1 PROPERTY CASES
CASE FACT ISSUE
MOVABLE PROPERTY (Art 416-418)
a. Leung Yee VS In 1913, Compania Agricola Filipina (CAF) was indebted to two Who is the owner of DOCTRINE: The mere fact that the parties decided to deal with the
Strong Machinery personalities: Leung Yee and Frank L. Strong Machinery Co. the building?
CAF purchased some rice cleaning machines from Strong
Machinery. CAF installed the machines in a building. As
security for the purchase price, CAF executed a chattel
mortgage on the rice cleaning machines including the building
where the machines were installed. CAF failed to pay Strong
Machinery, hence the latter foreclosed the mortgage – the same
was registered in the chattel mortgage registry.
CAF also sold the land (where the building was standing) to
Strong Machinery. Strong Machinery took possession of the
building and the land.
On the other hand, Yee, another creditor of CAF who engaged
in the construction of the building, being the highest bidder in
an auction conducted by the sheriff, purchased the same building
where the machines were installed. Apparently CAF also
executed a chattel mortgage in favor Yee. Yee registered the
sale in the registry of land. Yee was however aware that prior
to his buying, the property has been sold in favor of Strong
Machinery – evidence is the chattel mortgage already registered
by Strong Machinery (constructive notice).
RULING
building as personal property does not change its character as real
property. Neither the original registry in the chattel mortgage registry nor
the annotation in said registry of the sale of the mortgaged property had
any effect on the building.
HELD:
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. ID.; ID.—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.
The registry under Article 1473 of the Civil Code refers to registry of real
property and the annotation or inscription of a deed of sale of real property
in a chattel mortgage registry cannot be given the legal effect of an
inscription in the registry of real property.
The Chattel Mortgage Law contemplates mortgages of personal property.
The sole purpose and object of the chattel mortgage registry is the
registration of personal property mortgages executed in the manner and
form prescribed in the statute.
In this case, the building where the rice-cleaning machinery was installed
was real property. The mere fact that the parties dealt with it as separate and
apart from the land on which it stood does not change its character as real
property. Neither the original registry of the building in the chattel
mortgage nor the annotation of sale of the mortgaged property in the
registry had any effect on the building’s nature as immovable property.
2 PROPERTY CASES
b. Davao Sawmill VS ● The petitioner company operates a sawmill in
Castillo barrio Tigatu, Davao.
● Said facility contained both movable and
immovable property (machines and other such
implements).
● However, the land on which it is situated belongs
to another person.
● The parties executed a lease contract providing
that upon the expiration or termination of such lease, the
following shall happen:
o The ownership of all structures and
improvements introduced by the petitioner
company shall be transferred to the respondents
without any cost or obligation to pay.
o The machines and their accessories shall not be
included in said transfer.
● It was noted by the court that in a previous case
between the two parties, judgment was rendered against
the petitioner company upon which a writ of execution
was brought against its machines (as personalty) in favor
of Castilllo, et al.
● Additionally, the records of the current case
reflected that the petitioner company had treated its
machinery as personal property by executing chattel
mortgages on them in favor of third persons.
● Petitioner company contends that its machines
are immovable under the first and fifth paragraphs of
Article 334 (now Article 415) of the Civil Code.
Whether or not the DOCTRINE: Generally, machinery becomes immobilized when placed by the
machineries and owner of the plant or property. This rule does not apply should the machinery
equipments were be placed by any other person such as a tenant or usufructuary.
personal in nature.
HELD:
The machines are movable.
The court observed that the petitioner company failed to register its protest at
the time its machines were sold. Generally, this inaction would be
inconclusive but it is indicative of the intention impressed upon the property
in question.
This is so because while machines are generally movable property, they may
nevertheless be “immobilized” by destination or purpose subject to several
conditions.
This conclusion finds its ground under the fifth paragraph of Article 415. Here,
machinery becomes immobilized when placed by the owner of the plant or
property. This rule does not apply should the machinery be placed by any
other person such as a tenant or usufructuary.
Applying the rule to the case on hand, the machinery was placed by the
petitioner company who was merely a lessee. As such, the equipment was
never immobilized in the first place.
PROPERTY; MACHINERY AS PERSONAL PROPERTY; CIVIL CODE, ARTICLE 334,
PARAGRAPHS 1 and 5, CONSTRUED.—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 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.
ID.; ID.; ID.—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.
3 PROPERTY CASES
c. Machinery and ▪ On 13 March 1953, Machinery &
Engineering Engineering Supplies, Inc. (the “Petitioner”) filed a complaint
for replevin in the Court of First Instance (“CFI”) of Manila for
Supplies VS CA the recovery of the machinery and equipment sold and
delivered to Ipo Limestone Co., Inc and Dr. Antonio
Villarama (the “Respondents”) at their factory in Barrio Bigti,
Norzagaray, Bulacan.
▪ Upon application ex-parte of the
Petitioner and upon approval of its bond sum of P15,769.00,
herein Respondent Judge issued an order directing the
Provincial Sheriff of Bulacan to seize and take immediate
possession of the properties specified in the said order.
▪ On 19 March 1953, two deputy sheriffs of
Bulacan, Ramon S. Roco and a crew of technician and
laborers proceeded to Bigti to carry out the CFI’s order.
▪ Leonardo Contreras, herein Respondent
Company’s Manager met the sheriffs and handed the latter
a letter addressed to Atty. Leopoldo C. Paled, ex-officio
Provincial Sheriff of Bulacan, signed by the Respondent
Company’s counsel, protesting against the seizure of the
properties on the ground that the same are not personal
properties.
▪ Roco and the deputy sheriffs contended
that their duty is ministerial and went ahead to the factory.
At the factory, Rocco’s attention was called to the fact that
the equipment could not possibly be dismantled without
causing damages or injuries to the wooden frames attached
to them but Roco insisted in dismantling the same on his own
responsibility and alleged that the bond was posted for such
eventuality. Thus, the deputy sheriffs directed that some of
the machine’s supports be cut.
▪ On 20 March 1953, the Respondent
Company filed an urgent motion, with a counter-bond in the
amount of P15,769 for the return of the properties seized by
the sheriffs. On the same day, the trial court issued an order,
directing the Provincial Sheriff of Bulacan to return the
Whether the DOCTRINE:
machineries and When the machinery and equipment in question appeared to be attached to
equipments can be the land, particularly to the concrete foundation of said premises, in a fixed
considered as manner, in such a way that the former could not be separated from the latter
personal properties "without breaking the material or deterioration of the object or that in order to
subject to replevin. -- remove said outfit, it became necessary, not only to unbolt the same, but ,
NO also, to cut some of its wooden supports and when, said machinery and
equipment were "intended by the owner of the tenement for an industry"
carried on said immovable and tended, it becomes immovable property
pursuant to paragraphs 3 and 5 of Article 415 of Civil Code of the Philippines.
HELD:
The SC held that the special civil action known as replevin, governed by Rule
62 of Court, is applicable only to "personal property". When the sheriff
repaired to the premises of respondent company, the machinery and
equipment in question appeared to be attached to the land, particularly to the
concrete foundation of said premises, in a fixed manner, in such a way that
the former could not be separated from the latter "without breaking the
material or deterioration of the object." Hence, in order to remove said outfit,
it became necessary, not only to unbolt the same, but, also, to cut some of its
wooden supports. Moreover, said machinery and equipment were "intended
by the owner of the tenement for an industry" carried on said immovable and
tended." For these reasons, they were already immovable property pursuant
to paragraphs 3 and 5 of Article 415 of Civil Code of the Philippines, which
are substantially identical to paragraphs 3 and 5 of Article 334 of the Civil
Code of Spain. As such immovable property, they were not subject to
replevin.
it follows that petitioner must also do everything necessary to the reinstallation of
said property in conformity with its original condition.
4 PROPERTY CASES

machinery and equipment to the place where they were

installed at the time of seizure.

▪ On 2 March 1953, the deputy sheriffs

returned the said properties by depositing them along the
road near the quarry of the Respondent Company, without
inventory and re-installation in its former position and
replacing the destroyed posts, which rendered its use
impracticable.

▪ On 23 March 1953, Respondents’

counsel asked the provincial sheriff if the machinery and
equipment dumped on the road would be re-installed to their
former position and condition. The next day, the provincial
sheriff filed an urgent motion in court manifesting the Roco
had been asked to furnish the sheriff’s office with the
expenses, laborers, technical men and equipment to carry
into effect the courts order, among other things but that Roco
absolutely refused and asking the Court that Respondent
Company be ordered to provide the required aid or relieve
the sheriff of the duty of complying to the said order.

▪ On 30 March 1953, the trial court ordered

the provincial sheriff and the Petitioner Company to reinstate
the machinery and equipment removed by them in their
original condition. An urgent motion of the provincial sheriff
dated 15 April 1953 requesting for an extension was denied
and on 4 May 1953, the trial court ordered the Petitioner
Company to furnish the provincial sheriff with the necessary
funds and technical crew and laborers to reinstate the
machinery and equipment.

▪ The case was appealed before the Court

of Appeals but the latter dismissed the same for lack of merit.

