PROPERTY CASE DIGESTS

a.Introduction

1. BENGUET CORPORATION vs. CENTRAL BOARD OF ASSESSMENT APPEALS

G. R. No. 106041 January 29, 1993

FACTS
In 1985 the Provincial Assessor of Zambales assessed the petitioners tailings dam as taxable improvements. The
assessment was appealed to the Board of Assessment Appeals of the Province of Zambales and dismissed on
the ground of failure to pay the realty taxes. Thus, petition for certiorari was being sought by the petitioner on the
contention that the tailings dam is not subject to realty tax because it is not an improvement upon the land within
the meaning of the Real Property Tax Code. Furthermore, the petitioner does not dispute that the tailings dam
may be considered realty within the meaning of Article 415. It insists, however, that the dam cannot be subjected
to realty tax as a separate and independent property because it does not constitute an assessable improvement
on the mine although a considerable sum may have been spent in constructing and maintaining it. The Solicitor
General argues that the dam is an assessable improvement because it enhances the value and utility of the mine.
The primary function of the dam is to receive, retain and hold the water coming from the operations of the mine,
and it also enables the petitioner to impound water, which is then recycled for use in the plant.

ISSUE
Whether or not the petitioners tailings dam improvement becomes part of his immovable property

RULING
Petition was dismissed.

The Court is convinced that the subject dam falls within the definition of an improvement because it is permanent
in character and it enhances both the value and utility of petitioner's mine. Moreover, the immovable nature of the
dam defines its character as real property under Article 415 of the Civil Code and thus makes it taxable under
Section 38 of the Real Property Tax Code.

2. MARCELO R. SORIANO vs. SPS RICARDO and ROSALINA GALIT

G. R. No. 156295 September 23, 2003

FACTS
Petitioner was issued a writ of possession in Civil Case No. 6643 (1)for Sum of Money by the Regional Trial Court
of Balanga, Bataan, Branch 1. The writ of possession was,however, nullified by the Court of Appeals in CA-G.R.
SP No. 65891[2] because it included a parcel of land which was not among those explicitly enumerated in the
Certificate of Sale issued by the Deputy Sheriff, but on which stand the immovables covered by the said
Certificate. Petitioner contends that the sale of these immovables necessarily encompasses the land on which
they stand.

RULING
The foregoing provision of the Civil Code enumerates land and buildings separately. This can only mean that a
building is, by itself, considered immovable.Thus, it has been held that while it is true that a mortgage of land
necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a building by itself
may be mortgaged apart from the land on which it has been built. Such mortgage would be still a real estate
mortgage for the building would still be considered immovable property even if dealt with separately and apart
from the land. In this case, considering that what was sold by virtue of the writ of execution issued by the trial
court was merely the storehouse and bodega constructed on the parcel of land covered by Transfer Certificate of
Title No. T- 40785, which by themselves are real properties of respondents spouses, the same should be
regarded as separate and distinct from the conveyance of the lot on which they stand.

3. SERGS PRODUCTS vs. PCI LEASING AND FINANCE

G. R. No. 137705 August 22, 2000

FACTS
On 13 February 1998, PCI Leasing and Finance, Inc. filed a complaint for sum of money, with an application for a

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writ of replevin (Civil Case Q-98-33500). On 6 March 1998, upon an ex-parte application of PCI Leasing, judge
issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing
after 5 days and upon the payment of the necessary expenses. On 24 March 1998, the sheriff proceeded to
petitioner's factory, seized one machinery with word that the return for the other machineries. On 25 March 1998,
petitioners filed a motion for special protective order, 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. On 6 April 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. On 7
April 1998, they went to the CA via an original action for certiorari.

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; and ruled that the "words of the contract are clear
and leave no doubt upon the true intention of the contracting parties." It thus affirmed the 18 February 1998 Order,
and the 31 March 1998 Resolution of the lower court, and lifted the preliminary injunction issued on 15 June 1998.
A subsequent motion for reconsideration was denied on 26 February 1999. Hence, the petition for review on
certiorari.

ISSUE
Whether or not the property in question is a personal property.

RULING
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals; with costs against
petitioners.

Contracting parties may validly stipulate that a real property be considered as personal. After agreeing to such
stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a party to a
contract is ordinarily precluded from denying the truth of any material fact found therein. Thus, said machines are
proper subjects of the Writ of Seizure (compare Tumalad v. Vicencio).

4. FEL'S ENERGY, INC. vs. PROVINCE OF BATANGAS, et al.

G. R. No. 168557 Feb. 16, 2007

FACTS
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine
power barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion
Agreement (Agreement), was for a period of five years. Article 10 reads:

RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import duties, fees, charges
and other levies imposed by the National Government of the Republic of the Philippines or any agency or
instrumentality thereof to which POLAR may be or become subject to or in relation to the performance of their
obligations under this agreement (other than (i) taxes imposed or calculated on the basis of the net income of
POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees
and other similar fees and charges) and (b) all real estate taxes and assessments, rates and other charges in
respect of the Power Barges.

Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC initially opposed the
assignment of rights, citing paragraph 17.2 of Article 17 of the Agreement.

On August 7, 1995, FELS received an assessment of real property taxes on the power barges from Provincial
Assessor Lauro C. Andaya of Batangas City. The assessed tax, which likewise covered those due for 1994,
amounted to P56,184,088.40 per annum. FELS referred the matter to NPC, reminding it of its obligation under the
Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any
conference regarding the real property assessment of the Provincial Assessor.

In a letter dated September 7, 1995, NPC sought reconsideration of the Provincial Assessors decision to assess
real property taxes on the power barges. However, the motion was denied on September 22, 1995, and the
Provincial Assessor advised NPC to pay the assessment. This prompted NPC to file a petition with the Local
Board of Assessment Appeals (LBAA) for the setting aside of the assessment and the declaration of the barges as
non-taxable items; it also prayed that should LBAA find the barges to be taxable, the Provincial Assessor be
directed to make the necessary corrections.

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In its Answer to the petition, the Provincial Assessor averred that the barges were real property for purposes of
taxation under Section 199(c) of Republic Act (R.A.) No. 7160.

Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that the Department of
Finance (DOF) had rendered an opinion dated May 20, 1996, where it is clearly stated that power barges are not
real property subject to real property assessment.

On August 26, 1996, the LBAA rendered a Resolution denying the petition. The fallo reads:

WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the amount of
P56,184,088.40, for the year 1994.

ISSUE
Whether or not the NPC is liable for real property taxes on the power barges.

RULING
Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law
does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by
words too plain to be mistaken and too categorical to be misinterpreted. Thus, applying the rule of strict
construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial
corporations, we hold that FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the
payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to
petitioner NPC cannot be extended to FELS. The covenant is between FELS and NPC and does not bind a third
person not privy thereto, in this case, the Province of Batangas.

It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local governments
deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude,
acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the constituency who are to pay for it. The right of local
government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is
consistent with the State policy to guarantee the autonomy of local governments and the objective of the Local
Government Code that they enjoy genuine and meaningful local autonomy to empower them to achieve their
fullest development as self-reliant communities and make them effective partners in the attainment of national
goals.

In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to
finance and support myriad activities of the local government units for the delivery of basic services essential to
the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

5. SIMPLICIO BINALAY vs. GUILLERMO MANALO

G. R. No. 92161 March 18, 1991

FACTS
The late Judge Taccad owned a parcel of land on the west, bordering on the Cagayan River, on the east,
the national road. The western portion would occasionally go under the waters and reappear during the dry
season. Manalo purchased the land. A relocation survey was conducted during the rainy season, so the survey
didn't cover the submerged land. The sketch would show that the river branches through the west and east,
leaving a strip of land. The land was then surveyed into two 2 lots. One of these is being claimed by Manalo
through accretion.

ISSUE
Whether or not Manalo has a right over the land by virtue of accretion.

RULING
The subject land couldn't have been sold to Manalo, being part of the public domain.

Article 70 of the Law of Waters of 3 August 1866 is the law applicable to the case at bar:

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Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters during the highest
floods.

Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private ownership of the
bed of the eastern branch of the river even if it was included in the deeds of absolute sale executed by Gregorio
Taguba and Faustina Taccad in his favor. These vendors could not have validly sold land that constituted property
of public dominion.

Article 420 of the Civil Code states:

The following things are property of public dominion:

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

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

6. REPUBLIC OF THE PHILIPPINES vs. COURT OF APPEALS

G. R. No. 100709 November 14, 1997

FACTS
Respondent Morato filed a Free Patent Application on a parcel of land which was approved. Both the free patent
and the title specifically mandate that the land shall not be alienated nor encumbered within five years from the
date of the issuance of the patent. Thereafter, it was established that the subject land was not suitable to
vegetation. Moreover, a portion of the land was mortgaged by respondent Morato

ISSUES
1. Respondent court erred in holding that the patent granted and certificate of title issued to Respondent Morato
cannot be cancelled and annulled since the certificate of title becomes indefeasible after one year from the
issuance of the title.
2. Respondent Court erred in holding that the questioned land is part of a disposable public land and not a
foreshore land.

RULING
The Commonwealth Act No. 141, otherwise known as the Public Land Act clearly proscribe the encumbrance of a
parcel of land acquired under a free patent or homestead within five years from the grant of such patent.
Furthermore, such encumbrance results in the cancellation of the grant and the reversion of the land to the public
domain.

Encumbrance has been defined as "[a]nything that impairs the use or transfer of property; anything which
constitutes a burden on the title; a burden or charge upon property; a claim or lien upon property." It may be a
"legal claim on an estate for the discharge of which the estate is liable; and embarrassment of the estate or
property so that it cannot be disposed of without being subject to it; an estate, interest, or right in lands,
diminishing their value to the general owner; a liability resting upon an estate."

It is indisputable, however, that Respondent Morato cannot fully use or enjoy the land during the duration of the
lease contract. This restriction on the enjoyment of her property sufficiently meets the definition of an
encumbrance under Section 118 of the Public Land Act, because such contract "impairs the use of the property"
by the grantee. In a contract of lease which is consensual, bilateral, onerous and commutative, the owner
temporarily grants the use of his or her property to another who undertakes to pay rent therefor. During the term
of the lease, the grantee of the patent cannot enjoy the beneficial use of the land leased. As already observed, the
Public Land Act does not permit a grantee of a free patent from encumbering any portion of such land. Such
encumbrance is a ground for the nullification of the award.

It is well-known that the homestead laws were designed to distribute disposable agricultural lots of the State to
land-destitute citizens for their home and cultivation. Pursuant to such benevolent intention the State prohibits the
sale or incumbrance of the homestead (Section 116) within five years after the grant of the patent. After that five-
year period the law impliedly permits alienation of the homestead; but in line with the primordial purpose to favor

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the homesteader and his family the statute provides that such alienation or conveyance (Section 117) shall be
subject to the right of repurchase by the homesteader, his widow or heirs within five years. This section 117 is
undoubtedly a complement of section 116. It aims to preserve and keep in the family of the homesteader that
portion of public land which the State had gratuitously given to him. It would, therefore, be in keeping with this
fundamental idea to hold, as we hold, that the right to repurchase exists not only when the original homesteader
makes the conveyance, but also when it is made by his widow or heirs. This construction is clearly deducible from
the terms of the statute.

Conversely, when a "homesteader has complied with all the terms and conditions which entitled him to a patent
for [a] particular tract of public land, he acquires a vested interest therein and has to be regarded an equitable
owner thereof." 24 However, for Respondent Morato's title of ownership over the patented land to be perfected,
she should have complied with the requirements of the law, one of which was to keep the property for herself and
her family within the prescribed period of five (5) years. Prior to the fulfillment of all requirements of the law,
Respondent Morato's title over the property was incomplete. Accordingly, if the requirements are not complied
with, the State as the grantor could petition for the annulment of the patent and the cancellation of the title.

Respondent Morato cannot use the doctrine of the indefeasibility of her Torrens title to bar the state from
questioning its transfer or encumbrance. The certificate of title issued to her clearly stipulated that its award was
"subject to the conditions provided for in Sections 118, 119, 121, 122 and 124 of Commonwealth Act (CA) No.
141." Because she violated Section 118, the reversion of the property to the public domain necessarily follows,
pursuant to Section 124.

When the sea moved towards the estate and the tide invaded it, the invaded property became foreshore land and
passed to the realm of the public domain. In fact, the Court in Government vs. Cabangis annulled the registration
of land subject of cadastral proceedings when the parcel subsequently became foreshore land. In another case,
the Court voided the registration decree of a trial court and held that said court had no jurisdiction to award
foreshore land to any private person or entity. The subject land in this case, being foreshore land, should therefore
be returned to the public domain.

7. FRANCISCO I. CHAVEZ vs. PUBLIC ESTATES AUTHORITY

G. R. No. 133250 July 9, 2002

FACTS
The government signed a contract with the Construction and Development Corporation of the Philippines
("CDCP") to reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the
construction of Phases I and II of the Manila-Cavite Coastal Road. Then President Marcos created PEA which
was tasked to reclaim land, including foreshore and submerged areas, and to develop, improve, acquire, lease
and sell any and all kinds of lands. On the same date, then President Marcos transferred to PEA the lands
reclaimed in the foreshore and offshore of the Manila Bay under the Manila-Cavite Coastal Road and Reclamation
Project (MCCRRP). Then President Marcos issued a memorandum directing PEA to amend its contract with
CDCP, so that all future works in MCCRRP shall be funded and owned by PEA. Then President Aquino issued a
special patent granting and transferring to PEA the parcels of land so reclaimed under the MCCRRP.
Subsequently, the Register of Deeds issued Transfer Certificates of Title in the name of PEA, covering the three
reclaimed islands known as the "Freedom Islands."

Later on, PEA entered into a Joint Venture Agreement ("JVA") with AMARI, a private corporation, to develop the
Freedom Islands, without public bidding. Then Senate President Maceda delivered a privilege speech in the
Senate and denounced the JVA as the "grandmother of all scams." As a result, a joint investigation was
conducted. Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI
under the JVA are lands of the public domain which the government has not classified as alienable lands and
therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void,
and (3) the JVA itself is illegal. Then President Ramos created a Legal Task Force to conduct a study on the
legality of the JVA which upheld the legality of the JVA, contrary to the conclusions reached by the Senate
Committees.

Petitioner Frank I. Chavez ("Petitioner") as a taxpayer, filed the instant Petition for Mandamus with Prayer for the
Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order contending that the government
stands to lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA
publicly disclose the terms of any renegotiation of the JVA asserting the right of the people to information on
matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation

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of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private corporations. Finally,
petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of public
dominion.

However, PEA and AMARI later on signed the Amended JVA which the then President Estrada approved.
Petitioner now prays that on constitutional and statutory grounds, the renegotiated contract be declared null and
void.

ISSUE
Whether or not the stipulations in the amended joint venture agreement for the transfer to Amari of certain lands,
reclaimed and still to be reclaimed, violate the 1987 Constitution.

RULING
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which
holds that the State owns all lands and waters of the public domain. The Regalian doctrine is the foundation of the
time-honored principle of land ownership that "all lands that were not acquired from the Government, either by
purchase or by grant, belong to the public domain. Article 420 of the Civil Code of 1950, incorporated the Regalian
doctrine.

On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, known as the Public Land
Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and
individuals, which is the general law governing the classification and disposition of lands of the public domain.
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or
disposable" lands of the public domain, which prior to such classification are inalienable and outside the
commerce of man. Section 7 authorizes the President to "declare what lands are open to disposition or
concession." Section 8 states that the government can declare open for disposition or concession only lands that
are "officially delimited and classified." Thus, before the government could alienate or dispose of lands of the
public domain, the President must first officially classify these lands as alienable or disposable, and then declare
them open to disposition or concession. There must be no law reserving these lands for public or quasi-public
uses.

Since then and until now, the only way the government can sell to private parties government reclaimed and
marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No.
141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-
agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable or disposable
lands for non-agricultural purposes that the government could sell to private parties. Moreover, Section 60 of CA
No. 141 expressly requires congressional authority before lands under Section 59 that the government previously
transferred to government units or entities could be sold to private parties. In case of sale or lease of disposable
lands of the public domain falling under Section 59 of CA No. 141, Sections 63 and 67 require a public bidding.
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable
lands of the public domain.

Private parties could still reclaim portions of the sea with government permission. However, the reclaimed land
could become private land only if classified as alienable agricultural land of the public domain open to disposition
under CA No. 141. Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does
not make the reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of
PEA. Likewise, the mere transfer by the National Government of lands of the public domain to PEA does not
make the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Absent
two official acts a classification that these lands are alienable or disposable and open to disposition and a
declaration that these lands are not needed for public service, lands reclaimed by PEA remain inalienable lands of
the public domain. Only such an official classification and formal declaration can convert reclaimed lands into
alienable or disposable lands of the public domain, open to disposition.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article
1409 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the
commerce of men," are "inexistent and void from the beginning." The Court must perform its duty to defend and
uphold the Constitution, and therefore declares the Amended JVA null and void ab initio.

8. PHILIPPINE PORTS AUTHORITY vs. CITY OF ILOILO

G. R. No. 109791 July 14, 2003

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FACTS
This is an action for the recovery of sum of money filed by respondent City of Iloilo, a public corporation organized
under the laws of the Philippines, against petitioner Philippine Ports Authority (PPA), a government corporation
created by P.D. 857.

Respondent seeks to collect from petitioner real property taxes as well as business taxes alleging that petitioner is
engaged in the business of arrastre and stevedoring services and the leasing of real estate for which it should be
obligated to pay business taxes. It further alleges that petitioner is the declared and registered owner of a
warehouse which is used in the operation of its business and is also thereby subject to real property taxes.

ISSUE
Whether or not Philippine Ports Authority is exempt from the payment of real property tax and business tax.

RULING
Originally, petitioner was exempt from real property taxes on the basis of the Real Property Tax Code then
governing. Petitioners charter, P.D. 857, further specifically exempted it from real property taxes. However, P.D.
1931 effectively withdrew all tax exemption privileges granted to government-owned or controlled corporations.
Subsequently, Executive Order (E.O.) No. 93 was enacted restoring tax exemptions provided under certain laws,
one of which is the Real Property Tax Code.

The abovecited laws, therefore, indicate that petitioners tax exemption from real property taxes was withdrawn by
P.D. 1931 effective June 11, 1984, but was subsequently restored by virtue of E.O. 93, starting December 17,
1986. Hence, petitioner is liable for real property taxes on its warehouse, computed from the last quarter of 1984
up to December 1986.

Petitioner, however, seeks to be excused from liability for taxes by invoking the pronouncement in Basco v.
PAGCOR (Basco). Petitioner points out that its exercise of regulatory functions places it within the category of an
"agency or instrumentality of the government," which, according to Basco, is beyond the reach of local taxation.
Reliance in the abovecited case is unavailing considering that P.D. 1931 was never raised therein, and given that
the issue in said case focused on the constitutionality of P.D. 1869, the charter of PAGCOR. The said decision did
not absolutely prohibit local governments from taxing government instrumentalities.

We affirm the finding of the lower court on petitioners liability for business taxes for the lease of its building to
private corporations. During the trial, petitioner did not present any evidence to refute respondents proof of
petitioners income from the lease of its property. Neither did it present any proof of exemption from business
taxes. Instead, it emphasized its charter provisions defining its functions as governmental in nature. It averred that
it allowed port users to occupy certain premises within the port area only to ensure order and convenience in
discharging its governmental functions. It hence claimed that it is not engaged in business, as the act of leasing
out its property was not motivated by profit, but by its duty to manage and control port operations. The argument
is unconvincing. As admitted by petitioner, it leases out its premises to private persons for "convenience" and not
necessarily as part of its governmental function of administering port operations. In fact, its charter classifies such
act of leasing out port facilities as one of petitioners corporate powers. Any income or profit generated by an
entity, even of a corporation organized without any intention of realizing profit in the conduct of its activities, is
subject to tax. What matters is the established fact that it leased out its building to ten private entities from which it
regularly earned substantial income. Thus, in the absence of any proof of exemption therefrom, petitioner is liable
for the assessed business taxes.

In closing, we reiterate that in taxing government-owned or controlled corporations, the State ultimately suffers no
loss. Finally, we find it appropriate to restate that the primary reason for the withdrawal of tax exemption privileges
granted to government-owned and controlled corporations and all other units of government was that such
privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises,
hence resulting in the need for these entities to share in the requirements of development, fiscal or otherwise, by
paying the taxes and other charges due from them. WHEREFORE, the Petition is DENIED and the assailed
Decision AFFIRMED.

9. FRANCISCO I. CHAVEZ vs. PUBLIC ESTATES AUTHORITY

G. R. No. 133250 November 11, 2003

FACTS

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PEA, under the JVA, obligated itself to convey title and possession over the Property, consisting of approximately
One Million Five Hundred Seventy Eight Thousand Four Hundred Forty One (1,578,441) Square Meters for a total
consideration of One Billion Eight Hundred Ninety Four Million One Hundred Twenty Nine Thousand Two Hundred
(P1,894,129,200.00) Pesos, or a price of One Thousand Two Hundred (P1,200.00) Pesos per square
meter.According to the zonal valuation of the Bureau of Internal Revenue, the value of the Property is Seven
Thousand Eight Hundred Pesos (P7,800.00) per square meter. The Municipal Assessor of Paraaque, Metro
Manila, where the Property is located, pegs the market value of the Property at Six Thousand Pesos (P6,000.00)
per square meter. Based on these alone, the price at which PEA agreed to convey the property is a pittance. And
PEA cannot claim ignorance of these valuations, at least not those of the Municipal Assessors office, since it has
been trying to convince the Office of the Municipal Assessor of Paraaque to reduce the valuation of various
reclaimed properties thereat in order for PEA to save on accrued real property taxes. The credibility of the
foregoing appraisals, however, are greatly impaired by a subsequent appraisal report of AACI stating that the
property is worth P4,500.00 per square meter as of 26 March 1996. Such discrepancies in the appraised value as
appearing in two different reports by the same appraisal company submitted within a span of one year render all
such appraisal reports unworthy of even the slightest consideration. Furthermore, the appraisal report submitted
by the Commission on Audit estimates the value of the Property to be approximately P33,673,000,000.00, or
P21,333.07 per square meter.

There were also other offers made for the property from other parties which indicate that the Property has been
undervalued by PEA. For instance, on 06 March 1995, Mr. Young D. See, President of Saeil Heavy Industries Co.,
Ltd., (South Korea), offered to buy the property at P1,400.00 and expressed its willingness to issue a stand-by
letter of credit worth $10 million. PEA did not consider this offer and instead finalized the JVA with AMARI. Other
offers were made on various dates by Aspac Management and Development Group Inc. (for P1,600 per square
meter), Universal Dragon Corporation (for P1,600 per square meter), Cleene Far East Manila Incorporated and
Hyosan Prime Construction Co. Ltd. which had prepared an Irrevocable Clean Letter of Credit for P100,000,000.
Whether based on the official appraisal of the BIR, the Municipal Assessor or the Commission on Audit, the
P1,200 per square meter purchase price, or a total of P1.894 billion for the 157.84 hectares of government lands,
is grossly and unconscionably undervalued. The authoritative appraisal, of course, is that of the Commission on
Audit which valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673 billion. Thus, based
on the official appraisal of the Commission on Audit, the independent constitutional body that safeguards
government assets, the actual loss to the Filipino people is a shocking P31.779 billion.

Despite these revolting anomalies unearthed by the Senate Committees, the fatal flaw of this contract is that it
glaringly violates provisions of the Constitution expressly prohibiting the alienation of lands of the public domain.

ISSUE
Whether or not PEA is allowed to validly convey to a private corporation the subject land.

RULING
The Supreme Court ruled in the negative. Section 2, Article XII of the 1987 Constitution provides that all lands of
the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated. Submerged lands, like the waters
(sea or bay) above them, are part of the States inalienable natural resources. Submerged lands are property of
public dominion, absolutely inalienable and outside the commerce of man. This is also true with respect to
foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the Constitution.

The bulk of the lands subject of the Amended JVA are still submerged lands even to this very day, and therefore
inalienable and outside the commerce of man. Of the 750 hectares subject of the Amended JVA, 592.15 hectares
or 78% of the total area are still submerged, permanently under the waters of Manila Bay. Under the Amended
JVA, the PEA conveyed to Amari the submerged lands even before their actual reclamation, although the
documentation of the deed of transfer and issuance of the certificates of title would be made only after actual
reclamation.

PEA is not an end user agency with respect to the reclaimed lands under the Amended JVA. PEA is the central
implementing agency tasked to undertake reclamation projects nationwide. PEA took the place of the Department
of Environment and Natural Resources as the government agency charged with leasing or selling all reclaimed
lands of the public domain. In the hands of PEA, which took over the leasing and selling functions of DENR,
reclaimed foreshore (or submerged lands) lands are public lands in the same manner that these same lands
would have been public lands in the hands of DENR. To allow vast areas of reclaimed lands of the public domain
to be transferred to PEA as private lands will sanction a gross violation of the constitutional ban on private

8
corporations from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA
has now done under the Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to
be reclaimed lands to a single private corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably the
ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million strong.

The only patent and certificates of title issued are those in the name of PEA, a wholly government owned
corporation performing public as well as proprietary functions. No patent or certificate of title has been issued to
any private party. No one is asking the Director of Lands to cancel PEAs patent or certificates of title. In fact, the
thrust of the instant petition is that PEAs certificates of title should remain with PEA, and the land covered by
these certificates, being alienable lands of the public domain, should not be sold to a private corporation.

10. SALVADOR H. LAUREL vs. RAMON GARCIA

G. R. No. 92013 July 25, 1990

DIONISIO S. OJEDA vs. EXECUTIVE SECRETARY MACARAIG, JR., et al.

G.R. No. 92047 July 25, 1990

FACTS
The subject property in this case is one of the four properties in Japan acquired by the Philippine government
under the Reparations Agreement entered into with Japan on May 9, 1956. 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 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 percent Filipino-owned entities in national development projects.

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 the Court. Later, the rules on bidding were changed such that the $225 million floor price
became merely a suggested floor price.

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.

ISSUE
Whether or not the Roppongi property and others of its kind can be alienated by the Philippine Government.

RULING
The Supreme Court ruled in the negative. ART. 420 of the New Civil Code provides that the following things are
property of public dominion:

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

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

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

9
belonging to the State and intended for some public service. 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]). 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 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.

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. 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
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.

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. 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.

11. LEVY D. MACASIANO vs. HON. ROBERTO C. DIOKNO

G. R. No. 97764 August 10, 1992

FACTS
An ordinance was passed which authorized the closure of certain streets and thre establishment of a flea market
and/or vending areas thereon, however subject to certain conditions. The municipal council of Paraaque issued
a resolution authorizing Paraaque Mayor to enter into contract with any service cooperative for the
establishment, operation, maintenance and management of flea markets and/or vending areas. The respondent
municipality and respondent Palanyag, a service cooperative, entered into an agreement with the obligation to
remit dues to the treasury of the municipal government of Paraaque. Consequently, market stalls were put up by
respondent Palanyag on the said streets. But petitioner Brig. Gen. Macasiano, ordered the destruction and
confiscation of stalls along G.G. Cruz and J. Gabriel St. in Baclaran, and wrote a letter to respondent Palanyag
giving the latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be dismantled.
These stalls were later returned to respondent Palanyag. This prompted the respondents municipality and
Palanyag filed with the trial court a joint petition for prohibition and mandamus with damages and prayer for
preliminary injunction, to which the petitioner filed his memorandum/opposition to the issuance of the writ of
preliminary injunction. The trial court issued a temporary restraining order and an order upholding the validity of
Ordinance of the Municipality' of Paraaque and enjoining petitioner Brig. Gen. Macasiano from enforcing his
letter-order against respondent Palanyag.

Hence, this petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision of the
Regional Trial Court of Makati.

ISSUE
Whether or not an ordinance or resolution issued by the municipal council of Paraaque authorizing the lease and

10
use of public streets or thoroughfares as sites for flea markets is valid.

RULING
The Court ruled in the negative. The ordinance is void and illegal for lack of basis and authority in laws applicable
during its time. The powers of a local government unit are not absolute. They are subject to limitations laid down
by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be
subservient to paramount considerations of health and well-being of the members of the community. Based on
this objective, the local government should refrain from acting towards that which might prejudice or adversely
affect the general welfare.

As what we have said in the Dacanay case, the general public have a legal right to demand the demolition of the
illegally constructed stalls in public roads and streets and the officials of respondent municipality have the
corresponding duty arising from public office to clear the city streets and restore them to their specific public
purpose. Pursuant to Art. 23 of the Civil Code, the property of provinces, cities and municipalities are divided into
property for public use and patrimonial property.

The foregoing streets, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are local roads
used for public service and are therefore considered public properties of respondent municipality. Properties of the
local government which are devoted to public service are deemed public and are under the absolute control of
Congress. Hence, local governments have no authority whatsoever to control or regulate the use of public
properties unless specific authority is vested upon them by Congress. One of the authorities given by Congress to
the local governments is the power to close roads. However, this legal provision which gives authority to local
government units to close roads and other similar public places should be read and interpreted in accordance with
basic principles already established by law. These basic principles have the effect of limiting such authority of the
province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the
basic principle that properties of public dominion devoted to public use and made available to the public in general
are outside the commerce of man and cannot be disposed of or leased by the local government unit to private
persons. Aside from the requirement of due process which should be complied with before closing a road, street
or park, the closure should be for the sole purpose of withdrawing the road or other public property from public
use when circumstances show that such property is no longer intended or necessary for public use or public
service. When it is already withdrawn from public use, the property then becomes patrimonial property of the local
government unit concerned. It is only then that the respondent municipality can "use or convey them for any
purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed" in
accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as Local Government Code.

12. IN THE MATTER OF REVERSION/RECALL OF RECONSTITUTED vs. REGISTRY OF DEEDS

G. R. No. 171304 October 10, 2007

FACTS
The Petitioners claim that their ascendants were the original pioneers/settlers/occupants of the land in question
since 1843 as its indigenous inhabitants. In 1910, however, officials of the Municipal Government of Paniqui,
headed by Maximo Parazo, built a school, a public market, and a cemetery on an untitled parcel of land, by virtue
of the judicial confirmation of its title in 1911 and 1915 to the subject property. However, a former Board Member
of the municipality inadvertently showed a close friend of the petitioners the cancelled OCTs No. RO-532 (O-116)
and No. 338 covering the lot where the public market is located. The said OCTs allegedly named the petitioners
ascendants as the former owners of the subject property. Petitioners filed the Petition for Annulment of Judgment
with the Court of Appeals, praying for the cancellation of the TCTs and for the reconveyance in their favor of the
title to the parcels of land, but was dismissed, as well as the motion for reconsideration that was filed thereafter.

Hence, this Petition for Review on Certiorari.

ISSUE
Whether or not the property, covered by said title, being claimed by petitioners is a patrimonial property.

RULING
It is a patrimonial property. The schools, public markets and cemeteries are not for the free and indiscriminate use
of everyone. The determination of the persons allowed to study in such schools, or put up stalls in the public
market, or bury their dead in public cemeteries are regulated by the government. As such, the subject property is,
under the Civil Code classification, patrimonial property, and the Municipality may have the same registered in its
name. It was likewise affirmed that the claim of petitioners had already been barred by laches.

11
The recent discovery by petitioners of their supposed right to the disputed property notwithstanding, petitioners
alleged ascendants should have instituted an action against the Municipal Government of Paniqui or against
Maximo Parazo for the allegedly unlawful taking of the property way back in the 1920s.

13. PHILIPPINE NATIONAL BANK vs. COURT OF APPEALS

G. R. No. 105760 July 7, 1997

FACTS
Spouses Crisanto de la Cruz and Pepita Montano mortgaged two parcels of land to petitioner PNB for a loan of
Twenty-four Thousand Pesos (P24,000.00). Petitioner PNB extrajudicially foreclosed the mortgage and was the
only bidder at the public auction sale.

PNB filed before the Regional Trial Court of Gapan, Nueva Ecija, Branch 34, a Petition for the Issuance of a Writ
of Possession, alleging therein that by virtue of a foreclosure sale wherein it purchased the subject properties and
due to the mortgagors (spouses Crisanto de la Cruz and Pepita Montano) failure to redeem the property within a
period of one year, it had become the absolute owner of the same and is entitled to a Writ of Possession.

Private respondent Montano filed a Motion for the Dissolution of the Writ of Possession on December 9, 1986,
alleging that (1) he was instituted as tenant on the subject property even before 1972 by the former owners of the
land; (2) the two lots are the subject matters of CAR Case No. 2387 before the Regional Trial Court of Gapan,
Nueva Ecija, Branch 36, which he instituted on January 18, 1983 against spouses Crisanto de la Cruz and Pepita
Montano.

ISSUE
Whether or not PNB is entitled of the possession of the said parcels of land.

RULING
Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing without other limitations than those
established by law. As an incident of ownership, therefore, there is nothing to prevent a landowner form donating
his naked title to the land. However, the new owner must respect the rights of the tenant. Sec. 7 of R.A. No.
3844, as amended (Code of Agrarian Reforms of the Philippines) gives the agricultural lessee the right to work on
the landholding once the leasehold relationship is established.

[S]ecurity of tenure is a legal concession to agricultural lessees which they value as life itself and deprivation of
their landholdings is tantamount to deprivation of their only means of livelihood.

This doctrine has been reiterated in Endaya vs. Court of Appeals, where this Court further held that the
agricultural lessees rights are enforceable against the transferee or the landowners successor-in-interest.
Therefore, as the adjudged legitimate tenant on the land in question, private respondent Montano may enforce his
right of possession against petitioner PNB, whose contention that private respondent Montano is illegally
occupying the property lacks basis in fact and in law.

Furthermore, as purchaser at a public auction, petitioner PNB was only substituted to and acquired the right, title,
interest and claim of the judgment debtor or mortgagor to the property as of the time of the levy. Hence, PNB is
not entitled to a Writ of Possession, as possession of the land in question has been granted by law to private
respondent Montano as tenant of subject landholding.

14. HERMINIO TAYAG vs. AMANCIA LACSON

G. R. No. 134971 March 25, 2004

FACTS
Respondents Angelica Tiotuyco Vda. de Lacson, and her children Amancia, Antonio, Juan, and Teodosia, all
surnamed Lacson, were the registered owners of three parcels of land located in Mabalacat, Pampanga. The
properties, which were tenanted agricultural lands, were administered by Renato Espinosa for the owner.

On March 17, 1996, a group of original farmers/tillers executed in favor of the petitioner separate Deeds of
Assignment in which the assignees assigned to the petitioner their respective rights as tenants/tillers of the
landholdings possessed and tilled by them for and in consideration of P50.00 per square meter.

12
On August 19, 1996, the petitioner filed a complaint with the Regional Trial Court of San Fernando, Pampanga,
Branch 44, against the defendants-tenants, as well as the respondents, for the court to fix a period within which to
pay the agreed purchase price of P50.00 per square meter to the defendants, as provided for in the Deeds of
Assignment. The petitioner also prayed for a writ of preliminary injunction against the defendants and the
respondents therein.

ISSUES
1. Whether or not Tayag is entitled for the writ of preliminary injunction he prayed for.
2. Whether or not the Lacsons must be restrained to encumber or sell their lands being a registered owner by
virtue of the Deed of Assignment executed by the tenants to Tayag.

RULING
We have reviewed the pleadings of the parties and found that, as contended by the respondents, the petitioner
failed to establish the essential requisites for the issuance of a writ of preliminary injunction. Hence, the trial court
committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in denying the respondents
comment/motion as well as their motion for reconsideration.

First. The trial court cannot enjoin the respondents, at the instance of the petitioner, from selling, disposing of and
encumbering their property. As the registered owners of the property, the respondents have the right to enjoy and
dispose of their property without any other limitations than those established by law, in accordance with Article
428 of the Civil Code. The right to dispose of the property is the power of the owner to sell, encumber, transfer,
and even destroy the property. Ownership also includes the right to recover the possession of the property
from any other person to whom the owner has not transmitted such property, by the appropriate action for
restitution, with the fruits, and for indemnification for damages.38 The right of ownership of the respondents is not,
of course, absolute. It is limited by those set forth by law, such as the agrarian reform laws. Under Article 1306 of
the New Civil Code, the respondents may enter into contracts covering their property with another under such
terms and conditions as they may deem beneficial provided they are not contrary to law, morals, good conduct,
public order or public policy.

The respondents cannot be enjoined from selling or encumbering their property simply and merely because they
had executed Deeds of Assignment in favor of the petitioner, obliging themselves to assign and transfer their
rights or interests as agricultural farmers/laborers/sub-tenants over the landholding, and granting the petitioner the
exclusive right to buy the property subject to the occurrence of certain conditions. The respondents were not
parties to the said deeds. There is no evidence that the respondents agreed, expressly or impliedly, to the said
deeds or to the terms and conditions set forth therein. Indeed, they assailed the validity of the said deeds on their
claim that the same were contrary to the letter and spirit of P.D. No. 27 and Rep. Act No. 6657.

We are one with the Court of Appeals in its ruling that:

We cannot see our way clear on how or why injunction should lie against petitioners. As owners of the lands being
tilled by TIAMSON, et al., petitioners, under the law, have the right to enjoy and dispose of the same. Thus, they
have the right to possess the lands, as well as the right to encumber or alienate them. This principle of law
notwithstanding, private respondent in the lower court sought to restrain the petitioners from encumbering and/or
alienating the properties covered by TCT No. 35922-R, 35923-R and TCT No. 35925-R of the Registry of Deeds
of San Fernando, Pampanga. This cannot be allowed to prosper since it would constitute a limitation or restriction,
not otherwise established by law on their right of ownership, more so considering that petitioners were not even
privy to the alleged transaction between private respondent and TIAMSON, et al.

There is no showing in the petitioners complaint that the respondents had agreed to sell their property, and that
the legal impediments to the agreement no longer existed. The petitioner and the defendants-tenants had yet to
submit the Deeds of Assignment to the Department of Agrarian Reform which, in turn, had to act on and approve
or disapprove the same. In fact, as alleged by the petitioner in his complaint, he was yet to meet with the
defendants-tenants to discuss the implementation of the deeds of assignment. Unless and until the Department of
Agrarian Reform approved the said deeds, if at all, the petitioner had no right to enforce the same in a court of law
by asking the trial court to fix a period within which to pay the balance of the purchase price and praying for
injunctive relief.

SECTION 11. Lessees Right of Pre-emption. In case the agricultural lessor desires to sell the landholding, the
agricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions:
Provided, That the entire landholding offered for sale must be pre-empted by the Land Authority if the landowner

13
so desires, unless the majority of the lessees object to such acquisition: Provided, further, That where there are
two or more agricultural lessees, each shall be entitled to said preferential right only to the extent of the area
actually cultivated by him.

Under Section 12 of the law, if the property was sold to a third person without the knowledge of the tenants
thereon, the latter shall have the right to redeem the same at a reasonable price and consideration. By assigning
their rights and interests on the landholding under the deeds of assignment in favor of the petitioner, the
defendants-tenants thereby waived, in favor of the petitioner, who is not a beneficiary under Section 22 of Rep.
Act No. 6657, their rights of preemption or redemption under Rep. Act No. 3844.

15. MWSS vs. ACT THEATER, INC.

G. R. No. 147076 June 17, 2004

FACTS
On September 22, 1988, four employees of the respondent Act Theater, Inc., namely, Rodolfo Tabian, Armando
Aguilar, Arnel Concha and Modesto Ruales, were apprehended by members of the Quezon City police force for
allegedly tampering a water meter in violation of P.D. No. 401, as amended by B.P. Blg. 876. The respondents
employees were subsequently criminally charged (Criminal Case No. Q-89-2412) before the court a quo. On
account of the incident, the respondents water service connection was cut off. Consequently, the respondent filed
a complaint for injunction with damages (Civil Case No. Q-88-768) against the petitioner MWSS.

In the civil case, the respondent alleged in its complaint filed with the court a quo that the petitioner acted
arbitrarily, whimsically and capriciously, in cutting off the respondents water service connection without prior
notice. Due to lack of water, the health and sanitation, not only of the respondents patrons but in the surrounding
premises as well, were adversely affected. The respondent prayed that the petitioner be directed to pay damages.

ISSUE
Whether or not the act of MWSS in cutting respondents water service is within the bounce of law.

RULING
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of disconnecting the water supply of
the respondent without prior notice, reads:

Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and
disposal thereof. For this purpose, he may use such force as may be reasonable to repel or prevent an actual or
threatened unlawful physical invasion or usurpation of his property.

A right is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law, or recognized
as a result of long usage, constitutive of a legally enforceable claim of one person against the other.

Concededly, the petitioner, as the owner of the utility providing water supply to certain consumers including the
respondent, had the right to exclude any person from the enjoyment and disposal thereof. However, the exercise
of rights is not without limitations. Having the right should not be confused with the manner by which such right is
to be exercised.

Article 19 of the Civil Code precisely sets the norms for the exercise of ones rights:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong
is committed for which actor can be held accountable. In this case, the petitioner failed to act with justice and give
the respondent what is due to it when the petitioner unceremoniously cut off the respondents water service
connection.

16. NATIVIDAD V. ANDAMO vs. INTERMEDIATE APPELLATE COURT

G. R. No. 74761 November 6, 1990

FACTS
Petitioner spouses Emmanuel and Natividad Andamo are the owners of a parcel of land situated in Biga (Biluso)

14
Silang, Cavite which is adjacent to that of private respondent, Missionaries of Our Lady of La Salette, Inc., a
religious corporation.

Within the land of respondent corporation, waterpaths and contrivances, including an artificial lake, were
constructed, which allegedly inundated and eroded petitioners' land, caused a young man to drown, damaged
petitioners' crops and plants, washed away costly fences, endangered the lives of petitioners and their laborers
during rainy and stormy seasons, and exposed plants and other improvements to destruction.

On February 22, 1983, petitioners filed another action against respondent corporation, this time a civil case,
docketed as Civil Case No. TG-748, for damages with prayer for the issuance of a writ of preliminary injunction
before the same court.

ISSUE
whether a corporation, which has built through its agents, waterpaths, water conductors and contrivances within
its land, thereby causing inundation and damage to an adjacent land, can be held civilly liable for damages under
Articles 2176 and 2177 of the Civil Code on quasi-delicts such that the resulting civil case can proceed
independently of the criminal case.

RULING
While the property involved in the cited case belonged to the public domain and the property subject of the instant
case is privately owned, the fact remains that petitioners' complaint sufficiently alleges that petitioners have
sustained and will continue to sustain damage due to the waterpaths and contrivances built by respondent
corporation. Indeed, the recitals of the complaint, the alleged presence of damage to the petitioners, the act or
omission of respondent corporation supposedly constituting fault or negligence, and the causal connection
between the act and the damage, with no pre-existing contractual obligation between the parties make a clear
case of a quasi delict or culpa aquiliana.

It must be stressed that the use of one's property is not without limitations. Article 431 of the Civil Code provides
that "the owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person." SIC
UTERE TUO UT ALIENUM NON LAEDAS. Moreover, adjoining landowners have mutual and reciprocal duties
which require that each must use his own land in a reasonable manner so as not to infringe upon the rights and
interests of others. Although we recognize the right of an owner to build structures on his land, such structures
must be so constructed and maintained using all reasonable care so that they cannot be dangerous to adjoining
landowners and can withstand the usual and expected forces of nature. If the structures cause injury or damage
to an adjoining landowner or a third person, the latter can claim indemnification for the injury or damage suffered.

17. CANDELARIA Q. DAYOT vs. SHELL CHEMICAL CO. (PHILS.), INC.

G. R. NO. 156542 JUNE 26, 2007

FACTS
On April 20, 1982, Panay Railways, Inc. (PRI) executed a real estate mortgage contract over six parcels of land
located in Lapuz District, Iloilo City in favor of Traders Royal Bank (TRB) for purposes of securing its loan
obligations to TRB.

PRI failed to pay its loan. As a consequence, the mortgaged properties were foreclosed and sold at public auction
to TRB as the highest bidder. PRI failed to redeem the foreclosed properties. Hence, TRB consolidated its
ownership over the subject parcels of land and, thereafter, certificates of title were issued in its name.

Thereafter, TRB filed a Petition for Writ of Possession with the RTC of Iloilo City, docketed as LRC CAD. REC.
NO. 1 ILOILO CITY and LRC CAD. REC. NO. 9616 ILOILO CITY.[8] In its Order dated October 22, 1990, the trial
court granted the petition and ordered the issuance of a writ of possession in favor of TRB.[9] However, the writ
was not fully implemented.

On November 20, 1990, TRB sold to spouses Edmundo and Candelaria Dayot (Spouses Dayot), by virtue of a
Deed of Absolute Sale, five parcels of land which are portions of Lots 3834, 1-A and 6153.

