G.R. No.

L-41643
July 31, 1935
B.H. BERKENKOTTER, plaintiff-appellant,
vs.
CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND
MARINE INSURANCE COMPANY, MABALACAT SUGAR
COMPANY and THE PROVINCE SHERIFF OF
PAMPANGA, defendants-appellees.
Briones and Martinez for appellant.
Araneta, Zaragoza and Araneta for appellees Cu Unjieng e
Hijos.
No appearance for the other appellees.
VILLA-REAL, J.:
This is an appeal taken by the plaintiff, B.H. Berkenkotter,
from the judgment of the Court of First Instance of Manila,
dismissing said plaintiff's complaint against Cu Unjiengs e
Hijos et al., with costs.
In support of his appeal, the appellant assigns six alleged
errors as committed by the trial court in its decision in
question which will be discussed in the course of this
decision.
The first question to be decided in this appeal, which is
raised in the first assignment of alleged error, is whether or
not the lower court erred in declaring that the additional
machinery and equipment, as improvement incorporated
with the central are subject to the mortgage deed executed
in favor of the defendants Cu Unjieng e Hijos.
It is admitted by the parties that on April 26, 1926, the
Mabalacat Sugar Co., Inc., owner of the sugar central
situated in Mabalacat, Pampanga, obtained from the
defendants, Cu Unjieng e Hijos, a loan secured by a first
mortgage constituted on two parcels and land "with all its
buildings, improvements, sugar-cane mill, steel railway,
telephone line, apparatus, utensils and whatever forms part
or is necessary complement of said sugar-cane mill, steel
railway, telephone line, now existing or that may in the
future exist is said lots."
On October 5, 1926, shortly after said mortgage had been
constituted, the Mabalacat Sugar Co., Inc., decided to

increase the capacity of its sugar central by buying

additional machinery and equipment, so that instead of
milling 150 tons daily, it could produce 250. The estimated
cost of said additional machinery and equipment was
approximately P100,000. In order to carry out this plan,
B.A. Green, president of said corporation, proposed to the
plaintiff, B.H. Berkenkotter, to advance the necessary
amount for the purchase of said machinery and equipment,
promising to reimburse him as soon as he could obtain an
additional loan from the mortgagees, the herein defendants
Cu Unjieng e Hijos. Having agreed to said proposition
made in a letter dated October 5, 1926 (Exhibit E), B.H.
Berkenkotter, on October 9th of the same year, delivered
the sum of P1,710 to B.A. Green, president of the
Mabalacat Sugar Co., Inc., the total amount supplied by
him to said B.A. Green having been P25,750. Furthermore,
B.H. Berkenkotter had a credit of P22,000 against said
corporation for unpaid salary. With the loan of P25,750 and
said credit of P22,000, the Mabalacat Sugar Co., Inc.,
purchased the additional machinery and equipment now in
litigation.
On June 10, 1927, B.A. Green, president of the Mabalacat
Sugar Co., Inc., applied to Cu Unjieng e Hijos for an
additional loan of P75,000 offering as security the
additional machinery and equipment acquired by said B.A.
Green and installed in the sugar central after the execution
of the original mortgage deed, on April 27, 1927, together
with whatever additional equipment acquired with said
loan. B.A. Green failed to obtain said loan.

In the case of Bischoff vs. Pomar and Compaia General

de Tabacos (12 Phil., 690), cited with approval in the case
of Cea vs. Villanueva (18 Phil., 538), this court laid shown
the following doctrine:
1. REALTY; MORTGAGE OF REAL ESTATE
INCLUDES IMPROVEMENTS AND FIXTURES.
It is a rule, established by the Civil Code and
also by the Mortgage Law, with which the
decisions of the courts of the United States are in
accord, that in a mortgage of real estate, the
improvements on the same are included;
therefore, all objects permanently attached to a
mortgaged building or land, although they may
have been placed there after the mortgage was
constituted, are also included. (Arts. 110 and 111
of the Mortgage Law, and 1877 of the Civil Code;
decision of U.S. Supreme Court in the matter of
Royal Insurance Co. vs. R. Miller, liquidator, and
Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].)
2. ID.; ID.; INCLUSION OR EXCLUSION OF
MACHINERY, ETC. In order that it may be
understood that the machinery and other objects
placed upon and used in connection with a
mortgaged estate are excluded from the
mortgage, when it was stated in the mortgage
that the improvements, buildings, and machinery
that existed thereon were also comprehended, it
is indispensable that the exclusion thereof be
stipulated between the contracting parties.

Article 1877 of the Civil Code provides as follows.

ART. 1877. A mortgage includes all natural
accessions, improvements, growing fruits, and
rents not collected when the obligation falls due,
and the amount of any indemnities paid or due
the owner by the insurers of the mortgaged
property or by virtue of the exercise of the power
of eminent domain, with the declarations,
amplifications, and limitations established by law,
whether the estate continues in the possession of
the person who mortgaged it or whether it passes
into the hands of a third person.

The appellant contends that the installation of the

machinery and equipment claimed by him in the sugar
central of the Mabalacat Sugar Company, Inc., was not
permanent in character inasmuch as B.A. Green, in
proposing to him to advance the money for the purchase
thereof, made it appear in the letter, Exhibit E, that in case
B.A. Green should fail to obtain an additional loan from the
defendants Cu Unjieng e Hijos, said machinery and
equipment would become security therefor, said B.A.
Green binding himself not to mortgage nor encumber them
to anybody until said plaintiff be fully reimbursed for the
corporation's indebtedness to him.

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Upon acquiring the machinery and equipment in question

with money obtained as loan from the plaintiff-appellant by
B.A. Green, as president of the Mabalacat Sugar Co., Inc.,
the latter became owner of said machinery and equipment,
otherwise B.A. Green, as such president, could not have
offered them to the plaintiff as security for the payment of
his credit.

Co., Inc., and while the mortgage constituted on said sugar

central to Cu Unjieng e Hijos remained in force, only the
right of redemption of the vendor Mabalacat Sugar Co.,
Inc., in the sugar central with which said machinery and
equipment had been incorporated, was transferred thereby,
subject to the right of the defendants Cu Unjieng e Hijos
under the first mortgage.

Article 334, paragraph 5, of the Civil Code gives the

character of real property to "machinery, liquid containers,
instruments or implements intended by the owner of any
building or land for use in connection with any industry or
trade being carried on therein and which are expressly
adapted to meet the requirements of such trade or industry.

For the foregoing considerations, we are of the opinion and

so hold: (1) That the installation of a machinery and
equipment in a mortgaged sugar central, in lieu of another
of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production,
constitutes a permanent improvement on said sugar central
and subjects said machinery and equipment to the
mortgage constituted thereon (article 1877, Civil Code); (2)
that the fact that the purchaser of the new machinery and
equipment has bound himself to the person supplying him
the purchase money to hold them as security for the
payment of the latter's credit, and to refrain from
mortgaging or otherwise encumbering them does not alter
the permanent character of the incorporation of said
machinery and equipment with the central; and (3) that the
sale of the machinery and equipment in question by the
purchaser who was supplied the purchase money, as a
loan, to the person who supplied the money, after the
incorporation thereof with the mortgaged sugar central,
does not vest the creditor with ownership of said machinery
and equipment but simply with the right of redemption.

If the installation of the machinery and equipment in

question in the central of the Mabalacat Sugar Co., Inc., in
lieu of the other of less capacity existing therein, for its
sugar industry, converted them into real property by reason
of their purpose, it cannot be said that their incorporation
therewith was not permanent in character because, as
essential and principal elements of a sugar central, without
them the sugar central would be unable to function or carry
on the industrial purpose for which it was established.
Inasmuch as the central is permanent in character, the
necessary machinery and equipment installed for carrying
on the sugar industry for which it has been established
must necessarily be permanent.
Furthermore, the fact that B.A. Green bound himself to the
plaintiff B.H. Berkenkotter to hold said machinery and
equipment as security for the payment of the latter's credit
and to refrain from mortgaging or otherwise encumbering
them until Berkenkotter has been fully reimbursed therefor,
is not incompatible with the permanent character of the
incorporation of said machinery and equipment with the
sugar central of the Mabalacat Sugar Co., Inc., as nothing
could prevent B.A. Green from giving them as security at
least under a second mortgage.
As to the alleged sale of said machinery and equipment to
the plaintiff and appellant after they had been permanently
incorporated with sugar central of the Mabalacat Sugar

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

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

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

GAVINO A. TUMALAD and GENEROSA R.
TUMALAD, plaintiffs-appellees,
vs.
ALBERTA VICENCIO and EMILIANO
SIMEON, defendants-appellants.
Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants.

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

Case certified to this Court by the Court of Appeals (CAG.R. No. 27824-R) for the reason that only questions of law
are involved.
This case was originally commenced by defendantsappellants in the municipal court of Manila in Civil Case No.
43073, for ejectment. Having lost therein, defendantsappellants appealed to the court a quo (Civil Case No.
30993) which also rendered a decision against them, the
dispositive portion of which follows:
WHEREFORE, the court hereby
renders judgment in favor of the
plaintiffs and against the defendants,
ordering the latter to pay jointly and
severally the former a monthly rent of
P200.00 on the house, subject-matter
of this action, from March 27, 1956, to
January 14, 1967, with interest at the
legal rate from April 18, 1956, the filing
of the complaint, until fully paid, plus
attorney's fees in the sum of P300.00
and to pay the costs.
It appears on the records that on 1 September 1955
defendants-appellants executed a chattel mortgage in favor
of plaintiffs-appellees over their house of strong materials
located at No. 550 Int. 3, Quezon Boulevard, Quiapo,
Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which
were being rented from Madrigal & Company, Inc. The
mortgage was registered in the Registry of Deeds of Manila
on 2 September 1955. The herein mortgage was executed
to guarantee a loan of P4,800.00 received from plaintiffsappellees, payable within one year at 12% per annum. The
mode of payment was P150.00 monthly, starting
September, 1955, up to July 1956, and the lump sum of
P3,150 was payable on or before August, 1956. It was also
agreed that default in the payment of any of the
amortizations, would cause the remaining unpaid balance
to becomeimmediately due and Payable and

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the Chattel Mortgage will be

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

prove prior demand pursuant to Section 2, Rule 72, of the

Rules of Court. 6

redemption of the
foreclosed house.

During the pendency of the appeal to the Court of First

Instance, defendants-appellants failed to deposit the rent
for November, 1956 within the first 10 days of December,
1956 as ordered in the decision of the municipal court. As a
result, the court granted plaintiffs-appellees' motion for
execution, and it was actually issued on 24 January 1957.
However, the judgment regarding the surrender of
possession to plaintiffs-appellees could not be executed
because the subject house had been already demolished
on 14 January 1957 pursuant to the order of the court in a
separate civil case (No. 25816) for ejectment against the
present defendants for non-payment of rentals on the land
on which the house was constructed.

We will consider these questions seriatim.

The motion of plaintiffs for dismissal of the appeal,

execution of the supersedeas bond and withdrawal of
deposited rentals was denied for the reason that the liability
therefor was disclaimed and was still being litigated, and
under Section 8, Rule 72, rentals deposited had to be held
until final disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance
rendered its decision, the dispositive portion of which is
quoted earlier. The said decision was appealed by
defendants to the Court of Appeals which, in turn, certified
the appeal to this Court. Plaintiffs-appellees failed to file a
brief and this appeal was submitted for decision without it.
Defendants-appellants submitted numerous assignments
of error which can be condensed into two questions,
namely: .
(a) Whether the municipal court from
which the case originated had
jurisdiction to adjudicate the same;
(b) Whether the defendants are, under
the law, legally bound to pay rentals to
the plaintiffs during the period of one
(1) year provided by law for the

extrajudicially

(a) Defendants-appellants mortgagors question the

jurisdiction of the municipal court from which the case
originated, and consequently, the appellate jurisdiction of
the Court of First Instance a quo, on the theory that the
chattel mortgage is void ab initio; whence it would follow
that the extrajudicial foreclosure, and necessarily the
consequent auction sale, are also void. Thus, the
ownership of the house still remained with defendantsappellants who are entitled to possession and not plaintiffsappellees. Therefore, it is argued by defendants-appellants,
the issue of ownership will have to be adjudicated first in
order to determine possession. lt is contended further that
ownership being in issue, it is the Court of First Instance
which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of
the chattel mortgage on two grounds, which are: (a) that,
their signatures on the chattel mortgage were obtained
through fraud, deceit, or trickery; and (b) that the subject
matter of the mortgage is a house of strong materials, and,
being an immovable, it can only be the subject of a real
estate mortgage and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First
Instance found defendants-appellants' contentions as not
supported by evidence and accordingly dismissed the
charge, 8 confirming the earlier finding of the municipal
court that "the defense of ownership as well as the
allegations of fraud and deceit ... are mere allegations." 9
It has been held in Supia and Batiaco vs. Quintero and
Ayala 10 that "the answer is a mere statement of the facts
which the party filing it expects to prove, but it is not
evidence; 11 and further, that when the question to be
determined is one of title, the Court is given the authority to
proceed with the hearing of the cause until this fact is
clearly established. In the case of Sy vs.
Dalman, 12 wherein the defendant was also a successful

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bidder in an auction sale, it was likewise held by this Court

that in detainer cases the aim of ownership "is a matter of
defense and raises an issue of fact which should be
determined from the evidence at the trial." What
determines jurisdiction are the allegations or averments in
the complaint and the relief asked for. 13
Moreover, even granting that the charge is true, fraud or
deceit does not render a contract void ab initio, and can
only be a ground for rendering the contract voidable or
annullable pursuant to Article 1390 of the New Civil Code,
by a proper action in court. 14 There is nothing on record to
show that the mortgage has been annulled. Neither is it
disclosed that steps were taken to nullify the same. Hence,
defendants-appellants' claim of ownership on the basis of a
voidable contract which has not been voided fails.
It is claimed in the alternative by defendants-appellants
that even if there was no fraud, deceit or trickery, the
chattel mortgage was still null and void ab initio because
only personal properties can be subject of a chattel
mortgage. The rule about the status of buildings as
immovable property is stated in Lopez vs. Orosa, Jr. and
Plaza Theatre Inc., 15cited in Associated Insurance Surety
Co., Inc. vs. Iya, et al. 16 to the effect that
... it is obvious that the inclusion of the
building, separate and distinct from the
land, in the enumeration of what may
constitute real properties (art. 415, New
Civil Code) could only mean one thing
that a building is by itself an
immovable property irrespective of
whether or not said structure and the
land on which it is adhered to belong to
the same owner.
Certain deviations, however, have been allowed for various
reasons. In the case of Manarang and Manarang vs.
Ofilada, 17 this Court stated that "it is undeniable that the
parties to a contract may by agreement treat as personal
property that which by nature would be real property",
citing Standard Oil Company of New York vs.

Jaramillo. 18 In the latter case, the mortgagor conveyed and

transferred to the mortgagee by way of mortgage "the
following described personal property."19 The "personal
property" consisted of leasehold rights and a building.
Again, in the case of Luna vs. Encarnacion, 20 the subject of
the contract designated as Chattel Mortgage was a house
of mixed materials, and this Court hold therein that it was a
valid Chattel mortgage because it was so expressly
designated and specifically that the property given as
security "is a house of mixed materials, which by its very
nature is considered personal property." In the later case
of Navarro vs. Pineda,21 this Court stated that
The view that parties to a deed of
chattel mortgage may agree to
consider a house as personal
property for the purposes of said
contract, "is good only insofar as
the
contracting
parties
are
concerned. It is based, partly, upon
the
principle
of
estoppel"
(Evangelista vs. Alto Surety, No. L11139, 23 April 1958). In a case, a
mortgaged house built on a rented
land was held to be a personal
property, not only because the deed of
mortgage considered it as such, but
also because it did not form part of the
land (Evangelists vs. Abad, [CA]; 36
O.G. 2913), for it is now settled that an
object placed on land by one who had
only a temporary right to the same,
such as the lessee or usufructuary,
does not become immobilized by
attachment (Valdez vs. Central
Altagracia, 222 U.S. 58, cited in Davao
Sawmill Co., Inc. vs. Castillo, et al., 61
Phil. 709). Hence, if a house
belonging to a person stands on a
rented land belonging to another
person, it may be mortgaged as a
personal property as so stipulated
in the document of mortgage.
(Evangelista
vs. Abad, Supra.) It

should be noted, however that the

principle is predicated on statements
by the owner declaring his house to be
a chattel, a conduct that may
conceivably
estop
him
from
subsequently claiming otherwise.
(Ladera vs. C.N. Hodges, [CA] 48 O.G.
5374): 22
In the contract now before Us, the house on rented land is
not only expressly designated as Chattel Mortgage; it
specifically provides that "the mortgagor ... voluntarily
CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage 23 the property together with its leasehold rights
over the lot on which it is constructed and
participation ..." 24Although there is no specific
statement referring to the subject house as personal
property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendantsappellants could only have meant to convey the house
as chattel, or at least, intended to treat the same as
such, so that they should not now be allowed to make
an inconsistent stand by claiming otherwise.
Moreover, the subject house stood on a rented lot to
which defendats-appellants merely had a temporary
right as lessee, and although this can not in itself
alone determine the status of the property, it does so
when combined with other factors to sustain the
interpretation that the parties, particularly the
mortgagors, intended to treat the house as personalty.
Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and
Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Strong
Machinery
and
Williamson, 26 wherein third
persons assailed the validity of the chattel mortgage, 27 it is
the defendants-appellants themselves, as debtorsmortgagors, who are attacking the validity of the chattel
mortgage in this case. The doctrine of estoppel therefore
applies to the herein defendants-appellants, having treated
the subject house as personalty.
(b) Turning to the question of possession and rentals of the
premises in question. The Court of First Instance noted in
its decision that nearly a year after the foreclosure sale the
mortgaged house had been demolished on 14 and 15

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January 1957 by virtue of a decision obtained by the lessor

of the land on which the house stood. For this reason, the
said court limited itself to sentencing the erstwhile
mortgagors to pay plaintiffs a monthly rent of P200.00 from
27 March 1956 (when the chattel mortgage was foreclosed
and the house sold) until 14 January 1957 (when it was
torn down by the Sheriff), plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that
they were entitled to remain in possession without any
obligation to pay rent during the one year redemption
period after the foreclosure sale, i.e., until 27 March 1957.
On this issue, We must rule for the appellants.
Chattel mortgages are covered and regulated by the
Chattel Mortgage Law, Act No. 1508. 28 Section 14 of this
Act allows the mortgagee to have the property mortgaged
sold at public auction through a public officer in almost the
same manner as that allowed by Act No. 3135, as
amended by Act No. 4118, provided that the requirements
of the law relative to notice and registration are complied
with. 29 In the instant case, the parties specifically stipulated
that "the chattel mortgage will be enforceable in
accordance with the provisions of Special Act No.
3135 ... ." 30 (Emphasis supplied).
Section 6 of the Act referred to 31 provides that the debtormortgagor (defendants-appellants herein) may, at any time
within one year from and after the date of the auction sale,
redeem the property sold at the extra judicial foreclosure
sale. Section 7 of the same Act 32 allows the purchaser of
the property to obtain from the court the possession during
the period of redemption: but the same provision expressly
requires the filing of a petition with the proper Court of First
Instance and the furnishing of a bond. It is only upon filing
of the proper motion and the approval of the corresponding
bond that the order for a writ of possession issues as a
matter of course. No discretion is left to the court. 33 In the
absence of such a compliance, as in the instant case, the
purchaser can not claim possession during the period of
redemption as a matter of right. In such a case, the
governing provision is Section 34, Rule 39, of the Revised
Rules of Court 34 which also applies to properties
purchased
in
extrajudicial
foreclosure

proceedings. 35 Construing the said section, this Court

stated in the aforestated case of Reyes vs. Hamada.
In other words, before the expiration of
the 1-year period within which the
judgment-debtor or mortgagor may
redeem the property, the purchaser
thereof is not entitled, as a matter of
right, to possession of the same. Thus,
while it is true that the Rules of Court
allow the purchaser to receive the
rentals if the purchased property is
occupied by tenants, he is,
nevertheless, accountable to the
judgment-debtor or mortgagor as the
case may be, for the amount so
received and the same will be duly
credited against the redemption price
when the said debtor or mortgagor
effects the redemption.Differently
stated, the rentals receivable from
tenants, although they may be
collected by the purchaser during the
redemption period, do not belong to
the latter but still pertain to the debtor
of mortgagor. The rationale for the
Rule, it seems, is to secure for the
benefit of the debtor or mortgagor, the
payment of the redemption amount and
the consequent return to him of his
properties sold at public auction.
(Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan
vs. Espe. 36
Since the defendants-appellants were occupying the house
at the time of the auction sale, they are entitled to remain in
possession during the period of redemption or within one
year from and after 27 March 1956, the date of the auction
sale, and to collect the rents or profits during the said
period.

It will be noted further that in the case at bar the period of

redemption had not yet expired when action was instituted
in the court of origin, and that plaintiffs-appellees did not
choose to take possession under Section 7, Act No. 3135,
as amended, which is the law selected by the parties to
govern the extrajudicial foreclosure of the chattel mortgage.
Neither was there an allegation to that effect. Since
plaintiffs-appellees' right to possess was not yet born at the
filing of the complaint, there could be no violation or breach
thereof. Wherefore, the original complaint stated no cause
of action and was prematurely filed. For this reason, the
same should be ordered dismissed, even if there was no
assignment of error to that effect. The Supreme Court is
clothed with ample authority to review palpable errors not
assigned as such if it finds that their consideration is
necessary in arriving at a just decision of the cases. 37
It follows that the court below erred in requiring the
mortgagors to pay rents for the year following the
foreclosure sale, as well as attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed
from is reversed and another one entered, dismissing the
complaint. With costs against plaintiffs-appellees.

G.R. No. L-18456

November 30, 1963
CONRADO P. NAVARRO, plaintiff-appellee,
vs.
RUFINO G. PINEDA, RAMONA REYES, ET
AL., defendants-appellants.
Deogracias Taedo, Jr. for plaintiff-appellee.
Renato A. Santos for defendants-appellants.
PAREDES, J.:
On December 14, 1959, defendants Rufino G. Pineda and
his mother Juana Gonzales (married to Gregorio Pineda),
borrowed from plaintiff Conrado P. Navarro, the sum of
P2,500.00, payable 6 months after said date or on June 14,
1959. To secure the indebtedness, Rufino executed a
document captioned "DEED OF REAL ESTATE and
CHATTEL MORTGAGES", whereby Juana Gonzales, by

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way of Real Estate Mortgage hypothecated a parcel of

land, belonging to her, registered with the Register of
Deeds of Tarlac, under Transfer Certificate of Title No.
25776, and Rufino G. Pineda, by way of Chattel Mortgage,
mortgaged his two-story residential house, having a floor
area of 912 square meters, erected on a lot belonging to
Atty. Vicente Castro, located at Bo. San Roque, Tarlac,
Tarlac; and one motor truck, registered in his name, under
Motor Vehicle Registration Certificate No. A-171806. Both
mortgages were contained in one instrument, which was
registered in both the Office of the Register of Deeds and
the Motor Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the
defendants, after demands made on them, failed to pay.
They, however, asked and were granted extension up to
June 30, 1960, within which to pay. Came June 30,
defendants again failed to pay and, for the second time,
asked for another extension, which was given, up to July
30, 1960. In the second extension, defendant Pineda in a
document entitled "Promise", categorically stated that in
the remote event he should fail to make good the obligation
on such date (July 30, 1960), the defendant would no
longer ask for further extension and there would be no
need for any formal demand, and plaintiff could proceed to
take whatever action he might desire to enforce his rights,
under the said mortgage contract. In spite of said promise,
defendants, failed and refused to pay the obligation.
On August 10, 1960, plaintiff filed a complaint for
foreclosure of the mortgage and for damages, which
consisted of liquidated damages in the sum of P500.00 and
12% per annum interest on the principal, effective on the
date of maturity, until fully paid.

defendants are hard up these days and pleaded

to the plaintiff to grant them more time within
which to pay their obligation and the plaintiff
refused;
WHEREFORE, in view of the foregoing it is most
respectfully prayed that this Honorable Court
render judgment granting the defendants until
January 31, 1961, within which to pay their
obligation to the plaintiff.
On September 30, 1960, plaintiff presented a Motion for
summary Judgment, claiming that the Answer failed to
tender any genuine and material issue. The motion was set
for hearing, but the record is not clear what ruling the lower
court made on the said motion. On November 11, 1960,
however, the parties submitted a Stipulation of Facts,
wherein the defendants admitted the indebtedness, the
authenticity and due execution of the Real Estate and
Chattel Mortgages; that the indebtedness has been due
and unpaid since June 14, 1960; that a liability of 12% per
annum as interest was agreed, upon failure to pay the
principal when due and P500.00 as liquidated damages;
that the instrument had been registered in the Registry of
Property and Motor Vehicles Office, both of the province of
Tarlac; that the only issue in the case is whether or not the
residential house, subject of the mortgage therein, can be
considered a Chattel and the propriety of the attorney's
fees.
On February 24, 1961, the lower court held
... WHEREFORE, this Court renders decision in
this Case:

Defendants, answering the complaint, among others,

stated

(a) Dismissing the complaint with regard to

defendant Gregorio Pineda;

Defendants admit that the loan is overdue but

deny that portion of paragraph 4 of the First
Cause of Action which states that the defendants
unreasonably failed and refuse to pay their
obligation to the plaintiff the truth being the

(b) Ordering defendants Juana Gonzales and the

spouses Rufino Pineda and Ramon Reyes, to
pay jointly and severally and within ninety (90)
days from the receipt of the copy of this decision
to the plaintiff Conrado P. Navarro the principal

sum of P2,550.00 with 12% compounded interest

per annum from June 14, 1960, until said
principal sum and interests are fully paid, plus
P500.00 as liquidated damages and the costs of
this suit, with the warning that in default of said
payment of the properties mentioned in the deed
of real estate mortgage and chattel mortgage
(Annex "A" to the complaint) be sold to realize
said mortgage debt, interests, liquidated
damages and costs, in accordance with the
pertinent provisions of Act 3135, as amended by
Act 4118, and Art. 14 of the Chattel Mortgage
Law, Act 1508; and
(c) Ordering the defendants Rufino Pineda and
Ramona Reyes, to deliver immediately to the
Provincial Sheriff of Tarlac the personal
properties mentioned in said Annex "A",
immediately after the lapse of the ninety (90)
days above-mentioned, in default of such
payment.
The above judgment was directly appealed to this Court,
the defendants therein assigning only a single error,
allegedly committed by the lower court, to wit
In holding that the deed of real estate and chattel
mortgages appended to the complaint is valid,
notwithstanding the fact that the house of the
defendant Rufino G. Pineda was made the
subject of the chattel mortgage, for the reason
that it is erected on a land that belongs to a third
person.
Appellants contend that article 415 of the New Civil Code,
in classifying a house as immovable property, makes no
distinction whether the owner of the land is or not the
owner of the building; the fact that the land belongs to
another is immaterial, it is enough that the house adheres
to the land; that in case of immovables by incorporation,
such as houses, trees, plants, etc; the Code does not
require that the attachment or incorporation be made by
the owner of the land, the only criterion being the union or

6 | Page

incorporation with the soil. In other words, it is claimed that

"a building is an immovable property, irrespective of
whether or not said structure and the land on which it is
adhered to, belong to the same owner" (Lopez v. Orosa,
G.R. Nos. L-10817-8, Feb. 28, 1958). (See also the case of
Leung Yee v. Strong Machinery Co., 37 Phil. 644).
Appellants argue that since only movables can be the
subject of a chattel mortgage (sec. 1, Act No. 3952) then
the mortgage in question which is the basis of the present
action, cannot give rise to an action for foreclosure,
because it is nullity. (Citing Associated Ins. Co., et al. v.
Isabel Iya v. Adriano Valino, et al., L-10838, May 30, 1958.)
The trial court did not predicate its decision declaring
the deed of chattel mortgage valid solely on the
ground that the house mortgaged was erected on the
land which belonged to a third person, but also and
principally on the doctrine of estoppel, in that "the
parties have so expressly agreed" in the mortgage to
consider the house as chattel "for its smallness and
mixed materials of sawali and wood". In construing arts.
334 and 335 of the Spanish Civil Code (corresponding to
arts. 415 and 416, N.C.C.), for purposes of the application
of the Chattel Mortgage Law, it was held that under certain
conditions, "a property may have a character different from
that imputed to it in said articles. It is undeniable that the
parties to a contract may by agreement, treat as personal
property that which by nature would be real property"
(Standard Oil Co. of N.Y. v. Jaranillo, 44 Phil. 632633)."There can not be any question that a building of
mixed materials may be the subject of a chattel mortgage,
in which case, it is considered as between the parties as
personal property. ... The matter depends on the
circumstances and the intention of the parties". "Personal
property may retain its character as such where it is so
agreed by the parties interested even though annexed to
the realty ...". (42 Am. Jur. 209-210, cited in Manarang, et
al. v. Ofilada, et al., G.R. No. L-8133, May 18, 1956; 52
O.G. No. 8, p. 3954.) The view that parties to a deed of
chattel mortgagee may agree to consider a house as
personal property for the purposes of said contract, "is
good only insofar as the contracting parties are concerned.
It is based partly, upon the principles of estoppel ..."
(Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). In

a case, a mortgage house built on a rented land, was held

to be a personal property, not only because the deed of
mortgage considered it as such, but also because it did not
form part of the land (Evangelista v. Abad [CA];36 O.G.
2913), for it is now well settled that an object placed on
land by one who has only a temporary right to the same,
such as a lessee or usufructuary, does not become
immobilized by attachment (Valdez v. Central Altagracia,
222 U.S. 58, cited in Davao Sawmill Co., Inc. v. Castillo, et
al., 61 Phil. 709). Hence, if a house belonging to a person
stands on a rented land belonging to another person, it
may be mortgaged as a personal property is so stipulated
in the document of mortgage. (Evangelista v. Abad, supra.)
It should be noted, however, that the principle is predicated
on statements by the owner declaring his house to be a
chattel, a conduct that may conceivably estop him from
subsequently claiming otherwise (Ladera, et al.. v. C. N.
Hodges, et al., [CA]; 48 O.G. 5374). The doctrine,
therefore, gathered from these cases is that although in
some instances, a house of mixed materials has been
considered as a chattel between them, has been
recognized, it has been a constant criterion nevertheless
that, with respect to third persons, who are not parties to
the contract, and specially in execution proceedings, the
house is considered as an immovable property (Art. 1431,
New Civil Code).
In the case at bar, the house in question was treated as
personal or movable property, by the parties to the
contract themselves. In the deed of chattel mortgage,
appellant Rufino G. Pineda conveyed by way of
"Chattel Mortgage" "my personal properties", a
residential house and a truck. The mortgagor himself
grouped the house with the truck, which is, inherently
a movable property. The house which was not even
declared for taxation purposes was small and made of
light
construction
materials:
G.I.
sheets
roofing, sawali and wooden walls and wooden posts;
built on land belonging to another.
The cases cited by appellants are not applicable to the
present case. The Iya cases (L-10837-38, supra), refer to a
building or a house of strong materials, permanently
adhered to the land, belonging to the owner of the house

himself. In the case of Lopez v. Orosa, (L-10817-18), the

subject building was a theatre, built of materials worth more
than P62,000, attached permanently to the soil. In these
cases and in the Leung Yee case, supra, third persons
assailed the validity of the deed of chattel mortgages; in the
present case, it was one of the parties to the contract of
mortgages who assailed its validity.
CONFORMABLY WITH ALL THE FOREGOING, the
decision appealed from, should be, as it is hereby affirmed,
with costs against appellants.

THIRD DIVISION
[G.R. No. 137705. August 22, 2000]
SERGS PRODUCTS, INC., and SERGIO T.
GOQUIOLAY, petitioners, vs. PCI
LEASING
AND
FINANCE,
INC., respondent.
DECISION
PANGANIBAN, J.:
After agreeing to a contract stipulating
that a real or immovable property be
considered as personal or movable, a party is
estopped from subsequently claiming
otherwise. Hence, such property is a proper
subject of a writ of replevin obtained by the
other contracting party.

The Case
Before us is a Petition for Review on
Certiorari assailing the January 6, 1999
Decision[1] of the Court of Appeals (CA) [2] in CAGR SP No. 47332 and its February 26, 1999
Resolution[3] denying
reconsideration. The
decretal portion of the CA Decision reads as
follows:

7 | Page

WHEREFORE, premises considered, the assailed Order

dated February 18, 1998 and Resolution dated March 31,
1998 in Civil Case No. Q-98-33500 are
hereby AFFIRMED.The writ of preliminary injunction issued
on June 15, 1998 is hereby LIFTED.[4]

On March 25, 1998, petitioners filed a motion for special

protective order (Annex C), invoking the power of the court
to control the conduct of its officers and amend and control
its processes, praying for a directive for the sheriff to defer
enforcement of the writ of replevin.

In its February 18, 1998 Order, [5] the

Regional Trial Court (RTC) of Quezon City
(Branch 218)[6] issued a Writ of Seizure.[7] The
March 18, 1998 Resolution[8] denied petitioners
Motion for Special Protective Order, praying
that the deputy sheriff be enjoined from seizing
immobilized or other real properties in
(petitioners) factory in Cainta, Rizal and to
return to their original place whatever
immobilized machineries or equipments he
may have removed.[9]

This motion was opposed by PCI Leasing (Annex F), on

the ground that the properties [were] still personal and
therefore still subject to seizure and a writ of replevin.

The Facts
The undisputed facts are summarized by
the Court of Appeals as follows:[10]
On February 13, 1998, respondent PCI Leasing and
Finance, Inc. (PCI Leasing for short) filed with the RTC-QC
a complaint for [a] sum of money (Annex E), with an
application for a writ of replevin docketed as Civil Case No.
Q-98-33500.
On March 6, 1998, upon an ex-parte application of PCI
Leasing, respondent judge issued a writ of replevin (Annex
B) directing its sheriff to seize and deliver the machineries
and equipment to PCI Leasing after 5 days and upon the
payment of the necessary expenses.
On March 24, 1998, in implementation of said writ, the
sheriff proceeded to petitioners factory, seized one
machinery with [the] word that he [would] return for the
other machineries.

In their Reply, petitioners asserted that the properties

sought to be seized [were] immovable as defined in Article
415 of the Civil Code, the parties agreement to the contrary
notwithstanding. They argued that to give effect to the
agreement would be prejudicial to innocent third
parties. They further stated that PCI Leasing [was]
estopped from treating these machineries as personal
because the contracts in which the alleged agreement
[were] embodied [were] totally sham and farcical.

have realized the import of the document he

signed. The CA further held:
Furthermore, to accord merit to this petition would be to
preempt the trial court in ruling upon the case below, since
the merits of the whole matter are laid down before us via a
petition whose sole purpose is to inquire upon the
existence of a grave abuse of discretion on the part of the
[RTC] in issuing the assailed Order and Resolution. The
issues raised herein are proper subjects of a full-blown
trial, necessitating presentation of evidence by both
parties. The contract is being enforced by one, and [its]
validity is attacked by the other a matter x x x which
respondent court is in the best position to determine.
Hence, this Petition.[11]

The Issues

On April 6, 1998, the sheriff again sought to enforce the writ

of seizure and take possession of the remaining
properties. He was able to take two more, but was
prevented by the workers from taking the rest.

In their Memorandum, petitioners submit

the following issues for our consideration:

On April 7, 1998, they went to [the CA] via an original

action for certiorari.

A. Whether or not the machineries purchased and imported

by SERGS became real property by virtue of
immobilization.

Ruling of the Court of Appeals

B. Whether or not the contract between the parties is a

loan or a lease.[12]

Citing the Agreement of the parties,

the appellate court held that the subject
machines were personal property, and that
they had only been leased, not owned, by
petitioners. It also ruled that the words of
the contract are clear and leave no doubt
upon the true intention of the contracting
parties. Observing
that
Petitioner
Goquiolay
was
an
experienced
businessman who was not unfamiliar with
the ways of the trade, it ruled that he should

In the main, the Court will resolve

whether the said machines are personal, not
immovable, property which may be a proper
subject of a writ of replevin. As a preliminary
matter, the Court will also address briefly the
procedural points raised by respondent.

The Courts Ruling

8 | Page

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition
failed to indicate expressly whether it was
being filed under Rule 45 or Rule 65 of the
Rules of Court. It further alleges that the
Petition erroneously impleaded Judge Hilario
Laqui as respondent.
There is no question that the present
recourse is under Rule 45. This conclusion
finds support in the very title of the Petition,
which is Petition for Review on Certiorari.[13]
While Judge Laqui should not have been
impleaded as a respondent,[14] substantial
justice requires that such lapse by itself should
not warrant the dismissal of the present
Petition. In this light, the Court deems it proper
to remove, motu proprio, the name of Judge
Laqui from the caption of the present case.

corresponding writ of replevin describing the personal

property alleged to be wrongfully detained and requiring
the sheriff forthwith to take such property into his custody.
On the other hand, Article 415 of the Civil
Code enumerates immovable or real property
as follows:
ART. 415. The following are immovable property:
x x x....................................x x x....................................x x x
(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;
x x x....................................x x x....................................x x x

Petitioners contend that the subject

machines used in their factory were not proper
subjects of the Writ issued by the RTC,
because they were in fact real property.Serious
policy considerations, they argue, militate
against a contrary characterization.

In the present case, the machines that

were the subjects of the Writ of Seizure
were placed by petitioners in the factory
built on their own land. Indisputably, they
were essential and principal elements of
their chocolate-making industry. Hence,
although each of them was movable or
personal property on its own, all of them
have become immobilized by destination
because they are essential and principal
elements in the industry.[16] In that sense,
petitioners are correct in arguing that the
said machines are real, not personal,
property pursuant to Article 415 (5) of the
Civil Code.[17]

Rule 60 of the Rules of Court provides

that writs of replevin are issued for the recovery
of personal property only.[15] Section 3 thereof
reads:

Be that as it may, we disagree with the

submission of the petitioners that the said
machines are not proper subjects of the
Writ of Seizure.

SEC. 3. Order. -- Upon the filing of such affidavit and

approval of the bond, the court shall issue an order and the

The Court has held that contracting

parties may validly stipulate that a real
property be considered as personal.[18] After

Main Issue: Nature of the Subject Machinery

agreeing to such stipulation, they are

consequently estopped from claiming
otherwise. Under the principle of estoppel,
a party to a contract is ordinarily precluded
from denying the truth of any material fact
found therein.
Hence, in Tumalad v. Vicencio,[19] the
Court upheld the intention of the parties to treat
a house as a personal property because it had
been made the subject of a chattel
mortgage. The Court ruled:
x x x. Although there is no specific statement referring to
the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel
mortgage defendants-appellants could only have meant to
convey the house as chattel, or at least, intended to treat
the same as such, so that they should not now be allowed
to make an inconsistent stand by claiming otherwise.
Applying Tumalad, the Court in Makati
Leasing and Finance Corp. v. Wearever Textile
Mills[20] also held that the machinery used in a
factory and essential to the industry, as in the
present case, was a proper subject of a writ of
replevin because it was treated as personal
property in a contract. Pertinent portions of the
Courts ruling are reproduced hereunder:
x x x. If a house of strong materials, like what was involved
in the above Tumalad case, may be considered as
personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so
agree and no innocent third party will be prejudiced
thereby, there is absolutely no reason why a machinery,
which is movable in its nature and becomes immobilized
only by destination or purpose, may not be likewise treated
as such. This is really because one who has so agreed is
estopped from denying the existence of the chattel
mortgage.
In the present case, the Lease
Agreement clearly provides that the machines

9 | Page

in question are to be considered as personal

property. Specifically, Section 12.1 of the
Agreement reads as follows:[21]
12.1 The PROPERTY is, and shall at all times be and
remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or hereafter
become, in any manner affixed or attached to or embedded
in, or permanently resting upon, real property or any
building thereon, or attached in any manner to what is
permanent.
Clearly then, petitioners are estopped
from denying the characterization of the subject
machines as personal property. Under the
circumstances, they are proper subjects of the
Writ of Seizure.
It should be stressed, however, that our
holding -- that the machines should be deemed
personal property pursuant to the Lease
Agreement is good only insofar as the
contracting parties are concerned.[22] Hence,
while the parties are bound by the Agreement,
third persons acting in good faith are not
affected by its stipulation characterizing the
subject machinery as personal.[23] In any event,
there is no showing that any specific third party
would be adversely affected.

Validity of the Lease Agreement

In their Memorandum, petitioners
contend that the Agreement is a loan and not a
lease.[24] Submitting documents supposedly
showing that they own the subject machines,
petitioners also argue in their Petition that the
Agreement suffers from intrinsic ambiguity
which places in serious doubt the intention of
the parties and the validity of the lease
agreement itself.[25] In their Reply to

respondents Comment, they further allege that

the Agreement is invalid.[26]
These arguments are unconvincing. The
validity and the nature of the contract are
the lis mota of the civil action pending before
the RTC. A resolution of these questions,
therefore, is effectively a resolution of the
merits of the case. Hence, they should be
threshed out in the trial, not in the proceedings
involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,
the Court explained that the policy under
Rule 60 was that questions involving title to the
subject property questions which petitioners
are now raising -- should be determined in the
trial. In that case, the Court noted that the
remedy of defendants under Rule 60 was either
to post a counter-bond or to question the
sufficiency of the plaintiffs bond. They were not
allowed, however, to invoke the title to the
subject property. The Court ruled:
[27]

In other words, the law does not allow the defendant to file
a motion to dissolve or discharge the writ of seizure (or
delivery) on ground of insufficiency of the complaint or of
the grounds relied upon therefor, as in proceedings on
preliminary attachment or injunction, and thereby put at
issue the matter of the title or right of possession over the
specific chattel being replevied, the policy apparently being
that said matter should be ventilated and determined only
at the trial on the merits.[28]
Besides, these questions require a
determination of facts and a presentation of
evidence, both of which have no place in a
petition for certiorari in the CA under Rule 65 or
in a petition for review in this Court under Rule
45.[29]

Reliance on the Lease Agreement

It should be pointed out that the Court in

this case may rely on the Lease Agreement,
for nothing on record shows that it has been
nullified or annulled. In fact, petitioners assailed
it first only in the RTC proceedings, which had
ironically
been
instituted
by
respondent. Accordingly, it must be presumed
valid and binding as the law between the
parties.
Makati
Leasing
and
Finance
Corporation[30] is also instructive on this
point. In that case, the Deed of Chattel
Mortgage, which characterized the subject
machinery as personal property, was also
assailed because respondent had allegedly
been required to sign a printed form of chattel
mortgage which was in a blank form at the time
of signing. The Court rejected the argument
and relied on the Deed, ruling as follows:
x x x. Moreover, even granting that the charge is true, such
fact alone does not render a contract void ab initio, but can
only be a ground for rendering said contract voidable, or
annullable pursuant to Article 1390 of the new Civil Code,
by a proper action in court. There is nothing on record to
show that the mortgage has been annulled. Neither is it
disclosed that steps were taken to nullify the same. x x x

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that if the Court
allows these machineries to be seized, then its
workers would be out of work and thrown into
the streets.[31] They also allege that the seizure
would nullify all efforts to rehabilitate the
corporation.
Petitioners arguments do not preclude
the implementation of the Writ. As earlier
discussed, law and jurisprudence support its
propriety. Verily,
the
above-mentioned

10 | P a g e

consequences, if they come true, should not be

blamed on this Court, but on the petitioners for
failing to avail themselves of the remedy under
Section 5 of Rule 60, which allows the filing of
a counter-bond. The provision states:
SEC. 5. Return of property. -- If the adverse party objects
to the sufficiency of the applicants bond, or of the surety or
sureties thereon, he cannot immediately require the return
of the property, but if he does not so object, he may, at any
time before the delivery of the property to the applicant,
require the return thereof, by filing with the court where the
action is pending a bond executed to the applicant, in
double the value of the property as stated in the applicants
affidavit for the delivery thereof to the applicant, if such
delivery be adjudged, and for the payment of such sum to
him as may be recovered against the adverse party, and by
serving a copy bond on the applicant.
WHEREFORE,
the
Petition
is DENIED and the assailed Decision of the
Court of Appeals AFFIRMED. Costs against
petitioners.

G.R. No. L-40411

August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT &
POWER CO., INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo
and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
The issue in this case, as announced in the opening
sentence of the decision in the trial court and as set forth
by counsel for the parties on appeal, involves the
determination of the nature of the properties described in
the complaint. The trial judge found that those properties
were personal in nature, and as a consequence absolved

the defendants from the complaint, with costs against the

plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber
concession from the Government of the Philippine Islands.
It has operated a sawmill in the sitio of Maa, barrio of
Tigatu, municipality of Davao, Province of Davao. However,
the land upon which the business was conducted belonged
to another person. On the land the sawmill company
erected a building which housed the machinery used by it.
Some of the implements thus used were clearly personal
property, the conflict concerning machines which were
placed and mounted on foundations of cement. In the
contract of lease between the sawmill company and the
owner of the land there appeared the following provision:
That on the expiration of the period agreed upon,
all the improvements and buildings introduced
and erected by the party of the second part shall
pass to the exclusive ownership of the party of
the first part without any obligation on its part to
pay any amount for said improvements and
buildings; also, in the event the party of the
second part should leave or abandon the land
leased before the time herein stipulated, the
improvements and buildings shall likewise pass
to the ownership of the party of the first part as
though the time agreed upon had expired:
Provided, however, That the machineries and
accessories are not included in the
improvements which will pass to the party of the
first part on the expiration or abandonment of the
land leased.
In another action, wherein the Davao Light & Power Co.,
Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc.,
was the defendant, a judgment was rendered in favor of
the plaintiff in that action against the defendant in that
action; a writ of execution issued thereon, and the
properties now in question were levied upon as personalty
by the sheriff. No third party claim was filed for such
properties at the time of the sales thereof as is borne out
by the record made by the plaintiff herein. Indeed the
bidder, which was the plaintiff in that action, and the

defendant herein having consummated the sale,

proceeded to take possession of the machinery and other
properties described in the corresponding certificates of
sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be
explained that the Davao Saw Mill Co., Inc., has on a
number of occasions treated the machinery as personal
property by executing chattel mortgages in favor of third
persons. One of such persons is the appellee by
assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in
point. According to the Code, real property consists of
1. Land, buildings, roads and constructions of all
kinds adhering to the soil;
xxx

xxx

xxx

5. Machinery, liquid containers, instruments or

implements intended by the owner of any
building or land for use in connection with any
industry or trade being carried on therein and
which are expressly adapted to meet the
requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees
the last mentioned paragraph. We entertain no doubt that
the trial judge and appellees are right in their appreciation
of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the
appellant should have registered its protest before or at the
time of the sale of this property. It must further be pointed
out that while not conclusive, the characterization of the
property as chattels by the appellant is indicative of
intention and impresses upon the property the character
determined by the parties. In this connection the decision
of this court in the case of Standard Oil Co. of New Yorkvs.
Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or
not, furnishes the key to such a situation.

11 | P a g e

It is, however not necessary to spend overly must time in

the resolution of this appeal on side issues. It is machinery
which is involved; moreover, machinery not intended by the
owner of any building or land for use in connection
therewith, but intended by a lessee for use in a building
erected on the land by the latter to be returned to the
lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal
being taken to the United States Supreme Court, it was
held that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner
of the property or plant, but not when so placed by a
tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of
the owner. In the opinion written by Chief Justice White,
whose knowledge of the Civil Law is well known, it was in
part said:
To determine this question involves fixing the
nature and character of the property from the
point of view of the rights of Valdes and its nature
and character from the point of view of Nevers &
Callaghan as a judgment creditor of the
Altagracia Company and the rights derived by
them from the execution levied on the machinery
placed by the corporation in the plant. Following
the Code Napoleon, the Porto Rican Code treats
as immovable (real) property, not only land and
buildings, but also attributes immovability in
some cases to property of a movable nature, that
is, personal property, because of the destination
to which it is applied. "Things," says section 334
of the Porto Rican Code, "may be immovable
either by their own nature or by their destination
or the object to which they are applicable."
Numerous illustrations are given in the fifth
subdivision of section 335, which is as follows:
"Machinery, vessels, instruments or implements
intended by the owner of the tenements for the
industrial or works that they may carry on in any
building or upon any land and which tend directly
to meet the needs of the said industry or works."
(See also Code Nap., articles 516, 518 et seq. to

and inclusive of article 534, recapitulating the

things which, though in themselves movable,
may be immobilized.) So far as the subjectmatter with which we are dealing machinery
placed in the plant it is plain, both under the
provisions of the Porto Rican Law and of the
Code Napoleon, that machinery which is
movable in its nature only becomes immobilized
when placed in a plant by the owner of the
property or plant. Such result would not be
accomplished, therefore, by the placing of
machinery in a plant by a tenant or a
usufructuary or any person having only a
temporary right. (Demolombe, Tit. 9, No. 203;
Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent,
Tit. 5, No. 447; and decisions quoted in FuzierHerman ed. Code Napoleon under articles 522 et
seq.) The distinction rests, as pointed out by
Demolombe, upon the fact that one only having a
temporary right to the possession or enjoyment
of property is not presumed by the law to have
applied movable property belonging to him so as
to deprive him of it by causing it by an act of
immobilization to become the property of another.
It follows that abstractly speaking the machinery
put by the Altagracia Company in the plant
belonging to Sanchez did not lose its character of
movable property and become immovable by
destination. But in the concrete immobilization
took place because of the express provisions of
the lease under which the Altagracia held, since
the lease in substance required the putting in of
improved machinery, deprived the tenant of any
right to charge against the lessor the cost such
machinery, and it was expressly stipulated that
the machinery so put in should become a part of
the plant belonging to the owner without
compensation to the lessee. Under such
conditions the tenant in putting in the machinery
was acting but as the agent of the owner in
compliance with the obligations resting upon him,
and the immobilization of the machinery which
resulted arose in legal effect from the act of the

owner in giving by contract a permanent

destination to the machinery.
xxx

xxx

xxx

The machinery levied upon by Nevers &

Callaghan, that is, that which was placed in the
plant by the Altagracia Company, being, as
regards Nevers & Callaghan, movable property, it
follows that they had the right to levy on it under
the execution upon the judgment in their favor,
and the exercise of that right did not in a legal
sense conflict with the claim of Valdes, since as
to him the property was a part of the realty which,
as the result of his obligations under the lease,
he could not, for the purpose of collecting his
debt, proceed separately against. (Valdes vs.
Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment
appealed from will be affirmed, the costs of this instance to
be paid by the appellant.

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization
Trust, RAUL MANGLAPUS, as Secretary of Foreign
Affairs, and CATALINO MACARAIG, as Executive
Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS
PRIVATIZATION TRUST CHAIRMAN RAMON T.
GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al.,
as members of the PRINCIPAL AND BIDDING
COMMITTEES ON THE UTILIZATION/DISPOSITION

12 | P a g e

PETITION OF PHILIPPINE GOVERNMENT PROPERTIES

IN JAPAN,respondents.
Arturo M. Tolentino for petitioner in 92013.

The subject property in this case is one of the four (4)

properties in Japan acquired by the Philippine government
under the Reparations Agreement entered into with Japan
on May 9, 1956, the other lots being:

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin
respondents, their representatives and agents from
proceeding with the bidding for the sale of the 3,179 square
meters of land at 306 Roppongi, 5-Chome Minato-ku
Tokyo, Japan scheduled on February 21, 1990. We granted
the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No.
92047) likewise prayes for a writ of mandamus to compel
the respondents to fully disclose to the public the basis of
their decision to push through with the sale of the Roppongi
property inspire of strong public opposition and to explain
the proceedings which effectively prevent the participation
of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et
al. were heard by the Court on March 13, 1990. After G.R.
No. 92047, Ojeda v. Secretary Macaraig, et al. was filed,
the respondents were required to file a comment by the
Court's resolution dated February 22, 1990. The two
petitions were consolidated on March 27, 1990 when the
memoranda of the parties in the Laurel case were
deliberated upon.
The Court could not act on these cases immediately
because the respondents filed a motion for an extension of
thirty (30) days to file comment in G.R. No. 92047, followed
by a second motion for an extension of another thirty (30)
days which we granted on May 8, 1990, a third motion for
extension of time granted on May 24, 1990 and a fourth
motion for extension of time which we granted on June 5,
1990 but calling the attention of the respondents to the
length of time the petitions have been pending. After the
comment was filed, the petitioner in G.R. No. 92047 asked
for thirty (30) days to file a reply. We noted his motion and
resolved to decide the two (2) cases.
I

(1) The Nampeidai Property at 11-24 Nampeidai-machi,

Shibuya-ku, Tokyo which has an area of approximately
2,489.96 square meters, and is at present the site of the
Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho,
Kobe, with an area of around 764.72 square meters and
categorized as a commercial lot now being used as a
warehouse and parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyamacho, Shinohara, Nada-ku, Kobe, a residential lot which is
now vacant.
The properties and the capital goods and services
procured from the Japanese government for national
development projects are part of the indemnification to the
Filipino people for their losses in life and property and their
suffering during World War II.
The Reparations Agreement provides that reparations
valued at $550 million would be payable in twenty (20)
years in accordance with annual schedules of
procurements to be fixed by the Philippine and Japanese
governments (Article 2, Reparations Agreement). Rep. Act
No. 1789, the Reparations Law, prescribes the national
policy on procurement and utilization of reparations and
development loans. The procurements are divided into
those for use by the government sector and those
for private parties in projects as the then National
Economic Council shall determine. Those intended for the
private sector shall be made available by sale to Filipino
citizens or to one hundred (100%) percent Filipino-owned
entities in national development projects.
The Roppongi property was acquired from the Japanese
government under the Second Year Schedule and listed
under the heading "Government Sector", through

Reparations Contract No. 300 dated June 27, 1958. The

Roppongi property consists of the land and building "for the
Chancery of the Philippine Embassy" (Annex M-D to
Memorandum for Petitioner, p. 503). As intended, it
became the site of the Philippine Embassy until the latter
was transferred to Nampeidai on July 22, 1976 when the
Roppongi building needed major repairs. Due to the failure
of our government to provide necessary funds, the
Roppongi property has remained undeveloped since that
time.
A proposal was presented to President Corazon C. Aquino
by former Philippine Ambassador to Japan, Carlos J.
Valdez, to make the property the subject of a lease
agreement with a Japanese firm - Kajima Corporation
which shall construct two (2) buildings in Roppongi and one
(1) building in Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The consideration of the
construction would be the lease to the foreign corporation
of one (1) of the buildings to be constructed in Roppongi
and the two (2) buildings in Nampeidai. The other building
in Roppongi shall then be used as the Philippine Embassy
Chancery. At the end of the lease period, all the three
leased buildings shall be occupied and used by the
Philippine government. No change of ownership or title
shall occur. (See Annex "B" to Reply to Comment) The
Philippine government retains the title all throughout the
lease period and thereafter. However, the government has
not acted favorably on this proposal which is pending
approval and ratification between the parties. Instead, on
August 11, 1986, President Aquino created a committee to
study the disposition/utilization of Philippine government
properties in Tokyo and Kobe, Japan through
Administrative Order No. 3, followed by Administrative
Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order
No. 296 entitling non-Filipino citizens or entities to avail of
separations' capital goods and services in the event of
sale, lease or disposition. The four properties in Japan
including the Roppongi were specifically mentioned in the
first "Whereas" clause.

13 | P a g e

Amidst opposition by various sectors, the Executive branch

of the government has been pushing, with great vigor, its
decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding
at a minimum floor price of $225 million. The first bidding
was a failure since only one bidder qualified. The second
one, after postponements, has not yet materialized. The
last scheduled bidding on February 21, 1990 was
restrained by his Court. Later, the rules on bidding were
changed such that the $225 million floor price became
merely a suggested floor price.
The Court finds that each of the herein petitions raises
distinct issues. The petitioner in G.R. No. 92013 objects to
the alienation of the Roppongi property to anyone while the
petitioner in G.R. No. 92047 adds as a principal objection
the alleged unjustified bias of the Philippine government in
favor of selling the property to non-Filipino citizens and
entities. These petitions have been consolidated and are
resolved at the same time for the objective is the same - to
stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following
issues:
(1) Can the Roppongi property and others of its kind be
alienated by the Philippine Government?; and
(2) Does the Chief Executive, her officers and agents, have
the authority and jurisdiction, to sell the Roppongi
property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from
questioning the authority of the government to alienate the
Roppongi property assails the constitutionality of Executive
Order No. 296 in making the property available for sale to
non-Filipino citizens and entities. He also questions the
bidding procedures of the Committee on the Utilization or
Disposition of Philippine Government Properties in Japan
for being discriminatory against Filipino citizens and
Filipino-owned entities by denying them the right to be
informed about the bidding requirements.

II
In G.R. No. 92013, petitioner Laurel asserts that the
Roppongi property and the related lots were acquired as
part of the reparations from the Japanese government for
diplomatic and consular use by the Philippine government.
Vice-President Laurel states that the Roppongi property is
classified as one of public dominion, and not of private
ownership under Article 420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes
under "property intended for public service" in paragraph 2
of the above provision. He states that being one of public
dominion, no ownership by any one can attach to it, not
even by the State. The Roppongi and related properties
were acquired for "sites for chancery, diplomatic, and
consular quarters, buildings and other improvements"
(Second Year Reparations Schedule). The petitioner states
that they continue to be intended for a necessary service.
They are held by the State in anticipation of an opportune
use. (Citing 3 Manresa 65-66). Hence, it cannot be
appropriated, is outside the commerce of man, or to put it
in more simple terms, it cannot be alienated nor be the
subject matter of contracts (Citing Municipality of Cavite v.
Rojas, 30 Phil. 20 [1915]). Noting the non-use of the
Roppongi property at the moment, the petitioner avers that
the same remains property of public dominion so long as
the government has not used it for other purposes nor
adopted any measure constituting a removal of its original
purpose or use.
The respondents, for their part, refute the petitioner's
contention by saying that the subject property is not
governed by our Civil Code but by the laws of Japan where
the property is located. They rely upon the rule of lex
situs which is used in determining the applicable law
regarding the acquisition, transfer and devolution of the title
to a property. They also invoke Opinion No. 21, Series of
1988, dated January 27, 1988 of the Secretary of Justice
which used the lex situs in explaining the inapplicability of
Philippine law regarding a property situated in Japan.