▪ Hence this petition filed before the

Supreme Court (the “SC”). The Petitioner argued that the
respondent judge had completely disregarded his
manifestation that the machinery and equipment seized
were and still are the Petitioner's property until fully paid for
and such never became immovable. The question of
5 PROPERTY CASES
ownership and the applicability of Art. 415 of the new Civil
Code are immaterial in the determination of the only issue
involved in this case.
d. Associated Spouses Adriano Valino and Lucia A. Valino own a house of Which of the
Insurance VS Iya strong materials. They filed a bond of P 11,000.00 subscribed mortgages should
by the Associated Insurance and Surety Co., Inc. and as a have preference?
counter-guaranty, the spouses Valino executed an alleged
chattel mortgage on the aforementioned house in favor of the
surety company.
The parcel of land on which the house is erected was still
registered in the name of the Philippine Realty Corporation but
was able to obtain the same from them after full payment of the
purchase price. The Valinos acquired another loan from Isabel
Iya for P12,000.00, executing a real estate mortgage over the
house and lot. However, they were unable to pay off their other
loan which caused the foreclosure of the chattel mortgage. The
surety company was awarded the land as the highest bidder in
the auction but later on discovered that the land was subject to
a real estate mortgage. The surety company then requested that
the house and lot be excluded from the real estate mortgage.
Iya, in her answer, said that she had a real right over the property
and that the chattel mortgage on which the foreclosure was
based should be declared null and void for non-compliance with
the form required by law. The CA ruled that the foreclosure of
the real estate mortgage is limited to the land alone and they
awarded the structure to the surety company saying that the
house is a personal property and may be subject to chattel
mortgage.
e. Mindanao Bus Petitioner is a public utility solely engaged in transporting Whether or not the
Company VS City passengers and cargoes by motor trucks, over its authorized machineries and the
lines in the Island of Mindanao, collecting rates approved by the
equipments are
Assessor Public Service Commission. considered
immobilized and thus
The petitioner is the owner of the land where it maintains and subject to a realty tax.
operates a garage for its TPU motor trucks; a repair shop; -- NO
blacksmith and carpentry shops, and with these machineries
which are placed therein, its TPU trucks are made; body
DOCTRINE: A building is an immovable property irrespective of where or not
said structure and the land on which it is adhered to belong to the same
owner.
HELD:
It was held in Lopez vs. Orosa that the building is an immovable itself,
separate and distinct from the land. A building is an immovable property
irrespective of whether or not said structure and the land on which it is
adhered to belong to the same owner.
Only personal properties can be the subject of a chattel mortgage and since
the structure in this case is an immovable, it cannot subject to a chattel
mortgage. Therefore the chattel mortgage and the sale on which it was based
should be declared null and void. Also, while it is true that said document was
registered in the Chattel Mortgage Register of Rizal, this act produced no
effect whatsoever for where the interest conveyed is in the nature of a real
property, the registration of the document in the registry of chattels is merely
a futile act which would produce no legal effect insofar as the building is
concerned.
DOCTRINE: Movable equipment, to be immobilized in contemplation of
Article 415 of the Civil Code, must be the essential and principal elements of
an industry or works which are carried on in a building or on a piece of land.
Thus, where the business is one of transportation, which is carried on without
a repair or service shop, and its rolling equipment is repaired or serviced in a
shop belonging to another, the tools and equipment in its repair shop which
appear movable are merely incidentals and may not be considered
immovables, and, hence, not subject to assessment as real estate for
purposes of the real estate tax.
6 PROPERTY CASES
constructed; and same are repaired in a condition to be
serviceable in the TPU land transportation business it operates.
These machineries have never been or were never used as
industrial equipments to produce finished products for sale, nor
to repair machineries, parts and the like offered to the general
public indiscriminately for business or commercial purposes for
which petitioner has never engaged in,
The City Assessor of CDO then assessed a P4,400 realty tax on
said machineries and repair equipment. This was then appealed
to the Court of Tax Appeals (CTA) who sustained the respondent
city assessor's ruling.
HELD:
The Supreme Court held a decision for the petition for review to be set aside
and the equipments in question declared not subject to assessment as real
estate for the purposes of the real estate tax.
The law that governs the determination of the question at issue is as
follows:
Art. 415. The following are immovable property:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by
the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend directly
to meet the needs of the said industry or works; (Civil Code of the
Phil.)
Aside from the element of essentiality the above-quoted provision also
requires that the industry or works be carried on in a building or on a piece of
land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the "machinery,
liquid containers, and instruments or implements" are found in a building
constructed on the land. A sawmill would also be installed in a building on
land more or less permanently, and the sawing is conducted in the land or
building.
But in the case at bar the equipments in question are destined only to repair
or service the transportation business, which is not carried on in a building or
permanently on a piece of land, as demanded by the law. Said equipments
may not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in
question are not absolutely essential to the petitioner's transportation
business, and petitioner's business is not carried on in a building, tenement
or on a specified land, so said equipment may not be considered real estate
within the meaning of Article 415 (c) of the Civil Code.
Said equipments are not considered immobilized as they are merely
incidental, not essential and principal to the business of the petitioner. The
transportation business could be carried on without repair or service shops of
7 PROPERTY CASES
f. Board Assessment Generated by its hydroelectric plant, MERALCO’s electric power
of Appeals VS is transmitted from Laguna to Manila through electric
transmission wires. These electric transmission wires which
Manila Electric Co. carry high voltage current, are fastened to insulators attached
on steel towers. MERALCO has constructed 40 of these steel
towers within Quezon City, on land belonging to it.
Three steel towers were the subject of this dispute. When
inspected, the findings disclose that there was no concrete
foundation but there was adobe stone underneath. Further, it
could not be ascertained whether said adobe stone was
purposely or not.
From this, the City Assessor of Quezon City declared the steel
towers subject to real property tax. MERALCO, however,
protested the assessment saying that the steel towers are
considered poles and according to their franchise, it is exempt
from taxation
its rolling equipment as they can be repaired or services in another shop
belonging to another
Property; Immovable Property by Destination; Two requisites before movables may
be deemed to have immobilized; Tools and equipments merely incidental to
business not subject to real estate tax.—Movable equipments, to be immobilized in
contemplation of Article 415 of the Civil Code, must be the essential and principal
elements of an industry or works which are carried on in a building or on a piece of
land. Thus, where the business is one of transportation, which is carried on without
a repair or service shop, and its rolling equipment is repaired or serviced in a shop
belonging to another, the tools and equipments in its repair shop which appear
movable are merely incidentals and may not be considered immovables, and, hence,
not subject to assessment as real estate for purposes of the real estate tax.
Whether or not the DOCTRINE: The steel towers or poles of MERALCO are not real properties because
steel towers or poles 1) they are not adhered to the soil, 2) they are not attached to an immovable
of the MERALCO are property and can be dismantled without breaking or deteriorating the material and
considered real 3) they are not machineries nor instruments or implements intended for the
properties, hence industry or works on the land
subject to real HELD:
property tax? The Supreme Court held in the negative. The Court said that the steel towers are
personal properties. The Court based their ruling on the enumeration of immovable
properties in Art. 415 of the Civil Code.
First, the steel towers do not come within the objects mentioned in par. 1, because
they do not constitute buildings or constructions adhered to the soil.Moreover, they
are not construction analogous to buildings nor adhering to the soil because as per
description, they are removable and merely attached to a square metal frame by
means of bolts, which when unscrewed could easily be dismantled and moved from
place to place.
Second, they can not be included under paragraph 3 since they are not attached to
an immovable in a fixed manner; they can be separated without breaking the
material or causing deterioration upon the object to which they are attached. In
fact, each of these steel towers or supports consists of steel bars joined together by
means of bolts, which can be disassembled by unscrewing the bolts and
reassembled by screwing the same.
Lastly, they do not fall under paragraph 5, as they are not machineries, receptacles,
instruments or implements. SC said that even if they were machineries, receptacles,
8 PROPERTY CASES
g. Tumalad VS On 1 September 1955 defendants executed a chattel mortgage
Vicencio in favor of plaintiffs over their house 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 plaintiffs. 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 and the Chattel Mortgage will be enforceable in
accordance with the provisions of Special Act No. 3135, and for
this purpose, the Sheriff of the City of Manila or any of his
deputies is hereby empowered and authorized to sell all the
Mortgagor's property after the necessary publication in order to
settle the financial debts of P4,800.00, plus 12% yearly interest,
and attorney's fees.
When defendants defaulted in paying, the mortgage was
extrajudicially foreclosed, and the house was sold at public
auction pursuant to the said contract. As highest bidder, plaintiffs
were issued the corresponding certificate of sale. Thereafter,
plaintiffs commenced Civil Case No. 43073 in the municipal
court of Manila, praying, among other things, that the house be
vacated and its possession surrendered to them, and for
defendants to pay rent of P200.00 monthly from 27 March 1956
up to the time the possession is surrendered. MTC granted
petition.
Defendants, in their answers in both the municipal court and
court a quo impugned the legality of the chattel mortgage,
claiming that they are still the owners of the house. During the
pendency of the appeal to the Court of First Instance,
defendants failed to deposit the rent as ordered in the decision
of the municipal court. As a result, the court granted plaintiffs
motion for execution. However, the judgment regarding the
surrender of possession to plaintiffs could not be executed
because the subject house had been already demolished
pursuant to the order of the court in a separate civil case for
instruments or implements, they are not intended for industry or works on the land.
MERALCO is not engaged in an industry or works in the land in which the steel
supports or towers are constructed.
W/N the house may be DOCTRINE: The view that parties to a deed of chattel mortgage may agree
a subject of a Chattel to consider a house as personal property for the purposes of said contract,
Mortgage. – YES, it "is good only insofar as the contracting parties are concerned. It is based,
may be the subject of a partly, upon the principle of estoppel.”
chattel mortgage. HELD:
Defendants predicate their theory of nullity of the chattel mortgage on the
ground that the subject matter of the mortgage is a house of strong materials,
and, being an immovable, it can only be the subject of a real estate mortgage
and not a chattel mortgage.
The rule about the status of buildings as immovable property is that it is
obvious that the inclusion of the building, separate and distinct from the land,
in the enumeration of what may constitute real properties 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.
It is undeniable that the parties to a contract may by agreement treat as
personal property that which by nature would be real property. 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.”
In a case, a mortgaged 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 for it is now settled that an object
placed on land by one who had only a temporary right to the same, such as
the 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 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.
Although there is no specific statement referring to the subject house as
9 PROPERTY CASES
ejectment against the present defendants for non-payment of
rentals on the land on which the house was constructed.
h. Punsalan VS Vda. Punsalan was the owner of a piece of land, which he mortgaged
De Lacsamana in favor of PNB. Due to his failure to pay, the mortgage was
foreclosed and the land was sold in a public auction to which
PNB was the highest bidder.
personal property, yet by ceding, selling or transferring a property by way of
chattel mortgage defendants 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 defendants 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, because it is
the defendants themselves, as debtors-mortgagors, who are attacking the
validity of the chattel mortgage in this case, the doctrine of estoppel therefore
applies to the defendants, having treated the subject house as personalty.
Same; 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. L­4637, 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.
Whether or not the DOCTRINE: Buildings are always immovable under the Civil Code. Separate
warehouse is an treatment by the parties of building from the land in which it stood does not
immovable and must change the immovable character of the building.
be tried in the province HELD:
10 PROPERTY CASES
where
On a relevant date, while Punsalan was still the possessor of the lies.
land, it secured a permit for the construction of a warehouse.
A deed of sale was executed between PNB and Punsalan. This
contract was amended to include the warehouse and the
improvement thereon. By virtue of these instruments,
respondent Lacsamana secured title over the property in her
name.
Petitioner then sought for the annulment of the deed of sale.
Among his allegations was that the bank did not own the building
and thus, it should not be included in the said deed.
Petitioner’s complaint was dismissed for improper venue. The
trial court held that the action being filed in actuality by petitioner
is a real action involving his right over a real property.
i. Makati Leasing VS The private respondent Wearever Textile Mills, Inc., discounted
Wearever and assigned several receivables with the former under a
Receivable Purchase Agreement in order to obtain financial
accommodations from herein petitioner Makati Leasing and
Finance Corporation. To secure the collection of the receivables
assigned, private respondent executed a Chattel Mortgage over
certain raw materials inventory as well as a machinery described
as an Artos Aero Dryer Stentering Range.
Upon default, petitioner filed a petition for extrajudicial
the property Warehouse claimed to be owned by petitioner is an immovable or real
property. Buildings are always immovable under the Civil Code. A building
treated separately from the land on which it is stood is immovable property
and the mere fact that the parties to a contract seem to have dealt with it
separate and apart from the land on which it stood did not change its
character as immovable property.
Civil Law; Property; Immovable Property; Warehouse considered immovable or real
property; Building always immovable under the Civil Code; Separate treatment by
parties of building from the land in which it stood, does not change immovable
character of the building.—The warehouse claimed to be owned by petitioner is an
immovable or real property as provided in article 415(1) of the Civil Code. Buildings
are always immovable under the Code. A building treated separately from the land
on which it stood is immovable property and the mere fact that the parties to a
contract seem to have dealt with it separate and apart from the land on which it
stood in no wise changed its character as immovable property.
Same; Same; Same; Venue, improperly laid; Action for annulment of sale over
property and claim for damages does not operate to efface the prime objective and
nature of the case which is to recover said real property; Action of petitioner treated
as a real action, not personal action; Venue of real action is where the real property
or any part thereof is situated.—While it is true that petitioner does not directly
seek the recovery of title or possession of the property in question, his action for
annulment of sale and his claim for damages are closely intertwined with the issue
of ownership of the building which, under the law, is considered immovable
property, the recovery of which is petitioner’s primary objective. The prevalent
doctrine is that an action for the annulment or rescission of a sale of real property
does not operate to efface the fundamental and prime objective and nature of the
case, which is to recover said real property. It is a real action. Respondent Court,
therefore, did not err in dismissing the case on the ground of improper venue
(Section 2, Rule 4), which was timely raised (Section 1, Rule 16).
Whether or not the DOCTRINE: If a house of strong materials, like what was involved in the
property in suit is real above Tumalad case, may be considered as personal property for purposes
property – NO. It is a of executing a chattel mortgage thereon as long as the parties to the contract
personal property 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.
HELD:
Examining the records of the instant case, We find no logical justification to
11 PROPERTY CASES
foreclosure of the properties mortgage to it. The Deputy Sheriff
assigned to implement the foreclosure failed to gain entry into
private respondent's premises and was not able to effect the
seizure of the aforedescribed machinery. Petitioner thereafter
filed a complaint for judicial foreclosure with the Court of First
Instance of Rizal.
Acting on petitioner's application for replevin, the lower court
issued a writ of seizure, the enforcement of which was however
subsequently restrained upon private respondent's filing of a
motion for reconsideration. After several incidents, the lower
court finally issued an order lifting the restraining order for the
enforcement of the writ of seizure and an order to break open
the premises of private respondent to enforce said writ. The
lower court reaffirmed its stand upon private respondent's filing
of a further motion for reconsideration.
The Court of Appeals, in certiorari and prohibition proceedings
subsequently filed by herein private respondent, set aside the
Orders of the lower court and ordered the return of the drive
motor seized by the sheriff pursuant to said Orders, after ruling
that the machinery in suit cannot be the subject of replevin, much
less of a chattel mortgage, because it is a real property pursuant
to Article 415 of the new Civil Code, the same being attached to
the ground by means of bolts and the only way to remove it from
respondent's plant would be to drill out or destroy the concrete
floor, the reason why all that the sheriff could do to enfore the
writ was to take the main drive motor of said machinery. The
appellate court rejected petitioner's argument that private
respondent is estopped from claiming that the machine is real
property by constituting a chattel mortgage thereon.
exclude the rule out, as the appellate court did, the present case from the
application of the abovequoted pronouncement. If a house of strong
materials, like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a chattel mortgage
thereon as long as the parties to the contract so agree and no innocent third
party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really
because one who has so agreed is estopped from denying the existence of
the chattel mortgage.
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 a land that did not belong to the owner of such house. But the
law makes no distinction with respect to the ownership of the land on which
the house is built and We should not lay down distinctions not contemplated
by law.
It must be pointed out that the characterization of the subject machinery as
chattel by the private respondent is indicative of intention and impresses upon
the property the character determined by the parties. As stated in Standard
Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties
to a contract may by agreement treat as personal property that which by
nature would be real property, as long as no interest of third parties would be
prejudiced thereby.
Property, Mortgage; Replevin; Where a chattel mortgage is constituted on
machinery permanently attached to the ground the machinery is to be
considered as personal property and the chattel mortgage constituted thereon
is not null and void, regardless of who owns the land.—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. Same; Same; Same;
Same.—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
12 PROPERTY CASES
j. Meralco VS Pursuant to a pipeline concession issued under the Petroleum
Central Bd. Of Act of 1949, Republic Act No. 387, Meralco Securities installed
from Batangas to Manila a pipeline system consisting of
Assess Appeals cylindrical steel pipes joined together and buried not less than
one meter below the surface along the shoulder of the public
highway. The pipes are embedded in the soil and are firmly and
solidly welded together so as to preclude breakage or damage
thereto and prevent leakage or seepage of the oil. The valves
are welded to the pipes so as to make the pipeline system one
single piece of property from end to end.
In order to repair, replace, remove or transfer segments of the
pipeline, the pipes have to be cold-cut by means of a rotary hard-
metal pipe-cutter after digging or excavating them out of the
ground where they are buried. In points where the pipeline
traversed rivers or creeks, the pipes were laid beneath the bed
thereof. Hence, the pipes are permanently attached to the land.
Pursuant to the Assessment Law, Commonwealth Act No. 470,
the provincial assessor of Laguna treated the pipeline as real
property and issued tax declarations, containing the assessed
values of portions of the pipeline.
Meralco appealed the assessments to the defendants, but the
latter ruled that pipeline is subject to realty tax. The defendants
argued that the pipeline is subject to realty tax because they are
contemplated in Assessment Law and Real Property Tax Code;
that they do not fall within the category of property exempt from
realty tax under those laws; that Articles 415 & 416 of the Civil
Code, defining real and personal property have no applications
to this case because these pipes are constructions adhered to
soil and things attached to the land in a fixed manner, and that
Meralco Securities is not exempt from realty tax under petroleum
law.
Meralco insists that its pipeline is not subject to realty tax
because it is not real property within the meaning of Art. 415.
therein was built on a land that did not belong to the owner of such house.
But the law makes no
Whether the Yes, the pipelines are subject to realty tax.
aforementioned
pipelines are subject to Section 2 of the Assessment Law provides that the realty tax is due “on real
realty tax. property, including land, buildings, machinery, and other improvements.” This
provision is reproduced with some modification in Section 38, Real Property
Tax Code, which provides that “there shall be levied, assessed, and collected
xxx annual ad valorem tax on real property such as land, buildings,
machinery, and other improvements affixed or attached to real property xxx.”
It is incontestable that the pipeline of Meralco Securities does not fall within
any of the classes of exempt real property enumerated in section 3 of the
Assessment Law and section 40 of the Real Property Tax Code.
Pipeline means a line of pipe connected to pumps, valves and control devices
for conveying liquids, gases or finely divided solids. It is a line of pipe running
upon or in the earth, carrying with it the right to the use of the soil in which it
is placed.
Article 415[l] and [3] provides that real property may consist of constructions
of all kinds adhered to the soil and everything attached to an immovable in a
fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object.
The pipeline system in question is indubitably a construction adhering to the
soil. It is attached to the land in such a way that it cannot be separated
therefrom without dismantling the steel pipes which were welded to form the
pipeline.
WHEREFORE, the questioned decision and resolution are affirmed. The
petition is dismissed. No costs.
Taxation; Property; Real Property Tax Code; Pipeline System of Meralco
Securities classified as real property and subject to tax they being machinery
or improvements; And does not fall within the classes of exempt real
property.—Meralco Securities insists that its pipeline is not subject to realty
tax because it is not real property within the meaning of article 415. This
contention is not sustainable under the provisions of the Assessment Law,
the Real Property Tax Code and the Civil Code. Section 2 of the Assessment
Law provides that the realty tax is due “on real property, including land,
13 PROPERTY CASES
k. Manila Electric The case is about the imposition of the realty tax on two oil
Co. VS Central Bd. of storage tanks installed in 1969 by Manila Electric Company in
Batangas which it leased in 1968 from Caltex (Phil.), Inc. The
Assess. Appeals tanks are within the Caltex refinery compound, and are used for
storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates
welded and assembled on the spot. Their bottoms rest on a
foundation consisting of compacted earth as the outermost
layer, a sand pad as the intermediate layer and a two-inch thick
bituminous asphalt stratum as the top layer. The bottom of each
tank is in contact with the asphalt layer. Hence, it is not attached
to its foundation.
On the other hand, according to the hearing commissioners of
the Central Board of Assessment Appeals (CBAA) states that
while the tanks rest or sit on their foundation, the foundation itself
and the walls, dikes and steps, which are integral parts of the
tanks, are affixed to the land while the pipelines are attached to
the tanks.
The CBAA ruled that the tanks together with the foundation,
buildings, machinery, and other improvements” not specifically exempted in
section 3 thereof. It is incontestable that the pipeline of Meralco Securities
does not fall within any of the classes of exempt real property enumerated in
section 3 of the Assessment Law and section 40 of the Real Property Tax
Code.
Same; Same; Same; Petroleum Law does not exempt Meralco Securities
from payment of realty taxes; Realty tax distinguished from local tax.—
Meralco Securities argues that the realty tax is a local tax or levy and not a
tax of general application. This argument is untenable because the realty tax
has always been imposed by the lawmaking body and later by the President
of the Philippines in the exercise of his lawmaking powers, as shown in
sections 342 et seq. of the Revised Administrative Code, Act No. 3995,
Commonwealth Act No. 470 and Presidential Decree No. 464. The realty tax
is enforced throughout the Philippines and not merely in a particular
municipality or city but the proceeds of the tax accrue to the province, city,
municipality and barrio where the realty taxed is situated (Sec. 86, P.D. No.
464). In contrast, a local tax is imposed by municipal or city council by virtue
of the Local Tax Code, Presidential Decree No. 231, which took effect on July
1, 1973 (69 O.G. 6197).
WON the storage DOCTRINE: Oil storage tanks were held to be taxable realty. For purposes
tanks are considered of taxation, the term "real property" may include things which should
“improvements” on generally be regarded as personal property.
real property such that HELD:
it is subject to real Taxation; Civil Law; Property; Storage tanks although not embedded on
property tax. -- YES land considered as improvements and are subject to realty tax.—We hold that
while the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its
utility and rendering it useful to the oil industry. It is undeniable that the two
tanks have been installed with some degree of permanence as receptacles
for the considerable quantities of oil needed by Meralco for its operations. Oil
storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey
vs. Atlantic City, 15 Atl. 2nd 271.
Same; Same; Same; Real property, for taxation purposes, defined.—For
purposes of taxation, the term “real property” may include things which should
generally be regarded as personal property (84 C.J.S. 171, Note 8). It is a
familiar phenomenon to see things classed as real property for purposes of
taxation which on general principle might be considered personal property
(Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
Meralco contends that the said oil storage tanks do not fall within any of the
kinds of real property enumerated in article 415 of the Civil Code and,
therefore, they cannot be categorized as realty by nature, by incorporation,
14 PROPERTY CASES

walls, dikes, steps, pipelines and other appurtenances constitute
taxable improvements.
Meralco filed a motion for reconsideration which the Board
denied. They elevated the case to the SC.
by destination nor by analogy. Stress is laid on the fact that the tanks are not
attached to the land and that they were placed on leased land, not on the land
owned by Meralco.
The issue raised by Meralco has to be resolved in the light of the provisions
of the Assessment Law, Commonwealth Act No. 470, and the Real Property
Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.

