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Table of Contents

1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644).......................................................................................................................3


2. ANTONIO PUNZALAN ET. AL. VS. REMEDIOS LACSAMANA (GR NO. L-55729)...................................................................................3
3. STANDARD OIL CO. VS. JARANILLO (44 PHIL 631)..........................................................................................................................4
4. DAVAO SAWMILL CO. VS. CASTILLO (61 PHIL 709).........................................................................................................................4
5. BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC (10 SCRA 68)..........................................................................................4
6. MAKATI LEASING AND FINANCE CORP. VS. WEAREVER TEXTILE MILLS, INC. (22 SCRA 296)............................................................5
7. MINDANAO BUS COMPANY VS. CITY ASSESSOR (116 PHIL 501)......................................................................................................6
8. CALTEX PHILIPPINES INC. VS. CENTRAL BOARD OF ASSESSMENT APPEALS AND CITY ASSESSOR OF PASAY (GR NO. L-50466).........6
9. SERGS PRODCUTS, INC. AND SERGIO T. GOQUIOLAY VS. PCI LEASING AND FINANCE, INC. (GR NO. 137705).................................7
10. TUMALAD VS. VICENCIO (GR NO. L-30173)....................................................................................................................................8
11. PASTOR D. AGO VS. THE HON. COURT OF APPEALS (GR NO. L-17898)............................................................................................8
12. THE UNITED STATES VS. IGNACIO CARLOS (GR NO. 6295)...........................................................................................................10
13. LUIS MARCOS LAUREL VS. HON. ZEUS ABROGAR (GR NO. 155076)...............................................................................................10
14. MUNICIPALITY OF CAVITE VS. ROJAS (30 PHIL 20).......................................................................................................................11
15. MANECLANG VS. IAC (144 SCRA 553)...........................................................................................................................................11
16. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335).......................................................................................................................12
17. MACASIANO VS. DIOKNO (GR NO. 97764)....................................................................................................................................12
18. CEBU OXYGEN & ACETYLENE CO., INC. VS. BERCILLES (GR NO. L-40474).....................................................................................14
19. LAUREL VS. GARCIA (GR NO. 92013)............................................................................................................................................14
20. MANILA INTERNATIONAL AIRPORT AUTHORITY VS. COURT OF APPEALS, ET. AL. (GR NO. 155650)...............................................15
21. PHILIPPINE PORTS AUTHORITY VS. CITY OF ILOILO (GR NO. 109791)..........................................................................................19
22. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY VS. CA (GR NO. 169836)................................................................................20
23. IDEALS VS. PSALM (GR NO. 192088)............................................................................................................................................21
24. WOODRIDGE SCHOOL, INC. ET. AL. VS. ARB CONSTRUCTION INC. (GR NO. 157285).....................................................................21
25. THE CITY OF ANGELES, ET. AL. VS. COURT OF APPEALS (GR NO. 97882)......................................................................................22
26. FRANCISCO CHAVEZ VS. PUBLIC ESTATES AUTHORITY (GR NO. 133250)......................................................................................23
27. FRANCISCO CHAVEZ VS. NATIONAL HOUSING AUTHORITY (GR NO. 164527)................................................................................24
28. ESTATE OF YUJUICO VS. REPUBLIC (GR NO. 168661)...................................................................................................................25
29. LAND BANK OF THE PHILIPPINES VS. REPUBLIC (GR NO. 150824)................................................................................................26
30. HEIRS OF MARIO MALABANAN VS. REPUBLIC (GR NO. 179987).....................................................................................................27
31. DENR, ET. AL. VS. MAYOR YAP, ET. AL. (GR NO. 167707)..............................................................................................................28
32. VDA. TE TAN TOCO VS. MUNICIPAL COUNCIL OF ILOILO (49 PHIL 52)..........................................................................................30
33. PASAY CITY GOVERNMENT VS. CFI (GR NO. L-32162)...................................................................................................................30
34. ESPIRITU VS. MUNICIPAL COUNCIL OF POZORRUBIO (102 PHIL 867)...........................................................................................31
35. PROVINCE OF ZAMBOANGA DEL NORTE VS. CITY OF ZAMBOANGA (GR NO. L-24440)....................................................................31
36. SALAS VS. JARENCIO (46 SCRA 734)............................................................................................................................................32
37. MANILA LODGE NO. 761 VS. COURT OF APPEALS (73 SCRA 162)...................................................................................................33
38. COMMISSIONER OF PUBLIC HIGHWAYS, ET. AL. VS. LOURDES SAN DIEGO, ET. AL. (GR NO. L-30098)...........................................34
39. PHILIPPINE NATIONAL BANK VS. HON. JUDGE JAVIER PABALAN (GR NO. L-33112)........................................................................35

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40. PROFESSIONAL VIDEO INC. VS. TESDA (GR NO. 155504)..............................................................................................................35
41. VILLA VS. HEIRS OF ALTAVAS (GR NO. 162028)...........................................................................................................................35
42. ESTATE OF SOLEDED MANANTAN VS. ANICETO SOMERA (GR NO. 145867)....................................................................................36
43. IGLESIA NI CRISTO VS. HON. PONFERRADA (GR NO. 168943).......................................................................................................37
44. ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET. AL. VS. COURT OF APPEALS (GR NO. 77425)......................................................38
45. GERMAN MANAGEMENT & SERVICES, INC. VS. HON. COURT OF APPEALS (GR NO. 76216).............................................................39
46. AIR TRANSPORTATION OFFICE AND MACTAN-CEBU INTERNATIONAL AIRPORT VS. ANTIONIO GOPUCO (GR NO. 158563)..............39
47. HEIRS OF MORENO VS. MCIAA (GR NO. 156273)..........................................................................................................................40
48. MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS. LOZADA, ET. AL. (GR NO. 176625).......................................................41
49. APO FRUITS CORPORATION VS. COURT OF APPEALS (GR NO. 164195).........................................................................................42
50. CITY OF MANILA, ET. AL. VS. HON. LAGUIO, ET. AL. (GR NO. 118127)..........................................................................................43
51. NATIONAL POWER CORPORATION VS. LUCMAN IBRAHIM (GR NO. 168732)...................................................................................44
52. REPUBLIC VS. HON. COURT OF APPEALS AND JOSE DE LA ROSA (GR NO. L-43938).......................................................................45
53. RIOSA VS. VERZOSA (26 PHIL 86)................................................................................................................................................45
54. VELASCO VS. ROSENBERG (32 PHIL 72).......................................................................................................................................46
55. SARMIENTO VS. AGANA (129 SCRA 122)......................................................................................................................................47
56. BALUCANAG VS. JUDGE FRANCISCO (GR NO. L-34199).................................................................................................................48
57. FLOREZA VS. EVANGELISTA (96 SCRA 130)..................................................................................................................................48
58. FILIPINAS COLLEGES, INC. VS. TIMBANG (GR NO. L-12812)..........................................................................................................49
59. PNB VS. DE JESUS (GR NO. 149295).............................................................................................................................................50
60. PARILLA, ET. AL. VS. PILAR (GR NO. 167680)...............................................................................................................................50
61. ISMAEL MACASAET, ET. AL. VS. SPOUSES MACASAET (GR NOS. 154391-92)..................................................................................51
62. KILARIO VS. COURT OF APPEALS (GR NO. 134329).......................................................................................................................53
63. IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO (GR NO. L-12958).........................................................................................54
64. DE BUYSER VS. DIRECTOR OF LANDS, ET. AL. (GR NO. L-22763)..................................................................................................54
65. GRANDE, ET. AL. VS. HON. COURT OF APPEALS (GR NO. L-17652)................................................................................................55
66. REPUBLIC VS. COURT OF APPEALS, ET. AL. (GR NO. 61647)..........................................................................................................55
67. DIONESIA BAGAIPO VS. COURT OF APPEALS (GR NO. 116290).....................................................................................................56
68. SPOUSES BAES VS. COURT OF APPEALS AND REPUBLIC (GR NO. 108065).....................................................................................57
69. MARIO RONQUILLO VS. COURT OF APPEALS, ET. AL. (GR NO. 43346)...........................................................................................58
70. SIARY VALLEY ESTATES, INC. VS. LUCASAN AND HON. JUDGE ORTEGA (OCTOBER 31, 1957)........................................................59
71. GALLAR VS. HUSAIN (GR NO. L-20954).........................................................................................................................................59
72. CORONEL VS. INTERMEDIATE APPELLATE COURT (GR NO. L-70191).............................................................................................60
73. CARAGAY-LAYNO VS. COURT OF APPEALS (GR NO. 52064)...........................................................................................................60
74. ANASTACIA VDA. DE AVILES, ET. AL. VS. COURT OF APPEALS AND CAMILO AVILES ( GR. NO. 95748)............................................61
75. AZNAR BROTHERS REALTY COMPANY VS. AYING (458 SCRA 495).................................................................................................62

1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644)


Facts:

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The "Compaia Agricola Filipina" (CAF) bought a rice-cleaning machinery from the defendant machinery company, and executed a
chattel mortgage including the building of strong materials in which the machinery was installed to secure payment, without any
reference to the land on which it stood. The Chattel was foreclosed due to non-payment and the machinery, including the building,
was sold by the sheriff which was bought by Strong Machinery. The said sale was annotated in the same registry on December 29,
1913. Later on, CAF sold the lot where the building stood to Strong Machinery thru a deed of sale which was executed in a public
document but was not registered. Strong Machine took possession of the building and the land.

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 "Compaia 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
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

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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
hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers
within Quezon City, on land belonging to it.
On November 15, 1955, petitioner City Assessor of Quezon City declared the steel towers for real property tax. After denying
respondent's petition to cancel the tax declarations, an appeal was taken by respondent to the Board of Assessment Appeals of
Quezon City, which required respondent to pay the amount of P11,651.86 as real property tax on the steel towers for the years 1952
4 PROPERTY - CASE DIGESTS
to 1956. Respondent paid the amount under protest, and filed a petition for review with the Court of Tax Appeals (CTA). The CTA
then rendered a decision on December 29, 1958, ordering the cancellation of the tax declarations and the petitioner City Treasurer of
Quezon City to refund to the respondent the sum of P11,651.86 stating that the steel towers are personal properties not subject to
real property tax. The motion for reconsideration having been denied, the instant petition for review was filed.
ISSUE(S):
Whether or not the steel bars come in purview of real properties subject to real property tax.
RULING:
The Court in upholding the assailed decision referred to Article 415 of the Civil Code for the definition of an immovable property, as
such was not provided in the tax law. According to Article 415, the following are immovable property: "(1) Land, buildings, roads, and
constructions of all kinds adhered to the soil; xxx xxx xxx (3) Everything attached to an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without breaking the material or deterioration of the object; 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 in a
building or on a piece of land, and which tends directly to meet the needs of the said industry or works;" xxx xxx xxx
It was held that the steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do
not constitute buildings or constructions adhered to the soil. They are not constructions analogous to buildings nor adhering to the
soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts,
which when unscrewed could easily be dismantled and moved from place to place. They cannot be included under paragraph 3, as
they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing
deterioration upon the object to which they are attached. Each of the steel towers or supports consists of steel bars or metal strips,
joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. Also,
the steel towers or supports do not fall under paragraph 5, for they are not machineries or receptacles, instruments or implements,
and even if they were, they are not intended for industry or works on the land as the petitioner is not engaged in an industry or works
on the land in which the steel supports or towers are constructed.
6. MAKATI LEASING AND FINANCE CORP. VS. WEAREVER TEXTILE MILLS, INC. (22 SCRA 296)
Facts:
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and Finance Corporation, the private
respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the former under a Receivable Purchase
Agreement. To secure the collection of the receivables assigned, private respondent executed a Chattel Mortgage over certain raw
materials inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.
Upon default, Makati Leasing filed a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasings application
for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure order seized the machinery
subject matter of the mortgage. In a petition for certiorari and prohibition, the Court of Appeals ordered the return of the machinery
on the ground that the same can-not be the subject of replevin because it is a real property pursuant to Article 415 of the new Civil
Code, the same being attached to the ground by means of bolts and the only way to remove it from Wearever textiles plant would be
to drill out or destroy the concrete floor. When the motion for reconsideration of Makati Leasing was denied by the Court of Appeals,
Makati Leasing elevated the matter to the Supreme Court.

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.
In rejecting petitioners assertion on the applicability of the Tumalad doctrine, the CA lays stress on the fact that the house involved
therein was built on a land that did not belong to the owner of such house. But the law makes no distinction with respect to the
ownership of the land on which the house is built and we should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization by the private respondent is indicative of the intention and impresses upon the
property the character determined by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable
that the parties to a contract may, by agreement, treat as personal property that which by nature would be a real property as long as
no interest of third parties would be prejudiced thereby.
The status of the subject matter as movable or immovable property was not raised as an issue before the lower court and the CA,
except in a supplemental memorandum in support of the petition filed in the appellate court. There is no record showing that the

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mortgage has been annulled, or that steps were taken to nullify the same. On the other hand, respondent has benefited from the said
contract.
Equity dictates that one should not benefit at the expense of another.
As such, private respondent could no longer be allowed to impugn the efficacy of the chattel mortgage after it has benefited
therefrom.
Therefore, the questioned machinery should be considered as personal property.
7. MINDANAO BUS COMPANY VS. CITY ASSESSOR (116 PHIL 501)
Facts:

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.
The lessor of the land, where the gas station is located, does not become the owner of the machines and equipment installed therein.
Caltex retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable realty. The realty tax
on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled that they are personalty. The
assessor appealed to the Central Board of Assessment Appeals.
ISSUE:

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1. Whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax
2. Distinguish from the various applications of Art 415
HELD:
1. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, machinery, and other
improvements" not specifically exempted in section 3 thereof. The Code contains the following definitions in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs
or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further
purposes.
m) Machinery shall embrace machines, mechanical contrivances, instruments, appliances and apparatus attached to the real estate.
It includes the physical facilities available for production, as well as the installations and appurtenant service facilities, together with all
other equipment designed for or essential to its manufacturing, industrial or agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by Caltex (as to which it
is subject to realty tax) and which fixtures are necessary to the operation of the gas station, for without them the gas station would be
useless, and which have been attached or affixed permanently to the gas station site or embedded therein, are taxable improvements
and machinery within the meaning of the Assessment Law and the Real Property Tax Code.
2. Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in a plant by the
owner of the property or plant but not when so placed by a tenant, a usufructuary, or any person having only a temporary right,
unless such person acted as the agent of the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes real property by
destination. In the Davao Saw Mills case the question was whether the machinery mounted on foundations of cement and installed by
the lessee on leased land should be regarded as real property forpurposes of execution of a judgment against the lessee. The sheriff
treated the machinery as personal property. This Court sustained the sheriff's action. (Compare with Machinery & Engineering
Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case machinery was treated as realty).
Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas station and pavement
(which are indubitably taxable realty) should be subject to the realty tax. This question is different from the issue raised in the Davao
Saw Mill case.
Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty (84 C.J.S.
181-2, Notes 40 and 41). "It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general
principle might be considered personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil. 328, where Meralco's steel
towers were considered poles within the meaning of paragraph 9 of its franchise which exempts its poles from taxation. The steel
towers were considered personalty because they were attached to square metal frames by means of bolts and could be moved from
place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair shop of a bus company which
were held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city assessor's is imposition of
the realty tax on Caltex's gas station and equipment.
9. SERGS PRODCUTS, INC. AND SERGIO T. GOQUIOLAY VS. PCI LEASING AND FINANCE, INC. (GR NO. 137705)
Facts: Serg's Products, Inc. (SPI) and PCI Leasing & Finance, Inc. entered into a lease agreement providing that the machines in
question were to be considered as personal property, although the same were essential and principal elements in the chocolate-
making business of SPI.
Subsequently, PCI filed a complaint against SPI for sum of money, with an application for a writ of replevin. The sheriff then
proceeded to seize the machines in question. SPI contended that the subject machines used in their factory were not proper subjects
of the writ of replevin because they were in fact real property having become immobilized by destination.
SPI went to the Court of Appeals via an original action for certiorari. the Court of Appeals, however, sustained the writ and held
that the machines were personal property. Thus, SPI appealed to the Supreme Court.

Issue: Whether the said machines are personal, not immovable, property which may be a proper subject of a writ of replevin

7 PROPERTY - CASE DIGESTS


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 Sheriff of Surigao, acting upon the writ of execution issued by the lower court, levied upon and ordered the sale of the
sawmill machineries and equipments. These machineries and equipments had been taken to and installed in a sawmill building owned
by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of
the lower court but before levy by the Sheriff).
Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner filed the petition for certiorari
and prohibition with preliminary injunction with respondent Court of Appeals on December 1, 1959, alleging: (1) that a copy of the
aforementioned judgment given in open court was served upon petitioners counsel only on September 25, 1959 when the writ of
execution was dated September 23, 1959; (2) that the order and writ of execution having been issued by the lower court before
petitioners counsel received a copy of the judgment, its resultant last order that the "sheriff may now proceed with the sale of the
properties levied" constituted a grave abuse of discretion and was in excess of its jurisdiction; and (3) that the respondent Provincial

8 PROPERTY - CASE DIGESTS


Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying the same upon the sawmill machineries and
equipments which have become real properties of the Golden Pacific Sawmill, Inc.
The Court of Appeals issued a writ of preliminary injunction against the sheriff on December 8, 1959. However, it turned out that the
latter had already sold at public auction the machineries on December 4, 1959. The respondent Grace Park Engineering, Inc. was the
only bidder for P15,000.00, although the certificate of sale was not yet executed. The Court of Appeals instructed the sheriff to
suspend the issuance of a certificate of sale until the final decision of the case. On November 9, 1960, the Court of Appeals rendered a
decision stating that the lower court did not exceed nor abuse its jurisdiction in ordering the execution of the judgment.
Petitioner now alleges before this Court that the respondent Court of Appeals erred (1) in holding that the rendition of the judgment
on compromise was a sufficient notice; and (2) in not resolving the other issues raised before it, namely, (a) the legality of the public
auction sale made by the sheriff, and (b) the nature of the machineries in question, whether they are movables or immovables.
ISSUE(S):
The nature of the machineries and equipments mortgaged and subsequently sold in the public auction.
RULING:
It was held that the sawmill machineries and equipments are real estate properties. The record shows that after petitioner had
purchased the sawmill machineries and equipments, he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his
subscription to the shares of stock of said corporation. Thereafter, the sawmill machineries and equipments were installed in a building
and permanently attached to the ground. By reason of such installment in a building, the said sawmill machineries and equipments
became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus: "The following are immovable
property - 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;" xxx xxx xxx
The Court interpreted a similar question raised before in the case of Berkenkotter vs. Cu Unjieng e Hijos (61 Phil. 683) and held that
the installation of the machinery and equipment in the central of the Mabalacat Sugar Co., Inc. for use in connection with the industry
carried by that company, converted the said machinery and equipment into real estate by reason of their purpose. Paraphrasing the
language of the said decision, the Court held that by the installation of the sawmill machineries in the building of the Golden Pacific
Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the
building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the
meaning of Article 415 (5).
Considering that the machineries and equipments in question, valued at more than P15,000.00, appear to have been sold without the
necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, the sale made
by the sheriff must be declared null and void.

