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Leung Yee, another creditor of CAF, bought the same building where the machines were installed and registered in the land registry of
the Province of Cavite.
Issue: Was the property's nature changed by its registration in the Chattel Mortgage Registry?
Held:
Where the interest conveyed is of the nature of real property, the placing of the document on record in the Chattel Mortgage Registry
is a futile act.
Chattel Mortgage refers to the mortgage of Personal Property executed in the manner and form prescribed in the statute.
The building of strong materials in which the rice-cleaning machinery was installed by the "Compañia Agricola Filipina" was real property,
and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry in the chattel mortgage registry of the instrument purporting to
be a chattel mortgage of the building and the machinery installed therein, nor the annotation in that registry of the sale of the mortgaged
property, had any effect whatever so far as the building was concerned.
2. ANTONIO PUNZALAN ET. AL. VS. REMEDIOS LACSAMANA (GR NO. L-55729)
FACTS: It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land consisting of 340 square
meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the amount of
P10,000.00, but for failure to pay said amount, the property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch)
was the highest bidder in said foreclosure proceedings. However, the bank secured title thereto only on December 14, 1977.
In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with the alleged acquiescence of
respondent PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor, petitioner constructed a warehouse on said
property. Petitioner declared said warehouse for tax purposes for which he was issued Tax Declaration No. 5619. Petitioner then leased
the warehouse to one Hermogenes Sibal for a period of 10 years starting January 1975.
On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and respondent Lacsamana over the property.
This contract was amended on July 31, 1978, particularly to include in the sale, the building and improvement thereon.
On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against herein respondents PNB and
Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City, essentially impugning the validity of the sale
of the building as embodied in the Amended Deed of Sale.
On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid considering that the building
was real property under article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should apply. 4
Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with damages is in the nature of a
personal action, which seeks to recover not the title nor possession of the property but to compel payment of damages, which is not an
action affecting title to real property. On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss.
ISSUE: WON the building was real property under article 415 (1) of the New Civil Code and WON related case should be dismissed on
the ground of improper venue
HELD: We affirm respondent Court's Order denying the setting for pre-trial.
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
3 PROPERTY - CASE DIGESTS
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. 9
Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2, Rule 4) 10, which was
timely raised (Section 1, Rule 16).
3. STANDARD OIL CO. VS. JARANILLO (44 PHIL 631)
Facts: On 27 November 1922, Gervasia de la Rosa Vda. de Vera was the lessee of a parcel of land situated in the City of Manila and
owner of the house of strong materials built thereon, upon which date she executed a document in the form of a chattel mortgage,
purporting to convey to Standard Oil Company of New York by way of mortgage both the leasehold interest in said lot and the building
which stands thereon. After said document had been duly acknowledged and delivered, Standard Oil caused the same to be presented
to Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same recorded in the book of record of
chattel mortgages. Upon examination of the instrument, Jaramillo opined that it was not chattel mortgage, for the reason that the
interest therein mortgaged did not appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration
was refused on this ground only.
A petition for mandamus was filed against the register of deeds. The Supreme Court ruled that the position taken by the register
of deeds is untenable. It is his duty to accept the proper fee and place the instrument on record. The Court explained that "the duties
of a register of deeds in respect to the registration of chattel mortgages are of a purely ministerial character, and no provision of law
can be cited which confers upon him any judicial or quasi-judicial power to determine the nature of any document of which registration
is sought as a chattel mortgage."
4. DAVAO SAWMILL CO. VS. CASTILLO (61 PHIL 709)
Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. However, the land upon
which the business was conducted belonged to another person. On the land the sawmill company erected a building which housed the
machinery used by it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were
placed and mounted on foundations of cement. In the contract of lease between the sawmill company and the owner of the land there
appeared the following provision: That on the expiration of the period agreed upon, all the improvements and buildings introduced and
erected by the party of the second part shall pass to the exclusive ownership of the lessor without any obligation on its part to pay any
amount for said improvements and buildings; which do not include the machineries and accessories in the improvements.
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; 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 also that on number of occasion, Davao Sawmill treated the machinery as personal property by executing chattel
mortgages in favor of third persons. One of such is the appellee by assignment from the original mortgages.
The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.
Issue:
WON the machineries and equipments were personal in nature.
Held:
Yes. The Supreme Court affirmed the decision of the lower court. It said 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.
5. BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC (10 SCRA 68)
FACTS:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board of Manila to grant a franchise
to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its
suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the franchise on March 1903, the terms
and conditions of which were embodied in Ordinance No. 44 approved on March 24, 1903. Respondent MERALCO became the transferee
and owner of the franchise.
MERALCO's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of
Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires
which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its
Issue:
Whether or not the machinery in suit is real or personal property from the point of view of the parties.
Held:
It is similar to that of the Tumalad v Vicencio case. If a house of strong materials, like what was involved in the 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 the denying the existence of the chattel mortgage.
• Mindanao Bus Company is a public utility engaged in transporting passengers and cargoes by motor trucks in Mindanao Island;
• City Assessor of Cagayan assessed the machineries of the respondent, which are either sitting on cement or wooden platforms, as
real properties for P4,400. Petitioner is the owner of the land where it operates and garage for its buses, a repair shop; blacksmith and
carpentry shops where the buses are made; body constructed and repaired for it to be serviceable. The said machines were never used
as industrial equipments to produce finished products for sale or offered to the general public for business.
Issue:
• WON the Honorable Court of tax Appeals erred in upholding respondents’ contention that the questioned assessment are valid; and
that the said tools, equipments or machineries are immovable taxable real properties;
Held:
• Respondents contend that said equipments, though movable, are immobilized by destination, in accordance with paragraph 5 of
Article 415 of the New Civil Code which provides:
Art. 415. — The following are immovable properties:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works. (Emphasis ours.)
• Note that the stipulation expressly states that the equipments are placed on wooden or cement platforms. They can be moved around
and about in petitioner's repair shop. The tools and equipments in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks. They are merely incidentals
— acquired as movables and used only for expediency to facilitate and/or improve its service. Even without such tools and equipments,
its business may be carried on, as petitioner has carried on, without such equipments, before the war. The transportation business could
be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to another.
• The case at bar, the equipments in question are destined only to repair or service the transportation business, which is not carried
on in a building or permanently on a piece of land, as demanded by the law. Said equipments may not, therefore, be deemed real
property.
• We hold that the equipments in question are not absolutely essential to the petitioner's transportation business, and petitioner's
business is not carried on in a building, tenement or on a specified land, so said equipment may not be considered real estate within
the meaning of Article 415 (c) of the Civil Code.
8. CALTEX PHILIPPINES INC. VS. CENTRAL BOARD OF ASSESSMENT APPEALS AND CITY ASSESSOR OF PASAY (GR NO. L-
50466)
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.
Issue: Whether the said machines are personal, not immovable, property which may be a proper subject of a writ of replevin
Held: The Court has held that contracting parties may validly stipulate that a real property be considered as personal. After agreeing to
such stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a party to a contract is
ordinarily precluded from denying the truth of any material fact found therein.
In the present case, the Lease Agreement clearly provides that the machines in question are to be considered as personal
property. Specifically, Section 12.1 of the Agreement reads as follows:
“12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof
may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or
any building thereon, or attached in any manner to what is permanent.”
Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal property. Under the
circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding — that the machines should be deemed personal property pursuant to the Lease
Agreement – is good only insofar as the contracting parties are concerned. Hence, while the parties are bound by the Agreement, third
persons acting in good faith are not affected by its stipulation characterizing the subject machinery as personal. In any event, there is
no showing that any specific third party would be adversely affected.
10. TUMALAD VS. VICENCIO (GR NO. L-30173)
Facts:
On 1 September 1955 defendants-appellants executed a chattel mortgage in favor of plaintiffs-appellees over their house of strong
materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot No. 6-B and 7-B, Block No. 2554, which were being
rented from Madrigal & Company, Inc. The mortgage was registered in the Registry of Deeds of Manila on 2 September 1955. The
herein mortgage was executed to guarantee a loan of P4,800.00 received from plaintiffs-appellees, payable within one year at 12% per
annum. The mode of payment was P150.00 monthly, starting September, 1955, up to July 1956, and the lump sum of P3,150 was
payable on or before August, 1956.
Defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 March 1956, the house was sold at
public auction pursuant to the said contract. As highest bidder, plaintiffs-appellees were issued the corresponding certificate of sale.
Thereafter, on 18 April 1956, plaintiffs-appellees commenced Civil Case No. 43073 in the municipal court of Manila, praying, among
other things, that the house be vacated and its possession surrendered to them, and for defendants-appellants to pay rent of P200.00
monthly from 27 March 1956 up to the time the possession is surrendered.
Issue: WON the chattel mortgage executed upon an immovable valid?
Held: Yes. Citing Manarang and Manarang vs. Ofilada, the Court stated that "it is undeniable that the parties to a contract may by
agreement treat as personal property that which by ,nature would be real property", citing Standard Oil Company of New York vs.
Jaramillo. Further, the doctrine of estoppel applies in this case as against the defendants in which they are estopped from taking an
inconsistent ground by claiming otherwise. Having previously treated such property as personal property and that they themselves try
to assail the validity as debtor-mortgagor (being privy to the contract) and not third persons thus, doctrine of estoppel applies.
11. PASTOR D. AGO VS. THE HON. COURT OF APPEALS (GR NO. L-17898)
FACTS:
In 1957, petitioner Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park Engineering, Inc., executing
a chattel mortgage over said machineries and equipments to secure the payment of a balance remaining unpaid totalling P32,000.00,
to which petitioner agreed to pay on installment basis.
Petitioner Ago defaulted in his payments and so, in 1958, respondent Grace Park Engineering, Inc. instituted extrajudicial foreclosure
proceedings on the mortgage in the Court of First Instance of Agusan. The parties to the case arrived at a compromise agreement which
was submitted to the court in writing, signed by both petitioner and respondent. The judge of the Court of First Instance of Agusan then
dictated a decision in open court on January 28, 1959.
When petitioner continued to default in his payments, Grace Park Engineering, Inc. filed with the lower court a motion for execution,
which was granted on August 15, 1959. A writ of execution, dated September 23, 1959, later followed. The herein respondent Provincial
Issue:
Whether or not the court erred in declaring that the electrical energy may be stolen.
Held:
Based on this
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or intimidation against the person, or force against things, shall take another's
personal property without the owner's consent.
It is true that electricity is no longer, as formerly regarded by electricians, as fluid. But its manifestation and effects, like those of gas,
may be seen and felt. The true test of what may be stolen is not whether it is corporeal or incorporeal, but whether, being possessed
of value, a person other than the owner, may appropriate the same. Electricity, like gas, is valuable merchandise, and may thus be
stolen.
13. LUIS MARCOS LAUREL VS. HON. ZEUS ABROGAR (GR NO. 155076)
Facts:
• Laurel was charged with Theft under Art. 308 of the RPC for allegedly taking, stealing, and using PLDT's international long distance
calls by conducting International Simple Resale (ISR) – “a method of outing and completing international long-distance calls using lines,
cables, antennae, and/or air wave frequency which connect directly to the local/domestic exchange facilities of the country where the
call is destined”. PLDT alleged that this service was stolen from them using their own equipment and caused damage to them amounting
to P20,370,651.92;
• The Court held that Amended Information does not contain material allegations charging petitioner with theft of personal property
since international long distance calls and the business of providing telecommunication or telephone services are not personal properties
under Article 308 of the Revised Penal Code.
Issue:
WON International Simple Resale (international long-distance calls) maybe be considered as personal property, thus constituting theft
Held:
• The elements of theft under Article 308 of the Revised Penal Code are as follows: (1) that there be taking of personal property; (2)
that said property belongs to another; (3) that the taking be done with intent to gain; (4) that the taking be done without the consent
of the owner; and (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon
things. SDHETI
• Any personal property, tangible or intangible, corporeal or incorporeal, capable of appropriation can be the object of theft. In Article
335 of the Civil Code of Spain, "personal property" is defined as "anything susceptible of appropriation and not included in the foregoing
chapter (not real property)". The only requirement for a personal property to be the object of theft under the penal code is that it be
capable of appropriation. It need not be capable of "asportation", which is defined as "carrying away".
• To appropriate means to deprive the lawful owner of the thing. The word "take" in the Revised Penal Code includes any act intended
to transfer possession which, as held in the assailed Decision, may be committed through the use of the offenders' own hands, as well
as any mechanical device, such as an access device or card as in the instant case. This includes controlling the destination of the property
stolen to deprive the owner of the property, such as the use of a meter tampering, use of a device to fraudulently obtain gas and the
use of jumper to divert electricity. In the instant case, the act of conducting ISR operations by illegally connecting various equipment or
apparatus to private respondent PLDT's telephone system, through which petitioner is able to resell or re-route international long distance
calls using respondent PLDT's facilities constitutes all three acts of subtraction mentioned above.
