TOPIC: CONCEPT OF POSSESSION
been in continuous, adverse and open possession
GREGORIA ARNEDO CRUZ, et. al vs DOMINGO
DE LEON, et. al G.R. No. L-6546, January 15,
1912, 21 PHIL 210
FACTS OF THE CASE: On August 1907, Gregoria
and her three sisters applied for the registration of
two parcels of land with the Court of Land
Registration which the Court granted. Opposition
came when several persons, including Domingo
De Leon, claimed that they own building lots
within the two parcels of land. Domingo alleged
that for about eight years past he had been in
possession as owner of a building lot, containing
banana plants.
ISSUE: Whether it is proper or not to register the
aforementioned two parcels of land with the
inclusion of the lots that are the subject of those
oppositions.
HELD AND RATIO: YES. The four sisters are the
owners and are in possession of the two said
parcels of land, used for the cultivation of rice and
sugar cane and situated in the barrio of San
Miguel, of the pueblo of Calumpit Bulacan.
Therefore the registration of the two parcels of
land, the subject matter of the application, is
deemed proper, with the exclusion of the lots or
portions of land owned by the opponents. [The
petitioners have not duly established the fact that
they are the owners of the portions now in the
possession of the oppositors (De Leon and
friends).]
As for all other aspects of the case, let it be borne
in mind that by abandonment, negligence or
carelessness, owners provided with the most
perfect titles may be deprived and dispossessed of
their properties by usurpers who, by the lapse of
the time specified by law, acquire the same by
prescription. (Arts. 1930 and 1959, Civil Code.)
Civil possession, according to the article 430 of the
same code, is the holding of a thing of the
enjoyment of a right, together with the intention
of acquiring ownership of the thing or right. Every
possessor has a right to be respected in his
possession; and should he be disturbed therein, he
must be protected or possession must be restored
to him by the means established in laws of
procedure. (art. 446, Civil Code.)
TOPIC: CONCEPT OF POSSESSION
RIZAL CEMENT CO., INC., vs CONSUELO C.
VILLAREAL, et. al, G.R. No. L-30272 February
28, 1985, 135 SCRA 15
FACTS OF THE CASE: Sometime in December
1955, private respondents filed an application of
registration with CFI Pasig. Petitioner filed an
opposition stating that he is the owner of said lots
sought to be registered. The Villareals answered
that they and their predecessors-in-interest have
of said portion since time immemorial; and that
they have been religiously paying the real estate
taxes thereon. CFI Pasig issued a decree of
registration in favor of Rizal Cement. CA reversed.
Hence, the present petition.
ISSUE: Whether or not the Villareals have been in
actual possession of the lots in question
HELD AND RATIO: YES. The SC held that the CA
was correct in giving credence to the testimonial
and documentary evidence presented by the
respondents stating that the lots originally
belonged to one Maria Certeza; that upon her
death, the property was involved in a litigation
between her grandchildren and Gonzalo Certeza
and that the lots were given by the latter to former
Justice de Joya as the latter's attorney's fees; that
the lots were then sold by de Joya to Filomeno Sta.
Ana who, in turn sold the same to spouses
Victoriano Cervo and Ignacia Guillermo in 1939;
that sometime in November 1955, the said
spouses sold the said lots to the herein applicants
as shown by a duly notarized deed of sale; that the
spouses Cervo declared the property for taxation
purposes in the name of the wife, Ignacia
Guillermo, and paid for the realty taxes due
thereon; that prior to the sale, the spouses Cervo
had the two parcels surveyed first in 1950 and
then in 1955. These facts were bolstered by the
testimonies of the following witnesses of the
Villareals, namely: 1. Santiago Picadizo (one of the tenants
of the land); 2. Isaac Reyes (worked on ½ of the 2 parcels of
landsince 1934 to the present); 3. Mr. Valentin Marqueza
(rebuttal witness who averred that he began to live in Rizal
since 1910 after buying a portion of the property from Maria
Certeza and avers that Rizal Cement intended to make a
factory by building a small house which was later on
removed, and that Rizal Cement did not take possession of
the land and that it was Maria Certeza who had the
possession of the land until her death and that the tenants
gave the harvest of the land to Maria Certeza.
The CA further held that “The right to possess flows
from ownership. No person wig suffer adverse
possession by another of what belongs to him.”
Rizal Cement’s evidence, consisting of tax receipts,
tax declaration and survey plan are not conclusive
and indisputable basis of one's ownership of the
property in question. Assessment alone is of little
value as proof of title. Mere tax declaration does
not vest ownership of the property upon the
declarant. Settled is the rule that neither tax
receipts nor declaration of ownership for taxation
purposes alone constitutes sufficient evidence of
ownership or of the right to possess realty. They
must be supported by other effective
proofs. Neither can the survey plan or technical
descriptions prepared at the instance of the party
concerned be considered in his favor, the same
being self-serving.
Escritor vs IAC
Facts: Lot No. 2749, was the subject of cadastral
proceedings in the Court of First Instance of
Quezon. Miguel Escritor, as claimant, filed an
answer thereto declaring his ownership over the
lot alleging that he acquired it by inheritance from
his deceased father. Eventually, the lot was
adjudicated to Escritor. Escritor and later, his
heirs, immediately took possession of the lot.
Thirteen years later however, Acuna was able to
obtain a decision which adjudicated the same lot
to him. Same decision also ordered Escritor to
vacate the land. More than four years later Acuna
filed a complaint for recovery of damages against
petitioners for the fruits of lot No. 2749 which was
allegedly possessed by the latter unlawfully for
thirteen years.
ISSUE: WON Escritor was a possessor in bad faith
HELD: NO. It should be remembered that in the
first decision of the cadastral court dated May 15,
1958, Lot No. 2749 was adjudicated in favor of
claimant Escritor, petitioners' predecessor-in-
interest. In this decision, the said court found to its
satisfaction that claimant Escritor acquired the
land by inheritance from his father who in turn
acquired it by purchase, and that his open, public,
continuous, adverse, exclusive and notorious
possession dated back to the Filipino-Spanish
Revolution. On the basis of the aforementioned
favorable judgment which was rendered by a
court of competent jurisdiction, Escritor honestly
believed that he is the legal owner of the land.
