ARTICLE 428 penalties.
Defendant is further ordered to pay plaintiff
1. AYALA INC VS. RAY BURTON CORP
GR No. 163075
January 23, 2006
FACTS: On December 22, 1995, Ayala Inc. and Ray
Burton Corp. entered into a contract denominated as a
“Contract to Sell,” with a “Side Agreement” of even
date. In these contracts, petitioner agreed to sell to
respondent a parcel of land situated at Muntinlupa City.
The purchase price of the land is payable as follows:
On contract date: 26%, inclusive of option money
Not later than 1-6-96: 4%
In consecutive quarterly installments for a period of 5
years: 70%
Respondent paid thirty (30%) down payment and the
quarterly amortization. However in 1998, respondent
notified petitioner in writing that it will no longer
continue to pay due to the adverse effects of the
economic crisis to its business. Respondent then asked
for the immediate cancellation of the contract and for a
refund of its previous payments as provided in the
contract.
Petitioner refused to cancel the contract to sell. Instead,
it filed with the RTC Makati City, a complaint for
specific performance against respondent, demanding
from the latter the payment of the remaining unpaid
quarterly installments inclusive of interest and
penalties.
Respondent, in its answer, denied any further obligation
to petitioner, asserting that it (respondent) notified the
latter of its inability to pay the remaining installments.
Respondent invoked the provisions of paragraphs 3 and
3.1 of the contract to sell providing for the refund to it
of the amounts paid, less interest and the sum of 25%
of all sums paid as liquidated damages.
The trial court rendered a Decision in favor of Ayala and
holding that respondent transgressed the law in obvious
bad faith. It ordered the defendant ordered to pay
Ayala the unpaid balance, interest agreed upon, and
for attorney’s fees and the costs of suit. Upon full
payment of the aforementioned amounts by defendant,
plaintiff shall, as it is hereby ordered, execute the
appropriate deed of absolute sale conveying and
transferring full title and ownership of the parcel of land
subject of the sale to and in favor of defendant.
On appeal, the CA rendered a Decision reversing the
trial court’s Decision. Hence, the instant petition for
review on certiorari.
ISSUE:
1. WON respondent’s non-payment of the balance of
the purchase price gave rise to a cause of action on the
part of petitioner to demand full payment of the
purchase price; and
2. WON Ayala should refund respondent the amount
the latter paid under the contract to sell.
HELD: The petition is denied. The CA decision is
affirmed.
At the outset, it is significant to note that petitioner
does not dispute that its December 22, 1995 transaction
with respondent is a contract to sell. Also, the
questioned agreement clearly indicates that it is a
contract to sell, not a contract of sale. Paragraph 4 of
the contract provides:
4. TITLE AND OWNERSHIP OF THE PROPERTY. – The title
to the property shall transfer to the PURCHASER upon
payment of the balance of the Purchase Price and all
expenses, penalties and other costs which shall be due
and payable hereunder or which may have accrued
thereto. Thereupon, the SELLER shall execute a Deed of
Absolute Sale in favor of the PURCHASER conveying all
the SELLER’S rights, title and interest in and to the
Property to the PURCHASER
2. Eliseo Fajardo Jr., vs Freedom to Build Inc.
G. R. No. 134692 August 1, 2000
Facts: Freedom to Build Inc., an owner-developer and
seller of low-cost housing sold to petitioner-spouses a
house and lot in the De La Costa Homes, in Barangka,
Marikina, Metro Manila. The Contract to sell executed
between the parties, contained a Restrictive Covenant
providing certain prohibitions, to wit:
“Easements. For the good of the entire community, the
homeowner must observe a two-meter easement in
front. No structure of any kind (store, garage, bodega,
etc.) may be built on the front easement.
“Upward expansion. A second storey is not prohibited.
But the second storey expansion must be placed above
the back portion of the house and should not extend
forward beyond the apex of the original building.
“Front expansion: 2nd Storey: No unit may be extended
in the front beyond the line as designed and
implemented by the developer in the 60 sq. m. unit. In
other words, the 2nd floor expansion, in front, is 6
meters back from the front property line and 4 meters
back from the front wall of the house, just as provided
in the 60 sq. m. units.”
The above restrictions were also contained in Transfer
Certificate of Title No. N-115384 covering the lot issued
in the name of petitioner-spouses.
The controversy arose when the petitioners despite
repeated demand from the respondent, extended the
roof of their house to the property line and expanded
the second floor of their house to a point directly above
the original front wall. Respondent filed before the RTC
an action to demolish the unauthorized structures.
The RTC rendered a judgment against the petitioner
ordering them to immediately demolish and remove the
extension of their expanded housing unit that exceeds
the limitations imposed by the Restrictive Covenant,
otherwise the Branch Sheriff of this Court will execute
the this decision at the expense of the defendants.
On appeal, the CA affirmed the decision of the RTC.
Hence, this petition for review.
Issue: Whether or not the for the lack of a specific
provision, prescribing the penalty of the demolition in
the “Restrictive Covenant” in the event of the breach
thereof, the prayer of the respondent to demolish the
structure should fail.
Ruling:
The Court held that the argument of the petitioner-
spouses has no merit; Article 1168 of the New Civil
Code states that: “When the obligation consists in not
doing and the obligor does what has been forbidden
him, it shall be undone at his expense.”
This Court is not unaware of its ruling in Ayala
Corporation vs. Ray Burton Development Corporation,
which has merely adjudged the payment of damages in
lieu of demolition. In the aforementioned case,
however, the elaborate mathematical formula for the
determination of compensatory damages which takes
into account the current construction cost index during
the immediately preceding 5 years based on the
weighted average of wholesale price and wage indices
of the National Census and Statistics Office and the
Bureau of Labor Statistics is explicitly provided for in the
Deed of Restrictions entered into by the parties. This
unique and peculiar circumstance, among other strong
justifications therein mentioned, is not extant in the
case at bar.
In sum, the Court holds that since the extension
constructed exceeds the floor area limits of the
Restrictive Covenant, petitioner spouses can be
required to demolish the structure to the extent that it
exceeds the prescribed floor area limits.
Wherefore, the assailed decision of the Court of
Appeals is AFFIRMED. No costs.
3. Tayag Vs. Lacson
Facts:
 In March 1996 a group of farmer-tenants on three
parcels of land owned by the Lacsons assigned to
petitioner Tayag their rights as tenants/tillers for
p50/sqm.
 The said amount would be payable “when the
legal impediments to the sale of the property to
the petitioner no longer existed.” Tayag would
have exclusive rights to purchase the property if
and when the Lacsons agreed to sell the
property.
 Tayag gave varied sums of money to the farmers
as partial payments, and the farmers issued
receipts.
 Sometime later Tayag discovered that the farmers
changed their minds and would be selling their
rights to the Lacsons instead, prompting Tayag to
 pray for Injunction against the farmers and
Lacson.
 In their defense, the Lacsons claimed that they did
not induce the farmers to violate their contracts
with Tayag, and that since the farmers were
merely tenants, they had no right to enter into
any transactions involving Lacson properties
without the owners’ consent.
Issue: WON there was a valid option contract between
Tayag and the farmers by virtue of the deeds of
assignment. NO
Held:
Option contract defined
An option is a contract by which the owner of the
property agrees with another person that he shall have
the right to buy his property at a fixed price within a
certain time or under, or in compliance with certain
terms and conditions, or which gives to the owner of
the property the right to sell or demand a sale. It
imposes no binding obligation on the person holding
the option, aside from the consideration for the offer.
Until accepted, it is not, properly speaking, treated as a
contract.
The second party gets in praesenti, not lands, not an
agreement that he shall have the lands, but the right to
call for and receive lands if he elects.
Until accepted, it is not, properly speaking, treated as a
contract. An option contract is a separate and distinct
contract from which the parties may enter into upon
the conjunction of the option.
Farmers had no right to grant Tayag the option/right
to buy the property as they were merely tenants
In this case, the defendants-tenants-subtenants, under
the deeds of assignment, granted to the petitioner not
only an option but the exclusive right to buy the
landholding. But the grantors were merely the
defendants-tenants, and not the respondents, the
registered owners of the property. Not being the
registered owners of the property, the defendants-
tenants could not legally grant to the petitioner the
option, much less the "exclusive right" to buy the
property. Nemo dat quod non habet, literally meaning
"no one gives what he doesn't have" applies in this
case.
Deeds of Assignment not valid; conditions stipulated
did not arise
The full payment of 50/sqm under Tayag and the
farmers’ ‘’option contracts’ were on the following
conditions:
- that the Lacsons would agree to sell their property
- that the deeds of assignment were subject to the
approval of DAR
- that there was a prohibitive period within which the
farmers were able to sell their interest in the land
There is no showing in Tayag’s complaint that the
farmers had agreed to sell their property, and that the
legal impediments to the agreement no longer existed.
They had yet to submit the Deeds of Assignment to the
Department of Agrarian Reform which, in turn, had to
act on and approve or disapprove the same. Unless the
DAR approves the deeds, Tayag has no right to enforce
the same by asking the trial court to fix a period within
which to pay.
Ross Rica v. Sps. Ong (2005)
FACTS: Ross Rica obtained a parcel of land from
MandauePrime. MP acquired this land from the
Spouses Ong through adeed of sale. The Spouses were
still occupying it at the timeRR bought the land from
MP, and they refused to vacate.Hence, MP filed an
unlawful detainer suit against them. TheCA said the
action should have been accion reinvindicatoriaand not
unlawful detainer.
HELD: The unlawful detainer suit was proper.
Reinvindicatoryaction is a claim for ownership, while an
action for unlawfuldetainer is a claim for actual physical
possession.Regardlessof the language used in all
pleadings, MP was only trying toprove that the Ongs
were unlawfully dispossessing them oflands MP had the
right of ownership to, and it is seekingrecovery of the
physical possession of the land. Even if theMTC and RTC
made adjudications on the issue of ownership,this does
not mean that the complaint has become one
ofreinvindicatory action because such rulings must only
bedeemed provisional as against the actual issue of
ejectmentor recovery of possession
 ARTICLE 429
1. German Management and Services, Inc. vs Court of
Appeals
77 SCRA 495 – Civil Law – Property – Doctrine of Self-
Help
In February 1982, the spouses Manuel and Cynthia Jose
contracted with German Management and Services, Inc.
for the latter to develop their landholdings into a
residential subdivision. The spouses also executed a
special power of attorney to that effect.
German Management started the project in February
1983, however, German Management discovered that
the land was being possessed by Ernest0 Villeza et al
who were the farmers tilling the said land at that time.
German Management spoke with Villeza et al but the
farmers refused to vacate the land as the farmers
claimed that they have been occupying the land for
twelve years.
Nevertheless, German Management went on to develop
the property and demolished the properties of the
farmers without acquiring a court order. In turn, Villeza
et al filed a case of forcible entry against German
Management. In its defense, German Management
invoked the Doctrine of Self-help which provides that:
The owner or lawful possessor of a thing has the right to
exclude any person from the enjoyment and disposal
thereof. For this purpose, he may use such force as may
be reasonably necessary to repel or prevent an actual
or threatened unlawful physical invasion or usurpation
of his property. (Article 429, Civil Code)
ISSUE: Whether or not the doctrine of self-help is
applicable in this case.
HELD: No. The Doctrine of Self-help is not applicable
because at the time when German Management
excluded the farmers, there’s no longer an actual or
threatened unlawful physical invasion or usurpation.
That actual or threatened unlawful physical invasion by
the farmers have already lapsed 12 years ago when they
began occupying the said land. In fact, they were
already peaceably farming the land.
What should have been the remedy by German
Management?
German Management should have filed either accion
publiciana or accion reivindicatoria to lawfully eject the
farmers.
But the farmers are not the real owners and in fact, the
spouses Jose have a lawful title over the land?
Regardless of the actual condition of the title to the
property, the party in peaceable quiet possession shall
not be turned out by a strong hand, violence or terror.
Further, there is now a presumption of ownership in
favor of the farmers since they are the ones occupying
the said property. They can only be ejected either
by accion publicianaor accion reivindicatoria through
which the spouses Jose’s better right may be proven.
2. GRAND UNION SUPERMARKET, INC. and NELIA SANTOS
FANDINO,vs.JOSE J. ESPINO JR., and THE HONORABLE COURT
OF APPEALS,
FACTS:
Plaintiff Jose J. Espino, Jr., a civil engineer and an
executive of Procter and Gamble, was accused of
intentionally refusing to pay a “rat tail” file in one of the
South Supermarket stores in Makati, as he forgot to pay
such item as his wife paid for all the grocery items they
bought for the supermarket. The guards asked him to
follow their store procedures as to that situation,
including signing of an incident report. As not to worsen
the situation caused by the procedures of the store,
which was catching attention from other people from
the store, petitioner offered to pay defendant Nelia
Santos-Fandino a P5.00 bill and said he was paying
for the file whose cost was P3.85. Fandino took the
P5.00 bill from plaintiff stating that such is only the
petitioner’s fine for having committed the act. Plaintiff
was shocked and objected vigorously that he was not a
common criminal, and they wanted to get back the
P5.00. But Fandino told them that the money would be
given as an incentive to the guards who apprehend
pilferers. The plaintiff then filed the present case to the
trial to claim for damages of the humiliation caused to
him by the incident and to the fine collection, which,
the plaintiff believes, the store owner has no legal
ground to collect such. After trial, the Court of
First Instance of Pasig, Rizal dismissed the complaint,
interposing the appeal to the Court of Appeals, the
latter reversed and set aside the appealed judgment,
granting damages, including exemplary damages
for collecting a fine to the plaintiff. Not satisfied with
the decision of the respondent court, the petitioner
instituted the present petition with the ground that
there is no basis for her to pay exemplary damages to
the plaintiff.
Issue: Whether or not the petitioner legitimately
exercised the right of defense of property within the
context of Article 429of the Civil Code and is thus
exempted to pay the plaintiff with exemplary
damages.
Held: Petitioners acted in good faith in trying to protect
and recover their property, a right which the law
accords to them. Under Article 429, New Civil Code,
the owner or lawful possessor of a thing has a right
to exclude any person from the enjoyment and disposal
thereof and for this purpose, he may use such force as
may be reasonably necessary to repel or prevent an
actual or threatened unlawful physical invasion or
usurpation of his property. And since a person who acts
in the fulfillment of a duty or in the lawful exercise of a
right or office exempts him from civil or criminal
liability, petitioner may not be punished by imposing
fine against the plaintiff or anyone who may cause
damage to his property, or for that matter, to her store.
We agree that petitioners acted upon probable cause in
stopping and investigating private respondent for taking
the file without paying for it, hence, the imposition of
exemplary damages as a warning to others by way of
a deterrent is without legal basis. We, therefore,
eliminate the grant of exemplary damages to the
private respondent.
3. UNITED COCONUT PLANTERS BANK and LUIS MA.
ONGSIAPCO, vs. RUBEN E. BASCO
FACTS:
Respondent Ruben E. Basco had been employed
with the petitioner United Coconut Planters Bank
(UCPB) for seventeen (17) years.[3] He was also a
stockholder thereof and owned 804 common shares of
stock at the par value of P1.00.[4] He likewise
maintained a checking account with the bank at its Las
Pias Branch under Account No. 117-001520-6.[5] Aside
from his employment with the bank, the respondent
also worked as an underwriter at the United Coconut
Planters Life Association (Coco Life), a subsidiary of
UCPB since December, 1992.[6] The respondent also
solicited insurance policies from UCPB employees.
