases for the belief that Juana was the owner of the property she conveyed by sale, and therefore, the spouses Cereno had the good faith that acquisition by prescription requires when they became the purchasers in the contract of sale with Juana.

Notably, one of the affiants in the joint affidavit which was executed in 1970 was Alfredo, Pablo's son by his first marriage. Not one among Alfredo's children had ever come out to assail the validity of the affidavit executed by their father. In


77


fact, not one of Alfredo's heirs joined petitioners in this case. Moreover, not one among the children of the first marriage when they were still alive ever made a claim on their successional rights over the property by asking for its partition. Such joint affidavit could constitute a legal basis for Juana's adverse and exclusive character of the possession of the property and would show the Spouses Cereno's good faith belief that Juana was the owner of the property. Thus, when petitioners filed the instant case, more than 29 years had already elapsed, thus, the ten-year period for acquisitive prescription has already been satisfied.

Petitioners are guilty of laches that would bar them from belatedly asserting their claim.

Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. This equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of society.

Petitioners claim that they knew about the sale only in 1980 yet they did not take any action to recover the same and waited until 1999 to file a suit without offering any excuse for such delay. Records do not show any justifiable reason for petitioners' inaction for a long time in asserting whatever rights they have over the property given the publicity of respondents' conduct as owners of the property.

Disposition: The petition is DENIED.

52. Jaimes Abalos v. Heirs of Torio

Petitioner: JAIME ABALOS and SPOUSES FELIX SALAZAR and CONSUELO SALAZAR, GLICERIO ABALOS, HEIRS OF AQUILINO ABALOS, namely: SEGUNDA BAUTISTA, ROGELIO ABALOS, DOLORES A. ROSARIO, FELICIDAD ABALOS, ROBERTO ABALOS, JUANITO ABALOS, TITA ABALOS, LITA A. DELA CRUZ AND HEIRS OF AQUILINA ABALOS, namely: ARTURO BRAVO, PURITA B. MENDOZA, LOURDES B. AGANON, CONSUELO B. SALAZAR, PRIMA B. DELOS SANTOS, THELMA APOSTOL and GLECERIO ABALOSRespondent: HEIRS OF VICENTE TORIO, namely: PUBLIO TORIO, LIBORIO TORIO, VICTORINA TORIO, ANGEL TORIO, LADISLAO TORIO, PRIMO TORIO and NORBERTO TORIOPonente: PERALTA, J.


Vicente Torio died intestate, leaving behind a parcel of land located in Pangasinan. During the lifetime of Vicente, petitioners Jaime Abalos and Sps. Salazar were allowed to stay and build their houses on the subject land. However, years after Vicente’s death, respondents who are the children and heirs of Vicente asked Jaime and Sps. Salazar to vacate the lot, but they refused. The heirs filed a complaint for recovery of possession and damages with the MTC against the petitioners. Jaime and

the Sps. Salazar filed their Answer with Counterclaim and stated that respondents’ cause of action is barred by acquisitive prescription.

Held: It is clear that during their possession of the property in question, petitioners acknowledged ownership thereof by the immediate predecessor-in-interest of respondents. Petitioners never disputed such an acknowledgment. Thus, having knowledge that they nor their predecessors-in-interest are not the owners of the disputed lot, petitioners’ possession could not be deemed as possession in good faith as to enable them to acquire the subject land by ordinary prescription.

Petitioners’ possession of the lot in question was by mere tolerance of respondents and their predecessors-in-interest. Acts of possessory character executed due to license or by mere tolerance of the owner are inadequate for purposes of acquisitive prescription. Possession, to constitute the foundation of a prescriptive right, should be adverse, if not, such possessory acts, no matter how long, do not start the running of the period of prescription. Moreover, the CA correctly held that even if the character of petitioners’ possession of the subject property had become adverse, still falls short of the required period of thirty (30) years in cases of extraordinary acquisitive prescription.

Facts:

Vicente Torio (Vicente) died intestate, leaving behind a parcel of land located in Pangasinan. During the lifetime of Vicente, petitioners Jaime Abalos and Sps. Salazar were allowed to stay and build their houses on the subject land. However, years after Vicente’s death, respondents who are the children and heirs of Vicente asked Jaime and Sps. Salazar to vacate the lot, but they refused. The heirs filed a complaint for recovery of possession and damages with the MTC against the petitioners.

Jaime and the Sps. Salazar filed their Answer with Counterclaim and stated that respondents’ cause of action is barred by acquisitive prescription.

MTC – ruled in favor of the heirs of Torio, ordering the petitioners Jaime and Sps. Salazar to pay the heirs land rent and attorney’s fees and costs of suit.

RTC – in favor of Jaime and Sps. Salazar, holding that they have acquired the subject property through prescription.

CA – reversed ruling in favor of the heirs.

Issues:

WON Jaime and Sps. Salazar and their predecessors-in-interest possessed the disputed lot in the concept of an owner or by mere tolerance of Torio and his predecessors-in-interest.

Ruling:

Possession was by mere tolerance.


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Ratio:

Petitioners claim that they have acquired ownership over the disputed lot through ordinary acquisitive prescription.

Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.

Ordinary acquisitive prescription requires possession in good faith and with just title for ten (10) years. Without good faith and just title, acquisitive prescription can only be extraordinary in character which requires uninterrupted adverse possession for thirty (30) years.

Possession “in good faith” consists in the reasonable belief that the person from whom the thing is received has been the owner thereof, and could transmit his ownership.

There is “just title” when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.

In the instant case, it is clear that during their possession of the property in question, petitioners acknowledged ownership thereof by the immediate predecessor-in-interest of respondents. This is clearly shown by the Tax Declaration in the name of Jaime wherein it contains a statement admitting that Jaime’s house was built on the land of Vicente, respondents’ immediate predecessor-in-interest. Petitioners never disputed such an acknowledgment. Thus, having knowledge that they nor their predecessors-in-interest are not the owners of the disputed lot, petitioners’ possession could not be deemed as possession in good faith as to enable them to acquire the subject land by ordinary prescription.

In this respect, the Court agrees with the CA that petitioners’ possession of the lot in question was by mere tolerance of respondents and their predecessors-in-interest. Acts of possessory character executed due to license or by mere tolerance of the owner are inadequate for purposes of acquisitive prescription. Possession, to constitute the foundation of a prescriptive right, should be adverse, if not, such possessory acts, no matter how long, do not start the running of the period of prescription. Moreover, the CA correctly held that even if the character of petitioners’ possession of the subject property had become adverse, still falls short of the required period of thirty (30) years in cases of extraordinary acquisitive prescription. Records show that the earliest Tax Declaration in the name of petitioners was in 1974. Reckoned from such date, the thirty-year period was completed in 2004. However, herein respondents’ complaint was filed in 1996, effectively interrupting petitioners’ possession upon service of summons on them. Based on the foregoing, Jaime Abalos and the Spouses Salazar have not inherited the disputed land because the same was shown to have already been validly sold to Marcos Torio, who, thereupon, assigned the same to his son Vicente, the father of petitioners.

Disposition:

The petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

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IV.I.4 Possession: Acquisitive Prescription

53. Mercado v. Espinocilla

Petitioner: Mercado (Salvacion’s son)Respondents: Fernando and Belen Espinocilla (Grandson, and daughter in law of Macario)

Short facts: A parcel of land was inherited by the 5 children of Doroteo. After one of the children of Doroteo died, an oral partition among the 4 remaining children in 1945. Based on the oral partition and on the alleged donation by Dionisia, Macario obtained Dionisia’s part. Macario thereafter sold his part to his son Robert (father, and husband of the respondents). Robert thereafter sold a portion to Caridad. Thereafter, the son of Salvacion (one of the 4 remaining children) filed a complaint for recoveyance in 2000. He alleged that 39 sq. m. should be returned to him as he should have been entitled to 171 sq. m. but he is only occupying 132sq. m.

Court held acquisitive prescription has set in in favour of respondents. Furthermore, the action for reconveyance is barred by extinctive prescription.

Prescription, as a mode of acquiring ownership and other real rights over immovable property, is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse. Since 1945 until 2000 (time of filing of complaint), Macario and his heirs have been in adverse possession of the lot in question.

An action for reconveyance based on an implied or constructive trust prescribes in 10 years from the time the right of action accrues. This is the other kind of prescription under the Civil Code, called extinctive prescription, where rights and actions are lost by the lapse of time. Petitioners action for recovery of possession having been filed 55 years after Macario occupied Dionisias share, it is also barred by extinctive prescription.

Facts: Doroteo Espinocilla owned a 570 sq. m. parcel of land (Lot No. 552). After he

died, his five children, Salvacion, Aspren, Isabel, Macario, and Dionisia divided Lot No. 552 equally (114 each) among themselves.

Later, Dionisia died without issue ahead of her four siblings, and Macario took possession of Dionisia’s share. He claimed that Dionisia had donated her share to him in May 1945. In an affidavit of transfer of real property dated November 1, 1948, Macario claimed that Dionisia had donated her share to him in May 1945.


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On August 9, 1977, Macario and his daughters sold 225 sq. m. to his son Roger, father of respondent Ferdinand.

On March 8, 1985, Roger Espinocilla sold 114 sq. m. to Caridad Atienza. Per actual survey of Lot No. 552, respondent Belen Espinocilla (wife of Roger)

occupies 109 sq. m., Caridad Atienza occupies 120 sq. m., Caroline Yu occupies 209 sq. m., and petitioner, Salvacion's son, occupies 132 sq. m.

Petitioner sued the respondents (Belen and Ferdinand) to recover an alleged encroachment of 39 sq. m. that he claims must be returned to him.

Petitioner’s contention: He avers that he is entitled to own and possess 171 sq. m. of Lot No. 552,

having inherited 142.5 sq. m. from his mother Salvacion and bought 28.5 sq. m. from his aunt Aspren.

According to him, his mother’s inheritance is 142.5 sq. m., that is, 114 sq. m. from Doroteo plus 28.5 sq. m. from Dionisia. Since the area he occupies is only 132 sq. m., he claims that respondents encroach on his share by 39 sq. m.

Macario committed fraud in acquiring his share; hence, any evidence adduced by him to justify such acquisition is inadmissible. Thus, if a person obtains legal title to property by fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party.

Respondent’s contention: Respondents agree that Doroteos five children each inherited 114 sq. m. of Lot

No. 552. However, Macario’s share increased when he received Dionisias share. Macarios increased share was then sold to his son Roger, respondents’ husband and father.

Respondents claim that they rightfully possess the land they occupy by virtue of acquisitive prescription and that there is no basis for petitioners claim of encroachment.

RTC: Ruled in favour of Petitioner. There being no public document to prove Dionisias donation, the RTC also held that Macario’s 1948 affidavit is void and is an invalid repudiation of the shares of his sisters Salvacion, Aspren, and Isabel in Dionisias share. Accordingly, Macario cannot acquire said shares by prescription. The RTC further held that the oral partition of Lot No. 552 by Doroteo’s heirs did not include Dionisia’s share and that partition should have been the main action. CA: Reversed RTC ruling on the ground that extraordinary acquisitive prescription has set in. CA found that Doroteo’s four remaining children made an oral partition of Lot No. 552 after Dionisia’s death in 1945 and occupied specific portions. And since petitioner’s complaint was filed only on July 13, 2000, the CA concluded that prescription has set in.

Issue: Whether action to recover the subject portion is barred by prescription?

Held: Yes

Ratio: Prescription, as a mode of acquiring ownership and other real rights over

immovable property, is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse.

Acquisitive prescription of real rights may be ordinary or extraordinary. o Ordinary acquisitive prescription requires possession in good faith

and with just title for 10 years. o In extraordinary prescription, ownership and other real rights over

immovable property are acquired through uninterrupted adverse possession for 30 years without need of title or of good faith.

Here, petitioner himself admits the adverse nature of respondents’ possession with his assertion that Macario’s fraudulent acquisition of Dionisias share created a constructive trust.

o In a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee (Macario) neither accepts any trust nor intends holding the property for the beneficiary (Salvacion, Aspren, Isabel).

o The relation of trustee and cestui que trust does not in fact exist, and the holding of a constructive trust is for the trustee himself, and therefore, at all times adverse. Prescription may supervene even if the trustee does not repudiate the relationship.

Then, too, respondents’ uninterrupted adverse possession for 55 years of 109 sq. m. of Lot No. 552 was established.

o Macario occupied Dionisia’s share in 1945 although his claim that Dionisia donated it to him in 1945 was only made in a 1948 affidavit.

o Macarios possession of Dionisias share was public and adverse since his other co-owners also occupied portions of Lot No. 552.

o The 1977 sale made by Macario and his two daughters in favor of his son Roger confirms the adverse nature of Macarios possession because said sale of 225 sq. m. was an act of ownership over Macarios original share and Dionisias share.

o In 1985, Roger also exercised an act of ownership when he sold 114 sq. m. to Caridad Atienza.

It was only in the year 2000, upon receipt of the summons to answer petitioner’s complaint, that respondents’ peaceful possession of the remaining portion (109 sq. m.) was interrupted.

o By then, however, extraordinary acquisitive prescription has already set in in favor of respondents.

o That the RTC found Macarios 1948 affidavit void is of no moment. Extraordinary prescription is unconcerned with Macarios title or good faith.

The CA correctly dismissed petitioners complaint as an action for reconveyance based on an implied or constructive trust prescribes in 10 years from the time the right of action accrues. This is the other kind of


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prescription under the Civil Code, called extinctive prescription, where rights and actions are lost by the lapse of time.

Petitioner’s action for recovery of possession having been filed 55 years after Macario occupied Dionisias share, it is also barred by extinctive prescription.

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IV.I.5 Possession: Rights of Legal Possessor

54. Maglucot-Aw v. Maglucot

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IV.I.7 Possession: Possession of Movables

55. Subic Bay v. Fernandez

56. Dizon v. Suntay

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner,

LOURDES G. SUNTAY, respondent.

Recit Ready:

Lourdes Suntay owns a diamond ring. She gave this ring and several of her jewelries to her friend, Sison, so that Sison could sell them However, violating the rules on agency, Sison pledged the movables to Dizon’s pawnshop. Sunaty now wants to recover the jewelries from the pawnshop but Dizon refuses to deliver them back. The issue is whether Suntay has the right to revover the jewelries. SC held that yes, she does. 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. Also, estoppel cannot be invoked by Dizon.

Lourdes Suntay is the owner of a diamond ring and several pieces of jewelry. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission, along with other pieces of jewelry of Suntay. After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring but the latter could not comply.

Since Suntay insistently demanded from Clarita R. Sison the return of her ring, the latter finally delivered to the former the pawnshop ticket which is the

receipt of the pledge with Dizon’s pawnshop of the plaintiff's ring. Dizon, however, refused to return the ring. The RTC and the CA ruled in favor of Suntay, by virtue of Art. 559 of the

Civil Code. Dizon now brings the case to the SC.