9 PROPERTY - CASE DIGESTS


12. THE UNITED STATES VS. IGNACIO CARLOS (GR NO. 6295)
Facts:
Ignacio Carlos has been a consumer of electricity furnished by the Manila Electric Railroal and Light Company for building containing
residence of the accused and 30 other residences. Representatives of the company believing that more light is consumed than what is
shown in the meter installed on the pole outside Carlos house to compare actual consumption and found out that the latter used a
jumper.
Further, a jumper was found in a drawer of a small cabinet in the room the of defendants house were a meter was installed. In the
absence of any explanation for Carlos possession of said device, the presumption raised was that Carlos was the owner of the device
whose purpose was to deflect the current from the meter.
Thus he was charged with a crime of larceny/ theft amounting to 2,273 kw of electric power.

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

10 PROPERTY - CASE DIGESTS


or re-route international long distance calls using respondent PLDT's facilities constitutes all three acts of subtraction mentioned
above.
The business of providing telecommunication or telephone service is likewise personal property which can be the object of theft
under Article 308 of the Revised Penal Code. Article 414 of the Civil Code provides that all things which are or may be the object of
appropriation are considered either real property or personal property. Business is likewise not enumerated as personal property under
the Civil Code. Just like interest in business, however, it may be appropriated. Following the ruling in Strochecker v. Ramirez, business
should also be classified as personal property. Since it is not included in the exclusive enumeration of real properties under Article 415,
it is therefore personal property. As can be clearly gleaned from the above disquisitions, petitioner's acts constitute theft of respondent
PLDT's business and service, committed by means of the unlawful use of the latter's facilities.
14. MUNICIPALITY OF CAVITE VS. ROJAS (30 PHIL 20)
FACTS:
By an instrument dated December 5, 1911, afterwards amended on March 14,1912, the provincial fiscal of Cavite, representing the
municipality of that name, filed a complaint in the Court of First Instance of said province alleging that the plaintiff municipal
corporation, duly organized and constituted in accordance with Act No. 82, and as the successor to the rights said entity had under
the late Spanish government, and by virtue of Act No. 1039, had exclusive right, control and administration over the streets, lanes,
plazas, and public places of the municipality of Cavite; that the defendants, by virtue of a lease secured from the plaintiff municipality,
occupy a parcel of land 93 square meters in area that forms part of the public plaza known under the name of Soledad, belonging to
the municipality of Cavite, the defendants having constructed thereon a house, through payment to the plaintiff for occupation thereof
of a rental of P5.58 a quarter in advance, said defendants being furthermore obligated to vacate the leased land within sixty days
subsequent to plaintiff's demand to that effect; that the defendants have been required by the municipality to vacate and deliver
possession of the said land, but more than the sixty days within which they ought to have vacated it have elapsed without their having
done so to date.
ISSUE: WON the lease of a public plaza of the said municipality in favor of a private person is null and void
HELD: NULL & VOID
According to article 344 of the Civil Code: "Property for public use in provinces and in towns comprises the provincial and town roads,
the squares, streets, fountains, and public waters, the promenades, and public works of general service supported by said towns or
provinces."
The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907 withdraw or exclude from
public use a portion thereof in order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or
public place to the defendant for private use the plaintiffmunicipality exceeded its authority in the exercise of its powers by executing
a contract over a thing of which it could not dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not outside the commerce of man may be the object of a contract,
and plazas and streets are outside of this commerce, as was decided by the supreme court of Spain in its decision of February 12,
1895, which says: "Communal things that cannot be sold because they are by their very nature outside of commerce are those for
public use, such as the plazas, streets, common lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract, Exhibit C, whereby the municipality of Cavite leased to Hilaria Rojas a portion of the
Plaza Soledad is null and void and of no force or effect, because it is contrary to the law and the thing leased cannot be the object of a
contract. On the hypothesis that the said lease is null and void in accordance with the provisions of article 1303 of the Civil Code, the
defendant must restore and deliver possession of the land described in the complaint to themunicipality of Cavite, which in its turn
must restore to the said defendant all the sums it may have received from her in the nature of rentals just as soon as she restores the
land improperly leased. For the same reasons as have been set forth, and as said contract is null and void in its origin, it can produce
no effect and consequently the defendant is not entitled to claim that the plaintiff municipality indemnify her for the damages she may
suffer by the removal of her house from the said land.
15. MANECLANG VS. IAC (144 SCRA 553)
Facts: Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of Pangasinan, Branch XI a complaint for
quieting of title over a certain fishpond located within the four [41 parcels of land belonging to them situated in Barrio Salomague,
Bugallon, Pangasinan, and the annulment of Resolutions Nos. 38 and 95 of the Municipal Council of Bugallon Pangasinan. The trial
court dismissed the complaint in a decision dated August 15, 1975 upon a finding that the body of water traversing the titled
properties of petitioners is a creek constituting a tributary of the Agno River; therefore public in nature and not subject to private
appropriation.
Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed the same on April 29, 1983. Hence, this
petition for review on certiorari.

Issue: WON the fishpond is public in nature

11 PROPERTY - CASE DIGESTS


Held: YES. A creek, defined as a recess or arm extending from a river and participating in the ebb and flow of the sea, is a property
belonging to the public domain which is not susceptible to private appropriation and acquisitive prescription, and as a public water, it
cannot be registered under the Torrens System in the name of any individual.
16. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335)
Facts: Petitioner filed an application for registration of adjacent (mangrove) land by claiming ownership by right of accretion located
near the Manila Bay. Such application was opposed by the Director of lands claiming that such lands are part of public domain. Trial
Court decided in favor of the government holding it as public domain. Hence, present petition.
Issue: WON the land is part of public domain.
Held: Yes. Public Domain. First, right of accretion mentioned in Art. 457 applies only to gradual deposits on the BANKS OF RIVERS and
not in such case where accretion was due to the MANILA BAY thus it is public domain. Second, as to the claim that even if it formed
part of public domain, such was no longer necessary for public use therefore disposable and available for private ownership was
untenable because SC reiterated that in interpreting Art. 4 of Law of Waters there is a need of a positive declaration on the part of the
government (executive or legislative) that such land is not necessary for public purpose thus subject to private ownership or to be A
and D. Until a positive declaration said land continue to be part of public domain. Third, Acquisitive Prescription does not lie since
lands of public domain are not subject to ordinary prescription being outside of commerce of man.
17. MACASIANO VS. DIOKNO (GR NO. 97764)
FACTS:
On June 13, 1990, the respondent Municipality of Paraaque passed Ordinance No. 86, Series of 1990 which authorized the closure of
J. Gabrielle, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran, Paraaque, Metro Manila and the
establishment of a flea market thereon. The ordinance was approved by the municipal council pursuant to MCC Ordinance No. 2,
Series of 1979, authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within Metropolitan
Manila as sites for flea market and/or vending areas, under certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal council of the respondent
municipality subject to the following conditions: (1) that the streets are not used for vehicular traffic and that the majority of the
residents do not oppose the establishment of the flea market/vending areas thereon; (2) that the 2-meter middle road to be used as
flea market/vending area shall be marked distinctly and that the 2 meters on both sides of the road shall be used by pedestrians; (3)
that the time during which the vending area is to be used shall be clearly designated; and (4) that the use of the vending areas shall
be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority.
On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing the Paraaque Mayor to enter into a contract
with any service cooperative for the establishment, operation, maintenance and management of flea markets and/or vending areas.
Subsequently on August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered into an agreement
whereby the latter shall operate, maintain and manage the flea market in the aforementioned streets with the obligation to remit dues
to the treasury of the municipal government of Paraaque. Thereafter, market stalls were put up by respondent Palanyag on the said
streets.
However, on September 13, 1990, petitioner Macasiano, PNP Superintendent of the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls along G.G. Cruz and J. Gabrielle St. in Baclaran. These stalls were later returned to respondent
Palanyag. Petitioner then wrote a letter, on October 16, 1990, to respondent Palanyag giving the latter ten (10) days to discontinue
the flea market; otherwise, the market stalls shall be dismantled.
Hence, respondents municipality and Palanyag filed with the trial court a joint petition for prohibition and mandamus with damages
and prayer for preliminary injunction. On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner
from enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of preliminary injunction. Thereafter,
the trial court issued an order on December 17, 1990, upholding the validity of Ordinance No. 86 s. 1990 of the respondent
municipality and enjoining the petitioner from enforcing his letter-order against respondent Palayag.
This petition was then filed by the petitioner, thru the Office of the Solicitor General, alleging grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the trial judge in issuing the assailed order. The Solicitor General contends that municipal
roads are used for public service and are, therefore, public properties; that as such, they cannot be subject to private appropriation or
private contract by any person, even by the respondent municipality. Petitioner submits that a property already dedicated to public use
cannot be used for another public purpose and that absent a clear showing that the respondent municipality has been granted by the
legislature a specific authority to convert a property already in public use to another public use, respondent municipality is, therefore,
bereft of any authority to close municipal roads for the establishment of a flea market.
ISSUE(S):
Whether or not an ordinance issued by the municipal council authorizing the lease and use of public streets or thoroughfares as sites
for flea markets is valid.
12 PROPERTY - CASE DIGESTS
RULING:
The Court held that the petitioners contention is meritorious.
The property of provinces, cities and municipalities is divided into property for public use and patrimonial property as provided for in
Art. 423 of the Civil Code. As to what consists of property for public use, Article 424 of Civil Code states: "Property for public use, in
the provinces, cities and municipalities, consists of the provincial roads, city streets, the squares, fountains, public waters,
promenades, and public works for public service paid for by said provinces, cities or municipalities. All other property possessed by any
of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws."
Based on the foregoing, J. Gabrielle G.G. Cruz, Bayanihan, Lt. Gacia Extension and Opena streets are local roads used for public
service and are therefore considered public properties of respondent municipality. Properties of the local government which are
devoted to public service are deemed public and are under the absolute control of Congress, as held in the case of Province of
Zamboanga del Norte v. City of Zamboanga. Hence, local governments have no authority whatsoever to control or regulate the use of
public properties unless specific authority is vested upon them by Congress. One example of this authority given by Congress to the
local governments is the power to close roads as provided in Section 10 of the Local Government Code, which states: "A local
government unit may likewise, through its head acting pursuant to a resolution of its sangguniang and in accordance with existing law
and the provisions of this Code, close any barangay, municipal, city or provincial road, street, alley, park or square. No such way or
place or any part thereof shall be closed without indemnifying any person prejudiced thereby. A property thus withdrawn from public
use may be used or conveyed for any purpose for which other real property belonging to the local unit concerned might be lawfully
used or conveyed."
However, the aforestated legal provision which gives authority to local government units to close roads and other similar public places
should be read and interpreted in accordance with basic principles already established by law, which have the effect of limiting such
authority of the province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic
principle that properties of public dominion devoted to public use and made available to the public in general are outside the
commerce of man and cannot be disposed of or leased by the local government unit to private persons. Aside from the requirement of
due process which should be complied with before closing a road, street or park, the closure should be for the sole purpose of
withdrawing the road or other public property from public use when circumstances show that such property is no longer intended or
necessary for public use or public service. When it is already withdrawn from public use, the property then becomes patrimonial
property of the local government unit concerned as provided for in Article 422 of the Civil Code and as held in the case of Cebu
Oxygen, etc. et al. v. Bercilles, et al. It is only then that the respondent municipality can "use or convey them for any purpose for
which other real property belonging to the local unit concerned might be lawfully used or conveyed" in accordance with the last
sentence of Section 10 of the LGC.
In one case, the City Council of Cebu, through a resolution, declared the terminal road of M. Borces Street, Mabolo, Cebu City as an
abandoned road, the same not being included in the City Development Plan. Thereafter, the City Council passed another resolution
authorizing the sale of the said abandoned road through public bidding. We held therein that the City of Cebu is empowered to close a
city street and to vacate or withdraw the same from public use. Such withdrawn portion becomes patrimonial property which can be
the object of an ordinary contract. However, those roads and streets which are available to the public in general and ordinarily used
for vehicular traffic are still considered public property devoted to public use. In such case, the local government has no power to use
it for another purpose or to dispose of or lease it to private persons.
This limitation on the authority of the local government over public properties has been discussed and settled in the case of Francisco
v. Dacanay, wherein it was held that: "There is no doubt that the disputed areas from which the private respondents' market stalls are
sought to be evicted are public streets, as found by the trial court in Civil Case No. C-12921. A public street is property for public use
hence outside the commerce of man. Being outside the commerce of man, it may not be the subject of lease or other contract. xxx
xxx xxx As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government,
contrary to law, has been leasing portions of the streets to them. Such leases or licenses are null and void for being contrary to law.
The right of the public to use the city streets may not be bargained away through contract. The interests of a few should not prevail
over the good of the greater number in the community whose health, peace, safety, good order and general welfare, the respondent
city officials are under legal obligation to protect.
Even assuming that respondent municipality has the authority to pass the disputed ordinance, the same cannot be validly
implemented because it cannot be considered approved by the Metropolitan Manila Authority due to non-compliance by respondent
municipality of the conditions imposed by the former for the approval of the ordinance. Respondent municipality has not shown any
iota of proof that it has complied with the foregoing conditions precedent to the approval of the ordinance.
Moreover, the powers of a local government unit are not absolute. They are subject to limitations laid down by the Constitution and
the laws such as our Civil Code. Moreover, the exercise of such powers should be subservient to paramount considerations of health
and well-being of the members of the community. As held in the Dacanay case, the general public have a legal right to demand the
demolition of the illegally constructed stalls in public roads and streets and the officials of respondent municipality have the
corresponding duty arising from public office to clear the city streets and restore them to their specific public purpose. Thus, the
ordinance enacted by respondent municipality is void and illegal for lack of basis and authority in laws.

13 PROPERTY - CASE DIGESTS


18. CEBU OXYGEN & ACETYLENE CO., INC. VS. BERCILLES (GR NO. L-40474)
Facts:
In 1968, a terminal portion of a street in Cebu was excluded in the citys development plan hence the council declared it as
abandoned and was subsequently opened for public bidding. Cebu Oxygen was the highest bidder @P10,800.00. Cebu Oxygen applied
for the lands registration before CFI Cebu but the provincial fiscal denied it, so did the court later, alleging that the road is part of the
public domain hence beyond the commerce of man.

Issue:
Whether or not Cebu Oxygen can validly own said land.

Held:
Yes. Under Cebus 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 Oxygens 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.
"ART. 420.The following things are property of public dominion:

14 PROPERTY - CASE DIGESTS


"(1)Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
(2)Those which belong to the State, without being for public use, and are intended for some public service or for the development of
the national wealth.
"ART. 421.All other property of the State, which is not of the character stated in the preceding article, is patrimonial property."
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State
and intended for some public service. The fact that the Roppongi site has not been used for a long time for actual Embassy service
does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public
use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not
available for private appropriation or ownership "until there is a formal declaration on the part of the government to withdraw it from
being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention. We emphasize,
however, that an abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property
under Article 422 of the Civil Code must be definite. Abandonment cannot be inferred from the non-use alone specially if the non-use
was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve
the property (See Heirs of Felino Santiago v. Lazarao, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based
on correct legal premises.
20. MANILA INTERNATIONAL AIRPORT AUTHORITY VS. COURT OF APPEALS, ET. AL. (GR NO. 155650)
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Paraaque
City under Executive Order No. 903, otherwise known as the Revised Charter of the Manila International Airport Authority ("MIAA
Charter"). Executive Order No. 903 was issued on 21 July 1983 by then President Ferdinand E. Marcos. Subsequently, Executive Order
Nos. 909 1 and 298 2 amended the MIAA Charter.
As operator of the international airport, MIAA administers the land, improvements and equipment within the NAIA Complex. The MIAA
Charter transferred to MIAA approximately 600 hectares of land, 3 including the runways and buildings ("Airport Lands and Buildings")
then under the Bureau of Air Transportation. 4 The MIAA Charter further provides that no portion of the land transferred to MIAA shall
be disposed of through sale or any other mode unless specifically approved by the President of the Philippines. 5
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061. The OGCC opined that the Local
Government Code of 1991 withdrew the exemption from real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus,
MIAA negotiated with respondent City of Paraaque to pay the real estate tax imposed by the City. MIAA then paid some of the real
estate tax already due.
On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of Paraaque for the taxable years 1992
to 2001.
On 17 July 2001, the City of Paraaque, through its City Treasurer, issued notices of levy and warrants of levy on the Airport Lands
and Buildings. The Mayor of the City of Paraaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail
to pay the real estate tax delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The OGCC pointed out that Section 206 of the
Local Government Code requires persons exempt from real estate tax to show proof of exemption. The OGCC opined that Section 21
of the MIAA Charter is the proof that MIAA is exempt from real estate tax.

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 the exceptions mentioned in Section 193 of the Local Government Code. Thus, respondents assert that MIAA cannot
claim that the Airport Lands and Buildings are exempt from real estate tax.

15 PROPERTY - CASE DIGESTS


Respondents also cite the ruling of this Court in Mactan International Airport v. Marcos 8 where we held that the Local Government
Code has withdrawn the exemption from real estate tax granted to international airports. Respondents further argue that since MIAA
has already paid some of the real estate tax assessments, it is now estopped from claiming that the Airport Lands and Buildings are
exempt from real estate tax.

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 Paraaque, 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.