Issue:
Whether or not Cebu Oxygen can validly own said land.
Held:
Yes. Under Cebu’s Charter (RA 3857), the city council “may close any city road, street or alley, boulevard, avenue, park or square.
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.” Since that portion of the city street subject of Cebu Oxygen’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.”
19. LAUREL VS. GARCIA (GR NO. 92013)
Facts:
The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations
Agreement entered into with Japan on May 9, 1956;
The properties and the capital goods and services procured from the Japanese government for national development projects are part
of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II.
The Roponggi property consists of the land and building "for the Chancery of the Philippine Embassy". As intended, it became the site
of the Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building needed major
repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that
time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to make the
property the subject of a lease agreement with a Japanese firm — Kajima. At the end of the lease period, all the three leased buildings
shall be occupied and used by the Philippine government. No change of ownership or title shall occur. The Philippine government retains
the title all throughout the lease period and thereafter. However, the government has not acted favorably on this proposal which is
pending approval and ratification between the parties. On August 11, 1986, President Aquino created a committee to study the
disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of reparations' capital
goods and services in the event of sale, lease or disposition. The four properties in Japan including the Roppongi were specifically
mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell
the reparations properties starting with the Roppongi lot.
Issue:
WON the subject property can be alienated
Held:
• The Roppongi site and the three related properties were acquired through reparations agreements and the Poppongi site was
specifically designated under the Reparations Agreement to house the Philippine Embassy. The nature of the Roppongi lot as property
for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement and the corresponding contract of
procurement which bind both the Philippine government and the Japanese government. There can be no doubt that it is of public
dominion unless it is convincingly shown that the property has become patrimonial.
• As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special
collective ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in the social group.
The applicable provisions of the Civil Code are:
"ART. 419.Property is either of public dominion or of private ownership.
MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of MIAA. However, MIAA points
out that it cannot claim ownership over these properties since the real owner of the Airport Lands and Buildings is the Republic of the
Philippines. The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings
for the benefit of the general public. Since the Airport Lands and Buildings are devoted to public use and public service, the ownership
of these properties remains with the State. The Airport Lands and Buildings are thus inalienable and are not subject to real estate tax
by local governments.
MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of real estate tax. MIAA insists
that it is also exempt from real estate tax under Section 234 of the Local Government Code because the Airport Lands and Buildings are
owned by the Republic. To justify the exemption, MIAA invokes the principle that the government cannot tax itself. MIAA points out that
the reason for tax exemption of public property is that its taxation would not inure to any public advantage, since in such a case the tax
debtor is also the tax creditor.
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew the tax exemption privileges of "government-
owned and-controlled corporations" upon the effectivity of the Local Government Code. Respondents also argue that a basic rule of
statutory construction is that the express mention of one person, thing, or act excludes all others. An international airport is not among
ISSUE: Whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws. If so exempt, then the
real estate tax assessments issued by the City of Parañaque, and all proceedings taken pursuant to such assessments, are void.
HELD: We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local governments.
First, MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt
from local taxation. Second, the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate
tax.
A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which states:
SEC. 133.Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise provided herein, the exercise of
the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
xxx xxx xxx
(o)Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local government units.
There is also no reason for local governments to tax national government instrumentalities for rendering essential public services to
inhabitants of local governments. The only exception is when the legislature clearly intended to tax government instrumentalities for the
delivery of essential public services for sound and compelling policy considerations. There must be express language in the law
empowering local governments to tax national government instrumentalities. Any doubt whether such power exists is resolved against
local governments.
Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the Code, local governments cannot tax
national government instrumentalities. As this Court held in Basco v. Philippine Amusements and Gaming Corporation:
The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation of constitutional
laws enacted by Congress to carry into execution the powers vested in the federal government. (MC Culloch v. Maryland, 4 Wheat 316,
4 L Ed. 579)
The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial
ownership of these assets from the Republic to MIAA. The purpose was merely to reorganize a division in the Bureau of Air Transportation
into a separate and autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is
owned solely by the Republic. No party claims any ownership rights over MIAA's assets adverse to the Republic.
The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed through sale or through any other
mode unless specifically approved by the President of the Philippines." This only means that the Republic retained the beneficial
ownership of the Airport Lands and Buildings because under Article 428 of the Civil Code, only the "owner has the right to . . . dispose
of a thing." Since MIAA cannot dispose of the Airport Lands and Buildings, MIAA does not own the Airport Lands and Buildings.
SEC. 193.Withdrawal of Tax Exemption Privileges — Unless otherwise provided in this Code, tax exemptions or incentives granted to, or
presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water
districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions are hereby
withdrawn upon effectivity of this Code. (Emphasis supplied) ESacHC
The minority states that MIAA is indisputably a juridical person. The minority argues that since the Local Government Code withdrew
the tax exemption of all juridical persons, then MIAA is not exempt from real estate tax. Thus, the minority declares:
It is evident from the quoted provisions of the Local Government Code that the withdrawn exemptions from realty tax cover not just
GOCCs, but all persons. To repeat, the provisions lay down the explicit proposition that the withdrawal of realty tax exemption applies
to all persons. The reference to or the inclusion of GOCCs is only clarificatory or illustrative of the explicit provision.
The term "All persons" encompasses the two classes of persons recognized under our laws, natural and juridical persons. Obviously,
MIAA is not a natural person. Thus, the determinative test is not just whether MIAA is a GOCC, but whether MIAA is a juridical person
at all. (Emphasis and underscoring in the original)
The minority's theory violates Section 133(o) of the Local Government Code which expressly prohibits local governments from imposing
any kind of tax on national government instrumentalities. Section 133(o) does not distinguish between national government
instrumentalities with or without juridical personalities. Where the law does not distinguish, courts should not distinguish. Thus, Section
133(o) applies to all national government instrumentalities, with or without juridical personalities. The determinative test whether MIAA
is exempt from local taxation is not whether MIAA is a juridical person, but whether it is a national government instrumentality under
Section 133(o) of the Local Government Code. Section 133(o) is the specific provision of law prohibiting local governments from imposing
any kind of tax on the national government, its agencies and instrumentalities.
The exception to the exemption in Section 234(a) is the only instance when the national government, its agencies and instrumentalities
are subject to any kind of tax by local governments. The exception to the exemption applies only to real estate tax and not to any other
tax. The justification for the exception to the exemption is that the real property, although owned by the Republic, is not devoted to
public use or public service but devoted to the private gain of a taxable person.
----
To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the Introductory Provisions of the
Administrative Code because it is not organized as a stock or non-stock corporation. Neither is MIAA a government-owned or controlled
corporation under Section 16, Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability.
MIAA is a government instrumentality vested with corporate powers and performing essential public services pursuant to Section 2(10)
of the Introductory Provisions of the Administrative Code. As a government instrumentality, MIAA is not subject to any kind of tax by
local governments under Section 133(o) of the Local Government Code. The exception to the exemption in Section 234(a) does not
apply to MIAA because MIAA is not a taxable entity under the Local Government Code. Such exception applies only if the beneficial use
of real property owned by the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion.
Properties of public dominion are owned by the State or the Republic. Article 420 of the Civil Code provides:
Art. 420.The following things are property of public dominion:
(1)Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, andothers of similar character;
4.Conclusion
Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which governs the legal relation and status of
government units, agencies and offices within the entire government machinery, MIAA is a government instrumentality and not a
government-owned or controlled corporation. Under Section 133(o) of the Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is not subject to "[t]axes, fees or charges of any kind" by local governments. The only
exception is when MIAA leases its real property to a "taxable person" as provided in Section 234(a) of the Local Government Code, in
which case the specific real property leased becomes subject to real estate tax. Thus, only portions of the Airport Lands and Buildings
leased to taxable persons like private parties are subject to real estate tax by the City of Parañaque.
Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are properties of public
dominion and thus owned by the State or the Republic of the Philippines. Article 420 specifically mentions "ports . . . constructed by the
State," which includes public airports and seaports, as properties of public dominion and owned by the Republic. As properties of public
dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from real
estate tax under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled that properties of public dominion
are not subject to execution or foreclosure sale.
WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001 and 27
September 2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and Buildings of the Manila International Airport Authority
EXEMPT from the real estate tax imposed by the City of Parañaque. We declare VOID all the real estate tax assessments, including the
final notices of real estate tax delinquencies, issued by the City of Parañaque on the Airport Lands and Buildings of the Manila
International Airport Authority, except for the portions that the Manila International Airport Authority has leased to private parties. We
also declare VOID the assailed auction sale, and all its effects, of the Airport Lands and Buildings of the Manila International Airport
Authority
21. PHILIPPINE PORTS AUTHORITY VS. CITY OF ILOILO (GR NO. 109791)
Facts: Petitioner Philippine Ports Authority (PPA) is asking the court on Petition for Review on Certiorari to set aside the ruling ordering
it to pay real property and business taxes to respondent City of Iloilo.
The City of Iloilo filed an action for recovery of sum of money against PPA, seeking to collect real property taxes as well as
business taxes, computed from the last quarter of 1984 to the fourth quarter of 1988.
It was alleged that the PPA is engaged in the business of arrastre services, stevedoring services, leasing of real estate, and a
registered owner of a wharehouse which is used in the operation of its business. From these, PPA was alleged to be obligated to pay
business taxes and real property taxes.
The Regional Trial Court (RTC) of Iloilo held PPA liable for the payment of real property taxes and for business taxes. However,
it held that the City of Iloilo may not collect business taxes on PPA’s arrastre and stevedoring services, as these form part of PPA’s
governmental functions.
The following issues were raised on appeal:
1. Whether or not the RTC erred in decreeing a property of public dominion (port facility) as subject to realty taxes just
because the mentioned property is being administered by what it perceives to be a taxable government corporation.
2. Whether or not the petitioner is subject to business taxes for leasing to private entities real estate without considering that
the petitioner is not engaged in business.
The City countered by stating in its Comment that PPA changed its theory of the case on appeal citing that the allegation regarding
the subject property as public dominion which was never raised during trial nor in its memorandum filed with the lower court.
Issues: 1. Whether or not a party can change its theory of the case on appeal.
2. Whether or not improvements introduced by PPA on public properties are exempted from tax.
Held: As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court will not be
permitted to change theory on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court
need not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage.
Issues:
Whether the disputed road is a property of public dominion pursuant to the last clause of Article 420 (1), and, as such, is not a valid
subject for legal easement.
Whether the offer of petitioners amounting to P50,000 is a sufficient compensation for their use of the road.
Held:
With regard to the first issue, the Supreme Court says, no.
The Court held that the road lots in a private subdivision are private property, hence, the local government should first acquire them by
donation, purchase, or expropriation, if they are to be utilized as a public road. Otherwise, they remain to be private properties of the
owner developer. The use of the subdivision roads by the general public does not strip it of its private character.
The road is not converted into public property by mere tolerance of the subdivision owner of the public's passage through it. The local
government should first acquire them by donation, purchase, or expropriation, if they are to be utilized as a public road. In the present
case, since no donation has been made in favor of any local government and the title to the road lot is still registered in the name of
ARB, the disputed property remains private.
With regard to the second issue, the Supreme Court again says, no.
In order to be entitled to a legal easement of right of way, the following requisites must concur:
(1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway;
(2) payment of proper indemnity;
(3) The isolation was not due to acts of the proprietor of the dominant estate and;
Having settled the legal issues, the Supreme Court ordered the remand of the case to the trial court for the reception of evidence and
determination of the limits of the property to be covered by the easement, the proper indemnity to be paid and the respective
contributions of petitioners. The petition was PARTIALLY GRANTED.
25. THE CITY OF ANGELES, ET. AL. VS. COURT OF APPEALS (GR NO. 97882)
Facts:
Private Respondent, owner/developer of the Timog Park Subdivision in Angeles City donated 51 parcels of land with an aggregate area
of 50,676 sq. meters (more or less) with a condition that the said lots shall be devoted and utilized solely for the site of the Angeles City
Sports Center, excluding cockfighting, where any change/modification in the basic design or concept of the Sports Center must have
prior written consent from the Donor. It was also stipulated that any substantial breach of the foregoing provisos shall entitle the DONOR
to revoke or rescind this Deed of Donation, and in such eventuality, the DONEE agrees to vacate and return the premises, together with
all improvements, to the DONOR peacefully without necessity of judicial action.
Petitioners started the construction of a drug rehabilitation center which the private respondent protested such action for being violative
of the terms and conditions of the donation.
