G.R. No.

132518
March 28, 2000
GAVINA MAGLUCOT-AW, CATALINA ORCULLO, RICHARD ESTANO, NIDA
MAGLUCOT, MELANIA MAGLUCOT-CATUBIG, EMILIANO CATUBIG,
LADISLAO SALMA, petitioners, vs. LEOPOLDO MAGLUCOT, SEVERO
MAGLUCOT, WILFREDA MAGLUCOT-ALEJO and CONSTANCIO ALEJO,
respondents.
FACTS OF THE CASE:
Petitioners filed with the RTC a complaint for recovery of possession and damages
alleging, inter alia, that they are the owners of Lot No. 1639-D.
Said lot was originally part of Lot No. 1639 which was covered by Original
Certificate Title No. 6775 issued in the names of Hermogenes Olis, Bartolome
Maglucot, Pascual Olis, Roberto Maglucot, Anselmo Lara and Tomas Maglucot on
16 August 1927.
On 19 April 1952, Tomas Maglucot, one of the registered owners and respondents
predecessor-in-interest, filed a petition to subdivide Lot No. 1639. Consequently, on
13 May 1952, then CFI of Negros Oriental issued an order directing the parties to
subdivide said lot into six portions as follows: Rtcspped
Guillermo Maglucot rented a portion of Lot No. 1639-D (subject lot). Leopoldo and
Severo, both surnamed Maglucot, rented portions of subject lot in 1964 and 1969,
respectively, and each paying rentals therefor. Said respondents built houses on their
corresponding leased lots. They paid the rental amount of P100.00 per annum to Mrs.
Ruperta Salma, who represented the heirs of Roberto Maglucot, petitioners
predecessor-in-interest.
In December 1992, however, said respondents stopped paying rentals claiming
ownership over the subject lot. Petitioners thus filed the complaint a quo. Sdaadsc
After trial, the lower court rendered judgment in favor of petitioners.
On appeal, the CA reversed the decision of the RTC. The appellate court ruled that
the sketch plan and tax declarations relied upon by petitioners are not conclusive
evidence of partition. The CA likewise found that the prescribed procedure under
Rule 69 of the Rules of Court was not followed.
ISSUE:
WON there was a valid partition in 1952?
RULING:
YES. There is a valid partition in 1952. Partition may be inferred from circumstances
sufficiently strong to support the presumption. Thus, after a long possession in severalty,
a deed of partition may be presumed. It has been held that recitals in deeds, possession
and occupation of land, improvements made thereon for a long series of years, and
acquiescence for 60 years, furnish sufficient evidence that there was an actual partition of
land either by deed or by proceedings in the probate court, which had been lost and were
not recorded.
ANALYSIS:

The records show that respondents were paying rent for the use of a portion of Lot No.
1639-D. Had they been of the belief that they were co-owners of the entire Lot no. 1639
they would not have paid rent. Respondents attempted to counter this point by presenting
an uncorroborated testimony of their sole witness to the effect that the amount so paid to
Roberto Maglucot and, subsequently, to Ruperta Salma were for the payment of real
property taxes. It is quite improbable that the parties would be unaware of the difference
in their treatment of their transactions for so long a time.
Moreover, no evidence was ever presented to show that a tax declaration for the entire
Lot No. 1639 has ever been made. Replete in the records are tax declarations for specific
portions of Lot 1639. It is inconceivable that respondents would not be aware of this.
With due diligence on their part, they could have easily verified this fact. This they did
not do for a period spanning more than four decades.
The payment of rentals by respondents reveal that they are mere lessees. As such, the
possession of respondents over Lot No. 1639-D is that of a holder and not in the concept
of an owner. One who possesses as a mere holder acknowledges in another a superior
right which he believes to be ownership, whether his belief be right or wrong. Since the
possession of respondents were found to be that of lessors of petitioners, it goes without
saying that the latter were in possession of Lot No. 1639-D in the concept of an owner
from 1952 up to the time the present action was commenced.
CONCLUSION:
The existence of tax declarations in the names of Hermogenes Olis and Pascual Olis
(purported owners of Lot Nos. 1639-A and 1639-B, respectively) as indubitable proof
that there was a subdivision of Lot No. 1639. It likewise found that Tomas Maglucot,
respondents predecessor-in-interest, took active part in the partition as it was he, in fact,
who commenced the action for partition.
The court a quo cited Article 1431 of the Civil Code which states that "through estoppel
an admission or representation is rendered conclusive upon the person making it, and
cannot be denied or disproved as against the person relying thereon." Applying said
provision of law, it held that while there was no court order showing that Lot No. 1639
was partitioned, its absence could not be used by Tomas Maglucot, or respondents as his
successors-in-interest, to deny the existence of an approved partition against the other coowners who claim that there was oneSaid court, likewise, ruled that the tax declarations
over the houses of respondents, expressly stating that the same are constructed on the lots
of Roberto Maglucot, constitute a conclusive admission by them of the ownership of the
subject lot by the latter.
G.R. No. L-6019
March 25, 1911
JUAN N. ARAGON, petitioner-appellee, vs. THE INSULAR GOVERNMENT,
oppositor-appellant.
FACTS OF THE CASE:

 In 1892, a possessory title to the land in question was duly registered in favor of
Inocencio Aragon, one of the predecessors in interest of these applicants; the
applicant and their predecessors in interest have been in possession of the parcel
of land in question, under and undisputed claim of ownership; that it is located
toward the center of one of the most valuable residential sections of the city of
Manila
For many years a house stood upon this land, and was occupied by some of the
predecessors in interest of the applicants in these proceedings; that with some
relatively small expenditure by way of a "fill" or a "retaining wall" it would still
be a valuable building lot for residential purposes;
that the adjoining lots extend toward the bay to a line formed by the extension of
the outer boundary line of the lot in question, and that these adjoining lots would
be in substantially the same physical condition, by relation to the ebb and flow of
the tide, as lot in question,
The water which spreads over the lot in question at high tide is of but little depth,
and would be wholly excluded by a very limited amount of "filling" materials or a
low retaining wall;
In later years the waters risen to such a height along the shores of the Bay of
Manila at this point as to cover the land in question completely at high tide;
though it does not definitely appear whether this is due to changes in the current
and flow of the waters in the bay, or to the gradual sinking of the land along the
coast.
The Government of the Philippine Islands, through its proper representatives,
objected to the application for registry on the ground that, as it alleges, the land in
question is a part of the public domain, as defined in subsection 1, article 339, of
the Civil Code.
ISSUES:
WON the contested lot is part of the Public Domain?
RULING:
NO. The applicants have never abandoned their possession under a claim of ownership of
this land and that there has been no such destructive or total loss of the property as would
justify a holding that the owners have lost possession. Article 446 of the Civil Code
provides that:
Every possessor has a right to be respected in his possession; and should he be
disturbed therein, he must be protected or possession must be restored to him by the
means established in the laws of procedure.
ANALYSIS:
Doubtless the property has been injured by the erosive action of the sea. Doubtless the
owners in order to profitably enjoy the possession of this property will be compelled to
make some relatively small expenditures by way of a "fill" or a retaining wall. But the
actual condition of the property as it appears from the record makes a claim that it has
been totally lost or destroyed preposterous and wholly untenable. We need hardly add that
if the applicants have not lost their right of possession, the Government's claim of

ownership, on the ground that this is a part of the playa (shore) of Manila Bay,
necessarily falls to the ground.