Section 2 of the Assessment Law provides that the realty tax is due "on real
property, including land, buildings, machinery, and other improvements" not
specifically exempted in section 3 thereof. This provision is reproduced with
some modification in the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. — They shall be levied, assessed
and collected in all provinces, cities and municipalities an annual ad valorem
tax on real property, such as land, buildings, machinery and other
improvements affixed or attached to real property not hereinafter specifically
exempted.

The Code contains the following definition in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration
in its condition, amounting to more than mere repairs or replacement of waste,
costing labor or capital and intended to enhance its value, beauty or utility or
to adapt it for new or further purposes.

The SC holds that while the two storage tanks are not embedded in the land,
they may, nevertheless, be considered as improvements on the land,
enhancing its utility and rendering it useful to the oil industry. It is undeniable
that the two tanks have been installed with some degree of permanence as
receptacles for the considerable quantities of oil needed by Meralco for its
operations.

Oil storage tanks were held to be taxable realty in Standard Oil Co. of New
Jersey vs. Atlantic City, 15 Atl. 2nd 271.

For purposes of taxation, the term "real property" may include things which
should generally be regarded as personal property. It is a familiar
phenomenon to see things classed as real property for purposes of taxation
which on general principle might be considered personal property (Standard
Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
15 PROPERTY CASES
l. Caltex VS Central Machines and equipment are loaned by Caltex to gas station Whether
Bd. of Assessment operators under an appropriate lease agreement or receipt. It isGasoline
stipulated in the lease contract that the operators, upon demand,
equipment
Appeals shall return to Caltex the machines and equipment in good machineries
condition as when received, ordinary wear and tear excepted. permanent fixtures for
purposes of realty
The city assessor of Pasay City characterized the said items of taxation. -- YES
gas station equipment and machinery as taxable realty. The city
board of tax appeals ruled that they are personalty. The
assessor appealed to the Central Board of Assessment
Appeals.
The Board said machines and equipment are real property within
the meaning of sections 3(k) & (m) and 38 of the Real Property
Tax Code, Presidential Decree No. 464, which took effect on
June 1, 1974, and that the definitions of real property and
personal property in articles 415 and 416 of the Civil Code are
not applicable to this case.
Caltex filed this certiorari petition wherein it prayed for the setting
aside of the Board's decision and for a declaration that t he said
machines and equipment are personal property not subject to
realty tax.
m. Prudential Bank Spouses Magcale secured a loan from Prudential Bank. To
VS Panis secure payment, they executed a real estate mortgage over a
residential building. The mortgage included also the right to
occupy the lot and the information about the sales patent applied
or not DOCTRINE: Gasoline station equipment and machineries are permanent
station fixtures for purposes of realty taxation.
and
are HELD:
Same; Same; Gasoline station equipments and machineries are subject to
the real property tax.—We hold that the said equipment and machinery, as
appurtenances to the gas station building or shed owned by Caltex (as to
which it is subject to realty tax) and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be
useless, and which have been attached or affixed permanently to the gas
station site or embedded therein, are taxable improvements and machinery
within the meaning of the Assessment Law and the Real Property Tax Code.
Same; Same; Gasoline station equipments and machineries are permanent
fixtures for purposes of realty taxation.—Here, the question is whether the
gas station equipment and machinery permanently affixed by Caltex to its gas
station and pavement (which are indubitably taxable realty) should be subject
to the realty tax. This question is different from the issue raised in the Davao
Saw Mill case. Improvements on land are commonly taxed as realty even
though for some purposes they might be considered personalty (
The Supreme Court held that gasoline station equipment and machineries
are permanent fixtures for purposes of realty taxation. Thus, they are subject
to the real property tax. The said equipment and machinery, as
appurtenances to the gas station building or shed owned by Caltex (as to
which it is subject to realty tax) and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be
useless, and which have been attached or affixed permanently to the gas
station site or embedded therein, are taxable improvements and machinery
within the meaning of the Assessment Law and the Real Property Tax Code.
The Central Board of Assessment Appeals did not commit a grave abuse of
discretion in upholding the city assessor's is imposition of the realty tax on
Caltex's gas station and equipment.
WHEREFORE, the questioned decision and resolution of the Central Board
of Assessment Appeals are affirmed. The petition for certiorari is dismissed
for lack of merit.
WON a valid real Civil Law; Mortgages; Property; Under Art 415, Civil Code, the inclusion of
estate mortgage can a building separate and distinct from the land means that a building is by itself
be constituted on the an immovable property.—In the enumeration of properties under Article 415
building. -- YES of the Civil Code of the Philippines, this Court ruled that, "it is obvious that the
16 PROPERTY CASES
for by the spouses for the lot to which the building stood. After
securing the first loan, the spouses secured another from the
same bank. To secure payment, another real estate
mortgage was executed over the same properties.
The Secretary of Agriculture then issued a Miscellaneous Sales
Patent over the land which was later on mortgaged to the bank.
The spouses then failed to pay for the loan and the REM was
extrajudicially foreclosed and sold in public auction despite
opposition from the spouses. The respondent court held that the
REM was null and void.
n. Serg’s Products, PCI Leasing and Finance, Inc. filed a complaint with the RTC for
Inc. VS PCI Leasing a sum of money with an application for a writ of replevin. Upon
an ex-parte application of PCI Leasing, respondent judge issued
& Finance, Inc. 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.
Serg’s filed a motion for special protective order. This motion
was opposed by PCI Leasing on the ground that the properties
[were] still personal and therefore still subject to seizure and a
writ of replevin.
inclusion of 'building' separate and distinct from the land, in said provision of
law can only mean that a building is by itself an immovable property." (Lopez
vs. Orosa, Jr., et al., L­10817­18, Feb. 28, 1958; Associated Inc. and Surety
Co., Inc. vs. lya, et al., L-10837-38, May 30, 1958).
A real estate mortgage can be constituted on the building erected on the land
belonging to another.
Same; Same; Same; While a mortgage of land necessarily includes
buildings, a building by itself may be mortgaged apart from the land on which
it has been built; Mortgage is still a real estate mortgage for the building would
still be considered immovable property even if dealt with separately from the
land; Possessory rights over property before title is vested on the grantee
may be validly transferred as in a deed of mortgage.
The inclusion of building distinct and separate from the land in the Civil
Code can only mean that the building itself is an immovable property.
While it is true that a mortgage of land necessarily includes in the absence of
stipulation of the improvements thereon, buildings, still a building in itself
may be mortgaged by itself apart from the land on which it is built. Such a
mortgage would still be considered as a REM for the building would
still be considered as immovable property even if dealt with separately and
apart from the land.
The original mortgage on the building and right to occupancy of the land was
executed before the issuance of the sales patent and before the
government was divested of title to the land. Under the foregoing, it
is evident that the mortgage executed by private respondent on his own
building was a valid mortgage.
As to the second mortgage, it was done after the sales patent was issued and
thus prohibits pertinent provisions of the Public Land Act.
Whether or not the DOCTRINE: After agreeing to a contract stipulating that a real or immovable
machineries property be considered as personal or movable, a party is estopped from
purchased and subsequently claiming otherwise. Hence, such property is a proper subject
imported by SERG’S of a writ of replevin obtained by the other contracting party.
became real property HELD:
by virtue of The machineries herein are real properties but are considered personal by
immobilization. the parties’ agreement.
The Court will resolve whether the said machines are personal, not
immovable, property which may be a proper subject of a writ of replevin. Rule
60 of the Rules of Court provides that writs of replevin are issued for the
17 PROPERTY CASES
In their Reply, petitioners asserted that the properties sought to
be seized were immovable as defined in Article 415 of the Civil
Code, the parties’ agreement to the contrary notwithstanding.
They argued that to give effect to the agreement would be
prejudicial to innocent third parties. They further stated that PCI
Leasing was estopped from treating these machineries as
personal because the contracts in which the alleged agreement
were embodied were totally sham and farcical.
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. It also ruled that
the “words of the contract are clear and leave no doubt upon the
true intention of the contracting parties.”
recovery of personal property only. Section 3 thereof reads:
“SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond,
the court shall issue an order and the corresponding writ of replevin
describing the personal property alleged to be wrongfully detained and
requiring the sheriff forthwith to take such property into his custody.”
On the other hand, Article 415 of the Civil Code enumerates immovable or
real property as follows:
“ART. 415. The following are immovable property:
x 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;
x x x....................................x x x....................................x x x”
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.
Be that as it may, we disagree with the submission of the petitioners that the
said machines are not proper subjects of the Writ of Seizure.
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.
Hence, in Tumalad v. Vicencio, the Court upheld the intention of the parties
to treat a house as a personal property because it had been made the subject
of a chattel mortgage.
18 PROPERTY CASES
o. Tsai VS CA ● EVERTEX secured a loan from PBC, guaranteed by real
estate and chattel mortgage over a parcel of land where the
factory stands, and the chattels located therein, as included in a
schedule attached to the mortgage contract. another loan was
obtained secured by a chattel mortgage over properties with
similar descriptions listed in the first schedule.
● During the date of execution of the second mortgage.
EVERTEX purchased machineries and equipment.
● Due to business reverses, EVERTEX filed for insolvency
proceedings. It failed to pay its obligation and thus, PBC initiated
extrajudicial foreclosure of the mortgages.
● PBC was the highest bidder in the public auctions,
making it the owner of the properties. It then leased the factory
premises to Tsai.
● Afterwards, EVERTEX sought the annulment of the sale
and conveyance of the properties to PBC as it was allegedly a
violation of the insolvency law.
● The RTC held that the lease and sale were irregular as
it involved properties not included in the schedule of the
mortgage contract.
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.
Whether or not the DOCTRINE: Even if the properties are immovable by nature, nothing detracts
(immovable) the parties from treating them as chattels to secure an obligation under the
properties in question principle of estoppel.
can be entered into a HELD:
chattel mortgage. -- Property; Mortgages; The nature of the disputed machineries, i.e., that they
YES were heavy, bolted or cemented on the real property mortgaged, does not
make them ipso facto immovable under Article 415 (3) and (5) of the New
Civil Code, as the parties’ intent has to be looked into.—Petitioners contend
that the nature of the disputed machineries, i.e., that they were heavy, bolted
or cemented on the real property mortgaged by EVERTEX to PBCom, make
them ipso facto immovable under Article 415 (3) and (5) of the New Civil
Code. This assertion, however, does not settle the issue. Mere nuts and bolts
do not foreclose the controversy. We have to look at the parties’ intent. While
it is true that the controverted properties appear to be immobile, a perusal of
the contract of Real and Chattel Mortgage executed by the parties herein
gives us a contrary indication. In the case at bar, both the trial and the
appellate courts reached the same finding that the true intention of PBCom
and the owner, EVERTEX, is to treat machinery and equipment as chattels.
An immovable may be considered a personal property if there is a stipulation
as when it is used as security in the payment of an obligation where a chattel
mortgage is executed over it, as in the case at bar. While it is true that the
controverted properties appear to be immobile, a perusal of the contract of
real estate mortgage and chattel mortgage by the parties gives a contrary
indication. Both the trial and appellate courts show that the intention was to
treat the machineries as movables or personal property.
Assuming that the properties were considered immovables, nothing detracts
the parties from treating it as chattels to secure an obligation under the
principle of estoppel.
19 PROPERTY CASES

CASE FACT ISSUE RULING

PROPERTY IN RELATION TO THE PERSON WHERE IT BELONGS (Art. 419-425)
a. Government VS In 1986, A owned a parcel of land, but because of the action of the To which does the LAND REGISTRATION ; LAND DISAPPEARING INTO SEA;
Cabangis waves of Manila Bay, part of said land was gradually submerged in the ownership of the PUBLIC DOMAIN.—As the lots in question disappeared by natural erosion
sea. It remained submerged until 1912 when the government decided reclaimed land due to the ebb and flow of the tide, and as they remained in that condition
to make the necessary dredging to reclaim the land from the sea. As belong to? until reclaimed from the sea by the filling in done by the Government, they
soon as the land had been recovered A took possession of it. belong to the public domain for public use. (Aragon vs. Insular Government,
19 Phil., 223; Francisco vs. Government of the Philippine Islands, 28 Phil.,
505.)

b. Cebu VS Bercilles A portion of land, sought to be registered, was declared, through law, WON the portion of
an abandoned road. The lot was awarded to the petitioner for being land is susceptible to
the highest bidder. registration by a
private individual. --
The Assistant Provincial Fiscal of Cebu filed a motion to dismiss the YES
application on the ground that the property sought to be registered
being a public road intended for public use is considered part of the
public domain and therefore outside the commerce of man.
HELD: The government owns the reclaimed land in the sense that it has
become property of public dominion, because in letting it remained
submerged, A may be said to have abandoned the same. Having become part
of the sea or the seashore, it became property for public use. When the
government took steps to make it land again, its status as public dominion
remained unchanged; therefore, A is not entitled to the land.
Property; Property of public dominion withdrawn from public use
becomes patrimonial property.—Article 422 of the Civil Code expressly
provides that “Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of
the State.” Besides, the Revised Charter of the City of Cebu heretofore quoted,
in very clear and unequivocal terms, states that: “Property thus withdrawn
from public servitude may be used or conveyed for any purpose for which
other real property belonging to the City may be lawfully used or conveyed.”
Same; Same; Patrimonial property can be the object of an ordinary
contract.—Since that portion of the city street subject of petitioner’s
application for registration of title was withdrawn from public use, it follows
that such withdrawn portion becomes patrimonial property which can be the
object of an ordinary contract.

HELD:
Revised Charter of Cebu, under section 31, provides that, the City Council
shall have the power to close any city road, street or alley, etc, withdrawn
from public servitude, may be used or conveyed for any purpose.