Issue:
• Whether a subdivision owner/developer is legally bound under Presidential Decree No. 1216 to donate to the city or municipality the
"open space" allocated exclusively for parks, playground and recreational use.
• Whether the donation by of the "open space" of its subdivision in favor of petitioner City of Angeles may be revoked for alleged
violation of the Amended Deed of Donation.
Held:
A. Developer legally bound to donate open space
• Sec. 31 of P.D. 957, after it has been amended, in its last paragraph:
o "Upon their completion . . ., the roads, alleys, sidewalks and playgrounds shall be donated by the owner or developer to the city or
municipality and it shall be mandatory for the local government to accept; provided, however, that the parks and playgrounds may be
donated to the Homeowners Association of the project with the consent of the city or municipality concerned. . . ."
• It is clear from the aforequoted amendment that it is no longer optional on the part of the subdivision owner/developer to donate the
open space for parks and playgrounds; rather there is now a legal obligation to donate the same. Although there is a proviso that the
donation of the parks and playgrounds may be made to the homeowners association of the project with the consent of the city of
municipality concerned, nonetheless, the owner/developer is still obligated under the law to donate. Such option does not change the
mandatory character of the provision. The donation has to be made regardless of which donee is picked by the owner/developer.
B. Impositions of Conditions in Donation of Open Space
• The general law on donations does not prohibit the imposition of conditions on a donation so long as the conditions are not illegal or
impossible. It further declares that such open space devoted to parks, playgrounds and recreational areas are non-alienable public land
and non-buildable. However, there is no prohibition in either P.D. 957 or P.D. 1216 against imposing conditions on such donation.
• We hold that any condition may be imposed in the donation, so long as the same is not contrary to law, morals, good customs, public
order or public policy.
• P.D. 1216 clearly requires that the 3.5% to 9% of the gross area allotted for parks and playgrounds is "non-buildable", then the
obvious question arises whether or not such condition was validly imposed and is binding on the donee. It is clear that the "non-
buildable" character applies only to the 3.5% to 9% area set by law. If there is any excess land over and above the 3.5% to 9% required
by the decree, which is also used or allocated for parks, playgrounds and recreational purposes, it is obvious that such excess area is
not covered by the non-buildability restriction. In the instant case, if there be an excess, then the donee would not be barred from
developing and operating a sports complex thereon, and the condition in the amended deed would then be considered valid and binding.
• The subdivision in question is a "medium-density or economic housing" subdivision based on the sizes of the family lots donated in
the amended deed, 14 for which category the decree mandates that not less than 7% of gross area be set aside. Since the donated
land constitutes only a little more than 5% of the gross area of the subdivision, which is less than the area required to be allocated for
Issues:
1. Whether RBI can acquire reclaimed foreshore and submerged land areas because they are allegedly inalienable lands of the public
domain
2. Whether RBI can acquire reclaimed lands when there was no declaration that said lands are no longer needed for public use.
3. Whether RBI, being a private corporation, is barred from the Constitution to acquire lands of the public domain.
Held:
2. Yes. Even if it is conceded that there was no explicit declaration that the lands are no longer needed for public use or public
service, there was however an implicit executive declaration that the reclaimed areas R-10 are not necessary anymore for public use or
public service. President Aquino through MO 415 conveyed the same to the NHA partly for housing project and related
commercial/industrial development intended for disposition to and enjoyment of certain beneficiaries and not the public in general and
partly as enabling component to finance the project. Also, President Ramos, in issuing Proclamation No. 39, declared, though indirectly,
that the reclaimed lands of the Smokey Mountain project are no longer required for public use or service. In addition, President Ramos
issued Proclamation No. 465 increasing the area to be reclaimed from forty (40) hectares to seventy-nine (79) hectares, elucidating that
said lands are undoubtedly set aside for the beneficiaries of SMDRP and not the public. MO 415 and Proclamations Nos. 39 and 465 are
declarations that proclaimed the non-use of the reclaimed areas for public use or service as the SMDRP cannot be successfully
implemented without the withdrawal of said lands from public use or service.
3. Yes. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said proclamations were converted to
alienable and disposable lands of public domain. When the titles to the reclaimed lands were transferred to the NHA, said alienable and
disposable lands of public domain were automatically classified as lands of the private domain or patrimonial properties of the State
because the NHA is an agency NOT tasked to dispose of alienable or disposable lands of public domain. The only way it can transfer the
reclaimed land in conjunction with its projects and to attain its goals is when it is automatically converted to patrimonial properties of
the State. Being patrimonial or private properties of the State, then it has the power to sell the same to any qualified person—under the
Constitution, Filipino citizens as private corporations, 60% of which is owned by Filipino citizens like RBI.
28. ESTATE OF YUJUICO VS. REPUBLIC (GR NO. 168661)
Facts: Land in question was originally owned by a certain Fermina Castro which she sought to register on 1973 which was opposed by
the OSG but was then dismissed and as such attaining finality (Dir. Of lands did not appeal) then an OCT was subsequently issued in
Castro’s favor. The said land was then sold to Jesus Yujuico which then was subdivided into two, one for him and the other portion sold
to a certain Carpio (also petitioner in said case). Sometime in 1997, Pub. Estates Authority (PEA) was established for reclamation
purposes and then was tasked to create the Manila Coastal Road. Both Y and C discovered that in the plan, it overlapped their land and
a portion of their lands were sold by PEA to Manila Bay Dev Corp (MDBC). Y and C filed a petition for quieting title with damages but in
1998, parties entered into a Compromise Agreement approved by the RTC. A deed of exchange of property transpired where a 1.4 has
of PEA land will be conveyed to Y and C in exchange for a combined property of 1.7 has. Subsequently, a new PEA GM was appointed,
such held in abeyance the compromise agreement which led to the filing of a petition for relief which reached the SC, however was
dismissed for being filed out of time. In 2001, however, the OSG filed a petition for annulment and cancellation was filed claiming that
the land surveyed for Fermina Castro in 1973 was part of the Manila Bay thus claiming further that Castro had no registrable rights on
said land because it forms part of public dominion. RTC held that action was barred by res judicata however, it was overturned by the
CA claiming that res judicata does not apply to lands of Public Domain.
Issue: WON Equitable Estoppel applies in said case?
Held: Yes. GR is that Estoppel does not operate against the state, certain deviation has been allowed citing the case of Manila Lodge
No. 761 vs. CA where it stated: Nevertheless, the government must not be allowed to deal dishonorably or capriciously with its citizens,
and must not play an ignoble part or do a shabby thing; and subject to limitations, the doctrine of equitable estoppel may be invoked
against public authorities as well as against private individuals. SC said EE may be invoked against public authorities when said land was
already alienated to innocent purchasers of value. Not only was the land barred by estoppel but by laches as well because Yujuico
acquired the land from Castro in 1974 or more than 27 years have lapsed until the case for reversion was filed in 2001. Another law
cited is Sec. 32 of PD 1529 which recognizes the rights of innocent purchasers for value, it states “but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be
prejudiced.” According to SC, Yujuico relied on the clean title of Castro and acquired it through good faith and for value, and there was
no showing that he acquired such fraudulently. Thus, he should be protected under the Torrens system as well as subsequent buyer
Carpio. Aside from such grounds, SC relied on the grounds of res judicata and Laches. On RJ, a similar case existed thus applying
25 PROPERTY - CASE DIGESTS
Doctrine of Precedent plus by virtue of the Comp Agreement gov’t recognized ownership of Yujuico of said disputed land. On laches, 27
years.
29. LAND BANK OF THE PHILIPPINES VS. REPUBLIC (GR NO. 150824)
FACTS:
On September 26, 1969, Angelito C. Bugayong was issued OCT No. P-2823, which emanated from Sales Patent No. 4576 issued on
September 22, 1969. It covered a parcel of land located in Bocana, Kabacan, Davao City, with an area of 41,276 square meters. It was
originally surveyed as Lot No. 4159 and identified as marshy and under water during high tide and that it used to be a portion of a dry
river bed near the mouth of Davao River.
The land was initially subdivided into four lots under Subdivision Plan (LRC) Psd-139511 approved by the Commissioner of Land
Registration on April 23, 1971, as follows: Lot Nos. 4159-A, 4159-B, 4159-C and 4159-D. Consequently, OCT No. P-2823 was cancelled
and new Transfer Certificates of Title (TCTs) replaced it, all in the name of Bugayong. All four lots were then sold by Bugayong to
different persons. Lot No. 4159-A, which was then under TCT No. T-32769, was sold to spouses Lourdes and Candido Du. The said TCT
was then cancelled and replaced by TCT No. T-42166 in the name of spouses Du.
Afterwards, the spouses Du further caused the subdivision of their land into two lots. They sold one of said lots to spouses Felix and
Guadalupe Dayola, who were issued TCT No. T-45586. The other remaining lot, registered under TCT No. T-45587, was retained by and
registered in the names of spouses Du. Subsequently, Du spouses' TCT No. T-45587 was cancelled and was replaced by TCT No. T-
57348 registered in the name of Lourdes Farms, Inc., who subsequently mortgaged the property to petitioner LBP on April 14, 1980.
The validity of OCT No. P-2823, as well as its derivative TCTs, remained undisturbed until some residents of the land it covered filed a
formal petition before the Bureau of Lands on July 15, 1981. Investigation and ocular inspection were conducted by the Bureau of Lands
to check the legitimacy of OCT No. P-2823. It was found out that: (1) at the time Sales Patent No. 4576 was issued to Bugayong, the
land it covered was still within the forest zone, classified under Project No. 1, LC-47 dated August 6, 1923; it was released as alienable
and disposable land only on March 25, 1981, pursuant to BFD Administrative Order No. 4-1585 and to the provisions of Section 13,
Presidential Decree (P.D.) No. 705; (2) the land was marshy and covered by sea water during high tide; and (3) Bugayong was never
in actual possession of the land. Considering such findings, the Bureau of Lands resolved that the sales patent in favor of Bugayong was
improperly and illegally issued and that the Director of Lands had no jurisdiction to dispose of the subject land.
Upon recommendation of the Bureau of Lands, the Republic of the Philippines represented by the Director of Lands, through the Office
of the Solicitor General (OSG), instituted a complaint before the RTC in Davao, Branch 15, for the cancellation of title/patent and
reversion of the land covered by OCT No. P-2823 into the mass of public domain. Such complaint was filed against Bugayong and the
other present owners and mortgagees of the land, such as Lourdes Farms, Inc. and the latter's mortgagee, petitioner LBP.
The RTC then rendered a decision, which was affirmed by the CA, declaring OCT No. P-2823 as well as its derivative transfer certificate
of titles as null and void.
ISSUE(S):
Whether or not the CA erred in not finding the petitioner a mortgagee in good faith and for value.
RULING:
The contention that LBP has an interest over the subject land as a mortgagee has no merit. The mortgagor, Lourdes Farms, Inc. from
which LBP supposedly obtained its alleged interest has never been the owner of the mortgaged land. Acquisition of the subject land by
Lourdes Farms, Inc. is legally impossible as the land was released as alienable and disposable only on March 25, 1981. Even at present,
no one could have possessed the same under a claim of ownership for the period of thirty (30) years required under Section 48 (b) of
Commonwealth Act No. 141, as amended. Hence, LBP acquired no rights over the land.
Under Article 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the thing mortgaged. Since Lourdes
Farms, Inc. is not the owner of the land, it does not have the capacity to mortgage it to LBP.
Even assuming that LBP was able to obtain its own TCT over the property by means of its mortgage contract with Lourdes Farms, Inc.,
the title must also be cancelled as it was derived from OCT No. P-2823 which was not validly issued to Bugayong. Forest lands cannot
be owned by private persons. It is not registerable whether the title is a Spanish title or a Torrens title. 46 It is well settled that a
certificate of title is void when it covers property of public domain classified as forest or timber or mineral land. Any title issued covering
non-disposable lots even in the hands of an alleged innocent purchaser for value shall be cancelled.
Further, the same issue was already addressed by the Court in its Resolution of November 14, 2001 on the petition filed by the Philippine
National Bank (PNB) in G.R. No. 149568 entitled Philippine National Bank v. Republic of the Philippines represented by the Director of
Lands. In this case, PNB is also a mortgagee of another derivative TCT of the same OCT No. 2823. The Court in this case held that the
petitioner does not dispute that its predecessor-in-interest, Angelito C. Bugayong, had the subject property registered in his name when
it was forest land. Indeed, even if the subject property had been eventually segregated from the forest zone, neither petitioner nor its
predecessors-in-interest could have possessed the same under claim of ownership for the requisite period of thirty (30) years because
Issues:
1. In order that an alienable and disposable land of the public domain may be registered under Section 14(1) of Presidential Decree No.