On June 19, 1995, the respondent received a letter
from the UCPB informing him of the termination of his
employment with the bank for grave abuse of discretion
and authority, and breach of trust in the conduct of his
job as Bank Operations Manager of its Olongapo
Branch. The respondent thereafter filed a complaint for
illegal dismissal, non-payment of salaries, and damages
against the bank in the National Labor Relations
Commission (NLRC), docketed as NLRC Cases Nos. 00-
09-05354-92 and 00-09-05354-93. However, the
respondent still frequented the UCPB main office
in Makati City to solicit insurance policies from the
employees thereat. He also discussed the complaint he
filed against the bank with the said employees.[7]
The respondent was also employed by All-Asia Life
Insurance Company as an underwriter. At one time, the
lawyers of the UCPB had an informal conference with
him at the head office of the bank, during which the
respondent was offered money so that the case could
be amicably settled. The respondent revealed the
incident to some of the bank employees.[8]
On November 15, 1995, Luis Ma. Ongsiapco, UCPB
First Vice-President, Human Resource Division, issued a
Memorandum to Jesus Belanio, the Vice-President of
the Security Department, informing him that the
respondents employment had been terminated as of
June 19, 1995, that the latter filed charges against the
bank and that the case was still on-going. Ongsiapco
instructed Belanio not to allow the respondent access
to all bank premises.[9] Attached to the Memorandum
was a passport-size picture of the respondent. The next
day, the security guards on duty were directed to
strictly impose the security procedure in conformity
with Ongsiapcos Memorandum.[10]
On December 7, 1995, the respondent, through
counsel, wrote Ongsiapco, requesting that such
Memorandum be reconsidered, and that he be allowed
entry into the bank premises.[11]His counsel emphasized
that
In the meantime, we are more concerned with your
denying Mr. Basco access to all bank premises. As you
may know, he is currently connected with Cocolife as
insurance agent. Given his 17-year tenure with your
bank, he has established good relationships with many
UCPB employees, who comprise the main source of his
solicitations. In the
course of his work as insurance agent, he needs free
access to your bank premises, within reason, to add the
unnecessary. Your memorandum has effectively
curtailed his livelihood and he is once again becoming a
victim of another illegal termination, so to speak. And
Shakespeare said: You take his life when you do take
the means whereby he lives.
Mr. Bascos work as an insurance agent directly benefits
UCPB, Cocolifes mother company. He performs his work
in your premises peacefully without causing any
disruption of bank operations. To deny him access to
your premises for no reason except the pendency of the
labor case, the outcome of which is still in doubt his
liability, if any, certainly has not been proven is a clear
abuse of right in violation of our clients rights. Denying
him access to the bank, which is of a quasi-public
nature, is an undue restriction on his freedom of
movement and right to make a livelihood, comprising
gross violations of his basic human rights. (This is
Human Rights Week, ironically).
The respondent was undaunted. At 5:30 p.m. of
December 21, 1995, he went to the office of Junne
Cacay, the Assistant Manager of the Makati Branch.
Cacay was then having a conference with Bong
Braganza, an officer of the UCPB Sucat Branch. Cacay
entertained the respondent although the latter did have
an appointment. Cacay even informed him that he had
a friend who wanted to procure an insurance
policy.[14] Momentarily, a security guard of the bank
approached the respondent and told him that it was
already past office hours. He was also reminded not to
stay longer than he should in the bank
premises.[15] Cacay told the guard that the respondent
would be leaving shortly.[16] The respondent was
embarrassed and told Cacay that he was already
leaving.[17]
At 1:30 p.m. of January 31, 1996, the respondent
went to the UCPB Makati Branch to receive a check
from Rene Jolo, a bank employee, and to deposit money
with the bank for a friend.[18] He seated himself on a
sofa fronting the tellers booth[19] where other people
were also seated.[20] Meanwhile, two security guards
approached the respondent. The guards showed him
the Ongsiapcos Memorandum and told him to leave the
bank premises. The respondent pleaded that he be
allowed to finish his transaction before leaving. One of
the security guards contacted the management and was
told to allow the respondent to finish his transaction
with the bank.
Momentarily, Jose Regino Casil, an employee of
the bank who was in the 7th floor of the building, was
asked by Rene Jolo to bring a check to the respondent,
who was waiting in the lobby in front of the tellers
booth.[21] Casil agreed and went down to the ground
floor of the building, through the elevator. He was
standing in the working area near the Automated Teller
Machine (ATM) Section[22] in the ground floor when he
saw the respondent standing near the sofa[23] near the
two security guards.[24] He motioned the respondent to
come and get the check, but the security guard tapped
the respondent on the shoulder and prevented the
latter from approaching Casil. The latter then walked
towards the respondent and handed him the check
from Jolo.
Before leaving, the respondent requested the
security guard to log his presence in the logbook. The
guard did as requested and the respondents presence
was recorded in the logbook.[25]
10. Plaintiff thereafter decided to contest his
termination by filing an action for illegal dismissal
against the bank.
Despite the pendency of this litigation, plaintiff was
reported visiting employees of the bank in their place of
work during work hours, and circulating false
information concerning the status of his case against
the bank, including alleged offers by management of a
monetary settlement for his illegal dismissal.
11. Defendants acted to protect the banks interest by
preventing plaintiffs access to the banks offices, and at
the same time informing him of that decision.
Plaintiff purported to insist on seeing and talking to the
banks employees despite this decision, claiming he
needed to do this in connection with his insurance
solicitation activities, but the bank has not
reconsidered.
12. The complaint states, and plaintiff has, no cause of
action against defendants.[29]
 The petitioners likewise interposed compulsory
counterclaims for damages.
ISSUE: Whether or not the appellate court erred when it
found that UCPB excessively exercised its right to self-
help to the detriment of Basco as a depositor, when on
January 31, 1996, its security personnel stopped
respondent from proceeding to the area restricted to
UCPBs employees.
RULING: The petitioners aver that the petitioner bank
has the right to prohibit the respondent from access to
all bank premises under Article 429 of the New Civil
Code, which provides that:
Art. 429. The owner or lawful possessor of a thing has
the right to exclude any person from the enjoyment and
disposal thereof. For this purpose, he may use such
force as may be reasonably necessary to repel or
prevent an actual or threatened unlawful physical
invasion or usurpation of his property.
The petitioners contend that the provision which
enunciates the principle of self-help applies when there
is a legitimate necessity to personally or through
another, prevent not only an unlawful, actual, but also a
threatened unlawful aggression or usurpation of its
properties and records, and its personnel and
customers/clients who are in its premises. The
petitioners assert that petitioner Ongsiapco issued his
Memorandum dated November 15, 1995 because the
respondent had been dismissed from his employment
for varied grave offenses; hence, his presence in the
premises of the bank posed a threat to the integrity of
its records and to the persons of its personnel. Besides,
the petitioners contend, the respondent, while in the
bank premises, conversed with bank employees about
his complaint for illegal dismissal against the petitioner
bank then pending before the Labor Arbiter, including
negotiations with the petitioner banks counsels for an
amicable settlement of the said case.
The respondent, for his part, avers that Article 429
of the New Civil Code does not give to the petitioner
bank the absolute right to exclude him, a stockholder
and a depositor, from having access to the bank
premises, absent any clear and convincing evidence that
his presence therein posed an imminent threat or peril
to its property and records, and the persons of its
customers/clients.
We agree with the respondent bank that it has the
right to exclude certain individuals from its premises or
to limit their access thereto as to time, to protect, not
only its premises and records, but also the persons of its
personnel and its customers/clients while in the
premises. After all, by its very nature, the business of
the petitioner bank is so impressed with public trust;
banks are mandated to exercise a higher degree of
diligence in the handling of its affairs than that expected
of an ordinary business enterprise.[41] Banks handle
transactions involving millions of pesos and properties
worth considerable sums of money. The banking
business will thrive only as long as it maintains the trust
and confidence of its customers/clients. Indeed, the
very nature of their work, the degree of responsibility,
care and trustworthiness expected of officials and
employees of the bank is far greater than those of
ordinary officers and employees in the other business
firms.[42] Hence, no effort must be spared by banks and
their officers and employees to ensure and preserve the
trust and confidence of the general public and its
customers/clients, as well as the integrity of its records
and the safety and well being of its customers/clients
while in its premises. For the said purpose, banks may
impose reasonable conditions or limitations to access
by non-employees to its premises and records, such as
the exclusion of non-employees from the working areas
for employees, even absent any imminent or actual
unlawful aggression on or an invasion of its properties
or usurpation thereof, provided that such limitations
are not contrary to the law.[43]
It bears stressing that property rights must be
considered, for many purposes, not as absolute,
unrestricted dominions but as an aggregation of
qualified privileges, the limits of which are prescribed
by the equality of rights, and the correlation of rights
and obligations necessary for the highest enjoyment of
property by the entire community of
[44] [45]
proprietors. Indeed, in Rellosa vs. Pellosis, we held
that:
Petitioner might verily be the owner of the land, with
the right to enjoy and to exclude any person from the
enjoyment and disposal thereof, but the exercise of
these rights is not without limitations. The abuse of
rights rule established in Article 19 of the Civil Code
requires every person to act with justice, to give
everyone his due; and to observe honesty and good
faith. When right is exercised in a manner which
discards these norms resulting in damage to another, a
legal wrong is committed for which the actor can be
held accountable.
Rights of property, like all other social and
conventional rights, are subject to such reasonable
limitations in their enjoyment and to such reasonable
restraints established by law.[46]
In this case, the Memorandum of the petitioner
Ongsiapco dated November 15, 1995, reads as follows:
ARTICLE 432
1. ANITA TAN, plaintiff-appellant,
vs.
STANDARD VACUUM OIL CO., JULITO STO DOMINGO,
IGMIDIO RICO, and RURAL TRANSIT CO.,
FACTS:
Anita Tan is the owner of the house of strong materials
based in the City of Manila, Philippines. On May 3, 1949,
the Standard Vacuum Oil Company ordered the delivery
to the Rural Transit Company at its garage at Rizal
Avenue Extension, City of Manila, of 1,925 gallons of
gasoline using a gasoline tank-truck trailer. The truck
was driven by Julito Sto. Domingo, who was helped
Igmidio Rico. While the gasoline was being discharged
to the underground tank, it caught fire, whereupon
Julito Sto. Domingo drove the truck across the Rizal
Avenue Extension and upon reaching the middle of the
street he abondoned the truck with continued moving
to the opposite side of the first street causing the
buildings on that side to be burned and detroyed. The
house of Anita Tan was among those destroyed and for
its repair she spent P12,000.
As an aftermath of the fire, Julito Sto. Domingo and
Imigidio Rico were charged with arson through reckless
imprudence in the Court of First Instance of Manila
where, after trial, both were acquitted, the court
holding that their negligence was not proven and the
fire was due to an unfortunate accident.
Anita Tan then brought the action against the Standard
Vacuum Oil Company and the Rural Transit Company;,
including the two employees, seeking to recover the
damages she has suffered for the destruction of her
house.
Defendants filed separate motions to dismiss alleging in
substance that (a) plaintiff's action is barred by prior
judgment and (b) plaintiff's complaint states no cause of
action; and this motion having been sustained, plaintiff
elevated the case to this Court imputing eight errors to
the court a quo.
Ruling: This ruling is so far as defendants Julio Sto.
Domingo and Imigidio Rico are concerned is correct.
The rule is that "extinction of the penal action does not
carry with it extinction of the civil, unless the extinction
proceeds from the declaration in a final judgment that
the fact from which the civil might arise did not exist"
(Rule 107, section 1-d, Rules of Court). This provision
means that the acquittal of the accused from the
criminal charge will not necessarily extinguish the civil
liability unless the court declares in the judgment that
the fact from which the civil liability might arise and did
not exist. Here it is true that Julito Sto. Domingo and
Igmidio Rico were acquitted, the court holding that they
were not responsible for the fire that destroyed the
house of the plaintiff,—which as a rule will not
necessarily extinguish their civil liability,—but the court
went further by stating that the evidence throws no
light on the cause of fire and that it was an unfortunate
accident for which the accused cannot be held
responsible. In our opinion, this declaration fits well into
the exception of the rule which exempts the two
accused from civil liability. When the court acquitted
the accused because the fire was due to an unfortunate
accident it actually said that the fire was due to a
fortuitous event for which the accused are not to
blame. It actually exonerated them from civil liability.
But the case takes a different aspect with respect to the
other defendants. For one thing, the principle of res
judicata cannot apply to them for the simple reason
that they were not included as co-accused in the
criminal case. Not having been included in the criminal
case they cannot enjoy the benefit resulting from the
acquittal of the accused. This benefit can only be
claimed by the accused if a subsequent action is later
taken against them under the Revised Penal Code. And
this action can only be maintained if proper reservation explosion of the gasoline deposit of the company which
is made and there is no express declaration that the would have resulted in a conflagration of much greater
basis of the civil action has not existed. It is, therefore, proportion and consequences to the houses nearby or
an error for the lower court to dismiss the case against surrounding it. It cannot be denied that this company is
these two defendants more so when their civil liability is one of those for whose benefit a greater harm has been
predicated or facts other than those attributed to the prevented, and as such it comes within the purview of
two employees in the criminal case. said penal provision. The acquittal of the accused
cannot, therefore, be deemed a bar to a civil action
Take, for instance, of the Standard Vacuum Oil against this company because its civil liability is
Company. this company is sued not precisely because of completely divorced from the criminal liability of the
supposed negligent acts of its two employees Julito Sto. accused. The rule regarding reservation of the right to
Domingo and Igmidio Rico but because of acts of its file a separate civil action does not apply to it.
own which might have contributed to the fire that
destroyed the house of the plaintiff. The complaint ARTICLE 324
contains definite allegations of negligent acts properly
attributable to the company which proven and not 1. DEL FIERRO VS. SEGUIRAN 152141 AUG 8,2011
refuted may serve as basis of its civil liability. Thus, in
FACTS:
paragraph 5 of the first cause of action, it is expressly
The Complaint alleged that plaintiffs (petitioners) were
alleged that this company, through its employees, failed
the owners and possessors of a parcel of landidentified
to take the necessary precautions or measures to insure
as Lot Nos. 1625 and 1626, formerly part of Lot No.
safety and avoid harm to person and damage to
1197, situated at Barangay Locloc, Palauig,Zambales. On
property as well as to observe that degree of care,
July 26, 1964, Lodelfo and Narciso Marcial unlawfully
precaution and vigilance which the circumstances justly
entered the land occupied by plaintiffs. Plaintiffs
demanded, thereby causing the gasoline they were
sued them for forcible entry before the Municipal Court
unloading to catch fire. the precautions or measures
of Palauig.
which this company has allegedly failed to take to
prevent fire are not clearly stated, but they are matters
The municipal court ruled in favor of plaintiffs.
of evidence which need not now be determined. Suffice
Consequently, Lodelfo and Narciso Marcial were
it to say that such allegation furnishes enough basis for
ejected from the premises. Meanwhile, on June
a cause of action against this company. There is no need
29, 1964,Marcial had mortgaged the lots to the Rural
for the plaintiff to make a reservation of her right to file
Bank of San Marcelino, Inc., which foreclosed the real
a separate civil action, for as this court already held in a
estate mortgage on December 26, 1972, and
number of cases, such reservation is not necessary
consolidated ownership over the lots on April 22, 1982.
when the civil action contemplated is not derived from
On October 28,1981, defendant Rene S. Seguiran
the criminal liability but one based on culpa
purchased from Lodelfo Marcial (deceased) the subject
aquiliana under the Old Civil Code (articles 1902 to
lots.
1910). These two acts are separate and distinct and
should not be confused one with the other. Plaintiff can
On November 9,1981, defendant purchased the subject
choose either (Asuncion Parker vs. Hon. A.J
lots again from the Rural Bank of San Marcelino, Inc.
Panlilio supra, p. 1.)