Subsequently, on February 5, 1991, Candelaria Dayot (petitioner) filed a Supplemental Pleading before the RTC
of Iloilo City, praying that she, being the transferee of all the rights and interests of TRB over the parcels of land
subject of the Petition for Writ of Possession filed by the latter, be substituted as the new petitioner in LRC CAD.

15
REC. NOS. 1 and 9616, and that an alias writ of possession be issued in her favor.

On August 24, 1994, the spouses Dayot filed with the RTC of Iloilo City, a complaint for Recovery of Ownership
and Possession, Annulment of Documents, Cancellation of Titles, Reconveyance and Damages against TRB,
Petron Corporation (Petron) and herein respondent Shell Chemical Company (Phil.), Inc. (Shell), praying that
Shell be directed to vacate the portion of Lot No. 6153 which it actually possesses and for both Petron and Shell
to surrender ownership and possession of portions of parcels of lands covered separately by TCT Nos. T-47484
and T-94116.

On August 21, 1997, while Civil Case No. 21957 was pending resolution, herein petitioner filed in LRC CAD. REC.
NOS. 1 and 9616 an Amended Supplemental Motion for the Issuance of Writ of Possession, praying that Shell be
ejected from the portion of Lot 6153 which it actually possesses.

ISSUE
Whether or not an ex-parte writ of possession issued pursuant to Act No. 3135, as amended, can be enforced
against a third person who is in actual possession of the foreclosed property and who is not in privity with the
debtor/mortgagor.

RULING
WHEREFORE, the instant petition is DISMISSED. The Decision and Resolution of the Court of Appeals dated
July 30, 2002 and December 23, 2002 in CA-G.R. SP. No. 70696 are AFFIRMED insofar as respondent Shell
Chemical Company (Phils.), Inc. is concerned.

Nonetheless, the Court finds that under applicable laws and jurisprudence, respondent cannot be ejected from the
property by means of an ex-parte writ of possession.

Article 433 of the Civil Code states:

Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The true
owner must resort to judicial process for the recovery of the property.

Under the aforequoted provision, one who claims to be the owner of a property possessed by another must bring
the appropriate judicial action for its physical recovery. The term judicial process could mean no less than an
ejectment suit or reivindicatory action, in which the ownership claims of the contending parties may be properly
heard and adjudicated. In the present case, petitioner had already complied with this procedure by filing Civil
Case No. 21957.

The ex-parte petition for issuance of a possessory writ filed by petitioner's predecessor, TRB, in LRC CAD. REC.
NOS. 1 and 9616, strictly speaking, is not the kind of judicial process contemplated above. Even if the same
may be considered a judicial proceeding for the enforcement of ones right of possession as purchaser in a
foreclosure sale, it is not an ordinary suit filed in court, by which one party sues another for the enforcement or
protection of a right, or the prevention or redress of a wrong.

Thus, in Barican v. Intermediate Appellate Court, this Court held that the obligation of a court to issue a writ of
possession in favor of the purchaser in an extra-judicial foreclosure sale of a mortgaged property ceases to be
ministerial once it is shown that there is a third party in possession of the property who is claiming a right adverse
to that of the mortgagor and that such third party is a stranger to the foreclosure proceedings in which the ex-parte
writ of possession was applied for.

It bears emphasis that an ex-parte petition for issuance of a writ of possession is a non-litigious proceeding
authorized in an extra-judicial foreclosure of mortgage pursuant to Act 3135, as amended.[30] It is brought for the
benefit of one party only, and without notice to, or consent by any person adversely interested.

Furthermore, unlike a judicial foreclosure of real estate mortgage under Rule 68 of the Rules of Court where an
action for foreclosure is brought before the RTC where the mortgaged property or any part thereof is situated, any
property brought within the ambit of Act 3135 is foreclosed by the filing of a petition, not with any court of justice,
but with the office of the sheriff of the province where the sale is to be made. As such, a third person in
possession of an extra-judicially foreclosed property, who claims a right superior to that of the original mortgagor,
is thus given no opportunity to be heard in his claim.[32] It stands to reason, therefore, that such third person may
not be dispossessed on the strength of a mere ex-parte possessory writ, since to do so would be tantamount to
his summary ejectment, in violation of the basic tenets of due process.

16
18. PHILIPPINE NATIONAL BANK VS. COURT OF APPEALS
G. R. No. 135219 January 17, 2002

FACTS
Sometime during the late 70s, the spouses Godofredo and Wilma Monsod obtained a loan in the amount of
P120,000.00 from petitioner Philippine National Bank (PNB). To secure their loan, the Monsods mortgaged to
PNB a parcel of land covered by TCT No. S-84843, located within the Monte Villa de Monsod Subdivision in
Paraaque, Rizal.

Due to Monsods failure to pay their loan obligation, PNB extrajudicially foreclosed the mortgage. At the auction
sale of the subject real property, PNB was declared the highest bidder.

Upon expiration of the redemption period on July 12, 1985, ownership of the property was consolidated in PNB.

On June 23, 1992, PNB filed an Ex-Parte Petition for the Issuance of Writ of Possession with Branch 60 of the
Regional Trial Court of Makati City.

On August 28, 1992, the trial court granted PNBs petition and a writ of possession was issued on October 26,
1992.

On December 11, 1992, respondents Ernesto and Loreto Quintana Austria filed a Motion for Intervention and to
Recall and/or Stop the Enforcement of the Writ of Possession. The Austrias alleged that they are the actual
occupants of the subject lot, which they purportedly bought from the Monsods as early as 1974.

Due to the Austrias refusal to vacate the premises, the sheriff failed to enforce the challenged writ.

ISSUE
Whether or not an ex-parte writ of possession issued pursuant to Act No. 3135, as amended, can be enforced
against a third person who is in actual possession of the foreclosed property and who is not in privity with the
debtor/ mortgagor.

RULING
WHEREFORE, the instant petition is DENIED and the resolution of the Court of Appeals in CA G.R. SP No. 48660
is AFFIRMED.

Petitioner PNB also submits that since it is the registered owner of the property, it is entitled to a writ of
possession as a matter of right. The bank insists that it could rely on the title of the registered land which does not
have any annotation of respondents supposed rights.

On the other hand, respondents assert that the trial court correctly held that the writ of possession can only be
implemented against the debtor/mortgagor and his successors-in-interest. Since respondents acquired their
rights as owners of the property by virtue of a sale made to them by the Monsods prior to the banks mortgage
lien, respondents can not be dispossessed therefrom without due notice and hearing, through the simple
expedient of an ex-parte possessory writ.

We agree with respondents. Under applicable laws and jurisprudence, they can not be ejected from the property
by means of an ex-parte writ of possession.

Thus, in Barican v. Intermediate Appellate Court, we held that the obligation of a court to issue an ex-parte writ of
possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears
that there is a third party in possession of the property who is claiming a right adverse to that of the
debtor/mortgagor. The same principle was inversely applied in a more recent case,[28] where we ruled that a writ
of possession may be issued in an extrajudicial foreclosure of real estate mortgage, only if the debtor is in
possession and no third party had intervened. Although the factual nuances of this case may slightly differ from
the aforecited cases, the availing circumstances are undeniably similar a party in possession of the foreclosed
property is asserting a right adverse to the debtor/mortgagor and is a stranger to the foreclosure proceedings in
which the ex-parte writ of possession was applied for.

It should be stressed that the foregoing doctrinal pronouncements are not without support in substantive law.
Notably, the Civil Code protects the actual possessor of a property, to wit:

17
Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The true
owner must resort to judicial process for the recovery of the property.

Under the aforequoted provision, one who claims to be the owner of a property possessed by another must bring
the appropriate judicial action for its physical recovery. The term judicial process could mean no less than an
ejectment suit or reinvindicatory action, in which the ownership claims of the contending parties may be properly
heard and adjudicated.

An ex-parte petition for issuance of a possessory writ under Section 7 of Act No. 3135 is not, strictly speaking, a
judicial process as contemplated above.
Even if the same may be considered a judicial proceeding for the enforcement of ones right of possession as
purchaser in a foreclosure sale, it is not an ordinary suit filed in court, by which one party sues another for the
enforcement or protection of a right, or the prevention or redress of a wrong.

19. LEONOR DE LOS ANGELES VS. COURT OF APPEALS

G. R. No. 57312 March 5, 1993

FACTS
Leonor, Federico, Adelaida, Jaime and Josefina de los Angeles filed a complaint against Lorenzo, Sabina,
Raymunda, Prudencio, Sixto and Lope Cruz before Court of First Instance (CFI ). The complaint was for
reconveyance and annulment of title of lot subject in the controversy. The petitioners claimed that the subject lot
was inherited by them from their parents. They filed an application for registration of the land before the CFI, and
while it is pending, Domingo Cruz, predecessor-in-interest of the respondents thru fraud succeeded in causing the
issuance of a free patent allegedly including the subject land. Thereafter, Certificate of Title was issued in the
name of private respondents. Petitioners prayed that the Certificate of Title be declared void and the respondents
be ordered to reconvey to them the subject land. On the part of the respondents, they contended that the free
patent and Certificate of Title issued to them were in accordance with the law since they have been in open,
continuous, exclusive and notorious possession and occupation of the subject land for more than 30 years. The
lower court rendered its decision dismissing the complaint. Petitioners then filed an appeal with the Court of
Appeals (CA ) which affirmed in toto the decision of the lower court. Hence, the present petition for review on
certiorari.

ISSUE
Whether the CA erred in upholding the decision rendered by the lower court dismissing the complaint filed by the
petitioners?

RULING
The Supreme Court (SC) ruled in the negative. The SC ruled that in an action to recover, it is not enough that the
property has been identified; the title of the petitioners must also be strong. The SC further contended that the CA
did not err in affirming in toto the decision of the lower court. The weakness of petitioners claim against private
respondents is inherent in the complaint. The ancient deed of sale acquired by the petitioners showed that the
land described therein is entirely different from the land covered by the Certificate of Title held by the respondents.
The parcel of land mentioned in the Certificate of Title of the respondents does not have the same areas and
boundaries as the parcel of land originally owned by the predecessor-in-interest of the petitioners. On that alone,
petitioners already lost the legal battle over the subject land.

20. JOSE BAGTAS, JR VS. COURT OF APPEALS

G. R. No. 50732 August 10, 1989

FACTS
The petitioner filed with the lower court a petition for recovery of better right of possession with damages against
the respondents. It has been alleged that Felicidad de Bagtas, petitioners mother, was an applicant in November
1927 for a Sales Patent under C.A. No. 141 on the subject land. After having able to fulfill at the legal
requirements, an Original Certificate of Title was issued to her on August 12, 1952. Thereafter, she transferred the
ownership and title of the property to her son, Jose Bagtas, Jr. The petitioner alleged that private respondent
together with other persons entered the land in question since 1951 as trespassers and continued to do so
despite the warning of petitioners representatives. Gregorio Cabanela, who is one of the respondents, submitted
his evidence. He testified that the subject land has been occupied by them since 1947 or earlier, which was then a

18
forested area. He alleged that he did not know of the application for sales patent by the mother of the petitioner.
Respondents pleaded that they tilled the land in their honest belief that it was public land and they have already
introduced considerable improvements for a period of 17 years, and that it would not be easy to leave the fruits of
their labor. The trial court rendered decision ordering the petitioner to reimburse the respondents in the total
amount of P 17, 020.50 representing the reasonable value of their improvements. The petitioner filed an appeal to
the Court of Appeals (CA) which rendered a decision favoring the respondents. Thus, the present recourse.

ISSUE
Whether Gregorio Cabanela was a planter in good faith?

RULING
The Supreme Court ruled in the affirmative. Since petitioner was in bad faith for having tolerated the respondents
in making improvements on his property without positive steps to eject them and even assuming that respondents
were also in bad faith for continuously planting notwithstanding the advice of the overseer of the petitioner, the
rights of one and the other shall be the same as though both acted in good faith. This is based on the fact that the
respondents started occupying the land and planted on the same since 1947, however, they were prohibited from
continuing to do so by the petitioner but they failed to heed, with this, the respondents were planters in bad faith.
However, the petitioner acted in bad faith as well, since he instituted a complaint against the respondents only on
1965, this considerable delay in asserting his right before a court is strongly persuasive of the lack of merit of his
claim. Wherefore, the petition is hereby denied.

21. HEIRS OF NICOLAS Y. OROSA vs. THE HON. EUTROPIO MIGRINO

G. R. Nos. 99338-40 February 1, 1993

FACTS
In Maria Mayug Vda. de Cailles v. Dominador Mayuga, et. al., the Court affirmed the decision of the Court of
Appeals in C.A.-G.R. No. 31887-R, confirming ownership over a fifty-three (53) hectare parcel of land located in
Las Pias, Rizal, more particularly referred to as Lot 9 Psu-11411 Amd-2, in favor of one Dominador Mayuga. The
Court also extended the benefit of such confirmation to the latter's successor-in-interest, the late Nicolas Orosa.

After the case was remanded to Branch 151 of the Regional Trial Court, Pasig, where it was originally docketed in
1958 as Land Registration Case ("LRC") No. 2839, the heirs of Nicolas Orosa (petitioners herein) moved for
execution of judgment. This motion was granted by the lower court in its Order dated 25 October 1989, directing
the Land Registration Authority ("LRA") to submit the property's amended technical description for approval.

However, the LRA did not comply with said order because, among others, its records indicated that the property
had previously been decreed in favor of one Jose T. Velasquez, to whom was issued Original Certificate of Title
No. 6122.

On 10 September 1990, Goldenrod, Inc. ("Goldenrod") filed a motion for leave to intervene in the execution
proceeding, alleging an interest in the property which is the subject matter of LRC No. 2839.

Petitioners opposed Goldenrod's motion, without success. The lower court permitted Goldenrod to file its pleading
in intervention through its Order dated 7 December 1990. Petitioners' motion for reconsideration therefrom was
likewise denied in an Order dated 11 April 1991.

ISSUE
Whether Goldenrod has shown in its pleadings in intervention a sufficient legal interest in the land which is the
subject matter of LRC No. 2839

RULING
Goldenrod claims that in 1977, during the pendency of this case before the Court in G.R. No. L-30859, Delta
Motors Corporation (Delta) acquired for value the contingent rights of Nicolas Orosa over the property, as well as
the conflicting claims thereto of one Jose Velasquez. In 1980, the land registration court trying Jose Velasquez'
claims in LRC No. N-5416 excluded therefrom the land referred to as Lot 9 Psu-11411 Amd-2 in G.R. No. L-
30859. Meanwhile, Delta somehow managed to obtain transfer certificates of titles over the land and sold this
acquisition to Goldenrod in 1987. The latter then succeeded in obtaining issuance in its favor of Transfer
Certificates of Title Nos. 4893 and 4901, whose technical descriptions overlapped "big portions" of the land
referred to as Lot 9 Psu-11411 Amd-2 in G.R. No. L-30859. In February 1989, Goldenrod sold the land covered
by said transfer certificates of title to a consortium composed of Fil Estate Management Inc., Arturo Y. Dy,

19
Megatop Realty Development Inc., Peaksun Enterprises and Export Corporation, and Elena D. Jao
("Consortium"). The contract of sale contained an undertaking on Goldenrod's part to "defend the title of the
VENDEES to the property against claims of any third person whatsoever." It is on the basis of this stipulation that
Goldenrod seeks to intervene in the execution Proceedings of LRC
No. 2839.

Taking Goldenrod's own admissions at their face value, it is quite apparent that whatever direct and actual legal
interest it may have had over the land had been disposed of by it for value in favor of the consortium in 1989 and
that whatever residual legal interest in the property can be premised on Goldenrod's contractual undertaking,
actually an express warranty against eviction, is expectant or contingent in nature. Presently, Goldenrod has no
legal interest in the property and its warranty can only be enforced by the consortium if the latter is dispossessed
of the land by virtue of a proper action instituted by the Orosa heirs as registered owners thereof.

But, the legal interest which entitles a person to intervene in a suit must be actual and material, direct and
immediate. A party seeking to intervene in a pending case must show that he will either gain or lose by the direct
legal operation and effect of a judgment.
In the present case, Goldenrod has failed to meet this criteria and the lower court gravely abused its discretion in
permitting intervention after having overlooked this matter.

22. REBECCA BOYER-ROXAS and GUILLERMO ROXAS vs. HON. COURT OF APPEALS
G. R. NO. 100866 JULY 14, 1992

FACTS
In two (2) separate complaints for recovery of possession filed with the Regional Trial Court of Laguna against
petitioners Rebecca Boyer-Roxas and Guillermo Roxas respectively, respondent corporation, Heirs of Eugenia V.
Roxas, Inc., prayed for the ejectment of the petitioners from buildings inside the Hidden Valley Springs Resort
located at Limao, Calauan, Laguna allegedly owned by the respondent corporation.

In the case of petitioner Rebecca Boyer-Roxas (Civil Case No-802-84-C), the respondent corporation alleged that
Rebecca is in possession of two (2) houses, one of which is still under construction, built at the expense of the
respondent corporation; and that her occupancy on the two (2) houses was only upon the tolerance of the
respondent corporation.

In the case of petitioner Guillermo Roxas (Civil Case No. 803-84-C), the respondent corporation alleged that
Guillermo occupies a house which was built at the expense of the former during the time when Guillermo's father,
Eriberto Roxas, was still living and was the general manager of the respondent corporation; that the house was
originally intended as a recreation hall but was converted for the residential use of Guillermo; and that Guillermo's
possession over the house and lot was only upon the tolerance of the respondent corporation.

In both cases, the respondent corporation alleged that the petitioners never paid rentals for the use of the
buildings and the lots and that they ignored the demand letters for them to vacate the buildings.
In their separate answers, the petitioners traversed the allegations in the complaint by stating that they are heirs
of Eugenia V. Roxas and therefore, co-owners of the Hidden Valley Springs Resort; and as co-owners of the
property, they have the right to stay within its premises.

The cases were consolidated and tried jointly.

Upon motion of the plaintiff respondent corporation, Presiding Judge Francisco Ma. Guerrero of Branch 34 issued
an Order dated April 25, 1986 inhibiting himself from further trying the case. The cases were re-raffled to Branch
37 presided by Judge Odilon Bautista. Judge Bautista continued the hearing of the cases.

For failure of the petitioners (defendants below) and their counsel to attend the October 22, 1986 hearing despite
notice, and upon motion of the respondent corporation, the court issued on the same day, October 22, 1986, an
Order considering the cases submitted for decision. At this stage of the proceedings, the petitioners had not yet
presented their evidence while the respondent corporation had completed the presentation of its evidence. The
petitioners appealed the decision to the Court of Appeals. However, as stated earlier, the appellate court affirmed
the lower court's decision. The Petitioners' motion for reconsideration was likewise denied. Hence, this petition.
.
ISSUE
Respondent Court erred when it refused to pierce the veil of corporate fiction over private respondent and

20
maintain the petitioners in their possession and/or occupancy of the subject premises considering that petitioners
are owners of aliquot part of the properties of private respondent. Besides, private respondent itself discarded the
mantle of corporate fiction by acts and/or omissions of its board of directors and/or stockholders.

RUlLING
In the first assignment of error, the petitioners maintain that their possession of the questioned properties must be
respected in view of their ownership of an aliquot portion of all the properties of the respondent corporation being
stockholders thereof. They propose that the veil of corporate fiction be pierced, considering the circumstances
under which the respondent corporation was formed.

Originally, the questioned properties belonged to Eugenia V. Roxas. After her death, the heirs of Eugenia V.
Roxas, among them the petitioners herein, decided to form a corporation Heirs of Eugenia V. Roxas,
Incorporated (private respondent herein) with the inherited properties as capital of the corporation. The
corporation was incorporated on December 4, 1962 with the primary purpose of engaging in agriculture to develop
the inherited properties. The Articles of Incorporation of the respondent corporation were amended in 1971 to
allow it to engage in the resort business. Accordingly, the corporation put up a resort known as Hidden Valley
Springs Resort where the questioned properties are located.

These facts, however, do not justify the position taken by the petitioners. The respondent is a bona fide
corporation. As such, it has a juridical personality of its own separate from the members composing it. There is no
dispute that title over the questioned land where the Hidden Valley Springs Resort is located is registered in the
name of the corporation. The records also show that the staff house being occupied by petitioner Rebecca Boyer-
Roxas and the recreation hall which was later on converted into a residential house occupied by petitioner
Guillermo Roxas are owned by the respondent corporation.

The petitioners' stay within the questioned properties was merely by tolerance of the respondent corporation in
deference to the wishes of Eufrocino Roxas, who during his lifetime, controlled and managed the corporation.
Eufrocino Roxas' actions could not have bound the corporation forever. The petitioners have not cited any
provision of the corporation by-laws or any resolution or act of the Board of Directors which authorized Eufrocino
Roxas to allow them to stay within the company premises forever. We rule that in the absence of any existing
contract between the petitioners and the respondent corporation, the corporation may elect to eject the petitioners
at any time it wishes for the benefit and interest of the respondent corporation.

The petitioners' suggestion that the veil of the corporate fiction should be pierced is untenable. The separate
personality of the corporation may be disregarded only when the corporation is used "as a cloak or cover for fraud
or illegality, or to work injustice, or where necessary to achieve equity or when necessary for the protection of the
creditors. The construction of the unfinished building started when Eriberto Roxas, husband of Rebecca Boyer-
Roxas, was still alive and was the general manager of the respondent corporation. The couple used their own
funds to finance the construction of the building. The Board of Directors of the corporation, however, did not object
to the construction. They allowed the construction to continue despite the fact that it was within the property of the
corporation. Under these circumstances, we agree with the petitioners that the provision of Article 453 of the Civil
Code should have been applied by the lower courts.

Article 453 of the Civil Code provides:

If there was bad faith, not only on the part of the person who built, planted or sown on the land of another but also
on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted
in good faith.

In such a case, the provisions of Article 448 of the Civil Code govern the relationship between petitioner Rebecca-
Boyer-Roxas and the respondent corporation, to wit:
Art. 448 The owner of the land on which anything has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting after payment of the indemnity provided for in
articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the
land does not choose to appropriate the buildings 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.

WHEREFORE, the present petition is partly GRANTED. The questioned decision of the Court of Appeals affirming
the decision of the Regional Trial Court of Laguna, Branch 37, in RTC Civil Case No. 802-84-C is MODIFIED in
that subparagraphs (c) and (d) of Paragraph 1 of the dispositive portion of the decision are deleted. In their stead,

21
the petitioner Rebecca Boyer-Roxas and the respondent corporation are ordered to follow the provisions of Article
448 of the Civil Code as regards the questioned unfinished building in RTC Civil Case No. 802-84-C. The
questioned decision is affirmed in all other respects.

23. HEIRS OF JAIME BINUYA vs. COURT OF APPEALS

G. R. No. 100493 July 23, 1992

FACTS
Petitioners' father, Jaime Binuya, was the registered owner of a parcel of land located along P. Garcia Street,
Kalookan City. He leased out a portion thereof to private respondent Dungao for 10 years commencing from April
1, 1968 with a monthly rental of 20 pesos, who constructed thereon a residential house. In 1973, Carpio bought
one of two houses of Jaime and leased the portion of the lot occupied by the house for a period of ten years
commencing on June 22, 1973 for 20 pesos . Both contracts were in writing.

After the expiration of the contract both respondents were allowed to stay on the premises on a monthly basis.

Upon failure to pay rental after March 1989, an amicable settlement was attemped but failed therefore Jaime
Binuya filed Civil Cases 195587 and 19588 for Ejectment in which the Metropolitan Trial Court ruled for Jaime
Binuya .

Respondents appealed from said Decision to the Regional Trial Court whereby appealed decision was affirmed,
subject to the modification that the eviction shall be effected after defendants shall have been reimbursed or paid
by plaintiff for the value of their houses aforementioned. This order requiring plaintiff to reimburse defendants for
the value of the latter's houses is founded on its conclusion that private respondents are builders in good faith.

ISSUE
Whether or not the respondents are entitled to the reimbursement of their respective houses existing on the lots
from where they are now being evicted.

RUlLING
This principle of possessor in good faith naturally cannot apply to a lessee because as such lessee he knows that
he is not the owner of the leased property. Neither can he deny the ownership or title of the lessor.

It must be remembered that one of the conclusive presumptions in Section 2, Rule 131 of the Rules of Court is
that "[T]he tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation
of landlord and tenant between them."

In contracts of lease, the matter of improvements introduced by the lessee is specifically governed by Article 1678
of the new Civil Code which reads:

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 new Civil code allows indemnity, to the extent of one-half (1/2) of the value of the useful improvements, if the
lessor chooses to retain them. In short, it is the lessor who has the option to pay for one-half (1/2) the value of the
improvements.

The lessee does not have the right to demand that he be paid therefor. For if the lessor refuses "to reimburse said
amount", the only remedy available to the lessee is to "remove the improvements, even though the principal thing
may suffer damage thereby," provided, however, that he should not "cause any more impairment upon the
property leased than is necessary". Also, not being a possessor in good faith, and therefore, not entitled to the
benefits of Article 546 of the new Civil Code, the lessee does not have the right of retention over his

22
improvements until he is reimbursed one-half (1/2) of the value of the useful improvements. Petition granted.

24. RODOLFO MORALES vs. COURT OF APPEALS

G. R. No. 117228 June 19, 1997

FACTS
On July 8, 1948, Celso Avelino purchased the land in question consisting of two adjoining parcels while he was
still a bachelor and the City Fiscal of Calbayog City from Alejandra Mendiola and Celita Bartolome, through a
Escritura de Venta . After the purchase, he caused the transfer of the tax declarations of the two parcels in his
name as well as consolidated into one the two tax declarations in his name . With the knowledge of the
Intervenor and the defendant, Celso Avelino caused the survey of the premises in question, in his name, by the
Bureau of Lands . He also built his residential house .

When the two-storey residential house was finished, he took his parents, Rosendo Avelino and Juana Ricaforte,
and his sister, Aurea, who took care of the couple, to live there until their deaths. He also declared this residential
house in his tax declaration to the premises in question and paid the corresponding realty taxes, keeping intact
the receipts which he comes to get or Aurea would go to Cebu to give it to him .

Celso, after being City Fiscal of Calbayog, became an Immigration Officer and later a Judge of the CFI in Cebu
with his sister, Aurea, taking care of the premises in question. While he was already in Cebu, the defendant,
without the knowledge and consent of the former, constructed a small beauty shop in the premises in question.

Plaintiffs Ortiz were offered by Celso to buy the premises in question, they examined the premises in question and
talked with the defendant about that fact, and later on bought it and paid the purchased price with the agreement
that defendant will vacate the premises as soon as his uncle will notify him to do so.

However, despite due notice from his uncle to vacate the premises in question the defendant refused to vacate or
demolish the beauty shop unless he is reimbursed P35,000.00 for it although it was valued at less than
P5,000.00. So, the Plaintiffs demanded, orally and in writing to vacate the premises. The defendant refused.

ISSUES
1. Is Celso Avelina the true owner of the property in question or is he merely a trustee for his parents and siblings
(trust
property) ?
2. Was Rodolfo Morales a builder in good faith?

RULING
A trust is the legal relationship between one person having an equitable ownership in property and another person
owning the legal title to such property, the equitable ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter.The characteristics of a trust are:
1. It is a relationship;
2. it is a relationship of fiduciary character;
3. it is a relationship with respect to property, not one involving merely personal duties;
4. it involves the existence of equitable duties imposed upon the holder of the title to the property to deal
with it
for the benefit of another; and
5. it arises as a result of a manifestation of intention to create the relationship.

In the instant case, petitioners theory is that Rosendo Avelino owned the money for the purchase of the property
and he requested Celso, his son, to buy the property allegedly in trust for the former. The fact remains, however,
that title to the property was conveyed to Celso. Accordingly, the situation is governed by or falls within the
exception under the third sentence of Article 1448, which for convenience we quote:

However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the
price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.

On this basis alone, the case for petitioners must fall. The preponderance of evidence, as found by the trial court
and affirmed by the Court of Appeals, established positive acts of Celso Avelino indicating, without doubt, that he
considered the property he purchased from the Mendiolas as his exclusive property. He had its tax declaration
transferred in his name, caused the property surveyed for him by the Bureau of Lands, and faithfully paid the

23
realty taxes. Finally, he sold the property to private respondents.

Petitioners ere not able to prove the existence of an implied trust as the court ruled in the negative.. Priscilas
justification for her and her sisters failure to assert co-ownership of the property based on the theory of implied
trust is, to say the least, flimsy. In light of their assertion that Celso Avelino did not have actual possession of the
property because he was away from Calbayog continuously for more than 30 years until he died on October 31,
1987,and the established fact that the tax declarations of the property were in Celsos name and the latter paid
the realty taxes thereon, there existed no valid and cogent reason why Priscila and her sisters did not do anything
to have their respective shares in the property conveyed to them after the death of Rosendo Avelino in
1980. Neither is there any evidence that during his lifetime Rosendo demanded from Celso that the latter convey
the land to the former, which Rosendo could have done after Juanas death on 31 May 1965. This omission was
mute and eloquent proof of Rosendos recognition that Celso was the real buyer of the property in 1948 and the
absolute and exclusive owner thereof.

Article 448 applies only when the builder, planter or sower believes he has the right to so build, plant or sow
because he thinks he owns the land or believes himself to have a claim of title. In the instant case Rodolfo
Morales knew from the very beginning that he was not the owner of the land. He alleged in his answer that the
land was acquired by his grandparents Rosendo Avelino and Juana Ricaforte and he constructed the shop
building in 1979 upon due permission and financial assistance from his mother, Priscila A. Morales and from his
aunts Trinidad A. Cruz and Concepcion A. Peralta ,with the knowledge and consent of his uncle Celso Avelino.

Petitioners contention that even if assuming Rodolfo Morales was a builder in bad faith, the consent o Celso
Avelino is considered bad faith on the landowner and they shall both be considered to have acted in good faith
was rejected by the court for it was clearly self-serving and inconsistent with petitioners vigorous insistence that
Celso Avelino was away from Calbayog City continuously for more than 30 years until he died. The circumstances
of when and where allegedly the consent was given are unclear. Second, only Celso Avelino could have rebutted
it; but the testimony was given after Avelinos death, thus forever sealing his lips. Reason and fairness demand
that the attribution of an act to a dead man must be viewed with utmost caution. Finally, having insisted with all
vigor that the land was acquired by Rosendo Avelino and Juanita Ricaforte, it would be most unlikely that Rodolfo
would have taken the trouble of securing Celsos consent, who had been continuously away from Calbayog City
for more than 30 years, for the construction of the shop building.

25. SPS. DARIO LACAP & MATILDE LACAP VS. JOUVET ONG LEE
G. R. No. 142131 December 11, 2002

FACTS
Victor Facundo mortgaged two parcels of land and the improvements to Monte de Piedad Savings Bank.
Petitioner spouses Dario and Matilde Lacap assumed to pay Facundos mortgage obligation to the bank. For
failure to pay their obligation to the bank, the latter foreclosed on the mortgage. During the auction sale, the bank
emerged as the highest bidder and title passed on to it.

The bank allowed the petitioner spouses to stay in the premises as lessees. The petitioner spouses introduced
improvements thereon after relying on the banks assurance that the property would be sold back to them. Later,
the petitioner spouses representative went to the bank to pay the monthly rental. However, the bank refused to
accept the rentals inasmuch as, according to the bank, the property had already been sold to Jouvet Ong Lee.
When the petitioner spouses called the banks head office, the bank advised them to submit a written offer. The
petitioner spouses complied that same day. But the bank turned down the petitioner spouses offer. The petitioner
spouses received a letter demanding that they vacate the premises.

The petitioner spouses instituted a civil case against the respondent for cancellation of sale and damages with an
application for preliminary injunction. The respondent filed a complaint for unlawful detainer against the
petitioners. After trial, the court rendered in favor of the plaintiff and against the defendants. On appeal, the RTC
affirmed the assailed decision of the municipal trial court, with the modification that respondent should reimburse
the petitioner spouses for the improvements the latter introduced to the premises. The respondent filed a motion
for reconsideration praying for the deletion of the order to reimburse petitioner spouses for the improvements
introduced on the subject premises.

ISSUE
Whether or not petitioner spouses are entitled to be paid on the value of the useful improvements at the time of
the termination of the lease or to have the said improvements removed if the respondent refuses to reimburse

24
them.

RULING
The court ruled that the petitioner spouses are entitled to be paid only one-half of the value of the useful
improvements at the time of the termination of the lease or to have the said improvements removed if the
respondent refuses to reimburse them.

Article 528 of the Civil Code provides that possession in good faith continues to subsist until facts exist which
show that the possessor is already aware that he wrongfully possesses the thing. Although, in the beginning, the
petitioners were made to believe that they had a claim of title over the said property by assuming the mortgage
and possessing the subject property, all this changed when they started paying monthly rentals to the mortgagee
bank after the foreclosure of the said property. We find this finding of the courts a quo conclusive on us in this
petition for review.

A conclusive presumption arises from the fact that, during the tenancy relationship, the petitioner spouses
admitted the validity of the title of their landlord. This negated their previous claim of title. If, indeed, they believed
in good faith they had at least an imperfect title of dominion over the subject premises, they should have tried to
prevent the foreclosure and objected to the acquisition of title by the bank. In other words, their supposed belief in
good faith of their right of dominion ended when the bank foreclosed and acquired title over the subject premises.

Hence, the applicable provision in the instant case is Article 1678 of the Civil Code which provides that:

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 cause to the principal thing, and the lessor does not choose to
retain them by paying their value at the time the lease is extinguished.

26. NATIONAL HOUSING AUTHORITY VS. GRACE BAPTIST CHURCH & CA

G. R. No. 156437 March 1, 2004

FACTS
Grace Baptist Church wrote a letter to petitioner NHA, manifesting its interest in acquiring Lots 4 and 17 in Cavite.
Respondent entered into possession of the lots and introduced improvements thereon. Later, the NHAs Board of
Directors passed Resolution No. 2126, approving the sale of the subject lots to respondent Church at the price of
P700.00 per square meter. The Church was duly informed of this Resolution through a letter sent by NHA.

The Church tendered to the NHA a check in the amount of P55,350.00, purportedly in full payment of the subject
properties. The Church insisted that this was the price quoted to them by the NHA Field Office, as shown by an
unsigned piece of paper with a handwritten computation scribbled thereon. Petitioner NHA returned the check,
stating that the amount was insufficient considering that the price of the properties have changed. The Church
made several demands on the NHA to accept their tender of payment, but the latter refused. Thus, the Church
instituted a complaint for specific performance and damages against the NHA with RTC.

On appeal, CA affirmed the trial courts finding that there was indeed no contract of sale between the parties.
However, petitioner was ordered to execute the sale of the lots to Grace Baptist Church.

The appellate court ruled that the NHAs Resolution No. 2126, which earlier approved the sale of the subject lots
to Grace Baptist Church at the price of P700.00 per square meter, has not been revoked at any time and was
therefore still in effect. As a result, the NHA was estopped from fixing a different price for the subject properties.
Considering further that the Church had been occupying the subject lots and even introduced improvements
thereon, the Court of Appeals ruled that, in the interest of equity, it should be allowed to purchase the subject
properties.

Petitioner submits that the Court cannot compel it to sell the subject property to Grace Baptist Church without
violating its freedom to contract. Moreover, it contends that equity should be applied only in the absence of any

25
law governing the relationship between the parties, and that the law on sales and the law on contracts in general
apply to the present case.

Petitioner NHA filed a Motion for Reconsideration which was denied in a Resolution. Hence, the instant petition for
review.

ISSUE
Whether or not NHA can be compelled to sell the subject lots to Grace Baptist Church in the absence of any
perfected contract of sale between the parties?

RULING
The Court finds merit in petitioners petition. Petitioner NHA is not estopped from selling the subject lots at a price
equal to their fair market value, even if it failed to expressly revoke Resolution No. 2126. It is a principle that
estoppel does not operate against the Government for the act of its agents, or inaction.

The mere inexistence of a contract, which would ordinarily serve as the law between the parties, does not
automatically authorize disposing of a controversy based on equitable principles alone. Notwithstanding the
absence of a perfected contract between the parties, their relationship may be governed by other existing laws
which provide for their reciprocal rights and obligations. It must be remembered that contracts in which the
Government is a party are subject to the same rules of contract law which govern the validity and sufficiency of
contract between individuals.

This case involves an unperfected contract, the Civil Law principles governing contracts should apply. The offer
of the NHA to sell the subject property, as embodied in Resolution No. 2126, was similarly not accepted by the
respondent. Thus, the alleged contract involved in this case should be more accurately denominated as
inexistent. There being no concurrence of the offer and acceptance, it did not pass the stage of generation to the
point of perfection. As such, it is without force and effect from the very beginning.

The Church, despite knowledge that its intended contract of sale with the NHA had not been perfected, proceeded
to introduce improvements on the disputed land. On the other hand, the NHA knowingly granted the Church
temporary use of the subject properties and did not prevent the Church from making improvements thereon. Thus,
the Church and the NHA, who both acted in bad faith, shall be treated as if they were both in good faith. In this
connection, Article 448 of the Civil Code provides:

The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546
and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to buy the land and 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.

27. PEDRO P. PECSON vs. COURT OF APPEALS

G. R. No. 115814 May 26, 1995

FACTS
Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street , Quezon City , on which
he built a four-door two-storey apartment building. For his failure to pay realty taxes, the lot was sold at public
auction by the city Treasurer of Quezon City to Mamerto Nepomuceno who in turn sold it to the private
respondents, the spouses Juan Nuguid and Erlinda Tan-Nuguid.

The petitioner challenged the validity of the auction sale. The RTC dismissed the complaint. It held that there
was no legal basis for the contention that the apartment building was included in the sale.

Both parties then appealed the decision to the Court of Appeals. The Court of Appeals affirmed in toto the
assailed decision. It also agreed with the trial court that the apartment building was not included in the auction
sale of the commercial lot.

Private respondents filed with the trial court a motion for delivery of possession of the lot and the apartment
building, citing article 546 of the Civil Code. The court granted reimbursement to plaintiff the amount of

26
construction cost, and that he is entitled to immediate issuance of writ of possession.

ISSUE
Whether or not Articles 448 and 456 apply in this case.

RULING
Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later
loses ownership of the land by sale or donation.

The trial court erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentals paid by the
lessees of the apartment building. Since the private respondents have opted to appropriate the apartment
building, the petitioner is thus entitled to the possession and enjoyment of the apartment building, until he is paid
the proper indemnity, as well as of the portion of the lot where the building has been constructed. This is so
because the right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or
possession in fact of the land on which it is built, planted or sown. The petitioner not having been so paid, he was
entitled to retain ownership of the building and, necessarily, the income therefrom.

The case is remanded to the trial court for it to determine the current market value of the apartment building on
the lot. The value so determined shall be forthwith paid by the private respondents to the petitioner otherwise the
petitioner shall be restored to the possession of the apartment building until payment of the required indemnity.

28. RAFEAL BENITEZ vs. COURT OF APPEALS

G. R. No. 104828 January 16, 1997

FACTS
Petitioners Rafael and Avelina Benitez purchased a 303-square-meter parcel of land with improvement from the
Cavite Development Bank.

Subsequently, private respondents Renato and Elizabeth Macapagal bought a 361-square-meter lot. They filed a
case against petitioners for the recovery of possession pf an encroached portion of the lot they purchased.

Another property was bought by private respondents and discovered that some 46.50 square meters of their
property was occupied by petitioners house. Despite verbal and written demands, petiioners refused to vacate.

Private respondents filed an action.

ISSUE
Whether or not the possession of the portion of the private respondents land encroached by petitioners house
can be recovered through an action of ejectment, not accion publiciana.

RULING
The petition lacks merit and should be denied.

Possession can also be acquired, not only by material occupation, but also by the fact that a thing is subject to the
action of ones will or by the proper acts and legal formalities established for acquiring such right. Possession of
land can be acquired upon the execution of the deed of sale thereof by its vendor. Actual or physical occupation
is not always necessary.

Considering that private respondents are unlawfully deprived of possession of the encroached land and that the
action for the recovery of possession thereof was made within the one-year reglementary period, ejectment is the
proper remedy.

Damages are recoverable in ejectment cases under Section 8, Rule 70 of the Revised Rules of Court. It is limited
to rent or fair value for the use and occupation of the property. There is no question that petitioners benefited
from their occupation of a portion of private respondents property. Such benefit justifies the award of the
damages of this kind under the principle that no one shall enrich himself at the expense of another.

Article 448 of the Civil Code is unequivocal that the option to sell the land on which another in good faith builds,
plants or sows on, belongs to the landowner.

27
The lower courts were correct in rejecting the petitioner offer to buy the encroached land. The option to sell, not to
buy, and it is the landowners choice. Not even a declaration of the builder, planter, or sowers bad faith shifts this
option to him per Article 450 of the Civil Code. This advantage in Article 448 is accorded the landowner because
his right is older, and because, by principle of accession, he is entitled to the ownership of the accessory
thing. There can be no preemptive right to buy even as a compromise, as this prerogative belongs solely to the
landowner.

Petitioners cannot be considered in good faith because they bought their property ahead of the private
respondents. Reliance on the presumption in Article 256 of the Code is misplaced in view of the declaration of the
declaration of the respondent Court that petitioners are not builders in good faith.

29. EDEN BALLATAN vs. COURT OF APPEALS

G. R. No. 125683 March 2, 1999

FACTS
Petitioners herein are owners of adjacent lots located at Block No. 3 Poinsettia Street, Araneta University Village,
Malabon, Metro Manila. Lot No. 24, 414 square meters in are, is registered in the name of petitioners Eden
Ballatan and spouses Betty Martinez and Chong Ch Ling. Lots Nos. 25 and 26, with an area of 415 and 313
square meters respectively, are registered in the name of respondent Gonzalo Go, Sr. On Lot No. 25, respondent
Winston Go, son of Gonzalo Go, Sr.., constructed his house. Adjacent to Lot No. 26 is Lot No. 27, 417 square
meters in area, and is registered in the name of respondent Li Ching Yao.

In 1985, petitioner Ballatan constructed her house on Lot No. 24. During the construction, she noticed that the
concrete fence and side pathway of the adjoining house of respondent Winston Go encroached on the entire
length of the eastern side of her property. Her building contractor informed her that the area of her area of her lot
was actually less than that described in the tirle. Forthwith, Ballatan informed respondent Go of this discrepancy
and his encroachment on her property. Respondent Go, however, claimed that his house, including its fence and
pathway, were built within the parameters of his fathers lot; and that this lot was surveyed by Engineer Jose
Quedding, the authorized surveyor of the Araneta Institute of Agriculture (AIA), the owner-developer of the
subdivision project. With this, petitioner Ballatan called the attention of the AIA of the land area in her title and the
actual land area received from them. The AIA authorized another survey of the land by Engineer Jose Quedding.

In the repost made by Engineer Quedding, it was found out that the lot area of petitioner Ballatan was less than by
a few meters and that of respondent Li Ching Yao, which was three lots awaya, increased by two (2) meters. He
made a verification survey of Lots Nos. 25 and 26 of respondents and allegedly found the boundaries to have
been in their proper position but could not explain the reduction in Ballatans area since he was not present at the
time respondents Go constructed their boundary walls. Further, it was found out that Lots No. 25, 26 and 27
moved westward to the eastern boundary of Lot No. 24.

On the basis of the survey, Ballatan made a written demand on respondents Go to remove and dismantle this
improvements on Lot Np. 24 but the latter refused. The parties, including Li Ching Yao met several times to reach
an agreement on the matter but failed to agree amicably, thus, Ballatan brought the issue before the barangay,
where respondents Go did not appear. Thus, petitioner Ballatan instituted against respondent Go a Civil Case for
recovery of possession and the Gos filed their Answer with Third-Party Complaint impleading as third-party
defendants respondents Li Ching Yao, the AIA and Engineer Quedding.

The trial court decide in favor of petitioners, whereby it ordered the Gos to vacate the subject portion of Lot No.
24, demolish their improvements and pay petitioner Ballatan actual damages, attorneys fees and the costs of the
suit. It dismissed the third-party complaint against AIA, Engineer Quedding and Li Ching Yao. However, said
decision was modified by the Court of Appeals upon Gos appeal. Hence, this petition.

ISSUE
Whether or not the Court of Appeals erred when it applied equity or equitable solutions to the instant case in utter
disregard and in violation or gross ignorance of existing laws and jurisprudence vesting basic property rights to
herein petitioners.

RULING
All the parties are presumed to have acted in good faith. Their rights must, therefore be determined in accordance
with the appropriate provisions of the Civil Code on property.