CONCLUSION:
It affirmatively appears that the owners of the land in question have never in fact nor in
intent abandoned it, and that keeping in mind its location and actual condition it can not
be said to have been totally destroyed for the purposes for which it was held by them, so
as to have become a part of the playa (shore) of the Bay of Manila.
G.R. No. 137944
April 6, 2000
FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO,
petitioners, vs. HONORATA MENDOZA BOLANTE, respondent.
FACTS OF THE CASE:
The facts not disputed revealed that prior to 1954, the land was originally declared
for taxation purposes in the name of Sinforoso Mendoza, father of [respondent]
and married to Eduarda Apiado. Sinforoso died in 1930.
[Petitioners] were the daughters of Margarito Mendoza. On the basis of an
affidavit, the tax declaration in the name of Sinforoso Mendoza of the contested
lot was cancelled and subsequently declared in the name of Margarito Mendoza.
Margarito and Sinforoso are brothers. [Respondent] is the present occupant of the
land.
Earlier, on October 15, 1975, [respondent] and Miguel Mendoza, another brother
of [petitioners], during the cadastral survey had a dispute on ownership of the
land.
"After trial, the court a quo rendered its judgment in favor of [petitioners], the
dispositive portion of which reads as follows:
The Court of Appeals reversed the trial court because the genuineness and the due
execution of the affidavit allegedly signed by the respondent and her mother had
not been sufficiently established
ISSUE:
WON is the not petitioner is the lawful owner of the contested Lot?
RULING:
No, the Petitioner is not the lawful owner of the contested Lot. Tax declarations and
receipts are not conclusive evidence of ownership. At most, they constitute mere prima
facie proof of ownership or possession of the property for which taxes have been. On the
other hand, mere possession and occupation of land cannot ripen into ownership.
ANALYSIS:
In contrast, the petitioners, despite thirty-two years of farming the subject land, did not
acquire ownership. It is settled that ownership cannot be acquired by mere occupation.
Unless coupled with the element of hostility toward the true owner, occupation and use,
however long, will not confer title by prescription or adverse possession. Moreover, the

petitioners cannot claim that their possession was public, peaceful and uninterrupted.
Although their father and brother arguably acquired ownership through extraordinary
prescription because of their adverse possession for thirty-two years (1953-1985), this
supposed ownership cannot extend to the entire disputed lot, but must be limited to the
portion that they actually farmed.
CONCLUSION:
Ownership of immovable property is acquired by ordinary prescription through
possession for ten years. Being the sole heir of her father, respondent showed through his
tax receipt that she had been in possession of the land for more than ten years since 1932.
Respondent's possession was not disturbed until 1953 when the petitioners' father claimed
the land. But by then, her possession, which was in the concept of owner -- public,
peaceful, and uninterrupted-- had already ripened into ownership. Furthermore, she
herself, after her father's demise, declared and paid realty taxes for the disputed land. Tax
receipts and declarations of ownership for taxation, when coupled with proof of actual
possession of the property, can be the basis of a claim for ownership through prescription.
G.R. No. 82680
August 15, 1994
NICANOR SOMODIO, petitioner, vs. COURT OF APPEALS, EBENECER
PURISIMA, and FELOMINO AYCO, respondents.
FACTS OF THE CASE:
On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer
of Rights, conveying to Wilfredo Mabugat the possession of a residential lot situated
at Rajah Muda, Bula, General Santos City and described in the said instrument as
Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On
October 22, 1974, Mabugat executed an Affidavit of Trust expressly recognizing the
right of petitioner over one-half undivided portion of the lot. Later, petitioner
discovered in the District Land Office that the lot was numbered "6328-X, Csd 2281D." Thereafter, petitioner and Mabugat partitioned the property into two portions,
with petitioner taking the western part. Immediately after the partition, petitioner
took possession of his portion and planted thereon ipil-ipil trees, coconut trees and
other fruit-bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-by-18
feet on his lot. He would visit the property every three months or on weekened when
he had time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer
his hut to petitioner's lot. About six years later, petitioner demanded that Ayco vacate
the premises but such demand proved futile.
Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with
damages against respondent Ayco before the Municipal Trial Court, Branch I,
General Santos, docketed as Civil Case No. 2032-II.
On June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a
house thereon. Four days later, petitioner filed against respondent Purisima a
complaint for forcible entry before the same court docketed as Civil Case No. 2013-I.
Said case was later consolidated with Civil Case No. 2032-II.

 On April 30, 1986, the trial court rendered a decision finding that respondent
Purisima built his house "almost on the spot where Somodio's unfinished house"
stood "thru stealth and strategy," not knowing that the house was built on Lot No.
6328-X and not on Lot No. 6328-Y, the lot said respondent was claiming (Rollo, p.
43). The court went on to state that:
The Municipal Trial Court further held that petitioner was the actual possessor of Lot
No. 6328-X. Nothing that the ocular inspection of the area showed that the houses of
respondents Purisima and Ayco were "inside Lot No. 6328-X" and not on Lot No.
6328-Y, the Municipal Trial Court held that the case became one which entailed mere
removal of the houses from the lot in question. Accordingly, the court ordered private
respondents to remove their respective houses, to deliver the land to petitioner, and to
pay attorney's fees and litigation expenses.
On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in
toto the decision of the Municipal Trial Court. Respondent then elevated the cases on
a petition for review to the Court of Appeals, which, in its decision dated September
27, 1987, set aside the decisions of the two trial courts and ordered the dismissal of
the two complaints filed by petitioner.
ISSUE:
WON respondent is entitled to the possession of the contested lot?
RULING
NO. Upon a review of the records, the supreme court are convinced that petitioner indeed
enjoyed priority of possession over Lot No. 6328-X, notwithstanding respondent
Purisima's claim to the contrary.
Article 531 of the Civil Code of the Philippines provides that:
Possession is acquired by the material occupation of a thing or the exercise of a right, or
by the fact that it is subject to the action of our will, or by the proper acts and legal
formalities established for acquiring such right.
ANALYSIS
Respondent Purisima's father surveyed the property of help to his cause. As the Court of
Appeals found, respondent Purisima's father surveyed the land for the Small Farmers
Fishpond Association, Inc., not for himself. Although respondent Purisima now claims
that Lot No. 6328-X was in payment of his fee for the services of his father and that he
caused the construction of a perimeter wall in the area, these facts do not mean that
respondent Purisima himself had prior possession. He did not present any proof that his
father had authorized him to enter the land as his successor-in-interest.
Respondent Purisima claimed possession over Lot No. 6328-Y, while petitioner identified
the lot adjacent to it, Lot NO. 6328-X, as the area where private respondents built their
houses. That these two lots are distinct from one another was resolved by the ocular
inspection conducted by a Senior Geodetic Engineer of the Office of the City Engineer,
who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-Y and from
thence to the south is lot 6328-X."

CONCLUSION
Petitioner took possession of the property sometime in 1974 when he planted the property
to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a
building on the property. It is immaterial that the building was unfinished and that he left
for Kidapawan for employment reasons and visited the property only intermittently.
Possession in the eyes of the law does not mean that a man has to have his feet on every
square meter of ground before it can be said that he is in possession (Ramos v. Director of
Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject the property
to the action of his will.
G.R. No. 80294
March 23, 1990
CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, petitioner,
vs. COURT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO and JUAN
VALDEZ, respondents.
FACTS OF THE CASE:
Petitioner and private respondents were asking for confirmation of their alleged
imperfect titles to the lots in question under Section 49 (b) of the Public Land Act
That the petitioner was in possession of the said property as borrower in
commodatum from private respondents since 1906 but in 1951 petitioner repudiated
the trust when it declared the property for tax purposes under its name. When it filed
its application for registration of the said property in 1962, petitioner had been in
adverse possession of the same for at least 11 years
In separate motions for reconsideration filed by private respondents Heirs of
Octaviano and Heirs of Juan Valdez relating to the same decision, they also asked
that said two lots be registered in their names. On August 12, 1977, the Court of
Appeals denied both motions. Effectively, therefore, in the said decision the appellate
court ruled that neither the petitioner nor the private respondents are entitled to the
confirmation of imperfect title over said two lots. Pursuant to the said decision in
CA-G.R. No. 38830-R, the two lots in question remained part of the public lands.
ISSUES:
WON petitioner is entitled to the possession of the subject lots?
RULING:
Yes, Under Art. 555. A possessor may lose his possession:
(1) By the abandonment of the thing;
(2) By an assignment made to another either by onerous or gratuitous title;
(3) By the destruction or total loss of the thing or because it goes out of commerce;
(4) By the possession of another, subject to the provisions of Article 537, if the new
possession has lasted longer than one year. But the real right of possession is not lost till
after the lapse of ten years. (460a) (Emphasis supplied.)
From the foregoing provision of the law, particularly paragraph 4 thereof, it is clear
that the real right of possession of private respondents over the property was lost or no
longer exists after the lapse of 10 years that petitioner had been in adverse possession