The respondents add that even assuming for the sake of

argument that the Civil Code is applicable, the Roppongi
property has ceased to become property of public
dominion. It has become patrimonial property because it
has not been used for public service or for diplomatic
purposes for over thirteen (13) years now (Citing Article
422, Civil Code) and because the intention by the
Executive Department and the Congress to convert it to
private use has been manifested by overt acts, such as,
among others: (1) the transfer of the Philippine Embassy to
Nampeidai (2) the issuance of administrative orders for the
possibility of alienating the four government properties in
Japan; (3) the issuance of Executive Order No. 296; (4) the
enactment by the Congress of Rep. Act No. 6657 [the
Comprehensive Agrarian Reform Law] on June 10, 1988
which contains a provision stating that funds may be taken
from the sale of Philippine properties in foreign countries;
(5) the holding of the public bidding of the Roppongi
property but which failed; (6) the deferment by the Senate
in Resolution No. 55 of the bidding to a future date; thus an
acknowledgment by the Senate of the government's
intention to remove the Roppongi property from the public
service purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding Committee, et
al., G.R. No. 87478 which sought to enjoin the second
bidding of the Roppongi property scheduled on March 30,
1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this
Court to rule on the constitutionality of Executive Order No.
296. He had earlier filed a petition in G.R. No. 87478 which
the Court dismissed on August 1, 1989. He now avers that
the executive order contravenes the constitutional mandate
to conserve and develop the national patrimony stated in
the Preamble of the 1987 Constitution. It also allegedly
violates:
(1) The reservation of the ownership and acquisition of
alienable lands of the public domain to Filipino citizens.
(Sections 2 and 3, Article XII, Constitution; Sections 22 and
23 of Commonwealth Act 141).itc-asl

14 | P a g e

(2) The preference for Filipino citizens in the grant of rights,

privileges and concessions covering the national economy
and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against
unfair competition and trade practices;
(4) The guarantee of the right of the people to information
on all matters of public concern (Section 7, Article III,
Constitution);
(5) The prohibition against the sale to non-Filipino citizens
or entities not wholly owned by Filipino citizens of capital
goods received by the Philippines under the Reparations
Act (Sections 2 and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public
disclosure of all transactions involving public interest
(Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the
execution of an unconstitutional executive order is a
misapplication of public funds He states that since the
details of the bidding for the Roppongi property were never
publicly disclosed until February 15, 1990 (or a few days
before the scheduled bidding), the bidding guidelines are
available only in Tokyo, and the accomplishment of
requirements and the selection of qualified bidders should
be done in Tokyo, interested Filipino citizens or entities
owned by them did not have the chance to comply with
Purchase Offer Requirements on the Roppongi. Worse, the
Roppongi shall be sold for a minimum price of $225 million
from which price capital gains tax under Japanese law of
about 50 to 70% of the floor price would still be deducted.
IV
The petitioners and respondents in both cases do not
dispute the fact that the Roppongi site and the three related
properties were through reparations agreements, that
these were assigned to the government sector and that the
Roppongi property itself was specifically designated under

the Reparations Agreement to house the Philippine

Embassy.
The nature of the Roppongi lot as property for public
service is expressly spelled out. It is dictated by the terms
of the Reparations Agreement and the corresponding
contract of procurement which bind both the Philippine
government and the Japanese government.
There can be no doubt that it is of public dominion unless it
is convincingly shown that the property has become
patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside
the commerce of man. It cannot be alienated. Its ownership
is a special collective ownership for general use and
enjoyment, an application to the satisfaction of collective
needs, and resides in the social group. The purpose is not
to serve the State as a juridical person, but the citizens; it is
intended for the common and public welfare and cannot be
the object of appropration. (Taken from 3 Manresa, 66-69;
cited in Tolentino, Commentaries on the Civil Code of the
Philippines, 1963 Edition, Vol. II, p. 26).

ART. 421. All other property of the

State, which is not of the character
stated in the preceding article, is
patrimonial property.
The Roppongi property is correctly classified under
paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public
service.
Has the intention of the government regarding the use of
the property been changed because the lot has been Idle
for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such
conversion happens only if the property is withdrawn from
public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]). A property continues to be part of the
public domain, not available for private appropriation or
ownership until there is a formal declaration on the part of
the government to withdraw it from being such (Ignacio v.
Director of Lands, 108 Phil. 335 [1960]).

The applicable provisions of the Civil Code are:

(1) Those intended for public use, such

as roads, canals, rivers, torrents, ports
and bridges constructed by the State,
banks shores roadsteads, and others
of similar character;

The respondents enumerate various pronouncements by

concerned public officials insinuating a change of intention.
We emphasize, however, that an abandonment of the
intention to use the Roppongi property for public service
and to make it patrimonial property under Article 422 of the
Civil Code must be definiteAbandonment cannot be
inferred from the non-use alone specially if the non-use
was attributable not to the government's own deliberate
and indubitable will but to a lack of financial support to
repair and improve the property (See Heirs of Felino
Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment
must be a certain and positive act based on correct legal
premises.

(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.

A mere transfer of the Philippine Embassy to Nampeidai in

1976 is not relinquishment of the Roppongi property's
original purpose. Even the failure by the government to
repair the building in Roppongi is not abandonment since

ART. 419. Property is either of public

dominion or of private ownership.
ART. 420. The following things are
property of public dominion

15 | P a g e

as earlier stated, there simply was a shortage of

government funds. The recent Administrative Orders
authorizing a study of the status and conditions of
government properties in Japan were merely directives for
investigation but did not in any way signify a clear intention
to dispose of the properties.
Executive Order No. 296, though its title declares an
"authority to sell", does not have a provision in its text
expressly authorizing the sale of the four properties
procured from Japan for the government sector. The
executive order does not declare that the properties lost
their public character. It merely intends to make the
properties available to foreigners and not to Filipinos
alone in case of a sale, lease or other disposition. It merely
eliminates the restriction under Rep. Act No. 1789 that
reparations goods may be sold only to Filipino citizens and
one hundred (100%) percent Filipino-owned entities. The
text of Executive Order No. 296 provides:
Section 1. The provisions of Republic
Act No. 1789, as amended, and of
other
laws
to
the
contrary
notwithstanding, the above-mentioned
properties can be made available for
sale, lease or any other manner of
disposition to non-Filipino citizens or to
entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or
assumption that the Roppongi and the three other
properties were earlier converted into alienable real
properties. As earlier stated, Rep. Act No. 1789
differentiates the procurements for the government sector
and the private sector (Sections 2 and 12, Rep. Act No.
1789). Only the private sector properties can be sold to
end-users who must be Filipinos or entities owned by
Filipinos. It is this nationality provision which was amended
by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which
provides as one of the sources of funds for its
implementation, the proceeds of the disposition of the

properties of the Government in foreign countries, did not

withdraw the Roppongi property from being classified as
one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties which
are alienable and not to those reserved for public use or
service. Rep Act No. 6657, therefore, does not authorize
the Executive Department to sell the Roppongi property. It
merely enumerates possible sources of future funding to
augment (as and when needed) the Agrarian Reform Fund
created under Executive Order No. 299. Obviously any
property outside of the commerce of man cannot be tapped
as a source of funds.
The respondents try to get around the public dominion
character of the Roppongi property by insisting that
Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials,
of all people, should be the ones to insist that in the sale of
extremely valuable government property, Japanese law
and not Philippine law should prevail. The Japanese law its coverage and effects, when enacted, and exceptions to
its provision is not presented to the Court It is simply
asserted that the lex loci rei sitae or Japanese law should
apply without stating what that law provides. It is a ed on
faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply
when no conflict of law situation exists. A conflict of law
situation arises only when: (1) There is a dispute over
the title or ownership of an immovable, such that the
capacity to take and transfer immovables, the formalities of
conveyance, the essential validity and effect of the transfer,
or the interpretation and effect of a conveyance, are to be
determined (See Salonga,Private International Law, 1981
ed., pp. 377-383); and (2) A foreign law on land ownership
and its conveyance is asserted to conflict with a domestic
law on the same matters. Hence, the need to determine
which law should apply.
In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or

title. There is no question that the property belongs to the
Philippines. The issue is the authority of the respondent
officials to validly dispose of property belonging to the
State. And the validity of the procedures adopted to effect
its sale. This is governed by Philippine Law. The rule of lex
situs does not apply.
The assertion that the opinion of the Secretary of Justice
sheds light on the relevance of the lex situs rule is
misplaced. The opinion does not tackle the alienability of
the real properties procured through reparations nor the
existence in what body of the authority to sell them. In
discussing who are capable of acquiring the lots, the
Secretary merely explains that it is the foreign law which
should determine who can acquire the properties so that
the constitutional limitation on acquisition of lands of the
public domain to Filipino citizens and entities wholly owned
by Filipinos is inapplicable. We see no point in belaboring
whether or not this opinion is correct. Why should we
discuss who can acquire the Roppongi lot when there is no
showing that it can be sold?
The subsequent approval on October 4, 1988 by President
Aquino of the recommendation by the investigating
committee to sell the Roppongi property was premature or,
at the very least, conditioned on a valid change in the
public character of the Roppongi property. Moreover, the
approval does not have the force and effect of law since
the President already lost her legislative powers. The
Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the
Roppongi property is no longer of public dominion, there is
another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917
provides
Section 79 (f ) Conveyances and
contracts to which the Government is a

16 | P a g e

party. In cases in which the

Government of the Republic of the
Philippines is a party to any deed or
other instrument conveying the title to
real estate or to any other property the
value of which is in excess of one
hundred thousand pesos, the
respective Department Secretary shall
prepare the necessary papers which,
together
with
the
proper
recommendations, shall be submitted
to the Congress of the Philippines for
approval by the same. Such deed,
instrument, or contract shall be
executed and signed by the President
of the Philippines on behalf of the
Government of the Philippines unless
the Government of the Philippines
unless the authority therefor be
expressly vested by law in another
officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of
the Administrative Code of 1987 (Executive Order No.
292).
SEC. 48. Official Authorized to Convey
Real Property. Whenever real
property of the Government
is authorized by law to be
conveyed, the deed of conveyance
shall be executed in behalf of the
government by the following:
(1) For property belonging to and titled
in the name of the Republic of the
Philippines, by the President, unless
the authority therefor is expressly
vested by law in another officer.
(2) For property belonging to the
Republic of the Philippines but titled in
the name of any political subdivision or

of any corporate agency or

instrumentality, by the executive head
of the agency or instrumentality.
(Emphasis supplied)

Moreover, the sale in 1989 did not materialize. The

petitions before us question the proposed 1990 sale of the
Roppongi property. We are resolving the issues raised in
these petitions, not the issues raised in 1989.

It is not for the President to convey valuable real property

of the government on his or her own sole will. Any such
conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and
legislative concurrence.

Having declared a need for a law or formal declaration to

withdraw the Roppongi property from public domain to
make it alienable and a need for legislative authority to
allow the sale of the property, we see no compelling reason
to tackle the constitutional issues raised by petitioner
Ojeda.

Resolution No. 55 of the Senate dated June 8, 1989,

asking for the deferment of the sale of the Roppongi
property does not withdraw the property from public
domain much less authorize its sale. It is a mere resolution;
it is not a formal declaration abandoning the public
character of the Roppongi property. In fact, the Senate
Committee on Foreign Relations is conducting hearings on
Senate Resolution No. 734 which raises serious policy
considerations and calls for a fact-finding investigation of
the circumstances behind the decision to sell the Philippine
government properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee,
et al., supra, did not pass upon the constitutionality of
Executive Order No. 296. Contrary to respondents'
assertion, we did not uphold the authority of the President
to sell the Roppongi property. The Court stated that the
constitutionality of the executive order was not the real
issue and that resolving the constitutional question was
"neither necessary nor finally determinative of the case."
The Court noted that "[W]hat petitioner ultimately questions
is the use of the proceeds of the disposition of the
Roppongi property." In emphasizing that "the decision of
the Executive to dispose of the Roppongi property to
finance the CARP ... cannot be questioned" in view of
Section 63 (c) of Rep. Act No. 6657, the Court did not
acknowledge the fact that the property became alienable
nor did it indicate that the President was authorized to
dispose of the Roppongi property. The resolution should be
read to mean that in case the Roppongi property is reclassified to be patrimonial and alienable by authority of
law, the proceeds of a sale may be used for national
economic development projects including the CARP.

The Court does not ordinarily pass upon constitutional

questions unless these questions are properly raised in
appropriate cases and their resolution is necessary for the
determination of the case (People v. Vera, 65 Phil. 56
[1937]). The Court will not pass upon a constitutional
question although properly presented by the record if the
case can be disposed of on some other ground such as the
application of a statute or general law (Siler v. Louisville
and Nashville R. Co., 213 U.S. 175, [1909], Railroad
Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi
property should not be sold:
The Roppongi property is not just like
any piece of property. It was given to
the Filipino people in reparation for the
lives and blood of Filipinos who died
and suffered during the Japanese
military occupation, for the suffering of
widows and orphans who lost their
loved ones and kindred, for the homes
and other properties lost by countless
Filipinos during the war. The Tokyo
properties are a monument to the
bravery and sacrifice of the Filipino
people in the face of an invader; like
the monuments of Rizal, Quezon, and
other Filipino heroes, we do not expect
economic or financial benefits from
them. But who would think of selling

17 | P a g e

these monuments? Filipino honor and

national dignity dictate that we keep
our properties in Japan as memorials
to the countless Filipinos who died and
suffered. Even if we should become
paupers we should not think of selling
them. For it would be as if we sold the
lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013,
p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is
one ceded by the Japanese
government in atonement for its past
belligerence for the valiant sacrifice of
life and limb and for deaths, physical
dislocation and economic devastation
the whole Filipino people endured in
World War II.
It is for what it stands for, and for what
it could never bring back to life, that its
significance today remains undimmed,
inspire of the lapse of 45 years since
the war ended, inspire of the passage
of 32 years since the property passed
on to the Philippine government.
Roppongi is a reminder that cannot
should not be dissipated ... (Rollo92047, p. 9)
It is indeed true that the Roppongi property is valuable not
so much because of the inflated prices fetched by real
property in Tokyo but more so because of its symbolic
value to all Filipinos veterans and civilians alike.
Whether or not the Roppongi and related properties will
eventually be sold is a policy determination where both the
President and Congress must concur. Considering the
properties' importance and value, the laws on conversion

and disposition of property of public dominion must be

faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the
petitions are GRANTED. A writ of prohibition is issued
enjoining the respondents from proceeding with the sale of
the Roppongi property in Tokyo, Japan. The February 20,
1990 Temporary Restraining Order is made PERMANENT.

Once again, we have affirmed the principle that ours is a

government of laws and not of men, where every public
official, from the lowest to the highest, can act only by
virtue of a valid authorization. I am happy to note that in the
several cases where this Court has ruled against her, the
President of the Philippines has submitted to this principle
with becoming grace.
PADILLA, J., concurring:

SO ORDERED.
Melencio-Herrera, Paras,
Regalado, JJ., concur.

Bidin,

Grio-Aquino

and

Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr.
Justice Gutierrez and will add the following observations
only for emphasis.
It is clear that the respondents have failed to show the
President's legal authority to sell the Roppongi property.
When asked to do so at the hearing on these petitions, the
Solicitor General was at best ambiguous, although I must
add in fairness that this was not his fault. The fact is that
there is -no such authority. Legal expertise alone cannot
conjure that statutory permission out of thin air.
Exec. Order No. 296, which reads like so much legislative,
double talk, does not contain such authority. Neither does
Rep. Act No. 6657, which simply allows the proceeds of the
sale of our properties abroad to be used for the
comprehensive agrarian reform program. Senate Res. No.
55 was a mere request for the deferment of the scheduled
sale of tile Roppongi property, possibly to stop the
transaction altogether; and ill any case it is not a law. The
sale of the said property may be authorized only by
Congress through a duly enacted statute, and there is no
such law.

I concur in the decision penned by Mr. Justice Gutierrez,

Jr., I only wish to make a few observations which could
help in further clarifying the issues.
Under our tripartite system of government ordained by the
Constitution, it is Congress that lays down or determines
policies. The President executes such policies. The policies
determined by Congress are embodied in legislative
enactments that have to be approved by the President to
become law. The President, of course, recommends to
Congress the approval of policies but, in the final analysis,
it is Congress that is the policy - determining branch of
government.
The judiciary interprets the laws and, in appropriate cases,
determines whether the laws enacted by Congress and
approved by the President, and presidential acts
implementing such laws, are in accordance with the
Constitution.
The Roppongi property was acquired by the Philippine
government pursuant to the reparations agreement
between the Philippine and Japanese governments. Under
such agreement, this property was acquired by the
Philippine government for a specific purpose, namely, to
serve as the site of the Philippine Embassy in Tokyo,
Japan. Consequently, Roppongi is a property of public
dominion and intended for public service, squarely falling
within that class of property under Art. 420 of the Civil
Code, which provides:
Art. 420. The following things are
property of public dominion :

18 | P a g e

(1) ...

expressly vested
by law in another
officer.

(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.
(339a)

(2) For property

belonging to the
Republic of the
Philippines
but
titled in the name of
any
political
subdivision or of
any
corporate
agency
or
instrumentality, by
the executive head
of the agency or
instrumentality.
(Emphasis
supplied)

Public dominion property intended for public service cannot

be alienated unless the property is first transformed into
private property of the state otherwise known as
patrimonial property of the state. 1 The transformation of
public dominion property to state patrimonial property
involves, to my mind, a policy decision. It is a policy
decision because the treatment of the property varies
according to its classification. Consequently, it is Congress
which can decide and declare the conversion of Roppongi
from a public dominion property to a state patrimonial
property. Congress has made no such decision or
declaration.
Moreover, the sale of public property (once converted from
public dominion to state patrimonial property) must be
approved by Congress, for this again is a matter of policy
(i.e. to keep or dispose of the property). Sec. 48, Book 1 of
the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey
Real Property. Whenever real
property of the Government is
authorized by law to be conveyed, the
deed of conveyance shall be executed
in behalf of the government by the
following:
(1) For property
belonging to and
titled in the name of
the Republic of the
Philippines, by the
President, unless
the
authority
therefor
is

But the record is bare of any congressional decision or

approval to sell Roppongi. The record is likewise bare of
any congressional authority extended to the President to
sell Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order
the sale of Roppongi thru public bidding or otherwise
without a prior congressional approval, first, converting
Roppongi from a public dominion property to a state
patrimonial property, and, second, authorizing the
President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to
make PERMANENT the temporary restraining order earlier
issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the socalled "Roppongi property' has lost its nature as property of
public dominion, and hence, has become patrimonial
property of the State. I understand that the parties are
agreed that it was property intended for "public service"

within the contemplation of paragraph (2), of Article 430, of

the Civil Code, and accordingly, land of State dominion,
and beyond human commerce. The lone issue is, in the
light of supervening developments, that is non-user thereof
by the National Government (for diplomatic purposes) for
the last thirteen years; the issuance of Executive Order No.
296 making it available for sale to any interested buyer; the
promulgation of Republic Act No. 6657, the Comprehensive
Agrarian Reform Law, making available for the program's
financing, State assets sold; the approval by the President
of the recommendation of the investigating committee
formed to study the property's utilization; and the issuance
of Resolution No. 55 of the Philippine Senate requesting for
the deferment of its disposition it, "Roppongi", is still
property of the public dominion, and if it is not, how it lost
that character.
When land of the public dominion ceases to be one, or
when the change takes place, is a question our courts have
debated early. In a 1906 decision, 1 it was held that
property of the public dominion, a public plaza in this
instance, becomes patrimonial upon use thereof for
purposes other than a plaza. In a later case, 2 this ruling
was reiterated. Likewise, it has been held that land,
originally private property, has become of public dominion
upon its donation to the town and its conversion and use as
a public plaza. 3 It is notable that under these three cases,
the character of the property, and any change occurring
therein, depends on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal
declaration on the part of the Government, through the
executive department or the Legislative, to the effect that
the land . . . is no longer needed for [public] service- for
public use or for special industries, [it] continue[s] to be part
of the public [dominion], not available for private
expropriation or ownership." 5 So also, it was ruled that a
political subdivision (the City of Cebu in this case) alone
may declare (under its charter) a city road abandoned and
thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal
declaration to withdraw the Roppongi property from public
domain to make it alienable and a land for legislative

19 | P a g e

authority to allow the sale of the property" 7 the majority

lays stress to the fact that: (1) An affirmative act
executive or legislative is necessary to reclassify
property of the public dominion, and (2) a legislative decree
is required to make it alienable. It also clears the
uncertainties brought about by earlier interpretations that
the nature of property-whether public or patrimonial is
predicated on the manner it is actually used, or not used,
and in the same breath, repudiates the Government's
position that the continuous non-use of "Roppongi", among
other arguments, for "diplomatic purposes", has turned it
into State patrimonial property.
I feel that this view corresponds to existing
pronouncements of this Court, among other things, that: (1)
Property is presumed to be State property in the absence
of any showing to the contrary; 8 (2) With respect to forest
lands, the same continue to be lands of the public dominion
unless and until reclassified by the Executive Branch of the
Government; 9 and (3) All natural resources, under the
Constitution, and subject to exceptional cases, belong to
the State. 10
I am elated that the Court has banished previous
uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the conclusions
reached by Mr. Justice Hugo E. Gutierrez, Jr.
For purposes of this separate opinion, I assume that the
piece of land located in 306 Roppongi, 5-Chome, Minatoku Tokyo, Japan (hereinafter referred to as the "Roppongi
property") may be characterized as property of public
dominion, within the meaning of Article 420 (2) of the Civil
Code:
[Property] which belong[s] to the State,
without being for public use, and are
intended for some public service -.

It might not be amiss however, to note that the

appropriateness of trying to bring within the confines of the
simple threefold classification found in Article 420 of the
Civil Code ("property for public use property "intended for
some public service" and property intended "for the
development of the national wealth") all property owned by
the Republic of the Philippines whether found within the
territorial boundaries of the Republic or located within the
territory of another sovereign State, is not self-evident. The
first item of the classification property intended for public
use can scarcely be properly applied to property
belonging to the Republic but found within the territory of
another State. The third item of the classification property
intended for the development of the national wealth is
illustrated, in Article 339 of the Spanish Civil Code of 1889,
by mines or mineral properties. Again, mineral lands owned
by a sovereign State are rarely, if ever, found within the
territorial base of another sovereign State. The task of
examining in detail the applicability of the classification set
out in Article 420 of our Civil Code to property that the
Philippines happens to own outside its own boundaries
must, however, be left to academicians.
For present purposes, too, I agree that there is no question
of conflict of laws that is, at the present time, before this
Court. The issues before us relate essentially to authority to
sell the Roppongi property so far as Philippine law is
concerned.
The majority opinion raises two (2) issues: (a) whether or
not the Roppongi property has been converted into
patrimonial property or property of the private domain of
the State; and (b) assuming an affirmative answer to (a),
whether or not there is legal authority to dispose of the
Roppongi property.

does the Civil Code set out or refer to any procedure for
such conversion.
Our case law, however, contains some fairly explicit
pronouncements on this point, as Justice Sarmiento has
pointed out in his concurring opinion. In Ignacio v. Director
of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued
that if the land in question formed part of the public domain,
the trial court should have declared the same no longer
necessary for public use or public purposes and which
would, therefore, have become disposable and available
for private ownership. Mr. Justice Montemayor, speaking
for the Court, said:
Article 4 of the Law of Waters of 1866
provides that when a portion of the
shore is no longer washed by the
waters of the sea and is not necessary
for purposes of public utility, or for the
establishment of special industries, or
for
coast-guard
service,
the
government shall declare it to be the
property of the owners of the estates
adjacent thereto and as an increment
thereof. We believe that only the
executive and possibly the legislative
departments have the authority and the
power to make the declaration that any
land so gained by the sea, is not
necessary for purposes of public utility,
or for the establishment of special
industries, or for coast-guard service. If
no such declaration has been made by
said departments, the lot in question
forms part of the public domain.
(Natividad v. Director of Lands, supra.)

I
Addressing the first issue of conversion of property of
public dominion intended for some public service, into
property of the private domain of the Republic, it should be
noted that the Civil Code does not address the question
of who has authority to effect such conversion. Neither

The reason for this pronouncement,

according to this Tribunal in the case of
Vicente Joven y Monteverde v. Director
of Lands, 93 Phil., 134 (cited in
Velayo's Digest, Vol. 1, p. 52).

20 | P a g e

... is undoubtedly that the courts are

neither primarily called upon, nor
indeed in a position to determine
whether any public land are to be used
for the purposes specified in Article 4 of
the Law of Waters. Consequently, until
a formal declaration on the part of the
Government, through the executive
department or the Legislature, to the
effect that the land in question is no
longer needed for coast-guard service,
for public use or for special industries,
they continue to be part of the public
domain not available for private
appropriation or ownership. (108 Phil.
at 338-339; emphasis supplied)
Thus, under Ignacio, either the Executive Department or
the Legislative Department may convert property of the
State of public dominion into patrimonial property of the
State. No particular formula or procedure of conversion is
specified either in statute law or in case law. Article 422 of
the Civil Code simply states that: "Property of public
dominion, when no longer intended for public use or
for public service, shall form partof the patrimonial property
of the State". I respectfully submit, therefore, that the only
requirement which is legitimately imposable is that the
intent to convert must be reasonably clear from a
consideration of the acts or acts of the Executive
Department or of the Legislative Department which are
said to have effected such conversion.
The same legal situation exists in respect of conversion of
property of public dominion belonging to municipal
corporations, i.e., local governmental units, into patrimonial
property of such entities. In CebuOxygen Acetylene v.
Bercilles (66 SCRA 481 [1975]), the City Council of Cebu
by resolution declared a certain portion of an existing street
as an abandoned road, "the same not being included in the
city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the acting
City Mayor to sell the land through public bidding. Although
there was no formal and explicit declaration of conversion

of property for public use into patrimonial property, the

Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street
subject of petitioner's application for
registration of title was withdrawn from
public use, it follows that such
withdrawn portion becomes patrimonial
property which can be the object of an
ordinary contract.
Article 422 of the Civil Code expressly
provides that "Property of public
dominion, when no longer intended for
public use of for public service, shall
form part of the patrimonial property of
the State."
Besides, the Revised Charter of the
City of Cebu heretofore quoted, in very
clear and unequivocal terms, states
that "Property thus withdrawn from
public servitude may be used or
conveyed for any purpose for which
other real property belonging to the
City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the
property in question from public use
and its subsequent sale to the
petitioner is valid. Hence, the petitioner
has a registrable title over the lot in
question. (66 SCRA at 484-; emphasis
supplied)
Thus, again as pointed out by Sarmiento J., in his separate
opinion, in the case of property owned by municipal
corporations simple non-use or the actual dedication of
public property to some use other than "public use" or
some "public service", was sufficient legally to convert such

property into patrimonial property (Municipality of Oas v.

Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v.
Director of Lands 24 Phil. 124 [1913]; Province of
Zamboanga del Norte v. City of Zamboanga, 22 SCRA
1334 (1968).
I would also add that such was the case not only in respect
of' property of municipal corporations but also in respect of
property of the State itself. Manresa in commenting on
Article 341 of the 1889 Spanish Civil Code which has been
carried over verbatim into our Civil Code by Article 422
thereof, wrote:
La dificultad mayor en todo esto
estriba, naturalmente, en fijar el
momento en que los bienes de dominio
publico dejan de serlo. Si la
Administracion
o
la
autoridad
competente legislative realizan qun
acto en virtud del cual cesa el destino o
uso publico de los bienes de que se
trata naturalmente la dificultad queda
desde el primer momento resuelta. Hay
un punto de partida cierto para iniciar
las relaciones juridicas a que pudiera
haber lugar Pero puede ocurrir que no
haya taldeclaracion expresa, legislativa
or administrativa, y, sin embargo, cesar
de hecho el destino publico de los
bienes; ahora bien, en este caso, y
para los efectos juridicos que resultan
de entrar la cosa en el comercio de los
hombres,' se entedera que se ha
verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina,
respecto del antiguo Codigo italiano,
por la afirmativa, y por nuestra parte
creemos que tal debe ser la soluciion.
El destino de las cosas no depende
tanto de una declaracion expresa como
del uso publico de las mismas, y
cuanda el uso publico cese con

21 | P a g e

respecto de determinados bienes, cesa

tambien su situacion en el dominio
publico. Si una fortaleza en ruina se
abandona y no se repara, si un trozo
de la via publica se abandona tambien
por constituir otro nuevo an mejores
condiciones....ambos bienes cesan de
estar Codigo, y leyes especiales mas o
memos administrativas. (3 Manresa,
Comentarios al Codigo Civil Espanol,
p. 128 [7a ed.; 1952) (Emphasis
supplied)
The majority opinion says that none of the executive acts
pointed to by the Government purported, expressly or
definitely, to convert the Roppongi property into patrimonial
property of the Republic. Assuming that to be the case,
it is respectfully submitted that cumulative effect of the
executive acts here involved was to convert property
originally intended for and devoted to public service into
patrimonial property of the State, that is, property
susceptible of disposition to and appropration by private
persons. These executive acts, in their totality if not each
individual act, make crystal clear the intent of the Executive
Department to effect such conversion. These executive
acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which
created a Committee to study the disposition/utilization of
the Government's property in Japan, The Committee was
composed of officials of the Executive Department: the
Executive Secretary; the Philippine Ambassador to Japan;
and representatives of the Department of Foreign Affairs
and the Asset Privatization Trust. On 19 September 1988,
the Committee recommended to the President the sale of
one of the lots (the lot specifically in Roppongi) through
public bidding. On 4 October 1988, the President approved
the recommendation of the Committee.
On 14 December 1988, the Philippine Government by
diplomatic note informed the Japanese Ministry of Foreign
Affairs of the Republic's intention to dispose of the property
in Roppongi. The Japanese Government through its
Ministry of Foreign Affairs replied that it interposed no

objection to such disposition by the Republic.

Subsequently, the President and the Committee informed
the leaders of the House of Representatives and of the
Senate of the Philippines of the proposed disposition of the
Roppongi property.
(b) Executive Order No. 296, which was issued by the
President on 25 July 1987. Assuming that the majority
opinion is right in saying that Executive Order No. 296 is
insufficient to authorize the sale of the Roppongi property, it
is here submitted with respect that Executive Order No.
296 is more than sufficient to indicate anintention to
convert the property previously devoted to public service
into patrimonial property that is capable of being sold or
otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for
diplomatic or for any other public purposes. Assuming (but
only arguendo) that non-use does not, by itself,
automatically convert the property into patrimonial property.
I respectfully urge that prolonged non-use, conjoined with
the other factors here listed, was legally effective to convert
the lot in Roppongi into patrimonial property of the State.
Actually, as already pointed out, case law involving
property of municipal corporations is to the effect that
simple non-use or the actual dedication of public property
to some use other than public use or public service, was
sufficient to convert such property into patrimonial property
of the local governmental entity concerned. Also as pointed
out above, Manresa reached the same conclusion in
respect of conversion of property of the public domain of
the State into property of the private domain of the State.
The majority opinion states that "abandonment cannot be
inferred from the non-use alone especially if the non-use
was attributable not to the Government's own deliberate
and indubitable will but to lack of financial support to repair
and improve the property" (Majority Opinion, p. 13). With
respect, it may be stressed that there is no abandonment
involved here, certainly no abandonment of property or of
property rights. What is involved is the charge of the
classification of the property from property of the public
domain into property of the private domain of the State.
Moreover, if for fourteen (14) years, the Government did

not see fit to appropriate whatever funds were necessary to

maintain the property in Roppongi in a condition suitable
for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of
the crystalizing intent to change the character of the
property.
(d) On 30 March 1989, a public bidding was in fact held by
the Executive Department for the sale of the lot in
Roppongi. The circumstance that this bidding was not
successful certainly does not argue against an intent to
convert the property involved into property that is
disposable by bidding.
The above set of events and circumstances makes no
sense at all if it does not, as a whole, show at least the
intent on the part of the Executive Department (with the
knowledge of the Legislative Department) to convert the
property involved into patrimonial property that is
susceptible of being sold.
II
Having reached an affirmative answer in respect of the first
issue, it is necessary to address the second issue of
whether or not there exists legal authority for the sale or
disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised
Administrative Code of 1917 which reads as follows:
SEC. 79 (f). Conveyances and
contracts to which the Government is a
party. In cases in which the
Government of the Republic of the
Philippines is a party to any deed or
other instrument conveying the title to
real estate or to any other property the
value of which is in excess of one
hundred thousand pesos, the
respective Department Secretary shall
prepare the necessary papers which,
together
with
the
proper

22 | P a g e

recommendations, shall be submitted

to the Congress of the Philippines for
approval by the same. Such deed,
instrument, or contract shall be
executed and signed by the President
of the Philippines on behalf of the
Government of the Philippines unless
the authority therefor be expressly
vested by law in another officer.
(Emphasis supplied)
The majority opinion then goes on to state that: "[T]he
requirement has been retained in Section 4, Book I of the
Administrative Code of 1987 (Executive Order No. 292)"
which reads:
SEC. 48. Official Authorized to Convey
Real Property. Whenever real
property
of
the
Government
is authorized by law to be conveyed,
the deed of conveyance shall be
executed in behalf of the government
by the following:
(1) For property belonging to and titled
in the name of the Republic of the
Philippines, by the President, unless
the authority therefor is expressly
vested by law in another officer.
(2) For property belonging to the
Republic of the Philippines but titled in
the name of any political subdivision or
of any corporate agency or
instrumentality, by the executive head
of the agency or instrumentality.
(Emphasis supplied)
Two points need to be made in this connection. Firstly, the
requirement
of
obtaining
specific
approval of
Congress when the price of the real property being
disposed of is in excess of One Hundred Thousand Pesos
(P100,000.00) under the Revised Administrative Code of

1917, has been deleted from Section 48 of the 1987

Administrative Code. What Section 48 of the present
Administrative Code refers to is authorization by law for the
conveyance. Section 48 does not purport to be itself a
source of legal authority for conveyance of real property of
the Government. For Section 48 merely specifies the
official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a
conveyance.
Secondly, examination of our statute books shows that
authorization by law for disposition of real property of the
private domain of the Government, has been granted by
Congress both in the form of (a) a general, standing
authorization for disposition of patrimonial property of the
Government; and (b) specific legislation authorizing the
disposition of particular pieces of the Government's
patrimonial property.
Standing legislative authority for the disposition of land of
the private domain of the Philippines is provided by Act No.
3038, entitled "An Act Authorizing the Secretary of
Agriculture and Natural Resources to Sell or Lease Land of
the Private Domain of the Government of the Philippine
Islands (now Republic of the Philippines)", enacted on 9
March 1922. The full text of this statute is as follows:
Be it enacted by the Senate and House
of Representatives of the Philippines in
Legislature assembled and by the
authority of the same:
SECTION 1. The Secretary of
Agriculture and Natural Resources
(now Secretary of the Environment and
Natural Resources) is hereby
authorized to sell or lease land of the
private domain of the Government of
the Philippine Islands, or any part
thereof, to such persons, corporations
or associations as are, under the
provisions of Act Numbered Twentyeight hundred and seventy-four, (now

Commonwealth Act No. 141, as

amended) known as the Public Land
Act, entitled to apply for the purchase
or lease or agricultural public land.
SECTION 2. The sale of the land
referred
to in
the
preceding
section shall, if such land is
agricultural, be made in the manner
and subject to the limitations
prescribed in chapters five and six,
respectively, of said Public Land Act,
and if it be classified differently, in
conformity with the provisions of
chapter nine of said Act: Provided,
however, That the land necessary for
the public service shall be exempt from
the provisions of this Act.
SECTION 3. This Act shall take effect
on its approval.
Approved, March 9, 1922. (Emphasis
supplied)
Lest it be assumed that Act No. 3038 refers only to
agricultural lands of the private domain of the State, it must
be noted that Chapter 9 of the old Public Land Act (Act No.
2874) is now Chapter 9 of the present Public Land Act
(Commonwealth Act No. 141, as amended) and that both
statutes refer to: "any tract of land of the public domain
which being neither timber nor mineral land, is intended to
be used for residential purposes or for commercial or
industrial purposes other than agricultural" (Emphasis
supplied).itc-asl In other words, the statute covers the
sale or lease or residential, commercial or industrial land of
the private domain of the State.
Implementing regulations have been issued for the carrying
out of the provisions of Act No. 3038. On 21 December
1954, the then Secretary of Agriculture and Natural
Resources promulgated Lands Administrative Orders Nos.
7-6 and 7-7 which were entitled, respectively:

23 | P a g e

"Supplementary Regulations Governing the Sale of

the Lands of the Private Domain of the Republic of the
Philippines"; and "Supplementary Regulations Governing
the Lease of Lands of Private Domain of the Republic of
the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now
sixty-eight (68) years old, is still in effect and has not been
repealed. 1
Specific legislative authorization for disposition of particular
patrimonial properties of the State is illustrated by certain
earlier statutes. The first of these was Act No. 1120,
enacted on 26 April 1904, which provided for the
disposition of the friar lands, purchased by the Government
from the Roman Catholic Church, to bona fide settlers and
occupants thereof or to other persons. In Jacinto v. Director
of Lands (49 Phil. 853 [1926]), these friar lands were held
to be private and patrimonial properties of the State. Act
No. 2360, enacted on -28 February 1914, authorized the
sale of the San Lazaro Estate located in the City of Manila,
which had also been purchased by the Government from
the Roman Catholic Church. In January 1916, Act No. 2555
amended Act No. 2360 by including therein all lands and
buildings owned by the Hospital and the Foundation of San
Lazaro theretofor leased by private persons, and which
were also acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there
appears, to my knowledge, to be only one statute
authorizing the President to dispose of a specific piece of
property. This statute is Republic Act No. 905, enacted on
20 June 1953, which authorized the
President to sell an Identified parcel of land of the private
domain of the National Government to the National Press
Club of the Philippines, and to other recognized national
associations of professionals with academic standing, for
the nominal price of P1.00. It appears relevant to note that
Republic Act No. 905 was not an outright disposition in
perpetuity of the property involved- it provided for reversion
of the property to the National Government in case the
National Press Club stopped using it for its headquarters.

What Republic Act No. 905 authorized was really

a donation, and not a sale.

For all the foregoing, I vote to dismiss the Petitions for

Prohibition in both G.R. Nos. 92013 and 92047.

The basic submission here made is that Act No. 3038

provides standing legislative authorization for disposition of
the Roppongi property which, in my view, has been
converted into patrimonial property of the Republic. 2

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea,

JJ., concurring.

To some, the submission that Act No. 3038 applies not only
to lands of the private domain of the State located in the
Philippines but also to patrimonial property found outside
the Philippines, may appear strange or unusual. I
respectfully submit that such position is not any more
unusual or strange than the assumption that Article 420 of
the Civil Code applies not only to property of the Republic
located within Philippine territory but also to property found
outside the boundaries of the Republic.

CRUZ, J., concurring:

It remains to note that under the well-settled doctrine that

heads of Executive Departments are alter egos of the
President (Villena v. Secretary of the Interior, 67 Phil. 451
[1939]), and in view of the constitutional power of control
exercised by the President over department heads (Article
VII, Section 17,1987 Constitution), the President herself
may carry out the function or duty that is specifically lodged
in the Secretary of the Department of Environment and
Natural Resources (Araneta v. Gatmaitan 101 Phil. 328
[1957]). At the very least, the President retains the power to
approve or disapprove the exercise of that function or duty
when done by the Secretary of Environment and Natural
Resources.
It is hardly necessary to add that the foregoing analyses
and submissions relate only to the austere question of
existence of legal power or authority. They have nothing to
do with much debated questions of wisdom or propriety or
relative desirability either of the proposed disposition itself
or of the proposed utilization of the anticipated proceeds of
the property involved. These latter types of considerations
He within the sphere of responsibility of the political
departments of government the Executive and the
Legislative authorities.

Separate Opinions

I concur completely with the excellent ponencia of Mr.

Justice Gutierrez and will add the following observations
only for emphasis.
It is clear that the respondents have failed to show the
President's legal authority to sell the Roppongi property.
When asked to do so at the hearing on these petitions, the
Solicitor General was at best ambiguous, although I must
add in fairness that this was not his fault. The fact is that
there is -no such authority. Legal expertise alone cannot
conjure that statutory permission out of thin air.
Exec. Order No. 296, which reads like so much legislative,
double talk, does not contain such authority. Neither does
Rep. Act No. 6657, which simply allows the proceeds of the
sale of our properties abroad to be used for the
comprehensive agrarian reform program. Senate Res. No.
55 was a mere request for the deferment of the scheduled
sale of tile Roppongi property, possibly to stop the
transaction altogether; and ill any case it is not a law. The
sale of the said property may be authorized only by
Congress through a duly enacted statute, and there is no
such law.
Once again, we have affirmed the principle that ours is a
government of laws and not of men, where every public
official, from the lowest to the highest, can act only by
virtue of a valid authorization. I am happy to note that in the
several cases where this Court has ruled against her, the
President of the Philippines has submitted to this principle
with becoming grace.
PADILLA, J., concurring:

24 | P a g e

I concur in the decision penned by Mr. Justice Gutierrez,

Jr., I only wish to make a few observations which could
help in further clarifying the issues.
Under our tripartite system of government ordained by the
Constitution, it is Congress that lays down or determines
policies. The President executes such policies. The policies
determined by Congress are embodied in legislative
enactments that have to be approved by the President to
become law. The President, of course, recommends to
Congress the approval of policies but, in the final analysis,
it is Congress that is the policy - determining branch of
government.
The judiciary interprets the laws and, in appropriate cases,
determines whether the laws enacted by Congress and
approved by the President, and presidential acts
implementing such laws, are in accordance with the
Constitution.
The Roppongi property was acquired by the Philippine
government pursuant to the reparations agreement
between the Philippine and Japanese governments. Under
such agreement, this property was acquired by the
Philippine government for a specific purpose, namely, to
serve as the site of the Philippine Embassy in Tokyo,
Japan. Consequently, Roppongi is a property of public
dominion and intended for public service, squarely falling
within that class of property under Art. 420 of the Civil
Code, which provides:
Art. 420. The following things are
property of public dominion :
(1) ...
(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.
(339a)

Public dominion property intended for public service cannot

be alienated unless the property is first transformed into
private property of the state otherwise known as
patrimonial property of the state. 1 The transformation of
public dominion property to state patrimonial property
involves, to my mind, a policy decision. It is a policy
decision because the treatment of the property varies
according to its classification. Consequently, it is Congress
which can decide and declare the conversion of Roppongi
from a public dominion property to a state patrimonial
property. Congress has made no such decision or
declaration.
Moreover, the sale of public property (once converted from
public dominion to state patrimonial property) must be
approved by Congress, for this again is a matter of policy
(i.e. to keep or dispose of the property). Sec. 48, Book 1 of
the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey
Real Property. Whenever real
property of the Government is
authorized by law to be conveyed, the
deed of conveyance shall be executed
in behalf of the government by the
following:
(1) For property
belonging to and
titled in the name of
the Republic of the
Philippines, by the
President, unless
the authority
therefor is
expressly vested
by law in another
officer.
(2) For property
belonging to the
Republic of the
Philippines but

titled in the name of

any political
subdivision or of
any corporate
agency or
instrumentality, by
the executive head
of the agency or
instrumentality.
(Emphasis
supplied)
But the record is bare of any congressional decision or
approval to sell Roppongi. The record is likewise bare of
any congressional authority extended to the President to
sell Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order
the sale of Roppongi thru public bidding or otherwise
without a prior congressional approval, first, converting
Roppongi from a public dominion property to a state
patrimonial property, and, second, authorizing the
President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to
make PERMANENT the temporary restraining order earlier
issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the socalled "Roppongi property' has lost its nature as property of
public dominion, and hence, has become patrimonial
property of the State. I understand that the parties are
agreed that it was property intended for "public service"
within the contemplation of paragraph (2), of Article 430, of
the Civil Code, and accordingly, land of State dominion,
and beyond human commerce. The lone issue is, in the
light of supervening developments, that is non-user thereof
by the National Government (for diplomatic purposes) for
the last thirteen years; the issuance of Executive Order No.
296 making it available for sale to any interested buyer; the
promulgation of Republic Act No. 6657, the Comprehensive

25 | P a g e

Agrarian Reform Law, making available for the program's

financing, State assets sold; the approval by the President
of the recommendation of the investigating committee
formed to study the property's utilization; and the issuance
of Resolution No. 55 of the Philippine Senate requesting for
the deferment of its disposition it, "Roppongi", is still
property of the public dominion, and if it is not, how it lost
that character.
When land of the public dominion ceases to be one, or
when the change takes place, is a question our courts have
debated early. In a 1906 decision, 1 it was held that
property of the public dominion, a public plaza in this
instance, becomes patrimonial upon use thereof for
purposes other than a plaza. In a later case, 2 this ruling
was reiterated. Likewise, it has been held that land,
originally private property, has become of public dominion
upon its donation to the town and its conversion and use as
a public plaza. 3 It is notable that under these three cases,
the character of the property, and any change occurring
therein, depends on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal
declaration on the part of the Government, through the
executive department or the Legislative, to the effect that
the land . . . is no longer needed for [public] service- for
public use or for special industries, [it] continue[s] to be part
of the public [dominion], not available for private
expropriation or ownership." 5 So also, it was ruled that a
political subdivision (the City of Cebu in this case) alone
may declare (under its charter) a city road abandoned and
thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal
declaration to withdraw the Roppongi property from public
domain to make it alienable and a land for legislative
authority to allow the sale of the property" 7 the majority
lays stress to the fact that: (1) An affirmative act
executive or legislative is necessary to reclassify
property of the public dominion, and (2) a legislative decree
is required to make it alienable. It also clears the
uncertainties brought about by earlier interpretations that
the nature of property-whether public or patrimonial is
predicated on the manner it is actually used, or not used,

and in the same breath, repudiates the Government's

position that the continuous non-use of "Roppongi", among
other arguments, for "diplomatic purposes", has turned it
into State patrimonial property.
I feel that this view corresponds to existing
pronouncements of this Court, among other things, that: (1)
Property is presumed to be State property in the absence
of any showing to the contrary; 8 (2) With respect to forest
lands, the same continue to be lands of the public dominion
unless and until reclassified by the Executive Branch of the
Government; 9 and (3) All natural resources, under the
Constitution, and subject to exceptional cases, belong to
the State. 10
I am elated that the Court has banished previous
uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the conclusions
reached by Mr. Justice Hugo E. Gutierrez, Jr.
For purposes of this separate opinion, I assume that the
piece of land located in 306 Roppongi, 5-Chome, Minatoku Tokyo, Japan (hereinafter referred to as the "Roppongi
property") may be characterized as property of public
dominion, within the meaning of Article 420 (2) of the Civil
Code:
[Property] which belong[s] to the State,
without being for public use, and are
intended for some public service -.
It might not be amiss however, to note that the
appropriateness of trying to bring within the confines of the
simple threefold classification found in Article 420 of the
Civil Code ("property for public use property "intended for
some public service" and property intended "for the
development of the national wealth") all property owned by
the Republic of the Philippines whether found within the
territorial boundaries of the Republic or located within the
territory of another sovereign State, is not self-evident. The

first item of the classification property intended for public

use can scarcely be properly applied to property
belonging to the Republic but found within the territory of
another State. The third item of the classification property
intended for the development of the national wealth is
illustrated, in Article 339 of the Spanish Civil Code of 1889,
by mines or mineral properties. Again, mineral lands owned
by a sovereign State are rarely, if ever, found within the
territorial base of another sovereign State. The task of
examining in detail the applicability of the classification set
out in Article 420 of our Civil Code to property that the
Philippines happens to own outside its own boundaries
must, however, be left to academicians.
For present purposes, too, I agree that there is no question
of conflict of laws that is, at the present time, before this
Court. The issues before us relate essentially to authority to
sell the Roppongi property so far as Philippine law is
concerned.
The majority opinion raises two (2) issues: (a) whether or
not the Roppongi property has been converted into
patrimonial property or property of the private domain of
the State; and (b) assuming an affirmative answer to (a),
whether or not there is legal authority to dispose of the
Roppongi property.
Addressing the first issue of conversion of property of
public dominion intended for some public service, into
property of the private domain of the Republic, it should be
noted that the Civil Code does not address the question
of who has authority to effect such conversion. Neither
does the Civil Code set out or refer to any procedure for
such conversion.
Our case law, however, contains some fairly explicit
pronouncements on this point, as Justice Sarmiento has
pointed out in his concurring opinion. In Ignacio v. Director
of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued
that if the land in question formed part of the public domain,
the trial court should have declared the same no longer
necessary for public use or public purposes and which
would, therefore, have become disposable and available

26 | P a g e

for private ownership. Mr. Justice Montemayor, speaking

for the Court, said:
Article 4 of the Law of Waters of 1866
provides that when a portion of the
shore is no longer washed by the
waters of the sea and is not necessary
for purposes of public utility, or for the
establishment of special industries, or
for
coast-guard
service,
the
government shall declare it to be the
property of the owners of the estates
adjacent thereto and as an increment
thereof. We believe that only the
executive and possibly the legislative
departments have the authority and the
power to make the declaration that any
land so gained by the sea, is not
necessary for purposes of public utility,
or for the establishment of special
industries, or for coast-guard service. If
no such declaration has been made by
said departments, the lot in question
forms part of the public domain.
(Natividad v. Director of Lands, supra.)
The reason for this pronouncement,
according to this Tribunal in the case of
Vicente Joven y Monteverde v. Director
of Lands, 93 Phil., 134 (cited in
Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are
neither primarily called upon, nor
indeed in a position to determine
whether any public land are to be used
for the purposes specified in Article 4 of
the Law of Waters. Consequently, until
a formal declaration on the part of the
Government, through the executive
department or the Legislature, to the
effect that the land in question is no
longer needed for coast-guard service,
for public use or for special industries,

they continue to be part of the public

domain not available for private
appropriation or ownership. (108 Phil.
at 338-339; emphasis supplied)
Thus, under Ignacio, either the Executive Department or
the Legislative Department may convert property of the
State of public dominion into patrimonial property of the
State. No particular formula or procedure of conversion is
specified either in statute law or in case law. Article 422 of
the Civil Code simply states that: "Property of public
dominion, when no longer intended for public use or
for public service, shall form partof the patrimonial property
of the State". I respectfully submit, therefore, that the only
requirement which is legitimately imposable is that the
intent to convert must be reasonably clear from a
consideration of the acts or acts of the Executive
Department or of the Legislative Department which are
said to have effected such conversion.
The same legal situation exists in respect of conversion of
property of public dominion belonging to municipal
corporations, i.e., local governmental units, into patrimonial
property of such entities. In CebuOxygen Acetylene v.
Bercilles (66 SCRA 481 [1975]), the City Council of Cebu
by resolution declared a certain portion of an existing street
as an abandoned road, "the same not being included in the
city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the acting
City Mayor to sell the land through public bidding. Although
there was no formal and explicit declaration of conversion
of property for public use into patrimonial property, the
Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street
subject of petitioner's application for
registration of title was withdrawn from
public use, it follows that such
withdrawn portion becomes patrimonial
property which can be the object of an
ordinary contract.

Article 422 of the Civil Code expressly

provides that "Property of public
dominion, when no longer intended for
public use of for public service, shall
form part of the patrimonial property of
the State."
Besides, the Revised Charter of the
City of Cebu heretofore quoted, in very
clear and unequivocal terms, states
that "Property thus withdrawn from
public servitude may be used or
conveyed for any purpose for which
other real property belonging to the
City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the
property in question from public use
and its subsequent sale to the
petitioner is valid. Hence, the petitioner
has a registrable title over the lot in
question. (66 SCRA at 484-; emphasis
supplied)
Thus, again as pointed out by Sarmiento J., in his separate
opinion, in the case of property owned by municipal
corporations simple non-use or the actual dedication of
public property to some use other than "public use" or
some "public service", was sufficient legally to convert such
property into patrimonial property (Municipality of Oas v.
Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v.
Director of Lands 24 Phil. 124 [1913]; Province of
Zamboanga del Norte v. City of Zamboanga, 22 SCRA
1334 (1968).
I would also add that such was the case not only in respect
of' property of municipal corporations but also in respect of
property of the State itself. Manresa in commenting on
Article 341 of the 1889 Spanish Civil Code which has been
carried over verbatim into our Civil Code by Article 422
thereof, wrote:

27 | P a g e

La dificultad mayor en todo esto

estriba, naturalmente, en fijar el
momento en que los bienes de dominio
publico dejan de serlo. Si la
Administracion
o
la
autoridad
competente legislative realizan qun
acto en virtud del cual cesa el destino o
uso publico de los bienes de que se
trata naturalmente la dificultad queda
desde el primer momento resuelta. Hay
un punto de partida cierto para iniciar
las relaciones juridicas a que pudiera
haber lugar Pero puede ocurrir que no
haya taldeclaracion expresa, legislativa
or administrativa, y, sin embargo, cesar
de hecho el destino publico de los
bienes; ahora bien, en este caso, y
para los efectos juridicos que resultan
de entrar la cosa en el comercio de los
hombres,' se entedera que se ha
verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina,
respecto del antiguo Codigo italiano,
por la afirmativa, y por nuestra parte
creemos que tal debe ser la soluciion.
El destino de las cosas no depende
tanto de una declaracion expresa como
del uso publico de las mismas, y
cuanda el uso publico cese con
respecto de determinados bienes, cesa
tambien su situacion en el dominio
publico. Si una fortaleza en ruina se
abandona y no se repara, si un trozo
de la via publica se abandona tambien
por constituir otro nuevo an mejores
condiciones....ambos bienes cesan de
estar Codigo, y leyes especiales mas o
memos administrativas. (3 Manresa,
Comentarios al Codigo Civil Espanol,
p. 128 [7a ed.; 1952) (Emphasis
supplied)

The majority opinion says that none of the executive acts

pointed to by the Government purported, expressly or
definitely, to convert the Roppongi property into patrimonial
property of the Republic. Assuming that to be the case,
it is respectfully submitted that cumulative effect of the
executive acts here involved was to convert property
originally intended for and devoted to public service into
patrimonial property of the State, that is, property
susceptible of disposition to and appropration by private
persons. These executive acts, in their totality if not each
individual act, make crystal clear the intent of the Executive
Department to effect such conversion. These executive
acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which
created a Committee to study the disposition/utilization of
the Government's property in Japan, The Committee was
composed of officials of the Executive Department: the
Executive Secretary; the Philippine Ambassador to Japan;
and representatives of the Department of Foreign Affairs
and the Asset Privatization Trust. On 19 September 1988,
the Committee recommended to the President the sale of
one of the lots (the lot specifically in Roppongi) through
public bidding. On 4 October 1988, the President approved
the recommendation of the Committee.
On 14 December 1988, the Philippine Government by
diplomatic note informed the Japanese Ministry of Foreign
Affairs of the Republic's intention to dispose of the property
in Roppongi. The Japanese Government through its
Ministry of Foreign Affairs replied that it interposed no
objection to such disposition by the Republic.
Subsequently, the President and the Committee informed
the leaders of the House of Representatives and of the
Senate of the Philippines of the proposed disposition of the
Roppongi property.
(b) Executive Order No. 296, which was issued by the
President on 25 July 1987. Assuming that the majority
opinion is right in saying that Executive Order No. 296 is
insufficient to authorize the sale of the Roppongi property, it
is here submitted with respect that Executive Order No.
296 is more than sufficient to indicate anintention to
convert the property previously devoted to public service

into patrimonial property that is capable of being sold or

otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for
diplomatic or for any other public purposes. Assuming (but
only arguendo) that non-use does not, by itself,
automatically convert the property into patrimonial property.
I respectfully urge that prolonged non-use, conjoined with
the other factors here listed, was legally effective to convert
the lot in Roppongi into patrimonial property of the State.
Actually, as already pointed out, case law involving
property of municipal corporations is to the effect that
simple non-use or the actual dedication of public property
to some use other than public use or public service, was
sufficient to convert such property into patrimonial property
of the local governmental entity concerned. Also as pointed
out above, Manresa reached the same conclusion in
respect of conversion of property of the public domain of
the State into property of the private domain of the State.
The majority opinion states that "abandonment cannot be
inferred from the non-use alone especially if the non-use
was attributable not to the Government's own deliberate
and indubitable will but to lack of financial support to repair
and improve the property" (Majority Opinion, p. 13). With
respect, it may be stressed that there is no abandonment
involved here, certainly no abandonment of property or of
property rights. What is involved is the charge of the
classification of the property from property of the public
domain into property of the private domain of the State.
Moreover, if for fourteen (14) years, the Government did
not see fit to appropriate whatever funds were necessary to
maintain the property in Roppongi in a condition suitable
for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of
the crystalizing intent to change the character of the
property.
(d) On 30 March 1989, a public bidding was in fact held by
the Executive Department for the sale of the lot in
Roppongi. The circumstance that this bidding was not
successful certainly does not argue against an intent to
convert the property involved into property that is
disposable by bidding.