28
Under Article 448 of the Civil Code, the owner of the land on which anything has been built, sown or planted in
good faith shall have the right to appropriate as his own building, planting or sowing, after payment to the builder,
planter, or sower of the necessary and useful expenses, and in the proper case, expenses for pure luxury or mere
pleasure, the owner of the land may also oblige the builder, planter or sower to purchase and pay the price of the
land, otherwise the owner may remove the improvements thereon. The builder, planter or sower, however, is not
obliged to purchase the land if its value is considerably more than the building, planting or sowing. In such case,
the builder, planter or sower must pay the rent to the owner of the land. If the parties cannot come to terms over
the conditions of the lease, the court must fix the terms thereof. The right to choose between appropriating the
improvement stands to the builder, planter, sower, is given to the owner of the land.

In this light, petitioners, as owners of Lot No. 24, may choose to purchase the improvement made by respondents
Go on their land, or sell to respondents Go the subject portion. If buying the improvement is impractical as it may
render the Gos house useless, then petitioners may sell to respondents Go that portion of Lot No. 24 on which
their improvement stands. Of the Gos are unwilling or unable to buy the lot, then they must vacate the land and,
until they vacate, they must pay rent to petitioners. Petitioners, however, cannot compel respondents Go to buy
the land if its value is considerable more than the portion of their house constructed thereon. Of the value of the
land is much more than the Gos improvement, then respondents Go must pay reasonable rent. If they do not
agree on the terms of the lease, then they may go to court to fix the same.

In the event that petitioners elect to sell to respondents Go the subject portion of their lot, the price must be fixed
at the prevailing market value at the time of the payment.

30. PHILIPPINE NATIONAL BANK vs. GENEROSO DE JESUS

G. R. No. 149295 September 23, 2003

FACTS
Respondent filed a complaint against petitioner for recovery of ownership and possession, with damages, over the
questioned property. Respondent alleged that the northern portion of the lot was being encroached upon by a
building of petitioner to the extent of 124 square meters. Despite two letters of demand sent by respondent,
petitioner failed and refused to vacate the area.

Petitioner asserted that when it acquired the lot and the building from then Mayor Bienvenido Ignacio, the
encroachment already was in existence and to remedy the situation, Mayor Ignacio offered to sell the area in
question to petitioner, which offer the latter claimed to have accepted. The sale, however, did not materialize
when, without the knowledge and consent of petitioner, Mayor Ignacio later mortgaged the lot to the Development
Bank of the Philippines .

ISSUE
Whether PNB is a builder in good faith over the encroached property.

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

Given the findings of both the trial court and the appellate court, it should be evident enough that petitioner would
fall much too short from its claim of good faith. Evidently, petitioner was quite aware, and indeed advised, prior to
its acquisition of the land and building from Ignacio that a part of the building sold to it stood on the land not
covered by the land conveyed to it.

Equally significant is the fact that the building, constructed on the land by Ignacio, has in actuality been part of the
property transferred to petitioner. Article 448, of the Civil Code refers to a piece of land whose ownership is
claimed by two or more parties, one of whom has built some works (or sown or planted something) and not to a
case where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by

29
sale or otherwise for, elsewise stated, where the true owner himself is the builder of works on his own land, the
issue of good faith or bad faith is entirely irrelevant.

In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil Code.

31. CABANGIS vs. COURT OF APPEALS

G. R. No. 83722 August 9, 1991

FACTS
The petitioners filed an ejectment case against Gaspar Devis, the deceased father of the private respondent
Elvira Devis Nicandro in the City Court of Manila (now Metropolitan Trial Court) for non-payment of rents of a
parcel of land situated in Tondo, Manila, owned by the Cabangises and leased to Devis. The Court rendered the
decision for the plaintiffs and against the defendant. On appeal to the Court of First Instance (now Regional Trial
Court) the judgment was affirmed. The matter was elevated to the Court of Appeals which likewise affirmed the
decision of the Court of First Instance. Meanwhile, the Metropolitan Trial Court granted the motion of the
petitioners for a writ of execution since the said decision had already become final and executory. However,
before the said writ of execution could be implemented, herein private respondent Elvira Nicandro filed, in the
Regional Trial Court of Manila an action for indemnity of improvements with prayer for the issuance of a writ of
preliminary injunction against the petitioners. The trial court dismissed the complaint and denied Nicandro's
motion for preliminary injunction. On appeal, however, the respondent appellate court reversed the said order of
dismissal while affirming the denial of the issuance of a writ of injunction rederring its decision that plaintiff is not
contesting the decision in the ejectment case against her father but merely praying for the issuance of a cease-
and-desist injunctive writ against the implementation of the decision in the ejectment proceedings and the
consequent removal or demolition of her father's house and improvements on the lot.

ISSUE
1. Whether or not the plaintiff, the private respondent herein, has a cause of action to bring a suit for indemnity of
improvements with injunction against the petitioners.
2. Whether or not her cause of action has been abandoned, waived, barred by prescription, or barred by failure to
seasonably set it up as a compulsory counterclaim.

RULING
Petition is granted. Article 1678 of the Civil Code applies in this case which states that If the lessee makes, in
good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the
form or substance of the property leased, the lessor upon 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.

There is no choice was made neither that the private respondent manifested her desire to remove these
improvements absent any payment of the required indemnity. Her failure to do so, we rule, constitutes a waiver or
abandonment of her right of removal of the improvements. But even if there was no abandonment or waiver of her
right of removal, still she could not later file a complaint for the indemnity of the improvements because that cause
of action had long prescribed, accruing as it did when the petitioners effectively appropriated the improvements
when the lease expired, or even when the ejectment case was filed. The complaint of the private respondent for
indemnity was filed more than sixteen years from the accrual of the cause of action. Hence, the complaint was
filed six years after the expiration of the prescriptive period of ten years as provided in Article 1144. In any event,
well-established is the doctrine that the counterclaim for reimbursement of the useful expenses is in the nature of
a compulsory counterclaim and the failure to set it up in the ejectment suit bars the right to raise it in a subsequent
litigation.

32. FEDERICO GEMENIANO vs. COURT OF APPEALS

G. R. No. 120303 July 24, 1996

FACTS
Lot No. 3765-B-1 was originally owned by the petitioners' mother. On a 12-square-meter portion of that lot stood
the petitioners' unfinished bungalow, which the petitioners sold to the private respondents. 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.

30
The private respondents then introduced additional improvements and registered the house in their names. After
the expiration of the lease contract, 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. Lee sold the lot to
Lily Salcedo, who in turn sold it to the spouses Agustin and Ester Dionisio. The Dionisio spouses executed a Deed
of Quitclaim over the said property in favor of the petitioners. As such, the lot was registered in the latter's name.
The petitioners sent mail addressed to private respondent Mary Nicolas demanding to vacate the premises and
pay the rentals in arrears.. Upon failure of the private respondents to heed the demand, the petitioners filed with
the MTCC a complaint for unlawful detainer and damages. The trial court thus ordered the private respondents to
vacate the premises. On appeal by the private respondents, the RTC reversed the trial court's decision. 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 reimbursed of the
value of the house and improvements with the right of retention until reimbursement and had been made. On
appeal, this time by the petitioners, the Court of Appeals affirmed the decision of the RTC. Hence, the present
petition.

ISSUE
Whether the private respondents are builder in good faith or mere lessees.

RULING
Petition is granted. While the right to let property is an incident of title and possession, a person may be lessor
and occupy the position of a landlord to the tenant although he is not the owner of the premises let. Ownership of
the property is not being transferred, only the temporary use and enjoyment thereof.

It is undisputed that the private respondents came into possession of 126 square-meter portion of the said lot by
virtue of contract of lease executed by the petitioners' mother as lessor, is therefore well-established, and carries
with it a recognition of the lessor's title. 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. This estoppel applies even though the lessor had no title at the time the
relation of lessor and lessee was created, and may be asserted not only by the original lessor, but also by those
who succeed to his title. 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.

33. FLORENCIO IGNAO vs. INTERMEDIATE APPELLATE COURT

G. R. No. 72876 January 18, 1991

FACTS
Baltazar Ignao owned a lot situated in Cavite, with an area of 534 sq. m. He married twice wherein in his first
marriage he had 4 children, namely Justo (the father of Florencio, the petitioner), Leon, Juan and Isidro. In his
second marriage, Baltazar had also 4 children but the latter waived their rights over the controverted land in favor
of Justo. Thus, Justo owned 4/8 of the land which was waived by his half-brothers and sisters plus his 1/8 share
or a total of 5/8.

Thereafter, Justo acquired the 1/8 share of Leon for P500.00 which he later sold to his son Florencio for the same
amount. When Justo died, Florencio inherited the 5/8 share of his father Justo plus his 1/8 share of the land which
he bought or a total of 6/8 (representing 400.5 sq. m.) Juan and Isidro, on the other hand, had 1/8 share (66.75
sq. m.) each of the land or a total of 133.5 sq. m. Thus, Florencio and his uncles Juan and Isidro were co-owners
of a parcel of land.

In 1975, pursuant to an action for partition filed by Florencio Ignao, the then CFI Cavite directed the partition of the
aforesaid land, alloting 133.5 sq. m. or 2/8 thereof to Juan and Isidro, and giving the remaining portion with a total
area of 266.5 sq. m. to petitioner Florencio. However, no actual partition was ever effected.

In 1978, Florencio instituted a complaint for recovery of possession of real property against Juan and Isidro
before the CFI of Cavite. In his complaint, Florencio alleged that the area occupied by the 2 houses built by Juan
and Isidro exceeded the 133.5 sq. m. previously allotted to them by the trial court. An ocular inspection was
conducted by the lower court; which found that the houses of Juan and Isidro actually encroached upon a portion
of the land belonging to Florencio. Upon agreement of the parties, the trial court ordered a licensed geodetic
engineer to conduct a survey to determine the exact area occupied by the houses of Juan and Isidro. The survey

31
subsequently disclosed that the house of Juan occupied 42 sq. m. while that of Isidro occupied 59 sq. m. of
Florencio's land or a total of 101 sq. m. In its decision, the trial court (thru Judge Luis L. Victor) ruled that although
Juan and Isidro occupied a portion of Florencio's property, they should be considered builders in good faith. The
trial court observed that based on the facts of the case, it would be useless and unsuitable for Florencio to
exercise the first option (of appropriating part of the house standing on his lot) since this would render the entire
houses of Juan and Isidro worthless. The trial court then applied the ruling in the similar case of Grana vs. Court
of Appeals, where the Supreme Court had advanced a more "workable solution". Thus, it ordered Florencio to sell
to Juan and Isidro those portions of his land respectively occupied by the latter at P40.00 per sq. m., and to
execute the necessary deed of conveyance to the Juan and Isidro; without pronouncement as to costs. Florencio
appealed to the IAC. On 27 August 1985, the Appellate Court (Second Civil Cases Division), promulgated a
decision, affirming the decision of the trial court.

Hence this petition for review by certiorari, wherein the petitioner seeks the reversal of the decision of the
Intermediate Appellate Court (now Court of Appeals) affirming in toto the decision of the Court of First Instance of
Cavite, ordering petitioner Florencio Ignao to sell to private respondents Juan and Isidro Ignao, that part of his
property where private respondents had built a portion of their houses.

ISSUE
Whether or not the provisions of Article 448 should apply to a builder in good faith on a property held in common

RULING
Article 448 provides:

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

The Supreme Court held that:

Whether or not the provisions of Article 448 should apply to a builder in good faith on a property held in common
has been resolved in the affirmative in the case of Spouses del Campo vs. Abesia, wherein the Court ruled that:

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or
sows on the land owned in common for then he did not build, plant or sow upon land that exclusively belongs to
another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the
situation is governed by the rules of co-ownership.

However, when, as in this case, the ownership is terminated by the partition and it appears that the home of
defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the
defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code should apply.
Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when there is a co-
ownership if good faith has been established.

In other words, when the co-ownership is terminated by a partition and it appears that the house of an erstwhile
co-owner has encroached upon a portion pertaining to another co-owner which was however made in good faith,
then the provisions of Article 448 should apply to determine the respective rights of the parties.

34. CONCEPCION FERNANDEZ DEL CAMPO vs. BERNARD FERNANDEZ ABESIA

G. R. No. L-49219 April 15, 1988

FACTS
Sps. Estanislao and Concepcion del Campo and Bernarda Abesia are co-owners pro indiviso of a lot in Cebu City.
The spouses filed an action for partition with the CFI Cebu. Upon partition by commissioner it was found out that
Abesias house encroached upon the spouses lot with an area of 5 sq.m. The parties asked the trial court to
adjudicate who among the parties should take possession of the 5 sq. m. of the land in question.

The lower court held that Article 448 of the New Civil Code does not apply in the case, and ordered Abesia to

32
demolish at her own expense part of her house.

Abesia appealed to the Court of Appeals, which certified the case to the Supreme Court on account of the
question of law involved.

ISSUE
Whether or not Article 448 of the Civil Code relating to a builder in good faith when the property involved is owned
in common will apply.

RULING
Art. 448 may apply. The SC ordered the spouses to indemnify Abesia for the value of the said portion of the
Abesias house in accordance with Article 546 of the Civil Code, if the spouses elect to appropriate the same.
Otherwise, Abesia shall pay the value at such price as may be agreed upon; and if its value exceeds the portion of
Abesias house, Abesia may instead pay rent for that portion of the spouses land. In case of disagreement, the
rate of rental shall be determined by the trial court. Otherwise, defendants may remove or demolish at their own
expense the said portion of their house.

The provisions of Article 448 of the new Civil Code should apply when the co-ownership is terminated by the
partition, as in the present case, and when it appears that the house of Abesia overlaps or occupies a portion of 5
sq. m. of the land pertaining to the spouses which Abesia obviously built in good faith.

35. TECHNOGAS PHILIPPINES vs. CA

G. R. No. 108894 February 10, 1997

FACTS
The parties in this case are owners of adjoining lots in Paraaque, Metro Manila. It was discovered in a survey,
that a portion of a building of Technogas, which was presumably constructed by its predecessor-in-interest,
encroached on a portion of the lot owned by private respondent Edward Uy.

Upon learning of the encroachment or occupation by its buildings and wall of a portion of private respondents
land,the petitioner offered to buy from defendant that particular portion of Uys land occupied by portions of its
buildings and wall with an area of 770 square meters, more or less, but the latter, however, refused the offer.

CA decided that petitioner was in bad faith and ordered the demolition of the encroaching structure.

ISSUE
WON the petitioner is builder in good faith.

RULING
YES, petitioner was in good faith.

Bad faith cannot be imputed to a registered owner of land when a part of his building encroaches upon a
neighbor's land, simply because he is supposedly presumed to know the boundaries of his land as described in
his certificate of title,

Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the encroachment was
done in bad faith the builder should be presumed to have built them in good faith.

In view of the good faith, the rights and obligations are to be governed by Art. 448.

36. HEIRS OF RAMON DURANO vs. ANGELES SEPULVEDA UY

G. R. No. 136456 October 24, 2000

FACTS
On Aug. 1970, the Uys received notices signed by Durano, Sr. directing them their vacate the land and informing
them that the land they were tilling, formerly owned by Cepco was purchased by Durano & Co. Even before they
could vacate, Durano & Co. proceeded to bulldoze and destroy their property.

On Sept. 15, 1970, Durano & Co. sold the property to Durano III who proceeded to register the lands in his name.

33
Uy later claimed that they were deprived of their independent source of income, were made victims of serious
violence & demanded damages for cost of improvements on the land that were destroyed.

The Duranos moved for the dismissal of their complaint w/c the trial court granted w/o prejudice to the right of Uy,
etc. to maintain their counterclaim. The counterclaim was later upheld and it was affirmed by the CA.

ISSUE
Whether or not Durano III owned the property and a purchaser in good faith.

RULING
Duranos ownership was put into serious doubt by the ff: a) the certificates reveal the lack of registered title of
Cepoc to the Properties; b) alleged reconstituted titles of Cepoc were not produced in evidence; c) deed of sale
between Cepoc & Durano & Co. was unnotarized & thus unregisterable

The purchase of Durano & Co. could not be said to have been in good faith since it is not disputed that Durano III
acquired the property w/ full knowledge of Uys occupancy thereon. Uys action for reconveyance will prosper, it
being clear that the property, wrongfully registered in the name of Durano III, has not passed to an innocent
purchaser for value.

A buyer who could not have failed to know or discover that the land sold to him was in the adverse possession of
another is a buyer in bad faith. A purchaser cannot just close his eyes to facts w/c should put a reasonable man
upon his guard, such as when the subject of the sale is in the possession of persons other than the seller.

37. ALFREDO YASAY DEL ROSARIO vs. SPS. JOSE and CONCORDIA MANUEL
G. R. No. 153652 January 16, 2004

FACTS
On Aug. 12, 1999, spouses Jose and Concordia Manuel, respondents, filed with the Municipal Trial Court, San
Mateo, Rizal a complaint for unlawful detainer against petitioner. They alleged that they are the true and lawful
owners of a lot located at Sta. Ana, San Mateo, Rizal. Because of their compassion, they allowed petitioner,
whose house was destroyed by a strong typhoon, to occupy their lot. They agreed that he could build thereon a
temporary shelter of light materials. But without their consent, what he constructed was a house of concrete
materials.

In 1992, respondents asked petitioner to vacate the lot. This was followed by repeated verbal demands but to no
avail, prompting them to bring the matter to the barangay. But the parties failed to reach an amicable settlement.
In his answer to the complaint, petitioner claimed that sometime in 1968, respondents allowed him to build his
house on the lot, provided he would guard the premises to prevent land grabbers and squatters from occupying
the area.

ISSUE
Whether or not petitioner is a builder in good faith.

RULING
NO. Petitioner is not a builder in good faith. Considering that he occupies the land by mere tolerance, he is aware
that his occupation of the same may be terminated by respondents any time.

38. NATIONAL HOUSING AUTHORITY vs. GRACE BAPTIST CHUCRCH

G. R. No. 156437 March 1, 2004

FACTS
On June 13, 1986, Respondent Grace Baptist Church offered to purchase Lot 4 and 17 of the General Mariano
Alvarez Resettlement Project which was granted by NHA, so respondent entered into possession of the lots and
introduced improvements thereon. On February 22, 1991, NHA passed a resolution approving the sale of the
subject lots to respondent Church for 700 per square meter, a total of P430,500.

On April 8, 1991, respondent church tendered a check amounting to P55,350 contending that this was the agreed
price. NHA avers stating that the price now (1991) is different from before (1986).

34
The trial court rendered a decision in favor of NHA stating that there was no contract of sale ordering to return the
said lots to NHA and to pay NHA rent of 200 pesos from the time it took possession of the lot.

Respondent Church appealed to the CA which affirms the decision of RTC regarding no contract of sale.

ISSUE
Whether or not NHA can be compelled to sell the lots under market value?

RULING
No, because the contract has not been perfected.

The Church despite knowledge that its intended contract of sale with the NHA had not been perfected proceeded
to introduce improvements on the land. On the other hand, NHA knowingly granted the Church temporary use of
the subject properties and did not prevent the Church from making improvements thereon. Thus the Church and
NHA, who both acted in bad faith shall be treated as if they were both in good faith. In this connection, Art 448 of
New Civil Code will apply.

39. RACHEL C. CELESTIAL vs. JESSE CACHOPERO

G. R. No. 142595 October 15, 2003

FACTS
Respondent, brother of petitioner, filed an MSA (Miscellaneous Sales Application) with the Bureau of Lands.
Petitioner filed a protest, claiming preferential right over the land. However, on an ocular inspection, the Bureau
found that the subject land was outside the commerce of man and thus, denied the petitioners protest. Petitioner
thereafter filed an ejectment case against the respondent. Subsequently, respondent filed another MSA which the
petitioner once again protested against. The DENR Regional Executive Director declared that the land is suitable
for residential purposes and in the light of the conflicting interest of the parties, ordered that the land be sold at
public auction.

Respondent filed a Motion for Reconsideration of the said order but was denied by the OIC Regional Executive
Director of Region XII. Respondent filed a petition for certiorari, prohibition and mandamus with preliminary
mandatory injunction and temporary restraining order. Petitioner then moved for the dismissal for lack of
jurisdiction and non-exhaustion of administrative remedies. The RTC denied respondents petition.

The CA on the other hand, reversed and set aside the decision of the CA and ordered the DENR to process the
MSA of the respondent.

Petitioner contends that the RTC had no jurisdiction over the respondents petition for certiorari.

ISSUE
Whether or not the RTC had jurisdiction over the petition for certiorari.

RULING
Yes. Petition for review of a decision of a quasi-judicial agency under rule 43 and petition for review under rule 65
is separate and distinct. The petition filed before the RTC clearly shows that it alleged the DENR acted with grave
abuse of discretion and without or in excess of jurisdiction amounting to lack of jurisdiction. Orders through a
special civil action for certiorari was within the jurisdiction of the RTC. (cant find the full case sorry guys I really
tried my best)

40. SPS. BEDER MORANDARTE and MARINA FEBRERA vs. COURT OF APPEALS
G. R. No. 123586 August 12, 2004

FACTS
On July 27, 1976, the District Land Officer of the BOL approved the free patent application of Morandarte and
directed the issuance of a free patent in his favor. Later a corresponding Original Certificate of Title was issued.

However, 10 years after the issuance of the OCT, respondent Republic of the Philippines, represented by the
Director of Lands, filed before the RTC a Complaint for Annulment of Title and Reversion against the Morandarte

35
spouses alleging that the BOL found that the subject land includes a portion of the Miputak River which cannot be
validly awarded as it is outside the commerce of man and beyond the authority of the BOL to dispose of.

Petitioner reasoned that the land is a portion of inherited property from Antonio L. Morandarte whose ownership
thereof is covered by Tax Declaration No. 2296. As regards the Miputak River, they argued that the river changed
its course brought about by the fact that a portion of the Miputak River was leased by the Bureau of Fisheries to a
certain Aguido Realiza whose rights were subsequently transferred to Virginio Lacaya.

ISSUE
1. Whether or not the OCT issued under Morandarte's name be rendered void.
2. Whether or not Art. 462 is applicable in this case.

RULING
Whether navigable or not, rivers belong to the public and cannot be acquired by prescription. In fact, a stream
located within private land is still property of public dominion, even if the Torrens Title of the land does not show
the existence of said stream.

Correspondingly, Art. 462 of the same Civil Code provides: Whenever a river, changing its course by natural
causes, opens anew bed through a private estate, this bed shall become of public dominion. The rule is the same
that even if the new bed is on private property. The bed becomes property of public dominion. Just as the old bed
had been of public dominion before the abandonment, the new riverbed shall likewise be of public dominion.

The mistake or error of the officials or agents of the BOL in this regard cannot be invoked against the government
with regard to property of the public domain. It has been said that the State cannot be estopped by the omission,
mistake or error of its officials or agents.

41. JULITA IMUAN, et al. vs. JUANITO CERENO

G. R. No. 167995 September 11, 2009

FACTS
Pablo contracted two marriages and all his children on both are already dead. The petitioners in the case are his
grandchildren while the respondent is the husband of his daughter from his second marriage. Juana, Pablos
second wife, together with her children continued to be in possession of the parcel of land owned by Pablo after
his death. Juana sold said parcel of land to the respondent which was registered in the register of deeds. The land
area sold to respondents was divided by a barangay road. They built a house on one side and planted fruit-
bearing trees on the other side.

Petitioners now brought an action for reconveyance, damages, and annulment of deed of sale by Juana to the
respondents. They contend that it was through their tolerance that Juana and her children constructed their house
on the lot in dispute, that Pablo have not partitioned among his heirs his property and the sale made by Juana to
respondents are null and void.

Respondents invoke the ground that when Pablo married Juana the property was his exclusive property and
donated such through propter nuptias when they married. Thus Juana, being the owner of said lot, validly made
the sale to respondents who immediately took possession over the land and paid its realty tax.

MTC ruled in favor of the petitioners however upon appeal CA ruled in favor of the respondents as it held that the
respondents are in peaceful possession of said lot for 29 years which suffice to meet the requirement of 10-year
period of open, public, and adverse possession in the concept of owner that the law on prescription requires. It
ruled that petitioners are barred by latches from claiming ownership of the disputed property.

ISSUE
Whether or not the petitioners are barred by latches and prescription in claiming their share of the property?

RULING
The Supreme Court ruled that the respondents have acquired the disputed property by acquisitive prescription.
Prescription is another mode of acquiring ownership and other real rights over immovable property and is
concerned with a lapse of time laid down by law where possession should be in the concept of an owner, public,
peaceful, uninterrupted, and adverse.

36
Even if the petitioners saw respondents built a house thereon and planted fruit-bearing trees, they did not raise
objection on the respondents possession. Their inaction further made them guilty of latches since they live merely
100 meters away from the property to know of the respondents possession of said land. They only filed an action
for reconveyance 29 years after the respondents peaceful possession over the property, the 10-year prescription
period for ordinary acquisitive prescription has already lapsed. The SC affirmed the CA decision declaring the
respondents as the rightful owner of the land in dispute.

b. On Quieting of Title
42. HEIRS OF SUSANA DE GUZMAN TUAZON vs. CA
G. R. No. 125758 January 20, 2004

FACTS
On Aug. 17, 1994, the Regional Trial Court of Antipolo, Rizal, issued an order granting the petitioners prayer for
the issuance of a second owners duplicate copy of Original Certificate of Title of a parcel of land in lieu of a
supposedly lost copy.

On June 19, 1995, the private respondents filed with the same court an action for Quieting of Title and Nullification
and Cancellation of Title praying in the main that an order be issued directing the Register of Deeds of Rizal to
cancel the owners duplicate copy it has issued pursuant to the order of the Regional Trial Court of Antipolo, Rizal.

In their Answer filed on Aug. 14, 1995, the petitioners averred inter alia that the private respondents had no cause
of action against them. Petitioner seeks to dismiss the action filed by the respondent.

ISSUE
Whether or not the petition filed by private respondents is for quieting of title.

RULING
The averments of the private respondents petition show that indeed, as captioned, these are for quieting of title
and its nullification and cancellation. In it the private respondents assert that the issuance to petitioners of a new
owners duplicate copy which was procured by fraudulent representation, casts a cloud on the titles of the private
respondents and, therefore, should be ordered cancelled.

ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid,
ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.

43. AGNES GAPACAN vs. MARIA GAPACAN OMIPET

G. R. No. 148943 August 15, 2002

FACTS
Paicat Gapacan, a native Igorot of the Kankanai tribe, was the primitive possessor of an unregistered land
situated in Abatan, Bauko, Mt. Province. He declared the land for taxation purposes. He had 2 children. His son
tried his luck in the mines and his sister was left to take care of the father. Later, when the son returned, he
executed an affidavit of transfer of real property, allegedly thumbmarked by his sisters husband. Since then, his
family cultivated the property.

When his sister tried to cultivate the land, an action for forcible entry was filed against her.

On December 1992 respondent Maria Gapacan Omipet filed a complaint for Quieting of Title before the proper
Regional Trial Court praying that she be declared the lawful owner of the property. She contended that she merely
lent the parcels of rice land to petitioners when Antonio Gapacan returned to Abatan after his retirement.

ISSUE
Whether or not an action to quiet title may be brought.
37
RULING
Yes. Article 476 of the Civil Code provides that an action to quiet title may be brought when there exists a cloud on
the title to real property or any interest therein.

In the early case of Bautista v. Exconde it was held that a property owner whose property rights were being
disturbed may ask a competent court for a proper determination of the respective rights of the party-claimants, not
only to place things in their proper place but also for the benefit of both with the view of dissipating any cloud of
doubt over the property.

As the two surviving heirs of the Paicat Gapacan, neither Maria nor Antonio can claim absolute ownership over
the entire property to the prejudice of the other, for each, in legal contemplation, is entitled to only one-half pro-
indiviso share of his or her father's estate. Prior to partition, Maria and Antonio, and upon the latter's death, the
petitioners, hold the disputed property in their capacity as co-owners.

44. LUCIO ROBLES vs. COURT OF APPEALS

G. R. No. 123509 March 14, 2000

FACTS
The case is for quieting of title instituted by Petitioners over a parcel of land with an area of 9,985 square meters
at Kay Taga, Lagundi, Morong Rizal.

The uncontroverted facts are as follows: Per tax declarations and by open and adverse occupation, the subject lot
was originally owned by Silvino Robles,( predecessor in interest of petitioners), who inherited the same from Leon
Robles. Upon Silvino's death, his wife, Maria Dela Cruz and children (petitioners/plaintiffs and defendant Hilario
Robles), inherited the lot. Plaintiff Lucio was put in charge of cultivating it while defendant and half-brother, Hilario
was entrusted with the payment of the taxes thereon. Petitioners continued in their possession of the land in
dispute until 1988 when they were ousted therefrom due to foreclosure proceedings initiated by defendant Hilario
Robles in favor or the Rural Bank of Carmona, from whom Defendant-Spouses Santos allegedly bought the
property.

It seems therefore that unknown to petitioners and for some unkown reasons, the tax declaration of the subject
parcel of land was cancelled and transferred to one Exequiel Ballena in 1962. Thereafter, it was transferred to
Antipolo Rural Bank as security of a loan contracted by Ballena; later, to the name of defendant Hilario and his
wife Andrea (daughter of Ballena); and still later, to the Rural Bank of Carmona by way of mortgage (though
unsigned by Hilario) as security to a loan contracted by his wife Andrea. For failure to pay the debt and for failing
to redeem the property, the Rural Bank of Carmona sold the lot to the Santos Spouses who consequently
secured a free patent on the land.

Petitioners' complaint hinges on the theory that the encumbrance made by their half- brother Hilario constituted
on the subject land was null and void as well as the proceedings taken subsequent thereto. The trial court
rendered judgment in favor of petitioners rationating that the real mortgage subject of foreclosure executed by
Hilario was void, his signature, having been forged; and that the subject lot could not be covered by free patent
considering that it is private land, it having been openly, exclusively and undisputedly possessed by petitioners for
more than 30 years.

The Court of Appeals however, reversed the trial court holding that at the time of filing of the complaint, petitioners
no longer had title to the land as evidenced by the subsequent tax declarations of the lot being under other names
such as Ballena's, the Rural Bank of Antipolo, etc, reasoning that tax declarations can be evidence of a transfer
of a parcel of land or a portion thereof. It held further that though petitioners and defendant Hilario were co-owners
of the land left by their common father, Hilario's acts of declaring the land as his own was a form of repudiation
and as much as more than 20 years have elapsed, prescription had set in.

ISSUE
Whether or not petitioners have lost title to the lot to be not entitled to the remedy of quieting of title?

RULING
The failure of defendants to show title of Exequiel Ballena, from whom Hilario was alleged to have derived his title
gives merit to the contention that Hilario mortgaged the property not as an absolute owner but as co-owner of the
land in question. Clearly, the transaction did not deprive petitioners of the title to the property at the time of the

38
institution of the complaint. A co-owner cannot by acquire by prescription the share of the other co-owners, absent
any clear repudiation. In this case, Hilario effected no clear and evident repudiation of the co-ownership He did
not have possession nor excluded the petitioners from the lot but merely entered a mortgage thereon and merely
paid the land taxes in his name, as agreed upon by the co-owners. The assertion that the declaration of
ownership is tantamount to repudiation is belied by petitioners' continued occupation and possession as owners.
They therefore are entitled to quieting of title.

Quieting of title is a common remedy for the removal of any cloud or doubt, or uncertainty on the title to real
property. As in this case, to be entitled to it, plaintiff should have a legal or an equitable title to or interest in real
property which is the subject matter of the action. Also, the deed, claim or encumbrance or proceeding that is
being alleged as a cloud on plaintiff's title must be shown to be in fact invalid despite its prima facie appearance of
validity.

In sum, the real estate mortgage contract covering the disputed property a contract executed between
Spouses Hilario and Andrea on the one hand and the Rural Bank of Cardona, Inc., on the other is hereby
declared null and void insofar as it prejudiced the shares of Petitioners Lucio, Emerita, Aludia and Emilio Robles;
it is valid as to Hilario Robles' share therein. Consequently, the sale of the subject property to the Santos spouses
is valid insofar as it pertained to his share only. Likewise declared null and void is Free Patent No. IV-1-010021
issued by the Bureau of Lands covering the subject property.

45. BENIGNA SECUYA vs. GERARDA M. VDA. DE SELMA,

G.R. No. 136021 February 22, 2000

FACTS
The present Petition is rooted in an action for quieting of title filed before the RTC by Benigna, Miguel, Marcelino,
Corazon, Rufina, Bernardino, Natividad, Gliceria and Purita all surnamed Secuya against Gerarda M. vda.
de Selma. Petitioners asserted ownership over the disputed parcel of land, alleging the following facts:
xxx xxx xxx
8. The parcel of land subject of this case is a PORTION of Lot 5679 of the Talisay-Minglanilla Friar Lands
Estate, referred to and covered [o]n Page 279, Friar Lands Sale Certificate Register of the Bureau of
Lands (Exh. "K"). The property was originally sold, and the covering patent issued, to Maxima Caballero
Vda. de Cario (Exhs. "K-1"; "K-2). Lot 5679 has an area of 12,750 square meters, more or less;
9. During the lifetime of Maxima Caballero, vendee and patentee of Lot 5679, she entered into that
AGREEMENT OF PARTITION dated January 5, 1938 with Paciencia Sabellona, whereby the former
bound herself and parted [with] one-third (1/3) portion of Lot 5679 in favor of the latter (Exh. "D"). Among
others it was stipulated in said agreement of partition that the said portion of one-third so ceded will be
located adjoining the municipal road (par. 5. Exh "D");

10. Paciencia Sabellona took possession and occupation of that one-third portion of Lot 5679 adjudicated
to her. Later, she sold the three thousand square meter portion thereof to Dalmacio Secuya on October
20, 1953, for a consideration of ONE THOUSAND EIGHT HUNDRED FIFTY PESOS (P1,850.00), by
means of a private document which was lost (p. 8, tsn., 8/8/89-Calzada). Such sale was admitted and
confirmed by Ramon Sabellona, only heir of Paciencia Sabellona, per that instrument denominated
CONFIRMATION OF SALE OF UNDIVIDED SHARES, dated September 28, 1976(Exh. "B");

11. Ramon Sabellona was the only [or] sole voluntary heir of Paciencia Sabellona, per that KATAPUSAN
NGA KABUT-ON UG PANUGON NI PACIENCIA SABELLONA (Last Will and Testament of Paciencia
Sabellona), dated July 9, 1954, executed and acknowledged before Notary Public Teodoro P. Villarmina
(Exh. "C"). Pursuant to such will, Ramon Sabellona inherited all the properties left by Paciencia
Sabellona;

12. After the purchase [by] Dalmacio Secuya, predecessor-in interest of plaintiffs of the property in
litigation on October 20, 1953, Dalmacio, together with his brothers and sisters he being single took
physical possession of the land and cultivated the same. In 1967, Edilberto Superales married Rufina
Secuya, niece of Dalmacio Secuya. With the permission and tolerance of the Secuyas, Edilberto
Superales constructed his house on the lot in question in January 1974 and lived thereon continuously up
to the present (p. 8., tsn 7/25/88 Daclan). Said house is inside Lot 5679-C-12-B, along lines 18-19-20
of said lot, per Certification dated August 10, 1985, by Geodetic Engineer Celestino R. Orozco (Exh. "F");

39
 13. Dalmacio Secuya died on November 20, 1961. Thus his heirs brothers, sisters, nephews and
nieces are the plaintiffs in Civil Case No. CEB-4247 and now the petitioners;

14. In 1972, defendant-respondent Gerarda Selma bought a 1,000 square-meter portion of Lot 5679,
evidenced by Exhibit "P". Then on February 19, 1975, she bought the bigger bulk of Lot 5679, consisting
of 9,302 square meters, evidenced by that deed of absolute sale, marked as Exhibit "5". The land in
question, a 3,000-square meter portion of Lot 5679, is embraced and included within the boundary of the
later acquisition by respondent Selma;

15. Defendant-respondent Gerarda Selma lodged a complaint, and had the plaintiffs-petitioners
summoned, before the Barangay Captain of the place, and in the confrontation and conciliation
proceedings at the Lupong Tagapayapa, defendant-respondent Selma was asserting ownership over the
land inherited by plaintiffs-petitioners from Dalmacio Secuya of which they had long been in possession . .
. in concept of owner. Such claim of defendant-respondent Selma is a cloud on the title of plaintiffs-
petitioners, hence, their complaint (Annex "C").

Respondent Selma's version of the facts, on the other hand, was summarized by the appellate court as
follows:
She is the registered owner of Lot 5679-C-120 consisting of 9,302 square meters as evidenced by TCT
No. T-35678 (Exhibit "6", Record, p. 324), having bought the same sometime in February 1975 from
Cesaria Caballero as evidenced by a notarized Deed of Sale (Exhibit "5", Record, p. 323) and ha[ve]
been in possession of the same since then. Cesaria Caballero was the widow of Silvestre Aro, registered
owner of the mother lot, Lot. No. 5679 with an area of 12,750 square meters of the Talisay-Minglanilla
Friar Lands Estate, as shown by Transfer Certificate of Title No. 4752 (Exhibit "10", Record, p. 340). Upon
Silvestre Aro's demise, his heirs executed an "Extrajudicial Partition and Deed of Absolute Sale" (Exhibit
"11", Record, p. 341) wherein one-half plus one-fifth of Lot No. 5679 was adjudicated to the widow,
Cesaria Caballero, from whom defendant-appellee derives her title.

In affirming the trial court's ruling, the appellate court debunked petitioners' claim of ownership of the land and
upheld Respondent Selma's title thereto. It held that respondent's title can be traced to a valid TCT. On the other
hand, it ruled that petitioners anchor their claim on an "Agreement of Partition" which is void for being violative of
the Public Land Act. The CA noted that the said law prohibited the alienation or encumbrance of land acquired
under a free patent or homestead patent, for a period of five years from the issuance of the said patent.

ISSUES
1. Whether or not there was a valid transfer or conveyance of one-third (1/3) portion of Lot 5679 by Maxima
Caballero in favor of Paciencia Sabellona, by virtue of [the] Agreement of Partition dated January 5, 1938[;] and
2. Whether or not the trial court, as well as the court, committed grave abuse of discretion amounting to lack of
jurisdiction in not making a finding that respondent Gerarda M. vda. de Selma [was] a buyer in bad faith with
respect to the land, which is a portion of Lot 5679.

RULING
As to the first issue, notwithstanding its purported nomenclature, the Agreement is not one of partition, because
there was no property to partition and the parties were not co-owners. Rather, it is in the nature of a trust
agreement.

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations
between parties may either be express or implied. An express trust is created by the intention of the trustor or of
the parties. An implied trust comes into being by operation of law.

The present Agreement of Partition involves an express trust. Under Article 1444 of the Civil Code, "[n]o particular
words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." That
Maxima Caballero bound herself to give one third of Lot No. 5629 to Paciencia Sabellona upon the approval of the
former's application is clear from the terms of the Agreement. Likewise, it is evident that Paciencia acquiesced to
the covenant and is thus bound to fulfill her obligation therein.

As to the second issue, Petitioners insist that Paciencia sold the disputed property to Dalmacio Secuya on
October 20, 1953, and that the sale was embodied in a private document. However, such document, which would
have been the best evidence of the transaction, was never presented in court, allegedly because it had been lost.

40
While a sale of a piece of land appearing in a private deed is binding between the parties, it cannot be considered
binding on third persons, if it is not embodied in a public instrument and recorded in the Registry of Property.

Moreover, while petitioners could not present the purported deed evidencing the transaction between Paciencia
Sabellona and Dalmacio Secuya, petitioners' immediate predecessor-in-interest, private respondent in contrast
has the necessary documents to support her claim to the disputed property.

In action for quieting of title, the plaintiff must show not only that there is a cloud or contrary interest over the
subject real property, but that the have a valid title to it. In the present case, the action must fail, because
petitioners failed to show the requisite title.

46. EFREN TANDOG, et al. vs. RENATO MACAPAGAL, et al.

G. R. No. 144208 September 11, 2007

FACTS
The subject of the controversy is a land consisting of 147,991 square meters situated at Sitio Inarawan, Barangay
Inuman, San Isidro, Antipolo City.

The above-named petitioners claim that they and their predecessors-in-interest have been in actual, open,
continuous, exclusive, and notorious possession of the land since time immemorial. They trace their rights to
Casimiro Policarpio, unmarried, who died in 1945. He was survived by his nephews and nieces, now deceased,
except Maria Bautista Catanyag. She and Casimiros grand nieces and grand nephews (herein petitioners) have
continued possessing and cultivating the land.

When petitioners decided to apply for the judicial registration of the property, they found that portions of the land
have been occupied by spouses Alfonso and Marina Calderon and Renato Macapagal, respondents. According to
petitioners, spouses Calderon used falsified documents to justify their possession of 20,116 square meters of the
land which they sold to the government. For his part, Renato Macapagal applied for and was granted Free Patent
No. 045802-1165 which led to the issuance to him of Original Certificate of Title (OCT) No. P-665 over an area of
18,787 square meters. Because of these incidents, petitioners filed with the Regional Trial Court a complaint for
quieting of title.

Respondent Marina Calderon, in her answer, specifically denied petitioners allegations in their complaint. She
alleged that she and her husband bought their property in 1958 and, since then, have been in possession of the
same. They planted trees and crops thereon. Also, they have been paying the corresponding realty taxes. She
does not know petitioners who are all strangers in the place.

Petitioners contend that the allegations of spouses Calderon that they purchased their property and Macapagals
claim that he applied for a Free Patent are judicial admissions which they (petitioners) consider as cloud upon
their interest in the disputed property.

ISSUE
Whether or not the allegations of spouses Calderon that they purchased their property and Macapagals claim that
he applied for a Free Patent are judicial admissions which they (petitioners) consider as cloud upon their interest
in the disputed property.

RULING
Article 476 of the Civil Code provides:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth
and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action
may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

As a general rule, a cloud which may be removed by suit to quiet title is not created by mere verbal or parol
assertion of ownership of or an interest in property. This rule is subject to qualification, where there is a written or
factual basis for the asserted right. Thus, a claim of right based on acquisitive prescription or adverse possession
has been held to constitute a removable cloud on title.

41
While petitioners alleged that respondents claim of adverse possession is a cloud on their (petitioners) interest in
the land, however, such allegation has not been proved. The alleged falsified documents relied upon by
respondents to justify their possession were merely marked as exhibits but were never formally offered in
evidence by petitioners. We have consistently ruled that documents which may have been marked as exhibits
during the hearing, but which were not formally offered in evidence, cannot be considered as evidence, nor can
they be given any evidentiary value.

It is important that petitioners must first establish their legal or equitable title to, or interest in the real property
which is the subject matter of the action. Petitioners failed to do so. Parenthetically, they did not present any
evidence to prove that Casimiro Policarpio "existed" and that he is their predecessor-in-interest. Their testimonies
can not be considered declarations about pedigree. In order that pedigree may be proved by acts or declarations
of relatives under Section 39 of the Revised Rules of Evidence, it is necessary that (a) the actor or declarant is
dead or unable to testify; (b) the act or declaration is made by a person related to the subject by birth or marriage;
(c) the relationship between the declarant or the actor and the subject is shown by evidence other than such act
or declaration; and (d) the act or declaration was made ante litem motam, or prior to the controversy.

47. ROSALINACLADO-REYES vs. SPS> JULIUS AND LILYLIMPE

G. R. No. 163876 July 9, 2008

FACTS
Petitioners aver that they have been occupying the lot in Guiguinto, Bulacan covered by TCT No. RT-32498 since
1945 through their predecessor-in-interest Mamerto Reyes. Allegedly, Mamerto, a former tenant of Felipe Garcia,
accepted a verbal promise made by the latter to give the subject lot to the former in exchange for the surrender of
his tenancy rights as its tiller. In support of their allegations, the petitioners presented two documents, to wit, a
Certification and a Pagpapatunay said to be executed by Simeon Garcia, son of Felipe. They also alleged that
whenever respondents visited the lot, respondent Julius Limpe used to promise to deliver the certificate of title to
them. However, sometime in October 1994, respondents asserted ownership over the disputed lot through a
letter sent to the petitioners.

The respondents insisted that they are the legal owners of the lot by virtue of a Deed of Exchange of Real Estate
and Deed of Absolute Sale between them and Farm-Tech Industries, Incorporated (FTII). Furthermore, they
exhibited TCT No. T-199627, Tax Declaration Nos. 15172 and 9529 and realty tax receipts of the lot, which were
all registered and declared in their names. They maintained that as buyers in good faith of the disputed lot from
FTII, they are not obliged to go beyond the face of a TCT in the absence of any cloud therein. Moreover,
petitioners allegations deserve scant consideration in view of the fact that they failed to present Simeon in court
to testify on the veracity of the contents of the documents and neither was the said property particularly described
in the Pagpapatunay as the disputed realty .

