G.R.

No.

45534.

April

27,

1939.]

JOSEFA RIZAL MERCADO, ET AL., PlaintiffsAppellants, v. ALFREDO HIDALGO REAL,

Defendant-Appellee.
Jose

Perez

Jose

C.

Cardenas
Abreu

for
for

Appellants.
Appellee.

SYLLABUS
1. PAYMENT OF LAND TAX; USUFRUCTUARY;
NAKED OWNER. Pursuant the provision of
article 505 of the Civil Code, the tax; directs
burdens the capital, that is, the real value of the
property and should be paid by the owner (One
Lengco v. Monroy, G. R. No. 19411, July 18,
1923). It is contended, however, that under the
second paragraph of the aforesaid article, if the
usufructuary should pay the tax, he would be
entitled to reimbursement for the amount
thereof only upon the inspiration of the
usufruct, and the usufruct being still afoot, it is
premature for the plaintiffs as usufructuarics
who advanced the payment of the tax, to bring
the action for the recovery of What they paid.
There is, however, no basis for this reasoning.
The plaintiffs did not pay the tea. They objected
to this payment. They did not consent to the
deduction thereof from their player in the
products, and much less to the application
thereof to this payment which they believe they
are not bound to make. In fact they did not
make the payment; the naked owners were the
ones who made it without their consent and
with money belonging to them as their share of
the fruits coming to them in their capacity as
usufructuaries.
DECISION
AVANCEA, C.J. :
The properties left by the deceased Paciano
Rizal y Mercado belonged, in usufruct, to nine
heirs and, in naked ownership, to seven others.
The plaintiffs are two of the nine usufructuaries
and the defendant is one of the naked owners.
In 1932, 1933 and 1934, the amount of
P6,503.80 was paid for the tax of these lands.
Of this amount the naked owners made the
plaintiffs pay P1,445.29, or P722.64 each,
representing one-ninth of the taxes paid during
the aforesaid years. As the plaintiffs were not
agreeable to this payment, by cause they were
mere usufructuaries, and they contend that the
duty devolves upon the naked owners, this
amount was deducted from the products
corresponding to them and applied to the
payment
of
land
tax.

The plaintiffs alleged that, the naked owners

being the ones under a duty to pay the tax for
the lands, they should recover the amount
which was deducted from their share of the
fruits and applied, against their will, to the
payment of the tax. The naked owners, with the
exception of the defendant, agreed with this
contention and paid to each of the plaintiffs the
sum of P206.47, which is one-seventh of the
P1,445.29 deducted from the products of the
land
corresponding
to
the
plaintiffs.
The present action was brought to compel the
defendant to pay also to the plaintiffs the
amount
of
P206.47.
A demurrer was interposed to the complaint for
failure to allege facts sufficient to constitute a
cause of action. The court sustained the
demurrer on the ground that the action is
premature under article 505 of the Civil Code
providing:jgc:chanrobles.com.ph
"Any taxes which may be imposed directly upon
the capital, during the usufruct, shall be
chargeable
to
the
owner.
"If paid by the latter, the usufructuary shall pay
him the proper interest on any sums he may
have disbursed by reason thereof; if the
usufructuary should advance the amounts of
such taxes he shall recover them upon the
expiration of the usufruct."cralaw virtua1aw
library
This ruling of the trial court is erroneous.
Pursuant to the aforequoted provision, the tax
directly burdens the capital, that is, the real
value of the property and should be paid by the
owner (Ong Lengco v. Monroy, G. R. No. 19411,
July 18, 1923). It is contended, however, that
under the second paragraph of the aforequoted
article, if the usufructuary should pay the tax,
he would be entitled to reimbursement for the
amount thereof only upon the expiration of the
usufruct, and the usufruct being still afoot, it is
premature for the plaintiffs, as usufructuaries
who advanced the payment of the tax, to bring
the action for the recovery of what they paid.
There is, however, no basis for this reasoning.
The plaintiffs did not pay the tax. They objected
to this payment. They did not consent to the
deduction thereof from their share in the
products, and much less to the application
thereof to this payment which they believe they
are not bound to make. In fact they did not
make the payment; the naked owners were the
ones who made it without their consent and
with money belonging to them as their share of
the fruits coming to them in their capacity as
usufructuaries.
The plaintiffs, in claiming the amount of
P206.47, do not rely on paragraph 2 of article

505 of the Civil Code above quoted, for having

paid the tax on the lands, but on the first
paragraph thereof because it is their contention
that, as usufructuaries, they are not the ones
called upon to make this payment.
Reversing the resolutions of the trial court
excepted to, the demurrer interposed to the
complaint is overruled, and it is ordered that the
case be remanded to the court of origin so that
it may act in accordance with this decision and
go forward with the case until it is finally
decided, without special pronouncement as to
the costs in this instance. So ordered.
Villa-Real, Imperial,
Moran, JJ., concur.
\

Diaz,

Concepcion

and

VDA DE ALBAR v. CARANDANG, 106 PHIL

855- Usufruct
VDA DE ALBAR v. CARANDANG, 106 PHIL 855Usufruct

The reparation or indemnity given in exchange

for the destruction of the building is the
substitute for the building itself. The indemnity
is the capital which belongs to the naked owner
while the interest on the capital is the fruits
which belong to the usufructuary.
Notes:
The Civil Code contemplates a situation where
the owner pays for the construction of a new
building. However, the twist in this case was
that the naked owner did not have to construct
a new one because the Chinaman had one built
at his own expense. This is the reason why the
court had a difficult time ascertaining who had
the right to the indemnity given by the
government for the destruction of the building
due to the war.

Majority Opinion: The reparation should be

treated as fruits. Usufructuary should get 6% of
the reparation (from the time it was actually
received to the tend of the life of the usufruct)
because it was not used to construct a new
building. Otherwise, the naked owner is
enriched twice first from the reparation and
second from the fruits if payment of rent stops
when the building is constructed. Thus, the new
building should be considered as the capital,
and the reparation as fruits. The naked owner
should
share
the
reparation
with
the
usufructuary to prevent unjust enrichment.

Ponentes Opinion: The reparation should be

treated as capital (NCC). Only the interest on
the reparation up to the date that the new
building was constructed time should be given
to the usufructuary, not the interest until the
end of the usufruct. The reparation itself which
is considered as the capital (which rightfully
belongs to the naked owner) intended to
replace the old building. The intention was
fulfilled when the Chinaman constructed a new
one. It was not the naked owners fault that he
need not use the reparation to construct a new
building. The owner is not doubly compensated
because it was not his fault.

Dissenting opinion: There is double benefit in

either case. In the first, the usufructuary will be
receiving interest on the reparation and rent
from the building. In the second, the naked
owner receives value for the building and the
construction of a building at no expense to him.

Payment of interest should continue during the

life of the usufruct (not just 6%) because the
war damage is the equivalent to the building.
The construction of the new building does not
relieve the owners of the land used in the war
damage payment from continuing the payment
of interest. If they had used it to construct the
building, they would have been freed from
paying interest but they did not.

*********************************

FACTS:
Doa Rosario Fabie y Grey was the owner of the
lot in the City of Manila with a building and
improvements, and by a will left by her upon
her death which was duly probated she devised
the naked ownership of the whole property to
Rosario Grey Vda. de Albar, et al. but its
usufruct to Josefa Fabie for life.

During liberation, as a consequence of the fire

that gutted the building in many portions of
Manila, the building on the Ongpin lot was
burned, leaving only the walls and other
improvements that were not destroyed by the
fire.

One Au Pit, a Chinaman, offered to lease the

property for a period of five years, at the same

time agreeing to construct on the lot a new

building provided the naked owners as well as
the usufructuary sign the agreement of the
lease. As the usufructuary maintains that she
has the exclusive right to cede the property by
lease and to receive the full rental value by
virtue of her right to usufruct while on the other
hand the naked owners maintain that the right
of usufruct was extinguished when the building
was destroyed, the right of the usufructory
being limited to the legal interest on the value
of the lot and the materials, in order that the
agreement of lease may be affected, the parties
agreed on a temporary compromise whereby
the naked owners would receive P100.00, or
20% of the monthly rental of P500.00 and the
usufructuary the balance of 80% or P400.00 of
said monthly rental. It was likewise stipulated in
the agreement that the title to the building to
be constructed would accrue to the land upon it
completion as an integral part of the lot covered
by the transfer certificate of title issued in the
name of the naked owners but subject to the
right of usufruct of Josefa Fabie. The parties
expressly reserved the right to litigate their
respective claims after the termination of the
contract of lease to determine which of said
claims was legally correct.

By reason of the destruction of the building on

the Ongpin property, the United States War
Damage Commission approved the claim that
was presented for the damage caused to the
property, paid to and received by the naked
owners. In the meantime, the usufructuary paid
the real estate taxes due on the property at
Ongpin for the years 1945 to 1952.

ISSUE:
Whether or not the usufruct included the
building and the land? W/N the usufructuary
(FABIE) or naked owner (VDA DE ALBAR) should
undertake
the
reconstruction?
W/N
the
usufructuary should pay the real estate taxes?

HELD:
The usufruct for life extended to the land and
the building. From the above, it is clear that
when the deceased constituted the life usufruct
on the rentals "fincas situadas" in Ongpin and
Sto. Cristo streets, she meant to impose the
encumbrance both the building and the land on
which it is erected for indeed the building
cannot exist without the land. And as this Court
well said, "The land, being an indispensable part

of the rented premises cannot be considered as

having no rental value whatsoever." Moreover,
in the Spanish language, the term "fincas" has a
broad scope; it includes not only building but
land as well. (Diccionario Ingles-Espaol, por
Martines Amador) Since only the building was
destroyed and the usufruct is constituted not
only on the building but on the land as well,
then the usufruct is not deemed extinguished
by the destruction of the building for under the
law usufruct is extinguished only by the total
loss of the thing subject of the encumbrance
(Article
603,
old
Civil
Code).
FABIE, the usufructuary has the discretion to
reconstruct the building. Of course, this is
addressed to the wisdom and discretion of the
usufructuary who, to all intents and purposes is
deemed as the administrator of the property.
This has been clarified in the case of Fabie vs.
Gutierrez David, 75 Phil., 536, which was
litigated between the same parties and wherein
the scope of the same provision of the will has
been the subject of interpretation.

The usufructuary should pay the taxes. We find,

however, merit in the contention that the real
estate taxes paid by respondent in her capacity
as usufractuary for several years previous to
the present litigation should be paid by her, as
she did, instead of by petitioners not only
because she bound herself to pay such taxes in
a formal agreement approved by the court in
Civil Case No. 1569 of the Court of First Instance
of Manila (Fabie vs. Gutierrez David, supra). In
the case, which involved the same parties and
the same properties subject to usufruct, the
parties submitted an amicable agreement which
was approved by the court wherein the
usufructuary, herein respondent, bound herself
to pay all the real estate taxes, special
assessment and insurance premiums, and make
all the necessary repairs on each of the
properties covered by the usufruct and in
accordance with said agreement, respondent
paid all the taxes for the years 1945 to 1954

Board of Assessment Appeals-Zamboanga del Sur

v. Samar Mining Co., Inc. (Emerson)
THE BOARD OF ASSESSMENT APPEALS
OF ZAMBOANGA DEL SUR and PLACIDO
L. LUMBAY, in his capacity as PROVINCIAL
ASSESSOR OF ZAMBOANGA DEL SUR,
petitioners,
vs.

