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against the true owner of the land or of an interest therein; and the same rule must
Property and Ownership
Leung Yee vs. F. L. Strong Machinery Co. and Williamson., 37 Phil., 644,
No. 11658 February 15, 1918
CHATTEL MORTGAGE; REGISTRY OF MORTGAGE .COVERING REAL PROPERTY.—
The sole purpose and object of the chattel mortgage registry is to provide for the
registry of "chattel mortgages," and transfers thereof, that is to say, mortgages of
personal property executed in the manner and form prescribed in the statute.
Neither the original registry in a chattel mortgage registry of an instrument
purporting to be a chattel mortgage of a building and the machinery installed
therein, nor the annotation in that registry of the sale of the mortgaged property,
had any effect whatever so far as the building is concerned.
A factory building is real property, and the mere fact that it is mortgaged and sold,
separate and apart from the land on which it stands, in no wise changes its
character as real property.
VENDOR AND PURCHASER; REGISTRY OF TITLE; GOOD FAITH.—The rights secured
under the provisions of article 1473 of the Civil Code to that one of two purchasers
of the same real estate, who has secured and inscribed his title thereto in the Land
Registry,. do not accrue unless such inscription is made in good faith.
SEPARATE PURCHASERS; DETERMINATION OF RIGHTS.—The respective rights of
two or more separate purchasers of the same real estate from the same owner in
case none of them has secured an inscription of his title in the land registry in good
faith, are to be determined in accord with the third, and not the second paragraph of
that article.
GOOD FAITH.—One who purchases real estate with knowledge of a defect or lack of
title in his vendor cannot claim that he has acquired title thereto in good faith, as
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be applied to one who has knowledge of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him with the defects in
the title of his vendor.
A purchaser cannot close his eyes to facts which should put a reasonable man upon
his guard and then claim that he acted in good faith under the belief that there was
no defect in the title of the vendor.
Good faith, or the lack of it, is in its last analysis a question of intention; but in
ascertaining the intention by which one is actuated on a given occasion, we are
necessarily controlled by the evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be determined.
“Good faith, or the want of it, is not a visible, tangible fact that can be seen or
touched but rather a state or condition of mind which can only be judged of by
actual or fancied tokens. or signs."
Facts:
The Compania Agricola Filipina (CAF) bought rice-cleaning machines from Strong
Machinery Company (SMC). These machines were installed in one of the CAF’s
buildings, which was made out of strong materials.
A chattel mortgage was executed to secure payment of the purchase price. The
chattel mortgage included the building and the machines; the land on which it stood
was not included. When CAF failed to pay their debt, the property was sold by the
sheriff and the same was bought by SMC. The mortgage was registered in the
chattel mortgage registry and the sale of the property to SMC was annotated on the
same registry on December 29, 1913.

On January 14, 1913, CAF executed a deed of sale of the land, where the building
stood, to SMC. The sale was in the form of a public instrument, but the same was
not registered. SMC went into possession of the building at or about the same time
when the sale took place.
At or about the same time when the chattel mortgage was executed in favor of SMC,
CAF executed another mortgage to herein plaintiff (Leung Yee) upon the building to
secure payment of the balance of its indebtedness. Upon CAF’s failure to pay, Leung
Yee secured judgment for the amount and levied execution upon the building,
bought it at the sheriff’s sale on or about Dec 18, 1914 and had the sheriff’s
certificate of sale duly registered in the land registry of Cavite.
At the time of the execution, SMC, who was in possession, filed with the sheriff a
sworn statement setting up its claim of title and demanding the release of the
property from the levy. Accordingly, an action to recover possession of the building
was filed by Leung Yee. RTC ruled in favor of SMC on the ground that the company
had its title to the building registered prior to the date of the registry of Leung Yee’s
certificate. Thus, this appeal.
Issue: Who has a better right to the property?
Ruling: RTC ruling in favor of SMC is affirmed; ground modified.
Ratio Decidendi:
The building made out of strong materials is real property. The mere fact that the
parties dealt with it as separate and apart from the land (or as personal property)
does not change its character as real property. In this case, it follows that neither
the original registry in the chattel mortgage of the building and the machinery
installed therein, nor the annotation in the registry of the sale of the mortgaged
property had any legal effect.
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However, since the facts disclose that the purchase by Leung Yee and the inscription
on the sheriff’s certificate of sale were not made in good faith, it must be held that
SMC is the owner of the property pursuant to the third (3 rd) paragraph of Article
1473 of the NCC, “…should there be no entry, the property shall belong to the
person who first took possession of it in good faith, and in the absence thereof, to
the person who presents the oldest title, provided there is good faith.”
Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, No. 20329 March
16, 1923
CHATTEL MORTGAGE; REGISTRATION; NOTICE.—The efficacy of the act of
recording a chattel mortgage consists in the fact that registration operates as
constructive notice of the existence of the contract, and the legal effects of the
instrument must be discovered in the document itself, in relation with the fact of
notice. Registration adds nothing to the instrument, considered as a source of title,
and affects nobody's rights except as a species of constructive notice.
FUNCTION OF REGISTER.—The duties of a register of deeds in respect to the
registration of chattel mortgages are purely of a ministerial character, and he is
clothed with no judicial or quasi-judicial power to determine the-nature of the
property, whether real or personal, which is the subject of the mortgage. Generally
speaking, he should accept the qualification of the property adopted by the person
who presents the instrument for registration and should place the instrument on
record, upon payment of the proper fee, leaving the effects of registration to be
determined by the court if such question should arise for legal determination.
Facts:
On November 27, 1922, Gervasia de la Rosa, Vda. de Vera, was the lessee of a
parcel of land situated in the City of Manila and owner of the house of strong
materials built thereon, upon which date she executed a document in the form of a

chattel mortgage to convey to the Standard Oil. Co. by way of mortgage both the
leasehold interest in said lot and the building to which it stands
After said document had been duly acknowledged and delivered, it was then
presented to Joaquin Jaramillo, Register of Deeds of the City of Manila, for the
purpose of having the same recorded. Upon examination of the instrument, the
Jaramillo was of the opinion that it was not chattel mortgage, for the reason that the
interest therein mortgaged did not appear to be personal property, within the
meaning of the Chattel Mortgage Law, and registration was refused on this ground
only.
Issue: Whether or not the deed may be registered in the chattel mortgage registry?
Held: Yes it may be registered. The duties of a register of deeds in respect to the
registration of chattel mortgages are purely of a ministerial character, and he is
clothed with no judicial or quasi-judicial power to determine the nature of the
property, whether real or personal, which is the subject of the mortgage. Generally
speaking, he should accept the qualification of the property adapted by the person
who presents the instrument for registration and should place the instrument on
record, upon payment of the proper fee, leaving the effects of registration to be
determined by the court if such question should arise for legal determination.
The efficacy of the act of recording a chattel mortgage consists in the fact that
registration operates as constructive notice of the existence of the contract, and the
legal effects of the instrument must be discovered in the document itself, in relation
with the fact of notice. Registration adds nothing to the instrument, considered as a
source of title, and affects nobody's rights except as a species of constructive notice.
Davao Saw Mill Co. vs. Castillo, 61 Phil., 709, No. 40411 August 7, 1935
A lessee placed machinery in a building erected on land belonging to another, with
the understanding that the machinery was not included in the improvements which
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would pass to the lessor on the expiration or abandonment of the land leased. The
lessee also treated the machinery as personal property by executing chattel
mortgages in f favor of third persons. The machinery was levied upon by the sheriff
as personalty pursuant to a writ of execution obtained without any protest being
registered. Held: That the machinery must be classified as personal property.
Machinery which is movable in its nature only becomes immobilized when placed in a
plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted
as the agent of the owner.
Facts:
Davao Saw Mill Co., Inc., a holder of a lumber concession, has operated sawmill in
aland which it does not own. The company erected a building therein which housed
the machinery used by it. In the lease contract between the sawmill company and
the owner of the land,it has been agreed that after the lease period or in case the
company should leave or abandon the land leased before the said period, ownership
of all the improvements and buildings except machineries and accessories,made by
the company shall pass to the owner of the land without any obligation on its part to
pay any amount for said improvements and buildings. In another action, A writ of
execution was issued against the company and the properties in question were
levied upon. The company assailed the said writ contending that the machineries
and accessories were personal in nature, hence, not subject to writ of execution.
The trial judge ruled in favour of the company.
Issue: Whether or not the subject properties are personal in nature.
Held: The subject properties are personal in nature. Article 334, paragraph 5, of the
[Old] Civil Code provides that real property consists of (5) Machinery, liquid

containers, instruments or implements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which
are expressly adapted to meet the requirements of such trade of industry. Machinery
which is movable in nature only becomes immovable when placed in a land by the
owner of the property or land but not when so placed by a tenant or any person
having only a temporary right, unless such person acted as the agent of the owner.
In the case at bar, the machinery is intended not by the owner of the land but by
the saw mill company for use in connection with its trade. In this sense, the
machinery is not a real property.
Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil., 663, No. 41643 July 31, 1935
MORTGAGE; IMPROVEMENT ON THE MORTGAGED PROPERTY, INCLUDED IN THE
MORTGAGE.—The installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent
improvement on said sugar central and subjects said machinery and equipment to
the mortgage constituted thereon. (Article 1877, Civil Code.)
PERMANENT CHARACTER OF THE IMPROVEMENT.—The fact that the purchaser of
the new machinery and equipment has bound himself to the person supplying him
the purchase money to hold them as security for the payment of the latter's credit,
and to refrain from mortgaging or otherwise encumbering them does not alter the
permanent character of the incorporation of said machinery and equipment with the
central.
OWNERSHIP OF THE IMPROVEMENT.—The sale of the machinery and equipment in
question by the purchaser who was supplied the purchase money, as a loan, to the
person who supplied the money, after the incorporation thereof with the mortgaged
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sugar central, does not vest the creditor with ownership of said machinery and
equipment but simply with the right of redemption.
Facts:
On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos,
a loan secured by a first mortgage constituted on 2 parcels of land "with all its
buildings, improvements, sugar-cane mill, steel railway, telephone line, apparatus,
utensils and whatever forms part or is a necessary complement of said sugar-cane
mill, steel railway, telephone line, now existing or that may in the future exist in said
lots.”
On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity
of its sugar central by buying additional machinery and equipment, so that instead of
milling 150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to
advance the necessary amount for the purchase of said machinery and equipment,
promising to reimburse him as soon as he could obtain an additional loan from the
mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an
additional loan from Cu Unjieng e Hijos, said machinery and equipment would
become security therefore, said Green binding himself not to mortgage nor
encumber them to anybody until Berkenkotter be fully reimbursed for the
corporation's indebtedness to him.
Having agreed to said proposition made in a letter dated 5 October 1926,
Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total
amount supplied by him to Green having been P25,750. Furthermore, Berkenkotter
had a credit of P22,000 against said corporation for unpaid salary. With the loan of
P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased the
additional machinery and equipment.

