Case Digests in Property Law

(Civil Law Review I)

1) Serg’s Products, Inc. vs. PCI Leasing and Finance, Inc., et al.
G.R. No. 137705, August 22, 2000
(Classification of property)

Facts: Respondent PCI Leasing and Finance, Inc. filed with the RTC a complaint for
sum of money, with an application for a writ of replevin. Subsequently, the respondent
judge issued a writ of replevin directing its sheriff to seize and deliver the machineries
and equipment to PCI Leasing after 5 days and upon the payment of the necessary
expenses. The sheriff then seized one machinery at the petitioners’ factory, and said
that he would come back for the other machineries. Petitioners filed a motion for special
protective order to defer enforcement of the writ of replevin. PCI Leasing opposed the
motion on the ground that the properties were still personal and therefore can still be
subjected to seizure and writ of replevin. Notwithstanding the contract whereby both
parties agreed to consider the machineries in question as personal property, petitioners
asserted that the properties sought to be seized were immovable as defined in Article
415 of the Civil Code. Furthermore, the petitioner argued that to give effect to the
agreement would be prejudicial to innocent third parties.

When the aforementioned motion was denied by the trial court, the case was brought
before the Court of Appeals via an original action for certiorari. The appellate court then,
citing the Agreement of the parties, held that the subject machines were personal
property considering that the "words of the contract are clear and leave no doubt upon
the true intention of the contracting parties."

Issue: Are the machines in question considered personal, not immovable property
which may be a proper subject of a writ of replevin?

Held: Yes. The Court held that albeit the subject machines have become “immobilized
by destination because they are essential and principal elements in the industry”
pursuant to Article 415 (5) of the Civil Code, the contracting parties may validly stipulate
that a real property be considered as personal. After agreeing to such stipulation, they
are consequently estopped from claiming otherwise. Under the principle of estoppel, a
party to a contract is ordinarily precluded from denying the truth of any material fact
found therein.

In the present case, the Lease Agreement clearly provides that the machines in
question are to be considered as personal property. Hence, petitioners are estopped
from denying the characterization of the subject machines as personal property. Under
the circumstances, they are proper subjects of the Writ of Seizure under Rule 60 of the
Rules of Court.

The Court, however, stressed that its holding that the machines should be deemed
personal property pursuant to the Lease Agreement, is good only insofar as the
contracting parties are concerned. Hence, while the parties are bound by the
Agreement, third persons acting in good faith are not affected by its stipulation
characterizing the subject machinery as personal. In any event, the Court found no
showing in the case at bar that any specific third party would be adversely affected.
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2) BPI vs. Hontanosas, et al.

G.R. No. 157163, June 25, 2014
(Venue of actions for recovery of real or personal property)

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Facts: Private respondents commenced a civil action before the RTC-Cebu City,
seeking declaration of the nullity of the promissory notes, real estate and chattel
mortgages and continuing surety agreement they had executed in favor of the
petitioner. They also applied for a temporary restraining order (TRO) or writ of
preliminary injunction to prevent the petitioner from foreclosing on the mortgages
against their properties.

Apart from the promissory notes, the foregoing accessory contracts and agreement
were constituted by the private respondents as security for the payment of the loan they
had obtained from the petitioner. Later on, respondents’ obligation to the petitioner had
reached ₱17,983,191.49, but they had only been able to pay ₱13 Million. As such, the
petitioner required them to issue postdated checks to cover the loan under threat of
foreclosing on the mortgages. Thus, the aforesaid institution of a civil action by the
private respondents.

The petitioner filed a motion to dismiss, but the RTC denied the same for being
unmeritorious, and granted the respondents’ application for preliminary injunction.
Dissatisfied, the petitioner assailed the order of the trial court by petition for certiorari in
the Court of Appeals. The appellate court, however, affirmed the assailed order of the
RTC, and ordered that the original records of the case be remanded to the court a quo
for further proceedings. Aggrieved by such decision, the petitioner elevated the case to
the Supreme Court by a petition for review on certiorari, raising the issue, among
others, as to whether or not the civil case filed by the respondents before the court a
quo should be dismissed for improper venue.

Issue: Should the civil case filed before the RTC in Cebu City by the private
respondents against the petitioner be dismissed for improper venue?

Held: No. The civil case before the court a quo should not be dismissed as the Court
sustained the lower courts’ holdings that such case was a personal action; hence,
venue was properly laid.

The CA and the RTC held that said civil case, being for the declaration of the nullity of a
contract of loan and its accompanying continuing surety agreement, and the real estate
and chattel mortgages, was a personal action; hence, its filing in Cebu City, the place of
business of one of the plaintiffs, was correct under Section 2, Rule 4 of the Rules of
Court. The petitioner contended, however, that such case was a real action that should
be commenced and tried in the proper court having jurisdiction over the area wherein
the real property involved, or a portion thereof, was situated.

The Court, in sustaining the lower courts’ rulings, declared that the determinants of
whether an action is of a real or a personal nature have been fixed by the Rules of
Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court,
a real action is one that affects title to or possession of real property, or an interest
therein. Such action is to be commenced and tried in the proper court having jurisdiction
over the area wherein the real property involved, or a portion thereof, is situated, which
explains why the action is also referred to as a local action. In contrast, the Rules of
Court declares all other actions as personal actions. Such actions may include those
brought for the recovery of personal property, or for the enforcement of some contract
or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property. The venue of a personal action is the
place where the plaintiff or any of the principal plaintiffs resides, or where the defendant
or any of the principal defendants resides, or in the case of a non-resident defendant
where he may be found, at the election of the plaintiff, for which reason the action is
considered a transitory one.

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 From the allegations of the complaint in the aforesaid civil case, the respondents seek
the nullification of the promissory notes, continuing surety agreement, checks and
mortgage agreements for being executed against their will and vitiated by irregularities,
not the recovery of the possession or title to the properties burdened by the mortgages.
There was no allegation that the possession of the properties under the mortgages had
already been transferred to the petitioner in the meantime. Applying the determinants,
therefore, such case was unquestionably a personal action.