It is undoubtedly clear that the City of Cebu is empowered to close a city

road or street. Such power is discretionary and will not ordinarily be
20 PROPERTY CASES
c. Vda. De tan Toco Tan Toco had sued the municipal council of Iloilo for the amount of
VS Municipal P42,966.40, being the purchase price of two strips of land, one on
Council Calle J. M. Basa consisting of 592 square meters, and the otner on
Calle Aldiguer consisting of 59 square meters, which the municipality
of Iloilo had appropriated for widening said street. The Court of First
Instance of Iloilo sentenced the said municipality to pay the plaintiff
the amount so claimed, plus the interest, and the said judgment was
on appeal affirmed by this court.[1]
On account of lack of funds the municipality of Iloilo was unable to
pay the said judgment, wherefore plaintiff had a writ of execution
issue against the property of the said municipality, by virtue of which
the sheriff attached two auto trucks used for street sprinkling, one
police patrol automobile, the police stations on Mabini street, and in
Molo and Mandurriao and the concrete structures, with the
corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.
After notice of the sale of said property had been made, and a few
days before the sale, the provincial fiscal of Iloilo filed a motion with
the Court of First Instance praying that the attachment on the said
property be dissolved, that the said attachment be declared null and
void as being illegal and violative of the rights of the defendant
municipality.
d. Salas VS Jarencio
controlled or interfered with by the courts, absent a plain case of abuse or
fraud or collusion. It follows that such withdrawn portion becomes
patrimonial property which can be the object of an ordinary contract.
MUNICIPAL CORPORATIONS; EXEMPTION FROM
EXECUTION.—The property of a municipality, whether real or personal,
necessary for governmental purposes cannot be attached and sold at public
auction to satisfy a judgment against the municipality.
ID. ; ID. ; PROPERTY EXEMPT.—Auto trucks used by a municipality in
sprinkling its streets, its police patrol automobile, police stations, and public
markets, together with the land on which they stand, are exempt from
execution.
Civil law; Property; Municipal corporations; Presumption where
manner of acquisition of land by municipality not shown.— It is true that
the City of Manila as well as its predecessor, the Ayuntamiento de Manila,
could validly acquire property in its corporate or private capacity, following”
the accepted doctrine on the dual character—public and private—of a
municipal corporation. And when it acquires property in its private capacity,
it acts like an ordinary person capable of entering into contracts or making
transactions for the transmission of title or other real rights. In the absence
of title deed to any land claimed by the City of Manila as its own, showing
that it was acquired with its private or corporate funds, the presumption is
that such land came from the State upon the creation of the municipality
(Unson vs. Lacson, et al., 100 Phil 695).
21 PROPERTY CASES

Same; Same; Same; Ownership of communal lands belongs to the

State.—Communal lands or “legua comunal” came into existence when a
town or pueblo was established in this country under the laws of Spain (Law
VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The
municipalities of the Philippines were not entitled, as a matter of right, to any
part of the public domain for use as communal lands. The Spanish law
provided that the us territory might be granted by the government for
communal purposes, upon proper petition, but untilufruct of a portion of the
public domain adjoining municipal granted, no rights therein passed to the
municipalities, and, in any event, the ultimate title remained in the sovereign
(City of Manila vs. Insular Government, 10 Phil. 327).
Same; Same; Same; Rule as to ownership of land in possession of
municipality.—It may be laid down as a general rule that regardless of the
source or classification of land in the possession of a municipality, excepting
those acquired with its own funds in its private or corporate capacity, such
property is held iv trust for the State for the benefit of its inhabitants,
whether it be for governmental or proprietary purposes. It holds such lands
Rubiect to the paramount power of the legislature to dispose of the same, for
after all it owes its creation to it as an agent for the performance of a part of
its public work, the municipality being but a subdivision or instrumentality
thereof for purposes of local administration.
e. Municipality of Political Law; Municipal Corporations; Execution; Rule that public
San Miguel VS funds not subject to levy and execution; Municipal funds in possession
Fernandez of provincial and municipal treasurers are public funds exempt from
execution; Reason.—Well settled is the rule that public funds are not
subject to levy and execution. The reason for this was explained in the case
of Municipality of Paoay vs. Manaois, 86 Phil. 629 “that they are held in trust
for the people, intended and used for the accomplishment of the purposes for
which municipal corporations are created, and that to subject said properties
and public funds to execution would materially impede, even defeat and in
some instances destroy said purpose.” And, in Tantoco vs. Municipal Council
of Iloilo, 49 Phil. 52, it was held that “it is the settled doctrine of the law that
not only the public property but also the taxes and public revenues of such
corporations cannot be seized under execution against them, either in the
treasury or when in transit to it. Judgments rendered for taxes, and the
proceeds of such judgments in the hands of officers of the law, are not subject
to execution unless so declared by statute.” Thus, it is clear that all the funds
of petitioner municipality in the possession of the Municipal Treasurer of San
22 PROPERTY CASES
f. Zamboanga Del On October 12, 1936, Commonwealth Act 39 was approved WON RA 3039 is DOCTRINE: Under the law of Municipal Corporations, properties which
Norte VS City of converting the Municipality of Zamboanga into Zamboanga City. It valid – PARTLY are devoted to public service are deemed public and the rest remain
further provided that buildings and properties which the province VALID
Zamboanga
shall abandon upon the transfer of the capital to another place will be
acquired and paid for by the City of Zamboanga at a price to be fixed
by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some
buildings constructed thereon, located in the City of Zamboanga and
covered individually by Torrens certificates of title in the name of
Zamboanga Province. Pursuant to CA 39, the Auditor General fixed
the value of the properties and buildings in question left by
Zamboanga Province in Zamboanga City at P1,294,244.00.
When RA 711 was approved dividing the province of Zamboanga into
Zamboanga del Norte and Zamboanga del Sur, assets and obligations
of the previous Zamboanga province were divided as follows: 54.39%
for Zamboanga del Norte and 45.61% for Zamboanga del Sur.
Zamboanga del Norte therefore became entitled to 54.39% of
P1,294,244.00, the total value of the lots and buildings in question, or
P704,220.05 payable by Zamboanga City.
The Executive Secretary issued a ruling holding that Zamboanga del
Norte had a vested right as owner of the properties mentioned in Sec.
50 of CA 39, and is entitled to the price thereof, payable by
Zamboanga City. This ruling revoked the previous Cabinet Resolution
conveying all the said 50 lots and buildings thereon to Zamboanga City
Miguel, as well as those in the possession of the Provincial Treasurer of
Bulacan, are also public funds and as such they are exempt from execution.
Same; Same; Same; Same; Appropriation in the form of an ordinance
passed by the Sangguniang Bayan, necessary before any money of a
municipality may be paid out.—Otherwise stated, there must be a
corresponding appropriation in the form of an ordinance duly passed by the
Sangguniang Bayan before any money of the municipality may be paid out.
In the case at bar, it has not been shown that the Sangguniang Bayan has
passed an ordinance to this effect.
patrimonial. Under this norm, to be considered public, it is enough that the
property be held and, devoted for governmental purposes like local
administration, public education, public health, etc.
Same; Properties; Classification under the Civil Code. — Articles 423
and 424 of the Civil Code classify property of provinces, cities, and
municipalities into property for public use and patrimonial property.
Property for public use consists of provincial roads, city streets, municipal
streets, the squares, fountains, public waters, promenades, and public works
for public service paid for by said provinces, cities, or municipalities. All other
property possessed by any of them is patrimonial and shall be governed by
this Code, without prejudice to the provisions of special laws.
Same; Same; Lots adjoining public schools partake of the nature of the
same.—The eight lots which are adjoining each other, and in turn are
between two lots wherein the Burleigh Schools, are built, constitute the
appurtenant grounds of the said Burleigh Schools, and partake of the nature
of the same. Same; Same; Buildings which were erected by the national
government, using national fund, can very well be disposed of by
Congress in the same manner that it did with the lots in question. —
Buildings built on lots which are public in nature follow the classification of
the lots on which they are built. Moreover, said buildings, then located in the
city, will not be for the exclusive use and benefit of city residents for they
could be availed of also by the provincial residents. The province then—and
its successorsin-interest—are not really deprived of the benefits thereof.
HELD:
23 PROPERTY CASES
when the provincial capital of the then Zamboanga Province was
transferred to Dipolog.
The Secretary of Finance then authorized the Commissioner of
Internal Revenue to deduct an amount equal to 25% of the regular
internal revenue allotment for the City of Zamboanga. The
deductions, all aggregating P57,373.46, was credited to the province
of Zamboanga del Norte, in partial payment of the P704,220.05 due
it.
On June 17, 1961, RA 3039 was approved amending Sec. 50 of CA 39
by providing that buildings, properties and assets belonging to the
former province of Zamboanga and located within the City of
Zamboanga are transferred, free of charge, in favor of the said City of
Zamboanga.
Consequently, the Secretary of Finance ordered the CIR to stop from
effecting further payments to Zamboanga del Norte and to return to
Zamboanga City the sum taken from it out of the internal revenue
allotment of Zamboanga del Norte.
Zamboanga del Norte filed a complaint for relief with Preliminary
Mandatory Injunction against Zamboanga City, the Secretary of
Finance and the Commissioner of Internal Revenue. They prayed that
1) RA 3039 be declared unconstitutional, 2) plaintiff's rights and
obligations under said law be declared, 3) they be reimbursed the sum
paid to defendant City, and 4) the latter be ordered to continue paying
the balance of its internal revenue allotments.
The lower court ruled in favor of the plaintiff.
g. Villanueva VS The subject of the herein petition is a “talipapa” that the petitioners WON the
Castaneda claim they have a right to remain in and conduct business in this area agreement
Applying the norm obtaining under the principles constituting the law of
Municipal Corporations, all those of the 50 properties in question which are
devoted to public service are deemed public; the rest remain patrimonial.
Under this norm, to be considered public, it is enough that the property be
held and, devoted for governmental purposes like local administration, public
education, public health, etc.
Following this classification, RA 3039 is valid insofar as it affects the lots
used as capitol site, school sites and its grounds, hospital and leprosarium
sites and the high school playground sites — a total of 24 lots — since these
were held by the former Zamboanga province in its governmental capacity
and therefore are subject to the absolute control of Congress.
Regarding the several buildings existing on the lots above-mentioned, the
records do not disclose whether they were constructed at the expense of the
former Province of Zamboanga. Considering however the fact that said
buildings must have been erected even before 1936 when CA 39 was enacted
and the further fact that provinces then had no power to authorize
construction of buildings at their own expense, it can be assumed that said
buildings were erected by the National Government, using national funds.
Even assuming that provincial funds were used, still the buildings constitute
mere accessories to the lands, which are public in nature, and so, they follow
the nature of said lands, i.e., public.
But RA 3039 cannot be applied to deprive Zamboanga del Norte of its share
in the value of the rest of the 26 remaining lots which are patrimonial
properties since they are not being utilized for distinctly, governmental
purposes. Moreover, the fact that these 26 lots are registered strengthens the
proposition that they are truly private in nature. However, the fact that the
24 lots used for governmental purposes are also registered is of no
significance since registration cannot convert public property to private.
It results then that Zamboanga del Norte is still entitled to collect from the
City of Zamboanga the former's 54.39% share in the 26 properties which are
patrimonial in nature.
lease DOCTRINE: Article 344 of the Civil Code: "Property for public use in
whereby provinces and in towns comprises the provincial and town roads, the squares,
24 PROPERTY CASES

by virtue of a previous authorization granted to them by the municipal the municipality of streets, fountains, and public waters, the promenades, and public works of
government. The respondents deny this and justify the demolition of Cavite leased to the general service supported by said towns or provinces.” Such is outside the
their stalls as illegal constructions on public property. petitioner valid given commerce of man and cannot be the object of a valid contract. (Article 1271)
the fact the said area is
This dispute goes back to when the municipal council of San Fernando dedicated for public Same; Same; Same; Same; Petitioners had no right to occupy the
adopted Resolution No. 218 authorizing some 24 members of the use? -- NO disputed premises by invoking lease contracts.—Applying this
Fernandino United Merchants and Traders Association to construct wellsettled doctrine, we rule that the petitioners had no right in the first place
permanent stags and sell in the above-mentioned place. 2 The action to occupy the disputed premises and cannot insist in remaining there now on
was protested where the Court of First Instance of Pampanga, Branch the strength of their alleged lease contracts. They should have realized and
2, issued a writ of preliminary injunction that prevented the accepted this earlier, considering that even before Civil Case No. 2040 was
defendants from constructing the said stalls until final resolution of decided, the municipal council of San Fernando had already adopted
the controversy. 3 On January 18, 1964, while this case was pending, Resolution No. 29, series of 1964, declaring the area as the parking place and
the municipal council of San Fernando adopted Resolution G.R. No. public plaza of the municipality.
29, which declared the subject area as "the parking place and as the
public plaza of the municipality. Four years later, the judge decided HELD:
that the land occupied by the petitioners, being public in nature, was Applying this well-settled doctrine, we rule that the petitioners had no right
beyond the commerce of man and therefore could not be the subject in the first place to occupy the disputed premises and cannot insist in
of private occupancy. 5 The writ of preliminary injunction was made remaining there now on the strength of their alleged lease contracts. The
permanent. 6 lease agreement is null and void.
The decision was apparently not enforced, for the petitioners were
not evicted from the place; in fact, according to then they and the 128 According to article 344 of the Civil Code: "Property for public use in
other persons were in 1971 assigned specific areas or space provinces and in towns comprises the provincial and town roads, the squares,
allotments therein for which they paid daily fees to the municipal streets, fountains, and public waters, the promenades, and public works of
government. Then, on January 12, 1982, the Association of Concerned general service supported by said towns or provinces.
Citizens and Consumers of San Fernando filed a petition for the The said Plaza Soledad being a promenade for public use, the municipal
immediate implementation of Resolution No. 29, to restore the council of Cavite could not in 1907 withdraw or exclude from public use a
subject property "to its original and customary use as a public plaza portion thereof in order to lease it for the sole benefit of the defendant Hilaria
thereby the respondent was tasked to demolish the stalls in the Rojas.
subject place which was favored by the trial court.
Furthermore, the Civil Code, article 1271, prescribes that everything which
The basic contention of the petitioners is that the disputed area is is not outside the commerce of man may be the object of a contract, and plazas
under lease to them by virtue of contracts they had entered into with and streets are outside of this commerce.
the municipal government.
h. Maneclang VS ● Maneclang filed a complaint for quieting of title over a certain Whether or not a DOCTRINE: Finding that subject body of water is a creek belonging to the
IAC fishpond located within the four parcels of land belonging to them. creek can be registered public domain,not susceptible to private appropriation, a factual
● The trial court dismissed the complaint upon finding that the under the Torrens determination binding on the Supreme Court.
body of water traversing the titled properties of petitioners is a creek System -- NO
25 PROPERTY CASES

constituting a tributary of a river; therefore public in nature and not
subject to private appropriation.
Civil Law; Contracts; Compromise Agreement; Stipulations in
agreement which partake of the nature of an adjudication of ownership
of the fishpond which was originally a creek, null and void, as said creek
is a property of the public domain not susceptible to private
appropriation; Creek, concept of.—The stipulations contained in the
Compromise Agreement partake of the nature of an adjudication of
ownership in favor of herein petitioners of the fishpond in dispute, which, as
clearly found by the lower and appellate courts, was originally a creek
forming a tributary of the Agno River. Considering that as held in the case
of Mercado vs. Municipal President of Macabebe, 59 Phil. 592 [1934], a
creek, defined as a recess or arm extending from a river and participating in
the ebb and flow of the sea, is a property belonging to the public domain
which is not susceptible to private appropriation and acquisitive prescription,
and as a public water, it cannot be registered under the Torrens System in
the name of any individual [Diego v. Court of Appeals, 102 Phil. 494;
Mangaldan v. Manaoag, 38 Phil. 455]; and considering further that neither
the mere construction of irrigation dikes by the National Irrigation
Administration which prevented the water from flowing in and out of the
subject fishpond, nor its conversion into a fishpond, alter or change the
nature of the creek as a property of the public domain, the Court finds the
Compromise Agreement null and void and of no legal effect, the same being
contrary to law and public policy. Same; Same; Same; Finding that subject
body of water is a creek belonging to the public domain, a factual
determination binding on the Supreme Court; Denial of due process,
not a case of; Publication of notice of public bidding suffices as a
constructive notice to the whole world.—The finding that the subject
body of water is a creek belonging to the public domain is a factual
determination binding upon this Court. The Municipality of Bugallon, acting
thru its dulyconstituted municipal council is clothed with authority to pass,
as it did the two resolutions dealing with its municipal waters, and it cannot
be said that petitioners were deprived of their right to due process as mere
publication of the notice of the public bidding suffices as a constructive notice
to the whole world.

HELD:
A creek is a recess/arm extending from a river and participating in the ebb
and flow of the sea. It is a property belonging to the public domain, It is a
property belonging to the public domain. it is not susceptible to
26 PROPERTY CASES

appropriation and acquisitive prescription. As a public water, it cannot be

registered under the Torrens System in the name of any individual.