On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of
P75,000 offering as security the additional machinery and equipment acquired by
said Green and installed in the sugar central after the execution of the original
mortgage deed, on 27 April 1927, together with whatever additional equipment
acquired with said loan. Green failed to obtain said loan. Hence, above mentioned
mortgage was in effect.
Issue: Are the additional machines also considered mortgaged?
Held:
Article 1877 of the Civil Code provides that mortgage includes all natural accessions,
improvements, growing fruits, and rents not collected when the obligation falls due,
and the amount of any indemnities paid or due the owner by the insurers of the
mortgaged property or by virtue of the exercise of the power of eminent domain,
with the declarations, amplifications, and limitations established by law, whether the
state continues in the possession of the person who mortgaged it or whether it
passes into the hands of a third person. It is a rule, that in a mortgage of real
estate, the improvements on the same are included; therefore, all objects
permanently attached to a mortgaged building or land, although they may have
been placed there after the mortgage was constituted, are also included.
Article 334, paragraph 5, of the Civil Code gives the character of real property to
machinery, liquid containers, instruments or implements intended by the owner of
any building or land for use in connection with any industry or trade being carried on
therein and which are expressly adapted to meet the requirements of such trade or
industry. The installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent
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improvement on said sugar central and subjects said machinery and equipment to
the mortgage constituted thereon.
Manarang and Manarang vs. Ofilada and Esteban, 99 Phil. 108, No. L-8133
May 18, 1956
IMMOVABLE PROPERTY; BUILDINGS; HOUSE is PERSONAL PROPERTY FOR
PURPOSES OF CHATTEL MORTGAGE ONLY; REMAINS REAL PROPERTY.—The mere
fact that a house was the subject of a chattel mortgage and was considered as
personal property by the parties does not make said house personal property for
purposes of the notice to be given for its sale at public auction. It is real property
within the purview of Rule 39, section 16, of the Rules of Court as it has become a
permanent fixture on the land, which is real property.
Topic: Chattel Mortgage Immovable Property; House is Personal Property for Chattel
Mortgage Purposes only; remains real property
Facts:
Petitioner obtained a loan of P200 from Ernesto Esteban, and to secure its payment
she executed a chattel mortgage over a house of mixed materials erected on a lot
on Alvarado Street, Manila. As Manarang did not pay the loan as agreed upon,
Esteban brought an action against her in the municipal court of Manila for its
recovery, alleging that the loan was secured by a chattel mortgage on her property.
Judgment having been entered in plaintiff's favor, execution was issued against the
same property mortgaged.
Before the property could be sold Manarang offered to pay the sum of P277, which
represented the amount of the judgment of P250, the interest thereon, the costs,
and the sheriff's fees, but the sheriff refused the tender unless the additional
amount of P260 representing the publication of the notice of sale in two newspapers
be paid also. So defendants therein brought this suit to compel the sheriff to accept

the amount of P277 as full payment of the judgment and to annul the published
notice of sale.
On the basis of the above facts counsel for Manarang contended in the court below
that the house in question should be considered as personal property and the
publication of the notice of its sale at public auction in execution considered
unnecessary. The Court of First Instance held that although real property may
sometimes be considered as personal property, the sheriff was in duty bound to
cause the publication of the notice of its sale in order to make the sale valid or to
prevent its being declared void or voidable, and he did not, therefore, err in causing
such publication of the notice. So it denied the petition.
Issue: Does the fact that the parties entering into a contract regarding a house
gave said property the consideration of personal property in their contract, bind the
sheriff in advertising the property's sale at public auction as personal property?
Held:
There can not be any question that a building of mixed materials may be the subject
of a chattel mortgage, in which case it is considered as between the parties as
personal property. The matter depends on the circumstances and the intention of
the parties.
It is to be remembered that in the case at bar the action was to collect a loan
secured by a chattel mortgage on the house. It is also to be remembered that in
practice it is the judgment creditor who points out to the sheriff the properties that
the sheriff is to levy upon in execution, and the judgment creditor in the case at bar
is the party in whose favor the owner of the house and conveyed it by way of chattel
mortgage and, therefore, knew its consideration as personal property.
The mere fact that a house was the subject of a chattel mortgage and was
considered as personal property by the parties does not make said house personal
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property for purposes of the notice to be given for its sale at public auction. It is real
property within the purview of Rule 39, section 16, of the Rules of Court as it has
become a permanent fixture on the land, which is real property.
We, therefore, declare that the house of mixed materials levied upon on execution,
although 'subject of a contract of chattel mortgage between the owner and a third
person, is real property within the purview of Rule 39, section 16, of the Rules of
Court as it has become a permanent fixture on the land, which is real property.
Among the principal criteria for determining whether property remains personaly or
becomes realty are annexation to the soil, either actual or construction, and the
intention of the parties. Personal property may retain its character as such where it
is so agreed by the parties interested even though annexed to the realty, or where it
is affixed in the soil to be used for a particular purpose for a short period and then
removed as soon as it has served its purpose.
The general principle of law is that a building permanently fixed to the freehold
becomes a part of it, that prima facie a house is real estate, belonging to the owner
of the land on which it stands, even though it was erected against the will of the
landowner, or without his consent. The general rule is otherwise, however, where
the improvement is made with the consent of the landowner, and pursuant to an
understanding either expressed or implied that it shall remain personal property. Nor
does the general rule apply to a building which is wrongfully removed from the land
and placed on the land of the person removing it."
GSIS v. Calson [G.R. No. L-19867. May 29, 1968.]
When machineries are considered part of immovable property; Case at bar.—Where,
as in the case at bar, the disputed mortgage covers the lands “together with all the
buildings and improvements now existing or which may hereafter be constructed”
thereon; and the machineries found thereon were permanently attached to the
property and installed therein by the owner to meet the needs of certain works or

industry therein, said machineries are considered part of the immovable property
pursuant to Article 415 of the Civil Code, and need not be the subject of a separate
chattel mortgage in order to be deemed duly encumbered.
Facts: On 11 April 1957, Calsons Inc. applied for a loan of P2M to appellee to pay
the balance of the purchase price of certain parcels of land situated at the corner of
Globo de Oro and Elizondo Streets, Quiapo, Manila, and to finance the construction
of a 2-story textile market building on said land. The application was approved by
appellee’s Board of Trustees on 26 August 1957.
Appellee advanced the sum of P5,628,00 for the annual premium, but appellants
failed to reimburse the same. Appellee filed a complaint for the foreclosure of the
mortgage with the CFI Manila on 11 August 1958, alleging a number of violations of
the mortgage contract.
Issue: Whether the machineries are immovables and must be included in the
mortgage.
Held:
Machineries are immovables and are included in mortgage; installed by the owner to
meet demands of industry or works The mortgage was on the lands “together with
all the buildings and improvements now existing or which may hereafter be
constructed” thereon. And the machineries were permanently attached to the
property, and installed there by the former owner to meet the needs of certain
works or industry therein. They were therefore part of immovable pursuant to Article
415 of the Civil Code, and need not be the subject of a separate chattel mortgage in
order to be deemed duly encumbered in favor of appellee.
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Ago vs. Court of Appeals, 6 SCRA 530, No. L-17898 October 31, 1962
Property; Immovables by destination; Installation of sawmill machineries in building
of sawmill company.—By the installation of the sawmill machineries in the building of
the sawmill company, for use in the sawing of logs carried on in said building, the
same became a necessary and permanent part of the building or real estate on
which the same was constructed, converting the said machineries and equipments
into real estate within the meaning of Article 415 (5) of the. Civil Code.
Topic: Immovable; By Destination
Facts:
Pastor D. Ago bought sawmill machineries and equipments from respondent Grace
Park Engineering, Inc., executing a chattel mortgage over said machineries and
equipments to secure the payment of a balance of the price remaining unpaid of
P32,000.00, which petitioner agreed to pay on installment basis.
Petitioner Ago defaulted in his payment and so, in 1958, respondent Grace Park
Engineering, Inc. instituted extra-judicial foreclosure proceedings of the mortgage.
To enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53 in the
Court of First Instance of Agusan. The parties to the case arrived at a compromise
agreement and submitted the same in court in writing, signed by Pastor D. Ago and
the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of
First Instance of Agusan, then presiding, dictated a decision in open court on
January 28, 1959.
Petitioner continued to default in his payments as provided in the judgment by
compromise, so Grace Park Engineering, Inc. filed with the lower court a motion for
execution, which was granted by the court on August 15, 1959. A writ of execution,
dated September 23, 1959, later followed.

Issue: Whether the machineries in question are movable or immovable?
Held: The properties are immovable by destination. Paraphrasing the language of
said decision we hold that by the installation of the sawmill machineries in the
building of the Golden Pacific Sawmill, Inc., for use in the sawing of logs carried on
in said building, the same became a necessary and permanent part of the building or
real estate on which the same was constructed, converting the said machineries and
equipments into real estate within the meaning of Article 415(5) above-quoted of the
Civil Code of the Philippines.
The record shows that after petitioner herein Pastor D. Ago had purchased the
sawmill machineries and equipments he assigned the same to the Golden Pacific
Sawmill, Inc. in payment of his subscription to the shares of stock of said
corporation. Thereafter the sawmill machineries and equipments were installed in a
building and permanently attached to the ground. By reason of such installment in a
building, the said sawmill machineries and equipments became real estate properties
in accordance with the provision of Art. 415(5) of the Civil Code, thus:
“ART. 415. The following are immovable property:
x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a
piece of land, and which tend directly to meet the needs of the said industry or
works;”
This Court in interpreting a similar question raised before it in the case of
Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation of the
machinery and equipment in the central of the Mabalacat Sugar Co., Inc. for use in
connection with the industry carried by that company, converted the said machinery
and equipment into real estate by reason of their purpose.
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Serg’s Products v. PCI Leasing [G.R. No. 137705. August 22, 2000]
The machines although each of them was movable or personal property on its own,
all of them have become immobilized by destination because they are essential and
principal elements of petitioners chocolate-making industry.—In the present case,
the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were essential
and principal elements of their chocolate-making industry. Hence, although each of
them was movable or personal property on its own, all of them have become
immobilized by destination because they are essential and principal elements in the
industry. In that sense, petitioners are correct in arguing that the said machines are
real, not personal, property pursuant to Article 415 (5) of the Civil Code.
Contracting parties may validly stipulate that a real property be considered as
personal.—The Court has held that contracting parties may validly stipulate that a
real property be considered as personal. After agreeing to such stipulation, they are
consequently estopped from claiming otherwise. Under the principle of estoppel, a
party to a contract is ordinarily precluded from denying the truth of any material fact
found therein.
The Lease Agreement clearly provides that the machinesin question are to be
considered as personal property; Under the circumstances they are proper subjects
of the writ of seizure.—In the present case, the Lease Agreement clearly provides
that the machines in question are to be considered as personal property. x x x
Clearly then, petitioners are estopped from denying the characterization of the
subject machines as personal property. Under the circumstances, they are proper
subjects of the Writ of Seizure.
That the machines should be deemed personal property pursuant to the Lease
Agreement is good only insofar as the contracting parties are concerned.—It should