The trial court favored the respondents saying that the certificate of title, tax declarations, and realty tax receipts
indisputably established the respondents ownership over the lot over the petitioners allegation of an
undocumented promise which in law is unenforceable, hence it ordered the reconveyance of the lot to
respondents. The Court of Appeals affirmed the ruling of the lower court holding that the petitioners have no title
thereto which can cast a cloud on the title of the respondents since the documents allegedly executed by Simeon
Garcia did not in any way establish that Felipe did indeed donate the subject lot to them. Also, Simeon could not
have conveyed the said lot as he was not its owner.

ISSUE
Whether or not the petitioners Certification and Pagpapatunay are sufficient to cast doubt on the respondents title
to the disputed land.

RULING
Under Articles 476 and 477 of the New Civil Code, there are two indispensable requisites in order that an action to
quiet title could prosper, to wit: that the plaintiff or complainant has a legal or an equitable title to or interest in the
real property subject of the action and that the deed, claim, encumbrance or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.

The documentary evidence did not confirm their title over the land as those were purely hearsay considering that
the original copies thereof and the person who executed the same was not presented in court to verify its
authenticity. Meanwhile, the evidence of the respondents clearly established their ownership over the disputed
land because, these were all registered and made in their names; there is a presumption of validity of a Torrens

42
Certificate of Title which is also the best proof of ownership of a lot; plus the fact that realty tax payments is proof
that the holder has a claim of title over the property.

48. HEIRS OF ENRIQUE DIAZ vs. VIRATA

G. R. No. 162037 August 7, 2006

FACTS
In 1959, Antenor bought, by installments, from Miguela Crisologo, in good faith and for value, two parcels of land
located in Palico, Imus, Cavite, covered by TCTs No. (T-3855) RT-2633 and NO. (T-11171) RT-1228, which are
registered with the Registry of Deeds of Cavite. Consequently, TCT Nos. 517 and 518 were issued in the formers
name upon full payment of those lots. These lots were then partitioned by Antenor into several lots, and titles were
issued again in Antenors favor, as follows: TCT Nos. 4983-4986 and 5027-5033. In 1992, Enrique filed a claim
with the Department of Environment and Natural Resources (DENR), alleging that he and his predecessors-in-
interest had been in continuous possession of the same lots owned by Antenor, thereby creating a cloud which
may be prejudicial to the titles issued in the name of Antenor, and now managed by his Estate. Enrique had
fenced the lot and used it as a driveway.

In his Answer with Counter-Claim, Enrique contended that the fence and the driveway were located within the
boundaries of his and his heirs exclusive property per TCT Nos. T-304191 and T-66120, and that his
predecessors-in-interest have been in possession of and occupied the said realty since time immemorial, among
others. He also asserted that Antenor disturbed their peaceful and actual possession sometime in 1962 when
Antenor claimed a portion thereof after allegedly buying the same from Miguela Crisologo.

Enrique, invoking laches, posited that for almost 27 years after the dismissal of the action for reconveyance, the
heirs of Antenor were silent, while he was in actual and continuous possession of the disputed properties in the
character and concept of an owner, until again, his possession is disturbed by the suit. He pointed out that
respondents failure or neglect for an unreasonable and unexplained length of time to assert her right, created a
presumption that she had abandoned or declined to assert said right.

In January 1997, the relocation survey conducted showed that the driveway was truly outside Enriques property.
During the hearing, petitioners, through counsel, manifested that they will present their own surveyor who will
testify that the improvements made on the said lot are within the boundaries of their property, however, they failed
to present such surveyor. In September of the same year, Enrique in his Motion for Leave To File An Amended
Answer stated, among others, that he discovered a certification issued by the Register of Deeds of Cavite
signifying that TCT No. T-11171 (RT-1228), in Miguela Crisologos name, appeared to have been reconstituted but
nothing is recorded in the Primary Entry Book of said Registry pertaining to such administrative reconstitution,
thereby affecting not only Crisologos title over the same, but also Antenors, as purchaser thereof. The court
denied said motion holding that it is a collateral attack on the title which can only be done in a proceeding
precisely brought for that purpose.

The trial court upheld the validity of the titles in the name of Antenor and declared them as the only official titles to
the property and ruled as void and illegal the claim of Diaz and his possession of some portions thereof. The
Court of Appeals held that petitioners reliance on a certification issued by the Register of Deeds was an indirect
attack on the said titles and that laches is inapplicable because Antenor, as the registered owner, was within his
rights to demand the return of the properties at any time as the possession of the petitioners was unauthorized.

ISSUE
Whether or not the claimed ownership of the disputed lot by the heirs of Enrique Diaz constituted a cloud adverse
to the titles of the same realty owned by Antenor Virata.

RULING
Respondent fully satisfied the requisites of the law for the filing of the action to quiet title.

Under Art. 476 and 477, NCC, an action to quiet title can be availed of when there exists a cloud upon the title.
The party bringing the action must have a legal or an equitable title to the real property subject of the action and
the alleged cloud on his title must be shown to be in fact invalid. For such to prosper, two indispensable
requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the
real property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.

43
Anteros certificates of title, as found by the trial court and sustained by the appellate court, were issued as early
as 22 October 1959. It is well-settled that a certificate of title serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the person whose name appears therein. It becomes the best proof
of ownership of a parcel of land. Meanwhile, although Enrique possessed certificates of title over certain portions
of the subject properties, these were issued only on 7 March 1973 and 6 March 1991. Well-established is the
principle that the person holding a prior certificate is entitled to the land as against a person who relies on a
subsequent certificate. This rule refers to the date of the certificate of title. Absent any muniment of title issued
prior to 1959 in favor of Enrique, et al. which could prove their ownership over the contested lots, the Court
declares their claim over the properties as void.

On laches, the Court ruled that for the same to apply, it must be shown that there was lack of knowledge or notice
on the part of the defendant that complainant would assert the right in which he bases his suit. Petitioners cannot
be without knowledge of respondents claims over the subject properties as even prior to 1969, Antenor filed an
action for recovery of possession against Enrique. On 16 October 1969, the CFI of Cavite dismissed the case
without prejudice to the filing of a subsequent action. The dismissal without prejudice was adequate to apprise
petitioners that an action to assert respondents rights was forthcoming.

49. ROSALINA CLADO-REYES vs. SPS. JULIUS AND LILY LIMPE

G. R. No. 163876 July 9, 2008

FACTS
Petitioners aver that they have been occupying the lot in Guiguinto, Bulacan covered by TCT No. RT-32498 since
1945 through their predecessor-in-interest Mamerto Reyes. Allegedly, Mamerto, a former tenant of Felipe Garcia,
accepted a verbal promise made by the latter to give the subject lot to the former in exchange for the surrender of
his tenancy rights as its tiller. In support of their allegations, the petitioners presented two documents, to wit, a
Certification and a Pagpapatunay said to be executed by Simeon Garcia, son of Felipe. They also alleged that
whenever respondents visited the lot, respondent Julius Limpe used to promise to deliver the certificate of title to
them. However, sometime in October 1994, respondents asserted ownership over the disputed lot through a
letter sent to the petitioners.

The respondents insisted that they are the legal owners of the lot by virtue of a Deed of Exchange of Real Estate
and Deed of Absolute Sale between them and Farm-Tech Industries, Incorporated (FTII). Furthermore, they
exhibited TCT No. T-199627, Tax Declaration Nos. 15172 and 9529 and realty tax receipts of the lot, which were
all registered and declared in their names. They maintained that as buyers in good faith of the disputed lot from
FTII, they are not obliged to go beyond the face of a TCT in the absence of any cloud therein. Moreover,
petitioners allegations deserve scant consideration in view of the fact that they failed to present Simeon in court
to testify on the veracity of the contents of the documents and neither was the said property particularly described
in the Pagpapatunay as the disputed realty .

The trial court favored the respondents saying that the certificate of title, tax declarations, and realty tax receipts
indisputably established the respondents ownership over the lot over the petitioners allegation of an
undocumented promise which in law is unenforceable, hence it ordered the reconveyance of the lot to
respondents. The Court of Appeals affirmed the ruling of the lower court holding that the petitioners have no title
thereto which can cast a cloud on the title of the respondents since the documents allegedly executed by Simeon
Garcia did not in any way establish that Felipe did indeed donate the subject lot to them. Also, Simeon could not
have conveyed the said lot as he was not its owner.

ISSUE
Whether or not the petitioners Certification and Pagpapatunay are sufficient to cast doubt on the respondents
title to the disputed land.

RULING
Under Articles 476 and 477 of the New Civil Code, there are two indispensable requisites in order that an action
to quiet title could prosper, to wit: that the plaintiff or complainant has a legal or an equitable title to or interest in
the real property subject of the action and that the deed, claim, encumbrance or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.

The documentary evidence did not confirm their title over the land as those were purely hearsay considering that

44
the original copies thereof and the person who executed the same was not presented in court to verify its
authenticity. Meanwhile, the evidence of the respondents clearly established their ownership over the disputed
land because, these were all registered and made in their names; there is a presumption of validity of a Torrens
Certificate of Title which is also the best proof of ownership of a lot; plus the fact that realty tax payments is proof
that the holder has a claim of title over the property.

50. HEIRS OF ENRIQUE DIAZ vs. VIRATA

G. R. No. 162037 August 7, 2006

FACTS
In 1959, Antenor bought, by installments, from Miguela Crisologo, in good faith and for value, two parcels of land
located in Palico, Imus, Cavite, covered by TCTs No. (T-3855) RT-2633 and NO. (T-11171) RT-1228, which are
registered with the Registry of Deeds of Cavite. Consequently, TCT Nos. 517 and 518 were issued in the formers
name upon full payment of those lots. These lots were then partitioned by Antenor into several lots, and titles were
issued again in Antenors favor, as follows: TCT Nos. 4983-4986 and 5027-5033. In 1992, Enrique filed a claim
with the Department of Environment and Natural Resources (DENR), alleging that he and his predecessors-in-
interest had been in continuous possession of the same lots owned by Antenor, thereby creating a cloud which
may be prejudicial to the titles issued in the name of Antenor, and now managed by his Estate. Enrique had
fenced the lot and used it as a driveway.

In his Answer with Counter-Claim, Enrique contended that the fence and the driveway were located within the
boundaries of his and his heirs exclusive property per TCT Nos. T-304191 and T-66120, and that his
predecessors-in-interest have been in possession of and occupied the said realty since time immemorial, among
others. He also asserted that Antenor disturbed their peaceful and actual possession sometime in 1962 when
Antenor claimed a portion thereof after allegedly buying the same from Miguela Crisologo.

Enrique, invoking laches, posited that for almost 27 years after the dismissal of the action for reconveyance, the
heirs of Antenor were silent, while he was in actual and continuous possession of the disputed properties in the
character and concept of an owner, until again, his possession is disturbed by the suit. He pointed out that
respondents failure or neglect for an unreasonable and unexplained length of time to assert her right, created a
presumption that she had abandoned or declined to assert said right.

In January 1997, the relocation survey conducted showed that the driveway was truly outside Enriques property.
During the hearing, petitioners, through counsel, manifested that they will present their own surveyor who will
testify that the improvements made on the said lot are within the boundaries of their property, however, they failed
to present such surveyor. In September of the same year, Enrique in his Motion for Leave To File An Amended
Answer stated, among others, that he discovered a certification issued by the Register of Deeds of Cavite
signifying that TCT No. T-11171 (RT-1228), in Miguela Crisologos name, appeared to have been reconstituted but
nothing is recorded in the Primary Entry Book of said Registry pertaining to such administrative reconstitution,
thereby affecting not only Crisologos title over the same, but also Antenors, as purchaser thereof. The court
denied said motion holding that it is a collateral attack on the title which can only be done in a proceeding
precisely brought for that purpose.

The trial court upheld the validity of the titles in the name of Antenor and declared them as the only official titles to
the property and ruled as void and illegal the claim of Diaz and his possession of some portions thereof. The
Court of Appeals held that petitioners reliance on a certification issued by the Register of Deeds was an indirect
attack on the said titles and that laches is inapplicable because Antenor, as the registered owner, was within his
rights to demand the return of the properties at any time as the possession of the petitioners was unauthorized.

ISSUE
Whether or not the claimed ownership of the disputed lot by the heirs of Enrique Diaz constituted a cloud adverse
to the titles of the same realty owned by Antenor Virata.

RULING
Respondent fully satisfied the requisites of the law for the filing of the action to quiet title.

Under Art. 476 and 477, NCC, an action to quiet title can be availed of when there exists a cloud upon the title.
The party bringing the action must have a legal or an equitable title to the real property subject of the action and
the alleged cloud on his title must be shown to be in fact invalid. For such to prosper, two indispensable
requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the

45
real property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.

Anteros certificates of title, as found by the trial court and sustained by the appellate court, were issued as early
as 22 October 1959. It is well-settled that a certificate of title serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the person whose name appears therein. It becomes the best proof
of ownership of a parcel of land. Meanwhile, although Enrique possessed certificates of title over certain portions
of the subject properties, these were issued only on 7 March 1973 and 6 March 1991. Well-established is the
principle that the person holding a prior certificate is entitled to the land as against a person who relies on a
subsequent certificate. This rule refers to the date of the certificate of title. Absent any muniment of title issued
prior to 1959 in favor of Enrique, et al. which could prove their ownership over the contested lots, the Court
declares their claim over the properties as void.

On laches, the Court ruled that for the same to apply, it must be shown that there was lack of knowledge or notice
on the part of the defendant that complainant would assert the right in which he bases his suit. Petitioners cannot
be without knowledge of respondents claims over the subject properties as even prior to 1969, Antenor filed an
action for recovery of possession against Enrique. On 16 October 1969, the CFI of Cavite dismissed the case
without prejudice to the filing of a subsequent action. The dismissal without prejudice was adequate to apprise
petitioners that an action to assert respondents rights was forthcoming.

c. On Co-ownership
51. MANUEL T. DE GUIA vs. COURT OF APPEALS
G. R. No. 120864 October 8, 2003

FACTS
A case was filed against Manuel T. De Guia by Jose B. Abejo demanding him to turn over Jose B. Abejo
possession of the one half () undivided portion of a fishpond and to pay actual damages and attorneys fees.
Abejo alleged that Abejo continue to possess the fishpond without any contract and without paying rent. Despite
repeated demands against De Guia, he vehemently refused to surrender ownership and possession. As a
defense, De Guia denied that Abejo is not the rightful owner of the fishpond but the heirs of Primitiva Lejano. He
assailed that the ownership to the undivided portion of Abejo is void.

The lower court ruled against De Guia ordering him to surrender the possession of the undivided portion and to
pay actual damages and attorney fees to Abejo.

ISSUE
Who is the rightful owner of the undivided portion of the fishpond?

RULING
Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have equal shares in
the FISHPOND quantitatively speaking, they have the same right in a qualitative sense as co-owners. Simply
stated, ABEJO and DE GUIA are owners of the whole and over the whole, they exercise the right of dominion.
However, they are at the same time individual owners of a portion, which is truly abstract because until there is
partition, such portion remains indeterminate or unidentified. As co-owners, ABEJO and DE GUIA may jointly
exercise the right of dominion over the entire FISHPOND until they partition the FISHPOND by identifying or
segregating their respective portions.

Since a co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition is the proper
recourse.

To recapitulate, we rule that a co-owner may file an action for recovery of possession against a co-owner who
takes exclusive possession of the entire co-owned property. However, the only effect of such action is a
recognition of the co-ownership. The courts cannot proceed with the actual partitioning of the co-owned property.
Thus, judicial or extra-judicial partition is necessary to effect physical division of the FISHPOND between ABEJO
and DE GUIA. An action for partition is also the proper forum for accounting the profits received by DE GUIA from
the FISHPOND. However, as a necessary consequence of such recognition, ABEJO shall exercise an equal right
to possess, use and enjoy the entire FISHPOND.

46
52. DONATO S. PAULMITAN vs. COURT OF APPEALS
G. R. No. 61584 November 25, 1992

FACTS
Donato Paulmitan and Pascual Paulmitan are heirs of the late Agatona Paulmitan from Ciriaco Paulmitan.
Agatona left several parcels of land located in Negros Occidental. The estate of Agatona Paulmitan left unsettled.
Donato executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot No. 757
based on the claim that he is the only surviving heir of Agatona Sagario Paulmitan. It was filed in the Register of
Deeds thereby canceling the existing title under the name of Agatona Sagario. Later he executed a Deed of Sale
in favor of his daughter Juliana Fanesa to a certain lot. Due to non-payment of taxes, the disputed lot was sold to
public auction with the Provincial Government of Negros Occidental as buyer and later redeemed by Fanesa.
When the heirs of Pascual Paulmitan learned about the transactions they filed case against Donato Paulmitan
claiming for damages. As a defense, Donato Paulmitan set up the defense of prescription to question the
executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot No. 757 based on the
claim that he is the only surviving heir of Agatona Sagario. On the part of Fanesa she claimed that she has the
ownership over the disputed property by virtue of Deed of Sale and redemption.

The lower court rule that ownership is valid insofar as the one-half undivided portion of Lot 1091 is concerned as
to vest ownership over said half portion in favor of defendant Juliana Fanesa and her husband Rodolfo Fanesa,
while the remaining half shall belong to plaintiffs, pro-indiviso. Donato Sagario Paulmitan and Juliana Paulmitan
Fanesa are ordered to account to plaintiffs and to pay them, jointly and severally, the value of the produce from
Lot 1091 representing plaintiffs' share in the amount of P5,000.00 per year from 1966 up to the time of actual
partition of the property, and to pay them the sum of P2,000.00 as attorney's fees as well as the costs of the suit.

ISSUE
Rule on the ownership of the disputed lots.

RULING
Donato and Pascual Paulmitan were, therefore, co-owners of the estate left by their mother as no partition was
ever made.

When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the co-
ownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the
property passed on to his children, who, from the time of Pascual's death, became co-owners with their uncle
Donato over the disputed decedent estate.

When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-
owner with respondents and as such, he could only sell that portion which may be allotted to him upon termination
of the co-ownership. The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the
land which they inherited from their father. It did not vest ownership in the entire land with the buyer but
transferred only the seller's pro-indiviso share in the property and consequently made the buyer a co-owner of the
land until it is partitioned.

As stated by the rule, The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil
Code, Thus:

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto,
and he may therefore alienate, assign or mortgage it and even substitute another person its enjoyment, except
when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him in the division upon the termination of the co-
ownership.

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

53. LEONOR B. CRUZ vs. TEOFILA M. CATAPANG

G. R. No. 164110 February 12, 2008

FACTS
Petitioner Leonor B. Cruz, Luz Cruz and Norma Maligaya are the co-owners of a parcel of land covering an area
of 1,435 square meters located at Barangay Mahabang Ludlod, Taal, Batangas.

47
With the consent of Norma Maligaya, one of the aforementioned co-owners, respondent Teofila M. Catapang built
a house on a lot adjacent to the abovementioned parcel of land sometime in 1992. The house intruded, however,
on a portion of the co-owned property.

In the first week of September 1995, petitioner Leonor B. Cruz visited the property and was surprised to see a part
of respondents house intruding unto a portion of the co-owned property. She then made several demands upon
respondent to demolish the intruding structure and to vacate the portion encroaching on their property. The
respondent, however, refused and disregarded her demands. A complaint for Forcible Entry was then filed against
Catapang.

ISSUE
Whether consent given by a co-owner of a parcel of land to a person to construct a house on the co-owned
property warrants the dismissal of a forcible entry case filed by another co-owner against that person.

RULING
We have held that a co-owner cannot devote common property to his or her exclusive use to the prejudice of the
co-ownership.18 In our view, a co-owner cannot give valid consent to another to build a house on the co-owned
property, which is an act tantamount to devoting the property to his or her exclusive use.

Giving consent to a third person to construct a house on the co-owned property will injure the interest of the co-
ownership and prevent other co-owners from using the property in accordance with their rights.

The construction of a house on the co-owned property is an act of dominion. Therefore, it is an alteration falling
under Article 491 of the Civil Code. There being no consent from all co-owners, respondent had no right to
construct her house on the co-owned property.

Entry into the land effected clandestinely without the knowledge of the other co-owners could be categorized as
possession by stealth.20 Moreover, respondents act of getting only the consent of one co-owner, her sister
Norma Maligaya, and allowing the latter to stay in the constructed house, can in fact be considered as a strategy
which she utilized in order to enter into the co-owned property. As such, respondents acts constitute forcible entry.

54. MARINA REYES vs. HON. CONCEPTION

G. R. No. 56550 October 1, 1990

FACTS
In thise case parties are co-owners of quite a big area of parcels of land. Petitioners claimed that as co-owner
they have pre-emptive right at a price of 95T per hectare with respect to the other shares of the co-owners
respondents herein. Private Respondents on the other hand gave petitioners to buy their share at 12.5p per
square meter or to sell petitioners share to third person. The parties as co-owner did not come to an agreement.

The trial court rendered a decision applying Art 498 of the New Civil Code that where parties cannot agree as to
who shall be allotted and who shall indemnify the others the property shall be sold snd proceeds shall be
distributed among the co-owners, thus respondent judge ordered the public sale of the said property. Hence this
petition.

ISSUE
Whether or not Art. 498 of the New Civil Code was properly applied in this case and whether the petitioners are
justified in claiming pre-emptive rights with respect to the share of the other co-owners, private respondents
herein.

RULING
Art. 498 of the New Civil Code was properly applied in this case, the legal conditions calling for its applicability are
present in this case, to wit:

(1) the right to partition the property among the co-owners is invoked by any of them but because of the nature of
the property, it cannot be subdivided or its subdivision [See Article 495 of the New Civil Code] would prejudice the
interests of the co-owners (See Section 5 of Rule 69 of the Revised Rules of Court) and

(2) the co-owners are not in agreement as to who among them shall be allotted or assigned the entire property

48
upon reimbursement of the shares of the other co-owners.

Also, there is no basis on the petitioners claim of pre-emptive right.Article 1620 contemplates of a situation where
a co-owner has alienated his pro-indiviso shares to a stranger. By the very nature of the right of "legal
redemption", a co-owner's right to redeem is invoked only after the shares of the other co-owners are sold to a
third party or stranger to the co-ownership . But in the case at bar, at the time petitioners filed their complaint for
injunction and damages against private respondents, no sale of the latter's pro-indiviso shares to a third party had
yet been made. Thus, Article 1620 of the New Civil Code finds no application to the case at bar.

Moreover, petitioners under Art 493 has no right to enjoin the private respondents form alienating their pro-indiviso
shares to a third party. The only limitation of this right of the co-owners is provided in Art. 493, where the law
merely provides that the alienation or mortgage shall be limited only to the portion of the property which may be
allotted to him upon termination of the co-ownership. Petitionen is dismissed.

55. CORINTHIAN REALTY vs. CA

G. R. No. 150240 December 26, 2002

FACTS
Private respondents are co-owners of a parcel of land. Some of the co-owners entered into a conditional sale with
herein petitioner, subject to the sale of the entire property. However, two of the co-owners although their names
appear on the said deed, they did not affix their signatures. In said sale it was stipulated that petitioner is to pay
the balance within 90 days, otherwise the down payment shall be forfeited as and there shall be no absolute
sale.Petitioner failed to pay within the said period.

Petitioner filed an action for specific performance, but both the trial court and the Court of Appeals denied the
same. One of the issues raised by the petitioner was, it claimed that despite the absence of the signatures of the
other two co-owners, the conditional sale still covered their interests in the co-ownership because they should not
be treated individually but collectively.

ISSUE
Whether or not the sale of the an entire property held in common is valid even without the consent of the two of
the co-owners.

RULING
No, under Art. 493 a co-owner has the right to sell his only his undivided share. If he sells the entire property
without obtaining the consent of the other co-owners, the sale is not null and void. Only the rights of the co-owner-
seller are transferred, thereby making the buyer a co-owner of the property.

The transferee gets only what his transferor would have been entitled to after partition. 2
"Even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the
other co-owners who did not consent to the sale. This is because under the aforementioned codal provision, the
sale or other disposition affects only his undivided share and the transferee gets only what would correspond to
his grantor in the partition of the thing owned in common."

Indeed, only the pro-indiviso shares in the property of the co-owners - signatories to the deed were affected by the
deed NOT private respondent Delfin Guinto and the heirs of spouses Tomas de Leon and Francisca Medina who
were therein named co-owners-vendors not having affixed their respective signatures.

Also, petitioners claim of specific performance has not basis since it is the one who failed to perform its obligation
in the said conditional sale. Petition is dismissed.

56. BENJAMIN CORONEL vs. CONSTANTINO

G. R. No. 121069 February 7, 2003

FACTS
Petitioners and private respondents are co-owners of ( each) a parcel of land. As to the part of the petitioners, it
was co-owned by Emilia and her three sons. A sale was executed by Emilia (covering the entire share) without
the consent of her sons in favor of a third party, whom that third party sold the same to herein private
respondents. Now, private respondents claim absolute ownership of the said parcel of land.

49
Trial court and an Court of Appeals declared private respondents as absolute owners, hence this petition.

ISSUE
Whether or not the sale of the entire property held in common by Emilia and her three sons is valid even without
the consent of the latter.

RULING
The sale was only valid with respect to Emilias share in the co-ownership. Under Art. 493 of the Civil Code, the
sale of the subject property made by Emilia in favor of a third party is limited to the portion which may be allotted
to her upon the termination of her co-ownership over the subject property with her children. Emilia executed the
instrument in her own behalf and not in representation of her three children.

Moreover, no evidence was presented to show that the three brothers were aware of the sale made by their
mother. Unaware of such sale, Catalino, Ceferino and Benjamin could not be considered as having voluntarily
remained silent and knowingly chose not to file an action for the annulment of the sale. Their alleged silence and
inaction may not be interpreted as an act of ratification on their part.

57. CITY OF MANDALUYONG vs. ANTONIO AGUILAR

G. R. No. 137152 January 29, 2001

FACTS
Petitioner sought to expropriate three adjoining parcels of land with an aggregate area of 1,847 square meters
registered under Transfer Certificates of Title in the names of the defendants, herein respondents, located at 9 de
Febrero Street, Barangay Mauwag, City of Mandaluyong. In 1983, the lots were classified by Resolution No. 125
of the Board of the Housing and Urban Development Coordinating Council as an Area for Priority Development for
urban land reform under Proclamation Nos. 1967 and 2284 of then President Marcos; as a result of this
classification, the tenants and occupants of the lots offered to purchase the land from respondents, but the latter
refused to sell. On January 10, 1996, Mayor Abalos sent a letter to respondents offering to purchase the said
property at P3,000.00 per square meter. Respondents did not answer the letter. Petitioner thus prayed for the
expropriation of the said lots and the fixing of just compensation at the fair market value of P3,000.00 per square
meter.

In their answer, respondents, except Eusebio N. Aguilar who died in 1995, denied having received a copy of
Mayor Abalos' offer to purchase their lots. They alleged that the expropriation of their land is arbitrary and
capricious, and is not for a public purpose.

On September 17, 1998, the trial court issued an order dismissing the Amended Complaint after declaring
respondents as "small property owners" whose land is exempt from expropriation under Republic Act No. 7279.

ISSUE
Whether or not the respondent qualify as small property owners and are thus exempt from expropriation.

RULING
Yes. The question now is whether respondents qualify as "small property owners" as defined in Section 3 (q) of
R.A. 7279. Section 3 (q) provides:

"Section 3 x x x (q). "Small property owners" refers to those whose only real property consists of residential lands
not exceeding three hundred square meters (300 sq.m.) in highly urbanized cities and eight hundred square
meters (800 sq.m.) in other urban areas."

At the time of filing of the complaint for expropriation, the lots subject of this case were owned in common by
respondents. Under a co-ownership, the ownership of an undivided thing or right belongs to different persons.

Article 493 gives the owner of an undivided interest in the property the right to freely sell and dispose of his
undivided interest. The co-owner, however, has no right to sell or alienate a concrete specific or determinate part
of the thing owned in common, because his right over the thing is represented by a quota or ideal portion without
any physical adjudication. If the co-owner sells a concrete portion, this, nonetheless, does not render the sale
void. Such a sale affects only his own share, subject to the results of the partition but not those of the other co-

50
owners who did not consent to the sale.

In the instant case, the titles to the subject lots were issued in respondents' names as co-owners in 1987ten
(10) years before the expropriation case was filed in 1997. As co-owners, all that the respondents had was an
ideal or abstract quota or proportionate share in the lots. This, however, did not mean that they could not
separately exercise any rights over the lots. Each respondent had the full ownership of his undivided interest in
the property. He could freely sell or dispose of his interest independently of the other co-owners. And this interest
could have even been attached by his creditors. The partition in 1998, six (6) months after the filing of the
expropriation case, terminated the co-ownership by converting into certain and definite parts the respective
undivided shares of the co-owners. The subject property is not a thing essentially indivisible. The rights of the co-
owners to have the property partitioned and their share in the same delivered to them cannot be questioned for
"[n]o co-owner shall be obliged to remain in the co-ownership." The partition was merely a necessary incident of
the co-ownership; and absent any evidence to the contrary, this partition is presumed to have been done in good
faith.

Eusebio Aguilar was granted 347 square meters, which is 47 square meters more than the maximum of 300
square meters set by R.A. 7279 for small property owners. In TCT No. 13853, Eusebio's title, however, appears
the following annotation:

"... subject to x x x, and to the prov. of Sec. 4 Rule 74 of the Rules of Court with respect to the inheritance left by
the deceased Eusebio N. Aguilar."

Eusebio died on March 23, 1995, and, according to Antonio's testimony, the former was survived by five children.
Where there are several co-owners, and some of them die, the heirs of those who die, with respect to that part
belonging to the deceased, become also co-owners of the property together with those who survive. After Eusebio
died, his five heirs became co-owners of his 347 square-meter portion. Dividing the 347 square meters among the
five entitled each heir to 69.4 square meters of the land subject of litigation.

Consequently, the share of each co-owner did not exceed the 300 square meter limit set in R.A. 7279.

58. LILIA SANCHEZ vs. COURT OF APPEALS

G. R. No. 152766 June 20, 2003

FACTS
Lilia Sanchez, petitioner, constructed a house on a 76-square meter lot owned by her parents-in-law. The lot was
registered under TCT with the co-owners. On 20 February 1995, the lot was registered under TCT in the name of
Teria by virtue of a Deed of Absolute Sale supposed to have been executed on 23 June 1995 by all six (6) co-
owners in her favor.

Petitioner claimed that she did not affix her signature on the document and subsequently refused to vacate the lot,
thus prompting private respondent Virginia Teria to file an action for recovery of possession of the aforesaid lot
with the Metropolitan Trial Court of Caloocan City sometime in September 1995, subsequently raffled to Br. 49 of
that court.

On 12 February 1998, the MeTC of Caloocan City ruled in favor of private respondent declaring that the sale was
valid only to the extent of 5/6 of the lot and the other 1/6 remaining as the property of petitioner, on account of her
signature in the Deed of Absolute Sale having been established as a forgery.

Petitioner then elevated her appeal to the RTC which ordered the parties to file their respective memoranda of
appeal. Counsel for petitioner did not comply with this order, nor even inform her of the developments in her
case. Petitioner not having filed any pleading with the RTC, the trial court affirmed the 27 July 1998 decision of
the MeTC.

On 14 June 2000 petitioner filed her Petition for Certiorari with the Court of Appeals alleging grave abuse of
discretion on the part of the court a quo.

On 23 May 2001 the appellate court dismissed the petition for lack of merit.

ISSUE
Whether the Court of Appeals committed grave abuse of discretion in dismissing the challenged case before it.

51
RULING
Despite the procedural lapses present in this case, we are giving due course to this petition as there are matters
that require immediate resolution on the merits to effect substantial justice

The suspension of the Rules is warranted in this case since the procedural infirmity was not entirely attributable to
the fault or negligence of petitioner. Besides, substantial justice requires that we go into the merits of the case to
resolve the present controversy that was brought about by the absence of any partition agreement among the
parties who were co-owners of the subject lot in question. Hence, giving due course to the instant petition shall
put an end to the dispute on the property held in common.

The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b) unity of or material
indivision, which means that there is a single object which is not materially divided, and which is the element
which binds the subjects, and, (c) the recognition of ideal shares, which determines the rights and obligations of
the co-owners.

In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in character and attribute.
Whether established by law or by agreement of the co-owners, the property or thing held pro-indiviso is impressed
with a fiducial nature so that each co-owner becomes a trustee for the benefit of his co-owners and he may not do
any act prejudicial to the interest of his co-owners.

Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an express trust
among the heirs as co-owners of the properties. Co-ownership is a form of trust and every co-owner is a trustee
for the others.

Before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite
portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate share in the entire land or
thing.

Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to freely sell and
dispose of it, i.e., his undivided interest. He may validly lease his undivided interest to a third party independently
of the other co-owners. But he has no right to sell or alienate a concrete, specific or determinate part of the thing
owned in common because his right over the thing is represented by a quota or ideal portion without any physical
adjudication.

Although assigned an aliquot but abstract part of the property, the metes and bounds of petitioners lot has not
been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into by the other co-
owners, her right to 1/6 of the property must be respected. Partition needs to be effected to protect her right to
her definite share and determine the boundaries of her property. Such partition must be done without prejudice to
the rights of private respondent Virginia Teria as buyer of the 5/6 portion of the lot under dispute.

59. REYNALDO AGUIRRE vs. COURT OF APPEALS

G. R. No. 122249 January 29, 2004

FACTS
In his lifetime, Leocadio Medrano was the owner and possessor of a parcel of residential land, situated in Aplaya,
Bauan, Batangas, containing an area of 2,611 square meters.The parcel of land was conjugal property, having
been acquired by Leocadio during his first marriage with one Emiliana Narito. Their union begot four children,
namely: (a) Gertrudes Medrano, now deceased, represented in this case by her children, herein petitioners
Telesforo, Reynaldo, Remedios, Alfredo, and Belen, all surnamed Aguirre; (b) Isabel Medrano, likewise deceased,
represented by her children, herein petitioners Vicenta, Horacio, and Florencio, all surnamed Magtibay; (c)
Placido Medrano, also deceased, represented by his only child, herein petitioner Zosima Quiambao; and (d) Sixto
Medrano.

After the death of his first wife, Leocadio contracted a second marriage with Miguela Cario. Their union bore
four children, herein co-petitioners, namely: Venancio, Leonila, Antonio and Cecilia, all surnamed Medrano.

Upon the death of Leocadio on March 19, 1945, the surviving heirs agreed that Sixto should manage and
administer the subject property.

52
Sixto died on May 17, 1974. It was only after his death that petitioners heard rumors that Sixto had, in fact, sold
significant portions of the estate of Leocadio. It appears that on September 7, 1953, Sixto, without the knowledge
and consent of the petitioners, executed an Affidavit of Transfer of Real Property stating therein that he was the
only heir of Leocadio.Sixto declared that Leocadio died on September 16, 1949, instead of the actual date of his
death on March 19, 1945. With the use of said affidavit and a survey plan, Tax Declaration No. 40105 in the
name of Leocadio was cancelled and Tax Declaration No. 44984 was issued in the name of Sixto. On August 29,
1957, Sixto sold to Maria Bacong a 160- square meter portion of the subject land. On September 28, 1959, Sixto
sold to Tiburcio Balitaan a 1,695 square meter portion of the same land. Sometime in November 1967, Maria
Bacong sold her property to Rosendo Bacong.

Petitioners demanded the reconveyance of the portions sold by Sixto but Tiburcio Balitaan, Maria Bacong and
Rosendo Bacong refused to do so. Hence, petitioners filed against them before the RTC, a complaint for
Declaration of Nullity of Documents, Partition, Malicious Prosecution and Damages.

In their Answer, Maria Bacong and Rosendo Bacong contend that petitioners have no cause of action
because they acquired their property thru a valid deed of sale dated August 29, 1957, executed by Sixto
and, alternatively, petitioners cause of action, if any, was barred by prescription and laches.

ISSUE
Whether or not the Court of Appeals committed a reversible error in upholding the claim of petitioners that they
acquired ownership of the subject property through prescription

RULING
Supreme Court agrees with the petitioners that the Court of Appeals committed a reversible error in upholding the
claim of petitioners that they acquired ownership of the subject property through prescription.

The requirements for ordinary acquisitive prescription have not been met in this case.

After a careful examination of the records, we find that private respondents failed to discharge the burden of proof
that Tiburcio Balitaan was a purchaser in good faith. It is undisputed that Tiburcio practically lived his entire
lifetime in the area where the property in dispute is located and had been a neighbor of petitioners. He knew that
Sixto Medrano had other siblings because his son, Dr. Elias Balitaan, is the godson by baptism of spouses Jose
Aguirre and Gertrudes Medrano, the latter being a deceased sister of Sixto. Thus, Tiburcio was not a complete
stranger to the Medrano clan. Yet, he deliberately chose to close his eyes to said facts and despite his personal
knowledge to the contrary, he purchased the disputed property from Sixto on the basis of the misrepresentation of
the latter in his Affidavit of Transfer that he is the sole surviving heir of Leocadio. A purchaser cannot close his
eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under
the belief that there was no defect in the title of the vendor.

In order that a co-owners possession may be deemed adverse to the cestui que trust or the other co-owners, the
following elements must concur: (1) that he has performed unequivocal acts of repudiation amounting to an
ouster of the cestui que trust or the other co-owners; (2) that such positive acts of repudiation have been made
known to the cestui que trust or the other co-owners; and (3) that the evidence thereon must be clear and
convincing.

Tested against these guidelines, respondents failed to present competent evidence that the acts of Sixto
adversely and clearly repudiated the existing co-ownership among the heirs of Leocadio Medrano.

Private respondents reliance on the tax declaration in the name of Sixto Medrano is unworthy of credit since we
have held on several occasions that tax declarations by themselves do not conclusively prove title to land.
Further, private respondents failed to show that the Affidavit executed by Sixto to the effect that he is the sole
owner of the subject property was known or made known to the other co-heirs of Leocadio Medrano.

Neither can we subscribe to the appellate courts view that petitioners are guilty of laches. Laches is the
negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled
to assert it has abandoned it or declined to assert it. It does not involve mere lapse or passage of time, but is
principally an impediment to the assertion or enforcement of a right, which has become under the circumstances
inequitable or unfair to permit. The rule that each co-owner may demand at any time the partition of the
common property implies that an action to demand partition is imprescriptible or cannot be barred by
laches.

53
We have consistently held that if a co-owner sells the whole property as his, the sale will affect only his own share
but not those of the other co-owners who did not consent to the sale.

It is clear therefore that the deed of sale executed by Sixto Medrano in favor of Tiburcio Balitaan is a valid
conveyance only insofar as the share of Sixto Medrano in the co-ownership is concerned. Thus, the respondent
court erred in declaring the ownership of the entire 1,695-square meter property sold by Sixto, in favor of the
private respondents.

60. SPS. ALEXANDER CRUZ and ADELAIDA CRUZ vs. ELEUTERIO LEIS
G. R. No. 125233 March 9, 2000

FACTS
Gertrudes acquired a parcel of land for which the Deed of Sale and the TCT No. 43100 described her as a widow.
In 1973, her husband, Adriano, died. It does not appear that he executed a will before his death.

In 1985, Gertrudes obtained a loan from petitioners secured by a mortgage over the property covered by TCT No.
43100. Gertrudes failed to pay the loan so she executed a "Kasunduan" which the parties concede is a pacto de
retro sale, granting Gertrudes one year within which to repurchase the property and a "Kasunduan ng Tuwirang
Bilihan," a Deed of Absolute Sale covering the same property. For failure of Gertrudes to repurchase the property,
ownership thereof was consolidated in the name of Alexander Cruz.

In 1987, Gertrudes Isidro died. Thereafter, her heirs, herein private respondents, received demands to vacate the
premises from petitioners, the new owners of the property. Private respondents, the heirs of spouses Adriano Leis
and Gertrudes Isidro, filed an action before the RTC seeking the nullification of the contracts of sale over a lot
executed by Gertrudes Isidro in favor of petitioner Alexander Cruz, as well as the title subsequently issued in the
name of the latter. They claimed that the contracts were vitiated by fraud as Gertrudes was illiterate and already
80 years old at the time of the execution of the contracts; that the price for the land was insufficient; and that the
property subject of the sale was conjugal and, consequently, its sale without the knowledge and consent of private
respondents was in derogation of their rights as heirs.

The RTC rendered a decision in favor of private respondents. The RTC held that the land was conjugal property
since the evidence presented by private respondents disclosed that the same was acquired during the marriage of
the spouses and that Adriano contributed money for the purchase of the property. Thus, Gertrudes could only sell
to petitioner spouses her one-half share in the property.

The CA affirmed the RTC.

ISSUES
1. Whether or not the parcel of land covered by TCT No. 43100 is conjugal.
2. Whether or not Gertrudes' redemption of the property vested in her the ownership over the same to the
exclusion of her co-owners.

RULING
The paraphernal or conjugal nature of the property is not determinative of the ownership of the disputed property.

Incidentally, there is no merit in petitioners' contention that Gertrudes' redemption of the property from the Daily
Savings Bank vested in ownership over the same to the exclusion of her co-owners. In the case of Paulmitan
vs. Court of Appeals, where one of the petitioners therein claimed ownership of the entire property subject of the
case by virtue of her redemption thereof after the same was forfeited in favor of the provincial government for non-
payment of taxes. The SC held that the redemption of the land "did not terminate the co-ownership nor give her
title to the entire land subject of the co-ownership." The SC also quoted the case of Adille vs. Court of Appeals, to
wit:

Under the Civil Code:

Art. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of
preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt
himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his
share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.
The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under
Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by

54
 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 (Supra, art. 1607). 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.

As a rule, a co-owner such as Gertrudes could only dispose of her share in the property owned in common. Article
493 of the Civil Code provides:
Art. 493. Each co-owner shall have the full ownership of his part of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.

Unfortunately for private respondents, however, the property was registered in TCT No. 43100 solely in the name
of "Gertrudes Isidro, widow." Where a parcel of land, forming past of the undistributed properties of the dissolved
conjugal partnership of gains, is sold by a widow to a purchaser who merely relied on the face of the certificate of
title thereto, issued solely in the name of the widow, the purchaser acquires a valid title to the land even as
against the heirs of the deceased spouse. The rationale for this rule is that "a person dealing with registered land
is not required to go behind the register to determine the condition of the property. He is only charged with notice
of the burdens on the property which are noted on the face of the register or the certificate of title. To require him
to do more is to defeat one of the primary objects of the Torrens system."

61. TOMAS CLAUDIO MEMORIAL COLLEGE, INC. vs. COURT OF APPEALS

G. R. No. 124262 October 12, 1999

FACTS
On December 13, 1993, private respondents filed an action for Partition before the RTC of Morong, Rizal. They
alleged that their predecessor-in-interest, Juan De Castro, died intestate in 1993 and they are his only surviving
and legitimate heirs. They also alleged that their father owned a parcel of land designated at Barrio San Juan,
Morong, Rizal. They further claim that in 1979, without their knowledge and consent, said lot was sold by their
brother Mariano to petitioner. The sale was made possible when Mariano represented himself as the sole heir to
the property. It is the contention of private respondents that the sale made by Mariano affected only his undivided
share to the lot in question but not the shares of the other co-owners equivalent to four fifths (4/5) of the property.

Petitioner filed a motion to dismiss contending, as its special defense, lack of jurisdiction and prescription and/or
laches.

ISSUES
1. Whether or not the right of private respondents to assail the sale and to ask for the partition of the disputed
property were barred by laches and/or prescription.
2. Whether or not the private respondents share in the disputed lot was affected by the sale that was made by
their co-owner.

RULING
On the issue of prescription, the SC ruled that even if a co-owner sells the whole property as his, the sale will
affect only his own share but not those of the other co-owners who did not consent to the sale. Under Article 493
of the Civil Code, the sale or other disposition affects only the seller's share pro indiviso, and the transferee gets
only what corresponds to his grantor's share in the partition of the property owned in common. Since a co-owner
is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the
other co-owners is not null and void. However, only the rights of the co-owner/seller are transferred, thereby
making the buyer a co-owner of the property. The proper action in a case like this, is not for the nullification of the
sale, or for the recovery of possession of the property owned in common from the third person, but for division or
partition of the entire property if it continued to remain in the possession of the co-owners who possessed and
administered it. Such partition should result in segregating the portion belonging to the seller and its delivery to the
buyer.

Pursuant to Article 494 of the Civil Code, "no co-owner shall be obliged to remain in the co-ownership. Such co-
owner may demand at anytime the partition of the thing owned in common, insofar as his share is concerned." In
Budlong vs. Bondoc, the SC has interpreted said provision of law to mean that the action for partition is
imprescriptible. It cannot be barred by prescription. For Article 494 of the Civil Code explicitly declares: "No
55
prescription shall lie in favor of a co-owner or co-heirs as long as he expressly or impliedly recognizes the co-
ownership."

