G.R. No.

L-16513 January 18, 1921 When the occupants at whose request this installation
had been made vacated the premises, the gas
THE UNITED STATES, plaintiff-appellee, company disconnected the gas pipe and removed the
vs. meter, thus cutting off the supply of gas from said
MANUEL TAMBUNTING, defendant-appellant. premises.

Manuel Garcia Goyena for appellant. Upon June 2, 1919, one of the inspectors of the gas
Acting Attorney-General Feria for appellee. company visited the house in question and found that
gas was being used, without the knowledge and
STREET, J.: consent of the gas company, for cooking in the
quarters occupied by the defendant and his wife: to
This appeal was instituted for the purpose of reversing
effect which a short piece of iron pipe had been
a judgment of the Court of First Instance of the city of
inserted in the gap where the gas meter had formerly
Manila, finding the accused, Manuel Tambunting, guilty
been placed, and piece of rubber tubing had been
of stealing a quantity of gas belonging to the Manila
used to connect the gas pipe of rubber tubing had
Gas Corporation, and sentencing him to undergo
been used to connect the gas pipe in kitchen with the
imprisonment for two months and one day, of arresto
gas stove, or plate, used for cooking.
mayor, with the accessories prescribed by law; to
indemnify the said corporation in the sum of P2, with At the time this discovery was made, the accused,
subsidiary imprisonment in case of insolvency; and to Manuel Tambunting, was not at home, but he presently
pay the costs. arrived and admitted to the agent to the gas company
that he had made the connection with the rubber
The evidence submitted in behalf of the prosecution
tubing between the gas pipe and the stove, though he
shows that in January of the year 1918, the accused
denied making the connection below. He also admitted
and his wife became occupants of the upper floor of
that he knew he was using gas without the knowledge
the house situated at No. 443, Calle Evangelista, in the
of the company and that he had been so using it for
city of Manila. In this house the Manila Gas
probably two or three months.
Corporation had previously installed apparatus for the
delivery of gas on both the upper and lower floors, The clandestine use of gas by the accused in the
consisting of the necessary piping and a gas meter, manner stated is thus established in our opinion
which last mentioned apparatus was installed below.
beyond a doubt; and inasmuch as the animo same conclusion was reached in U.S. vs. Carlos (21
lucrandi is obvious, it only remains to consider, first, Phil., 553), which was also a case of prosecution for
whether gas can be the subject to larceny and, stealing electricity.
secondly, whether the quantity of gas appropriated in
the two months, during which the accused admitted The precise point whether the taking of gas may
having used the same, has been established with constitute larceny has never before, so far as the
sufficient certainty to enable the court to fix an present writer is aware, been the subject of
appropriate penalty. adjudication in this court, but the decisions of Spanish,
English, and American courts all answer the question
Some legal minds, perhaps more academic than in the affirmative. (See U.S. vs. Carlos, 21 Phil., 553,
practical, have entertained doubt upon the question 560.)
whether gas can be the subject of larceny; but no
judicial decision has been called to our attention In this connection it will suffice to quote the following
wherein any respectable court has refused to treat it as from the topic "Larceny," at page 34, Vol. 17, of Ruling
such. In U.S. vs. Genato (15 Phil., 170, 175), this Case Law:
court, speaking through Mr. Justice Torres, said ". . .
the right of the ownership of electric current is secured There is nothing in the nature of gas used for
by article 517 and 518 of the Penal Code; the illuminating purposes which renders it incapable of
application of these articles in cases of subtraction of being feloniously taken and carried away. It is a
gas, a fluid used for lighting, and in some respects valuable article of merchandise, bought and sold like
resembling electricity, is confirmed by the rule laid other personal property, susceptible of being severed
down in the decisions of the supreme court of Spain of from a mass or larger quantity and of being transported
January 20, 1887, and April 1, 1897, construing and from place to place. Likewise water which is confined
enforcing the provisions of articles 530 and 531 of the in pipes and electricity which is conveyed by wires are
Penal Code of that country, articles identical with subjects of larceny."
articles 517 and 518 of the code in force in these
As to the amount and value of the gas appropriated by
Islands." These expressions were used in a case
the accused in the period during which he admits
which involved the subtraction and appropriation of
having used it, the proof is not entirely satisfactory.
electrical energy and the court held, in accordance with
Nevertheless we think the trial court was justified in
the analogy of the case involving the theft of gas, that
fixing the value of the gas at P2 per month, which is
electrical energy could also be the subject of theft. The
the minimum charge for gas made by the gas installation in the house at No. 443, Calle Evangelista.
company, however small the amount consumed. That Upon this it is argued for the accused that, having
is to say, no person desiring to use gas at all for been acquitted of that charge, he is not now subject to
domestic purposes can purchase the commodity at a prosecution for the offense of theft, having been
lower rate per month than P2. There was evidence acquitted of the former charge. The contention is
before the court showing that the general average of evidently not well-founded, since the two offenses are
the monthly bills paid by consumers throughout the city of totally distinct nature. Furthermore, a prosecution for
for the use of gas in a kitchen equipped like that used violation of a city ordinance is not ordinarily a bar to a
by the accused is from P18 to 20, while the average subsequent prosecution for the same offense under
minimum is about P8 per month. We think that the the general law of the land. (U.S. vs. Garcia Gavieres,
facts above stated are competent evidence; and the 10 Phil., 694.)
conclusion is inevitable that the accused is at least
liable to the extent of the minimum charge of P2 per The conclusion is that the accused is properly subject
month. The market value of the property at the time to punishment, under No. 5 of article 518 of the Penal
and place of the theft is of court the proper value to be Code, for the gas taken in the course of two months a
proven (17 R.C.L., p. 66); and when it is found that the the rate of P2 per month. There being no aggravating
least amount that a consumer can take costs P2 per or attenuating circumstance to be estimated, it results
months, this affords proof that the amount which the that the proper penalty is two months and one day
accused took was certainly worth that much. Absolute of arresto mayor, as fixed by the trial court. The
certainty as to the full amount taken is of course judgment will therefore be affirmed, with costs against
impossible, because no meter wad used; but absolute the appellant, it being understood that the amount of
certainty upon this point is not necessary, when it is the indemnity which the accused shall pay to the gas
certain that the minimum that could have been taken company is P4, instead of P2, with subsidiary
was worth a determinable amount. imprisonment for one day in case of insolvency. So
ordered.
It appears that before the present prosecution was
instituted, the accused had been unsuccessfully
prosecuted for an infraction of section 504 of the
Revised Ordinances of the city of Manila, under a
complaint charging that the accused, not being a (ORIGINAL CASE) G.R. No. 155076 February
registered installer of gas equipment had placed a gas 27, 2006
LUIS MARCOS P. LAUREL, Petitioner, the National Telecommunications Commission (NTC),
vs. and operates and maintains an International Gateway
HON. ZEUS C. ABROGAR, Presiding Judge of the Facility (IGF). The PLDT network is thus principally
Regional Trial Court, Makati City, Branch 150, composed of the Public Switch Telephone Network
PEOPLE OF THE PHILIPPINES& PHILIPPINE LONG (PSTN), telephone handsets and/or
DISTANCE TELEPHONE COMPANY, Respondents. telecommunications equipment used by its
subscribers, the wires and cables linking said
DECISION telephone handsets and/or telecommunications
equipment, antenna, the IGF, and other
CALLEJO, SR., J.: telecommunications equipment which provide
interconnections.3 1avvphil.net
Before us is a Petition for Review on Certiorari of the
Decision1 of the Court of Appeals (CA) in CA-G.R. SP PLDT alleges that one of the alternative calling
No. 68841 affirming the Order issued by Judge Zeus patterns that constitute network fraud and violate its
C. Abrogar, Regional Trial Court (RTC), Makati City, network integrity is that which is known as International
Branch 150, which denied the "Motion to Quash (With Simple Resale (ISR). ISR is a method of routing and
Motion to Defer Arraignment)" in Criminal Case No. 99- completing international long distance calls using
2425 for theft. International Private Leased Lines (IPL), cables,
antenna or air wave or frequency, which connect
Philippine Long Distance Telephone Company (PLDT)
directly to the local or domestic exchange facilities of
is the holder of a legislative franchise to render local
the terminating country (the country where the call is
and international telecommunication services under
destined). The IPL is linked to switching equipment
Republic Act No. 7082.2 Under said law, PLDT is
which is connected to a PLDT telephone line/number.
authorized to establish, operate, manage, lease,
In the process, the calls bypass the IGF found at the
maintain and purchase telecommunication systems,
terminating country, or in some instances, even those
including transmitting, receiving and switching stations,
from the originating country.4
for both domestic and international calls. For this
purpose, it has installed an estimated 1.7 million One such alternative calling service is that offered by
telephone lines nationwide. PLDT also offers other Baynet Co., Ltd. (Baynet) which sells "Bay Super
services as authorized by Certificates of Public Orient Card" phone cards to people who call their
Convenience and Necessity (CPCN) duly issued by friends and relatives in the Philippines. With said card,
one is entitled to a 27-minute call to the Philippines for PLDT pointed out that Baynet utilized the following
about ¥37.03 per minute. After dialing the ISR access equipment for its ISR activities: lines, cables, and
number indicated in the phone card, the ISR operator antennas or equipment or device capable of
requests the subscriber to give the PIN number also transmitting air waves or frequency, such as an IPL
indicated in the phone card. Once the caller’s identity and telephone lines and equipment; computers or any
(as purchaser of the phone card) is confirmed, the ISR equipment or device capable of accepting information
operator will then provide a Philippine local line to the applying the prescribed process of the information and
requesting caller via the IPL. According to PLDT, calls supplying the result of this process; modems or any
made through the IPL never pass the toll center of IGF equipment or device that enables a data terminal
operators in the Philippines. Using the local line, the equipment such as computers to communicate with
Baynet card user is able to place a call to any point in other data terminal equipment via a telephone line;
the Philippines, provided the local line is National multiplexers or any equipment or device that enables
Direct Dial (NDD) capable.5 two or more signals from different sources to pass
through a common cable or transmission line;
PLDT asserts that Baynet conducts its ISR activities by switching equipment, or equipment or device capable
utilizing an IPL to course its incoming international long of connecting telephone lines; and software, diskettes,
distance calls from Japan. The IPL is linked to tapes or equipment or device used for recording and
switching equipment, which is then connected to PLDT storing information.7
telephone lines/numbers and equipment, with Baynet
as subscriber. Through the use of the telephone lines PLDT also discovered that Baynet subscribed to a total
and other auxiliary equipment, Baynet is able to of 123 PLDT telephone lines/numbers.8 Based on the
connect an international long distance call from Japan Traffic Study conducted on the volume of calls passing
to any part of the Philippines, and make it appear as a through Baynet’s ISR network which bypass the IGF
call originating from Metro Manila. Consequently, the toll center, PLDT incurred an estimated monthly loss of
operator of an ISR is able to evade payment of access, P10,185,325.96.9 Records at the Securities and
termination or bypass charges and accounting rates, Exchange Commission (SEC) also revealed that
as well as compliance with the regulatory requirements Baynet was not authorized to provide international or
of the NTC. Thus, the ISR operator offers international domestic long distance telephone service in the
telecommunication services at a lower rate, to the country. The following are its officers: Yuji Hijioka, a
damage and prejudice of legitimate operators like Japanese national (chairman of the board of directors);
PLDT.6 Gina C. Mukaida, a Filipina (board member and
president); Luis Marcos P. Laurel, a Filipino (board Matsuura, Miyake, Lacson and Villegas with theft
member and corporate secretary); Ricky Chan Pe, a under Article 308 of the Revised Penal Code. After
Filipino (board member and treasurer); and Yasushi conducting the requisite preliminary investigation, the
Ueshima, also a Japanese national (board member). State Prosecutor filed an Amended Information
impleading Laurel (a partner in the law firm of Ingles,
Upon complaint of PLDT against Baynet for network Laurel, Salinas, and, until November 19, 1999, a
fraud, and on the strength of two search member of the board of directors and corporate
warrants10 issued by the RTC of Makati, Branch 147, secretary of Baynet), and the other members of the
National Bureau of Investigation (NBI) agents board of directors of said corporation, namely, Yuji
searched its office at the 7th Floor, SJG Building, Hijioka, Yasushi Ueshima, Mukaida, Lacson and
Kalayaan Avenue, Makati City on November 8, 1999. Villegas, as accused for theft under Article 308 of the
Atsushi Matsuura, Nobuyoshi Miyake, Edourd D. Revised Penal Code. The inculpatory portion of the
Lacson and Rolando J. Villegas were arrested by NBI Amended Information reads:
agents while in the act of manning the operations of
Baynet. Seized in the premises during the search were On or about September 10-19, 1999, or prior thereto,
numerous equipment and devices used in its ISR in Makati City, and within the jurisdiction of this
activities, such as multiplexers, modems, computer Honorable Court, the accused, conspiring and
monitors, CPUs, antenna, assorted computer confederating together and all of them mutually helping
peripheral cords and microprocessors, cables/wires, and aiding one another, with intent to gain and without
assorted PLDT statement of accounts, parabolic the knowledge and consent of the Philippine Long
antennae and voltage regulators. Distance Telephone (PLDT), did then and there
willfully, unlawfully and feloniously take, steal and use
State Prosecutor Ofelia L. Calo conducted an inquest the international long distance calls belonging to PLDT
investigation and issued a Resolution11 on January 28, by conducting International Simple Resale (ISR), which
2000, finding probable cause for theft under Article 308 is a method of routing and completing international
of the Revised Penal Code and Presidential Decree long distance calls using lines, cables, antennae,
No. 40112 against the respondents therein, including and/or air wave frequency which connect directly to the
Laurel. local or domestic exchange facilities of the country
where the call is destined, effectively stealing this
On February 8, 2000, State Prosecutor Calo filed an business from PLDT while using its facilities in the
Information with the RTC of Makati City charging
estimated amount of P20,370,651.92 to the damage Court of Makati City, docketed as Criminal Case No.
and prejudice of PLDT, in the said amount. 276766.

CONTRARY TO LAW.13 The prosecution, through private complainant PLDT,

opposed the motion,14 contending that the movant
Accused Laurel filed a "Motion to Quash (with Motion unlawfully took personal property belonging to it, as
to Defer Arraignment)" on the ground that the factual follows: 1) intangible telephone services that are being
allegations in the Amended Information do not offered by PLDT and other telecommunication
constitute the felony of theft under Article 308 of the companies, i.e., the connection and interconnection to
Revised Penal Code. He averred that the Revised their telephone lines/facilities; 2) the use of those
Penal Code, or any other special penal law for that facilities over a period of time; and 3) the revenues
matter, does not prohibit ISR operations. He claimed derived in connection with the rendition of such
that telephone calls with the use of PLDT telephone services and the use of such facilities.15
lines, whether domestic or international, belong to the
persons making the call, not to PLDT. He argued that The prosecution asserted that the use of PLDT’s
the caller merely uses the facilities of PLDT, and what intangible telephone services/facilities allows electronic
the latter owns are the telecommunication voice signals to pass through the same, and ultimately
infrastructures or facilities through which the call is to the called party’s number. It averred that such
made. He also asserted that PLDT is compensated for service/facility is akin to electricity which, although an
the caller’s use of its facilities by way of rental; for an intangible property, may, nevertheless, be appropriated
outgoing overseas call, PLDT charges the caller per and be the subject of theft. Such service over a period
minute, based on the duration of the call. Thus, no of time for a consideration is the business that PLDT
personal property was stolen from PLDT. According to provides to its customers, which enables the latter to
Laurel, the P20,370,651.92 stated in the Information, if send various messages to installed recipients. The
anything, represents the rental for the use of PLDT service rendered by PLDT is akin to merchandise
facilities, and not the value of anything owned by it. which has specific value, and therefore, capable of
Finally, he averred that the allegations in the Amended appropriation by another, as in this case, through the
Information are already subsumed under the ISR operations conducted by the movant and his co-
Information for violation of Presidential Decree (P.D.) accused.
No. 401 filed and pending in the Metropolitan Trial
The prosecution further alleged that "international alleged in the Amended Information "will show how the
business calls and revenues constitute personal alleged crime was committed by conducting ISR," to
property envisaged in Article 308 of the Revised Penal the damage and prejudice of PLDT.
Code." Moreover, the intangible telephone
services/facilities belong to PLDT and not to the Laurel filed a Motion for Reconsideration17 of the Order,
movant and the other accused, because they have no alleging that international long distance calls are not
telephone services and facilities of their own duly personal property, and are not capable of
authorized by the NTC; thus, the taking by the movant appropriation. He maintained that business or revenue
and his co-accused of PLDT services was with intent is not considered personal property, and that the
to gain and without the latter’s consent. prosecution failed to adduce proof of its existence and
the subsequent loss of personal property belonging to
The prosecution pointed out that the accused, as well another. Citing the ruling of the Court in United States
as the movant, were paid in exchange for their illegal v. De Guzman,18Laurel averred that the case is not one
appropriation and use of PLDT’s telephone services with telephone calls which originate with a particular
and facilities; on the other hand, the accused did not caller and terminates with the called party. He insisted
pay a single centavo for their illegal ISR operations. that telephone calls are considered privileged
Thus, the acts of the accused were akin to the use of a communications under the Constitution and cannot be
"jumper" by a consumer to deflect the current from the considered as "the property of PLDT." He further
house electric meter, thereby enabling one to steal argued that there is no kinship between telephone calls
electricity. The prosecution emphasized that its position and electricity or gas, as the latter are forms of energy
is fortified by the Resolutions of the Department of which are generated and consumable, and may be
Justice in PLDT v. Tiongson, et al. (I.S. No. 97-0925) considered as personal property because of such
and in PAOCTF-PLDT v. Elton John Tuason, et al. (I.S. characteristic. On the other hand, the movant argued,
No. 2000-370) which were issued on August 14, 2000 the telephone business is not a form of energy but is
finding probable cause for theft against the an activity.
respondents therein.
In its Order19 dated December 11, 2001, the RTC
On September 14, 2001, the RTC issued an denied the movant’s Motion for Reconsideration. This
Order16 denying the Motion to Quash the Amended time, it ruled that what was stolen from PLDT was its
Information. The court declared that, although there is "business" because, as alleged in the Amended
no law that expressly prohibits the use of ISR, the facts Information, the international long distance calls made
through the facilities of PLDT formed part of its the other hand, the term "revenue" is defined as "the
business. The RTC noted that the movant was charged income that comes back from an investment (as in real
with stealing the business of PLDT. To support its or personal property); the annual or periodical rents,
ruling, it cited Strochecker v. Ramirez,20 where the profits, interests, or issues of any species of real or
Court ruled that interest in business is personal personal property."22
property capable of appropriation. It further declared
that, through their ISR operations, the movant and his Laurel further posited that an electric company’s
co-accused deprived PLDT of fees for international business is the production and distribution of
long distance calls, and that the ISR used by the electricity; a gas company’s business is the production
movant and his co-accused was no different from the and/or distribution of gas (as fuel); while a water
"jumper" used for stealing electricity. company’s business is the production and distribution
of potable water. He argued that the "business" in all
Laurel then filed a Petition for Certiorari with the CA, these cases is the commercial activity, while the goods
assailing the Order of the RTC. He alleged that the and merchandise are the products of such activity.
respondent judge gravely abused his discretion in Thus, in prosecutions for theft of certain forms of
denying his Motion to Quash the Amended energy, it is the electricity or gas which is alleged to be
Information.21 As gleaned from the material averments stolen and not the "business" of providing electricity or
of the amended information, he was charged with gas. However, since a telephone company does not
stealing the international long distance calls belonging produce any energy, goods or merchandise and
to PLDT, not its business. Moreover, the RTC failed to merely renders a service or, in the words of PLDT, "the
distinguish between the business of PLDT (providing connection and interconnection to their telephone
services for international long distance calls) and the lines/facilities," such service cannot be the subject of
revenues derived therefrom. He opined that a theft as defined in Article 308 of the Revised Penal
"business" or its revenues cannot be considered as Code.23
personal property under Article 308 of the Revised
Penal Code, since a "business" is "(1) a commercial or He further declared that to categorize "business" as
mercantile activity customarily engaged in as a means personal property under Article 308 of the Revised
of livelihood and typically involving some Penal Code would lead to absurd consequences; in
independence of judgment and power of decision; (2) a prosecutions for theft of gas, electricity or water, it
commercial or industrial enterprise; and (3) refers to would then be permissible to allege in the Information
transactions, dealings or intercourse of any nature." On that it is the gas business, the electric business or the
water business which has been stolen, and no longer which is abstract and intangible in form, it is
the merchandise produced by such enterprise. 24 nevertheless considered "property" under Article 308 of
the Revised Penal Code. The CA opined that PLDT’s
Laurel further cited the Resolution of the Secretary of business of providing international calls is personal
Justice in Piltel v. Mendoza,25 where it was ruled that property which may be the object of theft, and cited
the Revised Penal Code, legislated as it was before United States v. Carlos28 to support such conclusion.
present technological advances were even conceived, The tribunal also cited Strochecker v. Ramirez,29 where
is not adequate to address the novel means of this Court ruled that one-half interest in a day’s
"stealing" airwaves or airtime. In said resolution, it was business is personal property under Section 2 of Act
noted that the inadequacy prompted the filing of No. 3952, otherwise known as the Bulk Sales Law. The
Senate Bill 2379 (sic) entitled "The Anti- appellate court held that the operations of the ISR are
Telecommunications Fraud of 1997" to deter cloning of not subsumed in the charge for violation of P.D. No.
cellular phones and other forms of communications 401.
fraud. The said bill "aims to protect in number (ESN)
(sic) or Capcode, mobile identification number (MIN), Laurel, now the petitioner, assails the decision of the
electronic-international mobile equipment identity CA, contending that -
(EMEI/IMEI), or subscriber identity module" and "any
attempt to duplicate the data on another cellular phone THE COURT OF APPEALS ERRED IN RULING
without the consent of a public telecommunications THAT THE PERSONAL PROPERTY
entity would be punishable by law."26 Thus, Laurel ALLEGEDLY STOLEN PER THE INFORMATION
concluded, "there is no crime if there is no law IS NOT THE "INTERNATIONAL LONG
punishing the crime." DISTANCE CALLS" BUT THE "BUSINESS OF
PLDT."
On August 30, 2002, the CA rendered judgment
dismissing the petition.27 The appellate court ruled that THE COURT OF APPEALS ERRED IN RULING
a petition for certiorari under Rule 65 of the Rules of THAT THE TERM "BUSINESS" IS PERSONAL
Court was not the proper remedy of the petitioner. On PROPERTY WITHIN THE MEANING OF ART.
the merits of the petition, it held that while business is 308 OF THE REVISED PENAL CODE.30
generally an activity
Petitioner avers that the petition for a writ of certiorari
may be filed to nullify an interlocutory order of the trial
court which was issued with grave abuse of discretion international long distance calls alleged in the
amounting to excess or lack of jurisdiction. In support amended information should be construed to mean
of his petition before the Court, he reiterates the "business" of PLDT, which, while abstract and
arguments in his pleadings filed before the CA. He intangible in form, is personal property susceptible of
further claims that while the right to carry on a appropriation.31 The OSG avers that what was stolen
business or an interest or participation in business is by petitioner and his co-accused is the business of
considered property under the New Civil Code, the PLDT providing international long distance calls which,
term "business," however, is not. He asserts that the though intangible, is personal property of the PLDT.32
Philippine Legislature, which approved the Revised
Penal Code way back in January 1, 1932, could not For its part, respondent PLDT asserts that personal
have contemplated to include international long property under Article 308 of the Revised Penal Code
distance calls and "business" as personal property comprehends intangible property such as electricity
under Article 308 thereof. and gas which are valuable articles for merchandise,
brought and sold like other personal property, and are
In its comment on the petition, the Office of the capable of appropriation. It insists that the business of
Solicitor General (OSG) maintains that the amended international calls and revenues constitute personal
information clearly states all the essential elements of property because the same are valuable articles of
the crime of theft. Petitioner’s interpretation as to merchandise. The respondent reiterates that
whether an "international long distance call" is international calls involve (a) the intangible telephone
personal property under the law is inconsequential, as services that are being offered by it, that is, the
a reading of the amended information readily reveals connection and interconnection to the telephone
that specific acts and circumstances were alleged network, lines or facilities; (b) the use of its telephone
charging Baynet, through its officers, including network, lines or facilities over a period of time; and (c)
petitioner, of feloniously taking, stealing and illegally the income derived in connection therewith. 33
using international long distance calls belonging to
respondent PLDT by conducting ISR operations, thus, PLDT further posits that business revenues or the
"routing and completing international long distance income derived in connection with the rendition of such
calls using lines, cables, antenna and/or airwave services and the use of its telephone network, lines or
frequency which connect directly to the local or facilities are personal properties under Article 308 of
domestic exchange facilities of the country where the the Revised Penal Code; so is the use of said
call is destined." The OSG maintains that the telephone services/telephone network, lines or facilities
which allow electronic voice signals to pass through On the issue of whether or not the petition for certiorari
the same and ultimately to the called party’s number. It instituted by the petitioner in the CA is proper, the
is akin to electricity which, though intangible property, general rule is that a petition for certiorari under Rule
may nevertheless be appropriated and can be the 65 of the Rules of Court, as amended, to nullify an
object of theft. The use of respondent PLDT’s order denying a motion to quash the Information is
telephone network, lines, or facilities over a period of inappropriate because the aggrieved party has a
time for consideration is the business that it provides to remedy of appeal in the ordinary course of law. Appeal
its customers, which enables the latter to send various and certiorari are mutually exclusive of each other. The
messages to intended recipients. Such use over a remedy of the aggrieved party is to continue with the
period of time is akin to merchandise which has value case in due course and, when an unfavorable
and, therefore, can be appropriated by another. judgment is rendered, assail the order and the decision
According to respondent PLDT, this is what actually on appeal. However, if the trial court issues the order
happened when petitioner Laurel and the other denying the motion to quash the Amended Information
accused below conducted illegal ISR operations. 34 with grave abuse of discretion amounting to excess or
lack of jurisdiction, or if such order is patently
The petition is meritorious. erroneous, or null and void for being contrary to the
Constitution, and the remedy of appeal would not
The issues for resolution are as follows: (a) whether or afford adequate and expeditious relief, the accused
not the petition for certiorari is the proper remedy of the may resort to the extraordinary remedy of certiorari. 35 A
petitioner in the Court of Appeals; (b) whether or not special civil action for certiorari is also available where
international telephone calls using Bay Super Orient there are special circumstances clearly demonstrating
Cards through the telecommunication services the inadequacy of an appeal. As this Court held in
provided by PLDT for such calls, or, in short, PLDT’s Bristol Myers Squibb (Phils.), Inc. v. Viloria:36
business of providing said telecommunication services,
are proper subjects of theft under Article 308 of the Nonetheless, the settled rule is that a writ of certiorari
Revised Penal Code; and (c) whether or not the trial may be granted in cases where, despite availability of
court committed grave abuse of discretion amounting appeal after trial, there is at least a prima facie
to excess or lack of jurisdiction in denying the motion showing on the face of the petition and its annexes
of the petitioner to quash the amended information. that: (a) the trial court issued the order with grave
abuse of discretion amounting to lack of or in excess of
jurisdiction; (b) appeal would not prove to be a speedy
and adequate remedy; (c) where the order is a patent prosecution for the same offense.40 It must show, on its
nullity; (d) the decision in the present case will arrest face, that if the alleged facts are true, an offense has
future litigations; and (e) for certain considerations been committed. The rule is rooted on the
such as public welfare and public policy.37 constitutional right of the accused to be informed of the
nature of the crime or cause of the accusation against
In his petition for certiorari in the CA, petitioner averred him. He cannot be convicted of an offense even if
that the trial court committed grave abuse of its proven unless it is alleged or necessarily included in
discretion amounting to excess or lack of jurisdiction the Information filed against him.
when it denied his motion to quash the Amended
Information despite his claim that the material As a general prerequisite, a motion to quash on the
allegations in the Amended Information do not charge ground that the Information does not constitute the
theft under Article 308 of the Revised Penal Code, or offense charged, or any offense for that matter, should
any offense for that matter. By so doing, the trial court be resolved on the basis of said allegations whose
deprived him of his constitutional right to be informed truth and veracity are hypothetically committed; 41 and
of the nature of the charge against him. He further on additional facts admitted or not denied by the
averred that the order of the trial court is contrary to prosecution.42 If the facts alleged in the Information do
the constitution and is, thus, null and void. He insists not constitute an offense, the complaint or information
that he should not be compelled to undergo the rigors should be quashed by the court.43
and tribulations of a protracted trial and incur expenses
to defend himself against a non-existent charge. We have reviewed the Amended Information and find
that, as mentioned by the petitioner, it does not contain
Petitioner is correct. material allegations charging the petitioner of theft of
personal property under Article 308 of the Revised
An information or complaint must state explicitly and Penal Code. It, thus, behooved the trial court to quash
directly every act or omission constituting an the Amended Information. The Order of the trial court
offense38 and must allege facts establishing conduct denying the motion of the petitioner to quash the
that a penal statute makes criminal;39 and describes Amended Information is a patent nullity.
the property which is the subject of theft to advise the
accused with reasonable certainty of the accusation he On the second issue, we find and so hold that the
is called upon to meet at the trial and to enable him to international telephone calls placed by Bay Super
rely on the judgment thereunder of a subsequent Orient Card holders, the telecommunication services
provided by PLDT and its business of providing said them more comprehensive.47 Words and phrases in a
services are not personal properties under Article 308 statute are to be construed according to their common
of the Revised Penal Code. The construction by the meaning and accepted usage.
respondents of Article 308 of the said Code to include,
within its coverage, the aforesaid international As Chief Justice John Marshall declared, "it would be
telephone calls, telecommunication services and dangerous, indeed, to carry the principle that a case
business is contrary to the letter and intent of the law. which is within the reason or

The rule is that, penal laws are to be construed strictly. mischief of a statute is within its provision, so far as to
Such rule is founded on the tenderness of the law for punish a crime not enumerated in the statute because
the rights of individuals and on the plain principle that it is of equal atrocity, or of kindred character with those
the power of punishment is vested in Congress, not in which are enumerated.48 When interpreting a criminal
the judicial department. It is Congress, not the Court, statute that does not explicitly reach the conduct in
which is to define a crime, and ordain its question, the Court should not base an expansive
punishment.44 Due respect for the prerogative of reading on inferences from subjective and variable
Congress in defining crimes/felonies constrains the understanding.49
Court to refrain from a broad interpretation of penal
laws where a "narrow interpretation" is appropriate. Article 308 of the Revised Penal Code defines theft as
The Court must take heed to language, legislative follows:
history and purpose, in order to strictly determine the
Art. 308. Who are liable for theft.– Theft is committed
wrath and breath of the conduct the law
by any person who, with intent to gain but without
forbids.45 However, when the congressional purpose is
violence, against or intimidation of persons nor force
unclear, the court must apply the rule of lenity, that is,
upon things, shall take personal property of another
ambiguity concerning the ambit of criminal statutes
without the latter’s consent.
should be resolved in favor of lenity.46
The provision was taken from Article 530 of the
Penal statutes may not be enlarged by implication or
Spanish Penal Code which reads:
intent beyond the fair meaning of the language used;
and may not be held to include offenses other than 1. Los que con ánimo de lucrarse, y sin violencia o
those which are clearly described, notwithstanding that intimidación en las personas ni fuerza en las cosas,
the Court may think that Congress should have made
toman las cosas muebles ajenas sin la voluntad de su material, susceptible de ser aprehendida que tenga un
dueño.50 valor cualquiera."53

For one to be guilty of theft, the accused must have an According to Cuello Callon, in the context of the Penal
intent to steal (animus furandi) personal property, Code, only those movable properties which can be
meaning the intent to deprive another of his taken and carried from the place they are found are
ownership/lawful possession of personal property proper subjects of theft. Intangible properties such as
which intent is apart from and concurrently with the rights and ideas are not subject of theft because the
general criminal intent which is an essential element of same cannot be "taken" from the place it is found and
a felony of dolo (dolus malus). is occupied or appropriated.

An information or complaint for simple theft must allege Solamente las cosas muebles y corporales pueden ser
the following elements: (a) the taking of personal objeto de hurto. La sustracción de cosas inmuebles y
property; (b) the said property belongs to another; (c) la cosas incorporales (v. gr., los derechos, las ideas)
the taking be done with intent to gain; and (d) the no puede integrar este delito, pues no es posible
taking be accomplished without the use of violence or asirlas, tomarlas, para conseguir su apropiación. El
intimidation of person/s or force upon things. 51 Codigo emplea la expresión "cosas mueble" en el
sentido de cosa que es susceptible de ser llevada del
One is apt to conclude that "personal property" lugar donde se encuentra, como dinero, joyas, ropas,
standing alone, covers both tangible and intangible etcétera, asi que su concepto no coincide por
properties and are subject of theft under the Revised completo con el formulado por el Codigo civil (arts. 335
Penal Code. But the words "Personal property" under y 336).54
the Revised Penal Code must be considered in
tandem with the word "take" in the law. The statutory Thus, movable properties under Article 308 of the
definition of "taking" and movable property indicates Revised Penal Code should be distinguished from the
that, clearly, not all personal properties may be the rights or interests to which they relate. A naked right
proper subjects of theft. The general rule is that, only existing merely in contemplation of law, although it may
movable properties which have physical or material be very valuable to the person who is entitled to
existence and susceptible of occupation by another are exercise it, is not the subject of theft or larceny.55 Such
proper objects of theft.52 As explained by Cuelo Callon: rights or interests are intangible and cannot be "taken"
"Cosa juridicamente es toda sustancia corporal, by another. Thus, right to produce oil, good will or an
interest in business, or the right to engage in business, Taking may be by the offender’s own hands, by his use
credit or franchise are properties. So is the credit line of innocent persons without any felonious intent, as
represented by a credit card. However, they are not well as any mechanical device, such as an access
proper subjects of theft or larceny because they are device or card, or any agency, animate or inanimate,
without form or substance, the mere "breath" of the with intent to gain. Intent to gain includes the unlawful
Congress. On the other hand, goods, wares and taking of personal property for the purpose of deriving
merchandise of businessmen and credit cards issued utility, satisfaction, enjoyment and pleasure.60
to them are movable properties with physical and
material existence and may be taken by another; We agree with the contention of the respondents that
hence, proper subjects of theft. intangible properties such as electrical energy and gas
are proper subjects of theft. The reason for this is that,
There is "taking" of personal property, and theft is as explained by this Court in United States v.
consummated when the offender unlawfully acquires Carlos61 and United States v. Tambunting,62 based on
possession of personal property even if for a short decisions of the Supreme Court of Spain and of the
time; or if such property is under the dominion and courts in England and the United States of America,
control of the thief. The taker, at some particular gas or electricity are capable of appropriation by
amount, must have obtained complete and absolute another other than the owner. Gas and electrical
possession and control of the property adverse to the energy may be taken, carried away and appropriated.
rights of the owner or the lawful possessor thereof. 56 It In People v. Menagas,63 the Illinois State Supreme
is not necessary that the property be actually carried Court declared that electricity, like gas, may be seen
away out of the physical possession of the lawful and felt. Electricity, the same as gas, is a valuable
possessor or that he should have made his escape article of merchandise, bought and sold like other
with it.57 Neither asportation nor actual manual personal property and is capable of appropriation by
possession of property is required. Constructive another. It is a valuable article of merchandise, bought
possession of the thief of the property is enough. 58 and sold like other personal property, susceptible of
being severed from a mass or larger quantity and of
The essence of the element is the taking of a thing out being transported from place to place. Electrical
of the possession of the owner without his privity and energy may, likewise, be taken and carried away. It is a
consent and without animus revertendi.59 valuable commodity, bought and sold like other
personal property. It may be transported from place to
place. There is nothing in the nature of gas used for
illuminating purposes which renders it incapable of that which a person can be employed.66 Business may
being feloniously taken and carried away. also mean employment, occupation or profession.
Business is also defined as a commercial activity for
In People ex rel Brush Electric Illuminating Co. v. gain benefit or advantage.67 Business, like services in
Wemple,64 the Court of Appeals of New York held that business, although are properties, are not proper
electric energy is manufactured and sold in subjects of theft under the Revised Penal Code
determinate quantities at a fixed price, precisely as are because the same cannot be "taken" or "occupied." If it
coal, kerosene oil, and gas. It may be conveyed to the were otherwise, as claimed by the respondents, there
premises of the consumer, stored in cells of different would be no juridical difference between the taking of
capacity known as an accumulator; or it may be sent the business of a person or the services provided by
through a wire, just as gas or oil may be transported him for gain, vis-à-vis, the taking of goods, wares or
either in a close tank or forced through a pipe. Having merchandise, or equipment comprising his
reached the premises of the consumer, it may be used business.68 If it was its intention to include "business"
in any way he may desire, being, like illuminating gas, as personal property under Article 308 of the Revised
capable of being transformed either into heat, light, or Penal Code, the Philippine Legislature should have
power, at the option of the purchaser. In Woods v. spoken in language that is clear and definite: that
People,65 the Supreme Court of Illinois declared that business is personal property under Article 308 of the
there is nothing in the nature of gas used for Revised Penal Code.69
illuminating purposes which renders it incapable of
being feloniously taken and carried away. It is a We agree with the contention of the petitioner that, as
valuable article of merchandise, bought and sold like gleaned from the material averments of the Amended
other personal property, susceptible of being severed Information, he is charged of "stealing the international
from a mass or larger quantity and of being transported long distance calls belonging to PLDT" and the use
from place to place. thereof, through the ISR. Contrary to the claims of the
OSG and respondent PLDT, the petitioner is not
Gas and electrical energy should not be equated with charged of stealing P20,370,651.95 from said
business or services provided by business respondent. Said amount of P20,370,651.95 alleged in
entrepreneurs to the public. Business does not have the Amended Information is the aggregate amount of
an exact definition. Business is referred as that which access, transmission or termination charges which the
occupies the time, attention and labor of men for the PLDT expected from the international long distance
purpose of livelihood or profit. It embraces everything
calls of the callers with the use of Baynet Super Orient electronic voice signals through its facilities and
Cards sold by Baynet Co. Ltd. equipment. Baynet Card Ltd., through its operator,
merely intercepts, reroutes the calls and passes them
In defining theft, under Article 308 of the Revised Penal to its toll center. Indeed, the parties called receive the
Code, as the taking of personal property without the telephone calls from Japan.
consent of the owner thereof, the Philippine legislature
could not have contemplated the human voice which is In this modern age of technology, telecommunications
converted into electronic impulses or electrical current systems have become so tightly merged with computer
which are transmitted to the party called through the systems that it is difficult to know where one starts and
PSTN of respondent PLDT and the ISR of Baynet Card the other finishes. The telephone set is highly
Ltd. within its coverage. When the Revised Penal Code computerized and allows computers to communicate
was approved, on December 8, 1930, international across long distances.71 The instrumentality at issue in
telephone calls and the transmission and routing of this case is not merely a telephone but a telephone
electronic voice signals or impulses emanating from inexplicably linked to a computerized communications
said calls, through the PSTN, IPL and ISR, were still system with the use of Baynet Cards sold by the
non-existent. Case law is that, where a legislative Baynet Card Ltd. The corporation uses computers,
history fails to evidence congressional awareness of modems and software, among others, for its ISR. 72
the scope of the statute claimed by the respondents, a
narrow interpretation of the law is more consistent with The conduct complained of by respondent PLDT is
the usual approach to the construction of the statute. reminiscent of "phreaking" (a slang term for the action
Penal responsibility cannot be extended beyond the of making a telephone system to do something that it
fair scope of the statutory mandate.70 normally should not allow by "making the phone
company bend over and grab its ankles"). A "phreaker"
Respondent PLDT does not acquire possession, much is one who engages in the act of manipulating phones
less, ownership of the voices of the telephone callers and illegally markets telephone services.73 Unless the
or of the electronic voice signals or current emanating phone company replaces all its hardware, phreaking
from said calls. The human voice and the electronic would be impossible to stop. The phone companies in
voice signals or current caused thereby are intangible North America were impelled to replace all their
and not susceptible of possession, occupation or hardware and adopted full digital switching system
appropriation by the respondent PLDT or even the known as the Common Channel Inter Office Signaling.
petitioner, for that matter. PLDT merely transmits the
Phreaking occurred only during the 1960’s and 1970’s, If it was the intent of the Philippine Legislature, in
decades after the Revised Penal Code took effect. 1930, to include services to be the subject of theft, it
should have incorporated the same in Article 308 of the
The petitioner is not charged, under the Amended Revised Penal Code. The Legislature did not. In fact,
Information, for theft of telecommunication or the Revised Penal Code does not even contain a
telephone services offered by PLDT. Even if he is, the definition of services.
term "personal property" under Article 308 of the
Revised Penal Code cannot be interpreted beyond its If taking of telecommunication services or the business
seams so as to include "telecommunication or of a person, is to be proscribed, it must be by special
telephone services" or computer services for that statute79 or an amendment of the Revised Penal Code.
matter. The word "service" has a variety of meanings Several states in the United States, such as New York,
dependent upon the context, or the sense in which it is New Jersey, California and Virginia, realized that their
used; and, in some instances, it may include a sale. criminal statutes did not contain any provisions
For instance, the sale of food by restaurants is usually penalizing the theft of services and passed laws
referred to as "service," although an actual sale is defining and penalizing theft of telephone and
involved.74 It may also mean the duty or labor to be computer services. The Pennsylvania Criminal Statute
rendered by one person to another; performance of now penalizes theft of services, thus:
labor for the benefit of another.75 In the case of PLDT, it
is to render local and international telecommunications (a) Acquisition of services. --
services and such other services as authorized by the
CPCA issued by the NTC. Even at common law, (1) A person is guilty of theft if he intentionally obtains
neither time nor services may be taken and occupied services for himself or for another which he knows are
or appropriated.76A service is generally not considered available only for compensation, by deception or
property and a theft of service would not, therefore, threat, by altering or tampering with the public utility
constitute theft since there can be no caption or meter or measuring device by which such services are
asportation.77 Neither is the unauthorized use of the delivered or by causing or permitting such altering or
equipment and facilities of PLDT by the petitioner theft tampering, by making or maintaining any unauthorized
under the aforequoted provision of the Revised Penal connection, whether physically, electrically or
Code.78 inductively, to a distribution or transmission line, by
attaching or maintaining the attachment of any
unauthorized device to any cable, wire or other
component of an electric, telephone or cable television "Services" include labor, professional service,
system or to a television receiving set connected to a transportation, telephone or other public service,
cable television system, by making or maintaining any accommodation in hotels, restaurants or elsewhere,
unauthorized modification or alteration to any device admission to exhibitions, use of vehicles or other
installed by a cable television system, or by false token movable property. Where compensation for service is
or other trick or artifice to avoid payment for the ordinarily paid immediately upon the rendering of such
service. service, as in the case of hotels and restaurants,
refusal to pay or absconding without payment or offer
In the State of Illinois in the United States of America, to pay gives rise to a presumption that the service was
theft of labor or services or use of property is obtained by deception as to intention to pay; (2) A
penalized: person commits theft if, having control over the
disposition of services of others, to which he is not
(a) A person commits theft when he obtains the entitled, he knowingly diverts such services to his own
temporary use of property, labor or services of another benefit or to the benefit of another not entitled thereto.
which are available only for hire, by means of threat or
deception or knowing that such use is without the Interestingly, after the State Supreme Court of Virginia
consent of the person providing the property, labor or promulgated its decision in Lund v.
services. Commonwealth,80declaring that neither time nor
services may be taken and carried away and are not
In 1980, the drafters of the Model Penal Code in the proper subjects of larceny, the General Assembly of
United States of America arrived at the conclusion that Virginia enacted Code No. 18-2-98 which reads:
labor and services, including professional services,
have not been included within the traditional scope of Computer time or services or data processing services
the term "property" in ordinary theft statutes. Hence, or information or data stored in connection therewith is
they decided to incorporate in the Code Section 223.7, hereby defined to be property which may be the
which defines and penalizes theft of services, thus: subject of larceny under § § 18.2-95 or 18.2-96, or
embezzlement under § 18.2-111, or false pretenses
(1) A person is guilty of theft if he purposely obtains under § 18.2-178.
services which he knows are available only for
compensation, by deception or threat, or by false token
or other means to avoid payment for the service.
In the State of Alabama, Section 13A-8-10(a)(1) of the conspiracy to commit access devices fraud is a crime.
Penal Code of Alabama of 1975 penalizes theft of However, the petitioner is not charged of violation of
services: R.A. 8484.

"A person commits the crime of theft of services if: (a) Significantly, a prosecution under the law shall be
He intentionally obtains services known by him to be without prejudice to any liability for violation of any
available only for compensation by deception, threat, provisions of the Revised Penal Code inclusive of theft
false token or other means to avoid payment for the under Rule 308 of the Revised Penal Code and estafa
services …" under Article 315 of the Revised Penal Code. Thus, if
an individual steals a credit card and uses the same to
In the Philippines, Congress has not amended the obtain services, he is liable of the following: theft of the
Revised Penal Code to include theft of services or theft credit card under Article 308 of the Revised Penal
of business as felonies. Instead, it approved a law, Code; violation of Republic Act No. 8484; and estafa
Republic Act No. 8484, otherwise known as the Access under Article 315(2)(a) of the Revised Penal Code with
Devices Regulation Act of 1998, on February 11, 1998. the service provider as the private complainant. The
Under the law, an access device means any card, petitioner is not charged of estafa before the RTC in
plate, code, account number, electronic serial number, the Amended Information.
personal identification number and other
telecommunication services, equipment or Section 33 of Republic Act No. 8792, Electronic
instrumentalities-identifier or other means of account Commerce Act of 2000 provides:
access that can be used to obtain money, goods,
services or any other thing of value or to initiate a Sec. 33. Penalties.— The following Acts shall be
transfer of funds other than a transfer originated solely penalized by fine and/or imprisonment, as follows:
by paper instrument. Among the prohibited acts
enumerated in Section 9 of the law are the acts of a) Hacking or cracking which refers to unauthorized
obtaining money or anything of value through the use access into or interference in a computer
of an access device, with intent to defraud or intent to system/server or information and communication
gain and fleeing thereafter; and of effecting system; or any access in order to corrupt, alter, steal,
transactions with one or more access devices issued or destroy using a computer or other similar
to another person or persons to receive payment or information and communication devices, without the
any other thing of value. Under Section 11 of the law, knowledge and consent of the owner of the computer
or information and communications system, including Regional Trial Court and the Decision of
the introduction of computer viruses and the like, the Court of Appeals are REVERSED and
resulting on the corruption, destruction, alteration, theft SET ASIDE. The Regional Trial Court is
or loss of electronic data messages or electronic directed to issue an order granting the
documents shall be punished by a minimum fine of motion of the petitioner to quash the
One hundred thousand pesos (P100,000.00) and a Amended Information.
maximum commensurate to the damage incurred and
SO ORDERED.[1]
a mandatory imprisonment of six (6) months to three
(3) years. By way of brief background, petitioner is one of
the accused in Criminal Case No. 99-2425, filed with
IN LIGHT OF ALL THE FOREGOING, the petition is the Regional Trial Court of Makati City, Branch
GRANTED. The assailed Orders of the Regional Trial 150. The Amended Information charged the accused
Court and the Decision of the Court of Appeals are with theft under Article 308 of the Revised Penal Code,
REVERSED and SET ASIDE. The Regional Trial Court committed as follows:
is directed to issue an order granting the motion of the
petitioner to quash the Amended Information. On or about September 10-19,
1999, or prior thereto in Makati City, and
within the jurisdiction of this Honorable
Court, the accused, conspiring and
RECONSIDERATION: LAUREL v. ABROGAR (2009) confederating together and all of them
mutually helping and aiding one another,
RESOLUTION with intent to gain and without the
knowledge and consent of the Philippine
YNARES-SANTIAGO, J.: Long Distance Telephone (PLDT), did then
and there willfully, unlawfully and
feloniously take, steal and use the
On February 27, 2006, this Court’s First Division international long distance calls belonging
rendered judgment in this case as follows: to PLDT by conducting International Simple
Resale (ISR), which is a method of routing
IN LIGHT OF ALL THE and completing international long distance
FOREGOING, the petition calls using lines, cables, antenae, and/or
is GRANTED. The assailed Orders of the air wave frequency which connect directly
 to the local or domestic exchange facilities charging petitioner with theft is valid and sufficient; that
of the country where the call is destined, it states the names of all the accused who were
effectively stealing this business from specifically charged with the crime of theft of PLDT’s
PLDT while using its facilities in the international calls and business of providing
estimated amount of P20,370,651.92 to the telecommunication or telephone service on or about
damage and prejudice of PLDT, in the said September 10 to 19, 1999 in Makati City by conducting
amount. ISR or International Simple Resale; that it identifies the
international calls and business of providing
CONTRARY TO LAW.[2] telecommunication or telephone service of PLDT as
the personal properties which were unlawfully taken by
Petitioner filed a “Motion to Quash (with Motion the accused; and that it satisfies the test of sufficiency
to Defer Arraignment),” on the ground that the factual as it enabled a person of common understanding to
allegations in the Amended Information do not know the charge against him and the court to render
constitute the felony of theft. The trial court denied the judgment properly.
Motion to Quash the Amended Information, as well
petitioner’s subsequent Motion for Reconsideration. PLDT further insists that the Revised Penal Code
should be interpreted in the context of the Civil Code’s
Petitioner’s special civil action for certiorari was definition of real and personal property. The
dismissed by the Court of Appeals. Thus, petitioner enumeration of real properties in Article 415 of the Civil
filed the instant petition for review with this Court. Code is exclusive such that all those not included
therein are personal properties. Since Article 308 of
In the above-quoted Decision, this Court held the Revised Penal Code used the words “personal
that the Amended Information does not contain property” without qualification, it follows that all
material allegations charging petitioner with theft of “personal properties” as understood in the context of
personal property since international long distance the Civil Code, may be the subject of theft under Article
calls and the business of providing telecommunication 308 of the Revised Penal Code. PLDT alleges that the
or telephone services are not personal properties international calls and business of providing
under Article 308 of the Revised Penal Code. telecommunication or telephone service are personal
properties capable of appropriation and can be objects
Respondent Philippine Long Distance Telephone of theft.
Company (PLDT) filed a Motion for Reconsideration
with Motion to Refer the Case to the Supreme Court PLDT also argues that “taking” in relation to theft
En Banc. It maintains that the Amended Information under the Revised Penal Code does not require
“asportation,” the sole requisite being that the object brought under the control by science, are personal
should be capable of “appropriation.” The element of property.
“taking” referred to in Article 308 of the Revised Penal
Code means the act of depriving another of the In his Comment to PLDT’s motion for
possession and dominion of a movable coupled with reconsideration, petitioner Laurel claims that a
the intention, at the time of the “taking,” of withholding telephone call is a conversation on the phone or a
it with the character of permanency. There must be communication carried out using the telephone. It is
intent to appropriate, which means to deprive the not synonymous to electric current or
lawful owner of the thing. Thus, the term “personal impulses. Hence, it may not be considered as
properties” under Article 308 of the Revised Penal personal property susceptible of
Code is not limited to only personal properties which appropriation. Petitioner claims that the analogy
are “susceptible of being severed from a mass or between generated electricity and telephone calls is
larger quantity and of being transported from place to misplaced. PLDT does not produce or generate
place.” telephone calls. It only provides the facilities or
services for the transmission and switching of the
PLDT likewise alleges that as early as the 1930s, calls. He also insists that “business” is not personal
international telephone calls were in existence; hence, property. It is not the “business” that is protected but
there is no basis for this Court’s finding that the the “right to carry on a business.” This right is what is
Legislature could not have contemplated the theft of considered as property. Since the services of PLDT
international telephone calls and the unlawful cannot be considered as “property,” the same may not
transmission and routing of electronic voice signals or be subject of theft.
impulses emanating from such calls by unlawfully
tampering with the telephone device as within the The Office of the Solicitor General (OSG) agrees
coverage of the Revised Penal Code. with respondent PLDT that “international phone calls
and the business or service of providing international
According to respondent, the “international phone calls” are subsumed in the enumeration and
phone calls” which are “electric currents or sets of definition of personal property under the Civil Code
electric impulses transmitted through a medium, and hence, may be proper subjects of theft. It noted that
carry a pattern representing the human voice to a the cases of United States v. Genato,[3] United States
receiver,” are personal properties which may be v. Carlos[4] and United States v. Tambunting,[5] which
subject of theft. Article 416(3) of the Civil Code deems recognized intangible properties like gas and electricity
“forces of nature” (which includes electricity) which are as personal properties, are deemed incorporated in our
penal laws. Moreover, the theft provision in the
Revised Penal Code was deliberately couched in Article 308 of the Revised Penal Code provides:
broad terms precisely to be all-encompassing and
embracing even such scenario that could not have Art. 308. Who are liable for theft. –
been easily anticipated. Theft is committed by any person who, with
intent to gain but without violence against,
According to the OSG, prosecution under or intimidation of persons nor force upon
Republic Act (RA) No. 8484 or the Access Device things, shall take personal property of
Regulations Act of 1998 and RA 8792 or the Electronic another without the latter’s consent.
Commerce Act of 2000 does not preclude prosecution
under the Revised Penal Code for the crime of
theft. The latter embraces unauthorized appropriation The elements of theft under Article 308 of the
or use of PLDT’s international calls, service and Revised Penal Code are as follows: (1) that there be
business, for personal profit or gain, to the prejudice of taking of personal property; (2) that said property
PLDT as owner thereof. On the other hand, the belongs to another; (3) that the taking be done with
special laws punish the surreptitious and advanced intent to gain; (4) that the taking be done without the
technical means employed to illegally obtain the consent of the owner; and (5) that the taking be
subject service and business. Even assuming that the accomplished without the use of violence against or
correct indictment should have been under RA 8484, intimidation of persons or force upon things.
the quashal of the information would still not be
proper. The charge of theft as alleged in the Prior to the passage of the Revised Penal Code
Information should be taken in relation to RA 8484 on December 8, 1930, the definition of the term
because it is the elements, and not the designation of “personal property” in the penal code provision on theft
the crime, that control. had been established in Philippine jurisprudence. This
Court, in United States v. Genato, United States v.
Considering the gravity and complexity of the Carlos, and United States v. Tambunting, consistently
novel questions of law involved in this case, the ruled that any personal property, tangible or intangible,
Special First Division resolved to refer the same to the corporeal or incorporeal, capable of appropriation can
Banc. be the object of theft.

We resolve to grant the Motion for Moreover, since the passage of the Revised
Reconsideration but remand the case to the trial court Penal Code on December 8, 1930, the term “personal
for proper clarification of the Amended Information. property” has had a generally accepted definition in
civil law. In Article 335 of the Civil Code of Spain,
“personal property” is defined as “anything susceptible The only requirement for a personal property to
of appropriation and not included in the foregoing be the object of theft under the penal code is that it be
chapter (not real property).” Thus, the term “personal capable of appropriation. It need not be capable of
property” in the Revised Penal Code should be “asportation,” which is defined as “carrying
interpreted in the context of the Civil Code provisions away.”[7] Jurisprudence is settled that to “take” under
in accordance with the rule on statutory construction the theft provision of the penal code does not require
that where words have been long used in a technical asportation or carrying away.[8]
sense and have been judicially construed to have a
certain meaning, and have been adopted by the To appropriate means to deprive the lawful
legislature as having a certain meaning prior to a owner of the thing.[9] The word “take” in the Revised
particular statute, in which they are used, the words Penal Code includes any act intended to transfer
used in such statute should be construed according to possession which, as held in the assailed Decision,
the sense in which they have been previously used. may be committed through the use of the offenders’
[6]
In fact, this Court used the Civil Code definition of own hands, as well as any mechanical device, such as
“personal property” in interpreting the theft provision of an access device or card as in the instant case. This
the penal code in United States v. Carlos. includes controlling the destination of the property
stolen to deprive the owner of the property, such as the
Cognizant of the definition given by use of a meter tampering, as held in Natividad v. Court
jurisprudence and the Civil Code of Spain to the term of Appeals,[10] use of a device to fraudulently obtain
“personal property” at the time the old Penal Code was gas, as held in United States v. Tambunting, and the
being revised, still the legislature did not limit or qualify use of a jumper to divert electricity, as held in the
the definition of “personal property” in the Revised cases of United States v. Genato, United States v.
Penal Code. Neither did it provide a restrictive Carlos, and United States v. Menagas.[11]
definition or an exclusive enumeration of “personal
property” in the Revised Penal Code, thereby showing
its intent to retain for the term an extensive and As illustrated in the above cases, appropriation
unqualified interpretation. Consequently, any property of forces of nature which are brought under control by
which is not included in the enumeration of real science such as electrical energy can be achieved by
properties under the Civil Code and capable of tampering with any apparatus used for generating or
appropriation can be the subject of theft under the measuring such forces of nature, wrongfully redirecting
Revised Penal Code. such forces of nature from such apparatus, or using
any device to fraudulently obtain such forces of
nature. In the instant case, petitioner was charged
with engaging in International Simple Resale (ISR) or any such device shall, in the absence of
the unauthorized routing and completing of satisfactory explanation, be deemed
international long distance calls using lines, cables, sufficient evidence of such use by the
antennae, and/or air wave frequency and connecting persons benefiting thereby.
these calls directly to the local or domestic exchange
facilities of the country where destined.
It was further ruled that even without the above
As early as 1910, the Court declared ordinance the acts of subtraction punished therein are
in Genato that ownership over electricity (which an covered by the provisions on theft of the Penal Code
international long distance call consists of), as well then in force, thus:
as telephone service, is protected by the provisions on
theft of the Penal Code. The pertinent provision of the Even without them (ordinance), the
Revised Ordinance of the City of Manila, which was right of the ownership of electric current is
involved in the said case, reads as follows: secured by articles 517 and 518 of the
Penal Code; the application of these
Injury to electric apparatus; Tapping articles in cases of subtraction of gas, a
current; Evidence. – No person shall fluid used for lighting, and in some respects
destroy, mutilate, deface, or otherwise resembling electricity, is confirmed by the
injure or tamper with any wire, meter, or rule laid down in the decisions of the
other apparatus installed or used for supreme court of Spain of January 20,
generating, containing, conducting, or 1887, and April 1, 1897, construing and
measuring electricity, telegraph or enforcing the provisions of articles 530 and
telephone service, nor tap or otherwise 531 of the Penal Code of that country,
wrongfully deflect or take any electric articles 517 and 518 of the code in force in
current from such wire, meter, or other these islands.
apparatus.
The acts of “subtraction” include: (a) tampering
No person shall, for any purpose with any wire, meter, or other apparatus installed or
whatsoever, use or enjoy the benefits of used for generating, containing, conducting, or
any device by means of which he may measuring electricity, telegraph or telephone service;
fraudulently obtain any current of electricity (b) tapping or otherwise wrongfully deflecting or taking
or any telegraph or telephone service; and any electric current from such wire, meter, or other
the existence in any building premises of apparatus; and (c) using or enjoying the benefits of any
device by means of which one may fraudulently obtain assignor, shall be deemed to be a sale and
any current of electricity or any telegraph or telephone transfer in bulk, in contemplation of the Act.
service. x x x.

In the instant case, the act of conducting ISR

operations by illegally connecting various equipment or In Strochecker v. Ramirez,[12] this Court stated:
apparatus to private respondent PLDT’s telephone
system, through which petitioner is able to resell or re- With regard to the nature of the
route international long distance calls using respondent property thus mortgaged which is one-half
PLDT’s facilities constitutes all three acts of subtraction interest in the business above described,
mentioned above. such interest is a personal property
capable of appropriation and not included
The business of providing telecommunication or in the enumeration of real properties in
telephone service is likewise personal property which article 335 of the Civil Code, and may be
can be the object of theft under Article 308 of the the subject of mortgage.
Revised Penal Code. Business may be appropriated
under Section 2 of Act No. 3952 (Bulk Sales Law),
hence, could be object of theft: Interest in business was not specifically
enumerated as personal property in the Civil Code in
Section 2. Any sale, transfer, force at the time the above decision was
mortgage, or assignment of a stock of rendered. Yet, interest in business was declared to be
goods, wares, merchandise, provisions, or personal property since it is capable of appropriation
materials otherwise than in the ordinary and not included in the enumeration of real
course of trade and the regular prosecution properties. Article 414 of the Civil Code provides that
of the business of the vendor, mortgagor, all things which are or may be the object of
transferor, or assignor, or any sale, transfer, appropriation are considered either real property or
mortgage, or assignment of all, or personal property. Business is likewise not
substantially all, of the business or trade enumerated as personal property under the Civil
theretofore conducted by the vendor, Code. Just like interest in business, however, it may
mortgagor, transferor or assignor, or all, or be appropriated. Following the ruling in Strochecker v.
substantially all, of the fixtures and Ramirez, business should also be classified as
equipment used in and about the business personal property. Since it is not included in the
of the vendor, mortgagor, transferor, or
exclusive enumeration of real properties under Article 38. The role of
415, it is therefore personal property.[13] telecommunication companies is not
limited to merely providing the medium (i.e.
As can be clearly gleaned from the above the electric current) through which the
disquisitions, petitioner’s acts constitute theft of human voice/voice signal of the caller is
respondent PLDT’s business and service, committed transmitted. Before the human voice/voice
by means of the unlawful use of the latter’s signal can be so transmitted, a
facilities. In this regard, the Amended Information telecommunication company, using its
inaccurately describes the offense by making it appear facilities, must first break down or decode
that what petitioner took were the international long the human voice/voice signal into electronic
distance telephone calls, rather than respondent impulses and subject the same to further
PLDT’s business. augmentation and enhancements. Only
after such process of conversion will the
A perusal of the records of this case readily resulting electronic impulses be transmitted
reveals that petitioner and respondent PLDT by a telecommunication company, again,
extensively discussed the issue of ownership of through the use of its facilities. Upon
telephone calls. The prosecution has taken the reaching the destination of the call, the
position that said telephone calls belong to respondent telecommunication company will again
PLDT. This is evident from its Comment where it break down or decode the electronic
defined the issue of this case as whether or not “the impulses back to human voice/voice signal
unauthorized use or appropriation of PLDT before the called party receives the
international telephone calls, service and facilities, for same. In other words, a
the purpose of generating personal profit or gain that telecommunication company both
should have otherwise belonged to PLDT, constitutes converts/reconverts the human voice/voice
theft.”[14] signal and provides the medium for
transmitting the same.
In discussing the issue of ownership, petitioner
and respondent PLDT gave their respective 39. Moreover, in the case of an
explanations on how a telephone call is generated. international telephone call, once the
[15]
For its part, respondent PLDT explains the process electronic impulses originating from a
of generating a telephone call as follows: foreign telecommunication company
country (i.e. Japan) reaches the Philippines
through a local telecommunication
 company (i.e. private respondent PLDT), it call, therefore, is electrical energy. It was also held in
is the latter which decodes, augments and the assailed Decision that intangible property such as
enhances the electronic impulses back to electrical energy is capable of appropriation because it
the human voice/voice signal and provides may be taken and carried away. Electricity is personal
the medium (i.e. electric current) to enable property under Article 416 (3) of the Civil Code, which
the called party to receive the call. Thus, it enumerates “forces of nature which are brought under
is not true that the foreign control by science.”[17]
telecommunication company provides (1)
the electric current which transmits the Indeed, while it may be conceded that
human voice/voice signal of the caller and “international long distance calls,” the matter alleged to
(2) the electric current for the called party be stolen in the instant case, take the form of electrical
to receive said human voice/voice signal. energy, it cannot be said that such international long
distance calls were personal properties belonging to
40. Thus, contrary to petitioner PLDT since the latter could not have acquired
Laurel’s assertion, once the electronic ownership over such calls. PLDT merely encodes,
impulses or electric current originating from augments, enhances, decodes and transmits said calls
a foreign telecommunication company (i.e. using its complex communications infrastructure and
Japan) reaches private respondent PLDT’s facilities. PLDT not being the owner of said telephone
network, it is private respondent PLDT calls, then it could not validly claim that such telephone
which decodes, augments and enhances calls were taken without its consent. It is the use of
the electronic impulses back to the human these communications facilities without the consent of
voice/voice signal and provides the PLDT that constitutes the crime of theft, which is the
medium (i.e. electric current) to enable the unlawful taking of the telephone services and
called party to receive the call. Without business.
private respondent PLDT’s network, the
human voice/voice signal of the calling Therefore, the business of providing
party will never reach the called party.[16] telecommunication and the telephone service are
personal property under Article 308 of the Revised
Penal Code, and the act of engaging in ISR is an act of
In the assailed Decision, it was conceded that in “subtraction” penalized under said article. However,
making the international phone calls, the human voice the Amended Information describes the thing taken as,
is converted into electrical impulses or electric current “international long distance calls,” and only later
which are transmitted to the party called. A telephone mentions “stealing the business from PLDT” as the
manner by which the gain was derived by the
accused. In order to correct this inaccuracy of
description, this case must be remanded to the trial
court and the prosecution directed to amend the
Amended Information, to clearly state that the property G.R. No. L-41643 July 31, 1935
subject of the theft are the services and business of
respondent PLDT. Parenthetically, this amendment is B.H. BERKENKOTTER, plaintiff-appellant,
not necessitated by a mistake in charging the proper vs.
offense, which would have called for the dismissal of CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND
the information under Rule 110, Section 14 and Rule MARINE INSURANCE COMPANY, MABALACAT
119, Section 19 of the Revised Rules on Criminal SUGAR COMPANY and THE PROVINCE SHERIFF
Procedure. To be sure, the crime is properly OF PAMPANGA, defendants-appellees.
designated as one of theft. The purpose of the
amendment is simply to ensure that the accused is Briones and Martinez for appellant.
fully and sufficiently apprised of the nature and cause Araneta, Zaragoza and Araneta for appellees Cu
of the charge against him, and thus guaranteed of his Unjieng e Hijos.
rights under the Constitution. No appearance for the other appellees.
ACCORDINGLY, the motion for reconsideration VILLA-REAL, J.:
is GRANTED. The assailed Decision dated February
27, 2006 is RECONSIDERED and SET ASIDE. The This is an appeal taken by the plaintiff, B.H.
Decision of the Court of Appeals in CA-G.R. SP No. Berkenkotter, from the judgment of the Court of First
68841 affirming the Order issued by Judge Zeus C.
Instance of Manila, dismissing said plaintiff's complaint
Abrogar of the Regional Trial Court of Makati City,
against Cu Unjiengs e Hijos et al., with costs.
Branch 150, which denied the Motion to Quash (With
Motion to Defer Arraignment) in Criminal Case No. 99-
In support of his appeal, the appellant assigns six
2425 for theft, is AFFIRMED. The case is remanded
alleged errors as committed by the trial court in its
to the trial court and the Public Prosecutor of Makati
City is hereby DIRECTED to amend the Amended decision in question which will be discussed in the
Information to show that the property subject of the course of this decision.
theft were services and business of the private
offended party. The first question to be decided in this appeal, which is
raised in the first assignment of alleged error, is
whether or not the lower court erred in declaring that proposition made in a letter dated October 5, 1926
the additional machinery and equipment, as (Exhibit E), B.H. Berkenkotter, on October 9th of the
improvement incorporated with the central are subject same year, delivered the sum of P1,710 to B.A. Green,
to the mortgage deed executed in favor of the president of the Mabalacat Sugar Co., Inc., the total
defendants Cu Unjieng e Hijos. amount supplied by him to said B.A. Green having
been P25,750. Furthermore, B.H. Berkenkotter had a
It is admitted by the parties that on April 26, 1926, the credit of P22,000 against said corporation for unpaid
Mabalacat Sugar Co., Inc., owner of the sugar central salary. With the loan of P25,750 and said credit of
situated in Mabalacat, Pampanga, obtained from the P22,000, the Mabalacat Sugar Co., Inc., purchased the
defendants, Cu Unjieng e Hijos, a loan secured by a additional machinery and equipment now in litigation.
first mortgage constituted on two parcels and land
"with all its buildings, improvements, sugar-cane mill, On June 10, 1927, B.A. Green, president of the
steel railway, telephone line, apparatus, utensils and Mabalacat Sugar Co., Inc., applied to Cu Unjieng e
whatever forms part or is necessary complement of Hijos for an additional loan of P75,000 offering as
said sugar-cane mill, steel railway, telephone line, now security the additional machinery and equipment
existing or that may in the future exist is said lots." acquired by said B.A. Green and installed in the sugar
central after the execution of the original mortgage
On October 5, 1926, shortly after said mortgage had deed, on April 27, 1927, together with whatever
been constituted, the Mabalacat Sugar Co., Inc., additional equipment acquired with said loan. B.A.
decided to increase the capacity of its sugar central by Green failed to obtain said loan.
buying additional machinery and equipment, so that
instead of milling 150 tons daily, it could produce 250. Article 1877 of the Civil Code provides as follows.
The estimated cost of said additional machinery and
equipment was approximately P100,000. In order to ART. 1877. A mortgage includes all natural
carry out this plan, B.A. Green, president of said accessions, improvements, growing fruits, and
corporation, proposed to the plaintiff, B.H. rents not collected when the obligation falls due,
Berkenkotter, to advance the necessary amount for the and the amount of any indemnities paid or due
purchase of said machinery and equipment, promising the owner by the insurers of the mortgaged
to reimburse him as soon as he could obtain an property or by virtue of the exercise of the power
additional loan from the mortgagees, the herein of eminent domain, with the declarations,
defendants Cu Unjieng e Hijos. Having agreed to said amplifications, and limitations established by law,
 whether the estate continues in the possession that the improvements, buildings, and machinery
of the person who mortgaged it or whether it that existed thereon were also comprehended, it
passes into the hands of a third person. is indispensable that the exclusion thereof be
stipulated between the contracting parties.
In the case of Bischoff vs. Pomar and Compañia
General de Tabacos (12 Phil., 690), cited with approval The appellant contends that the installation of the
in the case of Cea vs. Villanueva (18 Phil., 538), this machinery and equipment claimed by him in the sugar
court laid shown the following doctrine: central of the Mabalacat Sugar Company, Inc., was not
permanent in character inasmuch as B.A. Green, in
1. REALTY; MORTGAGE OF REAL ESTATE proposing to him to advance the money for the
INCLUDES IMPROVEMENTS AND FIXTURES. purchase thereof, made it appear in the letter, Exhibit
— It is a rule, established by the Civil Code and E, that in case B.A. Green should fail to obtain an
also by the Mortgage Law, with which the additional loan from the defendants Cu Unjieng e
decisions of the courts of the United States are in Hijos, said machinery and equipment would become
accord, that in a mortgage of real estate, the security therefor, said B.A. Green binding himself not
improvements on the same are included; to mortgage nor encumber them to anybody until said
therefore, all objects permanently attached to a plaintiff be fully reimbursed for the corporation's
mortgaged building or land, although they may indebtedness to him.
have been placed there after the mortgage was
constituted, are also included. (Arts. 110 and 111 Upon acquiring the machinery and equipment in
of the Mortgage Law, and 1877 of the Civil Code; question with money obtained as loan from the
decision of U.S. Supreme Court in the matter of plaintiff-appellant by B.A. Green, as president of the
Royal Insurance Co. vs. R. Miller, liquidator, and Mabalacat Sugar Co., Inc., the latter became owner of
Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].) said machinery and equipment, otherwise B.A. Green,
as such president, could not have offered them to the
2. ID.; ID.; INCLUSION OR EXCLUSION OF plaintiff as security for the payment of his credit.
MACHINERY, ETC. — In order that it may be
understood that the machinery and other objects Article 334, paragraph 5, of the Civil Code gives the
placed upon and used in connection with a character of real property to "machinery, liquid
mortgaged estate are excluded from the containers, instruments or implements intended by the
mortgage, when it was stated in the mortgage owner of any building or land for use in connection with
any industry or trade being carried on therein and As to the alleged sale of said machinery and
which are expressly adapted to meet the requirements equipment to the plaintiff and appellant after they had
of such trade or industry. been permanently incorporated with sugar central of
the Mabalacat Sugar Co., Inc., and while the mortgage
If the installation of the machinery and equipment in constituted on said sugar central to Cu Unjieng e Hijos
question in the central of the Mabalacat Sugar Co., remained in force, only the right of redemption of the
Inc., in lieu of the other of less capacity existing vendor Mabalacat Sugar Co., Inc., in the sugar central
therein, for its sugar industry, converted them into real with which said machinery and equipment had been
property by reason of their purpose, it cannot be said incorporated, was transferred thereby, subject to the
that their incorporation therewith was not permanent in right of the defendants Cu Unjieng e Hijos under the
character because, as essential and principal elements first mortgage.
of a sugar central, without them the sugar central
would be unable to function or carry on the industrial For the foregoing considerations, we are of the opinion
purpose for which it was established. Inasmuch as the and so hold: (1) That the installation of a machinery
central is permanent in character, the necessary and equipment in a mortgaged sugar central, in lieu of
machinery and equipment installed for carrying on the another of less capacity, for the purpose of carrying out
sugar industry for which it has been established must the industrial functions of the latter and increasing
necessarily be permanent. production, constitutes a permanent improvement on
said sugar central and subjects said machinery and
Furthermore, the fact that B.A. Green bound himself to equipment to the mortgage constituted thereon (article
the plaintiff B.H. Berkenkotter to hold said machinery 1877, Civil Code); (2) that the fact that the purchaser of
and equipment as security for the payment of the the new machinery and equipment has bound himself
latter's credit and to refrain from mortgaging or to the person supplying him the purchase money to
otherwise encumbering them until Berkenkotter has hold them as security for the payment of the latter's
been fully reimbursed therefor, is not incompatible with credit, and to refrain from mortgaging or otherwise
the permanent character of the incorporation of said encumbering them does not alter the permanent
machinery and equipment with the sugar central of the character of the incorporation of said machinery and
Mabalacat Sugar Co., Inc., as nothing could prevent equipment with the central; and (3) that the sale of the
B.A. Green from giving them as security at least under machinery and equipment in question by the purchaser
a second mortgage. who was supplied the purchase money, as a loan, to
the person who supplied the money, after the
incorporation thereof with the mortgaged sugar central, asked that the case be heard and determined by the
does not vest the creditor with ownership of said court sitting in banc because the admiralty jurisdiction
machinery and equipment but simply with the right of of the court was involved, and this motion was granted
redemption. in regular course. On further investigation it appears
that this was error. The mere mortgage of a ship is a
Wherefore, finding no error in the appealed judgment, contract entered into by the parties to it without
it is affirmed in all its parts, with costs to the appellant. reference to navigation or perils of the sea, and does
So ordered. not, therefore, confer admiralty jurisdiction. (Bogart vs.
Steamboat John Jay [1854], 17 How., 399.)

Coming now to the merits, it appears that on varying

dates the Philippine Refining Co., Inc., and Francisco
G.R. No. L-41506 March 25, 1935 Jarque executed three mortgages on the motor
vessels Pandan and Zaragoza. These documents
PHILIPPINE REFINING CO., INC., plaintiff-appellant, were recorded in the record of transfers and
vs. incumbrances of vessels for the port of Cebu and each
FRANCISCO JARQUE, JOSE COROMINAS, and was therein denominated a "chattel mortgage". Neither
ABOITIZ & CO., defendants. of the first two mortgages had appended an affidavit of
JOSE COROMINAS, in his capacity as assignee of good faith. The third mortgage contained such an
the estate of the insolvent Francisco affidavit, but this mortgage was not registered in the
Jarque, appellee. customs house until May 17, 1932, or within the period
of thirty days prior to the commencement of insolvency
Thos. G. Ingalls, Vicente Pelaez and DeWitt, Perkins proceedings against Francisco Jarque; also, while the
and Brady for appellant. last mentioned mortgage was subscribed by Francisco
D.G. McVean and Vicente L. Faelnar for appellee. Jarque and M. N. Brink, there was nothing to disclose
in what capacity the said M. N. Brink signed. A fourth
MALCOLM, J.: mortgage was executed by Francisco Jarque and
Ramon Aboitiz on the motorship Zaragoza and was
First of all the reason why the case has been decided entered in the chattel mortgage registry of the register
by the court in banc needs explanation. A motion was of deeds on May 12, 1932, or again within the thirty-
presented by counsel for the appellant in which it was day period before the institution of insolvency
proceedings. These proceedings were begun on June to be noted n the registry of the register of deeds, but it
2, 1932, when a petition was filed with the Court of is essential that a record of documents affecting the
First Instance of Cebu in which it was prayed that title to a vessel be entered in the record of the
Francisco Jarque be declared an insolvent debtor, Collector of Customs at the port of entry. (Rubiso and
which soon thereafter was granted, with the result that Gelito vs. Rivera [1917], 37 Phil., 72; Arroyo vs. Yu de
an assignment of all the properties of the insolvent was Sane, supra.) Otherwise a mortgage on a vessel is
executed in favor of Jose Corominas. generally like other chattel mortgages as to its
requisites and validity. (58 C.J., 92.)
On these facts, Judge Jose M. Hontiveros declined to
order the foreclosure of the mortgages, but on the The Chattell Mortgage Law in its section 5, in
contrary sustained the special defenses of fatal describing what shall be deemed sufficient to
defectiveness of the mortgages. In so doing we believe constitute a good chattel mortgage, includes the
that the trial judge acted advisedly. requirement of an affidavit of good faith appended to
the mortgage and recorded therewith. The absence of
Vessels are considered personal property under the the affidavit vitiates a mortgage as against creditors
civil law. (Code of Commerce, article 585.) Similarly and subsequent encumbrancers. (Giberson vs. A. N.
under the common law, vessels are personal property Jureidini Bros. [1922], 44 Phil., 216; Benedicto de
although occasionally referred to as a peculiar kind of Tarrosa vs. F. M. Yap Tico & Co. and Provincial Sheriff
personal property. (Reynolds vs. Nielson [1903], 96 of Occidental Negros [1923], 46 Phil., 753.) As a
Am. Rep., 1000; Atlantic Maritime Co vs. City of consequence a chattel mortgage of a vessel wherein
Gloucester [1917], 117 N. E., 924.) Since the term the affidavit of good faith required by the Chattel
"personal property" includes vessels, they are subject Mortgage Law is lacking, is unenforceable against third
to mortgage agreeably to the provisions of the Chattel persons.
Mortgage Law. (Act No. 1508, section 2.) Indeed, it has
heretofore been accepted without discussion that a In effect appellant asks us to find that the documents
mortgage on a vessel is in nature a chattel mortgage. appearing in the record do not constitute chattel
(McMicking vs. Banco Español-Filipino [1909], 13 Phil., mortgages or at least to gloss over the failure to
429; Arroyo vs. Yu de Sane [1930], 54 Phil., 511.) The include the affidavit of good faith made a requisite for a
only difference between a chattel mortgage of a vessel good chattel mortgage by the Chattel Mortgage Law.
and a chattel mortgage of other personalty is that it is Counsel would further have us disregard article 585 of
not now necessary for a chattel mortgage of a vessel the Code of Commerce, but no reason is shown for
holding this article not in force. Counsel would further Respondent City Assessor of Cagayan de Oro City
have us revise doctrines heretofore announced in a assessed at P4,400 petitioner's above-mentioned
series of cases, which it is not desirable to do since equipment. Petitioner appealed the assessment to the
those principles were confirmed after due liberation respondent Board of Tax Appeals on the ground that
and constitute a part of the commercial law of the the same are not realty. The Board of Tax Appeals of
Philippines. And finally counsel would have us make the City sustained the city assessor, so petitioner
herein filed with the Court of Tax Appeals a petition for
rulings on points entirely foreign to the issues of the
the review of the assessment.
case. As neither the facts nor the law remains in doubt,
In the Court of Tax Appeals the parties submitted the
the seven assigned errors will be overruled. following stipulation of facts:
Petitioner and respondents, thru their respective
Judgment affirmed, the costs of this instance to be counsels agreed to the following stipulation of
paid by the appellant. facts:
1. That petitioner is a public utility solely engaged
in transporting passengers and cargoes by motor
trucks, over its authorized lines in the Island of
Mindanao, collecting rates approved by the
G.R. No. L-17870 September 29, 1962 Public Service Commission;
MINDANAO BUS COMPANY, petitioner, 2. That petitioner has its main office and shop at
vs. Cagayan de Oro City. It maintains Branch Offices
THE CITY ASSESSOR & TREASURER and the and/or stations at Iligan City, Lanao; Pagadian,
BOARD OF TAX APPEALS of Cagayan de Oro Zamboanga del Sur; Davao City and Kibawe,
City,respondents. Bukidnon Province;
Binamira, Barria and Irabagon for petitioner. 3. That the machineries sought to be assessed
Vicente E. Sabellina for respondents. by the respondent as real properties are the
following:
LABRADOR, J.: (a) Hobart Electric Welder Machine,
This is a petition for the review of the decision of the appearing in the attached photograph,
Court of Tax Appeals in C.T.A. Case No. 710 holding marked Annex "A";
that the petitioner Mindanao Bus Company is liable to (b) Storm Boring Machine, appearing in the
the payment of the realty tax on its maintenance and attached photograph, marked Annex "B";
repair equipment hereunder referred to.
 (c) Lathe machine with motor, appearing in commercial purposes for which petitioner has
the attached photograph, marked Annex never engaged in, to date.1awphîl.nèt
"C"; The Court of Tax Appeals having sustained the
(d) Black and Decker Grinder, appearing in respondent city assessor's ruling, and having denied a
the attached photograph, marked Annex motion for reconsideration, petitioner brought the case
"D"; to this Court assigning the following errors:
(e) PEMCO Hydraulic Press, appearing in 1. The Honorable Court of Tax Appeals erred in
the attached photograph, marked Annex upholding respondents' contention that the
"E"; questioned assessments are valid; and that said
(f) Battery charger (Tungar charge tools, equipments or machineries are immovable
machine) appearing in the attached taxable real properties.
photograph, marked Annex "F"; and 2. The Tax Court erred in its interpretation of
(g) D-Engine Waukesha-M-Fuel, appearing paragraph 5 of Article 415 of the New Civil Code,
in the attached photograph, marked Annex and holding that pursuant thereto the movable
"G". equipments are taxable realties, by reason of
4. That these machineries are sitting on cement their being intended or destined for use in an
or wooden platforms as may be seen in the industry.
attached photographs which form part of this 3. The Court of Tax Appeals erred in denying
agreed stipulation of facts; petitioner's contention that the respondent City
5. That petitioner is the owner of the land where Assessor's power to assess and levy real estate
it maintains and operates a garage for its TPU taxes on machineries is further restricted by
motor trucks; a repair shop; blacksmith and section 31, paragraph (c) of Republic Act No.
carpentry shops, and with these machineries 521; and
which are placed therein, its TPU trucks are 4. The Tax Court erred in denying petitioner's
made; body constructed; and same are repaired motion for reconsideration.
in a condition to be serviceable in the TPU land Respondents contend that said equipments, tho
transportation business it operates; movable, are immobilized by destination, in
6. That these machineries have never been or accordance with paragraph 5 of Article 415 of the New
were never used as industrial equipments to Civil Code which provides:
produce finished products for sale, nor to repair Art. 415. — The following are immovable
machineries, parts and the like offered to the properties:
general public indiscriminately for business or xxx xxx xxx
 (5) Machinery, receptacles, instruments or on the sugar industry for which it has been
implements intended by the owner of the established must necessarily be permanent.
tenement for an industry or works which may be (Emphasis ours.)
carried on in a building or on a piece of land, So that movable equipments to be immobilized in
and which tend directly to meet the needs of the contemplation of the law must first be "essential and
said industry or works. (Emphasis ours.) principal elements" of an industry or works without
Note that the stipulation expressly states that the which such industry or works would be "unable to
equipment are placed on wooden or cement platforms. function or carry on the industrial purpose for which it
They can be moved around and about in petitioner's was established." We may here distinguish, therefore,
repair shop. In the case of B. H. Berkenkotter vs. Cu those movable which become immobilized by
Unjieng, 61 Phil. 663, the Supreme Court said: destination because they are essential and principal
Article 344 (Now Art. 415), paragraph (5) of the elements in the industry for those which may not be so
Civil Code, gives the character of real property to considered immobilized because they are merely
"machinery, liquid containers, instruments or incidental, not essential and principal. Thus, cash
implements intended by the owner of any registers, typewriters, etc., usually found and used in
building or land for use in connection with any hotels, restaurants, theaters, etc. are merely
industry or trade being carried on therein and incidentals and are not and should not be considered
which are expressly adapted to meet the immobilized by destination, for these businesses can
requirements of such trade or industry." continue or carry on their functions without these
If the installation of the machinery and equipment equity comments. Airline companies use forklifts, jeep-
in question in the central of the Mabalacat Sugar wagons, pressure pumps, IBM machines, etc. which
Co., Inc., in lieu of the other of less capacity are incidentals, not essentials, and thus retain their
existing therein, for its sugar and industry, movable nature. On the other hand, machineries of
converted them into real property by reason of breweries used in the manufacture of liquor and soft
their purpose, it cannot be said that their drinks, though movable in nature, are immobilized
incorporation therewith was not permanent in because they are essential to said industries; but the
character because, as essential and principle delivery trucks and adding machines which they
elements of a sugar central, without them the usually own and use and are found within their
sugar central would be unable to function or industrial compounds are merely incidental and retain
carry on the industrial purpose for which it was their movable nature.
established. Inasmuch as the central is Similarly, the tools and equipments in question in this
permanent in character, the necessary instant case are, by their nature, not essential and
machinery and equipment installed for carrying principle municipal elements of petitioner's business of
transporting passengers and cargoes by motor trucks. permanently on a piece of land, as demanded by the
They are merely incidentals — acquired as movables law. Said equipments may not, therefore, be deemed
and used only for expediency to facilitate and/or real property.
improve its service. Even without such tools and Resuming what we have set forth above, we hold that
equipments, its business may be carried on, as the equipments in question are not absolutely essential
petitioner has carried on, without such equipments, to the petitioner's transportation business, and
before the war. The transportation business could be petitioner's business is not carried on in a building,
carried on without the repair or service shop if its tenement or on a specified land, so said equipment
rolling equipment is repaired or serviced in another may not be considered real estate within the meaning
shop belonging to another. of Article 415 (c) of the Civil Code.
The law that governs the determination of the question WHEREFORE, the decision subject of the petition for
at issue is as follows: review is hereby set aside and the equipment in
Art. 415. The following are immovable property: question declared not subject to assessment as real
xxx xxx xxx estate for the purposes of the real estate tax. Without
(5) Machinery, receptacles, instruments or costs.
implements intended by the owner of the
tenement for an industry or works which may be
carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said
industry or works; (Civil Code of the Phil.) G.R. No. 137705 August 22, 2000
Aside from the element of essentiality the above-
quoted provision also requires that the industry or SERG'S PRODUCTS, INC., and SERGIO T.
works be carried on in a building or on a piece of land. GOQUIOLAY, petitioners,
Thus in the case of Berkenkotter vs. Cu vs.
Unjieng, supra, the "machinery, liquid containers, and PCI LEASING AND FINANCE, INC., respondent.
instruments or implements" are found in a building
constructed on the land. A sawmill would also be DECISION
installed in a building on land more or less
permanently, and the sawing is conducted in the land PANGANIBAN, J.:
or building.
But in the case at bar the equipments in question are After agreeing to a contract stipulating that a real or
destined only to repair or service the transportation immovable property be considered as personal or
business, which is not carried on in a building or movable, a party is estopped from subsequently
claiming otherwise. Hence, such property is a proper The undisputed facts are summarized by the Court of
subject of a writ of replevin obtained by the other Appeals as follows:10
contracting party.
"On February 13, 1998, respondent PCI Leasing and
The Case Finance, Inc. ("PCI Leasing" for short) filed with the
RTC-QC a complaint for [a] sum of money (Annex ‘E’),
Before us is a Petition for Review on Certiorari with an application for a writ of replevin docketed as
assailing the January 6, 1999 Decision1 of the Court of Civil Case No. Q-98-33500.
Appeals (CA)2 in CA-GR SP No. 47332 and its
February 26, 1999 Resolution3 denying "On March 6, 1998, upon an ex-parte application of
reconsideration. The decretal portion of the CA PCI Leasing, respondent judge issued a writ of
Decision reads as follows: replevin (Annex ‘B’) directing its sheriff to seize and
deliver the machineries and equipment to PCI Leasing
"WHEREFORE, premises considered, the assailed after 5 days and upon the payment of the necessary
Order dated February 18, 1998 and Resolution dated expenses.
March 31, 1998 in Civil Case No. Q-98-33500 are
hereby AFFIRMED. The writ of preliminary injunction "On March 24, 1998, in implementation of said writ, the
issued on June 15, 1998 is hereby LIFTED."4 sheriff proceeded to petitioner’s factory, seized one
machinery with [the] word that he [would] return for the
In its February 18, 1998 Order,5 the Regional Trial other machineries.
Court (RTC) of Quezon City (Branch 218)6 issued a
Writ of Seizure.7 The March 18, 1998 "On March 25, 1998, petitioners filed a motion for
Resolution8 denied petitioners’ Motion for Special special protective order (Annex ‘C’), invoking the
Protective Order, praying that the deputy sheriff be power of the court to control the conduct of its officers
enjoined "from seizing immobilized or other real and amend and control its processes, praying for a
properties in (petitioners’) factory in Cainta, Rizal and directive for the sheriff to defer enforcement of the writ
to return to their original place whatever immobilized of replevin.
machineries or equipments he may have removed." 9
"This motion was opposed by PCI Leasing (Annex ‘F’),
The Facts on the ground that the properties [were] still personal
and therefore still subject to seizure and a writ of
replevin.
"In their Reply, petitioners asserted that the properties "Furthermore, to accord merit to this petition would be
sought to be seized [were] immovable as defined in to preempt the trial court in ruling upon the case below,
Article 415 of the Civil Code, the parties’ agreement to since the merits of the whole matter are laid down
the contrary notwithstanding. They argued that to give before us via a petition whose sole purpose is to
effect to the agreement would be prejudicial to inquire upon the existence of a grave abuse of
innocent third parties. They further stated that PCI discretion on the part of the [RTC] in issuing the
Leasing [was] estopped from treating these assailed Order and Resolution. The issues raised
machineries as personal because the contracts in herein are proper subjects of a full-blown trial,
which the alleged agreement [were] embodied [were] necessitating presentation of evidence by both parties.
totally sham and farcical. The contract is being enforced by one, and [its] validity
is attacked by the other – a matter x x x which
"On April 6, 1998, the sheriff again sought to enforce respondent court is in the best position to determine."
the writ of seizure and take possession of the
remaining properties. He was able to take two more, Hence, this Petition.11
but was prevented by the workers from taking the rest.
The Issues
"On April 7, 1998, they went to [the CA] via an original
action for certiorari." In their Memorandum, petitioners submit the following
issues for our consideration:
Ruling of the Court of Appeals
"A. Whether or not the machineries purchased and
Citing the Agreement of the parties, the appellate court imported by SERG’S became real property by virtue of
held that the subject machines were personal property, immobilization.
and that they had only been leased, not owned, by
petitioners. It also ruled that the "words of the contract B. Whether or not the contract between the parties is a
are clear and leave no doubt upon the true intention of loan or a lease."12
the contracting parties." Observing that Petitioner
Goquiolay was an experienced businessman who was In the main, the Court will resolve whether the said
"not unfamiliar with the ways of the trade," it ruled that machines are personal, not immovable, property which
he "should have realized the import of the document may be a proper subject of a writ of replevin. As a
he signed." The CA further held: preliminary matter, the Court will also address briefly
the procedural points raised by respondent.
 The Court’s Ruling Rule 60 of the Rules of Court provides that writs of
replevin are issued for the recovery of personal
The Petition is not meritorious. property only.15 Section 3 thereof reads:

Preliminary Matter:Procedural Questions "SEC. 3. Order. -- Upon the filing of such affidavit and
approval of the bond, the court shall issue an order
Respondent contends that the Petition failed to and the corresponding writ of replevin describing the
indicate expressly whether it was being filed under personal property alleged to be wrongfully detained
Rule 45 or Rule 65 of the Rules of Court. It further and requiring the sheriff forthwith to take such property
alleges that the Petition erroneously impleaded Judge into his custody."
Hilario Laqui as respondent.
On the other hand, Article 415 of the Civil Code
There is no question that the present recourse is under enumerates immovable or real property as follows:
Rule 45. This conclusion finds support in the very title
of the Petition, which is "Petition for Review on "ART. 415. The following are immovable property:
Certiorari."13
xxx xxx xxx
While Judge Laqui should not have been impleaded as
a respondent,14 substantial justice requires that such (5) Machinery, receptacles, instruments or implements
lapse by itself should not warrant the dismissal of the intended by the owner of the tenement for an industry
present Petition. In this light, the Court deems it proper or works which may be carried on in a building or on a
to remove, motu proprio, the name of Judge Laqui piece of land, and which tend directly to meet the
from the caption of the present case. needs of the said industry or works;

Main Issue: Nature of the Subject Machinery xxx xxx x x x"

Petitioners contend that the subject machines used in In the present case, the machines that were the
their factory were not proper subjects of the Writ subjects of the Writ of Seizure were placed by
issued by the RTC, because they were in fact real petitioners in the factory built on their own land.
property. Serious policy considerations, they argue, Indisputably, they were essential and principal
militate against a contrary characterization. elements of their chocolate-making industry. Hence,
although each of them was movable or personal
property on its own, all of them have become not now be allowed to make an inconsistent stand by
"immobilized by destination because they are essential claiming otherwise."
and principal elements in the industry."16 In that sense,
petitioners are correct in arguing that the said Applying Tumalad, the Court in Makati Leasing and
machines are real, not personal, property pursuant to Finance Corp. v. Wearever Textile Mills20 also held that
Article 415 (5) of the Civil Code.17 the machinery used in a factory and essential to the
industry, as in the present case, was a proper subject
Be that as it may, we disagree with the submission of of a writ of replevin because it was treated as personal
the petitioners that the said machines are not proper property in a contract. Pertinent portions of the Court’s
subjects of the Writ of Seizure. ruling are reproduced hereunder:

The Court has held that contracting parties may validly "x x x. If a house of strong materials, like what was
stipulate that a real property be considered as involved in the above Tumalad case, may be
personal.18After agreeing to such stipulation, they are considered as personal property for purposes of
consequently estopped from claiming otherwise. Under executing a chattel mortgage thereon as long as the
the principle of estoppel, a party to a contract is parties to the contract so agree and no innocent third
ordinarily precluded from denying the truth of any party will be prejudiced thereby, there is absolutely no
material fact found therein. reason why a machinery, which is movable in its nature
and becomes immobilized only by destination or
Hence, in Tumalad v. Vicencio,19 the Court upheld the purpose, may not be likewise treated as such. This is
intention of the parties to treat a house as a personal really because one who has so agreed is estopped
property because it had been made the subject of a from denying the existence of the chattel mortgage."
chattel mortgage. The Court ruled:
In the present case, the Lease Agreement clearly
"x x x. Although there is no specific statement referring provides that the machines in question are to be
to the subject house as personal property, yet by considered as personal property. Specifically, Section
ceding, selling or transferring a property by way of 12.1 of the Agreement reads as follows:21
chattel mortgage defendants-appellants could only
have meant to convey the house as chattel, or at least, "12.1 The PROPERTY is, and shall at all times be and
intended to treat the same as such, so that they should remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or
hereafter become, in any manner affixed or attached to itself."25 In their Reply to respondent’s Comment, they
or embedded in, or permanently resting upon, real further allege that the Agreement is invalid. 26
property or any building thereon, or attached in any
manner to what is permanent." These arguments are unconvincing. The validity and
the nature of the contract are the lis mota of the civil
Clearly then, petitioners are estopped from denying the action pending before the RTC. A resolution of these
characterization of the subject machines as personal questions, therefore, is effectively a resolution of the
property. Under the circumstances, they are proper merits of the case. Hence, they should be threshed out
subjects of the Writ of Seizure. in the trial, not in the proceedings involving the
issuance of the Writ of Seizure.
It should be stressed, however, that our holding -- that
the machines should be deemed personal property Indeed, in La Tondeña Distillers v. CA,27 the Court
pursuant to the Lease Agreement – is good only explained that the policy under Rule 60 was that
insofar as the contracting parties are questions involving title to the subject property –
concerned.22 Hence, while the parties are bound by the questions which petitioners are now raising -- should
Agreement, third persons acting in good faith are not be determined in the trial. In that case, the Court noted
affected by its stipulation characterizing the subject that the remedy of defendants under Rule 60 was
machinery as personal.23 In any event, there is no either to post a counter-bond or to question the
showing that any specific third party would be sufficiency of the plaintiff’s bond. They were not
adversely affected. allowed, however, to invoke the title to the subject
property. The Court ruled:
Validity of the Lease Agreement
"In other words, the law does not allow the defendant
In their Memorandum, petitioners contend that the to file a motion to dissolve or discharge the writ of
Agreement is a loan and not a lease.24 Submitting seizure (or delivery) on ground of insufficiency of the
documents supposedly showing that they own the complaint or of the grounds relied upon therefor, as in
subject machines, petitioners also argue in their proceedings on preliminary attachment or injunction,
Petition that the Agreement suffers from "intrinsic and thereby put at issue the matter of the title or right
ambiguity which places in serious doubt the intention of possession over the specific chattel being replevied,
of the parties and the validity of the lease agreement the policy apparently being that said matter should be
ventilated and determined only at the trial on the 1390 of the new Civil Code, by a proper action in court.
merits."28 There is nothing on record to show that the mortgage
has been annulled. Neither is it disclosed that steps
Besides, these questions require a determination of were taken to nullify the same. x x x"
facts and a presentation of evidence, both of which
have no place in a petition for certiorari in the CA under Alleged Injustice Committed on the Part of Petitioners
Rule 65 or in a petition for review in this Court under
Rule 45.29 Petitioners contend that "if the Court allows these
machineries to be seized, then its workers would be
Reliance on the Lease Agreement out of work and thrown into the streets." 31 They also
allege that the seizure would nullify all efforts to
It should be pointed out that the Court in this case may rehabilitate the corporation.
rely on the Lease Agreement, for nothing on record
shows that it has been nullified or annulled. In fact, Petitioners’ arguments do not preclude the
petitioners assailed it first only in the RTC proceedings, implementation of the Writ.1âwphi1 As earlier
which had ironically been instituted by respondent. discussed, law and jurisprudence support its propriety.
Accordingly, it must be presumed valid and binding as Verily, the above-mentioned consequences, if they
the law between the parties. come true, should not be blamed on this Court, but on
the petitioners for failing to avail themselves of the
Makati Leasing and Finance Corporation30 is also remedy under Section 5 of Rule 60, which allows the
instructive on this point. In that case, the Deed of filing of a counter-bond. The provision states:
Chattel Mortgage, which characterized the subject
machinery as personal property, was also assailed "SEC. 5. Return of property. -- If the adverse party
because respondent had allegedly been required "to objects to the sufficiency of the applicant’s bond, or of
sign a printed form of chattel mortgage which was in a the surety or sureties thereon, he cannot immediately
blank form at the time of signing." The Court rejected require the return of the property, but if he does not so
the argument and relied on the Deed, ruling as follows: object, he may, at any time before the delivery of the
property to the applicant, require the return thereof, by
"x x x. Moreover, even granting that the charge is true, filing with the court where the action is pending a bond
such fact alone does not render a contract void ab executed to the applicant, in double the value of the
initio, but can only be a ground for rendering said property as stated in the applicant’s affidavit for the
contract voidable, or annullable pursuant to Article
delivery thereof to the applicant, if such delivery be consequence absolved the defendants from the
adjudged, and for the payment of such sum to him as complaint, with costs against the plaintiff.
may be recovered against the adverse party, and by
serving a copy bond on the applicant." The Davao Saw Mill Co., Inc., is the holder of a lumber
concession from the Government of the Philippine
WHEREFORE, the Petition is DENIED and the Islands. It has operated a sawmill in the sitio of Maa,
assailed Decision of the Court of Appeals AFFIRMED. barrio of Tigatu, municipality of Davao, Province of
Costs against petitioners. Davao. However, the land upon which the business
was conducted belonged to another person. On the
land the sawmill company erected a building which
housed the machinery used by it. Some of the
implements thus used were clearly personal property,
G.R. No. L-40411 August 7, 1935 the conflict concerning machines which were placed
and mounted on foundations of cement. In the contract
DAVAO SAW MILL CO., INC., plaintiff-appellant, of lease between the sawmill company and the owner
vs. of the land there appeared the following provision:
APRONIANO G. CASTILLO and DAVAO LIGHT &
POWER CO., INC., defendants-appellees. That on the expiration of the period agreed upon,
all the improvements and buildings introduced
Arsenio Suazo and Jose L. Palma Gil and Pablo and erected by the party of the second part shall
Lorenzo and Delfin Joven for appellant. pass to the exclusive ownership of the party of
J.W. Ferrier for appellees. the first part without any obligation on its part to
pay any amount for said improvements and
MALCOLM, J.: buildings; also, in the event the party of the
second part should leave or abandon the land
The issue in this case, as announced in the opening leased before the time herein stipulated, the
sentence of the decision in the trial court and as set improvements and buildings shall likewise pass
forth by counsel for the parties on appeal, involves the to the ownership of the party of the first part as
determination of the nature of the properties described though the time agreed upon had expired:
in the complaint. The trial judge found that those Provided, however, That the machineries and
properties were personal in nature, and as a accessories are not included in the
 improvements which will pass to the party of the 1. Land, buildings, roads and constructions of all
first part on the expiration or abandonment of the kinds adhering to the soil;
land leased.
xxx xxx xxx
In another action, wherein the Davao Light & Power
Co., Inc., was the plaintiff and the Davao, Saw, Mill 5. Machinery, liquid containers, instruments or
Co., Inc., was the defendant, a judgment was rendered implements intended by the owner of any
in favor of the plaintiff in that action against the building or land for use in connection with any
defendant in that action; a writ of execution issued industry or trade being carried on therein and
thereon, and the properties now in question were which are expressly adapted to meet the
levied upon as personalty by the sheriff. No third party requirements of such trade of industry.
claim was filed for such properties at the time of the
sales thereof as is borne out by the record made by Appellant emphasizes the first paragraph, and
the plaintiff herein. Indeed the bidder, which was the appellees the last mentioned paragraph. We entertain
plaintiff in that action, and the defendant herein having no doubt that the trial judge and appellees are right in
consummated the sale, proceeded to take possession their appreciation of the legal doctrines flowing from
of the machinery and other properties described in the the facts.
corresponding certificates of sale executed in its favor
In the first place, it must again be pointed out that the
by the sheriff of Davao.
appellant should have registered its protest before or
As connecting up with the facts, it should further be at the time of the sale of this property. It must further
explained that the Davao Saw Mill Co., Inc., has on a be pointed out that while not conclusive, the
number of occasions treated the machinery as characterization of the property as chattels by the
personal property by executing chattel mortgages in appellant is indicative of intention and impresses upon
favor of third persons. One of such persons is the the property the character determined by the parties. In
appellee by assignment from the original mortgages. this connection the decision of this court in the case of
Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44
Article 334, paragraphs 1 and 5, of the Civil Code, is in Phil., 630), whether obiter dicta or not, furnishes the
point. According to the Code, real property consists of key to such a situation.
—
It is, however not necessary to spend overly must time
in the resolution of this appeal on side issues. It is
machinery which is involved; moreover, machinery not to which it is applied. "Things," says section 334
intended by the owner of any building or land for use in of the Porto Rican Code, "may be immovable
connection therewith, but intended by a lessee for use either by their own nature or by their destination
in a building erected on the land by the latter to be or the object to which they are applicable."
returned to the lessee on the expiration or Numerous illustrations are given in the fifth
abandonment of the lease. subdivision of section 335, which is as follows:
"Machinery, vessels, instruments or implements
A similar question arose in Puerto Rico, and on appeal intended by the owner of the tenements for the
being taken to the United States Supreme Court, it was industrial or works that they may carry on in any
held that machinery which is movable in its nature only building or upon any land and which tend directly
becomes immobilized when placed in a plant by the to meet the needs of the said industry or works."
owner of the property or plant, but not when so placed (See also Code Nap., articles 516, 518 et seq. to
by a tenant, a usufructuary, or any person having only and inclusive of article 534, recapitulating the
a temporary right, unless such person acted as the things which, though in themselves movable,
agent of the owner. In the opinion written by Chief may be immobilized.) So far as the subject-
Justice White, whose knowledge of the Civil Law is matter with which we are dealing — machinery
well known, it was in part said: placed in the plant — it is plain, both under the
provisions of the Porto Rican Law and of the
To determine this question involves fixing the Code Napoleon, that machinery which is
nature and character of the property from the movable in its nature only becomes immobilized
point of view of the rights of Valdes and its nature when placed in a plant by the owner of the
and character from the point of view of Nevers & property or plant. Such result would not be
Callaghan as a judgment creditor of the accomplished, therefore, by the placing of
Altagracia Company and the rights derived by machinery in a plant by a tenant or a
them from the execution levied on the machinery usufructuary or any person having only a
placed by the corporation in the plant. Following temporary right. (Demolombe, Tit. 9, No. 203;
the Code Napoleon, the Porto Rican Code treats Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent,
as immovable (real) property, not only land and Tit. 5, No. 447; and decisions quoted in Fuzier-
buildings, but also attributes immovability in Herman ed. Code Napoleon under articles
some cases to property of a movable nature, that 522 et seq.) The distinction rests, as pointed out
is, personal property, because of the destination by Demolombe, upon the fact that one only
having a temporary right to the possession or plant by the Altagracia Company, being, as
enjoyment of property is not presumed by the law regards Nevers & Callaghan, movable property, it
to have applied movable property belonging to follows that they had the right to levy on it under
him so as to deprive him of it by causing it by an the execution upon the judgment in their favor,
act of immobilization to become the property of and the exercise of that right did not in a legal
another. It follows that abstractly speaking the sense conflict with the claim of Valdes, since as
machinery put by the Altagracia Company in the to him the property was a part of the realty which,
plant belonging to Sanchez did not lose its as the result of his obligations under the lease,
character of movable property and become he could not, for the purpose of collecting his
immovable by destination. But in the concrete debt, proceed separately against. (Valdes vs.
immobilization took place because of the express Central Altagracia [192], 225 U.S., 58.)
provisions of the lease under which the
Altagracia held, since the lease in substance Finding no reversible error in the record, the judgment
required the putting in of improved machinery, appealed from will be affirmed, the costs of this
deprived the tenant of any right to charge against instance to be paid by the appellant.
the lessor the cost such machinery, and it was
expressly stipulated that the machinery so put in
should become a part of the plant belonging to
the owner without compensation to the lessee.
Under such conditions the tenant in putting in the
machinery was acting but as the agent of the
owner in compliance with the obligations resting
upon him, and the immobilization of the G.R. No. L-50008 August 31, 1987
machinery which resulted arose in legal effect
from the act of the owner in giving by contract a PRUDENTIAL BANK, petitioner,
permanent destination to the machinery. vs.
HONORABLE DOMINGO D. PANIS, Presiding
xxx xxx xxx Judge of Branch III, Court of First Instance of
Zambales and Olongapo City; FERNANDO
The machinery levied upon by Nevers & MAGCALE & TEODULA BALUYUT-
Callaghan, that is, that which was placed in the MAGCALE, respondents.
 materials, under a roofing of cor. g. i.
sheets; declared and assessed in the
PARAS, J.: name of FERNANDO MAGCALE under
Tax Declaration No. 21109, issued by the
This is a petition for review on certiorari of the Assessor of Olongapo City with an
November 13, 1978 Decision * of the then Court of assessed value of P35,290.00. This
First Instance of Zambales and Olongapo City in Civil building is the only improvement of the lot.
Case No. 2443-0 entitled "Spouses Fernando A.
Magcale and Teodula Baluyut-Magcale vs. Hon. 2. THE PROPERTY hereby conveyed by
Ramon Y. Pardo and Prudential Bank" declaring that way of MORTGAGE includes the right of
the deeds of real estate mortgage executed by occupancy on the lot where the above
respondent spouses in favor of petitioner bank are null property is erected, and more particularly
and void. described and bounded, as follows:

The undisputed facts of this case by stipulation of the A first class residential land
parties are as follows: Identffied as Lot No. 720, (Ts-
308, Olongapo Townsite
... on November 19, 1971, plaintiffs- Subdivision) Ardoin Street, East
spouses Fernando A. Magcale and Teodula Bajac-Bajac, Olongapo City,
Baluyut Magcale secured a loan in the sum containing an area of 465 sq.
of P70,000.00 from the defendant m. more or less, declared and
Prudential Bank. To secure payment of this assessed in the name of
loan, plaintiffs executed in favor of FERNANDO MAGCALE under
defendant on the aforesaid date a deed of Tax Duration No. 19595 issued
Real Estate Mortgage over the following by the Assessor of Olongapo
described properties: City with an assessed value of
P1,860.00; bounded on the
l. A 2-STOREY, SEMI-CONCRETE,
residential building with warehouse spaces NORTH:
containing a total floor area of 263 sq. By No.
meters, more or less, generally constructed 6,
of mixed hard wood and concrete
 Ardoin aforestated deed of mortgage,
Street there appears a rider typed at
the bottom of the reverse side
SOUTH: of the document under the lists
By No. of the properties mortgaged
2, which reads, as follows:
Ardoin
Street AND IT IS
FURTHER
EAST: AGREED that in the
By 37 event the Sales
Canda Patent on the lot
Street, applied for by the
and Mortgagors as
herein stated is
WEST: released or issued
By by the Bureau of
Ardoin Lands, the
Street. Mortgagors hereby
authorize the
All corners of the lot
Register of Deeds
marked by conc.
to hold the
cylindrical
Registration of
monuments of the
same until this
Bureau of Lands as
Mortgage is
visible limits.
cancelled, or to
( Exhibit "A, " also
annotate this
Exhibit "1" for
encumbrance on
defendant).
the Title upon
Apart from the stipulations in authority from the
the printed portion of the Secretary of
 Agriculture and additional loan, plaintiffs
Natural Resources, executed in favor of the said
which title with defendant another deed of Real
annotation, shall be Estate Mortgage over the same
released in favor of properties previously
the herein mortgaged in Exhibit "A."
Mortgage. (Exhibit "B;" also Exhibit "2" for
defendant). This second deed
From the aforequoted of Real Estate Mortgage was
stipulation, it is obvious that the likewise registered with the
mortgagee (defendant Registry of Deeds, this time in
Prudential Bank) was at the Olongapo City, on May 2,1973.
outset aware of the fact that the
mortgagors (plaintiffs) have On April 24, 1973, the Secretary of
already filed a Miscellaneous Agriculture issued Miscellaneous Sales
Sales Application over the lot, Patent No. 4776 over the parcel of land,
possessory rights over which, possessory rights over which were
were mortgaged to it. mortgaged to defendant Prudential Bank,
in favor of plaintiffs. On the basis of the
Exhibit "A" (Real Estate aforesaid Patent, and upon its transcription
Mortgage) was registered in the Registration Book of the Province of
under the Provisions of Act Zambales, Original Certificate of Title No.
3344 with the Registry of P-2554 was issued in the name of Plaintiff
Deeds of Zambales on Fernando Magcale, by the Ex-Oficio
November 23, 1971. Register of Deeds of Zambales, on May 15,
1972.
On May 2, 1973, plaintiffs
secured an additional loan from For failure of plaintiffs to pay their
defendant Prudential Bank in obligation to defendant Bank after it
the sum of P20,000.00. To became due, and upon application of said
secure payment of this defendant, the deeds of Real Estate
 Mortgage (Exhibits "A" and "B") were petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-
extrajudicially foreclosed. Consequent to 112).
the foreclosure was the sale of the
properties therein mortgaged to defendant Thereafter, in the Resolution dated June 13, 1979, the
as the highest bidder in a public auction petition was given due course and the parties were
sale conducted by the defendant City required to submit simultaneously their respective
Sheriff on April 12, 1978 (Exhibit "E"). The memoranda. (Ibid., p. 114).
auction sale aforesaid was held despite
written request from plaintiffs through On July 18, 1979, petitioner filed its Memorandum
counsel dated March 29, 1978, for the (Ibid., pp. 116-144), while private respondents filed
defendant City Sheriff to desist from going their Memorandum on August 1, 1979 (Ibid., pp. 146-
with the scheduled public auction sale 155).
(Exhibit "D")." (Decision, Civil Case No.
In a Resolution dated August 10, 1979, this case was
2443-0, Rollo, pp. 29-31).
considered submitted for decision (Ibid., P. 158).
Respondent Court, in a Decision dated November 3,
In its Memorandum, petitioner raised the following
1978 declared the deeds of Real Estate Mortgage as
issues:
null and void (Ibid., p. 35).
1. WHETHER OR NOT THE DEEDS OF REAL
On December 14, 1978, petitioner filed a Motion for
ESTATE MORTGAGE ARE VALID; AND
Reconsideration (Ibid., pp. 41-53), opposed by private
respondents on January 5, 1979 (Ibid., pp. 54-62), and 2. WHETHER OR NOT THE SUPERVENING
in an Order dated January 10, 1979 (Ibid., p. 63), the ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS
Motion for Reconsideration was denied for lack of OF MISCELLANEOUS SALES PATENT NO. 4776 ON
merit. Hence, the instant petition (Ibid., pp. 5-28). APRIL 24, 1972 UNDER ACT NO. 730 AND THE
COVERING ORIGINAL CERTIFICATE OF TITLE NO.
The first Division of this Court, in a Resolution dated
P-2554 ON MAY 15,1972 HAVE THE EFFECT OF
March 9, 1979, resolved to require the respondents to
INVALIDATING THE DEEDS OF REAL ESTATE
comment (Ibid., p. 65), which order was complied with
MORTGAGE. (Memorandum for Petitioner, Rollo, p.
the Resolution dated May 18,1979, (Ibid., p. 100),
122).
This petition is impressed with merit. Coming back to the case at bar, the records show, as
aforestated that the original mortgage deed on the 2-
The pivotal issue in this case is whether or not a valid storey semi-concrete residential building with
real estate mortgage can be constituted on the building warehouse and on the right of occupancy on the lot
erected on the land belonging to another. where the building was erected, was executed on
November 19, 1971 and registered under the
The answer is in the affirmative. provisions of Act 3344 with the Register of Deeds of
Zambales on November 23, 1971. Miscellaneous
In the enumeration of properties under Article 415 of
Sales Patent No. 4776 on the land was issued on April
the Civil Code of the Philippines, this Court ruled that,
24, 1972, on the basis of which OCT No. 2554 was
"it is obvious that the inclusion of "building" separate
issued in the name of private respondent Fernando
and distinct from the land, in said provision of law can
Magcale on May 15, 1972. It is therefore without
only mean that a building is by itself an immovable
question that the original mortgage was executed
property." (Lopez vs. Orosa, Jr., et al., L-10817-18,
before the issuance of the final patent and before the
Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs.
government was divested of its title to the land, an
Iya, et al., L-10837-38, May 30,1958).
event which takes effect only on the issuance of the
Thus, while it is true that a mortgage of land sales patent and its subsequent registration in the
necessarily includes, in the absence of stipulation of Office of the Register of Deeds (Visayan Realty Inc. vs.
the improvements thereon, buildings, still a building by Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110
itself may be mortgaged apart from the land on which it Phil. 28; Director of Lands vs. Jurado, L-14702, May
has been built. Such a mortgage would be still a real 23, 1961; Pena "Law on Natural Resources", p. 49).
estate mortgage for the building would still be Under the foregoing considerations, it is evident that
considered immovable property even if dealt with the mortgage executed by private respondent on his
separately and apart from the land (Leung Yee vs. own building which was erected on the land belonging
Strong Machinery Co., 37 Phil. 644). In the same to the government is to all intents and purposes a valid
manner, this Court has also established that mortgage.
possessory rights over said properties before title is
As to restrictions expressly mentioned on the face of
vested on the grantee, may be validly transferred or
respondents' OCT No. P-2554, it will be noted that
conveyed as in a deed of mortgage (Vda. de Bautista
Sections 121, 122 and 124 of the Public Land Act,
vs. Marcos, 3 SCRA 438 [1961]).
refer to land already acquired under the Public Land
Act, or any improvement thereon and therefore have However, the Court, in recently ruling on violations of
no application to the assailed mortgage in the case at Section 124 which refers to Sections 118, 120, 122
bar which was executed before such eventuality. and 123 of Commonwealth Act 141, has held:
Likewise, Section 2 of Republic Act No. 730, also a
restriction appearing on the face of private ... Nonetheless, we apply our earlier rulings
respondent's title has likewise no application in the because we believe that as in pari
instant case, despite its reference to encumbrance or delicto may not be invoked to defeat the
alienation before the patent is issued because it refers policy of the State neither may the doctrine
specifically to encumbrance or alienation on the land of estoppel give a validating effect to a void
itself and does not mention anything regarding the contract. Indeed, it is generally considered
improvements existing thereon. that as between parties to a contract,
validity cannot be given to it by estoppel if it
But it is a different matter, as regards the second is prohibited by law or is against public
mortgage executed over the same properties on May policy (19 Am. Jur. 802). It is not within the
2, 1973 for an additional loan of P20,000.00 which was competence of any citizen to barter away
registered with the Registry of Deeds of Olongapo City what public policy by law was to preserve
on the same date. Relative thereto, it is evident that (Gonzalo Puyat & Sons, Inc. vs. De los
such mortgage executed after the issuance of the Amas and Alino supra). ... (Arsenal vs. IAC,
sales patent and of the Original Certificate of Title, falls 143 SCRA 54 [1986]).
squarely under the prohibitions stated in Sections 121,
122 and 124 of the Public Land Act and Section 2 of This pronouncement covers only the previous
Republic Act 730, and is therefore null and void. transaction already alluded to and does not pass upon
any new contract between the parties (Ibid), as in the
Petitioner points out that private respondents, after case at bar. It should not preclude new contracts that
physically possessing the title for five years, voluntarily may be entered into between petitioner bank and
surrendered the same to the bank in 1977 in order that private respondents that are in accordance with the
the mortgaged may be annotated, without requiring the requirements of the law. After all, private respondents
bank to get the prior approval of the Ministry of Natural themselves declare that they are not denying the
Resources beforehand, thereby implicitly authorizing legitimacy of their debts and appear to be open to new
Prudential Bank to cause the annotation of said negotiations under the law (Comment; Rollo, pp. 95-
mortgage on their title. 96). Any new transaction, however, would be subject to
whatever steps the Government may take for the The machines and equipment consists of underground
reversion of the land in its favor. tanks, elevated tank, elevated water tanks, water
tanks, gasoline pumps, computing pumps, water
PREMISES CONSIDERED, the decision of the Court pumps, car washer, car hoists, truck hoists, air
of First Instance of Zambales & Olongapo City is compressors and tireflators. The city assessor
hereby MODIFIED, declaring that the Deed of Real described the said equipment and machinery in this
Estate Mortgage for P70,000.00 is valid but ruling that manner:
the Deed of Real Estate Mortgage for an additional
loan of P20,000.00 is null and void, without prejudice A gasoline service station is a piece of lot
to any appropriate action the Government may take where a building or shed is erected, a
against private respondents. water tank if there is any is placed in one
corner of the lot, car hoists are placed in an
adjacent shed, an air compressor is
attached in the wall of the shed or at the
concrete wall fence.