1529, otherwise known as the Property Registration Decree, should the land be classified as alienable and disposable as of June 12,
1945 or is it sufficient that such classification occur at any time prior to the filing of the applicant for registration provided that it is
established that the applicant has been in open, continuous, exclusive and notorious possession of the land under a bona fide claim of
ownership since June 12,1945 or earlier?
2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land classified as alienable and disposable be
deemed private land and therefore susceptible to acquisition by prescription in accordance with the Civil Code?
Held:
The Petition is denied.
2.) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil Code, prescription is recognized
as a mode of acquiring ownership of patrimonial property. However, public domain lands become only patrimonial property not only
with a declaration that these are alienable or disposable. There must also be an express government manifestation that the property is
already patrimonial or no longer retained for public service or the development of national wealth, under Article 422 of the Civil Code.
And only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion
begin to run.
(a) Patrimonial property is private property of the government. The person acquires ownership of patrimonial property by
prescription under the Civil Code is entitled to secure registration thereof under Section 14(2) of the Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and other extraordinary.
Under ordinary acquisitive prescription, a person acquires ownership of a patrimonial property through possession for at least ten (10)
years, in good faith and with just title. Under extraordinary acquisitive prescription, a person’s uninterrupted adverse possession of
patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens into ownership.
It is clear that the evidence of petitioners is insufficient to establish that Malabanan has acquired ownership over the subject property
under Section 48(b) of the Public Land Act. There is no substantive evidence to establish that Malabanan or petitioners as his
predecessors-in-interest have been in possession of the property since 12 June 1945 or earlier. The earliest that petitioners can date
back their possession, according to their own evidence—the Tax Declarations they presented in particular—is to the year 1948. Thus,
they cannot avail themselves of registration under Section 14(1) of the Property Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for registration. While the subject property was declared as alienable or
disposable in 1982, there is no competent evidence that is no longer intended for public use service or for the development of the
national evidence, conformably with Article 422 of the Civil Code. The classification of the subject property as alienable and disposable
land of the public domain does not change its status as property of the public dominion under Article 420(2) of the Civil Code. Thus, it
is insusceptible to acquisition by prescription.
31. DENR, ET. AL. VS. MAYOR YAP, ET. AL. (GR NO. 167707)
Facts:
On November 10, 1978, then President Marcos issued Proc. No. 1801 declaring Boracay Island, among other islands, caves and
peninsulas in the Philippines, as tourist zones and marine reserves under the administration of the Philippine Tourism Authority (PTA).
President Marcos later approved the issuance of PTA Circular 3-82 dated September 3, 1982, to implement Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an application for judicial confirmation of
imperfect title or survey of land for titling purposes, respondents-claimants Mayor . Yap, Jr., and others filed a petition for declaratory
relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proc. No. 1801 and PTA Circular No. 3-82 raised doubts on their right to secure
titles over their occupied lands. They declared that they themselves, or through their predecessors-in-interest, had been in open,
continuous, exclusive, and notorious possession and occupation in Boracay since June 12, 1945, or earlier since time immemorial. They
declared their lands for tax purposes and paid realty taxes on them. Respondents-claimants posited that Proclamation No. 1801 and its
implementing Circular did not place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was
susceptible of private ownership. Under Section 48(b) of the Public Land Act, they had the right to have the lots registered in their
names through judicial confirmation of imperfect titles.
The Republic, through the OSG, opposed the petition for declaratory relief. The OSG countered that Boracay Island was an unclassified
land of the public domain. It formed part of the mass of lands classified as “public forest,” which was not available for disposition
pursuant to Section 3(a) of the Revised Forestry Code, as amended. The OSG maintained that respondents-claimants’ reliance on PD
No. 1801 and PTA Circular No. 3-82 was misplaced. Their right to judicial confirmation of title was governed by Public Land Act and
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, declaring that, “PD 1810 and PTA Circular No. 3-82
Revised Forestry Code, as amended.
The OSG moved for reconsideration but its motion was denied. The Republic then appealed to the CA. On In 2004, the appellate court
affirmed in toto the RTC decision. Again, the OSG sought reconsideration but it was similarly denied. Hence, the present petition under
Rule 45.
On May 22, 2006, during the pendency the petition in the trial court, President Gloria Macapagal-Arroyo issued Proclamation No. 1064
classifying Boracay Island partly reserved forest land (protection purposes) and partly agricultural land (alienable and disposable).
On August 10, 2006, petitioners-claimants Sacay, and other landowners in Boracay filed with this Court an original petition for prohibition,
mandamus, and nullification of Proclamation No. 1064. They alleged that the Proclamation infringed on their “prior vested rights” over
portions of Boracay. They have been in continued possession of their respective lots in Boracay since time immemorial.
On November 21, 2006, this Court ordered the consolidation of the two petitions
Issue:
WON private claimants have a right to secure titles over their occupied portions in Boracay
Held:
Except for lands already covered by existing titles, Boracay was an unclassified land of the public domain prior to Proclamation No. 1064.
Such unclassified lands are considered public forest under PD No. 705.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as public forest. Section 3(a) of PD No.
705 defines a public forest as “a mass of lands of the public domain which has not been the subject of the present system of classification
for the determination of which lands are needed for forest purpose and which are not.” Applying PD No. 705, all unclassified lands,
including those in Boracay Island, are ipso facto considered public forests. PD No. 705, however, respects titles already existing prior
to its effectivity.
The 1935 Constitution classified lands of the public domain into agricultural, forest or timber, such classification modified by the 1973
Constitution. The 1987 Constitution reverted to the 1935 Constitution classification with one addition: national parks. Of these, only
agricultural lands may be alienated. Prior to Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly and
administratively classified under any of these grand divisions. Boracay was an unclassified land of the public domain.
A positive act declaring land as alienable and disposable is required. In keeping with the presumption of State ownership, the Court has
time and again emphasized that there must be a positive act of the government, such as a presidential proclamation or an executive
order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute. The applicant
may also secure a certification from the government that the land claimed to have been possessed for the required number of years is
alienable and disposable. The burden of proof in overcoming such presumption is on the person applying for registration (or claiming
ownership), who must prove that the land subject of the application is alienable or disposable.
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or certification was presented to the
Court. The records are bereft of evidence showing that, prior to 2006, the portions of Boracay occupied by private claimants were
subject of a government proclamation that the land is alienable and disposable. Matters of land classification or reclassification cannot
be assumed. They call for proof.
Proc. No. 1801 cannot be deemed the positive act needed to classify Boracay Island as alienable and disposable land. If President
Marcos intended to classify the island as alienable and disposable or forest, or both, she would have identified the specific limits of each,
as President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801.
Issue: WON the funds of the Pasay City Government which were garnished by the City Sheriff are by law exempt from execution and/or
garnishment.
Issue:
1.Whether or not the property involved is a private or patrimonial property of the City of Manila.
2.Whether or not Republic Act No. 4118 valid and not repugnant to the Constitution.
Held:
1. NO, it is the property of the State.
The rule is that when it comes to property of the municipality which it did not acquire in itsprivate or corporate capacity with its own
funds, the legislature can transfer itsadministration and disposition to an agency of the National Government to be disposed of according
to its discretion.
The possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity, such property is
held in trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes. The City of Manila,
although declared by the Cadastral Court as owner in fee simple, has not shown by any shred of evidence in what manner it acquired
said land as its private or patrimonial property. The presumption is that such land came from the State upon the creation of the
municipality. That it has in its name a registered title is not questioned, but this title should be deemed to be held in trust for the State
as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon its creation Therefore, the land
in question pertains to the State and the City of Manila merely acted as trustee for the benefit of the people therein for whom the State
can legislate in the exercise of its legitimate powers.
2. Yes, it is valid.
Consequently, the City of Manila was not deprived of anything it owns, either under the dueprocess clause or under the eminent domain
provisions of the Constitution. If it failed to getfrom the Congress the concession it sought of having the land involved given to it as its
patrimonial property, the Courts possess no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer from any
constitutional infirmity
37. MANILA LODGE NO. 761 VS. COURT OF APPEALS (73 SCRA 162)
Facts:
• June 26, 1905, Philippine Commission enacted Act No. 1360 authorizing the city of Manila to reclaim a portion of Manila Bay. It was
to form part of Luneta extension. It was stipulated that the reclaimed area “shall be the property of the City of Manila” and that “the
city of Manila is hereby authorized to set aside a tract not to exceed 500 ft. x 600 ft. for a hotel site for lease with a term not to exceed
99 years.
• Act No. 1657 was enacted to amend Act No. 1360 which authorize the city of Manila either to lease or to sell the portion set aside as
a hotel site.
• The reclaimed area, 25 hectares, was registered and on January 20, 1911 OCT No. 1909 was issued in the name of the city of Manila.
• The City of Manila conveyed 5,543.07sq.m. of reclaimed area to Manila Lodge No. 761 which was then sold to Tarlac Development
Corporation together with all the improvements.
Issue:
WON the said subject land is part of the public domain
Held:
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City could, by virtue of its ownership,
dispose of the whole reclaimed area without need of authorization to do so from the lawmaking body. Thus Article 348 of the Civil Code
HELD: Funds of public corporations which can sue and be sued are not exempt from garnishment. PVTA is also a public corporation with
the same attributes, a similar outcome is attributed. The government has entered with them into a commercial business hence it has
abandoned its sovereign capacity and has stepped down to the level of a corporation. Therefore, it is subject to rules governing ordinary
corporations and in effect can be sued. Therefore, the petition of PNB La Union is denied.
40. PROFESSIONAL VIDEO INC. VS. TESDA (GR NO. 155504)
Facts: TESDA procured the services of PROVI for the creation of polyvinyl (PVC) Identification Cards which TESDA issues to trainees
who passed its certification process. TESDA failed to pay an outstanding balance of P35M which led PROVI to file a complaint with RTC
for sum of money with damages against TESDA which also prayed for a Writ of Attachment/garnishment against TESDA. RTC granted
the PROVI’s Writ against the properties of TESDA amounting to P35M. The CA reversed the RTC which stated that TESDA’s funds are
public in nature thus exempt from garnishment and second, purchase of PVC Cards was a necessary incident of its gov’t function.
Issue: WON the writ of attachment against TESDA and its funds, to cover PROVI's claim against TESDA, is valid.
Held: INVALID. SC upheld CA. First, TESDA as an unincorporated instrumentality of the government operating under a specific charter
and performing governmental functions, STATE IMMUNITY apply to it. By reason of Public Policy, performance of governmental function
cannot be hindered or delayed by suits, nor can these suits control the use and disposition of the means for the performance of
governmental functions. Second, selling of the PVC cards does not characterize such transaction as industrial or business but rather part
of TESDA’s general gov’tal function as they are undertaken to discharge such functions. Third, TESDA's funds are still public in nature
and, thus, cannot be the valid subject of a writ of garnishment or attachment. Under Section 33 of the TESDA Act, the TESDA budget
for the implementation of the Act shall be included in the annual General Appropriation Act; hence, TESDA funds, being sourced from
the Treasury, are moneys belonging to the government, or any of its departments, in the hands of public officials. As reiterated in many
cases, public funds cannot be the object of garnishment proceedings even if the consent to be sued had been previously granted and
the state liability adjudged. Thus, there should be a specific appropriation covering such payment for PROVI to be able to garnish.
41. VILLA VS. HEIRS OF ALTAVAS (GR NO. 162028)
FACTS:
On November 26, 1997, respondents filed a Complaint for ejectment with the MCTC petitioner together with Virginia Bermejo and Rolito
Roxas, alleging that respondents are heirs of the registered owner of two parcels of fishpond designated as Lot No. 2816 and Lot No.
2817, who have been in actual possession through their administrator, overseer and representative, the late councilor Mussolini C.
Bermejo, the husband of Virgina. It was further alleged that on January 31, 1994, after the death of Mussolini, Virgina took over the
possession of the premises in question without the consent or permission of respondents. Virginia leased in favor of petitioner a portion
of about five hectares of Lot No. 2816, without any right to do so. On October 21, 1997, respondents through counsel formally sent
35 PROPERTY - CASE DIGESTS
demand letters to Virginia and petitioner to vacate the respective portions occupied by them; however, despite said demands, they
persisted in continuing their illegal possession of the premises.
The MCTC subsequently rendered a decision in favor of the respondents, declaring them the rightful owners and legal possessors of the
subject parcels of land. Aggrieved by the Decision of the MCTC, petitioner and Virginia filed an appeal with the RTC; however, the RTC
dismissed the appeal of petitioner for her failure to file her appeal memorandum, while, the RTC dismissed Virginia's appeal because of
the latter’s withdrawal of the appeal. Petitioner then filed a Motion for Reconsideration but the same was denied by the RTC. Petitioner
filed a special civil action for certiorari with the CA contending that the RTC committed grave abuse of discretion in dismissing her appeal
on technical ground. This was, however, dismissed by the CA and the orders of the RTC were affirmed by the CA.
