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Art. 712. Ownership is acquired by occupation and by intellectual creation.

Ownership and other real rights over property are acquired and transmitted by law, by donation, by estate and
intestate succession, and in consequence of certain contracts, by tradition.

They may also be acquired by means of prescription. (609a)

Art. 609. Should the thing in usufruct be expropriated for public use, the owner shall be obliged either to replace it
with another thing of the same value and of similar conditions, or to pay the usufructuary the legal interest on the
amount of the indemnity for the whole period of the usufruct. If the owner chooses the latter alternative, he shall give
security for the payment of the interest.

Title I. - OCCUPATION

Art. 713. Things appropriable by nature which are without an owner, such as animals that are the object of hunting
and fishing, hidden treasure and abandoned movables, are acquired by occupation. (610)

Art. 714. The ownership of a piece of land cannot be acquired by occupation. (n)

Art. 715. The right to hunt and to fish is regulated by special laws. (611)

Art. 716. The owner of a swarm of bees shall have a right to pursue them to another's land, indemnifying the
possessor of the latter for the damage. If the owner has not pursued the swarm, or ceases to do so within two
consecutive days, the possessor of the land may occupy or retain the same. The owner of domesticated animals may
also claim them within twenty days to be counted from their occupation by another person. This period having
expired, they shall pertain to him who has caught and kept them. (612a)

Art. 717. Pigeons and fish which from their respective breeding places pass to another pertaining to a different
owner shall belong to the latter, provided they have not been enticed by some article of fraud. (613a)

Art. 718. He who by chance discovers hidden treasure in another's property shall have the right granted him in article
438 of this Code. (614)

Art. 719. Whoever finds a movable, which is not treasure, must return it to its previous possessor. If the latter is
unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has
taken place.

The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best.

If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it
shall be sold at public auction eight days after the publication.

Six months from the publication having elapsed without the owner having appeared, the thing found, or its value,
shall be awarded to the finder. The finder and the owner shall be obliged, as the case may be, to reimburse the
expenses. (615a)

Art. 720. If the owner should appear in time, he shall be obliged to pay, as a reward to the finder, one-tenth of the
sum or of the price of the thing found. (616a)

Cariño vs Insular Government, 41 Phil 935


Posted by Pius Morados on November 21, 2011

(Land Titles and Deeds – Native Title)

Facts: An Igorot applied for the registration of a certain land. He and his ancestors had held the land as owners for
more than 50 years, which he inherited under Igorot customs. There was no document of title issued for the land
when he applied for registration. The government contends that the land in question belonged to the state. Under
the Spanish Law, all lands belonged to the Spanish Crown except those with permit private titles. Moreover, there is
no prescription against the Crown.

Issue: WON the land in question belonged to the Spanish Crown under the Regalian Doctrine.

Held: No. Law and justice require that the applicant should be granted title to his land.

The United States Supreme Court, through Justice Holmes declared:

“It might perhaps, be proper and sufficient to say that when, as far as testimony or memory goes, the land has been
held by individuals under a claim of private ownership, it will be presumed to have been held in the same way from
before the Spanish conquest, and never to have been public land.”

There is an existence of native title to land, or ownership of land by Filipinos by virtue of possession under a claim of
ownership since time immemorial and independent of any grant from the Spanish Crown, as an exception to the
theory of jura regalia.

GOLD CREEK MINING CORPORATION v. EULOGIO RODRIGUEZ +

66 Phil. 259

ABAD SANTOS, J.:

This petition seeks to compel the respondents, as Secretary of Agriculture and Commerce and as Director of the
Bureau of Mines, respectively, to approve petitioner's application for patent for a certain mining claim and prepare
the necessary papers in relation thereto, and to forward and submit said papers for the signature of the President of
the Philippines.

The petition alleges that petitioner owns the Nob Fraction mineral claim, situated in the barrio of Gomok,
municipality of Itogon, sub-province of Benguet, Mountain Province, and located on public lands by C L. O'Dowd in
accordance with the provisions of the Act of Congress of July 1, 1902, as amended by the Act of Congress of February
6, 1905, and of Act No. 624 of the Philippine Commission, relative to the location of mining claims; that said claim
was located on January 1929, and the original declaration of location registered in the office of the mining recorder
of Benguet, Mountain Province, on January 7, 1929; that from March 16 to 17,1934, an amended location on the
premises was made, for which an amended declaration of location was registered in the office of the mining recorder
on April 3, 1934; that petitioner by itself and its predecessors in interest, has been in continuous and exclusive
possession of said claim from the date of location thereof; that prior to August 9, 1933, petitioner filed in the office
of the Director of Lands an application for an order of patent survey of said claim, which survey was duly authorized
by the Secretary of Agriculture and Commerce and performed by a mineral land surveyor in the former division of
mines, Bureau of Science, from August 9, 1933, to April 30, 1934, at the expense of petitioner; that the return of the
surveyor, the plat and field notes of the claim and certificate that more than P1,600 worth of labor and
improvements had been expended on said claim, were approved by the Director of the Bureau of Science; that prior
to November 15, 1935, petitioner filed with the mining recorder an application for patent, together with a certificate
showing that more than P1,600, worth of labor and/or improvements had been expended by petitioner upon said
claim, and with the plat and field notes above mentioned; having previously posted a copy of such plat, together with
notice of said application for patent in a conspicuous place upon said claim; and filed a copy of such plat and of such
notice in the office of said mining recorder, as well as an affidavit of two persons that such notice had been duly
posted; that prior to November 15, 1935, the notice of petitioner's application for patent was forwarded by the
mining recorder to the division of mines, so that the latter could order the publication of said notice, as required by
law; that the publication of the said notice was made once a week for a period of sixty days in the "Philippines
Herald," "El Debate," and the Official Gazette, commencing February 13, 1936; that the sum of P113.59 was tendered
to respondents, as payment for the purchase price of said claim, the area of which is 4.5434 hectares; and that
petitioner has requested the respondents, as Secretary of Agriculture and Commerce and as Director of the Bureau
of Mines, respectively, to approve its application for patent, and to prepare the necessary papers relative to the
issuance thereof and to submit such papers for the signature of the President of the Philippines, but the respondents
have failed and refused, and still fail and refuse, to do so.

Petitioner claims that it is entitled, as a matter of right, to the patent applied for, having complied with all the
requisites of the law for the issuance of such patent.

Respondents, in their answer, admit some allegations of the petition and deny others, and, by way of special defense,
allege that "petitioner was not and is not entitled as a matter of right to a patent to the 'Nob Fraction' claim because
the Constitution provides that 'natural resources, with the exception of public agricultural land, shall not be
alienated'; and that the respondents are, not only under no obligation to approve petitioner's application for a patent
to said claim and to prepare the necessary papers in relation thereto, but, also, in duty bound to prevent the issuance
of said patent and the preparation of the aforesaid papers, because they have sworn to support and defend the
Constitution."

This is one of several cases now pending in this court which call for an interpretation, a determination of the meaning
and scope, of section 1 of Article XII of the Constitution, with reference to mining claims. The cases have been
instituted as test cases, with a view to determining the status, under the Constitution and the Mining Act (Common
wealthy Act No. 137), of the holders of unpatented mining claims which were located under the provisions of the Act
of Congress of July 1, 1902, as amended.

In view of the importance of the matter, we deem it conducive to the public interest to meet squarely the
fundamental question presented, disregarding for that purpose certain discrepancies found in the "pleadings filed in
this case. This is in accord with the view expressed by the Solicitor-General in his memorandum where he says that
"the statements of facts in both briefs of the petitioners may be accepted for the purpose of the legal issues raised.
We deny some of the allegations in the petitions and allege new ones in our answers, but these discrepancies are not
of such a nature or importance as should necessitate introduction of evidence before the cases are submitted for
decision. From our view of the cases, these may be submitted on the facts averred in the complaints, leaving out the
difference between the allegations in the pleadings to be adjusted or ironed out by the parties later, which, we are
confident, can be accomplished without much difficulty."

Section 1 of Article XII of the Constitution reads as follows:

"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, and other natural resources of the Philippines belong to the State,
and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to
corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any
existing right, grant, lease, or concession at the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license,
concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted
for a period exceeding twenty-five years, renewable for another twenty-five years, "except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant."

The fundamental principle of constitutional construction is to give effect to the intent of the framers of the organic
law and of the people adopting it. The intention to which force is to be given is that which is embodied and expressed
in the constitutional provisions themselves. It is clear that the foregoing constitutional provision prohibits the
alienation of natural resources, with the exception of public agricultural land. It seems likewise clear that the term
"natural resources," as used therein, includes mineral lands of the public domain, but not mineral lands which at the
time the provision took effect no longer formed part of the public domain. The reason for this conclusion is found in
the terms of the provision itself. It first declares that all agricultural, timber, and mineral lands of the public domain,
etc., and other natural resources of the Philippines, belong to the State. It then provides that "their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right,
grant, lease, or concession at the time of the inauguration of the Government established under this Constitution."
Next comes the prohibition against the alienation of natural resources. This prohibition is directed against the
alienation of such natural resources as were declared to be the property of the State. And as only "agricultural,
timber, and mineral lands of the public domain" were declared property of the State, it is fair to conclude that
mineral lands which at the time the constitutional provision took effect no longer formed part of the public domain,
do not come within the prohibition.

This brings us to the inquiry of whether the mining claim involved in the present proceeding formed part of the public
domain on November 15, 1935, when the provisions of Article XII of the Constitution became effective in accordance
with section 6 of Article XV thereof. In deciding this point, it should be borne in mind that a constitutional provision
must be presumed to have been framed and adopted in the light and understanding of prior and existing laws and
with reference to them. "Courts are bound to presume that the people adopting a constitution are familiar with the
previous and existing laws upon the subjects to which its provisions relate, and upon which they express their
judgment and opinion in its adoption." (Barry vs. Truax, 13 N. D., 181; 99 N. W., 769; 65 L. R. A., 762.)
It is not disputed that the location of the mining claim under consideration was perfected prior to November 15,
1935, when the Government of the Commonwealth was inaugurated; and according to the laws existing at that time,
as construed and applied by this court in McDaniel vs. Apacible and Cuisia (42 Phil., 749), a valid location of a mining
claim segregated the area from the public domain. Said the court in that case: "The moment the locator discovered a
valuable mineral deposit on the lands located, and perfected his location in accordance with law, the power of the
United States Government to deprive him of the exclusive right to the possession and enjoyment of the located claim
was gone, the lands had become mineral lands and they were exempted from lands that could be granted to any
other person. The reservations of public lands cannot be made so as to include prior mineral perfected locations;
and, of course, if a valid mining location is made upon public lands afterward included in a reservation, such inclusion
or reservation does not affect the validity of the former location. By such location and perfection, the land located is
segregated from the public domain even as against the Government. (Union Oil Co. vs. Smith, 249 U. S., 337; Van
Ness vs. Rooney, 160 Cal., 131; 27 Cyc., 546.)"

The legal effect of a valid location of a mining claim is not only to segregate the area from the public domain, but to
grant to the locator the beneficial ownership of the claim and the right to a patent therefor upon compliance with
the terms and conditions prescribed by law. "Where there is a valid location of a mining claim, the area becomes
segregated from the public domain and the property of the locator." (St. Louis Mining & Milling Co. vs. Montana
Mining Co., 171 U. S., 650, 655; 43 Law. ed., 320, 322.) "When a location of a mining claim is perfected it has the
effect of a grant by the United States of the right of present and exclusive possession, with the right to the exclusive
enjoyment of all the surface ground as well as of all the minerals within the lines of the claim, except as limited by
the extralateral rights of adjoining locators; and this is the locator's right before as well as after the issuance of the
patent. While a lode locator acquires a vested property right by virtue of his location, made in compliance with the
mining laws, the fee remains in the government until patent issues?' (18 R. C. L., 1152.) In Noyes vs. Mantle (127 U.
S., 348, 351; 32 Law. ed., 168, 170), the court said:

"There is no pretense in this case that the original locators did not comply-with all the requirements of the 1aw in
making the location of the Pay Streak Lode Mining claim, or that the claim was ever abandoned or forfeited. They
were the discoverers of the claim. They marked its boundaries by stakes, so that they could be readily traced. They
posted the required notice, which was duly recorded in compliance with the regulations of the district. They had thus
done all that was necessary under the law for the acquisition of an exclusive right to the possession and enjoyment of
the ground. The claim was thenceforth their property. They needed only a patent of the United States to render their
title perfect, and that they could obtain at any time upon proof what they had done in locating the claim, and of
subsequent expenditures to a specified amount in developing it. Until the patent issued the government held the
title in trust for the locators or their vendees. The ground itself was not afterwards open to sale."

In a recent case decided by the Supreme Court of the United States, it was said:

"The rule is established by innumerable decisions of this court, and of state and lower Federal courts, that when the
location of a mining claim is perfected under the law, it has the effect of a grant by the United States of the right of
present and exclusive possession. The claim is property in the fullest sense of that term; and may be sold,
transferred, mortgaged, and inherited without infringing any right or title of the United States. The right of the owner
is taxable by the state; and is 'real property,' subject to the lien of a judgment recovered against the owner in a state
or territorial court. (Belk vs. Neagher, 104 U. S., 279, 283; 26 L. ed., 735, 737; 1 Mor. Min. Rep., 510; Manuel vs.
Wulff, 152 U. S., 505, 510, 511; 38 L. ed., 532-534; 14, Sup. Ct. Rep., 651; 18 Mor. Min. Rep., 85; Elder vs. Wood, 208
U. S., 226, [317] 232; 52 L. ed., 464, 466; 28 Sup. Ct. Rep., 263; Bradford vs. Morrison, 212 U. S., 389; 53 L. ed., 564;
29 Sup. Ct. Rep., 349.) The owner is not required to purchase the claim or secure patent from the United States; but
so long as he complies with the provisions of the mining laws, his possessory right, for all practical purposes of
ownership, is as good as though secured by patent." (Wilbur vs. United States ex rel. Krushnic, 280 U. S., 306; 74 Law.
ed., 445.)

The Solicitor-General admits in his memorandum that the decision in the McDaniel case is determinative, of the
fundamental question involved in the instant case. But he maintains "that this decision is based on a
misapprehension of the authorities on which the court relied," and that it "is not well founded and should be
abandoned." We do not deem it necessary to belabor this point Whether well-founded or not, the decision in that
case was the law when section 1 of Article XII of the Constitution became effective; and even if we were disposed to
overrule that decision now, our action could not affect rights already fixed under it.

Our conclusion is that, as the mining claim under consideration no longed formed part of the public domain when the
provisions of Article XII of the Constitution became effective, it does not come within the prohibition against the
alienation of natural resources; and the petitioner has the right to a patent therefor upon compliance with the terms
and conditions prescribed by law.

It remains to consider whether mandamus is the proper remedy in this case. In Wilbur vs. United States ex rel.
Krushnic, supra, the Supreme Court of the United States held that "mandamus will lie to compel the Secretary of the
Interior to dispose of an application for a patent for a mining claim on its merits, where his refusal to do so is based
on his misinterpretation of a statute." In the course of its decision the court said: "While the decisions of this court
exhibit a reluctance to direct a writ of mandamus against an executive officer, they recognize the duty to do so by
settled principles of law in some cases. (Lane vs. Hoglund, 244 U. S., 174, 181; 61 L. ed., 1066, 1069; 37 Sup. Ct. Rep.,
552; and case cited.) In Roberts vs. United States (176 U. S., 221, 231; 44 L. ed., 443, 447; 20 Sup. Ct. Rep., 376),
referred to and quoted in the Hoglund case, this court said:

" 'Every statute to some extent requires construction by the public officer whose duties may be denned therein. Such
officer must read the law, and he must therefore, in a certain sense, construe it, in order to form a judgment from its
language what duty he is directed by the statute to perform. But that does not necessarily and in all cases make the
duty of the officer anything other than a purely ministerial one. If the law direct him to perform an act in regard to
which no discretion is committed to him, and which, upon the facts existing, he is bound to perform, then that act is
ministerial, although depending upon a statute which requires, in some degree a construction of its language by the
officer. Unless this be so, the value of this writ is very greatly impaired. Every executive officer whose duty is plainly
devolved upon him by a statute might refuse to perform it, and when his refusal is brought before the court he might
successfully plead that the performance of the duty involved the construction of a statute by him, and therefore it
was not ministerial, and the court would on that account be powerless to give relief. Such a limitation of the powers
of the court, we think, would be most unfortunate, as it would relieve from judicial supervision all executive officers
in the performance of their duties, whenever they should plead that the duty required of them arose upon the
construction of a statute, no matter how plain its language, nor how plainly they violated their duty in refusing to
perform the act required.' "

In the instant case, we are not justified, upon the state of the pleadings, to grant the relief sought by the petitioner.
Considering, however, that the refusal of the respondents to act on the application for a patent on its merits was due
to their misinterpretation of certain constitutional and statutory provisions, following the precedent established by
the Supreme Court of the United States in Wilbur vs. United States ex rel. Krushnic, supra, a writ of mandamus
should issue directing the respondents to dispose of the application for patent on its merits, unaffected by the
prohibition against the alienation of natural resources contained in section 1 of Article XII of the Constitution and in
Commonwealth Act No. 137. So ordered.