28 | P a g e

The above set of events and circumstances makes no

sense at all if it does not, as a whole, show at least the
intent on the part of the Executive Department (with the
knowledge of the Legislative Department) to convert the
property involved into patrimonial property that is
susceptible of being sold.
II
Having reached an affirmative answer in respect of the first
issue, it is necessary to address the second issue of
whether or not there exists legal authority for the sale or
disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised
Administrative Code of 1917 which reads as follows:
SEC. 79 (f). Conveyances and
contracts to which the Government is a
party. In cases in which the
Government of the Republic of the
Philippines is a party to any deed or
other instrument conveying the title to
real estate or to any other property the
value of which is in excess of one
hundred thousand pesos, the
respective Department Secretary shall
prepare the necessary papers which,
together
with
the
proper
recommendations, shall be submitted
to the Congress of the Philippines for
approval by the same. Such deed,
instrument, or contract shall be
executed and signed by the President
of the Philippines on behalf of the
Government of the Philippines unless
the authority therefor be expressly
vested by law in another officer.
(Emphasis supplied)
The majority opinion then goes on to state that: "[T]he
requirement has been retained in Section 4, Book I of the

Administrative Code of 1987 (Executive Order No. 292)"

which reads:
SEC. 48. Official Authorized to Convey
Real Property. Whenever real
property
of
the
Government
is authorized by law to be conveyed,
the deed of conveyance shall be
executed in behalf of the government
by the following:
(1) For property belonging to and titled
in the name of the Republic of the
Philippines, by the President, unless
the authority therefor is expressly
vested by law in another officer.
(2) For property belonging to the
Republic of the Philippines but titled in
the name of any political subdivision or
of any corporate agency or
instrumentality, by the executive head
of the agency or instrumentality.
(Emphasis supplied)
Two points need to be made in this connection. Firstly, the
requirement
of
obtaining
specific
approval of
Congress when the price of the real property being
disposed of is in excess of One Hundred Thousand Pesos
(P100,000.00) under the Revised Administrative Code of
1917, has been deleted from Section 48 of the 1987
Administrative Code. What Section 48 of the present
Administrative Code refers to is authorization by law for the
conveyance. Section 48 does not purport to be itself a
source of legal authority for conveyance of real property of
the Government. For Section 48 merely specifies the
official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a
conveyance.
Secondly, examination of our statute books shows that
authorization by law for disposition of real property of the
private domain of the Government, has been granted by

Congress both in the form of (a) a general, standing

authorization for disposition of patrimonial property of the
Government; and (b) specific legislation authorizing the
disposition of particular pieces of the Government's
patrimonial property.
Standing legislative authority for the disposition of land of
the private domain of the Philippines is provided by Act No.
3038, entitled "An Act Authorizing the Secretary of
Agriculture and Natural Resources to Sell or Lease Land of
the Private Domain of the Government of the Philippine
Islands (now Republic of the Philippines)", enacted on 9
March 1922. The full text of this statute is as follows:
Be it enacted by the Senate and House
of Representatives of the Philippines in
Legislature assembled and by the
authority of the same:
SECTION 1. The Secretary of
Agriculture and Natural Resources
(now Secretary of the Environment and
Natural Resources) is hereby
authorized to sell or lease land of the
private domain of the Government of
the Philippine Islands, or any part
thereof, to such persons, corporations
or associations as are, under the
provisions of Act Numbered Twentyeight hundred and seventy-four, (now
Commonwealth Act No. 141, as
amended) known as the Public Land
Act, entitled to apply for the purchase
or lease or agricultural public land.
SECTION 2. The sale of the land
referred
to in
the
preceding
section shall, if such land is
agricultural, be made in the manner
and subject to the limitations
prescribed in chapters five and six,
respectively, of said Public Land Act,
and if it be classified differently, in

29 | P a g e

conformity with the provisions of

chapter nine of said Act: Provided,
however, That the land necessary for
the public service shall be exempt from
the provisions of this Act.
SECTION 3. This Act shall take effect
on its approval.
Approved, March 9, 1922. (Emphasis
supplied)
Lest it be assumed that Act No. 3038 refers only to
agricultural lands of the private domain of the State, it must
be noted that Chapter 9 of the old Public Land Act (Act No.
2874) is now Chapter 9 of the present Public Land Act
(Commonwealth Act No. 141, as amended) and that both
statutes refer to: "any tract of land of the public domain
which being neither timber nor mineral land, is intended to
be used for residential purposes or for commercial or
industrial purposes other than agricultural" (Emphasis
supplied). In other words, the statute covers the sale or
lease or residential, commercial or industrial land of the
private domain of the State.
Implementing regulations have been issued for the carrying
out of the provisions of Act No. 3038. On 21 December
1954, the then Secretary of Agriculture and Natural
Resources promulgated Lands Administrative Orders Nos.
7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of
the Lands of the Private Domain of the Republic of the
Philippines"; and "Supplementary Regulations Governing
the Lease of Lands of Private Domain of the Republic of
the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now
sixty-eight (68) years old, is still in effect and has not been
repealed. 1
Specific legislative authorization for disposition of particular
patrimonial properties of the State is illustrated by certain
earlier statutes. The first of these was Act No. 1120,

enacted on 26 April 1904, which provided for the

disposition of the friar lands, purchased by the Government
from the Roman Catholic Church, to bona fide settlers and
occupants thereof or to other persons. In Jacinto v. Director
of Lands (49 Phil. 853 [1926]), these friar lands were held
to be private and patrimonial properties of the State. Act
No. 2360, enacted on -28 February 1914, authorized the
sale of the San Lazaro Estate located in the City of Manila,
which had also been purchased by the Government from
the Roman Catholic Church. In January 1916, Act No. 2555
amended Act No. 2360 by including therein all lands and
buildings owned by the Hospital and the Foundation of San
Lazaro theretofor leased by private persons, and which
were also acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there
appears, to my knowledge, to be only one statute
authorizing the President to dispose of a specific piece of
property. This statute is Republic Act No. 905, enacted on
20 June 1953, which authorized the
President to sell an Identified parcel of land of the private
domain of the National Government to the National Press
Club of the Philippines, and to other recognized national
associations of professionals with academic standing, for
the nominal price of P1.00. It appears relevant to note that
Republic Act No. 905 was not an outright disposition in
perpetuity of the property involved- it provided for reversion
of the property to the National Government in case the
National Press Club stopped using it for its headquarters.
What Republic Act No. 905 authorized was really
a donation, and not a sale.

unusual or strange than the assumption that Article 420 of

the Civil Code applies not only to property of the Republic
located within Philippine territory but also to property found
outside the boundaries of the Republic.
It remains to note that under the well-settled doctrine that
heads of Executive Departments are alter egos of the
President (Villena v. Secretary of the Interior, 67 Phil. 451
[1939]), and in view of the constitutional power of control
exercised by the President over department heads (Article
VII, Section 17,1987 Constitution), the President herself
may carry out the function or duty that is specifically lodged
in the Secretary of the Department of Environment and
Natural Resources (Araneta v. Gatmaitan 101 Phil. 328
[1957]). At the very least, the President retains the power to
approve or disapprove the exercise of that function or duty
when done by the Secretary of Environment and Natural
Resources.
It is hardly necessary to add that the foregoing analyses
and submissions relate only to the austere question of
existence of legal power or authority. They have nothing to
do with much debated questions of wisdom or propriety or
relative desirability either of the proposed disposition itself
or of the proposed utilization of the anticipated proceeds of
the property involved. These latter types of considerations
He within the sphere of responsibility of the political
departments of government the Executive and the
Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for
Prohibition in both G.R. Nos. 92013 and 92047.

The basic submission here made is that Act No. 3038

provides standing legislative authorization for disposition of
the Roppongi property which, in my view, has been
converted into patrimonial property of the Republic. 2

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea,

JJ., concurring.

To some, the submission that Act No. 3038 applies not only
to lands of the private domain of the State located in the
Philippines but also to patrimonial property found outside
the Philippines, may appear strange or unusual. I
respectfully submit that such position is not any more

[G.R. No. 120303. July 24, 1996]

FEDERICO
GEMINIANO,
MARIA
GEMINIANO,
ERNESTO
GEMINIANO,
ASUNCION
GEMINIANO, LARRY GEMINIANO, and
MARLYN GEMINIANO, petitioners, vs. COURT

30 | P a g e

OF APPEALS, DOMINADOR NICOLAS, and

MARY A. NICOLAS, respondents.
DECISION
DAVIDE, JR., J.:
This petition for review on certiorari has its origins in
Civil Case No. 9214 of Branch 3 of the Municipal Trial
Court in Cities (MTCC) in Dagupan City for unlawful
detainer and damages. The petitioners ask the Court to set
aside the decision of the Court of Appeals affirming the
decision of Branch 40 of the Regional Trial Court (RTC) of
Dagupan City, which, in turn, reversed the MTCC; ordered
the petitioners to reimburse the private respondents the
value of the house in question and other improvements;
and allowed the latter to retain the premises until
reimbursement was made.
It appears that Lot No. 3765-B-1 containing an area
of 314 square meters was originally owned by the
petitioners' mother, Paulina Amado vda. de Geminiano. On
a 12-square-meter portion of that lot stood the petitioners'
unfinished bungalow, which the petitioners sold in
November 1978 to the private respondents for the sum of
P6,000.00, with an alleged promise to sell to the latter that
portion of the lot occupied by the house. Subsequently, the
petitioners' mother executed a contract of lease over a 126
square-meter portion of the lot, including that portion on
which the house stood, in favor of the private respondents
for P40.00 per month for a period of seven years
commencing on 15 November 1978. [1] The private
respondents then introduced additional improvements and
registered the house in their names. After the expiration of
the lease contract in November 1985, however, the
petitioners' mother refused to accept the monthly rentals.
It turned out that the lot in question was the subject of
a suit, which resulted in its acquisition by one Maria Lee in
1972. In 1982, Lee sold the lot to Lily Salcedo, who in turn
sold it in 1984 to the spouses Agustin and Ester Dionisio.
On 14 February 1992, the Dionisio spouses executed
a Deed of Quitclaim over the said property in favor of the
petitioners.[2] As such, the lot was registered in the latter's
names.[3]

On
9
February
1993,
the
petitioners
sent, via registered mail, a letter addressed to private
respondent Mary Nicolas demanding that she vacate the
premises and pay the rentals in arrears within twenty days
from notice.[4]

rights of the private respondents were specifically governed

by Article 1678, which allows reimbursement of up to onehalf of the value of the useful improvements, or removal of
the improvements should the lessor refuse to reimburse.

Upon failure of the private respondents to heed the

demand, the petitioners filed with the MTCC of Dagupan
City a complaint for unlawful detainer and damages.

On the third issue, the court deemed as conclusive

the private respondents' allegation that the value of the
house and improvements was P180,000.00, there being no
controverting evidence presented.

During the pre-trial conference, the parties agreed to

confine the issues to: (1) whether there was an implied
renewal of the lease which expired in November 1985; (2)
whether the lessees were builders in good faith and entitled
to reimbursement of the value of the house and
improvements; and (3) the value of the house.

The trial court thus ordered the private respondents

to vacate the premises, pay the petitioners P40.00 a month
as reasonable compensation for their stay thereon from the
filing of the complaint on 14 April 1993 until they vacated,
and to pay the sum of P1,000.00 as attorney's fees, plus
costs.[5]

The parties then submitted their respective position

papers and the case was heard under the Rule on
Summary Procedure.

On appeal by the private respondents, the RTC of

Dagupan City reversed the trial court's decision and
rendered a new judgment: (1) ordering the petitioners to
reimburse the private respondents for the value of the
house and improvements in the amount of P180,000.00
and to pay the latter P10,000.00 as attorney's fees and
P2,000.00 as litigation expenses; and (2) allowing the
private respondents to remain in possession of the
premises until they were fully reimbursed for the value of
the house.[6] It ruled that since the private respondents
were assured by the petitioners that the lot they leased
would eventually be sold to them, they could be considered
builders in good faith, and as such, were entitled to
reimbursement of the value of the house and
improvements with the right of retention until
reimbursement had been made.

On the first issue, the court held that since the

petitioners' mother was no longer the owner of the lot in
question at the time the lease contract was executed in
1978, in view of its acquisition by Maria Lee as early as
1972, there was no lease to speak of, much less, a renewal
thereof. And even if the lease legally existed, its implied
renewal was not for the period stipulated in the original
contract, but only on a month-to-month basis pursuant to
Article 1687 of the Civil Code. The refusal of the petitioners'
mother to accept the rentals starting January 1986 was
then a clear indication of her desire to terminate the
monthly lease. As regards the petitioners' alleged failed
promise to sell to the private respondents the lot occupied
by the house, the court held that such should be litigated in
a proper case before the proper forum, not an ejectment
case where the only issue was physical possession of the
property.
The court resolved the second issue in the negative,
holding that Articles 448 and 546 of the Civil Code, which
allow possessors in good faith to recover the value of
improvements and retain the premises until reimbursed, did
not apply to lessees like the private respondents, because
the latter knew that their occupation of the premises would
continue only during the life of the lease. Besides, the

On appeal, this time by the petitioners, the Court of

Appeals affirmed the decision of the RTC [7] and
denied[8] the petitioners' motion for reconsideration. Hence,
the present petition.
The Court is confronted with the issue of which
provision of law governs the case at bench: Article 448 or
Article 1678 of the Civil Code? The said articles read as
follows:
Art. 448. The owner of the land on which anything has
been built, sown or planted in good faith, shall have the

31 | P a g e

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.
xxx xxx xxx
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.
The crux of the said issue then is whether the private
respondents are builders in good faith or mere lessees.
The private respondents claim they are builders in
good faith, hence, Article 448 of the Civil Code should
apply. They rely on the lack of title of the petitioners' mother
at the time of the execution of the contract of lease, as well
as the alleged assurance made by the petitioners that the
lot on which the house stood would be sold to them.

It has been said that while the right to let property is

an incident of title and possession, a person may be a
lessor and occupy the position of a landlord to the tenant
although he is not the owner of the premises let. [9] After all,
ownership of the property is not being transferred, [10] only
the temporary use and enjoyment thereof.[11]
In this case, both parties admit that the land in
question was originally owned by the petitioners'
mother. The land was allegedly acquired later by one Maria
Lee by virtue of an extrajudicial foreclosure of
mortgage. Lee, however, never sought a writ of possession
in order that she gain possession of the property in
question.[12] The petitioners' mother therefore remained in
possession of the lot.
It is undisputed that the private respondents came
into possession of a 126 square-meter portion of the said
lot by virtue of a contract of lease executed by the
petitioners' mother in their favor. The juridical relation
between the petitioners' mother as lessor, and the private
respondents as lessees, is therefore well-established, and
carries with it a recognition of the lessor's title. [13] The
private respondents, as lessees who had undisturbed
possession for the entire term under the lease, are then
estopped to deny their landlord's title, or to assert a better
title not only in themselves, but also in some third person
while they remain in possession of the leased premises
and until they surrender possession to the landlord. [14] This
estoppel applies even though the lessor had no title at the
time the relation of lessor and lessee was created, [15] and
may be asserted not only by the original lessor, but also by
those who succeed to his title.[16]
Being mere lessees, the private respondents knew
that their occupation of the premises would continue only
for the life of the lease. Plainly, they cannot be considered
as possessors nor builders in good faith.[17]
In a plethora of cases, [18] this Court has held that
Article 448 of the Civil Code, in relation to Article 546 of the
same Code, which allows 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 one's 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.
Anent the alleged promise of the petitioners to sell
the lot occupied by the private respondents' house, the
same was not substantiated by convincing
evidence. Neither the deed of sale over the house nor the
contract of lease contained an option in favor of the
respondent spouses to purchase the said lot. And even if
the petitioners indeed promised to sell, it would not make
the private respondents possessors or builders in good
faith so as to be covered by the provisions of Article 448 of
the Civil Code. The latter cannot raise the mere expectancy
of ownership of the aforementioned lot because the alleged
promise to sell was not fulfilled nor its existence even
proven. The first thing that the private respondents should
have done was to reduce the alleged promise into writing,
because under Article 1403 of the Civil Code, an
agreement for the sale of real property or an interest
therein is unenforceable, unless some note or
memorandum thereof be produced. Not having taken any
steps in order that the alleged promise to sell may be
enforced, the private respondents cannot bank on that
promise and profess any claim nor color of title over the lot
in question.
There is no need to apply by analogy the provisions
of Article 448 on indemnity as was done in Pecson vs.
Court of Appeals,[19] because the situation sought to be
avoided and which would justify the application of that
provision, is not present in this case. Suffice it to say, "a
state of forced co-ownership" would not be created
between the petitioners and the private respondents. For,
as correctly pointed out by the petitioners, the rights of the
private respondents as lessees are governed by Article
1678 of the Civil Code which allows reimbursement to the
extent of one-half of the value of the useful improvements.
It must be stressed, however, that the right to
indemnity under Article 1678 of the Civil Code arises only if
the lessor opts to appropriate the improvements. Since the
petitioners refused to exercise that option, [20] the private
respondents cannot compel them to reimburse the one-half
value of the house and improvements. Neither can they

32 | P a g e

retain the premises until reimbursement is made. The

private respondents' sole right then is to remove the
improvements without causing any more impairment upon
the property leased than is necessary.[21]
WHEREFORE, judgment is hereby rendered
GRANTING the instant petition; REVERSING and
SETTING ASIDE the decision of the Court of Appeals of 27
January 1995 in CA-G.R. SP No. 34337; and
REINSTATING the decision of Branch 3 of the Municipal
Trial Court in Cities of Dagupan City in Civil Case No. 9214
entitled "Federico Geminiano, et al. vs. Dominador Nicolas,
et al."
Costs against the private respondents.

[G.R. No. 98045. June 26, 1996]

DESAMPARADO VDA. DE NAZARENO and LETICIA
NAZARENO
TAPIA, petitioners,
vs. THE
COURT OF APPEALS, MR. & MRS. JOSE
SALASALAN, MR. & MRS. LEO RABAYA,
AVELINO LABIS, HON. ROBERTO G.
HILARIO, ROLLEO I. IGNACIO, ALBERTO M.
GILLERA and HON. ABELARDO G. PALAD,
JR., in their official and/or private
capacities, respondents.
SYLLABUS
1. CIVIL LAW; OWNERSHIP; RIGHTS OF ACCESSION
WITH RESPECT TO IMMOVABLE PROPERTY;
ARTICLE 457; REQUISITES.- In the case
of Meneses vs. CA, this Court held that accretion, as
a mode of acquiring property under Art. 457 of the
Civil Code, requires the concurrence of these
requisites: (1) that the deposition of soil or sediment
be gradual and imperceptible; (2) that it be the result
of the action of the waters of the river (or sea); and
(3) that the land where accretion takes place is
adjacent to the banks of rivers (or the sea
coast). These are called the rules on alluvion which if
present in a case, give to the owners of lands
adjoining the banks of rivers or streams any accretion

gradually received from the effects of the current of

waters.
2. ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT
BAR.- Where 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 petitioner's land, it cannot be claimed
that the accumulation was gradual and imperceptible,
resulting from the action of the waters or the current
of the creek and the river. In Hilario vs. City of
Manila, this Court held that the word current indicates
the participation of the body of water in the ebb and
flow of waters due to high and low tide. Not having
met the first and second requirements of the rules of
alluvion, petitioners cannot claim the rights of a
riparian owner.
3. ID.; ID.; ID.; ID.; ID.; THAT DEPOSIT IS DUE TO THE
CURRENT
OF
THE
RIVER,
MANDATORY.- In Republic vs. CA, this Court ruled
that the requirement that the deposit should be due
to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the
Civil Code all deposits caused by human
intervention. Putting it differently, alluvion must be the
exclusive work of nature. Thus, in Tiongco vs.
Director of Lands, et al., 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. In the case at bar,
the subject land was the direct result of the dumping
of sawdust by the Sun Valley Lumber Co.
consequent to its sawmill operations.
4. ID.; PUBLIC LANDS; FINDINGS AS SUCH BY THE
BUREAU OF LANDS, RESPECTED.- The mere
filing of the Miscellaneous Sales Application
constituted an admission that the land being applied
for was public land, having been the subject of a
Survey Plan wherein said land was described as an
orchard. Furthermore, the Bureau of Lands classified
the subject land as an accretion area which was

formed by deposits of sawdust in the Balacanas

Creek and the Cagayan river, in accordance with the
ocular inspection conducted by the Bureau of
Lands. This Court has often enough held that
findings of administrative agencies which have
acquired expertise because their jurisdiction is
confined to specific matters are generally accorded
not only respect but even finality. Again, when said
factual findings are affirmed by the Court of Appeals,
the same are conclusive on the parties and not
reviewable by this Court.
5. ID.; PUBLIC LAND LAW; JURISDICTION OVER
PUBLIC LANDS.- Having determined that the
subject land is public land, a fortiori, the Bureau of
Lands, as well as the Office of the Secretary of
Agriculture and Natural Resources have jurisdiction
over the same in accordance with the Public Land
Law. Under Sections 3 and 4 thereof, the Director of
Lands has jurisdiction, authority and control over
public lands. Here respondent Palad as Director of
Lands, is authorized to exercise executive control
over any form of concession, disposition and
management of the lands of the public domain. He
may issue decisions and orders as he may see fit
under the circumstances as long as they are based
on the findings of fact. In the case of Calibo vs.
Ballesteros, this Court held that where, in the
disposition of public lands, the Director of Lands
bases his decision on the evidence thus presented,
he clearly acts within his jurisdiction, and if he errs in
appraising the evidence, the error is one of judgment,
but not an act of grave abuse of discretion annullable
by certiorari.
6.

ADMINISTRATIVE
LAW;
ADMINISTRATIVE
REMEDIES; EXHAUSTED IN CASE AT BAR.- The
administrative
remedies
have
been
exhausted. Petitioners could not have intended to
appeal to respondent Ignacio as an Officer-In-Charge
of the Bureau of Lands. The decision being appealed
from was the decision of respondent Hilario who was
the Regional Director of the Bureau of Lands. Said
decision was made "for and by authority of the
Director of Lands." It would be incongruous to appeal

33 | P a g e

the decision of the Regional Director of the Bureau of

Lands acting for the Director of the Bureau of Lands
to an Officer-In-Charge of the Bureau of Lands. In
any case, respondent Ignacio's official designation
was "Undersecretary of the Department of Agriculture
and Natural Resources." He was only an "Officer-InCharge" of the Bureau of Lands.When he acted on
the late Antonio Nazareno's motion for
reconsideration by affirming or adopting respondent
Hilario's decision, he was acting on said motion as an
Undersecretary on behalf of the Secretary of the
Department. In the case of Hamoy vs. Secretary of
Agriculture and Natural Resources, this Court held
that the Undersecretary of Agriculture and Natural
Resources may modify, adopt, or set aside the orders
or decisions of the Director of Lands with respect to
questions involving public lands under the
administration and control of the Bureau of Lands
and the Department of Agriculture and Natural
Resources. He cannot, therefore, be said to have
acted beyond the bounds of his jurisdiction under
Sections 3, 4 and 5 of Commonwealth Act No. 141.
APPEARANCES OF COUNSEL
Manolo L. Tagarda, Sr. for petitioners.
Arturo R. Legaspi for private respondents.
DECISION
ROMERO, J.:
Petitioners Desamparado Vda. de Nazareno and
Leticia Nazareno Tapia challenge the decision of the Court
of Appeals which affirmed the dismissal of petitioners'
complaint by the Regional Trial Court of Misamis Oriental,
Branch 22. The complaint was for annulment of the
verification, report and recommendation, decision and
order of the Bureau of Lands regarding a parcel of public
land.
The only issue involved in this petition is whether or
not petitioners exhausted administrative remedies before
having recourse to the courts.

The subject of this controversy is a parcel of land

situated in Telegrapo, Puntod, Cagayan de Oro City. Said
land was formed as a result of sawdust dumped into the
dried-up Balacanas Creek and along the banks of the
Cagayan river.
Sometime in 1979, private respondents Jose
Salasalan and Leo Rabaya leased the subject lots on
which their houses stood from one Antonio Nazareno,
petitioners' predecessor-in-interest. In the latter part of
1982, private respondents allegedly stopped paying
rentals. As a result, Antonio Nazareno and petitioners filed
a case for ejectment with the Municipal Trial Court of
Cagayan de Oro City, Branch 4. A decision was rendered
against private respondents, which decision was affirmed
by the Regional Trial Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court
for execution of judgment after the same became final and
executory. Private respondents filed a case for annulment
of judgment before the Regional Trial Court of Misamis
Oriental, Branch 24 which dismissed the same. Antonio
Nazareno and petitioners again moved for execution of
judgment but private respondents filed another case
for certiorari with prayer for restraining order and/or writ of
preliminary injunction with the Regional Trial Court of
Misamis Oriental, Branch 25 which was likewise
dismissed. The decision of the lower court was finally
enforced with the private respondents being ejected from
portions of the subject lots they occupied.
Before he died, Antonio Nazareno caused the
approval by the Bureau of Lands of the survey plan
designated as Plan Csd-106-00571 with a view to
perfecting his title over the accretion area being claimed by
him. Before the approved survey plan could be released to
the applicant, however, it was protested by private
respondents before the Bureau of Lands.
In compliance with the order of respondent District
Land Officer Alberto M. Gillera, respondent Land
Investigator Avelino G. Labis conducted an investigation
and rendered a report to the Regional Director
recommending that Survey Plan No. MSI-10-06-000571-D
(equivalent to Lot No. 36302, Cad. 237) in the name of
Antonio Nazareno, be cancelled and that private

respondents be directed to file appropriate public land

applications.
Based on said report, respondent Regional Director
of the Bureau of Lands Roberto Hilario rendered a decision
ordering the amendment of the survey plan in the name of
Antonio Nazareno by segregating therefrom the areas
occupied by the private respondents who, if qualified, may
file public land applications covering their respective
portions.
Antonio Nazareno filed a motion for reconsideration
with respondent Rolleo Ignacio, Undersecretary of the
Department of Natural Resources and Officer-in-Charge of
the Bureau of Lands who denied the motion. Respondent
Director of Lands Abelardo Palad then ordered him to
vacate the portions adjudicated to private respondents and
remove whatever improvements they have introduced
thereon. He also ordered that private respondents be
placed in possession thereof.
Upon the denial of the late Antonio Nazareno's
motion for reconsideration, petitioners Desamparado Vda.
de Nazareno and Leticia Tapia Nazareno, filed a case
before the RTC, Branch 22 for annulment of the
following: order of investigation by respondent Gillera,
report and recommendation by respondent Labis, decision
by respondent Hilario, order by respondent Ignacio
affirming the decision of respondent Hilario and order of
execution by respondent Palad. The RTC dismissed the
complaint for failure to exhaust administrative remedies
which resulted in the finality of the administrative decision
of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the
decision of the RTC dismissing the complaint. Applying
Section 4 of C.A. No. 141, as amended, it contended that
the approval of the survey plan belongs exclusively to the
Director of Lands. Hence, factual findings made by the
Metropolitan Trial Court respecting the subject land cannot
be held to be controlling as the preparation and approval of
said survey plans belong to the Director of Lands and the
same shall be conclusive when approved by the Secretary
of Agriculture and Natural Resources.[1]

34 | P a g e

Furthermore, the appellate court contended that the

motion for reconsideration filed by Antonio Nazareno
cannot be considered as an appeal to the Office of the
Secretary of Agriculture and Natural Resources, as
mandated by C.A. No. 141 inasmuch as the same 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. For the failure of
Antonio Nazareno to appeal to the Secretary of Agriculture
and Natural Resources, the present case does not fall
within the exception to the doctrine of exhaustion of
administrative remedies. It also held that there was no
showing of oppressiveness in the manner in which the
orders were issued and executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF
APPEALS IN A WHIMSICAL, ARBITRARY
AND CAPRICIOUS MANNER AFFIRMED
THE DECISION OF THE LOWER COURT
WHICH IS CONTRARY TO THE
PREVAILING FACTS AND THE LAW ON
THE MATTER;
II. PUBLIC RESPONDENT COURT OF
APPEALS IN A WHIMSICAL, ARBITRARY
AND CAPRICIOUS MANNER AFFIRMED
THE DECISION OF THE LOWER COURT
DISMISSING THE ORIGINAL CASE
WHICH FAILED TO CONSIDER THAT
THE EXECUTION ORDER OF PUBLIC
RESPONDENT ABELARDO G. PALAD,
JR., DIRECTOR OF LANDS, MANILA,
PRACTICALLY
CHANGED
THE
DECISION OF PUBLIC RESPONDENT
ROBERTO
HILARIO,
REGIONAL
DIRECTOR, BUREAU OF LANDS,
REGION 10, THUS MAKING THE CASE
PROPER SUBJECT FOR ANNULMENT
WELL WITHIN THE JURISDICTION OF
THE LOWER COURT.

The resolution of the above issues, however, hinges

on the question of whether or not the subject land is public
land. Petitioners claim that the subject land is private land
being an accretion to his titled property, applying Article 457
of the Civil Code which provides:
"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."
In the case of Meneses v. CA,[2] this Court held that
accretion, as a mode of acquiring property under Art. 457
of the Civil Code, requires the concurrence of these
requisites: (1) that the deposition of soil or sediment be
gradual and imperceptible; (2) that it be the result of the
action of the waters of the river (or sea); and (3) that the
land where accretion takes place is adjacent to the banks
or rivers (or the sea coast). These are called the rules on
alluvion which if present in a case, give to the owners of
lands adjoining the banks of rivers or streams any
accretion gradually received from the effects of the current
of waters.
For petitioners to insist on the application of these
rules on alluvion to their case, the above-mentioned
requisites must be present. However, 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. [3] It cannot be
claimed, therefore, 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. In Hilario v. City of Manila,[4] this Court held that the
word "current" indicates the participation of the body of
water in the ebb and flow of waters due to high and low
tide. Petitioners' submission not having met the first and
second requirements of the rules on alluvion, they cannot
claim the rights of a riparian owner.
In any case, this court agrees with private
respondents that petitioners are estopped from denying the
public character of the subject land, as well as the
jurisdiction of the Bureau of Lands when the late Antonio
Nazareno filed his Miscellaneous Sales Application MSA

(G-6) 571.[5] The mere filing of said Application constituted

an admission that the land being applied for was public
land, having been the subject of Survey Plan No. MSI-1006-000571-D (Equivalent to Lot No. 36302, Cad-237)
which was conducted as a consequence of Antonio
Nazareno's Miscellaneous Sales Application wherein said
land was described as an orchard. Said description by
Antonio Nazareno was, however, controverted by
respondent Labis in his investigation report to respondent
Hilario based on the findings of his ocular inspection that
said land actually covers a dry portion of Balacanas Creek
and a swampy portion of Cagayan River. The investigation
report also states that except for the swampy portion which
is fully planted to nipa palms, the whole area is fully
occupied by a part of a big concrete bodega of petitioners
and several residential houses made of light materials,
including those of private respondents which were erected
by themselves sometime in the early part of 1978.[6]
Furthermore, the Bureau of Lands classified the
subject land as an accretion area which was formed by
deposits of sawdust in the Balacanas Creek and the
Cagayan river, in accordance with the ocular inspection
conducted by the Bureau of Lands. [7] This Court has often
enough held that findings of administrative agencies which
have acquired expertise because their jurisdiction is
confined to specific matters are generally accorded not
only respect but even finality.[8] Again, when said factual
findings are affirmed by the Court of Appeals, the same are
conclusive on the parties and not reviewable by this Court.
[9]

It is this Court's irresistible conclusion, therefore, that

the accretion was man-made or artificial. In Republic v. CA,
[10]
this Court ruled that the requirement that the deposit
should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the Civil
Code all deposits caused by human intervention. Putting it
differently, alluvion must be the exclusive work of
nature. Thus, in Tiongco v. Director of Lands, et al.,
[11]
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.

35 | P a g e

In the case at bar, the subject land was the direct

result of the dumping of sawdust by the Sun Valley Lumber
Co. consequent to its sawmill operations.[12] Even if this
Court were to take into consideration petitioners'
submission that the accretion site was the result of the late
Antonio Nazareno's labor consisting in the dumping of
boulders, soil and other filling materials into the Balacanas
Creek and Cagayan River bounding his land, [13] the same
would still be part of the public domain.
Having determined that the subject land is public
land, a fortiori, the Bureau of Lands, as well as the Office of
the Secretary of Agriculture and Natural Resources have
Jurisdiction over the same in accordance with the Public
Land Law. Accordingly, the court a quo dismissed
petitioners' complaint for non-exhaustion of administrative
remedies which ruling the Court of Appeals affirmed.
However, this Court agrees with petitioners that
administrative remedies have been exhausted. Petitioners
could not have intended to appeal to respondent Ignacio as
an Officer-in-Charge of the Bureau of Lands. The decision
being appealed from was the decision of respondent Hilario
who was the Regional Director of The Bureau of
Lands.Said decision was made "for and by authority of the
Director of Lands."[14] It would be incongruous to appeal the
decision of the Regional Director of the Bureau of Lands
acting for the Director of the Bureau of Lands to an OfficerIn-Charge of the Bureau of Lands.
In any case, respondent Rolleo Ignacio's official
designation was "Undersecretary of the Department of
Agriculture and Natural Resources." He was only an
"Officer-In-Charge" of the Bureau of Lands. When he acted
on the late Antonio Nazareno's motion for reconsideration
by affirming or adopting respondent's Hilario's decision, he
was acting on said motion as an Undersecretary on behalf
of the Secretary of the Department. In the case of Hamoy
v. Secretary of Agriculture and Natural Resources, [15] This
Court held that the Undersecretary of Agriculture and
Natural Resources may modify, adopt, or set aside the
orders or decisions of the Director of Lands with respect to
questions involving public lands under the administration
and control of the Bureau of Lands and the Department of
Agriculture and Natural Resources. He cannot therefore,

be said to have acted beyond the bounds of his jurisdiction

under Sections 3, 4 and 5 of Commonwealth Act No. 141.
[16]

As borne out by the administrative findings, the

controverted land is public land, being an artificial accretion
of sawdust. As such, the Director of Lands has jurisdiction,
authority and control over the same, as mandated under
Sections 3 and 4 of the Public Land Law (C.A. No. 141)
which states, thus:
"Sec. 3. The Secretary of Agriculture and Natural
Resources shall be the exclusive officer charged with
carrying out the provisions of this Act through the Director
of Lands who shall act under his immediate control.
Sec. 4. Subject to said control, the Director of Lands shall
have direct executive control of the survey, classification,
lease, sale or any other form of concession or disposition
and management of the lands of the public domain, and his
decisions as to questions of fact shall be conclusive when
approved by the Secretary of Agriculture and Natural
Resources."
In connection with the second issue, petitioners
ascribe whim, arbitrariness or capriciousness in the
execution order of public respondent Abelardo G. Palad,
the Director of Lands. This Court finds otherwise since said
decision was based on the conclusive finding that the
subject land was public land. Thus, this Court agrees with
the Court of Appeals that the Director of Lands acted within
his rights when he issued the assailed execution order, as
mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's
execution order directing them to vacate the subject land
practically changed respondent Hilario's decision is
baseless. It is incorrect for petitioners to assume that
respondent Palad awarded portions of the subject land to
private respondents Salasalans and Rayabas as they had
not yet been issued patents or titles over the subject
land. The execution order merely directed the segregation
of petitioners' titled lot from the subject land which was
actually being occupied by private respondents before they

were ejected from it. Based on the finding that private

respondents were actually in possession or were actually
occupying the subject land instead of petitioners,
respondent Palad, being the Director of Lands and in the
exercise of this administrative discretion, directed
petitioners to vacate the subject land on the ground that
private respondents have a preferential right, being the
occupants thereof.
While private respondents may not have filed their
application over the land occupied by them, they
nevertheless filed their protest or opposition to petitioners'
Miscellaneous Sales Application, the same being
preparatory to the filing of an application as they were in
fact directed to do so. In any case, respondent Palad's
execution order merely implements respondent Hilario's
order. It should be noted that petitioners' own application
still has to be given due course.[17]
As Director of lands, respondent Palad is authorized
to exercise executive control over any form of concession,
disposition and management of the lands of the public
domain.[18] He may issue decisions and orders as he may
see fit under the circumstances as long as they are based
on the findings of fact.
In the case of Calibo v. Ballesteros,[19] this Court held
that where, in the disposition of public lands, the Director of
Lands bases his decision on the evidence thus presented,
he clearly acts within his jurisdiction, and if he errs in
appraising the evidence, the error is one of judgment, but
not an act or grave abuse of discretion annullable
bycertiorari. Thus, except for the issue of non-exhaustion of
administrative remedies, this Court finds no reversible error
nor grave abuse of discretion in the decision of the Court of
Appeals.
WHEREFORE, the petition is DISMISSED for lack of
merit.

36 | P a g e

As the years went by, the Cagayan River moved gradually

eastward, depositing silt on the western bank. The shifting
of the river and the siltation continued until 1968.

G.R. Nos. L-66075-76 July 5, 1990

EULOGIO AGUSTIN, HEIRS OF BALDOMERO
LANGCAY, ARTURO BALISI & JUAN
LANGCAY, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, MARIA MELAD,
TIMOTEO MELAD, PABLO BINAYUG & GERONIMA
UBINA, respondents.
Antonio N. Laggui for petitioners.
Pedro R. Perez, Jr. for private respondents.
GRIO-AQUINO, J.:
The Cagayan River separates the towns of Solana on the
west and Tuguegarao on the east in the province of
Cagayan. According to the unrebutted testimony of Romeo
Rigor, Geodetic Engineer of the Bureau of Lands, in 1919
the lands east of the river were covered by the Tuguegarao
Cadastre. In 1925, Original Certificate of Title No. 5472
was issued for land east of the Cagayan River owned by
defendant-petitioner Eulogio Agustin (Exh. 2-Agustin).

In 1950, all lands west of the river were included in the

Solana Cadastre. Among these occupying lands covered
by the Solana Cadastre were plaintiffs-private respondents,
namely, Pablo Binayug, who has been in possession of
Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881, 7882,
7883, 7884, 7885, 7891 and 7892, and Maria Melad, who
owns Lot 3351 (Exh. 3-Binayug; Exh. B-Melad). Pablo
Binayug began his possession in 1947. An area of eight (8)
hectares was planted to tobacco and corn while 12
hectares were overgrown with talahib (Exh. C-1 Binayug.)
Binayug's Homestead Application No. W-79055 over this
land was approved in 1959 (Exh. B-Binayug). Binayug's
possession was recognized in the decision in Civil Case
No. 101 (Exh. F-Binayug). On the other hand, as a result of
Civil Case No. 343-T, Macario Melad, the predecessor-ininterest of Maria Melad and Timoteo Melad, was issued
Original Certificate of Title No. P-5026 for Lot 3351 of Cad.
293 on June 1, 1956.
Through the years, the Cagayan River eroded lands of the
Tuguegarao Cadastre on its eastern bank among which
was defendant-petitioner Eulogio Agustin's Lot 8457 (Exh.
E-Melad), depositing the alluvium as accretion on the land
possessed by Pablo Binayug on the western bank.
However, in 1968, after a big flood, the Cagayan River
changed its course, returned to its 1919 bed, and, in the
process, cut across the lands of Maria Melad, Timoteo
Melad, and the spouses Pablo Binayug and Geronima
Ubina whose lands were transferred on the eastern, or
Tuguegarao, side of the river. To cultivate those lots they
had to cross the river.
In April, 1969, while the private respondents and their
tenants were planting corn on their lots located on the
eastern side of the Cagayan River, the petitioners,
accompanied by the mayor and some policemen of
Tuguegarao, claimed the same lands as their own and
drove away the private respondents from the premises.

On April 21, 1970, private respondents Maria Melad and

Timoteo Melad filed a complaint (Civil Case No. 343-T) to
recover Lot No. 3351 with an area of 5 hectares and its
6.6-hectare accretion. On April 24, 1970, private
respondent Pablo Binayug filed a separate complaint (Civil
Case No. 344-T) to recover his lots and their accretions.
On June 16, 1975, the trial court rendered a decision, the
dispositive portion of which reads:
WHEREFORE, premises considered,
judgment is hereby made:
In Civil Case No. 343-T, commanding
Eulogio Agustin, Gregorio Tuliao,
Jacinto Buquel and Octavio Bancud, or
anybody
acting
as
their
representative[s] or agents to vacate
Lot No. 3351 of Solana Cadastre
together with its accretion consisting of
portions of Lots 9463, 9462 and 9461
of Tuguegarao Cadastre and for these
defendants to restore ownership in
favor of Maria Melad and Timoteo
Melad who are the only interested heirs
of Macario Melad.
In Civil Case No. 344-T, commanding
defendants Justo Adduru, Andres
Pastor, Teofilo Tagacay, Vicente
Camilan, Nicanor Mora, Baldomero
Cagurangan, Domingo Quilang, Cesar
Cabalza, Elias Macababbad, Titong
Macababbad, Arturo Balisi, Jose
Allabun, Eulogio Agustin, Banong
Aquino, Junior Cambri and Juan
Langoay, or any of their agents or
representatives to vacate the Lots
3349, 7876, 7877, 7878, 7879, 7875,
7881, 7882, 7883, 7884, 7885, 7891
and 7892, together with its accretion
and to restore possession to plaintiffs
Pablo Binayug and Geronima Ubina.

37 | P a g e

Without pronouncement as to damages

which were not properly proven and to
costs.
SO ORDERED. (As amended by the
order dated August 15, 1975.) (pp. 2425, Rollo.)
Only defendant-petitioner Eulogio Agustin appealed in Civil
Case No. 343-T, while in Civil Case No. 344-T, only
defendants-petitioners Eulogio Agustin, Baldomero
Cagurangan (substituted by his heir), Arturo Balisi and
Juan Langcay appealed. But upon motion of plaintiffsprivate respondents, the trial court ordered the execution
pending appeal of the judgment in Civil Case No. 344-T
against Cagurangan, Balisi and Langcay on the ground
that their appeal was dilatory as they had not presented
evidence at the trial (Order dated August 15, 1975).

The petition is unmeritorious and must be denied.

The finding of the Court of Appeals that there had been
accretions to the lots of the private respondents who did
not lose the ownership of such accretions even after they
were separated from the principal lots by the sudden
change of course of the river, is a finding of fact which is
conclusive on this Court. That finding is supported by Art.
457 of the New Civil Code which provides:
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. (366)

On November 29, 1983, the Intermediate Appellate Court

rendered a decision affirming in toto the judgment of the
trial court, with costs against the defendants-appellants.

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 (Republic vs.
CA, 132 SCRA 514).

In their petition for review of that decision, the petitioners

allege that the Court of Appeals erred:

All these requisites of accretion are present in this case for,

as the trial court found:

1. in declaring that the land in question

had become part of private
respondents' estate as a result of
accretion;

. . . Cagayan River did move year by

year from 1919 to 1968 or for a period
of 49 years. Within this period, the
alluvium (sic) deposited on the other
side has become greater in area than
the original lands of the plaintiffs in both
cases. Still the addition in every year is
imperceptible in nature, one could not
discern it but can be measured after
the lapse of a certain time. The
testimonial evidence in these cases
that said Cagayan River moved
eastward year by year is overwhelming
as against the denial of defendant
Eulogio Agustin alone. Cesar Caronan,
one time mayor of Solana, Cagayan,
said so. Arturo Taguian said so.

2. in declaring that the accretion to

private respondents' estate which used
to pertain to petitioners' estate cannot
preclude the private respondents from
being the owners thereof; and
3. in declaring that the ownership of
private respondents over the accretion
is not affected by the sudden and
abrupt change in the course of the
Cagayan River when it reverted to its
old bed

Timoteo Melad said so. Francisco

Ubina said so. Geodetic Engineer
Rigor impliedly said so when he
testified that when Solana Cadastre
was executed in 1950 it overlapped
portions of Tuguegarao Cadastre
executed in 1919. This could not have
happened if that part of Tuguegarao
Cadastre was not eroded by the
overflow of the Cagayan River. These
testimonies cannot be destroyed by the
denials of Vicente Cauilan, Marcelo
Agustin and Eulogio Agustin alone . . . .
(p. 27,Rollo.)
The appellate court confirmed that the accretion on the
western bank of the Cagayan River had been going on
from 1919 up to 1968 or for a period of 49 years. It was
gradual and imperceptible. Only when Lot No. 3351, with
an original area of 5 hectares described in the free patent
that was issued to Macario Melad in June 1956, was
resurveyed in 1968 did it become known that 6.6 hectares
had been added to it. Lot No. 3351, covered by a
homestead patent issued in June, 1950 to Pablo Binayug,
grew from its original area of 18 hectares, by an additional
50 hectares through alluvium as the Cagayan River
gradually moved to the east. These accretions belong to
riparian owners upon whose lands the alluvial deposits
were made (Roxas vs. Tuason, 9 Phil. 408; Director of
Lands vs. Rizal, 87 Phil. 806). The reason for this principle
is because, if lands bordering on streams are exposed to
floods and other damage due to the destructive force of the
waters, and if by virtue of law they are subject to
encumbrances and various kinds of easements, it is only
just that such risks or dangers as may prejudice the owners
thereof should in some way be compensated by the right of
accretion (Cortes vs. City of Manila, 10 Phil. 567).itc-asl
The private respondents' ownership of the accretion to their
lands was not lost upon the sudden and abrupt change of
the course of the Cagayan River in 1968 or 1969 when it
reverted to its old 1919 bed, and separated or transferred
said accretions to the other side (or eastern bank) of the

38 | P a g e

river. Articles 459 and 463 of the New Civil Code apply to
this situation.
Art. 459. Whenever the current of a
river, creek or torrent segregates from
an estate on its bank a known portion
of land and transfers it to another
estate, the owner of the land to which
the segregated portion belonged
retains the ownership of it, provided
that he removes the same within two
years.
Art. 463. Whenever the current of a
river divides itself into branches,
leaving a piece of land or part thereof
isolated, the owner of the land retains
his ownership. He also retains it if a
portion of land is separated from the
estate by the current. (Emphasis
supplied).
In the case at bar, the sudden change of course
of the Cagayan River as a result of a strong
typhoon in 1968 caused a portion of the lands of
the private respondents to be "separated from
the estate by the current." The private
respondents have retained the ownership of the
portion that was transferred by avulsion to the
other side of the river.
WHEREFORE, the petition is denied for lack of merit. The
decision of the Intermediate Appellate Court, now Court of
Appeals, is hereby affirmed. Costs against the petitioners.

G.R. No. L-17652

June 30, 1962
IGNACIO GRANDE, ET AL., petitioners,
vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG,
and ESTEBAN CALALUNG, respondents.

Bartolome Guirao and Antonio M. Orara for petitioners.

Gonzales and Fernandez for respondents.
BARRERA, J.:
This is an appeal taken by petitioners Ignacio, Eulogia,
Alfonso, Eulalia, and Sofia Grande, from the decision of the
Court of Appeals (CA-G.R. No. 25169-R) reversing that of
the Court of First Instance of Isabela (Civil Case No. 1171),
and dismissing petitioners' action against respondents
Domingo and Esteban Calalung, to quiet title to and
recover possession of a parcel of land allegedly occupied
by the latter without petitioners' consent.
The facts of the case, which are undisputed, briefly are:
Petitioners are the owners of a parcel of land, with an area
of 3.5032 hectares, located at barrio Ragan, municipality of
Magsaysay (formerly Tumauini), province of Isabela, by
inheritance from their deceased mother Patricia Angui (who
inherited it from her parents Isidro Angui and Ana Lopez, in
whose name said land appears registered, as shown by
Original Certificate of Title No. 2982, issued on June 9,
1934). Said property is identified as Lot No. 1, Plan PSU83342. When it was surveyed for purposes of registration
sometime in 1930, its northeastern boundary was the
Cagayan River (the same boundary stated in the title).
Since then, and for many years thereafter, a gradual
accretion on the northeastern side took place, by action of
the current of the Cagayan River, so much so, that by
1958, the bank thereof had receded to a distance of about
105 meters from its original site, and an alluvial deposit of
19,964 square meters (1.9964 hectares), more or less, had
been added to the registered area (Exh. C-1).
On January 25, 1958, petitioners instituted the present
action in the Court of First Instance of Isabela against
respondents, to quiet title to said portion (19,964 square
meters) formed by accretion, alleging in their complaint
(docketed as Civil Case No. 1171) that they and their
predecessors-in-interest, were formerly in peaceful and
continuous possession thereof, until September, 1948,
when respondents entered upon the land under claim of
ownership. Petitioners also asked for damages
corresponding to the value of the fruits of the land as well
as attorney's fees and costs. In their answer (dated

February 18, 1958), respondents claim ownership in

themselves, asserting that they have been in continuous,
open, and undisturbed possession of said portion, since
prior to the year 1933 to the present.
After trial, the Court of First Instance of Isabela, on May 4,
1959, rendered a decision adjudging the ownership of the
portion in question to petitioners, and ordering respondents
to vacate the premises and deliver possession thereof to
petitioners, and to pay to the latter P250.00 as damages
and costs. Said decision, in part, reads:
It is admitted by the parties that the land involved
in this action was formed by the gradual deposit
of alluvium brought about by the action of the
Cagayan River, a navigable river. We are inclined
to believe that the accretion was formed on the
northeastern side of the land covered by Original
Certificate of Title No. 2982 after the survey of
the registered land in 1931, because the
surveyors found out that the northeastern
boundary of the land surveyed by them was the
Cagayan River, and not the land in question.
Which is indicative of the fact that the accretion
has not yet started or begun in 1931. And, as
declared by Pedro Laman, defendant witness
and the boundary owner on the northwest of the
registered land of the plaintiffs, the accretion was
a little more than one hectare, including the stony
portion, in 1940 or 1941. Therefore, the
declarations of the defendant Domingo Calalung
and his witness, Vicente C. Bacani, to the effect
that the land in question was formed by accretion
since 1933 do not only contradict the testimony
of defendants' witness Pedro Laman, but could
not overthrow the incontestable fact that the
accretion with an area of 4 hectare more or less,
was formed in 1948, reason for which, it was only
declared in that same year for taxation purposes
by the defendants under Tax Dec. No. 257 (Exh.
"2") when they entered upon the land. We could
not give credence to defendants' assertion that
Tax Dec. No. 257 (Exh. "2") cancelled Tax Dee.
No. 28226 (Exh. "1"), because Exh. "2" says that

39 | P a g e

"tax under this declaration begins with the year

1948. But, the fact that defendants declared the
land for taxation purposes since 1948, does not
mean that they become the owner of the land by
mere occupancy, for it is a new provision of the
New Civil Code that ownership of a piece of land
cannot be acquired by occupation (Art. 714, New
Civil Code). The land in question being an
accretion to the mother or registered land of the
plaintiffs, the accretion belongs to the plaintiffs
(Art. 457, New Civil Code; Art. 366, Old Civil
Code). Assuming arguendo, that the accretion
has been occupied by the defendants since
1948, or earlier, is of no moment, because the
law does not require any act of possession on
the part of the owner of the riparian owner, from
the moment the deposit becomes manifest
(Roxas v. Tuason, 9 Phil. 408; Cortez v. City of
Manila, 10 Phil. 567). Further, no act of
appropriation on the part of the reparian owner is
necessary, in order to acquire ownership of the
alluvial formation, as the law does not require the
same (3 Manresa, C.C., pp. 321-326).
This brings us now to the determination of
whether the defendants, granting that they have
been in possession of the alluvium since 1948,
could have acquired the property by prescription.
Assuming that they occupied the land in
September, 1948, but considering that the action
was commenced on January 25, 1958, they have
not been in possession of the land for ten (10)
years; hence, they could not have acquired the
land by ordinary prescription (Arts. 1134 and
1138, New Civil Code). Moreover, as the alluvium
is, by law, part and parcel of the registered
property, the same may be considered as
registered property, within the meaning of Section
46 of Act No. 496: and, therefore, it could not be
acquired by prescription or adverse possession
by another person.

Unsatisfied, respondents appealed to the Court of Appeals,

which rendered, on September 14, 1960, the decision
adverted to at the beginning of this opinion, partly stating:
That the area in controversy has been formed
through a gradual process of alluvium, which
started in the early thirties, is a fact conclusively
established by the evidence for both parties. By
law, therefore, unless some superior title has
supervened, it should properly belong to the
riparian owners, specifically in accordance with
the rule of natural accession in Article 366 of the
old Civil Code (now Article 457), which provides
that "to the owner of lands adjoining the banks of
rivers, belongs the accretion which they gradually
receive from the effects of the current of the
waters." The defendants, however, contend that
they have acquired ownership through
prescription. This contention poses the real issue
in this case. The Court a quo, has resolved it in
favor of the plaintiffs, on two grounds: First, since
by accession, the land in question pertains to the
original estate, and since in this instance the
original estate is registered, the accretion,
consequently, falls within the purview of Section
46 of Act No. 496, which states that "no title to
registered land in derogation to that of the
registered owner shall be acquired by
prescription or adverse possession"; and,
second, the adverse possession of the defendant
began only in the month of September, 1948, or
less than the 10-year period required for
prescription before the present action was
instituted.
As a legal proposition, the first ground relied
upon by the trial court, is not quite correct. An
accretion to registered land, while declared by
specific provision of the Civil Code to belong to
the owner of the land as a natural accession
thereof, does not ipso jure become entitled to the
protection of the rule of imprescriptibility of title
established by the Land Registration Act. Such
protection does not extend beyond the area

given and described in the certificate. To hold

otherwise, would be productive of confusion. It
would virtually deprive the title, and the technical
description of the land given therein, of their
character of conclusiveness as to the identity and
area of the land that is registered. Just as the
Supreme Court, albeit in a negative manner, has
stated that registration does not protect the
riparian owner against the erosion of the area of
his land through gradual changes in the course of
the adjoining stream (Payatas Estate
Development Co. v. Tuason, 53 Phil. 55), so
registration does not entitle him to all the rights
conferred by Land Registration Act, in so far as
the area added by accretion is concerned. What
rights he has, are declared not by said Act, but by
the provisions of the Civil Code on accession:
and these provisions do not preclude acquisition
of the addition area by another person through
prescription. This Court has held as much in the
case of Galindez, et al. v. Baguisa, et al., CAG.R. No. 19249-R, July 17, 1959.
We now proposed to review the second ground
relied upon by the trial court, regarding the length
of time that the defendants have been in
possession. Domingo Calalung testified that he
occupied the land in question for the first time in
1934, not in 1948 as claimed by the plaintiffs.
The area under occupancy gradually increased
as the years went by. In 1946, he declared the
land for purposes of taxation (Exhibit 1). This tax
declaration was superseded in 1948 by another
(Exhibit 2), after the name of the municipality
wherein it is located was changed from Tumauini
to Magsaysay. Calalung's testimony is
corroborated by two witnesses, both owners of
properties nearby. Pedro Laman, 72 years of
age, who was Municipal president of Tumauini for
three terms, said that the land in question adjoins
his own on the south, and that since 1940 or
1951, he has always known it to be in the
peaceful possession of the defendants. Vicente
C. Bacani testified to the same effect, although,

40 | P a g e

he said that the defendants' possession started

sometime in 1933 or 1934. The area thereof, he
said, was then less than one hectare.
We find the testimony of the said witnesses
entitled to much greater weight and credence
than that of the plaintiff Pedro Grande and his
lone witness, Laureana Rodriguez. The first
stated that the defendants occupied the land in
question only in 1948; that he called the latter's
attention to the fact that the land was his, but the
defendants, in turn, claimed that they were the
owners, that the plaintiffs did not file an action
until 1958, because it was only then that they
were able to obtain the certificate of title from the
surveyor, Domingo Parlan; and that they never
declared the land in question for taxation
purposes or paid the taxes thereon. Pedro
Grande admitted that the defendants had the
said land surveyed in April, 1958, and that he
tried to stop it, not because he claimed the
accretion for himself and his co-plaintiffs, but
because the survey included a portion of the
property covered by their title. This last fact is
conceded by the defendants who, accordingly,
relinquished their possession to the part thus
included, containing an area of some 458 square
meters.1wph1.t
The oral evidence for the defendants concerning
the period of their possession from 1933 to
1958 is not only preponderant in itself, but is,
moreover, supported by the fact that it is they and
not the plaintiffs who declared the disputed
property for taxation, and by the additional
circumstance that if the plaintiff had really been in
prior possession and were deprived thereof in
1948, they would have immediately taken steps
to recover the same. The excuse they gave for
not doing so, namely, that they did not receive
their copy of the certificate of title to their property
until 1958 for lack of funds to pay the fees of the
surveyor Domingo Parlan, is too flimsy to merit
any serious consideration. The payment of the

surveyor's fees had nothing to do with their right

to obtain a copy of the certificate. Besides, it was
not necessary for them to have it in their hands,
in order to file an action to recover the land which
was legally theirs by accession and of which, as
they allege, they had been illegally deprived by
the defendants. We are convinced, upon
consideration of the evidence, that the latter,
were really in possession since 1934,
immediately after the process of alluvion started,
and that the plaintiffs woke up to their rights only
when they received their copy of the title in 1958.
By then, however, prescription had already
supervened in favor of the defendants.
It is this decision of the Court of Appeals which petitioners
seek to be reviewed by us.
The sole issue for resolution in this case is whether
respondents have acquired the alluvial property in question
through prescription.
There can be no dispute that both under Article 457 of the
New Civil Code and Article 366 of the old, petitioners are
the lawful owners of said alluvial property, as they are the
registered owners of the land which it adjoins. The question
is whether the accretion becomes automatically registered
land just because the lot which receives it is covered by a
Torrens title thereby making the alluvial property
imprescriptible. We agree with the Court of Appeals that it
does not, just as an unregistered land purchased by the
registered owner of the adjoining land does not, by
extension, become ipso facto registered land. Ownership of
a piece of land is one thing, and registration under the
Torrens system of that ownership is quite 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 Acts 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. The fact remain, however, that petitioners never
sought registration of said alluvial property (which was
formed sometime after petitioners' property covered by
Original Certificate of Title No. 2982 was registered on
June 9, 1934) up to the time they instituted the present
action in the Court of First Instance of Isabela in 1958. The
increment, therefore, never became registered property,
and hence is not entitled or subject to the protection of
imprescriptibility enjoyed by registered property under the
Torrens system. Consequently, it was subject to acquisition
through prescription by third persons.
The next issue is, did respondents acquire said alluvial
property through acquisitive prescription? This is a question
which requires determination of facts: physical possession
and dates or duration of such possession. The Court of
Appeals, after analyzing the evidence, found that
respondents-appellees were in possession of the alluvial
lot since 1933 or 1934, openly, continuously and adversely,
under a claim of ownership up to the filing of the action in
1958. This finding of the existence of these facts, arrived at
by the Court of Appeals after an examination of the
evidence presented by the parties, is conclusive as to them
and can not be reviewed by us.
The law on prescription applicable to the case is that
provided in Act 190 and not the provisions of the Civil
Code, since the possession started in 1933 or 1934 when
the pertinent articles of the old Civil Code were not in force
and before the effectivity of the new Civil Code in 1950.
Hence, the conclusion of the Court of Appeals that the
respondents acquired alluvial lot in question by acquisitive
prescription is in accordance with law.
The decision of the Court of Appeals under review is
hereby affirmed, with costs against the petitioners. So
ordered.

41 | P a g e

xxx xxx xxx

The parties have come to this Court for relief and

accordingly, our responsibility is to give them that relief
pursuant to the decree of law.

... [T]he land in question Lot 14694 of

Cadastral Survey of Albay located in
Legaspi City with an area of some
11,325 sq. m. originally belonged to
one Felisa Alzul as her own private
property; she married twice in her
lifetime; the first, with one Bernabe
Adille, with whom she had as an only
child, herein defendant Rustico Adille;
in her second marriage with one
Procopio Asejo, her children were
herein plaintiffs, now, sometime in
1939, said Felisa sold the property
in pacto de retro to certain 3rd persons,
period of repurchase being 3 years, but
she died in 1942 without being able to
redeem and after her death, but during
the period of redemption, herein
defendant repurchased, by himself
alone, and after that, he executed a
deed of extra-judicial partition
representing himself to be the only heir
and child of his mother Felisa with the
consequence that he was able to
secure title in his name alone also, so
that OCT. No. 21137 in the name of his
mother was transferred to his name,
that was in 1955; that was why after
some efforts of compromise had failed,
his half-brothers and sisters, herein
plaintiffs, filed present case for partition
with accounting on the position that he
was only a trustee on an implied trust
when he redeemed,-and this is the
evidence, but as it also turned out that
one of plaintiffs, Emeteria Asejo was
occupying a portion, defendant
counterclaimed for her to vacate that,

The antecedent facts

decision 2 appealed from:

Well then, after hearing the evidence,

trial Judge sustained defendant in his

G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EMETERIA
ASEJO, TEODORICA ASEJO, DOMINGO ASEJO,
JOSEFA ASEJO and SANTIAGO ASEJO, respondents.
SARMIENTO, J.:
In issue herein are property and property rights, a familiar
subject of controversy and a wellspring of enormous
conflict that has led not only to protracted legal
entanglements but to even more bitter consequences, like
strained relationships and even the forfeiture of lives. It is a
question that likewise reflects a tragic commentary on
prevailing social and cultural values and institutions, where,
as one observer notes, wealth and its accumulation are the
basis of self-fulfillment and where property is held as
sacred as life itself. "It is in the defense of his property,"
says this modern thinker, that one "will mobilize his deepest
protective devices, and anybody that threatens his
possessions will arouse his most passionate enmity." 1
The task of this Court, however, is not to judge the wisdom
of values; the burden of reconstructing the social order is
shouldered by the political leadership-and the people
themselves.

are

quoted

from

the

position that he was and became

absolute owner, he was not a trustee,
and therefore, dismissed case and also
condemned plaintiff occupant, Emeteria
to vacate; it is because of this that
plaintiffs have come here and contend
that trial court erred in:
I. ... declaring the defendant absolute
owner of the property;
II. ... not ordering the partition of the
property; and
III. ... ordering one of the plaintiffs who
is in possession of the portion of the
property to vacate the land, p. 1
Appellant's brief.
which can be reduced to simple question of whether or not
on the basis of evidence and law, judgment appealed from
should be maintained. 3
xxx xxx xxx
The respondent Court of appeals reversed the trial
Court, 4 and ruled for the plaintiffs-appellants, the private
respondents herein. The petitioner now appeals, by way of
certiorari, from the Court's decision.
We required the private respondents to file a comment and
thereafter, having given due course to the petition, directed
the parties to file their briefs. Only the petitioner, however,
filed a brief, and the private respondents having failed to
file one, we declared the case submitted for decision.
The petition raises a purely legal issue: May a co-owner
acquire exclusive ownership over the property held in
common?
Essentially, it is the petitioner's contention that the property
subject of dispute devolved upon him upon the failure of his

42 | P a g e

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.
There is no merit in this petition.
The right of repurchase may be exercised by a co-owner
with aspect to his share alone. 5 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. 6 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 coownership.
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. 7 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, as we said, 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.
We agree with the respondent Court of Appeals that 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 coheirs, 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 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 . 8 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 coowner 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. 9
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.

