MAGDALENA T. VILLASI, petitioner, vs .
prosper, the claimant must first
FILOMENO GARCIA
FACTS:
Sometime in 1990, petitioner
Magdalena T. Villasi (Villasi) engaged the
services of respondent Fil-Garcia
Construction, Inc. (FGCI) to construct a
seven-storey condominium building
located at Aurora Boulevard corner N.
Domingo Street, Cubao, Quezon City.
For failure of Villasi to fully pay the
contract price despite several demands,
FGCI initiated a suit for collection of sum
of money before the RTC of Quezon City.
In its action FGCI prayed for the payment
of the amount of P2,865,000.00,
representing the unpaid
accomplishment billings. Villasi filed an
answer specifically denying the material
allegations of the complaint. Contending
that FGCI has no cause of action against
her, Villasi averred that she delivered
the total amount of P7,490,325.10 to
FGCI but the latter accomplished only
28% of the project. RTC ruled in favor of
FGCI. Case elevated to CA and reversed
decision averring that an overpayment
was made by Villasi and thereby directed
FGCI to return the amount that was paid
in excess
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To enforce her right as prevailing party,
Villasi filed a Motion for Execution which
was favorably acted upon by the RTC. To
satisfy the judgment, the sheriff levied
on a building located at No. 140
Kalayaan Avenue, Quezon City, covered
by Tax Declaration No. D-021-01458,
and built in the lots registered under
Transfer Certificates of Title (TCT) Nos.
379193 and 379194. While the building
was declared for taxation purposes in
the name of FGCI, the lots in which it was
erected were registered in the names of
the Spouses Filomeno Garcia and
Ermelinda Halili- Garcia (Spouses
Garcia). Sps Garcia claimed that they are
the rightful owner of the said property,
but by pursuant to the tax declaration
FGCI owned it. After weighing the said
arguements of both parties, RTC
suspend the conduct of sale on the
excution of the said building.
ISSUE:
W/N THE SPS GARCIA ARE THE
RIGHTFUL OWNER OF THE SAID
PROPOERTY?
RULING: NO.
The Court said that the Spouses Garcia
are trying to protect FGCI from liability
by asserting that they, not FGCI, own the
levied property. The Spouses Garcia are
asserting their separation from FGCI.
FGCI, the judgment debtor, is the proven
owner of the building. Piercing FGCI's
corporate veil will not protect FGCI from
its judgment debt. Piercing will result in
the identification of the Spouses Garcia
as FGCI itself and will make them liable
for FGCI's judgment debt. The Court
found out that the record shows that, as
the party asserting their title, the
Spouses Garcia failed to prove that they
have a bonafide title to the building in
question. Aside from their postulation
that as title holders of the land, the law
presumes them to be owners of the
improvements built thereon, the
Spouses Garcia were unable to adduce
credible evidence to prove their
ownership of the property. In contrast,
Villasi was able to satisfactorily establish
the ownership of FGCI thru the pieces of
evidence she appended to her
opposition. Worthy to note is the fact
that the building in litigation was
declared for taxation purposes in the
name of FGCI and not in the Spouses
Garcias'. While it is true that tax receipts
and tax declarations are not
incontrovertible evidence of ownership,
they constitute credible proof of claim of
title over the property.
RATIO:
It is a basic principle of law that money
judgments are enforceable only against
the property incontrovertibly belonging
to the judgment debtor, and if the
property belonging to any third person is
mistakenly levied upon to answer for
another man's indebtedness, such
person has all the right to challenge the
levy through any of the remedies
provided for under the Rules of Court.
The right of a third-party claimant to file
a terceria is founded on his title or right
of possession. Corollary thereto, before
the court can exercise its supervisory
power to direct the release of the
property mistakenly levied and the
restoration thereof to its rightful owner,
the claimant must rst unmistakably
establish his ownership or right of
possession thereon. In Spouses Sy v.
Hon. Discaya , we declared that for a
third-party claim or a terceria to
sufficiently establish his right on the
property. It likewise failed to escape our
attention that FGCI is in actual
possession of the building and as the
payment of taxes coupled with actual
possession of the land covered by tax
declaration strongly supports a claim of
ownership. While it is a hornbook
doctrine that the accessory follows the
principal, 31 that is, the ownership of the
property gives the right by accession to
everything which is produced thereby,
or which is incorporated or attached
thereto, either naturally or artificially, 32
such rule is not without exception. In
cases where there is a clear and
convincing evidence to prove that the
principal and the accessory are not
owned by one and the same person or
entity, the presumption shall not be
applied and the actual ownership shall
be upheld. In a number of cases, we
recognized the separate ownership of
the land from the building and brushed
aside the rule that accessory follows the
principal. The rule on accession is not an
iron-clad dictum. On instances where
this Court was confronted with cases
requiring judicial determination of the
ownership of the building separate from
the lot, it never hesitated to disregard
such rule. The case at bar is of similar
import. When there are factual and
videntiary evidence to prove that the
building and the lot on which it stands
are owned by different persons, they
shall be treated separately. As such, the
building or the lot, as the case may be,
can be made liable to answer for the
obligation of its respective owner.
In the matter of the testate estate of Emil
Maurice Bachrach, deceased. MARY
MCDONALD BACHRACH , petitioner-
appellee, vs . SOPHIE SEIFERT and ELISA
ELIANOFF , oppositors-appellants.
Facts:
The deceased E. M. Bachrach, who left
no forced heir except his widow Mary
McDonald Bachrach, in his last will and
testament made varius legacies in cash
and willed the remainder of his estate:
“Sixth: It is my will and do herewith
bequeath and devise to my beloved wife
Mary McDonald Bachrach for life all the
fruits and usufruct of the remainder of
all my estate after payment of the
legacies, bequests, and gifts provided for
above; and she may enjoy said usufruct
and use or spend such fruits as she may
in any manner wish." The will further
provided that upon the death of Mary
McDonald Bachrach, one half of all his
estate "shall be divided share and share
alike by and between my legal heirs, to
the exclusion of my brothers."
The estate of E. M. Bachrach, as owner
of 108,000 shares of stock of the Atok
Big Wedge Mining Co., Inc., received
from the latter 54,000 shares
representing 50 per cent stock dividend
on the said 108,000 shares. On June 10,
1948, Mary McDonald Bachrach, as
usufructuary or life tenant of the estate,
petitioned the lower court to authorize
the Peoples Bank and Trust Company, as
administrator of the estate of E. M.
Bachrach, to transfer to her the said
54,000 shares of stock dividend by
indorsing and delivering to her the
corresponding certificate of stock,
claiming that said dividend, although
paid out in the form of stock, is fruit or
income and therefore belonged to her
as usufructuary or life tenant. Sophie
Siefert and Elisa Elianoff, legal heirs of
the deceased, opposed said petition on
the ground that the stock dividend in
question was not income but formed
part of the capital and therefore
belonged not to the usufructuary but to
the remainderman. And they have
appealed from the order granting the
petition and overruling their objection.
Issue: Is a stock dividend fruit or income,
which belongs to the usufructuary, or is
it capital or part of the corpus of the
estate, which pertains to the
remainderman?
Held:
Article 471 of the Civil Code provides
that the usufructuary shall be entitled to
receive all the natural, industrial, and
civil fruits of the property in the
usufruct. The stock dividend in question
in this case is a civil fruit of the original
investment. The shares of stock issued in
payment of said dividend may be sold
independently of the original shares just
as the offspring of a domestic animal
may be sold independently of its
mother. “The 108,000 shares of stock
are part of the property in usufruct. The
54,000 shares of stock dividend are civil
fruits of the original investment. They
represent profits, and the delivery of the
certificate of stock covering said
dividend is equivalent to the payment of
said profits. Said shares may be sold
independently of the original shares, just
as the offspring of a domestic animal
may be sold independently of its
mother.” For reference, if asked why
Pennsylvania rule is more in accord with
our statutory laws than the
Massachusetts rule with regard to the
issue… Pennsylvia rule- declares that all
earnings of the corporation made prior
to the death of the testator stockholder
belong to the corpus of the estate, and
that all earnings, when declared as
dividends in whatever form, made
during the lifetime of the usufructuary
or life tenant are income and belong to
the usufructuary or life tenant.
Massachusetts rule - It regards cash
dividends, however large, as income,
and stock dividends, however made, as
capital. It holds that a stock dividend is
not in any true sense any dividend at all
since it involves no division or severance
from the corporate assets of the subject
of the dividend; that it does not
distribute property but simply dilutes
the shares as they existed before; and
that it takes nothing from the property
of the corporation, and adds nothing to
the interests of the shareholders.
Philippine Sugar Estates v. Poizat 48 Phil
536
Facts:
August 25, 1905, the appellant, with his
consent executed to and in favor of her
husband, Juan M. Poizat, a general
power of attorney, which among other
things, authorized him to do in her
name, place and stead, and making use
of her rights and actions, the following
things: Toloanor borrow any amount in
cash or fungible conditions he may deem
convenient collecting or paying the
principal or interest, for the time,
and under the principal of the interest,
when they respectively should or private
documents, and making there
transactions with or without mortgage,
pledge or personal securities. November
2, 1912, Juan M. Poizat applied for and
obtained from the plaintiff a credit for
the sum of 10,000 Pounds Sterling to be
drawn on the" Banco Espanol del Rio de
la Plata" in London not later than
January, 1913. Later, to secure the
payment of the loan, he executed a
mortgage upon the real property of his
wife. For failure to pay the loan, on
November 12, 1923, plaintiff, PhilSugar
Estate, brought an action against the
defendants to foreclose the mortgage.
August 22, 1924, execution was issued
directing the sale of the mortgaged
property to satisfy the judgment.
September 18, 1924, the property was
sold to the PhilSugar Estate. September
23, 1924, and for the first time, the
appellant (wife) personally appeared by
her present attorney, and objected to
the confirmation of the sale, among
other things, upon illegally executed,
and is null and void, because: the agent
of this defendant was not authorized to
execute it that there was no
consideration. That the plaintiff, with full
knowledge that J. M. Poizat was acting
beyond the scope of his authority, filed
this action to subject the property of this
defendant to the payment of the debt
which, as to appellant, was not a valid
contract. That the judgment was
rendered by confession when the
plaintiff and J. M. Poizat knew that Poizat
was not authorized to confess judgment,
and that the proceeding was a
constructive fraud. That at the time the
action was filed and the judgment
rendered, this defendant was absent
from the Philippine Islands, and had no
knowledge of the execution of the
mortgage. That after the judgment of
foreclosure became final and order of
the sale of the property was made, that
this defendant for the first time learned
that he mortgage contract was tainted
with fraud, and that she first knew and
learned of such things on the 11th of
September, 1924. That J. M. Poizat was
not authorized to bind her property to
secure the payment of his personal
debts. That the plaintiff knew that the
agent of the defendant was not
authorized to bind her or her property.
That the mortgage was executed to
secure a loan of 10,000 Pounds which
was not made to this defendant or for
her benefit, but was made to him
personally and for the personal use and
benefit of J. M. Poizat.
Issue: The legal force and effect of the
real mortgage in question , by whom and
for whom it was executed, and upon
whom is it binding, and whether or not it
is null and void as to the appellant.
Held:
Real mortgage contract is null and void.
*Question of authority of attorneys to
represent wife is not material to the
case. It thus appears that at the time the
power of attorney and the mortgage
were executed, Don Juan M. Poizat and
Gabriela Andrea de Coster were
husband and wife, and that the real
property upon which the mortgage was
her sole property before her marriage,
and that it was her paraphernal property
at the time the mortgage was executed,
and that the new building constructed
on the land was the property of the
conjugal partnership. Giving to it the
very broadest construction, he would
not have any authority to mortgage her
property, unless the mortgage was
executed for her "and in her name, place
or stead," and as her act and deed. The
mortgage in question was not so
executed. it was signed by Don Juan M.
Poizat in his own name, his own proper
person, and by him only, and it was
acknowledge by him in his personal
capacity, and there is nothing in either
the signature or acknowledgment which
shows or tends to show that it was
executed for or on behalf of his wife or
"in her name, place or stead." It should
have been executed by both husband
and wife, and should have been so
acknowledged. It should be noted that
this is a mortgage upon real property,
the title to which cannot be divested
except by sale on execution or the
formalities of a will or deed. For such
reasons, the law requires that a power of
attorney to mortgage or sell real
property should be executed with all of
the formalities required in a deed. For
the same reason that the personal
signature of Poizat, standing alone,
would not convey the title of his wife in
her own real property, such a signature
would not bind her as a mortgagor in
real property, the title to which was in
her name. Under his power of attorney,
Juan M. Poizat may have had authority
to borrow money and mortgage the real
property of his wife, but the law
specifies how and in what manner it
must be done, and the stubborn fact
remains that, as to the transaction in
question, that power was never
exercised. The mortgage in question was
executed by him and him only, and for
such reason, it is not binding upon the
wife, and as to her, it is null and void.
It is an undisputed fact, which appears in
the mortgage itself, that the land in
question was the paraphernal property
of the wife, but after the marriage the
old buildings on the property were torn
down and a new building constructed
and, in the absence of evidence to the
contrary, it must be presumed that the
new building is conjugal property of the
husband and wife. As such, it is subject
of the debts of the conjugal partnership
for the payment or security of which the
husband has the power to mortgage or
otherwise encumber the property.
Dept of Education v Casibang
Facts:
The property in question is a portion of
Lot 115 covered by an OCT in the name
of Juan Cepeda. Upon the request of
Mayor Caronan, Cepeda allowed the
construction and operation of a school
on the western portion of his property.
The school is known as Solana North
Central School, operating under the
control and supervision of DepEd.
Respondents and other descendants of
Cepeda continued to tolerate the use
and possession of the property by the
school. Later on, the respondents
entered and occupied a portion of the
property, upon discovery of this, the
teachers of the school brought the
matter to the attention of the brgy
captain. The school officials demanded
that the respondents vacate the
property which respondents refused to
do. DepEd filed a complaint for Forcible
Entry and Damages against the
respindents. MCTC ruled in favor of
DepEd and directed respondents to
vacate the premises. RTC affirmed the
MCTCs ruling. Respondents then
demanded the petitioner to either pay
rent, purchase the area or vacate the
premises. DepEd did not heed and
refused to recognize the ownership of
the respondents over the property.
Respondents then filed am action for
Recovery of Possession against DepEd.
They averred that since their late father
did not have any immediate need of the
land in 1965, he consented to the
building of the temporary structure and
allowed the conduct of classes in the
premises. That they have been deprived
of the use and enjoyment of the portion
of the property and are entitled to just
compensation and reasonable rent. In
their answer, DepEd allege that it owned
the subject property because it was
purchased by civic-minded residents of
Solana from Cepede. That the property
has always been occupied and used
adversely, peacefully, continuously and
in the concept of owner for almost 40
years. That respondents lost whatever
right they had over the property through
laches. RTC ruled in favor of
respondents, finding that they are the
owners of the property. Ca affirmed the
RTC ruling.
Issue:
W/N the respondents is the owner of the
property
Ruling:
Yes. It is undisputed that the property is
covered by an OCT in the name of
Cepeda. As registered owners of the lots
in question, the respondents have a
right to enject any person illegaly
occupying their property. Such right is
imprescriptible. Even if it be supposed
that they were aware of the petitioner's
occupation of the property, and
regardless of the length of that
possession, the lawful owners have a
right to demand the return of their
property at any time as long as the
possession was unauthorized or merely
tolerated, if at all. This right is never
barred by laches. the occupation of the
subject lot is by mere tolerance or
permission of the respondents, the
DepEd, without any contract between
them, is bound by an implied promise
that it will vacate the same upon
demand. Hence, until such demand to
vacate was communicated by the
respondents to the DepEd, respondents
are not required to do any act to recover
the subject land, precisely because they
knew of the nature of the DepEd's
possession which is by mere tolerance.
BLISS DEVELOPMENT CORP. v.
MONTANO DIAZ
Doctrine: Abuyeringoodfaith
Facts: Petitioner Bliss Development
Corporation is the registered owner of
Lot No. 27, Block 30, New Capitol Estates
I, Brgy. Matandang Balara, Diliman,
Quezon City, and covered by Transfer
Certificate of Title (TCT) No. 331582. On
October 19, 1984, it entered into and
executed a Deed of Sale over the said
property in favor of Spouses Emiliano
and Leonila Melgazo, both of whom are
now deceased. On May 7, 1991, a
certain Rodolfo Nacua sent a letter to
BDC, saying that Sps. Melgazo
transferred to him their rights over the
property. He further expressed
willingness to pay the outstanding
obligations of Sps. Melgazo to BDC.
Before the property was fully paid,
however, Nacua sold his rights to Olivia
Garcia, through a Deed of Transfer of
Rights. Later, Garcia transferred her
rights to Elizabeth Reyes. Reyes then
transferred her rights to Domingo
Tapay, who then later sold his rights to
herein respondent Montano Diaz for
P600,000.00. Diaz then paid BDC the
amortizations due on the property,
amounting to P406,915.15, and BDC
issued a permit to occupy the property
in favor of Diaz. Diaz then introduced
improvements on the property,
amounting to P700,000.00 . On April 14,
1992, BDC executed a Contract to Sell in
favor of Diaz. On April 15, 1994,
however, BDC informed Diaz that
respondent Edgar Arreza was claiming
that the heirs of Sps. Melgazo sold to
him the rights over the property. BDC
then placed Diaz’s account in “inactive
status.” To resolve the conflicting claims
of Arreza and Diaz, BDC filed a complaint
for Interpleader against them, before
the RTC, Makati City, Branch 146. On
March 27, 1996, the Makati City RTC
Branch 146 ruled that the signatures of
Sps. Melgazo transferring their rights to
Nacua were mere forgeries. Thus, it
ruled that Arreza had a better right over
the property. This decision became final
and executory. On August 27, 1996, Diaz
filed the present complaint for sum of
money against BDC before the RTC,
Makati City. Diaz argued that BDC and
Tapay’s representations led him to
believe that he had a good title over the
property, but due to the court’s ruling in
the interpleader case, he was
constrained to transfer the property to
Arreza. RTC dismissed the complaint for
lack of merit because he failed to prove
that he is an assignee in good faith. CA
reversed the ruling of the RTC finding
Diaz is both a buyer and builder in good
faith. Considering that the property
involved is registered land, Diaz need
not go beyond the title to be considered
a buyer in good faith.
