1. LOPEZ V.

OROSA

ACTS:

1. Lopez was engaged in business under the name Lopez-Castelo Sawmill.

2. Orosa, who lived in the same province as Lopez, one dayapproached
Lopez and invited the latter to make an investment inthe theatre business.

3. Orosa, his family and close friends apparently were forming acorporation
named Plaza Theatre.

4. Lopez expressed his unwillingness to invest. Nonetheless, therewas an
oral agreement between Lopez and Orosa that Lopezwould be supplying the
lumber for the construction of the theatre.The terms were the following:
one, Orosa would be personallyliable for any account that the said
construction would incur; two,payment would be by demand and not by
cash on delivery.

5. Pursuant to the agreement, Lopez delivered the lumber for
theconstruction. Lopez was only paid one-third of the total cost.

6. The land on which the building has been erected was previously owned
by Orosa, which was later on purchased by the corporation.

7. Due to the incessant demands of Lopez, the corporation mortgaged its
properties.

8. On an earlier relevant date, the corporation obtained a loan with Luzon
Surety Company as surety and in turn, the corporation executed a mortgage
over the land and building. In the registration of the land under Act 496,
such mortgage wasnt revealed.

9. Also due to the demands of Lopez, Orosa issued a deed of assignment
over his shares of stock in the corporation.

10. As there was still an unpaid balance, Lopez filed a case against Orosa
and Plaza theatre. He asked that Orosa and Plaza theatre be held liable
solidarily for the unpaid balance; and in case defendants failed to pay, the
land and building should be sold in public auction with the proceeds to be
applied to the balance; or
that the shares of stock be sold in public auction. Lopez also had lis pendens
be annotated in the OCT.

11. The trial court decided that there was joint liability between defendants
and that the materialmans lien was only confined tothe building.
ISSUES:

W/N the materialmens lien for the value of the materials used in the
construction of the building attaches to said structure alone and doesnt
extend to the land on which the building is adhered to?
HELD:

The contention that the lien executed in favor of the furnisher of materials
used for the construction and repair of a building is also extended to land on
which the building was constructed is without merit. For while it is true that
generally, real estate connotes the land and the building constructed
thereon, it is obvious that the inclusion of the building in the enumeration
of what may constitute real properties could only mean one thingthat a
building is by itself an immovable property. Moreover, in the absence of
any specific provision to the contrary, a building is an immovable property
irrespective of whether or not said structure and the land on which it is
adhered to belong to the same owner.

Appelant invoked Article 1923 of the Spanish Civil Code, which provides
With respect to determinate real property and real rights of the debtor,
the following are preferred: xxx Credits for reflection, not entered or
recorded, and only with respect to other credits different from those
mentioned in four next preceding paragraphs. Close examination of the
abovementioned provision reveals that the law gives preference to
unregistered refectionary credits only with respect to the real estate upon
which the refectionary or work was made. This being so, the inevitable
conclusion must be that the lien so created attaches merely to the
immovable property for the construction or repair of which the obligation
was incurred. Therefore, the lien in favor of appellant for the unpaid value
of the lumber used in the construction of the building attaches only to said
structure and to no other property of the obligors.
2. PUNSALAN VS. LACSAMANA
Facts:
Antonio Punsalan, Jr. (petitioner), was the former registered owner of
a parcel of land consisting of 340 square meters situated in Tarlac. Petitioner
mortgaged said land to respondent PNB, but for failure to pay said amount,
the property was foreclosed. Respondent PNB was the highest bidder in said
foreclosure proceedings. In the meantime, while the properly was still in the
possession of petitioner, and upon securing a permit from the Municipal
Mayor, petitioner constructed a warehouse on said property. Petitioner
declared said warehouse for tax purposes.
A Deed of Sale was executed between respondent PNB and
respondent Lacsamana over the said property. This contract was amended,
particularly to include in the sale, the building and improvement thereon.
Petitioner then sought for the annulment of the deed of sale. Among his
allegations was that the bank did not own the building and thus, it should not
be included in the said deed.
Petitioners complaint was dismissed for improper venue. The trial
court held that the action being filed in actuality by petitioner is a real action
involving his right over a real property.

ISSUE:
Whether or not the trial court erred in dismissing the case on the
ground of improper venue.
Whether not the warehouse is an immovable and must be tried in the
province where the property lies.

RULING:
The warehouse claimed to be owned by petitioner is an immovable
or real property as provided in article 415(l) of the Civil Code. Buildings are
always immovable under the Code. A building treated separately from the
land on which it stood is immovable property and the mere fact that the
parties to a contract seem to have dealt with it separate and apart from the
land on which it stood in no wise changed its character as immovable
property.
While it is true that petitioner does not directly seek the recovery of
title or possession of the property in question, his action for annulment of
sale and his claim for damages are closely intertwined with the issue of
ownership of the building which, under the law, is considered immovable
property, the recovery of which is petitioner's primary objective. The
prevalent doctrine is that an action for the annulment or rescission of a sale
of real property does not operate to efface the fundamental and prime
objective and nature of the case, which is to recover said real property. It is a
real action. Petitioner's other contention that the case should proceed in so
far as respondent Lacsamana is concerned as she had already filed an
Answer, which did not allege improper venue and, therefore, issues had
already been joined, is likewise untenable. Respondent PNB is an
indispensable party as the validity of the Amended Contract of Sale between
the former and respondent Lacsamana is in issue. It would, indeed, be futile
to proceed with the case against respondent Lacsamana alone.
Hence, the SC denied the petition without prejudice to the refiling of
the case by petitioner Antonio Punsalan, Jr. in the proper forum.



3. ASS. INSURANCE V. IYA

FACTS:
Adriano Valino and Lucia A. Valino, husband and wife, were the
owners and possessors of a house of strong materials constructed on Lot
No. 3, Block No. 80 of the Grace Park Subdivision in Caloocan, Rizal, which
they purchased on installment basis from the Philippine Realty Corporation.
On November 6, 1951, to enable her to purchase on credit rice from the
NARIC, Lucia A. Valino filed a bond in the sum of P11,000.00 (AISCO Bond
No. G-971) subscribed by the Associated Insurance and Surety Co., Inc.,
and as counter-guaranty therefor, the spouses Valino executed an alleged
chattel mortgage on the aforementioned house in favor of the surety
company, which encumbrance was duly registered with the Chattel Mortgage
Register of Rizal on December 6, 1951 . however, or on October 24, 1952,
the Valinos, to secure payment of an indebtedness in the amount of
P12,000.00, executed a real estate mortgage over the lot and the house.
Sometime in July, 1953, the surety company learned of the existence of the
real estate mortgage over the lot covered by T.C.T. No. 26884 together with
the improvements thereon.
Defendant surety company, in answer to this complaint insisted on
its right over the building, arguing that as the lot on which the house was
constructed did not belong to the spouses at the time the chattel mortgage
was executed, the house might be considered only as a personal property
and that the encumbrance thereof and the subsequent foreclosure
proceedings made pursuant to the provisions of the Chattel Mortgage Law
were proper and legal. Defendant therefore prayed that said building be
excluded from the real estate mortgage and its right over the same be
declared superior to that of plaintiff, for damages, attorney's fees and costs.

ISSUE:
As the building constructed thereon has been the subject of 2
mortgages; controversy arise as to which of these encumbrances should
receive preference over the other?

HELD:
The decisive factor in resolving the issue presented by this appeal is
the determination of the nature of the structure litigated upon, for where it be
considered a personality, the foreclosure of the chattel mortgage and the
subsequent sale thereof at public auction, made in accordance with the
Chattel Mortgage Law would be valid and the right acquired by the surety
company therefrom would certainly deserve prior recognition; otherwise,
appellant's claim for preference must be granted.
A building certainly cannot be divested of its character of a realty by
the fact that the land on which it is constructed belongs to another. To hold it
the other way, the possibility is not remote that it would result in confusion,
for to cloak the building with an uncertain status made dependent on the
ownership of the land, would create a situation where a permanent fixture
changes its nature or character as the ownership of the land changes hands.
In the case at bar, as personal properties could only be the subject of a
chattel mortgage (Section 1, Act 3952) and as obviously the structure in
question is not one, the execution of the chattel mortgage covering said
building is clearly invalid and a nullity. While it is true that said document was
correspondingly registered in the Chattel Mortgage Register of Rizal, this act
produced no effect whatsoever for where the interest conveyed is in the
nature of a real property, the registration of the document in the registry of
chattels is merely a futile act.
A building is an immovable property irrespective of whether or not
said structure and the land on which it is adhered to belong to the same
owner. It cannot be divested of its character of a realty by the fact that the
land on which it is constructed belongs to another. If the status of the building
were to depend on the ownership of the land, a situation would be created
where a permanent fixture changes its nature or character as the ownership
of the land changes hands.
The rights of the surety company, over the building superior to that of
Isabel Iya and excluding the building from the foreclosure prayed for by the
latter is reversed and appellant Isabel Iya's right to foreclose not only the
land but also the building erected thereon is hereby recognized, and the
proceeds of the sale thereof at public auction (if the land has not yet been
sold), shall be applied to the unsatisfied judgment in favor of Isabel Iya. This
decision however is without prejudice to any right that the Associated
Insurance and Surety Co., Inc., may have against the spouses Adriano and
Lucia Valino on account of the mortgage of said building they executed in
favor of said surety company.


4. TUMALAD V. VICENCIO
FACTS:
Vicencio and Simeon executed a chattel mortgage in favor of
plaintiffs Tumalad over their house, which was being rented by Madrigal and
company. This was executed to guarantee a loan, payable in one year with a
12% per annum interest. The mortgage was extrajudicially foreclosed upon
failure to pay the loan. The house was sold at a public auction and the
plaintiffs were the highest bidder. A corresponding certificate of sale was
issued. Thereafter, the plaintiffs filed an action for ejectment against the
defendants, praying that the latter vacate the house as they were the proper
owners.

ISSUE:
Whether or not the subject matter of the mortgage, a house of strong
materials, be the object of a chattel mortgage?

HELD:
Certain deviations have been allowed from the general doctrine that
buildings are immovable property such as when through stipulation, parties
may agree to treat as personal property those by their nature would be real
property. This is partly based on the principle of estoppel wherein the
principle is predicated on statements by the owner declaring his house as
chattel, a conduct that may conceivably stop him from subsequently claiming
otherwise.
In the case at bar, though there be no specific statement referring to
the subject house as personal property, yet by ceding, selling or transferring
a property through chattel mortgage could only have meant that defendant
conveys the house as chattel, or at least, intended to treat the same as such,
so that they should not now be allowed to make an inconsistent stand by
claiming otherwise.


MANILA ELECTRIC COMPANY vs CBAA

Facts:
Pursuant to a pipeline concession issued under the Petroleum Act of
1949, Republic Act No.387, Meralco Securities installed from Batangas to
Manila a pipeline system consisting of cylindrical steel pipes joined together
and buried not less than one meter below the surface along the shoulder of
the public highway.
The pipes are embedded in the soil while the valves are welded to
the pipes so as to make the pipeline system one single piece of property
from end to end.
Pursuant to the Assessment Law, Commonwealth Act No. 470, the
provincial assessor of Laguna treated the pipeline as real property and
issued Tax Declarations

ISSUE:
Whether or not the Meralco Securities Pipeline System in Laguna is
realty property? Is it subject to realty tax?

RULING:
While the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its
utility and rendering it useful to the oil industry, it is undeniable that the two
tanks have been installed with some degree of permanence as receptacles
for the considerable quantities of oil needed by meralco for its operations.
The pipes are machinery or improvements and regarded as realty
because they are constructions adhered to the soil. It is attached to the land
in such away that it cannot be separated there from without dismantling the
steel pipes which are welded to the pipeline. In so far as the pipeline uses
valves, pumps and control devices to maintain the flow of the oil, it is in a
sense a machinery within the meaning of the Real Property Tax Code.
For purposes of taxation, the term real property may include things
which should generally be regarded as personal property. It is a familiar
phenomenon to see things classed as real property for purposed of taxation
which on general principle might be considered personal property.



6. MERALCO versus CBAA

FACTS:
Meralco Securities installed from Batangas to Manila a pipeline
system consisting of cylindrical steel pipes joined together and buried not
less than one meter below the surface along the shoulder of the public
highway. The pipes are embedded in the soil and are firmly and solidly
welded together so as to preclude breakage or damage thereto and prevent
leakage or seepage of the oil. The valves are welded to the pipes so as to
make the pipeline system one single piece of property from end to end.
Pursuant to the Assessment Law, Commonwealth Act No. 470, the
provincial assessor of Laguna treated the pipeline as real property and
issued Tax. Meralco Securities brought the case to the Central Board of
Assessment Appeals which ruled that the pipeline is subject to realty tax.
The Central Board of Assessment Appeals, in confirming the ruling
of the provincial assessor and the provincial board of assessment appeals
that Meralco Securities' pipeline is subject to realty tax, reasoned out that the
pipes are machinery or improvements, as contemplated in the Assessment
Law and the Real Property Tax Code; that they do not fall within the category
of property exempt from realty tax under those laws; that articles 415 and
416 of the Civil Code, defining real and personal property, have no
application to this case; that even under article 415, the steel pipes can be
regarded as realty because they are constructions adhered to the soil and
things attached to the land in a fixed manner
Meralco Securities insists that its pipeline is not subject to realty tax because
it is not real property within the meaning of article 415.