In this petition for certiorari, petitioner avers that respondents failed to establish that they are in actual possession of the lots in question;
that, in fact, they have not proven that they are the owners of the said properties; and that petitioner has a valid contract of lease with
Virginia which entitles her to the possession of Lot No. 2817. Petitioner further argues that respondents have no cause of action against
her as they are not lessors, vendors or persons with whom petitioner has a contract, express or implied and that respondents failed to
aver facts constitutive of either forcible entry or unlawful detainer. As such, the MCTC did not acquire jurisdiction over the case.
ISSUE(S):
Whether or not petitioner has claim over the subject property.
RULING:
Petitioner’s contention is without merit.
The Court reiterated the well-settled rule that the trial court’s findings of fact, especially when affirmed by the CA are generally binding
and conclusive. In the case at bar, the CA sustained the following findings of the MCTC, to wit: that respondents' predecessor, Enrique
Altavas, was not divested of his ownership of the subject lots; that the titles over the subject properties remain in his name; that, not
being the owner or administrator of the said lots, Virginia has no right to enter into any contract for the lease of the said properties;
and that petitioner's possession of portions of the disputed properties is merely upon tolerance of respondents.
Petitioner failed to show that any of the following exceptions to the general rules was present in this case: (1) the conclusion is grounded
on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of
discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of
specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence
on record; (8) the findings of the CA are contrary to the findings of the trial court; (9) the CA manifestly overlooked certain relevant and
undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the CA are beyond the issues of
the case; and (11) such findings are contrary to the admissions of both parties. Thus, it does not warrant a review of the findings of
fact of the lower courts.
As to respondents' ownership and right of possession of the subject properties, records show that the MCTC based its Decision not only
on the Position Paper of respondents but also on the pieces of evidence submitted by them. Respondents attached the Original
Certificates of Title Nos. RO-4326 and RO-4327 in the name of Enrique, covering Lot Nos. 2816 and 2817, respectively, as evidence of
their ownership and right to possess the disputed properties.
Moreover, being a mere lessee, petitioner steps into the shoes of her lessor, Virginia. However, Virginia's claim of ownership was not
sustained by the MCTC, which instead found that she was not the owner of and had no right to possess the disputed property or to
transfer possession of the same, through lease, in favor of another person. Virginia later withdrew her appeal filed with the RTC. By
reason of such withdrawal, she is bound by the findings of the MCTC.
42. ESTATE OF SOLEDED MANANTAN VS. ANICETO SOMERA (GR NO. 145867)
Facts:
Manantan alleged in her Complaint that she was the owner of a 214- square meter parcel of land. After causing a relocation survey of
the subject property, she discovered that respondent and Tavera occupied certain portions thereof [disputed portions]. Manantan
advised respondent and Tavera to vacate the disputed portions as soon as she would decide to sell the subject property to an interested
buyer. Later, a prospective buyer approached Manantan about the subject property. However, upon learning that respondent and
Tavera occupied some portions of the subject property, the prospective buyer decided not to proceed with the sale until after respondent
and Tavera vacated the same. Manantan repeatedly requested respondent and Tavera to abandon the disputed portions of the subject
property, but the two refused. Hence, Manantan hired the services of a lawyer who immediately sent a formal letter of demand to
respondent and Tavera requesting them to leave the disputed portions. Respondent and Tavera, however, ignored the demand letter.
In her Complaint in Civil Case, Manantan prayed that respondent, Tavera, and all persons claiming rights under them, be ordered to
vacate the portions of the subject property they were occupying. Respondent and Tavera filed a Joint Answer to Manantan’s Complaint,
he averred that the MTCC had no jurisdiction over the case, because it was neither an action for forcible entry nor for unlawful detainer.
The Complaint did not allege that Manantan was deprived of possession of the disputed portions by force, intimidation, threat, strategy,
or stealth, which would make a case for forcible entry. It also did not state that respondent and Tavera withheld possession of the
Issue:
Whether or not the MTCC had jurisdiction over the action?
Held:
A case for unlawful detainer must be instituted before the proper municipal trial court or metropolitan trial court within one year from
unlawful withholding of possession. Such one year period should be counted from the date of plaintiff’s last demand on defendant to
vacate the real property, because only upon the lapse of that period does the possession become unlawful. Well-settled is the rule that
the jurisdiction of the court, as well as the nature of the action, are determined by the allegations in the complaint. To vest the court
with the jurisdiction to effect the ejectment of an occupant from the land in an action for unlawful detainer, it is necessary that the
complaint should embody such a statement of facts clearly showing attributes of unlawful detainer cases, as this proceeding is summary
in nature. The complaint must show on its face enough ground to give the court jurisdiction without resort to parol testimony.
In the case at bar, the Complaint does not allege facts showing compliance with the prescribed one year period to file an action for
unlawful detainer. It does not state the material dates that would have established that it was filed within one year from the date of
Manantan’s last demand upon respondent to vacate the disputed portion of land. Such allegations are jurisdictional and crucial, because
if the complaint was filed beyond the prescribed one year period, then it cannot properly qualify as an action for unlawful detainer over
which the MTCC can exercise jurisdiction. It may be an accion publiciana or accion reivindicatoria.
Thus, in order that a municipal trial court or metropolitan trial court may acquire jurisdiction in an action for unlawful detainer, it is
essential that the complaint specifically allege the facts constitutive of unlawful detainer. The jurisdictional facts must appear on the
face of the complaint. When the complaint fails to aver facts constitutive of unlawful detainer, an action for unlawful detainer is not a
proper remedy and, thus, the municipal trial court or metropolitan trial court has no jurisdiction over the case.
Further, it appears from the allegations in the Complaint that the respondent was already in possession of the disputed portion at the
time Manantan bought the subject property from the Bayot family, and it was only after the conduct of a relocation survey, which
supposedly showed that respondent was encroaching on the subject property, did Manantan begin asserting her claim of ownership
over the portion occupied and used by respondent. Clearly, respondent’s possession of the disputed portion was not pursuant to any
contract, express or implied, with Manantan, and, resultantly, respondent’s right of possession over the disputed portion is not subject
to expiration or termination. At no point can it be said that respondent’s possession of the disputed portion ceased to be legal and
became an unlawful withholding of the property from Manantan.
Since the Complaint in Civil Case No. 10467 failed to satisfy on its face the jurisdictional requirements for an action for unlawful detainer,
the Court of Appeals was correct in holding that the MTCC had no jurisdiction over the said Complaint and should have dismissed the
same.
43. IGLESIA NI CRISTO VS. HON. PONFERRADA (GR NO. 168943)
Facts:
• Enrique Santos, owner of a 936-square-meter parcel of land located in Tandang Sora, Quezon City covered by Transfer Certificate of
Title (TCT) No. 57272 issued on July 27, 1961 which cancelled TCT No. 57193-289, had been in possession of the owner's duplicate of
said title and had been in continuous, open, adverse and peaceful possession of the property.
• Died on February 9, 1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were their children. The Register of
Deeds had the title reconstituted as TCT No. RT-110323, based on the owner's duplicate of TCT No. 57272 due to the fire that burned
down the ROD on June 11, 1988.
• Sometime in February 1996, plaintiffs learned that defendant was claiming ownership over the property based on TCT No. 321744
issued on September 18, 1984 which, on its face, cancelled TCT No. 320898, under the name of the Philippine National Bank, which
allegedly cancelled TCT No. 252070 in the names of the spouses Marcos and Romana dela Cruz.
• Enrique Santos, during his lifetime, and his heirs, after his death, never encumbered or disposed the property. In 1996, plaintiffs had
the property fenced but defendant deprived them of the final use and enjoyment of their property.
Issue:
WON the action, either Quieting of title or Accion Reinvindicatoria had prescribed
Held:
The contention of petitioner has no merit. The nature of an action is determined by the material allegations of the complaint and the
character of the relief sought by plaintiff, and the law in effect when the action was filed irrespective of whether he is entitled to all or
Issue: WON private respondents are entitled to file a forcible entry case against petitioner.
Held: YES, they are entitled to file a forcible entry case. Since private respondents were in actual possession of the property at the time
they were forcibly ejected by petitioner, private respondents have a right to commence an action for forcible entry regardless of the
legality or illegality of possession.
Private respondents, as actual possessors, can commence a forcible entry case against petitioner because ownership is not in
issue. Forcible entry is merely a quieting process and never determines the actual title to an estate. Title is not involved, only actual
possession. It is undisputed that private respondents were in possession of the property and not the petitioners nor the spouses Jose.
Although the petitioners have a valid claim over ownership this does not in any way justify their act of ―forcible entry.
It must be stated that regardless of the actual condition of the title to the property the party in peaceable quiet possession shall
not be turned out by a strong hand, violence or terror. Thus, a party who can prove prior possession can recover such possession even
against the owner himself.Whatever may be the character of his possession, if he has in his favor priority in time, he has the security
that entitles him to remain on the property until he is lawfully ejected by a person having a better right by accion publiciana or accion
reivindicatoria. The doctrine of self help, which the petitioners were using to justify their actions, are not applicable in the case because
it can only be exercised at the time of actual or threatened dispossession which is absent in the case at bar (in fact they are the ones
who are threatening to remove the respondents with the use of force.) Article 536 basically tells us that the owner or a person who has
a better right over the land must resort to judicial means to recover the property from another person who possesses the land.
When possession has already been lost, the owner must resort to judicial process for the recovery of property. As clearly stated
in Article 536- ―In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto.
He who believes that he has an action or right to deprive another of the holding of a thing must invoke the aid of the competent court,
if holder should refuse to deliver the thing.
46. AIR TRANSPORTATION OFFICE AND MACTAN-CEBU INTERNATIONAL AIRPORT VS. ANTIONIO GOPUCO (GR NO.
158563)
Facts: Eminent Domain case where original owner Gapuco sought for the recovery of a portion of a land which previously constituted
the LAHUG Airport. In 1949, landowners surrounding the vicinity of Lahug airport were informed of an expropriation of their lands for
the purpose of expansion with reassurance that they would be able to repurchase the same when said airport would be abandoned.
Defendant was one of the few who refused. However, CFI promulgated a decision in favor of Civil Aeronautics Authority (CAA) which
approved the lawful expropriation proceedings that was not appealed by Gopuco thus attaining finality. However, Lahug was
subsequently abandoned due to the creation of the MIA. A law was then passed that created MCIAA upon which the assets of Lahug
Airport was transferred thus including the titles to such lands. Gapuco then wanted to get back his land by asserting that by closure of
the Lahug Airport, the original purpose for which the property was expropriated had ceased or otherwise been abandoned, and title to
the property had therefore should be reverted to him. Furthermore, he claims that he agreed to a compromise settlement that assured
that such expropriated lots will be resold to them at the same price as it was expropriated in the event the lahug airport will be
abandoned. RTC dismissed Gapuco’s claim but CA reversed the RTC and upheld the reconveyance to Gapuco. RTC’s claim that the fact
Issue:
Whether or not a constructive trust was constituted in this case, and as such, the respondents herein are entitled to the restitution of
the expropriated property which was not used for a public purpose.
Held:
YES. Art. 1454 of the Civil Code provides: “If an absolute conveyance of property is made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfilment of the obligation is offered by the
grantor when it becomes due, he may demand the reconveyance of the property to him.”
Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by courts as devices to remedy
any situation in which the holder of legal title may not in good conscience retain the beneficial interest.
41 PROPERTY - CASE DIGESTS
In constructive trusts, the arrangement is temporary and passive in which the trustee’s sole duty is to transfer the title and possession
over the property to the plaintiff-beneficiary. Of course, the “wronged party seeking the aid of a court of equity in establishing a
constructive trust must himself do equity.” Accordingly, the court will exercise its discretion in deciding what acts are required of the
plaintiff-beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the consideration
received from the latter just as the plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good judgment of the
court, the trustee may also be paid the necessary expenses he may have incurred in sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will
secure a benefit from his acts.
The rights and obligations between the constructive trustee and the beneficiary, in this case, respondent MCIAA and petitioners over
Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, “When the conditions have for their purpose the extinguishment of an
obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received x x x In case
of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding
article shall be applied to the party who is bound to return x x x.
49. APO FRUITS CORPORATION VS. COURT OF APPEALS (GR NO. 164195)
Facts:
Apo Fruits Corp. (AFC) and Hijo Plantation Inc. (HPI) were owners of 5 parcels of land (1,338.60 has.) located in San Isidro, Tagum,
Davao. On 12 October 1995, the two voluntarily offered to sell the properties to the DAR.