Avanceña, C. J., Villa-Real, Imperial, and Diaz, JJ., concur.

CONCURRING IN THE RESULT

LAUREL, J.:

This is a case, as I understand it, of a mining claim whose location was duly perfected under a law of the Congress of
the United States prior to the inauguration of our Commonwealth. This law of the Congress is the Act of July 1, 1902,
the first Congressional legislation that gave us a cherished bill of rights.

I express the opinion that a perfected location of a mining claim is an "existing right" within the purview of section 1,
Article XII, of our Constitution. It is a substantial property right and permits the locator to take all the necessary steps
leading to the issuance of a patent. It is not contingent or expectant because contingency or expectation is neither
property nor property right. It is a legal right in the sense that it is recognized by law and acknowledged by the
Constitution. And recognition implies protection. I must, therefore, reject the suggestion that by the interposition of
the Constitution such a right had been wiped out or frittered away notwithstanding the saving clause therein
contained and now to be referred to.

The saving clause in the section involved of the Constitution was originally embodied in the report submitted by the
Committee on Nationalization and Preservation of Lands and Other Natural Resources to the Constitutional
Convention on September 17, 1934. It was later inserted in the first draft of the Constitution as section 13 of Article
XIII thereof, and finally incorporated as we find it now. Slight have been the changes undergone by the proviso from
the time it came out of committee until it was finally adopted. When first submitted and as inserted in the first draft
of the Constitution it reads: "subject to any right, grant, lease, or concession existing in respect thereto on the date of
the adoption of the Constitution." As finally adopted, the proviso reads: "subject to any existing right, grant, lease, or
concession at the time of the inauguration of the Government established under this Constitution." This recognition
is not mere graciousness but springs from the just character of the government established: The framers of the
Constitution were not obscured by the rhetoric of democracy or swayed to hostility by an intense spirit of
nationalism. They well knew that conservation of our natural resources did not mean destruction or annihilation of
acquired property rights. Withal, they erected a government neither episodic nor stationary but well-nigh
conservative in the protection of property rights. This, notwithstanding nationalistic and socialist traits discoverable
upon even a sudden dip into a variety of the provisions embodied in the instrument.

But while I regard the recognition and protection of the right here invoked inevitable, I feel constrained to withhold
my assent to the invocation of the case of McDaniel vs. Apacible and Cuisia ([1922], 42 Phil., 749), insofar as citation
thereof may imply unqualified acceptance of or adherence to the broad rule that where there is a valid and perfected
location of a mining claim, the area covered is not only thereby segregated from the body of the public domain but
becomes the private property of the locator. My opinion is that while the locator, under the circumstances, secures
the beneficial ownership or the dominium utile, the government retains the bare ownership or the dominium
directum, until the locator's claim ripens tnto full ownership upon full compliance with all the requirements of the
law for the issuance of a patent I, therefore, concur in the result.

DISSENTING

CONCEPCION, J.:

With regret, I have to dissent from the opinion of my learned colleagues in this very important case now under
advisement We are concerned with the correct construction of a constitutional prohibition in a matter directly
related to the conservation of a great portion of our national wealth: the mines.

Because of the refusal of the respondents, the Secretary of Agriculture and Commerce and the Director of the Bureau
of Mines, to approve the application of the petitioner, Gold Creek Mining Company, for the issuance in its favor of
the patent for or title to a mining claim, and to prepare the papers necessary for the issuance of said patent and
submit them for the signature of the President of the Philippines, the petitioner seeks to obtain from this court a writ
of mandamus to compel the respondents to do what they refused to do. Instead of granting or dismissing the
petition, the majority orders the respondents to act on the application, which, they rule, is not affected by the
prohibition against the alienation of natural resources contained in section 1 of Article XII of the Constitution and in
Commonwealth Act No. 137.

This is the first point on which I disagree with the majority, for the reason that, as alleged in the petition, the
respondents refused to approve the petitioner's application and, on the other hand, that the Solicitor-General
pointed out in his memorandum that the statement of facts contained in the briefs of the petitioner may be accepted
for the purpose of deciding the legal questions raised; and although there are some discrepancies between the
allegations of the parties, they are not of such nature or moment as would require the introduction of evidence
before the case is submitted for decision. In my opinion, this court should now dispose of the petition for mandamus
on its merits, granting or dismissing the same, instead of ordering the respondents to act on the petitioner's
application, it being a fact that said respondents had already acted by denying said application.

Now, considering the petition on its merits, should we order the respondents to approve the petitioner's application
for patent, or should we, on the contrary, deny the remedy prayed for? In other words, should we hold that the
petitioner is entitled to the patent applied for, or on the contrary, that it has not acquired such right?

Section 1 of Article XII of the Constitution provides as follows:

"All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, and other natural resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporations
or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing
right, grant, lease, or concession at the time of the inauguration of the Government established under this
constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license,
concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted
for a period exceeding twenty-five years renewable for another twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant."

The majority maintains that the foregoing constitutional provision prohibits, the alienation of natural resources and
that the term "natural resources" includes mineral lands of the public domain, but not the mineral lands which at the
time the provision became effective no longer formed part of the public domain. The majority further states that the
claim in question, having been located prior to the inauguration of the Commonwealth, has ceased to be land of the
public domain and, therefore, does not fall within the prohibition contained in the foregoing section which expressly
provides, that the natural resources shall not be alienated.

It is true that the mining claim in question was located prior to the inauguration of the Commonwealth on November
15, 1935. It may be conceded that a location, once made and perfected, operates to segregate the land from the
public domain, but this in no wise means that the Government parts with the absolute ownership over the mining
claim by the mere fact of its location. Location should only be understood as segregating the "land located from the
public domain in the sense that it is no longer open to location or susceptible of appropriation by another, while the
locator has not lost his right to or abandoned the mining claim. To give a broader meaning and a greater effect to the
location of a mining claim is to contend against the express provisions of sections 36, 37 and 39 of the Act of
Congress of July 1, 1902, as amended by section 9 of another Act of Congress of February 6, 1905, that location is all
that is necessary to acquire absolute ownership over a located mining claim. This is not the law. From the location of
a claim to the issuance of the patent for or title to the land, is a far cry. Location, without more, confers only the right
of possession. Thus section JJ6 of the Act of Congress of February 6, 1905 refers to the "manner of recording, and
amount of work necessary to hold possession of a mining claim." Section 39 of the same Act also speaks of the right
of possession of the claim, and the right to the issuance of a patent only arises after the execution of certain works
and acts prescribed by law, such as the labor or improvements made each year (sec. 36); the full description and
identification of the land by means of plat and field notes (sec. 37); the notice and publication of the application for a
patent by the locator, etc., etc. (sec. 37).

The same majority states: "The legal effect of a valid location of a mining claim is not only to segregate the area from
the public domain, but to grant to the locator the beneficial ownership of the claim and the right to a patent therefor
upon compliance with the terms and conditions prescribed by the law." (Underscoring mine.)

Well, then: the Act of Congress does not fix any period within which the conditions prescribed ought to be complied
with. It does specify the time for recording a claim in the registry, but it does not determine the period within which
to make the necessary annual labor or improvements thereon. The law requires universal publication and notice of
the application for a patent for a determinate number of days, but it fails to fix the date when said notice may be
made and published. The law requires that, if there be any claim adverse to the application for a patent, the
corresponding action should be instituted in the proper court to determine who is entitled to the patent; but no
period is fixed within which the litigation should be decided. The law finally requires the payment of a certain sum for
every hectare of land covered by the mining claim before the patent is issued; but it does not prescribe the period
within which to pay said sum, which is the price for the alienation of the land by the Government in favor of the
applicant for the title or patent.

I now ask: Within what time must the conditions prescribed by the law be complied with in order that the locator
may become entitled to the patent? I gather from the majority opinion that, as long as the location of the mining
claim was perfected before the inauguration of the new Government of the Philippines on November 15, 1935, the
other conditions may be complied with even after said date in order that the locator may acquire a fight to the
patent. I dissent on this fundamental point from the majority opinion. I maintain that in prohibiting the alienation of
natural resources, save any existing right, the Constitution does not refer to the eight of location or to the inherent
right of possession, or to any inchoate or contingent right which are only a means to bring about another right; it
refers only to the right to obtain a patent. And inasmuch as this right cannot be acquired until after compliance with
all the conditions prescribed by law, it is evident that the prescribed conditions should be complied with before the
inauguration, of the Commonwealth.
Was the petitioner entitled to the issuance of the patent for the mining claim in question before the inauguration of
the Commonwealth on November 15, 1935? I hold that he was not, because on said date, according to the very
allegations of the petition for mandamus, the publication in the newspapers of the application for a patent for a
period of 60 days as prescribed by law had not been made, as said publication was only commenced on February 13,
1936. Neither was the payment of P25 per hectare made before the inauguration of the new Government, that is,
the Government had not been paid the price for the alienation of the mineral land when Article XII of the
Constitution went into effect. Petitioner's right, therefore, to the patent had not matured before November 15, 1935,
wherefore, he falls squarely within the constitutional prohibition.

A similar thing has been provided for by Act No. 926, passed in October, 1903, and Act No. 2874, passed in
November, 1919, in relation to public lands. Section 54, paragraph 6, of the first Act, and section 45, paragraph (b), of
the second, provide that those who have been in possession of agricultural lands of the public domain since July 26,
1894, may acquire a perfect title of ownership; and it is necessarily inferred that those who commenced their
possession of such lands after July 26, 1894 have no right to obtain title, notwithstanding the fact that their
possession may have been for 10, 20 or 30 years. This is exactly what the Constitution has provided: to fix a time for
determining those who have become entitled to the patent for a mining claim.

Although the provisions of the Act of Congress of 1905 are very clear and there in no better aid to construction than
the law itself, I nevertheless cite the following authorities which support my points of view in this opinion.

"The locator of a mining claim under the United States laws, prior to the actual payment of the purchase-money and
the issuance to him of the receipt therefor by the Land Department, possesses a mere privilege to purchase the
property, and a constable's sale of the mine before payment only passes that privilege * • *." (Hamilton vs. Southern
Nev. G. & S. Min. Co., 33 Fed., 562.)

"* * * But he is not the owner of the land until he pays for it, and obtains the United States patent. It is a part of the
public domain. In the meantime the defendant is occupying it under a mere license from the government, which may
be revoked at any time by the repeal of the act giving it. * * * His license under the statute to occupy and to work it
as mining ground is sufficient for that purpose until withdrawn by Congress, without purchasing it. * * ?" (U. S. vs.
Nelson, Fed. Cas. No. 15,864.) (Underscoring mine.)

"A prospector on the public mineral domain may protect himself in the possession of his pedis possessionis while he
is searching for mineral. His possession so held is good as a possessory title against all the world, except the
government of the United States * * *." (Crossman vs. Pendery, 8 Fed., 693.)

"A possessory title, while it may not be divested by any one except the United States, may be avoided by the default
of its owner, either by abandonment or by forfeiture for non-compliance with local regulations or with the statutory
requirements as to annual labor * * *." (1 The Law of Mines and Mining in the United States, Barringer & Adams, 318,
319.)

"Prior to the issuance of a patent the locator cannot be said to own the fee simple title. The fee resides in the general
government, whose tribunals, specially charged with the ultimate conveyance of the title, must pass upon the
qualifications of the locator and his compliance with the law. Yet, as between the locator and everyone else save the
paramount proprietor the estate acquired by a perfected mining location possesses all the attributes of a title in fee,
and so long as the requirements of the law with reference to continued development are satisfied, the character of
the tenure remains that of a fee. As between the locator and the government, the former is the owner of the
beneficial estate, and the latter holds the fee in trust, to be convened to such beneficial owner upon his application
in that behalf and in compliance with the terms prescribed by the paramount proprietor." (Lindley on Mines, 3d. ed.,
sec. 539, p. 1200.) (Underscoring mine.)

I therefore vote for the denial of the petition.

ATOK BIG-WEDGE MINING COMPANY, PETITIONER, VS. HON. INTERMEDIATE APPELLATE COURT and TUKTUKAN
SAINGAN, respondents.

DECISION

HERMOSISIMA, JR., J.:

In the face of two sets of divergent rulings of the Supreme Court on the nature of the rights of mining claimants over
the land where their claim is located, the parties herein seek a definitive ruling on the issue: What is actually the right
of a locator of a mining claim located and perfected under the Philippine Bill of 1902 over the land where the claim is
found? Does he have an absolute right of ownership thereof or does he have the mere right to possess and claim the
same? Whose right to the land should, therefore, prevail: the mining claimants or that of an applicant for land
registration? Does the mere recording or location of a mining claim ipso facto and irreversibly convert the land into
mineral land, notwithstanding the fact that the mining claimant failed to comply with the strict work requirement
under the Philippine Bill of 1902?

Petitioner Atok Big Wedge Mining Company appeals from the decision[1] of the Court of Appeals[2] which reversed
the decision[3] of the then Court of First Instance of Baguio City[4] in a land registration case.[5] The court a quo
denied and correspondingly dismissed the application for registration of title filed by private respondent Tuktukan
Saingan, finding no merit in Saingans claim of adverse, open and continuous possession in concept of an owner of the
tract of land applied for by him, which happened to be claimed by petitioner as part of its mining claim duly recorded
by the Mining Recorder of Benguet. Respondent appellate court found petitioner to have abandoned its mining claim
over the said tract of land and, on the other hand, adjudged private respondent to be the owner thereof by virtue of
his having possessed the same under a bona fide claim of ownership for at least thirty (30) years prior to the filing of
his land registration application in 1965.

The court a quo made the following findings of fact:


Applicant [private respondent] seeks the registration of a parcel of land with an area of 41,296 square meters
situated in the barrio of Lucnab, Itogon, Benguet, which is shown in survey plan Psu-209851 x x x.

The evidence for the applicant [private respondent] who was 70 years old at the time he testified shows that he
acquired the land from his father-in-law, Dongail, when he married his daughter; that he was then 18 years old; that
at the time of his acquisition, it was planted with camotes, casava [sic], langka, gabi, coffee and avocados; that he
lived on the land since his marriage up to the present; that he has been paying the taxes during the Japanese
occupation and even before it; that he was never disturbed in his possession. Supporting his oral testimony, applicant
[private respondent] submitted tax declarations x x x both dated March 20, 1948, the former for a rural land and the
latter for urban land and improvement therein. The receipt showing payment of the taxes on such tax declarations is
dated Feb. 8, 1949 x x x. The said tax declarations x x x show that they cancel tax declaration No. 439 dated Feb. 10,
1947 which was presented by the Oppositor [petitioner] Atok Big Wedge Mining Company as its Exhibit 14, and the
land tax under Exh. 14 was paid by applicant [private respondent] in 1947 x x x. Applicant [private respondent] has
also submitted Exh. `C, which indicates that all pre-war records of tax declarations and real property receipts of the
municipality of Itogon where the property is located were burned and destroyed during the last world war.

The Bureau of Lands and Bureau of Forestry, represented by the Provincial fiscal, oppose [sic] application. The Atok
Big Wedge Mining Company came in also as oppositor claiming that the land in question is within its mineral claims -
Sally, Evelyn and Ethel x x x Atok Big Wedge Mining Company submitted Exhibits 6, 7 and 8, all showing that the
annual assessment work of these mineral claims were maintained from 1932 to 1967 for Sally and Evelyn and from
1946 to 1967 for Ethel. It was likewise shown that these mineral claims were recorded in the mining recorders office;
Sally and Evelyn on Jan. 2, 1931 and Ethel on March 18, 1921 x x x.[6]

The respondent appellate court additionally found that the tract of land in question according to the evidence, Exh.
2, covers portion of mineral claims, Sally, Evelyn, and Ethel, the first two located by one Reynolds in 1931 and the
last, also by Reynolds in 1921[7] but Atok x x x has not even been shown how connected with locator Reynolds.[8]
Private respondent reiterates this fact in his Comment:

x x x (T)he mining claims have become vested rights and properties of the locators, Messrs. H. I. Reynolds and E. J.
Harrison.