thereof. Thus, the action for recover of possession of said property filed by private
respondents against petitioner must fail.
ANALYSIS:
The totality of foregoing together with evidence of oppositors must convince this Court
that as to lots 2 and 3, it was oppositors who were possessors under bona fide claim of
ownership thru their predecessors since around 1906; and that appellee came in only in
the concept of a borrower in commodatum, but that appellee took it upon itself to claim
and repudiate the trust sometime in 1951, and since from that time at least, possession of
oppositors had been interrupted, neither can they claim registration under Sec. 48, par. b
of the Public Land Law, Com. Act 141, as amended by R.A. 1942; this must be the final
result, and there would be no more need to rule on the errors impugning the personality of
appellee to secure registration; 4
CONCLUSION:
The The Court, therefore, finds that the trial court and the Court of Appeals erred in
declaring the private respondents to be entitled to the possession thereof. Much less can
they pretend to be owners thereof. Said lots are part of the public domain.
G.R. No. L-30272
February 28, 1985
RIZAL CEMENT CO., INC., petitioner, vs. CONSUELO C. VILLAREAL, ISABEL
C. VILLAREAL, FLAVIANO C. VILLAREAL, ALFREDO V. GOMEZ, AURORA
V. GOMEZ and the COURT OF APPEALS, respondents.
FACTS OF THE CASE
Based on respondents-applicants' testimonial and documentary evidence, it appears
that the property applied for, designated as Lot Nos. 1 and 2 of Plan Psu-147662,
have a total area of 26,015 square meters; that these lots originally belonged to one
Maria Certeza; that upon her death, the property was involved in a litigation between
her grandchildren and Gonzalo Certeza and that the lots were given by the latter to
former Justice de Joya as the latter's attorney's fees; that the lots were then sold by de
Joya to Filomeno Sta. Ana who, in turn sold the same to spouses Victoriano Cervo
and Ignacia Guillermo in 1939; that sometime in November 1955, the said spouses
sold the said lots to the herein applicants as shown by a duly notarized deed of sale;
That the said land consists of two agricultural lots bounded and described as shown
on plan Psd-147662 as Lots Nos. 1 and 2 and technical description attached hereto
and made integral part hereof;
Upon the other hand, oppositor, (now petitioner) Rizal Cement Company, claims to
be the owner of the subject lots, having bought the same from Maria Certeza, and to
have been in continuous and adverse possession of the property since 1911,
After trial, judgment was rendered by the Court of First Instance on April 28, 1965
which was amended on May 21, 1965, denying the application for registration and
ordering the issuance of a decree of registration after finality of said decision in the
name of Rizal Cement Company.
Respondents appealed to the then Court of Appeals which reversed and set aside the
lower court's decision. Petitioner moved for reconsideration but the appellate court
denied the motion in its Resolution of February 11, 1969.

ISSUES
WON not respondents had been in actual possession of the land in question.
RULING
YES, Petitioner did not present any witness in actual possession of the land in question.
Possession is acquired by the material occupation of a thing or the exercise of a right or
by the fact it is subject to the action of our will, or by the proper acts and legal formalities
established for acquiring such right.
ANALYSIS
Petitioner's evidence, consisting of tax receipts, tax declaration and survey plan are not
conclusive and indisputable basis of one's ownership of the property in question.
Assessment alone is of little value as proof of title. Mere tax declaration does not vest
ownership of the property upon the declarant. 3 Settled is the rule that neither tax receipts
nor declaration of ownership for taxation purposes alone constitutes sufficient evidence
of ownership or of the right to possess realty. They must be supported by other effective
proofs. 4 Neither can the survey plan or technical descriptions prepared at the instance of
the party concerned be considered in his favor, the same being
CONCLUSION
A painstaking review of the evidence on record failed to disclose any evidence or
circumstance of note sufficient enough to overrule said findings and conclusions. The
jurisdiction of this Court in cases brought to Us from the Court of Appeals (now
Intermediate Appellate Court) is limited to the review of errors of law, said appellate
court's findings of fact being conclusive upon us except 6 (1) when the conclusion is a
finding grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly absurd, mistaken or impossible; (3) when there is grave abuse abuse
of discretion in the appreciation of facts; (4) when the judgment is premised on a
misapprehension of facts; (5) when the findings of fact are conflicting; and (6) when the
Court of Appeals, in making its findings went beyond the issues of the case and the same
is contrary to the admissions of both appellant and appellee, none of which obtain in the
case at bar.
G.R. No. L-50264 October 21, 1991
IGNACIO WONG, petitioner, vs. HON. LUCAS D. CARPIO, as Presiding Judge,
Court of First Instance of Davao del Sur, Branch V and MANUEL MERCADO,
respondents.
FACTS OF THE CASE:
Respondent Manuel Mercado acquired his rights to possess the land in litigation,
particularly lot 3 (LRC) Pcs-295 and embraced in Transfer Certificate of title No. (T4244) T-972 from William Giger by virtue of a deed of sale with right to repurchase
executed in 1972 for P3,500.00
In 1973, William Giger asked an additional P2,500.00 from respondent requiring
Giger to sign a new deed of Pacto de Retro Sale before a Notary Public.

 In 1972, respondent began harvesting only the coconut fruits and paid taxes for Mr.
Giger. He went periodically to the land to make copra but he never placed any person
on the land to watch it. Neither did he reside on the land as he is a businessman and
storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while the
land is at Colongan, Sta. Maria. Neither did he put any sign or hut to show that he is
in actual possession. He knew defendants' laborers were in the land in suit as early as
August 1976 and that they have a hut there but he did not do anything to stop them.
Instead respondent was happy that there were people and a hut on the land in suit.
Before July 1976, defendant Ignacio Wong went to the land in litigation to find out if
there were other people residing there or claiming it besides the owner and he found
none. So, defendant bought the parcel of land in litigation from William Giger and
his wife Cecilia Valenzuela. Defendant Ignacio Wong asked for the delivery of the
title to him and so he has in his possession TCT No. (T-4244) T-974 in the name of
William Giger. Mr. Wong declared the land in suit for taxation purposes in his name.
He tried to register the pacto de retro sale with the Register of Deeds by paying the
registration fee but due to some technicalities, the pacto de retro sale could not be
registered. The defendant Wong placed laborers on the land in suit, built a small farm
house after making some clearings and fenced the boundaries. He also placed
signboards.
On September 1976, respondent Manuel Mercado again went to the land in suit to
make copras. That was the time the matter was entered in the police blotter.
On November 1976, defendant Wong ordered the hooking of the coconuts from the
land in litigation and nobody disturbed him. But defendant received a copy of
respondent's complaint for forcible entry with summons to answer which is the case
now before the Court.
During the pendency of this instant complaint for forcible entry, spouses William
Giger and Cecilia Valenzuela filed a case for reformation of instrument against
respondent Mercado.
The Municipal Court decision found that petitioner had prior, actual and continuous
physical possession of the disputed property and dismissed both the complaint and
the counter-claim.
On appeal, the CFI drew a completely different conclusion from the same set of facts
and ruled in favor of herein private respondent
ISSUES:
Whether or not the respondent, Manuel Mercado, is the rightful owner of the land in
litigation and if rentals of the land should be properly imposed against petitioner?
RULING:
NO. it is clear that possession passed from vendor William Giger to private respondent
Manuel Mercado by virtue of the first sale a retro, and accordingly, the later sale a retro in
favor of petitioner failed to pass the possession of the property because there is an
impediment the possession exercised by private respondent.