43 | P a g e

It is true that registration under the Torrens system is

constructive notice of title, 10 but it has likewise been our
holding that the Torrens title does not furnish a shield for
fraud. 11 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, 12 reckoned from the date of
the registration of the property, 13 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." 14 Accordingly, we hold that
the right of the private respondents commenced from the
time they actually discovered the petitioner's act of
defraudation. 15 According to the respondent Court of
Appeals, they "came to know [of it] apparently only during
the progress of the litigation." 16 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, 17 and
here, the petitioner never raised that defense. 18 There are
recognized exceptions to this rule, but the petitioner has
not shown why they apply.
WHEREFORE, there being no reversible error committed
by the respondent Court of Appeals, the petition is
DENIED. The Decision sought to be reviewed is hereby
AFFIRMED in toto. No pronouncement as to costs.
SO ORDERED,

G.R. No. L-4656

November 18, 1912
RICARDO PARDELL Y CRUZ and
VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffsappellees,
vs.
GASPAR DE BARTOLOME Y ESCRIBANO and
MATILDE ORTIZ Y FELIN DE BARTOLOME, defendantsappellants.
Gaspar de Bartolome, in his own behalf.
B. Gimenez Zoboli, for appellees.

TORRES, J.:
This is an appeal by bill of exceptions, from the judgment of
October 5, 1907, whereby the Honorable Dionisio Chanco,
judge, absolved the defendants from the complaint, and the
plaintiff from a counterclaim, without special finding as to
costs.
Counsel for the spouses Ricardo y Cruz and Vicente Ortiz
y Felin de Pardell, the first of whom, absent in Spain by
reason of his employment, conferred upon the second
sufficient and ample powers to appear before the courts of
justice, on June 8, 1905, in his written complaint, alleged
that the plaintiff, Vicente Ortiz, and the defendant, Matilde
Ortiz, are the duly recognized natural daughters of the
spouses Miguel Ortiz and Calixta Felin y Paula who died in
Vigan, Ilocos Sur, in 1875 and 1882, respectively; that
Calixta Felin, prior to her death, executed on August 17,
1876, a nuncupative will in Vigan whereby she made her
four children, named Manuel, Francisca, Vicenta, and
Matilde, surnamed Ortiz y Felin, her sole and universal
heirs of all her property; that, of the persons enumerated,
Manuel died before his mother and Francisca a few years
after her death, leaving no heirs by force of law, and
therefore the only existing heirs of the said testatrix are the
plaintiff Vicenta Ortiz and the defendant Matilde Ortiz; that,
aside from some personal property and jewelry already
divided among the heirs, the testatrix possessed, at the
time of the execution of her will, and left at her death the
real properties which, with their respective cash values, are
as follows:

1. A house of strong material, with the

lot on which it is built, situated on
P6,000.00
Escolta Street, Vigan, and valued at
2. A house of mixed material, with the
lot on which it stands, at No. 88
Washington Street, Vigan; valued at

1,500.00

3. A lot on Magallanes Street, Vigan;

valued at

100.00

4. A parcel of rice land, situated in the

barrio of San Julian, Vigan; valued at

60.00

5. A parcel of rice land in the pueblo

of Santa Lucia; valued at

86.00

6. Three parcels of land in the pueblo

of Candon; valued at

150.00

Total

7,896.00

That, on or about the first months of the year 1888, the

defendants, without judicial authorization, nor friendly or
extrajudicial agreement, took upon themselves the
administration and enjoyment of the said properties and
collected the rents, fruits, and products thereof, to the
serious detriment of the plaintiffs' interest; that,
notwithstanding the different and repeated demands
extrajudicially made upon Matilde Ortiz to divide the
aforementioned properties with the plaintiff Vicente and to
deliver to the latter the one-half thereof, together with onehalf of the fruits and rents collected therefrom, the said
defendant and her husband, the self-styled administrator of
the properties mentioned, had been delaying the partition
and delivery of the said properties by means of unkept
promises and other excuses; and that the plaintiffs, on
account of the extraordinary delay in the delivery of onehalf of said properties, or their value in cash, as the case
might be, had suffered losses and damages in the sum of
P8,000. Said counsel for the plaintiffs therefore asked that
judgment be rendered by sentencing the defendants,
Gaspar de Bartolome, and Matilde Ortiz Felin de
Bartolome, to restore and deliver to the plaintiffs one-half of
the total value in cash, according to appraisal, of the

44 | P a g e

undivided property specified, which one-half amounted

approximately to P3,948, or if deemed proper, to recognize
the plaintiff Vicenta Ortiz to be vested with the full and
absolute right of ownership to the said undivided one-half
of the properties in question, as universal testamentary heir
thereof together with the defendant Matilde Ortiz, to
indemnify the plaintiffs in the sum of P8,000, for losses and
damages, and to pay the costs.
Counsel for the defendants, in his answer denied the facts
alleged in paragraphs 1, 4, 6, 7, and 8 thereof, inasmuch
as, upon the death of the litigating sister's brother Manuel,
their mother, who was still living, was his heir by force of
law, and the defendants had never refused to give to the
plaintiff Vicente Ortiz her share of the said properties; and
stated that he admitted the facts alleged in paragraph 2,
provided it be understood, however, that the surname of
the defendant's mother was Felin, and not Feliu, and that
Miguel Ortiz died in Spain, and not in Vigan; that he also
admitted paragraph 3 of the complaint, with the difference
that the said surname should be Felin, and likewise
paragraph 5, except the part thereof relating to the
personal property and the jewelry, since the latter had not
yet been divided; that the said jewelry was in the
possession of the plaintiffs and consisted of: one Lozada
gold chronometer watch with a chain in the form of a bridle
curb and a watch charm consisting of the engraving of a
postage stamp on a stone mounted in gold and bearing the
initials M. O., a pair of cuff buttons made of gold coins, four
small gold buttons, two finger rings, another with the initials
M. O., and a gold bracelet; and that the defendants were
willing to deliver to the plaintiffs, in conformity with their
petitions, one-half of the total value in cash, according to
appraisement, of the undivided real properties specified in
paragraph 5, which half amounted to P3,948.
In a special defense said counsel alleged that the
defendants had never refused to divide the said property
and had in fact several years before solicited the partition
of the same; that, from 1886 to 1901, inclusive, there was
collected from the property on Calle Escolta the sum of 288
pesos, besides a few other small amounts derived from
other sources, which were delivered to the plaintiffs with
other larger amounts, in 1891, and from the property on

Calle Washington, called La Quinta, 990.95 pesos, which

proceeds, added together, made a total of 1,278.95 pesos,
saving error or omission; that, between the years
abovementioned, Escolta, and that on Calle
Washington, La Quinta, 376.33, which made a total of
1,141.71, saving error or omission; that, in 1897, the work
of reconstruction was begun of the house on Calle Escolta,
which been destroyed by an earthquake, which work was
not finished until 1903 and required an expenditure on the
part of the defendant Matilde Ortiz, of 5,091.52 pesos; that
all the collections made up to August 1, 1905, including the
rent from the stores, amounted to only P3,654.15, and the
expenses, to P6,252.32, there being, consequently, a
balance of P2,598.17, which divided between the sisters,
the plaintiff and the defendant, would make the latter's
share P1,299.08; that, as shown by the papers kept by the
plaintiffs, in the year 1891 the defendant Bartolome
presented to the plaintiffs a statement in settlements of
accounts, and delivered to the person duly authorized by
the latter for the purpose, the sum of P2,606.29, which the
said settlement showed was owing his principals, from
various sources; that, the defendant Bartolome having
been the administrator of the undivided property claimed by
the plaintiffs, the latter were owing the former legal
remuneration of the percentage allowed by law for
administration; and that the defendants were willing to pay
the sum of P3,948, one-half of the total value of the said
properties, deducting therefrom the amount found to be
owing them by the plaintiffs, and asked that judgment be
rendered in their favor to enable them to recover from the
latter that amount, together with the costs and expenses of
the suit.
The defendants, in their counter claim, repeated each and
all of the allegations contained in each of the paragraphs of
section 10 of their answer; that the plaintiffs were obliged to
pay to the administrator of the said property the
remuneration allowed him by law; that, as the revenues
collected by the defendants amounted to no more than
P3,654.15 and the expenditures incurred by them, to
P6,252.32, it followed that the plaintiffs owed the
defendants P1,299.08, that is one-half of the difference
between the amount collected from and that extended on
the properties, and asked that judgment be therefore

rendered in their behalf to enable them to collect this sum

from the plaintiffs, Ricardo Pardell and Vicenta Ortiz, with
legal interest thereon from December 7, 1904, the date
when the accounts were rendered, together with the sums
to which the defendant Bartolome was entitled for the
administration of the undivided properties in question.
By a written motion of August 21, 1905, counsel for the
plaintiffs requested permission to amend the complaint by
inserting immediately after the words "or respective
appraisal," fifth line of paragraph 5, the phrase "in cash in
accordance with the assessed value," and likewise further
to amend the same, in paragraph 6 thereof, by substituting
the following word in lieu of the petition for the remedy
sought: "By reason of all the foregoing, I beg the court to
be pleased to render the judgment by sentencing the
defendants, Gaspar de Bartolome and Matilde Ortiz Felin
de Bartolome, to restore and deliver to the plaintiffs an
exact one-half of the total vale of the undivided properties
described in the complaint, such value to be ascertained by
the expert appraisal of two competent persons, one of
whom shall be appointed by the plaintiffs and the other by
the defendants, and, in case of disagreement between
these two appointees such value shall be determined by a
third expert appraiser appointed by the court, or, in a
proper case, by the price offered at public auction; or, in
lieu thereof, it is requested that the court recognize the
plaintiff, Vicenta Ortiz, to be vested with a full and absolute
right to an undivided one-half of the said properties;
furthermore, it is prayed that the plaintiffs be awarded an
indemnity of P8,000 for losses and damages, and the
costs." Notwithstanding the opposition of the defendants,
the said amendment was admitted by the court and
counsel for the defendants were allowed to a period of
three days within which to present a new answer. An
exception was taken to this ruling.
The proper proceedings were had with reference to the
valuation of the properties concerned in the division sought
and incidental issues were raised relative to the partition of
some of them and their award to one or the other of the
parties. Due consideration was taken of the averments and
statements of both parties who agreed between
themselves, before the court, that any of them might at any

45 | P a g e

time acquire, at the valuation fixed by the expert judicial

appraiser, any of the properties in question, there being
none in existence excluded by the litigants. The court,
therefore, by order of December 28, 1905, ruled that the
plaintiffs were entitled to acquire, at the valuation
determined by the said expert appraiser, the building
known as La Quinta, the lot on which it stands and the
warehouses and other improvements comprised within the
inclosed land, and the seeds lands situated in the pueblos
of Vigan and Santa Lucia; and that the defendants were
likewise entitled to acquire the house on Calle Escolta, the
lot on Calle Magallanes, and the three parcels of land
situated in the pueblo of Candon.
After this partition had been made counsel for the
defendants, by a writing of March 8, 1906, set forth: That,
having petitioned for the appraisement of the properties in
question for the purpose of their partition, it was not to be
understood that he desired from the exception duly entered
to the ruling made in the matter of the amendment to the
complaint; that the properties retained by the defendants
were valued at P9,310, and those retained by the plaintiffs,
at P2,885, one-half of which amounts each party had to
deliver to the other, as they were pro indiviso properties;
that, therefore, the defendants had to pay the plaintiffs the
sum of P3,212.50, after deducting the amount which the
plaintiffs were obliged to deliver to the defendants, as onehalf of the price of the properties retained by the former;
that, notwithstanding that the amount of the counterclaim
for the expenses incurred in the reconstruction of the pro
indiviso property should be deducted from the sum which
the defendants had to pay the plaintiffs, the former, for the
purpose of bringing the matter of the partition to a close,
would deliver to the latter, immediately upon the signing of
the instrument of purchase and sale, the sum of P3,212.50,
which was one-half of the value of the properties alloted to
the defendants; such delivery, however, was not to be
understood as a renouncement of the said counterclaim,
but only as a means for the final termination of the pro
indiviso status of the property.
The case having been heard, the court on October 5, 1907,
rendered judgment holding that the revenues and the
expenses were compensated by the residence enjoyed by

the defendant party, that no losses or damages were either

caused or suffered, nor likewise any other expense besides
those aforementioned, and absolved the defendants from
the complaint and the plaintiffs from the counterclaim, with
no special finding as to costs. An exception was taken to
this judgment by counsel for the defendants who moved for
a new trial on the grounds that the evidence presented did
not warrant the judgment rendered and that the latter was
contrary to law. This motion was denied, exception whereto
was taken by said counsel, who filed the proper bill of
exceptions, and the same was approved and forwarded to
the clerk of this court, with a transcript of the evidence.
Both of the litigating sisters assented to a partition by
halves of the property left in her will by their mother at her
death; in fact, during the course of this suit, proceedings
were had, in accordance with the agreement made, for the
division between them of the said hereditary property of
common ownership, which division was recognized and
approved in the findings of the trial court, as shown by the
judgment appealed from.
The issues raised by the parties, aside from said division
made during the trial, and which have been submitted to
this court for decision, concern: (1) The indemnity claimed
for losses and damages, which the plaintiffs allege amount
to P8,000, in addition to the rents which should have been
derived from the house on Calle Escolta, Vigan; (2) the
payment by the plaintiffs to the defendants of the sum of
P1,299.08, demanded by way of counterclaim, together
with legal interest thereon from December 7, 1904; (3) the
payment to the husband of the defendant Matilde Ortiz, of
a percentage claimed to be due him as the administrator of
the property of common ownership; (4) the division of
certain jewelry in the possession of the plaintiff Vicenta
Ortiz; and (5) the petition that the amendment be held to
have been improperly admitted, which was made by the
plaintiffs in their written motion of August 21, 1905, against
the opposition of the defendants, through which admission
the latter were obliged to pay the former
P910.50.lawphil.net
Before entering upon an explanation of the propriety or
impropriety of the claims made by both parties, it is

indispensable to state that the trial judge, in absolving the

defendants from the complaint, held that they had not
caused losses and damages to the plaintiffs, and that the
revenues and the expenses were compensated, in view of
the fact that the defendants had been living for several
years in the Calle Escolta house, which was pro
indivisoproperty of joint ownership.
By this finding absolving the defendants from the
complaint, and which was acquiesced in by the plaintiffs
who made no appeal therefrom, the first issue has been
decided which was raised by the plaintiffs, concerning the
indemnity for losses and damages, wherein are comprised
the rents which should have been obtained from the upper
story of the said house during the time it was occupied by
the defendants, Matilde Ortiz and her husband, Gaspar de
Bartolome.
Notwithstanding the acquiescence on the part of the
plaintiffs, assenting to the said finding whereby the
defendants were absolved from the complaint, yet, as such
absolution is based on the compensation established in the
judgment of the trial court, between the amounts which
each party is entitled to claim from the other, it is imperative
to determine whether the defendant Matilde Ortiz, as
coowner of the house on Calle Escolta, was entitled, with
her husband, to reside therein, without paying to her
coowner, Vicenta Ortiz, who, during the greater part of the
time, lived with her husband abroad, one-half of the rents
which the upper story would have produced, had it been
rented to a stranger.
Article 394 of the Civil Code prescribes:
Each coowner may use the things owned in
common, provided he uses them in accordance
with their object and in such manner as not to
injure the interests of the community nor prevent
the coowners from utilizing them according to
their rights.
Matilde Ortiz and her husband occupied the upper story,
designed for use as a dwelling, in the house of joint

46 | P a g e

ownership; but the record shows no proof that, by so doing,

the said Matilde occasioned any detriment to the interest of
the community property, nor that she prevented her sister
Vicenta from utilizing the said upper story according to her
rights. It is to be noted that the stores of the lower floor
were rented and accounting of the rents was duly made to
the plaintiffs.
Each coowner of realty held pro indiviso exercises his
rights over the whole property and may use and enjoy the
same with no other limitation than that he shall not injure
the interests of his coowners, for the reason that, until a
division be made, the respective part of each holder can
not be determined and every one of the coowners
exercises, together with his other coparticipants, joint
ownership over the pro indiviso property, in addition to his
use and enjoyment of the same.
As the hereditary properties of the joint ownership of the
two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz,
defendant, were situated in the Province of Ilocos Sur, and
were in the care of the last named, assisted by her
husband, while the plaintiff Vicenta with her husband was
residing outside of the said province the greater part of the
time between 1885 and 1905, when she left these Islands
for Spain, it is not at all strange that delays and difficulties
should have attended the efforts made to collect the rents
and proceeds from the property held in common and to
obtain a partition of the latter, especially during several
years when, owing to the insurrection, the country was in a
turmoil; and for this reason, aside from that founded on the
right of coownership of the defendants, who took upon
themselves the administration and care of the properties of
joint tenancy for purposes of their preservation and
improvement, these latter are not obliged to pay to the
plaintiff Vicenta one-half of the rents which might have
been derived from the upper of the story of the said house
on Calle Escolta, and, much less, because one of the living
rooms and the storeroom thereof were used for the storage
of some belongings and effects of common ownership
between the litigants. The defendant Matilde, therefore, in
occupying with her husband the upper floor of the said
house, did not injure the interests of her coowner, her sister
Vicenta, nor did she prevent the latter from living therein,

but merely exercised a legitimate right pertaining to her as

coowner of the property.
Notwithstanding the above statements relative to the jointownership rights which entitled the defendants to live in the
upper story of the said house, yet in view of the fact that
the record shows it to have been proved that the defendant
Matilde's husband, Gaspar de Bartolome, occupied for four
years a room or a part of the lower floor of the same house
on Calle Escolta, using it as an office for the justice of the
peace, a position which he held in the capital of that
province, strict justice, requires that he pay his sister-inlaw, the plaintiff, one half of the monthly rent which the said
quarters could have produced, had they been leased to
another person. The amount of such monthly rental is fixed
at P16 in accordance with the evidence shown in the
record. This conclusion as to Bartolome's liability results
from the fact that, even as the husband of the defendant
coowner of the property, he had no right to occupy and use
gratuitously the said part of the lower floor of the house in
question, where he lived with his wife, to the detriment of
the plaintiff Vicenta who did not receive one-half of the rent
which those quarters could and should have produced, had
they been occupied by a stranger, in the same manner that
rent was obtained from the rooms on the lower floor that
were used as stores. Therefore, the defendant Bartolome
must pay to the plaintiff Vicenta P384, that is, one-half of
P768, the total amount of the rents which should have
been obtained during four years from the quarters occupied
as an office by the justice of the peace of Vigan.
With respect to the second question submitted for decision
to this court, relative to the payment of the sum demanded
as a counterclaim, it was admitted and proved in the
present case that, as a result of a serious earthquake on
August 15, 1897, the said house on Calle Escolta was left
in ruins and uninhabitable, and that, for its reconstruction or
repair, the defendants had to expend the sum of
P6,252.32. This expenditure, notwithstanding that it was
impugned, during the trial, by the plaintiffs, was duly proved
by the evidence presented by the defendants. Evidence,
unsuccessfully rebutted, was also introduced which proved
that the rents produced by all the rural and urban
properties of common ownership amounted, up to August

1, 1905, to the sum of P3,654.15 which, being applied

toward the cost of the repair work on the said house,
leaves a balance of P2,598.17, the amount actually
advanced by the defendants, for the rents collected by
them were not sufficient for the termination of all the work
undertaken on the said building, necessary for its complete
repair and to replace it in a habitable condition. It is
therefore lawful and just that the plaintiff Vicenta Ortiz, who
was willing to sell to her sister Matilde for P1,500, her
share in the house in question, when it was in a ruinous
state, should pay the defendants one-half of the amount
expanded in the said repair work, since the building after
reconstruction was worth P9,000, according to expert
appraisal. Consequently, the counterclaim made by the
defendants for the payment to them of the sum of
P1,299.08, is a proper demand, though from this sum a
reduction must be made of P384, the amount of one-half of
the rents which should have been collected for the use of
the quarters occupied by the justice of the peace, the
payment of which is incumbent upon the husband of the
defendant Matilde, as aforesaid, and the balance
remaining, P915.08, is the amount which the plaintiff
Vicenta must pay to the defendants.
The defendants claim to be entitled to the collection of legal
interest on the amount of the counterclaim, from December
7, 1904. This contention can not be sustained, inasmuch
as, until this suit is finally decided, it could not be known
whether the plaintiffs would or would not be obliged to pay
the sum whatever in reimbursement of expenses incurred
by the plaintiffs in the repair work on the said house on
Calle Escolta, whether or not the defendants, in turn, were
entitled to collect any such amount, and, finally, what the
net sum would be which the plaintiff's might have to pay as
reimbursement for one-half of the expenditure made by the
defendants. Until final disposal of the case, no such net
sum can be determined, nor until then can the debtor be
deemed to be in arrears. In order that there be an
obligation to pay legal interest in connection with a matter
at issue between the parties, it must be declared in a
judicial decision from what date the interest will be due on
the principal concerned in the suit. This rule has been
established by the decisions of the supreme court of Spain,
in reference to articles 1108, 1109, and 1110 of the Civil

47 | P a g e

Code, reference on April 24, 1867, November 19, 1869,

and February 22, 1901.
With regard to the percentage, as remuneration claimed by
the husband of the defendant Matilde for his administration
of the property of common ownership, inasmuch as no
stipulation whatever was made in the matter by and
between him and his sister-in-law, the said defendant, the
claimant is not entitled to the payment of any remuneration
whatsoever. Of his own accord and as an officious
manager, he administered the said pro indivisoproperty,
one-half of which belonged to his wife who held it in joint
tenancy, with his sister-in-law, and the law does not allow
him any compensation as such voluntary administrator. He
is merely entitled to a reimbursement for such actual and
necessary expenditures as he may have made on the
undivided properties and an indemnity for the damages he
may have suffered while acting in that capacity, since at all
events it was his duty to care for and preserve the said
property, half of which belonged to his wife; and in
exchange for the trouble occasioned him by the
administration of his sister-in-law's half of the said property,
he with his wife resided in the upper story of the house
aforementioned, without payment of one-half of the rents
said quarters might have produced had they been leased
to another person.
With respect to the division of certain jewelry, petitioned for
by the defendants and appellants only in their brief in this
appeal, the record of the proceedings in the lower court
does not show that the allegation made by the plaintiff
Vicenta is not true, to the effect that the deceased mother
of the litigant sisters disposed of this jewelry during her
lifetime, because, had she not done so, the will made by
the said deceased would have been exhibited in which the
said jewelry would have been mentioned, at least it would
have been proved that the articles in question came into
the possession of the plaintiff Vicenta without the
expressed desire and the consent of the deceased mother
of the said sisters, for the gift of this jewelry was previously
assailed in the courts, without success; therefore, and in
view of its inconsiderable value, there is no reason for
holding that the said gift was not made.

As regards the collection of the sum of P910.50, which is

the difference between the assessed value of the undivided
real properties and the price of the same as determined by
the judicial expert appraiser, it is shown by the record that
the ruling of the trial judge admitting the amendment to the
original complaint, is in accord with the law and principles
of justice, for the reason that any of the coowners of a pro
indiviso property, subject to division or sale, is entitled to
petition for its valuation by competent expert appraisers.
Such valuation is not prejudicial to any of the joint owners,
but is beneficial to their interests, considering that, as a
general rule, the assessed value of a building or a parcel of
realty is less than the actual real value of the property, and
this being appraiser to determine, in conjunction with the
one selected by the plaintiffs, the value of the properties of
joint ownership. These two experts took part in the latter
proceedings of the suit until finally, and during the course of
the latter, the litigating parties agreed to an amicable
division of the pro indiviso hereditary property, in
accordance with the price fixed by the judicial expert
appraiser appointed as a third party, in view of the
disagreement between and nonconformity of the
appraisers chosen by the litigants. Therefore it is improper
now to claim a right to the collection of the said sum, the
difference between the assessed value and that fixed by
the judicial expert appraiser, for the reason that the
increase in price, as determined by this latter appraisal,
redounded to the benefit of both parties.

Vigan; and we further find: (1) That the defendants are not
obliged to pay one-half of the rents which could have been
obtained from the upper story of the said house; (2) that
the plaintiffs can not be compelled to pay the legal interest
from December 7, 1904, on the sum expanded in the
reconstruction of the aforementioned house, but only the
interest fixed by law, at the rate of 6 per cent per annum,
from the date of the judgment to be rendered in
accordance with this decision; (3) that the husband of the
defendant Matilde Ortiz is not entitled to any remuneration
for the administration of the pro indiviso property belonging
to both parties; (4) that, neither is he entitled to collect from
the plaintiffs the sum of P910.50, the difference between
the assessed valuation and the price set by the expert
appraisal solicited by the plaintiffs in their amendment to
the complaint; and, (5) that no participation shall be made
of jewelry aforementioned now in the possession of the
plaintiff Vicenta Ortiz. The said judgment, as relates to the
points appealed, is affirmed, in so far as its findings agree
with those of this decision, and is reversed, in so far as
they do not. No special finding is made regarding the costs
of both instances. So ordered.

In consideration of the foregoing, whereby the errors

assigned to the lower court have been duly refuted, it is our
opinion that, with a partial reversal of the judgment
appealed from, in so far as it absolves the plaintiffs from
the counterclaim presented by the defendants, we should
and hereby do sentence the plaintiffs to the payment of the
sum of P915.08, the balance of the sum claimed by the
defendants as a balance of the one-half of the amount
which the defendants advanced for the reconstruction or
repair of the Calle Escolta house, after deducting from the
total of such sum claimed by the latter the amount of P384
which Gaspar de Bartolome, the husband of the defendant
Matilde, should have paid as one-half of the rents due for
his occupation of the quarters on the lower floor of the said
house as an office for the justice of the peace court of

G.R. No. 83175 December 4, 1989

SPOUSES FREDILLO GUILLEN and LEONA SANTIAGO
GUILLEN, and RANULFO B. GUILLEN, petitioners,
vs.
COURT OF APPEALS, IGMEDIO SANTIAGO, EPETACIO
SANTIAGO, DIOSDADO SANTIAGO, SILVESTRE
SANTIAGO, LOURDES SANTIAGO, FELISA SANTIAGO,
NELITA SANTIAGO, VINA SANTIAGO, RICHARD
SANTIAGO, NELFA SANTIAGO, HILARIO SANTIAGO,
GLORIA SANTIAGO, and FANNY
SANTIAGO,respondents.
J. T. Barrera & Associates for petitioners.

48 | P a g e

Nemesio P. Diaz for respondents.

SARMIENTO, J.:
The decision 1 dated December 10, 1987 of the Court of
Appeals, which reversed and set aside the decision 2 dated
October 31, 1985 of the Regional Trial Court of Iloilo City in
Civil Case No. 14580, entitled, "Igmedio Santiago, et. al.
vs. Leona Santiago, et al.", is challenged in this petition for
review on certiorari.
On August 24, 1982, the private respondents, as plaintiffs,
filed before the Regional Trial Court of Iloilo City a verified
complaint for annullment of lease agreement, delivery of
possession, and damages against the petitioners as
defendants. In their complaint, the private respondents
averred that they are, together with their sister, Leona
Santiago-Guillen, who is married to her co-petitioner,
Fredillo Guillen, the lawful and absolute co-owners of
several properties, one of which is an unregistered parcel
of land, converted into a fishpond, with an area of 66,620
square meters located at Barosbos, Carles, Iloilo. The coownership is evidenced by a "Deed of Extra-judicial
Partition and Agreement of Subdivision" dated June 26,
1981. After the execution of the partition agreement, the
Guillen spouses requested that they be allowed to retain
possession of the entire fishpond until the end of 1981 after
which they (the Guillens) would immediately deliver to the
private respondents their respective shares thereof At the
end of 1981, however, the Guillens did not deliver as
promised. It turned out that on October 29, 1980, they
leased the property to Ranulfo Guillen (likewise a
defendant in the trial court and a petitioner herein), a
brother of Fredillo Guillen. The private respondents
charged that the lease was null and void because they did
not consent thereto. They claimed that the lease was
executed to deprive them of their shares in the fishpond as
well as in the annual rentals thereof. 3
In their answer with counterclaim, the Guillen spouses
alleged that the fishpond in controversy was acquired by

them on June 18,1963 from Manuel Bellosillo who had

purchased it at a public auction sale conducted by the Iloilo
provincial sheriff in connection with a criminal case
involving the plaintiffs Igmedio, Epitacio, Flaviano, and
Diosdado (among the private respondents herein), all
brothers of Leona, in which the said property was offered
as a bond and was subsequently forfeited by the
government. They claimed that from June 18, 1963 up to
the filing of the complaint, they actually possessed the
property as owners, received the fruits therefrom, paid the
realty taxes thereon, and caused it to be declared in their
names. They claimed further that the plaintiffs (the herein
private respondents) had lost their right to redeem the
property by prescription and/or laches, and that the deed of
extra-judicial partition and agreement of subdivision was
procured through force and fraud. 4
At the pre-trial conference conducted by the trial court on
June 22, 1983, 5 the parties agreed on the following points:
that they were co-owners of the property in question which
was originally owned by their father, the late Tomas
Santiago, and that the property had been the subject of a
writ of execution by virtue of a criminal case filed against
plaintiffs Igmedio Santiago, et al., resulting in the sale of
the property and its purchase by Manuel Bellosillo in a
public auction sale. The existence of a redemption
certificate, dated June 1, 1963, executed in favor of Leona
Santiago-Guillen, over the said property, was admitted, and
so with the payment by Leona of the realty taxes thereon.
The parties acknowledged the existence of the lease
agreement, dated October 29, 1980, signed by Leona and
defendant Ranulfo Guillen, as well as the "Deed Of ExtraJudicial Partition And Agreement Of Subdivision," dated
June 26, 1981, covering not only the fishpond in
controversy but also the other properties of the late Tomas
Santiago. 6
Accordingly, the trial court limited the issues of the case to
the following:
a) Whether after the sale at public
auction of the herein Lot No. 30, all the
heirs or only one of them had exercised

the right of redemption from the

awardee, Manuel Bellosillo.
b) Whether prescription and/or laches
lie against the plaintiffs as only the
defendant Leona Santiago Guillen had
exercised, as she did exercise the right
of redemption.
c) Whether the existing Deed of ExtraJudicial Partition and Agreement of
Subdivision dated June 26, 1981, as
well as the lease agreement dated
October 29, 1980, were (sic) valid;
assuming that the lease insofar as the
plaintiffs' share is concerned is upheld,
whether plaintiffs are bound by the
terms and conditions therein set forth;
and d) Whether parties are entitled to
damages prayed for in the respective
pleadings. 7
At the trial, private respondent Igmedio Santiago testified
that the redemption effected by petitioner Leona SantiagoGuillen was for and on behalf of all the co-owners of all the
properties sold at public auction, as evidenced by a
document, dated October 28, 1971, executed by Manuel
Bellosillo, the purchaser, in which the latter acknowledged
his receipt of the sum of P9,123.40 as redemption price of
all the properties, including Lot 30, the contested
fishpond, 8 of the late Tomas Santiago. Bellosillo, who was
called to the witness stand, testified that Leona personally
redeemed the property from the Iloilo provincial sheriff in
1963 and that he (Bellosillo) had knowledge that the herein
private respondents had agreed to, and authorized, Leona
to pay the redemption price. 9
When Leona Santiago-Guillen's turn at the witness stand
came, she testified that the redemption price did not come
from the plaintiffs, her brothers and sisters. She averred
that the plaintiffs failed to raise the necessary amount
corresponding to their respective shares, and showed no
intention of redeeming the properties, thus compelling her

49 | P a g e

to redeem personally the properties with her own funds.

She further claimed that her signature appearing on the
"Deed Of Extra-Judicial Partition And Agreement of
Subdivision" was procured through force and intimidation;
moreover, the said document was not formally executed
and completed as the other plaintiffs refused to sign the
same. 10

right of reimbursement from the private respondents of

their respective shares in the redemption cost of
P2,253.40. 12

Leona's testimony was corroborated by her husband,

Fredillo. The other defendant (also a petitioner here)
Ranulfo B. Guillen, when called to testify, said that he
leased the disputed fishpond fully aware that the Guillen
spouses purchased the same from Manuel Bellosillo and
that, to his knowledge, the said spouses were never
disturbed in their occupancy of the said property. 11

Now the petitioners contend before us that the appellate

court committed a grave error in supplanting with its own
findings those established by the trial court. In fine, the
petitioners posit that since the fishpond was redeemed
from Manuel Bellosillo by Leona Santiago-Guillen solely
with her money and in her personal capacity, it (the
property) had ceased to be a co-ownership. Moreover,
because of her kins' failure to exercise their right to redeem
the property from Bellosillo within one year from the date of
the sale, they are barred by prescription from claiming coownership over the property.

On October 31, 1985, the trial court, convinced that the

redemption of the fishpond was made by Leona alone and
that her brothers and sisters had already lost their rights by
prescription and/or laches, decided in favor of the
petitioners, dismissing the case and ordering the private
respondents to pay the petitioners P5,000.00 as attorney's
fees, including the costs of the suit.
The private respondents appealed the trial court's decision
to the respondent Court of Appeals. In turn, the appellate
court, finding that the subject property is co-owned by the
parties-the Santiagos and their sister, Leona SantiagoGuillen held that neither prescription nor laches had set in,
pursuant to Article 494 of the new Civil Code. It ruled that
the redemption of the property in controversy caused by
Leona Santiago-Guillen was not for herself alone but also
for all the other co-owners. Consequently, on December
10, 1987, it reversed the decision of the lower court and
declared as null and void the lease agreement dated
October 29, 1979 anent the shares of the private
respondents. It also confirmed the inclusion of the property
in question, Lot 30, in the deed of extra-judicial partition
and agreement of subdivision dated June 26, 1981.
Furthermore, it ordered the petitioners to deliver the
possession to the private respondents of their respective
shares on Lot 30, the fishpond, in accordance with the
deed of extra-judicial partition and agreement of
subdivision, subject to petitioner Leona Santiago-Guillen's

The petitioners moved for a reconsideration of the

appellate court's decision, but their motion was denied in a
resolution dated April 21, 1988. 13 Hence, this petition.

Finally, the petitioners argue that the co-ownership had

been effectively repudiated when Leona Guillen exercised
rights of dominion thereon as early as June 18, 1963 upon
its redemption by her from Bellosillo. Prescription and
laches therefore lie against the private respondents.
Verily, the fate of this petition hinges on the resolution of
two issues, namely: whether or not petitioner Leona
Santiago-Guillen, by her acts, has acquired exclusive
ownership over Lot 30 the fishpond in dispute to the
exclusion of the private respondents; and whether or not,
the private respondents' action has prescribed.
There is no question as to the nature of the property being
contested by the parties. It is an unregistered, and hence,
untitled, parcel of real property, a fishpond to be precise,
measuring 66.620 square meters and denominated as Lot
30, PCAOM 478-D, Carles, Iloilo. The property was
originally owned by Tomas Santiago, father of petitioner
Leona Santiago-Guillen and the private respondents. When
Tomas died, the property became part and parcel of his
estate which, by mode of succession, was inherited in
common by his compulsory heirs-Leona and the private

respondents. While still co-owned by the aforementioned

parties, the property was offered as a bond in a criminal
case involving some of the private respondents particularly,
Igmedio, Epitacio, Flaviano, and Diosdado. The property
was later levied on execution and forfeited by the
government in the said criminal case and sold at a public
auction to Manuel Bellosillo. These facts are admitted by
the parties.
Conflict, however, arose when the property was redeemed
by Leona. The petitioners claim that the redemption was
made by Leona for herself alone and not for and on behalf
of all co-owners. As such, she assumed exclusive
ownership over the property, rendering the co-ownership
non-existent. Moreover, the lapse of considerable length of
time before the private respondents instituted the action
questioning the title and possession of petitioner Leona
Santiago-Guillen has allowed prescription to set in. The title
acquired by Leona therefore has become unassailable
insofar as the private respondents are concerned. The trial
court agreed with the petitioners on this matter. The
appellate court, however, ruled otherwise, saying that the
redemption was carried out by Leona not for herself alone
but also on behalf of her co-owners, the private
respondents.
We are satisfied with the correctness of the assailed
decision. No reversible error has been committed by the
respondent court.
The petitioners' position can not be sustained. Their
contention that the redemption of the property from Manuel
Bellosillo was by, and for petitioner Leona Santiago-Guillen
alone, is flawed. Manuel Bellosillo, himself, disclosed the
untenability of the petitioners' arguments. In a document
executed by him on October 28, 1971, Bellosillo
acknowledged receipt of the sum of P9,123.40 from
petitioner Leona Santiago-Guillen and the private
respondents "for (the) repurchase of all the lands of the late
Tomas Santiago." 14 Among the "lands" is the fishpond in
controversy. Further, in his testimony, Bellosillo
categorically stated that the property was not redeemed
from him by Leona alone.

50 | P a g e

Q. Do you know this parcel of land, Lot 30

situated at Barosbos, Municipality of Carles
which is the subject matter of this case?
A. Yes, sir.
Q. You know this because you purchased this in
public auction sale sometime in 1962?
A. Yes, sir.
Q. By the way, do you know the previous owners
of this property?
A. The previous owners were Anacleto (sic) and
Tomas Santiago, who were the parents of
plaintiffs.
Q. By the way, are (you) still the owner of this lot
subject matter of this case?
A. No more because they already repurchased
this land from me.
COURT:
Q. Who are they?
A. They are Lourdes, Felisa, Leona, Silvestre,
all surnamed Santiago. (t.s.n. pp. 4-5,
December 3, 1984). 15 [Emphasis supplied.]
Lourdes, Felisa, and Silvestra are among the herein private
respondents.
As to the reason why only the name of petitioner Leona
Santiago-Guillen appears in the redemption certificate
issued by the provincial sheriff of Iloilo, again, the testimony
of Bellosillo while under cross-examination provides us
illumination.

Q. But you stated a while ago that it was

Lourdes, Felisa, Silvestra and Leona all
surnamed Santiago who redeemed the property
from you. Now, it was Leona, which is which
now?
A. The four persons, namely: Lourdes, Felisa,
Leona and Silvestra came to me and offered to
redeem the property but I told them that it is
better that we have to go to the office of the
provincial sheriff but because of the expenses in
going to Iloilo City in the Office of the sheriff, we
decided that only Leona and myself who will go
together to the Office of the provincial sheriff and
redeem the property. (t.s.n. pp. 7-8, December 3,
1984)16 [Emphasis supplied.]
It is thus shown that the other private respondents did not
accompany Leona and Bellosillo to the office of the
provincial sheriff for purely economic reasons they
simply wanted to save on travelling expenses.
Arrayed against the contention of the petitioners, the
testimony of Bellosillo, needless to say, gains the
upperhand. We find no reason to doubt Bellosillo's
testimony, coming, as it did, from a disinterested person
who had nothing to gain from the controversy. On this
score, the trial court's decision, for failure to consider a fact
of great import to the case the Bellosillo testimony
was correctly reversed. On the other hand, the findings of
facts of the appellate court being amply supported by
evidence on record, must be accorded due respect and
deserves finality.
Anent the claim of prescription by the petitioners, suffice it
to say that the same is untenable in view of the explicit
provisions of the ultimate paragraph of Article 494 of the
new Civil Code, which state:
No prescription shall run in favor of a
co-owner or co-heir against his coowners or co-heir so long as he

expressly or impliedly recognizes the

co-ownership.
Co-owners can not acquire by prescription the share of the
other co-owners absent a clear repudiation of the coownership which is communicated to the other coowners. 17 "A mere silent possession by a co-owner, his
receipt of rents, fruits or profits from the property, the
erection of buildings and fences and the planting of trees
thereon; and the payment of land taxes, can not serve as
proof of exclusive ownership, if it is not borne out by clear,
complete and conclusive evidence that he exercised acts
of possession which unequivocally constituted an ouster or
deprivation of the rights of the other co-owners." 18 On this
score, the petitioners have not only failed to show any
definite proof indicating effective repudiation of the coownership over the property: on the contrary, petitioner
Leona Santiago-Guillen even affixed her signature on the
deed of extra-judicial partition and agreement of
subdivision dated June 26, 1981. By this act, Leona
unequivocably affirmed her recognition of the existing coownership.
Finally, Leona's pretense that her signature in the deed of
extra-judicial partition and agreement of subdivision was
obtained by force and intimidation fails to impress us. As
correctly observed by the respondent appellate court, being
the youngest of the brood does not prove the presence of
duress or intimidation. 19 More important, good faith and
regularity are always presumed in the execution of
contracts and agreements. The burden of proving
otherwise falls on the party claiming it, in this instance, the
petitioners. Considering that the petitioners had failed to
present any proof beyond their naked assertion, the
presumption stands.
WHEREFORE, the petition is DENIED. The decision dated
December 10, 1987 of the respondent Court of Appeals is
hereby AFFIRMED.
Costs against the petitioners.

51 | P a g e

by respondent Court, which we are not at liberty to

disregard, and the governing legal provisions, there is no
basis for reversal. We affirm.

FERNANDO, J.:

The nature of the case presented before the lower court by

private respondent Angelina D. Guevara, assisted by her
spouse, Juan B. Guevara, as plaintiffs, was noted in the
decision of respondent Court of Appeals thus: "Plaintiff
seeks recovery of `one (1) lady's diamond ring 18 cts. white
gold mounting, with one (1) 2.05 cts. diamond-solitaire, and
four (4) brills 0.10 cts. total weight' which she bought on
October 27, 1947 from R. Rebullida, Inc." 1 Then came a
summary of now respondent Guevara of her evidence:
"Plaintiff's evidence tends to show that around October 11,
1953 plaintiff while talking to Consuelo S. de Garcia, owner
of La Bulakea restaurant recognized her ring in the finger
of Mrs. Garcia and inquired where she bought it, which the
defendant answered from her comadre. Plaintiff explained
that that ring was stolen from her house in February, 1952.
Defendant handed the ring to plaintiff and it fitted her finger.
Two or three days later, at the request of plaintiff, plaintiff,
her husband Lt. Col. Juan Guevara, Lt. Cementina of
Pasay PD, defendant and her attorney proceeded to the
store of Mr. Rebullida to whom they showed the ring in
question. Mr. Rebullida a examined the ring with the aid of
high power lens and after consulting the stock card
thereon, concluded that it was the very ring that plaintiff
bought from him in 1947. The ring was returned to
defendant who despite a written request therefor failed to
deliver the ring to plaintiff. Hence, this case. Later on when
the sheriff tried to serve the writ of seizure (replevin),
defendant refused to deliver the ring which had been
examined by Mr. Rebullida, claiming it was lost."2

This petition for certiorari to review a decision of

respondent Court of Appeals was given due course
because it was therein vigorously asserted that legal
questions of gravity and of moment, there being allegations
of an unwarranted departure from and a patent misreading
of applicable and controlling decisions, called for
determination by this Tribunal. The brief for petitionersspouses, however, failed to substantiate such imputed
failings of respondent Court. The performance did not live
up to the promise. On the basis of the facts as duly found

How the defendant, Consuelo S. de Garcia, the present

petitioner before us, along with her husband Anastacio
Garcia, sought to meet plaintiff's claim was narrated thus:
"On the other hand, defendant denied having made any
admission before plaintiff or Mr. Rebullida or the sheriff. Her
evidence tends to show that the ring (Exhibit 1) was
purchased by her from Mrs. Miranda who got it from Miss
Angelita Hinahon who in turn got it from the owner, Aling
Petring, who was boarding in her house; that the ring she
bought could be similar to, but not the same ring plaintiff

G.R. No. L-20264 January 30, 1971

CONSUELO S. DE GARCIA and ANASTACIO
GARCIA, petitioners,
vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA
and JUAN B. GUEVARA, respondents.
Deogracias T. Reyes and Jose M. Luison for petitioners.
Tolentino and Garcia and D.R. Cruz for private
respondents.

purchased from Mr. Rebullida which was stolen; that

according to a pawn-shop owner the big diamond on
Exhibit 1 was before the trial never dismantled. When
dismantled, defendant's diamond was found to weigh 2.57
cts."3
Plaintiff lost in the lower court. She elevated the matter to
respondent Court of Appeals with the judgment of the lower
court being reversed. It is this decision now under review.
These are the facts as found by respondent Court of
Appeals: "That the ring brought by the parties for
examination by Rafael Rebullida on December 14, 1953
was the same ring purchased by plaintiff from R. Rebullida,
Inc. on October 27, 1947 and stolen in February, 1952 has
been abundantly established by plaintiff's evidence. Before
plaintiff lost the ring, she had been wearing it for six years
and became familiar with it. Thus, when she saw the
missing ring in the finger of defendant, she readily and
definitely identified it. Her identification was confirmed by
Mr. Rafael Rebullida, whose candid testimony is entitled to
great weight, with his 30 years experience behind him in
the jewelry business and being a disinterested witness
since both parties are his customers. Indeed, defendant
made no comment when in her presence Rebullida after
examining the ring and stock card told plaintiff that that was
her ring, nor did she answer plaintiff's letter of demand, ...
asserting ownership. Further confirmation may be found in
the extra-judicial admissions, contained in defendant's
original and first amended answers ..."4
These further facts likewise appeal therein: "The foregoing
proof is not counter-balanced by the denial on the part of
defendant or the presentation of the ring, Exhibit I, which
has a diamond-solitaire 2.57 cts., or much heavier than the
lost diamond weighing 2.05 cts. only. It is noteworthy that
defendant gave a rather dubious source of her ring. Aling
Petring from whom the ring supposedly came turned out to
be a mysterious and ephemeral figure. Miss Hinahon did
not even know her true and full name, nor her forwarding
address. She appeared from nowhere, boarded three
months in the house of Miss Hinahon long enough to sell
her diamond ring, disappearing from the scene a week
thereafter. Indeed, the case was terminated without any

52 | P a g e

hearing on the third-party and fourth-party complaints,

which would have shown up the falsity of defendant's
theory. Moreover, Mrs. Baldomera Miranda, third-party
defendant, who tried to corroborate defendant on the
latter's alleged attempt to exchange the ring defendant
bought through her, is [belied] by her judicial admission in
her Answer that appellee `suggested that she would make
alterations to the mounting and structural design of the ring
to hide the true identity and appearance of the original one'
(Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is
refuted by her own extra-judicial admissions ... although
made by defendant's counsel. For an attorney who acts as
counsel of record and is permitted to act such, has the
authority to manage the cause, and this includes the
authority to make admission for the purpose of the
litigation... Her proffered explanation that her counsel
misunderstood her is puerile because the liability to error
as to the identity of the vendor and the exchange of the
ring with another ring of the same value, was rather
remote."5
It is in the light of the above facts as well as the finding that
the discrepancy as to the weight between the diamondsolitaire in Exhibit I and the lost diamond was due to
defendant having "substituted a diamond-solitaire of
plaintiff with a heavier stone" that the decision was
rendered, respondent Court reversing the lower court and
ordering defendant, now petitioner Consuelo S. de Garcia,
to return plaintiff's ring or fact value of P1,000.00 and costs,
as well as to pay plaintiff P1,000.00 as attorney's fee and
P1,000.00 as exemplary damages. Hence this appeal.
To repeat, there is no occasion to reverse respondent
Court. It correctly applied the law to the facts as found.
1. 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." Respondent Angelina D. Guevara, having been

unlawfully deprived of the diamond ring in question, was
entitled to recover it from petitioner Consuelo S. de Garcia
who was found in possession of the same. The only
exception the law allows is when there is acquisition in
good faith of the possessor at a public sale, in which case
the owner cannot obtain its return without reimbursing the
price. As authoritative interpreted in Cruz v. Pahati, 6 the
right of the owner cannot be defeated even by proof that
there was good faith by the acquisition by the possessor.
There is a reiteration of this principle in Aznar v.
Yapdiangco.7 Thus: "Suffice it to say in this regard that the
right of the owner to recover personal property acquired in
good faith by another, is based on his being dispossessed
without his consent. The common law principle that where
one of two innocent persons must suffer by a fraud
perpetrated by the another, the law imposes the loss upon
the party who, by his misplaced confidence, has enabled
the fraud to be committed, cannot be applied in a case
which is covered by an express provision of the new Civil
Code, specifically Article 559. Between a common law
principle and statutory provision, the latter must prevail in
this jurisdiction."8
2. It is thus immediately apparent that there is no merit to
the contention raised in the first assigned error that her
possession in good faith, equivalent to title, sufficed to
defeat respondent Guevara's claim. As the above cases
demonstrate, even on that assumption the owner can
recover the same once she can show illegal deprivation.
Respondent Court of Appeals was so convinced from the
evidence submitted that the owner of the ring in litigation is
such respondent. That is a factual determination to which
we must pay heed. Instead of proving any alleged
departure from legal norms by respondent Court, petitioner
would stress Article 541 of the Civil Code, which provides:
'A possessor 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." She would accord to
it a greater legal significance than that to which under the
controlling doctrines it is entitled.lwph1.t The brief for
respondents did clearly point out why petitioner's assertion
is lacking in support not only from the cases but even from
commentators. Thus: "Actually, even under the first clause,

possession in good faith does not really amount to title, for

the reason that Art. 1132 of the Code provides for a period
of acquisitive prescription for movables through
`uninterrupted possession for four years in good faith' (Art.
1955 of the old Spanish Code, which provided a period of
three years), so that many Spanish writers, including
Manresa, Sanchez Roman, Scaevola, De Buen, and
Ramos, assert that under Art. 464 of the Spanish Code
(Art. 559 of the New Civil Code), the title of the possessor
is not that of ownership, but is merely a presumptive title
sufficient to serve as a basis of acquisitive prescription (II
Tolentino, Civil Code of the Phil. p. 258: IV Manresa,
Derecho Civil Espaol, 6th Ed., p. 380). And it is for the
very reason that the title established by the first clause of
Art. 559 is only a presumptive title sufficient to serve as a
basis for acquisitive prescription, that the clause
immediately following provides that `one who has lost any
movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same.' As
stated by the Honorable Justice Jose B. L. Reyes of this
Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075, Dec.
1947: `Article 559 in fact assumes that possessor is as yet
not the owner; for it is obvious that where the possessor
has come to acquire indefeasible title by, let us say,
adverse possession for the necessary period, no proof of
loss or illegal deprivation could avail the former owner of
the chattel. He would no longer be entitled to recover it
under any condition.' "9
The second assigned error is centered on the alleged
failure to prove the identity of the diamond ring. Clearly the
question raised is one of the fact. What the Court of
Appeals found is conclusive. Again, petitioner could not
demonstrate that in reaching such a conclusion the Court
of Appeals acted in an arbitrary manner. As made mention
of in the brief for respondents two disinterested witnesses,
Mr. Rafael Rebullida as well as Lt. Col. Reynaldo
Cementina of the Pasay City Police Department, both of
whom could not be accused of being biased in favor of
respondent Angelina D. Guevara, did testify as to the
identity of the ring.
The third assigned error of petitioners would find fault with
respondent Court relying "on the weakness of the title or

53 | P a g e

evidence" of petitioner Consuelo S. de Garcia. It is true, in

the decision under review, mention was made of petitioner
Consuelo S. de Garcia making no comment when in her
presence Rebullida, after examining the ring the stock
card, told respondent Angelina L. Guevara that that was
her ring, nor did petitioner answer a letter of the latter
asserting ownership. It was likewise stated in such decision
that there were extra-judicial admissions in the original and
first amended answers of petitioner. In the appraisal of her
testimony, respondent Court likewise spoke of her giving a
rather dubious source of her ring, the person from whom
she allegedly bought it turning out "to be a mysterious and
ephemeral figure." As a matter of fact, as set forth a few
pages back, respondent Court did enumerate the flaws in
the version given by petitioner. From the weakness of the
testimony offered which, as thus made clear, petitioner, did
not even seek to refute, she would raise the legal question
that respondent Court relied on the "weakness of [her] title
or evidence" rather than on the proof justifying respondent
Angelina D. Guevara's claim of ownership. Petitioner here
would ignore the finding of fact of respondent Court that
such ownership on her part "has been abundantly
established" by her evidence. Again here, in essence, the
question raised is one of fact, and there is no justification
for us to reverse respondent Court.
The legal question raised in the fourth assignment of error
is that the matter of the substitution of the diamond on the
ring was a question raised for the first time on appeal as it
was never put in issue by the pleadings nor the subject of
reception of evidence by both parties and not touched upon
in the decision of the lower court. Why no such question
could be raised in the pleadings of respondent Angelina D.
Guevara was clarified by the fact that the substitution came
after it was brought for examination to Mr. Rebullida. After
the knowledge of such substitution was gained, however,
the issue was raised at the trial according to the said
respondent resulting in that portion of the decision where
the lower court reached a negative conclusion. As a result,
in the motion for reconsideration, one of the points raised
as to such decision being contrary to the evidence is the
finding that there was no substitution. It is not necessary to
state that respondent Court, exercising its appellate power
reversed the lower court. What was held by it is controlling.