Well-settled is the rule that an action to annul a contract of loan and its accessory real
estate mortgage is a personal action. In a personal action, the plaintiff seeks the
recovery of personal property, the enforcement of a contractor the recovery of
damages. In contrast, in a real action, the plaintiff seeks the recovery of real property,
or, as indicated in Section 2 (a), Rule 4 of the then Rules of Court, a real action is an
action affecting title to real property or for the recovery of possession, or for partition or
condemnation of, or foreclosure of mortgage on, real property.
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3) Heirs of Malabanan vs. Republic

G.R. No. 179987, September 3, 2013
(Original registration on the ground of prescription and the subject property is
patrimonial property of the State)

Facts: In 1998, Mario Malabanan filed in the RTC an application for land registration
covering a parcel of land which he had acquired by purchase. He claimed that the
property formed part of the alienable and disposable land of the public domain, and that
he and his predecessors-in-interest had been in open, continuous, uninterrupted, public
and adverse possession and occupation of the land for more than 30 years, thereby
entitling him to the judicial confirmation of his title.

Aside from his testimony and that of his witness, Malabanan presented during trial a
Certification dated 11 June 2001, issued by the CENRO-DENR, which stated that the
subject property was verified to be within the alienable or disposable land. After trial, the
RTC rendered judgment granting Malabanan’s application for land registration. The
Republic thru the OSG appealed the judgment to the CA, arguing that Malabanan had
failed to prove that the property belonged to the alienable and disposable land of the
public domain, and that the RTC had erred in finding that he had been in possession of
the property in the manner and for the length of time required by law for confirmation of
imperfect title. The appellate court promulgated its decision reversing the RTC and
dismissing the application for registration of Malabanan. The CA declared that under
Section 14(1) of the Property Registration Decree, any period of possession prior to the
classification of the lots as alienable and disposable was inconsequential and should be
excluded from the computation of the period of possession. Thus, the appellate court
noted that since the CENRO-DENR certification had verified that the property was
declared alienable and disposable only on 15 March 1982, the Velazcos' possession
prior to that date could not be tacked for purposes of computing Malabanan’s period of
possession.

Due to Malabanan’s intervening demise during the appeal, his heirs elevated the CA’s
decision to the Supreme Court through a petition for review on certiorari.

Issue: Are petitioners entitled to the registration of the subject land in their names under
either Section 14(1) or Section 14(2) of the Property Registration Decree?

Held: No. The Court declared that the arguments submitted by the OSG with respect to
Section 14(2) are more extensive. Accordingly, the OSG notes that under Article 1113
of the Civil Code, the acquisitive prescription of properties of the State refers to
"patrimonial property," while Section 14(2) speaks of "private lands." It observes that the

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 Court has yet to decide a case that presented Section 14(2) as a ground for application
for registration, and that the 30-year possession period refers to the period of
possession under Section 48(b) of the Public Land Act, and not the concept of
prescription under the Civil Code. The OSG further submits that, assuming that the 30-
year prescriptive period can run against public lands, said period should be reckoned
from the time the public land was declared alienable and disposable. Nevertheless,
there must be an express declaration by the State that the public dominion property is
no longer intended for public service or the development of the national wealth or that
the property has been converted into patrimonial. Without such express declaration, the
property, even if classified as alienable or disposable, remains property of the public
dominion, pursuant to Article 420(2), and thus incapable of acquisition by prescription. It
is only when such alienable and disposable lands are expressly declared by the State to
be no longer intended for public service or for the development of the national wealth
that the period of acquisitive prescription can begin to run. Such declaration shall be in
the form of a law duly enacted by Congress or a Presidential Proclamation in cases
where the President is duly authorized by law.

It is clear that the evidence of petitioners is insufficient to establish that Malabanan has
acquired ownership over the subject property under Section 48(b) of the Public Land
Act. There is no substantive evidence to establish that Malabanan or petitioners and
their predecessors-in-interest have been in possession of the property since 12 June
1945 or earlier. The earliest that petitioners can date back their possession, according
to their own evidence the Tax Declarations they presented in particular is to the year
1948. Thus, they cannot avail themselves of registration under Section 14(1) of the
Property Registration Decree.

Neither can petitioners properly invoke Section 14(2) as basis for registration. While the
subject property was declared as alienable or disposable in 1982, there is no competent
evidence that is no longer intended for public use service or for the development of the
national... evidence, conformably with Article 422 of the Civil Code. The classification of
the subject property as alienable and disposable land of the public domain does not
change its status as property of the public dominion under Article 420(2) of the Civil
Code. Thus, it is insusceptible to acquisition by prescription.
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4) Aranda vs. Republic

G.R. No. 172331, August 24, 2011
(Nature of possession that would give rise to ownership)

Facts: ICTSI Warehousing, Inc. filed a petition for original registration of a parcel of land
in Batangas before the RTC. The Republic through the OSG filed its opposition on
grounds that the land applied for is part of the public domain and the applicant has not
acquired a registrable title thereto under the provisions of the Public Land Act.
Meanwhile, the trial court admitted the Amended Application for Registration of Title,
this time filed in the name of Ramon Aranda, herein petitioner.

During trial, petitioner’s sister Merlita Enriquez testified that in 1965 her father Anatalio
Aranda donated the subject land to his brother, Ramon Aranda (petitioner) who has
been tilling the land since then, planting it with rice and corn. Another witness, Luis
Olan, testified that his father Lucio Olan originally owned and farmed the land in
question. Accordingly, they had open, peaceful, continuous and adverse possession of
the land in the concept of owner until his father sold it in 1946 to Anatalio Aranda.

Consequently, the trial court rendered its decision granting the application and ordering
the issuance of a decree of registration in favor of petitioner. The Republic appealed to
the CA which reversed the trial court’s decision, holding that petitioner’s evidence does
not satisfactorily establish the character and duration of possession required by law, as

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 petitioner failed to prove specific acts showing the nature of the possession by his
predecessors-in-interest. Thus, the petitioner elevated the case to the Supreme Court
by way of a petition for review on certiorari, alleging that the decision of the CA is based
on a misapprehension of facts with regard to compliance with the required 30 years of
open, exclusive, public and adverse possession in the concept of owner. Petitioner
argues that the deeds of confirmation of the 1946 sale in favor of Anatalio Aranda and
the 1965 donation to petitioner are competent proof of transfer of ownership
notwithstanding that these were executed only in the year 2000.