ISSUE:
Whether or not the pipelines are real property within the meaning of
Article 415.

RULING:
Article 415[l] and [3] provides that real property may consist of
constructions of all kinds adhered to the soil and everything attached to an
immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object.
The pipeline system in question is indubitably a construction
adhering to the soil. It is attached to the land in such a way that it cannot be
separated therefrom without dismantling the steel pipes which were welded
to form the pipeline. It should be borne in mind that what are being
characterized as real property are not the steel pipes but the pipeline system
as a whole.
A pipeline for conveying petroleum has been regarded as real property for
tax purposes .



7. CBAA v. MANILA ELECTRIC

FACTS:
Petitioner owns two oil storage tanks, made of steel plates wielded
and assembled on the spot. Their bottoms rest on a foundation
consisted of compacted earth, sand pad as immediate layer, and asphalt
stratum as top layer. The tanks merely sit on its foundation.

The municipal treasurer of Batangas made an assessment for realty tax on
the two tanks, based on the report of the Board of Assessors. MERALCO
wished to oppose this assessment as they averred that the tanks are not real
properties.

HELD:
While the two storage tanks are not embodied in the land, they may
nevertheless be considered as improvements in the land, enhancing its
utility and rendering it useful to the oil industry.

For purposes of taxation, the term real property may include things, which
should generally be considered as personal property. it is familiar
phenomenon to see things classified as real property for purposes of
taxation which on general principle may be considered as personal
property.
8. CALTEX (PHIL.) INC. VS. CENTRAL BOARD OF ASSESSMENT
APPEALS

FACTS
This case is about the realty tax on machinery and equipment
installed by Caltex (Philippines) Inc. in its gas stations located on leased
land. The machines and equipment consists of underground tanks, elevated
tank, elevated water tanks, water tanks, gasoline pumps, computing pumps,
water pumps, car washer, car hoists, truck hoists, air compressors and
tireflators. The said machines and equipment are loaned by Caltex to gas
station operators under an appropriate lease agreement or receipt. It is
stipulated in the lease contract that the operators, upon demand, shall return
to Caltex the machines and equipment in good condition as when received,
ordinary wear and tear excepted.
The lessor of the land, where the gas station is located, does not
become the owner of the machines and equipment installed therein. Caltex
retains the ownership thereof during the term of the lease. The city assessor
of Pasay City characterized the said items of gas station equipment and
machinery as taxable realty. The assessor appealed to the Central Board of
Assessment Appeals. The Board held that the said machines and equipment
are real property. The decision was reiterated by the Board denying Caltex's
motion for reconsideration. Caltex filed this certiorari petition wherein it
prayed for the setting aside of the Board's decision and for a declaration that
t he said machines and equipment are personal property not subject to realty
tax. Consequently, the only remedy available for seeking a review by this
Court of the decision of the Central Board of Assessment Appeals is the
special civil action of certiorari, the recourse resorted to herein by Caltex.

Issue:
Whether the pieces of gas station equipment and machinery already
enumerated are subject to realty tax.

Ruling:
said equipment and machinery, as appurtenances to the gas station
building or shed owned by Caltex (as to which it is subject to realty tax) and
which fixtures are necessary to the operation of the gas station, for without
them the gas station would be useless, and which have been attached or
affixed permanently to the gas station site or embedded therein, are taxable
improvements and machinery within the meaning of the Assessment Law
and the Real Property Tax Code.

Improvements on land are commonly taxed as realty even though for some
purposes they might be considered personalty. "It is a familiar phenomenon
to see things classed as real property for purposes of taxation which on
general principle might be considered personal property.

9. MAKATI LEASING v. WEAREVER TEXTILE MILSS

FACTS:
It appears that in order to obtain financial accommodations from
herein petitioner Makati Leasing and Finance Corporation, the private
respondent Wearever Textile Mills, Inc., discounted and assigned several
receivables with the former under a Receivable Purchase Agreement. To
secure the collection of the receivables assigned, private respondent
executed a Chattel Mortgage over certain raw materials inventory as well as
a machinery described as an Artos Aero Dryer Stentering Range. Upon
private respondent's default, petitioner filed a petition for extrajudicial
foreclosure of the properties mortgage to it. Acting on petitioner's application
for replevin, the lower court issued a writ of seizure. On July 13, 1981, the
sheriff enforcing the seizure order, repaired to the premises of private
respondent and removed the main drive motor of the subject machinery
The Court of Appeals, in certiorari and prohibition proceedings subsequently
filed by herein private respondent, set aside the Orders of the lower court
and ordered the return of the drive motor seized by the sheriff pursuant to
said Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property
pursuant to Article 415 of the new Civil Code, the same being attached to the
ground by means of bolts and the only way to remove it from respondent's
plant would be to drill out or destroy the concrete floor, the reason why all
that the sheriff could do to enfore the writ was to take the main drive motor of
said machinery. The appellate court rejected petitioner's argument that
private respondent is estopped from claiming that the machine is real
property by constituting a chattel mortgage thereon.

ISSUE:
Whether the machinery is real or personal property.

RULING:
Citing the case of Tumulad vs Vicencio where a house subjected to a
chatted mortgage was treated as personal property, We find no logical
justification to exclude the rule out, as the appellate court did, the present
case from the application of the abovequoted pronouncement. If a house of
strong materials, like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no
innocent third party will be prejudiced thereby, there is absolutely no reason
why a machinery, which is movable in its nature and becomes immobilized
only by destination or purpose, may not be likewise treated as such. This is
really because one who has so agreed is estopped from denying the
existence of the chattel mortgage.
It must be pointed out that the characterization of the subject
machinery as chattel by the private respondent is indicative of intention and
impresses upon the property the character determined by the parties. As
stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is
undeniable that the parties to a contract may by agreement treat as personal
property that which by nature would be real property, as long as no interest
of third parties would be prejudiced thereby



10. BERKENKOTTER V. CU UNJIENG

Facts:
Mabalacat Sugar Co. obtained from defendant a loan secured by the
a first mortgage constituted on 2 parcels of land with all its building,
improvements, etc.
The company decided to buy additional machinery and equipment to
increase the capacity of the sugar central. Green, president of Mabalacat
Sugar Co., proposed to petitioner Berkenkotter to advance the amount for
the purchase of the machinery and equipment, promising to reimburse him
as soon as he could obtain the additional loan from defendant. Petitioner
agreed. Green applied to defendant additional loan offering as security the
additional machinery and equipment acquired by Green and installed in the
sugar central after the execution of the original mortgage deed. However,
Green failed to obtain said loan.

Issue:
What is the nature of the machinery and equipment incorporated in
the sugar central?

Ruling:
The installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a
permanent improvement on said sugar central and subjects said machinery
and equipment to the mortgage constituted thereon.
The fact that the purchaser of the new machinery and equipment has
bound himself to the person supplying him the purchase money to hold them
as security for the payment of the latters creditor, and to refrain from
mortgaging or otherwise encumbering them does not alter the permanent
character of the incorporation of said machinery and equipment with the
central.
The sale of the machinery and equipment in question by the
purchaser who was supplied the purchase money, as a loan, to the person
who supplied the money, after the incorporation thereof with the mortgaged
sugar central, does not vest the creditor with ownership of said machinery
and equipment but simply with the right of redemption.
11. DAVAO SAW MILL VS CASTILLO

Facts:
The Davao Saw Mill Co., Inc., is the holder of a lumber concession.
However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which
housed the machinery used by it. Some of the implements thus used were
clearly personal property, the conflict concerning machines which were
placed and mounted on foundations of cement. Stipulated in the contract of
lease between the sawmill company and the owner of the land, that on the
expiration of the period agreed upon, all buildings and improvements would
pass to the ownership of the lessor, which would not include machineries and
accessories.
In another action, wherein the Davao Light & Power Co., Inc., was
the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a
judgment was rendered in favor of the plaintiff in that action against the
defendant in that action; a writ of execution issued thereon, and the
properties now in question were levied upon as personalty by the sheriff. No
third party claim was filed for such properties at the time of the sales thereof
as is borne out by the record made by the plaintiff herein. It must be noted
that Davao Saw Mill Co., Inc., has on a number of occasions treated the
machinery as personal property by executing chattel mortgages in favor of
third persons.

Issue:
WON the machineries and equipment were personal in nature.
WON the machineries and equipment are subject to real property
tax?
Held:
Yes. It was held that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or
plant, but not when so placed by a tenant, a usufructuary, or any person
having only a temporary right, unless such person acted as the agent of the
owner.
The said machineries and equipment, as appurtenances to the gas
station building or shed owned by Caltex and which fixtures are necessary to
the operation of the gas station, for without them the gas station would be
useless, and which have been attached or affixed permanently to the gas
station site or embedded therein, are taxable improvements and machinery
within the meaning of the assessment law and the real property tax code.



12. US VS CARLOS

Facts:
Ignacio Carlos has been a consumer of electricity furnished by the
Manila Electric Railroad and Light Company for a building containing the
residence of the accused and 3other residences. Representatives of the
company believing that more light is consumed than what is shown in the
meter installed an additional meter on the pole outside Carlos house to
compare the actual consumption and found out that the latter used a jumper.
Further, a jumper was found in a drawer of a small cabinet in the room of the
defendants house were the meter was installed. In the absence of any
explanation for Carlos possession of said device, the presumption raised
was that Carlos was the owner of the device whose only use was to deflect
the current from the meter. Thus he was charged with the crime of theft
amounting to 2,273KW of electric power worth909.20 pesos.

Issue:
Whether or not the court erred in declaring that the electrical energy
may be stolen.

Held:
It is true that electricity is no longer, as formerly, regarded by
electricians as a fluid, but its manifestation and effects, like those of gas, may
be seen and felt. The true test of what is a proper subject of larceny seems to
be not whether the subject is corporeal, but whether it is capable of
appropriation by another than the owner. The court ruled that electricity, the
same as gas, is a valuable article of merchandise, bought and sold like other
personal property and is capable of appropriation by another. It is also
susceptible of being severed from a mass or larger quantity, and of being
transported from place to place. So no error was committed by the trial court
in holding that electricity is a subject of larceny.



13. FELS ENERGY V. PROV. OF BATANGAS

Doctrine: In Consolidated Edison Company of New York, Inc., et al. v. The
City of New York, et al., a power company brought an action to review
property tax assessment. On the citys motion to dismiss, the Supreme Court
of New York held that the barges on which were mounted gas turbine power
plants designated to generate electrical power, the fuel oil barges which
supplied fuel oil to the power plant barges, and the accessory equipment
mounted on the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that docks and
structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake, or coast are considered immovable
property. Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other implements intended
by the owner for an industry or work which may be carried on in a building or
on a piece of land and which tend directly to meet the needs of said industry
or work.

Facts: On January 18, 1993, NPC entered into a lease contract with Polar
Energy, Inc. over 330 MW diesel engine power barges moored at Balayan
Bay in Calaca, Batangas. The contract, denominated as an Energy
Conversion Agreement, was for a period of five years. Article 10 states that
NPC shall be responsible for the payment of taxes. (other than (i) taxes
imposed or calculated on the basis of the net income of POLAR and
Personal Income Taxes of its employees and (ii) construction permit fees,
environmental permit fees and other similar fees and charges. Polar Energy
then assigned its rights under the Agreement to Fels despite NPCs initial
opposition.

FELS received an assessment of real property taxes on the power barges
from Provincial Assessor Lauro C. Andaya of Batangas City. FELS referred
the matter to NPC, reminding it of its obligation under the Agreement to pay
all real estate taxes. It then gave NPC the full power and authority to
represent it in any conference regarding the real property assessment of the
Provincial Assessor. NPC filed a petition with the LBAA. The LBAA ordered
Fels to pay the real estate taxes. The LBAA ruled that the power plant
facilities, while they may be classified as movable or personal property, are
nevertheless considered real property for taxation purposes because they
are installed at a specific location with a character of permanency. The LBAA
also pointed out that the owner of the bargesFELS, a private corporationis
the one being taxed, not NPC. A mere agreement making NPC responsible
for the payment of all real estate taxes and assessments will not justify the
exemption of FELS; such a privilege can only be granted to NPC and cannot
be extended to FELS. Finally, the LBAA also ruled that the petition was filed
out of time.

Fels appealed to the CBAA. The CBAA reversed and ruled that the power
barges belong to NPC; since they are actually, directly and exclusively used
by it, the power barges are covered by the exemptions under Section 234(c)
of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled that
prescription did not preclude the NPC from pursuing its claim for tax
exemption in accordance with Section 206 of R.A. No. 7160. Upon MR, the
CBAA reversed itself.

Issue: Whether or not the petitioner may be assessed of real property taxes.

Held: YES. The CBAA and LBAA power barges are real property and are
thus subject to real property tax. This is also the inevitable conclusion,
considering that G.R. No. 165113 was dismissed for failure to sufficiently
show any reversible error. Tax assessments by tax examiners are presumed
correct and made in good faith, with the taxpayer having the burden of
proving otherwise. Besides, factual findings of administrative bodies, which
have acquired expertise in their field, are generally binding and conclusive
upon the Court; we will not assume to interfere with the sensible exercise of
the judgment of men especially trained in appraising property. Where the
judicial mind is left in doubt, it is a sound policy to leave the assessment
undisturbed. We find no reason to depart from this rule in this case.

