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PROPERTY PHIL. REFINING CO. INC. VS. JARQUE, 61 Phil.

229
.
I. DEFINITION OF TERMS
C. FUNGIBLE ≠ CONSUMMABLE
A. PROPERTY ≠ THING
D. PROPERT OF PUBLIC DOMINION ≠ PATRIMONIAL
B. MOVABLE ≠ IMMOVABLE PROPERTY

IMMOVABLE = REAL PROPERTY (Art. 415) E. PROPERTY FOR PUBLIC USE ≠ PROPERTY FOR PUBLIC
SERVICE
1. By NATURE (Art. 415, Nos. 1, 8).
F. RES NULLIUS ≠ RES COMMUNES ≠ RES ALICUJUS ≠ RES
2. By INCORPORATION (Art. 415, Nos. 2, 3, 7). DERELICTA

3. By DESTINATION (Art. 415, Nos. 4, 5, 6, 9). G. BUILDER/POSSESSOR IN GOOD FAITH ≠


BUILDER/POSSESSOR IN BAD FAITH
4. By ANALOGY – (Art. 415, No. 10).
H. REAL RIGHT ≠ PERSONAL RIGHT
LADERA VS. HODGES [CA] 48 O.G. 4374 (no full case)
CLASSIFICATION OF REAL RIGHTS:
MANALANG VS. OFILADA, L-8133, May 18, 1956
1.) Of full control:
VALDEZ VS. ALTAGRACIA, 225 U.S. 58 (a) Ownership
(b) Possession
DAVAO SAW MILL VS. CASTILLO, 61 Phil. 709
2.) Of Enjoyment
(a) Usufruct
MCMICKING VS. BANCO ESPAÑ OL FILIPINO, 13 Phil. 429.
(b) Servitude
(c) Lease record.
MOVABLES = Personal Property
3.) Of Guaranty
1.By NATURE – Art. 416.
(a) Mortgage
2. By ANALOGY - Art. 417.
(b) Pledge
(c) Antichresis
BICERRA vs. TENEZA, L-16218, November 29, 1962 (d) Retention

MINDANAO BUS CO., vs. CITY ASSESSOR, L-17870, Sept. 29, 1962 4.) Of Acquisition
(a) Preemption
INVOLUNTARY INSOLVENCY OF STROCHKER VS. RAMIREZ, 44 (b) Redemption
PHIL. 933
I. OWNERSHIP ≠ POSSESSION
SIBAL VS. VALDEZ, 50 PHIL. 512
RIGHTS OF AN OWNER GOV’T. OF P.I. VS. CABAÑ GIS, 53 Phil. 112
(a) Jus possidendi – to possess
(b) Jus fruendi – to enjoy the fruits 2.b) With respect to personal property
(c) Jus utendi – to use. (i) Conjunction or adjunction
(d) Jus abutendi – to abuse. (ii) Conmixtion
(e) Jus disponendi – to dispose. (iii) Specification.
(f) Jus vindicandi – to recover or to pursue.
IV. QUIETING OF TITLE
DOCTRINE OF SELF-HELP
V. CO-OWNERSHIP
DOCTRINE OF INCOMPLETE PRIVILEGE
CO-OWNERSHIP ≠ PARTNERSHIP:
LIMITATIONS TO ONE’S OWNERSHIP:
1.Eminent Domain
2.Police Power LOPEZ VS. ILUSTRE, 5 Phil. 568
3.Taxation Power
Note: Read the Condominium Act or R.A No. 4726, approved on June
J. EMINENT DOMAIN ≠ ABATEMENT OF NUISANCE 19, 1966.

K. NECESSARY EXPENSES ≠ USEFUL EXPENSES ≠ ORNA- VI. POSSESSION


MENTAL/LUXURY EXPENSE:
OBJECTS OF POSSESSION: Only things and rights susceptible of
II. HIDDEN TREASURE appropriation (Art. 530). Excluded are res communes, property of public
dominion, discontinuous servitudes, and non-apparent servitudes.
III. ACCESSION
WAYS OF ACQUIRING POSSESSION:
- ACCESSION ≠ ACCESSORY
CLANDESTINE POSSESSION
KINDS OF ACCESSION:
RIGHT OF POSSESSION ≠ RIGHT TO POSSESSION
1. Accession Discreta – by internal forces (fruits)
JUS POSSESSIONIS
2. Accession Continua - by external forces (building, alluvium, etc.)
JUS POSSIDENDI
2.a) With respect to real property –
POSSESSION WITH A JURIDICAL TITLE ≠ POSSESSION WITH A
(i) Accession industrial – by the work of man. JUST TITLE
Ex.: building, planting, sowing.
POSSESSION WITH A JURIDICAL

(ii) Accession natural - by the forces of nature. POSSESSION WITH A JUST TITLE
Ex. Alluvium, avulsion.
WHO IS PREFERRED IN CASE OF DISPUTE OVER RIGHT OF
POSSESSION: REMEDIES AGAINST PUBLIC NUISANCE:
1.) Criminal prosecution;
DIFFERENT KINDS OF ACTION TO RECOVER POSSESSION OF 2.) Civil action (injunction, abatement, damages);
REAL PROPERTY: 3.) Abatement w/o judicial proceedings.
1. Summary (Accion interdictal) – Forcible entry or unlawful
detainer. REMEDIES AGAINST PRIVATE NUISANCE:
2. Accion publiciana – based on superior right of plaintiff to 1.) Civil action;
possession. 2.) Extrajudicial abatement.
3. Accion reivindicatoria – based on ownership.
4. Injunction, against continuation of trespass. X. MODES OF ACQURING OWNER-SHIP.

SPS. NUGUID VS. COURT OF APPEALS, G.R. NO. 151815, Feb. 23, TITLE ≠ MODE
2005
ART. 719 – not a finder’s keeper.
SAMPAYAN VS. COURT OF APPEALS, ET AL., G.R. No. 156360, Jan.
14, 2005 (a) Acquisitive Prescription;
(b) Law (by operation of law) Example: estoppel under Art. 1434.
JIMENEZ VS. PATRICIA INC., G.R. NO. 134651, Sept,. 18, 2000 (c) Intellectual creation.

VII. USUFRUCT 2. Derivative Modes:


(a) Succession mortis causa;
USUFRUCT ≠ LEASE ≠ COMMODATUM. (b) Tradition as a result of sales, barter, donation, assignment,
mutuum.
VIII. EASEMENT-
XI. DONATION
EASEMENT ≠ LEASE-
VOID DONATIONS ( Art. 739)
MODES OF ACQUIRING EASEMENT
GROUNDS FOR REVOCATION OF DONATION (Arts. 760, 764, 765).
RONQUILLO VS. ROCO, L-10619, Feb. 28, 1958
GROUNDS FOR REDUCTION:
REMMAN ENTERPRISES, INC. VS. COURT OF APPEALS, G.R. NO.
125018, April 6, 2000 XII. PRESCRIPTION

SPS. DELA CRUZ VS. RAMISCAL, G.R. NO. 137882, Feb. 4, 2005 PRESCRIPTION ≠ LACHES

IX. NUISANCE – Art. 694 – An act, omission, establishment, business, 1. Acquisitive Prescription
condition of property, or anything else … 2. Extinctive Prescription.

DOCTRINE OF ATTRACTIVE NUISANCE - Atty. Liza -

HIDALGO ENTERPRISES VS. BALANDAN, 48 O.G. 2641


LADERA VS. HODGES (G.R. NO. 8027-R, VOL. 48, NO. 12, O.G. 5 374,
a lot owned by another, should be regarded as movable or personal property. The
SEPTEMBER 23, 1952)
sale of the land was also made without proper publication required by law.
APRIL 23, 2015 ISSUE: Was the house movable or immovable?
FACTS:

RULING: Immovable.
1. Hodges entered into a contract promising to sell a lot to Ladera under certain terms

and conditions. One of which is that the contract may be rescinded and annulled in 1. As enumerated in the Civil Code, immovable property includes lands, buildings,
case Ladera failed to make the monthly payment 60 days after it is due. roads and constructions of all kinds adhered to the soil. The law does not make any
2. After the execution of the contract, Ladera built a house on the lot assessed at 4,500 distinction whether or not the owner of the lot was the one who built the
pesos. However, Ladera failed to pay the agreed installments so Hodges rescinded construction.
the contract and filed an action for ejectment. 2. Also, Ladera did not declare his house to be a chattel mortgage. The object of the
3. The MTC ruled in favor of Hodges and issued an alias writ of execution. Pursuant levy or sale was real property and its publication in a newspaper of general
thereto, the sheriff levied upon all rights, interests and participation over the house. circulation was indespensible. Without it, the execution sale was void.
Notices of sale were posted, however, were not published in a newspaper of general 3. In addition, Magno, the alleged purchaser at the auction sale, was a mere employee
circulation. of Hodges and the low bid made by her as well as the fact that she sold the house to
4. An auction sale was then conducted but Ladera was not able to attend as she had Villa on the same day Hodges sold him the land, proves that she was merely acting
gone to Manila. The house was then sold to one Avelina Magno as the highest for and in behalf of Hodges.
bidder. Meanwhile, Ladera sold the same lot to one Manuel Villa and on the same 4. In the sale of immovables, the lack of title of the vendor taints the rights of the
day purchased the house from Magno for 200 pesos. This, however, was not subsequent purchasers. Possession in good faith is not equivalent to title.
recorded. 5. The principles of accession regard buildings and constructions as mere accessories
5. Ladera then returned to Iloilo and learned what happened. She went to see the to the land on which it is built, it is logical that said accessories should partake the
sheriff and represented that the property can still be redeemed and so she gave him nature of the principal thing.
230 pesos. It does not appear, however, that it was turned over to Hodges.

Thereupon, Ladera filed an action against Hodges, the sheriff, Magno and Villa to

set aside the sale and recover the house.

6. The lower court ruled in favor of Ladera on the ground of non-compliance based on

Rule 39 of the Rules of Court. On appeal, Hodges contends that the house, built on
[No. L-8133. May 18, 1956] being declared void or voidable, and he did not, therefore, err in causing such
MANUEL C. MANARANG and LUCIA D. MANARANG, petitioners and publication of the notice. So it denied the petition.
appellants, vs. MACARIO M. OFILADA, Sheriff of the City of Manila and ERNESTO There can not be any question that a building of mixed materials may be the
ESTEBAN, respondents and appellees. subject of a chattel mortgage, in which case it is considered as between the parties as
IMMOVABLE PROPERTY; BUILDINGS; HOUSE is PERSONAL PROPERTY FOR personal property. We held so expressly in the cases of Luna vs. Encarnacion, et
PURPOSES OF CHATTEL MORTGAGE ONLY; REMAINS REAL PROPERTY.—The mere al., 48 Off. Gaz., No. 7, p. 2664; Standard Oil Co. of New York vs. Jaranillo, 44 Phil.,
*