Issue: W/N BDC acted in bad faith; W/N
Diaz is a purchaser for value and good
faith.
Ruling:
Petitioner BDC acted in bad faith BDC
acted in bad faith, when it allowed Diaz
to take over the payment of the
amortizations over the subject property.
As the CA correctly noted, “It is
undisputed that Bliss knew about
Arreza’s claim in 1991. It even received
amortization payments from Arreza. Yet,
Bliss acknowledged the transfer to Diaz
and received the monthly amortizations
paid by Diaz. Also, Bliss is aware that
should Arreza pursue his claim in court,
Diaz may be evicted from the property.
Respondent Diaz is not a purchaser for
value and in good faith This Court had
ruled that a purchaser in good faith and
for value is one who buys property of
another without notice that some other
person has a right to, or interest in, such
property and pays full and fair price for
the same at the time of such purchase or
before he or she has notice of the claim
or interest of some other person in the
property. For one to be considered a
purchaser in good faith, the following
requisites must concur: (1) that the
purchaser buys the property of another
without notice that some other person
has a right to or interest in such
property; and (2) that the purchaser
pays a full and fair price for the property
at the time of such purchase or before
he or she has notice of the claim of
another. We find that in the case at bar,
the first element is lacking. A careful
review of the records of this case reveals
that Diaz, in fact, failed to diligently
inquire into the title of his predecessor
before entering into the contract of sale.
As such, he cannot be considered a
buyer in good faith.
Heirs of Victorino Sarili vs. Lagrosa
G.R. No. 193517 January 15, 2014
Facts:
Respondent Pedro F. Lagrosa filed a
complaint against Spouses Sarili and
against the Register of Deeds. Lagrosa
claims that he is a resident of California,
USA, and that during his vacation in the
Philippines, he discovered that his parcel
of land located in Caloocan is now under
the name of Victorino Sarili by virtue of
a falsified Deed of Sale dated February
16, 1978 purportedly executed by him
and his wife, Amelia U. Lagrosa (Amelia).
Lagrosa prayed for the annulment of TCT
No. 262218, and that Sps. Sarili deliver
to him the possession of the subject
property, or, in the alternative, that Sps.
Sarili and the RD jointly and severally pay
him the amount of P1,000,000.00,
including moral damages as well as
attorney's fees. In their answer, Sps.
Sarili maintained that they are innocent
purchasers for value, having purchased
the subject property from Ramon B.
Rodriguez, who possessed and
presented a Special Power of Attorney
to dispose of the same, and, in such
capacity, executed a Deed of Absolute
Sale dated November 20, 1992
conveying the said property in their
favor. RTC rendered a Decision finding
respondent's signature on the subject
SPA as "the same and exact replica" of
his signature in the November 25, 1999
SPA in favor of Lourdes. respondent
appealed to the CA. CA granted
respondent's appeal and held that the
RTC erred in its ruling since the
November 20, 1992 deed of sale, which
the RTC found "as valid and genuine,"
was not the source document for the
transfer of the subject property and the
issuance of TCT No. 262218 in the name
of Sps. Sarili 25 but rather the February
16, 1978 deed of sale, the fact of which
may be gleaned from the Affidavit of
Late Registration executed by Isabel
(affidavit of Isabel). Petitioners
essentially argue that regardless of the
fictitious February 16, 1978 deed of sale,
there was still a valid conveyance of the
subject property to Sps. Sarili who relied
on the authority of Ramos (as per the
subject SPA) to sell the same.
Issue:
Whether or not there was a valid
conveyance of the subject property to
Sps. Sarili
Held:
It is well-settled that even if the
procurement of a certificate of title was
tainted with fraud and
misrepresentation, such defective title
may be the source of a completely legal
and valid title in the hands of an
innocent purchaser for value. The
general rule is that every person dealing
with registered land may safely rely on
the correctness of the certificate of title
issued therefor and the law will in no
way oblige him to go beyond the
certificate to determine the condition of
the property. However, a higher degree
of prudence is required from one who
buys from a person who is not the
registered owner, although the land
object of the transaction is registered.
The strength of the buyer's inquiry on
the seller's capacity or legal authority to
sell depends on the proof of capacity of
the seller. If no such power of attorney is
provided or there is one but there
appears to be flaws in its notarial
acknowledgment, mere inspection of
the document will not do; the buyer
must show that his investigation went
beyond the document and into the
circumstances of its execution. The
Court, however, finds a need to remand
the case to the court a quo in order to
determine the rights and obligations of
the parties with respect to the house Sps.
Sarili had built on the subject property in
bad faith in accordance with Article 449
in relation to Articles 450, 451, 452, and
the first paragraph of Article 546 of the
Civil Code.
ART. 449. He who builds, plants or sows
in bad faith on the land of another, loses
what is built, planted or sown without
right to indemnity.
ART. 450. The owner of the land on
which anything has been built, planted
or sown in bad faith may demand the
demolition of the work, or that the
planting or sowing be removed, in order
to replace things in their former
condition at the expense of the person
who built, planted or sowed; or he may
compel the builder or planter to pay the
price of the land, and the sower the
proper rent.
ART. 451. In the cases of the two
preceding articles, the landowner is
entitled to damages from the builder,
planter or sower.
ART. 452. The builder, planter or sower
in bad faith is entitled to reimbursement
for the necessary expenses of
preservation of the land.
xxx xxx xxx
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. (Emphases and underscoring
supplied)
xxx xxx xxx
To be deemed a builder in good faith, it
is essential that a person asserts title to
the land on which he builds, i.e., that he
be a possessor in concept of owner, and
that he be unaware that there exists in
his title or mode of acquisition any flaw
which invalidates it. As for Sps. Sarili,
they knew — or at the very least, should
have known — from the very beginning
that they were dealing with a person
who possibly had no authority to sell the
subject property considering the
palpable irregularity in the subject SPA's
acknowledgment. Yet, relying solely on
said document and without any further
investigation on Ramos's capacity to sell,
Sps. Sarili still chose to proceed with its
purchase and even built a house
thereon. Based on the foregoing, it
cannot be seriously doubted that Sps.
Sarili were actually aware of a flaw or
defect in their title or mode of
acquisition and have consequently built
the house on the subject property in bad
faith under legal contemplation. The
case is therefore remanded to the court
a quo for the proper application of the
above-cited Civil Code provisions.
FILOMENA R. BENEDICTO, petitioner, vs.
ANTONIO VILLAFLORES
Facts:
Maria Villaflores (Maria) was the owner
of Lot 2-A, with an area of 277 square
meters, in Poblacion, Meycauayan,
Bulacan, covered by Transfer Certificate
of Title (TCT) No. T-84.761 (M). In 1980,
Maria sold a portion of Lot 2-A to her
nephew, respondent Antonio Villaflores
(Antonio). Antonio then took possession
of the portion sold to him and
constructed a house thereon. Twelve
(12) years later, or on August 15,1992,
Maria executed in favor of Antonio a
Kasulatan ng Bilihang Tuluyan 3 covering
the entire Lot 2-A. However, Antonio did
not register the sale or pay the real
property taxes for the subject land.On
August 31, 1994, Maria sold the same
Lot 2-A to Filomena, evidenced by a
Kasulatan ng Bilihang Tuluyan. Filomena
registered the sale with the Registry of
Deeds of Meycauayan on September 6,
1994. Consequently, the title was then
named after Filomena and paid the real
property taxes for the subject parcel of
land.
******meat of the case***********
*AccionPubliciana-rightofpossesion
On September 28, 2000, Filomena filed
a case for Accion Publiciana with
Cancellation of Notice of Adverse Claim,
Damages and Attorney's Fees against
Antonio. She alleged that she acquired
Lot 2-A in 1994 from her grandaunt
Maria by virtue of the Kasulatan ng
Bilihang Tuluyan . At the time of the sale,
she was not aware that Antonio had any
claim or interest over the subject
property. Antonio assured her that there
was no impediment to her acquisition of
the land, and promised to vacate the
property five (5) years after the sale. In
August 1999, Antonio requested an
extension of one (1) year, and offered to
pay a monthly rental of P2,000.00, which
she granted. However, in 2000, Antonio
refused to vacate the property and,
instead, claimed absolute ownership of
Lot 2-A. Antonio traversed the
complaint, asserting absolute ownership
over Lot 2-A. He alleged that he
purchased the subject property from
Maria in 1980; and that he took
possession of the same and constructed
his house thereon. He came to know of
the sale in favor of Filomena only in 2000
when the latter demanded that he
vacate the property. He averred that
Filomena was aware of the sale; hence,
the subsequent sale in favor of Filomena
was rescissible, fraudulent, fictitious, or
simulated.
RTC - Filomena was the one who
registered the sale in good faith; as such,
she has better right than Antonio. It
rejected Antonio's allegation of bad faith
on the part of Filomena because no
sufficient evidence was adduced to
prove it, therefore Antonio is declared to
be a builder in good faith of his
improvement/building erected in TCT
No. T-208268 (M) and the provisions of
Art. 448 of the New Civil Code applies;
CA - The CA affirmed the RTC for
upholding Filomena's ownership of Lot
2-A and for declaring Antonio a builder
in good faith. However, it remanded the
case to the RTC for further proceedings
to determine the respective rights of the
parties under Articles 448 and 546 of the
Civil Code, and the amount due Antonio.
ISSUE:
W/N Antonio is not entitled to any
reimbursement because he possessed
the property by mere tolerance.
RULING:
No. It is not disputed that the
construction of Antonio's house was
undertaken long before the sale in favor
of Filomena; that when Filomena bought
the property from Maria, Antonio's
house which he used as residence had
already been erected on the property.
Thus, the Court sustain the finding that
Antonio is a builder in good faith. Under
Article 448, a landowner is given the
option to either appropriate the
improvement as his own upon payment
of the proper amount of indemnity, or
sell the land to the possessor in good
faith. Relatedly, Article 546 provides that
a builder in good faith is entitled to full
reimbursement for all the necessary and
useful expenses incurred; it also gives
him right of retention until full
reimbursement is made.
RATIO:
According to Pecson v. CA:
The objective of Article 546 of the Civil
Code is to administer justice between
the parties involved. In this regard, this
Court had long ago stated in Rivera vs.
Roman Catholic Archbishop of Manila
[40 Phil. 717 (1920)] that the said
provision was formulated in trying to
adjust the rights of the owner and
possessor in good faith of a piece of
land, to administer complete justice to
both of them in such a way as neither
one nor the other may enrich himself of
that which does not belong to him.
Guided by this precept, it is therefore
the current market value of the
improvements which should be made
the basis of reimbursement. A contrary
ruling would unjustly enrich the private
respondents who would otherwise be
allowed to acquire a highly valued
income-yielding four-unit apartment
building for a measly amount.
Consequently, the parties should
therefore be allowed to adduce
evidence on the present market value of
the apartment building upon which the
trial court should base its finding as to
the amount of reimbursement to be
paid by the landowner.
LUCIANO BRIONES and NELLY BRIONES ,
petitioners, vs . JOSE MACABAGDAL, FE
D. MACABAGDAL and VERGON REALTY
INVESTMENTS CORPORATION , signed the building permit. And that
respondents.
Facts:
Macabagdal, Respondent-spouses
purchased from Vergon Realty
Investments Corporation (Vergon) Lot
No. 2-R, a 325-square-meter land
located in Vergonville Subdivision No. 10
at Las Piñas City, Metro Manila and
covered by Transfer Certificate of Title
No. 62181 of the Registry of Deeds of
Pasay City. On the other hand,
petitioners are the owners of Lot No. 2-
S, which is adjacent to Lot No. 2-R.
Sometime in 1984, after obtaining the
necessary building permit and the
approval of Vergon, Briones
(petitioners) constructed a house on Lot
No. 2-R which they thought was Lot No.
2-S. After being informed of the mix up
by Vergon's manager, respondent
spouses immediately demanded
petitioners to demolish the house and
vacate the property. Petitioners,
however, refused to heed their demand.
Thus, respondent-spouses filed an
action to recover ownership and
possession of the said parcel of land with
the RTC of Makati City. Petitioners
insisted that the lot on which they
constructed their house was the lot
which was consistently pointed to them
as theirs by Vergon's agents over the
seven (7)-year period they were paying
for the lot. They interposed the defense
of being buyers in good faith and
impleaded Vergon as third-party
defendant claiming that because of the
warranty against eviction, they were
entitled to indemnity from Vergon in
case the suit is decided against them.
RTC ruled in favor of respondent-
spouses and found that petitioners'
house was undoubtedly built on Lot No.
2-R. On appeal, the CA affirmed the
RTC's finding that the lot upon which
petitioners built their house was not the
one (1) which Vergon sold to them.
Based on the documentary evidence,
such as the titles of the two (2) lots, the
contracts to sell, and the survey report
made by the geodetic engineer,
petitioners' house was built on the lot of
the respondent-spouses. Petitioners
insist that they relied with full faith and
confidence in the reputation of Vergon's
agents when they pointed the wrong
property to them. Even the President of
Vergon, Felix Gonzales, consented to the
construction of the house when he
they are builder’s in good faith.
Issue: WON Petitioners are builders in
good faith
Held:
We note that the CA and RTC did not
overlook or fail to appreciate any
material circumstance which, when
properly considered, would have altered
the result of the case. Indeed, it is
beyond cavil that petitioners mistakenly
constructed their house on Lot No. 2-R
which they thought was Lot No. 2-S.
Article 527 of the Civil Code presumes
good faith, and since no proof exists to
show that the mistake was done by
petitioners in bad faith, the latter should
be presumed to have built the house in
good faith. When a person builds in good
faith on the land of another, Article 448
of the Civil Code governs. Wherein, it
covers 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. The builder
in good faith can compel the landowner
to make a choice between appropriating
the building by paying the proper
indemnity or obliging the builder to pay
the price of the land. The choice belongs
to the owner of the land, a rule that
accords with the principle of accession,
that the accessory follows the principal
and not the other way around. However,
even as the option lies with the
landowner, the grant to him,
nevertheless, is preclusive. He must
choose one. He cannot, for instance,
compel the owner of the building to
remove the building from the land
without first exercising either option. It
is only if the owner chooses to sell his
land, and the builder or planter fails to
purchase it where its value is not more
than the value of the improvements,
that the owner may remove the
improvements from the land. The owner
is entitled to such remotion only when,
after having chosen to sell his land, the
other party fails to pay for the same.
Moreover, petitioners have the right to
be indemnified for the necessary and
useful expenses they may have made on
the subject property. Articles 546 and
548 of the Civil Code provide, 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. ART. 548. Expenses
for pure luxury or mere pleasure shall
not be refunded to the possessor in
good faith; but he may remove the
ornaments with which he has
embellished the principal thing if it
suffers no injury thereby, and if his
successor in the possession does not
prefer to refund the amount expended.
Consequently, the respondent-spouses
have the option to appropriate the
house on the subject land after payment
to petitioners of the appropriate
indemnity or to oblige petitioners to pay
the price of the land, unless its value is
considerably more than the value of the
structures, in which case petitioners
shall pay reasonable rent.
Tuatis v. Spouses Escol
Facts: Visminda Escol, the seller and
Ophelia Tuatis, the buyer entered into a
Deed of Sale by Installments, the subject
matter of which is a parcel of land in
Sindangan. It provided that upon the
failure of the buyer to pay the remaining
balance within the time stipulated, he
shall return the land to the seller, and
the seller shall return all the amounts
paid by the buyer. Tuatis took
possession of the land and constructed a
residential building. Tuatis asserted that
she paid Visminda the remaining
balance of P3000 in the presence of one
Erik Selda and thereafter requested
Visminda to sign the absolute deed of
sale. Visminda refused contending that
the purchase price has not been fully
paid. The RTC dismissed Tuatis’s
complaint and also ruled that Tuatis
constructed the building in bad faith for
she had knowledge of the fact that
Visminda is still the absolute owner of
the land and there was also bad faith on
the part of Visminda since she allowed
the construction of the building without
opposition on her part. The rights of the
parties must, therefore, be determined
as if they both had acted in bad faith.
Their rights in such cases are governed
by Article 448 of the Civil Code. The
Court of Appeals dismissed the appeal
by Tuatis which resulted to the finality of
the appealed decision. Visminda filed a
writ of execution. Tuatis then moved
that the RTC issue an order allowing her
to buy the subject property and
maintained that she has the right to
choose between being indemnified for
the value of her building or buying from
Visminda the parcel of land. During the
pendency of the motion, the writ of
execution was enforced. Tuatis filed with
the CA a petition for certiorari,
prohibition and mandamus but the same
was denied hence this petition.
Issue: Whether or not Tuatis is entitled
to exercise the options granted in Art.
448 of the Civil Code. NO.
Held: No, Tuatis is not entitled to
exercise the options granted in Article
448 of the Civil Code. Article 448
provides that 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. According to the
provision, the landowner can choose
between appropriating the building by
paying the proper indemnity for the
same, as provided for in Articles 546 and
548 of the Civil Code; or obliging the
builder to pay the price of the land,
unless its value is considerably more
than that of the structures, in which case
the builder in good faith shall pay
reasonable rent. Under the firstoption,
Visminda may appropriate for herself
the building on the subject property
after indemnifying Tuatis for the
necessary and useful expenses the latter
incurred for said building, as provided in
Article 546 of the Civil Code. Until
Visminda appropriately indemnifies
Tuatis for the building constructed by
the latter, Tuatis may retain possession
of the building and the subject property.
Under the secondoption, Visminda may
choose not to appropriate the building
and, instead, oblige Tuatis to pay the
present or current fair value of the
land.The P10,000.00 price of the subject
property, as stated in the Deed of Sale
on Installment executed in November
1989, shall no longer apply, since
Visminda will be obliging Tuatis to pay
for the price of the land in the exercise
of Visminda’s rights under Article 448 of
the Civil Code, and not under the said
Deed. Tuatis’ obligation will then be
statutory, and not contractual, arising
only when Visminda has chosen her
option under Article 448 of the Civil
Code. Still under the second option, if
the present or current value of the land,
the subject property herein, turns out to
be considerably more than that of the
building built thereon, Tuatis cannot be
obliged to pay for the subject property,
but she must pay Visminda reasonable
rent for the same. Visminda and Tuatis
must agree on the terms of the lease;
otherwise, the court will fix the terms.