In Consolidated Edison Company of New York, Inc., et al. v. The City of New
York, et al., a power company brought an action to review property tax
assessment. On the citys motion to dismiss, the Supreme Court of New York
held that the barges on which were mounted gas turbine power plants
designated to generate electrical power, the fuel oil barges which supplied
fuel oil to the power plant barges, and the accessory equipment mounted on
the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that docks and
structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake, or coast are considered immovable
property. Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other implements intended
by the owner for an industry or work which may be carried on in a building or
on a piece of land and which tend directly to meet the needs of said industry
or work.

Petitioners maintain nevertheless that the power barges are exempt from real
estate tax under Section 234 (c) of R.A. No. 7160 because they are actually,
directly and exclusively used by petitioner NPC, a government- owned and
controlled corporation engaged in the supply, generation, and transmission of
electric power.

We affirm the findings of the LBAA and CBAA that the owner of the taxable
properties is petitioner FELS, which in fine, is the entity being taxed by the
local government. As stipulated under Section 2.11, Article 2 of the
Agreement:

OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges
and all the fixtures, fittings, machinery and equipment on the Site used in
connection with the Power Barges which have been supplied by it at its own
cost. POLAR shall operate, manage and maintain the Power Barges for the
purpose of converting Fuel of NAPOCOR into electricity.

It follows then that FELS cannot escape liability from the payment of realty
taxes by invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed,
the law states that the machinery must be actually, directly and exclusively
used by the government owned or controlled corporation; nevertheless,
petitioner FELS still cannot find solace in this provision because Section 5.5,
Article 5 of the Agreement provides:

OPERATION. POLAR undertakes that until the end of the Lease Period,
subject to the supply of the necessary Fuel pursuant to Article 6 and to the
other provisions hereof, it will operate the Power Barges to convert such Fuel
into electricity in accordance with Part A of Article 7.

It is a basic rule that obligations arising from a contract have the force of law
between the parties. Not being contrary to law, morals, good customs, public
order or public policy, the parties to the contract are bound by its terms and
conditions.

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

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

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

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



14. GOVERNMENT V. CABANGIS

FACTS: In 1896, A owned a parcel of land, but because of the action of the
waves of Manila Bay, part of said land was gradually submerged in the sea.
It remained submerged until 1912 when the government decided to make
the necessary dredging to reclaim the land from the sea. As soon as the land
had been recovered A took possession of it.

Issue: the ownership of the reclaimed land.

HELD: The government owns the reclaimed land in the
sense that it has become property of public dominion, because
in letting it remain submerged, A may be said to have abandoned
the same. Having become part of the sea or the seashore,
it became property for public use. When the government took
steps to make it land again, its status as public dominion remained
unchanged; therefore, A is not entitled to the land.



15. CEBU OXYGEN AND ACETYLENE CO. V. BERCILLES

FACTS:
The land sought to be registered in this case was formerly a part of
M. Borces Street, Mabolo, Cebu City. Through a resolution, it was declared
as an abandoned road, the same not being included in the City Development
Plan. another resolution was passed which authorized the mayor to sell the
land through a public bidding wherein the petitioner I this case was the
highest bidder. Thus, an execution of a deed of absolute sale was executed
and the petitioner filed an application with the Court of First instance of Cebu
to have its title to the land registered. However, On June 26, 1974, the
Assistant Provincial Fiscal of Cebu filed a motion to dismiss the application
on the ground that the property sought to be registered being a public road
intended for public use is considered part of the public domain and therefore
outside the commerce of man. Consequently, it cannot be subject to
registration by any private individual.

ISSUE:
WON Cebu oxygen can validly own said land.

RULING:
Yes. Since that portion of the city street subject of petitioner's
application for registration of title was withdrawn from public use, it follows
that such withdrawn portion becomes patrimonial property which can be the
object of an ordinary contract. Article 422 of the Civil Code expressly
provides that "Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of
the State." "Property thus withdrawn from public servitude may be used or
conveyed for any purpose for which other real property belonging to the City
may be lawfully used or conveyed." Hence, the withdrawal of the property in
question from public use and its subsequent sale to the petitioner is valid.


16. Viuda de Tan Toco v. Mun. Council of Iloilo 49 Phil. 52

FACTS: The municipality of Iloilo bought from the widow of Tan Toco a
parcel of land for P42,966.40 which was used for street purposes. For failure
of the municipality to pay the debt, the widow obtained a writ of execution
against the municipal properties, and by virtue of such writ was able to obtain
the attachment of two auto trucks used for street sprinkling, one police patrol
automobile, two police stations, and two markets, including the lots on which
they had been constructed. The issue is the validity of the attachment.

HELD: The attachment is not proper because municipal-owned real and
personal properties devoted to public or governmental purposes may not be
attached and sold for the payment of a judgment against a municipality. Just
as it is essential to exempt certain properties of individuals (like the bare
essentials) from execution, so it is also essential and justifi able to exempt
property for public use from execution, otherwise governmental service
would be jeopardized. [NOTE: Had the properties been patrimonial, they
could have been levied upon or attached. (See Mun. of Pasay v. Manaois, et
al., L-3485, June 30, 1950).].

-

(1) Properties in Political Subdivisions

Art. 424 enumerates the various kinds of properties of political subdivisions,
and classifi es them into:

(a) property for public use

(b) patrimonial property

[NOTE: In the case of STATE properties, properties for public service are of
public dominion; this is not so in the case of provinces, cities, etc., said
properties for public service are patrimonial (since they are not for public
use). (Prov. of Zamboanga del Norte v. City of Zamboanga, et al., L-24440,
Mar. 28, 1968).].



17. PROVINCE OF ZAMBOANGA DEL NORTE VS ZAMBOANGA
CITY

FACTS: After Zamboanga Province was divided into two (Zamboanga del
Norte and Zamboanga del Sur), Republic Act 3039 was passed providing
that All buildings, properties, and assets belonging to the former province
of Zamboanga and located within the City of Zamboanga are hereby
transferred free of charge in favor of the City of Zamboanga. Suit was
brought alleging that this grant without just compensation was
unconstitutional because it deprived the province of property without due
process. Included in the properties were the capital site and capitol building,
certain school sites, hospital and leprosarium sites, and high school
playgrounds.

Issues:

a) Are the properties mentioned, properties for public use or patrimonial?

b) Should the city pay for said properties?

HELD:

a) If we follow the Civil Code classifi cation, only the high school playgrounds
are for public use (in the sense that generally, they are available to the
general public), and all the rest are PATRIMONIAL (since they are not
devoted to public use but to public service; since they are not for public use,
under Art. 424 of the Civil Code, they are patrimonial. [NOTE: For public use
if ANYBODY can use; for public service if only AUTHORIZED persons can
use.].

[NOTE: Had they been owned by the STATE, they would not have been
patrimonial but would have been properties of public dominion for this
would include public service, conformably with Art. 420, par. 2.].

BUT if we follow the law of Municipal Corporations (and not the Civil Code),
as long as the purpose is for a public service (governmental service like
public education, public health, local administration), the property should be
considered for PUBLIC USE.

b) If the Civil Code classifi cation is used, since almost all the properties
involved are patrimonial, the law would be unconstitutional since the province
would be deprived of its own property without just compensation.

If the law on Municipal Corporations would be followed, the properties would
be of public dominion, and therefore NO COMPENSATION would be
required. It is this law on Municipal Corporations that should be followed.
Firstly, while the Civil Code may classify them as patrimonial, they should not
be regarded as ordinary private property. They should fall under the control
of the State, otherwise certain governmental activities would be impaired.
Secondly, Art. 424, 2nd paragraph itself says without prejudice to the
provisions (or PRINCIPLES) of special laws.



18. Salas vs Jarencio
Facts:
On February 24, 1919, the 4th Branch of theCourt of First Instance of
Manila, acting as aland registration court, rendered judgmentdeclaring the
City of Manila the owner in feesimple of a parcel of land containing an area
of 9,689.8 square meters, more or less. On variousdates in 1924, the City of
Manila sold portionsof the aforementioned parcel of land in favor of Pura
Villanueva.On September 21, 1960, the Municipal Board of Manila, presided
by then Vice-Mayor Antono J.Villegas, adopted a resolution requesting
HisExcellency, the President of the Philippines toconsider the feasibility of
declaring the Cityproperty bounded by Florida, San Andres, andNebraska
Streets, containing a total area of 7,450 square meters as a patrimonial
propertyof the City of Manila for the purpose of resellingthese lots to the
actual occupants thereof. There is therefore a precedent that this parcelof
land could be subdivided and sold to bonafide occupants. The bill was
passed by theSenate and approved by the President andbecame RA 4118.
Issue:
WON the property involved in RA 4118 i s aprivate or patrimonial property
of the City of Manila.
Ruling:
The conclusion of the respondent court thatRepublic Act No. 4118
converted a patrimonialproperty of the City of Manila into a parcel of
disposable land of the State and took it awayfrom the City without
compensation is,therefore, unfounded. In the last analysis theland in
question pertains to the State and theCity of Manila merely acted as trustee
for thebenefit of the people therein for whom theState can legislate in the
exercise of itslegitimate powers.If it were its patrimonial property why
shouldthe City of Manila be requesting the Presidentto make representation
to the legislature todeclare it as such so it can be disposed of infavor of the
actual occupants? There could beno more blatant recognition of the fact
that saidland belongs to the State and was simplygranted in usufruct to the
City of Manila formunicipal purposes

19. AMUNATEGUI VS DIRECTOR OF FORESTRY


20. REPUBLIC V. BACUS

Facts:
Francisco Bacus filed application for registration of a parcel of land.
The Republic of the Philippines filed an opposition on the application on the
ground that the property is part of public domain. The registration court
favored the applicant. On appeal, the CA ruled that the subject land is still
part of the public forest and so it cannot be subject to alienation. Per
investigation by the District Forester, said land is still inside the timberland
project.

Issue:
Can the question land be subject to private ownership?

Ruling:
NO. from the evidence of record, the subject property has not yet
been declassified as forest land and is not therefore susceptible of private
ownership.
With regard to the imperfect title claimed by respondent, the court
said that there can be no imperfect title to be confirmed over lands not yet
classified as disposable. Declassification of forest land is an express and
positive act of government. It cannot be presumed; neither should it be
ignored or deemed waived.

21. TATTOC V. IAC



22. MUNICIPALITY OF SAN MIGUEL BULACAN VS FERNANDEZ

Facts:
In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al.
vs. Municipal Government of San Miguel, Bulacan, et al.", the then Court of
First Instance of Bulacan, on April 28, 1978, rendered judgment holding
municipality liable, among others, to pay to the plaintiffs (herein private
respondents) the sum of P64,440.00 corresponding to the rentals it has
collected from the occupants for their use and occupation of the premises
from 1970 up to and including 1975, plus interest thereon at the legal rate
from January 1970 until fully paid, restoration of ownership and possession
over the five lots in question in favor of the plaintiffs in the same proportion
aforementioned and to pay the plaintiffs (herein private respondents) the sum
of P3,000.00 for attomey's fees; and to pay the cost of suit. The judgement
became final, hence the order of writ of execution. Municipality of Bulacan
(herein petitioner) moved to Quash the writ of execution on the ground that
the municipality's property or funds are public funds exempt from execution.
The motion was however denied by the respondent Judge. Hence the
present petition.

Issue:
Whether the funds of the Municipality of San Miguel, Bulacan, in the
hands of the provincial and municipal treasurers of Bulacan and San Miguel,
respectively, are public funds which are exempt from execution for the
satisfaction of the money judgment in Civil Case No. 604-B.ch

Held:
Well settled is the rule that public funds are not subject to levy and
execution. The reason for this was explained in the case of Municipality of
Paoay vs. Manaois, 86 Phil. 629 "that they are held in trust for the people,
intended and used for the accomplishment of the purposes for which
municipal corporations are created, and that to subject said properties and
public funds to execution would materially impede, even defeat and in some
instances destroy said purpose." And, in Tantoco vs. Municipal Council of
Iloilo, 49 Phil. 52, it was held that "it is the settled doctrine of the law that not
only the public property but also the taxes and public revenues of such
corporations Cannot be seized under execution against them, either in the
treasury or when in transit to it. Judgments rendered for taxes, and the
proceeds of such judgments in the hands of officers of the law, are not
subject to execution unless so declared by statute." Thus, it is clear that all
the funds of petitioner municipality in the possession of the Municipal
Treasurer of San Miguel, as well as those in the possession of the Provincial
Treasurer of Bulacan, are also public funds and as such they are exempt
from execution.


23. LANZAR VS DIRECTOR OF LANDS

FACTS:
Lanzar filed for application for registration of title over a parcel of land, to
which the Director of Lands objected to as the land in question, according to
him, was part of the foreshore lands. The trial court adjudicated the
land to Lanzar as the said land wasnt necessary for public utility or
establishment of special industries.

The CA reversed the decision.

HELD:
Lands added to the shore by accretion and alluvial deposits caused by the
action of the sea, form part of the public domain. When they are no longer
washed by the water of the sea and are not necessary for purposes
of public utility, or for the establishment of special industries, or for
coastguard services, then the Government shall declare them to be
property of the owners of the estate adjacent thereto and as increment
thereof.
24.