With this well-grounded belief of ownership, he
continued in his possession of Lot No. 2749. This
cannot be categorized as possession in bad faith.
Nevertheless, assuming that claimant Escritor was
a possessor in bad faith, this should not prejudice
his successors-in-interest, petitioners herein, as
the rule is that only personal knowledge of the
flaw in one's title or mode of acquisition can make
him a possessor in bad faith, for bad faith is not
transmissible from one person to another, not
even to an heir.
Wong vs Carpio
Facts: Mr. Giger sold to Plaintiff Mr. Mercado a
piece of property for the price of P3,500 under the
terms of a pacto de retro. Mr.Mercado paid land
taxes and planted coconut trees but failed to erect
signs of occupancy, nor did he establish a hut. He
spent much of his time away at his place of
business where he ran a store. He visited the land
occasionally only to make copra.
Mr Wong happened to chance upon the land, and
finding no one occupying the same, purchased the
property from Mr. Giger. Thereupon, he obtained a
TCT, established a hut, populated the place with
laborers and fenced the property. Mr. Mercado
returned to the property and was dismayed to find
his land occupied. He had the incident blottered
and filed for forcible entry against Mr. Wong. He
also demanded rentals. Unfortunately, the MTC
ruled in favor of Mr. Wong, stating that the latter
was in open, actual, prior and continuous
possession. On appeal, the CFI reversed and ruled
for Mr. Mercado stating that he had taken
possession of the property much earlier and that
Mr. Wong is the actual intruder. Mr. Wong took
the case to the CA which ruled against him.
ISSUE: WON Mercado is entitled to possession
HELD: YES. It should be stressed that "possession
is acquired by the material occupation of a thing
or the exercise of a right, or by the fact that it is
subject to the action of our will, or by the proper
acts and legal formalities for acquiring such right.;
and that the execution of a sale thru a public
instrument shall be equivalent to the delivery of
the thing, unless there is stipulation to the
contrary . If, however, notwithstanding the
execution of the instrument, the purchaser cannot
have the enjoyment and material tenancy of the
thing and make use of it herself, because such
tenancy and enjoyment are opposed by another,
then delivery has not been effected. It is clear that
possession passed from vendor William Giger to
private respondent Manuel Mercado by virtue of
the first sale a retro, and accordingly, the later sale
a retro in favor of petitioner failed to pass the
possession of the property because there is an
impediment — the possession exercised by
private respondent. Possession as a fact cannot be
recognized at the same time in two different
personalities except in the cases of co-possession.
Should a question arise regarding the fact of
possession, the present possessor shall be
preferred; if there are two possessions, the one
longer in possession, if the dates of possession are
the same, the one who presents a title; and if these
conditions are equal, the thing shall be placed in
judicial deposit pending determination of its
possession or ownership through proper
proceedings
Furthermore, Wong cannot claim good faith to
deny Mercado due rentals. The moment he
received the complaint of forcible entry and
summons, he should have been aware of defects in
his title. He owes rentals from that point onwards.
Manotok Realty vs. CA
Facts:
The herein appellee is the registered owner of a
parcel of land covered by Tax Declaration Nos.
2455 and 2456 issued by the City Assessor's Office
of Manila with a total assessed value of
P3,059,180.00 and by TCT 55125 (Exh. A) and
TCT No. 76130 of the Register of Deeds of the City
of Manila. It acquired the aforementioned
property from the Testate Estate of Clara
Tambunting de Legarda, being the highest bidder
in a sale conducted by the Probate Court (Exhs. C-
7 & C-7-A). After having acquired said property,
the appellee subdivided it, but could not take
possession thereof because the whole area is
occupied by several houses among which is the
one belonging to the herein appellant Felipe
Carillo, Lot 143, Block 2 of the subdivision plan
(Exh. A-4 Carillo). Demands to vacate and to
surrender possession of the property were made
by the appellee verbally and by publication (Exhs.
D, D-1 & D-2) and by circulars served to the
appellant. In spite of such demands, the appellant
continued to occupy the disputed lot and refused
to surrender possession thereof to the appellee.
On the other hand, appellant's evidence tends to
show that he acquired the lot in dispute from a
certain Delfin Dayrit on September 25, 1962,
pursuant to a deed of assignment (Exh. 1-Carillo);
that Dayrit in turn had acquired the property from
the late Carla Tambunting by virtue of a Contract
of Sale on Installment Basis (EXIL 2-Carillo); that
Dayrit had religiously paid the monthly
installments as they fell due, his last payment
being on May 25, 1954, in the sum of P200.00,
then leaving an unpaid balance of Pl,306.00 when
the said parcel was conveyed to defendant Carino,
for which receipts were duly issued (Exhs. 3-
Carillo to 24-Carillo); that Dayrit could not
continue paying the succeeding installments as
they fen due because Vicente Legarda, the
surviving spouse of Clara Tambunting, refused to
receive any payment for the same and that it was
only lately, more specifically on September 25,
1962, when Dayrit conveyed the lot to appellant
Carillo.
Issue: whether appellant may be considered as a
possessor in good faith of the property in question
Ruling:
A possessor in good faith is one who is not aware
that there exists in his title or mode of acquisition
any flaw which invalidates it. (Caram v. Laureta,
103 SCRA 7, Art. 526, Civil Code). One who
acquires real estate with knowledge of a defect or
lack of title in his vendor cannot claim that he has
acquired title thereto in good faith as against the
true owner of the land or of an interest therein;
and the same rule must be applied to one who has
knowledge of facts which should put a reasonable
man upon his guard, and then claims that he acted
in good faith under the belief that there was no
defect in the title of the vendor. Article 256 of the
Civil Code defines a possessor in good faith as one
who is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it.