However, the locators, Reynolds and Harrison, or the PETITIONERS herein, assuming that there is any relation
between Atok Big Wedge Mining Co., and the locators, Reynolds and Harrison, have never shown that their rights
have been preserved or remain vested.

xxx
Furthermore, when the land in question was registered in the office of the Mining Recorder in 1921, and 1931,
respectively, the mineral claims covering the land in question namely: Sally, Evelyn and Ethel were in the name of the
Locators E. J. Harrison and H. I. Reynolds. No evidence was ever presented as to how Petitioner herein obtained
ownership over said claims during the hearing of this case in the Lower Court up to this time. It was not even shown
how Petitioner herein, Atok Big Wedge Mining Co., is connected or related to locator Reynolds. x x x[9]

Significantly, nothing in the subsequent pleadings filed by petitioner rebuts, disputes or proves otherwise, the
aforecited issue raised by private respondent with regard to its personality, interests and authority to oppose the
application for registration filed by private respondent respecting land to which petitioner claims rights but as to
which it is not the duly recorded mining locator.

The Director of Lands, thru the Office of the Solicitor General, opposed private respondents application on the
ground that the applicant did not have title in fee simple over the questioned land and that he had not exercised
continuous, exclusive and notorious possession and occupation over the said land for at least thirty (30) years
immediately preceding the filing of the application. However, the Solicitor General no longer joined petitioner in this
ultimate appeal, the Solicitor General later conceding existence of private respondents rights.

Petitioners presentation of evidence proving registration of the mining claims of petitioner in the Mining Recorder of
Benguet dating back to 1931, at the latest, notably about sixteen (16) years before private respondent declared the
land in question for taxation purposes and thirty four (34) years before private respondent filed the land registration
proceedings in 1965, apparently impressed the court a quo. And so it ruled in favor of petitioner as oppositor in the
land registration proceedings, the court a quo ratiocinating in this wise:

x x x (T)he mining claims were recorded ahead of the time when the applicant [private respondent] declared the land
for taxation purposes based on his documentary exhibits. So the evidence of the applicant [private respondent]
cannot prevail over the documentary exhibits of the oppositor Atok Big Wedge Mining Company. The government
oppositors adopted the evidence of the mining company.

Moreover, if applicant [private respondent] was already in possession and occupation of the land in the concept of
owner, as claimed, it is strange that he did not oppose its survey when the mining company surveyed the area
preparatory to its recording in the mining recorders office. The conclusion is that he was not yet there when the
survey by the mining company was conducted or if he was already there the nature of his occupation was not in the
concept of owner for otherwise he could have asserted it at the time.
The foregoing facts show that the mining company had established its rights long before applicant [private
respondent] asserted ownership over the land. The perfection of mining claims over the mineral lands involved
segregate [sic] them from the public domain and the beneficial ownership thereof became vested in the locator.[10]

The trial court having dismissed private respondents application for registration on the ground that petitioners had
already acquired a vested right over the subject land, private respondent appealed to the respondent court. The
Director of Lands, thru the Solicitor General, adopted as his own, the appellees brief filed by petitioner.

The respondent appellate court, on its part, correctly considered inadequate, however, the mere recording of
petitioners mining claims in the Mining Recorder of Benguet and the corresponding, albeit religious, payment of
annual assessment fees therefor, to vest in petitioner ownership rights over the land in question. Truly, under
Executive Order No. 141[11], the payment of annual assessment fees is only proof of compliance with the charges
imposed by law and does not constitute proof of actual assessment work on the mining land concerned. Respondent
court ruled in this connection:

x x x (I)t must be conceded that the same having been located and existing since 1921 and 1931, the rights of locator
if correspondingly preserved, remained vested, - but as this Court also examines the evidence, what has been shown
is that affidavits of assessment work had been filed, yes, from 1932 in connection with claim Sally and from 1933 as
to Evelyn, and from 1936 as to claim Ethel, but tsn. would not show that in truth and in fact, there had been that
assessment work on the claims, [sic] witness Pelayo of Atok admits that he had not gone over the area x x x in fact he
joined the company in 1962 only, [sic] in other words, all that Atok has shown as to assessment work is the affidavit
thereon, but as Ex. Order 141 of 1 August, [sic] 1968 has said:

(W)hat matters is [sic] maintaining and preserving possessory rights to the claims is the continuous performance of
the required assessment work, not the filing of an affidavit which may be disproved by findings of [sic] the ground,'

and here, the very fact that applicant has possessed continuously apparently without protest from Atok x x x must
disprove the truth that locator or Atok had indeed done assessment work x x x.[12]

Private respondent, in support of respondent courts quoted findings, points out in his pleadings that:

x x x The APPLICANT [private respondent] constructed various improvements on the land consisting of his 3
residential houses, fruit trees, ricefields and other permanent improvements. x x x

xxx
On the other hand, the PETITIONER Mining company has not shown that it has introduced a single improvement
(assessment work) on the property. It has only paid the minimum annual assessment required by law of P200.00 a
year. There was no evidence, whatsoever, of its alleged `factual possession of the property. No assessment work was
shown during the ocular inspection ordered by the Honorable Trial Court neither during the ocular inspection
conducted by the Bureau of Forestry.

THIS ritual of paying the uniform sum of P200.00 a year for alleged assessment work is not enough evidence that
such assessment work was actually made. It is precisely for this reason that Executive Order 141 dated August 1,
1968 was issued by the President of the Philippines. This order made it mandatory that it is not enough to pay
P200.00 a year but there must be actual continuous assessment work done on the surface of the mineral claims. x x x
[Underscoring supplied by private respondent.][13]

Also, private respondent also additionally informs this court that:

x x x PETITIONER Atok Big Wedge Mining Company has, on October 12, 1978, converted its application on mineral
claims in question (SALLY, EVELYN and ETHEL) into mining lease only in compliance with Presidential Decree 1214.
PETITIONER mining company is now a mere lessee of the mining claims. And as such lessee, it has no right on the
surface rights of such mineral claims. An official certification to that effect by the Bureau of Mines & Geo-Sciences,
Regional Office No. 1 of the City of Baguio is hereby attached as Annex `A and made integral part hereof. x x x.[14]

an allegation which obviously clinches this case in his favor.

Respondent court having reversed the trial courts decision on the ground that private respondent had, by sufficient
evidence, shown his right to registration over the contested parcel of land, petitioner elevated its cause to this court.
The Director of Lands, however, did not join in petitioners appeal. Thus, in a Manifestation and Motion, dated June
21, 1983,[15] the Director of Lands, thru the Solicitor General, acknowledged that the respondent Courts decision has
become final with respect to the Director of Lands.[16]

Petitioner, left to its own by the Director of Lands, cites the following grounds for the grant of the instant petition:

I
THAT THE LAND IN QUESTION HAD LONG BEEN SEGREGATED FROM THE PUBLIC DOMAIN AND OWNERSHIP THERETO
HAD LONG BECOME VESTED IN HEREIN PETITIONER WHEN ITS MINING CLAIMS IN QUESTION WERE REGISTERED IN
THE OFFICE OF THE MINING RECORDER IN 1921 AND 1931 RESPECTIVELY.

II

THAT THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN FINDING THAT THE APPLICANT WAS
IN CONTINUOUS OPEN AND ADVERSE POSSESSION OF THE LAND IN QUESTION.[17]

We find these arguments to be devoid of merit.

The records bear out that private

respondent has been in possession of

subject parcel of land in concept of owner

for more than thirty (30) years

----------------------------------------------------

The court a quo made the following factual findings based on the testimony of private respondent:

The evidence x x x shows that he [private respondent] acquired the land from his father-in-law, Dongail, when he
married his daughter; that he was then 18 years old; that at the time of his acquisition, it was planted with camotes,
casava [sic], langka, gabi, coffee and avocados; that he lived on the land since his marriage up to the present; that he
has been paying the taxes during the Japanese occupation and even before it; that he was never disturbed in his
possession. Supporting his oral testimony, applicant submitted tax declarations x x x both dated March 20, 1948, the
former for a rural land and the latter for urban land and improvement therein.[18]

Substantiating the aforecited testimonial evidence of private respondents actual, adverse and continuous possession
of the subject land for more than thirty (30) years are the observations of the court commissioner during the ocular
inspection of the subject land on February 1, 1969, pertinent transcribed portions of which read as follows:

Upon verification of the extent of the area applied for by the applicant which tallies with the plan on record, we find
the following improvements;
The land applied for is almost 90% improved with numerous irrigated rice terraces newly planted to palay at the time
of the ocular inspection and others planted to vegetables such as potatoes, banana plants, flowering plants and fruit
trees such as mangoes, jackfruits, coffee plants, avocados and citrus - all fruit bearing.

Most of the fruit trees such as the mango trees are about one half (1/2) meter in diameter.

There are four houses owned by the applicant [private respondent] and his children.

There is a creek traversing the middle portion of the land which serves as irrigation for the numerous rice paddies.

Upon verification of the surrounding area which we did by hiking all the way, there are no assessment tunnels or any
sign of mining activities.

xxx

There are earthen dikes and fences surrounding the property applied for.

It also appears that the surrounding area of the land applied for is also fully cultivated especially on the western
portion, southern portion and also on the northern portion.

On the northwestern ridge are numerous terraces planted to various vegetables and on the edges of the property is a
plantation of tiger grass used for brooms.

On the eastern slope are also numerous terraces planted to flowering plants and numerous banana plants.

There are only two (2) pine trees growing situated on the eastern slope of the land in question.

On the northern portion are terraces and ricefields and mango tree as well as banana plants.
At the northern slope of the land applied for is [sic] fully cultivated with the exception of whatever portions are
planted to bananas and tiger grass.

The terraces at the time of the ocular inspection is planted to vegetables and flowering plants such as African dishes
[sic].

On the northwestern portion of the land are numerous terraces planted to seasonal vegetable crops. The rest are
planted to banana except the small steep portion planted to tiger grass to prevent the land from eroding.

On the western portion is a big irrigation canal with plenty of water which serve [sic] as a water supply to irrigate the
ricefields which are found around the property.

An estimate of around 90 to 120 big and small trees are scattered all over the property. Around the houses are full of
fruit trees.

xxx

The mining compound of Itogon is very far from this place and this land is at the boundary of Baguio City and Itogon.
That is why it is more suitable for residential and agricultural purposes. Nowhere do we find any mining work done,
any cable or anything that would show any mining operation in this area.

Around the yard of the houses of the applicant are numerous coffee trees, jackfruits, pomelos, papaya, pineapples,
banana plants, guava trees and carrots.

The orchard is fully planted to coffee trees. The area is estimated to be more than one hectare which is planted to
coffee trees and other plants.[19]

Private respondent, it must be emphasized, offered in evidence in the land registration proceedings before the court
a quo, tax declarations, dated March 20, 1948, and tax payment receipts, dated February 8, 1949.

Significantly, petitioner did not present any evidence in rebuttal of private respondents aforestated claims of having
acquired the subject land from his wifes father and having lived on the land since his marriage at the age of eighteen
(18). Neither has petitioner taken exception to the aforecited observations of the court commissioner during the
ocular inspection of the subject land. There is nary a showing in petitioners numerous pleadings filed before us that
there exists substantial basis for us not to believe petitioners claims, and this is understandable, for petitioner largely
anchored its cause on its alleged vested rights to its mining claims under the mandate of the Philippine Bill of 1902
and our rulings in McDaniel vs. Apacible and Cuisia[20] and the catena of cases subsequent thereto.

Considering the aforestated evidence borne out by the records of the instant case, their credibleness and the lack of
adequate opposition thereto, we agree with respondent Court of Appeals that a reading of tsn. would rather
persuade that applicant [private respondent] had shown quite well that subject property had been in (the)
continuous and adverse possession, first, of his predecessor-in-interest, Dongail and, after the death of the latter, (by
respondent) himself, years before, that is, long before the outbreak of the last war.[21]

Petitioner is deemed to have abandoned

his mining claims under E.O. No. 141 and

P.D. No. 1214

-------------------------------------------

All mineral lands, as part of the countrys natural resources, belong to the Philippine State. This concept of jura regalia
enshrined in past and present Philippine constitutions, has not always been the prevailing principle in this
jurisdiction, however, the abundant resources within our coastal frontiers having in the past filled not just one
colonizers booty haul. Indeed, there was a time in our history when the mining laws prevailing in this jurisdiction
were compromising, to say the least, of the Filipino peoples inherent rights to their natural wealth.

Before the cession of the Philippine Islands to the United States under the Treaty of Paris, the prevailing mining law
in the colony was the Royal Decree of May, 1867, otherwise known as The Spanish Mining Law.

In the advent of American occupation, the Philippines was governed by means of organic acts which were in the
nature of charters serving as a Constitution of the occupied territory from 1900 to 1935.[22] Among the principal
organic acts of the Philippines was the Act of Congress of July 1, 1902 through which the United States Congress
assumed the administration of the Philippine Islands.

The Philippine Bill of 1902 contained provisions for, among many other things, the open and free exploration,
occupation and purchase of mineral deposits and the land where they may be found. It declared all valuable mineral
deposits in public lands in the Philippine Islands, both surveyed and unsurveyed x x x to be free and open to
exploration, occupation, and purchase, and the land in which they are found to occupation and purchase, by citizens
of the United States, or of said Islands x x x.[23]
Any qualified person desiring to locate a mineral claim may enter upon the same and locate a plot of ground
measuring, where possible, but not exceeding, one thousand feet in length by one thousand feet in breadth, in as
nearly as possible a rectangular form.[24] Under the Philippine Bill of 1902, the holder of the mineral claim so located
is entitled to all the minerals which may lie within his claim, but he may not mine outside the boundary lines of his
claim.[25] The mine claim locator must have his claim recorded in the mining recorder within thirty (30) days after
the location thereof; otherwise, he will be deemed to have abandoned the same.[26]

One of the continuing requirements for the subsistence of the mining claim is performance of not less than one
hundred dollars worth of labor or undertaking of improvements of the same value every year.[27] This is a strict
requisite, the locators failure to comply with which shall operate to open the claim or mine to relocation in the same
manner as if no location of the same had even been made.[28] Unequivocal is the mandatory nature of the work or
labor requirement on the mine that the Philippine Bill specifically designates the time when the work or labor
required to be done annually on all unpatented mineral claims, shall commence.[29]

Subsequently, among a few laws passed amending the Philippine Bill of 1902 was Act No. 624 passed by the United
States Philippine Commission and approved on February 7, 1903. Said Act prescribed regulations to govern the
location and the manner of recording mining claims and the amount of work necessary to hold possession thereof.
Such regulations reinforced the annual work or labor requirement of not less than one hundred dollars worth as
provided for in the Philippine Bill of 1902, in accordance with Section 36 thereof which limits the power of the United
States Philippine Commission to make regulations but not in conflict with the provision of this Act [i.e., the Philippine
Bill of 1902], governing the location, manner of recording, and amount of work necessary to hold possession of a
mining claim x x x.

On November 15, 1935, the Constitution of the Commonwealth took effect. The 1935 Constitution declared all
natural resources of the Philippines, including mineral lands and minerals, to be property belonging to the State.[30]
However, as it turned out, not really all of the Philippines natural resources were considered part of the public
domain. Those natural resources, and for that matter, those mineral lands and minerals with respect to which there
already was any existing right, grant, lease, or concession at the time of the inauguration of the Government
established under this Constitution, were then considered outside the application of the jura regalia doctrine or at
least not unconditionally or totally within the contemplation of said doctrine.

On November 7, 1936, the First National Assembly enacted Commonwealth Act No. 137, otherwise known as the
Mining Act. In contradistinction with the Philippine Bill of 1902 which was patterned after the United States Federal
Mining Acts which rejected the regalian doctrine, the Mining Act expressly adopted the regalian doctrine following
the provisions of the 1935 Constitution. Since said Constitution necessarily prohibits the alienation of mining lands,
the Mining Act granted only lease rights to mining claimants who are proscribed from purchasing the mining claim
itself. These provisions of the Mining Act, however, were expressly inapplicable to mining claimants who had located
and recorded their claims under the Philippine Bill of 1902.
The nationalism underlying the adoption of the regalian doctrine in the 1935 Constitution was further eroded by the
amendment thereto which was adopted by the First Congress on September 18, 1946 and approved by a majority at
the elections held on March 11, 1947. This amendment which came in the form of an Ordinance Appended to the
Constitution is what is known as the Parity Rights amendment. It provided that, notwithstanding the adoption in the
Constitution of the regalian doctrine and the proscription against aliens participating in the natural wealth of the
nation, excepted therefrom were the citizens of the United States and its business enterprises which would have the
equal right in the disposition, exploitation, development and utilization of our natural resources, among them, our
mining lands and minerals for the period from July 4, 1946 to July 3, 1974.