fact that a house was the subject of a chattel mortgage and was considered as personal 630; and De Jesus vs. Guan Dee Co., Inc., 72 Phil., 464. The matter depends on the
property by circumstances and the intention of the parties.
109
"* * * The general principle of law is that a building permanently fixed to the freehold becomes a
VOL. 99, MAY 18, 1956 109 part of it, that prima facie a house is real estate, belonging to the owner of the land on which it
stands, even though it was erected against the will of the landowner, or without his consent. * *
Manarang and Manarang vs. Ofilada and Esteban * The general rule is otherwise, however, where the improvement is made with the consent of
the parties does not make said house personal property for purposes of the notice to be the landowner, and pursuant to an understanding either expressed or implied that it shall
given for its sale at public auction. It is real property within the purview of Rule 39, section 16, remain personal property. Nor does the general rule apply to a building which is wrongfully
of the Rules of Court as it has become a permanent fixture on the land, which is real property. removed from the land and placed on the land of the person removing it." (42 Am. Jur. 199-200.)
APPEAL from a judgment of the Court of First Instance of Manila. "* * * Among the principal criteria for determining whether property remains personaly or
The f acts are stated in the opinion of the Court. becomes realty are annexation to the soil, either actual or construction, and the intention of the
Macapagal, Punzalan & Yabut for appellants. parties. * * *
_______________
Armando T. de Guzman for appellees.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for the * 91 Phil., 531.
Sheriff of the City of Manila. 111
VOL. 99, MAY 18, 1956 111
LABRADOR, J.:
Manarang and Manarang vs. Ofilada and Esteban
"Personal property may retain its character as such where it is so agreed by the parties
On September 8, 1951, petitioner Lucia D. Manarang obtained a loan of P200 from
interested even though annexed to the realty, or where it is affixed in the soil to be used for a
Ernesto Esteban, and to secure its payment she executed a chattel mortgage over a particular purpose for a short period and then removed as soon as it has served its purpose. * *
house of mixed materials erected on a lot on Alvarado Street, Manila. As Manarang *." (Ibid., 209-210.)
did not pay the loan as agreed upon, Esteban brought an action against her in the The question now before us, however, is: Does the fact that the parties entering into a
municipal court of Manila for its recovery, alleging that the loan was secured by a contract regarding a house gave said property the consideration of personal property
chattel mortgage on her property. Judgment having been entered in plaintiff's favor, in their contract, bind the sheriff in advertising the property's sale at public auction
execution was issued against the same property mortgaged. as personal property? It is to be remembered that in the case at bar the action was to
Before the property could be sold Manarang offered to pay the sum of P277, collect a loan secured by a chattel mortgage on the house. It is also to be remembered
which represented the amount of the judgment of P250, the interest thereon, the that in practice it is the judgment creditor who points out to the sheriff the properties
costs, and the sheriff's fees, but the sheriff refused the tender unless the additional that the sheriff is to levy upon in execution, and the judgment creditor in the case at
amount of P260 representing the publication of the notice of sale in two newspapers bar is the party in whose favor the owner of the house and conveyed it by way of
be paid also. So defendants therein brought this suit to compel the sheriff to accept chattel mortgage and, therefore, knew its consideration as personal property.
the amount of P277 as full payment of the judgment and to annul the published These considerations notwithstanding, we hold that the rules on execution do not
notice of sale. allow, and we should not interpret them in such a way as to allow, the special
It is to be noted that in the complaint filed in the municipal court, a copy of the consideration that parties to a contract may have desired to impart to real estate, for
chattel mortgage is attached and mention made of its registration, and in the prayer example, as personal property, when they are not ordinarily so. Sales on execution
request is made that the house mortgaged be affect the public and third persons. The regulation governing sales on execution are
110
for public officials to follow. The form of proceedings prescribed for each kind of
110 PHILIPPINE REPORTS ANNOTATED property is suited to its character, not to the character which the parties have given
Manarang and Manarang vs. Ofilada and Esteban to it or desire to give it. When the rules speak of personal property, property which is
sold at public auction to satisfy the debt. It is also important to note that the house ordinarily so considered is meant; and when real property is spoken of, it means
mortgaged was levied upon at plaintiff's request (Exhibit "E"). property which is generally known as real property. The regulations were never
On the basis of the above facts counsel for Manarang contended in the court intended to suit the consideration that parties, may have privately given to the
below that the house in question should be considered as personal property and the property levied upon. Enforcement of regulations would be difficult were the
publication of the notice of its sale at public auction in execution considered convenience or agreement of private parties to determine
112
unnecessary. The Court of First Instance held that although real property may
sometimes be considered as personal property, the sheriff was in duty bound to cause 112 PHILIPPINE REPORTS ANNOTATED
the publication of the notice of its sale in order to make the sale valid or to prevent its Bacsarpa, et al. vs. Court of Appeals
or govern the nature of the proceedings. We, therefore, hold that the mere fact that a
house was the subject of a chattel mortgage and was considered as personal property
by the parties does not make said house personal property for purposes of the notice
to be given for its sale at public auction. This ruling is demanded by the need for a
definite, orderly and well-defined regulation for official and public guidance and
which would prevent confusion and misunderstanding.
We, therefore, declare that the house of mixed materials levied upon on
execution, although 'subject of a contract of chattel mortgage between the owner and
a third person, is real property within the purview of Rule 39, section 16, of the Rules
of Court as it has become a permanent fixture on the land, which is real property. (42
, Am. Jur. 199-200; Leung Yee vs. Strong Machinery Co., 37 Phil., 644;
Republic vs. Ceniza, et al., 90 Phil., 544; Ladera, et al. vs.Hodges, et al., [C. A], 48
Off. Gaz., 5374.)
The judgment appealed from is hereby affirmed, with costs. So ordered.
Parás, C. J., Bengzon, Padilla, Montemayor, Reyes, A.,Jugo, Bautista
Angelo, Concepcion, Reyes, J. B. L., and Endencia, JJ., concur.
Judgment affirmed.

__________

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The mere form of an instrument transferring property of a debtor
U.S. Supreme Court cannot exclude the power of creditors to inquire into the reality and
substance of a contract unrecorded, although required by law to be
Valdes v. Central Altagracia, Inc., 225 U.S. 58 (1912)
recorded in order to be effective against third parties.
Valdes v. Central Altagracia, Incorporated
Under the general law of Porto Rico, machinery placed on property
by a tenant does not become immobilized; when, however, a
Nos. 193, 196
tenant places it there pursuant to contract that it shall belong to the
owner, it becomes immobilized as to that tenant and his assigns
Submitted March 6, 1912
with notice, although it does not become so as to creditors not
having legal notice of the lease.
Decided May 13, 1912
In this case, held that the lien of the attachment of a creditor of the
225 U.S. 58 tenant on machinery placed by the tenant on a sugar Central in
Porto Rico is superior to the claim of the transferee of an
Syllabus unrecorded
The record in this case shows that the court below did not err in Page 225 U. S. 59
bringing this case to a speedy conclusion and avoiding the loss
occasioned by the litigation to all concerned. lease, even though the lease required the tenant to place the
machinery on the property.
A litigant cannot, after all parties have acquiesced in the order
setting the case for trial and the court has denied his request for 5 P.R. 155 affirmed.
continuance, refuse to proceed with the trial on the ground that the
time to plead has not expired, and when such refusal to proceed is The facts are stated in the opinion.
inconsistent with his prior attitude in the case.

The granting of a continuance is within the sound discretion of the


trial court, and not subject to be reviewed on appeal except in
cases of clear error and abuse; in this case, the record shows that
the refusal to continue on account of absence of witness was not
an abuse, but a just exercise, of discretion.

Under the circumstances of this case, and in view of the existence


of an equity of redemption under prior transfers, held that a
transfer of all the property of a corporation to one advancing
money to enable it to continue its business was not a conditional
sale of the property, but a contract creating security for the money
advanced, and, on liquidation of the assets, the transferee stood
merely as a secured creditor
U.S. Supreme Court In this case, held that the lien of the attachment of a creditor of the tenant on machinery
placed by the tenant on a sugar Central in Porto Rico is superior to the claim of the
Valdes v. Central Altagracia, Inc., 225 U.S. 58 (1912) transferee of an unrecorded

Valdes v. Central Altagracia, Incorporated Page 225 U. S. 59

Nos. 193, 196 lease, even though the lease required the tenant to place the machinery on the property.

Submitted March 6, 1912 5 P.R. 155 affirmed.

Decided May 13, 1912 The facts are stated in the opinion.

225 U.S. 58 MR. CHIEF JUSTICE WHITE delivered the opinion of the Court.

APPEALS FROM THE DISTRICT COURT OF THE These cases were consolidated below, tried together, a like statement of facts was made
applicable to both, and the court disposed of them in one opinion. We shall do likewise.
UNITED STATES FOR PORTO RICO Stating only things deemed to be essential as shown by the pleadings and documents
annexed to them and the finding of facts made below, the case is this: Joaquin Sanchez
owned in Porto Rico a tract of land of about 22 acres (cuerdas) on which was a sugar
Syllabus house containing a mill for crushing cane and an evaporating apparatus for
manufacturing the juice of the cane into sugar. All of the machinery was antiquated and of
The record in this case shows that the court below did not err in bringing this case to a a limited capacity. The establishment was known as the Central Altagracia, and Sanchez,
speedy conclusion and avoiding the loss occasioned by the litigation to all concerned. while not a cane grower, carried on the business of a central -- that is, of acquiring cane
grown by others and manufacturing it into sugar at his factory. On the eighteenth day of
January, 1905, Sanchez leased his land and plant to Salvador Castello for a period of ten
A litigant cannot, after all parties have acquiesced in the order setting the case for trial
years. The lease gave to the tenant (Castello) the right to install in the plant
and the court has denied his request for continuance, refuse to proceed with the trial on
the ground that the time to plead has not expired, and when such refusal to proceed is
inconsistent with his prior attitude in the case. "such machinery as he may deem convenient, which said machinery at the end

The granting of a continuance is within the sound discretion of the trial court, and not Page 225 U. S. 60
subject to be reviewed on appeal except in cases of clear error and abuse; in this case,
the record shows that the refusal to continue on account of absence of witness was not of the years mentioned (the term of the lease) shall become the exclusive property"
an abuse, but a just exercise, of discretion.
of the lessor, Sanchez. The tenant was given one year in which to begin the work of
Under the circumstances of this case, and in view of the existence of an equity of repairing and improving the plant, and it was provided that,
redemption under prior transfers, held that a transfer of all the property of a corporation to
one advancing money to enable it to continue its business was not a conditional sale of
the property, but a contract creating security for the money advanced, and, on liquidation "upon the expiration of this term, if the necessary improvements shall not have been
of the assets, the transferee stood merely as a secured creditor begun by him (Castello), then this contract shall be null and void, and no cause of action
shall accrue to any of the contracting parties by reason thereof."

The mere form of an instrument transferring property of a debtor cannot exclude the
power of creditors to inquire into the reality and substance of a contract unrecorded, Further agreeing on the subject of the improved machinery which was to be placed in the
although required by law to be recorded in order to be effective against third parties. plant, the contract provided:

Under the general law of Porto Rico, machinery placed on property by a tenant does not "Upon the expiration of the term agreed on under this contract, any improvement or
become immobilized; when, however, a tenant places it there pursuant to contract that it machinery installed in the said central shall remain for the benefit of Don Joaquin
shall belong to the owner, it becomes immobilized as to that tenant and his assigns with Sanchez, and Don Salvador Castello shall have no right to claim anything for the
notice, although it does not become so as to creditors not having legal notice of the lease. improvements made."