In this case, it was shown that under the contract
of sale on installment basis, Delfin Dayrit had only
paid a total of P4,917.30, leaving an unpaid
balance of P3,860.20 as of August 9, 1954 The said
contract specifically provides that ". . . if for some
reason or other the purchaser cannot pay a certain
installment on the date agreed upon, it is hereby
agreed that said purchaser will be given a
maximum limit of two months' grace in which to
pay his arrears, after which the property will
revert to the original owner hereof: the Clara
Tambunting Subdivision, No. 50 Reina Regente St.,
Binondo, Manila, P.I." The subsequent installment
after August 9, 1954, not having been paid, the
property, therefore, reverted to Clara Tambunting
and therefore formed part of her estate, which
was subsequently acquired by appellee. Thus,
when appellant purchased the parcel of land in
question from Dayrit on August 25, 1962—or
eight (8) years after the default—the latter had no
more right over the same. It was incumbent on
appellant to inquire into the title of his vendor
over the property. Had appellant demanded from
his vendor, Dayrit, the certificate of his ownership
of the property subject of the negotiation, he
would have learned that the latter had no right,
much less, title over the same because of his
default in the payment of the monthly
installments. A purchaser cannot close his eyes to
facts which should put a reasonable man upon his
guard and then claim that he acted in good faith
under the behef that there was no defect in the
title of the vendor. Consequently, appellant cannot
be deemed a possessor in good faith and is not,
therefore, entitled to reimbursement for the
improvements he had introduced in the property
in question. Considering the facts, applicable law,
and equities of this case, the decision of the trial
court appears to be correct and is, therefore,
reinstated.
GABRIEL ELANE,vs. COURT OF APPEALS and
INOCENCIO V. CHUA,
G.R. No. 80638 April26, 1989
CASE DOCTRINES
Possession as a fact; rule; exception
General Rule: Possession as a fact cannot be recognized at the
same time in two different personalities Exception: in the
case of co-possession Should a question arise regarding the
fact of possession;
1. the present possessor shall be preferred;
2. if there are two possessors, the one longer in possession;
3. if the dates of the possession are the same, the one who
presents a title; and
4. if all these conditions are equal, the thing shall be placed in
judicial deposit pending determination of its possession or
ownership through proper proceedings.
FACTS: Petition for Review on Certiorari. Inocencio V. Chua
filed an action for forcible entry in the MTCC of Olongapo City
for the eviction of Gabriel Elane from a portion of a parcel of
land which was the subject of a permit to occupy issued to
Chua by the Bureau of Forestry on August 16, 1961.
Chua’s allegations:
1. that on February 15, 1980, while visiting the property, he
discovered that Elane was constructing a semi-concrete
building on a portion thereof, without his knowledge and
consent.
2.The order made by Chua upon Elane to desist therefrom
was ignored by the latter.
Elane’s answer/s:
1. that he was granted a permit by the Bureau of Forest
Development over a parcel of land located at Upper Kalaklan,
Olongapo City.
2.that he has been in possession and occupation of that
parcel of land continuously and uninterruptedly since 1970,
having originally erected a hut thereon which was later
replaced by a bungalow 3.that the land has been declared for
taxation in his name and the real property taxes thereon paid
by him for the years 1970 to 1979.MTCC decision:
dismissed the complaint. RTC decision: affirmed the
MTCC.CA decision: reversed the RTC and MTCC
ISSUE
: WON Chua has a better right over the property.
RULING:
In sum, private respondent was in earlier possession of
the contested lot; his sales application preceded that of
petitioner; his warehouse and gasoline station already
existed long before petitioner took possession of the
parcel of land in question; and he has been paying taxes
and rental fees thereon since 1968.
As provided by the Civil Code - Art. 538. Possession as a fact
cannot be recognized at the same time in two different
personalities except in the case of co-possession. Should a
question arise regarding the fact of possession, the present
possessor shall be preferred; if there are two possessors, the
one longer in possession; ...
Having been in prior continuous possession, private
respondent is preferentially entitled to occupy the land.
HELD: judgment appealed from is hereby AFFIRMED in
toto.
G.R. No. L-28602 September 29, 1970
UNIVERSITY OF THE PHILIPPINES, petitioner,
vs.
WALFRIDO DE LOS ANGELES, in his capacity as
JUDGE of the COURT OF FIRST INSTANCE IN
QUEZON CITY, et al., respondents.
Facts: A Land Grant was segregated from the
public domain and given as an endowment to UP,
to be operated and developed for the purpose of
raising additional income for its support, pursuant
to Act 3608.
UP and ALUMCO entered into a logging
agreement granting the latter exclusive authority
to cut, collect and remove timber from the Land
Grant, in consideration of payment to UP of
royalties, forest fees, etc. ALUMCO cut and
removed timber therefrom but, as of 8 December
1964, it had incurred an unpaid account of
P219,362.94, which, despite repeated demands, it
had failed to pay. After it had received notice that
UP would rescind or terminate the logging
agreement, ALUMCO executed an instrument,
entitled "Acknowledgment of Debt and Proposed
Manner of Payments” which was approved by the
president of UP. ALUMCO continued its logging
operations, but again incurred an unpaid account
in addition to the indebtedness that it had
previously acknowledged.
UP informed ALUMCO that it considered
as rescinded the logging agreement. Then, UP filed
a complaint against ALUMCO (Civil Case No. 9435)
in the CFI of Rizal (Quezon City), for the collection
or payment of money and it prayed for and
obtained an order, for preliminary attachment and
preliminary injunction restraining ALUMCO from
continuing its logging operations in the Land
Grant.
Before the issuance of the preliminary
injunction, UP had advertised an invitation to bid
for another concessionaire to take over the
logging operation. The concession was awarded to
Sta. Clara Lumber Company, Inc.