The controversial underground tank,

depository of gasoline or crude oil, is dug
G.R. No. L-50466 May 31, 1982
deep about six feet more or less, a few
CALTEX (PHILIPPINES) INC., petitioner, meters away from the shed. This is done to
vs. prevent conflagration because gasoline
CENTRAL BOARD OF ASSESSMENT APPEALS and other combustible oil are very
and CITY ASSESSOR OF PASAY, respondents. inflammable.

This underground tank is connected with a

steel pipe to the gasoline pump and the
AQUINO, J.: gasoline pump is commonly placed or
constructed under the shed. The footing of
This case is about the realty tax on machinery and the pump is a cement pad and this cement
equipment installed by Caltex (Philippines) Inc. in its pad is imbedded in the pavement under the
gas stations located on leased land. shed, and evidence that the gasoline
underground tank is attached and apparatus are allowed by Caltex
connected to the shed or building through (Philippines) Inc. ...
the pipe to the pump and the pump is
attached and affixed to the cement pad and The underground gasoline tank is attached
pavement covered by the roof of the to the shed by the steel pipe to the pump,
building or shed. so with the water tank it is connected also
by a steel pipe to the pavement, then to the
The building or shed, the elevated water electric motor which electric motor is
tank, the car hoist under a separate shed, placed under the shed. So to say that the
the air compressor, the underground gasoline pumps, water pumps and
gasoline tank, neon lights signboard, underground tanks are outside of the
concrete fence and pavement and the lot service station, and to consider only the
where they are all placed or erected, all of building as the service station is grossly
them used in the pursuance of the gasoline erroneous. (pp. 58-60, Rollo).
service station business formed the entire
gasoline service-station. The said machines and equipment are loaned by
Caltex to gas station operators under an appropriate
As to whether the subject properties are lease agreement or receipt. It is stipulated in the lease
attached and affixed to the tenement, it is contract that the operators, upon demand, shall return
clear they are, for the tenement we to Caltex the machines and equipment in good
consider in this particular case are (is) the condition as when received, ordinary wear and tear
pavement covering the entire lot which was excepted.
constructed by the owner of the gasoline
station and the improvement which holds The lessor of the land, where the gas station is
all the properties under question, they are located, does not become the owner of the machines
attached and affixed to the pavement and and equipment installed therein. Caltex retains the
to the improvement. ownership thereof during the term of the lease.

The pavement covering the entire lot of the The city assessor of Pasay City characterized the said
gasoline service station, as well as all the items of gas station equipment and machinery as
improvements, machines, equipments and taxable realty. The realty tax on said equipment
amounts to P4,541.10 annually (p. 52, Rollo). The city The Solicitor General's contention that the Court of Tax
board of tax appeals ruled that they are personalty. Appeals has exclusive appellate jurisdiction over this
The assessor appealed to the Central Board of case is not correct. When Republic act No. 1125
Assessment Appeals. created the Tax Court in 1954, there was as yet no
Central Board of Assessment Appeals. Section 7(3) of
The Board, which was composed of Secretary of that law in providing that the Tax Court had jurisdiction
Finance Cesar Virata as chairman, Acting Secretary of to review by appeal decisions of provincial or city
Justice Catalino Macaraig, Jr. and Secretary of Local boards of assessment appeals had in mind the local
Government and Community Development Jose Roño, boards of assessment appeals but not
held in its decision of June 3, 1977 that the said the Central Board of Assessment Appeals which under
machines and equipment are real property within the the Real Property Tax Code has appellate jurisdiction
meaning of sections 3(k) & (m) and 38 of the Real over decisions of the said local boards of assessment
Property Tax Code, Presidential Decree No. 464, appeals and is, therefore, in the same category as the
which took effect on June 1, 1974, and that the Tax Court.
definitions of real property and personal property in
articles 415 and 416 of the Civil Code are not Section 36 of the Real Property Tax Code provides that
applicable to this case. the decision of the Central Board of Assessment
Appeals shall become final and executory after the
The decision was reiterated by the Board (Minister lapse of fifteen days from the receipt of its decision by
Vicente Abad Santos took Macaraig's place) in its the appellant. Within that fifteen-day period, a petition
resolution of January 12, 1978, denying Caltex's for reconsideration may be filed. The Code does not
motion for reconsideration, a copy of which was provide for the review of the Board's decision by this
received by its lawyer on April 2, 1979. Court.

On May 2, 1979 Caltex filed this certiorari petition Consequently, the only remedy available for seeking a
wherein it prayed for the setting aside of the Board's review by this Court of the decision of the Central
decision and for a declaration that t he said machines Board of Assessment Appeals is the special civil action
and equipment are personal property not subject to of certiorari, the recourse resorted to herein by Caltex
realty tax (p. 16, Rollo). (Philippines), Inc.
The issue is whether the pieces of gas station value, beauty or utility or to adapt it for new
equipment and machinery already enumerated are or further purposes.
subject to realty tax. This issue has to be resolved
primarily under the provisions of the Assessment Law m) Machinery — shall embrace machines,
and the Real Property Tax Code. mechanical contrivances, instruments,
appliances and apparatus attached to the
Section 2 of the Assessment Law provides that the real estate. It includes the physical facilities
realty tax is due "on real property, including land, available for production, as well as the
buildings, machinery, and other improvements" not installations and appurtenant service
specifically exempted in section 3 thereof. This facilities, together with all other equipment
provision is reproduced with some modification in the designed for or essential to its
Real Property Tax Code which provides: manufacturing, industrial or agricultural
purposes (See sec. 3[f], Assessment Law).
SEC. 38. Incidence of Real Property Tax.—
There shall be levied, assessed and We hold that the said equipment and machinery, as
collected in all provinces, cities and appurtenances to the gas station building or shed
municipalities an annual ad valorem tax on owned by Caltex (as to which it is subject to realty tax)
real property, such as land, buildings, and which fixtures are necessary to the operation of
machinery and other improvements affixed the gas station, for without them the gas station would
or attached to real property not hereinafter be useless, and which have been attached or affixed
specifically exempted. permanently to the gas station site or embedded
therein, are taxable improvements and machinery
The Code contains the following definitions in its within the meaning of the Assessment Law and the
section 3: Real Property Tax Code.

k) Improvements — is a valuable addition Caltex invokes the rule that machinery which is
made to property or an amelioration in its movable in its nature only becomes immobilized when
condition, amounting to more than mere placed in a plant by the owner of the property or plant
repairs or replacement of waste, costing but not when so placed by a tenant, a usufructuary, or
labor or capital and intended to enhance its any person having only a temporary right, unless such
person acted as the agent of the owner (Davao Saw property" (Standard Oil Co. of New York vs. Jaramillo,
Mill Co. vs. Castillo, 61 Phil 709). 44 Phil. 630, 633).

That ruling is an interpretation of paragraph 5 of article This case is also easily distinguishable from Board of
415 of the Civil Code regarding machinery that Assessment Appeals vs. Manila Electric Co., 119 Phil.
becomes real property by destination. In the Davao 328, where Meralco's steel towers were considered
Saw Mills case the question was whether the poles within the meaning of paragraph 9 of its
machinery mounted on foundations of cement and franchise which exempts its poles from taxation. The
installed by the lessee on leased land should be steel towers were considered personalty because they
regarded as real property forpurposes of execution of were attached to square metal frames by means of
a judgment against the lessee. The sheriff treated the bolts and could be moved from place to place when
machinery as personal property. This Court sustained unscrewed and dismantled.
the sheriff's action. (Compare with Machinery &
Engineering Supplies, Inc. vs. Court of Appeals, 96 Nor are Caltex's gas station equipment and machinery
Phil. 70, where in a replevin case machinery was the same as tools and equipment in the repair shop of
treated as realty). a bus company which were held to be personal
property not subject to realty tax (Mindanao Bus Co.
Here, the question is whether the gas station vs. City Assessor, 116 Phil. 501).
equipment and machinery permanently affixed by
Caltex to its gas station and pavement (which are The Central Board of Assessment Appeals did not
indubitably taxable realty) should be subject to the commit a grave abuse of discretion in upholding the
realty tax. This question is different from the issue city assessor's is imposition of the realty tax on
raised in the Davao Saw Mill case. Caltex's gas station and equipment.

Improvements on land are commonly taxed as realty WHEREFORE, the questioned decision and resolution
even though for some purposes they might be of the Central Board of Assessment Appeals are
considered personalty (84 C.J.S. 181-2, Notes 40 and affirmed. The petition for certiorari is dismissed for lack
41). "It is a familiar phenomenon to see things classed of merit. No costs.
as real property for purposes of taxation which on
general principle might be considered personal
G.R. No. 106041 January 29, 1993 The petitioner seasonably elevated the matter to the
Central Board of Assessment Appeals, 1 one of the
BENGUET CORPORATION, petitioner, herein respondents. In its decision dated March 22,
vs. 1990, the Board reversed the dismissal of the appeal
CENTRAL BOARD OF ASSESSMENT APPEALS, but, on the merits, agreed that "the tailings dam and
BOARD OF ASSESSMENT APPEALS OF the lands submerged thereunder (were) subject to
ZAMBALES, PROVINCIAL ASSESSOR OF realty tax."
ZAMBALES, PROVINCE OF ZAMBALES, and
MUNICIPALITY OF SAN MARCELINO, respondents. For purposes of taxation the dam is
considered as real property as it comes
Romulo, Mabanta, Buenaventura, Sayoc & De los within the object mentioned in paragraphs
Angeles for petitioner. (a) and (b) of Article 415 of the New Civil
Code. It is a construction adhered to the
soil which cannot be separated or detached
without breaking the material or causing
CRUZ, J.:
destruction on the land upon which it is
The realty tax assessment involved in this case attached. The immovable nature of the
amounts to P11,319,304.00. It has been imposed on dam as an improvement determines its
the petitioner's tailings dam and the land thereunder character as real property, hence taxable
over its protest. under Section 38 of the Real Property Tax
Code. (P.D. 464).
The controversy arose in 1985 when the Provincial
Assessor of Zambales assessed the said properties as Although the dam is partly used as an anti-
taxable improvements. The assessment was appealed pollution device, this Board cannot accede
to the Board of Assessment Appeals of the Province of to the request for tax exemption in the
Zambales. On August 24, 1988, the appeal was absence of a law authorizing the same.
dismissed mainly on the ground of the petitioner's
xxx xxx xxx
"failure to pay the realty taxes that fell due during the
pendency of the appeal." We find the appraisal on the land
submerged as a result of the construction
 of the tailings dam, covered by Tax (1) as regards the tailings dam as an
Declaration Nos. "improvement":
002-0260 and 002-0266, to be in
accordance with the Schedule of Market (a) that the tailings dam has no
Values for Zambales which was reviewed value separate from and
and allowed for use by the Ministry independent of the mine;
(Department) of Finance in the 1981-1982 hence, by itself it cannot be
general revision. No serious attempt was considered an improvement
made by Petitioner-Appellant Benguet separately assessable;
Corporation to impugn its
reasonableness, i.e., that the P50.00 per (b) that it is an integral part of
square meter applied by Respondent- the mine;
Appellee Provincial Assessor is indeed
(c) that at the end of the mining
excessive and unconscionable. Hence, we
operation of the petitioner
find no cause to disturb the market value
corporation in the area, the
applied by Respondent Appellee Provincial
tailings dam will benefit the
Assessor of Zambales on the properties of
local community by serving as
Petitioner-Appellant Benguet Corporation
an irrigation facility;
covered by Tax Declaration Nos. 002-0260
and 002-0266. (d) that the building of the dam
has stripped the property of any
This petition for certiorari now seeks to reverse the
commercial value as the
above ruling.
property is submerged under
The principal contention of the petitioner is that the water wastes from the mine;
tailings dam is not subject to realty tax because it is not
(e) that the tailings dam is an
an "improvement" upon the land within the meaning of
environmental pollution control
the Real Property Tax Code. More particularly, it is
device for which petitioner must
claimed —
be commended rather than
penalized with a realty tax
assessment;
 (f) that the installation and (a) that where a tax is not paid
utilization of the tailings dam as in an honest belief that it is not
a pollution control device is a due, no penalty shall be
requirement imposed by law; collected in addition to the
basic tax;
(2) as regards the valuation of the tailings
dam and the submerged lands: (b) that no other mining
companies in the Philippines
(a) that the subject properties operating a tailings dam have
have no market value as they been made to declare the dam
cannot be sold independently of for realty tax purposes.
the mine;
The petitioner does not dispute that the tailings dam
(b) that the valuation of the may be considered realty within the meaning of Article
tailings dam should be based 415. It insists, however, that the dam cannot be
on its incidental use by subjected to realty tax as a separate and independent
petitioner as a water reservoir property because it does not constitute an "assessable
and not on the alleged cost of improvement" on the mine although a considerable
construction of the dam and the sum may have been spent in constructing and
annual build-up expense; maintaining it.

(c) that the "residual value To support its theory, the petitioner cites the following
formula" used by the Provincial cases:
Assessor and adopted by
respondent CBAA is arbitrary 1. Municipality of Cotabato v. Santos (105 Phil. 963),
and erroneous; and where this Court considered the dikes and gates
constructed by the taxpayer in connection with a
(3) as regards the petitioner's liability for fishpond operation as integral parts of the fishpond.
penalties for
non-declaration of the tailings dam and the 2. Bislig Bay Lumber Co. v. Provincial Government of
submerged lands for realty tax purposes: Surigao (100 Phil. 303), involving a road constructed
by the timber concessionaire in the area, where this
Court did not impose a realty tax on the road primarily meaning of Section 2 of C.A.
for two reasons: No. 470.

In the first place, it cannot be disputed that Apparently, the realty tax was not imposed not
the ownership of the road that was because the road was an integral part of the lumber
constructed by appellee belongs to the concession but because the government had the right
government by right of accession not only to use the road to promote its varied activities.
because it is inherently incorporated or
attached to the timber land . . . but also 3. Kendrick v. Twin Lakes Reservoir Co. (144 Pacific
because upon the expiration of the 884), an American case, where it was declared that the
concession said road would ultimately pass reservoir dam went with and formed part of the
to the national government. . . . In the reservoir and that the dam would be "worthless and
second place, while the road was useless except in connection with the outlet canal, and
constructed by appellee primarily for its use the water rights in the reservoir represent and include
and benefit, the privilege is not exclusive, whatever utility or value there is in the dam and
for . . . appellee cannot prevent the use of headgates."
portions of the concession for
homesteading purposes. It is also duty 4. Ontario Silver Mining Co. v. Hixon (164 Pacific 498),
bound to allow the free use of forest also from the United States. This case involved drain
products within the concession for the tunnels constructed by plaintiff when it expanded its
personal use of individuals residing in or mining operations downward, resulting in a constantly
within the vicinity of the land. . . . In other increasing flow of water in the said mine. It was held
words, the government has practically that:
reserved the rights to use the road to
Whatever value they have is connected
promote its varied activities. Since, as
with and in fact is an integral part of the
above shown, the road in question cannot
mine itself. Just as much so as any shaft
be considered as an improvement which
which descends into the earth or an
belongs to appellee, although in part is for
underground incline, tunnel, or drift would
its benefit, it is clear that the same cannot
be which was used in connection with the
be the subject of assessment within the
mine.
On the other hand, the Solicitor General argues that have been installed with some degree of
the dam is an assessable improvement because it permanence as receptacles for the
enhances the value and utility of the mine. The primary considerable quantities of oil needed by
function of the dam is to receive, retain and hold the MERALCO for its operations. (Manila
water coming from the operations of the mine, and it Electric Co. v. CBAA, 114 SCRA 273).
also enables the petitioner to impound water, which is
then recycled for use in the plant. The pipeline system in question is
indubitably a construction adhering to the
There is also ample jurisprudence to support this view, soil. It is attached to the land in such a way
thus: that it cannot be separated therefrom
without dismantling the steel pipes which
. . . The said equipment and machinery, as were welded to form the pipeline.
appurtenances to the gas station building (MERALCO Securities Industrial Corp. v.
or shed owned by Caltex (as to which it is CBAA, 114 SCRA 261).
subject to realty tax) and which fixtures are
necessary to the operation of the gas The tax upon the dam was properly
station, for without them the gas station assessed to the plaintiff as a tax upon real
would be useless and which have been estate. (Flax-Pond Water Co. v. City of
attached or affixed permanently to the gas Lynn, 16 N.E. 742).
station site or embedded therein, are
taxable improvements and machinery The oil tanks are structures within the
within the meaning of the Assessment Law statute, that they are designed and used by
and the Real Property Tax Code. (Caltex the owner as permanent improvement of
[Phil.] Inc. v. CBAA, 114 SCRA 296). the free hold, and that for such reasons
they were properly assessed by the
We hold that while the two storage tanks respondent taxing district as improvements.
are not embedded in the land, they may, (Standard Oil Co. of New Jersey v. Atlantic
nevertheless, be considered as City, 15 A 2d. 271)
improvements on the land, enhancing its
utility and rendering it useful to the oil The Real Property Tax Code does not carry a definition
industry. It is undeniable that the two tanks of "real property" and simply says that the realty tax is
imposed on "real property, such as lands, buildings, (k) Improvements — is a valuable addition
machinery and other improvements affixed or attached made to property or an amelioration in its
to real property." In the absence of such a definition, condition, amounting to more than mere
we apply Article 415 of the Civil Code, the pertinent repairs or replacement of waste, costing
portions of which state: labor or capital and intended to enhance its
value, beauty or utility or to adopt it for new
Art. 415. The following are immovable or further purposes.
property.
The term has also been interpreted as "artificial
(1) Lands, buildings and constructions of all alterations of the physical condition of the ground that
kinds adhered to the soil; arereasonably permanent in character." 2

xxx xxx xxx The Court notes that in the Ontario case the plaintiff
admitted that the mine involved therein could not be
(3) Everything attached to an immovable in operated without the aid of the drain tunnels, which
a fixed manner, in such a way that it cannot were indispensable to the successful development and
be separated therefrom without breaking extraction of the minerals therein. This is not true in the
the material or deterioration of the object. present case.
Section 2 of C.A. No. 470, otherwise known as the Even without the tailings dam, the petitioner's mining
Assessment Law, provides that the realty tax is due operation can still be carried out because the primary
"on the real property, including land, buildings, function of the dam is merely to receive and retain the
machinery and other improvements" not specifically wastes and water coming from the mine. There is no
exempted in Section 3 thereof. A reading of that allegation that the water coming from the dam is the
section shows that the tailings dam of the petitioner sole source of water for the mining operation so as to
does not fall under any of the classes of exempt real make the dam an integral part of the mine. In fact, as a
properties therein enumerated. result of the construction of the dam, the petitioner can
now impound and recycle water without having to
Is the tailings dam an improvement on the mine?
spend for the building of a water reservoir. And as the
Section 3(k) of the Real Property Tax Code defines
petitioner itself points out, even if the petitioner's mine
improvement as follows:
is shut down or ceases operation, the dam may still be
used for irrigation of the surrounding areas, again The Court is convinced that the subject dam falls within
unlike in the Ontario case. the definition of an "improvement" because it is
permanent in character and it enhances both the value
As correctly observed by the CBAA, the Kendrick case and utility of petitioner's mine. Moreover, the
is also not applicable because it involved water immovable nature of the dam defines its character as
reservoir dams used for different purposes and for the real property under Article 415 of the Civil Code and
benefit of the surrounding areas. By contrast, the thus makes it taxable under Section 38 of the Real
tailings dam in question is being used exclusively for Property Tax Code.
the benefit of the petitioner.
The Court will also reject the contention that the
Curiously, the petitioner, while vigorously arguing that appraisal at P50.00 per square meter made by the
the tailings dam has no separate existence, just as Provincial Assessor is excessive and that his use of
vigorously contends that at the end of the mining the "residual value formula" is arbitrary and erroneous.
operation the tailings dam will serve the local
community as an irrigation facility, thereby implying Respondent Provincial Assessor explained the use of
that it can exist independently of the mine. the "residual value formula" as follows:

From the definitions and the cases cited above, it A 50% residual value is applied in the
would appear that whether a structure constitutes an computation because, while it is true that
improvement so as to partake of the status of realty when slime fills the dike, it will then be
would depend upon the degree of permanence covered by another dike or stage, the stage
intended in its construction and use. The expression covered is still there and still exists and
"permanent" as applied to an improvement does not since only one face of the dike is filled,
imply that the improvement must be used perpetually 50% or the other face is unutilized.
but only until the purpose to which the principal realty
is devoted has been accomplished. It is sufficient that In sustaining this formula, the CBAA gave the following
the improvement is intended to remain as long as the justification:
land to which it is annexed is still used for the said
purpose. We find the appraisal on the land
submerged as a result of the construction
of the tailings dam, covered by Tax
Declaration Nos.
 002-0260 and 002-0266, to be in this Court in the exercise of its own powers of review.
accordance with the Schedule of Market There is no such showing in the case at bar.
Values for San Marcelino, Zambales, which
is fifty (50.00) pesos per square meter for We disagree, however, with the ruling of respondent
third class industrial land (TSN, page 17, CBAA that it cannot take cognizance of the issue of the
July 5, 1989) and Schedule of Market propriety of the penalties imposed upon it, which was
Values for Zambales which was reviewed raised by the petitioner for the first time only on appeal.
and allowed for use by the Ministry The CBAA held that this "is an entirely new matter that
(Department) of Finance in the 1981-1982 petitioner can take up with the Provincial Assessor
general revision. No serious attempt was (and) can be the subject of another protest before the
made by Petitioner-Appellant Benguet Local Board or a negotiation with the
Corporation to impugn its local sanggunian . . ., and in case of an adverse
reasonableness, i.e, that the P50.00 per decision by either the Local Board or the
square meter applied by Respondent- local sanggunian, (it can) elevate the same to this
Appellee Provincial Assessor is indeed Board for appropriate action."
excessive and unconscionable. Hence, we
find no cause to disturb the market value There is no need for this time-wasting procedure. The
applied by Respondent-Appellee Provincial Court may resolve the issue in this petition instead of
Assessor of Zambales on the properties of referring it back to the local authorities. We have
Petitioner-Appellant Benguet Corporation studied the facts and circumstances of this case as
covered by Tax Declaration Nos. 002-0260 above discussed and find that the petitioner has acted
and 002-0266. in good faith in questioning the assessment on the
tailings dam and the land submerged thereunder. It is
It has been the long-standing policy of this Court to clear that it has not done so for the purpose of evading
respect the conclusions of quasi-judicial agencies like or delaying the payment of the questioned tax. Hence,
the CBAA, which, because of the nature of its functions we hold that the petitioner is not subject to penalty for
and its frequent exercise thereof, has developed its
expertise in the resolution of assessment problems. non-declaration of the tailings dam and the submerged
The only exception to this rule is where it is clearly lands for realty tax purposes.
shown that the administrative body has committed
grave abuse of discretion calling for the intervention of
WHEREFORE, the petition is DISMISSED for failure to Case No. 43073, for ejectment. Having lost therein,
show that the questioned decision of respondent defendants-appellants appealed to the court a quo
Central Board of Assessment Appeals is tainted with (Civil Case No. 30993) which also rendered a decision
grave abuse of discretion except as to the imposition of against them, the dispositive portion of which follows:
penalties upon the petitioner which is hereby SET
ASIDE. Costs against the petitioner. It is so ordered. WHEREFORE, the court hereby renders
judgment in favor of the plaintiffs and
against the defendants, ordering the latter
to pay jointly and severally the former a
monthly rent of P200.00 on the house,
subject-matter of this action, from March
G.R. No. L-30173 September 30, 1971
27, 1956, to January 14, 1967, with interest
GAVINO A. TUMALAD and GENEROSA R. at the legal rate from April 18, 1956, the
TUMALAD, plaintiffs-appellees, filing of the complaint, until fully paid, plus
vs. attorney's fees in the sum of P300.00 and
ALBERTA VICENCIO and EMILIANO to pay the costs.
SIMEON, defendants-appellants.
It appears on the records that on 1 September 1955
Castillo & Suck for plaintiffs-appellees. defendants-appellants executed a chattel mortgage in
favor of plaintiffs-appellees over their house of strong
Jose Q. Calingo for defendants-appellants. materials located at No. 550 Int. 3, Quezon Boulevard,
Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No.
2554, which were being rented from Madrigal &
Company, Inc. The mortgage was registered in the
REYES, J.B.L., J.: Registry of Deeds of Manila on 2 September 1955.
The herein mortgage was executed to guarantee a
Case certified to this Court by the Court of Appeals loan of P4,800.00 received from plaintiffs-appellees,
(CA-G.R. No. 27824-R) for the reason that only payable within one year at 12% per annum. The mode
questions of law are involved. of payment was P150.00 monthly, starting September,
1955, up to July 1956, and the lump sum of P3,150
This case was originally commenced by defendants-
was payable on or before August, 1956. It was also
appellants in the municipal court of Manila in Civil
agreed that default in the payment of any of the ... ordering the defendants to vacate the
amortizations, would cause the remaining unpaid premises described in the complaint;
balance to becomeimmediately due and Payable and ordering further to pay monthly the amount
— of P200.00 from March 27, 1956, until such
(time that) the premises is (sic) completely
the Chattel Mortgage will be enforceable in vacated; plus attorney's fees of P100.00
accordance with the provisions of Special and the costs of the suit. 5
Act No. 3135, and for this purpose, the
Sheriff of the City of Manila or any of his Defendants-appellants, in their answers in both the
deputies is hereby empowered and municipal court and court a quo impugned the legality
authorized to sell all the Mortgagor's of the chattel mortgage, claiming that they are still the
property after the necessary publication in owners of the house; but they waived the right to
order to settle the financial debts of introduce evidence, oral or documentary. Instead, they
P4,800.00, plus 12% yearly interest, and relied on their memoranda in support of their motion to
attorney's fees... 2 dismiss, predicated mainly on the grounds that: (a) the
municipal court did not have jurisdiction to try and
When defendants-appellants defaulted in paying, the decide the case because (1) the issue involved, is
mortgage was extrajudicially foreclosed, and on 27 ownership, and (2) there was no allegation of prior
March 1956, the house was sold at public auction possession; and (b) failure to prove prior demand
pursuant to the said contract. As highest bidder, pursuant to Section 2, Rule 72, of the Rules of Court. 6
plaintiffs-appellees were issued the corresponding
certificate of sale. 3 Thereafter, on 18 April 1956, During the pendency of the appeal to the Court of First
plaintiffs-appellant commenced Civil Case No. 43073 Instance, defendants-appellants failed to deposit the
in the municipal court of Manila, praying, among other rent for November, 1956 within the first 10 days of
things, that the house be vacated and its possession December, 1956 as ordered in the decision of the
surrendered to them, and for defendants-appellants to municipal court. As a result, the court granted plaintiffs-
pay rent of P200.00 monthly from 27 March 1956 up to appellees' motion for execution, and it was actually
the time the possession is surrendered. 4 On 21 issued on 24 January 1957. However, the judgment
September 1956, the municipal court rendered its regarding the surrender of possession to plaintiffs-
decision — appellees could not be executed because the subject
house had been already demolished on 14 January
1957 pursuant to the order of the court in a separate provided by law for the redemption of the
civil case (No. 25816) for ejectment against the extrajudicially foreclosed house.
present defendants for non-payment of rentals on the
land on which the house was constructed. We will consider these questions seriatim.

The motion of plaintiffs for dismissal of the appeal, (a) Defendants-appellants mortgagors question the
execution of the supersedeas bond and withdrawal of jurisdiction of the municipal court from which the case
deposited rentals was denied for the reason that the originated, and consequently, the appellate jurisdiction
liability therefor was disclaimed and was still being of the Court of First Instance a quo, on the theory that
litigated, and under Section 8, Rule 72, rentals the chattel mortgage is void ab initio; whence it would
deposited had to be held until final disposition of the follow that the extrajudicial foreclosure, and
appeal. 7 necessarily the consequent auction sale, are also void.
Thus, the ownership of the house still remained with
On 7 October 1957, the appellate court of First defendants-appellants who are entitled to possession
Instance rendered its decision, the dispositive portion and not plaintiffs-appellees. Therefore, it is argued by
of which is quoted earlier. The said decision was defendants-appellants, the issue of ownership will
appealed by defendants to the Court of Appeals which, have to be adjudicated first in order to determine
in turn, certified the appeal to this Court. Plaintiffs- possession. lt is contended further that ownership
appellees failed to file a brief and this appeal was being in issue, it is the Court of First Instance which
submitted for decision without it. has jurisdiction and not the municipal court.

Defendants-appellants submitted numerous Defendants-appellants predicate their theory of nullity

assignments of error which can be condensed into two of the chattel mortgage on two grounds, which are: (a)
questions, namely: . that, their signatures on the chattel mortgage were
obtained through fraud, deceit, or trickery; and (b) that
(a) Whether the municipal court from which the subject matter of the mortgage is a house of strong
the case originated had jurisdiction to materials, and, being an immovable, it can only be the
adjudicate the same; subject of a real estate mortgage and not a chattel
mortgage.
(b) Whether the defendants are, under the
law, legally bound to pay rentals to the
plaintiffs during the period of one (1) year
On the charge of fraud, deceit or trickery, the Court of to nullify the same. Hence, defendants-appellants'
First Instance found defendants-appellants' claim of ownership on the basis of a voidable contract
contentions as not supported by evidence and which has not been voided fails.
accordingly dismissed the charge, 8 confirming the
earlier finding of the municipal court that "the defense It is claimed in the alternative by defendants-appellants
of ownership as well as the allegations of fraud and that even if there was no fraud, deceit or trickery, the
deceit ... are mere allegations." 9 chattel mortgage was still null and void ab
initio because only personal properties can be subject
It has been held in Supia and Batiaco vs. Quintero and of a chattel mortgage. The rule about the status of
Ayala 10 that "the answer is a mere statement of the buildings as immovable property is stated in Lopez vs.
facts which the party filing it expects to prove, but it is Orosa, Jr. and Plaza Theatre Inc., 15 cited
not evidence; 11 and further, that when the question to in Associated Insurance Surety Co., Inc. vs. Iya, et
be determined is one of title, the Court is given the al. 16 to the effect that —
authority to proceed with the hearing of the cause until
this fact is clearly established. In the case of Sy vs. ... it is obvious that the inclusion of the
Dalman, 12 wherein the defendant was also a building, separate and distinct from the
successful bidder in an auction sale, it was likewise land, in the enumeration of what may
held by this Court that in detainer cases the aim of constitute real properties (art. 415, New
ownership "is a matter of defense and raises an issue Civil Code) could only mean one thing —
of fact which should be determined from the evidence that a building is by itself an immovable
at the trial." What determines jurisdiction are the property irrespective of whether or not said
allegations or averments in the complaint and the relief structure and the land on which it is
asked for. 13 adhered to belong to the same owner.

Moreover, even granting that the charge is true, fraud Certain deviations, however, have been allowed for
or deceit does not render a contract void ab initio, and various reasons. In the case of Manarang and
can only be a ground for rendering the contract Manarang vs. Ofilada, 17 this Court stated that "it is
voidable or annullable pursuant to Article 1390 of the undeniable that the parties to a contract may by
New Civil Code, by a proper action in court. 14 There is agreement treat as personal property that which by
nothing on record to show that the mortgage has been nature would be real property", citing Standard Oil
annulled. Neither is it disclosed that steps were taken Company of New York vs. Jaramillo. 18 In the latter
case, the mortgagor conveyed and transferred to the does not become immobilized by
mortgagee by way of mortgage "the following attachment (Valdez vs. Central Altagracia,
described personal property."19 The "personal 222 U.S. 58, cited in Davao Sawmill Co.,
property" consisted of leasehold rights and a building. Inc. vs. Castillo, et al., 61 Phil. 709).
Again, in the case of Luna vs. Encarnacion, 20 the Hence, if a house belonging to a person
subject of the contract designated as Chattel Mortgage stands on a rented land belonging to
was a house of mixed materials, and this Court hold another person, it may be mortgaged as a
therein that it was a valid Chattel mortgage because it personal property as so stipulated in the
was so expressly designated and specifically that the document of mortgage. (Evangelista vs.
property given as security "is a house of mixed Abad, Supra.) It should be noted, however
materials, which by its very nature is considered that the principle is predicated on
personal property." In the later case of Navarro vs. statements by the owner declaring his
Pineda, 21 this Court stated that — house to be a chattel, a conduct that may
conceivably estop him from subsequently
The view that parties to a deed of chattel claiming otherwise. (Ladera vs. C.N.
mortgage may agree to consider a house Hodges, [CA] 48 O.G. 5374): 22
as personal property for the purposes of
said contract, "is good only insofar as the In the contract now before Us, the house on rented
contracting parties are concerned. It is land is not only expressly designated as Chattel
based, partly, upon the principle of Mortgage; it specifically provides that "the mortgagor ...
estoppel" (Evangelista vs. Alto Surety, No. voluntarily CEDES, SELLS and TRANSFERS by way
L-11139, 23 April 1958). In a case, a of Chattel Mortgage 23 the property together with its
mortgaged house built on a rented leasehold rights over the lot on which it is constructed
land was held to be a personal property, and participation ..." 24Although there is no specific
not only because the deed of mortgage statement referring to the subject house as personal
considered it as such, but also because it property, yet by ceding, selling or transferring a
did not form part of the land (Evangelists property by way of chattel mortgage defendants-
vs. Abad, [CA]; 36 O.G. 2913), for it is now appellants could only have meant to convey the house
settled that an object placed on land by as chattel, or at least, intended to treat the same as
one who had only a temporary right to the such, so that they should not now be allowed to make
same, such as the lessee or usufructuary, an inconsistent stand by claiming otherwise. Moreover,
the subject house stood on a rented lot to which Appellants mortgagors question this award, claiming
defendats-appellants merely had a temporary right as that they were entitled to remain in possession without
lessee, and although this can not in itself alone any obligation to pay rent during the one year
determine the status of the property, it does so when redemption period after the foreclosure sale, i.e., until
combined with other factors to sustain the 27 March 1957. On this issue, We must rule for the
interpretation that the parties, particularly the appellants.
mortgagors, intended to treat the house as personalty.
Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. Chattel mortgages are covered and regulated by the
and Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Chattel Mortgage Law, Act No. 1508. 28 Section 14 of
Strong Machinery and Williamson, 26 wherein third this Act allows the mortgagee to have the property
persons assailed the validity of the chattel mortgaged sold at public auction through a public
mortgage, 27 it is the defendants-appellants officer in almost the same manner as that allowed by
themselves, as debtors-mortgagors, who are attacking Act No. 3135, as amended by Act No. 4118, provided
the validity of the chattel mortgage in this case. The that the requirements of the law relative to notice and
doctrine of estoppel therefore applies to the herein registration are complied with. 29 In the instant case,
defendants-appellants, having treated the subject the parties specifically stipulated that "the chattel
house as personalty. mortgage will be enforceable in accordance with the
provisions of Special Act No. 3135 ... ." 30 (Emphasis
(b) Turning to the question of possession and rentals of supplied).
the premises in question. The Court of First Instance
noted in its decision that nearly a year after the Section 6 of the Act referred to 31 provides that the
foreclosure sale the mortgaged house had been debtor-mortgagor (defendants-appellants herein) may,
demolished on 14 and 15 January 1957 by virtue of a at any time within one year from and after the date of
decision obtained by the lessor of the land on which the auction sale, redeem the property sold at the extra
the house stood. For this reason, the said court limited judicial foreclosure sale. Section 7 of the same
itself to sentencing the erstwhile mortgagors to pay Act 32 allows the purchaser of the property to obtain
plaintiffs a monthly rent of P200.00 from 27 March from the court the possession during the period of
1956 (when the chattel mortgage was foreclosed and redemption: but the same provision expressly requires
the house sold) until 14 January 1957 (when it was the filing of a petition with the proper Court of First
torn down by the Sheriff), plus P300.00 attorney's fees. Instance and the furnishing of a bond. It is only upon
filing of the proper motion and the approval of the
corresponding bond that the order for a writ of the debtor of mortgagor. The rationale for
possession issues as a matter of course. No discretion the Rule, it seems, is to secure for the
is left to the court. 33 In the absence of such a benefit of the debtor or mortgagor, the
compliance, as in the instant case, the purchaser can payment of the redemption amount and the
not claim possession during the period of redemption consequent return to him of his properties
as a matter of right. In such a case, the governing sold at public auction. (Emphasis supplied)
provision is Section 34, Rule 39, of the Revised Rules
of Court 34 which also applies to properties purchased The Hamada case reiterates the previous ruling
in extrajudicial foreclosure proceedings. 35 Construing in Chan vs. Espe. 36
the said section, this Court stated in the aforestated
case of Reyes vs. Hamada. Since the defendants-appellants were occupying the
house at the time of the auction sale, they are entitled
In other words, before the expiration of the to remain in possession during the period of
1-year period within which the judgment- redemption or within one year from and after 27 March
debtor or mortgagor may redeem the 1956, the date of the auction sale, and to collect the
property, the purchaser thereof is not rents or profits during the said period.
entitled, as a matter of right, to possession
of the same. Thus, while it is true that the It will be noted further that in the case at bar the period
Rules of Court allow the purchaser to of redemption had not yet expired when action was
receive the rentals if the purchased instituted in the court of origin, and that plaintiffs-
property is occupied by tenants, he is, appellees did not choose to take possession under
nevertheless, accountable to the judgment- Section 7, Act No. 3135, as amended, which is the law
debtor or mortgagor as the case may be, selected by the parties to govern the extrajudicial
for the amount so received and the same foreclosure of the chattel mortgage. Neither was there
will be duly credited against the redemption an allegation to that effect. Since plaintiffs-appellees'
price when the said debtor or mortgagor right to possess was not yet born at the filing of the
effects the redemption.Differently stated, complaint, there could be no violation or breach
the rentals receivable from tenants, thereof. Wherefore, the original complaint stated no
although they may be collected by the cause of action and was prematurely filed. For this
purchaser during the redemption period, do reason, the same should be ordered dismissed, even if
not belong to the latter but still pertain to there was no assignment of error to that effect. The
Supreme Court is clothed with ample authority to
review palpable errors not assigned as such if it finds
that their consideration is necessary in arriving at a just DE CASTRO, J.:
decision of the cases. 37
Petition for review on certiorari of the decision of the
It follows that the court below erred in requiring the Court of Appeals (now Intermediate Appellate Court)
mortgagors to pay rents for the year following the promulgated on August 27, 1981 in CA-G.R. No. SP-
foreclosure sale, as well as attorney's fees. 12731, setting aside certain Orders later specified
herein, of Judge Ricardo J. Francisco, as Presiding
FOR THE FOREGOING REASONS, the decision Judge of the Court of First instance of Rizal Branch VI,
appealed from is reversed and another one entered, issued in Civil Case No. 36040, as wen as the
dismissing the complaint. With costs against plaintiffs- resolution dated September 22, 1981 of the said
appellees. appellate court, denying petitioner's motion for
reconsideration.

It appears that in order to obtain financial

accommodations from herein petitioner Makati Leasing
and Finance Corporation, the private respondent
G.R. No. L-58469 May 16, 1983
Wearever Textile Mills, Inc., discounted and assigned
MAKATI LEASING and FINANCE several receivables with the former under a Receivable
CORPORATION, petitioner, Purchase Agreement. To secure the collection of the
vs. receivables assigned, private respondent executed a
WEAREVER TEXTILE MILLS, INC., and Chattel Mortgage over certain raw materials inventory
HONORABLE COURT OF APPEALS, respondents. as well as a machinery described as an Artos Aero
Dryer Stentering Range.
Loreto C. Baduan for petitioner.
Upon private respondent's default, petitioner filed a
Ramon D. Bagatsing & Assoc. (collaborating counsel) petition for extrajudicial foreclosure of the properties
for petitioner. mortgage to it. However, the Deputy Sheriff assigned
to implement the foreclosure failed to gain entry into
Jose V. Mancella for respondent. private respondent's premises and was not able to
effect the seizure of the aforedescribed machinery. the same being attached to the ground by means of
Petitioner thereafter filed a complaint for judicial bolts and the only way to remove it from respondent's
foreclosure with the Court of First Instance of Rizal, plant would be to drill out or destroy the concrete floor,
Branch VI, docketed as Civil Case No. 36040, the case the reason why all that the sheriff could do to enfore
before the lower court. the writ was to take the main drive motor of said
machinery. The appellate court rejected petitioner's
Acting on petitioner's application for replevin, the lower argument that private respondent is estopped from
court issued a writ of seizure, the enforcement of which claiming that the machine is real property by
was however subsequently restrained upon private constituting a chattel mortgage thereon.
respondent's filing of a motion for reconsideration. After
several incidents, the lower court finally issued on A motion for reconsideration of this decision of the
February 11, 1981, an order lifting the restraining order Court of Appeals having been denied, petitioner has
for the enforcement of the writ of seizure and an order brought the case to this Court for review by writ of
to break open the premises of private respondent to certiorari. It is contended by private respondent,
enforce said writ. The lower court reaffirmed its stand however, that the instant petition was rendered moot
upon private respondent's filing of a further motion for and academic by petitioner's act of returning the
reconsideration. subject motor drive of respondent's machinery after the
Court of Appeals' decision was promulgated.
On July 13, 1981, the sheriff enforcing the seizure
order, repaired to the premises of private respondent The contention of private respondent is without merit.
and removed the main drive motor of the subject When petitioner returned the subject motor drive, it
machinery. made itself unequivocably clear that said action was
without prejudice to a motion for reconsideration of the
The Court of Appeals, in certiorari and prohibition Court of Appeals decision, as shown by the receipt
proceedings subsequently filed by herein private duly signed by respondent's
respondent, set aside the Orders of the lower court representative. 1 Considering that petitioner has
and ordered the return of the drive motor seized by the reserved its right to question the propriety of the Court
sheriff pursuant to said Orders, after ruling that the of Appeals' decision, the contention of private
machinery in suit cannot be the subject of replevin, respondent that this petition has been mooted by such
much less of a chattel mortgage, because it is a real return may not be sustained.
property pursuant to Article 415 of the new Civil Code,
The next and the more crucial question to be resolved as personality. Finally, unlike in the Iya
in this Petition is whether the machinery in suit is real cases, Lopez vs. Orosa, Jr. & Plaza
or personal property from the point of view of the Theatre, Inc. & Leung Yee vs. F.L. Strong
parties, with petitioner arguing that it is a personality, Machinery & Williamson, wherein third
while the respondent claiming the contrary, and was persons assailed the validity of the chattel
sustained by the appellate court, which accordingly mortgage, it is the defendants-appellants
held that the chattel mortgage constituted thereon is themselves, as debtors-mortgagors, who
null and void, as contended by said respondent. are attacking the validity of the chattel
mortgage in this case. The doctrine of
A similar, if not Identical issue was raised in Tumalad v. estoppel therefore applies to the herein
Vicencio, 41 SCRA 143 where this Court, speaking defendants-appellants, having treated the
through Justice J.B.L. Reyes, ruled: subject house as personality.

Although there is no specific statement Examining the records of the instant case, We find no
referring to the subject house as personal logical justification to exclude the rule out, as the
property, yet by ceding, selling or appellate court did, the present case from the
transferring a property by way of chattel application of the abovequoted pronouncement. If a
mortgage defendants-appellants could only house of strong materials, like what was involved in the
have meant to convey the house as above Tumalad case, may be considered as personal
chattel, or at least, intended to treat the property for purposes of executing a chattel mortgage
same as such, so that they should not now thereon as long as the parties to the contract so agree
be allowed to make an inconsistent stand and no innocent third party will be prejudiced thereby,
by claiming otherwise. Moreover, the there is absolutely no reason why a machinery, which
subject house stood on a rented lot to is movable in its nature and becomes immobilized only
which defendants-appellants merely had a by destination or purpose, may not be likewise treated
temporary right as lessee, and although as such. This is really because one who has so agreed
this can not in itself alone determine the is estopped from denying the existence of the chattel
status of the property, it does so when mortgage.
combined with other factors to sustain the
interpretation that the parties, particularly In rejecting petitioner's assertion on the applicability of
the mortgagors, intended to treat the house the Tumalad doctrine, the Court of Appeals lays stress
on the fact that the house involved therein was built on not render a contract void ab initio, but can only be a
a land that did not belong to the owner of such house. ground for rendering said contract voidable, or
But the law makes no distinction with respect to the annullable pursuant to Article 1390 of the new Civil
ownership of the land on which the house is built and Code, by a proper action in court. There is nothing on
We should not lay down distinctions not contemplated record to show that the mortgage has been annulled.
by law. Neither is it disclosed that steps were taken to nullify
the same. On the other hand, as pointed out by
It must be pointed out that the characterization of the petitioner and again not refuted by respondent, the
subject machinery as chattel by the private respondent latter has indubitably benefited from said contract.
is indicative of intention and impresses upon the Equity dictates that one should not benefit at the
property the character determined by the parties. As expense of another. Private respondent could not now
stated inStandard Oil Co. of New York v. Jaramillo, 44 therefore, be allowed to impugn the efficacy of the
Phil. 630, it is undeniable that the parties to a contract chattel mortgage after it has benefited therefrom,
may by agreement treat as personal property that
which by nature would be real property, as long as no From what has been said above, the error of the
interest of third parties would be prejudiced thereby. appellate court in ruling that the questioned machinery
is real, not personal property, becomes very apparent.
Private respondent contends that estoppel cannot Moreover, the case of Machinery and Engineering
apply against it because it had never represented nor Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by
agreed that the machinery in suit be considered as said court is not applicable to the case at bar, the
personal property but was merely required and nature of the machinery and equipment involved
dictated on by herein petitioner to sign a printed form therein as real properties never having been disputed
of chattel mortgage which was in a blank form at the nor in issue, and they were not the subject of a Chattel
time of signing. This contention lacks persuasiveness. Mortgage. Undoubtedly, the Tumalad case bears more
As aptly pointed out by petitioner and not denied by the nearly perfect parity with the instant case to be the
respondent, the status of the subject machinery as more controlling jurisprudential authority.
movable or immovable was never placed in issue
before the lower court and the Court of Appeals except WHEREFORE, the questioned decision and resolution
in a supplemental memorandum in support of the of the Court of Appeals are hereby reversed and set
petition filed in the appellate court. Moreover, even aside, and the Orders of the lower court are hereby
granting that the charge is true, such fact alone does reinstated, with costs against the private respondent.
 compliance with the writ of execution issued in said
case. The corresponding definite deed of sale was
issued to him on October 22, 1952, upon expiration of
the period of redemption. When Evangelista sought to
G.R. No. L-11139 April 23, 1958
take possession of the house, Rivera refused to
SANTOS EVANGELISTA, petitioner, surrender it, upon the ground that he had leased the
vs. property from the Alto Surety & Insurance Co., Inc. —
ALTO SURETY & INSURANCE CO., respondent herein — and that the latter is now the true
INC., respondent. owner of said property. It appears that on May 10,
1952, a definite deed of sale of the same house had
Gonzalo D. David for petitioner. been issued to respondent, as the highest bidder at an
Raul A. Aristorenas and Benjamin Relova for auction sale held, on September 29, 1950, in
respondent. compliance with a writ of execution issued in Civil
Case No. 6268 of the same court, entitled "Alto Surety
CONCEPCION, J.: & Insurance Co., Inc. vs. Maximo Quiambao, Rosario
Guevara and Ricardo Rivera," in which judgment, for
This is an appeal by certiorari from a decision of the the sum of money, had been rendered in favor
Court of Appeals. respondent herein, as plaintiff therein. Hence, on June
13, 1953, Evangelista instituted the present action
Briefly, the facts are: On June 4, 1949, petitioner against respondent and Ricardo Rivera, for the
herein, Santos Evangelista, instituted Civil Case No. purpose of establishing his (Evangelista) title over said
8235 of the Court of First, Instance of Manila entitled " house, securing possession thereof, apart from
Santos Evangelista vs. Ricardo Rivera," for a sum of recovering damages.
money. On the same date, he obtained a writ of
attachment, which levied upon a house, built by Rivera In its answer, respondent alleged, in substance, that it
on a land situated in Manila and leased to him, by filing has a better right to the house, because the sale
copy of said writ and the corresponding notice of made, and the definite deed of sale executed, in its
attachment with the Office of the Register of Deeds of favor, on September 29, 1950 and May 10, 1952,
Manila, on June 8, 1949. In due course, judgment was respectively, precede the sale to Evangelista (October
rendered in favor of Evangelista, who, on October 8, 8, 1951) and the definite deed of sale in his favor
1951, bought the house at public auction held in (October 22, 1952). It, also, made some special
defenses which are discussed hereafter. Rivera, in having in his possession or under his control,
effect, joined forces with respondent. After due trial, the such credits or other personal property, or with,
Court of First Instance of Manila rendered judgment for his agent, a copy of the order, and a notice that
Evangelista, sentencing Rivera and respondent to the debts owing by him to the defendant, and the
deliver the house in question to petitioner herein and to credits and other personal property in his
pay him, jointly and severally, forty pesos (P40.00) a possession, or under his control, belonging to the
month from October, 1952, until said delivery, plus defendant, are attached in pursuance of such
costs. order. (Emphasis ours.)

On appeal taken by respondent, this decision was However, the Court of Appeals seems to have been of
reversed by the Court of Appeals, which absolved said the opinion, also, that the house of Rivera should have
respondent from the complaint, upon the ground that, been attached in accordance with subsection (c) of
although the writ of attachment in favor of Evangelista said section 7, as "personal property capable of
had been filed with the Register of Deeds of Manila manual delivery, by taking and safely keeping in his
prior to the sale in favor of respondent, Evangelista did custody", for it declared that "Evangelists could not
not acquire thereby a preferential lien, the attachment have . . . validly purchased Ricardo Rivera's house
having been levied as if the house in question were from the sheriff as the latter was not in possession
immovable property, although in the opinion of the thereof at the time he sold it at a public auction."
Court of Appeals, it is "ostensibly a personal property."
As such, the Court of Appeals held, "the order of Evangelista now seeks a review, by certiorari, of this
attachment . . . should have been served in the decision of the Court of Appeals. In this connection, it
manner provided in subsection (e) of section 7 of Rule is not disputed that although the sale to the respondent
59," of the Rules of Court, reading: preceded that made to Evangelists, the latter would
have a better right if the writ of attachment, issued in
The property of the defendant shall be attached his favor before the sale to the respondent, had been
by the officer executing the order in the following properly executed or enforced. This question, in turn,
manner: depends upon whether the house of Ricardo Rivera is
real property or not. In the affirmative case, the
(e) Debts and credits, and other personal applicable provision would be subsection (a) of section
property not capable of manual delivery, by 7, Rule 59 of the Rules of Court, pursuant to which the
leaving with the person owing such debts, or attachment should be made "by filing with the registrar
of deeds a copy of the order, together with a (Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard
description of the property attached, and a notice that it Oil Co. of New York vs.Jaramillo, 44 Phil., 630; De
is attached, and by leaving a copy of such order, Jesus vs. Juan Dee Co., Inc., 72 Phil., 464). However,
description, and notice with the occupant of the this view is good only insofar as the contracting
property, if any there be." parties are concerned. It is based, partly, upon the
principle of estoppel. Neither this principle, nor said
Respondent maintains, however, and the Court of view, is applicable to strangers to said contract. Much
Appeals held, that Rivera's house is personal property, less is it in point where there has been no
the levy upon which must be made in conformity with contractwhatsoever, with respect to the status of the
subsections (c) and (e) of said section 7 of Rule 59. house involved, as in the case at bar. Apart from this,
Hence, the main issue before us is whether a house, in Manarang vs. Ofilada (99 Phil., 108; 52 Off. Gaz.,
constructed the lessee of the land on which it is built, 3954), we held:
should be dealt with, for purpose, of attachment, as
immovable property, or as personal property. The question now before us, however, is: Does
the fact that the parties entering into a contract
It is, our considered opinion that said house is not regarding a house gave said property the
personal property, much less a debt, credit or other consideration of personal property in their
personal property not capable of manual delivery, but contract, bind the sheriff in advertising the
immovable property. As explicitly held, in property's sale at public auction as personal
Laddera vs. Hodges (48 Off. Gaz., 5374), "a true property? It is to be remembered that in the case
building (not merely superimposed on the soil) is at bar the action was to collect a loan secured by
immovable or real property, whether it is erected by the a chattel mortgage on the house. It is also to be
owner of the land or by usufructuary or lessee. This is remembered that in practice it is the judgment
the doctrine of our Supreme Court in Leung creditor who points out to the sheriff the
Yee vs. Strong Machinery Company, 37 Phil., 644. And properties that the sheriff is to levy upon in
it is amply supported by the rulings of the French execution, and the judgment creditor in the case
Court. . . ." at bar is the party in whose favor the owner of
the house had conveyed it by way of chattel
It is true that the parties to a deed of chattel mortgage mortgage and, therefore, knew its consideration
may agree to consider a house as personal property as personal property.
for purposes of said contract
These considerations notwithstanding, we hold official and public guidance and would prevent
that the rules on execution do not allow, and, we confusion and misunderstanding.
should notinterpret them in such a way as to
allow, the special consideration that parties to a We, therefore, declare that the house of mixed
contract may have desired to impart to real materials levied upon on execution, although
estate, for example, as personal property, when subject of a contract of chattel mortgage between
they are, not ordinarily so. Sales on execution the owner and a third person, is real property
affect the public and third persons. The within the purview of Rule 39, section 16, of the
regulation governing sales on execution are for Rules of Court as it has become a permanent
public officials to follow. The form of proceedings fixture of the land, which, is real property. (42
prescribed for each kind of property is suited to Am. Jur. 199-200; Leung Yee vs. Strong
its character, not to the character, which the Machinery Co., 37 Phil., 644;
parties have given to it or desire to give it. When Republic vs. Ceniza, et al., 90 Phil., 544;
the rules speak of personal property, property Ladera,, et al. vs. Hodges, et al., [C.A.] Off. Gaz.
which is ordinarily so considered is meant; and 5374.)" (Emphasis ours.)
when real property is spoken of, it means
property which is generally known as real The foregoing considerations apply, with equal force,
property. The regulations were never intended to to the conditions for the levy of attachment, for it
suit the consideration that parties may have similarly affects the public and third persons.
privately given to the property levied upon.
It is argued, however, that, even if the house in
Enforcement of regulations would be difficult
question were immovable property, its attachment by
were the convenience or agreement of private
Evangelista was void or ineffective, because, in the
parties to determine or govern the nature of the
language of the Court of Appeals, "after presenting a
proceedings. We therefore hold that the mere
Copy of the order of attachment in the Office of the
fact that a house was the subject of the chattel
Register of Deeds, the person who might then be in
mortgage and was considered as personal
possession of the house, the sheriff took no pains to
property by the parties does not make said
serve Ricardo Rivera, or other copies thereof." This
house personal property for purposes of the
finding of the Court of Appeals is neither conclusive
notice to be given for its sale of public auction.
upon us, nor accurate.
This ruling is demanded by the need for a
definite, orderly and well defined regulation for
The Record on Appeal, annexed to the petition for deed executed by the sheriff in favor of respondent,
Certiorari, shows that petitioner alleged, in paragraph 3 the same became the "legitimate owner of the house"
of the complaint, that he acquired the house in in question; (2) that respondent "is a buyer in good
question "as a consequence of the levy of an faith and for value"; (3) that respondent "took
attachment and execution of the judgment in Civil possession and control of said house"; (4) that "there
Case No. 8235" of the Court of First Instance of was no valid attachment by the plaintiff and/or the
Manila. In his answer (paragraph 2), Ricardo Sheriff of Manila of the property in question as neither
Rivera admitted said attachment execution of took actual or constructive possession or control of the
judgment. He alleged, however, by way a of special property at any time"; and (5) "that the alleged
defense, that the title of respondent "is superior to that registration of plaintiff's attachment, certificate of sale
of plaintiff because it is based on a public instrument," and final deed in the Office of Register of Deeds,
whereas Evangelista relied upon a "promissory note" Manila, if there was any, is likewise, not valid as there
which "is only a private instrument"; that said Public is no registry of transactions covering houses erected
instrument in favor of respondent "is superior also to on land belonging to or leased from another." In this
the judgment in Civil Case No. 8235"; and that manner, respondent claimed a better right, merely
plaintiff's claim against Rivera amounted only to P866, under the theory that, in case of double sale of
"which is much below the real value" of said house, for immovable property, the purchaser who first obtains
which reason it would be "grossly unjust to acquire the possession in good faith, acquires title, if the sale has
property for such an inadequate consideration." not been "recorded . . . in the Registry of Property"
Thus, Rivera impliedly admitted that his house had (Art. 1544, Civil Code of the Philippines), and that the
been attached, that the house had been sold to writ of attachment and the notice of attachment in favor
Evangelista in accordance with the requisite of Evangelista should be considered unregistered, "as
formalities, and that said attachment was valid, there is no registry of transactions covering houses
although allegedly inferior to the rights of respondent, erected on land belonging to or leased from another."
and the consideration for the sale to Evangelista was In fact, said article 1544 of the Civil Code of the
claimed to be inadequate. Philippines, governing double sales, was quoted on
page 15 of the brief for respondent in the Court of
Respondent, in turn, denied the allegation in said Appeals, in support of its fourth assignment of error
paragraph 3 of the complaint, but only " for the therein, to the effect that it "has preference or priority
reasons stated in its special defenses" namely: (1) that over the sale of the same property" to Evangelista.
by virtue of the sale at public auction, and the final
In other words, there was no issue on whether copy of that the defendants had impliedly admitted-in said
the writ and notice of attachment had been served on pleadings and briefs, as well as by their conduct during
Rivera. No evidence whatsoever, to the effect that the entire proceedings, prior to the rendition of the
Rivera had not been served with copies of said writ decision of the Court of Appeals — that Rivera had
and notice, was introduced in the Court of First received copies of said documents; and that, for this
Instance. In its brief in the Court of reason, evidently, no proof was introduced thereon,
Appeals, respondent did not aver, or even, intimate, we, are of the opinion, and so hold that the finding of
that no such copies were served by the sheriff upon the Court of Appeals to the effect that said copies had
Rivera. Service thereof on Rivera had been impliedly not been served upon Rivera is based upon a
admitted by the defendants, in their respective misapprehension of the specific issues involved therein
answers, and by their behaviour throughout the and goes beyond the range of such issues, apart from
proceedings in the Court of First Instance, and, as being contrary to the aforementioned admission by the
regards respondent, in the Court of Appeals. In fact, parties, and that, accordingly, a grave abuse of
petitioner asserts in his brief herein (p. 26) that copies discretion was committed in making said finding, which
of said writ and notice were delivered to Rivera, is, furthermore, inaccurate.
simultaneously with copies of the complaint, upon
service of summons, prior to the filing of copies of said Wherefore, the decision of the Court of Appeals is
writ and notice with the register deeds, and the truth of hereby reversed, and another one shall be entered
this assertion has not been directly and positively affirming that of the Court of First Instance of Manila,
challenged or denied in the brief filed before us by with the costs of this instance against respondent, the
respondent herein. The latter did not dare therein to go Alto Surety and Insurance Co., Inc. It is so ordered.
beyond making a statement — for the first time in the
course of these proceedings, begun almost five (5)
years ago (June 18, 1953) — reproducing substantially
the aforementioned finding of the Court of Appeals and
then quoting the same. G.R. No. 120098 October 2, 2001
Considering, therefore, that neither the pleadings, nor RUBY L. TSAI, petitioner,
the briefs in the Court of Appeals, raised an issue on vs.
whether or not copies of the writ of attachment and HON. COURT OF APPEALS, EVER TEXTILE MILLS,
notice of attachment had been served upon Rivera; INC. and MAMERTO R VILLALUZ, respondents.
x---------------------------------------------------------x (REAL AND CHATTEL)

[G.R. No. 120109. October 2, 2001.] xxx xxx xxx

PHILIPPINE BANK OF The MORTGAGOR(S) hereby transfer(s) and

COMMUNICATIONS, petitioner, convey(s), by way of First Mortgage, to the
vs. MORTGAGEE, . . . certain parcel(s) of land,
HON. COURT OF APPEALS, EVER TEXTILE MILLS together with all the buildings and improvements
and MAMERTO R VILLALUZ, respondents. now existing or which may hereafter exist
thereon, situated in . . .
QUISUMBING, J.:
"Annex A"
1
These consolidated cases assail the decision of the
Court of Appeals in CA-G.R. CV No. 32986, affirming (Real and Chattel Mortgage executed by Ever
the decision2 of the Regional Trial Court of Manila, Textile Mills in favor of PBCommunications —
Branch 7, in Civil Case No. 89-48265. Also assailed is continued)
respondent court's resolution denying petitioners'
motion for reconsideration. LIST OF MACHINERIES & EQUIPMENT

On November 26, 1975, respondent Ever Textile Mills, A. Forty Eight (48) units of Vayrow Knitting
Inc. (EVERTEX) obtained a three million peso Machines-Tompkins made in Hongkong:
(P3,000,000.00) loan from petitioner Philippine Bank of
Communications (PBCom). As security for the loan, Serial Numbers Size of Machines
EVERTEX executed in favor of PBCom, a deed of
xxx xxx xxx
Real and Chattel Mortgage over the lot under TCT No.
372097, where its factory stands, and the chattels B. Sixteen (16) sets of Vayrow Knitting Machines
located therein as enumerated in a schedule attached made in Taiwan.
to the mortgage contract. The pertinent portions of the
Real and Chattel Mortgage are quoted below: xxx xxx xxx

MORTGAGE C. Two (2) Circular Knitting Machines made in

West Germany.
 xxx xxx xxx IV. Any and all replacements, substitutions,
additions, increases and accretions to above
D. Four (4) Winding Machines. properties.

xxx xxx xxx xxx xxx xxx3

SCHEDULE "A" On April 23, 1979, PBCom granted a second loan of

P3,356,000.00 to EVERTEX. The loan was secured by
I. TCT # 372097 - RIZAL a Chattel Mortgage over personal properties
enumerated in a list attached thereto. These listed
xxx xxx xxx
properties were similar to those listed in Annex A of the
II. Any and all buildings and improvements now first mortgage deed.
existing or hereafter to exist on the above-
After April 23, 1979, the date of the execution of the
mentioned lot.
second mortgage mentioned above, EVERTEX
III. MACHINERIES & EQUIPMENT situated, purchased various machines and equipments.
located and/or installed on the above-mentioned
On November 19, 1982, due to business reverses,
lot located at . . .
EVERTEX filed insolvency proceedings docketed as
(a) Forty eight sets (48) Vayrow Knitting SP Proc. No. LP-3091-P before the defunct Court of
Machines . . . First Instance of Pasay City, Branch XXVIII. The CFI
issued an order on November 24, 1982 declaring the
(b) Sixteen sets (16) Vayrow Knitting Machines . . corporation insolvent. All its assets were taken into the
. custody of the Insolvency Court, including the
collateral, real and personal, securing the two
(c) Two (2) Circular Knitting Machines . . . mortgages as abovementioned.

(d) Two (2) Winding Machines . . . In the meantime, upon EVERTEX's failure to meet its
obligation to PBCom, the latter commenced
(e) Two (2) Winding Machines . . . extrajudicial foreclosure proceedings against
EVERTEX under Act 3135, otherwise known as "An
Act to Regulate the Sale of Property under Special
Powers Inserted in or Annexed to Real Estate Further, EVERTEX averred that PBCom, without any
Mortgages" and Act 1506 or "The Chattel Mortgage legal or factual basis, appropriated the contested
Law". A Notice of Sheriff's Sale was issued on properties, which were not included in the Real and
December 1, 1982. Chattel Mortgage of November 26, 1975 nor in the
Chattel Mortgage of April 23, 1979, and neither were
On December 15, 1982, the first public auction was those properties included in the Notice of Sheriff's Sale
held where petitioner PBCom emerged as the highest dated December 1, 1982 and Certificate of Sale . . .
bidder and a Certificate of Sale was issued in its favor dated December 15, 1982.
on the same date. On December 23, 1982, another
public auction was held and again, PBCom was the The disputed properties, which were valued at
highest bidder. The sheriff issued a Certificate of Sale P4,000,000.00, are: 14 Interlock Circular Knitting
on the same day. Machines, 1 Jet Drying Equipment, 1 Dryer Equipment,
1 Raisin Equipment and 1 Heatset Equipment.
On March 7, 1984, PBCom consolidated its ownership
over the lot and all the properties in it. In November The RTC found that the lease and sale of said
1986, it leased the entire factory premises to petitioner personal properties were irregular and illegal because
Ruby L. Tsai for P50,000.00 a month. On May 3, 1988, they were not duly foreclosed nor sold at the
PBCom sold the factory, lock, stock and barrel to Tsai December 15, 1982 auction sale since these were not
for P9,000,000.00, including the contested included in the schedules attached to the mortgage
machineries. contracts. The trial court decreed:

On March 16, 1989, EVERTEX filed a complaint for WHEREFORE, judgment is hereby rendered in
annulment of sale, reconveyance, and damages with favor of plaintiff corporation and against the
the Regional Trial Court against PBCom, alleging inter defendants:
alia that the extrajudicial foreclosure of subject
mortgage was in violation of the Insolvency Law. 1. Ordering the annulment of the sale executed
EVERTEX claimed that no rights having been by defendant Philippine Bank of Communications
transmitted to PBCom over the assets of insolvent in favor of defendant Ruby L. Tsai on May 3,
EVERTEX, therefore Tsai acquired no rights over such 1988 insofar as it affects the personal properties
assets sold to her, and should reconvey the assets. listed in par. 9 of the complaint, and their return
to the plaintiff corporation through its assignee,
 plaintiff Mamerto R. Villaluz, for disposition by the August 31, 1994, the dispositive portion of which
Insolvency Court, to be done within ten (10) days reads:
from finality of this decision;
WHEREFORE, except for the deletion therefrom of the
2. Ordering the defendants to pay jointly and award; for exemplary damages, and reduction of the
severally the plaintiff corporation the sum of actual damages, from P100,000.00 to P20,000.00 per
P5,200,000.00 as compensation for the use and month, from November 1986 until subject personal
possession of the properties in question from properties are restored to appellees, the judgment
November 1986 to February 1991 and appealed from is hereby AFFIRMED, in all other
P100,000.00 every month thereafter, with interest respects. No pronouncement as to costs.5
thereon at the legal rate per annum until full
payment; Motion for reconsideration of the above decision
having been denied in the resolution of April 28, 1995,
3. Ordering the defendants to pay jointly and PBCom and Tsai filed their separate petitions for
severally the plaintiff corporation the sum of review with this Court.
P50,000.00 as and for attorney's fees and
expenses of litigation; In G.R No. 120098, petitioner Tsai ascribed the
following errors to the respondent court:
4. Ordering the defendants to pay jointly and
severally the plaintiff corporation the sum of I
P200,000.00 by way of exemplary damages;
THE HONORABLE COURT OF APPEALS
5. Ordering the dismissal of the counterclaim of (SECOND DIVISION) ERRED IN EFFECT
the defendants; and MAKING A CONTRACT FOR THE PARTIES BY
TREATING THE 1981 ACQUIRED
6. Ordering the defendants to proportionately pay MACHINERIES AS CHATTELS INSTEAD OF
the costs of suit. REAL PROPERTIES WITHIN THEIR EARLIER
1975 DEED OF REAL AND CHATTEL
SO ORDERED.4 MORTGAGE OR 1979 DEED OF CHATTEL
MORTGAGE.
Dissatisfied, both PBCom and Tsai appealed to the
Court of Appeals, which issued its decision dated II
 THE HONORABLE COURT OF APPEALS I.
(SECOND DIVISION) ERRED IN HOLDING
THAT THE DISPUTED 1981 MACHINERIES DID THE COURT OF APPEALS VALIDLY DECREE
ARE NOT REAL PROPERTIES DEEMED PART THE MACHINERIES LISTED UNDER PARAGRAPH 9
OF THE MORTGAGE — DESPITE THE CLEAR OF THE COMPLAINT BELOW AS PERSONAL
IMPORT OF THE EVIDENCE AND APPLICABLE PROPERTY OUTSIDE OF THE 1975 DEED OF REAL
RULINGS OF THE SUPREME COURT. ESTATE MORTGAGE AND EXCLUDED THEM FROM
THE REAL PROPERTY EXTRAJUDICIALLY
III FORECLOSED BY PBCOM DESPITE THE
PROVISION IN THE 1975 DEED THAT ALL AFTER-
THE HONORABLE COURT OF APPEALS ACQUIRED PROPERTIES DURING THE LIFETIME
(SECOND DIVISION) ERRED IN DEEMING OF THE MORTGAGE SHALL FORM PART THEREOF,
PETITIONER A PURCHASER IN BAD FAITH. AND DESPITE THE UNDISPUTED FACT THAT SAID
MACHINERIES ARE BIG AND HEAVY, BOLTED OR
IV CEMENTED ON THE REAL PROPERTY
MORTGAGED BY EVER TEXTILE MILLS TO
THE HONORABLE COURT OF APPEALS
PBCOM, AND WERE ASSESSED FOR REAL
(SECOND DIVISION) ERRED IN ASSESSING
ESTATE TAX PURPOSES?
PETITIONER ACTUAL DAMAGES,
ATTORNEY'S FEES AND EXPENSES OF II
LITIGATION — FOR WANT OF VALID FACTUAL
AND LEGAL BASIS. CAN PBCOM, WHO TOOK POSSESSION OF THE
MACHINERIES IN QUESTION IN GOOD FAITH,
V EXTENDED CREDIT FACILITIES TO EVER TEXTILE
MILLS WHICH AS OF 1982 TOTALLED
THE HONORABLE COURT OF APPEALS
P9,547,095.28, WHO HAD SPENT FOR
(SECOND DIVISION) ERRED IN HOLDING
MAINTENANCE AND SECURITY ON THE DISPUTED
AGAINST PETITIONER'S ARGUMENTS ON
MACHINERIES AND HAD TO PAY ALL THE BACK
PRESCRIPTION AND LACHES.6
TAXES OF EVER TEXTILE MILLS BE LEGALLY
In G.R. No. 120098, PBCom raised the following COMPELLED TO RETURN TO EVER THE SAID
issues: MACHINERIES OR IN LIEU THEREOF BE
ASSESSED DAMAGES. IS THAT SITUATION legal basis. Finally, it asserts that the Court of Appeals
TANTAMOUNT TO A CASE OF UNJUST erred in assessing damages and attorney's fees
ENRICHMENT?7 against PBCom.

The principal issue, in our view, is whether or not the In opposition, private respondents argue that the
inclusion of the questioned properties in the foreclosed controverted units of machinery are not "real
properties is proper. The secondary issue is whether or properties" but chattels, and, therefore, they were not
not the sale of these properties to petitioner Ruby Tsai part of the foreclosed real properties, rendering the
is valid. lease and the subsequent sale thereof to Tsai a
nullity.12
For her part, Tsai avers that the Court of Appeals in
effect made a contract for the parties by treating the Considering the assigned errors and the arguments of
1981 acquired units of machinery as chattels instead of the parties, we find the petitions devoid of merit and
real properties within their earlier 1975 deed of Real ought to be denied.
and Chattel Mortgage or 1979 deed of Chattel
Mortgage.8 Additionally, Tsai argues that respondent Well settled is the rule that the jurisdiction of the
court erred in holding that the disputed 1981 Supreme Court in a petition for review on certiorari
machineries are not real properties.9 Finally, she under Rule 45 of the Revised Rules of Court is limited
contends that the Court of Appeals erred in holding to reviewing only errors of law, not of fact, unless the
against petitioner's arguments on prescription and factual findings complained of are devoid of support by
laches10 and in assessing petitioner actual damages, the evidence on record or the assailed judgment is
attorney's fees and expenses of litigation, for want of based on misapprehension of facts.13 This rule is
valid factual and legal basis.11 applied more stringently when the findings of fact of
the RTC is affirmed by the Court of Appeals.14
Essentially, PBCom contends that respondent court
erred in affirming the lower court's judgment decreeing The following are the facts as found by the RTC and
that the pieces of machinery in dispute were not duly affirmed by the Court of Appeals that are decisive of
foreclosed and could not be legally leased nor sold to the issues: (1) the "controverted machineries" are not
Ruby Tsai. It further argued that the Court of Appeals' covered by, or included in, either of the two mortgages,
pronouncement that the pieces of machinery in the Real Estate and Chattel Mortgage, and the pure
question were personal properties have no factual and Chattel Mortgage; (2) the said machineries were not
included in the list of properties appended to the Notice PBCOM and appellee EVERTEX was the typing
of Sale, and neither were they included in the Sheriff's in capital letters, immediately following the
Notice of Sale of the foreclosed properties.15 printed caption of mortgage, of the phrase "real
and chattel." So also, the "machineries and
Petitioners contend that the nature of the disputed equipment" in the printed form of the bank had to
machineries, i.e., that they were heavy, bolted or be inserted in the blank space of the printed
cemented on the real property mortgaged by contract and connected with the word "building"
EVERTEX to PBCom, make them ipso by typewritten slash marks. Now, then, if the
facto immovable under Article 415 (3) and (5) of the machineries in question were contemplated to be
New Civil Code. This assertion, however, does not included in the real estate mortgage, there would
settle the issue. Mere nuts and bolts do not foreclose have been no necessity to ink a chattel mortgage
the controversy. We have to look at the parties' intent. specifically mentioning as part III of Schedule A a
listing of the machineries covered thereby. It
While it is true that the controverted properties appear would have sufficed to list them as immovables
to be immobile, a perusal of the contract of Real and in the Deed of Real Estate Mortgage of the land
Chattel Mortgage executed by the parties herein gives and building involved.
us a contrary indication. In the case at bar, both the
trial and the appellate courts reached the same finding As regards the 1979 contract, the intention of the
that the true intention of PBCOM and the owner, parties is clear and beyond question. It refers
EVERTEX, is to treat machinery and equipment as solely tochattels. The inventory list of the
chattels. The pertinent portion of respondent appellate mortgaged properties is an itemization of sixty-
court's ruling is quoted below: three (63) individually described machineries
while the schedule listed only machines and
As stressed upon by appellees, appellant bank 2,996,880.50 worth of finished cotton fabrics and
treated the machineries as chattels; never as real natural cotton fabrics.16
properties. Indeed, the 1975 mortgage contract,
which was actually real and chattel mortgage, In the absence of any showing that this conclusion is
militates against appellants' posture. It should be baseless, erroneous or uncorroborated by the
noted that the printed form used by appellant evidence on record, we find no compelling reason to
bank was mainly for real estate mortgages. But depart therefrom.
reflective of the true intention of appellant
Too, assuming arguendo that the properties in question described therein and not like or substituted property
are immovable by nature, nothing detracts the parties thereafter acquired by the mortgagor and placed in the
from treating it as chattels to secure an obligation same depository as the property originally mortgaged,
under the principle of estoppel. As far back as Navarro anything in the mortgage to the contrary
v. Pineda, 9 SCRA 631 (1963), an immovable may be notwithstanding."
considered a personal property if there is a stipulation
as when it is used as security in the payment of an And, since the disputed machineries were acquired in
obligation where a chattel mortgage is executed over 1981 and could not have been involved in the 1975 or
it, as in the case at bar. 1979 chattel mortgages, it was consequently an error
on the part of the Sheriff to include subject machineries
In the instant case, the parties herein: (1) executed a with the properties enumerated in said chattel
contract styled as "Real Estate Mortgage and Chattel mortgages.
Mortgage," instead of just "Real Estate Mortgage" if
indeed their intention is to treat all properties included As the auction sale of the subject properties to PBCom
therein as immovable, and (2) attached to the said is void, no valid title passed in its favor. Consequently,
contract a separate "LIST OF MACHINERIES & the sale thereof to Tsai is also a nullity under the
EQUIPMENT". These facts, taken together, evince the elementary principle of nemo dat quod non habet, one
conclusion that the parties' intention is to treat these cannot give what one does not have.17
units of machinery as chattels. A fortiori, the contested
after-acquired properties, which are of the same Petitioner Tsai also argued that assuming that
description as the units enumerated under the title PBCom's title over the contested properties is a nullity,
"LIST OF MACHINERIES & EQUIPMENT," must also she is nevertheless a purchaser in good faith and for
be treated as chattels. value who now has a better right than EVERTEX.

Accordingly, we find no reversible error in the To the contrary, however, are the factual findings and
respondent appellate court's ruling that inasmuch as conclusions of the trial court that she is not a
the subject mortgages were intended by the parties to purchaser in good faith. Well-settled is the rule that the
involve chattels, insofar as equipment and machinery person who asserts the status of a purchaser in good
were concerned, the Chattel Mortgage Law applies, faith and for value has the burden of proving such
which provides in Section 7 thereof that: "a chattel assertion.18 Petitioner Tsai failed to discharge this
mortgage shall be deemed to cover only the property burden persuasively.
Moreover, a purchaser in good faith and for value is properties was filed within the reglementary period.
one who buys the property of another without notice Here, in our view, the doctrine of laches does not
that some other person has a right to or interest in apply. Note that upon petitioners' adamant refusal to
such property and pays a full and fair price for the heed EVERTEX's claim, respondent company
same, at the time of purchase, or before he has notice immediately filed an action to recover possession and
of the claims or interest of some other person in the ownership of the disputed properties. There is no
property.19Records reveal, however, that when Tsai evidence showing any failure or neglect on its part, for
purchased the controverted properties, she knew of an unreasonable and unexplained length of time, to do
respondent's claim thereon. As borne out by the that which, by exercising due diligence, could or should
records, she received the letter of respondent's have been done earlier. The doctrine of stale demands
counsel, apprising her of respondent's claim, dated would apply only where by reason of the lapse of time,
February 27, 1987.20 She replied thereto on March 9, it would be inequitable to allow a party to enforce his
1987.21 Despite her knowledge of respondent's claim, legal rights. Moreover, except for very strong reasons,
she proceeded to buy the contested units of machinery this Court is not disposed to apply the doctrine of
on May 3, 1988. Thus, the RTC did not err in finding laches to prejudice or defeat the rights of an owner.22
that she was not a purchaser in good faith.
As to the award of damages, the contested damages
Petitioner Tsai's defense of indefeasibility of Torrens are the actual compensation, representing rentals for
Title of the lot where the disputed properties are the contested units of machinery, the exemplary
located is equally unavailing. This defense refers to damages, and attorney's fees.
sale of lands and not to sale of properties situated
therein. Likewise, the mere fact that the lot where the As regards said actual compensation, the RTC
factory and the disputed properties stand is in awarded P100,000.00 corresponding to the unpaid
PBCom's name does not automatically make PBCom rentals of the contested properties based on the
the owner of everything found therein, especially in testimony of John Chua, who testified that the
view of EVERTEX's letter to Tsai enunciating its claim. P100,000.00 was based on the accepted practice in
banking and finance, business and investments that
Finally, petitioners' defense of prescription and laches the rental price must take into account the cost of
is less than convincing. We find no cogent reason to money used to buy them. The Court of Appeals did not
disturb the consistent findings of both courts below that give full credence to Chua's projection and reduced the
the case for the reconveyance of the disputed award to P20,000.00.
Basic is the rule that to recover actual damages, the unrealized rental income of subject machineries
amount of loss must not only be capable of proof but and equipments.
must actually be proven with reasonable degree of
certainty, premised upon competent proof or best The testimony of John Cua (sic) is nothing but an
evidence obtainable of the actual amount opinion or projection based on what is claimed to
thereof.23 However, the allegations of respondent be a practice in business and industry. But such
company as to the amount of unrealized rentals due a testimony cannot serve as the sole basis for
them as actual damages remain mere assertions assessing the actual damages complained of.
unsupported by documents and other competent What is more, there is no showing that had
evidence. In determining actual damages, the court appellant Tsai not taken possession of the
cannot rely on mere assertions, speculations, machineries and equipments in question,
conjectures or guesswork but must depend on somebody was willing and ready to rent the
competent proof and on the best evidence obtainable same for P100,000.00 a month.
regarding the actual amount of loss.24 However, we are
not prepared to disregard the following dispositions of xxx xxx xxx
the respondent appellate court:
Then, too, even assuming arguendo that the said
. . . In the award of actual damages under machineries and equipments could have
scrutiny, there is nothing on record warranting generated a rental income of P30,000.00 a
the said award of P5,200,000.00, representing month, as projected by witness Mamerto Villaluz,
monthly rental income of P100,000.00 from the same would have been a gross income.
November 1986 to February 1991, and the Therefrom should be deducted or removed,
additional award of P100,000.00 per month expenses for maintenance and repairs . . .
thereafter. Therefore, in the determination of the actual
damages or unrealized rental income sued upon,
As pointed out by appellants, the testimonial there is a good basis to calculate that at least
evidence, consisting of the testimonies of Jonh four months in a year, the machineries in dispute
(sic) Chua and Mamerto Villaluz, is shy of what is would have been idle due to absence of a lessee
necessary to substantiate the actual damages or while being repaired. In the light of the
allegedly sustained by appellees, by way of foregoing rationalization and computation, We
believe that a net unrealized rental income of
 P20,000.00 a month, since November 1986, is accordance with the circumstances of each
more realistic and fair.25 case.29 While the imposition of exemplary damages is
justified in this case, equity calls for its reduction.
As to exemplary damages, the RTC awarded In Inhelder Corporation v. Court of Appeals, G.R. No.
P200,000.00 to EVERTEX which the Court of Appeals L-52358, 122 SCRA 576, 585, (May 30, 1983), we laid
deleted. But according to the CA, there was no clear down the rule that judicial discretion granted to the
showing that petitioners acted malevolently, wantonly courts in the assessment of damages must always be
and oppressively. The evidence, however, shows exercised with balanced restraint and measured
otherwise.It is a requisite to award exemplary damages objectivity. Thus, here the award of exemplary
that the wrongful act must be accompanied by bad damages by way of example for the public good should
faith,26 and the guilty acted in a wanton, fraudulent, be reduced to P100,000.00.
oppressive, reckless or malevolent manner.27 As
previously stressed, petitioner Tsai's act of purchasing By the same token, attorney's fees and other expenses
the controverted properties despite her knowledge of of litigation may be recovered when exemplary
EVERTEX's claim was oppressive and subjected the damages are awarded.30 In our view, RTC's award of
already insolvent respondent to gross disadvantage. P50,000.00 as attorney's fees and expenses of
Petitioner PBCom also received the same letters of litigation is reasonable, given the circumstances in
Atty. Villaluz, responding thereto on March 24, these cases.
1987.28 Thus, PBCom's act of taking all the properties
found in the factory of the financially handicapped WHEREFORE, the petitions are DENIED. The
respondent, including those properties not covered by assailed decision and resolution of the Court of
or included in the mortgages, is equally oppressive and Appeals in CA-G.R. CV No. 32986 are AFFIRMED
tainted with bad faith. Thus, we are in agreement with WITH MODIFICATIONS. Petitioners Philippine Bank of
the RTC that an award of exemplary damages is Communications and Ruby L. Tsai are hereby ordered
proper. to pay jointly and severally Ever Textile Mills, Inc. the
following: (1) P20,000.00 per month, as compensation
The amount of P200,000.00 for exemplary damages is, for the use and possession of the properties in
however, excessive. Article 2216 of the Civil Code question from November 198631 until subject personal
provides that no proof of pecuniary loss is necessary properties are restored to respondent corporation; (2)
for the adjudication of exemplary damages, their P100,000.00 by way of exemplary damages, and (3)
assessment being left to the discretion of the court in
P50,000.00 as attorney's fees and litigation expenses. injunction is the validity of two [2] search warrants
Costs against petitioners. issued on December 7, 1982 by respondent Judge
Ernani Cruz-Pano, Executive Judge of the then Court
of First Instance of Rizal [Quezon City], under which
the premises known as No. 19, Road 3, Project 6,
Quezon City, and 784 Units C & D, RMS Building,
Quezon Avenue, Quezon City, business addresses of
the "Metropolitan Mail" and "We Forum" newspapers,
G.R. No. L-64261 December 26, 1984 respectively, were searched, and office and printing
machines, equipment, paraphernalia, motor vehicles
JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI and other articles used in the printing, publication and
SORIANO and J. BURGOS MEDIA SERVICES, distribution of the said newspapers, as well as
INC.,petitioners, numerous papers, documents, books and other written
vs. literature alleged to be in the possession and control of
THE CHIEF OF STAFF, ARMED FORCES OF THE petitioner Jose Burgos, Jr. publisher-editor of the "We
PHILIPPINES, THE CHIEF, PHILIPPINE Forum" newspaper, were seized.
CONSTABULARY, THE CHIEF LEGAL OFFICER,
PRESIDENTIAL SECURITY COMMAND, THE Petitioners further pray that a writ of preliminary
JUDGE ADVOCATE GENERAL, ET AL., respondents. mandatory and prohibitory injunction be issued for the
return of the seized articles, and that respondents,
Lorenzo M. Tañada, Wigberto E. Tañada, Martiniano "particularly the Chief Legal Officer, Presidential
Vivo, Augusto Sanchez, Joker P. Arroyo, Jejomar Security Command, the Judge Advocate General, AFP,
Binay and Rene Saguisag for petitioners. the City Fiscal of Quezon City, their representatives,
assistants, subalterns, subordinates, substitute or
The Solicitor General for respondents. successors" be enjoined from using the articles thus
seized as evidence against petitioner Jose Burgos, Jr.
and the other accused in Criminal Case No. Q- 022782
of the Regional Trial Court of Quezon City,
ESCOLIN, J.:
entitled People v. Jose Burgos, Jr. et al. 1
Assailed in this petition for certiorari prohibition and
mandamus with preliminary mandatory and prohibitory
In our Resolution dated June 21, 1983, respondents circumstance justifies this Court to exercise its inherent
were required to answer the petition. The plea for power to suspend its rules. In the words of the revered
preliminary mandatory and prohibitory injunction was Mr. Justice Abad Santos in the case of C. Vda. de
set for hearing on June 28, 1983, later reset to July 7, Ordoveza v. Raymundo, 4 "it is always in the power of
1983, on motion of the Solicitor General in behalf of the court [Supreme Court] to suspend its rules or to
respondents. except a particular case from its operation, whenever
the purposes of justice require it...".
At the hearing on July 7, 1983, the Solicitor General,
while opposing petitioners' prayer for a writ of Respondents likewise urge dismissal of the petition on
preliminary mandatory injunction, manifested that ground of laches. Considerable stress is laid on the
respondents "will not use the aforementioned articles fact that while said search warrants were issued on
as evidence in the aforementioned case until final December 7, 1982, the instant petition impugning the
resolution of the legality of the seizure of the same was filed only on June 16, 1983 or after the
aforementioned articles. ..." 2 With this manifestation, lapse of a period of more than six [6] months.
the prayer for preliminary prohibitory injunction was
rendered moot and academic. Laches is failure or negligence for an unreasonable
and unexplained length of time to do that which, by
Respondents would have this Court dismiss the exercising due diligence, could or should have been
petition on the ground that petitioners had come to this done earlier. It is negligence or omission to assert a
Court without having previously sought the quashal of right within a reasonable time, warranting a
the search warrants before respondent judge. Indeed, presumption that the party entitled to assert it either
petitioners, before impugning the validity of the has abandoned it or declined to assert it. 5
warrants before this Court, should have filed a motion
to quash said warrants in the court that issued Petitioners, in their Consolidated Reply, explained the
them. 3 But this procedural flaw notwithstanding, we reason for the delay in the filing of the petition thus:
take cognizance of this petition in view of the
seriousness and urgency of the constitutional issues Respondents should not find fault, as they
raised not to mention the public interest generated by now do [p. 1, Answer, p. 3, Manifestation]
the search of the "We Forum" offices, which was with the fact that the Petition was filed on
televised in Channel 7 and widely publicized in all June 16, 1983, more than half a year after
metropolitan dailies. The existence of this special the petitioners' premises had been raided.
 The climate of the times has given the contrary, the extrajudicial efforts exerted by
petitioners no other choice. If they had petitioners quite evidently negate the presumption that
waited this long to bring their case to court, they had abandoned their right to the possession of the
it was because they tried at first to exhaust seized property, thereby refuting the charge of laches
other remedies. The events of the past against them.
eleven fill years had taught them that
everything in this country, from release of Respondents also submit the theory that since
public funds to release of detained persons petitioner Jose Burgos, Jr. had used and marked as
from custody, has become a matter of evidence some of the seized documents in Criminal
executive benevolence or largesse Case No. Q- 022872, he is now estopped from
challenging the validity of the search warrants. We do
Hence, as soon as they could, petitioners, not follow the logic of respondents. These documents
upon suggestion of persons close to the lawfully belong to petitioner Jose Burgos, Jr. and he
President, like Fiscal Flaminiano, sent a can do whatever he pleases with them, within legal
letter to President Marcos, through counsel bounds. The fact that he has used them as evidence
Antonio Coronet asking the return at least does not and cannot in any way affect the validity or
of the printing equipment and vehicles. And invalidity of the search warrants assailed in this
after such a letter had been sent, through petition.
Col. Balbino V. Diego, Chief Intelligence
and Legal Officer of the Presidential Several and diverse reasons have been advanced by
Security Command, they were further petitioners to nullify the search warrants in question.
encouraged to hope that the latter would
yield the desired results. 1. Petitioners fault respondent judge for his alleged
failure to conduct an examination under oath or
After waiting in vain for five [5] months, affirmation of the applicant and his witnesses, as
petitioners finally decided to come to Court. mandated by the above-quoted constitutional provision
[pp. 123-124, Rollo] as wen as Sec. 4, Rule 126 of the Rules of
Court . 6 This objection, however, may properly be
Although the reason given by petitioners may not be considered moot and academic, as petitioners
flattering to our judicial system, We find no ground to themselves conceded during the hearing on August 9,
punish or chastise them for an error in judgment. On 1983, that an examination had indeed been conducted
by respondent judge of Col. Abadilla and his and since it was Col. Abadilla himself who headed the
witnesses. team which executed the search warrants, the
ambiguity that might have arisen by reason of the
2. Search Warrants No. 20-82[a] and No. 20- 82[b] typographical error is more apparent than real. The
were used to search two distinct places: No. 19, Road fact is that the place for which Search Warrant No. 20-
3, Project 6, Quezon City and 784 Units C & D, RMS 82[b] was applied for was 728 Units C & D, RMS
Building, Quezon Avenue, Quezon City, respectively. Building, Quezon Avenue, Quezon City, which address
Objection is interposed to the execution of Search appeared in the opening paragraph of the said
Warrant No. 20-82[b] at the latter address on the warrant. 7 Obviously this is the same place that
ground that the two search warrants pinpointed only respondent judge had in mind when he issued Warrant
one place where petitioner Jose Burgos, Jr. was No. 20-82 [b].
allegedly keeping and concealing the articles listed
therein, i.e., No. 19, Road 3, Project 6, Quezon City. In the determination of whether a search warrant
This assertion is based on that portion of Search describes the premises to be searched with sufficient
Warrant No. 20- 82[b] which states: particularity, it has been held "that the executing
officer's prior knowledge as to the place intended in the
Which have been used, and are being warrant is relevant. This would seem to be especially
used as instruments and means of true where the executing officer is the affiant on whose
committing the crime of subversion affidavit the warrant had issued, and when he knows
penalized under P.D. 885 as amended and that the judge who issued the warrant intended the
he is keeping and concealing the same at building described in the affidavit, And it has also been
19 Road 3, Project 6, Quezon City. said that the executing officer may look to the affidavit
in the official court file to resolve an ambiguity in the
The defect pointed out is obviously a typographical warrant as to the place to be searched." 8
error. Precisely, two search warrants were applied for
and issued because the purpose and intent were to 3. Another ground relied upon to annul the search
search two distinct premises. It would be quite absurd warrants is the fact that although the warrants were
and illogical for respondent judge to have issued two directed against Jose Burgos, Jr. alone, articles b
warrants intended for one and the same place. belonging to his co-petitioners Jose Burgos, Sr.,
Besides, the addresses of the places sought to be Bayani Soriano and the J. Burgos Media Services, Inc.
searched were specifically set forth in the application, were seized.
Section 2, Rule 126 of the Rules of Court, enumerates petitioner Jose Burgos, Jr. was alleged to have in
the personal properties that may be seized under a relation to the articles and property seized under the
search warrant, to wit: warrants.