1.MIAA is Not a Government-Owned or Controlled Corporation


Respondents argue that MIAA, being a government-owned or controlled corporation, is not exempt from real estate tax. Respondents
claim that the deletion of the phrase "any government-owned or controlled so exempt by its charter" in Section 234(e) of the Local
Government Code withdrew the real estate tax exemption of government-owned or controlled corporations. The deleted phrase
appeared in Section 40(a) of the 1974 Real Property Tax Code enumerating the entities exempt from real estate tax.
There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. However, MIAA is not a
government-owned or controlled corporation. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines
a government-owned or controlled corporation as follows:
A government-owned or controlled corporation must be "organized as a stock or non-stock corporation." MIAA is not organized as a
stock or non-stock corporation. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no
stockholders or voting shares
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled corporation.
What then is the legal status of MIAA within the National Government?
MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any
other government instrumentality, the only difference is that MIAA is vested with corporate powers. Section 2(10) of the Introductory
Provisions of the Administrative Code defines a government "instrumentality" as follows:
SEC. 2.General Terms Defined. . . .
(10)Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. . . . (Emphasis supplied)

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)

2.Airport Lands and Buildings of MIAA are Owned by the Republic


a.Airport Lands and Buildings are of Public Dominion
The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the
Philippines. The Civil Code provides:
ARTICLE 419.Property is either of public dominion or of private ownership.
ARTICLE 420.The following things are property of public dominion:

16 PROPERTY - CASE DIGESTS


(1)Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
(2)Those which belong to the State, without being for public use, and are intended for some public service or for the development of
the national wealth. (Emphasis supplied)
No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like "roads, canals, rivers, torrents,
ports and bridges constructed by the State," are owned by the State. The term "ports" includes seaports and airports. The MIAA
Airport Lands and Buildings constitute a "port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands
and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel
and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of
the Airport Lands and Buildings as properties for public use. The operation by the government of a tollway does not change the
character of the road as one for public use. Someone must pay for the maintenance of the road, either the public indirectly through
the taxes they pay the government, or only those among the public who actually use the road through the toll fees they pay upon
using the road. The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public
roads.
The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the Philippines for both international and
domestic air traffic," 22 are properties of public dominion because they are intended for public use. As properties of public dominion,
they indisputably belong to the State or the Republic of the Philippines.

b.Airport Lands and Buildings are Outside the Commerce of Man


The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public dominion. As properties of public
dominion, the Airport Lands and Buildings are outside the commerce of man.
The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction
sale. 25
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale.
Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy.
Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale. This will
happen if the City of Paraaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of
real estate tax.
Before MIAA can encumber 26 the Airport Lands and Buildings, the President must first withdraw from public use the Airport Lands
and Buildings.
c.MIAA is a Mere Trustee of the Republic
MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48, Chapter 12, Book I of the
Administrative Code allows instrumentalities like MIAA to hold title to real properties owned by the Republic, thus:
SEC. 48.Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of the government by the following:
(1)For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is
expressly vested by law in another officer.
(2)For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)
In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even its executive head cannot sign
the deed of conveyance on behalf of the Republic. Only the President of the Republic can sign such deed of conveyance. 28

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.

e.Real Property Owned by the Republic is Not Taxable


Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property owned by the Republic of the
Philippines." Section 234(a) provides:
SEC. 234.Exemptions from Real Property Tax. The following are exempted from payment of the real property tax:
17 PROPERTY - CASE DIGESTS
(a)Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person;
xxx xxx xxx. (Emphasis supplied)
This exemption should be read in relation with Section 133(o) of the same Code, which prohibits local governments from imposing
"[t]axes, fees or charges of any kind on the National Government, its agencies and instrumentalities . . . ."
3.Refutation of Arguments of Minority
The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the Local Government Code of 1991
withdrew the tax exemption of "all persons, whether natural or juridical" upon the effectivity of the Code. Section 193 provides:

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;
(2)Those which belong to the State, without being for public use, and are intended for some public service or for the development of
the national wealth. (Emphasis supplied)
The term "ports . . . constructed by the State" includes airports and seaports. The Airport Lands and Buildings of MIAA are intended
for public use, and at the very least intended for public service. Whether intended for public use or public service, the Airport Lands
and Buildings are properties of public dominion. As properties of public dominion, the Airport Lands and Buildings are owned by the
Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code.

18 PROPERTY - CASE DIGESTS


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 Paraaque.

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 Paraaque. We declare VOID all the real estate tax assessments, including the
final notices of real estate tax delinquencies, issued by the City of Paraaque 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 PPAs arrastre and stevedoring services, as these form part of PPAs
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.
However, there is an exception to the rule as enunciated in Lianga Lumber Co. vs. Lianga Timber Co. Inc., 76 SCRA 197, where the
court said;
In the interest of justice and within the sound discretion of the appellate court, a party may change theory on appeal only
when the factual bases thereof would not require presentation of any further evidence by the adverse party in order to enable it to
properly meet the issue raised in the new theory.
But this exception is not applicable in this case. It must be emphasized that the enumeration of properties of public dominion
under Article 420 of the New Civil Code specifically states ports constructed by the State. Thus, in order to consider the port in this
case as falling under the said classification, the fact that the port was constructed by the State must first be established by sufficient
19 PROPERTY - CASE DIGESTS
evidence. Here, there was no proof adduced to establish that the port was constructed by the State, hence, the court cannot just
automatically conclude that the property is of public dominion.
It is also noted that the PPA failed to raise the issue of ownership during the pre-trial. The pretrial is primarily intended to
make certain that all issues necessary to the disposition of the case are properly raised. Consequently, the determination of issues at a
pre-trial conference bars the consideration of other questions on appeal. In the case at bar, the fact that the issue of ownership is
outside of what has been delimited during the pre-trial further justifies the disallowance of PPAs new theory. Hence, PPA may not be
permitted to change its theory on appeal.
Granting that the petitioners present theory is allowed, the court still found its contentions untenable. It must be stressed that
what is being taxed in the present case is PPAs warehouse, which, although located within the port is distinct from the port itself.
Considering the warehouses separable nature as an improvement upon the port, and the fact that it is not open for use by
everyone and freely accessible to the public, it is not part of the port as stated in Article 420 of the Civil Code. In the same way that it
was ruled that the exemption of public property from taxation does not extend to improvements made thereon by homesteaders or
occupants at their own expense. Also, it was held that the taxability of the warehouse in this case, it being a mere improvement built
on an alleged property of public dominion.
As regards the second issue raised by PPA regarding the lease of its property to private persons, the Court ruled that its own
admission that it leases out to private persons for convenience and not necessarily as part of its governmental function of
administering port operations is an admission that the act was a corporate power, which, is actually expressly stated as so in its
charter. Any income or profit generated by an entity, even of a corporation organized without any intention of realizing profit in the
conduct of its activities, is subject to tax (CIR vs. CA, 329 SCRA 237). What matters is the established fact that it leased out its
building to private entities from which it regularly earned substantial income. Thus, in the absence of any proof of exemption
therefrom, PPA is declared liable for the assessed business taxes.
The petition is denied.
22. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY VS. CA (GR NO. 169836)
Facts: Petitioner is an instrumentality of government which was a recipient of the lands and buildings of Iloilo Fishing Port Complex
(IFPC) which was reclaimed by the Ministry of Public Works and Highways. Portions of the IFPC were leased by PFDA to private firms
and individuals engaged in fish related businesses. In 1988, the LGU of Iloilo taxed the entire IFPC with real property tax, and
delinquency amounted to P5M thus City of Iloilo auctioned IFPC to satisfy such delinquency. Authority sought for tax exemption but
was rejected by the City assessor thus elevated the question to DOF which favored the taxation but as to the auction the properties of
PFDA should be ones auctioned and not IFPC because it was owned by government. Office of the Pres., RTC and CA affirmed such
decisions but opined that IFPC may then be sold at public auction to satisfy the delinquency.
Issues:
(1) Is PFDA liable to pay real property tax?
(2) Is IPFC a property of public dominion thus cannot be auctioned?
Held:
(1) PFDA is not a GOCC but an INSTRUMENTALITY of the government thus generally EXEMPTED from payment of real property tax.
PFDA is characterized as not a Govt Owned and Controlled Corp. (GOCC) on the basis of the MIAA vs. CA which stated that for one to
be a GOCC two reqs must concur: (1) that it has capital stock divided into shares, and (2) that it is authorized to distribute dividends
and allotments of surplus and profits to its stockholders; which is absent in the case at bar. Pursuant to Sec. 133 (o) of LGC,
instrumentalities of the national government, like MIAA, are exempt from local taxes. However, submits of an exception, Section 234
(a) of the LGC, the Court ruled that when an instrumentality of the national government grants to a taxable person the beneficial use
of a real property owned by the Republic, said instrumentality becomes liable to pay real property tax. The Authority should be
classified as an instrumentality of the national government which is liable to pay taxes only with respect to the portions of the
property, the beneficial use of which were vested in private entities. The real property tax assessments issued by the City of Iloilo
should be upheld only with respect to the portions leased to private persons.
(2) Yes, it cannot be auctioned in case PDF fails to pay real property tax due them. Taking basis from Chavez vs. PEA, reclaimed lands
are lands of public domain and thus cannot be subject of sale , WITHOUT CONGRESSIONAL authorization. SC said, In the same vein,
the port built by the State in the Iloilo fishing complex is a property of the public dominion and cannot therefore be sold at public
auction.
23. IDEALS VS. PSALM (GR NO. 192088)
24. WOODRIDGE SCHOOL, INC. ET. AL. VS. ARB CONSTRUCTION INC. (GR NO. 157285)
Facts:
Javier, is the registered owner of the adjacent lot to that of Woodridge. Respondent ARB Construction is the owner and developer of
Soldiers Hills Subdivision in Bacoor, Cavite, which is composed of four phases. Phase 1 of the subdivision was already accessible from

20 PROPERTY - CASE DIGESTS


the Marcos Alvarez Avenue. To provide the same accessibility to the residents of Phase II of the subdivision, ARB constructed the
disputed road to link the two phases.
Petitioners properties sit right in the middle of several estates: Phase 1 of Soldiers Hills Subdivision in the north, a creek in the east
and Green Valley Subdivision in the farther east, a road within Soldiers Hills Subdivision IV which leads to the Marcos Alvarez Avenue
in the west, and Phase III of Soldiers Hills Subdivision in the south. Petitioners offered to pay ARB P50,000 as indemnity for the use of
the road. ARB refused the offer and fenced the perimeter of the road fronting the properties of petitioners, thus, cutting off
petitioners access to and from the public highway.
After failing to settle the matter amicably, petitioners jointly filed a complaint in the RTC to enjoin ARB from depriving them of the use
of the disputed subdivision road and to seek a compulsory right of way after payment of proper indemnity. The RTC rendered its
decision in favor of petitioners relying on the ruling of the Supreme Court in White Plains Association, Inc. vs. Legaspi (193 SCRA 765)
stating that the government automatically becomes the owner of the subdivisions roads the moment the subdivision plan is approved,
and thus is open to public use without any need for compensation.
Respondent ARB elevated the case to the Court of Appeals. The appellate court reversed the Trial Courts decision and stating that the
ruling of the Supreme Court in the 1991 case of White Plains Subdivision is not applicable as it was not similarly situated as in the
present case. However the appellate court went on to rule that a compulsory right of way exists in favor of petitioners as there is no
other existing adequate outlet to and from petitioners properties to the Marcos Alvarez Avenue other than the subject existing road lot
belonging to ARB. In addition, it awarded P500,000 to ARB as compensation for the wear and tear that petitioners use of the road
would contribute to.
Unsatisfied with the ruling of the appellate court, petitioners elevated the matter to the Supreme Court arguing that ARB is not entitled
to be paid any indemnity since the contested road lot is a property of public dominion pursuant to Article 420 of the Civil Code
because the disputed road falls under the category of others of similar character which is the last clause of Article 420 (1). Hence, it
is a property of public dominion which can be used by the general public without need for compensation. Petitioners also assert that
their initial offer of P50,000 should be sufficient compensation for the right of way. Further, they should not be held accountable for
the increase in the value of the property since the delay was attributable to the stubborn refusal of ARB to accept their offer.

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;
(4) the right of way claimed is at the point least prejudicial to the servient estate.
In the present case, all of the requisites are present except for number two. The appellate and trial courts found that the properties
of petitioners are enclosed by other estates without any adequate access to a public highway except the subject road lot which leads
to Marcos Alvarez Avenue. Although it was shown that the shortest distance from the properties to the highway is toward the east
across a creek, this alternative route does not provide an adequate outlet for the students of the proposed school. The Civil Code
categorically provides for the measure by which the proper indemnity may be computed. Under Article 649, paragraph 2, it is stated:
Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate,
establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the amount of the damage caused
to the servient estate.

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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
non-buildable open space, therefore there is no "excess land" to speak of. This then means that the condition to build a sports
complex on the donated land is contrary to law and should be considered as not imposed.

C. Revocation of a Mandatory Donation Because of Non-compliance with an illegal condition


There is no legal basis whatsoever to revoke the donation of the subject open space and to return the donated land to private
respondent. The donated land should remain with the donee as the law clearly intended such open spaces to be perpetually part of
the public domain, non-alienable and permanently devoted to public use as such parks, playgrounds or recreation areas.

22 PROPERTY - CASE DIGESTS


26. FRANCISCO CHAVEZ VS. PUBLIC ESTATES AUTHORITY (GR NO. 133250)
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining order. The
petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's then on-going renegotiations with
Amari Coastal Bay and Development Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further seeks to
enjoin PEA from signing a new agreement with AMARI involving such reclamation.
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the Construction and
Development Corporation of the Philippines ("CDCP' for brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The
contract also included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the
works in consideration of fifty percent of the total reclaimed land.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private corporation, to develop the
Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of submerged areas surrounding these islands
to complete the configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered
into the JVA through negotiation without public bidding. 4 On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245,
confirmed the JVA. 5 On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the
JVA. 6
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as
the "grandmother of all scams." As a result, the Senate Committee on Government Corporations and Public Enterprises, and the
Committee on Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate Committees reported
the results of their investigation in Senate Committee Report No. 560 dated September 16, 1997. 7 Among the conclusions of their
report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of title covering
the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA
"to reclaim land, including foreshore and submerged areas," and "to develop, improve, acquire, . . . lease and sell any and all kinds of
lands." 1 On the same date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the
foreshore and offshore of the Manila Bay " 2 under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with CDCP, so that "[A]ll
future works in MCCRRP . . . shall be funded and owned by PEA." Accordingly, PEA and CDCP executed a Memorandum of Agreement
dated December 29, 1981.
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition for Mandamus with
Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner assails the sale to AMARI of
lands of the public domain as a blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands
of the public domain to private corporations.
ISSUE: WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN
LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION
HELD: NULL & VOID
We can now summarize our conclusions as follows;
1.The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA, are
alienable lands of the public domain. PEA may lease these lands to private corporations but may not sell or transfer ownership of
these lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to the ownership limitations in the
1987 Constitution and existing laws.
2.The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until classified as
alienable or disposable lands open to disposition and declared no longer needed for public service. The government can make such
classification and declaration only after PEA has reclaimed these submerged areas. Only then can these lands qualify as agricultural
lands of the public domain, which are the only natural resources the government can alienate. In their present state, the 592.15
hectares of submerged areas are inalienable and outside the commerce of man.
3.Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of the Freedom Islands, such
transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.
4.Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares 111 of still submerged areas of Manila Bay,
such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural
resources other than agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter, the government
can classify the reclaimed lands as alienable or disposable, and further declare them no longer needed for public service. Still, the

23 PROPERTY - CASE DIGESTS


transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.
Clearly the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. under Article 1409 112 of the Civil
Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of men," are "inexistent and
void from the beginning." The Court must perform its duty to defend and uphold the Constitution, and therefore declares the
Amended JVA null and void ab initio.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation are
PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declared NULL and VOID ab
initio.
27. FRANCISCO CHAVEZ VS. NATIONAL HOUSING AUTHORITY (GR NO. 164527)
Facts: Petitioner Francisco Chavez in his capacity as taxpayer seeks to declare null and void the Joint Venture Agreement (JVA)
between the NHA and R-II Builders Inc (RBI) for being unconstitutional and invalid, and to enjoin respondents particularly
respondent NHA from implementing and/or enforcing the said project and other agreements related thereto. On March 1, 1988, then
President Corazon C. Aquino issued Memorandum Order No. 161 (MO 161) approving and directing the implementation of the
Comprehensive and Integrated Metropolitan Manila Waste Management Plan. Specifically, respondent NHA was ordered to conduct
feasibility studies and develop low-cost housing projects at the dumpsite and absorb scavengers in NHA resettlement/low-cost housing
projects.
Pursuant to MO 161-A, NHA prepared the feasibility studies which resulted in the formulation of the Smokey Mountain
Development Plan and Reclamation of the Area Across R-10 or the Smokey Mountain Development and Reclamation Project (SMDRP).
SMDRP aimed to convert the Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of the area
across R-10, adjacent to the Smokey Mountain as the enabling component of the project. Once finalized, the Plan was submitted to
President Aquino for her approval.
On January 17, 1992, President Aquino proclaimed MO 415, approving and directing the implementation of the SMDRP through
a private sector joint venture. Said MO stipulated that the land area covered by the Smokey Mountain dumpsite is conveyed to the
NHA as well as the area to be reclaimed across R-10. In the same MO 415, President Aquino created an Executive Committee
(EXECOM) to oversee the implementation of the Plan and an inter-agency technical committee (TECHCOM) was created composed of
the technical representatives of the EXECOM. Based on the evaluation of the pre-qualification documents, the EXECOM declared the
New San Jose Builders, Inc. and RBI as top two contractors. Thereafter, TECHCOM submitted its recommendation to the EXECOM to
approve the RBI proposal which garnered the highest score.
On October 7, 1992, President Ramos authorized NHA to enter into a JVA with RBI. Afterwards, President Ramos issued
Proclamation No. 465 increasing the proposed area for reclamation across R-10 from 40 hectares to 79 hectares. On September 1,
1994, pursuant to Proclamation No. 39, the DENR issued Special Patent No. 3591 conveying in favor of NHA an area of 211,975
square meters covering the Smokey Mountain Dumpsite. The land reclamation was completed in August 1996. Sometime later in
1996, pursuant likewise to Proclamation No. 39, the DENR issued Special Patent No. 3598 conveying in favor of NHA an additional
390,000 square meter area. After some time, the JVA was terminated. RBI demanded the payment of just compensation for all
accomplishments and costs incurred in developing the SMDRP plus a reasonable rate of return. In a Memorandum of Agreement
(MOA) executed by NHA and RBI, both parties agreed to terminate the JVA and other subsequent agreements, which stipulated,
among others, that unpaid balance may be paid in cash, bonds or through the conveyance of properties or any combination thereof.

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:
1. Yes. The reclaimed lands across R-10 were classified alienable and disposable lands of public domain of the State. First, there
were three presidential proclamations classifying the reclaimed lands across R-10 as alienable or disposable hence open to disposition
or concession. These were MO 415 issued by President Aquino, Proclamation No. 39 and Proclamation No. 465 both issued by
President Ramos. Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR classified the reclaimed areas as alienable
and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that the lands to be reclaimed
are classified as alienable and disposable. We find however that such conclusion is derived and implicit from the authority given to the
NHA to transfer the reclaimed lands to qualified beneficiaries. In line with the ruling in Chavez v. PEA, the court held that MO 415 and
Proclamations Nos. 39 and 465 cumulatively and jointly taken together with Special Patent Nos. 3591, 3592, and 3598 more than

24 PROPERTY - CASE DIGESTS


satisfy the requirement in PEA that [t]here must be a law or presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession.

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
personunder 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
Castros 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 Doctrine of Precedent plus by virtue of the Comp Agreement govt 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.