ALUMCO filed a petition to enjoin UP from
conducting the bidding and Respondent Judge
issued an order enjoining UP from awarding
logging rights over the concession to any other
party. However, UP received this order after it had
already concluded its contract with Sta. Clara
Lumber Company, Inc., and said company had
started logging operations. Respondent Judge then
issued an order declaring petitioner UP in
contempt of court and directing Sta. Clara Lumber
Company, Inc., to refrain from exercising logging
rights or conducting logging operations in the
concession.
Issue: Whether petitioner U.P. can treat its
contract with ALUMCO rescinded, and may
disregard the same before any judicial
pronouncement to that effect.
Held: The Court ruled in the affirmative.
ALUMCO alleged that it is only after a final
court decree declaring the contract rescinded for
violation of its terms that U.P. could treat the
agreement as breached and of no force or effect.
The Court found this position untenable.
According to the Court, UP and ALUMCO
had expressly stipulated in the "Acknowledgment
of Debt and Proposed Manner of Payments" that,
upon default by the debtor ALUMCO, the creditor
(UP) has "the right and the power to consider, the
Logging Agreement dated 2 December 1960 as
rescinded without the necessity of any judicial
suit."
Moreover, it must be understood that the
act of party in treating a contract as cancelled or
resolved on account of infractions by the other
contracting party must be made known to the
other and is always provisional, being ever subject
to scrutiny and review by the proper court. If the
other party denies that rescission is justified, it is
free to resort to judicial action in its own behalf,
and bring the matter to court. Then, should the
court, after due hearing, decide that the resolution
of the contract was not warranted, the responsible
party will be sentenced to damages; in the
contrary case, the resolution will be affirmed, and
the consequent indemnity awarded to the party
prejudiced.
In other words, the party who deems the contract
violated may consider it resolved or rescinded,
and act accordingly, without previous court action,
but it proceeds at its own risk. For it is only the
final judgment of the corresponding court that will
conclusively and finally settle whether the action
taken was or was not correct in law. But the law
definitely does not require that the contracting
party who believes itself injured must first file suit
and wait for a judgment before taking
extrajudicial steps to protect its interest.
Otherwise, the party injured by the other's breach
will have to passively sit and watch its damages
accumulate during the pendency of the suit until
the final judgment of rescission is rendered when
the law itself requires that he should exercise due
diligence to minimize its own damages (Civil Code,
Article 2203).
G.R. No. L-44237 February 28, 1989
VICTORIA ONG DE OCSIO, petitioner,
vs.
COURT OF APPEALS and the RELIGIOUS OF
THE VIRGIN MARY, represented by M.O.
Leoncia Pacquing, R.V.M., respondents.
Facts: The controversy at bar arose in
connection with cadastral proceedings initiated by
the Director of Lands for the settlement and
adjudication of title to a large tract of land in the
City of Iligan.
Victoria Ong de Ocsio (petitioner) alleged
that she was the owner, by purchase, of two (2)
parcels of land with specific boundaries
comprehended in the cadastral proceeding and
that as owner, she had been in possession of both
lots for fifteen (15) years, and her predecessors-
in-interest, for sixty (60) years. 4 Title to the same
parcels of land was however claimed by the
Religious of the Virgin Mary.5 In its answer, it
averred that it had bought the lots from Victoria
Ong de Ocsio and had been in possession as owner
thereof for over four years, and its possession and
that of its predecessors was immemorial.
Petitioner asserts that in relation to
Section 11, Article XIV of the 1973 Constitution,
the private respondent as a religious corporation,
is disqualified to obtain judicial confirmation of an
imperfect title under Section 48(b) of the Public
Land Act which grants that right only to natural
persons.
The cadastral court held that Victoria Ong
de Ocsio had in truth sold the subject property to
the Religious of the Virgin Mary in virtue of a deed
of sale. CA affirmed in toto.
Issue: Whether the Constitution disqualifies the
corporation known as the Religious of the Virgin
Mary, from acquiring the land in question and
registering it in its name.
Held: The Court ruled in the negative.
The Court held that an open, continuous
and exclusive possession of alienable public land
for at least thirty (30) years in accordance with
the Public Land Act ipso jure converts the land to
private property, and a juridical person who
thereafter acquires the same may have title
thereto confirmed in its name. In this case, a
private corporation had purchased the land
originally of the public domain from parties who
had, by themselves and through their
predecessors-in-interest, possessed and occupied
it since time immemorial. It had thereafter
instituted proceedings for confirmation of title
under Section 48(b) of the Public Land Act.
Moreover, the fact that the proceedings
had been instituted by said purchaser in its own
name and not in the name of the transferors was
"xx simply xx (an) accidental circumstance,
productive of a defect hardly more than
procedural and in nowise affecting the substance
and merits of the right of ownership sought to be
confirmed."
The prohibitions in the 1973 and 1987
Constitutions against acquisition or registration of
lands by or in behalf of private corporations do
not apply to public lands already converted to
private ownership by natural persons under the
provisions of the Public Land Act. In the present
case, Virginia Ong de Ocsio and her predecessors-
in-interest having possessed Lot No. 1272 for the
period and under the conditions prescribed by law
for acquisition of ownership of disposable public
land prior to the sale of the property to the
Religious of the Virgin Mary, confirmation of title
thereto in the latter's name is, under the
precedents referred to, entirely in order.
Consing vs Jamandre
FACTS: Consing filed in the Municipal Court of
Sagay, Negros Occidental, a Complaint for Forcible
Entry and Detainer against Jamandre for taking
possession of Haciendas "Aida" and "Fe" through
force, intimidation, stealth and strategy despite
the contract of sublease. For his defense, Jamandre
averred that he took-over the haciendas in
question because of the failure of plaintiffs-
petitioners to comply with the terms and
conditions of the lease.