SAMAR MINING COMPANY, INC. and the

COURT OF TAX APPEALS, respondents.
G.R. No. L-28034 - February 27, 1971 Zaldivar,
J.
SUMMARY: By virtue of a government lease, a
mining company built a road on alienable public
land in Zamboanga del Sur. The provincial
assessor sent a letter of assessment of real estate
tax to the company, who appealed the same to the
Board of Assessment Appeals, which in turn
upheld the assessment. The company appealed to
the Court of Tax Appeals, which took cognizance
of the case and decided in favor of the company.
The tax authorities appealed to the SC. The SC
affirmed the CTA decision and reiterated
earlier case law which held that a private party
who introduces integral improvements on
public land subject to a lease is only a partial
usufructuary of the road and therefore cannot
be made to pay real estate tax on those
improvements; because in such cases
ownership ultimately remains with the
Government and the improvements remain
open to public use.
FACTS: Samar Mining (Samico) owned a mine
and mill in Buug, Zamboanga del Sur. To connect
them to the pier in Pamintayan, Zamboanga del
Sur, the company built the 42-km gravel pit
Samico Road, construction of which was finished
in 1959. Since the road traversed public lands,
Samico filed miscellaneous lease applications for
right of way with the Bureau of Lands and the
Bureau of Forestry in 1958 and 1959, respectively.
Temporary permits were granted, and eventually
the lease applications were granted on Oct. 7,
1965; but the lease contracts were never executed.
On June 5, 1964, Samico received an assessment
letter from the petitioner Provincial Assessor,
charging them P1,117,900.00 as real estate tax on
the taxable portion of Samico Road. Samico
appealed the assessment to petitioner BAA on the
ground that the road was not a taxable
improvement because it was constructed entirely
on public land within the meaning of Sec. 2 of CA
470 and the decision of the SC in Bislig Bay
Lumber Co. v. Surigao. The BAA upheld the
assessment but held it unenforceable until the
lease contracts were executed. Samico moved for
reconsideration, but the BAA, in a decision dated
Aug. 3, 1965, not only denied the appeal but made
the assessment immediately enforceable, with the
amount due accruing from the date of completion

of the road in 1959. Upon second denial by the

BAA, Samico elevated its case to the Court of Tax
Appeals.
The Provincial Assessor and the BAA assailed the
CTAs jurisdiction over the case on the ground that
Samico should have paid the tax under protest
first before appealing. On June 28, 1967, the CTA
ruled that it has jurisdiction over the case and then
decided in favor of Samico. The CTA held that
since the road was constructed on public lands
such that it is an integral part of the lands and not
an independent improvement thereon, and that
upon the termination of the lease the national
government will acquire ownership of the road,
Samico should be exempted from paying. Hence
this appeal to the SC.
ISSUE(HELD): W/N the road constructed on
alienable public land leased to Samico is taxable.
(NO)
ARGUMENTS/RATIO
1) BAA and the Provincial Assessor argue that the
road is an improvement and, therefore, taxable
under Section 2 of the Assessment Law
(Commonwealth Act No. 470) which provides as
follows: "Sec. 2. Incidence of real property tax. Except in chartered cities, there shall be levied,
assessed, and collected, an annual ad valorem tax
on real property including land, buildings,
machinery, and other improvements not
hereinafter specifically exempted."
SC: The road is indeed an improvement, but it is
not taxable under Sec. 2 of the Assessment Law
pursuant to the ruling in Bislig Bay Lumber Co. v.
Provl. Govt. of Surigao (100 Phil 303), which
held that a private party who introduces
improvements on public land subject to a lease is
only a partial usufructuary of the road and
therefore cannot be made to pay real estate tax;
because in such cases ownership ultimately
remains with the Government and the
improvements remain open to public use. In
Municipality of Cotabato, et al. v. Santos, (105
Phil 963), it was held that improvements which
form an integral part (such as dikes and gates) of a
publicly-owned immovable (such as swampland
converted into fishponds) are tax-exempt.
2) BAA and the Provincial Assessor argue that
Bislig Bay does not apply because the road in that
case was built on inalienable timberland. Samico
Road was built on alienable lands of the public
domain and is therefore taxable.

SC: The argument is untenable. The road in issue

in the Bislig Bay case was exempted not because it
was built on inalienable lands but because it
formed an integral part of the public land upon
which it was built; and because it was owned
by the Government through accession. Section
3(a) of the Assessment Law does not distinguish
between alienable or inalienable lands; as long
as the land is of public domain, it is tax-exempt.
3) BAA and the Provincial Assessor argue that the
CTA did not acquire jurisdiction over the case
because Samico failed to pay the tax under protest
as required by Sec. 54 of the Assessment Law
which states that: No court shall entertain any
suit assailing the validity of a tax assessment
under this Act until the taxpayer shall have paid
under protest the taxes assessed against him, nor
shall any court declare any tax invalid by
reason....
SC: Sec. 54 of the Assessment Law is inconsistent
with the express provision and legislative intent of
RA 1125 (the Law creating the Court of Tax
Appeals), and should be deemed impliedly
repealed insofar as it sets the payment of tax under
protest as a prerequisite for appeals to the CTA.
The SC quotes with approval the decision of the
CTA, thus: To require the taxpayer, as contended
by respondents, to pay first the disputed real
property tax before he can file an appeal assailing
the legality and validity of the realty tax
assessment will render nugatory the appellate
jurisdictional power of the Court of Tax Appeals
as envisioned in Section 7(3), in relation to
Section 11, of Republic Act No. 1125. If we follow
the contention of respondents to its logical
conclusion, we cannot conceive of a case
involving the legality and validity of real property
tax assessment, decided by the Board of
Assessment Appeals, which can be appealed to the
Court of Tax Appeals.
Juana Pichay v. Eulalo Querol
G.R. No. L-4452, October 1, 1908
Facts:
The plaintiff, Juan Pichay, in April, 1905,
conveyed to the defendants an undivided one-third
interest in twenty- five parcels of land situated in
the Province of Ilocos Sur, as payment of a debt of
P1,500 which she owed them. The defendants and
appellants claim that their agreement gave
plaintiff no right of usufruct in the land, saying
that it appears that she only asked for this right
and it does not appear that the defendants gave it

to her. On the 10th of August, 1905, the owners of

the twenty- five parcels of land made a partition
thereof among themselves, in which the plaintiff
took no part, and in this partition certain specific
tracts of land were assigned to the defendants as
the third to which they were entitled by reason of
the conveyance from the plaintiff to them. They
have been in possession of the tracts so assigned
to them in partition since the date thereof, and are
now in such possession, and have refused to
recognized in the plaintiff any right of usufruct
therein.
Issue:
Whether or not the usufructuary is bound by the
partition made by the owners of the undivided
property although he took no part therein.
Held:
The usufructuary shall be bound by the partition
made by the owners of the undivided property
although he took no part in the partition but the
naked owner to whom the part held in usufruct has
been alloted must respect the usufruct. The right
of the usufructuary is not affected by the division
but is limited to the fruits of said part alloted to
the co-owner.
G.R. No. 6969 December 20, 1911
VICENTE REYES, plaintiff-appellant,
vs.
JOSE GREY, ET AL., defendants-appellees.
Ramon Salinas, for appellant.
D. R. Williams, for appellees.

TRENT, J.:
Judgment having been rendered by the Court of
First Instance of the city of Manila, the Hon.
Charles S. Lobingier presiding, dismissing the
complaint in this case upon its merits, the plaintiff
appealed.
The only question raised by this appeal is purely
one of law.1awphil.net
Remedios Grey, wife of the plaintiff, died intestate
in 1905 without ascendants or descendants,
leaving a surviving husband and one sister and
three brothers. Under the law, the sisters and
brothers are called to inherit all of the estate of the
deceased, subject only to the right of the surviving

husband, the plaintiff, to a usufructuary interest in

one-half thereof.
Administration proceedings in the estate of the
deceased wife not taken out until June 15, 1907,
when Jose Grey, one of the defendants, was
appointed administrator. In these administration
proceedings, the Court of First Instance of this
city issued a decree on December 3, 1910,
declaring that each one of the defendants in the
case at the bar was entitled to one-fourth part of
the estate of the deceased Remedios Grey, subject
to the plaintiff's (Vicente Reyes') right to usufruct.
Prior to the appointment of the administrator for
the estate of the deceased Remedios Grey, and as
the result of certain judicial proceedings had
against her surviving husband (the plaintiff in the
case at bar), his usufructuary interest in the estate
of his deceased wife was sold under execution and
deeds issued therefor to the purchaser, the
defendant Jose Grey. Such deeds still subsist in
full force and effect, no steps ever having been
taken either to annul or set them aside or to
redeem the interest of the plaintiff thus
sold.1awphil.net
The plaintiff, as surviving husband of the
deceased Remedios Grey, now sues the sister and
brothers of his deceased wife, claiming of them
the payment of his usufructuary interest in the
property of the deceased, basing his claim upon
two grounds: first, that the execution sale and the
sheriff's deeds executed pursuant thereto did not
divest him of his usufructuary interest in the
property and that the defendants still remain
charge with its payment; and second, the
defendants having failed to appear from the order
of the probate court dated December 3, 1910,
which order was issued some three years after an
attempt was made to sell under execution the
plaintiff's usufructuary interest, and that order
having become final, it settled the plaintiffs right
to a usufructuary interest, and the defendants can
not now deny this fact.
Counsel for the plaintiff now insists that a
usufructuary interest in real property is not such
an interest or right as can be sold under execution.
With this connection we can not agree. Section

450 of the Code of Civil Procedure provides as

follows:
SEC. 450. Property liable to execution.
All goods, chattels, moneys, and other
property, both real and personal, or any
interest therein of the judgment debtor, not
excempt by law, and all property and
rights of property seized and held under
attachment in the action, shall be liable to
execution. Shares and interests in any
corporation or company, and debts, credits,
and all other property, both real and
personal, or any interest in either real or
personal property, and all other property
not capable of manual delivery, may be
attached on execution, in like manner as
upon writs of attachment.itc-alf
The term "property" as here applied to lands
comprehends every species of title, inchoate or
complete; legal or equitable. This statute
authorizes the sale under execution of every kind
of property, and every interest in property which
is, or may be, the subject of private ownership and
transfer. It deals with equitable rights and interests
as it deals with legal, without anywhere expressly
recognizing or any distinction between them.
Article 480 of the Civil Code reads:
The usufructuary may personally enjoy the
thing in usufruct, lease it to another
person, or alienate his right to the usufruct,
even for a good consideration; . . . .
If the usufructuary right is one which may be
leased or sold, it must logically and necessarily
follow that such a right is an "interest" in real
property within the meaning of section 450 of the
Code of Civil Procedure, above quoted. It was the
plaintiff's usufructuary right in real property
which was sold under execution. This right was
conferred upon him at the death of his wife by
operation of law, and by virtue of such a right he
was entitled to receive all the natural, industrial,
and civil fruits of said real property in usufruct.
He was entitled to hold the actual, material
possession of such property during his lifetime,
and was obligated only to preserve its form and
substance. In other words, he was entitled, subject
to his restriction, to use the property as his own.