Issue:

W/N Suntay has the right to recover her movable property from Dizon. YES

Ratio:

The controlling provision is Article 559 of the Civil Code. It reads thus: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.'

Estoppel: Suntay not estopped

Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil Procedure, 7 has its roots in equity. Good faith is its basis. 8 It is a response to the demands of moral right and natural justice. 9 For estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such a principle, must have altered his position, having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done or failed to be done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or omission. The principle comes into full play. It may successfully be relied upon. A court is to see to it then that there is no turning back on one's word or a repudiation of one's act. So it has been from our earliest decisions.

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized. The law for this sound reason accords the latter protection.


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IV.J.1 Usufruct: Nature/ Elements

57. NHA v CA

G.R. No. 148830|April 13, 2005Petitioner: NATIONAL HOUSING AUTHORITYRespondent: COURT OF APPEALS, BULACAN GARDEN CORPORATION and MANILA SEEDLING BANK FOUNDATION, INC.Ponente: CARPIO, J

Summary: Pres. Marcos issued Proclamation no. 481 setting aside 120 hectares for the National Gov’t Center. Proclamation no. 1670 was thereafter issued which removed 7 hectares from said reservation and granted MSBF usufructuary rights over it. MSBF leased a portion of the area to BGC. Pres. Corazon issued a memorandum authorizing the NHA to commercialize the remaining land out of the 120 hectares. NHA asked BGC to vacate so BGC filed an injunction case. The SC held that a usufructuary may lease the object held in usufruct. Thus, the NHA may not evict BGC if portion of land MSBF leased to BGC is within the seven-hectare area held in usufruct by MSBF. The owner of the property must respect the lease entered into by the usufructuary so long as the usufruct exists. However, the NHA has the right to evict BGC if BGC occupied a portion outside of the seven-hectare area covered by MSBFs usufructuary rights. The case was remanded to the trial court so that a proper survey can be conducted to determine the metes and bounds of the usufruct and the remaining area of the subject property that can be commercialized.

Facts:

Proclamation No. 481 issued by then President Marcos set aside a 120-hectare portion of land in Quezon City owned by the NHA as reserved property for the site of the National Government Center (NGC).

President Marcos then issued Proclamation No. 1670, which removed a seven-hectare portion from the coverage of the NGC. Said proclamation gave MSBF usufructuary rights over this segregated portion.

MSBF occupied the area granted by Proclamation No. 1670 but over the years, MSBFs occupancy exceeded the seven-hectare area subject to its usufructuary rights.

By 1987, MSBF occupied approximately 16 hectares. By then the land occupied by MSBF was bounded by Epifanio de los Santos Avenue (EDSA) to the west, Agham Road to the east, Quezon Avenue to the south and a creek to the north.

MSBF leased a portion of the area it occupied to BGC and other stallholders. BGC leased the portion facing EDSA, which occupies 4,590 square meters of the 16-hectare area.

President Corazon Aquino issued Memorandum Order No. 127 (MO 127) which revoked the reserved status of the 50 hectares, more or less,

remaining out of the 120 hectares of the NHA property reserved as site of the National Government Center. MO 127 also authorized the NHA to commercialize the area and to sell it to the public.

Acting on the power granted under MO 127, the NHA gave BGC ten days to vacate its occupied area. Any structure left behind after the expiration of the ten-day period will be demolished by NHA.

BGC then filed a complaint for injunction before the trial court. The trial court agreed with BGC that Proc. No. 1670 gave MSBF the right to

conduct the survey, which would establish the seven-hectare area covered by MSBFs usufructuary rights. However, the trial court held that MSBF failed to act seasonably on this right to conduct the survey. It then dismissed the injunction case.

The NHA demolished BGCs facilities soon thereafter. CA reversed the trial court’s ruling.

Issue: W/N NHA can evict BGC and demolish the improvements it build

Held: Case remanded to the trial court in order to determine whether MSBF and BGC exceeded the usufruct of 7 hectare granted to MSBF under Proclamation 1670. (The NHA can evict BGC if it is found to be outside the 7 hectares of land)

Ratio:

A usufruct may be constituted for a specified term and under such conditions as the parties may deem convenient subject to the legal provisions on usufruct. A usufructuary may lease the object held in usufruct. Thus, the NHA may not evict BGC if the 4,590 square meter portion MSBF leased to BGC is within the seven-hectare area held in usufruct by MSBF. The owner of the property must respect the lease entered into by the usufructuary so long as the usufruct exists. However, the NHA has the right to evict BGC if BGC occupied a portion outside of the seven-hectare area covered by MSBFs usufructuary rights.

MSBFs survey shows that BGCs stall is within the seven-hectare area. On the other hand, NHAs survey shows otherwise. The entire controversy revolves on the question of whose land survey should prevail.

Article 565 of the Civil Code states:

ART. 565. The rights and obligations of the usufructuary shall be those provided in the title constituting the usufruct; in default of such title, or in case it is deficient, the provisions contained in the two following Chapters shall be observed.

In the present case, Proclamation No. 1670 is the title constituting the usufruct. Proclamation No. 1670 categorically states that the seven-hectare area shall be determined by future survey under the administration of the Foundation subject to private rights if there be any. Proclamation No. 1670 authorized MSBF to determine the location of the seven-hectare area. This authority, coupled with the fact that


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Proclamation No. 1670 did not state the location of the seven-hectare area, leaves no room for doubt that Proclamation No. 1670 left it to MSBF to choose the location of the seven-hectare area under its usufruct.

To prefer the NHAs survey to MSBFs survey will strip MSBF of most of its main facilities. Only the main building of MSBF will remain with MSBF since the main building is near the corner of EDSA and Quezon Avenue. The rest of MSBFs main facilities will be outside the seven-hectare area.

The Court cannot countenance MSBFs act of exceeding the seven-hectare portion granted to it by Proclamation No. 1670. A usufruct is not simply about rights and privileges. A usufructuary has the duty to protect the owners interests. One such duty is found in Article 601 of the Civil Code which states:

ART. 601. The usufructuary shall be obliged to notify the owner of any act of a third person, of which he may have knowledge, that may be prejudicial to the rights of ownership, and he shall be liable should he not do so, for damages, as if they had been caused through his own fault.

A usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides. This controversy would not have arisen had MSBF respected the limit of the beneficial use given to it. MSBFs encroachment of its benefactors property gave birth to the confusion that attended this case. To put this matter entirely to rest, it is not enough to remind the NHA to respect MSBFs choice of the location of its seven-hectare area. MSBF, for its part, must vacate the area that is not part of its usufruct. MSBFs rights begin and end within the seven-hectare portion of its usufruct. Court agrees with the trial court that MSBF has abused the privilege given it under Proclamation No. 1670. The direct corollary of enforcing MSBFs rights within the seven-hectare area is the negation of any of MSBFs acts beyond it.

The seven-hectare portion of MSBF is no longer easily determinable considering the varied structures erected within and surrounding the area. Both parties advance different reasons why their own surveys should be preferred. At this point, the determination of the seven-hectare portion cannot be made to rely on a choice between the NHAs and MSBFs survey. There is a need for a new survey, one conducted jointly by the NHA and MSBF, to remove all doubts on the exact location of the seven-hectare area and thus avoid future controversies.

Article 605 of the Civil Code states:

ART. 605. Usufruct cannot be constituted in favor of a town, corporation, or association for more than fifty years. If it has been constituted, and before the expiration of such period the town is abandoned, or the corporation or association is dissolved, the usufruct shall be extinguished by reason thereof.

The law clearly limits any usufruct constituted in favor of a corporation or association

to 50 years. A usufruct is meant only as a lifetime grant. Unlike a natural person, a corporation or associations lifetime may be extended indefinitely. The usufruct would then be perpetual. This is especially invidious in cases where the usufruct given to a corporation or association covers public land. Proclamation No. 1670 was issued 19 September 1977, or 28 years ago. Hence, under Article 605, the usufruct in favor of MSBF has 22 years left.

Disposition: WHEREFORE, the Decision of the Court of Appeals dated 30 March 2001 and its Resolution dated 25 June 2001 in CA-G.R. CV No. 48382 are SET ASIDE. This case is REMANDED to Branch 87 of the Regional Trial Court of Quezon City, which shall order a joint survey by the National Housing Authority and Manila Seedling Bank Foundation, Inc. to determine the metes and bounds of the seven-hectare portion of Manila Seedling Bank Foundation, Inc. under Proclamation No. 1670. The seven-hectare portion shall be contiguous and shall include as much as possible all existing major improvements of Manila Seedling Bank Foundation, Inc. The parties shall submit the joint survey to the Regional Trial Court for its approval within sixty days from the date ordering the joint survey. SO ORDERED.

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IV.J.6 Usufruct: Termination of Usufruct

58. Moralidad v. Pernes

Petitioner: Mercedes MoralidadRespondent: Sps. Diosdado Pernes and Arlene PernesPonente: Garcia


Petitioner, the aunt of respondents, bought a parcel of land so that respondents (her nieces) can relocate in Davao (there was an insurgence of NPA rebels at that time). When petitioner went to the Philippines (she lived in the US), she lived with respondents. However, she was maltreated by respondents.

The court ruled that the relationship between the parties was one of usufruct. The usufruct should be deemed terminated because one of the implied conditions of the usufruct is the maintenance of harmonious relations within the family. Respondents cannot claim reimbursement of the value of the improvement (house) built on the lot because the usufructuary has no such right.

Facts:

At the heart of this controversy is a parcel of land located in Davao City and registered in the name of petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT) No. T-123125 of the Registry of Deeds of Davao City.


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In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in Manila, she had the good fortune of furthering her studies at the University of Pennsylvania, U.S.A. While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese, which she did for seven (7) years. Thereafter, she worked at the Mental Health Department of said University for the next seventeen (17) years.

During those years, she would come home to the Philippines to spend her two-month summer vacation in her hometown in Davao City. Being single, she would usually stay in Mandug, Davao City, in the house of her niece, respondent Arlene Pernes, a daughter of her younger sister, Rosario.

Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the outskirts of Davao City was infested by NPA rebels and many women and children were victims of crossfire between government troops and the insurgents. Shocked and saddened about this development, she immediately sent money to Araceli, Arlene’s older sister, with instructions to look for a lot in Davao City where Arlene and her family could transfer and settle down. This was why she bought the parcel of land covered by TCT No. T-123125.

Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug to Davao City proper but later she wanted the property to be also available to any of her kins wishing to live and settle in Davao City . Petitioner made known this intention in a document she executed on July 21, 1986.15

Following her retirement in 1993, petitioner came back to the Philippines to stay with the respondents on the house they build on the subject property.

In the course of time, their relations turned sour because members of the Pernes family were impervious to her suggestions and attempts to change certain practices concerning matters of health and sanitation within their compound.

o For instance, Arlenes eldest son, Myco Pernes, then a fourth year veterinary medicine student, would answer petitioner back with clenched fist and at one time hurled profanities when she corrected him.

o Later, Arlene herself followed suit. Petitioner brought the matter to the local barangay lupon where she lodged a complaint for slander, harassment, threat and defamation against the Pernes Family. Deciding

15 I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29 th day of January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania, U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village Subdivision, Bajada, Davao City, 9501, and hereby declare:1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay as long as they like;2. That anybody of my kins who wishes to stay on the aforementioned real property should maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another;3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not inimical to the purpose thereof;4. That anyone of my kins who cannot conform with the wishes of the undersigned may exercise the freedom to look for his own;5. That any proceeds or income derived from the aforementioned properties shall be allotted to my nearest kins who have less in life in greater percentage and lesser percentage to those who are better of in standing.

for petitioner, the lupon apparently ordered the Pernes family to vacate petitioners property but not after they are reimbursed for the value of the house they built thereon. Unfortunately, the parties could not agree on the amount, thus prolonging the impasse between them.

o Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the petitioner narrating that, at one occasion in July 1998, she sustained cuts and wounds when Arlene pulled her hair, hit her on the face, neck and back, while her husband Diosdado held her, twisting her arms in the process.

Petitioner filed with the MTCC of Davao City an unlawful detainer suit against the respondent spouses.

o Petitioner alleged that she is the registered owner of the land on which the respondents built their house; that through her counsel, she sent the respondent spouses a letter demanding them to vacate the premises and to pay rentals therefor, which the respondents refused to heed.

In their defense, the respondents alleged having entered the property in question, building their house thereon and maintaining the same as their residence with petitioners full knowledge and express consent. To prove their point, they invited attention to her written declaration of July 21, 1986, supra, wherein she expressly signified her desire for the spouses to build their house on her property and stay thereat for as long as they like.

Issues:

1. Whether or not the rules on usufruct should apply. Yes. 2. Whether the usufruct should be deemed terminated

Held/Ratio:

FIRST ISSUE (EXISTENCE OF USUFRUCT)

1. The Court is inclined to agree with the CA that what was constituted between the parties herein is one of usufruct 16 over a piece of land, with the petitioner being the owner of the property upon whom the naked title thereto remained and the respondents being two (2) among other unnamed usufructuaries who were simply referred to as petitioners kin. The Court, however, cannot go along with the CAs holding that the action for unlawful detainer must be dismissed on ground of prematurity.

Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property. It is also defined as the right to enjoy the property of another temporarily, including both the jus utendi and the jus fruendi, with the owner retaining the jus disponendi or the power to alienate the same.

16 Usufruct is defined under Article 562 of the Civil Code in the following wise:ART. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides.


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It is undisputed that petitioner, in a document dated July 21, 1986, made known her intention to give respondents and her other kins the right to use and to enjoy the fruits of her property. There can also be no quibbling about the respondents being given the right to build their own house on the property and to stay thereat as long as they like. Paragraph #5 of the same document earmarks proceeds or income derived from the aforementioned properties for the petitioners nearest kins who have less in life in greater percentage and lesser percentage to those who are better of (sic) in standing.

The established facts undoubtedly gave respondents not only the right to use the property but also granted them, among the petitioners other kins, the right to enjoy the fruits thereof. We have no quarrel, therefore, with the CAs ruling that usufruct was constituted between petitioner and respondents. It is thus pointless to discuss why there was no lease contract between the parties.

SECOND ISSUE (TERMINATION OF USUFRUCT)

Determinative of the outcome of the ejectment case is the resolution of the next issue, i.e., whether the existing usufruct may be deemed to have been extinguished or terminated.

o If the question is resolved in the affirmative, then the respondents’ right to possession, proceeding as it did from their right of usufruct, likewise ceased. In that case, petitioners action for ejectment in the unlawful detainer case could proceed and should prosper.

The term or period of the usufruct originally specified provides only one of the bases for the right of a usufructuary to hold and retain possession of the thing given in usufruct. There are other modes or instances whereby the usufruct shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other modes of extinguishment:

o ART. 603. Usufruct is extinguished:1. By the death of the usufructuary, unless a contrary

intention clearly appears;2. By expiration of the period for which it was constituted,

or by the fulfillment of any resolutory condition provided in the title creating the usufruct;

3. By merger of the usufruct and ownership in the same person;

4. By renunciation of the usufructuary;5. By the total loss of the thing in usufruct;6. By the termination of the right of the person constituting

the usufruct;7. By prescription.