62. TERESITA S. REYES-DE LEON vs. VICENTE B. DEL ROSARIO

G. R. No. 152862 July 26, 2004

FACTS
The instant case originated from an action for Partition filed by Pantaleon U. del Rosario and his son, respondent
Vicente B. del Rosario, before the Cebu City RTC. Petitioner Teresita Reyes-de Leon was impleaded as a
defendant, being one of the heirs of the late spouses Pantaleon S. del Rosario and Ceferina Llamas. Plaintiffs
therein are cousin and nephew, respectively, of the petitioner. Plaintiffs claimed that petitioner executed a deed of
absolute sale in favor of Vicente B. del Rosario covering all of her shares in the properties sought to be
partitioned. Petitioner claimed that she did not execute any deed of sale in favor of Vicente B. del Rosario.

Petitioner filed a Complaint for declaration of nullity of deed of sale with damages before the Regional Trial Court
of Cebu City. She stated that she sold her one-half share in a certain property to respondents father. However,
she was shocked when she learned from her cousins that respondent Vicente B. del Rosario was claiming all of
her shares in the estate of Ceferina Llamas, her maternal grandmother. However, the deed, she further alleged,
fraudulently added the phrase "including any and all of her shares, rights and interests on all other real estate
properties together with their improvements which she acquired by inheritance from the estate of the late Ceferina
Llamas Vda. De Del Rosario."

The Complaint for declaration of nullity was eventually dismissed. The trial court ratiocinated that the issue of
ownership should be determined and resolved in the partition case. Petitioner sought the reconsideration of
the Order but it was denied. Hence, the instant petition. While the petition was pending, petitioner died and was
substituted by her heirs.

ISSUE
Whether or not Teresita de Leon validly sold all her shares in the inheritance to plaintiff Vicente B. del Rosario.

RULING
Only the shares in the lots which are determined to have been validly sold to the respondent may be included in
the action for partition. Conversely, shares in the lots which were not validly disposed of by the petitioner shall
have to be excluded in the order of partition. Indeed, only properties owned in common may be the object of an
action for partition. Put elsewise, an order of partition presupposes a state of co-ownership as the status quo ante.
Article 494 of the Civil Code provides that "(e)ach co-owner may demand at any time the partition of the thing
owned in common, insofar as his share is concerned."

The issue of ownership or co-ownership, to be more precise, must first be resolved in order to effect a partition of
properties. This should be done in the action for partition itself. As held in the case of Catapusan v. Court of
Appeals:
"In actions for partition, the court cannot properly issue an order to divide the property, unless it first
makes a determination as to the existence of co-ownership. The court must initially settle the issue of
ownership, the first stage in an action for partition. Needless to state, an action for partition will not lie if
the claimant has no rightful interest over the subject property. In fact, Section 1 of Rule 69 requires the
party filing the action to state in his complaint the "nature and extent of his title" to the real estate. Until
and unless the issue of ownership is definitely resolved, it would be premature to effect a partition of the
properties. xxx."

63. VIRGILIO B. AGUILAR vs. COURT OF APPEALS

G. R. No. 76351 October 29, 1993

FACTS
Brothers Virgilio Aguilar and Senen Aguilar agreed to apply a loan with the SSS for the purchase of a house in a
quiet neighborhood so that their father, the late Manuel Aguilar can enjoy the final years of his life. A written
memorandum was drafted between the brothers stating that the share of Virgilio was two-thirds (2/3) while that of
Senen was one-third (1/3), but since Virgilio was disqualified to apply for a loan with the SSS, the deed of sale
and the title would be registered in the name of Senen and they also agreed that Senen will take care of the need
of their father since Virgilio lives in Cebu.

56
After the death of their father, petitioner expressed his desire to dissolve the co-ownership, and told respondent to
vacate the house. Respondent refused so that Petitioner filed a case to compel respondent to sell the house and
lot and to divide the proceeds based on the written agreement and also that respondent be made to pay rent
from the time of death of their father.

In his answer, respondent is amenable to selling the property but that the proceeds should be divided equally
based on the best selling price available and that he should not be made to pay rent because he is entitled to the
right to use and enjoy the property being a co-owner.

The lower court denied respondent counsels motion for postponement and rendered judgment because of the
failure of both respondent and counsel to appear at the pre-trial. Judgment was rendered ordering respondent to
sell the house and lot and to divide the shares equally being co-owners and that the rent should reckoned form
the date of the promulgation of judgment and not from the death of their father.

The Court of Appeals reversed the judgment by default of the lower court and ordered for another pre-trial and
trial stating that the motion for postponement should have been considered.

ISSUE
Whether or not the judgment of the trial court is valid?

HELD
The Supreme Court held that petitioner and respondents are co-owners of subject house and lot in equal shares;
either one of them may demand the sale of the house and lot at any time and the other cannot object to such
demand; thereafter the proceeds of the sale shall be divided equally according to their respective interests.

The SC also stated that the judgment of the lower is in accordance with Article 498 of the Civil Code, which states
that whenever the thing is essentially, indivisible and the co-owners cannot agree that it be, allotted to one of them
who shall indemnify the others, it shall be sold and its proceeds accordingly distributed.

The rentals demanded should be reckoned from the order of the trial court of ejectment of respondent and his
family to the present and not from the death of their father because as a co-owner of said property, respondent
has the right to the use and enjoyment of said property.

64. REMEDIOS G. SALVADOR vs. COURT OF APPEALSFRANCISCA YABO

G. R. No. 109910 April 5, 1995

FACTS
Lot No. 6080 and Lot No. 6180 are two parcels of land subject of the controversy, they were originally owned by
Alipio Yabo, who died before or during World War II. The ownership of the subject lots passed on to his nine
children. His children are, namely, Victoriano, Procopio, Lope, Jose, Pelagia, Baseliza, Francisca, Maria, and
Gaudencia.

Through successful purchases, the husband of Maria, Pastor Makibalo obtained the shares of Alipios heirs
including that of his wife upon the latters death, except that of Gaudencia. Owning 8/9 share on the subject lots
he filed a complaint for Quieting of Title, Annulment of Documents, and Damages against the spouses Alberto
and Elipia Yabo, adding that he occupied, cultivated, and possessed continuously, openly, peacefully, and
exclusively the two parcels of land. He then prayed that he be declared the absolute owner of 8/9 of the lots in
question.

The respondents represent the grandchildren and great-grandchildren of Alipio Yabo. They alleged that Lot No.
6080 and Lot No. 6180 are the common property of the heirs of Alipio Yabo, namely, the plaintiffs, defendant
Enecia Cristal, Maria Yabo and Jose Yabo, whose share had been sold to Alberto Yabo; that after Alipio's death,
the spouses Pastor and Maria Makibalo, Enecia Cristal and Jose Yabo became the de facto administrators of the
said properties; and that much to their surprise, they discovered that the Salvador spouses, who were strangers to
the family, have been harvesting coconuts from the lots, which act as a cloud on the plaintiffs' title over the lots.

Pastor Makibalo that he previously mortgaged his share in the two lots to the Salvador spouses and that two
years after the filing of the case, he transferred all of his right to the spouses via Confirmation and Quitclaim".

57
The court stated that all of the 7/9 share of the lot should be adjudicated in favor of Pastor alone and not to his co-
heirs, Pastor Makibalo who had been in possession of the whole of the eight shares in both Lots 6080 and 6180,
enjoying the fruits thereof exclusively, uninterruptedly, publicly, peacefully, and continuously from the death of
Maria Yabo up to the filing of the complaint in Civil Case No. 5174 on October 8, 1976, or a period of 14 years,
had acquired title to the whole of the eight shares in Lot 6080 and seven shares in Lot 6180 (the share of
Procopio in Lot 6180 had been sold back to Alberto Yabo).

On appeal, among the rulings of the Court of Appeals are prescription and laches have not run against the private
respondents with respect to the 1/9 share of Maria Yabo in the estate of her father and to her conjugal share in
the portions acquired from her brothers and sisters. The CA ruled that the all the lots subject of purchase of Pastor
are deemed conjugal in nature having been bought during his marriage with Maria and therefore the other heirs of
Maria have a share in the lots obtained by purchase by Pastor.

ISSUES
1. Whether or not the subject shares are conjugal property in nature.
2. Whether or prescription lie against the co-heirs of Pastor Makibalo.

RULING
The Supreme Court affirmed the ruling of the Court of Appeals with modifications.

On the first issue, the subject shares are conjugal in nature, Upon Maria's death in 1962; the conjugal partnership
of gains was dissolved. Half of the conjugal properties, together with Maria's l/9 hereditary share in the disputed
lots, constituted Maria's estate and should thus go to her surviving heirs. Under Article 1001 of the Civil Code, her
heirs are her spouse, Pastor Makibalo, who shall be entitled to-one-half (1/2) of her estate, her brother, Jose, and
the children of her other brothers and sisters, who shall inherit the other half.

There having been no actual partition of the estate yet, the said heirs became co-owners thereof by operation of
law.

What are not included in the Conjugal Propeties are: (1) the 1/9 share inherited by Maria which remained as her
exclusive property pursuant to Article 146 (2) of the Civil Code; (2) the 1/9 share of Gaudencia which was not sold
to Pastor; and (3) the 1/9 share of Pelagia which was acquired by Pastor in 1967 or five years after the death of
his wife and which was therefore his exclusive property.

On the second issue, Article 494 of the Civil Code which provides that each co-owner may demand at any time
the partition of the common property implies that an action to demand partition is imprescriptible or cannot be
barred by laches. The imprescriptibility of the action cannot, however, be invoked when one of the co-owners has
possessed the property as exclusive owner and for a period sufficient to acquire it by prescription.

The records do not show that Pastor Makibalo adjudicated to himself the whole estate of his wife by means of an
affidavit filed with the Office of the Register of Deeds as allowed under Section 1 Rule 74 of the Rules of Court, or
that he caused the issuance of a certificate of title in his name or the cancellation of the tax declaration in Alipio's
name and the issuance of a new one in his own name.

The prescriptive period only began to toll when he filed the case for quieting of title which is an overt act of
repudiation of the co-ownership.

d. On Possession
65. PEOPLE OF THE PHILIPPINES vs. NORMANDO DEL ROSARIO
G. R. No. 109633 July 20, 1994

FACTS
Normando del Rosario was charged before Branch 17 of the Regional Trial Court of the Fourth Judicial Region
stationed in Cavite City with Illegal Possession of Firearm and Ammunitions and Illegal Sale of Regulated Drugs.
Upon arraignment, accused-appellant pleaded not guilty to both charges. In view of the foregoing, the Court finds
the accused guilty beyond reasonable doubt in the above-entitled cases.

From said decision, the instant appeal has been interposed. The trial court gave much weight to the testimonies of
the police members of the buy-bust operation. However, the prosecution did not present as witness the supposed
poseur-buyer. Such omission casts serious doubt on appellant's guilt because without the testimony of the
58
poseur-buyer, there is no convincing evidence to show that appellant sold marijuana. The testimonies of the rest
of the buy-bust operation are hearsay in view of the fact that the poseur-buyer, was never presented at the trial.
There was even no testimony that when the accused-appellant handed the stuff to the poseur-buyer that the latter
in turn handed the marked money. The failure of the prosecution to present the alleged buyer of the marijuana
was a fatal flaw in the case against the accused.

ISSUES
1. Whether or not, sale is different from possession.
2. Whether or not, the accused be held guilty beyond reasonable doubt in the above charges.

RULING
Accused-appellant cannot be convicted of possession of the shabu contained in a canister and allegedly seized at
his house, for the charge against him was for selling shabu with the information alleging that the "accused, without
legal authority did . . . sell to a poseur buyer an aluminum foil containing Methamphetamine Hydrochloride . . ."

Sale is totally different from possession. Article 1458 of the Civil Code defines sale as a contract whereby "one of
the contracting parties obligates himself to transfer the ownership of and to deliver a determine thing, and the
other to pay therefor a price certain in money or its equivalent", while "possession is the holding of a thing or the
enjoyment of a right" as defined by Article 523 of the Civil Code. Accused-appellant cannot be convicted of a
crime which is not charged in the information for to do so would deny him the due process of law.

Neither can accused-appellant be convicted of illegal possession of firearm and ammunition. The search warrant
implemented by the raiding party authorized only the search and seizure of ". . . the described quantity of
Methamphetamine Hydrochloride commonly known as shabu and its paraphernalia". Thus, the raiding party was
authorized to seize only shabu and paraphernalia for the use thereof and no other.

Thus, the search warrant was no authority for the police officers to seize the firearm which was not mentioned,
much less described with particularity, in the search warrant. Said firearm, having been illegally seized, the same
is not admissible in evidence.

66. MANOTOK REALTY, INC. vs. THE HONORABLE JOSE H. TECSON

G. R. No. L-47475 August 19, 1988

FACTS
Petitioner filed petition for mandamus alleging that the respondent judge committed grave abuse of discretion in
denying his motion to exercise option and for execution of judgment on the grounds that under Articles 448 and
546 of the Civil Code, the exercise of option belongs to the owner of the property, the petitioner herein, and that
upon finality of judgment, the prevailing party is entitled, as a matter of right, to its execution which is only a
ministerial act on the part of the respondent judge. At the onset of the case, respondent was declared as the
possessor in good faith with affirmance by the Court of Appeals. On the other hand, respondent contended
against petitioners allegation that the same has already become moot and academic for two reasons: first, fire
gutted not only the house of the private respondent but the majority of the houses in Tambunting Estate; and
second, as a result of the said fire, the then First Lady and Metro Manila Governor Imelda R. Marcos has placed
the disputed area under her Zonal Improvement Project, thereby allowing the victims of the fire to put up new
structures on the premises, so that the willingness and readiness of the petitioner to exercise the alleged option
can no longer be exercised since the subject-matter thereof has been extinguished by the fire.

ISSUE
Whether or not the owner of the property may exercise the option given by law either to retain the premises and
pay for the improvements or to sell the said property to the builder in good faith considering final judgment with
writ of execution in favor of the possessor in good faith

RULING
Petition was granted. Neither can the respondent judge deny the issuance of a writ of execution because the
private respondent was adjudged a builder in good faith or on the ground of "peculiar circumstances which
supervened after the institution of this case, like, for instance, the introduction of certain major repairs of and other
substantial improvements..." because the option given by law either to retain the premises and pay for the
improvements thereon or to sell the said premises to the builder in good faith belongs to the owner of the property.
The repairs and improvements introduced by the said respondents after the complaint was filed cannot be
considered to have been built in good faith, much less, justifies the denial of the petitioner's exercise of option.

59
Since the improvements have been gutted by fire, and therefore, the basis for private respondent's right to retain
the premises has already been extinguished without the fault of the petitioner, there is no other recourse for the
private respondent but to vacate the premises and deliver the same to herein petitioner.

67. PEDRO P. PECSON vs. COURT OF APPEALS

G. R. No. 115814 May 26, 1995

FACTS
Petitioner Pedro P. Pecson was the owner of a commercial lot on which he built a four-door two-storey apartment
building. For his failure to pay realty taxes, the lot was sold at public auction by the city Treasurer of Quezon City
to Mamerto Nepomuceno who in turn sold to the private respondents, the spouses Juan Nuguid and Erlinda Tan-
Nuguid. Thus, petitioner challenged the validity of the auction sale. RTC dismissed the complaint but as to
respondents claim that the sale included the apartment building, it held that it was not the subject of the litigation,
and that there was no legal basis for the contention that the apartment building was included in the sale. The
lower court rendered a decision and was also affirmed by the CA that the apartment building was not included in
the auction sale of the commercial lot. Subsequently, respondents for delivery of possession of the lot and the
apartment building, citing article 546 of the Civil Code.

ISSUE
Whether or not the owner of the property who is at the same time the builder, sower or planter may exercise his
right under Article 448 of the NCC

RULING
The decision rendered by the lower court as affirmed by the CA was set aside.

By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one of
whom has built some works, or sown or planted something. The building, sowing or planting may have been
made in good faith or in bad faith. The rule on good faith laid down in Article 526 of the Civil Code shall be applied
in determining whether a builder, sower or planter had acted in good faith. Article 448 does not apply to a case
where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or
donation.

The case is hereby remanded to the trial court for it to determine the current market value of the apartment
building on the lot. For this purpose, the parties shall be allowed to adduce evidence on the current market value
of the apartment building. The value so determined shall be forthwith paid by the private respondents to the
petitioner otherwise the petitioner shall be restored to the possession of the apartment building until payment of
the required indemnity.

68. AGUEDA DE VERA vs. HON. COURT OF APPEALS

G. R. No. 97761 April 14, 1999

FACTS
Respondent Ricardo Ramos filed a complaint against the petitioners for recovery of property with damages.
Petitioners contended that they have been in possession not only of 22 square meters but 70 square meters of
land through their predecessor-in-interest, Teodoro de la Cruz (husband of defendant-appellant Agueda De Vera
and father of the rest of the defendants-appellants) and subsequently by themselves, as owners, before 1956;
that said 70 square meter area occupied by them is a portion of Lot 7005, Cad 211, over which their predecessor-
in-interest, Teodoro de la Cruz, had, during his lifetime, a pending Miscellaneous Sales Application which was
given due course and favorably recommended by the District Land Officer for Isabela to the Director of Lands;
that Teodoro de la Cruz also declared the said land for taxation purposes and after his death, by his heirs, and
that plaintiff-appellees cause of action is already barred by prescription and/or laches.

ISSUE
Whether or not the petitioners were possessors and builders in bad faith of some portions of the property under
controversy

RULING
Petition was denied. Article 526 of the New Civil Code, provides: He is deemed a possessor in good faith who is
not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

60
In distinguishing good faith and bad faith possession, the Code refers to the manner of acquisition in general. A
possessor in good faith is one who is unaware that there exists a flaw which invalidates his acquisition of the
thing. Good faith consists in the possessors belief that the person from whom he received a thing was the owner
of the same and could convey his title. It consists in an honest intention to abstain from taking any
unconscientious advantage of another, and is the opposite of fraud. Since good faith is a state of the mind, and is
not a visible, tangible fact that can be seen or touched, it can only be determined by outward acts and proven
conduct. It implies freedom from knowledge and circumstances which ought to put a person on inquiry.

Records disclosed that prior to the construction in 1983 of petitioners house on the land under controversy
(Portions B and C), a demand letter dated April 27, 1981 was sent by private respondent to the petitioners,
informing them that the land they were possessing and occupying is within his (private respondents) titled
property. In the same letter, the private respondent gave petitioner Agueda de Vera the option to either pay him
the value of the property or lease the same on a yearly or monthly basis. However, the contending parties failed to
reach a compromise agreement. The lower court found, that the defendants (herein petitioners) are occupying ...
an area of 22 square meters (Portions B and C),..., in which land, defendants constructed a house of strong
materials in 1983 after dismantling heir (sic) previous building erected thereon on or about January or February,
1970. The facts and circumstances aforestated are outward acts and proven conduct indicating bad faith of
petitioners as possessor and builder.

69. MANOTOK REALTY INC. vs. THE HONORABLE COURT OF APPEALS

G. R. No. L-39044 January 3, 1985

FACTS
Manotok Realty Inc. is the registered owner of a parcel of land with the assessed value of P3,059,180.00. It
acquired the property from the Testate Estate of Clara Tambunting de Legarda. The property was subdivided but
could not take possession therof because the whole area is occupied of several homes one of which belongs to
Felipe Carillo.

Demands to vacate were made, however Carillo continued to occupy the disputed lot and refuse to surrender
possession. After the petitioner failed in its attempt to take possession, he filed the reivindicatory action against
Carillo. The Trial Court decided in favor of Manotok Realty Inc. ordering Carillo to vacate and/or surrender
possession, to pay monthle rental of P75.50/month from 1/21/1996 up to the time he surrenders possession.

ISSUE
Whether or not appellant may be considered as a possessor in good faith of the property in question.

RULING
Art. 256 of the Civil Code defines a possessor in good faith as one who is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it. Appellant cannot be deemed a possessor in good faith and is
not, therefore, entitled to reimbursement for the improvements he had introduced in the property in question.

70. IGNACIO WONG vs. HON. LUCAS DE CARPIO

G. R. No. L-50264 October 21, 1991

FACTS
Manuel Mercado acquired his rights to possess the land in litigation from William Giger by virtue of a deed of sale
with the right to repurchase. Ignacio Wong went to the land in litigation to find out if there were other people
residing there and found none, and decided bought the parcel of land from William Giger. Manuel Mercado went
to the land in litigation to make copras, Mr. Wong ordered the hooking of the coconuts and nobody disturb him.

November 29, 1976. Manuel Mercado received a complaint for forcible entry. Municipal Trial Courts decision
found that Mr. Wong had prior, actual and continuous physical possession of the disputed property. MTC drew
completely different conclusion.

ISSUE
Whether or not Manuel Mercado is an intruder in land in litigation.

RULING
The act entering the property and excluding the lawful therefrom necessarily implies the exertion of force over the

61
property, and this is all that is necessary. Under the rule, entering upon the premises by strategy or stealth is
equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the
original possessor by a person who has entered without right. The words by force, intimidation, threat, strategy,
or stealth include every situation or condition under which one person can wrongfully enter upon real property
and exclude another who has had prior possession therefrom. If a trespasser enters upon land in open daylight,
under the very eyes of person already clothed with lawful possession, but without the consent of the latter, and
there plants himself and excludes such prior possessor from the property, the action of forcible entry and detainer
can unquestionably be maintained, even though no force is used by the trespasser other than such as is
necessarily implied from the mere acts of planting himself on the ground and excluding the other party. (Tolentino,
Civil Code of the Philippines, Vol. II, 1983 Ed.,pp.243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]).

A perusal of the records of the case shows that the petitioner received private respondents complaint for forcible
entry with summons on November 29, 1976 (Rollo, p.46). His good faith therefore ceased on November 29, 1976.

71. SPOUSES DARIO LACAP vs. JOUVET ONG LEE

G. R. No. 142131 December 11, 2002

FACTS
Victor Facundo mortgaged two parcels of land and improvements to Monte de Piedad Savings Bank. Spouses
Dario and Matilde Lacap assumed Facundos obligations to the bank. The bank foreclosed the mortgage due to
failure to pay their obligation.

The bank allowed the spouses to stay in the premise as lessees paying a monthly rental of P800.00. The spouses
introduced improvements amounting to P500,000.00. The spouses received a letter demanding them to vacate
because it was already owned by Jouvet Ong Lee.

The respondent filed a complaint for unlawful detainer. The Municipal Trial Court rendered a decision in favor of
the plaintiff. On appeal, RTC affirmed the decision with modification that respondent should reimburse for the
requirements the spouses introduced.

ISSUE
Whether or not Spouses Lacap is entitled for the indemnity for the improvements in the subject property.

RULING
A conclusive presumption arises from the fact that, during the tenancy relationship, the petitioner spouses
admitted the validity of the title of their landlord. This negated their previous claim of title. If, indeed, they believed
in good faith they had at least an imperfect title of dominion over the subject premises, they should have tried to
prevent the foreclosure and objected to the acquisition of title by the bank. In other words, their supposed belief in
good faith of their right of dominion ended when the bank foreclosed and acquired title over the subject premises.

72. CIR vs. SOLIDBANK CORPORATION

G. R. No. 148191 November 25, 2003

FACTS
On January 30, 1996, [the Court of Tax Appeals] rendered a decision in CTA Case No. 4720 entitled Asian Bank
Corporation vs. Commissioner of Internal Revenue, wherein it was held that the 20% final withholding tax on
banks interest income should not form part of its taxable gross receipts for purposes of computing the gross
receipts tax. Since there is no actual receipt, the FWT is not to be included in the tax base for computing the
GRT. There is supposedly no pecuniary benefit or advantage accruing to the bank from the FWT, because the
income is subjected to a tax burden immediately upon receipt through the withholding process.

Respondent argues that only items of income actually received should be included in its gross receipts. It claims
that since the amount had already been withheld at source, it did not have actual receipt thereof.

ISSUE
Whether the 20% FWT forms part of the taxable gross receipts in computing the 5% gross receipts tax.

RULING

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The court applied the rules on actual and constructive possession provided in Articles 531 and 532 of our Civil
Code. Under Art 531: Possession is acquired by the material occupation of a thing or the exercise of a right, or
by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for
acquiring such right.

Article 532 states: Possession may be acquired by the same person who is to enjoy it, by his legal
representative, by his agent, or by any person without any power whatever; but in the last case, the possession
shall not be considered as acquired until the person in whose name the act of possession was executed has
ratified the same, without prejudice to the juridical consequences of negotiorum gestio in a proper case.

Article 531 of the Civil Code clearly provides that the acquisition of the right of possession is through the proper
acts and legal formalities established therefor. The withholding process is one such act. There may not be actual
receipt of the income withheld; however, as provided for in Article 532, possession by any person without any
power whatsoever shall be considered as acquired when ratified by the person in whose name the act of
possession is executed.

In our withholding tax system, possession is acquired by the payor as the withholding agent of the government,
because the taxpayer ratifies the very act of possession for the government. There is thus constructive receipt.
The processes of bookkeeping and accounting for interest on deposits and yield on deposit substitutes that are
subjected to FWT are indeed -- for legal purposes -- tantamount to delivery, receipt or remittance. Besides,
respondent itself admits that its income is subjected to a tax burden immediately upon receipt, although it claims
that it derives no pecuniary benefit or advantage through the withholding process. There being constructive
receipt of such income -- part of which is withheld -- RR 17-84 applies, and that income is included as part of the
tax base upon which the GRT is imposed.

73. REPUBLIC OF THE PHILIPPPINES vs. JERRY DAVID

G. R. No. 155634 August 16, 2004

FACTS
Jerry David is an employee of SSS and pursuant to its Employees Housing Loan Program, SSS awarded David a
house and lot located at North Fairview, Quezon City. In an investigation conducted by SSS, it was revealed that
David committed two violations of his deed of conditional sale. SSS then sent a letter to David formally revoking,
terminating or rescinding the deed of conditional sale. However, the latter refused to vacate and surrender
possession of the subject property, prompting SSS to file a complaint. David denied the allegations, stating that
Buenaventura Penus was a caretaker until renovations and modifications on the house were made. The lower
court dismissed the complaint. CA affirmed the decision ruling that while person had been found occupying the
subject property, no proof was adduced by petitioner to prove that they had take possession of it on their own
behalf and not merely as respondent caretakers.

ISSUE
Whether the Court of Appeals committed reversible error in affirming the Decision of the trial court holding that
respondent did not violate the terms and conditions of the Deed of Conditional Sale.

RULING
The court ruled that the respondent did not comply with two concurring conditions actual occupancy and
possession at all times.

Actual possession consists in the manifestation of acts of dominion over property of such a nature as a party
would naturally exercise over his own - as when respondent himself is physically in occupation of the property, or
even when another person who recognizes the formers rights as owner is in occupancy. In short, possession can
be either actual or merely constructive.

On the other hand, actual occupancy connotes something real, or actually existing, as opposed to something
merely possible, or to something which is presumptive or constructive. Unlike possession, it can only be actual or
real, not constructive.

Under the terms of the subject Contract, actual possession cannot be equated with actual occupancy. Inasmuch
as the housing unit was physically occupied by parties other than those intended to be benefited by the housing
program of the Social Security System, there was a clear violation of the Contract. Since respondent did not
comply with his obligations, rescission is proper.

63
The Petition was granted and the assailed Decision set aside.

75. JOSE C. LEE vs. RTC OF QUEZON CITY BRANCH 85

G. R. No. 146006 February 23, 2004

FACTS
Dr. Juvencio P. Ortanez incorporate the Philippine International Life Insurance Company, Inc. on Ju6, 1956. At
the time of the companys incorporation, Dr. Ortaes owned ninety percent (90%) of the subscribed capital stock.

On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado Ortaez), three legitimate children
(Rafael, Jose and Antoni Ortaez) and five illegitimate children by Ligaya Novicio (herein private respondentMa.
Divina Ortaez-Enders and her siblings Jose, Romeo, EnricoManuel and Cesar, all surnamed Ortaez).

On September 24, 1980, Rafael Ortaez filed before the CFI of Rizal, Quezon City Branch a petition for letters of
administration of the intestate estate of Dr. Ortaez. Private respondent Ma. Divina Ortaez-enderes and her
siblings filed an opposition to the petition for letters of administration and, in a subsequent urgent motion, prayed
that the intestate court appoint a special administrator.

On March 10, 1982, then presiding judge appointed Rafael and Jose Ortaez joint special administrators of their
fathers estate. Hearings continued for the appointment of a regular administrator. As ordered by the insteste
court, special administrators Rafael and Jose Ortaez submitted an inventory of the estate of their father which
included, among other properties, 2,029 shares of stock in the Philippine International Life Insurance Company
(herein Philinterlife), representing 50.725% of the companys outstanding capital stock.

On April 15,1989, the decedents wife, Juliana S. Ortaez, claiming that she owned 1,014 Philinterlife shares of
stock as her conjugal share in the estate, sold said shares with right to repurchase in favor of herein petitioner
Filipino Loan Assistance Group (FLAG), represented by its president, herein petitioner Jose C. Lee. Juliana
Ortaez failed to repurchase the shares of stock within the stipulated period, thus ownership thereof was
consolidated by petitioner FLAG in its name.

On October 30, 1991, Special Administrator Jose Ortaez, acting in his personal capacity and claiming that he
owned the remaining 1,011 Philinterlife shares of stocks as his inheritance share in the estate, sold said shares
with right to repurchase also in favor of herein petitioner FLAG, represented by its president, herein petitioner
Jose C. Lee. After one year, petitioner FLAG consolidated in its name the ownership of the Philinterlife shares of
stock when Jose Ortaez failed to repurchase the same.

It appears that several years before (but already during the pendency of the intestate proceedings at the RTC of
QC Branch 85), Julian Ortaez and her two children, Special Administrators Rafael and Jose Ortaez, entered
into a memorandum of agreement dated March 4, 1982 for the extrajudicial settlement of the estate of Dr.
Juvencio Ortaez, partitioning the estate (including the Philinterlife shares of stock) among themselves. This was
the basis of the number of shares separately sold by Juliana Ortaez on April 15, 1989 (1,014 shares) and by
Jose Ortaez on October 30, 1991 (1.011 shares) in favor of herein petitioner FLAG.

On July 12, 1995, herein private respondent Ma. Divina-Enderes and her siblings filed a motion for appointment of
special administrator of Philinterlife shares of stock. This move was opposed by Special Administrator Jose
Ortaes. On November 8, 1995, the intestate court granted the motion of private respondent Enderes et al. and
appointed private respondent Enderes special administratrix of the Philinterlife shares of stock. On December 20,
1995, special Aministratrix Enderes filed an urgent motion to declare void ab initio the memorandum of agreement
dated March 4,1982. On January 9, 1996, she filed a motion to declare the partial nullity of the extrajudicial
settlement of the decedents estate. These motion were opposed by Special Administrator Jose Ortaez.

On Mach 22, 1996, special administratrix Enderes filed an urgent motion to declare void ab initio the deeds of sale
of Philinterlife shares of stocks, which was again opposed by Special Administrator Jose Ortaez. On February 4,
1997, Jose Ortaez filed an omnibus motion for (1) the approval of the deeds of sale of the Philinterlife shares of
stock and (2) the release of Ma. Divina Ortaez-Enderes as special administratrix of the Philinterlife shares of
stock on the ground that there were no longer any shares of stock for her to administer.

On August 11, 1997, the intestate court denied the omnibus motion of special administrator Jose Ortaez for the
approval of the deeds of sale.

64
ISSUE
Whether or not the sale of any property of the estate by an administrator or prospective heir without order of the
probate or intestate court is valid.

RULING
An heir can sell his right, interest, or participation in the property under administration under Art. 533 of the Civil
Code which provides that possession of hereditary property is deemed transmitted to the heir without interruption
from the moment of the death of the decedent. However, an heir can only alienate such portion of the estate that
may be allotted to him in the division of the estate by the probate or intestate court after final adjudication, that is,
after all debtors shall been paid or the devisees or legatees shall have been given their shares. This means that
an heir ma only sell his ideal or undivided share in the estate, not any specific property therein. IN the present
case, Juliana Ortaez sold specific properties of the estate (1,014 and 1,011 shares of stock in the Philinterlife) in
favor of petitioner FLAG. This they could not lawfully do pending the final adjudication of the estate by the
intestate court because of the undue prejudice it would cause the other claimants to the estate, as what happened
in the present case.

The subject properties therefore are under the jurisdiction of the probate court which according to our settled
Jurisprudence has the authority to approved any disposition regarding properties under administration. More
emphatic is the declaration we made in Estate of Olave vs. Reyes (1243 SCRA 767) where we stated that when
the estate of the deceased person is already the subject of a testator or intestate proceeding, the administrator
cannot enter into any transaction involving it without prior approval of the probate court.

It is being settled that property under administration needs the approval of the probate court before it can be
disposed of, any unauthorized disposition does not bind the estate and is null and void. As early as 1921 in the
case of Godoy vs. Orellano (42 Phil 347), we laid down the rule that the sale by an administrator of property of the
deceased, which is not authorized by the probate court is null and void and the tile does not pass to the
purchaser.

76. ATOK-BIG WEDGE MINING CO. vs. COURT OF APPEALS

G. R. No. 88883 January 18, 1991

FACTS
Fredia Mineral claim of about 9 hectares situated in Tuding, Itogon, Benguet was located sometime between
December 25-31, 1930 by A.I. Reynolds in accordance with the provisions of the Act of Congress of July 1, 1902,
better known as the Philippines Bill of 1902, in a so called Declaration of Location. The said Declaration of
Location of mineral claim was duly recorded in the Office of Mining Recorder sometime on January 2, 1931. FMC,
together with other mineral claims, was sold A.I. Reynolds to big Wedge Mining Company, Inc. in the Deed of Sale
executed on November 2, 1931. Since then Atok has been in continuous and exclusive ownership and possession
of said claim up to the present.

On the other hand, private respondent Liwan Consi has a lot below the land of a certain Mr. Acay at Tuding Slide,
Itogon Benguet covered by a Tax Declaration No. 9462. He first constructed his house below the lot of Mr. Acay
he was told that it was not necessary for him to obtain a building permit as it was only a nipa hut. And no one
prohibited him from entering the land so he was constructing a house thereon. It was only in January 1984 when
private respondent Consi repaired the said house that people came to take pictures and told him that the lot
belongs to Atok. Private respondent Consi has been paying taxes on said land which his father before him had
occupied.

Upon the knowledge of Atok that a construction was being undertaken at the area of the Fredia Mineral claim by
private respondent Liwan Consi. The former filed a complaint for forcible entry and detainer against the latter on
March 1, 1984.

ISSUE
Whether or not an individuals long term occupation of land of a public domain vest him with such rights over the
same as to defeat the rights of the owner of that claim.

RULING
It is of no importance whether Benguet and Atok had secured a patent for as held in the gold Creek Mining
Corporation case, for all physical purposes of ownership, the owner is not required to secure a patent as long as

65
he complies with the provision of the mining laws; his possessory right, for all practical purposes of ownership, ia
a good as though secured by patent (Republic vs. CA, 160 SCRA 228). In the case at bar, the evidence on record
pointed that the petitioner Atok has faithfully complied with al the requirements of the law regarding the
maintenance of the said Fredia Mineral Claim.

It is therefore, evident that Benguet and Atok have exclusive rights to the property in question by virtue of their
respective mining claims which they validly acquired before the constitution of 1935 prohibited the alienation of all
lands of the public domain except agricultural lands, subject to vested rights existing at the time of its adoption.
The land was not and could not have been transferred to the private respondents by virtue of acquisitive
prescription, nor could its use be shared simultaneously by them and the mining companies for agricultural and
mineral purposes. On the matter of possession, private respondent contends that his predecessor-in-interests has
been in possession of said lot even before the war and has in fact cultivated the same. In the case of Republic
vs.CA, this court held even if it be assumed that the predecessor-in-interest of the de la Rosas had already been
in possession of the subject property, their possession was not in the concept of owner of the mining claim but of
the property as agricultural land, which it was not. The property was mineral land, and they were claiming it as
agricultural land. Since the subject lot no matter how long did not confer upon him possessory rights over the
same.

77. FERNANDA MENDOZA CEQUEA vs. HONORABLE MENDOZA BOLANTE

G. R. No. 137944 April 6, 2000

FACTS
Prior to 1954, a parcel of land situated in Brgy. Bangad, Binangonan, Province of Rizal was originally declared for
taxation purposes in the name of Sinforoso Mendoza, father of herein respondent Honorata M. Bolante. When
Sinforoso died in 1930, Margarito Mendoza who was the brother of Sinforoso took possession of the land and
cultivated it with his son Miguel. At the same time, respondent and her mother continued residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the year 1932-1948. Margarito declared the lot
for taxation in his name in 1953 and paid its realty taxes beginning 1952. When h died Miguel continued
cultivating the land. However, the respondent and her mother were living on the land, which was being tilled by
Miguel until 1985 when he was physically ousted by the respondent. Earlier on October 15,1975 respondent and
Miguel, during the cadastral survey had a dispute on ownership of the land.

ISSUE
Who was the lawful owner and possessor of the land subject in the case.

RULING
We concede that despite their dispossession in 1985, the petitioners did not lose legal possession because
possession cannot be acquired through force or violence. To all intents and purposes, a possessor, even if
physically ousted, is still deemed the legal possessor. Indeed, anyone who can prove prior possession, regardless
of its character, may recover such possession.

However, possession by the petitioners does not prevail over that of the respondent. Possession by the former
before 1985 was not exclusive, as the latter also acquired it before 1985. The records show that the petitioners
father and brother, as well as the respondent and her mother were simultaneously in adverse possession of the
land.

The petitioners, despite thirty-two years of farming the subject land, did not acquire ownership. It is settled that
ownership cannot be acquired by mere occupation. Unless coupled with the element of hostility toward the true
owner, occupation and use, however long, will not confer title by prescription or adverse possession.

78. PHIL TRUST CO vs. CA

G. R. No. 124658 December 15, 1999

FACTS
In 1958,a loan was obtained by Lumen Policarpio from Philtrust, P300,000.00. So as a security for the mentioned
loan, Lumen's parents, executed a deed of mortgage to the bank over some parcel of land. Due to failure to pay
the loan it was foreclosed. Philtrust purchased it thru the auction sale. After sometime the bank sold the properties

66
to the present owner, Alto Industrial Enterprises, Inc. . Later by then, S Simeon Policarpio Shipyard and
Shipbuilding Corporation,filed a complaint for Damages, Injunction, and Mandamus against petitioner Philtrust ,
the defendant Sheriff, together with Philtrust counsel Atty. Antonio Sikat, Justice Guillermo Santos and Maria C.
Noche, with the use of trickery and fraudulent machination, in the absence of the owner of the shipyard
shipbuilding corporation, opened the gates of the shipyard without notice to the owners and took possession of it
despite the fact that it was not one of the properties mortgaged to the bank.

Petitioner Philtrust appealed to the Court of Appeals reiterating its claim that private respondent's complaint states
no cause of action since private respondent failed to redeem its mortgaged property covered by OCT-R-165 to
Landbank within the one year period of redemption and, hence, is not a real party in interest.

ISSUE
Whether or not private respondent has cause of action over the subject property.

RULING
Nevertheless, despite failure of private respondent to redeem the property within the one year period following its
foreclosure, the bank has deferred consolidation of title and has given private respondent the option to re-acquire
the property subject to certain terms under negotiation. A certification issued by the bank dated October 18, 1994 r

It is elementary that a lawful possessor of a thing has the right to institute an action should he be disturbed in its
enjoyment. Verily, Article 539 of the Civil Code states that: Every possessor has a right to be respected in his
possession; and should he be disturbed therein, he shall be restored to said possession by the means
established by the laws and rules of court. . . .

The phrase "every possessor" in the article indicates that all kinds of possession, from that of the owner to that of
a mere holder, except that which constitutes a crime, should be respected and protected by the means
established and the laws of procedure. Consequently, private respondent having been in lawful possession of the
property covered by OCT-R-165 at the time the writ of possession was implemented, may institute an action for
having been disturbed in its enjoyment.

79. FERNANDA MENDOZA CEQUEA vs. HONORABLE MENDOZA BOLANTE

G. R. No. 137944 April 6, 2000

FACTS
Prior to 1954, a parcel of land situated in Brgy. Bangad, Binangonan, Province of Rizal was originally declared for
taxation purposes in the name of Sinforoso Mendoza, father of herein respondent Honorata M. Bolante. When
Sinforoso died in 1930, Margarito Mendoza who was the brother of Sinforoso took possession of the land and
cultivated it with his son Miguel. At the same time, respondent and her mother continued residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the year 1932-1948. Margarito declared the lot
for taxation in his name in 1953 and paid its realty taxes beginning 1952. When h died Miguel continued
cultivating the land. However, the respondent and her mother were living on the land, which was being tilled by
Miguel until 1985 when he was physically ousted by the respondent. Earlier on October 15,1975 respondent and
Miguel, during the cadastral survey had a dispute on ownership of the land.

ISSUE
Who was the lawful owner and possessor of the land subject in the case.

RULING
We concede that despite their dispossession in 1985, the petitioners did not lose legal possession because
possession cannot be acquired through force or violence. To all intents and purposes, a possessor, even if
physically ousted, is still deemed the legal possessor. Indeed, anyone who can prove prior possession, regardless
of its character, may recover such possession.

However, possession by the petitioners does not prevail over that of the respondent. Possession by the former
before 1985 was not exclusive, as the latter also acquired it before 1985. The records show that the petitioners
father and brother, as well as the respondent and her mother were simultaneously in adverse possession of the
land.

The petitioners, despite thirty-two years of farming the subject land, did not acquire ownership. It is settled that

67
ownership cannot be acquired by mere occupation. Unless coupled with the element of hostility toward the true
owner, occupation and use, however long, will not confer title by prescription or adverse possession.

80. RODOLFO EUSEBIO vs. IAC

G. R. No. 72188 September 15,1986

FACTS
What transpired in this case is an easement of the right of way along a parcel of land belonging to Francisco,
petitioner herein, wherein Ramos had wanted to avail for right of passage. The lots involved in this dispute are
adjacent and owned by persons herein mentioned.

ISSUE
Whether or not respondent herein shall be entitled to a road right of way.

RULING
In Bacolod-Murcia Milling Co., Inc. v. Capital Subdivision, Inc., this Court held that a compulsory easement of way
cannot be obtained without the presence of four (4) requisites provided for in Articles 649 and 650 of the Civil
Code, which the owner of the dominant tenement must establish, to wit:
(1) That the dominant estate is surrounded by other immovables and has no adequate outlet to a public
highway
(2) After payment of proper indemnity
(3) That the isolation was not due to acts of the proprietor of the dominant estate; 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.

But the law makes it amply clear that an owner cannot, as respondent has done, by his own act isolate his
property from a public highway and then claim an easement of way through an adjacent estate. The third of the
cited requisites: that the claimant of a right of way has not himself procured the isolation of his property had not
been met indeed the respondent had actually brought about the contrary condition and thereby vitiated his claim
to such an easement. It will not do to assert that use of the passageway through Lot 860-B was

81. CABANGIS vs. COURT OF APPEALS

G. R. No. 83722 August 9, 1991

FACTS
The petitioners filed an ejectment case against Gaspar Devis, the deceased father of the private respondent
Elvira Devis Nicandro in the City Court of Manila (now Metropolitan Trial Court) for non-payment of rents of a
parcel of land situated in Tondo, Manila, owned by the Cabangises and leased to Devis. The Court rendered the
decision for the plaintiffs and against the defendant. On appeal to the Court of First Instance (now Regional Trial
Court) the judgment was affirmed. The matter was elevated to the Court of Appeals which likewise affirmed the
decision of the Court of First Instance. Meanwhile, the Metropolitan Trial Court granted the motion of the
petitioners for a writ of execution since the said decision had already become final and executory. However,
before the said writ of execution could be implemented, herein private respondent Elvira Nicandro filed, in the
Regional Trial Court of Manila an action for indemnity of improvements with prayer for the issuance of a writ of
preliminary injunction against the petitioners. The trial court dismissed the complaint and denied Nicandro's
motion for preliminary injunction. On appeal, however, the respondent appellate court reversed the said order of
dismissal while affirming the denial of the issuance of a writ of injunction rederring its decision that plaintiff is not
contesting the decision in the ejectment case against her father but merely praying for the issuance of a cease-
and-desist injunctive writ against the implementation of the decision in the ejectment proceedings and the
consequent removal or demolition of her father's house and improvements on the lot.

ISSUES
1. Whether or not the plaintiff, the private respondent herein, has a cause of action to bring a suit for indemnity of
improvements with injunction against the petitioners.
2. Whether or not her cause of action has been abandoned, waived, barred by prescription, or barred by failure to
seasonably set it up as a compulsory counterclaim.

RULING
Petition is granted. Article 1678 of the Civil Code applies in this case which states that If the lessee makes, in

68
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 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.