Sec. 2. Personal Property to be seized. — 4. Neither is there merit in petitioners' assertion that
A search warrant may be issued for the real properties were seized under the disputed
search and seizure of the following warrants. Under Article 415[5] of the Civil Code of the
personal property: Philippines, "machinery, receptables, instruments or
implements intended by the owner of the tenement for
[a] Property subject of the an industry or works which may be carried on in a
offense; building or on a piece of land and which tend directly to
meet the needs of the said industry or works" are
[b] Property stolen or considered immovable property. In Davao Sawmill Co.
embezzled and other proceeds v. Castillo 9 where this legal provision was invoked, this
or fruits of the offense; and Court ruled that machinery which is movable by nature
becomes immobilized when placed by the owner of the
[c] Property used or intended to
tenement, property or plant, but not so when placed by
be used as the means of
a tenant, usufructuary, or any other person having only
committing an offense.
a temporary right, unless such person acted as the
The above rule does not require that the property to be agent of the owner.
seized should be owned by the person against whom
In the case at bar, petitioners do not claim to be the
the search warrant is directed. It may or may not be
owners of the land and/or building on which the
owned by him. In fact, under subsection [b] of the
machineries were placed. This being the case, the
above-quoted Section 2, one of the properties that may
machineries in question, while in fact bolted to the
be seized is stolen property. Necessarily, stolen
ground remain movable property susceptible to seizure
property must be owned by one other than the person
under a search warrant.
in whose possession it may be at the time of the
search and seizure. Ownership, therefore, is of no 5. The questioned search warrants were issued by
consequence, and it is sufficient that the person respondent judge upon application of Col. Rolando N.
against whom the warrant is directed has control or Abadilla Intelligence Officer of the P.C.
possession of the property sought to be seized, as
Metrocom. 10 The application was accompanied by the connection with the offense are in the place sought to
Joint Affidavit of Alejandro M. Gutierrez and Pedro U. be searched. And when the search warrant applied for
Tango, 11 members of the Metrocom Intelligence and is directed against a newspaper publisher or editor in
Security Group under Col. Abadilla which conducted a connection with the publication of subversive materials,
surveillance of the premises prior to the filing of the as in the case at bar, the application and/or its
application for the search warrants on December 7, supporting affidavits must contain a specification,
1982. stating with particularity the alleged subversive
material he has published or is intending to publish.
It is contended by petitioners, however, that the Mere generalization will not suffice. Thus, the broad
abovementioned documents could not have provided statement in Col. Abadilla's application that petitioner
sufficient basis for the finding of a probable cause "is in possession or has in his control printing
upon which a warrant may validly issue in accordance equipment and other paraphernalia, news publications
with Section 3, Article IV of the 1973 Constitution which and other documents which were used and are all
provides: continuously being used as a means of committing the
offense of subversion punishable under Presidential
SEC. 3. ... and no search warrant or Decree 885, as amended ..." 12 is a mere conclusion
warrant of arrest shall issue except upon of law and does not satisfy the requirements of
probable cause to be determined by the probable cause. Bereft of such particulars as would
judge, or such other responsible officer as justify a finding of the existence of probable cause,
may be authorized by law, after said allegation cannot serve as basis for the issuance
examination under oath or affirmation of of a search warrant and it was a grave error for
the complainant and the witnesses he may respondent judge to have done so.
produce, and particularly describing the
place to be searched and the persons or Equally insufficient as basis for the determination of
things to be seized. probable cause is the statement contained in the joint
affidavit of Alejandro M. Gutierrez and Pedro U. Tango,
We find petitioners' thesis impressed with merit. "that the evidence gathered and collated by our unit
Probable cause for a search is defined as such facts clearly shows that the premises above- mentioned and
and circumstances which would lead a reasonably the articles and things above-described were used and
discreet and prudent man to believe that an offense are continuously being used for subversive activities in
has been committed and that the objects sought in conspiracy with, and to promote the objective of, illegal
organizations such as the Light-a-Fire Movement, cabinets, tables, communications/recording
Movement for Free Philippines, and April 6 equipment, tape recorders, dictaphone and
Movement." 13 the like used and/or connected in the
printing of the "WE FORUM" newspaper
In mandating that "no warrant shall issue except upon and any and all documents communication,
probable cause to be determined by the judge, ... after letters and facsimile of prints related to the
examination under oath or affirmation of the "WE FORUM" newspaper.
complainant and the witnesses he may
produce; 14 the Constitution requires no less than 2] Subversive documents, pamphlets,
personal knowledge by the complainant or his leaflets, books, and other publication to
witnesses of the facts upon which the issuance of a promote the objectives and piurposes of
search warrant may be justified. In Alvarez v. Court of the subversive organization known as
First Instance, 15 this Court ruled that "the oath Movement for Free Philippines, Light-a-Fire
required must refer to the truth of the facts within the Movement and April 6 Movement; and,
personal knowledge of the petitioner or his witnesses,
because the purpose thereof is to convince the 3] Motor vehicles used in the
committing magistrate, not the individual making the distribution/circulation of the "WE FORUM"
affidavit and seeking the issuance of the warrant, of and other subversive materials and
the existence of probable cause." As couched, the propaganda, more particularly,
quoted averment in said joint affidavit filed before
respondent judge hardly meets the test of sufficiency 1] Toyota-Corolla, colored
established by this Court in Alvarez case. yellow with Plate No. NKA 892;

Another factor which makes the search warrants under 2] DATSUN pick-up colored
consideration constitutionally objectionable is that they white with Plate No. NKV 969
are in the nature of general warrants. The search
3] A delivery truck with Plate
warrants describe the articles sought to be seized in
No. NBS 524;
this wise:
4] TOYOTA-TAMARAW,
1] All printing equipment, paraphernalia,
colored white with Plate No.
paper, ink, photo (equipment, typewriters,
PBP 665; and,
 5] TOYOTA Hi-Lux, pick-up or publication that speaks with "the voice of non-
truck with Plate No. NGV 427 conformity" but poses no clear and imminent danger to
with marking "Bagong Silang." state security.

In Stanford v. State of Texas 16 the search warrant As heretofore stated, the premises searched were the
which authorized the search for "books, records, business and printing offices of the "Metropolitan Mail"
pamphlets, cards, receipts, lists, memoranda, pictures, and the "We Forum newspapers. As a consequence of
recordings and other written instruments concerning the search and seizure, these premises were
the Communist Party in Texas," was declared void by padlocked and sealed, with the further result that the
the U.S. Supreme Court for being too general. In like printing and publication of said newspapers were
manner, directions to "seize any evidence in discontinued.
connectionwith the violation of SDC 13-3703 or
otherwise" have been held too general, and that Such closure is in the nature of previous restraint or
portion of a search warrant which authorized the censorship abhorrent to the freedom of the press
seizure of any "paraphernalia which could be used to guaranteed under the fundamental law, 18 and
violate Sec. 54-197 of the Connecticut General constitutes a virtual denial of petitioners' freedom to
Statutes [the statute dealing with the crime of express themselves in print. This state of being is
conspiracy]" was held to be a general warrant, and patently anathematic to a democratic framework where
therefore invalid. 17 The description of the articles a free, alert and even militant press is essential for the
sought to be seized under the search warrants in political enlightenment and growth of the citizenry.
question cannot be characterized differently.
Respondents would justify the continued sealing of the
In the Stanford case, the U.S. Supreme Courts calls to printing machines on the ground that they have been
mind a notable chapter in English history: the era of sequestered under Section 8 of Presidential Decree
disaccord between the Tudor Government and the No. 885, as amended, which authorizes "the
English Press, when "Officers of the Crown were given sequestration of the property of any person, natural or
roving commissions to search where they pleased in artificial, engaged in subversive activities against the
order to suppress and destroy the literature of dissent government and its duly constituted authorities ... in
both Catholic and Puritan Reference herein to such accordance with implementing rules and regulations as
historical episode would not be relevant for it is not the may be issued by the Secretary of National Defense."
policy of our government to suppress any newspaper It is doubtful however, if sequestration could validly be
effected in view of the absence of any implementing over the "WE FORUM " case. 20 In this reply dated
rules and regulations promulgated by the Minister of February 11, 1983, Minister Romulo stated:
National Defense.
2. Contrary to reports, President Marcos
Besides, in the December 10, 1982 issue of the Daily turned down the recommendation of our
Express, it was reported that no less than President authorities to close the paper's printing
Marcos himself denied the request of the military facilities and confiscate the equipment and
authorities to sequester the property seized from materials it uses. 21
petitioners on December 7, 1982. Thus:
IN VIEW OF THE FOREGOING, Search Warrants
The President denied a request flied by Nos. 20-82[a] and 20-82[b] issued by respondent judge
government prosecutors for sequestration on December 7, 1982 are hereby declared null and
of the WE FORUM newspaper and its void and are accordingly set aside. The prayer for a
printing presses, according to Information writ of mandatory injunction for the return of the seized
Minister Gregorio S. Cendana. articles is hereby granted and all articles seized
thereunder are hereby ordered released to petitioners.
On the basis of court orders, government No costs.
agents went to the We Forum offices in
Quezon City and took a detailed inventory
of the equipment and all materials in the
premises.

Cendaña said that because of the denial

the newspaper and its equipment remain at
the disposal of the owners, subject to the G.R. No. L-32917 July 18, 1988
discretion of the court. 19
JULIAN S. YAP, petitioner,
That the property seized on December 7, 1982 had not vs.
been sequestered is further confirmed by the reply of HON. SANTIAGO O. TAÑADA, etc., and GOULDS
then Foreign Minister Carlos P. Romulo to the letter PUMPS INTERNATIONAL (PHIL.), INC., respondents.
dated February 10, 1983 of U.S. Congressman Tony P.
Paterno P. Natinga for private respondent.
Hall addressed to President Marcos, expressing alarm
 Upon petition Atty. Natinga, the plaintiff is
hereby allowed to present its evidence ex-
NARVASA, J.: parte.

The petition for review on certiorari at bar involves two After considering the evidence of the
(2) Orders of respondent Judge Tañada 1 in Civil Case plaintiff, the court hereby renders judgment
No. 10984. The first, dated September 16, 1970, in favor of the plaintiff and against the
denied petitioner Yap's motion to set aside execution defendant (Yap), ordering the latter to pay
sale and to quash alias writ of execution. The second, to the former the sum of Pl,459.30 with
dated November 21, 1970, denied Yap's motion for interest at the rate of 12% per annum until
reconsideration. The issues concerned the propriety of fully paid, computed from August 12, 1968,
execution of a judgment claimed to be "incomplete, date of the filing of the complaint; to pay
vague and non-final," and the denial of petitioner's the sum of P364.80 as reasonable
application to prove and recover damages resulting attorney's fees, which is equivalent " to
from alleged irregularities in the process of execution. 25% of the unpaid principal obligation; and
to pay the costs, if any.
The antecedents will take some time in the telling. The
case began in the City Court of Cebu with the filing by Yap appealed to the Court of First Instance. The
Goulds Pumps International (Phil.), Inc. of a appeal was assigned to the sala of respondent Judge
complaint 2 against Yap and his wife 3 seeking recovery Tañada. For failure to appear for pre-trial on August 28,
of P1,459.30 representing the balance of the price and 1968, this setting being intransferable since the pre-
installation cost of a water pump in the latter's trial had already been once postponed at his
premises. 4 The case resulted in a judgment by the instance, 5 Yap was declared in default by Order of
City Court on November 25, 1968, reading as follows: Judge Tañada dated August 28, 1969, 6 reading as
follows:
When this case was called for trial today,
Atty. Paterno Natinga appeared for the When this case was called for pre-trial this
plaintiff Goulds and informed the court that morning, the plaintiff and counsel
he is ready for trial. However, none of the appeared, but neither the defendants nor
defendants appeared despite notices his counsel appeared despite the fact that
having been served upon them. they were duly notified of the pre-trial set
 this morning. Instead he filed an Ex-Parte amicable settlement; that the court should give the
Motion for Postponement which this Court parties time to arrive at an amicable settlement failing
received only this morning, and on petition which, he should be allowed to present evidence in
of counsel for the plaintiff that the Ex-Parte support of his defenses (discrepancy as to the price
Motion for Postponement was not filed in and breach of warranty). The motion was not verified
accordance with the Rules of Court he or accompanied by any separate affidavit. Goulds
asked that the same be denied and the opposed the motion. Its opposition 9 drew attention to
defendants be declared in default; ..the the eleventh-hour motion for postponement of Yap
motion for the plaintiff being well- which had resulted in the cancellation of the prior
grounded, the defendants are hereby hearing of June 30, 1969 despite Goulds' vehement
declared in default and the Branch Clerk of objection, and the re-setting thereof on August 28,
Court ..is hereby authorized to receive 1969 with intransferable character; it averred that Yap
evidence for the plaintiff and .. submit his had again sought postponement of this last hearing by
report within ten (10) days after reception another eleventh-hour motion on the plea that an
of evidence. amicable settlement would be explored, yet he had
never up to that time ever broached the matter, 10 and
Goulds presented evidence ex parte and judgment by that this pattern of seeking to obtain last-minute
default was rendered the following day by Judge postponements was discernible also in the
Tañada requiring Yap to pay to Goulds (1) Pl,459.30 proceedings before the City Court. In its opposition,
representing the unpaid balance of the pump Goulds also adverted to the examination made by it of
purchased by him; (2) interest of 12% per annum the pump, on instructions of the City Court, with a view
thereon until fully paid; and (3) a sum equivalent to to remedying the defects claimed to exist by Yap; but
25% of the amount due as attorney's fees and costs the examination had disclosed the pump's perfect
and other expenses in prosecuting the action. Notice of condition. Yap's motion for reconsideration was denied
the judgment was served on Yap on September 1, by Order dated October 10, 1969, notice of which was
1969. 7 received by Yap on October 4, 1969. 11

On September 16, 1969 Yap filed a motion for On October 15, 1969 Judge Tañada issued an Order
reconsideration. 8 In it he insisted that his motion for granting Goulds' Motion for Issuance of Writ of
postponement should have been granted since it Execution dated October 14, 1969, declaring the
expressed his desire to explore the possibility of an reasons therein alleged to be meritorious. 12 Yap
forthwith filed an "Urgent Motion for Reconsideration of In the meantime the Sheriff levied on the water pump
Order" dated October 17, 1969, 13 contending that the in question, 19 and by notice dated November 4, 1969,
judgment had not yet become final, since contrary to scheduled the execution sale thereof on November 14,
Goulds' view, his motion for reconsideration was 1969. 20 But in view of the pendency of Yap's motion for
not pro forma for lack of an affidavit of merit, this not reconsideration of October 29, 1969, suspension of the
being required under Section 1 (a) of Rule 37 of the sale was directed by Judge Tañada in an order dated
Rules of Court upon which his motion was grounded. November 6, 1969. 21
Goulds presented an opposition dated October 22,
1969. 14 It pointed out that in his motion for Counsel for the plaintiff is hereby given 10
reconsideration Yap had claimed to have a valid days time to answer the Motion, dated
defense to the action, i.e., ".. discrepancy as to price October 29, 1969, from receipt of this
and breach of seller's warranty," in effect, that there Order and in the meantime, the Order of
was fraud on Goulds' paint; Yap's motion for October 23, 1969, insofar as it orders the
reconsideration should therefore have been supported sheriff to enforce the writ of execution is
by an affidavit of merit respecting said defenses; the hereby suspended.
absence thereof rendered the motion for
reconsideration fatally defective with the result that its It appears however that a copy of this Order was not
filing did not interrupt the running of the period of transmitted to the Sheriff "through oversight,
appeal. The opposition also drew attention to the inadvertence and pressure of work" of the Branch
failure of the motion for reconsideration to specify the Clerk of Court. 22 So the Deputy Provincial Sheriff went
findings or conclusions in the judgment claimed to be ahead with the scheduled auction sale and sold the
contrary to law or not supported by the evidence, property levied on to Goulds as the highest
making it a pro forma motion also incapable of bidder. 23 He later submitted the requisite report to the
stopping the running of the appeal period. On October Court dated November 17, 1969, 24 as well as the
23, 1969, Judge Tañada denied Yap's motion for "Sheriffs Return of Service" dated February 13,
reconsideration and authorized execution of the 1970, 25 in both of which it was stated that execution
judgment. 15 Yap sought reconsideration of this order, had been "partially satisfied." It should be observed
by another motion dated October 29, 1969. 16 This that up to this time, February, 1970, Yap had not
motion was denied by Order dated January 26, bestirred himself to take an appeal from the judgment
1970. 17 Again Yap moved for reconsideration, and of August 29, 1969.
again was rebuffed, by Order dated April 28, 1970. 18
On May 9, 1970 Judge Tañada ordered the issuance of 3) "said judgment is defective because it contains no
an alias writ of execution on Gould's ex parte motion statement of facts but a mere recital of the evidence;
therefor. 26 Yap received notice of the Order on June and
11. Twelve (1 2) days later, he filed a "Motion to Set
Aside Execution Sale and to Quash Alias Writ of 4) "there has been a change in the situation of the
Execution." 27 As regards the original, partial execution parties which makes execution unjust and inequitable"
of the judgment, he argued that — because Yap suffered damages by reason of the illegal
execution.
1) "the issuance of the writ of execution on October 16,
1969 was contrary to law, the judgment sought to be Goulds filed an opposition on July 6, 1970. Yap's
executed not being final and executory;" and motion was thereafter denied by Order dated
September 16, 1970. Judge Tañada pointed out that
2) "the sale was made without the notice required by the motion had "become moot and academic" since
Sec. 18, Rule 39, of the New Rules of Court," i.e., the decision of August 29, 1969, "received by the
notice by publication in case of execution sale of real defendant on September 1, 1969 had long become
property, the pump and its accessories being final when the Order for the Issuance of a Writ of
immovable because attached to the ground with Execution was promulgated on October 15, 1969." His
character of permanency (Art. 415, Civil Code). Honor also stressed that —

And with respect to the alias writ, he argued that it The defendant's Motion for
should not have issued because — Reconsideration of the Courts decision was
in reality one for new trial. Regarded as
1) "the judgment sought to be executed is null and motion for new trial it should allege the
void" as "it deprived the defendant of his day in court" grounds for new trial, provided for in the
and "of due process;" Rules of Court, to be supported by affidavit
of merits; and this the defendant failed to
2) "said judgment is incomplete and vague" because do. If the defendant sincerely desired for an
there is no starting point for computation of the interest opportunity to submit to an amicable
imposed, or a specification of the "other expenses settlement, which he failed to do extra
incurred in prosecuting this case" which Yap had also judicially despite the ample time before
been ordered to pay;
 him, he should have appeared in the pre- The errors of law he attributes to the Court a quo are
trial to achieve the same purpose. the following: 31

Judge Tañada thereafter promulgated another Order 1) refusing to invalidate the execution pursuant to its
dated September 21, 1970 granting a motion of Goulds Order of October 16, 1969 although the judgment had
for completion of execution of the judgment of August not then become final and executory and despite its
29, 1969 to be undertaken by the City Sheriff of Cebu. being incomplete and vague;
Once more, Yap sought reconsideration. He submitted
a "Motion for Reconsideration of Two Orders" dated 2) ignoring the fact that the execution sale was carried
October 13, 1970, 28 seeking the setting aside not only out although it (the Court) had itself ordered
of this Order of September 21, 1970 but also that suspension of execution on November 6, 1969;
dated September 16, 1970, denying his motion to set
aside execution dated June 23, 1970. He contended 3) declining to annul the execution sale of the pump
that the Order of September 21, 1970 (authorizing and accessories subject of the action although made
execution by the City Sheriff) was premature, since the without the requisite notice prescribed for the sale of
30-day period to appeal from the earlier order of immovables; and
September 16, 1970 (denying his motion to set aside)
4) refusing to allow the petitioner to prove irregularities
had not yet expired. He also reiterated his view that his
in the process of execution which had resulted in
motion for reconsideration dated September 15, 1969
damages to him.
did not require that it be accompanied by an affidavit of
merits. This last motion was also denied for "lack of Notice of the Trial Court's judgment was served on Yap
merits," by Order dated November 21, 1970. 29 on September 1, 1969. His motion for reconsideration
thereof was filed 15 days thereafter, on September 16,
On December 3, 1970, Yap filed a "Notice of Appeal"
1969. Notice of the Order denying the motion was
manifesting his intention to appeal to the Supreme
received by him on October 14, 1969. The question is
Court on certiorari only on questions of law, "from the
whether or not the motion for reconsideration — which
Order ... of September 16, 1970 ... and from the
was not verified, or accompanied by an affidavit of
Order ... of November 21, 1970, ... pursuant to
merits (setting forth facts constituting his meritorious
sections 2 and 3 of Republic Act No. 5440." He filed his
defenses to the suit) or other sworn statement (stating
petition for review with this Court on January 5, 1971,
facts excusing his failure to appear at the pre-trial
after obtaining an extension therefor. 30
was pro forma and consequently had not interrupted
the running of the period of appeal. It is Yap's impaired in his rights" because he was denied the right
contention that his motion was not pro forma for lack of to present evidence of his defenses (discrepancy as to
an affidavit of merits, such a document not being price and breach of warranty) — it was a fatal omission
required by Section 1 (a) of Rule 37 of the Rules of to fail to attach to his motion an affidavit of merits, i.e.,
Court upon which his motion was based. This is an affidavit "showing the facts (not conclusions)
incorrect. constituting the valid x x defense which the movant
may prove in case a new trial is granted." 34 The
Section 2, Rule 37 precisely requires that when the requirement of such an affidavit is essential because
motion for new trial is founded on Section 1 (a), it obviously "a new trial would be a waste of the court's
should be accompanied by an affidavit of merit. time if the complaint turns out to be groundless or the
defense ineffective." 35
xxx xxx xxx
In his motion for reconsideration, Yap also contended
When the motion is made for the causes that since he had expressed a desire to explore the
mentioned in subdivisions (a) and (b) of the possibility of an amicable settlement, the Court should
preceding section, it shall be proved in the have given him time to do so, instead of declaring him
manner provided for proof of in default and thereafter rendering judgment by default
motions. Affidavit or affidavits of merits on Gould's ex parte evidence.
shall also be attached to a motion for the
cause mentioned in subdivision (a) which The bona fides of this desire to compromise is
may be rebutted by counter-affidavits. however put in doubt by the attendant circumstances.
It was manifested in an eleventh-hour motion for
xxx xxx xxx 32 postponement of the pre-trial which had been
scheduled with intransferable character since it had
Since Yap himself asserts that his motion for
already been earlier postponed at Yap's instance; it
reconsideration is grounded on Section 1 (a) of Rule
had never been mentioned at any prior time since
37, 33 i.e., fraud, accident, mistake or excusable
commencement of the litigation; such a possible
negligence which ordinary prudence could not have
compromise (at least in general or preliminary terms)
guarded against and by reason of which ... (the)
was certainly most appropriate for consideration at the
aggrieved party has probably been impaired in his
pre-trial; in fact Yap was aware that the matter was
rights" — this being in any event clear from a perusal
indeed a proper subject of a pre-trial agenda, yet he
of the motion which theorizes that he had "been
sought to avoid appearance at said pre-trial which he set aside the judgment or order or for a new trial has
knew to be intransferable in character. These been pending shall be deducted, unless such motion
considerations and the dilatory tactics thus far fails to satisfy the requirements of Rule 37. 38
attributable to him-seeking postponements of hearings,
or failing to appear therefor despite notice, not only in Notice of the judgment having been received by Yap
the Court of First Instance but also in the City Court — on September 1, 1969, and the period of appeal
proscribe belief in the sincerity of his avowed desire to therefrom not having been interrupted by his motion for
negotiate a compromise. Moreover, the disregard by reconsideration filed on September 16, 1969, the
Yap of the general requirement that "(n)otice of a reglementary period of appeal expired thirty (30) days
motion shall be served by the applicant to all parties after September 1, 1969, or on October 1, 1969,
concerned at least three (3) days before the hearing without an appeal being taken by Yap. The judgment
thereof, together with a copy of the motion, and of any then became final and executory; Yap could no longer
affidavits and other papers accompanying it," 36 for take an appeal therefrom or from any other
which no justification whatever has been offered, also subsequent orders; and execution of judgment
militates against the bona fides of Yap's expressed correctly issued on October 15, 1969, "as a matter of
wish for an amicable settlement. The relevant right." 39
circumstances do not therefore justify condemnation,
as a grave abuse of discretion, or a serious mistake, of The next point discussed by Yap, that the judgment is
the refusal of the Trial Judge to grant postponement incomplete and vague, is not well taken. It is true that
upon this proferred ground. the decision does not fix the starting time of the
computation of interest on the judgment debt, but this
The motion for reconsideration did not therefore is inconsequential since that time is easily
interrupt the running of the period of appeal. The time determinable from the opinion, i.e., from the day the
during which it was pending before the court — from buyer (Yap) defaulted in the payment of his
September 16, 1969 when it was filed with the obligation, 40 on May 31, 1968. 41 The absence of any
respondent Court until October 14, 1969 when notice disposition regarding his counterclaim is also
of the order denying the motion was received by the immaterial and does not render the judgment
movant — could not be deducted from the 30-day incomplete. Yap's failure to appear at the pre-trial
period of appeal. 37 This is the inescapable conclusion without justification and despite notice, which caused
from a consideration of Section 3 of Rule 41 which in the declaration of his default, was a waiver of his right
part declares that, "The "time during which a motion to to controvert the plaintiff s proofs and of his right to
prove the averments of his answer, inclusive of the to allow him to prove these acts and recover the
counterclaim therein pleaded. Moreover, the damages rightfully due him. Now, as to the loss of his
conclusion in the judgment of the merit of the plaintiff s water supply, since this arose from acts legitimately
cause of action was necessarily and at the same time done, the seizure on execution of the water pump in
a determination of the absence of merit of the enforcement of a final and executory judgment, Yap
defendant's claim of untenability of the complaint and most certainly is not entitled to claim moral or any
of malicious prosecution. other form of damages therefor.

Yap's next argument that the water pump had become WHEREFORE, the petition is DENIED and the appeal
immovable property by its being installed in his DISMISSED, and the Orders of September 16, 1970
residence is also untenable. The Civil Code considers and November 21, 1970 subject thereof, AFFIRMED in
as immovable property, among others, anything toto. Costs against petitioner.
"attached to an immovable in a fixed manner, in such a
way that it cannot be separated therefrom without
breaking the material or deterioration of the
object." 42 The pump does not fit this description. It
could be, and was in fact separated from Yap's
premises without being broken or suffering
deterioration. Obviously the separation or removal of G.R. No. L-7057 October 29, 1954
the pump involved nothing more complicated than the
loosening of bolts or dismantling of other fasteners. MACHINERY & ENGINEERING SUPPLIES, INC.,
petitioner,
Yap's last claim is that in the process of the removal of vs.
the pump from his house, Goulds' men had trampled THE HONORABLE COURT OF APPEALS, HON.
on the plants growing there, destroyed the shed over POTENCIANO PECSON, JUDGE OF THE COURT
the pump, plugged the exterior casings with rags and OF FIRST INSTANCE OF MANILA, IPO LIMESTONE
cut the electrical and conduit pipes; that he had CO., INC., and ANTONIO VILLARAMA, respondents.
thereby suffered actual-damages in an amount of not
less than P 2,000.00, as well as moral damages in the Vicente J. Francisco for petitioner.
sum of P 10,000.00 resulting from his deprivation of Capistrano and Capistrano for respondents.
the use of his water supply; but the Court had refused
CONCEPCION, J.: purpose of carrying the court's order into effect.
Leonardo Contreras, Manager of the respondent
This is an appeal by certiorari, taken by petitioner Company, and Pedro Torres, in charge thereof,
Machinery and Engineering Supplies Inc., from a met the deputy sheriffs, and Contreras handed to
decision of the Court of Appeals denying an original them a letter addressed to Atty. Leopoldo C.
petition for certiorari filed by said petitioner against Palad, ex-oficio Provincial Sheriff of Bulacan,
Hon. Potenciano Pecson, Ipo Limestone Co., Inc., and signed by Atty. Adolfo Garcia of the defendants
Antonio Villarama, the respondents herein. therein, protesting against the seizure of the
properties in question, on the ground that they
The pertinent facts are set forth in the decision of the are not personal properties. Contending that the
Court of Appeals, from which we quote: Sheriff's duty is merely ministerial, the deputy
sheriffs, Roco, the latter's crew of technicians
On March 13, 1953, the herein petitioner filed a
and laborers, Contreras and Torres, went to the
complaint for replevin in the Court of First
factory. Roco's attention was called to the fact
Instance of Manila, Civil Case No. 19067, entitled
that the equipment could not possibly be
"Machinery and Engineering Supplies, Inc.,
dismantled without causing damages or injuries
Plaintiff, vs. Ipo Limestone Co., Inc., and Dr.
to the wooden frames attached to them. As Roco
Antonio Villarama, defendants", for the recovery
insisted in dismantling the equipment on his own
of the machinery and equipment sold and
responsibility, alleging that the bond was posted
delivered to said defendants at their factory in
for such eventuality, the deputy sheriffs directed
barrio Bigti, Norzagaray, Bulacan. Upon
that some of the supports thereof be cut
application ex-parte of the petitioner company,
(Appendix 2). On March 20, 1953, the defendant
and upon approval of petitioner's bond in the
Company filed an urgent motion, with a counter-
sum of P15,769.00, on March 13,1953,
bond in the amount of P15,769, for the return of
respondent judge issued an order, commanding
the properties seized by the deputy sheriffs. On
the Provincial Sheriff of Bulacan to seize and
the same day, the trial court issued an order,
take immediate possession of the properties
directing the Provincial Sheriff of Bulacan to
specified in the order (Appendix I, Answer). On
return the machinery and equipment to the place
March 19, 1953, two deputy sheriffs of Bulacan,
where they were installed at the time of the
the said Ramon S. Roco, and a crew of technical
seizure (Appendix 3). On March 21, 1953, the
men and laborers proceeded to Bigti, for the
deputy sheriffs returned the properties seized, by
depositing them along the road, near the quarry, was denied; and on May 4, 1953, the trial court
of the defendant Company, at Bigti, without the ordered the Plaintiff therein to furnish the
benefit of inventory and without re-installing hem Provincial Sheriff within 5 days with the
in their former position and replacing the necessary funds, technical men, laborers,
destroyed posts, which rendered their use equipment and materials to effect the repeatedly
impracticable. On March 23, 1953, the mentioned re-installation (Appendix 13).
defendants' counsel asked the provincial Sheriff (Petitioner's brief, Appendix A, pp. I-IV.)
if the machinery and equipment, dumped on the
road would be re-installed tom their former Thereupon petitioner instituted in the Court of Appeals
position and condition (letter, Appendix 4). On civil case G.R. No. 11248-R, entitled "Machinery and
March 24, 1953, the Provincial Sheriff filed an Engineering Supplies, Inc. vs. Honorable Potenciano
urgent motion in court, manifesting that Roco had Pecson, Provincial Sheriff of Bulacan, Ipo Limestone
been asked to furnish the Sheriff's office with the Co., Inc., and Antonio Villarama." In the petition therein
expenses, laborers, technical men and filed, it was alleged that, in ordering the petitioner to
equipment, to carry into effect the court's order, furnish the provincial sheriff of Bulacan "with necessary
to return the seized properties in the same way funds, technical men, laborers, equipment and
said Roco found them on the day of seizure, but materials, to effect the installation of the machinery
said Roco absolutely refused to do so, and and equipment" in question, the Court of Firs Instance
asking the court that the Plaintiff therein be of Bulacan had committed a grave abuse if discretion
ordered to provide the required aid or relieve the and acted in excess of its jurisdiction, for which reason
said Sheriff of the duty of complying with the said it was prayed that its order to this effect be nullified,
order dated March 20, 1953 (Appendix 5). On and that, meanwhile, a writ of preliminary injunction be
March 30, 1953, the trial court ordered the issued to restrain the enforcement o said order of may
Provincial Sheriff and the Plaintiff to reinstate the 4, 1953. Although the aforementioned writ was issued
machinery and equipment removed by them in by the Court of Appeals, the same subsequently
their original condition in which they were found dismissed by the case for lack of merit, with costs
before their removal at the expense of the against the petitioner, upon the following grounds:
Plaintiff (Appendix 7). An urgent motion of the
Provincial Sheriff dated April 15, 1953, praying While the seizure of the equipment and personal
for an extension of 20 days within which to properties was ordered by the respondent Court,
comply with the order of the Court (appendix 10) it is, however, logical to presume that said court
did not authorize the petitioner or its agents to the letter to the court's attention and have the
destroy, as they did, said machinery and equipment and machinery guarded, so as not to
equipment, by dismantling and unbolting the frustrate the order of seizure issued by the trial
same from their concrete basements, and cutting court. But acting upon the directives of the
and sawing their wooden supports, thereby president of the Petitioner, to seize the properties
rendering them unserviceable and beyond repair, at any costs, in issuing the order sought to be
unless those parts removed, cut and sawed be annulled, had not committed abuse of discretion
replaced, which the petitioner, not withstanding at all or acted in an arbitrary or despotic manner,
the respondent Court's order, adamantly refused by reason of passion or personal hostility; on the
to do. The Provincial Sheriff' s tortious act, in contrary, it issued said order, guided by the well
obedience to the insistent proddings of the known principle that of the property has to be
president of the Petitioner, Ramon S. Roco, had returned, it should be returned in as good a
no justification in law, notwithstanding the condition as when taken (Bachrach Motor Co.,
Sheriffs' claim that his duty was ministerial. It was Inc., vs. Bona, 44 Phil., 378). If any one had
the bounden duty of the respondent Judge to gone beyond the scope of his authority, it is the
give redress to the respondent Company, for the respondent Provincial Sheriff. But considering
unlawful and wrongful acts committed by the that fact that he acted under the pressure of
petitioner and its agents. And as this was the true Ramon S. Roco, and that the order impugned
object of the order of March 30, 1953, we cannot was issued not by him, but by the respondent
hold that same was within its jurisdiction to issue. Judge, We simply declare that said Sheriff' act
The ministerial duty of the Sheriff should have its was most unusual and the result of a poor
limitations. The Sheriff knew or must have known judgment. Moreover, the Sheriff not being an
what is inherently right and inherently wrong, officer exercising judicial functions, the writ may
more so when, as in this particular case, the not reach him, forcertiorari lies only to review
deputy sheriffs were shown a letter of respondent judicial actions.
Company's attorney, that the machinery were not
personal properties and, therefore, not subject to The Petitioner complains that the respondent
seizure by the terms of the order. While it may be Judge had completely disregarded his
conceded that this was a question of law too manifestation that the machinery and equipment
technical to decide on the spot, it would not have seized were and still are the Petitioner's property
costs the Sheriff much time and difficulty to bring until fully paid for and such never became
 immovable. The question of ownership and the Ordinarily replevin may be brought to recover
applicability of Art. 415 of the new Civil Code are any specific personal property unlawfully taken or
immaterial in the determination of the only issue detained from the owner thereof, provided such
involved in this case. It is a matter of evidence property is capable of identification and
which should be decided in the hearing of the delivery; but replevin will not lie for the recovery
case on the merits. The question as to whether of real property or incorporeal personal property.
the machinery or equipment in litigation are (77 C. J. S. 17) (Emphasis supplied.)
immovable or not is likewise immaterial, because
the only issue raised before the trial court was When the sheriff repaired to the premises of
whether the Provincial Sheriff of Bulacan, at the respondent, Ipo Limestone Co., Inc., machinery and
Petitioner's instance, was justified in destroying equipment in question appeared to be attached to the
the machinery and in refusing to restore them to land, particularly to the concrete foundation of said
their original form , at the expense of the premises, in a fixed manner, in such a way that the
Petitioner. Whatever might be the legal character former could not be separated from the latter "without
of the machinery and equipment, would not be in breaking the material or deterioration of the object."
any way justify their justify their destruction by Hence, in order to remove said outfit, it became
the Sheriff's and the said Petitioner's. necessary, not only to unbolt the same, but , also, to
(Petitioner's brief, Appendix A, pp. IV-VII.) cut some of its wooden supports. Moreover, said
machinery and equipment were "intended by the owner
A motion for reconsideration of this decision of the of the tenement for an industry" carried on said
Court of Appeals having been denied , petitioner has immovable and tended." For these reasons, they were
brought the case to Us for review by writ of certiorari. already immovable property pursuant to paragraphs 3
Upon examination of the record, We are satisfied, and 5 of Article 415 of Civil Code of the Philippines,
however that the Court of Appeals was justified in which are substantially identical to paragraphs 3 and 5
dismissing the case. of Article 334 of the Civil Code of Spain. As such
immovable property, they were not subject to replevin.
The special civil action known as replevin, governed by
Rule 62 of Court, is applicable only to "personal In so far as an article, including a fixture annexed
property". by a tenant, is regarded as part of the realty, it is
not the subject for personality; . . . .
 . . . the action of replevin does not lie for articles in substantially the same condition as when taken (54
so annexed to the realty as to be part as to be C.J., 590-600, 640-641). Inasmuch as the machinery
part thereof, as, for example, a house or a and equipment involved in this case were duly installed
turbine pump constituting part of a building's and affixed in the premises of respondent company
cooling system; . . . (36 C. J. S. 1000 & 1001) when petitioner's representative caused said property
to be dismantled and then removed, it follows that
Moreover, as the provincial sheriff hesitated to remove petitioner must also do everything necessary to the
the property in question, petitioner's agent and reinstallation of said property in conformity with its
president, Mr. Ramon Roco, insisted "on the original condition.
dismantling at his own responsibility," stating that.,
precisely, "that is the reason why plaintiff posted a Wherefore, the decision of the Court of Appeals is
bond ." In this manner, petitioner clearly assumed the hereby affirmed, with costs against the petitioner. So
corresponding risks. ordered.

Such assumption of risk becomes more apparent when CESAR T. HILARIO, for himself and as Attorney-in-
we consider that, pursuant to Section 5 of Rule 62 of Fact of IBARRA, NESTOR, LINA and
the Rules of Court, the defendant in an action for PRESCILLA, all surnamed
replevin is entitled to the return of the property in HILARIO, petitioners, vs. ALLAN T.
dispute upon the filing of a counterbond, as provided SALVADOR, respondent.
therein. In other words, petitioner knew that the
restitution of said property to respondent company HEIRS OF SALUSTIANO SALVADOR, namely,
might be ordered under said provision of the Rules of REGIDOR M. SALVADOR and VIRGINIA
Court, and that, consequently, it may become SALVADOR-LIM, respondents-intervenors.
necessary for petitioner to meet the liabilities incident
to such return. DECISION

Lastly, although the parties have not cited, and We CALLEJO, SR., J.:
have not found, any authority squarely in point —
This is a petition for review on certiorari under Rule
obviously real property are not subject to replevin — it
45 of the Revised Rules of Court of the Decision [1] of
is well settled that, when the restitution of what has
the Court of Appeals (CA) in CA-G.R. CV No. 63737 as
been ordered, the goods in question shall be returned
well as its Resolution[2]denying the motion for the 5. That, to reach a possible amicable settlement,
reconsideration of the said decision. the plaintiffs brought the matter to the Lupon of
Barangay Sawang, to no avail, evidenced by the
The Antecedents CERTIFICATE TO FILE ACTION hereto
attached as ANNEX B;
On September 3, 1996, petitioners Cesar, Ibarra,
Nestor, Lina and Prescilla, all surnamed Hilario, filed a 6. That, the unjustified refusal of the defendant to
complaint with the Regional Trial Court (RTC) of vacate the property has caused the plaintiffs to
Romblon, Romblon, Branch 71, against private suffer shame, humiliation, wounded feelings,
respondent Allan T. Salvador. They alleged anxiety and sleepless nights;
therein, inter alia, as follows:
7. That, to protect their rights and interest,
2. That, the plaintiffs are co-owners by inheritance plaintiffs were constrained to engage the
from Concepcion Mazo Salvador of a parcel of services of a lawyer.[3]
land designated as Cad. Lot No. 3113-part,
located at Sawang, Romblon, Romblon, which The petitioners prayed that, after due proceedings,
property was [adjudged] as the hereditary share judgment be rendered in their favor, thus:
of their father, Brigido M. Hilario, Jr. when their
father was still single, and which adjudication WHEREFORE, it is prayed of this Honorable Court that
was known by the plaintiffs[’] father’s co-heirs; after due process (sic), an order be issued for the
defendant to vacate and peacefully turn over to the
3. That, sometime in 1989, defendant constructed plaintiffs the occupied property and that defendant be
his dwelling unit of mixed materials on the made to pay plaintiffs:
property of the plaintiffs’ father without the
knowledge of the herein plaintiffs or their a. actual damages, as follows:
predecessors-in-interest;
a.1. transportation expenses in connection
4. That, demands have been made of the with the projected settlement of the case
defendant to vacate the premises but the latter amounting to P1,500.00 and for the
manifested that he have (sic) asked the prior subsequent attendance to the hearing of
consent of their grandmother, Concepcion Mazo this case at P1,500.00 each schedule;
Salvador;
 a.2. attorney’s fees in the amount In the face of this predicament, it can nevertheless be
of P20,000.00 and P500.00 for every surmised by reading between the lines, that the
court appearance; assessed value of the land in question cannot
exceed P20,000.00 and, as such, it falls within the
b. moral and exemplary damages in such jurisdiction of the Municipal Trial Court of Romblon and
amount incumbent upon the Honorable Court should have been filed before said Court rather than
to determine; and before the RTC. …[6]

c. such other relief and remedies just and The petitioners opposed the motion. [7] They
equitable under the premises.[4] contended that the RTC had jurisdiction over the action
since the court can take judicial notice of the market
The private respondent filed a motion to dismiss value of the property in question, which was P200.00
the complaint on the ground of lack of jurisdiction over per square meter and considering that the property
the nature of the action, citing Section 33 of Batas was 14,797 square meters, more or less, the total
Pambansa (B.P.) Blg. 129, as amended by Section value thereof is P3,500,000.00. Besides, according to
3(3) of Republic Act (R.A.) No. 7691. [5] He averred that the petitioners, the motion to dismiss was premature
– and “the proper time to interpose it is when the
[petitioners] introduced evidence that the land is of
(1) the complaint failed to state the assessed
such value.”
value of the land in dispute;
On November 7, 1996, the RTC issued an
(2) the complaint does not sufficiently identify
Order[8] denying the motion to dismiss, holding that the
and/or describe the parcel of land referred to as the
action was incapable of pecuniary estimation, and
subject-matter of this action;
therefore, cognizable by the RTC as provided in
both of which are essential requisites for determining Section 19(1) of B.P. Blg. 129, as amended.
the jurisdiction of the Court where the case is filed. In
After the denial of the motion to dismiss, the private
this case, however, the assessed value of the land in
respondent filed his answer with counterclaim.
question is totally absent in the allegations of the [9]
Traversing the material allegations of the complaint,
complaint and there is nothing in the relief prayed for
he contended that the petitioners had no cause of
which can be picked-up for determining the Court’s
action against him since the property in dispute was
jurisdiction as provided by law.
the conjugal property of his grandparents, the spouses IN VIEW OF THE FOREGOING, the appealed
Salustiano Salvador and Concepcion Mazo-Salvador. decision is REVERSED, and the case DISMISSED,
without prejudice to its refilling in the proper court.
On April 8, 1997, Regidor and Virginia Salvador
filed their Answer-in-Intervention [10] making common SO ORDERED.[14]
cause with the private respondent. On her own
motion, however, Virginia Salvador was dropped as The CA declared that the action of the petitioners
intervenor.[11] was one for the recovery of ownership and possession
of real property. Absent any allegation in the complaint
During trial, the petitioners adduced in evidence of the assessed value of the property, the Municipal
Tax Declaration No. 8590-A showing that in 1991 the Trial Court (MTC) had exclusive jurisdiction over the
property had an assessed value of P5,950.00.[12] action, conformably to Section 33[15] of R.A. No. 7691.

On June 3, 1999, the trial court rendered judgment The petitioners filed a motion for reconsideration of
finding in favor of the petitioners. The dispositive the said decision, which the appellate court denied.
[16]
portion of the decision reads: Hence, they filed the instant petition, with the
following assignment of errors:
WHEREFORE, as prayed for, judgment is rendered:
I
Ordering the defendant to vacate and peacefully turn
over to the plaintiffs the occupied property; and THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE REVERSIBLE ERROR IN
Dismissing defendant’s counterclaim. HOLDING THAT THE INSTANT CASE, ACCION
REINVINDICATORIA, FALLS WITHIN THE
SO ORDERED.[13] EXCLUSIVE ORIGINAL JURISDICTION OF THE
MUNICIPAL TRIAL COURT OF ROMBLON, AND NOT
Aggrieved, the private respondent and respondent-
WITH THE REGIONAL TRIAL COURT OF ROMBLON.
intervenor Regidor Salvador appealed the decision to
the CA, which rendered judgment on May 23, 2003 II
reversing the ruling of the RTC and dismissing the
complaint for want of jurisdiction. The fallo of the THE HONORABLE COURT OF APPEALS
decision is as follows: COMMITTED SERIOUS REVERSIBLE ERROR IN
ORDERING THE REFILING OF THE CASE IN THE the same is determined by the material allegations of
[PROPER] COURT, INSTEAD OF DECIDING THE the complaint, the type of relief prayed for by the
CASE ON THE MERITS BASED ON THE COMPLETE plaintiff and the law in effect when the action is filed,
RECORDS ELEVATED BEFORE SAID APPELLATE irrespective of whether the plaintiffs are entitled to
COURT AND IN NOT AFFIRMING IN TOTO THE some or all of the claims asserted therein. [18] The
DECISION OF THE TRIAL COURT.[17] caption of the complaint is not determinative of the
nature of the action. Nor does the jurisdiction of the
The Ruling of the Court court depend upon the answer of the defendant or
agreement of the parties or to the waiver or
The lone issue for our resolution is whether the acquiescence of the parties.
RTC had jurisdiction over the action of the petitioners,
the plaintiffs in the RTC, against the private We do not agree with the contention of the
respondent, who was the defendant therein. petitioners and the ruling of the CA that the action of
the petitioners in the RTC was an accion
The petitioners maintain that the RTC has reinvindicatoria. We find and so rule that the action of
jurisdiction since their action is an accion the petitioners was an accion publiciana, or one for the
reinvindicatoria, an action incapable of pecuniary recovery of possession of the real property subject
estimation; thus, regardless of the assessed value of matter thereof. An accion reinvindicatoria is a suit
the subject property, exclusive jurisdiction falls within which has for its object the recovery of possession
the said court. Besides, according to the petitioners, in over the real property as owner. It involves recovery of
their opposition to respondent’s motion to dismiss, they ownership and possession based on the said
made mention of the increase in the assessed value of ownership. On the other hand, an accion publicianais
the land in question in the amount of P3.5 million. one for the recovery of possession of the right to
Moreover, the petitioners maintain that their action is possess. It is also referred to as an ejectment suit filed
also one for damages exceeding P20,000.00, over after the expiration of one year after the occurrence of
which the RTC has exclusive jurisdiction under R.A. the cause of action or from the unlawful withholding of
No. 7691. possession of the realty.[19]
The petition has no merit. The action of the petitioners filed on September 3,
1996 does not involve a claim of ownership over the
It bears stressing that the nature of the action and
property. They allege that they are co-owners thereof,
which court has original and exclusive jurisdiction over
and as such, entitled to its possession, and that the (3) Exclusive original jurisdiction in all civil actions
private respondent, who was the defendant, which involve title to, or possession of, real property, or
constructed his house thereon in 1989 without their any interest therein where the assessed value of the
knowledge and refused to vacate the property despite property or interest therein does not exceed Twenty
demands for him to do so. They prayed that the Thousand Pesos (P20,000.00) or, in civil actions in
private respondent vacate the property and restore Metro Manila, where such assessed value does not
possession thereof to them. exceed Fifty Thousand Pesos (P50,000.00) exclusive
of interest, damages of whatever kind, attorney’s fees,
When the petitioners filed their complaint on litigation expenses and costs: Provided, That in cases
September 3, 1996, R.A. No. 7691 was already in of land not declared for taxation purposes, the value of
effect. Section 33(3) of the law provides: such property shall be determined by the assessed
value of the adjacent lots.
Sec. 33. Jurisdiction of Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Section 19(2) of the law, likewise, provides that:
Courts in Civil Cases. – Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Sec. 19. Jurisdiction in civil cases. – The Regional
Courts shall exercise: Trial Court shall exercise exclusive original jurisdiction:

… …

(2) In all civil actions, which involve the title to, or

possession of, real property, or any interest therein,
where the assessed value of the property involved
exceeds Twenty Thousand Pesos (P20,000.00) or, for
civil actions in Metro Manila, where such value
exceeds Fifty Thousand Pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is
conferred upon the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts.
 The jurisdiction of the court over an action involving case involved title to or possession of real property
title to or possession of land is now determined by the with an assessed value of less than P20,000.00.[23]
assessed value of the said property and not the
market value thereof. The assessed value of real We quote with approval, in this connection, the
property is the fair market value of the real property CA’s disquisition:
multiplied by the assessment level. It is synonymous
to taxable value.[20] The fair market value is the price at The determining jurisdictional element for the accion
which a property may be sold by a seller, who is not reinvindicatoria is, as RA 7691 discloses, the assessed
compelled to sell, and bought by a buyer, who is not value of the property in question. For properties in the
compelled to buy. provinces, the RTC has jurisdiction if the assessed
value exceeds P20,000, and the MTC, if the value
Even a cursory reading of the complaint will show is P20,000 or below. An assessed value can have
that it does not contain an allegation stating the reference only to the tax rolls in the municipality where
assessed value of the property subject of the the property is located, and is contained in the tax
complaint.[21] The court cannot take judicial notice of declaration. In the case at bench, the most recent tax
the assessed or market value of lands. [22] Absent any declaration secured and presented by the plaintiffs-
allegation in the complaint of the assessed value of the appellees is Exhibit B. The loose remark made by
property, it cannot thus be determined whether the them that the property was worth 3.5 million pesos, not
RTC or the MTC had original and exclusive jurisdiction to mention that there is absolutely no evidence for this,
over the petitioners’ action. is irrelevant in the light of the fact that there is an
assessed value. It is the amount in the tax declaration
We note that during the trial, the petitioners that should be consulted and no other kind of value,
adduced in evidence Tax Declaration No. 8590-A, and as appearing in Exhibit B, this is P5,950. The
showing that the assessed value of the property in case, therefore, falls within the exclusive original
1991 was P5,950.00. The petitioners, however, did not jurisdiction of the Municipal Trial Court of Romblon
bother to adduce in evidence the tax declaration which has jurisdiction over the territory where the
containing the assessed value of the property when property is located, and not the court a quo.[24]
they filed their complaint in 1996. Even assuming that
the assessed value of the property in 1991 was the It is elementary that the tax declaration indicating
same in 1995 or 1996, the MTC, and not the RTC had the assessed value of the property enjoys the
jurisdiction over the action of the petitioners since the
presumption of regularity as it has been issued by the SEC. 19. Jurisdiction in civil cases. – Regional Trial
proper government agency.[25] Courts shall exercise exclusive original jurisdiction:

Unavailing also is the petitioners’ argumentation …

that since the complaint, likewise, seeks the recovery
of damages exceeding P20,000.00, then the RTC had (8) In all other cases in which the demand, exclusive of
original jurisdiction over their actions. Section 33(3) of interest, damages of whatever kind, attorney's fees,
B.P. Blg. 129, as amended, quoted earlier, explicitly litigation expenses, and costs or the value of the
excludes from the determination of the jurisdictional property in controversy exceeds One Hundred
amount the demand for “interest, damages of whatever Thousand Pesos (P100,000.00) or, in such other cases
kind, attorney’s fees, litigation expenses, and costs.” in Metro Manila, where the demand, exclusive of the
This Court issued Administrative Circular No. 09-94 above-mentioned items exceeds Two Hundred
setting the guidelines in the implementation of R.A. No. Thousand Pesos (P200,000.00).
7691, and paragraph 2 thereof states that –
The said provision is applicable only to “all other
2. The exclusion of the term “damages of whatever cases” other than an action involving title to, or
kind” in determining the jurisdictional amount under possession of real property in which the assessed
Section 19(8) and Section 33(1) of B.P. Blg. 129, as value is the controlling factor in determining the court’s
amended by R.A. 7691, applies to cases where the jurisdiction. The said damages are merely incidental
damages are merely incidental to or a consequence of to, or a consequence of, the main cause of action for
the main cause of action. However, in cases where recovery of possession of real property.[26]
the claim for damages is the main cause of action, or
one of the causes of action, the amount of such claim Since the RTC had no jurisdiction over the action of
shall be considered in determining the jurisdiction of the petitioners, all the proceedings therein, including
the court. the decision of the RTC, are null and void. The
complaint should perforce be dismissed.[27]
Neither may the petitioners find comfort and solace
in Section 19(8) of B.P. Blg. 129, as amended, which WHEREFORE, the petition is DENIED. The
states: assailed Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 63737 are AFFIRMED.
Costs against the petitioners.
 From the pleadings and memoranda respectively
filed by the parties, the Court gathers the following
CESAR SAMPAYAN, petitioner, vs. The factual antecedents:
HONORABLE COURT OF APPEALS,
CRISPULO VASQUEZ and FLORENCIA On July 8, 1992, in the MCTC of Bayugan and
VASQUEZ GILSANO,respondents. Sibagat, Agusan del Sur, the siblings Crispulo Vasquez
and Florencia Vasquez-Gilsano filed complaint for
DECISION forcible entry against Cesar Sampayan for allegedly
having entered and occupied a parcel of land,
GARCIA, J.:
identified as Lot No. 1959, PLS-225, and built a house
In this verified petition for review on certiorari under thereon without their knowledge, consent or authority,
Rule 45 of the Rules of Court, petitioner Cesar the entry having been supposedly effected through
Sampayan seeks the annulment and setting aside of strategy and stealth.
the following issuances of the Court of Appeals in CA-
In their complaint, the plaintiffs (now private
G.R. SP No. 43557, to wit:
respondents), substantially alleged that their mother
1. Decision dated May 16, 2002, denying his petition Cristita Quita was the owner and actual possessor of
for review and affirming an earlier decision of the Lot No. 1959; that after their mother’s death on
Regional Trial Court at Agusan del Sur, Branch VII, January 11, 1984, they became co-owners pro-indiviso
which in turn reversed on appeal a favorable judgment and lawful possessors of the same lot; that on June 1,
of the Municipal Circuit Trial Court (MCTC) of Bayugan 1992, while they were temporarily absent from the lot
and Sibagat, Agusan del Sur in a forcible entry case in question, defendant Cesar Sampayan, through
thereat commenced against him by herein private strategy and stealth, entered the lot and built a house
respondents, the brother-and-sister Crispulo Vasquez thereon, to their exclusion; and that, despite their
and Florencia Vasquez-Gilsano; and repeated demands for Sampayan to vacate the lot and
surrender the possession thereof to them, the latter
2. Resolution dated November 7, 2002, which denied failed and refused to do so.
his motion for reconsideration.
In his answer, defendant Sampayan denied the
material allegations of the complaint and averred that
neither the plaintiffs nor their mother have ever been in
possession of Lot No. 1959 and that he does not even 2. Certificate of Death showing the date of death of
know plaintiffs’ identities or their places of residence. Cristita Quita on January 11, 1984;
He claimed that he did not enter the subject lot by
stealth or strategy because he asked and was given 3. Certificate issued by Fermina R. Labonete, Land
permission therefor by Maria Ybañez, the overseer of Management Officer-III of CENRO X-3-E, DENR-X-3-
the lot’s true owners, Mr. and Mrs. Anastacio Terrado 9, Bayugan, Agusan del Sur showing that Lot 1959,
who were then temporarily residing in Cebu City for PLS-225 is covered by a Miscellaneous Sales
business purposes. In the same answer, Sampayan Application of Cristita Quita;
alleged that the plaintiffs’ claim has long prescribed for
the reason that the lot in dispute had been possessed 4. Affidavit of one Emiliano G. Gatillo to the effect
and declared for taxation purposes by the spouses that he was the one who gave the lot in question to
Felicisimo Oriol and Concordia Balida-Oriol in 1960, Cristita Quita sometime in 1957 and that since then the
and that in 1978, the Oriol spouses sold one-half (1/2) latter had been occupying the lot;
of the lot to the spouses Mr. and Mrs. Anastacio
Plaintiffs also filed a Supplemental Position Paper
Terrado, while the other half, to the couple Manolito
dated July 13, 1994 for the purpose of showing that
Occida and Juliana Sambale-Occida in 1979. Both
Cristita Quita is one of the oppositors in Cadastral
vendees, so Sampayan averred, have actually
Case No. 149. Together with said position paper, they
possessed the respective portions purchased by them
submitted a copy of the Answer/Opposition earlier filed
up to the present. He thus prayed for the dismissal of
in Cadastral Case No. 149. In said cadastral case,
the complaint.
Cristita Quita was claiming Lot 1959, thus her name
In the ensuing proceedings following the joinder of appeared in the list of oppositors therein.
issues, the plaintiffs, to prove that they have been in
5. The decision in the said Cadastral Case No. 149
actual possession of Lot No. 1959 when defendant
showing that the then Court of First Instance of Agusan
Sampayan effected his entry thereto, submitted in
del Sur declared Lot No. 1959 as one of the lots
evidence the following documents:
subject of the same cadastral case.
1. Tax Declaration No. 3180 in the name of Cristita
For his part, defendant Sampayan, to prove the
Quita;
allegations in his answer, offered in evidence the
following:
 1. Tax Declaration No. A-11698 in the name of 6. Protest filed with the CENRO, Agusan del Sur
Felicisimo Oriol, which cancels Tax Declaration 8103; by the vendee Juliana Sambale-Occida against the
Miscellaneous Sales Application of Cristita Quita;
2. Tax Declaration No. GRB-01-930 in the name of
Felicisimo Oriol which cancels Tax Declaration No. A- 7. Affidavit of Dionesia Noynay attesting to the fact
11698; that she is residing in Lot No. 1957, a lot adjacent to
the lot in question, since 1960 up to the present. In the
3. Deed of Absolute Sale of Portion of Land, dated same affidavit, Dionisia claimed that neither Cristita
April 30, 1979, executed by Jesus Oriol for and in Quita, much less the plaintiffs, had ever possessed Lot
behalf of the spouses Felicisimo Oriol and Concordia No. 1959. She claimed that it was the Occida couple
Balida-Oriol, conveying the one-half (1/2) portion of Lot who possessed said lot and introduced improvements
No. 1959 to the couple Manolito Occida and Juliana thereon; and
Sambale-Occida who possessed the one-half (1/2)
portion and introduced improvements thereon, such as 8. Affidavit of Juliana Occida and Maria Ybañez to
coconut and caimito trees; show the impossibility of plaintiffs’ possession of the
same lot.
4. Deed of Relinquishment of Rights of Portion of
Land, executed by the spouses Oriol in favor of the Meanwhile, on March 21, 1996, while the case was
same couple Manolito Occida and Juliana Sambale- pending with the MCTC, the presiding judge thereof
Occida, to further strengthen the transfer of possession personally conducted an ocular inspection of the
and whatever possessory rights the Oriols had in the contested lot in the presence of the parties and/or their
lot in question; counsels. Among those found in the area during the
inspection are: the house of defendant Sampayan; the
5. Deed of Absolute Sale of Land executed by dilapidated house of a certain Peter Siscon; and a
Concordia Balida-Oriol with the conformity of Teodosio portion of the house of Macario Noynay, husband of
Mosquito (another claimant), to prove that the other Dionisia Noynay, one of Sampayan’s witnesses.
half of Lot No. 1959 was sold in 1978 to Mr. and Mrs.
Anastacio Terrado whose overseer allowed Sampayan Based on his ocular findings, the judge concluded
to enter and occupy the premises; that the improvements he saw in the premises could
never have been introduced by the plaintiffs nor by
their mother Cristita Quita but by the vendees of the
same lot. Reproduced by petitioner Jose Sampayan in of the said property since 1957, openly,
the instant petition as well as in the Memorandum he exclusively, continuously, adversely and in the
subsequently filed with this Court, the MCTC judge’s concept of an owner is a naked claim, unsupported
findings and observations during the ocular inspection, by any evidence.
about which the herein private respondents took no
exception whatsoever, are hereunder quoted, as Clearly, from the appearance of the improvements
follows: introduced by the predecessors-in-interest of the
defendant, it is showed that they have been in
“Noted inside the land are the house of the defendant, possession of the land for more than one (1) year.
Cesar Sampayan, of Peter Siscon, which appears to Hence, the action of the plaintiffs, if any, is accion
be dilapidated, and part of the house of Macario publiciana or plenaria de possession”[1] (Emphasis
Noynay which encroached to the land in question. supplied).
Planted on the land are five (5) coconut trees, fruit
bearing, three (3) not fruit bearing coconut trees, and In time, the MCTC rendered judgment dismissing
three (3) star apple or caimito trees. Defendant the compliant “for lack of merit”.
Sampayan admitted that he started occupying the land
since 1992. It is admitted by the parties during the Therefrom, the plaintiffs appealed to the Regional
ocular inspection that one-half (1/2) portion of the land Trial Court (RTC) at Agusan del Sur, which appeal was
was bought by a certain Occida from certain Mr. and raffled to Branch VII thereof. In a decision dated
Mrs. Felicisimo Oriol. December 5, 1996, said court reversed that of the
MCTC, taking note of the fact that Cristita Quita was
The findings in the ocular inspection have among the oppositors in Cadastral Case No. 149 and
confirmed the allegation of the defendant that his that she filed a Miscellaneous Sales Application over
predecessors-in-interest have introduced the lot. On the basis of such finding, the RTC
improvements by planting caimito trees, coconut concluded that it was Cristita Quita, predecessor-in-
trees, and others on the land in question. interest of the herein private respondents, who was in
actual prior physical possession of Lot No. 1959.
Nothing can be seen on the land that plaintiffs had
once upon a time been in possession of the land. Unable to accept the RTC judgment, Sampayan
The allegation that Cristita Quita, the predecessor- went to the Court of Appeals on a petition for review,
in-interest of the plaintiffs had been in possession thereat docketed as CA-G.R. SP No. 43557.
 As stated at the threshold hereof, the Court of PRIVATE RESPONDENTS HAVE NEVER DONE - IS
Appeals, in the herein assailed Decision dated May CONTRARY TO LAW”.[4]
16, 2002,[2] denied Sampayan’s petition. His motion for
reconsideration having been similarly denied by that In the main, petitioner maintains that based on the
court in its Resolution of November 7, 2002, pieces of evidence on record, he had sufficiently
[3]
Sampayan is now with us via the present recourse, it proven his prior physical possession of the subject lot.
being his submissions - Upon this premise, he argues that private respondents’
complaint for forcible entry has no leg to stand on,
“I. adding that the proper remedy available to the latter
is accion publiciana or plenaria de posesion which falls
THAT THE COURT OF APPEALS ERRED IN RULING under the original jurisdiction of Regional Trial Courts
THAT THE MUNICIPAL CIRCUIT TRIAL COURT OF and not of Municipal Circuit Trial Courts.
BAYUGAN, AGUSAN DEL SUR, HAS JURISDICTION
OVER THE CASE, CONSIDERING THAT DURING As we see it, the arguments put forward by the
THE HEARING THEREOF IT WAS FOUND OUT BY petitioner crystallize to one pivotal question: will the
THE SAID MUNICIPAL COURT THAT ACCION complaint for forcible entry in this case prosper? To
PUBLICIANA OR PLENARIA DE POSESION, AND resolve this, however, we must first determine as to
NOT FORCIBLE ENTRY, IS THE PROPER ACTION; who between the herein parties was in prior actual
physical possession of the subject lot at the time the
II. complaint was filed in the MCTC. For, as we have said
in Gaza vs. Lim[5],
THAT THE CONCLUSION OF THE HONORABLE
COURT OF APPEALS THAT PRIVATE “xxx In an action for forcible entry, the plaintiff must
RESPONDENTS HAVE BEEN IN PRIOR ACTUAL prove that he was in prior possession of the land or
POSSESSION IS CONTRADICTED BY EVIDENCE building and that he was deprived thereof by means of
ON RECORD, AND CONSIDERING THAT THE force, intimidation, threat, strategy or stealth. xxx”
POSSESSION TO BE LEGALLY SUFFICIENT,
CONSIST (SIC) IN THE EXERCISE OF DOMINIUM We emphasize, absence of prior physical
OVER IT, SUCH AS FENCING, CULTIVATING OR possession by the plaintiff in a forcible entry case
OTHER UNMISTAKABLE ACTS OF EXCLUSIVE warrants the dismissal of his complaint.
CUSTODY AND CONTROL – FACTS WHICH THE
 Undoubtedly, the issue of prior physical possession premised on the supposed absence of evidence and
is one of fact, and settled is the rule that this Court is contradicted by the evidence on record; and (11) when
not a trier of facts and does not normally embark on a the Court of Appeals manifestly overlooked certain
re-examination of the evidence adduced by the parties relevant facts not disputed by the parties, which, if
during trial. Of course, the rule admits of exceptions. properly considered, would justify a different
So it is that in Insular Life Assurance Company, Ltd. conclusion.”
vs. CA,[6] we wrote:
To our mind, exceptions (5) and (11) are present in
“[i]t is a settled rule that in the exercise of the Supreme this case.
Court's power of review, the Court is not a trier of facts
and does not normally undertake the re-examination of However, before delving into the question of who
the evidence presented by the contending parties' as between the petitioner and private respondents had
during the trial of the case considering that the findings prior physical possession of the subject lot, we deem it
of facts of the CA are conclusive and binding on the best to first resolve the issue of whether or not the
Court. However, the Court had recognized several MCTC had jurisdiction over the complaint filed in this
exceptions to this rule, to wit: (1) when the findings are case, an issue also raised by the petitioner.
grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly Relying on the conclusion of the MCTC that private
mistaken, absurd or impossible; (3) when there is respondents’ proper remedy is accion publiciana or
grave abuse of discretion; (4) when the judgment is plenaria de posesion, and not forcible entry, petitioner
based on a misapprehension of facts; (5) when the would deny the MCTC’s jurisdiction over the case.
findings of facts are conflicting; (6) when in making its
Petitioner is in error.
findings the Court of Appeals went beyond the issues
of the case, or its findings are contrary to the In Sarmiento vs. CA[7], we held:
admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) “[t]o give the court jurisdiction to effect the ejectment of
when the findings are conclusions without citation of an occupant or deforciant on the land, it is necessary
specific evidence on which they are based; (9) when that the complaint should embody such a statement of
the facts set forth in the petition as well as in the facts as brings the party clearly within the class of
petitioner's main and reply briefs are not disputed by cases for which the statutes provide a remedy, as
the respondent; (10) when the findings of fact are these proceedings are summary in nature. The
complaint must show enough on its face to give the improvements by planting caimito trees, coconut trees,
court jurisdiction without resort to parol testimony. The and others on the land in question”, adding that
jurisdictional facts must appear on the face of the “[N]othing can be seen on the land that plaintiff had
complaint. x x x” once upon a time been in possession of the land”, and
categorically stating that “[T]he allegation that Cristita
Clear it is from the above that for the MCTC to Quita, the predecessor-in-interest of the plaintiffs had
acquire jurisdiction over a forcible entry case, it is been in possession of the said property since 1957,
enough that the complaint avers the jurisdictional openly, exclusively, continuously, adversely and in the
facts, i.e. that the plaintiff had prior physical concept of an owner is a naked claim, unsupported by
possession and that he was deprived thereof by the any evidence”.
defendant through force, intimidation, threats, strategy
and stealth.[8] The complaint in this case makes such Then, too, there is the sworn affidavit of Dionesia
an averment. Hence, the irrelevant circumstance that Noynay to the effect that she had been residing since
the evidence adduced during the hearing rendered 1960 onward on Lot No. 1957, the lot adjacent to Lot
improper an action for forcible entry is of no moment No. 1959, and that neither the private respondents nor
and cannot deprive the MCTC of its jurisdiction over their mother had ever possessed Lot No. 1959.
the case. The MCTC continues to have that Coming as it does from an immediate neighbor,
jurisdiction. Dionesia’s statement commands great weight and
respect. Incidentally, the MCTC judge himself found
We shall now address the more decisive question during the ocular inspection that a portion of the house
of prior physical possession. of Macario Noynay, husband of Dionesia, protruded on
Lot No. 1959.
After a careful evaluation of the evidence at hand,
we find for the petitioner. We note that in the herein assailed decision, the
Court of Appeals attached much significance to the fact
To begin with, we are at once confronted by the that private respondents’ mother Cristita Quita was an
uncontested findings of the MCTC judge himself during oppositor in Cadastral Case No. 149. We rule and so
his ocular inspection of the premises in dispute that hold that the mother’s being an oppositor in said
what he saw thereat “confirmed the allegations of the cadastral case does not, by itself, establish prior
defendant [now petitioner Sampayan] that his physical possession because not all oppositors in
predecessors-in-interest have introduced
cadastral cases are actual possessors of the lots or In his complaint, petitioner averred that he is the
lands subject thereof. registered owner of three lots situated at Lanzona
Subdivision, Matina, Davao City, covered by Transfer
WHEREFORE, the instant petition is hereby Certificates of Title (TCT) Nos. 108174, 108175, and
GRANTED and the Decision and Resolution, 108176. Respondent spouses are the registered
respectively dated May 16, 2002 and November 7, owners of an adjacent parcel of land covered by TCT
2002, of the Court of Appeals REVERSED and SET No. T-247792. The previous occupant of this property
ASIDE. built a building which straddled both the lots of the
herein parties. Respondents have been using the
building as a warehouse.

Petitioner further alleged in his complaint that in

RUBEN SANTOS, petitioner, vs. SPOUSES TONY 1985, when he bought the three lots, he informed
AYON and MERCY AYON, respondents. respondents that the building occupies a portion of his
land. However, he allowed them to continue using the
DECISION building. But in 1996, he needed the entire portion of
his lot, hence, he demanded that respondents demolish
SANDOVAL-GUTIERREZ, J.: and remove the part of the building encroaching his
property and turn over to him their possession. But
For our resolution is the petition for review they refused. Instead, they continued occupying the
on certiorari assailing the Decision[1] of the Court of contested portion and even made improvements on the
Appeals dated October 5, 1998 in CA-G.R. SP No. building. The dispute was then referred to
4735 and its Resolution[2] dated December 11, 1998 the barangay lupon, but the parties failed to reach an
denying the motion for reconsideration. amicable settlement. Accordingly, on March 27, 1996,
a certification to file action was issued.
The petition alleges that on November 6, 1996,
Ruben Santos, petitioner, filed with the Municipal Trial In their answer, respondents sought a dismissal of
Court in Cities (MTCC), Branch 2, Davao City a this case on the ground that the court has no
complaint for illegal detainer against spouses Tony and jurisdiction over it since there is no lessor-lessee
Mercy Ayon, respondents, docketed as Civil Case No. relationship between the parties. Respondents denied
3506-B-96. they were occupying petitioner’s property by mere
tolerance, claiming they own the contested portion and needed the same, he has the right to eject them
have been occupying the same long before petitioner through court action.
acquired his lots in 1985.
Respondents then elevated the case to the Court of
On July 31, 1997, the MTCC rendered its Decision Appeals through a petition for review. In its Decision
in favor of petitioner, thus: dated October 5, 1988 now being challenged by
petitioner, the Court of Appeals held that petitioner’s
“WHEREFORE, judgment is rendered in favor of the proper remedy should have been
plaintiff and against the defendants ordering the latter, an accion publiciana before the RTC, not an action for
their successors-in-interest and other persons acting in unlawful detainer, thus:
their behalf to vacate the portion of the subject
properties and peacefully surrender possession thereof “In this case, petitioners were already in possession of
to plaintiff as well as dismantle/remove the structures the premises in question at the time private respondent
found thereon. bought three (3) lots at the Lanzona Subdivision in
1985, a portion of which is occupied by a building being
Defendants are further ordered to pay reasonable value used by the former as a bodega. Apart from private
for the use and occupation of the encroached area in respondent’s bare claim, no evidence was alluded to
the amount of One Thousand Pesos (P1,000.00) a show that petitioners’ possession was tolerated by (his)
month beginning September 1996 and the subsequent predecessor-in-interest. The fact that respondent might
months thereafter until premises are vacated; to pay have tolerated petitioners’ possession is not decisive.
attorney’s fees of Ten Thousand Pesos (P10,000.00); What matters for purposes of determining the proper
and to pay the costs of suit. cause of action is the nature of petitioners’ possession
from its inception. And in this regard, the Court notes
SO ORDERED.”[3] that the complaint itself merely alleges that defendants-
petitioners have been ‘occupying a portion of the above
On appeal, the Regional Trial Court (RTC), Branch
properties of the plaintiff for the past several years by
11, Davao City, in its Decision dated February 12, 1998
virtue of the tolerance of the plaintiff.’ Nowhere is it
in Civil Case No. 25, 654-97, affirmed in toto the MTCC
alleged that his predecessor likewise tolerated
judgment.[4] The RTC upheld the finding of the MTCC
petitioners’ possession of the premises. x x x.
that respondents’ occupation of the contested portion
was by mere tolerance. Hence, when petitioner
Consequently, x x x, respondent should present his The sole issue here is whether the Court of Appeals
claim before the Regional Trial Court in an accion committed a reversible error of law in holding that
publiciana and not before the Municipal Trial Court in a petitioner’s complaint is within the competence of the
summary proceeding of unlawful detainer. RTC, not the MTCC.

WHEREFORE, the decision under review is hereby Petitioner contends that it is not necessary that he
REVERSED and SET ASIDE. Accordingly, the has prior physical possession of the questioned
complaint for unlawful detainer is ordered property before he could file an action for unlawful
DISMISSED.”[5] detainer. He stresses that he tolerated respondents’
occupancy of the portion in controversy until he needed
Petitioner filed a motion for reconsideration, but was it. After his demand that they vacate, their continued
denied by the Appellate Court in its Resolution dated possession became illegal. Hence, his action for
December 11, 1998. unlawful detainer before the MTCC is proper.

Hence, the instant petition for review Respondents, in their comment, insisted that they
on certiorari ascribing to the Court of Appeals the have been in possession of the disputed property even
following errors: before petitioner purchased the same on April 10,
1985. Hence, he cannot claim that they were
“I occupying the property by mere tolerance because they
were ahead in time in physical possession.
THE HONORABLE COURT OF APPEALS
MISAPPLIED THE LAW IN DISMISSING THE We sustain the petition.
INSTANT CASE ON THE GROUND THAT
PETITIONER SHOULD PRESENT HIS CLAIM It is an elementary rule that the jurisdiction of a
BEFORE THE REGIONAL TRIAL COURT IN court over the subject matter is determined by the
AN ACCION PUBLICIANA. allegations of the complaint and cannot be made to
depend upon the defenses set up in the answer or
II pleadings filed by the defendant.[6] This rule is no
different in an action for forcible entry or unlawful
THE FINDINGS OF THE HONORABLE COURT OF
detainer.[7] All actions for forcible entry or unlawful
APPEALS IS NOT IN CONSONANCE WITH EXISTING
detainer shall be filed with the proper Metropolitan Trial
LAWS AND JURISPRUDENCE.”
Courts, the Municipal Trial Courts and the Municipal them, for the restitution of such possession, together
Circuit Trial Courts, which actions shall include not only with damages and costs.”
the plea for restoration of possession but also all claims
for damages and costs arising therefrom. [8] The said Under the above provision, there are two entirely
courts are not divested of jurisdiction over such cases distinct and different causes of action, to wit: (1) a case
even if the defendants therein raises the question of for forcible entry, which is an action to recover
ownership over the litigated property in his pleadings possession of a property from the defendant whose
and the question of possession cannot be resolved occupation thereof is illegal from the beginning as he
without deciding the issue of ownership.[9] acquired possession by force, intimidation, threat,
strategy or stealth; and (2) a case for unlawful detainer,
Section 1, Rule 70 on forcible entry and unlawful which is an action for recovery of possession from
detainer of the 1997 Rules of Civil Procedure, as defendant whose possession of the property was
amended, reads: inceptively lawful by virtue of a contract (express or
implied) with the plaintiff, but became illegal when he
“Section 1. Who may institute proceedings, and continued his possession despite the termination of his
when. – Subject to the provisions of the next right thereunder.[10]
succeeding section, a person deprived of the
possession of any land or building by force, Petitioner’s complaint for unlawful detainer in Civil
intimidation, threat, strategy, or stealth, or a lessor, Case No. 3506-B-96 is properly within the competence
vendor, vendee, or other person against whom the of the MTCC. His pertinent allegations in the complaint
possession of any land or building is unlawfully withheld read:
after the expiration or termination of the right to hold
possession, by virtue of any contract, express or “4. That defendants (spouses) have constructed an
implied, or the legal representatives or assigns of any extension of their residential house as well as other
such lessor, vendor, vendee or other person may, at structures and have been occupying a portion of the
any time within one (1) year after such unlawful above PROPERTIES of the plaintiff for the past several
deprivation or withholding of possession, bring an years by virtue of the tolerance of the plaintiff since
action in the proper Municipal Trial Court against the at the time he has no need of the property;
person or persons unlawfully withholding or depriving of
possession, or any person or persons claiming under 5. That plaintiff needed the property in the early
part of 1996 and made demands to the defendants
to vacate and turn over the premises as well as the year therefrom, or on November 6, 1996, petitioner filed
removal (of) their structures found inside the the instant complaint.
PROPERTIES of plaintiff; that without any
justifiable reasons, defendants refused to vacate It bears stressing that possession by tolerance is
the portion of the PROPERTIES occupied by them lawful, but such possession becomes unlawful when
to the damage and prejudice of the plaintiff. the possessor by tolerance refuses to vacate upon
demand made by the owner. Our ruling in Roxas vs.
6. Hence, plaintiff referred the matter to the Office Court of Appeals[13] is applicable in this case: “A person
of the Barangay Captain of Matina Crossing 74-A, who occupies the land of another at the latter’s
Davao City for a possible settlement sometime in the tolerance or permission, without any contract between
latter part of February 1996. The barangay case them, is necessarily bound by an implied promise that
reached the Pangkat but no settlement was had. he will vacate upon demand, failing which, a summary
Thereafter, a ‘Certification To File Action’ dated March action for ejectment is the proper remedy against him.”
27, 1996 was issued x x x;
WHEREFORE, the petition is GRANTED. The
[11]
x x x.” (underscoring ours) assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 47435 are hereby
Verily, petitioner’s allegations in his complaint REVERSED and SET ASIDE. The Decision dated
clearly make a case for an unlawful detainer. We find February 12, 1998 of the Regional Trial Court, Branch
no error in the MTCC assuming jurisdiction over 11, Davao City in Civil Case No. 25, 654-97, affirming
petitioner’s complaint. A complaint for unlawful detainer the Decision dated July 31, 1997 of the Municipal Trial
is sufficient if it alleges that the withholding of the Court in Cities, Branch 2, Davao City in Civil Case No.
possession or the refusal to vacate is unlawful without 3506-B-96, is hereby REINSTATED.
necessarily employing the terminology of the law.
[12]
Here, there is an allegation in petitioner’s complaint
that respondents occupancy on the portion of his
property is by virtue of his tolerance. Petitioner’s
cause of action for unlawful detainer springs from
respondents’ failure to vacate the questioned premises
upon his demand sometime in 1996. Within one (1) RENE GANILA,* EDUARDO DUMADA-OG, SR.,
RAFAEL GANILA, JOSE PASTRANA,
 LOURDES GANILA, FLORENTINO GANILA, Jordan, Guimaras. Private respondent alleged that
SERAFIN GANILA, LORETO ARELLANO, she owns Lot 1227 of the Cadastral Survey of Jordan,
CONRADO GANILA, VIVENCIO ALVIOR, Guimaras, with an area of 43,210 square meters; that
EDUARDO GANTALA, AMPARO VILLANUEVA, she inherited the lot from her parents; and that she
ELEUTERIO SILVA, ADELINA GANILA, only tolerated petitioners to construct residential
FELIZARDO GANILA, SR., ENRIQUE GANILA, houses or other improvements on certain portions of
ABRAHAM TANONG, EMILIO ALFARAS, JR., the lot without rental. Sometime in September or
BAPTIST CHRISTIAN LEARNING October 1996, private respondent demanded that the
CENTER,petitioners, vs. HON. COURT OF petitioners vacate the lot and remove their houses and
APPEALS AND VIOLETA C. other improvements thereon. Petitioners refused,
HERRERA, respondents. despite offer of money by way of assistance to them.
After thebarangay conciliation failed, private
DECISION respondent filed the complaints.

QUISUMBING, J.: In their Answers,[5] eight[6] of the petitioners

claimed that Lot 1227 was formerly a shoreline which
For review on certiorari are the Decision[1] dated they developed when they constructed their respective
March 30, 2001 of the Court of Appeals in CA-G.R. SP houses. Another eight[7]maintained that their houses
No. 58191, and its Resolution[2] dated October 18, stood on Lot 1229 of the Cadastral Survey of Jordan,
2001 denying the motion for reconsideration. The Guimaras. The other three[8] asserted that Lot 1227 is a
assailed decision denied the petition to set aside social forest area.
the Resolution[3] of the Regional Trial Court (RTC) of
San Miguel, Jordan, Guimaras, Branch 65, affirming At the preliminary conference, the parties agreed to
the Order of the Municipal Circuit Trial Court (MCTC) designate two geodetic engineers as commissioners of
for the 19 petitioners to vacate the contested parcel of the MCTC to conduct a relocation survey of Lot 1227
land. and to identify who among the petitioners have houses
within the lot.[9]
The facts are as follows:
The commissioners reported that: (1) the house of
On March 19, 1997, private respondent Violeta Henry Gabasa, defendant in Civil Case No. 288-J, is
Herrera filed 21 ejectment Complaints[4] before the almost outside Lot 1227; (2) the house of Ludovico
16th MCTC, Jordan-Buenavista-Nueva Valencia,
Amatorio, defendant in Civil Case No. 289-J, Petitioners appealed to the RTC, Branch 65, at
diagonally traversed the boundary; and (3) the houses Jordan, Guimaras, which decided as follows:
of the 19 petitioners are inside Lot 1227. [10]
WHEREFORE, premises considered, the decision in
Eight months after herein petitioners’ failure to Civil Cases Nos. 0270-J, 0272-J, 0273-J, 0274-J,
comment on the manifestation of private respondent to 0275-J, 0276-J, 0277-J, 0278-J, 0279-J, 0280-J, 0281-
terminate the preliminary conference, the MCTC J, 0282-J, 0283-J, 0284-J, 0285-J, 0286-J, 0287-J,
terminated the preliminary conference.[11] Thereafter, 0291-J and 0292-J are hereby affirmed.
petitioners’ counsel Atty. Nelia Jesusa L. Gonzales
failed to file her clients’ position papers and affidavits, The decision of the court below in Civil Cases Nos.
even after they sought a 30-day extension to file the 0288-J and 0289-J are set aside. Civil Cases Nos.
same.[12] 0288-J and 0289-J are hereby DISMISSED.

Consequently, the MCTC decided the cases as SO ORDERED.[14]

follows:
The RTC ruled that the evidence showed the better
WHEREFORE, premises considered, judgment is right of private respondent to possess Lot 1227.
hereby rendered in favor of the plaintiff whereby each Private respondent’s position paper, affidavit and tax
of the twenty-one (21) defendants are hereby ordered: declaration supported her allegations. In addition, the
commissioners’ report and sketch plan showed that
1. To vacate Lot 1227 of the Cadastral indeed petitioners occupy Lot 1227. On the other hand,
Survey of Jordan, Guimaras; according to the RTC, the petitioners failed to present
evidence which would show that they are entitled to
2. To pay Two Hundred Pesos (P200.00) per possess the lot.
month from October, 1996 as compensation
for the use of the property until the same is Based on the sketch plan, the RTC dismissed the
vacated; and cases against Gabasa and Amatorio since their houses
occupy only a small area of Lot 1227. It declared that
3. To pay Two Thousand Pesos (P2,000.00) Gabasa and Amatorio believed in good faith that the
as attorney’s fees and litigation expenses. whole area they occupied was part of the seashore.

SO ORDERED.[13]
 The 19 petitioners, who were ordered to vacate the they possessed Lot 1227 in good faith for more than
lot, filed a joint petition for review with the Court of 30 years in the concept of owners. And two, there was
Appeals. The appellate court denied the petition. no withholding of possession since private respondent
Petitioners moved for reconsideration and filed an was not in prior possession of the lot.
amended petition. The Court of Appeals, however,
affirmed the factual findings and conclusions arrived at Private respondent states in her Comment before
by the trial courts and denied the amended petition for us that the allegations in her Complaints make out a
lack of merit.[15] It also denied the motion for clear case of unlawful detainer which is cognizable by
reconsideration. the MCTC. We are in agreement with her stance.
There was no error in the choice of the complainant’s
Petitioners are now before us, on a petition for remedy, a matter left to her determination as the
review, alleging that: suitor. And the complaint itself is defined by the
allegations therein, not the allegations of the
The Honorable Court of Appeals, with due respect and defendants.
deference, committed a reversible error in the
interpretation/application of the law in the instant case At the outset, we note that petitioners question the
and in the appreciation of the facts and evidence MCTC’s jurisdiction yet they admit in their preliminary
presented. The Court of Appeals gravely abused its statement that the Complaints filed are indeed for
discretion when it denied and dismissed the petition unlawful detainer, and that the only issue to be
filed by the petitioners.[16] determined is mere physical possession (possession
de facto) and not juridical possession (possession de
After considering the parties’ submissions, we find jure), much less ownership.[17]
three basic issues: (1) Did the MCTC err in taking
jurisdiction over and deciding the cases? (2) Did the While petitioners assert that this case involves only
RTC err in sustaining the MCTC’s judgment? (3) Did deprivation of possession, they confuse the remedy of
the CA err in denying the petition for review filed by the an action for forcible entry with that of unlawful
19 petitioners ordered to be ejected? detainer. In unlawful detainer, prior physical
possession by the plaintiff is not necessary. It is
Petitioners insist that private respondent should enough that plaintiff has a better right of possession.
have filed an action to recover possession de jure, not Actual, prior physical possession of a property by a
a mere complaint for ejectment, for two reasons. One, party is indispensable only in forcible entry cases. In
unlawful detainer cases, the defendant is necessarily for unlawful detainer between the parties springs from
in prior lawful possession of the property but his the failure of petitioners to vacate the lot upon lawful
possession eventually becomes unlawful upon demand of the private respondent. When they refused
termination or expiration of his right to possess. to vacate the lot after her demand, petitioners’
[18]
Thus, the fact that petitioners are in possession of continued possession became unlawful. Her complaint
the lot does not automatically entitle them to remain in for ejectment against respondent, to put it simply, is not
possession. And the issue of prior lawful possession without sufficient basis.
by the defendants does not arise at all in a suit for
unlawful detainer, simply because prior lawful Petitioners’ contention that private respondent
possession by virtue of contract or other reasons is should have filed an action to recover possession de
given or admitted. Unlike in forcible entry where jure with the RTC is not supported by law or
defendants, by force, intimidation, threat, strategy or jurisprudence. The distinction between a summary
stealth, deprive the plaintiff or the prior physical action of ejectment and a plenary action for recovery of
possessor of possession. Here there is no evidence to possession and/or ownership of the land is settled in
show that petitioners entered the lot by any of these our jurisprudence.
acts.
What really distinguishes an action for unlawful
If only to stress the fundamental principles related detainer from a possessory action (accion publiciana)
to present controversy, jurisdiction over unlawful and from a reinvindicatory action (accion
detainer suits is vested in municipal trial courts. [19] And reinvindicatoria) is that the first is limited to the
in ejectment cases, the jurisdiction of the court is question ofpossession de facto. An unlawful detainer
determined by the allegations of the complaint. [20] suit (accion interdictal) together with forcible entry are
the two forms of an ejectment suit that may be filed to
In this case for ejectment, private recover possession of real property. Aside from the
respondent’s allegations sufficiently present a case of summary action of ejectment, accion publiciana or the
unlawful detainer. She alleged that (1) she owns Lot plenary action to recover the right of possession
1227; (2) she tolerated petitioners to construct their and accion reinvindicatoria or the action to recover
houses thereon; (3) she withdrew her tolerance; and ownership which includes recovery of possession,
(4) petitioners refused to heed her demand to vacate make up the three kinds of actions to judicially recover
the lot. The Complaints were also filed within one possession.[21]
year from the date of her demand. The cause of action
 It is not up to defendants, now petitioners herein, to cannot be raised by the petitioners for the first time on
dictate upon plaintiff, now the private respondent, what appeal.[24]
her initial recourse should be. Her choice of an action
for ejectment against so-called squatters is well within Besides, petitioners did not question initially the
her rights. MCTC’s Order dated February 19, 1999, when they
moved for an extension of time to file their position
Petitioners cite the case of Bayubay v. Court of papers and affidavits. They wanted another 30 days
Appeals,[22] and argue that the MCTC’s decision was on top of the 30 days set by the MCTC, which strictly
without jurisdictional or legal basis because the MCTC should have been 10 days only. In this regard,
did not issue a preliminary conference order. They petitioners could not claim that they were denied
assert that the 10-day period to file position papers and sufficient time to file their position papers and affidavits
affidavits only starts after the parties had received a before the trial court. Further, they cannot validly
preliminary conference order. They insist they were invoke our ruling[25] in Bayubay, for in that case there
denied due process when the MCTC decided the was no order at all terminating the preliminary
cases based merely on private conference and requiring the parties to submit position
respondent’s Complaints and affidavit, without papers and affidavits.
considering their Answers.
We note with dismay petitioners’ insistence that we
For her part, private respondent maintains that order the MCTC “to conduct the requisite preliminary
there was substantial compliance with the rules in the conference.” The summary character of ejectment
MCTC’s conduct of the preliminary conference, hence suits will be disregarded if we allow petitioners to
there was no violation of due process nor disregard of further delay this case by allowing a second
its proper jurisdiction. preliminary conference. Ejectment by way of forcible
entry and unlawful detainer cases are summary
Petitioners’ present contention was first raised only proceedings, designed to provide an expeditious
in their appeal to the RTC. Raising it before the means of protecting actual possession or the right to
appellate tribunal is barred by estoppel. [23] They should possession over the property involved. It is a timely
have raised it in the proceedings before the MCTC. In procedure designed to remedy the delay in the
our view, this issue is a mere afterthought, when the resolution of such cases.[26]
MCTC decided against them. Basic rules of fair play,
justice and due process require that as a rule an issue
 Lastly, petitioners aver that private respondent contribute needed revenues to the Government. Such
failed to prove her allegation of ownership of Lot 1227 an act strengthens one’s bona fide claim of acquisition
as it is only based on a tax declaration which is not an of ownership.[27]
evidence of ownership. They also claim that their
possession of the lot was not and could not be by mere The lower courts did not err in adjudicating the
tolerance. However, this is a factual matter best left to issue of possession. Mere absence of title over the lot
the trial courts. is not a ground for the courts to withhold relief from the
parties in an ejectment case. Plainly stated, the trial
What we have now is sufficient evidence showing court has validly exercised its jurisdiction over the
that private respondent has a better right to possess ejectment cases below. The policy behind ejectment
Lot 1227. The commissioners’ report and sketch plan suits is to prevent breaches of the peace and criminal
show that the 19 petitioners occupy the lot, which disorder, and to compel the party out of possession to
corroborate private respondent’s allegation and respect and resort to the law alone to obtain what she
disprove petitioners’ defense that Lot 1227 is a claims is hers. The party deprived of possession must
shoreline; or that Lot 1227 is a social forest area. While not take the law into his or her own hands. [28] For their
not a conclusive evidence of ownership, private part, herein petitioners could not be barred from
respondent’s tax declaration constitutes proof that she defending themselves before the court adequately, as
has a claim of title over the lot. It has been held that: a matter of law and right.

Although tax declarations or realty tax payment of However, petitioners in their defense should show
property are not conclusive evidence of ownership, that they are entitled to possess Lot 1227. If they had
nevertheless, they are good indicia of possession in any evidence to prove their defenses, they should
the concept of owner for no one in his right mind would have presented it to the MCTC with their position
be paying taxes for a property that is not in his actual papers and affidavits. But they ignored the court’s
or at least constructive possession. They constitute at order and missed the given opportunity to have their
least proof that the holder has a claim of title over the defenses heard, the very essence of due process.
[29]
property. The voluntary declaration of a piece of Their allegations were not only unsubstantiated but
property for taxation purposes manifests not only one’s were also disproved by the plaintiff’s evidence.
sincere and honest desire to obtain title to the property
and announces his adverse claim against the State In sum, we find no reversible error much less any
and all other interested parties, but also the intention to grave abuse of discretion committed by the Court of
Appeals. A person who occupies the land of another at CHICO-
the latter’s tolerance or permission, without any NAZARIO, JJ.
contract between them, is necessarily bound by an
implied promise that he will vacate upon demand, SPOUSES GERRY ONG and
failing which a summary action for ejectment is the ELIZABETH ONG, Promulgated:
proper remedy against him.[30] His status is analogous Respondents.
August 16,
to that of a lessee or tenant whose term of lease has
2005
expired but whose occupancy continued by tolerance
of the owner. In such a case, the date of unlawful x-------------------------------------------------------------------x
deprivation or withholding of possession is to be
counted from the date of the demand to vacate. [31]
DECISION
WHEREFORE, the instant petition is DENIED for
lack of merit. The Decision of the Court of Appeals TINGA, J.:
dated March 30, 2001 and its Resolution dated
October 18, 2001 are AFFIRMED. In a Decision[1] dated 6 January 1998, the Former
First Division of the Court of Appeals overturned the
Costs against petitioners. decisions of the Municipal Trial Court (MTC) and the
Regional Trial Court (RTC) of Mandaue City, ruling
instead that the MTC had no jurisdiction over the
subject complaint for unlawful detainer. This petition
for review prays for the reversal of the aforesaid Court
of Appeals’ Decision.
ROSS RICA SALES CENTER, G.R. No. 132197
INC. and JUANITO KING & The case originated from a complaint for
SONS, INC., Present: ejectment filed by petitioners against respondents,
Petitioners, docketed as Civil Case No. 2376, before the MTC of
PUNO, J., Mandaue City, Branch I. In the complaint, petitioners
Chairman, alleged the fact of their ownership of three (3) parcels
AUSTRIA-MARTINEZ, of land covered by Transfer Certificates of Title (TCT)
- versus - CALLEJO, SR., Nos. 36466, 36467 and 36468. Petitioners likewise
TINGA, and acknowledged respondent Elizabeth Ong’s ownership
of the lots previous to theirs. On 26 January 1995, respondents’ notice of appeal filed on 8 May 1997;
Atty. Joseph M. Baduel, representing Mandaue Prime denied their motion for reconsideration dated 9 May
Estate Realty, wrote respondents informing them of its 1997,[3] and granted petitioners’ motion for immediate
intent to use the lots and asking them to vacate within execution pending appeal.
thirty (30) days from receipt of the letter. But In a Petition for Certiorari with Injunction filed
respondents refused to vacate, thereby unlawfully with the Court of Appeals and treated as a Petition for
withholding possession of said lots, so petitioners Review, the appellate court ruled that the MTC had no
alleged. jurisdiction over said case as there was no contract
between the parties, express or implied, as would
Ross Rica Sales Center, Inc. and Juanito King qualify the same as one for unlawful detainer. Thus,
and Sons, Inc. (petitioners) had acquired the lands the assailed Orders of the MTC and RTC were set
from Mandaue Prime Estate Realty through a sale aside.
made on 23 March 1995. In turn, it appears that Petitioners then took this recourse via Petition for
Mandaue Prime Estate Realty had acquired the Review under Rule 45 of the Rules of Court. The
properties from the respondents through a Deed of principal issues raised before this Court are: (i)
Absolute Sale dated 14 July 1994. However, this latter whether the RTC decision has already become final
deed of sale and the transfers of title consequential and executory at the time the petition for review was
thereto were subsequently sought to be annulled by filed; (ii) whether the allegations in the complaint
respondents in a complaint filed on 13 February 1995 constitute a case for unlawful detainer properly
before the Mandaue RTC against Mandaue Prime cognizable by the MTC; and, (iii) whether petitioners,
Estate Realty.[2] Per record, this case is still pending as registered owners, are entitled to the possession of
resolution. the subject premises.
Meanwhile, the MYC resolved the ejectment We resolve the first argument to be without
case on 24 April 1996, with the decision ordering merit.
respondents to vacate the premises in question and to The following sequence of events is undisputed:
peacefully turn over possession thereof to petitioners. (1) On 1 March 1997,
On appeal, the RTC rendered on 1 March 1997 a the RTC rendered the questioned decision
judgment affirming the MTC’s decision in its entirety. affirming the judgment of the MTC.
On 8 May 1997, respondents filed a notice of (2) On 28 April 1997,
appeal. However, on the following day, they filed a respondents received a copy of the
motion for reconsideration. aforementioned decision.
On 23 June 1997, the RTC issued
an Order which concurrently gave due course to
 (3) On 8 May 1997, petition for review to either the Court of Appeals or the
respondents filed a Notice of Appeal with Supreme Court.[4]
the RTC. Petitioners further argue that respondents, after
(4) On 9 May 1997, having filed the Notice of Appeal which was given due
respondents filed likewise with the RTC course by the RTC, cannot take an inconsistent stand
a Motion for Reconsideration of the such as filing a Motion for Reconsideration. Such
aforementioned 1 March 1997 decision. filing, therefore, did not toll the fifteen (15)-day period
(5) On 23 June 1997, which started running from the date of receipt of the
the RTC of Mandaue issued RTC decision on 28 April 1997 and ended on 13 May
an Order denying respondents’ Motion for 1997.
Reconsideration. Respondents, in their Comment,[5] submit that the
(6) On 9 July 1997, filing of the Notice of Appeal dated 8 May 1997 was
respondents received a copy of the improper, and as such did not produce any legal
aforementioned 23 June 1997 Order. effect. Therefore, the filing of the Motion for
(7) On 24 July 1997, Reconsideration immediately on the following day
respondents filed with the Court of Appeals cured this defect. The RTC refused to subscribe
their motion for an additional period of ten respondents’ position. It justified the denial of
(10) days within which to file their Petition the Motion for Reconsideration on the ground that the
for Review. respondents had already filed a Notice of Appeal.
(8) On 30 July 1997, The Order dated 23 June 1997 stated:
respondents filed with the Court of Appeals On record is a Notice of Appeal by
their Petition for Review. Certiorari filed by Defendants on May 8,
Petitioners assert that the Petition for 1997.
Review was filed beyond the fifteen (15)-day period for Likewise filed by Defendants on May
appeal. They theorize that the period started running 9, 1997 is a Motion for Reconsideration.
on 28 April 1995, the date of receipt of the RTC Considering the Notice of Appeal filed
decision, and ended on 13 May 1997. According to earlier which the court hereby approves, the
them, this reglementary period could not have been Motion for Reconsideration is DENIED.
interrupted by the filing on 9 May 1997 of the Motion The Motion for Immediate Execution
for Reconsideration because of the filing one day Pending Appeal being meritorious, is
earlier of the Notice of Appeal. This Notice of GRANTED.[6] (Emphasis in the original.)
Appeal dated 8 May 1997, albeit the wrong mode of Strangely enough, the Court of Appeals passed
appeal, expressly manifested their intention to file a no comment on this point when it took cognizance of
respondents’ position and reversed the RTC. But does compelling reason and in no case to
this necessarily mean that the RTC was correct when it exceed fifteen (15) days.
declared that the Motion for Reconsideration was
barred by the filing of theNotice of Appeal, no matter Since the unlawful detainer case was filed with
how erroneous the latter mode was? the MTC and affirmed by the RTC, petitioners should
Rule 42 governs the mode of appeal applicable have filed a Petition for Review with the Court of
in this case. Sec. 1 provides: Appeals and not a Notice of Appeal with the RTC.
Section 1. How appeal taken; time for However, we consider this to have been remedied by
filing. -- A party desiring to appeal from a the timely filing of the Motion for Reconsideration on
decision of the RTC rendered in the the following day. Section 3, Rule 50 of the Rules of
exercise of its appellate jurisdiction may file Court allows the withdrawal of appeal at any time, as a
a verified petition for review with the Court matter of right, before the filing of the appellee’s brief.
of Appeals, paying at the same time to the Applying this rule contextually, the filing of the Motion
clerk of said court the corresponding for Reconsideration may be deemed as an effective
docket and other lawful fees, depositing the withdrawal of the defective Notice of Appeal.
amount of P500.00 for costs, and Perforce, the period of appeal was tolled by
furnishing the Regional Trial Court and the the Motion for Reconsideration and started to run
adverse party with a copy of the petition. again from the receipt of the order denying theMotion
The petition shall be filed and served within for Reconsideration. A Motion for Additional Time to
fifteen (15) days from notice of the decision File the Petition was likewise filed with the Court of
sought to be reviewed or of the denial of Appeals. Counting fifteen (15) days from receipt of the
petitioner’s motion for new trial or denial of the Motion for Reconsideration and the ten
reconsideration filed in due time after (10)-day request for additional period, it is clear that
judgment. Upon proper motion and the respondents filed their Petition for Review on time.
payment of the full amount of the docket Petitioners invoke to the ruling in People v. De la
[7]
and other lawful fees and the deposit for Cruz that once a notice of appeal is filed, it cannot be
costs before the expiration of the validly withdrawn to give way to a motion for
reglementary period, the Court of Appeals reconsideration. The factual circumstances in the two
may grant an additional period of fifteen cases are different.
(15) days only within which to file the De la Cruz is a criminal case, governed by
petition for review. No further extension criminal procedure. Section 3, Rule 122 of the Rules of
shall be granted except for the most Court provides that the proper mode of appeal from a
decision of the RTC is a notice of appeal and an
appeal is deemed perfected upon filing of the notice of 36468 of the Register of Deeds of
appeal. Mandaue City, all situated in the City of
In the case at bar, a petition for review before the Mandaue. Copies of said Transfer
Court of Appeals is the proper mode of appeal from a Certificate of Titles are hereto attached as
decision of the RTC. Since the filing of the notice of Annexes “A”, “B”, and “C” respectively and
appeal is erroneous, it is considered as if no appeal made an integral part hereof;
was interposed. 4. That defendant Elizabeth Ong is the
Now on the second and more important issue previous registered owner of said lots;
raised by petitioners: whether the Complaint satisfies 5. That as the previous registered
the jurisdictional requirements for a case of unlawful owner of said lots, defendant Elizabeth
detainer properly cognizable by the MTC. Ong and her husband and co-defendant
The MTC considered itself as having jurisdiction Jerry Ong have been living in the house
over the ejectment complaint and disposed of the constructed on said lots;
same in favor of petitioners. Said ruling was affirmed 6. That on May 6, 1995, plaintiffs,
by the RTC. The Court of Appeals reversed the lower through the undersigned counsel, wrote
courts and found the complaint to be one not for defendants a letter informing them or their
unlawful detainer based on two (2) grounds, namely: intent to use said lots and demanded of
that the allegations fail to show that petitioners were them to vacate said lots within 30 days
deprived of possession by force, intimidation, threat, from receipt of said letter. Copy of said
strategy or stealth; and that there is no contract, letter is hereto attached as Annex “D” and
express or implied, between the parties as would made an integral part thereof;
qualify the case as one of unlawful detainer. 7. That despite demand to vacate, the
We disagree with the Court of Appeals. defendants have refused and still refuse to
The complaint for unlawful detainer contained the vacate said lots, thus, unlawfully
following material allegations: withholding possession of said lots from
.... plaintiffs and depriving plaintiffs of the use
3. That plaintiffs are the owners of Lot of their lots;
No. 2, which is covered by T.C.T. No. 8. That in unlawfully withholding the
36466 of the Register of Deeds of possession of said lots from the plaintiffs,
Mandaue City, Lot No. 1-A which is plaintiffs have suffered damages in the
covered by T.C.T. No. 36467 of the form of unearned rentals in the amount
Register of Deeds of Mandaue City and Lot of P10,000.00 a month
No. 86-A which is covered by T.C.T. No. . . . .[8]
 Well-settled is the rule that what determines the . . . . despite demand to vacate, the
nature of an action as well as which court has defendants have refused and still refuse to
jurisdiction over it are the allegations of the complaint vacate said lots, thus, unlawfully
and the character of the relief sought.[9] withholding possession of said lots from
Respondents contend that the complaint did not plaintiffs and depriving plaintiffs of the use
allege that petitioners’ possession was originally lawful of their lots;[14]
but had ceased to be so due to the expiration of the is already sufficient to constitute an unlawful detainer
right to possess by virtue of any express or implied case.
contract. In the subject complaint, petitioners alleged that
The emphasis placed by the Court of Appeals on they are the registered owners of the lots covered by
the presence of a contract as a requisite to qualify the TCT Nos. 36466, 36467 and 36468. By their implied
case as one of unlawful detainer contradicts the tolerance, they have allowed respondents, the former
various jurisprudence dealing on the matter. owners of the properties, to remain therein.
In Javelosa v. Court of the Appeals,[10] it was held Nonetheless, they eventually sent a letter to
that the allegation in the complaint that there was respondents asking that the latter vacate the said lots.
unlawful withholding of possession is sufficient to make Respondents refused, thereby depriving petitioners of
out a case for unlawful detainer. It is equally settled possession of the lots. Clearly, the complaint
that in an action for unlawful detainer, an allegation establishes the basic elements of an unlawful detainer
that the defendant is unlawfully withholding possession case, certainly sufficient for the purpose of vesting
from the plaintiff is deemed sufficient, without jurisdiction over it in the MTC.
necessarily employing the terminology of the law.[11] Respondents would like to capitalize on the
Hence, the phrase "unlawful withholding" has requisites as cited in the case of Raymundo dela Paz
been held to imply possession on the part of v. Panis.[15] But the citation is a mere reiteration of Sec.
defendant, which was legal in the beginning, having no 1, Rule 70[16] of the Rules of Court. The case doesid
other source than a contract, express or implied, and not provide for rigid standards in the drafting of the
which later expired as a right and is being withheld by ejectment complaint. The case of Co Tiamco v.
defendant.[12] InRosanna B. Barba v. Court of Appeals, Diaz[17] justifies a more liberal approach, thus:
[13]
we held that a simple allegation that the defendant . . . The principle underlying the brevity and
is unlawfully withholding possession from plaintiff is simplicity of pleadings in forcible entry and
sufficient. unlawful detainer cases rests upon
Based on this premise, the allegation in considerations of public policy. Cases of
the Complaint that: forcible entry and detainer are summary in
nature, for they involve perturbation of
 social order which must be restored as Neither the allegation in petitioners’ complaint for
promptly as possible and, accordingly, ejectment nor the defenses thereto raised by
technicalities or details of procedure should respondents sufficiently convert this case into
be carefully avoided.[18] an accion reivindicatoria which is beyond the province
of the MTC to decide. Petitioners did not institute the
Moreover, petitioners fail to mention any of the complaint for ejectment as a means of claiming or
incidents of the pending case involving the annulment obtaining ownership of the properties. The
of deed of sale and title over said property. Petitioners acknowledgment in their pleadings of the fact of prior
know better than to question this in an ejectment ownership by respondents does not constitute a
proceeding, which brings us to the nature of the action recognition of respondents’ present ownership. This is
in this case. meant only to establish one of the necessary elements
Respondents insist that the RTC, and not the for a case of unlawful detainer, specifically the unlawful
MTC, had jurisdiction over the action, it being withholding of possession. Petitioners, in all their
an accion reivindicatoria according to them, on the pleadings, only sought to recover physical possession
ground that petitioners were constantly claiming of the subject property. The mere fact that they claim
ownership over the lands in the guise of filing an action ownership over the parcels of land as well did not
for ejectment. In their Comment,[19]respondents deprive the MTC of jurisdiction to try the ejectment
maintain that they occupy the subject lots as the legal case.
owners. Petitioners, on the other hand, are seeking Even if respondents claim ownership as a
recovery of possession under a claim of ownership defense to the complaint for ejectment, the conclusion
which is tantamount to recovery of possession based would be the same for mere assertion of ownership by
on alleged title to the lands, and therefore is within the the defendant in an ejectment case will not therefore
original jurisdiction of the RTC, so respondents oust the municipal court of its summary jurisdiction.[21]
conclude. This Court inGanadinv. Ramos[22] stated that if what is
This contention is not tenable. prayed for is ejectment or recovery of possession, it
The issue involved in accion reivindicatoria is the does not matter if ownership is claimed by either
recovery of ownership of real property. This differs party. Therefore, the pending actions for declaration
from accion publiciana where the issue is the better of nullity of deed of sale and Transfer Certificates of
right of possession or possession de jure, and accion Title and quieting of title in Civil Case No. MAN-2356
interdictal where the issue is material possession or will not abate the ejectment case.
possession de facto. In an action for unlawful detainer, In Drilon v. Gaurana,[23] this Court ruled that the
the question of possession is primordial while the issue filing of an action for reconveyance of title over the
of ownership is generally unessential.[20] same property or for annulment of the deed of sale
over the land does not divest the MTC of its jurisdiction the ejectment case is merely provisional,
to try the forcible entry or unlawful detainer case before and our affirmance of the trial courts'
it, the rationale being that, while there may be identity decisions as well, would not bar or
of parties and subject matter in the forcible entry case prejudice an action between the same
and the suit for annulment of title and/or reconveyance, parties involving title to the property, if and
the rights asserted and the relief prayed for are not the when such action is brought seasonably
same.[24] before the proper forum.
In Oronce v. Court of Appeals,[25] this Court held
that the fact that respondents had previously filed a The long settled rule is that the issue of
separate action for the reformation of a deed of ownership cannot be subject of a collateral attack.
absolute sale into one of pacto de retro sale or In Apostol v. Court of Appeals, [27] this Court had
equitable mortgage in the same Court of First Instance the occasion to clarify this:
is not a valid reason to frustrate the summary remedy
of ejectment afforded by law to the plaintiff. . . . Under Section 48 of Presidential
Consequently, an adjudication made in an ejectment Decree No. 1529, a certificate of title shall
proceeding regarding the issue of ownership should be not be subject to collateral attack. It cannot
regarded as merely provisional and, therefore, would be altered, modified or cancelled, except in
not bar or prejudice an action between the same a direct proceeding for that purpose in
parties involving title to the land. The foregoing accordance with law. The issue of the
doctrine is a necessary consequence of the nature of validity of the title of the respondents can
forcible entry and unlawful detainer cases where the only be assailed in an action expressly
only issue to be settled is the physical or material instituted for that purpose. Whether or not
possession over the real property, that is, the petitioners have the right to claim
possession de facto and not possession de jure. ownership over the property is beyond the
The Court reiterated this in the case of Tecson v. power of the court a quo to determine in an
Gutierrez[26] when it ruled: action for unlawful detainer.[28]
We must stress, however, that before
us is only the initial determination of With the conclusion of the second issue in favor
ownership over the lot in dispute, for the of petitioners, there is no need to discuss the third
purpose of settling the issue of possession, assignment of error which is related to the second
although the issue of ownership is issue.
inseparably linked thereto. As such, the WHEREFORE, the Petition is GRANTED.
lower court's adjudication of ownership in The Decision of the Court of Appeals dated 6 January
1998 is REVERSED and SET ASIDE and modification the January 26, 2000 judgment [3] of the
the Decision dated 24 April 1996 of the Municipal Trial Regional Trial Court (RTC) of Iba, Zambales, Branch
Court of Mandaue City REINSTATED and AFFIRMED. 71, in Civil Case No. RTC-1590-I, which in turn
Costs against respondents. affirmed the decision[4] dated May 16, 1999 of the
Municipal Trial Court (MTC) of San Felipe, Zambales,
in Civil Case No. 328, and its September 6, 2004
resolution[5] denying reconsideration thereof.