The computation of the payment of monthly rental should start from December, 1976
after the petitioner received private respondent's complaint for forcible entry with
summons.
ANALYSIS:
Possession as a fact cannot be recognized at the same time in two different personalities
except in the cases of co-possession. Should a question arise regarding the fact of
possession, the present possessor shall be preferred; if there are two possessions, the one
longer in possession, if the dates of possession are the same, the one who presents a title;
and if these conditions are equal, the thing shall be placed in judicial deposit pending
determination of its possession or ownership through proper proceedings (Art. 538, Civil
Code).
It should be noted that possession acquired in good faith does not lose this character
except in the case and from the moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code).
CONCLUSION:
Possessor in good faith is entitled to the fruits only so long as his possession is not legally
interrupted, and such interruption takes place upon service of judicial summons (Arts.
544 and 1123, Civil Code)
G.R. No. 80298
April 26, 1990
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs. THE SPOUSES
LEONOR and GERARDO SANTOS, doing business under the name and style of
"SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
FACTS OF THE CASE:
In October 1981, a person identifying himself as Professor Jose Cruz placed an order
by telephone with the petitioner company for 406 books, payable on delivery. EDCA
prepared the corresponding invoice and delivered the books as ordered, for which
Cruz issued a personal check covering the purchase price of P8,995.65.
On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos
who, after verifying the seller's ownership from the invoice he showed her, paid him
P1,700.00.
Meanwhile, EDCA having become suspicious over a second order placed by Cruz
even before clearing of his first check, made inquiries with the De la Salle College
where he had claimed to be a dean and was informed that there was no such person
in its employ. Further verification revealed that Cruz had no more account or deposit
with the Philippine Amanah Bank, against which he had drawn the payment check.
EDCA then went to the police, which set a trap and arrested Cruz on October 1981.
Investigation disclosed his real name as Tomas dela Pea and his sale of 120 of the
books he had ordered from EDCA to the private respondents.
On the night of the same date, EDCA sought the assistance of the police in Precinct 5
at the UN Avenue, which forced their way into the store of the private respondents
and threatened Leonor Santos with prosecution for buying stolen property. They

seized the 120 books without warrant, loading them in a van belonging to EDCA,
and thereafter turned them over to the petitioner.
Protesting this high-handed action, the private respondents sued for recovery of the
books after demand for their return was rejected by EDCA. A writ of preliminary
attachment was issued and the petitioner, after initial refusal, finally surrendered the
books to the private respondents. As previously stated, the petitioner was
successively rebuffed in the three courts below and now hopes to secure relief from
us.
ISSUES:
Whether or not the petitioner has been unlawfully deprived of the books because the
check issued by the impostor in payment therefor was dishonored?
RULING:
YES. It would certainly be unfair to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence. There is no justice in transferring
EDCA's loss to the Santoses who had acted in good faith, and with proper care, when
they bought the books from Cruz.
ANALYSIS:
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer ownership to the buyer who can
in turn transfer it to another.
Actual delivery of the books having been made, Cruz acquired ownership over the books
which he could then validly transfer to the private respondents. The fact that he had not
yet paid for them to EDCA was a matter between him and EDCA and did not impair the
title acquired by the private respondents to the books.
CONCLUSION:
While we sympathize with the petitioner for its plight, it is clear that its remedy is not
against the private respondents but against Tomas de la Pea, who has apparently caused
all this trouble. The private respondents have themselves been unduly inconvenienced,
and for merely transacting a customary deal not really unusual in their kind of business. It
is they and not EDCA who have a right to complain.
G.R. No. L-20264
January 30, 1971
CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners, vs. HON.
COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA,
respondents
FACTS OF THE CASE:
Around October 11, 1953 respondent while talking to Consuelo S. de Garcia, owner
of La Bulakea restaurant recognized her ring in the finger of Mrs. Garcia and
inquired where she bought it, which the defendant answered from her comadre.

 respondent explained that that ring was stolen from her house in February, 1952.
Defendant handed the ring to respondent and it fitted her finger.
Two or three days later, the respondent, her husband Lt. Col. Juan Guevara, Lt.
Cementina of Pasay PD, defendant and her attorney proceeded to the store of Mr.
Rebullida to whom they showed the ring in question. Mr. Rebullida examined the
ring with the aid of high power lens and after consulting the stock card thereon,
concluded that it was the very ring that respondent bought from him in 1947. The
ring was returned to defendant who despite a written request therefor failed to deliver
the ring to respondent. Hence, this case.
Later on when the sheriff tried to serve the writ of seizure (replevin), defendant
refused to deliver the ring which had been examined by Mr. Rebullida, claiming it
was lost.
How the defendant, Consuelo S. de Garcia, the present petitioner before us, along
with her husband Anastacio Garcia, sought to meet respondent's claim was narrated
thus: "On the other hand, defendant denied having made any admission before
respondent or Mr. Rebullida or the sheriff. Her evidence tends to show that the ring
was purchased by her from Mrs. Miranda who got it from Miss Angelita Hinahon
who in turn got it from the owner, Aling Petring, who was boarding in her house; that
the ring she bought could be similar to, but not the same ring respondent purchased
from Mr. Rebullida which was stolen; that according to a pawn-shop owner the big
diamond was before the trial never dismantled. When dismantled, defendant's
diamond was found to weigh 2.57 cts."
respondent lost in the lower court. She elevated the matter to respondent Court of
Appeals with the judgment of the lower court being reversed.
ISSUES:
Whether or not the possessor-petitioner has the better title of ownership over the ring?
RULING:
NO. One who has lost any movable or has been unlawfully deprived thereof, may recover
it from the person in possession of the same.
ANALYSIS:
Article 541 of the Civil Code, which provides: 'A possessor in the concept of owner has
in his favor the legal presumption that he possesses with a just title and he cannot be
obliged to show or prove it." She would accord to it a greater legal significance than that
to which under the controlling doctrines it is entitled. The brief for respondents did
clearly point out why petitioner's assertion is lacking in support not only from the cases
but even from commentators. Thus: "Actually, even under the first clause, possession in
good faith does not really amount to title, for the reason that Art. 1132 of the Code
provides for a period of acquisitive prescription for movables through `uninterrupted
possession for four years in good faith'
Article 559 assumes that possessor is as yet not the owner; for it is obvious that where the
possessor has come to acquire indefeasible title by, let us say, adverse possession for the
necessary period, no proof of loss or illegal deprivation could avail the former owner of

the chattel. He would no longer be entitled to recover it under any condition.

CONCLUSION:
The right of the owner to recover personal property acquired in good faith by another, is
based on his being dispossessed without his consent. The common law principle that
where one of two innocent persons must suffer by a fraud perpetrated by the another, the
law imposes the loss upon the party who, by his misplaced confidence, has enabled the
fraud to be committed, cannot be applied in a case which is covered by an express
provision of the new Civil Code, specifically Article 559. Between a common law
principle and statutory provision, the latter must prevail in this jurisdiction.
G.R. No. L-30817
September 29, 1972
DOMINADOR DIZON, doing business under the firm name "Pawnshop of
Dominador Dizon", petitioner, vs. LOURDES G. SUNTAY, respondent.
FACTS OF THE CASE:
Respondent is the owner of a three-carat diamond ring valued at P5,500.00.
In June 1962, the Respondent and Clarita R. Sison entered into a transaction wherein
respondent's ring was delivered to Clarita R. Sison for sale on commission. Upon
receiving the ring, Clarita R. Sison executed and delivered to respondent the
receipt ... . respondent had already previously known Clarita R. Sison as the latter is a
close friend of respondent's cousin and they had frequently met each other at the
place of respondent's said cousin.
In fact, about one year before their transaction of June 1962 took place, Clarita R.
Sison received a piece of jewelry from respondent to be sold for P500.00, and when
it was sold, Sison gave the price to respondent.
After the lapse of a considerable time without Sison having returned to respondent
the latter's ring, respondent made demands on Sison for the return of her ring but the
latter could not comply with the demands because, without the knowledge of
respondent, three days after the ring above-mentioned was received by Clarita R.
Sison from respondent, said ring was pledged by Melia Sison, niece of the husband
of Clarita R. Sison, evidently in connivance with the latter, with the defendant's
pawnshop for P2,600.00 ... ."
Then came this portion of the decision under review: "Since respondent insistently
demanded from Sison the return of her ring, the latter finally delivered to the former
the pawnshop ticket ... which is the receipt of the pledge with the defendant's
pawnshop of respondent's ring. When respondent found out that Sison pledged, she
took steps to file a case of estafa against the latter with the fiscal's office.
Subsequently thereafter, respondent, through her lawyer, wrote a letter to the
defendant asking for the delivery to respondent of her ring pledged with defendant's
pawnshop. Since the defendant refused to return the ring, respondent filed the present
action with the Court of First Instance of Manila for the recovery of said ring.
Respondent asked for the provisional remedy of replevin by the delivery of the ring
to her, upon her filing the requisite bond, pending the final determination of the
action.
The lower court issued the writ of replevin prayed for by respondent and the latter
was able to take possession of the ring during the pendency of the action upon her