Moreover, plaintiffs alleged that Lodelfo Marcial,
predecessor-in-interest of defendant, had no legal right
Considering the above quoted law and facts, the cause
toconvey the said lots to plantiffs, since he was merely
of action against the Rural Transit Company can hardly
a deforciant in the said lots. Further, defendant,
be disputed, it appearing that the damage caused to the
withevident bad faith, fraudulently applied with the
plaintiff was brought about mainly because of the
Bureau of Lands for a free patent over the said lots,
desire of driver Julito Sto. Domingo to avoid greater evil
alleging that he was the actual possessor thereof, which
or harm, which would have been the case had he not
constitutes a false statement, since the plaintiffs were
brought the tank-truck trailer to the middle of the
the ones in actual possession. Despite knowing that the
street, for then the fire would have caused the
said lots were the subject of legal controversy before
the CFI of Iba ,Zambales, Branch II, defendant
fraudulently secured a certification from the Court of
Olongapo to prove that the said parcels of land
were not subject of any court action. As a consequence
of the foregoing illegal and fraudulent acts, defendant
was able to secure OCT Nos. P-7013 and P-7014 for Lot
Nos. 1625 and 1626,respectively.On May 20, 1988,
defendant filed his Answer, claiming that when he
bought the land in dispute, Lodelfo Marcial was no
longer its owner, but the Rural Bank of San Marcelino,
Inc., since Marcial failed to redeem the land within the
one-year period of redemption. His only purpose for
buying the land from the mortgagor, Lodelfo Marcial in
November 1981 was for the peaceful turn-over of the
property to him by Marcial. Defendant denied any
fraud, illegality or bad faith in securing OCT Nos. P-7013
and P-7014. He asserted that when he secured a
certification from the RTC on June 6, 1983, there was in
truth no pending case involving the subject properties
in any court in Zambales; hence, no bad faith could be
attributed to him. Defendant prayed that judgment be
rendered by the trial court dismissing the complaint
and ordering plaintiffs to pay him actual, moral
and exemplary damages as well as attorney’s fees and
the expenses of litigation. The trial court held that
plaintiffs (petitioners) failed to prove the identity of the
property sought to be recovered. The numerous
documents they presented to prove ownership of Lot
Nos. 1625 and 1626 showed that the properties
covered by sale or pacto de retro are located at Liozon,
Palauig, Zambales, while Lot Nos. 1625 and1626 are
located at Locloc, Palauig, Zambales; and there is no
clear showing that parts of Liozon becameLocloc.
Moreover, although the Del Fierros were declared as
the possessors of the property in the ejectment case
(forcible entry) filed by Generosa del Fierro against
Lodelfo and Narciso Marcial, the property concernedin
the said case is Lot No. 1197.
There was no evidence as to the original size of Lot No.
1197 and no proof thatnLot Nos. 1625 and 1626 formed
part of Lot No. 1197. Based on the foregoing, the trial
court dismissed plaintiffs’complaint.
ISSUE: whether petitioners are entitled to
reconveyance of Lot Nos. 1625 and 1626, and whether
the certificates of title of respondent to the said lots
should be cancelled.
HELD: NO. The requisites of reconveyance are provided
for in Article 434 of the Civil Code, thus: Art. 434. In an
action to recover, the property must be identified, and
the plaintiff must rely on the strength of his title and
not on the weakness of the defendant’s claim. Article
434 of the Civil Code provides that to successfully
maintain an action to recover the ownership of a real
property, the person who claims a better right to it
must prove two (2) things: first, the identity of the
landclaimed; and second, his title thereto.
In regard to the first requisite, in an
accion reinvindicatoria, the person who claims that he
has a better right to the property must first fix the
identity of the land he is claiming by describing the
location, area and boundaries thereof .
Anent the second requisite,
the claimant's title over the disputed area, the rule is
that a party can claim a right of ownership only over the
parcel of land that was the object of the deed.
In this case, petitioners failed to prove the identity of
the parcels of land sought to be recovered and their
title thereto. Petitioners contend that they are the
owners of Lot Nos. 1625 and 1626 by virtue of the
decision of theMunicipal Court of Palauig, Zambales in
the ejectment case (forcible entry) against Lodelfo and
NarcisoMarcial, declaring them (petitioners) as the ones
in possession of the property, which decision was
affirmed on appeal.
In addition, petitioners failed to establish which of the
deeds of sale, donation or documents evidencing
transfer of properties to their father, Miguel del Fierro,
which were adduced in evidence, covered Lot Nos. 1625
and 1626. A perusal of the documents ( DEED OF
SALE IN SPANISH )would readily show that the lots
indicated in theSpanish deeds of conveyence were
located in Barrio Lioson and not in Locloc, Palauig,
Zambales, the actual location of the Lot Nos. 1625 and
1626. As to the tax declarations, the real properties
declared therein, although situated in Locloc, Palauig,
Zambales were not designated as Lot Nos. 1625 and
1626 until the year 1985, the same year the said lots
were titled in the name of defendant-appellee. And
even without such designation of Lot Nos. 1625 and
1626, plaintiffs-appellants failed to show that
the separate lots which their predecessor-in-interest,
Don Miguel del Fierro, had acquired in the 1920’s, were
the very same land (or included therein) which have
been designated as Lot Nos. 1625 and 1626, or which
was covered by the land supposedly donated by their
grandfather to Don Miguel del Fierro. In other words,
the identity of the land being claimed by plaintiffs-
appellants could not be clearly established on the basis
of either the Spanish deeds of purchase and donation
or the old tax declarations presented by plaintiffs-
appellants.
Based on the foregoing, petitioners failed to prove the
identity of the properties sought to be recovered and
their title thereto. As regards the second issue raised,
petitioners contend that the Partial Pre-Trial Order
stated that duringthe pre-trial conference the following
facts were stipulated on:1) By the plaintiffs and
intervenor – that Lot 1625 is actually occupied by the
Del Fierros, while Lot 1626,Cad. Lot 364-D of the Palauig
is occupied by the heirs of Francisco Santos, who is
already deceased. The defendant did not admit this
fact.2 ) T h e p l a i n t i f f s and defendants—
that there exists a decision rendered by
t h e t h e n C o u r t o f F i r s t Instance of Zambales thru
Honorable Judge Pedro Cenzon in favor of the plaintiffs
in this case, affirming the decision of the Municipal Trial
Court of Palauig, Zambales where it was stated that the
plaintiffs arethe ones in possession of Lots 1625
and 1626, which is docketed as Civil Case No. 706-I
entitled"Generosa Jimenez Vda. de Del Fierro, et al.
versus Leodolfo Marcial, et al." The intervenor did no
tadmit this fact.
Petitioners’ contention does not persuade. As stated by
the trial court and the Court of Appeals, the ejectment
case entitled Generosa Jimenez Vda. de DelFierro, et al.
v. Leodolfo Marcial, et al. involved Lot No. 1197, and
there was no mention of Lot Nos. 1625 and1626
therein. The land involved in the ejectment case was
described by the plaintiffs (petitioners) in
their Complaint.
2. SAMPACO vs. LANTUD
FACTS:
1. On September 14, 1984, Hadji Sevad Mingca Lantud
filed an action to quiet title with damages before the
RTC of Lanao del Sur.
2. He claims that he is the owner of the 897-square
meter lot in Marawi City registered with the Register of
Deeds.
3. This action was instituted because Datu Kiram
Sampaco, through his daughter, forcibly and unlawfully
entered Lantud’s property and destroyed the nursery
buildings therein including the cabbage seedlings and
other improvements valued at 10k.
4. Moreover, the Bgy. Captain and his councilmen
issued a decision stating that Sampaco is the owner of
said land.
5. Sampaco also filed a counterclaim for damages
because of Lantud’s complaint and prayed for the
reconveyance of the land to him.
THE PARTIES’ CONTENTIONS:
1. Lantud claims that he and his predecessors-in-
interest have been in OCEN (open, continuous,
exclusive, and notorious) possession of the property for
more than 30 years.
2. Sampaco, on the other hand denied the complaint
and claims that:
a. Lantud’s title was obtained through fraud considering
that the land is a residential lot but the title was a free
patent only for agricultural lands; and that a
certification was issued by the Adm. Assistant of the
Natural Resources District of Marawi City stating that
the land has no record in said office;
b. the land is a portion of the 1,800 square meter land
he inherited from his father; and
c. he mortgaged the land to DBP and paid the real
estate taxes for it
ISSUE: Who is the true owner of the land?
RULING: Hadji Lantud. This is because:
a. the Torrens title is a conclusive evidence with respect
to land;
b. tax declarations and receipts cannot prevail over a
certificate of title;
c. the claim that the land is a residential lot was only
made by Sampaco and there was no declaration by the
President upon the recommendation of the Secretary of
Environmental and Natural Resources (Sec. 9 of CA
141);
d. there was no fraud – must be proven by clear and
convincing evidence; the certification is not sufficient;
the said officer was not presented as a witness;
e. at present, not only agricultural lands can be acquired
by free patent but also residential lands (RA 10023);
f. based on Article 434 of the Civil Code, to successfully
maintain an action to recover the ownership of a real
property, the person who claims it must prove: (1) the
identitiy of the land; and (2) the title thereto;
Art. 434 – In an action to recover, the property must be
identified and the plaintiff must rely on the strength of
his title and not in the weakness of defendant’s action.
Here, Sampaco failed to identify his larger property.
g. the counterclaim was beyond the 1-year prescriptive
period; the title was issued on May 22, 1981 and the
counterclaim was filed on October 15, 1984.
Note:
Issue on direct and indirect attack:
1. Indirect attack is the same with collateral attack.
2. Indirect or collateral attack: exists when in an action
to obtain a different relief, an attack on the judgment or
proceeding is nevertheless made as an incident thereof.
3. Direct attack: exists when the object of an action is to
annul or set aside such judgment or enjoin its
enforcement.
3. ROGELIO J. JAKOSALEM v. ROBERTO S. BARANGAN +
This case exemplifies the age-old rule that the one who
holds a Torrens title over a lot is the one entitled to its
possession.[1]
FACTS:
On August 13, 1966, respondent Col. Roberto S.
Barangan (respondent Barangan) entered into a Land
Purchase Agreement[5] with Ireneo S. Labsilica of Citadel
Realty Corporation whereby respondent Barangan
agreed to purchase on installment a 300 square meter
parcel of land, covered by Transfer Certificate of Title
(TCT) No. 165456,[6] located in Antipolo, Rizal.[7] Upon
full payment of the purchase price, a Deed of Absolute
Sale[8] was executed on August 31, 1976 in his favor.[9]
Consequently, the old title, TCT No. 171453,[10] which
was a transfer from TCT No. 165456,[11] was cancelled
and a new one, TCT No. N-10772,[12] was issued in his
name.[13] Since then, he has been dutifully paying real
property taxes for the said property.[14] He was not,
however, able to physically occupy the subject property
because as a member of the Philippine Air Force, he
was often assigned to various stations in the
Philippines.[15]
On December 23, 1993, when he was about to retire
from the government service, respondent Barangan
went to visit his property, where he was planning to
build a retirement home. It was only then that he
discovered that it was being occupied by petitioner
Godofredo Dulfo (petitioner Dulfo) and his family.[16]
On February 4, 1994, respondent Barangan sent a
letter[17] to petitioner Dulfo demanding that he and his
family vacate the subject property within 30 days. In
reply, petitioner Atty. Rogelio J. Jakosalem (petitioner
Jakosalem), the son-in-law of petitioner Dulfo, sent a
letter[18] claiming ownership over the subject property.
On February 19, 1994, respondent Barangan filed with
Barangay San Luis, Antipolo, Rizal, a complaint for
Violation of Presidential Decree No. 772 or the Anti-
Squatting Law against petitioners.[19] No settlement was
reached; hence, the complaint was filed before the
Prosecutor's Office of Rizal.[20] The case, however, was
dismissed because the issue of ownership must first be
resolved in a civil action.[21]
On May 28, 1994, respondent Barangan commissioned
Geodetic Engineer Lope C. Jonco (Engr. Jonco) of J.
Surveying Services to conduct a relocation survey of the
subject property based on the technical description
appearing on respondent Barangan's TCT.[22] The
relocation survey revealed that the property occupied
by petitioner Dulfo and his family is the same property
covered by respondent Barangan's title.[23]
On November 17, 1994, respondent Barangan filed a
Complaint[24] for Recovery of Possession, docketed as
Civil Case No. 94-3423, against petitioners Dulfo and
Jakosalem with the Regional Trial Court (RTC), Branch
73, Antipolo City. Respondent Barangan prayed that
petitioners Dulfo and Jakosalem be ordered to vacate
the subject property and pay a monthly rental of
P3,000.00 for the use and occupancy of the subject
property from May 1979 until the time the subject
property is vacated, plus moral and exemplary damages
and cost of suit.[25]
In their Answer with Counterclaim,[26] petitioners Dulfo
and Jakosalem claimed that the subject property was
assigned to petitioner Jakosalem by Mr. Nicanor
Samson (Samson);[27] that they have been in possession
of the subject property since May 8, 1979;[28] and that
the property covered by respondent Barangan's title is
not the property occupied by petitioner Dulfo and his
family.[29]
During the trial, respondent Barangan testified for
himself and presented three witnesses: (1) Gregorio
Estardo (Estardo), the caretaker of Villa Editha
Subdivision and Rodville Subdivision[30] employed by
Citadel Realty Corporation, who stated under oath that
petitioner Dulfo used to rent the lot owned by Dionisia
Ordialez (Estardo's Aunt) and that when petitioner
Dulfo could no longer pay the rent, he and his family
squatted on the property of respondent
[31]
Barangan; (2) Candida Lawis, a representative of the
Municipal Assessor of Antipolo, Rizal, who confirmed
that respondent Barangan is included in the list of
registered owners of lots in Villa Editha Subdivision III
and Rodville Subdivision[32] and; (3) Engr. Jonco, who
testified that the property occupied by petitioner Dulfo
and his family and the property owned by respondent
Barangan are one and the same.[33]
The defense moved for the dismissal of the case on
demurrer to evidence but was denied by the RTC.[34]
Thus, the defense presented petitioner Jakosalem who
maintained that he acquired the subject property by
assignment from its previous owner, Samson.[35] The
defense likewise requested an ocular inspection of the
subject property to show that it is not the property
covered by respondent Barangan's title.[36] However,
instead of granting the request, the RTC issued an
Order[37] dated September 15, 2000 directing Engr.
Romulo Unciano of the Department of Environment and
Natural Resources (DENR) Antipolo City to conduct a
resurvey or replotting of land based on the title of
respondent Barangan and to submit a report within 15
days.[38] The resurvey, however, did not push through
because the defense in an Omnibus Motion[39] dated
September 20, 2000 abandoned its request for an
ocular inspection claiming that it was no longer
necessary.[40]
Issues: WHETHER X X X [BARANGAN] HAS FULLY
SATISFIED THE REQUIREMENTS OF ARTICLE 434 OF THE
CIVIL CODE X X X;
RULING: Respondent Barangan is entitled
to recover the subject property
Article 434 of the Civil Code provides that "[i]n an action
to recover, the property must be identified, and the
plaintiff must rely on the strength of his title and not on
the weakness of the defendant's claim." In other
words, in order to recover possession, a person must
prove (1) the identity of the land claimed, and (2) his
title.[58]
In this case, respondent Barangan was able to prove the
identity of the property and his title. To prove his title
to the property, he presented in evidence the following
documents: (1) Land Purchase Agreement;[59] (2) Deed
of Absolute Sale;[60] (3) and a Torrens title registered
under his name, TCT No. N-10772.[61] To prove the
identity of the property, he offered the testimonies of
Engr. Jonco, who conducted the relocation
survey,[62] and Estardo, the caretaker of the subdivision,
who showed respondent Barangan the exact location of
the subject property.[63] He likewise submitted as
evidence the Verification Survey Plan of Lot 11, Block
5, (LRC) Psd-60846, which was plotted based on the
technical description appearing on respondent
Barangan's title.[64]
Petitioners' contention that the relocation survey was
done in violation of their agreement deserves scant
consideration. Petitioners were informed[65] beforehand
of the scheduled relocation survey on May 29, 1994 but
they opted not to attend. In fact, as testified by
respondent Barangan and Engr. Jonco, the relocation
survey had to be postponed several times because
petitioners refused to participate.[66] By refusing to
attend and participate in the relocation survey, they are
now estopped from questioning the results of the
relocation survey.[67]
Records also show that during the trial, the RTC ordered
the DENR to conduct a resurvey of the subject property;
but petitioners moved that the same be abandoned
claiming that the resurvey would only delay the
proceedings.[68] To us, the persistent refusal of
petitioners to participate in the relocation survey does
not speak well of their claim that they are not occupying
respondent Barangan's property. In fact, their
unjustified refusal only shows either of two things: (1)
that they know for a fact that the result would be
detrimental to their case; or (2) that they have doubts
that the result would be in their favor.