25 PROPERTY - CASE DIGESTS


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 it was released as alienable and disposable only on March 25, 1981. The Court also rejected the petitioners
contention that respondents action for reversion is barred by prescription for having been filed nearly two decades after the issuance
of Bugayong's sales patent. It was held that prescription does not lie against the State for reversion of property which is part of the
public forest or of a forest reservation registered in favor of any party. Public land registered under the Land Registration Act may be
recovered by the State at any time.
Contrary to the argument of LBP, since the title is void, it could not have become incontrovertible. Even prescription may not be used
as a defense against the Republic. On this aspect, the Court in Reyes v. Court of Appeals, citing Republic v. Court of Appeals, held
that: Petitioners' contention that the government is now estopped from questioning the validity of OCT No. 727 issued to them,
considering that it took the government 45 years to assail the same, is erroneous. We have ruled in a host of cases that prescription
does not run against the government. In point is the case of Republic v. Court of Appeals, wherein we declared that in so far as the
26 PROPERTY - CASE DIGESTS
timeliness of the action of the Government is concerned, it is basic that prescription does not run against the State. xxx xxx xxx When
the government is the real party in interest, and is proceeding mainly to assert its own rights and recover its own property, there can
be no defense on the ground of laches or limitation. xxx xxx xxx Public land fraudulently included in patents or certificates of title may
be recovered or reverted to the State in accordance with Section 101 of the Public Land Act. Prescription does not lie against the State
in such cases for the Statute of Limitations does not run against the State. The right of reversion or reconveyance to the State is not
barred by prescription.
Moreover, the constitutional guarantee of non-impairment of contracts may not likewise be used by LBP to validate its interest over
the land as mortgagee. The State's restraint upon the right to have an interest or ownership over forest lands does not violate the
constitutional guarantee of non-impairment of contracts. Said restraint is a valid exercise of the police power of the State.
30. HEIRS OF MARIO MALABANAN VS. REPUBLIC (GR NO. 179987)
Facts:
On 20 February 1998, Mario Malabanan filed an application for land registration before the RTC of Cavite-Tagaytay, covering a parcel
of land situated in Silang Cavite, consisting of 71,324 square meters. Malabanan claimed that he had purchased the property from
Eduardo Velazco, and that he and his predecessors-in-interest had been in open, notorious, and continuous adverse and peaceful
possession of the land for more than thirty (30) years. Velazco testified that the property was originally belonged to a twenty-two
hectare property owned by his great-grandfather, Lino Velazco. Lino had four sons Benedicto, Gregorio, Eduardo and Estebanthe
fourth being Aristedess grandfather. Upon Linos death, his four sons inherited the property and divided it among themselves. But by
1966, Estebans wife, Magdalena, had become the administrator of all the properties inherited by the Velazco sons from their father,
Lino. After the death of Esteban and Magdalena, their son Virgilio succeeded them in administering the properties, including Lot 9864-
A, which originally belonged to his uncle, Eduardo Velazco. It was this property that was sold by Eduardo Velazco to Malabanan.
Among the evidence presented by Malabanan during trial was a Certification dated June 11, 2001, issued by the Community
Environment & Natural Resources Office, Department of Environment and Natural Resources (CENRO-DENR), which stated that the
subject property was verified to be within the Alienable or Disposable land per Land Classification Map No. 3013 established under
Project No. 20-A and approved as such under FAO 4-1656 on March 15, 1982. On 3 December 2002, the RTC approved the
application for registration.
The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan had failed to prove that the property belonged to
the alienable and disposable land of the public domain, and that the RTC had erred in finding that he had been in possession of the
property in the manner and for the length of time required by law for confirmation of imperfect title. On 23 February 2007, the Court
of Appeals reversed the RTC ruling and dismissed the appliocation of Malabanan.

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.

1.) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the Public Land Act recognizes and confirms
that those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious
possession and occupation of alienable and disposable lands of the public domain, under a bona fide claim of acquisition of ownership,
since June 12, 1945 have acquired ownership of, and registrable title to, such lands based on the length and quality of their
possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that the lands should have
been alienable and disposable during the entire period of possession, the possessor is entitled to secure judicial confirmation of his
title thereto as soon as it is declared alienable and disposable, subject to the timeframe imposed by Section 47 of the Public Land Act.
(b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed by Section 14(1) of the
Property Registration Decree.

27 PROPERTY - CASE DIGESTS


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 persons 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 evidencethe Tax Declarations they presented in particularis 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 Revised Forestry Code, as amended. Since Boracay Island had not been classified as alienable and disposable, whatever
possession they had cannot ripen into ownership.

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).

28 PROPERTY - CASE DIGESTS


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.
32. VDA. TE TAN TOCO VS. MUNICIPAL COUNCIL OF ILOILO (49 PHIL 52)
It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the amount of P42,966.40, being
the purchase price of two strips of land, one on Calle J. M. Basa consisting of 592 square meters, and the other on Calle Aldiguer
consisting of 59 square meters, which the municipality of Iloilo had appropriated for widening said street. The Court of First Instance
of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed, plus the interest, and the said judgment was on
appeal affirmed by this court.
On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore plaintiff had a writ of execution
issue against the property of the said municipality, by virtue of which the sheriff attached two auto trucks used for street sprinkling,
one police patrol automobile, the police stations on Mabini street, and in Molo and Mandurriao and the concrete structures, with the
corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.
ISSUE: Whether or not the property levied upon is exempt from execution.
HELD:
The principle is that the property for public use of the State is not within the commerce of man and, consequently, is unalienable and
not subject to prescription. Likewise, property for public use of the municipality is not within the commerce of man so long as it is
used by the public and, consequently, said property is also inalienable.

29 PROPERTY - CASE DIGESTS


It is evident that the movable and immovable property of a municipality, necessary for governmental purposes, may not be attached
and sold for the payment of a judgment against the municipality. The supreme reason for this rule is the character of the public use to
which such kind of property is devoted. The necessity for government service justifies that the property of public use of the
municipality be exempt from execution just as it is necessary to exempt certain property of private individuals in accordance with
section 452 of the Code of Civil Procedure.
33. PASAY CITY GOVERNMENT VS. CFI (GR NO. L-32162)
Facts: This is a petition for review on certiorari of the order rendered by the Court of First Instance of Manila, Branch X, presided by
Honorable Judge Jose L. Moya on July 23, 1969.
On August 12, 1964, respondent-appellee V.D. Isip, Sons & Associates represented by Vicente David Isip entered into a
contract with the City of Pasay represented by the then Mayor Pablo Cuneta. The contract entitled "Contract and Agreement" was for
the construction of a new Pasay City Hall at F.B. Harrison St., Pasay City.
The respondentappellee accomplished under various stages of construction the amount of work (including supplies and
materials) equivalent to an estimated value of P1,713,096.00 of the total contract price of P4,914,500.80. The appellants paid only the
total amount of P1,100,000.00 to the respondent-appellee leaving an amount of P613,096.00 immediately due from the petitioner-
appellants to the respondent-appellee. Notwithstanding demands for payment thereof, the petitioner-appellants failed to remit the
aforesaid amount of P613,096.00 to the respondent-appellee.
The parties arrived at a draft of amicable agreement which was submitted to the Municipal Board of Pasay City for its
consideration. On February 25, 1969, the Municipal Board of Pasay enacted Ordinance No. 1012 which approved the Compromise
Agreement and also authorized and empowered the incumbent City Mayor Jovito Claudio to represent the appellant Pasay City
Government, subject to the final approval of the respondent Court herein. On March 12, 1969, the respondent Court approved the said
Compromise Agreement including a Manifestation and Addendum thereto.
On April 10, 1969, the appellants filed an urgent motion seeking a declaration of legality of the original contract and agreement
dated August 4, 1964 from the respondent Court. On May 10, 1969, the respondent Court issued an order declaring that the original
contract is legal and valid. On June 21, 1969, at the instance of the appellee, the respondent Court granted an order of execution
pursuant to which a writ of execution dated June 25, 1969 was issued. On July 9, 1969, an application for and notice of garnishment
were made and effected upon the funds of appellant Pasay City Government with the Philippine National Bank.
On July 11, 1969, the appellant filed an urgent motion to set aside the respondent Court's order of June 21, 1969 and to quash
the writ of execution issued pursuant thereto upon the following grounds: 1) that the execution sought was then still premature, the
period of 90 days stipulated not having elapsed as yet; 2) that the obligations of the parties under the Compromise Agreement were
reciprocal and the appellee not having put up a new performance bond in the sufficient amount equivalent to 20% of the remaining
cost of construction as per agreement, the appellants cannot be obliged to pay the sum due appellee as yet; 3) that the Sheriff has no
power or authority to levy or garnish on execution the general funds, especially more so, the trust funds of the defendant Pasay City.
On July 19, 1969, the respondent Court issued an order stating that inasmuch as the defendant has not yet paid the plaintiff as of this
date then "the writ of execution and of garnishment are declared to be again in full force and effect ..."

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.

Held: A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance
with a judicial compromise. A compromise agreement not contrary to law, public order, public policy, morals or good customs is a valid
contract which is the law between the parties themselves. A judgment on a compromise is a final and executory. It is immediately
executory in the absence of a motion to set the same aside on the ground of fraud, mistake or duress. In fact in the herein case
before Us, execution has already been issued. Considering this in the light of Article 2041 of the New Civil Code, to wit: Art. 2041. If
one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as
rescinded and insist upon his original demand.
It is obvious that the respondent-appellee did not only succeed in enforcing the compromise but said plaintiff-appellee likewise
wants to rescind the said compromise. It is clear from the language of the law, specifically Article 2041 of the New Civil Code that one
of the parties to a compromise has two options: 1) to enforce the compromise; or 2) to rescind the same and insist upon his original
demand. The respondent-appellee in the case herein before Us wants to avail of both of these options. This can not be done. The
respondent-appellee cannot ask for rescission of the compromise agreement after it has already enjoyed the first option of enforcing
the compromise by asking for a writ of execution resulting thereby in the garnishment of the Pasay City funds deposited with the
Philippine National Bank which eventually was delivered to the respondent-appellee.
Upon the issuance of the writ of execution, the petitioner-appellants moved for its quashal alleging among other things the
exemption of the government from execution. This move on the part of the petitioner-appellant is at first glance laudable for "all
government funds deposited with the Philippine National Bank by any agency or instrumentality of the government, whether by way of
general or special deposit, remain government funds and may not be subject to garnishment or levy. But, inasmuch as an ordinance
has already been enacted expressly appropriating the amount of P613,096.00 of payment to the respondent-appellee, then the herein

30 PROPERTY - CASE DIGESTS


case is covered by the exception to the general nile stated in the case of Republic vs. Palacio (L-20322, 23 SCRA 899 [May 29,1968]),
to wit: Judgments against a State in cases where it has consented to be sued, generally operate merely to liquidate and establish
plaintiff's claim in the absence of express provision; otherwise they cannot be enforced by processes of the law; and it is for the
legislature to provide for the payment in such manner as it sees fit.
Hence, the respondent Court was correct in refusing to quash the writ of execution it has issued.
34. ESPIRITU VS. MUNICIPAL COUNCIL OF POZORRUBIO (102 PHIL 867)
Facts: The town plaza of Pozzorubio was subjected to lease by the municipal council to market vendors who created small make-shift
stalls and some even small residences on said land. This was evidenced by the collection of the municipal treasurer of P.25/ per sq.
meter. It was questioned by some civic organizations which then called the attention of the Provincial Board and the Secretary of
Interior which declared such action as illegal. Thus, said Council passed Reso. No. 209 (S. 1951) which asked for the removal of said
stalls within 60 days. Some of the Stall owners opposed such resolution and filed a prohibition in CFI Pangasinan.
Issue: WON Town Plazas are properties of Public Domain thus cannot be subjected to sale nor lease?
Held: Town Plazas are properties of Public Domain and cannot be a subject of contract either for sale or for lease. Such are devoted
for public use and made available for public in general thus it is outside the commerce of man. The use of the plaza in the case at bar
was temporarily tolerated due to the emergency caused by the aftermath of the war, since the emergency has ceased, temporary
occupation must likewise cease.
35. PROVINCE OF ZAMBOANGA DEL NORTE VS. CITY OF ZAMBOANGA (GR NO. L-24440)
FACTS:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the then Zamboanga
Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality of Zamboanga into Zamboanga City.
Sec. 50 of the Act also provided that buildings and properties which the province shall abandon, upon the transfer of the capital to
another place, will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General. The properties
and buildings referred to consisted of 50 lots and some buildings constructed thereon, located in the City of Zamboanga and covered
individually by Torrens certificates of title in the name of Zamboanga Province. Based on the records, such properties were being
utilized as capitol site, school site, hospital site, leprosarium, highschool playground and hydroelectric site, among others. The
Appraisal Committee formed by the Auditor General, pursuant to CA 39, fixed the value of the properties and buildings in question left
by Zamboanga Province in Zamboanga City at P1,294,244.00.
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and
Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two new ones, Sec. 6 of
the law provided that the funds, assets and other properties and the obligations of the province of Zamboanga shall be divided
equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines,
upon the recommendation of the Auditor General.
Pursuant to such provision, the Auditor General, on January 11, 1955, apportioned the assets and obligations of the defunct Province
of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore
became entitled to 54,39% of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by
Zamboanga City.
The Secretary of Finance then authorized the Commissioner of Internal Revenue (CIR) to deduct from the regular internal revenue
allotment for the City of Zamboanga for several fiscal quarters totaling P57,373.46, which was credited to the province of Zamboanga
del Norte, in partial payment of the P704,220,05 due it. However, on June 17, 1961, Republic Act 3039 was approved amending Sec.
50 of Commonwealth Act 39 by providing that all buildings, properties and assets belonging to the former province of Zamboanga and
located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga.
Consequently, the Secretary of Finance ordered the CIR to stop from effecting further payments to Zamboanga del Norte and to
return to Zamboanga City the sum paid and taken from the internal revenue allotment of the latter. Of the total amount paid by
Zamboanga City, a total of P43,030.11 has already been returned to it.
This prompted the petitioner Zamboanga del Norte to file, on March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary
Mandatory Injunction" in the Court of First Instance against defendants Zamboanga City, the Secretary of Finance and the CIR,
praying that: (a) Republic Act 3039 be declared unconstitutional for depriving the province of property without due process and just
compensation; (b) plaintiff's rights and obligations under said law be declared; (c) the Secretary of Finance and the CIR be enjoined
from reimbursing the sum of 57,373.46 to defendant City; and (d) the latter be ordered to continue paying the balance of
P704,220.05.
After trial, the lower court held rendered a decision in favor of the petitioners. Prior to the perfection of defendants' appeal, petitioner
filed a motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in lump sum with 6% interest per
annum, which was subsequently granted by the lower court.
ISSUE(S):
31 PROPERTY - CASE DIGESTS
Whether or not Republic Act 3039 is unconstitutional.
RULING:
The validity of the law ultimately depends on the nature of the properties in question. If the property is owned by the municipality in
its public and governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in
its private or proprietary capacity, then it is patrimonial and Congress has no absolute control; the municipality cannot be deprived of
it without due process and payment of just compensation. The capacity in which the property is held is, however, dependent on the
use to which it is intended and devoted.
In this case, the Court applied the norm obtaining under the principles constituting the law of Municipal Corporations, which states
that, to be considered public, it is enough that the property be held and devoted for governmental purposes like local administration,
public education, public health, etc. Thus, all those of the 50 properties in question, which are devoted to public service are deemed
public; the rest remain patrimonial.
Following such classification, the Court upheld the validity of Republic Act 3039 insofar as it affects the lots used as capitol site, school
sites and its grounds, hospital and leprosarium sites and the high school playground sites, or a total of 24 lots, since these were held
by the former Zamboanga province in its governmental capacity and therefore are subject to the absolute control of Congress.
However, Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26
remaining lots which are patrimonial properties since they are not being utilized for distinctly governmental purposes.
It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's 54.39% share in the 26
properties which are patrimonial in nature, said share to be computed on the basis of the valuation of said 26 properties as contained
in Resolution No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General.
Petitioner's share, however, cannot be paid in lump sum, except as to the P43,030.11 already returned to defendant City. The return
of said amount to defendant was without legal basis. Republic Act 3039 took effect only on June 17, 1961 after a partial payment of
P57,373.46 had already been made. Since the law did not provide for retroactivity, it could not have validly affected a completed act.
Hence, the amount of P43,030.11 should be immediately returned by defendant City to petitioner province. The remaining balance, if
any, in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by defendant City in the same manner originally
adopted by the Secretary of Finance and the CIR, and not in lump sum.
36. SALAS VS. JARENCIO (46 SCRA 734)
Facts:
February 24, 1919the 4th Branch of the Court of First Instance of Manila, acting asa land registration court, rendered judgment in
Case No. 18, G.L.R.O. Record No. 111,declaring the City of Manila the owner in fee simple of a parcel of land known as LotNo. 1,
Block 557 of the Cadastral Survey of the City of Mani1a, containing an area of 9,689.8 square meters, more or less.
August 21, 1920 Title No. 4329 issued on in favor of the City of Manila after the landin question was registered in the City's favor.
The Torrens Title expressly states thatthe City of Manila was the owner in 'fee simple' of the said land
September 20, 1960the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His Excellency the President of
the Philippines to consider the feasibility of declaring the city property bounded by Florida, San Andres andNebraska Streets, under
Transfer Certificate of Title Nos. 25545 and 25547, containing an area of 7,450 square meters, as patrimonial property of the City of
Manila for the purpose of reselling these lots to the actual occupants thereof
The said resolution of the Municipal Board of the City of Manila was officiallytransmitted to the President of the Philippines the
following day, to which a copy wasfurnished to the Senate and House of Representatives of the Congress of the Philippines.
June 20, 1964RA 4118 was passed by the Senate and approved by the President pursuant to the request. Such bill was enacted for
social justice purposes, that they be sold to their currently landless occupants.
But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December 20, 1966,
Antonio J. Villegas, in his capacity asthe City Mayor of Manila and the City of Manila as a duly organized publiccorporation, brought an
action for injunction and/or prohibition with preliminaryinjunction to restrain, prohibit and enjoin the herein appellants, particularly the
Governor of the Land Authority and the Register of Deeds of Manila, from further implementing Republic Act No. 4118, and praying for
the declaration of Republic Act No. 4118 as unconstitutional.

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.