In the meantime, the provisions of the Philippine Bill of 1902 regarding mining claims, insofar as the mining lands and
mining claims acquired before the effectivity of the 1935 Constitution are concerned, continued to be in effect.
Annual performance of labor or undertaking of improvements on the mine remained an annual requirement, non-
compliance with which resulted in the mine becoming again open to relocation but now subject to the lease
provisions of the Mining Act. The intention for this annual work requirement to be a strict prerequisite to
maintenance of a claimants rights under the Philippine Bill of 1902 apparently not lost on subsequent legislators,
they took the same as an absolute prerequisite with grave consequences and believed it necessary to expressly enact
a law[31] waiving this requirement during the period from January 1, 1952 to January 1, 1954 as the circumstances
then necessitated the same.

The Philippine Bill of 1902 clearly required the annual performance of work on the mine or the undertaking of
improvements thereon in order for the mine claim locator to continue enjoying all the rights accruing to him as such
under the said Bill. This and nothing short of this was the requirement. The filing of affidavits of annual assessment
work, which procedure is not even provided for in the Philippine Bill of 1902, is required only for purposes of proving
that there had actually been work or improvements done. Such filing could not have been intended to replace the
actual work requirement, and nary is there a basis in law to support any conclusion to the contrary, notwithstanding
what was appearing to be the practice of mine claim locators of annually filing affidavits of annual assessment but
willfully not undertaking actual work or tangible improvement on the mine site.

On August 1, 1968, then President Marcos issued Executive Order (E.O.) No. 141. Whereas mining claim holders
under the Philippine Bill of 1902 x x x are of the impression that they may hold on to their claims indefinitely by the
mere filing of affidavits of annual assessment work x x x, E.O. No. 141 precisely declared that such impression is not
correct, for what matters in maintaining and preserving possessory title to the claim is the continuous performance
of the required assessment work, not the filing of an affidavit which may be disproved by findings on the ground.
Consequently, E.O. No. 141 established the status of such unpatented mining claims which have not complied with
the annual work requirement, as having been abandoned and open for relocation, their declarations of location
being accordingly cancelled.
On January 17, 1973, the 1973 Constitution came into force and effect. Unlike the former Charter, the 1973
Constitution did not expressly qualify the application of the regalian doctrine as being subject to any right granted
before the effectivity of the 1935 Constitution or the 1973 Constitution for that matter. It provided:

SEC. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential
energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. x x x.[32]

But the conditional application of the regalian doctrine under the 1973 Constitution could be found in Presidential
Decree (P.D.) No. 463, enacted on May 17, 1974, which revised the Mining Act (C.A. No. 137). While the said decree
declares that x x x all mineral deposits in public or private lands x x x belong to the State, inalienably and
imprescriptively x x x, it also recognizes whatever rights or reservations had already been existing with respect to
certain mining lands,[33] apparently alluding to the rights of mining claim holders under the Philippine Bill of 1902.

Under the Philippine Bill of 1902, the procedure was that a mining claim locator need not apply for a patent soon
after locating the mine. The patent may come later, and the said locator, for as long as he complies with the annual
actual work requirement, enjoyed possessory rights with respect to such mining claim with or without a patent
therefor. It has already been stated that under E.O. No. 141, unpatented mining claims shall be deemed abandoned
upon a finding that the holders thereof had not been actually performing any work or labor or undertaking any
improvement at the mine site notwithstanding their having religiously filed annual affidavits of assessment.

Even under P.D. 463 which was enacted in 1974, the possessory rights of mining claim holders under the Philippine
Bill of 1902 remained effective for as long as said holders complied with the annual actual work requirement. But on
October 14, 1977, P.D. No. 1214 required all the holders of unpatented mining claims to secure mining lease
contracts under P.D. No. 463. Faced with the grave consequence of forfeiture of all their rights to their claims,
holders of subsisting and valid patentable mining claims located under the Philippine Bill of 1902 were to file mining
lease applications therefor within one (1) year from the effectivity of the said decree.[34] The filing of such mining
lease applications was considered a waiver of the holders rights to the issuance of mining patents for their
claims.[35] Corollarily, non-filing of applications for mining lease by the holders thereof within the one-year period
would cause the forfeiture of all their rights to their claims.[36]

Against the backdrop of the afore-chronicled evolution of the pertinent mining laws, past and present, in this
jurisdiction, we now proceed to resolve the controlling issue in this case: Whether or not the ownership of subject
land had long been vested on petitioner after it had allegedly located and recorded its mining claim in accordance
with the pertinent provisions of the Philippine Bill of 1902.

This issue is certainly not a novel one. It has been first ruled upon by this court in the 1922 case of McDaniel vs.
Apacible and Cuisia.[37] There, applying American precedents, we stated:
The moment the locator discovered a valuable mineral deposit on the lands located, and perfected his location in
accordance with law, the power of the United States Government to deprive him of the exclusive right to the
possession and enjoyment of the located claim was gone, the lands had become mineral lands and they were
exempted from lands that could be granted to any other person. The reservations of public lands cannot be made so
as to include prior mineral perfected located locations; and of course, if a valid mining location is made upon public
lands afterward included in a reservation, such inclusion or reservation does not affect the validity of the former
location. By such location and perfection, the land located is segregated from the public domain even as against the
Government. x x x.[38]

We reiterated this ruling in the subsequent cases of Gold Creek Mining vs. Rodriguez (1938),[39] Salacot Mining
Company vs. Abadilla (1939),[40] Salacot Mining Company vs. Rodriguez (1939),[41] Bambao vs. Lednicky (1961),[42]
Comilang vs. Buendia (1967),[43] Benguet Consolidated, Inc. vs. Republic (1986),[44] Republic vs. Court of Appeals
(1988)[45] and Atok-Big Wedge Mining Co., Inc. vs. Court of Appeals (1991).[46]

Notwithstanding our ruling in the aforecited cases, however, there came about thereafter a catena of cases where
we declared that the rights of the holder of a mining claim located under the Philippine Bill of 1902, are not absolute
or are not strictly of ownership. This declaration was a necessary premise in our affirmation of the constitutionality of
P.D. No. 1214 in the 1987 case of Santa Rosa Mining Co., Inc. vs. Leido, Jr.[47] where we stated:

Mere location does not mean absolute ownership over the affected land or mining claim. It merely segregates the
located land or area from the public domain by barring other would-be locators from locating the same and
appropriating for themselves the minerals found therein. To rule otherwise would imply that location is all that is
needed to acquire and maintain rights over a located mining claim. This, we cannot approve or sanction because it is
contrary to the intention of the lawmaker that the locator should faithfully and consistently comply with the
requirements for annual work and improvements in the located mining claim.[48]

And our ruling there was upheld in the tradition of stare decisis in the subsequent cases of Director of Lands vs.
Kalahi Investments, Inc. (1989),[49] Zambales Chromite Mining Company, Inc. vs. Leido, Jr. (1989),[50] Poe Mining
Association vs. Garcia (1991),[51] United Paracale Mining Company, Inc. vs. De la Rosa (1993),[52] and Manuel vs.
Intermediate Appellate Court (1995).[53]

While petitioner adamantly insists that there is only one construction of the provisions of the Philippine Bill of 1902
as regards his mining claim rights, and this is that the same are absolute and in the nature of ownership, private
respondent posits the ultimate question of which between the aforecited seemingly inconsistent rulings is the
correct interpretation of the Philippine Bill of 1902 in relation to E.O. No. 141 and P.D. 1214 insofar as the rights of
mining claim holders under the said Bill are concerned.
This is not the first time either that we are asked to, in all awareness of the precedents, resolve these postulations of
this court that are perceived to be contradictory. In the 1994 case of United Paracale Mining Company vs. Court of
Appeals,[54] posed before us by petitioner therein was the same question that herein private respondent asks us to
resolve in the ultimate. We noted in that case:

"The query of petitioner: What is actually the right of a locator of mining claim located and perfected under the
Philippine Bill of 1902. Does he have an absolute right of ownership, or merely a right to possess and claim?

Petitioner contends that there are two (2) conflicting rulings made by this Court on the same issue. In Director of
Lands vs. Kalahi Investments, Inc. (169 SCRA 683), a locator of mining claims perfected under the Philippine Bill of
1902 has been held not to have an absolute right of ownership over said claims but merely a possessory right
thereto. In Atok-Big Wedge Mining Company, Inc. vs. Court of Appeals and Liwan Consi (193 SCRA 71), however, a
locator of mining claim perfected under the Philippine Bill of 1902, the Court has ruled, does have an absolute right
of ownership over his claim being thereby removed from the public domain.[55]

In that case of United Paracale Mining, it would have been premature for us to rule on the query, not all
indispensable parties therein having been joined. That is not the situation in this present controversy, however, and
so we shall forthwith resolve the matter at hand once and for all.

The earlier chronicle of the evolution of the mining laws, past and present, in this jurisdiction was not without a
predetermined purpose. The detailing of the provisions of those laws, especially of the Philippine Bill of 1902, was
certainly deliberate. It is undeniable at this point that the determination of the rights of a mining claim holder under
the said Bill is best undertaken on the basis of the very source of those rights, that is, the Bill itself. And any alteration
or change in the nature of those rights must be conceded for as long as such is statutorily and constitutionally
sanctioned, for even vested rights may be taken away by the State in the exercise of its absolute police power.

Under the Philippine Bill of 1902, the mining claim holder, upon locating and recording of his claim, has the right to
acquire for himself all mineral deposits found within his claim to the exclusion of everyone, including the
Government. Such rights are necessarily possessory as they are essentially utilitarian and exploitative. Such rights
accruing to the mining claim locator are personal to him in the sense that no conclusion as to the nature of the land
may definitively be made based solely on the fact that a mining claim has been recorded as regards a particular land.
However, insofar as his rights are exclusive and no other person may undertake mining activities on a recorded
mining claim, unless the same has been abandoned or the works thereon not done, the mining locators rights are
also protected against adverse mining claims of third persons. He also has the right to immediately or eventually
secure a patent on his mining claim and in the event that he postpones securing a patent, his rights to exclusive
possession and exploitation of his mining claim subsist for as long as he complies with the continuing requirement of
annually performing work or undertaking improvements at the mine site. Insofar as the Philippine Bill of 1902 does
not provide a specific time within which the mining claim holder must secure a patent, his rights to possession and
use of the mining land appear to be unconditional, the option not at all to secure a patent being available to him in
the absence of a deadline or ultimatum therefor. The Philippine Bill of 1902, however, did not foreclose a subsequent
act on the part of the State to limit the time within which the said patent must be secured under threat of forfeiture
of rights provided for under the Philippine Bill of 1902. Thus, in the sense that the rights of a mining claim holder may
in the future be curtailed by failure to obtain a patent, especially if we recall that Section 36 of the said Bill itself
foretold the subsequent promulgation of regulations regarding mining claims, such rights cannot also be said to be
truly unconditional or absolute.

We also learn from our reading of our past and present mining laws in their proper historical perspectives, that the
process of recording mining claims could not have been intended to be the operative act of classifying lands into
mineral lands. The recording of a mining claim only operates to reserve to the registrant exclusive rights to undertake
mining activities upon the land subject of the claim. The power to classify lands into mineral lands could not have
been intended under the Philippine Bill of 1902 to be vested in just anyone who records a mining claim. In fact, this
strengthens our holding that the rights of a mining claimant are confined to possessing the land for purposes of
extracting therefrom minerals in exclusion of any or all other persons whose claims are subsequent to the original
mining locator. Thus, if no minerals are extracted therefrom, notwithstanding the recording of the claim, the land is
not mineral land and registration thereof is not precluded by such recorded claim. Thus, in the case at bench, the
mining claimant, who had failed to comply with the annual minimum labor requirement, could not, all the more, be
expected to have extracted minerals from the mining location. Utter lack of proof of even its potential deposits on
the part of the petitioner, thus, does not surprise us at all.

Thus, it can be said (1) that the rights under the Philippine Bill of 1902 of a mining claim holder over his claim has
been made subject by the said Bill itself to the strict requirement that he actually performs work or undertakes
improvements on the mine every year and does not merely file his affidavit of annual assessment, which requirement
was correctly identified and declared in E.O. No. 141; and (2) that the same rights have been terminated by P.D. No.
1214, a police power enactment, under which non-application for mining lease amounts to waiver of all rights under
the Philippine Bill of 1902 and application for mining lease amounts to waiver of the right under said Bill to apply for
patent. In the light of these substantial conditions upon the rights of a mining claim holder under the Philippine Bill of
1902, there should remain no doubt now that such rights were not, in the first place, absolute or in the nature of
ownership, and neither were they intended to be so.

Applying the aforecited ruling to the facts of this case, we find that, not only has petitioner failed to sufficiently show
compliance with actual annual work requirement on its mining claims but also that credible are the transcribed
observations of the trial commissioner that nowhere on the subject land could be found tangible works or
improvements of an extent that would have existed had petitioner really complied with the annual work requirement
from 1931 when it allegedly first located said mining claims. In fact, no mining infrastructure or equipment of any
sort can be found on the area. Understandable thus is the action of the Director of Lands not to further appeal from
respondent courts decision, Director of Lands eventually conceding the subject land to be registrable, considering
petitioners non-performance of mining works thereon, private respondents adverse possession of the subject land
more than thirty (30) years and its use thereof for as many years solely for agricultural purposes.
Equally borne out by the records is the fact that petitioner has indeed applied for a mining lease under P.D. No. 1214.
For that reason, it has, in effect, waived its right to secure a patent and it shall have been governed, if private
respondents claim of adverse and open possession of the subject land for more than 30 years were not established,
by P.D. No. 463 in its activities respecting its mining lease.

WHEREFORE, the petition is HEREBY DISMISSED, with costs against petitioner.

SO ORDERED.

Isagani Cruz vs Secretary of Environment and Natural Resources

347 SCRA 128 (400 Phil 904) – Civil Law – Land Titles and Deeds – IPRA Law vis a vis Regalian Doctrine

Former Justice Isagani Cruz, a noted constitutionalist, assailed the validity of the Republic Act No. 8371 or the
Indigenous People’s Rights Act (IPRA Law) on the ground that the law amount to an unlawful deprivation of the
State’s ownership over lands of the public domain as well as minerals and other natural resources therein, in
violation of the regalian doctrine embodied in Section 2, Article XII of the Constitution. The IPRA law basically
enumerates the rights of the indigenous peoples over ancestral domains which may include natural resources.

In addition, Cruz et al contend that, by providing for an all-encompassing definition of “ancestral domains” and
“ancestral lands” which might even include private lands found within said areas, Sections 3(a) and 3(b) of said law
also violate the rights of private landowners.

ISSUE: Whether or not the IPRA law is unconstitutional.

HELD: The Supreme Court deliberated upon the matter. After deliberation they voted and reached a 7-7 vote. They
deliberated again and the same result transpired. Since there was no majority vote, Cruz’s petition was dismissed and
the constitutionality of the IPRA law was sustained. Hence, ancestral domains may include public domain – somehow
against the regalian doctrine.

NPC Vs. Ibrahim

Facts:

Ibrahim owns a parcel of land located in Lanao del Norte.

In 1978, NAPOCOR took possession of the sub-terrain area of the land and constructed underground tunnels on the
said property.

The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake Lanao and in the operation of
NAPOCOR’s Agus projects.

In 1991, Maruhom (one of the co-heirs of Ibrahim) requested Marawi City Water District for a permit to construct or
install a motorized deep well on the parcel of land but it was rejected on the grounds that the construction would
cause danger to lives and property by reason of the presence of the underground tunnels.

Maruhom demanded NAPOCOR to pay damages and to vacate the sub-terrain portion of the land.
Issue: WON Ibrahim is the rightful owner of the sub-terrain area of the land.

If yes, are they entitled to the payment of just compensation.

Held: YES. The sub-terrain portion of the property belongs to Ibrahim.

The Supreme Court cited Article 437 of the Civil Code which provides that: The owner of a parcel of land is the owner
of its surface and of everything under it, and he can construct thereon any works or make any plantations and
excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances.
xxx

Hence, the ownership of land extends to the surface as well as to the subsoil under it. Therefore, Ibrahim owns the
property as well as the sub-terrain area of the land where the underground tunnels were constructed.

On the issue of just compensation, the Supreme Court also said that Ibrahim should be paid a just compensation.

Ibrahim could have dug upon their property and built motorized deep wells but was prevented from doing so by the
authorities because of the construction of the tunnels underneath the surface of the land.

Ibrahim still had a legal interest in the sub-terrain portion insofar as they could have excavated the same for the
construction of the deep wells. It has been shown that the underground tunnels have deprived the plaintiffs of the
lawful use of the land and considerably reduced its value.