be stressed, however, that our holding—that the machines should be deemed
personal property pursuant to the Lease Agreement—is good only insofar as the
contracting parties are concerned. Hence, while the parties are bound by the
Agreement, third persons acting in good faith are not affected by its stipulation
characterizing the subject machinery as personal. In any event, there is no showing
that any specific third party would be adversely affected.
Facts:
On 13 February 1998, PCI Leasing and Finance, Inc. filed a complaint for sum of
money, with an application for a writ of replevin. On 6 March 1998, upon an ex-
parte application of PCI Leasing, judge issued a writ of replevin directing its sheriff
to seize and deliver the machineries and equipment to PCI Leasing after 5 days and
upon the payment of the necessary expenses. On 24 March 1998, the sheriff
proceeded to petitioner's factory, seized one machinery with word that the return for
the other machineries.
Citing the Agreement of the parties, the appellate court held that the subject
machines were personal property, and that they had only been leased, not owned,
by petitioners; and ruled that the "words of the contract are clear and leave no
doubt upon the true intention of the contracting parties." It thus affirmed the 18
February 1998 Order, and the 31 March 1998 Resolution of the lower court, and
lifted the preliminary injunction issued on 15 June 1998. A subsequent motion for
reconsideration was denied on 26 February 1999. Hence, the petition for review on
certiorari.
Issue: Whether the machines are personal or real property?
Held: The machinery were essential and principal elements of their chocolate-
making industry. Hence, although each of them was movable or personal property
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on its own, all of them have become "immobilized by destination because they are
essential and principal elements in the industry." The machines are thus, real, not
personal, property pursuant to Article 415 (5) of the Civil Code.
Contracting parties may validly stipulate that a real property be considered as
personal. After agreeing to such stipulation, they are consequently estopped from
claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein. Thus, said
machines are proper subjects of the Writ of Seizure (compare Tumalad v. Vicencio).
The holding that the machines should be deemed personal property pursuant to the
Lease Agreement is good only insofar as the contracting parties are concerned.
Hence, while the parties are bound by the Agreement, third persons acting in good
faith are not affected by its stipulation characterizing the subject machinery as
personal. In the present case, however, there is no showing that any specific third
party would be adversely affected.
Tumalad vs. Vicencio, 41 SCRA 143, No. L-30173 September 30, 1971
Property; Status of buildings as immovable property.—It is obvious that the inclusion
of the building, separate and distinct from the land, in the enumeration of what may
constitute real properties (art. 415, New Civil Code) could only mean one thing—that
a building is by itself an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same owner.
Same; Same; Same; Deviations from rule.—Certain deviations, however, have been
allowed for various reasons. In the case of Manarang vs. Ofilada, No. L-8133, 18
May 1956, 99 Phil. 109, this Court stated that ‘‘it is undeniable that the parties to a
contract may by agreement treat as personal property that which by nature would
be real property.’’ Again, in the case of Luna vs. Encarnacion, No. L-4637, 30 June
1952, 91 Phil. 531, the subject of the contract designated as Chattel Mortgage was a
house of mixed materials, and this Court held therein that it was a valid Chattel

mortgage because it was so expressly designated and specifically that the property
given as security ‘‘is a house of mixed materials, which by its very nature is
considered personal property.”
Same; Same; Same; Same; Reason; Owner is estopped.—The view that parties to a
deed of chattel mortgage may agree to consider a house as personal property for
the purposes of said contract, is good only insofar as the contracting parties are
concerned. It is based, partly, upon the principle of estoppel. Hence, if a house
belonging to a person stands on a rented land belonging to another person, it may
be mortgaged as a personal property as so stipulated in the document of mortgage.
It should be noted, however, that the principle is predicated on statements by the
owner declaring his house to be a chattel, a conduct that may conceivably estop him
from subsequently claiming otherwise.
Same; Contracts; By ceding, selling or transferring house by way of chattel
mortgage, house is treated as chattel.—In the contract, the house on rented land is
not only expressly designated as Chattel Mortgage; it specifically provides that “the
mortgagor . . . voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage the property together with its leasehold rights over the lot on which it is
constructed and participation. . .” Although there is no specific statement referring to
the subject house as personal property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendants-appellants could not have meant to
convey the house as chattel, or at least, intended to treat the same as such, so that
they should not now be allowed to make an inconsistent stand by claiming
otherwise. Moreover, the subject house stood on a rented lot to which defendants-
appellants merely had a temporary right as lessee, and although this can not in itself
alone determine the status of the property, it does so when combined with other
factors to sustain the interpretation that the parties, particularly the mortgagors,
intended to treat the house as personalty.
Chattel Mortgage Law; Foreclosure of the mortgaged property.—Chattel mortgages
are covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of
this Act allows the mortgagee to have the property mortgaged sold at public auction
through a public officer in almost the same manner as that allowed by Act No. 3135,
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MIDTERMS CASE DIGEST IN PROPERTY- TIAMZON
as amended by Act No. 4118, provided that the requirements of the law relative to
notice and registration are complied with.
Same; Redemption of foreclosed property.—Section 6 of Act No. 3135, as amended
provides that the debtor-mortgagor may, at any time within one year from and after
the date of the auction sale, redeem the property sold at the extrajudicial
foreclosure sale.
Same; Petition to obtain possession during period of redemption; Requirements.—
Section 7 of Act 3135, as amended allows the purchaser of the property to obtain
from the court the possession during the period of redemption; but the same
provision expressly requires the filing of a petition with the proper Court of First
Instance and the furnishing of a bond. It is only upon filing of the proper motion and
the approval of the corresponding bond that the order for a writ of possession issues
as a matter of course. No discretion is left to the court. In the absence of such a
compliance, the purchaser can not claim possession during the period of redemption
as a matter of right. In such a case, the governing provision is Section 34, Rule 39,
of the Revised Rules of Court, which also applies to properties purchased in
extrajudicial foreclosure proceedings.
Same; To whom rentals receivable during redemption period belong.—While it is
true that the Rules of Court allow the purchaser to receive the rentals if the
purchased property is occupied by tenants, he is, nevertheless, accountable to the
judgmentdebtor or mortgagor as the case may be, for the amount so received and
the same will be duly credited against the redemption price when the said debtor or
mortgagor effects the redemption. Differently stated, the rentals receivable from
tenants, although they may be collected by the purchaser during the redemption
period, do not belong to the latter but still pertain to the debtor or mortgagor. The
rationale for the Rule, it seems, is to secure for the benefit of the debtor or
mortgagor, the payment of the redemption amount and the consequent return to
him of his properties sold at public auction.
Same; Mortgagor is entitled to remain in possession during period of redemption and
to collect rents.—Since the defendants-appellants were occupying the house at the

time of the auction sale, they are entitled to remain in possession during the period
of redemption or within one year from and after 27 March 1956, the date of the
auction sale, and to collect the rents or profits during the said period.
FACTS:
On 1 September 1955 Vicencio and Simeon executed a chattel mortgage in favor of
the Tumalads over their house of strong materials located at Quiapo, Manila, which
were being rented from Madrigal & Company, Inc. The mortgage was registered in
the Registry of Deeds of Manila on 2 September 1955. The mortgage was executed
to guarantee a loan of P4,800.00 received from the Tumalads, payable within one
year at 12% yearly. Monthly payments are to be made starting September 1955 to
July 1956, and the lump sum of P3,150 was payable on or before August 1956. It
was also agreed that default in the payment of any of the amortizations would cause
the remaining unpaid balance to become immediately due and payable, the Chattel
Mortgage enforceable, and the Sheriff of Manila authorized the to sell the property in
a public auction for payment of debt. When Vicencio and Simeon defaulted in
paying, the mortgage was extrajudicially foreclosed, and on 27 March 1956, the
house was sold at public auction pursuant to the said contract. As highest bidder,
the Tumalads were issued the corresponding certificate of sale.
On 18 April 1956, the Tumalads commenced civil case in the MTC of Manila, praying
that the house be vacated and its possession surrendered to them, and for Vicencio
and Simeon to pay rent of P200.00 monthly from 27 March 1956 up to the time the
possession is surrendered. On 21 September 1956, the municipal court rendered its
decision in favor of the Tumalads. Vicencios appealed to the court a quo which also
rendered a decision against them. On appeal, the case was elevated to the Supreme
Court by the Court of Appeals for the reason that only questions of law are involved.
Tumalads failed to file a brief and this appeal was submitted for decision without it.
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Nearly a year after the foreclosure sale the mortgaged house had been demolished
on January 1957 by virtue of a decision obtained by the lessor of the land on which
the house stood.
ISSUE:
Whether or not the chattel mortgage was null and void ab initio because only
personal properties can be subject of a chattel mortgage?
HELD:
The inclusion of the building, separate and distinct from the land, in the enumeration
of what may constitute real properties (art. 415, New Civil Code) could only mean
one thing — that a building is by itself an immovable property irrespective of
whether or not said structure and the land on which it is adhered to belong to the
same owner. Certain deviations, however, have been allowed for various reasons; if
parties to a contract by agreement treat as personal property that which by nature
would be real property.
In the contract now before Us, the house on rented land is not only expressly
designated as Chattel Mortgage; it specifically provides that "the mortgagor ...
voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage the property
together with its leasehold rights over the lot on which it is constructed and
participation ..."
Although there is no specific statement referring to the subject house as personal
property, yet by ceding, selling or transferring a property by way of chattel mortgage
Vicencios could only have meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they should not now be allowed to make
an inconsistent stand by claiming otherwise.