Its nature as property of the public domain cannot be modified by the

construction of irrigation dikes by the National Irrigation Authority, or by
its conversion into a fishpond. Hence, a compromise agreement adjudicating
the ownership of such property in favor of an individual is null and void. The
compromise agreement has no legal effect since it is contrary to law and
public policy.
i. Director of Lands Manila Electric Company (MERALCO) filed an amended application for 1. Whether or DOCTRINE: Open, exclusive and undisputed possession of alienable public
VS Manila Electric registration of a parcel of land located in Taguig, Metro Manila. not a corporation may land for the period prescribed by law creates the legal fiction whereby the
Applicant acquired the land applied for registration by purchase from apply for registration land ceases to be public land and becomes private property.
Co.
Ricardo Natividad who in turn acquired the same from his father of titles to public land. HELD:
Gregorio Natividad as evidenced by a Deed of Original Absolute Sale. 2. Whether or 1. Yes.
Applicant's predecessors-in-interest have possessed the property not open, exclusive
under the concept of an owner for more than 30 years. The property and undisputed The legal issue raised by the petitioner Director of Lands has been squarely
was declared for taxation purposes under the name of the applicant possession of alienable dealt with in two recent cases (The Director of Lands v. Intermediate
and the taxes due thereon have been paid. public land for the Appellate Court and Acme Plywood & Veneer Co., Inc., etc., No. L-73002
period prescribed by (December 29, 1986), 146 SCRA 509. The Director of Lands v. Hon. Bengzon
The respondent Judge rendered a decision ordering the registration law creates the legal and Dynamarine Corporation, etc., No. 54045 (July 28, 1987)], and resolved
of the property in the name of the private respondent. The petitioner fiction whereby the in the affirmative. There can be no different answer in the case at bar.
Director of Lands interposed this petition raising the issue of whether land ceases to be
or not a corporation may apply for registration of title to land. public land and Coming to the case at bar, if the land was already private at the time Meralco
Petitioner contends that a corporation is not among those that may becomes private bought it from Natividad, then the prohibition in the 1973 Constitution
apply for confirmation of title under Section 48 of Commonwealth Act property. against corporations holding alienable lands of the public domain except by
No. 141, the Public Land Act. lease (1973 Const., Art. XIV, See. 11) does not apply.

The fact that the confirmation proceedings were instituted by a corporation

is simply another accidental circumstance, "productive of a defect hardly
more than procedural and in nowise affecting the substance and merits of the
right of ownership sought to be confirmed in said proceedings." Considering
that it is not disputed that the Natividads could have had their title
confirmed, only a rigid subservience to the letter of the law would deny
private respondent the right to register its property which was validly
acquired.

2. Yes.
27 PROPERTY CASES
j. Laurel VS Garcia These are two petitions for prohibition seeking to enjoin respondents,
their representatives and agents from proceeding with the bidding for
the sale of the 3,179 square meters of land at Tokyo, Japan scheduled
on February 21, 1990.
The subject property in this case is 1 of the 4 properties in Japan
acquired by the Philippine government under the Reparations
Agreement entered into with Japan on May 9, 1956. The properties
and the capital goods and services procured from the Japanese
government for national development projects are part of the
indemnification to the Filipino people for their losses in life and
property and their suffering during World War II.
A proposal was presented to President Corazon C. Aquino by former
Philippine Ambassador to Japan, Carlos J. Valdez, to make the
property the subject of a lease agreement with a Japanese firm. No
change of ownership or title shall occur. The Philippine government
retains the title all throughout the lease period and thereafter.
However, the government has not acted favorably.
On July 25, 1987, the President issued Executive Order No. 296
entitling non-Filipino citizens or entities to avail of separations' capital
goods and services in the event of sale, lease or disposition. The four
properties in Japan including the Roppongi were specifically
mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the
government has been pushing its decision to sell the reparations
In the Acme decision, Supreme Court upheld the doctrine that open,
exclusive and undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby the land, upon completion
of the requisite period ipso jure and without the need of judicial or other
sanction, ceases to be public land and becomes private property.
WHEREFORE, the petition is DENIED. The questioned decision of the
respondent Judge is AFFIRMED.
W/N the Roppongi DOCTRINE: An abandonment of the intention to use the property for
property and others of public service and to make it patrimonial property under Article 422 of the
its kind be alienated by Civil Code must be definite Abandonment and it cannot be inferred from
the Philippine the non-use alone specially if the non-use was attributable not to the
Government. -- NO government's own deliberate and indubitable will but to a lack of financial
support to repair and improve the property Abandonment must be a certain
and positive act based on correct legal premises.
HELD:
NO, the subject property cannot be alienated by the government, even if the
property has not been in use for a long time.
Vice President Laurel asserts that the lands were acquired as part of the
reparations for diplomatic and consular use by the Philippine government.
Laurel states that the Roppongi property is classified as one of public
dominion, and not of private ownership under Article 420 of the Civil Code.
The petitioner submits that the Roppongi property comes under "property
intended for public service" in paragraph 2 of the above provision. He states
that being one of public dominion, no ownership by anyone can attach to it,
not even by the State. The Roppongi and related properties were acquired
for "sites for chancery, diplomatic, and consular quarters, buildings and other
improvements. The petitioner states that they continue to be intended for a
necessary service. They are held by the State in anticipation of an opportune
use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside
the commerce of man, or to put it in more simple terms, it cannot be alienated
nor be the subject matter of contracts (Citing Municipality of Cavite v. Rojas,
30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the
moment, the petitioner avers that the same remains property of public
28 PROPERTY CASES

properties starting with the Roppongi lot. The property has twice dominion so long as the government has not used it for other purposes nor
been set for bidding at a minimum floor price of $225 million. adopted any measure constituting a removal of its original purpose or use.

As property of public dominion, the Roppongi lot is outside the commerce of

man. It cannot be alienated. Its ownership is a special collective ownership
for general use and enjoyment, an application to the satisfaction of collective
needs, and resides in the social group. The purpose is not to serve the State
as a juridical person, but the citizens; it is intended for the common and public
welfare and cannot be the object of appropration

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks shores roadsteads, and
others of similar character;
(2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the national
wealth.
ART. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.

The Roppongi property is correctly classified under paragraph 2 of Article

420 of the Civil Code as property belonging to the State and intended for
some public service.

The fact that the Roppongi site has not been used for a long time for actual
Embassy service does not automatically convert it to patrimonial property.
Any such conversion happens only if the property is withdrawn from public
use. A property continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the
part of the government to withdraw it from being such.

An abandonment of the intention to use the Roppongi property for public

service and to make it patrimonial property under Article 422 of the Civil
Code must be definite Abandonment cannot be inferred from the non-use
alone specially if the non-use was attributable not to the government's own
deliberate and indubitable will but to a lack of financial support to repair and
29 PROPERTY CASES
k. Macasiano VS On June 13, 1990, the respondent municipality passed Ordinance No.
Diokno 86, Series of 1990 which authorized the closure of J. Gabriel, G.G.
Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at
Baclaran, Paranaque, Metro Manila and the establishment of a flea
market thereon. July 20, 1990, the Metropolitan Manila Authority
approved Ordinance No. 86, s. 1990 of the municipal council of
respondent municipality subject to the following conditions:
1. That the aforenamed streets are not used for vehicular traffic,
and that the majority of the residents do not oppose the
establishment of the flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and that the 2 meters
on both sides of the road shall be used by pedestrians;
3. That the time during which the vending area is to be used
shall be clearly designated;
4. That the use of the vending areas shall be temporary and shall
be closed once the reclaimed areas are developed and donated by the
Public Estate Authority.
June 20, 1990, Mayor Walfrido N. Ferrer to enter into contract with
any service cooperative for the establishment, operation,
maintenance and management of flea markets and/or vending areas.
improve the property Abandonment must be a certain and positive act based
on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not
relinquishment of the Roppongi property's original purpose.
Moreover, President Aquino’s approval of the recommendation by the
investigating committee to sell the Roppongi property was premature or, at
the very least, conditioned on a valid change in the public character of the
Roppongi property. It does not have the force and effect of law since the
President already lost her legislative powers. The Congress had already
convened for more than a year. Assuming that the Roppongi property is no
longer of public dominion, there is another obstacle to its sale by the
respondents. There is no law authorizing its conveyance, and thus, the Court
sees no compelling reason to tackle the constitutional issue raised by
petitioner Ojeda.
W/N an ordinance or DOCTRINE: "Verily, the powers of a local government unit are not
resolution issued by absolute. They are subject to limitations laid down by the Constitution and
the municipal council the laws such as our Civil Code. Moreover, the exercise of such powers
of Paranaque should be subservient to paramount considerations of health and well-being
authorizing the lease of the members of the community."
and use of public
streets or HELD:
thoroughfares as sites The Executive Order issued by acting Mayor Robles authorizing the use of
for flea markets is Heroes del '96 Street as a vending area for stallholders who were granted
valid. -- NO licenses by the city government contravenes the general law that reserves
city streets and roads for public use. Mayor Robles' Executive Order may
not infringe upon the vested right of the public to use city streets for the
purpose they were intended to serve: i.e., as arteries of travel for vehicles
and pedestrians. The Solicitor General furthers the matter with his
observation, "Verily, the powers of a local government unit are not
absolute. They are subject to limitations laid down by the Constitution and
the laws such as our Civil Code. Moreover, the exercise of such powers
should be subservient to paramount considerations of health and well-being
of the members of the community. Every local government unit has the
sworn obligation to enact measures that will enhance the public health,
safety and convenience, maintain peace and order, and promote the general
prosperity of the inhabitants of the local units. Based on this objective, the
30 PROPERTY CASES
On August 8, 1990, respondent municipality and respondent
Palanyag, a service cooperative, entered into an agreement whereby
the latter shall operate, maintain and manage the flea market in the
aforementioned streets with the obligation to remit dues to the
treasury of the municipal government of Paranaque. Consequently,
market stalls were put up by respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP
Superintendent of the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St.
in Baclaran. These stalls were later returned to respondent Palanyag.
October 16, 1990, petitioner Brig. General Macasiano wrote a letter
to respondent Palanyag giving the latter ten (10) days to discontinue
the flea market; otherwise, the market stalls shall be dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag
filed with the trial court a joint petition for prohibition and mandamus
with damages and prayer for preliminary injunction, to which the
petitioner filed his memorandum/opposition to the issuance of the
writ of preliminary injunction. October 24, 1990, the trial court issued
a temporary restraining order to enjoin petitioner from enforcing his
letter-order of October 16, 1990 pending the hearing on the motion
for writ of preliminary injunction. On December 17, 1990, the trial
court issued an order upholding the validity of Ordinance No. 86 s.
1990 of the Municipality of Paranaque and enjoining petitioner Brig.
Gen. Macasiano from enforcing his letter-order against respondent
Palanyag.
l. CHAVEZ VS PEA The government, through the Commissioner of Public Highways,
ET AL. signed a contract with CDCP to reclaim certain foreshore and offshore
areas of Manila Bay under the MCCRRP. Later on President Marcos
signed PD No. 1084 and 1085 creating PEA and transferring to PEA the
reclaimed lands in the foreshore and offshore of the Manila Bay. In
addition, a Memorandum of Agreement was executed between PEA
and CDCP wherein the latter acceded and transferred its rights and
interest in favor of the former as regards CDCP’s reclaimed lands
under MCCRRP. During Aquino’s administration, special patents as
well as 3 TCTs (the lands were known as Freedom Islands) were issued
in favor of PEA.
local government should refrain from acting towards that which might
prejudice or adversely affect the general welfare." Moreover, the
municipality did not even comply with the guidelines set forth by the
Metropolitan Manila Authority. Even if we were to argue for purposes of
debate, the city of Paranaque's claim would still be bereft and lacking in
reason.
ACCORDINGLY, the petition is GRANTED and the decision of the
respondent Regional Trial Court dated December 17, 1990 which granted
the writ of preliminary injunction enjoining petitioner as PNP
Superintendent, Metropolitan Traffic Command from enforcing the
demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets is hereby RESERVED and SET
ASIDE.
SO ORDERED.
Whether or not DOCTRINE: Until now, the only way the government can sell to private
AMARI, a private parties government reclaimed and marshy disposable lands of the public
corporation may domain is for the legislature to pass a law authorizing such sale. However,
acquire the reclaimed there exists a constitutional ban wherein private corporations are prohibited
lands? NO from acquiring alienable lands of the public domain. These corporations may
only lease the lands from a period granted by the law.
HELD:
In this case, the SC traced back the laws governing reclaimed lands as
regards its alienability. The previous Constitutions including the 1987
Constitution has adopted the Regalian Doctrine wherein it states that all
public lands and waters are owned by the State. The court discussed and
emphasized also CA No. 141 which states that the only way the government
31 PROPERTY CASES
PEA and AMARI, a private corporation, through negotiation but
without conducting any public bidding entered into a Joint Venture
Agreement (JVA for brevity) for the development of the Freedom
Islands. A year later, Senate President Maceda described such JVA
during his privileged speech as the “grandmother of all scams”.
Consequently, a joint investigation was conducted and the report
concluded that the JVA is illegal because what PEA seeks to do is to
transfer ownership of the reclaimed lands which are public lands
hence inalienable to AMARI. However, the Legal Task formed by Pres.
Ramos upheld the legality of the JVA.
Phillipine Daily Inquirer and Today published reports that Pres. Ramos
ordered that renegotiations regarding the JVA be again made. Such
JVA (now called Amended JVA) was later on approved by Pres.
Estrada. Petitioner Chavez prays that the Amended JVA be declared
null and void for it violating the Constitutional and statutory
provisions.
m. HEIRS OF
MARIO
MALABANAN VS
REPUBLIC OF
THE PHILIPPINES
can sell to private parties’ government reclaimed and marshy disposable
lands of the public domain is for the legislature to pass a law authorizing such
sale. In addition, the Constitution has established that private corporations
(such as AMARI) cannot acquire the reclaimed lands however; these
corporations are allowed to lease them. This rule is absolute.
Applying these provisions to the case, the reclaimed lands are classified as
public property and in order for PEA to sell these lands; there must be a
legislative act granting such right to sell. In addition, even if there exist an
express provision in favor of PEA, such would still subject of the
constitutional ban as regards private corporation acquiring reclaimed
alienable lands.
As mentioned and established already, these reclaimed lands are considered
inalienable public property. PD No. 1085 granting PEA the power to oversee
the Freedom Islands did not in any way convert the lands into alienable or
disposable lands. The issuance of special patents by Pres. Aquino as well as
the TCTs also did not convert it into private lands. It must be noted that the
registration of public lands under Torrens system cannot convert it into
private property.
Civil Law; Property; Public Dominion; Private Ownership; Land, which
is an immovable property, may be classified as either of public dominion
or of private ownership.—Land, which is an immovable property, may be
classified as either of public dominion or of private ownership. Land is
considered of public dominion if it either: (a) is intended for public use; or (b)
belongs to the State, without being for public use, and is intended for some
public service or for the development of the national wealth. Land belonging
to the State that is not of such character, or although of such character but
no longer intended for public use or for public service forms part of the
patrimonial property of the State. Land that is other than part of the
patrimonial property of the State, provinces, cities and municipalities is of
private ownership if it belongs to a private individual. Same; Same; Same;
Regalian Doctrine; Pursuant to the Regalian Doctrine (Jura Regalia), a legal
concept first introduced into the country from the West by Spain through
the Laws of the Indies and the Royal Cedulas, all lands of the public domain
belong to the State.—Pursuant to the Regalian Doctrine (Jura Regalia), a
legal concept first introduced into the country from the West by Spain
through the Laws of the Indies and the Royal Cedulas, all lands of the public
32 PROPERTY CASES

domain belong to the State. This means that the State is the source of any
asserted right to ownership of land, and is charged with the conservation of
such patrimony. All lands not appearing to be clearly under private
ownership are presumed to belong to the State. Also, public lands remain
part of the inalienable land of the public domain unless the State is shown to
have reclassified or alienated them to private persons.
33 PROPERTY CASES

CASE FACT ISSUE RULING

OWNERSHIP IN GENERAL (Art. 427-439)
Perez VS Mendoza Civil law; Property; Possession; There is a presumption of ownership in
favor of the possessor.—Possession is an indicium of ownership of the thing
possessed and to the possessor goes the presumption that he holds the thing
under a claim of ownership. Article 433 of the Civil Code provides that
“(A)ctual possession under claim of ownership raises a disputable
presumption of ownership. The true owner must resort to judicial process for
the recovery of the property.” In Chan vs. Court of Appeals, et al., L27488,
June 30, 1970, 33 SCRA 737, this Court upheld the finding of the Court of
Appeals that the litigated property belonged to the private respondents
therein based on their possession of the property, not only because such
findings of fact of the appellate court are conclusive and binding on this Court
but because the conclusion is in accordance with Articles 433 and 531 of the
Civil Code.
Same; Same; Same; In case of conflicting claims of possession, the
present possessor is preferred.—As we have here conflicting claims of
possession by the parties over the land in controversy and because the fact of
possession cannot be recognized at the same time in two different
personalities except in case of copossession, the present possessor is to be
preferred pursuant to Article 538 of the Civil Code.