Issue: Did the CA err in reversing the trial court’s decision and dismissing the
application for judicial confirmation of title?

Held: No. The Property Registration Decree (P.D. No. 1529) provides for original
registration of land in an ordinary registration proceeding. Under Section 14(1) thereof,
a petition may be granted upon compliance with the following requisites: (a) that the
property in question is alienable and disposable land of the public domain; (b) that the
applicants by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation; and (c) that such
possession is under a bona fide claim of ownership since June 12, 1945 or earlier.

In this case, the status of the land applied for as alienable and disposable was not
clearly established. Moreover, the court found out that petitioner started paying taxes on
the land just three years before the filing of the application for original registration. As a
rule, tax declarations or realty tax payments of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner,
for no one in his right mind would be paying taxes for a property that is not in his actual
or constructive possession.

The Court also declared that a person who seeks the registration of title to a piece of
land on the basis of possession by himself and his predecessors-in-interest must prove
his claim by clear and convincing evidence, i.e., he must prove his title and should not
rely on the absence or weakness of the evidence of the oppositors. Accordingly, the
court has the bounden duty, even in the absence of any opposition, to require the
petitioner to show, by a preponderance of evidence and by positive and absolute proof,
so far as possible that he is the owner in fee simple of the land which he is attempting to
register. Since petitioner failed to meet the quantum of proof required by law, the CA
was correct in reversing the trial court’s decision and dismissing his application for
judicial confirmation of title.
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5) Abobon vs. Abobon, et al.

G.R. No. 155830, August 15, 2012
(Possession as an attribute of ownership)

Facts: Respondents Felicitas and Gelima Abobon filed an action for recovery of
possession of registered land and damages against petitioner Numeriano Abobon
before the MCTC. They averred that they were the registered owners of that parcel of
unirrigated riceland which they inherited from their father and covered by a certificate of
title registered in their own names. They also claimed that they had allowed their first
cousin, herein petitioner, the free use of the land out of benevolence. When they
needed the subject land for their own use, they demanded that petitioner should vacate
and return it to them but he refused to do so. On the contrary, the petitioner asserted
that he was the owner of the land in question. He also claimed that if the land in
question related to the unirrigated riceland that he was then tilling and covered by tax
declaration no. 2 in the name of his father, Rafael Abobon, then the respondents did not
have a valid cause of action against him because he had inherited that portion from his
parents.

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 After due proceedings, the MCTC ruled in favor of the respondents, finding that the
respondents’ parents Leodegario Abobon and Macaria Abata had purchased the
property from their grandfather Emilio Abobon with the conformity of the latter’s other
children, including Rafael Abobon, petitioner’s father. Consequently, the petitioner
appealed to the RTC which upheld the MCTC’s decision. Still dissatisfied, the petitioner
elevated the case to the Court of Appeals, submitting that he was the lawful owner and
possessor of the subject land which he occupied and cultivated, and that the
respondents’ TCT was invalid. Nevertheless, the CA rejected the petitioner’s
submissions and affirmed the RTC, holding that the respondents were in possession of
a certificate of title that enjoyed the conclusive presumption of validity, by virtue of which
they were entitled to possess the land in question.

Issue: Who has the preferential right to the possession of the land in question?

Held: At the outset, the Court stated that a fundamental principle in land registration
under the Torrens system is that a certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name
appears therein. The certificate of title thus becomes the best proof of ownership of a
parcel of land; hence, anyone who deals with property registered under the Torrens
system may rely on the title and need not go beyond the title. This reliance on the
certificate of title rests on the doctrine of indefeasibility of the land title, which has long
been well-settled in this jurisdiction. It is only when the acquisition of the title is attended
with fraud or bad faith that the doctrine of indefeasibility finds no application.

Accordingly, the Court ruled for the respondents on the issue of the preferential right to
the possession of the land in question. Their having preferential right conformed to the
age-old rule that whoever held a Torrens title in his name is entitled to the possession of
the land covered by the title. Indeed, possession, which is the holding of a thing or the
enjoyment of a right, was but an attribute of their registered ownership.

It is beyond question under the law that the owner has not only the right to enjoy and
dispose of a thing without other limitations than those established by law, but also the
right of action against the holder and possessor of the thing in order to recover it. He
may exclude any person from the enjoyment and disposal of the thing, and, for this
purpose, he may use such force as may be reasonably necessary to repel or prevent an
actual or threatened unlawful physical invasion or usurpation of his property.
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6) NAPOCOR vs. Ibrahim, et al.

G.R. No. 168732, January 29, 2007
(Surface and subsurface rights)

Facts: Respondent Lucman Ibrahim, in his personal capacity and in behalf of his co-
heirs instituted an action against petitioner National Power Corporation (NAPOCOR) for
recovery of possession of land and damages before the Regional Trial Court (RTC). In
their complaint, Ibrahim and his co-heirs claimed that they were owners of several
parcels of land which the NAPOCOR, through alleged stealth and without respondents’
knowledge and prior consent, took possession of the sub-terrain area thereof and
constructed therein underground tunnels.

Later on, one of the respondents Omar Maruhom requested the Marawi City Water
District for a permit to construct and/or install a motorized deep well in the area within
the aforesaid parcels of land, but his request was turned down because the construction
of the deep well would cause danger to lives and property. Subsequently, respondents
demanded that NAPOCOR pay damages and vacate the sub-terrain portion of their
lands but the latter refused to vacate much less pay damages. Respondents further

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 averred that the construction of the underground tunnels has endangered their lives and
properties as their locality lies in an area of local volcanic and tectonic activity.

On its part, petitioner maintained that the sub-terrain portion where the underground
tunnels were constructed does not belong to respondents because, even conceding the
fact that respondents owned the property, their right to the subsoil of the same does not
extend beyond what is necessary to enable them to obtain all the utility and
convenience that such property can normally give.