DAR offered P86.9M for AFC’s land and P164.40M for HPI’s land. AFC, HPI and DAR cannot agree on the price hence the Complaint for
Determination of Just Compensation was filed before the DAR Adjudication Board on 14 February 1997.
The DARAB failed to render a decision on the valuation of the land for three years. But nevertheless, the government deposited P26M
into AFC’s account and P45M into HPI’s account as down payment in 1996. The DAR also caused the titling of the land in the name of
the Republic of the Philippines. Later, titles were given to farmers under the CARP.
Due to DARAB’s failure to adjudicate, AFC and HPI filed a complaint for determination of just compensation before the RTC of Davao
which rendered a decision in favor of AFC and HPI. The RTC ruled, based on the reports it gathered from assessors, that the purchase
price should be higher than what was offered by DAR; that the purchase price should be at P103.33/ sq. m; that DAR is to pay AFC and
HPI a total of P1.38B.
Upon MR, the RTC modified its earlier ruling and added that the DAR should, in addition to the amount of just compensation, pay AFC
and HPI interest at a rate of 12% per annum computed from the time the complaint was filed until the finality of the decision.
DAR appealed to the CA, the CA reversed the RTC.
The case was then elevated to the SC Third Division where the Court reversed the CA ruling and affirmed the RTC decision with a slight
modification that the order to pay interest at 12% per annum be deleted in its entirety.
Hence this Motion for Reconsideration
Issue:
WON AFC and HPI were entitled to the payment of interest in addition to the amount of just compensation that is due them
Held:
The taking of property under the CARL is an exercise by the State of the power of eminent domain. A basic limitation on the State’s
power of eminent domain is the constitutional directive that private property shall not be taken for public use without just compensation
Just compensation refers to the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller
in open market in the usual and ordinary course of legal action and competition, or the fair value of the property as between one who
receives and one who desires to sell. It is fixed at the time of the actual taking by the State. Thus, if property is taken for public use
before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its
just value, to be computed from the tine the property is taken up to the time when compensation is actually paid or deposited with the
court. In fine, between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position
as good as (but not better than) the position he was before the taking occurred.
It is explicit from LBP v. Wycoco that interest on the just compensation is imposed only in case of delay in the payment thereof which
must be sufficiently established. Given the foregoing, we find that the imposition of interest on the award of just compensation is not
justified and should therefore be deleted.
It must be emphasized that "pertinent amounts were deposited in favor of AFC and HPI within fourteen months after the filing by the
latter of the Complaint for determination of just compensation before the RTC". 24 It is likewise true that AFC and HPI already collected
P149.6 and P262 million, respectively, representing just compensation for the subject properties. Clearly, there is no unreasonable delay
in the payment of just compensation which should warrant the award of 12% interest per annum in AFC and HPI's favor.
In the Petition and in its Memorandum, 33 petitioners in essence repeat the assertions they made before the lower court. They contend
that the assailedOrdinance was enacted in the exercise of the inherent and plenary power of the State and the general welfare clause
exercised by local government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458
(a) 4 (vii) of the Code. 34 They allege that the Ordinance is a valid exercise of police power; it does not contravene P.D. 499; and that
it enjoys the presumption of validity. 35
ISSUE: Validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.
The tests of a valid ordinance are well established. A long line of decisions has held that for an ordinance to be valid, it must not only
be within the corporate powers of the local government unit to enact and must be passed according to the procedure prescribed by law,
it must also conform to the following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must not
be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and
consistent with public policy; and (6) must not be unreasonable.
The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the City Council acting as agent of
Congress. Local government units, as agencies of the State, are endowed with police power in order to effectively accomplish and carry
out the declared objects of their creation. 41 This delegated police power is found in Section 16 of the Code, known as the general
welfare clause, viz:
SECTION 16.General Welfare. — Every local government unit shall exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential
to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace
and order, and preserve the comfort and convenience of their inhabitants.
The object of the Ordinance was, accordingly, the promotion and protection of the social and moral values of the community. Granting
for the sake of argument that the objectives of the Ordinance are within the scope of the City Council's police powers, the means
employed for the accomplishment thereof were unreasonable and unduly oppressive.
The closing down and transfer of businesses or their conversion into businesses "allowed" under the Ordinance have no reasonable
relation to the accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments will not per se
protect and promote the social and moral welfare of the community; it will not in itself eradicate the alluded social ills of prostitution,
adultery, fornication nor will it arrest the spread of sexual disease in Manila.
This is not warranted under the accepted definitions of these terms. The enumerated establishments are lawful pursuits which are not
per se offensive to the moral welfare of the community.
The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to be injurious to the health or
comfort of the community and which in itself is amoral, but the deplorable human activity that may occur within its premises. While a
motel may be used as a venue for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a house
of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption.
Means employed are constitutionally infirm
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the governmental interference
itself, infringes on the constitutional guarantees of a person's fundamental right to liberty and property.
Modality employed is unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of the beneficial use of its property.
An ordinance which permanently restricts the use of property that it can not be used for any reasonable purpose goes beyond regulation
and must be recognized as a taking of the property without just compensation. 77 It is intrusive and violative of the private property
rights of individuals. EHTCAa
The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken for public use without just
compensation." The provision is the most important protection of property rights in the Constitution.
There are two different types of taking that can be identified. A "possessory" taking occurs when the government confiscates or physically
occupies property. A "regulatory" taking occurs when the government's regulation leaves no reasonable economically viable use of the
property.
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it leaves no reasonable
economically viable use of property in a manner that interferes with reasonable expectations for use. 83 A regulation that permanently
denies all economically beneficial or productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles
of nuisance or property law that existed when the owner acquired the land make the use prohibitable.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance, although a valid exercise of police
power, which limits a "wholesome" property to a use which can not reasonably be made of it constitutes the taking of such property
without just compensation. Private property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed
without compensation. Such principle finds no support in the principles of justice as we know them. The police powers of local
government units which have always received broad and liberal interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent domain. It needs restating that the property taken in the
exercise of police power is destroyed because it is noxious or intended for a noxious purpose while the property taken under the power
of eminent domain is intended for a public use or purpose and is therefore "wholesome."
The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of property and personal rights of citizens.
For being unreasonable and an undue restraint of trade, it cannot, even under the guise of exercising police power, be upheld as valid.
51. NATIONAL POWER CORPORATION VS. LUCMAN IBRAHIM (GR NO. 168732)
Facts: The National Power Corporation constructed underground tunnels on several parcels of land owned in common by Ibrahim and
his co-owners situated in Lanao del Sur. NAPOCOR constructed the tunnels in 1978 but its existence was discovered by the land owners
only in 1992. The tunnels were apparently being used by the NAPOCOR in siphoning the water of Lake Lanao and in the operation of
NAPOCOR's other projects located in other parts of Mindanao.
The existence of the tunnels came to the attention of the co-owners only when one of them applied for a permit with the Marawi
City Water District to construct and/or install a motorized deep well. The application was denied on the ground that the construction of
the deep well would cause danger to lives and properties because Marawi City lies in the area of volcanic and tectonic activity and
Held: The Supreme Court held that pursuant to Article 437 of the Civil Code, the ownership of the land extends to the surface as well
as to the subsoil under it. The Court explained that the argument by the petitioner that the landowner's right extends to the subsoil
insofar as necessary for their practical interests serves only to further weaken its case because the theory would limit the right to the
subsoil upon the economic utility which such area offer to the surface owners.
Presumably, according to the Court, the landowner's right extends to such height or depth where it is possible for them to obtain
some benefit or enjoyment, and it is extinguished beyond such limit as there would be no more interest protected by law.
In this case, the landowners could have dug upon their property motorized deep wells but were prevented from doing so by the
authorities precisely because of the construction and existence of the tunnels underneath the surface of their property. Hence, the
landowners still had a legal interest in the sub-terrain portion insofar as they could have excavated the same for the construction of the
deep well.
There was, therefore, in this case, "taking" of private respondents' property which entitled the latter to the payment of just
compensation.
52. REPUBLIC VS. HON. COURT OF APPEALS AND JOSE DE LA ROSA (GR NO. L-43938)
Facts: Jose De la Rosa sought for the registration of a parcel of land from Sps. Babaliao and Alberto who claims to have acquired it
through prescription. However, Benguet Consolidated, Inc. and Atok Wedge Mining Company opposed such registration by virtue of
their Mining Claims which they acquired through purchase on 1934 and 1931, respectively. Bureau of Forestry also opposed claiming
that it was part of Forest Reserves under Proc. 217 on Feb. 1929. Trial court denied the application due to failure to prove their claim
of ownership. CA however, reversed the TC, approving the application of JDR but subject to the rights of BENGUET and ATOK. B and A
appealed claiming Superior rights while Republic claims that neither JDC nor A and B had valid claims because it is not Alienable and
Disposable. The CA’s claim is that there were no Conflict of Interest between JDR and A and B, it enunciated that under the aforesaid
ruling, the land is classified as mineral underneath and agricultural on the surface, subject to separate claims of title. Such doctrine of
CA because as commonly applied, SC said “for it is a well-known principle that the owner of a piece of land has rights not only to its
surface but also to everything underneath and the airspace above it up to a reasonable height.”
Issue: WON the doctrine enunciated by the CA proper?
Held: No. (1) By virtue of the Mining Claim, the land which was originally classified as forest land ceased to be so and became mineral
— and completely mineral — once the mining claims were perfected. Benguet and Atok have exclusive rights to the property in question
by virtue of their respective mining claims which they validly acquired before the Constitution of 1935 prohibited the alienation of all
lands of the public domain except agricultural lands, subject to vested rights existing at the time of its adoption.
(2) REGALIAN DOCTRINE which simply reserves to the State all minerals that may be found in public and even private land devoted to
"agricultural, industrial, commercial, residential or (for) any purpose other than mining." Thus, if a person is the owner of agricultural
land in which minerals are discovered, his ownership of such land does not give him the right to extract or utilize the said minerals
without the permission of the State to which such minerals belong. Furthermore, once minerals are discovered in the land, whatever
the use to which it is being devoted at the time, such use may be discontinued by the State to enable it to extract the minerals therein
in the exercise of its sovereign prerogative. Thus, JDR with his successors-in-interests could not have validly acquired such lands through
prescription neither could they share simultaneously with the mining companies.
53. RIOSA VS. VERZOSA (26 PHIL 86)
FACTS:
Sometime prior to December 1, 1909, a judgment was rendered against defendant Verzosa for the sum of P320.87. An execution was
made upon said judgment, in which the property subject of the execution was purchased by plaintiff Riosa. Subsequently, on January
25, 1910, plaintiff Riosa commenced an action against the defendants, the purpose of which was to secure an injunction to prevent the
defendants form harvesting and destroying the growing hemp upon a certain parcel of land, to recover damages in the sum of P500 for
injuries already committed upon such land and to require the defendants to deposit the hemp already harvested with the deputy sheriff.
Issue:
1. Whether or not Ernesto was in good faith.
2. Whether or not Sarmiento could exercise both refusal to pay the spouses and give option to purchase.
Held:
1.Yes. The Court agree that Ernesto and wife were builders in good faith in view of the peculiar circumstances under which they had
constructed the residential house. As far as they knew, the LAND was owned by Ernesto's mother-in-law who, having stated they could
build on the property, could reasonably be expected to later on give them the land.
In regards to builders in good faith, Article 448 of the Code provides:
ART. 448.
The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own
the works, sowing or planting, after payment of the indemnity provided for in articles 546and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy
the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the terms thereof.
2. No. 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 (now Article 546).
The owner, of the land upon, the other hand, has the option, under article 361 (now Article 448),either to pay for the building or to sell
his land to the owner of the building.
The question again calls for a negative answer. It should be noted that petitioner did not construct his house as a vendee a retro. 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 Code (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.
3. We come now to the issue of rentals. It is clear that from the date that the redemption price had been paid by the EVANGELISTAS
on January 2, 1955, petitioner's right to the use of the residential lot without charge had ceased. Having retained the property although
a redemption had been made, he should be held liable for damages in the form of rentals for the continued use of the subject residential
lot 16 at the rate of P10.00 monthly from January 3, 1955, and not merely from the date of demand on May 4, 1956, as held by the
Court of Appeals, until the house was removed and the property vacated by petitioner or his heirs.