It was held that: If the government takes property without expropriation and devotes the property to public use,
after many years, the property owner may demand payment of just compensation in the event restoration of
possession is neither convenient nor feasible. This is in accordance with the principle that persons shall not be
deprived of their property except by competent authority and for public use and always upon payment of just
compensation.

Art. 712. Ownership is acquired by occupation and by intellectual creation.

Ownership and other real rights over property are acquired and transmitted by law, by donation, by estate and
intestate succession, and in consequence of certain contracts, by tradition.

They may also be acquired by means of prescription. (609a)

CHAPTER 4

OBLIGATIONS OF THE VENDOR

SECTION 1. - General Provisions

Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the
object of the sale. (1461a)

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of
the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee. (n)
SECTION 2. - Delivery of the Thing Sold

Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the
vendee. (1462a)

Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred.

With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository
where it is stored or kept. (1463a)

Art. 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or
if the latter already had it in his possession for any other reason. (1463a)

Art. 1500. There may also be tradition constitutum possessorium. (n)

Art. 1501. With respect to incorporeal property, the provisions of the first paragraph of article 1498 shall govern. In
any other case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of
the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery.
(1464)

SAN LORENZO DEVELOPMENT CORPORATION v. CA +

490 Phil. 7

TINGA, J.:

From a coaptation of the records of this case, it appears that respondents Miguel Lu and Pacita Zavalla, (hereinafter,
the Spouses Lu) owned two (2) parcels of land situated in Sta. Rosa, Laguna covered by TCT No. T-39022 and TCT No.
T-39023 both measuring 15,808 square meters or a total of 3.1616 hectares.

On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo Babasanta,
(hereinafter, Babasanta) for the price of fifteen pesos (P15.00) per square meter. Babasanta made a downpayment of
fifty thousand pesos (P50,000.00) as evidenced by a memorandum receipt issued by Pacita Lu of the same date.
Several other payments totaling two hundred thousand pesos (P200,000.00) were made by Babasanta.

Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his
favor so that he could effect full payment of the purchase price. In the same letter, Babasanta notified the spouses
about having received information that the spouses sold the same property to another without his knowledge and
consent. He demanded that the second sale be cancelled and that a final deed of sale be issued in his favor.
In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged having agreed to sell the property to
him at fifteen pesos (P15.00) per square meter. She, however, reminded Babasanta that when the balance of the
purchase price became due, he requested for a reduction of the price and when she refused, Babasanta backed out
of the sale. Pacita added that she returned the sum of fifty thousand pesos (P50,000.00) to Babasanta through
Eugenio Oya.

On 2 June 1989, respondent Babasanta, as plaintiff, filed before the Regional Trial Court (RTC), Branch 31, of San
Pedro, Laguna, a Complaint for Specific Performance and Damages[1] against his co-respondents herein, the Spouses
Lu. Babasanta alleged that the lands covered by TCT No. T- 39022 and T-39023 had been sold to him by the spouses
at fifteen pesos (P15.00) per square meter. Despite his repeated demands for the execution of a final deed of sale in
his favor, respondents allegedly refused.

In their Answer,[2] the Spouses Lu alleged that Pacita Lu obtained loans from Babasanta and when the total advances
of Pacita reached fifty thousand pesos (P50,000.00), the latter and Babasanta, without the knowledge and consent of
Miguel Lu, had verbally agreed to transform the transaction into a contract to sell the two parcels of land to
Babasanta with the fifty thousand pesos (P50,000.00) to be considered as the downpayment for the property and the
balance to be paid on or before 31 December 1987. Respondents Lu added that as of November 1987, total
payments made by Babasanta amounted to only two hundred thousand pesos (P200,000.00) and the latter allegedly
failed to pay the balance of two hundred sixty thousand pesos (P260,000.00) despite repeated demands. Babasanta
had purportedly asked Pacita for a reduction of the price from fifteen pesos (P15.00) to twelve pesos (P12.00) per
square meter and when the Spouses Lu refused to grant Babasanta's request, the latter rescinded the contract to sell
and declared that the original loan transaction just be carried out in that the spouses would be indebted to him in the
amount of two hundred thousand pesos (P200,000.00). Accordingly, on 6 July 1989, they purchased Interbank
Manager's Check No. 05020269 in the amount of two hundred thousand pesos (P200,000.00) in the name of
Babasanta to show that she was able and willing to pay the balance of her loan obligation.

Babasanta later filed an Amended Complaint dated 17 January 1990[3] wherein he prayed for the issuance of a writ
of preliminary injunction with temporary restraining order and the inclusion of the Register of Deeds of Calamba,
Laguna as party defendant. He contended that the issuance of a preliminary injunction was necessary to restrain the
transfer or conveyance by the Spouses Lu of the subject property to other persons.

The Spouses Lu filed their Opposition[4] to the amended complaint contending that it raised new matters which
seriously affect their substantive rights under the original complaint. However, the trial court in its Order dated 17
January 1990[5] admitted the amended complaint.

On 19 January 1990, herein petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for
Intervention[6] before the trial court. SLDC alleged that it had legal interest in the subject matter under litigation
because on 3 May 1989, the two parcels of land involved, namely Lot 1764-A and 1764-B, had been sold to it in a
Deed of Absolute Sale with Mortgage.[7] It alleged that it was a buyer in good faith and for value and therefore it had
a better right over the property in litigation.

In his Opposition to SLDC's motion for intervention,[8] respondent Babasanta demurred and argued that the latter
had no legal interest in the case because the two parcels of land involved herein had already been conveyed to him
by the Spouses Lu and hence, the vendors were without legal capacity to transfer or dispose of the two parcels of
land to the intervenor.

Meanwhile, the trial court in its Order dated 21 March 1990 allowed SLDC to intervene. SLDC filed its Complaint-in-
Intervention on 19 April 1990.[9] Respondent Babasanta's motion for the issuance of a preliminary injunction was
likewise granted by the trial court in its Order dated 11 January 1991[10] conditioned upon his filing of a bond in the
amount of fifty thousand pesos (P50,000.00).

SLDC in its Complaint-in-Intervention alleged that on 11 February 1989, the Spouses Lu executed in its favor an
Option to Buy the lots subject of the complaint. Accordingly, it paid an option money in the amount of three
hundred sixteen thousand one hundred sixty pesos (P316,160.00) out of the total consideration for the purchase of
the two lots of one million two hundred sixty-four thousand six hundred forty pesos (P1,264,640.00). After the
Spouses Lu received a total amount of six hundred thirty-two thousand three hundred twenty pesos (P632,320.00)
they executed on 3 May 1989 a Deed of Absolute Sale with Mortgage in its favor. SLDC added that the certificates of
title over the property were delivered to it by the spouses clean and free from any adverse claims and/or notice of lis
pendens. SLDC further alleged that it only learned of the filing of the complaint sometime in the early part of January
1990 which prompted it to file the motion to intervene without delay. Claiming that it was a buyer in good faith,
SLDC argued that it had no obligation to look beyond the titles submitted to it by the Spouses Lu particularly because
Babasanta's claims were not annotated on the certificates of title at the time the lands were sold to it.

After a protracted trial, the RTC rendered its Decision on 30 July 1993 upholding the sale of the property to SLDC. It
ordered the Spouses Lu to pay Babasanta the sum of two hundred thousand pesos (P200,000.00) with legal interest
plus the further sum of fifty thousand pesos (P50,000.00) as and for attorney's fees. On the complaint-in-
intervention, the trial court ordered the Register of Deeds of Laguna, Calamba Branch to cancel the notice of lis
pendens annotated on the original of the TCT No. T-39022 (T-7218) and No. T-39023 (T-7219).

Applying Article 1544 of the Civil Code, the trial court ruled that since both Babasanta and SLDC did not register the
respective sales in their favor, ownership of the property should pertain to the buyer who first acquired possession of
the property. The trial court equated the execution of a public instrument in favor of SLDC as sufficient delivery of
the property to the latter. It concluded that symbolic possession could be considered to have been first transferred
to SLDC and consequently ownership of the property pertained to SLDC who purchased the property in good faith.
Respondent Babasanta appealed the trial court's decision to the Court of Appeals alleging in the main that the trial
court erred in concluding that SLDC is a purchaser in good faith and in upholding the validity of the sale made by the
Spouses Lu in favor of SLDC.

Respondent spouses likewise filed an appeal to the Court of Appeals. They contended that the trial court erred in
failing to consider that the contract to sell between them and Babasanta had been novated when the latter
abandoned the verbal contract of sale and declared that the original loan transaction just be carried out. The
Spouses Lu argued that since the properties involved were conjugal, the trial court should have declared the verbal
contract to sell between Pacita Lu and Pablo Babasanta null and void ab initio for lack of knowledge and consent of
Miguel Lu. They further averred that the trial court erred in not dismissing the complaint filed by Babasanta; in
awarding damages in his favor and in refusing to grant the reliefs prayed for in their answer.

On 4 October 1995, the Court of Appeals rendered its Decision[11] which set aside the judgment of the trial court. It
declared that the sale between Babasanta and the Spouses Lu was valid and subsisting and ordered the spouses to
execute the necessary deed of conveyance in favor of Babasanta, and the latter to pay the balance of the purchase
price in the amount of two hundred sixty thousand pesos (P260,000.00). The appellate court ruled that the Absolute
Deed of Sale with Mortgage in favor of SLDC was null and void on the ground that SLDC was a purchaser in bad faith.
The Spouses Lu were further ordered to return all payments made by SLDC with legal interest and to pay attorney's
fees to Babasanta.

SLDC and the Spouses Lu filed separate motions for reconsideration with the appellate court.[12] However, in a
Manifestation dated 20 December 1995,[13] the Spouses Lu informed the appellate court that they are no longer
contesting the decision dated 4 October 1995.

In its Resolution dated 11 March 1996,[14] the appellate court considered as withdrawn the motion for
reconsideration filed by the Spouses Lu in view of their manifestation of 20 December 1995. The appellate court
denied SLDC's motion for reconsideration on the ground that no new or substantial arguments were raised therein
which would warrant modification or reversal of the court's decision dated 4 October 1995.

Hence, this petition.

SLDC assigns the following errors allegedly committed by the appellate court:

THE COURT OF APPEALS ERRED IN HOLDING THAT SAN LORENZO WAS NOT A BUYER IN GOOD FAITH BECAUSE WHEN
THE SELLER PACITA ZAVALLA LU OBTAINED FROM IT THE CASH ADVANCE OF P200,000.00, SAN LORENZO WAS PUT
ON INQUIRY OF A PRIOR TRANSACTION ON THE PROPERTY.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE ESTABLISHED FACT THAT THE ALLEGED FIRST BUYER,
RESPONDENT BABASANTA, WAS NOT IN POSSESSION OF THE DISPUTED PROPERTY WHEN SAN LORENZO BOUGHT
AND TOOK POSSESSION OF THE PROPERTY AND NO ADVERSE CLAIM, LIEN, ENCUMBRANCE OR LIS PENDENS WAS
ANNOTATED ON THE TITLES.

THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE FACT THAT RESPONDENT BABASANTA HAS
SUBMITTED NO EVIDENCE SHOWING THAT SAN LORENZO WAS AWARE OF HIS RIGHTS OR INTERESTS IN THE
DISPUTED PROPERTY.

THE COURT OF APPEALS ERRED IN HOLDING THAT NOTWITHSTANDING ITS FULL CONCURRENCE ON THE FINDINGS
OF FACT OF THE TRIAL COURT, IT REVERSED AND SET ASIDE THE DECISION OF THE TRIAL COURT UPHOLDING THE
TITLE OF SAN LORENZO AS A BUYER AND FIRST POSSESSOR IN GOOD FAITH. [15]

SLDC contended that the appellate court erred in concluding that it had prior notice of Babasanta's claim over the
property merely on the basis of its having advanced the amount of two hundred thousand pesos (P200,000.00) to
Pacita Lu upon the latter's representation that she needed the money to pay her obligation to Babasanta. It argued
that it had no reason to suspect that Pacita was not telling the truth that the money would be used to pay her
indebtedness to Babasanta. At any rate, SLDC averred that the amount of two hundred thousand pesos
(P200,000.00) which it advanced to Pacita Lu would be deducted from the balance of the purchase price still due
from it and should not be construed as notice of the prior sale of the land to Babasanta. It added that at no instance
did Pacita Lu inform it that the lands had been previously sold to Babasanta.

Moreover, SLDC stressed that after the execution of the sale in its favor it immediately took possession of the
property and asserted its rights as new owner as opposed to Babasanta who has never exercised acts of ownership.
Since the titles bore no adverse claim, encumbrance, or lien at the time it was sold to it, SLDC argued that it had
every reason to rely on the correctness of the certificate of title and it was not obliged to go beyond the certificate to
determine the condition of the property. Invoking the presumption of good faith, it added that the burden rests on
Babasanta to prove that it was aware of the prior sale to him but the latter failed to do so. SLDC pointed out that the
notice of lis pendens was annotated only on 2 June 1989 long after the sale of the property to it was consummated
on 3 May 1989.

Meanwhile, in an Urgent Ex-Parte Manifestation dated 27 August 1999, the Spouses Lu informed the Court that due
to financial constraints they have no more interest to pursue their rights in the instant case and submit themselves to
the decision of the Court of Appeals.[16]

On the other hand, respondent Babasanta argued that SLDC could not have acquired ownership of the property
because it failed to comply with the requirement of registration of the sale in good faith. He emphasized that at the
time SLDC registered the sale in its favor on 30 June 1990, there was already a notice of lis pendens annotated on the
titles of the property made as early as 2 June 1989. Hence, petitioner's registration of the sale did not confer upon it
any right. Babasanta further asserted that petitioner's bad faith in the acquisition of the property is evident from the
fact that it failed to make necessary inquiry regarding the purpose of the issuance of the two hundred thousand
pesos (P200,000.00) manager's check in his favor.

The core issue presented for resolution in the instant petition is who between SLDC and Babasanta has a better right
over the two parcels of land subject of the instant case in view of the successive transactions executed by the
Spouses Lu.

To prove the perfection of the contract of sale in his favor, Babasanta presented a document signed by Pacita Lu
acknowledging receipt of the sum of fifty thousand pesos (P50,000.00) as partial payment for 3.6 hectares of farm lot
situated at Barangay Pulong, Sta. Cruz, Sta. Rosa, Laguna.[17] While the receipt signed by Pacita did not mention the
price for which the property was being sold, this deficiency was supplied by Pacita Lu's letter dated 29 May 1989[18]
wherein she admitted that she agreed to sell the 3.6 hectares of land to Babasanta for fifteen pesos (P15.00) per
square meter.

An analysis of the facts obtaining in this case, as well as the evidence presented by the parties, irresistibly leads to the
conclusion that the agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.

Contracts, in general, are perfected by mere consent,[19] which is manifested by the meeting of the offer and the
acceptance upon the thing which are to constitute the contract. The offer must be certain and the acceptance
absolute.[20] Moreover, contracts shall be obligatory in whatever form they may have been entered into, provided
all the essential requisites for their validity are present.[21]

The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos (P50,000.00) from
Babasanta as partial payment of 3.6 hectares of farm lot situated in Sta. Rosa, Laguna. While there is no stipulation
that the seller reserves the ownership of the property until full payment of the price which is a distinguishing feature
of a contract to sell, the subsequent acts of the parties convince us that the Spouses Lu never intended to transfer
ownership to Babasanta except upon full payment of the purchase price.

Babasanta's letter dated 22 May 1989 was quite telling. He stated therein that despite his repeated requests for the
execution of the final deed of sale in his favor so that he could effect full payment of the price, Pacita Lu allegedly
refused to do so. In effect, Babasanta himself recognized that ownership of the property would not be transferred to
him until such time as he shall have effected full payment of the price. Moreover, had the sellers intended to transfer
title, they could have easily executed the document of sale in its required form simultaneously with their acceptance
of the partial payment, but they did not. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as
a perfected contract to sell.
The distinction between a contract to sell and a contract of sale is quite germane. In a contract of sale, title passes to
the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved
in the vendor and is not to pass until the full payment of the price.[22] In a contract of sale, the vendor has lost and
cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is
retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and
failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming
effective.[23]

The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the purchase price.
There being an obligation to pay the price, Babasanta should have made the proper tender of payment and
consignation of the price in court as required by law. Mere sending of a letter by the vendee expressing the intention
to pay without the accompanying payment is not considered a valid tender of payment.[24] Consignation of the
amounts due in court is essential in order to extinguish Babasanta's obligation to pay the balance of the purchase
price. Glaringly absent from the records is any indication that Babasanta even attempted to make the proper
consignation of the amounts due, thus, the obligation on the part of the sellers to convey title never acquired
obligatory force.