25. YAP VS GRAGEDA

26. MERALCO v. BARTOLOME

FACTS:
This is an application by MERALCO to the CA for land registration as
it was dismissed by the lower court.
This case involves the prohibition in section 11, Article XIV of the
Constitution that "no private coporation or associaiton may hold alienable
lands of the public domain except by lease not to exceed one thousand
hectares in area".Manila Electric Company, filed on December 1, 1976 in the
Makati branch of the Court of First Instance of Rizal, prayed for the
confirmation of its title to two lots with a total area of one hundred sixty-five
square meters.
Republic of the Philippines opposed the application on the grounds
that the applicant, as a private corporation,is disqualified to hold alienable
public lands and that the applicant and its predecessors-in-interest have not
been in the open, continuous, exclusive and notorious possession and
occupation of the land for at least thirty years immediately preceding the filing
of the application.
Lower court rendered a decision dismissing the application because
in its opinion the Meralco is not qualified to apply for the registration of the
said land since under section 48(b) of the Public Land Law only Filipino
citizens or natural persons can apply for judicial confirmation of their
imperfect titles to public land. The Meralco is a juridical person.
MERALCO contends that the said land, after having been possessed
in the concept of owner by Olimpia Ramos and the Piguing spouses for more
than thirty years, had become private land in the hands of the latter, and,
therefore, the constitutional prohibition, banning a private corporation from
acquiring alienable public land, is not applicable to the said land. CA affirms
the ruling of the lower court.

ISSUE:
DID THE PIGUING SPOUSES (AS PREDECESSOR IN INTEREST)
ABLE TO QUALIFY TO CONVERT THE PUBLIC LAND TO PRIVATE LAND
SO AS TO QUALIFY MERALCO TO REGISTER THE LAND?

RULING:
No, as reiterated in OH CHO case, the benefits provided in the
Public Land Act (meaning the confirmation of an imperfect title under section
48[b]) for applicant's immediate predecessors-in-interest are or constitute a
grant or concession by the State; and before they could acquire any right
under such benefits, the applicant's immediate predecessors-in-interest
should comply with the condition precedent for the grant of such benefits.
The condition precedent is to apply for the registration of the land of
which they had been in possession at least since July 26, 1894. This the
applicant's immediate predecessors-in-interest (meaning the Piguing
spouses in the instant case) failed to do.
They did not have any vested right in the lot amounting to title which
was transmissible to the applicant. The only right, if it may thus be called, is
their possession of the lot which, tacked to that of their predecessors-in-
interest, may be availed of by a qualified person to apply for its registration
but not by a person as the applicant who is disqualified.



27. SUSI VS RAZON

Facts:
On December 18, 1880, Nemesio Pinlac sold the land in question,
then a fish pond, tho Apolonio Garcia and Basilio Mendoza for the sum of
P12, reserving the right to repurchase the same. After having been in
possession thereof for about eight years, and the fish pond having been
destroyed, Apolonio Garcia and Basilio Mendoza, on September 5, 1899,
sold it to Valentin Susi for the sum of P12, reserving the right to repurchase
it. Before the execution of the deed of sale, Valentin Susi had already paid its
price and sown "bacawan" on said land, availing himself of the firewood
gathered thereon, with the proceeds of the sale of which he had paid the
price of the property. The possession and occupation of the land in question,
first, by Apolonio Garcia and Basilio Mendoza, and then by Valentin Susi has
been open, continuous, adverse and public, without any interruption, except
during the revolution, or disturbance, except when Angela Razon, on
September 13, 1913, commenced an action in the Court of First Instance of
Pampanga to recover the possession of said land, wherein after considering
the evidence introduced at the trial, the court rendered judgment in favor of
Valentin Susi and against Angela Razon, dismissing the complaint.
Having failed in her attempt to obtain possession of the land in
question through the court, Angela Razon applied to the Director of Lands for
the purchase thereof on August 15, 1914. Having learned of said application,
Valentin Susi filed and opposition thereto on December 6, 1915, asserting his
possession of the land for twenty-five years. After making the proper
administrative investigation, the Director of Lands overruled the opposition of
Valentin Susi and sold the land to Angela Razon. By virtue of said grant the
register of deeds of Pampanga, on August 31, 1921, issued the proper
certificate of title to Angela Razon. Armed with said document, Angela Razon
required Valentin Susi to vacate the land in question, and as he refused to do
so, she brought and action for forcible entry and detainer in the justice of the
peace court of Guagua, Pampanga, which was dismissed for lack of
jurisdiction, the case being one of title to real property. Valentin Susi then
brought this action.

Ruling:
It clearly appears from the evidence that Valentin Susi has been in
possession of the land in question openly, continuously, adversely, and
publicly, personally and through his predecessors, since the year 1880, that
is, for about forty-five years. In favor of Valentin Susi, there is, moreover, the
presumption juris et de jure established in paragraph (b) of section 45 of Act
No. 2874, amending Act No. 926, that all the necessary requirements for a
grant by the Government were complied with, for he has been in actual and
physical possession, personally and through his predecessors, of an
agricultural land of the public domain openly, continuously, exclusively and
publicly since July 26, 1894, with a right to a certificate of title to said land
under the provisions of Chapter VIII of said Act. So that when Angela Razon
applied for the grant in her favor, Valentin Susi had already acquired, by
operation of law, not only a right to a grant, but a grant of the Government,
for it is not necessary that certificate of title should be issued in order that
said grant may be sanctioned by the courts, an application therefore is
sufficient, under the provisions of section 47 of Act No. 2874. If by a legal
fiction, Valentin Susi had acquired the land in question by a grant of the
State, it had already ceased to be the public domain and had become private
property, at least by presumption, of Valentin Susi, beyond the control of the
Director of Lands. Consequently, in selling the land in question to Angela
Razon, the Director of Lands disposed of a land over which he had no longer
any title or control, and the sale thus made was void and of no effect, and
Angela Razon did not thereby acquire any right.

28.

29. DACANAY VS ASISTIO

FACTS:
On January 5, 1979, MMC Ordinance No. 79-02 was enacted by the
Metropolitan Manila Commission, designating certain city and municipal
streets, roads and open spaces as sites for flea markets. Pursuant, thereto,
the Caloocan City mayor opened up seven (7) flea markets in that city. One
of those streets was the "Heroes del '96" where the petitioner lives. Upon
application of vendors the respondents city mayor and city engineer, issued
them licenses to conduct vending activities on said street.
In 1987, Antonio Martinez, as OIC city mayor of Caloocan City,
caused the demolition of the market stalls on Heroes del '96, V. Gozon and
Gonzales streets. To stop Mayor Martinez' efforts to clear the city streets,
some vendors filed an action for prohibition against the City of Caloocan
praying the court to issue a writ of preliminary injunction ordering the city
officials to discontinue the demolition of their stalls during the pendency of
the action. However, the court dismissed the petition ruling that Heroes del
'96, Gozon and Gonzales streets are of public dominion, hence, outside the
commerce of man.
However, shortly after the decision came out, the city administration
in Caloocan City changed hands. City Mayor Macario Asistio, Jr., as
successor of Mayor Martinez, did not pursue the latter's policy of clearing
and cleaning up the city streets. Invoking the trial court's decision Francisco
U. Dacanay who resides on Heroes del '96 Street, one of the affected streets
filed the present petition for mandamus praying that the public respondents
be ordered to enforce the final decision.

ISSUE:
Whether or not Heroes del 96 Street can be the subject to of a lease
contract.

RULING:
There is no doubt that the disputed areas from which the private
respondents' market stalls are sought to be evicted are public streets. A
public street is property for public use hence outside the commerce of man
(Arts. 420, 424, Civil Code). Being outside the commerce of man, it may not
be the subject of lease or other contract
As the stallholders pay fees to the City Government for the right to
occupy portions of the public street, the City Government, contrary to law,
has been leasing portions of the streets to them. Such leases or licenses are
null and void for being contrary to law. The right of the public to use the city
streets may not be bargained away through contract. The interests of a few
should not prevail over the good of the greater number in the community
whose health, peace, safety, good order and general welfare, the respondent
city officials are under legal obligation to protect. The Executive Order issued
by Acting Mayor Robles authorizing the use of Heroes del '96 Street as a
vending area for stallholders who were granted licenses by the city
government contravenes the general law that reserves city streets and roads
for public use.

30.



31.



32. SIBAL VS VALDEZ

Facts:
Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff
of the Province of Tarlac, , attached and sold to the defendant Emiliano J.
Valdez the sugar cane planted by the plaintiff and his tenants on parcels of
land.
Within one year from the date of the attachment and sale the plaintiff
offered to redeem said sugar cane and tendered to the defendant Valdez the
amount sufficient to cover the price paid by the latter, the interest thereon
and any assessments or taxes which he may have paid thereon after the
purchase, and the interest corresponding thereto and that Valdez refused to
accept the money and to return the sugar cane to the plaintiff.
Plaintiff alleged that the defendant Emiliano J. Valdez was
attempting to harvest the palay planted in four of the seven parcels of land
and that he had harvested and taken possession of the palay in one of said
seven parcels and in another parcel and that all of said palay belonged to the
plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against
the defendant Emiliano J. Valdez his attorneys and agents, restraining them
(1) from distributing him in the possession of the parcels of land described in
the complaint; (2) from taking possession of, or harvesting the sugar cane in
question; and (3) from taking possession, or harvesting the palay in said
parcels of land.
Plaintiff also prayed that a judgment be rendered in his favor and
against the defendants ordering them to consent to the redemption of the
sugar cane in question, and that the defendant Valdez be condemned to pay
to the plaintiff the sum of P1,056 the value of palay harvested by him in the
two parcels of land, with interest and costs.
The trial court rendered a judgment against the plaintiff and in favor
of the defendants. It appeared that the eight parcels of land belonging to
Sibal were attached and Macondray Co., Inc. bought the eight parcels of
land. Within 1 year from the sale, Sibal paid Macondray Co., Inc. for the
account of the redemption price.
The deputy sheriff attached the personal property of Sibal, which
included the sugar cane now in question in the seven parcels of land. Said
personal properties were sold to Valdez in a public auction. Real property of
Sibal was also attached, consisting of 11 parcels of land, 8 of which were
bought by Valdez in an auction held by the sheriff. The remaining 3 parcels
were released by virtue of claims of Cuyugan and Tizon.
On that same date, Macondray sold all of its rights to Valdez in the
eight parcels of land acquired, for the unpaid balance of the redemption price
of said eight parcels of land. Valdez became the absolute owner of the land.
Meanwhile, defendant argued that the sugar cane was personal
property hence not subject to redemption.

Issue:
Whether or not the sugar cane is to be classified as personal
property

Ruling:
It is contended on the part of the appellee that paragraph 2 of article
334 of the Civil Code has been modified by section 450 of the Code of Civil
Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said
section 450 enumerates the property of a judgment debtor which may be
subjected to execution. The pertinent portion of said section reads as follows:
"All goods, chattels, moneys, and other property, both real and personal, * * *
shall be liable to execution. Said section 450 and most of the other sections
of the Code of Civil Procedure relating to the execution of judgment were
taken from the Code of Civil Procedure of California. The Supreme Court of
California, under section 688 of the Code of Civil Procedure of that state
(Pomeroy, p. 424) has held, without variation, that growing crops were
personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that
growing crops are personal property. Section 2 of said Act provides: "All
personal property shall be subject to mortgage, agreeably to the provisions of
this Act, and a mortgage executed in pursuance thereof shall be termed a
chattel mortgage." Section 7 in part provides: "If growing crops be mortgaged
the mortgage may contain an agreement stipulating that the mortgagor binds
himself properly to tend, care for and protect the crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was
enacted on the assumption that "growing crops" are personal property. This
consideration tends to support the conclusion hereinbefore stated, that
paragraph 2 of article 334 of the Civil Code has been modified by section 450
of Act No. 190 and by Act No. 1508 in the sense that "ungathered products"
as mentioned in said article of the Civil Code have the nature of personal
property. In other words, the phrase "personal property" should be
understood to include "ungathered products."


33.



34.



35. LUNOD V. MENESES

Facts:
Petitioner and defendant owned and possessed farm lands.
Petitioners farm land is located on a higher ground adjoining the Calalaran
lake, which water from the lake passes through Ds land in flowing toward the
Taliptip River. However, defendant converted his farm land into a fish pond
and had built his own dam to prevent sea water from the river flowing into his
fish pond. Now during rainy days, the farm land of petitioner would become
flooded because the outlet of water from the higher ground to the river is
impeded by the construction of defendant. The dam caused serious damage
to plaintiffs growing crops. With this, plaintiff filed a complaint against
defendant.
The lower court decided on plaintiffs favor and ordered defendant to remove
or destroy the obstacles to the free passage of the waters through the strip of
land in Paraanan. The court rules that there exist a favor of the farm land of
plaintiff a statutory easement permitting the flow of water over the said land
in Paraanan. This was denied by defendant.

Issue:
Whether or not there exists a statutory easement in favor of plaintiffs
farm land?

Ruling:
Yes. The court relied on article 552 of the civil code and the Laws of
Water. Under said provisions, owners of lower lands cannot erect works that
will impede/prevent such an easement constituted and improved by the law
upon his estate for the benefit of the higher lands belonging to different
owners.
Thus defendant Meneses neither has a right to construct the works
nor the dams which blocks the passage of the waters through his lands and
the outlet to the Taliptip river which flood the lands of plaintiff.
Under art 338 of the Civil Code, the right of owners to enclose his
estate is limited by the easement imposed.