Neither is there any discrepancy between the title
number stated in the Land Purchase Agreement and the
Deed of Absolute Sale. As correctly found by the CA,
TCT No. 171453, the title stated in the Deed of Absolute
Sale, is a transfer from TCT No. 165456, the title stated
in the Land Purchase Agreement.[69] Hence, both TCTs
pertain to the same property.
ARTICLE 435
1. AIR TRANSPORTATION OFFICE, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS and MACTAN-CEBU
INTERNATIONAL AIRPORT AUTHORITY, Petitioners,
versus ANGELES URGELLO TONGOY and the HEIRS OF
PILAR U. ARCENAS, namely, ENRIQUE ARCENAS,
MONETTE ARCENAS SANCHEZ, RENATO U. A
FACTS:
In 1963, the Republic of the Philippines instituted
expropriation proceedings for the improvement and
expansion of the Lahug Airport in Cebu City. Among the
properties affected were Lot Nos. 913-F and 913-G
belonging to respondents.[3] The trial court ruled in
favor of the government. The respondents filed an
appeal.[4]
Pending the appeal, the parties entered into a verbal
compromise agreement whereby the owners of the
affected lots agreed to withdraw their appeal in
consideration of a commitment that, pursuant to an
established policy involving similar cases, the subject
lots would be resold to them at the same price at which
they were expropriated in the event that the Civil
Aeronautics Administration (CAA), predecessor of
petitioner Air Transportation Office (ATO),[5] later
abandoned the Lahug Airport.[6] Consequently, the
respondents withdrew their appeal.[7]
In accordance with the expropriation, the subject
properties were registered in the name of the
government. However, the projected improvement and
expansion plan did not materialize as ATO decided to
move its operations to the Mactan Airbase and to
instead lease out the area of the Lahug Airport.
Petitioner Department of Public Works and Highways
constructed a building on a portion of the subject
properties.[8]
In 1964 or a year after the expropriation, respondents
requested the repurchase of the lots in accordance with
the commitment of the CAA. On August 10, 1964, the
CAA responded that there could still be a need to use
the Lahug Airport as an emergency DC-3 airport. It
reiterated, however, that “should this office dispose
and resell the properties which may be found out to be
no longer necessary as an airport, then the policy of this
office is to give priority to the former owners subject to
the approval of the President.”[9]

On January 7, 1967, respondents reiterated their
offer to repurchase the properties, referring to an
executive order of President Ferdinand Marcos which
directed the closure of the Lahug Airport and
transferred all aviation operations to Mactan Airbase.
The Director of the CAA, in a letter dated Mach 28,
1967, informed respondents that their office had no
plans yet of abandoning Lahug Airport.[10]
In a memorandum dated November 29, 1989 to the
Secretary of the Department of Transportation,[11]
President Corazon Aquino directed the transfer of
general aviation operations of the Lahug Airport to the
Mactan International Airport before the end of 1990,
and upon such transfer, to close the Lahug Airport. By
virtue of RA 6958,[12] the management and aeronautics
operations of Lahug Airport were transferred to
petitioner Mactan-Cebu International Airport Authority
(MCIAA).[13]
In 1992, respondents filed an action for recovery of
possession and reconveyance of ownership of
properties with damages in the Regional Trial Court
(RTC), Cebu City, Branch 21 against petitioners.[14]
Petitioners did not present any testimonial or
documentary evidence. Neither did they cross-examine
the witness presented by respondents. They also failed
to submit any memorandum despite the ample time
given to file it.[15]
The RTC rendered a decision on December 27, 1995
ordering petitioners to restore possession and
ownership of Lot Nos. 913-F and 913-G to respondents
and to remove all improvements thereon upon
reimbursement of the just compensation paid to
respondents at the time of expropriation. It also
ordered the Register of Deeds of Cebu City to issue new
transfer certificates of title in the name of respondents,
upon payment of the proper fees.[16] It held that
respondents were able to prove the oral agreement
that the lots could be repurchased by their previous
owners for the same price at which they were
expropriated in case the CAA abandoned Lahug Airport.
Aggrieved, petitioners filed an appeal in the CA. In a
decision dated March 31, 2004, the CA affirmed the RTC
judgment. It denied reconsideration in a resolution
promulgated on August 2, 2006.
ISSUE: Whether the respondents were able to prove
that there was an oral compromise agreement that
entitled them to repurchase the expropriated lots.
Ruling: The issue raised by petitioners is factual. Both
the RTC and CA found that there was such an
agreement and that petitioners failed to rebut the
evidence presented by respondents. We find no reason
to disturb their findings.
Moreover, in Heirs of Timoteo Moreno and Maria Rotea
v. MCIAA[17] involving lots similarly expropriated for
the expansion of the same Lahug Airport, we recognized
the right of the previous owners who were able to
prove the commitment of the government to allow
them to repurchase their land:
The indisputable certainty in the present case is that
there was a prior promise by the predecessor of the
respondent that the expropriated properties may be
recovered by the former owners once the airport is
transferred to Mactan, Cebu. In fact, the witness for the
respondent testified that 15 lots were already
reconveyed to their previous owners.[18]
MCIAA v. CA[19] and ATO v. Gopuco[20] cited by
petitioners are not applicable here. In MCIAA, the
previous owner failed to prove that there was a
compromise settlement.[21] In ATO, the previous
owner was not a party to the compromise
agreements.[22]
2. REPUBLIC vs. LIM
GR no. 161656, June 29, 2005
FACTS:
In 1938, the Republic instituted a special civil action for
expropriation of a land in Lahug, Cebu City forthe
purpose of establishing a military reservation for the
Philippine Army. The said lots were registered in the ISSUE: Whether the Republic has retained ownership of
name of Gervasia and Eulalia Denzon. The Republic Lot 932 despite its failure to pay respondents’
deposited P9,500 in the PNB then took possession predecessors-in-interest the just compensation therefor
of the lots. Thereafter, on May 1940, the CFI rendered pursuant to the judgment of the CFI rendered as early
its Decision ordering the Republic to pay the Denzons as May 14, 1940
the sum of P4,062.10 as just compensation. The
Denzons appealled to the CA but it was dismissed on RULING: There are two stages in expropriation. The
March 11, 1948. An entry of judgment was made on decisions of the court in both instances are final and
April 5, 1948. appealable. Multiple appeals are allowed in this
case. www.pinoylegal.com
In 1950, one of the heirs of the Denzons, filed with the  Stage 1: Determination of the Right to Expropriate
National Airports Corporation a claim for rentals for the
The government or LGU will file a verified complaint:
two lots, but it "denied knowledge of the matter." On
a) stating its right and the purpose for its exercise
September 6, 1961, Lt. Cabal rejected the claim but
b) description of the property
expressed willingness to pay the appraised value of the
c) name of all persons owning, or claiming to own, or
lots within a reasonable time. For failure of the Republic
occupying it, showing as far as practicable their
to pay for the lots, on September 20, 1961, the
separate interest
Denzons· successors-in-interest, Valdehueza and
d) if the title to the property is in the name of the
Panerio, filed with the same CFI an action for recovery
Republic of the Philippines but is occupied by a private
of possession with damages against the Republic and
individual, or if the title is obscure or doubtful, this fact
AFP officers in possession of the property. On
must be stated
November 1961, Titles of the said lots were issued in
Upon filing of the complaint, the expropriator may
the names of Valdehueza and Panerio with the
enter the property after depositing a certain amount
annotation "subject to the priority of the National
with an authorized government depositary. The value
Airports Corporation to acquire said parcels of land,
of the deposit will vary – if it is real property, the
Lots 932 and939 upon previous payment of a
assessed value for tax purposes, and if it is personal
reasonable market value". On July 1962, the CFI
property, the court will provisionally determine it.
promulgated its Decision in favor of Valdehueza and
If it is an LGU expropriating a real property, the deposit
Panerio, holding that they are the owners and have
should be equal to 15% of the market value of the
retained their right as such over lots because of the
property based on the tax declaration.
Republic’s failure to pay the amount of P
If the acquisition involves property to be used for
national government infrastructure projects (RA 8794),
4,062.10,adjudged in the expropriation proceedings.
the government should deposit 100% of the value of
However, in view of the annotation on their land titles,
the property based on the current zonal valuation of
they were ordered to execute a deed of sale in favor of
the Bureau of Internal Revenue, including the value of
the Republic. They appealed the CFI·s decision to the
improvements, if any. www.pinoylegal.com
SC. The latter held that Valdehueza and Panerio are still
These amounts are only provisional; the purpose is only
the registered owners of Lots 932 and 939, there having
to allow the plaintiff/expropriator to enter the property
been no payment of just compensation by the Republic.
while the case is pending. It is for the protection of the
SC still ruled that they are not entitled to recover
property owner, who, in the meantime, will be deprived
possession of the lots but may only demand the
of the use and enjoyment of his/her property. If the
payment of their fair market value. Meanwhile, in 1964,
case pushes through, the court will still have to
Valdehueza and Panerio mortgaged Lot 932 to Vicente
determine the amount of just compensation to be paid
Lim,herein respondent, as security for their loans. For
to the owner in exchange for his or her
their failure to pay Lim despite demand, he had the
property. www.pinoylegal.com
mortgage foreclosed in 1976. The lot title was issued in
Then, the court may either dismiss the complaint or
his name.On 1992, respondent Lim filed a complaint for
issue an Order of Expropriation declaring the plaintiff’s
quieting of title
right to expropriate. www.pinoylegal.com
 Stage 2: Determination of Just Compensation
The just compensation is equivalent to the fair market
value of the property – that is the price agreed upon by
a buyer not compelled to buy and a seller not
compelled to sell. This is to avoid a price that is either
lower or higher than the actual market
value. www.pinoylegal.com
The court will determine the just compensation with
the aid of commissioners. The court will appoint not
more than three competent and disinterested persons.
They are to submit a report with recommendations to
the court after they have viewed and examined the
property. The court may wholly or partially accept or
reject their report, securing the rights of both parties in
either case. www.pinoylegal.com
Just compensation means not only the correct
determination of the amount to be paid to the owner,
but also payment within reasonable time after taking.
Without prompt payment, compensation cannot be
considered just. (Republic vs. Lim, June 29, 2005)
3. NPC v. Heirs of f Sangkay (All Surnamed
Macabangkit)
FACTS:
Pursuant to its legal mandate under Republic Act No.
6395 (An Act Revising the Charter of the National Power
Corporation), NPC undertook the Agus River
Hydroelectric Power Plant Project in the 1970s to
generate electricity for Mindanao. The project included
the construction of several underground tunnels to be
used in diverting the water flow from the Agus River to
the hydroelectric plants.
On November 21, 1997, the respondents as the owners
of land with an area of 221,573 square meters situated
in Ditucalan, Iligan City, sued NPC in the RTC for the
recovery of damages and of the property, with the
alternative prayer for the payment of just
compensation. They alleged that they had belatedly
discovered that one of the underground tunnels of NPC
that diverted the water flow of the Agus River for the
operation of the Hydroelectric Project in Agus V, Agus VI
and Agus VII traversed their land; that their discovery
had occurred in 1995 after Atty. Saidali C. Gandamra,
President of the Federation of Arabic Madaris School,
had rejected their offer to sell the land because of the
danger the underground tunnel might pose to the
proposed Arabic Language Training Center and Muslims
Skills Development Center; that such rejection had been
followed by the withdrawal by Global Asia Management
and Resource Corporation from developing the land
into a housing project for the same reason; that Al-
Amanah Islamic Investment Bank of the Philippines had
also refused to accept their land as collateral because of
the presence of the underground tunnel; that the
underground tunnel had been constructed without their
knowledge and consent; that the presence of the tunnel
deprived them of the agricultural, commercial,
industrial and residential value of their land; and that
their land had also become an unsafe place for
habitation because of the loud sound of the water
rushing through the tunnel and the constant shaking of
the ground, forcing them and their workers to relocate
to safer grounds.
In its answer with counterclaim, NPC countered that the
Heirs of Macabangkit had no right to compensation
under section 3(f) of Republic Act No. 6395, under
which a mere legal easement on their land was
established; that their cause of action, should they be
entitled to compensation, already prescribed due to the
tunnel having been constructed in 1979; and that by
reason of the tunnel being an apparent and continuous
easement, any action arising from such easement
prescribed in five years.
ISSUE:
1) Whether the CA and the RTC erred in holding that
there was an underground tunnel traversing the Heirs
of Macabangkits land constructed by NPC; and
2) Whether the Heirs of Macabangkits right to claim
just compensation had prescribed under section 3(i) of
Republic Act No. 6395, or, alternatively, under Article
620 and Article 646 of the Civil Code.
HELD: We uphold the liability of NPC for payment of
just compensation.
POLITICAL LAW: just compensation
The action to recover just compensation from the State
or its expropriating agency differs from the action for
damages. The former, also known as inverse
condemnation, has the objective to recover the value of
property taken in fact by the governmental defendant,
even though no formal exercise of the power of
eminent domain has been attempted by the taking
agency.Just compensation is the full and fair equivalent
of the property taken from its owner by the
expropriator. The measure is not the takers gain, but
the owner's loss. The word just is used to intensify the
meaning of the word compensation in order to convey
the idea that the equivalent to be rendered for the
property to be taken shall be real, substantial, full, and
ample. On the other hand, the latter action seeks to
vindicate a legal wrong through damages, which may be
actual, moral, nominal, temperate, liquidated, or
exemplary. When a right is exercised in a manner not
conformable with the norms enshrined in Article 19 and
like provisions on human relations in the Civil Code,and
the exercise results to the damage of another, a legal
wrong is committed and the wrongdoer is held
responsible.
The two actions are radically different in nature and
purpose. The action to recover just compensation is
based on the Constitution while the action for damages
is predicated on statutory enactments. Indeed, the
former arises from the exercise by the State of its
power of eminent domain against private property for
public use, but the latter emanates from the
transgression of a right. The fact that the owner rather
than the expropriator brings the former does not
change the essential nature of the suit as an inverse
condemnation, for the suit is not based on tort, but on
the constitutional prohibition against the taking of
property without just compensation. It would very well
be contrary to the clear language of the Constitution to
bar the recovery of just compensation for private
property taken for a public use solely on the basis of
statutory prescription.
Due to the need to construct the underground tunnel,
NPC should have first moved to acquire the land from
the Heirs of Macabangkit either by voluntary tender to
purchase or through formal expropriation proceedings.
In either case, NPC would have been liable to pay to the
owners the fair market value of the land, for Section
3(h) of Republic Act No. 6395 expressly requires NPC to
pay the fair market value of such property at the time of
the taking, thusly:
(h)To acquire, promote, hold, transfer, sell, lease, rent,
mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry
out the purposes for which the Corporation was
created:Provided, That in case a right of way is
necessary for its transmission lines, easement of right of
way shall only be sought:Provided, however,That in
case the property itself shall be acquired by purchase,
the cost thereof shall be the fair market value at the
time of the taking of such property.
POLITICAL LAW: NPCs construction of the tunnel
constituted taking of the land, and entitled owners to
just compensation
The Court held in National Power Corporation v.