The RTC then rendered judgment, denying private respondents’ prayer for NAPOCOR
to dismantle the said underground tunnels, and ordering the latter to pay to respondents
the fair market value of the parcels of land in question, the amount of rentals and
damages. On appeal, the CA amended the RTC’s decision by deleting the award of
moral damages and reducing the amount of rentals and attorney’s fees.

Issue: Does the sub-terrain area occupied by petitioner belong to the respondents
thereby entitling them to just compensation?

Held: Yes. The Court declared that the foregoing contention of the petitioner lacks
merit, and maintained that the CA’s findings which upheld those of the trial court that
respondents owned and possessed the property and that its substrata was possessed
by petitioner since 1978 for the underground tunnels, cannot be disturbed. Moreover,
the Court sustained the finding of the lower courts that the sub-terrain portion of the
property similarly belongs to respondents. This is drawn from 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. He cannot complain of the reasonable
requirements of aerial navigation.
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7) German Management vs. Court of Appeals, et al.

G.R. No. 76217, September 14, 1989
(Doctrine of self-help)

Facts: Spouses Cynthia and Manuel Jose, residents of USA are the owners of a parcel
of land in Antipolo, Rizal, and covered by a certificate of title. They executed a special
power of attorney authorizing German Management Services to develop their property
into a residential subdivision. Finding that part of the property was occupied by private
respondents and twenty other persons, petitioner advised the occupants to vacate the
premises but the latter refused. Nevertheless, petitioner proceeded with the
development of the subject property which included the portions occupied and cultivated
by private respondents. Private respondents then filed an action for forcible entry
against petitioner before the MTC of Antipolo, Rizal, alleging that they are mountainside
farmers of such place. They further averred that the petitioner had deprived them of
their property without due process of law with the use of force, violence and intimidation.

Subsequently, the MTC dismissed private respondents' complaint for forcible entry. On
appeal, the RTC sustained the dismissal by the MTC. Private respondents then filed a
petition for review which was given due course by the Court of Appeals which reversed
the both decisions of the MTC and the RTC. The CA held that since private respondents
were in actual possession of the property at the time they were forcibly ejected by
petitioner, private respondents have a right to commence an action for forcible entry
regardless of the legality or illegality of possession.

Issue: May the doctrine of self-help be availed of when respondents refused to vacate
the premises?

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 Held: No. As stated by the Court, both the Municipal Trial Court and the Regional Trial
Court have rationalized petitioner's drastic action of bulldozing and destroying the crops
of private respondents on the basis of the doctrine of self-help enunciated in Article 429
of the New Civil Code. Such justification is unavailing because the doctrine of self-help
can only be exercised at the time of actual or threatened dispossession which is absent
in the case at bar. When possession has already been lost, the owner must resort to
judicial process for the recovery of property. This is clear from Article 536 of the Civil
Code which states, “In no case may possession be acquired through force or
intimidation as long as there is a possessor who objects thereto. He who believes that
he has an action or right to deprive another of the holding of a thing, must invoke the aid
of the competent court, if the holder should refuse to deliver the thing."
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8) Spouses Andamo vs. Intermediate Appellate Court, et al.

G.R. No. 74761, November 6, 1990
(Sic utere tuo ut alienum non laedas)

Facts: Petitioner spouses Emmanuel and Natividad Andamo are the owners of a parcel
of land in Silang, Cavite which is adjacent to that of private respondent, Missionaries of
Our Lady of La Salette, Inc., a religious corporation. Within the land of respondent
corporation, water paths and contrivances, including an artificial lake were constructed
which allegedly inundated and eroded petitioners' land. It also caused a young man to
drown, damaged petitioners' crops and plants, washed away costly fences, endangered
the lives of petitioners and their laborers during rainy and stormy seasons, as well as
exposed plants and other improvements to destruction. Thus, it prompted the petitioners
to institute a criminal action before the RTC against the officers and directors of
respondent corporation, for destruction by means of inundation under Article 324 of the
Revised Penal Code. Subsequently, petitioners filed another action, a civil one, against
respondent corporation for damages before the same court.

Hearings were conducted and thereafter, the trial court dismissed the civil case for lack
of jurisdiction, as the criminal case which was instituted ahead of the civil case was still
unresolved. Said order was anchored on the provision of Section 3 (a), Rule III of the
Rules of Court which provides that "criminal and civil actions arising from the same
offense may be instituted separately, but after the criminal action has been commenced
the civil action cannot be instituted until final judgment has been rendered in the criminal
action." On appeal, the then Intermediate Appellate Court affirmed the order of the trial
court.

Issue: Can the respondent corporation be held liable for indemnification for the
damages sustained by the petitioners?

Held: Yes. Petitioners' complaint sufficiently alleges that petitioners have sustained and
will continue to sustain damage due to the water paths and contrivances built by
respondent corporation. Indeed, the recitals of the complaint, the alleged presence of
damage to the petitioners, the act or omission of respondent corporation supposedly
constituting fault or negligence, and the causal connection between the act and the
damage, with no pre-existing contractual obligation between the parties make a clear
case of a quasi delict or culpa aquiliana.

The Court stressed that the use of one's property is not without limitations. Article 431 of
the Civil Code provides that "the owner of a thing cannot make use thereof in such a
manner as to injure the rights of a third person." Sic utere tuo ut alienum non laedas.
Moreover, adjoining landowners have mutual and reciprocal duties which require that
each must use his own land in a reasonable manner so as not to infringe upon the
rights and interests of others. Although we recognize the right of an owner to build

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 structures on his land, such structures must be so constructed and maintained using all
reasonable care so that they cannot be dangerous to adjoining landowners and can
withstand the usual and expected forces of nature. If the structures cause injury or
damage to an adjoining landowner or a third person, the latter can claim indemnification
for the injury or damage suffered under Article 2176 of the Civil Code which imposes a
civil liability on a person for damage caused by his act or omission constituting fault or
negligence. Although the responsibility for fault or negligence under the said article is
entirely separate and distinct from the civil liability arising from negligence under the
Penal Code, the plaintiff, however, cannot recover damages twice for the same act or
omission of the defendant.