On January 18, 1996, petitioner Lilia V. Peralta-

LILIA V. PERALTA-LABRADOR, G.R. No. Labrador filed a case for “Recovery of Possession and
165177 Ownership,” docketed as Civil Case No. 328, with the
Petitioner, MTC of San Felipe, Zambales. She alleged that she is
Present: the owner of Cadastral Lot No. 2650, with an area of
400 sq. m. located at Sitio Caarosipan, Barangay
Manglicmot, San Felipe, Zambales, having purchased
Davide, Jr., C.J. (Chairman), the same in 1976 from spouses Artemio and Angela
- versus - Pronto. In 1977, she was issued Tax Declaration No.
Quisumbing, 10462 and paid the taxes due thereon.[6]
Ynares- In 1990, the Department of Public Works and
Santiago, Highways constructed a road which traversed
Carpio, and Cadastral Lot No. 2650 thereby separating 108 sq. m.
Azcuna, JJ. from the rest of petitioner’s lot, for which she was
SILVERIO BUGARIN, issued Tax Declaration No. 02-2460R in 1991.[7]
substituted by his widow, Sometime in 1994, respondent Silverio Bugarin
Promulgated: forcibly took possession of the 108 sq. m. lot and
CONSOLACION BUGARIN,[1] refused to vacate the same despite the pleas of
Respondent. petitioner. Hence, on January 18, 1996, she instituted
August 25, 2005 a complaint for recovery of possession and ownership
against respondent.
YNARES-SANTIAGO, J.: In his Answer with Counterclaims,[8] respondent
Challenged in this petition for review on certiorari contended that the area claimed by petitioner is
is the March 12, 2004 decision[2] of the Court of included in the 4,473 square meter lot, covered by the
Appeals in CA-G.R. SP No. 57475, which affirmed with Original Certificate of Title (OCT) No. P-13011; and
that he has been in continuous possession and evidence to prove ownership or prior actual physical
occupation thereof since 1955. In his Amended possession. The appellate court deleted the monetary
Answer with Counterclaim,[9] however, respondent awards in favor of respondent as well as the
failed to allege that the questioned lot is covered by the declaration of the MTC that respondent is the owner of
OCT No. P-13011, and instead asserted that he the questioned lot on the ground that the OCT No. P-
planted fruit bearing trees in the property. Respondent 13011, relied upon by said court was not formally
further pleaded the defenses of lack of cause of action offered in evidence, hence, cannot be considered by
and prescription. the court. The decretal portion thereof, states:
On May 16, 1999, the court a quo ruled in favor WHEREFORE, in view of the
of respondent declaring him as the owner of the foregoing discussion, the instant petition is
controverted lot on the basis of the OCT No. P-13011. hereby PARTIALLY GRANTED. The
The complaint was dismissed for failure of petitioner to assailed Decision dated January 26, 2000,
prove prior physical possession and ownership in Civil Case No. RTC 1590 I of the
thereof. The dispositive portion thereof, reads: Regional Trial Court (RTC), Branch 71, Iba,
WHEREFORE, all the foregoing Zambales, and Decision dated May 16,
premises considered and for failure on the 1999, in Civil Case No. 328 of the
part of the plaintiff to establish the Municipal Trial Court of San Felipe,
preponderance of evidence of prior actual Zambales are MODIFIED by deleting the
physical possession and present title over declaration of ownership as to the disputed
the lot in her favor, let the instant case be 108 square meters and the monetary
ordered DISMISSED, and the defendant be award in favor of respondent Silverio
awarded the rightful possession and Bugarin. However, the dismissal of the
ownership of the same and the plaintiff is complaint is AFFIRMED.
hereby ordered to pay FIFTEEN SO ORDERED.[12]
THOUSAND (P15,000.00) PESOS as
reasonable Attorney’s fee and FIVE The motion for reconsideration filed by petitioner
THOUSAND (P5,000.00) PESOS as was denied. Hence the instant petition.
appearance fee plus costs.
SO ORDERED.[10] Pertinent portion of Section 1, Rule 70 of the
Revised Rules of Civil Procedure, provides:
The RTC affirmed the assailed decision, [11] hence SECTION 1. Who may institute
petitioner filed a petition for review before the Court of proceedings, and when. – … a person
Appeals which was however denied for insufficiency of deprived of the possession of any land or
 building by force, intimidation, threat, ascertaining whether or not the action falls within the
strategy, or stealth, … may at any exclusive jurisdiction of the inferior courts, the
time within one (1) year after such averments of the complaint and the character of the
unlawful deprivation or withholding of relief sought are to be examined.[15]
possession, bring an action in the proper In the instant case, petitioner’s complaint alleges
Municipal Trial Court against the person or that:
persons unlawfully withholding or depriving 2. That plaintiff is the owner of a
of possession, or any person or persons parcel of land denominated as Cadastral
claiming under them, for the restitution of lot No. 2650, San Felipe Cadastre, situated
such possession, together with the at sitio Caarosipan, Barangay Manglicmot,
damages and costs. (Emphasis supplied) San Felipe, Zambales which she bought in
1976 from Spouses Artemio Pronto and
In Lopez v. David Jr.,[13] it was held that an action Angela Merano when she was still a widow,
for forcible entry is a quieting process and the one with the following boundaries: North, Alipio
year time bar for filing a suit is in pursuance of the Abad, East, Antonio Cueva, South, Juan
summary nature of the action. Thus, we have nullified Borja, and West, Old Provincial Road,
proceedings in the MTCs when it improperly assumed containing an area of 108 square meters,
jurisdiction of a case in which the unlawful deprivation declared under Tax Declaration No. 002-
or withholding of possession had exceeded one year. 1860R and assessed at P1,120.00;
After the lapse of the one year period, the suit must be 3. That plaintiff has been in
commenced in the RTC via an accion publiciana, a suit open, continuous, exclusive and
for recovery of the right to possess. It is an ordinary adverse as well as notorious
civil proceeding to determine the better right of possession of the said lot and in the
possession of realty independently of title. It also concept of an owner since she
refers to an ejectment suit filed after the expiration of [acquired] it in 1976 until the time when
one year from the accrual of the cause of action or defendant took possession forcibly, two
from the unlawful withholding of possession of the years ago;
realty independently of title. Likewise, the case may 4. That in or before 1990 the
be instituted before the same court as an accion land was traversed by a new National
reivindicatoria, which is an action to recover ownership Highway and the land was segregated from
as well as possession.[14] a bigger portion of the land, the western
Corrollarily, jurisdiction of a court is determined portion is now the land in question and
by the allegations of the complaint. Thus, in since the new provincial road which
 traversed the whole land of the plaintiff, the entry to the land. However, when entry is
old highway which is west of Lot 2650 shall made through stealth, then the one-year
belong to the plaintiff in compensation of period is counted from the time the plaintiff
the portion of her lot traversed by the new learned about it. After the lapse of the one-
highway, said old highway is also taken by year period, the party dispossessed of a
defendant unlawfully;[16] parcel of land may file either an accion
It is clear that petitioner’s averment make out a publiciana, which is a plenary action to
case for forcible entry because she alleged prior recover the right of possession; or
physical possession of the subject lot way back in an accion reivindicatoria, which is an action
1976, and the forcible entry thereon by respondent. to recover ownership as well as
Considering her allegation that the unlawful possession.
possession of respondent occurred two years[17] prior On the basis of the foregoing facts, it
to the filing of the complaint on January 18, 1996, the is clear that the cause of action for forcible
cause of action for forcible entry has prescribed and entry filed by respondents had already
the MTC had no jurisdiction to entertain the case. prescribed when they filed the Complaint
Petitioner’s complaint therefore should have been filed for ejectment on July 10, 1992. Hence,
with the proper RTC. even if Severo Malvar may be the owner of
It is settled that jurisdiction over the subject the land, possession thereof cannot be
matter cannot be waived by the parties or cured by wrested through a summary action for
their silence, acquiescence or even express consent. ejectment of petitioner, who had been
[18]
Hence, the failure of respondent to insist on the occupying it for more than one (1) year.
defenses of lack of cause of action and prescription Respondents should have presented their
stated in his Amended Answer with Counterclaim will suit before the RTC in an accion
not vest the MTC with jurisdiction over the case. publiciana or an accion reivindicatoria, not
On this point, the Court held in Bongato v. before the MTCC in summary proceedings
Malvar[19] that: for forcible entry. Their cause of action for
It is wise to be reminded that forcible forcible entry had prescribed already, and
entry is a quieting process, and that the the MTCC had no more jurisdiction to hear
restrictive time bar is prescribed to and decide it.
complement the summary nature of such ...
process. Indeed, the one-yearperiod within Further, a court’s lack of jurisdiction
which to bring an action for forcible entry is over the subject matter cannot be waived
generally counted from the date of actual by the parties or cured by their silence,
 acquiescence or even express consent. A lot in question is covered by said OCT No. P-13011 or
party may assail the jurisdiction of the court any other title of respondent.
over the action at any stage of the WHEREFORE, the May 16, 1999 decision of the
proceedings and even on appeal. That the Municipal Trial Court of San Felipe, Zambales, the
MTCC can take cognizance of a motion to January 26, 2000 decision of the Regional Trial Court,
dismiss on the ground of lack Branch 71, Iba, Zambales, and the March 12, 2004
of jurisdiction, even if an answer has been decision of the Court of Appeals,
belatedly filed we likewise held in Bayog v. are ANNULLED and SET ASIDE for lack of
Natino[.] jurisdiction. The complaint in Civil Case No. 328 is
Moreover, even if the MTC has jurisdiction over DISMISSED.
the subject matter, the complaint should still be
dismissed because petitioner failed to prove that the
controverted 108 sq. m. lot is part of Cadastral Lot No.
2650. Petitioner admitted that she has never seen the
Cadastral Map of San Felipe, Zambales, and relied DR. JESUS SERIÑA and G.R. No.
only on the Survey Notification Card[20] from the Bureau 127382
of Lands,[21] with a sketch of Cadastral Lot No. 2650.
Said card, however, does not reflect the 108 sq. m. lot ENRIQUETA SERIÑA
subject of this case. Neither did petitioner cause the
survey of Cadastral Lot No. 2650 after the construction (deceased), represented by
of a new road to prove that the segregated portion on
the western side is part thereof. Ei incumbit probotio DR. JESUS SERIÑA, JR.,
qui dicit, non qui negat. He who asserts, not he who
denies, must prove.[22] Failing to discharge this burden, ANTONIO SERIÑA, VIOLETA Present:
the dismissal of the complaint is proper.
In the same vein, ownership of the lot in question SERIÑA TAN, REYNALDO
cannot be awarded to respondent considering that
OCT No. P-13011,[23] and the Survey Plan[24] were not SERIÑA and EMMANUEL
formally offered in evidence. While the issue of
ownership may be passed upon in ejectment cases for SERIÑA, PUNO,
the sole purpose of determining the nature of J., Chairman,
possession,[25] no evidence conclusively show that the
 Petitioners, AUST Before us is a petition for review on certiorari of
RIA-MARTINEZ, the Decision[1] of the Court of Appeals (CA) dated
August 23, 1996, affirming the dismissal of the
CALLE complaint for quieting of title, recovery of possession,
JO, SR., and damages by the Regional Trial Court (RTC) of
Misamis Oriental, Cagayan de Oro City, in Civil Case
- versus No. 8716.
- The Antecedents
TINGA, a On August 11, 1982, Dr. Jesus Seriña and his
nd wife, Enriqueta Seriña filed a Complaint for quieting of
title, recovery of possession, and damages with a
CHIC prayer for a writ of preliminary mandatory injunction
O-NAZARIO, JJ. against respondents Victor Caballero and his tenants,
Teodoro Donela and Oliver Donela. When Dr. Seriña
VICTOR CABALLERO, died on August 6, 1983, he was substituted by his
children, petitioners Jesus, Jr., Antonio, Violeta,
TEODORO DONELA, OLIVER Promulgated: Reynaldo and Emmanuel.[2]
The petitioners alleged in their complaint that
DONELA, COURT OF APPEALS, they are the absolute owners and have been in actual
and constructive possession for thirty-five (35) years of
and THE HONORABLE REGIONAL a parcel of land described as follows:
Lot No. 3533-A, Cad-237, Cagayan
TRIAL COURT, BRANCH 20, Cadastre
Tax Declaration No. 02161
MISAMIS ORIENTAL, August Location - Mantadiao, Opol,
17, 2004 Misamis Oriental
Area - 2.5000 has.
Respondents. Boundaries:
North - Alejo Seriña
South - T. Sabornido
East - A. Seriña & T. Sabornido
CALLEJO, SR., J.: West - F. Caballero[3]
 The petitioners averred that sometime in March purposes even before the war. Tax Declaration No.
1982, they discovered that respondent Caballero was 2442 was issued in lieu of the records that were
claiming ownership over the said land and offering it destroyed during the war. This tax declaration
for sale or mortgage to third parties. They also indicated that the 119,490 square-meter parcel of land
discovered that the respondents Donelas were was located at Pontacon, Iponan, Cagayan de Oro
occupying the land as tenants and caretakers of the City, bounded on North by Rustico Dablio, on the East
land. [4] by J. Seriña and T. Saburnido, on the South by Victor
The petitioners claimed that their father, Dr. Obsioma, and on the West by Victorino Caballero.[10]
Seriña, bought the land from Lucia Vda. de Marbella Emiliana Ibarat, respondent Caballero’s sister,
who inherited it from her father, Ramon Neri. [5] They testified that when Eustaquio Caballero died in 1944,
presented a Deed of Sale[6] dated August 23, 1947 the land was divided among his three children,
showing that Dr. Seriña bought 5 hectares of ricefield, Vicenta, Benita and Victorino, the father of respondent
bounded on the North by Raymundo Seriña, on the Caballero. Lot A, with an area of 39,625 square
East by Teofilo Saburnido, on the South by Obdelio meters, was given to Victorino, which was later
Caballero, on the West by Obdullo Caballero, from inherited by the respondent. Lot B, with an area of 71,
Lucia Vda. de Marbella. Dr. Seriña was issued Tax 450 square meters, was given to Benita; and Lot C,
Declaration No. 4029 allegedly for the said property. As with only 7,938 square meters was given to Vicenta.
indicated in the tax declaration and subsequent tax Lots B and C were, thereafter, sold to one Gaga Yasay.
declarations issued in the name of Dr. Seriña, they Because of the trouble between the petitioners and the
were issued for Cadastral Lot No. 3533 and covered a respondents, Yasay agreed to buy only a portion of Lot
2.5-hectare ricefield with the same boundary owners A.[11]
as those in the complaint.[7] The petitioners also The land was surveyed during the trial and it was
averred that they regularly paid taxes thereon since determined that it now consisted of only 23,373 square
1947 up to the present.[8] meters,[12] and not 25,000 square meters as claimed by
In his answer, respondent Caballero alleged that the petitioners. Gliceria Legaspi, respondent
he was the lawful owner, and had been in actual Caballero’s other sister, also testified that the disputed
physical possession of the disputed land since time land was now bounded on the North by Seriña and
immemorial. He averred that the disputed land is part Nangcas, on the East by Teofilo Saburnido, on the
of Cadastral Lot No. 3533, C-7 of the Cagayan South by Gaga Yasay, and on the West by Nangcas. [13]
Cadastre and originally owned by his grandfather, The RTC rendered judgment[14] on January 21,
Eustaquio Caballero.[9] 1992, dismissing the complaint, and upholding the right
The respondents averred that Eustaquio of the respondents over the land. The dispositive
Caballero declared the entire parcel of land for tax portion reads:
 WHEREFORE, judgment is hereby cadastral claimant of the land. It also noted that the
rendered in favor of the defendant Victor deed of sale between Lucia Vda. de Marbella and
Caballero and against the plaintiffs herein, Dr. Seriña showed that the land had an area of 5
to wit: hectares, whereas, the petitioners only claimed 2.5
hectares. Furthermore, the boundaries of the land
1. Ordering the dismissal stated in the complaint did not coincide with what
of the complaint with costs. was stated in the Deed of Sale, or in Tax
2. Ordering the defendant Declaration No. 2442 in the name of Eustaquio
Victor Caballero as the absolute and lawful Caballero. The trial court ruled that the petitioners
owner and possessor of the land in failed to explain these discrepancies, and that there
question. was no showing that
3. Ordering the plaintiffs, Tax Declaration No. 2442 was cancelled by Tax
their heirs, lawyers, servants or privies not Declaration No. 4029 in the name of Dr. Seriña.
to disturb or molest the possession and The trial court interpreted this to mean that
ownership of Victor Caballero over the land Eustaquio Caballero's right as owner of the land
in question. remained.
4. Ordering the plaintiffs to Dissatisfied, the petitioners appealed the case to
pay to defendant Victor Caballero, jointly the CA, which rendered a Decision [16] affirming in
and severally the sum of FIVE THOUSAND toto the decision of the RTC. The petitioners filed a
(P5,000.00) pesos for expenses of Motion for Reconsideration on September 30, 1996.
[17]
litigation, and THREE THOUSAND The CA denied the motion.[18]
(P3,000.00) pesos for and as attorney's Hence, the instant petition.
fees having been compelled to retain the The petitioners assign the following errors:
services of counsel to protect his interest 1. THAT IT IS ERROR FOR THE
herein. HONORABLE COURT OF APPEALS
SO ORDERED.[15] TO UPHOLD THE HONORABLE RTC
ON THE ISSUE THAT THE ALLEGED
The trial court ruled that it was not clearly IDENTITY OF THE LAND IN
shown that the land bought by Dr. Seriña from Lucia LITIGATION IS UNESTABLISHED
Vda. de Marbella was the same land owned by BETWEEN THE PARTIES-LITIGANTS.
Victor Caballero, and that the petitioners failed to 2. THAT IT IS ERROR FOR THE
show that Lucia Vda. de Marbella bought the land HONORABLE COURT OF APPEALS
from Eustaquio Caballero, the original owner and TO FAIL TO APPRECIATE THE 35-
 YEAR ACQUISITIVE PRESCRIPTION appellee; (7) when the findings of the Court
IN FAVOR OF THE PLAINTIFFS- of Appeals are contrary to those of the trial
APPELLANTS.[19] court; (8) when the findings of fact are
conclusions without citation of specific
The issues in this petition are, therefore, the evidence on which they are based; (9)
following: (1) whether the petitioners were able to when the Court of Appeals manifestly
establish the identity of the land being claimed by overlooked certain relevant facts not
them; and (2) whether acquisitive prescription should disputed by the parties, which, if properly
be appreciated in favor of the petitioners. considered, would justify a different
The Ruling of the Court conclusion; and (10) when the findings of
The first issue deals clearly with a question of fact of the Court of Appeals are premised
fact which is beyond the province of this Court in a on the absence of evidence and are
petition for review on certiorari. Well-entrenched is the contradicted by the evidence on record.[21]
rule that the Court's jurisdiction in a petition for review
is limited to reviewing or revising errors of law allegedly We find no cogent reason to reverse the findings
committed by the appellate court. Factual findings of of the CA. None of the aforementioned exceptions is
the Court of Appeals are conclusive on the parties and present in this case. The CA was correct in concluding
not reviewable by this Court—and they carry even that the petitioners failed to establish that the parcel of
more weight when the Court of Appeals affirms the land in the possession of the respondents is the same
factual findings of the trial court. [20] The exceptions to as that subject of their complaint.
this rule are the following: The CA noted that the land subject of the
(1) when the conclusion is a finding complaint has boundaries different from the land in
grounded entirely on speculations, possession of the respondents. In fact, the land
surmises or conjectures; (2) when the described in the complaint appears to be different from
inference made is manifestly mistaken, the land described in the Deed of Sale which the
absurd or impossible; (3) when there is petitioners invoke as the basis of their ownership.
grave abuse of discretion; (4) when the First. The petitioners alleged in their complaint
judgment is based on misapprehension of that the boundaries of their property are as follows:
facts; (5) when the findings of facts are North - Alejo Seriña
conflicting; (6) when the Court of Appeals, South - T. Sabornido
in making its findings, went beyond the East - A. Seriña & T. Sabornido
issues of the case and the same is contrary West - F. Caballero[22]
to the admissions of both appellant and
 On the other hand, the Deed of Sale provides West - Victorino Caballero[28]
that the property sold to them has the following Under Tax Declaration No. 4029, on the other
boundaries: hand, the boundary owners are as follows:
North - Raymundo Seriña North - Alejo Seriña
South - Obdullo Caballero South - Teofilo Saburnido
East - Teofilo Saburnido East - A. Seriña [and] T. Saburnido
West - Obdullo Caballero[23] West - Eustaquio Caballero[29]
Second. The complaint[24] of the petitioners
states that the property they are claiming has an area Moreover, Tax Declaration No. 2442 covers an
of 2.5 hectares. On the other hand, the Deed of area of 119,490 square meters[30] while Tax Declaration
Sale[25] provides that the subject property has an area No. 4029 covers only 25,000 square meters or 2.5
of 5 hectares. hectares.[31]
Third. The complaint alleged that the property is The petitioners argue that the Deed of Sale and
located in “Mantadiao, Opol, Misamis Tax Declaration No. 4029 should not be compared to
[26]
Oriental,” while the Deed of Sale shows that the Tax Declaration No. 2442 and the Technical
property purchased is located in “Puntakon, Igpit, Description of Cadastral Lot No. 3533 because the
Cagayan Or. Misamis.”[27] former refers only to a portion of the area referred to by
We agree with the CA that there was no showing the latter.[32] While the petitioners are correct on this
that Tax Declaration No. 2442 in the name of point, such mistake would still not justify a different
Eustaquio Caballero was cancelled. Absent any conclusion. The fact remains that the documentary and
specific statement therein to that effect, it cannot be testimonial evidence presented by the petitioners did
presumed that Tax Declaration No. 4029 in the name not prove the identity of the land being claimed. The
of Dr. Seriña cancelled Tax Declaration No. 2442. petitioners did not present evidence to prove that the
Moreover, the land covered by Tax Declaration land registered in the name of Eustaquio Caballero
No. 2442 is different from that covered by Tax was sold to Lucia Vda. de Marbella or her
Declaration No. 4029 for the following reasons: predecessor-in-interest from whom they purchased the
The boundary owners of the land as indicated in land subject of their complaint.
Tax Declaration No. 2442 differ from those stated in
Tax Declaration No. 4029. The boundary owners as The failure to establish the identity of the land is
indicated in Tax Declaration No. 2442 are as follows: obviously fatal to the petitioners’ case. In Beo vs. Court
North - Rustico Dablio of Appeals,[33] a case which also involves an action for
South -Victor Obsioma possession and quieting of title, the Court had the
East - J. Seriña & T. Saburnido occasion to state:
 …[B]ecause petitioners failed to On the second issue, the CA ruled that inasmuch
explain the discrepancy or present other as the petitioners failed to establish that the parcel of
evidence to prove with certainty the land in possession of the respondents is the same as
location and area of the land they seek to the subject of their complaint, their claim of acquisitive
recover, respondent court correctly applied prescription is clearly untenable.
the invariable rule that a person who The petitioners argue that they would not have
claims ownership of real property is regularly paid taxes on the land since 1947 had they
duty-bound to clearly identify the land not believed that they owned the same. [35] The
being claimed, in accordance with the respondents, for their part, aver that the petitioners
title on which he anchors his right of were only able to prove seven (7) years of actual
ownership. When the record does not possession of the land through cultivation by their
show that the land subject matter of the tenants. They argue that such seven-year period of
action for recovery of possession has been cultivation cannot be considered in the petitioners’
exactly determined, such action cannot favor, since the witness who testified on this fact did
prosper, as in the case of petitioners. In not personally know the boundaries of the land
sum, proof of ownership coupled with cultivated, or whether it was the same land bought by
identity of the land is the basic rule. Dr. Seriña. The respondents contend that acquisitive
Corollarily, the rule is likewise well- prescription applies only when there is no dispute as to
settled that in order that an action for the identity of the property.[36]
recovery of possession may prosper, it We agree with the respondents. Since the
is indispensable that he who brings the property has not been clearly identified by the
action fully proves not only his petitioners, their claim of acquisitive prescriptioncannot
ownership but also the identity of the be considered. Insufficient identification of the portion
property claimed, by describing the of land claimed in absolute ownership cannot ripen into
location, area and boundaries ownership. Possession as a means of acquiring
thereof. As the appellate court succinctly ownership, while it may be constructive, is not a mere
stated, he who fiction.[37]
claims to have a better right to the property Assuming, however, that the disputed land has
must clearly show that the land possessed been clearly identified, acquisitive prescription will still
by the other party is the very land that not lie in favor of the petitioners because they were not
belongs to him.[34] able to prove that they have been in possession of the
property for the requisite number of years. Prescription
requires public, peaceful, uninterrupted and adverse
possession of the property in the concept of an owner and the HONORABLE COURT OF
for ten years, in case the possession is in good faith APPEALS, respondents.
and with just title.[38]
Aside from the testimony of Leonardo Vacalares Pedro T. Panganiban for petitioners.
that certain tenants of the petitioners cultivated the
land for a total of seven years, the petitioners did not Julio D. Enriquez, Sr. for respondents.
present any other evidence to show that they have
been in actual possession of the property for at least
ten years.
The petitioners’ argument that the payment of MUNOZ PALMA, J.:
taxes on the property since May 31, 1948 constitutes
proof of their possession of the subject land for thirty- Civil Case 689 of the Court of First Instance of
five years is untenable. Tax declarations and receipts Batangas was an action to quiet title over a piece of
are not conclusive evidence of ownership. At most, land filed on March 20, 1959, by spouses Basilio Perez
they constitute mere prima facie proof of ownership of and Petra Montalbo with spouses Nicolas Mendoza
the property for which taxes have been paid. In the and Margarita Macalalad as defendants. According to
absence of actual, public and adverse possession, the the complaint, the land in controversy is located in
declaration of the land for tax purposes does not prove barrio Dagatan, municipality of Taysan, Batangas, with
ownership.[39] an area of approximately 4,765 sq. meters, declared
IN LIGHT OF ALL THE FOREGOING, the for taxation purposes in the name of the "Heirs of
petition is DENIED. The Decision of the Court of
Estanislao Montalbo", and is "bounded on the north by
Appeals is AFFIRMED. No costs.
a school site, on the east by Calixto Flores, on the
south by a creek, and on the west by a creek and the
land of Gregorio Mendoza." On the basis of evidence
adduced by the parties, the trial court then presided by
Hon. Lorenzo Relova rendered judgment on February
G.R. No. L-22006 July 28, 1975 19, 1962, dismissing the complaint and declaring the
spouses Mendoza "to have a better right to the
BASILIO PEREZ and PETRA property in question." 1
MONTALBO, petitioners,
vs. Spouses Perez elevated the Relova decision to the
NICOLAS MENDOZA, MARGARITA MACALALAD Court of Appeals which, however, affirmed in toto the
findings of the court a quo, and declared that "upon the purposes by the municipality together with its adjoining
evidence it has been shown by a great preponderance properties (Exhs. 6, 6-A, 6-B).1äwphï1.ñët In 1927 the
that the land in question belongs to the defendants." 2 remainder of the lot was given by Andrea Montalbo to
her daughter Margarita Macalalad on the occasion of
The case is now before Us on a petition her marriage to Nicolas Mendoza, and from the time of
for certiorari filed by spouses Perez. their marriage the couple possessed the said property.
That donation was confirmed subsequently in a public
The findings of fact both of the trial court and the Court instrument dated August 15, 1951 (Exh. 2 for the
of Appeals may be briefly summarized as follows: Mendozas). Nicolas Mendoza sought to transfer the
tax declaration of the property to his name and of his
The litigated parcel of land was originally part of a
wife and for that purpose he submitted a deed of
bigger tract owned by Estanislao Montalbo. When
exchange of property dated January 14, 1922,
Estanislao died in 1918, his properties passed on to
allegedly executed by Felisa Montalbo and Andrea
his children Petra, Felisa, and Pedro all surnamed
Montalbo in the presence of the municipal secretary
Montalbo, and because Pedro died single the two
Rafael Manahan (Exh. 5). When Basilio Perez came to
women remained as the only heirs. By mutual
know about the supposed deed of exchange, he had it
agreement Petra and Felisa divided between
investigated and upon discovering that the signature of
themselves the lands of their father and the parcel of
Rafael Manahan appearing on the document was
which the litigated land was a part was assigned to
forged, he filed a criminal complaint before the Fiscal's
Felisa. Sometime in 1922 Felisa exchanged the above-
office which led to an accusation for falsification of
mentioned parcel with a land belonging to her aunt.
private document against Andrea Montalbo and
Andrea Montalbo, a sister of her father. The reason for
Nicolas Mendoza. Only Nicolas Mendoza was
the exchange was that Andrea wanted to donate a
arraigned and tried and was convicted by the Court of
piece of land to the municipality for use as a school
First Instance of Batangas, but on appeal he was
site and the land of Felisa was what the municipality
acquitted by the Court of Appeals for insufficiency of
preferred as it was adjacent to other properties of the
evidence to show that he participated in affixing the
municipality. (Exh. 5 for defendants Mendoza) Upon
signature of Rafael Manahan or that he was aware of
her acquisition of Felisa's aforementioned land, Andrea
the falsity of the document in question when he
donated to the municipality the northern portion thereof
presented it to the tax assessor's
which constituted almost one-half of the entire parcel,
office. 3 Notwithstanding the forged signature of Rafael
and since then that portion was declared for taxation
Manahan on the document Exhibit 5, there is sufficient
evidence to prove that an exchange of property did in For not giving credit to the foregoing evidence,
fact occur in 1922 between Andrea and Felisa petitioners now assail the adverse decision of
Montalbo, and that Felisa's land passed on to Andrea respondent court on four assigned errors.
who in turn gave part of it to the municipality and part
to her daughter, Margarita; hence, the decision in favor 1. Petitioners contend that respondent court erred in
of the spouses Mendoza. considering the criminal case for falsification res
adjudicataon the matter of ownership of the land in
On the other hand, petitioners contend that the litigation when the "question of ownership was not
disputed property was inherited by Petra and Felisa actually and directly in issue in the criminal case and
Montalbo from their father Estanislao who died in 1918 the latter was not the proper vehicle for the
and since that date the two sisters were in possession determination of the ownership of the land." (p. 9,
of said land. In 1934 a deed of partition of the various petitioners brief) Petitioners refer to portions in the
properties of Estanislao was executed between Petra decision of respondent court, viz:
and the heirs of Felisa, and the land in question was
divided equally, between them; among those who The land in question, together with that
signed as witnesses to that agreement was Andrea portion that was acquired by the
Montalbo(Exh. D for petitioners). In 1952 Felisa's municipality of Taysan, the identity of which
husband, Jose Ortega, and children sold their one-half is admitted by the parties, belonged to
share to spouses Petra Montalbo and Basilio Perez, Felisa Montalbo, as held in the decision of
now petitioners, but the deed of sale was lost a year the Court of Appeals, thus — "The said
after. Sometime in 1946 petitioners leased the property parcel of land previously belonged to Felisa
to the Mendozas and when the lease expired in 1951 Montalbo (married to Jose Ortega), who
they demanded for the return of the land but the inherited it from her deceased father, the
Mendozas refused and so petitioners had to file an aforecited Estanislao Montalbo;", and the
ejectment suit before the justice of the peace court of land in question was donated propter
Taysan which was still pending at the time of the trial of nuptias by Andrea Montalbo to Margarita
the civil case in 1960. (tsn. witness Basilio Perez, Macalalad and Nicolas Mendoza, the
December 15, 1960, pp. 16-34) defendants, (Margarita Macalalad is the
daughter of Andrea Montalbo) on the
occasion of their marriage on February 27,
1927, as found and held in the decision of
the Court of Appeals, thus — "and this land Undoubtedly, there is merit to the contention of
was acquired by the donor (Andrea petitioners that the pronouncements or findings of fact
Montalbo) by means of a barter with her made by the Court of Appeals in the criminal case
own parcel of land planted with bamboos concerning the possession and ownership of the land
and mango trees" now in litigation in the civil case, do not constitute the
law on the matter and cannot be taken or adopted as a
Upon the basis of the findings of fact and basis for deciding the question of ownership of said
conclusion arrived at in the decision of the land in this civil case. Since there is no identity of
Court of Appeals, it clearly appears that parties in the two cases — the petitioners here not
although the document of exchange of the being parties in the criminal case — and the object or
lands was found to be falsified, subject matter in the criminal prosecution is different,
nevertheless the Court found upon the the latter being concerned with the guilt or innocence
facts as demonstrated by the evidence that of accused Nicolas Mendoza for falsification of private
the land in question "previously belonged document, it follows that the judgment in the criminal
to Felisa Montalbo (married to Jose action cannot be used as evidence in the civil case
Ortega), who inherited it from her deceased where the issue is ownership of a piece of land. It is
father, the aforesaid Estanislao the rule that the plea of res judicata generally cannot
Montalbo ..."; that said land was be interposed except where the parties, facts, and
donated propter nuptias by Andrea questions are the
Montalbo to the defendants on the same, 4 hence, the judgment in a criminal case cannot
occasion of their marriage on February 27, be pleaded as res judicata in a civil action. 5
1927; and that "this land was acquired by
the donor by means of a barter with her But whatever error was committed by respondent court
own parcel of land planted with bamboos in this regard, the same is not sufficient to nullify the
and mango trees". From the context of the appealed decision.
decision the natural and logical inference is
that factually the exchange of the lands Analyzing the decision of respondent court. We see
had been consummated.... (pp. 6-7, CA that the latter made its own appraisal and evaluation of
decision at pp. 20-21, rollo; emphasis the evidence existing in the record relative to the
supplied to indicate disputed statements) possession and ownership of the land in question.
Thus it said that the conclusions arrived at by the Court
of Appeals in the criminal case to wit(1) that there was defendants since 1946 was that of a mere
an exchange of lands consummated between Andrea lessee of the land. On this matter, the trial
and Felisa and (2) that the exchanged land was later court said, "the records do not show any
donated by Andrea to her daughter Margarita in 1927, documentary evidence to support such
"can hardly be doubted if we take account of the contention. Nor is any document, say
undisputed fact that the defendants have been in receipts of payment of rentals presented to
possession of the land since 1927, and the bolster their theory. On the contrary their
plaintiffs (meaning spouses Perez) have not attempted averment has been strongly denied by the
to disturb defendants' possession of the land until 1952 defendants and the records show that it
when said plaintiffs filed an action of unlawful detainer was only in 1952 that a civil action was
against the defendants." (p. 7 of appealed decision at instituted by the plaintiffs against the
p. 21, SC rollo; emphasis supplied) Continuing, defendants in the Justice of the Peace
respondent court expounded: Court of Taysan, Batangas, for detainer
and damages", and said allegation of
Contrary to the allegation in the complaint possession of the defendants as lessees of
— "That plaintiffs were in possession of the the land "is not supported by positive and
land prior and up to January, 1946, when convincing evidence". We find no reason to
the same was leased to the defendants ...", disagree with the foregoing findings of fact
and the testimony of Basilio Perez to the and conclusion of the trial court because
same tenor, the evidence has conclusively the same is supported by the
shown that the defendants have been in preponderance of evidence, and the
continuous possession of the land since plaintiffs have not pointed to us any fact of
1927 to the present time, and they have significance or influence which have been
built a house on the land in 1928 where disregarded by the court, other than the
they have resided and lived to the present, testimony of Basilio Perez who testified
as testified to by the defendant about the supposed contract of lease. (pp.
Mendoza, .... 21-22, 23, ibid.; emphasis supplied)
The plaintiffs have contended, however, Digging further into the evidence of herein petitioners,
with the support of the testimony of Basilio respondent court found for itself that the agreement of
Perez, that the possession of the partition dated May 27, 1934, Exhibit D, is not
incontrovertible proof that in 1934 the litigated property First, the northern boundary of the land in controversy
belonged in common to Petra and the heirs of Felisa is undisputably a school site which originally was part
Montalbo both of whom may have been guided by the of a bigger tract belonging to Estanislao Montalbo. This
fact that the property was still declared for taxation is admitted by petitioner Basilio Perez who to a
purposes in the name of Estanislao Montalbo, and that question propounded by his counsel, Atty. Panganiban,
the document of partition "did not overcome the declared:
evidence on record that Andrea Montalbo became the
owner of the land, and that since 1927 the defendants Mr. Panganiban: (Counsel of
have been in continuous possession of the land, petitioners)
openly, adversely and in the concept of owners thereby
acquiring ownership of the land through acquisitive Q. According to these tax
prescription." (p. 10 of CA decision at p. 24, SC rollo) declarations which you said
covers the land in question, the
Independently therefore of the pronouncements of the boundaries on the north, school
Court of Appeals in the criminal case, respondent court site; on the east, land of Calixto
examined the evidence in this civil case and made its Flores; on the south, estero;
own findings of fact on the basis of which it affirmed and on the west, estero and
the decision of the trial court. Gregoria Mendoza, why is it
that there is a discrepancy?
We could have stopped here and resolved this petition
under well-entrenched precepts in Philippine A. Because from the whole
jurisprudence that findings of fact of the Court of parcel of land a portion was
Appeals are as a rule conclusive and binding upon this taken for the school site, and
Court; 6 nonetheless, to set our mind at rest that the that which remains now is the
conclusions of respondent court were not grounded on land in question, sir. (tsn
speculation, surmises or conjectures, 7We went over December 15, 1960, pp. 22-23)
the evidence before Us.
No explanation however was offered by Perez as to
Certain salient facts strongly support the claim of how that portion became a school site. On the other
respondents Mendoza over the property in dispute: hand, there is evidence of respondent Mendoza that
because Andrea Montalbo wanted to donate a piece of
land to be used as a school site and the municipality authorities more particularly, Engineer Ramirez, for
preferred the location of the land inherited by Felisa them to give without compensation from lot "A" a
from her father, the two women exchanged lands after stretch of land of one meter in width to widen said
which Andrea gave one-half of the property to the road, and they agreed. At that time Donata Mendoza
municipality while the remaining portion which is the still owned lot "B" and she was also asked to give part
land now in litigation was donated propter nuptias to of her land for the road but she was paid for the value
her daughter Margarita way back in 1927. (tsn October of the plants destroyed in the process.(tsn October 24,
24, 1961, pp. 14-18) This donation of Andrea was not 1961, pp. 32-34) For his part, petitioner Perez admitted
disproved by any evidence of petitioners. On the part during the cross-examination conducted by the
of respondents Mendoza, their documentary evidence, opposite counsel, Atty. Julio Enriquez, that the
Exhibits 6, 6-A and 6-B, show that the municipality of provincial authorities did not deal with him at all during
Taysan declared the donated property in its name as the widening of that particular road. (tsn September 25,
early as July, 1925, which supports respondents' claim 1961, p. 34) This is of marked significance, because if
that the exchange of properties between Andrea and it were true as claimed by petitioners that they were in
Felisa Montalbo took place sometime in 1922. possession of the property since the death of
Estanislao Montalbo in 1918 or even after the deed of
Second, the provincial authorities authorities dealt with partition in 1934, they would have been the persons
the Mendozas for the widening of the provincial road approached by the authorities for the widening of the
which traverses the land in question. Nicolas Mendoza road. The fact that the Mendozas were the ones who
testified that the land covered by the complaint actually gave away part of the land for the widening of the Lobo
consists of two lots which he described in his sketch, road shows that they were in possession of the
Exhibit 1, with letters "A" and "B" respectively, property and were living there at the time.
separated by a provincial road leading to the
municipality of Lobo; that lot "A" which is the bigger Third, respondents Mendoza have been in possession
parcel is the one donated to his wife, Margarita, by of the property since 1927 in concept of owners
Andrea Montalbo on the occasion of their marriage in thereof. We have the testimony of respondent Nicolas
1927 (Exh. 2); while lot "B" was bought from Donata Mendoza that after the land was donated to his wife in
Mendoza in 1951 as shown by the deed of sale, 1927 they built a house on it and lived there
Exhibit 7; that sometime in 1937-38, the province continuously, witness referring particularly to what he
widened the provincial road traversing the two lots, and described as lot "A" in his sketch Exhibit 1. (tsn
he and his wife were approached by the provincial October 24, 1961, pp. 7, .30-31) Respondent's
testimony was found both by the trial and appellate that he holds the thing under a claim of
courts credible because (1) petitioner Basilio Perez ownership. 8 Article 433 of the Civil Code provides that
himself admitted during cross-examination that even "(A)ctual possession under claim of ownership raises a
before the last world war the Mendozas had disputable presumption of ownership. The true owner
constructed a house on the land in litigation (tsn must resort to judicial process for the recovery of the
September 25, 1971, pp. 37-39; see Exh. E-3) which property." In Chan vs. Court of Appeals, et al., L-
admission disproves the allegation in the complaint 27488, June 30, 1970, 33 SCRA 737, this Court upheld
and Perez' testimony that it was only in 1946 when the the finding of the Court of Appeals that the litigated
Mendozas occupied the property as lessees; (2) the property belonged to the private respondents therein
testimony of Nicolas Mendoza was corroborated by based on their possession of the property, not only
witness Adriano Gonzales, a retired justice of the because such findings of fact of the appellate court are
peace of Taysan, Batangas, who declared that he conclusive and binding on this Court but because the
knew the Mendozas since 1937 and he saw them conclusion is in accordance with Articles 433 and 531
living on the land in question and they have not of the Civil Code. 9
changed residence at all since he had known them (tsn
December 6, 1961, pp. 5-6); and (3) the respondents As we have here conflicting claims of possession by
Mendoza were the ones who were living on the the parties over the land in controversy and because
property and not the petitioners at the time the the fact of possession cannot be recognized at the
provincial government in 1937 widened the Lobo road same time in two different personalities except in
which crosses said land. cases of co-possession, the present possessor is to be
preferred pursuant to Article 538 of the Civil Code
The court a quo and the respondent appellate court did which We quote:
not err when they upheld the claim of ownership of the
Mendozas principally on the ground that the latter were Possession as a fact cannot be recognized
in actual possession of the property since 1927 and at the same time in two different
were sought to be dispossessed by petitioners herein personalities except in the cases of co-
only in 1952 when an ejectment suit was filed against possession. Should a question arise
them. regarding the fact of possession, the
present possessor shall be preferred; if
Possession is an indicium of ownership of the thing there are two possessors, the one longer in
possessed and to the possessor goes the presumption possession; if the dates of the possession
 are the same, the one who presents a title; Rafael Manahan, the person before whom the parties
and if all these conditions are equal, the to the document allegedly appeared, was not his.
thing shall be placed in judicial deposit There was no finding in that criminal case as per
pending determination of its possession or decision rendered therein that the barter or exchange
ownership through proper proceedings." 10 of lands between Andrea and Felisa Montalbo did not
in effect take place. On the contrary, what appears in
The pretension of petitioners that the possession of the said decision offered by petitioners as their Exhibit J
Mendozas is that of a mere lessee was not believed by are the following findings of the Court of Appeals, viz:
the trial judge and the appellate court not only because that the land donated by Andrea Montalbo to her
of the absence of any written or oral evidence on the daughter Margarita Macalalad "was acquired by the
matter other than the bare testimony of petitioner donor by means of a barter with her own parcel of land
Basilio Perez, but also due to the circumstances planted with bamboos and mango trees"; that while it is
present in the case which We indicated and true that because of this presentation of the falsified
enumerated at pages 7 to 9 of this decision. In fine, it document appellant (now respondent Nicolas
is a fact that the Mendozas are presently in possession Mendoza) was able to secure the declaration of the
of the property and the presumption of ownership in property donated in his name, no criminal liability
their favor has not been successfully rebutted by should be imposed upon him in the absence of any
evidence that they are mere lessees of the land in their evidence that he presented said exhibit with the
possession as claimed by petitioners. knowledge that it was forged "especially if we take into
consideration the fact that he and his wife were and
2. In their second assigned error, petitioners contend are still in possession of the land donated since 1927";
that respondent court should not have given weight to that in fact, the color and appearance of the document
the evidence of respondent Mendoza because the in question show that it is not a new document but an
latter's Exhibit 5 was proven to be a falsified document. old one thus confirming Mendoza's theory that it was
executed in or about the year 1922 as appearing in the
To recall, Exhibit 5 is the alleged deed of exchange or
document or five years before his marriage. (pp. 1, 5, 6
barter of lands between Andrea and Felisa Montalbo
of Exh. J, folder of exhibits) Thus, if the document
dated January 14, 1922. On this point, petitioners
Exhibit 5 was held to be forged, it was simply because
overlook the fact that Exhibit 5 was made the basis of
the municipal secretary, Rafael Manahan, did not sign
a criminal accusation of falsification of private
it and not for any other reason. What is material and
document solely on the allegation that the signature of
relevant to the civil case is that both the trial court and
respondent appellate court found for a fact that there as Exhibit D-1. He also testified that Exhibit D was
was an exchange of lands between Andrea and Felisa signed by him and his wife, Petra Montalbo, by Jose
Montalbo on the basis of evidence other than the Ortega, husband of deceased Felisa Montalbo, and
disputed Exhibit 5. As to what the evidence is, has thumbmarked by the latter's children all in his
been discussed above. presence. (tsn December 15,1960, pp. 19-24)
Surprisingly, however, Basilio Perez did not at all
Petitioners cite Gonzales vs. Mauricio, 53 Phil. 728 mention during the course of his testimony that the old
where this Court stated inter alia that the introduction woman, Andrea Montalbo, signed the deed of partition
of a forged instrument by a witness renders the as a witness. We have gone over the transcript of
testimony of the latter practically worthless. That Basilio Perez' declaration on direct and cross-
statement however is not applicable to the situation examination (tsn December 15, 1960, pp. 15-34;
before Us because in Gonzalez the particular September 25, 1961, pp. 3-40) and at no instance did
document or receipt referred to was found to be he ever state that Andrea Montalbo was present during
entirely false as to its contents, handwriting, and the preparation of the document, that she read or knew
signature, whereas here all that was found to be false the contents thereof which by the way consists of six
is the signature of a witnessing official. handwritten pages, and that she signed her name on
the document. It was incumbent upon petitioners to
3. The last argument of petitioners is the object of the identify the signature of Andrea Montalbo on the
third assigned error. It is contended that the appellate document if her signature was truly there. As a matter
court erred in not giving effect to the deed of partition, of fact, examining the document Exhibit D We entertain
Exhibit D, notwithstanding the fact that the name of doubts whether the name referred to by petitioners is
Andrea Montalbo appears in the document as one of "Andrea Montalbo", for, as written, it also can read
the witnesses thereto. "Maria Montalbo". At any rate, whatever is the import of
said deed of partition, the same binds only the parties
Exhibit D appears to be a document dated May 27,
thereto but does not affect third persons such as
1934, wherein certain properties allegedly belonging to
Andrea Montalbo or the herein Mendozas in the
Estanislao Montalbo were divided between Petra
absence of proof that they participated in one way or
Montalbo and Jose Ortega, husband of deceased
another in the preparation and execution of
Felisa Montalbo. Petitioner Basilio Perez declared that
thedocument. As it is, Andrea Montalbo was a stranger
one of the parcels of land mentioned in the document
to that deed of partition and any recital therein
is the land now in litigation which is particularly marked
concerning the property under litigation cannot be used
as evidence to prejudice her and her successors-in- PEPITO DELOS SANTOS (Heirs of Donata Vergara),
interest or place her in estoppel as to her claims over ARNEO VERGARA, BENIGNO VERGARA, JOSE
the property. Res inter alios acta alteri nocere non VERGARA, SCION VERGARA, DEMETRIA
debet. A transaction between two parties ought not to VERGARA (all heirs of Dionisio
operate to the prejudice of a third person or stranger. 11 Galang), petitioners,
vs.
4. In the fourth assignment of error, petitioners claim COURT OF APPEALS, AUREO REYES, AURELIO
that the appellate court should have rendered a SAMIA, ALFONSO SAMIA, POTENCIANO GALANG,
decision in their favor. That both the trial court and LEONCIA GARCIA, BIENVENIDO TAPNIO, LYDIA
respondent appellate court have correctly evaluated BALINGIT VDA. DE GARCIA, BENEDICTO GARCIA,
the evidence, has been clearly demonstrated by Us. ROMULADO GARCIA, AMY GARCIA, ALEXANDER
GARCIA, LUDIVINA GARCIA, MONTANO
IN VIEW OF ALL THE ABOVE CONSIDERATIONS, GUEVARRA, CORAZON LAMPA, RUDY LAMPA,
We find no reversible error in the decision under EDUARDO LAMPA, ILLUMINADA GUEVARRA,
review and We AFFIRM the same with costs against CARMELITA MASANQUE VDA. DE GARCIA, MA.
petitioners. CONCEPCION AQUINO VDA. DE GUEVARRA,
HONZAI GUEVARRA, RODA REBECCA
GUEVARRA, RUTH GUEVARRA, minors
represented by their mother Ma. Concepcion Vda.
de Guevarra, PRIMITIVA GUEVARRA, JOSIAS N.
GARCIA, LUCITA M. GARCIA, VICTOR M. GARCIA,
G.R. No. 101929 January 6, 1993 LUTERO M. GARCIA, SAMSON M. GARCIA,
FELIXBERTO M. GARCIA, JR., HERMENIGILDA
BENJAMIN DIZON, ZACARIAS DIZON, AFRICA GARCIA, CONSTANCIO GARCIA, REYNALDO
DIZON, PERFECTO DIZON, CARMEN DIZON (Heirs GARCIA, AGAPITA GARCIA, ERNESTO GARCIA,
of Paula Galang), JULIA GALANG, CONSOLACION NORICO GARCIA, PACIFICO GARCIA, NORMANDO
TABORA, ABELARDO TABORA, CECILIA TABORA, GARCIA, ARTURO GARCIA, ESTELLA GARCIA,
AVELINA TABORA, TRINIDAD TABORA, DIOSDADO GARCIA (representing LEONCIA
REMEDIOS TABORA, VIRGINIA TABORA, DELFIN GARCIA), GREGORIA MENDOZA, ELEUTERIA
TABORA, PENINA TABORA, FRANCISCO TABORA, BAUTISTA, PEDRO ATIENZA, BENITA
CIPRIANA GALANG, RUFINO DELOS SANTOS, SAMANIEGO, NENE SAMANIEGO (representing
FLAVIANA GALANG), LETICIA REYES, MANUEL Conformably, the Register of Deeds
REYES (representing MARCIANA GALANG), concerned is hereby ordered to cancel the
CARMEN ROQUE VDA. DE DIMABUYU, PORFIRIO said titles; and subject Lots 3548 and 3562
R. DIMABUYU, CARMEN R. DIMABUYU, CARIDAD are hereby adjudicated to the heirs of the
R. DIMABUYU, PEDRO R. DIMABUYU, MARCOS deceased co-owners to be partitioned
DIMABUYU (representing GERTRUDES among them as follows:
GALANG), respondents.
a. one-sixth to the Heirs of Marciana
Heminio Z. Canlas for petitioners. Galang;

Lagunzad, Juan, Rubin & Cabaron Law Office for b. one-sixth to the Heirs of Dionisio Galang;
respondents.
c. one-sixth to the Heirs of Flaviana
Galang;

PADILLA, J.: d. one-sixth to the Heirs of Gertrudes

Galang;
In this petition for review on certiorari, petitioners seek
to nullify the decision ** of the Court of Appeals, dated e. one-sixth to the Heirs of Potenciana
29 April 1991, in CA-G.R. CV. No. 14312, the Galang;
dispositive portion of which reads as follows:
f. one-sixth to the Heirs of Leoncia Galang.
WHEREFORE, the appealed judgment is
hereby REVERSED; and the Deed of Costs against defendants-appellees.
Extra-Judicial Settlement of the estate of
the deceased Dionisio Galang (Exh. "D"), SO ORDERED. 1
in so far as it relates to Lots 3548 and 3562
It appears that on 21 August 1984, Aureo Reyes, et al.
the Bacolor Cadastre, and Transfer
(hereafter "respondents") filed an amended complaint
Certificates of Title Nos. 182670-R and
before the Regional Trial Court of San Fernando,
182671-R issued by virtue thereof are
Pampanga, docketed as Civil Case No. 6752, for the
hereby declared null and void.
annulment of a deed of extra-judicial settlement and
partition of the estate of Dionisio Galang, claiming to unnotarized affidavit executed by Galang (Exh. "C"). As
have been deprived thereby of their shares, as co- a consequence thereof, Galang's sisters constructed
owners, in Lot Nos. 3548 and 3562 Bacolor cadastre, their houses on Lot 3548. The structures passed on
and that OCT Nos. 9010 and 9102, issued in the name from generation to generation, with each of Galang's
of Dionisio Galang, covering said lots, are fraudulent sisters and their descendants enjoying the benefits
and should therefore be annulled and cancelled. therefrom. No one questioned or disturbed them until
the petitioners (heirs of Galang), informed them that
The facts of the case, as culled from the Court of the lots in question were titled in Galang's name and
Appeals decision, are as follows: had been partitioned, on the basis of a Deed of
Extrajudicial Partition (Exh. "D"), into three (3) equal
The spouses Hilario Galang and Martina Laxamana parts corresponding to his (Galang's) three (3)
owned two (2) lots located in San Agustin, Potrero, children; that petitioners had succeeded in subdividing
Municipality of Bacolor, Province of Pampanga. They the lots and in obtaining titles thereto in their name
had six (6) children, namely, Dionisio, Marciana, (TCT Nos. 182670-R and 182671-R) despite their
Potenciana, Flaviana, Leonora and Gertrudes. (respondents') earlier demands for an extrajudicial
settlement of their dispute.
The spouses (Hilario and Martina) mortgaged the
aforesaid lots to Camilo Angeles. It is alleged by the Petitioners, on the other hand, contend that the
respondents that Dionisio Galang redeemed these lots cadastral case which culminated in the issuance of the
in his own name, despite the fact that part of the funds original certificates of title over the subject lots in the
used for the redemption came from his sisters. 2 A sole name of Galang, was a proceeding in rem, thus
cadastral survey involving the two (2) lots was binding on the whole world; that when original
conducted, and on 19 May 1919, the Court of First certificates of title (OCT Nos. 9010 and 9102) were
Instance ordered the issuance in Cadastral Case No. issued on 9 January 1922 to Galang, respondents did
14, of OCT Nos. 9010 (for lot 3548) and 9102 (for lot not raise any objection until March 1983 when they
3562) in the name solely of Dionisio Galang ( hereafter filed the complaint in Civil Case No. 6752, or after a
Galang). lapse of sixty-one (61) years.
Respondents, who are heirs of Galang's sisters, claim The trial court 3 upheld Galang's titles over the lots
that Galang and his five (5) sisters had partitioned the which, as aforestated, had been issued as early as
subject lots on 27 June 1920, as embodied in an 1922 in his name. The trial court further held that
respondents' action had long prescribed, having been which, although unnotarized, was nonetheless an
filed only on 24 March 1983, or after a lapse of sixty- ancient document, pursuant to Sec. 22, Rule 132 of
one (61) long years from the issuance of said titles. the Rules of Court, since it was executed on 27 June
The court also noted respondents' failure to establish 1920. As such, proof of its due execution and
their relationship to Galang's five (5) sisters, premising authentication could be dispensed with, according to
their claim solely on an unsubstantiated assertion that the appellate court.
they are descendants of the deceased Galang
sisters. 4 The presence or construction of the houses Hence, this recourse in turn by the petitioners.
on Lot No. 3548 was also not considered as evidence
in respondents' favor, since no proof was submitted We find the petition impressed with merit.
establishing respondents' right to occupy the place.
It is a fact that Dionisio Galang's ownership over the
The documentary evidence (Exh. "C" and "C-1")
disputed lots (3548 and 3562) had been judicially
allegedly showing co-ownership among Dionisio and
confirmed on 19 May 1919 in Cadastral Case No. 14,
his co-heirs, was likewise ignored by the trial court as
G.L.R.O. No. 51, which is a proceeding in rem and
this did not specifically refer to the disputed Lots 3548
hence binding "on the whole world." OCT No. 1056
and 3562.
(9010) and OCT No. 1057 (9102) were, as a
On appeal by the respondents, respondent Court of consequence, issued on 9 January 1922. None of
Appeals reversed the trial court by upholding Galang's co-heirs objected to or protested their
respondents' rights. It focused on two (2) issues. issuance. These titles became indefeasible and
Thus — incontrovertible. Then it was only after sixty-one (61)
years or on 24 March 1983 that the descendants of
Are the properties in question owned in Galang's co-heirs asserted co-ownership claims over
common by the predecessors-in-interest of the subject lots.
appellants and appellees? And has
appellants' present action for partition It is true that Galang executed an affidavit, unnotarized
prescribed? 5 at that, on 27 June 1920 which states in part as follows
(per English translation [Exh.
The appellate court declared that co-ownership existed "C-1"]): 6
between respondents' predecessors-in-interest and
those of petitioners, on the basis of Galang's affidavit That on this date, I have received from all
my sisters and nephews who are my co-
 heirs, namely Potenciana Galang, Flaviana merely referred to a certain "land" which
Galang, Gertrudes Galang, who are my Dionisio Galang and his co-heirs "co-
sisters, and Silverio Garcia and Hilarion inherited" and partitioned without any
Samia, in their own names and for their indication as to which property is being
brothers and sisters who are also co-heirs, referred
the sum of ONE HUNDRED AND SIX to. 8
PESOS (P106.00), Philippine Currency, as
complete payment for the discharge of the We likewise agree with the trial court that in the
land we co-inherited, which is the one we absence of definite proof establishing respondents'
partitioned this date also, which was link/relationship to their alleged predecessors-in-
mortgaged to the Angeles family. 7 interest, i.e., the Galang sisters, they do not have any
cause of action, and the suit for partition must
However, as can be gleaned from the foregoing, there necessarily fall. The trial court aptly observed:
is no reference to Lot Nos. 3548 and 3562. Said
affidavit is not therefore a sufficient basis or support for . . . the plaintiffs thru their witnesses
what is alleged by respondents as a partition among Bienvenido Tapnio, Marcos Dimabuyu,
Dionisio and his now deceased sisters. It does not, as Pedro Atienza, and Carmelita Galang, tried
correctly stated by the trial court, amount to anything to prove that all the plaintiffs herein are
insofar as the two (2) lots involved in this case are heirs and direct descendants, respectively,
concerned: of Marciana Galang, Potenciana Galang,
Flaviana Galang, Leoncia Galang and
Even their presentation of the document Gertrudes Galang who, in their lifetime,
purportedly executed by Dionisio Galang together with their late brother Dionisio
on June 27, 1910 (Exh. "C" and "C-1") Galang, are the co-owners of these two
where the latter acknowledges that he and lots, namely, Lots Nos. 3548 and 3562.
his co-heirs named therein as co-owners of Lamentably, all that was proved in the
a certain property which they had process by the plaintiffs thru these
mortgaged to a certain family surnamed witnesses despite several proddings and
Angeles does not amount to anything for suggestions made by the court toward this
nothing in this document shows that it end was that each of these plaintiffs are
pertains to the two lots involved herein. It just related to one another in varying
 degrees of relationship. They failed to This is a petition for review on certiorari of the
establish their connection or relationship February 27, 1990 decision * of the Court of Appeals in
with any of these five sisters save for their CA-G.R. CV No. 10603 entitled "PACIFIC COAST
unfounded averment that they are indeed TIMBER PRODUCTS, INC. vs. LUCIO TAN ALIM",
descendants and heirs of these deceased affirming the decision ** of the Regional Trial Court of
individuals. 9 Quezon City, Branch LXXXIX in Civil Case No. Q-
24970 which dismissed private respondent's complaint,
WHEREFORE, the petition is GRANTED. The but allowed the petitioner to exercise his option to buy
appealed decision of the Court of Appeals is hereby the tractor in question, which decision was later
SET ASIDE and the decision of the trial court dated 3 amended in its Order, dated September 19, 1985,
October 1986 in Civil Case No. 6752 is hereby partially granting petitioner's motion for reconsideration
REINSTATED. No costs. but denying his plea therein to grant damages for
unrealized income in his logging business due to the
alleged irregular and illegal seizure of the said
equipment leased to him.

G.R. No. 93213 August 9, 1991 The case arose out of a Lease Contract with Option To
Buy, dated January 5, 1977, which was entered into by
LUCIO TAN ALIM, petitioner, and between respondent PACIFIC COAST TIMBER
vs. PRODUCTS, INC., as lessor, and petitioner LUCIO
HON. COURT OF APPEALS and PACIFIC COAST TAN ALIM, as lessee, for a term of fifteen months over
TIMBER PRODUCTS, INC., respondents. a unit of tractor at a monthly rental of P10,000.00
subject to the stipulation, among others, that after
Celestino R. Calauit for petitioner. payment of five months, the lessee is given an option
to purchase the equipment at the price of P150,000.00,
Jose S. Santos, Jr. for private respondent in which event the rental paid shall be considered as
part payment of the consideration and that the subject
equipment has to remain at the lessee's jobsite at
PARCEL III-R between Dianawan Creek and Bazal,
PARAS, J.:p
San Joaquin, Baler (Original Record, p. 7; Exhibit "I"
and Exhibit "A").
However, upon its delivery on January 15, 1977, the P70,000.00, for which reason the contract of lease as
tractor was discovered to be defective. Consequently, well as the option to buy, are automatically terminated.
petitioner Alim informed the private respondent's The same counsel likewise sent a notice of default in
manager at San Luis, Quezon of such fact in his letter obligation secured by the Chattel Mortgage (Ibid.,
dated January 25, 1977, relaying likewise the need for Exhibit "C"; p. 11, Exhibit "D"; Original Records, p. 12).
the tractor's reconditioning or replacement with another However, the petition for extrajudicial foreclosure
unit in good running condition and the immediate repair thereon was returned by the sheriff unsatisfied (Ibid., p.
thereof as may be arranged by him with the Manila 12). Thereafter, a complaint for recovery of possession
Office (Ibid., p. 96, Exhibit "2"). The Logging Manager with replevin of a unit of tractor (Ibid., pp. 13-15-A;
of the respondent corporation, Luis O. Barredo, issued Rollo, pp. 15-18), was filed by private respondent
a certification on June 11, 1977 that a defective tractor before the then Court of First Instance of Quezon City
was delivered to the petitioner (Ibid., p. 98, Exhibit "5"). due to petitioner's refusal to pay the arrears and to
The amount of P5,000.00 for the repair of the tractor deliver the subject equipment.
was then paid by the private respondent to petitioner
Alim on January 29, 1977 (Ibid., p. 97, Exhibit "4"). Upon the filing of a bond by Pacific Coast Timber
Petitioner Alim expended the amount of P36,130.60 for Products, Inc., furnished by Pioneer Insurance and
its repair and reconditioning, as specifically contained Surety Corporation in the sum of P300,000.00 (Ibid., p.
in his letter to respondent corporation of June 25, 1977 26), the trial court issued a writ of replevin for the
(Ibid., p. 99, Exhibit "3"). seizure and delivery of the property in question on April
13, 1978 (Ibid., p. 36; Rollo, p. 20). On April 16, 1978,
On July 1, 1977, the parties amended the lease Deputy Sheriff Reynaldo P. Lopez of the then Court of
contract with petitioner's obligation to execute a Deed First Instance of Aurora Sub-province at Baler,
of Chattel Mortgage for his three motor vehicles in Quezon, seized the tractor from the petitioner and
favor of the respondent to guarantee his undertaking in turned it over to the respondent corporation on April
the amended lease contract (Ibid., pp. 101-102; Rollo, 26, 1978 (Ibid p. 45, Sheriff's Return of Service).
pp. 12-13). Respondent corporation's counsel, Lino M.
Patajo, formally informed Alim in a letter dated March In his answer (Ibid., pp. 38-43), the petitioner denied
16, 1978 that under the amended contract wherein having defaulted in the payment of rentals and claimed
payment of rentals commenced in August, 1977, the to have sustained damages for unrealized income in
latter failed to pay rentals for seven months, from his logging business as a result of the wrongful seizure
September, 1977 to February, 1978 in the amount of of the tractor (Rollo, p. 21).
Both parties having failed to reach an agreement at the defendant the amount of P36,130.60 as
pretrial, the case was tried on the merits. reimbursement for the expenses for repairs
made by the defendant on the tractor which
In the order of the trial court dated December 17, 1980, may be offsetted from the remaining
respondent corporation's motion to recall or lift the purchase price of P90,000.00 if the
Order of Seizure and to cancel the replevin bond the defendant exercises his option to buy, plus
same having already served their purposes, (Ibid., pp. reasonable attorney's fees in the amount of
142-143), which was opposed by petitioner Alim (Ibid., P5,000.00, with costs against the plaintiff.
pp. 144-146), was denied for lack of merit since the
case was still pending in court (Ibid., p. 149). SO ORDERED. (Rollo, pp. 32-33)

On the scheduled hearing of July 14, 1981, both The said decision was, however, partially modified
parties failed to attend. Hence, the dismissal of the upon motion for reconsideration of the petitioner, dated
case (Ibid., p. 158). However, the order of dismissal August 19, 1985 (Original Record, pp. 259-261), in its
was reconsidered upon explanation of the parties Order dated September 19, 1985, in this wise:
(Ibid., p. 159). The case was finally resolved in favor of
petitioner Alim on July 31, 1985 by the trial court (RTC, ACCORDINGLY, judgment is hereby
Quezon City), the dispositive portion of which states: rendered dismissing the plaintiff's
complaint, and allowing the defendant,
ACCORDINGLY, judgment is hereby within fifteen (15) days from and after (sic)
rendered dismissing the plaintiffs this judgment becomes final and executory,
complaint, and allowing the defendant to exercise his option under the Lease
within fifteen days from and after this Contract with Option To Buy, as amended,
judgment becomes final and executory, to to buy the tractor, in question by paying to
exercise his option under the Lease the plaintiff the balance of P80,000.00 after
Contract with Option to Buy, as amended, deducting from the purchase price of
to buy the tractor, in question, by paying to P150,000.00, the amount of P70,000.00 in
the plaintiff the balance of P90,000.00 after rentals, already paid by him, and ordering
deducting from the purchase price of the plaintiff to pay to the defendant the
P150,000.00, in rentals, already paid by amount of P36,130.60 as reimbursement
him, and ordering the plaintiff to pay to the for the expenses for repairs made by the
 defendant on the tractor, which may be off- whether or not the petitioner is entitled to
setted (sic) from the remaining purchase collect/recover damages as prayed for in the
price of P80,000.00, if the defendant complaint; and (3) whether or not petitioner is entitled
exercises his option to buy, plus to recover the sum of P300,000.00 from the replevin
reasonable attorney's fees in the amount of bond, all of which may be synthesized in one pivotal
P5,000.00, with costs against the plaintiff. issue, the interpretation of the "Amendment to Contract
(Rollo, pp. 37-A-38). of Lease" (Exhibit "6", Original Records, p. 9) in
relation to the "Original Lease Contract with Option to
Not satisfied with the modified decision, petitioner Alim Buy (Exhibit "1". Original Records, p. 7).
appealed, claiming damages because of the wrongful
seizure of the tractor, but the same was affirmed by the Both the trial court and the Court of Appeals are of the
Court of Appeals which denied said petitioner's claim view that there is no amendment as to the duration of
for compensation and concurred with the following the Contract of Lease; that the contract expired as
findings of the trial court: originally stipulated on April 5, 1978 and that when the
tractor was seized by virtue of a writ of replevin on
However, since the fifteen (15) month lease August 16, 1978, the contract of lease had expired and
period provided in the contract had already the lessee Alim was consequently not entitled to
expired ... the plaintiff may not be judicially damages.
compelled to deliver the tractor to
defendant since after the expiration of the A careful review of the records shows that in the
lease period, it is legally entitled to its original contract, it was expressly stipulated that the
possession, as the owner thereof. (Rollo, P. lease shall be for a period of fifteen (15) months
62) (Exhibit "1". par. 2) and that the lessee is given an
option to purchase the equipment for ONE HUNDRED
Petitioner's motion for reconsideration was denied by FIFTY THOUSAND (P150,000.00) PESOS, after Alim
the Court of Appeals in its resolution dated April 30, has completed and religiously paid the 5-month rentals
1990 (Rollo, p. 65). Hence, this petition. which shall be considered as part payment of the
consideration (Ibid., par. 4).
The issues raised in this case are: (1) whether or not
the fifteen (15) month lease period had commenced On the other hand, there is no provision in the
from August 1977 and expired in October 1978; (2) amended contract as to the period of the lease.
Instead, it provides that "All provisions of the original Nothing is more settled than the rule that the terms of
lease contract not amended by the foregoing written contract are binding on the parties thereto. In
provisions shall remain in full force and effect." (Exhibit the interpretation of the provisions of a written contract,
"6", par. 5). The alteration is evidently focused on the the courts should follow the literal meaning of the
period for the right to exercise the option to buy. stipulation. Otherwise, the evident intention of the
Originally, the period was five (5) months of regular parties must prevail (Art. 1370, Civil Code) (Spouses
payment but under the amended contract, the period Roberto E. Fermin and Maylinda Ferraren v. Hon.
was changed to fifteen (15) months, unquestionably Court of Appeals, et al., G.R. 95146, May 6, 1991).
including the period from the commencement of the
original contract on January 7, 1977, as specifically There is therefore no merit in the petitioner's allegation
provided in paragraph 4 thereof, which states: that the seizure was wrongful for which he must be
compensated. The ownership or right of possession
4. The monthly rentals of the equipment over the subject equipment belonged to the Pacific
which on the date of the execution of this Coast Timber Products, Inc. at the time it was seized.
amendment to the original lease contract The seizure of the equipment was ordered by the trial
have not been paid shall be considered as court for its restoration by means established in the
paid obligation of LESSEE to LESSOR, the laws of procedure. Thus, the requisites for the
payment of which will be the subject of issuance of the writ of replevin (Sec. 2, Rule 60) have
negotiation between LESSOR and been satisfied.
LESSEE.
The writ is a provisional remedy in replevin suits. It is in
The letter of Atty. Lino M. Patajo, counsel of the "nature of a possessory action and the applicant
respondent corporation, on which Alim heavily relied in who seeks the immediate possession of the property
his arguments in his favor, unmistakably confirms the need not be the holder of the legal title to the property."
fact of non-extension of the lease agreement when he It is sufficient that at the time he applied for a writ of
spoke of the commencement of the payment of the replevin he is found to be "entitled to a possession
rentals, not on the commencement of the new period thereof as stated in Section 2, Rule 60 of the Rules of
of lease (Exhibit "C", Original Records, p. 11). Court (Yang v. Valdez, 177 SCRA 141 [1989]).
Inevitably, the courts cannot go beyond what appears
in the documents submitted by the parties. The Appellate Court correctly observed that the trial
court was right in holding that "the plaintiff may not
anymore be judicially compelled to deliver the tractor to [1990]), neither can claim for exemplary damages be
the defendant since after the expiration of the lease granted in the absence of gross or reckless negligence
period, it is legally entitled to its possession, as the (De los Santos, et al. v. Court of Appeals, G.R. 51165,
owner thereof (p 5, RTC decision; Rollo, p. 31)". It is June 21, 1990), which misfeasance is not true in the
very clear therefore, that Alim is not entitled to any case at bar.
award of damages based on the foregoing facts and
evidence presented. Neither can he claim moral and A replevin bond is simply intended to indemnify the
exemplary damages. The records show that the defendant against any loss that he may suffer by being
petitioner was not able to adduce any evidence before compelled to surrender the possession of the disputed
the trial court to prove facts upon which the award for property pending the trial of the action. He cannot
such damages may be predicated. In fact, even in the recover on the bond as for a reconversion when he
petition and memorandum for the petitioner, there was has failed to have the judgment entered for the return
no discussion of the evidence upon which Alim relies of the property. Nor is the surety liable for payment of
for his claim. the judgment for damages rendered against the
plaintiff on a counterclaim or punitive damages for
Moral damages have to do with injury personal to the fraudulent or wrongful acts committed by the plaintiffs
awardee such a physical sufferings and the like, while and unconnected with the defendant's deprivation of
exemplary damages are imposed by way of example possession by the plaintiff. Even where the judgment
or correction for the public good (Makabili v. Court of was that the defendant was entitled to the property, but
Appeals, 157 SCRA 253 [1988]). no order was made requiring the plaintiff to return it or
assessing damages in default of a return, it was
Indisputably, moral damages cannot generally be declared that until judgment was entered that the
awarded in the absence of bad faith (De Aparico v. property should be restored, there could be no liability
Paraguya, 150 SCRA 279 [1987]). Otherwise stated, on the part of the sureties Sapugay v. Court of
moral damages can be awarded if they are the Appeals, 183 SCRA 464 [1990]).
proximate results of a wrongful act or omission
(Filinvest Credit Corporation v. Mendez, 152 SCRA PREMISES CONSIDERED, the instant petition is
593 [1987]), while exemplary damages are not DISMISSED and the assailed decision is AFFIRMED.
awarded if the defendant had not acted in a wanton,
oppressive or malevolent manner (Zenith Insurance
Corporation v. Court of Appeals, 185 SCRA 398
 This case divides itself into two parts and gives rise to
two main questions; (1) that relating to the power of the
court to restrain by injunction the collection of the tax
complained of, and (2) that relating to the validity of
G.R. No. L-10572 December 21, 1915 those provisions of subsection (b) of section 100 of Act
No. 2339, conferring power upon the Collector of
FRANCIS A. CHURCHILL and STEWART
Internal Revenue to remove any sign, signboard, or
TAIT, plaintiffs-appellees,
billboard upon the ground that the same is offensive to
vs.
the sight or is otherwise a nuisance.
JAMES J. RAFFERTY, Collector of Internal
Revenue, defendant-appellant. The first question is one of the jurisdiction and is of
vital importance to the Government. The sections of
Attorney-General Avanceña for appellant.
Act No. 2339, which bear directly upon the subject, are
Aitken and DeSelms for appellees.
139 and 140. The first expressly forbids the use of an
injunction to stay the collection of any internal revenue
tax; the second provides a remedy for any wrong in
TRENT, J.: connection with such taxes, and this remedy was
intended to be exclusive, thereby precluding the
The judgment appealed from in this case perpetually remedy by injunction, which remedy is claimed to be
restrains and prohibits the defendant and his deputies constitutional. The two sections, then, involve the right
from collecting and enforcing against the plaintiffs and of a dissatisfied taxpayers to use an exceptional
their property the annual tax mentioned and described remedy to test the validity of any tax or to determine
in subsection (b) of section 100 of Act No. 2339, any other question connected therewith, and the
effective July 1, 1914, and from destroying or removing question whether the remedy by injunction is
any sign, signboard, or billboard, the property of the exceptional.
plaintiffs, for the sole reason that such sign, signboard,
or billboard is, or may be, offensive to the sight; and Preventive remedies of the courts are extraordinary
decrees the cancellation of the bond given by the and are not the usual remedies. The origin and history
plaintiffs to secure the issuance of the preliminary of the writ of injunction show that it has always been
injunction granted soon after the commencement of regarded as an extraordinary, preventive remedy, as
this action. distinguished from the common course of the law to
redress evils after they have been consummated. No illegal, or that the law, by virtue of which it is imposed,
injunction issues as of course, but is granted only upon is unconstitutional, does not authorize a court of equity
the oath of a party and when there is no adequate to restrain its collection by injunction. There must be a
remedy at law. The Government does, by section 139 further showing that there are special circumstances
and 140, take away the preventive remedy of which bring the case under some well recognized head
injunction, if it ever existed, and leaves the taxpayer, in of equity jurisprudence, such as that irreparable injury,
a contest with it, the same ordinary remedial actions multiplicity of suits, or a cloud upon title to real estate
which prevail between citizen and citizen. The will result, and also that there is, as we have indicated,
Attorney-General, on behalf of the defendant, contends no adequate remedy at law. This is the settled law in
that there is no provisions of the paramount law which the United States, even in the absence of statutory
prohibits such a course. While, on the other hand, enactments such as sections 139 and 140.
counsel for plaintiffs urge that the two sections are (Hannewinkle vs. Mayor, etc., of Georgetown, 82 U.S.,
unconstitutional because (a) they attempt to deprive 547; Indiana Mfg. Co. vs. Koehne, 188 U.S., 681; Ohio
aggrieved taxpayers of all substantial remedy for the Tax cases, 232 U. S., 576, 587; Pittsburgh C. C. & St.
protection of their property, thereby, in effect, depriving L. R. Co. vs. Board of Public Works, 172 U. S., 32;
them of their property without due process of law, and Shelton vs. Plat, 139 U.S., 591; State Railroad Tax
(b) they attempt to diminish the jurisdiction of the Cases, 92 U. S., 575.) Therefore, this branch of the
courts, as conferred upon them by Acts Nos. 136 and case must be controlled by sections 139 and 140,
190, which jurisdiction was ratified and confirmed by unless the same be held unconstitutional, and
the Act of Congress of July 1, 1902. consequently, null and void.