What is clear is that there is no factual basis for the legal

arguments on which the fourth assigned error is
predicated.
What is said takes care of the fifth assigned error that
respondent Court was mistaken in its finding that there was
such a substitution. Again petitioner would have us pass on
a question of credibility which is left to respondent Court of
Appeals. The sixth assigned error would complain against
the reversal of the lower court judgment as well as
petitioner Consuelo S. de Garcia being made to pay
respondent Angelina D. Guevara exemplary damages,
attorney's fees and costs. The reversal is called for in the
light of the appraisal of the evidence of record as
meticulously weighed by respondent Court. As to the
attorney's fees and exemplary damages, this is what
respondent Court said in the decision under review:
"Likewise, plaintiff is entitled to recover reasonable
attorney's fees in the sum of P1,000, it being just and
equitable under the circumstances, and another P1,000 as
exemplary damages for the public good to discourage
litigants from resorting to fraudulent devices to frustrate the
ends of justice, as defendant herein tried to substitute the
ring, Exhibit 1, for plaintiff's ring." 10 Considering the
circumstances, the cursory discussion of the sixth assigned
error on the matter by petitioner fails to demonstrate that
respondent Court's actuation is blemished by legal defects.
WHEREFORE, the decision of respondent Court of
Appeals of August 6, 1962 is hereby affirmed. With costs.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro,
Teehan

G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm
name "Pawnshop of Dominador Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.
Andres T. Velarde for petitioner.
Rafael G. Suntay for respondent.
FERNANDO, J.:p
In essence there is nothing novel in this petition for review
of a decision of the Court of Appeals affirming a lower court
judgment sustaining the right of an owner of a diamond
ring, respondent Lourdes G. Suntay, as against the claim of
petitioner Dominador Dizon, who owns and operates a
pawnshop. The diamond ring was turned over to a certain
Clarita R. Sison, for sale on commission, along with other
pieces of jewelry of respondent Suntay. It was then pledged
to petitioner. Since what was done was violative of the
terms of the agency, there was an attempt on her part to
recover possession thereof from petitioner, who refused.
She had to file an action then for its recovery. She was
successful, as noted above, both in the lower court and
thereafter in the Court of Appeals. She prevailed as she
had in her favor the protection accorded by Article 559 of
the
Civil
Code. 1 The matter was then elevated to us by petitioner.
Ordinarily, our discretion would have been exercised
against giving due course to such petition for review. The
vigorous plea however, grounded on estoppel, by his
counsel, Atty. Andres T. Velarde, persuaded us to act
otherwise. After a careful perusal of the respective

54 | P a g e

contentions of the parties, we fail to perceive any sufficient

justification for a departure from the literal language of the
applicable codal provision as uniformly interpreted by this
Court in a number of decisions. The invocation of estoppel
is therefore unavailing. We affirm.
The statement of the case as well as the controlling facts
may be found in the Court of Appeals decision penned by
Justice Perez. Thus: "Plaintiff is the owner of a three-carat
diamond ring valued at P5,500.00. On June 13, 1962, the
plaintiff and Clarita R. Sison entered into a transaction
wherein the plaintiff's ring was delivered to Clarita R. Sison
for sale on commission. Upon receiving the ring, Clarita R.
Sison executed and delivered to the plaintiff the receipt ... .
The plaintiff had already previously known Clarita R. Sison
as the latter is a close friend of the plaintiff's cousin and
they had frequently met each other at the place of the
plaintiff's said cousin. In fact, about one year before their
transaction of June 13, 1962 took place, Clarita R. Sison
received a piece of jewelry from the plaintiff to be sold for
P500.00, and when it was sold, Clarita R. Sison gave the
price to the plaintiff. 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 with
the demands because, without the knowledge of the
plaintiff, on June 15, 1962 or three days after the ring
above-mentioned was received by Clarita R. Sison from
the plaintiff, said ring was pledged by Melia Sison, niece of
the husband of Clarita R. Sison, evidently in connivance
with the latter, with the defendant's pawnshop for
P2,600.00 ... ." 2 Then came this portion of the decision
under review: "Since the plaintiff 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 the defendant's pawnshop of the
plaintiff's ring. When the plaintiff found out that Clarita R.
Sison pledged, she took steps to file a case of estafa
against the latter with the fiscal's office. Subsequently
thereafter, the plaintiff, through her lawyer, wrote a letter ...
dated September 22, 1962, to the defendant asking for the
delivery to the plaintiff of her ring pledged with defendant's
pawnshop under pawnshop receipt serial-B No. 65606,
dated June 15, 1962 ... . Since the defendant refused to

return the ring, the plaintiff filed the present action with the
Court of First Instance of Manila for the recovery of said
ring, with P500.00 as attorney's fees and costs. The
plaintiff asked for the provisional remedy of replevin by the
delivery of the ring to her, upon her filing the requisite bond,
pending the final determination of the action. The lower
court issued the writ of replevin prayed for by plaintiff and
the latter was able to take possession of the ring during the
pendency of the action upon her filing the requisite
bond." 3 It was then noted that the lower court rendered
judgment declaring that plaintiff, now respondent Suntay,
had the right to the possession of the ring in question.
Petitioner Dizon, as defendant, sought to have the
judgment reversed by the Court of Appeals. It did him no
good. The decision of May 19, 1969, now on review,
affirmed the decision of the lower court.
In the light of the facts as thus found by the Court of
Appeals, well-nigh conclusive on use, with the applicable
law being what it is, this petition for review cannot prosper.
To repeat, the decision of the Court of Appeals stands.
1. There is a fairly recent restatement of the force and
effect of the governing codal norm in De Gracia v. Court of
Appeals. 4 Thus: "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.'
Respondent Angelina D. Guevara, having been unlawfully
deprived of the diamond ring in question, was entitled to
recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the
law allows is when there is acquisition in good faith of the
possessor at a public sale, in which case the owner cannot
obtain its return without reimbursing the price. As
authoritatively interpreted in Cruz v. Pahati, the right of the
owner cannot be defeated even by proof that there was
good faith in the acquisition by the possessor. There is a
reiteration of this principle in Aznar v. Yapdiangco. Thus:

'Suffice it to say in this regard that the right of the owner to

recover personal property acquired in good faith by
another, is based on his being dispossessed without his
consent. The common law principle that were one of two
innocent persons must suffer by a fraud perpetrated by
another, the law imposes the loss upon the party who, by
his misplaced confidence, has enabled the fraud to be
committed, cannot be applied in a case which is covered
by an express provision of the new Civil Code, specifically
Article 559. Between a common law principle and a
statutory provision, the latter must prevail in this
jurisdiction." " 5
2. It must have been a recognition of the compulsion
exerted by the above authoritative precedents that must
have caused petitioner to invoke the principle of estoppel.
There is clearly a misapprehension. Such a contention is
devoid of any persuasive force.
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. As
Justice Mapa pointed out in the first case, a 1905
decision, Rodriguez v. Martinez, 10 a party should not be
permitted "to go against his own acts to the prejudice of
[another]. Such a holding would be contrary to the most
rudimentary principles of justice and law." 11 He is not, in
the language of Justice Torres, in Irlanda v.
Pitargue, 12 promulgated in 1912, "allowed to gainsay [his]
own acts or deny rights which [he had] previously
recognized." 13 Some of the later cases are to the effect

55 | P a g e

that an unqualified and unconditional acceptance of an

agreement forecloses a claim for interest not therein
provided. 14 Equally so the circumstance that about a
month after the date of the conveyance, one of the parties
informed the other of his being a minor, according to Chief
Justice Paras, "is of no moment, because [the former's]
previous misrepresentation had already estopped him from
disavowing the contract. 15 It is easily understandable why,
under the circumstances disclosed, estoppel is a frail reed
to hang on to. There was clearly the absence of an act or
omission, as a result of which a position had been
assumed by petitioner, who if such elements were not
lacking, could not thereafter in law be prejudiced by his
belief in what had been misrepresented to him. 16 As was
put by Justice Labrador, "a person claimed to be estopped
must have knowledge of the fact that his voluntary acts
would deprive him of some rights because said voluntary
acts are inconsistent with said rights." 17 To recapitulate,
there is this pronouncement not so long ago, from the pen
of Justice Makalintal, who reaffirmed that estoppel "has its
origin in equity and, being based on moral right and natural
justice, finds applicability wherever and whenever the
special circumstances of a case so demand." 18
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. So it has always been
since Varela
v.
Finnick, 19 a 1907 decision. According to Justice Torres: "In
the present case not only has the ownership and the origin
of the jewels misappropriated been unquestionably proven
but also that the accused, acting fraudulently and in bad
faith, disposed of them and pledged them contrary to
agreement, with no right of ownership, and to the prejudice
of the injured party, who was thereby illegally deprived of

said jewels; therefore, in accordance with the provisions of

article 464, the owner has an absolute right to recover the
jewels from the possession of whosoever holds
them, ... ." 20 There have been many other decisions to the
same effect since then. At least nine may be cited. 21 Nor
could any other outcome be expected, considering the civil
code provisions both in the former Spanish
legislation 22 and in the present Code. 23 Petitioner ought to
have been on his guard before accepting the pledge in
question. Evidently there was no such precaution availed
of. He therefore, has only himself to blame for the fix he is
now in. It would be to stretch the concept of estoppel to the
breaking point if his contention were to prevail. Moreover,
there should have been a realization on his part that courts
are not likely to be impressed with a cry of distress
emanating from one who is in a business authorized to
impose a higher rate of interest precisely due to the greater
risk assumed by him. A predicament of this nature then
does not suffice to call for less than undeviating adherence
to the literal terms of a codal provision. Moreover, while the
activity he is engaged in is no doubt legal, it is not to be lost
sight of that it thrives on taking advantage of the
necessities precisely of that element of our population
whose lives are blighted by extreme poverty. From
whatever angle the question is viewed then, estoppel
certainly cannot be justly invoked.
WHEREFORE, the decision of the Court of Appeals of May
19, 1969 is affirmed, with costs against petitioner.
Concepcion, C.J., Zaldivar, Makasiar, Antonio and
Esguerra, JJ., concur.

G.R. No. 80298

April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,

vs.
THE SPOUSES LEONOR and GERARDO SANTOS,
doing business under the name and style of "SANTOS
BOOKSTORE," and THE COURT OF
APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne
B. Samson for petitioner.
Cendana Santos, Delmundo & Cendana for private
respondents.
CRUZ, J.:
The case before us calls for the interpretation of Article 559
of the Civil Code and raises the particular question of when
a person may be deemed to have been "unlawfully
deprived" of movable property in the hands of another. The
article runs in full as follows:
Art. 559. 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 or 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.

56 | P a g e

The movable property in this case consists of books, which

were bought from the petitioner by an impostor who sold it
to the private respondents. Ownership of the books was
recognized in the private respondents by the Municipal
Trial Court, 1 which was sustained by the Regional Trial
Court, 2 which was in turn sustained by the Court of
Appeals. 3 The petitioner asks us to declare that all these
courts have erred and should be reversed.
This case arose when on October 5, 1981, a person
identifying himself as Professor Jose Cruz placed an order
by telephone with the petitioner company for 406 books,
payable on delivery. 4 EDCA prepared the corresponding
invoice and delivered the books as ordered, for which Cruz
issued a personal check covering the purchase price of
P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the
books to private respondent Leonor Santos who, after
verifying the seller's ownership from the invoice he showed
her, paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a
second order placed by Cruz even before clearing of his
first check, made inquiries with the De la Salle College
where he had claimed to be a dean and was informed that
there was no such person in its employ. Further verification
revealed that Cruz had no more account or deposit with the
Philippine Amanah Bank, against which he had drawn the
payment check. 7 EDCA then went to the police, which set
a trap and arrested Cruz on October 7, 1981. Investigation
disclosed his real name as Tomas de la Pea and his sale
of 120 of the books he had ordered from EDCA to the
private respondents. 8
On the night of the same date, EDCA sought the
assistance of the police in Precinct 5 at the UN Avenue,
which forced their way into the store of the private
respondents and threatened Leonor Santos with
prosecution for buying stolen property. They seized the 120
books without warrant, loading them in a van belonging to
EDCA, and thereafter turned them over to the petitioner. 9
Protesting this high-handed action, the private respondents
sued for recovery of the books after demand for their return

was rejected by EDCA. A writ of preliminary attachment

was issued and the petitioner, after initial refusal, finally
surrendered the books to the private respondents. 10 As
previously stated, the petitioner was successively rebuffed
in the three courts below and now hopes to secure relief
from us.
To begin with, the Court expresses its disapproval of the
arbitrary action of the petitioner in taking the law into its
own hands and forcibly recovering the disputed books from
the private respondents. The circumstance that it did so
with the assistance of the police, which should have been
the first to uphold legal and peaceful processes, has
compounded the wrong even more deplorably. Questions
like the one at bar are decided not by policemen but by
judges and with the use not of brute force but of lawful
writs.
Now to the merits
It is the contention of the petitioner that the private
respondents have not established their ownership of the
disputed books because they have not even produced a
receipt to prove they had bought the stock. This is
unacceptable. Precisely, the first sentence of Article 559
provides that "the possession of movable property acquired
in good faith is equivalent to a title," thus dispensing with
further proof.
The argument that the private respondents did not acquire
the books in good faith has been dismissed by the lower
courts, and we agree. Leonor Santos first ascertained the
ownership of the books from the EDCA invoice showing
that they had been sold to Cruz, who said he was selling
them for a discount because he was in financial need.
Private respondents are in the business of buying and
selling books and often deal with hard-up sellers who
urgently have to part with their books at reduced prices. To
Leonor Santos, Cruz must have been only one of the many
such sellers she was accustomed to dealing with. It is
hardly bad faith for any one in the business of buying and
selling books to buy them at a discount and resell them for
a profit.

But the real issue here is whether the petitioner has been
unlawfully deprived of the books because the check issued
by the impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases
holding that the owner who has been unlawfully deprived of
personal property is entitled to its recovery except only
where the property was purchased at a public sale, in
which event its return is subject to reimbursement of the
purchase price. The petitioner is begging the question. It is
putting the cart before the horse. Unlike in the cases
invoked, it has yet to be established in the case at bar that
EDCA has been unlawfully deprived of the books.
The petitioner argues that it was, because the impostor
acquired no title to the books that he could have validly
transferred to the private respondents. Its reason is that as
the payment check bounced for lack of funds, there was a
failure of consideration that nullified the contract of sale
between it and Cruz.
The contract of sale is consensual and is perfected once
agreement is reached between the parties on the subject
matter and the consideration. According to the Civil Code:
Art. 1475. The contract of sale is perfected at the
moment there is a meeting of minds upon the
thing which is the object of the contract and upon
the price.
From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contracts.
xxx

xxx

xxx

Art. 1477. The ownership of the thing sold shall

be transferred to the vendee upon the actual or
constructive delivery thereof.
Art. 1478. The parties may stipulate that
ownership in the thing shall not pass to the
purchaser until he has fully paid the price.

57 | P a g e

It is clear from the above provisions, particularly the last

one quoted, that ownership in the thing sold shall not pass
to the buyer until full payment of the purchase only if there
is a stipulation to that effect. Otherwise, the rule is that
such ownership shall pass from the vendor to the vendee
upon the actual or constructive delivery of the thing
soldeven if the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to
rescind the contract, or to criminal prosecution in the case
of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to
another.
In Asiatic Commercial Corporation v. Ang, 11 the plaintiff sold
some cosmetics to Francisco Ang, who in turn sold them to
Tan Sit Bin. Asiatic not having been paid by Ang, it sued for
the recovery of the articles from Tan, who claimed he had
validly bought them from Ang, paying for the same in cash.
Finding that there was no conspiracy between Tan and Ang
to deceive Asiatic the Court of Appeals declared:
Yet the defendant invoked Article 464 12 of the
Civil Code providing, among other things that
"one who has been unlawfully deprived of
personal property may recover it from any person
possessing it." We do not believe that the plaintiff
has been unlawfully deprived of the cartons of
Gloco Tonic within the scope of this legal
provision. It has voluntarily parted with them
pursuant to a contract of purchase and sale. The
circumstance that the price was not subsequently
paid did not render illegal a transaction which
was valid and legal at the beginning.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist,
who sold it to Sanchez, who sold it to Jimenez. When the
payment check issued to Tagatac by Feist was dishonored,
the plaintiff sued to recover the vehicle from Jimenez on
the ground that she had been unlawfully deprived of it by
reason of Feist's deception. In ruling for Jimenez, the Court
of Appeals held:

The point of inquiry is whether plaintiff-appellant

Trinidad
C.
Tagatac
has
been
unlawfully deprived of her car. At first blush, it
would seem that she was unlawfully deprived
thereof, considering that she was induced to part
with it by reason of the chicanery practiced on
her by Warner L. Feist. Certainly, swindling, like
robbery, is an illegal method of deprivation of
property. In a manner of speaking, plaintiffappellant was "illegally deprived" of her car, for
the way by which Warner L. Feist induced her to
part with it is illegal and is punished by law. But
does this "unlawful deprivation" come within the
scope of Article 559 of the New Civil Code?
xxx

xxx

xxx

. . . The fraud and deceit practiced by Warner L.

Feist earmarks this sale as a voidable contract
(Article 1390 N.C.C.). Being a voidable contract,
it is susceptible of either ratification or annulment.
If the contract is ratified, the action to annul it is
extinguished (Article 1392, N.C.C.) and the
contract is cleansed from all its defects (Article
1396, N.C.C.); if the contract is annulled, the
contracting parties are restored to their
respective situations before the contract and
mutual restitution follows as a consequence
(Article 1398, N.C.C.).
However, as long as no action is taken by the
party entitled, either that of annulment or of
ratification, the contract of sale remains valid and
binding. When plaintiff-appellant Trinidad C.
Tagatac delivered the car to Feist by virtue of
said voidable contract of sale, the title to the car
passed to Feist. Of course, the title that Feist
acquired was defective and voidable.
Nevertheless, at the time he sold the car to Felix
Sanchez, his title thereto had not been avoided
and he therefore conferred a good title on the
latter, provided he bought the car in good faith,
for value and without notice of the defect in
Feist's title (Article 1506, N.C.C.). There being no

proof on record that Felix Sanchez acted in bad

faith, it is safe to assume that he acted in good
faith.
The above rulings are sound doctrine and reflect our own
interpretation of Article 559 as applied to the case before
us.
Actual delivery of the books having been made, Cruz
acquired ownership over the books which he could then
validly transfer to the private respondents. The fact that he
had not yet paid for them to EDCA was a matter between
him and EDCA and did not impair the title acquired by the
private respondents to the books.
One may well imagine the adverse consequences if the
phrase "unlawfully deprived" were to be interpreted in the
manner suggested by the petitioner. A person relying on
the seller's title who buys a movable property from him
would have to surrender it to another person claiming to be
the original owner who had not yet been paid the purchase
price therefor. The buyer in the second sale would be left
holding the bag, so to speak, and would be compelled to
return the thing bought by him in good faith without even
the right to reimbursement of the amount he had paid for it.
It bears repeating that in the case before us, Leonor
Santos took care to ascertain first that the books belonged
to Cruz before she agreed to purchase them. The EDCA
invoice Cruz showed her assured her that the books had
been paid for on delivery. By contrast, EDCA was less than
cautious in fact, too trusting in dealing with the impostor.
Although it had never transacted with him before, it readily
delivered the books he had ordered (by telephone) and as
readily accepted his personal check in payment. It did not
verify his identity although it was easy enough to do this. It
did not wait to clear the check of this unknown drawer.
Worse, it indicated in the sales invoice issued to him, by
the printed terms thereon, that the books had been paid for
on delivery, thereby vesting ownership in the buyer.
Surely, the private respondent did not have to go beyond
that invoice to satisfy herself that the books being offered

58 | P a g e

for sale by Cruz belonged to him; yet she did. Although the
title of Cruz was presumed under Article 559 by his mere
possession of the books, these being movable property,
Leonor Santos nevertheless demanded more proof before
deciding to buy them.
It would certainly be unfair now to make the private
respondents bear the prejudice sustained by EDCA as a
result of its own negligence.1wphi1 We cannot see the
justice in transferring EDCA's loss to the Santoses who had
acted in good faith, and with proper care, when they bought
the books from Cruz.
While we sympathize with the petitioner for its plight, it is
clear that its remedy is not against the private respondents
but against Tomas de la Pea, who has apparently caused
all this trouble. The private respondents have themselves
been unduly inconvenienced, and for merely transacting a
customary deal not really unusual in their kind of business.
It is they and not EDCA who have a right to complain.
WHEREFORE, the challenged decision is AFFIRMED and
the petition is DENIED, with costs against the petitioner.

G.R. No. L-11108

June 30, 1958
CHUA HAI, petitioner,
vs.
HON. RUPERTO KAPUNAN, JR. as Judge of the Court
of First Instance of Manila and ONG SHU,respondents.
Pedro Panganiban y Tolentino for petitioner.
German Lee for respondent Ong Shu.
REYES, J. B. L., J.:

Certiorari against an order of the Court of First Instance of

Manila, Hon. Ruperto Kapunan, Jr. presiding, ordering the
return to the complainant in criminal case No.
34250, People vs. Roberto Sotto, of 100 sheets of
galvanized iron roofing which had been sold by the
accused in said case to petitioner herein, Chua Hai. The
order is as follows:
Counsel for the complainant in this case seeks
the return of the 700 sheets of galvanized iron
now with the Manila Police Department which
form part of the hardware materials involved in
this case. Chua Hai, one of the persons who
purchased from the accused one hundred (100)
pieces of the said galvanized iron sheets,
opposes the said motion on the ground that the
question of ownership should be determined in
the proper proceedings, claiming that he has a
valid title to the 100 pieces, having bought them
from the accused Roberto Soto on February 1,
1956. Roberto Soto is presently at large, his
arrest having been ordered by this Court on June
13, 1956, for failure to appear for trial.
Considering the provisions of Article 105 of the
Revised Penal Code, the said 700 sheets, except
five of them which are to be retained for
purposes of evidence, are hereby ordered
returned to the complainant, subject, however, to
the condition that the complainant post a bond in
an amount equal to twice the value of 100 sheets
in favor of Chua Hai who has a claim of
ownership to the said 100 sheets, and without
prejudice on the part of said Chua Hai to file the
corresponding action on the matter of ownership
thereof by virtue of his purchase from the herein
accused.
From the facts alleged in the pleadings presented in this
case, we gather the following: On January 31, 1956,
Roberto Soto purchased from Youngstown Hardware,
owned by Ong Shu, 700 corrugated galvanized iron sheets
and 249 pieces of round iron bar for P6,137.70, and in
payment thereof he issued a check drawn against the

Security Bank and Trust Company for P7,000.00, without

informing Ong Shu that he had no sufficient funds in said
bank to answer for the same. When the check was
presented for payment, it was dishonored for insufficiency
of funds. Soto sold 165 sheets in Pangasinan and 535
sheets in Calapan, Mindoro. Of those sold in Pangasinan,
100 were sold to petitioner Chua Hai. When the case was
filed in the Court of First Instance of Manila against
Roberto Soto, for estafa, the offended party filed a petition
asking that the 700 galvanized iron sheets, which were
deposited with the Manila Police Department, be returned
to him, as owner of the Youngstown Hardware. Petitioner
herein opposed the motion with respect to the 100 sheets
that he had bought from Soto. Notwithstanding the
opposition, the court ordered the return of the galvanized
iron sheets to Ong Shu. Petitioner then presented a motion
to reconsider the order, alleging that by the return thereof
to the offended party, the court had not only violated the
contract of deposit, because it was in that concept that
petitioner had delivered the 100 sheets to the Manila Police
Department, and that said return to Ong Shu amounted to
a deprivation of his property without due process of law. It
is also claimed that Article 105 of the Revised Penal Code,
under whose authority the return was ordered, can be
invoked only after the termination of the criminal case and
not while said criminal case is still pending trial.
The court having given no heed to these protests on the
part of the petitioner, the latter brought the present petition
to this Court alleging that the order of the respondent judge
constitutes a deprivation of petitioner's property without due
process of law, violating the contract of deposit under
which the sheets were delivered to the police department
of the City of Manila, and determining the respective rights
of petitioner and respondent Ong Shu without a previous
trial of the criminal case all of which constitute a grave
abuse of discretion and excess of jurisdiction. In answer to
the petition, it is claimed that as respondent Ong Shu is the
owner of the property, he has the right to recover
possession thereof even if said property appears to have
fallen into the possession of a third party who acquired it by
legal means, provided that said form of acquisition is not
that provided for in Article 464 of the Civil Code (where
property has been pledged in a monte de

59 | P a g e

piedad established under authority of the Government) ;

that even if the property was acquired in good faith, the
owner who has been unlawfully deprived thereof may
recover it from the person in possession of the same
unless a person in possession acquired it in good faith at a
public sale. (Art. 559, Civil Code of the Philippines). It is
also claimed that under the provisions of Article 105 of the
Revised Penal Code, under which restitution is made by a
return of the thing itself whenever possible, the galvanized
iron sheets in question should be returned to the offended
party, the owner, and that there is no provision of law
requiring that the criminal case must first be finally
disposed of before restitution of the goods swindled can be
ordered returned to the owner. In answer to the allegation
that petitioner has been deprived of his property without
due process of law, it is alleged that same is without
foundation because the petitioner was given ample time to
be heard. As to the claim that the galvanized iron sheets in
question were deposited with the Manila Police
Department, it is argued that the delivery to the Manila
Police Department was by virtue of the order of the court,
because the said sheets, were the subject of or are the
instruments of the commission of the crime of estafa, and
the court had the power to order the return thereof to the
owner after it had satisfied itself of the ownership thereof
by the offended party. It is also alleged in defense that
petitioner's rights, if any, are sufficiently protected by the
bond that the court has required to be filed.
We find the case meritorious, since petitioner's good faith is
not questioned. To deprive the possessor in good faith,
even temporarily and provisionally, of the chattels
possessed, violates the rule of Art. 559 of the Civil Code.
The latter declares that possession of chattels in good faith
is equivalent to title; i.e., that for all intents and purposes,
the possessor is the owner, until ordered by the proper
court to restore the thing to the one who was illegally
deprived thereof. Until such decree is rendered (and it can
not be rendered in a criminal proceeding in which the
possessor is not a party), the possessor, as presumptive
owner, is entitled to hold and enjoy the thing; and "every
possessor has a right to be respected in his possession;
and should he be disturbed therein he shall be protected in
or restored to said possession established by the means

established by the laws and the Rules of Court."(Art. 539,

New Civil Code).
The decision of the court below, instead of conforming to
Arts. 559 and 539 of the Civil Code, directs possessor to
surrender the chattel to the claimant Ong Shu before the
latter has proved that he was illegally deprived thereof,
without taking into account that the mere filing of a criminal
action for estafa is no proof that estafa was in fact
committed. Instead of regarding the possessor as the
owner of the chattel until illegal deprivation is shown, the
court below regards the possessor of the chattel not as an
owner, but as a usurper, and compels him to surrender
possession even before the illegal deprivation is proved.
We see no warrant for such a reversal of legal rules.
It can not be assumed at this stage of the proceedings that
respondent Ong Shu is still the owner of the property; to do
so it take for granted that the estafa was in fact committed,
when so far, the trial on the merits has not even started,
and the presumption of innocence holds full sway.
In the third place, the civil liability of the offender to make
restitution, under Art. 105 of the Revised Penal Code,does
not arise until his criminal liability is finally declared, since
the former is a consequence of the latter. Art. 105 of the
Revised Penal Code, therefore, can not be invoked to
justify the order of the court below, since that very article
recognizes the title of an innocent purchaser when it says:

The last paragraph of Article 105 plainly refers to those

cases where recovery is denied by the civil law,
notwithstanding the fact that the former owner was
deprived of his chattels through crime. One of these cases
is that provided for in Art. 85 of the Code of Commerce:
ART. 85. La compra de mercaderias en
almacenes o tiendas abiertas al publico causara
prescripcion de derecho a favor del comprador
respecto de las mercaderias adquiridas,
quedando a salvo en su caso los derechos del
propietario de los objetos vendidos para ejercitar
las acciones civiles o criminales que puedan
corresponderle contra el que los vendiere
indebidamente. (Civ. 464)
Para los efectos de esta prescripcion, se
reputaran almacenes o tiendas abiertas al
publico:
1. Los que establezcan los comerciantes
inscritos.
2. Los que establezcan los comerciantes no
inscritos, siempre que los almacenes o tiendas
permanezcan abiertos al publico por espacio de
echo dias consecutivos, o se hayan anunciado
por medio de rotulos, muestras o titulos en el
local mismo, o por avisos repartidos al publico o
insertos en los diarios de la localidad.

ART. 105. Restitution . . .

The thing itself shall be restored, even though it
be found in the possession of a third person who
has acquired it by lawful means, saving to the
latter his action against the proper person who
may be liable to him.
This provision is not applicable in cases in which
the thing has been acquired by the third person
in the manner and under the requirements which,
by law, bar an action for its recovery. (R.P.C.)
(Emphasis supplied)

Notwithstanding the claim of some authors that this Art. 85

has been repealed, the fact is that its rule exists and has
been confirmed by Article 1505 of the new Civil Code:
ART. 1505. Subject to the provisions of this Title,
where goods are sold by a person who is not the
owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer
acquires no better title to the goods than the
seller had, unless the owner of the goods is by
his conduct precluded from denying the seller's
authority to sell.

60 | P a g e

Nothing in this Title, however, shall affect:

xxx

xxx

xxx

(3) Purchases made in a merchant's store, or in

fairs, or markets in accordance with the Code of
Commerce and special laws. (C.C.)
But even if the articles in dispute had not been acquired in
a market, fair or merchant's store, still, so far as disclosed,
the facts do not justify a finding that the owner, respondent
Ong Shu, was illegally deprived of the iron sheets, at least
in so far as appellant was concerned. It is not denied that
Ong Shu delivered the sheets to Soto upon a perfected
contract of sale, and such delivery transferred title or
ownership to the purchaser. Says Art. 1496:
ART. 1496. The ownership of the thing sold is
acquired by the vendee from the moment it is
delivered to him in any of the ways specified in
articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is
transferred from the vendor to the vendee. (C.C.)
The failure of the buyer to make good the price does not, in
law, cause the ownership to revest in the seller until and
unless the bilateral contract of sale is first rescinded or
resolved pursuant to Article 1191 of the new Civil Code.
And, assuming that the consent of Ong Shu to the sale in
favor of Sotto was obtained by the latter through fraud or
deceit, the contract was not thereby rendered void ab initio,
but only voidable by reason of the fraud, and Article 1390
expressly provides that:
ART. 1390. The following contracts are voidable
or annullable, even though there may have been
no damage to the contracting parties:
(1) Those where one of the parties is incapable of
giving consent to a contract;

(2) Those where the consent is vitiated by

mistake, violence, intimidation, undue influence
or fraud.
These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification. (C.C.)
Agreeably to this provision, Article 1506 prescribes:

1) That the acquirer and possessor in good faith, of a

chattel or movable property is entitled to be respected and
protected in his possession, as if he were the true owner
thereof, until a competent court rules otherwise;
2) That being considered, in the meantime, as the true
owner, the possessor in good faith cannot be compelled to
I surrender possession nor to be required to institute an
action for the recovery of the chattel, whether or not an
indemnity bond is issued in his favor;

ART. 1506. Where the seller of goods has a

voidable title thereto, but his title has not been
avoided at the time of the sale, the buyer
acquires a good title to the goods, provided he
buys them in good faith, for value, and without
notice of the seller's defect of title. (C.C.)

3) That the filing of an information charging that the chattel

was illegally obtained through estafa from its true owner by
the transferor of the bona fide possessor does not warrant
disturbing the possession of the chattel against the will of
the possessor; and

Hence, until the contract of Ong Shu with Sotto is set aside
by a competent court (assuming that the fraud is
established to its satisfaction), the validity of appellant's
claim to the property in question cannot be disputed, and
his right to the possession thereof should be respected.

4) That the judge taking cognizance of the criminal case

against the vendor of the possessor in good faith has not
right to interfere with the possession of the latter, who is not
a party to the criminal proceedings, and such unwarranted
interference is not made justifiable by requiring a bond to
answer for damages caused to the possessor.

It is no excuse that the respondent Ong Shu was required

to post a redelivery bond. An indemnity bond, while
answering for damages, is not, by itself alone, sufficient
reason for disturbing property rights, whether temporarily or
permanently. If the invasion is not warranted, the filing of a
bond will not make it justifiable.

Wherefore, the writ of certiorari is granted, and the order of

the Court of First Instance of Manila in Criminal Case No.
34250, dated July 31, 1956, is hereby revoked and set
aside, as issued in abuse of discretion amounting to
excess of jurisdiction. Costs against appellant Ong Shu.

Questions of ownership and possession being eminently

civil in character, they should not be settled by exclusive
reference to the Revised Penal Code. If Ong Shu has
reason to fear that petitioner Chua Hai may dispose of the
chattels in dispute and thereby render nugatory his
eventual right to restitution, then the proper remedy lies in
a civil suit and attachment, not in an order presuming to
adjudicate in a criminal case the civil rights of one who is
not involved therein.
Summing up, we hold:

Paras, C. J., Bengzon, Montemayor, Reyes, A., Bautista

Angelo, Concepcion, and Endencia, JJ., concur.

G.R. No. L-18003

September 29, 1962
ROSARIO GREY VDA. DE ALBAR and JOSE M.
GREY, petitioners,
vs.
JOSEFA FABIE DE CARANDANG and THE COURT OF
APPEALS (Second Division), respondents.

61 | P a g e

Montenegro, Madayag, Viola and Hernandez for

petitioners.
Ambrosio Padilla and Santiago P. Blanco for respondents.

DIZON, J.:
Appeal taken by Rosario, Grey Vda. de Albar and Jose M.
Grey from the decision of the Court of Appeals CA-G.R.
No. 28196-R an original action for certiorari filed by
respondents Josefa Fabie de Carandang.
In her will the deceased Doa Rosario Fabie y Grey
bequeathed the naked ownership of a parcel of land
situated at Ongpin St., Manila, and of the building and
other improvements existing thereon, to petitioners, and
the usufruct thereof to respondent for life. Because the
improvements were destroyed during the battle for the
liberation of the City of Manila, the Philippine War Damage
Commission paid petitioners a certain sum of money war
damage. It was respondent, however, who paid the real
estate taxes due on the land for the years 1945 to 1954.
On October 2, 1952, petitioners commenced Civil Case No.
17674 in the Court of First Instance of Manila to limit
respondent's usufruct to the legal interest on the value of
the land. After due trial the court rendered judgment as
follows:
En virtud de todo lo cual, el Juzgado promulga
decision a favor de la demandada usufructuaria,
declarando:
(a) Que su usufructo vitalicio continua sobre la
finca en Ongpin con derecho exclusivo de
percibir durante su vida la totalidad de sus
rentas, sin que los demandantes tengan derecho
de inmiscuirse en la administracion de dicha
finca;

(b) Con derecho de percibir el 6% de la cantidad

de P8,574.00 percibidos como indemnizacion de
guerra desde Enero 11, 1950;
(c) Al reembolso de la suma de P1,989.27
pagados o abonados por la demandada como
pagos de amillaramiento desde la fecha de la
Contestacion, Octubre 22, 1953;
(d) Mas la suma de P2,000.00 como daos y
perjuicios en forma de honorarios de abogado y
gastos de litigio;
(e) Con las costas a cargo de los demandantes.
Deciding the appeal taken by petitioners, the Court of
Appeals rendered judgment as follows:
Wherefore, we hereby affirm the decision
appealed from insofar as it holds that appellee's
right of life usufruct subsist and is in full force and
effect upon the Ongpin lot and the building now
existing thereon, and that she is entitled to
receive from appellants 6% of the amount the
latter actually received from the Philippine War
Damage Commission, and we hereby reverse
said decision, declaring that reimbursement to
appellee of the sum of P1,989.27 paid by her for
real estate taxes is deferred until the termination
of the usufruct, and that she is not entitled to any
amount for attorney's fees.
On appeal taken by petitioners, We, in turn, rendered
judgment affirming that of the Court of Appeals with the
modification that petitioners should not be made to
reimburse the real estate taxes paid by respondent for the
years 1945 to 1954. Upon a motion for reconsideration,
filed by petitioner, We further modified the appealed
judgment by eliminating therefrom the portion requiring
them to give security for the payment of legal interest on
the amount of the war damage.

The record of the case having been remanded to the court

of origin for execution, respondent filed a motion praying
that the court issue an order for the "payment of the
appellate jurisdiction of the Court of Appeals, 11, 1950 to
January 11, 1960, which are already due to the defendant
usufructuary from the plaintiffs, naked owners, as legal
interest on the war damage payments received by the latter
covering said ten years period and that plaintiffs be ordered
to pay defendant usufructuary the amount of P196.32
every year, representing the legal interest per annum
payable on or before January 15, 1961, and every year
thereafter during the existence of the usufruct."1awphl.nt
Petitioners opposed the motion alleging that because
respondent failed to pay the real estate taxes on the
property for the years 1954 to 1959, the property was
declared delinquent and sold at public auction to Mrs. Pilar
T. Bautista; that respondent failed to repurchase the
property despite the fact that she was under obligation to
do so in order to maintain her usufruct thereon; that June 8,
1959, petitioners repurchased the same for P715.05 and
paid all the back taxes due thereon up to 1957, bringing the
total amount of real estate taxes paid by them to
P3,495.00; that, consequently, respondent's usufruct over
the property was extinguished and they are entitled to
reimbursement for the amount of real estate taxes paid by
them. On these grounds they prayed for the denial
respondent's motion, or for the suspension of the issuance
of the writ of execution until the question of the termination
of respondent's usufruct has been finally settled.
On July 2, 1960, the Court of First Instance of Manila
issued the following order:
On motion of the defendant and it appearing that
the decision of this Court dated August 10, 1953,
as modified by the decisions of the Court of
Appeals in CA-G.R. No. 11917-R and of the
Supreme Court in G.R. No. L-13361, had already
become final and executory, let a writ be issued
for the execution of the said decision.

62 | P a g e

In collecting and satisfying the sums adjudged in

the judgment in favor of the plaintiffs, [defendant]
the Sheriff of Manila is hereby ordered to
withhold the sum of P3,495.90 which the plaintiffs
claim to be reimbursable to them for real estate
taxes paid on the property for the years 1954,
1955, 1957 and 1959, as well as the sum spent
in repurchasing the property from the buyer at
public auction, Mrs. Pilar T. Bautista. The
disposition of the said sum should be threshed
out by the parties in a separate incident either in
this action or in an independent litigation.
On July 23, 1960 respondent filed a motion for the
reconsideration of the above order upon the ground that it
imposes a condition on the execution of the judgment
rendered in the case which, as modified by the appellate
courts, had already become executory. The court, however,
denied the motion in its order of August 25 of the same
year, which, in part, said:
The Court recognizes the fact that the decision
had already become final and executory and has
ordered the issuance of the property writ for the
enforcement of the said decision, in the first
paragraph of the questioned order. The second
paragraph of the same order was deemed
necessary in view of the apparent conflict
between the parties as to how to execute the
decision, particularly with regard to the liability for
real estate taxes on the property in question. The
difference of their views on this matter is very
evident in the pleadings they have filed in
connection with the issuance of the writ of
execution. In view of this divergence of opinion
between the parties, the Court considered it wise
to withhold the disputed sum, the same to be
disposed of in such manner that the parties may
thresh out between themselves in a separate
incident or in an independent action. There is no
intention to modify or impose any condition on
the enforcement of the judgment; rather, the
Court merely desires that the said judgment be

enforced and executed in the correct and proper

manner.
A petition for certiorari was thereafter filed by respondent
Josefa Fabie de Carandang with the Court of Appeals to
annul the orders of July 2, 1960 and August 25, 1960, on
the ground that the same were not in conformity with our
decision in G.R. No. L-13361, as modified by our resolution
of February 10, 1960.
Respondents' answer, after admitting some of the
averments made in the petition for certiorari and denying
the others, alleged as affirmative defenses, inter alia, that
appeal in due time was the proper remedy against the
orders complained of; that the Court of Appeals had no
jurisdiction over the petition because the writ sought was
not in aid of its appellate jurisdiction, and lastly, that the
respondent judge, in issuing the aforesaid orders, did not
commit any grave abuse of discretion.
Upon the issues thus submitted, the Court of Appeals
rendered the appealed decision annuling the orders of July
2 and August 25, 1960 mentioned heretofore, and ordering
the respondent judge to issue the writ of execution in
accordance with our decision of December 29, 1959, as
modified by our resolution of February 10, 1960. Hence the
present appeal.
Petitioners reiterate now their contention that the Court of
Appeals had no jurisdiction over the petition
for certiorarifiled by herein respondent, Josefa Fabie Vda.
de Carandang (CA-G.R. No. 28196), because the writ
sought therein was not in aid of its appellate jurisdiction.
We find this contention to be meritorious.
It is not disputed that the Court of Appeals has original
jurisdiction
to
issue
writs
of certiorari,
prohibition, mandamus, and all other auxiliary writs in aid of
its appellate jurisdiction (Section 30, Republic Act 296,
commonly known as Judiciary Act of, 1948). Settled
likewise is the view that anyone of the writs aforesaid is in
aid of the appellate jurisdiction of the Court of Appeal within
the meaning of the law, if said court has jurisdiction to

review, by appeal or writ of error, the final decision that

might be rendered in the principal case by the court against
which the writ is sought.
In Breslin vs. Luzon Stevedoring Co., et al., 47 O.G. 1170,
the main question raised by certiorari, was whether or not
the Court of First Instance of Manila erred in denying
admission of an amended complaint filed by the plaintiffs in
Civil Case No. 4609 and, accordingly, in dismissing the
case. The Court of Appeals forwarded the case to us in the
belief that the writ sought by petitioners therein was not in
aid of its appellate jurisdiction. The reason given in support
of this view was that if petitioners in the case had sought a
review of the orders complained of, by appeal or writ of
error, the review would have fallen under our exclusive
appellate jurisdiction because it would have involved
exclusively a question of law. In deciding whether or not the
case was correctly forwarded to Us, however, we said that
the reason relied upon had no bearing on the question of
whether or not the writ of certiorari sought by the therein
petitioners was in aid of the appellate jurisdiction of the
Court of Appeals because the determining factor for the
solution of that question was whether said court had
appellate jurisdiction to review the final decision of the
Court of First Instance on the merits of petitioners' action.
In the present case it is undisputed that the review of the
final decision rendered by the Court of First Instance of
Manila in Civil Case No. 17674 instituted by herein
petitioner against respondent Josefa Fabie de Carandang
was within the appellate jurisdiction of the Court of
Appeals. In fact, it was actually appealed to said court (CAG.R No. 11917-R) and its decision was subsequently
appealed to us (G.R. No. L-13361).
While from the above circumstances it might appear
that conformally with our decision in the Breslin
case the Court of Appeals had jurisdiction over the
petition for certiorari filed by respondent Josefa Fabie de
Carandang against herein petitioners and the Court of First
Instance of Manila, because the writ sought was in aid of
its appellate jurisdiction, we find it to be otherwise in view
of one important fact that makes the aforesaid decision
inapplicable to the present case.

63 | P a g e

Before Breslin and others filed their petition

for certiorari with the Court of Appeals, there had been no
trial and decision on the merits in the principal
case which was for the recovery of a sum of
money because the trial court not only refused to admit
their amended complaint but also dismissed the case on
the ground that the plaintiffs had no cause of action against
the defendant. Consequently, it was still reasonable and
logical to say that the writ ofcertiorari sought in their petition
was in aid of the appellate jurisdiction of the Court of
Appeals because, upon trial on the merits, the final
decision that would have been rendered by the Court of
First Instance of Manila would have been appealable to the
Court of Appeals considering the amount involved.
In the present case such situation does not obtain. The
main case (Civil Case No. 17674 of the Court of First
Instance of Manila) had already been finally decided, first
by the Court of First Instance of Manila, then by the Court
of Appeals and lastly, by Us; our decision had become
executory, for which reason the record of the case was
remanded below for purposes of execution; there was
absolutely nothing left of the substance of the action to be
resolved. Such being the case, there can be no reason to
say that the Court of Appeals still had jurisdiction to review
the final orders and decision of the Court of First Instance
in said case, by appeal or writ of error. That jurisdiction had
already been exercised and exhausted with the rendition of
the decision of the Court of Appeals in C.A. G.R. No.
11917. Upon the other hand, assuming that the orders
complained of are appealable, they could only be appealed
to Us because the appeal would have necessarily involved
nothing more than a question of law, namely, whether or
not the Court of First Instance of Manila had jurisdiction to
issue the orders complained of.
In view of the foregoing, we hold that the Court Appeals
had no jurisdiction to entertain Carandang's petition
forcertiorari, and, as a result, the appealed decision is set
aside. But, in view of the fact that we have original
jurisdiction to entertain said petition, we shall proceed to
decide it on the merits as if it had been originally filed with
Us, in order to save time and avoid unnecessary expenses

for the parties following the practice adopted in the

Breslin case.
The question to be resolved is whether the order July 2 and
August 25, 1960 issued by the Court of First Instance of
Manila modify our decision in G.R. No. L-13361, as
modified by our resolution of February 10, 1960. The
answer must be in the negative.
It is, of course, the law in this jurisdiction that a decision,
once executory, is beyond amendment, the prevailing party
being entitled to its execution as a matter of right; that the
writ of execution to be issued must form with the decision
(Buenaventura vs. Garcia, 78 Phil. 759); but it is likewise
settled that a stay of execution of a final judgment may be
authorized if necessary to accomplish the aims of justice,
as for instance, where there has been a change in the
situation of the parties which makes such execution
inequitable (Chua Lee vs. Mapa, 51 Phil. 624-625, Li Kim
Tho vs. Sanchez, 83 Phil. 776, 778).
As stated heretofore, when petitioners opposed respondent
Carandang's motion for execution, they alleged that
because the latter did not pay the real estate taxes on the
property over which she had usufructuary rights, for the
years 1954 to 1959, the property was declared delinquent
and sold at public auction; that because Carandang failed
to repurchase it, petitioners made the purchase for the sum
of P715.05, and paid all the back taxes up to 1957 as well
as those for the year 1959, having paid the total sum of
P3,495.00 as real estate taxes, which amount they claimed
reimbursement from respondent Carandang.
Upon the above facts if proven it would seem that
petitioners had at least a prima facie case against the
aforesaid respondent. It was in this connection precisely
that the order of July 2, 1960 provided that "the Sheriff of
Manila is hereby ordered to withhold the sum of
P3,495.98 . . ., as well as the sum spent in repurchasing
the property . . .", providing further that "the disposition of
said sum should be threshed out by the parties in a
separate incident either in this action or in the independent
litigation." This order, in our opinion, does not amount to a

modification of our final decision in the principal case, nor

to the imposition of a condition upon its enforcement. It
amounts to a mere stay of execution and is authorized by
our decisions in the Chua Lee and Lim Kim Tho cases
(supra).
IN VIEW OF THE FOREGOING, the writ prayed for in the
petition for certiorari filed by Josefa Fabie de Carandang
against Rosario Grey Vda. de Albar, Jose M. Grey, and the
Hon. Conrado M. Vasquez (CA-G.R. No. 28196-R) is
denied. With costs.

[G.R. No. L-14652. June 30, 1960.]

JUAN GARGANTOS, Petitioner, v. TAN YANON and
THE COURT OF APPEALS, Respondents.
Jose T. Nery for Petitioner.
Constantino P. Tadena for Respondents.
SYLLABUS
EASEMENT OF LIGHT AND VIEW; TWO ADJOINING
ESTATES FORMERLY OWNED BY ONE PERSON;
WHEN EXISTENCE OF DOORS AND WINDOWS IS
EQUIVALENT TO A TITLE. Where two adjoining estates
were formerly owned by just one person who introduced
improvements on both such that the wall of the house
constructed on the first estate extends to the wall of the
camarin on the second estate; and at the time of the sale of
the first estate, there existed on the aforementioned wall of
the house, doors and windows which serve as passages
for light and view, there being no provision in the deed of
sale that the easement of light and view will not be
established, the same is covered by Article 624, New Civil

64 | P a g e

code, which provides that the existence of an apparent sign

of easement between two estates established by the
proprietor of both, shall be considered, if one of them is
alienated, as a title so that easement will continue actively
and passively, unless at the time the ownership of the
estate is divided, the contrary is stated in the deed of
alienation of either of them, or the sign is made to
disappear before the instrument is executed. The existence
of doors and windows on the aforesaid wall of the house is
equivalent to a title, for the visible and permanent sign of
an easement is the title that characterizes its existence. But
while the law declares that the easement is to "continue",
the easement actually arises for the first time only upon
alienation of either estate, inasmuch as before that time
there is no easement to speak of, there being but one
owner of both estates (Article 613, N.C.C.) .
DECISION
GUTIERREZ DAVID, J.:
Juan Gargantos appeals by certiorari from the decision of
the Court of Appeals reversing the judgment of the Court of
First
Instance
of
Romblon.
The record discloses that the late Francisco Sanz was the
former owner of a parcel of land containing 888 square
meters, with the buildings and improvements thereon,
situated in the poblacion of Romblon. He subdivided the lot
into three and then sold each portion to different persons.
One portion was purchased by Guillermo Tengtio who
subsequently sold it to Vicente Uy Veza. Another portion,
with the house of strong materials thereon, was sold in
1927 to Tan Yanon, respondent herein. This house has on
its northeastern side, doors and windows overlooking the
third portion, which, together with the camarin and small
building thereon, after passing through several hands, was
finally acquired by Juan Gargantos, petitioner herein.
On April 23, 1955, Gargantos applied to the Municipal
Mayor of Romblon for a permit to demolish the roofing of
the old camarin. The permit having been granted,

Gargantos tore down the roof of the camarin. On May 11,

1955, Gargantos asked the Municipal Council of Romblon
for another permit, this time in order to construct a
combined residential house and warehouse on his lot. Tan
Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of
Romblon recommended granting of the building permit to
Gargantos, Tan Yanon filed against Gargantos an action to
restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through
the windows of his house, unless such building is erected
at a distance of not less than three meters from the
boundary line between the lots of plaintiff and defendant,
and to enjoin the members of the Municipal Council of
Romblon from issuing the corresponding building permit to
defendants. The case as against the members of the
Municipal Council was subsequently dismissed with
concurrence of plaintiffs council. After trial, the Court of
First Instance of Romblon rendered judgment dismissing
the complaint and ordering plaintiff to pay defendant the
sum of P12,500.00 by way of compensatory, exemplary,
moral
and
moderate
damages.
On appeal, the Court of Appeals set aside the decision of
the Court of First Instance of Romblon and enjoined
defendant from constructing his building unless "he erects
the same at a distance of not less than three meters from
the boundary line of his property, in conformity with Article
673 of the New Civil Code."cralaw virtua1aw library
So Juan Gargantos filed this petition for review of the
appellate Courts decision. The focal issue herein is
whether the property of respondent Tan Yanon has an
easement of light and view against the property of
petitioner
Gargantos.
The kernel of petitioners argument is that respondent
never acquired any easement either by title or by
prescription. Assuredly, there is no deed establishing an
easement. Likewise, neither petitioner nor his
predecessors-in-interest have ever executed any deed
whereby they recognized the existence of the easement,
nor has there been final judgment to that effect. Invoking

our decision in Cortes v. Yu-Tibo (2 Phil., 24), petitioner

maintains that respondent has not acquired an easement
by prescription because he has never formally forbidden
petitioner from performing any act which would be lawful
without the easement, hence the prescriptive period never
started.
It is obvious, however, that Article 538, O.C.C. (now Article
621, N.C.C.) and the doctrine in the Yu-Tibo case are not
applicable herein because the two estates, that now owned
by petitioner, and that owned by respondent, were formerly
owned by just one person, Francisco Sanz. It was Sanz
who introduced improvements on both properties. On that
portion presently belonging to respondent, he constructed
a house in such a way that the northeastern side thereof
extends to the wall of the camarin on the portion now
belonging to petitioner. On said northeastern side of the
house, there are windows and doors which serve as
passages for light and view. These windows and doors
were in existence when respondent purchased the house
and lot from Sanz. The deed of sale did not provide that the
easement of light and view would not be established. This
then is precisely the case covered by Article 541, O.C.C.
(now Article 624, N.C.C.) which provides that the existence
of an apparent sign of easement between two estates,
established by the proprietor of both, shall be considered, if
one of them is alienated, as a title so that the easement will
continue actively and passively, unless at the time the
ownership of the two estates is divided, the contrary is
stated in the deed of alienation of either of them, or the
sign is made to disappear before the instrument is
executed. The existence of the doors and windows on the
northeastern side of the aforementioned house, is
equivalent to a title, for the visible and permanent sign of
an easement is the title that characterizes its existence
(Amor v. Florentino, 74 Phil., 403). It should be noted,
however, that while the law declares that the easement is
to "continue" the easement actually arises for the first time
only upon alienation of either estate, inasmuch as before
that time there is no easement to speak of, there being but
one owner of both estates (Article 530, O.C.C., now Article
613,
N.C.C.)
.
We find that respondent Tan Yanons property has an

65 | P a g e

easement of light and view against petitioners property. By

reason of this easement, petitioner cannot construct on his
land any building unless he erects it at a distance of not
less than three meters from the boundary line separating
the
two
estates.
Wherefore, the appealed decision is hereby affirmed with
costs against petitioner.

[G.R. No. L-19614. March 27, 1971.]

JESUS M. GABOYA, as Administrator of the Estate of
DON MARIANO CUI, Plaintiff-Appellant, v. ANTONIO
MA. CUI, MERCEDES CUl-RAMAS, and GIL RAMAS,
defendants-appellees, JESUS MA. CUI, JOSE MA. CUI,
SERAFIN MA. CUI, JORGE MA. CUI, ROSARIO CUI DE
ENCARNACION, PRECILLA C. VELEZ, and LOURDES
C. VELEZ, intervenors-appellants, VICTORINO
REYNES, defendant-in-counterclaim and appellee.
Vicente Jayme, for Plaintiff-Appellant.
Hector L. Hofileia, Candido Vasquez & Jaime R.
Nuevas for Defendants-Appellees.
Jose W. Diokno for Intervenors-Appellants.
SYLLABUS
1. CIVIL LAW; PROPERTY; OWNERSHIP; INDUSTRIAL
ACCESSION BY EDIFICATION; RULE; NOT APPLICABLE
IN CASE AT BAR Under the articles of the Civil Code on
industrial accession by edification on the principal land
(Articles 445 to 456 of the Civil Code), such accession is
limited either to buildings erected on the land of another, or
buildings constructed by the owner of the land with
materials owned by someone else. Thus, Article 445,

establishing the basic rule of industrial accession,

prescribes that "Whatever is built, planted or sown on
the land of another, and the improvements or repairs made
thereon, belong to the owner of the land subject to the
provisions of the following articles" while Article 449 states:
"He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to
indemnity." Articles 447 and 455, in turn, treat of accession
produced by the landowners building, planting and sowing
"with the materials of another" and when the "materials,
plants or seeds belong to a third person" other than the
landowner or the builder, planter or sower. Nowhere in
these articles on industrial accession is there any mention
of the case of a landower building on his own land with
materials owned by himself (which is the case of appellees
Mercedes and Antonio Cui). The reason for the omission is
readily apparent: recourse to the rules of accession are
totally unnecessary and inappropriate where the ownership
of land and of the materials used to build thereon are
concentrated on one and the same person. Even if the law
did not provide for accession, the landowner would
necessarily own the building, because he has paid for the
materials and labor used in constructing it. We deem it
unnecessary to belabor this obvious point.

IN CASE AT BAR. The alleged breach of contract by the

appellees Antonio and Mercedes Cui could only consist in
their failure to pay to the usufructuary the rental value of
the area occupied by the building constructed by them. But
as the rental value in question had not been ascertained or
fixed either by the parties or by the court prior to the
decision of 31 October 1961, now under appeal, nor had
Don Mariano Cui, or anyone else in his behalf, made any
previous demand for its payment, the default, if any, can
not be exclusively blamed upon the defendants-appellees.
Hence, the breach is not "so substantial and fundamental
as to defeat the object of the parties in making the
agreement" as to justify the radical remedy of rescission.
This Court, in Banahaw, Inc. v. Dejarme, 55 Phil. 338, ruled
that ." .. Under the third paragraph of Article 1124 (Now
Article 1191, Civil Code of the Philippines) of the Civil
Code, the court is given a discretionary power to allow a
period within which a person in default may be permitted to
perform the stipulation upon which the claim for resolution
of the contract is based. The right to resolve or rescind a
contract for nonperformance of one of its stipulations is
therefore, not absolute."
DECISION

2. ID.; CONTRACTS; MORTGAGE; MORTGAGOR, NOT

DIRECTLY LIABLE FOR LOAN SECURED BY
MORTGAGE. Appellants urge that the loan for the
construction of the building was obtained upon the security
of a mortgage not only upon the share of appellees but
also upon the undivided interest of Don Manano Cui in the
lots in question. That factor is irrelevant to the ownership of
the building, because the money used for the building was
loaned exclusively to the appellees, and they were the
ones primarily responsible for its repayment. Since the
proceeds of the loan was exclusively their property, the
building constructed with the funds loaned is likewise their
own. A mortgagor does not become directly liable for the
payment of the loan secured by the mortgage, in the
absence of stipulation to that effect; and his subsidiary role
as guarantor does not entitle him to the ownership of the
money borrowed, for which the mortgage is mere security.

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

Direct appeal (before Republic Act 5440) from a decision of
the Court of First Instance of Cebu (in its Civil Case No. R1720) denying resolution of a contract of sale of Lots 2312,
2313 and 2319 executed on 20 March 1946 by the late
Don Mariano Cui in favor of three of his children, Antonio
Ma. Cui, Mercedes Cui de Ramas and Rosario Cui de
Encarnacion, but sentencing the first two, Antonio Cui and
Mercedes Cui, to pay, jointly and severally (in solidum), to
the Judicial Administrator of the Estate of Mariano Cui
(appellant Jesus M. Gaboya) the amount of P100,088.80,
with legal interest from the interposition of the complaint (5
November 1951), plus P5,000.00 attorneys fees and the
costs.

3. ID. ID.; RESCISSION; WITHOUT SUFFICIENT BASIS

66 | P a g e

The antecedents of the case are stated in the previous

decision of this Supreme Court rendered on 31 July 1952,
in the case of Antonio and Mercedes Cui v. Judge Piccio,
Et
Al.,
91
Phil.
712:jgc:chanrobles.com.ph
"Don Mariano Cui, widower, as owner of lots Nos. 2312,
2313 and 2319 situated in the City of Cebu, with an area of
152 square meters, 144 square meters and 2,362 square
meters, respectively, or a total extension of 2,658 square
meters, on March 8, 1946, sold said three lots to three of
his children named Rosario C. de Encarnacion, Mercedes
C. de Ramas and Antonio Ma. Cui, pro indiviso for the sum
of P64,000. Because Rosario C. de Encarnacion for lack of
funds was unable to pay her corresponding share of the
purchase price, the sale to her was cancelled and the onethird of the property corresponding to her was returned to
the vendor. These three lots are commercial. The
improvements thereon were destroyed during the last
Pacific War so that at the time of the sale in 1946, there
were no buildings or any other improvements on them.
Because of the sale of these lots pro indiviso and because
of the cancellation of the sale to one of the three original
vendees, Don Mariano and his children Mercedes and
Antonio became co-owners of the whole mass in equal
portions. In the deed of sale vendor Don Mariano retained
for himself the usufruct of the property in the following
words:chanrob1es
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library
. . . do hereby sell, transfer, and convey to Messrs. Rosario
C. de Encarnacion, Mercedes C. de Ramas and Antonio
Ma, Cui, the above-mentioned parcel of land in equal parts,
. . . and the further consideration, that I, shall enjoy the
fruits and rents of the same, as long as my natural life shall
last. Granting and conveying unto the said buyers the full
rights as owners to enjoy the constructive possession of
the same, improve, construct and erect a building in the lot,
or do whatever they believe to be proper and wise, as long
as the same will not impair nor obstruct my right to enjoy
the fruits and rents of the same. . .
"Subsequently, a building was erected on a portion of this
mass facing Calderon street and was occupied by a
Chinese businessman for which he paid Don Mariano P600
a month as rental. The date when the building was

constructed and by whom do not appear in the record.

"Sometime after the sale to Mercedes and Antonio the two
applied to the Rehabilitation Finance Corporation (RFC) for
a loan of P130,000 with which to construct a 12-door
commercial building presumably on a portion of the entire
parcel corresponding to their share. In order to facilitate the
granting of the loan and inasmuch as only two of the three
co-owners applied for the loan, Don Mariano on January 7,
1947, executed an authority to mortgage (Annex U)
authorizing his two children co-owners to mortgage his
share, the pertinent portion of said authority reading
thus:chanrob1es
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That by virtue of these presents, I hereby agree, consent,
permit and authorize my said co-owners to mortgage,
pledge my share so that they may be able to construct a
house or building in the said property, provided however,
that the rents of the said land shall not be impaired and will
always
be
received
by
me.
The loan was eventually granted and was secured by a
mortgage on the three lots in question, Don Mariano being
included as one of the three mortgagors and signing the
corresponding promissory note with his two co-owners. He
did not however, join in the construction of the 12-door
commercial building as may be gathered from the
"Convenio de Asignacion de Parte (Annex V) wherein it
was agreed among the three co-owners to assign to Don
Mariano that one-third of the whole mass facing Calderon
street and on which was erected the building already
referred to as being occupied by a Chinese businessman
and for which he was paying Don Mariano P600 a month
rental. The area of this one-third portion was fixed at 900
square meters approximately one-third of the total area of
these three lots. The pertinent portion of this Annex V reads
as
follows:chanrob1es
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Que como quiera que, la propiedad arriba descrita est
actualmente hipotecada a la Rehabilitation Finance
Corporation para garantizar la construccion que mis
condueos contruyeron en la parte que les corresponde;
Y que como quiera que, el Sr. Don Mariano Cui, uno de los

condueos, no ha querido unirse a la construccion de

dicho edificio, y desea que la parte que le corresponda sea
la 1/3 que est dando frente a la Calle Calderon.
The 12-door commercial building was eventually
constructed and the builder-owners thereof Mercedes and
Antonio received and continued to receive the rents thereof
amounting to P4,800 a month and paying therefrom the
installments due for payment on the loan to the
Rehabilitation
Finance
Corporation.
On March 25, 1948, two other children of Don Mariano
named Jesus and Jorge brought an action (Civil case No.
599-R) in the Court of First Instance of Cebu for the
purpose of annulling the deed of sale of the three lots in
question on the ground that they belonged to the conjugal
partnership of Don Mariano and his deceased wife Antonia
Perales. Thereafter, plaintiffs Jesus and Jorge applied for
the appointment of a receiver to take charge of the lots and
of the rentals of the building. This petition was denied on
November
8,
1948.
On March 19, 1949, Rosario C. Encarnacion, that daughter
of Don Mariano who was one of the original vendees, filed
a petition to declare her father incompetent and to have a
guardian appointed for his property, in Special Proceeding
No. 481-R of the Court of First Instance of Cebu. In May
1949 the petition was granted and Don Mariano was
declared incompetent and Victorino Reynes was appointed
guardian of his property. Thereafter, the complaint in civil
case No. 599-R seeking to annul the deed of sale of the
three lots in favor of Mercedes and Antonio was amended
so as to include as plaintiffs not only the guardian Victorino
Reynes but also all the other children of Don Mariano.
On June 15, 1949, guardian Victorino Reynes filed a
motion in the guardianship proceedings seeking authority
to collect the rentals from the three lots in question and
asking the Court to order Antonio and Mercedes to deliver
to him as guardian all the rentals they had previously
collected from the 12-door commercial building, together
with all the papers belonging to his ward. This motion was
denied by Judge Piccio in his order of July 12, 1949. The
guardian did not appeal from this order.