filing the requisite bond." It was then noted that the lower court rendered judgment
declaring that respondent, now respondent Suntay, had the right to the possession of
the ring in question. Petitioner Dizon, as defendant, sought to have the judgment
reversed by the Court of Appeals. It did him no good. The CA affirmed the decision
of the lower court.
ISSUES:
Whether or not respondent has the right to the possession of the ring in question?
RULING:
YES. Respondent having been unlawfully deprived of the diamond ring in question, was
entitled to recover it from petitioner who was found in possession of the same.
ANALYSIS:
"The controlling provision is Article 559 of the Civil Code. It reads thus: 'The possession
of movable property acquired in good faith is equivalent to a title. Nevertheless, one who
has lost any movable or has been unlawfully deprived thereof may recover it from the
person in possession of the same. If the possessor of a movable lost of which the owner
has been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor.'
Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring
in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the law allows is when there is
acquisition in good faith of the possessor at a public sale, in which case the owner cannot
obtain its return without reimbursing the price. As authoritatively interpreted in Cruz v.
Pahati, the right of the owner cannot be defeated even by proof that there was good faith
in the acquisition by the possessor.
CONCLUSION:
The right of the owner to recover personal property acquired in good faith by another, is
based on his being dispossessed without his consent. The common law principle that
were one of two innocent persons must suffer by a fraud perpetrated by another, the law
imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud
to be committed, cannot be applied in a case which is covered by an express provision of
the new Civil Code, specifically Article 559. Between a common law principle and a
statutory provision, the latter must prevail in this jurisdiction.
G.R. No. 86051
September 1, 1992
JAIME LEDESMA, Petitioner, v. THE HONORABLE COURT OF APPEALS and
CITIWIDE MOTORS, INC., Respondents.
FACTS OF THE CASE:
On September 1977, a person representing himself to be Jojo Consunji, purchased
purportedly for his father, from a certain Rustico T. Consunji, two (2) brand new
motor vehicles from plaintiff-appellant Citiwide Motors, Inc.,
Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively.

 On the following day, plaintiff-appellant delivered the motor vehicles to the person
who represented himself as Jojo Consunji, allegedly the son of the purported buyers
Rustico T. Consunji, and said person in turn issued to plaintiff-appellant Managers
Check of the Philippine Commercial and Industrial Bank for the amount of
P101,000.00 as full payment for the value of the two (2) motor vehicles.
However, when plaintiff-appellant deposited the said check, it was dishonored by the
bank on the ground that it was tampered with, the correct amount of P101.00 having
been raised to P101,000.00 per the banks notice of dishonor.
In September 1977, plaintiff-appellant reported to the Philippine Constabulary the
criminal act perpetrated by the person who misrepresented himself as Jojo Consunji
and in the course of the investigation, plaintiff-appellant learned that the real identity
of the wrongdoer/impostor is Armando Suarez who has a long line of criminal cases
against him for estafa using this similar modus operandi.
In October 1977, plaintiff-appellant was able to recover the Holden Premier vehicle
which was found abandoned somewhere in Quezon City.
On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was
transferred by Armando Suarez to third person and was in the possession of one
Jaime Ledesma at the time plaintiff-appellant instituted this action for replevin.
In his defense, Jaime Ledesma claims that he purchased and paid for the subject
vehicle in good faith from its registered owner, Pedro Neyra, as evidenced by the
Land Transportation Commission Registration Certificate No. RCO1427249.
After posting the necessary bond in the amount double the value of the subject motor
vehicle, plaintiff-appellant was able to recover possession of the 1977 Isuzu Gemini.
After trial on the merits, the lower court rendered the decision and subsequently
issued the Final Order both earlier adverted to, which plaintiff (private respondent
herein) appealed to the respondent Court of Appeals
ISSUES:
Whether or not private respondent was unlawfully deprived of the cars when it sold the
same to Rustico Consunji, through a person who claimed to be Jojo Consunji, allegedly
the latters son, but who nevertheless turned out to be Armando Suarez, on the faith of a
Managers Check with a face value of P101,000.00, dishonored for being altered, the
correct amount being only P101.00?
RULING:
NO. The subsequent dishonor of the check because of the alteration merely amounted to a
failure of consideration which does not render the contract of sale void, but merely allows
the prejudiced party to sue for specific performance or rescission of the contract, and to
prosecute the impostor for estafa under Article 315 of the Revised Penal Code.
ANALYSIS:
There was a perfected unconditional contract of sale between private respondent and the
original vendee. The former voluntarily caused the transfer of the certificate of
registration of the vehicle in the name of the first vendee even if the said vendee was
represented by someone who used a fictitious name and likewise voluntarily delivered
the cars and the certificate of registration to the vendees alleged representative Title

thereto was forthwith transferred to the vendee.

It is clear from the above provisions, particularly the last one quoted, that ownership in
the thing sold shall not pass to the buyer until full payment of the purchase price only if
there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass
from the vendor to the vendee upon the actual or constructive delivery of the thing sold
even if the purchase price has not yet been paid.
CONCLUSION:
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer ownership to the buyer who can
in turn transfer it to another."
The failure of the buyer to make good the price does not, in law, cause the ownership to
revest in the seller until and unless the bilateral contract of sale is first rescinded or
resolved pursuant to Article 1191 of the new Civil Code.
G.R. No. L-11977
April 29, 1959
LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO,
petitioner, vs. VICTOR EUSEBIO, respondent.
FACTS OF THE CASE:
Respondent and petitioners had a dispute over the possession of a certain parcel of
public land in the year 1954. Victor Eusebio filed a lease application for a parcel of
land known as lot No. 3807, containing an area of about 349 hectares. A portion
thereof was occupied by petitioners under a homestead application. The conflict
between the lessee and the homesteaders was ordered to be investigated by the
Director of Lands and again by the Secretary of Agriculture and Natural Resources.
Before the dispute could be settled, Victor Eusebio filed a complaint in the CFI of
Nueva Ecija, alleging that he had acquired a big parcel of land, 349 hectares in area,
by lease from the Bureau of Lands; that while he was in possession thereof
defendants occupied a portion, known as lot No. 2807, containing an area of 6
hectares more or less. He, therefore, prayed that defendants be ordered to vacate the
six hectares occupied by them and pay damages.
Defendant Leonardo Azarcon answered the complaint alleging that he is in actual
possession of a portion of 24 hectares since 1941 by virtue of a homestead
application; that the lease application of plaintiff is subsequent to said homestead
application of Leonardo Azarcon; that Azarcon had occupied the land since 1941
with interruption during the war and again in 1950 up to the time of the filing of the
action. He, therefore, prayed that the action be dismissed.
The defendants were declared in default. A motion to set aside the default was
denied, and a judgment by default was entered by the court. It ordered defendants to
restore possession of the land to plaintiff. Having failed to obtain a reconsideration of
the above decision, defendants appealed to the Court of Appeals.
While the case was pending in the Court of Appeals, a writ for the execution of the
judgment of the lower court was issued. Various petitions were submitted by the