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets forth the conditions of, the usufruct. Paragraph #3 thereof states [T]hat anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not inimical to the purpose thereof .

o What may be inimical to the purpose constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it abundantly clear that anybody of my kins who wishes to stay on the aforementioned property should maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another.

o That the maintenance of a peaceful and harmonious relations between and among kin constitutes an indispensable condition for the continuance of the usufruct is clearly deduced from the succeeding Paragraph #4 where petitioner stated [T]hat anyone of my kins who cannot conform with the wishes of the undersigned may exercise the freedom to look for his own.

In fine, the occurrence of any of the following: the loss of the atmosphere of cooperation, the bickering or the cessation of harmonious relationship between/among kin constitutes a resolutory condition which, by express wish of the petitioner, extinguishes the usufruct.

As aptly pointed out by the petitioner in her Memorandum, respondents own evidence before the MTCC indicated that the relations between the parties have deteriorated to almost an irretrievable level. There is no doubt then that what impelled petitioner to file complaints before the local barangay lupon, the Office of the Ombudsman for Mindanao, and this instant complaint for unlawful detainer before the MTCC is that she could not live peacefully and harmoniously with the Pernes family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family and the violence and humiliation she was made to endure, despite her advanced age and frail condition, are enough factual bases to consider the usufruct as having been terminated.

To reiterate, the relationship between the petitioner and respondents respecting the property in question is one of owner and usufructuary. Accordingly, respondents claim for reimbursement of the improvements they introduced on the property during the effectivity of the usufruct should be governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with approval what Justice Edgardo Paras wrote on the matter:

o If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the terms of the contract and the pertinent provisions of law should govern.

By express provision of law, respondents, as usufructuary, do not have the right to reimbursement for the improvements they may have introduced on the property.17

17 Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere pleasure as he may deem proper, provided he does not alter its form or substance;but he shall have no right to be indemnified therefor. He may, however, remove such improvements, should it be possible to do so without damage to the property. (Emphasis supplied.)


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Given the foregoing perspective, respondents will have to be ordered to vacate the premises without any right of reimbursement. If the rule on reimbursement or indemnity were otherwise, then the usufructuary might, as an author pointed out, improve the owner out of his property. The respondents may, however, remove or destroy the improvements they may have introduced thereon without damaging the petitioners property.

Disposition: WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are REVERSED and SET ASIDE. Accordingly, the decision of the MTCC isREINSTATED with MODIFICATION that all of respondents counterclaims are dismissed, including their claims for reimbursement of useful and necessary expenses.

59. Rivera-Calingasan v. Rivera

Petitioners: EVANGELINE RIVERA-CALINGASAN and E. RICAL ENTERPRISES

Respondents: WILFREDO, substituted by MA. LYDIA (2nd wife of Wilfredo), FREIDA LEAH and WILFREDO JR. all surnamed Rivera

Facts:

Wilfredo and his wife, Loreto Inciong, acquired parcels of land in Lipa, Batangas. Loreto died leaving Wilfredo and their daughters Evangeline and Brigida Liza as heirs.

11 years later, Loreto’s heirs executed an extrajudicial settlement of her one-half share of the conjugal estate, adjudicating all the properties in favor of Evangeline and Brigida Liza; Wilfredo waived his rights with a reservation of his usufructuary rights during his lifetime. The TCTs over two lots were cancelled and new ones issued in the names of Evangeline and Brigida Liza, with an annotation of Wilfredo’s usufructuary rights.

Almost a decade later, Wilfredo filed with the MTCC of Lipa a complaint for forcible entry against the Evangeline and Star Honda. He claimed lawful possession over the lots, one of which with a building that housed his furniture business. Taking advantage of his absence due to his hospital confinement, petitioners and Star Honda took possession and caused the renovation of the building. He claims that with the aid of armed men, they barred him from entering the property.

Petitioners and Star Honda claimed that Wilfredo voluntarily renounced his usufructuary rights in a petition for cancellation of usufructuary rights and another action for the annulment of the petition for cancellation of usufructuary rights filed by Wilfredo is pending with the RTC of Lipa City.

MTCC dismissed Wilfredo’s complaint upon finding no evidence of Wilfredo’s prior possession and subsequent dispossession of the property; that Wilfredo

Art. 580. The usufructuary may set off the improvements he may have made on the property against any damage to the same.

admitted that both E. Rical Enterprises and Star Honda, Inc. occupied the property through lease contracts from Evangeline and her husband. RTC affirmed, but reversed on MR. It ordered the eviction of petitioners and Star Honda, Inc. On MR of the petitioners, only Star Honda was absolved. CA affirmed.

Petitioners: CA erred in equating possession with residence since possession in forcible entry cases means physical possession without qualification as to the nature of possession, i.e., whether residing or not in a particular place. The pronouncements of the RTC that they have been "occupying the premises since 1997" and Wilfredo’s own admission that he padlocked the doors of the building contradict Wilfredo’s claim of prior possession.

Respondents: Petitioners mistakenly relied on the statements of the RTC since such statements had been rendered in an interlocutory order, and should not prevail over Evangeline’s admission in her answer of "Poblacion, Rosario, Batangas"21 as her residence, compared to Wilfredo’s admission in his complaint of "C.M. Recto Avenue, Lipa City, Batangas" as his residence, the exact address of the disputed property

The Issue: Who, between the petitioners and Wilfredo, had been in prior physical possession of the property.

RULING: WILFREDO has prior possession hence the ejectment case is decided in his favor however his death extinguishes his right to usufruct consequently, this deprives his heirs of the usufructuary the right to retain or to reacquire possession of the property even if the ejectment judgment directs its restitution. Therefore, only the judgment of damages is affirmed. No restitution.

RATIO:

Ejectment cases involve only physical possession or possession de facto.

"Ejectment cases - forcible entry and unlawful detainer - are summary proceedings designed to provide expeditious means to protect actual possession or the right to possession of the property involved.”

The only question is: who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It does not even matter if a party's title to the property is questionable." an ejectment case will not necessarily be decided in favor of one who has presented proof of ownership of the subject property.

Possession in ejectment cases "means nothing more than actual physical possession, not legal possession in the sense contemplated in civil law." In a forcible entry case, "prior physical possession is the primary consideration." "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 prior


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possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him." "The party in peaceable, quiet possession shall not be thrown out by a strong hand, violence, or terror."

IN THIS CASE, respondents have proven prior physical possession of the property and that the petitioners deprived him of such possession by means of force, strategy and stealth. Residence was correctly equated with physical possession since residence is a manifestation of possession and occupation. Wilfredo had consistently alleged that he resided on the location of the property, whereas Evangeline has always admitted that she has been a resident of "J. Belen Street, Rosario, Batangas." The petitioners failed to prove that they have occupied the property through some other person, even if they have declared their residence in another area. The affidavit of Barangay Captain Briones attested to Wilfredo’s prior possession and the petitioners’ unlawful entry to the property during Wilfredo’s hospital confinement.

In another proceeding, a criminal complaint for qualified trespass to dwelling, the Lipa City Prosecutor observed that petitioners did not reside on or occupy the property before Wilfredo filed the complaint for forcible entry. The petitioners also alleged therein that they are residents of "J. Belen St., Rosario, Batangas" and not "No. 30 C.M. Recto Ave., Lipa City."30

Thus, the RTC’s pronouncement on the petitioners’ occupation in the interlocutory order is not res judicata on the issue of actual physical possession.

IMPLICATIONS OF WILFREDO’S DEATH: The judgment on the ejectment case is binding however the right to usufruct is rendered moot.

Wilfredo’s death did not render moot the forcible entry case. The judgment in an ejectment case is conclusive between the parties and their successors-in-interest by title subsequent to the commencement of the action; hence, it is enforceable by or against the heirs of the deceased. They are entitled the winning party to: (a) the restitution of the premises, (b) the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises, and (c) attorney’s fees and costs.

However, the right to the usufruct is now rendered moot by the death of Wilfredo since death extinguishes a usufruct under Article 603(1) of the Civil Code. This deprives the heirs of the usufructuary the right to retain or to reacquire possession of the property even if the ejectment judgment directs its restitution. Thus, what actually survives under the circumstances is the award of damages, by way of compensation.

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IV.K Easements

60. La Vista v. CA

PETITIONERS: LA VISTA ASSOCIATION, INC.RESPONDENT: CA, ATENEO, LOYOLA GRAND VILLAS ET ALPONENTE: BELLOSILLO

SHORT VERSION:

The Tuasons owned a parcel of land which includes the land in question. Said parcel of land was sold to Philippine Building Corporation. Subsequently, the latter assigned its rights to Ateneo. The Tuasons developed a part of the estate adjoining the portion sold to Philippine Building Corporation into a residential village known as La Vista Subdivision. Thus the boundary between LA VISTA and the portion sold to Philippine Building Corporation was the 15-meter wide roadway known as the Mangyan Road. ATENEO offered to sell the property to the public subject to the condition that the right to use the 15-meter roadway will be transferred to the vendee who will negotiate with the legally involved parties regarding the use of such right as well as the development costs for improving the access road. Solid Homes became the highest bidder to the sale. Solid Homes, Inc., developed a subdivision now known as Loyola Grand Villas and together they now claim to have an easement of right-of-way along Mangyan Road through which they could have access to Katipunan Avenue. La vista refused to recognize such easement. Issue: Whether or not there is a legally demandable easement of right-of-way along Mangyan Road in favor of Solid Homes, Inc. The SC answered in the affirmative. The free ingress and egress along Mangyan Road created by the voluntary agreement between Ateneo and Solid Homes, Inc., is legally demandable. Like any other contractual stipulation, the same cannot be extinguished except by voluntary rescission of the contract establishing the servitude or renunciation by the owner of the dominant more so when the easement was implicitly recognized by the letters of the La Vista President to Ateneo dated February 11 and April 28, 1976.

FACTS:

MANGYAN ROAD is a 15-meter wide thoroughfare in Quezon City abutting Katipunan Avenue on the west, traversing the edges of La Vista Subdivision on the north and of the Ateneo and Miriam College on the south. Mangyan Road serves as the boundary between LA VISTA on one side and ATENEO and MIRIAM on the other. It bends towards the east and ends at the gate of Loyola Grand Villas Subdivision.

The land in question was formed part of lands owned by the Tuasons. It was sold to Philippine Building Corporation by virtue of a deed of sale and mortgage dated 1 July 1949 wherein it was stipulated that: “(3) of the deed provides that ". . . the boundary line between the property herein sold and the adjoining property of the VENDORS shall be a road fifteen (15) meters wide, one-half of which shall be taken from the property herein sold to the VENDEE and the other half from the portion adjoining belonging to the VENDORS."


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Philippine Building Corporation acting in behalf of ATENEO in buying the properties from the Tuasons, sold in a Deed of Assignment with Assumption of Mortgage, with the consent of the Tuasons, the subject parcel of land to ATENEO which assumed the mortgage. It was stipulated that:

The ASSIGNEE hereby agrees and assumes to pay the mortgage obligation on the above-described land in favor of the MORTGAGOR and to perform any and all terms and conditions as set forth in the Deed of Sale with Mortgage dated July 1, 1949, hereinabove referred to, which said document is incorporated herein and made an integral part of this contract by reference.

The Tuasons developed a part of the estate adjoining the portion sold to Philippine Building Corporation into a residential village known as La Vista Subdivision. Thus the boundary between LA VISTA and the portion sold to Philippine Building Corporation was the 15-meter wide roadway known as the Mangyan Road.

ATENEO sold to Miriam the western portion of the land adjacent to Mangyan Road.

Meanwhile, the Tuasons developed its 7.5-meter share of the 15-meter wide boundary. ATENEO deferred improvement on its share and erected instead an adobe wall on the entire length of the boundary of its property parallel to the 15-meter wide roadway.

ATENEO offered to sell the property to the public subject to the condition that the right to use the 15-meter roadway will be transferred to the vendee who will negotiate with the legally involved parties regarding the use of such right as well as the development costs for improving the access road.

La Vista tried to bid but lost to Solid Homes who became the highest bidder to the sale. Subsequently, Solid Homes, Inc., developed a subdivision now known as Loyola Grand Villas and together they now claim to have an easement of right-of-way along Mangyan Road through which they could have access to Katipunan Avenue.

LA VISTA’S CONTENTION: LA VISTA could not recognize the right-of-way over Mangyan Road because, first, Philippine Building Corporation and its assignee ATENEO never complied with their obligation of providing the Tuasons with a right-of-way on their 7.5-meter portion of the road and, second, since the property was purchased for commercial purposes, Solid Homes, Inc., was no longer entitled to the right-of-way as Mangyan Road was established exclusively for ATENEO in whose favor the right-of-way was originally constituted.

ISSUE: Whether or not there is a legally demandable easement of right-of-way along Mangyan Road in favor of Solid Homes, Inc. YES.

HELD:

From the facts of the instant case it is very apparent that the parties and their respective predecessors-in-interest intended to establish an easement of right-of-way over Mangyan Road for their mutual benefit, both as dominant and servient estates.

The Supreme Court gave credence to the finding of the Court of Appeals:

A right-of-way was properly appreciated along the entire route of Mangyan Road. Incidentally, the pretense that the court a quo erred in holding that Mangyan Road is the boundary road between La Vista and Ateneo does not raise any critical eyebrow since the same is wholly irrelevant to the existence of a servitude thereon from their express admission to the contrary.

One's attention should rather be focused on the contractual stipulations in the deed of sale between the Tuason Family and the Philippine Building Corporation) which were incorporated in the deed of assignment with assumption of mortgage by the Philippine Building Corporation in favor of Ateneo as well as in the deed of sale dated October 24, 1976 when the property was ultimately transferred by Ateneo to plaintiff-appellee. Like any other contractual stipulation, the same cannot be extinguished except by voluntary rescission of the contract establishing the servitude or renunciation by the owner of the dominant more so when the easement was implicitly recognized by the letters of the La Vista President to Ateneo dated February 11 and April 28, 1976.

The free ingress and egress along Mangyan Road created by the voluntary agreement between Ateneo and Solid Homes, Inc., is thus legally demandable (Articles 619 and 625, New Civil Code) with the corresponding duty on the servient estate not to obstruct the same so much so that —

When the owner of the servient tenement performs acts or constructs works impairing the use of the servitude, the owner of the dominant tenement may ask for the destruction of such works and the restoration of the things to their condition before the impairment was committed, with indemnity for damages suffered. An injunction may also be obtained in order to restrain the owner of the servient tenement from obstructing or impairing in any manner the lawful use of the servitude.

The argument of petitioner LA VISTA that there are other routes to LOYOLA from Mangyan Road is likewise meritless, to say the least. The opening of an adequate outlet to a highway can extinguish only legal or compulsory easements, not voluntary easements like in the case at bar. The fact that an easement by grant may have also qualified as an easement of necessity does not detract from its permanency as a property right, which survives the termination of the necessity.