In fine, the Court reversed and set aside the lower courts’ decision and ordered the
court a quo to proceed with the hearing of the case with dispatch.
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9) Cosio vs. Palileo

G.R. No. L-18452, May 31, 1965
(Accession continua)

Facts: This case is an action to recover the possession of a house formerly owned by
Felicisima Vda. de Barza, and erected on a lot belonging to the Hospicio de San Juan
de Dios. The house in question and the leasehold right to the lot were bought by
respondent Cherie Palileo who paid part of the purchase price and mortgaged the
house to secure the payment of the balance. Later on, the respondent defaulted in her
payment, but to prevent her foreclosed house to be sold at public auction, she sought to
raise money and eventually, she was able to settle her obligation. The money raised by
the respondent in the sum of P12,000.00 came from petitioner Beatriz Cosio de Rama,
and in consideration thereof, the former signed a document entitled "Conditional Sale of
Residential Building," purporting to convey to the petitioner the house in question. Under
such document, the right to repurchase the house within one year was reserved to the
respondent. Likewise, the parties entered into an agreement whereby the respondent
remained in possession of the house as tenant, paying the petitioner a monthly rental of
P250.00.

Subsequently, petitioner insured the house against fire, and when the house was partly
gutted by fire, the insurance company paid petitioner the amount of P13,107.00 for the
loss. Thereafter, petitioners Beatriz and Augusto Cosio entered the premises and began
the repair of the house. Soon after, an action was filed by respondent Palileo against
petitioner Beatriz Cosio de Rama for the reformation of the deed of pacto de retro sale
into a loan with an equitable mortgage. It must be stressed that judgment has already
been rendered in this case wherein the High Court ruled that the house in question had
not been sold out but had merely been given as security for a debt, the pacto de retro
sale between the parties being in reality a loan with an equitable mortgage. A week
after, respondent Palileo filed another action, seeking the ejectment of the petitioner
who was alleged to have entered and occupied the house without her knowledge and
consent. The lower court, however, rendered judgment finding petitioner Cosio de
Rama to be a possessor in good faith with a right to retain possession until reimbursed
for her expenses in repairing the house.

Not satisfied, respondent Palileo appealed to the Court of Appeals and succeeded in
having the lower court’s decision modified. Accordingly, the CA declared respondent
Pelileo to be the lawful owner of the disputed house, thus, entitled to the possession
thereof, without reimbursing the petitioner the sum of P12,000.00 allegedly spent for the
reconstruction of the same. Thus, both petitioners appealed to the Supreme Court by
certiorari, citing Article 526 of the Civil Code which states that “He is deemed a
possessor in good faith who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it. He is deemed a possessor in bad faith who

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 possesses in any case contrary to the foregoing. Mistake upon a doubtful or difficult
question of law may be the basis of good faith.” They contended that they were not only
possessors in good faith from the beginning but that they continue to be such even after
the Court's declaration that their transaction was a loan with a mortgage and not a sale
with a right of repurchase, because, as a matter of fact, the Court did not invalidate, but
merely reformed, the supposed deed of sale.

Issue: Is the petitioner, Beatriz Cosio de Rama entitled to be reimbursed for her
expenses in restoring the house to its original condition after it had been partly
damaged by fire?

Held: Yes. Even as the Court holds petitioner Cosio de Rama to be a possessor in bad
faith, it nevertheless believes that she is entitled to be reimbursed for the expenses she
incurred in repairing the house in question because such expenses are necessary and,
under Article 546 of the Civil Code, are to be refunded even to possessors in bad faith.

Accordingly, the error of the appellate court lies in its failure to appreciate the distinction
that while petitioner Cosio de Rama is a possessor in bad faith, she is not a builder in
bad faith. Thus, in describing petitioners as "builders in bad faith" and, consequently, in
holding that they have no right to be reimbursed, the court obviously applied Article 449
which states that "he who builds, plants or sows in bad faith on the land of another loses
what is built, planted or sown without right to indemnity." But article 449 is a rule of
accession which is deemed misplaced in this case. There is here no reason for the
application of the principle accesio cedit principali, such as is contemplated in cases of
accession continua of which article 449 is a rule. For what petitioners did in this case
was not to build a new house on the land of another. Rather, what they did was merely
to make repairs on a house that had been partly destroyed by fire and the Court is not
asked whether they have a right to be refunded for what they spent in repairs. The land
on which the house is built is not even owned by respondent Palileo, that land being the
property of the Hospicio de San Juan de Dios. This case comes under article 546
which, as already indicated herein, provides for the refund of necessary expenses "to
every possessor."
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10) Parilla, et al. vs. Pilar

G.R. No. 167680, November 30, 2006
(Reimbursement and right of retention of a BPS in good faith)

Facts: Petitioners, spouses Samuel and Chinita Parilla and their son, as dealers of
Pilipinas Shell Petroleum Corporation, have been in possession of a parcel of land
which was leased to the Pilipinas Shell by respondent Dr. Prospero Pilar. When the
aforesaid lease contract expired, and despite demands to vacate, the Parillas remained
in the property where they built some improvements thereon. Hence, respondent who
has been residing in the United States, through his attorney-in-fact filed a complaint for
ejectment before the MTC against the petitioners and the other occupants of the
property.

After trial, the MTC ordered the petitioners and their co-defendants to vacate the
property and to pay the respondent a reasonable compensation for the use of the
property. The respondent was also ordered to reimburse the petitioners the amount Two
Million Pesos, representing the value of the improvements introduced on the property.
On appeal, the RTC affirmed the MTC’s decision, and when the case was elevated to
the appellate court, however, the latter set aside the questioned order for respondent to
reimburse petitioners. In setting aside the questioned order, the CA, applying Article 546
of the New Civil Code, held that petitioners’ tolerated occupancy could not be
interpreted to mean that they are builders or possessors in good faith and that for one to

10
 be a builder in good faith, it is assumed that he claims title to the property which is not
the case of petitioners.

Issue: Are the petitioners entitled to reimbursement for the improvements they made on
subject property being builders in good faith?