Ibrahim that NPC was liable to pay not merely an
easement fee but rather the full compensation for land
traversed by the underground tunnels,viz:
In disregarding this procedure and failing to recognize
respondents ownership of the sub-terrain portion,
petitioner took a risk and exposed itself to greater
liability with the passage of time. It must be emphasized
that the acquisition of the easement is not without
expense. The underground tunnels impose limitations
on respondents use of the property for an indefinite
period and deprive them of its ordinary use. Based upon
the foregoing, respondents are clearly entitled to the
payment of just compensation.Notwithstanding the fact
that petitioner only occupies the sub-terrain portion, it
is liable to pay not merely an easement fee but rather
the full compensation for land. This is so because in this
case, the nature of the easement practically deprives
the owners of its normal beneficial use. Respondents, as
the owner of the property thus expropriated, are
entitled to a just compensation which should be neither
more nor less, whenever it is possible to make the
assessment, than the money equivalent of said
property.
Here, like in National Power Corporation v. Ibrahim,
NPC constructed a tunnel underneath the land of the
Heirs of Macabangkit without going through formal
expropriation proceedings and without procuring their
consent or at least informing them beforehand of the
construction. NPCs construction adversely affected the
owners rights and interests because the subterranean
intervention by NPC prevented them from introducing
any developments on the surface, and from disposing of
the land or any portion of it, either by sale or mortgage.
We agree with both the RTC and the CA that there was
a full taking on the part of NPC, notwithstanding that
the owners were not completely and actually
dispossessed. It is settled that the taking of private
property for public use, to be compensable, need not
be an actual physical taking or appropriation. Indeed,
the expropriators action may be short of acquisition of
title, physical possession, or occupancy but may still
amount to a taking. Compensable taking includes
destruction, restriction, diminution, or interruption of
the rights of ownership or of the common and
necessary use and enjoyment of the property in a lawful
manner, lessening or destroying its value. It is neither
necessary that the owner be wholly deprived of the use
of his property, nor material whether the property is
removed from the possession of the owner, or in any
respect changes hands.
As a result, NPC should pay just compensation for the
entire land. In that regard, the RTC pegged just
compensation at P500.00/square meter based on its
finding on what the prevailing market value of the
property was at the time of the filing of the complaint,
and the CA upheld the RTC.
ARTICLE 437
1. NPC v. Ibrahim, et al., - Eminent Domain
G.R. No. 168732, June 29, 2007
The NPC constructed underground tunnels on the
property of the respondents without their knowledge
and consent and without any expropriation
proceeding. It contended that it constructed an
easement on the property. Was there taking of the
property considering that the owners were deprived of
their beneficial use and enjoyment of the same, hence,
entitled to just compensation?
Yes. The manner in which the easement was created by
the NPC, violated the due process rights of the owners
as it was without notice and indemnity to them and did
not go through proper expropriation proceedings. NPC
could have, at any time, validly exercised the power of
eminent domain to acquire the easement over the
property as this power encompasses not only the taking
or appropriation of title to and possession of the
expropriated property but likewise covers even the
imposition of a mere burden upon the owner of the
condemned property. (Rep. v. PLDT, 136 Phil. 20
(1969)). Significantly, though, landowners cannot be
deprived of their right over their land until
expropriation proceedings are instituted in court. The
court must then see to it that the taking is for pubic use,
that there is payment of just compensation and that
there is due process of law.
In disregarding this procedure and failing to recognize
the owners’ ownership of the sub-terrain portion, NPC
took a risk and exposed itself to greater liability with the
passage of time. It must be emphasized that the
acquisition of the easement is not without
expense. The underground tunnels imposed limitations
on the owners’ use of the property for an indefinite
period and deprived them of its ordinary use. The
owners are clearly entitled to the payment of just
compensation. Notwithstanding the fact that NPC only
occupied the sub-terrain portion, it is liable to pay not
merely an easement fee but rather the full
compensation for the land. This is so because, the
nature of the easement practically deprived the
owners of its normal beneficial use. The owners, as the
owners of the property thus expropriated, are entitled
to a just compensation which should be neither more
nor less, whenever it is possible to make the
assessment, than the money equivalent of said
property. (NPC v. Ibrahim, et al., G.R. No. 168732, June
29, 2007).
Valuation of the property.
NPC contended that if ever it is liable, it should be
made to pay the value of the land from the time it
constructed the tunnels. Is the contention correct?
Why?
No. To it to use the date it constructed the tunnels as
the date of valuation would be grossly unfair. First, it
did not enter the land under warrant or color of legal
authority or with intent to expropriate the same. It did
not notify the owners and wrongly assumed that it had
the right to dig the tunnels under their property.
Secondly, the improvements introduced in no way
contributed to an increase in the value of the land. The
valuation should be based at the time of the discovery
of the construction of the underground tunnels. (NPC
v. Ibrahim, et al., G.R. No. 168732, June 29, 2007).
It is undisputed that there is a legal easement of right-
of-way in favor of the Republic. Andaya’s transfer
certificates of title contained the reservation that the
lands covered thereby are subject to the provisions of
the Land Registration Act and the Public Land Act.
Section 112 of the Public Land Act provides that land
granted by patent shall be subject to a right-of-way
not exceeding 60 meters in width for public highways,
irrigation ditches, aqueducts, and other similar works
of the government or any public enterprise, free of
charge, except only for the value of the improvements
existing thereon that may be affected. In view of this,
the Court of Appeals declared that all Republic needs
to do is to enforce such right without having to initiate
expropriation proceedings and without having to pay
any just compensation. Hence, the Republic may
appropriate the 701 square meters necessary for the
construction of the floodwalls without paying for it. Is
the Republic liable for just compensation if in
enforcing the legal easement of right-of-way on a
property, the remaining area would be rendered
unusable and uninhabitable?
Yes, it is liable to pay consequential damages if in
enforcing the legal easement on Andaya’s property, the
remaining area would be rendered unusable and
uninhabitable. “Taking”, in the exercise of the power of
eminent domain, occurs not only when the
government actually deprives or dispossess the
property owner of his property or of its ordinary use,
but also when there is a practical destruction or
material impairment of the value of his property. Using
this standard, there was undoubtedly a taking of the
remaining area of Andaya’s property. True, no burden
was imposed thereon and Andaya still retained title and
possession of the property. But, the nature and the
effect of the floodwalls would deprive Andaya of the
normal use of the remaining areas. It would prevent
ingress and egress to the property and turn it into a
catch basin for the floodwaters coming from the Agusan
River.
For this reason, Andaya is entitled to payment of just
compensation, which must be neither more nor less
than the monetary equivalent of the land. One of the
basic principles enshrined in our Constitution is that no
person shall be deprived of his private property without
due process of law; and in expropriation cases, an
essential element of due process is that there must be
just compensation whenever private property is taken
for public use. Noteworthy, Section 9, Article III of our
Constitution mandates that private property shall not
be taken for public use without just compensation.
(Rep. v. Lim, G.R. No. 161656, June 29, 2005, 462 SCRA
265; Rep. v. Andaya, G.R. No. 160656, June 15, 2007).
RIGHTS OF ACCESSION
ART. 445
1. G.R. No. L-23352 December 31, 1925
THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO.,
LTD., INC.,
JUAN M. POIZAT, ET AL., defendants.
GABRIELA ANDREA DE COSTER, .
FACTS:
August 25, 1905, the appellant, with his consent
executed to and in favor of her husband, Juan M. Poizat,
a general power of attorney, which among other things,
authorized him to do in her name, place and stead, and
making use of her rights and actions, the following
things:
To loan or borrow any amount in cash or
fungible conditions he may deem convenient
collecting or paying the principal or interest, for
the time, and under the principal of the
interest, when they respectively should or
private documents, and making there
transactions with or without mortgage, pledge
or personal securities.
November 2, 1912, Juan M. Poizat applied for and
obtained from the plaintiff a credit for the sum of
10,000 Pounds Sterling to be drawn on the" Banco
Espanol del Rio de la Plata" in London not later than
January, 1913. Later, to secure the payment of the loan,
he executed a mortgage upon the real property of his
wife, the material portions.
For failure to pay the loan, on November 12, 1923, the
plaintiff brought an action against the defendants to
foreclose the mortgage. In this action, the summons
was served upon the defendant Juan M. Poizat only,
who employed the services of Antonio A. Sanz to
represent the defendants. The attorneys filed a general
appearance for all of them, and later an answer in the
nature of a general denial.
February 18, 1924, when the case was called for trial,
Jose Galan y Blanco in open court admitted all of the
allegations made in the compliant, and consented that
judgment should be rendered as prayed for . Later, Juan
M. Poizat personally, for himself and his codefendants,
file an exception to the judgment and moved for a new
trial, which was denied March 31, 1924.
August 22, 1924, execution was issued directing the sale
of the mortgaged property to satisfy the judgment.
September 18, 1924, the property, which had an
assessed value of P342,685, was sold to the plaintiff for
the sum of P100,000.
September 23, 1924, and for the first time, the
appellant personally appeared by her present attorney,
and objected to the confirmation of the sale, among
other things, upon illegally executed, and is null and
void, because the agent of this defendant was not
authorized to execute it. That there was no
consideration. That the plaintiff, with full knowledge
that J. M. Poizat was acting beyond the scope of his
authority, filed this action to subject the property of this
defendant to the payment of the debt which, as to
appellant, was not a valid contract. That the judgment
was rendered by confession when the plaintiff and J. M.
Poizat knew that Poizat was not authorized to confess
judgment, and that the proceeding was a constructive
fraud. That at the time the action was filed and the
judgment rendered, this defendant was absent from the
Philippine Islands, and had no knowledge of the
execution of the mortgage. That after the judgment of
foreclosure became final and order of the sale of the
property was made, that this defendant for the first
time learned that he mortgage contract was tainted
with fraud, and that she first knew and learned of such
things on the 11th of September, 1924. That J. M. Poizat
was not authorized to bind her property to secure the
payment of his personal debts. That the plaintiff knew
that the agent of the defendant was not authorized to
bind her or her property. That the mortgage was
executed to secure a loan of 10,000 Pounds which was
not made to this defendant or for her benefit, but was
made to him personally and for the personal use and
benefit of J. M. Poizat.
Among other things, the mortgage in question, marked
Exhibit B, was introduced in evidence, and made a part
of the record.
For the reasons stated in the decision of this court in
the Bank of the Philippine Islands vs. De Coster, the
alleged service of the summons in the foreclosure suit
upon the appellant was null and void. In fact, it was
made on J. M. Poizat only, and there is no claim or
pretense that any service of summons was ever made
upon her. After service was made upon him, the
attorneys in question entered their appearance for all of
the defendants in the action, including the appellant
upon whom no service was ever made, and file an
answer for them. Later, in open court, it was agreed
that judgment should be entered for the plaintiff as
prayed for in its complaint.
The appellant contends that the appearance made by
the attorneys for her was collusive and fraudulent, and
that it was made without her authority, and there
maybe some truth in that contention. It is very apparent
that t the attorneys made no effort to protect or defend
her legal rights, but under our view of the case, that
question is not material to this decision.
The storm center of this case is the legal force and
effect of the real mortgage in question , by whom and
for whom it was executed, and upon whom is it binding,
and whether or not it is null and void as to the
appellant.
It is admitted that the appellant gave her husband, J. M.
Poizat, the power of attorney in question, and that it is
in writing and speaks for itself. If the mortgage was
legally executed by her attorney in fact for her and in
her name as her act and deed, it would be legal and
binding upon her and her property. If not so executed, it
is null and void.
It appears upon the face of the instrument that J. M.
Poizat as the husband of the wife, was personally a
party to the mortgage, and that he was the only
persona who signed the mortgage. and the he was the
only person who signed the mortgage. It does not
appear from his signature that he signed it for his wife
or as her agent or attorney in fact, and there is nothing
in his signature that would indicate that in the signing of
it by him, he intended that his signature should bind his
wife. It also appears from the acknowledgment of the
instrument that he executed it as his personal act and
deed only, and there is nothing to show that he
acknowledge it as the agent or attorney in fact of his
wife, or as her act and deed.
The mortgage recites that it was entered into by and
between Juan M. Poizat in his own behalf and as
attorney in fact of his wife. That the record title of the
mortgaged property is registered in the name of his
wife, Dona Gabriela Andrea de Coster. That they were
legally married, and that the marriage between them
has never been dissolved. That with the object of
constructing a new building on the land. the six
warehouses thereon were demolished, and that a new
building was erected. That the property is the subject of
a new registration in which it must be made to appear
that the land belongs in fee simple and in full ownership
as the paraphernal property of the wife, and that the
new building thereon is the property of the conjugal
partnership. "That the Philippine Sugar Estates
Development Company, Ltd., having granted to Don
Juan M. Poizat a credit of 10,000 Pounds Sterling with
the mortgage upon the real property above described,"
that the Development Company "hereby grants Don
Juan M. Poizat a credit in the amount of 10,000 Pounds
Sterling which the said Mr. Poizat may use, etc." That
should he personally or on behalf of his wife use the
credit he acknowledges, that he and his principal are
indebted to the Development Company in the sum of
10,000 Pounds Sterling which "they deem to have
received as a loan from the said commercial entity."
That he binds himself and his wife to pay that amount
with a yearly interest of 9 per cent, payable quarterly.
That as security for the payment of said credit in the
case Mr. Poizat should receive the money at any time,
with its interest, "the said Mr. Poizat in the dual
capacity that above mentioned binds himself, should he
receive the amount of the credit."
It thus appears that at the time the power of attorney
and the mortgage were executed, Don Juan M. Poizat
and Gabriela Andrea de Coster were husband and wife,
and that the real property upon which the mortgage
was her sole property before her marriage, and that it
was her paraphernal property at the time the mortgage
was executed, and that the new building constructed on
the land was the property of the conjugal partnership.
It is contended that the instrument upon its face shows
that its purpose and intent was to bind the wife. But it
also shows upon its face that the credit was granted to
Don Juan M. Poizat which he might use within the
"entire month of January."
Any authority which he had to bind his wife should be
confined and limited to his power of attorney.
Giving to it the very broadest construction, he would
not have any authority to mortgage her property, unless
the mortgage was executed for her "and in her name,
place or stead," and as her act and deed. The mortgage
in question was not so executed. it was signed by Don
Juan M. Poizat in his own name, his own proper person,
and by him only, and it was acknowledge by him in his
personal capacity, and there is nothing in either the
signature or acknowledgment which shows or tends to
show that it was executed for or on behalf of his wife or
"in her name, place or stead."
It is contended that the instrument shows upon its face
that it was intended to make the wife liable for his debt,
and to mortgage her property to secure its payment,
and that his personal signature should legally be
construed as the joined or dual signature of both the
husband and that of the wife as her agent. That is to
say, construing the recitals in the mortgage and the
instrument as a whole, his lone personal signature
should be construed in a double capacity and binding
equally and alike both upon the husband and the wife.
No authority has been cited, and none will ever be
found to sustain such a construction.
As the husband of the wife, his signature was necessary
to make the mortgage valid. In other words, to make it
valid, it should have been signed by the husband in his
own proper person and by him as attorney in fact for his
wife, and it should have been executed by both
husband and wife, and should have been so
acknowledged.
There is no principle of law by which a person can
become liable on a real mortgage which she never
executed either in person or by attorney in fact. It
should be noted that this is a mortgage upon real
property, the title to which cannot be divested except
by sale on execution or the formalities of a will or deed.
For such reasons, the law requires that a power of
attorney to mortgage or sell real property should be
executed with all of the formalities required in a deed.
For the same reason that the personal signature of
Poizat, standing alone, would not convey the title of his
wife in her own real property, such a signature would
not bind her as a mortgagor in real property, the title to
which was in her name.
That is good law. Applying it to the facts, under his
power of attorney, Juan M. Poizat may have had
authority to borrow money and mortgage the real
property of his wife, but the law specifies how and in
what manner it must be done, and the stubborn fact
remains that, as to the transaction in question, that
power was never exercised. The mortgage in question
was executed by him and him only, and for such reason,
it is not binding upon the wife, and as to her, it is null
and void.