He was the real owner of this interest, and article

480, supra, conferred upon him the right to enjoy
the possession of the property or lease it to
another or to sell such interest outright. We think
the real test, as to whether or not property can be
attached and sold upon execution
is does the judgment debtor hold such a
beneficial interest in such property that he can sell
or otherwise dispose of it for value? If he does,
then the property is subject to execution and
payment of his debts. The right of usufruct is such
an interest, and when the sheriff sold the plaintiff's
usufructuary right by virtue of an execution, he
had no further interest in said property.
The plaintiff's second contention that the
defendants, by failing to appeal from the order of
the court in the administration proceedings dated
December 3, 1910, wherein the right of plaintiff to
a usufructuary interest in the property was
recognized, have lost their right to refuse such
payment to him at this time, is not well founded.
The plaintiff had no interest in this property at the
time the probate court issued this order. The order
only set out the fact that under the law the plaintiff
was entitled to a usufructuary interest in one-half
of the estate of his deceased wife. It was not a
finding that in the meantime the plaintiff had not
sold, leased, or otherwise disposed of or lost such
right of participation. This order merely fixed the
legal status of the plaintiff and did not have the
effect of canceling or annulling the sale made by
the sheriff. Again, the plaintiff instituted the action
in the case at bar on June 1, 1910, several months
prior to the order of December 3, 1910. The right
to recover was traversed by the defendants on July
1 of that same year, and the question was pending
and undetermined at the time the probate court
issued its order.
The validity of the execution sale was not an issue
in those administration proceedings, and the order
of December 3d cannot, under any circumstances,
be held to affect the validity of such sale.
The judgment appealed from is therefore affirmed,
with costs against the appellant.
Arellano, C.J., Torres, Mapa, Johnson, Carson
and Moreland, JJ., concur.
G.R. No. L-9865 December 24, 1915

VERGO D. TUFEXIS, plaintiff-appellant,

vs.
FRANCISCO OLAGUERA and THE
MUNICIPAL COUNCIL OF GUINOBATAN,
represented by its president, Agapito Paulate,
defendants-appellees.
Rafael de la Sierra for appellant.
Attorney-General Avancea for appellee
Municipal Council of Guinobatan.
No appearance for the other appellee.

TORRES, J.:
Counsel for plaintiff, in his written petition of
May 13, 1913, prayed the Court of First Instance
of Albay to declare that his client was entitled to
the possession and use of the land referred to in
the complaint in conformity with the terms of the
Government concession (Exhibit A), of which he
claimed to be the sole and lawful owner; that the
defendants be ordered to remove from the said
land all the stores, sheds, billiard tables, and other
obstructions thereon, so that plaintiff might
reconstruct the public market building on the said
land in accordance with the provisions of the said
concession, and that they be ordered to pay jointly
and severally to the plaintiff, as damages, the sum
of P250 per month from March 1, 1912, until the
date on which the land be vacated, and to pay the
legal costs and expenses of the suit.
After the complaint had been answered by counsel
for the defendant Francisco Olaguera, who prayed
that his client be absolved therefrom, with the
costs against the plaintiff, the provincial fiscal, in
the name and representation of the municipality of
Guinobatan, demurred on the ground that plaintiff
lacked the personality to institute the action and
further alleged that the complaint did not set forth
sufficient facts to constitute a cause of
action.1awphil.net
By an order of August 25, 1913, the court
sustained the demurrer filed by the defendant
municipality of Guinobatan, allowed plaintiff ten
days in which to amend his complaint, and
notified him that unless he did so within that
period the action would be dismissed.

Counsel for plaintiff, by a writing of the 27th of

the said month, set forth: That he objected to the
above ruling as he believed it erroneous and
contrary to law; that he did not desire to amend
his complaint, wherefore, in accordance with the
provisions of section 101 of the Code of Civil
Procedure, the court should render such judgment
in the case as the law might warrant, and his
exception to the said ruling should be entered on
the record. By an order of September 1, 1913, the
court, overruling the motion made by the
defendant Olaguera, dismissed the complaint filed
by the plaintiff, Vergo D. Tufexis, against the
municipal council of Guinobatan on the ground
that plaintiff had not amended his complaint.
Plaintiff's counsel, when notified of this ruling,
excepted thereto and moved for a rehearing and a
new trial. This motion was overruled, whereupon
the plaintiff excepted and filed the proper bill of
exceptions.
In the complaint filed by counsel for Vergo D.
Tufexis, it was alleged that on September 30,
1911, plaintiff acquired at a public sale held in
execution of a judgment rendered against Ricardo
Pardo y Pujol, a piece of property situated in the
municipality of Guinobatan, consisting of a frame
building of strong materials with a galvanizediron roof, erected on a parcel of land belonging to
that municipality and intended for a public
market; that plaintiff also acquired at the sale all
the right, interest, title, and participation in the
said property that appertained or might appertain
to Pardo y Pujol; that the said building was
constructed by virtue of a concession granted by
the former Spanish government to Ricardo Pardo
y Cabaas, father of the judgment debtor, who, by
a public instrument of July 31, 1912, renounced
his right to redeem the said property and conveyed
it to plaintiff, together with all his rights therein,
the instrument of grant, Exhibit A, being attached
to the complaint as a part thereof; that on January
2, 1912, the said building was totally destroyed by
an accidental fire; that subsequent to the date just
mentioned and for several months thereafter the
municipal council of Guinobatan carried on
negotiations with plaintiff for the purchase of his
rights in the said concession; that these
negotiations could not be brought to a conclusion
because the municipal council had acted therein
deceitfully, fraudulently, and in bad faith and for

the sole purpose of beguiling, deceiving, and

prejudicing plaintiff in order to prevent him from
exercising his right to reconstruct the burned
market building and utilize it in accordance with
the terms of the said concession; that the
defendant municipal council, without plaintiff's
consent and in connivance with the other
defendant, Francisco Olaguera, had authorized the
latter unlawfully to take possession of all the land
from March 1, 1912, in violation of plaintiff's
rights; that the said Olaguera occupied the same
with booths or stores for the sale of groceries and
other merchandise, for billiard tables, and other
analogous uses and derived unlawful gain from
the revenues and rents produced by the said
buildings; that plaintiff was entitled to the
possession of the said land in accordance with the
concession, which was in full force and effect and
belonged to plaintiff; that plaintiff proposed to
construct another public market building on the
same land, but that the defendants had prevented
him from using the land and reconstructing
thereon the said public market building, and
refused to recognize plaintiff's right and to vacate
the land that had been occupied by the burned
edifice.
The provincial fiscal alleged as a ground for the
demurrer that in no part of the instrument of
concession did it appear that the privilege granted
to Ricardo Pardo y Cabaas had likewise been
granted to his successors or assignees, and that
therefore such rights and actions as might have
appertained to the assignee, Pardo y Cabaas,
could not be conveyed to nor could they be
acquired by any other person; that it was alleged
in the complaint that the building was completely
destroyed by fire on January 2, 1912, and that if
plaintiff's right to the possession of the land was
conditioned by the existence thereon of the said
market building, such right had terminated by the
disappearance of the building, inasmuch as
plaintiff's right of action for the possession of the
land was a corollary of the existence or
nonexistence of the market building, and upon the
disappearance of the latter the eland had reverted
to the control of its owner; that pursuant to the
terms of the said concession, the land belonging to
the municipality was granted for the purpose of
constructing thereon a market, and as this market
had disappeared plaintiff would need a new

concession, if it could be obtained, in order to be

entitled to the possession of the land and to
construct a new building; that by plaintiff's
acquiring the right, title and interest of Ricardo
Pardo y Pujol in the land he could not be
understood to have also acquired such right and
interest in the building intended for a public
market, for the purchase of the building refers
only to the edifice itself and it never could be
understood that plaintiff acquired any right in the
concession, which was never sold to him, as the
complaint contains no allegation whatever that he
purchased or acquired such right; that a personal
privilege like the said concession is only
temporary and is extinguished at the death of the
grantee, unless otherwise provided in the grant;
and that, from the lack of an allegation in the
complaint that plaintiff legally purchased or
acquired the right in the said concession, it was
evident that the complaint did not allege sufficient
facts to constitute a cause of action and was fatally
defective.
The question presented in the case at bar consists
of whether a building of strong materials, erected
by the said debtor's father, Ricardo Pardo y
Cabaas, on land belonging to the municipality of
Guinobatan and intended for a public market, by
virtue of a concession granted on August 4, 1884,
under the conditions therein imposed upon the
grantee, could be attached and sold for the
payment of a certain debt owed by Ricardo Pardo
y Pujol to a third person who had obtained a final
judgment.
In deciding this question it is indispensable to
determine what rights were acquired by Pardo y
Pujol's father by virtue of the said concession
granted to him by the Spanish Government, in the
building erected by him on a parcel of land
belonging to the municipality of Guinobatan. The
concession referred to contains, among other
provisions, the following:itc-a1f
ARTICLE 1. There is hereby granted to
Mr. Ricardo Pardo y Cabaas the parcel of
land in the pueblo of Guinobatan, a
prolongation of another parcel belonging
to him, situated between the store and
house of the Chinaman Valentin Garcia
and that of Mr. Roco, following the line of