On the assumption that the transaction between the parties is a contract of sale and not a contract to sell,
Babasanta's claim of ownership should nevertheless fail.

Sale, being a consensual contract, is perfected by mere consent[25] and from that moment, the parties may
reciprocally demand performance.[26] The essential elements of a contract of sale, to wit: (1) consent or meeting of
the minds, that is, to transfer ownership in exchange for the price; (2) object certain which is the subject matter of
the contract; (3) cause of the obligation which is established.[27]

The perfection of a contract of sale should not, however, be confused with its consummation. In relation to the
acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title. A mode is the
legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by
which to affect dominion or ownership.[28] Under Article 712 of the Civil Code, "ownership and other real rights over
property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence
of certain contracts, by tradition." Contracts only constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the mode of accomplishing the same.[29] Therefore, sale by itself does not
transfer or affect ownership; the most that sale does is to create the obligation to transfer ownership. It is tradition
or delivery, as a consequence of sale, that actually transfers ownership.

Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in Article 1497 to 1501.[30] The word "delivered" should not be taken
restrictively to mean transfer of actual physical possession of the property. The law recognizes two principal modes
of delivery, to wit: (1) actual delivery; and (2) legal or constructive delivery.
Actual delivery consists in placing the thing sold in the control and possession of the vendee.[31] Legal or
constructive delivery, on the other hand, may be had through any of the following ways: the execution of a public
instrument evidencing the sale;[32] symbolical tradition such as the delivery of the keys of the place where the
movable sold is being kept;[33] traditio longa manu or by mere consent or agreement if the movable sold cannot yet
be transferred to the possession of the buyer at the time of the sale;[34] traditio brevi manu if the buyer already had
possession of the object even before the sale;[35] and traditio constitutum possessorium, where the seller remains in
possession of the property in a different capacity.[36]

Following the above disquisition, respondent Babasanta did not acquire ownership by the mere execution of the
receipt by Pacita Lu acknowledging receipt of partial payment for the property. For one, the agreement between
Babasanta and the Spouses Lu, though valid, was not embodied in a public instrument. Hence, no constructive
delivery of the lands could have been effected. For another, Babasanta had not taken possession of the property at
any time after the perfection of the sale in his favor or exercised acts of dominion over it despite his assertions that
he was the rightful owner of the lands. Simply stated, there was no delivery to Babasanta, whether actual or
constructive, which is essential to transfer ownership of the property. Thus, even on the assumption that the
perfected contract between the parties was a sale, ownership could not have passed to Babasanta in the absence of
delivery, since in a contract of sale ownership is transferred to the vendee only upon the delivery of the thing
sold.[37]

However, it must be stressed that the juridical relationship between the parties in a double sale is primarily governed
by Article 1544 which lays down the rules of preference between the two purchasers of the same property. It
provides:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of
double sale of immovable property. When the thing sold twice is an immovable, the one who acquires it and first
records it in the Registry of Property, both made in good faith, shall be deemed the owner.[38] Verily, the act of
registration must be coupled with good faith that is, the registrant must have no knowledge of the defect or lack of
title of his vendor or must not have been aware of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of his vendor.[39]
Admittedly, SLDC registered the sale with the Registry of Deeds after it had acquired knowledge of Babasanta's claim.
Babasanta, however, strongly argues that the registration of the sale by SLDC was not sufficient to confer upon the
latter any title to the property since the registration was attended by bad faith. Specifically, he points out that at the
time SLDC registered the sale on 30 June 1990, there was already a notice of lis pendens on the file with the Register
of Deeds, the same having been filed one year before on 2 June 1989.

Did the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and
possession in good faith which admittedly had occurred prior to SLDC's knowledge of the transaction in favor of
Babasanta?

We do not hold so.

It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in favor of SLDC
upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than one half of the agreed
purchase price of P1,264,640.00, the Spouses Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in
favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of the prior transaction of the Spouses
Lu with Babasanta. Simply stated, from the time of execution of the first deed up to the moment of transfer and
delivery of possession of the lands to SLDC, it had acted in good faith and the subsequent annotation of lis pendens
has no effect at all on the consummated sale between SLDC and the Spouses Lu.

A purchaser in good faith is one who buys property of another without notice that some other person has a right to,
or interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has
notice of the claim or interest of some other person in the property.[40] Following the foregoing definition, we rule
that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had knowledge of
the prior transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors were still the
registered owners of the property and were in fact in possession of the lands. Time and again, this Court has ruled
that a person dealing with the owner of registered land is not bound to go beyond the certificate of title as he is
charged with notice of burdens on the property which are noted on the face of the register or on the certificate of
title.[41] In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies on
the principle of constructive notice incorporated in Section 52 of the Property Registration Decree (P.D. No. 1529)
which reads, thus:

Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order,
judgment, instrument or entry affecting registered land shall, if registered, filed, or entered in the office of the
Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons
from the time of such registering, filing, or entering.

However, the constructive notice operates as such-by the express wording of Section 52-from the time of the
registration of the notice of lis pendens which in this case was effected only on 2 June 1989, at which time the sale in
favor of SLDC had long been consummated insofar as the obligation of the Spouses Lu to transfer ownership over the
property to SLDC is concerned.
More fundamentally, given the superiority of the right of SLDC to the claim of Babasanta the annotation of the notice
of lis pendens cannot help Babasanta's position a bit and it is irrelevant to the good or bad faith characterization of
SLDC as a purchaser. A notice of lis pendens, as the Court held in Nataño v. Esteban,[42] serves as a warning to a
prospective purchaser or incumbrancer that the particular property is in litigation; and that he should keep his hands
off the same, unless he intends to gamble on the results of the litigation." Precisely, in this case SLDC has intervened
in the pending litigation to protect its rights. Obviously, SLDC's faith in the merit of its cause has been vindicated with
the Court's present decision which is the ultimate denouement on the controversy.

The Court of Appeals has made capital[43] of SLDC's averment in its Complaint-in-Intervention[44] that at the
instance of Pacita Lu it issued a check for P200,000.00 payable to Babasanta and the confirmatory testimony of Pacita
Lu herself on cross-examination.[45] However, there is nothing in the said pleading and the testimony which
explicitly relates the amount to the transaction between the Spouses Lu and Babasanta for what they attest to is that
the amount was supposed to pay off the advances made by Babasanta to Pacita Lu. In any event, the incident took
place after the Spouses Lu had already executed the Deed of Absolute Sale with Mortgage in favor of SLDC and
therefore, as previously explained, it has no effect on the legal position of SLDC.

Assuming ex gratia argumenti that SLDC's registration of the sale had been tainted by the prior notice of lis pendens
and assuming further for the same nonce that this is a case of double sale, still Babasanta's claim could not prevail
over that of SLDC's. In Abarquez v. Court of Appeals,[46] this Court had the occasion to rule that if a vendee in a
double sale registers the sale after he has acquired knowledge of a previous sale, the registration constitutes a
registration in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if
there is no registration at all, and the buyer who has taken possession first of the property in good faith shall be
preferred.

In Abarquez, the first sale to the spouses Israel was notarized and registered only after the second vendee, Abarquez,
registered their deed of sale with the Registry of Deeds, but the Israels were first in possession. This Court awarded
the property to the Israels because registration of the property by Abarquez lacked the element of good faith. While
the facts in the instant case substantially differ from that in Abarquez, we would not hesitate to rule in favor of SLDC
on the basis of its prior possession of the property in good faith. Be it noted that delivery of the property to SLDC
was immediately effected after the execution of the deed in its favor, at which time SLDC had no knowledge at all of
the prior transaction by the Spouses Lu in favor of Babasanta.

The law speaks not only of one criterion. The first criterion is priority of entry in the registry of property; there being
no priority of such entry, the second is priority of possession; and, in the absence of the two priorities, the third
priority is of the date of title, with good faith as the common critical element. Since SLDC acquired possession of the
property in good faith in contrast to Babasanta, who neither registered nor possessed the property at any time,
SLDC's right is definitely superior to that of Babasanta's.
At any rate, the above discussion on the rules on double sale would be purely academic for as earlier stated in this
decision, the contract between Babasanta and the Spouses Lu is not a contract of sale but merely a contract to sell.
In Dichoso v. Roxas,[47] we had the occasion to rule that Article 1544 does not apply to a case where there was a sale
to one party of the land itself while the other contract was a mere promise to sell the land or at most an actual
assignment of the right to repurchase the same land. Accordingly, there was no double sale of the same land in that
case.

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals appealed from is
REVERSED and SET ASIDE and the decision of the Regional Trial Court, Branch 31, of San Pedro, Laguna is
REINSTATED. No costs.

SO ORDERED.

EQUATORIAL V. MAYFAIR- Sale of Land

While execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing sold,
such constructive or symbolic delivery is merely presumptive. It is nullified by the failure of the vendee to take
actual possession of the land sold.

FACTS:

Carmelo & Bauermann, Inc. owned a land, together with two 2-storey buildings at Claro M. Recto Avenue, Manila,
and covered by TCT No. 18529.

On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. fpr 20 years. The lease covered a
portion of the second floor and mezzanine of a two-storey building with about 1,610 square meters of floor area,
which respondent used as Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Lease with Carmelo for another portion of the
latter’s property this time, a part of the second floor of the two-storey building, and two store spaces on the ground
floor. In that space, Mayfair put up another movie house known as Miramar Theater. The Contract of Lease was
likewise for a period of 20 years.

Both leases contained a clause giving Mayfair a right of first refusal to purchase the subject properties. Sadly, on July
30, 1978 - within the 20-year-lease term -- the subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. for eleven million smackers, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the Regional Trial
Court of Manila for the recission of the Deed of Absolute Sale between Carmelo and Equatorial, specific
performance, and damages. RTC decided for Carmelo and Equatorial. Tsk tsk.

CA reversed and ruled for Mayfair. The SC denied a petition questioning the CA decision. What happened is that the
contract did get rescinded, Equatorial got its money back and asserted that Mayfair have the right to purchase the
lots for 11 million bucks.

Decision became final and executory, so Mayfair deposited with the clerk the 11M (less 847grand withholding)
payment for the properties (Carmelo somehow disappeared).

Meanwhile, on Sept 18, 1997, barely five months after Mayfair submitted its Motion for Execution, Equatorial
demanded from Mayfair backrentals and reasonable compensation for the Mayfair’s continued use of the subject
premises after its lease contracts expired. Remember that Mayfair was still occupying the premises during all this
hullabaloo.

ISSUE:

Whether or not Equatorial was the owner of the subject property and could thus enjoy the fruits and rentals.

HELD:NO.

Nor right of ownership was transferred from Carmelo to Equatorial since there was failure to deliver the property to
the buyer. Compound this with the fact that the sale was even rescinded.

The court went on to assert that rent is a civil fruit that belonged to the owner of the property producing it by right of
accession. Hence, the rentals that fell due from the time of the perfection of the sale to petitioner until its rescission
by final judgment should belong to the owner of the property during that period.

We remember from SALES that in a contract of sale, “one of the contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its
equivalent.”

Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him “in any of
the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee.” This right is transferred, not by contract alone, but by tradition or
delivery. There is delivery if and when the thing sold “is placed in the control and possession of the vendee.”

While execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing sold,
such constructive or symbolic delivery is merely presumptive. It is nullified by the failure of the vendee to take actual
possession of the land sold.

For property to be delivered, we need two things. Delivery of property or title, and transfer of control or custody to
the buyer.

Possession was never acquired by the petitioner. It therefore had no rights to rent.

UNION MOTOR CORPORATION, petitioner-appellant, vs. THE COURT OF APPEALS, JARDINE-MANILA FINANCE, INC.,
SPOUSES ALBIATO BERNAL and MILAGROS BERNAL, respondents-appelles.

DECISION

DE LEON, JR., J.:

Before us on appeal, by way of a petition for review on certiorari, is the Decision[1] dated March 30, 1994 and
Resolution[2] dated September 14, 1994 of the Court of Appeals[3] which affirmed the Decision dated March 6, 1989
of the Regional Trial Court of Makati, Metro Manila, Branch 150, in Civil Case No. 920 as well as its Resolution dated
September 14, 1994 which denied the Motion for Reconsideration of the petitioner.

The facts are as follows:

On September 14, 1979, the respondent Bernal spouses purchased from petitioner Union Motor Corporation one
Cimarron Jeepney for Thirty Seven Thousand Seven Hundred Fifty Eight Pesos and Sixty Centavos (P37,758.60) to be
paid in installments. For this purpose, the respondent spouses executed a promissory note and a deed of chattel
mortgage in favor of the petitioner. Meanwhile, the petitioner entered into a contract of assignment of the
promissory note and chattel mortgage with Jardine-Manila Finance, Inc. Through Manuel Sosmea, an agent of the
petitioner, the parties agreed that the respondent spouses would pay the amount of the promissory note to Jardine-
Manila Finance, Inc., the latter being the assignee of the petitioner. To effectuate the sale as well as the assignment
of the promissory note and chattel mortgage, the respondent spouses were required to sign a notice of assignment, a
deed of assignment, a sales invoice, a registration certificate, an affidavit, and a disclosure statement. The
respondent spouses were obliged to sign all these documents for the reason that, according to Sosmea, it was a
requirement of petitioner Union Motor Corporation and Jardine-Manila Finance, Inc. for the respondent spouses to
accomplish all the said documents in order to have their application approved. Upon the respondent spouses tender
of the downpayment worth Ten Thousand Thirty-Seven Pesos (P10,037.00), and the petitioners acceptance of the
same, the latter approved the sale. Although the respondent spouses have not yet physically possessed the vehicle,
Sosmea required them to sign the receipt as a condition for the delivery of the vehicle.

The respondent spouses continued paying the agreed installments even if the subject motor vehicle remained
undelivered inasmuch as Jardine-Manila Finance, Inc. promised to deliver the subject jeepney. The respondent
spouses have paid a total of Seven Thousand Five Hundred Seven Pesos (P7,507.00) worth of installments before
they discontinued paying on account of non-delivery of the subject motor vehicle. According to the respondent
spouses, the reason why the vehicle was not delivered was due to the fact that Sosmea allegedly took the subject
motor vehicle in his personal capacity.

On September 11, 1981, Jardine-Manila Finance, Inc., filed a complaint for a sum of money, docketed as Civil Case
No. 42849, against the respondent Bernal spouses before the then Court of First Instance of Manila. This case was
later on transferred to the Regional Trial Court of Makati, Branch 150. On November 10, 1981, the complaint was
amended to include petitioner Union Motor Corporation as alternative defendant, the reason being that if the
respondent spouses refusal to pay Jardine-Manila Finance, Inc. was due to petitioners non-delivery of the unit, the
latter should pay Jardine-Manila Finance, Inc. what has been advanced to the petitioner. After the petitioner filed its
answer, the respondent spouses filed their amended answer with cross-claim against the former and counterclaim
against Jardine-Manila Finance, Inc. Following the presentation of evidence of Jardine-Manila Finance, Inc., the
respondent spouses presented as witnesses Albiato Bernal and Pacifico Tacub in support of their defense and
counterclaim against the plaintiff and cross-claim against the petitioner. The petitioner did not present any evidence
inasmuch as the testimony of the witness it presented was ordered stricken off the record for his repeated failure to
appear for cross-examination on the scheduled hearings. The trial court deemed the presentation of the said witness
as having been waived by the petitioner.

On March 6, 1989, the trial court rendered a decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering:

1. Plaintiff to pay spouses Bernals the sum of P7,507.15 plus legal interest until fully paid;

2. Union Motor Corporation to pay defendants spouses Bernals the downpayment in the amount of P10,037.00, plus
legal interest until fully paid;

3. Union Motor Corporation to pay plaintiff P23,268.29, plus legal interest until fully paid, and attorneys fees
equivalent to 20% of the amount due to plaintiff.

Union Motor Corporation shall further pay defendants spouses Bernals the sum of P20,000.00 as moral damages,
P10,000.00 as attorneys fees and costs of suit.[4]
The petitioner interposed an appeal before the Court of Appeals while the respondent spouses appealed to hold the
petitioner solidarily liable with Jardine-Manila Finance, Inc. The appellate court denied both appeals and affirmed the
trial courts decision by holding that:

Now, as to the appeal of defendant Union Motors, it must be noted that said defendant had failed to adduce
evidence in court to support its claim of non-liability. We cannot see how the absence of any evidence in favor of said
defendant can result in favorable reliefs to its side on appeal. There is simply no evidence to speak of in appellant
Union Motors favor to cause a reversal of the lower courts decision. In the case of Tongson v. C.A. G.R. No. 77104,
Nov. 6, 1992, the Supreme Court reiterated that:

As mandated by the Rules of Court, each party must prove his own affirmative allegation, i.e., one who asserts the
affirmative of the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a
favorable judgment: by preponderance of evidence in civil cases, and by proof beyond reasonable doubt in criminal
cases. x x x.