It follows that the whole decree against her and her
paraphernal property and the sale of that property to
satisfy the mortgage are null and void, and that any title
she may have had in or to her paraphernal property
remains and is now vested in the wife as fully and as
absolutely as if the mortgage had never been executed,
the decree rendered or the property sold. As to Don
Juan M. Poizat, the decree is valid and binding, and
remains in full force and effect.
It is an undisputed fact, which appears in the mortgage
itself, that the land in question was the paraphernal
property of the wife, but after the marriage the old
buildings on the property were torn down and a new
building constructed and, in the absence of evidence to
the contrary, it must be presumed that the new building
is conjugal property of the husband and wife. As such, it
is subject of the debts of the conjugal partnership for
the payment or security of which the husband has the
power to mortgage or otherwise encumber the
property .
It is very probable that his particular question was not
fully presented to or considered by the lower court.
The mortgage as to the paraphernal property of the
wife is declared null and void ab initio, and as to her
personally, the decree is declared null and void, and as
to her paraphernal property, the sale is set aside and
vacated, and held for naught, leaving it free and clear
from the mortgage, decree and sale, and in the same
condition as if the mortgage had never been executed,
with costs in favor of the appellant.
2. G.R. No. L-14309 June 30, 1960
CALTEX (PHILIPPINES) INC., petitioner,
vs.
FELISA FELIAS, respondent.
FACTS:
Lot No. 107 aforementioned was originally owned by
the spouses Juliano Felias and Eulalia Felion. On March
31, 1928, said spouses donated said Lot No. 107 to their
daughter, Felisa Felias, herein respondent, as a result of
which Original Certificate of Title No. 645 was cancelled
and Transfer Certificate of Title No. 97 was issued in lieu
thereof, in favor of Felisa Felias, making said lot her
paraphernal property.
On March 26, 1941, the trial court (Court of First
Instance of Cebu) rendered judgment in Civil Case No.
1527, entitled Texas Company (Phil.,) Inc., plaintiff, vs.
Simeon Sawamoto, defendant, (husband of respondent
Felias) ordering the latter to pay plaintiff the sum of
P661.94, with legal interest from the date complaint
was filed, plus attorney's fees equivalent to 10% of the
award, and the costs. A writ of execution was issued to
the provincial sheriff who levied upon Lot No. 107,
together with the improvements thereon described in
paragraph II of the amended complaint and a small
parcel of coconut land located in Look, Nasipit, Agusan,
and on August 20, 1941, sold them at public auction to
the Texas Company, now petitioner herein Caltex
(Philippines) Inc. The corresponding certificate of sale
was annotated on the back of Transfer Certificate of
Title No. 97 on August 21, 1941. Upon the expiration of
the one year period without judgment debtor
Sawamoto making the redemption, on January 25,
1947, the provincial sheriff executed in favor of Caltex
(Philippines) Inc., a final deed of sale which was duly
recorded on the reconstituted Transfer Certificate of
Title No. RT-65 (97) on November 26, 1947.
On February 3, 1950, Felisa Felias (herein respondent)
filed the present action to declare herself exclusive
owner of the two parcels in question; on January 4,
1955, after hearing, the trial court rendered judgment
as follows:
Plaintiff Felisa Felias as well as defendant Caltex
(Philippines) Inc. appealed the foregoing judgment to
the Court of Appeals which court rendered the decision
sought to be reviewed, the dispositive portion of which
reads:
"In view of the foregoing, the judgment appealed from
is hereby modified; and judgment is hereby rendered—
"1. Declaring that plaintiff is the owner of Lot No. 107 of
the Cadastral Survey of Nasipit; and ordering the
Register of Deeds to cancel: entry No. 234 referring to
the sale with pacto de retro; entry No. 1951, notice of
levy under attachment; entry No. 2050, notice of levy
under execution; entry No. 2147, sheriff's certificate of
sale; entry No. 114, sheriff's deed of sale in favor of
Caltex (Phil.) Inc., dated January 28, 1947; entry No.
121, affidavit of consolidation of ownership, all
appearing in the memorandum of encumbrances at the
back of Transfer Certificate of Title No. RT-65 (97) of the
land records of Agusan; and
"2. Declaring that Caltex (Phil.) Inc. is the exclusive
owner of the small parcel of coconut land located in
sitio Look, municipality of Nasipit, Agusan, described in
paragraph X (b) of the amended complaint."
The only issues involved in this appeal is the status and
ownership of Lot 107 of the cadastral survey of the City
of Agusan at the time it was levied upon and later sold
by the Sheriff. As already stated, the Court of Appeals
found that it had been donated to Felisa Felias on
March 31, 1928 by her parents, so that it became her
paraphernal property. It was levied upon and sold by
the Sheriff as conjugal property of the spouses Felisa
and Simeon on the theory that under Article 1404,
paragraph 2, of the Old Civil Code, which reads as
follows:
ART. 1404. ...
Buildings constructed during the marriage on
the land belonging to one of the spouse shall
also belong to the partnership, but the value of
the land shall be paid to the spouse owning the
same.
which legal provision was embodied in Article 158,
paragraph 2, of the New Civil Code, which reads thus:
ART. 158. ...
Buildings constructed at the expense of
partnership during the marriage on land
belonging to one of the spouses, also pertain to
the partnership, but the value of the land shall
be reimbursed to the spouse who owns the
same.,
it automatically became conjugal when during the
marriage, and with conjugal partnership funds, a
building was construed on it. However, the Court of
Appeals fund as a fact that at the time the building was
constructed, the lot still belonged to the parents of
Felisa because the donation to her was not made until
March 31, 1928, whereas the building was constructed
earlier, which building was assessed as early as
September, 1927, at P12,000. Consequently, Article
1404 of the Old Civil Code is not applicable. The Court of
Appeals itself said so, but nevertheless, it proceeded to
assume that article 1404 was applicable, and proceeded
to discuss the question thus:
While it is true that the building was
constructed by the spouses Felisa and Simeon
Sawamoto on Lot No. 107 at a time when they
were already married, nevertheless, it is equally
true that then Lot No. 107 did not yet belong to
Felisa Felias, one of the spouses — that land
was still the property of the parents of Felisa
Felias. It would seem therefore, that Article
1404 of the Spanish Civil Code would not apply.
That legal percept refers to a building
constructed `on land belonging to one of the
spouses.' Rather, we would say that the familiar
rule of accessory following the principal should
apply.
 But conceding, for present purposes, that after
the acquisition of the land by plaintiff, the
matter of ownership of the land (on which the
said building was erected) comes within the
coverage of Article 1404 still the question
arises: As of what time should the land be
considered the property of the spouse? On this
point, we have but to restate the jurisprudence
established by Supreme Tribunal of this
country.
We believe the assumption and the discussion to be
profitless and unnecessary. For purposes of this appeal,
we shall decide the issue on the basis of the fact that
the building was construed when the lot belonged not
to Felisa but her parents, in which case, as the Court of
Appeals itself observed, what was applicable was "the
familiar rule of accessory following the principal". In
other words, when the lot was donated to Felisa by her
parents, as owners of the land on which the building
was constructed, the lot became her paraphernal
property. The donation transmitted to her the rights of
a landowner over a building constructed on it.
Therefore at the time of the levy and sale of the sheriff,
Lot No. 107 did not belong to the conjugal partnership,
but it was paraphernal property of Felisa. As such, it
was not answerable for the obligations of her
husband1 which resulted in the judgment against him in
favor of Caltex. It may be stated in this connection that
as further found by the Court of Appeals, the building
constructed on Lot No. 107 was destroyed during the
last war, so that "at the time the Sheriff executed the
final deed of sale in favor of Caltex (Phil.) Inc. on the
27th day of January, 1947, that house which was
included in both deeds was no longer in existence."
In view of the foregoing, the appealed decision of the
Court of Appeals is hereby affirmed, though on another
ground, with costs against petitioner.
3. MUNOZ, JR. v. ERLINA RAMIREZ and ELISEO CARLOS,
G.R. 156125, 25 August 2010
FACTS:Respondent-spouses mortgaged a residential lot
(which the wife inherited) to the GSIS to secure a
housing loan (200k). Thereafter, they used the money
loaned to construct a residential house on said lot.
It is alleged that MUNOZ granted the spouses a 600k
loan, which the latter used to pay the debt to GSIS. The
balance of the loan (400k) will be delivered by MUNOS
upon surrender of the title over the property and an
affidavit of waiver of rights (over the property) to be
executed by the husband. While the spouses were able
to turn over the title, no affidavit was signed by the
husband. Consequently, MUNOZ refused to give the
400k balance of the loan and since the spouses could no
longer return the 200k (which was already paid to GSIS),
MUNOZ kept the title over the property and
subsequently, caused the issuance of a new one in his
own name.
The spouses then filed a case for the annulment of the
purported sale of the property in favor of MUNOZ. The
RTC ruled that the property was the wife’s exclusive
paraphernal property (since she inherited it from her
father) and as such, the sale is valid even without the
husband’s consent.
The CA reversed and ruled that while the property was
originally exclusive paraphernal property of the wife, it
became conjugal property when it was used as a
collateral for a housing loan that was paid through
conjugal funds. Hence, the sale is void.
ISSUE (1): Is the property paraphernal or conjugal?
RULING: PARAPHERNAL. As a general rule, all property
acquired during the marriage is presumed to be
conjugal unless the contrary is proved. In this case, clear
evidence that the wife inherited the lot from her father
has sufficiently rebutted this presumption of conjugal
ownership. Consequently, the residential lot is the
wife’s exclusive paraphernal property (pursuant to
Article 92 and 109 of FC).
It was error for the CA to apply Article 158 of the CC and
the ruling on Calimlim-Canullas. True, respondents were
married during the effectivity of the CC and thus its
provisions should govern their property relations. With
the enactment of the FC however, the provisions of the
latter on conjugal partnership of gains superseded
those of the CC. Thus, it is the FC that governs the
present case and not the CC. And under Article 120 of
the FC (which supersedes Article 158 of the CC), when
the cost of the improvement and any resulting increase
in the value are more than the value of the property at
the time of the improvement, the entire property shall
belong to the conjugal partnership, subject to
reimbursement; otherwise, the property shall be
retained in ownership by the owner-spouse, likewise
subject to reimbursement for the cost of improvement.
In this case, the husband only paid a small portion of
the GSIS loan (60k). Thus, it is fairly reasonable to
assume that the value of the residential lot is
considerably more than the contribution paid by the
husband. Thus, the property remained the exclusive
paraphernal property of the wife at the time she
contracted with MUNOZ; the written consent of the
husband was not necessary.
ISSUE (2): Was the transaction a sale or equitable
mortgage?
RULING: EQUITABLE MORTGAGE. Under Article 1602 of
the CC, a contract is presumed an equitable mortgage
when: (a) price of sale with right to repurchase is
unusually inadequate; (b) vendor remains in possession
as lessee or otherwise; (c) upon or after the expiration
of the right to repurchase, another instrument
extending the period of redemption is executed; (d)
purchase retains for himself a part of the purchase
price; (e) vendor binds himself to pay the taxes on the
thing sold; and, (f) in any other case it may be fairly
inferred that the real intention of the parties is for the
transaction to secure the payment of a debt.
In this case, considering that (a) the spouses remained
in possession of the property (albeit as lessees thereof);
(b) MUNOZ retained a portion of the ‘purchase price’
(200k); (c) it was the spouses who paid real property
taxes on the property; and, (d) it was the wife who
secure the payment of the principal debt with the
subject property — the parties clearly intended an
equitable mortgage and not a contract of sale
ART 447
PACIFIC FARMS, INC. VS. SIMPLICIO G. ESGUERRA,
CARRIED LUMBER COMPANY
FACTS:
On several occasions, the Company sold and delivered
lumber and construction materials to the Insular Farms,
Inc. which the latter used in the construction of the
aforementioned six buildings at its compound in
Bolinao, Pangasian. Of the total procurement price of
P15,000, the sum of P4,710.18 has not been paid by the
Insular Farms, Inc. The Company instituted a civil case
with the CIR of Pangasinan to recover the said unpaid
balance from the Insular Farms, Inc. The trial court
rendered judgment in favor of the Company's claim.
The corresponding writ of execution was issued because
there was no appeal instituted by Insular, Inc.
The Pacific Farms, Inc. filed a third-party claim asserting
ownership over the levied buildings which it had
acquired from the Insular Farms, Inc. by virtue of a deed
of absolute sale executed about seven months before
the Company filed the civil action. Shielded by an
indemnity bond put up by the Company and the
Cosmopolitan Insurance Company, Inc., the sheriff
proceeded with the announced public auction and sold
the levied buildings to the Company.
ISSUE:
WON the Company is entitled to a materialman’s lien to
be paid by Pacific Farms, Inc?
HELD: YES.
Therefore, applying article 447 by analogy, we perforce
consider the buildings as the principal and the lumber
and construction materials that went into their
construction as the accessory. Thus Pacific Farms, if it
does own the six buildings, must bear the obligation to
pay for the value of the said materials; the Company-
which apparently has no desire to remove the
materials, and, even if it were minded to do so, cannot
remove them without necessarily damaging the
buildings has the corresponding right to recover the
value of the unpaid lumber and construction materials.
Of course, the character of a buyer in good faith and for
value, if really possessed by the Pacific Farms, could
possibly exonerate it from making compensation. But
the Pacific Farm's stance that it is an innocent purchaser
for value and in good faith is open to grave doubt
because of certain facts of substantial import (evident
from the records) that cannot escape notice.
In the deed of absolute sale, exhibit 1, the Insular
Farms, Inc. (vendor) was represented in the contract by
its president, J. Antonio Araneta. The latter was a
director of the appellee (Pacific Farms, Inc.) and was the
counsel who signed the complaint filed by the appellee
in the court below. J. Antonio Araneta was, therefore,
not only the president of the Insular Farms, Inc. but
also a director and counsel of Pacific Farms.
During the trial of civil case the Insular Farms, Inc. was
represented by Attorney Amado Santiago, Jr. of the law
firm of J. Antonio Araneta. The latter was one of the
counsels of the Pacific Farms, Inc. They cannot claim
ignorance of the pendency of civil case because the
Insular Farms, Inc. was defended by the same lawyer
from the same law firm that commenced the present
action.
Pacific Farms merely folded its arms in disinterest and
waited, so to speak. Not until a decision was rendered
therein in favor of the Company, a writ of execution
issued, and the six buildings levied upon by the sheriff,
did it file a third-party claim over the levied buildings.
MARTIN VS MARTIN
FACTS
Jose Balagui and Dorotea Balagui, brother and sister,
sold the two parcels of land subject of the action, to
Feliciano Martin and Florentino Martin for P1,200. Jose
Balagui brought an action against said Feliciano and
Florentino Martin for damages arising from failure of
the Martins to comply with some conditions agreed
upon in the sale. The said action was terminated by a
compromise agreement between Feliciano Martin,
Florentino Martin and Isidro Martin.
CA found that Feliciano Martin did in fact the sign
agreement. The court also found that the intention of
the parties was to transform the original sale made in
favor of Feliciano and Florentino Martin into an
equitable mortgage, as contended by the spouses and
their transferees, the defendant Prudencio Martin and
intervenor Ignacio de la Cruz. The court also found that
Jose Balagui sold the parcels of land in question to
Ignacio de la Cruz for the sum of P2,500, with the
understanding that the purchaser would redeem the
lands from Feliciano Martin and Florentino Martin by
paying to them the sum of P1,200.
CA reversed the decision of the CFI which had declared
the compromise null and void for having been made
before a court which had no competent jurisdiction
over the action.
Petitioner contending that the Court of Appeals erred in
declaring that the compromise had the effect of
converting the previous contract of sale into one of loan
secured by a mortgage; and on failing to make a finding
on the rights and obligations of the petitioner, with
respect to the houses builts on the lands in good faith
by the petitioner Feliciano Martin and hi son-in-law and
his daughter. The court of Appeals is also alleged to
have made an error in declaring that the compromise
was valid even if the court before which it was made
had no jurisdiction over the case brought and in which it
was entered into.