There is no choice was made neither that the private respondent manifested her desire to remove these
improvements absent any payment of the required indemnity. Her failure to do so, we rule, constitutes a waiver or
abandonment of her right of removal of the improvements. But even if there was no abandonment or waiver of her
right of removal, still she could not later file a complaint for the indemnity of the improvements because that cause
of action had long prescribed, accruing as it did when the petitioners effectively appropriated the improvements
when the lease expired, or even when the ejectment case was filed. The complaint of the private respondent for
indemnity was filed more than sixteen years from the accrual of the cause of action. Hence, the complaint was
filed six years after the expiration of the prescriptive period of ten years as provided in Article 1144. In any event,
well-established is the doctrine that the counterclaim for reimbursement of the useful expenses is in the nature of
a compulsory counterclaim and the failure to set it up in the ejectment suit bars the right to raise it in a subsequent
litigation.

82. HEIR OF JAIME BINUYA vs. COURT OF APPEALS

G. R. No. 100493 July 23, 1992

FACTS
Petitioners' father, Jaime Binuya, was the registered owner of a parcel of land located along P. Garcia Street,
Kalookan City. He leased out a portion thereof to private respondent Dungao for 10 years commencing from April
1, 1968 with a monthly rental of 20 pesos, who constructed thereon a residential house. In 1973, Carpio bought
one of two houses of Jaime and leased the portion of the lot occupied by the house for a period of ten years
commencing on June 22, 1973 for 2O pesos . Both contracts were in writing.

After the expiration of the contract both respondents were allowed to stay on the premises on a monthly basis.

Upon failure to pay rental after March 1989, an amicable settlement was attemped but failed therefore Jaime
Binuya filed Civil Cases 195587 and 19588 for Ejectment in which the Metropolitan Trial Court ruled for Jaime
Binuya .

Respondents appealed from said Decision To the Regional Trial Court docketed as Civil Cases 14662 and 14663
whereby appealed decision was affirmed subject to the modification that the eviction shall be effected after
defendants shall have been reimbursed or paid by plaintiff for the value of their housesaforementioned. This
order requiring plaintiff to reimburse defendants for the value of the latter's houses is founded on its conclusion
that private respondents are builders in good faith.

Therefore this instant petiotion.

ISSUE
Whether or not the respondents are entitled to the reimbursement of their respective houses existing on the lots
from whence (sic) they are now being evicted.

RULING
This principle of possessor in good faith naturally cannot apply to a lessee because as such lessee he knows that
he is not the owner of the leased property. Neither can he deny the ownership or title of the lessor.

It must be remembered that one of the conclusive presumptions in Section 2, Rule 131 of the Rules of Court is
that "[T]he tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation
of landlord and tenant between them."

In contracts of lease, the matter of improvements introduced by the lessee is specifically governed by Article 1678
of the new Civil Code which reads:

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

69
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 new Civil code allows indemnity, to the extent of one-half (1/2) of the value of the useful improvements, if the
lessor chooses to retain them. In short, it is the lessor who has the option to pay for one-half (1/2) the value of the
improvements.

The lessee does not have the right to demand that he be paid therefor. For if the lessor refuses "to reimburse said
amount", the only remedy available to the lessee is to "remove the improvements, even though the principal thing
may suffer damage thereby," provided, however, that he should not "cause any more impairment upon the
property leased than is necessary". Also, not being a possessor in good faith, and therefore, not entitled to the
benefits of Article 546 of the new Civil Code, the lessee does not have the right of retention over his
improvements until he is reimbursed one-half (1/2) of the value of the useful improvements.

WHEREFORE, judgment is hereby rendered GRANTING the instant petition, SETTING ASIDE the resolution of
respondent Court in 6 June 1991 in CA.-G.R. SP No. 24779, SETTING ASIDE the modification in the Decision of
respondent Judge of 4 April 1991 in Civil Cases Nos. 14662 and 14663; and REINSTATING in full the Decision of
12 October 1990 of Branch 50 of the Metropolitan Trial Court of Kalookan in Civil Cases Nos. 19587 and 19588.

83. PEDRO PECSON vs. COURT OF APPEALS

G. R. No. 115814 May 26, 1995

FACTS
Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street , Quezon City , on which
he built a four-door two-storey apartment building. For his failure to pay realty taxes, the lot was sold at public
auction by the city Treasurer of Quezon City to Mamerto Nepomuceno who in turn sold it to the private
respondents, the spouses Juan Nuguid and Erlinda Tan-Nuguid.

The petitioner challenged the validity of the auction sale. The RTC dismissed the complaint. It held that there
was no legal basis for the contention that the apartment building was included in the sale.

Both parties then appealed the decision to the Court of Appeals. The Court of Appeals affirmed in toto the
assailed decision. It also agreed with the trial court that the apartment building was not included in the auction
sale of the commercial lot.

Private respondents filed with the trial court a motion for delivery of possession of the lot and the apartment
building, citing article 546 of the Civil Code. The court granted reimbursement to plaintiff the amount of
construction cost, and that he is entitled to immediate issuance of writ of possession.

ISSUE
Whether or not Articles 448 and 456 apply in this case.

RULING
Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later
loses ownership of the land by sale or donation.

The trial court erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentals paid by the
lessees of the apartment building. Since the private respondents have opted to appropriate the apartment
building, the petitioner is thus entitled to the possession and enjoyment of the apartment building, until he is paid
the proper indemnity, as well as of the portion of the lot where the building has been constructed. This is so
because the right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or
possession in fact of the land on which it is built, planted or sown. The petitioner not having been so paid, he was
entitled to retain ownership of the building and, necessarily, the income therefrom.

The case is remanded to the trial court for it to determine the current market value of the apartment building on
the lot. The value so determined shall be forthwith paid by the private respondents to the petitioner otherwise the

70
petitioner shall be restored to the possession of the apartment building until payment of the required indemnity.

84. HEIR OF JAIME BINUYA vs. COURT OF APPEALS

G. R. No. 100493 July 23, 1992

FACTS
Petitioners' father, Jaime Binuya, was the registered owner of a parcel of land located along P. Garcia Street,
Kalookan City. He leased out a portion thereof to private respondent Dungao for 10 years commencing from April
1, 1968 with a monthly rental of 20 pesos, who constructed thereon a residential house. In 1973, Carpio bought
one of two houses of Jaime and leased the portion of the lot occupied by the house for a period of ten years
commencing on June 22, 1973 for 2O pesos . Both contracts were in writing.

After the expiration of the contract both respondents were allowed to stay on the premises on a monthly basis.

Upon failure to pay rental after March 1989, an amicable settlement was attemped but failed therefore Jaime
Binuya filed Civil Cases 195587 and 19588 for Ejectment in which the Metropolitan Trial Court ruled for Jaime
Binuya .

Respondents appealed from said Decision To the Regional Trial Court docketed as Civil Cases 14662 and 14663
whereby appealed decision was affirmed subject to the modification that the eviction shall be effected after
defendants shall have been reimbursed or paid by plaintiff for the value of their housesaforementioned. This
order requiring plaintiff to reimburse defendants for the value of the latter's houses is founded on its conclusion
that private respondents are builders in good faith.

Therefore this instant petiotion.

ISSUE
Whether or not the respondents are entitled to the reimbursement of their respective houses existing on the lots
from whence (sic) they are now being evicted.

RULING
This principle of possessor in good faith naturally cannot apply to a lessee because as such lessee he knows that
he is not the owner of the leased property. Neither can he deny the ownership or title of the lessor.

It must be remembered that one of the conclusive presumptions in Section 2, Rule 131 of the Rules of Court is
that "[T]he tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation
of landlord and tenant between them."

In contracts of lease, the matter of improvements introduced by the lessee is specifically governed by Article 1678
of the new Civil Code which reads:

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 new Civil code allows indemnity, to the extent of one-half (1/2) of the value of the useful improvements, if the
lessor chooses to retain them. In short, it is the lessor who has the option to pay for one-half (1/2) the value of the
improvements.

The lessee does not have the right to demand that he be paid therefor. For if the lessor refuses "to reimburse said
amount", the only remedy available to the lessee is to "remove the improvements, even though the principal thing
may suffer damage thereby," provided, however, that he should not "cause any more impairment upon the
property leased than is necessary". Also, not being a possessor in good faith, and therefore, not entitled to the
benefits of Article 546 of the new Civil Code, the lessee does not have the right of retention over his

71
improvements until he is reimbursed one-half (1/2) of the value of the useful improvements.

WHEREFORE, judgment is hereby rendered GRANTING the instant petition, SETTING ASIDE the resolution of
respondent Court in 6 June 1991 in CA.-G.R. SP No. 24779, SETTING ASIDE the modification in the Decision of
respondent Judge of 4 April 1991 in Civil Cases Nos. 14662 and 14663; and REINSTATING in full the Decision of
12 October 1990 of Branch 50 of the Metropolitan Trial Court of Kalookan in Civil Cases Nos. 19587 and 19588.

85. CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE vs. COURT OF APPEALS
G. R. No. 80294-95 September 21, 1988

FACTS
The documents and records presented reveal that the whole controversy started when the defendant Catholic
Vicar Apostolic of the Mountain Province (VICAR for brevity) filed with the Court of First Instance of Baguio
Benguet on September 5, 1962 an application for registration of title over Lots 1, 2, 3, and 4 in Psu-194357,
situated at Poblacion Central, La Trinidad, Benguet, said Lots being the sites of the Catholic Church building,
convents, high school building, school gymnasium, school dormitories, social hall, stonewalls, etc.

On March 22, 1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed their Answer/Opposition on
Lots Nos. 2 and 3, respectively, asserting ownership and title thereto.

During trial, petitioner Vicar admitted Lots 2 and 3 were owned by Valdez and Octaviano. Both Valdez and
Octaviano had Free Patent Application for those lots since 1906. The predecessors of private respondents, not
petitioner Vicar, were in possession of the questioned lots since 1906. There is evidence that petitioner Vicar
occupied Lots 1 and 4, which are not in question, but not Lots 2 and 3, because the buildings standing thereon
were only constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3 for taxation purposes in
1951. The improvements oil Lots 1, 2, 3, 4 were paid for by the Bishop but said Bishop was appointed only in
1947, the church was constructed only in 1951 and the new convent only 2 years before the trial in 1963. When
petitioner Vicar was notified of the oppositor's claims, the parish priest offered to buy the lot from Fructuoso
Valdez. Lots 2 and 3 were surveyed by request of petitioner Vicar only in 1962.

Who rightfully owns the subject lots 2 and 3? Is the petitioner Vicar an owner or a bailee in commodatum? Can
the petitioners claim of adverse possession ripen into just title?

RULING
Petition is denied.

Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the
church and the convent were destroyed. They never asked for the return of the house, but when they allowed its
free use, they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the
subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The
bailee held in trust the property subject matter of commodatum. The adverse claim of petitioner VICAR came only
in 1951 when it declared the lots for taxation purposes. The action of petitioner Vicar by such adverse claim could
not ripen into title by way of ordinary acquisitive prescription because of the absence of just title.

The Court of Appeals found that the predecessors-in-interest and private respondents were possessors under
claim of ownership in good faith from 1906; that petitioner Vicar was only a bailee in commodatum; and that the
adverse claim and repudiation of trust came only in 1951.

We find no reason to disregard or reverse the ruling of the Court of Appeals. Its findings of fact have become
incontestible. This Court declined to review said decision, thereby in effect, affirming it. It has become final and
executory a long time ago.

e. Article 559 Cases

86. EDCA PUBLISHING & DISTRIBUTING CORP. vs. SPOUSES LEONOR and GERARDO SANTOS
G. R. No. 80298 April 26, 1990

FACTS
On October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by telephone with the
petitioner EDCA for 406 books, payable on delivery. EDCA prepared the corresponding invoice and delivered the
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books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. 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.

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. 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.

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.
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. As previously stated, the petitioner was successively
rebuffed in the three courts below and now hopes to secure relief from us.
ISSUE
Who is the rightful owner of the 120 books sold by Tomas dela Pea (a.k.a Cruz)? Who is negligent, the
petitioner or the private respondents?
RULING
Petition is denied. The NCC code provides:
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.
The private respondent Santos did not have to go beyond that invoice to satisfy herself that the books being
offered 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. 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. Petitioners remedy is not against the
private respondents but against Tomas de la Pea, who has apparently caused all this trouble.

87. PAJUNAR vs. COURT OF APPEALS

G. R. No. 77266 July 19, 1989

FACTS
Sometime in 1969, respondent Mauro Eluna bartered his three-year old male cow for one year old female
carabao then in the possession of Aurelio Enopia. The female carabao, which is the one in question, bore the
brand "ART" in her front and hind legs at the time she was acquired by Mauro. Although the animal was branded,
said respondent did not or could not register the transfer to him.

In March, 1980, petitioner Arthur Pajunar learned that the disputed carabao was in the possession of respondent
Eluna. Claiming that he was the original owner of the carabao which got lost in 1974, petitioner demanded her
return. He demanded also the delivery to him of the two offsprings of the carabao which were five years and eight
months old at the time they were registered in 1980. When Eluna refused to do so despite repeated demands,
petitioner went to court to recover possession.

Private respondents claim that the female carabao has been in their possession for more than ten (10) years as
the subject carabao was acquired by the defendants now respondents through barter from one Aurelio Enopia in
1969.

ISSUE
Whether who are entitled to the possession of the subject movable property.

73
RULING
It is clear that possession in good faith for four (4) years is not applicable, neither can possession in bad faith of
eight (8) years benefit respondents, for when the owner of a movable has lost or has been illegally deprived of his
property he can recover the same without need to reimburse the possessor, as provided in Art. 559 of the Civil
Code which states:
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.

Arthur Pajunar and Invencia Pajunar were declared the owners of the carabaos in question.

88. LEDESMA vs. COURT OF APPEALS

G. R. No. 86051 September 1, 1992

FACTS
On September 27, 1977, a person representing himself to be Jojo Consunji, purchased purportedly for his father,
a certain Rustico Consunji, two brand new motor vehicles from the plaintiff-appellant Citiwide Motors, Inc. by
issuing managers check amounting to P 101,000.00 as full payment. However, when plaintiff deposited the
check, it was dishonored by the bank on the ground that it was tampered with, the correct amount of P 101.00
having been raised to P 101,000 per banks notice of dishonor. Later on, in the course of investigation, the plaintiff
learned that the real identity of Jojo Consunji is Armando Suarez who has a long line of criminal cases against
him for estafa using similar modus operandi. On October 17, 1977, plaintiff was able to recover the one vehicle
which was found abandoned somewhere in Quezon City. On the other hand, the other car was already possessed
by Jaime Ledesma, thus the plaintiff instituted this action for replevin. In his defense, Jaime Ledesma claims that
he purchases and paid for the subject vehicle in good faith from its registered owner, one Pedro Neyra, as
evidenced by the Registration Certificate from Land Transportation Commission.

ISSUE
Whether or not Mr. Ledesma be deprived of his possession of the subject car.

RULING
There was a perfected conditional contract of sale between private respondent and the original vendee. The
former voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the first vendee-
even if the said vendee was represented by someone who used a fictitious name and likewise voluntarily
delivered the cars and the certificate of registration to the vendees alleged representative. Title thereto was
forthwith transferred to the vendee. The subsequent dishonor of the check because of the alteration merely
amounted to a failure of consideration which does not render the contract of sale void, but allows the prejudiced
party to sue for specific performance or rescission of the contract, and to prosecute the impostor for estafa under
Article 315 of the Revised Penal Code.

The case was decided by the Supreme Court in favor of Mr. Jaime Ledesma.

89. BPI FAMILY BANK vs. AMADO FRANCO

G. R. No. 123498 November 23, 2007

FACTS
On August 15, 1989, Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco) opened a savings and current account
with BPI-FB. On August 25, 1989, First Metro Investment Corporation (FMIC) also opened a time deposit account
with the same branch of BPI-FB.

Subsequently, on August 31, 1989, Franco opened three accounts, namely, a current, savings, and time
deposit, with BPI-FB totaling to P2,000,000.00 traceable to a check issued by Tevesteco. TheP2,000,000.00
check was part of the P80,000,000.00 debited by BPI-FB from FMICs time deposit account and credited to
Tevestecos current account pursuant to an Authority to Debit purportedly signed by FMICs officers.

74
It appears, however, that the signatures of FMICs officers on the Authority to Debit were forged. On September 4,
1989, Antonio Ong, upon being shown the Authority to Debit, personally declared his signature therein to be a
forgery. Unfortunately, Tevesteco had already effected several withdrawals from its current account (to which had
been credited the P80,000,000.00 covered by the forged Authority to Debit) amounting to P37,455,410.54,
including the P2,000,000.00 paid to Franco.

In the meantime, two checks drawn by Franco against his BPI-FB current account were dishonored upon
presentment for payment, and stamped with a notation account under garnishment.

Consequently, in light of BPI-FBs refusal to heed Francos demands to unfreeze his accounts and release his
deposits therein, the latter filed on June 4, 1990 with the Manila RTC the subject suit.

BPI-FB traversed this complaint, insisting that it was correct in freezing the accounts of Franco and refusing to
release his deposits, claiming that it had a better right to the amounts which consisted of part of the money
allegedly fraudulently withdrawn from it by Tevesteco and ending up in Francos accounts.

BPI-FB contends that its position is not unlike that of an owner of personal property who regains possession
after it is stolen, and to illustrate this point, BPI-FB gives the following example: where Xs television set is stolen
by Y who thereafter sells it to Z, and where Z unwittingly entrusts possession of the TV set to X, the latter would
have the right to keep possession of the property and preclude Z from recovering possession thereof. To bolster
its position, BPI-FB cites Article 559 of the Civil Code.

ISSUE
Whether or not generic and fungible things are covered by Art. 559 of the Civil Code.

RULING
BPI-FBs argument is unsound. The movable property mentioned in Article 559 of the Civil Code pertains to a
specific or determinate thing. A determinate or specific thing is one that is individualized and can be identified or
distinguished from others of the same kind.

In this case, the deposit in Francos accounts consists of money which, albeit characterized as a movable, is
generic and fungible. The quality of being fungible depends upon the possibility of the property, because of its
nature or the will of the parties, being substituted by others of the same kind, not having a distinct individuality.

Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of a movable to
recover the exact same thing from the current possessor, BPI-FB simply claims ownership of the equivalent
amount of money, i.e., the value thereof, which it had mistakenly debited from FMICs account and credited to
Tevestecos, and subsequently traced to Francos account.

Thus, inasmuch as what is involved is not a specific or determinate personal property Article 559 is inapplicable to
the instant case.

f. Easements
90. EDILBERTO ALCANTARA vs. CORNELIO RETA, Jr.
G. R. No. 136996 December 14, 2001

FACTS
The plaintiffs claimed that they were tenants or lessees of the land located in Barangay Sasa, Davao City,
covered by Transfer Certificate of Title No. T-72594, owned by Reta; that the land has been converted by Reta
into a commercial center; and that Reta is threatening to eject them from the land. They assert that they have the
right of first refusal to purchase the land in accordance with Section 3(g) of Presidential Decree No. 1517 since
they are legitimate tenants or lessees thereof.

They also claimed that the amicable settlement executed between Reta and Ricardo Roble was void ab initio for
being violative of Presidential Decree No. 1517.

On the other hand, Reta claimed that the land is beyond the ambit of Presidential Decree No. 1517 since it has
not been proclaimed as an Urban Land Reform Zone; that the applicable law is Batas Pambansa Blg. 25 for
failure of the plaintiffs to pay the rentals for the use of the land; and that the amicable settlement between him and
Ricardo Roble was translated to the latter and fully explained in his own dialect.
75
The trial court rendered a decision dismissing the complaint and ordering the plaintiffs to pay Reta certain sums
representing rentals that had remained unpaid

CA Affirmed the decision.

ISSUE
Whether petitioners have the right of first refusal under Presidential Decree No. 1517.

RULING
The area involved has not been proclaimed an Urban Land Reform Zone (ULRZ). In fact, petitioners filed a
petition with the National Housing Authority requesting that the land they were occupying be declared as an
ULRZ.

Where a person is allowed to construct his house on the land of another to facilitate gathering of fruits, this would
be in the nature of a personal easement.

Clearly, from the moment respondent Reta demanded that the petitioners vacate the premises, the verbal lease
agreements, which were on a monthly basis since rentals were paid monthly, ceased to exist as there was
termination of the lease.

Another factor which militates against petitioners claim is the fact that there is no intention on the part of
respondent Reta to sell the property. Hence, even if the petitioners had the right of first refusal, the situation which
would allow the exercise of that right, that is, the sale or intended sale of the land, has not happened. P. D. No.
1517 applies where the owner of the property intends to sell it to a third party.

91. SOLID MANILA CORP. vs. BIO HONG TRADING

G. R. No. 90596 April 8, 1991

FACTS
Petitioner Corporation, is the owner of a parcel of land located in Ermita, Manila, The private respondent's (de
Guzman) title came from a prior owner, and in their deed of sale, the parties thereto reserved as an easement of
way: a portion thereof measuring NINE HUNDRED FOURTEEN SQUARE METERS, more or less, had been
converted into a private alley for the benefit of neighboring estates, this being duly annotated at the back of the
covering transfer Certificate of title per regulations of the Office of the City Engineer of Manila and that the
three meterwide portion of said parcel along the Pasig River, with an area of ONE HUNDRED SEVENTY NINE
(179) SQUARE METERS, more or less, had actually been expropriated by the City Government, and
developed pursuant to the beautification drive of the Metro Manila Governor. (p. 3, Record).

The petitioner claims that ever since, it had (as well as other residents of neighboring estates) made use of the
above private alley and maintained and contributed to its upkeep, until sometime in 1983, when, and over its
protests, the private respondent constructed steel gates that precluded unhampered use.

ISSUE
Whether or not an easement exists on the property even after the property was sold.
RULING
AFFIRMATIVE. Easement cannot be separated from the tenement and maintain an independent existence.

It is true that the sale did include the alley. On this score, the Court rejects the petitioner's contention that the deed
of sale excluded it, because as a mere right-of-way, it cannot be separated from the tenement and maintains an
independent existence. Thus:

Art. 617. Easements are inseparable from the estate to which they actively or passively belong.

The fact, however, that the alley in question, as an easement, is inseparable from the main lot is no argument to
defeat the petitioner's claims, because as an easement precisely, it operates as a limitation on the title of the
owner of the servient estate, specifically, his right to use (jus utendi).
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Hence, and so we reiterate, albeit the private respondent did acquire ownership over the property including the
disputed alley as a result of the conveyance, it did not acquire the right to close that alley or otherwise put up
obstructions thereon and thus prevent the public from using it, because as a servitude, the alley is supposed to be
open to the public.

The Court is furthermore of the opinion, contrary to that of the Court of Appeals, that no genuine merger took
place as a consequence of the sale in favor of the private respondent corporation. According to the Civil Code, a
merger exists when ownership of the dominant and servient estates is consolidated in the same person. Merger
then, as can be seen, requires full ownership of both estates.

In the case at bar, the defense of merger is, clearly, not a valid defense, indeed, a sham one, because as we
said, merger is not possible, and secondly, the sale unequivocally preserved the existing easement. In other
words, the answer does not, in reality, tender any genuine issue on a material fact and cannot militate against the
petitioner's clear cause of action.

92. BRYAN VILLANUEVA vs. TIRSO VELASCO

G. R. No.130845 November 27, 2000

FACTS
Petitioner Bryan Villanueva is the registered owner of the parcel of land. He bought it from Pacific Banking
Corporation, the mortgagee of said property. The bank had acquired it from the spouses Maximo and Justina
Gabriel at a public auction on March 19, 1983. When petitioner bought the parcel of land there was a small house
on its southeastern portion. It occupied one meter of the two-meter wide easement of right of way the Gabriel
spouses granted to the Espinolas, predecessors-in-interest of private respondents, in a Contract of Easement of
Right of Way.

Unknown to petitioner, even before he bought the land, the Gabriels had constructed the aforementioned small
house that encroached upon the two-meter easement. Petitioner was also unaware that private respondents, Julio
Sebastian and Shirley Lorilla, had filed on May 8, 1991, a civil case for easement, damages and with prayer for a
writ of preliminary injunction and restraining order against the spouses Gabriel.

On May 15, 1991, the trial court issued a temporary restraining order. On August 13, 1991, it issued a writ of
preliminary mandatory injunction ordering the Gabriels to provide the right of way and to demolish the small house
encroaching on the easement. On August 15, 1991, the Gabriels filed a motion for reconsideration which was
denied.
On January 5, 1995, Judge Tirso Velasco of the RTC in Quezon City, issued an Alias Writ of Demolition. On June
20, 1995, the sheriff tried to demolish the small house pursuant to the writ. Petitioner filed a Third Party Claim
with Prayer to Quash Alias Writ of Demolition which was denied for lack of merit.

ISSUE
Whether or not there is right of way.

RULING
Petition is denied. At the outset, it can be noted that the subject easement (right of way) was voluntarily
constituted by agreement between the Gabriels and the Espinolas. But as correctly observed by the Court of
Appeals, the easement in the instant petition is both (1) an easement by grant or a voluntary easement, and (2)
an easement by necessity or a legal easement. A legal easement is one mandated by law, constituted for public
use or for private interest, and becomes a continuing property right. As a compulsory easement, it is inseparable
from the estate to which it belongs, as provided for in said Article 617 of the Civil Code. The essential requisites
for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no
adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was not due to acts of
the proprietor of the dominant estate; (4) the right of way claimed is at a point least prejudicial to the servient
estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a
public highway may be the shortest. The trial court and the Court of Appeals have declared the existence of said
easement (right of way). This finding of fact of both courts below is conclusive on this Court, hence re-affirm the
decision of the lower court. Conformably then, petitioner ought to demolish whatever edifice obstructs the
easement in view of the needs of private respondents estate.

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93. NATIONAL IRRIGATION ADMINISTRATION vs. COURT OF APPEALS and DICK MANGLAPUS
G. R. No. 114348 September 20, 2000

FACTS
On June 28, 1963, a free patent over three (3) hectares of land, situated in barrio Baybayog, municipality of
Alcala, province of Cagayan was issued in the name of respondent's predecessor-in-interest, Vicente Manglapus,
and registered under Original Certificate of Title No. P-24814, in his name. The land was granted to Vicente
Manglapus. Subsequently, respondent Manglapus acquired the lot from Vicente Manglapus by absolute sale.

On July 18, 1974, the land was registered in Dick Manglapus' name under Transfer Certificate of Title No. T-26658
of the Register of Deeds for the Province of Cagayan.The land is particularly described as follows:
"Lot No. 3559, Pls-497, with an area of 30,438 square meters, and covered by TRANSFER
CERTIFICATE OF TITLE NO. T-26658, and Tax Declaration No. 11985."

Sometime in 1982, NIA entered into a contract with Villamar Development Construction. Under the contract, NIA
was to construct canals in Amulung, Cagayan and Alcala, Cagayan. NIA then entered a portion of Manglapus'
land and made diggings and fillings thereon. On March 14, 1991, Manglapus filed with the Regional Trial Court,
Tuguegarao, Cagayan a complaint for damages against NIA.Manglapus alleged that NIA's diggings and fillings
destroyed the agricultural use of his land and that no reasonable compensation was paid for its taking. Despite
service of notice of the pre-trial conference, NIA did not appear at the pre-trial conference. On December 3, 1991,
the trial court declared NIA in default and received Manglapus' evidence ex parte. On December 23, 1991, the trial
court rendered a decision in favor of Manglapus. On January 27, 1992, NIA filed a motion to lift the order of
default dated December 3, 1991, and to set aside the afore-quoted decision of December 23, 1991. On June 3,
1992, the trial court issued a resolution denying the motion for lack of merit. On July 17, 1992, NIA filed a notice of
appeal to the Court of Appeals. On July 27, 1992, the trial court gave due course to the appeal and ordered the
transmission of the original records to the Court of Appeals. On July 30, 1992, Manglapus filed a motion for
execution of judgment with the trial court. On August 7, 1992, the NIA through the Solicitor General filed an
opposition to the motion for execution. On August 17, 1992, the trial court declared that since the notice of appeal
of NIA was given due course, the motion for execution was "moot and academic. On March 8, 1994, the Court of
Appeals promulgated its decision, the dispositive portion of which reads:
"WHEREFORE, PREMISES CONSIDERED, the decision appealed from is hereby AFFIRMED in toto and
the appeal is hereby DISMISSED.
"SO ORDERED."

Hence, this appeal.

ISSUE
Whether or not the NIA should pay Manglapus just compensation for the taking of a portion of his property for use
as easement of a right of way.

RULING
We find that NIA is under no such obligation. We sustain the appeal.

We agree with NIA that the Transfer Certificate of Title and the Original Certificate of Title covering the subject
parcel of land contained a reservation granting the government a right of way over the land covered therein.
The transfer certificate of title, on which both the trial court and Court of Appeals relied, contains such a
reservation. It states that title to the land shall be:
". . . subject to the provisions of said Land Registration Act and the Public Land Act, as well as those of
Mining Laws, if the land is mineral, and subject, further to such conditions contained in the original title as
may be subsisting (emphasis ours)."
Under the Original Certificate of Title, there was a reservation and condition that the land is subject to "to all
conditions and public easements and servitudes recognized and prescribed by law especially those mentioned in
Sections 109, 110, 111, 112, 113 and 114, Commonwealth Act No. 141, as amended." This reservation, unlike the
other provisos imposed on the grant, was not limited by any time period and thus is a subsisting condition.

Section 112, Commonwealth Act No. 141, provides that lands granted by patent,
"shall further be subject to a right of way sot exceeding twenty meters in width for public highways,
railroads,irrigation ditches, aqueducts, telegraphs and telephone lines, and similar works as the
Government or any public or quasi-public service or enterprises, including mining or forest
concessionaires may reasonably require for carrying on their business, with damages for the
improvements only (emphasis ours)."
78
We note that the canal NIA constructed was only eleven (11) meters in width. This is well within the limit provided
by law. Manglapus has therefore no cause to complain.

Article 619 of the Civil Code provides that, "Easements are established either by law or by the will of the owners.
The former are called legal and the latter voluntary easements." In the present case, we find and declare that a
legal easement of a right-of-way exists in favor of the government. The land was originally public land, and
awarded to respondent Manglapus by free patent. The ruling would be otherwise if the land were originally private
property, in which case, just compensation must be paid for the taking of a part thereof for public use as an
easement of a right of way.

Neither can Manglapus argue that he was a transferee or buyer in good faith. Under the Torrens system, for one
to be a buyer in good faith and for value, the vendee must see the transfer certificate of title and rely upon the
same. 33 Here, the annotation on the transfer certificate of title imposed on Manglapus the duty to refer to the
conditions annotated on the back of the original certificate of title. This, he did not do. The law cannot protect him.
Manglapus is a transferee with notice of the liens annotated in the title.

One who deals with property registered under the Torrens system is charged with notice of burdens and claims
that are annotated on the title.

WHEREFORE, the Court GRANTS the petition for review on certiorari, and REVERSES the decision of the Court
of Appeals in CA-G. R. CV No. 38835.

94. CONCORDIO ABELLANA, SR. vs. COURT OF APPEALS

G. R. No. 97039 April 24, 1992

FACTS
The petitioners who live on a parcel of land abutting the northwestern side of the Nonoc Homes Subdivision, sued
to establish an easement of right of way over a subdivision road which, according to the petitioners, used to be a
mere footpath which they and their ancestors had been using since time immemorial, and that, hence, they had
acquired, through prescription, an easement of right of way therein. The construction of a wall by the respondents
around the subdivision deprived the petitioners of the use of the subdivision road which gives the subdivision
residents access to the public highway. They asked that the high concrete walls enclosing the subdivision and
cutting of their access to the subdivision road be removed and that the road be opened to them.
The private respondents denied that there was a pre-existing footpath in the place before it was developed into a
subdivision. They alleged furthermore that the Nonoc Subdivision roads are not the shortest way to a public road
for there is a more direct route from the petitioners' land to the public highway.

After trial, the trial court rendered judgment disposing as follows:

WHEREFORE, judgment is hereby rendered, and, accordingly, defendants Orlando P. Naya and
Rosendo Estoye, Jr. and the intervenors are hereby ordered to demolish the subject fences or
enclosures at the dead ends of Road Lots 1 and 3 of the Nonoc Homes Subdivision at their
expense and to leave them open for the use of the plaintiffs and the general public, within fifteen
(15) days from finality of this judgment. The complaint as against defendant Municipal
Government of Talisay, Cebu is ordered dismissed. All counterclaims are ordered dismissed. No
pronouncement as to costs. (p.15, Rollo.)
However, on appeal by the defendants and intervenors (now private respondents), the appellate court on October
17, 1990, reversed the appealed judgment. It found that:
As borne out by the records of the case, the abovementioned requisites essential
for the grant of an easement of right of way are not obtaining in this case hence
no alternative presents itself except reversal of the judgment below. . . .
However, the foregoing is without prejudice to the filing of the appropriate action
by the proper authorities. Records bear that attention of the Municipal Mayor of
Talisay was already called by the Provincial Fiscal to Opinion No. 172, Series of
1975, of the Department of Justice wherein the Acting Secretary of Justice
opined that "road lots in a private subdivision are private property and should be
acquired by the government by donation, purchase or expropriation if they are to
be utilized for a public highway. . . ."
xxx xxx xxx

79
 WHEREFORE, the judgment appealed from is hereby REVERSED and set
aside. The Municipal Government of Talisay, Cebu, at its option, may institute the
proper action for expropriation. (p. 22, Rollo)
In an order dated January 9, 1991, the appellate court denied petitioners' motion for reconsideration of the
aforesaid decision. Hence, this petition for review in which the petitioners allege that the Court of Appeals erred:
1. in not holding that the easement claimed by them is a legal easement established by law (Art.
619. Civil Code) and acquired by them by virtue of a title under Art. 620, Civil Code and P.D. No.
957 through the National Housing Authority which has exclusive jurisdiction to regulate
subdivision and condominium projects;
2. in not holding that the footpaths and passageways which were converted into subdivision road
lots have acquired the status of public streets in view of Section 4 of Municipal Ordinance No. 1,
Series of 1969 of Talisay, Cebu which provides that subdivision roads shall be used not only for
the exclusive use of the homeowners but also for the general public, and Section 5 of Ordinance
No. 5, Series of 1974, which provides that "those subdivision road lots whose use by the public
are (sic) deemed necessary by the proper authorities shall be made available for public use" (p.
7, Rollo); and
3. in not determining whether or not the closure of the dead ends of road lots 1 and 3 of the
Nonoc Homes Subdivision by the private respondents, Estoye and Naya, was legal.
After deliberating on their petition for review of the decision dated October 17, 1990 of the Court of Appeals in CA-
G.R. CV No. 19948, and the private respondents' comments, we find that the petition raises merely factual issues
which are not reviewable by this Court under Rule 45 of the Rules of Court, and that, in any event, no reversible
error was committed by the Court of Appeals in dismissing the complaint on the ground that the requisite
conditions do not exist for the grant of an easement of right of way in favor of the petitioners' land under Articles
649 and 650 of the Civil Code. The appellate court did not err in holding that the road lots in a private subdivision
are private property, hence, the local government should first acquire them by donation, purchase, or
expropriation, if they are to be utilized as a public road.

ISSUE
Whether or not petitioners can invoke the right of way to public roads.

RULING
Petitioners' assumption that an easement of right of way is continuous and apparent and may be acquired by
prescription under Article 620 of the Civil Code, is erroneous. The use of a footpath or road may be apparent but it
is not a continuous easement because its use is at intervals and depends upon the acts of man. It can be
exercised only if a man passes or puts his feet over somebody else's land (4 Manresa 597; Haffman vs.
Shoemaker, 71 SE 198, both cited on p. 454, Vol. 2, 6th Ed., Paras, Civil Code of the Philippines). Hence, a right
of way is not acquirable by prescription (Cuaycong, et al, vs Benedicto, et al., 37 Phil. 781; Ronquillo, et al. vs.
Roco, et al., 103 Phil. 84; Ayala de Roxas vs. Case, 8 Phil. 197).

Neither may petitioners invoke Section 29 of P.D. 957 which provides:

Sec. 29. Right of Way to Public Road. The owner or developer of a subdivision without access
to any existing public road or street must secure a right of way to a public road or street and such
right of way must be developed and maintained according to the requirement of the government
authorities concerned.

The above provision applies to the owner or developer of a subdivision (which petitioners are not) without access
to a public highway.

The petitioners' allegation that the footpaths which were converted to subdivision roads have acquired the status
of public streets, is not well taken. In the first place, whether or not footpaths previously existed in the area which
is now known as the Nonoc Homes Subdivision, is a factual issue which this Court may not determine for it is not
a trier of facts.

The municipal ordinances which declared subdivision roads open to public use "when deemed necessary by the
proper authorities" (p. 7, Rollo) simply allow persons other than the residents of the Nonoc Homes Subdivision, to
use the roads therein when they are inside the subdivision but those ordinances do not give outsiders a right to
open the subdivision walls so they can enter the subdivision from the back. As the private respondents pointed out
in their Comment:
The closure of the dead ends of road lots 1 and 3 is a valid exercise of proprietary rights. It is for
the protection of residents in the subdivision from night prowlers and thieves. And the public is not
denied use of the subdivision roads, only that the users must get inside the subdivision through

80
 the open ends of the road lots that link the same to the public road. It is common to most, if not all
subdivisions in Cebu, Metro Manila and other places, that points of ingress to and egress from
the subdivision are the points where the subdivision roads intersect with public roads. It is of
judicial notice that most, if not all, subdivisions are enclosed and fenced with only one or few
points that are used as ingress to and egress from the subdivisions. (54-55, Rollo)

WHEREFORE, finding no merit in the petition for review, the same is DENIED with costs against the petitioners.

95. NATIONAL POWER CORPORATION vs. SPS. JOSE C. CAMPOS, JR. and MA. CLARA LOPEZ-CAMPOS
G.R. No. 143643 June 27, 2003

FACTS
On February 2, 1996, the respondents filed with the court a quo an action for sum of money and damages against
the petitioner. In their complaint, the respondents alleged that they are the owners of a parcel of land situated in
Bo. San Agustin, Dasmarias, Cavite, consisting of 66,819 square meters ("subject property") covered by Transfer
Certificate of Title (TCT) No. T-957323. Sometime in the middle of 1970, Dr. Paulo C. Campos, who was then the
President of the Cavite Electric Cooperative and brother of respondent Jose C. Campos, Jr., verbally requested
the respondents to grant the petitioner a right-of-way over a portion of the subject property. Wooden electrical
posts and transmission lines were to be installed for the electrification of Puerto Azul. The respondents acceded to
this request upon the condition that the said installation would only be temporary in nature. The petitioner assured
the respondents that the arrangement would be temporary and that the wooden electric posts would be relocated
as soon as permanent posts and transmission lines shall have been installed. Contrary to the verbal agreement of
the parties, however, the petitioner continued to use the subject property for its wooden electrical posts and
transmission lines without compensating the respondents therefor.

The complaint likewise alleged that some time in 1994, the petitioners agents trespassed on the subject property
and conducted engineering surveys thereon. The respondents caretaker asked these agents to leave the
property. Thereafter, in 1995, a certain "Mr. Raz," who claimed to be the petitioners agent, went to the office of
respondent Jose C. Campos, Jr., then Associate Justice of the Supreme Court, and requested permission from
the latter to enter the subject property and conduct a survey in connection with the petitioners plan to erect an all-
steel transmission line tower on a 24-square meter area inside the subject property. Respondent Jose Campos,
Jr., refused to grant the permission and expressed his preference to talk to the Chief of the Calaca Sub-station or
the head of the petitioners Quezon City office. The respondents did not hear from "Mr. Raz" or any one from the
petitioners office since then. Sometime in July or August of 1995, the petitioners agents again trespassed on the
subject property, presenting to the respondents caretaker a letter of authority purportedly written by respondent
Jose C. Campos, Jr. When the caretaker demanded that the letter be given to him for verification with respondent
Jose C. Campos, Jr. himself, the petitioners agents refused to do so. Consequently, the caretaker ordered the
agents to leave the subject property.

The complaint further alleged that on December 12, 1995, the petitioner instituted an expropriation case involving
the subject property before the RTC of Imus, Cavite, Branch 22. The case was docketed as Civil Case No. 1174-
95. The petitioner alleged in its complaint therein that the subject property was selected "in a manner compatible
with the greatest public good and the least private injury" and that it (petitioner) had tried to negotiate with the
respondents for the acquisition of the right-of-way easement on the subject property but that the parties failed to
reach an amicable settlement.

The respondents maintained that, contrary to the petitioners allegations, there were other more suitable or
appropriate sites for the petitioners all-steel transmission lines and that the petitioner chose the subject property
in a whimsical and capricious manner. The respondents averred that the proposed right-of-way was not the least
injurious to them as the system design prepared by the petitioner could be further revised to avoid having to
traverse the subject property. The respondents vigorously denied negotiating with the petitioner in connection with
the latters acquisition of a right-of-way on the subject property.

Finally, the complaint alleged that unaware of the petitioners intention to expropriate a portion of the subject
property, the respondents sold the same to Solar Resources, Inc. As a consequence, the respondents stand to
lose a substantial amount of money derived from the proceeds of the sale of the subject property should the buyer
(Solar Resources, Inc.) decide to annul the sale because of the contemplated expropriation of the subject
property.

ISSUES

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1.Whether or not the Court of Appeals grievously erred and labored under a gross misapprehension of fact in
finding that the Complaint below should not be dismissed on the ground of prescription.
2. Whether or not the Court of Appeals erred in affirming the award of nominal and moral damages, attorneys
fees and costs of litigation.

RULING
The petition is bereft of merit.

The petitioners claim that, under Article 620 of the Civil Code, it had already acquired by prescription the
easement of right-of-way over that portion of the subject property where its wooden electric posts and
transmission lines were erected is untenable. Article 620 of the Civil Code provides that:
Art. 620. Continuous and apparent easements are acquired either by virtue of a title or by prescription of
ten years.

Prescription as a mode of acquisition requires the existence of the following: (1) capacity to acquire by
prescription; (2) a thing capable of acquisition by prescription; (3) possession of the thing under certain conditions;
and (4) lapse of time provided by law. Acquisitive prescription may either be ordinary, in which case the
possession must be in good faith and with just title, or extraordinary, in which case there is neither good faith nor
just title. In either case, there has to be possession which must be in the concept of an owner, public, peaceful
and uninterrupted. As a corollary, Article 1119 of the Civil Code provides that:
Art. 1119. Acts of possessory character executed in virtue of license or by mere tolerance of the owner
shall not be available for the purposes of possession.

In this case, the records clearly reveal that the petitioners possession of that portion of the subject property where
it erected the wooden posts and transmission lines was merely upon the tolerance of the respondents.
Accordingly, this permissive use by the petitioner of that portion of the subject property, no matter how long
continued, will not create an easement of right-of-way by prescription. The case of Cuaycong vs. Benedicto15 is
particularly instructive. In that case, the plaintiffs for more than twenty years made use of the road that passed
through the hacienda owned by the defendants, being the only road that connected the plaintiffs hacienda to the
public road. The defendants closed the road in question and refused the use of the same unless a toll was paid.
The plaintiffs therein brought an action to enjoin the defendants from interfering with the use of the road. In
support of their action, the plaintiffs presented evidence tending to show that they have acquired the right-of-way
through the road by prescription. This Court rejected the contention, holding as follows:
Had it been shown that the road had been maintained at the public expense, with the acquiescence of the
owners of the estates crossed by it, this would indicate such adverse possession by the government as in
course of time would ripen into title or warrant the presumption of a grant or of a dedication. But in this
case there is no such evidence, and the claims of plaintiffs, whether regarded as members of the public
asserting a right to use the road as such, or as persons claiming a private easement of way over the land
of another must be regarded as resting upon the mere fact of user.

If the owner of a tract of land, to accommodate his neighbors or the public in general, permits them to
cross his property, it is reasonable to suppose that it is not his intention, in so doing, to divest himself of
the ownership of the land so used, or to establish an easement upon it, and that the persons to whom
such permission, tacit or express, is granted, do not regard their privilege of use as being based upon
anything more than the mere tolerance of the owner. Clearly, such permissive use is in its inception based
upon an essentially revocable license. If the use continues for a long period of time, no change being
made in the relations of the parties by any express or implied agreement, does the owner of the property
affected lose his right of revocation? Or, putting the same question in another form, does the mere
permissive use ripen into title by prescription?