37. LALUAN V. MALPAYA



2
nd
BATCH

38. BACHRACH MOTOR CO. V. TALISAY-SILAY MILLING

FACTS:
Talisay-Silay was indebted to PNB. To secure the loan, Talisay
induced its planters one of whom was Mariano LacsonLedesma to mortgage
their land. The central undertook to credit the owners of the plantation to
compensate the planters for mortgaging their property which shall be every
year with a sum equal to 2% of the debt secured according to the yearly
balance. Mariano sold his land to Cesar Ledesma for P7500. Bachrach on
the other hand was a creditor of Ledesma. When Mariano could no longer
pay Bachrach, it went after Talisay (original complaint), praying for the
delivery of P13850 Talisay owed to Mariano as bonus, or any instrument of
credit. It also prayed for accounting of whatever the central owed to Mariano
by way of bonus, dividend, etc., as well as the nullification of the sale made
to Cesar.
PNB filed third party claim alleging a preferential right over Marianos
credit owed by Talisay as part of the civil fruits of the land mortgaged to the
bank. Bachrach contested this. Talisay prayed for the absolution of 7500 of
the credit as it belonged to Cesar as buyer in good faith. All parties later
agreed to respect Cesars credit and absolved him from the complaint and
ordered delivery to him of P7500.
Trial court ruled in favor of Bachrach, awarding it P11,076.02 of
Marianos bonus from Talisay. Hence this appeal

ISSUES:
Is the bonus a civil fruit which forms part of the mortgaged land?

RULING:
NO. Article 442 of the New Civil Code considers three things as civil
fruits: rents of buildings, proceeds from leases of lands, and income from
perpetual of life annuities or other similar sources of revenue.
The bonus in question was neither rent of a building nor land. For it
to come under the coverage of income, it must be obtained from the land. In
this case however, the bonus bears no immediate but only a remote and
accidental relation to the land. The central granted it as compensation for the
risk that the landowners entered in mortgaging their lands. If the bonus was
an income of any kind, it comes from the assumption of risk, and not from the
land itself. Thus, it is distinct and independent from the property referred to in
the mortgage to the bank.


39. JOSEFINA S. DE LAUREANO vs. HON. MIDPANTAO L. ADIL

Facts
Josefina S. de Laureano in this special civil action of certiorari
assails the interlocutory orders of the Court of First Instance of Iloilo, denying
her motions for execution and for a preliminary mandatory injunction in an
ejectment suit which was decided in her favor by the city court of Iloilo City
and which was appealed by the lessee, Ong Cu (Civil Case No. 10370).
Mrs. Laureano is the registered owner of Lots 996 and 1004-B with a
total area of 3,107 square meters located at the corner of Iznart and Solis
Streets, Iloilo City. The lots were leased to Ong Cu for fifteen year period
which allegedly expired on August 31, 1974.
In view of Ong Cus failure to vacate the lots and remove his
improvements thereon. Mrs. Laureano filed against him an ejectment suit in
October, 1974 in the city court of Iloilo City.
After trial, the city court on September 23, 1975 rendered a judgment
ordering Ong Cu to vacate the lots, to restore their possession to Mrs.
Laureano, to remove his buildings and other improvements thereon and to
pay P12,428 monthly as compensation for the use and occupation of the lots
from September 1, 1974 up to the time he vacates them, with interest at
twelve percent per annum from the date of accrual plus P10,000 as moral
and exemplary damages and attorneys fees.

Held:
As a lessee, who constructed a building on the leased land, Ong Cu
cannot be characterized as a builder in good faith. Under article 448 of the
Civil Code the owner of the land on which anything has been built in good
faith may appropriate the building after payment of the indemnity provided in
articles 546 and 548 of the Civil Code.
Article 448 applies to a case where one builds on land of which he
honestly claims to be the owner and not to lands wherein ones only interest
is that of a lessee under a rental contract. A contrary rule would place it
within the power of the lessee to improve his landlord out of his property
(Alburo vs. Villanueva, 7 Phil. 277, 280; Cortes vs. Ramos, 46 Phil. 184;
Fojas vs. Velasco, 51 Phil. 520; Bantug vs. Montinola, 73 Phil. 13).
In other words, article 448 refers to a possessor who occupied the
land in the belief that he was the owner thereof. It does not apply to the
lessee because the lessee knows at the outset that he is not the owner of the
land (Lopez, Inc. vs. Philippine & Eastern Traiding Co., Inc., 98 Phil. 348).
The tenant has no pretension to being the owner of the land (Rivera vs.
Trinidad, 48 Phil. 396, 401).

40. MARIANO FLOREZA VS EVANGELISTA

FACTS:
This is a Petition for Review on certiorari of the Decision of the Court
of Appeals (CA-G.R. No. 23516-R) promulgated on November 4, 1965,
entitled "Maria de Evangelista and Sergio Evangelists, (now the
respondents) vs. Mariano Floreza (petitioner herein)," reversing the judgment
of the Court of First Instance of Rizal rendered on July 17, 1957, and instead
ordering petitioner to vacate respondents' residential lot, to remove his house
at his own expenses and to pay rental from May 5, 1956. Plaintiffs Maria de
Evangelista and Sergio Evangelista, who are mother and son, (the
EVANGELISTAS, for short) are the owners of a residential lot located at
Sumilang St., Tanay, Rizal, with an area of 204.08 sq. ms. In May 1945, the
EVANGELISTAS borrowed from FLOREZA the amount of P100.00. . On or
about November 1945, with the consent of the EVANGELISTAS, FLOREZA
occupied the above residential lot and built thereon a house of light materials
(barong- barong) without any agreement as to payment for the use of said
residential lot. On the following dates, the EVANGELISTAS again borrowed a
sum of money an d sums up to P740.00 including the first loan.
August 1, 1949, the EVANGELISTAS, for and in consideration of
P1,000.00 representing the total outstanding loan of P740.00 plus P260.00 in
cash, sold their residential lot to FLOREZA, with a right to repurchase within
a period of 6 years from date, or up to August 1, 1955. Evangelistas made a
formal written demand to vacate. FLOREZA refused to vacate unless he was
first reimbursed the value of his house. Hence, the filing of this Complaint on
May 18, 1956 by the EVANGELISTAS. CA ruled in favor of the Evangelista.
Hence, this Petition for Review on certiorari by FLOREZA.

ISSUE:
Does Floreza has the right to be reimbursed with the residential lot he built
on the land owned by Evangelista?

RULING:
The house had already been constructed as far back as 1949 (1945
for the house of light materials) even before the pacto de retro sale in 1949.
Petitioner incurred no useful expense, therefore, after that sale. The house
was already there at the tolerance of the EVANGELISTAS in consideration of
the several loans extended to them. Since petitioner cannot be classified as
a builder in good faith within the purview of Article 448 of the Civil Code, nor
as a vendee a retro, who made useful improvements during the lifetime of
the pacto de retro, petitioner has no right to reimbursement of the value of
the house which he had erected on the residential lot of the
EVANGELISTAS, much less to retention of the premises until he is
reimbursed.
The rights of petitioner are more akin to those of a usufructuary who,
under Article 579 of the Civil (Art. 487 of the old Code), may make on the
property useful improvements but with no right to be indemnified therefor. He
may, however, remove such improvements should it be possible to do so
without damage to the property: For if the improvements made by the
usufructuary were subject to indemnity, we would have a dangerous and
unjust situation in which the usufructuary could dispose of the owner's funds
by compelling him to pay for improvements which perhaps he would not have
made.


41. INTER-REGIONAL DEVELOPMENT CORPORATION VS.
COURT OF APPEALS

Facts:
Ricardo Caballero owns an agricultural land and had leased it to
Inter-Regional Development Corp. represented by spouses Jose Baez and
Isabel Baez. Conflict started when Caballero sold the land to Isidro Estrada
eventhough there was still a standing crop to be harvested by the petitioner.
Caballero's argument is that when he sold the land, it follows that what ever
was planted there comes with it. The petitioner for this certiorari case argues
otherwise.

Issue:
WON the standing crops is treated as part of a leased land if sold.

Held:
No. True it is that under article 440 of the Civil Code the ownership of
property includes the right of accession to everything attached thereto either
naturally or artificially, and that under article 415, trees, plants and growing
fruits, while they are attached to the land, are immovable property; it is
equally true that when a person plants in good faith on land belonging to
another, the landowner does not ipso facto acquire ownership of what has
been planted; he must first indemnify the planter before he can appropriate
the same. And so provides article 448: 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 .



42. Ortiz vs Kayanan

Facts: Martin Dolorico I executed an affidavit relinquishing his rights over the
property subject of Homestead in favor of defendants Quirino Comintan and
Eleuterio Zamora, his grandson and son-in-law, and requested the Director
of Lands to cancel the homestead application. On the strength of the
affidavit, Homestead Application was cancelled and Comintan and Zamora
filed their respective sales applications. Plaintiff filed his protest alleging that
he should be given preference to purchase the lot inasmuch as he is the
actual occupant and has been in continuous possession of the same since
1931.

An investigation was conducted on plaintiff's protest by Assistant Public
Lands Inspector Serapion Bauzon who rendered a decision dismissing
plaintiff's claim and giving due course to defendants' sales applications on
the ground that the relinquishment of the homestead rights of Martin Dolorico
I in favor of Comintan and Zamora is proper, the former having been
designated as successor in interest of the original homestead applicant and
that because plaintiff failed to participate in the public auction, he is forever
barred to claim the property.
Pending appeal and upon petition of Comintan and Zamora, the Court
appointed Vicente Ferro, Clerk of Court, as Receiver to collect tolls on a
portion of the property used as a diversion road. Petitioner sought the
annulment of this Order with the Court of Appeals, but said Court ruled that
its decision had already become final and that the records of the case were
to be remanded to the trial court. Not satisfied with such denial, petitioner
filed a petition for certiorari, prohibition and mandamus with preliminary
injunction before this Court, praying for the annulment of the Order
reappointing the Receiver but was dismissed on the ground of insufficient
showing of grave abuse of discretion.

Issue:
Aafter the rendition by the trial court of its judgment confirming the award of
one-half of the property to Quirino Comintan whether or not petitioner is still
entitled to retain for his own exclusive benefit all the fruits of the property,
such as the tolls collected by him?

Ruling:
There is no question that a possessor in good faith is entitled to the fruits
received before the possession is legally interrupted. 11 Possession in good
faith ceases or is legally interrupted from the moment defects in the title are
made known to the possessor, by extraneous evidence or by the filing of an
action in court by the true owner for the recovery of the property. Hence, all
the fruits that the possessor may receive from the time he is summoned in
court, or when he answers the complaint, must be delivered and paid by him
to the owner or lawful possessor.

However, even after his good faith ceases, the possessor in fact can still
retain the property, pursuant to Article 546 of the New Civil Code, until he
has been fully reimbursed for all the necessary and useful expenses made
by him on the property.
Petitioner cannot appropriate for his own exclusive benefit the tolls which he
collected from the property retained by him. It was his duty under the law,
after deducting the necessary expenses for his administration, to apply such
amount collected to the payment of the interest, and the balance to the
payment of the principal of the obligation.
We hold, therefore, that the disputed tolls, after deducting petitioner's
expenses for administration, belong to Quirino Comintan, owner of the land
through which the toll road passed, further considering that the same was on
portions of the property on which petitioner had not introduced any
improvement. The trial court itself clarified this matter when it placed the toll
road under receivership.

The records further reveal that earnest efforts have been made by private
respondents to have the judgment executed in the most practicable manner.
They deposited in court the amount of the judgment in the sum of
P13,632.00 in cash, subject only to the accounting of the tolls collected by
the petitioner so that whatever is due from him may be set off with the
amount of reimbursement. With respect to the amount of reimbursement to
be paid by Comintan, it appears that the dispositive portion of the decision
was lacking in specificity, as it merely provided that Comintan and Zamora
are jointly liable. When two persons are liable under a contract or under a
judgment, and no words appear in the contract or judgment to make each
liable for the entire obligation, the presumption is that their obligation is joint
or mancomunada, and each debtor is liable only for a proportionate part of
the obligation. The judgment debt of P13,632.00 should, therefore, be pro-
rated in equal shares to Comintan and Zamora.

43.


44. SARMIENTO V. AGANA

FACTS:
Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccas
mother offered a lot in Paranaque that they could build their house on. In
1967, they finally built their home which cost about PhP8,000-10,000,
thinking that someday, the lot would be transferred to them in their name. It
turns out, though, that the lot was owned by the Spouses Santos who , in
turn, sold the same to Leonila Sarmiento in 1974. A year later, Sarmiento
ordered the Valentinos to vacate their lot, then eventually filed and Ejection
Suit against them.
The lower court ruled in Sarmientos favor and ordered her to pay
20,000 as the value of the house. But the case was then elevated to the CFI
of Pasay (w/ Agana as Judge), and pursuant to Art.448 of the CC (March
1979), the Court ordered Sarmiento to exercise the option in 60 days to pay
Ernesto 40,000 as the value of the house or to let them purchase the land for
25,000. Sarmiento was not able to exercise this option, and the CFI allowed
Ernesto to deposit the 25,000 purchase price with the Court.

ISSUE:
Whether or not the land owner is compelled to exercise either option: to buy
the building or to sell the land?