58. FILIPINAS COLLEGES, INC. VS. TIMBANG (GR NO. L-12812)
Facts: This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring from the Sheriff's
certificate of sale covering a school building sold at public auction null and void within 15 days from notice of said order. The successful
bidders, defendant-appellants, spouses Maria Garcia Timbang and Marcelino Timbang shall pay to, appelle, Maria Gervacio Blas directly
or through the Sheriff of Manila, the sum of Php5,750, that the spouses Timbang had bid for the building at the Sheriff's sale; (b) that
the other appelle Filipinas Colleges, Inc. owner of 34,500/3,285,934 undivided interest in Lot 2-A covered by certificate of title no. 45970
on which the building sold in auction sale is situated; and (c) ordering the sale in public auction of the said undivided interest of the
Filipinas Colleges, Inc. in the amount of Php8,200 minus the sum of Php5,750 mentioned in (a) above. The order appealed from is the
result of three motions filed in 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. The spouses Timbang
presented their opposition to each and all of this motion. In assailing the order of the court a quo directing the appellants to pay the
appellee Blas the amount of their bid (Php5,750) made at the public auction, the appellants' counsel has presented a novel albeit
ingenious, argument. They contend that since the builder in good faith has failed to pay the price of the land after the owners thereof
exercised their option under Article 448 of the Civil Code, the builder has lost his right and the appellants as owners of the land became
the owners ipso facto.
Issue:
49 PROPERTY - CASE DIGESTS
1. WON the contention of the appellants is valid. If not, what are the remedies left to the owners of the land if the builder fails to
pay?
2.WON the appellants, as owners of the land, may seek the recovery of the value of their land by writ of execution; levy the house
of the builder and sell it in public auction.
Held/Rationale:
NO, the appellants contention is superfluous. There is nothing in the language of these two articles 448 & 546, which would
justify the conclusion of the appellants, that, upon the failure of the builder to pay the value of the land, when such is demanded by the
landowner, the latter becomes automatically the owner of the improvement under Article 445. 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. The remedy left to the parties in such eventuality in which the builder fails to pay the value of the land,
though the Code is silent on this Court, a builder in good may 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 with 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 improvements 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 they decide to leave things as they are and assume the relation of lessor-lessee,
and should they disagree as to the amount of rental then they could to the court to fix that amount.
The second contention was without merit. 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. 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 Timbangs. This Court likewise finds the same as justified, for such represents, in effect, a partial payment of the
value of the land. Failure of the Timbang spouses to pay to the Sheriff or to Maria Gervacio Blas said sum of Php5,750 within 15 days
from notice of the final judgment, an order of execution shall issue in favor of Maria Gervacio Blas to be levied upon all the properties
of the Timbang spouses not exempt from execution as satisfaction for the said amount.
59. PNB VS. DE JESUS (GR NO. 149295)
Facts: Respondent filed a case in the RTC for recovery of ownership and possession, with damages over a portion of the land it owns
that is being encroached to an extent of 124 sq.m. by petitioner’s building. Petitioners, on the other hand, claimed that when it acquired
the said building from a certain Mayor Ignacio, he was informed that said building encroached a portion of said land, and to remedy it,
such portion was also sold to him and latter accepted. Such sale did not materialize because said land was mortgage to DBP without
petitioner’s consent. The RTC promulgated a decision in favor of respondents and was affirmed by the CA.
Issue:
(1) WON PNB is in good faith as it claims to be?
(2) WON Art. 448 is applicable to this case?
Held:
(1) No, PNB is not in good faith. SC said, petitioner was quite aware, and indeed advised, prior to its acquisition of the land and building
from Ignacio that a part of the building sold to it stood on the land not covered by the land conveyed to it. Contrary, GOOD FAITH
under Art. 448 one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it. It’s essence lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence of intention to
overreach another.
(2) Not applicable. Article 448, of the Civil Code refers to a piece of land whose ownership is claimed by two or more parties, one of
whom has built some works (or sown or planted something) and NOT to a case where the owner of the land is the builder, sower, or
planter who then later loses ownership of the land by sale or otherwise for, elsewise stated, "where the true owner himself is the builder
of works on his own land, the issue of good faith or bad faith is entirely irrelevant." In this case, petitioner was not the one who built
the building but rather it was already built by Mayor Ignacio when it acquired, thus such case does not fall in Art. 448.
60. PARILLA, ET. AL. VS. PILAR (GR NO. 167680)
FACTS:
Petitioners, as dealers of Pilipinas Shell Petroleum Corporation, have been in possession of a parcel of land in Ilocos Sur, which was
leased to it by the respondent under a 10-year Lease Agreement entered into in 1990. When the lease contract between Pilipinas Shell
and the respondent expired in 2000, petitioners remained in possession of the property on which they built improvements consisting of
a billiard hall and a restaurant, maintained a sari-saristore and allowed the use of a portion thereof as parking lot. Despite demands to
vacate, petitioners and the other occupants remained in the property.
Held:
To better understand the main issue, it is important to note that the possession of the petitioner is not merely a tolerated possession.
The Court has consistently held that those who occupy the land of another at the latter's tolerance or permission, without any contract
between them, are necessarily bound by an implied promise that the occupants will vacate the property upon demand. A summary
action for ejectment is the proper remedy to enforce this implied obligation. The unlawful deprivation or withholding of possession is to
be counted from the date of the demand to vacate.
Toleration is defined as "the act or practice of permitting or enduring something not wholly approved of."
We hold that the facts of the present case rule out the finding of possession by mere tolerance. Petitioners were able to establish that
respondents had invited them to occupy the subject lots in order that they could all live near one other and help in resolving family
problems. By occupying those lots, petitioners demonstrated their acceptance of the invitation. Hence, there was a meeting of minds,
and an agreement regarding possession of the lots impliedly arose between the parties.
The CFI found for the Grandes and ordered the Calalungs to vacate the premises and pay for damages. Upon appeal to the CA,
however, the decision was reversed.
Issue: Whether or not the alluvium deposited land automatically belongs to the riparian owners?
Held: Art. 457 dictates that alluvium deposits on land belong to the owners of the adjacent land. However, this does not ipso jure
become theirs merely believing that said land have become imprescriptible. The land of the Grandes only specifies a specific portion, of
which the alluvial deposits are not included, and are thus, subject to acquisition by prescription.
Since the Calalungs proved that they have been in possession of the land since 1934 via two credible witnesses, as opposed to
the Grande’s single witness who claims that the Calalungs only entered the land in 1948, the Calalungs have been held to have acquired
the land created by the alluvial deposits by prescription. This is because the possession took place in 1934, when the law to be followed
was Act 190, and not the New Civil Code, which only took effect in 1950.
66. REPUBLIC VS. COURT OF APPEALS, ET. AL. (GR NO. 61647)
Facts: Respondents Tancinco’s claim as Riparian owners sought for the registration of lots 2 & 3 as accretions to their adjacent lands
(fishponds) found near the Meycauayan River. Both the RTC and the CA had the same findings and approved the applications of said
respondents. On the other hand, petitioner Republic claims that there was no accretion to speak of under Art. 457 but rather it was
artificial and man-made due to respondents transfer of dikes near the river bed thus falling short of the requirement of Art. 457 that
accretion should be natural.
Issue: WON there was accretion under Art. 457?
55 PROPERTY - CASE DIGESTS
Held: NO accretion. For Art. 457 to apply, it requires the concurrence of three requisites before an accretion covered by this particular
provision is said to have taken place: (1) that the deposit be gradual and imperceptible; (2) that it be made through the effects of the
current of the water; and (3) that the land where accretion takes place is adjacent to the banks of rivers. The SC claimed that there is
no evidence whatsoever to prove that the addition to the said property was made gradually through the effects of the current of the
Meycauayan and Bocaue rivers. SC also refuted the claim of the lone witness of the respondents that if the accretion of 4 hectares took
place on 1939 and she testified on same year, then the accretion could have been SUDDEN which was impossible. Furthermore, what
the SC gave more credence is that there was evidence that the alluvial deposits were MAN-MADE and ARTIFICIAL, it claimed, “the
alleged alluvial deposits came into being not because of the sole effect of the current of the rivers but as a result of the transfer of the
dike towards the river and encroaching upon it.” SC simply states that what transpired in this case is not accretion but rather an
encroachment of a portion of the river by reclamation. In this light, the Riparian owner CANNOT CLAIM the additions to his lands caused
by SPECIAL WORKS EXPRESSLY INTENDED OR DESIGNED TO BRING ABOUT ACCRETION.
67. DIONESIA BAGAIPO VS. COURT OF APPEALS (GR NO. 116290)
FACTS:
Petitioner Bagaipo is the registered owner of Lot No. 415, a 146,900 square meter agricultural land situated in Ma-a, Davao City under
TCT No. T-15757 and bounded on the southeast by the Davao River. Private respondent Lozano, on the other hand, is the owner of a
registered parcel of land located across and opposite the southeast portion of the petitioner’s lot facing the Davao River. Lozano acquired
and occupied her property in 1962 when his wife inherited the land from her father who died that year.
On May 26, 1989, Bagaipo filed a complaint for Recovery of Possession with Mandatory Writ of Preliminary Injunction and Damages
against Lozano for: (1) the surrender of possession by Lozano of a certain portion of land measuring 29,162 square meters which is
supposedly included in the area belonging to Bagaipo under TCT No. T-15757; and (2) the recovery of a land area measuring 37,901
square meters which Bagaipo allegedly lost when the Davao River traversed her property. Bagaipo contended that as a result of a
change in course of the said river, her property became divided into three lots, namely: Lots 415-A, 415-B and 415-C.
Bagaipo then commissioned a resurvey of Lot 415 and presented before the trial court a survey plan prepared by Geodetic Engineer
Magno. The survey plan allegedly showed that: a) the area presently occupied by Bagaipo, identified as Lot 415-A, now had an area of
only 79,843 square meters; b) Lot 415-B, with an area measuring 37,901 square meters, which cut across Bagaipo's land was taken up
by the new course of the Davao River; and c) an area of 29,162 square meters designated as Lot 415-C was illegally occupied by
respondent Lozano. The combined area of the lots described in the survey plan tallied with the technical description of Bagaipo's land
under TCT No. T-15757; thus, it was concluded that the land presently located across the river and parallel to Bagaipo's property still
belonged to the latter and not to Lozano, who planted some 350 fruit-bearing trees on Lot 415-C and the old abandoned river bed.
For his part, Lozano insisted that the land claimed by Bagaipo is actually an accretion to their titled property. He asserted that the Davao
River did not change its course and that the reduction in Bagaipo's domain was caused by gradual erosion due to the current of the
Davao River. Lozano added that it is also because of the river's natural action that silt slowly deposited and added to his land over a
long period of time. He further averred that this accretion continues up to the present and that registration proceedings instituted by
him over the alluvial formation could not be concluded precisely because it continued to increase in size.
On April 5, 1991, the trial court conducted an ocular inspection and, thereafter, dismissed the complaint holding that the applicable law
in the case is Article 457 and that the reduction in the land area of the petitioner was caused by erosion and not by change in course of
the Davao River. This decision was subsequently confirmed by the CA.
ISSUE(S):
Whether or not private respondent owned Lot 415-C in accordance with the principle of accretion under Article 457.
RULING:
The Court held that factual findings of the trial court and of the appellate court, after observation during ocular inspection conducted by
the trial judge, that the decrease in land area was brought about erosion and not a change in the river’s course, are conclusive unless
there are strong and exceptional reasons or they are unsupported by the evidence on record or the judgment itself is based on a
misapprehension of facts. In the absence of such, the Court held that there is no convincing reason to disregard or disbelieve such
factual findings.
Since the decrease in petitioner's land area and the corresponding expansion of respondent's property were the combined effect of
erosion and accretion respectively, Article 461 of the Civil Code is inapplicable. Petitioner cannot claim ownership over the old abandoned
riverbed because the same is inexistent. The riverbed's former location cannot even be pinpointed with particularity since the movement
of the Davao River took place gradually over an unspecified period of time, up to the present.
The rule is well-settled that accretion benefits a riparian owner when the following requisites are present: 1) that the deposit be gradual
and imperceptible; 2) that it resulted from the effects of the current of the water; and 3) that the land where accretion takes place is
adjacent to the bank of the river. These requisites were sufficiently proven in favor of respondents. In the absence of evidence that the
Issues:
Whether or not Baes is the owners of the lot, because of article 461?
Whether or not the owner, Baes, is entitled to compensation?
Held:
The dispute relates to Lot 1-B which the petitioners, relying on Article461 of the Civil Code, are claiming as their own.
Article 461 of the Civil Code states:
River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands
are occupied by the new course in proportion to the area lost. However, the owners of the land adjoining the old bed shall have the
right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.
A portion of the Tripa de Gallina creek was diverted to a man-made canal which totallyoccupied Lot 2958-B (with an area of 3,588 sq.m.)
belonging to Felix Baes. Thus, the petitioners claim that they became the owners of the old bed (which was eventually filled up by soil
excavated from Lot 2958-B) by virtue of Article 461.