ISSUES:
1. W/N the compromise agreement have the effect of
converting the sale in into loan secured by mortgaged
2. W/N the CA failed to make a finding on the rights and
obligations of the petitioner, with respect to the houses
builts on the lands in good faith by the petitioner
Feliciano Martin and hi son-in-law and his daughter.
HELD
1. NO. petitioner Feliciano Martin had actually signed
the compromise agreement, this being a finding of fact,
which is final and binding upon us. A person cannot
repudiate the effects of his voluntary acts simply
because it does not fit him, or simply because the judge
before whom he executed the act did not have
jurisdiction of the case. In a regime of law and order,
repudiation of an agreement validly entered into can
not be made without any ground or reason in law or in
fact for such repudiation. The conclusion of the trial
court in respect to the validity of the compromise
agreement and its binding effect upon Feliciano Martin
cannot be questioned.
2. Yes. The decision of the Court of Appeals is silent on
the rights and obligations of the parties with respect to
the said houses. We find merit in the contention that
the Court of Appeals erred in failing to make a specific
pronouncement on the rights and obligations of the
parties with respect to the said houses.
The Court of Appeals found that the houses were built
after October 31, 1930, after Feliciano Martin had
returned the amount of P600 that Florentino Martin
had contributed to the purchase money. At the time of
the construction, therefore, the petitioner had already
become the rightful possessor of the land having,
besides, declared them for tax purposes. No claim is
made by any of the parties-respondents that the
construction of the houses had been made in bad faith.
The compromise agreement did not specify within what
period of time Feliciano Martin was to enjoy the
possession and use of the lands in question. Neither has
there any evidence submitted to show that the building
of the houses was prohibited by the original owners of
the land or by the subsequent purchaser. A portion of
the land was residential, so its use could only be
enjoyed by the building of a house thereon. So we must
find as a fact that the building of the houses was made
in good faith and in the exercise of the rights granted to
Feliciano Martin by the compromise agreement.
The law applicable to petitioner is Article 361 of the
Spanish Civil Code, which provides as follows:
Art. 361. The owner of land on which anything has been
built sown, or planted, in good faith, shall be entitled to
appropriate the thing so built, sown, or planted, upon
paying the indemnification mentioned in Articles 453
and 454, or to compel the person who has built or
planted to pay him the value of the land, and the
person who sowed thereon to pay the proper rent
therefor.
Ignacio de la Cruz is declared to be the owner of the
lands subjects of the action and entitled to the
possession thereof upon payment by him of the sum of
P600 to petitioner Feliciano Martin, but the decision is
modified by further ordering that the case be remanded
to the court below for determination of the price or the
value of the two houses built on the lands in question,
and thereafter for the intervenor-appellee to exercise
the option specified in Article 361 of the Spanish Civil
Code.
ART. 448
1. Benedicto vs. Villaflores
FACTS:
 Maria Villaflores (Maria) was the owner of Lot
2-A, with an area of 277 square meters, in
Bulacan. In 1980, Maria sold a portion of Lot 2-
A to her nephew, Antonio Villaflores.
 Antonio then took possession of the portion
sold to him and constructed a house thereon.
 Twelve (12) years later, Maria executed in favor
of Antonio a Kasulatan ng Bilihang
Tuluyan covering the entire Lot 2-A. However,
Antonio did not register the sale or pay the real
property taxes for the subject land.
 In 1994, Maria sold the same Lot 2-A to
Filomena. Filomena registered the sale with the
Registry of Deeds. Consequently, Transfer of
Certificate of Title was issued in the name of
Filomena. Since then Filomena paid the real
property taxes for the subject parcel of land.
 In September 2000, Filomena filed a case
for Accion Publiciana with Cancellation of Notice
of Adverse Claim against Antonio.
 She alleged at the time of the sale, she was not
aware that Antonio had any claim or interest
over the subject property.
 Antonio assured her that there was no
impediment to her acquisition of the land, and
promised to vacate the property five (5) years
after the sale. In August 1999, Antonio
requested an extension of one (1) year, and
offered to pay a monthly rental which she
granted. However, in 2000, Antonio refused to
vacate the property and, instead, claimed
absolute ownership of Lot 2-A.
 Antonio asserted absolute ownership
over Lot 2-A. He alleged that he purchased the
subject property. He averred that Filomena was
aware of the sale; hence, the subsequent sale in
favor of Filomena was rescissible, fraudulent,
fictitious, or simulated.
 RTC rendered a decision sustaining Filomena’s
ownership. According to the RTC, Filomena was
the one who registered the sale in good faith; as
such, she has better right than Antonio. It
rejected Antonio’s allegation of bad faith on the
part of Filomena because no sufficient evidence
was adduced to prove it. It declared Antonio a
builder in good faith.

 CA affirmed the decision of the RTC and
remanded the case to the RTC for further
proceedings to determine the respective rights
of the parties under Articles 448 and 546 of the
Civil Code.
ISSUE: WON Antonio is a builder in good faith
HELD: YES.
It is not disputed that the construction of
Antonio’s house was undertaken long before the sale in
favor of Filomena; that when Filomena bought the
property from Maria, Antonio’s house which he used as
residence had already been erected on the property.
Thus, we sustain the finding that Antonio is a builder in
good faith.
Under Article 448, a landowner is given the option to
either appropriate the improvement as his own upon
payment of the proper amount of indemnity, or sell the
land to the possessor in good faith. Relatedly, Article
546 provides that a builder in good faith is entitled to
full reimbursement for all the necessary and useful
expenses incurred; it also gives him right of retention
until full reimbursement is made.
The builder in good faith can compel the landowner to
make a choice between appropriating the building by
paying the proper indemnity or obliging the builder to
pay the price of the land. The choice belongs to the
owner of the land, a rule that accords with the principle
of accession, i.e., that the accessory follows the
principal and not the other way around.
2. PEDRO ANGELES V ESTELITA PASCUAL
Pascual and Angeles were the registered owners of
adjacent parcel of lands. Pascual owned Lot 4 while
Angeles owned Lot 5. Each of them built a house on
respective lot, believing that their lots were properly
delineated. However, Lot 3 was foreclosed and the
geodetic engineer who caused the relocation survey
found that Pascual’s house encroached Lot 3. He was
ejected. Pascual then caused the relocation survey of
his own lot and discovered that Angeles also
encroached on 252 sq.m leaving Pascual with only
66sq.m. Pascual demanded rentals from Angeles or to
vacate but he refused. Pascual sued him for recovery of
possession and damages. CA affirmed but modified RTC.
It applied Art. 448 which defined the rights of a builder,
sower, and planter in good faith. angeles appealed.
SUPREME COURT: Art. 448.the owner of the land on
which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the
works, sowing or planting, after payment of the
indemnity provided for in Arts. 546 and 548, or to oblige
the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that
of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the
terms thereof. The provision contemplates a person
building or sowing or planting in good faith on land
owned by another. The law presupposes that the land
and the building or plants are owned by different
persons, like here. the RTC and CA found and declared
Angeles to be a builder in good faith. Court agrees.
Good faith consists in the belief of the builder that the
land he is building on is his and in his ignorance of a
defect or flaw in his title. Since Angeles had built his
house in good faith, Art. 448 is applicable.
Consequently, the land being the principal and the
building the accessory, preference is given to Pascual as
the owner of the land to make the choice as between
appropriating the building or obliging Angeles as the
builder to pay the value of the land.
3. PNB V. DE JESUS
FACTS:
It would appear that on 10 June 1995, respondent filed
a complaint against petitioner before the Regional Trial
Court of Occidental Mindoro for recovery of ownership
and possession, with damages, over the questioned
property. In his complaint, respondent stated that he
had acquired a parcel of land situated in Mamburao,
Occidental Mindoro, with an area of 1,144 square
meters covered by TCT No. T-17197, and that on 26
March 1993, he had caused a verification survey of the
property and discovered that the northern portion of
the lot was being encroached upon by a building of
petitioner to the extent of 124 square meters. Despite
two letters of demand sent by respondent, petitioner
failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired
the lot and the building sometime in 1981 from then
Mayor Bienvenido Ignacio, the encroachment already
was in existence and to remedy the situation, Mayor
Ignacio offered to sell the area in question (which then
also belonged to Ignacio) to petitioner at P100.00 per
square meter which offer the latter claimed to have
accepted. The sale, however, did not materialize when,
without the knowledge and consent of petitioner,
Mayor Ignacio later mortgaged the lot to the
Development Bank of the Philippines. He also contends
that he is a builder in good faith.
ISSUE:
Whether or not being a builder in good faith matters
under article 448.
HELD:
Article 448, of the Civil Code refers to a piece of land
whose ownership is claimed by two or more parties,
one of whom has built some works (or sown or planted
something) and not to a case where the owner of the
land is the builder, sower, or planter who then later
loses ownership of the land by sale or otherwise for,
elsewise stated, “where the true owner himself is the
builder of works on his own land, the issue of good faith
or bad faith is entirely irrelevant.”
4. GEMINIANO, ET. AL. VS. COURT OF APPEALS
FACTS:
It appears that subject lot was originally owned by the
petitioners' mother, Paulina Amado vda. de Geminiano.
On a 12-square-meter portion of that lot stood the
petitioners' unfinished bungalow, which the petitioners
sold to the private respondents, with an alleged
promise to sell to the latter that portion of the lot
occupied by the house. Subsequently, the
petitioners' mother executed a contract of lease over a
126 square-meter portion of the lot, including that
portion on which the house stood, in favor of the
private respondents for P40.00 per month for a period
of 7 years.
The private respondents then introduced additional
improvements and registered the house in their names.
After the expiration of the lease contract, however, the
petitioners' mother refused to accept the monthly
rentals.
It turned out that the lot in question was the subject of
a suit, which resulted in its acquisition by one Maria Lee
in 1972. Lee sold the lot to Lily Salcedo, who in turn
sold it to the spouses Dionisio. Spouses Dionisio
executed a Deed of Quitclaim over the said property in
favor of the petitioners.
The petitioners sent a letter addressed to private
respondent Mary Nicolas demanding that she vacate
the premises and pay the rentals in arrears within
twenty days from notice.
Upon failure of the private respondents to heed the
demand, the petitioners filed a complaint for unlawful
detainer and damages.
ISSUE: WON Art. 448 is applicable to this case.
HELD: NO.
The private respondents claim they are builders in good
faith, hence, Article 448 of the Civil Code should apply.
They rely on the lack of title of the petitioners' mother
at the time of the execution of the contract of lease, as
well as the alleged assurance made by the petitioners
that the lot on which the house stood would be sold to
them.
But being mere lessees, the private respondents knew
that their occupation of the premises would continue
only for the life of the lease. Plainly, they cannot be
considered as possessors nor builders in good faith.
Article 448 of the Civil Code, in relation to Article 546 of
the same Code, which allows full reimbursement of
useful improvements and retention of the premises
until reimbursement is made, applies only to a
possessor in good faith, i.e., one who builds on land
with the belief that he is the owner thereof. It does not
apply where one's only interest is that of a lessee under
a rental contract; otherwise, it would always be in the
power of the tenant to "improve" his landlord out of his
property.
And even if the petitioners indeed promised to sell, it
would not make the private respondents possessors or
builders in good faith so as to be covered by the
provisions of Article 448 of the Civil Code. The latter
cannot raise the mere expectancy of ownership of the
aforementioned lot because the alleged promise to sell
was not fulfilled nor its existence even proven.
5. NATIONAL HOUSING AUTHORITY vs. GRACE
BAPTIST CHURCH and COURT OF APPEALS
FACTS:
On June 13, 1986, Respondent Grace Baptist
Church wrote a letter to NHA manifesting their intent to
purchase Lot 4 and 17 of the General Mariano Alvarez
Resettlement Project in Cavite. The latter granted
request hence respondent entered into possession of
the lots and introduced improvements thereon. On
February 22, 1991, NHA passed a resolution approving
the sale of the subject lots to respondent Church for
700 per square meter, a total of P430,500. respondents
were duly informed.
On April 8, 1991, respondent church tendered a
check amounting to P55,350 contending that this was
the agreed price. NHA avers stating that the price now
(1991) is different from before (1986).
The trial court rendered a decision in favour of
NHA stating that there was no contract of sale, ordering
to return the said lots to NHA and to pay NHA rent of
200 pesos from the time it took possession of the lot.
Respondent Church appealed to the CA which
affirms the decision of RTC regarding “no contract of
sale” but modifying it by ordering NHA to execute the
sale of the said lots to Church for 700 per square, with
6% interest per annum from March 1991. Petitioner
NHA filed a motion for reconsideration which was
denied. Hence this petition for review on certiorari
ISSUE:
WON NHA can be compelled to sell the lots under
market value?
HELD:
No, because the contract has not been perfected.
The Church despite knowledge that its intended
contract of sale with the NHA had not been perfected
proceeded to introduce improvements on the land. On
the other hand, NHA knowingly granted the Church
temporary use of the subject properties and did not
prevent the Church from making improvements
thereon. Thus the Church and NHA, who both acted in
bad faith shall be treated as if they were both in good
faith. In this connection Art 448 provides: “the owner of
the land in which anything has been built, sown or
planted in good faith, shall have the right to appropriate
as his own the works, sowing or planting, after payment
of the indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of
the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to
buy the land and if its value is considerably more than
that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper
indemnity. The parties shall agree, on case of
disagreement, court shall fix.”
6. SPOUSES JUAN NUGUID AND ERLINDA T.
NUGUID VS. HON. COURT OF APPEALS AND
PEDRO P. PECSON
FACTS:
Pedro P. Pecson owned a commercial lot on which he
built a four-door two-storey apartment building. For
failure to pay realty taxes, the lot was sold at public
auction by the City Treasurer to Mamerto Nepomuceno,
who in turn sold it for P103,000 to the spouses Juan and
Erlinda Nuguid.
Pecson challenged the validity of the auction sale
before the RTC of Quezon City, the RTC upheld the
spouses’ title but declared that the four-door two-
storey apartment building was not included in the
auction sale. This was affirmed by the CA and by the SC.
The Nuguids became the uncontested owners of
commercial lot. The Nuguid spouses moved for delivery
of possession of the lot and the apartment building.
ISSUE:
WON the Nuguids should reimburse Pecson for the
benefits derived from the apartment building.
HELD: YES.
Since petitioners opted to appropriate the
improvement for themselves as early as June 1993,
when they applied for a writ of execution despite
knowledge that the auction sale did not include the
apartment building, they could not benefit from the
lot’s improvement, until they reimbursed the improver
in full, based on the current market value of the
property.
Under Article 448, the landowner is given the option,
either to appropriate the improvement as his own upon
payment of the proper amount of indemnity or to sell
the land to the possessor in good faith. Relatedly,
Article 546 provides that a builder in good faith is
entitled to full reimbursement for all the necessary and
useful expenses incurred; it also gives him right of
retention until full reimbursement is made.
The right of retention is considered as one of the
measures devised by the law for the protection of
builders in good faith. Its object is to guarantee full and
prompt reimbursement as it permits the actual
possessor to remain in possession while he has not
been reimbursed (by the person who defeated him in
the case for possession of the property) for those
necessary expenses and useful improvements made by
him on the thing possessed.
Given the circumstances of the instant case where the
builder in good faith has been clearly denied his right of
retention for almost half a decade, we find that the
increased award of rentals by the RTC was reasonable
and equitable. The petitioners had reaped all the
benefits from the improvement introduced by the
respondent during said period, without paying any
amount to the latter as reimbursement for his
construction costs and expenses. They should account
and pay for such benefits.
7. SPS. RASDAS, ET. AL. VS. ESTENOR, ET. AL.
FACTS:
The dispute centers on a parcel of land with an situated
in Ilagan, Isabela. Respondent filed a Complaint For
Recovery Of Ownership And Possession With Damages
against. The complaint was docketed and tried by the
RTC of Ilagan. In the same complaint, respondent
asserted that he was the owner of the subject property,
which was then in the possession of petitioners. The
RTC decided in favor of petitioners. The CA reversed the
judgment of the RTC and declared respondent as the
owner of the subject property. Thereafter, a Writ of
Execution and Writ of Demolition was issued against
petitioners, who were ordered to demolish their
houses, structures, and improvements on the property.