32 PROPERTY - CASE DIGESTS


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 of Spain provides that "ownership is the right to enjoy and dispose of a thing without further limitations than those established
by law." 36 The right to dispose ( jus disponendi) of one's property is an attribute of ownership. Act No. 1360, as amended, however,
provides by necessary implication, that the City of Manila could not dispose of the reclaimed area without being authorized by the
lawmaking body. If the reclaimed area were patrimonial property of the City, the latter could dispose of it without need of the
authorization provided by the statute, and the authorization to set aside . . . lease . . . or sell . . . given by the statute would indeed be
superfluous. To authorize means to empower, to give a right to act. 38 Act No. 1360 furthermore qualifies the verb "authorize" with
the adverb "hereby," which means "by means of this statue or section." Hence without the authorization expressly given by Act No.
1360, the City of Manila could not lease or sell even the northern portion; much less could it dispose of the whole reclaimed area.
Consequently, the reclaimed area was granted to the City of Manila, not as its patrimonial property. At most, only the northern portion
reserved as a hotel site could be said to be patrimonial property, for, by express statutory provision it could be disposed of, and the
title thereto would revert to the City should the grantee fail to comply with the terms provided by the statute.
Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed area is an extension of the
Luneta, then it is of the same nature or character as the old Luneta. It is not disputed that the old Luneta is a public park or plaza and
it is so considered by Section 859 of the Revised Ordinances of the City of Manila. 42 Hence the "extension to the Luneta" must be
also a public park or plaza and for public use.
Thirdly, the reclaimed area was formerly a part of the Manila Bay. A bay is nothing more than an inlet of the sea. Pursuant to Article 1
of the Law of Waters of 1866, bays, roadsteads, coast sea, inlets and shores are parts of the national domain open to public use.
These are also property of public ownership devoted to public use, according to Article 339 of the Civil Code of Spain.When the shore
or part of the bay is reclaimed, it does not lose its character of being property for public use.

33 PROPERTY - CASE DIGESTS


Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed area as a hotel site. The subject
property is not that northern portion authorized to be leased or sold; the subject property is the southern portion. Hence, applying the
rule of expresio unius est exlusio alterius, the City of Manila was not authorized to sell the subject property. The application of this
principle of statutory construction becomes the more imperative in the case at bar inasmuch as not only must the public grant of the
reclaimed area to the City of Manila be, as above stated, strictly construed against the City of Manila, but also because a grant of
power to a municipal corporation, as happens in this case where the city is authorized to lease or sell the northern portion of the
Luneta extension, is strictly limited to such as are expressly or impliedly authorized or necessarily incidental to the objectives of the
corporation.
Fifthly, Article 344 of the Civil Code of Spain provides that "property of public use, in provinces and in towns, comprises the provincial
and town roads, the squares, streets, fountains, and public waters, the promenades, and public works of general service paid for by
such towns or provinces." A park or plaza, such as the extension to the Luneta, is undoubtedly comprised in said article.
38. COMMISSIONER OF PUBLIC HIGHWAYS, ET. AL. VS. LOURDES SAN DIEGO, ET. AL. (GR NO. L-30098)
FACTS: On or about November 20, 1940, the Government of the Philippines filed a complaint for eminent domain in the Court of First
Instance of Rizal 1 for the expropriation of a parcel of land belonging to N. T. Hashim, with an area of 14,934 square meters, needed
to construct a public road, now known as Epifanio de los Santos Avenue. On November 25,1940, the Government took possession of
the property upon deposit with the City Treasurer of the sum of P23,413.64 fixed by the Court therein as the provisional value of all
the lots needed to construct the road, including Hashim's property. The records of the expropriation case were destroyed and lost
during the second world war, and neither party took any step thereafter to reconstitute the proceedings.
On November 7, 1966, the Compromise Agreement subscribed by counsel for respondent estate and by then Solicitor General Antonio
P. Barredo, now a member of this Court, was submitted to the lower Court and under date of November 8, 1966, respondent judge,
as prayed for, rendered judgment approving the Compromise Agreement and ordering petitioners, as defendants therein, to pay
respondent estate as plaintiff therein, the total sum of P209,076.00 for the expropriated lot.
October 14, 1968, respondent Garcia, as special sheriff, forthwith served a Notice of Garnishment, together with the writ of execution
dated October 14, 1968, issued by respondent Manuela C. Florendo as Deputy Clerk of Court, on respondent Philippine National Bank,
notifying said bank that levy was thereby made upon funds of petitioners Bureau of Public Highways and the Auditor General on
deposit, with the bank to cover the judgment of P209,076.00 in favor of respondent estate, and requesting the bank to reply to the
garnishment within five days. On October 16, 1968, three days before the expiration of the five-day deadline, respondent Benjamin V.
Corua in his capacity as Chief, Documentation Staff, of respondent bank's Legal Department, allegedly acting in excess of his
authority and without the knowledge and consent of the Board of Directors and other ranking officials of respondent bank, replied to
the notice of garnishment that in compliance therewith, the bank was holding the amount of P209,076.00 from the account of
petitioner Bureau of Public Highways. Respondent bank alleged that when it was served with Notice to Deliver Money signed by
respondent Garcia, as special sheriff, on October 17, 1968, it sent a letter to the officials of the Bureau of Public Highways notifying
them of the notice of garnishment.
Under date of October 16, 1968, respondent estate further filed with the lower Court an ex-parte motion for the issuance of an order
ordering respondent bank to release and deliver to the special sheriff, respondent Garcia, the garnished amount of P209,076.00
deposited under the account of petitioner Bureau, which motion was granted by respondent judge in an order of October 18, 1968. On
the same day, October 18, 1968, respondent Corua, allegedly taking advantage of his position, authorized the issuance of a cashier's
check of the bank in the amount of P209,076.00, taken out of the funds of petitioner Bureau deposited in current account with the
bank and paid the same to respondent estate, without notice to said petitioner
ISSUE: WON respondent Court's two questioned orders (1) for execution of the judgment, in pursuance whereof respondent deputy
clerk issued the corresponding writ of execution and respondent special sheriff issued the notice of garnishment, and (2) for delivery
of the garnished amount of P209,076.00 to respondent estate as judgment creditor through respondent special sheriff, are null and
void
HELD: Null and void on the fundamental ground that government funds are not subject to execution or garnishment.
As early as 1919, the Court has pointed out that although the Government, as plaintiff in expropriation proceedings, submits itself to
the jurisdiction of the Court and thereby waives its immunity from suit, the judgment that is thus rendered requiring its payment of
the award determined as just compensation for the condemned property as a condition precedent to the transfer to the title thereto in
its favor, cannot be realized upon execution. 12 The Court there added that it is incumbent upon the legislature to appropriate any
additional amount, over and above the provisional deposit, that may be necessary to pay the award determined in the judgment, since
the Government cannot keep the land and dishonor the judgment. The universal rule that where the State gives its consent to be sued
by private parties either by general or special law, it may limit claimant's action "only up to the completion of proceedings anterior to
the stage of execution" and that the power of the Courts ends when the judgment is rendered, since government funds and properties
may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public
policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and
public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their
legitimate and specific objects, as appropriated by law.

34 PROPERTY - CASE DIGESTS


39. PHILIPPINE NATIONAL BANK VS. HON. JUDGE JAVIER PABALAN (GR NO. L-33112)
Facts: On 17 Dec 1970, Judge Pabalan issued a writ of execution followed thereafter by a notice of garnishment of the funds of
Philippine Virginia Tobacco Administration (PVTA) in the sum of P12,724.66 deposited with the petitioner bank. PNB La Union filed an
administrative complaint against Pabalan for grave abuse of discretion, alleging that the latter failed to recognize that the questioned
funds are of public character and therefore may not be garnished, attached or levied upon. The PNB La Union Branch invoked the
doctrine of non suability, putting a bar on the notice of garnishment.

ISSUE: Whether or not PNB may be sued.

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 PROVIs Writ against the properties of TESDA amounting to P35M. The CA reversed the RTC which stated that TESDAs funds are
public in nature thus exempt from garnishment and second, purchase of PVC Cards was a necessary incident of its govt 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 TESDAs general govtal 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 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 latters 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):
35 PROPERTY - CASE DIGESTS
Whether or not petitioner has claim over the subject property.
RULING:
Petitioners contention is without merit.
The Court reiterated the well-settled rule that the trial courts 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 Manantans
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 disputed portions from Manantan after expiration or termination of the right to hold possession of the same
by virtue of an express or implied contract, which would build a case for unlawful detainer. Respondent and Tavera argued that even
if there was dispossession, it was evident from the face of the Complaint that it was not committed through any of the means
enumerated under Rule 70 of the Rules of Court and, thus, forcible entry or unlawful detainer could not be the proper remedy for
Manantan.

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 plaintiffs 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

36 PROPERTY - CASE DIGESTS


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
Manantans 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, respondents possession of the disputed portion was not pursuant to any
contract, express or implied, with Manantan, and, resultantly, respondents right of possession over the disputed portion is not subject
to expiration or termination. At no point can it be said that respondents 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
only some of such relief. 37 As gleaned from the averments of the complaint, the action of respondents was one for quieting of title
under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil Code. The latter provision reads:
Art. 476.Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.
A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing in some legal form but
which is, in fact, unfounded, or which it would be inequitable to enforce. 38 An action for quieting of title is imprescriptible until the
claimant is ousted of his possession. 39
The owner of a real property is entitled to the relief of quieting of title even if, at the time of the commencement of his action, he was
not in actual possession of real property. After all, under Article 477 of the New Civil Code, the owner need not be in possession of the
property. If on the face of TCT No. 321744 under the name of plaintiff, its invalidity does not appear but rests partly in pais, an action
for quieting of title is proper.
Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion reinvindicatoria does not
necessarily presuppose that the actual and material possession of the property is on defendant and that plaintiff seeks the recovery of
such possession from defendant. It bears stressing that an accion reinvindicatoria is a remedy seeking the recovery of ownership and

37 PROPERTY - CASE DIGESTS


includes jus possidendi, jus utendi, and jus fruendi as well. It is an action whereby a party claims ownership over a parcel of land and
seeks recovery of its full possession. 41 Thus, the owner of real property in actual and material possession thereof may file an accion
reinvindicatoria against another seeking ownership over a parcel of land including jus vindicandi, or the right to exclude defendants
from the possession thereof. In this case, respondents filed an alternative reinvindicatory action claiming ownership over the property
and the cancellation of TCT No. 321744 under the name of petitioner. In fine, they sought to enforce their jus utendi and jus
vindicandi when petitioner claimed ownership and prevented them from fencing the property.
Since respondents were in actual or physical possession of the property when they filed their complaint against petitioner on October
24, 2001, the prescriptive period for the reinvindicatory action had not even commenced to run, even if petitioner was able to secure
TCT No. 321744 over the property in 1984. The reason for this is that
. . . one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its
effect on his own title, which right can be claimed only by one who is in possession.
44. ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET. AL. VS. COURT OF APPEALS (GR NO. 77425)
In 1930, the spouses Eusebio de Castro and Martina Rieta, executed a deed of donation in favor of the Roman Catholic Archbishop of
Manila covering a parcel of land located at Kawit, Cavite. The deed of donation provides that the donee shall not dispose or sell the
property within a period of 100 years from the execution of the deed of donation, otherwise a violation of such condition would render
ipso facto null and void the deed of donation and the property would revert to the estate of the donors. In 1980, and while still within
the prohibited period, the Roman Catholic Bishop of Imus, sold the property to spouses Florencio and Soledad Ignao. When the heirs
of Eusebio Castro and Martina Rieta learned about the sale, they led an action for the nulli cation of the deed of donation,
rescission of the sale in favor of the spouses Ignao and reconveyance of the property. When the case was elevated to the Supreme
Court, the Court declared the prohibition imposed on the donation as contrary to public policy. Applying the provisions of Article 727 of
the Code, the Court further held that such condition shall be considered as not imposed. The Court explained
The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of
donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the
deed of donation. Said condition, in our opinion, constitutes anundue restriction on the rights arising from ownership of petitioners and
is, therefore, contrary to public policy.
Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee.
Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain
conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The
condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right
of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against
alienation, in order to be valid, must not be perpetual or for an unreasonable period of time.
Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy. Under the third
paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years. Article 870,
on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years
are void.
It is signi cant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by
gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of
prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that
reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy
expressed in the aforesaid Articles 494 and 870 of the Code.
In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century,
being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible
condition within the contemplation of Article 727 of the Civil Code. Consequently, as specically stated in said statutory provision, such
condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of
donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the
nullication of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private
respondents must fail.
45. GERMAN MANAGEMENT & SERVICES, INC. VS. HON. COURT OF APPEALS (GR NO. 76216)
Facts: Spouses Jose are residents of Pennsylvania, Philadelphia, USA are owners of the land situated in Sitio Inarawan, San Isidro,
Antipolo, Rizal (the land being disputed in the case at bar.) The spouses Jose executed a special power of attorney authorizing
petitioner German Management Services to develop their property. They have already acquired the proper permits to do so but they
discovered that the land was occupied by the respondent with 20 other farmers (members of the Concerned of Farmers Association.)
These farmers have occupied the land for the last twelve to fifteen years prior to the issuance of the permits and they already have
their crops all over the property. In short, they are in actual possession of the land.

38 PROPERTY - CASE DIGESTS


Petitioners tried to forcibly drive the farmers away and; demolish and bulldoze their crops and property. The respondents filed
in CFI because they were deprived of their property without due process of law by trespassing, demolishing and bulldozing their crops
and property situated in the land. CFI and RTC denied it but CA reversed the decision. Petitioners tried to appeal the decision in CA
but were denied thus this appeal.

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 Gapucos claim but CA reversed the RTC and upheld the reconveyance to Gapuco. RTCs claim that the fact
of abandonment does not ipso facto give the original owner to recover the same. CAs claim was about the existence of genuine
necessity, that when it ceases to exist govt interest must yield to the private rights of the original owner.
Issue:
(1) When private land is expropriated for a particular public use, and that particular public use is abandoned, does its former owner
acquire a cause of action for recovery of the property?
(2) WON Gapuco had the right to get back his land.
Held:
(1) It depends upon the character of the title acquired by expropriator. SC said, If, for example, land is expropriated for a particular
purpose, with the condition that when that purpose is ended or abandoned the property shall return to its former owner, then, of
course, when the purpose is terminated or abandoned the former owner reacquires the property so expropriated. On the other hand,
when land has been acquired for public use in fee simple, unconditionally, either by the exercise of eminent domain or by purchase,
the former owner retains no rights in the land, and the public use may be abandoned or the land may be devoted to a different use,
without any impairment of the estate or title acquired, or any reversion to the former owner.
(2) No. The SC enunciated that Gapucos case was similar to that of CHIONGBIAN where, there was no condition imposed to the effect
that the lot would return to CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for which it was

39 PROPERTY - CASE DIGESTS


expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport. What the SC simply imply was
that there was complete absence of PREPONDERANT EVIDENCE to prove that he had the right to repurchase that could have been
proven by virtue of the COMPROMISE SETTLEMENT he was claiming.
47. HEIRS OF MORENO VS. MCIAA (GR NO. 156273)
FACTS:
Petitioners are the successors-in-interest of the former registered owners of two parcels of land situated in Lahug, Cebu City,
designated as Lot No. 916 and Lot No. 920. In 1949, the National Airport Corporation (NAC), as the predecessor agency of respondent
Mactan-Cebu International Airport Authority (MCIAA), wanted to acquire Lots Nos. 916 and 920 among other parcels of land for the
proposed expansion of Lahug Airport. The government assured the landowners that they could repurchase their lands once Lahug
Airport was closed or its operations transferred to Mactan Airport. Despite such offer, the landowners of the subject properties refused
because the payment was perceived to be way below the market price.
As the negotiations for the purchase of the lots necessary irredeemably broke down, the Civil Aeronautics Administration (CAA), as the
successor agency of the NAC, filed a complaint with the Court of First Instance for the expropriation of Lots Nos. 916 and 920 and
other subject realties. On December 29, 1961 the trial court promulgated its decision condemning the subject lots for public use upon
payment of just compensation. No appeal was taken from the decision and the judgment of condemnation became final and
executory. Thereafter, the certificates of title for these parcels of land were issued in the name of the Republic of the Philippines,
which were later transferred in favor of respondent MCIAA under Republic Act 6958 in 1990.
Soon after the subject lots were transferred to MCIAA, Lahug Airport ceased operations as the Mactan Airport was opened for
incoming and outgoing flights. Thus, the properties which had been expropriated for the extension of Lahug Airport were not utilized
since no expansion of Lahug Airport was undertaken by MCIAA and its predecessors-in-interest. As a result, petitioners wrote then
President Ramos and the airport manager begging them for the exercise of their alleged right to repurchase; however, their pleas
were not heeded.
On 11 March 1997 petitioners filed a complaint for reconveyance and damages with the RTC against respondent MCIAA to compel the
repurchase of the subject lots. Petitioners averred that they had been convinced by the officers of the predecessor agency of
respondent MCIAA not to oppose the expropriation proceedings since in the future they could repurchase the properties if the airport
expansion would not push through. Such allegation was not objected to by respondent MCIAA. When the civil case was pending,
others alleging to have interest over the said properties through deeds of assignment or lease contract, filed motions to intervene in
the case.
On 12 April 1999, the RTC found merit in the claims of petitioners and granted them the right to repurchase the properties at the
amount pegged as just compensation but subject to the alleged property rights of those who intervened. The trial court opined that
the expropriation became illegal or functus officio when the purpose for which it was intended was no longer there.
This decision, however, was subsequently reversed by the Court of Appeals on December 20, 2001 on the ground that the judgment
of condemnation was unconditional so that the rights gained therefrom by respondent MCIAA were indicative of ownership in fee
simple.
ISSUE(S):
Whether or not the petitioners are entitled to a right to repurchase their properties.
RULING:
The Court held in the affirmative. In the case of Fery v. Municipality of Cabanatuan, citing the case of Reyes v. Court of Appeals, it
was held that the government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title
over the properties, to wit: If the land is expropriated for a particular purpose, with the condition that when that purpose is ended or
abandoned the property shall return to its former owner, then, when the purpose is terminated or abandoned the former, the owner
reacquires the property so expropriated. If, upon the contrary, however, the decree of expropriation gives to the entity a fee simple
title, then, the land becomes the absolute property of the expropriator and the non-user does not have the effect of defeating the title
acquired by the expropriation proceedings. When land has been acquired for public use in fee simple, unconditionally, either by the
exercise of eminent domain or by purchase, the former owner retains no rights in the land, and the public use may be abandoned, or
the land may be devoted to a different use, without any impairment of the estate or title acquired, or any reversion to the former
owner.
The respondents contention, in stating that one would not find an express statement in the decision to the effect that the condemned
lot would return to the landowner or that the landowner had a right to repurchase the same if the purpose for which it was
expropriated ended or abandoned or if the property was to be used other than as the Lahug Airport, was upheld by the Court.
However, the Court opined that such is not fatal to the cause of the petitioners since the return or repurchase of the condemned
properties of petitioners could be readily justified as the manifest legal effect or consequence of the trial court's underlying
presumption that "Lahug Airport will continue to be in operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.