61. Villanueva v. Velasco


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62. Liwag v. Happy Glen Loop

Petitioner: Emetria Liwag

Respondent: Happy Glen Loop Homeowners Association

Ponente: J. Sereno

Short Facts:

F. G. R. Sales, the original developer of Happy Glen Loop, loaned from Ernesto Marcelo, owner of T. P. Marcelo Realty Corporation. The former failed to settle its debts with the latter, so, he assigned all his rights to Marcelo over several parcels of land in the Subdivision including the receivables from the lots already sold. Marcelo represented to lot buyers, the National Housing Authority (NHA) and the Human Settlement Regulatory Commission (HSRC) that a water facility is available in the subdivision. The said water facility has been the only source of water of the residents for thirty (30) years. Marcelo sold Lot 11, Block 5 to Hermogenes LiwagPetitioner, wife of Hermogenes, subsequently wrote to the respondent Association demanding the removal of the overhead water tank over the parcel of land.

SC held that an easement for water facility exists on Lot 11, Block 5 of Happy Glen Loop Subdivision. Easements or servitudes are encumbrances imposed upon an immovable for the benefit of another immovable belonging to a different owner, for the benefit of a community, or for the benefit of one or more persons to whom the encumbered estate does not belong. In this case, the water facility is an encumbrance on Lot 11, Block 5 of the Subdivision for the benefit of the community. It is continuous and apparent, because it is used incessantly without human intervention, and because it is continually kept in view by the overhead water tank, which reveals its use to the public. The Civil Code provides that continuous and apparent easements are acquired either by virtue of a title or by prescription of 10 years. It is therefore clear that an easement of water facility has already been acquired through prescription.

Facts:

Sometime in 1978, F.G.R. Sales, the original developer of Happy Glen Loop, obtained a loan from Ernesto Marcelo (Marcelo), the owner of T.P. Marcelo Realty Corporation. To settle its debt after failing to pay its obligation, F.G.R. Sales assigned to Marcelo all its rights over several parcels of land in the Subdivision, as well as receivables from the lots already sold. As the successor-in-interest of the original developer, Marcelo represented to subdivision lot buyers, the National Housing Authority (NHA) and the Human

Settlement Regulatory Commission (HSRC) that a water facility was available in the Subdivision.

For almost 30 years, the residents of the Subdivision relied on this facility as their only source of water. This fact was acknowledged by Marcelo and Hermogenes Liwag (Hermogenes), petitioners late husband who was then the president of respondent Happy Glen Loop Homeowners Association (Association). Marcelo sold Lot 11, Block No. 5 to Hermogenes. As a result, Transfer Certificate of Title (TCT) No. C-350099 was issued to him. When Hermogenes died in 2003, petitioner Emeteria P. Liwag subsequently wrote a letter to respondent Association, demanding the removal of the overhead water tank from the subject parcel of land.

Refusing to comply with petitioners demand, respondent Association filed before the HLURB Arbiter an action for specific performance; confirmation, maintenance and donation of water facilities; annulment of sale; and cancellation of TCT No. 350099 against T.P. Marcelo Realty Corporation (the owner and developer of the Subdivision), petitioner Emeteria, and the other surviving heirs of Hermogenes.

HLURB ruled in favor of the Association. He invalidated the transfer of the parcel of land in favor of Hermogenes. On appeal before the HLURB Board of Commissioners, the Board found that Lot 11, Block 5 was not an open space. Moreover, it ruled that Marcelo had complied with the requirements of Presidential Decree No. (P.D.) 1216 with the donation of 9,047 square meters of open space and road lots. It further stated that there was no proof that Marcelo or the original subdivision owner or developer had at any time represented that Lot 11, Block 5 was an open space. It therefore concluded that the use of the lot as site of the water tank was merely tolerated.

Association interposed an appeal to the OP, which set aside the Decision of the HLURB Board of Commissioners and affirmed that of the Housing and Land Use Arbiter.

Petitioner Liwag unsuccessfully moved for reconsideration, then filed a petition for review before the CA.The CA affirmed that the HLURB possessed jurisdiction to invalidate the sale of the subject parcel of land to Hermogenes and to invalidate the issuance of TCT No. C-350099 pursuant thereto. The appellate court agreed with the OP that an easement for water facility existed on the subject parcel of land and formed part of the open space required to be reserved by the subdivision developer under P.D. 957. However, it ruled that Arbiter Melchor should not have recommended the filing of a criminal action against petitioner, as she was not involved in the development of the Subdivision or the sale of its lots to buyers.

Issue/s:

1. W/N HLURB has exclusive jurisdiction over the case at bar. YES

2. W/N an easement for water facility exists on Lot 11, Block 5 of Happy Glen Loop Subdivision. YES


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3. W/N Lot 11, Block 5 of Happy Glen Loop Subdivision forms part of its open space. YES

4. W/N the subject parcel of land is beyond the commerce of man and its sale is prohibited under the law. NO

Ratio:

1. The jurisdiction of the HLURB is outlined in P.D. 1344, Empowering the National Housing Authority to Issue Writ of Execution in the Enforcement of its Decision under Presidential Decree No. 957.

Sec. 1. In the exercise of its functions to regulate real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have the exclusive jurisdiction to hear and decide cases of the following nature.

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or condominium units against the owner, developer, broker or salesman.

The allegation states that the subdivision owner and developer fraudulently sold to Hermogenes the lot where the water facility was located. Subdivisions are mandated to maintain and provide adequate water facilities for their communities. Without a provision for an alternative water source, the subdivision developers alleged sale of the lot where the community’s sole water source was located constituted a violation of this obligation. This is a case for an unsound real estate business practice of the subdivision owner and developer which falls within the exclusive jurisdiction of the HLURB.

2. Easements or servitudes are encumbrances imposed upon an immovable for the benefit of another immovable belonging to a different owner, for the benefit of a community, or for the benefit of one or more persons to whom the encumbered estate does not belong.

The law provides that easements may be continuous or discontinuous and apparent or non-apparent. The pertinent provisions of the Civil Code are quoted below:

Art. 615. Easements may be continuous or discontinuous, apparent or non-apparent.

Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man.

Discontinuous easements are those which are used at intervals and depend upon the acts of man.

Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same.

Non-apparent easements are those which show no external indication of their existence.

In this case, the water facility is an encumbrance on Lot 11, Block 5 of the Subdivision for the benefit of the community. It is continuous and apparent, because it is used incessantly without human intervention, and because it is continually kept in view by the overhead water tank, which reveals its use to the public.

Contrary to petitioners contention that the existence of the water tank on Lot 11, Block 5 is merely tolerated, we find that the easement of water facility has been voluntarily established either by Marcelo, the Subdivision owner and developer; or by F.G.R. Sales, his predecessor-in-interest and the original developer of the Subdivision. For more than 30 years, the facility was continuously used as the residents sole source of water. The Civil Code provides that continuous and apparent easements are acquired either by virtue of a title or by prescription of 10 years. It is therefore clear that an easement of water facility has already been acquired through prescription.

3. The term open space is defined in P.D. 1216 as an area reserved exclusively for parks, playgrounds, recreational uses, schools, roads, places of worship, hospitals, health centers, barangaycenters and other similar facilities and amenities.

The decree makes no specific mention of areas reserved for water facilities. Therefore, we resort to statutory construction to determine whether these areas fall under other similar facilities and amenities. The basic statutory construction principle of ejusdem generis states that where a general word or phrase follows an enumeration of particular and specific words of the same class, the general word or phrase is to be construed to include or to be restricted to things akin to or resembling, or of the same kind or class as, those specifically mentioned.

Applying this principle to the afore-quoted Section 1 of P.D. 1216, we find that the enumeration refers to areas reserved for the common welfare of the community. Thus, the phrase other similar facilities and amenities should be interpreted in like manner. Here, the water facility was undoubtedly established for the benefit of the community. Water is a basic need in human settlements, without which the


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community would not survive. Therefore, based on the principle of ejusdem generis and taking into consideration the intention of the law to create and maintain a healthy environment in human settlements, the location of the water facility in the Subdivision must form part of the area reserved for open space.

4. The law expressly provides that open spaces in subdivisions are reserved for public use and are beyond the commerce of man. As such, these open spaces are not susceptible of private ownership and appropriation. We therefore rule that the sale of the subject parcel of land by the subdivision owner or developer to petitioners late husband was contrary to law. Hence, there was no reversible error in the appellate courts Decision upholding the HLURB Arbiters annulment of the Deed of Sale.

Disposition: WHEREFORE, premises considered, the instant Petition for Review is DENIED, and the assailed Decision and Resolution of the Court of Appeals in CA-GR SP No. 100454 are hereby AFFIRMED.

63. Pilar Dev't v. Dumadag

693 SCRA 96 , March 11, 2013Petitioner: Pilar Development CorporationRespondents: Ramon Dumadag, Emma Bacabac and 23 others

Summary:

A complaint for accion publiciana was filed by Pilar Development against respondents alleging that the subject property is an open space intended for the subdivisions recreational facilities. The trial court opined that the subject property is within the 3-meter strip reserved for public easement because the area is leading towards the Mahabang Ilog Creak. Pilar alleges that although the property is within the 3-meter strip reserved for public easement, it remains to be the lawful possessor of the said lot conformably with Articles 428 and 539 of the Code. The Court denied such claim. Article 635 is specific in saying that “[all] matters concerning easements established for public or communal use shall be governed by the special laws and regulations relating thereto, and, in the absence thereof, by the provisions of this Title [Title VII on Easements or Servitudes].” Certainly, in the case of residential subdivisions, the allocation of the 3meter strip along the banks of a stream, like the Mahabang Ilog Creek in this case, is required and shall be considered as forming part of the open space requirement pursuant to P.D. 1216. Said law is explicit: open spaces are “for public use and are, therefore, beyond the commerce of men” and that “[the] areas reserved for parks, playgrounds and recreational use shall be non-alienable public lands, and nonbuildable.” Pilar’s right of ownership and possession has been limited by law with respect to the 3meter strip/zone along the banks of Mahabang Ilog Creek.

Facts:

Pilar Development filed for accion publiciana with damages against respondents for allegedly building their shanties without its knowledge and consent in a property located in Pilar Village Subdivision and designated as an open space of the village intended for recreational facilities and amenities for subdivision residents. In their Answer, the respondents asserted that it is the local government, not the petitioner, which has jurisdiction and authority over them.

The trial court dismissed the complaint finding that the land being occupied by the respondents are situated on an area leading towards the Mahabang Ilog Creak, and within the three-meter legal easement; thus, considered as public property and part of public dominion under Article 502 of the NCC, which could not be owned by Pilar Development. It further opined that respondents have a better right to possess the occupied lot, since they are in an area reserved for public easement purposes and that only the local government of Las Piñas City could institute an action for recovery of possession or ownership.

Petitioner Pilar argues that although the portion of the subject property occupied by respondents is within the 3meter strip reserved for public easement, it still retains ownership thereof since the strip does not form part of the public dominion. As the owner of the subject parcel of land, it is entitled to its lawful possession, hence, the proper party to file an action for recovery of possession against respondents conformably with Articles 428 and 539 of the Code.

Issue:

WON petitioner Pilar has right of title and lawful possession over the subject the property which is within the 3-meter strip reserved for public easement. NO.

Held:

An easement or servitude is a real right on another’s property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his or her property, for the benefit of another person or tenement; it is jus in re aliena, inseparable from the estate to which it actively or passively belongs, indivisible, perpetual, and a continuing property right, unless extinguished by causes provided by law. The Code defines easement as an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner or for the benefit of a community, or of one or more persons to whom the encumbered estate does not belong. There are two kinds of easement according to source: by law or by will of the owners—the former are called legal and the latter voluntary easement. A legal easement or compulsory easement, or an easement by necessity constituted by law has for its object either public use or the interest of private persons.

While Article 630 of the Code provides for the general rule that “[t]he owner of the servient estate retains the ownership of the portion on which the easement is established, and may use the same in such a manner as not to affect the exercise of


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the easement,” Article 635 thereof is specific in saying that “[all] matters concerning easements established for public or communal use shall be governed by the special laws and regulations relating thereto, and, in the absence thereof, by the provisions of this Title [Title VII on Easements or Servitudes].”

Certainly, in the case of residential subdivisions, the allocation of the 3meter strip along the banks of a stream, like the Mahabang Ilog Creek in this case, is required and shall be considered as forming part of the open space requirement pursuant to P.D. 1216 dated October 14, 1977. Said law is explicit: open spaces are “for public use and are, therefore, beyond the commerce of men” and that “[the] areas reserved for parks, playgrounds and recreational use shall be nonalienable public lands, and nonbuildable.”

Petitioner’s right of ownership and possession has been limited by law with respect to the 3meter strip/zone along the banks of Mahabang Ilog Creek. Despite this, the Court cannot agree with the trial court’s opinion, as to which the CA did not pass upon, that respondents have a better right to possess the subject portion of the land because they are occupying an area reserved for public easement purposes. Similar to petitioner, respondents have no right or title over it precisely because it is public land. Likewise, we repeatedly held that squatters have no possessory rights over the land intruded upon. The length of time that they may have physically occupied the land is immaterial; they are deemed to have entered the same in bad faith, such that the nature of their possession is presumed to have retained the same character throughout their occupancy.

As to the issue of who is the proper party entitled to institute a case with respect to the 3meter strip/zone, the Court finds that both the Republic of the Philippines, through the OSG and the local government of Las Piñas City, may file an action depending on the purpose sought to be achieved. The former shall be responsible in case of action for reversion under C.A. 141, while the latter may also bring an action to enforce the relevant provisions of Republic Act No. 7279 (otherwise known as the Urban Development and Housing Act of 1992). Under R.A. 7279, which was enacted to uplift the living conditions in the poorer sections of the communities in urban areas and was envisioned to be the antidote to the pernicious problem of squatting in the metropolis, all local government units (LGUs) are mandated to evict and demolish persons or entities occupying danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks, and playgrounds.

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V.D.1 Donation: Essential Elements

64. Republic v. Guzman

Petitioner: Republic of the Philippines

Respondent: David Rey Guzman, represented by his Attorney-In-Fact, Lolita G. Abela, and the Register of Deeds of Bulacan, Meycauayan BranchPonente: Bellosillo J.