It is a fundamental principle of the law in this jurisdiction concerning the possession of real property that
such possession is not affected by acts of a possessory character which are "merely tolerated" by the
possessor, which are or due to his license (Civil Code, arts. 444 and 1942). This principle is applicable not
only with respect to the prescription of the dominium as a whole, but to the prescription of right in rem. In
the case of Cortes vs. Palanca Yu-Tibo (2 Phil. Rep., 24, 38), the Court said:
The provision of article 1942 of the Civil Code to the effect that acts which are merely tolerated
produce no effect with respect to possession is applicable as much to the prescription of real
rights as to the prescription of the fee, it being a glaring and self-evident error to affirm the
contrary, as does the appellant in his motion papers. Possession is the fundamental basis of
prescription. Without it no kind of prescription is possible, not even the extraordinary.
Consequently, if acts of mere tolerance produce no effect with respect to possession, as that

82
 article provides, in conformity with article 444 of the same Code, it is evident that they can
produce no effect with respect to prescription, whether ordinary or extraordinary. This is true
whether the prescriptive acquisition be of a fee or of real rights, for the same reason holds in one
and the other case; that is, that there has been no true possession in the legal sense of the word.
(Citations omitted)

Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession
under claim of title (en concepto de dueo), or to use the common law equivalent of the term, it must be
adverse. Acts of possessory character performed by one who holds by mere tolerance of the owner are
clearly not en concepto de dueo, and such possessory acts, no matter how long so continued, do not
start the running of the period of prescription.

Following the foregoing disquisition, the petitioners claim that it had acquired the easement of right-of-way by
prescription must perforce fail. As intimated above, possession is the fundamental basis of prescription, whether
ordinary or extraordinary. The petitioner never acquired the requisite possession in this case. Its use of that
portion of the subject property where it erected the wooden poles and transmission lines was due merely to the
tacit license and tolerance of the respondents. As such, it cannot be made the basis of the acquisition of an
easement of right-of-way by prescription.

Neither can the petitioner invoke Section 3(i) of its Charter (Rep. Act No. 6395, as amended) to put up the
defense of prescription against the respondents. The said provision reads in part:
Sec. 3(i). The Corporation or its representatives may also enter upon private property in the lawful
performance or prosecution of its business or purposes, including the construction of transmission lines
thereon; Provided, that the owner of such private property shall be paid the just compensation therefor in
accordance with the provisions hereinafter provided; Provided, further, that any action by any person
claiming compensation and/or damages shall be filed within five years after the right-of-way, transmission
lines, substations, plants or other facilities shall have been established: Provided, finally, that after the
said period no suit shall be brought to question the said right-of-way, transmission lines, substations,
plants or other facilities nor the amounts of compensation and/or damages involved;

Two requisites must be complied before the above provision of law may be invoked:
1. The petitioner entered upon the private property in the lawful performance or prosecution of its
businesses or purposes; and
2.The owner of the private property shall be paid the just compensation therefor.

As correctly asserted by the respondents, Section 3(i) of Rep. Act No. 6395, as amended, presupposes that the
petitioner had already taken the property through a negotiated sale or the exercise of the power of eminent
domain, and not where, as in this case, the petitioner was merely temporarily allowed to erect wooden electrical
posts and transmission lines on the subject property. Significantly, the provision uses the term "just
compensation," implying that the power of eminent domain must first be exercised by the petitioner in accordance
with Section 9, Article III of the Constitution, which provides that "no private property shall be taken for public use
without just compensation.

Further, nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded
by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.23 Similarly, the court may award nominal damages in every case where any property right
has been invaded.24 The petitioner, in blatant disregard of the respondents proprietary right, trespassed the
subject property and conducted engineering surveys thereon. It even attempted to deceive the respondents
caretaker by claiming that its agents were authorized by the respondents to enter the property when in fact, the
respondents never gave such authority. Under the circumstances, the award of nominal damages is likewise
warranted.

Finally, the award of attorneys fees as part of damages is deemed just and equitable considering that by the
petitioners unjustified acts, the respondents were obviously compelled to litigate and incur expenses to protect
their interests over the subject property.

96. BOGO-MEDELLIN MILLING CO. INC. vs. COURT OF APPEALS

G. R. No. 124699 July 31, 2003

FACTS

83
Magdaleno Valdez, Sr., father of herein private respondents Sergio Valdez et al, purchased from Feliciana
Santillan a parcel of unregistered land with an area of one hectare, 34 ares and 16 centares, located in Barrio
Dayhagon, Medellin, Cebu. He took possession of the property and declared it for tax purposes in his name. Prior
to the sale, however, the entire length of the land from north to south was already traversed in the middle by
railroad tracks owned by petitioner Bogo-Medellin Milling Co., Inc. (hereafter Bomedco). The tracks were used for
hauling sugar cane from the fields to petitioners sugar mill. When Magdaleno Valdez, Sr. passed away in 1948,
herein private respondents inherited the land. However, unknown to them, Bomedco was able to have the
disputed middle lot which was occupied by the railroad tracks placed in its name in the Cadastral Survey of
Medellin, Cebu in 1965. The entire subject land was divided into three. However, Lot No. 954, the narrow lot
where the railroad tracks lay, was claimed by Bomedco as its own and was declared for tax purposes in its name.

It was not until 1989 when private respondents discovered the aforementioned claim of Bomedco on inquiry with
the Bureau of Lands. Through their lawyer, they immediately demanded the legal basis for Bomedco's claim over
Cadastral Lot No. 954 but their letter of inquiry addressed to petitioner went unheeded, as was their subsequent
demand for payment of compensation for the use of the land.

Respondent heirs filed a Complaint for Payment of Compensation and/or Recovery of Possession of Real
Property and Damages with Application for Restraining Order/Preliminary Injunction against Bomedco before the
Regional Trial Court of Cebu. Respondent heirs alleged that, before she sold the land to Valdez, Sr. in 1935,
Santillan granted Bomedco, in 1929, a railroad right of way for a period of 30 years. When Valdez, Sr. acquired
the land, he respected the grant. The right of way expired sometime in 1959 but respondent heirs allowed
Bomedco to continue using the land because one of them was then an employee of the company.

On the other hand, Bomedcos principal defense was that it was the owner and possessor of Cadastral Lot No.
954, having allegedly bought the same from Feliciana Santillan in 1929, prior to the sale of the property by the
latter to Magdaleno Valdez, Sr. in 1935. It also contended that plaintiffs claim was already barred by prescription
and laches because of Bomedcos open and continuous possession of the property for more than 50 years.

In its decision dated November 27, 1991, the trial court rejected Bomedco's defense of ownership on the basis of
a prior sale, citing that its evidence a xerox copy of the Deed of Sale dated March 18, 1929 was inadmissible
and had no probative value. Not only was it not signed by the parties but defendant Bomedco also failed to
present the original copy without valid reason pursuant to Section 4, Rule 130 of the Rules of Court. Nonetheless,
the trial court held that Bomedco had been in possession of Cadastral Lot No. 954 in good faith for more than 10
years, thus, it had already acquired ownership of the property through acquisitive prescription under Article 620 of
the Civil Code. This decision was reversed by the Court of Appeals, hence, this petition.

ISSUE
Whether or not, Bomedcos ownership of the land in question is valid and whether or not herein private
respondents action is barred by prescription and laches due to petitioners open and continuous possession of
subject lot.

RULING
The Supreme Court, upholds the decision of the Court of Appeals which stated among others that Bomedco did
not acquire ownership over the lot. In its decision dated November 17, 1995, the appellate court held that
Bomedco only acquired an easement of right of way by unopposed and continuous use of the land, but not
ownership, under Article 620 of the Civil Code.

The appellate court further ruled that Bomedcos claim of a prior sale to it by Feliciana Santillan was untrue. Its
possession being in bad faith, the applicable prescriptive period in order to acquire ownership over the land was
30 years under Article 1137 of the Civil Code. Adverse possession of the property started only in 1965 when
Bomedco registered its claim in the cadastral survey of Medellin. Since only 24 years from 1965 had elapsed
when the heirs filed a complaint against Bomedco in 1989, Bomedcos possession of the land had not yet ripened
into ownership.

And since there was no showing that respondent heirs or their predecessor-in-interest was ever paid
compensation for the use of the land, the appellate court awarded compensation to them, to be computed from
the time of discovery of the adverse acts of Bomedco.

Neither can petitioner find refuge in the principle of laches. It is not just the lapse of time or delay that constitutes
laches. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do
that which, through due diligence, could or should have been done earlier, thus giving rise to a presumption that

84
the party entitled to assert it had either abandoned or declined to assert it. Records show that respondent heirs
only learned about petitioners claim on their property when they discovered the inscription for the cadastral
survey in the records of the Bureau of Lands in 1989. Respondents lost no time in demanding an explanation for
said claim in their letters to the petitioner dated March 1, 1989 and April 6, 1989. When petitioner ignored them,
they instituted their complaint before the Regional Trial Court of Cebu City on June 8, 1989.

WHEREFORE, the petition is DENIED. The appealed decision dated November 17, 1995 and resolution dated
March 2, 1996 of the Court of Appeals are AFFIRMED with MODIFICATION. Petitioner Bogo-Medellin Milling
Company, Inc. is hereby ordered to vacate the subject strip of land denominated as Cadastral Lot No. 954,
remove its railway tracks thereon and return its possession to the private respondents, the heirs of Magdaleno
Valdez, Sr. It is also hereby ordered to pay private respondents attorney's fees in the amount ofP10,000.

97. FLORO vs. LLENADO

G. R. No. 75723 June 2, 1995

FACTS
Simeon Floro is the owner of a piece of land known as the Floro Park Subdivision situated in Barangay Saluysoy,
Meycauayan, Bulacan. Orlando A. Llenado, 2 on the other hand, was the registered owner of two parcels of land,
with a total area of 34,573 sq. meters, more or less, 3 known as the Llenado Homes Subdivision ("Llenado
Homes," for brevity). Prior to its purchase by Llenado from the owner Francisco de Castro, the land was known as
the Emmanuel Homes Subdivision, a duly licensed and registered housing subdivision in the name of Soledad
Ortega. Bounded on the South by the 5 to 6 meter-wide Palanas Creek, which separates it from the Floro Park
Subdivision, and on the west by ricelands belonging to Marcial Ipapo, Montaos and Guevarra, the Llenado Homes
does not have any existing road or passage to the MacArthur Highway. However, a proposed access road
traversing the idle riceland of Marcial Ipapo has been specifically provided in the subdivision plan of the
Emmanuel Homes Subdivision, which was duly approved by the defunct Human Settlement Regulatory
Commission (now Housing and Land Use Regulatory Board).
Sometime in February, 1983, the Llenados sought, and were granted, permission by the Floros to use Road Lots
4 and 5 of the Floro Park Subdivision as passageway to and from MacArthur Highway. On April 7, 1983, however,
Floro barricaded Road Lot 5 with a pile of rocks, wooden posts and adobe stones, thereby preventing its use by
the Llenados.
Their request for the reopening of Road Lot 5 having been denied, Orlando Llenado instituted a complaint before
the RTC of Malolos, Bulacan, against Simeon Floro for Easement of Right of Way.

ISSUE
Whether or not an owner/developer of a subdivision can demand a compulsory easement of right of way over the
existing roads of an adjacent subdivision instead of developing his subdivision's proposed access road as
provided in his duly approved subdivision plan.

RULING
No. For the Llenados to be entitled to a compulsory servitude of right of way under the Civil Code the
preconditions provided under Articles 649 and 650 thereof must be established. These preconditions are: (1) that
the dominant estate is surrounded by other immovable and has no adequate outlet to a public highway (Art. 649,
par. 1); (2) after payment of proper indemnity (Art. 649, par. 1); (3) that the isolation was not due to acts of the
proprietor of the dominant estate (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).

The burden of proving the existence of the prerequisites to validly claim a compulsory right of way lies on the
owner of the dominant estate. Private respondents have failed in this regard.

Failing to establish the existence of the prerequisites under Articles 649 and 650 of the Civil Code, private
respondent Llenado's bid for a compulsory easement of right of way over Road Lots 4 and 5 of the Floro Park
Subdivision must fail.

98. COSTABELLA CORPORATION vs. COURT OF APPEALS

G. R. No. 80511 January 25, 1991

FACTS
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It is admitted that the petitioner owns the real estate properties of the Opon Cadastre on which it had constructed
a resort and hotel. The private respondents, on the other hand, are the owners of adjoining.

Before the petitioner began the construction of its beach hotel, the private respondents, in going to and from their
respective properties and the provincial road, passed through a passageway which traversed the petitioners
property. In 1981, the petitioner closed the aforementioned passageway when it began the construction of its
hotel, but nonetheless opened another route across its property through which the private respondents, as in the
past, were allowed to pass.

In the same complainant, the private respondents likewise alleged that the petitioner had constructed a dike on
the beach fronting the latters property without the necessary permit, obstructing the passage of the residents and
local fishermen, and trapping debris and flotsam on the beach. They also claimed that the debris and flotsam that
had accumulated prevented them from using their properties for the purpose for which they had acquired them.
The complaint thus prayed for the trial court to order the re-opening of the original passageway across the
petitioners property as well as the destruction of the dike.

However, private respondents failed to indicate in their complaint or to manifest during the trial of the case that
they were willing to indemnify fully the petitioner for the right of way to be established over its property. Neither
have the private respondents been able to show that the isolation of their property was not due to their personal or
their predecessors-in-interests own acts. Finally, the private respondents failed to allege, much more introduce
any evidence, that the passageway they seek to be re-opened is at a point least prejudicial to the petitioner. It is
therefore of great importance that the claimed right of way over the petitioners property be located at a point least
prejudicial to its business.

ISSUE
Whether or not the private respondents had acquired a vested right over the passageway in question by
prescription.

RULING
It is already well-established that an easement of right of way, as is involved here, is discontinuous and as such
cannot be acquired by prescription. While a right of way is legally demandable, the owner of the dominant estate
is not at liberty to impose one based on arbitrary choice. Under Article 650 of the Code, it shall be established
upon two criteria: (1) at the point least prejudicial to the servient state; and (2) where the distance to a public
highway may be the shortest. According, however, to one commentator, least prejudice prevails over shortest
distance. Yet, each case must be weighed according to its individual merits, and judged according to the sound
discretion of the court. The court, says Tolentino, is not bound to establish what is the shortest; a longer way
may be established to avoid injury to the servient tenement, such as when there are constuctions or walls which
can be avoided by a roundabout way, or to secure the interest of the dominant owner, such as when the shortest
distance would place the way on a dangerous decline. It is based on these settled principles that we have
resolved this case.

99. SPOUSES MANUEL MEJORADA vs. GLORIFICACION VERTUDAZO, et al.

G. R. No. 151797 October 11, 2007

FACTS
Glorificacion and Sol Vertudazo and their co-respondents established their permanent residence on a 300-square
meter lot located at Telaje, Tandag, Surigao del Sur. Their property is landlocked being bordered on all sides by
different lots. As an access route going to Quiones Street and the public highway, they utilized a proposed
undeveloped barangay road on the south side of their property owned by Rosario Quiones.

In 1988, spouses Manuel and Rosalinda Mejorada, petitioners, bought Rosarios 646-square meter lot adjacent to
respondents property. Included therein is an area measuring 55.5 square meters which serves as an adequate
outlet to Quiones Street, now the subject of the present controversy. For several years, respondents and the
general public have been using that area as a passageway to and from Quiones Street.

On July 2, 1997, petitioners closed the passageway by building a new garage for their service jeep. Hence,
respondents brought the matter to the barangay concerned but no settlement was reached by the parties.
Respondents then filed a complaint3 with the Regional Trial Court, Branch 27, Tandag, Surigao del Sur praying for
a grant of easement of right of way over petitioners property with an application for writ of preliminary mandatory
injunction.

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In their answer, petitioners claimed that there is an alternate route which respondents have been using although it
was long, circuitous and muddy; that the isolation of respondents property was due to their construction of a
fence fronting the house of the petitioners; that this made it difficult for petitioners to maneuver their service jeep,
hence, they were constrained to construct a new garage; that respondents never offered to pay compensation for
the right of way; and that they failed to show that the easement is at the point least prejudicial to the servient
estate.

The trial court rendered a Decision in favor of respondents. On appeal, the Court of Appeals affirmed the Decision
of the trial court.

ISSUE
Whether or not respondents are entitled to the easement of right of way on the property owned by petitioners

RULING
Yes, respondents are entitled to the easement of right of way on the property owned by petitioners

Easement has been defined as an encumbrance imposed upon an immovable for the benefit of another
immovable belonging to a different owner.

Articles 649 and 650 of the Civil Code provide:

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. xxx

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.

A legal or compulsory easement is that which is constituted by law for public use or for private interest. Pursuant
to the above provisions, the owner of an estate may claim a legal or compulsory right of way only after he has
established the existence of these four (4) requisites: (a) the estate is surrounded by other immovables and is
without adequate outlet to a public highway; (b) after payment of the proper indemnity; (c) the isolation was not
due to the proprietors own acts; and (d) the right of way claimed is at a point least prejudicial to the servient
estate.

Here, these four requisites have been satisfied.

First, as found by the Court of Appeals, there is no other road which respondents could use leading to Quiones
Street except the passageway on petitioners property.

Second, respondents have offered to pay petitioners proper indemnity for the easement of way.

Third, the Court of Appeals likewise found that the isolation of respondents property was not due to their acts.

Fourth, the easement is at the point least prejudicial to petitioners property. In fact, the area of the easement
which is 55.5 square meters is located at the corner of petitioners landholding, hence, does not cause them
inconvenience in anyway.

100. LORETO VDA. DE BALTAZAR vs. COURT OF APPEALS and DANIEL PANGANIBAN
G. R. No. 10608 June 27, 1995

FACTS
Daniel Panganiban is the owner of a parcel of residential land consisting of 117 square meters denominated as
Lot no. 1027 located at Sta. Ines, Bulacan. Immediately to the front of said land is Lot 1026 of Loreto Vda. de
Baltazar and her son Nestor Baltazar. Immediately behind is the Sta. Ana River. On either side are Lots 1025 and
1028 owned by Ricardo Calimon and Jose Legaspi, respectively. Braulio Street, a provincial road, runs along the
frontage of Lots 1025, 1026 and 1028.

87
Sometime in 1989, Daniel Panganiban filed a complaint against the Baltazars who are owners of Lot 1026 for the
establishment of a permanent and perpetual easement of right of way for him to have access to the provincial
road. In said complaint, he prayed for the issuance of a writ of preliminary injunction.

In their answer, petitioners opposed the prayer for the issuance of a writ of preliminary injunction arguing that
there exists two other rights of way adjacent to private respondent's property. They likewise argue that private
respondent had abandoned the alleged right of way.

The court a quo, after conducting an ocular inspection and hearings for the issuance of the writ prayed for,
dismissed the complaint.

The Court of Appeals, in its assailed decision, reversed the order of dismissal of the court a quo and granted
respondent's right of way.

ISSUE
Whether or not respondent Panganiban is entitled to claim an easement of right of way over the Baltazars'
property

RULING
Yes, respondent Panganiban is entitled to claim an easement of right of way over the Baltazars' property.

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 (4) 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.

For respondent Panganiban to claim a compulsory easement of right of way, he must, therefore, first establish the
existence of the four requisites stated above.

It is not disputed that the first requisite has been established by the court a quo in its Order dated May 22, 1990.
Respondent Panganiban's property is indeed surrounded by immovables on three sides and a river on the fourth.

As for the second requisite, Francisco v. Intermediate Appellate Court states:

There would indeed be some point in looking askance at a reading of the law which would impute to it a strict
requirement to pay "proper indemnity" in advance of a suit the purpose of which, in addition to creating an
easement, is precisely to fix the amount of the indemnity to be paid therefor.

We agree with the Court of Appeals when it ordered the remand of this case to the lower court for the purpose of
fixing the proper indemnity.

With respect to the third requisite, respondent Panganiban was likewise able to establish that the isolation of his
property was not due to his own act for he merely bought Lot 1027, which was formerly part of the Baltazars' Lot
1026-A, from petitioner Nestor Baltazar's predecessors-in-interest.

As regards the fourth requirement, both parties agreed that the passage claimed by respondent as his right of
way, compared to the other passageways, is the shortest distance from respondent's lot to Braulio Street.

101. WOODRIDGE SCHOOL, INC.,et al. vs. ARB CONSTRUCTION CO., INC.
G. R. No. 157285 February 16, 2007

FACTS
Petitioner Woodridge is the usufructuary of a parcel of land in the name of spouses Ernesto T. Matugas and
Filomena U. Matugas. Its co-petitioner, Miguela Jimenez-Javier, is the registered owner of the adjacent lot.

On the other hand, ARB is the owner and developer of Soldiers Hills Subdivision in Bacoor, Cavite, which is
composed of four phases. Phase I of the subdivision was already accessible from the Marcos Alvarez Avenue. To
provide the same accessibility to the residents of Phase II of the subdivision, ARB constructed the disputed road

88
to link the two phases.

As found by the appellate court, petitioners' properties sit right in the middle of several estates: Phase I of Soldiers
Hills Subdivision in the north, a creek in the east and Green Valley Subdivision the farther east, a road within
Soldiers Hills Subdivision IV which leads to the Marcos Alvarez Avenue in the west and Phase III of Soldiers Hills
Subdivision in the south.

Initially, petitioners offered to pay ARB P50,000 as indemnity for the use of the road. Adamant, ARB refused the
offer and fenced the perimeter of the road fronting the properties of petitioners. By doing so, ARB effectively cut
off petitioners' access to and from the public highway.

After failing to settle the matter amicably, petitioners jointly filed a complaint in the RTC of Imus, Cavite to enjoin
ARB from depriving them of the use of the disputed subdivision road and to seek a compulsory right of way after
payment of proper indemnity. The trial court rendered its decision in favor of petitioners. ARB elevated the case to
the Court of Appeals. The appellate court reversed the decision of the lower court.

ISSUE
Whether or not petitioners are entitled to the the use of the road.

RULING
Contrary to the position of petitioners, the use of the subdivision roads by the general public does not strip it of its
private character. The road is not converted into public property by mere tolerance of the subdivision owner of the
public's passage through it. To repeat, "the local government should first acquire them by donation, purchase, or
expropriation, if they are to be utilized as a public road.

Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and playgrounds shall be
donated by the owner or developer to the city or municipality and it shall be mandatory for the local governments
to accept them provided, however, that the parks and playgrounds may be donated to the Homeowners
Association of the project with the consent of the city or municipality concerned

The law is clear. The transfer of ownership from the subdivision owner-developer to the local government is not
automatic but requires a positive act from the owner-developer before the city or municipality can acquire
dominion over the subdivision roads. Therefore, until and unless the roads are donated, ownership remains with
the owner-developer.

Since no donation has been made in favor of any local government and the title to the road lot is still registered in
the name of ARB, the disputed property remains private.

This is not to say that ARB may readily exclude petitioners from passing through the property. As correctly pointed
out by the Court of Appeals, the circumstances clearly make out a case of legal easement of right of way. It is an
easement which has been imposed by law and not by the parties and it has "for (its) object either public use or the
interest of private persons."

To be entitled to a legal easement of right of way, the following requisites must concur: (1) the dominant estate is
surrounded by other immovables and has no adequate outlet to a public highway; (2) payment of proper
indemnity; (3) the isolation was not due to acts of the proprietor of the dominant estate and (4) the right of way
claimed is at the point least prejudicial to the servient estate.

102. MA. LINDA ALMENDRAS vs. COURT OF APPEALS

G. R. No. 110067 August 3, 1998

FACTS
Petitioner is the registered owner of a parcel of land, in Banilad, Cebu. The land is bounded on the
north and on the east by lots owned by private respondents Tan Pang Eng and Fabiana Yap,
on the south by the lot owned by Celedonio Bongo, and
on the west by the properties of Tomas Opone and Zosimo Opone.

About 9.74 meters of the western boundary of petitioner's land abuts an existing private road, 6.00 meters wide,
which passes through the lots of Tomas Opone, Vicente Lao, Manuel Opone, Luis Sison, and Silvestre Opone

89
and leads to another private road located on the property of Bienvenido Tudtud which in turn connects to the
provincial road.

Sometime in September, 1987, private respondents began building a concrete wall on his property on the
northern and eastern sides of petitioner's lot. For this reason, petitioner wrote private respondents on September
15, 1987 offering to buy a portion of the latter's lot, 17.45 meters long and 3 meters wide, so that petitioner could
have access to the provincial road. But her request was denied by private respondents on the ground that there
was an existing private road on the western side of petitioner's property providing adequate outlet to the provincial
road. Private respondents claimed that granting petitioner's request would greatly reduce the value of his property,
as the proposed right of way cuts across the middle of the property.

Shortly thereafter, in January 1988, Celedonio Bongo also fenced his property, thus closing off the southern
boundary of petitioner's lot.

On January 29, 1988, petitioner brought this action in the RTC of Cebu, Branch 16 for the establishment of a right
of way through private respondents' land.

Zosimo Opone subsequently closed off the western side of petitioner's property by erecting a fence on his lot, with
the result that petitioner's property became inaccessible.

RTC
Granted the right of way through 57.35 square meters of private respondents' property, upon payment by her of
P11,470.00 as indemnity. In the case at bar, the trial court ruled that the easement should be constituted
THROUGH THE LAND of private respondents on the eastern side because it would be the shortest way to the
provincial road, being only 17.45 meters long, compared to 149.22 meters if the easement was constituted on the
Opone and Tudtud roads on the western and southern sides of petitioner's land.

CA
Pointed to the LONGER WAY, considered the fact that this was already existing and does not preclude its use by
other parties than the individual owners of Lot 1-A to Lot 1-G and the owners of the land on which the connecting
Tudtud road is found.

CA
Reversed. Staating that the road around petitioner's lot on its western and southern boundaries was an adequate
outlet for petitioner to the provincial road. MR denied. Hence this petition.

Petitioner contends that the appellate court erred in dismissing her complaint because both the Opone and Tudtud
roads are private roads which were built for the benefit only of those lots through which the roads pass and, as
such, cannot be considered adequate outlets within the contemplation of Art. 649 of the Civil Code. The roads not
being adequate outlets, Tan was bound under the law to open up a right of way for her through his property.

ISSUE
Whether or not petitioner is entitled to a right of way THROUGH private respondents' property.

RULING
We hold that she has failed to prove that she has a right to the establishment of such an easement through
private respondents' property.
A right of way was constituted running almost the entire length of the eastern boundary of all these lots. The
servitude was annotated on the transfer certificates of title covering the seven lots.

Petitioner's property abuts 9.74 meters of the aforesaid right of way. As already stated, the Opone road connects
to another right of way on the property of Bienvenido Tudtud (the Tudtud road). This right of way was constituted
on July 4, 1983 by Bienvenido Tudtud in favor of the individual owners of Lot 1-A to Lot 1-G by virtue of an
instrument entitled "Easement of Right of Way" .
Tudtud and the Opone roads already constitute permanent easements.Although the Tudtud easement was
constituted by naming the owners of the individual lots, the annotation of the easement nevertheless categorically
states that the easement is established "as a gesture of [Bienvenido Tudtud's] love and service to his fellowmen,"
which, the appellate court interpreted to mean for the benefit of the public in general.

To begin with, the owner of a landlocked property has the right to demand a right of way through the neighboring
estates. The easement must be established at the point which is least prejudicial to the servient estate and,

90
whenever possible, the shortest to the highway. 3 If these two conditions exist on different properties, the land
where establishment of the easement will cause the least prejudice should be chosen.

The way may be longer and not the most direct way to the provincial road, but if the establishment of the
easement in favor of petitioner on this roads will cause the least prejudice, then the easement should be
constituted there. However, this can only be determined if the several lot are before the court, for the
determination of the point least prejudicial to the owners of servient estates (if there are two or more possible sites
for an easement) requires a comparative evaluation of the physical conditions of the estates. Although evidence
concerning the condition of their estates has been presented by private respondents, it is impossible to determine
with certainty which estate would be least prejudiced by the establishment of an easement for petitioner until
these parties have been heard. Any decision holding them liable to bear the easement would not be binding on
them since they are not parties to this action.

Accordingly, the decisions of the Court of Appeals and of the Regional Trial Court should be set aside and this
case remanded to the trial court so that private respondents may file a third-party complaint against the owners of
servient estates through whose lands they believe the right of way sought by petitioner should be established and
then prove their claim. On the basis of the evidence of all parties concerned the trial court should render a new
decision.

103. ANASTACIA QUIMEN vs. COURT OF APPEALS

G. R. No. 112331 May 29, 1996

FACTS
Petitioner Anastacia Quimen together with her brothers Sotero, Sulpicio, Antonio and sister Rufina inherited a
piece of property situated in Pandi, Bulacan. They agreed to subdivide the property equally among themselves.

In February 1982 Yolanda purchased Lot No. 1448-B-6-A from her uncle Antonio through her aunt Anastacia who
was then acting as his administratrix. According to Yolanda, when petitioner offered her the property for sale she
was hesitant to buy as it had no access to a public road. But Anastacia prevailed upon her to buy the lot with the
assurance that she would give her a right of way on her adjoining property for P200.00 per square meter.

Thereafter, Yolanda constructed a house on the lot she bought using as her passageway to the public highway a
portion of Anastacia's property. But when Yolanda finally offered to pay for the use of the pathway Anastacia
refused to accept the payment. In fact she was thereafter barred by Anastacia from passing through her property.
In February 1986 Yolanda purchased the other lot of Antonio Quimen, located directly behind the property of her
parents who provided her a pathway gratis et amore between their house, extending about nineteen (19) meters
from the lot of Yolanda behind the sari sari store of Sotero, and Anastacia's perimeter fence. The store is made of
strong materials and occupies the entire frontage of the lot measuring four (4) meters wide and nine meters (9)
long. Although the pathway leads to the municipal road it is not adequate for ingress and egress. The municipal
road cannot be reached with facility because the store itself obstructs the path so that one has to pass through the
back entrance and the facade of the store to reach the road.

On 29 December 1987 Yolanda filed an action with the proper court praying for a right of way through Anastacia's
property. Report from the ocular inspection the proposed right of way was at the extreme right of Anastacia's
property facing the public highway, starting from the back of Sotero's sari-sari store and extending inward by one
(1) meter to her property and turning left for about five (5) meters to avoid the store of Sotero in order to reach the
municipal road and the way was unobstructed except for an avocado tree standing in the middle.

RTC
But on 5 September 1991 the trial court dismissed the complaint for lack of cause of action; explaining that the
right of way through Sotero's property was a straight path and to allow a detour by cutting through Anastacia's
property would no longer make the path straight. Hence, It was more practical to extend the existing pathway to
the public road by removing that portion of the store blocking the path as that was the shortest route to the public
road and the least prejudicial to the parties concerned than passing through Anastacia's property.

CA
Reversed. She was entitled to a right of way on petitioner's property and that the way proposed by Yolanda would
cause the LEAST DAMAGE and detriment to the servient estate and the shortest distance to the public road.

91
Incidentally, petitioner denies having promised private respondent a right of way. She claims that her agreement
with private respondent was to provide the latter with a right of way on the other lot of Antonio Quimen under her
administration when it was not yet sold to private respondent. Petitioner insists that passing through the property
of Yolanda's parents is more accessible to the public road than to make a detour to her property and cut down the
avocado tree standing thereon.

Petitioner further argues that when Yolanda purchased Lot No.1448-B-6-B in 1986 the easement of right of way
she provided her (petitioner) was ipso jure extinguished as a result of the merger of ownership of the dominant
and the servient estates in one person so that there was no longer any compelling reason to provide private
respondent with a right of way as there are other surrounding lots suitable for the purpos e. Petitioner strongly
maintains that the proposed right of way is not the shortest access to the public road because of the detour and
that, moreover, she is likely to suffer the most damage as she derives a net income of P600.00 per year from the
sale of the fruits of her avocado tree, and considering that an avocado has an average life span of seventy (70)
years, she expects a substantial earning from it.

ISSUES
1. Whether or not the right of way be granted.
2. Whether or not the proposed right of way is the least onerous.

RULING
Affirmed. right of way to private respondent through petitioner's property is granted. In fact, as between petitioner
Anastacia and respondent Yolanda their agreement has already been rendered moot insofar as it concerns the
determination of the principal issue herein presented. The voluntary easement in favor of private respondent,
which petitioner now denies but which the court is inclined to believe, has in fact become a legal easement or an
easement by necessity constituted by law.
EASEMENT
As defined, an easement is a real right on another's property, corporeal and immovable, whereby the
owner of the latter must refrain from doing or allowing somebody else to do or something to be done on
his property, for the benefit of another person or tenement.
It is jus in re aliena, inseparable, indivisible and perpetual, unless extinguished by causes provided by
law.
A right of way in particular is a privilege constituted by covenant or granted by law to a person or class
of persons to pass over another's property when his tenement is surrounded by realties belonging to
others without an adequate outlet to the public highway.
The owner of the dominant estate can demand a right of way through the servient estate provided he
indemnifies the owner thereof for the beneficial use of his property.

The conditions sine quo non for a valid grant of an easement of right of way are:
1. the dominant estate is surrounded by other immovables without an adequate outlet to a public highway;
2. the dominant estate is willing to pay the proper indemnity;
3. the isolation was not due to the acts of the dominant estate; and,
4. the right of way being claimed is at a point least prejudicial to the servient estate.
That the aforesaid right of way is the shortest, most convenient and the least onerous leading to the road and
being used by the plaintiff's predecessors-in-interest from the very inception . . .

The evidence clearly shows that the property of private respondent is hemmed in by the estates of other persons
including that of petitioner; that she offered to pay P200.00 per square meter for her right of way as agreed
between her and petitioner; that she did not cause the isolation of her property; that the right of way is the least
prejudicial to the servient estate. 14 These facts are confirmed in the ocular inspection report of the clerk of court,
more so that the trial court itself declared that "[t]he said properties of Antonio Quimen which were purchased by
plaintiff Yolanda Quimen Oliveros were totally isolated from the public highway and there appears an imperative
need for an easement of right of way to the public highway."

No.
RELEVANT LAW
Article 650 of the New Civil Code explicitly states that 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. The criterion of least prejudice to the servient estate
must prevail over the criterion of shortest distance although this is a matter of judicial appreciation. While shortest
92
distance may ordinarily imply least prejudice, it is not always so as when there are permanent structures
obstructing the shortest distance; while on the other hand, the longest distance may be free of obstructions and
the easiest or most convenient to pass through. In other words, where the easement may be established on any
of several tenements surrounding the dominant estate, the one where the way is shortest and will cause the least
damage should be chosen. However, as elsewhere stated, if these two (2) circumstances do not concur in a
single tenement, the way which will cause the least damage should be used, even if it will not be the shortest.
This is the test.
In applying Art. 650 of the New Civil Code, respondent Court of Appeals declared that the proposed right of way of
Yolanda, which is one (1) meter wide and five (5) meters long at the extreme right of petitioner's property, will
cause the least prejudice and/or damage as compared to the suggested passage through the property of
Yolanda's father which would mean destroying the sari sari store made of strong materials.

As between a right of way that would demolish a store of strong materials to provide egress to a public highway,
and another right of way which although longer will only require an avocado tree to be cut down, the second
alternative should be preferred.

104. TOMAS ENCARNACION vs. COURT OF APPEALS

G. R. No. 77628 March 11, 1991

FACTS
Petitioner Tomas Encarnacion and private respondent Heirs of the late Aniceta Magsino Viuda de Sagun are the
owners of two adjacent estates situated in Buco, Talisay, Batangas. Petitioner owns the dominant estate which
has an area of 2,590 square meters and bounded on the North by Eusebio de Sagun and Mamerto Magsino, on
the south by Taal Lake, on the East by Felino Matienzo and on the West by Pedro Matienzo. Private respondents
co-own the 405-square-meter servient estate which is bounded on the North by the National Highway (Laurel-
Talisay Highway), on the South by Tomas Encarnacion, on the East by Mamerto Magsino and on the West by
Felipe de Sagun. In other words, the servient estate stands between the dominant estate and the national road.

Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to the national
highway just crossed the servient estate at no particular point. However, in 1960 when private respondents
constructed a fence around the servient estate, a roadpath measuring 25 meters long and about a meter wide
was constituted to provide access to the highway. One-half meter width of the path was taken from the servient
estate and the other one-half meter portion was taken from another lot owned by Mamerto Magsino. No
compensation was asked and non was given for the portions constituting the pathway.

It was also about that time that petitioner started his plant nursery business on his land where he also had his
abode. He would use said pathway as passage to the highway for his family and for his customers.

Petitioner's plant nursery business through sheer hard work flourished and with that, it became more and more
difficult for petitioner to haul the plants and garden soil to and from the nursery and the highway with the use of
pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep which he could use for transporting his
plants. However, that jeep could not pass through the roadpath and so he approached the servient estate owners
(Aniceta Vda. de Sagun and Elena Romero Vda. de Sagun) and requested that they sell to him one and one-half
(1 1/2) meters of their property to be added to the existing pathway so as to allow passage for his jeepney. To his
utter consternation, his request was turned down by the two widows and further attempts at negotiation proved
futile.

Thus, the petition for the writ of easement of a right of way over an additional width of at least two (2) meters over
the De Saguns' 405-square-meter parcel of land.

During the trial, the attention of the lower court was called to the existence of another exit to the highway, only
eighty (80) meters away from the dominant estate.

RTC
Dismissed.
It is clear, therefore, that plaintiff at present has two outlets to the highway:
1. one, through the defendants' land on a one meter wide passageway, which is bounded
on both sides by concrete walls and
2. second, through the dried river bed eighty meters away.
3.

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CA
Affirmed.
The necessity interposed by petitioner was not compelling enough to justify interference with the property rights of
private respondents. The presence of a dried river bed only eighty (80) meters away from the dominant estate and
conjectured that petitioner might have actually driven his jeep through the river bed in order to get to the highway,
and that the only reason why he wanted a wider easement through the De Sagun's estate was that it was more
convenient for his business and family needs.

ISSUE
Whether or not petitioner is entitled to a widening of an already existing easement of right-of-way. Both the trial
court and the Appellate Court ruled that petitioner is not so entitled, hence the recourse to this Court.

RULING
ADDITIONAL EASEMENT OF RIGHT OF WAY
YES. Petitioner Tomas Encarnacion is hereby declared entitled to an additional easement of right of way of
twenty-five (25) meters long by one and one-half (1 1/2) meters wide over the servient estate or a total area of
62.5 square meters after payment of the proper indemnity.

While there is a dried river bed less than 100 meters from the dominant tenement, that access is grossly
inadequate.
Generally, the right of way may be demanded:
1. when there is absolutely no access to a public highway, and
2. when, even if there is one, it is difficult or dangerous to use or is grossly insufficient.
PRESENT CASE
In the present case, the river bed route is traversed by a semi-concrete bridge and there is no ingress nor
egress from the highway. For the jeep to reach the level of the highway, it must literally jump four (4) to
five (5) meters up. Moreover, during the rainy season, the river bed is impassable due to the floods. Thus,
it can only be used at certain times of the year. With the inherent disadvantages of the river bed which
make passage difficult, if not impossible, it is if there were no outlet at all.
Where a private property has no access to a public road, it has the right of easement over adjacent
servient estates as a matter of law.

There is a real and compelling need for such servitude in his favor, for the convenience of his business and family.
Article 651 of the Civil Code provides that "(t)he width of the easement of right of way shall be that which is
sufficient for the needs of the dominant estate, and may accordingly be changed from time to time."

This is taken to mean that under the law, it is the needs of the dominant property which ultimately determine the
width of the passage. And these needs may vary from time to time.
Manual hauling of plants and garden soil and use of pushcarts have become extremely cumbersome and
physically taxing.
To force petitioner to leave his jeepney in the highway, exposed to the elements and to the risk of theft
simply because it could not pass through the improvised pathway, is sheer pigheadedness on the part of
the servient estate and can only be counter-productive for all the people concerned.
Petitioner should not be denied a passageway wide enough to accomodate his jeepney since that is a
reasonable and necessary aspect of the plant nursery business.

PAY INDEMNITY
We are well aware that an additional one and one-half (1 1/2) meters in the width of the pathway will reduce the
servient estate to only about 342.5 square meters. But petitioner has expressed willingness to exchange an
equivalent portion of his land to compensate private respondents for their loss. Perhaps, it would be well for
respondents to take the offer of petitioner seriously. But unless and until that option is considered, the law decrees
that petitioner must indemnify the owners of the servient estate including Mamerto Magsino from whose adjoining
lot 1/2 meter was taken to constitute the original path several years ago. Since the easement to be established in
favor of petitioner is of a continuous and permanent nature, the indemnity shall consist of the value of the land
occupied and the amount of the damage caused to the servient estate pursuant to Article 649 of the Civil Code
which states in part:
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

94
 public highway, is entitled to demand a right of way through the neighboring estates, after payment of the
proper indemnity.

Should this easement be established in such a manner that its use may be continuous for all the needs of
the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the
land occupied and the amount of the damage caused to the servient estate.

g. On Nuisance
105. CELESTINO TATEL vs. MUNICIPALITY OF VIRAC
G. R. No. 40243 March 11, 1992

FACTS
Petitioner Celestino Tatel owns a warehouse in barrio Sta. Elena, Municipality of Virac. Complaints were received
by the municipality concerning the disturbance caused by the operation of the abaca bailing machine inside
petitioners warehouse. A committee was then appointed by the municipal council, and it noted from its
investigation on the matter that an accidental fire within the warehouse of the petitioner created a danger to the
lives and properties of the people in the neighborhood. Resolution No. 29 was then passed by the Municipal
council declaring said warehouse as a public nuisance within a purview of Article 694 of the New Civil Code.
According to respondent municipal officials, petitioners warehouse was constructed in violation of Ordinance No.
13, series of 1952, prohibiting the construction of warehouses near a block of houses either in the poblacion or
barrios without maintaining the necessarydistance of 200 meters from said block of houses to avoid loss of lives
and properties by accidental fire. On the other hand, petitioner contends that Ordinance No. 13 is unconstitutional.

ISSUES
1. Whether or not petitioners warehouse is a nuisance within the meaning Article 694 of the Civil Code
2. Whether or not Ordinance No. 13, series of 1952 of the Municipality of Virac is unconstitutional and void.

RULING
The storage of abaca and copra in petitioners warehouse is a nuisance under the provisions of Article 694 of the
Civil Code. At the same time, Ordinance No. 13 was passed by the Municipal Council of Virac in the exercise of
its police power. It is valid because it meets the criteria for a valid municipal ordinance: 1) must not contravene the
Constitution or any statute, 2) must not be unfair or oppressive, 3) must not be partial or discriminatory, 4) must
not prohibit but may regulate trade, 5) must be general and consistent with public policy, and 6) must not be
unreasonable. The purpose of the said ordinance is to avoid the loss of property and life in case of fire which is
one of the primordial obligation of government. The lower court did not err in its decision.

106. CAMILO E. TAMIN vs. COURT OF APPEALS

G. R. No. 97477 May 8, 1992

FACTS
Petitioner filed with the RTC a complaint of Ejectment with Preliminary Injunction against respondents. The
complaint alleged that the plaintiff is the real owner of a parcel of a residential land that the respondents leased
subject to the condition that they should vacate the place in case it is needed for public purpose. Such land
occupied by respondents is said to be reserved for public plaza under Presidential Proclamation No. 365.
Thereafter, respondents refused to vacate the land upon demand by petitioner that such land be used for the
construction of a municipal gymnasium within the public plaza but the said construction which was already started
could not continue because of the presence of the buildings constructed by the respondents. Petitioner contended
that the appropriation for the construction of gymnasium might be reverted back to the national government which
would result to irreparable damage, injury and prejudice to the municipality and its people who are expected to
derive benefits from the accomplishment of the project.

The petitioner judge issued an order granting the petitioner municipalitys motion for a writ of possession with the
ancillary writ of demolition.

Private respondents filed their answer to the complaint alleging that the subject parcel of land has been owned,
occupied and possessed by respondent, Vicente Medina since 1947 when he bought the parcel from a Subanan
native and that respondents were never lessees of petitioner municipality. They also averred that there is a case
pending before the cadastral court between respondent Medina and petitioner municipality as regards the
95
ownership of the subject parcel of land.

ISSUE
Whether or not the petitioner municipality is entitled to a writ of possession and a writ of demolition even before
the trial of the case starts.

RULING
It is to be noted that even before the proclamation, the parcel of land was the subject of a cadastral proceedings
before another branch of RTC. At the time of filing the instant case, the cadastral proceedings intended to settle
the ownership over the questioned portion of the parcel of land under proclamation No. 365 were still pending.

Parenthetically, the issuance of a writ of possession and demolition by the petitioner judge in the ejectment
proceedings was premature. What the petitioner should have done was to stop the proceedings in the instant
case and wait for the final outcome of the cadastral proceedings.

The legality of the occupation of private respondents of the subject parcel of land is still to be resolved in the
cadastral proceedings. In the event that respondent Medina is declared owner of the subject parcel of land,
necessarily, the private respondents would be entitled to just compensation for the precipitate demolition of their
buildings. On the other hand, if private respondent Medina is declared to have no rights over the subject parcel of
lands then, the private respondents would not be entitled to any compensation for the demolition of their buildings.
In such case the private respondents are considered squatters and therefore the demolition of their buildings
would turn out to be justified.