The rental was thus provided for:


"After each crop, such profits as may be produced by the Central Altagracia shall be Page 225 U. S. 62
distributed, and twenty-five percent (25%) thereof shall be immediately paid to Don
Joaquin Sanchez as equivalent for the rental of said central and of the twenty-two (22) are usually made and entered into in the months of June, July, and August."
cuerdas of land surrounding the same. The remaining seventy-five percent (75%) shall
belong to Don Salvador Castello, who may interest therein whomsoever he may wish,
either for the whole or part thereof." In other words, on the termination of one grinding season, in the months of June or July,
it is usual in the ensuing August to make new contracts for the cane to be delivered in the
following grinding season, which, as we have said, commences in December. The
It was stipulated, however, that, in fixing the profits, no charge should be made for repairs contract transferring the lease to the Central Altagracia, Incorporated, was made in July,
of the existing machinery or for new machinery put in, as the entire cost of these matters 1905, at the end, therefore, of the grinding season of that year. To what extent the
was to be borne by the lessee, Castello. The lease provided, moreover, that, in case of corporation contracted for cane to be delivered to it for grinding during the season of
the death of Sanchez, the obligations of the contract should be binding on his heirs, and 1905-06, which began in December, 1905, does not appear. It is inferable, however, that
in the case of the death of Castello, his brother, Gerardo Castello, should take his place, the corporation began the work of installing new machinery to give the plant a larger
capacity within the year stipulated in the lease from Sanchez to Castello. We say this
"and be a contracting party if he so desired. Otherwise, the plantation, in such a condition because it is certain that, in the fall of 1906 (October), the corporation borrowed from the
at it may be at his death, shall immediately pass into the possession of its owner, Don commercial firm of Nevers & Callaghan in New York City the sum of twenty-five thousand
Joaquin Sanchez." dollars ($25,000) to enable the corporation to pay for new and enlarged machinery which
it had ordered, and which was placed in the factory in time to be used in the grinding
In June, season of 1906-07, which began in December, 1906. While such grinding season was
progressing, on April 11, 1907, the corporation, through its president, under the authority
of its board of directors, sold to one Ramon Valdes all its rights acquired under the lease
Page 225 U. S. 61 transferred by Castello. This transfer expressly included all the machinery previously
placed by the corporation in the sugar house, as well as machinery which might be
1905, by a supplementary contract, the lease was extended without change of its terms thereafter installed during the term of redemption hereafter to be referred to, and which, it
and conditions for an additional period of ten years, making the total term twenty years. was declared, conformably to the original lease, "shall be a part of said factory for the
Although executed under private signature, this lease, conformably to the laws of Porto manufacture of sugar." The consideration for the sale was stated in the contract to be
Rico, was produced before a notary and made authentic, and in such form was duly
registered on the public records, as required by the Porte Rican laws. "thirty-five thousand dollars ($35,000) received by the corporation, twenty-five thousand
four hundred dollars
On the first day of July, 1905, Salvador and Gerardo Castello transferred all their rights
acquired under the lease, as above stated, to Frederick L. Cornwell for "the corporation to Page 225 U. S. 63
be organized under the name of Central Altagracia, of which he is the trustee." This
transfer bound the corporation to all the obligations in favor of the original lessor,
Sanchez, provided that the corporation should issue to Castello a certain number of paid- ($25,400) whereof had been paid prior to this act [of sale], and to its entire satisfaction,
up shares of its capital stock and a further number of shares as the output of sugar from and the balance of nine thousand six hundred dollars ($9,600) shall be turned over to the
the plant increased as the result of its enlarged capacity consequent upon the vendor corporation by Senor Valdes immediately upon being required to do so by the
improvement of the machinery by the corporation. The lease further provided for the former."
employment of Castello as superintendent at a salary, for a substitution of Gerardo
Castello, in the event of the absence or death of his brother Salvador, and, for this This sale was made subject to a right to redeem the property within a year on paying
reason, it is to be assumed Gerardo made himself a party to the transfer of the lease. Valdes the entire amount of his debt. There was a stipulation that Valdes assumed all the
This transfer of the lease to the corporation was never put upon the public records. The obligations of the lease transferred by Castello to the company.
corporation was organized under the laws of the State of Maine, and, under the transfer,
took charge of the plant. The season for grinding cane and the manufacture of sugar in The undoubted purpose was not to interfere with the operation of the plant by the
Porto Rico usually commences corporation, since there was a provision in the contract binding Valdes to lease the
property to the corporation pending the period of redemption. This sale was passed in
"about the month of December of each year, and terminates in the months of May, June, Porto Rico before a notary public, but was never put upon the public records. At the time
or July of the year following, according to the amount of cane to be ground." it was made, there was a very considerable sum unpaid on the debt of Nevers &
Callaghan. This fact, joined with the period when the sale with the right to redeem was
Central factories in Porto Rico usually made -- that is, the approaching end of the sugar-making season of 1906 and 1907 --
coupled with other facts to which we shall hereafter make reference, all tend to establish
that, at that time, either because insufficient capital had been put into the venture or
"make contracts with the people (colonos) growing cane, so that growers of cane will because the business had been carried on at a loss, the affairs of the corporation were
deliver the same to be ground, and such contracts embarrassed, if it was not insolvent. A short while before the commencement of the
grinding season of 1907-1908 in October, 1907, in the City of New York, the corporation,
through its president, declaring himself to be authorized by the board of directors, This litigation was commenced in June, 1908, by the bringing by Valdes of an action at
sanctioned by a vote of the stockholders, apparently made an absolute sale of all the law in the court below to recover the plant on the ground that, by the default in paying one
rights of the corporation under the lease, and all its title to the machinery which the of the installments of the price stated in the conditional sale, the right to the relief prayed
corporation had put into the plant. This sale was declared to be for a consideration of had arisen. On the same day, Valdes commenced a suit in equity against the corporation
sixty-five thousand ($65,000) dollars which the company acknowledged to have received in aid of the suit at law. The bill alleged the default of the corporation, the bringing of the
from Valdes, first, by the payment of the thirty-five suit at law, the confusion in the affairs of the corporation, the judgment and levy of the
execution by Nevers and Callaghan, and the threat to sell the machinery under such
Page 225 U. S. 64 execution, the refusal of the corporation to deliver possession of the property, the waste
and destruction of the value of the property which would result if there was no one
representing the corporation having power to contract for cane to be delivered during the
($35,000) dollars cash, as stated in the previous sale made subject to the equity of next grinding season, etc., etc. The prayer was for the appointment of a receiver to take
redemption, and thirty thousand ($30,000) dollars which "the company has received charge of the property, with authority
afterwards in cash from Valdes." There was a provision in the contract to the effect that,
as the purpose of the previous contract of sale, which had been made subject to the
equity of redemption, was accomplished by the new sale, the previous sale was declared Page 225 U. S. 66
to be no longer operative.
to carry on the same, make the necessary contracts for cane for the future, it being
A few days afterwards, likewise in the City of New York (on November 2, 1907), Valdes prayed that the receiver should be empowered to issue receiver's certificates to the
sold to the company all the rights which he had acquired from it by the previous sale, the extent necessary to the accomplishment of the purposes which the bill had in view.
price being sixty-five thousand ($65,000) dollars, payable in installments falling due in the
years 1908, 1909, 1910, and 1911, respectively. This transfer was put in the form of a On the same day, a bill was filed on behalf of the corporation against Valdes. This bill
conditional sale which reserved the title in Valdes until the payment of the deferred price, attacked the sale made to Valdes and by him to the corporation. It was charged that the
and upon the stipulation that any default by the corporation entitled Valdes ipso facto to price stated to have been paid by Valdes as a consideration of the conditional sale was
take possession of the property. Neither this act of sale from Valdes to the corporation fictitious, and that the only sum he had advanced at that time was the $35,000 which it
nor the one made by the corporation to Valdes were ever put upon the public records. was the purpose to secure by means of the sale with the equity of redemption. That, at
that time, Valdes exacted as a consideration for his loan that he be made a director and
Prior to the making of the sales just stated, or about that time, the corporation defaulted in vice-president of the company. The bill then stated that, it having become evident in the
the payment of a note held by Nevers & Callaghan for a portion of the money which they following autumn that the corporation would require more money to increase its plant, to
had loaned the corporation under the circumstances which we have previously stated, pay off the sum due Nevers & Callaghan, and for the operation of the plant, Valdes
and that firm sued in the court below the corporation to recover the debt. agreed to advance the money if he were made president of the company at a stipulated
salary, given a bonus in the stock of the company, and upon the condition that the papers
be executed embodying the so-called sale of the company to Valdes and the practically
The grinding season of 1907-1908 commenced in December, 1907, and was obviously simultaneous conditional sale by Valdes to the company. The bill then alleged that
not a successful one, for the debt of Nevers & Callaghan was not paid, and in May, 1908, Valdes, having thus become the president of the company, failed to carry out his
a judgment was recovered by them against the corporation for about $17,000, with agreement to advance the money, failed to provide for the debt of Nevers & Callaghan,
interest, and in the same month execution was issued and levied upon the machinery in mismanaged the affairs of the property in many alleged particulars, and did various acts
the sugar house. Previous to, or not long subsequent to, the time Nevers & Callaghan to the prejudice of the company and to his own wrongful enrichment, which it is
unnecessary to recapitulate. The necessity of contracting for cane during the contract
Page 225 U. S. 65 season in order that the plant might continue during the next operating season to be a
going concern, and the waste and loss which would otherwise
commenced their suit, the precise date not being stated in the record, the heirs of
Sanchez, the original lessor, brought a suit in the court below against the corporation. Page 225 U. S. 67
The nature of the suit and the relief sought is not disclosed, but it is inferable from the
facts stated that the suit either sought to recover the property on the ground that there be occasioned, were fully alleged. Valdes and the firm of Nevers & Callaghan and the
was no power in Castello to transfer the lease or upon the ground of default in the individual members of that firm were made defendants. The prayer was for the
conditions as to payment of profits as rental which the lease stipulated. It would seem appointment of a receiver and with power to carry on the business of the central, with
also, at about the same time, either one or both of the Castellos brought a suit against the power, for that purpose, to contract for cane for the coming season, with authority to
company, presumably upon the theory that there had been a default in the obligations issue receiver's certificates for the purpose of borrowing the money which might be
assumed in their favor by the corporation at the time it took the transfer of the lease. In required.
the meanwhile also, probably as the result of the want of success of the corporation,
discord arose between its stockholders, and a suit growing out of that state of things was
brought in the lower court. The judge, being about to leave Porto Rico for a brief period, declined to appoint a
permanent receiver, but named a temporary one to keep the property together until a
further hearing could be had, interference in the meanwhile with the custodian being
enjoined. Shortly thereafter, creditors of the corporation intervened and joined in the opinion filed on July the 21st stating very fully the position of the respective suits, the
prayer made by both of the complainants for the appointment of a receiver. In July, the necessity for action in order to preserve the property from waste, and reiterating the view
two suits were by order consolidated, and, after a hearing, a receiver was appointed and that, whatever might be the rights of the Central Altagracia or of Valdes under the lease,
authority given him to continue the property as a going concern and to borrow a limited those rights would be subordinate to the ultimate determination of the suit brought by the
amount of money on receiver's certificates, if necessary, to secure contracts for cane for heirs of Sanchez. To the action of the court as above stated no objection appears to have
the coming crop season. The execution of the Nevers & Callaghan judgment was stayed been made. On the contrary, between the time of that order and the period fixed for the
pending an appeal which had been taken to this Court. The only difference which seems commencement of a hearing, the Central Altagracia, Valdes, and Nevers & Callaghan
to have arisen concerning the appointment of the receiver grew out of the fact that a modified their pleadings to the extent deemed by them necessary to present for trial the
prayer of the Central Altagracia, asking the court to appoint as receiver Mr. Pettingill, a issues upon which they relied. In the case of the Central Altagracia, this was done by
member of the bar and one of the counsel of the corporation, and who was also its filing, on July 22, an amended bill of complaint in its suit against Valdes, and on July 26
treasurer, was denied. Despite this, the fair inference is that the ultimate action of the its answer in the suit of Valdes. The acceptance by Valdes of the terms of the order was
court was not objected to by anyone, because of the hope that the result of a successful shown by an answer filed to the bill in the suit of the company and the cross-bill in the
operation of the plant during the coming crop season might ameliorate the affairs of the same cause, and Nevers & Callaghan manifested their acquiescence by obtaining leave
corporation, and thus prevent further controversies. We say this not only because of the to make themselves parties and asserting their rights by cross-bill and answers which it is
conduct of the parties prior to the order appointing the receiver, but because, unnecessary to detail.