parties, and among them was that of defendants-appellants asking for the lifting of
the writ of execution. This petition and the court again fixed the supersedeas bond to
stay execution in the amount of P1,000 to be filed with and approved by the Court of
First Instance of Nueva Ecija as to its sufficiency. In the same order, the Court of
Appeals denied a petition of the plaintiff-appellee to file a counter-supersedeas bond
as well as plaintiff appellee's motion for injunction.
The Court of Appeals on motion of plaintiff, reconsidered its order or resolution
authorizing the stay of execution upon the filing of bond by the defendantsappellants, on the ground that the defendants-appellants have not filed any
supersedeas bond as required. The Court of Appeals denied a petition of defendantsappellants to reconsider said order on the ground that the writ of execution had
already been executed.
In spite of the receipt by the defendants of the notice of the writ of execution, which
commanded defendants "to forthwith remove from said premises and that plaintiff
have restitution of the same," defendants-appellants nevertheless entered the land to
gather palay which was then pending harvest. The rice found on the disputed land at
the time of the service of the order of execution had been planted by defendantsappellants, who appear to have been in possession of the land from 1951. While the
court order of October 3, 1955 ordered the defendant-appellant to move out from the
premises, it did not prohibit them from gathering the crop then existing thereon.
ISSUES:
Whether or not the petitioners who is in possession and who is being ordered to leave a
parcel of land while products thereon are pending harvest be entitled of the harvest?
RULING:
YES. If at the time the good faith ceases, there should be any natural or industrial fruits,
the possessor shall have a right to a part of the expenses of cultivation, and to a part of the
net harvest, both in proportion to the time of the possession.
ANALYSIS:
As the order of execution did not expressly prohibit the defendants-appellants from
gathering the pending fruits, which fruits were the result of their possession and
cultivation of the land, it cannot be said that the defendants-appellants committed an act
which is clear violation of the courts' order. Besides, the defendants-appellants had
presented, after receipt of the order of execution, a motion to set aside the said order of
execution, and this motion to stay execution was granted. Defendants furthermore
presented a bond in accordance with the order of the court and had it approved by the
Court of First Instance. It was perhaps in expectation of this resolution of the court setting
aside the order of execution that defendants-appellants may have felt justified in entering
the land and harvesting the fruits existing thereon.
A person who has been ordered to leave certain premises is ordinarily not prohibited from
taking with him his own effects and possession, unless there is an express prohibition to
this effect. No such, prohibition was contained in the order for the defendants to leave the
land. There may have been a technical violation of an order not to enter the premises, but

not of one prohibiting them from removing anything therefrom. Such technical violation
of the order cannot be considered as one amounting to a defiance of the court's authority,
punishable as contempt..
CONCLUSION:
Under the law a person who is in possession and who is being ordered to leave a parcel of
land while products thereon are pending harvest, has the right to a part of the net harvest,
as expressly provided by Article 545 of the Civil Code.
G.R. No. L-36789
July 25, 1983
FELIPA CORDERO (Deceased) MAURO OCAMPO, CASIMIRO OCAMPO and
ELISEA OCAMPO, petitioners, vs. VICTORIA P. CABRAL, ALEJANDRO
BERBOSO, DALMACIO MONTAOS and HONORABLE COURT OF APPEALS,
respondents.
FACTS OF THE CASE:
Mr. Gregorio Z. Ocampo, husband of plaintiff Felipa Cordero and father of the other
plaintiffs surnamed Ocampo, died leaving several properties, which were inherited
by the plaintiffs, one of which is the land in litigation situated in the barrio of
Saluysoy, Municipality of Meycauayan containing an area of 78,181 sq.m. more or
less. with TCT No. 14513 in the name of Gregorio Z. Ocampo and Tax Declaration
No assessed at P4,290.00.
The said land was originally registered in accordance with the Land Registration Act
in the name of Mr. Gregorio Z. Ocampo;
After the death of the said Mr. Gregorio Z. Ocampo the plaintiffs herein took
possession of the properties left by him, among others is the afore-described parcel of
land which is a riceland, but found out that the southern portion of the same with an
area 4,303 square meters, more or less, upon verification, was possessed by
defendants Victoria P. Cabral, Alejandro Berboso and Dalmacio Montaos and that
defendant Victoria P. Cabral claimed to be the owner of said portion while her codefendants co-possessed the same as her tenants;
The plaintiffs demanded of the defendants to surrender to the former possession of
the afore-mentioned portion of land and/or vacate it but they refused and failed to do
so, and the defendant Victoria P. Cabral continued claiming to be the owner of the
same while her co-defendants continued recognizing her as the owner thereof instead
of the plaintiffs;
The plaintiffs had the afore-described parcel of land (with T.C.T. No. 14513)
relocated in the presence of the defendants' representatives and it was found and/or
determined that the afore-said portion of land with the area of 4,303 square meters,
more or less, was a part of the plaintiffs' land with T.C.T. No. 14513;
Yet even after the said relocation the defendant Victoria P. Cabral persisted and still
persist in her claim of ownership over the said portion and her co-defendants
persisted and still persist in recognizing her as the owner thereof instead of the
plaintiffs;
Because of the defendants' refusal to recognize plaintiffs' ownership over the
aforementioned portion of land and their refusal and failure to surrender and/or
vacate the same, the plaintiffs filed a complaint before the trial court. The trial court

dismissed the complaint which the CA affirmed.

ISSUES:
Whether or not the petitioner is the rightful owner of the disputed portion of land as heirs
of Gregorio Ocampo who has the land title registered in his name?
RULING:
YES. The disputed land is included in T.C.T. No. 14513 issued to Gregorio Z. Ocampo,
the predecessor of the plaintiffs. SC ordered the defendants to vacate and surrender the
land in question to the plaintiffs and to account for the fruits thereof pursuant to Article
549 of the Civil Code from the service of the summons.
ANALYSIS:
The defendants, by their own admission, are in possession of the disputed land. There is
no evidence that they were possessors in bad faith. However, their good faith ceased
when they were served with summons to answer the complaint. As possessors in bad faith
from the service of the summons they "shall reimburse the fruits received and those
which the legitimate possessor could have received, ... (Art. 549, Civil Code.)
CONCLUSION:
The fact is that the defendant Victoria P. Cabral or any of her predecessors in interest did
not sincerely and honestly believe that they were the owners of this portion of property.
In fact they did not have and do not have any kind of title or any kind of document, either
public or private, over this property and they did not even have this property declared in
their names for taxation purposes.
G.R. No. L-62943
July 14, 1986
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs.
COURT OF APPEALS (Now INTERMEDIATE APPELLATE COURT) and THE
PHILIPPINE NATIONAL BANK, respondents.
FACTS OF THE CASE:
Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS) is
a government owned and controlled corporation created under Republic Act No.
6234 as the successor-in- interest of the defunct NWSA. The Philippine National
Bank, on the other hand, is the depository bank of MWSS and its predecessor-ininterest NWSA. Among the several accounts of NWSA with PNB is NWSA Account
No. 6, otherwise known as Account No. 381-777 and which is presently allocated
No. 010-500281. The authorized signature for said Account No. 6 were those of
MWSS treasurer Jose Sanchez, its auditor Pedro Aguilar, and its acting General
Manager Victor L. Recio. Their respective specimen signatures were submitted by
the MWSS to and on file with the PNB. By special arrangement with the PNB, the
MWSS used personalized checks in drawing from this account. These checks were
printed for MWSS by its printer, F. Mesina Enterprises, located at 1775 Rizal
Extension, Caloocan City.
During the months of March, April and May 1969, twenty-three (23) checks were
prepared, processed, issued and released by NWSA, all of which were paid and