Moreover, the subject house stood on a rented lot to which Vicencios merely had a
temporary right as lessee, and although this can not in itself alone determine the
status of the property, it does so when combined with other factors to sustain the
interpretation that the parties, particularly the mortgagors, intended to treat the
house as personalty.
Finally unlike other jurisprudence wherein third persons assailed the validity of the
chattel mortgage, it is the Vicencios themselves, as debtors-mortgagors, who are
attacking the validity of the chattel mortgage in this case. The doctrine of estoppel
therefore applies to the herein defendants-appellants, having treated the subject
house as personalty.
Navarro vs. Pineda, 9 SCRA 631, No L-18456 November 30, 1963
Chattel Mortgage; Subject-matter; House on land belonging to another treated as
movable property between the parties.— Where a house stands on a rented land
belonging to another person, it may be the subject-matter of a chattel mortgage as
personal or movable property if so stipulated in the document of mortgage, and in
an action by the mortgagee for foreclosure, the validity of the chattel mortgage
cannot be assailed by one of the parties to the contract of mortgage.
Property; Immovable Property; House on land belonging to another; General rule
and exceptions.—Although in some instances, a house of mixed materials has been
considered as a chattel between the parties and that the validity of the contract
between them, has been recognized, it has been a constant criterion that, with
respect to third persons, who are not parties to the contract, and specially in
execution proceedings, the house is considered as immovable property.
Topic: Chattel Mortgage; Immovable Property
Facts:
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Defendants borrowed from plaintiff Conrado P. Navarro, the sum of P2,550.00,
payable 6 months after said date or on June 14, 1959. To secure the indebtedness,
Rufino executed a document captioned “DEED OF REAL ESTATE and CHATTEL
MORTGAGES”, whereby Juana Gonzales, by way of Real Estate Mortgage
hypothecated a parcel of land, belonging to her, registered with the Register of
Deeds of Tarlac, under Transfer Certificate of Title No. 25776, and Rufino G. Pineda,
by way of Chattel Mortgage, mort-gaged his two-story residential house, having a
floor area of 912 square meters, erected on a lot belonging to Atty. Vicente Castro,
located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in his
name, under Motor Vehicle Registration Certificate No. A-171806. Both mortgages
were contained in one instrument, which was registered in both the Office of the
Register of Deeds and the Motor Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the defendants, after demands
made on them, failed to pay. They, however, asked and were granted an extension
up to June 30, 1960, within which to pay. Came June 30, defendants again failed to
pay and, for the second time, asked for another extension, which was given, up to
July 30, 1960. In the second extension, defendant Pineda in a document entitled
“Promise”, categorically stated that in the remote event he should fail to make good
the obligation on such date (July 30, 1960), the defendant would no longer ask for
further extension and there would be no need for any formal demand, and plaintiff
could proceed to take whatever action he might desire to enforce his rights, under
the said mortgage contract. In spite of said promise, defendants, failed and. refused
to pay the obligation.
Plaintiff filed a complaint for foreclosure of the mortgage and for damages, which
consisted of liquidated damages in the sum of P500.00 and 12% per annum interest
on the principal, effective on the date of maturity, until fully paid.
Issue: Whether deed of real estate and chattel mortgages appended to the
complaint is valid, notwithstanding the fact that the house of the defendant Rufino

G. Pineda was made the subject of the chattel mortgage, for the reason that it is
erected on a land that belongs to a third person.”
Held:
In the case at bar, the house in question was treated as personal or movable
property, by the parties to the contract themselves. In the deed of chattel mortgage,
appellant Rufino G. Pineda conveyed by way of “Chattel Mortgage” “my personal
properties”, a residential house and a truck. The mortgagor himself grouped the
house with the truck, which is, inherently a movable property. The house which was
not even declared for taxation purposes was small and made of light construction
materials: G.I. sheets roofing, sawali and wooden walls and wooden posts; built on
land belonging to another.
The cases cited by appellants are not applicable to the present case. The Iya cases
(L-10837-38, supra), refer to a building or a house of strong materials, permanently
adhered to the land, belonging to the owner of the house himself. In the case of
Lopez v. Orosa, (L-10817-18), the subject building was a theatre, built of materials
worth more than P62,000, attached permanently to the soil. In these two cases and
in the Leung Yee case, supra, third persons assailed the validity of the deed of
chattel mortgages; in the present case, it was one of the parties to the contract of
mortgages who assailed its validity.
Where a house stands on a rented land belonging to another person, it may be the
subject-matter of a chattel mortgage as personal or movable property if so
stipulated in the document of mortgage, and in an action by the mortgagee for
foreclosure, the validity of the chattel mortgage cannot be assailed by one of the
parties to the contract of mortgage.
In Manarang vs. Ofilada Case:
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“There can not be any question that a building of mixed materials may be the
subject of a chattel mortgage, in which case, it is considered as between the parties
as personal property. x x x The matter depends on the circumstances and the
intention of the par-ties”. “Personal property may retain its character as such where
it is so agreed by the parties interested even though annexed to the realty x x x”.
The view that parties to a deed of chattel mortgage may agree to consider a house
as personal property for the purposes of said contract, “is good only insofar as the
contracting parties are concerned. It is based partly, upon the principles of estoppel
x x x” (Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958).
In Davao Sawmill vs. Castillo Case:
In a case, a mortgage house built on a rented land, was held to be a personal
property, not only because the deed of mortgage considered it as such, but also
because it did not form part of the land (Evangelista v. Abad [CA]; 36 O.G. 2913),
for it is now well-settled that an object placed on land by one who has only a
temporary right to the same, such as a lessee or usufructuary, does not become
immobilized by attachment. Hence, if a house belonging to a person stands on a
rented land belonging to another person, it may be mortgaged as a personal
property is so stipulated in the document of mortgage. (Evangelista v. Abad, supra.)
It should be noted, however, that the principle is predicated on statements by the
owner declaring his house to be a chattel, a conduct that may conceivably estop him
from subsequently claiming otherwise (Ladera, et al. v. C. N. Hodges, et al., [CA]; 48
O.G. 5374). The doctrine, therefore, gathered from these cases is that although in
some instances, a house of mixed materials has been considered as a chattel
between the parties and the validity of the contract between them, has been
recognized, it has been a constant criterion nevertheless that, with respect to third
persons, who are not parties to the contract, and specially in execution proceedings,
the house is considered as an immovable property (Art. 1431, New Civil Code).

With respect to the principle restated in the Navarro case, supra, that “the parties to
a contract may by agreement, treat as personal property that which by nature would
be real property”, the ruling in Piansay, et al. v. David, et al., L-19468, Oct. 30,
1964, seems to disagree. In this latter case, it was held: “x x x the registration of the
chattel mortgage of the building produced no effect as far as the building is
concerned. Thus Mrs. Uy Kim had no right to foreclose the alleged chattel mortgage
constituted in her favor because it was in reality a mere contract of an unsecured
loan. It follows that the Sheriff was not authorized to sell the house as a result of the
foreclosure of such chattel mortgage. And as Mrs. Uy Kim could not have acquired
the house when the Sheriff sold it at public auction, she could not, in the same
token, have sold it validly to Piansay.” As to when machineries are considered part of
immovable property and need not be the subject of a separate chattel mortgage in
order to be deemed duly encumbered. (GSIS v. Calsons, Inc., L-19867, May 29,
1968, 23 SCRA 891)
Makati Leasing and Finance Corp. vs. Wearever Textile Mills, Inc., 122
SCRA 296, No. L-58469 May 16, 1983
Examining the records of the instant case, We find no logical justification to exclude
and rule out, as the appellate court did, the present case from the application of the
abovequoted pronouncement. If a house of strong materials, like what was involved
in the above Tumalad case, may be considered as personal property for purposes of
executing a chattel mortgage thereon as long as the parties to the contract so agree
and no innocent third party will be prejudiced thereby, there is absolutely no reason
why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because
one who has so agreed is estopped from denying the existence of the chattel
mortgage.
In rejecting petitioner’s assertion on the applicability of the Tumalad doctrine, the
Court of Appeals lays stress on the fact that the house involved therein was built on
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a land that did not belong to the owner of such house. But the law makes no
distinction with respect to the ownership of the land on which the house is built and
We should not lay down distinctions not contemplated by law.
Private respondent contends that estoppel cannot apply against it because it had
never represented nor agreed that the machinery in suit be considered as personal
property but was merely required and dictated on by herein petitioner to sign a
printed form of chattel mortgage which was in a blank form at the time of signing.
This contention lacks persuasiveness. As aptly pointed out by petitioner and not
denied by the respondent, the status of the subject machinery as movable or
immovable was never placed in issue before the lower court and the Court of
Appeals except in a supplemental memorandum in support of the petition filed in the
appellate court. Moreover, even granting that the charge is true, such fact alone
does not render a contract void ab initio, but can only be a ground for rendering said
contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a
proper action in court. There is nothing on record to show that the mortgage has
been annulled. Neither is it disclosed that steps were taken to nullify the same. On
the other hand, as pointed out by petitioner and again not refuted by respondent,
the latter has indubitably benefited from said contract. Equity dictates that one
should not benefit at the expense of another. Private respondent could not now
therefore, be allowed to impugn the efficacy of the chattel mortgage after it has
benefited therefrom.
Facts:
Wearever Textile in order to obtain a financial accommodation from Makati Leasing,
discounted and assigned several receivables with the former under a Receivable
Purchase Agreement. To secure the collection of the receivables assigned, Waerever
executed a Chattel Mortgage over certain raw materials inventory as well as a
machinery described as an Artos Aero Dryer Stentering Range.