Hence, the instant petition anchored on the following assigned errors:

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT
FINDING THAT THE LOWER COURT A QUOS DECISION OF MARCH 6, 1989 IS CONTRARY TO LAW AND THE EVIDENCE
ON RECORD;

II

THE HONORALBLE COURT OF APPEALS (SECOND DIVISION) GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT
FINDING THAT THE APPEALED DECISION WAS RENDERED IN DEPRIVATION AND IN DENIAL OF HEREIN PETITIOENR-
APPELLANTS RIGHT TO DUE PROCESS.

The first issue to be resolved in the instant case is whether there has been a delivery, physical or constructive, of the
subject motor vehicle.

On this score, petitioner Union Motor Corporation maintains that the respondent spouses are not entitled to a return
of the downpayment for the reason that there was a delivery of the subject motor vehicle. According to the
petitioner, the appellate court erred in holding that no delivery was made by relying exclusively on the testimonial
evidence of respondent Albiato Bernal without considering the other evidence on record, like the sales invoice and
delivery receipt which constitute an admission that there was indeed delivery of the subject motor vehicle. Also,
there was a constructive delivery of the vehicle when respondent Albiato Bernal signed the registration certificate of
the subject vehicle. Inasmuch as there was already delivery of the subject motor vehicle, ownership has been
transferred to the respondent spouses. The Chattel Mortgage Contract signed by the respondent Bernal spouses in
favor of the petitioner likewise proves that ownership has already been transferred to them for the reason that,
under Article 2085 of the New Civil Code, the mortgagor must be the owner of the property.[5] As owners of the
jeepney, the respondent Bernal spouses should bear the loss thereof in accordance with Article 1504 of the New Civil
Code which provides that when the ownership of goods is transferred to the buyer, the goods are at the buyers risk
whether actual delivery has been made or not. These, then, are the contentions of the petitioner.

The main allegation of the respondent Bernal spouses, on the other hand, is that they never came into possession of
the subject motor vehicle. Thus, it is but appropriate that they be reimbursed by the petitioner of the initial payment
which they made. They also claim that Jardine-Manila Finance, Inc., and the petitioner conspired to defraud and
deprive them of the subject motor vehicle for which they suffered damages.

We rule in favor of the respondent Bernal spouses.

Undisputed is the fact that the respondent Bernal spouses did not come into possession of the subject Cimarron
jeepney that was supposed to be delivered to them by the petitioner. The registration certificate, receipt and sales
invoice that the respondent Bernal spouses signed were explained during the hearing without any opposition by the
petitioner. According to testimonial evidence adduced by the respondent spouses during the trial of the case, the
said documents were signed as a part of the processing and for the approval of their application to buy the subject
motor vehicle. Without such signed documents, no sale, much less delivery, of the subject jeepney could be made.
The documents were not therefore an acknowledgment by respondent spouses of the physical acquisition of the
subject motor vehicle but merely a requirement of petitioner so that the said subject motor vehicle would be
delivered to them.

We have ruled that the issuance of a sales invoice does not prove transfer of ownership of the thing sold to the
buyer; an invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has
been considered not a bill of sale.[6]

The registration certificate signed by the respondent spouses does not conclusively prove that constructive delivery
was made nor that ownership has been transferred to the respondent spouses. Like the receipt and the invoice, the
signing of the said documents was qualified by the fact that it was a requirement of petitioner for the sale and
financing contract to be approved. In all forms of delivery, it is necessary that the act of delivery, whether
constructive or actual, should be coupled with the intention of delivering the thing. The act, without the intention, is
insufficient.[7] The critical factor in the different modes of effecting delivery which gives legal effect to the act, is the
actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention, there is no
tradition.[8] Enlightening is Addison v. Felix and Tioco[9] wherein we ruled that:

The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be delivered
when it is placed in the hands and possession of the vendee. (Civil Code, Art. 1462). It is true that the same article
declares that the execution of a public instrument is equivalent to the delivery of the thing which is the object of the
contract, but, in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor
shall have had control over the thing sold that, at the moment of the sale, its material delivery could have been
made. It is not enough to confer upon the purchaser the ownership and the right of possession. The thing sold must
be placed in his control. When there is no impediment whatever to prevent the thing sold passing into the tenancy of
the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is
sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or through another in his name, because such tenancy and
enjoyment are opposed by the interposition of another will, then fiction yields to reality-the delivery has not been
effected. (Italics supplied)

The act of signing the registration certificate was not intended to transfer the ownership of the subject motor vehicle
to respondent Bernal spouses inasmuch as the petitioner still needed the same for the approval of the financing
contract with Jardine-Manila Finance, Inc. The record shows that the registration certificate was submitted to
Jardine-Manila Finance, Inc., which took possession thereof until Sosmea requested the latter to hand over the said
document to him. The fact that the registration certificate was still kept by Jardine-Manila Finance, Inc. and its
unhesitating move to give the same to Sosmea just goes to show that the respondent spouses still had no complete
control over the subject motor vehicle as they did not even possess the said certificate of registration nor was their
consent sought when Jardine-Manila Finance, Inc. handed over the said document to Sosmea.

Inasmuch as there was neither physical nor constructive delivery of a determinate thing, (in this case, the subject
motor vehicle) the thing sold remained at the sellers risk.[10] The petitioner should therefore bear the loss of the
subject motor vehicle after Sosmea allegedly stole the same.

Petitioners reliance on the Chattel Mortgage Contract executed by the respondent spouses does not help its
assertion that ownership has been transferred to the latter since there was neither delivery nor transfer of
possession of the subject motor vehicle to respondent spouses. Consequently, the said accessory contract of chattel
mortgage has no legal effect whatsoever inasmuch as the respondent spouses are not the absolute owners thereof,
ownership of the mortgagor being an essential requirement of a valid mortgage contract. The Carlos case[11] cited
by the petitioner is not applicable to the case at bar for the reason that in the said case, apart from the fact that it
has a different issue, the buyer took possession of the personal property and was able to sell the same to a third
party. In the instant case, however, the respondent spouses never acquired possession of the subject motor vehicle.
The manifestations of ownership are control and enjoyment over the thing owned. The respondent spouses never
became the actual owners of the subject motor vehicle inasmuch as they never had dominion over the same.

The petitioner also disputes the finding of the appellate court that there was no delivery. It did not consider,
according to the petitioner, the fact that the circumstance of non-delivery was not shown and that the respondent
spouses never made any demand for the possession of the vehicle. Contrary to the petitioners allegation, the
respondent spouses presented sufficient evidence to prove that Sosmea took delivery and possession of that subject
motor vehicle in his personal capacity as shown by a document[12] on which he (Sosmea) personally acknowledged
receipt of the registration certificate from Jardine-Manila Finance, Inc. Also, respondent Albiato Bernal testified to
the effect that they went several times to the office of the petitioner to demand the delivery of the subject motor
vehicle. The petitioner failed to refute that testimonial evidence considering that it waived its right to present
evidence.

Anent the second issue, the petitioner claims that the trial court committed a violation of due process when it
ordered the striking off of the testimony of the petitioners witness as well as the declaration that petitioner has
abandoned its right to present evidence. According to the petitioner, the delays in the hearing of the case were
neither unjust nor deliberate. It just so happened that from August 5, 1986 up to June 1987, the designated counsel
for the petitioner was either appointed to the government or was short of time to go over the records of the case
inasmuch as he was a new substitute counsel. During the last time the petitioners counsel moved for the
postponement of the case, witness Ambrosio Balones was not available due to gastro-enteritis as shown by a medical
certificate.

Well-settled is the rule that factual findings of the Court of Appeals are conclusive on the parties and not reviewable
by the Supreme Court and they carry even more weight when the Court of Appeals affirms the factual findings of the

trial court.[13] In the present case, the trial court found that after the direct testimony of petitioners witness,
Ambrosio Balones, the continuation of the cross-examination was postponed and re-scheduled for four (4) times
from November 21, 1986 up to June 19, 1987, all at the instance of petitioner Union Motor Corporation. For three (3)
times, the witness did not appear whenever the case was called for hearing. On June 19, 1987, when asked by the
trial court why the witness was not present, the petitioners counsel could not give any good reason for his absence.
Neither did the petitioner offer to present any other witness to testify on that day. The appellate court assented to
these findings by quoting the decision of the trial court, to wit:
Defendant Union Motors Corporation has no evidence as the testimony of its only witness, Ambrosio Balones, was
orderd stricken off the record in the hearing of June 19, 1987, for his continuous failure to appear on scheduled
hearings. The Court further considered said defendant to have waived further presentation of evidence.[14]

The petitioner attempts to shift the blame on the respondents for the failure of its witness, Balones, to finish his
testimony. It was at the instance of Atty. Tacub, counsel for the respondents, that the testimony of petitioners
witness, Balones, was discontinued after Atty. Tacub asked for a recess and later on for the postponement of the
cross-examination of the said witness. The petitioner had the duty to produce its witness when he was called to finish
his testimony. To place the blame on the respondent spouses is to put a premium on the negligence of the petitioner
to require its own witness to testify on cross-examination. By presenting witness Balones on direct-examination, the
petitioner had the corresponding duty to make him available for cross-examination in accordance with fair play and
due process. The respondents should not be prejudiced by the repeated failure of the petitioner to present its said
witness for cross-examination. Hence, the trial court ordered that the unfinished testimony of said witness be
stricken off the record.

However, we cannot affirm that part of the ruling of the courts a quo awarding moral damages to the respondents.
For moral damages to be awarded in cases of breach of contract, the plaintiff must prove bad faith or fraudulent act
on the part of the defendant.[15] In the instant case, the allegations about connivance and fraudulent schemes by
the petitioner and Manuel Sosmea were merely general allegations and without any specific evidence to sustain the
said claims. In fact, Exhibit 1 which bears the name and signature of Sosmea as the person who received the
registration certificate militates against the respondent spouses claim that the petitioner connived with its agent to
deprive them of the possession of the subject motor vehicle. The said document shows that Sosmea acted only in his
personal and private capacity, thereby effectively excluding any alleged participation of the petitioner in depriving
them of the possession of the subject motor vehicle. The petitioner should not be held liable for the acts of its agent
which were done by the latter in his personal capacity.

However, we affirm the award of attorneys fees. When a party is compelled to litigate with third persons or to incur
expenses to protect his interest, attorneys fees should be awarded.[16] In the present case, the respondent spouses
were forced to implead the petitioner Union Motor Corporation on account of the collection suit filed against them
by Jardine-Manila Finance, Inc., a case which was eventually won by the respondent spouses.

WHEREFORE, the appealed Decision dated March 30, 1994 of the Court of Appeals is hereby AFFIRMED with the
MODIFICATION that the award of moral damages is deleted. With costs against the petitioner.SO ORDERED.

Title III. - DONATION

CHAPTER 1

NATURE OF DONATIONS

Art. 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another,
who accepts it. (618a)

Art. 726. When a person gives to another a thing or right on account of the latter's merits or of the services rendered
by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a
burden which is less than the value of the thing given, there is also a donation. (619)

EFFECT OF DONATIONS AND LIMITATIONS THEREON


Art. 750. The donations may comprehend all the present property of the donor, or part thereof, provided he
reserves, in full ownership or in usufruct, sufficient means for the support of himself, and of all relatives who, at the
time of the acceptance of the donation, are by law entitled to be supported by the donor. Without such reservation,
the donation shall be reduced in petition of any person affected. (634a)

Art. 751. Donations cannot comprehend future property.

By future property is understood anything which the donor cannot dispose of at the time of the donation. (635)

Art. 752. The provisions of Article 750 notwithstanding, no person may give or receive, by way of donation, more
than he may give or receive by will.

Art. 755. The right to dispose of some of the things donated, or of some amount which shall be a charge thereon,
may be reserved by the donor; but if he should die without having made use of this right, the property or amount
reserved shall belong to the donee. (639)

Art. 756. The ownership of property may also be donated to one person and the usufruct to another or others,
provided all the donees are living at the time of the donation. (640a)

CHAPTER 3

EFFECT OF DONATIONS AND LIMITATIONS THEREON

Art. 750. The donations may comprehend all the present property of the donor, or part thereof, provided he
reserves, in full ownership or in usufruct, sufficient means for the support of himself, and of all relatives who, at the
time of the acceptance of the donation, are by law entitled to be supported by the donor. Without such reservation,
the donation shall be reduced in petition of any person affected. (634a)

Art. 751. Donations cannot comprehend future property.

By future property is understood anything which the donor cannot dispose of at the time of the donation. (635)

Art. 752. The provisions of Article 750 notwithstanding, no person may give or receive, by way of donation, more
than he may give or receive by will.

The donation shall be inofficious in all that it may exceed this limitation. (636)

Art. 753. When a donation is made to several persons jointly, it is understood to be in equal shares, and there shall
be no right of accretion among them, unless the donor has otherwise provided.

The preceding paragraph shall not be applicable to donations made to the husband and wife jointly, between whom
there shall be a right of accretion, if the contrary has not been provided by the donor. (637)

Art. 754. The donee is subrogated to all the rights and actions which in case of eviction would pertain to the donor.
The latter, on the other hand, is not obliged to warrant the things donated, save when the donation is onerous, in
which case the donor shall be liable for eviction to the concurrence of the burden.

The donor shall also be liable for eviction or hidden defects in case of bad faith on his part. (638a)
Art. 755. The right to dispose of some of the things donated, or of some amount which shall be a charge thereon,
may be reserved by the donor; but if he should die without having made use of this right, the property or amount
reserved shall belong to the donee. (639)

Art. 756. The ownership of property may also be donated to one person and the usufruct to another or others,
provided all the donees are living at the time of the donation. (640a)

Art. 757. Reversion may be validly established in favor of only the donor for any case and circumstances, but not in
favor of other persons unless they are all living at the time of the donation.

Any reversion stipulated by the donor in favor of a third person in violation of what is provided in the preceding
paragraph shall be void, but shall not nullify the donation. (614a)

Art. 758. When the donation imposes upon the donee the obligation to pay the debts of the donor, if the clause does
not contain any declaration to the contrary, the former is understood to be liable to pay only the debts which appear
to have been previously contracted. In no case shall the donee be responsible for the debts exceeding the value of
the property donated, unless a contrary intention clearly appears. (642a)

Art. 759. There being no stipulation regarding the payment of debts, the donee shall be responsible therefor only
when the donation has been made in fraud of creditors.

The donation is always presumed to be in fraud of creditors, when at the time thereof the donor did not reserve
sufficient property to pay his debts prior to the donation. (643)

OSORIO v. OSORIO

GR No.L-10474, March 29, 1916

41 PHIL 531

FACTS: Francisco Osorio y Garcia filed a written complaint alleging that he is a natural son of one Francisco Osorio y
Reyes who died in 1896; and that he had been in continuous possession of the status of natural son of said Osorio y
Reyes, as proven by direct acts of the latter and of his family; that the defendant Soledad Osorio, lawful daughter and
lawful heir of said Osorio y Reyes, be ordered to recognize the plaintiff as a natural son of said Osorio y Reyes, and is
entitled to share in his father's estate; and, furthermore, that said defendant be ordered to furnish subsistence to
plaintiff in such amount as the court might deem proper to fix. The evidence offered relating to the fact of filiation of
Osorio y Garcia to Osorio Reyes is strong and unimpeachable, so that the court found the legitimacy of claim of
Osorio y Garcia to be properly established.

ISSUE: Has the plaintiff the right to be recognized as co-heir and be entitled to the rights appertaining to his deceased
father's estate?

HELD: Yes. Recognition of the child as a natural child must be made if he has been in continuous possession of his
filiation, proven by the attendance of his father at his baptism, in the certificate in which his name and that of his
mother appear, though the document contains errors, and by his father's statement to various friends that the boy
was his natural son, and by his father's always having attended to the care, education and support of his son.

So that the plaintiff, Francisco Osorio y Garcia, according to the facts proven in this case and the law on the subject,
is entitled to have his half sister Soledad Osorio, a legitimate daughter of the father of both of them, recognize him as
being the natural, recognized son of Francisco Osorio y Reyes and as entitled to the rights granted him by law in
respect to his deceased father's estate, all of which is in possession of the defendant spouses.

CENTRAL PHILIPPINE UNIVERSITY VS. CA- Resolutory Condition

When a person donates land to another on the condition that a construction be made, the condition is akin to a
resolutory (not suspensive) one. The non-compliance to the condition extinguishes the right to the donation, but it
need not occur first in order for the donation to be effected and validated.