40 PROPERTY - CASE DIGESTS


Hence, respondent MCIAA as representative of the State is obliged to reconvey the lots to the petitioners, who shall hold the same
subject to existing liens established. In return, petitioners must restore to respondent MCIAA what they received as just compensation
with consequential damages by way of legal interest from November 16, 1947. Petitioners must likewise pay respondent MCIAA the
necessary expenses it may have incurred in sustaining the properties and the monetary value of its services in managing them to the
extent that petitioners will be benefited thereby. The government, however, may keep whatever income or fruits it may have obtained
from the parcels of land, in the same way that petitioners need not account for the interests that the amounts they received as just
compensation may have earned in the meantime. As a matter of justice and convenience, the law considers the fruits and interests as
the equivalent of each other.
Petitioners need not also pay for improvements introduced by third parties as the disposition of these properties is governed by
existing contracts and relevant provisions of law. As for the improvements that respondent MCIAA may have made, if any, petitioners
must pay respondent their prevailing free market price in case petitioners opt to buy them and respondent decides to sell. In other
words, if petitioners do not want to appropriate such improvements or respondent does not choose to sell them, the improvements
would have to be removed without any obligation on the part of petitioners to pay any compensation to respondent MCIAA for
whatever it may have tangibly introduced therein.
48. MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS. LOZADA, ET. AL. (GR NO. 176625)
Facts:
Subject of this case is a lot (Lot No. 88) located in Lahug, Cebu City. Its original owner was Anastacio Deiparine when the same was
subject to expropriation proceedings, initiated by Republic, represented by the then Civil Aeronautics Administration (CAA), for the
expansion and improvement of the Lahug Airport.
During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr. acquired Lot No. 88 from Deiparine. The
trial court ruled for the Republic and ordered the latter to pay Lozada the fair market value of the lot. However, the projected
improvement and expansion plan of the old Lahug Airport, however, was not pursued. The plaintiff-respondents initiated a complaint
for the recovery of possession and reconveyance of ownership the subject lot.
On the other hand, the petitioners asked for the immediate dismissal of the complaint. They specifically denied that the Government
had made assurances to reconvey Lot No. 88 to respondents in the event that the property would no longer be needed for airport
operations. Petitioners instead asserted that the judgment of condemnation was unconditional, and respondents were, therefore, not
entitled to recover the expropriated property notwithstanding non-use or abandonment thereof. The lower court ruled for herein
plaintiff-respondents, which decision was affirmed by the Court of Appeals. In this petition, the petitioners argued that the judgment in
Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to the Republic.

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.
In constructive trusts, the arrangement is temporary and passive in which the trustees 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:

41 PROPERTY - CASE DIGESTS


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 AFCs land and P164.40M for HPIs 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 AFCs account and P45M into HPIs 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 DARABs 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 States
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.
50. CITY OF MANILA, ET. AL. VS. HON. LAGUIO, ET. AL. (GR NO. 118127)
FACTS:The pivotal issue in this Petition 1 under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure seeking the reversal of
the Decision 2 in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18 (lower court), 3 is the validity of
Ordinance No. 7783 (the Ordinance) of the City of Manila. 4
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the business of operating hotels,
motels, hostels and lodging houses. 5 It built and opened Victoria Court in Malate which was licensed as a motel although duly
accredited with the Department of Tourism as a hotel. 6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for
a Writ of Preliminary Injunction and/or Temporary Restraining Order 7 (RTC Petition)with the lower court impleading as defendants,
herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the City Council of Manila
(City Council). MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be
declared invalid and unconstitutional. 8
Enacted by the City Council 9 on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993, the said Ordinance is
entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF
AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR
VIOLATION THEREOF, AND FOR OTHER PURPOSES. 10

42 PROPERTY - CASE DIGESTS


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.

HELD: NOT VALID

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.

Requisites for the valid exercise


of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the enactment of the Ordinance, and to free it from the
imputation of constitutional infirmity, not only must it appear that the interests of the public generally, as distinguished from those of a
particular class, require an interference with private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals. 60 It must be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. A reasonable relation must exist between the purposes of the
police measure and the means employed for its accomplishment, for even under the guise of protecting the public interest, personal
rights and those pertaining to private property will not be permitted to be arbitrarily invaded. 61
Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary intrusion into private rights 62
a violation of the due process clause.

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

43 PROPERTY - CASE DIGESTS


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 because of the existence of tunnels underneath the surface of their property. He was then informed that underneath the
land are underground tunnels of the NAPOCOR. Upon such discovery, the co-owners filed an action against NAPOCOR for recovery of
land and damages.
The trial court denied the prayer of the co-owners for the dismantling of the tunnels but ordered NAPOCOR to pay them just
compensation since there was "taking" of their property. the Court of Appeals sustained the decision of the trial court. Hence,
NAPOCOR elevated the matter to the Supreme Court.
NAPOCOR maintains that the sub-terrain portion where the underground tunnels were constructed does not belong to Ibrahim
and his co-owners even if they owned the property because their right to subsoil does not extend beyond what is necessary to enable
them to obtain all the utility and convenience that such property can normally give. NAPOCOR also asserts that Ibrahim and his co-
owners were still able to use the subject property even with the existence of the tunnels.

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

44 PROPERTY - CASE DIGESTS


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 CAs 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.
Upon the presentation of said petition, the judge granted a temporary injunction in conformity with the prayer of the petition. The
defendants were duly served with a summons and a copy of the petition, as well as with a copy of the injunction granted by the court.
However, the defendants failed to appear and answer the complaint within the time prescribed by law and by reason of such failure,
the plaintiff, on the March 21, 1910, presented a motion asking that a judgment by default be rendered against them. Such motion
was granted on the April 2, 1910.
The defendants appeared on April 15, 1910, by their attorney, and the cause was duly brought to trial April 20, 1910. After hearing
the evidence, the judge granted a permanent injunction against the defendants, restraining them from cultivating or harvesting the
crops upon the said land or from doing anything thereon which would tend to injure its value, and also found that the defendants had
caused damages to the plaintiff in the sum of P300.
On September 11, 1910, the defendants were able to redeem the land, in the manner provided for by law, and later on renewed their
motion to have the judgment by default set aside. Trial was duly brought for the motion on September 17, 1910 to which the judge
rendered a decision setting aside the judgment rendered on Aril 1910. On April 3, 1911, the judge held that the plaintiff was not
entitled to the remedy prayed for in the petition and subsequently dismissed the cause of action with costs against the defendants.
ISSUE(S):
Whether or not the plaintiff has a right to the damages being prayed for in the petition.
RULING:
The Court held that inasmuch as the law permits the owner of the land which has been sold under an execution to redeem the same
within a period of twelve months, the purchaser of the land sold at a public auction under a writ of execution only has an inchoate

45 PROPERTY - CASE DIGESTS


right in the property, subject to be defeated and terminated within the said period of twelve months from the date of sale, by a
redemption on the part of the owner. As held in De la Rosa v. Santos, the purchaser, where the land was in possession of the owner
and not a tenant, is not entitled to recover the rents and profits of the land sold during the period within which the owner might
redeem.
In the present case, the property was in the possession of the owner and the inchoate right of the purchaser was subject to be
defeated at any moment during the period of redemption. The owner was entitled to remain in the possession of the land sold for the
statutory term of twelve months, and she might at any time defeat the inchoate right obtained by the purchaser by proper redemption
within that period. Under the law it would seem to be difficult to fully understand the right of the plaintiff to interfere in the manner in
which he has attempted to interfere with the owner of the land before the expiration of the twelve months within which the owner had
a right to redeem the land.
The defendants, having redeemed the land in accordance with the provisions of law and within the legal period, it must follow that the
plaintiff was not entitled to the remedy prayed for in his petition and is, therefore, not entitled to damages resulting from the use and
occupation by the defendants.
54. VELASCO VS. ROSENBERG (32 PHIL 72)
FACTS:
On July 14, 1913, plaintiff commenced an action against the defendant in the Court of First Instance of the city of Manila, with the
purpose to recover from the defendant corporation the possession of a certain parcel of land together with the buildings thereon,
more particularly described in the third paragraph of the complaint, and together with the sum of P500, for each and every month
from July 1, 1912, until the same is delivered to the plaintiff. It was further petitioned by the plaintiff for the appointment of a receiver
to take charge of and conserve the property in litigation during the pendency of the action.
In accordance with the prayer of the petition, on July 14, 1913, a receiver was appointed, who took possession of the property.
The defendant set up a general and denied that the plaintiff is entitled to the possession of the property in question. The defendant
alleged that the receiver not only took possession of the property described in the third paragraph of the complaint, but other
properties as well. The defendant further alleged that the plaintiff, through its receiver, fraudulently used the name of Rosenberg, and
did solicit and obtain business from the public by the use of such name, to the damage of the defendant in the sum of P20,000. The
defendant also alleged that he had been damaged by the appointment of the receiver in the sum of P5,000, together with other
damages which the defendant claims to have received from the action of the plaintiff, and prayed for a judgment against the plaintiff
in the sum of P29,350.
After hearing the evidence on trial, the presiding judge found that during the time the plaintiff occupied the property in question,
through its receiver, and used the trade name of the defendant, the latter was damaged in the sum of P500. The court further found
that the receiver took possession of certain personal properties and retained the same to the damage of the defendant in the sum of
P350. Thereafter, the judge rendered the following judgment: (1) that the plaintiff was entitled to the possession of the parcel of land,
together with the buildings thereon, particularly described in said paragraph three; and (2) that a judgment be rendered in favor of
the defendant and against the plaintiff in the sum of P850.
ISSUE(S):
1. Whether or not the purchaser at an execution sale has a right to the rents and profits of the property sold.
2. Whether or not the defendant has a right to recover damages resulting from a continuance of the business sold under execution.
RULING:
With reference to the first question, the Court reiterated the principle discussed in the case of De la Rosa vs. Revita Santos in so far as
the right of the purchaser is concerned to collect rent for the property during the period of redemption when the execution debtor is in
possession of the property. In that case, the Court held: "That, inasmuch as, under the law, the rents received by the purchaser
during the period allowed for redemption must be applied on account of the redemption price, the judgment debtor in possession of
such property should not be required to pay rent, inasmuch as he would thereby imply be paying rent to himself."
With reference to the damage caused to the defendant by the receiver in continuing in the business, the Court held that inasmuch as
the receiver was an officer of the court, appointed thereby for the purpose of conserving the property, there is a right to assume that
he was authorized to do so. That being true, the question of damages should have been settled in the receivers final accounting to
the court. There is nothing in the record in the present case which justifies that part of the judgment of the lower court, therefore,
that part of the judgment in favor of the defendant and against the plaintiff for the sum of P500 must be revoked.
With reference to that part of the judgment of the lower court relating to the P350, the Court held that there is nothing in the record
which shows that the properties taken were not part of those turned over to the receiver. If it were, then the receiver should have
rendered an account for the same in his final report to the court. If the receiver has not properly reported the same or accounted
therefor, an objection might properly have then been made being that the receiver should be held responsible in case of loss through
negligence or by bad administration of the property given into his care. There is nothing in the record which shows that the properties

46 PROPERTY - CASE DIGESTS


have not been properly accounted for or have been negligently lost. Therefore, nothing in the record justifies the judgment against
the plaintiff and in favor of the defendant for its value and the same must also be revoked.
55. SARMIENTO VS. AGANA (129 SCRA 122)
Facts:
When Ernesto was still courting his wife, the latter's mother had told him the couple could build a residential houseon the land which
Ernesto did at a cost of P8,000.00 to P10,000.00. He assumed that the wife's mother was the owner of the land and it would be
transferred to the spouses.
It subsequently turned out that the land had been titled in the name of Mr. & Mrs. Jose C. Santo, Jr. who, sold the same to petitioner
Sarmiento. SARMIENTO filed an Ejectment suit against them. In the evidentiary hearings before the Municipal Court, Sarmiento
submitted the deed of sale of the land in her favor, which showed the price to beP15,000.00.
On the other hand, Ernesto testified that the then cost of the residential house would be from P30,000.00 to P40,000.00.Sarmiento
refuse to pay and give option to buy the property.

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.
But he cannot, as respondents here did, refuse both to pay for the building and to sell the land
and compel the owner of the building to remove it from the land where it is erected. He is entitled to such remotion only when, after
having chosen to sell his land, the other party fails to pay for the same. We hold, therefore, that the order of Judge Natividad
compelling defendants-petitioners to remove their buildings from the land belonging to plaintiffs-respondents only because the latter
chose neither to pay for such buildings nor to sell the land, is null and void, for it amends substantially the judgment sought to be
executed and is, furthermore, offensive to articles 361 (nowArticle 448) and 453 (now Article 546) of the Civil Code.
56. BALUCANAG VS. JUDGE FRANCISCO (GR NO. L-34199)
Facts:
Balucanag bought the land from Mrs. Charvet that was leased by Richard Stohner for a period of 5 years with the following
agreements: 40.00 monthly rental to be paid in advance during the first 10 days of the month, and that Stohner may make such
improvements to the leased land provided that he should remove that improvements within a period of 2 months after the expiration
of the agreement otherwise, the lessor may remove the said buildings/improvements at the expense of the lessee.
During the existence of the lease, Stohner made some fillings and built a house. Said improvements were valued at 35,000;
When Stohner failed to pay his rents, the counsel of Balucanag wrote a demand letter that he vacate the premises. Stohner replied
thru his counsel that he was a builder in good faith.
Issue:
WON Stohner is a builder in good faith
Held:
Respondent Stohner cannot be considered a builder in good faith Article 448 of the Civil Code, relied upon by respondent judge,
applies only to a case where one builds on land in the belief that he is the owner thereof and it does not apply where one's only
47 PROPERTY - CASE DIGESTS
interest in the land is that of a lessee under a rental contract. In the case at bar, there is no dispute that the relation between
Balucanag and Stohner is that of lessor and lessee, the former being the successor in interest of the original owner of the lot.
". . . the principle of possessor in good faith refers only to a party who occupies or possess property in the belief that he is the
owner thereof and said good faith ends only when he discovers a flaw in his title so as to reasonably advise or inform him that after all
he may not be the legal owner of said property. It cannot apply to a lessee because as such lessee he knows that he is not the owner
of he leased premises. Neither can he deny the ownership or title of his lessor. . . . A lessee who introduces improvements in the
leased premises, does so at his own risk in the sense that he cannot recover their value from the lessor, much less retain the premises
until such reimbursement. . . ."
57. FLOREZA VS. EVANGELISTA (96 SCRA 130)
Plaintiffs Maria de Evangelista and Sergio Evangelista, who are mother and son, (the EVANGELISTAS, for short) are the owners of a
residential lot located at Sumilang St., Tanay, Rizal, with an area of 204.08 sq. ms., assessed at P410.00.
In May 1945, the EVANGELISTAS borrowed from FLOREZA the amount of P100.00. On or about November 1945, with the consent of
the EVANGELISTAS, FLOREZA occupied the above residential lot and built thereon a house of light materials (barong-barong) without
any agreement as to payment for the use of said residential lot owing to the fact that the EVANGELISTAS has then a standing loan of
P100.00 in favor of FLOREZA. 1
On the following dates, the EVANGELISTAS again borrowed the indicated amounts: September 16, 1946 - P100.00; 2 August 17, 1947
P200.00; 3 January 30, 1949 P200.00; 4 April 1, 1949 P140.00, 5 or a total of P740.00 including the first loan. The last three
items are evidenced by private documents stating that the residential lot stands as security therefor and that the amounts covered
thereunder are payable within six years from date, without mention of interest. The document executed on September 16, 1946
stated specifically that the loan was without interest "walang anumang patubo."
On January 10, 1949, FLOREZA demolished this house of light materials and in its place constructed one of strong materials assessed
in his name at P1,410.00 under Tax Declaration No. 4448. FLOREZA paid no rental as before.
On August 1, 1949, the EVANGELISTAS, for and in consideration of P1,000.00 representing the total outstanding loan of P740.00 plus
P260.00 in cash, sold their residential lot to FLOREZA, with a right to repurchase within a period of 6 years from date, or up to August
1, 1955, as evidenced by a notarial document, Exh. B, registered under Act 3344 on December 6, 1949, as Inscription No. 2147. 7
On January 2, 1955, or seven months before the expiry of the repurchase period, the EVANGELISTAS paid in full the repurchase price
of P1,000.00.
On April 25, 1956, the EVANGELISTAS, through their counsel, wrote FLOREZA a letter 8 asking him to vacate the premises as they
wanted to make use of their residential lot besides the fact that FLOREZA had already been given by them more than one year within
which to move his house to another site. On May 4, 1956, the EVANGELISTAS made a formal written demand to vacate, within five
days from notice, explaining that they had already fully paid the consideration for the repurchase of the lot. 9 FLOREZA refused to
vacate unless he was first reimbursed the value of his house. Hence, the filing of this Complaint on May 18, 1956 by the
EVANGELISTAS.
During the pendency of this appeal, petitioner Maria D. de Evangelista died and was ordered substituted by her son, petitioner Sergio,
as her legal representative, in a Resolution dated May 14, 1976. On October 20, 1978, the EVANGELISTAS filed a Motion to Dismiss
stating that FLOREZA had since died and that his heirs had voluntarily vacated the residential lot in question. The date FLOREZA
passed away and the date his heirs had voluntarily vacated the property has not been stated.
ISSUES:
1. WON petitioner Floreza was a builder in bad faith and WON the EVANGELISTAS should also be held in bad faith, so that both of
them being in bad faith, Article 453 of the Civil Code should apply
2. WON petitioner IS entitled to reimbursement for the value of his house and WON he should remove the same at his expense
3. WON petitioner should vacate respondents' lot in question and to pay rentals commencing until he shall have vacated the premises
HELD:
1. We uphold the Court of Appeals in its conclusion that Article 448 of the Civil Code is inapplicable to the factual milieu herein. Said
codal provision applies only when the builder, planter, or sower believes he had the right so to build, plant or sow because he thinks
he owns the land or believes himself to have a claim of title. 13 In this case, petitioner makes no pretensions of ownership
whatsoever.
Petitioner concedes that he was a builder in bad faith but maintains that the EVANGELISTAS should also be held in bad faith, so that
both of them being in bad faith, Article 453 of the Civil Code 14 should apply. By the same token, however, that Article 448 of the
same Code is not applicable, neither is Article 453 under the ambiance of this case.
2. Would petitioner, as vendee a retro, then be entitled to the rights granted in Article 1616 of the Civil Code (Art. 1518 of the old
Code)? To quote:
"Art. 1616.The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in
addition:
(1)The expenses of the contract, and any other legitimate payments made by reason of the sale;
(2)The necessary and useful expenses made on the thing sold."
48 PROPERTY - CASE DIGESTS
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:
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