Upon Wearever's default, Makati Leasing filed a petition for extrajudicial foreclosure
of the properties mortgage to it. However, the Deputy Sheriff assigned to implement
the foreclosure failed to gain entry into Wearever's premises and was not able to
effect the seizure of the machinery. Makati Leasing thereafter filed a complaint for
judicial foreclosure with the CFI Rizal. RTC then issued a writ of seizure, the
enforcement of which was restrained upon Wearever's filing of a motion for
reconsideration. finally issued on 11 February 1981, an order to break open the
premises of Wearever to enforce said writ.
The sheriff enforcing the seizure order, repaired to the premises of Wearever and
removed the main drive motor of the subject machinery.
CA set aside the orders of the RTC and ordered the return of the drive motor seized
by the sheriff after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to
Article 415 of the new Civil Code. CA also rejected the argument that Wearever is
estopped from claiming that the machine is real property by constituting a chattel
mortgage thereon. A motion for reconsideration was filed by Makati Leasing, but it
was denied. Hence this petition.
Issue:
Whether the machinery in suit is real or personal property?
Held:
If a house of strong materials, like what was involved in the above Tumalad case,
may be considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no innocent
third party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because
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one who has so agreed is estopped from denying the existence of the chattel
mortgage.
It must be pointed out that the characterization of the subject machinery as chattel
by the private respondent is indicative of intention and impresses upon the property
the character determined by the parties. As stated in Standard Oil Co. of New York
vs. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by
agreement treat as personal property that which by nature would be real property,
as long as no interest of third parties would be prejudiced thereby.
Benguet Corp. vs. Central Board of Assessment Appeals, 218 SCRA 271,
G.R. No. 106041 January 29, 1993
Civil Law; Taxation; Property; The Real Property Tax Code does not carry a definition
of "real property".—The Real Property Tax Code does not carry a definition of "real
property" and simply says that the realty tax is imposed on "real property, such as
lands, buildings, machinery and other improvements affixed or attached to real
property." In the absence of such a definition, we apply Article 415 of the Civil Code.
Same; Same; Same; The tailings dam of the petitioner does not fall under any of the
classes of exempt real properties enumerated under Section 2 of C.A. No. 470.—
Section 2 of C.A. No. 470, otherwise known as the Assessment Law, provides that
the realty tax is due "on the real property, including land, buildings, machinery and
other improvements" not specifically exempted in Section 3 thereof. A reading of
that section shows that the tailings dam of the petitioner does not fall under any of
the classes of exempt real property therein enumerated.
Same; Same; Same; Court is convinced that the subject dam falls within the
definition of an improvement because it is permanent in character and it enhances
both the value and utility of petitioner's mine.—The Court is convinced that the
subject dam falls within the definition of an "improvement" because it is permanent

in character and it enhances both the value and utility of petitioner's mine.
Moreover, the immovable nature of the dam defines its character as real property
under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the
Real Property Tax Code.
Topic: Immovables; Improvements; Taxable
Facts:
The controversy arose in 1985 when the Provincial Assessor of Zambales assessed
the said properties as taxable improvements. The assessment was appealed to the
Board of Assessment Appeals of the Province of Zambales. On August 24, 1988, the
appeal was dismissed mainly on the ground of the petitioner's "failure to pay the
realty taxes that fell due during the pendency of the appeal."
The petitioner seasonably elevated the matter to the Central Board of Assessment
Appeals,1 one of the herein respondents. In its decision dated March 22, 1990, the
Board reversed the dismissal of the appeal but, on the merits, agreed that "the
tailings dam and the lands submerged thereunder (were) subject to realty tax."
The petitioner does not dispute that the tailings dam may be considered realty within
the meaning of Article 415. It insists, however, that the dam cannot be subjected to
realty tax as a separate and independent property because it does not constitute an
"assessable improvement" on the mine although a considerable sum may have been
spent in constructing and maintaining it. To support its theory, the petitioner cites
several cases.
Issue: Whether or not it be considered as immovable property?
Held:
Yes. The Court is convinced that the subject dam falls within the definition of an
"improvement" because it is permanent in character and it enhances both the value
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and utility of petitioner's mine. Moreover, the immovable nature of the dam defines
its character as real property under Article 415 of the Civil Code and thus makes it
taxable under Section 38 of the Real Property Tax Code.
Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property
Tax Code defines improvement as follows:
(k) Improvements—is a valuable addition made to property or an amelioration in its
condition, amounting to a more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adopt it for
new or further purposes.
The term has also been interpreted as "artificial alterations of the physical condition
of the ground that are reasonably permanent in character."
From the definitions and the cases cited above, it would appear that whether a
structure constitutes an improvement so as to partake of the status of realty would
depend upon the degree of permanence intended in its construction and use. The
expression "permanent" as applied to an improvement does not imply that the
improvement must be used perpetually but only until the purpose to which the
principal realty is devoted has been accomplished. It is sufficient that the
improvement is intended to remain as long as the land to which it is annexed is still
used for the said purpose.
The Court is convinced that the subject dam falls within the definition of an
"improvement" because it is permanent in character and it enhances both the value
and utility of petitioner's mine. Moreover, the immovable nature of the dam defines
its character as real property under Article 415 of the Civil Code and thus makes it
taxable under Section 38 of the Real Property Tax Code.

Co- Ownership Cases
Sanchez vs Court of Appeals and Teria [G.R. No. 108947. September 29,
1997]
A co-owner’s share of the property shall not be included if she did not consent to the
sale
FACTS:
Lilia Sanchez, constructed a house on a 76-square meter lot owned by her parents-
in-law. The lot was registered under TCT No. 263624 with the following co-owners:
Eliseo Sanchez married to Celia Sanchez, Marilyn Sanchez married to Nicanor
Montalban, Lilian Sanchez, widow, Nenita Sanchez, single, Susana Sanchez married
to Fernando Ramos, and Felipe Sanchez.
On 20 February 1995, the lot was registered under TCT No. 289216 in the name of
private respondent Virginia Teria by virtue of a Deed of Absolute Sale supposed to
have been executed on 23 June 1995 by all six (6) co-owners in her favor.
Lilia Sanchez claimed that she did not affix her signature on the document and
subsequently refused to vacate the lot, thus prompting Virginia Teria to file an action
for recovery of possession of the aforesaid lot with the MeTC.
MeTC decision: in favor of Teria, declaring that the sale was valid only to the
extent of 5/6 of the lot and the other 1/6 remaining as the property of petitioner, on
account of her signature in the Deed of Absolute Sale having been established as a
forgery.
RTC decision: affirmed the RTC, because they failed to submit their pleadings.
On 4 November 1998, the MeTC issued an order for the issuance of a writ of
execution in favor of private Virginia Teria, buyer of the property. On 4 November
1999 or a year later, a Notice to Vacate was served by the sheriff upon petitioner
who however refused to heed the Notice.
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On 28 April 1999 private respondent started demolishing petitioner’s house without
any special permit of demolition from the court.
Due to the demolition of her house which continued until 24 May 1999 petitioner
was forced to inhabit the portion of the premises that used to serve as the house’s
toilet and laundry area.
On 29 October 1999 petitioner filed her Petition for Relief from Judgment with the
RTC on the ground that she was not bound by the inaction of her counsel who failed
to submit petitioner’s appeal memorandum.
RTC decision: denied the Petition and the subsequent Motion for Reconsideration.
CA (Petition for Certiorari): dismissed the petition for lack of merit
ISSUE:
Whether or not the portion of the petitioner should be included in the sale,
notwithstanding the fact that she did not affix her signature in the alleged deed of
sale
RULING:
Article 493 of the Civil Code gives the owner of an undivided interest in the property
the right to freely sell and dispose of it, i.e., his undivided interest. He may validly
lease his undivided interest to a third party independently of the other co-owners.
But he has no right to sell or alienate a concrete, specific or determinate part of the
thing owned in common because his right over the thing is represented by a quota
or ideal portion without any physical adjudication.
Although assigned an aliquot but abstract part of the property, the metes and
bounds of petitioner’s lot has not been designated. As she was not a party to the
Deed of Absolute Sale voluntarily entered into by the other co-owners, her right to
1/6 of the property must be respected. Partition needs to be effected to protect her
right to her definite share and determine the boundaries of her property. Such
partition must be done without prejudice to the rights of private respondent Virginia
Teria as buyer of the 5/6 portion of the lot under dispute.

Vda. de Ape vs. Court of Appeals, 456 SCRA 193, G.R. No. 133638 April 15,
2005
The exercise of the right to redeem presupposes the existence of a co-ownership at
the time the conveyance is made by a co-owner and when it is demanded by the
other co-owner or co-owners—as legal redemption is intended to minimize co-
ownership, once the property is subdivided and distributed among the co-owners,
the community ceases to exist and there is no more reason to sustain any right of
legal redemption.—In this case, the records are bereft of any indication that
Fortunato was given any written notice of prospective or consummated sale of the
portions of Lot No. 2319 by the vendors or would-be vendors. The thirty (30)-day
redemption period under the law, therefore, has not commenced to run. Despite
this, however, we still rule that petitioner could no longer invoke her right to redeem
from private respondent for the exercise of this right “presupposes the existence of a
co-ownership at the time the conveyance is made by a co-owner and when it is
demanded by the other co-owner or co-owners.” The regime of co-ownership exists
when ownership of an undivided thing or right belongs to different persons. By the
nature of a co-ownership, a co-owner cannot point to specific portion of the property
owned in common as his own because his share therein remains intangible. As legal
redemption is intended to minimize co-ownership, once the property is subdivided
and distributed among the co-owners, the community ceases to exist and there is no
more reason to sustain any right of legal redemption. In this case, records reveal
that although Lot No. 2319 has not yet been formally subdivided, still, the particular
portions belonging to the heirs of Cleopas Ape had already been ascertained and
they in fact took possession of their respective parts.
Same; Same; Same; Partition; Although a partition might have been informal, it is of
no moment for even an oral agreement of partition is valid and binding upon the
parties.—Similarly telling of the partition is the stipulation of the parties during the
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pre-trial wherein it was admitted that Lot No. 2319 had not been subdivided
nevertheless, “Fortunato Ape had possessed a specific portion of the land ostensibly
corresponding to his share.” From the foregoing, it is evident that the partition of Lot
No. 2319 had already been effected by the heirs of Cleopas Ape. Although the
partition might have been informal is of no moment for even an oral agreement of
partition is valid and binding upon the parties. Likewise, the fact that the respective
shares of Cleopas Ape’s heirs are still embraced in one and the same certificate of
title and have not been technically apportioned does not make said portions less
determinable and identifiable from one another nor does it, in any way, diminish the
dominion of their respective owners. Vda. de Ape vs. Court of Appeals, 456 SCRA
193, G.R. No. 133638 April 15, 2005
Topic: Sales; Partition; Co-Ownership
Facts:
Cleopas Ape was the registered owner of a parcel of land particularly known as Lot
No. 2319 of the Escalante Cadastre of Negros Occidental and covered by Original
Certificate of Title (OCT) No. RP 1379 (RP-154 [300]). Upon Cleopas Ape’s death
sometime in 1950, the property passed on to his wife, Maria Ondoy, and their eleven
(11) children.
Private respondent joined by her husband, Braulio, instituted a case for “Specific
Performance of a Deed of Sale with Damages” against Fortunato and his wife
Perpetua (petitioner herein) before the then Court of First Instance of Negros
Occidental. It was alleged in the complaint that on 11 April 1971, private respondent
and Fortunato entered into a contract of sale of land under which for a consideration
of P5,000.00, Fortunato agreed to sell his share in Lot No. 2319 to private
respondent.
Issue: Whether or not there was a valid contract of sale?