The Court highlights that the options
under Article 448 are available to
Visminda, as the owner of the subject
property. There is no basis for Tuatis’
demand that, since the value of the
building she constructed is considerably
higher than the subject property, she
may choose between buying the subject
property from Visminda and selling the
building to Visminda for P502,073.00.
Again, the choice of options is for
Visminda, not Tuatis, to make. And,
depending on Visminda’s choice, Tuatis’
rights as a builder under Article 448 are
limited to the following: (a) under the
first option, a right to retain the building
and subject property until Visminda pays
proper indemnity; and (b) under the
second option, a right not to be obliged
to pay for the price of the subject
property, if it is considerably higher than
the value of the building, in which case,
she can only be obliged to pay
reasonable rent for the same. The rule
that the choice under Article 448 of the
Civil Code belongs to the owner of the
land is in accord with the principle of
accession, i.e., that the accessory follows
the principal and not the other way
around. Even as the option lies with the
landowner, the grant to him,
nevertheless, is preclusive. The
landowner cannot refuse to exercise
either option and compel instead the
owner of the building to remove it from
the land. The raison d’etre for this
provision has been enunciated thus:
Where the builder, planter or sower has
acted in good faith, a conflict of rights
arises between the owners, and it
becomes necessary to protect the
owner of the improvements without
causing injustice to the owner of the
land. In view of the impracticability of
creating a state of forced co-ownership,
the law has provided a just solution by
giving the owner of the land the option
to acquire the improvements after
payment of the proper indemnity, or to
oblige the builder or planter to pay for
the land and the sower the proper rent.
He cannot refuse to exercise either
option. It is the owner of the land who is
authorized to exercise the option,
because his right is older, and because,
by the principle of accession, he is
entitled to the ownership of the
accessory thing. Visminda’s Motion for
Issuance of Writ of Execution cannot be
deemed as an expression of her choice
to recover possession of the subject
property under the first option, since the
options under Article 448 of the Civil
Code and their respective consequences
were also not clearly presented to her by
the 19 April 1999 Decision of the RTC.
She must then be given the opportunity
to make a choice between the options
available to her after being duly
informed herein of her rights and
obligations under both.
Spouses Narvaez vs. Spouses Alciso
594 SCRA 60
Facts:
Larry A. Ogas (Ogas) owned a 1,329-
square meter parcel of land situated in
Pico, La Trinidad, Benguet a portion of
which was subject to a 30-year lease
agreement with Esso Standard Eastern,
Inc. Ogas sold the property to his
daughter Rose O. Alciso. TCT No T-1068
was cancelled and TCT No. T-12422 5
was issued in the name of Alciso. On 25
August 1979, Alciso entered into a Deed
of Sale with Right to Repurchase, selling
the property to Jaime Sansano for
P10,000. Alciso later repurchased the
property from Sansano and, on 28
March 1980, she entered into another
Deed of Absolute Sale, this time selling
the property to Celso S. Bate for
P50,000. The lease rights over the said
property in favor of ESSO STANDARD
EASTERN, INC., as a lessor is likewise
hereby transfered in full to the buyer.
TCT No. T-12422 was cancelled and TCT
No. T-16066 9 was issued in the name of
Bate. On 14 August 1981, Bate entered
into a Deed of Sale of Realty, selling the
property to the spouses Dominador R.
Narvaez and Lilia W. Narvaez (Spouses
Narvaez) for P80,000. TCT No. T-16066
was cancelled and TCT No. T-16528 11
was issued in the name of the Spouses
Narvaez. In 1982, the Spouses Narvaez
built a commercial building on the
property amounting to P300,000. Alciso
demanded that a stipulation be included
in the 14 August 1981 Deed of Sale of
Realty allowing her to repurchase the
property from the Spouses Narvaez. In
compliance with Alciso's demand, the
Deed stated that, "The SELLER (Bate)
carries over the manifested intent of the
original SELLER of the property (Alciso)
to buy back the same at a price under
such conditions as the present BUYERS
(Spouses Narvaez) may impose." The
Spouses Narvaez furnished Alciso with a
copy of the Deed. Alciso alleged that she
informed the Spouses Narvaez that she
wanted to repurchase the property. The
Spouses Narvaez demanded P300,000,
but Alciso was willing to pay only
P150,000. Alciso and the Spouses
Narvaez failed to reach an agreement on
the repurchase price. In a Complaint
dated 15 June 1984 and filed with the
RTC, Alciso prayed that (1) the 25 August
1979 Deed of Sale with Right to
Repurchase, the 28 March 1980 Deed of
Absolute Sale, and the 14 August 1981
Deed of Sale of Realty be annulled; (2)
the Register of Deeds be ordered to
cancel TCT Nos. T-16066 and T-16528;
(3) the Spouses Narvaez be ordered to
reconvey the property; and (4) Sansano,
Bate, and the Spouses Narvaez be
ordered to pay damages, attorney's fees
and expenses of litigation. Alciso claimed
that the intention of the parties was to
enter into a contract of real estate
mortgage and not a contract of sale with
right of repurchase. The RTC held among
others that Deed of Sale of Realty
contained a stipulation pour autrui in
favor of Alciso — Alciso could
repurchase the property and that Alciso
could either appropriate the commercial
building after payment of the indemnity
equivalent to one-half of its market
value when constructed or sell the land
to the Spouses Narvaez.
he Spouses Narvaez appealed to the
Court of Appeals. The Spouses Narvaez
claimed that (1) the 14 August 1981
Deed of Sale of Realty did not contain a
stipulation pour autrui — not all
requisites were present; (2) the RTC
erred in setting the repurchase price at
P80,000; (3) they were purchasers for
value and in good faith; and (4) they
were builders in good faith. The Court of
Appeals held among others that the
Spouses Narvaez were builders in good
faith; and Alciso could either
appropriate the commercial building
after payment of the indemnity or oblige
the Spouses Narvaez to pay the price of
the land, unless the price was
considerably more than that of the
building. The Spouses Narvaez elevated
the case to the Supreme Court.
Issue:
Held:
The Court disagreed with the Court of
Appeals. The Court of Appeals stated
that: “The contract between
defendants-appellants Bate and Narvaez
spouses is a contract of sale with a
stipulation granting plaintiffs-appellees
the right to repurchase the property at a
reasonable price. Being the absolute
owners of the property in question,
defendants-appellants Narvaez spouses
have the undisputed right to use, enjoy
and build thereon. Having built the
improvement on the land they own and
registered in their names, they are
likened to builders in good faith and
their rights over the improvement shall
be governed by Article 448 of the Civil
Code. Applying said Article, plaintiffs-
appellees, after repurchasing the land,
will have the following options:(1) to
appropriate for themselves the building
upon payment of its value to
defendants-appellants Narvaez spouses;
OR (2) to compel the defendants-
appellants Narvaez spouses to buy the
land, unless the value of thereof [sic] be
considerably more than that of the
building, in which case, said spouses may
lease the land instead. The parties shall
agree upon the terms of the lease and in
case of disagreement, the courts shall fix
the terms thereof.” Article 448 does not
apply 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 donation. Elsewise stated, where
the true owner himself is the builder of
the works on his own land, the issue of
good faith or bad faith is entirely
irrelevant. Article 448 is inapplicable in
the present case because the Spouses
Narvaez built the commercial building
on the land that they own. Besides, to
compel them to buy the land, which they
own, would be absurd. In a sale with
right of repurchase, the applicable
provisions are Articles 1606 and 1616 of
the Civil Code, not Article 448. Under
Article 1616, Alciso may exercise her
right of redemption by paying the
Spouses Narvaez (1) the price of the
sale, (2) the expenses of the contract, (3)
legitimate payments made by reason of
the sale, and (4) the necessary and
useful expenses made on the thing sold.
In the present case, the cost of the
building constitutes a useful expense.
Useful expenses include improvements
which augment the value of the land.
Heirs of Cabal v SPS Lorenzo and Cabal
FACTS:
During his lifetime, Marcelo owned a
parcel of land (Lot G) covered by an OCT,
when he died, he was survived by his
wife Higinia and his children. 5 years
before he died, Marcelo allowed his son,
Marcelino to build his house on a
portion of the parcel of land, later,
Marcelino’s son also build his house on
the disputed property. Marcelos heirs
extra-judicially settled among
themselves Lot G. Daniel sold a portion
of his share to SPS Merete. Later on, the
heirs subdivided Lot G into Lot G-1 in
favor of Marcelino and Lot G-2 in favor
of Higinia, Daniel, Natividad, Juan,
Cecilio, Margarita, Lorenzo, Lauro and
Anacleto. Lot G-2 was further subdivided
and the remaining portion, Lot 1,
became subject of TCT with Higinia,
Margarita, Natividad, Lorenzo, Daniel,
Oscar, Merete, Cecilio, Carmelita and
Anacleto. The co-owners executed a
deed of agreement of partition and in
the same deed, Lorenzo bought the
shares of Higinia, Margarita, Daniel and
Natividad. The subdivision plan revealed
that Marcelino and his son occupied and
built their houses in the southernmost
portion of Lot 1-E and not adjacent to
Lot G-1, the respondents confronted
Marcelino on this matter which resulted
to a re-survey and swapping of lots for
the purpose of reconstruction of land
titles. But this did not materialize and
efforts to settle were futile.
Respondents filed a complaint for
recovery of possession with damages
against Marcelino. Marcelino answered
with counterclaim, contending that
respondents have no cause of action
against him because he has been in
possession in good faith since 1949 with
respondents knowledge and
acquiescence. MTC ruled in favor of
Marcelino saying that prescription has
barred respondents from filing a claim.
RTC reversed the decision of the MTC
saying that Marcelino’s possession was
in the concept of a co-owner and
therefore prescription does not run in
his favor. CA affirmed the RTC ruling,
that Marcelino may have been in good
faith when he started to occupy the land
but his occupation in good faith
diminished after Lot G was surveyed.
ISSUE:
W/N Marcelino occupied the land in
good faith.
RULING:
The Court remanded the case to the
court of origin for further proceedings to
determine the facts essential to the
proper application of Art. 448 in rel. to
Art. 546 and 548 of the NCC. Marcelino’s
possession of the disputed lot was based
on a mistaken belief that Lot-G-1 is the
same lot on which he has nuilt his house
with the consent of his father. There is
no evidence, other than bare allegation,
that Marcelino was aware that he
intruded on the respondents property
when he continued to occupy and
possess the disputed lot after partition
was effected. The fact that Marcelino
mortgaged Lot G-1 is not an indication of
bad faith since there is no concrete
evidence that he was aware at that time
that the property covered by the title
and the one he was occupying were not
the same. There is no evidence that he
introduced improvements on Lot G-1.
LEONILA SARMINETO v. HON. ENRIQUE
A. AGANA
Doctrine: Abuilderingoodfaith;Art.448
Facts: It appears that while Ernesto
Valentino was still courting his wife, the
latter's mother had told him the couple
could build a residential house on a lot
of 145 sq. ms., being Lot D of a
subdivision in Paranaque (the LAND, for
short). In 1967, Ernesto did construct a
residential house on the land at a cost of
P8,000.00 to P10,000.00. It was
probably assumed that the wife's
mother was the owner of the land and
that, eventually, it would somehow 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, on
September 7 ,1974, sold the same to
petitioner Leonila Sarmiento. The
following January 6, 1975, Petitioner
asked Ernesto and wife to vacate and, on
April 21, 1975, filed an Ejectment suit
against them. In the evidentiary hearings
before the Municipal Court, Petitioner
submitted the deed of sale of the land in
her favor, which showed the price to be
P15,000.00. On the other hand, Ernesto
testified that the then cost of the
residential house would be from
P30,000.00 to P40,000.00. The
Municipal Court found that private
respondents had built the RESIDENTIAL
HOUSE in good faith, and, disregarding
the testimony of ERNESTO, that it had a
value of P20,000.00. It then ordered
ERNESTO and wife to vacate the LAND
after SARMIENTO has paid them the
mentioned sum of P20,000.00. The
Ejectment suit was elevated to the Court
of First Instance of Pasay where, after
the submission of memoranda, said
Court rendered a modifying Decision
under Article 448 of the Civil Code.
SARMIENTO was required, within 60
days, to exercise the option to reimburse
ERNESTO and wife the sum of 40,000.00
as the value of the RESIDENTIAL HOUSE,
or the option to allow them to purchase
the LAND for P25,000.00. SARMIENTO
did not exercise any of the two options
within the indicated period, and
ERNESTO was then allowed to deposit
the sum of P25,000.00 with the Court as
the purchase price for the LAND. This is
the hub of the controversy. SARMIENTO
then instituted the instant certiorari
proceedings.
Issue: W/N Spouses Ernesto are builders
in good faith.
Ruling: We 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. 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.
WHEREFORE, the Petition for Certiorari
is hereby ordered dismissed.
FRANCISCO DEPRA, plaintiff-appellee, vs.
AGUSTIN DUMLAO
FACTS:
Francisco Depra, is the owner of a parcel
of land registered under Transfer
Certificate of Title No. T-3087, known as
Lot No. 685, situated in the municipality
of Dumangas, Iloilo. Agustin Dumlao,
defendant-appellant, owns an adjoining
lot, designated as Lot No. 683, with an
approximate area of 231 sq. ms.
Sometime in 1972, DUMLAO
constructed his house on his lot, the
kitchen thereof had encroached on an
area of thirty four (34) square meters of
DEPRA's property. After the
encroachment was discovered in a
relocation survey of DEPRA's lot made
on November 2, 1972, his mother,
Beatriz Derla, after writing a demand
letter asking DUMLAO to move back
from his encroachment, filed an action
for Unlawful Detainer on February 6,
1973 against DUMLAO in the Municipal
Court of Dumangas, docketed as Civil
Case No. I. Said complaint was later
amended to include DEPRA as a party
plaintiff. MTC- Found that DUMLAO was
a builder in good faith, and applying
Article 448 of the Civil Code. "Ordering
that a forced lease is created between
the parties with the plaintiffs, as lessors,
and the defendants as lessees, over the
disputed portion with an area of thirty
four (34) square meters, the rent to be
paid is five (P5.00) pesos a month,
payable by the lessee to the lessors
within the first five (5) days of the month
the rent is due; and the lease shall
commence on that day that this decision
shall have become final." On July 15,
1974, DEPRA filed a Complaint for
Quieting of Title against DUMLAO before
the then Court of First Instance of Iloilo.
(Court ruled that the litigated property
belongs to plaintiff evidenced by title)
Rebutting the argument of res judicata
relied upon by DUMLAO, DEPRA claims
that the Decision of the Municipal Court
was null and void ab initio because its
jurisdiction is limited to the sole issue of
possession, whereas decisions affecting
lease, which is an encumbrance on real
property, may only be rendered by
Courts of First Instance.
RULING:
Since the Municipal Court, acted without
jurisdiction, its Decision was null and
void and cannot
operate as res judicata to the subject
complaint for Queting of Title. Besides,
even if the Decision were valid, the rule
on res judicata would not apply due to
difference in cause of action.
WHEREFORE, the judgment of the trial
Court is hereby set aside, and this case is
hereby ordered remanded to the
Regional Trial Court of Iloilo for further
proceedings consistent with Articles 448
and 546 of the Civil Code. Pursuant to
the foregoing provision, DEPRA has the
option either to pay for the encroaching
part of DUMLAO's kitchen, or to sell the
encroached 34 square meters of his lot
to DUMLAO. He cannot refuse to pay for
the encroaching part of the building, and
to sell the encroached part of his land, as
he had manifested before the Municipal
Court. But that manifestation is not
binding because it was made in a void
proceeding. However, the good faith of
DUMLAO. is part of the Stipulation of
Facts in the Court of First
Instance. It was thus error for the Trial
Court to have ruled that DEPRA is
"entitled to possession," without more,
of the disputed portion implying thereby
that he is entitled to have the kitchen
removed. He is entitled to such removal
only when, after having chosen to sell his
encroached land, DUMLAO fails to pay
for the same. In this case, DUMLAO had
expressed his willingness to pay for the
land, but DEPRA refused to sell. The
Court however reiterated that: "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
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. Additional benefits were
extended to the builder but the
landowner retained his options. The
fairness of the rules in Article 448 has
also been explained as follows: "Where
the builder, planter or sower has acted
in good faith, a conflict of rights arises
between the owners, and it becomes
necessary to protect the owner of the
improvements without causing injustice
to the owner of the land. In view of the
impracticability of creating a state of
forced co-ownership, the law has
provided a just solution by giving the
owner of the land the option to acquire
the improvements after payment of the
proper indemnity, or to oblige the
builder or planter to pay for the land and
the sower to pay for the proper rent. It
is the owner of the land who is
authorized to exercise the option,
because his right is older, and because,
by the principle of accession, he is
entitled to the ownership of the
accessory thing.
ver 2
FRANCISCO DEPRA vs. AGUSTIN DUMLAO
[G.R. No. L-57348. May 16, 1985.]
FACTS:
Francisco Depra and Agustin Dumlao
were owners of adjoining parcels of
land. In 1972, Dumlao constructed his
house on his lot. However, the kitchen
thereof had encroached on an area of
34-sq. m. of Depra's property. Such
encroachment was discovered upon a
relocation survey of Depra’s land.
Depra’s mother, Beatriz Depra, wrote a
letter asking Dumlao to move back from
his encroachment. An action for
Unlawful Detainer was filed against
Dumlao in the Municipal Court of
Dumangas. Municipal Court found that
Dumlao was a builder in good faith and
ordered a forced lease agreement over
the encroached portion (5pesos per
month). The judgment lapsed into
finality. But even then, Depra did not
accept payment of rentals, hence,
Dumlao deposited such rentals with the
Municipal Court. Depra filed a Complaint
for Quieting of Title against Dumlao
before CFI of Iloilo involving the same
34-sq.m. portion of his land. CFI held
that Depra owned the 34-sq.m. subject
of the litigation and entitled to possess
the same.