MTC and RTC held for Consing but the Court of
Appeals reversed the lower courts. Plaintiffs-
petitioners appealed to the SC, maintaining that
the original case being one of forcible entry,
reception of evidence should have been limited
only to that of possession de facto. Petitioners
further contend that the only issue in forcible
entry case is the physical possession of the
property involved which is only possession de
facto and not possession de jure; that what is
needed to be proved only in forcible entry case is
prior possession, and that if one could prove prior
possession of the property under litigation, he is
entitled to stay thereon until he is lawfully ejected
by a person having a better right either by accion
publiciana or accion reivindicatoria.
ISSUE: WON the court may receive evidence
relating to title/ownership in a forcible entry case
HELD: YES. On the question that the reception of
evidence should have been limited to
possession de facto only, We rule that the court a
quo did not err in going further by interpreting the
contract sub-lease. While it is true that the only
issue in forcible entry or unlawful detainer action
is the physical possession of the leased property,
that is possession de facto — not possession de
jure, yet the court may go beyond that if only to
prove the nature of the possession. The court may
receive evidence upon the question of the title, or
for that matter possession de jure, solely for the
purpose of determining the character and extent
of possession and damages for the detention
Bachrach v. Seifert [G.R. No. L-2659. October
12, 1950.]
Facts:
The deceased E. M. Bachrach, who left no forced
heir except his widow Mary McDonald Bachrach,
in his last will and testament made various
legacies in cash and willed the remainder of his
estate. The estate of E. M. Bachrach, as owner of
108,000 shares of stock of the Atok-Big Wedge
Mining Co., Inc., received from the latter 54,000
shares representing 50 per cent stock dividend on
the said 108,000 shares. On June 10, 1948, Mary
McDonald Bachrach, as usufructuary or life tenant
of the estate, petitioned the lower court to
authorize the Peoples Bank and Trust Company,
as administrator of the estate of E. M. Bachrach, to
transfer to her the said 54,000 shares of stock
dividend by indorsing and delivering to her the
corresponding certificate of stock, claiming that
said dividend, although paid out in the form of
stock, is fruit or income and therefore belonged to
her as usufructuary or life tenant. Sophie Siefert
and Elisa Elianoff, legal heirs of the deceased,
opposed said petition on the ground that the stock
dividend in question was not income but formed
part of the capital and therefore belonged not to
the usufructuary but to the remainderman. While
appellants admit that a cash dividend is an
income, they contend that a stock dividend is not,
but merely represents an addition to the invested
capital.
Issue:
Whether or not a dividend is an income and
whether it should go to the usufructuary.
Held:
The usufructuary shall be entitled to receive
all the natural, industrial, and civil fruits of the
property in usufruct. The 108,000 shares of
stock are part of the property in usufruct. The
54,000 shares of stock dividend are civil fruits of
the original investment. They represent profits,
and the delivery of the certificate of stock covering
said dividend is equivalent to the payment of said
profits. Said shares may be sold independently of
the original shares, just as the offspring of a
domestic animal may be sold independently of its
mother. If the dividend be in fact a profit, although
declared in stock, it should be held to be income. A
dividend, whether in the form of cash or stock, is
income and, consequently, should go to the
usufructuary, taking into consideration that a
stock dividend as well as a cash dividend can be
declared only out of profits of the corporation, for
if it were declared out of the capital it would be a
serious violation of the law.
Under the Massachusetts rule, a stock dividend is
considered part of the capital and belongs to the
remainderman; while under the Pennsylvania
rule, all earnings of a corporation, when declared
as dividends in whatever form, made during the
lifetime of the usufructuary, belong to the latter.
The Pennsylvania rule is more in accord with our
statutory laws than the Massachusetts rule.
LAWS INVOLVED:
Article 471 of the Civil Code provides that
the usufructuary shall be entitled to receive
all the natural, industrial, and civil fruits of
the property in usufruct. And articles 474
and 475 provide as follows:
ART. 474. Civil fruits are deemed to accrue
day by day, and belong to the usufructuary
in proportion to the time the usufruct may
last.
ART. 475. When a usufruct is created on
the right to receive an income or periodical
revenue, either in money or fruits, or the
interest on bonds or securities payable to
bearer, each matured payment shall be
considered as the proceeds or fruits such
right.
When it consists of the enjoyment of the
benefits arising from an interest in an
industrial or commercial enterprise, the
profits of which are not distributed at fixed
periods, such profits shall have the same
consideration.lawphil.net
In either case they shall be distributed as
civil fruits, and shall be applied in
accordance with the rules prescribed by
the next preceding article.
MAXIMA HEMEDES, petitioner, vs. THE
HONORABLE COURT OF APPEALS, DOMINIUM
REALTY AND CONSTRUCTION CORPORATION,
ENRIQUE D. HEMEDES, and R & B INSURANCE
CORPORATION, respondents.
FACTS:
 Jose Hemedes executed a document
entitled “Donation Inter Vivos With
Resolutory Conditions” conveying
ownership a parcel of land, together with
all its improvements, in favor of his third
wife, Justa Kauapin, subject to the
resolutory condition that upon the latter’s
death or remarriage, the title to the
property donated shall revert to any of
the children, or heirs, of the DONOR
expressly designated by the DONEE.
 Pursuant to said condition, Justa Kausapin
executed a “Deed of Conveyance of
Unregistered Real Property by Reversion”
conveying to Maxima Hemedes the
subject property with the condition that
the possession and enjoyment of the said
property shall remain vested in Justa
during her lifetime, or widowhood and
which upon her death or remarriage shall
also automatically revert to, and be
transferred to her designee, Maxima
Hemedes.
 Maxima Hemedes and her husband Raul
Rodriguez constituted a real estate
mortgage over tsubject property in favor
of R & B Insurance to serve as security for
a loan which they obtained.
 R & B Insurance extrajudicially foreclosed
the mortgage since Maxima Hemedes
failed to pay the loan even. The land was
sold at a public auction with R & B
Insurance as the highest bidder. A new
 title was subsequently issued in favor the
R&B. The annotation of usufruct in favor
of Justa Kausapin was maintained in the
new title.