HELD:
Yes. The landowner on which a building has been constructed in
good faith by another has the option to buy the building or sell his land to the
builder, he cannot refuse to exercise either option. The challenged decision
of respondent Court based on valuations of P25,000 for the land and
P40,000 for the residential house cannot be viewed as not supported by
evidence. The proivion for the exercise by petitioner Sarmiento of either the
option to indemnify private respondents in the amount of P40,000 or the
option to allow private respondents to purchase the land at P25,000 in our
opinion, was a correct decision. Respondents cannot refuse to both pay for
the building and to sell the land and compel the owner of the building to
remove it from the land where it is erected. He is entitled to such remotion
only when after having chosen to sell his land, the other party fails to pay for
the same.



45. depra vs. Dumlao


Facts:
Petitioner Depra, is the owner of a parcel of land, while Dumlao owns the
land adjoining his. when Dumlao constructed his house in his lot, the kitchen
thereof encroached on an area of 34 sq.m of Depra's property. Upon the
discovery of the encroachment through a relocation survey, Depra's mother
wrote a demand letter asking Dumlao to move back from his encroachment
and filed a case of Unlawful Detainer against Dumlao. The Municipal Court
found that Dumlao was a builder in good faith and ordered that a forced
lease be created between the parties with the plaintiffs as lessors and
defendants as lessees over the disputed portion of Depra's lot, the rent being
P5.00 a month. Neither party appealed, however, Depra did not accept
payment of rentals so that Dumlao deposited such rentals with the MTC. One
year later, Depra filed a complaint for Quieting of Title against Dumlao before
the Court of first Instance which held that plaintiff Depra is the owner of the
34 sq.m disputed area and as such, he is entitled to possess the same.

Issue: Whether or not the Court of First Instance was correct in ruling that, as
owner of the 34 sq.m disputed portion, Depra is "entitled to possession"
without more, considering that Dumlao is a builder in good faith.

Ruling:
No. Pursuant to Article 448 of the Civil Code, Depra has the option either to
1) pay for the encroaching part of Dumlao's kitchen, or 2) to sell the
encroached 34 sq.m of his lot to Dumlao. It was thus error for the Trial Court
to have ruled that Depra is entitled to possession without more, of the
disputed portion implying thereby that he is entitled to have the kitchen
removed. He is entitled to such removal only when, after having chosen to
sell his encroached land, Dumlao fails to pay for the same. In this case,
Dumlao had expressed his willingness to pay for the land, but Depra refuses
to sell. The owner of the land (Depra) is given the option to acquire the
improvements after payment of the proper indemnity, or to oblige the builder
or planter in good faith (Dumlao) to pay for the land. The Court held in
Ignacio vs. Hilario that "the owner of the land cannot refuse both to pay for
the building and to sell the land, and compel the owner of the building to
remove it from the land where it erected. He is entitled to such remotion only
when, after having chosen to sell his land, the other party fails to pay for the
same".

Decision: judgment of CFI is set aside, remanding the case to the RTC of Ilo-
Ilo for further proceedings consistent with Articles 448 and 546 of the Civil
Code.



46. QUEMEL AND SOLIS VERSUS OLAES AND PRUDENTE

FACTS:
The Quemel spouses were gratuitously occupying the lot owned by
the Olaes spouses, the registered owners herein, located in Rosario, Cavite.
The Olaes spouses sought the recovery of the possession of the said lot and
the rentals. The trial court ordered the Quemel spouses to return the
possession of the lot and to pay the Olaes spouses P20.00 per month from
January 1954 until they shall have vacated the premises.In the present
complaint, the Quemel spouses seek to reduce the monthly rental from
P20.00 to P5.60 a month and to compel the Olaes spouses to sell to them
the portion of the lot where the house is erected. The Quemels were claiming
that they were builders in good faith.

ISSUES:
Were the Quemel spouses builders in good faith? Can the Quemel spouses
use article 448 in relation to article 546 in this case?

Ruling:
No. It is undisputable that the lot in question originally belonged to
the government until it was purchased by by Agapita Solis. The Quemel
spouses have been occupying the southeastern half portion of the lot without
any right thereto, except the admitted tolerance of the Olaes spouses. It
would therefore appear that the Quemel spouses were AWARE of the flaw.
No. Under Article 448, the right to appropriate the work or
improvements or to oblige the one who built or planted to pay the price of the
land, belongs to the owner of the land. The only right given to the builder IN
GOOD FAITH is the right to reimbursement for the improvements. This is in
the case where the builders are in good faith. But in this case, the Quemel
spouses were not. It should be noted that article 448 of the NCC relied upon
by the plaintiffs, is intended to apply only to a case where one builds, or
sows, or plants on land in which he believes in himself to have a claim of title
and not to land where ones only interest is that of a tenant, under a rental
contract, which is the present case. The tenant cannot be a builder in good
faith as he has no pretension to be the o47. Gabrito vs Court of Appeals,
G.R. No. L-77976, Nov. 24, 1988

Facts: The spouses Roberto Tan and Benita Ching-Tan filed a complaint
against defendants Maximo Gabrito, et. al., alleging that they are the
possessors and legal owners of a certain property; that defendants are
leasing portions of this parcel of land, each paying monthly rentals; and that
defendants constructed buildings and have allowed other persons to
sublease the same for commercial purposes. As the spouses have no other
property where they could construct their house, they notified the defendants
of their personal intent on the land and gave defendants three months to
vacate the premises and remove the structures and improvements thereon.
Defendants requested for an extension, which the spouses granted.
However, the defendants also stopped paying their monthly rentals. As a
result, defendants were told to leave and pay rentals in arrears but they
refused to comply with both demands. Hence, the spouses filed an action for
unlawful detainer with damages against defendants.

Defendants denied the allegations of the complaint and alleged that: they are
builders in good faith over the land as provided in Article 448 of the Civil
Code; the land where the houses of defendants were built is a public land;
plaintiff's alleged predecessor-in-interest (Gloria Carillo), not being the
owener thereof, could not have passed nor transferred ownership thereof to
them (plaintiffs) considering that the Gloria Carillo's Miscellaneous Sales
Application has not yet been acted upon by the Bureau of Lands; plaintiffs
and their predecessor-in-interest are absentee applicants over the land,
hence, are disqualified to own the same; plaintiffs have never been in
possession of the land while the defendants are in actual physical
possession thereof; and the sale of plaintiff's alleged predecessor-in-interest
in favor of plaintiffs is null and void for being in violation of P.D. No. 1517 as
defendants, being lessees of the land, have the right of first refusal thereof.
The respondent MTC judge ruled in favor of the spouses. On appeal, the
decision of the MTC was affirmed. And on review, respondent CA sustained
the decision by the RTC. Hence, this petition for review of certiorari.

Issue: WON an action for unlawful detainer is the proper action to oust
petitioners from their occupation of the land in dispute.

Held: Yes. Defendants admitted that they entered the premises as lessees
and had been paying rentals for the use of the land to Gloria Carillo, private
respondents' predecessor-in-interest. When requested to vacate the
premises, petitioners asked for an extension of time which request was
granted. However, petitioners failed to vacate the premises and also stopped
paying rentals. In view of said admissions, petitioners had unquestionably
recognized private respondents' prior right of possession over the questioned
property. Petitioners allegation that they are builders in good faith over the
land as provided for in Article 448 of the Civil Code is untenable for it applies
only where one builds on land in the belief that he is the owner of the land,
but does not apply where one's interest in the land is that of a lessee under a
rental contract.

In the case of Bocaling vs Laguna (54 SCRA 243, 250 [1973]), this Court
held that: "The rule is well-settled that lessees, like petitioner, are not
possessors in good faith, because he knew that their occupancy of the
premises continues only during the life of the lease, and they cannot as a
matter of right, recover the value of their improvements from the lessor, much
less retain the premises until they are reimbursed. Their rights are governed
by Article 1678 of the Civil Code which allows reimbursement of lessees up
to one-half of the value of their improvements if the lessor so elects."


48. PERSHING TAN QUETO vs.COURT OF APPEALS, POMBUENA and
GUANGCO-POMBUENA.

Facts:
Restituta received the questioned lot as a purported donation or by
wat of purchase; the transaction took place during the lifetime of her mother;
the donation/sale was consumated by Restituta while already married to
Juan.
Juan, acquired a Torrens title over the land. then a contract of lease
was entered into between Tan Queto and Restituta. After lease contract
expired, Restituta sued Tan Queto for unlawful detainer.
The case for unlawful detainer was dismissed because of a barter
whereby Tan Queto became the owner of the disputed lot, and Restituta and
Juan became the owners of a parcel of land previously owned by Tan Queto.
After the barter, Tan Queto built on the lot a concrete building without
objections from Restituta.
Restituta, later, sued Juan and Tan Queto for reconveyance of the
title over the registered but disputed lot, for annulment of the barter, and for
recovery of the land with damages.


Issue:
1. Is the lot paraphernal or conjugal?
2. Was Tan Queto a possessor and builder in good faith or in bad faith?

Ruling:
1. Conjugal. The fact is ownership was acquired by both JUAN and
RESTITUTA by tradition (delivery) as a consequence of the contract
of sale (See Art. 712, Civil Code) with P50.00 (then a considerable
amount) as the cause or consideration of the transaction. The lot is
therefore conjugal, having been acquired by the spouses thru
onerous title (the money used being presumably conjugal there
being no proof that RESTITUTA had paraphernal funds of her own).
The contention that the sale was fictitious or simulated (and therefore
void) is bankrupt. Firstly, there was a valid consideration therefor.
Secondly, assuming that there had indeed been a simulation, the
parties thereto cannot use said simulation to prejudice a stranger to
said stratagem (like petitioner herein).

2. Even assuming that despite registration of the lot as conjugal, Tan
Queto nursed the belief that the lot was actually RESTITUTA's
(making him in bad faith), still RESTITUTA's failure to prohibit him
from building despite her knowledge that construction was actually
being done, makes her also in bad faith. The net resultant of mutual
bad faith would entitle TAN QUETO to the rights of a builder in good
faith (Art. 448, Civil Code), ergo, reimbursement should be given him
if RESTITUTA decides to appropriate the building for herself (Art.
448, Civil Code).

However, as already previously intimated, TAN QUETO having
bartered his own lot and small house with the questioned lot with
JUAN (who has been adverted to by a court decision and by the
OCT a conjugal owner) may be said to be the OWNER-
POSSESSOR of the lot. Certainly he is not merely a possessor or
builder in good faith (this phrase presupposes ownership in another);
much less is he a builder in bad faith. He is a builder-possessor jus
possidendi because he is the OWNER himself. Please note that the
Chapter on Possession (jus possesionis, not juspossidendi) in the
Civil Code refers to a possessor other than the owner. Please note
further that the difference between a builder (or possessor) in good
faith and one in bad faith is that the former is NOT AWARE of the
defect or flaw in his title or mode of acquisition while the latter is
AWARE of such defect or flaw (Art. 526, Civil Code). But in either
case there is a flaw or defect. In the case of TAN QUETO there is no
such flaw or defect because it is he himself (not somebody else) who
is the owner of the property.


49. J.M. TUASON & CO. VS. MACALINDONG

Facts:
Petitioner was the owner of a parcel of land, known as the Sta. Mesa
Heights Subd. It claimed that in 1955, Macalindong, through force, strategy
and stealth, unlawfully entered into possession about 200 sq meters within
the said parcel of land, and built a house therein. Petitioner claims that
because of defendant, it suffered and will continue to suffer damages at
P60/month.
Defendant claimed that he and his predecessors-in-interest have
been in open, adverse, public, continuous and actual possession of the lot in
question prior to 1955 and since time immemorial, and that he had made
improvements thereon amounting to P9,000.
The Court rendered judgment in favor of plaintiff. Defendant filed a
Motion to Reconsider and/or to Set Aside Decision, claiming that while
plaintiff secured title over the entire land since 1914, the portion in question
had been in the adverse, open, public and continuous possession of the
defendants predecessors-in-interest since 1893. The motion was denied,
hence this petition.

ISSUE:
1. Has plaintiffs action prescribed or been barred by laches?
2. Is plaintiffs TCT null and void?
3. Is defendant builder in good faith, entitled to retention until
reimbursed for his improvements?

RULING:
1. Appellant (Macalindong) did not in his defenses raised the issue of
prescription and laches, and cannot anymore do so during appeal.
His failure to raise them earlier amounts to a waiver of such
defenses. Moreover, plaintiffs right to file an action to recover
possession based on its Torrens title is imprescriptible and cannot be
barred by laches.
However, the laws on prescription of actions and on estoppels and
laches operate against appellant. After 44 years of inaction (from
1914, issuance of OCT No. 735) or 19 years (from 1939, issuance of
TCT No. 1267), appellant should be completely barred from assailing
the decree of registration of the subject property.

2. Registration under Act No. 496 merely confirms title but does not
vest any when there is none, as registration under the Torrens
system is not a mode of acquiring ownership. However, these
principles do not justify the partial annulment of plaintiffs Torrens
title, which can be traced to an OCT issued in 1914, and is now
incontrovertible and conclusive against the whole world. In order to
have a Torrens title declared void ab initio, there must be a showing
the land Court that issued the decree of registration did not have
jurisdiction over the case, and actual fraud must be shown in
securing the title. None of these were alleged in the pleadings filed
by appellant.