ISSUE:
Whether or not Depra is entitled to
possess the disputed portion of his
property
RULING:
The CFI’s decision SET ASIDE. Case
REMANDED to RTC for further
proceedings consistent with Articles 448
and 546 of the Civil Code. CFI’s decision
that Depra is entitled to possess the
disputed portion of his land, implying
that he is entitled to have the kitchen
removed is invalid. He is entitled to such
removal only when, after having chosen
to sell his encroached land, Dumlao fails
to pay for the same. Under Article 448,
the owner of the land has the option to
either pay for the building or to sell his
land to the owner of the building. But he
cannot refuse both to pay for the
building and to sell the land and compel
the owner of the building to remove it
from the land where it 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.
Ortiz vs. Kayanan
92 SCRA 146
Antonio, J.
TOPIC: Rights of possessor in good faith
FACTS:
The ward of Martin Dolorico II owned a
lot subject of Homestead Application.
Upon the death of Dolorico II’s ward in
1931, he continued the cultivation and
possession of the property, without
however filing any application to acquire
title thereon. In the Homestead
application, Dolorico II named his uncle,
Martin Dolorico I as his heir and
successor in interest. Dolorico I
relinquished his rights to Quirino
Comintan and Eleuterio Zamora, his
grandson and son-in-law, respectively,
and requested the Director of Lands to
cancel the homestead application. The
Homestead application was cancelled
and respective sales application was
filed. Dolorico II protested alleging that
he should be given preference to
purchase the lot inasmuch as he is the
actual occupant and has been in
continuous possession of the same since
1931. Despite opposition, “Portion A” of
the property was sold at public auction
wherein defendant Comintan was the
only bidder. Regional Land officer
dismissed the protest and gave due
course to the sales application on the
ground that the relinquishment of the
homestead rights of Dolorico I in favor of
Comintan and Zamora is proper and that
because Dolorico II failed to participate
in the public auction, he is forever
barred to claim the property. Director of
Land denied motion for reconsideration.
Secretary of Agriculture and Natural
Resources affirmed Regional Land
Officer’s decision. Bartolome Ortiz
sought the review and/or annulment of
the decision of the Secretary of
Agriculture and Natural Resources. CFI
of Quezon awarded ½ portion of the
property in litigation to Comintan, being
the highest bidder, and gave due course
to the sales application of Zamora over
the other half without prejudice to Ortiz’
right to participate in the public bidding
of the same. However, should Ortiz be
not declared the successful bidder,
Comintan and Zamora are ordered to
reimburse jointly Ortiz for the
improvements he has introduced to the
property. CA affirmed. The judgment
became final and executory and a
motion for execution was filed. In the
order of Judge Union Kayanan of CFI of
Quezon, it was found that Ortiz collected
tolls a portion of the property wherein
he has not introduced any
improvements. Such tolls and the
possession of ½ of the land were
awarded to Comintan. In addition, the
other half was awarded to Zamora.
ISSUE:
Whether or not Ortiz is a possessor in
good faith and thus entitled to
possession and tolls collected pending
full payment of the value of the
improvements he introduced
HELD:
Judgment MODIFIED.
A possessor in good faith is entitled to
the fruits received before the possession
is legally interrupted. Possession in good
faith ceases or is legally interrupted from
the moment defects in the title are
made known to the possessor, by
extraneous evidence or by the filing of
an action in court by the true owner for
the recovery of the property. Hence, all
the fruits that the possessor may receive
from the time he is summoned in court,
or when he answers the complaint, must
be delivered and paid by him to the
owner or lawful possessor. However,
even after his good faith ceases, the
possessor in fact can still retain the
property, pursuant to Article 546 of the
New Civil Code, until he has been fully
reimbursed for all the necessary and
useful expenses made by him on the
property. This right of retention has
been considered as one of the
conglomerate of measures devised by
the law for the protection of the
possessor in good faith. Its object is to
guarantee the reimbursement of the
expenses, such as those for the
preservation of the property, or for the
enhancement of its utility or
productivity. It permits the actual
possessor to remain in possession while
he has not been reimbursed by the
person who defeated him in the
possession for those necessary expenses
and useful improvements made by him
on the thing possessed.
Applying this in the case, Ortiz cannot
appropriate for his own exclusive benefit
the tolls which he collected from the
property retained by him. It was his duty
under the law, after deducting the
necessary expenses for his
administration, to apply such amount
collected to the payment of the interest,
and the balance to the payment of the
obligation. The disputed tolls, after
deducting petitioner’s expenses for
administration, belong to Comintan,
owner of the land through which the toll
road passed, further considering that
the same was on portions of the
property on which petitioner had not
introduced any improvement.

VICENTE STO. DOMINGO BERNARDO ,
plaintiff-appellant, vs . CATALINO
BATACLAN , defendant-appellant and
TORIBIO TEODORO , purchaser-appellee.
Facts:
By a contract of sale executed on July 17,
1920, the plaintiff herein, Bernardo,
acquired from Pastor Samonte and
others ownership of the parcel of land of
about 90 hectares situated in sitio
Balayunan, Silang Cavite. To secure
possession of the land from the vendors
the said plaintiff, on July 20, 1929,
instituted Civil Case No. 1935 in the
Court of First Instance of Cavite. The trial
court found for the plaintiff in a decision
which was armed by this Supreme Court
on appeal (G. R. No. 33017). When
plaintiff entered upon the premises,
however, he found the defendant
herein, Catalino Bataclan, who appears
to have been authorized by former
owners, as far back as 1922, to clear the
land and make improvements thereon.
As Bataclan was not a party in Case No.
1935, plaintiff, on June 11, 1931,
instituted against him a Civil Case No.
2428. In this case, plaintiff was declared
owner but the defendant Bataclan was
held to be possessor in good faith,
entitled to reimbursement in the total
sum of P1,642, for work done and
improvements made. Plaintiff was given
by this court 30 days from the date when
the decision became final within which
to exercise his option, either to sell the
land to the defendant or to buy the
improvements from him. On January 9,
1934, the plaintiff manifested to the
lower court his desire (to sell) "to require
the defendant Bataclan to pay him the
value of the land at the rate of P200 per
hectare or a total price of P18,000 for
the whole tract of land." H/r the
defendant informed the lower court that
he was unable to pay for the land and,
on January 24, 1934, an order was issued
giving the plaintiff 30 days within which
to pay the defendant the sum of P2,212
stating that, in the event of failure to
make such payment, the land would be
ordered sold at public auction.
Plaintiff appealed for reconsideration
but was denied. Then on April 24, 1934,
the court below, at the instance of the
plaintiff and without objection on the
part of the defendant, ordered the sale
of the land in question at public auction.
The land was sold to Toribio Teodoro,
the highest bidder, for P8,000. Teodoro
then moved that he be placed in
possession of the land purchased by
him. The motion was granted. H/r the
defendant states that he is a possessor
in good faith and that the amount of
P2,212 to which he is entitled has not yet
been paid to him. Therefore, he says, he
has a right to retain the land in
accordance with the provisions of article
453 of the Civil Code.
Issue: WON the defendant Bataclan lost
his right to retain the property pending
payment for indemnity.
Held:
The Court ruled that the right to retain
the property has already been lost. Due
to the failure and inability of the
defendant to pay the purchase price the
subject property was sold in apublic
auction which Bernardo asked for,
without any protest from Bataclan.
Therefore, the court found no reason to
keep the property in the possession of
the defendant. The Court explained that
Article 448 provides a just and equitable
solution to the imprac- ticability of
creating “forced co-ownership” by giving
the owner of the land the option to
acquire the improvements after
payment of the proper indemnity or to
oblige the builder or planter to pay for
the land and the sower to pay the proper
rent. The owner of the land is allowed to
exercise the said options because his
right is older and because, by the
principle of accession, he is entitled to
the ownership of the accessory thing.
Mores v Yu-Go
CASE DOCTRINE: Indeed, full
reimbursement of useful improvements
and retention of the premises until
reimbursement is made applies only to a
possessor in good faith, i.e., one who
builds on land with the belief that he is
the owner thereof. It does not apply
where one’s only interest is that of a
lessee under a rental contract,
otherwise, it would always be in the
power of the tenant to improve his
landlord out of his property
DETAILED FACTS:
Facts: On January 21, 1998, plaintiffs-
appellants Shirley M. Yu-Go, Ma. Victoria
M. Yu-Lim and Ma. Estrella M. Yu
("appellants") filed a Complaint for
InjunctionandDamageswithPrayerforIss
uanceofa Temporary Restraining Order
and Preliminary Injunction before the
Regional Trial Court in Naga City against
defendants-appellees, spouses Antonio
and Alida Mores ("appellees").
Appellants alleged that they co-owned a
parcel of land located in Sto. Tomas,
Magarao, Camarines Sur on which a
building of strong materials ("subject
property") was built. In March 1983,
appellees pleaded to appellants that they
be allowed to stay in the subject property
in the meantime that they did not own a
house yet. Since appellee Antonio Mores
used to be an errand boy of appellants’
family, they readily agreed without
asking for any rental but subject only to
the condition that the said stay would
last until anyone of appellants would
need the subject property. Forthwith,
appellees and their children occupied
the same as agreed upon.
In November 1997, appellants made
known to appellees that they were
already in need of the subject property.
They explained that appellant Shirley Yu-
Go needed the same and, besides,
appellees already have their own house
in Villa Grande Homes, Naga City. Yet,
appellees begged that they be given a 6-
month extension to stay thereat or until
May 1998. However, even after May
1998, appellees failed to make good
their promise and even further asked
that they be allowed to stay therein until
October 1998, which was again
extended until the end of the same year.
Appellants gave their final demand for
appellees to vacate the subject
property. However, instead of heeding
such demand, appellees hired some
laborers and started demolishing the
improvements on the subject property
on January 20, 1999.
Appellants’ protest fell on deaf ears
because appellees continued their
demolition and even took away and
appropriated for themselves the
materials derived from such unlawful
demolition.
They denied that appellants made a
demand for them to vacate the subject
property, insisting that it was merely a
sort of reminder that sooner or later
appellees should yield possession thereof
since, after all, they had already bought a
second-hand house which was
undergoing repair. Appellees argued
that what they removed was merely the
improvements made on the subject
property, which removal had not caused
any substantial damage thereto as, in
fact, it remained intact
RTC ruling: Ruled in favour of Mores
defendants failed to prove the
allegations in their counterclaims that
plaintiffs acted in bad faith and/or
through gross and reckless negligence in
filing this complaint, and the damages
defendants allegedly suffered. Failing in
this, plaintiffs must also be presumed to
have acted in good faith when they filed
this complaint with the honest belief that
their rights were violated when
defendants removed the useful
improvements from the principal
building and land of plaintiffs. Applying
the same principle, the equipoise rule,
defendants’ counterclaims must
necessarily fail. Both parties having acted
in good faith, the court will not disturb
the present status, and will leave the
parties where it found them.
CA ruling: Ruled in favour of Yu Go The
appellate court disagreed with the trial
court’s conclusion that the spouses
Mores were builders in good faith and
have the right of accession under Articles
546 and 547 of the Civil Code. Instead,
the appellate court believed that the
relationship between the Yu siblings and
the spouses Mores is one between a
lessor and a lessee, making Article 1678
of the Civil Code applicable to the
present case. . The options given by
Article 1678, the right of appropriating
the useful improvements after
reimbursing 50% of its value or the right
of removal of the useful improvements,
are given by law to the lessor - the Yu
siblings. The spouses Mores, however,
failed to give the Yu siblings the
opportunity to choose from these two
options
Issue: 1) Whether or not spouses mores
are builders in good faith. NO.
2) Whether or not Article 1678 should
apply. YES.
Held: 1) NO, [The Spouses Mores’] good
faith is underscored by the fact that no
one from appellants had objected or
prevented appellees from effecting said
improvements which, obviously, were
undertaken in quite a span of time. Even
if we believe appellant Victoria Yu-Lim’s
testimony that they would only learn of
the introduction of such improvements
after each of such improvements had
already been built, [the Yu siblings]
never made known their objections
thereto nor did they pose a warning
against future introduction of any
improvement. After all, the said
improvements were not introduced
simultaneously. The good faith referred
to by Alida Mores was about the building
of the improvements on the leased
subject property. However, tenants like
the spouses Mores cannot be said to be
builders in good faith as they have no
pretension to be owners of the
property.10 Indeed, full reimbursement
of useful improvements and retention of
the premises until reimbursement is
made applies only to a possessor in good
faith, i.e., one who builds on land with
the belief that he is the owner thereof.
2) YES, The appellate court is correct in
ruling that Article 1678 of the Civil Code
should apply in the present case. Article
1678 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. With regard to
the ornamental expenses, the lessee
shall not be entitled to any
reimbursement, but he may remove the
ornamental objects, provided no
damage is caused to the principal thing,
and the lessor does not choose to retain
them by paying their value at the time
the lease is extinguished. It is incorrect,
however, for the appellate court to state
that the spouses Mores did not give the
Yu siblings the option to retain the
improvements. Since the Yu siblings
failed to make such offer, the spouses
Mores had the right to remove the
improvements. WHEREFORE, we GRANT
the petition. We AFFIRM with
MODIFICATION the Decision of the Court
of Appeals promulgated on 26 August
2005 as well as the Resolution
promulgated on 14 March 2006 in CA-
G.R. CV No. 76076. Article 1678 of the
Civil Code is applicable to the present
case. The award of moral damages
worth ₱100,000 to the Yu siblings is
deleted. SO ORDERED
Rex Daclison vs. Eduardo Baytion GR No.
219811 April 6, 2016
FACTS:
Eduardo Baytion and his siblings were
co-owners a parcel of land which they
inherited from their parents. A one-
storey building divided into 7 units was
erected on the land As administrator, he
leased the units to third persons. One of
whom is Leonida Dela Cruz who used it
for her business of selling rocks, pebbles
and similar construction materials. Upon
expiration of Leonida’s lease, Rex
Daclison and other persons acting under
her took possession of the leased
property without prior knowledge and
consent of Baytion. Since then, Daclison
had been using the property without
paying anything to Baytion. Baytion
demanded Daclison to vacate the
property when he learned Daclison’s
unauthorized entry. Daclison refused. A
complaint for forcible entry and
damages was filed against Daclison. In
his answer, Daclison contended that the
portion that he occupied was outside
Baytion’s property. It was outside the
stone wall erected at the creek lying
beside Baytion’s property. This down-
sloping area was filled up until it was
leveled with Baytion’s property and
Antonio dela Cruz, one of Baytion’s
lessee, paid for the right to possess the
same. Ernanie dela Cruz who took over
Antonio’s business and Daclison entered
into a business venture in the leveled
portion. Despite investigation made to
affirm that the leveled portion was
outside Baytion’s property, Baytion still
demanded him to vacate. MeTC
dismissed. RTC held that Baytion had a
better right of possession over the
leveled portion as it was considered as
an improvement of the leased property.
CA dismissed appeal and affirmed that
Baytion had a better right to possess.
ISSUE:
Whether or not Baytion has a better
right over the leveled portion as it forms
part of his property because it is an
accretion, construction, or improvement
on the property
HELD:
Petition GRANTED.
Baytion does not have a better right over
the leveled portion. Under Article 457 of
the Civil Code, in order for an accretion
to be considered the following requisites
must concur, namely: (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 the accretion takes place is
adjacent to the banks of rivers. In the
case, the leveled portion cannot be
considered as an accretion. The land did
not came about by reason of a gradual
and imperceptible deposit. The deposits
were artificial and man-made and not
the exclusive result of the current from
the creek adjacent to his property.
Baytion failed to prove the attendance
of the indispensable requirement that
the deposit was due to the effect of the
current of the river or creek. Alluvion
must be the exclusive work of nature
and not a result of human intervention.
Narvasa v Imbornal
Facts:
Basilia had four children. Francisco and
Perdro were the children of Alejandra,
one of the children of Basilia, while
petitioner Petra was the daughter of
Balbina. Petitioners are the herirs and
successors-in-interest of Francisco,
Pedro, and Petra. Respondents are the
descendants of Pablo, one of the
children of Basilia. During her lifetime,
Basilia owned a parcel of land located in
Pangasinan which she conveyed to her 3
daughters, Imbornal sisters. Catalina's
husband, Ciriaco applied and was
granted homestead patent over a
riparian land adjacent to the Cayanga
River. An OCT was later issued in his
name. This was eventually cancelled and
a TCT was issued in the heirs of Ciriaco.
Ciriaco and his heirs had since occupied
the northern portion of the Motherland,
while respondents occupied the
southern portion. In 1949, the first
accretion adjoined the southern portion
of the Motherland. An OCT was issued in
the name of respondent Victoriano
covering the first accretion. The second
accretion abutted the first accretion on
its southern portion. An OCT was issued
in the names of all respondents covering
the second accretion. Claiming rights
over the entire Motherland, Francisco et
al filed an Amended Complaint for
reconveyance against respondents.
They anchored their claim on the
allegation that Ciriaco urged Balbona
and Alejandra to sell the Sabangan
property and that Ciriaco used the
proceeds to fund the homestead patent
application over the Motherland. That
when the patent is approved, Ciriaco is
deemed to be holding the Motherland in
trust for the Imbornal sisters. Francisco
et al alleged that through deceit, fraud,
falsehood, and misrepresentation,
respondent Victoriano had illegally
registered the accretions in their names
notwithstanding the fact that they were
not the riparian owners, that they did
not assert their inheritance claims over
the Motherland and the accretions in
respect to respondents rights.
Respondents answered that the
amended complaint state mo cause of
action against them, having failed to
describe the disputed properties, the
action was barred by prescription, and
the properties sought to be reconveyed
are not the properties of their
predecessors-in-interest. RTC ruled in
favor of Francisco et al who found that
an implied trust existed between Ciriaco
and the Imbornal sisters. With respect to
the accretions, RTC ruled that the
owners of the Motherland are likewise
the owners of the accretions. Ca
reversed the RTC ruling having found
that Ciriaco alone was awarded a
homestead patent which later became
the basis for the issuance of a Torrens
certificate of title in his name, as such, it
cannot be attacked collaterally. That the
homestead patent was awarded by the
government to Ciriaco after complying
with the requirements of CA 141. With
respect to the accretions, CA ruled that
respondents need not be the owners of
the Motherland in order to acquire them
by acquisitive prescription.