 Despite the earlier conveyance of the
subject land in favor of Maxima Hemedes,
Justa Kausapin executed a Kasunduan on
May 27, 1971 whereby she transferred
the same land to her stepson Enrique D.
Hemedes, pursuant to the resolutory
condition in the deed of donation
executed in her favor by her late husband
Jose Hemedes.
 Enriques D. Hemedes sold the property to
Dominium Realty and Construction
Corporation (Dominium).
 On August 27, 1981, Dominium and
Enrique D. Hemedes filed a complaint
with the Court of First Instance of Binan,
Laguna for the annulment of TCT No.
41985 issued in favor of R & B Insurance
and/or the reconveyance to Dominium of
the subject property.
ISSUES:
WON Justa Kausapin is entitle to the
usufructuary rights of the subject property.
HELD:
The annotation of usufructuary rights in
favor of Justa Kausapin upon Maxima Hemedes
OCT dose not impose upon R & B Insurance the
obligation to investigate the validity of its
mortgagors title. Usufruct gives a right to enjoy
the property of another with the obligation of
preserving its form and substance. The
usufructuary is entitled to all the natural,
industrial and civil fruits of the property and may
personally enjoy the thing in usufruct, lease it to
another, or alienate his right of usufruct, even by a
gratuitous title, but all the contracts he may enter
into as such usufructuary shall terminate upon the
expiration of the usufruct.
Based on the foregoing, the annotation of
usufructuary rights in favor of Justa Kausapin is
not sufficient cause to require R & B Insurance to
investigate Maxima Hemedes title, contrary to
public respondents ruling, for the reason that
Maxima Hemedes ownership over the property
remained unimpaired despite such
encumbrance. R & B Insurance had a right to rely
on the certificate of title and was not in bad faith
in accepting the property as a security for the loan
it extended to Maxima Hemedes.
JOSEFA FABIE, petitioner,
vs.
JOSE GUTIERREZ DAVID, Judge of First
Instance of Manila, NGO BOO SOO and JUAN
GREY, respondents
Facts: Josefa Fabie is the usufructuary of the
income of certain houses located at 372-376 Santo
Cristo, Binondo, and 950-956 Ongpin, Santa Cruz,
Manila, under the ninth clause of the will of the
deceased Rosario Fabie y Grey.
The owner of Santo Cristo property
abovementioned is the respondent Juan Grey,
while those of the Ongpin property are other
person not concern herein. Previous to September
1944 litigation arose between Josefa Fabie as
plaintiff and Juan Grey as defendant and the
owner of the Ongpin property as intervenors,
involving the administration of the houses
mentioned in the will.
June 1945 Josefa Fabie commenced an action of
unlawful detainer against the herein respondent
Ngo Boo Soo, alleging in her amended complaint
that the defendant is occupying the premises
located at 372-376 Santo Cristo on a month-to
month rental payable in advance not latter than
the 5th of each month; that she is the
administratrix and usufructuary of said premises;
"that the defendant offered to pay P300 monthly
rent payable in advance not later than the 5th of
every month, beginning the month of April 1945,
for the said of premises including the one door
which said defendant, without plaintiff's consent
and contrary to their agreement, had subleased to
another Chinese, but plaintiff refused, based on
the fact that the herein plaintiff very badly needs
the said house to live in, as her house was burned
by the Japanese on the occasion of the entry of the
American liberators in the City and which was
located then at No. 38 Flores, Dominga, Pasay; that
defendant was duly notified on March 24 and
April 14, 1945, to leave the said premises, but he
refused"; and she prayed for judgment of eviction
and for unpaid rentals.
The defendant answered alleging that he was and
since 1908 had been a tenant of the premises in
question, which he was using and had always used
principally as a store and secondarily for living
quarters; that he was renting it from its owner and
administrator Juan Grey; "that plaintiff is merely
the usufructuary of the income therefrom, and by
agreement between her and said owner, which is
embodied in a final judgment of the Court of First
Instance of Manila, her only right as usufructuary
of the income is to receive the whole of such
income; that she has no right or authority to eject
tenants, such right being in the owner and
administrator of the house, the aforesaid Juan
Grey, who has heretofore petitioned this Court for
permission to intervene in this action; that
plaintiff herein has never had possession of said
property; that defendant's lease contract with the
owner of the house is for 5-year period, with
renewal option at the end of each period, and that
his present lease due to expire on December 31,
1945 . . .; that on June 1, 1945, defendant made a
written offer to plaintiff to compromise and settle
the question of the amount of rent to be paid by
defendant but said plaintiff rejected the same for
no valid reason whatever and instituted the
present action; that the reason plaintiff desires to
eject defendant from the property is that she
wishes to lease the same to other persons for a
higher rent, ignoring the fact that as usufructuary
of the income of the property she has no right to
lease the property; that the defendant has
subleased no part of the house to any person
whomsoever.
Juan Grey intervened in the unlawful detainer suit,
alleging in his complaint in intervention that he is
the sole and absolute owner of the premises in
question; that the plaintiff Josefa Fabie is the
usufructuary of the income of said premises; by
virtue of a contract between him and the
intervenor which will expire on December 31,
1945, with the option to renew it for another
period of five years from and after said date; that
under the agreement between the intervenor and
plaintiff Josefa Fabie in civil case No. 1659 of the
Court of First Instance of Manila, which was
approved by the court and incorporated in its
decision of September 2, 1944, the only right
recognized in favor of Josefa Fabie as usufructuary
of the income of said premises is to receive the
rents therefrom when due; and that as
usufructuary she has no right nor authority to
administer the said premises nor to lease them
nor to evict tenants, which right and authority are
vested in the intervenor as owner of the premises.
Issue: 1) whether the action instituted by the
petitioner Josefa Fabie in the municipal court is a
purely possessory action and as such within the
jurisdiction of said court, or an action founded on
property right and therefore beyond the
jurisdiction of the municipal court. In other words,
is it an action of unlawful detainer within the
purview of section 1 of Rule 72, or an action
involving the title to or the respective interests of
the parties in the property subject of the
litigation?