In the first place, it has been suggested that section The right and power of judicial tribunals to
139 does not apply to the tax in question because the declare whether enactments of the legislature
section, in speaking of a "tax," means only legal taxes; exceed the constitutional limitations and are
and that an illegal tax (the one complained of) is not a invalid has always been considered a grave
tax, and, therefore, does not fall within the inhibition of responsibility, as well as a solemn duty. The
the section, and may be restrained by injunction. There courts invariably give the most careful
is no force in this suggestion. The inhibition applies to consideration to questions involving the
all internal revenue taxes imposes, or authorized to be interpretation and application of the Constitution,
imposed, by Act No. 2339. (Snyder vs. Marks, 109 and approach constitutional questions with great
U.S., 189.) And, furthermore, the mere fact that a tax is deliberation, exercising their power in this
 respect with the greatest possible caution and payment of its taxes without any judicial proceedings
even reluctance; and they should never declare a whatever. In this country, as well as in the United
statute void, unless its invalidity is, in their States, the officer charged with the collection of taxes
judgment, beyond reasonable doubt. To justify a is authorized to seize and sell the property of
court in pronouncing a legislative act delinquent taxpayers without applying to the courts for
unconstitutional, or a provision of a state assistance, and the constitutionality of the law
constitution to be in contravention of the authorizing this procedure never has been seriously
Constitution of the United States, the case must questioned. (City of Philadelphia vs. [Diehl] The
be so clear to be free from doubt, and the conflict Collector, 5 Wall., 720; Nicholl vs. U.S., 7 Wall., 122,
of the statute with the constitution must be and cases cited.) This must necessarily be the course,
irreconcilable, because it is but a decent respect because it is upon taxation that the Government chiefly
to the wisdom, the integrity, and the patriotism of relies to obtain the means to carry on its operations,
the legislative body by which any law is passed and it is of the utmost importance that the modes
to presume in favor of its validity until the adopted to enforce the collection of the taxes levied
contrary is shown beyond reasonable doubt. should be summary and interfered with as little as
Therefore, in no doubtful case will the judiciary possible. No government could exist if every litigious
pronounce a legislative act to be contrary to the man were permitted to delay the collection of its taxes.
constitution. To doubt the constitutionality of a This principle of public policy must be constantly borne
law is to resolve the doubt in favor of its validity. in mind in determining cases such as the one under
(6 Ruling Case Law, secs. 71, 72, and 73, and consideration.
cases cited therein.)
With these principles to guide us, we will proceed to
It is also the settled law in the United States that "due inquire whether there is any merit in the two
process of law" does not always require, in respect to propositions insisted upon by counsel for the plaintiffs.
the Government, the same process that is required Section 5 of the Philippine Bill provides: "That no law
between citizens, though it generally implies and shall be enacted in said Islands which shall deprive
includes regular allegations, opportunity to answer, and any person of life, liberty, or property without due
a trial according to some well settled course of judicial process of law, or deny to any person therein the equal
proceedings. The case with which we are dealing is in protection of the law."
point. A citizen's property, both real and personal, may
be taken, and usually is taken, by the government in
The origin and history of these provisions are well- power of impeding or controlling the collection of taxes,
known. They are found in substance in the Constitution or relieving the hardship incident to taxation, the very
of the United States and in that of ever state in the existence of the government might be placed in the
Union. power of a hostile judiciary. (Dows vs. The City of
Chicago, 11 Wall., 108.) While a free course of
Section 3224 of the Revised Statutes of the United remonstrance and appeal is allowed within the
States, effective since 1867, provides that: "No suit for departments before the money is finally exacted, the
the purpose of restraining the assessment or collection General Government has wisely made the payment of
of any tax shall be maintained in any court." the tax claimed, whether of customs or of internal
revenue, a condition precedent to a resort to the courts
Section 139, with which we have been dealing, reads: by the party against whom the tax is assessed. In the
"No court shall have authority to grant an injunction to internal revenue branch it has further prescribed that
restrain the collection of any internal-revenue tax." no such suit shall be brought until the remedy by
appeal has been tried; and, if brought after this, it must
A comparison of these two sections show that they are
be within six months after the decision on the appeal.
essentially the same. Both expressly prohibit the
We regard this as a condition on which alone the
restraining of taxes by injunction. If the Supreme Court
government consents to litigate the lawfulness of the
of the United States has clearly and definitely held that
original tax. It is not a hard condition. Few
the provisions of section 3224 do not violate the "due
governments have conceded such a right on any
process of law" and "equal protection of the law"
condition. If the compliance with this condition requires
clauses in the Constitution, we would be going too far
the party aggrieved to pay the money, he must do it."
to hold that section 139 violates those same provisions
in the Philippine Bill. That the Supreme Court of the Again, in State Railroad Tax Cases (92 U.S., 575,
United States has so held, cannot be doubted. 613), the court said: "That there might be no
misunderstanding of the universality of this principle, it
In Cheatham vs. United States (92 U.S., 85,89) which
was expressly enacted, in 1867, that "no suit for the
involved the validity of an income tax levied by an act
purpose of restraining the assessment or collection of
of Congress prior to the one in issue in the case of
any tax shall be maintained in any court." (Rev, Stat.,
Pollock vs. Farmers' Loan & Trust Co. (157 U.S., 429)
sec. 3224.) And though this was intended to apply
the court, through Mr. Justice Miller, said: "If there
alone to taxes levied by the United States, it shows the
existed in the courts, state or National, any general
sense of Congress of the evils to be feared if courts of
justice could, in any case, interfere with the process of We will first review briefly the former and present
collecting taxes on which the government depends for systems of taxation. Upon the American occupation of
its continued existence. It is a wise policy. It is founded the Philippine, there was found a fairly complete
in the simple philosophy derived from the experience system of taxation. This system was continued in force
of ages, that the payment of taxes has to be enforced by the military authorities, with but few changes, until
by summary and stringent means against a reluctant the Civil Government assumed charge of the subject.
and often adverse sentiment; and to do this The principal sources of revenue under the Spanish
successfully, other instrumentalities and other modes regime were derived from customs receipts, the so-
of procedure are necessary, than those which belong called industrial taxes, the urbana taxes, the stamp tax,
to courts of justice." the personal cedula tax, and the sale of the public
domain. The industrial and urbana taxes constituted
And again, in Snyder vs. Marks (109 U.S., 189), the practically an income tax of some 5 per cent on the net
court said: "The remedy of a suit to recover back the income of persons engaged in industrial and
tax after it is paid is provided by statute, and a suit to commercial pursuits and on the income of owners of
restrain its collection is forbidden. The remedy so given improved city property. The sale of stamped paper and
is exclusive, and no other remedy can be substituted adhesive stamp tax. The cedula tax was a graduated
for it. Such has been the current of decisions in the tax, ranging from nothing up to P37.50. The revenue
Circuit Courts of the United States, and we are derived from the sale of the public domain was not
satisfied it is a correct view of the law."itc-a1f considered a tax. The American authorities at once
abolished the cedula tax, but later restored it in a
In the consideration of the plaintiffs' second modified form, charging for each cedula twenty
proposition, we will attempt to show (1) that the centavos, an amount which was supposed to be just
Philippine courts never have had, since the American sufficient to cover the cost of issuance. The urbana tax
occupation, the power to restrain by injunction the was abolished by Act No. 223, effective September 6,
collection of any tax imposed by the Insular 1901.
Government for its own purpose and benefit, and (2)
that assuming that our courts had or have such power, The "Municipal Code" (Act No. 82) and the Provincial
this power has not been diminished or curtailed by Government Act (No. 83), both enacted in 1901,
sections 139 and 140. authorize municipal councils and provincial boards to
impose an ad valorem tax on real estate. The
Municipal Code did not apply to the city of Manila. This
city was given a special charter (Act No. 183), effective inhibition was not inserted in the Manila Charter until
August 30, 1901; Under this charter the Municipal the passage of Act No. 1793, effective October 12,
Board of Manila is authorized and empowered to 1907. Act No. 355 expressly makes the payment of the
impose taxes upon real estate and, like municipal exactions claimed a condition precedent to a resort to
councils, to license and regulate certain occupations. the courts by dissatisfied importers. Section 52 of Act
Customs matters were completely reorganized by Act No. 1189 provides "That no courts shall have authority
No. 355, effective at the port of Manila on February 7, to grant an injunction restraining the collection of any
1902, and at other ports in the Philippine Islands the taxes imposed by virtue of the provisions of this Act,
day after the receipt of a certified copy of the Act. The but the remedy of the taxpayer who claims that he is
Internal Revenue Law of 1904 (Act No. 1189), unjustly assessed or taxed shall be by payment under
repealed all existing laws, ordinances, etc., imposing protest of the sum claimed from him by the Collector of
taxes upon the persons, objects, or occupations taxed Internal Revenue and by action to recover back the
under that act, and all industrial taxes and stamp taxes sum claimed to have been illegally collected."
imposed under the Spanish regime were eliminated,
but the industrial tax was continued in force until Sections 139 and 140 of Act No. 2339 contain, as we
January 1, 1905. This Internal Revenue Law did not have indicated, the same prohibition and remedy. The
take away from municipal councils, provincial boards, result is that the courts have been expressly forbidden,
and the Municipal Board of the city of Manila the power in every act creating or imposing taxes or imposts
to impose taxes upon real estate. This Act (No. 1189), enacted by the legislative body of the Philippines since
with its amendments, was repealed by Act No. 2339, the American occupation, to entertain any suit assailing
an act "revising and consolidating the laws relative to the validity of any tax or impost thus imposed until the
internal revenue." tax shall have been paid under protest. The only taxes
which have not been brought within the express
Section 84 of Act No. 82 provides that "No court shall inhibition were those included in that part of the old
entertain any suit assailing the validity of a tax Spanish system which completely disappeared on or
assessed under this act until the taxpayer shall have before January 1, 1905, and possibly the old customs
paid, under protest, the taxes assessed against him, . . duties which disappeared in February, 1902.
. ."
Section 56 of the Organic Act (No. 136), effective June
This inhibition was inserted in section 17 of Act No. 83 16, 1901, provides that "Courts of First Instance shall
and applies to taxes imposed by provincial boards. The have original jurisdiction:
 xxx xxx xxx injunction can be granted, it must appear upon the trial
of the action that the plaintiff is entitled to have
2. In all civil actions which involve the ... legality commission or continuance of the acts complained of
of any tax, impost, or assessment, . . . . perpetually restrained (sec. 171). These provisions
authorize the institution in Courts of First Instance of
xxx xxx xxx what are known as "injunction suits," the sole object of
which is to obtain the issuance of a final injunction.
7. Said courts and their judges, or any of them,
They also authorize the granting of injunctions as
shall have power to issue writs of
aiders in ordinary civil actions. We have defined in
injunction, mandamus,certiorari, prohibition, quo
Davesa vs. Arbes (13 Phil. Rep., 273), an injunction to
warranto, and habeas corpus in their respective
be "A "special remedy" adopted in that code (Act 190)
provinces and districts, in the manner provided in
from American practice, and originally borrowed from
the Code of Civil Procedure.
English legal procedure, which was there issued by the
The provisions of the Code of Civil Procedure (Act No. authority and under the seal of a court of equity, and
190), effective October 1, 1901, which deals with the limited, as in other cases where equitable relief is
subject of injunctions, are sections 162 to 172, sought, to those cases where there is no "plain,
inclusive. Injunctions, as here defined, are of two adequate, and complete remedy at law,"which will not
kinds; preliminary and final. The former may be be granted while the rights between the parties are
granted at any time after the commencement of the undetermined, except in extraordinary cases where
action and before final judgment, and the latter at the material and irreparable injury will be done,"which
termination of the trial as the relief or part of the relief cannot be compensated in damages . . .
prayed for (sec. 162). Any judge of the Supreme Court
By paragraph 2 of section 56 of Act No. 136, supra,
may grant a preliminary injunction in any action
and the provisions of the various subsequent Acts
pending in that court or in any Court of First Instance. A
heretofore mentioned, the Insular Government has
preliminary injunction may also be granted by a judge
consented to litigate with aggrieved persons the
of the Court of First Instance in actions pending in his
validity of any original tax or impost imposed by it on
district in which he has original jurisdiction (sec. 163).
condition that this be done in ordinary civil actions after
But such injunctions may be granted onlywhen the
the taxes or exactions shall have been paid. But it is
complaint shows facts entitling the plaintiff to the relief
said that paragraph 2 confers original jurisdiction upon
demanded (sec. 166), and before a final or permanent
Courts of First Instance to hear and determine "all civil
actions" which involve the validity of any tax, impost or preliminary and final, in any civil action pending in their
assessment, and that if the all-inclusive words "all" and districts, provided always, that the complaint shows
"any" be given their natural and unrestricted meaning, facts entitling the plaintiff to the relief demanded.
no action wherein that question is involved can arise Injunction suits, such as the one at bar, are "civil
over which such courts do not have jurisdiction. actions," but of a special or extraordinary character. It
(Barrameda vs. Moir, 25 Phil. Rep., 44.) This is true. cannot be said that the Commission intended to give a
But the term "civil actions" had its well defined broader or different meaning to the word "action," used
meaning at the time the paragraph was enacted. The in Chapter 9 of the Code of Civil Procedure in
same legislative body which enacted paragraph 2 on connection with injunctions, than it gave to the same
June 16, 1901, had, just a few months prior to that word found in paragraph 2 of section 56 of the Organic
time, defined the only kind of action in which the Act. The Insular Government, in exercising the power
legality of any tax imposed by it might be assailed. conferred upon it by the Congress of the United States,
(Sec. 84, Act 82, enacted January 31, 1901, and sec. has declared that the citizens and residents of this
17, Act No. 83, enacted February 6, 1901.) That kind of country shall pay certain specified taxes and imposts.
action being payment of the tax under protest and an The power to tax necessarily carries with it the power
ordinary suit to recover and no other, there can be no to collect the taxes. This being true, the weight of
doubt that Courts of First Instance have jurisdiction authority supports the proposition that the Government
over all such actions. The subsequent legislation on may fix the conditions upon which it will consent to
the same subject shows clearly that the Commission, litigate the validity of its original taxes.
in enacting paragraph 2, supra, did not intend to (Tennessee vs. Sneed, 96 U.S., 69.)
change or modify in any way section 84 of Act No. 82
and section 17 of Act No. 83, but, on the contrary, it We must, therefore, conclude that paragraph 2 and 7
was intended that "civil actions," mentioned in said of section 56 of Act No. 136, construed in the light of
paragraph, should be understood to mean, in so far as the prior and subsequent legislation to which we have
testing the legality of taxes were concerned, only those referred, and the legislative and judicial history of the
of the kind and character provided for in the two same subject in the United States with which the
sections above mentioned. It is also urged that the Commission was familiar, do not empower Courts of
power to restrain by injunction the collection of taxes or firs Instance to interfere by injunction with the
imposts is conferred upon Courts of First Instance by collection of the taxes in question in this
paragraph 7 of section 56, supra. This paragraph does case.1awphil.net
empower those courts to grant injunctions, both
If we are in error as to the scope of paragraph 2 and The legislative body of the Philippine Islands has
7, supra, and the Commission did intend to confer the declared from the beginning (Act No. 82) that payment
power upon the courts to restrain the collection of under protest and suit to recover is an adequate
taxes, it does not necessarily follow that this power or remedy to test the legality of any tax or impost, and
jurisdiction has been taken away by section 139 of Act that this remedy is exclusive. Can we say that the
No. 2339, for the reason that all agree that an remedy is not adequate or that it is not exclusive, or
injunction will not issue in any case if there is an both? The plaintiffs in the case at bar are the first, in so
adequate remedy at law. The very nature of the writ far as we are aware, to question either the adequacy
itself prevents its issuance under such circumstances. or exclusiveness of this remedy. We will refer to a few
Legislation forbidding the issuing of injunctions in such cases in the United States where statutes similar to
cases is unnecessary. So the only question to be here sections 139 and 140 have been construed and
determined is whether the remedy provided for in applied.
section 140 of Act No. 2339 is adequate. If it is, the
writs which form the basis of this appeal should not In May, 1874, one Bloomstein presented a petition to
have been issued. If this is the correct view, the the circuit court sitting in Nashville, Tennessee, stating
authority to issue injunctions will not have been taken that his real and personal property had been assessed
away by section 139, but rendered inoperative only by for state taxes in the year 1872 to the amount of
reason of an adequate remedy having been made $132.60; that he tendered to the collector this amount
available. in "funds receivable by law for such purposes;" and
that the collector refused to receive the same. He
prayed for an alternative writ of mandamus to compel
the collector to receive the bills in payment for such
taxes, or to show cause to the contrary. To this petition
the collector, in his answer, set up the defense that the
petitioner's suit was expressly prohibited by the Act of
the General Assembly of the State of Tennessee,
passed in 1873. The petition was dismissed and the
relief prayed for refused. An appeal to the supreme
court of the State resulted in the affirmance of the
judgment of the lower court. The case was then carried
to the Supreme Court of the United States
(Tennessee vs. Sneed, 96 U. S., 69), where the ought to be refunded; and thereupon the
judgment was again affirmed. Comptroller shall issue his warrant for the same,
which shall be paid in preference to other claims
The two sections of the Act of [March 21,] 1873, drawn on the Treasury.
in question in that cases, read as follows:
2. That there shall be no other remedy, in any
1. That in all cases in which an officer, charged case of the collection of revenue, or attempt to
by law with the collection of revenue due the collect revenue illegally, or attempt to collect
State, shall institute any proceeding, or take any revenue in funds only receivable by said officer
steps for the collection of the same, alleged or under the law, the same being other or different
claimed to be due by said officer from any funds than such as the tax payer may tender, or
citizen, the party against whom the proceeding or claim the right to pay, than that above provided;
step is taken shall, if he conceives the same to and no writ for the prevention of the collection of
be unjust or illegal, or against any statute or any revenue claimed, or to hinder or delay the
clause of the Constitution of the State, pay the collection of the same, shall in anywise issue,
same under protest; and, upon his making said either injunction, supersedeas, prohibition, or any
payment, the officer or collector shall pay such other writ or process whatever; but in all cases in
revenue into the State Treasury, giving notice at which, for any reason, any person shall claim
the time of payment to the Comptroller that the that the tax so collected was wrongfully or
same was paid under protest; and the party illegally collected, the remedy for said party shall
paying said revenue may, at any time within thirty be as above provided, and in no other manner."
days after making said payment, and not longer
thereafter, sue the said officer having collected In discussing the adequacy of the remedy provided by
said sum, for the recovery thereof. And the same the Tennessee Legislature, as above set forth, the
may be tried in any court having the jurisdiction Supreme Court of the United States, in the case just
of the amount and parties; and, if it be cited, said: "This remedy is simple and effective. A suit
determined that the same was wrongfully at law to recover money unlawfully exacted is as
collected, as not being due from said party to the speedy, as easily tried, and less complicated than a
State, for any reason going to the merits of the proceeding bymandamus. ... In revenue cases,
same, then the court trying the case may certify whether arising upon its (United States) Internal
of record that the same was wrongfully paid and Revenue Laws or those providing for the collection of
duties upon foreign imports, it (United States) adopts revenue; and, even in its absence, the strong arm of
the rule prescribed by the State of Tennessee. It the court of chancery ought not to be interposed in that
requires the contestant to pay the amount as fixed by direction except where resort to that court is grounded
the Government, and gives him power to sue the upon the settled principles which govern its
collector, and in such suit to test the legality of the tax. jurisdiction."
There is nothing illegal or even harsh in this. It is a
wise and reasonable precaution for the security of the In Louisville & N.R. Co. vs. State (8 Heisk. [64 Tenn.],
Government." 663, 804), cited by the Supreme Court of the United
States in Shelton vs. Platt, supra, the court said: "It
Thomas C. Platt commenced an action in the Circuit was urged that this statute (sections 1 and 2 of the Act
Court of the United States for the Eastern District of of 1873,supra) is unconstitutional and void, as it
Tennessee to restrain the collection of a license tax deprives the citizen of the remedy by certiorari,
from the company which he represented. The defense guaranteed by the organic law."
was that sections 1 and 2 of the Act of 1873, supra,
prohibited the bringing of that suit. This case also By the 10th section of the sixth article of the
reached the Supreme Court of the United States. Constitution, [Tennessee] it is provided that: "The
(Shelton vs. Platt, 139 U. 591.) In speaking of the judges or justices of inferior courts of law and equity
inhibitory provisions of sections 1 and 2 of the Act of shall have power in all civil cases to issue writs
1873, the court said: "This Act has been sanctioned of certiorari, to remove any cause, or the transcript of
and applied by the Courts of Tennessee. the record thereof, from any inferior jurisdiction into
(Nashville vs. Smith, 86 Tenn., 213; Louisville & N. R. such court of law, on sufficient cause, supported by
Co. vs. State, 8 Heisk., 663, 804.) It is, as counsel oath or affirmation."
observe, similar to the Act of Congress forbidding suit
for the purpose of restraining the assessment or The court held the act valid as not being in conflict with
collection of taxes under the Internal Revenue Laws, in these provisions of the State constitution.
respect to which this court held that the remedy by suit
In Eddy vs. The Township of Lee (73 Mich., 123), the
to recover back the tax after payment, provided for by
complainants sought to enjoin the collection of certain
the Statute, was exclusive. (Snyder vs. Marks, of this
taxes for the year 1886. The defendants, in support of
character has been called for by the embarrassments
their demurrer, insisted that the remedy by injunction
resulting from the improvident employment of the writ
had been taken away by section 107 of the Act of
of injunction in arresting the collection of the public
1885, which section reads as follows: "No injunction It will be seen that this section has not taken away
shall issue to stay proceedings for the assessment or from the Philippine Government the power to change
collection of taxes under this Act." the practice and method of procedure. If sections 139
and 140, considered together, and this must always be
It was claimed by the complainants that the above done, are nothing more than a mode of procedure,
quoted provisions of the Act of 1885 were then it would seem that the Legislature did not exceed
unconstitutional and void as being in conflict with its constitutional authority in enacting them. Conceding
article 6, sec. 8, of the Constitution, which provides for the moment that the duly authorized procedure for
that: "The circuit courts shall have original jurisdiction the determination of the validity of any tax, impost, or
in all matters, civil and criminal, not excepted in this assessment was by injunction suits and that this
Constitution, and not prohibited by law. ... They shall method was available to aggrieved taxpayers prior to
also have power to issue writs of habeas the passage of Act No. 2339, may the Legislature
corpus, mandamus, injunction, quo warranto, certiorari, change this method of procedure? That the Legislature
and other writs necessary to carry into effect their has the power to do this, there can be no doubt,
orders, judgments, and decrees." provided some other adequate remedy is substituted in
lieu thereof. In speaking of the modes of enforcing
Mr. Justice Champlin, speaking for the court, said: "I rights created by contracts, the Supreme Court of the
have no doubt that the Legislature has the United States, in Tennessee vs. Sneed, supra, said:
constitutional authority, where it has provided a plain, "The rule seems to be that in modes of proceedings
adequate, and complete remedy at law to recover back and of forms to enforce the contract the Legislature
taxes illegally assessed and collected, to take away has the control, and may enlarge, limit or alter them,
the remedy by injunction to restrain their collection." provided that it does not deny a remedy, or so
embarrass it with conditions and restrictions as
Section 9 of the Philippine Bill reads in part as follows:
seriously to impair the value of the right."
"That the Supreme Court and the Courts of First
Instance of the Philippine Islands shall possess and In that case the petitioner urged that the Acts of 1873
exercise jurisdiction as heretofore provided and such were laws impairing the obligation of the contract
additional jurisdiction as shall hereafter be prescribed contained in the charter of the Bank of Tennessee,
by the Government of said Islands, subject to the which contract was entered into with the State in 1838.
power of said Government to change the practice and It was claimed that this was done by placing such
method of procedure." impediments and obstructions in the way of its
enforcement, thereby so impairing the remedies as of equity, then every controversy where money is
practically to render the obligation of no value. In demanded may be made the subject of equitable
disposing of this contention, the court said: "If we cognizance. To enforce against a dealer a promissory
assume that prior to 1873 the relator had authority to note may in some cases as effectually break up his
prosecute his claim against the State bymandamus, business as to collect from him a tax of equal amount.
and that by the statutes of that year the further use of This is not what is known to the law as irreparable
that form was prohibited to him, the question remains. injury. The courts have never recognized the
whether an effectual remedy was left to him or consequences of the mere enforcement of a money
provided for him. We think the regulation of the statute demand as falling within that category."
gave him an abundant means of enforcing such right
as he possessed. It provided that he might pay his Certain specified sections of Act No. 2339 were
claim to the collector under protest, giving notice amended by Act No. 2432, enacted December 23,
thereof to the Comptroller of the Treasury; that at any 1914, effective January 1, 1915, by imposing
time within thirty days thereafter he might sue the increased and additional taxes. Act No. 2432 was
officer making the collection; that the case should be amended, were ratified by the Congress of the United
tried by any court having jurisdiction and, if found in States on March 4, 1915. The opposition manifested
favor of the plaintiff on the merits, the court should against the taxes imposed by Acts Nos. 2339 and 2432
certify that the same was wrongfully paid and ought to is a matter of local history. A great many business men
be refunded and the Comptroller should thereupon thought the taxes thus imposed were too high. If the
issue his warrant therefor, which should be paid in collection of the new taxes on signs, signboards, and
preference to other claim on the Treasury." billboards may be restrained, we see no well-founded
reason why injunctions cannot be granted restraining
But great stress is laid upon the fact that the plaintiffs the collection of all or at least a number of the other
in the case under consideration are unable to pay the increased taxes. The fact that this may be done, shows
taxes assessed against them and that if the law is the wisdom of the Legislature in denying the use of the
enforced, they will be compelled to suspend business. writ of injunction to restrain the collection of any tax
This point may be best answered by quoting from the imposed by the Acts. When this was done, an
case of Youngblood vs. Sexton (32 Mich., 406), equitable remedy was made available to all dissatisfied
wherein Judge Cooley, speaking for the court, said: taxpayers.
"But if this consideration is sufficient to justify the
transfer of a controversy from a court of law to a court
The question now arises whether, the case being one British and German Consuls, he "decided that the
of which the court below had no jurisdiction, this court, billboard complained of was and still is offensive to the
on appeal, shall proceed to express an opinion upon sight, and is otherwise a nuisance." The plaintiffs
the validity of provisions of subsection (b) of section proved by Mr. Churchill that the "billboards were quite
100 of Act No. 2339, imposing the taxes complained a distance from the road and that they were strongly
of. As a general rule, an opinion on the merits of a built, not dangerous to the safety of the people, and
controversy ought to be declined when the court is contained no advertising matter which is filthy,
powerless to give the relief demanded. But it is claimed indecent, or deleterious to the morals of the
that this case is, in many particulars, exceptional. It is community." The defendant presented no testimony
true that it has been argued on the merits, and there is upon this point. In the agreed statement of facts
no reason for any suggestion or suspicion that it is not submitted by the parties, the plaintiffs "admit that the
a bona fide controversy. The legal points involved in billboards mentioned were and still are offensive to the
the merits have been presented with force, clearness, sight."
and great ability by the learned counsel of both sides.
If the law assailed were still in force, we would feel that The pertinent provisions of subsection (b) of section
an opinion on its validity would be justifiable, but, as 100 of Act No. 2339 read: "If after due investigation the
the amendment became effective on January 1, 1915, Collector of Internal Revenue shall decide that any
we think it advisable to proceed no further with this sign, signboard, or billboard displayed or exposed to
branch of the case. public view is offensive to the sight or is otherwise a
nuisance, he may by summary order direct the removal
The next question arises in connection with the of such sign, signboard, or billboard, and if same is not
supplementary complaint, the object of which is to removed within ten days after he has issued such
enjoin the Collector of Internal Revenue from removing order he my himself cause its removal, and the sign,
certain billboards, the property of the plaintiffs located signboard, or billboard shall thereupon be forfeited to
upon private lands in the Province of Rizal. The the Government, and the owner thereof charged with
plaintiffs allege that the billboards here in question "in the expenses of the removal so effected. When the
no sense constitute a nuisance and are not deleterious sign, signboard, or billboard ordered to be removed as
to the health, morals, or general welfare of the herein provided shall not comply with the provisions of
community, or of any persons." The defendant denies the general regulations of the Collector of Internal
these allegations in his answer and claims that after Revenue, no rebate or refund shall be allowed for any
due investigation made upon the complaints of the portion of a year for which the tax may have been paid.
Otherwise, the Collector of Internal Revenue may in authorize administrative officers to find, as a fact, that
his discretion make a proportionate refund of the tax legitimate trades, callings, and businesses are, under
for the portion of the year remaining for which the certain circumstances, statutory nuisances, and
taxes were paid. An appeal may be had from the order whether the procedure prescribed for this purpose is
of the Collector of Internal Revenue to the Secretary of due process of law, are foreign to the issue here
Finance and Justice whose decision thereon shall be presented.
final."
There can be no doubt that the exercise of the police
The Attorney-General, on behalf of the defendant, power of the Philippine Government belongs to the
says: "The question which the case presents under this Legislature and that this power is limited only by the
head for determination, resolves itself into this inquiry: Acts of Congress and those fundamentals principles
Is the suppression of advertising signs displayed or which lie at the foundation of all republican forms of
exposed to public view, which are admittedly offensive government. An Act of the Legislature which is
to the sight, conducive to the public interest?" obviously and undoubtedly foreign to any of the
purposes of the police power and interferes with the
And cunsel for the plaintiffs states the question thus: ordinary enjoyment of property would, without doubt,
"We contend that that portion of section 100 of Act No. be held to be invalid. But where the Act is reasonably
2339, empowering the Collector of Internal Revenue to within a proper consideration of and care for the public
remove billboards as nuisances, if objectionable to the health, safety, or comfort, it should not be disturbed by
sight, is unconstitutional, as constituting a deprivation the courts. The courts cannot substitute their own
of property without due process of law." views for what is proper in the premises for those of
the Legislature. In Munn vs. Illinois (94 U.S., 113), the
From the position taken by counsel for both sides, it is United States Supreme Court states the rule thus: "If
clear that our inquiry is limited to the question whether no state of circumstances could exist to justify such
the enactment assailed by the plaintiffs was a statute, then we may declare this one void because in
legitimate exercise of the police power of the excess of the legislative power of this state; but if it
Government; for all property is held subject to that could, we must presume it did. Of the propriety of
power. legislative interference, within the scope of the
legislative power, a legislature is the exclusive judge."
As a consequence of the foregoing, all discussion and
authorities cited, which go to the power of the state to
This rule very fully discussed and declared in their respective stations." (Commentaries, vol. 4, p.
Powell vs. Pennsylvania (127 U.S., 678) — "oleo- 162.)
margarine" case. (See also Crowley vs. Christensen,
137 U.S., 86, 87; Camfield vs. U.S., 167 U.S., 518.) Chanceller Kent considered the police power the
While the state may interfere wherever the public authority of the state "to regulate unwholesome trades,
interests demand it, and in this particular a large slaughter houses, operations offensive to the senses."
discretion is necessarily vested in the legislature to Chief Justice Shaw of Massachusetts defined it as
determine, not only what the interest of the public follows: "The power vested in the legislature by the
require, but what measures are necessary for the constitution to make, ordain, and establish all manner
protection of such interests; yet, its determination in of wholesome and reasonable laws, statutes, and
these matters is not final or conclusive, but is subject ordinances, either with penalties or without, not
to the supervision of the courts. (Lawton vs. Steele, repugnant to the constitution, as they shall judge to be
152 U.S., 133.) Can it be said judicially that signs, for the good and welfare of the commonwealth, and of
signboards, and billboards, which are admittedly the subjects of the same." (Com.vs. Alger, 7 Cush.,
offensive to the sight, are not with the category of 53.)
things which interfere with the public safety, welfare,
and comfort, and therefore beyond the reach of the In the case of Butchers' Union Slaughter-house, etc.
police power of the Philippine Government? Co. vs. Crescent City Live Stock Landing, etc. Co. (111
U.S., 746), it was suggested that the public health and
The numerous attempts which have been made to limit public morals are matters of legislative concern of
by definition the scope of the police power are only which the legislature cannot divest itself. (See
interesting as illustrating its rapid extension within State vs. Mountain Timber Co. [1913], 75 Wash., 581,
comparatively recent years to points heretofore where these definitions are collated.)
deemed entirely within the field of private liberty and
property rights. Blackstone's definition of the police In Champer vs. Greencastle (138 Ind., 339), it was
power was as follows: "The due regulation and said: "The police power of the State, so far, has not
domestic order of the kingdom, whereby the individuals received a full and complete definition. It may be said,
of the state, like members of a well governed family, however, to be the right of the State, or state
are bound to conform their general behavior to the functionary, to prescribe regulations for the good order,
rules of propriety, good neigborhood, and good peace, health, protection, comfort, convenience and
manners, to be decent, industrious, and inoffensive in morals of the community, which do not ... violate any of
the provisions of the organic law." (Quoted with whenever public policy, in a broad sense, demands, for
approval in Hopkins vs. Richmond [Va., 1915], 86 S.E., the benefit of society at large, regulations to guard its
139.) morals, safety, health, order or to insure in any respect
such economic conditions as an advancing civilization
In Com. vs. Plymouth Coal Co. ([1911] 232 Pa., 141), it of a high complex character requires." (As quoted with
was said: "The police power of the state is difficult of approval in Stettlervs. O'Hara [1914], 69 Ore, 519.)
definition, but it has been held by the courts to be the
right to prescribe regulations for the good order, peace, Finally, the Supreme Court of the United States has
health, protection, comfort, convenience and morals of said in Noble State Bank vs. Haskell (219 U.S. [1911],
the community, which does not encroach on a like 575: "It may be said in a general way that the police
power vested in congress or state legislatures by the power extends to all the great public needs. It may be
federal constitution, or does not violate the provisions put forth in aid of what is sanctioned by usage, or held
of the organic law; and it has been expressly held that by the prevailing morality or strong and preponderant
the fourteenth amendment to the federal constitution opinion to be greatly and immediately necessary to the
was not designed to interfere with the exercise of that public welfare."
power by the state."
This statement, recent as it is, has been quoted with
In People vs. Brazee ([Mich., 1914], 149 N.W., 1053), it approval by several courts.
was said: "It [the police power] has for its object the (Cunningham vs. Northwestern Imp. Co. [1911], 44
improvement of social and economic conditioned Mont., 180; State vs. Mountain Timber Co. [1913], 75
affecting the community at large and collectively with a Wash., 581; McDavid vs. Bank of Bay Minette [Ala.,
view to bring about "he greatest good of the greatest 1915], 69 Sou., 452; Hopkins vs. City of Richmond
number."Courts have consistently and wisely declined [Va., 1915], 86 S.E., 139; State vs. Philipps [Miss.
to set any fixed limitations upon subjects calling for the 1915], 67 Sou., 651.)
exercise of this power. It is elastic and is exercised
from time to time as varying social conditions demand It was said in Com. vs. Alger (7 Cush., 53, 85), per
correction." Shaw, C.J., that: "It is much easier to perceive and
realize the existence and sources of this police power
In 8 Cyc., 863, it is said: "Police power is the name than to mark its boundaries, or to prescribe limits to its
given to that inherent sovereignty which it is the right exercise." In Stone vs. Mississippi (101 U.S., 814), it
and duty of the government or its agents to exercise was said: "Many attempts have been made in this
court and elsewhere to define the police power, but injuria. (Com. vs. Plymouth Coal Co. 232 Pa., 141;
never with entire success. It is always easier to Bemis vs. Guirl Drainage Co., 182 Ind., 36.) There was
determine whether a particular case comes within the a time when state interference with the use of private
general scope of the power, than to give an abstract property under the guise of the police power was
definition of the power itself, which will be in all practically confined to the suppression of common
respects accurate." nuisances. At the present day, however, industry is
organized along lines which make it possible for large
Other courts have held the same vow of efforts to combinations of capital to profit at the expense of the
evolve a satisfactory definition of the police power. socio-economic progress of the nation by controlling
Manifestly, definitions which fail to anticipate cases prices and dictating to industrial workers wages and
properly within the scope of the police power are conditions of labor. Not only this but the universal use
deficient. It is necessary, therefore, to confine our of mechanical contrivances by producers and common
discussion to the principle involved and determine carriers has enormously increased the toll of human
whether the cases as they come up are within that life and limb in the production and distribution of
principle. The basic idea of civil polity in the United consumption goods. To the extent that these
States is that government should interfere with businesses affect not only the public health, safety, and
individual effort only to the extent necessary to morals, but also the general social and economic life of
preserve a healthy social and economic condition of the nation, it has been and will continue to be
the country. State interference with the use of private necessary for the state to interfere by regulation. By so
property may be exercised in three ways. First, through doing, it is true that the enjoyment of private property is
the power of taxation, second, through the power of interfered with in no small degree and in ways that
eminent domain, and third, through the police power. would have been considered entirely unnecessary in
Buy the first method it is assumed that the individual years gone by. The regulation of rates charged by
receives the equivalent of the tax in the form of common carriers, for instance, or the limitation of hours
protection and benefit he receives from the of work in industrial establishments have only a very
government as such. By the second method he indirect bearing upon the public health, safety, and
receives the market value of the property taken from morals, but do bear directly upon social and economic
him. But under the third method the benefits he derived conditions. To permit each individual unit of society to
are only such as may arise from the maintenance of a feel that his industry will bring a fair return; to see that
healthy economic standard of society and is often his work shall be done under conditions that will not
referred to as damnum absque either immediately or eventually ruin his health; to
prevent the artificial inflation of prices of the things resulting from trade risks, it being considered that such
which are necessary for his physical well being are accidents are a legitimate charge against production
matters which the individual is no longer capable of and that the employer by controlling the prices of his
attending to himself. It is within the province of the product may shift the burden to the community. Laws
police power to render assistance to the people to the requiring state banks to join in establishing a
extent that may be necessary to safeguard these depositors' guarantee fund have also been upheld by
rights. Hence, laws providing for the regulation of the Federal Supreme Court in Noble State
wages and hours of labor of coal miners (Rail & River Bank vs. Haskell (219 U. S., 104), and Assaria State
Coal Co. vs. Taylor, 234 U.S., 224); requiring payment Bank vs. Dolley (219 U.S., 121).
of employees of railroads and other industrial concerns
in legal tender and requiring salaries to be paid Offensive noises and smells have been for a long time
semimonthly (Erie R.R. Co. vs. Williams, 233 U.S., considered susceptible of suppression in thickly
685); providing a maximum number of hours of labor populated districts. Barring livery stables from such
for women (Miller vs. Wilson, U.S. Sup. Ct. [Feb. 23, locations was approved of in Reinman vs. Little Rock
1915], Adv. Opns., p. 342); prohibiting child labor (U.S. Sup. Ct. [Apr. 5, 1915], U.S. Adv. Opns., p. 511).
(Sturges & Burn vs. Beauchamp, 231 U.S., 320); And a municipal ordinance was recently upheld
restricting the hours of labor in public laundries (In re (People vs. Ericsson, 263 Ill., 368), which prohibited
Wong Wing, 167 Cal., 109); limiting hours of labor in the location of garages within two hundred feet of any
industrial establishment generally (State vs. Bunting, hospital, church, or school, or in any block used
71 Ore., 259); Sunday Closing Laws (State vs. Nicholls exclusively for residential purposes, unless the consent
[Ore., 1915], 151 Pac., 473; People vs. C. Klinck of the majority of the property owners be obtained.
Packing Co. [N.Y., 1915], 108 N. E., 278; Such statutes as these are usually upheld on the
Hiller vs. State [Md., 1914], 92 Atl., 842; theory of safeguarding the public health. But we
State vs.Penny, 42 Mont., 118; City of apprehend that in point of fact they have little bearing
Springfield vs. Richter, 257 Ill., 578, 580; upon the health of the normal person, but a great deal
State vs. Hondros [S.C., 1915], 84 S.E., 781); have all to do with his physical comfort and convenience and
been upheld as a valid exercise of the police power. not a little to do with his peace of mind. Without
Again, workmen's compensation laws have been quite entering into the realm of psychology, we think it quite
generally upheld. These statutes discard the common demonstrable that sight is as valuable to a human
law theory that employers are not liable for industrial being as any of his other senses, and that the proper
accidents and make them responsible for all accidents ministration to this sense conduces as much to his
contentment as the care bestowed upon the senses of all by the traveler because of the gaudy array of
hearing or smell, and probably as much as both posters announcing a particular kind of breakfast food,
together. Objects may be offensive to the eye as well or underwear, the coming of a circus, an incomparable
as to the nose or ear. Man's esthetic feelings are soap, nostrums or medicines for the curing of all the ills
constantly being appealed to through his sense of to which the flesh is heir, etc. It is quite natural for
sight. Large investments have been made in theaters people to protest against this indiscriminate and
and other forms of amusement, in paintings and wholesale use of the landscape by advertisers and the
spectacular displays, the success of which depends in intrusion of tradesmen upon their hours of leisure and
great part upon the appeal made through the sense of relaxation from work. Outdoor life must lose much of its
sight. Moving picture shows could not possible without charm and pleasure if this form of advertising is
the sense of sight. Governments have spent millions permitted to continue unhampered until it converts the
on parks and boulevards and other forms of civic streets and highways into veritable canyons through
beauty, the first aim of which is to appeal to the sense which the world must travel in going to work or in
of sight. Why, then, should the Government not search of outdoor pleasure.
interpose to protect from annoyance this most valuable
of man's senses as readily as to protect him from The success of billboard advertising depends not so
offensive noises and smells? much upon the use of private property as it does upon
the use of the channels of travel used by the general
The advertising industry is a legitimate one. It is at the public. Suppose that the owner of private property, who
same time a cause and an effect of the great industrial so vigorously objects to the restriction of this form of
age through which the world is now passing. Millions advertising, should require the advertiser to paste his
are spent each year in this manner to guide the posters upon the billboards so that they would face the
consumer to the articles which he needs. The sense of interior of the property instead of the exterior. Billboard
sight is the primary essential to advertising success. advertising would die a natural death if this were done,
Billboard advertising, as it is now conducted, is a and its real dependency not upon the unrestricted use
comparatively recent form of advertising. It is of private property but upon the unrestricted use of the
conducted out of doors and along the arteries of travel, public highways is at once apparent. Ostensibly
and compels attention by the strategic locations of the located on private property, the real and sole value of
boards, which obstruct the range of vision at points the billboard is its proximity to the public thoroughfares.
where travelers are most likely to direct their eyes. Hence, we conceive that the regulation of billboards
Beautiful landscapes are marred or may not be seen at and their restriction is not so much a regulation of
private property as it is a regulation of the use of the those subjects, everything which encroaches upon
streets and other public thoroughfares. such territory is amenable to the police power. A
source of annoyance and irritation to the public does
We would not be understood as saying that billboard not minister to the comfort and convenience of the
advertising is not a legitimate business any more than public. And we are of the opinion that the prevailing
we would say that a livery stable or an automobile sentiment is manifestly against the erection of
garage is not. Even a billboard is more sightly than billboards which are offensive to the sight.
piles of rubbish or an open sewer. But all these
businesses are offensive to the senses under certain We do not consider that we are in conflict with the
conditions. decision in Eubank vs. Richmond (226 U.S., 137),
where a municipal ordinance establishing a building
It has been urged against ministering to the sense of line to which property owners must conform was held
sight that tastes are so diversified that there is no safe unconstitutional. As we have pointed out, billboard
standard of legislation in this direction. We answer in advertising is not so much a use of private property as
the language of the Supreme Court in Noble State it is a use of the public thoroughfares. It derives its
Bank vs.Haskell (219 U.S., 104), and which has value to the power solely because the posters are
already been adopted by several state courts (see exposed to the public gaze. It may well be that the
supra), that "the prevailing morality or strong and state may not require private property owners to
preponderating opinion" demands such legislation. The conform to a building line, but may prescribe the
agitation against the unrestrained development of the conditions under which they shall make use of the
billboard business has produced results in nearly all adjoining streets and highways. Nor is the law in
the countries of Europe. (Ency. Britannica, vol. 1, pp. question to be held invalid as denying equal protection
237-240.) Many drastic ordinances and state laws of the laws. In Keokee Coke Co. vs. Taylor (234 U.S.,
have been passed in the United States seeking to 224), it was said: "It is more pressed that the act
make the business amenable to regulation. But their discriminates unconstitutionally against certain
regulation in the United states is hampered by what we classes. But while there are differences of opinion as
conceive an unwarranted restriction upon the scope of to the degree and kind of discrimination permitted by
the police power by the courts. If the police power may the Fourteenth Amendment, it is established by
be exercised to encourage a healthy social and repeated decisions that a statute aimed at what is
economic condition in the country, and if the comfort deemed an evil, and hitting it presumably where
and convenience of the people are included within experience shows it to be most felt, is not to be upset
by thinking up and enumerating other instances to For the foregoing reasons the judgment appealed from
which it might have been applied equally well, so far as is hereby reversed and the action dismissed upon the
the court can see. That is for the legislature to judge merits, with costs. So ordered.
unless the case is very clear."
Arellano, C.J., Torres, Carson, and Araullo, JJ.,
But we have not overlooked the fact that we are not in concur.
harmony with the highest courts of a number of the
states in the American Union upon this point. Those DECISION ON THE MOTION FOR A REHEARING,
courts being of the opinion that statutes which are JANUARY 24, 1916.
prompted and inspired by esthetic considerations
merely, having for their sole purpose the promotion TRENT, J.:
and gratification of the esthetic sense, and not the
Counsel for the plaintiffs call our attention to the case
promotion or protection of the public safety, the public
of Ex parte Young (209 U.S., 123); and say that they
peace and good order of society, must be held invalid
are of the opinion that this case "is the absolutely
and contrary to constitutional provisions holding
determinative of the question of jurisdiction in
inviolate the rights of private property. Or, in other
injunctions of this kind." We did not refer to this case in
words, the police power cannot interfere with private
our former opinion because we were satisfied that the
property rights for purely esthetic purposes. The
reasoning of the case is not applicable to section 100
courts, taking this view, rest their decisions upon the
(b), 139 and 140 of Act No. 2339. The principles
proposition that the esthetic sense is disassociated
announced in the Young case are stated as follows: "It
entirely from any relation to the public health, morals,
may therefore be said that when the penalties for
comfort, or general welfare and is, therefore, beyond
disobedience are by fines so enormous and
the police power of the state. But we are of the opinion,
imprisonment so severe as to intimidate the company
as above indicated, that unsightly advertisements or
and its officers from resorting to the courts to test the
signs, signboards, or billboards which are offensive to
validity of the legislation, the result is the same as if the
the sight, are not disassociated from the general
law in terms prohibited the company from seeking
welfare of the public. This is not establishing a new
judicial construction of laws which deeply affect its
principle, but carrying a well recognized principle to
rights.
further application. (Fruend on Police Power, p. 166.)
It is urged that there is no principle upon which to
base the claim that a person is entitled to
disobey a statute at least once, for the purpose ordinary case of a statute upon a subject
of testing its validity without subjecting himself to requiring no such investigation and over which
the penalties for disobedience provided by the the jurisdiction of the legislature is complete in
statute in case it is valid. This is not an accurate any event.
statement of the case. Ordinarily a law creating
offenses in the nature of misdemeanors or An examination of the sections of our Internal Revenue
felonies relates to a subject over which the Law and of the circumstances under which and the
jurisdiction of the legislature is complete in any purposes for which they were enacted, will show that,
event. In these case, however, of the unlike the statutes under consideration in the above
establishment of certain rates without any cited case, their enactment involved no attempt on the
hearing, the validity of such rates necessarily part of the Legislature to prevent dissatisfied taxpayers
depends upon whether they are high enough to "from resorting to the courts to test the validity of the
permit at least some return upon the investment legislation;" no effort to prevent any inquiry as to their
(how much it is not now necessary to state), and validity. While section 139 does prevent the testing of
an inquiry as to that fact is a proper subject of the validity of subsection (b) of section 100 in
judicial investigation. If it turns out that the rates injunction suits instituted for the purpose of restraining
are too low for that purpose, then they are illegal. the collection of internal revenue taxes, section 140
Now, to impose upon a party interested the provides a complete remedy for that purpose. And
burden of obtaining a judicial decision of such a furthermore, the validity of subsection (b) does not
question (no prior hearing having ever been depend upon "the existence of a fact which can be
given) only upon the condition that, if determined only after investigation of a very
unsuccessful, he must suffer imprisonment and complicated and technical character," but the
pay fines as provided in these acts, is, in effect, jurisdiction of the Legislature over the subject with
to close up all approaches to the courts, and thus which the subsection deals "is complete in any event."
prevent any hearing upon the question whether The judgment of the court in the Young case rests
the rates as provided by the acts are not too low, upon the proposition that the aggrieved parties had no
and therefore invalid. The distinction is obvious adequate remedy at law.
between a case where the validity of the acts
depends upon the existence of a fact which can Neither did we overlook the case of General Oil
be determined only after investigation of a very Co. vs. Crain (209 U.S., 211), decided the same
complicated and technical character, and the day and citing Ex parte Young, supra. In that
case the plaintiff was a Tennessee corporation, against the State and reversed the judgment of
with its principal place of business in Memphis, the Chancellor. In the Supreme Court of the
Tennessee. It was engaged in the manufacture United States, where the case was reviewed
and sale of coal oil, etc. Its wells and plant were upon a writ of error, the contentions of the parties
located in Pennsylvania and Ohio. Memphis was were stated by the court as follows: "It is
not only its place of business, at which place it contended by defendant in error that this court is
sold oil to the residents of Tennessee, but also a without jurisdiction because no matter sought to
distributing point to which oils were shipped from be litigated by plaintiff in error was determined by
Pennsylvania and Ohio and unloaded into the Supreme Court of Tennessee. The court
various tanks for the purpose of being forwarded simply held, it is paid, that, under the laws of the
to the Arkansas, Louisiana, and Mississippi State, it had no jurisdiction to entertain the suit
customers. Notwithstanding the fact that the for any purpose. And it is insisted "hat this
company separated its oils, which were holding involved no Federal question, but only
designated to meet the requirements of the the powers and jurisdiction of the courts of the
orders from those States, from the oils for sale in State of Tennessee, in respect to which the
Tennessee, the defendant insisted that he had a Supreme Court of Tennessee is the final arbiter."
right, under the Act of the Tennessee Legislature,
approved April 21, 1899, to inspect all the oils Opposing these contentions, plaintiff in error
unlocated in Memphis, whether for sale in that urges that whether a suit is one against a State
State or not, and charge and collect for such cannot depend upon the declaration of a statute,
inspection a regular fee of twenty-five cents per but depends upon the essential nature ofthe suit,
barrel. The company, being advised that the and that the Supreme Court recognized that the
defendant had no such right, instituted this action statute "aded nothing to the axiomatic principle
in the inferior States court for the purpose of that the State, as a sovereign, is not subject to
enjoining the defendant, upon the grounds stated suit save by its own consent."And it is hence
in the bill, from inspecting or attempting to insisted that the court by dismissing the bill gave
inspect its oils. Upon trial, the preliminary effect to the law which was attacked. It is further
injunction which had been granted at the insisted that the bill undoubtedly present rights
commencement of the action, was continued in under the Constitution of the United States and
force. Upon appeal, the supreme court of the conditions which entitle plaintiff in error to an
State of Tennessee decided that the suit was one injunction for the protection of such rights, and
 that a statute of the State which operates to deny nullified as to much of its operation. ... It being then the
such rights, or such relief, `is itself in conflict with right of a party to be protected against a law which
the Constitution of the United States." violates a constitutional right, whether by its terms or
the manner of its enforcement, it is manifest that a
That statute of Tennessee, which the supreme court of decision which denies such protection gives effect to
that State construed and held to be prohibitory of the the law, and the decision is reviewable by this court."
suit, was an act passed February 28, 1873, which
provides: "That no court in the State of Tennessee has, The court then proceeded to consider whether the law
nor shall hereafter have, any power, jurisdiction, or of 1899 would, if administered against the oils in
authority to entertain any suit against the State, or any question, violate any constitutional right of the plaintiff
officer acting by the authority of the State, with a view and after finding and adjudging that the oils were not in
to reach the State, its treasury, funds or property; and movement through the States, that they had reached
all such suits now pending, or hereafter brought, shall the destination of their first shipment, and were held
be dismissed as to the State, or such officer, on there, not in necessary delay at means of
motion, plea or demurrer of the law officer of the State, transportation but for the business purposes and profit
or counsel employed by the State." of the company, and resting its judgment upon the
taxing power of the State, affirmed the decree of the
The Supreme Court of the United States, after supreme court of the State of Tennessee.
reviewing many cases, said: "Necessarily, to give
adequate protection to constitutional rights a distinction From the foregoing it will be seen that the Supreme
must be made between valid and invalid state laws, as Court of Tennessee dismissed the case for want of
determining the character of the suit against state jurisdiction because the suit was one against the State,
officers. And the suit at bar illustrates the necessity. If a which was prohibited by the Tennessee Legislature.
suit against state officer is precluded in the national The Supreme Court of the United States took
courts by the Eleventh Amendment to the Constitution, jurisdiction of the controversy for the reasons above
and may be forbidden by a State to its courts, as it is quoted and sustained the Act of 1899 as a revenue
contended in the case at bar that it may be, without law.
power of review by this court, it must be evident that an
easy way is open to prevent the enforcement of many The case of Tennessee vs. Sneed (96 U.S., 69), and
provisions of the Constitution; and the Fourteenth Shelton vs. Platt (139 U.S., 591), relied upon in our
Amendment, which is directed at state action, could be former opinion, were not cited in General Oil
Co. vs. Crain, supra, because the questions presented erection, construction or location of such bill-board or
and the statutes under consideration were entirely sign-board."
different. The Act approved March 31, 1873, expressly
prohibits the courts from restraining the collection of The evidence which the Illinois court relied upon was
any tax, leaving the dissatisfied taxpayer to his the danger of fires, the fact that billboards promote the
exclusive remedy — payment under protest and suit to commission of various immoral and filthy acts by
recover — while the Act approved February 28, 1873, disorderly persons, and the inadequate police
prohibits suits against the State. protection furnished to residential districts. The last
objection has no virtue unless one or the other of the
In upholding the statute which authorizes the removal other objections are valid. If the billboard industry
of signboards or billboards upon the sole ground that does, in fact, promote such municipal evils to
they are offensive to the sight, we recognized the fact noticeable extent, it seems a curious inconsistency that
that we are not in harmony with various state courts in a majority of the property owners on a given block may
the American Union. We have just examined the legalize the business. However, the decision is
decision of the Supreme Court of the State of Illinois in undoubtedly a considerable advance over the views
the recent case (October [December], 1914) of taken by other high courts in the United States and
Thomas Cusack Co. vs. City of Chicago (267 Ill., 344), distinguishes several Illinois decisions. It is an advance
wherein the court upheld the validity of a municipal because it permits the suppression of billboards where
ordinances, which reads as follows: "707. Frontage they are undesirable. The ordinance which the court
consents required. It shall be unlawful for any person, approved will no doubt cause the virtual suppression of
firm or corporation to erect or construct any bill-board the business in the residential districts. Hence, it is
or sign-board in any block on any public street in which recognized that under certain circumstances billboards
one-half of the buildings on both sides of the street are may be suppressed as an unlawful use of private
used exclusively for residence purposes, without first property. Logically, it would seem that the premise of
obtaining the consent, in writing, of the owners or duly fact relied upon is not very solid. Objections to the
authorized agents of said owners owning a majority of billboard upon police, sanitary, and moral grounds
the frontage of the property, on both sides of the street, have been, as pointed out by counsel for Churchill and
in the block in which such bill-board or sign-board is to Tait, duly considered by numerous high courts in the
be erected, constructed or located. Such written United States, and, with one exception, have been
consent shall be filed with the commissioner of rejected as without foundation. The exception is the
buildings before a permit shall be issued for the Supreme Court of Missouri, which advances practically
the same line of reasoning as has the Illinois court in experience of the people of the United States and may
this recent case. (St. Louis Gunning Advt. Co. vs. City make our legislation preventive rather than corrective.
of St. Louis, 137 S. W., 929.) In fact, the Illinois court, There are in this country, moreover, on every hand in
in Haller Sign Works vs. Physical Culture Training those districts where Spanish civilization has held
School (249 Ill., 436), "distinguished" in the recent sway for so many centuries, examples of architecture
case, said: "There is nothing inherently dangerous to now belonging to a past age, and which are attractive
the health or safety of the public in structures that are not only to the residents of the country but to visitors. If
properly erected for advertising purposes." the billboard industry is permitted without constraint or
control to hide these historic sites from the passerby,
If a billboard is so constructed as to offer no room for the country will be less attractive to the tourist and the
objections on sanitary or moral grounds, it would seem people will suffer a district economic loss.
that the ordinance above quoted would have to be
sustained upon the very grounds which we have The motion for a rehearing is therefore denied.
advanced in sustaining our own statute.

It might be well to note that billboard legislation in the

United States is attempting to eradicate a business
which has already been firmly established. This G.R. No. L-59234 September 30, 1982
business was allowed to expand unchecked until its TAXICAB OPERATORS OF METRO MANILA, INC.,
very extent called attention to its objectionable FELICISIMO CABIGAO and ACE
TRANSPORTATION CORPORATION, petitioners,
features. In the Philippine Islands such legislation has
vs.
almost anticipated the business, which is not yet of
THE BOARD OF TRANSPORTATION and THE
such proportions that it can be said to be fairly DIRECTOR OF THE BUREAU OF LAND
established. It may be that the courts in the United TRANSPORTATION,respondents.
States have committed themselves to a course of
decisions with respect to billboard advertising, the full MELENCIO-HERRERA, J.:
consequences of which were not perceived for the This Petition for "Certiorari, Prohibition and mandamus
reason that the development of the business has been with Preliminary Injunction and Temporary Restraining
so recent that the objectionable features of it did not Order" filed by the Taxicab Operators of Metro Manila,
present themselves clearly to the courts nor to the Inc., Felicisimo Cabigao and Ace Transportation, seeks
people. We, in this country, have the benefit of the to declare the nullity of Memorandum Circular No. 77-
42, dated October 10, 1977, of the Board of WHEREAS, after studies and inquiries
Transportation, and Memorandum Circular No. 52, made by the Board of Transportation, the
dated August 15, 1980, of the Bureau of Land latter believes that in six years of operation,
Transportation. a taxi operator has not only covered the
Petitioner Taxicab Operators of Metro Manila, Inc. cost of his taxis, but has made reasonable
(TOMMI) is a domestic corporation composed of profit for his investments;
taxicab operators, who are grantees of Certificates of NOW, THEREFORE, pursuant to this
Public Convenience to operate taxicabs within the City policy, the Board hereby declares that no
of Manila and to any other place in Luzon accessible to car beyond six years shall be operated as
vehicular traffic. Petitioners Ace Transportation taxi, and in implementation of the same
Corporation and Felicisimo Cabigao are two of the hereby promulgates the following rules and
members of TOMMI, each being an operator and regulations:
grantee of such certificate of public convenience. 1. As of December 31, 1977, all taxis of
On October 10, 1977, respondent Board of Model 1971 and earlier are ordered
Transportation (BOT) issued Memorandum Circular withdrawn from public service and
No. 77-42 which reads: thereafter may no longer be registered and
SUBJECT: Phasing out and Replacement of operated as taxis. In the registration of
Old and Dilapidated Taxis cards for 1978, only taxis of Model 1972
WHEREAS, it is the policy of the and later shall be accepted for registration
government to insure that only safe and and allowed for operation;
comfortable units are used as public 2. As of December 31, 1978, all taxis of
conveyances; Model 1972 are ordered withdrawn from
WHEREAS, the riding public, particularly in public service and thereafter may no longer
Metro-Manila, has, time and again, be registered and operated as taxis. In the
complained against, and condemned, the registration of cars for 1979, only taxis of
continued operation of old and dilapidated Model 1973 and later shall be accepted for
taxis; registration and allowed for operation; and
WHEREAS, in order that the commuting every year thereafter, there shall be a six-
public may be assured of comfort, year lifetime of taxi, to wit:
convenience, and safety, a program of 1980 — Model 1974
phasing out of old and dilapidated taxis 1981 — Model 1975, etc.
should be adopted; All taxis of earlier models than those
provided above are hereby ordered
 withdrawn from public service as of the last years old shall be refused registration. The
day of registration of each particular year following schedule of phase-out is herewith
and their respective plates shall be prescribed for the guidance of all
surrendered directly to the Board of concerned:
Transportation for subsequent turnover to Year Automati
the Land Transportation Commission. Model c Phase-
For an orderly implementation of this Out Year
Memorandum Circular, the rules herein
shall immediately be effective in Metro- 1980
Manila. Its implementation outside Metro-
Manila shall be carried out only after the 1974 1981
project has been implemented in Metro- 1975 1982
Manila and only after the date has been
determined by the Board. 1 1976 1983
Pursuant to the above BOT circular, respondent
Director of the Bureau of Land Transportation (BLT) 1977
issued Implementing Circular No. 52, dated August 15, etc. etc.
1980, instructing the Regional Director, the MV
Strict compliance here is desired. 2
Registrars and other personnel of BLT, all within the
In accordance therewith, cabs of model 1971 were
National Capitol Region, to implement said Circular,
phase-out in registration year 1978; those of model
and formulating a schedule of phase-out of vehicles to
1972, in 1979; those of model 1973, in 1980; and
be allowed and accepted for registration as public
those of model 1974, in 1981.
conveyances. To quote said Circular:
On January 27, 1981, petitioners filed a Petition with
Pursuant to BOT Memo-Circular No. 77-42,
the BOT, docketed as Case No. 80-7553, seeking to
taxi units with year models over six (6)
nullify MC No. 77-42 or to stop its implementation; to
years old are now banned from operating
allow the registration and operation in 1981 and
as public utilities in Metro Manila. As such
subsequent years of taxicabs of model 1974, as well
the units involved should be considered as
as those of earlier models which were phased-out,
automatically dropped as public utilities
provided that, at the time of registration, they are
and, therefore, do not require any further
roadworthy and fit for operation.
dropping order from the BOT.
On February 16, 1981, petitioners filed before the BOT
Henceforth, taxi units within the National
a "Manifestation and Urgent Motion", praying for an
Capitol Region having year models over 6
early hearing of their petition. The case was heard on and enforcement of the assailed
February 20, 1981. Petitioners presented testimonial memorandum circulars violate the
and documentary evidence, offered the same, and petitioners' constitutional rights to.
manifested that they would submit additional (1) Equal protection
documentary proofs. Said proofs were submitted on of the law;
March 27, 1981 attached to petitioners' pleading (2) Substantive due
entitled, "Manifestation, Presentation of Additional process; and
Evidence and Submission of the Case for (3) Protection
Resolution." 3 against arbitrary
On November 28, 1981, petitioners filed before the and unreasonable
same Board a "Manifestation and Urgent Motion to classification and
Resolve or Decide Main Petition" praying that the case standard?
be resolved or decided not later than December 10, On Procedural and Substantive Due Process:
1981 to enable them, in case of denial, to avail of Presidential Decree No. 101 grants to the Board of
whatever remedy they may have under the law for the Transportation the power
protection of their interests before their 1975 model 4. To fix just and reasonable standards,
cabs are phased-out on January 1, 1982. classification, regulations, practices,
Petitioners, through its President, allegedly made measurements, or service to be furnished,
personal follow-ups of the case, but was later informed imposed, observed, and followed by
that the records of the case could not be located. operators of public utility motor vehicles.
On December 29, 1981, the present Petition was Section 2 of said Decree provides procedural
instituted wherein the following queries were posed for guidelines for said agency to follow in the exercise of
consideration by this Court: its powers:
A. Did BOT and BLT promulgate the Sec. 2. Exercise of powers. — In the
questioned memorandum circulars in exercise of the powers granted in the
accord with the manner required by preceding section, the Board shag proceed
Presidential Decree No. 101, thereby promptly along the method of legislative
safeguarding the petitioners' constitutional inquiry.
right to procedural due process? Apart from its own investigation and
B. Granting, arguendo, that respondents studies, the Board, in its discretion, may
did comply with the procedural require the cooperation and assistance of
requirements imposed by Presidential the Bureau of Transportation, the Philippine
Decree No. 101, would the implementation Constabulary, particularly the Highway
 Patrol Group, the support agencies within not availed of other sources of inquiry prior to issuing
the Department of Public Works, the challenged Circulars. operators of public
Transportation and Communications, or conveyances are not the only primary sources of the
any other government office or agency that data and information that may be desired by the BOT.
may be able to furnish useful information or Dispensing with a public hearing prior to the issuance
data in the formulation of the Board of any of the Circulars is neither violative of procedural due
policy, plan or program in the process. As held in Central Bank vs. Hon. Cloribel and
implementation of this Decree. Banco Filipino, 44 SCRA 307 (1972):
The Board may also can conferences, Pevious notice and hearing as elements of
require the submission of position papers due process, are constitutionally required
or other documents, information, or data by for the protection of life or vested property
operators or other persons that may be rights, as well as of liberty, when its
affected by the implementation of this limitation or loss takes place in
Decree, or employ any other suitable consequence of a judicial or quasi-judicial
means of inquiry. proceeding, generally dependent upon a
In support of their submission that they were denied past act or event which has to be
procedural due process, petitioners contend that they established or ascertained. It is not
were not caged upon to submit their position papers, essential to the validity of general rules or
nor were they ever summoned to attend any regulations promulgated to govern future
conference prior to the issuance of the questioned conduct of a class or persons or
BOT Circular. enterprises, unless the law provides
It is clear from the provision aforequoted, however, that otherwise. (Emphasis supplied)
the leeway accorded the Board gives it a wide range of Petitioners further take the position that fixing the
choice in gathering necessary information or data in ceiling at six (6) years is arbitrary and oppressive
the formulation of any policy, plan or program. It is not because the roadworthiness of taxicabs depends upon
mandatory that it should first call a conference or their kind of maintenance and the use to which they
require the submission of position papers or other are subjected, and, therefore, their actual physical
documents from operators or persons who may be condition should be taken into consideration at the time
affected, this being only one of the options open to the of registration. As public contend, however, it is
Board, which is given wide discretionary authority. impractical to subject every taxicab to constant and
Petitioners cannot justifiably claim, therefore, that they recurring evaluation, not to speak of the fact that it can
were deprived of procedural due process. Neither can open the door to the adoption of multiple standards,
they state with certainty that public respondents had possible collusion, and even graft and corruption. A
reasonable standard must be adopted to apply to an conducting studies regarding the operation of taxicabs
vehicles affected uniformly, fairly, and justly. The span in other cities.
of six years supplies that reasonable standard. The The Board's reason for enforcing the Circular initially in
product of experience shows that by that time taxis Metro Manila is that taxicabs in this city, compared to
have fully depreciated, their cost recovered, and a fair those of other places, are subjected to heavier traffic
return on investment obtained. They are also generally pressure and more constant use. This is of common
dilapidated and no longer fit for safe and comfortable knowledge. Considering that traffic conditions are not
service to the public specially considering that they are the same in every city, a substantial distinction exists
in continuous operation practically 24 hours everyday so that infringement of the equal protection clause can
in three shifts of eight hours per shift. With that hardly be successfully claimed.
standard of reasonableness and absence of As enunciated in the preambular clauses of the
arbitrariness, the requirement of due process has been challenged BOT Circular, the overriding consideration
met. is the safety and comfort of the riding public from the
On Equal Protection of the Law: dangers posed by old and dilapidated taxis. The State,
Petitioners alleged that the Circular in question violates in the exercise, of its police power, can prescribe
their right to equal protection of the law because the regulations to promote the health, morals, peace, good
same is being enforced in Metro Manila only and is order, safety and general welfare of the people. It can
directed solely towards the taxi industry. At the outset it prohibit all things hurtful to comfort, safety and welfare
should be pointed out that implementation outside of society. 5 It may also regulate property rights. 6 In the
Metro Manila is also envisioned in Memorandum language of Chief Justice Enrique M. Fernando "the
Circular No. 77-42. To repeat the pertinent portion: necessities imposed by public welfare may justify the
For an orderly implementation of this exercise of governmental authority to regulate even if
Memorandum Circular, the rules herein thereby certain groups may plausibly assert that their
shall immediately be effective in Metro interests are disregarded". 7
Manila. Its implementation outside Metro In so far as the non-application of the assailed
Manila shall be carried out only after the Circulars to other transportation services is concerned,
project has been implemented in Metro it need only be recalled that the equal protection
Manila and only after the date has been clause does not imply that the same treatment be
determined by the Board. 4 accorded all and sundry. It applies to things or persons
In fact, it is the understanding of the Court that Identically or similarly situated. It permits of
implementation of the Circulars in Cebu City is already classification of the object or subject of the law
being effected, with the BOT in the process of provided classification is reasonable or based on
substantial distinction, which make for real differences,
and that it must apply equally to each member of the ZALDIVAR, J.:p
class. 8 What is required under the equal protection
clause is the uniform operation by legal means so that Appeal from the decision of the Court of First Instance
all persons under Identical or similar circumstance of Pampanga in its Civil Case No. 1623, an
would be accorded the same treatment both in expropriation proceeding.
privilege conferred and the liabilities imposed. 9 The
challenged Circulars satisfy the foregoing criteria. Plaintiff-appellant, the Republic of the Philippines,
Evident then is the conclusion that the questioned (hereinafter referred to as the Republic) filed, on June
Circulars do not suffer from any constitutional infirmity. 26, 1959, a complaint for eminent domain against
To declare a law unconstitutional, the infringement of defendant-appellee, Carmen M. Vda. de Castellvi,
constitutional right must be clear, categorical and judicial administratrix of the estate of the late Alfonso
undeniable.10 de Castellvi (hereinafter referred to as Castellvi), over
WHEREFORE, the Writs prayed for are denied and
a parcel of land situated in the barrio of San Jose,
this Petition is hereby dismissed. No costs.
Floridablanca, Pampanga, described as follows:

A parcel of land, Lot No. 199-B Bureau of

Lands Plan Swo 23666. Bounded on the
NE by Maria Nieves Toledo-Gozun; on the
G.R. No. L-20620 August 15, 1974 SE by national road; on the SW by AFP
reservation, and on the NW by AFP
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, reservation. Containing an area of 759,299
vs. square meters, more or less, and
CARMEN M. VDA. DE CASTELLVI, ET registered in the name of Alfonso Castellvi
AL., defendants-appellees. under TCT No. 13631 of the Register of
Pampanga ...;
Office of the Solicitor General for plaintiff-appellant.
and against defendant-appellee Maria Nieves Toledo
C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Gozun (hereinafter referred to as Toledo-Gozun over
Associates for defendant-appellees. two parcels of land described as follows:

A parcel of land (Portion Lot Blk-1, Bureau

of Lands Plan Psd, 26254. Bounded on the
 NE by Lot 3, on the SE by Lot 3; on the SW commissioners to ascertain and report to the court the
by Lot 1-B, Blk. 2 (equivalent to Lot 199-B just compensation for the property sought to be
Swo 23666; on the NW by AFP military expropriated, and that the court issues thereafter a
reservation. Containing an area of 450,273 final order of condemnation.
square meters, more or less and registered
in the name of Maria Nieves Toledo-Gozun On June 29, 1959 the trial court issued an order fixing
under TCT No. 8708 of the Register of the provisional value of the lands at P259,669.10.
Deeds of Pampanga. ..., and
In her "motion to dismiss" filed on July 14, 1959,
A parcel of land (Portion of lot 3, Blk-1, Castellvi alleged, among other things, that the land
Bureau of Lands Plan Psd 26254. Bounded under her administration, being a residential land, had
on the NE by Lot No. 3, on the SE by a fair market value of P15.00 per square meter, so it
school lot and national road, on the SW by had a total market value of P11,389,485.00; that the
Lot 1-B Blk 2 (equivalent to Lot 199-B Swo Republic, through the Armed Forces of the Philippines,
23666), on the NW by Lot 1-B, Blk-1. particularly the Philippine Air Force, had been, despite
Containing an area of 88,772 square repeated demands, illegally occupying her property
meters, more or less, and registered in the since July 1, 1956, thereby preventing her from using
name of Maria Nieves Toledo Gozun under and disposing of it, thus causing her damages by way
TCT No. 8708 of the Register of Deeds of of unrealized profits. This defendant prayed that the
Pampanga, .... complaint be dismissed, or that the Republic be
ordered to pay her P15.00 per square meter, or a total
In its complaint, the Republic alleged, among other of P11,389,485.00, plus interest thereon at 6% per
things, that the fair market value of the above- annum from July 1, 1956; that the Republic be ordered
mentioned lands, according to the Committee on to pay her P5,000,000.00 as unrealized profits, and the
Appraisal for the Province of Pampanga, was not more costs of the suit.
than P2,000 per hectare, or a total market value of
P259,669.10; and prayed, that the provisional value of By order of the trial court, dated August, 1959, Amparo
the lands be fixed at P259.669.10, that the court C. Diaz, Dolores G. viuda de Gil, Paloma Castellvi,
authorizes plaintiff to take immediate possession of the Carmen Castellvi, Rafael Castellvi, Luis Castellvi,
lands upon deposit of that amount with the Provincial Natividad Castellvi de Raquiza, Jose Castellvi and
Treasurer of Pampanga; that the court appoints three Consuelo Castellvi were allowed to intervene as
parties defendants. Subsequently, Joaquin V. Gozun, dated May 27, 1960, all alleged that the value of the
Jr., husband of defendant Nieves Toledo Gozun, was lands sought to be expropriated was at the rate of
also allowed by the court to intervene as a party P15.00 per square meter.
defendant.
On November 4, 1959, the trial court authorized the
After the Republic had deposited with the Provincial Provincial Treasurer of Pampanga to pay defendant
Treasurer of Pampanga the amount of P259,669.10, Toledo-Gozun the sum of P107,609.00 as provisional
the trial court ordered that the Republic be placed in value of her lands. 2 On May 16, 1960 the trial Court
possession of the lands. The Republic was actually authorized the Provincial Treasurer of Pampanga to
placed in possession of the lands on August 10, pay defendant Castellvi the amount of P151,859.80 as
1959. 1 provisional value of the land under her administration,
and ordered said defendant to deposit the amount with
In her "motion to dismiss", dated October 22, 1959, the Philippine National Bank under the supervision of
Toledo-Gozun alleged, among other things, that her the Deputy Clerk of Court. In another order of May 16,
two parcels of land were residential lands, in fact a 1960 the trial Court entered an order of
portion with an area of 343,303 square meters had condemnation.3
already been subdivided into different lots for sale to
the general public, and the remaining portion had The trial Court appointed three commissioners: Atty.
already been set aside for expansion sites of the Amadeo Yuzon, Clerk of Court, as commissioner for
already completed subdivisions; that the fair market the court; Atty. Felicisimo G. Pamandanan, counsel of
value of said lands was P15.00 per square meter, so the Philippine National Bank Branch at Floridablanca,
they had a total market value of P8,085,675.00; and for the plaintiff; and Atty. Leonardo F. Lansangan,
she prayed that the complaint be dismissed, or that Filipino legal counsel at Clark Air Base, for the
she be paid the amount of P8,085,675.00, plus interest defendants. The Commissioners, after having qualified
thereon at the rate of 6% per annum from October 13, themselves, proceeded to the performance of their
1959, and attorney's fees in the amount of P50,000.00. duties.

Intervenors Jose Castellvi and Consuelo Castellvi in On March 15,1961 the Commissioners submitted their
their answer, filed on February 11, 1960, and also report and recommendation, wherein, after having
intervenor Joaquin Gozun, Jr., husband of defendant determined that the lands sought to be expropriated
Maria Nieves Toledo-Gozun, in his motion to dismiss, were residential lands, they recommended
unanimously that the lowest price that should be paid pesos per square meter for the three lots of
was P10.00 per square meter, for both the lands of the defendants subject of this action is fair
Castellvi and Toledo-Gozun; that an additional and just.
P5,000.00 be paid to Toledo-Gozun for improvements
found on her land; that legal interest on the xxx xxx xxx
compensation, computed from August 10, 1959, be
paid after deducting the amounts already paid to the The plaintiff will pay 6% interest per annum
owners, and that no consequential damages be on the total value of the lands of defendant
awarded. 4 The Commissioners' report was objected to Toledo-Gozun since (sic) the amount
by all the parties in the case — by defendants Castellvi deposited as provisional value from August
and Toledo-Gozun, who insisted that the fair market 10, 1959 until full payment is made to said
value of their lands should be fixed at P15.00 per defendant or deposit therefor is made in
square meter; and by the Republic, which insisted that court.
the price to be paid for the lands should be fixed at
In respect to the defendant Castellvi,
P0.20 per square meter. 5
interest at 6% per annum will also be paid
After the parties-defendants and intervenors had filed by the plaintiff to defendant Castellvi from
their respective memoranda, and the Republic, after July 1, 1956 when plaintiff commenced its
several extensions of time, had adopted as its illegal possession of the Castellvi land
memorandum its objections to the report of the when the instant action had not yet been
Commissioners, the trial court, on May 26, 1961, commenced to July 10, 1959 when the
rendered its decision 6 the dispositive portion of which provisional value thereof was actually
reads as follows: deposited in court, on the total value of the
said (Castellvi) land as herein adjudged.
WHEREFORE, taking into account all the The same rate of interest shall be paid from
foregoing circumstances, and that the July 11, 1959 on the total value of the land
lands are titled, ... the rising trend of land herein adjudged minus the amount
values ..., and the lowered purchasing deposited as provisional value, or
power of the Philippine peso, the court P151,859.80, such interest to run until full
finds that the unanimous recommendation payment is made to said defendant or
of the commissioners of ten (P10.00) deposit therefor is made in court. All the
 intervenors having failed to produce Defendants Castellvi and Toledo-Gozun filed not only a
evidence in support of their respective joint opposition to the approval of the Republic's record
interventions, said interventions are on appeal, but also a joint memorandum in support of
ordered dismissed. their opposition. The Republic also filed a
memorandum in support of its prayer for the approval
The costs shall be charged to the plaintiff. of its record on appeal. On December 27, 1961 the trial
court issued an order declaring both the record on
On June 21, 1961 the Republic filed a motion for a new appeal filed by the Republic, and the record on appeal
trial and/or reconsideration, upon the grounds of filed by defendant Castellvi as having been filed out of
newly-discovered evidence, that the decision was not time, thereby dismissing both appeals.
supported by the evidence, and that the decision was
against the law, against which motion defendants On January 11, 1962 the Republic filed a "motion to
Castellvi and Toledo-Gozun filed their respective strike out the order of December 27, 1961 and for
oppositions. On July 8, 1961 when the motion of the reconsideration", and subsequently an amended
Republic for new trial and/or reconsideration was record on appeal, against which motion the defendants
called for hearing, the Republic filed a supplemental Castellvi and Toledo-Gozun filed their opposition. On
motion for new trial upon the ground of additional July 26, 1962 the trial court issued an order, stating
newly-discovered evidence. This motion for new trial that "in the interest of expediency, the questions raised
and/or reconsideration was denied by the court on July may be properly and finally determined by the
12, 1961. Supreme Court," and at the same time it ordered the
Solicitor General to submit a record on appeal
On July 17, 1961 the Republic gave notice of its containing copies of orders and pleadings specified
intention to appeal from the decision of May 26, 1961 therein. In an order dated November 19, 1962, the trial
and the order of July 12, 1961. Defendant Castellvi court approved the Republic's record on appeal as
also filed, on July 17, 1961, her notice of appeal from amended.
the decision of the trial court.
Defendant Castellvi did not insist on her appeal.
The Republic filed various ex-parte motions for Defendant Toledo-Gozun did not appeal.
extension of time within which to file its record on
appeal. The Republic's record on appeal was finally
submitted on December 6, 1961.
The motion to dismiss the Republic's appeal was 1. In finding the price of P10 per square
reiterated by appellees Castellvi and Toledo-Gozun meter of the lands subject of the instant
before this Court, but this Court denied the motion. proceedings as just compensation;

In her motion of August 11, 1964, appellee Castellvi 2. In holding that the "taking" of the
sought to increase the provisional value of her land. properties under expropriation commenced
The Republic, in its comment on Castellvi's motion, with the filing of this action;
opposed the same. This Court denied Castellvi's
motion in a resolution dated October 2,1964. 3. In ordering plaintiff-appellant to pay 6%
interest on the adjudged value of the
The motion of appellees, Castellvi and Toledo-Gozun, Castellvi property to start from July of 1956;
dated October 6, 1969, praying that they be authorized
to mortgage the lands subject of expropriation, was 4. In denying plaintiff-appellant's motion for
denied by this Court or October 14, 1969. new trial based on newly discovered
evidence.
On February 14, 1972, Attys. Alberto Cacnio, and
Associates, counsel for the estate of the late Don In its brief, the Republic discusses the second error
Alfonso de Castellvi in the expropriation proceedings, assigned as the first issue to be considered. We shall
filed a notice of attorney's lien, stating that as per follow the sequence of the Republic's discussion.
agreement with the administrator of the estate of Don
Alfonso de Castellvi they shall receive by way of 1. In support of the assigned error that the lower court
attorney's fees, "the sum equivalent to ten per centum erred in holding that the "taking" of the properties
of whatever the court may finally decide as the under expropriation commenced with the filing of the
expropriated price of the property subject matter of the complaint in this case, the Republic argues that the
case." "taking" should be reckoned from the year 1947 when
by virtue of a special lease agreement between the
--------- Republic and appellee Castellvi, the former was
granted the "right and privilege" to buy the property
Before this Court, the Republic contends that the lower should the lessor wish to terminate the lease, and that
court erred: in the event of such sale, it was stipulated that the fair
market value should be as of the time of occupancy;
and that the permanent improvements amounting to
more that half a million pesos constructed during a it should be noted that the Castellvi property had been
period of twelve years on the land, subject of occupied by the Philippine Air Force since 1947 under
expropriation, were indicative of an agreed pattern of a contract of lease, typified by the contract marked
permanency and stability of occupancy by the Exh. 4-Castellvi, the pertinent portions of which read:
Philippine Air Force in the interest of national Security. 7
CONTRACT OF LEASE
Appellee Castellvi, on the other hand, maintains that
the "taking" of property under the power of eminent This AGREEMENT OF LEASE MADE AND
domain requires two essential elements, to wit: (1) ENTERED into by and between
entrance and occupation by condemn or upon the INTESTATE ESTATE OF ALFONSO DE
private property for more than a momentary or limited CASTELLVI, represented by CARMEN M.
period, and (2) devoting it to a public use in such a way DE CASTELLVI, Judicial Administratrix ...
as to oust the owner and deprive him of all beneficial hereinafter called the LESSOR and THE
enjoyment of the property. This appellee argues that in REPUBLIC OF THE PHILIPPINES
the instant case the first element is wanting, for the represented by MAJ. GEN. CALIXTO
contract of lease relied upon provides for a lease from DUQUE, Chief of Staff of the ARMED
year to year; that the second element is also wanting, FORCES OF THE PHILIPPINES,
because the Republic was paying the lessor Castellvi a hereinafter called the LESSEE,
monthly rental of P445.58; and that the contract of
lease does not grant the Republic the "right and WITNESSETH:
privilege" to buy the premises "at the value at the time
1. For and in consideration of the rentals
of occupancy." 8
hereinafter reserved and the mutual terms,
Appellee Toledo-Gozun did not comment on the covenants and conditions of the parties,
Republic's argument in support of the second error the LESSOR has, and by these presents
assigned, because as far as she was concerned the does, lease and let unto the LESSEE the
Republic had not taken possession of her lands prior to following described land together with the
August 10, 1959. 9 improvements thereon and appurtenances
thereof, viz:
In order to better comprehend the issues raised in the
appeal, in so far as the Castellvi property is concerned, Un Terreno, Lote No. 27 del Plano de
subdivision Psu 34752, parte de la
 hacienda de Campauit, situado en el Barrio of this lease and the LESSOR undertakes
de San Jose, Municipio de Floridablanca without cost to the LESSEE to eject all
Pampanga. ... midiendo una extension trespassers, but should the LESSOR fail to
superficial de cuatro milliones once mil do so, the LESSEE at its option may
cuatro cientos trienta y cinco (4,001,435) proceed to do so at the expense of the
[sic] metros cuadrados, mas o menos. LESSOR. The LESSOR further agrees that
should he/she/they sell or encumber all or
Out of the above described property, 75.93 any part of the herein described premises
hectares thereof are actually occupied and during the period of this lease, any
covered by this contract. . conveyance will be conditioned on the right
of the LESSEE hereunder.
Above lot is more particularly described in
TCT No. 1016, province of 4. The LESSEE shall pay to the LESSOR
Pampanga ... as monthly rentals under this lease the
sum of FOUR HUNDRED FIFTY-FIVE
of which premises, the LESSOR warrants that PESOS & 58/100 (P455.58) ...
he/she/they/is/are the registered owner(s) and with full
authority to execute a contract of this nature. 5. The LESSEE may, at any time prior to
the termination of this lease, use the
2. The term of this lease shall be for the property for any purpose or purposes and,
period beginning July 1, 1952 the date the at its own costs and expense make
premises were occupied by the alteration, install facilities and fixtures and
PHILIPPINE AIR FORCE, AFP until June errect additions ... which facilities or fixtures
30, 1953, subject to renewal for another ... so placed in, upon or attached to the
year at the option of the LESSEE or unless said premises shall be and remain property
sooner terminated by the LESSEE as of the LESSEE and may be removed
hereinafter provided. therefrom by the LESSEE prior to the
termination of this lease. The LESSEE
3. The LESSOR hereby warrants that the
shall surrender possession of the premises
LESSEE shall have quiet, peaceful and
upon the expiration or termination of this
undisturbed possession of the demised
lease and if so required by the LESSOR,
premises throughout the full term or period
shall return the premises in substantially combat operations, acts of GOD, the
the same condition as that existing at the elements or other acts and deeds not due
time same were first occupied by the AFP, to the negligence on the part of the
reasonable and ordinary wear and tear and LESSEE.
damages by the elements or by
circumstances over which the LESSEE has 8. This LEASE AGREEMENT supersedes
no control excepted: PROVIDED, that if the and voids any and all agreements and
LESSOR so requires the return of the undertakings, oral or written, previously
premises in such condition, the LESSOR entered into between the parties covering
shall give written notice thereof to the the property herein leased, the same
LESSEE at least twenty (20) days before having been merged herein. This
the termination of the lease and provided, AGREEMENT may not be modified or
further, that should the LESSOR give altered except by instrument in writing only
notice within the time specified above, the duly signed by the parties. 10
LESSEE shall have the right and privilege
to compensate the LESSOR at the fair It was stipulated by the parties, that "the foregoing
value or the equivalent, in lieu of contract of lease (Exh. 4, Castellvi) is 'similar in terms
performance of its obligation, if any, to and conditions, including the date', with the annual
restore the premises. Fair value is to be contracts entered into from year to year between
determined as the value at the time of defendant Castellvi and the Republic of the Philippines
occupancy less fair wear and tear and (p. 17, t.s.n., Vol. III)". 11 It is undisputed, therefore, that
depreciation during the period of this lease. the Republic occupied Castellvi's land from July 1,
1947, by virtue of the above-mentioned contract, on a
6. The LESSEE may terminate this lease at year to year basis (from July 1 of each year to June 30
any time during the term hereof by giving of the succeeding year) under the terms and conditions
written notice to the LESSOR at least thirty therein stated.
(30) days in advance ...
Before the expiration of the contract of lease on June
7. The LESSEE should not be responsible, 30, 1956 the Republic sought to renew the same but
except under special legislation for any Castellvi refused. When the AFP refused to vacate the
damages to the premises by reason of leased premises after the termination of the contract,
on July 11, 1956, Castellvi wrote to the Chief of Staff, dismissed Civil Case No. 1458, upon petition of the
AFP, informing the latter that the heirs of the property parties, in an order which, in part, reads as follows:
had decided not to continue leasing the property in
question because they had decided to subdivide the 1. Plaintiff has agreed, as a matter of fact
land for sale to the general public, demanding that the has already signed an agreement with
property be vacated within 30 days from receipt of the defendants, whereby she has agreed to
letter, and that the premises be returned in receive the rent of the lands, subject matter
substantially the same condition as before occupancy of the instant case from June 30, 1966 up
(Exh. 5 — Castellvi). A follow-up letter was sent on to 1959 when the Philippine Air Force was
January 12, 1957, demanding the delivery and return placed in possession by virtue of an order
of the property within one month from said date (Exh. 6 of the Court upon depositing the
Castellvi). On January 30, 1957, Lieutenant General provisional amount as fixed by the
Alfonso Arellano, Chief of Staff, answered the letter of Provincial Appraisal Committee with the
Castellvi, saying that it was difficult for the army to Provincial Treasurer of Pampanga;
vacate the premises in view of the permanent
installations and other facilities worth almost 2. That because of the above-cited
P500,000.00 that were erected and already agreement wherein the administratrix
established on the property, and that, there being no decided to get the rent corresponding to
other recourse, the acquisition of the property by the rent from 1956 up to 1959 and
means of expropriation proceedings would be considering that this action is one of illegal
recommended to the President (Exhibit "7" — detainer and/or to recover the possession
Castellvi). of said land by virtue of non-payment of
rents, the instant case now has become
Defendant Castellvi then brought suit in the Court of moot and academic and/or by virtue of the
First Instance of Pampanga, in Civil Case No. 1458, to agreement signed by plaintiff, she has
eject the Philippine Air Force from the land. While this waived her cause of action in the above-
ejectment case was pending, the Republic instituted entitled case. 12
these expropriation proceedings, and, as stated earlier
in this opinion, the Republic was placed in possession The Republic urges that the "taking " of Castellvi's
of the lands on August 10, 1959, On November 21, property should be deemed as of the year 1947 by
1959, the Court of First Instance of Pampanga, virtue of afore-quoted lease agreement. In American
Jurisprudence, Vol. 26, 2nd edition, Section 157, on occupancy of (real) property should be construed to
the subject of "Eminent Domain, we read the definition mean "a limited period" — not indefinite or permanent.
of "taking" (in eminent domain) as follows: The aforecited lease contract was for a period of one
year, renewable from year to year. The entry on the
Taking' under the power of eminent domain property, under the lease, is temporary, and considered
may be defined generally as entering upon transitory. The fact that the Republic, through the AFP,
private property for more than a momentary constructed some installations of a permanent nature
period, and, under the warrant or color of does not alter the fact that the entry into the land was
legal authority, devoting it to a public use, transitory, or intended to last a year, although
or otherwise informally appropriating or renewable from year to year by consent of 'The owner
injuriously affecting it in such a way as of the land. By express provision of the lease
substantially to oust the owner and deprive agreement the Republic, as lessee, undertook to
him of all beneficial enjoyment thereof. 13 return the premises in substantially the same condition
as at the time the property was first occupied by the
Pursuant to the aforecited authority, a number of AFP. It is claimed that the intention of the lessee was
circumstances must be present in the "taking" of to occupy the land permanently, as may be inferred
property for purposes of eminent domain. from the construction of permanent improvements. But
this "intention" cannot prevail over the clear and
First, the expropriator must enter a private property.
express terms of the lease contract. Intent is to be
This circumstance is present in the instant case, when
deduced from the language employed by the parties,
by virtue of the lease agreement the Republic, through
and the terms 'of the contract, when unambiguous, as
the AFP, took possession of the property of Castellvi.
in the instant case, are conclusive in the absence of
Second, the entrance into private property must be for averment and proof of mistake or fraud — the question
more than a momentary period. "Momentary" means, being not what the intention was, but what is
"lasting but a moment; of but a moment's duration" expressed in the language used. (City of Manila v.
(The Oxford English Dictionary, Volume VI, page 596); Rizal Park Co., Inc., 53 Phil. 515, 525); Magdalena
"lasting a very short time; transitory; having a very brief Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in
life; operative or recurring at every moment" (Webster's order to judge the intention of the contracting parties,
Third International Dictionary, 1963 edition.) The word their contemporaneous and subsequent acts shall be
"momentary" when applied to possession or principally considered (Art. 1371, Civil Code). If the
intention of the lessee (Republic) in 1947 was really to
occupy permanently Castellvi's property, why was the Fifth, the utilization of the property for public use must
contract of lease entered into on year to year basis? be in such a way as to oust the owner and deprive him
Why was the lease agreement renewed from year to of all beneficial enjoyment of the property. In the
year? Why did not the Republic expropriate this land of instant case, the entry of the Republic into the property
Castellvi in 1949 when, according to the Republic and its utilization of the same for public use did not
itself, it expropriated the other parcels of land that it oust Castellvi and deprive her of all beneficial
occupied at the same time as the Castellvi land, for the enjoyment of the property. Castellvi remained as
purpose of converting them into a jet air base? 14 It owner, and was continuously recognized as owner by
might really have been the intention of the Republic to the Republic, as shown by the renewal of the lease
expropriate the lands in question at some future time, contract from year to year, and by the provision in the
but certainly mere notice - much less an implied notice lease contract whereby the Republic undertook to
— of such intention on the part of the Republic to return the property to Castellvi when the lease was
expropriate the lands in the future did not, and could terminated. Neither was Castellvi deprived of all the
not, bind the landowner, nor bind the land itself. The beneficial enjoyment of the property, because the
expropriation must be actually commenced in court Republic was bound to pay, and had been paying,
(Republic vs. Baylosis, et al., 96 Phil. 461, 484). Castellvi the agreed monthly rentals until the time
when it filed the complaint for eminent domain on June
Third, the entry into the property should be under 26, 1959.
warrant or color of legal authority. This circumstance in
the "taking" may be considered as present in the It is clear, therefore, that the "taking" of Catellvi's
instant case, because the Republic entered the property for purposes of eminent domain cannot be
Castellvi property as lessee. considered to have taken place in 1947 when the
Republic commenced to occupy the property as lessee
Fourth, the property must be devoted to a public use or thereof. We find merit in the contention of Castellvi that
otherwise informally appropriated or injuriously two essential elements in the "taking" of property under
affected. It may be conceded that the circumstance of the power of eminent domain, namely: (1) that the
the property being devoted to public use is present entrance and occupation by the condemnor must be
because the property was used by the air force of the for a permanent, or indefinite period, and (2) that in
AFP. devoting the property to public use the owner was
ousted from the property and deprived of its beneficial
use, were not present when the Republic entered and how a right to buy could be merged in a contract of
occupied the Castellvi property in 1947. lease in the absence of any agreement between the
parties to that effect. To sustain the contention of the
Untenable also is the Republic's contention that Republic is to sanction a practice whereby in order to
although the contract between the parties was one of secure a low price for a land which the government
lease on a year to year basis, it was "in reality a more intends to expropriate (or would eventually expropriate)
or less permanent right to occupy the premises under it would first negotiate with the owner of the land to
the guise of lease with the 'right and privilege' to buy lease the land (for say ten or twenty years) then
the property should the lessor wish to terminate the expropriate the same when the lease is about to
lease," and "the right to buy the property is merged as terminate, then claim that the "taking" of the property
an integral part of the lease relationship ... so much so for the purposes of the expropriation be reckoned as of
that the fair market value has been agreed upon, not, the date when the Government started to occupy the
as of the time of purchase, but as of the time of property under the lease, and then assert that the
occupancy" 15 We cannot accept the Republic's value of the property being expropriated be reckoned
contention that a lease on a year to year basis can as of the start of the lease, in spite of the fact that the
give rise to a permanent right to occupy, since by value of the property, for many good reasons, had in
express legal provision a lease made for a determinate the meantime increased during the period of the lease.
time, as was the lease of Castellvi's land in the instant This would be sanctioning what obviously is a
case, ceases upon the day fixed, without need of a deceptive scheme, which would have the effect of
demand (Article 1669, Civil Code). Neither can it be depriving the owner of the property of its true and fair
said that the right of eminent domain may be exercised market value at the time when the expropriation
by simply leasing the premises to be expropriated proceedings were actually instituted in court. The
(Rule 67, Section 1, Rules of Court). Nor can it be Republic's claim that it had the "right and privilege" to
accepted that the Republic would enter into a contract buy the property at the value that it had at the time
of lease where its real intention was to buy, or why the when it first occupied the property as lessee nowhere
Republic should enter into a simulated contract of appears in the lease contract. What was agreed
lease ("under the guise of lease", as expressed by expressly in paragraph No. 5 of the lease agreement
counsel for the Republic) when all the time the was that, should the lessor require the lessee to return
Republic had the right of eminent domain, and could the premises in the same condition as at the time the
expropriate Castellvi's land if it wanted to without same was first occupied by the AFP, the lessee would
resorting to any guise whatsoever. Neither can we see have the "right and privilege" (or option) of paying the
lessor what it would fairly cost to put the premises in of the filing of the complaint. This Court has ruled that
the same condition as it was at the commencement of when the taking of the property sought to be
the lease, in lieu of the lessee's performance of the expropriated coincides with the commencement of the
undertaking to put the land in said condition. The "fair expropriation proceedings, or takes place subsequent
value" at the time of occupancy, mentioned in the lease to the filing of the complaint for eminent domain, the
agreement, does not refer to the value of the property just compensation should be determined as of the date
if bought by the lessee, but refers to the cost of of the filing of the complaint. (Republic vs. Philippine
restoring the property in the same condition as of the National Bank, L-14158, April 12, 1961, 1 SCRA 957,
time when the lessee took possession of the property. 961-962). In the instant case, it is undisputed that the
Such fair value cannot refer to the purchase price, for Republic was placed in possession of the Castellvi
purchase was never intended by the parties to the property, by authority of the court, on August 10, 1959.
lease contract. It is a rule in the interpretation of The "taking" of the Castellvi property for the purposes
contracts that "However general the terms of a contract of determining the just compensation to be paid must,
may be, they shall not be understood to comprehend therefore, be reckoned as of June 26, 1959 when the
things that are distinct and cases that are different from complaint for eminent domain was filed.
those upon which the parties intended to agree" (Art.
1372, Civil Code). Regarding the two parcels of land of Toledo-Gozun,
also sought to be expropriated, which had never been
We hold, therefore, that the "taking" of the Castellvi under lease to the Republic, the Republic was placed
property should not be reckoned as of the year 1947 in possession of said lands, also by authority of the
when the Republic first occupied the same pursuant to court, on August 10, 1959, The taking of those lands,
the contract of lease, and that the just compensation to therefore, must also be reckoned as of June 26, 1959,
be paid for the Castellvi property should not be the date of the filing of the complaint for eminent
determined on the basis of the value of the property as domain.
of that year. The lower court did not commit an error
when it held that the "taking" of the property under 2. Regarding the first assigned error — discussed as
expropriation commenced with the filing of the the second issue — the Republic maintains that, even
complaint in this case. assuming that the value of the expropriated lands is to
be determined as of June 26, 1959, the price of P10.00
Under Section 4 of Rule 67 of the Rules of Court, 16 the per square meter fixed by the lower court "is not only
"just compensation" is to be determined as of the date exhorbitant but also unconscionable, and almost
fantastic". On the other hand, both Castellvi and In determining the value of land
Toledo-Gozun maintain that their lands are residential appropriated for public purposes, the same
lands with a fair market value of not less than P15.00 consideration are to be regarded as in a
per square meter. sale of property between private parties.
The inquiry, in such cases, must be what is
The lower court found, and declared, that the lands of the property worth in the market, viewed
Castellvi and Toledo-Gozun are residential lands. The not merely with reference to the uses to
finding of the lower court is in consonance with the which it is at the time applied, but with
unanimous opinion of the three commissioners who, in reference to the uses to which it is plainly
their report to the court, declared that the lands are adapted, that is to say, What is it worth
residential lands. from its availability for valuable uses?

The Republic assails the finding that the lands are So many and varied are the circumstances
residential, contending that the plans of the appellees to be taken into account in determining the
to convert the lands into subdivision for residential value of property condemned for public
purposes were only on paper, there being no overt acts purposes, that it is practically impossible to
on the part of the appellees which indicated that the formulate a rule to govern its appraisement
subdivision project had been commenced, so that any in all cases. Exceptional circumstances will
compensation to be awarded on the basis of the plans modify the most carefully guarded rule, but,
would be speculative. The Republic's contention is not as a general thing, we should say that the
well taken. We find evidence showing that the lands in compensation of the owner is to be
question had ceased to be devoted to the production of estimated by reference to the use for which
agricultural crops, that they had become adaptable for the property is suitable, having regard to
residential purposes, and that the appellees had the existing business or wants of the
actually taken steps to convert their lands into community, or such as may be reasonably
residential subdivisions even before the Republic filed expected in the immediate future. (Miss.
the complaint for eminent domain. In the case of City and Rum River Boom Co. vs. Patterson, 98
of Manila vs. Corrales (32 Phil. 82, 98) this Court laid U.S., 403).
down basic guidelines in determining the value of the
property expropriated for public purposes. This Court In expropriation proceedings, therefore, the owner of
said: the land has the right to its value for the use for which
it would bring the most in the market. 17 The owner The evidence shows that Castellvi broached the idea
may thus show every advantage that his property of subdividing her land into residential lots as early as
possesses, present and prospective, in order that the July 11, 1956 in her letter to the Chief of Staff of the
price it could be sold for in the market may be Armed Forces of the Philippines. (Exh. 5-Castellvi) As
satisfactorily determined. 18 The owner may also show a matter of fact, the layout of the subdivision plan was
that the property is suitable for division into village or tentatively approved by the National Planning
town lots. 19 Commission on September 7, 1956. (Exh. 8-Castellvi).
The land of Castellvi had not been devoted to
The trial court, therefore, correctly considered, among agriculture since 1947 when it was leased to the
other circumstances, the proposed subdivision plans of Philippine Army. In 1957 said land was classified as
the lands sought to be expropriated in finding that residential, and taxes based on its classification as
those lands are residential lots. This finding of the residential had been paid since then (Exh. 13-
lower court is supported not only by the unanimous Castellvi). The location of the Castellvi land justifies its
opinion of the commissioners, as embodied in their suitability for a residential subdivision. As found by the
report, but also by the Provincial Appraisal Committee trial court, "It is at the left side of the entrance of the
of the province of Pampanga composed of the Basa Air Base and bounded on two sides by roads
Provincial Treasurer, the Provincial Auditor and the (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-
District Engineer. In the minutes of the meeting of the Castellvi), the poblacion, (of Floridablanca) the
Provincial Appraisal Committee, held on May 14, 1959 municipal building, and the Pampanga Sugar Mills are
(Exh. 13-Castellvi) We read in its Resolution No. 10 closed by. The barrio schoolhouse and chapel are also
the following: near (T.S.N. November 23,1960, p. 68)." 20

3. Since 1957 the land has been classified The lands of Toledo-Gozun (Lot 1-B and Lot 3) are
as residential in view of its proximity to the practically of the same condition as the land of
air base and due to the fact that it was not Castellvi. The lands of Toledo-Gozun adjoin the land of
being devoted to agriculture. In fact, there Castellvi. They are also contiguous to the Basa Air
is a plan to convert it into a subdivision for Base, and are along the road. These lands are near
residential purposes. The taxes due on the the barrio schoolhouse, the barrio chapel, the
property have been paid based on its Pampanga Sugar Mills, and the poblacion of
classification as residential land; Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a
matter of fact, regarding lot 1-B it had already been
surveyed and subdivided, and its conversion into a in 1949 and which are now the site of the Basa Air
residential subdivision was tentatively approved by the Base. In the Narciso case this Court fixed the fair
National Planning Commission on July 8, 1959 (Exhs. market value at P.20 per square meter. The lands that
5 and 6 Toledo-Gozun). As early as June, 1958, no are sought to be expropriated in the present case
less than 32 man connected with the Philippine Air being contiguous to the lands involved in the Narciso
Force among them commissioned officers, non- case, it is the stand of the Republic that the price that
commission officers, and enlisted men had requested should be fixed for the lands now in question should
Mr. and Mrs. Joaquin D. Gozun to open a subdivision also be at P.20 per square meter.
on their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-
Gozun). 21 We can not sustain the stand of the Republic. We find
that the price of P.20 per square meter, as fixed by this
We agree with the findings, and the conclusions, of the Court in the Narciso case, was based on the allegation
lower court that the lands that are the subject of of the defendants (owners) in their answer to the
expropriation in the present case, as of August 10, complaint for eminent domain in that case that the
1959 when the same were taken possession of by the price of their lands was P2,000.00 per hectare and that
Republic, were residential lands and were adaptable was the price that they asked the court to pay them.
for use as residential subdivisions. Indeed, the owners This Court said, then, that the owners of the land could
of these lands have the right to their value for the use not be given more than what they had asked,
for which they would bring the most in the market at notwithstanding the recommendation of the majority of
the time the same were taken from them. The most the Commission on Appraisal — which was adopted by
important issue to be resolved in the present case the trial court — that the fair market value of the lands
relates to the question of what is the just compensation was P3,000.00 per hectare. We also find that the price
that should be paid to the appellees. of P.20 per square meter in the Narciso case was
considered the fair market value of the lands as of the
The Republic asserts that the fair market value of the year 1949 when the expropriation proceedings were
lands of the appellees is P.20 per square meter. The instituted, and at that time the lands were classified as
Republic cites the case of Republic vs. Narciso, et al., sugar lands, and assessed for taxation purposes at
L-6594, which this Court decided on May 18, 1956. around P400.00 per hectare, or P.04 per square meter.
The Narciso case involved lands that belonged to 22 While the lands involved in the present case, like
Castellvi and Toledo-Gozun, and to one Donata the lands involved in the Narciso case, might have a
Montemayor, which were expropriated by the Republic fair market value of P.20 per square meter in 1949, it
can not be denied that ten years later, in 1959, when follows, therefore, that, contrary to the stand of the
the present proceedings were instituted, the value of Republic, that resolution No. 5 of the Provincial
those lands had increased considerably. The evidence Appraisal Committee can not be made the basis for
shows that since 1949 those lands were no longer fixing the fair market value of the lands of Castellvi and
cultivated as sugar lands, and in 1959 those lands Toledo-Gozun.
were already classified, and assessed for taxation
purposes, as residential lands. In 1959 the land of The Republic further relied on the certification of the
Castellvi was assessed at P1.00 per square meter. 23 Acting Assistant Provincial Assessor of Pampanga,
dated February 8, 1961 (Exhibit K), to the effect that in
The Republic also points out that the Provincial 1950 the lands of Toledo-Gozun were classified partly
Appraisal Committee of Pampanga, in its resolution as sugar land and partly as urban land, and that the
No. 5 of February 15, 1957 (Exhibit D), recommended sugar land was assessed at P.40 per square meter,
the sum of P.20 per square meter as the fair valuation while part of the urban land was assessed at P.40 per
of the Castellvi property. We find that this resolution square meter and part at P.20 per square meter; and
was made by the Republic the basis in asking the court that in 1956 the Castellvi land was classified as sugar
to fix the provisional value of the lands sought to be land and was assessed at P450.00 per hectare, or
expropriated at P259,669.10, which was approved by P.045 per square meter. We can not also consider this
the court. 24 It must be considered, however, that the certification of the Acting Assistant Provincial Assessor
amount fixed as the provisional value of the lands that as a basis for fixing the fair market value of the lands
are being expropriated does not necessarily represent of Castellvi and Toledo-Gozun because, as the
the true and correct value of the land. The value is only evidence shows, the lands in question, in 1957, were
"provisional" or "tentative", to serve as the basis for the already classified and assessed for taxation purposes
immediate occupancy of the property being as residential lands. The certification of the assessor
expropriated by the condemnor. The records show that refers to the year 1950 as far as the lands of Toledo-
this resolution No. 5 was repealed by the same Gozun are concerned, and to the year 1956 as far as
Provincial Committee on Appraisal in its resolution No. the land of Castellvi is concerned. Moreover, this Court
10 of May 14, 1959 (Exhibit 13-Castellvi). In that has held that the valuation fixed for the purposes of the
resolution No. 10, the appraisal committee stated that assessment of the land for taxation purposes can not
"The Committee has observed that the value of the bind the landowner where the latter did not intervene in
land in this locality has increased since 1957 ...", and fixing it. 25
recommended the price of P1.50 per square meter. It
On the other hand, the Commissioners, appointed by and factors involved therein are similar in
the court to appraise the lands that were being many respects to the defendants' lands in
expropriated, recommended to the court that the price this case. The land in Civil Case No. 1531
of P10.00 per square meter would be the fair market of this Court and the lands in the present
value of the lands. The commissioners made their case (Civil Case No. 1623) are both near
recommendation on the basis of their observation after the air bases, the Clark Air Base and the
several ocular inspections of the lands, of their own Basa Air Base respectively. There is a
personal knowledge of land values in the province of national road fronting them and are
Pampanga, of the testimonies of the owners of the situated in a first-class municipality. As
land, and other witnesses, and of documentary added advantage it may be said that the
evidence presented by the appellees. Both Castellvi Basa Air Base land is very near the sugar
and Toledo-Gozun testified that the fair market value of mill at Del Carmen, Floridablanca,
their respective land was at P15.00 per square meter. Pampanga, owned by the Pampanga
The documentary evidence considered by the Sugar Mills. Also just stone's throw away
commissioners consisted of deeds of sale of from the same lands is a beautiful vacation
residential lands in the town of San Fernando and in spot at Palacol, a sitio of the town of
Angeles City, in the province of Pampanga, which were Floridablanca, which counts with a natural
sold at prices ranging from P8.00 to P20.00 per square swimming pool for vacationists on
meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23- weekends. These advantages are not
Castellvi). The commissioners also considered the found in the case of the Clark Air Base. The
decision in Civil Case No. 1531 of the Court of First defendants' lands are nearer to the
Instance of Pampanga, entitled Republic vs. Sabina poblacion of Floridablanca then Clark Air
Tablante, which was expropriation case filed on Base is nearer (sic) to the poblacion of
January 13, 1959, involving a parcel of land adjacent Angeles, Pampanga.
to the Clark Air Base in Angeles City, where the court
fixed the price at P18.00 per square meter (Exhibit 14- The deeds of absolute sale, according to
Castellvi). In their report, the commissioners, among the undersigned commissioners, as well as
other things, said: the land in Civil Case No. 1531 are
competent evidence, because they were
... This expropriation case is specially executed during the year 1959 and before
pointed out, because the circumstances August 10 of the same year. More
 specifically so the land at Clark Air Base land values, and the lowered purchasing power of the
which coincidentally is the subject matter in Philippine peso.
the complaint in said Civil Case No. 1531, it
having been filed on January 13, 1959 and In the case of Manila Railroad Co. vs. Caligsihan, 40
the taking of the land involved therein was Phil. 326, 328, this Court said:
ordered by the Court of First Instance of
Pampanga on January 15, 1959, several A court of first instance or, on appeal, the
months before the lands in this case were Supreme Court, may change or modify the
taken by the plaintiffs .... report of the commissioners by increasing
or reducing the amount of the award if the
From the above and considering further facts of the case so justify. While great
that the lowest as well as the highest price weight is attached to the report of the
per square meter obtainable in the market commissioners, yet a court may substitute
of Pampanga relative to subdivision lots therefor its estimate of the value of the
within its jurisdiction in the year 1959 is property as gathered from the record in
very well known by the Commissioners, the certain cases, as, where the
Commission finds that the lowest price that commissioners have applied illegal
can be awarded to the lands in question is principles to the evidence submitted to
P10.00 per square meter. 26 them, or where they have disregarded a
clear preponderance of evidence, or where
The lower court did not altogether accept the findings the amount allowed is either palpably
of the Commissioners based on the documentary inadequate or excessive. 28
evidence, but it considered the documentary evidence
as basis for comparison in determining land values. The report of the commissioners of appraisal in
The lower court arrived at the conclusion that "the condemnation proceedings are not binding, but merely
unanimous recommendation of the commissioners of advisory in character, as far as the court is
ten (P10.00) pesos per square meter for the three lots concerned. 29 In our analysis of the report of the
of the defendants subject of this action is fair and commissioners, We find points that merit serious
just". 27 In arriving at its conclusion, the lower court consideration in the determination of the just
took into consideration, among other circumstances, compensation that should be paid to Castellvi and
that the lands are titled, that there is a rising trend of Toledo-Gozun for their lands. It should be noted that
the commissioners had made ocular inspections of the commissioners and adopted by the lower court, is quite
lands and had considered the nature and similarities of high. It is Our considered view that the price of P5.00
said lands in relation to the lands in other places in the per square meter would be a fair valuation of the lands
province of Pampanga, like San Fernando and in question and would constitute a just compensation
Angeles City. We cannot disregard the observations of to the owners thereof. In arriving at this conclusion We
the commissioners regarding the circumstances that have particularly taken into consideration the resolution
make the lands in question suited for residential of the Provincial Committee on Appraisal of the
purposes — their location near the Basa Air Base, just province of Pampanga informing, among others, that in
like the lands in Angeles City that are near the Clark Air the year 1959 the land of Castellvi could be sold for
Base, and the facilities that obtain because of their from P3.00 to P4.00 per square meter, while the land
nearness to the big sugar central of the Pampanga of Toledo-Gozun could be sold for from P2.50 to P3.00
Sugar mills, and to the flourishing first class town of per square meter. The Court has weighed all the
Floridablanca. It is true that the lands in question are circumstances relating to this expropriations
not in the territory of San Fernando and Angeles City, proceedings, and in fixing the price of the lands that
but, considering the facilities of modern are being expropriated the Court arrived at a happy
communications, the town of Floridablanca may be medium between the price as recommended by the
considered practically adjacent to San Fernando and commissioners and approved by the court, and the
Angeles City. It is not out of place, therefore, to price advocated by the Republic. This Court has also
compare the land values in Floridablanca to the land taken judicial notice of the fact that the value of the
values in San Fernando and Angeles City, and form an Philippine peso has considerably gone down since the
idea of the value of the lands in Floridablanca with year 1959. 30Considering that the lands of Castellvi and
reference to the land values in those two other Toledo-Gozun are adjoining each other, and are of the
communities. same nature, the Court has deemed it proper to fix the
same price for all these lands.
The important factor in expropriation proceeding is that
the owner is awarded the just compensation for his 3. The third issue raised by the Republic
property. We have carefully studied the record, and the relates to the payment of interest. The
evidence, in this case, and after considering the Republic maintains that the lower court
circumstances attending the lands in question We erred when it ordered the Republic to pay
have arrived at the conclusion that the price of P10.00 Castellvi interest at the rate of 6% per
per square meter, as recommended by the annum on the total amount adjudged as
 the value of the land of Castellvi, from July placed in possession by virtue of an order
1, 1956 to July 10, 1959. We find merit in of the Court upon depositing the
this assignment of error. provisional amount as fixed by the
Provincial Appraisal Committee with the
In ordering the Republic to pay 6% interest on the total Provincial Treasurer of
value of the land of Castellvi from July 1, 1956 to July Pampanga; ...
10, 1959, the lower court held that the Republic had
illegally possessed the land of Castellvi from July 1, If Castellvi had agreed to receive the rentals from June
1956, after its lease of the land had expired on June 30, 1956 to August 10, 1959, she should be
30, 1956, until August 10, 1959 when the Republic was considered as having allowed her land to be leased to
placed in possession of the land pursuant to the writ of the Republic until August 10, 1959, and she could not
possession issued by the court. What really happened at the same time be entitled to the payment of interest
was that the Republic continued to occupy the land of during the same period on the amount awarded her as
Castellvi after the expiration of its lease on June 30, the just compensation of her land. The Republic,
1956, so much so that Castellvi filed an ejectment case therefore, should pay Castellvi interest at the rate of
against the Republic in the Court of First Instance of 6% per annum on the value of her land, minus the
Pampanga. 31 However, while that ejectment case was provisional value that was deposited, only from July
pending, the Republic filed the complaint for eminent 10, 1959 when it deposited in court the provisional
domain in the present case and was placed in value of the land.
possession of the land on August 10, 1959, and
because of the institution of the expropriation 4. The fourth error assigned by the Republic relates to
proceedings the ejectment case was later dismissed. the denial by the lower court of its motion for a new
In the order dismissing the ejectment case, the Court trial based on nearly discovered evidence. We do not
of First Instance of Pampanga said: find merit in this assignment of error.

Plaintiff has agreed, as a matter of fact has After the lower court had decided this case on May 26,
already signed an agreement with 1961, the Republic filed a motion for a new trial,
defendants, whereby she had agreed to supplemented by another motion, both based upon the
receive the rent of the lands, subject matter ground of newly discovered evidence. The alleged
of the instant case from June 30, 1956 up newly discovered evidence in the motion filed on June
to 1959 when the Philippine Air Force was 21, 1961 was a deed of absolute sale-executed on
January 25, 1961, showing that a certain Serafin alter the result of the case if admitted. 32 The lower
Francisco had sold to Pablo L. Narciso a parcel of court correctly ruled that these requisites were not
sugar land having an area of 100,000 square meters complied with.
with a sugar quota of 100 piculs, covered by P.A. No.
1701, situated in Barrio Fortuna, Floridablanca, for The lower court, in a well-reasoned order, found that
P14,000, or P.14 per square meter. the sales made by Serafin Francisco to Pablo Narciso
and that made by Jesus Toledo to the Land Tenure
In the supplemental motion, the alleged newly Administration were immaterial and irrelevant, because
discovered evidence were: (1) a deed of sale of some those sales covered sugarlands with sugar quotas,
35,000 square meters of land situated at Floridablanca while the lands sought to be expropriated in the instant
for P7,500.00 (or about P.21 per square meter) case are residential lands. The lower court also
executed in July, 1959, by the spouses Evelyn D. Laird concluded that the land sold by the spouses Laird to
and Cornelio G. Laird in favor of spouses Bienvenido the spouses Aguas was a sugar land.
S. Aguas and Josefina Q. Aguas; and (2) a deed of
absolute sale of a parcel of land having an area of We agree with the trial court. In eminent domain
4,120,101 square meters, including the sugar quota proceedings, in order that evidence as to the sale price
covered by Plantation Audit No. 161 1345, situated at of other lands may be admitted in evidence to prove
Floridablanca, Pampanga, for P860.00 per hectare (a the fair market value of the land sought to be
little less than P.09 per square meter) executed on expropriated, the lands must, among other things, be
October 22, 1957 by Jesus Toledo y Mendoza in favor shown to be similar.
of the Land Tenure Administration.
But even assuming, gratia argumenti, that the lands
We find that the lower court acted correctly when it mentioned in those deeds of sale were residential, the
denied the motions for a new trial. evidence would still not warrant the grant of a new trial,
for said evidence could have been discovered and
To warrant the granting of a new trial based on the produced at the trial, and they cannot be considered
ground of newly discovered evidence, it must appear newly discovered evidence as contemplated in Section
that the evidence was discovered after the trial; that 1(b) of Rule 37 of the Rules of Court. Regarding this
even with the exercise of due diligence, the evidence point, the trial court said:
could not have been discovered and produced at the
trial; and that the evidence is of such a nature as to
The Court will now show that there was no move for the issuance of a
reasonable diligence employed. subpoena duces tecum directing the
Register of Deeds of Pampanga to come to
The land described in the deed of sale testify and to bring with him all documents
executed by Serafin Francisco, copy of found in his office pertaining to sales of
which is attached to the original motion, is land in Floridablanca adjacent to or near
covered by a Certificate of Title issued by the lands in question executed or recorded
the Office of the Register of Deeds of from 1958 to the present. Even this
Pampanga. There is no question in the elementary precaution was not done by
mind of the court but this document passed plaintiff's numerous attorneys.
through the Office of the Register of Deeds
for the purpose of transferring the title or The same can be said of the deeds of sale
annotating the sale on the certificate of attached to the supplementary motion.
title. It is true that Fiscal Lagman went to They refer to lands covered by certificate of
the Office of the Register of Deeds to title issued by the Register of Deeds of
check conveyances which may be Pampanga. For the same reason they
presented in the evidence in this case as it could have been easily discovered if
is now sought to be done by virtue of the reasonable diligence has been exerted by
motions at bar, Fiscal Lagman, one of the the numerous lawyers of the plaintiff in this
lawyers of the plaintiff, did not exercise case. It is noteworthy that all these deeds
reasonable diligence as required by the of sale could be found in several
rules. The assertion that he only went to government offices, namely, in the Office of
the office of the Register of Deeds 'now the Register of Deeds of Pampanga, the
and then' to check the records in that office Office of the Provincial Assessor of
only shows the half-hazard [sic] manner by Pampanga, the Office of the Clerk of Court
which the plaintiff looked for evidence to be as a part of notarial reports of notaries
presented during the hearing before the public that acknowledged these
Commissioners, if it is at all true that Fiscal documents, or in the archives of the
Lagman did what he is supposed to have National Library. In respect to Annex 'B' of
done according to Solicitor Padua. It would the supplementary motion copy of the
have been the easiest matter for plaintiff to document could also be found in the Office
of the Land Tenure Administration, another was rendered, and later promulgated on
government entity. Any lawyer with a May 26, 1961 or more than one
modicum of ability handling this month after Solicitor Padua made the
expropriation case would have right away above observation. He could have,
though [sic] of digging up documents therefore, checked up the alleged sale and
diligently showing conveyances of lands moved for a reopening to adduce further
near or around the parcels of land sought evidence. He did not do so. He forgot to
to be expropriated in this case in the offices present the evidence at a more propitious
that would have naturally come to his mind time. Now, he seeks to introduce said
such as the offices mentioned above, and evidence under the guise of newly-
had counsel for the movant really exercised discovered evidence. Unfortunately the
the reasonable diligence required by the Court cannot classify it as newly-
Rule' undoubtedly they would have been discovered evidence, because tinder the
able to find these documents and/or circumstances, the correct qualification that
caused the issuance of subpoena duces can be given is 'forgotten evidence'.
tecum. ... Forgotten however, is not newly-
discovered
It is also recalled that during the hearing evidence. 33
before the Court of the Report and
Recommendation of the Commissioners The granting or denial of a motion for new trial is, as a
and objection thereto, Solicitor Padua general rule, discretionary with the trial court, whose
made the observation: judgment should not be disturbed unless there is a
clear showing of abuse of discretion. 34 We do not see
I understand, Your Honor, that there was a any abuse of discretion on the part of the lower court
sale that took place in this place of land when it denied the motions for a new trial.
recently where the land was sold for P0.20
which is contiguous to this land. WHEREFORE, the decision appealed from is modified,
as follows:
The Court gave him permission to submit
said document subject to the approval of (a) the lands of appellees Carmen Vda. de
the Court. ... This was before the decision Castellvi and Maria Nieves Toledo-Gozun,
as described in the complaint, are declared (f) the costs should be paid by appellant
expropriated for public use; Republic of the Philippines, as provided in
Section 12, Rule 67, and in Section 13,
(b) the fair market value of the lands of the Rule 141, of the Rules of Court.
appellees is fixed at P5.00 per square
meter;

(c) the Republic must pay appellee

Castellvi the sum of P3,796,495.00 as just
compensation for her one parcel of land
that has an area of 759,299 square meters,
minus the sum of P151,859.80 that she
withdrew out of the amount that was
deposited in court as the provisional value
of the land, with interest at the rate of 6%
per annum from July 10, 1959 until the day
full payment is made or deposited in court;

(d) the Republic must pay appellee Toledo-

Gozun the sum of P2,695,225.00 as the
just compensation for her two parcels of G.R. No. L-34915 June 24, 1983
land that have a total area of 539,045
square meters, minus the sum of CITY GOVERNMENT OF QUEZON CITY and CITY
P107,809.00 that she withdrew out of the COUNCIL OF QUEZON CITY, petitioners,
amount that was deposited in court as the vs.
provisional value of her lands, with interest HON. JUDGE VICENTE G. ERICTA as Judge of the
at the rate of 6%, per annum from July 10, Court of First Instance of Rizal, Quezon City,
1959 until the day full payment is made or Branch XVIII; HIMLAYANG PILIPINO,
deposited in court; (e) the attorney's lien of INC., respondents.
Atty. Alberto Cacnio is enforced; and
City Fiscal for petitioners.
Manuel Villaruel, Jr. and Feliciano Tumale for For several years, the aforequoted section of the
respondents. Ordinance was not enforced by city authorities but
seven years after the enactment of the ordinance, the
Quezon City Council passed the following resolution:

GUTIERREZ, JR., J.: RESOLVED by the council of Quezon

assembled, to request, as it does hereby
This is a petition for review which seeks the reversal of request the City Engineer, Quezon City, to
the decision of the Court of First Instance of Rizal, stop any further selling and/or transaction
Branch XVIII declaring Section 9 of Ordinance No. of memorial park lots in Quezon City where
6118, S-64, of the Quezon City Council null and void. the owners thereof have failed to donate
the required 6% space intended for
Section 9 of Ordinance No. 6118, S-64, entitled
paupers burial.
"ORDINANCE REGULATING THE ESTABLISHMENT,
MAINTENANCE AND OPERATION OF PRIVATE Pursuant to this petition, the Quezon City Engineer
MEMORIAL TYPE CEMETERY OR BURIAL GROUND notified respondent Himlayang Pilipino, Inc. in writing
WITHIN THE JURISDICTION OF QUEZON CITY AND that Section 9 of Ordinance No. 6118, S-64 would be
PROVIDING PENALTIES FOR THE VIOLATION enforced
THEREOF" provides:
Respondent Himlayang Pilipino reacted by filing with
Sec. 9. At least six (6) percent of the total the Court of First Instance of Rizal Branch XVIII at
area of the memorial park cemetery shall Quezon City, a petition for declaratory relief, prohibition
be set aside for charity burial of deceased and mandamus with preliminary injunction (Sp. Proc.
persons who are paupers and have been No. Q-16002) seeking to annul Section 9 of the
residents of Quezon City for at least 5 Ordinance in question The respondent alleged that the
years prior to their death, to be determined same is contrary to the Constitution, the Quezon City
by competent City Authorities. The area so Charter, the Local Autonomy Act, and the Revised
designated shall immediately be developed Administrative Code.
and should be open for operation not later
than six months from the date of approval There being no issue of fact and the questions raised
of the application. being purely legal both petitioners and respondent
agreed to the rendition of a judgment on the pleadings. The respondent also stresses that the general welfare
The respondent court, therefore, rendered the decision clause is not available as a source of power for the
declaring Section 9 of Ordinance No. 6118, S-64 null taking of the property in this case because it refers to
and void. "the power of promoting the public welfare by
restraining and regulating the use of liberty and
A motion for reconsideration having been denied, the property." The respondent points out that if an owner is
City Government and City Council filed the instant deprived of his property outright under the State's
petition. police power, the property is generally not taken for
public use but is urgently and summarily destroyed in
Petitioners argue that the taking of the respondent's order to promote the general welfare. The respondent
property is a valid and reasonable exercise of police cites the case of a nuisance per se or the destruction
power and that the land is taken for a public use as it is of a house to prevent the spread of a conflagration.
intended for the burial ground of paupers. They further
argue that the Quezon City Council is authorized under We find the stand of the private respondent as well as
its charter, in the exercise of local police power, " to the decision of the respondent Judge to be well-
make such further ordinances and resolutions not founded. We quote with approval the lower court's
repugnant to law as may be necessary to carry into ruling which declared null and void Section 9 of the
effect and discharge the powers and duties conferred questioned city ordinance:
by this Act and such as it shall deem necessary and
proper to provide for the health and safety, promote the The issue is: Is Section 9 of the ordinance
prosperity, improve the morals, peace, good order, in question a valid exercise of the police
comfort and convenience of the city and the power?
inhabitants thereof, and for the protection of property
therein." An examination of the Charter of Quezon
City (Rep. Act No. 537), does not reveal
On the other hand, respondent Himlayang Pilipino, Inc. any provision that would justify the
contends that the taking or confiscation of property is ordinance in question except the provision
obvious because the questioned ordinance granting police power to the City. Section 9
permanently restricts the use of the property such that cannot be justified under the power granted
it cannot be used for any reasonable purpose and to Quezon City to tax, fix the license fee,
deprives the owner of all beneficial use of his property. and regulatesuch other business, trades,
and occupation as may be established or may determine, subject to the
practised in the City.' (Subsections 'C', Sec. provisions of the general law
12, R.A. 537). regulating burial grounds and
cemeteries and governing
The power to regulate does not include the funerals and disposal of the
power to prohibit (People vs. Esguerra, 81 dead.' (Sub-sec. (t), Sec. 12,
PhiL 33, Vega vs. Municipal Board of Iloilo, Rep. Act No. 537).
L-6765, May 12, 1954; 39 N.J. Law, 70,
Mich. 396). A fortiori, the power to regulate There is nothing in the above provision
does not include the power to confiscate. which authorizes confiscation or as
The ordinance in question not only euphemistically termed by the
confiscates but also prohibits the operation respondents, 'donation'
of a memorial park cemetery, because
under Section 13 of said ordinance, We now come to the question whether or
'Violation of the provision thereof is not Section 9 of the ordinance in question
punishable with a fine and/or imprisonment is a valid exercise of police power. The
and that upon conviction thereof the permit police power of Quezon City is defined in
to operate and maintain a private cemetery sub-section 00, Sec. 12, Rep. Act 537
shall be revoked or cancelled.' The which reads as follows:
confiscatory clause and the penal provision
in effect deter one from operating a (00) To make such further
memorial park cemetery. Neither can the ordinance and regulations not
ordinance in question be justified under repugnant to law as may be
sub- section "t", Section 12 of Republic Act necessary to carry into effect
537 which authorizes the City Council to- and discharge the powers and
duties conferred by this act and
'prohibit the burial of the dead such as it shall deem
within the center of population necessary and proper to
of the city and provide for their provide for the health and
burial in such proper place and safety, promote, the prosperity,
in such manner as the council improve the morals, peace,
 good order, comfort and Tanada and Carreon, V-11, p. 50). It is
convenience of the city and the usually exerted in order to merely regulate
inhabitants thereof, and for the the use and enjoyment of property of the
protection of property therein; owner. If he is deprived of his property
and enforce obedience thereto outright, it is not taken for public use but
with such lawful fines or rather to destroy in order to promote the
penalties as the City Council general welfare. In police power, the owner
may prescribe under the does not recover from the government for
provisions of subsection (jj) of injury sustained in consequence thereof
this section. (12 C.J. 623). It has been said that police
power is the most essential of government
We start the discussion with a restatement powers, at times the most insistent, and
of certain basic principles. Occupying the always one of the least limitable of the
forefront in the bill of rights is the provision powers of government (Ruby vs. Provincial
which states that 'no person shall be Board, 39 PhiL 660; Ichong vs. Hernandez,
deprived of life, liberty or property without 1,7995, May 31, 1957). This power
due process of law' (Art. Ill, Section 1 embraces the whole system of public
subparagraph 1, Constitution). regulation (U.S. vs. Linsuya Fan, 10 PhiL
104). The Supreme Court has said that
On the other hand, there are three inherent police power is so far-reaching in scope
powers of government by which the state that it has almost become impossible to
interferes with the property rights, namely-. limit its sweep. As it derives its existence
(1) police power, (2) eminent domain, (3) from the very existence of the state itself, it
taxation. These are said to exist does not need to be expressed or defined
independently of the Constitution as in its scope. Being coextensive with self-
necessary attributes of sovereignty. preservation and survival itself, it is the
most positive and active of all
Police power is defined by Freund as 'the
governmental processes, the most
power of promoting the public welfare by
essential insistent and illimitable Especially
restraining and regulating the use of liberty
it is so under the modern democratic
and property' (Quoted in Political Law by
framework where the demands of society
and nations have multiplied to almost confiscate private property in order to
unimaginable proportions. The field and destroy it for the purpose of protecting the
scope of police power have become almost peace and order and of promoting the
boundless, just as the fields of public general welfare as for instance, the
interest and public welfare have become confiscation of an illegally possessed
almost all embracing and have article, such as opium and firearms.
transcended human foresight. Since the
Courts cannot foresee the needs and It seems to the court that Section 9 of
demands of public interest and welfare, Ordinance No. 6118, Series of 1964 of
they cannot delimit beforehand the extent Quezon City is not a mere police regulation
or scope of the police power by which and but an outright confiscation. It deprives a
through which the state seeks to attain or person of his private property without due
achieve public interest and welfare. (Ichong process of law, nay, even without
vs. Hernandez, L-7995, May 31, 1957). compensation.