Petitioners alleged that they were entitled to just
compensation relating to the value of the houses they
had built on the property, owing to their purported
status as builders in good faith. They claimed that the
CA decision did not declare them as builders in bad
faith, and thus, they were entitled to be reimbursed of
the value of their houses before these could be
demolished. They posited that without such
reimbursement, they could not be ejected from their
houses.
ISSUE:
WON petitioners are in good faith.
HELD: NO.
The father of the petitioners (and their predecessor-in-
interest) had already known that he did not own the
property, and that his stay therein was merely out of
tolerance. Such conclusion in fact bolstered the
eventual conclusion that respondents were the owners
of the land and that petitioners should vacate the same.
These premises remaining as they are, it is clear that
petitioners are not entitled to the just compensation
they seek through the present complaint. Under Article
448 of the Civil Code, the builder in bad faith on the
land of another loses what is built without right to
indemnity. Petitioners were in bad faith when they built
the structures as they had known that the subject
property did not belong to them.
8. FERNANDO CARRASCOSO, JR. VS. COURT OF
APPEALS, LAURO LEVISTE
FACTS:
El Dorado Plantation, Inc. (El Dorado) was the registered
owner of a land situated in Sablayan, Occidental
Mindoro. At a special meeting of El Dorado’s Board of
Directors, a Resolution was passed authorizing Feliciano
Leviste, then President of El Dorado, to negotiate the
sale of the property and sign all documents and
contracts bearing thereof. Through a Deed of Sale of
Real Property, El Dorado, through Feliciano Leviste, sold
the property to Carrascoso, Jr.
PLDT commenced construction of improvements on the
1,000 hectare portion of the property immediately after
the execution of Agreement to Buy and Sell.
Lauro Leviste (Lauro), a stockholder and member of the
Board of Directors of El Dorado, through his counsel,
Atty. Benjamin Aquino, called the attention of the Board
to Carrascoso’s failure to pay the balance of the
purchase price of the property. He wants a rescission of
the sale made by the El Dorado Plantation, Inc. to Mr.
Carrascoso.
ISSUE: WON PLDT is in good faith when it built its
improvements on the subject land.
HELD:
In the case at bar, it is undisputed that PLDT
commenced construction of improvements on the
1,000 hectare portion of the property immediately after
the execution of the July 11, 1975 Agreement to Buy
and Sell with the full consent of Carrascoso. Thus, until
March 15, 1977 when the Notice of Lis Pendens was
annotated on Carrascoso’s TCT No. T-6055, PLDT is
deemed to have been in good faith in introducing
improvements on the 1,000 hectare portion of the
property. After March 15, 1977, however, PLDT could
no longer invoke the rights of a builder in good faith.
Should El Dorado then opt to appropriate the
improvements made by PLDT on the 1,000 hectare
portion of the property, it should only be made to pay
for those improvements at the time good faith existed
on the part of PLDT or until March 15, 1977, to be
pegged at its current fair market value.
The commencement of PLDT’s payment of reasonable
rent should start on March 15, 1977 as well, to be paid
until such time that the possession of the 1,000 hectare
portion is delivered to El Dorado, subject to the
reimbursement of expenses as aforestated, that is, if El
Dorado opts to appropriate the improvements.
If El Dorado opts for compulsory sale, however, the
payment of rent should continue up to the actual
transfer of ownership.
9. 3ROSALES VS. CASTELLFORT
FACTS:
Spouses-petitioners Rodolfo V. Rosales and Lily
Rosqueta-Rosales (petitioners) are the registered
owners of a parcel of land with an area of
approximately 315 square meters, covered by Transfer
Certificate of Title (TCT) No. 36856[4] and designated as
Lot 17, Block 1 of Subdivision Plan LRC Psd-55244
situated in Los Baños, Laguna.
On August 16, 1995, petitioners discovered that a house
was being constructed on their lot, without their
knowledge and consent, by respondent Miguel
Castelltort (Castelltort).
It turned out that respondents Castelltort and his wife
Judith had purchased a lot, Lot 16 of the same
Subdivision Plan, from respondent Lina Lopez-Villegas
(Lina) through her son-attorney-in-fact Rene Villegas
(Villegas) but that after a survey thereof by geodetic
engineer Augusto Rivera, he pointed to Lot 17 as the Lot
16 the Castelltorts purchased.
Negotiations for the settlement of the case thus began,
with Villegas offering a larger lot near petitioners’ lot in
the same subdivision as a replacement thereof. In the
alternative, Villegas proposed to pay the purchase price
of petitioners’ lot with legal interest. Both proposals
were, however, rejected by petitioners whose counsel,
by letter of August 24, 1995, directed Castelltort to stop
the construction of and demolish his house and any
other structure he may have built thereon, and desist
from entering the lot.
Petitioners subsequently filed on September 1, 1995 a
complaint for recovery of possession and damages with
prayer for the issuance of a restraining order and
preliminary injunction against spouses-respondents
Miguel and Judith Castelltort before the RTC of
Calamba, Laguna, docketed as Civil Case No. 2229-95-C.
ISSUE:
Under Art 448, who has the right of option?
HELD:
Under the foregoing provision (Art 448), the landowner
can choose between appropriating the building by
paying the proper indemnity or obliging the builder to
pay the price of the land, unless its value is considerably
more than that of the structures, in which case the
builder in good faith shall pay reasonable rent.[34] If the
parties cannot come to terms over the conditions of the
lease, the court must fix the terms thereof.
The choice belongs to the owner of the land, a rule that
accords with the principle of accession, i.e., that the
accessory follows the principal and not the other way
around. Even as the option lies with the landowner, the
grant to him, nevertheless, is preclusive. The landowner
cannot refuse to exercise either option and compel
instead the owner of the building to remove it from the
land.
The raison d’etre for this provision has been enunciated
thus:
Where the builder, planter or sower has acted in good
faith, a conflict of rights arises between the owners, and
it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of
the land. In view of the impracticability of creating a
state of forced co-ownership, the law has provided a
just solution by giving the owner of the land the option
to acquire the improvements after payment of the
proper indemnity, or to oblige the builder or planter to
pay for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the owner
of the land who is authorized to exercise the option,
because his right is older, and because, by the principle
of accession, he is entitled to the ownership of the
accessory thing.
10. FRANCISCO MUNOZ VS RAMIREZ
11. VSD REALTY AND DEVELOPMENT CORP VS
UNIWIDE SALES
FACTS:
Petitioner VSD Realty and Development Corporation
(VSD) filed a Complaint for annulment of title and
recovery of possession of property against respondents
Uniwide Sales, Inc. (Uniwide) and Dolores Baello
(Baello) with the RTC.
VSD alleged that it is the registered owner of a parcel of
land in Caloocan City, wherein VSD purchased the said
property from Felisa D. Bonifacio. VSD proved the
identity of the land it is claiming through the technical
description contained in its title, TCT No. T-285312; the
derivative title of Felisa D. Bonifacio, TCT No. 265777;
the technical description included in the official records
of the subject lot in the Register of Deeds of Caloocan
City; and the verification survey conducted by Geodetic
Engineer Evelyn Celzo of the DENR-NCR.
On the other hand, Baello countered that the subject
property was bequeathed to her through a will by her
adoptive mother as approved by the probate court.
Therafter, she entered into a Contract of Lease with
respondent Uniwide. As a consequence of the lease
agreement, Uniwide constructed in good faith a
building worth at least P200,000,000.00 on the said
property.
The RTC ruled in favor of VSD. On appeal, the CA
reversed the RTC. Hence, this petition.
ISSUES:
I. Whether or not VSD is entitled to recovery of
possession of the subject property?
II. Whether or not Uniwide, as a lessee, is entitled to
recover the amount of improvements introduced to the
land?
HELD: The petition has merit.
CIVIL LAW: accion reivindicatoria; builder in good faith
Article 434 of the Civil Code provides that to
successfully maintain an action to recover the
ownership of a real property, the person who claims a
better right to it must prove two (2) things: first, the
identity of the land claimed, and; second, his title
thereto. In regard to the first requisite, in an accion
reinvindicatoria, the person who claims that he has a
better right to the property must first fix the identity of
the land he is claiming by describing the location, area
and boundaries thereof. Hutchison v. Buscas held: "It
bears stress that in an action to recover real property,
the settled rule is that the plaintiff must rely on the
strength of his title, not on the weakness of the
defendants title. This requirement is based on two (2)
reasons: first, it is possible that neither the plaintiff nor
the defendant is the true owner of the property in
dispute, and second, the burden of proof lies on the
party who substantially asserts the affirmative of an
issue for he who relies upon the existence of a fact
should be called upon to prove that fact."
In this case, petitioner proved his title over the property
in dispute as well as the identity of the said property;
hence, it is entitled to recover the possession of the
property from respondents.
SECOND ISSUE: Uniwide is not entitled to recover from
VSD the cost of its improvement on the land.
It is noted that when the contract of lease was
executed, Uniwide was unaware that the property
leased by it was owned by another person other than
Dolores Baello. Nevertheless, Uniwide cannot avail of
the rights of a builder in good faith under Article 448 of
the Civil Code, in relation to Article 546 of the same
Code, which provides for full reimbursement of useful
improvements and retention of the premises until
reimbursement is made, as the said provisions apply
only to a possessor in good faith who builds on land
with the belief that he is the owner thereof. It does not
apply where ones only interest is that of a lessee under
a rental contract. Parilla v. Pilar held: "Articles 448 of
the Civil Code, in relation to Article 546 of the same
Code, applies only to a possessor in good faith, i.e., one
who builds on land with the belief that he is the owner
thereof. It does not apply where ones only interest is
that of a lessee under a rental contract; otherwise, it
would always be in the power of the tenant to improve
his landlord out of his property."
ART. 449
DEL ROSARIO V. SPS. MANUEL
FACTS:
On August 12, 1999, spouses Jose and Concordia
Manuel, respondents, filed with the Municipal Trial
Court (MTC), San Mateo, Rizal a complaint1 for unlawful
detainer against Alfredo Yasay del Rosario, petitioner,
docketed as Civil Case No. 1360. They alleged that they
are the true and lawful owners of a 251 square meter
lot located at Sta. Ana, San Mateo, Rizal. Because of
their compassion, they allowed petitioner, whose house
was destroyed by a strong typhoon, to occupy their lot.
They agreed that he could build thereon a temporary
shelter of light materials. But without their consent,
what he constructed was a house of concrete materials.
In 1992, respondents asked petitioner to vacate the lot.
This was followed by repeated verbal demands but to
no avail, prompting them to bring the matter to the
barangay. But the parties failed to reach an amicable
settlement. On June 25, 1999, the barangay chairman
issued a Certification to File Action.
In his answer to the complaint, petitioner claimed that
sometime in 1968, respondents allowed him to build his
house on the lot, provided he would guard the premises
to prevent landgrabbers and squatters from occupying
the area. In 1995, when respondents visited this
country, they agreed verbally to sell the portion on
which his house was constructed. A year later, he made
an offer to buy the 60 square meter portion occupied by
him and to spend for its survey. But what respondents
wanted to sell was the whole area containing 251
square meters. He then informed them that he would
first consult his children and they said they will wait.
Instead, they filed the instant complaint.
ISSUE:
WON petitioner is a builder in good faith.
HELD: NO.
Petitioner is not a builder in good faith. Considering that
he occupies the land by mere tolerance, he is aware
that his occupation of the same may be terminated by
respondents any time
SPS. RASDAS VS. ESTENOR
(Similar to the previous article)
LUMUNGO V. USMAN
FACTS:
Dominga Usman sold and transfers her rights in and to
the 3 lots in question to Jose Angeles. The latter made
the purchase with the knowledge that the property was
already in dispute by Atty. Usman, husband of Dominga,
and by the plaintiffs. Angeles, upon taking possession of
the land, planted the same with coconuts, which,
together with those already planted by Dominga
Usman, numbered about 3,000, most of which are now
fruit-bearing. In short, Angeles was a purchaser and a
builder in bad faith.
ISSUE:
Whether or not Angeles is entitled to reimbursement
for the coconuts tree he planted on the property in
litigation.
HELD:
No. It should be noted that said trees are
improvements, not "necessary expenses of
preservation," which a builder, planter or sower in bad
faith may recover under Arts. 452 and 546, first
paragraph, of the Civil Code. The facts and findings of
both the trial court and the Court of Appeals leave no
room for doubt that Jose Angeles was a purchaser and a
builder in bad faith. The provision applicable to this case
is, accordingly, Article 449 of the Civil Code, which
provides that, "he who builds, plants or sows in bad
faith on the land of another, loses what is built, planted
or sown without right to indemnity."
ART. 453
MUNICIPALITY OF OAS V. ROA
FACTS:
The Municipality brought the action for the recovery of
a tract of land in the pueblo of Oas, claiming that it was
a part of the public square of said town, while Roa
alleged that he was the owner of the property. The
defendant admitted in writing that he knew that the
land is owned by the Municipality and that Jose Castillo,
whom he bought the property did not own the land.
When Roa constructed a substantial building on the
property in question after he “acquired” the property
from Castillo, the Municipality did not oppose the
construction.
ISSUE:
Whether or not the municipality owns the land.
HELD:
Yes. The defendant was not a purchaser in good faith.
The plaintiff, having permitted the erection by the
defendant of a building on the land without objection,
acted in bad faith. The rights of the parties must,
therefore, be determined as if they both had acted in
good faith. To the case are applicable those provisions
of the Civil Code which relate to the construction by one
person of a building upon land belonging to another.
Article 364 (now Art.453) of the Civil Code is as follows:
"When there has been bad faith, not only on the part of
the person who built, sowed, or planted on another's
land, but also on the part of the owner of the latter, the
rights of both shall be the same as if they had acted in
good faith.” The Supreme declared that the
Municipality is the owner of the land and that it has the
option of buying the building thereon, which is the
property of the defendant, or of selling to him the land
on which it stands.
ART. 458
GOVERNMENT V. COLEGIO DE SAN JOSE
FACTS:
During the months of September to November every
year, the waters of Laguna de Bay cover a long strip of
land along the eastern border of the two parcels of land
in question. The claimant Colegio de San Jose contends
that the parcels of land are a part of the Hacienda de
San Pedro Tunasan belonging it, which has been in
possession thereof since time immemorial by means of
its tenants or lessees and farmers. In contrast, the
Government contends that the said two parcels of land
belong to the public domain, and its evidence tends to
prove that they have always been known as the shores
of Laguna de Bay. The CFI rendered a decision in favor
of Colegio de San Jose ordering the registration of the 2
parcels of land in accordance with law. Both admitted
that the strip was formerly covered by water but since
the Bay receded, it was now uncovered. The
government tried to apply Art. 458 which states the
adjoin estate (the College) does not acquire the land left
dry by the natural decrease of the waters.
ISSUES:
Whether or not Art. 458 is applicable.
Whether or not the property in question belongs to the
public domain as a part of the bed of Laguna de Bay.
HELD:

No. Article 367 (now Art.458) provides that “the owners

of estates bordering on ponds or lagoons, do not
acquire the land left dry by the natural decrease of the
waters, nor lose those inundated by them in
extraordinary floods.” The provision refers to ponds and
lagoons, and has therefore no application to the
present case, which refers to a lake, a lagoon being
legally distinct in character from a lake. Instead, Art.77
of the Spanish Law of Waters should apply, which
provides: “Lands accidentally inundated by the waters
of lakes, or by creeks, rivers or other streams shall
continue to be the property of their respective owners.”
Therefore, they must belong to Colegio de San Jose as
part of Hacienda de San Pedro Tunasan, which was
originally owned by it.