49 PROPERTY - CASE DIGESTS


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 petitioners 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 petitioners 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. Its 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.
Hence, respondent who has been residing in the United States, through his attorney-in-fact, filed on February 4, 2002 a complaint for
ejectment before the MTC with prayer for the issuance of a writ of preliminary injunction with damages against petitioners and the
other occupants of the property. The MTC, by its decision on February 3, 2003, ordered the petitioners and their co-defendants and all
persons claiming rights under them to vacate the property and to pay the respondent the amount of P50,000 as reasonable
compensation for the use of the property and P10,000 as attorneys fees and to pay cost of suit. It also ordered the respondent to
reimburse the defendants the amount of P2,000,000 representing the value of the improvements introduced on the property.
The respondent appealed to the RTC part of the MTCs decision which ordered him to reimburse the petitioners for the value of the
improvements. In setting aside the questioned order, the RTC, applying Article 546 of the New Civil Code (NCC), held that the
petitioners tolerated occupancy could not be interpreted to mean that they are builders or possessors in good faith and that for one to
be a builder in good faith, it is assumed that he claims title to the property which is not the case of the petitioners.
Petitioners, in their petition for review to the SC, argue that since neither the respondent nor his agents or representatives performed
any act to prevent them from introducing the improvements, the applicable provision in this case would be Article 453 of the NCC.
Petitioners further allege that being builders in good faith, until they are reimbursed of the value of the improvements they had
introduced on the property, they have the right of retention or occupancy thereof pursuant to Article 448, in relation to Article 546, of
the New Civil Code, otherwise, respondent would be unjustly enriched at their expense.
ISSUE(S):
Whether or not the petitioners have the right to retain the property until reimbursement of the value of the improvements is made by
respondent.
RULING:
The petition should fail.
It was shown that in 1960, a lease contract over the property was forged between Shell Company of the Philippines Limited and
respondent's predecessors-in-interest. In 1990, the lease contract was renewed by Pilipinas Shell and respondent. Petitioners, being

50 PROPERTY - CASE DIGESTS


dealers of Pilipinas Shell's petroleum products, were allowed to occupy the property. Petitioners are thus considered agents of Pilipinas
Shell. The facts of the instant case calls then for the application of the provisions on lease under the New Civil Code.
The right of the lessor upon the termination of a lease contract with respect to useful improvements introduced on the leased property
by a lessee is covered by Article 1678 of the NCC which reads: If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the
termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He
shall not, however, cause any more impairment upon the property leased than is necessary.
The above provision is a modification of the Old Code under which the lessee had no right at all to be reimbursed for the
improvements introduced on the leased property, since the lessee is being entitled merely to the rights of a usufructuary - right of
removal and set-off, but not of reimbursement. The modificiation introduced in the NCC on partial reimbursement was intended to
prevent unjust enrichment on the part of the lessor which now has to pay one-half of the value of the improvements at the time the
lease terminates because the lessee has already enjoyed the same, whereas the lessor could enjoy them indefinitely thereafter.
Since the law on lease under the NCC has specific rules concerning useful improvements introduced by a lessee on the property
leased, it is erroneous to apply Article 448, in relation to Article 546. As jurisprudence would show, Article 448 covers only cases in
which builders, sowers or planters believe themselves to be owners of the land, or at least, have a claim of title thereto, but not when
the interest is merely that of a holder, such as a mere tenant, agent or usufructuary. A tenant cannot be said to be a builder in good
faith as he has no pretension to be owner.
Thus, in the case at bar, it is the lessor, applying Article 1678, who is given the option upon termination of the lease contract either to
appropriate the useful improvements by paying one-half of the value of their value at that time, or to allow the lessee to remove the
improvements.
61. ISMAEL MACASAET, ET. AL. VS. SPOUSES MACASAET (GR NOS. 154391-92)
Facts:
Petitioners Ismael and Teresita Macasaet and respondents Vicente and Rosario Macasaet are first-degree relatives. Ismael is the
son of respondents, and Teresita is his wife.
On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC) of Lipa City an ejectment suit against the
children. Respondents alleged that they were the owners of two (2) parcels of land covered by Transfer Certificate of Title (TCT) Nos.
T-78521 and T-103141, situated at Banay-banay, Lipa City; that by way of a verbal lease agreement, Ismael and Teresita occupied
these lots in March 1992 and used them as their residence and the situs of their construction business; and that despite repeated
demands, petitioners failed to pay the agreed rental of P500 per week
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that respondents had invited them to construct
their residence and business on the subject lots in order that they could all live near one other, employ Marivic (the sister of Ismael),
and help in resolving the problems of the family. They added that it was the policy of respondents to allot the land they owned as an
advance grant of inheritance in favor of their children. Thus, they contended that the lot covered by TCT No. T-103141 had been
allotted to Ismael as advance inheritance. On the other hand, the lot covered by TCT No. T-78521 was allegedly given to petitioners
as payment for construction materials used in the renovation of respondents' house.

Issue: (related to the subject)


Whether or not Article 1678 of the Civil Code should apply to the case on the matters of improvements, or is it Article 447 of the
Civil Code in relation to the Article 453 and 454 thereof that should apply, if ever to apply the Civil Code

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.

Main Issue (related to our subject)


51 PROPERTY - CASE DIGESTS
As applied to the present case, accession refers to the right of the owner to everything that is incorporated or attached to the
property. 60 Accession industrial building, planting and sowing on an immovable is governed by Articles 445 to 456 of the Civil
Code.

Articles 447 and 1678 of the Civil Code Inapplicable


To buttress their claim of reimbursement for the improvements introduced on the property, petitioners cite Article 447. 61 They allege
that the CA erred in applying Article 1678, since they had no lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply when the owner of the property uses the materials of
another. It does not refer to the instance when a possessor builds on the property of another, which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of petitioners regarding the inapplicability of Article 1678
deserves attention. The CA applied the provisions on lease, because it found their possession by mere tolerance comparable with that
of a lessee, per the pronouncement in Calubayan v. Pascual, from which we quote:
". . . It has been held that a person who occupies the land of another at the latter's tolerance or permission, without any contract
between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for
ejectment is the proper remedy against them. The status of defendant is analogous to that of a lessee or tenant whose term of lease
has expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation or withholding of
possession is to be counted from the date of the demand to vacate."
Ismael and Teresita's possession of the two lots was not by mere tolerance, a circumstance that negates the applicability of Calubayan
case.

Article 448 Applicable


On the other hand, when a person builds in good faith on the land of another, the applicable provision is Article 448, which reads:
"Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige
the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof."
This Court has ruled that this provision covers only cases in which the builders, sowers or planters believe themselves to be owners of
the land or, at least, to have a claim of title thereto. It does not apply when the interest is merely that of a holder, such as a mere
tenant, agent or usufructuary. From these pronouncements, good faith is identified by the belief that the land is owned; or that by
some title one has the right to build, plant, or sow thereon.
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond this limited definition. Thus, in Del
Campo v. Abesia, this provision was applied to one whose house despite having been built at the time he was still co-owner
overlapped with the land of another. This article was also applied to cases wherein a builder had constructed improvements with the
consent of the owner. The Court ruled that the law deemed the builder to be in good faith. In Sarmiento v. Agana, the builders were
found to be in good faith despite their reliance on the consent of another, whom they had mistakenly believed to be the owner of the
land.
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The established facts of this case show that
respondents fully consented to the improvements introduced by petitioners. In fact, because the children occupied the lots upon their
invitation, the parents certainly knew and approved of the construction of the improvements introduced thereon. Thus, petitioners
may be deemed to have been in good faith when they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. In that case, this Court deemed the son to be in good faith for building the
improvement (the house) with the knowledge and consent of his father, to whom belonged the land upon which it was built. Thus,
Article 448 was applied.

Rule on Useful Expenses


The structures built by petitioners were "useful" improvements, because they augmented the value or income of the bare lots. Thus,
the indemnity to be paid by respondents under Article 448 is provided for by Article 546, which we quote:
"Art. 546.Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he
has been reimbursed therefor.
"Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated
him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing
may have acquired by reason thereof."
Consequently, respondents have the right to appropriate as their own the building and other improvements on the subject lots,
but only after (1) refunding the expenses of petitioners or (2) paying the increase in value acquired by the properties by reason

52 PROPERTY - CASE DIGESTS


thereof. They have the option to oblige petitioners to pay the price of the land, unless its value is considerably more than that of the
structures in which case, petitioners shall pay reasonable rent.
In accordance with Depra v. Dumlao, this case must be remanded to the trial court to determine matters necessary for the proper
application of Article 448 in relation to Article 546. Such matters include the option that respondents would take and the amount of
indemnity that they would pay, should they decide to appropriate the improvements on the lots. We disagree with the CA's
computation of useful expenses, which were based only on petitioners' bare allegations in their Answer.

Ruling on Improvement Justified


While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the issue of physical or material possession of the
property in question, this Court finds it necessary to abbreviate the issue on the improvements in relation to Article 448. First, the
determination of the parties' right to those improvements is intimately connected with the MTCC proceedings in the light of the
ejectment of petitioners. Second, there is no dispute that while they constructed the improvements, respondents owned the land.
Third, both parties raised no objection when the RTC and the CA ruled accordingly on this matter.
Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid needless delay. Both parties have already
been heard on this issue; to dillydally or equivocate would not serve the cause of substantial justice.
62. KILARIO VS. COURT OF APPEALS (GR NO. 134329)
Facts:
One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador, Higino, Valentina and Ruperta. He died intestate. His
estate included a parcel of land of residential and coconut land located at Poblacion, Matalom, Leyte, denominated as Cadastral Lot
No. 5581 with an area of 1,301.92 square meters. It is the northern portion of Cadastral Lot No. 5581 which is the subject of the
instant controversy.
During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained permission from him to build a house on the northern
portion of Cadastral Lot No. 5581. When Feliciano died, his son, Pastor, continued living in the house together with his eight children.
Petitioner Verona Pada-Kilario, one of Pastor's children, has been living in that house since 1960.
Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-judicial partition of his estate. For this purpose, they executed
a private document which they, however, never registered in the Office of the Registrar of Deeds of Leyte.
At the execution of the extra-judicial partition, Ananias was himself present while his other brothers were represented by their
children. Their sisters, Valentina and Ruperta, both died without any issue. Marciano was represented by his daughter, Maria; Amador
was represented by his daughter, Concordia; and Higino was represented by his son, Silverio who is the private respondent in this
case. It was to both Ananias and Marciano, represented by his daughter, Maria, that Cadastral Lot No. 5581 was allocated during the
said partition. When Ananias died, his daughter, Juanita, succeeded to his right as co-owner of said property.
Later on, it was contended that the extra-judicial partition of the estate of Jacinto Pada executed in 1951 was invalid and ineffectual
since no special power of attorney was executed by either Marciano, Amador or Higino in favorof their respective children who
represented them in the extra-judicial partition. Moreover, it was effectuated only through a private document that was never
registered in the office of the Registrar of Deeds of Leyte.
Issue:
WON Petitioner is a co-owner of the controversial property given that the heirs of Jacinto Pada donated to the Petitioner
WON petitioners are builders in good faith
HELD:
The extrajudicial partition of the estate of Jacinto Pada among his heirs made in 1951 is valid, albeit executed in an unregistered
private document. No law requires partition among heirs to be in writing and be registered in order to be valid. The requirement in
Sec. 1, Rule 74 of the Revised Rules of Court that a partition be put in a public document and registered, has for its purpose the
protection of creditors and the heirs themselves against tardy claims. The object of registration is to serve as constructive notice to
others. It follows then that the intrinsic validity of partition not executed with the prescribed formalities is not undermined when no
creditors are involved. Without creditors to take into consideration, it is competent for the heirs of an estate to enter into an
agreement for distribution thereof in a manner and upon a plan different from those provided by the rules from which, in the first
place, nothing can be inferred that a writing or other formality is essential for the partition to be valid. The partition of inherited
property need not be embodied in a public document so as to be effective as regards the heirs that participated therein. The
requirement of Article 1358 of the Civil Code that acts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property, must appear in a public instrument, is only for convenience, non-compliance
with which does not affect the validity or enforceability of the acts of the parties as among themselves. And neither does the Statute
of Frauds under Article 1403 of the New Civil Code apply because partition among heirs is not legally deemed a conveyance of real
property, considering that it involves not a transfer of property from one to the other but rather, a confirmation or ratification of title
or right of property that an heir is renouncing in favor of another heir who accepts and receives the inheritance. The extrajudicial
partition which the heirs of Jacinto Pada executed voluntarily and spontaneously in 1951 has produced a legal status. When they
discussed and agreed on the division of the estate of Jacinto Pada, it is presumed that they did so in furtherance of their mutual

53 PROPERTY - CASE DIGESTS


interests. As such, their division is conclusive, unless and until it is shown that there were debts existing against the estate which had
not been paid. No showing, however, has been made of any unpaid charges against the estate of Jacinto Pada. Thus, there is no
reason why the heirs should not be bound by their voluntary acts.
Considering that petitioners were in possession of the subject property by sheer tolerance of its owners, they knew that their
occupation of the premises may be terminated any time. Persons who occupy the land of another at the latter's tolerance or
permission, without any contract between them, is necessarily bound by an implied promise that they will vacate the same upon
demand, failing in which a summary action for ejectment is the proper remedy against them. Thus, they cannot be considered
possessors nor builders in good faith. It is well-settled that both Article 448 and Article 546 of the New Civil Code which allow full
reimbursement of useful improvements and retention of the premises until reimbursement is made, apply only to a possessor in good
faith, i.e., one who builds on land with the belief that he is the owner thereof. Verily, persons whose occupation of a realty is by sheer
tolerance of its owners are not possessors in good faith.
63. IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO (GR NO. L-12958)
*See Case No. 16 (108 Phil 335)
64. DE BUYSER VS. DIRECTOR OF LANDS, ET. AL. (GR NO. L-22763)
FACTS: This is an appeal, perfected before the effectivity of Republic Act 5440, from the decision of the Court of First Instance of
Surigao, declaring a parcel of land formed along the shore by the action of the sea as part of the public domain.
Plaintiff-appellant is the registered owner of Lot No. 4217 of the Surigao Cadastre, which borders the Surigao Strait. Contiguous to
said lot is a parcel of land which was formed by accretion from the sea, the subject-matter of this controversy. Defendants Ignacio
Tandayag and his wife CANDIDA Tandayag have been occupying this foreshore land order a Revocable Permit issued by the Director
of Lands. For the use and occupation thereof, said spouses paid the Bureau of Lands the amount of P6.50 annually. They have a
house on said lot, which plaintiff alleged had been purchased by the Tandayags from one Francisco Macalinao, a former lessee of the
plaintiff. llcd
Claiming ownership of the said land, plaintiff filed an action against the spouses Tandayag in the Court of First Instance of Surigao to
recover possession of this land as well as rents in arrears for a period of six years. The complaint was subsequently amended to
implead the Director of Land as defendant, allegedly for having illegally issued a revocable permit to the Tandayags.
ISSUE: WON plaintiff has a claim of ownership over the land in question
HELD:
The plaintiff's claim of ownership over the land in question is bereft of legal basis. Such alluvial formation along the seashore is part of
the public domain and, therefore, not open to acquisition by adverse possession by private persons. It is outside the commerce of
man, unless otherwise declared by either the executive or legislative branch of the government. 1
In asserting the right of ownership over the land, plaintiff invokes Article 4 of the Spanish Law of Waters of August 3, 1866 which
provides:
"Art. 4.Lands added to the shore by accretion and alluvial deposits caused by the action of the sea, form part of the public domain,
when they are no longer washed by the waters of the sea, and are not necessary for purposes of public utility, or for the
establishment of special industries, or for the coastguard service, the Government shall declare them to be the property of the owners
of the estate adjacent thereto and as an increment thereof."
Plaintiff's reliance on the above article is quite misplaced. The true construction of the cited provision is that the State shall grant these
lands to the adjoining owners only when they are no longer needed for the purposes mentioned therein. In the case at bar, the trial
court found that plaintiff's evidence failed to prove that the land in question is no longer needed by the government, or that the
essential conditions for such grant under Article 4 of the Spanish Law of Waters, exists. prcd
Plaintiff, however, argues that the approval by the Director of Lands of the defendants' Revocable Permit Application is tantamount to
an implied declaration on the part of the Director of Lands of the fact that the disputed lot is no longer needed for public use. We fail
to see such implication. In his letter, dated June 16, 1955, approving the defendants' Revocable Permit Application, the Director of
Lands did not declare the land as no longer needed for public use.
Since the land is admittedly property of public dominion, its disposition falls under the exclusive supervision and control of the Bureau
of Lands. 3 Under the Public Land Act, an application for the sale or lease of lands enumerated under Section 59 thereof, should be
filed with the Bureau of Lands. 4 In compliance therewith, the spouses Tandayag filed the appropriate application, while plaintiff did
not. In fine, the grant of a Revocable Permit to the defendants Tandayag for the temporary use and occupation of the disputed land is
valid, having been legally issued by the Bureau of Lands, acting for and in behalf of the Secretary (now Minister) of Agriculture and
Natural Resources who is empowered to grant revocable permits under Section 68 of the Public Land Act which we quote:
"The Secretary of Agriculture and Natural Resources may grant to qualified persons temporary permission upon the payment of a
reasonable charge, for the use of any portion of the lands covered by this chapter for any lawful private purpose, subject to
revocation, at any time when, in his judgment the public interest shall require."

54 PROPERTY - CASE DIGESTS


65. GRANDE, ET. AL. VS. HON. COURT OF APPEALS (GR NO. L-17652)
Facts: The Grandes are owners of a parcel of land in Isabela, by inheritance from their deceased mother, Patricia Angui, who likewise,
inherited it from her parents. In the early 1930s, the Grandes decided to have their land surveyed for registration purposes. The land
was described to have Cagayan River as the northeastern boundary, as stated in the title.
By 1958, a gradual accretion took place due to the action of the current of the river, and an alluvial deposit of almost 20,000
sq.m. was added to the registered area. The Grandes filed an action for quieting of title against the Calalungs, stating that they were
in peaceful and continuous possession of the land created by the alluvial deposit until 1948, when the Calalungs allegedly trespassed
into their property. The Calalungs, however, stated that they were the rightful owners since prior to 1933.