67 | P a g e

"On May 22, 1951, Judge Saguin rendered a decision in

civil case No. 599-R and found that the three lots in
question were not conjugal property but belonged
exclusively to Don Mariano and so upheld the sale of twothirds of said lots to Antonio and Mercedes. The plaintiffs
appealed to the Court of Appeals where the case is now
pending."cralaw
virtua1aw
library
From the Court of Appeals the case was brought to the
Supreme Court, and the decision of Judge Saguin
upholding the validity of the sale in favor of Antonio and
Mercedes Cui was finally affirmed on 21 February 1957, in
Cui
v.
Cui,
100
Phil.
914.
This third case now before Us was started by the erstwhile
guardian of Don Mariano Cui (while the latter was still alive)
in order to recover P126,344.91 plus legal interest from
Antonio Cui and Mercedes Cui (Record on Appeal, pages
2-3) apparently as fruits due to his ward by virtue of his
usufruct. The guardians complaint was supplemented and
amplified by a 1957 complaint in intervention (duly
admitted) filed by the other compulsory heirs of Mariano
Cui, who had died on 29 July 1952, some nine months
after the present case was instituted in the court below
(Record
on
Appeal,
pages
67-68).
In essence, the complaint alleges that the usufructuary
right reserved in favor of Don Mariano Cui extends to and
includes the rentals of the building constructed by Antonio
Cui and Mercedes Cui on the land sold to them by their
father; that the defendants retained those rentals for
themselves; that the usufructuary rights of the vendor were
of the essence of the sale, and their violation entitled him to
rescind (or resolve) the sale. It prayed either for rescission
with accounting, or for delivery of the rentals of the building
with interests, attorneys fees and costs (Record on Appeal,
pages
12-38).
The amended answer, while admitting the reserved
usufruct and the collection of rentals of the building by the
defendants, denied that the usufructuary rights included or
extended to the said rentals, or that such usufruct was of
the essence of the sale; that the vendor (Don Mariano Cui)

had waived and renounced the usufruct and that the

defendants vendees gave the vendor P400.00 a month by
way of aid; that the original complaint having sought
fulfillment of the contract, plaintiff can not thereafter seek
rescission; that such action is barred by res judicata (on
account of the two previous decisions of the Supreme
Court and by extinctive prescription. Defendants counter
claimed for actual and moral damages and attorneys fees.
Plaintiffs denied the allegations in the counterclaim.
From a consideration of the pleadings, the basic and
pivotal issue appears to be whether the usufruct reserved
by the vendor in the deed of sale, over the lots in question
that were at the time vacant and unoccupied, gave the
usufructuary the right to receive the rentals of the
commercial building constructed by the vendees with funds
borrowed from the Rehabilitation and Finance Corporation,
the loan being secured by a mortgage over the lots sold.
Similarly, if the usufruct extended to the building, whether
the failure of the vendees to pay over its rentals to the
usufructuary entitled the latter to rescind, or more properly,
resolve the contract of sale. In the third place, should the
two preceding issues be resolved affirmatively, whether the
action for rescission due to breach of the contract could still
be
enforced
and
was
not
yet
barred.
The court below declared that the reserved right of usufruct
in favor of the vendor did not include, nor was it intended to
include, the rentals of the building subsequently
constructed on the vacant lots, but that it did entitle the
usufructuary to receive a reasonable rental for the portion
of the land occupied by the building, which the Court a quo
fixed at P1,858.00 per month; and that the rentals for the
land from November, 1947, when the building was rented,
to 29 July 1952, when Don Mariano died, amounted to
P100,088.80. It also found no preponderant evidence that
the seller, Don Mariano Cui, had ever waived his right of
usufruct, as contended by the defendants; and that the
Supreme Court, in denying reconsideration of its second
(1957) decision (100 Phil. 914), had, like the court of origin,
refused to pass upon the extent of the usufructuary rights
of the seller, specially because the present cases was
already pending in the Court of First Instance, hence no res

judicata existed. No attorneys fees were awarded to the

defendants, but they were sentenced to pay counsel fees
to
plaintiffs.
Both parties appealed from the decision of the court a quo.
We find no error in the decision appealed from. As therein
pointed out, the terms of the 1946 deed of sale of the
vacant lots in question made by the late Don Mariano Cui
in favor of his three children, Rosario, Mercedes and
Antonio Cui, in consideration of the sum of P64,000.00 and
the reserved usufruct of the said lot in favor of the vendor,
as amplified by the deed of 7 January 1947, authorizing
Mercedes, and Antonio Cui to borrow money, with the
security of a mortgage over the entirety of the lots, in order
to enable them to construct a house or building thereon
"provided, however, that the rents of said land shall not be
impaired and will always received by me."cralaw virtua1aw
library
clearly prove that the reserved usufruct in favor of the
vendor, Mariano Cui, was limited to the rentals of the land
alone. Had it been designed to include also the rents of the
buildings intended to be raised on the land, an express
provision would have been included to that effect, since in
both documents (heretofore quoted) the possibility of such
construction was clearly envisaged and mentioned.
Appellants, however, argue that the terms of the deed
constituting the usufruct are not determinative of the extent
of the right conferred; and that by law, the enjoyment of the
rents of the building subsequently erected passed to the
usufructuary, by virtue of Article 571 of the Civil Code of the
Philippines (Article 479 of the Spanish Civil Code of 1889)
prescribing
that:jgc:chanrobles.com.ph
"Art. 571. The usufructuary shall have the right to enjoy any
increase which the thing in usufruct may acquire through
accession, the servitudes established in its favor, and, in
general,
all
the
benefits
inherent
therein",
inasmuch as (in the appellants view) the building
constructed by appellees was an accession to the land.

68 | P a g e

This argument is not convincing. Under the articles of the

Civil Code on industrial accession by edification on the
principal land (Articles 445 to 456 of the Civil Code) such
accession is limited either to buildings erected on the land
of another, or buildings constructed by the owner of the
land with materials owner by someone else.
Thus, Article 445, establishing the basic rule of industrial
accession,
prescribes
that

"Whatever is built, planted or sown on the land of another,

and the improvements or repairs made thereon, belong to
the owner of the land subject to the provisions of the
following
articles."cralaw
virtua1aw
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while

Article

449

states:jgc:chanrobles.com.ph

"He who builds, plants or sows in bad faith on the land of

another, loses what is built, planted or sown without right to
indemnity."
(Emphasis
supplied)
Articles 447 and 445, in turn, treat of accession produced
by the landowners building, planting and sowing "with the
materials of another" and when "the materials, plants or
seeds belong to a third person" other than the landowner or
the
builder,
planter
or
sower.
Nowhere in these articles on industrial accession is there
any mention of the case of landowner building on his own
land with materials owned by himself (which is the case of
appellees Mercedes and Antonio Cui). The reason for the
omission is readily apparent: recourse to the rules of
accession are totally unnecessary and inappropriate where
the ownership of land and of the materials used to build
thereon are concentrated on one and the same person.
Even if the law did not provide for accession, the
landowner would necessarily own the building, because he
has paid for the materials and labor used in constructing it.
We deem it unnecessary to belabor this obvious point.
There is nothing in the authorities (Manresa, Venezian,
Santamaria, and Borrell) cited by appellants that
specifically deals with constructions made by a party on his

own land, with his own materials, and at his own expense.
The authorities cited merely indicate the application in
general of the rules of accession. But as already stated
above, the Civil Code itself limits the cases of industrial
accession to those involving land and materials belonging
to different owners. Anyway, commentators opinions are
not binding where not in harmony with the law itself.
The author that specifically analyses the situation of the
usufructuary vis-a-vis constructions made by the landowner
with his own materials is Scaevola (Codigo Civil, 2d
Edition, pages 288 to 297); and his conclusion after
elaborate discussion is that, at the most
"(b) El nudo propietario no podria, sin el consentimiento del
usufructuario, hacer construcciones. plantaciones y
siembras en el predio objecto del usufructo; y en el caso
de que aqul las cosintiese, la utilizacion ser comun en los
frutos y productos de lo sembrado y plantado, y con
respecto a las construcciones, el usufructuario tendra
derecho a la renta que de mutuo acuerdo se fije a las
mismas; en su defecto, por la autoridad judicial." (Author
cit., Emphasis
supplied)
Scaevolas opinion is entirely in harmony with Article 595 of
the Civil Code of the Philippines, prescribing that
"The owner may construct any works and make any
improvements of which the immovable in usufruct is
susceptible, or make new plantings thereon if it be rural,
provided that such acts do not cause a diminution in the
value of the usufruct or prejudice the right of the
usufructuary."cralaw
virtua1aw
library
Note that if the income from constructions made by the
owner during the existence of the usufruct should be held
to accrue automatically to the usufructuary under Article
571, such improvements could not diminish the value of the
usufruct nor prejudice the right of the usufructuary; and the
qualifications by Article 595 on the owners right to build
would be redundant. The limitations set by Article 595 to
the construction rights of the naked owner of the land are
evidently premised upon the fact that such constructions
would necessarily reduce the area of the land under

usufruct, for which the latter should be indemnified. This is

precisely what the court a quo has done in sentencing the
appellee owners of the building to pay to the usufructuary a
monthly rent of P1,758.00 for the area occupied by their
building, after mature consideration, of the rental values of
lands
in
the
neighborhood.
Additional considerations against the thesis sustained by
appellants are (1) that the amount invested in the building
represents additional capital of the landowners not
foreseen when the usufruct was created; and (2) that no
landowner would be willing to build upon vacant lots under
usufruct if the gain therefrom were to go to the usufructuary
while the depreciation of the value of the building (as
distinguished from the necessary repairs) and the
amortization of its cost would burden exclusively the owner
of the land. The unproductive situation of barren lots would
thus be prolonged for an indefinite time, to the detriment of
society. In other words, the rule that appellants advocate
would contradict the general interest and be against public
policy.
Appellants urge, in support of their stand, that the loan for
the construction of the building was obtained upon the
security of a mortgage not only upon the share of appellees
but also upon the undivided interest of Don Mariano Cui in
the lots in question. That factor is irrelevant to the
ownership of the building, because the money used for the
building was loaned exclusively to the appellees, and they
were the ones primarily responsible for its repayment.
Since the proceeds of the loan was exclusively their
property, 1 the building constructed with the funds loaned is
likewise their own. A mortgagor does not become directly
liable for the payment of the loan secured by the mortgage,
in the absence of stipulation to that effect; and his
subsidiary role as guarantor does not entitle him to the
ownership of the money borrowed, for which the mortgage
is
mere
security.
We agree with the trial court that there was no adequate
proof that the vendor, Don Mariano Cui, ever renounced his
usufruct. The alleged waiver was purely verbal, and is
supported solely by the testimony of Antonio Cui, one of
the alleged beneficiaries thereof. As a gratuitous

69 | P a g e

renunciation of a real right over immovable property that

was created by public document, the least to be expected
in the regular course of business is that the waiver should
also appear in writing. Moreover, as pointed out in the
appealed decision (Record on Appeal, page 184, et seq.),
in previous pleadings sworn to by Antonio Cui himself, in
Civil Case No. 599 and Special Proceeding 481-R of the
Cebu Court of First Instance (Exhibits "I," "J," and "20-A"),
he and his sister Mercedes had contended that Don
Mariano Cui had been receiving from them P400.00 per
month as the value of his usufruct, and never claimed that
the real right had been renounced or waived. The
testimony of Antonio Cui on the alleged waiver, given after
the usufructuary had been declared incompetent and could
no longer contradict him, is obviously of negligible
probative
value.
Turning now to the second issue tendered by herein
appellants, that the non-compliance with the provisions
concerning the usufruct constituted sufficient ground for the
rescission (or resolution) of the sale under the tacit
resolutory condition established by Article 1191 of the Civil
Code. What has been stated previously in discussing the
import of Don Marianos usufruct shows that the alleged
breach of contract by the appellees Antonio and Mercedes
Cui could only consist in their failure to pay to the
usufructuary the rental value of the area occupied by the
building constructed by them. But as the rental value in
question had not been ascertained or fixed either by the
parties or the court, prior to the decision of 31 October
1961, now under appeal, nor had Don Mariano Cui, or
anyone else in his behalf, made any previous demand for
its payment, the default, if any, can not be exclusively
blamed upon the defendants-appellees. Hence, the breach
is not "so substantial and fundamental as to defeat the
object of the parties in making the agreement" 2 as to
justify the radical remedy of rescission. This Court, in
Banahaw, Inc. v. Dejarme, 55 Phil. 338, ruled that
". . . Under the third paragraph of article 1124 3 of the Civil
Code, the court is given a discretionary power to allow a
period within which a person in default may be permitted to
perform the stipulation upon which the claim for resolution
of the contract is based. The right to resolve or rescind a

contract for nonperformance of one of its stipulations is,

therefore, not absolute."cralaw virtua1aw library
We have stated "the default, if any," for the reason that
without previous ascertainment of the exact amount that
the defendants-appellees were obligated to turn over to the
usufructuary by way of reasonable rental value of the land
occupied by their building, said parties can not be
considered as having been in default (mora) for failure to
turn over such monies to the usufructuary. "Ab illiquido non
fit mora" : this principle has been repeatedly declared by
the jurisprudence of Spanish Supreme Court (v. Manresa,
Commentaries to the Spanish Civil Code [5th Ed.], Vol. 8,
No. 1, page 134) that is of high persuasive value in the
absence of local adjudications on the point.
"No puede estimarse que incurre en mora el obligado al
pago de cantidad mientras esta no sea liquida, y tenga
aqul conocimiento por virtud de requirimiento o
reclamacion judicial de lo que debe abonar" (Sent. TS of
Spain,
13
July
1904)
"Segun tiene declarado esta sala con repeticion, no se
puede establecer que hay morosidad, ni condenar por tal
razon al abono de intereses, cuando no se conoce la
cantidad liquida reclamable" (Sent. TS of Spain, 29
November
1912)
". . .es visto que no existiendo obligacion de entregar
cantidad hasta tanto que se liquide, no puede estimarse,
segun jurisprudencia, que los recurridos incurran en mora,
y por tanto que hayan de pagar intereses legales de la
cantidad que en su caso resulte." (Sent. TS of Spain, 29
April
1914)
In the absence of default on the part of the defendantsvendees, Article 1592 of the Civil Code of the Philippines, 4
that is invoked by appellants in support of their alleged right
to rescind the sale, is not applicable: for said article (which
is a mere variant of the general principle embodied in
Article 1191, of the same Code) presupposes default of the
purchasers in the fulfillment of their obligations. As already
noted, no such default or breach could occur before
liquidation of the usufructuarys credit; and the time for

paying such unliquidated claim can not be said to have

accrued until the decisions under appeal was rendered,
fixing the rental value of the land occupied by the building.
The filing of the initial complaint by Victoriano Reynes, then
guardian of the late Don Mariano in 1951, seeking to
recover P126,344.91 plus interest, did not place appellees
in default, for that complaint proceeded on the theory that
the usufructuary was entitled to all the rentals of the
building constructed by the appellees on the lot under
usufruct; and as We have ruled, that theory was not legally
tenable. And the 1957 complaint in intervention, seeking
rescission of the sale as alternative remedy, was only
interposed after the death of the usufructuary in 1952, and
the consequent extinction of the usufruct, conformably to
Article 603, paragraph (1), of the Civil Code.
It is also urged by the appellants that the usufruct was a
condition precedent to the conveyance of ownership over
the land in question to herein appellees, and their failure to
comply with their obligations under the usufruct prevented
the vesting of title to the property in said appellees. We
need not consider this argument, since We have found that
the usufruct over the land did not entitle the usufructuary to
either the gross or the net income of the building erected
by the vendees, but only to the rental value of the portion of
the land occupied by the structure (in so far as the
usufructuary was prevented from utilizing said portion), and
that rental value was not liquidated when the complaints
were filed in the court below; hence, there was no default in
its payment. Actually, this theory of appellants fails to take
into account that Don Mariano could not retain ownership
of the land and, at the same time, be the usufructuary
thereof. His intention of the usufructuary rights in itself
imports that he was no longer its owner. For usufruct is
essentially jus in re aliena; and to be a usufructuary of
ones own property is in law a contradiction in terms, and a
conceptual
absurdity.
The decision (Exhibit "30") as well as the resolution of this
Court upon the motion to reconsider filed in the previous
case (100 Phil. 914) refusing to adjudicate the usufructuary
rights of Don Mariano in view of the pendency of the
present litigation (Exhibit "22") amply support the trial

70 | P a g e

courts overruling of the defense of res judicata.

Summing up, We find and hold:chanrob1es virtual 1aw
library
(1) That the usufructuary rights of the late Don Mariano
Cui, reserved in the deed of sale (Exhibit "A" herein), was
over the land alone and did not entitle him to the rents of
the building later constructed thereon by defendants
Mercedes and Antonio Cui at their own expense.
(2) That said usufructuary was entitled only to the
reasonable rental value of the land occupied by the
building
aforementioned.

SPOUSES VICTOR VALDEZ AND JOCELYN VALDEZ,

represented by their Attorney-In-Fact, VIRGILIO
VALDEZ,
Petitioners,
- versus SPOUSES FRANCISCO TABISULA AND CARIDAD
TABISULA,
Respondents.
July 28, 2008
x - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - x
DECISION

(3) That such rental value not having been liquidated until
the judgment under appeal was rendered, Antonio and
Mercedes Cui were not in default prior thereto, and the
deed of sale was, therefore, not subject to rescission.
(4) That, as found by the court below, the reasonable rental
value of the land occupied by the defendants building
totalled P100,088.80 up to the time the usufructuary died
and
the
usufruct
terminated.
(5) That pursuant to Articles 2208 (No. 11), 2210 and 2213
of the Civil Code, 5 the trial court had discretion to
equitably award legal interest upon said sum of
P100,088.80, as well as P5,000.00 attorneys fees,
considering that defendants Cui have enjoyed the said
rental value of the land during all those years.
WHEREFORE, finding no reversible error in the appealed
decision, the same is hereby affirmed. Costs against
appellant-intervenors, Jesus Ma. Cui, Jose Ma. Cui,
Serafin Ma. Cui, Jorge Ma. Cui, Rosario Cui de
Encarnacion, Precilla C. Velez, and Lourdes C. Velez.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Teehankee,
Barredo,
Villamor
and
Makasiar, JJ.,
concur.
Castro and Fernando, JJ., did not take part.
SECOND DIVISION

CARPIO MORALES, J.:

Petitioner-spouses Victor and Jocelyn Valdez
purchased via a January 11, 1993 Deed of Absolute
Sale[1] (the
deed)
from
respondent-spouses
FranciscoTabisula and Caridad Tabisula a 200 square
meter (sq.m.) portion (the subject property) of a 380 sq. m.
parcel of land located in San Fernando, La Union, which
380sq.m. parcel of land is more particularly described in
the deed as follows:
A parcel of land classified as
residential lot, bounded on the North by
Lot No. 25569, on the East, by Lot No.
247, 251, on the South, by a
Creek and on the West, by Lot No.
223-A, declared under Tax Decl. No.
52820, with an area of 380 square
meters, more or less, and assessed
at P 17100.00 for the current year. It is
not registered under Act 496nor under
the Spanish Mortgage Law. (Emphasis
and underscoring supplied)
The pertinent portions of the deed read:
xxxx

That for and in consideration

of the sum of SEVENTY THOUSAND
(P70,000.00)
PESOS,
Philippine Currencyp [sic] paid to us at
our entire satisfaction by spouses
VICTOR and JOECELYN [sic]
VALDEZ, both of legal age, Filipinos
and residents of 148 P. Burgos St., San
Fernando, La Union, receipt of which is
hereby acknowledged, do hereby
SELL, CONVEY and TRANSFER by
way of absolute sale unto the said
spouses Victor and Joecelyn Valdez,
their heirs and assigns, the TWO
HUNDRED (200) SQUARE METERS,
EASTERN PORTION of the parcel of
land above-described, free from all
liens and encumbrances.
xxxx
That now and hereinafter,
said VENDEE-SPOUSES VICTOR and
JOECELYN [sic] VALDEZ shall be the
absolute owners of the said 200 sq.
meters, eastern portion and that we
shall warrant and forever defend their
ownership of the same against the
claims
of
all
persons
whomsoever; they shall be provided
a 2 1/2 meters [sic] wide road rightof-way on the western side of their lot
but which is not included in this sale.
x x x.x (Emphasis
underscoring supplied)

and

Respondents subsequently built a concrete wall

on the western side of the subject property. [2] Believing that
that side is the intended road right of way mentioned in the
deed, petitioners, through their representative, reported the
matter
to
the barangay for
mediation
and
conciliation. Respondents failed to attend the conferences

71 | P a g e

scheduled by the barangay, however, drawing petitioners to

file in April 1999 or more than six years after the execution
of the deed a Complaint for Specific Performance with
Damages[3] against respondents before the Regional
Trial Court (RTC) of San Fernando City, La Union.

hereby ordered to pay the defendants,

the following:

In their complaint, petitioners alleged that they

purchased the subject property on the strength of
respondents assurance of providing them a road right of
way.They thus prayed that respondents be ordered to
provide the subject property with a 2-meter wide easement
and to remove the concrete wall blocking the same.[4]

2) P50,000.00 as
exemplary damages;

Respondents, in their Answer with Compulsory

Counterclaim (for damages and attorneys fees), [5] averred
that the 2 -meter easement should be taken from the
western portion of the subject property and not from theirs;
[6]
and petitioners and their family are also the owners of
two properties adjoining the subject property, which
adjoining properties have access to two public roads or
highways the bigger one which adjoins P. Burgos St. on the
north, and the smaller one which abuts an
existing barangay road on the north.[7]
Respondents further averred that they could not have
agreed to providing petitioners an easement on the
western side of their lot as there exists a two-storey
concrete house on their lot where the supposed easement
is to be located, which was erected long before the subject
property was sold to petitioners. [8] In support of this claim,
respondents submitted a February 20, 2003 letter from the
City Engineers Office.[9]
Branch 26 of the RTC of San Fernando dismissed
petitioners complaint and granted respondents
Counterclaim by Decision[10] of March 18, 2005,
the dispositiveportion of which reads:
WHEREFORE, and in view of
all the foregoing, judgment is hereby
rendered finding the defendants as
against the plaintiffs and hereby orders
the Complaint dismissed for being
unmeritorious and plaintiffs are

1) P100,000.00 as moral
damages;

3) P50,000.00 as
attorneys fees;
4) P30,000.00 as
expenses of litigation; and
5) To pay the costs.
[11]

SO
ORDERED.
(Underscoring supplied)

On appeal by petitioners, the Court of Appeals, by Decision

of May 29, 2006,[12] affirmed that of the trial court, it holding
that the deed only conveyed ownership of the subject
property to petitioners, and that the reference therein to an
easement in favor of petitioners is not a definite grant-basis
of a voluntary easement of right of way.[13]
The appellate court went on to hold that
petitioners are neither entitled to a legal or compulsory
easement of right of way as they failed to present
circumstances justifying their entitlement to it under Article
649 of the Civil Code.[14]
Petitioners motion for reconsideration[15] having been
denied by the Court of Appeals by Resolution of November
15, 2006, they filed the present petition for review on
certiorari faulting the trial [sic] court
I. . . . IN RULING THAT THE
RIGHT OF WAY IS NOT PART OF THE
ABSOLUTE
DEED OF SALE DATED JANUARY 11,
1993;

II. . . . IN RULING THAT THE

PROVISION OF THE ABSOLUTE
DEED OF SALE GRANTING A RIGHT
OF WAY IS VAGUE AND OBSCURE;
III. . . . IN AWARDING
MORAL
AND
EXEMPLARY
DAMAGES TO THE RESPONDENTS.
[16]
(Underscoring supplied)
An easement or servitude is a real right constituted on
anothers property, corporeal and immovable, by virtue of
which the owner of the same has to abstain from doing or
to allow somebody else to do something on his property for
the benefit of another thing or person. [17] The statutory
basis of this right is Article 613 of the Civil Code which
reads:
Art. 613. An easement or
servitude is an encumbrance imposed
upon an immovable for the benefit of
another immovable belonging to a
different owner.
The immovable in favor of
which the easement is established is
called the dominant estate; that which
is subject thereto, the servient estate.
There are two kinds of easements according to
source by law or by the will of the owners. So Article 619 of
the Civil Code provides:
Art. 619. Easements are
established either by law or by the will
of the owners. The former are called
legal and the latter voluntary
easements.

72 | P a g e

From the allegations in petitioners complaint, it is clear that

what they seek to enforce is an alleged grant in the deed
by respondents of an easement reading: they shall be
provided a 2 meters wide road right-of-way on the western
side of their lot but which is not included in this sale.
Article 1358 of the Civil Code provides that any transaction
involving the sale or disposition of real property must be in
writing.[18] The stipulation harped upon by petitioners that
they shall be provided a 2 meters wide road right-of-way on
the western side of their lot but which is not included in this
sale is not a disposition of real property. The proviso that
the intended grant of right of way is not included in this sale
could only mean that the parties would have to enter into a
separate and distinct agreement for the purpose. [19] The
use of the word shall, which is imperative or mandatory in
its ordinary signification, should be construed as merely
permissive where, as in the case at bar, no public benefit or
private right requires it to be given an imperative meaning.
[20]

Besides, a document stipulating a voluntary easement

must be recorded in the Registry of Property in order not to
prejudice third parties. So Articles 708 and 709 of the Civil
Code call for, viz:
Art. 708. The Registry of
Property has for its object the
inscription or annotation of acts and
contracts relating to the ownership and
other rights over immovable property.
Art. 709. The titles of
ownership, or of other rights over
immovable property, which are not duly
inscribed or annotated in the Registry
of Property shall not prejudice third
persons.
Petitioners are neither entitled to a legal or
compulsory easement of right of way. For to be entitled to
such kind of easement, the preconditions under Articles
649 and 650 of the Civil Code must be established, viz:

Art. 649. The owner, or any

person who by virtue of a real right may
cultivate or use any immovable, which
is
surrounded
by
other immovables pertaining to other
persons, and without adequate outlet to
a public highway, is entitled to demand
a right of way through the neighboring
estates, after payment of the proper
indemnity.
xxxx
This easement is not
compulsory if the isolation of the
immovable is due to the proprietors
own acts. (Underscoring supplied)
Art. 650. The easement of
right of way shall be established at the
point
least
prejudicial
to
the servient estate, and, insofar as
consistent with this rule, where the
distance from the dominant estate to a
public highway may be the
shortest. (Underscoring supplied)
Thus, to be conferred a legal easement of right of way
under Article 649, the following requisites must be complied
with: (1)
the
property
is
surrounded
by
otherimmovables and has no adequate outlet to a public
highway; (2) proper indemnity must be paid; (3) the
isolation is not the result of the owner of the dominant
estates own acts; (4) the right of way claimed is at the point
least prejudicial to the servient estate; and (5) to the extent
consistent with the foregoing rule, the distance from the
dominant estate to a public highway may be the shortest.
[21]
The onus of proving the existence of these prerequisites
lies on the owner of the dominant estate, [22]herein
petitioners.

As found, however, by the trial court, which is supported by

the Sketch[23] (Exhibit B; Exhibit 1) of the location of the lots
of the parties and those adjoining them, acommon
evidence of the parties, petitioners and their family are also
the owners of two properties adjoining the subject property
which have access to two public roads or highways.[24]
Since petitioners then have more than adequate passage
to two public roads, they have no right to demand the grant
by respondents of an easement on the western side of
[respondents] lot.
It may not be amiss to note at this juncture that at the time
the deed was executed in 1993, the barangay road-Exhibit
1-G, by which petitioners could access Burgos StreetExhibit 1-F, was not yet in existence; and that the Interior
Street-Exhibit 1-H, which petitioners via this case seek
access to with a right of way, was still acreek,[25] as
reflected in the earlier-quoted particular description of
respondents parcel of land from which the subject property
originally formed part.
Respecting the grant of damages in favor of respondents
by the trial court which was affirmed by the appellate court,
the Court finds the same baseless.
To merit an award of moral damages, there must
be proof of moral suffering, mental anguish, fright and the
like. It is not enough that one suffers sleepless nights,
mental anguish, serious anxiety as a result of the actuation
of the other party.[26] Invariably, such actuation must be
shown by clear and convincing evidence[27] to have been
willfully done in bad faith or with ill-motive.
In respondents case, they predicated their Counterclaim for
damages on general allegations of sickness, humiliation
and embarrassment, without establishing bad faith, fraud or
ill-motive on petitioners part.[28]
More importantly, respondents are precluded from filing any
counterclaim in light of Article 199 of Rule XXVI of
the Rules and Regulations Implementing the Local
Government Code of 1991 reading:

73 | P a g e

xxxx

corresponding complaint may now be

filed in court.

ARTICLE 199. Penalty for

Refusal or Failure of Any Party or
Witness
to
Appear
before
the Lupon or Pangkat. Refusal or willful
failure of any party or witness to appear
before
the lupon or pangkat in
compliance with summons issued
pursuant to this Rule may be punished
by the city or municipal court as for
indirect contempt of court upon
application
filed
therewith
by
the lupon chairman,
the pangkat chairman, or by any of the
contending parties. Such refusal or
willful failure to appear shall be
reflected
in
the
records
of
the lupon secretary or in the minutes of
the pangkat secretary and shall bar the
complainant who fails to appear, from
seeking judicial recourse for the same
course of action, and the respondent
who refuses to appear, from filing
any counterclaim arising out of, or
necessarily connected with the
complaint.
x x x x (Emphasis
underscoring supplied)

Issued this 24th day of November 1998

at the Multi Purpose Hall, Barangay 1
City of San Fernando (LU).
x x x x (Underscoring supplied)
The award for moral damages being thus baseless, that for
exemplary damages must too be baseless.
As for the award of attorney's fees and expenses
of litigation, respondents have not shown their entitlement
thereto in accordance with Article 2208 of the Civil Code.
WHEREFORE, the May 29, 2006 Decision and November
15, 2006 Resolution of the Court of Appeals are MODIFIED
in that the grant of the Counterclaim of respondents,
Spouses Francisco Tabisula and Caridad Tabisula, is
reversed and set aside. In all other respects, the
challenged decision is AFFIRMED.

and

While respondent Caridad Tabisula claimed that she

always
appeared,
when
summoned,
before
the barangay lupon,[29] the following Certificate to File
Action[30]belies the claim.
xxxx
This is to certify that respondents failed
to
appear
for
(2)
Mediation Proceeding before
our Punong Barangay thus the

windows in the wall of his house adjacent to the property of

the plaintiff, because the wall of defendant's house is less
than 2 meters from the division line. The defendant pleads
prescription and relies exclusively upon these defense. The
lower court agreed with the plaintiff's contention and
ordered the windows of the defendant's house to be
closed,
with
costs
against
the
defendant.chanroblesvirtualawlibrary chanrobles virtual law
library
The facts, the law, and the issue are
certain.chanroblesvirtualawlibrary chanrobles virtual law
library
The case was submitted to the lower court upon the
following stipulated facts:
1. That the wall of the house of defendant Oscar Sternberg,
in which are found four windows and a gallery (upper
story), two windows, one door and an opening with wooden
lattice (lower story), with the dimensions indicated in the
diagram, Exhibit A, attached to, and made a part of this
agreement, is 1 meter and 36 centimeters (1.36 m.) distant
from the dividing line between the lot on which said building
stands
and
the
lot
of
the
plaintiff.chanroblesvirtualawlibrary chanrobles virtual law
library
2. That the building of the defendant has stood with the
identical openings before mentioned, since the year
1905.chanroblesvirtualawlibrary chanrobles virtual law
library

G.R. No. L-15628 November 18, 1920

MANUEL SORIANO, Plaintiff-Appellee, vs. OSCAR
STERNBERG, Defendant-Appellant.

MALCOLM, J.:

3. That both lawyers will inspect the building to determine

precisely the distance existing between its outermost
portion and a line erected on the dividing line perpendicular
to it, which distance they will embody in a written
agreement
to
supplement
the
present.chanroblesvirtualawlibrary chanrobles virtual law
library

By means of this action, the plaintiff desires to obtain a

judicial order, to compel the defendant to close the

4. That the views which defendant pretends to have over

plaintiff's lot are direct, and that the windows and the

Gibbs, McDonough and Johnson for appellant.

No appearance for appellee.

74 | P a g e

gallery of plaintiff's edifice have direct views on defendant's

lot.chanroblesvirtualawlibrary chanrobles virtual law library
5. That in the Torrens titles which both parties have to their
respective buildings, there does not appear any easement
of view in plaintiff's title, nor any right to easement in
defendant's.chanroblesvirtualawlibrary chanrobles virtual
law library
6. That considering these facts, the point at issue between
both parties is submitted to the decision of the court.
The provisions of law upon which plaintiff bases his action
concern easements, and are found in the Civil code.
Reliance is principally made upon the first paragraph of
article 582 of the Civil code reading as follows: "No
windows or balconies or other similar projections which
directly overlook the adjoining property may be opened or
built without leaving a distance of not less than 2 meters
between the wall in which they are built and such adjoining
property.chanroblesvirtualawlibrary chanrobles virtual law
library
The provisions of law upon which the defendant grounds
his defense concern prescription of actions, and are found
in Chapter III of the Code of Civil Procedure. The maximum
time within which an action for relief can be brought is there
fixed as within the years after the case of action
accrues.chanroblesvirtualawlibrary chanrobles virtual law
library
The subject of easements of light and view is so thoroughly
covered in two learned 3rd decisions handed down by the
Chief Justice that it would be highly unprofitable to enter
this intricate field of the law. (Cortes vs. Yu-Tibo [1903], 2
Phil., 24; Fabie vs. Lichauco [1908], 11 Phil., 14). But here
there is no question of easement. The point now to be
decided is whether or not a right of action to enforce article
582 of the Civil code may be lost by failure to prosecute
within the prescriptive period fixed by the Code of Civil
Procedure.chanroblesvirtualawlibrary chanrobles virtual
law library

It should first be noted that the defendant in this case has

never prohibited the plaintiff from building on his, the
plaintiff's, own land, any wall that he may desire to
construct. Further, it should be noted that the offending
edifice of the defendant was constructed in 1905. This was
the year when the defendant violated the law. This was the
date when the cause of action accrued. Nevertheless, the
windows complained of were permitted to be open for
thirteen years without protest. The plaintiff must,
consequently, by reason of his own laches, be considered
to have waived any right which he may have had to compel
the windows to be closed. The argument of plaintiff that it
was only in 1917, when he bought the land in question, that
the statute of limitations began to run, is not convincing, for
the general rule is, that once the statute begins to run, it
never stops, and the transfer of the cause of action does
not have the effect of suspending its operation.
(Ervin vs. Brooks [1892], 111 N. C., 358.)chanrobles virtual
law library

ordered.chanroblesvirtualawlibrary chanrobles virtual law

library

It is our holding that plaintiff right of action under article 582

of the Civil Code accrued in 1905 when the windows in
defendant's house were opened, and that, in accordance
with Chapter III of the Code of Civil Procedure, his action
has prescribed.chanroblesvirtualawlibrary chanrobles
virtual law library
A point was made at the hearing of this case as to the right
of the attorney for the appellee to appear and make an oral
argument. The record discloses that the appellee was not
permitted to file a brief because of his failure to ask for an
extension of time within the period fixed by the rules of this
court. (Rules 22, 23.) This failure does not, however,
prohibit counsel from making an oral argument at the
hearing, but does prohibit him from filing a memorandum or
brief at that time, for this would be tantamount to absolving
him from his failure to file his brief in time. The oral
argument of appellee has been noted and has been taken
into consideration.chanroblesvirtualawlibrary chanrobles
virtual law library
Judgment is reversed, and the plaintiff's complaint is
dismissed, with costs of both instances against him. So

G.R. No. L-27319

January 31, 1969

JOSE MA. LOCSIN, JESUSA LOCSIN, CONCEPCION

LOCSIN, EMMA LOCSIN, ROSARIO LOCSIN and
TERESITA LOCSIN, petitioners,
vs.
HON. RAFAEL C. CLIMACO, in his capacity as District
Judge of the Court of First Instance of Negros
Occidental, 12th Judicial District, and HawaiianPhilippine Company, respondents.
Carreon and Taada for petitioners.
Hilado and Hilado and Pelaez, Jalandoni and Jamir for
respondents.
CASTRO, J.:

75 | P a g e

This is a petition for certiorari with preliminary injunction

by Jose Ma., Jesusa, Concepcion, Emma, Rosario and
Teresita, all surnamed Locsin (hereinafter referred to as the
Locsins), owners of the hacienda San Vicente situated in
the Silay-Saravia mill district in Negros Occidental, against
Judge Rafael C. Climaco of the Court of First Instance of
Negros Occidental and the Hawaiian-Philippine Company
(hereinafter referred to as the Central).
The Central is a domestic corporation organized under
the laws of the Philippines, with principal office in Manila
and branch office in Silay City. The Central owns a
centrifugal sugar mill located in the said city, has operated
it since the 1920-1921 crop year, and manufactures sugar
from sugar cane planted and grown in the aforesaid mill
district, also known as the Hawaiian-Philippine mill district
19.
In 1919 the Central entered into identical milling contracts
with the sugar planters in the mill district, effective for thirty
(30) crop years from 1921-1922 to 1951-1952.
The Central, under the milling contracts, undertook to
construct, maintain and operate a railway system over and
across the lands of the sugar planters in the mill district for
the transportation of sugar cane, materials and supplies.
Concomitant to the above obligation, the landowners
granted to the Central corresponding rights of way over
their lands.
In 1920 the Central constructed railroad tracks on the
lands of the sugar planters. One trunk thereof traverses
thehacienda San Vicente.1awphil.t
The 1919 milling contracts expired automatically with the
1951- 1952 crop year.
On March 30, 1953 the Central and the Asociacion de
Hacienderos de Silay-Saravia, representing sugar planters
in the mill district (hereinafter referred to as the
Asociacion), among them the Locsins, entered into a
memorandum agreement, the term of which was for twelve
(12) crop years ending with the 1963-1964 crop year.

Paragraphs 7, 8, 10 and 12 of this memorandum

agreement are hereunder quoted:
7. The Mill recognizes the Asociacion de
Hacienderos de Silay-Saravia or its successors
in interest as the sole agent of the planters of the
Silay-Saravia Mill District in its dealings with them
during the period of the milling contract. The Mill
binds itself not to enter into milling contracts with
any individual planter except through the
Asociacion de Hacienderos de Silay-Saravia.
8. The Planter agrees and undertakes to plant
to cane at least one-third (1/3) of his land each
crop year, and to carry another one-third (1/3)
thereof in ratoons, or at his option, and subject to
the prior approval of the Planter's Association, to
plant to cane each crop year not less than onehalf () of his land, leaving the rest to fallow or
planted to other crops.
10. Subject to the provisions stated in
paragraph 9 of this Agreement, the rights of way
availed of by the PARTY OF THE SECOND
PART under the previous milling contract
between the Mill and the Planter shall be granted
to said PARTY OF THE SECOND PART for the
entire period of the milling contract to be signed.
The PARTY OF THE SECOND PART shall have
two (2) years from the expiration of the contract
within which to remove the railroad tracks at its
expense, unless prevented from so doing by
force majeure, and after which period the railroad
tracks not so removed shall become the absolute
property of the Planter on whose property it is
situated. During that period the Planters will be
granted the use of said railroad tracks or the
remaining portions thereof, free of charge,
provided that this does not delay or interrupt the
removal of the said tracks by the Mill.
12. The Haciendas or sugar cane plantations
initially affected by this Agreement are more or

less the same as those affected by and described

in the previous milling contracts executed
between the individual planters and the
Hawaiian-Philippine Company during the crop
years 1921/1922-1951/1952 as registered in the
offices of the Register of Deeds of the Province
of Negros Occidental.
The "previous milling contracts" referred to in paragraphs
10 and 12 above are the 1919 milling contracts.
The 1953 memorandum agreement expired automatically
with the 1963-1964 crop year.
Prior to the expiration of the 1953 memorandum
agreement, or sometime in 1961, the Central and the
Asociacion took steps to negotiate a new agreement; the
Asociacion demanded a new milling contract on a 70%
participation for the sugar planters and 30% participation
for the Central, and the eventual purchase by the sugar
planters of the sugar mill. These negotiations collapsed. In
April 1962 the Asociacion pressed its aforesaid demands
and made it known that unless the Central sold its sugar
mill to the sugar planters, the Asociacion would buy a sugar
mill and install and operate it in the mill district. Shortly
afterwards the Asociacion organized the Agricultural
Industrial Development Company of Silay-Saravia
Incorporated (hereinafter referred to as the AIDSISA), with
the primary purpose of establishing and operating a sugar
mill in the Silay-Saravia mill district. The Asociacion and the
AIDSISA thereafter signed a 15-year milling contract to
take effect with the 1964-1965 crop year, and negotiations
proceeded for the purchase of a sugar mill from abroad.
The Locsins were among the signatories to this 15-year
milling contract.
On May 28, 1962 the Central informed the Asociacion and
all adherent sugar planters of its willingness to negotiate a
new milling contract, with the admonition that in the event
the parties (Central-Planters) could not agree on an
extension of the 1953 memorandum agreement, or, if no
new milling contract is entered into between them after its
expiration, the Central would invoke and "abide by the

76 | P a g e

pertinent provisions of Republic Acts 809 and 1825

including the prescribed division of shares between the
sugar mill and the sugar planters if said Acts shall not
finally be declared invalid by the courts and are still in
force."
On June 14 the Asociacion informed the Central that (1) it
would resume negotiations for a new milling contract on a
70% participation for the sugar planters and 30%
participation for the Central; (2) it desired an option to buy
50% of the common shares of the Central upon the signing
of a new contract and the remaining 50% common shares
5 years afterwards, and (3) its decision to buy and own the
sugar mill or to establish a new one is "irrevocable."
On June 25 the Central filed an action for declaratory
relief with the Court of First Instance of Manila (CC
50760) 1against the Asociacion, Arsenio J. Jison, and
others named in an attached list, numbering 74 in all,
praying that judgment be rendered:
(1) Declaring Section 4 of Republic Act No. 1825
unconstitutional and hence, null and void.
(2) In any event, defining the rights and
obligations of petitioner Central and respondents
Arsenio J. Jison, et al. and other sugar cane
planters similarly situated as said respondents,
under said statutory provision: (a) the sugar cane
planter is not the owner of the totality of the sugar
production allowance or quota; (b) the right of the
sugar cane planter to transfer the quota can not
prejudice the central's share in said quota; (c) the
sugar cane planter can not establish a new
central in a district where there is a milling
contract in force and the existing central can
satisfactorily meet the milling needs of planters
therein; (d) the sugar cane planter can not
transfer the quota to a central which did not
produce sugar during the pre-war years specified
under Philippine and American sugar quota
legislation; (e) the sugar cane planter can not
transfer the quota to any other central, so long as

the existing central in the district is willing to grant

it the sharing participations established under
Section 1 of Republic Act No. 809 in the absence
of a written milling contract.
On June 29 the Asociacion informed the Central by letter
that it "welcomes your initiative in instituting an action for
declaratory relief to determine the respective rights of the
millers and the planters under R.A. 1825. Such action
would constitute a distinct service not only to us but also
the entire sugar industry...."
On February 14, 1965 the AIDSISA put up a sugar mill in
the Silay-Saravia mill district.
Sometime in November, 1965, the Central submitted the
following two proposals to the sugar planters in the mill
district respecting the use and operation of the railway
system:
1) The rights-of-way granted by the Planters to
the Central over and across their respective
plantations, as provided for in the Memorandum
Agreement shall continue and be effective, in the
meantime that the issue pertinent to said rightsof-way has not been finally decided by the courts.
2) Should final court judgment be in favor of the
planters, the Central shall have one year from the
date of such final judgment within which to
remove the rails from the plantations concerned,
and those rails not so removed within said period
shall become the property of the owners of the
respective plantations.
When these proposals were rejected by a majority of the
sugar planters, the Central decided to dismantle the railway
system and remove the tracks from the lands of the sugar
planters, and so informed the latter that pursuant to
paragraph 10 of the 1953 memorandum agreement, the
Central "shall have two (2) years from the expiration of this
contract within which to remove the railroad tracks at its
expense, unless prevented from so doing by force majeure,

and after which period the railroad tracks not so removed

shall become the absolute property of the Planter on
whose property it is situated."
On January 31, 1966 Luis F. Magalona and other sugar
planters in the mill district, numbering 94 in all (who do not
constitute a majority of the sugar planters in the said mill
district), filed a complaint for injunction with the Court of
First Instance of Negros Occidental (CC 246), praying that
an ex parte writ of preliminary injunction issue restraining
the Central from removing the railway system or any
portion thereof from their lands; that after a hearing on the
merits, the writ be made permanent until the close of the
1978-1979 crop year, pursuant to milling agreements which
the plaintiffs allegedly entered into; and that the Central be
directed to remove the railway system only after the said
1978-1979 crop year under just and equitable conditions.
The 94 plaintiffs alleged that in the absence of written
milling contracts between the Central and a majority of the
sugar planters in the mill district, the Central-Planters
relationship should be governed by sections 1 and 5 of
R.A. 809, 2 under which law the Central is bound to mill the
sugar cane of the planters in the mill district; that the then
milling season in the district would continue for 3 more
months from February to April 1966, for which reason the
Central had to mill the sugar cane remaining in the fields;
that a common practice in sugar plantations is that new
plantings and cultivation of ratoons for the subsequent crop
year are done simultaneously with the harvest of seasoned
canes, and for the ensuing 1966-1967 crop year the
planters had already planted sugar cane and/or cultivated
ratoons and they would continue to do so until the close of
the 1965-1966 milling season, and the new crops would be
milled necessarily at the sugar mill of the Central; that in
view of the obligation of the Central to mill the sugar cane
the railway system would be absolutely necessary and
indispensable; that the Central has sued the Association, et
al., in the CFI of Manila (CC 50760), 3 and the AIDSISA and
others in the Court of First Instance of Negros Occidental
(CC-214-S); that in the first case the Central maintained
that even in the absence of a milling agreement between
the Central and the sugar planters, the latter are obliged
under existing laws to mill their sugar cane in its (Central's)

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sugar mill, and, without its consent, cannot transfer their

sugar production allowance and coefficient or quota to any
other sugar mill; that in CC-214-S the Central maintained
that on the basis of applicable laws and rulings of this
Court, it has acquired a vested right as the exclusive mill or
mill company in the Silay-Saravia mill district 19 for all
sugar quotas allocated to the said district in the form of
production allowance and marketing allotments, as well as
the vested right to demand from the planters after the
expiration of the milling contracts the reassumption by both
parties of the same terms and conditions mutually
stipulated by them under the said milling contracts and the
continuation of the Central-Planters relationship as long as
the said laws are effective and the sugar limitation and
quota system established thereunder continue; that the
Central in the said civil cases 50760 and 214-S impliedly
assumed to keep the railway system intact at least up to
the termination of the said cases; that independently of the
said cases and in view of the absence of written milling
contracts between the Central and a majority of the sugar
cane for the 1966-1967 crop year and on to include the
1978-1979 crop year, or, during the same crop years, the
sugar planters may refuse or neglect to plant sugar cane in
their lands, in any of which eventuality the Philippine
Government, pursuant to sections 4 and 5 of R.A. 809, "in
order to avoid a deficiency or delinquency of the national
quota," might take over the sugar mill and/or the sugar
plantations and operate and administer them under its
name and authority, and in these events the railway system
would be vital and necessary; that if not enjoined, the
Central will dismantle and remove the railway tracks thus
precluding the hauling and transportation of sugar cane
and cause great and irreparable damage to the sugar
planters; that while other means of transportation might be
provided, like trucks and truck-trailers, their evident
shortcomings pitted against the efficiency of locomotives
and rail cars would result in permanent irreparable injury to
the complainants; that an injunctive writ would avoid
multiplicity of suits; and that their complaint for injunction is
the only plain, speedy and adequate remedy in the ordinary
course of law to restrain the Central from removing the
railway system or any part thereof from the mill district.

On February 9 the CFI of Negros Occidental (CC 246)

issued an order stating that at the hearing on the petition
for preliminary injunction the counsel for the Central
"appeared and confirmed the main allegations in the
Complaint particularly that despite its position that the
previous milling agreement between it and the Plaintiffs
had been renewed by force of law, the Defendant intends
to remove the rails to protect its ownership over the said
rails;" and the same counsel further indicated that "an
injunction would safeguard the said rights of ownership."
The same court also stated that "the Plaintiffs are entitled
to the relief demanded," and consequently issued a writ of
preliminary injunction restraining the Central from removing
the railway system or any portion thereof pending decision
of the case.
On March 4 the Central filed its answer to the basic
complaint, containing admissions with clarifications and
amplifications, and averring that (1) under the doctrine
announced in Asturias Sugar Central, Inc. vs. Montinola,
69 Phil. 725 the railroad rights-of-way have by force of law
been extended up to July 3, 1974 as to quota "A" and up to
the end of 1973-1974 crop year as to quotas "B" and "C";
(2) the grant of railroad rights-of-way is an indivisible
obligation assumed collectively and generally by all the
sugar planters in the mill district under the 1919 milling
contracts and the 1953 memorandum agreement; (3)
should it be eventually resolved by the courts that there is
no contract to govern the relationship between the Central
and the sugar planters in the mill district, still it would be
"quite remote" for the Central to refuse milling the sugar
cane in the district, it having manifested repeatedly its
willingness to mill the cane on the basis of the participation
rates fixed by section 1 of R.A. 809, and until such time as
the constitutionality of the said Act shall have been decided
by the courts; (4) the Central has decided to dismantle and
remove the railway system because "it would not want to
run the risk of losing its ownership over said railways,"
pursuant to paragraph 10 of the 1953 memorandum
agreement; (5) while in civil case 50760, the CFI of Manila,
in its order of February 11, 1966, held that "where the
central is willing to grant the participation provided for in
paragraph 4 of Republic Act 1825, and the adherent
planters are willing to accept such participation, the other

rights and obligations of the parties shall be covered by the

memorandum of the parties which shall be deemed
reproduced in accordance with the ruling in the case of
Asturias Sugar Central vs. Montinola," nevertheless until
that case is finally decided on appeal, the Central
"continues to be subject to the risk of losing ownership of
its railways ... unless it dismantles the said railways from
the plantations;" and (6) the basic complaint failed to
include all the sugar planters in the mill district, or, at least,
all sugar planters who have granted rights-of-way to the
Central over and across their plantations, and their noninclusion would possibly prevent "the grant of complete
relief as between the present plaintiffs and defendant."
Also on March 4 the Central filed a third-party complaint
against Lourdes de la Paz and other third-party
defendants, numbering 170 in all, including the Locsins,
averring, in addition to allegations (1) to (6) above as an
alternative cause of action, that if the 1919 milling
contracts, the 1953 memorandum agreement and the
ruling inAsturias, supra, do not justify a grant and/or
continuation of railroad rights-of-way over and across the
plantations in the Silay-Saravia mill district, "the third party
plaintiff is entitled to said rights-of-way as a legal easement
under the Philippine Civil Code, the sugar limitation laws,
and the pertinent executive orders and regulations issued
in implementation thereof." The Central prayed that
judgment be rendered, in the alternative, (1) to compel the
sugar planters in the mill district, including the third-party
defendants to grant the Central railroad rights-of-way
necessary for its railway system; or (2) if the sugar planters
cannot be compelled to grant the same, the Central be
given a reasonable time (not less than a year) to dismantle
and remove the railway system from the plantations
concerned; and that the status quo be preserved during the
pendency of the case.
On April 30 the third-party defendants answered the thirdparty complaint, alleging, inter alia, that the Central had
never averred or maintained that the grant of railroad
rights-of-way over and across the lands of the sugarplanters is an indivisible obligation assumed collectively
and generally by all the sugar planters in the mill district;
that such averment was made by the Central only after and

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as a result of the sugar planters' assertion of their rights

under paragraph 10 of the 1953 memorandum agreement;
that no such indivisible and collective obligation could have
been undertaken by the sugar planters under the milling
contracts or memorandum agreement as no consideration
was given to or received by them in virtue of such
obligation; that their obligations under the milling contracts
and the memorandum agreement are individual and
separate, unrelated to any other similar obligation in the
same contracts and agreement; that there is no need for
the Central to demand a railroad right-of-way in the mill
district because the sugar cane produced therein can be
transported by other means of transportation such as
trucks and truck-trailers; that the acts of the Central after
the enactment of Act 4166 4 of executing and attempting to
execute new milling contracts with the sugar planters in the
mill district providing for definite expiration periods in them
clearly indicate that it did not believe that the milling
contracts and the memorandum agreement were
automatically renewed; that assuming arguendo that the
ruling in Asturias, supra, is still controlling, nonetheless the
reassumption mentioned in that case refers to the rights
and obligations of the Central and the planters on the basic
milling conditions, such as participation, rate, polarization,
etc., and does not cover other terms like the grant of
railroad rights-of-way, which, even if related, are neither
essential nor indispensable to its milling obligation since
the Central can comply with its milling obligations by
transporting sugar cane from the plantations to the mill site
by truck and truck-trailers; that having failed to dismantle or
remove its rails within two years after the 1963-1964 crop
year, the Central has lost ownership thereof to the sugar
planters-owners; and that they deny they were "duly
informed" of the Central's decision to dismantle its railroad
tracks, the truth being that it was more practical for the
Central to risk an adverse court decision after several
years in respect to the ownership of the rails rather than
remove them at its expense, aside from the fact that it does
not want to incur additional expense in acquiring trucks and
truck-trailers. The third-party defendants prayed that the
third-party complaint be dismissed, that they be declared
owners of the railroad tracks found in their respective
lands, and that they be awarded reasonable attorney's
fees.