Issue:
W/N the descendants of Ciriaco are the
owners of the Motherland and
respondents owns the accretions
Ruling:
The Court found that the cause of action
pertaining to the Motherland and First
Accretion are barred by prescription.
When property is registered in another's
name, an implied trust is created by law
in favor of the true owner, as such, an
action for reconveyance bases on
implied trust prescribes in 10 years from
the date of registration. Francisco, et al.
had then a period of ten (10) years from
the registration of the respective titles
covering the disputed properties within
which to file their action for
reconveyance, taking into account the
fact that they were never in
possessionof the said properties. Hence,
with respect tothe Motherland covered
by OCT No. 1462 issued on December 5,
1933 in the name of Ciriaco, an action
for reconveyance therefor should have
been filed until December 5, 1943; with
respect to the First Accretion covered by
OCT No. P-318 issued on August 15,
1952in the name of respondent
Victoriano, an action of the same nature
should have been filed untilAugust
15, 1962; and, finally, with respect to the
Second Accretion covered by OCT No.
21481 issued on November 10, 1978in
the name of the respondents, a suit for
reconveyance therefor should have
been filed until November 10, 1988. The
burden of proving the existence of a
trust is on the party asserting its
existence, and such proof must be clear
and satisfactorily show the existence of
the trust and its elements. In this case, it
cannot be said, merely on the basis of
the oral evidence offered by Francisco,
et al., that the Motherland had been
either mistakenly or fraudulently
registered in favor of Ciriaco.
Accordingly, it cannot be said either that
he was merely a trustee of an implied
trust holding the Motherland for the
benefit of the Imbornal sisters or their
heirs. Consequently, as Francisco, et
al.failed to prove their ownership rights
over the Motherland, their cause of
action with respect to the First Accretion
and, necessarily, the Second Accretion,
must likewise fail.
OFFICE OF THE CITY MAYOR OF
PARAÑAQUE CITY VS EBIO
FACTS:
Respondents claim that they are the
absolute owners of a parcel of land
consisting of 406 square meters, more
or less, located at 9781 Vitalez
Compound in Barangay Vitalez,
Parañaque City and covered by Tax
Declaration Nos. 01027 and 01472 in the
name of respondent Mario D. Ebio. ---->
Said land was an accretion of Cut-cut
creeK.
-Respondents assert that the original
occupant and possessor of the said
parcel of land was their great
grandfather, Jose Vitalez. Sometime in
1930, Jose gave the land to his son,
Pedro Vitalez. From then on, Pedro
continuously and exclusively occupied
and possessed the said lot. In 1966, after
executing an affi davit declaring
possession and occupancy, Pedro was
able to obtain a tax declaration over the
said property in his name. Since then,
respondents have been religiously
paying real property taxes for the said
property. In April 1964 and in October
1971, Mario Ebio secured building
permits from the Parañaque municipal
office for the construction of their house
within the said compound. 7 On April 21,
1987, Pedro executed a notarized
Transfer of Rights 8 ceding his claim over
the entire parcel of land in favor of
Mario Ebio- In January 2003, however,
respondents were surprised when
several officials from the barangay and
the city planning office proceeded to cut
eight (8) coconut trees planted on the
said lot. Respondents filed letter-
complaints before the Regional Director
of the Bureau of Lands, the Department
of Interior and Local Government and
the Office of the Vice Mayor. 13 On June
29, 2003, the Sangguniang Barangay of
Vitalez held a meeting to discuss the
construction of the proposed road. In
the said meeting, respondents asserted
their opposition to the proposed project
and their claim of ownership over the
affected property. - respondents went
to the RTC of Parañaque City on April 21,
2005 and applied for a writ of
preliminary injunction against
petitioners. 18 In the course of the
proceedings, respondents admitted
before the trial court that they have a
pending application for the issuance of a
sales patent before the Department of
Environment and Natural Resources
(DENR). becauase theyare ordering to
vacate the area within 30 days rtc - RL
containing an area of 291 square meters
is owned by Guaranteed Homes, Inc.
covered by TCT No. S- 62176. The same
RL 8 appears to have been donated by
the Guaranteed Homes to the City
Government of Parañaque on 22 March
1966 and which was accepted by the
then Mayor FLORENCIO BERNABE on 5
April 1966. There is no evidence
however, when RL 8 has been intended
as a road lot.
- On the other hand, the evidentiary
records reveal that PEDRO VITALEZ
possessed the accreted property since
1930 per his Affidavit dated 21 March
1966 for the purpose of declaring the
said property for taxation purposes. The
property then became the subject of Tax
Declaration No. 20134 beginning the
year 1967 and
the real property taxes therefor had
been paid for the years 1966, 1967,
1968, 1969, 1970, 1972, 1973,
1974, 1978, 1980, 1995, 1996, 1997,
1998, 1999,
2000, 2001, 2002, 2003, and 2004.
Sometime in 1964 and 1971,
construction permits were issued in
favor of Appellant MARIO EBIO for the
subject property. On 21 April 1987,
PEDRO VITALEZ transferred his rights in
the accreted property to MARIO EBIO
and his successors-in-interest.
Issue:
Whether the character of respondents'
possession and occupation of the
subject property entitles them to avail of
the relief of prohibitory injunction.
RULING
It is an uncontested fact that the subject
land was formed from the alluvial
deposits that have gradually settled
along the banks of Cut-cut creek. This
being the case, the law that governs
ownership over the accreted portion is
1866, which remains in effect, 26 in
relation to Article 457 of the Civil Code.
Article 457 of the Civil Code states: Art.
457. To the owners of lands adjoining
the banks of rivers belong the accretion
which they gradually receive from the
effects of the current of the waters. It is
therefore explicit from the foregoing
provisions that alluvial deposits along
the banks of a creek do not form part of
the public domain as the alluvial
property automatically belongs to the
owner of the estate to which it may have
been added. The only restriction
provided for by law is that the owner of
the adjoining property must register the
same under the Torrens system;
otherwise, the alluvial property may be
subject to acquisition through
prescription by third persons. In
contrast, properties of public dominion
cannot be acquired by prescription. No
matter how long the possession of the
properties has been, there can be no
prescription against the State regarding
property of public domain. 29 Even a city
or municipality cannot acquire them by
prescription as against the State. Hence,
while it is true that a creek is a property
of public dominion, 31 the land
which is formed by the gradual and
imperceptible accumulation of
sediments along its banks does not form
part of the public domain by clear
provision of law. We also find that the
character of possession and ownership
by the respondents over the contested
land entitles them to the avails of the
action. A right in esse means a clear and
unmistakable right. 34 A party seeking to
avail of an injunctive relief must prove
that he or she possesses a right in esse
or one that is actual or existing. It should
not be contingent, abstract, or future
rights, or one which may never arise. In
the case at bar, respondents assert that
their predecessor-in-interest, Pedro
Vitalez, had occupied and possessed the
subject lot as early as 1930. In 1964,
respondent Mario Ebio secured a permit
from the local government of Parañaque
for the construction of their family
dwelling on the said lot. In 1966, Pedro
executed an affidavit of possession and
occupancy allowing him to declare the
property in his name for taxation
purposes. Curiously, it was also in 1966
when Guaranteed Homes, Inc., the
registered owner of Road Lot No. 8 (RL
8) which adjoins the land occupied by
the respondents, donated RL 8 to the
local government of Parañaque.
RATIO:
From these findings of fact by both the
trial court and the Court of Appeals, only
one conclusion can be made: that for
more than thirty (30) years, neither
Guaranteed Homes, Inc. nor the local
government of Parañaque in its
corporate or private capacity sought to
register the accreted portion.
Undoubtedly, respondents are deemed
to have acquired ownership over the
subject property through prescription.
Respondents can assert such right
despite the fact that they have yet to
register their title over the said
lot. It must be remembered that the
purpose of land registration is not the
acquisition of lands, but only the
registration of title which the applicant
already possessed over the land.
Registration was never intended as a
means of acquiring ownership. 37 A
decree of registration merely confirms,
but does not confer, ownership.
---------------------------------> Version 2
OFFICE OF THE CITY MAYOR OF
PARANAQUE CITY v. MARIO D. EBIO
Doctrine: Aluvial Deposits; Registration
Facts: Respondents claim that they are
the absolute owners of a parcel of land
consisting of 406 square meters, more
or less, located at 9781 Vitalez
Compound in Barangay Vitalez,
Paraaque City and covered by Tax
Declaration Nos. 01027 and 01472 in the
name of respondent Mario D. Ebio. Said
land was an accretion of Cut-cut creek.
Respondents assert that the original
occupant and possessor of the said
parcel of land was their great
grandfather, Jose Vitalez. Sometime in
1930, Jose gave the land to his son,
Pedro Vitalez. From then on, Pedro
continuously and exclusively occupied
and possessed the said lot. In 1966, after
executing an affidavit declaring
possession and occupancy, Pedro was
able to obtain a tax declaration over the
said property in his name. Since then,
respondents have been religiously
paying real property taxes for the said
property. Meanwhile, in 1961,
respondent Mario Ebio married Pedros
daughter, Zenaida. Upon Pedros advice,
the couple established their home on
the said lot. In April 1964 and in October
1971, Mario Ebio secured building
permits from the Paraaque municipal
office for the construction of their house
within the said compound. On April 21,
1987, Pedro executed a notarized
Transfer of Rights ceding his claim over
the entire parcel of land in favor of
Mario Ebio. Subsequently, the tax
declarations under Pedros name were
cancelled and new ones were issued in
Mario Ebios name. On March 30, 1999,
the Office of the Sangguniang
Barangayof Vitalez passed Resolution
No. 08, series of 1999 seeking assistance
from the City Government of Paraaque
for the construction of an access road
along Cut-cut Creek located in the said
barangay. The proposed road, projected
to be eight (8) meters wide and sixty (60)
meters long, will run from Urma Drive to
the main road of Vitalez Compound
traversing the lot occupied by the
respondents. When the city government
advised all the affected residents to
vacate the said area, respondents
immediately registered their opposition
thereto. As a result, the road project was
temporarily suspended. On March 28,
2005, City Administrator Noli Aldip sent
a letter to the respondents ordering
them to vacate the area within the next
thirty (30) days, or be physically evicted
from the said property. Threatened of
being evicted, respondents went to the
RTC of Paraaque City on April 21, 2005
and applied for a writ of preliminary
injunction against petitioners which was
denied. The CA reversed the decision
and ruled in favor of respondents.
Issue: W/N the State is an indispensable
party to respondents action for
prohibitory injunction; and
substantively, whether the character of
respondents possession and occupation
of the subject property entitles them to
avail of the relief of prohibitory
injunction.
Ruling: The petition is without merit. An
action for injunction is brought
specifically to restrain or command the
performance of an act. It is distinct from
the ancillary remedy of preliminary
injunction, which cannot exist except
only as part or as an incident to an
independent action or proceeding.
Moreover, in an action for injunction,
the auxiliary remedy of a preliminary
prohibitory or mandatory injunction
may issue. Under Article 84 of the
Spanish Law of Waters of 1866 and
Article 457 of the Civil Code, it is clear
that alluvial deposits along the banks of
a creek do not form part of the public
domain as the alluvial property
automatically belongs to the owner of
the estate to which it may have been
added. The only restriction provided for
by law is that the owner of the adjoining
property must register the same under
the Torrens system; otherwise, the
alluvial property may be subject to
acquisition through prescription by third
persons. Hence, while it is true that a
creek is a property of public dominion,
the land which is formed by the gradual
and imperceptible accumulation of
sediments along its banks does not form
part of the public domain by clear
provision of law. That for more than 30
years, neither Guaranteed Homes, Inc.
nor the local government of Paraaque in
its corporate or private capacity sought
to register the accreted portion.
Undoubtedly, respondents are deemed
to have acquired ownership over the
subject property through prescription.
Respondents can assert such right
despite the fact that they have yet to
register their title over the said lot. It
must be remembered that the purpose
of land registration is not the acquisition
of lands, but only the registration of title
which the applicant already possessed
over the land. Registration was never
intended as a means of acquiring
ownership. A decree of registration
merely confirms, but does not confer,
ownership.
NEW REGENT SOURCES, INC vs
TANJUATCO, JR., and VICENTE CUEVAS
[G.R. No. 168800. April 16, 2009.] FACTS:
Petitioner New Regent Sources, Inc.
(NRSI) filed a Complaint for
Rescission/Declaration of Nullity of
Contract, Reconveyance and Damages
against respondent Tanjuatco and the
Register of Deeds of Calamba. NRSI
alleged that in 1994, it authorized
Cuevas, its Chairman and President, to
apply on its behalf, for the acquisition of
two parcels of land by virtue of its right
of accretion. Cuevas purportedly
applied for the lots in his name by paying
P82,400.38 to the Bureau of Lands. On
January 2, 1995, Cuevas and his wife
executed a Voting Trust Agreement over
their shares of stock in the corporation.
Then, pending approval of the
application with the Bureau of Lands,
Cuevas assigned his right to Tanjuatco
for the sum of P85,000. On March 12,
1996, the Director of Lands released an
Order, which approved the transfer of
rights from Cuevas to Tanjuatco.
Transfer Certificates of Titles were then
issued in the name of Tanjuatco. NRSI
anchors its claim over the lands subjects
of this case ontherightofaccretion. It
submitted in evidence, titles to four
parcels of land, which allegedly adjoin
the lots in the name of Tanjuatco.
ISSUES:
1) W/N the complaint for
rescission/declaration of nullity of
contract, reconveyance and damages
against Tanjuanco may prosper
2) W/n NRSI has claim over the subject
property base on the right of accretion
3) W/N Cuevas is an innocent purchaser
in good faith.
RULINGS:
1) No.
An action for reconveyance is one that
seeks to transfer property, wrongfully
registered by another, to its rightful and
legal owner.22 In an action for
reconveyance, the certificate of title is
respected as incontrovertible. What is
sought instead is the transfer of the
property, specifically the title thereof,
which has been wrongfully or
erroneously registered in another
person’s name, to its rightful and legal
owner, or to one with a better right. To
warrant a reconveyance of the land, the
following requisites must concur: (1) the
action must be brought in the name of a
person claiming ownership or dominical
right over the land registered in the
name of the defendant; (2) the
registration of the land in the name of
the defendant was procured through
fraud or other illegal means; (3) the
property has not yet passed to an
innocent purchaser for value; and (4) the
action is filed after the certificate of title
had already become final and
incontrovertible but within four years
from the discovery of the fraud, or not
later than 10 years in the case of an
implied trust. Petitioner failed to show
the presence of these requisites.
2) No, NRSI has no claim over the subject
property base on the right of accretion
Accretion as a mode of acquiring
property under Article 45731 of the Civil
Code requires the concurrence of the
following requisites: (1) that the
deposition of soil or sediment be gradual
and imperceptible; (2) that it be the
result of the action of the waters of the
river; and (3) that the land where
accretion takes place is adjacent to the
banks of rivers. It is not enough to be a
riparian owner in order to enjoy the
benefits of accretion. One who claims
the right of accretion must show by
preponderant evidence that he has met
all the conditions provided by law.
Petitioner has notably failed in this
regard as it did not offer any evidence to
prove that it has satisfied the foregoing
requisites. Further, it is undisputed that
Tanjuatco derived his title to the lands
from Original Certificate of Title (OCT)
registered in the name of the Republic of
the Philippines. Said parcels of land
formed part of the Dried San Juan River
Bed, which under Article 502 (1) of the
Civil Code rightly pertains to the public
dominion. The Certification issued by
the forester confirms that said lands
were verified to be within the Alienable
and Disposable lands certified and
declared as such on September 28,
1981. Clearly, the Republic is the entity
which had every right to transfer
ownership thereof to respondent.
3) Yes, Cuevas is an innocent purchaser
in good faith Tanjuatco’s titles were
derived from Original Certificates of Title
in the name of no less than the Republic
of the Philippines. Hence, we cannot
validly and fairly rule that in relying upon
said title, Tanjuatco acted in bad faith. A
person dealing with registered land may
safely rely upon the correctness of the
certificate of title issued therefor and
the law will in no way oblige him to go
behind the certificate to determine the
condition of the property. This applies
even more particularly when the seller
happens to be the Republic, against
which, no improper motive can be
ascribed. The law, no doubt, considers
Tanjuatco an innocent purchaser for
value. An innocent purchaser for value is
one who buys the property of another,
without notice that some other person
has a right or interest in such property
and pays the full price for the same, at
the time of such purchase or before he
has notice of the claims or interest of
some other person in the property
Republic V CA
FACTS:
Respondents are registered owners of a
parcel of land covered by a TCT located
in Bulacan bordering on the
Meycauayan and Bocaue rivers. They
filed an application for the registration
of 3 lots adjacent to their fishpond
property. Assistant Provincial Fiscal
Vicente filed a written opposition to the
application. Respondents filed a partial
withdrawal of the application with
respect to Lot 3 in line with the
recommendation of the Commissioner.
Lot 3 was ordered withdrawn and the
lower court granted the application
finding that the lands in question are
accretions to the private respondents’
fishponds. On appeal by the Republic, CA
affirmed the decision of the lower court.
Republic submits that there is no
accretion to speak of under Art. 457 of
the NCC because what actually
happened is that the private
respondents simply transferred their
dikes further down the river bed of the
Meycauayan river, and thus, if there is
any accretion to speak of, it is man-made
and artificial and not the result of the
gradual and imperceptible
sedimentation by the water. *read the
full text on the testament of Mrs. Acuna
to get private respondents’ response*
ISSUE:
W/N there is accretion
RULING: No. Art. 457 requires the
concurrence of the 3 requisites before
an accretion is said to have taken place.