Short Facts and Doctrine/s: David was a natural-born American citizen. His dad is a naturalized American citizen. When his dad died, properties were left in favor of him and his mother. Thereafter, a quitclaim was executed by the mother, conveying to him all of her shares in the property. Govt petitioned for escheat. It contends that as a rule, only a Filipino citizen can acquire private lands in the Philippines. It asserts that David being an American citizen could not validly acquire 1/2 interest in each of the subject parcels of land by way of the 2 deeds of quitclaim as they are in reality donations inter vivos. (The only instances when a foreigner can acquire private lands in the Philippines are by hereditary succession and if he was formerly a natural-born Filipino citizen who lost his Philippine citizenship.) Held: Not all the elements of a donation of an immovable property are present in the instant case. There are three (3) essential elements of a donation: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi. The language of the deed of quitclaim is clear that Helen merely contemplated a waiver of her rights, title and interest over the lands in favor of David, and not a donation. The element of animus donandi therefore was missing. Likewise, the deeds of quitclaim executed by Helen may have been in the nature of a public document but they lack the essential element of acceptance in the proper form required by law to make the donation valid. When applied to a donation of an immovable property, the law further requires that the donation be made in a public document and that there should be an acceptance thereof made in the same deed of donation or in a separate public document. In cases where the acceptance is made in a separate instrument, it is mandated that the donor should be notified thereof in an authentic form, to be noted in both instruments.

Facts:

David Rey Guzman, a natural-born American citizen, is the son of the spouses Simeon Guzman, a naturalized American citizen, and Helen Meyers Guzman, an American citizen. Simeon died leaving an estate of several parcels of land to his sole heirs, David and Helen.

Helen and David executed a Deed of Extrajudicial Settlement of the Estate. The document of was registered in the Office of the RD.

The parcels of land were accordingly registered in the name of Helen Meyers Guzman and David Rey Guzman in undivided equal shares.

Helen executed a Quitclaim Deed transferring to David her undivided 1/2 interest on all the parcels of land subject matter of the Deed of Extrajudicial Settlement.

Government petitioned for escheat. It contends that as a rule, only a Filipino citizen can acquire private lands in the Philippines. The only instances when a foreigner can acquire private lands in the Philippines are by hereditary succession and if he was formerly a natural-born Filipino citizen who lost his


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Philippine citizenship. Government therefore alleges that the acquisition of the parcels of land by David does not fall under any of these exceptions.

It asserts that David being an American citizen could not validly acquire 1/2 interest in each of the subject parcels of land by way of the 2 deeds of quitclaim as they are in reality donations inter vivos.

David maintains, on the other hand, that he acquired the property by right of accretion and not by way of donation, with the deeds of quitclaim merely declaring Helens intention to renounce her share in the property and not an intention to donate. He further argues that, assuming there was indeed a donation, it never took effect since there was no acceptance.

Issues: 1. Whether the quitclaim executed by Helen is tantamount to a donation in favor of David.

Ruling: No.

Ratio:

Not all the elements of a donation of an immovable property are present in the instant case. The language of the deed of quitclaim is clear that Helen merely contemplated a waiver of her rights, title and interest over the lands in favor of David, and not a donation. That a donation was far from Helen's mind is further supported by her deposition which indicated that she was aware that a donation of the parcels of land was not possible since Philippine law does not allow such an arrangement. The element of animus donandi therefore was missing.

There are three (3) essential elements of a donation: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi.

When applied to a donation of an immovable property, the law further requires that the donation be made in a public document and that there should be an acceptance thereof made in the same deed of donation or in a separate public document. In cases where the acceptance is made in a separate instrument, it is mandated that the donor should be notified thereof in an authentic form, to be noted in both instruments.

Likewise, the deeds of quitclaim executed by Helen may have been in the nature of a public document but they lack the essential element of acceptance in the proper form required by law to make the donation valid.

Moreover, it is mandated that if an acceptance is made in a separate public writing the notice of the acceptance must be noted not only in the document containing the acceptance but also in the deed of donation. Commenting on Art. 633 of the Civil Code from whence Art. 749 came Manresa said: "If the acceptance does not appear in the same document, it must be made in another. Solemn words are not necessary; it is sufficient if it shows the intention to accept it is necessary that formal notice thereof be given to the donor, and the fact that due notice has been given

must be noted in both instruments. Then and only then is the donation perfected."

Therefore, the provisions of the law not having been complied with, there was no effective conveyance of the parcels of land by way of donation inter vivos.

However, the inexistence of a donation does not make the repudiation of Helen in favor David valid.

There is no valid repudiation of inheritance as Helen had already accepted her share of the inheritance when she, together with David, executed a Deed of Extrajudicial Settlement dividing and adjudicating between the 2 of them all the property in Simeon’s estate. By virtue of such extrajudicial settlement the parcels of land were registered in her and her son’s name in undivided equal share and for 11 years they possessed the lands in the concept of owner.

Nevertheless, the nullity of the repudiation does not ipso facto operate to convert the parcels of land into res nullius to be escheated in favor of the Government. The repudiation having no effect, the land should revert to their private owner, Helen, who, although being an American citizen, is qualified by hereditary succession to own the property.

Disposition: WHEREFORE, the assailed Decision of the Court of Appeals which sustained the Decision of the Regional Trial Court of Malolos, Bulacan, dismissing the petition for escheat is AFFIRMED. No costs.SO ORDERED.

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V.D.2 Donation: Kinds

65. Calanasan v. Dolorito

Recitation Ready Digest. Petitioner-aunt donated a mortgaged parcel of land to respondent-niece. The donation was made on the condition that the niece must redeem the land for P 15K and her aunt should be granted usufructuary rights until her death. Later, the donor filed an action for revocation as the donee allegedly committed acts of ingratitude. However the RTC found that it was the donee’s husband who maltreated the donor’s sister. Hence, the RTC held that this does not come within the purview of Art. 765 as acts of ingratitude towards the donor’s sister is not a ground for revocation. CA affirmed on a different ground that the donation was onerous because the donee had to redeem the property. At issue in this case was the nature of the donation and whether it may be revoked. The Court applied Art. 733 and held that to the extent of the price paid for the redemption of the donated property, the donation was onerous and hence the provisions on contracts govern. As regards the portion that exceeds the value of the onerous consideration, it should be governed by the provisions on donations. However, Art. 765 still does not apply. Because the act of ingratitude was not committed by the donee to the donor or to the donor’s spouse or children.


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Facts: Petitioner (Cerila) was the aunt of the respondent (Edelyn… joke lang Evelyn

yun. Hi Chelle!). Said aunt took care of her orphan niece since childhood. At the time the respondent-niece was already married, her aunt donated a

mortgaged parcel of land to her. The donation was made on the condition that the niece must redeem the land for

P 15K and her aunt was entitled to possess and enjoy the property as long as she lived.

Respondent-niece accepted the donation and thereafter complied with the conditions; she redeemed the land and granted usufructuary rights to her aunt.

20 years after, petitioner-aunt filed an action for revocation of the donation on the ground that her niece committed acts of ingratitude against her.

During the pendency of the action, the aunt died and was substituted by her sister.

Subsequently, RTC dismissed the case on the ground that the ungrateful acts (ill-treatment) were committed by respondent’s husband against the petitioner’s sister and not by the donee-niece to donor-aunt. Hence, Art. 765 cannot be applied.

Art. 765 The donation may also be revoked at the instance of the donor, by reason of ingratitude in the following cases:

(1) If the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority;

CA affirmed the RTC ruling on a different ground. CA found that the donation was onerous. Therefore, the deed of donation must be treated as an ordinary contract and Article 765 of the New Civil Code finds no relevance.

Issue: What kind of donation is this?

Doctrine: Classification of donations:1. Pure or Simple donation – is based on pure gratuity. 2. Remuneratory or Compensatory – has for its purpose the rewarding of the donee

for past services, which services do not amount to a demandable debt. 3. Conditional/modal donation – is a consideration for future services; it also occurs

where the donor imposes certain conditions, limitations or charges upon the donee, whose value is inferior to the donation given.

4. Onerous donation – imposes upon the donee a reciprocal obligation; this is made for a valuable consideration whose cost is equal to or more than the thing donated.

Article 733. Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

Held: The Court held that since the donation imposed on the donee was the burden of redeeming the property, the donation was onerous. As an endowment for a valuable consideration, it partakes of the nature of an ordinary contract; hence, the rules of contract will govern Thus Article 765 on grounds for revocation finds no application with respect to the onerous portion of the donation.

Insofar as the value of the land exceeds the redemption price paid for by the donee, a donation exists, and the legal provisions on donation apply.

However, Art. 765 is still inapplicable because it was established that the ungrateful acts were committed not by the done but by her husband, and were perpetrated not against the donor but against the donor’s sister who received the alleged ill treatments.

66. Del Rosario v. Ferrer

G.R. No. 187056 | September 20, 2010

Petitioner: JARABINI G. DEL ROSARIORespondents: ASUNCION G. FERRER, substituted by her heirs, VICENTE, PILAR, ANGELITO, FELIXBERTO, JR., all surnamed G. FERRER, and MIGUELA FERRER ALTEZA

Short Facts/Doctrine: Spouses Leopoldo and Guadalupe Gonzales executed a document entitled Donation Mortis Causa in favor of their children Emiliano and petitioner Asuncion and granddaughter, petitioner Jarabini, with the stipulation that such donation shall be irrevocable, among others. The donees accepted the donation, as reflected on the face of the document. When the Guadalupe died, Leopoldo assigned to Asuncion his rights over the property. The SC ruled that the document was a donation inter vivos, not a donation mortis causa, as the express "irrevocability" of the donation is the "distinctive standard that identifies the document as a donation inter vivos." Although Leopoldo and Guadalupe reserved the "right, ownership, possession, and administration of the property" and made the donation operative upon their death, such reservation in the context of an irrevocable donation simply means that the donors parted with their naked title, maintaining only beneficial ownership of the donated property while they lived. The Court also held that in case of doubt, the conveyance should be deemed a donation inter vivos rather than mortis causa, in order to avoid uncertainty as to the ownership of the property subject of the deed. Given that the donation in this case was irrevocable or one given inter vivos, Leopoldo’s subsequent assignment of his rights and interests in the property to Asuncion should be regarded as void.


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FACTS:In 1968, spouses Leopoldo and Guadalupe Gonzales executed a document entitled “Donation Mortis Causa” in favor of their 2 children, Asuncion and Emiliano, and granddaughter Jarabini (daughter of predeceased son, Zoilo) covering a house and lot in Manila in equal shares. The deed stated that such shall be irrevocable, that Jarabini and Emiliano will continue to occupy the portions currently occupied by them and that the donation shall not affect any other distribution of other properties belonging to either Leopoldo and Guadalupe. The deed shall be operative and effective upon the death of the donors. The deed had no attestation clause and was witnessed by only 2 persons. The donees, however, signified their acceptance of the donation on the face of the document.

Guadalupe died in 1968. Before his death in 1972, Leopoldo executed a deed of assignment of his rights and interests in the subject property to their daughter Asuncion. In 1998, Jarabini filed a petition for the probate of the deed of donation mortis causa, which was opposed by Asuncion, invoking the assignment made by Leopoldo in her favor.

ISSUE:Whether the deed was a donation mortis causa or inter vivos

HELD:DONATION INTER VIVOS. That the document was captioned “donation mortis causa” is not controlling. "Irrevocability" is a quality absolutely incompatible with the idea of conveyances mortis causa, where "revocability" is precisely the essence of the act. A donation mortis causa has the following characteristics:

1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;

2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and

3. That the transfer should be void if the transferor should survive the transferee.

The Court stated in Austria-Magat v. CA, that the express "irrevocability" of the donation is the "distinctive standard that identifies the document as a donation inter vivos." In this case, the donors plainly said that it is "our will that this Donation Mortis Causa shall be irrevocable and shall be respected by the surviving spouse." The intent to make the donation irrevocable becomes even clearer by the proviso that a surviving donor shall respect the irrevocability of the donation. Consequently, the donation was in reality a donation inter vivos. The donors in this case of course reserved the "right, ownership, possession, and administration of the property" and made the donation operative upon their death. But this Court has consistently held that such reservation (reddendum)

in the context of an irrevocable donation simply means that the donors parted with their naked title, maintaining only beneficial ownership of the donated property while they lived.

Notably, the three donees signed their acceptance of the donation, which acceptance the deed required. This Court has held that an acceptance clause indicates that the donation is inter vivos, since acceptance is a requirement only for such kind of donations. Donations mortis causa, being in the form of a will, need not be accepted by the donee during the donor’s lifetime. Also, the Court held in Puig v. Peñaflorida, that in case of doubt, the conveyance should be deemed a donation inter vivos rather than mortis causa, in order to avoid uncertainty as to the ownership of the property subject of the deed.

Since the donation in this case was one made inter vivos, it was immediately operative and final. The reason is that such kind of donation is deemed perfected from the moment the donor learned of the donee’s acceptance of the donation. The acceptance makes the donee the absolute owner of the property donated.

Given that the donation in this case was irrevocable or one given inter vivos, Leopoldo’s subsequent assignment of his rights and interests in the property to Asuncion should be regarded as void for, by then, he had no more rights to assign. He could not give what he no longer had. Nemo dat quod non habet.

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V.D.3 Donation: Conditional Donations

67. Roman Catholic v. CA

G.R. No. 77425 | June 19, 1991PETITIONER: THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAORESPONDENT: HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO

SHORT FACTS AND HELD: The spouses donated property to the archbishop with the condition that no disposition shall be made within 100 years. There is no need for prescription to be applied in cases where there is stipulation for automatic reversion. Nonetheless, the stipulation is against public policy and thus, is void.

FACTS:

On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of donation, rescission of contract and reconveyance


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of real property with damages against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman Catholic Archbishop of Manila, before the RTC of Imus, Cavite.

In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant Roman Catholic Archbishop of Manila covering a parcel of land located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation allegedly provides that the donee shall not dispose or sell the property within a period of one hundred (100) years from the execution of the deed of donation, otherwise a violation of such condition would render ipso facto null and void the deed of donation and the property would revert to the estate of the donors.

It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000. 00. As a consequence of the sale, Transfer Certificate of Title was issued by the Register of Deeds of Cavite on November 15, 1980 in the name of said petitioner spouses.

RTC dismissed the complaint on the ground that the cause of action has prescribed. CA set aside the order of the RTC holding that the action has not yet prescribed

ISSUES:

(1) Whether the cause of action has already prescribed

(2) Whether the complaint for nullification of deed of donation, rescission of contract and reconveyance of real property with damages should be dismissed

HELD:

(1) Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation must be brought within four (4) years from the non-compliance of the conditions of the donation, the same is not applicable in the case at bar. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to

have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading "would render ipso facto null and void" would not appear in the deed of donation.

The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon non-compliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al. It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply.

The rationale for the foregoing is that in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper.

When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act.

On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of action of herein private respondents has not yet prescribed since an action to enforce a written contract prescribes in ten (10) years. It is our view that Article 764 was intended to provide a judicial remedy in case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the parties have not agreed on the automatic revocation of such donation upon the occurrence of the contingency contemplated therein. That is not the situation in the case at bar.

(2) Nonetheless, we find that although the action filed by private respondents may not be dismissed by reason of prescription, the same should be dismissed on the ground that private respondents have no cause of action against petitioners.


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The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy.

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy. Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void.

It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail.