Page 225 U. S. 68 When the consolidated cause was called for trial on the morning of July 27, the counsel
for the Central Altagracia moved a continuance in order to take the testimony of certain
after that order, the solicitors of the Altagracia Company and Valdes put a stipulation of witnesses in Philadelphia and New York for the purpose of proving some of the
record that, until the following October, no steps whatever should be taken in the allegations of the complaint
proceedings, and not even then unless the attorneys for both parties should be in Porto
Rico. Page 225 U. S. 70

The hope of a beneficial result from the operation of the plant by the receiver proved as to the wrongdoing of Valdes in administering the affairs of the corporation. This
delusive. As a result of such operation, there was a considerable loss represented by application was supported by the affidavit of Mr. Pettingill, the counsel of the corporation.
outstanding receiver's certificates, with no means of paying except out of the property. The record states that the request for continuance was opposed by all the other counsel,
Obviously for this reason, the record contains a statement that, on July 12, 1909, a and the application was denied. In doing so, the court stated:
conference was had between the court and all parties concerned to determine what steps
should be taken to meet the situation. It appears that, at that conference, the counsel "That the matter has been pending for more than a year, and that counsel had full notice
representing the heirs of Sanchez and of Nevers & Callaghan stated their opposition to a of the court's intention to press the matters to issue and trial, and that it is not disposed to
continuance of the receivership. delay matters at this time, when the admissions of the pleadings are so broad that the
proofs available here in Porto Rico are probably sufficient, and the amended complaint
On July 17, 1909, the court placed a memorandum on the files, indicating its purpose to already on file in suit No. 565, -- Valdes v. Central Altagracia -- and the answer thereto
bring the litigation, receivership, etc., to an end, and to cause "immediate issue to be and the answer recently filed in suit No. 564 -- Altagracia v. Valdes -- as well as the
raised on the pleadings for that purpose." This memorandum was entitled in all the cross-bill also recently filed in suit No. 465, make so many allegations and admissions as
pending causes concerning the property. It directed that demurrers which had been filed that the real issue between the parties can be plainly seen, and that, in the opinion of the
in the consolidated cause of Valdes against the corporation and of the corporation court, enough proof is available here in Porto Rico."
against Valdes be overruled, and the defendants were required to answer on or before
Monday, July 26, in order that, upon the following day, the 27th of July, the issues raised The court thereupon declared that the Altagracia Company might by the next day, if it so
might be tried before the court without the intervention of a master. It was provided in the desired, file exceptions to the answer in suit 565 and an answer to the cross-complaint --
order, however, that nothing in this direction should prevent the parties from filing such indeed, that the corporation might, if it wished, treat them as filed, and proceed with the
additional pleadings as it is deemed necessary for the protection of their rights by way of cause and file them at any convenient time thereafter. Thereupon, the record states:
cross bill or amendment, etc. To make the order efficacious, it was declared that nothing
would be done in the suit of the heirs of Sanchez against Castello and the Altagracia,
"Said counsel for the Central Altagracia stated that he desired time to file exceptions to
the answer and an answer to the cross-bill in suit No. 565, and the court granted until the
Page 225 U. S. 69 morning of July 28 for such purpose. Later in the day of July 27, one of the counsel for
Valdes having requested the court to postpone the hearing of the cause until the morning
which was pending on appeal, and that a demurrer filed to the suit of Castello against the of the 29th because of an unexpected professional engagement elsewhere, the request
Central would be overruled; that the demurrer in the suit at law of Valdes would remain in was communicated by the court to the other counsel in the cause."
abeyance to await the final action of the court on the trial of all the issues in the equity
causes, and that a stay of the Nevers & Callaghan execution would be also disposed of Thereupon the record again recites:
when the equity cases came to be decided. This order was followed by a memorandum
"Messrs. Pettingill & became the purchaser, to pay enough cash to discharge the costs, taxes, receiver's
certificates, and the claim of Nevers & Callaghan.
Page 225 U. S. 71
These appeals were then prosecuted, the one by the Central Altagracia and the other by
Cornwell, attorneys for the Central Altagracia, stated that they withdrew any statement Valdes. We shall endeavor as briefly as may be to dispose of the contentions relied upon
they have hitherto made in the cause in that regard, and desired to be understood that to secure a reversal.
they would not except to the answer in suit No. 565, or plead or answer to the cross-bill
therein save and except within the time which they contended the rules governing this I. The Central Altagracia appeal. -- The alleged errors insisted on in behalf of that
Court of equity gave them, and would stand upon what they considered their rights in that company relate to the asserted arbitrary action of the court in forcing the cause to trial
regard." without affording the time which it is insisted the corporation was entitled to under the
equity rules applicable to the subject, and second, the refusal of the court to grant a
When the court assembled the next day, on the morning of the 28th, a statement continuance upon the affidavit as to the absence of material witnesses.
concerning the occurrence of the previous day as to the continuance, etc., just reviewed,
was read by the court in the presence of all the counsel, whereupon the record recites: We think all the contentions on this subject are demonstrated to be devoid of merit by the
statement of the case which we have made. In the first place, it is manifest
"N. B. Pettingill, counsel for the Central Altagracia, in response to the same, stated that
he objected to proceeding to take any evidence in any of the causes at that time, or the Page 225 U. S. 73
testimony of any witnesses, because the same was not at issue or in condition for the
taking of evidence, and objected to the taking of such evidence until the issues of said from that statement that the proceeding leading up to the appointment of a receiver and
causes are made up in accordance with the rules of practice applicable to equity causes." the power given to administer the property was largely the result of the assent of the
corporation. In the second place, when the unsuccessful financial issue of the
The record further recites: receivership had become manifest, we think the statement makes it perfectly clear that
the steps taken by the court for the purpose of bringing the case to a speedy conclusion,
"Which objection was overruled by the court on the ground that the action called for and thus avoiding the further loss which would result to all interests concerned, were also
thereby is not necessary. That the bill was amended within three days; an answer was acquiesced in by all the parties in interest who complied with the terms of that order and
immediately filed to it and a cross-bill also filed, the said cross-bill making only the same took advantage of the rights which it conferred. We think also the statement makes it
claims as were made in suit No. 563 at law, and that, anyway, the issue could be tried on apparent that the refusal on the part of the corporation to proceed with the trial, upon the
the bill and answer in both suits. . . ." theory that the time to plead allowed by the equity rules had not elapsed, was the result
of a change of view because of the action of the court in refusing the continuance on
account of the absent witnesses -- a change of front which was inconsistent with the
This ruling of the court having been excepted to, the trial proceeded from day to day, the rights which the corporation had exercised in accord with the order setting the cause for
counsel for the Central Altagracia taking no part in the same and virtually treating the trial, and with the rights of all the other parties to the cause which had arisen from that
proceedings as though they did not concern that corporation. order and from the virtual approval of it, or at least acquiescence in it, by all concerned.

In substance, the court decided: first, that as the result of the contracts between Valdes Considering the assignments of error insofar as they relate alone to overruling of the
and the Central Altagracia, he was not the owner of the rights of that corporation under application for continuance, based upon the absence of witnesses, it suffices to say that
the lease, or of the machinery which the elementary rule is that the granting of a continuance of the cause was peculiarly
within the sound discretion of the court below -- a discretion not subject to be reviewed on
Page 225 U. S. 72 appeal except in case of such clear error as to amount to a plain abuse springing from an
arbitrary exercise of power. Instead of coming within this latter category, we think the
had been placed in the sugar house by the Altagracia Company, or of the other assets of facts as to the refusal to continue and the conduct of the parties make it clear that there
the corporation, but that he was merely a secured creditor. The sum of the secured debt was not only no abuse, but a just exercise, of discretion.
was fixed after making allowances for some not very material credits which the
corporation was held to be entitled to. Second, that the judgment in favor of Nevers & Page 225 U. S. 74
Callaghan was valid, and that that firm, by virtue of its execution and levy upon the
machinery, had a prior right to Valdes. Third, the sums due to various creditors of the II. As to the Appeal of Valdes. -- Two propositions are relied upon: first, that error was
corporation were fixed and the equities or priorities were classified as follows: (a) taxes committed in treating Valdes merely as a secured creditor, and in not holding him to be
due by the corporation and the sum of the receiver's certificates and certain costs; (b) the the absolute owner of the rights and property alleged to have been transferred by the so-
judgment of Nevers & Callaghan, and (c) the debt of Valdes; (d) debts due the other called conditional sale. Second, that, in any event, error was committed in awarding to
creditors. Without going into details, it suffices to say that, for the purpose of enforcing Nevers & Callaghan priority over Valdes.
these conclusions, the decree directed a sale of all the rights of the Central Altagracia in
and to the lease, machinery, contract, etc., and imposed the duty upon Valdes, if he
The first proposition is supported by a reference to the Porto Rican Code and decisions of implements intended by the owner of the tenements for the industry or works that they
the Supreme Court of Spain and the opinions of Spanish law writers. But the contention is may carry on in any building or upon any land, and which tend directly to meet the needs
not relevant, and the authorities cited to sustain it are inapposite to the case to be here of the said industry or works."
decided, because the argument rests upon an imaginary premise -- that is, that the ruling
of the court below denied that right under the Spanish law to make a conditional sale, or See also Code Nap., articles 516, 518, et seq., to and inclusive of article 534,
held that such a sale, if made, would not have the effect which the argument insists it was recapitulating the things which, though in themselves movable, may be immobilized. So
entitled to. This is true because the action of the court was solely based upon a premise far as the subject matter with which we are dealing -- machinery placed in the plant -- it is
of fact, viz., that, under the circumstances of the case and in view of the prior sale with plain, both under the provisions of the Porto Rican law and of the Code Napoleon, that
the equity of redemption, the cancellation of that sale, and the transfer made by the machinery which is movable in its nature only becomes immobilized when placed in a
corporation to Valdes, and the immediate transfer of the same rights by him to the plant by the owner of the property or plant. Such result would not be accomplished,
corporation in the form of a conditional sale, the failure to register any of the contracts, therefore, by the placing of machinery in a plant by a tenant or a usufructuary or any
and the relation of Valdes to the corporation at the time the contracts were made, it person having only a temporary right. Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p.
resulted that whatever might be the mere form, in substance and effect, no conditional 12, § 164; Laurent, Tit. 5, No. 447, and decisions quoted in Fuzier-Herman ed., Code
sale was made, but a mere contract was entered into which the parties intended to be a Napoleon, under article 522 et seq. The distinction rests, as pointed out by Demolombe,
mere security to Valdes for money advanced and to be advanced by him. This being the upon the fact that one only having a temporary right to the possession or enjoyment of
case, it is manifest that it is wholly irrelevant to argue that error was committed in not property is not presumed by the law to have applied movable property belonging to him
applying the assumed principles of the Porto Rican and Spanish law governing in the so as to deprive him of it by causing it, by an act of immobilization, to become the
case of a conditional sale, when the ruling which the court made proceeded upon the property of another. It follows that, abstractly speaking, the machinery put by the
conclusion that there was no conditional sale. Altagracia Company in the plant belonging to Sanchez did not lose its character of
movable property and become immovable by destination. But, in the concrete,
Page 225 U. S. 75 immobilization took place because of the express provisions of the lease under which the
Altagracia held, since the lease in substance required the putting in of improved
The contention that, under the Porto Rican law, the form was controlling because proof of machinery, deprived the tenant of any right to charge against the lessor the cost of such
the substance was not admissible seems not to have been raised below, but, if it had machinery, and it was expressly stipulated that the machinery so put in should become a
been, is obviously without merit, as the case as presented involved not a controversy part of the plant belonging to the owner without compensation to the lessee.
alone between the parties to the contract, but the effect and operation of the contract
upon third parties, the creditors of the corporation. The contention is additionally without Page 225 U. S. 77
merit since it assumes that the mere form of the contract excluded the power of creditors
to inquire into its reality and substance, even although the contract was never inscribed Under such conditions, the tenant, in putting in the machinery, was acting but as the
upon the public records so as to bind third parties. That its character was such as to agent of the owner, in compliance with the obligations resting upon him, and the
require inscription we shall in a few moments demonstrate in coming to consider the immobilization of the machinery which resulted arose in legal effect from the Act of the
second proposition -- that is, upon the hypothesis that Valdes was but a secured creditor, owner in giving by contract a permanent destination to the machinery. It is true, says
was error committed in subordinating his claim to the prior claim of Nevers & Callaghan Aubry and Rau, vol. 2, § 164, par. 2, p. 12, that
under their judgment and execution?
"the immobilization with which the article is concerned can only arise from an act of the
To determine this question involves fixing the nature and character of the property from owner himself or his representative. Hence, the objects which are dedicated to the use of
the point of view of the rights of Valdes, and its nature and character from the point of a piece of land or a building by a lessee cannot be considered as having become
view of Nevers & Callaghan as a judgment creditor of the Altagracia Company, and the immovable by destination except in the case where they have been applied for account of
rights derived by them from the execution levied on the machinery placed by the the proprietor, or in execution of an obligation imposed by the lease."
corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats as
immovable (real) property not only land and buildings, but also attributes immovability in
some cases to property of a movable nature -- that is, personal property -- because of the It follows that the machinery placed by the corporation in the plant, by the fact of its being
destination to which it is applied. "Things," says § 334 of the Porto Rican Code, "may be so placed, lost its character as a movable, and became united with and a part of the plant
immovable either by their own nature or by their destination, or the object to which they as an immovable by destination. It also follows that, as to Valdes, who claimed under the
are applicable." Numerous illustrations are given in the fifth subdivision of section 335, lease, and who had expressly assumed the obligations of the lease, the machinery, for all
which is as follows: the purposes of the exercise of his rights, was but a part of the real estate -- a conclusion
which cannot be avoided without saying that Valdes could at one and the same time
assert the existence in himself of rights and yet repudiate the obligations resulting from
"Machinery, vessels, instruments, or the rights thus asserted.