Held:
As to the issue on Co-ownership
The exercise of the right to redeem presupposes the existence of a co-ownership at
the time the conveyance is made by a co-owner and when it is demanded by the
other co-owner or co-owners—as legal redemption is intended to minimize co-
ownership, once the property is subdivided and distributed among the co-owners,
the community ceases to exist and there is no more reason to sustain any right of
legal redemption.
In this case, the records are bereft of any indication that Fortunato was given any
written notice of prospective or consummated sale of the portions of Lot No. 2319
by the vendors or would-be vendors. The thirty (30)-day redemption period under
the law, therefore, has not commenced to run. Despite this, however, we still rule
that petitioner could no longer invoke her right to redeem from private respondent
for the exercise of this right “presupposes the existence of a co-ownership at the
time the conveyance is made by a co-owner and when it is demanded by the other
co-owner or co-owners.” The regime of co-ownership exists when ownership of an
undivided thing or right belongs to different persons. By the nature of a co-
ownership, a co-owner cannot point to specific portion of the property owned in
common as his own because his share therein remains intangible. As legal
redemption is intended to minimize co-ownership, once the property is subdivided
and distributed among the co-owners, the community ceases to exist and there is no
more reason to sustain any right of legal redemption. In this case, records reveal
that although Lot No. 2319 has not yet been formally subdivided, still, the particular
portions belonging to the heirs of Cleopas Ape had already been ascertained and
they in fact took possession of their respective parts.
Similarly telling of the partition is the stipulation of the parties during the pre-trial
wherein it was admitted that Lot No. 2319 had not been subdivided nevertheless,
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“Fortunato Ape had possessed a specific portion of the land ostensibly corresponding
to his share.” From the foregoing, it is evident that the partition of Lot No. 2319 had
already been effected by the heirs of Cleopas Ape. Although the partition might have
been informal is of no moment for even an oral agreement of partition is valid and
binding upon the parties. Likewise, the fact that the respective shares of Cleopas
Ape’s heirs are still embraced in one and the same certificate of title and have not
been technically apportioned does not make said portions less determinable and
identifiable from one another nor does it, in any way, diminish the dominion of their
respective owners.
As to the issue on Sales:
No. Fortunato was a “no read no write” person. It was incumbent for the the other
party to prove that details of the contract was fully explained to Fortunato before
Fortunato signed the receipt.
A contract of sale is a consensual contract, thus, it is perfected by mere consent
of the parties. It is born from the moment there is a meeting of minds upon the
thing which is the object of the sale and upon the price. Upon its perfection, the
parties may reciprocally demand performance, that is, the vendee may compel
the transfer of the ownership and to deliver the object of the sale while the
vendor may demand the vendee to pay the thing sold. For there to be a perfected
contract of sale, however, the following elements must be present: consent,
object, and price in money or its equivalent.
For consent to be valid, it must meet the following requisites:
(a) it should be intelligent, or with an exact notion of the matter to which it refers;
(b) it should be free and
(c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom
by violence, intimidation or undue influence; spontaneity by fraud.
Lumayno claimed that she explained fully the receipt to Fortunato, but Flores’
testimony belies it. Flores said there was another witness but the other was a
maid who also lacked education. Further, Flores himself was not aware that the

receipt was “to transfer the ownership of Fortunato’s land to her mom-in-law”. It
merely occurred to him to explain the details of the receipt but he never did.
Pardell vs. Bartolome, 23 Phil., 450, No. 4656 November 18, 1912
Topic: Hereditary succession gives rise to co-ownership; Co-ownership; extent
"Each co-owner may use the things owned in common, provided he uses them in
accordance with their object andin such manner as not to injure the interests of the
community nor prevent the co-owners from utilizing themaccording to their rights."
(Article 394 of the Civil Code, now Art. 486)
Facts: Petitioner Vicenta Ortiz y Felin de Pardell and respondent Matilde Ortiz y Felin
Bartolome were the existing heirs of the late Miguel Ortiz and Calixta Felin. On 1888,
Matilde and co-defendantGaspar de Bartolome y Escribano took it upon themselves
without an judicial authorization or even extra judicial agreement the administration
of the properties of the late Calixta and Miguel. These properties included a house in
Escolta Street, Vigan, Ilocos Sur; a house in Washington Street, Vigan, Ilocos Sur; a
lot in MagallanesStreet, Vigan, Ilocos Sur; parcels of rice land in San Julian and Sta.
Lucia; and parcels of land in Candon, Ilocos Sur.
Vicenta filed an action in court asking that the judgement be rendered in restoring
and returning to them one half of the total value of the fruits and rents, plus losses
and damages from the aforementioned properties. However, respondent Matilde
asserted that she never refused to give the plaintiff her share of the said properties.
Vicenta also argued that Matilde and her husband, Gaspar are obliged to pay rent to
the former for their occupation of the upper story of the house in Escolta Street.
Issue: Whether or not Matilde and Gaspar are obliged to pay rent for their
occupation of the said property
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Held: No. The Court ruled that the spouses are not liable to pay rent. Their
occupation of the said property was a mere exercise of their right to use the same as
a co-owner. One of the limitations on a co-owner’s right of use is that he must use it
in such a way so as not to injure the interest of the other co-owners. In the case at
bar, the other party failed to provide proof that by the occupation of the spouses
Bartolome, they prevented Vicenta from utilizing the same.
Estates; Realty; Rights of Coowners or Tenants in Common
Each co-owner or tenant in common of undivided realty has the same rights therein
as the others; he may use and enjoy the same without other limitation except that
he must not prej-udice the rights of his coowners, but until a division is effected, the
respective parts belonging to each can not be determined; each coowner exercises
joint dominion and is entitled to joint use.
Rent by One Coowner
For the use and enjoyment of a particular portion of the lower part of a house, not
used as living quarters, a coowner must, in strict justice, pay rent, in like manner as
other people pay for similar space in the house; he has no right to the free use and
enjoyment of such space which, if rented to a third party, would produce income.
Repairs and Improvements; Interest
Until a cause instituted to determine the liability of the rest of the coowners for
repairs and improvements made by one of their number is finally decided and the
amount due is fixed, the persons alleged to be liable can not be considered in
default as to interest, because interest is only due from the date of the decision
fixing- the principal liability.
Voluntary Administrator; Compensation

To an administrator or voluntary manager of property belonging to his wife and
another, both coowners, the property being undi-vided, the law does not concede
any remuneration, without prejudice to his right to be reimbursed for any necessary
and useful expenditures in connection with the property and for any damages he
may have suffered thereby.
Right to Demand Valuation Before Division or Sale
Any one of the coowners of undivided property about to be divided or to be sold in
consequence of a mutual petition, has the right to ask that the property be valued
by experts, a valuation which would not be prejudicial but rather beneficial to all.
Longings Javier vs Segundo Javier
Topic: Community of Property
The ownership of a house by one person, and of the land on which it stands by
another, does not create a community of property as that term is used in articles
392 et seq. of the Civil Code. The defendants, tenants in common with others of a
tract of land, built a house thereon. That they could not compel their cotenants to
share in the expense of such construction, though they tacitly consented thereto.
(Art. 397, Civil Code.)
Facts:
This case relates to the ownership of the lot, and of the house standing thereon, No.
521 Calle Real, Malate, Manila. The court below found that the land belonged to the
plaintiff as administrator of the estate of his father, Manuel Javier, and that the
defendant Isabel Hernandez and Manuel Ramon Javier, her son, are the owners of
the house standing on the lot. Judgment was rendered in favor of the plaintiff for
the possession of the property, but giving the defendants a reasonable opportunity
to remove the house.
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The evidence sustains the findings of fact to the effect that the land belongs to the
estate represented by the plaintiff. There was evidence to show that the land was, in
1860, in the possession of Manuel Javier, the father of the defendant Segundo
Javier, and that since that time it has been occupied by his children and that no one
of these children ever made any claim to the ownership thereof, and no one them
ever occupied the property as owner.
Manuel Ramon Javier, testifying as a witness, made no claim to the ownership of the
land, and testified simply that the result of his investigations into the question of
ownership showed that there was a great confusion in regard thereto.
The appellants claim that this action can not be maintained by the administrator of
the estate of Manuel Javier, but that it should be maintained by all the heirs of the
deceased. The right of judicial administrator to recover the possession of real
property belonging to the estate of the deceased was recognized in the case of
Alfonso v. Natividad 1 (4 Off. Gaz., 461; secs. 702, 703, and 704 of the Code of Civil
Procedure).
The appellants claim in their brief that they were possessors in good faith, and by
reason thereof and of the provisions of article 451 of the Civil Code they can not be
compelled to pay rent. It is to be observed, however, that the appellants do not
come within the definition of a possessor in good faith found in article 433 of the
Civil Code cited in their brief. As said by the appellants themselves in that brief, the
two defendants, Segundo Javier and his wife, Isabel Hernandez, always believed
that the land did not belong to them but belonged to the estate of Manuel Javier. It
is to be observed, moreover, that the judgment of the court does not allow any
recovery at all for the use or occupation of the house, and the recovery of rent for
the use of the land is limited to the time elapsed since April 24, 1904, when a
demand was made upon the defendants for the possession of the property.
Held:
It is also claimed by the appellants that, in accordance with article 453 of the Civil
Code, they are entitled to be reimbursed for the expenses of constructing the house.