3. Macalindong claims, for the first time during appeal, that he is a
builder in good faith. From the documents, the Court believes that he
was not a builder in good faith. There is a presumptive knowledge by
appellant of appellees Torrens title, which is a notice to the whole
world, over the subject premises, and consequently Macalindong
cannot now say that he believed his vendor, his vendors vendor,
and the latters vendor had rights of ownership over the said lot. Had
he investigated before buying and building a house on the lot, he
would have been informed that the land is registered under the name
of J.M. Tuason & Co. Moreover, when appellant was trying to
declare the property, the City Assessor told him he could not do so,
because there was a question to that. His remedies should have
been directed against his predecessors-in-interest.


50.


51. IGNACIO v. HILARIO

Facts:
In this case, the lower court held that petitioners Ignacio are the legal
owners of the parcel of land partly residential and partly rice-land but
conceding to defendants Hilariothe ownership of the houses and granaries
built by them in the residential portion with the rights of a possessor in good
faith. That plaintiff has the option either to pay defendant the actual market
value of the improvements therein or to sell the residential lot to the Hilario.
Plaintiffs chooseneither any of the options instead filed a motion
praying to order defendants to remove the structure at their own expense nor
to restore plaintiffs in the possession of said lot. The said motion was granted
by the court, through Judge Natividad, relying on art. 361 (now 448) and 453
(now 546).

Issue:
Is the order of judge Natividad proper/correct?

Ruling:
No. the order of Judge Natividad compelling defendants-petitioners
to remove their buildings from the land belonging to plaintiffs-respondents
only because the latter chose neither to pay for such buildings nor to sell the
land, is null and void, for it amends substantially the judgment sought to be
executed and is, furthermore, offensive to articles 361 and 453 of the Civil
Code.
The owner of the building erected in good faith on a land owned by
another, is entitled to retain the possession of the land until he is paid the
value of his building, under article 453. The owner of the land, upon the other
hand, has the option, under article 361, either to pay for the building or to sell
his land to the owner of the building. But he cannot, as respondents here did,
refuse both to pay for the building and to sell the land and compel the owner
of the building to remove it from the land where it is erected. He is entitled to
such remotion only when, after having chosen to sell his land, the other party
fails to pay for the same.
Moreover, the procedure in this case is erroneous as it fails to
determine the value of the improvements and of the lot as well as the periods
of time within which the option may be exercise and payment should be
made.
Thus, the lower court is ordered to hold a hearing in the principal
case wherein it must determine the prices of the buildings and of the
residential lot where they are erected, as well as the period of time within
which the plaintiffs-respondents may exercise their option either to pay for
the buildings or to sell their land, and, in the last instance, the period of time
within which the defendants-petitioners may pay for the land, all these
periods to be counted from the date the judgment becomes executory or
unappealable. After such hearing, the court shall render a final judgment
according to the evidence presented by the parties.



52. FILIPINAS COLLEGES v. TIMBANG

Facts:
This is an appeal taken from an order of the Court of First Instance of
Manila dated May 10, 1957. The order appealed from is the result of three
motions filed in the court a quo in the course of the execution of a final
judgment of the Court of Appeals rendered in 2 cases appealed to it in which
the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas
were the parties. Filipinas Colleges, Inc. having failed to pay or deposit the
sum of P32,859.34 within the time prescribed, the spouses Timbang, in
compliance with the judgment of the Court of Appeals, on September 28,
1956, made known to the court their decision that they had chosen not of
appropriate the building but to compel Filipinas Colleges, Inc., for the
payment of the sum of P32,859,34. The motion having been granted, a writ
of execution was issued on January 8, 1957.
On January 16, 1957, appellee Blas in turn filed a motion for
execution of her judgment of P8,200.00 representing the unpaid portion of
the price of the house sold to Filipinas Colleges, Inc. Over the object of the
Timbangs, the court grated the motion and the corresponding writ of
execution was issued on January 30, 1957, date of the granting of the motion
for execution, Blas through counsel, sent a letter to the Sheriff of Manila
advising him of her preferential claim or lien on the house to satisfy the
unpaid balance of the purchase price thereof under Article 2242 of the Civil
Code, and to withhold from the proceed of the auction sale the sum of
P8,200.00. Levy having been made on the house in virtue of the writs of
execution, the Sheriff of Manila on March 5, 1957, sold the building in public
auction in favor of the spouses Timbang, as the highest bidders, in the
amount of P5,750.00. Personal properties of Filipinas Colleges, Inc. were
also auctioned for P245.00 in favor of the spouses Timbang.

Issue:
a. rights of the land owner if builder fails to pay the value of the land.
b. what is the recourse or remedy left to the parties in such eventuality
where the builder fails to pay the value of the land?
c. spouses Timbang become the owners of the land without paying for
it.
d. whether or not Filipinas became part owner of the land.

Ruling:
a. Under the terms of Articles 448 and 546, it is true that the owner of
the land has the right to choose between appropriating the building
by reimbursing the builder of the value thereof or compelling the
builder in good faith to pay for his land. Even this second right cannot
be exercised if the value of the land is considerably more than that of
the building. In addition to the right of the builder to be paid the value
of his improvement, Article 546 gives him the corollary right of
retention of the property until he is indemnified by the owner of the
land. There is nothing in the language of these two article, 448 and
546, which would justify the conclusion of appellants that, upon the
failure of the builder to pay the value of the land, when such is
demanded by the land-owner, the latter becomes automatically the
owner of the improvement under Article 445. The case of Bernardo
vs. Bataclan, 66 Phil., 590 cited by appellants is no authority for this
conclusion. Although it is true it was declared therein that in the
event of the failure of the builder to pay the land after the owner
thereof has chosen this alternative, the builder's right of retention
provided in Article 546 is lost, nevertheless there was nothing said
that as a consequence thereof, the builder loses entirely all rights
over his own building.
b. A builder in good faith not be required to pay rentals. he has right to
retain the land on which he has built in good faith until he is
reimbursed the expenses incurred by him. Possibly he might be
made to pay rental only when the owner of the land chooses not to
appropriate the improvement and requires the builder in good faith to
pay for the land but that the builder is unwilling or unable to pay the
land, and then they decide to leave things as they are and assume
the relation of lessor and lessee, and should they disagree as to the
amount of rental then they can go to the court to fix that amount.
Should the parties not agree to leave things as they are and to
assume the relation of lessor and lessee, another remedy is
suggested in the case of Ignacio vs. Hilario, supra, wherein the court
has ruled that the owner of the land in entitled to have the
improvement removed when after having chosen to sell his land to
the other party, i.e., the builder in good faith fails to pay for the same.
A further remedy is indicated in the case of Bernardo vs. Bataclan,
supra, where this Court approved the sale of the land and the
improvement in a public auction applying the proceeds thereof first to
the payment of the value of the land and the excess, if any, to be
delivered to the owner of the house in payment thereof.
c. This contention is without merit. This Court has already held in
Matias vs. The Provincial Sheriff of Nueva Ecija (74 Phil., 326) that
while it is the inveriable practice, dictated by common sense, that
where the successful bidder is the execution creditor himself, he
need not pay down the amount of the bid if it does not exceed the
amount of his judgement, nevertheless, when their is a claim by a
third-party, to the proceeds of the sale superior to his judgment
credit, the execution creditor, as successful bidder, must pay in cash
the amount of his bid as a condition precedent to the issuance to him
of the certificate of sale. In the instant case, the Court of Appeals has
already adjudged that appellee Blas is entitled to the payment of the
unpaid balance of the purchase price of the school building. Blas is
actually a lien on the school building are concerned. The order of the
lower court directing the Timbang spouses, as successful bidders, to
pay in cash the amount of their bid in the sum of P5,750.00 is
therefore correct.
d. With respect to the order of the court declaring appellee Filipinas
Colleges, Inc. part owner of the land to the extent of the value of its
personal properties sold at public auction in favor of the Timbang,
this Court Likewise finds the same as justified, for such amount
represents, in effect, a partial payment of the value of the land. If this
resulted in the continuation of the so-called involuntary partnership
questioned by the difference between P8,200.00 the unpaid
balance of the purchase price of the building and the sum of
P5,750.00 amount to be paid by the Timbangs, the order of the
court directing the sale of such undivided interest of the Filipinas
Colleges, Inc. is likewise justified to satisfy the claim of the appellee
Blas.
53. MIRANDA V. FADULLON

Facts:
Lucio Tio was the owner of a parcel of land, in Banilad Estate, Cebu.
On December 29, 1939, a power of attorney in favor of one Esteban Fadullon
executed by Lucio Tio was registered in the land records of Cebu City and
annotated on the same certificate of title. In the year 1946, on the strength of
the said power of attorney Fadullon sold the property to the Segarass to
make the repurchase within 30 day period, the Segarras about ten days after
the expiration of the period filed a sworn petition for the consolidation of their
ownership and registered said petition in the office of the Register of Deeds.
Apprised of the sale of his property, Lucio Tio on June 4, 1946, filed a
complaint in the Court of First Instance of Cebu, to annul the sale. Service of
summons was made upon the Segarras on June 10, 1946. After hearing the
trial court rendered judgment annulling the sale.
The Segarras appealed to the Court of Appeals but the said Tribunal
affirmed the appealed decision and further required the Segarras to pay
plaintiff the reasonable rentals on the property from the filing of the action
until said property shall have been returned to plaintiff. Upon the decision
becoming final the corresponding writ of execution was issued directing the
Sheriff to put plaintiff Tio in possession of the lot. It turned out however that
during the possession of the property by the Segarras they had introduced
improvements thereon consisting of a building of three rooms and a storage
room, and one artesan well, with tower and water tank and a cement flooring
covering about one-third of the lot which according to the Segarras cost them
P5,300. They then filed a motion with the trial court claiming that they were
possessors in good faith of the lot in question, and that they had introduced
the improvements aforementioned in good faith and asked the court to order
the plaintiff to pay for the said improvements valued at P5,300 or to allow
them to buy the land should the plaintiff decide not to pay for the
improvements.

Issue:
Are the Spouses Segerras possessors and builders in good faith?

Ruling:
Yes. The Supeme court upheld the decision on the CA which ruled
that the Segarras were possessors in bad faith. THey did not require
Fadullon to produce his power of attorney. Also Fadullon executed the sale
with the right to repurchase within the extraordinary short period of 30 days.
This circumstance, again, should have placed the Segarras on their guards,
knowing, as they did, that they were dealing with an agent under a power of
attorney executed before the war.
The Supreme Court also ruled that the Segarras were builders in bad faith.
They applied for a building permit to construct the improvements in question
on December 4, 1946, and the permit was granted on January 11, 1947, all
this about seven months after they received the summons on June 10, 1946,
meaning to say that the improvements were introduced long after their
alleged good faith as possessors had ended



54.


55. BAES VS. COURT OF APPEALS

FACTS:
In 1962, when the government dug a canal on a private parcel of
land, covering an area of P33,902 sq.m., to streamline the Tripa de Gallina
creek. The said land was owned by Felix Baes. He had the lot subvidided
into three lots. In exchange for the lot which was totally occupied by the
canal, the government gave Baes a lot with exactly the same area through a
Deed of Exchange of Real Property.
Meanwhile, Baes had the remainder two lots resurveyed and subdivided. He
submitted a petition for the approval of his resurvey and subdivision plans,
claiming that after the said lots were plotted by a competent surveyor, it was
found that there were errors in respect of their bearings and distances. The
resurvey-subdivision plan was approved by the Court of First Instance of
Pasay City.
In 1978, the Republic of the Philippines discovered that the lot, on which the
petitioners had erected an apartment building, belong to the filled-up portion
of the Tripa de Gallina creek. Moreover, the lot of Baes had been unlawfully
enlarged. Hence, it filed a petition for cancellation of the said titles and Baes
did not object to the cancellation of the said title. Now, the only remaining lot
in dispute and which Baes claims is his is the portion on which the
government had used for the canal. The government rejects this claim and
avers that the petitioners had already been fully compensated for it when
they agreed to exchange their lot belonging to the government.

ISSUE:
whether or not the petitioner is the owner of the old river bed (filled up with
soil excavated) pursuant to article 461?

RULING:
Article (461) states that a natural change in the course of a stream. If
the change of the course is due to works constructed by concessioners
authorized by the government, the concession may grant the abandoned
river bed to the concessioners. If there is no such grant, then, by analogy, the
abandoned river bed will belong to the owners of the land covered by the
waters, as provided in this article, without prejudice to a superior right of third
persons with sufficient title. (Citing 3 Manresa 251-252; 2 Navarro Amandi,
100-101; 3 Sanchez Roman 148)
However, the said code is not applicable since the petitioners have already
been compensated. Felix Baes was given Lot 3271-A in exchange for the
affected Lot 2958-B through the Deed of Exchange of Real Property. This
was a fair exchange because the two lots were of the same area and value
and the agreement was freely entered into by the parties. The petitioners
cannot now claim additional compensation because, as correctly observed
by the Solicitor General, to allow petitioners to acquire ownership of the
dried-up portion of the creek would be a clear case of double compensation
and unjust enrichment at the expense of the state. Hence, petition is denied
with costs against petitioner.