Calle Real or Calzada de Albay and that of

Calle del Carmen, up to and as far as the
square that is to be laid out in the said
pueblo.
ART. 2. On the said land the petitioner
shall construct a public market building,
with a galvanized-iron roof, in accordance
with the plan submitted to this office on
the 13th of last May and which was
approved by his Excellency the GovernorGeneral in conformity with the changes
recommended by the advisory board of the
consulting board of public works; and
these changes are those hereinafter
specified.
ART. 3. The said Mr. Pardo is granted the
right to enjoy the revenue derived from the
floor space of the market for the period of
forty years, since the revenue from such
floor space appertains to the grantee of the
said service. By floor space is meant the
right to shelter or retail merchandise in the
market belonging to the grantee.
ART. 4. On the expiration of the said
period both the land aforementioned and
the building thereon constructed shall be
the property of the Government and the
building shall be delivered to it in good
condition.
ART. 5. It shall be obligatory for every
vendor to sell his goods in the said market,
which shall be the only one in the said
pueblo.
ART. 7. The said authority shall put Mr.
Pardo in possession of the land affected by
this concession, and the proper
proceedings in connection therewith shall
be had in the presence of the chief
engineer of public works of the said
district and the headmen of the pueblo.
ART. 8. Mr. Pardo shall inform this office
of the date of the commencement of the
work of construction, and the work shall
be inspected by the public works officials
residing in Albay; the building when
completed shall be examined and accepted

by the chief engineer of the district of

Nueva Caceres or by the deputy to whom
the latter may delegate this duty: all with
the knowledge of the office of the
inspector of public works.
The land on which the building was erected and
which is referred to in the foregoing articles,
contained in the franchise granted by the
Government of the former sovereignty, belongs to
the municipality of Guinobatan. Although the
building was constructed at the expense and with
the money of the grantee, Ricardo Pardo y
Cabaas, it is, nevertheless, the property of the
state or of the said municipality, and was
temporarily transferred to the grantee, Pardo y
Cabaas, in order that he might enjoy the usufruct
of its floor space for forty years, but on the
termination of this period the said right of usufruct
was to cease and the building was to belong
finally and absolutely to the state or the
municipality in representation thereof.
For these reasons, then, there is no question that
the building and the land on which it was erected,
since they did not belong to the grantee, Pardo y
Cabaas, nor do they belong to his son and heir,
Ricardo Pardo y Pujol, could not be attached or
sold for the payment of a debt contracted by the
latter.
The concession granted by the former Spanish
Government is personal and transferable only by
inheritance, and in no manner could it be
conveyed as a special personal privilege to
another and a third person unless were an
hereditary successor of the grantee, Pardo y
Cabaas, without knowledge and consent of the
administrative authorities under whose control the
special right of usufruct in the floor space of the
said market building was enjoyed and exercised.
Even though it is unquestionable that the creditor
has a right to collect the money due him, out of
his debtor's property, yet when among such
property is included the right of usufruct in a
public-service building and this right is closely
related to a service of a public character, the right
that lies in behalf of the creditor for the collection
of a debt from the person who enjoys the said
special privilege of right of usufruct in the floor

space of a building intended for a public market is

not absolute and may be exercised only through
the action of a court of justice with respect to the
profits or revenues obtained under the special
right of usufruct granted to the debtor.
Ricardo Pardo y Pujol, as the successor and heir
of the grantee, Pardo y Cabaas, is bound to pay
his debts and his property can be attached on
petition of his creditors. However, his personal
privilege of usufruct in the floor space of the
public market building of Guinobatan cannot be
attached like any ordinary right, because that
would mean that a person who has contracted with
the state or with the Governmental authorities to
furnish a service of a public character would be
substituted, for another person who took no part in
the contract, and that the regular course of a
public service would be disturbed by the more or
less legal action of the creditors of a grantee, to
the prejudice of the state and the public interests.
It is indeed true that the building, which for many
years served as a public market in the pueblo of
Guinobatan, was erected out of the private funds
of the grantee, Pardo y Cabaas, and at first sight
it seems natural that the latter, who paid the cost
of the construction of the building, should be its
owner. However, judging from the agreement
between him and the Government authorities, he
was granted the right to usufruct in the floor space
of the said building in order that, during the period
of forty years, he might reimburse himself for and
collect the value of the building constructed by
him; and it must be believed that Pardo y
Cabaas, before executing the contract with the
Government for the purpose of obtaining the right
of usufruct granted to him and before accepting
the contract, thought over its conditions
deliberately and maturely and felt sure that he
would profit thereby, that is, that he would
reimburse himself for the value of the building he
erected, and obtain interest on the investment and
other advantages by enjoying the usufruct for the
space of forty long years, as in fact even after his
death this right continued to be enjoyed by his
son, Ricardo Pardo y Pujol. Therefore, the said
privilege conferred on the grantee by the Spanish
Government on August 4, 1884, was neither
onerous nor prejudicial to him or his heir, but on
the contrary was beneficial to them.

So, if neither the land nor the building in question

belongs to Pardo y Pujol, it is evident that they
could not be attached or sold at public auction to
satisfy his debt and, consequently, the attachment
and sale of the said Government property
executed on petition of the creditor of the said
Pardo y Pujol are notoriously illegal, null and
void, and the acquisition of the property by
plaintiff confers upon him no right whatever based
on the said concession.
In the decision in the case of Lopez vs. Alvarez (9
Phil. Rep., 28) the principle was asserted that:
In attachments of all kinds it is an essential
condition that the thing which is attached shall be
the property of the debtor, and from no provision
of the Mortgage Law can any conclusion be
drawn which shall be contrary to this principle.
This same principle was set up in the decision of
the case of Alvaran vs. Marquez (11 Phil. Rep.,
263).
It having been demonstrated by the foregoing
reasons that the building constructed on land of
the municipality of Guinobatan for a public
market could not be attached and sold as the result
of a debt contracted by Ricardo Pardo y Pujol in
favor of a third person, we shall now proceed to
examine whether an attachment would lie of the
special right, granted by the former Spanish
Government to the said debtor's father, of usufruct
in the floor space of the said market and right to
collect the revenues therefrom for the period of
forty years, counted from the date of the granting
of the said right.
Without the consent of the proper administrative
official, a grantee, or one charged with conducting
a public service such as a market of the
municipality of Guinobatan, cannot be permitted
to be substituted by any other person, though this
latter be a creditor of the usufructuary grantee.
Hence, we hold that the attachment of the right of
usufruct in the said building and of collecting the
revenue obtained from the floor space of the said
public market of Guinobatan, was illegal, because,
were this right susceptible of attachment, a third
person, as a creditor or a purchaser, might exercise
such right, notwithstanding his personal status,
instead of the grantee contractor. This theory does

not bar the creditor from collecting the money

owed him by the grantee, inasmuch as he has the
right to petition the courts to allow him through
proper legal proceedings to collect his money out
of the revenues produced by the usufruct
conferred by the Government on the grantee of the
said service.
The concession obtained by Ricardo Pardo y
Pujol's father on August 4, 1884, is a true
sovereignty and the grantee, Pardo y Cabaas, and
therefore the stipulations made by and between
the contracting parties, the obligation to which
that contract may have given rise, and the
consequences that may have been entailed by the
contract, all come within the scope of the civil law
which guarantees the rights of the contracting
parties.
Although in our opinion the said concession is
somewhat of the nature of a franchise, yet we do
not think that the provisions of sections 56 to 61
of Act No. 1459 are applicable to the case at bar,
for these sections refer to a franchise granted to a
corporation, while the concession given by the
former Spanish Government was granted to a
private party and not to a corporation or judicial
entity. Therefore, though under the said Act a
franchise is subject to attachment, the Act contains
no express provision whatever which authorizes
the attachment and sale of a right or franchise
especially granted to a private party under the
conditions in which the concession in question
was granted. The substitution of a third person
instead of the one who obtained such an
administrative concession must be explicitly
authorized by the proper official of the
administrative branch of the Government in order
that the substitute may exercise the right so
granted.
In the case of Ricardo y Pujol, the grantee of the
usufruct on the floor space in the said market
building in Guinobatan, his creditor, in order to
obtain the payment of his credit, could have
applied to the courts for an attachment of the
revenues or proceeds collected by his said debtor
by virtue of the said concession; but it was in no
wise proper to attach and sell the right granted by
the public administration to operate and enjoy the

usufruct of the floor space of the said public

market.
Although there is no similarity between the
management of a public market and that of a
railroad company, yet for the reason that the
operation of the one as well as the other is of
public interest, when a creditor of such a company
sues to collect a debt it would be improper to
attach the stationary equipment and rolling stock
of the railroad only the gross receipts of the
business over and above the amount required for
its operation could be touched. This same legal
principle holds in the case where the grantee of a
market is a debtor and his property is attached on
petition of his creditor. The receipts of the market
may be attached, but not the right to operate and
conduct the service, which is of a public character.
In fact, article 1448 of the Ley de Enjuiciamiento
Civil, cited in this decision, not as a law now in
force, but for the purpose of setting out a principle
of law, prohibits the levy of attachments on
railroads opened to public service, and on the
stations, stores, shops, lands, works and buildings
necessary for their operation, or on the
locomotives, rails and other material intended for
the operation of the line. When execution is levied
on such railroad companies, the proceedings are
governed by the provisions of the Law of
November 12, 1869, extended by a royal order of
August 3, 1886, to the overseas provinces. This
law prescribes among other things that
attachments may be levied and executed only on
the gross receipts remaining after the necessary
operating expenses have been deducted.
In harmony with this legal provision, the supreme
court of the State of Nebraska, in which State
there is no law whatever that authorizes the
attachment and sale of a bridge belonging to a
corporation, in the case of the Overton Bridge co.
vs. Means (33 Neb., 857) laid down the principle
that such a bridge and the rights of the corporation
therein could not be sold to satisfy a judgment
against the corporation for the reason that:
The property of corporations which are
closed as public agencies, such as railroad
and bridge companies, which is essential
to the exercise of their corporate franchise,

and the discharge of the duties they have

assumed toward the general public, cannot,
without statutory authority, be sold to
satisfy a common law judgment.
It cites decisions of several states, and also, in the
decision referred to, cited Morawetz on Private
Corporations, section 1125, and held that after
attachment of the property not necessary to enable
the corporation to perform its duties to the public,
the only remedy remaining to a judgment creditor
was to obtain the appointment of a receiver and a
sequestration of the company's earnings.
The supreme court of Alabama, in deciding a
similar case (Gardner vs. Mobile & Northwestern
R.R. Co., 102 Ala., 635, 645), affirmed the same
principle and said:
The only remedy of a judgment creditor is
to obtain the appointment of a receiver and
the sequestration of its income or earnings.
It is to be noted that section 56 of Act No. 1459,
which permits the sale under execution of a
corporation's franchise, is in no wise applicable to
the case at bar, for the reason that, since this Act
was promulgated on March 1, 1906, it could not
and cannot affect the laws, decrees, and orders of
the Spanish government in conformity with which
the administrative concession, Exhibit A, was
granted to Pardo y Cabaas.
The operation of a railroad is of public interest,
and concerns both the public and the state, even
though the superintendent and management
thereof be conducted by a private company.
Therefore, the property of a railroad, either its
rolling stock or permanent equipment, is not
subject to attachment and sale, and the rights of
the creditors of the operating company may be
exercised for the collection of their credit only of
the gross receipts after the operation of the
railroad is insured from its own income.
This decision is based on the provisions of the
aforecited law and the premise that the usufruct of
the floor space of the public market of
Guinobatan, granted to Ricardo Pardo y Pujol's
father was not subject to attachment on account of
its being of a public character, but still the latter's
creditor could have applied for a writ of execution

and laid an attachment on the proceeds obtained

from the operation of the market, which proceeds
or income could have been collected by a receiver
and intervenor.
This, however, was not done, but on the creditor's
petition the public market building, which was not
his debtor's property, together with all the right,
interest, title and participation which the latter had
or might have had therein, was attached and sold;
and as plaintiff was unable to acquire any right or
title in such property illegally sold and illegally
acquired by him at public auction or in the
usufruct of the floor space of the building, it is
unquestionable that he lacks the personality to
claim possession of the land that belongs to the
municipality or the enjoyment and exercise of the
right conferred by the aforesaid administrative
concession, which was and is inalienable on
account of its being a personal right. For the same
reason, plaintiff has no right to reconstruct the
burned building on the land where it formerly
stood.
The only right to which the creditor was entitled
was to petition for the attachment of the income
and proceeds obtained from the use of the floor
space of the market; but he did not avail himself
of this right, nor were the receipts therefrom
attached, nor were they adjudicated either to the
creditor or to the plaintiff Tufexis. Therefore, the
order of dismissal appealed is in accordance with
law and the merits of the case, and likewise the
errors assigned thereto have been duly refuted by
the reasons set forth herein.
For the foregoing considerations, we hereby
affirm the said order of dismissal, with the costs
against the appellant. So ordered.
Arellano, C.J., Moreland, and Araullo, JJ.,
concur.
Johnson, J., concurs in the result.
Fabie v. David
G.R. No. L-123, December 12, 1945
Ozaeta, J.
FACTS:
Josefa Fabie is the usufructuary of the
income of certain houses located at 372-376
Santo Cristo, Binondo, and 950-956 Ongpin,