cleared by PNB and debited by PNB against NWSA Account No. 6

During the same months of March, April and May 1969, twenty-three (23) checks
bearing the same numbers as the aforementioned NWSA checks were likewise paid
and cleared by PNB and debited against NWSA Account No. 6
The foregoing checks were deposited by the payees Raul Dizon, Arturo Sison and
Antonio Mendoza in their respective current accounts with the Philippine
Commercial and Industrial Bank (PCIB) and Philippine Bank of Commerce (PBC) in
the months of March, April and May 1969. Thru the Central Bank Clearing, these
checks were presented for payment by PBC and PCIB to the defendant PNB, and
paid, also in the months of March, April and May 1969. At the time of their
presentation to PNB these checks bear the standard indorsement which reads 'all
prior indorsement and/or lack of endorsement guaranteed.'
Subsequent investigation however, conducted by the NBI showed that Raul Dizon,
Arturo Sison and Antonio Mendoza were all fictitious persons.
In June 1969, NWSA addressed a letter to PNB requesting the immediate restoration
to its Account No. 6, of the total sum of P3,457,903.00 corresponding to the total
amount of these twenty-three (23) checks claimed by NWSA to be forged and/or
spurious checks. "In view of the refusal of PNB to credit back to Account No. 6 the
said total sum MWSS filed the instant complaint before the Court of First Instance of
Manila.
In its answer, PNB contended among others, that the checks in question were regular
on its face in all respects, including the genuineness of the signatures of authorized
NWSA signing officers and there was nothing on its face that could have aroused any
suspicion as to its genuineness and due execution and; that NWSA was guilty of
negligence which was the proximate cause of the loss.
PNB also filed a third party complaint against the negotiating banks PBC and PCIB
on the ground that they failed to ascertain the Identity of the payees and their title to
the checks which were deposited in the respective new accounts of the payees with
them.
The Court of First Instance of Manila rendered judgment in favor of the MWSS.
The respondent Court of Appeals, now Intermediate Appellate Court, reversed the
decision of the Court of First Instance and dismissed the plaintiff's complaint, the
third party complaint, as well as the defendant's counterclaim.

ISSUES:
Whether or not the total sum of P3,457,903.00 corresponding to the total amount of
twenty-three (23) checks claimed by NWSA should be returned to Petitioner, NWSA?
RULING:
NO. SC concluded that it cannot fault the respondent drawee Bank for not having
detected the fraudulent encashment of the checks because the printing of the petitioner's
personalized checks was not done under the supervision and control of the Bank. There is
no evidence on record indicating that because of this private printing the petitioner
furnished the respondent Bank with samples of checks, pens, and inks or took other
precautionary measures with the PNB to safeguard its interests.

ANALYSIS:
Relying on the foregoing statement of Mr. Ongtengco, the National Bureau of
Investigation concluded in its Report dated November 2, 1970 that the fraudulent
encashment of the twenty-three (23)cheeks in question was an "inside job". ThusWe have all the reasons to believe that this fraudulent act was an inside job or one pulled
with inside connivance at NAWASA. As pointed earlier in this report, the serial numbers
of these checks in question conform with the numbers in current use of NAWASA, aside
from the fact that these fraudulent checks were found to be of the same kind and design
as that of NAWASA's own checks. While knowledge as to such facts may be obtained
through the possession of a NAWASA check of current issue, an outsider without
information from the inside can not possibly pinpoint which of NAWASA's various
accounts has sufficient balance to cover all these fraudulent checks. None of these
checks, it should be noted, was dishonored for insufficiency of funds. . .
Even if the twenty-three (23) checks in question are considered forgeries, considering the
petitioner's gross negligence, it is barred from setting up the defense of forgery under
Section 23 of the Negotiable Instruments Law.The records show that the respondent
drawee bank, had taken the necessary measures in the detection of forged checks and the
prevention of their fraudulent encashment. In fact, long before the encashment of the
twenty-three (23) checks in question, the respondent Bank had issued constant reminders
to all Current Account Bookkeepers informing them of the activities of forgery
syndicates.
CONCLUSION:
Under the circumstances, therefore, the petitioner was in a better position to detect and
prevent the fraudulent encashment of its checks.
G.R. No. L-28721
October 5, 1928
MARTIN MENDOZA and NATALIO ENRIQUEZ, plaintiffs-appellees, vs .
MANUEL DE GUZMAN, defendant-appellant. MAX B. SOLIS, intervenor-appellant.
FACTS OF THE CASE:
In the cadastral proceedings of the municipality of Sariaya, Tayabas, the piece of land
was identified as lot No. 687. In the decision rendered in the cadastral case, this lot
was adjudicated in favor of Martin Mendoza and Natalio Enriquez in equal parts pro
indiviso subject to the right of retention on the part of Manuel de Guzman until he
shall have been indemnified for the improvements existing on the land.
By virtue of this judgment, De Guzman presented a motion requesting the issuance
of a writ of possession for lot No. 687 in his favor which was granted on June 25,
1924. From the time Leandra Solis and Bernardo Solis, as well as Manuel de
Guzman who was working on the land, were ejected therefrom, Martin Mendoza
possessed it until June 25, 1924, when de Guzman obtained the writ of possession
above- mentioned. Since then De Guzman has had dominion over the land.
Being unable to come to an agreement as to the amount which should be allowed for
the improvements made on the land, Martin Mendoza and Natalio Enriquez began an
action requesting the court.

 Being unable to come to an agreement as to the amount which should be allowed for
the improvements made on the land, Martin Mendoza and Natalio Enriquez began an
action requesting the court to (a) fix the value of the necessary and useful expenses
incurred by Manuel de Guzman in introducing the improvements; (b) require the
defendant to render an accounting of the fruits received by him and order that the
value of the fruits be applied to the payment of the necessary and useful expenses;
and (c) decree the restitution of the possession to the plaintiffs. To the complaint, the
defendant filed an answer in the form of a general denial with special defenses and
appended a counter-claim and cross complaint, in which a total of P6,000 was asked.
During the pendency of the case, Bernardo Solis, or Max. B. Solis, one of the persons
who was ejected from the land, asked leave to intervene, alleging, among other
things, that De Guzman, in consideration of the sum of P5,000, had transferred all his
rights in the improvements and in the lot to him with the exception of two hundred
coconut trees. This petition was granted by the trial court.
At the trial which followed and at the instance of the parties, two commissioners
were appointed with instructions to inspect the land and to count the number of
coconut trees planted thereon, determining the number of fruit-bearing trees and
those that are not fruit-bearing as well as the condition of the same. After trial, Judge
of First Instance Gloria rendered judgment declaring (a) that the defendant Manuel
de Guzman and the intervenor Bernardo Solis have the right to collect from the
plaintiffs Martin Mendoza and Natalio Enriquez the sum of P2,046 as compensation
for the necessary and useful expenditures in the proportion of 20 per cent for Manuel
de Guzman and 80 per cent for Bernardo Solis; and (b) that Manuel de Guzman and
Bernardo Solis are obliged to pay to the plaintiffs the sum of P666.93 per annum
from June 25, 1924, one-fifth of this amount to be paid by Manuel de Guzman and
the other four-fifths by Bernardo Solis. As on the date when this judgment was
rendered, that is on September 23, 1927, the amount that the plaintiffs were required
to pay to the defendant and intervenor exceeded the amount that the latter were to
pay the former, the defendant and intervenor were ordered to deliver the land and its
improvement as soon as the plaintiffs have paid the difference, without
pronouncement as to cost.
ISSUE:
WON the trial court declared the amount be paid as Indemnizacion in the form of
necessary and useful expenditures incurred by the defendant?
RULING:
Yes. Under Article 361 of the Civil Code in the original Spanish text uses the word
"indemnizacion." However one may speculate as to the true meaning of the term
"indemnizacion" whether correctly translated as "compensation" or "indemnity," the
amount of the "indemnizacion" is the amount of the expenditures mentioned in articles
453 and 454 of the Civil Code, which in the present case is the amount of the necessary
and useful expenditures incurred by the defendant.
ANALYSIS:
On November 6, 1916, Leandra Solis and her husband Bernardo Solis brought an action