They are (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 requirement that
the deposit should be due to the effect
of the current of the river is
indispensable. In the instant case, 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. We agree with the
observation of the Solicitor General that
it is preposterous to believe that almost
four (4) hectares of land came into being
because of the effects of the
Meycauayan and Bocaue rivers. The lone
witness of the private respondents who
happens to be their overseer and whose
husband was first cousin of their father
noticed the four hectare accretion to the
twelve hectare fishpond only in 1939.
The respondents claim that at this point
in time, accretion had already taken
place. If so, their witness was
incompetent to testify to a gradual and
imperceptible increase to their land in
the years before 1939. However, the
witness testified that in that year, she
observed an increase in the area of the
original fishpond which is now the land
in question. If she was telling the truth,
the accretion was sudden. However,
there is evidence that the alleged alluvial
deposits were artificial and man-made
and not the exclusive result of the
current of the Meycauayan and Bocaue
rivers. 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. The land
sought to be registered is not even dry
land cast imperceptibly and gradually by
the river's current on the fishpond
adjoining it. It is under two meters of
water. The private respondents' own
evidence shows that the water in the
fishpond is two meters deep on the side
of the pilapil facing the fishpond and
only one meter deep on the side of the
pilapil facing the river
SPOUSES FELIX BAES AND RAFAELA BAES
, petitioners, vs. THE COURT OF APPEALS
AND REPUBLIC OF THE PHILIPPINES ,
The controversy began in 1962, when
the government dug a canal on a private
parcel of land, identified as Lot 2958 and
covering an area of 33,902 sq.m., to
streamline the Tripa de Gallina
creek.This lot was later acquired by Felix
Baes, who registered it in his name
under TCT No. 10990 and then had it
subdivided 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., covered by TCT Nos.
11041, 11042 and 11043, respectively.
In exchange for Lot 2958-B, 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. The
property, which was near but not
contiguous to Lot 2958-C, was
denominated as Lot 3271-A and later
registered in the name of Felix Baes. The
soil displaced by the canal was used to
fill up the old bed of the creek. After
resurvey, it was discovered that there
were errors. New TCT’s were issued to
represent the enlargement.
Government opposed as the lots were
allegedly unlawfully enlarged. Baes
relying on Art. 461 of the CCV, averred
that he should own dried up land as the
creek was discovered to the canal in his
property. The government rejects this
claim and avers that the petitioners had
already been fully compensated for it
when they agreed to exchange their Lot
2958-B with Lot 3271-A belonging to the
government.
Issue:
Held:
Art. 461 states that 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 lands 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. Thus 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.
Santos v Bernabe
CASE DOCTRINE: In the following rule
prescribed in article 381 of the Civil Code
for cases of this nature, is applicable: Art.
381. If, by the will of their owners, two
things of identical or dissimilar nature
are mixed, or if the mixture occurs
accidentally, if in the latter case the
things cannot be separated without
injury, each owner shall acquire a right in
the mixture proportionate to the part
belonging to him, according to the value
of the things mixed or commingled.
RECIT-READY FACTS: Santos deposited
778 cavans and 38 kilos of palay in the
warehouse of Bernabe. At the same
time, Tiongson also deposited 1,026
cavans and 9 kilos of palay. The share of
Tiongson and Santos were mixed
together and cannot be separated. Later
on and for some unknown reason,
Tiongson files a case against Bernabe to
recover the 1,026 cavans and 9 kilos of
palay deposited in Bernabe’s
warehouse. So Tiongson files for a
petition for a writ of attachment and the
Court granted it. Bernabe’s properties
were attached, including only 924
cavans of rice and 31 ½ kilos of palay.
These were sold at a public auction and
the proceeds were delivered to
Tiongson. Santos tried to intervene in
the attachment of the palay but then the
sheriff had already proceeded with the
attachment, so Santos files a complaint.
He says that Tiongson cannot claim the
924 cavans of palay; he says that by
asking for the attachment of the
properties, Tiongson is claiming that the
cavans of rice all belonged to Bernabe
and not to him. The court ruled that both
Tiongson and Santos must divide the
cavans and palay proportionately.
The cavans belonging to Santos, having
been mixed with those belonging to
Tiongson, the following rule prescribed
is Article 381 of the Civil Code: “If, by will
of one of their owners, two things of
identical or dissimilar nature are mixed,
or if the mixture occurs accidentally, if in
the latter case, the things cannot be
separated without injury, each owner
shall acquire a right in the mixture
proportionate to the part belonging to
him, according to the value of the things
mixed or comingled.” The number of
kilos in a cavan not having been
determined, the Court took the
proportion only of the 924 cavans of
palay which were attached andsold,
therby giving Santos, who deposited 778
cavans, 398.49 and Tiongson, who
deposited 1,026 cavans, 525.51, or the
value thereof at the rate of 3Php per
cavan.
DETAILED FACTS:
Facts: This appeal was taken by the
defendants Pablo Tiongson and the
Provincial Sheriff of Bulacan from the
judgment of the Court of First of said
province, wherein said defendant Pablo
Tiongson was ordered to pay the
plaintiff Urbano Santos the value of 778
cavans and 38 kilos of palay, at the rate
of P3 per cavan, without special
pronouncement as to costs. The
following facts were conclusively proved
at the trial: On March 20, 1928, there
were deposited in Jose C. Bernabe's
warehouse by the plaintiff Urbano
Santos 778 cavans and 38 kilos of palay
and by Pablo Tiongson 1,026 cavans and
9 kilos of the same grain. On said date,
March 20, 1928, Pablo Tiongson filed
with the Court of First Instance of
Bulacan a complaint against Jose C.
Bernabe, to recover from the latter the
1,026 cavans and 9 kilos of palay
deposited in the defendant's
warehouse. At the same time, the
application of Pablo Tiongson for a writ
of attachment was granted, and the
attachable property of Jose C. Bernabe,
including 924 cavans and 31 1/2 kilos of
palay found by the sheriff in his
warehouse, were attached, sold at
public auction, and the proceeds thereof
delivered to said defendant Pablo
Tiongson, who obtained judgment in
said case. The herein plaintiff, Urbano
Santos, intervened in the attachment of
the palay, but upon Pablo Tiongson's
filing the proper bond, the sheriff
proceeded with the attachment, giving
rise to the present complaint. It does not
appear that the sacks of palay of Urbano
Santos and those of Pablo Tiongson,
deposited in Jose C. Bernabe's
warehouse, bore any marks or signs, nor
were they separated one from the other.
Issue: Whether or not Tiongson can
claim the 924 cavans of rice as his own.
NO.
Held: NO, the following rule prescribed
in article 381 of the Civil Code for cases
of this nature, is applicable: Art. 381. If,
by the will of their owners, two things of
identical or dissimilar nature are mixed,
or if the mixture occurs accidentally, if in
the latter case the things cannot be
separated without injury, each owner
shall acquire a right in the mixture
proportionate to the part belonging to
him, according to the value of the things
mixed or commingled. The number of
kilos in a cavan not having been
determined, we will take the proportion
only of the 924 cavans of palay which
were attached and sold, thereby giving
Urbano Santos, who deposited 778
cavans, 398.49 thereof, and Pablo
Tiongson, who deposited 1,026 cavans,
525.51, or the value thereof at the rate
of P3 per cavan. Wherefore, the
judgment appealed from is hereby
modified, and Pablo Tiongson is hereby
ordered to pay the plaintiff Urbano
Santos the value of 398.49 cavans of
palay at the rate of P3 a cavan, without
special pronouncement as to costs. So
ordered.
QUIETING OF TITLE
HEIRS OF LIBERATO CASTILLEJOS V. LA
TONDEÑA INCORPORADA
Doctrine: Tax Declaration; Action to quiet
title
Fact: On September 16, 1997, the
respondent filed a Complaint4 for Quieting
of Title, Declaration of Nullity and/or
Nullification of Tax Declarations and
Damages against Liberato Castillejos
(Liberato) who perished pending trial and
was thus substituted by his heirs, herein
petitioners. Respondent alleges that it is the
absolute owner of two parcels of land
located at Barangay Bagbag (now Casilagan),
Bauang, La Union. Furthermore, it is alleged
that petitioner through stealth,
misrepresentation and deliberate fraud,
maliciously executed an affidavit of
ownership over the subject properties and
presented the same to the Provincial
Assessor of La Union. Petitioner claims that
his land and the subject properties claimed
by the respondent are different from one
another because they have different
boundaries. He alleged that his land was
tilled by his father-in-law since 1940 before
he took possession thereof in 1962. He
planted the land with different crops and
trees and built a house thereon where he and
his family have continuously resided.
RTC: Granted the complaint for the reason
that the respondent had older documents
proving ownership. The respondent's oldest
TD was issued way back in 1948 while
Liberato's TDs were dated 1982.
CA: Affirmed the RTC decision stressing that
the oldest TD in favor of the respondent is
sufficient proof that it owns the land.
Although TDs are not conclusive proof of
ownership, they are nonetheless, good
indication of possession in concept of owner.
The respondent also exercised acts of
ownership and possession over the land
through its administrators.
Issue: Whether or not CA erred in its decision
Ruling: The petition is partly meritorious.
An action to quiet title to property or to
remove a cloud thereon is a remedy or form
of proceeding originating in equity
jurisprudence. For the action to prosper, two
requisites must concur, viz: (1) the plaintiff or
complainant must have a legal or an
equitable title to or interest in the real
property which is the subject matter of the
action; and (2) the deed, claim, encumbrance
or proceeding that is being alleged as a cloud
on plaintiff's title must be shown to be in fact
invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.
In this case, no clear and concrete evidence
is extant from the records that the properties
covered by Liberato's TD Nos. 26682 and
26683 are the same parcels of land described
in the respondent's TDs. The boundaries,
nature and classification of the land claimed
by the parties appear to be different. The TDs
proffered by the respondent shows that the
land it claims has the following boundaries:
North - Leandro Quinzon, South – Luisa
Perillo and Others, East - Faustino Pichay and
Others, and West – Santiago Lucas Quinzon
etc. Considering that the claim of overlapping
has not been clearly established, the Court
deems it appropriate to remand the case to
the RTC for the conduct of a
verification/relocation survey under the
direction and supervision of the Land
Management Bureau of the DENR.
GIL MACALINO JR. V. ARTEMIO PIS-AN
FACTS
Emeterio Jumento is an owner of a parcel of
land in Dumaguete City, Negros Oriental. His
children died single making Emeterio as their
sole heir, and when Emeterio died Artemio
(respondent), the grandson-in-law of
Emeterio, inherited the property.
Apparently, the City of Dumaguete built in
the 1950's a barangay road which cut across
said lot. As a result, Lot 3154 was divided into
three portions namely: Lot 3154-A (the
portion on the left side of the road), Lot
3154-B (the portion which was converted
into a barangay road), and Lot 3154-C (the
portion on the right side of the road). The
sketch plan made by the geodetic engineer
revealed that the portion occupied by
Artemio, was Lot 3154-A. On May 3, 1995,
Artemio and the other heirs of Emeterio
executed an Extra Judicial Settlement of
Estate and Absolute Sale 8 (Absolute Sale)
adjudicating among themselves Lot 3154 and
selling a 207-square meter portion of the
same to the spouses Wilfredo and Judith
Sillero (spouses Sillero). The document, did
not, however, identify the portion being sold
as Lot No. 3154-A it merely stated that the
sale covers 207 square meters of land. The
spouses Sillero, immediately after the sale,
fenced Lot No. 3154-A and built a house
thereon and thereafter sold the same to
petitioner Gil Macalino, Jr. (Gil). Gil caused
the survey of the land and discovered that
the portion occupied by Gil consists of 140
square meters only and not 207. Believing
that he was deceived, Gil filed a complaint for
estafa against the spouses Sillero and
averred that he should also be the owner of
lot 3154-C.
A few years later or on January 18, 2005, Gil
filed against Artemio a Complaint for
Quieting of Title and Damages with the RTC.
RTC rendered Judgment in favor of Gil
Macalino against [Artemio], declaring . . . Gil
Macalino the rightful owner of Lot 3154-A
and Lot 3154-C.
The CA set aside the decision of RTC and
declared Artemio Pis-an as the true and legal
owner of the Sixty Seven (67) square meter
lot known as Lot 1354-C
Issue
1. WON the complaint for quieting of title
should be granted.
Held
NO, what the spouses Sillero bought from
Artemio and his co-heirs was Lot 3154-A, it
logically follows that what they sold to Gil
was the same and exact property. After all,
"no one can give what one does not have. A
seller can only sell what he or she owns and
a buyer can only acquire what the seller can
legally transfer. Further, the court said that It
is implausible for a former Provincial
Agriculturist like Gil to buy a parcel of land
without being conscious of its area, metes
and bounds, and location especially
considering that what he was buying in this
case was a mere portion of a still undivided
lot. The remedy of quieting of title is not
available to petitioners.
(CASE DOCTRINE)
"Quieting of title is a common law remedy for
the removal of any cloud upon or doubt or
uncertainty with respect to title to real
property." "In order that an action for quieting
of title may prosper, it is essential that the
plaintiff must have legal or equitable title to,
or interest in, the property which is the
subject-matter of the action. Legal title
denotes registered ownership, while
equitable title means beneficial ownership. In
the absence of such legal or equitable title, or
interest, there is no cloud to be prevented or
removed."
Petitioners anchored their Complaint on
their alleged legal title over Lot 3154-C which
as above-discussed, they do not have. Hence,
the action for quieting of title is unavailable
to petitioners
IVQ LANDHOLDINGS v. REUBEN BARBOSA
GR No. 193156 ; Jan 18, 2017
Facts: Barbosa bought from Therese Vargas a
parcel of land in Quezon City. Vargas
surrendered to Barbosa the TCT No. 159487.
Barbosa took possession of the subject
property and paid real estate taxes.
Sometime in 2003, Barbosa learned that
Therese Vargas's name was cancelled and
replaced with that of IVQ in the tax
declaration of the subject property. Upon
investigation, Barbosa found out that the
subject property was previously registered in
the name of Kawilihan Corporation under
TCT No. 71507. Therese Vargas acquired the
subject property from Kawilihan Corporation
and the date of entry of her TCT No. 159487
was November 6, 1970. On the other hand,
IVQ supposedly bought the subject property
from Jorge Vargas III who, in turn, acquired it
also from Kawilihan Corporation. The date of
entry of Jose Vargas III's TCT No. 223019 was
October 14, 1976. This title was later
reconstituted and re-numbered as TCT No.
RT-76391. The title of IVQ, TCT No. 253434,
was issued on August 6, 2003. Barbosa filed
a Petition for Cancellation and Quieting of
Titles against Jorge Vargas III, Benito
Montinola, IVQ, and the Register of Deeds of
Quezon City. The RTC granted Barbosa's
petition and ordered the cancellation of
IVQ's TCT No. 253434. The Court of Appeals
affirmed the ruling of the RTC.
Issue: Whether or not Barbosa is the legal
owner of the subject property.
Held: In an action to quiet title, the plaintiffs
or complainants must demonstrate a legal or
an equitable title to, or an interest in, the
subject real property. Likewise, they must
show that the deed, claim, encumbrance or
proceeding that purportedly casts a cloud on
their title is in fact invalid or inoperative
despite its prima facie appearance of validity
or legal efficacy.
IVQ adduced new pieces of documentary
evidence that tended to cast doubt on the
veracity of Barbosa's claim of ownership. IVQ
submitted a copy of the Certification from
the Office of the Bar Confidant that
Espiridion J. Dela Cruz, the notary public who
supposedly notarized the said deed, is not a
member of the Philippine Bar. Anent the
Deed of Absolute Sale between Therese
Vargas and Barbosa, the notarial entries of
Atty. Santiago R. Reyes in said deed
pertained to a deed of sale between other
individuals. Article 1358 of the New Civil
Code requires that the form of a contract
transmitting or extinguishing real rights over
immovable property should be in a public
document. Not having been properly and
validly notarized, the deed of sale cannot be
considered a public document. Not being
considered a public document, the deed is
subject to the requirement of proof under
Section 20, Rule 132. (Even if pieces of
evidence were not newly-discovered, the SC
made an exemption as the same were
important for the proper determination of
ownership) Case remanded to CA for the
conduct of further proceedings.
CLT REALTY DEVELOPMENT CORP V. PHIL-
VILLE DEVELOPMENT
CLT Realty Development Corp. v. Phil-Ville
Development and Housing Corp., G.R. No.
160728, [March 11, 2015]
Facts
A Complaint for Quieting of Title, Damages
and Injunction was filed by respondent Phil-
Ville against petitioner and the Register of
Deeds of Metro Manila District III. The said
complaint was filed because respondent CLT
claimed that they have a TCT evidencing their
ownership over the property in dispute, a
parcel of land situated in Caloocan City
whose title were passed from various
individuals and it was expropriated by the
government before its acquisition. The RTC
of Caloocan ruled in favor of respondent Phil-
Ville and this decision was affirmed by CA
declaring Phil-Ville Development and
Housing Corporation the true, absolute and
legitimate owner of the sixteen (16) parcels
of land, the subject matter of this case,
located in Caloocan City registered in its
name; and it Declared as null and void
defendant CLT's Transfer Certificate of Title
No. T-177013 and ordering defendant to
surrender said title to defendant Register of
Deeds of Metro Manila District III; A petition
for review on certiorari seeking to reverse
and set aside the decision of CA was filed by
the respondent.
Issue: WON petitioner's TCT No. T-177013
imposes a cloud on respondent Phil-Ville's
titles to the 16 parcels of land subject matter
of this case, as provided in Article 476 of the
Civil Code
Ruling:
Yes, the said TCT covers the subject property.
In this case the land was awarded by the
court to Phil-Ville because CLTs claim was
anchored on the title of a person named
Hipolito and DIMSON’s these, however were
never presented in evidence for purposes of
tracing the validity of titles of CLT. Thus, both
requisites in order for an action for quieting
of title to prosper have been met in this case:
(1) respondent Phil-Ville had established its
equitable title or interest in the 16 parcels of
land subject of the action; and (2) TCT No. T-
177013, found to overlap titles to said
properties of respondent Phil-Ville, was
previously declared invalid. In fine, the Court
of Appeals, in its questioned Decision and
Resolution, did not commit reversible error
in upholding the RTC Decision
CASE DOCTRINE
The requisites of quieting of title under 476
are the cloud on title consists of: (1) any
instrument, record, claim, encumbrance or
proceeding; (2) which is apparently valid or
effective; (3) but is in truth and in fact invalid,
ineffective, voidable, or unenforceable; and
(4) may be prejudicial to the title sought to be
quieted.