Santa Cruz, Manila, under the ninth clause of

the will of the deceased Rosario Fabie y Grey.
The owner of Santo Cristo property is the
respondent Juan Grey. Litigation arose between
Josefa Fabie as plaintiff and Juan Grey as
defendant and the owner of the Ongpin
property
as
intervenors,
involving
the
administration of the houses mentioned in
clause 9 of the will referred to above.
In June 1945 Josefa Fabie commenced an
action of unlawful detainer against Ngo Boo Soo
(who says that his correct name is Ngo Soo),
alleging that the defendant is occupying the
premises located at 372-376 Santo Cristo on a
month-to month rental payable in advance not
later than the 5th of each month; that she is the
administratrix
and
usufructuary
of
said
premises; that the defendant offered to pay
P300 monthly rent payable in advance not later
than the 5th of every month, beginning the
month of April 1945, for the said of premises
including the one door which said defendant,
without plaintiffs consent and contrary to their
agreement, had subleased to another Chinese,
but plaintiff refused, based on the fact that the
plaintiff very badly needs the said house to live
in, as her house was burned by the Japanese on
the occasion of the entry of the American
liberators in the City; that defendant was duly
notified to leave the said premises, but he
refused; and she prayed for judgment of
eviction and for unpaid rentals.
The defendant answered alleging that he
was and since 1908 had been a tenant of the
premises in question, which he was using and
had always used principally as a store and
secondarily for living quarters; that he was
renting it from its owner and administrator Juan
Grey; that plaintiff is merely the usufructuary of
the income therefrom, and by agreement
between her and said owner, her only right as
usufructuary of the income is to receive the
whole of such income; that she has no right or
authority to eject tenants, such right being in
the owner and administrator of the house, Juan
Grey; that plaintiff has never had possession of
said property; that defendants lease contract
with the owner of the house is for 5-year period,
with renewal option at the end of each period,
and that his present lease due to expire on
December 31, 1945; that on June 1, 1945,
defendant made a written offer to plaintiff to
compromise and settle the question of the
amount of rent to be paid by defendant but said
plaintiff rejected the same for no valid reason
whatever and instituted the present action; that
the reason plaintiff desires to eject defendant
from the property is that she wishes to lease
the same to other persons for a higher rent,
ignoring the fact that as usufructuary of the
income of the property she has no right to lease
the property.
ISSUE:

Who is entitled to administer the

property subject matter of this case and who
should be the tenant?

SEPT 11, 1934, the Benguet Consolidated

Mining Company declared and distributed stock
dividends out of its surplus profits, Jacinto
receiving his proportionate portion of 11,428
shares.

NOV 17, 1939, said Mining Company again

declared stock dividends out of its surplus profits,
of which the Jacinto received 17,142 shares,
making a total of 28,570 shares.

HELD:
The usufructuary has the right to
administer the property in question. All the acts
of administration to collect the rents for
herself, and to conserve the property by making
all necessary repairs and paying all the taxes,
special assessments, and insurance premiums
thereon were by court judgment vested in
the usufructuary. The pretension of the
respondent Juan Grey that he is the
administrator of the property with the right to
choose the tenants and to dictate the conditions
of the lease is contrary to both the letter and
the spirit of the said clause of the will, the
stipulation of the parties, and the judgment of
the court. He cannot manage or administer the
property after all the acts of management and
administration have been vested by the court,
with his consent, in the usufructuary. He
admitted that before said judgment he had
been collecting the rents as agent of the
usufructuary under an agreement with the
latter. As long as the property is properly
conserved and insured he can have no cause for
complaint, and his right in that regard is fully
protected by the terms of the stipulation and
the judgment of the court above mentioned. To
permit him to arrogate to himself the privilege
to choose the tenant, to dictate the conditions
of the lease, and to sue when the lessee fails to
comply therewith, would be to place the
usufructuary entirely at his mercy. It would
place her in the absurd situation of having a
certain indisputable right without the power to
protect, enforce, and fully enjoy it.

ISSUE: WON the stock dividend is part of the

capital which should be preserved in favor of
the owners or an income of fruits of the
capital which should be given to and enjoyed
by the life usufructuary, Jacinto, as his own
exclusive property?

COURT LOOKS AT in re: Testate Estate of

Emil Maurice Bachrach AS BASIS Is a stock
dividend fruit or income, which belongs to the
usufructuary, or is it capital or part of the corpus
of the estate, which pertains to the
remainderman.

Justice Ozaeta ruled that a dividend, whether in

the form of cash or stock, is income and,
consequently, should go to the usufructuary,
taking into consideration that a stock dividend as
well as a cash dividend can be declared only out
of profits of the corporation, for it were declared
out of the capital it would be a serious violation of
the law.

Del Saz Orozco V Araneta 1951

IN THIS CASE
DEL SAZ OROZCO vs. ARANETA (1951)

Araneta and his clients attempt to differentiate

the present case from that case, contending that,
while the doctrine in that case effected a just and
equitable distribution, the application of it in the
present case would cause an injustice quoting
Justice Holmes, "abstract propositions do not
decide concrete cases."

Difference pointed out by the declaration of

stock dividends the voting power of the original
shares of stock is considerably diminished, and, if
the stock dividends are not given to the
remaindermen, the voting power of the latter
would be greatly impaired

JUGO, J.:

FACTS

Eugenio del Saz Orozco died on February 7,

1922, leaving a will which he had executed on
March 5, 1921 will provided that certain
properties should be given in life usufruct to his
son Jacinto del Saz Orozco with the obligation on
his part to preserve said properties in favor of the
other heirs who were declared the naked owners
thereof. Among these properties were 5,714
shares of stock of the Benguet Consolidated
Mining Company.

o Bearing in mind that the number of shares of stock

of the Benguet Consolidated Mining company is
so large, the diminution of the voting power of the

original shares of stock in this case cannot

possibly affect or influence the control of the
policies of the corporation which is vested in the
owners of the great block of shares. not
significant enough a reason to change doctrine

We have examined the two cases carefully

and we have not perceived any difference
which would justify a reversal or modification
of the doctrine in the Bachrach case.

With regard to the sum of P3,428.40 which is

alleged to have been received by Jacinto from the
Benguet Consolidated Mining Company, as a
result of the reduction of its capital not proven
on the contrary, it was denied by him as soon as
he arrived in the Philippines from Spain. There is
no ground, therefore, for ordering the plaintiff to
deliver such sum to the defendants.
DECISION: Reversed, and it is declared that
the stock dividends amounting to 28,570
shares belongs to Jacinto del Saz Orozco
exclusively and in absolute ownership.

Bachrach v. Seifert
[G.R. No. L-2659.
October 12, 1950.]
Jul4

Facts:
The deceased E. M. Bachrach, who left no forced
heir except his widow Mary McDonald Bachrach,
in his last will and testament made various
legacies in cash and willed the remainder of his
estate. The estate of E. M. Bachrach, as owner of
108,000 shares of stock of the Atok-Big Wedge
Mining Co., Inc., received from the latter 54,000
shares representing 50 per cent stock dividend on
the said 108,000 shares. On June 10, 1948, Mary
McDonald Bachrach, as usufructuary or life tenant
of the estate, petitioned the lower court to
authorize the Peoples Bank and Trust Company,
as administrator of the estate of E. M. Bachrach,
to transfer to her the said 54,000 shares of stock
dividend by indorsing and delivering to her the
corresponding certificate of stock, claiming that
said dividend, although paid out in the form of
stock, is fruit or income and therefore belonged to
her as usufructuary or life tenant. Sophie Siefert

and Elisa Elianoff, legal heirs of the deceased,

opposed said petition on the ground that the stock
dividend in question was not income but formed
part of the capital and therefore belonged not to
the usufructuary but to the remainderman. While
appellants admit that a cash dividend is an
income, they contend that a stock dividend is not,
but merely represents an addition to the invested
capital.
Issue:
Whether or not a dividend is an income and
whether it should go to the usufructuary.
Held:
The usufructuary shall be entitled to receive all
the natural, industrial, and civil fruits of the
property in usufruct. The 108,000 shares of stock
are part of the property in usufruct. The 54,000
shares of stock dividend are civil fruits of the
original investment. They represent profits, and
the delivery of the certificate of stock covering
said dividend is equivalent to the payment of said
profits. Said shares may be sold independently of
the original shares, just as the offspring of a
domestic animal may be sold independently of its
mother. If the dividend be in fact a profit, although
declared in stock, it should be held to be income.
A dividend, whether in the form of cash or stock,
is income and, consequently, should go to the
usufructuary, taking into consideration that a stock
dividend as well as a cash dividend can be
declared only out of profits of the corporation, for
if it were declared out of the capital it would be a
serious violation of the law.
Under the Massachusetts rule, a stock dividend is
considered part of the capital and belongs to the
remainderman; while under the Pennsylvania rule,
all earnings of a corporation, when declared as
dividends in whatever form, made during the
lifetime of the usufructuary, belong to the latter.
The Pennsylvania rule is more in accord with our
statutory laws than the Massachusetts rule.
Jun
30

Vda. De Baustista v.
Marcos, G.R. No. L17072 (October 31,
1961) Case Digest
Ownership > Ownership in General > Rights of an
Owner > Use, Possession, Fruits and Disposition
Facts:
Marcos obtained a loan from Bautista secured by
a mortgage of an unregistered parcel of land. It
was to last for 3 years and the possession of the
land mortgaged was to be turned over to Bautista
by way of usufruct.
Marcos filed an application for the issuance of a
free patent over the land. The free patent was
issued to her and the land was registered in her
name.
Marcos was unable to pay her debt to Bautista so
the latter filed for the foreclosure of her mortgage
on the land given as a security.
Issue:
Whether or not Bautista could foreclose the land
made as a security for the debt.
Held:
No, the mortgage was void and ineffective
because Marcos was not yet the owner of the land
when the mortgage was executed. Hence, Marcos
could not encumber the same to Bautista.
Neither could the subsequent acquisition by
Marcos of title over the land through the issuance
of a free patent validate and legalize the mortgage
since upon the issuance of the said patent, the land
was brought under the operations of the Public
Land Law that prohibits the taking of said land for
the satisfaction of debts contracted prior to the
expiration of 5 years from the issuance of the
patent.
Marcos had possessory rights over the land before
the title was vested in her name, and these
possessory rights could validly be transferred to
Bautista, as Marcos did in the deed of mortgage.