Page 225 U. S. 76 Nevers & Callaghan were creditors of the corporation. They were not parties to nor had
they legal notice of the lease and its conditions from which alone it arose that machinery
put in the premises by the Altagracia became immovable property. The want of notice
arose from the failure to record the transfer from Castello to the Altagracia, or from the
Altagracia to Valdes, and from Valdes apparently conditionally back to the corporation --
a clear result of § 613 of the Civil Code of Porto Rico, providing,

"The titles of ownership or of other real rights relating

Page 225 U. S. 78

to immovables which are not properly inscribed or annotated in the registry of property
shall not be prejudicial to third parties."

It is not disputable that the duty to inscribe the lease by necessary implication resulted
from the general provisions of article 2 of the mortgage law of Porto Rico, as stated in
paragraphs 1, 2, and 3 thereof, and explicitly also arose from the express requirement of
paragraph 6, relating to the registry of "contracts for the lease of real property for a period
exceeding six years. . . ." It is true that, in a strict sense, the contracts between Castello
and the Altagracia Company and with Valdes were not contracts of lease, but for the
transfer of a contract of that character. But such a transfer was clearly a contract
concerning real rights to immovable property within the purview of article 613 of the Civil
Code, just previously quoted. Especially is this the case in view of the stipulations of the
lease as to the immobilization of movable property placed in the plant, and the other
obligations imposed upon the lessee.

"The sale which a lessee makes to a third person to whom he transfers his right of lease
is the sale of an immovable right, and not simply a sale of a movable one."

See numerous decisions of the courts of France, beginning with the decision on February
2, 1842, of the Court of Cassation (Journal du Palais [1842] vol. 1, 171). See
also numerous authorities collected under the heading above stated in paragraph 21,
under articles 516, 517, and 518 of the Code Napoleon. Fuzier-Herman ed. of that Code,
p. 643.

The machinery levied upon by Nevers & Callaghan -- that is, that which was placed in the
plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable
property, it follows that they had the right to levy on it under the execution upon the
judgment in their favor, and the exercise of that right did not in a legal sense conflict with
the claim of Valdes, since, as to him, the property was a part of the realty, which as the
result

Page 225 U. S. 79

of his obligations under the lease, he could not, for the purpose of collecting his debt,
proceed separately against.

As a matter of precaution, we say that nothing we have said affects the rights, whatever
they may be, of the heirs of Sanchez, the original lessor.

Affirmed.
[No. 40411. August 7, 1935] VOL. 61, AUGUST 7, 1935 711
DAVAO SAW MILL Co., INC., plaintiff and appellant, vs.APRONIANO G. Davao Saw Mill Co. vs. Castillo
CASTILLO and DAVAO LIGHT & POWER Co., INC., def endants and appellees.
though the time agreed upon had expired: Provided, however, That the machineries
and accessories are not included in the improvements which will pass to the party of
1. 1.PROPERTY; MACHINERY AS PERSONAL PROPERTY; CIVIL CODE, ARTICLE the first part on the expiration or abandonment of the land leased."
334, PARAGRAPHS 1 and 5, CONSTRUED.—A lessee placed machinery in a
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff
building erected on land belonging to another, with the understanding that the
machinery was not included in the improvements which would pass to the lessor on
and the Davao Saw Mill Co., Inc., was the defendant, a judgment was rendered in
the expiration or abandonment of the land leased. The lessee also treated the favor of the plaintiff in that action against the def endant in that action; a writ of
machinery as personal property by executing chattel mortgages in f favor of third execution issued thereon, and the properties now in question were levied upon as
persons. The machinery was levied upon by the sheriff as personalty pursuant to a personalty by the sheriff. No third party claim was filed for such properties at the
writ of execution obtained without any protest being registered. Held: That the time of the sales thereof as is borne out by the record made by the plaintiff herein.
machinery must be classified as personal property. Indeed the bidder, which was the plaintiff in that action, and the defendant herein
having consummated the sale, proceeded to take possession of the machinery and
1. 2.ID.; ID.; ID.—Machinery which is movable in its nature only becomes immobilized other properties described in the corresponding certificates of sale executed in its
when placed in a plant by the owner of the property or plant, but not when so placed favor by the sheriff of Davao.
by a tenant, a usufructuary, or any person having only a temporary right, unless As connecting up with the facts, it should further be explained that the Davao
such person acted as the agent of the owner. Saw Mill Co., Inc., has on a number of occasions treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such
710 persons is the appellee by assignment from the original mortgagees.
710 PHILIPPINE REPORTS ANNOTATED Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the
Code, real property consists of—
Davao Saw Mill Co. vs. Castillo
APPEAL from a judgment of the Court of First Instance of Davao. Hilario, J.
The facts are stated in the opinion of the court. 1. "1.Land, buildings, roads and constructions of all kinds adhering to the soil;
Arsenio Suazo & Jose L. Palma Gil and Pablo Lorenzo & Delfin Joven for
appellant. * * * * * * *
J. W. Ferrier for appellees.
1. "5.Machinery, liquid containers, instruments or implements intended by the
MALCOLM, J.: owner of any building or land for use in connection with any industry or
trade being carried on therein and which are expressly adapted to meet the
The issue in this case, as announced in the opening sentence of the decision in the requirements of such trade or industry."
trial court and as set forth by counsel for the parties on appeal, involves the
determination of the nature of the properties described in the complaint. The trial Appellant emphasizes the first paragraph, and appellees the last mentioned
judge found that those properties were personal in nature, and as a consequence paragraph. We entertain no doubt that
absolved the defendants from the complaint, with costs against the plaintiff. 712
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
712 PHILIPPINE REPORTS ANNOTATED
Government of the Philippine Islands. It has operated a sawmill in the sitio of Maa,
barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon Davao Saw Mill Co. vs. Castillo
which the business was conducted belonged to another person. On the land the the trial judge and the appellees are right in their appreciation of the legal doctrines
sawmill company erected a building which housed the machinery used by it. Some of flowing from the facts.
the implements thus used were clearly personal property, the conflict concerning In the first place, it must again be pointed out that the appellant should have
machines which were placed' and mounted on f oundations of cement. In the contract registered its protest before or at the time of the sale of this property. It must further
of lease between the sawmill company and the owner of the land there appeared the be pointed out that while not conclusive, the characterization of the property as
following provision: chattels by the appellant is indicative of intention and impresses upon the property
"That on the expiration of the period agreed upon, all the improvements and the character determined by the parties. In this connection the decision of this court
buildings introduced and erected by the party of the second part shall pass to the in the case of Standard Oil Co. of New York vs.Jaramillo ([1923], 44 Phil., 630),
exclusive ownership of the party of the first part without any obligation on its part to whether obiter dicta or not, furnishes the key to such a situation.
pay any amount for said improvements and buildings; also, in the event the party of It is, however, not necessary to spend overly much time in the resolution of this
the second part should leave or abandon the land leased before the time herein appeal on side issues. It is machinery which is involved; moreover, machinery not
stipulated, the improvements and buildings shall likewise pass to the ownership of intended by the owner of any building or land for use in connection therewith, but
the party of the first part as intended by a lessee for use in a building erected on the land by the latter to be
711 returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United obligations resting upon him, and the immobilization of the machinery which
States Supreme Court, it was held that machinery which is movable in its nature resulted arose in legal effect from the act of the owner in giving by contract a
only becomes immobilized when placed in a plant by the owner of the property or permanent destination to the machinery.
plant, but not when so placed by a tenant, a usufructuary, or any person having only
a temporary right, unless such person acted as the agent of the owner. In the opinion * * * * * * *
written by Chief Justice White, whose knowledge of the Civil Law is well known, it
was in part said: "The machinery levied upon by Nevers & Callaghan, that is, that which was placed in
"To determine this question involves fixing the nature and character of the the plant by the Altagracia Company, being, as regards Nevers & Callaghan,
property from the point of view of the rights of Valdes and its nature and character movable property, it follows that they had the right to levy on it under the execution
from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia upon the judgment in their favor, and the exercise of that right did not in a legal
Company and the rights derived by them from the execution levied on the machinery sense conflict with the claim of Valdes, since as to him the property was a part of the
placed by the corporation in the plant. Following the Code Napoleon, the Porto Rican realty which, as the result of his obligations under the lease, he could not, for the
Code treats as immovable (real) property, purpose of collecting his debt, proceed separately against." (Valdes vs. Central
713
Altagracia [1912], 225 U. S., 58.)
VOL. 61, AUGUST 7, 1935 713 Finding no reversible error in the record, the judgment appealed from will be
Davao Saw Mill Co. vs. Castillo affirmed, the costs of this instance to be paid by the appellant.
not only land and buildings, but also attributes immovability in some cases to Villa-Real, Imperial, Butte, and Goddard, JJ., concur.
property of a movable nature, that is, personal property, because of the destination to Judgment affirmed.
which it is applied. 'Things,' says section 334 of the Porto Rican Code, 'may be
immovable either by their own nature or by their destination or the object to which ___________
they are applicable.' Numerous illustrations are given in the fifth subdivision of
section 335, which is as follows: 'Machinery, vessels, instruments or implements © Copyright 2019 Central Book Supply, Inc. All rights reserved.
intended by the owner of the tenements for the industry or works that they may
carry on in any building or upon any land and which tend directly to meet the needs
of the said industry or works.' (See also Code Nap., articles 516, 518 et seq. to and
inclusive of article 534, recapitulating the things which, though in themselves
movable, may be immobilized.) So far as the subject-matter with which we are
dealing—machinery placed in the plant—it is plain, both under the provisions of the
Porto Rican Law and of the Code Napoleon, that machinery which is movable in its
nature only becomes immobilized when placed in a plant by the owner of the property
or plant. Such result would not be accomplished, therefore, by the placing of
machinery in a plant by a tenant or a usufructuary or any person having only a
temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164;
Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon
under articles 522 et seq.) The distinction rests, as pointed out by Demolombe, upon
the fact that one only having a temporary right to the possession or enjoyment of
property is not presumed by the law to have applied movable property belonging to
him so as to deprive him of it by causing it by an act of immobilization to become the
property of another. It follows that abstractly speaking the machinery put by the
Altagracia Company in the plant belonging to Sanchez did not lose its character of
movable property and become immovable by destination. But in the concrete
immobilization took place because of the express provisions of
714