Faced with these alternative possibilities and in the interest of justice, the court rule that the petitioner municipality
must put up a bond to be determined by the trial court to answer for just compensation to which the private
respondents may be entitled in case the demolition of their buildings is adjudged to be illegal.

h. On Donation and Modes of Acquiring Title

107. SHOPPERS PARADISE REALTY vs. ROQUE
G. R. No. 148775 January 13, 2004

FACTS
The respondent, the son of deceased Felipe C. Roque, has filed a petition for the annulment of a contract of
lease with the petitioner entered into with his father. He claims that the property was legally donated to him by his
parents 16 years ago but the title was only transferred to his name only recently. He further claims that the
petitioner did not enter into the transaction in good faith, knowing very well that he was the true owner of the
property.

The lower court dismissed the respondents petition for annulment stating that the petitioner cannot be bound by
the donation because it was not registered and therefore, does not bind third persons. Upon appeal, however, the
Court of Appeals reversed te decision and ordered the annulment of the contract of lease finding that the
petitioner was not a purchaser in good faith.

ISSUE
Whether or not the contract of lease is valid

RULING
The donation was a valid transaction. The non-registration of a deed of donation does not affect its validity. As
being itself a mode of acquiring ownership, donation results in an effective transfer of title over the property from
the donor to the donee. In donations of immovable property, the law requires for its validity that it should be
contained in a public document, specifying therein the property donated and the value of the charges which the
donee must satisfy. The Civil Code provides, however, that "titles of ownership, or other rights over immovable
property, which are not duly inscribed or annotated in the Registry of Property (now Registry of Land Titles and
Deeds) shall not prejudice third persons." It is enough, between the parties to a donation of an immovable
property, that the donation be made in a public document but, in order to bind third persons, the donation must be
registered in the Registry of Property.

A person dealing with registered land may thus safely rely on the correctness of the certificate of title issued
therefore, and he is not required to go beyond the certificate to determine the condition of the property 7 but, where

96
such party has knowledge of a prior existing interest which is unregistered at the time he acquired a right thereto,
his knowledge of that prior unregistered interest would have the effect of registration as regards to him.

However, in the case at bar, the petitioner was found to have knowledge of the donation at the time it entered into
the agreement with the respondents father. It was also apprised of the fact that the subject property belonged to
the respondent.

It was not shown that Dr. Felipe C. Roque had been an authorized agent of respondent.
In a contract of agency, the agent acts in representation or in behalf of another with the consent of the latter.
Article 1878 of the Civil Code expresses that a special power of attorney is necessary to lease any real
property to another person for more than one year. The lease of real property for more than one year is
considered not merely an act of administration but an act of strict dominion or of ownership. A special power of
attorney is thus necessary for its execution through an agent.

Thus, the contract of lease is invalid.

108. HEIRS OF ROSENDO SEVILLA FLORENCIO vs. HEIRS OF TERESA SEVILLA DE LEON
G. R. No. 149570 March 12, 2004

FACTS
Teresa De Leon owned a parcel of land with an area of 828 square meters situated in San Miguel, Bulacan. In
1960 Teresa De Leon allowed the spouses Florencio to occupy the said lot and construct a house thereon by
mere tolerance.

In 1991 when the original parties have already died, the heirs of Teresa De Leon demanded the heirs of Florencio
to vacate the land in question by instituting an action for ejectment, on the ground that the petitioner merely
occupies the lot by mere tolerance.

The heirs of Rosendo Florencio interposed by way of their defense the existence of a deed of donation
purportedly executed by the late Teresa Sevilla De Leon in favor of Rosendo Florencio in 1976; and that said
deed of donation was made in public instrument only that it was not registered with the Registry of Deeds by
reason of death of the donor.

ISSUE
1. Whether or not the respondent as an heir of the donee has a better right to possess the property against the
heirs of Teresa De Leon.
2. Whether or not the property, covered by said title, being claimed by petitioners is a patrimonial property.

RULING
Although donation is an effective mode of transferring title over a certain property and although registration does
not vest title; it is merely evidence of such title over a particular parcel of land, the necessity of registration comes
into play when the rights of third persons are affected.

Veritable doubt exist as to the genuiness and authenticity of the deed of donation for the following reasons that:
after the purported donation the donor did not turn over the duplicate copy of title of the land to facilitate the
issuance of the new title; there was no registration of said deed of donation nor annotation in the title of the land
concerning the donation; and the deed of donation came out for the first time when the heirs of the respondent
demanded the return of the property. Hence, the deed of donation relied upon by the petitioner is unreliable as
evidence. Corollary the respondent shall have a better right to possess the property.

It is a patrimonial property. The schools, public markets and cemeteries are not for the free and indiscriminate use
of everyone. The determination of the persons allowed to study in such schools, or put up stalls in the public
market, or bury their dead in public cemeteries are regulated by the government. As such, the subject property is,
under the Civil Code classification, patrimonial property, and the Municipality may have the same registered in its
name. It was likewise affirmed that the claim of petitioners had already been barred by laches.

The recent discovery by petitioners of their supposed right to the disputed property notwithstanding, petitioners
alleged ascendants should have instituted an action against the Municipal Government of Paniqui or against
Maximo Parazo for the allegedly unlawful taking of the property way back in the 1920s.

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109. ROSITA PEA vs. COURT OF APPEALS
G. R. No. 91478 February 7, 1991

FACTS
A reading of the records shows that [Pampanga Bus Co.] PAMBUSCO, original owners of the lots in question
under TCT Nos. 4314, 4315 and 4316, mortgaged the same to the Development Bank of the Philippines (DBP) on
January 3, 1962 in consideration of the amount of P935,000.00. This mortgage was foreclosed. In the foreclosure
sale under Act No. 3135 held on October 25, 1974, the said properties were awarded to Rosita Pea as highest
bidder.

On November 19, 1974, the board of directors of PAMBUSCO, through three (3) out of its five (5) directors,
resolved to assign its right of redemption over the aforesaid lots and authorized one of its members, Atty. Joaquin
Briones "to execute and sign a Deed of Assignment for and in behalf of PAMBUSCO in favor of any interested
party . . ." (Exh. 24). Consequently, on March 18, 1975, Briones executed a Deed of Assignment of PAMBUSCO's
redemption right over the subject lots in favor of Marcelino Enriquez (Exh. 25). The latter then redeemed the said
properties and a certificate of redemption dated August 15, 1975 was issued in his favor by Sheriff Zabat upon
payment of the sum of one hundred forty thousand, four hundred seventy four pesos P140,474.00) to the Office of
the Provincial Sheriff of Pampanga (Exh. 26).

A day after the aforesaid certificate was issued, Enriquez executed a deed of absolute sale of the subject
properties in favor of plaintiffs-appellants, the spouses Rising T. Yap and Catalina Lugue, for the sum of
P140,000.00.

ISSUE
Whether or not the respondent Court of Appeals erred in not holding that the questioned Deed of Assignment,
dated March 8, 1975, as void ab initio for failing to comply with the formalities mandatorily required under the law
for donations.

RULING
The petition is impressed with merit. Respondent court, in upholding the questioned deed of assignment, which
appears to be without any consideration at all, held that the consideration thereof is the liberality of the respondent
PAMBUSCO in favor of its former corporate officer, respondent Enriquez, for services rendered. Assuming this to
be so, then as correctly argued by petitioner, it is not just an ordinary deed of assignment, but is in fact a donation.
Under Article 725 of the Civil Code, in order to be valid, such a donation must be made in a public document and
the acceptance must be made in the same or in a separate instrument. In the latter case, the donor shall be
notified of the acceptance in an authentic form and such step must be noted in both instruments.

Non-compliance with this requirement renders the donation null and void. Since undeniably the deed of
assignment dated March 8, 1975 in question, shows that there was no acceptance of the donation in the
same and in a separate document, the said deed of assignment is thus void ab initio and of no force and
effect. WHEREFORE, the petition is GRANTED.

110. NAZARIO VITA vs. SOLEDAD MONTANO

G. R. No. 50553 February 19, 1991

FACTS
A complaint was filed before the CFI by plaintiff-appellant Nazario Vita, in his capacity as judicial administrator of
the estate of deceased Edilberto Vita, seeking to recover from defendants-appellants Soledad Montanano,
Estanislao Jovellano and Estebana Jovellano the possession of three (3) parcels of land Laguna and their annual
yield since January, 1962 in the amount of P1,100.00 a year. Plaintiff-appellant claims that during the lifetime of
Edilberto Vita, he was the owner and possessor of these three (3) parcels of land covered by: Tax Declaration No.
1252 (73, old) with an area of 3,640 square meters, Tax Declaration No. 1231 (72, old) with an area of 1,000
square meters, and Tax Declaration No. 1253 (4, old) with an area of 640 square meters; and he was enjoying the
fruits therefrom. When he died on January 23, 1962, defendants-appellants, through stealth and strategy, took
possession of the above-stated parcels of land and gathered the fruits therefrom. Notwithstanding demands from
plaintiff-appellant, defendants-appellants refused to surrender the possession of these parcels of land.

In their answer dated December 1, 1964, defendants-appellants deny that the three (3) parcels of land belong to
the estate of Edilberto Vita. Instead, they claim that the two parcels of land covered by Tax Declaration No. 1252

98
and Tax Declaration No. 1231 belong to Soledad Montanano as these were conveyed to her by Isidra Montanano
(her aunt and wife of Edilberto Vita) and Edilberto Vita in a document signed and executed by them on November
22, 1938 and ratified by one Mr. Matienzo, a Notary Public from Nagcarlan, Laguna. However, all copies were
during the war.

ISSUES
1) whether or not the three (3) parcels of land mentioned in the complaint are included in the estate of Edilberto
Vita (as regards the appeal of plaintiff-appellant); and
2) whether or not acceptance is necessary in a donation mortis causa; and whether the donation dated December
20, 1940 is mortis causa or inter vivos (with respect to the appeal of defendants-appellants and intervenors-
appellants).

RULING
We are in conformity with the finding of the trial court that the three (3) parcels of land mentioned in the complaint
were paraphernal properties of Isidra Montanano, being supported by documentary and testimonial evidence.

This contention of the plaintiff in effect corroborates the claim of the defendants and intervenors that an the three
(3) parcels of land, subject-matter of the complaint, including all the parcels of land being claimed by them in the
intervenor's counterclaim, were all paraphernal properties of Isidra Montanano. The two (2) parcels of land
supposedly received as donation by Isidra Montanano during her marriage with Edilberto Vita should be classified
as her paraphernal properties, it being acquired by her through lucrative title (Art. 148, Civil Code). On the other
hand, plaintiffs testimony that the third parcel of land covered in the complaint was inherited by Edilberto Vita from
Isidra Montanano is an admission that the said property was the paraphernal property of the latter.

111. URSULINA GANUELAS vs. ROBERT T. CAWED

G. R. No. 123968 April 24, 2003

FACTS
On April 11, 1958, Celestina Ganuelas Vda. de Valin (Celestina) executed a Deed of Donation of Real Property
covering seven parcels of land in favor of her niece Ursulina Ganuelas (Ursulina), one of herein petitioners.

On June 10, 1967, Celestina executed a document denominated as Revocation of Donation purporting to set
aside the deed of donation. More than a month later or on August 18, 1967, Celestina died without issue and any
surviving ascendants and siblings.

After Celestina's death, Ursulina had been sharing the produce of the donated properties with private respondents
Leocadia G. Flores, et al., nieces of Celestina.

In 1982, or twenty-four years after the execution of the Deed of Donation, Ursulina secured the corresponding tax
declarations, in her name, over the donated properties, and since then, she refused to give private respondents
any share in the produce of the properties despite repeated demands.

Private respondents were thus prompted to file on May 26, 1986 with the RTC of San Fernando, La Union a
complaint against Ursulina, along with Metodio Ganuelas and Antonio Ganuelas who were alleged to be unwilling
plaintiffs.

The complaint alleged that the Deed of Donation executed by Celestina in favor of Ursulina was void for lack of
acknowledgment by the attesting witnesses thereto before notary public Atty. Henry Valmonte, and the donation
was a disposition mortis causa which failed to comply with the provisions of the Civil Code regarding formalities of
wills and testaments, hence, it was void.

ISSUE
Whether the donation is inter vivos or mortis causa.

RULING
Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even
if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or
acquired by the donee until the death of the donor-testator.

99
The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the
donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the
formalities prescribed by Articles 74825 and 74926 of the Civil Code, except when it is onerous in which case the
rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities
for the validity of wills, otherwise it is void and cannot transfer ownership.

In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest
in the donated properties was to be transferred to Ursulina prior to the death of Celestina.

The phrase "to become effective upon the death of the DONOR" admits of no other interpretation but that
Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime.

More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall
be deemed rescinded and of no further force and effect shows that the donation is a postmortem disposition.

112. Roman Catholic Archbishop of Manila vs. CA

G. R. No. 77425 & 50 June 19, 1991

FACTS
Private respondents as plaintiffs, filed a complaint for nullification of deed of donation, rescission of contract and
reconveyance of real property with damages against petitioners Florencio and Soledad C. Ignao and the Roman
Catholic Bishop of Imus, Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial
Court, Branch XX, Imus, Cavite.

In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro and
Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant Roman Catholic
Archbishop of Manila covering a parcel of land. The deed of donation allegedly provides that the donee shall not
dispose or sell the property within a period of one hundred (100) years from the execution of the deed of donation,
otherwise a violation of such condition would render ipso facto null and void the deed of donation and the property
would revert to the estate of the donors.

On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based on the
grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue; and (2) the
complaint states no cause of action.

On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three (3)
grounds, the first two (2) grounds of which were identical to that of the motion to dismiss filed by the Ignao
spouses, and the third ground being that the cause of action has prescribed.

On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the ground
that he is not a real party in interest and, therefore, the complaint does not state a cause of action against him.

The trial court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of
action has prescribed.

Private respondents thereafter appealed to the Court of Appeals and holding that the action has not yet prescibed,
rendered a decision in favor of private respondents.

Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for reconsideration
which were denied by respondent Court of Appeals in its resolution dated February 6, 1987, 8 hence, the filing of
these appeals by certiorari.

ISSUE
Whether or not the cause of action has already prescribed.

RULING
Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation must be
brought within four (4) years from the non-compliance of the conditions of the donation, the same is not applicable
in the case at bar. The deed of donation involved herein expressly provides for automatic reversion of the property
donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not

100
necessary.

In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a
contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of
its terms and conditions. It called attention to the holding that there is nothing in the law that prohibits the parties
from entering into an agreement that a violation of the terms of the contract would cause its cancellation even
without court intervention, and that it is not always necessary for the injured party to resort to court for rescission
of the contract. It reiterated the doctrine that a judicial action is proper only when there is absence of a special
provision granting the power of cancellation.

The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory
condition in the deed of donation that the property donated should not be sold within a period of one hundred
(100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an
undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy.

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the
donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property
donated. Although the donor may impose certain conditions in the deed of donation, the same must not be
contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of
donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee
to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition
against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy.
Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not
exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the testator declaring all or part
of the estate inalienable for more than twenty (20) years are void.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an
entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be
declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code.
Consequently, as specifically stated in said statutory provision, such condition shall be considered as not
imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net
result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the
nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case
for private respondents must fail.

113. TITO R. LAGAZO vs. COURT OF APPEALS

G. R. No. 112796 March 5, 1998

FACTS
Catalina Jacob Vda. de Reyes, a widow and grandmother of plaintiff-appellee, was awarded in July 1975 a 60.10-
square meter lot which is a portion of the Monserrat Estate, The Monserrat Estate is a public land owned by the
City of Manila and distributed for sale to bona fide tenants under its land-for-the-landless program. Catalina
Jacob constructed a house on the lot.

Shortly before she left for Canada where she is now a permanent resident, Catalina Jacob executed a special
power of attorney in favor of her son-in-law Eduardo B. Espaol authorizing him to execute all documents
necessary for the final adjudication of her claim as awardee of the lot.

Due to the failure of Eduardo B. Espaol to accomplish the purpose of the power of attorney granted to him,
Catalina Jacob revoked said authority in an instrument executed in Canada on April 16, 1984 Simultaneous with
the revocation, Catalina Jacob executed another power of attorney of the same tenor in favor plaintiff-appellee.
(Alfredo Cabanlit)

Catalina Jacob executed in Canada a Deed of Donation in favor of plaintiff-appellee. Following the donation,
plaintiff-appellee checked with the Register of Deeds and found out that the property was in the delinquent list, so

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that he paid the installments in arrears and the remaining balance on the lot.

On January 29, 1986, plaintiff-appellee sent a demand letter to defendant-appellant asking him to vacate the
premises. Opposing plaintiff-appellees version, defendant-appellant claimed that the house and lot in controversy
were his by virtue of the following documents:

ISSUE
Whether or not the facts involve a Simple or Onerous Donation.

RULING
A simple or pure donation is one whose cause is pure liberality (no strings attached), while an onerous
donation is one which is subject to burdens, charges or future services equal to or more in value than the thing
donated. Under Article 733 of the Civil Code, donations with an onerous cause shall be governed by the rules on
contracts; hence, the formalities required for a valid simple donation are not applicable.

We rule that the donation was simple, not onerous. Even conceding that petitioners full payment of the purchase
price of the lot might have been a burden to him, such payment was not however imposed by the donor as a
condition for the donation.

It is clear that the donor did not have any intention to burden or charge petitioner as the donee. The words in the
deed are in fact typical of a pure donation. We agree with Respondent Court that the payments made by
petitioner were merely his voluntary acts. This much can be gathered from his testimony in court, in which he
never even claimed that a burden or charge had been imposed by his grandmother.

As a pure or simple donation, the following provisions of the Civil Code are applicable:

Art. 734. The donation is perfected from the moment the donor knows of the acceptance by the donee.

Art. 746. Acceptance must be made during the lifetime of the donor and the donee.

Art. 749. In order that the donation of an immovable may be valid, it must be made in a public instrument,
specifying therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation and in a separate public document, but it shall not
take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in authentic form, and this
step shall be noted in both instruments.

Acceptance of the donation by the donee is, therefore, indispensable; its absence makes the donation null and
void.

114. REPUBLIC OF THE PHILIPPINES vs. LEON SILIM and ILDEFONSA MANGUBAT
G. R. No. 140487 April 2, 2001

FACTS
Respondent spouses Leon Silim and Ildefonsa Mangubat, In the Deed of Donation, respondents imposed the
condition that the said property should "be used exclusively and forever for school purposes only."1 This donation
was accepted by Gregorio Buendia, the District Supervisor of BPS, through an Affidavit of Acceptance and/or
Confirmation of Donation.

Pursuant to this, District Supervisor Buendia and Teresita Palma entered into a Deed of Exchange whereby the
donated lot was exchanged with the bigger lot owned by the latter. Consequently, the Bagong Lipunan school
buildings were constructed on the new school site and the school building previously erected on the donated lot
was dismantled and transferred to the new location.
On February 10, 1982, respondents filed a Complaint for Revocation and CanceCancellation of Conditional
Donation, Annulment of Deed of Exchange and Recovery of Possession and Ownership of Real Property with
damages. However, the Court ruled that, the exchange is proper since it is still for the exclusive use for school
purposes and for the expansion and improvement of the school facilities within the community. The Deed of
Exchange is but a continuity of the desired purpose of the donation made by plaintiff Leon Silim.

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Respondents elevated the case to the Court of Appeals. In its Decision dated 22 October 1999, the Court of
Appeals reversed the decision of the trial court and declared the donation null and void on the grounds that the
donation was not properly accepted and the condition imposed on the donation was violated.4

ISSUES
1. Whether or not the acceptance made by the donee was invalid.
2. Whether or not, the donee violated the conditions in the donation.

RULING
1. We hold that there was a valid acceptance of the donation.
Sections 745 and 749 of the New Civil Code provide:
ART. 745. The donee must accept the donation personally, or through an authorized person with a
special power for the purpose, or with a general and sufficient power; otherwise the donation shall be void.
ART. 749. In order that the donation of an immovable may be laid, it must be made in a public document,
specifying therein the property donated and the value of the charge which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take
effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and
this step shall be noted in both instruments.

The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is duly
communicated to the donor. Thus, in Pajarillo vs. Intermediate Appellate Court, the Court held:
There is no question that the donation was accepted in a separate public instrument and that it was duly
communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that such
acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the instrument of
acceptance, as required by the Civil Code.

That is perfectly true. There is nothing in either of the two instruments showing that "authentic notice" of the
acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the statement that
"the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality
of the donor," the only signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the
reason for the separate instrument of acceptance signed by Salud a month later.

The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to
the donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact
confirmed it later and requested that the donated land be not registered during her lifetime by Salud. Given this
significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation
in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form
over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in the
separate instrument dated June 20, 1946, and as later acknowledged by Juan.

In the case at bar, a school building was immediately constructed after the donation was executed. Respondents
had knowledge of the existence of the school building put up on the donated lot through the efforts of the Parents-
Teachers Association of Barangay Kauswagan. It was when the school building was being dismantled and
transferred to the new site and when Vice-Mayor Wilfredo Palma was constructing a house on the donated
property that respondents came to know of the Deed of Exchange. The actual knowledge by respondents of the
construction and existence of the school building fulfilled the legal requirement that the acceptance of the
donation by the donee be communicated to the donor.

2. Without the slightest doubt, the condition for the donation was not in any way violated when the lot donated was
exchanged with another one. The purpose for the donation remains the same, which is for the establishment of a
school. The exclusivity of the purpose was not altered or affected. In fact, the exchange of the lot for a much
bigger one was in furtherance and enhancement of the purpose of the donation. The acquisition of the bigger lot
paved the way for the release of funds for the construction of Bagong Lipunan school building which could not be
accommodated by the limited area of the donated lot.

115. RICARDO F. MARQUEZ vs. COURT OF APPEALS

G. R. No. 125715 December 29, 1998

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FACTS

During the lifetime of spouses Rafael Sr. and Felicidad Marquez, they begot twelve children. They
both acquired a parcel of land sometime in 1945. Felicidad predeceased Rafael in 1952. Sometime in 1982,
Rafael Sr. executed an affidavit of adjudication vesting unto himself the sole ownership of the property thus, a new
TCT was issued in his name. He executed a donation inter vivos covering the land and the house constructed
thereon in favor of three of his children. As a result of the donation, a new T C T w a s i s s u e d i n
f a v o r o f t h e d o n e e s w h o o c c u p i e d t h e l a n d f r o m 1 9 8 3 t o 1 9 9 1 . W h e n t h e o t h e r children
knew about the new let, they immediately demanded their respective shares over the land but tono avail.

They filed a complaint for reconveyance and partition with damages alleging that the affidavit of adjudication
and the deed of donation inter vivos executed by their father were fraudulent as the three
children who benefited as donees took advantage of
t h e a d v a n c e d a g e o f t h e i r f a t h e r . T h e d o n e e s contended that the action has prescribed.
The trial court decided against the donees but the Court of Appeals reversed the decision.

ISSUE
Whether or not the petition for reconveyance and partition has prescribed.

RULING
The action has not yet prescribed. When Rafael Sr. misrepresented in the affidavit of adjudication that he was the
only heir of his wife when in fact all their children were alive and managed to secure anew TCT in his name, a
constructive trust under Article 1456 of the New Civil Code was established in favor of the children. Perforce, an
action based on an implied or constructive trust prescribes in ten (10) years from the issuance of the Torrens title
over the property. Therefore, the prescriptive period shall start to run in 1982 when a new TCT was issued in the
name of Rafael Sr. Thus, considering that the action for reconveyance was filed in 1991 or nine years later,
prescription has not yet barred the action.

116. HEIRS OF WILLIAM SEVILLA vs. LEOPOLDO SEVILLA

G. R. No. 150179 April 30, 2003

FACTS
Parcel I, Lot No. 653, is the paraphernal property of Filomena Almirol de Sevilla which she co-owned with her
sisters, Honorata Almirol and Felisa Almirol, who were both single and without issue. Parcels II, II and IV are
conjugal properties of Filomena Almirol de Sevilla and her late husband Andres Sevilla. When Honorata died in
1982, her 1/3 undivided share in Lot No. 653 was transmitted to her heirs, Felisa Almirol and the heirs of Filomena
Almirol de Sevilla, who thereby acquired the property in the proportion of one-half share each.

During the lifetime of Felisa and Honorata Almirol, they lived in the house of Filomena Almirol de Sevilla, together
with their nephew, respondent Leopoldo Sevilla and his family. Leopoldo attended to the needs of his mother,
Filomena, and his two aunts, Honorata and Felisa.

Felisa died on July 6, 1988. Previous thereto, on November 25, 1985, she executed a last will and testament
devising her 1/2 share in Lot No. 653 to the spouses Leopoldo Sevilla and Belen Leyson. On August 8, 1986,
Felisa executed another document denominated as Donation Inter Vivos ceding to Leopoldo Sevilla her 1/2
undivided share in Lot No. 653, which was accepted by Leopoldo in the same document.

On September 3, 1986, Felisa Almirol and Peter Sevilla, in his own behalf and in behalf of the heirs of Filomena
Almirol de Sevilla, executed a Deed of Extra-judicial Partition, identifying and adjudicating the 1/3 share of
Honorata Almirol to the heirs of Filomena Almirol de Sevilla and to Felisa Almirol.

Thereafter, respondents Leopoldo, Peter and Luzvilla Sevilla obtained the cancellation of Transfer Certificate of
Title No. (T-6671)-1448, over Lot No. 653, and the issuance of the corresponding titles to Felisa Almirol and the
heirs of Filomena Almirol de Sevilla. However, the requested titles for Lot Nos. 653-A and 653-B, were left
unsigned by the Register of Deeds of Dipolog City, pending submission by Peter Sevilla of a Special Power of
Attorney authorizing him to represent the other heirs of Filomena Almirol de Sevilla.

On June 21, 1990, Felipe Sevilla, Rosa Sevilla, and the heirs of William, Jimmy and Maria, all surnamed Sevilla,
filed the instant case against respondents Leopoldo Sevilla, Peter Sevilla and Luzvilla Sevilla, for annulment of the
Deed of Donation and the Deed of Extrajudicial Partition, Accounting, Damages, with prayer for Receivership and

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for Partition of the properties of the late Filomena Almirol de Sevilla. They alleged that the Deed of Donation is
tainted with fraud because Felisa Almirol, who was then 81 years of age, was seriously ill and of unsound mind at
the time of the execution thereof; and that the Deed of Extra-judicial Partition is void because it was executed
without their knowledge and consent.

In their answer, respondents denied that there was fraud or undue pressure in the execution of the questioned
documents. They alleged that Felisa was of sound mind at the time of the execution of the assailed deeds and
that she freely and voluntarily ceded her undivided share in Lot No. 653 in consideration of Leopoldos and his
familys love, affection, and services rendered in the past. Respondents further prayed that Parcels II, III, and IV
be partitioned among the heirs of Filomena Almirol de Sevilla in accordance with the law on intestate succession.

On December 16, 1994, a decision was rendered by the Regional Trial Court of Dipolog City, Zamboanga del
Norte, Branch 6, upholding the validity of the Deed of Donation and declaring the Deed of Extra-judicial Partition
unenforceable.

ISSUE
Whether or not the donation inter vivos was valid and the partition was enforceable.

RULING
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who
accepts it. Under Article 737 of the Civil Code, the donors capacity shall be determined as of the time of the
making of the donation. Like any other contract, an agreement of the parties is essential, and the attendance of a
vice of consent renders the donation voidable.
There is fraud when, through the 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. There is undue influence when
a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable
freedom of choice. The following circumstances shall be considered: the confidential, family, spiritual and other
relations between the parties, or the fact that the person alleged to have been unduly influenced was suffering
from mental weakness, or was ignorant or in financial distress.

He who asserts, not he who denies, must prove. We have consistently applied the ancient rule that if the plaintiff,
upon whom rests the burden of proving his cause of action, fails to show in a satisfactory manner facts on which
he bases his claim, the defendant is under no obligation to prove his exception or defense. Fraud and undue
influence that vitiated a partys consent must be established by full, clear and convincing evidence, otherwise, the
latters presumed consent to the contract prevails. Neither does the fact that the donation preceded the partition
constitute fraud.

A donation inter vivos, as in the instant case, is immediately operative and final. As a mode of acquiring
ownership, it results in an effective transfer of title over the property from the donor to the donee and the donation
is perfected from the moment the donor knows of the acceptance by the donee. And once a donation is accepted,
the donee becomes the absolute owner of the property donated.

Evidently, Felisa did not possess the capacity to give consent to or execute the deed of partition inasmuch as she
was neither the owner nor the authorized representative of respondent Leopoldo to whom she previously
transmitted ownership of her undivided share in Lot No. 653. Considering that she had no legal capacity to give
consent to the deed of partition, it follows that there is no consent given to the execution of the deed, and
therefore, there is no contract to speak of. As such, the deed of partition is void ab initio, hence, not susceptible
of ratification.

123. VDA. DE TUPAZ vs. RTC OF NEGROS

G. R. No. L-65800 October 3, 1986

FACTS
Epifanio Tupas died on August 20, 1978, leaving Partenza Lucerna, his widow, as his only surviving compulsory
heir. He also left a will, dated May 18, 1976, which was subsequently admitted to probate and included therein
certain lots in question which has, at the time of decendents death, has been donated to the Tupas Foundation.
Said lots were already titled in the foundations name.

105
Lucerna filed a petition in court praying for the donation to be declared as inofficious as it has left her destitute and
has prejudiced her legitime. The trial court did not grant her petition. Hence, this issue in Court.

ISSUE
Whether or not a donation inter vivos by a donor now deceased is inofficious and should be reduced at the
instance of the donor's widow.

RULING
The Trial Court is in error on all counts and must be reversed.

A person's prerogative to make donations is subject to certain limitations, one of which is that he cannot give by
donation more than he can give by will (Art. 752, Civil Code). If he does, so much of what is donated as exceeds
what he can give by will is deemed inofficious and the donation is reducible to the extent of such excess, though
without prejudice to its taking effect in the donor's lifetime or the donee's appropriating the fruits of the thing
donated (Art. 771, Civil Code). Such a donation is, moreover, collationable that is, its value is imputable into the
hereditary estate of the donor at the tune of his death for the purpose of determining the legitime of the forced or
compulsory heirs and the freely disposable portion of the estate. This is true as well of donations to strangers as
of gifts to compulsory heirs, although the language of Article 1061 of the Civil Code would seem to limit collation to
the latter class of donations.

The fact, therefore, that the donated property no longer actually formed part of the estate of the donor at the time
of his death cannot be asserted to prevent its being brought to collation. Indeed, it is an obvious proposition that
collation contemplates and particularly applies to gifts inter vivos. The further fact that the lots donated were
admittedly capital or separate property of the donor is of no moment, because a claim of inofficiousness does not
assert that the donor gave what was not his, but that he gave more than what was within his power to give.

Since it is clear that the questioned donation is collationable and that, having been made to a stranger (to the
donor) it is, by law chargeable to the freely disposable portion of the donor's estate, to be reduced insofar as
inofficious, i.e., it exceeds said portion and thus impairs the legitime of the compulsory heirs, in order to find out
whether it is inofficious or not, recourse must be had to the rules established by the Civil Code for the
determination of the legitime and, by extension, of the disposable portion. These rules are set forth in Articles 908,
909 and 910 of the Code, on the basis of which the following step-by-step procedure has been correctly outlined:
1. determination of the value of the property which remains at the time of the testator's death;
2. determination of the obligations, debts, and charges which have to be paid out or deducted from
the value of the property thus left;
3. the determination of the difference between the assets and the liabilities, giving rise to the
hereditary estate;
4. the addition to the net value thus found, of the value, at the time they were made, of donations
subject to collation; and
5. the determination of the amount of the legitimes by getting from the total thus found the portion
that the law provides as the legitime of each respective compulsory heir.

Deducting the legitimes from the net value of the hereditary estate leaves the freely disposable portion by which
the donation in question here must be measured. If the value of the donation at the time it was made does not
exceed that difference, then it must be allowed to stand. But if it does, the donation is inofficious as to the excess
and must be reduced by the amount of said excess. In this case, if any excess be shown, it shall be returned or
reverted to the petitioner-appellant as the sole compulsory heir of the deceased Epifanio R. Tupas.

124. GARRIDO vs. COURT OF APPEALS

G. R. No. 101262 September 14, 1994

FACTS
Petitioners were Sps Garrido who opposed the sale of the questioned Lot 209 to private respondents Sps
Suplemento on the ground that such sale was void as the land in question was a donated land to their mother,
Magdalena Rondael, from their step grandfather,Tomas Hingco, on the condition that such could not be sold,
transferred or ceded. The petitioners pray for reconveyance and for damages.

106
Upon the review of the trial court on the facts, it ordered the sale as valid but ordered the private respondents to
pay for the cost of the land with legal interest. This decision was affirmed by the Court of Appeals upon petitioners
appeal.

ISSUE
Whether Magdalena Rondael could sell the property despite the prohibition in the deed of donation.

RULING
Petitioners have no personality to question the violation of the restriction because they are not heirs of the donor.
When the donee fails to comply with any of the conditions imposed by the donor, it is the donor who has the right
to impugn the validity of the transaction affecting the donated property, conformably with Art. 764 of the Civil
Code, which provides that the right to revoke may be transmitted to the heirs of the donor and may be exercised
against the heirs of the donee, and the action prescribes four years after the violation of the condition.

125. CENTRAL PHILIPPINE UNIVERSITY vs. COURT OF APPEALS

G. R. No. 112127 July 17, 1995

FACTS
Private respondents are heirs of the late Don Ramon Lopez Sr who, sometime in 1939, donated the questioned
land to petitioners Central Philippine University (CPU) on the condition that such be utilized exclusively for the
establishment of a medical college; that such land cannot be transferred or encumbered; that such establishment
be laid a cornerstone bearing the name Ramon Lopez Campus and that finally, any net income from the land
shall be used for the improvement of the campus and the erection of a building.

On May 31, 1989 (around 50 years after the donation), private respondents filed a petition for the annulment of
the donation, reconveyance and damages against CPU on the ground that the conditions set therein have not
been complied with. The lower court granted the petition. However, upon appeal, the Court of Appeals reversed
this on the ground that the conditions set therein were resolutory and that the petitioners cannot be considered in
violation of the conditions of the donation unless a period is fixed for the compliance of such. It reverted the case
back to the trial court for the determination of the fixed period. Hence, this petition.

ISSUE Whether or not the conditions set forth in the deed of donation was in fact resolutory in nature.

RULING
A clear perusal of the conditions set forth in the deed of donation executed by Don Ramon Lopez, Sr., leads to the
conclusion that his donation was onerous, one executed for a valuable consideration which is considered the
equivalent of the donation itself, e.g., when a donation imposes a burden equivalent to the value of the donation.
Where Don Ramon Lopez donated the subject parcel of land to petitioner but imposed an obligation upon the
latter to establish a medical college thereon, the donation must be for an onerous consideration.

Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes
the condition. Thus, when a person donates land to another on the condition that the latter would build upon the
land a school, the condition imposed was not a condition precedent or a suspensive condition but a resolutory
one. It is not correct to say that the schoolhouse had to be constructed before the donation became effective, that
is, before the donee could become the owner of the land, otherwise, it would be invading the property rights of the
donor. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment or compliance
with the condition, such as what obtains in the instant case, the donation may now be revoked and all rights which
the donee may have acquired under it shall be deemed lost and extinguished.

Thus, when the obligation does not fix a period but from its nature and circumstances it can be inferred that a
period was intended, the general rule provided in Art. 1197 of the Civil Code applies, which provides that the
courts may fix the duration thereof because the fulfillment of the obligation itself cannot be demanded until after
the court has fixed the period for compliance therewith and such period has arrived.

This general rule however cannot be applied considering the different set of circumstances existing in the instant
case. More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the
opportunity to comply with the condition even if it be burdensome, to make the donation in its favor forever
valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a term of the
obligation when such procedure would be a mere technicality and formality and would serve no purpose
107
than to delay or lead to an unnecessary and expensive multiplication of suits. Moreover, under Art. 1191 of
the Civil Code, when one of the obligors cannot comply with what is incumbent upon him, the obligee may seek
rescission and the court shall decree the same unless there is just cause authorizing the fixing of a period. In the
absence of any just cause for the court to determine the period of the compliance, there is no more obstacle for
the court to decree the rescission claimed.

The Supreme Court there affirmed the decision of the Regional Trial Court to reconvey the said land to the
respondents.

126. AUSTRIA-MAGAT vs. COURT OF APPEALS

G. R. No. 106755 February 1, 2002

FACTS
The case is a complaint for the annulment of sale of the questioned land by respondents mother, Basilisa
Comerciante, to petitioner Apolinaria Austria-Magat, one of the children of the deceased. It is claimed that on
December 17, 1975, the decedent had expressly donated such parcel of land to her remaining 4 children with the
children correspondingly declared that such donated was accepted and that such land would remain in
possession of the decedent and could not be sold or transferred during her lifetime. It is further alleged that on
February 6, 1979, the land was the subject of a deed of sale between the decedent and one of the children,
Apolinaria. The rest of the siblings filed a petition to declare such sale null and void as it was already a subject of
a valid donation prior to the execution of such document.

Upon review of the facts, the trial court declared the sale valid as it considered the donation as one in mortis
causa. Being such, it required the formalities of will. Such not being complied with, the donation was considered
null and void. Hence, the decedent had the right to sell the land as a result. Upon appeal, however, the Court of
Appeals reversed the decision of the trial court declaring the donation to be one inter vivos and therefore, valid.
Hence this petition.

ISSUE
Whether or not the questioned donation was a donation mortis causa.

RULING
The Supreme Court ruled that the donation was inter vivos.

It has been held that whether the donation is inter vivos or mortis causa depends on whether the donor intended
to transfer ownership over the properties upon the execution of the deed. A donation mortis causa, requires the
following:

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;
3. That the transfer should be void if the transferor should survive the transferee.

On the other hand, the Supreme Court, in Cuevas v. Cuevas, ruled that when the deed of donation provides that
the donor will not dispose or take away the property donated (thus making the donation irrevocable), he in effect
is making a donation inter vivos. He parts away with his naked title but maintains beneficial ownership while he
lives. It remains to be a donationinter vivos despite an express provision that the donor continues to be in
possession and enjoyment of the donated property while he is alive.

In addition, the Supreme Court ruled in the case of Gestopa v. Court of Appeals, that the prohibition to alienate
does not necessarily defeat the inter vivos character of the donation. It even highlights the fact that what remains
with the donor is the right of usufruct and not anymore the naked title of ownership over the property donated. In
the case at bar, the provision in the deed of donation that the donated property will remain in the possession of
the donor just goes to show that the donor has given up his naked title of ownership thereto and has maintained
only the right to use (jus utendi) and possess (jus possidendi) the subject donated property. The petitioners cited
108
provisions are only necessary assurances that during the donors lifetime, the latter would still enjoy the right of
possession over the property; but, his naked title of ownership has been passed on to the donees; and that upon
the donors death, the donees would get all the rights of ownership over the same including the right to use and
possess the same.

127. SPS. EDUARTE vs. COURT OF APPEALS

G. R. No. 105944 February 9, 1996

FACTS
Petitioners are the vendees of a lot involving 12, 042 square meters sold by Helen Doria on March 5, 1988. Said
lot was a subject of a deed of donation to the Helen Doria by her uncle and private respondent in this case Pedro
Calapine.

The subsequent sale by Helen to the spouses was questioned by the respondent Pedro Calapine on the ground
that the donation was taken in fraud as the original intention was to donate only half of the portion of the land
owned. The respondent claimed that Helen Doria forged his signature to establish the donation of the whole lot.
As a result, he now intends to revoke the donation based on ingratitude and the subsequent fraud that Helen
Doria had allegedly done.

The spouses oppose the order of the lower court and the Court of Appeals of annulment of the sale and
reconveyance of the property as they are buyers in good faith and that the ground for revocation of donation
asserted by the respondent is not one that can be validly raised.

ISSUE
Whether or not the petitioners are buyers in good faith

RULING
The petitioners bought the property in good faith.

The rule is well-settled that mere possession cannot defeat the title of a holder of a registered Torrens Title to real
property. When herein petitioners purchased the subject property from Helen Doria, the same was already
covered by a title under the latter's name. And although such title was fraudulently secured, such fact cannot
prejudice the rights of petitioners absent any showing that they had any knowledge or participation in such
irregularity. Thus, they cannot be obliged to look beyond the certificate of title which appeared to be valid on its
fade and sans any annotation or notice of private respondents' adverse claim. Contrary therefore to the
conclusion of respondent Court, petitioners are purchasers in good faith and for value as they bought the disputed
property without notice that some other person has a right or interest in such property, and paid a full price for the
same at the time of the purchase or before they had notice of the claim or interest of some other person in the
property.

128. IMPERIAL vs. COURT OF APPEALS

G. R. No. 112483 October 8, 1999

FACTS
Leoncio Imperial owned a 32,387 sq meter parcel of land in Albay. He subsequently sold the land for an
insignificant amount to his natural son, the petitioner in this case. The said sale was deemed to be equivalent to a
donation. This was affirmed when Leoncio filed a case for the annulment of such transaction. However, the case
was amicably settled by affirming the donation and providing for some conditions.

The respondents are heirs of Victor Imperial, the adopted child of Leoncio, who was the co-heir of the petitioner
upon the death of their father. The respondents filed a case for the declaration of the donation as inofficious on
the ground that it preiterated the legitime of Victor Imperial. The trial court as well as the Court of Appeals, upon
appeal, granted the petition. The defense of res judicata and prescription was as not considered.

ISSUES
1. Whether or not res judicata exists on the ground that such issue was already resolved in the previous case
amicably settled.
2. Whether or not the action was barred by prescription.
3. Whether or not the donation was inofficious.
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RULING
Res judicata does not exist in this case. It is an indispensable requirement in res judicata that there be, between
the first and second action, identity of parties, of subject matter and of cause of action. In the case at bar, there
is no identity of parties and of cause of action as because the previous case was instituted by Leoncio in his
capacity as donor of the questioned donation. While it is true that upon his death, Victor was substituted as
plaintiff of the action, such does not alter the fact that Victor's participation in the case was in representation of the
interests of the original plaintiff, Leoncio. The purpose behind the rule on substitution of parties is to ensure that
the deceased party would continue to be properly represented in the suit through the duly appointed legal
representative of the estate , or his heir, as in this case, for which no court appointment is required. Petitioner's
argument, therefore, that there is substantial identity between Leoncio and private respondents, being heirs and
successors-in-interest of Victor, is unavailing.

The Civil Code specifies the following instances of reduction or revocation of donations: (1) four years, in cases of
subsequent birth, appearance, recognition or adoption of a child; (2) four years, for non-compliance with
conditions of the donation; and (3) at any time during the lifetime of the donor and his relatives entitled to support,
for failure of the donor to reserve property for his or their support. Interestingly, donations as in the instant case,
the reduction of which hinges upon the allegation of impairment of legitime, are not controlled by a particular
prescriptive period, for which reason we must resort to the ordinary rules of prescription.

Under Article 1144 of the Civil Code, actions upon an obligation created by law must be brought within ten years
from the time the right of action accrues. Thus, the ten-year prescriptive period applies to the obligation to reduce
inofficious donations, required under Article 771 of the Civil Code, to the extent that they impair the legitime of
compulsory heirs.
The case of Mateo vs. Lagua, 29 SCRA 864, which involved the reduction for inofficiousness of a donation propter
nuptias, recognized that the cause of action to enforce a legitime accrues upon the death of the donor-decedent.
Clearly so, since it is only then that the net estate may be ascertained and on which basis, the legitimes may be
determined.
It took private respondents 24 years since the death of Leoncio to initiate this case. The action, therefore, has
long prescribed.

Lastly, the donation was inofficious because Leoncio had no other property at the time of his death. However, the
rules of succession require that before any conclusion as to the legal share due to a compulsory heir may be
reached, the following steps must be taken: (1) the net estate of the decedent must be ascertained, by deducting
all the payable obligations and charges from the value of the property owned by the deceased at the time of his
death; (2) the value of all donations subject to collation would be added to it.

Thus, it is the value of the property at the time it is donated, and not the property itself, which is brought to
collation. Consequently, even when the donation is found inofficious and reduced to the extent that it impaired
Victor's legitime, private respondents will not receive a corresponding share in the property donated. Thus, in this
case where the collatable property is an immovable, what may be received is: (1) an equivalent, as much as
possible, in property of the same nature, class and quality; (2) if such is impracticable, the equivalent value of the
impaired legitime in cash or marketable securities; or (3) in the absence of cash or securities in the estate, so
much of such other property as may be necessary, to be sold in public auction.

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