Ruling: orders of dismissal of the respondent CFI
are set aside that court is directed to try and
decide the said case on the merits; with the costs
hereof against the respondent Ngo Soo.
Ration: section 1 of Rule 72 provides that "a
landlord, vendor, vendee, or other person against
whom the possession of any land or building is
unlawfully withheld after the expiration or
termination of the right to hold possession, by
virtue of any contract, express or implied, or the
legal representatives or assigns of any such
landlord, vendor vendee, or other person, may, at
any time within one year after such unlawful
deprivation of withholding of possession, bring an
action in the proper inferior court against the
person or persons unlawfully withholding or
depriving of possession, or any person or persons
claiming under them, for the restitution of such
possession, together with the damages and costs."
It is admitted by the parties that Josefa Fabie is the
usufructuary of the income of the property in
question and that the respondent Juan Grey is the
owner thereof. It is likewise admitted that by
virtue of a final judgment entered in civil case No.
1659 of the CFI of Manila between the
usufructuary and the owner, the former has the
right to collect all the rents of said property for
herself with the obligation on her part to pay all
the real estate taxes, special assessments, and
insurance premiums, and make all necessary
repairs thereon, and in case default on her part
the owner shall have the right to do all those
things, in which event he shall be entitled to
collect all subsequent rents of the property
concerned until the amount paid by him and the
expenses of collection are fully satisfied, after
which the usufructuary shall again collect the
rents.
There is therefore no dispute as to the title to or
the respective interests of the parties in the
property in question. The naked title to the
property is to admittedly in the respondent Juan
Grey, but the right to all the rents thereof, with the
obligation to pay the taxes and insurance
premiums and make the necessary repairs, is, also
admittedly, vested in the usufructuary, the
petitioner Josefa Fabie, during her lifetime.
The only question between the plaintiff and the
intervenor is: Who has the right to manage or
administer the property — to select the tenant
and to fix the amount of the rent? Whoever has
that right has the right to the control and
possession of the property in question, regardless
of the title thereto. Therefore, the action is purely
possessory and not one in any way involving the
title to the property. Indeed, the averments and
the prayer of the complaint filed in the municipal
court so indicate, and as a matter of fact the
defendant Ngo Soo does not pretend to be the
owner of the property, but on the contrary admits
to be a mere tenant thereof. We have repeatedly
held that in determining whether an action of this
kind is within the original jurisdiction of the
municipal court or of the Court of First Instance,
the averments of the complaint and the character
of the relief sought are primarily to be consulted;
that the defendant in such an action cannot defeat
the jurisdiction of the justice of the peace or
municipal court by setting up title in himself; and
that the factor which defeats the jurisdiction of
said court is the necessity to adjudicate the
question of title.
We find that the said usufructuary has the right to
administer the property in question. All the acts of
administration — to collect the rents for herself,
and to conserve the property by making all
necessary repairs and paying all the taxes, special
assessments, and insurance premiums thereon —
were by said judgment vested in the usufructuary.
The pretension of the respondent Juan Grey that
he is the administrator of the property with the
right to choose the tenants and to dictate the
conditions of the lease is contrary to both the
letter and the spirit of the said clause of the will,
the stipulation of the parties, and the judgment of
the court. He cannot manage or administer the
property after all the acts of management and
administration have been vested by the court,
with his consent, in the usufructuary. He admitted
that before said judgment he had been collecting
the rents as agent of the usufructuary under an
agreement with the latter.
As long as the property is properly conserved and
insured owner can have no cause for complaint,
and his right in that regard is fully protected by
the terms of the stipulation and the judgment of
the court above mentioned. To permit him to
arrogate to himself the privilege to choose the
tenant, to dictate the conditions of the lease, and
to sue when the lessee fails to comply therewith,
would be to place the usufructuary entirely at his
mercy. It would place her in the absurd situation
of having a certain indisputable right without the
power to protect, enforce, and fully enjoy it.
The court think that, as a corollary to Josefa’s right
to all the rent, to choose the tenant, and to fix the
amount of the rent, she necessarily has the right to
choose herself as the tenant thereof, if she wishes
to; and, as she fulfills her obligation to pay the
taxes and insure and conserve the property
properly, the owner has no legitimate cause to
complain. As Judge Nable of the municipal court
said in his decision, "the pretension that the
plaintiff, being a mere usufructuary of the rents,
cannot occupy the property, is illogical if it be
taken into account that that could not have been
the intention of the testatrix."
We find that upon the pleadings, the undisputed
facts, and the law the action instituted in the
municipal court by the petitioner Josefa Fabie
against the respondent Ngo Soo is one of unlawful
detainer, within the original jurisdiction of said
court, and that therefore Judges Dizon and
Gutierrez David of the Court of First Instance
erred in holding otherwise and in quashing the
case upon appeal.
Eleizegui v. The Manila Lawn Tennis Club
G.R. No. 967 May 19, 1903
Facts:
A contract of lease was executed on January 25,
1980 over a piece of land owned by the plaintiffs
Eleizegui (Lessor) to the Manila Lawn Tennis
Club, an English association (represented by Mr.
Williamson) for a fixed consideration of P25 per
month and accordingly, to last at the will of the
lessee. Under the contract, the lessee can make
improvements deemed desirable for the comfort
and amusement of its members. It appeared that
the plaintiffs terminated the lease right on the first
month. The defendant is in the belief that there
can be no other mode of terminating the lease
than by its own will, as what they believe has been
stipulated.
As a result the plaintiff filed a case for unlawful
detainer for the restitution of the land claiming
that article 1569 of the Civil Code provided that a
lessor may judicially dispossess the lessee upon
the expiration of the conventional term or of the
legal term; the conventional term — that is, the
one agreed upon by the parties; the legal term, in
defect of the conventional, fixed for leases by
articles 1577 and 1581. The Plaintiffs argued that
the duration of the lease depends upon the will of
the lessor on the basis of Art. 1581 which provides
that, "When the term has not been fixed for the
lease, it is understood to be for years when an
annual rental has been fixed, for months when the
rent is monthly. . . ." The second clause of the
contract provides as follows: "The rent of the said
land is fixed at 25 pesos per month."