The police power being the most active In sustaining the decision of the respondent court, we
power of the government and the due are not unmindful of the heavy burden shouldered by
process clause being the broadest station whoever challenges the validity of duly enacted
on governmental power, the conflict legislation whether national or local As early as 1913,
between this power of government and the this Court ruled in Case v. Board of Health (24 PhiL
due process clause of the Constitution is 250) that the courts resolve every presumption in favor
oftentimes inevitable. of validity and, more so, where the ma corporation
asserts that the ordinance was enacted to promote the
It will be seen from the foregoing common good and general welfare.
authorities that police power is usually
exercised in the form of mere regulation or In the leading case of Ermita-Malate Hotel and Motel
restriction in the use of liberty or property Operators Association Inc. v. City Mayor of Manila (20
for the promotion of the general welfare. It SCRA 849) the Court speaking through the then
does not involve the taking or confiscation Associate Justice and now Chief Justice Enrique M.
of property with the exception of a few Fernando stated
cases where there is a necessity to
Primarily what calls for a reversal of such a ... Under the provisions of municipal
decision is the a of any evidence to offset charters which are known as the general
the presumption of validity that attaches to welfare clauses, a city, by virtue of its
a statute or ordinance. As was expressed police power, may adopt ordinances to the
categorically by Justice Malcolm 'The peace, safety, health, morals and the best
presumption is all in favor of validity. ... The and highest interests of the municipality. It
action of the elected representatives of the is a well-settled principle, growing out of
people cannot be lightly set aside. The the nature of well-ordered and society, that
councilors must, in the very nature of every holder of property, however absolute
things, be familiar with the necessities of and may be his title, holds it under the
their particular ... municipality and with all implied liability that his use of it shall not be
the facts and lances which surround the injurious to the equal enjoyment of others
subject and necessitate action. The local having an equal right to the enjoyment of
legislative body, by enacting the ordinance, their property, nor injurious to the rights of
has in effect given notice that the the community. An property in the state is
regulations are essential to the well-being held subject to its general regulations,
of the people. ... The Judiciary should not which are necessary to the common good
lightly set aside legislative action when and general welfare. Rights of property, like
there is not a clear invasion of personal or all other social and conventional rights, are
property rights under the guise of police subject to such reasonable limitations in
regulation. (U.S. v. Salaveria (1918], 39 their enjoyment as shall prevent them from
Phil. 102, at p. 111. There was an being injurious, and to such reasonable
affirmation of the presumption of validity of restraints and regulations, established by
municipal ordinance as announced in the law, as the legislature, under the governing
leading Salaveria decision in Ebona v. and controlling power vested in them by the
Daet, [1950]85 Phil. 369.) constitution, may think necessary and
expedient. The state, under the police
We have likewise considered the principles power, is possessed with plenary power to
earlier stated in Case v. Board of deal with all matters relating to the general
Health supra : health, morals, and safety of the people, so
long as it does not contravene any positive
 inhibition of the organic law and providing manner as prescribed by law or ordinance" it simply
that such power is not exercised in such a authorizes the city to provide its own city owned land
manner as to justify the interference of the or to buy or expropriate private properties to construct
courts to prevent positive wrong and public cemeteries. This has been the law and practise
oppression. in the past. It continues to the present. Expropriation,
however, requires payment of just compensation. The
but find them not applicable to the facts of this case. questioned ordinance is different from laws and
regulations requiring owners of subdivisions to set
There is no reasonable relation between the setting aside certain areas for streets, parks, playgrounds, and
aside of at least six (6) percent of the total area of an other public facilities from the land they sell to buyers
private cemeteries for charity burial grounds of of subdivision lots. The necessities of public safety,
deceased paupers and the promotion of health, health, and convenience are very clear from said
morals, good order, safety, or the general welfare of requirements which are intended to insure the
the people. The ordinance is actually a taking without development of communities with salubrious and
compensation of a certain area from a private wholesome environments. The beneficiaries of the
cemetery to benefit paupers who are charges of the regulation, in turn, are made to pay by the subdivision
municipal corporation. Instead of building or developer when individual lots are sold to home-
maintaining a public cemetery for this purpose, the city owners.
passes the burden to private cemeteries.
As a matter of fact, the petitioners rely solely on the
The expropriation without compensation of a portion of general welfare clause or on implied powers of the
private cemeteries is not covered by Section 12(t) of municipal corporation, not on any express provision of
Republic Act 537, the Revised Charter of Quezon City law as statutory basis of their exercise of power. The
which empowers the city council to prohibit the burial clause has always received broad and liberal
of the dead within the center of population of the city interpretation but we cannot stretch it to cover this
and to provide for their burial in a proper place subject particular taking. Moreover, the questioned ordinance
to the provisions of general law regulating burial was passed after Himlayang Pilipino, Inc. had
grounds and cemeteries. When the Local Government incorporated. received necessary licenses and permits
Code, Batas Pambansa Blg. 337 provides in Section and commenced operating. The sequestration of six
177 (q) that a Sangguniang panlungsod may "provide percent of the cemetery cannot even be considered as
for the burial of the dead in such place and in such having been impliedly acknowledged by the private
respondent when it accepted the permits to commence defendant on the interconnection of telephone facilities
operations. owned and operated by said parties.

WHEREFORE, the petition for review is hereby The plaintiff, Republic of the Philippines, is a political
DISMISSED. The decision of the respondent court is entity exercising governmental powers through its
affirmed. branches and instrumentalities, one of which is the
Bureau of Telecommunications. That office was
created on 1 July 1947, under Executive Order No. 94,
with the following powers and duties, in addition to
certain powers and duties formerly vested in the
G.R. No. L-18841 January 27, 1969 Director of Posts: 1awphil.ñêt

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, SEC. 79. The Bureau of Telecommunications shall
vs. exercise the following powers and duties:
PHILIPPINE LONG DISTANCE TELEPHONE
(a) To operate and maintain existing wire-
COMPANY, defendant-appellant.
telegraph and radio-telegraph offices, stations,
Office of the Solicitor General Arturo A. Alafriz, and facilities, and those to be established to
Assistant Solicitor General Antonio A. Torres and restore the pre-war telecommunication service
Solicitor Camilo D. Quiason for plaintiff-appellant. under the Bureau of Posts, as well as such
Ponce Enrile, Siguion Reyna, Montecillo and Belo for additional offices or stations as may hereafter be
defendant-appellant. established to provide telecommunication service
in places requiring such service;
REYES, J.B.L., J.:
(b) To investigate, consolidate, negotiate for,
Direct appeals, upon a joint record on appeal, by both operate and maintain wire-telephone or radio
the plaintiff and the defendant from the dismissal, after telephone communication service throughout the
hearing, by the Court of First Instance of Manila, in its Philippines by utilizing such existing facilities in
Civil Case No. 35805, of their respective complaint and cities, towns, and provinces as may be found
counterclaims, but making permanent a preliminary feasible and under such terms and conditions or
mandatory injunction theretofore issued against the arrangements with the present owners or
 operators thereof as may be agreed upon to the the Philippines and to carry on the business of
satisfaction of all concerned; electrical transmission of messages within the
Philippines and between the Philippines and the
(c) To prescribe, subject to approval by the telephone systems of other countries. 2 The RCA
Department Head, equitable rates of charges for Communications, Inc., (which is not a party to the
messages handled by the system and/or for time present case but has contractual relations with the
calls and other services that may be rendered by parties) is an American corporation authorized to
said system; transact business in the Philippines and is the grantee,
by assignment, of a legislative franchise to operate a
(d) To establish and maintain coastal stations to domestic station for the reception and transmission of
serve ships at sea or aircrafts and, when public long distance wireless messages (Act 2178) and to
interest so requires, to engage in the operate broadcasting and radio-telephone and radio-
international telecommunication service in telegraphic communications services (Act 3180). 3
agreement with other countries desiring to
establish such service with the Republic of the Sometime in 1933, the defendant, PLDT, and the
Philippines; and RCA Communications, Inc., entered into an agreement
whereby telephone messages, coming from the United
(e) To abide by all existing rules and regulations States and received by RCA's domestic station, could
prescribed by the International automatically be transferred to the lines of PLDT; and
Telecommunication Convention relative to the vice-versa, for calls collected by the PLDT for
accounting, disposition and exchange of transmission from the Philippines to the United States.
messages handled in the international service, The contracting parties agreed to divide the tolls, as
and those that may hereafter be promulgated by follows: 25% to PLDT and 75% to RCA. The sharing
said convention and adhered to by the was amended in 1941 to 30% for PLDT and 70% for
Government of the Republic of the Philippines. 1 RCA, and again amended in 1947 to a 50-50 basis.
The arrangement was later extended to radio-
The defendant, Philippine Long Distance Telephone
telephone messages to and from European and Asiatic
Company (PLDT for short), is a public service
countries. Their contract contained a stipulation that
corporation holding a legislative franchise, Act 3426, as
either party could terminate it on a 24-month notice to
amended by Commonwealth Act 407, to install,
the other. 4 On 2 February 1956, PLDT gave notice to
operate and maintain a telephone system throughout
RCA to terminate their contract on 2 February 1958. 5
 Soon after its creation in 1947, the Bureau of On 7 April 1958, the defendant Philippine Long
Telecommunications set up its own Government Distance Telephone Company, complained to the
Telephone System by utilizing its own appropriation Bureau of Telecommunications that said bureau was
and equipment and by renting trunk lines of the PLDT violating the conditions under which their Private
to enable government offices to call private parties. 6 Its Branch Exchange (PBX) is inter-connected with the
application for the use of these trunk lines was in the PLDT's facilities, referring to the rented trunk lines, for
usual form of applications for telephone service, the Bureau had used the trunk lines not only for the
containing a statement, above the signature of the use of government offices but even to serve private
applicant, that the latter will abide by the rules and persons or the general public, in competition with the
regulations of the PLDT which are on file with the business of the PLDT; and gave notice that if said
Public Service Commission. 7 One of the many rules violations were not stopped by midnight of 12 April
prohibits the public use of the service furnished the 1958, the PLDT would sever the telephone
telephone subscriber for his private use. 8 The Bureau connections. 13 When the PLDT received no reply, it
has extended its services to the general public since disconnected the trunk lines being rented by the
1948, 9 using the same trunk lines owned by, and Bureau at midnight on 12 April 1958. 14 The result was
rented from, the PLDT, and prescribing its (the the isolation of the Philippines, on telephone services,
Bureau's) own schedule of rates. 10 Through these from the rest of the world, except the United States. 15
trunk lines, a Government Telephone System (GTS)
subscriber could make a call to a PLDT subscriber in At that time, the Bureau was maintaining 5,000
the same way that the latter could make a call to the telephones and had 5,000 pending applications for
former. telephone connection. 16 The PLDT was also
maintaining 60,000 telephones and had also 20,000
On 5 March 1958, the plaintiff, through the Director of pending applications. 17Through the years, neither of
Telecommunications, entered into an agreement with them has been able to fill up the demand for telephone
RCA Communications, Inc., for a joint overseas service.
telephone service whereby the Bureau would convey
radio-telephone overseas calls received by RCA's The Bureau of Telecommunications had proposed to
station to and from local residents. 11 Actually, they the PLDT on 8 January 1958 that both enter into an
inaugurated this joint operation on 2 February 1958, interconnecting agreement, with the government
under a "provisional" agreement. 12 paying (on a call basis) for all calls passing through the
interconnecting facilities from the Government
Telephone System to the PLDT. 18 The PLDT replied (1) to forthwith reconnect and restore the
that it was willing to enter into an agreement on seventy-eight (78) trunk lines that it has
overseas telephone service to Europe and Asian disconnected between the facilities of the
countries provided that the Bureau would submit to the Government Telephone System, including its
jurisdiction and regulations of the Public Service overseas telephone services, and the facilities of
Commission and in consideration of 37 1/2% of the defendant; (2) to refrain from carrying into effect
gross revenues. 19 In its memorandum in lieu of oral its threat to sever the existing telephone
argument in this Court dated 9 February 1964, on page communication between the Bureau of
8, the defendant reduced its offer to 33 1/3 % (1/3) as Telecommunications and defendant, and not to
its share in the overseas telephone service. The make connection over its telephone system of
proposals were not accepted by either party. telephone calls coming to the Philippines from
foreign countries through the said Bureau's
On 12 April 1958, plaintiff Republic commenced suit telephone facilities and the radio facilities of RCA
against the defendant, Philippine Long Distance Communications, Inc.; and (3) to accept and
Telephone Company, in the Court of First Instance of connect through its telephone system all such
Manila (Civil Case No. 35805), praying in its complaint telephone calls coming to the Philippines from
for judgment commanding the PLDT to execute a foreign countries — until further order of this
contract with plaintiff, through the Bureau, for the use Court.
of the facilities of defendant's telephone system
throughout the Philippines under such terms and On 28 April 1958, the defendant company filed its
conditions as the court might consider reasonable, and answer, with counterclaims.
for a writ of preliminary injunction against the
defendant company to restrain the severance of the It denied any obligation on its part to execute a
existing telephone connections and/or restore those contrary of services with the Bureau of
severed. Telecommunications; contested the jurisdiction of the
Court of First Instance to compel it to enter into
Acting on the application of the plaintiff, and on the interconnecting agreements, and averred that it was
ground that the severance of telephone connections by justified to disconnect the trunk lines heretofore leased
the defendant company would isolate the Philippines to the Bureau of Telecommunications under the
from other countries, the court a quo, on 14 April 1958, existing agreement because its facilities were being
issued an order for the defendant: used in fraud of its rights. PLDT further claimed that
the Bureau was engaging in commercial telephone Taking up first the appeal of the Republic, the latter
operations in excess of authority, in competition with, complains of the action of the trial court in dismissing
and to the prejudice of, the PLDT, using defendants the part of its complaint seeking to compel the
own telephone poles, without proper accounting of defendant to enter into an interconnecting contract with
revenues. it, because the parties could not agree on the terms
and conditions of the interconnection, and of its refusal
After trial, the lower court rendered judgment that it to fix the terms and conditions therefor.
could not compel the PLDT to enter into an agreement
with the Bureau because the parties were not in We agree with the court below that parties can not be
agreement; that under Executive Order 94, coerced to enter into a contract where no agreement is
establishing the Bureau of Telecommunications, said had between them as to the principal terms and
Bureau was not limited to servicing government offices conditions of the contract. Freedom to stipulate such
alone, nor was there any in the contract of lease of the terms and conditions is of the essence of our
trunk lines, since the PLDT knew, or ought to have contractual system, and by express provision of the
known, at the time that their use by the Bureau was to statute, a contract may be annulled if tainted by
be public throughout the Islands, hence the Bureau violence, intimidation, or undue influence (Articles
was neither guilty of fraud, abuse, or misuse of the 1306, 1336, 1337, Civil Code of the Philippines). But
poles of the PLDT; and, in view of serious public the court a quo has apparently overlooked that while
prejudice that would result from the disconnection of the Republic may not compel the PLDT to celebrate a
the trunk lines, declared the preliminary injunction contract with it, the Republic may, in the exercise of the
permanent, although it dismissed both the complaint sovereign power of eminent domain, require the
and the counterclaims. telephone company to permit interconnection of the
government telephone system and that of the PLDT, as
Both parties appealed. the needs of the government service may require,
subject to the payment of just compensation to be
determined by the court. Nominally, of course, the
power of eminent domain results in the taking or
appropriation of title to, and possession of, the
expropriated property; but no cogent reason appears
why the said power may not be availed of to impose
only a burden upon the owner of condemned property,
without loss of title and possession. It is A perusal of the complaint shows that the Republic's
unquestionable that real property may, through cause of action is predicated upon the radio telephonic
expropriation, be subjected to an easement of right of isolation of the Bureau's facilities from the outside
way. The use of the PLDT's lines and services to allow world if the severance of interconnection were to be
inter-service connection between both telephone carried out by the PLDT, thereby preventing the
systems is not much different. In either case private Bureau of Telecommunications from properly
property is subjected to a burden for public use and discharging its functions, to the prejudice of the
benefit. If, under section 6, Article XIII, of the general public. Save for the prayer to compel the PLDT
Constitution, the State may, in the interest of national to enter into a contract (and the prayer is no essential
welfare, transfer utilities to public ownership upon part of the pleading), the averments make out a case
payment of just compensation, there is no reason why for compulsory rendering of inter-connecting services
the State may not require a public utility to render by the telephone company upon such terms and
services in the general interest, provided just conditions as the court may determine to be just. And
compensation is paid therefor. Ultimately, the since the lower court found that both parties "are
beneficiary of the interconnecting service would be the practically at one that defendant (PLDT) is entitled to
users of both telephone systems, so that the reasonable compensation from plaintiff for the
condemnation would be for public use. reasonable use of the former's telephone facilities"
(Decision, Record on Appeal, page 224), the lower
The Bureau of Telecommunications, under section 78 court should have proceeded to treat the case as one
(b) of Executive Order No. 94, may operate and of condemnation of such services independently of
maintain wire telephone or radio telephone contract and proceeded to determine the just and
communications throughout the Philippines by utilizing reasonable compensation for the same, instead of
existing facilities in cities, towns, and provinces under dismissing the petition.
such terms and conditions or arrangement with present
owners or operators as may be agreed upon to the This view we have taken of the true nature of the
satisfaction of all concerned; but there is nothing in this Republic's petition necessarily results in overruling the
section that would exclude resort to condemnation plea of defendant-appellant PLDT that the court of first
proceedings where unreasonable or unjust terms and instance had no jurisdiction to entertain the petition
conditions are exacted, to the extent of crippling or and that the proper forum for the action was the Public
seriously hampering the operations of said Bureau. Service Commission. That body, under the law, has no
authority to pass upon actions for the taking of private
property under the sovereign right of eminent domain. telephone trunk lines it had previously leased to the
Furthermore, while the defendant telephone company Bureau. We find that the court a quo ruled correctly in
is a public utility corporation whose franchise, rejecting both assertions.
equipment and other properties are under the
jurisdiction, supervision and control of the Public Executive Order No. 94, Series of 1947, reorganizing
Service Commission (Sec. 13, Public Service Act), yet the Bureau of Telecommunications, expressly
the plaintiff's telecommunications network is a public empowered the latter in its Section 79, subsection (b),
service owned by the Republic and operated by an to "negotiate for, operate and maintain wire telephone
instrumentality of the National Government, hence or radio telephone communication service throughout
exempt, under Section 14 of the Public Service Act, the Philippines", and, in subsection (c), "to prescribe,
from such jurisdiction, supervision and control. The subject to approval by the Department Head, equitable
Bureau of Telecommunications was created in rates of charges for messages handled by the system
pursuance of a state policy reorganizing the and/or for time calls and other services that may be
government offices — rendered by the system". Nothing in these provisions
limits the Bureau to non-commercial activities or
to meet the exigencies attendant upon the prevents it from serving the general public. It may be
establishment of the free and independent that in its original prospectuses the Bureau officials
Government of the Republic of the Philippines, had stated that the service would be limited to
and for the purpose of promoting simplicity, government offices: but such limitations could not
economy and efficiency in its operation (Section block future expansion of the system, as authorized by
1, Republic Act No. 51) — the terms of the Executive Order, nor could the officials
of the Bureau bind the Government not to engage in
and the determination of state policy is not vested in services that are authorized by law. It is a well-known
the Commission (Utilities Com. vs. Bartonville Bus rule that erroneous application and enforcement of the
Line, 290 Ill. 574; 124 N.E. 373). law by public officers do not block subsequent correct
application of the statute (PLDT vs. Collector of
Defendant PLDT, as appellant, contends that the Internal Revenue, 90 Phil. 676), and that the
court below was in error in not holding that the Bureau Government is never estopped by mistake or error on
of Telecommunications was not empowered to engage the part of its agents (Pineda vs. Court of First
in commercial telephone business, and in ruling that Instance of Tayabas, 52 Phil. 803, 807; Benguet
said defendant was not justified in disconnecting the
Consolidated Mining Co. vs. Pineda, 98 Phil. 711, And third, as the trial court correctly stated, "when the
724). Bureau of Telecommunications subscribed to the trunk
lines, defendant knew or should have known that their
The theses that the Bureau's commercial services use by the subscriber was more or less public and all
constituted unfair competition, and that the Bureau was embracing in nature, that is, throughout the
guilty of fraud and abuse under its contract, are, Philippines, if not abroad" (Decision, Record on
likewise, untenable. Appeal, page 216).

First, the competition is merely hypothetical, the The acceptance by the defendant of the payment of
demand for telephone service being very much more rentals, despite its knowledge that the plaintiff had
than the supposed competitors can supply. As extended the use of the trunk lines to commercial
previously noted, the PLDT had 20,000 pending purposes, continuously since 1948, implies assent by
applications at the time, and the Bureau had another the defendant to such extended use. Since this
5,000. The telephone company's inability to meet the relationship has been maintained for a long time and
demands for service are notorious even now. Second, the public has patronized both telephone systems, and
the charter of the defendant expressly provides: their interconnection is to the public convenience, it is
too late for the defendant to claim misuse of its
SEC. 14. The rights herein granted shall not be facilities, and it is not now at liberty to unilaterally sever
exclusive, and the rights and power to grant to the physical connection of the trunk lines.
any corporation, association or person other than
the grantee franchise for the telephone or ..., but there is high authority for the position
electrical transmission of message or signals that, when such physical connection has been
shall not be impaired or affected by the granting voluntarily made, under a fair and workable
of this franchise: — (Act 3436) arrangement and guaranteed by contract and the
continuous line has come to be patronized and
established as a great public convenience, such
connection shall not in breach of the agreement
be severed by one of the parties. In that case,
the public is held to have such an interest in the
arrangement that its rights must receive due
consideration. This position finds approval in
 State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 ground for the discontinuance of the service agreed
N.E. 650, and is stated in the elaborate and upon.
learned opinion of Chief Justice Myers as
follows: "Such physical connection cannot be The last issue urged by the PLDT as appellant is its
required as of right, but if such connection is right to compensation for the use of its poles for
voluntarily made by contract, as is here alleged bearing telephone wires of the Bureau of
to be the case, so that the public acquires an Telecommunications. Admitting that section 19 of the
interest in its continuance, the act of the parties PLDT charter reserves to the Government —
in making such connection is equivalent to a
declaration of a purpose to waive the primary the privilege without compensation of using the
right of independence, and it imposes upon the poles of the grantee to attach one ten-pin cross-
property such a public status that it may not be arm, and to install, maintain and operate wires of
disregarded" — citing Mahan v. Mich. Tel. Co., its telegraph system thereon; Provided, however,
132 Mich. 242, 93 N.W. 629, and the reasons That the Bureau of Posts shall have the right to
upon which it is in part made to rest are referred place additional cross-arms and wires on the
to in the same opinion, as follows: "Where poles of the grantee by paying a compensation,
private property is by the consent of the owner the rate of which is to be agreed upon by the
invested with a public interest or privilege for the Director of Posts and the grantee; —
benefit of the public, the owner can no longer
the defendant counterclaimed for P8,772.00 for the
deal with it as private property only, but must
use of its poles by the plaintiff, contending that what
hold it subject to the right of the public in the
was allowed free use, under the aforequoted provision,
exercise of that public interest or privilege
was one ten-pin cross-arm attachment and only for
conferred for their benefit." Allnut v. Inglis (1810)
plaintiff's telegraph system, not for its telephone
12 East, 527. The doctrine of this early case is
system; that said section could not refer to the
the acknowledged law. (Clinton-Dunn Tel. Co. v.
plaintiff's telephone system, because it did not have
Carolina Tel. & Tel. Co., 74 S.E. 636, 638).
such telephone system when defendant acquired its
It is clear that the main reason for the objection of the franchise. The implication of the argument is that
PLDT lies in the fact that said appellant did not expect plaintiff has to pay for the use of defendant's poles if
that the Bureau's telephone system would expand with such use is for plaintiff's telephone system and has to
such rapidity as it has done; but this expansion is no
pay also if it attaches more than one (1) ten-pin cross- from the future expansion of its services under its non-
arm for telegraphic purposes. exclusive franchise.

As there is no proof that the telephone wires strain WHEREFORE, the decision of the Court of First
the poles of the PLDT more than the telegraph wires, Instance, now under appeal, is affirmed, except in so
nor that they cause more damage than the wires of the far as it dismisses the petition of the Republic of the
telegraph system, or that the Government has Philippines to compel the Philippine Long Distance
attached to the poles more than one ten-pin cross-arm Telephone Company to continue servicing the
as permitted by the PLDT charter, we see no point in Government telephone system upon such terms, and
this assignment of error. So long as the burden to be for a compensation, that the trial court may determine
borne by the PLDT poles is not increased, we see no to be just, including the period elapsed from the filing
reason why the reservation in favor of the telegraph of the original complaint or petition. And for this
wires of the government should not be extended to its purpose, the records are ordered returned to the court
telephone lines, any time that the government decided of origin for further hearings and other proceedings not
to engage also in this kind of communication. inconsistent with this opinion. No costs.

In the ultimate analysis, the true objection of the

PLDT to continue the link between its network and that
of the Government is that the latter competes
"parasitically" (sic) with its own telephone services.
Considering, however, that the PLDT franchise is non- U.S. v Causby; 328 U.S. 256; May 27,1946
exclusive; that it is well-known that defendant PLDT is
Argued: May 1, 1946.
unable to adequately cope with the current demands
for telephone service, as shown by the number of Decided: May 27, 1946.
pending applications therefor; and that the PLDT's right
to just compensation for the services rendered to the Mr. Justice DOUGLAS delivered the opinion of the
Government telephone system and its users is herein Court.
recognized and preserved, the objections of
defendant-appellant are without merit. To uphold the This is a case of first impression. The problem
PLDT's contention is to subordinate the needs of the presented is whether respondents' property was taken
general public to the right of the PLDT to derive profit within the meaning of the Fifth Amendment by frequent
and regular flights of army and navy aircraft over used about four per cent of the time in taking off and
respondents' land at low altitudes. The Court of Claims about seven per cent of the time in landing. Since the
held that there was a taking and entered judgment for United States began operations in May, 1942, its four-
respondent, one judge dissenting. 60 F.Supp. 751. The motored heavy bombers, other planes of the heavier
case is here on a petition for a writ of certiorari which type, and its fighter planes have frequently passed
we granted becuase of the importance of the question over respondents' land buildings in considerable
presented. numbers and rather close together. They come close
enough at times to appear barely to miss the tops of
Respondents own 2.8 acres near an airport outside of the trees and at times so close to the tops of the trees
Greensboro, North Carolina. It has on it a dwelling as to blow the old leaves off. The noise is startling. And
house, and also various outbuildings which were at night the glare from the planes brightly lights up the
mainly used for raising chickens. The end of the place. As a result of the noise, respondents had to give
airport's northwest-southeast runway is 2,220 feet from up their chicken business. As many as six to ten of
respondents' barn and 2,275 feet from their house. The their chickens were killed in one day by flying into the
path of glide to this runway passes directly over the walls from fright. The total chickens lost in that manner
property which is 100 feet wide and 1,200 feet long. was about 150. Production also fell off. The result was
The 30 to 1 safe glide angle 1 approved by the Civil the destruction of the use of the property as a
Aeronautics Authority 2 passes over this property at 83 commercial chicken farm. Respondents are frequently
feet, which is 67 feet above the house, 63 feet above deprived of their sleep and the family has become
the barn and 18 feet above the highest tree. 3 The use nervous and frightened. Although there have been no
by the United States of this airport is pursuant to a airplane accidents on respondents' property, there
lease executed in May, 1942, for a term commencing have been several accidents near the airport and close
June 1, 1942 and ending June 30, 1942, with a to respondents' place. These are the essential facts
provision for renewals until June 30, 1967, or six found by the Court of Claims. On the basis of these
months after the end of the national emergency, facts, it found that respondents' property had
whichever is the earlier. depreciated in value. It held that the United States had
taken an easement over the property on June 1, 1942,
Various aircraft of the United States use this airport and that the value of the property destroyed and the
bombers, transports and fighters. The direction of the easement taken was $2,000.
prevailing wind determines when a particular runway is
used. The north-west-southeast runway in question is
I. The United States relies on the Air Commerce Act of took airspace owned by respondents, no compensable
1926, 44 Stat. 568, 49 U.S.C. 171 et seq., 49 U.S.C.A. damage was shown. Any damages are said to be
§ 171 et seq., as amended by the Civil Aeronautics Act merely consequential for which no compensation may
of 1938, 52 Stat. 973, 49 U.S.C. 401 et seq., 49 be obtained under the Fifth Amendment.
U.S.C.A. § 401 et seq. Under those statutes the United
States has 'complete and exclusive national It is ancient doctrine that at common law ownership of
sovereignty in the air space' over this country. 49 the land extended to the periphery of the universe—
U.S.C. 176(a), 49 U.S.C.A. § 176(a). They grant any Cujus est solum ejus est usque ad coelum. 5 But that
citizen of the United States 'a public right of freedom of doctrine has no place in the modern world. The ai is a
transit in air commerce 4 through the navigable air public highway, as Congress has declared. Were that
space of the United States.' 49 U.S.C. not true, every transcontinental flight would subject the
403, 49 U.S.C.A. § 403. And 'navigable air space' is operator to countless trespass suits. Common sense
defined as 'airspace above the minimum safe altitudes revolts at the idea. To recognize such private claims to
of flight prescribed by the Civil Aeronautics the airspace would clog these highways, seriously
Authority.' 49 U.S.C. 180, 49 U.S.C.A. § 180. And it is interfere with their control and development in the
provided that 'such navigable airspace shall be subject public interest, and transfer into private ownership that
to a public right of freedom of interstate and foreign air to which only the public has a just claim.
navigation.' Id. It is, therefore, argued that since these
flights were within the minimum safe altitudes of flight But that general principle does not control the present
which had been prescribed, they were an exercise of case. For the United States conceded on oral
the declared right of travel through the airspace. The argument that if the flights over respondents' property
United States concludes that when flights are made rendered it uninhabitable, there would be a taking
within the navigable airspace without any physical compensable under the Fifth Amendment. It is the
invasion of the property of the landowners, there has owner's loss, not the taker's gain, which is the measure
been no taking of property. It says that at most there of the value of the property taken. United States v.
was merely incidental damage occurring as a Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336,
consequence of authorized air navigation. It also 147 A.L.R. 55. Market value fairly determined is the
argues that the landowner does not own superadjacent normal measure of the recovery. Id. And that value
airspace which he has not subjected to possession by may reflect the use to which the land could readily be
the erection of structures or other occupancy. converted, as well as the existing use. United States v.
Moreover, it is argued that even if the United States Powelson, 319 U.S. 266, 275, 63 S.Ct. 1047, 1053, 87
L.Ed. 1390, and cases cited. If, by reason of the There is no material difference between the supposed
frequency and altitude of the flights, respondents could case and the present one, except that here enjoyment
not use this land for any purpose, their loss would be and use of the land are not completely destroyed. But
complete. 6 It would be as complete as if the United that does not seem to us to be controlling. The path of
States had entered upon the surface of the land and glide for airplanes might reduce a valuable factory site
taken exclusive possession of it. to grazing land, an orchard to a vegetable patch, a
residential section to a wheat field. Some value would
We agree that in those circumstances there would be a remain. But the use of the airspace immediately above
taking. Though it would be only an easement of flight the land would limit the utility of the land and cause a
which was taken, that easement, if permanent and not diminution in its value. 7 That was the philosophy of
merely temporary, normally would be the equivalent of Portsmouth Harbor Land & Hotel Co. v. United
a fee interest. It would be a definite exercise of States, 260 U.S. 327, 43 S.Ct. 135, 67 L.Ed. 287. In
complete dominion and control over the surface of the that case the petition alleged that the United States
land. The fact that the planes never touched the erected a fort on nearby land, established a battery
surface would be as irrelevant as the absence in this and a fire control station there, and fired guns over
day of the feudal livery of seisin on the transfer of real petitioner's land. The Court, speaking through Mr.
estate. The owner's right to possess and exploit the Justice Holmes, reversed the Court of Claims which
land—that is to say, his beneficial ownership of it— dismissed the petition on a demurrer, olding that 'the
would be destroyed. It would not be a case of specific facts set forth would warrant a finding that a
incidental damages arising from a legalized nuisance servitude has been imposed.' 8 260 U.S. at page 330,
such as was involved in Richards v. Washington 43 S.Ct. at page 137, 67 L.Ed. 287. And see Delta Air
Terminal Co., 233 U.S. 546, 34 S.Ct. 654, 58 L.Ed. Corp. v. Kersey, 193 Ga. 862, 20 S.E.2d 245, 140
1088, L.R.A.1915A, 887. In that case property owners A.L.R. 1352. Cf. United States v. 357.25 Acres of Land,
whose lands adjoined a railroad line were denied D.C., 55 F.Supp. 461.
recovery for damages resulting from the noise,
vibrations, smoke and the like, incidental to the The fact that the path of glide taken by the planes was
operations of the trains. In the supposed case the line that approved by the Civil Aeronautics Authority does
of flight is over the land. And the land is appropriated not change the result. The navigable airspace which
as directly and completely as if it were used for the Congress has placed in the public domain is 'airspace
runways themselves. above the minimum safe altitudes of flight prescribed
by the Civil Aeronautics Authority.' 49 U.S.C.
180, 49 U.S.C.A. § 180. If that agency prescribed 83 enjoyment of the land, he must have exclusive control
feet as the minimum safe altitude, then we would have of the immediate reaches of the enveloping
presented the question of the validity of the regulation. atmosphere. Otherwise buildings could not be erected,
But nothing of the sort has been done. The path of trees could not be planted, and even fences could not
glide governs the method of operating—of landing or be run. The principle is recognized when the law gives
taking off. The altitude required for that operation is not a remedy in case overhanging structures are erected
the minimum safe altitude of flight which is the on adjoining land. 9 The landowner owns at least as
downward reach of the navigable airspace. The much of the space above the ground as the can
minimum prescribed by the authority is 500 feet during occupy or use in connection with the land. See Hinman
the day and 1000 feet at night for air carriers (Civil Air v. Pacific Air Transport, 9 Cir., 84 F.2d 755. The fact
Regulations, Pt. 61, §§ 61.7400, 61.7401, Code that he does not occupy it in a physical sense—by the
Fed.Reg.Cum.Supp., Tit. 14, ch. 1) and from 300 to erection of buildings and the like—is not material. As
1000 feet for other aircraft depending on the type of we have said, the flight of airplanes, which skim the
plane and the character of the terrain. Id., Pt. 60, §§ surface but do not touch it, is as much an appropriation
60.350-60.3505, Fed.Reg.Cum.Supp., supra. Hence, of the use of the land as a more conventional entry
the flights in question were not within the navigable upon it. We would not doub that if the United States
airspace which Congress placed within the public erected an elevated railway over respondents' land at
domain. If any airspace needed for landing or taking off the precise altitude where its planes now fly, there
were included, flights which were so close to the land would be a partial taking, even though none of the
as to render it uninhabitable would be immune. But the supports of the structure rested on the land. 10 The
United States concedes, as we have said, that in that reason is that there would be an intrusion so
event there would be a taking. Thus, it is apparent that immediate and direct as to subtract from the owner's
the path of glide is not the minimum safe altitude of full enjoyment of the property and to limit his
flight within the meaning of the statute. The Civil exploitation of it. While the owner does not in any
Aeronautics Authority has, of course, the power to physical manner occupy that stratum of airspace or
prescribe air traffic rules. But Congress has defined make use of it in the conventional sense, he does use
navigable airspace only in terms of one of them—the it in somewhat the same sense that space left between
minimum safe altitudes of flight. buildings for the purpose of light and air is used. The
superadjacent airspace at this low altitude is so close
We have said that the airspace is a public highway. Yet to the land that continuous invasions of it affect the use
it is obvious that if the landowner is to have full of the surface of the land itself. We think that the
landowner, as an incident to his ownership, has a claim owners of the surface beneath.' Id. § 63-12. Our
to it and that invasions of it are in the same category holding that there was an invasion of respondents'
as invasions of the surface. 11 property is thus not inconsistent with the local law
governing a landowner's claim to the immediate
In this case, as in Portsmouth Harbor Land & Hotel Co. reaches of the superadjacent airspace.
v. United States, supra, the damages were not merely
consequential. They were the product of a direct The airplane is part of the modern environment of life,
invasion of respondents' domain. As stated in United and the inconveniences which it causes are normally
States v. Cress,243 U.S. 316, 328, 37 S.Ct. 380, 385, not compensable under the Fifth Amendment. The
61 L.Ed. 746, '* * * it is the character of the invasion, airspace, apart from the immediate reaches above the
not the amount of damage resulting from it, so long as land, is part of the public domain. We need not
the damage is substantial, that determines the determine at this time what those precise limits are.
question whether it is a taking.' Flights over private land are not a taking, unless they
are so low and so frequent as to be a direct and
We said in United States v. Powelson, supra, 319 U.S. immediate interference with the enjoyment and use of
at page 279, 63 S.Ct. at page 1054, 87 L.Ed. 1390, the land. We need not speculate on that phase of the
that while the meaning of 'property' as used in the Fifth present case. For the findings of the Court of Claims
Amendment was a federal question, 'it will normally plainly establish that there was a diminution in value of
obtain its content by reference to local law.' If we look the property and that the frequent, low-level flights
to North Carolina law, we reach the same result. were the direct and immediate cause. We agree with
Sovereignty in the airspace rests in the State 'except the Court of Claims that a servitude has been imposed
where granted to and assumed by the United States.' upon the land.
Gen.Stats. 1943, § 63-11. The flight of aircraft is lawful
'unless at such a low altitude as to interfere with the II. By § 145(1) of the Judicial Code, 28 U.S.C.
then existing use to which the land or water, or the 250(1), 28 U.S.C.A. § 250(1), the Court of Claims has
space over the land or water, is put by the owner, or jurisdiction to hear and determine 'All claims (except
unless so conducted as to be imminently dangerous to for pensions) founded upon the Constitution of the
persons or property lawfully on the land or water United States or * * * upon any contract, express or
beneath.' Id., § 63-13. Subject to that right of flight, implied, with the Government of the United States.'
'ownership of the space above the lands and waters of
this State is declared to be vested in the several
We need not decide whether repeated trespasses statutory requirement. 53 Stat. 752, 28 U.S.C.
might give rise to an implied contract. Cf. Portsmouth 288, 28 U.S.C.A. § 288. The importance of findings of
Harbor Land & Hotel Co. v. United States, supra. If fact based on evidence is emphasized here by the
there is a taking, the claim is 'founded upon the Court of Claims' treatment of the nature of the
Constitution' and within the jurisdiction of the Court of easement. It stated in its opinion that the easement
Claims to hear and determine. See Hollister v. was permanent because the United States 'no doubt
Benedict & Burnham Mfg. Co., 113 U.S. 59, 67, 5 S.Ct. intended to make some sort of arrangement whereby it
717, 721, 28 L.Ed. 901; Hurley v. Kincaid, 285 U.S. 95, could use the airport for its military planes whenever it
104, 52 S.Ct. 267, 269, 76 L.Ed. 637; Yearsley v. W. A. had occasion to do so.' (60 F.Supp. 758.) That sounds
Ross Construction Co., 309 U.S. 18, 21, 60 S.Ct. 413, more like conjecture rather than a conclusion from
415, 84 L.Ed. 554. Thus, the jurisdiction of the Court of evidence; and if so, it would not be a proper foundation
Claims in this case is clear. for liability of the United States. We do not stop to
examine the evidence to determine whether it would
III. The Court of Claims held, as we have noted, that support such a finding, if made. For that is not our
an easement was taken. But the findings of fact function. United States v. Esnault-Pelterie, supra, 299
contain no precise description as to its nature. It is not U.S. at page 206, 57 S.Ct. at page 162, 81 L.Ed. 123.
described in terms of frequency of flight, permissible
altitude, or type of airplane. Nor is there a finding as to Since on this record it is not clear whether the
whether the easement taken was temporary or easement taken is a permanent or a temporary one, it
permanent. Yet an accurate description of the property would be premature for us to consider whether the
taken is essential, since that interest vests in the amount of the award made by the Court of Claims was
United States. United States v. Cress, supra, 243 U.S. proper.
328, 329, 37 S.Ct. 385, 386, 61 L.Ed. 746, and cases
cited. It is true that the Court of Claims stated in its The judgment is reversed and the cause is remanded
opinion that the easement taken was permanent. But to the Court of Claims so that it may make the
the deficiency in findings cannot be rectified by necessary findings in conformity with this opin on.
statements in the opinion. United States v. Esnault-
Pelterie, 299 U.S. 201, 205, 206, 57 S.Ct. 159, 161, Reversed.
162, 81 L.Ed. 123; United States v. Seminole
Nation, 299 U.S. 417, 422, 57 S.Ct. 283, 287, 81 L.Ed.
316. Findings of fact on every 'material issue' are a
G.R. No. 4223 August 19, 1908 defendant, without any right or reason, converted the
land in Paraanan into a fishpond and by means of a
NICOLAS LUNOD, ET AL., plaintiffs-appellees, dam and a bamboo net, prevented the free passage of
vs. the water through said place into the Taliptip River, that
HIGINO MENESES, defendant-appellant. in consequence the lands of the plaintiff became
flooded and damaged by the stagnant waters, there
T. Icasiano, for appellant. being no outlet except through the land in Paraanan;
R. Salinas, for appellee. that their plantation were destroyed, causing the loss
and damages to the extent of about P1,000, which loss
TORRES, J.:
and damage will continue if the obstructions to the flow
On the 14th of March, 1904, Nicolas Lunod, Juan de la of the water are allowed to remain, preventing its
Vega, Evaristo Rodriguez, Fernando Marcelo, Esteban passage through said land and injuring the rice
Villena, Benito Litao, Ventura Hernandez, and plantations of the plaintiffs. They therefore asked that
Casimiro Pantanilla, residents of the town of Bulacan, judgment be entered against the defendant, declaring
province of the same name, filed a written complaint that the said tract of land in Paraanan is subject to a
against Higino Meneses, alleging that they each statutory easement permitting the flow of water from
owned and possessed farm lands, situated in the the property of the plaintiffs, and that, without prejudice
places known as Maytunas and Balot, near a small to the issuing of a preliminary injunction, the defendant
lake named Calalaran; that the defendant is the owner be ordered to remove and destroy the obstructions that
of a fish-pond and a strip of land situated in Paraanan, impede the passage of the waters through Paraanan,
adjoining the said lake on one side, and the River and that in future, and forever, he abstain from closing
Taliptip on the other; that from time immemorial, and in any manner the aforesaid tract of land; that, upon
consequently for more than twenty years before 1901, judgment being entered, the said injunction be
there existed and still exists in favor of the rice fields of declared to be final and that the defendant be
the plaintiffs a statutory easement permitting the flow sentenced to pay to the plaintiffs an indemnity of
of water over the said land in Paraanan, which P1,000, and the costs in the proceedings; that they be
easement the said plaintiffs enjoyed until the year 1901 granted any other and further equitable or proper
and consisted in that the water collected upon their remedy in accordance with the facts alleged and
lands and in the Calalaran Lake flow through Paraanan proven.
into the Taliptip River. From that year however, the
In view of the demurrer interposed by the plaintiffs to be sentenced to pay an indemnity was denied, and no
the answer of the defendant, the latter, on the 29th of ruling was made as to costs.
August, 1904, filed an amended answer, denying each
and everyone of the allegations of the complaint, and The defendant excepted to the above judgment and
alleged that no statutory easement existed nor could furthermore asked for a new trial which was denied
exist in favor of the lands described in the complaint, and also excepted to, and, upon approval of the bill of
permitting the waters to flow over the fish pond that he, exceptions, the question was submitted to this court.
together with his brothers, owned in the sitio of
Bambang, the area and boundaries of which were Notwithstanding the defendant's denial in his amended
stated by him, and which he and his brothers had answer, it appears to have been clearly proven in this
inherited from their deceased mother. case that the lands owned by the plaintiffs in the
aforesaid barrio, as well as the small adjoining lake,
Apolinara de Leon; that the same had been surveyed named Calalaran, are located in places relatively
by a land surveyor in September, 1881, he also denied higher than the sitio called Paraanan where the land
that he had occupied or converted any land in the and fish pond of the defendant are situated, and which
barrio of Bambang into a fishpond; therefore, and to border on the Taliptip River; that during the rainy
sentence the plaintiffs to pay the costs and season the rain water which falls on he land of the
corresponding damages. plaintiffs, and which flows toward the small Calalaran
Lake at flood time, has no outlet to the Taliptip River
Upon the evidence adduced by both parties to the suit, other than through the low land of Paraanan: that the
the court, on the 13th of March, 1907, entered border line between Calalaran and Paraanan there has
judgment declaring that the plaintiffs were entitled to a existed from time immemorial a dam, constructed by
decision in their favor, and sentenced the defendant to the community for the purpose of preventing the salt
remove the dam placed on the east of the Paraanan waters from the Taliptip River, at high tide, from
passage on the side of the Taliptip River opposite the flooding the land in Calalaran, passing through the
old dam in the barrio of Bambang, as well as to lowlands of Paraanan; but when rainfall was abundant,
remove and destroy the obstacles to the free passage one of the residents was designated in his turn by the
of the waters through the strip of land in Paraanan; to lieutenant or justice of the barrio to open the sluice
abstain in future, and forever, from obstructing or gate in order to let out the water that flooded the rice
closing in any manner the course of the waters through fields, through the land of Paraanan to the above-
the said strip of land. The request that the defendant mentioned river, that since 1901, the defendant
constructed another dam along the boundary of this Article 563 of the said code reads also:
fishpond in Paraanan, thereby impeding the outlet of
the waters that flood the fields of Calalaran, to the The establishment, extent, form, and conditions
serious detriment of the growing crops. of the easements of waters to which this section
refers shall be governed by the special law
According to article 530 of the Civil Code, an easement relating thereto in everything not provided for in
is charge imposed upon one estate for the benefit of this code.
another estate belonging to a different owner, and the
realty in favor of which the easement is established is The special law cited in the Law of Waters of August 3,
called the dominant estate, and the one charged with it 1866, article 111 of which, treating of natural
the servient estate. easements relating to waters, provides:

The lands of Paraanan being the lower are subject to Lands situated at a lower level are subject to
the easement of receiving and giving passage to the receive the waters that flow naturally, without the
waters proceeding from the higher lands and the lake work of man, from the higher lands together with
of Calalaran; this easement was not constituted by the stone or earth which they carry with them.
agreement between the interested parties; it is of a
statutory nature, and the law had imposed it for the Hence, the owner of the lower lands can not erect
common public utility in view of the difference in the works that will impede or prevent such an easement or
altitude of the lands in the barrio Bambang. charge, constituted and imposed by the law upon his
estate for the benefit of the higher lands belonging to
Article 552 of the Civil code provides: different owners; neither can the latter do anything to
increase or extend the easement.
Lower estates must receive the waters which
naturally and without the intervention of man According to the provisions of law above referred to,
descend from the higher estates, as well as the the defendant, Meneses, had no right to construct the
stone or earth which they carry with them. works, nor the dam which blocks the passage, through
his lands and the outlet to the Taliptip River, of the
Neither may the owner of the lower estates waters which flood the higher lands of the plaintiffs;
construct works preventing this easement, nor and having done so, to the detriment of the easement
the one of the higher estate works increasing the charged on his estate, he has violated the law which
burden. protects and guarantees the respective rights and
regulates the duties of the owners of the fields in be permitted to obstruct the flow of the waters through
Calalaran and Paraanan. his lands to the Taliptip River during the heavy rains,
when the high lands in Calalaran and the lake in said
It is true that article 388 of said code authorizes every place are flooded, thereby impairing the right of the
owner to enclose his estate by means of walls, ditches owners of the dominant estates.
fences or any other device, but his right is limited by
the easement imposed upon his estate. For the above reasons, and accepting the findings of
the court below in the judgment appealed from in so far
The defendant Meneses might have constructed the as they agree with the terms of this decision, we must
works necessary to make and maintain a fish pond and do hereby declare that the defendant, Higino
within his own land, but he was always under the strict Meneses, as the owner of the servient estate, is
and necessary obligation to respect the statutory obliged to give passage to and allow the flow of the
easement of waters charged upon his property, and waters descending from the Calalaran Lake and from
had no right to close the passage and outlet of the the land of the plaintiffs through his lands in Paraanan
waters flowing from the lands of the plaintiffs and the for their discharge into the Taliptip River; and he is
lake of Calalaran into the Taliptip River. He could not hereby ordered to remove any obstacle that may
lawfully injure the owners of the dominant estates by obstruct the free passage of the waters whenever
obstructing the outlet to the Taliptip River of the waters there may be either a small or large volume of running
flooding the upper lands belonging to the plaintiffs. water through his lands in the sitio of Paraanan for
their discharge into the Taliptip River; and in future to
It is perhaps useful and advantageous to the plaintiffs abstain from impeding, in any manner, the flow of the
and other owners of high lands in Calalaran, in addition waters coming from the higher lands. The judgment
to the old dike between the lake of said place and the appealed from is affirmed, in so far as it agrees with
low lands in Paraanan, to have another made by the decision, and reversed in other respects, with the costs
defendant at the border of Paraanan adjoining the said of this instance against the appellants. So ordered.
river, for the purpose of preventing the salt waters of
the Taliptip River flooding, at high tide, not only the
lowlands in Paraanan but also the higher ones of
Calalaran and its lake, since the plaintiffs can not
prevent the defendant from protecting his lands against
the influx of salt water; but the defendant could never G.R. No. L-2659 October 12, 1950
In the matter of the testate estate of Emil Maurice The will further provided that upon the death of Mary
Bachrach, deceased. MARY McDONALD McDonald Bachrach, one-half of the all his estate
BACHRACH,petitioner-appellee, "shall be divided share and share alike by and between
vs. my legal heirs, to the exclusion of my brothers."
SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-
appellants. The estate of E. M. Bachrach, as owner of 108,000
shares of stock of the Atok-Big Wedge Mining Co.,
Ross, Selph, Carrascoso and Janda for appellants. Inc., received from the latter 54,000 shares
Delgado and Flores for appellee. 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
OZAETA, J.: Bank and Trust Company as administrator of the
estate of E. M. Bachrach, to her the said 54,000 share
Is a stock dividend fruit or income, which belongs to
of stock dividend by endorsing and delivering to her
the usufructuary, or is it capital or part of the corpus of
the corresponding certificate of stock, claiming that
the estate, which pertains to the remainderman? That
said dividend, although paid out in the form of stock, is
is the question raised in the appeal.
fruit or income and therefore belonged to her as
The deceased E. M. Bachrach, who left no forced heir usufructuary or life tenant. Sophie Siefert and Elisa
except his widow Mary McDonald Bachrach, in his last Elianoff, legal heirs of the deceased, opposed said
will and testament made various legacies in cash and petition on the ground that the stock dividend in
willed the remainder of his estate as follows: question was not income but formed part of the capital
and therefore belonged not to the usufructuary but to
Sixth: It is my will and do herewith bequeath and the remainderman. And they have appealed from the
devise to my beloved wife Mary McDonald order granting the petition and overruling their
Bachrach for life all the fruits and usufruct of the objection.
remainder of all my estate after payment of the
legacies, bequests, and gifts provided for above; While appellants admits that a cash dividend is an
and she may enjoy said usufruct and use or income, they contend that a stock dividend is not, but
spend such fruits as she may in any manner merely represents an addition to the invested capital.
wish. The so-called Massachusetts rule, which prevails in
certain jurisdictions in the United States, supports re Thompson's Estate, 262 Pa., 278; 105 Atl.
appellants' contention . It regards cash dividends, 273, 274.)
however large, as income, and stock dividends,
however made, as capital. (Minot vs. Paine, 99 Mass., In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the
101; 96 Am. Dec., 705.) It holds that a stock dividend is Court of Appeals of Kentucky, speaking thru its Chief
not in any true sense any true sense any dividend at all Justice, said:
since it involves no division or severance from the
corporate assets of the dividend; that it does not . . . Where a dividend, although declared in
distribute property but simply dilutes the shares as they stock, is based upon the earnings of the
existed before; and that it takes nothing from the company, it is in reality, whether called by one
property of the corporation, and nothing to the interests name or another, the income of the capital
of the shareholders. invested in it. It is but a mode of distributing the
profit. If it be not income, what is it? If it is, then it
On the other hand, so called Pennsylvania rule, which is rightfully and equitably the property of the life
prevails in various other jurisdictions in the United tenant. If it be really profit, then he should have it,
States, supports appellee's contention. This rule whether paid in stock or money. A stock dividend
declares that all earnings of the corporation made prior proper is the issue of new shares paid for by the
to the death of the testator stockholder belong to the transfer of a sum equal to their par value from
corpus of the estate, and that all earnings, when the profits and loss account to that representing
declared as dividends in whatever form, made during capital stock; and really a corporation has no
the lifetime of the usufructuary or life tenant. (Earp's right to a dividend, either in cash or stock, except
Appeal, 28 Pa., 368.) from its earnings; and a singular state of case —
it seems to us, an unreasonable one — is
. . . It is clear that testator intent the presented if the company, although it rests with it
remaindermen should have only the corpus of whether it will declare a dividend, can bind the
the estate he left in trust, and that all dividends courts as to the proper ownership of it, and by
should go the life tenants. It is true that profits the mode of payment substitute its will for that of
realized are not dividends until declared by the that of the testator, and favor the life tenants or
proper officials of the corporation, but distribution the remainder-men, as it may desire. It cannot, in
of profits, however made, in dividends, and the reason, be considered that the testator
form of the distribution is immaterial. (In contemplated such a result. The law regards
 substance, and not form, and such a rule might ART. 475. When a usufruct is created on the right
result not only in a violation of the testator's to receive an income or periodical revenue,
intention, but it would give the power to the either in money or fruits, or the interest on bonds
corporation to beggar the life tenants, who, in this or securities payable to bearer, each matured
case, are the wife and children of the testator, for payment shall be considered as the proceeds or
the benefit of the remainder-men, who may fruits such right.
perhaps be unknown to the testator, being
unborn when the will was executed. We are When it consists of the enjoyment of the benefits
unwilling to adopt a rule which to us seems so arising from an interest in an industrial or
arbitrary, and devoid of reason and justice. If the commercial enterprise, the profits of which are
dividend be in fact a profit, although declared in not distributed at fixed periods, such profits shall
stock, it should be held to be income. It has been have the same consideration.lawphil.net
so held in Pennsylvania and many other states,
and we think it the correct rule. Earp's Appeal, 28 In either case they shall be distributed as civil
Pa. St. 368; Cook, Stocks & S. sec. 554. . . . fruits, and shall be applied in accordance with the
rules prescribed by the next preceding article.
We think the Pennsylvania rule is more in accord with
our statutory laws than the Massachusetts rule. Under The 108,000 shares of stock are part of the property in
section 16 of our Corporation Law, no corporation may usufruct. The 54,000 shares of stock dividend are civil
make or declare any dividend except from the surplus fruits of the original investment. They represent profits,
profits arising from its business. Any dividend, and the delivery of the certificate of stock covering said
therefore, whether cash or stock, represents surplus dividend is equivalent to the payment of said profits.
profits. Article 471 of the Civil Code provides that the Said shares may be sold independently of the original
usufructuary shall be entitled to receive all the natural, shares, just as the offspring of a domestic animal may
industrial, and civil fruits of the property in usufruct. be sold independently of its mother.
And articles 474 and 475 provide as follows:
The order appealed from, being in accordance with the
ART. 474. Civil fruits are deemed to accrue day above-quoted provisions of the Civil Code, his hereby
by day, and belong to the usufructuary in affirmed, with costs against the appellants.
proportion to the time the usufruct may last.
 The Philippine National Bank filed a third party claim
alleging a preferential right to receive any amount
G.R. No. 35223 September 17, 1931 which Mariano Lacson Ledesma might be entitled to
from the Talisay-Silay Milling Co. as bonus, because
THE BACHRACH MOTOR CO., INC., plaintiff-
that would be civil fruits of the land mortgaged to said
appellee,
bank by said debtor for the benefit of the central
vs.
referred to, and by virtue of a deed of assignment, and
TALISAY-SILAY MILLING CO., ET AL., defendants-
praying that said central be ordered to delivered
appellees.
directly to the intervening bank said sum on account of
THE PHILIPPINE NATIONAL BANK, intervenor-
the latter's credit against the aforesaid Mariano Lacson
appellant.
Ledesma.
Roman J. Lacson for intervenor-appellant.
The corporation Talisay-Silay Milling Co., Inc.,
Mariano Ezpeleta for plaintiff-appellee.
answered the complaint stating that of Mariano Lacson
Nolan and Hernaez for defendants-appellees Talisay-
Ledesma's credit, P7,500 belonged to Cesar Ledesma
Silay Milling Co. and Cesar Ledesma.
because he had purchased it, and praying that it be
ROMUALDEZ, J.: absolved from the complaint and that the proper party
be named so that the remainder might be delivered.
This proceeding originated in a complaint filed by the
Bachrach Motor Co., Inc., against the Talisay-Silay Cesar Ledesma, in turn, claiming to be the owner by
Milling Co., Inc., for the delivery of the amount P13,850 purchase in good faith an for a reconsideration of the
or promissory notes or other instruments or credit for P7,500 which is a part of the credit referred to above,
that sum payable on June 30, 1930, as bonus in favor answered praying that he be absolved from the
of Mariano Lacson Ledesma; the complaint further complaint.
prays that the sugar central be ordered to render an
The plaintiff Bachrach Motor Co., Inc., answered the
accounting of the amounts it owes Mariano Lacson
third party claim alleging that its credit against Mariano
Ledesma by way of bonus, dividends, or otherwise,
Lacson Ledesma was prior and preferential to that of
and to pay the plaintiff a sum sufficient to satisfy the
the intervening bank, and praying that the latter's
judgment mentioned in the complaint, and that the sale
complaint be dismissed.
made by said Mariano Lacson Ledesma be declared
null and void.
At the trial all the parties agreed to recognize and Mariano Lacson Ledesma to the Philippine
respect the sale made in favor of Cesar Ledesma of National Bank to be applied to the payment of his
the P7,500 part of the credit in question, for which debt to said Philippine National Bank is
reason the trial court dismissed the complaint and fraudulent.
cross-complaint against Cesar Ledesma authorizing
the defendant central to deliver to him the 4. In holding that the Bachrach Motor Co. Inc., in
aforementioned sum of P7,500. And upon conclusion civil case No. 31597 of the Court of First Instance
of the hearing, the court held that the Bachrach Motor of Manila levied a valid attachment upon the
Co., Inc., had a preferred right to receive the amount of bonus in question.
P11,076.02 which was Mariano Lacson Ledesma's
bonus, and it ordered the defendant central to deliver 5. In admitting and considering the
said sum to the plaintiff. supplementary complaint filed by the Bachrach
Motor Co., Inc., alleging as a cause of action the
The Philippine National Bank appeals, assigning the attachment of the bonus in question which said
following alleged errors as committed by the trial court: Bachrach Motor Co., Inc., in civil case No. 31821
of the Court of First Instance of Manila levied
1. In holding that the bonus which the Talisay- after the filing of the original complaint in this
Silay Milling Co., Inc., bound itself to pay the case, and after Mariano Lacson Ledesma in this
planters who had mortgaged their land to the case had been declared in default.
Philippine National Bank to secure the payment
of the debt of said central to said bank is not civil 6. In holding that the Bachrach Motor Co., Inc.,
fruits of said land. has a preferential right to receive from the
Talisay-Silay Milling Co., Inc., the amount of
2. In not holding that said bonus became subject P11,076.02 which is in the possession of said
to the mortgage executed by the defendant corporation as the bonus to be paid to Mariano
Mariano Lacson Ledesma to the Philippine Lacson Ledesma, and in ordering the Talisay-
National Bank to secure the payment of his Silay Milling Co., Inc., to deliver said amount to
personal debt to said bank when it fell due. the Bachrach Motor Co., Inc.

3. In holding that the assignment (Exhibit 9, 7. In not holding that the Philippine National Bank
P.N.B.) of said bonus made on March 7, 1930, by has a preferential right to receive from the
 Talisay-Silay Milling Co., Inc., the amount of civil fruits of the land mortgaged to the Philippine
P11,076.02 held by said corporation as Mariano National Bank." (P. 31.)
Lacson Ledesma's bonus, and in not ordering
said Talisay-Silay Milling Co., Inc., to deliver said The fundamental question, then, submitted to our
amount to the Philippine National Bank. consideration is whether or not the bonus in question is
civil fruits.
8. In not holding that the amended complaint and
the supplementary complaint of the Bachrach This is how the bonus came to be granted: On
Motor Co., Inc., do not state facts sufficient to December 22, 1923, the Talisay-Silay Milling Co., Inc.,
constitute a cause of action in favor of the was indebted to the Philippine National Bank. To
Bachrach Motor Co., Inc., and against the secure the payment of its debt, it succeeded in
Talisay-Silay Milling Co., Inc., or against the inducing its planters, among whom was Mariano
Philippine National Bank. Lacson Ledesma, to mortgage their land to the creditor
bank. And in order to compensate those planters for
The appellant bank bases its preferential right upon the the risk they were running with their property under the
contention that the bonus in question is civil fruits of mortgage, the aforesaid central, by a resolution passed
the lands which the owners had mortgaged for the on that same date, i.e., December 22, 1923, undertook
benefit of the central giving the bonus, and that, as civil to credit the owners of the plantation thus mortgaged
fruits of said land, said bonus was assigned by every year with a sum equal to two per centum of the
Mariano Lacson Ledesma on March 7, 1930, by virtue debt secured according to yearly balance, the payment
of the document Exhibit 9 of said intervening of the bonus being made at once, or in part from time
institution, which admitted in its brief that "if the bonus to time, as soon as the central became free of its
in question is not civil fruits or rent which became obligations to the aforesaid bank, and of those
subject to the mortgage in favor of the Philippine contracted by virtue of the contract of supervision, and
National Bank when Mariano Lacson Ledesma's had funds which might be so used, or as soon as it
personal obligation fell due, the assignment of March obtained from said bank authority to make such
7, 1930 (Exhibit 9, P.N.B.), is null and void, not payment. (Exhibits 5, 6; P.N.B.)
because it is fraudulent, for there was no intent of fraud
in executing the deed, but that the cause or Article 355 of the Civil Code considers three things as
consideration of the assignment was erroneous, for it civil fruits: First, the rents of buildings; second, the
was based upon the proposition that the bonus was proceeds from leases of lands; and, third, the income
from perpetual or life annuities, or other similar sources anything, it is income arising from said risk, or, if one
of revenue. It may be noted that according to the chooses, from Mariano Lacson Ledesma's generosity
context of the law, the phrase "u otras analogas" refers in facing the danger for the protection of the central,
only to rent or income, for the but certainly it is not civil fruits or income from the
adjectives "otras" and "analogas" agree with the mortgaged property, which, as far as this case is
noun "rentas," as do also the other concerned, has nothing to do with it. Hence, the
adjectives"perpetuas" and "vitalicias." That is why we amount of the bonus, according to the resolution of the
say that by "civil fruits" the Civil Code understands one central granting it, is not based upon the value,
of three and only three things, to wit: the rent of a importance or any other circumstance of the
building, the rent of land, and certain kinds of income. mortgaged property, but upon the total value of the
debt thereby secured, according to the annual balance,
As the bonus in question is not rent of a building or of which is something quite distinct from and independent
land, the only meaning of "civil fruits" left to be of the property referred to.
examined is that of "income."
Finding no merit in this appeal, the judgment appealed
Assuming that in broad juridical sense of the word from is affirmed, without express finding as to costs.
"income" it might be said that the bonus in question is So ordered.
"income" under article 355 of the Civil Code, it is
obvious to inquire whether it is derived from the land
mortgaged by Mariano Lacson Ledesma to the
appellant bank for the benefit of the central; for it is not
obtained from that land but from something else, it is G.R. No. 133879 November 21, 2001
not civil fruits of that land, and the bank's contention is EQUATORIAL REALTY DEVELOPMENT,
untenable. INC., petitioner,
vs.
It is to be noted that the said bonus bears no MAYFAIR THEATER, INC., respondent.
immediate, but only a remote accidental relation to the PANGANIBAN, J.:
General propositions do not decide specific cases.
land mentioned, having been granted as compensation
Rather, laws are interpreted in the context of the
for the risk of having subjected one's land to a lien in peculiar factual situation of each proceeding. Each
favor of the bank, for the benefit of the entity granting case has its own flesh and blood and cannot be ruled
said bonus. If this bonus be income or civil fruits of
upon on the basis of isolated clinical classroom entitled Equatorial Realty Development, Inc. v. Mayfair
principles. Theater, Inc.5 (henceforth referred to as the "mother
While we agree with the general proposition that a case"), docketed as G.R No. 106063.
contract of sale is valid until rescinded, it is equally true Carmelo & Bauermann, Inc. ("Camelo" ) used to own a
that ownership of the thing sold is not acquired by parcel of land, together with two 2-storey buildings
mere agreement, but by tradition or delivery. The constructed thereon, located at Claro M. Recto
peculiar facts of the present controversy as found by Avenue, Manila, and covered by TCT No. 18529
this Court in an earlier relevant Decision show that issued in its name by the Register of Deeds of Manila.
delivery was not actually effected; in fact, it was On June 1, 1967, Carmelo entered into a Contract of
prevented by a legally effective impediment. Not Lease with Mayfair Theater Inc. ("Mayfair") for a period
having been the owner, petitioner cannot be entitled to of 20 years. The lease covered a portion of the second
the civil fruits of ownership like rentals of the thing sold. floor and mezzanine of a two-storey building with about
Furthermore, petitioner's bad faith, as again 1,610 square meters of floor area, which respondent
demonstrated by the specific factual milieu of said used as a movie house known as Maxim Theater.
Decision, bars the grant of such benefits. Otherwise, Two years later, on March 31, 1969, Mayfair entered
bad faith would be rewarded instead of punished. into a second Contract of Lease with Carmelo for the
The Case lease of another portion of the latter's property —
Filed before this Court is a Petition for Review1 under namely, a part of the second floor of the two-storey
Rule 45 of the Rules of Court, challenging the March building, with a floor area of about 1,064 square
11, 1998 Order2 of the Regional Trial Court of Manila meters; and two store spaces on the ground floor and
(RTC), Branch 8, in Civil Case No. 97-85141. The the mezzanine, with a combined floor area of about
dispositive portion of the assailed Order reads as 300 square meters. In that space, Mayfair put up
follows: another movie house known as Miramar Theater. The
"WHEREFORE, the motion to dismiss filed by Contract of Lease was likewise for a period of 20
defendant Mayfair is hereby GRANTED, and the years.
complaint filed by plaintiff Equatorial is hereby Both leases contained a provision granting Mayfair a
DISMISSED."3 right of first refusal to purchase the subject properties.
Also questioned is the May 29, 1998 RTC However, on July 30, 1978 — within the 20-year-lease
Order4 denying petitioner's Motion for Reconsideration. term — the subject properties were sold by Carmelo to
The Facts Equatorial Realty Development, Inc. ("Equatorial") for
The main factual antecedents of the present Petition the total sum of P11,300,000, without their first being
are matters of record, because it arose out of an earlier offered to Mayfair.
case decided by this Court on November 21, 1996,
As a result of the sale of the subject properties to Mayfair filed a Motion for Execution, which the trial
Equatorial, Mayfair filed a Complaint before the court granted.
Regional Trial Court of Manila (Branch 7) for (a) the However, Carmelo could no longer be located. Thus,
annulment of the Deed of Absolute Sale between following the order of execution of the trial court,
Carmelo and Equatorial, (b) specific performance, and Mayfair deposited with the clerk of court a quo its
(c) damages. After trial on the merits, the lower court payment to Carmelo in the sum of P11,300,000 less;
rendered a Decision in favor of Carmelo and P847,000 as withholding tax. The lower court issued a
Equatorial. This case, entitled "Mayfair" Theater, Inc. v. Deed of Reconveyance in favor of Carmelo and a
Carmelo and Bauermann, Inc., et al.," was docketed as Deed of Sale in favor of Mayfair. On the basis of these
Civil Case No. 118019. documents, the Registry of Deeds of Manila canceled
On appeal (docketed as CA-GR CV No. 32918), the Equatorial's titles and issued new Certificates of
Court of Appeals (CA) completely reversed and set Title7 in the name of Mayfair.
aside the judgment of the lower court. Ruling on Equatorial's Petition for Certiorari and
The controversy reached this Court via G.R No. Petition contesting the foregoing manner of execution,
106063. In this mother case, it denied the Petition for the CA in its Resolution of November 20, 1998,
Review in this wise: explained that Mayfair had no right to deduct the
"WHEREFORE, the petition for review of the P847,000 as withholding tax. Since Carmelo could no
decision of the Court of Appeals, dated June 23, longer be located, the appellate court ordered Mayfair
1992, in CA-G.R. CV No. 32918, is HEREBY to deposit the said sum with the Office of the Clerk of
DENIED. The Deed of Absolute Sale between Court, Manila, to complete the full amount of
petitioners Equatorial Realty Development, Inc. P11,300,000 to be turned over to Equatorial.
and Carmelo & Bauermann, Inc. is hereby Equatorial questioned the legality of the above CA
deemed rescinded; Carmelo & Bauermann is ruling before this Court in G.R No. 136221 entitled
ordered to return to petitioner Equatorial Realty "Equatorial Realty Development, Inc. v. Mayfair
Development the purchase price. The latter is Theater, Inc." In a Decision promulgated on May 12,
directed to execute the deeds and documents 2000,8 this Court directed the trial court to follow strictly
necessary to return ownership to Carmelo & the Decision in GR. No. 106063, the mother case. It
Bauermann of the disputed lots. Carmelo & explained its ruling in these words:
Bauermann is ordered to allow Mayfair Theater, "We agree that Carmelo and Bauermann is
Inc. to buy the aforesaid lots for obliged to return the entire amount of eleven
P11,300,000.00."6 million three hundred thousand pesos
The foregoing Decision of this Court became final and (P11,300,000.00) to Equatorial. On the other
executory on March 17, 1997. On April 25, 1997, hand, Mayfair may not deduct from the purchase
 price the amount of eight hundred forty-seven In granting the Motion to Dismiss, the court a quo held
thousand pesos (P847,000.00) as withholding that the critical issue was whether Equatorial was the
tax. The duty to withhold taxes due, if any, is owner of the subject property and could thus enjoy the
imposed on the seller Carmelo and Bauermann, fruits or rentals therefrom. It declared the rescinded
Inc."9 Deed of Absolute Sale as avoid at its inception as
Meanwhile, on September 18, 1997 — barely five though it did not happen."
months after Mayfair had submitted its Motion for The trial court ratiocinated as follows:
Execution before the RTC of Manila, Branch 7 — "The meaning of rescind in the aforequoted
Equatorial filed with the Regional Trial Court of Manila, decision is to set aside. In the case of Ocampo v.
Branch 8, an action for the collection of a sum of Court of Appeals, G.R. No. 97442, June 30,
money against Mayfair, claiming payment of rentals or 1994, the Supreme Court held that, 'to rescind is
reasonable compensation for the defendant's use of to declare a contract void in its inception and to
the subject premises after its lease contracts had put an end as though it never were. It is not
expired. This action was the progenitor of the present merely to terminate it and release parties from
case. further obligations to each other but to abrogate it
In its Complaint, Equatorial alleged among other things from the beginning and restore parties to relative
that the Lease Contract covering the premises positions which they would have occupied had
occupied by Maxim Theater expired on May 31, 1987, no contract ever been made.'
while the Lease Contract covering the premises "Relative to the foregoing definition, the Deed of
occupied by Miramar Theater lapsed on March 31, Absolute Sale between Equatorial and Carmelo
1989.10 Representing itself as the owner of the subject dated July 31, 1978 is void at its inception as
premises by reason of the Contract of Sale on July 30, though it did not happen.
1978, it claimed rentals arising from Mayfair's "The argument of Equatorial that this complaint
occupation thereof. for back rentals as 'reasonable compensation for
Ruling of the RTC Manila, Branch 8 use of the subject property after expiration of the
As earlier stated, the trial court dismissed the lease contracts presumes that the Deed of
Complaint via the herein assailed Order and denied Absolute Sale dated July 30, 1978 from whence
the Motion for Reconsideration filed by Equatorial. 11 the fountain of Equatorial's all rights flows is still
The lower court debunked the claim of petitioner for valid and existing.
unpaid back rentals, holding that the rescission of the xxx xxx xxx
Deed of Absolute Sale in the mother case did not "The subject Deed of Absolute Sale having been
confer on Equatorial any vested or residual proprietary rescinded by the Supreme Court, Equatorial is
rights, even in expectancy. not the owner and does not have any right to
 demand backrentals from the subject property. . . by the Supreme Court in G.R. No. 106063,
12
petitioner 'is not the owner and does not have
The trial court added: "The Supreme Court in the any right to demand backrentals from the subject
Equatorial case, G.R No. 106063, has categorically property,' and that the rescission of the Deed of
stated that the Deed of Absolute Sale dated July 31, Absolute Sale by the Supreme Court does not
1978 has been rescinded subjecting the present confer to petitioner 'any vested right nor any
complaint to res judicata."13 residual proprietary rights even in expectancy.'
Hence, the present recourse.14 "D.
Issues The issue upon which the Regional Trial Court
Petitioner submits, for the consideration of this Court, dismissed the civil case, as stated in its Order of
the following issues:15 March 11, 1998, was not raised by respondent in
"A its Motion to Dismiss.
The basis of the dismissal of the Complaint by "E.
the Regional Trial Court not only disregards basic The sole ground upon which the Regional Trial
concepts and principles in the law on contracts Court dismissed Civil Case No. 97-85141 is not
and in civil law, especially those on rescission one of the grounds of a Motion to Dismiss under
and its corresponding legal effects, but also Sec. 1 of Rule 16 of the 1997 Rules of Civil
ignores the dispositive portion of the Decision of Procedure."
the Supreme Court in G.R. No. 106063 entitled Basically, the issues can be summarized into two: (1)
'Equatorial Realty Development, Inc. & Carmelo the substantive issue of whether Equatorial is entitled
& Bauermann, Inc. vs. Mayfair Theater, Inc.' to back rentals; and (2) the procedural issue of
"B. whether the court a quo's dismissal of Civil Case No.
The Regional Trial Court erred in holding that the 97-85141 was based on one of the grounds raised by
Deed of Absolute Sale in favor of petitioner by respondent in its Motion to Dismiss and covered by
Carmelo & Bauermann, Inc., dated July 31, Rule 16 of the Rules of Court.
1978, over the premises used and occupied by This Court's Ruling
respondent, having been 'deemed rescinded' by The Petition is not meritorious.
the Supreme Court in G.R. No. 106063, is 'void First Issue:
at its inception as though it did not happen.' Ownership of Subject Properties
"C. We hold that under the peculiar facts and
The Regional Trial Court likewise erred in holding circumstances of the case at bar, as found by this
that the aforesaid Deed of Absolute Sale, dated Court en banc in its Decision promulgated in 1996 in
July 31, 1978, having been 'deemed rescinded' the mother case, no right of ownership was transferred
from Carmelo to Equatorial in view of a patent failure to Delivery has been described as a composite act, a
deliver the property to the buyer. thing in which both parties must join and the minds of
Rental — a Civil both parties concur. It is an act by which one party
Fruit of Ownership parts with the title to and the possession of the
To better understand the peculiarity of the instant case, property, and the other acquires the right to and the
let us begin with some basic parameters. Rent is a civil possession of the same. In its natural sense, delivery
fruit16 that belongs to the owner of the property means something in addition to the delivery of property
producing it17 by right of accession.18 Consequently or title; it means transfer of possession.26 In the Law on
and ordinarily, the rentals that fell due from the time of Sales, delivery may be either actual or constructive,
the perfection of the sale to petitioner until its but both forms of delivery contemplate "the absolute
rescission by final judgment should belong to the giving up of the control and custody of the property on
owner of the property during that period. the part of the vendor, and the assumption of the same
By a contract of sale, "one of the contracting parties by the vendee."27
obligates himself to transfer ownership of and to Possession Never
deliver a determinate thing and the other to pay Acquired by Petitioner
therefor a price certain in money or its equivalent." 19 Let us now apply the foregoing discussion to the
Ownership of the thing sold is a real right, 20 which the present issue. From the peculiar facts of this case, it is
buyer acquires only upon delivery of the thing to him clear that petitioner never took actual
"in any of the ways specified in articles 1497 to 1501, control and possession of the property sold, in view of
or in any other manner signifying an agreement that respondent's timely objection to the sale and the
the possession is transferred from the vendor to the continued actual possession of the property. The
vendee."21 This right is transferred, not merely by objection took the form of a court action impugning the
contract, but also by tradition or delivery.22 Non nudis sale which, as we know, was rescinded by a judgment
pactis sed traditione dominia rerum transferantur. And rendered by this Court in the mother case. It has been
there is said to be delivery if and when the thing sold held that the execution of a contract of sale as a form
"is placed in the control and possession of the of constructive delivery is a legal fiction. It holds true
vendee."23 Thus, it has been held that while the only when there is no impediment that may prevent the
execution of a public instrument of sale is recognized passing of the property from the hands of the vendor
by law as equivalent to the delivery of the thing into those of the vendee.28 When there is such
sold,24 such constructive or symbolic delivery, being impediment, "fiction yields to reality — the delivery has
merely presumptive, is deemed negated by the failure not been effected."29
of the vendee to take actual possession of the land Hence, respondent's opposition to the transfer of the
sold.25 property by way of sale to Equatorial was a legally
sufficient impediment that effectively prevented the equivalent to delivery, this legal fiction only holds
passing of the property into the latter's hands. true when there is no impediment that may
This was the same impediment contemplated in Vda. prevent the passing of the property from the
de Sarmiento v. Lesaca,30 in which the Court held as hands of the vendor into those of the vendee. x x
follows: x."31
"The question that now arises is: Is there any The execution of a public instrument gives rise,
stipulation in the sale in question from which we therefore, only to a prima facie presumption of delivery.
can infer that the vendor did not intend to deliver Such presumption is destroyed when the instrument
outright the possession of the lands to the itself expresses or implies that delivery was not
vendee? We find none. On the contrary, it can be intended; or when by other means it is shown that
clearly seen therein that the vendor intended to such delivery was not effected, because a third person
place the vendee in actual possession of the was actually in possession of the thing. In the latter
lands immediately as can be inferred from the case, the sale cannot be considered consummated.
stipulation that the vendee 'takes actual However, the point may be raised that under Article
possession thereof . . . with full rights to dispose, 1164 of the Civil Code, Equatorial as buyer acquired a
enjoy and make use thereof in such manner and right to the fruits of the thing sold from the time the
form as would be most advantageous to herself.' obligation to deliver the property to petitioner
The possession referred to in the contract arose.32 That time arose upon the perfection of the
evidently refers to actual possession and not Contract of Sale on July 30, 1978, from which moment
merely symbolical inferable from the mere the laws provide that the parties to a sale may
execution of the document. reciprocally demand performance.33 Does this mean
"Has the vendor complied with this express that despite the judgment rescinding the sale, the right
commitment? she did not. As provided in Article to the fruits34 belonged to, and remained enforceable
1462, the thing sold shall be deemed delivered by, Equatorial?
when the vendee is placed in Article 1385 of the Civil Code answers this question in
the control and possession thereof, which the negative, because "[r]escission creates the
situation does not here obtain because from the obligation to return the things which were the object of
execution of the sale up to the present the the contract, together with their fruits, and the price
vendee was never able to take possession of the with its interest; x x x" Not only the land and building
lands due to the insistent refusal of Martin sold, but also the rental payments paid, if any, had to
Deloso to surrender them claiming ownership be returned by the buyer.
thereof. And although it is postulated in the same Another point. The Decision in the mother case stated
article that the execution of a public document is that "Equatorial x x x has received rents" from Mayfair
"during all the years that this controversy has been At bottom, it may be conceded that, theoretically, a
litigated." The Separate Opinion of Justice Teodoro rescissible contract is valid until rescinded. However,
Padilla in the mother case also said that Equatorial thisgeneral principle is not decisive to the issue of
was "deriving rental income" from the disputed whether Equatorial ever acquired the right to collect
property. Even hereinponente's Separate Concurring rentals. What is decisive is the civil law rule that
Opinion in the mother case recognized these rentals. ownership is acquired, not by mere agreement, but by
The question now is: Do all these statements concede tradition or delivery. Under the factual environment of
actual delivery? this controversy as found by this Court in the mother
The answer is "No." The fact that Mayfair paid rentals case, Equatorial was never put in actual and effective
to Equatorial during the litigation should not be control or possession of the property because of
interpreted to mean either actual delivery or ipso facto Mayfair's timely objection.
recognition of Equatorial's title. As pointed out by Justice Holmes, general propositions
The CA Records of the mother case 35 show that do not decide specific cases. Rather, "laws are
Equatorial — as alleged buyer of the disputed interpreted in the context of the peculiar factual
properties and as alleged successor-in-interest of situation of each case. Each case has its own flesh
Carmelo's rights as lessor — submitted two ejectment and blood and cannot be decided on the basis of
suits against Mayfair. Filed in the Metropolitan Trial isolated clinical classroom principles."36
Court of Manila, the first was docketed as Civil Case In short, the sale to Equatorial may have been valid
No. 121570 on July 9, 1987; and thesecond, as Civil from inception, but it was judicially rescinded before it
Case No. 131944 on May 28, 1990. Mayfair eventually could be consummated. Petitioner never acquired
won them both. However, to be able to maintain ownership, not because the sale was void, as
physical possession of the premises while awaiting the erroneously claimed by the trial court, but because the
outcome of the mother case, it had no choice but to sale was not consummated by a legally
pay the rentals. effective delivery of the property sold.
The rental payments made by Mayfair should not be Benefits Precluded by
construed as a recognition of Equatorial as the new Petitioner's Bad Faith
owner. They were made merely to avoid imminent Furthermore, assuming for the sake of argument that
eviction. It is in this context that one should understand there was valid delivery, petitioner is not entitled to any
the aforequoted factual statements in the ponencia in benefits from the "rescinded" Deed of Absolute Sale
the mother case, as well as the Separate Opinion of because of its bad faith. This being the law of the
Mr. Justice Padilla and the Separate Concurring mother case decided in 1996, it may no longer be
Opinion of the herein ponente. changed because it has long become final and
executory. Petitioner's bad faith is set forth in the Carmelo and Equatorial took unconscientious
following pertinent portions of the mother case: advantage of Mayfair."37 (Italics supplied)
"First and foremost is that the petitioners acted Thus, petitioner was and still is entitled solely to he
in bad faith to render Paragraph 8 'inutile.' return of the purchase price it paid to Carmelo; no
xxx xxx xxx more, no less. This Court has firmly ruled in the mother
"Since Equatorial is a buyer in bad faith, this case that neither of them is entitled to any
finding renders the sale to it of the property in consideration of equity, as both "took unconscientious
question rescissible. We agree with respondent advantage of Mayfair."38
Appellate Court that the records bear out the fact In the mother case, this Court categorically denied the
that Equatorial was aware of the lease contracts payment of interest, a fruit of ownership. By the same
because its lawyers had, prior to the sale, token, rentals, another fruit of ownership, cannot be
studied the said contracts. As such, Equatorial granted without mocking this Court's en banc Decision,
cannot tenably claim to be a purchaser in good which has long become final.
faith, and, therefore, rescission lies. Petitioner's claim of reasonable compensation for
xxx xxx xxx respondent's use and occupation of the subject
"As also earlier emphasized, the contract of sale property from the time the lease expired cannot be
between Equatorial and Carmelo is characterized countenanced. If it suffered any loss, petitioner must
by bad faith, since it was knowingly entered into bear it in silence, since it had wrought that loss upon
in violation of the rights of and to the prejudice of itself. Otherwise, bad faith would be rewarded instead
Mayfair. In fact, as correctly observed by the of punished.@lawphil.net
Court of Appeals, Equatorial admitted that its We uphold the trial court's disposition, not for the
lawyers had studied the contract of lease prior to reason it gave, but for (a) the patent failure to deliver
the sale. Equatorial's knowledge of the the property and (b) petitioner's bad faith, as above
stipulations therein should have cautioned it to discussed.
look further into the agreement to determine if it Second Issue:itc-alf
involved stipulations that would prejudice its own Ground in Motion to Dismiss
interests. Procedurally, petitioner claims that the trial court
xxx xxx xxx deviated from the accepted and usual course of judicial
"On the part of Equatorial, it cannot be a buyer in proceedings when it dismissed Civil Case No. 97-
good faith because it bought the property with 85141 on a ground not raised in respondent's Motion
notice and full knowledge that Mayfair had a right to Dismiss. Worse, it allegedly based its dismissal on a
to or interest in the property superior to its own. ground not provided for in a motion to dismiss as
enunciated in the Rules of Court.@lawphil.net
We are not convinced A review of respondent's Motion actions involving the same claim, demand, or cause of
to Dismiss Civil Case No. 97-85141 shows that there action."41 Res judicata is based on the ground that the
were two grounds invoked, as follows: "party to be affected, or some other with whom he is in
"(A) privity, has litigated the same matter in a former action
Plaintiff is guilty of forum-shopping.itc-alf in a court of competent jurisdiction, and should not be
"(B) permitted to litigate it again.42
Plaintiff's cause of action, if any, is barred by It frees the parties from undergoing all over again the
prior judgment."39 rigors of unnecessary suits and repetitive trials. At the
The court a quo ruled, inter alia, that the cause of same time, it prevents the clogging of court dockets.
action of petitioner plaintiff in the case below) had been Equally important, it stabilizes rights and promotes the
barred by a prior judgment of this Court in G.R No. rule of law.@lawphil.net
106063, the mother case. We find no need to repeat the foregoing disquisitions
Although it erred in its interpretation of the said on the first issue to show satisfaction of the elements
Decision when it argued that the rescinded Deed of of res judicata. Suffice it to say that, clearly, our ruling
Absolute Sale was avoid," we hold, nonetheless, that in the mother case bars petitioner from claiming back
petitioner's cause of action is indeed barred by a prior rentals from respondent. Although the court a
judgment of this Court. As already discussed, our quo erred when it declared "void from inception" the
Decision in G.R No. 106063 shows that petitioner is Deed of Absolute Sale between Carmelo and
not entitled to back rentals, because it never became petitioner, our foregoing discussion supports the grant
the owner of the disputed properties due to a failure of of the Motion to Dismiss on the ground that our prior
delivery. And even assuming arguendo that there was judgment in G.R No. 106063 has already resolved the
a valid delivery, petitioner's bad faith negates its issue of back rentals.
entitlement to the civil fruits of ownership, like interest On the basis of the evidence presented during the
and rentals. hearing of Mayfair's Motion to Dismiss, the trial court
Under the doctrine of res judicata or bar by prior found that the issue of ownership of the subject
judgment, a matter that has been adjudicated by a property has been decided by this Court in favor of
court of competent jurisdiction must be deemed to Mayfair. We quote the RTC:
have been finally and conclusively settled if it arises in "The Supreme Court in the Equatorial case, G.R.
any subsequent litigation between the same parties No. 106063 has categorically stated that the
and for the same cause.40 Thus, "[a] final judgment on Deed of Absolute Sale dated July 31, 1978 has
the merits rendered by a court of competent jurisdiction been rescinded subjecting the present complaint
is conclusive as to the rights of the parties and their to res judicata."43(Emphasis in the original)
privies and constitutes an absolute bar to subsequent
Hence, the trial court decided the Motion to Dismiss on This is an appeal taken by both the plaintiff and the
the basis of res judicata, even if it erred in interpreting defendant from the order of September 26, 1935,
the meaning of "rescinded" as equivalent to "void" In hereinabove referred to, of the Court of First Instance
short, it ruled on the ground raised; namely, bar by of Cavite in Civil Case No. 2428.
prior judgment. By granting the Motion, it disposed
correctly, even if its legal reason for nullifying the sale There is no controversy as to the facts. By a contract
was wrong. The correct reasons are given in this of sale executed from Pastor Samonte and others
Decision. ownership of a parcel of land of about 90 hectares
WHEREFORE, the Petition is hereby DENIED. Costs situated in sitio Balayunan, Silang, Cavite. To secure
against petitioner.itc-alf
possession of the land from the vendors the said
plaintiff, on July 20, 1929, instituted Civil Case No.
1935 in the Court of First Instance of Cavite. The trial
court found for the plaintiff in a decision which was
affirmed by this Supreme Court on appeal (G.R. No.
33017). 1 When plaintiff entered upon the premises,
G.R. No. L-44606 November 28, 1938 however, he found the defendant herein, Catalino
Bataclan, who appears to have been authorized by
VICENTE STO. DOMINGO BERNARDO, plaintiff- former owners, as far back as 1922, to clear the land
appellant, and make improvements thereon. As Bataclan was not
vs. a party in Case No. 1935, plaintiff, on June 11, 1931,
CATALINO BATACLAN, defendant-appellant. instituted against him, in the Court of First Instance of
TORIBIO TEODORO, purchaser-appellee. Cavite, Civil Case No. 2428. In this case, plaintiff was
declared owner but the defendant was held to be a
Pedro de Leon for plaintiff-appellant.
possessor in good faith, entitled to reimbursement in
Angel H. Mojica and Francisco Lavides for defendant
the total sum of P1,642, for work done and
appellant.
improvements made. The dispositive part of the
Jose Y. Garde for appellee.
decision reads:

Por las consideraciones expuestas, se declara al

LAUREL, J.: demandante Vicente Santo Domingo Bernardo
dueño con derecho a la posesion del terreno que
 se describe en la demanda, y al demandado court his desire "to require the defendant to pay him
Catalino Bataclan con derecho a que del the value of the land at the rate of P200 per hectare or
demandante le pague la suma de P1,642 por a total price of P18,000 for the whole tract of land." The
gastos utiles hechos de buena fe en el terreno, y defendant informed the lower court that he was unable
por el cerco y ponos de coco y abaca existentes to pay the land and, on January 24, 1934, an order
en el mismo, y con derecho, ademas a retener la was issued giving the plaintiff 30 days within which to
posesion del terreno hasta que se le pague dicha pay the defendant the sum of P2,212 stating that, in
cantidad. Al demandante puede optar, en el the event of failure to make such payment, the land
plazo de treinta dias, a partir de la fecha en que would be ordered sold at public auction "Para hacer
fuere notificado de la presente, por pagar esa pago al demandante de la suma de P2,212 y el
suma al demandado, haciendo asi suyos el remanente despues de deducidos los gastos legales
cerco y todas las plantaciones existentes en el de la venta en publica subasta sera entregado al
terreno, u obligar al demandado a pagarle el demandante." On February 21, 1934, plaintiff moved to
precio terreno, a razon de trescientos pesos la reconsider the foregoing order so that he would have
hectarea. En el caso de que el demandante preference over the defendant in the order of payment.
optara por que el demandado le pagara el precio The motion was denied on March 1, 1934 but on
del terreno, el demandado efectuara el pago en March 16 following the court below, motu
el plazo convenientes por las partes o que sera proprio modified its order of January 24, "en el sentido
fijado por el Juzgado. Sin costas. de que el demandante tiene derecho preferente al
importe del terreno no se vendiere en publica subasta,
Both parties appealed to this court (G. R. No. a razon de P200 por hectares y el remanente, si acaso
37319). 2 The decision appealed from was modified by lo hubiere se entregara al demandado en pago de la
allowing the defendant to recover compensation cantidad de P2,212 por la limpieza del terreno y las
amounting to P2,212 and by reducing the price at mejoras introducidas en el mismo por el citado
which the plaintiff could require the defendant to demandado." On April 24, 1934, the court below, at the
purchase the land in question from P300 to P200 per instance of the plaintiff and without objection on the
hectare. Plaintiff was given by this court 30 days from part of the defendant, ordered the sale of the land in
the date when the decision became final within which question at public auction. The land was sold on April
to exercise his option, either to sell the land to the 5, 1935 to Toribio Teodoro, the highest bidder, for
defendant or to buy the improvements from him. On P8,000. In the certificate of sale issued to said
January 9, 1934, the plaintiff manifested to the lower purchaser on the very day of sale, it was stated that
the period of redemption of the land sold was to expire Where, however, the planter, builder, or sower has
on April 5, 1936. Upon petition of Toribio Teodoro the acted in good faith, a conflict of rights arises between
court below ordered the provincial sheriff to issue the owners and it becomes necessary to protect the
another certificate not qualified by any equity of owner of the improvements without causing injustice to
redemption. This was complied with by the sheriff on the owner of the land. In view of the impracticability of
July 30, 1935. On September 18, 1935, Teodoro creating what Manresa calls a state of "forced
moved that he be placed in possession of the land coownership" (vol. 3, 4th ed., p. 213), the law has
purchased by him. The motion was granted by order of provided a just and equitable solution by giving the
September 26, 1935, the dispositive part of which is as owner of the land the option to acquire the
follows: improvements after payment of the proper indemnity or
to oblige the builder or planter to pay for the land and
Por tanto, se ordena al Sheriff Provincial de the sower to pay the proper rent (art. 361). It is the
Cavite ponga a Toribio Teodoro en posesion del owner of the land who is allowed to exercise the option
terreno comprado por el en subasta publica y por because his right is older and because, by the principle
el cual se le expidio certificado de venta of accession, he is entitled to the ownership of the
definitiva, reservando al demandado su derecho accessory thing (3 Manresa, 4th ed., p. 213). In the
de ejercitar una accion ordinaria para reclamar case before us, the plaintiff, as owner of the land,
del demandante la cantidad de P2,212 a que chose to require the defendant, as owner of the
tiene derecho por la limpieza y mejoras del improvements, to pay for the land.
terreno y cuya suma, en justicia y equidad, debe
ser descontada y deducida de la suma de The defendant states that he is a possessor in good
P8,000 que ya ha recibido el demandante. faith and that the amount of P2,212 to which he is
entitled has not yet been paid to him. Therefore, he
The Civil Code confirms certain time-honored says, he has a right to retain the land in accordance
principles of the law of property. One of these is the with the provisions of article 453 of the Civil Code. We
principle of accession whereby the owner of property do not doubt the validity of the premises stated.
acquires not only that which it produces but that which "Considera la ley tan saarada y legitima la deuda, que,
is united to it either naturally or artificially. (Art. 353.) hasta que sea pagada, no consiente que la cosa se
Whatever is built, planted or sown on the land of restituya all vencedor." (4 Manresa, 4th ed, p., 304.)
another, and the improvements or repairs made We find, however, that the defendant has lost his right
thereon, belong to the owner of the land (art. 358). of retention. In obedience to the decision of this court
in G.R. No. 37319, the plaintiff expressed his desire to
require the defendant to pay for the value of the land.
The said defendant could have become owner of both
land and improvements and continued in possession
G.R. No. L-175 April 30, 1946
thereof. But he said he could not pay and the land was
sold at public auction to Toribio Teodoro. The law, as DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS
we have already said, requires no more than that the IGNACIO, petitioners,
owner of the land should choose between indemnifying vs.
the owner of the improvements or requiring the latter to ELIAS HILARIO and his wife DIONISIA DRES, and
pay for the land. When he failed to pay for the land, the FELIPE NATIVIDAD, Judge of First Instance of
defendant herein lost his right of retention. Pangasinan, respondents.
The sale at public auction having been asked by the Leoncio R. Esliza for petitioners.
plaintiff himself (p. 22, bill of exceptions) and the Mauricio M. Monta for respondents.
purchase price of P8,000 received by him from Toribio
Teodoro, we find no reason to justify a rapture of the MORAN, C.J.:
situation thus created between them, the defendant-
appellant not being entitled, after all, to recover from This is a petition for certiorari arising from a case in the
the plaintiff the sum of P2,212. lawphi1.net Court of First Instance of Pangasinan between the
herein respondents Elias Hilario and his wife Dionisia
The judgment of the lower court is accordingly Dres as plaintiffs, and the herein petitioners Damian,
modified by eliminating therefrom the reservation made Francisco and Luis, surnamed Ignacio, as defendants,
in favor of the defendant-appellant to recover from the concerning the ownership of a parcel of land, partly
plaintiff the sum of P2,212. In all the respects, the rice-land and partly residential. After the trial of the
same is affirmed, without pronouncement regarding case, the lower court, presided over by Hon. Alfonso
costs. So ordered. Felix, rendered judgment holding plaintiffs as the legal
owners of the whole property but conceding to
defendants the ownership of the houses and granaries
built by them on the residential portion with the rights
of a possessor in good faith, in accordance with article
361 of the Civil Code. The dispositive part of the Once this decision becomes final, the plaintiffs
decision, hub of this controversy, follows: and defendants may appear again before this
court for the purpose of determining their
Wherefore, judgment is hereby rendered respective rights under article 361 of the Civil
declaring: Code, if they cannot come to an extra-judicial
settlement with regard to said rights.
(1) That the plaintiffs are the owners of the whole
property described in transfer certificate of title Subsequently, in a motion filed in the same Court of
No. 12872 (Exhibit A) issued in their name, and First Instance but now presided over by the herein
entitled to the possession of the same; respondent Judge Hon. Felipe Natividad, the plaintiffs
prayed for an order of execution alleging that since
(2) That the defendants are entitled to hold the they chose neither to pay defendants for the buildings
position of the residential lot until after they are nor to sell to them the residential lot, said defendants
paid the actual market value of their houses and should be ordered to remove the structure at their own
granaries erected thereon, unless the plaintiffs expense and to restore plaintiffs in the possession of
prefer to sell them said residential lot, in which said lot. Defendants objected to this motion which,
case defendants shall pay the plaintiffs the after hearing, was granted by Judge Natividad. Hence,
proportionate value of said residential lot taking this petition by defendants praying for (a) a restraint
as a basis the price paid for the whole land and annulment of the order of execution issued by
according to Exhibit B; and Judge Natividad; (b) an order to compel plaintiffs to
pay them the sum of P2,000 for the buildings, or sell to
(3) That upon defendant's failure to purchase the
them the residential lot for P45; or (c), a rehearing of
residential lot in question, said defendants shall
the case for a determination of the rights of the parties
remove their houses and granaries after this
upon failure of extra-judicial settlement.
decision becomes final and within the period of
sixty (60) days from the date that the court is The judgment rendered by Judge Felix is founded on
informed in writing of the attitude of the parties in articles 361 and 453 of the Civil Code which are as
this respect. follows:
No pronouncement is made as to damages and ART. 361. The owner of land on which anything
costs. has been built, sown or planted in good faith,
 shall have the right to appropriate as his own the chosen to sell his land, the other party fails to pay for
work, sowing or planting, after the payment of the the same. But this is not the case before us.
indemnity stated in articles 453 and 454, or to
oblige the one who built or planted to pay the We hold, therefore, that the order of Judge Natividad
price of the land, and the one who sowed, the compelling defendants-petitioners to remove their
proper rent. buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to
ART. 453. Necessary expenses shall be pay for such buildings not to sell the land, is null and
refunded to every possessor; but only the void, for it amends substantially the judgment sought to
possessor in good faith may retain the thing until be executed and is, furthermore, offensive to articles
such expenses are made good to him. 361 and 453 of the Civil Code.

Useful expenses shall be refunded to the There is, however, in the decision of Judge Felix a
possessor in good faith with the same right of question of procedure which calls for the clarification,
retention, the person who has defeated him in to avoid uncertainty and delay in the disposition of
the possession having the option of refunding the cases. In that decision, the rights of both parties are
amount of the expenses or paying the increase in well defined under articles 361 and 453 of the Civil
value which the thing may have acquired in Code, but it fails to determine the value of the buildings
consequence thereof. and of the lot where they are erected as well as the
periods of time within which the option may be
The owner of the building erected in good faith on a exercised and payment should be made, these
land owned by another, is entitled to retain the particulars having been left for determination
possession of the land until he is paid the value of his apparently after the judgment has become final. This
building, under article 453. The owner of the land, procedure is erroneous, for after the judgment has
upon the other hand, has the option, under article 361, become final, no additions can be made thereto and
either to pay for the building or to sell his land to the nothing can be done therewith except its execution.
owner of the building. But he cannot, as respondents And execution cannot be had, the sheriff being
here did, refuse both to pay for the building and to sell ignorant as to how, for how much, and within what time
the land and compel the owner of the building to may the option be exercised, and certainly no authority
remove it from the land where it is erected. He is is vested in him to settle these matters which involve
entitled to such remotion only when, after having exercise of judicial discretion. Thus the judgment
rendered by Judge Felix has never become final, it First Instance of Rizal, Seventh Judicial District,
having left matters to be settled for its completion in a Branch XXVIII, Pasay City, and SPOUSES
subsequent proceeding, matters which remained ERNESTO VALENTINO and REBECCA LORENZO-
unsettled up to the time the petition is filed in the VALENTINO,respondents.
instant case.
Mercedes M. Respicio for petitioner.
For all the foregoing, the writ of execution issued by
Judge Natividad is hereby set aside and the lower Romulo R. Bobadilla for private respondents.
court ordered to hold a hearing in the principal case
wherein it must determine the prices of the buildings
and of the residential lot where they are erected, as
MELENCIO-HERRERA, J.:ñé+.£ªwph!1
well as the period of time within which the plaintiffs-
respondents may exercise their option either to pay for This Petition for certiorari questions a March 29, 1979
the buildings or to sell their land, and, in the last Decision rendered by the then Court of First Instance
instance, the period of time within which the of Pasay City. The Decision was one made on
defendants-petitioners may pay for the land, all these memoranda, pursuant to the provisions of RA 6031,
periods to be counted from the date the judgment and it modified, on October 17, 1977, a judgment of
becomes executory or unappealable. After such the then Municipal Court of Paranaque, Rizal, in an
hearing, the court shall render a final judgment Ejectment suit instituted by herein petitioner Leonila
according to the evidence presented by the parties. SARMIENTO against private respondents, the
spouses ERNESTO Valentino and Rebecca Lorenzo.
The costs shall be paid by plaintiffs-respondents.
For the facts, therefore, we have to look to the
evidence presented by the parties at the original level.

It appears that while ERNESTO was still courting his

wife, the latter's mother had told him the couple could
G.R. No. L-57288 April 30, 1984 build a RESIDENTIAL HOUSE on a lot of 145 sq. ms.,
being Lot D of a subdivision in Paranaque (the LAND,
LEONILA SARMINETO, petitioner, for short). In 1967, ERNESTO did construct a
vs. RESIDENTIAL HOUSE on the LAND at a cost of
HON. ENRIQUE A. AGANA, District Judge, Court of P8,000.00 to P10,000.00. It was probably assumed
that the wife's mother was the owner of the LAND and as the value of the RESIDENTIAL HOUSE, or the
that, eventually, it would somehow be transferred to option to allow them to purchase the LAND for
the spouses. P25,000.00. SARMIENTO did not exercise any of the
two options within the indicated period, and ERNESTO
It subsequently turned out that the LAND had been was then allowed to deposit the sum of P25,000.00
titled in the name of Mr. & Mrs. Jose C. Santo, Jr. who, with the Court as the purchase price for the LAND.
on September 7 , 1974, sold the same to petitioner This is the hub of the controversy. SARMIENTO then
SARMIENTO. The following January 6, 1975, instituted the instant certiorari proceedings.
SARMIENTO asked ERNESTO and wife to vacate
and, on April 21, 1975, filed an Ejectment suit against We agree that ERNESTO and wife were builders in
them. In the evidentiary hearings before the Municipal good faith in view of the peculiar circumstances under
Court, SARMIENTO submitted the deed of sale of the which they had constructed the RESIDENTIAL
LAND in her favor, which showed the price to be HOUSE. As far as they knew, the LAND was owned by
P15,000.00. On the other hand, ERNESTO testified ERNESTO's mother-in-law who, having stated they
that the then cost of the RESIDENTIAL HOUSE would could build on the property, could reasonably be
be from P30,000.00 to P40,000.00. The figures were expected to later on give them the LAND.
not questioned by SARMIENTO.
In regards to builders in good faith, Article 448 of the
The Municipal Court found that private respondents Code provides:têñ.£îhqwâ£
had built the RESIDENTIAL HOUSE in good faith, and,
disregarding the testimony of ERNESTO, that it had a ART. 448.The owner of the land on which
value of P20,000.00. It then ordered ERNESTO and anything has been built, sown or planted in
wife to vacate the LAND after SARMIENTO has paid good faith,
them the mentioned sum of P20,000.00.
shall have the right
The Ejectment suit was elevated to the Court of First
Instance of Pasay where, after the submission of to appropriate as his own the works,
memoranda, said Court rendered a modifying Decision sowing or planting, after payment of the
under Article 448 of the Civil Code. SARMIENTO was indemnity provided for in articles 546 and
required, within 60 days, to exercise the option to 548, or
reimburse ERNESTO and wife the sum of 40,000.00
 to oblige the one who built or planted to be said that the Court of First Instance had abused its
pay the price of the land, and the one who discretion.
sowed, the proper rent.
The challenged decision of respondent Court, based
However, the builder or planter cannot be on valuations of P25,000.00 for the LAND and
obliged to buy the land if its value is P40,000.00 for the RESIDENTIAL HOUSE, cannot be
considerably more than that of the building viewed as not supported by the evidence. The
or trees. In such case, he shall pay provision for the exercise by petitioner SARMIENTO of
reasonable rent, if the owner of the land either the option to indemnify private respondents in
does not choose to appropriate the building the amount of P40,000.00, or the option to allow
or trees after proper indemnity. The parties private respondents to purchase the LAND at
shall agree upon the terms of the lease and P25,000.00, in our opinion, was a correct decision.têñ.
in case of disagreement, the court shall fix £îhqwâ£
the terms thereof. (Paragraphing supplied)
The owner of the building erected in good
The value of the LAND, purchased for P15,000.00 on faith on a land owned by another, is entitled
September 7, 1974, could not have been very much to retain the possession of the land until he
more than that amount during the following January is paid the value of his building, under
when ERNESTO and wife were asked to vacate. article 453 (now Article 546). The owner, of
However, ERNESTO and wife have not questioned the the land. upon, the other hand, has the
P25,000.00 valuation determined by the Court of First option, under article 361 (now Article 448),
Instance. either to pay for the building or to sell his
land to the owner of the building. But he
In regards to the valuation of the RESIDENTIAL cannot, as respondents here did, refuse
HOUSE, the only evidence presented was the both to pay for the building and to sell the
testimony of ERNESTO that its worth at the time of the land and compel the owner of the building
trial should be from P30,000.00 to P40,000.00. The to remove it from the land where it is
Municipal Court chose to assess its value at erected. He is entitled to such remotion
P20,000.00, or below the minimum testified by only when, after having chosen to sell his
ERNESTO, while the Court of First Instance chose the land, the other party fails to pay for the
maximum of P40,000.00. In the latter case, it cannot same. (Emphasis ours)
 We hold, therefore, that the order of Judge MELENCIO-HERRERA, J.:
Natividad compelling defendants-
petitioners to remove their buildings from This is an appeal from the Order of the former Court of
the land belonging to plaintiffs-respondents First Instance of Iloilo to the then Court of Appeals,
only because the latter chose neither to which the latter certified to this instance as involving
pay for such buildings nor to sell the land, pure questions of law
is null and void, for it amends substantially
the judgment sought to be executed and is, Plaintiff-appellee, Francisco Depra, is the owner of a
furthermore, offensive to articles 361 (now parcel of land registered under Transfer Certificate of
Article 448) and 453 (now Article 546) of Title No. T3087, known as Lot No. 685, situated in the
the Civil Code. (Ignacio vs. Hilario, 76 Phil. municipality of Dumangas, Iloilo, with an area of
605, 608 [1946]). approximately 8,870 square meters. Agustin Dumlao,
defendant-appellant, owns an adjoining lot, designated
WHEREFORE, the Petition for Certiorari is hereby as Lot No. 683, with an approximate area of 231 sq.
ordered dismissed, without pronouncement as to ms.
costs.
Sometime in 1972, when DUMLAO constructed his
house on his lot, the kitchen thereof had encroached
on an area of thirty four (34) square meters of
DEPRA's property, After the encroachment was
discovered in a relocation survey of DEPRA's lot made
G.R. No. L-57348 May 16, 1985 on November 2,1972, his mother, Beatriz Depra after
writing a demand letter asking DUMLAO to move back
FRANCISCO DEPRA, plaintiff-appellee,
from his encroachment, filed an action for Unlawful
vs.
Detainer on February 6,1973 against DUMLAO in the
AGUSTIN DUMLAO, defendant-appellant.
Municipal Court of of Dumangas, docketed as Civil
Roberto D. Dineros for plaintiff-appellee. Case No 1, Said complaint was later amended to
include DEPRA as a party plain. plaintiff.
Veil D. Hechanova for defendant-appellant.
After trial, the Municipal Court found that DUMLAO
was a builder in good faith, and applying Article 448 of
the Civil Code, rendered judgment on September 29, After the case had been set for pre-trial, the parties
1973, the dispositive portion of which reads: submitted a Joint Motion for Judgment based on the
Stipulation of Facts attached thereto. Premised
Ordering that a forced lease is created thereon, the Trial Court on October 31, 1974, issued
between the parties with the plaintiffs, as the assailed Order, decreeing:
lessors, and the defendants as lessees,
over the disputed portion with an area of WHEREFORE, the Court finds and so
thirty four (34) square meters, the rent to holds that the thirty four (34) square meters
be paid is five (P5.00) pesos a month, subject of this litigation is part and parcel of
payable by the lessee to the lessors within Lot 685 of the Cadastral Survey of
the first five (5) days of the month the rent Dumangas of which the plaintiff is owner as
is due; and the lease shall commence on evidenced by Transfer Certificate of Title
the day that this decision shall have No. 3087 and such plaintiff is entitled to
become final. possess the same.