56. SIARI VALLEY ESTATES VS LUCASAN

FACTS:
In connection with a money judgment against Lucasan, the Sherrif
proceeded to levy on certain parcels of lands belonging to the former. These
land were sold at public auction to Petitioner as the highest bidder. Upon
petition of the corporation, a writ of possession was issued directing the
sheriff to place said corporation in possession thereof. Notwithstanding said
writ, however, the corporation failed to take possession of the lands, hence it
filed a motion reiterating its petition that it be placed in their possession. This
time judgment debtor Filemon Lucasan filed an opposition alleging that he
was in possession of one of the parcels of land sold at public auction on
which he has erected a house and which he has extra judicially constituted
as a family home, the rest being in possession of third parties.

ISSUE:
Is the family home extra judicially established by respondent on the lot and
house in question exempt from execution?

RULING:
The article above referred to provides that The family home extra
judicially formed shall be exempt from execution except for debts incurred
before the declaration was recorded in the Registry of Property. What if the
meaning of the word debt used in this article? Does it refer to a debt that is
undisputed, or may it also refer to any pecuniary obligation even if the same
has not yet been finally determined? In other words, can a judgment for a
sum of money be considered a debt within the meaning of this provision even
if said judgment is still pending appeal?
We are inclined to uphold the affirmative considering the real
purpose of the law. The reason why a family home constituted after a debt
had been incurred is not exempt from execution is to protect the creditor
against a debtor who may act in bad faith by resorting to such declaration
just to defeat the claim against him. If the purpose is to protect the creditor
from fraud it would be immaterial if the debt incurred be undisputed or
inchoate, for a debtor acting in good faith would prefer to wait until his case is
definitely decided before constituting the family home. Indeed, it may result,
as in this case, that the Supreme Court may affirm the judgment of the lower
court. If the contention of respondent be sustained a debtor may be allowed
to circumvent this provision of the law to the prejudice of the creditor. This
the Court cannot countenance. Hence, we are persuaded to conclude that
the money judgment in question comes within the purview of the word debt
used in Article 243 (2) of the new Civil Code.



57. SANTOS, VS BERNABE

FACTS:
Deposited in Jose C. Bernabe's warehouse by the plaintiff Urbano
Santos 778 cavans and 38 kilos of palay and by Pablo Tiongson 1,026
cavans and 9 kilos of the same grain. On the same day , Pablo Tiongson
filed with the CFI Jose C. Bernabe, to recover from the latter the 1,026
cavans and 9 kilos of palay deposited in the defendant's warehouse. At the
same time, the application of Pablo Tiongson for a writ of attachment was
granted, and the attachable property of Jose C. Bernabe, including 924
cavans and 31 1/2 kilos of palay found by the sheriff in his warehouse, were
attached, sold at public auction, and the proceeds thereof delivered to said
defendant Pablo Tiongson, who obtained judgment in said case. The herein
plaintiff, Urbano Santos, intervened in the attachment of the palay, but upon
Pablo Tiongson's filing the proper bond, the sheriff proceeded with the
attachment, giving rise to the present complaint. It does not appear that the
sacks of palay of Urbano Santos and those of Pablo Tiongson, deposited in
Jose C. Bernabe's warehouse, bore any marks or signs, nor were they
separated one from the other. The plaintiff-appellee Urbano Santos contends
that Pablo Tiongson cannot claim the 924 cavans and 31 kilos of palay
attached by the defendant sheriff as part of those deposited by him in Jose
C. Bernabe's warehouse, because, in asking for the attachment thereof, he
impliedly acknowledged that the same belonged to Jose C. Bernabe and not
to him.

ISSUE:
Whether or not Urban Santos cavans deposited in Bernabes warehouse can
be the subject of attachment.

RULING.
The 778 cavans and 38 kilos of palay belonging to the plaintiff
Urbano Santos, having been mixed with the 1,026 cavans and 9 kilos of
palay belonging to the defendant Pablo Tiongson in Jose C. Bernabe's
warehouse; the sheriff having found only 924 cavans and 31 1/2 kilos of
palay in said warehouse at the time of the attachment thereof; and there
being no means of separating form said 924 cavans and 31 1/2 of palay
belonging to Urbano Santos and those belonging to Pablo Tiongson, the
following rule prescribed in article 381 (now 472) of the Civil Code for cases
of this nature, is applicable:
Art. 381. If, by the will of their owners, two things of identical or
dissimilar nature are mixed, or if the mixture occurs accidentally, if in the
latter case the things cannot be separated without injury, each owner shall
acquire a right in the mixture proportionate to the part belonging to him,
according to the value of the things mixed or commingled.
The number of kilos in a cavan not having been determined, we will
take the proportion only of the 924 cavans of palay which were attached and
sold, thereby giving Urbano Santos, who deposited 778 cavans, 398.49
thereof, and Pablo Tiongson, who deposited 1,026 cavans, 525.51, or the
value thereof at the rate of P3 per cavan.
Wherefore, the judgment appealed from is hereby modified, and
Pablo Tiongson is hereby ordered to pay the plaintiff Urbano Santos the
value of 398.49 cavans of palay at the rate of P3 a cavan, without special
pronouncement as to costs. So ordered.



58. BRIGIDO RAMOS and FELICIDAD JUAN vs. INTERMEDIATE
APPELLATE COURT, RODOLFO RAMOS and GERTRUDES MERCADO

FACTS:
The usual conflicting claims of ownership culminated in this case involving a
parcel of land in Tanawan, Bustos, Bulacan covered by Transfer Certificate
of Title No. T-92071 in the name of private respondent Rodolfo Ramos. Said
realty was formerly part of the public land constituting the Buenavista Estate
which was under the administration of and subject to disposition by the Land
Tenure Administration pursuant to Republic Act No. 1400 and, later, by the
Land Authority under Republic Act No. 3844.

ISSUE:
1. Whether or not the petitioners can claim ownership of the land in
dispute by raising article 440 of the NCC?
2. Are they entitled to reconveyance of the property?

RULING:
Despite such inconsistent postures, petitioners shift to a new tack, this time
on a claim of ownership of the land by invoking Article 440 of the Civil Code
on accession natural. We do not have to unduly dwell on this issue which
was only raised by petitioners for the first time on appeal. An issue which
was neither averred in the complaint nor raised during the trial in the court
below cannot be raised for the first time on appeal as it would be offensive to
the basic rules of fair play, justice and due process. 8 Besides, We cannot
but note petitioners' apocryphal submissions on the matter. They contend
that the land in dispute, being supposedly a part of an abandoned river bed,
is automatically owned by them as owners of the adjoining lot. Had the
petitioners proceeded to read the succeeding provisions of the Civil Code,
they would not have missed Article 461 thereof which provides that "river
beds which are abandoned through the natural change in the course of the
waters ipso facto belong to the owners of the land occupied by the new
course" with the owners of the adjoining lots having the right to acquire them
only after paying their value.
Incidentally, We digress to clarify what appears to have been an oversight on
the part of respondent court when it noted that the action herein had
prescribed after four years from registration of the deed of sale in favor of
private respondent Rodolfo Ramos. This was premised on the assumption
that the action was for annulment of a contract on the ground of fraud. A
scrutiny of the basic complaint 10 which commenced this case, however,
shows that petitioners based their claim for recovery on an alleged implied
trust. Consequently, the action for reconveyance prescribes after ten years
counted from the date adverse title to the property was asserted, that is, from
the registration of the title. 11 At any rate, such misperception would not
affect the adjudication made by respondent court since, as already
explained, there is no ownership of petitioners over the land on which they
can anchor their fancied theory of an implied trust in their favor.



59. HEIRS OF OLVIGA V. CA

Facts:
A civil action for reconveyance of a parcel of land was filed against
the heirs of Olviga.
In 1950, the question lot was still forest land when Pureza and his
father cleared and cultivated it and eventually introduced improvements
thereon. In 1956, the Bureau of Lands surveyed the land and disposed it in
the name of Pureza. Godofredo Olviga protested the survey only with respect
to the hectare potion of said land. In 1960, Pureza filed a homestead
application over said lot. But without his application being acted upon, he
transferred his rights to Cornelio Glor in 1961.
Now in 1967, Jose Olviga obtained a registered title of said lot in a
cadastral proceeding, in fraud of the rights of Pureza and Cornelio - the real
and actual occupants of the land. The Glors were not aware of the
proceedings.
It was established that the spouses Olila, were not innocent
purchasers for value of the land from their father and have never been in
possession. The Glors and their predecessor-in-interest were the ones found
to be in possession of the property.
The RTC and CA order the defendant, heirs of Olviga, to reconvey
the land in dispute to the plaintiffs, heirs of Glor.

Issue:
Whether or not plaintiffs action is really one for quieting of title that does not
prescribe?

Ruling:
YES. The court has ruled that before an action for reconveyance of a
parcel of land based on implied or constructive trust prescribes in ten years,
the point of reference being the date of registration of the deed or the date of
the issuance of the certificate of title over the property. But this rule applies
only when the plaintiff is not in possession of the property, since if a person
claiming to be the owner thereof is in actual possession of the property, the
right to seek reconveyance, which in effect seeks to quiet title to the property,
does not prescribe.
In the case at bar, private respondents and their predecessors-in-
interest were in actual possession of the property since 1950. Their
undisturbed possession gave them the continuing right to seek the aid of a
court of equity to determine the nature of the adverse claim of petitioners,
who in 1988 disturbed their possession.


60. PINGOL VS CA

Facts:
The case at bar is for an action for specific performance and
damages. Pingol sold 1/2 of his lot to Nadesco. In their contract of absolute
sale there was no stipulation that the vendor reserve the right to rescind the
contract in case of breach or default in the installment of payments but to pay
only an interest on top of the monthly installments. The deed of absolute sale
was executed on Feb 1969 and Nadesco paid P2000 as down payment the
rest of the installments for the remainder of the total amount will commence
on Jan 1970 and will accrue in 6 years from said date. Nadescotoook
possession of the said lot, built a house on it, and was able to pay up to 1972
but Pingol never demanded for payments of the remaining balance. Nadesco
died in 1984 and his heirs continued to possess the subject lot. The heirs of
Nadesco offered to pay the remainder of the remaining balance but Pingol
was demanding for a much higher rate. The heirs of Nadesco filed a case in
court to have pingol accept the remainder of the balance and the court ruled
in their favor. This was reversed by the CA. Hence this appeal on certiorari.

Issue:
1. Whether or not the the contract between Pingol and Nadesco was a
contract to sell or a contract of sale.
2. Whether or not the action for specific performance is that of an action
for quieting of title.
3. Whether or not the cause of action against the subject property is
barred by prescription.

Ruling:
1. The distinction between the two is important for in a contract of sale, the
title passes to the vendee upon the delivery of the thing sold, whereas in a
contract to sell, by agreement, ownership is reserved in the vendor and is not
to pass until the full payment of the price. In a contract of sale, the vendor
has lost and cannot recover ownership until and unless the contract is
resolved or rescinded, whereas in a contract to sell, title is retained by the
vendor until the full payment of the price, such payment being a positive
suspensive condition, failure of which is not a breach but an event that
prevented the obligation of the vendor to convey title from becoming
effective.
In Dignos vs. Court of Appeals, 16 we held that a deed of sale is absolute in
nature although denominated as a "Deed of Conditional Sale" where there is
no stipulation in the deed that title to the property sold is reserved in the
seller until the full payment of the price, nor is there a stipulation giving the
vendor the right to unilaterally resolve the contract the moment the buyer fails
to pay within a fixed period. Exhibit "A" contains neither stipulation. What is
merely stated therein is that "the VENDEE agrees that in case of default in
the payment of the installments due the same shall earn a legal rate of
interest, and to which the VENDOR likewise agrees."
The contract here being one of absolute sale, the ownership of the subject lot
was transferred to the buyer upon the actual and constructive delivery
thereof. The constructive delivery of the subject lot was made upon the
execution of the deed of sale 18 while the actual delivery was effected when
the private respondents took possession of and constructed a house on Lot
No. 3223-A.
In the sale of immovable property, even though it may have been stipulated
that upon failure to pay the price at the time agreed upon the rescission of
the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract
has been made upon him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
2. Although the private respondents' complaint before the trial court was
denominated as one for specific performance, it is in effect an action to quiet
title. In this regard, the following excerpt from Bucton vs. Gabar is apropos:
The real and ultimate basis of petitioners' action is their ownership of one-
half of the lot coupled with their possession thereof, which entitles them to a
conveyance of the property. In Sapto, et al. v. Fabiana [103 Phil. 683, 686-87
(1958)], this Court, speaking thru Mr. Justice J.B.L. Reyes, explained that
under the circumstances no enforcement of the contract is needed, since the
delivery of possession of the land sold had consummated the sale and
transferred title to the purchaser, and that, actually, the action for
conveyance is one to quiet title, i.e., to remove the cloud upon the appellee's
ownership by the refusal of the appellants to recognize the sale made by
their predecessors.
3. Prescription thus cannot be invoked against the private respondents for it
is aphoristic that an action to quiet title to property in one's possession
is imprescriptible. The rationale for this rule has been aptly stated thus:
The owner of real property who is in possession thereof may wait until his
possession is invaded or his title is attacked before taking steps to vindicate
his right. A person claiming title to real property, but not in possession
thereof, must act affirmatively and within the time provided by the statute.
Possession is a continuing right as is the right to defend such possession. So
it has been determined that an owner of real property in possession has a
continuing right to invoke a court of equity to remove a cloud that is a
continuing menace to his title. Such a menace is compared to a continuing
nuisance or trespass which is treated as successive nuisances or
trespasses, not barred by statute until continued without interruption for a
length of time sufficient to affect a change of title as a matter of law.

61.