714 PHILIPPINE REPORTS ANNOTATED


Government of the Philippine Islands vs. Conde
the lease under which the Altagracia held, since the lease in substance required the
putting in of improved machinery, deprived the tenant of any right to charge against
the lessor the cost of 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
[No. 5029. April 1, 1909.] been broken by the mortgagors, and requested that the sheriff sell said mortgaged
JOSE McMlCKING, sheriff of the city of Manila, plaintiff and appellee, vs. EL property in accordance with the provisions of section 14 of said Act (No. 1508).
BANCO ESPAÑOL-FILIPINO ET AL., defendants.—MANUEL AYALA, appellant. Sixth. The sheriff gave notice to said mortgagors of said request on the part of the
said mortgagee (El Banco Español-Filipino) and that said ship would be sold in
accordance with the law.
1. 1.SHIPS AND SHIPPING; STATUTORY LIENS IN FAVOR OF CREW.—Article 646 431
of the Code of Commerce creates a statutory lien upon a ship in favor of the crew
engaged in operating the same, and this lien takes certain preference in accordance VOL. 13, APRIL 1, 1909 431
with the provisions of article 580. The wages due the crew and the expenses incurred McMicking vs. Banco Español-Filipino.
in maintaining the vessel during the last voyage constitute a lien which takes
preference over a lien created by pledging the ship as security for money borrowed.
Seventh. That due notice was given of the sale of said mortgaged property (the Hock-
But there is no provision of law which authorizes the use of funds received from the Tay) in accordance with the provisions of said Act.
sale of a mortgaged vessel to pay prior liens. Eighth. That the date fixed for the sale of said property was the 27th day of
October, 1907.
1. 2.PLEADING AND PRACTICE; ACTION BY REAL PARTY IN Ninth. That, upon the 27th day of October, 1907, Manuel Ayala served upon the
INTEREST; ASSIGNMENT OF ACTIONS.—Under section 114 of the Code of Civil said sheriff the following notice:
Procedure only the real party in interest may sue. This section, however, recognizes "MANILA, October 26, 1907.
the assignment of rights of action and also recognizes that when one has such a right
assigned to him he is then the real party in interest and may maintain an action "To the SHERIFF OF THE CITY OF MANILA.
upon such claim or right. Said section, however, should not be construed to prohibit
the maintenance of an action by one who is legally authorized to represent the real "SlR: As captain of the steamer Hock-Tay, the judicial sale of which has been advertised by you
parties in interest, when brought in the name of the latter. for the 28th instant, at 9 o'clock, a. m., I make demand upon you not to deliver to the Banco
Español-Filipino the sum of P4,441.92, which is the amount of the wages of the crew and
430 expenses of supplies now owing, and which, in accordance with the Code of Commerce,
constitute preferred claims; I make this claim in writing and under oath, as shown by the
430 PHILIPPINE REPORTS ANNOTATED
attached affidavit.
McMicking vs. Banco Español-Filipino. "Very respectf ully,
APPEAL from a judgment of the Court of First Instance of Manila. Lobingier, J. "(Signed) MANUEL AYALA."
The facts are stated in the opinion of the court. The attached affidavit is as f ollows:
Rosado, Sanz & Opisso, for appellant.
Ortigas & Fisher, for appellee. "CITY OF MANILA, PHILIPPINE ISLANDS, 88.:

"Manuel Ayala, being first duly sworn, says that he is the holder of a captain's license
JOHNSON, J.:
authorizing him to command vessels of any tonnage in Philippine waters; that he is at the
present time captain of the steamer Hock-Tay, registered in the port of Manila, P. I. That the
From the record the following facts appear. said steamer Hock-Tay has been attached by the sheriff of Manila, who has announced the
First. That prior to the 21st day of February, 1907, one Sanchez and one Cue judicial sale thereof for the 28th instant to satisfy a credit in favor of the Banco Español-
Suan as a sociedad en comanditawere the owners of a certain steamship, known as Filipino; that in accordance with article 580 of the Code of Commerce, the money due to the
the Hock-Tay. captain and other members of the crew for salaries is entitled to preference over the claim of the
Second. That on the 21st day of February, 1907, the said sociedad borrowed f rom bank; that the amounts owing by the ship for her equipment and provisions are also entitled to
preference; that the wages due the captain and crew as shown by the shipping articles and
El Banco Español-Filipino the sum of P30,000 at 8 per cent per annum from the 21st
account books of the
day of September, 1907, until paid, and gave as security for the payment of said sum 432
a chattel mortgage executed and delivered in accordance with Act No. 1508 of the
432 PHILIPPINE REPORTS ANNOTATED
Philippine Commission.
Third. That said mortgage was duly recorded in the office of the collector of McMicking vs. Banco Español-Filipino.
customs of the port of Manila on the 27th day of February, 1907, in the record of Pl,601.73 is now owing to the affiant for provisions, equipment and supplies f urnished the
conveyances of titles, mortgages and hypothecations of vessels documented at said vessel and expended during her last voyage upon proper authority.
port. "(Signed) MANUEL AYALA.
"Subscribed and sworn to before me, etc."
Fourth. That said mortgage was duly recorded in the office of the register of
property of the city of Manila on the 13th day of September, 1907, in accordance with Tenth. On the 27th day of October, 1907, the steamer was sold to the highest bidder
the provisions of section 4 of said Act (No. 1508). for cash for the sum of P30,000.
Fifth. That, upon the 10th day of October, 1907, El Banco Español-Filipino On the 30th day of October, 1907, the sheriff of the city of Manila filed a
caused to be delivered to the sheriff of the city of Manila the said chattel mortgage on complaint in the Court of First Instance of the city of Manila in which the foregoing
the said steamer, Hock-Tay, together with notice that the terms of said mortgage had facts were, in substance, alleged, which complaint concluded with the f ollowing
prayer:
"The plaintiff asks the court: of these Islands, were hired upon a monthly salary with food and drink.
"Ninth. That Inchausti & Co., as charterers of the steamer Hock-Tay, paid to Manuel Ayala,
during the month of September, 1907, all the expenses for subsistence, with the exception of
1. "1.That the defendants be requested to interplead their respective rights to those corresponding to the maintenance of the officers and crew, and that the balances
said funds. appearing in Exhibits C and D, attached to the answer of Manuel Ayala, only refer to the food
2. "2.That, upon the delivery of the said funds to such person or persons and drink of the officers and crew.
ordered by the court, the plaintiff be relieved of any responsibility as to all "Tenth. That the firm of H. J. Andrews & Co. was the authorized agent of the partnership
the defendants in connection with said funds; and "Sanchez y Cue Sang," sociedad en comandita, the owner of the steamer Hock-Tay, and that G.
3. "3.That the plaintiff be granted any other remedy which the court may deem Andrews was authorized to represent the firm of H. J. Andrews & Co.
"Eleventh. That the days of service of the crew and officers referred to in the statement
just and equitable."
contained in Exhibit B, attached to the answer of Captain Manuel Ayala, are in'tended to
correspond to a number of successive days from the 1st day of October, 1907.
To this complaint the defendant Manuel Ayala answered and alleged his claim or lien "Twelfth. That the port of Manila was, during all the dates referred to in this suit, the port
which he held against the said ship Hock-Tay. On the 9th day of November, 1907, the of entry of the steamer Hock-Tay.
defendant El Banco Español-Filipino presented its answer in which it attempted to "Thirteenth. That on the date of the sale of the steamer Hock-Tay, under the mortgage
show that neither the said Sanchez et al., nor the said Manuel Ayala had any right executed by the partnership owner of said vessel in favor of the Banco Español-Filipino, the
amount of the lien created on said vessel in favor of the mortgage creditor was the sum of thirty
whatever to participate in the proceeds of the. sale of said ship by said sheriff, and
thousand (P30,000) pesos, Philippine currency, with the interest thereon at the rate of 8 per
claimed that all of the money except the legal expenses should be paid to said bank. cent per year, from the 21st of September, 1907, the date of the last payment of interest.
The record does not disclose whether or not the said sociedad en comandita filed an "The respective parties signing this stipulation pray the court to render a decision in the
answer in said cause. case in accordance with the facts contained herein, respectively waiving the submission of other
Upon the 4th day of August, 1908, the attorneys for El Banco Español-Filipino evidence.
and for the said Manuel Ayala entered into an agreement in the words and figures "Manila, August 4, 1908.
following: (Signed) "ORTIGAS & FISHER,
433 "Attorneys for the Banco Español-Filipino.
(Signed) "ROSADO, SANZ & OPISSO,
VOL. 13, APRIL 1, 1909 433 "Attorneys for Don Manuel Ayala."
McMicking vs. Banco Español-Filipino. 435
"For the purposes of this suit it is hereby stipulated between the representatives of the Banco VOL. 13, APRIL 1, 1909 435
Español-Filipino and of Captain Don Manuel Ayala, as follows:
"First. That the facts alleged in the paragraphs 1, 2, 4, 5, 6, 7, 8, and 9 of the complaint of McMicking vs. Banco Español-Filipino.
interpleader filed in these proceedings by J. McMicking, as sheriff of the city of Manila, are true. Upon this agreed statement of facts the cause was submitted to the lower court and
"Second. That it is true that the mortgage deed of the steamer Hock-Tay, which appears after due consideration of the facts that court rendered a judgment upon the 29th day
literally copied in paragraph 5 of the said complaint, was duly recorded by the Banco Español- of September, 1908, the dispositive part of which was in the words following:
Filipino in the office of the collector of customs of Manila, on the 27th day of February, 1907, "The court therefore finds that there is due the defendant Ayala from the
and in the registry of chattel mortgages of the city of Manila on the 13th day of September, proceeds of the sale of the vessel and in preference to the claim of the mortgagee the
1907.
said sum of P756.66. It is therefore considered and adjudged that the judgment
"Third. That the limited partnership named "Sanchez y Cue Sang," sociedad en
comandita, was the owner of the af oresaid steamer Hock-Tay at the date on which the
herein of January 20, 1908, be and the same is hereby vacated and that the sheriff of
representative of that partnership executed the mortgage deed of said steamer in favor of the Manila, out of the proceeds of the sale of said vessel as reported by him, pay to the
Banco Español-Filipino defendant Manuel Ayala the said sum of P756.66, and that the balance of said
"Fourth. That there is no credit, arising from the maintenance of the steamer Hock- proceeds less the costs of this proceeding be paid to the mortgagee, the Banco
Tay, recorded in the mercantile registry in favor of Captain Ayala. Español-Filipino."
"Fifth. That the last voyage of the steamer Hock-Tay prior to her sale by virtue of the From this decision of the lower court the defendant Manuel Ayala duly appealed
mortgage executed by the partnership owner of the same in favor of the Banco Español-Filipino and made the following assignments of error:
began on the 12th of September, 1907, and ended on the 29th of September of the same year.
"The Court of First Instance of Manila, in rendering judgment in the above
"Sixth. That the allegations contained in paragraphs 1, 2, 5, 6, and '7 of the answer of
Manuel Ayala are true.
entitled case, committed error:
"Seventh. That Captain Manuel Ayala was the one who collected from the agents "Sanchez
y Cue Sang," sociedad en comandita, the wages of the crew hired by him and who distributed 1. "I.In considering the credit of the Banco Español-Filipino as unquestionably
the same among them, the said crew having nothing to do with the ship's agents whom they did a mortgage credit, in a suit in which the adverse party in interest is not the
not know and with whom they made no contract except through Captain Ayala. debtor, but a third party.
"Eighth. That the officers and crew of the steamer HockTay,the same as all those belonging
2. "II.In not acknowledging the lien existing in favor of all the credits claimed
to the coastwise trade
434 by the appellant.
3. "III.In making, for the purposes of compliance with a mercantile contract,
434 PHILIPPINE REPORTS ANNOTATED
computations of time which violate the provisions of articles 57 and 60 of
McMicking vs. Banco Español-Filipino.
the Code of Commerce, giving to article 646 of the same code a restrictive 1. "6.The salaries due the captain and crew during their last voyage, which
construction which leads to an absurdity. shall be vouched for by virtue of the liquidation made from the shipping
4. "IV.In giving to the food and drink of the crew, who give their services for articles and account books of the vessel, approved by the chief of the
salary and maintenance, a distinct character of salary or rent like an bureau of merchant marine where there is one, and in his absence by the
industrial contract of lease. consul, or judge, or court.
5. "V.In not granting the appellant Ayala the wages corresponding to the 2. "7.The reimbursement for the goods of the freight the captain may have sold
subordinate crew employed by him on the ship, and who are unable to in order to repair the vessel, provided the sale has been ordered by a
claim, by themselves, their judicial instrument executed with the formalities required in such cases,
and recorded in the certificate of the registry of the vessel.
436 3. "8.The part of the price which has not been paid the last vendor, the credits
436 PHILIPPINE REPORTS ANNOTATED
pending for the payment of material and work in the .construction of the
vessel, when it has not navigated, and those arising f rom the repair and
McMicking vs. Banco Español-Filipino. equipment of the vessel and its provisioning with victuals and fuel during
its last voyage.
1. the wandering character of the life imposed upon them by their occupation.
2. "VI.In granting the credit of the Banco Español-Filipino a preference over a "In order that said credits may enjoy the preference contained in this number, they
great part of those claimed by the appellant Ayala, which were expenses must appear by contracts recorded in the commercial registry, or if they were
incurred for the maintenance and benefit of the vessel during the existence contracted for the vessel while on a voyage and said vessel has not returned to the
of the mortgage in favor of the bank." port where she is registered, they must be proven with the authority required for
such cases and entered in the certificate of the record of said vessel.
El Banco Español-Filipino did not appeal from the judgment of the lower court and
theref ore whatever error may have been committed by the lower court to the 1. "9.The amounts borrowed on bottomry bonds before the departure of the
prejudice of the said bank can not now be considered. vessel, proven by means of the contracts executed according to law and
The claim of the defendant Manuel Ayala is based upon the theory that the wages recorded in the commercial registry, the amounts borrowed during the
of the crew and expenses incurred for the ship and furnishing supplies for the same voyage with the authority mentioned in the foregoing number, filling the
have a preference over the claim of the other defendant, El Banco Español-Filipino same requisites, and the insurance premium, proven by the policy of the
The def endant, the said Ayala, evidently bases his claim upon the provisions of contract or certificate taken from the books of the broker.
articles 580 and 646 of the Code of Commerce. Article 580 is as f ollows: 2. "10.The indemnity due the shippers for the value of the goods shipped, which
"In all judicial sales of vessels for the payment of creditors, the f ollowing shall were not delivered to the consignees, or for averages suffered for which the
have preference in the order stated: vessel is liable, provided either appear in a judicial or arbitration decision,"
By reference to paragraph 6 of said article 580, as above quoted, it is seen
1. "1.The credits in favor of the public treasury which are accounted for by that in all judicial sales of vessels the
means of a judicial certificate of the competent authority.
2. "2.The judicial costs of the proceedings, according to an appraisement 438
approved by the judge or court. 438 PHILIPPINE REPORTS ANNOTATED
3. "3.The pilotage charges, tonnage dues, and the other sea or port charges,
'McMicking vs. Banco Español-Filipino.
proven by means of proper certificates of the officers intrusted with the
collection.
4. "4.The salaries of the caretakers and watchmen of the vessel and any other 1. salaries due the captain and the crew during the last voyage shall be paid in
expense connected with the preservation of said vessel, from the time of accordance with the preferences mentioned in said article out of the
arrival until her sale, which appear to have been paid or are due by virtue proceeds of said ship. Article 646 of said Code of Commerce provides:
of a true account approved by the judge or court.
5. "5.The rent of the warehouse where the rigging and stores of the vessel have "The vessel with her engines, rigging, equipment, and freights shall be liable for the
been taken care of, according to contract. pay earned by the crew engaged per month or f or the trip, the liquidation and
payment to take place between one voyage and the other.
437 "After a new voyage has been undertaken, credits such as the former shall lose
VOL. 13, APRIL 1, 1909 437 their right of preference."
This article creates a lien upon a ship in favor of the crew engaged in the
McMicking vs. Banco Español-Filipino.
operation of the same and this lien in favor of the crew takes certain preference in
accordance with the provisions of said article 580. The wages due the crew and
expenses incurred in maintaining the ship during the last voyage constitute a lien
under the law and take preference over a lien created by giving the ship as security the creditors shall present and enforce their liens when the sale is a voluntary one.
for money borrowed. The crew, therefore, under article 580 of the Commercial Code, Articles 579 and 584 provide a method of collecting or enf orcing not only the liens
for their wages, etc., for the last voyage, have a prior lien upon a ship, to the lien created under section 580 but also for the collection of any other kind of lien
created in the present case by the chattel mortgage. Liens in f avor of the crew under whatsoever.
these circumstances are known as legal liens and whoever buys a ship or loans The appellant alleges that the lower court committed an error in not allowing
money and takes a chattel mortgage as security, takes the ship subject to such prior Manuel Ayala to collect the amount due the other members of the crew. The lower
liens. In the present case the said mortgage was executed and delivered in court denied the right of Ayala to collect the amount due the other members of the
accordance with the provisions of Act No. 1508 of the Philippine Commission. The crew upon the theory that he was not the real person in interest and was not,
ship was sold by the sheriff of the city of Manila in accordance with the provisions of therefore, permitted to collect the amount under section 114 of the Code of Procedure
section 14 of that Act. Section 14 provides the method of disposing of the funds in Civil Actions. The lower court allowed Ayala to collect the amount that was due
received under such a sale. The method is as f ollows: him, as well as the amount which was due other members of the crew and which had
"The proceeds of such sale shall be applied to the payment, (1) of the cost and been assigned to him. With reference to the amounts which had been assigned to him
expenses of keeping and sale; (2) to the payment of the demand or obligation secured he was the real party in interest and, if he was entitled to recover at all he was
by such mortgage; (3) the residue shall be paid to persons holding subsequent entitled to recover not only what was due him but what had been assigned, to him.
mortgages in their order; and (4) the balance shall be paid to the mortgagor or person But under no theory could he recover the amount due to the other members of the
holding under him on demand." crew whose claims had not been assigned to him. Said section 114 of the Code of
439 Procedure in Civil Actions expressly provides that every action must be prosecuted in
VOL. 13, APRIL 1, 1909 439 the name of the real party in interest. This section of the code recognizes the
assignments of rights of action and also recognizes that when one has a right of
McMicking vs. Banco Español-Filipino.
action assigned to him he is then the real party in interest and may maintain an
It will be seen that there is no provision in the law for using the f unds received in action upon such claim or right. The purpose of section 114 is to require the plaintiff
the sale of mortgaged property f or the payment of amounts due on prior liens. The to be the real party in interest, or, in other words, he must be the person to whom the
reason is plain why no such provision was made. It is that in no case can such a sale
proceeds of the action shall belong, and to prevent actions by persons who have no
or a sale based upon the second mortgage or lien upon property affect in any way
interest in the result of the same. Of course the said section can not be construed to
prior liens. To illustrate: Suppose that "A" held a mortgage against the ship in prohibit the maintenance of an action by one who is legally authorized to represent
question, executed, delivered and recorded prior to the date of the mortgage executed, the real parties in interest.
delivered, and recorded to and by El Banco Español-Filipino. Certainly the sale of the 441
ship under the mortgage in favor of the second mortgagee could in no way affect the
VOL. 13, APRIL 2, 1909 441
rights which "A" held against the ship and the purchaser under the sale of the
mortgage in favor of El Banco Español-Filipino would take the ship subject to the Pascual vs. Angeles.
claim which "A" held against the same. The lien which Manuel Ayala and the other In view of the fact that the defendant El Banco Español-Filipino did not appeal from
members of his crew held against the said ship were exactly analogous to the claims the judgment of the lower court in which the defendant Manuel Ayala was allowed
of "A" in the above illustration. Therefore the sale of the ship under the mortgage in the sum of P756.66 out of the proceeds of the sale, we make no change in the result of
question in no way divested the lien which the law created in favor of the said the decision in the lower court.
Manuel Ayala and his crew against the ship in question. His remedy is, therefore, not For all of the foregoing reasons, the judgment of the lower court is hereby
against the money which was received under said sale, but against the ship by affirmed, without any special finding as to costs.
foreclosing his lien against the same. It is true that under a sale of personal property Arellano, C. J., Torres, Mapa, and Carson, JJ., concur.
in accordance with section 14 of said Act, the sheriff has a right to pay the costs and Judgment affirmed.
expenses of keeping and sale, but we are not of the opinion that this relates to the
cost of keeping and maintaining the ship prior to the time when the sheriff takes ______________
possession of it for the purpose of selling the same.
The Code of Commerce refers to two methods of sale: one a judicial and the other © Copyright 2019 Central Book Supply, Inc. All rights reserved.
a voluntary sale. Article 580 provides how the funds received from a judicial sale
shall be distributed and for the cancellation of liens held against the ship. But it can
not be contended, even under the provisions of article 582, that by the mere fact that
a ship has been sold under a judicial sale, the rights of prior lien holders, who were
not parties to the procedure under which
440