FACTS:

In 1939, the late Don Ramon Lopez was a member of the board of trustees of Central Philippine University when he
executed a donation to the school, stating that the land must be for exclusive use of a medical college. 50 years later,
The heirs of Ramon Lopez filed an action to annul the donation, stating the failure of the school to construct the
medical college over the land. RTC ruled in favor of respondents, which the CA affirmed.

ISSUE: Whether there is a resolutory condition

RULING:

The donation was an onerous one, where failure of the school to construct a medical college would give the heirs the
power to revoke the donation, reverting the property back to the heirs of the donor. It is therefore a resolutory
condition. Although, the period was not stated, and the courts should have fixed a period, in this case, 50 years has
lapsed since the donation was executed, thus fixing a period would serve no purpose and the property must already
be reverted back.

Dissenting Opinion:

Davide considered the donation as "modal" where the obligations are unconditional, and the fulfillment,
performance, existence or extinguishment is not dependent on any future and uncertain event. It is more accurate to
say that the condition stated is not a resolutory condition, rather a obligation itself, being an onerous donation. Since
this is an onerous donation, it has to comply with the rules on Oblicon, and therefore the courts should have fixed a
period.

DE LUNA VS. JUDGE ABRIGO- Onerous Donation

FACTS:

De Luna donated a portion of a 75 sq. m. lot to the Luzonian University Foundation. The donation was embodied in a
Deed of Donation Intervivos and was subject to certain terms and conditions. In case of violation or non-compliance,
the property would automatically revert to the donor. When the Foundation failed to comply with the conditions, de
Luna “revived” the said donation by executing a Revival of Donation Intervivos with the following terms and
conditions:

1) The Donee shall construct on the land and at its expense a Chapel, Nursery, and Kindergarten School to be named
after St. Veronica

2) Construction shall start immediately and must be at least 70% completed three years from the date of the Deed
unless the Donor grants extensions

3) Automatic reversion in case of violation


The Foundation accepted and the donation was registered and annotated in the TCT. By a Deed of Segregation, the
foundation was issued a TCT for area the lot donated while the remaining area was retained by the De Luna.

The children and only heirs of the late De Luna (died after the donation) filed a complaint with the RTC for the
cancellation of the donation on the ground that the terms were violated. The Foundation defended itself by saying
that it had partially and substantially complied with the conditions and that the donor granted it an indefinite
extension of time to complete construction.

The RTC dismissed the petition on the ground of prescription (for being filed after 4 years). The heirs did not file an
MR and went straight to the SC.

ISSUE:

Whether the action prescribes in 4 years (based on art. 764 NCC-judicial decree of revocation of the donation) or in
10 years (based on art. 1144 –enforcement of a written contract)

RULING: 10 years

The donation subject of this case is one with an onerous cause.

Under the old Civil Code, it is a settled rule that donations with an onerous cause are governed not by the law on
donations but by the rules on contract. On the matter of prescription of actions for the revocation of onerous
donation, it was held that the general rules on prescription apply. The same rules apply under the New Civil Code as
provided in Article 733 thereof which provides:

Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the
provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

It is true that under Article 764 of the New Civil Code, actions for the revocation of a donation must be brought
within four (4) years from the non-compliance of the conditions of the donation. However, said article does not apply
to onerous donations in view of the specific provision of Article 733 providing that onerous donations are governed
by the rules on contracts. The rules on prescription and not the rules on donation applies in the case at bar.

PARTENZA LUCERNA VDA. DE TUPAS, petitioner-appellant,

vs.

BRANCH XLIII of the HON. REGIONAL TRIAL COURT OF NEGROS OCCIDENTAL, respondent, and TUPAS
FOUNDATION, INC., private respondent-appellee.

Abraham D. Caña for petitioner-appellant.

Jose R. Edis for private respondent-appellee.


NARVASA, J.:

Involved in this appeal is the question of whether or not a donation inter vivos by a donor now deceased is inofficious
and should be reduced at the instance of the donor's widow.

Epifanio R. Tupas died on August 20, 1978 in Bacolod City, childless, leaving his widow, Partenza Lucerna, as his only
surviving compulsory heir. He also left a win dated May 18, 1976, which was admitted to probate on September 30,
1980 in Special Proceedings No. 13994 of the Court of First Instance of Negros Occidental. Among the assets listed in
his will were lots Nos. 837, 838 and 839 of the Sagay Cadastre, admittedly his private capital. However, at the time of
his death, these lots were no longer owned by him, he having donated them the year before (on August 2, 1977) to
the Tupas Foundation, Inc., which had thereafter obtained title to said lots.

Claiming that said donation had left her practically destitute of any inheritance, Tupas' widow brought suit against
Tupas Foundation, Inc. in the same Court of First Instance of Negros Occidental (docketed as Civil Case No. 16089) to
have the donation declared inofficious insofar as it prejudiced her legitime, therefore reducible " ... by one-half or
such proportion as ... (might be deemed) justified ... and " ... the resulting deduction ... " restored and conveyed or
delivered to her. The complaint also prayed for attorney's fees and such other relief as might be proper.

The Trial Court did not see things her way. Upon the facts above stated, on which the parties stipulated, 1 said Court
dismissed the complaint for lack of merit, rejecting her claim on several grounds, viz.:

... (1) Article 900 relied upon by plaintiff is not applicable because the properties which were disposed of by way of
donation one year before the death of Epifanio Tupas were no longer part of his hereditary estate at the time of his
death on August 20, 1978; (2) the donation properties were Epifanio's capital or separate estate; and (3) Tupas
Foundation, Inc. being a stranger and not a compulsory heir, the donation inter vivos made in its favor was not
subject to collation under Art. 106 1, C.C.2

The Trial Court is in error on all counts and must be reversed.

A person's prerogative to make donations is subject to certain limitations, one of which is that he cannot give by
donation more than he can give by will (Art. 752, Civil Code). 3 If he does, so much of what is donated as exceeds
what he can give by will is deemed inofficious and the donation is reducible to the extent of such excess, though
without prejudice to its taking effect in the donor's lifetime or the donee's appropriating the fruits of the thing
donated (Art. 771, Civil Code). Such a donation is, moreover, collationable that is, its value is imputable into the
hereditary estate of the donor at the tune of his death for the purpose of determining the legitime of the forced or
compulsory heirs and the freely disposable portion of the estate. This is true as well of donations to strangers as of
gifts to compulsory heirs, although the language of Article 1061 of the Civil Code would seem to limit collation to the
latter class of donations. And this has been held to be a long-established rule in Liguez vs. Honorable Court of
Appeals, et al., 4 where this Court said:

... Hence, the forced heirs are entitled to have the donation set aside in so far as inofficious: i.e., in excess of the
portion of free disposal (Civil Code of 1889, Articles 636, 645), computed as provided in Articles 818 and 819, and
bearing in mind that collationable gifts' under Article 818 should include gifts made not only in favor of the forced
heirs, but even those made in favor of strangers, as decided by the Supreme Court of Spain in its decision of 4 May
1899 and 16 June 1902. So that in computing the legitimes, the value of the property donated to herein appellant,
Conchita Liguez, should be considered part of the donor's estate. Once again, only the court of origin has the
requisite data to determine whether the donation is inofficious or not. 5

The fact, therefore, that the donated property no longer actually formed part of the estate of the donor at the time
of his death cannot be asserted to prevent its being brought to collation. Indeed, it is an obvious proposition that
collation contemplates and particularly applies to gifts inter vivos. 6 The further fact that the lots donated were
admittedly capital or separate property of the donor is of no moment, because a claim of inofficiousness does not
assert that the donor gave what was not his, but that he gave more than what was within his power to give.

Since it is clear that the questioned donation is collationable and that, having been made to a stranger (to the donor)
it is, by law 7 chargeable to the freely disposable portion of the donor's estate, to be reduced insofar as inofficious,
i.e., it exceeds said portion and thus impairs the legitime of the compulsory heirs, in order to find out whether it is
inofficious or not, recourse must be had to the rules established by the Civil Code for the determination of the
legitime and, by extension, of the disposable portion. These rules are set forth in Articles 908, 909 and 910 of the
Code, on the basis of which the following step-by-step procedure has been correctly outlined:

(1) determination of the value of the property which remains at the time of the testator's death;

(2) determination of the obligations, debts, and charges which have to be paid out or deducted from the value
of the property thus left;

(3) the determination of the difference between the assets and the liabilities, giving rise to the hereditary estate;

(4) the addition to the net value thus found, of the value, at the time they were made, of donations subject to
collation; and
(5) the determination of the amount of the legitimes by getting from the total thus found the portion that the
law provides as the legitime of each respective compulsory heir.8

Deducting the legitimes from the net value of the hereditary estate leaves the freely disposable portion by which the
donation in question here must be measured. If the value of the donation at the time it was made does not exceed
that difference, then it must be allowed to stand. But if it does, the donation is inofficious as to the excess and must
be reduced by the amount of said excess. In this case, if any excess be shown, it shall be returned or reverted to the
petitioner-appellant as the sole compulsory heir of the deceased Epifanio R. Tupas.

For obvious reasons, this determination cannot now be made, as it requires appreciation of data not before this
Court and may necessitate the production of evidence in the Court a quo.

WHEREFORE, the appealed decision is reversed and petitioner-appellant Partenza Lucerna Vda. de Tupas is adjudged
entitled to so much of the donated property in question, as may be found in excess of the freely disposable portion
of the estate of Epifanio B. Tupas, determined in the manner above-indicated. Let the case be remanded to the Trial
Court for further appropriate proceedings in accordance with this decision.

SO ORDERED.

BUHAY DE ROMA, petitioner,

vs.

THE HONORABLE COURT OF APPEALS and FELICIDAD CARINGAL, as Guardian of Rosalinda de Roma, respondents.

CRUZ, J.:

Candelaria de Roma had two legally adopted daughters, Buhay de Roma and Rosalinda de Roma. She died intestate
on April 30, 1971, and administration proceedings were instituted in the Court of First Instance of Laguna by the
private respondent as guardian of Rosalinda. Buhay was appointed administratrix and in due time filed an inventory
of the estate. This was opposed by Rosalinda on the ground that certain properties earlier donated by Candelaria to
Buhay, and the fruits thereof, had not been included.1

The properties in question consisted of seven parcels of coconut land worth P10,297.50.2 There is no dispute
regarding their evaluation; what the parties cannot agree upon is whether these lands are subject to collation. The
private respondent rigorously argues that it is, conformably to Article 1061 of the Civil Code. Buhay, for her part,
citing Article 1062, claims she has no obligation to collate because the decedent prohibited such collation and the
donation was not officious.

The two articles provide as follows:

Article 1061. Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the
estate any property or right which he may have received from the decedent during the lifetime of the latter, by way
of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of
each heir, and in the account of the partition.

Article 1062. Collation shall not take place among compulsory heirs if the donor should have so expressly provided, or
if the donor should repudiate the inheritance, unless the donation should be reduced as inofficious.

The issue was resolved in favor of the petitioner by the trial court,* which held that the decedent, when she made
the donation in favor of Buhay, expressly prohibited collation. Moreover, the donation did not impair the legitimes of
the two adopted daughters as it could be accommodated in, and in fact was imputed to, the free portion of
Candelaria's estate.3

On appeal, the order of the trial court was reversed, the respondent court** holding that the deed of donation
contained no express prohibition to collate as an exception to Article 1062. Accordingly, it ordered collation and
equally divided the net estate of the decedent, including the fruits of the donated property, between Buhay and
Rosalinda.4

The pertinent portions of the deed of donation are as follows:

IKALAWA. Na alang-alang sa aking pagmamahal, pagtingin at pagsisilbi sa akin ng aking anak na si BUHAY DE ROMA,
kasal kay Arabella Castaneda, may karampatang gulang, mamamayang Pilipino at naninirahan at may pahatirang-
sulat din dito sa Lunsod ng San Pablo sa pamamagitan ng kasulatang ito ay kusang-loob kong ibinibigay,
ipinagkakaloob at inililipat sa nabanggit na BUHAY DE ROMA, sa kanyang mga kahalili at tagapagmana, sa
pamamagitan ng pagbibigay na di na mababawing muli, ang lahat ng mga lagay ng lupa na sinasabi sa itaas, sa ilalim
ng kasunduan na ngayon pa ay siya na ang nagmamay-aring tunay ng mga lupang ito at kanya nang maaring ipalipat
ang mga hoja declaratoria ng mga lupang ito sa kanyang pangalan, datapwa't samantalang ako ay nabubuhay, ay ako
rin ang makikinabang sa mga mapuputi at mamomosesion sa mga nasabing lupa;
IKATLO. Na pinagtibay ko na ako ay marami pang ibang mga pag-aari sa sapat pang aking ikabuhay at sa pagbibigay
kong ito ay hindi masisira ang legitimate ng mga tao na dapat magmana sa akin, sapagkat ang mga lupang sinasabi sa
itaas ay bahagui ng aking kabuhayan na ako ay may layang ipamigay kahit na kaninong tao na kung tawagin ay Libre
Disposicion. 5

We agree with the respondent court that there is nothing in the above provisions expressly prohibiting the collation
of the donated properties. As the said court correctly observed, the phrase "sa pamamagitan ng pagbibigay na di na
mababawing muli" merely described the donation as "irrevocable" and should not be construed as an express
prohibition against collation.6 The fact that a donation is irrevocable does not necessarily exempt the subject thereof
from the collation required under Article 1061.

We surmise from the use of such terms as "legitime" and "free portion" in the deed of donation that it was prepared
by a lawyer, and we may also presume he understood the legal consequences of the donation being made. It is
reasonable to suppose, given the precise language of the document, that he would have included therein an express
prohibition to collate if that had been the donor's intention.

Anything less than such express prohibition will not suffice under the clear language of Article 1062.1awphil The
suggestion that there was an implied prohibition because the properties donated were imputable to the free portion
of the decedent's estate merits little consideration. Imputation is not the question here, nor is it claimed that the
disputed donation is officious The sole issue is whether or not there was an express prohibition to collate, and we see
none.

The intention to exempt from collation should be expressed plainly and unequivocally as an exception to the general
rule announced in Article 1062. Absent such a clear indication of that intention, we apply not the exception but the
rule, which is categorical enough.

There is no need to dwell long on the other error assigned by the petitioner regarding the decision of the appealed
case by the respondent court beyond the 12-month period prescribed by Article X, Section 11 (1) of the 1973
Constitution. As we held in Marcelino v. Cruz,7 the said provision was merely directory and failure to decide on time
would not deprive the corresponding courts of jurisdiction or render their decisions invalid.

It is worth stressing that the aforementioned provision has now been reworded in Article VIII, Section 15, of the 1987
Constitution, which also impresses upon the courts of justice, indeed with greater urgency, the need for the speedy
disposition of the cases that have been clogging their dockets these many years. Serious studies and efforts are now
being taken by the Court to meet that need.
WHEREFORE, the appealed decision is AFFIRMED in toto, with costs against the petitioner. It is so ordered.

Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.

2. CLASSIFICATION

ONEROUS

Art. 726. When a person gives to another a thing or right on account of the latter's merits or of the services rendered
by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a
burden which is less than the value of the thing given, there is also a donation. (619)

Art. 733. Donations with an onerous cause shall be governed by the rules on contracts and remuneratory donations
by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed. (622)

Art. 758. When the donation imposes upon the donee the obligation to pay the debts of the donor, if the clause does
not contain any declaration to the contrary, the former is understood to be liable to pay only the debts which appear
to have been previously contracted. In no case shall the donee be responsible for the debts exceeding the value of
the property donated, unless a contrary intention clearly appears. (642a)

SIMPLE

Art. 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another,
who accepts it. (618a)

Art. 726. When a person gives to another a thing or right on account of the latter's merits or of the services rendered
by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a
burden which is less than the value of the thing given, there is also a donation. (619)

Art. 733. Donations with an onerous cause shall be governed by the rules on contracts and remuneratory donations
by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed. (622)

MODAL

Art. 726. When a person gives to another a thing or right on account of the latter's merits or of the services rendered
by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a
burden which is less than the value of the thing given, there is also a donation. (619)

CONDITIONAL

Art. 727. Illegal or impossible conditions in simple and remuneratory donations shall be considered as not imposed.
(n)

Art. 730. The fixing of an event or the imposition of a suspensive condition, which may take place beyond the natural
expectation of life of the donor, does not destroy the nature of the act as a donation inter vivos, unless a contrary
intention appears. (n)

Art. 731. When a person donates something, subject to the resolutory condition of the donor's survival, there is a
donation inter vivos. (n)