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V.D.4 Donation: Inter Vivos/Mortis Causa Donations

68. Aluad v. Aluad

G.R. No. 176943 | October 17, 2008

SUMMARY:

Matilde executed a deed on donation inter vivos in favor of her daughter Maria, which stated that it is to become effective upon her death, but in the event that Maria should die before her, the donation shall be deemed rescinded. Subsequently, Matilde died and on the same year, Maria died. Petitioner, the heirs of Maria, filed a complaint for declaration and recovery of ownership and possession of Lots 1 and 3 which Zenaido claimed to have been adjudicated to him under Matilden’s Last Will and Testament and under a DOAS. The SC ruled in favor of Zenaido stating that the Deed of Donation Mortis Causa not Inter Vivos, it having the following characteristics: (1) It conveys no title or ownership to the transferee before the death of the transferor ; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2) That before the death of the transferor, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and (3) That the transfer should be void if the transferor should survive the transferee. Being mortis causa, it should have followed the formalities of a will, which it did not. It is thus, void and transmitted no right to Maria. The subsequent disposal of Lots 1 and 3 to Zenaido were thus, valid.

FACTS:

Petitioners’ mother, Maria Aluad, and respondent Zenaido Aluad were raised by the childless spouses Matilde Aluad and Crispin Aluad. After Crispin died, his wife Matilde adjudicated 6 lots owned by Crispin to herself.

On November 14, 1981, Matilde executed a "Deed of Donation of Real Property Inter Vivos" in favor of petitioners’ mother Maria covering the 6 lots, which provided the donation is “to become effective upon the death of the DONOR, but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and [of] no further force and effect; Provided, however, that anytime during the lifetime of the DONOR or anyone of them who should survive, they could use[,] encumber or even dispose of any or even all of the parcels of landherein donated.”

In 1986, OCTs were issued in Matilde’s name. In 1991, Matilde sold Lot 3 to Zenaido by a Deed of Absolute Sale of Real Property. In 1992, Matilde executed a last will and testament, devising Lots 2, 4, 5, and 6 to Maria, and her "remaining properties" including Lot 1 to Zenaido.

Matilde and Maria died in 1994. In 1995, Maria’s heirs—herein petitioners filed before the RTC of Roxas City a Complaint for declaration and recovery of ownership and possession of Lots 1 and 3, and damages against Zenaido, alleging that they


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possessed the lots until January 1991 when Zenaido entered and possessed the 2 lots claiming as the adopted son of Crispin Aluad who refused to give back possession until Matilde died in [1994] and then retained the possession thereof up to and until the present time, thus, depriving the petitioners of their enjoyment. That after the death of Matilde, they succeeded by inheritance by right of representation from their deceased mother, Maria who is the sole and only daughter of Matilde. In his answer, Zenaido alleged that Lot 1 was adjudicated to him in Matilde’s Last Will and Testament while Lot 3 was purchased from Matilde. The RTC held that Matilde could not have transmitted any right over Lots 1 and 3 to Zenaido, she having previously alienated them to Maria via the Deed of Donation.

ISSUE:

1. Whether the deed of donation inter vivos in favor of petitioners’ mother is in fact a donation mortis causa

2. Whether Zenaido is the rightful owner of lot 3 on the basis of a deed of sale executed by the donor who had no more right to sell the same

HELD:

1. It is a donation mortis causa, it having the following characteristics:(1) It conveys no title or ownership to the transferee before the death of the transferor; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;(2) That before the death of the transferor, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and(3) That the transfer should be void if the transferor should survive the transferee.

The phrase "to become effective upon the death of the DONOR" admits of no other interpretation than to mean that Matilde did not intend to transfer the ownership of the six lots to Maria during Matilde’s lifetime.

The statement in the Deed of Donation reading "anytime during the lifetime of the DONOR or anyone of them who should survive, they could use, encumber or even dispose of any or even all the parcels of land herein donated" means that Matilde retained ownership of the lots and reserved in her the right to dispose them. For the right to dispose of a thing without other limitations than those established by law is an attribute of ownership. The phrase in the Deed of Donation "or anyone of them who should survive" is of course out of sync. For the Deed of Donation clearly stated that it would take effect upon the death of the donor, hence, said phrase could only have referred to the donor Matilde.

Further, that the donation is mortis causa is fortified by Matilde’s acts of possession as she continued to pay the taxes for the said properties which remained under her

name; appropriated the produce; and applied for free patents for which OCTs were issued under her name." The donation being then mortis causa, the formalities of a will should have been observed but they were not, as it was witnessed by only two, not three or more witnesses following Article 805 of the Civil Code. Further, the witnesses did not even sign the attestation clause the execution of which clause is a requirement separate from the subscription of the will and the affixing of signatures on the left-hand margins of the pages of the will. So the Court has emphasized: Article 805 particularly segregates the requirement that the instrumental witnesses sign each page of the will from the requisite that the will be "attested and subscribed by [the instrumental witnesses]. The respective intents behind these two classes of signature[s] are distinct from each other. The signatures on the left-hand corner of every page signify, among others, that the witnesses are aware that the page they are signing forms part of the will. On the other hand, the signatures to the attestation clause establish that the witnesses are referring to the statements contained in the attestation clause itself. Indeed, the attestation clause is separate and apart from the disposition of the will. An unsigned attestation clause results in an unattested will. Even if the instrumental witnesses signed the left-hand margin of the page containing the unsigned attestation clause, such signatures cannot demonstrate these witnesses’ undertakings in the clause, since the signatures that do appear on the page were directed towards a wholly different avowal. It is the witnesses, and not the testator, who are required under Article 805 to state the number of pages used upon which the will is written; the fact that the testator had signed the will and every page thereof; and that they witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. The only proof in the will that the witnesses have stated these elemental facts would be their signatures on the attestation clause. Furthermore, the witnesses did not acknowledge the will before the notary public, which is not in accordance with the requirement of Article 806 of the Civil Code that every will must be acknowledged before a notary public by the testator and the witnesses. The requirement that all the pages of the will must be numbered correlatively in letters placed on the upper part of each page was not also followed. 2. Yes. Not having followed the formalities of a will, the deed of donation is void and transmitted no right to Maria. But even assuming arguendo that the formalities were observed, since it was not probated, no right to Lot 1 and 3 was transmitted to Maria. Matilde thus validly disposed of Lot 1 to Zenaido by her last will and testament, subject of course to the qualification that her (Matilde’s) will must be probated. With respect to Lot 3, the same had been validly sold to Zenaido.

Petitioners argument that they acquired the lot by prescription is also untenable. They failed to raise the issue of acquisitive prescription before the lower courts, however, they having laid their claim on the basis of inheritance from their mother. As a general rule, points of law, theories, and issues not brought to the attention of the trial court cannot be raised for the first time on appeal. For a contrary rule would be unfair to the adverse party who would have no opportunity to present further evidence material to


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the new theory, which it could have done had it been aware of it at the time of the hearing before the trial court.

69. Villanueva v. Sps. Branoco

Title: Villanueva v. Sps. BranocoPetitioner: Gonzalo Villanueva (represented by his heirs)Respondent: Spouses Froilan And Leonila BranocoPonente: J. CarpioRecit Ready:

Gonzalo Villanueva, represented by his heirs, sued Spouses Branoco to recover a parcel of land. The former claimed ownership over the property thru purchase from Vere, who in turn, bought the property from Rodrigo. Gonzalo declared the property in his name for tax purposes soon after acquiring it. In their answer, the Spouses Baranoco similarly claimed ownership over the property thru purchase from Rodriguez, who in turn, acquired the property from Rodrigo by way of donation. The Spouses entered the property and paid taxes afterwards.

The trial court ruled in favor of Gonzalo and declared him owner of the property, and ordered the Spouses Branoco to surrender possession to Gonzalo. The trial court rejected Spouses Branoco’s claim of ownership after treating the Deed as a donation mortis causa which Rodrigo effectively cancelled by selling the Property to Vere. Thus, by the time Rodriguez sold the property to the Spouses, she had no title to transfer. On appeal, the CA granted the Spouses’ appeal and set aside the trial court's ruling. it held that the deed of donation is one of inter vivos. In his petition, Gonzalo seeks the reinstatement of the trial court's ruling. Alternatively, petitioner claims ownership over the Property through acquisitive prescription, having allegedly occupied it for more than 10 years.

SC affirmed the CA in treating the deed of donation one of intervivos. This is because from the wording of the deed, it is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation inter vivos.

Facts:Petitioner Gonzalo Villanueva (petitioner), here represented by his heirs, sued respondents, spouses Froilan and Leonila Branoco (respondents), in the Regional Trial Court of Naval, Biliran (trial court) to recover a 3,492 square-meter parcel of land in Amambajag, Culaba, Leyte (Property) and collect damages. Petitioner claimed ownership over the Property through purchase in July 1971 from Casimiro Vere (Vere), who, in turn, bought the Property from Alvegia Rodrigo (Rodrigo) in August 1970. Petitioner declared the Property in his name for tax purposes soon after acquiring it.

In their Answer, respondents similarly claimed ownership over the Property through purchase in July 1983 from Eufracia Rodriguez (Rodriguez) to whom Rodrigo

donated the Property in May 1965. The two-page deed of donation (Deed), signed at the bottom by the parties and two witnesses, reads in full:

KNOW ALL MEN BY THESE PRESENTS:

That I, ALVEGIA RODRIGO, Filipino, of legal age, widow of the late Juan Arcillas, a resident of Barrio Bool, municipality of Culaba, subprovince of Biliran, Leyte del Norte, Philippines, hereby depose and say:

That as we live[d] together as husband and wife with Juan Arcillas, we begot children, namely: LUCIO, VICENTA, SEGUNDINA, and ADELAIDA, all surnamed ARCILLAS, and by reason of poverty which I suffered while our children were still young; and because my husband Juan Arcillas aware as he was with our destitution separated us [sic] and left for Cebu; and from then on never cared what happened to his family; and because of that one EUFRACIA RODRIGUEZ, one of my nieces who also suffered with our poverty, obedient as she was to all the works in our house, and because of the love and affection which I feel [for] her, I have one parcel of land located at Sitio Amambajag, Culaba, Leyte bearing Tax Decl. No. 1878 declared in the name of Alvegia Rodrigo, I give (devise) said land in favor of EUFRACIA RODRIGUEZ, her heirs, successors, and assigns together with all the improvements existing thereon, which parcel of land is more or less described and bounded as follows:

1. Bounded North by Amambajag River; East, Benito Picao; South, Teofilo Uyvico; and West, by Public land; 2. It has an area of 3,492 square meters more or less; 3. It is planted to coconuts now bearing fruits; 4. Having an assessed value of P240.00; 5. It is now in the possession of EUFRACIA RODRIGUEZ since May 21, 1962 in the concept of an owner, but the Deed of Donation or that ownership be vested on her upon my demise.

That I FURTHER DECLARE, and I reiterate that the land above described, I already devise in favor of EUFRACIA RODRIGUEZ since May 21, 1962, her heirs, assigns, and that if the herein Donee predeceases me, the same land will not be reverted to the Donor, but will be inherited by the heirs of EUFRACIA RODRIGUEZ;

That I EUFRACIA RODRIGUEZ, hereby accept the land above described from Inay Alvegia Rodrigo and I am much grateful to her and praying further for a longer life; however, I will give one half (1/2) of the produce of the land to Apoy Alve during her lifetime.

Respondents entered the Property in 1983 and paid taxes afterwards.

The trial court ruled in favor of Gonzalo and declared him owner of the property, and ordered the Spouses Branoco to surrender possession to Gonzalo. The trial court rejected Spouses Branoco’s claim of ownership after treating the Deed as a donation mortis causa which Rodrigo effectively cancelled by selling the Property to Vere. Thus, by the time Rodriguez sold the property to the Spouses, she had no title to transfer. On appeal, the CA granted the Spouses’ appeal and set aside the trial court's ruling. it held that the deed of donation is one of inter vivos. In his petition, Gonzalo seeks the reinstatement of the trial court's ruling. Alternatively, petitioner claims ownership over the Property through acquisitive prescription, having allegedly occupied it for more than 10 years.

Issue:Whether or not the contract between Rodrigo and Rodriguez is a donation or

a devise? (Donation)

Ruling:


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It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation inter vivos.

We examine the juridical nature of the Deed – whether it passed title to Rodriguez upon its execution or is effective only upon Rodrigo’s death – using principles distilled from relevant jurisprudence. Post-mortem dispositions typically –(1) Convey no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;(2) That before the [donor’s] death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed;(3) That the transfer should be void if the transferor should survive the transferee.10Further –[4] [T]he specification in a deed of the causes whereby the act may be revoked by the donor indicates that the donation is inter vivos, rather than a disposition mortis causa[;][5] That the designation of the donation as mortis causa, or a provision in the deed to the effect that the donation is "to take effect at the death of the donor" are not controlling criteria; such statements are to be construed together with the rest of the instrument, in order to give effect to the real intent of the transferor[;] [and](6) That in case of doubt, the conveyance should be deemed donation inter vivos rather than mortis causa, in order to avoid uncertainty as to the ownership of the property subject of the deed.

First. Rodrigo stipulated that "if the herein Donee predeceases me, the [Property] will not be reverted to the Donor, but will be inherited by the heirs of x x x Rodriguez," signaling the irrevocability of the passage of title to Rodriguez's estate, waiving Rodrigo's right to reclaim title. This transfer of title was perfected the moment Rodrigo learned of Rodriguez's acceptance of the disposition which, being reflected in the Deed, took place on the day of its execution on 3 May 1965. Rodrigo's acceptance of the transfer underscores its essence as a gift in presenti, not in futuro, as only donations inter vivosneed acceptance by the recipient. Indeed, had Rodrigo wished to retain full title over the Property, she could have easily stipulated, as the testator did in another case, that "the donor, may transfer, sell, or encumber to any person or entity the properties here donated x x x" or used words to that effect. Instead, Rodrigo expressly waived title over the Property in case Rodriguez predeceases her.

Second. What Rodrigo reserved for herself was only the beneficial title to the Property, evident from Rodriguez's undertaking to "give one [half] x x x of the

produce of the land to Apoy Alve during her lifetime." Thus, the Deed's stipulation that "the ownership shall be vested on [Rodriguez] upon my demise," taking into account the non-reversion clause, could only refer to Rodrigo's beneficial title. Indeed, if Rodrigo still retained full ownership over the Property, it was unnecessary for her to reserve partial usufructuary right over it.

Third. The existence of consideration other than the donor's death, such as the donor's love and affection to the donee and the services the latter rendered, while also true of devises, nevertheless "corroborates the express irrevocability of x x x [inter vivos] transfers." Thus, the CA committed no error in giving weight to Rodrigo's statement of "love and affection" for Rodriguez, her niece, as consideration for the gift, to underscore its finding.

Nor can petitioner capitalize on Rodrigo's post-donation transfer of the Property to Vere as proof of her retention of ownership. If such were the barometer in interpreting deeds of donation, not only will great legal uncertainty be visited on gratuitous dispositions, this will give license to rogue property owners to set at naught perfected transfers of titles, which, while founded on liberality, is a valid mode of passing ownership. The interest of settled property dispositions counsels against licensing such practice.