CASE FACT ISSUE RULING

ACCESSION DISCRETA (Art. 441-444)
a. Bachrach VS USUFRUCT; STOCK DIVIDEND CONSIDERED CIVIL FRUIT AND
Seifert BELONGS TO USUFRUCTUARY.—Under the Massachusetts rule, a
stock dividend is considered part of the capital and belongs to the
remainderman; while under the Pennsylvania rule, all earnings of a
corporation, when declared as dividends in whatever form, made during the
lifetime of the usufructuary, belong to the latter.
ID.; ID.—The Pennsylvania rule is more in accord with our statutory laws
than the Massachusetts rule. Under section 16 of our Corporation Law, no
corporation may make or declare any dividend except from the surplus
profits arising from its business. Any dividend, therefore, whether cash or
stock, represents surplus profits. Article 471 of the Civil Code provides that
the usufructuary shall be entitled to receive all the natural, industrial, and
34 PROPERTY CASES

civil fruits of the property in usufruct. The stock dividend in question in this
case is a civil fruit of the original investment. The shares of stock issued in
payment of said dividend may be sold independently of the original shares,
just as the offspring of a domestic animal may be sold independently of its
mother.
b. Bachrach VS REAL PROPERTY; CIVIL FRUITS.—The bonus which the Talisay-Silay
Talisay Silay Milling Co., Inc., had 'to pay the planters who had mortgaged their lands to
the Philippine Nataional Bank in order to- secure the payment of the
company's debt to the bank, is not a civil fruit of the mortgaged property.
ID.; ID.—Article 355 of the Civil Code considers three things as civil fruits;
(1) rents from. buildings, (2) proceeds from leases of lands, and (3) the income
from perpetual or life annuities or similar sources of revenue. The phrase "u
otras análogas" used (in the original Spanish, art. 355, last paragraph, Civil
Code) in the following context: "Y el importe de las rentas perpetuas,
vitalicias u otras análogas," refers to "rentas," for the adjectives "otras" and
"análogas" agree with the noun '"rentas," as do also the other adjectives
"perpetuas" and "vitalicias."

CASE FACT ISSUE RULING

ACCESSION INDUSTRIAL (Art. 445-456)
a. Bernardo VS OWNERSHIP; ACCESSION; LAND AND IMPROVEMENTS.—The
Bataclan Civil Code confirms certain time-honored principles of the law of property.
One of these is the principle of accession whereby the owner of property
acquires not only that which it produces but that which is united to it either
naturally or artificially. Whatever is built, planted or sown on the land of
another, and the improvements or repairs made thereon, belong to the owner
of the land. Where, however, the planter, builder, or sower has acted in good
faith, a conflict of rights arises between the owners and it becomes necessary
to protect the owner of the improvements without causing injustice to the
owner of the land.
ID.; ID.; ID.; OPTION GRANTED TO OWNER OF LAND. — In view
of the impracticability of creating what Manresa calls a state of "forced
coownership" (vol. 3, 4th ed., p. 213), the law has provided a just and
equitable solution by giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity or to oblige the builder
or planter to pay for the land and the sower to pay the proper rent. It is the
35 PROPERTY CASES
b. Ignacio VS
Hilario
c. Depra VS Francisco Depra, is the owner of a parcel of land registered, Whether or not the
Dumlao situated in the municipality of Dumangas, Iloilo. Agustin
Dumlao, defendant-appellant, owns an adjoining lot. When
Dumlao constructed his house on his lot, the kitchen thereof had
encroached on an area of thirty four (34) square meters of
Depra’s property, After the encroachment was discovered in a
relocation survey of Depra’s lot made on November 2, 1972, his
mother, Beatriz Depra after writing a demand letter asking
Dumlao to move back from his encroachment, filed an action for
Unlawful Detainer. Said complaint was later amended to include
Depra as a party plaintiff. After trial, the Municipal Court found
that Dumlao was a builder in good faith, and applying Article
448 of the Civil Code. Depra did not accept payment of rentals
so that Dumlao deposited such rentals with the Municipal
Court. In this case, the Municipal Court, acted without
jurisdiction, its Decision was null and void and cannot operate
as res judicata to the subject complaint for Quieting of Title.
The court conceded in the MCs decision that Dumlao is a
builder in good faith.
owner of the land who is allowed to exercise the option because his right is
older and because, by the principle of accession, he is entitled to the
ownership of the accessory thing. The, plaintiff, as owner of the land, chose
to require the defendant, as owner of the improvements, to pay for
the land. When the latter failed to pay for the land, he lost his right of
retention.
PROPERTY; IMPROVEMENTS; RIGHT AND OBLIGATIONS OF
OWNERS OF LAND AND OF OWNER OF IMPROVEMENTS. — The
owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his
building, under article 453 of the Civil Code. The owner of the land, upon the
other hand, has the option, under article 361, either to pay for the building
or to sell his land to the owner of the building. But he cannot, as respondents
here did, refuse both to pay for the building and to sell the land and compel
the owner of the building to remove it from the land where it is erected. He
is entitled to such remotion only when, after having chosen to sell his land,
the other party fails to pay for the same.
DOCTRINE: The owner of land on which improvement was built by
factual situations of another in good faith is entitled to removal of improvement only after land
Dumlao and Depra owner has opted to sell the land and the builder refused to pay for the same.
conform to the where the land’s value is considerably more than the improvement, the
juridical positions landowner cannot compel the builder to buy the land. In such event, a “forced
respectively defined lease” is created and the court shall fix the terms thereof in case the parties
by law, for a "builder disagree thereon.
in good faith" under Same; Property; Owner of land on which improvement was built by
Article 448, a another in good faith is entitled to removal of improvement only after
"possessor in good landowner has opted to sell the land and the builder refused to pay for
faith" under Article the same.—However, the good faith of DUMLAO is part of the Stipulation
526 and a "landowner of Facts in the Court of First Instance. It was thus er ror for the Trial Court
in good faith' under to have ruled that DEPRA is “entitled to possession,” without more, of the
Article 448? disputed portion implying thereby that he is entitled to have the kitchen
removed. He is entitled to such removal only when, after having chosen to
sell his encroached land, DUMLAO fails to pay for the same. In this case,
DUMLAO had expressed his willingness to pay for the land, but DEPRA
refused to sell.
Same; Same; Where the land’s value is considerably more than the
improvement, the landowner cannot compel the builder to buy the land. In
36 PROPERTY CASES
d. Sarmiento VS While one Ernesto was still courting his wife, the latter's WON
Agana mother had told him the couple could build a residential house respondents
on a certain lot. They constructed a residential house.
Subsequently, the land was sold to petitioner Sarmiento, who
asked Ernesto and his wife to vacate. Sarmiento filed an
Ejectment suit against them.
In the evidentiary hearing, Sarmiento submitted the deed of sale
of the land which showed the price to be PHP15,000. On the
otherhand, Ernesto testified that the residential house then cost
PHP30,000-40,000, which was not questioned.
The MTC found that Ernesto was a builder in good faith and
the house had a value of PHP20,000. When the case was
elevated, the CFI of Pasay ordered Sarmiento to exercise his
option, to reimburse Ernesto for the sum of the house or allow
such event, a “forced lease” is created and the court shall fix the terms thereof
in case the parties disagree thereon.
HELD:
Owner of the land on which improvement was built by another in good faith is
entitled to removal of improvement only after landowner has opted to sell the
land and the builder refused to pay for the same. Res judicata doesn’t apply
wherein the first case was for ejectment and the other was for quieting of title.
ART. 448. The owner of the land on which anything has been built sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in articles 546
and 548, or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value
is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
private HELD:
are Ernesto and his wife were builders in good faith in view of the peculiar
builders in good faith. circumstance under which they had constructed the residential house. As far
-- YES as they knew, the land was owned by Ernesto's mother-in-law, and could
reasonably be expected to later on give them the land.
The owner of the building erected in good faith on a land owned by another,
is entitled to retain the possession of the land until he is paid the value of his
building. The owner of the land, has the option either to pay for the building
or to sell his land to the owner of the building. But he cannot, as Sarmiento
did, refuse both to pay for the building and to sell the land and compel the
owner of the building to remove it from the land where it is erected.
37 PROPERTY CASES

them to purchase the land, within sixty days. Upon expiration

of the period, Ernesto was allowed to deposit the sum of
PHP25,000 with the Court as the purchase price for the land.
e. Filipinas ACCESSION; RlGHTS OF LANDOWNER AND BUILDER; FAILURE
Colleges VS OF BUILDER IN GOOD FAITH TO PAY VALUE OF LAND WHEN
Timbang SUCH IS DEMANDED BY THE LANDOWNER.—Under the terms of
Articles 448 and 546 of the Civil Code, it is true that the owner of the land
has the right to choose between appropriating the building by reimbursing
the builder of the value thereof or compelling the builder in good faith to pay
for his land. Even this second right cannot be exercised if the value of the
land is considerably more than that of the building. In addition to the right
of the builder to be paid the value of his improvement, Article 546 gives him
the corollary right of retention of the property until he is indemnified by the
owner of the land. There is nothing in the language of these two articles
which would justify the conclusion that, upon the failure of the builder to pay
the value of the land, when such is demanded by the landowner, the latter
becomes automatically the owner of the improvement under Article 445 of
the Civil Code.
ID.; ID.; ID.; REMEDY OF PARTIES.—Where, as in the present case, the
builder in good faith fails to pay the value of the land when such is demanded
by the landowner, the parties may resort to the following remedies: (1) The
parties may decide to leave things as they are and assume the relation of
lessor and lessee, and should they disagree as to the amount of rental, then
they can go to the court to fix that amount (Miranda vs. Fadullon, -et al., 51
Off. Gaz., 6226); (2) Should the parties not agree to assume the relation of
lessor and lessee, the owner of the land is entitled to have the improvement
removed (Ignacio vs. Hilario, 76 Phil., 605); and (3) The land and the
improvement may be sold at public auction, applying the proceeds thereof
first to the payment of the value of the land and the excess, if any, to be
delivered to the owner of the improvement in payment thereof (Bernardo vs.
Bataclan, 66 Phil., 590).
f. Ortiz VS Civil Law; Property; Possessor in Good Faith; Rights of a possessor in
Kayanan good faith; When does possession in good faith legally interrupted.—
There is no question that a possessor in good faith is entitled to the fruits
received before the possession is legally interrupted. Possession in good faith
ceases or is legally interrupted from the moment defects in the title are made
known to the possessor, by extreneous evidence or by the filing of an action
in court by the true owner for the recovery of the property. Hence, all the
38 PROPERTY CASES

fruits that the possessor may receive from the time he is summoned in court,
or when he answers the complaint, must be delivered and paid by him to the
owner or lawful possessor.
Same; Same; Same; Same; Right of retention of a possessor in good
faith until reimbursement of his expenses on the land; Nature of the
right.—However, even after his good faith ceases, the possessor in fact can
still retain the property, pursuant to Article 546 of the New Civil Code, until
he has been fully reimbursed for all the necessary and useful expenses made
by him on the property. This right of retention has been considered as one of
the conglomerate of measures devised by the law for the protection of the
possessor in good faith. Its object is to guarantee the reimbursement of the
expenses, such as those for the preservation of the property, or for the
enhancement of its utility or productivity. It permits the actual possessor to
remain in possession while he has not been reimbursed by the person who
defeated him in the possession for those necessary expenses and useful
improvements made by him on the thing possessed. The principal
characteristic of the right of retention is its accessory character. It is
accessory to a principal obligation. Considering that the right of the
possessor to receive the fruits terminates when his good faith ceases, it is
necessary in order that this right to retain may be useful, to concede to the
creditor the right to secure reimbursement from the fruits of the property by
utilizing its proceeds for the payment of the interest as well as the principal
of the debt while he remains in possession. This right of retention of the
property by the creditor, according to Scaevola, in the light of the provisions
of Article 502 of the Spanish Civil Code, is considered not a coercive measure
to oblige the debtor to pay, depriving him temporarily of the enjoyment of
the fruits of his property, but as a means of obtaining compensation for the
debt.
Same; Same; Same; Same; Right of retention of a possessor in good faith
analogous to a contract of antichresis.—The right of retention in this case
is analogous to a contract of antichresis and it can be considered as a means
of extinguishing the obligation, inasmuch as the right to retain the thing lasts
only for the period necessary to enable the creditor to be reimbursed from
the fruits for the necessary and useful expenses.
Same; Same; Same; Same; Right of retention of a possessor in good faith
analogous to pledge as to movable property and antichresis as to
immovable property.—According to Manresa, the right of retention is,
therefore, analogous to that of a pledge, if the property retained is a movable,
39 PROPERTY CASES

and to that of antichresis, if property held is immovable. This construction

appears to be in harmony with similar provisions of the civil law which
employs the right of retention as a means or device by which a creditor is
able to obtain the payment of a debt. Thus, under Article 1731 of the New
Civil Code, any person who has performed work upon a movable has a right
to retain it by way of pledge until he is paid.