Held: According to the Court, jurisprudence is replete with cases which categorically
declare that Article 448 of the Civil Code covers only cases in which the builders,
sowers or planters believe themselves to be owners of the disputed land or, at least,
have a claim of title thereto, but not when the interest is merely that of a holder, such as
a mere tenant, agent or usufructuary. A tenant cannot be said to be a builder in good
faith as he has no pretension to be owner.

The right of the lessor upon the termination of a lease contract with respect to useful
improvements introduced on the leased property by a lessee is covered by Article 1678
of the New Civil Code. Hence, it is clearly such provision of the civil law which applies to
the present case. The petitioners’ claim for reimbursement of the alleged entire value of
the improvements does not therefore lie under Article 1678. Not even for one-half of
such alleged value, there being no substantial evidence, e.g., receipts or other
documentary evidence detailing costs of construction.

At all events, under Article 1678, it is the lessor who is given the option, upon
termination of the lease contract, either to appropriate the useful improvements by
paying one-half of their value at that time, or to allow the lessee to remove the
improvements. This option solely belongs to the lessor as the law is explicit that “should
the lessor refuse to reimburse said amount, the lessee may remove the improvements,
even though the principal thing may suffer damage thereby.”
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11) Grande, et al. vs. Court of Appeals, et al.

G.R. No. L-17652, June 30, 1962
(Ownership and registration of alluvium)

Facts: Petitioners are the owners of a parcel of land located in the province of Isabela.
When it was surveyed for purposes of registration sometime in 1930, its northeastern
boundary was the Cagayan River (the same boundary stated in the title). Since then,
and for many years thereafter, a gradual accretion on the northeastern side took place,
by action of the current of the Cagayan River, so much so, that by 1958, the bank
thereof had receded to a distance of about 105 meters from its original site, and an
alluvial deposit had been added to the registered area. Later on, the petitioners
instituted the present action in then CFI against respondents, to quiet title to the
portion formed by accretion, alleging in their complaint that they and their predecessors-
in-interest, were formerly in peaceful and continuous possession thereof, until
September, 1948, when respondents entered upon the land under claim of ownership.
Petitioners also asked for damages corresponding to the value of the fruits of the land
as well as attorney's fees and costs. In their answer, respondents claimed ownership in
themselves, asserting that they have been in continuous, open, and undisturbed
possession of said portion, since prior to the year 1933 to the present. It is admitted by
the parties that the land involved in this action was formed by the gradual deposit of
alluvium brought about by the action of the Cagayan River, a navigable river.

Issue: Does the accretion automatically become registered land for the reason that the
lot which receives it is covered by a Torrens title thereby making the alluvial property
imprescriptible?

Held: The Court expressed its agreement with the Court of Appeals that it does
not, just as an unregistered land purchased by the registered owner of the

11
 adjoining land does not, by extension, become ipso facto registered land. Ownership of
a piece of land is one thing, and registration under the Torrens system of that ownership
is quite another. Ownership over the accretion received by the land adjoining a river is
governed by the Civil Code. Imprescriptibility of registered land is provided in the
registration law. Registration under the Land Registration and Cadastral Acts does not
vest or give title to the land, but merely confirms and thereafter protects the title
already possessed by the owner, making it imprescriptible by occupation of third
parties. But to obtain this protection, the land must be placed under the operation
of the registration laws wherein certain judicial procedures have been provided.
The fact remains, however, that petitioners never sought registration of said alluvial
property (which was formed sometime after petitioners' property covered by Original
Certificate of Title No. 2982 was registered on June 9, 1934) up to the time they
instituted the present action in then CFI of Isabela in 1958. The increment, therefore,
never became registered property, hence, it is not entitled or subject to the protection of
imprescriptibility enjoyed by registered property under the Torrens system.
Consequently, it was subject to acquisition through prescription by third persons.
---------------------------------------------------------------------------------------------------------------------

12) Torres, et al. vs. Lapinid and Velez

G.R. No. 187987, November 26, 2014
(Sale by a co-owner of his undivided portion in the co-owned property)

Facts: The petitioners filed a complaint before the RTC for the nullification of the sale of
real property by respondent Jesus Velez in favor of Lapinid, for the recovery of
possession and ownership of the property, and for the payment of damages. The
petitioners were co-owners, with Jesus, who filed an action for partition of the parcels of
land against petitioners. The judgment was that Jesus, Mariano and Vicente were jointly
authorized to sell the said properties and receive the proceeds thereof and distribute
them to all the co-owners which was later amended to exclude Jesus co-owner but
during inspection, it was found out that Lapinid was occupying a portion the lot by virtue
of a deed of sale executed by Jesus. The petitioners prayed that the deed of sale to be
null and void. Further, the complainants prayed for payment of rental fees. Jesus said
that there was a partition case between him and the petitioners filed in 1993 involving
several parcels of land. Then, Lapinid admitted that a deed of sale was entered into
between him and Jesus pertaining to a parcel of land. However, he insisted on the
validity of sale since Jesus showed him several deeds of sale making him a majority
owner of the lot. He explained that Jesus permitted him to occupy a portion not
exceeding 3,000 square meters conditioned on the result of the partition of the co-
owners. It was ruled that the buyers, including Lapinid, were buyers in good faith since a
proof of ownership was shown to them by Jesus before buying the property. A partial
motion for reconsideration was filed by the petitioners but it was denied. Moreover, the
Court of Appeals affirmed the decision of the trial court that the compromise agreement
did not affect the validity of the sale previously executed by Jesus and Lapinid.

Issue: Can a co-owner validly sell a portion of the property he co-owns in favor of
another person?

Held: Yes. A co-owner has an absolute ownership of his undivided and pro indiviso
share in the co-owned property. He has the right to alienate, assign and mortgage it,
even to the extent of substituting a third person in its enjoyment provided that no
personal rights will be affected. This is evident from the provision of the Civil Code (Art.
493) which states that each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage
it, and even substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.

12
 A co-owner is an owner of the whole and over the whole, he exercises the right of
dominion, but he is at the same time the owner of a portion which is truly abstract.
Hence, his co-owners have no right to enjoin a co-owner who intends to alienate or
substitute his abstract portion or substitute a third person in its enjoyment.