The lower court ruled in favor of the Plaintiffs on
the basis of Article 1581 of the Civil Code, the law
which was in force at the time the contract was
entered into. It is of the opinion that the contract
of lease was terminated by the notice given by the
plaintiff. The judgment was entered upon the
theory of the expiration of a legal term which does
not exist, as the case requires that a term be fixed
by the courts under the provisions of article 1128
with respect to obligations which, as is the
present, are terminable at the will of the obligee.
ISSUE: a) Whether or not the parties have
agreed upon the duration of the lease
b) Whether or not the lease depends
upon the will of the lessee
RULING:
a) YES, the parties have agreed upon a term
hence Art. 1581 is inapplicable.
The legal term cannot be applied under Art 1581
as it appears that there was actually an agreement
between the parties as to the duration of the lease,
albeit implied that the lease is to be dependent
upon the will of the lessee. It would be absurd to
accept the argument of the plaintiff that the
contract was terminated at its notice, given this
implication.
Interestingly, the contract should not be
understood as one stipulated as a life tenancy, and
still less as a perpetual lease since the terms of the
contract express nothing to this effect, even if they
implied this idea. If the lease could last during
such time as the lessee might see fit, because it has
been so stipulated by the lessor, it would last, first,
as long as the will of the lessee — that is, all his
life; second, during all the time that he may have
succession, inasmuch as he who contracts does so
for himself and his heirs. (Art. 1257 of the Civil
Code.) The lease in question does not fall within
any of the cases in which the rights and
obligations arising from a contract can not be
transmitted to heirs, either by its nature, by
agreement, or by provision of law. Moreover,
being a lease, then it must be for a determinate
period. (Art. 1543.) By its very nature it must be
temporary, just as by reason of its nature, an
emphyteusis must be perpetual, or for an
unlimited period. (Art. 1608.)
B) The duration of the lease does not depend
solely upon the will of the Lessee (defendant).
It cannot be concluded that the termination of the
contract is to be left completely at the will of the
lessee simply because it has been stipulated that
its duration is to be left to his will.
The Civil Code has made provision for such a case
in all kinds of obligations. In speaking in general of
obligations with a term it has supplied the
deficiency of the former law with respect to the
"duration of the term when it has been left to the
will of the debtor," and provides that in this case
the term shall be fixed by the courts. (Art. 1128,
sec. 2.) In every contract, as laid down by the
authorities, there is always a creditor who is
entitled to demand the performance, and a debtor
upon whom rests the obligation to perform the
undertaking. In bilateral contracts the contracting
parties are mutually creditors and debtors. Thus,
in this contract of lease, the lessee is the creditor
with respect to the rights enumerated in article
1554, and is the debtor with respect to the
obligations imposed by articles 1555 and 1561.
The term within which performance of the latter
obligation is due is what has been left to the will of
the debtor. This term it is which must be fixed by
the courts.
The only action which can be maintained under
the terms of the contract is that by which it is
sought to obtain from the judge the determination
of this period, and not the unlawful detainer
action which has been brought — an action which
presupposes the expiration of the term and makes
it the duty of the judge to simply decree an
eviction. To maintain the latter action it is
sufficient to show the expiration of the term of the
contract, whether conventional or legal; in order
to decree the relief to be granted in the former
action it is necessary for the judge to look into the
character and conditions of the mutual
undertakings with a view to supplying the lacking
element of a time at which the lease is to expire.
The lower court’s judgement is erroneous
and therefore reversed and the case was
remanded with directions to enter a judgment of
dismissal of the action in favor of the defendant,
the Manila Lawn Tennis Club.
Baretto, et. al. v. Tuason, et. al.
G.R. Nos. L-36811, 36827, 36840, 36872 March
31, 1934
FACTS:
It is presented for consideration
the mayorazgo founded by the deceased Don
Antonio Tuason on February 25, 1794. On June 4
of the same year the founder died in the City of
Manila. One of the issues at bar is who are the
persons entitled to the remedy. The recipients of
the fifth of the revenues of the mayorazgo are
indicated in the sixth clause of the instrument of
foundation, it states:
"It shall be his duty to set apart one-fifth of the net
revenue derived from the entail each year, and that
one-fifth part shall be divided into eight parts,
giving one to each of my eight children, and in their
absence, to my grandchildren, but upon the
understanding that if one or more of my children
should die without succession, the part belonging to
them shall be distributed among my children and
other descendants of mine according to their needs
and as prudence may dictate to him, so that, when
the time arrives that none of my children are alive,
it shall then be always understood that said fifth
part shall be applied to all those of my descendants
who are poor, the apportionment to be made by
him prudently according to their needs and
therefore the possessor of the entail is hereby
charged to discharge this duty with conscientious
scruple.”
ISSUE:
Whether or not the descendants of Don Antonio
Tuason subsequent to his grandchildren are
entitled to receive a fifth of revenues of his
properties.
HELD:
If the descendants of the younger children,
subsequent to the grandchildren of the founder,
are granted under certain circumstances the right
to possess the mayorazgo itself, with all its
properties, it does not make sense how it can be
said that these descendants, subsequent to
grandchildren, the sons of sons, were prohibited
from receiving a fifth of the revenues of said
properties. The intention of the founder was not
to restrict the grant of the usufruct of the fifth of
the revenue by limiting it to a certain number of
generations of the younger children, but that he
intended to extend it to all of the descendants of
the latter. If this is so we should apply to the case
the rule of law of the Partidas (Rule 28, Title 34,
7th Partido), which says: "Privilegia recipiunt
largum interpretationem voluntati consonan
concedentis." (Privileges are to be interpreted with
liberality in accordance with the will of him who
grants them.)