g. Floreza VS Civil Law; Builder in good faith, not a case of; Applicability of Art 448
Evangelista of the Civil Code.—We uphold the Court of Appeals in its conclusion that
Article 448 of the Civil Code is inapplicable to the factual milieu herein. Said
codal provision applies only when the builder, planter, or sower believes he
has the right so to build, plant or sow because he thinks he owns the land or
believes himself to have a claim of title. In this case, petitioner makes no
pretensions of ownership whatsoever.
Same; Same; Rights of a person who made useful improvements on the
lot of another before effectivity of the pacto de retro sale of the lot;
Rights akin to those of the usufructuary.— Since petitioner cannot be
classified as a builder in good faith within the purview of Article 448 of the
Civil Code, nor as a vendee a retro, who made useful improvements during
the lifetime of the pacto de retro, petitioner has no right to reimbursement of
the value of the house which he had erected on the residential lot of the
EVANGELISTAS, much less to retention of the premises until he is
reimbursed. The rights of petitioner are more akin to those of a usufructuary
who, under Article 579 of the Civil Code (Art. 487 of the old Code), may make
on the property useful improvements but with no right to be indemnified
therefor. He may, however, remove such improvements should it be possible
to do so without damage to the property. For if the improvements made by
the usufructuary were subject to indemnity, we would have a dangerous and
unjust situation in which the usufructuary could dispose of the owner’s funds
by compelling him to pay for improvements which perhaps he would not have
made.
h. Sps. Del An action for partition of a parcel of land was filed by the Whether or Not DOCTRINE: When the co-ownership is terminated by the partition and it
Campo VS spouses Del Campo in the CFI of Cebu. Plaintiffs and defendants Article 448 of the Civil appears that the house of the defendants occupies a portion of 5 square meters
are co-owners pro indiviso of this lot in the proportion of and Code is applicable to a
of the land pertaining to plaintiffs which the defendant obviously built in
Abesia
1/3 share each, respectively. The trial court appointed a builder in good faithgood faith, the provisions of Article 448 of the new Civil Code should apply.
commissioner in accordance with the agreement of the parties. when the property
The commissioner conducted a survey, prepared a sketch plan involved is owned in HELD:
and submitted a report to the trial court on May 29, 1976, common.
40 PROPERTY CASES
recommending that the property be divided into two lots: Lot
1161-A with an area of 30 square meters for the spouses Del
Campo and Lot No. 1161-B with an area of 15 square meters for
Obesia. Upon surveying, it was shown that the house of Obesia
occupied the portion with an area of 5 square meters of Lot
1161-A of the spouses Del Campo. The parties manifested their
conformity to the report and asked the trial court to finally
settle and adjudicate who among the parties should take
possession of the 5 square meters of the land in question.
i. Ignao VS IAC Petitioner Florencio Ignao and his uncles private respondents
Juan Ignao and Isidro Ignao were co-owners of a parcel of land
with an area of 534 square meters situated in Barrio Tabon,
Municipality of Kawit, Cavite. Pursuant to an action for
partition filed by petitioner, the then CFI directed the partition
of the aforesaid land, allotting 133.5 square meters or 2/8
thereof to private respondents Juan and Isidro, and giving the
remaining portion with a total area of 266.5 square meters to
petitioner Florencio. However, no actual partition was ever
effected.
Petitioner instituted a complaint for recovery of possession of
real property against private respondents Juan and Isidro before
the CFI. In his complaint petitioner alleged that the area
occupied by the two (2) houses built by private respondents
exceeded the 133.5 square meters previously allotted to them by
the trial court.
It was found that the houses of Juan and Isidro actually
encroached upon a portion of the land belonging to Florencio.
Upon agreement of the parties, the trial court ordered a licensed
geodetic engineer to conduct a survey to determine the exact
When the co-ownership is terminated by the partition and it appears that the
house of Obesia occupies a portion of 5 square meters of the land pertaining
to spouses Del Campo which Obesia obviously built in good faith, the
provisions of Article 448 of the new Civil Code should apply.
In applying Article 448 of the New Civil Code, the plaintiffs have the right
to appropriate said portion of the house of defendants upon payment of
indemnity to defendants as provided for in Article 546 of the Civil Code.
Otherwise, the plaintiffs may oblige the defendants to pay the price of the
land occupied by their house. But if the price asked for is considerably much
more than the value of the portion of the house of defendants built thereon,
then the latter cannot be obliged to buy the land. The defendants shall then
pay the reasonable rent to the plaintiff upon such terms and conditions that
they may agree. In case of disagreement, the trial court shall fix the terms
thereof. The defendants may opt to demolish or remove the said portion of
their house, at their own expense, if they so decide.
Whether the DOCTRINE: When the co-ownership is terminated by a partition and it
provisions of Article appears that the house of an erstwhile co-owner has encroached upon a
448 should apply to a portion pertaining to another co-owner which was however made in good
builder in good faith faith, then the provisions of Article 448 should apply to determine the
on a property held in respective rights of the parties.
common. -- YES
HELD:
It should be noted that prior to partition, all the co-owners hold the property
in common dominion but at the same time each is an owner of a share which
is abstract and undetermined until partition is effected. As co-owners, the
parties may have unequal shares in the common property, quantitatively
speaking. But in a qualitative sense, each co-owner has the same right as any
one of the other co-owners. Every co-owner is therefore the owner of the
whole, and over the whole he exercises the right of dominion, but he is at the
same time the owner of a portion which is truly abstract, because until
division is effected such portion is not concretely determined.
Article 448 provides: The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to appropriate as his
own the works, sowing or planting, after payment of the indemnity provided
for in articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the
41 PROPERTY CASES
area occupied by the houses of private respondents. The survey
subsequently disclosed that the house of Juan occupied 42
square meters while that of Isidro occupied 59 square meters of
Florencio's land or a total of 101 square meters.
Trial court ruled that although private respondents occupied a
portion of Florencio's property, they should be considered
builders in good faith.
Petitioner appealed to IAC which subsequently affirmed the
decision of the trial court.
Thus, herein petition.
j. Pecson VS CA Pecson was the owner of a commercial lot on which he built a Is
4-door, 2-storey apartment. For his failure to pay realty tax on
said property, the lot was sold at public auction by the City
Treasurer of Quezon City to Nepomuceno, who in turn the
property to Sps. Nuguid. Pecson questioned the validity of the
auction sale. RTC then, dismissed the complaint and ruled that
the apartment building was included in the sale. It reached the
builder or planter cannot be obliged to buy the land if its value is considerably
more than that of the building or trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.
Whether or not the provisions of Article 448 should apply to a builder in
good faith on a property held in common has been resolved in the case of
Spouses del Campo vs. Abesia, wherein the Court ruled that:
The court a quo correctly held that Article 448 of the Civil Code cannot apply
where a co-owner builds, plants or sows on the land owned in common for
then he did not build, plant or sow upon land that exclusively belongs to
another but of which he is a co-owner. The co-owner is not a third person
under the circumstances, and the situation is governed by the rules of co-
ownership.
However, when, as in this case, the ownership is terminated by the partition
and it appears that the home of defendants overlaps or occupies a portion of
5 square meters of the land pertaining to plaintiffs which the defendants
obviously built in good faith, then the provisions of Article 448 of the new
Civil Code should apply.
Both the trial court and the Appellate Court erred when they peremptorily
adopted the "workable solution" in the case of Grana vs. CA, and ordered the
owner of the land, petitioner Florencio, to sell to private respondents, Juan
and Isidro, the part of the land they intruded upon, thereby depriving
petitioner of his right to choose. Such ruling contravened the explicit
provisions of Article 448 to the effect that "(t)he owner of the land xxx shall
have the right to appropriate xxx or to oblige the one who built xxx to pay
the price of the land xxx." The law is clear and unambiguous when it confers
the right of choice upon the landowner and not upon the builder and the
courts
Article 448 DOCTRINES:
applicable in a case 1. Article 448 of the Civil Code does not apply to a case where the owner
wherein the owner of of the land is the builder, sower, or planter who then later loses ownership of
the land is also the the land by sale or donation.
builder who then later
loses ownership of the
land by sale? -- NO
42 PROPERTY CASES
SC, but the same was denied. Thereafter, Sps. Nuguid filed a
Motion for delivery of possession, which was granted by the
trial court. Pecson contested. The Court of Appeals affirmed in
part the order of the trial court citing Article 448 of the Civil
Code. CA ordered that Pecson should be indemnified with the
construction cost of the apartment.
k. MWSS VS CA Dagupan City filed a complaint against MWSS for recovery of Whether or not a
ownership and possession of the Dagupan Waterworks System.
MWSS interposed R.A. 1383 as its defense; it vested to MWSS
the ownership, possession, and control of all waterworks system
throughout the Philippines. MWSS also filed a counterclaim for
reimbursement of expenses it incurred for necessary and useful
improvements.
Trial court ruled that MWSS is a possessor in bad faith so it is
not entitled to claim reimbursement. MWSS appealed to the
Court of Appeals arguing that Dagupan City should be liable for
payment of the balance of the loan secured by MWSS for the
improvement of the Dagupan Waterworks System; however the
Court of Appeals affirmed trial court’s judgment.
2. The provision of Art. 448 on indemnity may be applied by analogy to
a case where one loses the ownership of the land on which he earlier built an
apartment.
HELD:
By its clear language, Article 448 refers to a land whose ownership is claimed
by two or more parties, one of whom has built some works, or sown or
planted something. The building, sowing or planting may have been made in
good faith or in bad faith. The rule on good faith laid down in Article 526 of
the Civil Code shall be applied in determining whether a builder, sower or
planter had acted in good faith. Article 448 does not apply to a case where
the owner of the land is the builder, sower, or planter who then later loses
ownership of the land by sale or donation.
Elsewise stated, where the true owner himself is the builder of works on his
own land, the issue of good faith or bad faith is entirely irrelevant. Thus in
strict point of law, Article 448 is not apposite to the case at bar. Nevertheless,
we believe that the provision therein on indemnity may be applied by analogy
considering that the primary intent of Article 448 is to avoid a state of forced
co-ownership and that the parties, including the two courts below, in the
main agree that Articles 448 and 546 of the Civil Code are applicable and
indemnity for the improvements may be paid although they differ as to the
basis of the indemnity.
DOCTRINE: The right of a possessor in bad faith to remove improvements
possessor in bad faith applies only to improvements for pure luxury or mere pleasure, provided the
has the right to thing does not suffer any injury and the lawful possessor does not prefer to
remove useful retain them by paying their value at the time of his possession.
improvements. -- NO
HELD:
Under Article 499 of the Civil Code, “he who builds, plants, or sows in bad
faith on the land of another, loses what is built, planted, or sown without
right to indemnity.” Additionally, under Article 546 of the Civil Code, only a
possessor in good faith shall be refunded for useful expenses with the right
of retention until reimbursed. Finally, under Article 547 of the Civil Code,
only a possessor in good faith may remove useful improvements if this can
be done without damage to the principal thing and if the person who recovers
the possession does not exercise the option of reimbursing the useful
expenses.
43 PROPERTY CASES

MWSS appealed to the Supreme Court for the removal of useful The right of a possessor in bad faith to remove improvements applies only to
improvements. Dagupan City argues that MWSS is a possessor improvements for pure luxury or mere pleasure, provided the thing does not
in bad faith so it has absolutely no right to the useful suffer any injury and the lawful possessor does not prefer to retain them by
improvements. paying their value at the time of his possession.

In this case, MWSS is a builder in bad faith so it loses whatever useful

improvements it made without right to indemnity.
l. Sabido VS IAC Civil Law; Property; Builder in Bad Faith; Useful Improvements; A
builder in bad faith loses what is built without right to indemnity. Only
a possessor in good faith shall be refunded for useful expenses with the
right of rentention until reimbursed.—Hence, it is clear that the private
respondent has to remove all his constructions over Lot “B” and vacate the
premises. This is his only option. Being adjudged in privy with spouses
Dasals, he cannot avail himself of the rights granted to a builder in good faith.
He, therefore, must remove all his useful improvements over Lot “B” at his
own expense and if the same have already been removed, he cannot be
entitled to the right of retention or to any reimbursement. Thus, in the case
of Metropolitan Waterworks and Sewerage System v. Court of Appeals, (143
SCRA 623, 629), we ruled: “Article 449 of the Civil Code of the Philippines
provides that ‘he who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.’ As
a builder in bad faith, NAWASA lost whatever useful improvements it had
made without right to indemnity (Santos y Mojica, Jan. 31, 1969, 26 SCRA
703). “Moreover, under Article 546 of said code, only a possessor in good
faith shall be refunded for useful expenses with the right of retention until
reimbur sed; and under Article 547 thereof, only a possessor in good faith
may remove useful improvements if this can be done without damage to the
principal thing and if the person who recovers the possession does not
exercise the option of reimbursing the useful expenses. The right given a
possessor in bad faith to remove improvements applies only to improvements
for pure luxury or mere pleasure,provided the thing suffers no injury thereby
and the lawful possessor does not prefer to retain them by paying the value
they have at the time he enters into possession.
m. Communities Same; Builders in Good Faith; Petition for Review on Certiorari; The
Cagayan, Inc. issue of whether respondent-spouses are builders in good faith or bad
VS Nanol faith is a factual question, which is beyond the scope of a petition filed
under Rule 45 of the Rules of Court.—At the outset, we emphasize that
the issue of whether respondentspouses are builders in good faith or bad faith
44 PROPERTY CASES