From the foregoing judgment, neither party appeal so Without pronouncement as to costs.
that, ff it were a valid judgment, it would have ordinarily
lapsed into finality, but even then, DEPRA did not SO ORDERED.
accept payment of rentals so that DUMLAO deposited
such rentals with the Municipal Court. Rebutting the argument of res judicata relied upon by
DUMLAO, DEPRA claims that the Decision of the
On July 15,1974, DEPRA filed a Complaint for Quieting Municipal Court was null and void ab initio because its
of Title against DUMLAO before the then Court of First jurisdiction is limited to the sole issue of possession,
Instance of Iloilo, Branch IV (Trial Court), involving the whereas decisions affecting lease, which is an
very same 34 square meters, which was the bone of encumbrance on real property, may only be rendered
contention in the Municipal Court. DUMLAO, in his by Courts of First Instance.
Answer, admitted the encroachment but alleged, in the
main, that the present suit is barred by res judicata by Addressing out selves to the issue of validity of the
virtue of the Decision of the Municipal Court, which had Decision of the Municipal Court, we hold the same to
become final and executory. be null and void. The judgment in a detainer case is
effective in respect of possession only (Sec. 7, Rule
70, Rules of Court). 1 The Municipal Court over-
stepped its bounds when it imposed upon the parties a kitchen and has been in the possession of
situation of "forced lease", which like "forced co- the defendant since 1952 continuously up
ownership" is not favored in law. Furthermore, a lease to the present; ... (Emphasis ours)
is an interest in real property, jurisdiction over which
belongs to Courts of First Instance (now Regional Trial Consistent with the principle that our Court system, like
Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2) any other, must be a dispute resolving mechanism, we
Batas Pambansa Blg. 129). 3 Since the Municipal accord legal effect to the agreement of the parties,
Court, acted without jurisdiction, its Decision was null within the context of their mutual concession and
and void and cannot operate as res judicata to the stipulation. They have, thereby, chosen a legal
subject complaint for Queting of Title. Besides, even if formula to resolve their dispute to appeal ply to
the Decision were valid, the rule on res judicata would DUMLAO the rights of a "builder in good faith" and to
not apply due to difference in cause of action. In the DEPRA those of a "landowner in good faith" as
Municipal Court, the cause of action was the prescribed in Article 448. Hence, we shall refrain from
deprivation of possession, while in the action to quiet further examining whether the factual situations of
title, the cause of action was based on ownership. DUMLAO and DEPRA conform to the juridical
Furthermore, Sec. 7, Rule 70 of the Rules of Court positions respectively defined by law, for a "builder in
explicitly provides that judgment in a detainer case good faith" under Article 448, a "possessor in good
"shall not bar an action between the same parties faith" under Article 526 and a "landowner in good faith'
respecting title to the land. " 4 under Article 448.

Conceded in the Stipulation of Facts between the In regards to builders in good faith, Article 448 of the
parties is that DUMLAO was a builder in good faith. Civil Code provides:
Thus,
ART. 448. The owner of the land on which anything
8. That the subject matter in the unlawful has been built sown or planted in good faith,
detainer case, Civil Case No. 1, before the
Municipal Court of Dumangas, Iloilo shall have the right
involves the same subject matter in the
to appropriate as his own the works,
present case, the Thirty-four (34) square
sowing or planting, after payment of the
meters portion of land and built thereon in
indemnity provided for in articles 546 and
good faith is a portion of defendant's
548, or
 to oblige the one who built or planted to removal only when, after having chosen to sell his
pay the price of the land, and the one who encroached land, DUMLAO fails to pay for the
sowed, the proper rent. same. 6 In this case, DUMLAO had expressed his
willingness to pay for the land, but DEPRA refused to
However, the builder or planter cannot be sell.
obliged to buy the land if its value is
considerably more than that of the building The owner of the building erected in good
or trees. In such case, he shall pay faith on a land owned by another, is entitled
reasonable rent, if the owner of the land to retain the possession of the land until he
does not choose to appropriate the building is paid the value of his building, under
or trees after proper indemnity. The parties article 453 (now Article 546). The owner of
shall agree upon the terms of the lease and the land, upon the other hand, has the
in case of disagreement, the court shall fix option, under article 361 (now Article 448),
the terms thereof (Paragraphing supplied) either to pay for the building or to sell his
land to the owner of the building. But he
Pursuant to the foregoing provision, DEPRA has the cannot as respondents here did refuse
option either to pay for the encroaching part of both to pay for the building and to sell the
DUMLAO's kitchen, or to sell the encroached 34 land and compel the owner of the building
square meters of his lot to DUMLAO. He cannot refuse to remove it from the land where it erected.
to pay for the encroaching part of the building, and to He is entitled to such remotion only when,
sell the encroached part of his land, 5 as he had after having chosen to sell his land. the
manifested before the Municipal Court. But that other party fails to pay for the same (italics
manifestation is not binding because it was made in a ours).
void proceeding.
We hold, therefore, that the order of Judge
However, the good faith of DUMLAO is part of the Natividad compelling defendants-
Stipulation of Facts in the Court of First Instance. It petitioners to remove their buildings from
was thus error for the Trial Court to have ruled that the land belonging to plaintiffs-respondents
DEPRA is "entitled to possession," without more, of the only because the latter chose neither to
disputed portion implying thereby that he is entitled to pay for such buildings nor to sell the land,
have the kitchen removed. He is entitled to such is null and void, for it amends substantially
 the judgment sought to be executed and is. como un extraordinario privilegio en favor
furthermore, offensive to articles 361 (now de la propiedad territorial. Entienden que
Article 448) and 453 (now Article 546) of impone el Codigo una pena al poseedor de
the Civil Code. (Ignacio vs. Hilario, 76 Phil. buena fe y como advierte uno de los
605, 608[1946]). comentaristas aludidos 'no se ve claro el
por que de tal pena . . . al obligar al que
A word anent the philosophy behind Article 448 of the obro de buena fe a quedarse con el edificio
Civil rode. o plantacion, previo el pago del terreno que
ocupa, porque si bien es verdad que
The original provision was found in Article 361 of the cuando edifico o planto demostro con este
Spanish Civil Code; which provided: hecho, que queria para si el edificio o
plantio tambien lo es que el que edifico o
ART. 361. The owner of land on which
planto de buena fe lo hizo en la erronea
anything has been built, sown or planted in
inteligencia de creerse dueno del terreno
good faith, shall have the right to
Posible es que, de saber lo contrario, y de
appropriate as his own the work, sowing or
tener noticia de que habia que comprar y
planting, after the payment of the indemnity
pagar el terreno, no se hubiera decidido a
stated in Articles 453 and 454, or to oblige
plantar ni a edificar. La ley obligandole a
the one who built or planted to pay the
hacerlo fuerza su voluntad, y la fuerza por
price of the land, and the one who sowed,
un hecho inocente de que no debe ser
the proper rent.
responsable'. Asi podra suceder pero la
As will be seen, the Article favors the owner of the realidad es que con ese hecho voluntario,
land, by giving him one of the two options mentioned in aunque sea inocente, se ha enriquecido
the Article. Some commentators have questioned the torticeramente con perjuicio de otro a quien
preference in favor of the owner of the land, but es justo indemnizarle,
Manresa's opinion is that the Article is just and fair.
En nuestra opinion, el Codigo ha resuelto
. . . es justa la facultad que el codigo da al el conflicto de la manera mas justa y
dueno del suelo en el articulo 361, en el equitativa y respetando en lo possible el
caso de edificacion o plantacion? Algunos principio que para la accesion se establece
comentaristas la conceptuan injusta, y en el art. 358. 7
Our own Code Commission must have taken account Where the builder, planter or sower has
of the objections to Article 361 of the Spanish Civil acted in good faith, a conflict of rights
Code. Hence, the Commission provided a modification arises between the owners, and it becomes
thereof, and Article 448 of our Code has been made to necessary to protect the owner of the
provide: improvements without causing injustice to
the owner of the land. In view of the
ART. 448. The owner of the land on which impracticability of creating a state of forced
anything has been built, sown or planted in co-ownership, the law has provided a just
good faith, shall have the right to solution by giving the owner of the land the
appropriate as his own the works, sowing option to acquire the improvements after
or planting, after payment of the indemnity payment of the proper indemnity, or to
provided for in articles 546 and 548, or to oblige the builder or planter to pay for the
oblige the one who built or planted to pay land and the sower to pay for the proper
the price of the land, and the one who rent. It is the owner of the land who is
sowed, the proper rent. However, the authorized to exercise the option, because
builder or planter cannot be obliged to buy his right is older, and because, by the
the land if its value is considerably more principle of accession, he is entitled to the
than that of the building or trees. In such ownership of the accessory thing. (3
case, he shall pay reasonable rent, if the Manresa 213; Bernardo vs. Bataclan, 37
owner of the land does not choose to Off. Gaz. 1382; Co Tao vs. Chan Chico,
appropriate the building or trees after G.R. No. 49167, April 30, 1949; Article
proper indemnity. The parties shall agree applied: see Cabral, et al vs. Ibanez [S.C.]
upon the terms of the lease and in case of 52 Off. Gaz. 217; Marfori vs. Velasco,
disagreement, the court shall fix the terms [C.A.] 52 Off. Gaz. 2050). 8
thereof.
WHEREFORE, the judgment of the trial Court is
Additional benefits were extended to the builder but the hereby set aside, and this case is hereby ordered
landowner retained his options. remanded to the Regional Trial Court of Iloilo for
further proceedings consistent with Articles 448 and
The fairness of the rules in Article 448 has also been 546 of the Civil Code, as follows:
explained as follows:
1. The trial Court shall determine be respectively paid by DUMLAO and
DEPRA, in accordance with the option thus
a) the present fair price of DEPRA's 34 exercised by written notice of the other
square meter area of land; party and to the Court, shall be paid by the
obligor within fifteen (15) days from such
b) the amount of the expenses spent by notice of the option by tendering the
DUMLAO for the building of the kitchen; amount to the Court in favor of the party
entitled to receive it;
c) the increase in value ("plus value") which
the said area of 34 square meters may b) The trial Court shall further order that if
have acquired by reason thereof, and DEPRA exercises the option to oblige
DUMLAO to pay the price of the land but
d) whether the value of said area of land is
the latter rejects such purchase because,
considerably more than that of the kitchen
as found by the trial Court, the value of the
built thereon.
land is considerably more than that of the
2. After said amounts shall have been determined by kitchen, DUMLAO shall give written notice
competent evidence, the Regional, Trial Court shall of such rejection to DEPRA and to the
render judgment, as follows: Court within fifteen (15) days from notice of
DEPRA's option to sell the land. In that
a) The trial Court shall grant DEPRA a event, the parties shall be given a period of
period of fifteen (15) days within which to fifteen (15) days from such notice of
exercise his option under the law (Article rejection within which to agree upon the
448, Civil Code), whether to appropriate terms of the lease, and give the Court
the kitchen as his own by paying to formal written notice of such agreement
DUMLAO either the amount of tile and its provisos. If no agreement is
expenses spent by DUMLAO f or the reached by the parties, the trial Court,
building of the kitchen, or the increase in within fifteen (15) days from and after the
value ("plus value") which the said area of termination of the said period fixed for
34 square meters may have acquired by negotiation, shall then fix the terms of the
reason thereof, or to oblige DUMLAO to lease, provided that the monthly rental to
pay the price of said area. The amounts to be fixed by the Court shall not be less than
Ten Pesos (P10.00) per month, payable subject area, up to the commencement
within the first five (5) days of each date of the forced lease referred to in the
calendar month. The period for the forced preceding paragraph;
lease shall not be more than two (2) years,
counted from the finality of the judgment, d) The periods to be fixed by the trial Court
considering the long period of time since in its Precision shall be inextendible, and
1952 that DUMLAO has occupied the upon failure of the party obliged to tender
subject area. The rental thus fixed shall be to the trial Court the amount due to the
increased by ten percent (10%) for the obligee, the party entitled to such payment
second year of the forced lease. DUMLAO shall be entitled to an order of execution for
shall not make any further constructions or the enforcement of payment of the amount
improvements on the kitchen. Upon due and for compliance with such other
expiration of the two-year period, or upon acts as may be required by the prestation
default by DUMLAO in the payment of due the obligee.
rentals for two (2) consecutive months,
DEPRA shall be entitled to terminate the
forced lease, to recover his land, and to
have the kitchen removed by DUMLAO or
at the latter's expense. The rentals herein
provided shall be tendered by DUMLAO to
the Court for payment to DEPRA, and such
tender shall constitute evidence of whether
or not compliance was made within the TECNOGAS PHILIPPINES MANUFACTURING
period fixed by the Court. CORPORATION, petitioner, vs. COURT OF
APPEALS (FORMER SPECIAL
c) In any event, DUMLAO shall pay SEVENTEENTH DIVISION) and EDUARDO
DEPRA an amount computed at Ten Pesos UY, respondents.
(P10.00) per month as reasonable
compensation for the occupancy of DECISION
DEPRA's land for the period counted from
PANGANIBAN, J.:
1952, the year DUMLAO occupied the
 The parties in this case are owners of adjoining lots 4. Ordering appellee to pay the value of the land
in Parañaque, Metro Manila. It was discovered in a occupied by the two-storey building;
survey that a portion of a building of petitioner, which
was presumably constructed by its predecessor-in- 5. Ordering appellee to pay the sum of P20,000.00
interest, encroached on a portion of the lot owned by for and as attorney’s fees;
private respondent. What are the rights and
obligations of the parties? Is petitioner considered a 6. Costs against appellee.”
builder in bad faith because, as held by respondent
Acting on the motions for reconsideration of both
Court, he is “presumed to know the metes and bounds
petitioner and private respondent, respondent Court
of his property as described in his certificate of
ordered the deletion of paragraph 4 of the dispositive
title”? Does petitioner succeed into the good faith or
portion in an Amended Decision dated February 9,
bad faith of his predecessor-in-interest which
1993, as follows:[4]
presumably constructed the building?
“WHEREFORE, premises considered, our decision of
These are the questions raised in the petition for
August 28, 1992 is hereby modified deleting paragraph
review of the Decision[1] dated August 28, 1992, in CA-
4 of the dispositive portion of our decision which reads:
G.R. CV No. 28293 of respondent Court [2] where the
disposition reads:[3] ‘4. Ordering appellee to pay the value of the land
occupied by the two-storey building.’
“WHEREFORE, premises considered, the Decision of
the Regional Trial Court is hereby reversed and set The motion for reconsideration of appellee is hereby
aside and another one entered - DENIED for lack of merit.”
1. Dismissing the complaint for lack of cause of action; The foregoing Amended Decision is also
challenged in the instant petition.
2. Ordering Tecnogas to pay the sum of P2,000.00 per
month as reasonable rental from October 4, 1979 until The Facts
appellee vacates the land;
The facts are not disputed. Respondent Court
3. To remove the structures and surrounding walls on merely reproduced the factual findings of the trial court,
the encroached area; as follows:[5]
“That plaintiff (herein petitioner) which is a corporation an area of 770 square meters, more or less, but
duly organized and existing under and by virtue of defendant, however, refused the offer. In 1973, the
Philippine laws is the registered owner of a parcel of parties entered into a private agreement before a
land situated in Barrio San Dionisio, Parañaque, Metro certain Col. Rosales in Malacañang, wherein plaintiff
Manila known as Lot 4331-A (should be 4531-A) of Lot agreed to demolish the wall at the back portion of its
4531 of the Cadastral Survey of Parañaque, Metro land thus giving to defendant possession of a portion
Manila, covered by Transfer Certificate of Title No. of his land previously enclosed by plaintiff’s wall; that
409316 of the Registry of Deeds of the Province of defendant later filed a complaint before the office of
Rizal; that said land was purchased by plaintiff from Municipal Engineer of Parañaque, Metro Manila as
Pariz Industries, Inc. in 1970, together with all the well as before the Office of the Provincial Fiscal of
buildings and improvements including the wall existing Rizal against plaintiff in connection with the
thereon; that the defendant (herein private respondent) encroachment or occupation by plaintiff’s buildings and
is the registered owner of a parcel of land known as walls of a portion of its land but said complaint did not
Lot No. 4531-B of Lot 4531 of the Cadastral Survey of prosper; that defendant dug or caused to be dug a
Parañaque, LRC (GLRO) Rec. No. 19645 covered by canal along plaintiff’s wall, a portion of which collapsed
Transfer Certificate of Title No. 279838, of the Registry in June, 1980, and led to the filing by plaintiff of the
of Deeds for the Province of Rizal; that said land which supplemental complaint in the above-entitled case and
adjoins plaintiff’s land was purchased by defendant a separate criminal complaint for malicious mischief
from a certain Enrile Antonio also in 1970; that in 1971, against defendant and his wife which ultimately
defendant purchased another lot also adjoining resulted into the conviction in court of defendant’s wife
plaintiff’s land from a certain Miguel Rodriguez and the for the crime of malicious mischief; that while trial of
same was registered in defendant’s name under the case was in progress, plaintiff filed in Court a
Transfer Certificate of Title No. 31390, of the Registry formal proposal for settlement of the case but said
of Deeds for the Province of Rizal; that portions of the proposal, however, was ignored by defendant.”
buildings and wall bought by plaintiff together with the
land from Pariz Industries are occupying a portion of After trial on the merits, the Regional Trial Court [6] of
defendant’s adjoining land; that upon learning of the Pasay City, Branch 117, in Civil Case No. PQ-7631-P,
encroachment or occupation by its buildings and wall rendered a decision dated December 4, 1989 in favor
of a portion of defendant’s land, plaintiff offered to buy of petitioner who was the plaintiff therein. The
from defendant that particular portion of defendant’s dispositive portion reads:[7]
land occupied by portions of its buildings and wall with
”WHEREFORE, judgment is hereby rendered in favor Whether or not the respondent Court of Appeals
of plaintiff and against defendant and ordering the erred in holding the petitioner a builder in bad faith
latter to sell to plaintiff that portion of land owned by because it is ‘presumed to know the metes and
him and occupied by portions of plaintiff’s buildings bounds of his property.’
and wall at the price of P2,000.00 per square meter
and to pay the former: (B)

1. The sum of P44,000.00 to compensate for the Whether or not the respondent Court of Appeals
losses in materials and properties incurred by plaintiff erred when it used the amicable settlement
through thievery as a result of the destruction of its between the petitioner and the private respondent,
wall; where both parties agreed to the demolition of the
rear portion of the fence, as estoppel amounting to
2. The sum of P7,500.00 as and by way of attorney’s recognition by petitioner of respondent’s right over
fees; and his property including the portions of the land
where the other structures and the building stand,
3. The costs of this suit.” which were not included in the settlement.

Appeal was duly interposed with respondent Court, (C)

which as previously stated, reversed and set aside the
decision of the Regional Trial Court and rendered the Whether or not the respondent Court of Appeals erred
assailed Decision and Amended Decision. Hence, this in ordering the removal of the ‘structures and
recourse under Rule 45 of the Rules of Court. surrounding walls on the encroached area’ and in
withdrawing its earlier ruling in its August 28, 1992
The Issues decision for the petitioner ‘to pay for the value of the
land occupied’ by the building, only because the
The petition raises the following issues:[8] private respondent has ‘manifested its choice to
demolish’ it despite the absence of compulsory sale
“(A)
where the builder fails to pay for the land, and which
‘choice’ private respondent deliberately deleted from its
September 1, 1980 answer to the supple-mental
complaint in the Regional Trial Court.”
 In its Memorandum, petitioner poses the following The respondent court’s citation of the twin cases
issues: of Tuason & Co. v. Lumanlan and Tuason & Co. v.
Macalindong is not the ‘judicial authority’ for a
“A boundary dispute situation between adjacent torrens
titled lot owners, as the facts of the present case
The time when to determine the good faith of the do not fall within nor square with the involved principle
builder under Article 448 of the New Civil Code, is of a dissimilar case.[11]
reckoned during the period when it was actually being
built; and in a case where no evidence was D.
presented nor introduced as to the good faith or bad
faith of the builder at that time, as in this case, he must Quite contrary to respondent Uy’s reasoning, petitioner
be presumed to be a ‘builder in good faith,’ since ‘bad Tecnogas continues to be a builder in good faith, even
faith cannot be presumed.’[9] if it subsequently built/repaired the walls/other
permanent structures thereon while the case a quowas
B. pending and even while respondent sent the petitioner
many letters/filed cases thereon.[12]
In a specific ‘boundary overlap situation’ which involves
a builder in good faith, as in this case, it is now well D. (E.)
settled that the lot owner, who builds on the adjacent
lot is not charged with ‘constructive notice’ of the The amicable settlement between the parties should
technical metes and bounds contained in their torrens be interpreted as a contract and enforced only in
titles to determine the exact and precise extent of his accordance with its explicit terms, and not over and
boundary perimeter.[10] beyond that agreed upon; because the courts
do nothave the power to create a contract nor expand
C. its scope.[13]

E. (F.)

As a general rule, although the landowner has the

option to choose between: (1) ‘buying the building built
in good faith’, or (2) ‘selling the portion of his land on
which stands the building’ under Article 448 of the Civil
Code; the first option is not absolute, because General Manager of Tecnogas that the sale between
an exception thereto, once it would be impractical for petitioner and Pariz Industries “was not registered”
the landowner to choose to exercise the first because of some problems with China Banking
alternative, i.e. buy that portion of the house standing Corporation; and (3) the Deed of Sale in favor of
on his land, for the whole building might be rendered petitioner was registered in its name only in “the month
useless. The workable solution is for him to select the of May 1973.”[16]
second alternative, namely, to sell to the builder that
part of his land on which was constructed a portion of The Court’s Ruling
the house.”[14]
The petition should be granted.
Private respondent, on the other hand, argues that
the petition is “suffering from the following flaws: [15] Good Faith or Bad Faith

1. It did not give the exact citations of cases Respondent Court, citing the cases of J. M.
decided by the Honorable Supreme Court that Tuason & Co., Inc. vs. Vda. de Lumanlan [17] and J. M.
allegedly contradicts the ruling of the Hon. Court Tuason & Co., Inc. vs. Macalindong,[18] ruled that
of Appeals based on the doctrine laid down in petitioner “cannot be considered in good faith” because
Tuason vs. Lumanlan case citing also Tuason vs. as a land owner, it is “presumed to know the metes
Macalindong case (Supra). and bounds of his own property, specially if the same
are reflected in a properly issued certificate of
2. Assuming that the doctrine in the alleged Co Tao title. One who erroneously builds on the adjoining lot
vs. Chico case is contradictory to the doctrine in should be considered a builder in (b)ad (f)aith, there
Tuason vs. Lumanlan and Tuason vs. being presumptive knowledge of the Torrens title, the
Macalindong, the two cases being more current, area, and the extent of the boundaries.” [19]
the same should prevail.”
We disagree with respondent Court. The two
Further, private respondent contends that the following cases it relied upon do not support its main
“unmistakably” point to the bad faith of petitioner: (1) pronouncement that a registered owner of land has
private respondent’s purchase of the two lots, “was presumptive knowledge of the metes and bounds of its
ahead of the purchase by petitioner of the building and own land, and is therefore in bad faith if he mistakenly
lot from Pariz Industries”; (2) the declaration of the builds on an adjoining land. Aside from the fact that
those cases had factual moorings radically different
from those obtaining here, there is nothing in those his ignorance of any defect or flaw in his title. [23] Hence,
cases which would suggest, however remotely, that such good faith, by law, passed on to Pariz’s
bad faith is imputable to a registered owner of land successor, petitioner in this case. Further, “(w)here
when a part of his building encroaches upon a one derives title to property from another, the act,
neighbor’s land, simply because he is supposedly declaration, or omission of the latter, while holding the
presumed to know the boundaries of his land as title, in relation to the property, is evidence against the
described in his certificate of title. No such doctrinal former.”[24] And possession acquired in good faith does
statement could have been made in those cases not lose this character except in case and from the
because such issue was not before the Supreme moment facts exist which show that the possessor is
Court. Quite the contrary, we have rejected such a not unaware that he possesses the thing improperly or
theory in Co Tao vs. Chico,[20] where we held that wrongfully.[25] The good faith ceases from the moment
unless one is versed in the science of surveying, “no defects in the title are made known to the possessor,
one can determine the precise extent or location of his by extraneous evidence or by suit for recovery of the
property by merely examining his paper title.” property by the true owner.[26]

There is no question that when petitioner Recall that the encroachment in the present case
purchased the land from Pariz Industries, the buildings was caused by a very slight deviation of the erected
and other structures were already in existence. The wall (as fence) which was supposed to run in a straight
record is not clear as to who actually built those line from point 9 to point 1 of petitioner’s lot. It was an
structures, but it may well be assumed that petitioner’s error which, in the context of the attendant facts, was
predecessor-in-interest, Pariz Industries, did consistent with good faith. Consequently, the builder, if
so. Article 527 of the Civil Code presumes good faith, sued by the aggrieved landowner for recovery of
and since no proof exists to show that the possession, could have invoked the provisions of Art.
encroachment over a narrow, needle-shaped portion of 448 of the Civil Code, which reads:
private respondent’s land was done in bad faith by the
builder of the encroaching structures, the latter should ”The owner of the land on which anything has been
be presumed to have built them in good faith. [21] It is built, sown or planted in good faith, shall have the right
presumed that possession continues to be enjoyed in to appropriate as his own the works, sowing or
the same character in which it was acquired, until the planting, after payment of the indemnity provided for in
contrary is proved.[22] Good faith consists in the belief articles 546 and 548, or to oblige the one who built or
of the builder that the land he is building on is his, and planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or overthrown the presumption of good faith under Article
planter cannot be obliged to buy the land if its value is 527 of the Civil Code, as already stated, taken together
considerably more than that of the building or trees. In with the disputable presumptions of the law on
such case, he shall pay reasonable rent, if the owner evidence. These presumptions state, under Section 3
of the land does not choose to appropriate the building (a) of Rule 131 of the Rules of Court, that the person is
or trees after proper indemnity. The parties shall agree innocent of a crime or wrong; and under Section 3 (ff)
upon the terms of the lease and in case of of Rule 131, that the law has been obeyed. In fact,
disagreement, the court shall fix the terms thereof.” private respondent Eduardo Uy himself was unaware
of such intrusion into his property until after 1971 when
The obvious benefit to the builder under this article is he hired a surveyor, following his purchase of another
that, instead of being outrightly ejected from the land, adjoining lot, to survey all his newly acquired
he can compel the landowner to make a choice lots. Upon being apprised of the encroachment,
between the two options: (1) to appropriate the building petitioner immediately offered to buy the area occupied
by paying the indemnity required by law, or (2) sell the by its building -- a species of conduct consistent with
land to the builder. The landowner cannot refuse to good faith.
exercise either option and compel instead the owner of
the building to remove it from the land.[27] In the second place, upon delivery of the property
by Pariz Industries, as seller, to the petitioner, as
The question, however, is whether the same benefit buyer, the latter acquired ownership of the
can be invoked by petitioner who, as earlier stated, is property. Consequently and as earlier discussed,
not the builder of the offending structures but petitioner is deemed to have stepped into the shoes of
possesses them as buyer. the seller in regard to all rights of ownership over the
immovable sold, including the right to compel the
We answer such question in the affirmative. private respondent to exercise either of the two options
provided under Article 448 of the Civil Code.
In the first place, there is no sufficient showing that
petitioner was aware of the encroachment at the time it Estoppel
acquired the property from Pariz Industries. We agree
with the trial court that various factors in evidence Respondent Court ruled that the amicable
adequately show petitioner’s lack of awareness settlement entered into between petitioner and private
thereof. In any case, contrary proof has not respondent estops the former from questioning the
private respondent’s “right” over the disputed to “be subject to negotiation by herein parties.” The
property. It held that by undertaking to demolish the settlement may have recognized the ownership of
fence under said settlement, petitioner recognized private respondent but such admission cannot be
private respondent’s right over the property, and equated with bad faith. Petitioner was only trying to
“cannot later on compel” private respondent “to sell to avoid a litigation, one reason for entering into an
it the land since” private respondent “is under no amicable settlement.
obligation to sell.”[28]
As was ruled in Osmeña vs. Commission on Audit,
[30]
We do not agree. Petitioner cannot be held in
estoppel for entering into the amicable settlement, the
pertinent portions of which read:[29] “A compromise is a bilateral act or transaction that is
expressly acknowledged as a juridical agreement by
”That the parties hereto have agreed that the rear the Civil Code and is therein dealt with in some
portion of the fence that separates the property of the detail. `A compromise,’ declares Article 2208 of said
complainant and respondent shall be demolished up to Code, `is a contract whereby the parties, by making
the back of the building housing the machineries which reciprocal concessions, avoid a litigation or put an end
demolision (sic) shall be undertaken by the to one already commenced.’
complainant at anytime.
xxx xxx xxx
That the fence which serve(s) as a wall housing the
electroplating machineries shall not be demolished in The Civil Code not only defines and authorizes
the mean time which portion shall be subject to compromises, it in fact encourages them in civil
negotiation by herein parties.” actions. Art. 2029 states that `The Court shall
endeavor to persuade the litigants in a civil case to
From the foregoing, it is clear that petitioner agreed agree upon some fair compromise.’ x x x.”
only to the demolition of a portion of the wall
separating the adjoining properties of the parties In the context of the established facts, we hold that
-- i.e. “up to the back of the building housing the petitioner did not lose its rights under Article 448 of the
machineries.” But that portion of the fence which Civil Code on the basis merely of the fact that some
served as the wall housing the electroplating years after acquiring the property in good faith, it
machineries was not to be demolished. Rather, it was learned about -- and aptly recognized -- the right of
private respondent to a portion of the land occupied by
its building. The supervening awareness of the the land. In view of the impracticality of creating a
encroachment by petitioner does not militate against its state of forced co-ownership, the law has provided a
right to claim the status of a builder in good faith. In just solution by giving the owner of the land the option
fact, a judicious reading of said Article 448 will readily to acquire the improvements after payment of the
show that the landowner’s exercise of his option can proper indemnity, or to oblige the builder or planter to
only take place after the builder shall have come to pay for the land and the sower to pay the proper
know of the intrusion -- in short, when both parties rent. It is the owner of the land who is authorized to
shall have become aware of it. Only then will the exercise the option, because his right is older, and
occasion for exercising the option arise, for it is only because, by the principle of accession, he is entitled to
then that both parties will have been aware that a the ownership of the accessory thing. (3 Manresa 213;
problem exists in regard to their property rights. Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs.
Chan Chico, G. R. No. 49167, April 30, 1949; Article
Options of Private Respondent applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off.
Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz.
What then is the applicable provision in this case 2050).”
which private respondent may invoke as his
remedy: Article 448 or Article 450[31] of the Civil The private respondent’s insistence on the removal
Code? of the encroaching structures as the proper remedy,
which respondent Court sustained in its assailed
In view of the good faith of both petitioner and Decisions, is thus legally flawed. This is not one of the
private respondent, their rights and obligations are to remedies bestowed upon him by law. It would be
be governed by Art. 448. The essential fairness of this available only if and when he chooses to compel the
codal provision has been pointed out by Mme. Justice petitioner to buy the land at a reasonable price but the
Ameurfina Melencio-Herrera, citing Manresa and latter fails to pay such price. [33] This has not taken
applicable precedents, in the case of Depra vs. place. Hence, his options are limited to: (1)
Dumlao,[32] to wit: appropriating the encroaching portion of petitioner’s
building after payment of proper indemnity, or (2)
“Where the builder, planter or sower has acted in good
obliging the latter to buy the lot occupied by the
faith, a conflict of rights arises between the owners,
structure. He cannot exercise a remedy of his own
and it becomes necessary to protect the owner of the
liking.
improvements without causing injustice to the owner of
 Neither is petitioner’s prayer that private The award of attorney’s fees by respondent Court
respondent be ordered to sell the land [34] the proper against petitioner is unwarranted since the action
remedy. While that was dubbed as the “more workable appears to have been filed in good faith. Besides,
solution” in Grana and Torralba vs. The Court of there should be no penalty on the right to litigate. [41]
Appeals, et al.,[35] it was not the relief granted in that
case as the landowners were directed to exercise WHEREFORE, premises considered, the petition is
“within 30 days from this decision their option to either hereby GRANTED and the assailed Decision and the
buy the portion of the petitioners’ house on their land or Amended Decision are REVERSED and SET
sell to said petitioners the portion of their land on which ASIDE. In accordance with the case of Depra vs.
it stands.”[36] Moreover, in Grana and Torralba, the area Dumlao,[42] this case is REMANDED to the Regional
involved was only 87 square meters while this case Trial Court of Pasay City, Branch 117, for further
involves 520 square meters[37]. In line with the case of proceedings consistent with Articles 448 and 546 [43] of
Depra vs. Dumlao,[38] this case will have to be the Civil Code, as follows:
remanded to the trial court for further proceedings to
fully implement the mandate of Art. 448. It is a rule of The trial court shall determine:
procedure for the Supreme Court to strive to settle the
a) the present fair price of private respondent’s
entire controversy in a single proceeding leaving no
520 square-meter area of land;
root or branch to bear the seeds of future litigation. [39]
b) the increase in value (“plus value”) which
Petitioner, however, must also pay the rent for the
the said area of 520 square meters may
property occupied by its building as prescribed by
have acquired by reason of the existence
respondent Court from October 4, 1979, but only up to
of the portion of the building on the area;
the date private respondent serves notice of its option
upon petitioner and the trial court; that is, if such option c) the fair market value of the encroaching
is for private respondent to appropriate the portion of the building; and
encroaching structure. In such event, petitioner would
have a right of retention which negates the obligation d) whether the value of said area of land is
to pay rent.[40] The rent should however continue if the considerably more than the fair market
option chosen is compulsory sale, but only up to the value of the portion of the building thereon.
actual transfer of ownership.
2. After said amounts shall have been determined by days from such notice of rejection within
competent evidence, the regional trial court shall which to agree upon the terms of the lease,
render judgment as follows: and give the trial court formal written notice of
the agreement and its provisos. If no
a) The private respondent shall be granted a agreement is reached by the parties, the trial
period of fifteen (15) days within which to court, within fifteen (15) days from and after
exercise his option under the law (Article 448, the termination of the said period fixed for
Civil Code), whether to appropriate the negotiation, shall then fix the terms of the
portion of the building as his own by paying to lease provided that the monthly rental to be
petitioner its fair market value, or to oblige fixed by the Court shall not be less than two
petitioner to pay the price of said area. The thousand pesos (P2,000.00) per month,
amounts to be respectively paid by petitioner payable within the first five (5) days of each
and private respondent, in accordance with calendar month. The period for the forced
the option thus exercised by written notice of lease shall not be more than two (2) years,
the other party and to the court, shall be paid counted from the finality of the judgment,
by the obligor within fifteen (15) days from considering the long period of time since
such notice of the option by tendering the 1970 that petitioner has occupied the subject
amount to the trial court in favor of the party area. The rental thus fixed shall be increased
entitled to receive it; by ten percent (10%) for the second year of
the forced lease. Petitioner shall not make
b) If private respondent exercises the option to any further constructions or improvements on
oblige petitioner to pay the price of the land the building. Upon expiration of the two-year
but the latter rejects such purchase because, period, or upon default by petitioner in the
as found by the trial court, the value of the payment of rentals for two (2) consecutive
land is considerably more than that of the months, private respondent shall be entitled
portion of the building, petitioner shall give to terminate the forced lease, to recover his
written notice of such rejection to private land, and to have the portion of the building
respondent and to the trial court within fifteen removed by petitioner or at latter’s
(15) days from notice of private respondent’s expense. The rentals herein provided shall
option to sell the land. In that event, the be tendered by petitioner to the trial court for
parties shall be given a period of fifteen (15) payment to private respondent, and such
 tender shall constitute evidence of whether or
not compliance was made within the period
fixed by the said court. G.R. No. L-32974 July 30, 1979

c) In any event, petitioner shall pay private BARTOLOME ORTIZ, petitioner,

respondent an amount computed at two vs.
thousand pesos (P2,000.00) per month as HON. UNION C. KAYANAN, in his capacity as
reasonable compensation for the occupancy Judge of the Court of First Instance of Quezon,
of private respondent’s land for the period Branch IV; ELEUTERIO ZAMORA, QUIRINO
counted from October 4, 1979, up to the date COMINTAN, VICENTE FERRO, AND GREGORIO
private respondent serves notice of its option PAMISARAN, respondents.
to appropriate the encroaching structures,
Salonga, Ordoñ;ez, Yap, Sicat & Associates and
otherwise up to the actual transfer of
Salvador, Ulgado & Carbon for petitioner.
ownership to petitioner or, in case a forced
lease has to be imposed, up to the Jose A. Cusi for private respondents.
commencement date of the forced lease
referred to in the preceding paragraph;

d) The periods to be fixed by the trial court in its ANTONIO, J.:1äwphï1.ñët

decision shall be non-extendible, and upon
failure of the party obliged to tender to the Petition for certiorari and Prohibition with Preliminary
trial court the amount due to the obligee, the Injunction to nullify the Order of respondent Judge
party entitled to such payment shall be directing the execution of the final judgment in Civil
entitled to an order of execution for the Case No. C-90, entitled "Bartolome Ortiz vs. Secretary
enforcement of payment of the amount due of Agriculture and Natural Resources, et al.," and the
and for compliance with such other acts as Writ of Execution issued to implement said Order,
may be required by the prestation due the allegedly for being inconsistent with the judgment
obligee. sought to be enforced.

Civil Case No. C-90 was filed by Bartolome Ortiz who

sought the review and/or annulment of the decision of
the Secretary of Agriculture and Natural Resources, defendants Comintan and Zamora filed
giving preference to the sales applications of private their respective sales applications Nos.
respondents Quirino Comintan and Eleuterio Zamora 8433 and 9258; that plaintiff filed his
over Lot No. 5785, PLS-45, located at Barrio protest on November 26, 1951 alleging that
Cabuluan, Calauag, Quezon. he should be given preference to purchase
the lot inasmuch as he is the actual
I occupant and has been in continuous
possession of the same since 1931; and
The factual background of the case, as found by inspite of plaintiff's opposition, "Portion A"
respondent Court, is as follows:têñ.£îhqw⣠of the property was sold at public auction
wherein defendant Comintan was the only
... The lot in controversy was formerly the
bidder; that on June 8, 1957, investigation
subject of Homestead Application No.
was conducted on plaintiff's protest by
122417 of Martin Dolorico II, plaintiff's ward
Assistant Public Lands Inspector Serapion
who died on August 20, 1931; that since
Bauzon who submitted his report to the
then it was plaintiff who continued the
Regional Land Officer, and who in turn
cultivation and possession of the property,
rendered a decision on April 9, 1958,
without however filing any application to
dismissing plaintiff's claim and giving due
acquire title thereon; that in the Homestead
course to defendants' sales applications on
Application No. 122417, Martin Dolorico II
the ground that the relinquishment of the
named his uncle, Martin Dolorico I as his
homestead rights of Martin Dolorico I in
heir and successor in interest, so that in
favor of Comintan and Zamora is proper,
1951 Martin Dolorico I executed an affidavit
the former having been designated as
relinquishing his rights over the property in
successor in interest of the original
favor of defendants Quirino Comintan and
homestead applicant and that because
Eleuterio Zamora, his grandson and son-in-
plaintiff failed to participate in the public
law, respectively, and requested the
auction, he is forever barred to claim the
Director of Lands to cancel the homestead
property; that plaintiff filed a motion for
application; that on the strength of the
reconsideration of this decision which was
affidavit, Homestead Application No.
denied by the Director of Lands in his order
122417 was cancelled and thereafter,
dated June 10, 1959; that, finally, on
 appeal to the Secretary of Agriculture and jointly said plaintiff the improvements he
Natural Resources, the decision rendered has introduced on the whole property in the
by the Regional Land Officer was amount of THIRTEEN THOUSAND SIX
affirmed in toto. 1 HUNDRED THIRTY-TWO (P13,632.00)
PESOS, the latter having the right to retain
On March 22, 1966, respondent Court rendered the property until after he has been fully
judgment in the afore-mentioned civil case, the paid therefor, without interest since he
dispositive portion of which reads as follows:têñ. enjoys the fruits of the property in
£îhqw⣠question, with prejudice and with costs
again the plaintiff. 2
IN VIEW OF THE FOREGOING
CONSIDERATIONS, judgment is hereby Plaintiff appealed the decision to the Court of Appeals.
rendered awarding Lot No. 5785-A of PLS-
45, (Calauag Public Land Subdivision) one- Two (2) years after the rendition of the judgment by the
half portion of the property in litigation court a quo, while the case was pending appeal and
located at Bo. Cabuluan, Calauag, upon petition of private respondents Quirino Comintan
Quezon, in favor of defendant QUIRINO and Eleuterio Zamora, respondent Court appointed
COMINTAN, being the successful bidder in respondent Vicente Ferro, Clerk of Court, as Receiver
the public auction conducted by the bureau to collect tolls on a portion of the property used as a
of Lands on April 18, 1955, and hereby diversion road. On August 19, 1969, the Court of
giving due course to the Sales Application Appeals issued a Resolution annulling the Order
No. 9258 of defendant Eleuterio Zamora appointing the Receiver. Subsequently, on February
over the other half, Lot No. 5785-B of PLS- 19, 1970, the Appellate Court affirmed the decision of
45, Calauag, without prejudice to the right the trial court. A petition for review on certiorari of the
of plaintiff BARTOLOME ORTIZ to decision of the Court of Appeals was denied by this
participate in the public bidding of the same Court on April 6, 1970. At this point, private
to be announced by the Bureau of Lands, respondents filed a petition for appointment of a new
Manila. However, should plaintiff Bartolome receiver with the court a quo. This petition was granted
Ortiz be not declared the successful bidder and the receiver was reappointed. Petitioner sought
thereof, defendants Quirino Comintan and the annulment of this Order with the Court of Appeals,
Eleuterio Zamora are ordered to reimburse but said Court ruled that its decision had already
become final and that the records of the case were to there is still an amount due and payable to
be remanded to the trial court. said plaintiff, then if such amount is not
paid on demand, including the legal
Not satisfied with such denial, petitioner filed a interests, said bond shall be held
petitioner for certiorari, prohibition and mandamus with answerable.
preliminary injunction before this Court, 3 praying for
the annulment of the Order reappointing the Receiver. Ordering further the plaintiff to render an
On July 13, 1970, the petition was dismissed by this accounting of the tolls he collected from
Court on the ground of insufficient showing of grave March of 1967 to December 31, 1968 and
abuse of discretion. from September 1969 to March 31, 1970,
and deliver said tolls collected to the
II receiver and if judgment is already
executed, then to Quirino Comintan and
The judgment having become final and executory Eleuterio Zamora; and,
private respondents filed a motion for the execution of
the same, praying as follows:têñ.£îhqw⣠Finally, to condemn plaintiff to pay moral
damages for withholding the tools which
WHEREFORE, it is respectfully prayed of belong to your movant in an amount this
this Honorable Court to order the issuance Court may deem just in the premises. 4
of a writ of execution in accordance with
the judgment of this Honorable Court, Acting upon the foregoing motion, respondent Judge
confirmed by the Court of Appeals and the issued an Order, dated September 23, 1970, stating,
Supreme Court, commanding any lawful among others, the following: têñ.£îhqwâ£
officer to deliver to defendants Comintan
and Zamora the land subject of the The records further disclosed that from
decision in this case but allowing March 1967 to December 31, 1968, piaintiff
defendants to file a bond in such amount Bartolome Ortiz collected tolls on a portion
as this Honorable Court may fix, in lieu of of the propertv in question wherein he has
the P13,632.00 required to be paid to not introduced anv improvement
plaintiff, conditioned that after the particularlv on Lot No. 5785-A; PLS-45
accounting of the tools collected by plaintiff, awarded to defendant Quirino Comintan,
thru which vehicular traffic was detoured or the interregnum pending such accounting
diverted, and again from September 1969 and recovery by the Receiver of the tolls
to March 31, 1970, the plaintiff resumed the collected by the plaintiff, the defendants
collection of tools on the same portion pray that they allowed to put up a bond in
without rendering any accounting on said lieu of the said P13,632.00 to answer for
tolls to the Receiver, who, was reappointed damages of the former, if any.
after submitting the required bond and
specifically authorized only to collect tolls On the other hand, plaintiff contends in his
leaving the harvesting of the improvements opposition, admitting that the decision of
to the plaintiff. the Supreme Court has become final and
executory; (1) the offer of a bond in lieu of
xxx xxx xxx payment of P13,632.00 does not, and
cannot, satisfy the condition imposed in the
ln virtue of he findings of this Court as decision of this Court which was affirmed in
contained in the dispositive portion of its toto;(2) the public sale of Portion "B" of the
decision, the defendants are jointly land has still to take place as ordained
obligated to pay the plaintiff in the amount before the decision could be executed;
of P13,632.00 as reasonable value of the and, (3) that whatever sums plaintiff may
improvements he introduced on the whole derive from the property cannot be set off
property in question, and that he has the against what is due him for the
right of retention until fully paid. It can be improvements he made, for which he has
gleaned from the motion of the defendants to be reimbursed as ordered.
that if plaintiff submits an accounting of the
tolls he collected during the periods above xxx xxx xxx
alluded to, their damages of about
P25,000.00 can more than offset their Let it be known that plaintiff does not
obligation of P13,362.00 in favor of the dispute his having collected tolls during the
plaintiff, thereafter the possession of the periods from March 1967 to December 31,
land be delivered to the defendants since 1968 and from September 1969 to March
the decision of the Supreme Court has 31, 1970. The Supreme Court affirmed the
already become final and executory, but in decision of this Court its findings that said
tolls belong to the defendant, considering meritorious, the same is granted; provided,
that the same were collected on a portion however, that they put up a bond equal the
of the land question where the plaintiff adjudicated amount of P13,632.00
did not introduce any improvement. The accruing in favor of the plaintiff, from a
reimbursement to the plaintiff pertains only reputable or recognized bonding or surety
to the value of the improvements, like company, conditioned that after an
coconut trees and other plants which he accounting of the tolls collected by the
introduced on the whole property. The tolls plaintiff should there be found out any
collected by the plaintiff on an unimproved balance due and payable to him after
portion naturally belong to the defendants, reckoning said obligation of P13,632.00 the
following the doctrine on accretion. Further, bond shall be held answerable therefor. 5
the reappointment of a Receiver by this
Court was upheld by the Supreme Court Accordingly, a Writ of Execution was issued after
when it denied the petition for certiorari private respondent Quirino Comintan had filed the
filed by the plaintiff, bolstering the legal required bond. The writ directed the Sheriff to enforce
claim of defendants over said tolls. Thus, the decision of the Court, and stated, part in, the
the decision of the Supreme Court following:têñ.£îhqwâ£
rendered the decision of this Court
retroactive from March 22, 1966 although But should there be found any amount
pending accounting of the tolls collected by collectible after accounting and deducting
the plaintiff is justified and will not prejudice the amount of P3,632.00, you are hereby
anybody, but certainly would substantially ordered that of the goods and chattels of
satisfy the conditions imposed in the Bartolome Ortiz of Bo. Kabuluan, Calauag,
decision. However, insofar as the one-half Quezon, be caused to be made any excess
portion "B" of the property, the decision in the above-metioned amount together
may be executed only after public sale by with your lawful fees and that you render
the Bureau of Lands shall be same to defendant Quirino Comintan. If
accomplished. sufficient personal property cannot be
found thereof to satisfy this execution and
WHEREFORE, finding the Motion for lawful fees thereon, then you are
Execution filed by the defendants to be commanded that of the lands and buildings
 of the said BARTOLOME ORTIZ you make The foregoing Motion for Reconsideration was denied
the said excess amount in the manner by respondent Judge per Order dated November 18,
required by the Rules of Court, and make 1970. Saod Order states, in part:têñ.£îhqwâ£
return of your proceedings within this Court
within sixty (60) days from date of service. It goes without saying that defendant
Comintan is entitled to be placed in
You are also ordered to cause Bartolome possession of lot No. 5785-A of PLS-45
Ortiz to vacate the property within fifteen (Calauag Public Land Subdivision) and
(15) days after service thereof the enjoyment of the tolls from March, 1967 to
defendant Quirino Comintan having filed March, 1968 and from September, 1969 to
the required bond in the amount of March 31, l970 which were received by
THIRTEEN THOUSAND SIX HUNDRED plaintiff Bartolome Ortiz, collected from the
THIRTY-TWO (P13,632.00) PESOS. 6 property by reason of the diversion road
where vehicular traffic was detoured. To
On October 12, 1970, petitioner filed a Motion for defendant Comintan belongs the tolls thus
Reconsideration of the aforesaid Order and Writ of collected from a portion of the land
Execution, alleging:têñ.£îhqw⣠awarded to him used as a diversionary
road by the doctrine of accretion and his
(a) That the respondent judge has no right over the same is ipso jure, there being
authority to place respondents in no need of any action to possess said
possession of the property; addition. It is so because as consistently
maintained by the Supreme Court, an
(b) That the Supreme Court has never
applicant who has complied with all the
affirmed any decision of the trial court that
terms and conditions which entitle him to a
tolls collected from the diversionary road on
patent for a particular tract of publlic land,
the property, which is public land, belong to
acquires a vested right therein and is to be
said respondents;
regarded as equitable owner thereof so
(c) That to assess petitioner a P25,000.00 that even without a patent, a perfected
liability for damages is purely punitive homestead or sales application is a
imposition without factual or legal property right in the fullest sense,
justification. unaffectcd by the fact that the paramount
title is still in the Government and no SO ORDERED. 7
subsequent law can deprive him of that
vested right The question of the actual III
damages suffered by defendant Comintan
by reason of the unaccounted tolls Petitioner thus filed the instant petition, contending that
received by plaintiff had already been fully in having issued the Order and Writ of Execution,
discussed in the order of September 23, respondent Court "acted without or in excess of
1970 and the Court is honestly convinced jurisdiction, and/or with grave abuse of discretion,
and believes it to be proper and regular because the said order and writ in effect vary the terms
under the circumstances. of the judgment they purportedly seek to enforce." He
argued that since said judgment declared the petitioner
Incidentally, the Court stands to correct a possessor in good faith, he is entitled to the payment
itself when in the same order, it directed the of the value of the improvements introduced by him on
execution of he decision with respect to the the whole property, with right to retain the land until he
one-half portion "B" of the property only has been fully paid such value. He likewise averred
after the public sale by the Bureau of that no payment for improvements has been made
Lands, the same being an oversight, it and, instead, a bond therefor had been filed by
appearing that the Sales Application of defendants (private respondents), which, according to
defendant Eleuterio Zamora had already petitioner, is not the payment envisaged in the decision
been recognized and full confirmed by the which would entitle private respondents to the
Supreme Court. possession of the property. Furthermore, with respect
to portion "B", petitioner alleges that, under the
In view thereof, finding the motion filed by decision, he has the right to retain the same until after
plaintiff to be without merit, the Court he has participated and lost in the public bidding of the
hereby denies the same and the order of land to be conducted by the Bureau of Lands. It is
September 23, 1970 shall remain in full claimed that it is only in the event that he loses in the
force subject to the amendment that the bidding that he can be legally dispossessed thereof.
execution of the decision with respect to
the one-half portion "B" shall not be It is the position of petitioner that all the fruits of the
conditioned to the public sale by the property, including the tolls collected by him from the
Bureau of Lands. passing vehicles, which according to the trial court
amounts to P25,000.00, belongs to petitioner and not manifested that the amount of P14,040.96,
to defendant/private respondent Quirino Comintan, in representing the amount decreed in the judgment as
accordance with the decision itself, which decreed that reimbursement to petitioner for the improvements, plus
the fruits of the property shall be in lieu of interest on interest for six months, has already been deposited by
the amount to be paid to petitioner as reimbursement them in court, "with the understanding that said amount
for improvements. Any contrary opinion, in his view, shall be turned over to the plaintiff after the court a
would be tantamount to an amendment of a decision quo shall have determined the improvement on Lot
which has long become final and executory and, 5785-A, and subsequently the remaining balance of
therefore, cannot be lawfully done. the deposit shall be delivered to the petitioner (plaintiff
therein) in the event he loses the bid for Lot 5785-B in
Petitioner, therefore, prayed that: (1) a Writ of favor of private respondent Eleuterio Zamora." 8 The
Preliminary Injunction be issued enjoining the deposit is evidenced by a certification made by the
enforcement of the Orders of September 23, 1970 and Clerk of the Court a quo. 9 Contending that said deposit
November 18, 1970, and the Writ of Execution issued was a faithful compliance with the judgment of the trial
thereto, or restoring to petitioner the possession of the court, private respondent Quirino Comintan prayed for
property if the private respondents had been placed in the dissolution of the Writ of Injunction.
possession thereof; (2) annulling said Orders as well
as the Writ of Execution, dissolving the receivership It appears that as a consequence of the deposit made
established over the property; and (3) ordering private by private respondents, the Deputy, Sheriff of Calauag,
respondents to account to petitioner all the fruits they Quezon ousted petitioner's representative from the
may have gathered or collected from the property in land in question and put private respondents in
question from the time of petitioiier's illegal possession thereof. 10
dispossession thereof.
On March 10, 1971, petitioner filed a "Comment on
On January 29, 1971, this Court issued the Writ of Respondents' 'Motion for Reconsideration' dated
Preliminary Injunction. On January 30, 1971, private January 29, 1971' and 'Supplemental Motion for
respondents filed a Motion for Reconsideration and/or Reconsideration and Manifestation,'" contending that
Modification of the Order dated January 29, 1971. This the tender of deposit mentioned in the Suplemental
was followed by a Supplemental Motion for Motion was not really and officially made, "inasmuch
Reconsideration and Manifestation on February 3, as the same is not supported by any official receipt
1971. In the latter motion, private respondents from the lower court, or from its clerk or cashier, as
required by law;" that said deposit does not constitute amount of P13,632,00 decreed in the judgment
sufficient compliance with the judgment sought to be representing the expenses for clearing the land and
enforced, neither was it legally and validly made the value of the coconuts and fruit trees planted by him
because the requisites for consignation had not been remains unpaid, he can appropriate for his exclusive
complied with; that the tender of legal interest for six benefit all the fruits which he may derive from the
months cannot substitute petitioner's enjoyment of the property, without any obligation to apply any portion
fruits of the property as long as the judgment in Civil thereof to the payment of the interest and the principal
Case No. C-90 has not been implemented in the of the debt.
manner decreed therein; that contrary to the
allegations of private respondents, the value of the We find this contention untenable.
improvements on the whole property had been
determined by the lower court, and the segregation of There is no question that a possessor in good faith is
the improvements for each lot should have been raised entitled to the fruits received before the possession is
by them at the opportune moment by asking for the legally interrupted. 11 Possession in good faith ceases
modification of the decision before it became final and or is legally interrupted from the moment defects in the
executory; and that the tolls on the property constituted title are made known to the possessor, by extraneous
"civil fruits" to which the petitioner is entitled under the evidence or by the filing of an action in court by the
terms of the decision. true owner for the recovery of the property. 12 Hence, all
the fruits that the possessor may receive from the time
IV he is summoned in court, or when he answers the
complaint, must be delivered and paid by him to the
The issue decisive of the controvery is—after the owner or lawful possessor. 13
rendition by the trial court of its judgment in Civil Case
No. C-90 on March 22, 1966 confirming the award of However, even after his good faith ceases, the
one-half of the property to Quirino Comintan—whether possessor in fact can still retain the property, pursuant
or not petitioner is still entitled to retain for his own to Article 546 of the New Civil Code, until he has been
exclusive benefit all the fruits of the property, such as fully reimbursed for all the necessary and useful
the tolls collected by him from March 1967 to expenses made by him on the property. This right of
December 1968, and September 1969 to March 31, retention has been considered as one of the
1970, amounting to about P25,000.00. In other words, conglomerate of measures devised by the law for the
petitioner contends that so long as the aforesaid protection of the possessor in good faith. Its object is to
guarantee the reimbursement of the expenses, such According to Manresa, the right of retention is,
as those for the preservation of the property, 14 or for therefore, analogous to that of a pledge, if the property
the enhancement of its utility or productivity. 15It permits retained is a movable, and to that of antichresis, if the
the actual possessor to remain in possession while he property held is immovable. 18 This construction
has not been reimbursed by the person who defeated appears to be in harmony with similar provisions of the
him in the possession for those necessary expenses civil law which employs the right of retention as a
and useful improvements made by him on the thing means or device by which a creditor is able to obtain
possessed. The principal characteristic of the right of the payment of a debt. Thus, under Article 1731 of the
retention is its accessory character. It is accessory to a New Civil Code, any person who has performed work
principal obligation. Considering that the right of the upon a movable has a right to retain it by way of
possessor to receive the fruits terminates when his pledge until he is paid. Similarly, under Article 1914 of
good faith ceases, it is necessary, in order that this the same Code, the agent may retain in pledge the
right to retain may be useful, to concede to the creditor things which are the object of the agency until the
the right to secure reimbursement from the fruits of the principal effects reimbursement of the funds advanced
property by utilizing its proceeds for the payment of the by the former for the execution of the agency, or he is
interest as well as the principal of the debt while he indemnified for all damages which he may have
remains in possession. This right of retention of the suffered as a consequence of the execution of the
property by the creditor, according to Scaevola, in the agency, provided he is free from fault. To the same
light of the provisions of Article 502 of the Spanish Civil effect, the depositary, under Article 1994 of the same
Code, 16 is considered not a coercive measure to oblige Code, may retain the thing in pledge until the full
the debtor to pay, depriving him temporarily of the payment of what may be due him by reason of the
enjoyment of the fruits of his property, but as a means deposit. The usufructuary, pursuant to Article 612 of
of obtainitig compensation for the debt. The right of the same Code, may retain the property until he is
retention in this case is analogous to a contract of reimbursed for the amount paid for taxes levied on the
antichresis and it cati be considered as a means of capital (Article 597) and tor extraordinary repairs
extinguishing the obligation, inasmuch as the right to (Article 594).
retain the thing lasts only for the period necessary to
enable the creditor to be reimbursed from the fruits for In all of these cases, the right of retention is used as a
the necessary and useful expenses. 17 means of extinguishing the obligation. As amply
observed by Manresa: "El derecho de retencion, lo
hemos dicho, es el derecho de prenda o el de
anticresis constituido por la ley con independencia de attributed to the fact that the tolls appear to have been
las partes." 19 In a pledge, if the thing pledged earns or collected after the rendition of the judgment of the trial
produces fruits, income, dividends or interests, the court.
creditor shall compensate what he receives with those
which are owing him. 20 In the same manner, in a The records further reveal that earnest efforts have
contract of antichresis, the creditor acquires the right to been made by private respondents to have the
receive the fruits of an immovable of his debtor with judgment executed in the most practicable manner.
the obligation to apply them to payment of the interest, They deposited in court the amount of the judgment in
if owing, and thereafter to the principal of his the sum of P13,632.00 in cash, subject only to the
credit. 21 The debtor can not reacquire enjoyment of accounting of the tolls collected by the petitioner so
the immovable until he has actually paid what he owes that whatever is due from him may be set off with the
the creditor. 22 amount of reimbursement. This is just and proper
under the circumstances and, under the law,
Applying the afore-cited principles to the case at bar, compensation or set off may take place, either totally
petitioner cannot appropriate for his own exclusive or partially. Considering that petitioner is the creditor
benefit the tolls which he collected from the property with respect to the judgment obligation and the debtor
retained by him. It was his duty under the law, after with respect to the tolls collected, Comintan being the
deducting the necessary expenses for his owner thereof, the trial court's order for an accounting
administration, to apply such amount collected to the and compensation is in accord with law. 23
payment of the interest, and the balance to the
payment of the obligation. With respect to the amount of reimbursement to be
paid by Comintan, it appears that the dispositive
We hold, therefore, that the disputed tolls, after portion of the decision was lacking in specificity, as it
deducting petitioner's expenses for administration, merely provided that Comintan and Zamora are jointly
belong to Quirino Comintan, owner of the land through liable therefor. When two persons are liable under a
which the toll road passed, further considering that the contract or under a judgment, and no words appear in
same was on portions of the property on which the contract or judgment to make each liable for the
petitioner had not introduced any improvement. The entire obligation, the presumption is that their
trial court itself clarified this matter when it placed the obligation is joint ormancomunada, and each debtor is
toll road under receivership. The omission of any liable only for a proportionate part of the
mention of the tolls in the decision itself may be obligation. 24 The judgment debt of P13,632.00 should,
therefore, be pro-rated in equal shares to Comintan MARLYN GEMINIANO,petitioners, vs. COURT
and Zamora. OF APPEALS, DOMINADOR NICOLAS, and
MARY A. NICOLAS, respondents.
Regarding Lot 5785-B, it appears that no public sale
has yet been conducted by the Bureau of Lands and, DECISION
therefore, petitioner is entitled to remain in possession
thereof. This is not disputed by respondent Eleuterio DAVIDE, JR., J.:
Zamora. 25 After public sale is had and in the event that
Ortiz is not declared the successful bidder, then he This petition for review on certiorari has its origins
should be reimbursed by respondent Zamora in the in Civil Case No. 9214 of Branch 3 of the Municipal
corresponding amount for the improvements on Lot Trial Court in Cities (MTCC) in Dagupan City for
5785-B. unlawful detainer and damages. The petitioners ask
the Court to set aside the decision of the Court of
WHEREFORE, in view hereof, the Order of respondent Appeals affirming the decision of Branch 40 of the
Court of November 18, 1970 is hereby modified to Regional Trial Court (RTC) of Dagupan City, which, in
conform to the foregoing judgment. The Writ of turn, reversed the MTCC; ordered the petitioners to
Preliminary Injunction, dated January 29, 1971, is reimburse the private respondents the value of the
hereby dissolved. Without special pronouncement as house in question and other improvements; and
to costs. allowed the latter to retain the premises until
reimbursement was made.

It appears that Lot No. 3765-B-1 containing an area

of 314 square meters was originally owned by the
petitioners' mother, Paulina Amado vda. de
Geminiano. On a 12-square-meter portion of that lot
stood the petitioners' unfinished bungalow, which the
petitioners sold in November 1978 to the private
respondents for the sum of P6,000.00, with an alleged
promise to sell to the latter that portion of the lot
FEDERICO GEMINIANO, MARIA GEMINIANO,
occupied by the house. Subsequently, the petitioners'
ERNESTO GEMINIANO, ASUNCION
mother executed a contract of lease over a 126
GEMINIANO, LARRY GEMINIANO, and
square-meter portion of the lot, including that portion During the pre-trial conference, the parties agreed
on which the house stood, in favor of the private to confine the issues to: (1) whether there was an
respondents for P40.00 per month for a period of implied renewal of the lease which expired in
seven years commencing on 15 November 1978. November 1985; (2) whether the lessees were builders
[1]
The private respondents then introduced additional in good faith and entitled to reimbursement of the value
improvements and registered the house in their of the house and improvements; and (3) the value of
names. After the expiration of the lease contract in the house.
November 1985, however, the petitioners' mother
refused to accept the monthly rentals. The parties then submitted their respective position
papers and the case was heard under the Rule on
It turned out that the lot in question was the subject Summary Procedure.
of a suit, which resulted in its acquisition by one Maria
Lee in 1972. In 1982, Lee sold the lot to Lily Salcedo, On the first issue, the court held that since the
who in turn sold it in 1984 to the spouses Agustin and petitioners' mother was no longer the owner of the lot
Ester Dionisio. in question at the time the lease contract was executed
in 1978, in view of its acquisition by Maria Lee as early
On 14 February 1992, the Dionisio spouses as 1972, there was no lease to speak of, much less, a
executed a Deed of Quitclaim over the said property in renewal thereof. And even if the lease legally existed,
favor of the petitioners.[2] As such, the lot was its implied renewal was not for the period stipulated in
registered in the latter's names.[3] the original contract, but only on a month-to-month
basis pursuant to Article 1687 of the Civil Code. The
On 9 February 1993, the petitioners refusal of the petitioners' mother to accept the rentals
sent, via registered mail, a letter addressed to private starting January 1986 was then a clear indication of
respondent Mary Nicolas demanding that she vacate her desire to terminate the monthly lease. As regards
the premises and pay the rentals in arrears within the petitioners' alleged failed promise to sell to the
twenty days from notice.[4] private respondents the lot occupied by the house, the
court held that such should be litigated in a proper
Upon failure of the private respondents to heed the case before the proper forum, not an ejectment case
demand, the petitioners filed with the MTCC of where the only issue was physical possession of the
Dagupan City a complaint for unlawful detainer and property.
damages.
 The court resolved the second issue in the attorney's fees and P2,000.00 as litigation expenses;
negative, holding that Articles 448 and 546 of the Civil and (2) allowing the private respondents to remain in
Code, which allow possessors in good faith to recover possession of the premises until they were fully
the value of improvements and retain the premises reimbursed for the value of the house. [6] It ruled that
until reimbursed, did not apply to lessees like the since the private respondents were assured by the
private respondents, because the latter knew that their petitioners that the lot they leased would eventually be
occupation of the premises would continue only during sold to them, they could be considered builders in
the life of the lease. Besides, the rights of the private good faith, and as such, were entitled to
respondents were specifically governed by Article reimbursement of the value of the house and
1678, which allows reimbursement of up to one-half of improvements with the right of retention until
the value of the useful improvements, or removal of the reimbursement had been made.
improvements should the lessor refuse to reimburse.
On appeal, this time by the petitioners, the Court of
On the third issue, the court deemed as conclusive Appeals affirmed the decision of the RTC [7] and
the private respondents' allegation that the value of the denied[8] the petitioners' motion for
house and improvements was P180,000.00, there reconsideration. Hence, the present petition.
being no controverting evidence presented.
The Court is confronted with the issue of which
The trial court thus ordered the private respondents provision of law governs the case at bench: Article
to vacate the premises, pay the petitioners P40.00 a 448 or Article 1678 of the Civil Code? The said articles
month as reasonable compensation for their stay read as follows:
thereon from the filing of the complaint on 14 April
1993 until they vacated, and to pay the sum of Art. 448. The owner of the land on which anything has
P1,000.00 as attorney's fees, plus costs.[5] been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or
On appeal by the private respondents, the RTC of planting, after payment of the indemnity provided for in
Dagupan City reversed the trial court's decision and articles 546 and 548, or to oblige the one who built or
rendered a new judgment: (1) ordering the petitioners planted to pay the price of the land, and the one who
to reimburse the private respondents for the value of sowed, the proper rent. However, the builder or
the house and improvements in the amount of planter cannot be obliged to buy the land if its value is
P180,000.00 and to pay the latter P10,000.00 as considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner The private respondents claim they are builders in
of the land does not choose to appropriate the building good faith, hence, Article 448 of the Civil Code should
or trees after proper indemnity. The parties shall agree apply. They rely on the lack of title of the petitioners'
upon the terms of the lease and in case of mother at the time of the execution of the contract of
disagreement, the court shall fix the terms thereof. lease, as well as the alleged assurance made by the
petitioners that the lot on which the house stood would
xxx xxx xxx be sold to them.

Art. 1678. If the lessee makes, in good faith, useful It has been said that while the right to let property is
improvements which are suitable to the use for which an incident of title and possession, a person may be a
the lease is intended, without altering the form or lessor and occupy the position of a landlord to the
substance of the property leased, the lessor upon the tenant although he is not the owner of the premises let.
termination of the lease shall pay the lessee one-half [9]
After all, ownership of the property is not being
of the value of the improvements at that time. Should transferred,[10] only the temporary use and enjoyment
the lessor refuse to reimburse said amount, the lessee thereof.[11]
may remove the improvements, even though the
principal thing may suffer damage thereby. He shall In this case, both parties admit that the land in
not, however, cause any more impairment upon the question was originally owned by the petitioners'
property leased than is necessary. mother. The land was allegedly acquired later by one
Maria Lee by virtue of an extrajudicial foreclosure of
With regard to ornamental expenses, the lessee shall mortgage. Lee, however, never sought a writ of
not be entitled to any reimbursement, but he may possession in order that she gain possession of the
remove the ornamental objects, provided no damage is property in question.[12] The petitioners' mother
caused to the principal thing, and the lessor does not therefore remained in possession of the lot.
choose to retain them by paying their value at the time
the lease is extinguished. It is undisputed that the private respondents came
into possession of a 126 square-meter portion of the
The crux of the said issue then is whether the said lot by virtue of a contract of lease executed by the
private respondents are builders in good faith or mere petitioners' mother in their favor. The juridical relation
lessees. between the petitioners' mother as lessor, and the
private respondents as lessees, is therefore well-
established, and carries with it a recognition of the Anent the alleged promise of the petitioners to sell
lessor's title.[13] The private respondents, as lessees the lot occupied by the private respondents' house, the
who had undisturbed possession for the entire term same was not substantiated by convincing
under the lease, are then estopped to deny their evidence. Neither the deed of sale over the house nor
landlord's title, or to assert a better title not only in the contract of lease contained an option in favor of the
themselves, but also in some third person while they respondent spouses to purchase the said lot. And
remain in possession of the leased premises and until even if the petitioners indeed promised to sell, it would
they surrender possession to the landlord. [14] This not make the private respondents possessors or
estoppel applies even though the lessor had no title at builders in good faith so as to be covered by the
the time the relation of lessor and lessee was created, provisions of Article 448 of the Civil Code. The latter
[15]
and may be asserted not only by the original lessor, cannot raise the mere expectancy of ownership of the
but also by those who succeed to his title.[16] aforementioned lot because the alleged promise to sell
was not fulfilled nor its existence even proven. The
Being mere lessees, the private respondents knew first thing that the private respondents should have
that their occupation of the premises would continue done was to reduce the alleged promise into writing,
only for the life of the lease. Plainly, they cannot be because under Article 1403 of the Civil Code, an
considered as possessors nor builders in good faith. [17] agreement for the sale of real property or an interest
therein is unenforceable, unless some note or
In a plethora of cases,[18] this Court has held that memorandum thereof be produced. Not having taken
Article 448 of the Civil Code, in relation to Article 546 of any steps in order that the alleged promise to sell may
the same Code, which allows full reimbursement of be enforced, the private respondents cannot bank on
useful improvements and retention of the premises that promise and profess any claim nor color of title
until reimbursement is made, applies only to a over the lot in question.
possessor in good faith, i.e., one who builds on land
with the belief that he is the owner thereof. It does not There is no need to apply by analogy the provisions
apply where one's only interest is that of a lessee of Article 448 on indemnity as was done in Pecson vs.
under a rental contract; otherwise, it would always be Court of Appeals,[19] because the situation sought to be
in the power of the tenant to "improve" his landlord out avoided and which would justify the application of that
of his property. provision, is not present in this case. Suffice it to say,
"a state of forced co-ownership" would not be created
between the petitioners and the private
respondents. For, as correctly pointed out by the
petitioners, the rights of the private respondents as
lessees are governed by Article 1678 of the Civil Code PLEASANTVILLE DEVELOPMENT
which allows reimbursement to the extent of one-half CORPORATION, petitioner, vs. COURT OF
of the value of the useful improvements. APPEALS, WILSON KEE, C.T. TORRES
ENTERPRISES, INC. and ELDRED
It must be stressed, however, that the right to JARDINICO, respondents.
indemnity under Article 1678 of the Civil Code arises
only if the lessor opts to appropriate the DECISION
improvements. Since the petitioners refused to
PANGANIBAN, J.:
exercise that option,[20] the private respondents cannot
compel them to reimburse the one-half value of the Is a lot buyer who constructs improvements on the
house and improvements. Neither can they retain the wrong property erroneously delivered by the owner’s
premises until reimbursement is made. The private agent, a builder in good faith? This is the main issue
respondents' sole right then is to remove the resolved in this petition for review on certiorari to
improvements without causing any more impairment reverse the Decision[1] of the Court of Appeals[2] in CA-
upon the property leased than is necessary.[21] G.R. SP No. 11040, promulgated on August 20, 1987.
WHEREFORE, judgment is hereby rendered By resolution dated November 13, 1995, the First
GRANTING the instant petition; REVERSING and Division of this Court resolved to transfer this case
SETTING ASIDE the decision of the Court of Appeals (along with several others) to the Third Division. After
of 27 January 1995 in CA-G.R. SP No. 34337; and due deliberation and consultation, the Court assigned
REINSTATING the decision of Branch 3 of the the writing of this Decision to the
Municipal Trial Court in Cities of Dagupan City in Civil undersigned ponente.
Case No. 9214 entitled "Federico Geminiano, et al. vs.
Dominador Nicolas, et al." The Facts

Costs against the private respondents. The facts, as found by respondent Court, are as
follows:
 Edith Robillo purchased from petitioner a parcel of It appears that on March 26, 1974, Kee bought on
land designated as Lot 9, Phase II and located installment Lot 8 of the same subdivision from C.T.
at Taculing Road, Pleasantville Torres Enterprises, Inc. (CTTEI), the exclusive real
Subdivision, Bacolod City. In 1975, respondent Eldred estate agent of petitioner. Under the Contract to Sell on
Jardinico bought the rights to the lot from Robillo. At Installment, Kee could possess the lot even before the
that time, Lot 9 was vacant. completion of all installment payments. On January
20, 1975, Kee paid CTTEI the relocation fee of P50.00
Upon completing all payments, Jardinico secured and another P50.00 on January 27, 1975, for the
from the Register of Deeds of Bacolod City preparation of the lot plan. These amounts were paid
on December 19, 1978 Transfer Certificate of Title No. prior to Kee’s taking actual possession of Lot 8. After
106367 in his name. It was then that he discovered the preparation of the lot plan and a copy thereof given
that improvements had been introduced on Lot 9 by to Kee, CTTEI through its employee, Zenaida
respondent Wilson Kee, who had taken possession Octaviano, accompanied Kee’s wife, Donabelle Kee, to
thereof. inspect Lot 8. Unfortunately, the parcel of land pointed
by Octaviano was Lot 9. Thereafter, Kee proceeded to
construct his residence, a store, an auto repair shop
and other improvements on the lot.

After discovering that Lot 9 was occupied by Kee,

Jardinico confronted him. The parties tried to reach an
amicable settlement, but failed.

On January 30, 1981, Jardinico’s lawyer wrote Kee,

demanding that the latter remove all improvements
and vacate Lot 9. When Kee refused to vacate Lot 9,
Jardinico filed with the Municipal Trial Court in Cities,
Branch 3, Bacolod City (MTCC), a complaint for
ejectment with damages against Kee.

Kee, in turn, filed a third-party complaint against

petitioner and CTTEI.
 The MTCC held that the erroneous delivery of Lot 9 remove all structures and improvements he introduced
to Kee was attributable to CTTEI. It further ruled that thereon;
petitioner and CTTEI could not successfully invoke as
a defense the failure of Kee to give notice of his 2. Defendant Wilson Kee is ordered to pay to the
intention to begin construction required under plaintiff rentals at the rate of P 15.00 a day computed
paragraph 22 of the Contract to Sell on Installment and from the time this suit was filed on March 12, 1981 until
his having built a sari-sari store without. the prior he actually vacates the premises. This amount shall
approval of petitioner required under paragraph 26 of bear interests (sic) at the rate of 12 per cent (sic) per
said contract, saying that the purpose of these annum.
requirements was merely to regulate the type of
improvements to be constructed on the lot[3]. 3. Third-Party Defendant CT. Torres Enterprises, Inc.
and Pleasantville Subdivision are ordered to pay the
However, the MTCC found that petitioner had plaintiff jointly and severally the sum of P3,000.00 as
already rescinded its contract with Kee over Lot 8 for attorney’s fees and P700.00 as cost and litigation
the latter’s failure to pay the installments due, and that expenses.”[4]
Kee had not contested the rescission. The rescission
was effected in 1979, before the complaint was On appeal, the Regional Trial Court, Branch 48,
instituted. The MTCC concluded that Kee no longer Bacolod City (RTC) ruled that petitioner and CTTEI
had any right over the lot subject of the contract were not at fault or were not negligent, there being no
between him and petitioner. Consequently, Kee must preponderant evidence to show that they directly
pay reasonable rentals for the use of Lot 9, and, participated in the delivery of Lot 9 to Kee.[5] It found
furthermore, he cannot claim reimbursement for the Kee a builder in bad faith. It further ruled that even
improvements he introduced on said lot. assuming arguendo that Kee was acting in good faith,
he was, nonetheless, guilty of unlawfully usurping the
The MTCC thus disposed: possessory right of Jardinico over Lot 9 from the time
he was served with notice to vacate said lot, and thus
“IN VIEW OF ALL THE FOREGOING, judgment is was liable for rental.
hereby rendered as follows:
The RTC thus disposed:
1. Defendant Wilson Kee is ordered to vacate tithe
premises of Lot 9, covered by TCT No. 106367 and to “WHEREFORE, the decision appealed from is affirmed
with respect to the order against the defendant to
vacate the premises of Lot No. 9 covered by Transfer herein. The appellate court also ruled that the award
Certificate of Title No. T-106367 of the land records of of rentals was without basis.
Bacolod City; the removal of all structures and
improvements introduced thereon at his expense and Thus, the Court of Appeals disposed:
the payment to plaintiff (sic) the sum of Fifteen (P
15.00) Pesos a day as reasonable rental to be “WHEREFORE, the petition is GRANTED, the
computed from January 30, 1981, the date of the appealed decision is REVERSED, and judgment is
demand, and not from the date of the filing of the rendered as follows:
complaint, until he had vacated (sic) the premises, with
1. Wilson Kee is declared a builder in good
interest thereon at 12% per annum. This Court further
faith with respect to the improvements he
renders judgment against the defendant to pay the
introduced on Lot 9, and is entitled to the
plaintiff the sum of Three Thousand (P3,000.00) Pesos
rights granted him under Articles 448, 546
as attorney’s fees, plus costs of litigation.
and 548 of the New Civil Code.
“The third-party complaint against Third-Party
2. Third-party defendants C.T. Torres
Defendants Pleasantville Development Corporation
Enterprises, Inc. and Pleasantville
and C.T. Torres Enterprises, Inc. is dismissed. The
Development Corporation are solidarily liable
order against Third-Party Defendants to pay attorney’s
under the following circumstances:
fees to plaintiff and costs of litigation is reversed.” [6]
a. If Eldred Jardinico decides to appropriate
Following the denial of his motion for
the improvements and, thereafter, remove
reconsideration on October 20, 1986, Kee appealed
these structures, the third-party defendants
directly to the Supreme Court, which referred the
shall answer for all demolition expenses and
matter to the Court of Appeals.
the value of the improvements thus
The appellate court ruled that Kee was a builder in destroyed or rendered useless;
good faith, as he was unaware of the “mix-up” when he
b. If Jardinico prefers that Kee buy the land,
began construction of the improvements on Lot 8. It
the third-party defendants shall answer for
further ruled that the erroneous delivery was due to the
the amount representing the value of Lot 9
negligence of CTTEI, and that such wrong delivery
that Kee should pay to Jardinico.
was likewise imputable to its principal, petitioner
 3. Third-party defendants C.T. Torres “2. The Court of Appeals has so far departed from the
Enterprises, Inc. and Pleasantville accepted course of judicial proceedings, by granting to
Development Corporation are ordered to private respondent-Kee the rights of a builder in good
pay in solidum the amount of P3,000.00 to faith in excess of what the law provides, thus enriching
Jardinico as attorney’s fees, as well as private respondent Kee at the expense of the
litigation expenses. petitioner;

4. The award of rentals to Jardinico is “3. In the light of the subsequent events or
dispensed with. circumstances which changed the rights of the parties,
it becomes imperative to set aside or at least modify
“Furthermore, the case is REMANDED to the court of the judgment of the Court of Appeals to harmonize with
origin for the determination of the actual value of the justice and the facts;
improvements and the property (Lot 9), as well as for
further proceedings in conformity with Article 448 of the “4. Private respondent-Kee in accordance with the
New Civil Code.”[7] findings of facts of the lower court is clearly a builder in
bad faith, having violated several provisions of the
Petitioner then filed the instant petition against Kee, contract to sell on installments;
Jardinico and CTTEI.
“5. The decision of the Court of Appeals, holding the
The Issues principal, Pleasantville Development Corporation
(liable) for the acts made by the agent in excess of its
The petition submitted the following grounds to authority is clearly in violation of the provision of the
justify a review of the respondent Court’s Decision, as law;
follows:
“6. The award of attorney’s fees is clearly without basis
“1. The Court of Appeals has decided the case in a and is equivalent to putting a premium in (sic) court
way probably not in accord with law or the the (sic) litigation.”
applicable decisions of the Supreme Court on third-
party complaints, by ordering third-party defendants to From these grounds, the issues could be re-stated
pay the demolition expenses and/or price of the land; as follows:

(1) Was Kee a builder in good faith?

(2) What is the liability, if any, of petitioner and its presumed to have knowledge of the metes and bounds
agent, C.T. Torres Enterprises, Inc.? and of the property with which he is dealing. x x x

(3) Is the award of attorney’s fees proper? xxx xxx

xxx
The First Issue: Good Faith
“But as Kee is a layman not versed in the technical
Petitioner contends that the Court of Appeals erred description of his property, he had to find a way to
in reversing the RTC’s ruling that Kee was a builder in ascertain that what was described in TCT No. 69561
bad faith. matched Lot 8. Thus, he went to the subdivision
developer’s agent and applied and paid for the
Petitioner fails to persuade this Court to abandon relocation of the lot, as well as for the production of a
the findings and conclusions of the Court of Appeals lot plan by CTTEI’s geodetic engineer. Upon Kee’s
that Kee was a builder in good faith. We agree with receipt of the map, his wife went to the subdivision site
the following observation of the Court of Appeals: accompanied by CTTEI’s employee, Octaviano, who
authoritatively declared that the land she was pointing
“The roots of the controversy can be traced directly to
to was indeed Lot 8. Having full faith and confidence
the errors committed by CTTEI, when it pointed the
in the reputation of CTTEI, and because of the
wrong property to Wilson Kee and his wife. It is highly
company’s positive identification of the property, Kee
improbable that a purchaser of a lot would knowingly
saw no reason to suspect that there had been a
and willingly build his residence on a lot owned by
misdelivery. The steps Kee had taken to protect his
another, deliberately exposing himself and his family to
interests were reasonable. There was no need for him
the risk of being ejected from the land and losing all
to have acted ex-abundantia cautela, such as being
improvements thereon, not to mention the social
present during the geodetic engineer’s relocation
humiliation that would follow.
survey or hiring an independent geodetic engineer to
“Under the circumstances, Kee had acted in the countercheck for errors, for the final delivery of
manner of a prudent man in ascertaining the identity of subdivision lots to their owners is part of the regular
his property. Lot 8 is covered by Transfer Certificate of course of everyday business of CTTEI. Because of
Title No. T-69561, while Lot 9 is identified in Transfer CTTEI’s blunder, what Kee had hoped to forestall did
Certificate of Title No. T-106367. Hence, under in fact transpire. Kee’s efforts all went to naught.” [8]
the Torrens system of land registration, Kee is
 Good faith consists in the belief of the builder that wrong lot to Kee. Such circumstance is relevant only
the land he is building on is his and his ignorance of as it gives Jardinico a cause of action for unlawful
any defect or flaw in his title. [9] And as good faith is detainer against Kee.
presumed, petitioner has the burden of proving bad
faith on the part of Kee.[10] Petitioner next contends that Kee cannot “claim
that another lot was erroneously pointed out to him”
At the time he built improvements on Lot 8, Kee because the latter agreed to the following provision in
believed that said lot was what he bought from the Contract of Sale on Installment, to wit:
petitioner. He was not aware that the lot delivered to
him was not Lot 8. Thus, Kee’s good faith. Petitioner “13. The Vendee hereby declares that prior to the
failed to prove otherwise. execution of his contract he/she has personally
examined or inspected the property made subject-
To demonstrate Kee’s bad faith, petitioner points to matter hereof, as to its location, contours, as well as
Kee’s violation of paragraphs 22 and 26 of the the natural condition of the lots and from the date
Contract of Sale on Installment. hereof whatever consequential change therein made
due to erosion, the said Vendee shall bear the
We disagree. Such violations have no bearing expenses of the necessary fillings, when the same is
whatsoever on whether Kee was a builder in good so desired by him/her.”[11]
faith, that is, on his state of mind at the time he built
the improvements on Lot 9. These alleged violations The subject matter of this provision of the contract
may give rise to petitioner’s cause of action against is the change of the location, contour and condition of
Kee under the said contract (contractual breach), but the lot due to erosion. It merely provides that the
may not be bases to negate the presumption that Kee vendee, having examined the property prior to the
was a builder in good faith. execution of the contract, agrees to shoulder the
expenses resulting from such change.
Petitioner also points out that, as found by the trial
court, the Contract of Sale on Installment covering Lot We do not agree with the interpretation of petitioner
8 between it and Kee was rescinded long before the that Kee contracted away his right to recover damages
present action was instituted. This has no relevance resulting from petitioner’s negligence. Such waiver
on the liability of petitioner, as such fact does not would be contrary to public policy and cannot be
negate the negligence of its agent in pointing out the allowed. “Rights may be waived, unless the waiver is
contrary to law, public order, public policy, morals, or CTTEI was acting within its authority as the sole
good customs, or prejudicial to a third person with a real estate representative of petitioner when it made
right recognized by law.”[12] the delivery to Kee. In acting within its scope of
authority, it was, however, negligent. It is this
The Second Issue: Petitioner’s Liability negligence that is the basis of petitioner’s liability, as
principal of CTTEI, per Articles 1909 and 1910 of the
Kee filed a third-party complaint against petitioner Civil Code.
and CTTEI, which was dismissed by the RTC after
ruling that there was no evidence from which fault or Pending resolution of the case before the Court of
negligence on the part of petitioner and CTTEI can be Appeals, Jardinico and Kee on July 24, 1987 entered
inferred. The Court of Appeals disagreed and found into a deed of sale, wherein the former sold Lot 9 to
CTTEI negligent for the erroneous delivery of the lot by Kee. Jardinico and Kee did not inform the Court of
Octaviano, its employee. Appeals of such deal.

Petitioner does not dispute the fact that CTTEI was The deed of sale contained the following provision:
its agent. But it contends that the erroneous delivery
of Lot 9 to Kee was an act which was clearly outside “1. That Civil Case No. 3815 entitled
the scope of its authority, and consequently, CTTEI “Jardinico vs. Kee” which is now pending appeal with
alone should be liable. It asserts that “while [CTTEI] the Court of Appeals, regardless of the outcome of the
was authorized to sell the lot belonging to the herein decision shall be mutually disregarded and shall not be
petitioner, it was never authorized to deliver the wrong pursued by the parties herein and shall be considered
lot to Kee.”[13] dismissed and without effect whatsoever;[16]

Petitioner’s contention is without merit. Kee asserts though that the “terms and conditions
in said deed of sale are strictly for the parties thereto”
The rule is that the principal is responsible for the and that “(t)here is no waiver made by either of the
acts of the agent, done within the scope of his parties in said deed of whatever favorable judgment or
authority, and should bear the damage caused to third award the honorable respondent Court of Appeals may
persons.[14] On the other hand, the agent who exceeds make in their favor against herein petitioner
his authority is personally liable for the damage. [15] Pleasantville Development Corporation and/or private
respondent C.T. Torres Enterprises, Inc.”[17]
 Obviously, the deed of sale can have no effect on Decision would require petitioner and CTTEI jointly and
the liability of petitioner. As we have earlier stated, solidarily to “answer” or reimburse Kee there for.
petitioner’s liability is grounded on the negligence of its
agent. On the other hand, what the deed of sale We agree with petitioner.
regulates are the reciprocal rights of Kee and
Jardinico; it stressed that they had reached an Petitioner’s liability lies in the negligence of its
agreement independent of the outcome of the case. agent CTTEI. For such negligence, the petitioner
should be held liable for damages. Now, the extent
Petitioner further assails the following holding of the and/or amount of damages to be awarded is a factual
Court of Appeals: issue which should be determined after evidence is
adduced. However, there is no showing that such
“2. Third-party defendants C.T. Torres Enterprises, Inc. evidence was actually presented in the trial court;
and Pleasantville Development Corporation are hence no damages could now be awarded.
solidarily liable under the following circumstances:
The rights of Kee and Jardinico vis-a-vis each
“a. If Eldred Jardinico decides to appropriate other, as builder in good faith and owner in good faith,
the improvements and, thereafter, remove respectively, are regulated by law (i.e., Arts. 448, 546
these structures, the third-party defendants and 548 of the Civil Code). It was error for the Court of
shall answer for all demolition expenses and Appeals to make a “slight modification” in the
the value of the improvements thus application of such law, on the ground of “equity”. At
destroyed or rendered useless; any rate, as it stands now, Kee and Jardinico have
amicably settled through their deed of sale their rights
“b. If Jardinico prefers that Kee buy the land, and obligations with regards to Lot 9. Thus, we delete
the third-party defendants shall answer for items 2 (a) and (b) of the dispositive portion of the
the amount representing the value of Lot 9 Court of Appeals’ Decision [as reproduced above]
that Kee should pay to Jardinico.”[18] holding petitioner and CTTEI solidarily liable.

Petitioner contends that if the above holding would The Third Issue: Attorney’s Fees
be carried out, Kee would be unjustly enriched at its
expense. In other words, Kee would be -able to own The MTCC awarded Jardinico attorney’s fees and
the lot, as buyer, without having to pay anything on it, costs in the amount of P3,000.00 and P700.00,
because the aforequoted portion of respondent Court’s respectively, as prayed for in his complaint. The RTC
deleted the award, consistent with its ruling that (1) Wilson Kee is declared a builder in good
petitioner was without fault or negligence. The Court faith;
of Appeals, however, reinstated the award of attorney’s
fees after ruling that petitioner was liable for its agent’s (2) Petitioner Pleasantville Development
negligence. Corporation and respondent C.T. Tones
Enterprises, Inc. are declared solidarily
The award of attorney’s fees lies within the liable for damages due to negligence;
discretion of the court and depends upon the however, since the amount and/or extent of
circumstances of each case.[19] We shall not interfere such damages was not proven during the
with the discretion of the Court of Appeals. Jardinico trial, the same cannot now be quantified
was compelled to litigate for the protection of his and awarded;
interests and for the recovery of damages sustained as
a result of the negligence of petitioner’s agent. [20] (3) Petitioner Pleasantville Develpment
Corporation and respondent C.T. Torres
In sum, we rule that Kee is a builder in good Enterprises, Inc. are ordered to pay
faith. The disposition of the Court of Appeals that Kee in solidum the amount of P3,000.00 to
“is entitled to the rights granted him under Articles 448, Jardinico as attorney’s fees, as well as
546 and 548 of the New Civil Code” is deleted, in view litigation expenses; and
of the deed of sale entered into by Kee and Jardinico,
which deed now governs the rights of Jardinico and (4) The award of rentals to Jardinico is
Kee as to each other. There is also no further need, as dispensed with.
ruled by the appellate Court, to remand the case to the
court of origin “for determination of the actual value of
the improvements and the property (Lot 9), as well as
for further proceedings in conformity with Article 448 of
the New Civil Code.”

WHEREFORE, the petition is partially

GRANTED. The Decision of the Court of Appeals is
hereby MODIFIED as follows: G.R. No. L-11269 February 28, 1958
SILVERIO FELICES, plaintiff-appellee, Two years after the sale, on April 19, 1951, appellee
vs. tried to recover the land in question from appellant, but
MAMERTO IRIOLA, defendant-appellant. the latter refused to allow it unless he was paid the
amount of P2,000 as the alleged value of
Ezekiel S. Grageda for appellant. improvements he had introduced on the property. In
Reyes & Dy-Liaco for appellee. view of appellant's persistent refusal, plaintiff deposited
the received price in court and filed this action on
REYES, J.B.L., J.: October 4, 1951.
Originally brought to the Court of Appeals, this appeal In the court below, appellant, while recognizing
was certified to us by that Court on the ground that it appellee's right to "redeem", insisted that he must first
does not raise any genuine issue of fact. be reimbursed, the value of his improvements.
Whereupon, the court appointed a commissioner to
It appears that plaintiff and appellee Silverio Fences
ascertain the nature and value of the alleged
was the grantee of a homestead of over eight hectares
improvements, and thereafter found that said
located in barrio Curry, Municipality of Pili, Province of
improvements were made by defendant either after
Camarines Sur, under Homestead Patent No. V-2117
plaintiff had informed him of his intention to recover the
dated January 26, 1949, and by virtue of which he was
land, or after the complaint had been filed; some of the
issued Original Certificate of Title No. 104 over said
improvements were even introduced after a
property. The month following the issuance of his
commissioner had already been appointed to appraise
patent, on February 24, 1949, appellee conveyed in
their value. Wherefore, the lower court held defendant
conditional sale to defendant and appellant Mamerto
in bad faith and not entitled to reimbursement for his
Iriola a portion of his homestead of more than four
improvements. Defendant was, likewise, ordered to
hectares, for the consideration of P1,700. The
accept the amount of P1,700 deposited by plaintiff in
conveyance (Exh. 1) expressly stipulates that the sale
court, to execute in favor of the latter the
was subject to the provisions of Sec. 119 of Act 141, as
corresponding deed of reconveyance, and to restore
amended, and to the prohibitions spread on the
him in possession of the land in question.
vendor's patent; and that after the lapse of five years or
as soon as may be allowed by law, the vendor or his At the outset, it must be made clear that as the sale in
successors would execute in vendee's favor a deed of question was executed by the parties within the five-
absolute sale over the land in question. year prohibitive period under section 118 of the Public
Land Law, the same is absolutely null and void and hand, appellant, recognizing as he does appellee's
ineffective from its inception. Consequently, appellee right to get back his property, continued to act in bad
never lost his title or ownership over the land in faith when he made improvements on the land in
question, and there was no need either for him to question after he had already been asked extra-
repurchase the same from appellant, or for the latter to judicially and judicially, to surrender and return its
execute a deed of reconveyance in his favor. The case possession to appellee; and as a penalty for such bad
is actually for mutual restitution, incident to the faith, he must forfeit his improvements without any
nullity ab initio of the conveyance. . right to reimbursement therefor. "He who builds, plants
or sows in bad faith on the land of another, loses that is
The question now is: May appellant recover or be built, planted, or sown without right to indemnity" (Art.
reimbursed the value of his improvements on the land 449, New Civil Code).
in question, on the theory that as both he and appellee
knew that their sale was illegal and void, they were Wherefore, the judgment appealed from is affirmed,
both in bad faith and consequently, Art. 453 of the Civil with the sole modification that appellant need not
Code applies in that "the rights of one and the other execute a deed of reconveyance in appellee's favor,
shall be the same as though both had acted in good the original conveyance being hereby declared void ab
faith"? initio. Costs against appellant Mamerto Iriola. So
ordered.
The rule of Art. 453 of the Civil Code invoked by
appellant1 can not be applied to the instant case for the
reason that the lower court found, and appellant
admits, that the improvements in question were made
on the premises only after appellee had tried to
G.R. No. 151815 February 23, 2005
recover the land in question from appellant, and even
during the pendency of this action in the court below. SPOUSES JUAN NUGUID AND ERLINDA T.
After appellant had refused to restore the land to the NUGUID, petitioners,
appellee, to the extent that the latter even had to resort vs.
to the present action to recover his property, appellee HON. COURT OF APPEALS AND PEDRO P.
could no longer be regarded as having impliedly PECSON, respondents.
assented or conformed to the improvements thereafter
made by appellant on the premises. Upon the other DECISION
QUISUMBING, J.: Pedro P. Pecson owned a commercial lot located at 27
Kamias Road, Quezon City, on which he built a four-
This is a petition for review on certiorari of the door two-storey apartment building. For failure to pay
Decision1 dated May 21, 2001, of the Court of Appeals realty taxes, the lot was sold at public auction by the
in CA-G.R. CV No. 64295, which modified the Order City Treasurer of Quezon City to Mamerto
dated July 31, 1998 of the Regional Trial Court (RTC) Nepomuceno, who in turn sold it for P103,000 to the
of Quezon City, Branch 101 in Civil Case No. Q-41470. spouses Juan and Erlinda Nuguid.
The trial court ordered the defendants, among them
petitioner herein Juan Nuguid, to pay respondent Pecson challenged the validity of the auction sale
herein Pedro P. Pecson, the sum of P1,344,000 as before the RTC of Quezon City in Civil Case No. Q-
reimbursement of unrealized income for the period 41470. In its Decision,3 dated February 8, 1989, the
beginning November 22, 1993 to December 1997. The RTC upheld the spouses’ title but declared that the
appellate court, however, reduced the trial court’s four-door two-storey apartment building was not
award in favor of Pecson from the said P1,344,000 included in the auction sale.4 This was affirmed in toto
to P280,000. Equally assailed by the petitioners is the by the Court of Appeals and thereafter by this Court, in
appellate court’s Resolution2 dated January 10, 2002, its Decision5 dated May 25, 1993, in G.R. No. 105360
denying the motion for reconsideration. entitled Pecson v. Court of Appeals.

It may be recalled that relatedly in our Decision dated On June 23, 1993, by virtue of the Entry of Judgment
May 26, 1995, in G.R. No. 115814, entitled Pecson v. of the aforesaid decision in G.R. No. 105360, the
Court of Appeals, we set aside the decision of the Nuguids became the uncontested owners of the 256-
Court of Appeals in CA-G.R. SP No. 32679 and the square meter commercial lot.
Order dated November 15, 1993, of the RTC of
Quezon City, Branch 101 and remanded the case to As a result, the Nuguid spouses moved for delivery of
the trial court for the determination of the current possession of the lot and the apartment building.
market value of the four-door two-storey apartment
building on the 256-square meter commercial lot. In its Order6 of November 15, 1993, the trial court,
relying upon Article 5467 of the Civil Code, ruled that
The antecedent facts in this case are as follows: the Spouses Nuguid were to reimburse Pecson for his
construction cost of P53,000, following which, the
spouses Nuguid were entitled to immediate issuance
of a writ of possession over the lot and improvements. Sheriff has enforced the Writ of Possession and the
In the same order the RTC also directed Pecson to pay premises have been turned over to the possession of
the same amount of monthly rentals to the Nuguids as private respondents, the quest of petitioner that he be
paid by the tenants occupying the apartment units restored in possession of the premises is rendered
or P21,000 per month from June 23, 1993, and moot and academic, although it is but fair and just that
allowed the offset of the amount of P53,000 due from private respondents pay petitioner the construction
the Nuguids against the amount of rents collected by cost of P53,000.00; and that petitioner be ordered to
Pecson from June 23, 1993 to September 23, 1993 account for any and all fruits of the improvements
from the tenants of the apartment.8 received by him starting on June 23, 1993, with the
amount of P53,000.00 to be offset therefrom.
Pecson duly moved for reconsideration, but on
November 8, 1993, the RTC issued a Writ of IT IS SO ORDERED.11 [Underscoring supplied.]
Possession,9directing the deputy sheriff to put the
spouses Nuguid in possession of the subject property Frustrated by this turn of events, Pecson filed a petition
with all the improvements thereon and to eject all the for review docketed as G.R. No. 115814 before this
occupants therein. Court.