440 PHILIPPINE REPORTS ANNOTATED


McMicking vs. Banco Español-Filipino.
such sale took place, were f oreclosed. The rights of persons not parties to a
proceeding can not be affected thereby. Article 582 gives a certain time within which
_______________
VOL. 6, NOVEMBER 29, 1962 649
Bicerra vs. Teneza 1This amount, cognizable by the Justice of the Peace Court, has been increased to P5,000 in R.A. 2613,
enacted August 1, 1959.
No. L-16218. November 29, 1962. 651
ANTONIA BICERRA,DOMINGO BICERRA,BERNARDO BICERRA, CAYETANO
VOL. 6, NOVEMBER 29, 1962 651
BICERRA,LINDA BICERRA,PIO BICERRA and EUFRICINA BICERRA, plaintiffs-
appellants, vs. TOMASA TENEZA and BENJAMIN BARBOSA, defendants- People vs. Paulin
appellees. The dismissal of the complaint was proper. A house is classified as immovable
Jurisdiction; Action for recovery of damages arising from demolished house; Nature of property by reason of its adherence to the soil on which it is built (Art. 415, par. 1,
Action.—A house, even if situated or land belonging to a different owner, is classified as Civil Code). This classification holds true regardless of the fact that the house may be
immovable property. However, once it is demolished, its character as an immovable ceases. situated on land belonging to a different owner. But once the house is demolished, as
Hence, an action for recovery of damages in connection with the demolished house, does not in this case, it ceases to exist as such and hence its character as an immovable
involve title to real property, and falls under the jurisdiction of the justice of the peace court or
likewise ceases. It should be noted that the complaint here is for recovery of damages.
the court of first instance, depending on the amount of the demand. Although the plaintiffs ask
that they be declared owners of the dismantled house and/or of the materials, such declaration This is the only positive relief prayed for by appellants. To be sure, they also asked
in no wise constitutes the relief itself which if granted by final judgment could be enforceable by that they be declared owners of the dismantled house and/or of the materials.
execution, but is only incidental to the real cause of action to recover damages. However, such declaration in no wise constitutes the relief itself which if granted by
final judgment could be enforceable by execution, but is only incidental to the real
APPEAL from an order of the Court of First Instance cause of action to recover damages.
The order appealed from is affirmed. The appeal having been admitted in forma
650 pauperis, no costs are adjudged.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador,Concepcion, Reyes,
650 SUPREME COURT REPORTS ANNOTATED
J.B.L., Barrera, Paredes, Dizon and Regala, JJ., concur.
Bicerra vs. Teneza Order affirmed.
of Abra. Note.—Buildings are considered immovable provided they are substantially
The facts are stated in the opinion of the Court. adhered to the land (Article 415, No. 1, Civil Code), whether the building is built on
Agripino Brillantes and Alberto B. Bravo for plaintiffs-appellants. one’s own land or on rented land. It is obvious that the inclusion of the word
Ernesto Parol for defendants-appellees. “building” as a separate and distinct enumeration from the land in Article 415 of the
Civil Code can only mean that a building is by itself an immovable property (Lopez
MAKALINTAL, J.: vs. Oroso, Jr., et al., L-40817-1.8, Feb. 28, 1958; Associated Insurance & Surety Co.,
Inc. v. lya, et al., L-10837-38, May 30, 1958). The nature of a building does not
This case is before us on appeal from the order of the Court of First Instance of Abra depend on the way the parties deal with it (Leung Yee v. Strong Machinery Co., 37
dismissing the complaint filed by appellants, upon motion of defendants-appellees on Phil. 644).
the ground that the action was within the exclusive (original) jurisdiction of the
Justice of the Peace Court of Lagangilang, of the same province. ________________
The complaint alleges in substance that appellants were the owners of the house,
worth P200.00, built on a lot owned by them and situated in the said municipality of © Copyright 2019 Central Book Supply, Inc. All rights reserved.
Lagangilang; that sometime in January 1957 appellees forcibly demolished the
house, claiming to be the owners thereof; that the materials of the house, after it was
dismantled, were placed in the custody of the barrio lieutenant of the place; and that
as a result of appellees’ refusal to restore the house or to deliver the materials to
appellants the latter have suffered actual damages in the amount of P200.00, plus
moral and consequential damages in the amount of P600.00. The relief prayed for is
that “the plaintiffs be declared the owners of the house in question and/or the
materials that resulted in (sic) its dismantling; (and) that the defendants be ordered
to pay the sum of P200.00, plus P600.00 as damages, and the costs.”
The issue posed by the parties in this appeal is whether the action involves title
to real property, as appellants contend, and therefore is cognizable by the Court of
First Instance (Sec. 44, par. [b], R.A. 296, as amended), or whether it pertains to the
jurisdiction of the Justice of the Peace Court, as stated in the order appealed from,
since there is no real property litigated, the house having ceased to exist, and the
amount of the demand does not exceed P2,000.00 (Sec. 88, id.). 1
3. “(c)Lathe machine with motor, appearing in the attached photograph, marked Annex
VOL. 6, SEPTEMBER 29, 1962 197
‘C’;
Mindanao Bus Co. vs. City Assessor and Treasurer 4. “(d)Black and Decker Grinder, appearing in the attached photograph, marked Annex
‘D’;
No. L-17870. September 29, 1962. 5. “(e)PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex
MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR &TREASURER ‘E’;
and the BOARD OF TAX APPEALS of Cagayan de Oro City, respondents. 6. “(f)Battery charger (Tungar charge machine) appearing in the attached photograph,
Property; Immovable Property by Destination; Two requisites before movables may be marked Annex ‘F’; and
deemed to have immobilized; Tools and equipments merely incidental to business not subject to 7. “(g)D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked
real estate tax.—Movable equipments, to be immobilized in contemplation of Article 415 of the Annex ‘G’.
Civil Code, must be the essential and principal elements of an industry or works which are
carried on in a building or on a piece of land. Thus, where the business is one of transportation,
1. “4.That these machineries are sitting on cement or wooden platforms as may be seen
which is carried on without a repair or service shop, and its rolling equipment is repaired or
in the attached photographs which form part of this agreed stipulation of facts;
serviced in a shop belonging to another, the tools and equipments in its repair shop which
2. “5.That petitioner is the owner of the land where it maintains and operates a garage
appear movable are merely incidentals and may not be considered immovables, and, hence, not
for its TPU motor trucks; a repair shop; blacksmith and carpentry shops, and with
subject to assessment as real estate for purposes of the real estate tax.
these machineries which are placed therein, its TPU trucks are made; body
constructed; and same are repaired in a condition to be serviceable in the TPU land
PETITION for review of a decision of the Court of the Appeals. transportation business it operates;