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 Grandes 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 Tancincos 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?
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 petitioners 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

55 PROPERTY - CASE DIGESTS


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 rivers 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 change in the course of the river was sudden or that it occurred through avulsion, the presumption is that the change was
gradual and was caused by alluvium and erosion.
As to the petitioners assertion that Lot 415-C forms part of her property under TCT No. T-15757, the Court reiterated the principle
held in the case of C.N. Hodges v. Garcia, to wit: . . . The fact that the accretion to his land used to pertain to plaintiff's estate, which
is covered by a Torrens certificate of title, cannot preclude him (defendant) from being the owner thereof. Registration does not
protect the riparian owner against the diminution of the area of his land through gradual changes in the course of the adjoining
stream. Accretions which the banks of rivers may gradually receive from the effect of the current become the property of the owners
of the banks (Art. 366 of the old Civil Code; Art. 457 of the new). Such accretions are natural incidents to land bordering on running
streams and the provisions of the Civil Code in that respect are not affected by the Land Registration Act.
Petitioner did not demonstrate that Lot 415-C allegedly comprising 29,162 square meters was within the boundaries of her titled
property. The survey plan commissioned by petitioner, which was not approved by the Director of Lands, was properly discounted by
the appellate court. In view of the foregoing, the Court rendered judgment in favor of the respondent.
68. SPOUSES BAES VS. COURT OF APPEALS AND REPUBLIC (GR NO. 108065)
Facts:
In 1962, the government dug a canal on a private parcel of land covering an area of P33,902 sq.m., to streamline the Tripa de Gallina
creek.
This lot was later acquired by Felix Baes, who registered it in his name. He subdividedit into three lots, namely: (a) Lot 2958-A, with
an area of 28,889 sq.m.; (b) Lot 2958-B, with an area of 3,588 sq.m.; and (c) Lot 2958-C, with an area of 452 sq.m.,
In 1970, in exchange for Lot 2958-B (SECOND LOT), which was totally occupied by the canal, the government gave Baes a lot with
exactly the same area as Lot 2958-B through a Deed of Exchange of Real Property .
Baes had Lot 2958-C and a portion of Lot 2958-A designated as Lot 1, Blk., 4, resurveyed and subdivided however, it was found out
that there were errors in respect of their bearings and distances.
The resurvey-subdivision plan was approved by the Court of First Instance of Pasay City. As a result, the old TCTs covering the said
lots were cancelled and new ones were issued, to wit: (a) Lot 1-A, Blk. 4, with 672 sq. m., under TCT No. T-14404; (b) Lot 1-B, with
826 sq. m., representing the increase in area after the resurvey, under TCT No. T-14405; (c) Lot 2958-C-1, with 452 sq.m., under TCT
No. T-14406; and (d) Lot 2958-C-2,with 2,770 sq. m. representing the increase after resurvey, under TCT No. T-14407.

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Lots 2958-C-1 and 2958-C-2 were later consolidated and this time further subdivided into four (4) lots, namely, Lot 1, with an area of
147 sq. m.; Lot 2, with an area of 950 sq. m.; Lot 3, with an area of 257 sq. m.; and Lot 4, with an area of 1,868sq.m., which were
respectively issued TCT Nos. 29592, 29593, 29594, and 29595.
The Republic of the Philippines discovered that Lot 1-B (with TCT No. 14405and an area of 826 sq.m.), on which the petitioners had
erected an apartment building, covered Lot 3611 of the Pasay Cadastre, which is a filled-up portion of the Tripa de Gallina
creek.Moreover, Lot 2958-C had been unlawfully enlarged.
Thus, it filed a petition for cancellation of TCT Nos. 14405 and 29592 to29595. Baes did not object in his answer to the cancellation of
TCT 29592, 29594 and 29595and was not able to prove during the trial that the government utilized a portion of Lot2 under TCT
29593.
The Lower court and court of appeals rendered the TCTs null and void and ordered the Register of deeds to cancel and issue new
ones.

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
such grant, then, by analogy, the abandoned river bed will belong to the owners of the land covered by the waters, as provided in this
article, without prejudice to a superior right of third persons with sufficient title. (Citing 3 Manresa 251-252; 2 Navarro Amandi, 100-
101; 3 Sanchez Roman 148)
The Court agreed with this interpretation but, as the government avers, the petitioners had already been fully compensated for it on
June 20, 1970 when they agreed to exchange their Lot 2958-B with Lot 3271-A belonging to the government. This makes the
difference as Baes had receive something in exchange thereof.
Thus, with the second issue, Baes is not also entitled for compensation.
If the riparian owner is entitled to compensation for the damage to or loss of his property due to natural causes, there is all the
more reason to compensate him when the change in the course of the river is effected through artificial means. The loss to the
petitioners of the land covered by the canal was the result of a deliberate act on the part of the government when it sought to
improve the flow of the Tripa de Gallina creek. It was therefore obligated to compensate the Baeses for their loss.
We find, however, that the petitioners have already been so compensated. Felix Baes was given Lot 3271-A in exchange for the
affected Lot 2958-B through the Deed of Exchange of Real Property dated June 20, 1970.
This was a fair exchange because the two lots were of the same area and value and the agreement was freely entered into by the
parties. The petitioners cannot now claim additional compensation because, as correctly observed by the Solicitor General. Baes
cannot claim additional compensation because allowing Baes to acquire ownership of the dried-up portion of the creek would be a
clear case of double compensation and unjust enrichment at the expense of the state.
69. MARIO RONQUILLO VS. COURT OF APPEALS, ET. AL. (GR NO. 43346)
Facts:
Rosendo del Rosario was a registered owner of a parcel of land known as Lot 34, Block 9, Sulucan Subdivision, situated at
Sampaloc, Manila and covered by Transfer Certificate of Title No. 34797 of the Registry of Deeds of Manila. The other plaintiffs
Florencia and Amparo del Rosario were daughters of said Rosendo del Rosario. Adjoining said lot is a dried-up portion of the old
Estero Calubcub occupied by the defendant since 1945 which is the subject matter of the present action.
.That said property of the plaintiffs abuts and is adjacent to the dried-up river bed of Estero Calubcub, Sampaloc, Manila;
After a relocation survey of the land in question sometime in 1960, plaintiffs learned that defendant was occupying a portion of their
land and thus demanded defendant to vacate said land when the latter refused to pay the reasonable rent for its occupancy. However,
despite said demand defendant refused to vacate.

57 PROPERTY - CASE DIGESTS


Defendant on the other hand claims that sometime before 1945 he lived with his sister who was renting plaintiffs' titled lot. In 1945
he built his house on the disputed dried-up portion of the Estero Calubcub with a small portion thereof on the titled lot of plaintiffs.
Later in 1961, the house was destroyed by a fire and rebuilt the house this time it was built only on the dried-up portion of the old
Estero Calubcub without touching any part of plaintiffs' titled land. He further claims that said dried-up portion is a land of public
domain.
That the plaintiffs and defendant have both filed with the Bureau of Lands miscellaneous sales application for the purchase of the
abandoned river bed known as Estero Calubcub and their sales applications, dated August 5, 1958 and October 13, 1959, respectively,
are still pending action before the Bureau of Lands;
On December 26, 1962, the court rendered judgment ordering the defendant to deliver the said portion of land which was occupied
by him and to pay for rental at the rate of 5.00 per month from the date of filing until he surrenders and that the Del Rosarios are the
owner of the dried-up portion of estero Calubcub.
On appeal, CA affirmed the decision of the trial court on 25 September 1975 and declared that since Estero Calubcub had already
dried-up way back in 1930 due to the natural change in the course of the waters, under Article 370 of the old Civil Code which it
considers applicable to the present case, the abandoned river bed belongs to the Del Rosarios as riparian owners. Consequently,
respondent court opines, the dried-up river bed is private land and does not form part of the land of the public domain. It stated
further that even assuming for the sake of argument that said estero did not change its course but merely dried up or disappeared,
said dried-up estero would still belong to the riparian owner, thus upholding its declaration that the del Rosarios are the rightful
owner. Hence, petition for review.
Issue:
WON the del Rosarios are the rightful owner of the dried-up portion of Estero Calubcub
Held:
Art. 370 which states that The beds of rivers, which are abandoned because of a natural change in the course of the waters, belong
to the owners of the riparian lands throughout the respective length of each. If the abandoned bed divided tenements belonging to
different owners the new dividing line shall be equidistant from one and the other." Is no longer applicable given after careful perusal
of evidence presented by both parties revealed that the change in the course of Estero Calubcub was caused, not by natural forces,
but due to the dumping of garbage therein by the people of the surrounding neighborhood. The relocation plan, which also formed
the basis of respondent court's ruling, merely reflects the change in the course of Estero Calubcub but it is not clear therefrom as to
what actually brought about such change. The inescapable conclusion is that the dried-up portion of Estero Calubcub was occasioned,
not by a natural change in the course of the waters, but through the active intervention of man. The rules on alluvion do not apply to
man-made or artificial accretions nor to accretions to lands that adjoin canals or esteros or artificial drainage systems. Hence, the del
Rosarios cannot be entitled as the riparian owners and that dried-up portion of Estero Calubcub should be considered as public domain
which cannot be subject to acquisition by private ownership.
70. SIARY VALLEY ESTATES, INC. VS. LUCASAN AND HON. JUDGE ORTEGA (OCTOBER 31, 1957)
The Siari Valley Estate Inc. started raising livestock on its 950-hectare ranch, in 1921, with 7 native cattle. In 1923 it acquired 30
native cattle and two Indian bulls. It also introduced native stock into its herd thru a native black bull. Male offspring of this bull were
castrated.
Prior to the Japanese occupation, the fence enclosing plaintiff's pasture was well kept. However in 1943 a portion thereof was
destroyed, with the result that some cattle strayed into the adjoining unfenced range of defendant Lucasan. And taking advantage of
the situation several men in the employ of defendant willfully and deliverately rounded up and drove many animals from the Siari
pasture towards Lucasan's grazing land.
The defendant, admitted that some cattle of the Siari Valley Estate did enter his ranch. He says however that thru the good offices of
Fiscal Ubay the company rounded up and drove away from his ranch 98 head of cattle in November 1946; and that in May 1947
plaintiff's herdsmen took away 5 more head of cattle. He affirmed that as of December 1951 he had 400 head on his ranch all
belonging to him, after deducting 200 head which he had disposed of.
After going thru the record, we have no doubt that hundreds of cattle belonging to plaintiff have been driven, into or wandered into
defendant's land. Defendant himself admitted such commixtion although, he says, plaintiff had already retrieved its animals.
ISSUE: WON Defendant acted in bad faith and WON he is liable
No actual evidence exists that all these missing animals (823) were taken by defendant or his men; but in view of proof that his men
on two occasions drove away more than 30 heads of cattle, it is not erroneous to believe that the others must have also been driven
away on subsequent or prior occasions, applying , by analogy, the principle that one who stole a part of the stolen money must have
taken also the larger sum lost by the offended party. (People vs. Fernandez, 58 Phil. 674; People vs. Buada, 60 Phil. 363).
Art. 473. If by the will of only one owner, but in good faith, two things of the same or different kinds are mixed or confused, the
rights of the owners shall be determined by the provisions of the preceding article.
If the one who caused the mixture or confusion acted in bad faith, he shall lose the thing belonging to him thus mixed or confused,
besides being obliged to pay indemnity for the damages caused to the owner of the other thing with which his own was mixed.

58 PROPERTY - CASE DIGESTS


Did defendant act in bad faith? The circumstances disclosed in this record answer the question in the affirmative: his cowboys -and
even his sons Rafael and Vicente- rounded up and drove plaintiff's cattle into his pasture; he knew he had plaintiff's cattle, but refused
to return them despite demands by plaintiff; he even threatened plaintiff's men when the latter tried to retrieve its animals; he
harassed them with false prosecutions for their attempts to get back the company's animals; he wouldn't allow plaintiff' s cowboys to
get into his pasture to identify its flock; he rebranded several Siari Valley cattle with his own brand; he sold cattle without registering
the sales; after some cattle impounded were entrusted to his custody as trustee, he disposed of not less than 5 head of cattle among
those he received as such trustee; lastly, he disposed of much more cattle than he had a right to.
The circumstances disclosed in the record show that defendant acted in bad faith. Under the Civil Code if commingling of two things
is made in bad faith, the one responsible for it will lose his share
71. GALLAR VS. HUSAIN (GR NO. L-20954)
Facts: Husains in this case are the heirs of Teodoro Husain. Teodoro Husain sold the land under dispute for 30 pesos to Serapio
Chichirita with the right to repurchase within 6 years. Teodoro transferred his right to his sister, Graciana Husain. Graciana paid the
redemption price and later sold the land to Elias Gallar for a cattle.
Possession of the land, together with the owner's duplicate of the certificate of title of Teodoro Husain, was delivered on the
same occasion to Gallar, who since then has been in possession of the land. A couple of years after, Gallar filed this suit in the Court
of Instance of Iloilo on October 10, 1960 to compel Hermenegilda and Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed
of conveyance in his favor so that he could get a transfer certificate of title. He also asked for damages. The Husains countered by
saying that Graciana already paid the redemption price thus their father had already reacquired ownership over the same. They also
claim that the action of Elias has already PRESCRIBED.

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.

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.

59 PROPERTY - CASE DIGESTS


(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.
After hearing, the Trial Court rendered judgment ordering petitioner to vacate the Disputed Portion. This was subsequently affirmed
by the respondent Appellate Court, which held that the petitioners claim for reconveyance based on implied or constructive trust has
prescribed after ten years from the date when De Veras land was registered on September 11, 1947 since it was only on March 28,
1967 when the petitioner sought for the reconveyance of the property.
ISSUE(S):
Whether or not the CA was correct in rendering judgment in favor of the respondent.
RULING:
The Court held in the negative.
The evidence discloses that the Disputed Portion was originally possessed openly, continuously and uninterruptedly in the concept of
an owner by Juan Caragay, the deceased father of the petitioner, and had been declared in his name under tax declarations since
1921. Upon the demise of the petitioners father in 1914, petitioner adjudicated the property to herself as his sole heir in 1968 and
declared it in her name under tax declarations since 1959. Realty taxes were also religiously paid from 1938 to 1972. Taking the
previous possession of petitioners father to her own, they had been in actual, open, continuous and uninterrupted possession in the
concept of owner for about forty five (45) years, until said possession was disturbed in 1966 when the private respondent Estrada
informed petitioner that the Disputed Portion was registered in Mariano De Vera's name.
To substantiate her claim of fraud in the inclusion of the Disputed Portion in OCT No. 68, the petitioner declared that Mariano De Vera,
during his lifetime, borrowed from the former, the tax declaration of her land purportedly to be used as collateral for the latters loan
and sugar quota application. Relying on De Vera's assurances, petitioner acceded to the request and was made to sign some
documents, the contents of which was unknown to her because of her ignorance and that she discovered the fraudulent inclusion of
the Disputed Portion in OCT No. 63 only in 1966 when Estrada sought to eject them.
The Court made significance of the fact, as disclosed by the evidence, that for twenty years from the date of registration of title in
1947 up to 1967 when this suit for recovery of possession was instituted, neither the deceased De Vera, up to the time of his death in
1951, nor his successors-in-interest, had taken steps to possess or lay adverse claim to the Disputed Portion. They may, therefore be
said to be guilty of laches as would effectively derail their cause of action. Administrator Estrada tackles interest in recovering the said
portion only when he noticed the discrepancy in areas in the Inventory of Property and in the title. In view of such fact and that
petitioner had been in actual, continuous and open possession thereof to the exclusion of all, the inescapable inference is, fraud
having been unsubstantiated, that it had been erroneously included in OCT No. 63. The mistake is confirmed by the fact that
deducting 3,732 square meters (the area of the Disputed Portion) from 8,752 square meters (the area of Lot 1 in OCT No. 63), the
60 PROPERTY - CASE DIGESTS
difference is 5,020 square meters, which closely approximates the area of 5,147 square meters, indicated in the Inventory of Property
of De Vera.
The Court held that such conclusion does not necessarily wreak havoc on the indefeasibility of a Torrens title. For mere possession of
a certificate of title under the Torrens System is not conclusive as to the holder's true ownership of all the property described therein
as he does not, by virtue of said certificate alone, become the owner of the land illegally included. Thus, petitioner, whose property
had been wrongfully registered in the name of another, but which had not yet passed into the hands of third parties, can properly
seek its reconveyance.
It was further held that prescription cannot be invoked against the petitioner for the reason that as lawful possessor and owner of the
Disputed Portion, her cause of action for reconveyance which, in effect, seeks to quiet title to the property, falls within settled
jurisprudence that an action to quiet title to property in one's possession is imprescriptible. Her undisturbed possession over a period
of fifty two years gave her a continuing right to seek the aid of a Court of equity to determine the nature of the adverse claim of a
third party and the effect on her own title. Besides, under the circumstances, petitioner's right to quiet title, to seek reconveyance, and
to annul OCT. No. 63 accused only in 1966 when she was made aware of a claim adverse to her own. It was only then that the
statutory period of prescription may be said to have commenced to run against her, following the pronouncement in Faja v. Court of
Appeals, to wit: There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner thereof
may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of third party and its effect on his own title, which right can be claimed only by one who is in possession.
74. ANASTACIA VDA. DE AVILES, ET. AL. VS. COURT OF APPEALS AND CAMILO AVILES ( GR. NO. 95748)
Facts:
Eduardo Aviles, the predecessor of the petitioners is the bother of defendant Camilo. They inherited their lands from their parents and
have agreed to subdivide the same amongst themselves. The area allotted to Eduardo Aviles is 16,111 square meters more or less, to
Anastacio Aviles is 16,214 square meters more or less, while the area alloted to defendant Camilo Aviles is 14,470 square meters more
or less.
Defendants land composed of the rice land portion of his land is 13,290 square meters, the fishpond portion is 500 square meters and
the residential portion is 680 square meters, or a total of 14,470 square meters.
The Petitioners claim that they are the owners of the fish pond which they claim is within their area. Defendant Camilo Aviles asserted
a color of title over the northern portion of the property with an area of approximately 1,200 square meters by constructing a bamboo
fence and moving the earthen dikes, thereby molesting and disturbing the peaceful possession of the plaintiffs over said portion.
Petitioners say that the fences were created to unduly encroach to their property but the defendant said that he merely reconstructed
the same.
Petitioners brought an action to quiet title but were denied thus this case.

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

61 PROPERTY - CASE DIGESTS


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, 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 RTCs 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 respondents 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.

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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.
In ruling that the prescriptive period applies to the respondents, the Court made notice of the fact that the respondents in the present
case all testified that they have never occupied or been in possession of the land in dispute. As to the period from which prescription
will start to run, the Court held that since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under
Act No. 3344 and not under Act No. 496, said document is deemed not registered. Accordingly, the ten-year prescriptive period cannot
be reckoned from March 6, 1964, the date of registration of the subject document under Act No. 3344. The prescriptive period only
began to run from the time respondents had actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.
Respondents filed their Amended Complaint on December 6, 1993. 24 Thus, with regard to respondent heirs of Roberta Aying who
had knowledge of the conveyance as far back as 1967, their cause of action is already barred by prescription when said amended
complaint was filed as they only had until 1977 within which to bring action. As to the respondent heirs of Emiliano and Simeon Aying,
they were able to initiate their action for reconveyance of property based on implied or constructive trust well within the ten-year
prescriptive period reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property. Evidently, laches
cannot be applied against respondent heirs of Emiliano and Simeon Aying, as they took action to protect their interest well within the
period accorded them by law.

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