Accordingly, having irrevocably transferred naked title over the Property to Rodriguez in 1965, Rodrigo "cannot afterwards revoke the donation nor dispose of the said property in favor of another." Thus, Rodrigo's post-donation sale of the Property vested no title to Vere. As Vere's successor-in-interest, petitioner acquired no better right than him. On the other hand, respondents bought the Property from Rodriguez, thus acquiring the latter's title which they may invoke against all adverse claimants, including petitioner.

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V.D.5

70. Danguilan v. IAC

GR no. 69970, November 28, 1988Petitioners: Felix DanguilanRespondents: Apolonia MeladPonente: CRUZ, J.

No recit ready since the case is already short ;)Facts Respondent filed a complaint against the petitioner for recovery of a farm lot and

a residential lot which she claimed she had purchased from Domingo Melad, the original owner, and were now being unlawfully withheld by the defendant. In his answer, the petitioner denied the allegation and averred that he was the owner of


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the said lots of which he had been in open, continuous and adverse possession, having acquired them from Domingo Melad in 1941 and 1943 by donation.

The Petitioner testified that he was the husband of Isidra Melad, Domingo's niece, whom he and his wife Juana Malupang had taken into their home as their ward as they had no children of their own. He and his wife lived with the couple in their house on the residential lot and helped Domingo with the cultivation of the farm. Domingo Melad signed in a private instrument in which he gave the defendant the farm18 and in another private instrument in which he also gave him the residential lot19, on the understanding that the latter would take care of the grantor and would bury him upon his death.

Respondent attacked the alleged donations on the ground that that they were donations of real property and as such should have been effected through a public instrument.20

ISSUE: W/N the donation was valid? RULING/RATIO:It is our view, considering the language of the two instruments, that Domingo Melad did intend to donate the properties to the petitioner, as the private respondent contends. We do not think, however, that the donee was moved by pure liberality. While truly donations, the conveyances were onerous donations as the properties were given to the petitioner in exchange for his obligation to take care of the donee for the rest of his life and provide for his burial. Hence, it was not covered by the rule in Article 749 of the Civil Code requiring donations of real properties to be effected through a public instrument. The case at bar comes squarely under the doctrine laid down in Manalo v. De Mesa, where the Court held:

There can be no doubt that the donation in question was made for a valuable consideration, since the donors made it conditional upon the donees' bearing the expenses that might be occasioned by the death and burial of the donor Placida Manalo, a condition and obligation.

18 “I, DOMINGO MELAD do hereby declare in this receipt the truth of my giving to Felix

Danguilan, my agricultural land...that I hereby declare and bind myself that there is no one to whom I will deliver this land except to him as he will be the one responsible for me in the event that I will die and also for all other things needed and necessary for me...”19

“I, DOMINGO MELAD, declare the truth that I have delivered my residential lot to Felix Danguilan because he will be the one to take care of SHELTERING me or bury me when I die...”20

Three essential elements of a donation:1. Reduction in the patrimony of the donor2. Increase in the patrimony of the donee3. Intent to do an act of liberality or aniumus donandiIt is also required that the donation be made in a public document and that its acceptance be made in the same deed of donation or in a separate public document, which has to be recorded as well.

Therefore, in order to determine whether or not said donation is valid and effective it should be sufficient to demonstrate that, as a contract, it embraces the conditions the law requires and is valid and effective, although not recorded in a public instrument.

The private respondent argues that as there was no equivalence between the value of the lands donated and the services for which they were being exchanged, the two transactions should be considered pure or gratuitous donations of real rights, hence, they should have been effected through a public instrument and not mere private writings. However, no evidence has been adduced to support her contention that the values exchanged were disproportionate or unequal. As to the claim of Respondent that there was a deed of sale between her and the original owner (the validity and proper execution of the alleged deed of sale was seriously challenged and highly suspicious)21, assuming that the sale was valid, there was no transfer of ownership because the land was never delivered to Respondent. It is true that the same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at the moment of the sale, its material delivery could have been made. It is not enough to confer upon the purchaser the ownership and the right of possession. There is no dispute that it is the petitioner and not the private respondent who is in actual possession of the litigated properties.

Disposition:Petition is granted. Decision of CA reversed.

71. Arangote v. Maglunob

Summary:

Petitioners acquired subject land from Esperanza by virtue of an Affidavit executed by the latter. Respondents contended that the Affidavit was void and there was no valid transfer. Respondents being co-owners of their grand aunt Esperanza, the latter’s share shall be adjudicated to them. Held: (1) Affidavit was VOID. It was actually a deed of donation. However the requisites for valid donation were not complied with.

21 The deed of sale was allegedly executed when the respondent was only three years old and the consideration was supposedly paid by her mother, Maria Yedan from her earnings as a wage worker in a factory. 16 This was itself a suspicious circumstance, one may well wonder why the transfer was not made to the mother herself, who was after all the one paying for the lands. The sale was made out in favor of Apolonia Melad although she had been using the surname Yedan her mother's surname, before that instrument was signed and in fact even after she got married. The averment was also made that the contract was simulated and prepared after Domingo Melad's death in 1945. It was also alleged that even after the supposed execution of the said contract, the respondent considered Domingo Melad the owner of the properties and that she had never occupied the same.


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No valid transfer to the petitioners. (2) Petitioners were not possessors and builders in GF.

Facts:

Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the registered owner of the subject property, as evidenced by an OCT. Respondents Martin (Martin II) and Romeo are first cousins and the grandnephews of Esperanza MaglunobDailisan (Esperanza), from whom petitioner acquired the subject property.

The Petition stems from a Complaint filed by petitioner and her husband against the

respondents for Quieting of Title, Declaration of Ownership and Possession, Damages with Preliminary Injunction, and Issuance of Temporary Restraining Order before the MCTC.

The Complaint further stated that Esperanza executed a Last Will and Testament bequeathing the subject property to petitioner and her husband, but it was never

probated. Esperanza executed another document, an Affidavit, in which she waived

all her rights and interest in the subject property in favor of petitioner and her husband. Tax Declaration in the name of Esperanza was cancelled and a different Tax Declaration was issued in the name of the petitioner and her husband.

Petitioner and her husband constructed a house on the subject property. An OCT was issued by the DAR Secretary in the name of petitioner, married to Ray Mars E. Arangote. However, respondents, together with some hired persons, entered the subject property and built a hollow block wall behind and in front of petitioner’s house, which effectively blocked the entrance to its main door.

As a consequence thereof, petitioner and her husband were compelled to institute a civil case. In their Answer, respondents averred that they coowned the subject property with Esperanza. Respondents also asserted in their Counterclaim that petitioner and her husband, by means of fraud, undue influence and deceit were able to make Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit, wherein she renounced all her rights, share, interest and participation whatsoever over the subject property in favor of petitioner and her husband. Respondents thus prayed that the OCT issued in petitioner’s name be declared void insofar as their twothirds shares are concerned.

MCTC rendered decision declaring petitioner and her husband as the true and lawful owners of the subject property. Respondents appealed to the RTC. RTC reversed MCTC decision and adjudged the respondents as lawful owners and possessors of the entire subject property. MNT (whereby petitioner presented Deed of Acceptance and notice of such acceptance) was denied. Petitioner and husband then filed Petition for Review before the CA. Petition denied; CA affirmed RTC decision. MR denied. Hence this petition before the SC.

Issues:

1) Whether Esperanza’s Affidavit was valid2) Whether petitioner and her husband can be considered as possessors in good

faith and entitled to the rights provided under Articles 448 and 546 of the Civil Code

Held: NO to both

1)

After a careful scrutiny of the records, this Court affirms the findings of both the RTC and the Court of Appeals as regards the origin of the subject property and the fact that respondents, with their grand aunt Esperanza, were coheirs and coowners of the subject property (right of representation).

Esperanza’s Affidavits states: “That I hereby renounce, relinquish, waive and

quitclaim all my rights, share, interest and participation whatsoever in the [subject

property] unto the said Sps. Ray Mars Arangote and Elvira T. Arangote, their heirs,

successors, and assigns including the improvement found thereon.”

Logically, if Esperanza fully owned the subject property, she would have simply waived her rights to and interest in the subject property, without mentioning her “share” and “participation” in the same. By including such words in her Affidavit, Esperanza was aware of and was limiting her waiver, renunciation, and quitclaim to her onethird share and participation in the subject property.

Esperanza’s Affidavit is, in fact, a Donation. Esperanza’s real intent in executing the said Affidavit was to donate her share in the subject property to petitioner and her husband. As no onerous undertaking is required of petitioner and her husband under the said Affidavit, the donation is regarded as a pure donation of an interest in a real property covered by Article 749 of the Civil Code.

From the aforesaid provision, there are three requisites for the validity of a simple donation of a real property, to wit: (1) it must be made in a public instrument; (2) it must be accepted, which acceptance may be made either in the same Deed of Donation or in a separate public instrument; and (3) if the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same must be noted in both instruments.

This Court agrees with the RTC and the Court of Appeals that the Affidavit executed by Esperanza relinquishing her rights, share, interest and participation over the subject property in favor of the petitioner and her husband suffered from legal infirmities, as it failed to comply with the aforesaid requisites of the law.


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In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first requisite, as it was notarized; thus, it became a public instrument. Nevertheless, it failed to meet the aforesaid second and third requisites. The acceptance of the said donation was not made by the petitioner and her husband either in the same Affidavit or in a separate public instrument. As there was no acceptance made of the said donation, there was also no notice of the said acceptance given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor of petitioner and her husband is null and void.

The subsequent notarized Deed of Acceptance

as well as the notice

of such acceptance, executed by the petitioner did not cure the defect. Moreover, it was only made by the petitioner several years after the Complaint was filed in court, or when the RTC had already rendered its Decision, although it was still during Esperanza’s lifetime. Evidently, its execution was a mere afterthought, a belated attempt to cure what was a defective donation.

For this reason, even Esperanza’s onethird share in the subject property cannot be adjudicated to the petitioner.

With the foregoing, this Court holds that the RTC and the Court of Appeals did not err in declaring null and void Esperanza’s Affidavit.

Considering that Esperanza died without any compulsory heirs and that the supposed donation of her onethird share in the subject property per her Affidavit was already declared null and void, Esperanza’s onethird share in the subject property passed on to her legal heirs, the respondents.

2)

Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner. Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so.

From the moment when respondents brought a Complaint before the Lupon ng Barangay, challenging the title of petitioner to the subject property, the good faith of the petitioner had ceased. Petitioner cannot be entitled to the rights under Articles 448 and 546 of the Civil Code, because the rights mentioned therein are applicable only to builders in good faith and not to possessors in good faith.

Thus, when petitioner and her husband built a house thereon in 1989 they cannot be considered to have acted in good faith as they were fully aware that when Esperanza executed an Affidavit relinquishing in their favor the subject property the only proof of Esperanza’s ownership over the same was a mere tax declaration. This fact or circumstance alone was enough to put the petitioner and her husband under inquiry. Settled is the rule that a tax declaration does not prove ownership. It is merely an indicium of a claim of ownership.

With the foregoing, the petitioner is not entitled to the rights under Article 448 and 546 as the petitioner is not a builder and possessor in good faith.

Petition denied.

72. Quilala v. Alcantara

Petitioner: RICKY Q. QUILALARespondent: GLICERIA ALCANTARA, LEONORA ALCANTARA, INES REYES and JOSE REYESPonente: Ynares-Santiago J.

Short Facts and Doctrine/s: The validity of a donation is being assailed on the ground that the done failed to acknowledge her acceptance before the notary public, which makes the donation appearing merely on a private instrument. Held: Such defect did not invalidate the donation. The requirement that the contracting parties and their witnesses should sign on the left-hand margin of the instrument is not absolute. The intendment of the law merely is to ensure that each and every page of the instrument is authenticated by the parties. The requirement is designed to avoid the falsification of the contract after the same has already been duly executed by the parties. Hence, a contracting party affixes his signature on each page of the instrument to certify that he is agreeing to everything that is written thereon at the time of signing. Simply put, the specification of the location of the signature is merely directory. The fact that one of the parties signs on the wrong side of the page does not invalidate the document. The purpose of authenticating the page is served, and the requirement in the above-quoted provision is deemed substantially complied with. The lack of an acknowledgment by the donee before the notary public does not also render the donation null and void. The instrument should be treated in its entirety.

Facts: On February 20, 1981, Catalina Quilala executed a Donation of Real

Property Inter Vivos in favor of Violeta Quilala over a parcel of land located in Sta. Cruz, Manila registered in her name under Transfer Certificate of Title No. 17214 of the Register of Deeds for Manila.

The Donation of Real Property Inter Vivos consists of two pages. The first page contains the deed of donation itself, and is signed on the bottom portion by Catalina Quilala as donor, Violeta Quilala as donee, and two instrumental witnesses.

The second page contains the Acknowledgment, which states merely that Catalina Quilala personally appeared before the notary public and acknowledged that the donation was her free and voluntary act and deed. There appear on the left-hand margin of the second page the signatures of Catalina Quilala and one of the witnesses, and on the right-hand margin the signatures of Violeta Quilala and the other witness.

On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on May 22, 1984. Petitioner Ricky Quilala alleges that he is the surviving son of Violeta Quilala.


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Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and Juan Reyes, claiming to be Catalina’s only surviving relatives within the fourth civil degree of consanguinity, executed a deed of extrajudicial settlement of estate, dividing and adjudicating unto themselves the above-described property.

On September 13, 1984, respondents instituted against petitioner an action for the declaration of nullity of the donation inter vivos, and for the cancellation of TCT in the name of Violeta Quilala.

The trial court found that the deed of donation, although signed by both Catalina and Violeta, was acknowledged before a notary public only by the donor, Catalina. Consequently, there was no acceptance by Violeta of the donation in a public instrument, thus rendering the donation null and void. Furthermore, the trial court held that nowhere in Catalinas SSS records does it appear that Violeta was Catalinas daughter. Rather, Violeta was referred to therein as an adopted child, but there was no positive evidence that the adoption was legal. On the other hand, the trial court found that respondents were first cousins of Catalina Quilala.

However, since it appeared that Catalina died leaving a will, the trial court ruled that respondents deed of extrajudicial settlement cannot be registered. The trial court rendered judgment in favor of plaintiffs Gliceria Alcantara, Leonarda Alcantara, Ines Reyes and Juan Reyes and against defendant Ricky A. Quilala.

Issue:W/N the donation executed by Catalina in favor of Violeta is valid.

Ratio: Yes, it is valid.

Held:Under Article 749 of the Civil Code, the donation of an immovable must be made in a public instrument in order to be valid, specifying therein the property donated and the value of the charges which the donee must satisfy. As a mode of acquiring ownership, donation results in an effective transfer of title over the property from the donor to the donee, and is perfected from the moment the donor knows of the acceptance by the donee, provided the donee is not disqualified or prohibited by law from accepting the donation. Once the donation is accepted, it is generally considered irrevocable, and the donee becomes the absolute owner of the property. The acceptance, to be valid, must be made during the lifetime of both the donor and the donee. It may be made in the same deed or in a separate public document, and the donor must know the acceptance by the donee.