in the Court of First Instance of Tayabas against Martin Mendoza for the recovery of a
certain piece of land. Judgment was rendered in that case absolving Mendoza from the
complaint, and this judgment was subsequently affirmed by the Supreme Court. 1 When
the case was remanded to the court of origin, the trial judge issued an order requiring the
provincial sheriff immediately to dissolve the preliminary writ of injunction and to put
Mendoza in the possession of the land. By virtue of this order, Mendoza was in fact put in
possession of the property.
CONCLUSION:
Necessary expenses have been variously described by the Spanish commentators as those
made for the preservation of the thing, as those without which the thing would deteriorate
or be lost; as those that augment the income of the things upon which they are expanded.
Among the necessary expenditures are those incurred for cultivation, production, upkeep,
etc.
Here, the plaintiffs have chosen to take the improvements introduced on the land and are
disposed to pay the amount of the necessary and useful expenses incurred by the
defendant. Inasmuch as the retentionist, who is not exactly a posessor in good faith with
in the meaning of the law, seeks to be reimbursed for the necessary and useful
expenditures, it is only just that he should account to the owners of the estate for any
rents, fruits, or crops he has gathered from it.
G.R. No. L-16736
December 22, 1921
EVARISTA ROBLES and her husband ENRIQUE MARTIN, plaintiffs-appellees, vs.
LIZARRAGA HERMANOS, defendants-appellant.
-------------------------------------G.R. No. L-16661
December 22, 1921
SOCIEDAD LIZARRAGA HERMANOS, plaintiff-appellee, vs. EVARISTA
ROBLES DE MARTIN and ENRIQUE MARTIN, defendants-appellants.
-------------------------------------G.R. No. L-16662
December 22, 1921
EVARISTA ROBLES and her husband ENRIQUE MARTIN, plaintiff-appellants, vs.
LIZARRAGA HERMANOS and THE REGISTER OF DEEDS OF ILOILO,
defendants-appellees.
FACTS OF THE CASE:
Anastasia de la Rama died on October, 1916, leaving six children, to wit, Magdalena,
Jose, Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and some
properties, among which is house No. 4 on Iznart Street in the city of Iloilo,
concerning which a controversy arose.
The children and heirs of Anastasia de la Rama entered into partnership with
Lizarraga Hermanos in liquidation and settlement of their accounts, by virtue of
which the competent court awarded to said partnership the properties left by the
deceased, including the aforesaid house No. 4 on Iznart Street.
Evarista Robles, one of the aforesaid heirs, since before the death of her mother
Anastasia de la Rama, has been with her husband occupying the aforesaid house No.
4 on Iznart Street, at the beginning, by permission of her mother, later on by the

consent of her coheirs, and lastly by agreement with the partnership, Lizarraga
Hermanos, to whom it had been awarded, having made some improvements on the
house, the value of which is fixed at four thousand five hundred pesos (P4,500), and
paying to said partnership forty pesos (P40) monthly as rent of the upper story.
In March 1918, Lizarraga Hermanos notified Evarista Robles that beginning April
the rent of the upper story of the house would be raised to sixty pesos (P60) a month,
and that, if she did not agree to the new rate of rent, she might vacate the house.
Evarista Robles refused to pay such a new rate of rent and to vacate the house, and
Lizarraga Hermanos brought suit against her for ejectment. Evarista Robles sued
Lizarraga Hermanos afterwards to recover the value of the improvements, and
demanded, in another action, that said value be noted on the certificate of title as an
encumbrance.
Evarista Robles contends that the understanding with Lizarraga Hermanos by virtue
of which she continued to occupy the house and made the improvements, was a
contract whereby it was agreed to sell her the said building on Iznart Street, the deed
of sale to be executed as soon as the title deeds of the property were transferred to the
name of said partnership; that by virtue of this contract she remained in the
occupation of the building and made the improvements; that, as one of the
stipulations in the contract of sale of the estate, Evarista Robles assumed the liability
of an encumbrance of fourteen thousand pesos (P14,000) on the estate and another
one in favor of the Agricultural Bank and its successor, the National Bank, paying the
interest thereon as well as the land tax and the premiums of the five insurance, all of
which payments were made through the same firm of Lizarraga Hermanos who, as a
result of the liquidation of accounts, held funds in their possession.
It should here be noted that Evarista Robles does not seek the execution of the proper
instrument of evidence this contract of sale, nor the performance thereof. She only
claims the cost of the improvements made at her expense and that this be recorded in
the corresponding certificate of title.
While the firm of Lizarraga Hermanos does not question that fact that said
improvements have been made and that their value amounts to four thousand five
hundred pesos (P4,500), it denies, however, having entered into any agreement with
Evarista Robles for the sale of the building in question.
In deciding the case of this court, the court a quo found such a verbal contract of sale
to have been proven not only by, which leads to such a conclusion, but by the oral
evidence, which, in its opinion, had a preponderance in favor thereof, and by the
corroborative evidence consisting in the fact of Lizarraga Hermanos having executed
the deed of sale of the warehouse. This firm questions the right of Evarista Robles to
the improvements under consideration.

ISSUES:
Whether or not Evarista Robles is the owner of the aforesaid improvements and has the
right to demand payment of their value (case No. 16736)?
Whether or not Evarista Robles has any right to retain the building until the said value is
paid to her (case No. 16661)?
Whether or not a note for the four thousand five hundred pesos (P4,500), the value of the
above-mentioned improvements, as an encumbrance on this estate (case No. 16662),

should be made on the title deeds thereof?

RULING:
SC set out the following judgment:
1. That Lizarraga Hermanos pay to the spouses Evarista Robles and Enrique Martin the
sum of four thousand five hundred pesos (P4,500), the value of the improvements
referred to in these cases, with right on the part of said spouses to retain the building in
question until the payment hereby ordered is made.
2. That said spouses Evarista Robles and Enrique Martin vacate the aforesaid building
immediately after the receipt, or the legal tender, of the payment hereby decreed.
3. That the said spouses Evarista Robles and Enrique Martin pay to Lizarraga Hermanos a
compensation for the occupation of the building at the rate of forty pesos (P40) a month,
beginning with the month of April, 1918, until they vacate the aforesaid building as it is
ordered herein.
4. That upon payment of his lawful fees, the register of deeds note said right of retention
on the back of the transfer certificate No. 526 issued in favor of Lizarraga Hermanos, or
of any other certificate standing in lieu thereof, concerning the said building, which note
will remain in force until the payment of the aforesaid improvements is made as above
ordered. Without pronouncement as to the costs in this instance, so ordered.
ANALYSIS:
There existed a contract of sale of this building executed by Lizarraga Hermanos in favor
of Evarista Robles about November 1916, the performance of which is not, however,
sought to be enforced, nor would it be enforceable if the evidence offered in the action
instituted for the purpose be not the document itself of the sale, or a memorandum
thereof, signed by the party bound by the contract and required in the action to fulfill it,
and objection be made to said evidence, as was done here.
The possession of these spouses was in no way begun by virtue of any lease whatever,
since it is not disputed, and is a proven fact, that they came to occupy the building by
permission of the mother of Evarista Robles. Upon said mother's death, the continued to
occupy the property by the consent of the coheirs. After the assignment of the property of
Lizarraga Hermanos was concluded, but before the title deeds were transferred to the
name of this partnership, an agreement was made for the sale of the building to Evarista
Robles and her husband, the latter agreeing in the meantime to pay to Lizarraga
Hermanos a certain sum per month forty pesos (P40) by way of compensation for
the occupation of the building until the execution of the deed of sale in favor of the
occupants.
CONCLUSION:
If the improvements are useful and Evarista Robles' possession was in good faith, the
conclusion set out in article 453 of the Civil Code, is inevitable; Evarista Robles is the
owner of such improvements, and entitled to reimbursement therefor, and to retain the
building until the same is made.

It is a fact that the value of the improvements in question has not as yet been paid by
Lizarraga Hermanos. Wherefore, if Evarista Robles and her husband are entitled to retain
the building until the value of such improvements is paid them, Lizarraga Hermanos have
not yet any right to oust them from the building, nor, therefore, to be indemnified for any
damages caused by the refusal of the plaintiffs found on their legitimate rights.
It being a burden on the building to the extent of being inseparably attached to the
possession thereof, this right of retention must necessarily be a real one. If so, as we
regard, and find, it to be, it is but just that such an encumbrance should be noted on the
transfer certificate No. 526 issued by the register of deeds of Iloilo in favor of Lizarraga
Hermanos, or on any substitute thereof.