In this case, Jesus can validly alienate his co-owned property in favor of Lapinid, free
from any opposition from the co-owners. Lapinid, as a transferee, validly obtained the
same rights of Jesus from the date of the execution of a valid sale. Absent any proof
that the sale was not perfected, the validity of sale subsists. In essence, Lapinid steps
into the shoes of Jesus as co-owner of an ideal and proportionate share in the property
held in common. Thus, from the perfection of contract on 9 November 1997, Lapinid
eventually became a co-owner of the property.

Even assuming that the petitioners are correct in their allegation that the disposition in
favor of Lapinid before partition was a concrete or definite portion, the validity of sale
still prevails. In a catena of decisions, the Supreme Court had repeatedly held that no
individual can claim title to a definite or concrete portion before partition of co-owned
property. Each co-owner only possesses a right to sell or alienate his ideal share after
partition. However, in case he disposes his share before partition, such disposition does
not make the sale or alienation null and void. What will be affected on the sale is only
his proportionate share, subject to the results of the partition. The co-owners who did
not give their consent to the sale stand to be unaffected by the alienation.
---------------------------------------------------------------------------------------------------------------------

13) Spouses Si vs. Court of Appeals, et al.

G.R. No. 122047, October 12, 2000
(Redemption by a co-owner of the sold portion of the co-owned property)

Facts: The property in dispute consisting of a titled and registered land originally
belonged to Escolastica, wife of Severo Armada, Sr. During the lifetime of the spouses,
the property was transferred to their three children and registered in their respective
names. Crisostomo Armada through Cresencia (atty-in-fact) executed a deed of sale in
favor of Anita Si. Spouses Jose Armada and Remedios Almanzor then filed a complaint
for Annulment of Deed of Sale and Reconveyance of Title with Damages, against herein
petitioners Anita and Serafin Si and Conrado Isada, brother-in-law of Cresenciana.
Further, the complaint alleged that Conrado Isada sold Crisostomo's share by making it
appear that Cresenciana, the attorney-in-fact of her husband, is a Filipino citizen.
Petitioners claimed that there was really no co-ownership since the parents executed
three deeds of sale assigning specific properties to the brothers. Since there is no co-
ownership, it follows that there is no right to redemption. Petitioners pointed out that it
was only because the brothers failed to submit a subdivision plan which was the reason
why there was only one certificate of title.

The lower court dismissed the petition. CA reversed and said that co-ownership still
exists and that the land was undivided. Petitioners filed a motion for new trial on the
basis that there was annotation at the back of the original TCT due to the sale in favor
of the brothers. CA denied because the reglementary period had lapsed and the
decision has become final and executory.

Issue: Are private respondents co-owners who are legally entitled to redeem the lot
under Article 1623 of the Civil Code?

Held: The Court ruled that after the physical division of the lot among the brothers, the
community ownership terminated, and the right of preemption or redemption for each
brother was no longer available.

13
 Under Art. 484 of the Civil Code, there is co-ownership whenever the ownership of an
undivided thing or right belongs to different persons. There is no co-ownership when the
different portions owned by different people are already concretely determined and
separately identifiable, even if not yet technically described. This situation makes
inapplicable the provision on the right of redemption of a co-owner in the Civil Code, as
follows:

"Art. 1623. The right of legal pre-emption or redemption shall not be exercised except
within thirty days from the notice in writing by the prospective vendor, or by the vendor,
as the case may be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given written notice
thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners."

Moreover, the Court also noted that private respondent Jose Armada was well informed
of the impending sale of Crisostomo's share in the land. In a letter dated February 22,
1979, Jose told his brother Crisostomo: "Well you are the king of yourselves, and you
can sell your share of Leveriza." Co-owners with actual notice of the sale are not
entitled to written notice. A written notice is a formal requisite to make certain that the
co-owners have actual notice of the sale to enable them to exercise their right of
redemption within the limited period of thirty days. But where the co-owners had actual
notice of the sale at the time thereof and/or afterwards, a written notice of a fact already
known to them, would be superfluous. The statute does not demand what is
unnecessary.
---------------------------------------------------------------------------------------------------------------------

14) Unisource Commercial vs. Chung, et al.

G.R. No. 173252, July 17, 2009
(Easement of right of way)

Facts: Petitioner Unisource Commercial and Development Corporation is the registered

owner of a parcel of land covered by a certificate of title which contains a memorandum
of encumbrance of a voluntary easement. Such memorandum has been carried over
from the Original Certificate of Title of the aforesaid parcel of land in the name of the
original owner, Encarnacion S. Sandico. As the property was successively transferred to
several owners, the memorandum of encumbrance of a voluntary easement in favor of
Francisco Hidalgo was consistently annotated at the back of every title covering subject
property until a certificate of title was issued in petitioner's favor. On the other hand,
Hidalgo's property was eventually transferred to the respondents.

Later on, petitioner filed a Petition to Cancel the Encumbrance of Voluntary Easement
of Right of Way on the ground that the dominant estate has an adequate access to a
public road. The respondents countered that the extinguishment of the easement will be
of great prejudice to the locality and that petitioner is guilty of laches since it took
petitioner 15 years from acquisition of the property to file the petition. After the conduct
of laborious proceedings, the trial court ordered the cancellation of the encumbrance of
voluntary easement of right of way in favor of the dominant estate owned by
respondents. It found that the dominant estate has no more use for the easement since
it has another adequate outlet to a public road.

On appeal, the appellate court reversed the decision of the trial court and dismissed the
petition to cancel the encumbrance of voluntary easement of right of way. The appellate
court further held that the trial court erred in canceling the encumbrance of voluntary
easement of right of way. It ruled that Article 631(3)13 of the Civil Code, which was cited
by the trial court, is inapplicable since the presence of an adequate outlet to a highway
extinguishes only legal or compulsory easements but not voluntary easements like in

14
 the instant case. There having been an agreement between the original parties for the
provision of an easement of right of way in favor of the dominant estate, the same can
be extinguished only by mutual agreement or by renunciation of the owner of the
dominant estate.