GABOYA V. CUI- Usufruct

FACTS:

Don Mariano sold his 2 lots to two of his children.

Later on, he and his children became co-owners of
the property. Don Mariano executed a deed
authorizing the children to apply for a loan w/
mortgage with a stipulation reserving his right to
the fruits of the land. The children then
constructed a building on the land and collected
rent from the lessee thereof. Much later, when
Don Mariano died, his estate was claiming the
fruits of the building.

ISSUE:

Whether or not Don Mariano had a right to fruits

of the building?

RULING: NO.

The deed expressly reserved only to his right to

the fruits of the land. He only owned the rent for
the portion of land occupied by the building; thus,
the estate could only claim the rent on that piece
of land and not on the entire parcel of land. The
children are entitled to the rents of the building.
(A usufruct on the land may be separate from the
building.

There should be no rescission of the contract coz

the exact amount of rent due and owing to the
Don Marianos estate is still unliquidated and
undetermined. The trial court has the discretion to
grant the debtor (children) a period within which
to pay the rental income from the portion of land
owned by the building because the same has not
yet been determined. Article 1191 of the Civil
Code grants the right to rescind but subject to the
period that the court will grant.

Moreover, on the issue of co-ownership, the court

held that a co-owner cannot simultaneously be a
usufructuary of the same land owned.

GABOYA V. CUI 38
SCRA 85
Jul4

FACTS:
Don Mariano Cui, widower, as owner of 3 lots
situated in the City of Cebu, sold said three lots to
three of his children named Rosario C. de
Encarnacion, Mercedes C. de Ramas and Antonio
Ma. Cui, pro indiviso for the sum of P64,000.
However one-third of the property corresponding
to Rosario C. de Encarnacion was returned to the
vendor because she was not able to pay for the
purchase price which resulted to the cancellation
of the 1/3 sale. Because of the sale of these lots
pro indiviso and because of the cancellation of the
sale to one of the three original vendees, Don
Mariano and his children Mercedes and Antonio
became co-owners of the whole mass in equal
portions. In the deed of sale vendor Don Mariano
retained for himself the usufruct of the property.
Subsequently, a building was erected on a portion
of this mass facing Calderon street and was
occupied by a Chinese businessman for which he
paid Don Mariano P600 a month as rental. The
date when the building, was constructed and by
whom do not appear in the record.
Sometime after the sale to Mercedes and Antonio
the two applied to the Rehabilitation Finance
Corporation (RFC) for a loan of P130,000 with
which to construct a 12-door commercial building
presumably on a portion of the entire parcel
corresponding to their share. On January 7, 1947
Don Mariano, executed an authority to mortgage
authorizing his two children co-owners to
mortgage his share. The loan was eventually
granted and was secured by a mortgage on the
three lots in question, Don Mariano being
included as one of the three mortgagors and
signing the corresponding promissory note with
his two co-owners. He did not however, join in the
construction of the 12-door commercial building.
The 12-door commercial building was eventually
constructed and the builder-owners thereof
Mercedes and Antonio received and continued to

receive the rents thereof amounting to P4,800 a

month and paying therefrom the installments due
for payment on the loan to the Rehabilitation
Finance Corporation.
The complaint alleges that the usufructuary right
reserved in favor of Don Mariano Cui extends to
and includes the rentals of the building
constructed by Antonio Cui and Mercedes Cui on
the land sold to them by their father; that the
defendants retained those rentals for themselves;
that the usufructuary rights of the vendor were of
the essence of the sale, and their violation entitled
him to rescind (or resolve) the sale. It prayed
either for rescission with accounting, or for
delivery of the rentals of the building with
interests, attorneys fees and costs.
Issue: Whether or not the usufruct reserved by the
vendor in the deed of sale, over the lots in
question that were at the time vacant and
unoccupied, gave the usufructuary the right to
receive the rentals of the commercial building
constructed by the vendees with funds borrowed
from the Rehabilitation and Finance Corporation,
the loan being secured by a mortgage over the lots
sold.
Whether or not the failure of the vendees to pay
over its rentals to the usufructuary entitled the
latter to rescind, or more properly, resolve the
contract of sale.
Whether the action for rescission due to breach of
the contract could still be enforced and was not
yet barred.
Held: Under the articles of the Civil Code on
industrial accession by modification on the
principal land (Articles 445 to 456 of the Civil
Code) such accession is limited either to buildings
erected on the land of another, or buildings
constructed by the owner of the land with
materials owned by someone else.
Thus, Article 445, establishing the basic rule of
industrial accession, prescribes that
Whatever is built, planted or sown on the land of
another, and the improvements or repairs made
thereon, belong to the owner of the land subject to
the provisions of the following articles.
while Article 449 states:

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

land of another, loses what is built, planted or
sown without right to indemnity. (Emphasis
supplied)

Pursuant to said condition, Justa Kausapin

executed a Deed of Conveyance of Unregistered
Real Property by Reversion conveying to
Maxima Hemedes the subject property.

Articles 447 and 445, in turn, treat of accession

produced by the landowners building, planting
and sowing with the materials of another and
when the materials, plants or seeds belong to a
third person other than the landowner or the
builder, planter or sower.

Maxima Hemedes and her husband Raul

Rodriguez constituted a real estate mortgage over
the subject property in favor of R & B Insurance
to serve as security for a loan which they
obtained.

Nowhere in these articles on industrial accession

is there any mention of the case of landowner
building on his own land with materials owned by
himself (which is the case of appellees Mercedes
and Antonio Cui).

R & B Insurance extrajudicially foreclosed the

mortgage since Maxima Hemedes failed to pay
the loan even. The land was sold at a public
auction with R & B Insurance as the highest
bidder. A new title was subsequently issued in
favor the R&B. The annotation of usufruct in
favor of Justa Kausapin was maintained in the
new title.

The Civil Code itself limits the cases of industrial

accession to those involving land and materials
belonging to different owners
The usufruct over the land did not entitle the
usufructuary to either the gross or the net income
of the building erected by the vendees, but only to
the rental value of the portion of the land occupied
by the structure (in so far as the usufructuary was
prevented from utilizing said portion), and that
rental value was not liquidated when the
complaints were filed in the court below, hence,
there was no default in its payment. Actually, this
theory of appellants fails to take into account that
Don Mariano could not retain ownership of the
land and, at the same time, be the usufructuary
thereof. His intention of the usufructuary rights in
itself imports that he was no longer its owner. For
usufruct is essentially jus in re aliena; and to be a
usufructuary of ones own property is in law a
contradiction in terms, and a conceptual absurdity.
HEMEDES vs CA Case Digest

HEMEDES vs CA
316 SCRA 347
FACTS: Jose Hemedes executed a document
entitled Donation Inter Vivos With Resolutory
Conditions conveying ownership a parcel of
land, together with all its improvements, in favor
of his third wife, Justa Kauapin, subject to the
resolutory condition that upon the latters death or
remarriage, the title to the property donated shall
revert to any of the children, or heirs, of the
DONOR expressly designated by the DONEE.

Despite the earlier conveyance of the subject land

in favor of Maxima Hemedes, Justa Kausapin
executed a Kasunduan whereby she transferred
the same land to her stepson Enrique D. Hemedes,
pursuant to the resolutory condition in the deed of
donation executed in her favor by her late husband
Jose Hemedes. Enrique D. Hemedes obtained two
declarations of real property, when the assessed
value of the property was raised. Also, he has
been paying the realty taxes on the property from
the time Justa Kausapin conveyed the property to
him. In the cadastral survey, the property was
assigned in the name of Enrique Hemedes.
Enrique Hemedes is also the named owner of the
property in the records of the Ministry of Agrarian
Reform office at Calamba, Laguna.
Enriques D. Hemedes sold the property to
Dominium Realty and Construction Corporation
(Dominium).
Dominium leased the property to its sister
corporation Asia Brewery, Inc. (Asia Brewery)
who made constructions therein. Upon learning
of Asia Brewerys constructions, R & B Insurance
sent it a letter informing the former of its
ownership of the property. A conference was held
between R & B Insurance and Asia Brewery but
they failed to arrive at an amicable settlement.
Maxima Hemedes also wrote a letter addressed to
Asia Brewery asserting that she is the rightful

owner of the subject property and denying the

execution of any real estate mortgage in favor of
R&B.
Dominium and Enrique D. Hemedes filed a
complaint with the CFI for the annulment of TCT
issued in favor of R & B Insurance and/or the
reconveyance to Dominium of the subject
property alleging that Dominion was the absolute
owner of the land.
The trial court ruled in favor of Dominium and
Enrique Hemedes.
ISSUE: W/N the donation in favor of Enrique
Hemedes was valid?
HELD: NO. Enrique D. Hemedes and his
transferee, Dominium, did not acquire any rights
over the subject property. Justa Kausapin sought
to transfer to her stepson exactly what she had
earlier transferred to Maxima Hemedes the
ownership of the subject property pursuant to the
first condition stipulated in the deed of donation
executed by her husband. Thus, the donation in
favor of Enrique D. Hemedes is null and void for
the purported object thereof did not exist at the
time of the transfer, having already been
transferred to his sister. Similarly, the sale of the
subject property by Enrique D. Hemedes to
Dominium is also a nullity for the latter cannot
acquire more rights than its predecessor-in-interest
and is definitely not an innocent purchaser for
value since Enrique D. Hemedes did not present
any certificate of title upon which it relied.
The declarations of real property by Enrique D.
Hemedes, his payment of realty taxes, and his
being designated as owner of the subject property
in the cadastral survey of Cabuyao, Laguna and in
the records of the Ministry of Agrarian Reform
office in Calamba, Laguna cannot defeat a
certificate of title, which is an absolute and
indefeasible evidence of ownership of the
property in favor of the person whose name
appears therein. Particularly, with regard to tax
declarations and tax receipts, this Court has held
on several occasions that the same do not by
themselves conclusively prove title to land.
LIMITATIONS OF PROPERTY RIGHTS

REPUBLIC VS. VDA.