Aggrieved, Pecson then filed a special civil action for On May 26, 1995, the Court handed down the decision
certiorari and prohibition docketed as CA-G.R. SP No. in G.R. No 115814, to wit:
32679 with the Court of Appeals.
WHEREFORE, the decision of the Court of Appeals in
In its decision of June 7, 1994, the appellate court, CA-G.R. SP No. 32679 and the Order of 15 November
relying upon Article 44810 of the Civil Code, affirmed 1993 of the Regional Trial Court, Branch 101, Quezon
the order of payment of construction costs but City in Civil Case No. Q-41470 are hereby SET ASIDE.
rendered the issue of possession moot on appeal,
thus: The case is hereby remanded to the trial court for it to
determine the current market value of the apartment
WHEREFORE, while it appears that private building on the lot. For this purpose, the parties shall
respondents [spouses Nuguid] have not yet be allowed to adduce evidence on the current market
indemnified petitioner [Pecson] with the cost of the value of the apartment building. The value so
improvements, since Annex I shows that the Deputy determined shall be forthwith paid by the private
respondents [Spouses Juan and Erlinda Nuguid] to the
petitioner [Pedro Pecson] otherwise the petitioner shall In an Order13 dated January 26, 1996, the RTC denied
be restored to the possession of the apartment building the Motion to Restore Possession to the plaintiff
until payment of the required indemnity. averring that the current market value of the building
should first be determined. Pending the said
No costs. determination, the resolution of the Motion for
Accounting was likewise held in abeyance.
SO ORDERED.12 [Emphasis supplied.]
With the submission of the parties’ assessment and the
In so ruling, this Court pointed out that: (1) Article 448 reports of the subject realty, and the reports of the
of the Civil Code is not apposite to the case at bar Quezon City Assessor, as well as the members of the
where the owner of the land is the builder, sower, or duly constituted assessment committee, the trial court
planter who then later lost ownership of the land by issued the following Order14 dated October 7, 1997, to
sale, but may, however, be applied by analogy; (2) the wit:
current market value of the improvements should be
made as the basis of reimbursement; (3) Pecson was On November 21, 1996, the parties manifested that
entitled to retain ownership of the building and, they have arrived at a compromise agreement that the
necessarily, the income therefrom; (4) the Court of value of the said improvement/building is P400,000.00
Appeals erred not only in upholding the trial court’s The Court notes that the plaintiff has already
determination of the indemnity, but also in ordering receivedP300,000.00. However, when defendant was
Pecson to account for the rentals of the apartment ready to pay the balance of P100,000.00, the plaintiff
building from June 23, 1993 to September 23, 1993. now insists that there should be a rental to be paid by
defendants. Whether or not this should be paid by
On the basis of this Court’s decision in G.R. No. defendants, incident is hereby scheduled for hearing
115814, Pecson filed a Motion to Restore Possession on November 12, 1997 at 8:30 a.m.
and a Motion to Render Accounting, praying
respectively for restoration of his possession over the Meantime, defendants are directed to pay plaintiff the
subject 256-square meter commercial lot and for the balance of P100,000.00.
spouses Nuguid to be directed to render an accounting
under oath, of the income derived from the subject SO ORDERED.15
four-door apartment from November 22, 1993 until
possession of the same was restored to him. On December 1997, after paying the said P100,000
balance to Pedro Pecson the spouses Nuguid prayed
for the closure and termination of the case, as well as dispossessed, up to the time of said full payment, in
the cancellation of the notice of lis pendens on the title December 1997, or a total of 48 months.
of the property on the ground that Pedro Pecson’s
claim for rentals was devoid of factual and legal The only question left is the determination of income of
bases.16 the four units of apartments per month. But as correctly
pointed out by plaintiff, the defendants have
After conducting a hearing, the lower court issued an themselves submitted their affidavits attesting that the
Order dated July 31, 1998, directing the spouses to income derived from three of the four units of the
pay the sum of P1,344,000 as reimbursement of the apartment building is P21,000.00 or P7,000.00 each
unrealized income of Pecson for the period beginning per month, or P28,000.00 per month for the whole four
November 22, 1993 up to December 1997. The sum units. Hence, at P28,000.00 per month, multiplied by
was based on the computation of P28,000/month 48 months, plaintiff is entitled to be paid by defendants
rentals of the four-door apartment, thus: the amount of P1,344,000.00.17

The Court finds plaintiff’s motion valid and meritorious. The Nuguid spouses filed a motion for reconsideration
The decision of the Supreme Court in the aforesaid but this was denied for lack of merit.18
case [Pecson vs. Court of Appeals, 244 SCRA 407]
which set aside the Order of this Court of November The Nuguid couple then appealed the trial court’s
15, 1993 has in effect upheld plaintiff’s right of ruling to the Court of Appeals, their action docketed as
possession of the building for as long as he is not fully CA-G.R. CV No. 64295.
paid the value thereof. It follows, as declared by the
Supreme Court in said decision that the plaintiff is In the Court of Appeals, the order appealed from in
entitled to the income derived therefrom, thus – CA-G.R. CV No. 64295, was modified. The CA
reduced the rentals from P1,344,000 to P280,000 in
... favor of the appellee.19 The said amount represents
accrued rentals from the determination of the current
Records show that the plaintiff was dispossessed of market value on January 31, 199720 until its full
the premises on November 22, 1993 and that he was payment on December 12, 1997.
fully paid the value of his building in December 1997.
Therefore, he is entitled to the income thereof Hence, petitioners state the sole assignment of error
beginning on November 22, 1993, the time he was now before us as follows:
THE COURT OF APPEALS ERRED IN HOLDING dispossessed be accounted for, since this Court
PETITIONERS LIABLE TO PAY RENT OVER AND explicitly recognized in G.R. No. 115814, he was
ABOVE THE CURRENT MARKET VALUE OF THE entitled to the property. He points out that this Court
IMPROVEMENT WHEN SUCH WAS NOT PROVIDED ruled that "[t]he petitioner [Pecson] not having been so
FOR IN THE DISPOSITIVE PORTION OF THE paid, he was entitled to retain ownership of the building
SUPREME COURT’S RULING IN G.R. No. 115814. and, necessarily, the income therefrom."22 In other
words, says respondent, accounting was necessary.
Petitioners call our attention to the fact that after For accordingly, he was entitled to rental income from
reaching an agreed price of P400,000 for the the property. This should be given effect. The Court
improvements, they only made a partial payment could have very well specifically included rent (as fruit
of P300,000. Thus, they contend that their failure to or income of the property), but could not have done so
pay the full price for the improvements will, at most, at the time the Court pronounced judgment because its
entitle respondent to be restored to possession, but not value had yet to be determined, according to him.
to collect any rentals. Petitioners insist that this is the Additionally, he faults the appellate court for modifying
proper interpretation of the dispositive portion of the the order of the RTC, thus defeating his right as a
decision in G.R. No. 115814, which states in part that builder in good faith entitled to rental from the period of
"[t]he value so determined shall be forthwith paid by his dispossession to full payment of the price of his
the private respondents [Spouses Juan and Erlinda improvements, which spans from November 22, 1993
Nuguid] to the petitioner [Pedro Pecson] otherwise the to December 1997, or a period of more than four
petitioner shall be restored to the possession of the years.
apartment building until payment of the required
indemnity."21 It is not disputed that the construction of the four-door
two-storey apartment, subject of this dispute, was
Now herein respondent, Pecson, disagrees with herein undertaken at the time when Pecson was still the
petitioners’ contention. He argues that petitioners are owner of the lot. When the Nuguids became the
wrong in claiming that inasmuch as his claim for uncontested owner of the lot on June 23, 1993, by
rentals was not determined in the dispositive portion of virtue of entry of judgment of the Court’s decision,
the decision in G.R. No. 115814, it could not be the dated May 25, 1993, in G.R. No. 105360, the
subject of execution. He points out that in moving for apartment building was already in existence and
an accounting, all he asked was that the value of the occupied by tenants. In its decision dated May 26,
fruits of the property during the period he was 1995 in G.R. No. 115814, the Court declared the rights
and obligations of the litigants in accordance with this case, the owner of the land is prohibited from
Articles 448 and 546 of the Civil Code. These offsetting or compensating the necessary and useful
provisions of the Code are directly applicable to the expenses with the fruits received by the builder-
instant case. possessor in good faith. Otherwise, the security
provided by law would be impaired. This is so because
Under Article 448, the landowner is given the option, the right to the expenses and the right to the fruits both
either to appropriate the improvement as his own upon pertain to the possessor, making compensation
payment of the proper amount of indemnity or to sell juridically impossible; and one cannot be used to
the land to the possessor in good faith. Relatedly, reduce the other.26
Article 546 provides that a builder in good faith is
entitled to full reimbursement for all the necessary and As we earlier held, since petitioners opted to
useful expenses incurred; it also gives him right of appropriate the improvement for themselves as early
retention until full reimbursement is made. as June 1993, when they applied for a writ of execution
despite knowledge that the auction sale did not include
While the law aims to concentrate in one person the the apartment building, they could not benefit from the
ownership of the land and the improvements thereon in lot’s improvement, until they reimbursed the improver
view of the impracticability of creating a state of forced in full, based on the current market value of the
co-ownership,23 it guards against unjust enrichment property.
insofar as the good-faith builder’s improvements are
concerned. The right of retention is considered as one Despite the Court’s recognition of Pecson’s right of
of the measures devised by the law for the protection ownership over the apartment building, the petitioners
of builders in good faith. Its object is to guarantee full still insisted on dispossessing Pecson by filing for a
and prompt reimbursement as it permits the actual Writ of Possession to cover both the lot and the
possessor to remain in possession while he has not building. Clearly, this resulted in a violation of
been reimbursed (by the person who defeated him in respondent’s right of retention. Worse, petitioners took
the case for possession of the property) for those advantage of the situation to benefit from the highly
necessary expenses and useful improvements made valued, income-yielding, four-unit apartment building
by him on the thing possessed.24 Accordingly, a builder by collecting rentals thereon, before they paid for the
in good faith cannot be compelled to pay rentals during cost of the apartment building. It was only four years
the period of retention25 nor be disturbed in his later that they finally paid its full value to the
possession by ordering him to vacate. In addition, as in respondent.
Petitioners’ interpretation of our holding in G.R. No. respondent during said period, without paying any
115814 has neither factual nor legal basis. The amount to the latter as reimbursement for his
decision of May 26, 1995, should be construed in construction costs and expenses. They should account
connection with the legal principles which form the and pay for such benefits.
basis of the decision, guided by the precept that
judgments are to have a reasonable intendment to do We need not belabor now the appellate court’s
justice and avoid wrong.27 recognition of herein respondent’s entitlement to
rentals from the date of the determination of the
The text of the decision in G.R. No. 115814 expressly current market value until its full payment. Respondent
exempted Pecson from liability to pay rentals, for we is clearly entitled to payment by virtue of his right of
found that the Court of Appeals erred not only in retention over the said improvement.
upholding the trial court’s determination of the
indemnity, but also in ordering him to account for the WHEREFORE, the instant petition is DENIED for lack
rentals of the apartment building from June 23, 1993 to of merit. The Decision dated May 21, 2001 of the Court
September 23, 1993, the period from entry of judgment of Appeals in CA-G.R. CV No. 64295 is SET ASIDE
until Pecson’s dispossession. As pointed out by and the Order dated July 31, 1998, of the Regional
Pecson, the dispositive portion of our decision in G.R. Trial Court, Branch 101, Quezon City, in Civil Case No.
No. 115814 need not specifically include the income Q-41470 ordering the herein petitioners, Spouses Juan
derived from the improvement in order to entitle him, and Erlinda Nuguid, to account for the rental income of
as a builder in good faith, to such income. The right of the four-door two-storey apartment building from
retention, which entitles the builder in good faith to the November 1993 until December 1997, in the amount
possession as well as the income derived therefrom, is of P1,344,000, computed on the basis of Twenty-eight
already provided for under Article 546 of the Civil Thousand (P28,000.00) pesos monthly, for a period of
Code. 48 months, is hereby REINSTATED. Until fully paid,
said amount of rentals should bear the legal rate of
Given the circumstances of the instant case where the interest set at six percent (6%) per annum computed
builder in good faith has been clearly denied his right from the date of RTC judgment. If any portion thereof
of retention for almost half a decade, we find that the shall thereafter remain unpaid, despite notice of finality
increased award of rentals by the RTC was reasonable of this Court’s judgment, said remaining unpaid
and equitable. The petitioners had reaped all the amount shall bear the rate of interest set at twelve
benefits from the improvement introduced by the
percent (12%) per annum computed from the date of This is a petition for certiorari to set aside the decision
said notice. Costs against petitioners. of the respondent Court of Appeals (now Intermediate
Appellate Court) affirming the decision of the Court of
First Instance of Bulacan, Fifth Judicial District, Branch
VIII, which found that Lots 1 and 2 of Plan Psu-131892
are accretion to the land covered by Transfer
G.R. No. L-61647 October 12, 1984 Certificate of Title No. 89709 and ordered their
registration in the names of the private respondents.
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF
LANDS), petitioner, Respondents Benjamin Tancinco, Azucena Tancinco
vs. Reyes, Marina (should be "Maria") Tancinco Imperial
THE HON. COURT OF APPEALS, BENJAMIN and Mario C. Tancinco are registered owners of a
TANCINCO, AZUCENA TANCINCO REYES, MARINA parcel of land covered by Transfer Certificate of Title
TANCINCO IMPERIAL and MARIO C. No. T-89709 situated at Barrio Ubihan, Meycauayan,
TANCINCO, respondents. Bulacan bordering on the Meycauayan and Bocaue
rivers.
The Solicitor General for petitioner.
On June 24, 1973, the private respondents filed an
Martin B. Laurea for respondents. application for the registration of three lots adjacent to
their fishpond property and particularly described as
follows: têñ.£îhqwâ£

GUTIERREZ, JR., J.:ñé+.£ªwph!1 Lot 1-Psu-131892

(Maria C. Tancinco)

A parcel of land (lot 1 as shown on plan

Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan,
Province of Bulacan. Bounded on the NE.,
along line 1-2, by Lot 3 of plan Psu-
131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along A parcel of land (Lot 3 as shown on plan
fines 4-5-6-7-8-9, by Bocaue River; on the Psu-131892), situated in the Barrio of
NE., along line 9-10, by property of Ubihan, Municipality of Meycauayan,
Joaquina Santiago; on the E., NE., and Province of Bulacan. Bounded on the NE.,
NW., along lines 10-11-12-1, by property of along line 1-2, by property of Mariano
Mariano Tancinco (Lot 2, Psu-111877). ... Tancinco (Lot 1, Psu-111877); and along
containing an area of THIRTY THREE line 2-3, by Lot 2 of plan Psu-131892; on
THOUSAND NINE HUNDRED THIRTY the S., along line 3-4, by Meycauayan
SEVEN (33,937) SQUARE METERS. ... River, on the SW., along line 4-5, by Lot 1
of plan Psu-131892; and along line 5-6 by
Lot 2-Psu-131892 property of Mariano Tancinco (Lot 2, Psu-
(Maria C. Tancinco) 111877), and on the NW., along line 6-1, by
property of Joaquina Santiago. ...
A parcel of land (Lot 2 as shown on plan containing an area of ONE THOUSAND
Psu-131892), situated in the Barrio of NINE HUNDRED EIGHTY FIVE (1,985)
Ubihan, Municipality of Meycauayan, SQUARE METERS. ...
Province of Bulacan. Bounded on the E.,
along line 1-2, by property of Rafael On April 5, 1974, Assistant Provincial Fiscal Amando
Singson; on the S., along line 2-3, by C. Vicente, in representation of the Bureau of Lands
Meycauayan River; on the SW., along line filed a written opposition to the application for
3-4, by Lot 3 of plan Psu-131892; and on registration.
the N., along line 4-1, by property of
Mariano Tancinco (Lot 1, Psu-111877). ... On March 6, 1975, the private respondents filed a
containing an area of FIVE THOUSAND partial withdrawal of the application for registration with
FOUR HUNDRED FIFTY THREE (5,453) respect to Lot 3 of Plan Psu-131892 in line with the
SQUARE METERS. ... recommendation of the Commissioner appointed by
the Court.
Lot 3-Psu-131892
(Maria C. Tancinco) On March 7, 1975, Lot 3 was ordered withdrawn from
the application and trial proceeded only with respect to
Lots 1 and 2 covered by Plan Psu-131892.
On June 26, 1976, the lower court rendered a decision On July 30, 1976, the petitioner Republic appealed to
granting the application on the finding that the lands in the respondent Court of Appeals.
question are accretions to the private respondents'
fishponds covered by Transfer Certificate of Title No. On August, 19, 1982, the respondent Court rendered a
89709. The dispositive portion of the decision decision affirming in toto the decision of the lower
reads: têñ.£îhqw⣠court. The dispositive portion of the decision
reads: têñ.£îhqwâ£
WHEREFORE, it appearing that Lots 1 & 2
of plan Psu-131892 (Exh. H) are accretions DAHIL DITO, ang hatol na iniakyat ay
to the land covered by Transfer Certificate sinasangayunan at pinagtitibay sa kanyang
of Title No. 89709 of the Register of Deeds kabuuan nang walang bayad.
of Bulacan, they belong to the owner of
said property. The Court, therefore, orders The rule that the findings of fact of the trial court and
the registration of lots 1 & 2 situated in the the Court of Appeals are binding upon this Court
barrio of Ubihan, municipality of admits of certain exceptions. Thus in Carolina
Meycauayan, province of Bulacan, and Industries Inc. v. CMS Stock Brokerage, Inc. (97 SCRA
more particularly described in plan Psu- 734) we held that this Court retains the power to
131892 (Exh. H) and their accompanying review and rectify the findings of fact of said courts
technical descriptions (Exhs. E, E-1) in when (1) the conclusion is a finding grounded entirely
favor of Benjamin Tancinco, married to on speculations, surmises and conjectures; (2) when
Alma Fernandez and residing at 3662 the inference made is manifestly mistaken, absurd,
Heatherdown, Toledo, Ohio 43614 U.S.A.; and impossible; (3) where there is grave abuse of
Azucena Tancinco Reyes, married to Alex discretion, (4) when the judgment is based on a
Reyes, Jr., residing at 4th St., New Manila, misapprehension of facts; and (5) when the court, in
Quezon City; Marina Tancinco Imperial, making its findings, went beyond the issues of the case
married to Juan Imperial, residing at Pasay and the same are contrary to the admissions of both
Road, Dasmariñas Village, Makati, Rizal; appellant and appellee.
and Mario C. Tancinco, married to Leticia
There are facts and circumstances in the record which
Regidor, residing at 1616 Cypress St.,
render untenable the findings of the trial court and the
Dasmariñas Village, Makati, Rizal, all of
legal age, all Filipino citizens.
Court of Appeals that the lands in question are the side of the Pilapil facing the fishpond ...
accretions to the private respondents' fishponds. .

The petitioner submits that there is no accretion to The private respondents submit that the foregoing
speak of under Article 457 of the New Civil Code evidence establishes the fact of accretion without
because what actually happened is that the private human intervention because the transfer of the dike
respondents simply transferred their dikes further down occurred after the accretion was complete.
the river bed of the Meycauayan River, and thus, if
there is any accretion to speak of, it is man-made and We agree with the petitioner.
artificial and not the result of the gradual and
imperceptible sedimentation by the waters of the river. Article 457 of the New Civil Code provides: têñ.
£îhqwâ£
On the other hand, the private respondents rely on the
testimony of Mrs. Virginia Acuña to the effect that: têñ. To the owners of lands adjoining the banks
£îhqw⣠of rivers belong the accretion which they
gradually receive from the effects of the
xxx xxx xxx current of the waters.

... when witness first saw the land, namely, The above-quoted article requires the concurrence of
Lots 1 & 2, they were already dry almost at three requisites before an accretion covered by this
the level of the Pilapil of the property of Dr. particular provision is said to have taken place. They
Tancinco, and that from the boundaries of are (1) that the deposit be gradual and imperceptible;
the lots, for about two (2) arms length the (2) that it be made through the effects of the current of
land was still dry up to the edge of the river; the water; and (3) that the land where accretion takes
that sometime in 1951, a new Pilapil was place is adjacent to the banks of rivers.
established on the boundaries of Lots 1 & 2
and soil from the old Pilapil was transferred The requirement that the deposit should be due to the
to the new Pilapil and this was done effect of the current of the river is indispensable. This
sometime in 1951; that the new lots were excludes from Art. 457 of the New Civil Code all
then converted into fishpond, and water in deposits caused by human intervention. Alluvion must
this fishpond was two (2) meters deep on be the exclusive work of nature. In the instant case,
there is no evidence whatsoever to prove that the
addition to the said property was made gradually facing the fishpond and only one meter deep on the
through the effects of the current of the Meycauayan side of the pilapil facing the river
and Bocaue rivers. We agree with the observation of
the Solicitor General that it is preposterous to believe The reason behind the law giving the riparian owner
that almost four (4) hectares of land came into being the right to any land or alluvion deposited by a river is
because of the effects of the Meycauayan and Bocaue to compensate him for the danger of loss that he
rivers. The lone witness of the private respondents suffers because of the location of his land. If estates
who happens to be their overseer and whose husband bordering on rivers are exposed to floods and other
was first cousin of their father noticed the four hectare evils produced by the destructive force of the waters
accretion to the twelve hectare fishpond only in 1939. and if by virtue of lawful provisions, said estates are
The respondents claim that at this point in time, subject to incumbrances and various kinds of
accretion had already taken place. If so, their witness easements, it is proper that the risk or danger which
was incompetent to testify to a gradual and may prejudice the owners thereof should be
imperceptible increase to their land in the years before compensated by the right of accretion. (Cortes v. City
1939. However, the witness testified that in that year, of Manila, 10 Phil. 567). Hence, the riparian owner
sheobserved an increase in the area of the original does not acquire the additions to his land caused by
fishpond which is now the land in question. If she was special works expressly intended or designed to bring
telling the truth, the accretion was sudden. However, about accretion. When the private respondents
there is evidence that the alleged alluvial deposits transferred their dikes towards the river bed, the dikes
were artificial and man-made and not the exclusive were meant for reclamation purposes and not to
result of the current of the Meycauayan and Bocaue protect their property from the destructive force of the
rivers. The alleged alluvial deposits came into being waters of the river.
not because of the sole effect of the current of the
rivers but as a result of the transfer of the dike towards We agree with the submission of the Solicitor General
the river and encroaching upon it. The land sought to that the testimony of the private respondents' lone
be registered is not even dry land cast imperceptibly witness to the effect that as early as 1939 there
and gradually by the river's current on the fishpond already existed such alleged alluvial deposits,
adjoining it. It is under two meters of water. The private deserves no merit. It should be noted that the lots in
respondents' own evidence shows that the water in the question were not included in the survey of their
fishpond is two meters deep on the side of the pilapil adjacent property conducted on May 10, 1940 and in
the Cadastral Survey of the entire Municipality of
Meycauayan conducted between the years 1958 to
1960. The alleged accretion was declared for taxation
purposes only in 1972 or 33 years after it had
supposedly permanently formed. The only valid
G.R. No. L-17652 June 30, 1962
conclusion therefore is that the said areas could not
have been there in 1939. They existed only after the IGNACIO GRANDE, ET AL., petitioners,
private respondents transferred their dikes towards the vs.
bed of the Meycauayan river in 1951. What private HON. COURT OF APPEALS, DOMINGO
respondents claim as accretion is really an CALALUNG, and ESTEBAN
encroachment of a portion of the Meycauayan river by CALALUNG, respondents.
reclamation.
Bartolome Guirao and Antonio M. Orara for petitioners.
The lower court cannot validly order the registration of Gonzales and Fernandez for respondents.
Lots 1 & 2 in the names of the private respondents.
These lots were portions of the bed of the Meycauayan BARRERA, J.:
river and are therefore classified as property of the
public domain under Article 420 paragraph 1 and This is an appeal taken by petitioners Ignacio, Eulogia,
Article 502, paragraph 1 of the Civil Code of the Alfonso, Eulalia, and Sofia Grande, from the decision
Philippines. They are not open to registration under the of the Court of Appeals (CA-G.R. No. 25169-R)
Land Registration Act. The adjudication of the lands in reversing that of the Court of First Instance of Isabela
question as private property in the names of the private (Civil Case No. 1171), and dismissing petitioners'
respondents is null and void. action against respondents Domingo and Esteban
Calalung, to quiet title to and recover possession of a
WHEREFORE, the instant petition is GRANTED. The parcel of land allegedly occupied by the latter without
decision appealed from is hereby REVERSED and petitioners' consent.
SET ASIDE. The private respondents are ordered to
move back the dikes of their fishponds to their original The facts of the case, which are undisputed, briefly
location and return the disputed property to the river to are: Petitioners are the owners of a parcel of land, with
which it belongs. an area of 3.5032 hectares, located at barrio Ragan,
municipality of Magsaysay (formerly Tumauini),
province of Isabela, by inheritance from their deceased
mother Patricia Angui (who inherited it from her of said portion, since prior to the year 1933 to the
parents Isidro Angui and Ana Lopez, in whose name present.
said land appears registered, as shown by Original
Certificate of Title No. 2982, issued on June 9, 1934). After trial, the Court of First Instance of Isabela, on
Said property is identified as Lot No. 1, Plan PSU- May 4, 1959, rendered a decision adjudging the
83342. When it was surveyed for purposes of ownership of the portion in question to petitioners, and
registration sometime in 1930, its northeastern ordering respondents to vacate the premises and
boundary was the Cagayan River (the same boundary deliver possession thereof to petitioners, and to pay to
stated in the title). Since then, and for many years the latter P250.00 as damages and costs. Said
thereafter, a gradual accretion on the northeastern side decision, in part, reads:
took place, by action of the current of the Cagayan
River, so much so, that by 1958, the bank thereof had It is admitted by the parties that the land involved
receded to a distance of about 105 meters from its in this action was formed by the gradual deposit
original site, and an alluvial deposit of 19,964 square of alluvium brought about by the action of the
meters (1.9964 hectares), more or less, had been Cagayan River, a navigable river. We are inclined
added to the registered area (Exh. C-1). to believe that the accretion was formed on the
northeastern side of the land covered by Original
On January 25, 1958, petitioners instituted the present Certificate of Title No. 2982 after the survey of
action in the Court of First Instance of Isabela against the registered land in 1931, because the
respondents, to quiet title to said portion (19,964 surveyors found out that the northeastern
square meters) formed by accretion, alleging in their boundary of the land surveyed by them was the
complaint (docketed as Civil Case No. 1171) that they Cagayan River, and not the land in question.
and their predecessors-in-interest, were formerly in Which is indicative of the fact that the accretion
peaceful and continuous possession thereof, until has not yet started or begun in 1931. And, as
September, 1948, when respondents entered upon the declared by Pedro Laman, defendant witness
land under claim of ownership. Petitioners also asked and the boundary owner on the northwest of the
for damages corresponding to the value of the fruits of registered land of the plaintiffs, the accretion was
the land as well as attorney's fees and costs. In their a little more than one hectare, including the stony
answer (dated February 18, 1958), respondents claim portion, in 1940 or 1941. Therefore, the
ownership in themselves, asserting that they have declarations of the defendant Domingo Calalung
been in continuous, open, and undisturbed possession and his witness, Vicente C. Bacani, to the effect
that the land in question was formed by accretion appropriation on the part of the reparian owner is
since 1933 do not only contradict the testimony necessary, in order to acquire ownership of the
of defendants' witness Pedro Laman, but could alluvial formation, as the law does not require the
not overthrow the incontestable fact that the same (3 Manresa, C.C., pp. 321-326).
accretion with an area of 4 hectare more or less,
was formed in 1948, reason for which, it was only This brings us now to the determination of
declared in that same year for taxation purposes whether the defendants, granting that they have
by the defendants under Tax Dec. No. 257 (Exh. been in possession of the alluvium since 1948,
"2") when they entered upon the land. We could could have acquired the property by prescription.
not give credence to defendants' assertion that Assuming that they occupied the land in
Tax Dec. No. 257 (Exh. "2") cancelled Tax Dee. September, 1948, but considering that the action
No. 28226 (Exh. "1"), because Exh. "2" says that was commenced on January 25, 1958, they have
"tax under this declaration begins with the year not been in possession of the land for ten (10)
1948. But, the fact that defendants declared the years; hence, they could not have acquired the
land for taxation purposes since 1948, does not land by ordinary prescription (Arts. 1134 and
mean that they become the owner of the land by 1138, New Civil Code). Moreover, as the alluvium
mere occupancy, for it is a new provision of the is, by law, part and parcel of the registered
New Civil Code that ownership of a piece of land property, the same may be considered as
cannot be acquired by occupation (Art. 714, New registered property, within the meaning of
Civil Code). The land in question being an Section 46 of Act No. 496: and, therefore, it could
accretion to the mother or registered land of the not be acquired by prescription or adverse
plaintiffs, the accretion belongs to the plaintiffs possession by another person.
(Art. 457, New Civil Code; Art. 366, Old Civil
Code). Assuming arguendo, that the accretion Unsatisfied, respondents appealed to the Court of
has been occupied by the defendants since Appeals, which rendered, on September 14, 1960, the
1948, or earlier, is of no moment, because the decision adverted to at the beginning of this opinion,
law does not require any act of possession on partly stating:
the part of the owner of the riparian owner, from
That the area in controversy has been formed
the moment the deposit becomes manifest
through a gradual process of alluvium, which
(Roxas v. Tuason, 9 Phil. 408; Cortez v. City of
started in the early thirties, is a fact conclusively
Manila, 10 Phil. 567). Further, no act of
established by the evidence for both parties. By specific provision of the Civil Code to belong to
law, therefore, unless some superior title has the owner of the land as a natural accession
supervened, it should properly belong to the thereof, does not ipso jure become entitled to the
riparian owners, specifically in accordance with protection of the rule of imprescriptibility of title
the rule of natural accession in Article 366 of the established by the Land Registration Act. Such
old Civil Code (now Article 457), which provides protection does not extend beyond the area
that "to the owner of lands adjoining the banks of given and described in the certificate. To hold
rivers, belongs the accretion which they gradually otherwise, would be productive of confusion. It
receive from the effects of the current of the would virtually deprive the title, and the technical
waters." The defendants, however, contend that description of the land given therein, of their
they have acquired ownership through character of conclusiveness as to the identity and
prescription. This contention poses the real issue area of the land that is registered. Just as the
in this case. The Courta quo, has resolved it in Supreme Court, albeit in a negative manner, has
favor of the plaintiffs, on two grounds: First, since stated that registration does not protect the
by accession, the land in question pertains to the riparian owner against the erosion of the area of
original estate, and since in this instance the his land through gradual changes in the course
original estate is registered, the accretion, of the adjoining stream (Payatas Estate
consequently, falls within the purview of Section Development Co. v. Tuason, 53 Phil. 55), so
46 of Act No. 496, which states that "no title to registration does not entitle him to all the rights
registered land in derogation to that of the conferred by Land Registration Act, in so far as
registered owner shall be acquired by the area added by accretion is concerned. What
prescription or adverse possession"; and, rights he has, are declared not by said Act, but
second, the adverse possession of the defendant by the provisions of the Civil Code on accession:
began only in the month of September, 1948, or and these provisions do not preclude acquisition
less than the 10-year period required for of the addition area by another person through
prescription before the present action was prescription. This Court has held as much in the
instituted. case of Galindez, et al. v. Baguisa, et al., CA-
G.R. No. 19249-R, July 17, 1959.
As a legal proposition, the first ground relied
upon by the trial court, is not quite correct. An We now proposed to review the second ground
accretion to registered land, while declared by relied upon by the trial court, regarding the length
of time that the defendants have been in defendants, in turn, claimed that they were the
possession. Domingo Calalung testified that he owners, that the plaintiffs did not file an action
occupied the land in question for the first time in until 1958, because it was only then that they
1934, not in 1948 as claimed by the plaintiffs. were able to obtain the certificate of title from the
The area under occupancy gradually increased surveyor, Domingo Parlan; and that they never
as the years went by. In 1946, he declared the declared the land in question for taxation
land for purposes of taxation (Exhibit 1). This tax purposes or paid the taxes thereon. Pedro
declaration was superseded in 1948 by another Grande admitted that the defendants had the
(Exhibit 2), after the name of the municipality said land surveyed in April, 1958, and that he
wherein it is located was changed from Tumauini tried to stop it, not because he claimed the
to Magsaysay. Calalung's testimony is accretion for himself and his co-plaintiffs, but
corroborated by two witnesses, both owners of because the survey included a portion of the
properties nearby. Pedro Laman, 72 years of property covered by their title. This last fact is
age, who was Municipal president of Tumauini conceded by the defendants who, accordingly,
for three terms, said that the land in question relinquished their possession to the part thus
adjoins his own on the south, and that since included, containing an area of some 458 square
1940 or 1951, he has always known it to be in meters.1äwphï1.ñët
the peaceful possession of the defendants.
Vicente C. Bacani testified to the same effect, The oral evidence for the defendants concerning
although, he said that the defendants' the period of their possession — from 1933 to
possession started sometime in 1933 or 1934. 1958 — is not only preponderant in itself, but is,
The area thereof, he said, was then less than moreover, supported by the fact that it is they
one hectare. and not the plaintiffs who declared the disputed
property for taxation, and by the additional
We find the testimony of the said witnesses circumstance that if the plaintiff had really been
entitled to much greater weight and credence in prior possession and were deprived thereof in
than that of the plaintiff Pedro Grande and his 1948, they would have immediately taken steps
lone witness, Laureana Rodriguez. The first to recover the same. The excuse they gave for
stated that the defendants occupied the land in not doing so, namely, that they did not receive
question only in 1948; that he called the latter's their copy of the certificate of title to their
attention to the fact that the land was his, but the property until 1958 for lack of funds to pay the
 fees of the surveyor Domingo Parlan, is too thereby making the alluvial property imprescriptible.
flimsy to merit any serious consideration. The We agree with the Court of Appeals that it does not,
payment of the surveyor's fees had nothing to do just as an unregistered land purchased by the
with their right to obtain a copy of the certificate. registered owner of the adjoining land does not, by
Besides, it was not necessary for them to have it extension, become ipso facto registered land.
in their hands, in order to file an action to recover Ownership of a piece of land is one thing, and
the land which was legally theirs by accession registration under the Torrens system of that ownership
and of which, as they allege, they had been is quite another. Ownership over the accretion received
illegally deprived by the defendants. We are by the land adjoining a river is governed by the Civil
convinced, upon consideration of the evidence, Code. Imprescriptibility of registered land is provided in
that the latter, were really in possession since the registration law. Registration under the Land
1934, immediately after the process of alluvion Registration and Cadastral Acts does not vest or give
started, and that the plaintiffs woke up to their title to the land, but merely confirms and thereafter
rights only when they received their copy of the protects the title already possessed by the owner,
title in 1958. By then, however, prescription had making it imprescriptible by occupation of third parties.
already supervened in favor of the defendants. But to obtain this protection, the land must be placed
under the operation of the registration laws wherein
It is this decision of the Court of Appeals which certain judicial procedures have been provided. The
petitioners seek to be reviewed by us. fact remain, however, that petitioners never sought
registration of said alluvial property (which was formed
The sole issue for resolution in this case is whether sometime after petitioners' property covered by
respondents have acquired the alluvial property in Original Certificate of Title No. 2982 was registered on
question through prescription. June 9, 1934) up to the time they instituted the present
action in the Court of First Instance of Isabela in 1958.
There can be no dispute that both under Article 457 of
The increment, therefore, never became registered
the New Civil Code and Article 366 of the old,
property, and hence is not entitled or subject to the
petitioners are the lawful owners of said alluvial
protection of imprescriptibility enjoyed by registered
property, as they are the registered owners of the land
property under the Torrens system. Consequently, it
which it adjoins. The question is whether the accretion
was subject to acquisition through prescription by third
becomes automatically registered land just because
persons.
the lot which receives it is covered by a Torrens title
The next issue is, did respondents acquire said alluvial HEIRS OF EMILIANO NAVARRO, petitioner,
property through acquisitive prescription? This is a vs. INTERMEDIATE APPELLATE COURT AND
question which requires determination of facts: HEIRS OF SINFOROSO PASCUAL,
physical possession and dates or duration of such respondents.
possession. The Court of Appeals, after analyzing the
evidence, found that respondents-appellees were in DECISION
possession of the alluvial lot since 1933 or 1934,
openly, continuously and adversely, under a claim of HERMOSISIMA, JR., J.:
ownership up to the filing of the action in 1958. This
Unique is the legal question visited upon the claim
finding of the existence of these facts, arrived at by the
of an applicant in a Land Registration case by
Court of Appeals after an examination of the evidence
oppositors thereto, the Government and a Government
presented by the parties, is conclusive as to them and
lessee, involving as it does ownership of land formed
can not be reviewed by us.
by alluvium.
The law on prescription applicable to the case is that
The applicant owns the property immediately
provided in Act 190 and not the provisions of the Civil
adjoining the land sought to be registered. His
Code, since the possession started in 1933 or 1934
registered property is bounded on the east by the
when the pertinent articles of the old Civil Code were
Talisay River, on the west by the Bulacan River, and on
not in force and before the effectivity of the new Civil
the north by the Manila Bay. The Talisay River and the
Code in 1950. Hence, the conclusion of the Court of
Bulacan River flow down towards the Manila Bay and
Appeals that the respondents acquired alluvial lot in
act as boundaries of the applicant's registered land on
question by acquisitive prescription is in accordance
the east and on the west.
with law.
The land sought to be registered was formed at the
The decision of the Court of Appeals under review is
northern tip of the applicant's land. Applicant's
hereby affirmed, with costs against the petitioners. So
registered property is bounded on the north by the
ordered.
Manila Bay.

The issue: May the land sought to be registered be

deemed an accretion in the sense that it naturally
accrues in favor of the riparian owner or should the application but only to the extent of seven (7) hectares
land be considered as foreshore land? of the property as may be certified by the Bureau of
Forestry as suitable for fishpond purposes.
Before us is a petition for review of: (1) the
decision[1] and (2) two subsequent resolutions[2] of the The Municipal Council of Balanga, Bataan, had
Intermediate Appellate Court[3] (now the Court of opposed Emiliano Navarro's application. Aggrieved by
Appeals) in Land Registration Case No. N-84, [4] the the decision of the Director of Fisheries, it appealed to
application over which was filed by private the Secretary of Natural Resources who, however,
respondents' predecessor-in-interest, Sinforoso affirmed the grant. The then Executive Secretary,
Pascual, now deceased, before the Court of First acting in behalf of the President of the Philippines,
Instance[5] (now the Regional Trial Court) of Balanga, similarly affirmed the grant.
Bataan.
On the other hand, sometime in the early part of 1960,
There is no dispute as to the following facts: Sinforoso Pascual filed an application to register and
confirm his title to a parcel of land, situated in Sibocon,
On October 3, 1946, Sinforoso Pascual, now Balanga, Bataan, described in Plan Psu-175181 and
deceased, filed an application for foreshore lease said to have an area of 146,611 square meters.
covering a tract of foreshore land in Sibocon, Balanga, Pascual claimed that this land is an accretion to his
Bataan, having an area of approximately seventeen property, situated in Barrio Puerto Rivas, Balanga,
(17) hectares. This application was denied on January Bataan, and covered by Original Certificate of Title No.
15, 1953. So was his motion for reconsideration. 6830. It is bounded on the eastern side by the Talisay
River, on the western side by the Bulacan River, and
Subsequently, petitioners' predecessor-in-interest, also on the northern side by the Manila Bay. The Talisay
now deceased, Emiliano Navarro, filed a fishpond River as well as the Bulacan River flow downstream
application with the Bureau of Fisheries covering and meet at the Manila Bay thereby depositing sand
twenty five (25) hectares of foreshore land also in and silt on Pascual's property resulting in an accretion
Sibocon, Balanga, Bataan. Initially, such application thereon. Sinforoso Pascual claimed the accretion as
was denied by the Director of Fisheries on the ground the riparian owner.
that the property formed part of the public
domain. Upon motion for reconsideration, the Director On March 25, 1960, the Director of Lands, represented
of Fisheries, on May 27, 1988, gave due course to his by the Assistant Solicitor General, filed an opposition
thereto stating that neither Pascual nor his Marcelo Lopez and their privies, alleged by Pascual to
predecessors-in-interest possessed sufficient title to have unlawfully claimed and possessed, through
the subject property, the same being a portion of the stealth, force and strategy, a portion of the subject
public domain and, therefore, it belongs to the property covered by Plan Psu-175181. The
Republic of the Philippines. The Director of Forestry, defendants in the case were alleged to have built a
through the Provincial Fiscal, similarly opposed provisional dike thereon: thus they have thereby
Pascual's application for the same reason as that deprived Pascual of the premises sought to be
advanced by the Director of Lands. Later on, however, registered. This, notwithstanding repeated demands
the Director of Lands withdrew his opposition. The for defendants to vacate the property.
Director of Forestry become the sole oppositor.
The case was decided adversely against
On June 2, 1960, the court a quo issued an order of Pascual. Thus, Pascual appealed to the Court of First
general default excepting the Director of Lands and the Instance (now Regional Trial Court) of Balanga,
Director of Forestry. Bataan, the appeal having been docketed as Civil
Case No. 2873. Because of the similarity of the parties
Upon motion of Emiliano Navarro, however, the order and the subject matter, the appealed case for
of general default was lifted and, on February 13, ejectment was consolidated with the land registration
1961, Navarro thereupon filed an opposition to case and was jointly tried by the court a quo.
Pascual's application. Navarro claimed that the land
sought to be registered has always been part of the During the pendency of the trial of the consolidated
public domain, it being a part of the foreshore of Manila cases, Emiliano Navarro died on November 1, 1961
Bay; that he was a lessee and in possession of a part and was substituted by his heirs, the herein petitioners.
of the subject property by virtue of a fishpond permit
issued by the Bureau of Fisheries and confirmed by Subsequently, on August 26, 1962, Pascual died and
the Office of the President; and that he had already was substituted by his heirs, the herein private
converted the area covered by the lease into a respondents.
fishpond.
On November 10, 1975, the court a quo rendered
During the pendency of the land registration case, that judgment finding the subject property to be foreshore
is, on November 6, 1960, Sinforoso Pascual filed a land and, being a part of the public domain, it cannot
complaint for ejectment against Emiliano Navarro, one be the subject of land registration proceedings.
 The decision's dispositive portion reads: 4. The lower court erred in not finding that the
applicants-appellants [private respondents] are entitled
"WHEREFORE, judgment is rendered: to eject the oppositor-appellee [petitioners]." [7]

(1) Dismissing plaintiff [private respondent] Sinforoso On appeal, the respondent court reversed the
Pascual's complaint for ejectment in Civil Case No. findings of the court a quo and granted the petition for
2873; registration of the subject property but excluding
therefrom fifty (50) meters from corner 2 towards
(2) Denying the application of Sinforoso Pascual for corner 1; and fifty meters (50) meters from corner 5
land registration over the land in question; and towards corner 6 of the Psu-175181.
(3) Directing said Sinforoso Pascual, through his heirs, The respondent appellate court explained the
as plaintiff in Civil Case No. 2873 and as applicant in reversal in this wise:
Land Registration Case No. N-84 to pay costs in both
instances."[6] "The paramount issue to be resolved in this appeal as
set forth by the parties in their respective briefs is —
The heirs of Pascual appealed and, before the whether or not the land sought to be registered is
respondent appellate court, assigned the following accretion or foreshore land, or, whether or not said
errors: land was formed by the action of the two rivers of
Talisay and Bulacan or by the action of the Manila
"1. The lower court erred in not finding the land in
Bay. If formed by the action of the Talisay and Bulacan
question as an accretion by the action of the Talisay
rivers, the subject land is accretion but if formed by the
and Bulacan Rivers to the land admittedly owned by
action of the Manila Bay then it is foreshore land.
applicants-appellants [private respondents].
xxx
2. The lower court erred in holding that the land in
question is foreshore land. It is undisputed that applicants-appellants [private
respondents] owned the land immediately adjoining the
3. The lower court erred in not ordering the registration
land sought to be registered. Their property which is
of the and is controversy in favor of applicants-
covered by OCT No. 6830 is bounded on the east by
appellants [private respondents].
the Talisay River, on the west by the Bulacan River,
and on the north by the Manila Bay. The Talisay and
Bulacan rivers come from inland flowing downstream which acts as a barricade preventing these two rivers
towards the Manila Bay. In other words, between the to meet. Thus, since the flow of the two rivers is
Talisay River and the Bulacan River is the property of downwards to the Manila Bay the sediments of sand
applicants with both rivers acting as the boundary to and silt are deposited at their mouths.
said land and the flow of both rivers meeting and
emptying into the Manila Bay. The subject land was It is, therefore, difficult to see how the Manila Bay
formed at the tip or apex of appellants' [private could have been the cause of the deposit thereat for in
respondents'] land adding thereto the land now sought the natural course of things, the waves of the sea eat
to be registered. the land on the shore, as they suge [sic] inland. It
would not therefore add anything to the land but
This makes this case quite unique because while it is instead subtract from it due to the action of the waves
undisputed that the subject land is immediately and the wind. It is then more logical to believe that the
attached to appellants' [private respondents'] land and two rivers flowing towards the bay emptied their cargo
forms the tip thereof, at the same time, said land of sand, silt and clay at their mouths, thus causing
immediately faces the Manila Bay which is part of the appellants' [private respondents'] land to accumulate
sea. We can understand therefore the confusion this therein.
case might have caused the lower court, faced as it
was with the uneasy problem of deciding whether or However, our distinguished colleage [sic], Mr. Justice
not the subject land was formed by the action of the Serrano, do [sic] not seem to accept this theory and
two rivers or by the action of the sea. Since the stated that the subject land arose only when x x x
subject land is found at the shore of the Manila Bay Pascual planted 'palapat' and 'bakawan' trees thereat
facing appellants' [private respondents'] land, it would to serve as a boundary or strainer. But we do not see
be quite easy to conclude that it is foreshore and how this act of planting trees by Pascual would explain
therefore part of the patrimonial property of the State how the land mass came into being. Much less will it
as the lower court did in fact rule x x x . prove that the same came from the sea. Following Mr.
Justice Serrano's argument that it were the few trees
xxx that acted as strainers or blocks, then the land that
grew would have stopped at the place where the said
It is however undisputed that appellants' [private trees were planted. But this is not so because the land
respondents'] land lies between these two rivers and it mass went far beyond the boundary, or where the
is precisely appellants' [private respondents'] land trees were planted.
On the other hand, the picture-exhibits of appellants' property of the applicant [private respondents]. About
[private respondents'] clearly show that the land that four-fifth [sic] of the area applied for is now dry land
accumulated beyond the so-called boundary, as well whereon are planted palapat trees thickly growing
as the entire area being applied for is dry land, above thereon. It is the natural action of these two rivers that
sea level, and bearing innumerable trees x x x. The has caused the formation of said land x x x subject of
existence of vegetation on the land could only confirm this registration case. It has been formed, therefore,
that the soil thereat came from inland rather than from by accretion. And having been formed by accretion,
the sea, for what could the sea bring to the shore but the said land may be considered the private property of
sand, pebbles, stones, rocks and corrals? On the other the riparian owner who is the applicant herein [private
hand, the two rivers would be bringing soil on their respondents'] x x x .
downward flow which they brought along from the
eroded mountains, the lands along their path, and In view of the above, the opposition hereto filed by the
dumped them all on the northern portion of appellants' government should be withdrawn, except for the
[private respondents'] land. portion recommended by the land investigator in his
report dated May 2, 1960, to be excluded and
In view of the foregoing, we have to deviate from the considered foreshore. x x x'
lower court's finding. While it is true that the subject
land is found at the shore of the Manila Bay fronting Because of this report, no less than the Solicitor
appellants' [private respondents'] land, said land is not General representing the Bureau of Lands withdrew
foreshore but an accretion from the action of the his opposition dated March 25, 1960, and limited 'the
Talisay and Bulacan rivers. In fact, this is exactly what same to the northern portion of the land applied for,
the Bureau of Lands found out, as shown in the compromising a strip 50 meters wide along the Manila
following report of the Acting Provincial Officer, Jesus Bay, which should be declared public land as part of
M. Orozco, to wit: the foreshore' x x x.”[8]

'Upon ocular inspection of the land subject of this Pursuant to the aforecited decision, the respondent
registration made on June 11, 1960, it was found out appellate court ordered the issuance of the
that the said land is x x x sandwitched [sic] by two big corresponding decree of registration in the name of
rivers x x x These two rivers bring down considerable private respondents and the reversion to private
amount of soil and sediments during floods every year respondents of the possession of the portion of the
thus raising the soil of the land adjoining the private subject property included in Navarro's fishpond permit.
 On December 20, 1978, petitioners filed a motion Thereafter, the Solicitor General, in behalf of the
for reconsideration of the aforecited decision. The Director of Forestry, filed a petition for review entitled,
Director of Forestry also moved for the reconsideration "The Director of Forestry vs. the Court of
of the same decision. Both motions were opposed by Appeals."[10] We, however, denied the same in a minute
private respondents on January 27, 1979. resolution dated July 20, 1981, such petition having
been prematurely filed at a time when the Court of
On November 21, 1980, respondent appellate court Appeals was yet to resolve petitioners' pending motion
promulgated a resolution denying the motion for to set aside the resolution dated November 21, 1980.
reconsideration filed by the Director of Forestry. It,
however, modified its decision, to read, viz: On October 9, 1981, respondent appellate court
denied petitioners' motion for reconsideration of the
"(3). Ordering private oppositors Heirs of Emiliano decision dated November 29, 1978.
Navarro to vacate that portion included in their
fishpond permit covered by Plan Psu-175181 and hand On October 17, 1981, respondent appellate court
over possession of said portion to applicants- made an entry of judgment stating that the decision
appellants, if the said portion is not within the strip of dated November 29, 1978 had become final and
land fifty (50) meters wide along Manila Bay on the executory as against herein petitioners as oppositors in
northern portion of the land subject of the registration L.R.C. Case No. N-84 and Civil Case No. 2873 of the
proceedings and which area is more particularly Court of First Instance (now the Regional Trial Court)
referred to as fifty (50) meters from corner 2 towards of Balanga, Bataan.
corner 1; and fifty (50) meters from corner 5 towards
corner 6 of Plan Psu-175181.” x x x[9] On October 26, 1981, a second motion for
reconsideration of the decision dated November 29,
On December 15, 1980, we granted the Solicitor 1978 was filed by petitioners' new counsel.
General, acting as counsel for the Director of Forestry,
an extension of time within which to file in this court, a On March 26, 1982, respondent appellate court
petition for review of the decision dated November 29, issued a resolution granting petitioners' request for
1978 of the respondent appellate court and of the leave to file a second motion for reconsideration.
aforecited resolution dated November 21, 1980.
On July 13, 1984, after hearing, respondent
appellate court denied petitioners' second motion for
reconsideration on the ground that the same was filed
out of time, citing Rule 52, Section 1 of the Rules of sediment be gradual and imperceptible; (2) that it be
Court which provides that a motion for reconsideration the result of the action of the waters of the river; and
shall be made ex-parte and filed within fifteen (15) (3) that the land where the accretion takes place is
days from the notice of the final order or judgment. adjacent to the bank of the river.[11] Accretion is the
process whereby the soil is deposited, while alluvium is
Hence this petition where the respondent appellate the soil deposited on the estate fronting the river bank;
court is imputed to have palpably erred in appreciating [12]
the owner of such estate is called the riparian
the facts of the case and to have gravely misapplied owner. Riparian owners are, strictly speaking, distinct
statutory and case law relating to accretion, from littoral owners, the latter being owners of lands
specifically, Article 457 of the Civil Code. bordering the shore of the sea or lake or other tidal
waters.[13] The alluvium, by mandate of Article 457 of
We find merit in the petition. the Civil Code, is automatically owned by the riparian
owner from the moment the soil deposit can be
The disputed property was brought forth by both
seen[14] but is not automatically registered property,
the withdrawal of the waters of Manila Bay and the
hence, subject to acquisition through prescription by
accretion formed on the exposed foreshore land by the
third persons.[15]
action of the sea which brought soil and sand
sediments in turn trapped by the palapat and bakawan Private respondents' claim of ownership over the
trees planted thereon by petitioner Sulpicio Pascual in disputed property under the principle of accretion, is
1948. misplaced.
Anchoring their claim of ownership on Article 457 of First, the title of private respondents' own tract of
the Civil Code, private respondents vigorously argue land reveals its northeastern boundary to be Manila
that the disputed 14-hectare land is an accretion Bay. Private respondents' land, therefore, used to
caused by the joint action of the Talisay and Bulacan adjoin, border or front the Manila Bay and not any of
Rivers which run their course on the eastern and the two rivers whose torrential action, private
western boundaries, respectively, of private respondents insist, is to account for the accretion on
respondents' own tract of land. their land. In fact, one of the private respondents,
Sulpicio Pascual, testified in open court that the waves
Accretion as a mode of acquiring property under
of Manila Bay used to hit the disputed land being part
said Article 457, requires the concurrence of the
of the bay's foreshore but, after he had planted palapat
following requisites: (1) that the accumulation of soil or
and bakawan trees thereon in 1948, the land began to "Appellant next contends that x x x Manila Bay cannot
rise.[16] be considered as a sea. We find said contention
untenable. A bay is part of the sea, being a mere
Moreover, there is no dispute as to the location of: indentation of the same:
(a) the disputed land; (b) private respondents' own
tract of land; (c) the Manila Bay; and, (d) the Talisay 'Bay. — An opening into the land where the water is
and Bulacan Rivers. Private respondents' own land lies shut in on all sides except at the entrance; an inlet of
between the Talisay and Bulacan Rivers; in front of the sea; an arm of the sea, distinct from a river, a
their land on the northern side lies now the disputed bending or curbing of the shore of the sea or of a lake.'
land where before 1948, there lay the Manila Bay. If 7 C.J. 1013-1014."[17]
the accretion were to be attributed to the action of
either or both of the Talisay and Bulacan Rivers, the The disputed land, thus, is an accretion not on a
alluvium should have been deposited on either or both river bank but on a sea bank, or on what used to be
of the eastern and western boundaries of private the foreshore of Manila Bay which adjoined private
respondents' own tract of land, not on the northern respindents' own tract of land on the northern side. As
portion thereof which is adjacent to the Manila such, the applicable law is not Article 457 of the Civil
Bay. Clearly lacking, thus, is the third requisite of Code but Article 4 of the Spanish Law of Waters of
accretion, which is, that the alluvium is deposited on 1866.
the portion of claimant's land which is adjacent to the
river bank. The process by which the disputed land was
formed, is not difficult to discern from the facts of the
Second, there is no dispute as to the fact that case. As the trial court correctly observed:
private respondents' own tract of land adjoins the
Manila Bay. Manila Bay is obviously not a river, and "A perusal of the survey plan x x x of the land subject
jurisprudence is already settled as to what kind of body matter of these cases shows that on the eastern side,
of water the Manila Bay is. It is to be remembered that the property is bounded by Talisay River, on the
we held that: western side by Bulacan River, on the southern side by
Lot 1436 and on the northern side by Manila Bay. It is
not correct to state that the Talisay and Bulacan Rivers
meet a certain portion because the two rivers both flow
towards Manila Bay. The Talisay River is straight while
the Bulacan River is a little bit meandering and there is eastern or western portion of private respondents' land
no portion where the two rivers meet before they end where a river each runs, but on the northern portion of
up at Manila Bay. The land which is adjacent to the petitioners' land which adjoins the Manila Bay. Worse,
property belonging to Pascual cannot be considered such conclusions are further eroded of their practical
an accretion [caused by the action of the two rivers]. logic and consonance with natural experience in the
light of Sulpicio Pascual's admission as to having
Applicant Pascual x x x has not presented proofs to planted palapat and bakawan trees on the northern
convince the Court that the land he has applied for boundary of their own land. In amplification of this,
registration is the result of the settling down on his plainly more reasonable and valid are Justice Mariano
registered land of soil, earth or other deposits so as to Serrano's observations in his dissenting opinion when
be rightfully be considered as an accretion [caused by he stated that:
the action of the two rivers]. Said Art. 457 finds no
applicability where the accretion must have been "As appellants' (titled) land x x x acts as a barricade
caused by action of the bay."[18] that prevents the two rivers to meet, and considering
the wide expanse of the boundary between said land
The conclusion formed by the trial court on the and the Manila Bay, measuring some 593.00 meters x
basis of the foregoing observation is that the disputed x x it is believed rather farfetched for the land in
land is part of the foreshore of Manila Bay and question to have been formed through 'sediments of
therefore, part of the public domain. The respondent sand and salt [sic] . . . deposited at their [rivers']
appellate court, however, perceived the fact that mouths.' Moreover, if 'since the flow of the two rivers is
petitioners' own land lies between the Talisay and downwards to the Manila Bay the sediments of sand
Bulacan Rivers, to be basis to conclude that the and silt are deposited at their mouths,' why then would
disputed land must be an accretion formed by the the alleged cargo of sand, silt and clay accumulate at
action of the two rivers because private respondents' the northern portion of appellants' titled land facing
own land acted as a barricade preventing the two Manila Bay instead of merely at the mouths and banks
rivers to meet and that the current of the two rivers of these two rivers? That being the case, the accretion
carried sediments of sand and silt downwards to the formed at said portion of appellants' titled [land] was
Manila Bay which accumulated somehow to a 14- not caused by the current of the two rivers but by the
hectare land. These conclusions, however, are fatally action of the sea (Manila Bay) into which the rivers
incongruous in the light of the one undisputed critical empty.
fact: the accretion was deposited, not on either the
The conclusion x x x is not supported by any reference eventually raising the former shore leading to the
to the evidence which, on the contrary, shows that the formation of the land in question."[19]
disputed land was formed by the action of the
sea. Thus, no less than Sulpicio Pascual, one of the In other words, the combined and interactive effect of
heirs of the original applicant, testified on cross- the planting of palapat and bakawan trees, the
examination that the land in dispute was part of the withdrawal of the waters of Manila Bay eventually
shore and it was only in 1948 that he noticed that the resulting in the drying up of its former foreshore, and
land was beginning to get higher after he had planted the regular torrential action of the waters of Manila
trees thereon in 1948. x x x Bay, is the formation of the disputed land on the
northern boundary of private respondents' own tract of
x x x it is established that before 1948 sea water from land.
the Manila Bay at high tide could reach as far as the
dike of appellants' fishpond within their titled property, The disputed property is an accretion on a sea bank,
which dike now separates this titled property from the Manila Bay being an inlet or an arm of the sea; as
land in question. Even in 1948 when appellants had such, the disputed property is, under Article 4 of the
already planted palapat and bakawan trees in the land Spanish Law of Waters of 1866, part of the public
involved, inasmuch as these trees were yet small, the domain.
waves of the sea could still reach the dike. This must
be so because in x x x the survey plan of the titled At the outset, there is a need to distinguish
property approved in 1918, said titled land was between Manila Bay and Laguna de Bay.
bounded on the north by Manila Bay. So Manila Bay
While we held in the case of Ignacio v. Director of
was adjacent to it on the north. It was only after the
Lands and Valeriano[20] that Manila Bay is considered a
planting of the aforesaid trees in 1948 that the land in
sea for purposes of determining which law on accretion
question began to rise or to get higher in elevation.
is to be applied in multifarious situations, we have
The trees planted by appellants in 1948 became a sort ruled differently insofar as accretions on lands
of strainer of the sea water and at the same time a kind adjoining the Laguna de Bay are concerned.
of block to the strained sediments from being carried
In the cases of Government of the P.I v. Colegio de
back to the sea by the very waves that brought them to
San Jose,[21] Republic v. Court of Appeals,[22] Republic
the former shore at the end of the dike, which must
v. Alagad[23], and Meneses v. Court of Appeals,[24] we
have caused the shoreline to recede and dry up
categorically ruled that Laguna de Bay is a lake the
accretion on which, by the mandate of Article 84 of the is not capable of being appropriated by any private
Spanish Law of Waters of 1866, belongs to the owner person, except through express authorization granted
of the land contiguous thereto. in due form by a competent authority." [25]Only the
executive and possibly the legislative departments
The instant controversy, however, brings a situation have the right and the power to make the declaration
calling for the application of Article 4 of the Spanish that the lands so gained by action of the sea is no
Law of Waters of 1866, the disputed land being an longer necessary for purposes of public utility or for the
accretion on the foreshore of Manila Bay which is, for cause of establishment of special industries or for
all legal purposes, considered a sea. coast guard services.[26] Petitioners utterly fail to show
that either the executive or legislative department has
Article 4 of the Spanish Law of Waters of August 3, already declared the disputed land as qualified, under
1866 provides as follows: Article 4 of the Spanish Law of Waters of 1866, to be
the property of private respondents as owners of the
"Lands added to the shores by accretions and alluvial
estates adjacent thereto.
deposits caused by the action of the sea, form part of
the public domain. When they are no longer washed by WHEREFORE, the instant Petition for Review is
the waters of the sea and are not necessary for hereby GRANTED.
purposes of public utility, or for the establishment of
special industries, or for the coast-guard service, the The decision of the Intermediate Appellate Court
Government shall declare them to be the property of (now Court of Appeals) in CA G.R. No. 59044-R dated
the owners of the estates adjacent thereto and as November 29, 1978 is hereby REVERSED and SET
increment thereof." ASIDE. The resolution dated November 21, 1980 and
March 28, 1982, respectively, promulgated by the
In the light of the aforecited vintage but still valid Intermediate Appellate Court are likewise REVERSED
law, unequivocal is the public nature of the disputed and SET ASIDE.
land in this controversy, the same being an accretion
on a sea bank which, for all legal purposes, the The decision of the Court of First Instance (now the
foreshore of Manila Bay is. As part of the public Regional Trial Court), Branch 1, Balanga, Bataan, is
domain, the herein disputed land is intended for public hereby ORDERED REINSTATED.
uses, and "so long as the land in litigation belongs to
the national domain and is reserved for public uses, it Costs against private respondents.
 their stead in the name of the plaintiff after
segregating from TCT No. 29593 452 sq.
m., the actual area of Lot 2958-C (covered
by cancelled TCT No. 11043) belonging to
G.R. No. 108065 July 6, 1993
defendant Felix Baes. The counterclaim is
SPOUSES FELIX BAES AND RAFAELA hereby dismissed.
BAES, petitioners,
Let a copy of this Decision be furnished the
vs.
Register of Deeds for Pasay City.
THE COURT OF APPEALS AND REPUBLIC OF THE
PHILIPPINES, respondents. SO ORDERED.
Lorenzo F. Miravite for petitioners. The controversy began in 1962, when the government
dug a canal on a private parcel of land, identified as
The Solicitor General for respondents.
Lot 2958 and covering an area of P33,902 sq.m., to
streamline the Tripa de Gallina creek.

CRUZ, J.: This lot was later acquired by Felix Baes, who
registered it in his name under TCT No. 10990 and
This is an appeal by way of certiorari from the decision then had it subdivided into three lots, namely: (a) Lot
of the respondent Court of Appeals which affirmed in 2958-A, with an area of 28,889 sq.m.; (b) Lot 2958-B,
totothe ruling of the trial court in Civil Case No. 0460-P, with an area of 3,588 sq.m.; and (c) Lot 2958-C, with
the dispositive portion of which read thus: an area of 452 sq.m., covered by TCT Nos. 11041,
11042 and 11043, respectively.
WHEREFORE, judgment is hereby
rendered declaring null and void TCT Nos. In exchange for Lot 2958-B, which was totally occupied
14405, 29592, 29593, 29594, 29595, and by the canal, the government gave Baes a lot with
TCT No. 29593's derivative titles TCT Nos. exactly the same area as Lot 2958-B through a Deed
124725, 124726, 124727 and 124729, and of Exchange of Real Property dated June 20,
ordering the Register of Deeds for Pasay 1970. 1 The property, which was near but not
City to cancel them and issue new ones in contiguous to Lot 2956-C, was denominated as Lot
3271-A and later registered in the name of Felix Baes
under TCT No. 24300. The soil displaced by the canal Lots 2958-C-1 and 2958-C-2 were later consolidated
was used to fill up the old bed of the creek. and this time further subdivided into four (4) lots,
namely, Lot 1, with an area of 147 sq.m.; Lot 2, with an
Meanwhile, Baes had Lot 2958-C and a portion of Lot area of 950 sq.m.; Lot 3, with an area of 257 sq.m.;
2958-A designated as Lot 1, Blk., 4, resurveyed and and Lot 4, with an area of 1,868 sq.m., which were
subdivided. On January 12, 1968, he submitted a respectively issued TCT Nos. 29592, 29593, 29594,
petition for the approval of his resurvey and subdivision and 29595.
plans, claiming that after the said lots were plotted by a
competent surveyor, it was found that there were In 1978, the Republic of the Philippines discovered that
errors in respect of their bearings and distances. Lot 1-B (with TCT No. 14405 and an area of 826
sq.m.), on which the petitioners had erected an
The resurvey-subdivision plan was approved by the apartment building, covered Lot 3611 of the Pasay
Court of First Instance of Pasay City in an order dated Cadastre, which is a filled-up portion of the Tripa de
January 15, 1968. 2 Gallina creek. Moreover, Lot 2958-C (covered by TCT
Nos. 29592 to 29595, with an increased area of 2,770
As a result, the old TCTs covering the said lots were after resurvey and subdivision) had been unlawfully
canceled and new ones were issued, to wit: (a) Lot 1- enlarged.
A, Blk. 4, with 672 sq.m., under TCT No.
T-14404; (b) Lot 1-B, with 826 sq.m., representing the On November 17, 1982, it filed a petition for
increase in area after the resurvey, under TCT No. T- cancellation of TCT Nos. 14405 and 29592 to 29595. 3
14405; (c) Lot 2958-C-1, with 452 sq.m., under TCT
No. T-14406; and (d) Lot 2958-C-2, with 2,770 sq.m. Baes did not object in his answer to the cancellation of
representing the increase after resurvey, under TCT TCT Nos. 29592, 29594 and 29595 and was notable to
No. T-14407. prove during the trial that the government utilized a
portion of Lot 2 under, TCT No. 29593. The trial court
therefore decreed (correctly) that the original Lot 2958-
C (with an area of 452 sq.m.) be reverted to its status
before the resurvey-subdivision of Lot 2958-C.

The only remaining dispute relates to Lot 1-B (TCT No.

14405), which the petitioners, relying on Article 461 of
the Civil Code, are claiming as their own. The This article (461) refers to a natural change
government rejects this claim and avers that the in the course of a stream. If the change of
petitioners had already been fully compensated for it the course is due to works constructed by
on June 20, 1970 when they agreed to exchange their concessioners authorized by the
Lot 2958-B with Lot 3271-A belonging to the government, the concession may grant the
government. abandoned river bed to the concessioners.
If there is no such grant, then, by analogy,
Article 461 of the Civil Code states: the abandoned river bed will belong to the
owners of the land covered by the waters,
River beds which are abandoned through as provided in this article, without prejudice
the natural change in the course of the to a superior right of third persons with
waters ipso factobelong to the owners sufficient title. (Citing 3 Manresa 251-252; 2
whose lands are occupied by the new Navarro Amandi, 100-101; 3 Sanchez
course in proportion to the area lost. Roman 148)
However, the owners of the land adjoining
the old bed shall have the right to acquire We agree.
the same by paying the value thereof,
which value shall not exceed the value of If the riparian owner is entitled to compensation for the
the area occupied by the new bed. damage to or loss of his property due to natural
(Emphasis supplied) causes, there is all the more reason to compensate
him when the change in the course of the river is
A portion of the Tripa de Gallina creek was diverted to effected through artificial means. The loss to the
a man-made canal which totally occupied Lot 2958-B petitioners of the land covered by the canal was the
(with an area of 3,588 sq.m.) belonging to Felix Baes. result of a deliberate act on the part of the government
Thus, the petitioners claim that they became the when it sought to improve the flow of the Tripa de
owners of the old bed (which was eventually filled up Gallina creek. It was therefore obligated to
by soil excavated from Lot 2958-B) by virtue of Article compensate the Baeses for their loss.
461.
We find, however, that the petitioners have already
The petitioners rely heavily on Dr. Arturo M. Tolentino's been so compensated. Felix Baes was given Lot 3271-
interpretation of this Article, to wit: A in exchange for the affected Lot 2958-B through the
Deed of Exchange of Real Property dated June 20, FULGENCIO MORA, petitioners
1970. This was a fair exchange because the two lots vs.
were of the same area and value and the agreement GUILLERMO MANALO and COURT OF
was freely entered into by the parties. The petitioners APPEALS, respondents.
cannot now claim additional compensation because,
as correctly observed by the Solicitor General, Josefin De Alban Law Office for Petitioners.

. . . to allow petitioners to acquire

ownership of the dried-up portion of the
creek would be a clear case of double FELICIANO, J.:p
compensation and unjust enrichment at the
The late Judge Taccad originally owned a parcel of
expense of the state.
land situated in Tumauini, Isabela having an estimated
The exchange of lots between the petitioners and the area of twenty (20) hectares. The western portion of
Republic was the result of voluntary negotiations. If this land bordering on the Cagayan River has an
these had failed, the government could still have taken elevation lower than that of the eastern portion which
Lot 2958-B under the power of eminent domain, upon borders on the national road. Through the years, the
payment of just compensation, as the land was needed western portion would periodically go under the waters
for a public purpose. of the Cagayan River as those waters swelled with the
coming of the rains. The submerged portion, however,
WHEREFORE, the petition is DENIED, with costs would re-appear during the dry season from January to
against the petitioners. It is so ordered. August. It would remain under water for the rest of the
year, that is, from September to December during the
rainy season.

G.R. No. 92161 March 18, 1991 The ownership of the landholding eventually moved
from one person to another. On 9 May 1959,
SIMPLICIO BINALAY, PONCIANO GANNABAN, respondent Guillermo Manalo acquired 8.65 hectares
NICANOR MACUTAY, DOMINGO ROSALES, thereof from Faustina Taccad, daughter of Judge Juan
GREGORIO ARGONZA, EUSTAQUIO BAUA, Taccad. The land sold was described in the Deed of
FLORENTINO ROSALES, TEODORO Absolute Sale 1 as follows:
MABBORANG, PATRICIO MABBORANG and
 . . . a parcel of agricultural land in Balug, parcels of land belonging to respondent Manalo were
Tumauini, Isabela, containing an area of surveyed and consolidated into one lot, designated as
8.6500 hectares, more or less; bounded on Lot No. 307, Pls-964. Lot 307 which contains 4.6489
the North by Francisco Forto on the East hectares includes: (a) the whole of the 1.80 hectares
by National Road; on South by Julian acquired from Gregorio Taguba; and (b) 2.8489
Tumolva and on the West by Cagayan hectares out of the 8.65 hectares purchased from
River; declared for taxation under Tax Faustina Taccad. As the survey was conducted on a
Declaration No. 12681 in the name of rainy month, a portion of the land bought from Faustina
Faustina Taccad, and assessed at P Taccad then under water was left unsurveyed and was
750.00. . . . not included in Lot 307.

Later in 1964, respondent Manalo purchased another The Sketch Plan 3 submitted during the trial of this
1.80 hectares from Gregorio Taguba who had earlier case and which was identified by respondent Manalo
acquired the same from Judge Juan Taccad. The shows that the Cagayan River running from south to
second purchase brought the total acquisition of north, forks at a certain point to form two (2) branches
respondent Manalo to 10.45 hectares. The second —the western and the eastern branches—and then
piece of property was more particularly described as unites at the other end, further north, to form a narrow
follows: strip of land. The eastern branch of the river cuts
through the land of respondent Manalo and is
. . . a piece of agricultural land consisting of inundated with water only during the rainy season. The
tobacco land, and containing an area of bed of the eastern branch is the submerged or the
18,000 square meters, more or less, unsurveyed portion of the land belonging to
bounded on the North by Balug Creek; on respondent Manalo. For about eight (8) months of the
the South, by Faustina Taccad (now year when the level of water at the point where the
Guillermo R. Manalo); on the East, by a Cagayan River forks is at its ordinary depth, river water
Provincial Road; and on the West, by does not flow into the eastern branch. While this
Cagayan River assessed at P 440.00, as condition persists, the eastern bed is dry and is
tax Declaration No. 3152. . . . 2 susceptible to cultivation.

During the cadastral survey conducted at Balug, Considering that water flowed through the eastern
Tumauini, Isabela on 21 October 1969, the two (2) branch of the Cagayan River when the cadastral
survey was conducted, the elongated strip of land Petitioners who are in possession of Lot 821, upon the
formed by the western and the eastern branches of the other hand, insist that they own Lot 821. They occupy
Cagayan River looked very much like an island. This the outer edges of Lot 821 along the river banks, i.e.,
strip of land was surveyed on 12 December 1969. 4 It the fertile portions on which they plant tobacco and
was found to have a total area of 22.7209 hectares other agricultural products. They also cultivate the
and was designated as Lot 821 and Lot 822. The area western strip of the unsurveyed portion during
of Lot 822 is 10.8122 hectares while Lot 821 has an summer. 5 This situation compelled respondent Manalo
area of 11.9087 hectares. Lot 821 is located directly to file a case for forcible entry against petitioners on 20
opposite Lot 307 and is separated from the latter only May 1969. The case was dismissed by the Municipal
by the eastern branch of the Cagayan River during the Court of Tumauini, Isabela for failure of both parties to
rainy season and, during the dry season, by the appear. On 15 December 1972, respondent Manalo
exposed, dry river bed, being a portion of the land again filed a case for forcible entry against petitioners.
bought from Faustina Taccad. Respondent Manalo The latter case was similarly dismissed for lack of
claims that Lot 821 also belongs to him by way of jurisdiction by the Municipal Court of Tumauini,
accretion to the submerged portion of the property to Isabela.
which it is adjacent.
On 24 July 1974, respondent Manalo filed a
complaints 6 before the then Court of First Instance of
Isabela, Branch 3 for quieting of title, possession and
damages against petitioners. He alleged ownership of
the two (2) parcels of land he bought separately from
Faustina Taccad and Gregorio Taguba for which
reason he prayed that judgment be entered ordering
petitioners to vacate the western strip of the
unsurveyed portion. Respondent Manalo likewise
prayed that judgment be entered declaring him as
owner of Lot 821 on which he had laid his claim during
the survey.

Petitioners filed their answer denying the material

allegations of the complaint. The case was then set for
trial for failure of the parties to reach an amicable 4. That there is no pronouncement as to
agreement or to enter into a stipulation of facts. 7 On attorney's fees and costs.
10 November 1982, the trial court rendered a decision
with the following dispositive portion: SO ORDERED. 8

WHEREFORE, in the light of the foregoing Petitioners appealed to the Court of Appeals which,
premises, the Court renders judgment however, affirmed the decision of the trial court. They
against the defendants and in favor of the filed a motion for reconsideration, without success.
plaintiff and orders:
While petitioners insist that Lot 821 is part of an island
1. That plaintiff, Guillermo Manalo, is surrounded by the two (2) branches of the Cagayan
declared the lawful owner of the land in River, the Court of Appeals found otherwise. The Court
question, Lot No. 821, Pls-964 of Tumauini of Appeals concurred with the finding of the trial court
Cadastre, and which is more particularly that Lot 821 cannot be considered separate and
described in paragraph 2-b of the distinct from Lot 307 since the eastern branch of the
Complaint; Cagayan River substantially dries up for the most part
of the year such that when this happens, Lot 821
2. That the defendants are hereby ordered becomes physically (i.e., by land) connected with the
to vacate the premises of the land in dried up bed owned by respondent Manalo. Both
question, Lot No. 821, Pls-964 of Tumauini courts below in effect rejected the assertion of
Cadastre, and which is more particularly petitioners that the depression on the earth's surface
described in paragraph 2-b of the which separates Lot 307 and Lot 821 is, during part of
Complaint; the year, the bed of the eastern branch of the Cagayan
River.
3. That the defendants are being restrained
from entering the premises of the land in It is a familiar rule that the findings of facts of the trial
question, Lot No. 821, Pls-964 of Tumauini court are entitled to great respect, and that they carry
Cadastre, and which is more particularly even more weight when affirmed by the Court of
described in paragraph 2-b of the Appeals. 9 This is in recognition of the peculiar
Complaint; and advantage on the part of the trial court of being able to
observe first-hand the deportment of the witnesses
while testifying. Jurisprudence is likewise settled that manifest" (Roxas vs. Tuazon, 6 Phil.
the Court of Appeals is the final arbiter of questions of 408). 12
fact. 10 But whether a conclusion drawn from such
findings of facts is correct, is a question of law The Court of Appeals adhered substantially to the
cognizable by this Court. 11 conclusion reached by the trial court, thus:

In the instant case, the conclusion reached by both As found by the trial court, the disputed
courts below apparently collides with their findings that property is not an island in the strict sense
periodically at the onset of and during the rainy of the word since the eastern portion of the
season, river water flows through the eastern bed of said property claimed by appellants to be
the Cagayan River. The trial court held: part of the Cagayan River dries up during
summer. Admittedly, it is the action of the
The Court believes that the land in heavy rains which comes during rainy
controversy is of the nature and character season especially from September to
of alluvion (Accretion), for it appears that November which increases the water level
during the dry season, the body of water of the Cagayan river. As the river becomes
separating the same land in controversy swollen due to heavy rains, the lower
(Lot No. 821, Pls-964) and the two (2) portion of the said strip of land located at
parcels of land which the plaintiff its southernmost point would be inundated
purchased from Gregorio Taguba and with water. This is where the water of the
Justina Taccad Cayaba becomes a marshy Cagayan river gains its entry.
land and is only six (6) inches deep and Consequently, if the water level is high the
twelve (12) meters in width at its widest in whole strip of land would be under water.
the northern tip (Exhs. "W", "W-l", "W-2",
"W-3" and "W-4"), It has been held by our In Government of the Philippine Islands vs. Colegio de
Supreme Court that "the owner of the San Jose, it was held that —
riparian land which receives the gradual
deposits of alluvion, does not have to make According to the foregoing
an express act of possession. The law definition of the words
does not require it, and the deposit created "ordinary" and "extra-ordinary,"
by the current of the water becomes the highest depth of the waters
 of Laguna de Bay during the River is that attained during the dry season
dry season is the ordinary one, which is confined only on the west side of
and the highest depth they Lot [821] and Lot [822]. This is the natural
attain during the extra-ordinary Cagayan river itself. The small residual of
one (sic); inasmuch as the water between Lot [821] and 307 is part of
former is the one which is the small stream already in existence when
regular, common, natural, the whole of the late Judge Juan Taccad's
which occurs always or most of property was still susceptible to cultivation
the time during the year, while and uneroded. 13
the latter is uncommon,
transcends the general rule, The Court is unable to agree with the Court of Appeals
order and measure, and goes that Government of the Philippine Islands vs. Colegio
beyond that which is the de San Jose 14 is applicable to the present case. That
ordinary depth. If according to case involved Laguna de Bay; since Laguna de Bay is
the definition given by Article 74 a lake, the Court applied the legal provisions governing
of the Law of Waters quoted the ownership and use of lakes and their beds and
above, the natural bed or basin shores, in order to determine the character and
of the lakes is the ground ownership of the disputed property. Specifically, the
covered by their waters when at Court applied the definition of the natural bed or basin
their highest ordinary depth, the of lakes found in Article 74 of the Law of Waters of 3
natural bed or basin of Laguna August 1866. Upon the other hand, what is involved in
de Bay is the ground covered the instant case is the eastern bed of the Cagayan
by its waters when at their River.
highest depth during the dry
season, that is up to the We believe and so hold that Article 70 of the Law of
northeastern boundary of the Waters of 3 August 1866 is the law applicable to the
two parcels of land in question. case at bar:

We find the foregoing ruling to be Art. 70. The natural bed or channel of a
analogous to the case at bar. The highest creek or river is the ground covered by its
ordinary level of the waters of the Cagayan
 waters during the highest floods. Cagayan River by a large tract of land which includes
(Emphasis supplied) not only Lot 821 but also what this Court characterizes
as the eastern branch of the Cagayan River.
We note that Article 70 defines the natural bed or
channel of a creek or river as the ground covered Secondly, the pictures identified by respondent Manalo
by its waters during the highest floods. The during his direct examination depict the depressed
highest floods in the eastern branch of the portion as a river bed. The pictures, marked as
Cagayan River occur with the annual coming of Exhibits "W" to "W-4", were taken in July 1973 or at a
the rains as the river waters in their onward time when the eastern bed becomes visible. 16 Thus,
course cover the entire depressed portion. Exhibit "W-2" which according to respondent Manalo
Though the eastern bed substantially dries up for was taken facing the east and Exhibit "W-3" which was
the most part of the year (i.e., from January to taken facing the west both show that the visible, dried
August), we cannot ignore the periodical swelling up portion has a markedly lower elevation than Lot 307
of the waters ( i.e., from September to and Lot 821. It has dike-like slopes on both sides
December) causing the eastern bed to be connecting it to Lot 307 and Lot 821 that are vertical
covered with flowing river waters. upward and very prominent. This topographic feature
is compatible with the fact that a huge volume of water
The conclusion of this Court that the depressed portion passes through the eastern bed regularly during the
is a river bed rests upon evidence of record. Firstly, rainy season. In addition, petitioner Ponciano
respondent Manalo admitted in open court that the Gannaban testified that one had to go down what he
entire area he bought from Gregorio Taguba was called a "cliff" from the surveyed portion of the land of
included in Lot 307. 15 If the 1.80 hectares purchased respondent Manalo to the depressed portion. The cliff,
from Gregorio Taguba was included in Lot 307, then as related by petitioner Gannaban, has a height of
the Cagayan River referred to as the western boundary eight (8) meters. 17
in the Deed of Sale transferring the land from Gregorio
Taguba to respondent Manalo as well as the Deed of The records do not show when the Cagayan River
Sale signed by Faustina Taccad, must refer to the began to carve its eastern channel on the surface of
dried up bed (during the dry months) or the eastern the earth. However, Exhibit "E" 18 for the prosecution
branch of the river (during the rainy months). In the which was the Declaration of Real Property standing in
Sketch Plan attached to the records of the case, Lot the name of Faustina Taccad indicates that the eastern
307 is separated from the western branch of the bed already existed even before the sale to respondent
Manalo. The words "old bed" enclosed in parentheses development of the national wealth.
—perhaps written to make legitimate the claim of (Emphasis supplied)
private ownership over the submerged portion—is an
implied admission of the existence of the river bed. In Although Article 420 speaks only of rivers and banks,
the Declaration of Real Property made by respondent "rivers" is a composite term which includes: (1) the
Manalo, the depressed portion assumed the name Rio running waters, (2) the bed, and (3) the
Muerte de Cagayan. Indeed, the steep dike-like slopes banks. 19 Manresa, in commenting upon Article 339 of
on either side of the eastern bed could have been the Spanish Civil Code of 1889 from which Article 420
formed only after a prolonged period of time. of the Philippine Civil Code was taken, stressed the
public ownership of river beds:
Now, then, pursuant to Article 420 of the Civil Code,
respondent Manalo did not acquire private ownership La naturaleza especial de los rios, en
of the bed of the eastern branch of the river even if it punto a su disfrute general, hace que sea
was included in the deeds of absolute sale executed necesario considerar en su relacion de
by Gregorio Taguba and Faustina Taccad in his favor. dominio algo mas que sus aguas
These vendors could not have validly sold land that corrientes. En efecto en todo rio es preciso
constituted property of public dominion. Article 420 of distinguir 1. esta agua corriente; 2. el alveo
the Civil Code states: o cauce, y 3. las riberas. Ahora bien: son
estas dos ultimas cosas siempre de
The following things are property of public dominio publico, como las aguas?
dominion:
Realmente no puede imaginarse un rio sin
(1) Those intended for public use, such as alveo y sin ribera; de suerte que al decir el
roads, canals, rivers, torrents, ports and Codigo civil que los rios son de dominio
bridges constructed by the State, banks, publico, parece que debe ir implicito el
shores, roadsteads, and others of similar dominio publico de aquellos tres elementos
character; que integran el rio. Por otra parte, en
cuanto a los alveos o cauces tenemos la
(2) Those which belong to the State, declaracion del art. 407, num 1, donde
without being for public use, and are dice: son de dominion publico . . . los rios y
intended for some public service or for the sus cauces naturales; declaracion que
 concuerda con lo que dispone el art. 34 de was no evidence to prove that Lot 821 is an increment
la ley de [Aguas], segun el cual, son de to Lot 307 and the bed of the eastern branch of the
dominion publico: 1. los alveos o cauces river. Accretion as a mode of acquiring property under
de los arroyos que no se hallen Article 457 of the Civil Code requires the concurrence
comprendidos en el art. 33, y 2. los alveos of three (3) requisites: (a) that the deposition of soil or
o cauces naturales de los rios en la sediment be gradual and imperceptible; (b) that it be
extension que cubran sus aguas en las the result of the action of the waters of the river (or
mayores crecidas ordinarias. 20 (Emphasis sea); and (c) that the land where accretion takes place
supplied) is adjacent to the banks of rivers (or the sea
coast). 22 The Court notes that the parcels of land
The claim of ownership of respondent Manalo over the bought by respondent Manalo border on the eastern
submerged portion is bereft of basis even if it were branch of the Cagayan River. Any accretion formed by
alleged and proved that the Cagayan River first began this eastern branch which respondent Manalo may
to encroach on his property after the purchase from claim must be deposited on or attached to Lot 307. As
Gregorio Taguba and Faustina Taccad. Article 462 of it is, the claimed accretion (Lot 821) lies on the bank of
the Civil Code would then apply divesting, by operation the river not adjacent to Lot 307 but directly opposite
of law, respondent Manalo of private ownership over Lot 307 across the river.
the new river bed. The intrusion of the eastern branch
of the Cagayan River into his landholding obviously Assuming (arguendo only) that the Cagayan River
prejudiced respondent Manalo but this is a common referred to in the Deeds of Sale transferring ownership
occurrence since estates bordering on rivers are of the land to respondent Manalo is the western
exposed to floods and other evils produced by the branch, the decision of the Court of Appeals and of the
destructive force of the waters. That loss is trial court are bare of factual findings to the effect that
compensated by, inter alia, the right of accretion the land purchased by respondent Manalo received
acknowledged by Article 457 of the Civil Code. 21 It so alluvium from the action of the aver in a slow and
happened that instead of increasing the size of Lot gradual manner. On the contrary, the decision of the
307, the eastern branch of the Cagayan River had lower court made mention of several floods that
carved a channel on it. caused the land to reappear making it susceptible to
cultivation. A sudden and forceful action like that of
We turn next to the issue of accretion. After examining flooding is hardly the alluvial process contemplated
the records of the case, the Court considers that there under Article 457 of the Civil Code. It is the slow and
hardly perceptible accumulation of soil deposits that alleged that the parcels of land he bought separately
the law grants to the riparian owner. from Gregorio Taguba and Faustina Taccad were
formerly owned by Judge Juan Taccad who was in
Besides, it is important to note that Lot 821 has an possession thereof through his (Judge Taccad's)
area of 11.91 hectares. Lot 821 is the northern portion tenants. When ownership was transferred to him,
of the strip of land having a total area of 22.72 respondent Manalo took over the cultivation of the
hectares. We find it difficult to suppose that such a property and had it declared for taxation purposes in
sizable area as Lot 821 resulted from slow accretion to his name. When petitioners forcibly entered into his
another lot of almost equal size. The total landholding property, he twice instituted the appropriate action
purchased by respondent Manalo is 10.45 hectares before the Municipal Trial Court of Tumauini, Isabela.
(8.65 hectares from Faustina Taccad and 1.80 Against respondent Manalo's allegation of prior
hectares from Gregorio Taguba in 1959 and 1964, possession, petitioners presented tax declarations
respectively), in fact even smaller than Lot 821 which standing in their respective names. They claimed
he claims by way of accretion. The cadastral survey lawful, peaceful and adverse possession of Lot 821
showing that Lot 821 has an area of 11.91 hectares since 1955.
was conducted in 1969. If respondent Manalo's
contention were accepted, it would mean that in a span If respondent Manalo had proved prior possession, it
of only ten (10) years, he had more than doubled his was limited physically to Lot 307 and the depressed
landholding by what the Court of Appeals and the trial portion or the eastern river bed. The testimony of
court considered as accretion. As already noted, there Dominga Malana who was a tenant for Justina Taccad
are steep vertical dike-like slopes separating the did not indicate that she was also cultivating Lot 821.
depressed portion or river bed and Lot 821 and Lot In fact, the complaints for forcible entry lodged before
307. This topography of the land, among other things, the Municipal Trial Court of Tumauini, Isabela
precludes a reasonable conclusion that Lot 821 is an pertained only to Lot 307 and the depressed portion or
increment to the depressed portion by reason of the river bed and not to Lot 821. In the same manner, the
slow and constant action of the waters of either the tax declarations presented by petitioners conflict with
western or the eastern branches of the Cagayan River. those of respondent Manalo. Under Article 477 of the
Civil Code, the plaintiff in an action for quieting of title
We turn finally to the issue of ownership of Lot 821. must at least have equitable title to or interest in the
Respondent Manalo's claim over Lot 821 rests on real property which is the subject matter of the action.
accretion coupled with alleged prior possession. He The evidence of record on this point is less than
satisfactory and the Court feels compelled to refrain BENGZON, J.:
from determining the ownership and possession of Lot
821, adjudging neither petitioners nor respondent This is an offshoot of our decision in G.R. No. L-7046,
Manalo as owner(s) thereof. Siari Valley Estate Inc, vs. Filemon Lucasan,1 wherein
we affirmed, on appeal, the judgment of Hon. Patricio
WHEREFORE, the Decision and Resolution of the Ceniza, of the Zamboanga court of first instance in its
Court of Appeals in CA-GR CV No. 04892 are hereby Civil Case No. 134. The dispositive part of such
SET ASIDE. Respondent Manalo is hereby declared affirmed judgment read as follows:
the owner of Lot 307. The regularly submerged portion
or the eastern bed of the Cagayan River is hereby Valley Estate all the cattle that may be found in
DECLARED to be property of public dominion. The the cattle ranch ". . . judgment is hereby
ownership of Lot 821 shall be determined in an rendered adjudicating to the Siari of Filemon
appropriate action that may be instituted by the Lucasan specially the 321 heads that had been
interested parties inter se. No pronouncement as to entrusted to his care as receiver or trustee of this
costs. Court and ordering the defendant to deliver to the
plaintiff all said cattle or their value amounting to
P40,000 to pay damages to the Siari Valley
Estate for the 400 heads of cattle that he sold
since 1946 up to the date of the trial at the rate of
P100 per head or P40,000 plus interest at the
G.R. No. L-11005 October 31, 1957
rate of 6 per cent from the date of the trial of this
SIARI VALLEY ESTATES, INC., petitioner, case in January, 1951 and to pay the cost of the
vs. proceeding.In addition, the defendant is hereby
FILEMON LUCASAN and Hon. W. M. ORTEGA, ordered to allow the Siari Valley Estate to round
Judge of the Court of First Instance of Zamboanga up all the buffaloes that may be found in his
del Norte, respondents. cattle ranch after the Siari Valley Estate shall
have posted a bond in the amount of P5,000 to
Orendain and Sarmiento for petitioner. answer for whatever damages the operation may
Hon. Wenceslao M. Ortega in his own behalf. cause to him.
Barrios, Barrios and Lucasan for respondents.
With regard to the contempt proceedings, Filemon Knowing the extent and scope of our decision in said
Lucasan is hereby found guilty of the charges and he appealed case, we issued a preliminary injunction
is hereby sentenced to pay a fine of P500 pursuant to designed to protest petitioner's interests. And now,
section 6 Rule 64 of the Rules of Court or suffer after the parties have been heard, we turn to the
subsidiary imprisonment in case of insolvency at the principal question, which is: did we uphold the right
rate of one day every P2.50 that he falls to pay. given to plaintiff by the court below "to round up the
buffaloes"? The answer must be: we did. In the
With regard to the three causes of action the counter- concluding part of our decision we found the appealed
claim of the defendant, all of them are hereby judgment to be substantially in accordance with the
dismissed for lack of merit. facts and the law; and then we adjudged: "Therefore it
is hereby affirmed with appellant."
Upon petition by the intervenors, the intervention had
been dismissed in a previous order of this Court, Ordinarily the affirmed judgment is that contained in its
without prejudice to the filing of an independent action. dispositive part; in the said Siari Valley appealed case,
(emphasis ours.) the above-quoted four paragraphs.

After our decision had become final, It is true that in the opening statements our decision
the expediente was returned to the court below for quoted the dispositive part of the appealed judgment
execution. Thereupon a dispute arose whether we as follows:
had affirmed also that part of Judge Ceniza's
judgement underlined in the above quotation Premises considered, judgment is hereby
(concerning buffaloes) Lucasan pointed out that, in rendered, adjudicating to the Siari Valley Estate
quoting the dispositive paragraphs of the appealed all the cattle that may be found in the cattle ranch
judgment, our decision had omitted the underlined of Filemon Lucasan, specially the 321 heads that
portion. Therefore, he argued, the affirmance of the had been entrusted to his care as receiver or
judgment did not include the directive about buffaloes. trustee of this Court and ordering the defendant
As the respondent judge sustained Lucasan's to deliver to the plaintiff all said cattle or their
contention, this petition for mandamus and other value amounting to P40,000, to pay damages to
auxiliary remedies was promptly filed. the Siari Valley Estate for the 400 heads of cattle
that he sold since 1946 up to the date of the trial
at the rate of P100 per head or P40,000 plus
 interest at the rate of 6 per cent from the date of decree was one affirming the appealed judgment. If
the trial of this case in January, 1951 and to pay any statement in the opinion preceding the decree
the costs of the proceeding. seemingly excluded a portion (which we deny), it must
be overlooked, because the judgment or the decree
With regard to the contempt proceedings, prevails over the opinion.
Filemon Lucasan is hereby found guilty of the
charges and he is hereby sentenced to pay a fine In construing confirmatory decisions of appellate courts
of P500 pursuant to section 6, Rule 64, of the the practice is to regard the whole of the appealed
Rules of Court or suffer subsidiary imprisonment judgment to have been upheld3 even if several points
in case of insolvency at the rate of one day for thereof have not been discussed "or touched upon
every P2.50 that he fails to pay. such confirmatory decision."4

thereby omitting the portion regarding buffaloes. But The truth is, as may be verified from our decision itself,
observe that we used elliptical signs, i. e. several *'s our statement omitted the portion concerning buffaloes
which indicated the omission of some portion or because it was immaterial for the purpose of the
portions. This did not evince any intention to "modify" appeal. It was not a point necessary to understand or
the judgment by eliminating the omitted portion. 2 The decide the questions then before us.5 Indeed the whole
judgment, we decreed in concluding, "is hereby decision made no reference to the subject of buffaloes,
affirmed". We did not say, it is hereby modified. Neither even as appellant's brief (Lucasan) failed to debate
did we say, "the quoted portion of the judgment is such aspect of the appealed judgment.
hereby affirmed". For that matter, would respondents
maintain likewise the last two paragraphs of the The argument is advanced that inasmuch as the
dispositive part of the appealed judgment (regarding plaintiff "never claimed the buffaloes in its amended
the counterclaim and the intervenors) were not equally complaint (and) the (lower) court could not have
affirmed, because they were not quoted? granted that which was not prayed", therefore the
Supreme Court most probably had excluded the matter
We explained in Contreras vs. Felix, 78 Phil., 570, 44 (of buffaloes) from its confirmatory order. Such
Off. Gaz., 4306 that "the final judgment as rendered is reasoning has no valid foundation because Lucasan
the judgment of the court, irrespective of all seemingly was not in default, there was trial, and under the
contrary statements in the decision", and that the circumstances the plaintiff could be granted any relief
judgement must be distinguished from the opinion. Our that was supported by the evidence "although not
specified in his pleadings."6 The other argument aforementioned judgment in full of Judge Ceniza which
addressed to the proposition that the Court shouldn't was totally affirmed by this Court on appeal. Costs of
have, and couldn't have affirmed that phase of the this proceeding shall be paid respondent Lucasan. So
judgment is too late, if not impertinent. The affirmance ordered.
without modification of the judgment is final. And the
parties should realize that the matter of buffaloes was
not such plain error (supposing it was error) as to call
for special consideration by this Court even if
ignored7 by appellant's counsel in his brief.

All the foregoing shows the respondent judge's mistake

in declining to permit Siari Valley Inc. to round up its
buffaloes roaming on Lucasan's ranch. But the latter's G.R. No. L-5416 July 26, 1954
resistance to such rounding-up, founded on a rather ALFREDO MONTELIBANO, ET AL., plaintiffs-
technical plea, despite his knowledge that he had appellants,
complained of such buffaloes grazing on his land (R. A. vs.
in L-7046 p. 140), was not a mere mistake but a rather THE BACOLOD-MURCIA MILLING CO., defendants-
sharp practice transcending the limits of good faith. appellants.
However-overruling petitioner's contention-Lucasan will San Juan, Africa, Yñiquez and Benedicto and Abundio
not be declared to have committed contempt of court Z. Arrieta for
considering on the one hand that his ground of plaintiffs-appellants.
Vicente Hilado and Nolan and Manoloto for
objection appeared to be not so flimsy8 as to make his
defendants-appellants.
conduct a "willful disregard or disobedience" 9 or a
LABRADOR, J.:
"clear and contumacious refusal to obey" 10 and on the Parties plaintiffs and defendant appeal from a
other hand remembering that the power to punish for judgment of the Court of First Instance of Negros
contempt should be conservatively exercised. Occidental dismissing plaintiff's complaint for the
recovery of P4,712,501.89, representing the value of
Wherefore, the petition for mandamus is granted, the sugar alleged to belong to them and existing in
respondent judge, and whoever may be acting in his defendant's warehouse at the time of the liberation,
place, is hereby ordered to enforce, and the other and ordering plaintiff Alfredo Montelibano to pay
respondent Filemon Lucasan is ordered to obey, the defendant the sum of P35,163.06, plus legal interest
thereon from April, 1945, until fully paid. Plaintiffs balance to planters not parties to the action (Exhibit C,
appeal from the judgment of dismissal, and defendant C-1, C-2 and C-3. On February 10, 1943 (18th year of
from the judgment in so far as it fixes at P35,163.06 as Showa February 10), the Japanese Military
the amount defendant is entitled to recover from Administration, Visayan Branch, designated Fidel
plaintiff Alfredo Montelibano. Henares, president of the Sugar Planters' Association,
Plaintiffs are sugar planters, members of the Bacolod with the following authority:
Murcia Planters' Association, Inc., or assignees of . . . hereby authorized to sell and dispose of all
sugar planters. The former have contracts with the sugar to the Mitsui Bussan Kaisha, the
defendant corporation, hereinafter known as the authorized purchaser of the Philippine Military
Central, for the delivery of their sugar cane to the Administration, and in addition granting the
sugar mill of the defendant for milling and processing following powers:
into sugar. In accordance with the contracts, which the To contract, deliver, to receive payments, to
planters had signed with the defendant, the sugar pay various accounts to the members of
processed from the sugar cane delivered by each the Planters' Association; and to open
planter was to be divided between the planter and the accounts, to contract overdraft accounts
Central in the following proportion, namely, 60% for the with the Bank of Taiwan, and perform such
planter and 40% for the Central. The Central was to other powers as may be necessary in the
furnish the planter, from time to time as the milling premises. (Exhibit RH, Annex A, Annex A-1,
progressed, with information as to the share of sugar Exhibit 19).
that the planter was entitled to receive, furnishing the Thereafter the Japanese Military Administration issued
planter with quedans or warehouses receipts therefor. a regulation governing purchases of sugar by the
After the milling, and for a period of 90 days, the Military Administration (Exhibit JJ) by virtue of which,
Central was to keep the sugar in its warehouse free of upon purchase of sugar by the Military Administration,
charge; thereafter the planter was to pay five centavos any claim of the Philippine National Bank or of any
per picul per month for storage, aside from such other enemy corporation thereto shall be automatically
expenses of conservation and repacking as may be cancelled, and the sugar thus purchased deposited as
incurred in relation to the sugar upon presentation of new "Renegesis a/c" in the name of the vendee, the
his warehouse receipt (Exhibit KK). Bank of Taiwan, Ltd.
At the time of the occupation of Negros Occidental by Planters or owners of the sugar were authorized , if
the Japanese forces on May 21, 1942, there were on they chose, to borrow funds from the Bank of Taiwan,
deposit at the Central's warehouse 664,091.22 piculs Ltd. According to regulations issued by the Executive
of sugar, of which 128,452.24 belonged to the Commission under the Military Administration, the
plaintiffs, 284,425.81 to the defendant Central, and the checks in payment of the sugar which, however, were
to be deposited with said bank and set-off against the a balance of 12,153.05 piculs as of December, 1943
mortgages on old crop loans of the planters as Farmer (Exhibit 1, p. 3).
Rehabilitation Funds. New crop loans could be granted From the time of Mitsui Bussan Kaisha made
within the limits of the proceeds of their sugar sold purchases it began withdrawing sugar from the Central
(Exhibit 23). in sacks. Withdrawals were made during the years
As early as February 24, 1943, the Mitsui Bussan 1943 and 1944 (Exhibit 72, 73, 74), but without
Kaisha, Ltd., notified the president of the Planters' indication as to whose sugar each withdrawal was
Association that it was buying all the sugar of the being made. As the sugar belonging to the planters
planters, whether they could be located or not (Exhibit and that of the Central were mixed up, and there being
II). Warehouse orders for release of sugar he had sold nothing to show what the vendee was withdrawing, it
were issued at the request of the president of the could not be determined whose sugar had been
Planter's Association on the following dates and for the actually sold or withdrawn. It is a fact admitted by both
following amounts: parties, however, that at the time of the liberation,
February 17, 22,724.09 piculs (Exhibit notwithstanding the sales and withdrawals, there were
1943 62) around 150,000 piculs of sugar was impounded by the
March 6, 1943 275,580.35 piculs (Exhibit U. S. Enemy Property Custodian, but upon
22) representation of the parties the same was finally
released. And upon resolution of the majority of the
March 27, 575.84 piculs (Exhibit planters, it was agreed that 60 per cent thereof among
1943 63) them according to the sugar they had on deposit in the
April 20, 1943 4,105.92 piculs (Exhibit Central prior to the military occupation, irrespective of
54) whether they had been paid their sugar or not during
May 17, 1943 22,698.31 piculs (Exhibit the occupation, and the balance of 40 per cent to be
65 C) assigned to the Central to be disposed by it, but the
proceed were to be kept by it in trust subject to the
May 18, 1943 6,240.92 piculs (Exhibit 6
results of this litigation. The share of the defendant in
B)
this distribution was 93,663.60 piculs (Exhibit H) and
As for the share of the Central in the sugar, Exhibit E that of the plaintiffs 35,405.35 piculs.
shows that as early as April 21, 1943, as much as a After liberation (around March to June, 1945) and
total of 272,601 piculs had been sold to the Mitsui before the proration above set forth, plaintiff Alfredo
Bussan Kaisha, and by the end of December, 1943, a Montelibano withdrew from the warehouse some
full total of 272,801.07 piculs. There was, however, still 12,789 piculs. Of these around 5,115.60 piculs were
the share of the defendant Central. Montelibano
received a bill of P45,273.06 for the value of this sugar, manner that the defendant was obliged to sell its own
and he proposed to pay the said amount in sugar to the buyer of the Military Administration, and
installments. A first payment of P10,000 was made. that all the sugar that plaintiffs had in the warehouse
The amount of the bill was based on a basic price of had, therefore, been sold and delivered through said
P8.85 per picul. The balance of the price has not yet president of the plaintiffs, so that the latter had no
been paid by plaintiff Alfredo Montelibano. more sugar in the warehouse at the time of the
The present action of plaintiffs is predicated on the liberation. The defendant presented a counterclaim
claim that the defendant has already been fully paid for against plaintiff Alfredo Montelibano for the value of the
its share of the sugar in the warehouse, as it had sold 5,115.60 piculs of the defendant which he appropriated
during the period from April, 1943, to March, 1945, and which they claim to be valued at P248,337. The
some 284,601 piculs, in excess of around 175.19 right of the defendant to said sugar is denied, and
piculs of its own share, and had received the total price instead plaintiff Montelibano demands the return of the
of this amount (P2,410,790.03), so that the sugar P10,000 which he claims was erroneously paid to
remaining at the time of the liberation pertained and defendant.
belonged exclusively to plaintiffs and the other The trial court found that the sugar remaining in the
planters. It is contended that of the 129,452.24 piculs central's warehouse at the time of the liberation was
that plaintiffs owned at the time of the military already purchased by the Military Administration, but it
occupation, only 35,405.35 piculs had actually been could not withdraw the same by reason of the advent
taken advantage of by them (that which they received of the liberation; that as the sugar of the parties were
by the proration), so that the remaining 94,046.89 all mixed up, none of the owners could claim exclusive
piculs should be charged against the balance of the ownership of those remaining in the warehouse, and
sugar and which was adjudicated to the Central as its their rights thereto should be governed by the provision
share in the proration, the value of which was of Article 381 of the Spanish Civil Code. This, the court
P4,712,501.89. Moral justification for this claim of the said, the parties had already accepted and carried out
plaintiffs is sought for in the fact that the defendant by the proration. The court also held that the taking of
Central had actually sold its share and received in full the sugar belonging to both plaintiffs and defendant
the price thereof, which is not the case with the was an act of confiscation by the Japanese Military
plaintiffs, who have not been paid for, or credited with, Government, which was legal and valid in accordance
the value of their own. The defense is that all the sugar with the ruling in the case of Hodges vs. Lacson, 46
plaintiffs had in the Central's warehouse at the time of Official Gazette (No. 3) 1148, from which no recourse
the military occupation was ordered by the Japanese may be had by the parties against the Japanese
Military Administration to be sold by the through the Government or against the defendant. The plaintiffs'
president, which it did itself appoint, in the same
action was, therefore, dismissed and the defendant occupant, or one of requisition, or one of voluntary
absolved therefrom. sale, is beside the fundamental issue, which we find to
As to the counterclaim, the court found the same to be be: Who are the legal owners of the sugar existing in
justified, and it sentenced Montelibano to pay for its the Central's warehouse at the time of the liberation?
value, which the court, however, fixed at P8.80 per Irrespective of the legality or illegality of the purchase
picul only. It, therefore, rendered judgment against of plaintiffs' sugar (by the Japanese Military
Montelibano, ordering him to pay defendant the Administration, for which defendant may not certainly
balance of its value, i.e., P35,163.06. be made responsible, the fact remains that in
Plaintiffs have appealed from the judgment dismissing consequence thereof of warehouse orders for the
their action, while defendant has also appealed from release of plaintiffs' sugar were issued and sugar
the amount adjudge on its counterclaim, asserting that actually taken from the warehouse. Also by the sale of
the price of the sugar taken by Montelibano should defendants' sugar, release were authorized to the
have been fixed at P256,291.56 at the rate of P50.10 purchaser and withdrawals made. But evidently the
per picul. delivery of all the sugar sold by both was not
Plaintiffs-appellants rely on the following legal completed, as some 150,000 piculs remained
propositions: that the purchase of plaintiffs' sugar thereafter. As to this sugar (remaining), we hold that
during the Japanese Military Occupation was neither title thereto remained in the original owners, because
an act of confiscation nor of requisition, but a voluntary ownership of personal property sold is not transferred
sale, but as there was no consent of the plaintiffs until actual delivery — non nudis pactis, sed traditione
thereto or consideration paid for the sugar, none of dominia rerum transferuntur. (Fidelity and Deposit
plaintiffs' sugar should be considered as sold; that, on Co. vs. Wilson, 8 Phil., 51; Crusado vs. Bustos, 34
the other hand, defendant's sale of its sugar was Phil., 17.)
validly made and it had received in full the value It also follows that as the sugar of the plaintiffs and of
thereof, hence the sugar remaining in the Central's the other planters and of the Central were stored
warehouse at the time of the liberation should belong together in one single mass, without separation of
to plaintiffs, to the exclusion of the Central. identification, and as it appears that the Mitsui Bussan
In our opinion, the determination of the nature or Kaisha mad withdrawals of sugar from the Central's
validity of the act of the Japanese Military warehouse without express statement as to whose
Administration in purchasing plaintiffs' sugar from the sugar was being withdrawn, whether the planters' or
president of the planters, whom it appointed without the Central's, it is absolutely impossible, physically or
the planters or owners consent, is absolutely legally, to determine whose sugar it was that remained
immaterial; whether the act of purchase was an act of after the withdrawals. There is no legal basis for
confiscation of enemy property by the military plaintiffs' proposition that as the taking of their sugar
was without their consent, and that of the defendant's ART. 381. If, by the will of their owners, two
with its consent, all that remained is theirs. The only things of identical or dissimilar nature are
legal solution is, as the mass of sugar in the mixed or if the mixture occurs accidentally,
warehouse was owned in common, and as it is not if in the latter case the things can not be
possible to determine whose sugar was withdrawn and separated without injury, each owner shall
whose was not, the mass remaining must pertain to acquire a right in the mixture proportionate
the original owners in the proportion of the original to the part belonging to him according to
amounts owned by each of them. This is the solution the value of the things mixed or
expressly indicated by the law (article 381, Spanish commingled.
Civil Code), and the one most consistent with justice The number of kilos in a cavan not having been
and equity. determined, we will take the proportion only of
ART. 381. If, by the will of their owners, two the 924 cavans of palay which were attached
things of identical or dissimilar nature are mixed, and sold, thereby giving Urbano Santos, who
or if the mixture occurs accidentally, and in the deposited 778 cavans, 398.49 thereof, and Pablo
latter case the things can not be separated Tiongson, who deposited 1,026 cavans, 525.51
without injury each owner shall acquire a right in or the value thereof at the rate of P3 per cavan.
the mixture proportionate to the part belonging to (Santos vs. Bernabe, 54 Phil., 19, 22)
him, according to the value of the things mixed or Lastly, article 393 of the Civil Code, referring to
commingled. (Spanish Civil Code) common ownership, provides that the share of
The 778 cavans and 38 kilos of palay belonging the participants in the benefits, as well as in the
to the plaintiff Urbano Santos, having been mixed charges, shall be proportionate to their
with 1,026 cavans and 9 kilos of palay belonging respective interests.
to the defendant Pablo Tiongson in Jose C. This being the rule, it is obvious that whenever
Bernabe's warehouse; the sheriff having found an undivided property gains an increase in its
only 924 cavans and 31 1/2 kilos of palay in said area, all the co-owners shall be entitled to
warehouse at the time of the attachment thereof; participate in the benefits to be proportionate to
and there being no means of separating from their shares; if it suffers diminution they shall
924 cavans and 31 1/2 kilos of palay belonging have to share, too, the charges in accordance
to Urbano Santos and those belonging to Pablo with their interest. (Tarnate vs. Tarnate, 46 Off.
Tiongson, the following rule prescribed in article Gaz. (No. 9) 4397,4403-4404)
381 of the Civil Code for cases of this nature, is If goods of the same kind owned by various
applicable. persons are so mixed with the mutual consent of
the owners that the portions or shares of the
various owners in the mixture are There can be no doubt that, where the volume of
indistinguishable, the owners become tenants in grain, stored in an elevator, or of oil stored in a
common of the mixture, each having an interest tank, is made up of contributions from different
in common in proportion to his respective shares. owners, and becomes "common stock." its partial
This is the rule of the civil law. The doctrine finds destruction by fire, resulting from lightning or
its most frequent application where several other fortuitous cause must necessitate a pro
owners deposit grain in a warehouse although it rata distribution of the loss. ... (Jennings-
of course exists wherever the goods of two or Heywood Oil Syndicate vs. Houssiere-Latrelle Oil
more parties are indistinguishably mingled by Co., et al., Ann. Cas. 1913 E. 679, 690.)
common consent, as where quantities of oil With respect to defendant's counterclaim, we agree
belonging to different persons are stored in a with the trial court that the evidence submitted shows
tank. In such cases, in the event of partial loss, that P8.85 is the fair price of the sugar taken by plaintiff
there will be prorated distribution of the loss. Alfredo Montelibano. Defendant's own original bill fixed
Where such a confusion arises it seldom causes this as a price for said sugar (Exhibit 49), and sales
inconvenience, embarrassment, or dispute, for made to third persons at the time the sugar was
the separation of the intermingled goods into the withdrawn were at prices fluctuating around this sum.
aliquot shares of the owners is merely a matter of We find no reason, therefore, for disturbing the
measuring, weighing, counting, or selecting, and judgment in relation thereto.
in all such cases it is certain that he is entitled to For the foregoing considerations, the judgment
receive back a like quantity. Since they are appealed from is hereby affirmed, both in so far as it
tenants in common, however, the co-owners are dismisses the complaint and in so far as it awards the
subject to stand their pro rata share of any loss sum of P35,163.06 on defendant's counterclaim
which may accrue to the general property from against plaintiff Alfredo Montelibano, with costs against
diminution, decay, or other causes. (11 Am. Jur. the plaintiffs-appellants.
532-533.)