AQUINO V. QUIAZON
Aquino v. Quiazon
Facts:
A complaint for Annulment and Quieting of
Title was filed by the petitioners, they alleged
that they were the heirs of the late Epifanio
Makam and Severina Bautista, who acquired
a house and lot, in dispute, by virtue of a
Deed of Sale, dated April 20, 1894; that since
then, they and their predecessors-in-interest
had been in open, continuous, adverse, and
notorious possession for more than a
hundred years, constructing houses and
paying real estate taxes on the property; that
sometime in June 2005, they received
various demand letters from the
respondents, claiming ownership over the
subject property and demanding that they
vacate the same; that upon inquiry with the
Register of Deeds they confirmed that the
property had been titled in the name of
respondents under Transfer Certificate of
Title No. 213777-R; that the said title was
invalid, ineffective, voidable or
unenforceable; and that they were the true
owners of the property. Hence, petitioners
prayed that the title be cancelled and a new
title be issued in their favor. H/r respondents
asserted that they were the absolute owners
of the subject land as per TCT No. 213777-R;
that they had inherited the same from their
predecessor-in-interest, Fausta Baluyut, one
of the registered owners under Original
Certificate of Title (OCT) No. RO-1138
(11376), as per the Project of Partition and
Deed of Agreement, dated January 2, 1974;
that petitioners had been occupying the
property by mere tolerance; and that
petitioners "have no valid, legal and
sufficient cause of action" against them,
because their deed of sale was spurious and
could not prevail over Land Registration
Decree, in favor of their predecessor-in-
interest. The predecessors-in-interest of
petitioners were among the oppositors in the
land registration proceeding but,
nevertheless, after the trial, the subject lot
was awarded, decreed and titled in favor of
respondents' predecessor-in-interest,
Issue: WON plaintiffs have no cause of action.
Held:
In determining the existence of a cause of
action, only the allegations in the complaint
may properly be considered. For the court to
do otherwise would be a procedural error
and a denial of the plaintiff's right to due
process. In the case at bench, petitioners'
cause of action relates to an action to quiet
title under Article 476 of the Civil Code. A
"cloud on title" is an outstanding instrument,
record, claim, encumbrance or proceeding
which is actually invalid or inoperative, but
which may nevertheless impair or affect
injuriously the title to property. The matter
complained of must have a prima facie
appearance of validity or legal efficacy. The
cloud on title is a semblance of title which
appears in some legal form but which is in
fact unfounded. The invalidity or
inoperativeness of the instrument is not
apparent on the face of such instrument, and
it has to be proved by extrinsic evidence.
In order that an action for quieting of title
may prosper, two requisites must concur: (1)
the plaintiff or complainant has a legal or
equitable title or interest in the real property
subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be
casting cloud on his title must be shown to be
in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.
It is readily apparent from the complaint that
petitioners alleged that (1) they had an
interest over the subject property by virtue
of a Deed of Sale, dated April 20, 1894; and
that (2) the title of respondents under TCT
No. 213777-R was invalid, ineffective,
voidable or unenforceable. Hypothetically
admitting these allegations as true, as is
required in determining whether a complaint
fails to state a cause of action, petitioners
may be granted their claim. Clearly, the
complaint suf=ciently stated a cause of
action. In resolving whether or not the
complaint stated a cause of action, the trial
court should have limited itself to examining
the suf=ciency of the allegations in the
complaint. It was proscribed from inquiring
into the truth of the allegations in the
complaint or the authenticity of any of the
documents referred or attached to the
complaint.
SYJUCO V. BONIFACIO
IMELDA SYJUCO vs. FELISA D. BONIFACIO G.R.
No. 148748, January 14, 2015, 745 SCRA 468
Case Doctrine: “an established doctrine in
land ownership dispute that the filing of an
action to quiet title is imprescriptible if the
disputed property is in the possession of the
plaintiff.”
FACTS: The Syjucos are the registered owners
of a parcel of land situated in Caloocan City
covered by TCT # T-108530 issued on March
26, 1984. They have been in open,
continuous and uninterrupted possession of
the subject land, by themselves or through
their predecessors-in-interest since 1926
and they have been paying the real property
taxes over the subject land since 1949.
Sometime in 1994, Syjucos learned that the
purported owner of the subject land was
Felisa Bonifacio who was able to register the
subject land in her name under TCT No.
265778 on March 29, 1993. Bonifacio’s title
was issued pursuant to an order dated
October 8, 1992 by RTC, Branch 125 of
Caloocan City in the Petition for Authority to
Segregate. For unexplained reasons, the
Registry of Deeds of Caloocan issued TCT No.
265778 to Bonifacio on March 29, 1993 even
before RTC - Branch 125 declared its Order
dated October 8, 1992 granting Bonifacio’s
petition for segregation final and executory
on April 6, 1993. On July 28, 1994, to protect
their rights and interest over the subject
property, the Syjucos lodged a special civil
action for quieting of title especially praying
for declaration of nullity and cancellation of
Bonifacio’s TCT No. 265778. Subsequently,
the Syjucos discovered that Bonifacio sold
the subject land to VSD Realty. Bonifacio’s
TCT # 265778 was cancelled and replaced by
TCT # 285313 in the name of VSD Realty. As
a result, the Syjucos amended their petition
impleading VSD Realty on April 25, 1995.
ISSUES:
(1) W/N an action for quieting of title is a
direct attack on the certificates of title of
Bonifacio and VSD Realty.
(2) W/N an action for quieting of title has
prescribed.
HELD: (1) YES. The instituted action in this
case is clearly a direct attack on a certificate
of title to real property. In their complaint for
quieting of title, the Syjucos specifically pray
for the declaration of nullity and/or
cancellation of Bonifacio’s TCT # 265778 and
VSD TCT # 285313 over the subject land. The
relief sought is certainly feasible since the
objective of an action for quieting of title as
provided under Article 476 of the Civil Code,
is precisely to quiet title, remove, invalidate,
annul and/or nullify a cloud on title to real
property or any interest therein by reason of
any instrument, record, claims,
encumbrance or proceeding which is
apparently valid or effective but is in truth
and in fact, ineffective, voidable or
unenforceable and may be prejudicial to the
title. (2) NO. It is an established doctrine in
land ownership dispute that the filing of an
action to quiet title is imprescriptible if the
disputed property is in the possession of the
plaintiff. One who is in actual possession of a
piece of land claiming to be the owner
thereof may wait his possession is disturbed
or his title is attacked before taking steps to
vindicate his right, the reason for this 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 effects on his own title, which
right can be claimed only by one who is in
possession.
HEIRS OF PACIFICO POCDO V. AVILO
FACTS:
As it appears, in 1894, Pocdo Pool, who
died in 1942, began his occupation and claim
on three lots (Lots 43, 44 and 45) that were
eventually surveyed in his name. Certificates
of Ancestral Lands Claims (CALS) were issued
by the DENR for Lots 44 and 45, but Lot 43
was not approved due to Memorandum
Order 98-15 issued by the DENR Secretary in
September 1998.
In the meantime, on September 14, 1960,
Polon Pocdo, an heir of Pocdo Pool, ceded his
rights over the three lots to Pacifico Pocdo in
exchange for a one hectare lot to be taken
from Lot 43. However, Pacifico entered into
a contract with Florencio Pax and Braulio
Yaranon on November 21, 1968 revoking the
agreement with Polon. In the contract, the
4,875 square meters where Polon’s house
was located became part of the 1-hectare
given to Pax and Yaranon in exchange for
their services in the titling of Pacifico’s lands.
On September 3, 1980, an amicable
settlement was settled that Polon would
again retain the 4,875 square meters and
Pacifico would give the 5,125 square meter
area, the remaining portion of the 1-hectare
share of Polon, to be taken from Lot 43 after
a segregation. On April 18, 1981, Polon
entered into a Catulagan with Arsenia Avila
authorizing the latter to undertake the
segregation of his one-hectare land from Lot
43 in accord with the amicable settlement of
September 3, 1980. In exchange, Polon
would award to her 2,000 square meters
from the 1- hectare lot.
After spending time, money and effort in
the execution of the survey, Avila gave the
survey results to Polon prompting Polon to
execute a Waiver of Rights dated January 21,
1987.
Accordingly, the subdivided lots were
declared for tax purposes and the
corresponding tax declaration issued to
Polon and Arsenia, with 8,010 square meters
going to Polon and 1,993 square meters to
Avila.
the CENRO of Baguio City issued in favor of
Avila a Certificate of Exclusion of 993 square
meters from the Ancestral Land Claim of the
Heirs of Pocdo Pool over Lot 43
On April 27, 2007, the Heirs of Polon Pocdo
and his wife Konon filed an affidavit of
cancellation with OIC-CENRO Teodoro
Suaking and on that basis, Suaking cancelled
the Certificate of Exclusion. On May 8, 2000,
Avila complained to the Regional Executive
Director or RED the unlawful cancellation of
her Certificate of Exclusion, and on June 1,
2000, the RED issued a memorandum setting
aside the revocation and restoring the
Certificate of Exclusion.
The Affidavit of Cancellation dated April 27,
2002 filed by the heirs of Polon Pocdo was
dismissed for lack of jurisdiction and the
validity of the Amicable Settlement,
Catulagan and Deed of Waiver of Rights were
recognized.
Hence, this petition.
RTC: Lack of jurisdiction. The DENR had
already declared the disputed property as
public land, which the State, through the
DENR, has the sole power to dispose. Thus,
the claim of petitioners to quiet title is not
proper since they do not have title over the
disputed property.
CA: petitioners, in raising the issue of
quieting of title, failed to allege any legal or
equitable title to quiet. Under Article 477 of
the Civil Code, in an action to quiet title, the
plaintiff must have legal or equitable title to,
or interest in the real property which is the
subject matter of the action. Instead of an
action to quiet title or accion reivindicatoria,
the Court of Appeals stated that petitioners
should have filed an accion publiciana based
merely on the recovery of possession de jure.
On the validity of the Catulagan and the
Waiver of Rights, the Court of Appeals held
that petitioners have no right to question
these since they were not parties to said
documents had not participated in any
manner in their execution.
ISSUE: WON PETITIONERS HAVE NO TITLE TO
THE PROPERTY THAT WOULD SUPPORT AN
ACTION FOR QUIETING OF TITLE WHEN TRIAL
HAD NOT YET COMMENCED. NONETHELESS,
THE RECORD IS REPLETE OF PROOF THAT THE
PETITIONERS HAVE RIGHTS/TITLE OVER THE
SUBJECT PROPERTY
HELD:
SC: We find the petition without merit.
Lot 43 is public land and part of the Baguio
Townsite Reservation. The DENR Decision
was affirmed by the Office of the President
which held that lands within the Baguio
Townsite Reservation belong to the public
domain and are no longer registrable under
the Land Registration Act. The Office of the
President ordered the disposition of the
disputed property in accordance with the
applicable rules of procedure for the
disposition of alienable public lands within
the Baguio Townsite Reservation, particularly
Chapter X of Commonwealth Act No. 141 on
Townsite Reservations and other applicable
rules. Having established
that the disputed property is public land, the
trial court was therefore correct in dismissing
the complaint to quiet title for lack of
jurisdiction
In an action for quieting of title, the
complainant is seeking for "an adjudication
that a claim of title or interest in property
adverse to the claimant is invalid, to free him
from the danger of hostile claim, and to
remove a cloud upon or quiet title to land
where stale or unenforceable claims or
demands exist." Under Articles 476 and 477
of the Civil Code, the two indispensable
requisites in an action to quiet title are: (1)
that the plaintiff has a legal or equitable title
to or interest in the real property subject of
the action; and (2) that there is a cloud on his
title by reason of any instrument, record,
deed, claim, encumbrance or proceeding,
which must be shown to be in fact invalid or
inoperative despite its prima facie
appearance of validity.
In this case, petitioners, claiming to be
owners of the disputed property, allege that
respondents are unlawfully claiming the
disputed property by using void documents,
namely the "Catulagan" and the Deed of
Waiver of Rights. However, the records
reveal that petitioners do not have legal or
equitable title over the disputed property,
which forms part of Lot 43, a public land
within the Baguio Townsite Reservation. It is
clear from the facts of the case that
petitioners’ predecessors-in-interest, the
heirs of Pocdo Pool, were not even granted a
Certificate of Ancestral Land Claim over Lot
43, which remains public land. Thus, the trial
court had no other recourse but to dismiss
the case.
TEOFISTO ONO V. VICENTE LIM
Ono et al v Lim
FACTS:
Lim filed in the RTC Cebu a petition for the
reconstruction of the owners duplicate of a
OCT, that had been lost during WW2 by his
mother, Lisa, covering a lot located in Cebu
that had been sold to Luisa by SPS Oo.
Although the deed evidencing the sale had
been lost, Antonio, the only legitimate heir of
SPS Oo, had executed in favor of Luisa a
notarized document confirming the sale.
Petitioners opposed Lim’s petition,
contending that they had the certificate of
title in their possession as the successor-in-
interest of the SPS Oo. Lim converted the
petition into a complaint for quieting of title,
averring that he and his predecessor-in-
interest had been in actual possession of the
property since 1937. He prayed that the Oos
be ordered to surrender the reconstituted
owners duplicate of the OCT over the land
and that it be cancelled and a new certificate
be issued in the name of Luisa. Oos claimed
that their predecessors-in-interest never
sold the lot to Luisa and that the document
confirming the sale was fabricated as
Antonio’s signature was not authentic. RTC
ruled in favor of Lim, having found that he
had been in peaceful possession of the land,
that their possession had never been
disturbed by the Oos, except when the Oos
seized the harvested copra from the Lim’s
caretaker, that the signature of Antonio was
genuine. On appeal, Oos maintained that the
confirmation of sale was spurious, that the
property could not be acquired by the Lim’s
through prescription, their action could not
be barred by laches and the action instituted
by the Lim’s constituted a collateral attack
against their registered title. CA affirmed the
RTC ruling.
ISSUE:
W/N the quieting of title should be disallowed
as it constituted a collateral attack
RULING:
Quieting of title is a common law remedy for
the removal of any cloud, doubt, or
uncertainty affecting title to real property.
An action or proceeding is deemed an attack
on a title when its objective is to nullify the
title, thereby challenging the judgment
pursuant to which the title was decreed. The
attack is direct when the objective is to annul
or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack
is indirect or collateral when, in an action to
obtain a different relief, an attack on the
judgment is nevertheless made as an
incident thereof. The averments readily
show that the action was neither a direct nor
a collateral attack on OCT No. RO-9969-(O-
20449), for Lim was asserting only that the
existing title registered in the name of the
petitioners predecessors had become
inoperative due to the conveyance in favor of
Lims mother, and resultantly should be
cancelled. Lim did not thereby assail the
validity of OCT No. RO-9969-(O-20449), or
challenge the judgment by which the title of
the lot involved had been decreed. In other
words, the action sought the removal of a
cloud from Lims title, and the confirmation of
Lims ownership over the disputed property
as the successor-in-interest of Luisa.
LUCASAN V. PDIC
INOCENCIO Y. LUCASAN for himself and as the
Judicial Administrator of the Intestate Estate
of the late JULIANITA SORBITO LUCASAN,
Petitioner,
v.s. PHILIPPINE DEPOSIT INSURANCE
CORPORATION (PDIC), Respondent.
Doctrine: Cloud on title; Right of redemption
Facts: Petitioner Inocencio Y. Lucasan
(Lucasan) and his wife Julianita Sorbito (now
deceased) were the owners of two lots
situated in Bacolod City covered by their
respective TCT’s. On August 3, 1972, Pacific
Banking Corporation (PBC) extended a
P5,000.00 loan to Lucasan. Upon failure to
pay the loan, PBC filed a collection case with
the RTC of Bacolod City. Upon failure to
comply with the obligation of the Court, the
RTC issued a writ of execution directing the
sheriff to effect a levy on the properties
owned by Lucasan and sell the same at public
auction. The lots were sold at public auction
and were awarded to PBC as the highest
bidder. In January 1997, Lucasan, through
counsel, wrote a letter to the Philippine
Deposit Insurance Corporation (PDIC), PBCs
receiver and liquidator seeking the
cancellation of the certificate of sale. PDIC
denied Lucasan’s request for the cancellation
of the certificate of sale stating that the TCT’s
have already become part of the acquired
assets of Pacific Banking Corporation by
virtue of a Certificate of Sale executed by the
City Sheriff of Bacolod. Subsequently, this
document was registered on the titles on
June 5, 1981 so that the last day of the
redemption period was June 5, 1982.
Lucasan then filed a petition denominated as
declaratory relief with the RTC of Bacolod
City for the lifting and/or cancellation of the
notice of embargo and the certificate of sale.
PDIC moved to dismiss the complaint for lack
of cause of action. It averred that an action
to quiet title under Section 1 of Rule 63 may
only be brought when there is a cloud on, or
to prevent a cloud from being cast upon, the
title to real property.It asseverated that a
cloud on the title is an outstanding
instrument record, claim, encumbrance or
proceeding which is actually invalid or
inoperative, but which may nevertheless
impair or affect injuriously the title to
property. PDIC claimed that the notice of
embargo was issued pursuant to a writ of
execution in Civil Case No. 12188, while the
certificate of sale was executed as a result of
a public bidding. Thus, their annotations on
the titles were valid, operative or effective.
PDIC asserted that Lucasans petition is
nothing but a disguised attempt to compel
PDIC to resell the properties at a reduced
price.
RTC: granted PDICs motion to dismiss since
Notice of Embargo was issued by virtue of a
valid judgment rendered in Civil Case entitled
PBC vs. Lucasan
CA: affirmed RTC
Issue: Whether or not the dismissal of
Lucasans complaint was proper.