is a factual question, which is beyond the scope of a petition filed under Rule
45 of the Rules of Court. In fact, petitioner is deemed to have waived all
factual issues since it appealed the case directly to this Court, instead of
elevating the matter to the CA. It has likewise not escaped our attention that
after their failed preliminary conference, the parties agreed to submit the case
for resolution based on the pleadings and exhibits presented. No trial was
conducted. Thus, it is too late for petitioner to raise at this stage of the
proceedings the factual issue of whether respondentspouses are builders in
bad faith. Hence, in view of the special circumstances obtaining in this case,
we are constrained to rely on the presumption of good faith on the part of the
respondentspouses which the petitioner failed to rebut.
Same; Same; Article 448 of the Civil Code applies when the builder
believes that he is the owner of the land or that by some title he has the
right to build thereon, or that, at least, he has a claim of title thereto.—
Article 448 of the Civil Code applies when the builder believes that he is the
owner of the land or that by some title he has the right to build thereon, or
that, at least, he has a claim of title thereto. Concededly, this is not present in
the instant case. The subject property is covered by a Contract to Sell hence
ownership still remains with petitioner being the seller. Nevertheless, there
were already instances where this Court applied Article 448 even if the
builders do not have a claim of title over the property.
45 PROPERTY CASES
CASE FACT ISSUE
ACCESSION NATURAL (Art. 457-465)
a. Ronquillo VS Plaintiff Rosendo del Rosario was a registered owner of a Whether the dried-up DOCTRINE: The rules of accretion do not apply where the drying-up of
CA certain Lot No. 34. Adjoining said lot is a dried-up portion of portion of Estero river is not due to a “natural” change in the course of the waters. Herein, the
the old Estero Calubcub occupied by the defendant since 1945.
Plaintiffs claim that long before the year 1930, when title was
issued over the lot to his name, Rosendo del Rosario had been
in possession of this including the adjoining dried-up portion of
the old Estero Calubcub having bought the same from Arsenio
Arzaga.
In the early part of 1945 defendant (Ronquillo) occupied the
eastern portion of said titled lot as well as the dried-up portion
of the old Estero Calubcub which abuts plaintiffs' titled lot.
After a relocation survey of the land in question sometime in
1960, plaintiffs learned that defendant was occupying a portion
of their land and thus demanded defendant to vacate said land
when the latter refused to pay the reasonable rent for its
occupancy. However, despite said demand defendant refused to
vacate.
Rosendo, Amparo and Florencia, all surnamed del Rosario (Del
Rosarios), lodged a complaint with the Court of First Instance
of Manila praying, among others, that they be declared the
rightful owners of the dried-up portion of Estero Calubcub.
The trial court upheld the complaint. On appeal, respondent
court, in affirming the decision of the trial court, declared that
since Estero Calubcub had already dried-up way back in 1930
due to the natural change in the course of the waters, under
Article 370 of the old Civil Code, the abandoned river bed
belongs to the Del Rosarios as riparian owners.
Hence, the petition before the SC.
Before the SC, the Director of Lands in his Comment stated:
RULING
Calubcub being change was man-made (pollution). The dried-up portion belongs to the State
claimed by herein as land of public domain.
petitioner was caused
by a natural change in HELD:
the course of the Caused by man. Article 370, thus, does not apply.
waters; and, corollary
thereto, is the issue of A careful perusal of the evidence presented by both parties in the case at bar
the applicability of will reveal that the change in the course of Estero Calubcub was caused, not
Article 370 of the old by natural forces, but due to the dumping of garbage therein by the people of
Civil Code. the surrounding neighborhood.
Private respondent Florencia del Rosario, in her testimony, made a
categorical statement which in effect admitted that Estero Calubcub changed
its course because of the garbage dumped therein, by the inhabitants of the
locality.
In addition, the relocation plan which also formed the basis of respondent
court's ruling, merely reflects the change in the course of Estero Calubcub
but it is not clear therefrom as to what actually brought about such change.
There is nothing in the testimony of lone witness Florencia del Rosario nor
in said relocation plan which would indicate that the change in the course of
the estero was due to the ebb and flow of the waters. On the contrary, the
aforequoted testimony of the witness belies such fact, while the relocation
plan is absolutely silent on the matter. The inescapable conclusion is that the
dried-up portion of Estero Calubcub was occasioned, not by a natural change
in the course of the waters, but through the active intervention of man.
The foregoing facts and circumstances remove the instant case from the
applicability of Article 370 of the old Civil Code which provides:
Art. 370. The beds of rivers, which are abandoned because of a natural change
in the course of the waters, belong to the owners of the riparian lands
throughout the respective length of each. If the abandoned bed divided
46 PROPERTY CASES
We do not see our way clear to subscribe to the ruling of the
Honorable Court of Appeals on this point for Article 370 of the
Old Civil Code, insofar as ownership of abandoned river beds by
the owners of riparian lands are concerned, speaks only of a
situation where such river beds were abandoned because of a
natural change in the course of the waters. Conversely, we
submit that if the abandonment was for some cause other than
the natural change in the course of the waters, Article 370 is not
applicable and the abandoned bed does not lose its character as
a property of public dominion not susceptible to private
ownership in accordance with Article 502 (No. 1) of the New
Civil Code. In the present case, the drying up of the bed, as
contended by the petitioner, is clearly caused by human activity
and undeniably not because of the natural change of the course
of the waters.
b. Viajar VS CA The spouses Ricardo Y. Ladrido and Leonor P. Ladrido were 1. Whether or
the owners of Lot No. 7511 of the Cadastral Survey of Pototan not the change in the
situated in barangay Cawayan, Pototan, Iloilo. This lot course of the Suague
contained an area of 154,267 square meters and was registered River was sudden
in the names of the spouses under Transfer Certificate of Title 2. Whether or
No. T-21940 of the Register of Deeds of Iloilo. not the plaintiffs are
protected by the
Spouses Rosendo H. Te and Ana Te were also the registered Torrens Title.
owners of a parcel of land described in their title as Lot No. 7340
of the Cadastral Survey of Pototan.
Rosendo H. Te, with the conformity of Ana Te, sold this lot to
Angelica F. Viajar and Celso F. Viajar. A Torrens title was later
issued in the names of Angelica F. Viajar and Celso F. Viajar.
Later, Angelica F. Viajar had Lot No. 7340 relocated and found
out that the property was in the possession of Ricardo Y.
Ladrido. Consequently, she demanded its return but Ladrido
refused.
Angelica F. Viajar and Celso F. Viajar instituted a civil action
for recovery of possession and damages against Ricardo Y.
tenements belonging to different owners the new dividing line shall be
equidistant from one and the other.
Hence, the Del Rosarios cannot be entitled thereto supposedly as riparian
owners.
The dried-up portion of Estero Calubcub should thus be considered as
forming part of the land of the public domain which cannot be subject to
acquisition by private ownership.
DOCTRINE: Registration does not protect the riparian owner against the
diminution of the area of his land through gradual changes in the course of
the adjoining stream. Accretions which the banks of rivers may gradually
receive from the effect of the current become the property of the owners of
the banks (Art. 366 of the Old Civil Code; Art. 457 of the New). Such
accretions are natural incidents to land bordering on running streams and
the provisions of the Civil Code in that respect are not affected by the
Registration Act.
HELD:
No it was gradual. The trial court found that the change in the course of the
Suague River was gradual and this finding was affirmed by the respondent
Court of Appeals. We do not find any valid reason to disturb this finding of
fact.
Article 457 of the New Civil Code must be construed to limit the accretion
mentioned therein as accretion of unregistered land to the riparian owner,
and should not extend to registered land. Thus, the lot in question having
remained the registered land of the petitioners, then the private respondents
cannot acquire title there in derogation to that of the petitioners, by
accretion, for that will defeat the indefeasibility of a Torrens Title.
47 PROPERTY CASES
Ladrido. Summoned to plead, defendant Ladrido filed his
answer with a counterclaim. Plaintiffs filed their reply to the
answer.
CFI ruled in favor of the defendants which the CA confirmed.
There was a mention in the case that the issue from which the
decision of the CFI was not the issue appealed in the CA so the
affirmation made by the CA should be void.
c. Republic VS Tancinco (the “Tancincos”) are registered owners of a parcel of Whether there was
CA land situated at Barrio Ubihan, Meycauayan, Bulacan bordering accretion to the
on the Meycauayan and Bocaue Rivers. fishpond property of
the Tancincos. -- NO
On 24 June 1973, the Tancincos filed the application for the
registration of three lots adjacent to their fishpond property
(Lots 1, 2 and 3 of plan Psu-131892).
However, on 5 April 1974, Assistant Provincial Fiscal Amando
C. Vicente, representing the Bureau of Lands (the “Republic”)
filed a written opposition to the said application for registration.
On 6 March 1975, in line with the recommendation of the
Commissioner appointed by the Court, the Tancincos filed a
partial withdrawal of the application for registration of Lot 3.
On 7 March 1975, Lot 3 was ordered withdrawn from the
application and trial proceeded only with respect to Lots 1 and
2.
On 26 June 1976, the Court of First Instance of Bulacan
rendered a decision granting the application on the finding that
the lots (1 and 2) are accretions to the Tancincos’ fishpond
property.
On 30 July 1976, the Republic appealed to the Court of Appeals
(the “CA”)
However, the CA, on 19 August 1982, rendered a decision
affirming in toto the decision of the lower court.
The rule that registration under the Torrens System does not protect the
riparian owner against the diminution of the area of his registered land
through gradual changes in the course of an adjoining stream is well settled.
DOCTRINE: Article 457 of the New Civil Code states that, “To the owners
of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.”
Article 457 requires the concurrence of three requisites before an accretion
is said to have taken place: (1) That the deposit be gradual and imperceptible;
(2) that it be made through the effects of the current of the water; and (3) that
the land where accretion takes place is adjacent to the banks of the rivers.
HELD:
The SC agreed with the Republic’s contention that there is no accretion to
speak of under Article 457 of the New Civil Code.
The SC held that Article 457 of the New Civil Code which provides that “To
the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters”, requires
the concurrence of three requisites before an accretion is said to have taken
place, namely: (1) that the deposit be gradual and imperceptible; (2) that it be
made through the effects of the current of the water; and (3) that the land
where accretion takes place is adjacent to the banks of rivers.
The SC emphasized that the requirement that the deposit should be due to
the effect of the current of the river is indispensable. It held that this excludes
from Article 457 of the New Civil Code all deposits caused by human
intervention.
It further held that alluvion must be the exclusive work of nature. On the
contrary, in the instant case, there is no evidence to prove that the addition
to the fishpond property was made gradually through the effects of the
current of the Meycauayan and Bocaue rivers. The alleged alluvial deposits
48 PROPERTY CASES
Hence, the Republic filed this petition with the Supreme Court
(the “SC”). The Republic contended that there is no accretion
to speak of under Article 457 of the New Civil Code because the
Tancincos simply transferred their dikes further down the
riverbed of the Meycauayan River, and thus, if there is any
accretion to speak of, it is man-made and artificial and not the
result of the gradual and imperceptible sedimentation by the
waters of the river.
d. Binalay VS Guillermo Manalo bought parcels of land in Isabela; 8.65 Whether or not
Manalo hectares from was acquired from Faustino Taccad and 1.80 Manalo owns Lot 821?
hectares was bought from Gregorio Taguba. The parcels of land
were described as having the Cagayan River on their west.
During a cadastral survey conducted, the two parcels of land
was consolidated into one lot and was designated as Lot No.
307. But since the survey was conducted on a rainy day, a
portion of the land bought from Taccad was covered with water
and was not included in Lot No. 37.
The Sketch Plan shows that the Cagayan River running from
south to north, forks at a certain point to form 2 branches
(eastern and western branches) and then unites at the other end,
further north, to form a narrow strip of land. It appears that
eastern branch of the river cuts through the land of Manalo and
is inundated with water during rainy season. The bed of the
eastern branch is the unsurveyed portion of the land belonging
to Manalo, and is, for most part of the year (about 8 months),
dry and susceptible to cultivation.
Lot 821 is located directly opposite Lot 307 and is separated
from it during the rainy season. Being a portion of the land
bought from Taccad, Manalo claims that Lot 821 also belongs
to him by way of accretion to the submerged portion of the
property to which it is adjacent. Petitioners (Binalay et al)
however claims ownership over the land as they have possessed
it, occupied it and have cultivated it.
came into being not because of the sole effect of the current of the rivers but
as a result of the transfer of the dike towards the river and encroaching upon
it by reclamation.
Thus, the SC granted the Republic’s petition, reversed and set aside the
decisions of the lower courts and ordered the Tancincos to move back the
dikes of their fishpond to their original location and return the disputed
property to the river to which it belongs.
DOCTRINE: For accretion to take place as a mode of acquiring ownership
over the land, the land formed should be directly adjacent to the land owned.
HELD:
The Court held in the negative saying that 1.) it is part of public dominion
and 2.) it fails to meet all the requisites needed for accretion to take place.
First, it must be noted that Art. 70 of the Law of Waters defines the natural
bed or channel of a creek or river as the ground covered by its waters during
the highest floods. The periodic swelling of the water was taken into
consideration and it was concluded that the submerged portion of the land
during rainy days forms part of the natural bed of the river. In connection
with this conclusion, Art. 420 of the Civil Code provides that rivers form
part of public dominion.
Second, accretion as a mode of acquiring property under Art. 457 of the Civil
Code requires the concurrence of 3 requisites: 1) that the deposition of soil
or sediment be gradual and imperceptible; 2) that it be the result of the action
of the waters of the river (or sea); and 3) that the land where accretion takes
place is adjacent to the banks of rivers (or the sea coast). In this case, the
claimed accretion lies on the bank of the river not adjacent to Lot 307 but
directly opposite Lot 307 across the river.
Lastly, SC held that it is difficult to suppose that a land with an area of 22.72
hectares resulted from slow accretion to another lot of almost equal size. If
Manalo’s contention is accepted, then his land would have doubled in a span
of 10 years.
49 PROPERTY CASES
e. Reynante VS Petitioner, Jose Reynante was a tenant over the two lots of Don 1.
CA Cosme Carlos for more than 50 years. A fishpond is situated the
between the two lots. During his tenancy, Reynante constructed
a nipa hut, and planted and harvested nipa plams, to which he
appropriated it as his own. When Don Cosme Carlos died, his
heirs, private respondents, executed a written agreement with
Reynante wherein the latter would turn over the fishpond to the
former. After executing the agreement, Reynante surrendered
the fishponds as well as the lots. The fishpond was leased to one
Carlos de la Cruz. However, Reynante did not vacate the lots
and continued to live there and harvest the nipa palms he
planted. The private respondents formally demanded that
Reynante vacate the lots to which the latter refused to do. A
forcible entry with preliminary injunction was filed against
Reynante however the trial court dismissed the complaint
basing from the fact that Reynante was the prior possessor of
the lots. The trial court’s decision was affirmed by the Court of
Appeals.
f. Republic VS
Santos III
All these considered, the Court held that the land in question is part of public
dominion and neither Manalo nor the petitioners were held owners of the
land.
Who between DOCTRINE: Granting that the lots were created by alluvial formation and
petitioner and while it is true that accretions which the bank of rivers may gradually receive
private respondents from the effect of the current become the property of the owner of the banks,
has prior physical such accretion to registered land does not preclude acquisition of the
possession the two additional are by another person through prescription
lots? --
PETITIONER HELD:
REYNANTE It has been held that party who can prove prior possession can recover such
2. Whether or possession even against the owner himself. As long as the party is able to
not the disputed lots prove prior possession he is entitled to remain on the property until he is
belong to private lawfully ejected. It is clear from the records that Reynante has been in
respondents as a result possession of the lots for more than 50 years. Consequently, the court cannot
of accretion? -- NO legally grant the possession over the two lots to the private respondents.
The Court of Appeals ruled that the two lots were created by alluvial
formation hence under Article 457 of the New Civil code the ownership of
such is granted to the private respondents. However, although the lands to
which the additional areas (which are the two lots subject in this case) are
attached to are registered; the failure to register the additional lands
subjected it to acquisition through prescription. Applying this to the case, the
private respondents never registered the two lots and since Reynante has
been in possession of such for more than 50 years already, its possession over
it must be respected unless the private respondents are able to show that they
have the better title over it.
Same; Property; Accretion; Words and Phrases; Accretion is the
process whereby the soil is deposited along the banks of rivers. —
Accretion is the process whereby the soil is deposited along the banks of
rivers. The deposit of soil, to be considered accretion, must be: (a) gradual
and imperceptible; (b) made through the effects of the current of the water;
and (c) taking place on land adjacent to the banks of rivers. Accordingly,
respondents should establish the concurrence of the elements of accretion to
warrant the grant of their application for land registration.
Same; Same; River Beds; River beds that dry up continue to belong to
the State as its property of public dominion, unless there is an express
law that provides that the dried-up river beds should belong to some
50 PROPERTY CASES

other person.—Article 502 of the Civil Code expressly declares that rivers
and their natural beds are public dominion of the State. It follows that the
river beds that dry up, like Lot 4998-B, continue to belong to the State as its
property of public dominion, unless there is an express law that provides that
the dried-up river beds should belong to some other person.
51 PROPERTY CASES
CASE FACT ISSUE
OVER MOVABLES (Art. 466-475)
a. Santos VS Plaintiff Urbano Santos deposited 778 cavans and 38 kilos of Whether
Bernabe palay and appellant Pablo Tiongson deposited 1,026 cavans and
9 kilos of the same grain in defendant Jose C. Bernabe's
warehouse. It does not appear that the sacks of palay deposited
in Jose C. Bernabe's warehouse bore any marks or signs nor
were they separated one from the other.
Pablo Tiongson filed with the Court of First Instance of Bulacan
a complaint against Jose C. Bernabe, to recover the cavans and
kilos palay he deposited in the defendant's warehouse. At the
same time, the application of Pablo Tiongson for a writ of
attachment was granted, and the attachable property of Jose C.
Bernabe, including 924 cavans and 31 1/2 kilos of palay found
by the sheriff in his warehouse, were attached, sold at public
auction, and the proceeds thereof delivered to said defendant
Pablo Tiongson, who obtained judgment in said case.
Plaintiff, Urbano Santos, intervened in the attachment of the
palay, but upon Pablo Tiongson's filing the proper bond, the
sheriff proceeded with the attachment, giving rise to the present
complaint.
Source: https://www.academia.edu/27666535/Property_case_digests uploaded by Corina Basubas
RULING
or not DOCTRINE: Article 381 of the Civil Code states: “If, by the will of their
plaintiff acquired right owners, two things of identical or dissimilar nature are mixed, or if the
over the mixture of mixture occurs accidentally, if in the latter case the things cannot be
cavans and kilos of separated without injury, each owner shall acquire a right in the mixture
palay. -- YES proportionate to the part belonging to him, according to the value of the
things mixed or commingled.”
HELD:
The sheriff having found only 924 cavans and 31 1/2 kilos of palay in said
warehouse at the time of the attachment thereof and there being no means of
separating form said 924 cavans and 31 1/2 of palay belonging to Urbano
Santos and those belonging to Pablo Tiongson, the following rule prescribed
in article 381 of the Civil Code for cases of this nature, is applicable:
Art. 381. If, by the will of their owners, two things of identical or dissimilar
nature are mixed, or if the mixture occurs accidentally, if in the latter case
the things cannot be separated without injury, each owner shall acquire a
right in the mixture proportionate to the part belonging to him, according to
the value of the things mixed or commingled.
The number of kilos in a cavan not having been determined, we will take the
proportion only of the 924 cavans of palay which were attached and sold,
thereby giving Urbano Santos, who deposited 778 cavans, 398.49 thereof,
and Pablo Tiongson, who deposited 1,026 cavans, 525.51, or the value thereof
at the rate of P3 per cavan.
Wherefore, the judgment appealed from is hereby modified, and Pablo
Tiongson is hereby ordered to pay the plaintiff Urbano Santos the value of
398.49 cavans of palay at at the rate of P3 a cavan, without special
pronouncement as to costs. So ordered.