The petitioners rely heavily on Dr. Arturo M. Tolentino's interpretation of this Article, to wit:
This article (461) refers to 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
ISSUE:
1) Whether or not ownership was transferred to Gallar?
2) Whether or not the action has already prescribed?
RULING:
1) YES, ownership has been transferred to Gallar. The right of repurchase may be exercised only by the vendor in whom the
right is recognized by contract or by any person to whom the right may have been transferred. Graciana Husain must, therefore, be
deemed to have acquired the land in her own right, subject only to Teodoro Husain's right of redemption. As the new owner she had a
perfect right to dispose of the land as she in fact did when she exchanged it for a cattle with Gallar.
59 PROPERTY - CASE DIGESTS
2) NO, the action is imprescriptible. This action is not for specific performance; all it seeks is to quiet title, to remove the cloud
cast on appellee's ownership as a result of appellant's refusal to recognize the sale made by their predecessor. And, as plaintiff-appellee
is in possession of the land, the action is imprescriptible. Appellant's argument that the action has prescribed would be correct if they
were in possession as the action to quiet title would then be an action for recovery of real property which must be brought within the
statutory period of limitation governing such actions.
72. CORONEL VS. INTERMEDIATE APPELLATE COURT (GR NO. L-70191)
Facts: The lot involved in this case is the 2/8 share of the NAIC ESTATE of Bernabela Lontoc which was subdivided into 3 portions: 1/3,
Bernardino Merlan (Grandson), 1/3, Jose and Brigido Merlan (defendants), 1/3, Daniel and Paz Anuat (grandchildren). Sometime in
1950, the 2/3 share of BERNARDINO and DANIEL&PAZ ‘s undivided portion of BERNABELA of the NAIC ESTATE was sold to IGNACIO
MANALO became Lot 1950 which was later subdivided and became Lot 1950-A containing 12, 189 sq. m. IGNACIO subsequently sold it
(Lot 1950-A) to MARIANO MANALO. The OCT issued in favor of MARIANO did not mention of the 1/3 share of the defendants (JOSE
and BRIGIDO) which was NOT sold to them because what was sold was merely 2/3 (BERNARDINO and D& P). Petitioner (CORONEL)
subsequently bought Lot. 1950-A from MARIANO and it became T-75543. What is clear is that respondents never sold their 1/3 portion
over Lot 1950-A of the NAIC Estate. There was a mistake when TCT 75543 was issued to Mariano because such covered the entire Lot
1950-A. Respondents was in peaceful possession of said land even before first sale in 1950 until 1975 when the complaint was filed
against them. Petitioner contends respondents are barred by prescription since 25 years has already elapsed when registration of Lot.
1950-A took place and further claims that annulment should have been brought within 4 years. Petitioner further alleges he was
purchaser in good faith.
Issue: (1)WON respondents are barred by prescription.
(2) The Issue of Good Faith.
Held: (1) Respondents are not barred by prescription. The facts of the case show that the private respondents have always been in
peaceful possession of the 1/3 portion of the subject lot, exercising ownership thereto for more than 25 years disrupted only in 1975. It
was only at that time that the statutory period of prescription may be said to have commenced to run against them. It was only at this
point that private respondents knew about the supposed sale of their 1/3 portion of Lot 1950-A of the Naic Estate and they immediately
resisted.
(2) SC said, “this notwithstanding we cannot close our eyes to the fact that neither the private respondents nor their co-owners of the
subject parcel of land sold the former's share of the lot.” Further, “The point is that the 1/3 undivided portion of the private respondents
over Lot No. 1950-A was mistakenly included in the transfer certificate of title of Mariano Manalo.” The SC claimed that there is a
countervailing doctrine which militates against the harshness of the iron-clad doctrine of giving full faith and credit to a Torrens title and
that is FAIRNESS and EQUITY. Moreover, it said, simple possession of a certificate of title, under the Torrens System, does not necessarily
make the possessor a true owner of all the property described therein.”
Final note: The 1/3 portion of the land was segregated to JOSE and BRIGIDO and was issued a new OCT and the 2/3 to said petitioner
was also issued a new OCT after cancelling T-75543.
73. CARAGAY-LAYNO VS. COURT OF APPEALS (GR NO. 52064)
FACTS:
The disputed portion, as established by a relocation survey, is a 3,732 square meter area of a bigger parcel of sugar and coconut land
(with a total area of 8,752 square meters) situated in Calasiao, Pangasinan. The entire parcel is covered by OCT No. 63, which includes
the adjoining Lots 2 and 3, issued on September 11, 1947 in the name of Mariano M. De Vera. The latter died in 1951, without issue,
and his intestate estate was administered by his widow then by her nephew, private respondent Estrada.
Petitioner Caragay and the decedent De Vera were first cousins and were both orphans, who lived together under one roof in the care
of a common aunt. As Administratrix, De Vera's widow filed with the former Court of First Instance of Pangasinan, an Inventory of all
properties of the deceased, which included a parcel of land in Calasiao, Pangasinan, containing an area of more or less 5,417 square
meters, and covered by Tax Declaration No. 12664.
Because of the discrepancy in area mentioned in the Inventory as 5,147 square meters and that in the title as 8,752 square meters,
private respondent Estrada repaired to the Disputed Property and found that the northwestern portion, subsequently surveyed to be
3,732 square meters, was occupied by petitioner spouses. Private respondent demanded that they vacate the Disputed Portion since it
was titled in the name of the deceased De Vera, but petitioners refused claiming that the land belonged to them and, before them, to
Juliana Caragay's, father Juan Caragay.
Private respondent then instituted suit against petitioner for the recovery of the Disputed Portion. The latter resisted, mainly on the
ground that the Disputed Portion had been fraudulently or mistakenly included in OCT No. 63, so that an implied or constructive trust
existed in her favor. Petitioner then counterclaimed for reconveyance of property in the sense that title be issued in her favor.
Issue:
Whether or not petitioners filed the right action
Ruling:
No, Petitioners filed the wrong action. This is obviously a boundary dispute and as such the action must fail.
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon a title to real property or any interest therein.
Petitioners fail to point out any instrument, record, claim, encumbrance or proceeding that could been a “cloud” to their title. In fact,
both plaintiffs and defendant admitted the existence of the agreement of partition dated June 8, 1957 and in accordance therewith, a
fixed area was allotted to them and that the only controversy is whether these lands were properly measured.
A special civil action for quieting of title is not the proper remedy for settling a boundary dispute, and that petitioners should have
instituted an ejectment suit instead. An action for forcible entry, whenever warranted by the period prescribed in Rule 70, or for recovery
of possession de facto, also within the prescribed period, may be availed of by the petitioners, in which proceeding the boundary dispute
may be fully threshed out.
75. AZNAR BROTHERS REALTY COMPANY VS. AYING (458 SCRA 495)
FACTS:
The disputed property is Lot No. 4399 with an area of 34,325 square meters, to which Crisanta Maloloy-on petitioned for the issuance
of a cadastral decree in her favor. After her death in 1930, the Cadastral Court issued a Decision directing the issuance of a decree in
the name of her eight children, namely: Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying.
The certificate of title was, however, lost during the war.
Subsequently, all the heirs of the Aying siblings conveyed the subject parcel of land to petitioner Aznar Brothers Realty Company by
executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964, which was registered with the
Register of Deeds on March 6, 1964 under Act No. 3344. Since then, the petitioner had been religiously paying real property taxes on
said property.
In 1988, petitioner filed a Petition for Reconstitution of the Original Title. This was granted by the Court on April 12, 1988 in its decision
directing the Register of Deeds to issue a reconstituted title in the name of the abovementioned Aying siblings. Consequently, OCT No.
RO-2856 was issued.
Petitioner, claiming to be the rightful owner of the subject property, sent out in 1991 notices to vacate, addressed to persons occupying
the property. Unheeded, the petitioner then filed a complaint for ejectment against the occupants before the MTC. On February 1, 1994,
the MTC ordered the occupants to vacate the property. The case eventually reached this Court, which promulgated on March 7, 2000,a
decision in favor of herein petitioner, declaring it as the rightful possessor of the parcel of land in question.
Meanwhile, herein respondents, along with other persons claiming to be descendants of the eight Aying siblings, totaling approximately
220 persons, filed a complaint for cancellation of the Extra-Judicial Partition with Absolute Sale, recovery of ownership, injunction and
damages with the RTC. However, the complaint was dismissed twice without prejudice. In their amended complaint, herein respondents
allege among others: (1) that they are co-owners of subject property, being descendants of the registered owners thereof under OCT
No. RO-2856; (2) that they had been in actual, peaceful, physical, open, adverse, continuous and uninterrupted possession in concept
of owner of subject parcel of land since time immemorial; and (3) that the extra-judicial partition of real estate with deed of absolute
sale, entered into by the petitioner, is a fraud and is null and void ab initio because not all the co-owners of subject property affixed
their signature on said document and some of the co-owners who supposedly signed said document had been dead at the time of the
execution thereof.
Petitioner, in its answer, denied that respondents are the lawful owners of subject parcel of land by virtue of their being descendants or
heirs of the registered owners of subject property. Instead, petitioner alleged that it had been in actual possession of subject land as
owner thereof by virtue of the extra-judicial partition of real property and deed of absolute sale executed in its favor; and that in fact,
62 PROPERTY - CASE DIGESTS
it had been paying taxes thereon religiously. Petitioner then raised the affirmative defenses of failure to state cause of action and
prescription, as it took respondents 27 years, 10 months and 27 days to file the action to recover subject property, when an action to
recover property based on an implied trust should be instituted within 4 years from discovery of the fraud.
On July 4, 1997, the RTC rendered a Decision ruling that respondents' evidence failed to prove that the extra-judicial partition with deed
of absolute sale was a totally simulated or fictitious contract and concluded that said document is valid, thus, effectively conveying to
petitioner the property in question. It further held that respondents' action, being considered as one for reconveyance based on implied
or constructive trust, had prescribed in 10 years from the registration of the deed on March 6, 1964; and if the action is considered as
one for annulment of contract on the ground of fraud, it should have been filed within 4 years from discovery of the fraud. The trial
court also ruled that respondents failed to present any admissible proof of filiation, hence, they were not able to prove that they are
indeed heirs of the eight Aying siblings who appear as the registered owners under OCT No. RO-2856.
Upon appeal, the CA affirmed and modified the RTC’s decision and held that the heirs of Emiliano Aying, Simeon Aying and Roberta
Aying are hereby declared as the lawful owners of the contested property but equivalent only to 3/8. The CA held that "an action for
recovery of possession of registered land never prescribes in view of the provision of Section 44, Act No. 496 (now Sec. 47, PD 1520),
to the effect that no title to registered land in derogation to that of a registered owner shall be acquired by prescription." Even if the
action is deemed to be based on implied trust, prescription did not begin to run since there is no evidence that positive acts of repudiation
were made known to the heirs who did not participate in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute
Sale. Thus, striking down the RTC's ruling that the respondents' complaint is dismissible on the ground of prescription, the CA held
instead that herein respondents' action had not prescribed but upheld the validity of the Extra-Judicial Partition of Real Estate with Deed
of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon and Roberta, who did not participate in the execution of said
document.
ISSUE(S):
1. Whether or not the respondent’s cause of action is imprescriptible.
2. If the action is indeed imprescriptible, whether or not the principle of laches apply.
RULING:
The Court held that the RTC and the CA that were correct in ruling that the Extra-Judicial Partition of Real Estate with Deed of Absolute
Sale is valid and binding only as to the heirs who participated in the execution thereof, hence, the heirs of Emiliano, Simeon and Roberta
Aying, who undisputedly did not participate therein, cannot be bound by said document.
The Court emphasized the facts shown on record show that petitioner acquired the entire parcel of land with the mistaken belief that
all the heirs have executed the subject document. Thus, it was correct for the trial court to apply Article 1456 of the Civil Code, which
states that “If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes.”
The concept of constructive trusts was discussed in Philippine National Bank v. Court of Appeals, to wit: “xxx On the other hand,
constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment.
They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property
which he ought not, in equity and good conscience, to hold.”
Based on such concept of constructive trusts, the Court ruled in said case that: “The rule that a trustee cannot acquire by prescription
ownership over property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied trusts.
However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily,
repudiation of said trust is not a condition precedent to the running of the prescriptive period.”
In Amerol v. Bagumbaran, the Court held that as to the prescriptive period within which to bring an action for reconveyance of property
based on implied or constructive trust, Article 1144 of the Civil Code is applicable, to wit: “The following actions must be brought within
ten years from the time the right of action accrues - (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a
judgment.”
An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise.
Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years
from the issuance of the Torrens title over the property. It has also been ruled that the ten-year prescriptive period begins to run from
the date of registration of the deed or the date of the issuance of the certificate of title over the property, but if the 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.