Issue: Can the easement of right of way in the case at bar be judicially cancelled or
revoked?

Held: No. At the outset, the Court defined an easement as a real right on another’s
property, corporeal and immovable, whereby the owner of the latter must refrain from
doing or allowing somebody else to do or something to be done on his property, for the
benefit of another person or tenement. Easements are established either by law or by
the will of the owner. The former are called legal, and the latter, voluntary easements.

In this case, petitioner itself admitted that a voluntary easement of right of way exists in
favor of respondents. In its petition to cancel the encumbrance of voluntary easement of
right of way, petitioner alleged that the easement is personal, and it was constituted
simply by will or agreement of the parties. It was not a statutory easement and definitely
not an easement created by such court order because the Court merely declares the
existence of an easement created by the parties.

Having made such an admission, petitioner cannot now claim that what exists is a legal
easement and that the same should be cancelled since the dominant estate is not an
enclosed estate as it has an adequate access to a public road. As the Court have said,
the opening of an adequate outlet to a highway can extinguish only legal or compulsory
easements, not voluntary easements like in the case at bar. The fact that an easement
by grant may have also qualified as an easement of necessity does not detract from its
permanency as a property right, which survives the termination of the necessity. A
voluntary easement of right of way, like any other contract, could be extinguished only
by mutual agreement or by renunciation of the owner of the dominant estate.

Finally, the mere fact that respondents subdivided the property does not extinguish the
easement. Article 618 of the Civil Code provides that if the dominant estate is divided
between two or more persons, each of them may use the easement in its entirety,
without changing the place of its use, or making it more burdensome in any other way.
---------------------------------------------------------------------------------------------------------------------

15) Ganuelas, et al. vs. Cawed, et al.

G.R. No. 123968, April 24, 2003
(Donations inter vivos and mortis causa)

Facts: In 1958, Celestina Ganuelas executed a Deed of Donation of Real Property

covering seven parcels of land in favor of her niece Ursulina Ganuelas, one of herein
petitioners. The pertinent provision of the deed of donation reads as follows:

“That, for and in consideration of the love and affection which the DONOR
has for the DONEE, and of the faithful services the latter has rendered in the
past to the former, the said DONOR does by these presents transfer and
convey, by way of DONATION, unto the DONEE the property above,
described, to become effective upon the death of the DONOR; but in the
event that the DONEE should die before the DONOR, the present donation
shall be deemed rescinded and of no further force and effect.”

The deed has the following attestation clause, to wit:

“SIGNED by the above-named donor, Celestina Ganuelas, at the foot of this

deed of donation mortis causa, consisting of two (2) pages and on the left

15
 margin of each and every page thereof in the joint presence of all of us who
at her request and in her presence and that of each other have in like manner
subscribed our names as witnesses.”

In 1967, the donor executed a document denominated as Revocation of Donation

purporting to set aside the deed of donation. More than a month later, Celestina died
without issue and any surviving ascendants and siblings. Since then, Ursulina had been
sharing the produce of the donated properties with private respondents. Twenty-four
years after the execution of the Deed of Donation, however, Ursulina secured the
corresponding tax declarations, in her name, over the donated properties, and since
then, she refused to give private respondents any share in the produce of the properties
despite repeated demands.

Private respondents were thus prompted to file with the RTC a complaint against
Ursulina, along with Metodio Ganuelas and Antonio Ganuelas who were alleged to be
unwilling plaintiffs. The complaint alleged that the Deed of Donation executed by
Celestina in favor of Ursulina was void for lack of acknowledgment by the attesting
witnesses thereto before notary public, and the same was a disposition mortis causa
which failed to comply with the provisions of the Civil Code regarding formalities of wills
and testaments, hence, it was void. They prayed, among others, that judgment be
rendered ordering Ursulina to return to them as intestate heirs the possession and
ownership of the properties.

On the other hand, the petitioners averred that the donation in favor of Ursulina was
inter vivos as contemplated under Article 729 of the Civil Code, hence, the deed did not
have to comply with the requirements for the execution of a valid will. They also claimed
that the Revocation of Donation is null and void as the ground mentioned therein is not
among those provided by law to be the basis thereof, and at any rate, the revocation
could only be legally enforced upon filing of the appropriate complaint in court within the
prescriptive period provided by law, which period had, at the time the complaint was
filed, already lapsed.

Issue: Is the donation inter vivos or mortis causa?

Held: The Deed of Donation is mortis causa. Crucial in the resolution of the issue is the
determination of whether the donor intended to transfer the ownership over the
properties upon the execution of the deed. Donation inter vivos differs from donation
mortis causa in that in the former, the act is immediately operative even if the actual
execution may be deferred until the death of the donor, while in the latter, nothing is
conveyed to or acquired by the donee until the death of the donor-testator.

If the donation is made in contemplation of the donor‘s death, then it is a donation

mortis causa which should be embodied in a last will and testament. But if the donation
takes effect during the donor‘s lifetime or independently of the donor‘s death, then the
donation is inter vivos. The distinction between a transfer inter vivos and mortis causa is
important as the validity or revocation of the donation depends upon its nature. If the
donation is inter vivos, it must be executed and accepted with the formalities prescribed
by Articles 748 and 749 of the Civil Code, except when it is onerous in which case the
rules on contracts will apply. If it is mortis causa, the donation must be in the form of a
will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer
ownership.

In the case at bar, there is nothing in the deed of donation which indicates that any right,
title or interest in the donated properties was to be transferred to Ursulina prior to the
death of Celestina. The phrase “to become effective upon the death of the DONOR”
admits of no other interpretation but that Celestina intended to transfer the ownership of
the properties to Ursulina upon her death, not during her lifetime. More importantly, the

16
provision in the deed stating that if the donee should die before the donor, the donation
shall be deemed rescinded and of no further force and effect shows that the donation is
a postmortem disposition. Moreso, the deed contains an attestation clause expressly
confirming the donation as mortis causa. As the subject deed then is in the nature of a
mortis causa disposition, the formalities of a will should have been complied with, failing
which the donation is void and produces no effect.

Submitted by:
MIGUEL A. ANAS JR.

17