Ruling: To avail of the remedy of quieting of
title, two (2) indispensable requisites must
concur, namely: (1) the plaintiff or
complainant has a legal or an equitable title
to or interest in the real property subject of
the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be
casting a cloud on his title must be shown to
be in fact invalid or inoperative despite its
prima facie appearance of validity or legal
efficacy.[20] Stated differently, the plaintiff
must show that he has a legal or at least an
equitable title over the real property in
dispute, and that some deed or proceeding
beclouds its validity or efficacy.
Unfortunately, the foregoing requisites are
wanting in this case.
Admittedly, the subject parcels of land were
levied upon by virtue of a writ of execution
issued in Civil Case No. 12188. On May 13,
1981, a public auction of the subject parcels
of land was held and the lots were awarded
to PBC as the highest bidder. A certificate of
sale in favor of PBC was issued on the same
day, and was registered and annotated on
TCT Nos. T-68115 and T-13816 as Entry No.
112552 on June 5, 1981. Moreover, the
judgment debtor or redemptioner had the
right to redeem the property from PBC
within twelve (12) months from the
registration of the certificate of sale.[21]
With the expiration of the twelve-month
period of redemption and no redemption
having been made, as in this case, the
judgment debtor or the redemptioner lost
whatever right he had over the land in
question. Lucasan admitted that he failed to
redeem the properties within the
redemption period, on account of his then
limited financial situation.[23] It was only in
January 1997 or fifteen (15) years later that
he manifested his desire to reacquire the
properties. Clearly thus, he had lost whatever
right he had over Lot Nos. 1500-A and 229-E.
Furthermore, Lucasan failed to demonstrate
that the notice of embargo and the
certificate of sale are invalid or inoperative.
In fact, he never put in issue the validity of
the levy on execution and of the certificate of
sale duly registered on June 5, 1981. It is
clear, therefore, that the second requisite for
an action to quiet title is, likewise, absent.
WHEREFORE, the petition is DENIED
CLADO-REYES V. SPOUSES LIMPE
CLADO-REYES, et al vs SPOUSES LIMPE [G.R.
No. 163876. July 9, 2008.]
Doctrine: An action for quieting of title
originated in equity jurisprudence to secure
an adjudication that a claim of title to or an
interest in property, adverse to that of the
complainant, is invalid, so that the
complainant and those claiming under him
may be forever free from any danger of
hostile claim. So that he who has the right
would see every cloud of doubt over the
property dissipated, and he could afterwards
without fear introduce the improvements he
may desire, to use and even to abuse the
property as he may deem best. 2 Requisites of
an action to quiet title .
FACTS: February 1, 1995, petitioners, Claudo-
Reyes, filed an action to quiet title,
reconveyance and damages against
respondents, Spouses Limpe, and alleged
that they have been occupying the disputed
lot since 1945 through their predecessor-in-
interest, Mamerto B. Reyes.
They claimed that during his lifetime,
Mamerto had accepted a verbal promise of
the former lot owner, Felipe Garcia, to give
the disputed lot to him in exchange for the
surrender of his tenancy rights as a tiller
thereof.
To prove that Mamerto was a former tenant
of Felipe; that during his lifetime he had
worked on the lot; and that he owned and
possessed the same, petitioners presented
two documents, namely: (1) Certification
dated October 12, 1979 and (2)
"Pagpapatunay" dated November 17, 1982
allegedly executed by Simeon I. Garcia, the
eldest son of Felipe, attesting to such facts.
Petitioners also alleged that whenever
respondents visited the lot, respondent
Julius Limpe would promise to deliver the
certificate of title to them. However,
sometime in October 1994, petitioners
received a letter from respondents asserting
ownership over the disputed lot.
In their answer, respondents contended that
they are the legal owners of the lot by virtue
of a Deed of Exchange of Real Estate and
Deed of Absolute Sale executed on July 5,
1974 and February 28, 1974, respectively,
between them and Farm-Tech Industries,
Incorporated they presented TCT No. T-
199627, Tax Declaration and realty tax
receipts of the lot, which were all registered
and declared in their names. RTC ruled in
favor of respondents and held that the
certificate of title, tax declarations and realty
tax receipts presented in court indisputably
established respondents' ownership over the
lot. The certificate of title was registered in
respondents' names and the realty tax
receipts showed that respondents
consistently paid the corresponding real
property taxes. These pieces of evidence,
said the trial court, prevail over petitioners'
allegation of an "undocumented promise" by
the former lot owner, which in itself, is
ineffective or unenforceable under the law.
Accordingly, the trial court ordered
petitioners to reconvey the disputed lot to
respondents.
Court of Appeals affirmed the trial court's
ruling and held that petitioners have no title
whatsoever upon which respondents' title
could cast a cloud, as they were the ones
casting doubt on respondents' title. It held
that the documents allegedly executed by
Simeon I. Garcia showed no indicia that the
alleged owner, Felipe Garcia, donated the
disputed lot to them. It further held that
Simeon I. Garcia was not the real owner of
the lot; thus, he could not make an effective
conveyance thereof. Consequently, it upheld
respondents' title over the disputed lot.
ISSUE: WON the petitioners have a cause of
action to quiet title, reconveyance and
damages against respondents
RULING: NO. Under Articles 476 22 and 477
23 of the New Civil Code. There are two
indispensable requisites in order that an
action to quiet title could prosper: (1) that
the plaintiff or complainant has a legal or an
equitable title to or interest in the real
property subject of the action; and (2) that
the deed, claim, encumbrance or proceeding
claimed to be casting cloud on his title must
be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity
or legal efficacy.
(Additional info na lang to kung bakit mas
mabigat yung evidence na pinakita ni
respondent.)
PETITIONERS cited Section 4 of Article XIII of
the 1987 Constitution and Section 2 of the
Comprehensive Agrarian Reform Law. They
hardly argued on the matter neither was
there positive evidence (1) that their
predecessor had legal title, i.e., a certificate
of land transfer; (2) that the lot was an
agricultural lot and not a commercial one as
contended by respondents; and (3) that they
are qualified beneficiaries under the Agrarian
Reform Law.
The documentary evidence petitioners
presented, namely, the "Certification" and
"Pagpapatunay", did not confirm their title
over the disputed lot. First, original copies of
those documents were not presented in
court. Second, as the appellate court pointed
out, Simeon I. Garcia, the declarant in those
documents, was not presented in court to
prove the veracity of their contents. Third,
even a cursory examination of those
documents would not show any transfer or
intent to transfer title or ownership of the
disputed lot from the alleged owner, Felipe
Garcia, to petitioners or their predecessor-in-
interest, Mamerto B. Reyes. Fourth,
petitioners did not bother to adduce
evidence that Simeon I. Garcia, as the eldest
son of the late Felipe Garcia, inherited the
entire lot as to effectively convey title or
ownership over the disputed lot, i.e. thru
extrajudicial settlement of the estate of the
late Felipe Garcia. Accordingly, the Court
agree that the documents allegedly executed
by Simeon I. Garcia are purely hearsay and
have no probative value.
RESPONDENTS presented evidence which
clearly preponderates in their favor. First, the
transfer certificate of title, tax declarations
and realty tax receipts were all in their
names. Second, pursuant to the Torrens
System, enjoys the conclusive presumption
of validity and is the best proof of ownership
of the lot. Third, although tax declarations or
realty tax receipts are not conclusive
evidence of ownership, nevertheless, they
are good indicia of possession in the concept
of an owner, for no one in his right mind
would be paying taxes for a property that is
not in his actual or at least constructive
possession.
After carefully considering the arguments of
the parties, the Court unanimously agree
that the petitioners were not able to prove
that they have any legal or equitable title
over the disputed lot. Thus, the Court find no
reversible error in the assailed decisions of
the courts below.
RAGASA V. ROA
RAGASA vs ROA
G.R. NO. 141964
June 30, 2006
Facts: On May 10, 1989, Ragasa entered into
a contract with Oakland Development
Resources Corporation for the purchase in
installments of a piece of property, with
improvements. Despite the execution of the
Deed of Absolute Sale, Oakland
Development Resources Corporation failed
to cause the transfer of title to plaintiffs.
Sometime March of 1999, during one of the
trips of plaintiff Consorcia Ragasa to the
Philippines from Italy, upon learning that
Oakland Development Resources
Corporation was no longer functional as a
corporate entity, she decided to cause the
transfer of registration of TCT No. 27946. She
was thus surprised to learn that the property
in question was sold by defendant Ex-Officio
Sheriff of Quezon City to defendants Sps. Roa
in an execution sale.
Ragasa then filed a complaint against Sps.
and the ex-officio sheriff of Quezon City. The
RTC granted the Motion to Dismiss filed by
Sps. Roa stating that the action was barred by
prescription for having been filed more than
four years after the registration of the
execution sale. Ragasa filed the present
petition for review on certiorari before the
SC raising only a pure question of law.
Issue: Whether or not the action is barred by
prescription.

Held: No. The averments in petitioners'
complaint that (1) they acquired ownership
of a piece of land by tradition or delivery as a
consequence of sale and (2) private
respondents subsequently purchased the
same piece of land at an allegedly void
execution sale were sufficient to make out an
action to quiet title under Article 476. The
prevailing rule is that the right of a plaintiff to
have his title to land quieted, as against one
who is asserting some adverse claim or lien
thereon, is not barred while the plaintiff or
his grantors remain in actual possession of
the land, claiming to be owners thereof. (This
rule can only be invoked by a complainant
when he is in possession. If not in possession,
remedy must be exercised within 4 years
pursuant to Article 1146).
Petition granted. RTC reversed and set aside.
Remanded to RTC QC for further
proceedings.
OLVIGA V. CA
Heirs of Olviga vs CA
FACTS:
Angelita Glor and her children filed for
reconveyance of a parcel of land with the RTC
of Caluag, Quezon against the heirs of Jose
Olviga. The RTC ruled in favor of the Glors
which led to the Olvigas to appeal with the
CA arguing that the action for reconveyance
has already prescribed and that they were
purchasers in good faith. The CA affirmed the
RTC decision. In 1950 Lot in question was still
forestland when Eutiquio Pureza and his
father cultivated it by introducing fruit
bearing trees such as coconuts, jackfruits,
mangoes, avocado and bananas. On 1956
The Bureau of Lands surveyed the land in the
name of Pureza but Godofredo Olviga, a son
of Jose Olviga, protested the survey but only
with respect to a one-half-hectare portion
"sa dakong panulukan ng Amihanan-
Silanganan." In 1960, Eutiquio Pureza filed a
homestead application over Lot 13. Without
his application having been acted upon, he
transferred his rights in said lot to Cornelio
Glor in 1961. Neither the homestead
application of Eutiquio nor the proposed
transfer of his rights to Cornelio Glor was
acted upon by the Director of Lands for
reasons that the records of the Bureau of
Lands do not disclose. In 1967, Jose Olviga
obtained a registered title for said lot in a
cadastral proceeding, in fraud of the rights of
Pureza and his transferee, Cornelio Glor and
his family, who were the real and actual
occupants of the land. It is then found that
that Cornelio Glor, Sr. was sickly, and his wife
(now widowed) Angelita Glor, was
unschooled, they failed to follow up Pureza's
homestead application over Lot 13 in the
cadastral proceedings in the Municipal Court
of Guinayangan Public Land Subdivision.
Hence, they were not aware of the
proceedings nor did she receive any notice
from the barangay captain or court sheriff. It
was also established that the spouses Jaime
Olila and Lolita Olviga Olila, were not
innocent purchasers for value of the land
from their father, and have never been in
possession. The Glors and their
predecessors-in-interest (Cornelio Glor Sr.,
and Eutiquio Pureza) were the ones found to
be in possession of the property. Glor then
filed an action for reconveyance over Lot 13.
The CA affirmed that the plaintiffs (Glors)
action is really one for quieting of title that
does not prescribed.
Petitioners (Olvigas) raises the ff issues with
the SC They allege that:
(1) the present action has already prescribed;
(2) the Court of Appeals erred when it ruled
that the private respondents' cause of action
accrued not in 1967 but in 1988;
(3) that the Court of Appeals erred when it
failed to consider that private respondents as
mere homestead transferees cannot
maintain an action for reconveyance;
(4) that the Faja and Caragay- Layno cases
have no bearing and direct application to the
case at bar;
(5) that private respondents have not proven
by preponderance of evidence their
ownership and possession of the disputed
land.
Ruling:
The Court ruled that there were no reversible
error in the decision of the Court of Appeals.
Where, the petition for review is DENIED.
PRESCRIPTION OF ACTION; RULE IN CASE OF
AN ACTION FOR RECONVEYANCE OF A
PARCEL OF LAND BASED ON IMPLIED OR
CONSTRUCTIVE TRUST; EXCEPTION.
With regard to the issue of prescription, this
Court has ruled a number of times before
that an action for reconveyance of a parcel of
land based on implied or constructive trust
prescribes in ten years, the point of reference
being the date of registration of the deed or
the date of the issuance of the certificate of
title over the property (Vda. de Portugal vs.
IAC, 159 SCRA 178). But this rule applies only
when the plaintiff is not in possession of the
property, since if a person claiming to be the
owner thereof is in actual possession of the
property, the right to seek reconveyance,
which in effect seeks to quiet title to the
property, does not prescribe.
SAPTO ET AL V. FABIAN
RULE FOR ACTIONS TO QUIET TITLE OVER A
PROPERTY; SAPTO vs.
FABIANA, (103 PHIL. 683) CITED. — In Sapto
vs. Fabiana, appellants' predecessors sold to
appellees in 1931 a parcel of land. The sale
was approved by the Provincial Governor of
Davao but was never registered. Possession
of the land was, however, transferred to
Fabiana and the latter has been in possession
thereof from 1931 up to the present. The
widow and children of Samuel Sapto filed an
action to recover the land. This Court in
affirming the validity of the sale in favor of
appellee (Fabiana) held: "No enforcement of
the contract is in fact needed, since the
delivery of possession of the land sold had
consummated the sale and transferred title
to the purchaser, registration of the contract
not being indispensable as between the
parties. Actually the action for conveyance
was one to quiet title, i.e., to remove the
cloud cast upon appellee's ownership by the
refusal of the appellants to recognize the sale
made by their predecessors. This action
accrued only when appellants initiated their
suit to recover the land in 1954.
Furthermore, it is an established rule of
American jurisprudence (made applicable in
this jurisdiction by Art. 480 of the New Civil
Code) that actions to quiet title to property
in the possession of the plaintiff are
imprescriptible.
POSSESSION; ACTUAL POSSESSOR OF A PIECE
OF LAND CLAIMING TO BE
OWNER THEREOF MAY WAIT UNTIL HIS
POSSESSION IS DISTURBED OR HIS TITLE IS
ATTACKED; REASON THEREFOR. — In Faja vs.
Court of Appeals: 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 a third
party and its effect on his own title, which
right can be claimed only by one who is in
possession. No better situation can be
conceived at the moment for Us to apply this
rule on equity than that of herein petitioners
whose mother, Felipa Faja, was in possession
of the litigated property for no less than 30
years and was suddenly confronted with a
claim that the land she had been occupying
and cultivating all these years, was titled in
the name of a third person. We hold that in
such a situation the right to quiet title to the
property, to seek its reconveyance and annul
any certificate of title covering it, accrued
only from the time the one in possession was
made aware of a claim adverse to his own,
and it is only then that the statutory period
of prescription commences to run against
such possessor."
In the case at bar, private respondents and
their predecessors-in-interest were in actual
possession of the property since 1950. Their
undisturbed possession gave them the
continuing right to seek the aid of a court of
equity to determine the nature of the adverse jurisprudence; he cited, in support of his
claim of petitioners, who in 1988 disturbed ruling, article 1875 of the old Civil Code and
their possession decisions of this Court circa 1910 and 1912.
Under article 1875 of the Civil Code of 1889,
registration was a necessary requisite for the
validity of a mortgage even as between the
TAN V. VALDEHUESA parties, but under article 2125 of the new
Tan v. Valdehuesa (66 SCRA 61) Civil Code (in effect since August 30,1950),
Case Doctrine: The trial court treated the this is no longer so. If the instrument is not
registered deed of pacto de retro as an recorded, the mortgage is nonetheless
equitable mortgage but considered the binding between the parties. (Article 2125,
unregistered deed of pacto de retro "as a 2nd sentence).
mere case of simple loan, secured by the The Valdehuezas having remained in
property thus sold under pacto de retro," on possession of the land and the realty taxes
the ground that no suit lies to foreclose an having been paid by them, the contracts
unregistered mortgage. It would appear that which purported to be pacto de retro
the trial judge had not updated himself on transactions are presumed to be equitable
law mortgages, 5 whether registered or not,
Facts: there being no third parties involved.
An action instituted by the plaintiff-appellee
Lucia Tan against the defendants-appellants
Arador Valdehueza and Rediculo Valdehueza
for (a) declaration of ownership and recovery
of possession of the parcel of land described
in the first cause of action of the complaint,
and (b) consolidation of ownership of two
portions of another parcel of (unregistered)
land described in the second cause of action
of the complaint, purportedly sold to the
plaintiff in two separate deeds of pacto de
retro. Parcel of land described in the first
cause of action was the subject matter of the
public auction sale in Oroquieta, Misamis
Occidental, wherein the TAN was the highest
bidder. Due to the failure of defendant
Arador Valdehueza to redeem the said land
within the period of one year as being
provided by law, MR. VICENTE D. ROA who
was then the Ex-Officio Provincial Sheriff
executed an ABSOLUTE DEED OF SALE in
favor of the plaintiff LUCIA TAN. Civil case
2002 was a complaint for injunction filed by
Tan on July 24, 1957 against the
Valdehuezas, to enjoin them "from entering
the above-described parcel of land and
gathering the nuts therein " This complaint
and the counterclaim were subsequently
dismissed. The Valdehuezas appealed to the
lower court alleging that it erred in making a
finding on the second cause of action that
the transactions between the parties were
simple loan, instead, it should be declared as
equitable mortgage.

Issue: W/N the transactions between the

parties were simple loan?

Held: The trial court treated the registered

deed of pacto de retro as an equitable
mortgage but considered the unregistered
deed of pacto de retro "as a mere case of
simple loan, secured by the property thus
sold under pacto de retro," on the ground
that no suit lies to foreclose an unregistered
mortgage. It would appear that the trial
judge had not updated himself on law and