DE
CASTELLVI, digested
Posted by Pius Morados on November 7, 2011
GR # L-20620 August 15, 1974 (Constitutional
Law Eminent Domain, Elements of Taking)
FACTS: After the owner of a parcel of land that
has been rented and occupied by the government
in 1947 refused to extend the lease, the latter
commenced expropriation proceedings in 1959.
During the assessment of just compensation, the
government argued that it had taken the property
when the contract of lease commenced and not
when the proceedings begun. The owner
maintains that the disputed land was not taken
when the government commenced to occupy the
said land as lessee because the essential elements
of the taking of property under the power of
eminent domain, namely (1) entrance and
occupation by condemnor upon the private
property for more than a momentary period, and
(2) devoting it to a public use in such a way as to
oust the owner and deprive him of all beneficial
enjoyment of the property, are not present.
ISSUE: Whether or not the taking of property has
taken place when the condemnor has entered and
occupied the property as lesse.
HELD: No, the property was deemed taken only
when the expropriation proceedings commenced
in 1959.
The essential elements of the taking are: (1)
Expropriator must enter a private property, (2) for
more than a momentary period, (3) and under
warrant of legal authority, (4) devoting it to public
use, or otherwise informally appropriating or
injuriously affecting it in such a way as (5)
substantially to oust the owner and deprive him of
all beneficial enjoyment thereof.
In the case at bar, these elements were not present
when the government entered and occupied the
property under a contract of lease.
City Government of QC vs Judge Ericta &
Himlayang Pilipino

Police Power Not Validly Exercised

Quezon City enacted an ordinance entitled

ORDINANCE REGULATING THE
ESTABLISHMENT, MAINTENANCE AND
OPERATION OF PRIVATE MEMORIAL TYPE
CEMETERY OR BURIAL GROUND WITHIN
THE JURISDICTION OF QUEZON CITY AND
PROVIDING PENALTIES FOR THE
VIOLATION THEREOF. The law basically
provides that at least six (6) percent of the total
area of the memorial park cemetery shall be set
aside for charity burial of deceased persons who
are paupers and have been residents of Quezon
City for at least 5 years prior to their death, to be
determined by competent City Authorities. QC
justified the law by invoking police power.

enter into a contract where no agreement is had

between them.

ISSUE: Whether or not the ordinance is valid.

CASE DIGEST: Republic vs. PLDT

HELD: The SC held the law as an invalid

exercise of police power. There is no reasonable
relation between the setting aside of at least six (6)
percent of the total area of all private cemeteries
for charity burial grounds of deceased paupers and
the promotion of health, morals, good order,
safety, or the general welfare of the people. The
ordinance is actually a taking without
compensation of a certain area from a private
cemetery to benefit paupers who are charges of
the municipal corporation. Instead of building or
maintaining a public cemetery for this purpose,
the city passes the burden to private cemeteries.

REPUBLIC OF THE
PHILIPPINES VS.
PLDT, digested
Posted by Pius Morados on November 8, 2011
26 SCRA 620 (1969) (Constitutional Law
Eminent Domain, Expropriation, Just
Compensation)
FACTS: Public petitioner commenced a suit
against private respondent praying for the right of
the Bureau of Telecommunications to demand
interconnection between the Government
Telephone System and that of PLDT, so that the
Government Telephone System could make use of
the lines and facilities of the PLDT. Private
respondent contends that it cannot be compelled to

ISSUE: Whether or not interconnection between

PLDT and the Government Telephone System can
be a valid object for expropriation.
HELD: Yes, in the exercise of the sovereign
power of eminent domain, the Republic may
require the telephone company to permit
interconnection as the needs of the government
service may require, subject to the payment of just
compensation. The use of lines and services to
allow inter-service connection between the both
telephone systems, through expropriation can be a
subject to an easement of right of way.

(1969)

FACTS:

Sometime in 1933, the defendant PLDT

entered into an agreement with RCA
Communications Inc., an American corporation,
whereby telephone messages coming from the
US and received by RCAs domestic station,
could automatically be transferred to the lines of
PLDT, and vice versa.

The plaintiff through the Bureau of

Telecommunications, after having set up its own
Government Telephone System, by utilizing its
own appropriation and equipment and by renting
trunk lines of the PLDT, entered into an
agreement with RCA for a joint overseas
telephone service.

Alleging that plaintiff is in competition with

them, PLDT notified the former and receiving no
reply, disconnected the trunk lines being rented
by the same; thus, prompting the plaintiff to file a
case before the CFI praying for judgment
commanding PLDT to execute a contract with the
Bureau for the use of the facilities of PLDTs
telephone system, and for a writ of preliminary
injunction against the defendant to restrain the
severance of the existing trunk lines and restore
those severed.

ISSUE:
Whether or not the defendant PLDT can
be compelled to enter into a contract with the
plaintiff.
HELD:
x x x while the Republic may not compel
the PLDT to celebrate a contract with it, the
Republic may, in the exercise of the sovereign
power of eminent domain, require the telephone
company to permit interconnection of the
government telephone system and that of the
PLDT, as the needs of the government service
may require, subject to the payment of just
compensation to be determined by the court.

Churchill & Tait v. Rafferty

32 Phil. 580 (1915)
In re: Police power of the State, Lawful Subject of
police power
This is an appeal from a judgment of the Court of
First Instance of Manila. The case involves a dual
question one involving the power of the court to
restrain by injunction the collection of the tax in
question and the other relating to the power of the
Collector of Internal Revenue to remove any sign,
signboard, or billboard upon the ground that the
same is offensive to the sight or is otherwise a
nuisance.
The focus of this digest is to highlight the cases
latter aspect as correlated to the police power of
the State.
Facts
Appellees, Francis A. Churchill and Stewart Tait
are involved in the advertising business,
particularly in billboard advertising. Their
billboards located upon private lands in the
Province of Rizal were removed upon complaints
and by the orders of the defendant Collector of
Internal Revenue by virtue of the provisions of
subsection (b) of section 100 of Act No. 2339.
Appellees, in their supplementary complaint
challenge the power of the of the Collector of
Internal Revenue to remove any sign, signboard,
or billboard upon the ground that the same is
offensive to the sight or is otherwise a nuisance
and maintain that the billboards in question in no
sense constitute a nuisance and are not
deleterious to the health, morals, or general

welfare of the community, or of any persons.

Defendant Collector of Internal Revenue avers
that after due investigation made upon the
complaints of the British and German Consuls,
the defendant decided that the billboard
complained of was and still offensive to the sight
and is otherwise a nuisance.
Issue
1. Was the enactment assailed by the plaintiffs
was a legitimate
exercise of the police power of the Government?
Held
The High Court is of the opinion that unsightly
advertisements or signs, signboards, or billboards
which are offensive to the sight, are not
disassociated from the general welfare of the
public. This is not establishing a new principle,
but carrying a well- recognized principle to further
application. Moreover, if the police power may be
exercised to encourage a healthy social and
economic condition in the country, and if the
comfort and convenience of the people are
included within those subjects, everything which
encroaches upon such territory is amenable to
the police power. Judgment reversed.
Taxicab Operators vs Board of
Transportation

Petitioner Taxicab Operators of Metro Manila,

Inc. (TOMMI) is a domestic corporation
composed of taxicab operators, who are grantees
of Certificates of Public Convenience to operate
taxicabs within the City of Manila and to any
other place in Luzon accessible to vehicular
traffic.
On October 10, 1977, respondent Board of
Transportation (BOT) issued Memorandum
Circular No. 77-42 which reads:
SUBJECT: Phasing out and Replacement of Old
and Dilapidated Taxis
On January 27, 1981, petitioners filed a Petition
with the BOT, docketed as Case No. 80-7553,
seeking to nullify MC No. 77-42 or to stop its
implementation; to allow the registration and
operation in 1981 and subsequent years of
taxicabs of model 1974, as well as those of earlier
models which were phased-out, provided that, at

the time of registration, they are roadworthy and

fit for operation.
ISSUES:
A. Did BOT and BLT promulgate the questioned
memorandum circulars in accord with the manner
required by Presidential Decree No. 101, thereby
safeguarding the petitioners constitutional right to
procedural due process?
B. Granting arguendo, that respondents did
comply with the procedural requirements imposed
by Presidential Decree No. 101, would the
implementation and enforcement of the assailed
memorandum circulars violate the petitioners
constitutional rights to.
(1) Equal protection of the law;
(2) Substantive due process; and
(3) Protection against arbitrary and unreasonable
classification and standard?
HELD
As enunciated in the preambular clauses of the
challenged BOT Circular, the overriding
consideration is the safety and comfort of the
riding public from the dangers posed by old and
dilapidated taxis. The State, in the exercise of its
police power, can prescribe regulations to promote
the health, morals, peace, good order, safety and
general welfare of the people. It can prohibit all
things hurtful to comfort, safety and welfare of
society. It may also regulate property rights. In
the language of Chief Justice Enrique M.
Fernando the necessities imposed by public
welfare may justify the exercise of governmental
authority to regulate even if thereby certain groups
may plausibly assert that their interests are
disregarded.

TAXICAB
OPERATORS OF
METRO MANILA VS.
BOARD OF

TRANSPORTATION,
digested
Posted by Pius Morados on November 8, 2011
GR # L-59234, September 30, 1982
(Constitutional Law Police Power, Equal
Protection)
FACTS: Petitioner assailed the constitutionality of
an administrative regulation phasing out taxicabs
more than six years old on grounds that it is
violative of the constitutional rights of equal
protection because it is only enforced in Manila
and directed solely towards the taxi industry.
Respondents contend that the purpose of the
regulation is the promotion of safety and comfort
of the riding public from the dangers posed by old
and dilapidated taxis.
ISSUE: Whether or not an administrative
regulation phasing out taxicabs more than six
years old is a valid exercise of police power.
HELD: No, the State in the exercise of its police
power, can prescribe regulations to promote the
safety and general welfare of the people. In
addition, there is no infringement of the equal
protection clause because it is common
knowledge that taxicabs in Manila are subjected to
heavier traffic pressure and more constant use,
creating a substantial distinction from taxicabs of
other places.
CID vs. JAVIER- Notarial Prohibition

Notarial prohibition is required to start the

running of prescription. Also Registration of the
Immovable without the registration of the
easement extinguishes the easement.

FACTS:

The easement in dispute here is an easement of

light and view, which is a negative easement. The
respondents Javier, et al are the owners of the
building standing on their lot with windows
overlooking the adjacent lot. Respondents have
claimed that they had acquired by prescription an
enforceable easement of light and view arising

from a verbal prohibition to obstruct such view

and light. The lower courts have ruled in their
favor.

Note: easement of light and view is continuous

and apparent so it is subject to prescription.

ISSUES:

Whether or not the respondents Irene P. Javier, et

al., owners of a building standing on their lot with
windows overlooking the adjacent lot, had
acquired by prescription an enforceable easement
of light and view arising from a verbal prohibition
to obstruct such view and light, alleged to have
been made upon petitioners predecessor-ininterest as owner of the adjoining lot, both of
which lots being covered by Torrens titles.

RULING: NO.