In the case at bar, the deed of donation contained the number of the certificate of title as well as the technical description as the real property donated. It stipulated that the donation was made for and in consideration of the love and affection which the DONEE inspires in the DONOR, and as an act of liberality and generosity. This was sufficient cause for a donation. Indeed, donation is legally defined as an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.

The donee’s acceptance of the donation was explicitly manifested in the penultimate paragraph of the deed, which reads: That the DONEE hereby receives and accepts the gift and donation made in her favor by the DONOR and she hereby expresses her appreciation and gratefulness for the kindness and generosity of the DONOR. Below the terms and stipulations of the donation, the donor, donee and their witnesses affixed their signature. However, the Acknowledgment appearing on the second page mentioned only the donor, Catalina Quilala. Thus, the trial court ruled that for Violeta’s failure to acknowledge her acceptance before the notary public, the same was set forth merely on a private instrument, i.e., the first page of the instrument. This Court disagrees.

The pertinent provision is Section 112, paragraph 2 of Presidential Decree No. 1529, which states: Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall be registrable: Provided, that, every such instrument shall be signed by the person or persons executing the same in the presence of at least two witnesses who shall likewise sign thereon, and shall be acknowledged to be the free act and deed of the person or persons executing the same before a notary public or other public officer authorized by law to take acknowledgment. Where the instrument so acknowledged consists of two or more pages including the page whereon acknowledgment is written, each page of the copy which is to be registered in the office of the Register of Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary public, except the page where the signatures already appear at the foot of the instrument, shall be signed on the left margin thereof by the person or persons executing the instrument and their witnesses, and all the pages sealed with the notarial seal, and this fact as well as the number of pages shall be stated in the acknowledgment. Where the instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or more parcels of land, the number thereof shall likewise be set forth in said acknowledgment.

As stated above, the second page of the deed of donation, on which the Acknowledgment appears, was signed by the donor and one witness on the left-hand margin, and by the donee and the other witness on the right-hand margin. Surely, the requirement that the contracting parties and their witnesses should sign on the left-hand margin of the instrument is not absolute. The intendment of the law merely is to ensure that each and every page of the instrument is authenticated by the parties. The requirement is designed to avoid the falsification of the contract after the same has already been duly executed by the parties. Hence, a contracting party affixes his signature on each page of the instrument to certify that he is agreeing to everything that is written thereon at the time of signing.

Simply put, the specification of the location of the signature is merely directory. The fact that one of the parties signs on the wrong side of the page does not invalidate the document. The purpose of authenticating the page is served, and the requirement in the above-quoted provision is deemed


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substantially complied with. The lack of an acknowledgment by the donee before the notary public does not also render the donation null and void. The instrument should be treated in its entirety. It cannot be considered a private document in part and a public document in another part. The fact that it was acknowledged before a notary public converts the deed of donation in its entirety a public instrument. The fact that the donee was not mentioned by the notary public in the acknowledgment is of no moment. To be sure, it is the conveyance that should be acknowledged as a free and voluntary act. In any event, the donee signed on the second page, which contains the Acknowledgment only. Her acceptance, which is explicitly set forth on the first page of the notarized deed of donation, was made in a public instrument.

It should be stressed that this Court, not being a trier of facts, cannot make a determination of whether Violeta was the daughter of Catalina, or whether petitioner is the son of Violeta. These issues should be ventilated in the appropriate probate or settlement proceedings affecting the respective estates of Catalina and Violeta. Suffice it to state that the donation, which we declare herein to be valid, will still be subjected to a test on its inofficiousness under Article 771, in relation to Articles 752, 911 and 912 of the Civil Code. Moreover, property donated inter vivos is subject to collation after the donors death, whether the donation was made to a compulsory heir or a stranger, unless there is an express prohibition if that had been the donor’s intention

Disposition: WHEREFORE, in view of the foregoing, the petition is GRANTED. The appealed decision of the Court of Appeals is REVERSED and SET ASIDE and a new judgment is rendered dismissing Civil Case No. 84-26603.

73. Carinan v. Spouses Cueto

Petitioner: Esperanza C. CarinanRespondents: Spouses Gavino Cueto and Carmelita Cueto

Summary:

Spouses Jose and Esperanza acquired from Roberta the rights over a parcel of land in Juana Complex I, Biñan, Laguna, registered under GSIS. Their transaction was covered by a Deed of Assignment and Transfer of Rights with Assumption of Obligations. Esperanza and Jose were to assume the payment of the applicable monthly amortizations for the subject land to the GSIS. Several amortizations remained unpaid by Esperanza and Jose, resulting in an impending cancellation in 2005 of GSIS’ conditional sale of the subject property to Roberto. It was then that Esperanza, then already a widow, sought financial assistance from her brother, respondent Gavino. The respondents then paid from their conjugal savings Esperanza’s total obligation of under the subject deed of assignment. The respondents alleged that Esperanza and Jazer (son) undertook to execute a Deed of Absolute Sale in favor of the respondents once the title over the subject property was

transferred to their names, subject to the condition that they would be given the first option to buy it back within three years by reimbursing the expenses incurred by the respondents on the property. Esperanza and Jazer, however, failed to comply, prompting respondents to file a complaint for specific performance against them, to compel them to execute a deed of sale in favor of the respondents. Esperanza and Jazer disputed these claims. They argued that there was neither a written or verbal agreement for the transfer of the disputed property to the respondents’ names, nor a promise for the repayment of the amounts that were paid by the respondents. Esperanza believed that Gavino paid her outstanding balance with the GSIS out of sheer generosity and pity upon her. RTC ordered Esperanza and Jazer to pay respondents P927,182.12, representing the amount of P 785,680.37 paid by the [respondents] to the GSIS; and P 141,501.75 consisting of the expenses in transferring the title to the name of Esperanza and Jazer plus the cost of improvements introduced on the property, with legal interest from the time of demand until fully paid. Issue: Whether a contract of loan was created when respondents paid Esperanza’s arrears with the GSIS and not a donation or help extended by respondents to Esperanza. Held: Loan. The Court adopts the RTC’s and CA’s finding that between Esperanza and the respondents, there was a clear intention for a return of the amounts which the respondents spent for the acquisition, transfer and renovation of the subject property. The respondents then reasonably expected to get their money back from Esperanza. When a large amount of money is involved, as in this case, this court is constrained to take Esperanza and Jazer’s claim of generosity by the respondents with more than a grain of salt. Esperanza’s refusal to pay back would likewise result in unjust enrichment, to the clear disadvantage of the respondents. In order to sufficiently substantiate her claim that the money paid by the respondents was actually a donation, Esperanza should have also submitted in court a copy of their written contract evincing such agreement. Article 748 of the New Civil Code (NCC), which applies to donations of money, is explicit on this point.

Facts:

The case originated from a complaint for specific performance with damages filed by Spouses Gavino C. Cueto (Gavino) and Carmelita J. Cueto (respondents) against Esperanza C. Carinan (Esperanza) and her son, Jazer C. Carinan (Jazer). The respondents alleged that sometime in May 1986, Esperanza and her husband, Jose Carinan (Jose), acquired from one Roberto Ventura (Roberto) the rights over a parcel of land formerly covered by Transfer Certificate of Title (TCT) No. T-129128 under the name of the Government Service Insurance System (GSIS), measuring 180 square meters and more particularly described as Lot 24, Block 20, Juana Complex I, Biñan, Laguna. Their transaction was covered by a Deed of Assignment and Transfer of Rights with Assumption of Obligations. Esperanza and Jose were to assume the payment of the applicable monthly amortizations for the subject land to the GSIS.

Several amortizations remained unpaid by Esperanza and Jose, resulting in an impending cancellation in 2005 of GSIS’ conditional sale of the subject property to Roberto. It was then that Esperanza, then already a widow, sought financial assistance from her brother, Gavino, in October 2005. The respondents then paid


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from their conjugal savings Esperanza’s total obligation of P785,680.37 under the subject deed of assignment.

The respondents alleged that Esperanza and Jazer undertook to execute a Deed of Absolute Sale in favor of the respondents once the title over the subject property was transferred to their names, subject to the condition that they would be given the first option to buy it back within three years by reimbursing the expenses incurred by the respondents on the property. Besides satisfaction of the unpaid amortizations to GSIS, the respondents paid for the transfer of the subject property from Roberto to Esperanza, and the renovation of the residential house erected on the subject land, resulting in additional expenses of P515,000.00.7 TCT No. T-636804 already under the name of Esperanza was surrendered to the respondents.

Sometime in 2006, the respondents demanded from Esperanza and Jazer the fulfillment of their commitment to transfer the subject property to the respondents’ names through the execution of a deed of sale. When Esperanza and Jazer failed to comply despite efforts for an amicable settlement, the respondents filed with the Regional Trial Court (RTC) of Biñan, Laguna the subject complaint for specific performance with damages.

Esperanza and Jazer disputed these claims. They argued that there was neither a written or verbal agreement for the transfer of the disputed property to the respondents’ names, nor a promise for the repayment of the amounts that were paid by the respondents. Esperanza believed that Gavino paid her outstanding balance with the GSIS out of sheer generosity and pity upon her. She denied having borrowed the respondents’ money because given her financial standing, she knew that she could not afford to pay it back. Furthermore, to require her to execute a deed of sale for the property’s full conveyance would totally disregard the payments that she personally made for the purchase. Finally, Esperanza questioned Jazer’s inclusion as a party to the case, claiming that he had no personal knowledge nor was he privy to any negotiation with the respondents.

RTC

RTC ordered Esperanza and Jazer to pay respondents P927,182.12, representing the amount of P 785,680.37 [paid] by the [respondents] to the GSIS; and P 141,501.75 consisting of the expenses in transferring the title to the name [of Esperanza and Jazer] plus the cost of improvements introduced on the property, with legal interest from the time of demand until fully paid.

Given the substantial amount involved, the RTC ruled that the money paid by the respondents for Esperanza’s arrears could not have been given gratuitously, but was intended as a loan that demanded a repayment. This arrangement was also bolstered by the fact that Esperanza surrendered possession of the subject land’s TCT to the respondents. Had the parties intended a donation, then Esperanza should have kept possession of the title. Besides the amount of P785,680.37 paid to GSIS, expenses

for transfer and property renovation paid by the respondents were determined by the court to total P141,501.75.13

The RTC emphasized that Esperanza and Jazer could not be compelled to convey the subject property to the respondents. Even granting that a promise to sell was made by Esperanza, the same was unenforceable as it was not reduced into writing.

CA

CA affirmed RTC. It agreed with the RTC’s finding that the respondents’ payment of the GSIS obligation could not have been gratuitous, considering its substantial amount. The CA also took note of the fact that the respondents retained possession of TCT No. T-636804 that covered the subject property. The CA then held that to prevent unjust enrichment by Esperanza, she should refund the payments which the respondents made to GSIS, the expenses for transfer of title, and the cost of improvements introduced on the property.

Issue:

1. Whether or not a contract of loan was created when respondents paid Esperanza’s arrears with the GSIS and not a donation or help extended by respondents to Esperanza. – LOAN.

2. Whether or not a co-ownership exists between the parties. – Beyond scope of petition for review on certiorari.

3. Whether or not respondents are builders in bad faith, hence not entitled to reimbursement of the costs of improvements on the subject property. - Beyond scope of petition for review on certiorari.

Held:

First Issue:

The Court adopts the RTC’s and CA’s finding that between Esperanza and the respondents, there was a clear intention for a return of the amounts which the respondents spent for the acquisition, transfer and renovation of the subject property. The respondents then reasonably expected to get their money back from Esperanza. Esperanza’s claim that the expenses and payments in her behalf were purely gratuitous remained unsupported by records. Indeed, the absence of intention to be reimbursed is negated by the facts of this case. The respondents’ conduct never at any time intimated any intention to donate in favor of Esperanza and Jazer. A donation is a simple act of liberality where a person gives freely of a thing or right in favor of another, who accepts it (Article 725, New Civil Code, as amended). But when a large amount of money is involved, as in this case, this court is constrained to take Esperanza and Jazer’s claim of generosity by the respondents with more than a grain of salt. Esperanza’s refusal to pay back would likewise result in unjust enrichment, to the clear disadvantage of the respondents.


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In order to sufficiently substantiate her claim that the money paid by the respondents was actually a donation, Esperanza should have also submitted in court a copy of their written contract evincing such agreement. Article 748 of the New Civil Code (NCC), which applies to donations of money, is explicit on this point as it reads:

Art. 748. The donation of a movable may be made orally or in writing.

An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated.

If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing.1âwphi1 Otherwise, the donation shall be void.

As the Court ruled in Moreño-Lentfer v. Wolff, a donation must comply with the mandatory formal requirements set forth by law for its validity. When the subject of donation is purchase money, Article 748 of the NCC is applicable. Accordingly, the donation of money as well as its acceptance should be in writing. Otherwise, the donation is invalid for non-compliance with the formal requisites prescribed by law.

The respondents’ statement that they paid for Esperanza’s obligations because they wanted to help her did not contradict an understanding for the return of the claimed amounts. Clearly, the aid then needed by Esperanza was for the immediate production of the money that could pay for her obligations to the GSIS and effect transfer of title, in order that her payments and interest over the property would not be forfeited. The help accorded by the respondents corresponded to such need. It did not follow that the respondents could no longer be allowed to later demand the repayment. In disputing the claim against her, Esperanza imputed deceit upon the respondents and claimed that they misled her into their real intention behind the payment of her obligations and possession of TCT No. T-636804. Deceit, however, is a serious charge which must be proven by more than just bare allegations.

Although the Court affirms the trial and appellate courts' ruling that, first, there was no donation in this case and, second, the respondents are entitled to a return of the amounts which they spent for the subject property, it still cannot sustain the respondents' plea for Esperanza's full conveyance of the subject property. To impose the property's transfer to the respondents' names would totally disregard Esperanza's interest and the payments which she made for the property's purchase. Thus, the principal amount to be returned to the respondents shall only pertain to the amounts that they actually paid or spent. The Court finds no cogent reason to disturb the trial court's resolve to require in its Decision dated December 15, 2009, around four years after the sums were paid for the subject property's acquisition and renovation, the immediate return of the borrowed amounts.

Second and Third Issues

Esperanza's plea for a reversal of the lower courts' rulings upon her claim of co-ownership and allegation that the respondents were builders in bad faith cannot be considered at this stage of the case. These claims raise factual issues which are beyond the scope of a petition for review on certiorari. More importantly, such defenses were not advanced by Esperanza during the proceedings with the trial and appellate courts. Settled is the rule that "defenses not pleaded in the answer may not be raised for the first time on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in the case. When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on appeal, because to permit him to do so would be unfair to the adverse party."


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