These expenses are only allowed in accordance with the article cited by the
appellants to a possession in good faith, and the appellants were not such
possessors.
It is claimed finally by the appellants that the case should be decided by an
application of the principles of law meant that community of property existed
because the house was owned by the appellants and the land by the plaintiff, the
contention can not be maintained, for such a condition of affairs does not create a
community of property within the meaning of that term as it is used in title 3, book 2
of the Civil Code. If, on the other hand, it is itself belonged to the heirs of Manuel
Javier, and that two of the defendants were such heirs, it can be said that the
decision of the court below was fully as favorable to the appellants as it could be.
Article 397 of the Civil Code relates to improvements made upon the common
property by one of the coowners. The burden of proof was on the appellants to
show that the house was built with the consent of their cotenants. Even if a tacit
consent was shown this would not require such cotenants to pay for the house.
FERNANDO MONTANO LOPEZ v. PEDRO MARTINEZ ILUSTRE [G.R. No.
2426. January 24, 1906. ]
REALTY; TENANTS IN COMMON; SALE OF UNDIVIDED INTEREST; PARTITION.—M.
and the defendant were owners as tenants in common of twenty-eight separate
tracts of land. M. sold to the plaintiff his undivided one-half interest in two of these
tracts by contract with pacto de retro. Before the right to repurchase had expired M.
and the defendant made a voluntary partition between themselves of the twenty-
eight tracts, by which partition the two tracts in which the plaintiff was interested fell
to the defendant. M. did not exercise his right of repurchase. Held, That the partition
between M. and the defendant did not affect the plaintiff, and that he was the owner
of an undivided one-half of the two lots in question.
FACTS: Father Francisco and son Pedro Martinez were the owners as tenants in
common of 2 separate parcels of land, each being the owner of an undivided ½ of
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said lands. Later, Francisco converyed to Lopez his undivided half interest in both
lands, containing a clause that Francisco has the right to repurchase within 1 year.
He did not repurchase it, then Lopez caused the proper marginal entry to be made
upon the books in the Registry of Property where the conveyance has been
recorded. Afterwards, he brought this action asking for a partition of the 2 lots,
between him and Pedro.
It appeared that Francisco and Pedro were the owners as tenants in common of 26
other parcels of land, and that before the expiration of the 1 year for repurchase,
the 2 of them made a voluntary partition of the 28 lots, which partition was
approved by the CFI. In this partition, the 2 parcels of land in question fell to Pedro,
and he claims that Lopez lost all his interest in the property because of this partition.
Trial court ruled in favor of Lopez
HELD:
Article 399 of the Civil Code is as follows:
Every coowner shall have full ownership of his part and in the fruits and benefits
derived therefrom, and he therefore may alienate, assign, or mortgage it, and even
substitute another person in its enjoyment, unless personal rights are in question.
But the effect of the alienation or mortgage, with regard to the coowners, shall be
limited to the share which may be awarded him in the division on the dissolution of
the community.
This article gives the owner of an undivided interest in the property the right to
freely sell and dispose of it that is, of his undivided interest. he has no right to sell a
divided part of the real estate. If he is the owner of an undivided half of a tract of
land, he has a right to sell and convey an undivided half, but he has no right to
divide the lot into two parts, and convey the whole of one part by metes and

bounds. All that Francisco Martinez undertook to do in this case was to convey his
undivided interest in these two properties. This he had a perfect right to do, in
accordance with the terms of said article. There is nothing in the last clause of the
article inconsistent with this position. That declares simply that when the property is
divided the purchaser gets an interest only in that part which may be assigned to
him. For the purposes of this case we see no difference between it and a case in
which the tenant in common makes an absolute conveyance of his undivided interest
in the property, without reserving the right to repurchase. In the case of an absolute
conveyance of that character, the relation between the grantor in the deed and his
cotenant is terminated. They are no longer cotenants. The grantee in the deed takes
the place of the grantor, and he and the other owner of the property
become cotenants. In such a case the grantor loses all interest in the property, and
of course has no right to take any part in the partition of it. It would be absurd to
say that after such conveyance the grantor, who had lost all his interest in the
property, could by agreement with the other owner make a partition of property in
which he had no interest that would be binding upon his grantee.
MAURICIO RAMIREZ, administrator of the estate of MOISES RAMIREZ,
deceased vs. SIMEON BAUTISTA, ET AL. G.R. No. L-5075 December 1,
1909
ESTATES; RlGHT OF COHEIRS TO ALIENATE COMMUNITY PROPERTY.—Every coheir
has the absolute ownership of his share in the community property and may
alienate, assign, or mortgage the same, except as to purely personal rights, but the
effect of any such transfer is limited to the portion which may be awarded to him
upon the partition of the property.
Facts:
The subject of this complaint is two fish ponds, left by Moises Ramirez on his
demise, and subsequently illegally sold. This action was brought for the purpose of
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having the sale declared to be void, to secure the recovery of possession of the fish
ponds, their restitution to the administrator of the estate of the deceased owner,
and indemnity for damages.
Moises Ramirez, who died intestate in February, 1900, was married twice. The
children of the first marriage, Rosa, Carmen, Francisco, Mauricia, and Ignacia, sold
the two fish ponds on the 28th of November, 1901, to Simeon Bautista and
Raymundo Duran for the sum of 1,100 pesos. The only surviving child of the second
marriage, Isabel, was not a party to said sale, hence the suit now filed by the
administrator of the intestate estate to have the sale declared null and void and the
fish ponds restored to the intestate estate of Moises Ramirez.
The two purchasers proved their purchase by two documents, one of which was a
private and other a notarial one executed for the purpose. When summoned to
answer the complaint they requested that the vendors be cited also, but the latter
although so summoned did not appear at trial.
The action was proceeded with against the purchasers and the Court of First
Instance of Bulacan, before whom the matter was heard, rendered judgment holding
that the fish ponds in question pertained to the intestate estate of the late Moises
Ramirez, and that the sale effected by the said Rosa, Carmen, Francisco, Mauricia,
and Ignacia to the defendants, Simeon Bautista and Raymundo Duran, was null and
void. The court decreed that possession of the fish ponds be restored to the plaintiff,
Mauricio Ramirez as administrator of the property of the late Moises Ramirez, and
accorded him the right to recover from the defendants 200 pesos per annum, as loss
and damages, to commence from the day they were notified of the complaint,
without prejudice to their right, which was reserved to them, of action against the
said vendors; the court also sentenced the defendants to pay the costs.
I. In that it was not in the judgment the children of the late Moises Ramirez, of both
the first and the second marriage, had become owners in common of the two fish
ponds in question by reason of the death of their ancestor.

II. In that it was found therein that, without a partition having been made of the
property left by Moises Ramirez, the children of his first marriage could not validly
have transmitted their rights of partition in common to the property which is the
subject of this suit.
III. In that sale of the thirteen-sixteenths of the two parcels of land in question was
not declared valid, and void as to three-sixteenths thereof.
The appeal having been heard and the evidence reviewed, the following facts must
be held to have been proven:
- That Moises Ramirez was first married to Apolinaria Guillermo and by her had
the above-mentioned five children, Rosa, Carmen, Francisco, Mauricia, and
Ignacia Ramirez.
- That by his second wife, Alejandra Capistrano, he had three children, as
already stated, named Cirila, Isabel, and Serapio Ramirez.
- That Moises Ramirez and his two wives are now dead, as are also the two
children of the second marriage, Cirila and Serapio. Isabel, a girl of about
eight years of age, alone survives.
- That the two fish ponds in question were acquired by Moises Ramirez during
the time of his first marriage with Apolinaria Guillermo, on the 17th of March,
1895, which is the date of the title by composition with the Spanish
Government that constitutes his title of ownership.
The two fish ponds in litigation belonged to the conjugal partnership between Moises
Ramirez and Apolinaria Guillermo. (Civil Code, art. 1401, par. 1.) By virtue of the
conjugal partnership, these two fish ponds belonged half to the husband and half to
the wife upon the dissolution of the marriage by reason of the death of either of
them. Consequently, upon the death of Apolinaria Guillermo one-half of the fish
ponds belonged to Moises Ramirez, and the other half, that belonging to Apolinaria
Guillermo, to the children of the said married couple, Rosa, Carmen, Francisco,
Mauricia, and Ignacia, as the lawful heirs of their mother. Inasmuch as the said
property continued undivided between the father on the one hand and the children
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on the other, and as the conjugal partnership had terminated, a community of
property maintained the father and the children in the joint dominion.
By the second marriage three additional children survived the father, and upon his
death the first five children, together with the latter three, became his heirs, and all
are entitled to divide the said half share belonging to their father into eight parts.
By the death of two of these last three children, their respective shares fell to Isabel
sole heir, inasmuch as they were children of the same parents. (Civil Code art. 947.)
In view of these considerations, the claim of the appellants is entirely legal that
thirteen-sixteenths should be apportioned among the children of the first marriage —
to wit, eight as their own, already inherited from their mother, Apolinaria Guillermo,
and five subsequently inherited from their deceased father, Moises Ramirez — and
three-sixteenths should be the share of the three children of the second marriage,
which accrued to Isabel Ramirez.
Therefore, in the succession of Moises Ramirez that is now opened the whole of
these fractional parts can not be included, but only the eight which actually
constitute his share in the community of property maintained by him with his
children of the first marriage, Rosa, Carmen, Francisco, Mauricia, and Ignacia, since
the death of his first wife.
The above children of the first marriage, upon the death of Moises Ramirez,
continued the aforesaid community of property with their three half sisters and
brother, Cirila, Isabel, and Serapio; that is to say, now with Isabel, their share being
thirteen-sixteenths, and that of Isabel three sixteenths.
The present status of the two fish ponds in question is that of community of
property.
It is certain that when two or more heirs appear at the opening of a
testamentary succession, or during the progress of the settlement of an
intestate estate, and each turns out to be an owner pro indiviso of the

inheritance, by reason of the share he may be entitled to receive, a
community of property then exists between the participants as long as the
estate remains undivided . . . and nothing more tangible can be imagined
than this necessary community, which arose at the moment when the coheirs
assumed the entire representation of the person of the deceased with
respect to all of his property, rights, and actions, both active and passive. (3
Manresa, 357.)
With regard to the community of property the Civil Code provides that —
Every coowner shall have full ownership of his part and in the fruits and
benefits derived therefrom, and he therefore may alienate, assign, or
mortgage it, and even substitute another person in its enjoyment, unless
personal rights are in question. But the effect of the alienation or mortgage,
with regard to the coowners, shall be limited to the share which may be
awarded him in the division on the dissolution of the community. (Art. 399,
Civil Code.)
If Rosa, Carmen, Francisco, Mauricia, and Ignacia Ramirez could lawfully alienate
their respective shares in the joint ownership of the two parcels of land sold to the
defendants, Simeon Bautista and Raymundo Duran, it is evident that the sale of
thirteen-sixteenths of the said two lands could not be void; the sale of the three-
sixteenths which belonged to Isabel alone is illegal, as alleged in the third
assignment of error.
Therefore, the sale described in the public instrument of the 29th of November,
1901, of the thirteen-sixteenths which belonged to the vendors is valid, and that of
the three-sixteenths which pertain to Isabel, who neither by herself nor by means of
another took part in said sale is null.
Simeon Bautista and Raymundo Duran succeed to the vendors and are subrogated
thereto in the joint ownership of the two fish ponds sold; their shares are the same
that were owned by the vendors, that is, thirteen-sixteenths.
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The whole of the two fish ponds can not pertain to the intestate estate of Moises
Ramirez, but merely the half that belonged to him and which at his death became a
part of his intestate estate. Intestate succession can not disturb the lawful holder in
his possession of property, which it is thought should constitute a part of the
hereditary property.
Only in the event of a division of the common property, or upon dissolution of the
community of property now existing between the purchasers, Simeon Bautista and
Raymundo Duran, on the one hand and Isabel Ramirez on the other, can the fruits,
rents, or benefits received, and the part thereof, as well as of the expenses,
corresponding to the coowner Isabel Ramirez in maintaining the community, be
considered, as well as of the rights and actions that may pertain to the purchasers
as against the vendors (who have taken no part in these proceedings), by reason of
the total consideration paid for the two properties, and other obligations which may
have arisen because of the sale.
The present cause of action and the complaint based thereon being limited to the
recovery of the two properties in question, and the restitution of the possession
thereof to the administrator of the intestate estate of Moises Ramirez, in
consequence of the latter's hereditary succession, it is evident that neither recovery
of possession nor the restitution asked for can be granted, as the defendants are the
legitimate proprietors and possessors in joint ownership of the greater portion of the
common property claimed.
ANGELA I. TUASON vs. ANTONIO TUASON, JR., and GREGORIO ARANETA,
INC.,
Old Code: ART. 400. No co-owner shall be obliged to remain a party to the
community. Each may, at any time, demand the partition of the thing held in
common.
Nevertheless, an agreement to keep the thing undivided for a specified length of
time, not exceeding ten years, shall be valid. This period may be a new agreement.