The third-party defendants O. Ledesma & Co., Inc.,

Juanita J. Ledesma, Velia and Anita Gorres, filed a
separate answer to the third-party complaint reproducing
"in toto the allegations of the basic Complaint" in civil case
246, "in so far as said allegations affect each of them, and
adopt and make their own all said allegations and prayers,
reserving unto them, however, the right to file amendatory
answer as the development of the issues warrants."
On May 19 the Central answered the counterclaim for
attorney's fees, further averring that the construction and
maintenance of the railroad rights-of-way and system by it
were "sufficient and valid consideration for the collective,
solidary and indivisible obligation of petitioners to grant or
cause to be granted the right-of-way necessary for said
railway system;" that it had two years from the 1963-1964
crop year within which to remove the railroad tracks and
that said period has not yet expired; and that by reason of
the writ of preliminary injunction issued by the respondent
Judge, it had been prevented by force majeure from
removing the railroad tracks and that therefore it remained
the owner thereof. The Central prayed for the dismissal of
the third-party defendants' counterclaim.
On November 18 Jose Ma. Locsin notified the Central that
five days from receipt of such notice, he will "place
obstructions and close my hacienda, Hda. San Vicente ...
to all traffic traversing the same by way of the railroad
lines," placed a sign "PRIVATE PROPERTY NO
TRESPASSING JOSE MA. LOCSIN" alongside the portion
of the railroad tracks traversing a boundary of
the hacienda and erected two posts, one on each side of
the railroad tracks.
On November 21 the Central filed an urgent ex
parte motion for issuance of a writ of preliminary injunction,
reiterating the main allegations in its third-party complaint,
and praying that the Locsins be enjoined from obstructing
and closing the portion of hacienda San Vicente through
which the railroad lines pass.
On November 21 also, the 94 sugar planters,
complainants in civil case 246, filed a manifestation that as

such plaintiffs, they in general, have legal interest in the

preservation and free use of the entire railways system
subject matter of the Complaint, and the plaintiffs Danilo
Gamboa. Estate of Enrique Jaranilla, Letty Mijares, Priscilla
Maglinte, and Pilar G. Hofilena, in particular, have a special
legal interest in that portion of the said railways passing
through Hacienda San Vicente, for the additional reason
that their sugar cane are presently being hauled or about to
be hauled by cane railways" that they "have legal interest in
the success of the aforesaid "Urgent Ex-Parte Motion for
Preliminary Injunction" of the defendant and legal interest
against the acts which defendant seeks to be restrained in
that pleading;" and that they adopt the urgent ex
parte motion for preliminary injunction and join in the prayer
for its approval.
On November 22 the CFI of Negros Occidental issued an
order, granting a writ of preliminary injunction restraining
any and all parties to the case, particularly the Locsins,
"from removing or in any manner damaging the railroad
lines of the third-party plaintiff (Central) and/or obstructing,
impeding or in any manner hindering its continued use and
operation thereof, pending final decision of this case." This
order reads in part:
The plaintiffs have filed a manifestation joining
in the petition for the issuance of such a writ,
because the sugar of some of them are hauled
on the portion of the railways going
thru Hacienda San Vicente.
Among the issues raised by the pleadings are:
(a) Who owns the railways - the
Central: or the individual planters? .
(b) Does the Central still own and enjoy
a right-of-way thru the land of the
planters?
To allow any of the planters (whether plaintiffs or
third party defendants) to block the free
movements of cane cars at this time i.e.,

79 | P a g e

before final resolution of the issues and during

the milling season is to disturb the status quo;
would work injustice to the Central and to the
planters whose crop has to be transported to the
mill; and would seriously affect the production of
sugar and injure the national economy.
The said railways system, it may be added, has
been in use by planters and Central these many,
many years. To maintain the status quo for
sometime yet cannot possibly prejudice greatly
any one.
On November 28 the Locsins moved to dissolve the writ,
on the ground that it was issued with grave abuse of
discretion, because (1) the Central's right to maintain and
operate the railway system within the hacienda San
Vicente ceased to exist at the end of the 1964-1965 crop
year, pursuant to paragraph 1 of the 1953 memorandum
agreement (2) there is no specific averment in the Central's
third-party complaint and Urgent Ex-Parte Motion for
Preliminary Injunction that it has established the
preconditions for the grant of a railroad right-of-way over
thehacienda, pursuant to articles 649 and 650 of the Civil
Code of the Philippines; (3) assuming arguendo that the
Civil Code grants the Central the necessary railroad rightof-way over and across the hacienda, the Central waived
this right when it executed the 1919 milling contracts and
the 1953 memorandum agreement stipulating therein that
the existence of the railroad tracks would be co-terminous
with the life of the said contracts; (4) the railroad tracks are
neither necessary nor indispensable to the operation of the
Central's sugar mill, pointing out that at least two other
sugar centrals in Negros Occidental employ trucks and
truck-trailers in transporting their cane from the plantations
to their respective mill sites; and (5) the Central in fact
threatened to dismantle its railway complex in the entire
Silay-Saravia mill district and would have succeeded in
doing so had it not been restrained.
On or about December 8 the Central opposed the motion
to dissolve the writ of injunction, asserting that its
dissolution would pave the way for the perpetration of the
threatened acts the blocking off of portions of the railway

system and once free movement through the railway

system is impeded, the railway system would be rendered
useless; that dissolution of the injunction would negate
whatever judgment may be rendered on the main reliefs
sought by the 94 plaintiffs in their basic complaint and
would do violence to the judgment of the CFI of Manila in
CC 50760, which, "in fine, directs the continued operation
of the railway system as one of the obligations under the
Memorandum Agreement (milling contract) which were
indeclinably reassumed by the parties by operation of law,"
and now on appeal in L-26344; and that the Central being
"in uncontested possession of the railway system at the
time the threatened acts of disturbance became known, to
allow any of the movants to block off portions of the said
railway system would be to run roughshod over the
cardinal rule of law that every possessor should be
respected in his possession (Art. 539, Civil Code)."
January 7, 1967, the said court issued another order,
stating that "to dissolve the preliminary injunction at this
stage is to allow one of the parties to go ahead and do
what it pleases with the railway system even before the
Supreme Court will have resolved in the appealed case
from the Court of First Instance of Manila exactly what the
rights of the Company and the planters are under the
Asturias case and particularly the right to operate and
maintain the railway," and consequently maintained the writ
of preliminary injunction.
Hence the present petition, the Locsins contending that
the orders of November 22, 1966 and January 7, 1967,
were issued with grave abuse of discretion and in excess
of jurisdiction, and praying that a restraining order issue
pending a hearing of the petition enjoining respondent
court from enforcing the writ, and that after a hearing on
the merits the said orders be annulled and the injunction
made permanent.
We gave due course to the petition on March 15, 1967
and required the respondents to file their answer.
On the Procedural Issues

The petition, the respondents maintain, is fatally defective

and should be dismissed, because (1) it was filed without
the petitioners first instituting a motion for reconsideration
of the order of January 7, 1967; and (2) it does not implead
as co-respondents the 94 complainants and the 170 thirdparty defendants (minus the Locsins), pursuant to section 5
of Rule 65 of the Revised Rules of Court providing in part
that when the petition filed relates to the acts or omissions
of a court or judge, "the petitioner shall join, as parties
defendant with such court or judge, the person or persons
interested in, sustaining the proceeding in the court."
1. When a definite question has been properly
raised, argued, and submitted to a lower court,
and the latter has decided the question, a motion
for reconsideration is no longer necessary as a
condition precedent to the filing of a petition
for certiorari in this Court. 5 From the order of
November 22, 1966, enjoining any and all parties
to the case "from removing or in any manner
damaging the railroad lines," the Locsins filed a
motion to dissolve the said writ, contending that
the writ was issued in excess of jurisdiction and
with grave abuse of discretion, and alleging five
reasons in support thereof. This motion was
denied by the respondent court when, in its order
of January 7, 1967, it maintained the effectivity of
the writ. The motion to dissolve the writ satisfied
the requirements of a motion for reconsideration;
another one of the same species would be a
patent superfluity.
2. 43 C.J.S. 35 says that in order to be entitled to
an injunction, a complainant must be the "real
party in interest," and that a real party in interest
is one "who has an actual and substantial interest
in the subject matter, as distinguished from one
who has only a nominal interest, having
reference not merely to the name in which the
action was brought, but to the facts as they
appear or record." And 1 Sutherland's Code
Pleading, Practice and Forms, section 12, page
11, defines a real party in interest as "the party
who would be benefited or injured by the

80 | P a g e

judgment or the "party entitled to the avails of the

suit". "Interest", within the meaning of this rule,
means material interest, an interest in issue and
to be affected by the decree, as distinguished
from a mere interest in the question involved, or
mere incidental interest."
Tested by these rules the 94 plaintiffs and 170 third-party
defendants (minus the Locsins) are not real parties in
interest entitled to an injunction. While the respondent court
found that they "have legal interest in the preservation and
free use of the entire railway system including of course the
portion of the hacienda San Vicente in question, such
"legal interest" is merely incidental to, and entirely
dependent upon, the primary rights and interests of the
Central in maintaining and operating the railway system.
This is so because the 94 plaintiffs and the 170 third-party
defendants have no cause of action against the Locsins,
that is, they have no right to demand from the latter "the
preservation and free use" of the part of the railway system
that traverses the hacienda San Vicente. They have no
contractual relations with the Locsins. Neither have they
demanded that the Locsins grant them a railroad right of
way over the hacienda San Vicente. And, significantly, they
have not come forward to ask that they be impleaded as
parties to the instant petition.
On the Merits
The basic issue herein posed is whether or not the
respondent court acted in excess of jurisdiction and/or with
grave abuse of discretion in issuing the writ of preliminary
injunction.
This Court, in Angela Estate, Inc., et al. vs. Court of First
Instance of Negros Occidental, et al., 6 explained quite
unequivocally that a writ of preliminary injunction.
may be issued at any time after the
commencement of an action and before
judgment, when it is established that the plaintiff
is entitled to the relief demanded and only when
his complaint shows facts entitling him to such

relief. This extraordinary writ is not designed to

protect contingent or future rights. "An injunction
will not issue to protect a right not in esse and
which may never arise or to restrain an act which
does not give rise to a cause of action. (32 C. J.
pp. 34, 35)" "Injunction, like other equitable
remedies, will issue only at the instance of a
suitor who has sufficient interest or title in the
right or property sought to be protected.... For the
court to act, there must be an existing basis of
facts affording a present right which is directly
threatened by the act sought to be enjoined. An
impending or threatened invasion of some legal
right of the complainant, and some interest in
preventing the wrong sought to be perpetrated
must be shown. It is always a ground for denying
injunction that the party seeking it has insufficient
title or interest to sustain it, and no claim to the
ultimate relief sought in other words, that he
shows no equity. Want of equity on the part of the
plaintiff in attempting to use the injunctive
process of the court to enforce a mere barren
right will justify the court in refusing the relief
even though the defendant has little equity on his
side. The complainant's right or title, moreover,
must be clear and unquestioned, for equity, as a
rule, will not take cognizance of suits to establish
title, and will not lend its preventive aid by
injunction where the complainant's title or right is
doubtful or disputed. He must stand on the
strength of his own right or title, rather than on
the weakness of that claimed by his adversary."
The possibility of irreparable damage, without
proof of violation of an actually existing right, is
no ground for an injunction, being a
mere damnum absque injuria.
The principal relief sought by the Central, found in its
third-party complaint, is that in the event the 1919 milling
contracts, the 1953 memorandum agreement, and the
ruling in Asturias, supra, do not justify the granting and/or
continuation of the railroad rights-of-way, the Central is
entitled to, and should therefore be granted, a right-of-way
as a legal easement under the Civil Code of the

Philippines, Act 4166 (otherwise known as "the Sugar

Limitation Law"), and the pertinent executive orders and
regulations issued in implementation thereof.
The 1919 milling contracts, as earlier stabbed, expired
automatically with the 1951-1952 crop year. The 1953
memorandum agreement expired automatically with the
1963-1964 crop year.
The Central contends, notwithstanding, that its relation
with the sugar planters in the mill district, and its right to
maintain and operate the railroad rights of way, continue by
operation of law, conformably with the ruling in Asturias,
hereunder reproduced:
Fue en virtud de las mencionadas Leyes No.
213 del Congreso de los Estados Unidos, y No.
4166 de la Legislatura Filipina, como los
recurridos se vieron obligados a moler sus canas
en la Central de la recurrente. Hubo por
consiguiente una indeclinable reasuncion tanto
por los recurridos como por la recurrente de su
contrato celebrado antes de la zafra de 19311932, reanudando entre si, las relaciones que
entre ellos entonces existian, y viendose
necesariamente obligadas a las prestaciones
que se habian prometido mutua mente. Esto es
obvio porque las obligaciones no solamente
nacen de los contratos y cuasi contratos, y de los
actos y omisiones ilicitos, o culposos o
negligentes sino tambien y mas principalmente,
de la ley. (Art. 1089, Codigo Civil.).
The contention is old saw, in a manner of speaking, which
we disposed of in Angela Estate, supra, in the following
words: "That case referred to a planter who had
a verbal milling contract with a central before the crop year
1931-32. Under this contract the former received from the
latter a certain form of bonus as additional participation. In
the crop years 1932-1933 and 1933-1934, the planter
milled his sugar cane with another central. After the
passage of Act 4166 in 1934, the planter resumed milling
his sugar cane with the first central. Resolving the question

81 | P a g e

whether the planter was entitled to the same bonus which

the central had given him in the 1981-1932 and previous
crop years, this Court ruled in the affirmative, holding that
there was an indeclinable reassumption both by the central
and the planter of their contract subsisting before the 19311932 crop year, reviewing the relations which between
them then existed, they finding themselves necessarily
obligated by the undertaking which they had mutually
assumed." Apart, therefore, from the fact that the issue
therein posed is completely alien to the main issue in the
present case, which is, whether the Central is entitled to a
right of way over the hacienda San Vicente the
inescapable, fundamental and decisive difference is that
the verbal milling contract of the parties in Asturias was
deemed renewed to govern the relationship which existed
between them; while in the case at bar, the 1919 milling
contracts and the 1958 memorandum agreement were not
renewed.
Is the Central entitled to a legal easement under the new
Civil Code? This was the self-same question resolved by
this Court in Angela Estate, supra:
By express provision of articles 649 and 650 of
the new Civil Code, the owner of an estate may
claim a compulsory right of way only after he has
established the existence of four requisites,
namely, (1) the estate is surrounded by other
immovables and is without adequate outlet to a
public highway; (2) after payment of the proper
indemnity; (3) the isolation was not due to the
proprietor's own acts; and (4) the right of way
claimed is "at a point least prejudicial to the
servient estate, and in so far as consistent with
this rule, where the distance from the dominant
estate to a public highway may be the shortest."
The onus is upon the owner of the dominant
estate to show by specific averments in his
complaint the existence of the requisites or preconditions enumerated. And in granting the writ
of preliminary injunction, the order of the court
must show by specific finding, even preliminary,
that the preconditions exist.

The record yields no indication that the Central has met or

satisfied the requisites or pre-conditions required by the
Civil Code.
The Sugar Limitation Law (Act 4166) is erroneously
invoked as authority to sustain the position that the Central
is entitled to rail road rights of way on the hacienda San
Vicente. Act 4166, even with the amendments introduced
by Commonwealth Acts 77 and 323 and Republic Acts
1072 and 1825, contains no provision conferring upon the
Central the right to establish rights of way on the lands of
the adherent planters. It would appear from its title and
declaration of policy that Act 4166 was enacted solely for
the purposes of limiting and allocating the production of
sugar in the Philippines as well as regulating the
processing and marketing thereof.
The respondents likewise contend that the dissolution of
the writ of preliminary injunction would do violence to the
judgment of the CFI of Manila in CC 50760, which,
according to them, "directs the continued operation of the
railway system as one of the obligations under the 1953
Memorandum Agreement which were indeclinably
reassumed by the parties by operation of law."
Without prejudging the merits of the appeal in L-26344,
nothing in either the body or the dispositive portion of the
decision in that case supports this contention. The
dispositive portion of the said decision is quoted hereunder:
WHEREFORE, judgment is hereby rendered
declaring that Sections 1 and 2, Republic Act
809, Section 4, Republic Act 1825, and Section
3, Republic Act 1072, are valid and constitutional;
that the respondent planters cannot transfer their
export sugar, or "A" and "AA" sugar to a central
which did not produce sugar in 1940; and that the
respondent planters cannot transfer their export
quota, or "A" and "AA" sugar to any other central
as long as the petitioner is willing to grant them
the participation provided for in Section 1,
Republic Act 809 in the absence of a milling
contract.

Indeed, the CFI of Manila in the said civil case could not
have decreed the continuous operation of the railway
system as one of the obligations under the 1953 milling
agreement that were indeclinably reassumed by the parties
by operation of law, since all that the Central prayed for in
the said cases are (1) to declare section 4 of R.A. 1825
unconstitutional; and (2) in any event, to define the rights
and obligations of the Central and the sugar planters in the
district under the said Act. This Act, by its title, provides for
"THE
ALLOCATION,
REALLOCATION
AND
ADMINISTRATION OF THE ABSOLUTE QUOTA ON
SUGAR," and this Court has expressed the view in Angela
Estate, supra, that R.A. 1825, among other Acts therein
mentioned, "contains no provision conferring upon the
Central the right to establish rights of way on the lands of
the adherent planters."
It then follows ineluctably that in the absence of a renewal
contract or the establishment of a compulsory servitude of
right of way on the same spot and route which must be
predicated on the satisfaction of the preconditions required
by law, there subsists no right of way to be protected or
respected.
The Central finally maintains that the writ of preliminary
injunction should be preserved to safeguard its rights of
ownership of the railways. Such claim of ownership,
however, is contested by the sugar planters, particularly the
third-party defendants, claiming that the Central, having
failed to dismantle or remove the rails within two years after
the 1963-1964 crop year, thereby lost ownership in their
favor. This conflict as to the ownership of the railways can
best be considered after this case is tried on the merits.
The pronouncements of this Court in Bacolod-Murcia
Milling Co. vs. Capitol Subdivision, et al., 7 L-25887, July 26,
1966, reiterated in Angela Estate, supra, are apropos to the
present case:
In truth, the court of origin seems to have
proceeded on the erroneous assumption that,
even after expiration of its contractual right of
way, petitioner Central was entitled to a

82 | P a g e

compulsory right of way in the same location and

route it has been using up to the present. This is
not true: the Central's use of the present railway
for the preceding 45 years was based on the
assent of the Subdivision's predecessors-ininterest, as evidenced by their milling contract,
while a compulsory servitude of right of way on
the same spot and route must be predicated on
the minimum inconvenience to the would-be
servient estate, in addition to the other requisites
above set forth. There is no specific finding by
the court of origin that the prerequisites exist, and
the lack of it suffices to negate the Central's right
to the servitude claimed, as it likewise negates
the propriety of the temporary injunction issued.

ACCORDINGLY, the petition for certiorari is granted, and

the orders of November 22, 1966, and January 7, 1967 are
annulled and set aside, at the private respondent's cost.

In issuing the preliminary writ for defendant to

permit the Central to use its railway, in the
manner established under the milling contract,
the court of origin in effect extended that
corresponding part of the contract even beyond
the term stipulated by the parties. Such action is
not warranted by law. The function of an
injunction is the maintenance of the status quo as
of the time of its issuance, and at that time, the
right of the Central under the milling contract had
uncontrovertibly expired. It needs no
emphasizing that the court can not create
contracts between the parties.

In this petition for review on certiorari, the petitioner assails

the decision of the Court of Appeals dated August 29, 1986
which affirmed the November 14, 1984 order of the
Regional Trial Court, Branch CXI at Pasay City dismissing
the petitioner's civil action for a right of way with prayer for
preliminary injunction.

[T]he Preliminary injunction was issued on an

erroneous premise, "the premature assumption
that respondent Bacolod-Murcia Milling Co., Inc.,
is entitled to the legal easement prayed for by it",
since the existence of the statutory requisites for
such easement had not been properly averred or
proved.... Of course, petitioner may duly show at
the hearing on the merits that the preconditions
required by the Civil Code do actually exist; but
until that is done the right to the legal servitude is
not clear, and the writ of injunction is
unwarranted, and issued in grave abuse of
discretion.

G.R. No. 75905 October 12, 1987

REMIGIO O. RAMOS, SR., petitioner,
vs.
GATCHALIAN REALTY, INC., EDUARDO ASPREC, and
COURT OF APPEALS, respondents.
GUTIERREZ, JR., J.:

Petitioner Ramos is the owner of a house and lot

containing an area of 901 square meters covered by
Transfer Certificate of Title No. 14927 situated at Barrio
San Dionisio, Paraaque, Metro Manila. The lot was
acquired by the petitioner from Science Rodriguez Lombos
Subdivision In the subdivision survey plan of Lot 4133-G,
(LRC) PSD-172544, the lot is more particularly described
as Lot 4133-G-11 (Exhibits "1" and "1-A "). Two road lots
abut petitioner's property namely lot 4133-G-12 with an
area of 2,160 square meters clearly appearing as a
proposed road in the Lombos subdivision plan and Lot
4135 of the Paraaque Cadastre now known as Pambansa
Road but more commonly referred to as Gatchalian
Avenue.
Respondents Asprec own Lot 4135. Gatchalian Avenue is
alongside Lot 4135. Respondent Gatchalian Realty was
granted the road right of way and drainage along Lot 4135
to service the Gatchalian and Asprec subdivision, by the
respondent Asprecs.

The records of this case disclose that on April 30, 1981, a

complaint for an easement of a right of way with
preliminary mandatory injunction was filed by Ramos
against the private respondents. Among the allegations in
the complaint are:
... that he (referring to the petitioner) constructed his
house at 27 Gatchalian Avenue (also known as
Pambansa Road), Paranaque, and has since
resided therein with his family from 1977 up to the
present; that during construction of the house,
Gatchalian Realty, Inc. built a 7-8, feet high
concrete wall right infront of appellant's premises,
blocking his entrance/exit to Gatchalian Road, the
nearest, most convenient and adequate
entrance/exit to the public road. or highway,
formerly Sucat Road but now known as Dr. A.
Santos Avenue, Paraaque; that this house and lot
is only about 100 meters from Sucat, Road passing
thru Gatchalian Avenue; that prior to this, appellant
and
his
counsel
addressed
separate
request/demand letters (Exh. A and Annex B) to
defendant company to allow him to exercise a right
of way on the subject premises; that in September
1977, a meeting/conference was held between
appellant and his counsel on one hand and Mr.
Roberto Gatchalian and counsel on the other,
during which defendant Corporation manifested its
conformity to grant appellant the requested right of
way upon payment of proper indemnity, with the
request that appellant inform defendants Asprec of
their aforesaid agreement; that consequently,
appellant wrote Mr. Cleto Asprec on September 16,
1977 (Exh. D); that with the construction of the 7-8
feet concrete wall appellant and his family have
been constrained to pass through the back portion
of their lot bounded by other lots belonging to
different owners, which is grassy and cogonal as
temporary ingress/egress with great inconvenience
and hardship, and this becomes all the more
pronounced during the rainy season due to flood
and mud (Exhs. B-1, B-1-A, B-2; B-2-A, B-3, B-3-A,
B-3-B and B-4); and, lastly, that the aforesaid
concrete wall is dangerously leaning towards

83 | P a g e

appellant's premises posing great danger or hazard.

(Court of Appeals Decision, p. 3, Rollo, p. 39)
On May 20, 1981, the respondent corporation filed a
motion to dismiss on grounds of lack of cause of action and
bar by prior judgment alleging that the complaint was
merely a reproduction of that filed on October 26, 1972 in
Civil Case No. 5930-P which was dismissed on October 30,
1980 for failure to prosecute within a reasonable length of
time. Respondents Asprec later joined the respondent
company in its motion to dismiss and adopted the grounds
and arguments stated therein.
On November 20, 1981, after the petitioner had filed his
opposition to the above motions, the lower court issued its
order denying the motion to dismiss on the ground that the
order dismissing the earlier case was not an adjudication
on the merits.
On November 26, 1981, the petitioner filed an urgent
exparte motion for the issuance of a preliminary mandatory
injunction as well as a preliminary prohibitory injunction. On
the same day, the lower court set the motion for hearing on
December 1, 1981, later reset to December 10, 1981, and
ordered that:
In the meantime, pending determination of the
application on the merits and in order that the
reliefs sought therein may not be rendered moot
and academic, the defendants and all persons
acting upon their orders are hereby temporarily
enjoined from building, constructing and/or
erecting a wall, fence or any enclosure adjoining
or abutting plaintiff's premises and/or from
restraining, preventing or prohibiting the plaintiff,
his family or persons residing in his premises as
well as any person/s who may have any dealing
or business with them from using, passing and/or
traversing the said Gatchalian Avenue in going to
or returning from the plaintiff's premises and in
going to or returning from Sucat Road via
Gatchalian Avenue, until further orders from this

Court. (Order dated

Records, p. 66).

November

26,1981,

On December 1, 1981, Gatchalian Realty filed its answer

and averred, among others, that:
xxx xxx xxx
Defendant Corporation has never entered into a
verbal agreement with plaintiff to grant the latter a
road right of way;
xxx xxx xxx
The so-called Gatchalian Avenue or Palanyag
Road is not a public road but a private street
established and constructed by the defendant
Corporation intended for the sole and exclusive
use of its residents and lot buyers of its
subdivisions, as well as of the subdivisions
owned and operated by the various naked
owners of the different portions constituting the
entire length and breadth of said street;
If plaintiff's property referred to in the complaint is
Lot No. 4133-G-11, (LRC) Psd-229001 (sic), then
a grant of a right of way to plaintiff is not a legal
necessity, because such lot has an eating road
right of way, more particularly Lot 4133-G-12,
towards Dr. Arcadio Santos Avenue(Sukat Road);
xxx xxx xxx
The opening of Gatchalian Avenue to the
property of plaintiff will unduly cause great
prejudice to defendant Corporation as it can no
longer effectively regulate the use of the said
private road; ...
Assuming, though not admitting, that
plaintiff may be granted a right of way,
still the reasonable compensation for

such grant would be some

P800,000.00, as such portion of
Gatchalian Avenue consists of some
2,000 square meters of prime and
valuable property which could readily
command a market value of P400.00
per square meter; moreover, plaintiff
still has to shoulder his proportionate
share of the expenses and upkeep of
such street and the real estate taxes
imposed
thereon.
(Answer
of
Gatchalian Realty, Inc., Records, pp.
81-82).
On December 2, 1981, respondent Asprec filed their
answer which basically contained the same averments as
that of the realty company.
At the hearing of the petitioner's application for issuance of
a writ of preliminary injunction to compel the private
respondents to remove the wall constructed right in front of
the petitioner's premises barring him access to Gatchalian
Avenue, both parties presented oral and documentary
evidence to support their respective positions. After the
hearing, the lower court issued the following order:
Plaintiff is given fifteen (15) days to file
a memorandum and the defendant is
given another fifteen days from receipt
thereof to file a reply, after which the
case shall be deemed submitted for
resolution. So ordered. (TSN,
December 10, 1981, p. 57)
After compliance by both parties with the above order, the
lower court, on July 9, 1982, rendered a decision the
dispositive part of which reads:
WHEREFORE, judgment is hereby
rendered in favor of the plaintiff and
against the defendants ordering the
latter to grant the former a right of way
through Palanyag Road to and from

84 | P a g e

Don Arcadio Santos Avenue and to and

from his residence, upon payment by
the plaintiff to the defendants Asprecs
the sum of P5,000 as indemnity
therefor and under the following terms
and conditions to wit: (1) the easement
created shall be only in favor of the
plaintiff, members of his family and
person or persons dealing with them;
and (2) the opening to be created
through the concrete wall separating
plaintiff's residence and Palanyag Road
shall only be three (3) meters wide and
shall be provided by an iron gate by the
plaintiff all at the expense of the
plaintiff. Without pronouncement as to
costs and damages. (Rollo, p. 30)
Thereafter, the respondent company filed a motion to set
aside and/or reconsider the lower court's decision for being
premature since only the application for the writ of
injunction was heard and submitted for resolution and not
the entire case. Respondents Asprec, likewise, filed a
motion for reconsideration mainly on the ground that the
lower court's grant of a right of way through Gatchalian
Avenue in petitioner's favor would be in derogation of the
"Contract of Easement of Road Right-of-Way and of
Drainage" executed between them and Gatchalian Realty.
In his opposition to both motions, the petitioner argued that
on the basis of the transcript of steno graphic notes taken
on December 10, 1981, it was clear that both parties
submitted the entire case for resolution inasmuch as the
pieces of evidence for the injunction and for the main case
were the same and there was nothing left to be presented.
Thus, in effect, the petitioner contended that the lower
court's decision dated July 9, 1982 was an adjudication on
the merits.
On July 8, 1983, the lower court under a new judge by
virtue of the reorganization of the judiciary, issued an order
setting aside and vacating its previous decision dated July
9, 1982 on the ground that the same was "rendered

prematurely as the defendants had not presented their

evidence on the main evidence."
After the petitioner had rested his case, the respondent
company filed a motion to dismiss based on the
insufficiency of the evidence adduced by the petitioner. An
opposition to said motion, was, thereafter, filed by the
petitioner.
On November 14, 1984, the lower court, acting on the
respondent company's motion to dismiss, issued an order
with the following tenor:
WHEREFORE, finding the motion to
dismiss of defendant corporation
Gatchalian Realty, Inc. to be impressed
with merit, the same is hereby granted.
For insufficiency of evidence, plaintiff's
complaint is hereby dismissed, without
pronouncement as to costs. (Rollo, p.
34)
The Court of Appeals on August 29, 1986, found that the
petitioner failed to establish the existence of the preconditions in order that he could legally be entitled to an
easement of a right of way. It affirmed the lower court's
order dated November 14, 1984 in all respects, with costs
against the petitioner.
Hence, this petition which presents the following
assignment of errors:
I
PUBLIC RESPONDENT ERRED IN AFFIRMING I-IV
TOTO THE ORDER OF DISMISSAL OF THE TRIAL
COURT IN ALL RESPECTS WITH COSTS AGAINST THE
PETITIONER.
II

PUBLIC RESPONDENT ERRED IN ITS DECISION TO

THE EFFECT THAT PETITIONER HAS NOT
SUFFICIENTLY MET THE REQUIREMENTS OF THE LAW
AND IN FAILING TO PROVE HIS RIGHT OF WAY
THROUGH GATCHALIAN AVENUE OR PALANYAG
ROAD AGAINST THE RESPONDENTS HEREIN;
III
PUBLIC RESPONDENT ERRED IN FAILING TO SET
ASIDE THE ORDER OF THE TRIAL COURT, AND NOT
ADOPTING THE DECISION OF THE TRIAL COURT
DATED JULY 9,1982 GRANTING TO PETITIONER A
RIGHT OF WAY IN THE SUBJECT PREMISES. (Rollo, pp.
14-15)
These assigned errors center on the issue of whether or
not the petitioner has successfully shown that all the
requisites necessary for the grant of an easement of a right
of way in his favor are present.
An easement or servitude in an encumbrance imposed
upon an immovable for the benefit of another immovable
belonging to a different owner as defined in Article 613 of
the Civil Code. It is established either by law, in which case
it is called legal or by the will of the parties, in which event
it is a voluntary easement. (See Article 619, Civil Code of
the Philippines; City of Manila vs. Entote, 57 SCRA 497,
503).
Since there is no agreement between the contending
parties in this case granting a right of way by one in favor
of the other, the establishment of a voluntary easement
between the petitioner and the respondent company and/or
the other private respondents is ruled out. What is left to
examine is whether or not the petitioner is entitled to a
legal or compulsory easement of a right of way.
In the case of Bacolod-Murcia Milling Company, Inc. vs.
Capitol Subdivision Inc., et al. (17 SCRA 731, 735-6), we
held that:

85 | P a g e

... the Central had to rely strictly on its

being entitled to a compulsory
servitude of right of way, under the Civil
Code, and it could not claim any such
servitude without first establishing the
pre-conditions for its grant fixed by
Articles 649 and 650 of the Civil Code
of the Philippines:
(1) That it is surrounded by other immovables
and has no adequate outlet to a public highway
(Art. 649, par. 1);
(2) After payment of proper indemnity (Art. 649,
p. 1. end);
(3) That the isolation was not due to the Central's
own acts (Art. 649, last par.); and
(4) That the right of way claimed is "at the point
least prejudicial to the servient estate; and
insofar as consistent with this rule, where the
distance from the dominant estate to a public
highway may be the shortest." (Art. 650).
By express provision of law, therefore, a
compulsory right of way can not be obtained
unless the four requisites enumerated are first
shown to exist, and the burden of proof to show
their existence was on the Central. (See also
Angela Estate, Inc. vs. Court of First Instance of
Negros Occidental 24 SCRA 500, 510)
On the first requisite, the petitioner contends that since the
respondent company constructed the concrete wall
blocking his ingress and egress via the Gatchalian Avenue,
the "nearest, most convenient and adequate road" to and
from a public highway, he has been constrained to use as
his "temporary" way the adjoining lots belonging to different
persons. Said way is allegedly "bumpy and impassable
especially during rainy seasons because of flood waters,
mud and tall 'talahib' grasses thereon." Moreover,
according to the petitioner, the road right of way which the

private respondents referred to as the petitioner's

alternative way to Sucat Road is not an existing road but
has remained a proposed road as indicated in the
subdivision plan of the Sobrina Rodriguez Lombos
Subdivision.
The petitioner's position is not impressed with merit. We
find no reason to disturb the appellate court's finding of fact
that the petitioner failed to prove the non-existence of an
adequate outlet to the Sucat Road except through the
Gatchalian Avenue. As borne out by the records of the
case, there is a road right of way provided by the Sabrina
Rodriguez Lombos Subdivision indicated as Lot 4133-G-12
in its subdivision plan for the buyers of its lots. The fact that
said lot is still undeveloped and causes inconvenience to
the petitioner when he uses it to reach the public highway
does not bring him within the ambit of the legal requisite.
We agree with the appellate court's observation that the
petitioner should have, first and foremost, demanded from
the Sabrina Rodriguez Lombos Subdivision the
improvement and maintenance of Lot 4133-G-12 as his
road right of way because it was from said subdivision that
he acquired his lot and not either from the Gatchalian
Realty or the respondents Asprec. To allow the petitioner
access to Sucat Road through Gatchalian Avenue inspite of
a road right of way provided by the petitioner's subdivision
for its buyers simply because Gatchalian Avenue allows
petitioner a much greater ease in going to and coming from
the main thoroughfare is to completely ignore what
jurisprudence has consistently maintained through the
years regarding an easement of a right of way, that "mere
convenience for the dominant estate is not enough to serve
as its basis. To justify the imposition of this servitude, there
must be a real, not a fictitious or artificial, necessity for it."
(See Tolentino, Civil Code of the Philippines, Vol. II, 2nd
ed., 1972, p. 371)
Considering that the petitioner has failed to prove the
existence of the first requisite as aforestated, we find it
unnecessary to discuss the rest of the preconditions for a
legal or compulsory right of way.
Once again, we apply the rule that findings of facts of the
Court of Appeals are binding on the Supreme Court and

who not be overturned when supported by the evidence on

record save in the known exceptions such as gross
misappreciation of the evidence or misapprehension of
facts. (See Community Savings and Loan Association, Inc.
vs. Court of Appeals, et al., G.R. No. 75786 promulgated
on August 31, 1987; Regalario vs. Northwest Finance
Corporation, 117 SCRA 45; Agton vs. Court of Appeals, 113
SCRA 322).
WHEREFORE, in view of the foregoing, the petition is
hereby DISMISSED for lack of merit. The questioned
decision of the Court of Appeals is AFFIRMED.
SO ORDERED.

G.R. No. L-18390 December 20, 1971

PEDRO J. VELASCO, plaintiff-appellant,
vs.
MANILA ELECTRIC CO., ET AL., defendants-appellees.
RESOLUTION

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

Both appellant Velasco and appellee Manila Electric have
filed their respective motions to reconsider the decision of

86 | P a g e

this Court dated 6 August 1971. For the sake of clarity, the
two motions will be here dealt with separately.

deem the rules invoked to be applicable. Article 1250 of the

Civil Code is to the effect that:

For the foregoing reasons, the motion for reconsideration is

denied.

A APPELLANT'S MOTION FOR

RECONSIDERATION

ART. 1250. In case an extraordinary

inflation or deflation of the currency
stipulated should supervene, the value
of the currency at the time of the
establishment of the obligation shall be
the basis of payment, unless there is
an agreement to the contrary.

B APPELLEE'S MOTION TO
RECONSIDER

The thrust of this motion is that the decision has incorrectly

assessed appellant's damages and unreasonably reduced
their amount. It is first argued that the decision erred in not
taking into account, in computing appellant's loss of
income, the appellant's undeclared income of P8,338.20,
assessed by the Bureau of Internal Revenue for the year
1954, in addition to his declared income for that year
(P10,975), it being argued that appellant never claim any
other source of income besides his professional earnings.
Several circumstances of record disprove this claim. (1)
That the amount of P8,338.20 was kept apart from ordinary
earnings of appellant for the year 1954 (P10,975), and not
declared with it, is in itself circumstantial evidence that it
was not of comparable character. (2) If it was part of his
ordinary professional income, appellant was guilty of fraud
in not declaring it and he should not be allowed to derive
advantage from his own wrongdoing. (3) The decision
pointed out that by including the undeclared amount in
appellant's disclosed professional earning for 1954, to a
grand total of P19,313.20, the income for said year
becomes abnormally high (in fact, more that double), as
compared to appellant's earnings for the preceding years,
1951-1953, that averaged not more that P7,000 per
annum. Such abnormality justifies the Court's refusal to
consider the undisclosed P8,338.20 as part of appellant's
regular income for the purpose of computing the reduction
in his earnings as a result of the complained acts of
appellee. (4) Finally, the true source of the undeclared
amount lay in appellant's own knowledge, but he chose not
to disclose it; neither did he call upon the assessing
revenue officer to reveal its character.
Appellant Velasco urges that the damages awarded him
are inadequate considering the present high cost of living,
and calls attention to Article 1250 of the present Civil Code,
and to the doctrines laid down in People vs. PantojaG.R.
No. L-18793, 11 October 1968, 25 SCRA 468. We do not

It can be seen from the employment of the words

"extraordinary
inflation
or
deflation
of
the
currency stipulated" that the legal rule envisages
contractual obligations where a specific currency is
selected by the parties as the medium of payment; hence it
is inapplicable to obligations arising from tort and not from
contract, as in the case at bar, besides there being no
showing that the factual assumption of the article has come
into existence. As to the Pantoja ruling, the regard paid to
the decreasing purchase of the peso was considered a
factor in estimating the indemnity due for loss of life, which
in itself is not susceptible of accurate estimation. It should
not be forgotten that the damages awarded to herein
appellant were by no means full compensatory damages,
since the decision makes clear that appellant, by his failure
to minimize his damages by means easily within his reach,
was declared entitled only to a reduced award for the
nuisance sued upon (Steel vs. Rail & River Coal Co., 43
Ohio App. 228,182 N.E. 552); and the amount granted him
had already taken into account the changed economic
circumstances.
Nor is the fact that appellant lost a chance to sell his house
for P95,000 to Jose Valencia constitute a ground for an
award of damages in that amount. As remarked in the main
decision, there is no adequate proof of loss, since there is
no evidence of the depreciation in the market value of the
house in question caused by the acts of defendant Meralco
The house, after all, has remained with appellant and he
admits in his motion for reconsideration (page 48) that
properties have increased in value by 200% since then.

Appellee Manila Electric Company argues that in case the

noise emitted by its substation can not be brought down to
the 50 decibel level imposed by our decision in chief, the
remedy of the appellant would be to compel appellee
Company to acquire and pay for the value of the house,
under the so-called doctrine of "inverse condemnation and
cites in support our doctrines in Bengzon vs. Province of
Pangasinan, 62 Phil. 816, and Republic vs. Philippine Long
Distance Telephone Co., L-18841, 27 January 1969, 26
SCRA 620-634. But as pointed out by appellant in his
opposition, this issue was not raised, nor was the inverse
condemnation doctrine invoked in the trial court, so that it
would be improper to consider it on appeal, and worse still,
on a motion for reconsideration of the decision on the
merits. Furthermore, there is no showing that it is
impossible to reduce the substation noise to the level
decreed by this Court in the main decision. On the contrary,
appellee's own evidence is that the noise can be reduced
by erecting a wall barrier on the line separating the
substation lot and the property of appellant.
The version that appellee did not erect the wall because of
the objections of appellant's wife was denied by her, and
there is no preponderance of evidence in favor of appellee
on this point. Moreover, since it was appellant Dr. Velasco
who complained, his wife's objection would not suffice to
constitute a waiver of his claim.
As to the petition to increase the sound level prescribed by
his Court from 50 to 55 decibels on the ground that present
"ambient sound already ranges from 44 to 55 decibels in
the mornings", the same can not be granted. As shown by
the evidence at the trial, the intensity of the noise emitted
by appellee's transformers are most objectionable at night,
when people are endeavoring to rest and sleep in
compensation for the fatigue and tensions accumulated
during daytime.

87 | P a g e

WHEREFORE, appellee's motion to reconsider is likewise

denied.

It appears that the petitioner Hidalgo Enterprises, Inc. "was

the owner of an ice-plant factory in the City of San Pablo,
Laguna, in whose premises were installed two tanks full of
water, nine feet deep, for cooling purposes of its engine.
While the factory compound was surrounded with fence,
the tanks themselves were not provided with any kind of
fence or top covers. The edges of the tanks were barely a
foot high from the surface of the ground. Through the wide
gate entrance, which is continually open, motor vehicles
hauling ice and persons buying said commodity passed,
and any one could easily enter the said factory, as he
pleased. There was no guard assigned on the gate. At
about noon of April 16, 1948, plaintiff's son, Mario
Balandan, a boy barely 8 years old, while playing with and
in company of other boys of his age entered the factory
premises through the gate, to take a bath in one of said
tanks; and while thus bathing, Mario sank to the bottom of
the tank, only to be fished out later, already a cadaver,
having been died of "asphyxia secondary to drowning."
The Court of Appeals, and the Court of First Instance of
Laguna, took the view that the petitioner maintained an
attractive nuisance (the tanks), and neglected to adopt the
necessary precautions to avoid accidents to persons
entering its premises. It applied the doctrine of attractive
nuisance, of American origin, recognized in this Jurisdiction
in Taylor vs. Manila Electric 16 Phil., 8.

G.R. No. L-3422

June 13, 1952
HIDALGO ENTERPRISES, INC., petitioner,
vs.
GUILLERMO BALANDAN, ANSELMA ANILA and THE
COURT OF APPEALS, respondents.
Quisumbing, Sycip, Quisumbing and Salazar for petitioner.
Antonio M. Moncado for respondents.
BENGZON, J.:
This is an appeal by certiorari, from a decision of the Court
of Appeals requiring Hidalgo Enterprises, Inc. to pay
Guillermo Balandan and his wife, damages in the sum of
P2,000 for the death of their son Mario.

The doctrine may be stated, in short, as follows: One who

maintains on his premises dangerous instrumentalities or
appliances of a character likely to attract children in play,
and who fails to exercise ordinary care to prevent children
from playing therewith or resorting thereto, is liable to a
child of tender years who is injured thereby, even if the
child is technically a trespasser in the premises. (See 65
C.J.S., p. 455.)
The principle reason for the doctrine is that the condition or
appliance in question although its danger is apparent to
those of age, is so enticing or alluring to children of tender
years as to induce them to approach, get on or use it, and
this attractiveness is an implied invitation to such children
(65 C.J.S., p. 458).

Now, is a swimming pool or water tank an instrumentality or

appliance likely to attract the little children in play? In other
words is the body of water an attractive nuisance?
The great majority of American decisions say no.
The attractive nuisance doctrine generally is not
applicable to bodies of water, artificial as well as
natural, in the absence of some unusual
condition or artificial feature other than the mere
water and its location.
There are numerous cases in which the attractive
nuisance doctrine has not been held not to be
applicable to ponds or reservoirs, pools of water,
streams, canals, dams, ditches, culverts, drains,
cesspools or sewer pools, . . . (65 C.J.S., p. 476
et seg. citing decisions of California, Georgia,
Idaho, Illinois, Kansas, Iowa, Louisiana, Miss.,
Missouri, Montana, Oklahoma, Pennsylvania,
Tennessee, Texas, Nebraska, Wisconsin.)
In fairness to the Court of Appeals it should be stated that
the above volume of Corpus Juris Secundum was
published in 1950, whereas its decision was promulgated
on September 30, 1949.
The reason why a swimming pool or pond or reservoir of
water is not considered an attractive nuisance was lucidly
explained by the Indiana Appellate Court as follows:
Nature has created streams, lakes and pools
which attract children. Lurking in their waters is
always the danger of drowning. Against this
danger children are early instructed so that they
are sufficiently presumed to know the danger;
and if the owner of private property creates an
artificial pool on his own property, merely
duplicating the work of nature without adding any
new danger, . . . (he) is not liable because of
having created an "attractive nuisance."
Anderson vs. Reith-Riley Const. Co., N. E., 2nd,
184, 185; 112 Ind. App., 170.

88 | P a g e

Therefore, as petitioner's tanks are not classified as

attractive nuisance, the question whether the petitioner had
taken reasonable precautions becomes immaterial. And the
other issue submitted by petitioner that the parents of
the boy were guilty of contributory negligence precluding
recovery, because they left for Manila on that unlucky day
leaving their son under the care of no responsible
individual needs no further discussion.

AUSTRIA-MARTINEZ, J.:

The appealed decision is reversed and the Hidalgo

Enterprises, Inc. is absolved from liability. No costs.

On February 17, 1992, Conchita Cabatingan

executed in favor of her brother, petitioner Nicolas
Cabatingan, a Deed of Conditional of Donation (sic) Inter
Vivos for House and Lot covering one-half () portion of the
formers house and lot located at Cot-cot, Liloan, Cebu.
[1]
Four (4) other deeds of donation were subsequently
executed by Conchita Cabatingan on January 14, 1995,
bestowing upon: (a) petitioner Estela C. Maglasang, two (2)
parcels of land - one located in Cogon, Cebu (307 sq. m.)
and the other, a portion of a parcel of land in Masbate
(50,232 sq. m.); (b) petitioner Nicolas Cabatingan, a portion
of a parcel of land located in Masbate (80,000 sq. m.); and
(c) petitioner Merly S. Cabatingan, a portion of the Masbate
property (80,000 sq. m.).[2] These deeds of donation
contain similar provisions, to wit:

Feria, Padilla, Tuason, Montemayor, and Bautista Angelo,

JJ., concur.

[G.R. No. 131953. June 5, 2002]

MA. ESTELA MAGLASANG, NICOLAS CABATINGAN
and MERLY S. CABATINGAN, petitioners, vs.
THE HEIRS OF CORAZON CABATINGAN,
namely, LUZ M. BOQUIA, PERLA M. ABELLA,
ESTRELLA M. CAETE, LOURDES M. YUSON,
and JULIA L. MAYOL, HEIRS OF GENOVIVA C.
NATIVIDAD namely, OSCAR C. NATIVIDAD,
OLGA NATIVIDAD, ODETTE NATIVIDAD,
OPHELIA NATIVIDAD, RICHARD NATIVIDAD,
RAYMUND NATIVIDAD, RICHIE NATIVIDAD,
SONIA NATIVIDAD and ENCARNACION
CABATINGAN VDA. DE TRINIDAD, ALFREDO
CABATINGAN
and
JESUSA
C.
NAVADA, respondents.
DECISION

Posed for resolution before the Court in this petition

for review on certiorari filed under Rule 45 of the Rules of
Court is the sole issue of whether the donations made by
the late Conchita Cabatingan are donations inter
vivos or mortis causa.
The facts of the case are as follows:

That for and in consideration of the love and affection of the

DONOR for the DONEE, x x x the DONOR does hereby, by
these presents, transfer, convey, by way of donation, unto
the DONEE the above-described property, together with
the buildings and all improvements existing thereon, to
become effective upon the death of the
DONOR; PROVIDED, HOWEVER, that in the event that
the DONEE should die before the DONOR, the present
donation shall be deemed automatically rescinded and
of no further force and effect; x x x[3] (Emphasis Ours)
On May 9, 1995, Conchita Cabatingan died.
Upon learning of the existence of the foregoing
donations, respondents filed with the Regional Trial Court
of Mandaue, Branch 55, an action for Annulment And/Or
Declaration of Nullity of Deeds of Donations and
Accounting, docketed as Civil Case No. MAN-2599,
seeking the annulment of said four (4) deeds of donation

executed on January 14, 1995. Respondents allege, inter

alia, that petitioners, through their sinister machinations
and strategies and taking advantage of Conchita
Cabatingans fragile condition, caused the execution of the
deeds of donation, and, that the documents are void for
failing to comply with the provisions of the Civil Code
regarding formalities of wills and testaments, considering
that these are donations mortis causa.[4] Respondents
prayed that a receiver be appointed in order to preserve
the disputed properties, and, that they be declared as coowners of the properties in equal shares, together with
petitioner Nicolas Cabatingan.[5]
Petitioners in their Amended Answer, deny
respondents allegations contending that Conchita
Cabatingan freely, knowingly and voluntarily caused the
preparation of the instruments. [6]
On respondents motion, the court a quo rendered a
partial judgment on the pleadings on December 2, 1997 in
favor of respondents, with the following dispositive portion:
WHEREREFORE, and in consideration of all the foregoing,
judgment is hereby rendered in favor of the plaintiffs and
against the defendant and unwilling co-plaintiff with regards
(sic) to the four Deeds of Donation Annexes A, A-1, B and
Annex C which is the subject of this partial decision by:
Declaring the four Deeds of Donation as null and void ab
initio for being a donation Mortis Causa and for failure to
comply with formal and solemn requisite under Art. 806 of
the New Civil Code;
b) To declare the plaintiffs and defendants as
well as unwilling co-plaintiff as the heirs of the
deceased Conchita Cabatingan and therefore
hereditary co-owners of the properties subject
of this partial decision, as mandated under Art.
777 of the New Civil Code;
SO ORDERED.[7]
The court a quo ruled that the donations are
donations mortis causa and therefore the four (4) deeds in

89 | P a g e

question executed on January 14, 1995 are null and void

for failure to comply with the requisites of Article 806 of the
Civil Code on solemnities of wills and testaments.[8]
Raising questions of law, petitioners elevated the
court a quos decision to this Court,[9] alleging that:
THE LOWER COURT PALPABLY DISREGARDED THE
LONG-AND-WELL-ESTABLISHED RULINGS OF THIS
HONORABLE SUPREME COURT ON THE
CHARACTERIZATION OF DONATIONS AS INTER
VIVOS OR MORTIS CAUSA AND, INSTEAD,
PROCEEDED TO INTERPRET THE DONATIONS IN
QUESTION IN A MANNER CONTRARY THERETO.[10]
Petitioners insist that the donations are inter
vivos donations as these were made by the late Conchita
Cabatingan in consideration of the love and affection of the
donor for the donee, and there is nothing in the deeds
which indicate that the donations were made in
consideration of Cabatingans death.[11] In addition,
petitioners contend that the stipulation on rescission in
case petitioners die ahead of Cabatingan is a resolutory
condition that confirms the nature of the donation as inter
vivos.
Petitioners arguments are bereft of merit.
In a donation mortis causa, the right of disposition is
not transferred to the donee while the donor is still alive.
[12]
In determining whether a donation is one of mortis
causa, the following characteristics must be taken into
account:
(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.[13]
In the present case, the nature of the donations
as mortis causa is confirmed by the fact that the donations
do not contain any clear provision that intends to pass
proprietary rights to petitioners prior to Cabatingans death.
[14]
The phrase to become effective upon the death of the
DONOR admits of no other interpretation but that
Cabatingan did not intend to transfer the ownership of the
properties to petitioners during her lifetime. Petitioners
themselves expressly confirmed the donations as mortis
causa in the following Acceptance and Attestation clauses,
uniformly found in the subject deeds of donation, to wit:
That the DONEE does hereby accept the foregoing
donation mortis causa under the terms and conditions set
forth therein, and avail herself of this occasion to express
her profound gratitude for the kindness and generosity of
the DONOR.
xxx
SIGNED by the above-named DONOR and DONEE at the
foot of this Deed of Donation mortis causa, which consists
of two (2) pages x x x.[15]
That the donations were made in consideration of the
love and affection of the donor does not qualify the
donations as inter vivos because transfers mortis
causa may also be made for the same reason. [16]
Well in point is National Treasurer of
Phils. v. Vda. de Meimban. [17] In
said
case,
questioned donation contained the provision:

the
the

"That for and in consideration of the love and affection

which the DONOR has for the DONEE, the said Donor by
these presents does hereby give, transfer, and convey unto
the DONEE, her heirs and assigns a portion of ONE
HUNDRED THOUSAND (100,000) SQUARE METERS, on

the southeastern part Pro-indiviso of the above described

property. (The portion herein donated is within Lot 2-B of
the proposed amendment Plan Subdivision of Lots Nos. 1
and 2, Psu-109393), with all the buildings and
improvements thereon, to become effective upon the death
of the DONOR. (italics supplied.)" [18]
Notably, the foregoing provision is similar to that contained
in the donation executed by Cabatingan. We held in
Meimban case that the donation is a mortis
causa donation, and that the above quoted provision
establishes the donors intention to transfer the ownership
and possession of the donated property to the donee only
after the formers death. Further:
As the donation is in the nature of a mortis causa
disposition, the formalities of a will should have been
complied with under Article 728 of the Civil Code,
otherwise, the donation is void and would produce no
effect. As we have held in Alejandro v. Geraldez (78 SCRA
245,253), If the donation is made in contemplation of the
donors death, meaning that the full or naked ownership of
the donated properties will pass to the donee because of
the donors death, then it is at that time that the donation
takes effect, and it is a donation mortis causa which should
be embodied in a last will and testament. (Citing Bonsato v.
Court of Appeals, 95 Phil. 481).[19]
We apply the above rulings to the present case. The
herein subject deeds expressly provide that the donation
shall be rescinded in case petitioners predecease Conchita
Cabatingan. As stated in Reyes v. Mosqueda,[20] one of
the decisive characteristics of a donation mortis causa is
that the transfer should be considered void if the donor
should survive the donee. This is exactly what Cabatingan
provided for in her donations. If she really intended that the
donation should take effect during her lifetime and that the
ownership of the properties donated be transferrred to the
donee or independently of, and not by reason of her death,
she would have not expressed such proviso in the subject
deeds.
Considering that the disputed donations are
donations mortis causa, the same partake of the nature of

90 | P a g e

testamentary provisions[21] and as such, said deeds must

be executed in accordance with the requisites on
solemnities of wills and testaments under Articles 805 and
806 of the Civil Code, to wit:

WHEREFORE, the petition is hereby DENIED for

lack of merit.
SO ORDERED.

ART. 805. Every will, other than a holographic will, must be

subscribed at the end thereof by the testator himself or by
the testators name written by some other person in his
presence, and by his express direction, and attested and
subscribed by three or more credible witnesses in the
presence of the testator and of one another.
The testator or the person requested by him to write his
name and the instrumental witnesses of the will, shall also
sign, as aforesaid, each and every page thereof, except the
last, on the left margin, and all the pages shall be
numbered correlatively in letters placed on the upper part
of each page.
The attestation shall state the number of pages used upon
which the will is written , and the fact that the testator
signed the will and every page thereof, or caused some
other person to write his name, under his express direction,
in the presence of the instrumental witnesses, and that the
latter witnessed and signed the will and all the pages
thereof in the presence of the testator and of one another.
If the attestation clause is in a language not known to the
witnesses, it shall be interpreted to them. (n)
ART. 806. Every will must be acknowledged before a
notary public by the testator and the witnesses. The notary
public shall not be required to retain a copy of the will, or
file another with the office of the Clerk of Court. (n)
The deeds in question although acknowledged
before a notary public of the donor and the donee, the
documents were not executed in the manner provided for
under the above-quoted provisions of law.
Thus, the trial court did not commit any reversible
error in declaring the subject deeds of donation null and
void.

expressly and consistently declared her conveyance to be

one of donation mortis causa, and further forbade the
registration of the deed until after her death. All these
features concordantly indicated that the conveyance was
not intended to produce any definitive effects, nor to finally
pass any interest to the grantee, except from and after the
death of the grantor.
We see nothing in the deed itself to indicate that any right,
title or interest in the properties described was meant to be
transferred to Doa Estela Magbanua prior to the death of
the grantor, Carmen Ubalde Vda. de Parcon. Not
ownership, certainly, for the stipulation:

G.R. No. L-15939

January 31, 1966
ANGELES UBALDE PUIG, ET AL., plaintiffs-appellants,
vs.
ESTELLA MAGBANUA PEAFLORIDA, ET
AL., defendants-appellants.
Salonga and Ordonez for the plaintiffs-appellants.
Fulgencio Vega for the defendants-appellants.
RESOLUTION
(Main opinion was promulgated on November 29, 1965).
REYES, J.B.L., J.:
Defendants-appellants Estela Magbanua Peaflorida, et
al., insist that the reservation by the donor of the right to
dispose of the property during her lifetime in the deed of
December 28, 1949 indicates that title had passed to the
donee in her lifetime, otherwise, it is argued, the
reservation would be superfluous, and they cite American
authorities in support.
This thesis would be plausible if the reservation of the
power to dispose were the only indication to be considered
in deciding whether the donation of December 28, 1949
was mortis causa or inter vivos. But such is not the case.
The Court in its decision took to account not only the
foregoing circumstance but also the fact that the deceased

Que esta escritura de donacion mortis causa no

se registrara en la oficina del Registrador de
Titulos de Iloilo sino despues del fallecimiento de
la Donante
necessarily meant, according to section 50 of the Land
Registration Act, that the deed in question should not take
effect as a conveyance nor bind the land until after the
death of the "donor".
Neither did the document operate to vest possession upon
Doa Estela Magbanua, in view of the express condition
that (paragraph 3) if at the date of her death the donor had
not transferred, sold, or conveyed one-half of lot 58 of the
Pototan Cadastre to other persons or entities, the donee
would be bound to pay to Caridad Ubalde, married to
Tomas Pedrola, the amount of P600.00, and such payment
was to be made on the date the donee took possession of
Lot No. 58. As the obligation to pay the legacy to Caridad
Ubalde would not definitely arise until after the death of the
donor, because only by then would it become certain that
the "donor" could not transfer the property to someone
else, and such payment must precede the taking
possession of the property "donated", it necessarily follows
that the "donee's" taking of possession could not occur
before the death of the donor.
It being thus clear that the disposition contained in the
deed is one that produces no effect until the death of the

91 | P a g e

grantor, we are clearly faced by an act mortis causa of the

Roman and Spanish law. We thus see no need of resorting
to American authorities as to the import of the reservation
of the donor's right to dispose of the donated property, for
the Spanish authorities are very clear on this point:

established in the contract dealt with in Taylor vs. Uy Tieng

Piao & Tau Liuan, 43 Phil. 874, invoked by appellants.

Desde el momento en que la muerte del donante

es la que determina la adquisicion o el derecho a
los bienes; desde el montento en que la
disposicion puede ser revocada voluntariamente,
se salva la linea divisoria entre unos y otros
actos: la donacion equivale a un legado; mas
aun que esto: es un legado en realidad. (5
Manresa, 5th Ed., p. 107)

Que antes de su muerte, la Donante podra

enajenar, vender, traspasar e hipotecar a
cualesquiera personas o entidades los bienes
aqui donados a favor de la Donataria en
concepto de Donacion mortis causa.

Ahora bien: si el mal llamado donante no solo

dilata la fecha de la ejecucion para el momento
de su muerte, sino que ademas se reserva la
facultad de revocar a su arbitrio la disposicion,
entonces el acto no es valido bajo la forma de
contrato; hay en realidad una disposicion mortis
causa que exige las solemnidades del
testamento. (V Manresa, 5th Ed., p. 109)
(Emphasis supplied)
The presence of an acceptance is but a consequence of
the erroneous concept of the true nature of the juridical act,
and does not indicate that in the same is a true
donation inter vivos.
Appellant Magbanua further argues that the reserved
power of the donor to convey the donated property to other
parties during her lifetime is but a resolutory condition
(albeit a potestative one) that confirms the passing of the
title to the donee. In reality, this argument is a
veritable petitio principii; it takes for granted what has to be
proved, i.e., that some proprietary right has passed under
the terms of the deed, which, as we have shown, is not true
until thedonor has died.
It is highly illuminating to compare the condition imposed in
the deed of donation of December 28, 1949 with that

Wherefore, the motion to reconsider is denied.

In the alleged deed of donation of December 28, 1949, the

late Doa Carmen Ubalde imposed expressly that:

In the Taylor vs. Uy Tieng Piao case, on the other hand, the
condition read:
It is understood and agreed that should the
machinery to be installed in said factory fail, for
any reason, to arrive, in the City of Manila within
the period of six (6) months from date hereof, this
contract may be cancelled by the party of the
second part at its option, such cancellation,
however, not to occur before the expiration of
such six (6) months. (pp. 874-875, cas. cit.).
In the Uy Tieng Piao case the contract could only be
cancelled after six months, so that there could be no doubt
that it was in force at least for that long, and the optional
cancellation can be viewed as a resolutory condition (or
more properly, a non-retroactive revocatory one); but no
such restriction limited the power of the donor, Doa
Carmen Ubalde, to set at naught the alleged conveyance in
favor of Doa Estela Magbanua by conveying the property
to other parties at any time, even at the very next instant
after executing the donation, if she so chose. It requires no
argument to demonstrate that the power, as reserved in the
deed, was a power to destroy the donation at any time, and
that it meant that the transfer is not binding on the grantor
until her death made it impossible to channel the property
elsewhere. Which, in the last analysis, as held in our main
decision, signifies that the liberality is testamentary in
nature, and must appear with the solemnities required of
last wills and testaments in order to be legally valid.