Art538s requirement is a formal act and not

just any verbal or written act. Formal act
contemplated in art538 in the OLD Civil Code
pertains to an instrument acknowledged before a
notary public. Prescription for a negative
easement only begins when there is a notarial
prohibition by the dominant estate. Respondents
could have not acquired the easement by
prescription because they have not fulfilled this
requirement. Even assuming they have acquired it,
the easement no longer exists because the
properties were registered under the Torrens
system without any annotation or registration of
the said easement.
[G.R. No. L-793. April 27, 1949.]
FELISA R. PAEZ ET AL., PlaintiffsAppellants, v. FRANCISCO MAGNO,
Defendant-Appellee.
V. M. Fortich Zerda and Buenaventura
Evangelista for Appellants.
Juan S. Rustia for Appellee.
SYLLABUS

1. OBLIGATION AND CONTRACT;

PAYMENT; TENDER OF PAYMENT
WITHOUT CONSIGNATION, EFFECT OF.
"If a creditor to whom tender of payment has been
should refuse without reason to accept it, the
debtor may relieve himself of the liability by the
deposit (consignacion) of the thing due."
According to article 1177, "in order that the
deposit (consignacion) of the thing due may
release the obligor, previous notice thereof must
be given to the persons interested in the
performance of the obligation. And the
consignation shall be made, according to article
1178, "by delivery to a judicial authority of the
things due, accompanied by proof of tender, when
required, and of notice of the deposit in other
cases."
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2. ID.; ID.; TENDER OF PAYMENT IS

SUFFICIENT TO COMPEL REDEMPTION
BUT IS NOT IN ITSELF A PAYMENT.
Tender does not in itself relieve the vendor from
his obligation to pay the price when redemption is
allowed by the court. In other words, tender of
payment is sufficient to compel redemption but is
not in itself a payment that relieves the vendor
from his liability to pay the redemption price.
DECISION
MORAN, C.J. :
On October 1943, plaintiffs and appellants
borrowed from defendant and appellee P4,000 in
Japanese Military notes, with the promise to pay
within a period of five years. As a security, a
parcel of land was mortgaged in favor of the
creditor. On September 1944, payment of this debt
was offered and tendered, but was rejected by the
creditor. For that reason, an action was filed on
November 18, 1945 asking that the obligation be
declared as already paid and the deed of mortgage
be cancelled. Defendant filed a motion to dismiss
upon the ground that plaintiffs have no cause of
action, there being no allegation that the thing due
was consigned in court, as provided by law. The
motion was granted, hence, this appeal by the
plaintiffs.
The order of dismissal is correct. Article 1176 of
the Civil Code provides that "if a creditor to
whom tender of payment has been made should
refuse without reason to accept it, the debtor may

relieve himself of the liability by the deposit

(consignacion) of the thing due." According to
article 1177, "in order that the deposit
(consignacion) of the thing due may release the
obligor, previous notice thereof must be given to
the persons interested in the performance of the
obligation." And the consignation shall be made,
according to article 1178, "by delivery to a
judicial authority of the things due, accompanied
by proof of tender, when required, and of notice of
the deposit in other cases."

HELD:

In the complaint, there is no allegation that the

amount of debt was consigned in court after
tender of payment had been made and rejected.
Therefore, the debtor is not relieved of his
liability.

G.R. No. L-42334 October 31, 1936

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The rule regarding payment of redemption prices

is invoked. True that consignation of the
redemption price is not necessary in order that the
vendor may compel the vendee to allow the
repurchase within the time provided by law or by
contract. (Rosales v. Reyes and Ordoveza, 25
Phil., 495.) We have held that in such cases a mere
tender of payment is enough, if made on time, as a
basis for action against the vendee to compel him
to resell. But that tender does not in itself relieve
the vendor from his obligation to pay the price
when redemption is allowed by the court. In other
words, tender of payment is sufficient to compel
redemption but is not in itself a payment that
relieves the vendor from his liability to pay the
redemption price.
From all the foregoing, the order appealed from is
affirmed, with costs against plaintiffs and
appellants.
Paras, Feria, Pablo, Perfecto, Bengzon, Briones,
Tuason, Montemayor, and Reyes, JJ., concur.
BENEDICTO V. CA
25 SCRA 145

FACTS:
Hendrick was the owner of a property which half
of it was sold to Recto. An easement of way was
annotated in the certificates of title. Subsequently,
the remaining half of the property was sold to
Herras who then closed and walled the part of
land serving as easement of way.

The easement is perpetual in character and was

annotated in all the certificates of title. Absence of
anything that would show mutual agreement to
extinguish the easement, the easement persists.
NORTH NEGROS SUGAR CO vs.
SERAFIN HIDALGO
Posted on July 1, 2013 by winnieclaire
Standard

Facts: North Negros Sugar Co. (NNSC) is the

owner of a site known as the mill site. It is
where its sugar central, with its factory building
and residence for its employees and laborers are
located. It also owns the adjoining sugar
plantation known as Hacienda Begoa. Across
its properties NNSC constructed a road
connecting the mill site with the provincial
highway. Through this road it allowed vehicles to
pass upon payment of a toll charge of P0.15 for
each truck or automobile. Pedestrians are allowed
free passage through it.
Immediately adjoining the above-mentioned mill
site of the NNSC is the hacienda of Luciano
Aguirre, known as Hacienda Sagay, where the
Hidalgo has a billiard hall and a tuba saloon. Like
other people in and about the place, Hidalgo used
to pass through the said road of the NNSC
because it was his only means of access to the
Hacienda Sagay. Later on, by order of the
NNSC , every time that the Hidalgo passed
driving his automobile with a cargo of tuba
plaintiff ,the gatekeeper would stop him and
prevent him from passing through said road.
Hidalgo in such cases merely deviated from said
road and continued on his way to Hacienda
Sagay across the fields of Hacienda Begoa,
likewise belonging to the NNSC.
Issue: Whether or not NNSC can enjoin Hidalgo
from passing the property.
Ruling: NO.
We, therefore, have the case of an easement of
way voluntarily constituted in favor of a
community. Civil Code articles 531 and 594 read:
ART. 531. Easements may also be established for
the benefit of one or more persons or of a

community to whom the encumbered estate does

not belong.
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ART. 594. The owner of an estate may burden it
with such easements as he may deem fit, and in
such manner and form as he may consider
desirable, provided he does not violate the law or
public order.
As may be seen from the language of article 594,
in cases of voluntary easement, the owner is given
ample liberty to establish them: as he may deem
fit, and in such manner and form as he may
consider desirable. The plaintiff considered it
desirable to open this road to the public in
general, without imposing any condition save the
payment of a fifteen-centavo toll by motor
vehicles, and it may not now go back on this and
deny the existence of an easement. Voluntary
easements under article 594 are not contractual
in nature; they constitute the act of the owner.
If he exacts any condition, like the payment of
a certain indemnity for the use of the easement,
any person who is willing to pay it may make
use of the easement. If the contention be made
that a contract is necessary, it may be stated
that a contract exits from the time all those
who desire to make use of the easement are
disposed to pay the required indemnity.The
plaintiff contends that the easement of way is
intermittent in nature and can only be acquired by
virtue of a title under article 539. The defendant,
however, does not lay claim to it by prescription.
The title in this case consists in the fact that the
plaintiff has offered the use of this road to the
general public upon payment of a certain sum as
passage fee in case of motor vehicles.
The cases of Roman Catholic Archbishop of
Manila vs. Roxas (22 Phil., 450), and Cuaycong
vs. Benedicto (37 Phil., 781), are not controlling,
as there the attempt was to establish that the right
to an easement of way had been acquired by
prescription. Here defendants contention is, that
while the road in question remains open to the
public, he has a right to its use upon paying the
passage fees required by the plaintiff. Indeed the
latter may close it at its pleasure, as no period has
been fixed when the easement was voluntarily
constituted, but while the road is thrown open, the
plaintiff may not capriciously exclude the
defendant from its use.

Furthermore, plaintiffs evidence discloses the

existence of a forcible right of way in favor of the
owner and occupants of the Hacienda Sagay
under the Civil Code, article 564, because,
according to said evidence, those living in
Hacienda Sagay have no access to the
provincial road except thru the road in question.
VALDERAMA V. NORTH NEGROS SUGAR
CENTRAL
48 PHIL 492

FACTS:
Case regarding the milling contracts and
use of the railroad in going to the sugar
central

HELD:
1. In a contract establishing an easement of way in
favor of a sugar company for the construction of a
railroad for the transportation of sugar cane from
the servient estates to the mill, it is contrary to the
nature of the contract to pretend that only sugar
cane grown in the servient estates can be
transported on said railroad, because it is a wellsettled rule that things serve their owner by reason
of ownership and not by easement. That an
easement being established in favor of the sugar
company, the owners of the servient estates cannot
limit its use to the transportation of their cane,
there being no express stipulation to that effect.
2. An easement of way is not more burdensome by
causing to pass hereon wagons carrying goods
pertaining to persons who arent wners of the
servient estates and at all time the person entitled
o the easement may please, for in such case the
easement ontinues to be the same.
Eduardo Cuaycong vs Ramona Benedicto
November 20, 2011

37 Phil. 781 Civil Law Law on Property

Easement Right of Way Public Highway
Ramona Benedicto owns Hacienda Toreno which
is located in Victorias, Negros Occidental. Two
roads pass through the said hacienda: the
Dacuman-Toreno Road and the Nanca-Victorias
Road. For forty years, the owners of the nearby
hacienda, Eduardo Cuaycong et al, had been using
the said roads to transport their products.

But in 1911, Benedicto decided to close the roads

and began asking for toll fees for wagons passing
through their hacienda. In 1912, Cuaycong et al
sued Benedicto. Cuaycong claimed that they have
a right of way over the said Nanca-Victorias Road
considering that they have been using it since time
immemorial.
The lower court dismissed the claim over the
Dacuman-Toreno Road for the other parties were
in default, but the lower court declared that
Cuaycong et al do have a right of way over the
Nanca-Victorias Road. Benedicto appealed.
Cuaycong then averred that the road is a public
highway.
ISSUE: Whether or not Cuaycong et al were able
to establish their right over the Nanca-Victorias
Road.
HELD: No. The Nanca-Victorias Road is not a
public highway. First it was shown that in the
Torrens title held by Benedicto, there was no
encumbrance attached to the hacienda, that it is
nowhere nearby a road nor does it border a road.

Second, the road was not maintained by the local

government. Its upkeep was solely supported by
the road users for their benefits, convenience and
interest. There was no adverse possession by the
government.
Third, there was no evidence which shows that the
land is of the nature of a public highway. It was
shown that the road was in existence since 1885,
but it was not shown as a public highway, in fact,
the other evidence shown pertain to DacumanToreno Road.
Fourth, the road was closed in 1911; it was only in
1912 that Cuaycong et al filed their suit.
Neither did Cuaycong et al acquire a right of
private easement. The lower court ruled that
Cuaycong et al and their predecessors in interest
had been using the said road since time
immemorial yet they only showed evidence that it
was in use in 1885 but no other evidence to show
a further time of usage was ever shown to prove
their claim.