FACTS: In 1941 the sisters Angela I. Tuason and Nieves Tuason de Barreto and
their brother Antonio Tuason Jr., held a parcel of land with an area of 64,928.6 sq.
m. covered by Certificate of Title No. 60911 in Sampaloc, Manila, in common, each
owning an undivided 1/3 portion
The share of Nieves was sold to Gregorio Araneta Inc., a domestic corporation, and
a new Certificate of Title No. 61721 was issued in lieu of the old title No. 60911
covering the same property. The three co-owners agreed to have the whole parcel
subdivided into small lots and then sold, the proceeds of the sale to be later divided
among them.
Before, during and after the execution of this contract , Atty. J. Antonio Araneta was
acting as the attorney-in-fact and lawyer of the two co-owners, Angela I. Tuason
and her brother Antonio Tuason Jr. At the same time he was a member of the Board
of Director of the third co-owner, Araneta, Inc.
On September 16, 1944, Angela I. Tuason revoked the powers conferred on her
attorney-in-fact and lawyer, J. Antonio Araneta because of alleged breach of the
terms of the "Memorandum of Agreement" and abuse of powers granted to it in the
document, she had decided to rescind said contract and she asked that the property
held in common be partitioned. Later, Angela filed a complaint in the Court of First
Instance of Manila asking the court to order the partition of the property in question
and that she be given 1/3 of the same including rents collected during the time that
the same including rents collected during the time that Araneta Inc., administered
said property.
The suit was administered principally against Araneta, Inc. Plaintiff's brother, Antonio
Tuason Jr., one of the co-owners evidently did not agree to the suit and its purpose,
for he joined Araneta, Inc. as a co-defendant.however the court dismissed the
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complaint without pronouncement as to costs. The plaintiff appealed from that
decision.
Some of the reasons advanced by appellant to have the memorandum contract (Exh.
6) declared null and void or rescinded are that she had been tricked into signing it;
that she was given to understand by Antonio Araneta acting as her attorney-in-fact
and legal adviser that said contract would be similar to another contract of
subdivision of a parcel into lots and the sale thereof entered into by Gregorio
Araneta Inc., that the defendant company has violated the terms of the contract by
not previously showing her the plans of the subdivision, the schedule of prices and
conditions of the sale, in not introducing the necessary improvements into the land
and in not delivering to her her share of the proceeds of the rents and sales.
Issue: Whether or not the contract should be declared null and void because its
terms, particularly paragraphs 9, 11 and 15 which violate the provisions of Art. 400
of the Civil Code
Held: We agree with the trial court that the provisions of Art. 400 of the Civil Code
are not applicable. The contract far from violating the legal provision that forbids a
co-owner being obliged to remain a party to the community, precisely has for its
purpose and object the dissolution of the co-ownership and of the community by
selling the parcel held in common and dividing the proceeds of the sale among the
co-owners. The obligation imposed in the contract to preserve the co-ownership until
all the lots shall have been sold, is a mere incident to the main object of dissolving
the co-owners. By virtue of the document, the parties thereto practically and
substantially entered into a contract of partnership as the best and most expedient
means of eventually dissolving the co-ownership, the life of said partnership to end
when the object of its creation shall have been attained.

Looking at the case from a practical standpoint as did the trial court, we find no valid
ground for the partition insisted upon the appellant.
ROMANA CORTES, ET AL. vs. FLORENCIO G. OLIVA
G.R. No. L-10104 February 10, 1916
LlMITATION OF ACTIONS; RECOVERY OF POSSESSION OF SUGAR MlLL.—In an
action for the recovery of possession of a sugar mill wherein it appeared that the
defendant had been in possession for more than four years under a claim of
ownership, Held: That the action had prescribed at the date of its institution under
the provisions of section 43 of Act No. 190.
ADVERSE POSSESSION BY COTENANT.—Ordinarily possession by one joint owner
will not be presumed to be adverse to the others, but will, as a rule, be held to be
for the benefit of all. Much stronger evidence is required to show an adverse holding
by one of several joint owners than by a stranger; and in such cases, to sustain a
plea of prescription, it must always clearly appear that one who was originally a joint
owner has repudiated the claims of his coöwners, and that his coöwners were
apprised or should have been apprised of his claim of adverse and exclusive
ownership before the alleged prescriptive period began to run.
Facts:
This is an action for the recovery of personal property and for the damages incident
to its alleged unlawful conversion.
The plaintiffs are the heirs of one Pio Oliva, deceased, who during his lifetime was
the owner of a large machine used for grinding sugar cane; he was also the joint
owner with his brother, Florencio Oliva, the defendant herein, of another smaller
machine used for the same purpose. Throughout the record the machine owned
outright by Pio Oliva is referred to as the large machine or mill ( trapiche grande)
while the other is referred to as the small or partnership machine.
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In 1896 defendant was the manager of an hacienda in Nasugbu, Batangas, and Pio
Oliva was a tenant on the hacienda. The two machines in question were installed
and in use on the hacienda at the time of the breaking out of the revolution against
Spain. Owing to the unsettled conditions incident to the revolution, the hacienda was
abandoned together with the two machines in question and various other
agricultural implements. Pio Oliva died in 1898 in the pueblo of Calawang, Laguna,
P. I., leaving as his heirs the plaintiffs herein. The defendant, Florencio Oliva,
returned to Nasugbu in 1899. In 1901 he took them in an abandoned condition and
badly in need of repairs. On the large machine he expended approximately P163 and
a less amount on the smaller machine, and he kept both machines under shelter
until work was received on the hacienda. In 1906 the large machine was again used
for grinding cane and it appears to have been used for that purpose ever since. The
smaller machine, the one owned in partnership, has never been used since 1896,
and unsuccessful efforts have been made to sell it. The record is very unsatisfactory
and inconclusive as to the value of the two machines.
The plaintiffs contend that the defendant unlawfully took possession of these
machines in the year 1906 without their knowledge or consent; that from that date
until the year 1912 he had ground cane in the large machine to the value of
P42,000, and that they, as the heirs of the true owner of the machine, are entitled
to P14,000 for the use of this machine, that being one third the estimated value of
the output; that the profits which would have accrued to them from the use of the
small machine during that period amounts to P3,500; that they are entitled to a
judgment for the recovery of the machines of their value; and further to a judgment
for the sum of P17,500 for the profits which should have accrued to them for the
use of these machines from the year 1906 to the year 1912.
The defendant contends that he took possession of the machines in 1901, and has
them in his possession since that date under a claim of ownership; that he took
possession because his brother, Pio Oliva, was indebted to him at the time of his

death, and in view of conditions existing at that time, 1901, he took this mode of
indemnity himself against loss of the amount of the indebtedness which exceeded
the value of both machines at the time when he took possession.
The plaintiff contend that the defendant did not take and keep possession of this
machine under a claim of ownership; and that in truth and in fact he originally took
possession of this machine in the year 1906, and that since that time he has kept
possession merely as security for his claim of indebtedness against their father. In
support of their contentions, they rely on certain statements made by the defendant
in a letter written to one of the plaintiffs. This letter appears to have been written
partly with a view to secure some compromise of the threatened litigation over the
machines, and partly by way of justification and defense of the defendant's conduct
in taking possession of the machines after his brother's death. In the course of the
letter he insists that the plaintiffs were not wronged by his action in taking
possession, because, as he indicates, their claim of ownership in the machine and of
profits from its operation is fully met by his claim of indebtedness and of interest on
the debt. Plaintiffs insist that this statement demonstrates that the defendant was
not asserting a right of ownership in the machine at the time when the letter was
written, but only the right to payment of the amount of the alleged indebtedness
with interest.
With reference to the smaller machine, which was originally owned jointly by the
defendant and his brother, the claim of prescription of the action brought by the
plaintiffs is not satisfactorily established.
This machine having been originally the joint property of the defendant and his
brother, the fact that he held it in his possession for a long period of years, and
exercised acts of ownership with reference to it does not afford a sufficient ground
for the inference he had possession under a claim of exclusive ownership, and
adverse to the claims of his brother's estate. Ordinarily possession by one joint
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owner will not be presumed to be adverse to the others, but will, as a rule, be held
to be for the benefit of all. Much stronger evidence is required to show an adverse
holding by one of several joint owners than by a stranger; and in such cases, to
sustain a plea of prescription, it must always clearly appear that one who was
originally a joint owner has repudiated the claims of his coowners, and that his
coowners were apprised or should have been apprised of his claim of adverse and
exclusive ownership before the alleged prescriptive period began to run. We do not
think that the evidence or record is sufficient to sustain a finding to that effect with
reference to the small machine.
On their own allegations, however, plaintiffs cannot maintain an action for
possession of this machine against the defendant, who was originally a joint with his
brother, their predecessor in interest. Doubtless they have a right to have the
machine sold and to a partition of the proceeds of the sale, and an accounting for
profits while in the exclusive possession of the defendant; and liberally construed,
the allegations of their complaint would seem to be sufficient, if supported by
competent evidence to entitle them to a judgment for such profits.
But there is no direct evidence in the record as to profits gained by the defendant
from the use of this machine, though there are indications in the record that in fact
he made no such profits, and that the machine, which was practically worthless, has
lain idle ever since it came into his possession.