[G.R. No. 107132. October 8, 1999]

MAXIMA HEMEDES, petitioner, vs. THE HONORABLE
COURT OF APPEALS, DOMINIUM REALTY
AND
CONSTRUCTION
CORPORATION,
ENRIQUE D. HEMEDES, and R & B
INSURANCE CORPORATION, respondents.
[G.R. No. 108472. October 8, 1999]
R & B INSURANCE CORPORATION, petitioner, vs. THE
HONORABLE
COURT
OF
APPEALS
DOMINIUM REALTY AND CONSTRUCTION
CORPORATION, ENRIQUE D. HEMEDES and
MAXIMA HEMEDES, respondents.
DECISION
GONZAGA_REYES, J.:
Assailed in these petitions for review on certiorari is
the decision[1] of the eleventh division of the Court of
Appeals in CA-G.R. CV No. 22010 promulgated on
September 11, 1992 affirming in toto the decision of Branch
24 of the Regional Trial Court of Laguna in Civil Case No.
B-1766 dated February 22, 1989, [2] and the resolution
dated December 29, 1992 denying petitioner R & B
Insurance Corporations (R & B Insurance) motion for
reconsideration. As the factual antecedents and issues are
the same, we shall decide the petitions jointly.
The instant controversy involves a question of
ownership over an unregistered parcel of land, identified as

92 | P a g e

Lot No. 6, plan Psu-111331, with an area of 21,773 square

meters, situated in Sala, Cabuyao, Laguna. It was originally
owned by the late Jose Hemedes, father of Maxima
Hemedes and Enrique D. Hemedes. On March 22, 1947
Jose Hemedes executed a document entitled Donation
Inter Vivos With Resolutory Conditions[3] whereby he
conveyed ownership over the subject land, together with all
its improvements, in favor of his third wife, Justa Kauapin,
subject to the following resolutory conditions:
(a) Upon the death or remarriage of the DONEE, the title to
the property donated shall revert to any of the children, or
their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the
latter; or
(b) In absence of such an express designation made by the
DONEE before her death or remarriage contained in a
public instrument as above provided, the title to the
property shall automatically revert to the legal heirs of the
DONOR in common.
Pursuant to the first condition abovementioned, Justa
Kausapin executed on September 27, 1960 a Deed of
Conveyance of Unregistered Real Property by
Reversion[4] conveying to Maxima Hemedes the subject
property under the following terms That the said parcel of land was donated unto me by the
said Jose Hemedes, my deceased husband, in a deed of
DONATION INTER VIVOS WITH RESOLUTORY
CONDITIONS executed by the donor in my favor, and duly
accepted by me on March 22, 1947, before Notary Public
Luis Bella in Cabuyao, Laguna;
That the donation is subject to the resolutory conditions
appearing in the said deed of DONATION INTER VIVOS
WITH RESOLUTORY CONDITIONS, as follows:
(a) Upon the death or remarriage of the DONEE, the title to
the property donated shall revert to any of the children, or
their heirs, of the DONOR expressly designated by the

DONEE in a public document conveying the property to the

latter; or
(b) In absence of such an express designation made by the
DONEE before her death or remarriage contained in a
public instrument as above provided, the title to the
property shall automatically revert to the legal heirs of the
DONOR in common.
That, wherefore, in virtue of the deed of donation above
mentioned and in the exercise of my right and privilege
under the terms of the first resolutory condition therein
contained and hereinabove reproduced, and for and in
consideration of my love and affection, I do hereby by
these presents convey, transfer, and deed unto my
designee, MAXIMA HEMEDES, of legal age, married to
RAUL RODRIGUEZ, Filipino and resident of No. 15 Acacia
Road, Quezon City, who is one of the children and heirs of
my donor, JOSE HEMEDES, the ownership of, and title to
the property hereinabove described, and all rights and
interests therein by reversion under the first resolutory
condition in the above deed of donation; Except the
possession and enjoyment of the said property which shall
remain vested in me during my lifetime, or widowhood and
which upon my death or remarriage shall also automatically
revert to, and be transferred to my designee, Maxima
Hemedes.
Maxima Hemedes, through her counsel, filed an
application for registration and confirmation of title over the
subject unregistered
land. Subsequently, Original
Certificate of Title (OCT) No. (0-941) 0-198[5] was issued in
the name of Maxima Hemedes married to Raul Rodriguez
by the Registry of Deeds of Laguna on June 8, 1962, with
the annotation that Justa Kausapin shall have the
usufructuary rights over the parcel of land herein described
during her lifetime or widowhood.
It is claimed by R & B Insurance that on June 2,
1964, Maxima Hemedes and her husband Raul Rodriguez
constituted a real estate mortgage over the subject
property in its favor to serve as security for a loan which
they obtained in the amount of P6,000.00. On February 22,
1968, R & B Insurance extrajudicially foreclosed the

mortgage since Maxima Hemedes failed to pay the loan

even after it became due on August 2, 1964. The land was
sold at a public auction on May 3, 1968 with R & B
Insurance as the highest bidder and a certificate of sale
was issued by the sheriff in its favor. Since Maxima
Hemedes failed to redeem the property within the
redemption period, R & B Insurance executed an Affidavit
of Consolidation dated March 29, 1974 and on May 21,
1975 the Register of Deeds of Laguna cancelled OCT No.
(0-941) 0-198 and issued Transfer Certificate of Title (TCT)
No. 41985 in the name of R & B Insurance. The annotation
of usufruct in favor of Justa Kausapin was maintained in
the new title.[6]
Despite the earlier conveyance of the subject land in
favor of Maxima Hemedes, Justa Kausapin executed a
Kasunduan on May 27, 1971 whereby she transferred the
same land to her stepson Enrique D. Hemedes, pursuant
to the resolutory condition in the deed of donation executed
in her favor by her late husband Jose Hemedes. Enrique D.
Hemedes obtained two declarations of real property - in
1972, and again, in 1974, when the assessed value of the
property was raised. Also, he has been paying the realty
taxes on the property from the time Justa Kausapin
conveyed the property to him in 1971 until 1979. In the
cadastral survey of Cabuyao, Laguna conducted from
September 8, 1974 to October 10, 1974, the property was
assigned Cadastral No. 2990, Cad. 455-D, Cabuyao
Cadastre, in the name of Enrique Hemedes. Enrique
Hemedes is also the named owner of the property in the
records of the Ministry of Agrarian Reform office at
Calamba, Laguna.
On February 28, 1979, Enriques D. Hemedes sold
the property to Dominium Realty and Construction
Corporation (Dominium). On April 10, 1981, Justa
Kausapin executed an affidavit affirming the conveyance of
the subject property in favor of Enrique D. Hemedes as
embodied in the Kasunduan dated May 27, 1971, and at
the same time denying the conveyance made to Maxima
Hemedes.
On May 14, 1981, Dominium leased the property to
its sister corporation Asia Brewery, Inc. (Asia Brewery)
who, even before the signing of the contract of lease,

93 | P a g e

constructed two warehouses made of steel and asbestos

costing about P10,000,000.00 each. Upon learning of Asia
Brewerys constructions upon the subject property, R & B
Insurance sent it a letter on March 16, 1981 informing the
former of its ownership of the property as evidenced by
TCT No. 41985 issued in its favor and of its right to
appropriate the constructions since Asia Brewery is a
builder in bad faith. On March 27, 1981, a conference was
held between R & B Insurance and Asia Brewery but they
failed to arrive at an amicable settlement.
On May 8, 1981, Maxima Hemedes also wrote a
letter addressed to Asia Brewery wherein she asserted that
she is the rightful owner of the subject property by virtue of
OCT No. (0-941) 0-198 and that, as such, she has the right
to appropriate Asia Brewerys constructions, to demand its
demolition, or to compel Asia Brewery to purchase the
land. In another letter of the same date addressed to R & B
Insurance, Maxima Hemedes denied the execution of any
real estate mortgage in favor of the latter.
On August 27, 1981, Dominium and Enrique D.
Hemedes filed a complaint[7] with the Court of First Instance
of Binan, Laguna for the annulment of TCT No. 41985
issued in favor of R & B Insurance and/or the
reconveyance
to
Dominium
of
the
subject
property. Specifically, the complaint alleged that Dominium
was the absolute owner of the subject property by virtue of
the February 28, 1979 deed of sale executed by Enrique D.
Hemedes, who in turn obtained ownership of the land from
Justa Kausapin, as evidenced by the Kasunduan dated
May 27, 1971. The plaintiffs asserted that Justa Kausapin
never transferred the land to Maxima Hemedes and that
Enrique D. Hemedes had no knowledge of the registration
proceedings initiated by Maxima Hemedes.
After considering the merits of the case, the trial court
rendered judgment on February 22, 1989 in favor of
plaintiffs Dominium and Enrique D. Hemedes, the
dispositive portion of which states
WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No.

41985 of the Register of Deeds of Laguna
null and void and ineffective;
(b)

Declaring Dominium Realty and

Construction Corporation the absolute
owner and possessor of the parcel of land
described in paragraph 3 of the complaint;

(c) Ordering the defendants and all persons

acting for and/or under them to respect
such ownership and possession of
Dominium Realty and Construction
Corporation and to forever desist from
asserting adverse claims thereon nor
disturbing such ownership and possession;
and
(d) Directing the Register of Deeds of Laguna
to cancel said Transfer Certificate of Title
No. 41985 in the name of R & B Insurance
Corporation, and in lieu thereof, issue a
new transfer certificate of title in the name
of Dominium Realty and Construction
Corporation. No pronouncement as to
costs and attorneys fees.[8]
Both R & B Insurance and Maxima Hemedes
appealed from the trial courts decision. On September 11,
1992 the Court of Appeals affirmed the assailed decision in
toto and on December 29, 1992, it denied R & B
Insurances motion for reconsideration. Thus, Maxima
Hemedes and R & B Insurance filed their respective
petitions for review with this Court on November 3, 1992
and February 22, 1993, respectively.
In G.R. No. 107132[9], petitioner Maxima Hemedes
makes the following assignment of errors as regards public
respondents ruling
I
RESPONDENT COURT OF APPEALS GRAVELY ERRED
IN APPLYING ARTICLE 1332 OF THE NEW CIVIL CODE
IN DECLARING AS SPURIOUS THE DEED OF
CONVEYANCE OF UNREGISTERED REAL PROPERTY

BY REVERSION EXECUTED BY JUSTA KAUSAPIN IN

FAVOR OF PETITIONER MAXIMA HEMEDES.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED
IN NOT FINDING AS VOID AND OF NO LEGAL EFFECT
THE KASUNDUAN DATED 27 MAY 1971 EXECUTED BY
JUSTA KAUSAPIN IN FAVOR OF RESPONDENT
ENRIQUE HEMEDES AND THE SALE OF THE SUBJECT
PROPERTY BY RESPONDENT ENRIQUE HEMEDES IN
FAVOR OF RESPONDENT DOMINIUM REALTY AND
CONSTRUCTION CORPORATION.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED
IN NOT FINDING RESPONDENTS ENRIQUE AND
DOMINIUM IN BAD FAITH.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED
IN DECLARING THAT ORIGINAL CERTIFICATE OF TITLE
NO. (0-941) 0-198 ISSUED IN THE NAME OF
PETITIONER MAXIMA HEMEDES NULL AND VOID.
V
RESPONDENT COURT OF APPEALS ERRED IN NOT
FINDING THAT NO LOAN WAS OBTAINED BY
PETITIONER MAXIMA HEMEDES FROM RESPONDENT
R & B INSURANCE CORPORATION.
VI
RESPONDENT COURT OF APPEALS ERRED IN NOT
FINDING THAT NO REAL ESTATE MORTGAGE OVER
THE SUBJECT PROPERTY WAS EXECUTED BY
PETITIONER MAXIMA HEMEDES IN FAVOR OF
RESPONDENT R & B INSURANCE CORPORATION.

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VII
RESPONDENT COURT OF APPEALS ERRED IN NOT
FINDING THAT THE VALID TITLE COVERING THE
SUBJECT PROPERTY IS THE ORIGINAL CERTIFICATE
OF TITLE NO. (0-941) 0-198 IN THE NAME OF
PETITIONER MAXIMA HEMEDES AND NOT THE
TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN
THE NAME OF R & B INSURANCE CORPORATION.[10]
Meanwhile, in G.R. No. 108472[11], petitioner R & B
Insurance assigns almost the same errors, except with
regards to the real estate mortgage allegedly executed by
Maxima Hemedes in its favor. Specifically, R & B Insurance
alleges that:

RESPONDENT COURT SERIOUSLY ERRED IN NOT

FINDING THAT THE COMPLAINT OF ENRIQUE AND
DOMINIUM HAS PRESCRIBED AND/OR THAT ENRIQUE
AND DOMINIUM WERE GUILTY OF LACHES.
V
RESPONDENT COURT SERIOUSLY ERRED IN FINDING
R & B AS A MORTGAGEE NOT IN GOOD FAITH.
VI
RESPONDENT COURT SERIOUSLY ERRED IN NOT
GRANTING THE DAMAGES PRAYED FOR BY R & B IN
ITS COUNTERCLAIM AND CROSSCLAIM.[12]

I
RESPONDENT COURT ERRONEOUSLY ERRED IN
APPLYING ARTICLE 1332 OF THE CIVIL CODE.
II
RESPONDENT COURT SERIOUSLY ERRED IN GIVING
CREDENCE ON (sic) THE KASUNDUAN BY AND
BETWEEN JUSTA KAUSAPIN AND ENRIQUE
NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN
BY WAY OF A DEED OF CONVEYANCE OF
UNREGISTERED REAL PROPERTY BY REVERSION
CEDED THE SUBJECT PROPERTY TO MAXIMA SOME
ELEVEN (11) YEARS EARLIER.
III
RESPONDENT COURT SERIOUSLY ERRED IN GIVING
CREDENCE ON (sic) THE AFFIDAVIT OF REPUDIATION
OF JUSTA KAUSAPIN NOTWITHSTANDING THE FACT
THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED
THE SAME SOME TWENTY-ONE (21) YEARS AFTER
THE EXECUTION OF THE DEED OF CONVEYANCE IN
FAVOR OF MAXIMA.
IV

The primary issue to be resolved in these

consolidated petitions is which of the two conveyances by
Justa Kausapin, the first in favor of Maxima Hemedes and
the second in favor of Enrique D. Hemedes, effectively
transferred ownership over the subject land.
The Register of Deeds of Laguna issued OCT No. (0941) 0-198 in favor of Maxima Hemedes on the strength of
the Deed of Conveyance of Unregistered Real Property by
Reversion executed by Justa Kausapin. Public respondent
upheld the trial courts finding that such deed is sham and
spurious and has no evidentiary value under the law upon
which claimant Maxima Hemedes may anchor a valid claim
of ownership over the property. In ruling thus, it gave
credence to the April 10, 1981 affidavit executed by Justa
Kausapin repudiating such deed of conveyance in favor of
Maxima Hemedes and affirming the authenticity of the
Kasunduan in favor of Enrique D. Hemedes. Also, it
considered as pivotal the fact that the deed of conveyance
in favor of Maxima Hemedes was in English and that it was
not explained to Justa Kausapin, although she could not
read nor understand English; thus, Maxima Hemedes failed
to discharge her burden, pursuant to Article 1332 of the
Civil Code, to show that the terms thereof were fully
explained to Justa Kausapin. Public respondent concluded
by holding that the registration of the property on the
strength of the spurious deed of conveyance is null and

void and does not confer any right of ownership upon

Maxima Hemedes. [13]
Maxima Hemedes argues that Justa Kausapins
affidavit should not be given any credence since she is
obviously a biased witness as it has been shown that she
is dependent upon Enrique D. Hemedes for her daily
subsistence, and she was most probably influenced by
Enrique D. Hemedes to execute the Kasunduan in his
favor. She also refutes the applicability of article 1332. It is
her contention that for such a provision to be applicable,
there must be a party seeking to enforce a contract;
however, she is not enforcing the Deed of Conveyance of
Unregistered Real Property by Reversion as her basis in
claiming ownership, but rather her claim is anchored upon
OCT No. (0-941) 0-198 issued in her name, which
document can stand independently from the deed of
conveyance. Also, there exist various circumstances which
show that Justa Kausapin did in fact execute and
understand the deed of conveyance in favor of Maxima
Hemedes. First, the Donation Intervivos With Resolutory
Conditions executed by Jose Hemedes in favor of Justa
Kausapin was also in English, but she never alleged that
she did not understand such document. Secondly, Justa
Kausapin failed to prove that it was not her thumbmark on
the deed of conveyance in favor of Maxima Hemedes and
in fact, both Enrique D. Hemedes and Dominium objected
to the request of Maxima Hemedes counsel to obtain a
specimen thumbmark of Justa Kausapin.[14]
Public respondents finding that the Deed of
Conveyance of Unregistered Real Property By Reversion
executed by Justa Kausapin in favor of Maxima Hemedes
is spurious is not supported by the factual findings in this
case.. It is grounded upon the mere denial of the same by
Justa Kausapin. A party to a contract cannot just evade
compliance with his contractual obligations by the simple
expedient of denying the execution of such contract. If,
after a perfect and binding contract has been executed
between the parties, it occurs to one of them to allege
some defect therein as a reason for annulling it, the alleged
defect must be conclusively proven, since the validity and
fulfillment of contracts cannot be left to the will of one of the
contracting parties.[15]

95 | P a g e

Although a comparison of Justa Kausapins

thumbmark with the thumbmark affixed upon the deed of
conveyance would have easily cleared any doubts as to
whether or not the deed was forged, the records do not
show that such evidence was introduced by private
respondents and the lower court decisions do not make
mention of any comparison having been made. [16] It is a
legal presumption that evidence willfully suppressed would
be adverse if produced.[17] The failure of private
respondents to refute the due execution of the deed of
conveyance by making a comparison with Justa Kausapins
thumbmark necessarily leads one to conclude that she did
in fact affix her thumbmark upon the deed of donation in
favor of her stepdaughter.
Moreover, public respondents reliance upon Justa
Kausapins repudiation of the deed of conveyance is
misplaced for there are strong indications that she is a
biased witness. The trial court found that Justa Kausapin
was dependent upon Enrique D. Hemedes for financial
assistance.[18] Justa Kausapins own testimony attests to
this fact Atty. Conchu:
Q: Aling Justa, can you tell the Honorable Court why
you donated this particular property to Enrique
Hemedes?
A: Because I was in serious condition and he was the
one supporting me financially.
Q: As of today, Aling Justa are you continuing to
receive any assistance from Enrique Hemedes?
A: Yes Sir.
(TSN pp. 19 and 23, November 17, 1981)[19]
Even Enrique Hemedes admitted that Justa Kausapin was
dependent upon him for financial support. The transcripts
state as follows:
Atty. Mora:
Now you said that Justa Kausapin has been receiving
from you advances for food, medicine & other
personal or family needs?

E. Hemedes:

Conveyance of Unregistered Real Property by Reversion

for failure of Maxima Hemedes to comply with article 1332
of the Civil Code, which states:

A: Yes.
Q: Was this already the practice at the time this
Kasunduan was executed?
A: No that was increased, no, no, after this document.
xxx xx xxx
Q: And because of these accommodations that you
have given to Justa Kausapin; Justa Kausapin
has in turn treated you very well because shes
very grateful for that, is it not?
A: I think thats human nature.
Q: Answer me categorically, Mr. Hemedes shes very
grateful?
A: Yes she might be grateful but not very grateful.
(TSN, p. 34, June 15, 1984)[20]
A witness is said to be biased when his relation to the
cause or to the parties is such that he has an incentive to
exaggerate or give false color to his statements, or to
suppress or to pervert the truth, or to state what is false.
[21]
At the time the present case was filed in the trial court in
1981, Justa Kausapin was already 80 years old, suffering
from worsening physical infirmities and completely
dependent upon her stepson Enrique D. Hemedes for
support. It is apparent that Enrique D. Hemedes could
easily have influenced his aging stepmother to donate the
subject property to him. Public respondent should not have
given credence to a witness that was obviously biased and
partial to the cause of private respondents. Although it is a
well-established rule that the matter of credibility lies within
the province of the trial court, such rule does not apply
when the witness credibility has been put in serious doubt,
such as when there appears on the record some fact or
circumstance of weight and influence, which has been
overlooked or the significance of which has been
misinterpreted.[22]
Finally, public respondent was in error when it
sustained the trial courts decision to nullify the Deed of

When one of the parties is unable to read, or if the contract

is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to
the former.
Article 1332 was intended for the protection of a party
to a contract who is at a disadvantage due to his illiteracy,
ignorance, mental weakness or other handicap. [23] This
article contemplates a situation wherein a contract has
been entered into, but the consent of one of the parties is
vitiated by mistake or fraud committed by the other
contracting party.[24] This is apparent from the ordering of
the provisions under Book IV, Title II, Chapter 2, section 1
of the Civil Code, from which article 1332 is taken. Article
1330 states that A contract where consent is given through mistake,
violence, intimidation, undue influence, or fraud is voidable.
This is immediately followed by provisions explaining what
constitutes mistake, violence, intimidation, undue influence,
or fraud sufficient to vitiate consent.[25] In order that mistake
may invalidate consent, it should refer to the substance of
the thing which is the object of the contract, or to those
conditions which have principally moved one or both
parties to enter into the contract.[26] Fraud, on the other
hand, is present when, through insidious words or
machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he
would not have agreed to.[27] Clearly, article 1332 assumes
that the consent of the contracting party imputing the
mistake or fraud was given, although vitiated, and does not
cover a situation where there is a complete absence of
consent.
In this case, Justa Kausapin disclaims any
knowledge of the Deed of Conveyance of Unregistered
Real Property by Reversion in favor of Maxima
Hemedes. In fact, she asserts that it was only during the

96 | P a g e

hearing conducted on December 7, 1981 before the trial

court that she first caught a glimpse of the deed of
conveyance and thus, she could not have possibly affixed
her thumbmark thereto.[28] It is private respondents own
allegations which render article 1332 inapplicable for it is
useless to determine whether or not Justa Kausapin was
induced to execute said deed of conveyance by means of
fraud employed by Maxima Hemedes, who allegedly took
advantage of the fact that the former could not understand
English, when Justa Kausapin denies even having seen
the document before the present case was initiated in
1981.
It has been held by this Court that mere
preponderance of evidence is not sufficient to overthrow a
certificate of a notary public to the effect that the grantor
executed a certain document and acknowledged the fact of
its execution before him. To accomplish this result, the
evidence must be so clear, strong and convincing as to
exclude all reasonable controversy as to the falsity of the
certificate, and when the evidence is conflicting, the
certificate will be upheld.[29] In the present case, we hold
that private respondents have failed to produce clear,
strong, and convincing evidence to overcome the positive
value of the Deed of Conveyance of Unregistered Real
Property by Reversion a notarized document. The mere
denial of its execution by the donor will not suffice for the
purpose.
In upholding the deed of conveyance in favor of
Maxima Hemedes, we must concomitantly rule that
Enrique D. Hemedes and his transferee, Dominium, did not
acquire any rights over the subject property. Justa
Kausapin sought to transfer to her stepson exactly what
she had earlier transferred to Maxima Hemedes the
ownership of the subject property pursuant to the first
condition stipulated in the deed of donation executed by
her husband. Thus, the donation in favor of Enrique D.
Hemedes is null and void for the purported object thereof
did not exist at the time of the transfer, having already been
transferred to his sister.[30] Similarly, the sale of the subject
property by Enrique D. Hemedes to Dominium is also a
nullity for the latter cannot acquire more rights than its
predecessor-in-interest and is definitely not an innocent

purchaser for value since Enrique D. Hemedes did not

present any certificate of title upon which it relied.
The declarations of real property by Enrique D.
Hemedes, his payment of realty taxes, and his being
designated as owner of the subject property in the
cadastral survey of Cabuyao, Laguna and in the records of
the Ministry of Agrarian Reform office in Calamba, Laguna
cannot defeat a certificate of title, which is an absolute and
indefeasible evidence of ownership of the property in favor
of the person whose name appears therein. [31] Particularly,
with regard to tax declarations and tax receipts, this Court
has held on several occasions that the same do not by
themselves conclusively prove title to land.[32]
We come now to the question of whether or not R &
B Insurance should be considered an innocent purchaser
of the land in question. At the outset, we note that both the
trial court and appellate court found that Maxima Hemedes
did in fact execute a mortgage over the subject property in
favor of R & B Insurance. This finding shall not be
disturbed because, as we stated earlier, it is a rule that the
factual findings of the trial court, especially when affirmed
by the Court of Appeals, are entitled to respect, and should
not be disturbed on appeal.[33]
In holding that R & B Insurance is not a mortgagee in
good faith, public respondent stated that the fact that the
certificate of title of the subject property indicates upon its
face that the same is subject to an encumbrance, i.e.
usufructuary rights in favor of Justa Kausapin during her
lifetime or widowhood, should have prompted R & B
Insurance to ...investigate further the circumstances behind
this encumbrance on the land in dispute, but which it failed
to do. Also, public respondent considered against R & B
Insurance the fact that it made it appear in the mortgage
contract that the land was free from all liens, charges,
taxes and encumbrances.[34]
R & B Insurance alleges that, contrary to public
respondents ruling, the presence of an encumbrance on
the certificate of title is not reason for the purchaser or a
prospective mortgagee to look beyond the face of the
certificate of title. The owner of a parcel of land may still
sell the same even though such land is subject to a
usufruct; the buyers title over the property will simply be

restricted by the rights of the usufructuary. Thus, R & B

Insurance accepted the mortgage subject to the
usufructuary rights of Justa Kausapin. Furthermore, even
assuming that R & B Insurance was legally obliged to go
beyond the title and search for any hidden defect or
inchoate right which could defeat its right thereto, it would
not have discovered anything since the mortgage was
entered into in 1964, while the Kasunduan conveying the
land to Enrique D. Hemedes was only entered into in 1971
and the affidavit repudiating the deed of conveyance in
favor of Maxima Hemedes was executed by Justa
Kausapin in 1981.[35]
We sustain petitioner R & B Insurances claim that it
is entitled to the protection of a mortgagee in good faith.
It is a well-established principle that every person
dealing with registered land may safely rely on the
correctness of the certificate of title issued and the law will
in no way oblige him to go behind the certificate to
determine the condition of the property.[36] An innocent
purchaser for value[37] is one who buys the property of
another without notice that some other person has a right
to or interest in such property and pays a full and fair price
for the same at the time of such purchase or before he has
notice of the claim of another person.[38]
The annotation of usufructuary rights in favor of Justa
Kausapin upon Maxima Hemedes OCT dose not impose
upon R & B Insurance the obligation to investigate the
validity of its mortgagors title. Usufruct gives a right to
enjoy the property of another with the obligation of
preserving its form and substance. [39] The usufructuary is
entitled to all the natural, industrial and civil fruits of the
property[40] and may personally enjoy the thing in usufruct,
lease it to another, or alienate his right of usufruct, even by
a gratuitous title, but all the contracts he may enter into as
such usufructuary shall terminate upon the expiration of the
usufruct.[41]
Clearly, only the jus utendi and jus fruendi over the
property is transferred to the usufructuary. [42] The owner of
the property maintains the jus disponendi or the power to
alienate, encumber, transform, and even destroy the same.
[43]
This right is embodied in the Civil Code, which provides
that the owner of property the usufruct of which is held by

97 | P a g e

another, may alienate it, although he cannot alter the

propertys form or substance, or do anything which may be
prejudicial to the usufructuary.[44]
There is no doubt that the owner may validly
mortgage the property in favor of a third person and the law
provides that, in such a case, the usufructuary shall not be
obliged to pay the debt of the mortgagor, and should the
immovable be attached or sold judicially for the payment of
the debt, the owner shall be liable to the usufructuary for
whatever the latter may lose by reason thereof. [45]
Based on the foregoing, the annotation of
usufructuary rights in favor of Justa Kausapin is not
sufficient cause to require R & B Insurance to investigate
Maxima Hemedes title, contrary to public respondents
ruling, for the reason that Maxima Hemedes ownership
over the property remained unimpaired despite such
encumbrance. R & B Insurance had a right to rely on the
certificate of title and was not in bad faith in accepting the
property as a security for the loan it extended to Maxima
Hemedes.
Even assuming in gratia argumenti that R & B
Insurance was obligated to look beyond the certificate of
title and investigate the title of its mortgagor, still, it would
not have discovered any better rights in favor of private
respondents. Enrique D. Hemedes and Dominium base
their claims to the property upon the Kasunduan allegedly
executed by Justa Kausapin in favor of Enrique
Hemedes. As we have already stated earlier, such contract
is a nullity as its subject matter was inexistent. Also, the
land was mortgaged to R & B Insurance as early as 1964,
while the Kasunduan was executed only in 1971 and the
affidavit of Justa Kausapin affirming the conveyance in
favor of Enrique D. Hemedes was executed in 1981. Thus,
even if R & B Insurance investigated the title of Maxima
Hemedes, it would not have discovered any adverse claim
to the land in derogation of its mortgagors title. We reiterate
that at no point in time could private respondents establish
any rights or maintain any claim over the land.
It is a well-settled principle that where innocent third
persons rely upon the correctness of a certificate of title
and acquire rights over the property, the court cannot just
disregard such rights.Otherwise, public confidence in the

certificate of title, and ultimately, the Torrens system, would

be impaired for everyone dealing with registered property
would still have to inquire at every instance whether the
title has been regularly or irregularly issued.[46] Being an
innocent mortgagee for value, R & B Insurance validly
acquired ownership over the property, subject only to the
usufructuary rights of Justa Kausapin thereto, as this
encumbrance was properly annotated upon its certificate of
title.
The factual findings of the trial court, particularly
when affirmed by the appellate court, carry great weight
and are entitled to respect on appeal, except under certain
circumstances.[47] One such circumstance that would
compel the Court to review the factual findings of the lower
courts is where the lower courts manifestly overlooked
certain relevant facts not disputed by the parties and which,
if properly considered, would justify a different conclusion.
[48]
Also, it is axiomatic that the drawing of the proper legal
conclusions from such factual findings are within the
peculiar province of this Court.[49]
As regards R & B Insurances prayer that Dominium
be ordered to demolish the warehouses or that it be
declared the owner thereof since the same were built in
bad faith, we note that such warehouses were constructed
by Asia Brewery, not by Dominium. However, despite its
being a necessary party in the present case, the lower
courts never acquired jurisdiction over Asia Brewery,
whether as a plaintiff or defendant, and their respective
decisions did not pass upon the constructions made upon
the subject property. Courts acquire jurisdiction over a party
plaintiff upon the filing of the complaint, while jurisdiction
over the person of a party defendant is acquired upon the
service of summons in the manner required by law or by
his voluntary appearance.As a rule, if a defendant has not
been summoned, the court acquires no jurisdiction over his
person, and any personal judgment rendered against such
defendant is null and void.[50] In the present case, since
Asia Brewery is a necessary party that was not joined in
the action, any judgment rendered in this case shall be
without prejudice to its rights.[51]
As to its claim for moral damages, we hold that R & B
Insurance is not entitled to the same for it has not alleged

nor proven the factual basis for the same. Neither is it

entitled to exemplary damages, which may only be
awarded if the claimant is entitled to moral, temperate,
liquidated or compensatory damages. [52] R & B Insurances
claim for attorneys fees must also fail. The award of
attorneys fees is the exception rather than the rule and
counsels fees are not to be awarded every time a party
wins a suit. Its award pursuant to article 2208 of the Civil
Code demands factual, legal and equitable justification and
cannot be left to speculation and conjecture. [53] Under the
circumstances prevailing in the instant case, there is no
factual or legal basis for an award of attorneys fees.
WHEREFORE, the assailed decision of public
respondent and its resolution dated February 22, 1989 are
REVERSED. We uphold petitioner R & B Insurances
assertion of ownership over the property in dispute, as
evidenced by TCT No. 41985, subject to the usufructuary
rights of Justa Kausapin, which encumbrance has been
properly annotated upon the said certificate of title.No
pronouncement as to costs.
SO ORDERED.

[G.R. No. L-8178. October 31, 1960.]

JUANITA KAPUNAN, ET AL., Petitioners, v. ALIPIO N.

98 | P a g e

CASILAN and the COURT OF APPEALS,Respondents.

E. Granador, J. B. Velasco, D. T. Reyes, Luison & Cruz,
for Petitioners.
Manuel Lim and Julio Siayngco for Respondent.
SYLLABUS
1. NOTARIAL LAW; SPANISH NOTARIAL LAW
REPEALED BY ENACTMENT OF ACT NO. 496. The
old Spanish notarial law and system of conveyance was
repealed in the Philippines and another and different
notarial law and system became the law of the land with
the enactment of Act No. 496." (Philippine Sugar Estates v.
Poizat, 48 Phil., 536, cited in Vda. de Estuart v. Garcia,
Adm. Case No. 212, prom. February 15, 1957.)
2. DONATIONS OF REALTY; ACCEPTANCE;
FORMALITIES
REQUIRED
TO
EFFECTIVELY
TRANSFER TITLE. Under Art. 633 of the old Civil Code,
a donation transfers title effectively if it is accepted with all
the formalities that must accompany the acceptance of
donations of realty, to wit, thru the medium of a public
instrument with authentic notice to the donor, unless the
acceptance is made in the deed of gift itself. (Tagala v.
Ybeas,
49
Off.
Gaz.
200).
3. ID.; ID.; AUTHENTIC NOTICE (CONSTANCIA
AUTENTICA) WHEN NOT ESSENTIAL. The
acceptance having been made in the deed of gift itself,
notification thereof to the donor in a "constancia autentica"
was not necessary. The rule applies even if the acceptance
was made on another date and in a place other than that
where the deed was executed, where the donation as so
worded implied a previous understanding between the
parties who intervened therein, and the donor admittedly
knew of the actual acceptance by the donee thru the
latters
grandmother.
4. ID.; ID.; WHERE DONEE IS INCAPACITATED. The
rule that a donation to an incapacitated donee requires its

acceptance by his lawful representative (Art. 626, old Civil

Code), applies only in case of onerous and conditional
donations, where the donee may have to assume certain
charges or burdens. In simple and pure donations, a formal
acceptance is not important for the donor acquires no right
to be protected and the donee neither undertakes to do
anything
nor
assumes
any
obligation.
5. ID.; ID.; ID. If under the rule provided in Article 626 of
the old Civil Code, the donation of realty to a minor may be
accepted in his behalf by his mother (Laureta v. Mata, 44
Phil., 663), there is no reason why a simple and pure
donation by the mother herself in favor of her own minor
daughter may not be validly accepted through the
grandmother, the donees acting guardian who was later
appointed as her legal guardian.
DECISION
GUTIERREZ DAVID, J.:
This is a petition to review on certiorari a decision of the
Court of Appeals declaring the respondent Alipio N. Casilan
owner of certain real property described in the complaint
and ordering petitioners to deliver possession thereof to
said Respondent.
The facts are not disputed. The property in question, which
is a commercial lot 1 located in Tacloban City, was on
October 2, 1935 donated by the spouses Ruperto
Kapunan, Sr., and Iluminada Fernandez de Kapunan to
their daughter Concepcion K. Salcedo, who accepted the
donation in the same document. The deed of donation was
acknowledged on the same date by the donors and donee
before Notary Public Mateo Canonoy, the donors son-inlaw and the donees brother-in-law. The property, however,
remained in the possession of the donors.
On December 23, 1939, Concepcion K. Salcedo donated
the same property to her daughter Marita Antonia Salcedo,
then a minor. In behalf of said minor, Iluminada Fernandez

Vda. de Kapunan, the donees grandmother and acting

guardian with whom the said donee was then living as her
parents were estranged from each other, accepted the
donation. The acceptance was contained in the deed of
donation itself, which was authenticated by the same
Notary
Public
Mateo
Canonoy.
On November 4, 1944, Concepcion Kapunan Salcedo and
the respondent Alipio N. Casilan executed a "Deed of
Conditional Sale" wherein the former accepted the latters
offer to purchase the land in dispute, and received the sum
of P2,000 as part of the purchase price, the balance of
P4,500 to be paid within 3 years therefrom.
Notwithstanding the fact that the property in question was
in the possession of the petitioners and respondent Alipio
N. Casilan knew that Concepcion Kapunan Salcedo had
previously donated the said property in favor of her
daughter Marita Antonia Salcedo, the said respondent on
June 14, 1945 proceeded to buy the same and paid the
balance of the purchase price on the assurance given by
the donor that the donation was not legal. The deed of sale
was annotated on July 27 of the same year in the Daily
Book of the Register of Deeds of Leyte, but not on the
original certificate of title because of the refusal of
Iluminada Vda. de Kapunan to deliver the duplicate
certificate
of
title.
In due time, the respondent Casilan filed a petition in the
Court of First Instance of Leyte to compel Iluminada Vda.
de Kapunan to surrender the transfer certificate of title, but
the petition was dismissed. In connection with this petition,
Concepcion K. Salcedo, on March 9, 1946, gave a
deposition that she had knowledge of the acceptance by
her mother Iluminada Vda. de Kapunan of the donation she
made to her daughter Marita Antonia Salcedo.
To recover title and possession of the property in question,
respondent Casilan filed the present action in the Court of
First Instance of Leyte against Concepcion Kapunan de
Salcedo, Iluminada Fernandez Vda. de Kapunan and
Marita Antonia Salcedo. Juanita, Trinidad, Ruperto, Jr.,
Emma, Lilia, Socorro and Rosario, all surnamed Kapunan,
intervened as alleged co-owners of the land in dispute and
as heirs of their late father Don Ruperto Kapunan, Sr. On

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March 31, 1950, after hearing, the trial court, Judge

Hipolito Alo presiding, rendered judgment declaring the
plaintiff, herein respondent Casilan, to be the owner of the
property in question and ordering the defendants and
intervenors to deliver possession thereof to said plaintiff.
The trial court also dismissed the complaint in intervention.
Acting, however, upon the motions for reconsideration filed
by the defendants and intervenors, the lower court, through
Judge Jose S. Rodriguez, in a resolution dated May 30,
1950, reconsidered its decision and declared the sale of
the property in question by Concepcion K. Salcedo in favor
of respondent Alipio N. Casilan null and void. On appeal to
the Court of Appeals, that court reversed the decision and
awarded the land in dispute to Alipio N. Casilan. Hence,
this
petition
for
review.
It is petitioners contention that Notary Public Mateo
Canonoy, who was related to the parties in the donation
within the fourth civil degree of affinity, was, under Articles
22 and 28 of the Spanish Notarial Law, incompetent and
disqualified to authenticate the deed of donation executed
by the Kapunan spouses in favor of their daughter
Concepcion Kapunan Salcedo. Said deed of donation,
according to petitioners, became a mere private instrument
under Article 1223 of the old Civil Code, so that under the
ruling laid down in the case of Barretto v. Cabreza (33 Phil.,
413), the donation was inefficacious. The appellate court,
however, in the decision complained of held that the
Spanish Notarial Law has been repealed with the
enactment of Act No. 496. We find this ruling to be correct.
In the case of Philippine Sugar Estate v. Poizart (48 Phil.,
536), cited in Vda. de Estuart v. Garcia (Adm. Case No.
212, prom. February 15, 1957), this Court held that "The
old Spanish notarial law and system of conveyance was
repealed in the Philippines and another and different
notarial law and system became the law of the land with
the enactment of Act No. 496."cralaw virtua1aw library
We do not, however, agree with the Court of Appeals that
the donation in favor of Marita Antonia Salcedo was null
and void in that there was no "constancia autentica" given
to the donor Concepcion K. Salcedo that the donation had
been accepted. Article 633 of the Civil Code of 1889
provided
that

"ART. 633. In order that a donation of real property be valid

it must be made by public instrument in which the property
donated must be specifically described and the amount of
the encumbrances to be assumed by the donee
expressed.
"The acceptance must be made in the deed of gift or in a
separate public writing; but it shall produce no effect if not
made
during
the
lifetime
of
the
donor.
"If the acceptance is made by separate instrument,
authentic notice thereof shall be given the donor, and this
proceeding shall be noted in both instruments."cralaw
virtua1aw
library
Under the above legal provisions, a donation transfers title
effectively if it is accepted with all the formalities that must
accompany the acceptance of donations of realty, to wit,
thru the medium of a public instrument with authentic
notice to the donor, unless the acceptance is made in the
deed of gift itself. (Tagala v. Ybeas, 49 Off. Gaz., 200). In
the present case, the deed of donation executed by
Concepcion K. Salcedo in favor of her daughter Marita
Antonia Salcedo states "that the said donee, Marita Antonia
Kapunan Salcedo being a minor and being represented by
her maternal grandmother, Iluminada F. Vda. de Kapunan,
does hereby accept and receive this donation and gift, and
further does express her appreciation and gratefulness for
the generosity of said donor," The acceptance having been
made in the deed of gift itself, notification thereof to the
donor in a "constancia autentica" was evidently not
necessary. It is true that the acceptance was made on
another date and in a place other than that where the deed
was executed, but the deed of donation as so worded
implied a previous understanding between the parties who
intervened therein, and, what is more, the donor,
Concepcion K. Salcedo, admittedly knew of the actual
acceptance by the donee through the latters grandmother.
Pursuant to Art. 623 of the old Civil Code, her knowledge of
such
acceptance
perfected
the
donation.
It is also argued that the acceptance of the donation by the
donees grandmother was not valid since at the time of the

acceptance she had not yet been appointed legal guardian

of the donee. Under article 626 of the old Civil Code, a
donation to an incapacitated donee requires its acceptance
by his lawful representative. 1 This rule, however, appears
to be applicable only in case of onerous and conditional
donations, where the donee may have to assume certain
charges or burdens. As was said by former Justice
Montemayor in Perez v. Calingo (CA, 40 Off. Gaz., Supp.
11, p. 53), "In simple and pure donations, a formal
acceptance is not important for the donor acquires no right
to be protected and the donee neither undertakes to do
anything nor assumes any obligation. In this case, the
acceptance may be said to be a mere formality required by
law for the performance of the contract. Whenever the
donation does not impose any obligation upon the donee
the acceptance may be made by the donee himself."
Anyway, if under the rule provided in Article 626 of the old
Civil Code the donation of realty to a minor may be
accepted in his behalf by his mother (Laureta v. Mata, 44
Phil., 668), we see no reason why a simple and pure
donation made by the mother herself in favor of her own
minor daughter may not be validly accepted through the
grandmother, the donees acting guardian who was later
appointed as her legal guardian. It should here be stated
that Iluminada Vda. de Kapunan who accepted the
donation in behalf of the minor donee was appointed legal
guardian of the said minor on June 12, 1944, or prior to the
execution of the deed of conditional sale between the
donor Concepcion K. Salcedo and herein respondent Alipio
N. Casilan. There being no showing that the donation had
been revoked prior to the appointment of the donees
grandmother as her legal guardian, it is apparent that said
donation had been confirmed and impliedly ratified by the
parties intervening therein before the execution of the deed
of sale referred to. (See Atacador v. Silayan, 67 Phil., 674.)
In conclusion, we find and so hold that the donation of the
property in dispute to Marita Antonia Salcedo by
Concepcion K. Salcedo was valid, and consequently the
sale thereof by the latter in favor of respondent Alipio N.
Casilan was null and void. Said respondent, however, may
still recover what he has paid under the equitable principle
that no one shall be unjustly enriched or benefited at the
expense
of
another.

100 | P a g e

Wherefore, the decision complained of is reversed and the

sale of the property in controversy in favor of respondent
Alipio N. Casilan declared null and void. Without costs.
Paras, C.J., Bengzon, Padilla, Labrador, Reyes, J.B.L., and
Barrera, JJ., concur.

G.R. No. 22173, September 25, 1924

JULIANA ABRAGAN ET AL., PLAINTIFFS AND
APPELLANTS, VS. RITA G. DE CENTENERA ET AL.,
DEFENDANTS AND APPELLEES.
DECISION

documents conveys by way of gift to Julieta G. Abragan

and her mother Juliana Abragan, two parcels of property,
namely, first, a piece of land planted with fruit-bearing
coconut trees and having an area of nine hectares, located
in the barrio of Matacla, in the municipality of Goa,
Camarines Sur, valued at P2,000; and, secondly, a building
lot in the pueblo of Tigaon, of an area of 446 square
meters, containing a warehouse (camarin) for commercial
use, and having a value of P1,900. The instrument gives to
the mother, Juliana, the lisufruct in these properties and to
the daughter, Julieta, the nude ownership. By the second
instrument (Exhibit B) the same donor gives to the same
donees and in the same manner a piece of hemp land
having an area of twenty hectares, and located in the barrio
of Tinawgan, municipality of Tigaon, Camarines Sur. Both
of these instruments contain an acceptance of the gifts on
the part of Julieta G. Abragan, aided by her mother Juliana;
but owing to circumstances not necessary to be here set
out, neither document was at any time acknowledged
before a notary public.

STREET, J.:
By the amended complaint filed in this cause in the Court
of First Instance of the Province of Camarines Sur on
January 18, 1923, the plaintiffs, Juliana Abragan and her
daugther, Julieta Abragan, seek to recover from the
defendant, Jose N. Garchitorena, administrator of the
estate of Andres Garchitorena, deceased, three parcels of
real property described in paragraph I of the complaint; to
obtain a judicial declaration that said property belongs in
usufruct to the plaintiff, Juliana Abragan, with the nude
ownership in her daugther, Julieta; and further to recover a
sum of money as alleged damages for detention of the said
properties. Upon hearing the cause the trial court absolved
the defendants from the complaint and the plaintiffs
appealed.
It appears that Julieta G. Abragan is the natural daughter of
Don Andres Garchitorena, deceased, formerly a resident of
the municipality of Tigaon, in the Province of Camarines
Sur. Not long before his death in the year 1921 the said
Andres Garchitorena executed two deeds of gift, Exhibits A
and B, bearing the date of February 10, 1920, though the
correct date was evidently 1921. The first of these

Garchitorena, who now refuses to recognize the validity of

the donations. The present action was therefore instituted
by the Abragans, mother and daughter, to test their rights
upon the facts above recited.
It is quite evident, as declared by the trial judge, that these
deeds of gift, Exhibits A and B, had no effect whatever per
se, for the reason that the instruments referred to never
took the form of a public document and were not accepted
by the donees in any public document in the life of the
donor. (Velasquez vs. Biala, 18 Phil., 231; Abellara vs.
Balanag, 37 Phil., 865.) Nor can it be said that the
donations are onerous and subject to the rules governing
contracts (art. 622, Civ. Code), although said donations are
declared by the donor to rest in part upon consideration of
the past services rendered to him by Juliana Abragan. A gift
in compensation for services is considered to have been
made upon an onerous consideration (causa onerosa) only
when the services which constitute the determining cause
have not yet been rendered. (Carlos vs. Ramil, 20 Phil.,
183.)

After the death of the donor, Rita G. de Centenera, who is

the sole heir of Andres Garchitorena, qualified as special
administratrix of his estate; and on April 1, 1921, she
executed a public document (Exhibit D) in which she
recites that her deceased father had in life made two
donations in favor of his daughter, Julieta G. Abragan, and
Juliana Abragan, vesting the nude ownership in Julieta and
the usufruct in Juliana. The declarant then proceeds to give
a description of the two properties described in the deed of
gift Exhibit A, but making no' mention of the hemp land
described in the document Exhibit B; and she declares
that, being the universal heir of all the property left by her
deceased father, she recognizes said donations as his last
expressed will, "in order that they may have full legal effect
in the premises" (para que tengan sus efectos, cuantos en
derecho lugar haya).

It appears that the deed of conveyance of the hemp land,

Exhibit B, imposes on the donee the duty to pay off a
mortgage for P5,000 in favor of the Philippine National
Bank; and it is suggested that this gift should be
considered as having been made upon an onerous
consideration from the existence of this obligation, but it is
clear that it cannot be so considered. As was said by Chief
Justice Arellano in Castillo vs. Castillo and Quizon (23
Phil., 364, 367), "A gift of this kind is not in fact a gift for a
valuable consideration, but is remuneratory or
compensatory, made for the purpose of remunerating or
compensating a charge, burden or condition imposed upon
the donee, inferior to the value of the gift, * * *" and under
article 622 of the Civil Code such a gift is governed by the
provisions relating to gifts and not contracts.

After this document had been executed and delivered, Rita

G. de Centenera ceased to be special administratrix of the
estate of her father and one Jose N. Garchitorena was
appointed as administrator in her stead. The properties
mentioned in the deeds of gift appear to have come into
the possession of the said administrator of Andres

It remains to consider what effect, if any, can be attributed

to the deed executed by Rita G. de Centenera after her
father's death, in which she, in her own right and as sole
heir of her father, recognized the validity of the gifts
contained in Exhibit A (not Exhibit B). Upon this point it is at
once obvious that this act cannot be considered as naving

101 | P a g e

retroactively perfected the gifts attempted to be made in

the Exhibit A. But we are of the opinion that this document
should operate, with respect to the lands mentioned
therein, as a quitclaim on the part of Rita G. de Centenera,
and she is estopped from asserting any right to said
properties. In this connection we note that the commentator
Manresa cites a decision of the supreme court of Spain,
from June 12, 1896, in which a ratification by the heirs of a
deceased donor was given effect although the deed of gift
had never been accepted in the form required by law. (5
Manresa, 2d ed., 115.) The deed of ratification in the case
before us was based upon a commendable motive, which
was the desire of the declarant to give effect to the wishes
of her father. This was a good consideration in law and
sufficient to give legal effect to the instrument, though not
precisely in the sense expressed. It is needless to say that
this document could not be given effect to the prejudice of
creditors of the estate of a deceased person, and while we
hold that it is effective for the purpose of raising an
estoppel against the heir, the plaintiffs cannot maintain this
action against the administrator of the donor. It will
therefore be necessary for them to intervene in the
proceedings in administration and ask that their rights to
the properties covered by Exhibit A be there recognized.
A judgment of affirmance pro forma must therefore be
entered, without prejudice to the rights of the plaintiffs to
assert their rights by a proper proceeding in the
administration of the estate. The judgment will be affirmed,
without express pronouncement as to costs. So ordered.
G.R. No. L-28721

October 5, 1928

MARTIN MENDOZA and NATALIO ENRIQUEZ, plaintiffsappellees,

vs.
MANUEL DE GUZMAN, defendant-appellant.
MAX B. SOLIS, intervenor-appellant.
Juan S. Rustia for appellants.
Godofredo Reyes for appellees.
MALCOLM, J.:

This case calls for the application of articles 361, 435, and
454 of the Civil Code to the proven facts.
On November 6, 1916, Leandra Solis and her husband
Bernardo Solis brought an action in the Court of First
Instance of Tayabas against Martin Mendoza for the
recovery of a certain piece of land. Judgment was rendered
in that case absolving Mendoza from the complaint, and
this judgment was subsequently affirmed by the Supreme
Court. 1 When the case was remanded to the court of origin,
the trial judge issued an order requiring the provincial
sheriff immediately to dissolve the preliminary writ of
injunction and to put Mendoza in the possession of the
land. By virtue of this order, Mendoza was in fact put in
possession of the property.
In the cadastral proceedings of the municipality of Sariaya,
Tayabas, the piece of land above-mentioned was identified
as lot No. 687. In the decision rendered in the cadastral
case, this lot was adjudicated in favor of Martin Mendoza
and Natalio Enriquez in equal parts pro indiviso subject to
the right of retention on the part of Manuel de Guzman until
he shall have been indemnified for the improvements
existing on the land. By virtue of this judgment, De Guzman
presented a motion requesting the issuance of a writ of
possession for lot No. 687 in his favor which was granted
on June 25, 1924. From the time Leandra Solis and
Bernardo Solis, as well as Manuel de Guzman who was
working on the land, were ejected therefrom, Martin
Mendoza possessed it until June 25, 1924, when de
Guzman obtained the writ of possession abovementioned. Since then De Guzman has had dominion over
the land.
Being unable to come to an agreement as to the amount
which should be allowed for the improvements made on
the land, Martin Mendoza and Natalio Enriquez began an
action requesting the court to (a) fix the value of the
necessary and useful expenses incurred by Manuel de
Guzman in introducing the improvements; (b) require the
defendant to render an accounting of the fruits received by
him and order that the value of the fruits be applied to the
payment of the necessary and useful expenses; and (c)
decree the restitution of the possession to the plaintiffs. To

the complaint, the defendant filed an answer in the form of

a general denial with special defenses and appended a
counter-claim and crosscomplaint, in which a total of
P6,000 was asked. During the pendency of the case,
Bernardo Solis, or Max. B. Solis, one of the persons who
was ejected from the land, asked leave to intervene,
alleging, among other things, that De Guzman, in
consideration of the sum of P5,000, had transferred all his
rights in the improvements and in the lot to him with the
exception of two hundred coconut trees. This petition was
granted by the trial court.
When the case was called for trial, the parties entered into
the follwing stipulation:
1. That the plaintiffs are the owners and
proprietors of the land described in the second
paragraph of the complaint.
2. That a decree of registration has been issued
on said land in the terms set forth in paragraph 3
of the complaint.
3. That the defendant Manuel de Guzman is the
one who has been in possession and enjoyment
of the land from June 25, 1924, up to the present
time by virtue of a writ of possession obtained by
him from the Court of Land Registration.
4. That the defendant has made improvements
on said land be planting coconut trees thereon.
5. That the plaintiff Martin Mendoza is the one
who has been in possession and enjoyment of
said property and its improvements since
December 16, 1916, by virtue of a writ of
possession in civil case No. 356 until said
pssession was transferred to the defendant
Manuel de Guzman.
6. That from March 20, 1920, the plaintiff Natalio
Enriquez has been in possession and enjoyment
of a portion of the land, the subject matter of the

102 | P a g e

complaint herein, by virtue of a deed of sale

executed in his favor by Attorney Agustin Alvarez,
who, in turn, acquired it from the other plaintiff
Martin Mendoza, until June 25, 1924.
The parties desire to submit, as they do submit,
under this stipulation of facts the following
questions:
(a) The amount of the indemnity to be
paid to the defendant for the
improvements made by him on said lot
and the basis upon which said amount
shall be fixed.
(b) Whether or not the defendant is
obliged to render an account of the
fruits received by him from June 25,
1924, until the improvements are
delivered after same have been paid
for. 1awph!l.net
(c) Whether the value of said fruits and
products received by the defendant
shall be applied to the indemnity to
which he is entitled, or whether said
defendant is obliged to deliver to the
plaintiffs the remainder in case of
excess.
(d) Whether or not the defendant has
the right to be paid by the plaintiffs in
whole or in part for the value of the
fruits received by Martin Mendoza and
Natalio Enriquez from the respective
dates that they were in possession and
enjoyment of the land until June 25,
1924.
The parties at the same time that they submit to
the court for decision the questions presented in
the above stipulation reserve to themselves,
whatever said decision may be, the right to

present later their evidence in support of their

respective views with respect to the amount of
the indemnity.
After the preliminary questions have been
decided, the parties request that commissioners
be appointed to receive said evidence with
respect to the amount of the indemnity in
accordance with the views of both parties.
The trial court resolved the questions presented by holding
(1) that in accordance with the provisions of articles 435
and 454 in relation with article 361 of the Civil Code, the
value of the "indemnization" to be paid to the defendant
should be fixed according to the necessary and useful
expenses incurred by him in introducing "las plantaciones
en cuestion"; (2) that the plaintiffs as the owner of the
property have the right to make their own "las plantaciones
hechas por el demandado" upon payment in the form
indicated in No. 1, the defendant having the right to retain
the land until the expenditures have been refunded; (3) that
the defendant is obliged to render a detail and just account
of the fruits and other profits received by him from the
property for their due application; and (4) that the value of
the fruits received by the defendant should first be applied
to the payment of the "indemnizacion," and in that it
exceeds the value of the "indemnizacion," the excess shall
be returned to the plaintiffs. With respect to the last
question as to whether or not the plaintiffs are obliged to
return to the defendant the value of the fruits received by
them before the defendant took possession of the land, the
trial court abstained from making any pronouncement for
the reason that the circumstances under which the plaintiffs
acquired possession and the defendant again acquired it
were not before him, the parties needing to submit their
evidence with respect to this point.
At the trial which followed and at the instance of the
parties, two commissioners were appinted with instructions
to inspect the land and to count the number of coconut
trees planted thereon, determining the number of fruitbearing trees and those that are not fruit-bearing as well as
the condition of the same. After trial, Judge of First
Instance Gloria rendered judgment declaring (a) that the

defendant Manuel de Guzman and the intervenor Bernardo

Solis have the right to collect from the plaintiffs Martin
Mendoza and Natalio Enriquez the sum of P2,046 as
compensation for the necessary and useful expenditures in
the proportion of 20 per cent for Manuel de Guzman and
80 per cent for Bernardo Solis; and (b) that Manuel de
Guzman and Bernardo Solis are obliged to pay to the
plaintiffs the sum of P666.93 per annum from June 25,
1924, one-fifth of this amount to be paid by Manuel de
Guzman and the other four-fifths by Bernardo Solis. As on
the date when this judgment was rendered, that is on
September 23, 1927, the amount that the plaintiffs were
required to pay to the defendant and intervenor exceeded
the amount that the latter were to pay the former, the
defendant and intervenor were ordered to deliver the land
and its improvement as soon as the plaintiffs have paid the
difference, without special pronouncement as to costs.
The appeal of the defendant and intervenor is based on
fourteen assigned errors relating to both questions of fact
and of law. The question of fact mainly concerns the
amount to be paid as "indemnizacion" in the form of
necessary and useful expenditures incurred by the
defendant. The question of law mainly concerns the
interpretation of articles 361, 453, and 454 of the Civil
Code. Counsel for the appellants has presented a learned
brief divided into three chapters. Counsel for the appellees
has countered with an equally helpful brief in which the
fourteen assigned errors are reduced for purposes of
arguments to four fundamental questions. It would not be
profitable and it is not necessary to follow opposing
counsel into all of their refinements of fact and law.
As to the facts, the findings of the trial judge should be
given effect. An examination of the evidence shows that
these findings are fully substantiated. Our only doubt has
been as to the just value for each coconut tree now found
on the land. However, everything considered, we have at
last determined that we would not be justified in changing
the value per tree of P2 as fixed in the trial court. With
respect to the fruits received by the defendant while the
land was in his possession, the finding in the trial court is
correct.

103 | P a g e

With the facts as above indicated, little time need be taken

to discuss the points of law. Article 361 of the Civil Code in
the original Spanish text uses the word "indemnizacion."
However one may speculate as to the true meaning of the
term "indemnizacion" whether correctly translated as
"compensation" or "indemnity," the amount of the
"indemnizacion" is the amount of the expenditures
mentioned in articles 453 and 454 of the Civil Code, which
in the present case is the amount of the necessary and
useful expenditures incurred by the defendant. Necessary
expenses have been variously described by the Spanish
commentators as those made for the preservation of the
thing (4 Manresa's Comentarios al Codigo Civil, p. 258); as
those without which the thing would deteriorate or be lost
(Scaevola's Comentarios al Codigo Civil, p.408); as those
that augment the income of the things upon which they are
expanded (4 Manresa's Comentarios al Codigo Civil, p.
261; 8 Scaevola's Comentarios al Codigo Civil, p. 416).
Among the necessary expenditures are those incurred for
cultivation,
production,
upkeep,
etc.
(4
Manresa'sComentarios al Codigo Civil, p. 257). Here the
plaintiffs have chosen to take the improvements introduced
on the land and are disposed to pay the amount of the
necessary and useful expenses incurred by the defendant.
Inasmuch as the retentionist, who is not exactly a posessor
in good faith with in the meaning of the law, seeks to be
reimbursed for the necessary and useful expenditures, it is
only just that he should account to the owners of the estate
for any rents, fruits, or crops he has gathered from it.
In brief, therefore, and with special reference to the
decision appealed from, the errors assigned on appeal,
and the argument of counsel as addressed to the decision
in the lower court and the assignment of errors, we may
say that we are content to make the findings of fact and law
of Judge Gloria in the lower court the findings of fact and
law in the appellate court.
Based on the foregoing considerations, the judgment
appealed from will be affirmed, with the costs of this
instance against the appellants.

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