The facts are stated in the opinion of the Court. 199


Binamira, Barria & Irabagon for petitioner.
VOL. 6, SEPTEMBER 29, 1962 199
Vicente E. Sabellina for respondents.
Mindanao Bus Co. vs. City Assessor and Treasurer
LABRADOR, J.: “6. That these machineries have never been or were never used as industrial equipments to
produce finished products for sale, nor to repair machineries, parts and the like offered to the
general public indiscriminately for business or commercial purposes for which petitioner has
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. never engaged in, to date.”
Case No. 710 holding that the petitioner Mindanao Bus Company is liable to the The Court of Tax Appeals having sustained the respondent city assessor’s ruling, and
payment of the realty tax on its maintenance and repair equipment hereunder having denied a motion for reconsideration, petitioner brought the case to this Court
referred to. assigning the following errors:
198

198 SUPREME COURT REPORTS ANNOTATED


1. “1.The Honorable Court of Tax Appeals erred in upholding respondents’
Mindanao Bus Co. vs. City Assessor and Treasurer contention that the questioned assessments are valid; and that said tools,
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner’s equipments or machineries are immovable taxable real properties.
above-mentioned equipment. Petitioner appealed the assessment to the respondent 2. “2.The Tax Court erred in its interpretation of paragraph 5 of Article 415 of
Board of Tax Appeals on the ground that the same are not realty. The Board of Tax the New Civil Code, and holding that pursuant thereto, the movable
Appeals of the City sustained the city assessor, so petitioner herein filed with the equipments are taxable realties, by reason of their being intended or
Court of Tax Appeals a petition for the review of the assessment. destined for use in an industry.
In the Court of Tax Appeals the parties submitted the following stipulation of 3. “3.The Court of Tax Appeals erred in denying petitioner’s contention that the
facts: respondent City Assessor’s power to assess and levy real estate taxes on
“Petitioner and respondents, thru their respective counsels agreed to the following stipulation of machineries is further restricted by section 31, paragraph (c) of Republic
facts: Act No. 521; and
4. “4.The Tax Court erred in denying petitioner’s motion for reconsideration.”
1. “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,
Respondents contend that said equipments, tho movable, are immobilized by
collecting rates approved by the Public Service Commission;
2. “2.That petitioner has its main office and shop at Cagayan de Oro City. It maintains
destination, in accordance with paragraph 5 of Article 415 of the New Civil Code
Branch Offices and/or stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; which provides:
Davao City and Kibawe, Bukidnon Province; “Art. 415.—The following are immovable properties:
3. “3.That the machineries sought to be assessed by the respondent as real properties are x x x x
the following: “(5) Machinery, receptacles, instruments or 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.” (Italics ours.)
1. “(a)Hobart Electric Welder Machine, appearing in the attached photograph, marked Note that the stipulation expressly states that the equipment are placed on wooden
Annex ‘A’;
or cement platforms. They can be moved around and about in petitioner’s repair
2. “(b)Storm Boring Machine, appearing in the attached photograph, marked Annex ‘B’;
shop. In the case of B. H. Berkenkotter vs. Cu Unjieng, 61 Phil. 663, the Supreme and which tend directly to meet the needs of the said industry or works;” (Civil Code of the
Court said: Phil.)
“Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property Aside from the element of essentiality the above-quoted provision also requires that
to ‘machinery, liquid the industry or works be carried on in a building or on a piece of land. Thus in the
200 case of Berkenkotter vs. Cu Unjieng, supra, the “machinery, liquid containers, and
200 SUPREME COURT REPORTS ANNOTATED instruments or implements” are found in a building constructed on the land. A
sawmill would also be installed in a building on land more or less permanently, and
Mindanao Bus Co. vs. City Assessor and Treasurer
the sawing is conducted in the land or building.
containers, instruments or implements intended by the owner of any building or land for use in
connection with any industry or trade being carried on therein and which are expressly adapted
But in the case at bar the equipments in question are destined only to repair or
to meet the requirements of such trade or industry. service the transportation business, which is not carried on in a building or
If the installation of the machinery and equipment in question in the central of the permanently on a piece of land, as demanded by the law. Said equipments may not,
Mabalacat Sugar Co., Inc., in lieu of the other of less capacity existing therein, for its sugar therefore, be deemed real property.
industry, converted them into real property by reason of their purpose, it cannot be said that Resuming what we have set forth above, we hold that the equipments in question
their incorporation therewith was not permanent in character because, as essential and are not absolutely essential to the petitioner’s transportation business, and
principal elements of a sugar central, without them, the sugar central would be unable to petitioner’s business is not carried on in a building, tenement or on a specified land,
function or carry on the industrial purpose for which it was established. Inasmuch as the central
so said equipment may not be considered real estate within the meaning of Article
is permanent in character, the necessary machinery and equipment installed for carrying on the
sugar industry for which it has been established must necessarily be permanent.” (Italics ours.)
415(c) of the Civil Code.
202
So that movable equipments to be immobilized in contemplation of the law must first
be “essential and principal elements” of an industry or works without which such 202 SUPREME COURT REPORTS ANNOTATED
industry or works would be “unable to function or carry on the industrial purpose for People vs. Repato
which it was established.” We may here distinguish, therefore, those movables which WHEREFORE, the decision subject of the petition for review is hereby set aside and
become immobilized by destination because they are essential and principal the equipment in question declared not subject to assessment as real estate for the
elements in the industry from those which may not be so considered immobilized purposes of the real estate tax. Without costs. So ordered.
because they are merely incidental, not essential and principal. Thus, cash registers, Bengzon, C.J., Padilla, Bautista Angelo, Reyes,
typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are J.B.L., Paredes, Dizon and Makalintal, JJ., concur.
merely incidentals and are not and should not be considered immobilized by Concepcion and Barrera, JJ., took no part.
destination, for these businesses can continue or carry on their functions without Regala, J., did not take part.
these equipments. Airline companies use forklifts, jeep-wagons, pressure pumps, Decision set aside.
IBM machines, etc. which are incidentals, not essentials, and thus retain their
movable nature. On the other hand, machineries of breweries used in the ______________
manufacture of liquor and soft drinks, though movable in nature, are immobilized
because they are essential to said industries; but the delivery trucks and adding © Copyright 2019 Central Book Supply, Inc. All rights reserved.
machines which they usually own and use and are found within their industrial
compounds are merely incidentals and retain their movable nature.
Similarly, the tools and equipments in question in this instant case are, by their
nature, not essential and prin-
201
VOL. 6, SEPTEMBER 29, 1962 201
Mindanao Bus Co. vs. City Assessor and Treasurer
cipal elements of petitioner’s business of transporting passengers and cargoes by
motor trucks. They are merely incidentals—acquired as movables and used only for
expediency to facilitate and/or improve its service. Even without such tools and
equipments, its business may be carried on, as petitioner has carried on, without
such equipments, before the war. The transportation business could be carried on
without the repair or service shop if its rolling equipment is repaired or serviced in
another shop belonging to another.
The law that governs the determination of the question at issue is as follows:
“Art. 415. The following are immovable property:
x x x x
“(5) Machinery, receptacles, instruments or 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,
[No. 18700. September 26, 1922] sufficient; and (b) that the amount due the appellant is a purchase price, citing
INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, article 1922 of the
935
appellee, vs. ILDEFONSO RAMIREZ, creditor and appellant. WILLIAM EDMONDS,
assignee. VOL. 44, SEPTEMBER 26, 1922 935
Involuntary Insolvency of Strochecker vs. Ramirez
1. 1.CHATTEL MORTGAGE; INTEREST IN A BUSINESS.—An interest in a business Civil Code in support thereof, and that his mortgage is but a modification of the
may be the subject of mortgage, for it is a personal property, being capable of security given by the debtor on February 15, 1919, that is, prior to the mortgage
appropriation, and not included among the real properties enumerated in article 335 executed in favor of the Fidelity & Surety Co.
of the Civil Code.
As to the first ground, the thing that was mortgaged to this corporation is
described in the document as follows:
1. 2.ID.; ID.; DESCRIPTION; SUFFICIENCY OF.—Where the description of the chattel " * * * his half interest in the drug business known as Antigua Botica
mortgaged is such as to enable the .parties to the mortgage or any other person to Ramirez (owned by Srta. Dolores del Rosario and the mortgagor herein referred to as
identify the same after a reasonable investigation or inquiry, the description is
the partnership), located at Calle Real Nos. 123 and 125, District of Intramuros,
sufficient. Thus, if the thing is described as the half interest of the debtor in the drug
business known as Antigua Botica Ramirez (owned by a certain person therein Manila, Philippine Islands."
named and the mortgagor) located at Nos. 123 and 125, Calle Real, District of With regard to the nature of the property thus mortgaged, which is one-half
Intramuros, Manila, P. I., the description meets the requirements of the law. interest in the business above described, such interest is a personal property capable
of appropriation and not included in the enumeration of real properties in article 335
1. 3.ID.; PREFERENCE; PURCHASE PRICE; POSSESSION.—The vendor of a chattel, of the Civil Code, and may be the subject of mortgage. All personal property may be
who is a creditor for the purchase price, has no preference over a creditor holding a mortgaged. (Sec. 2, Act No. 1508.)
mortgage on that chattel where the vendor is not in possession of the thing The description contained in the document is sufficient. The law (sec. 7, Act No.
mortgaged. 1508) requires only a description of the following nature:
"The description of the mortgaged property shall be such as to enable the parties
934 to the mortgage, or any other person, after reasonable inquiry and investigation, to
identify the same."
1. 4.ID.; ID.; RETROACTIVITY; PERSONAL SECURITY.—A junior mortgage can have Turning to the second error assigned, numbers 1, 2, and 3 of article 1922 of the
no preference over a senior mortgage by the mere fact that prior to said junior Civil Code invoked by the appellant are not applicable. Neither he, as debtor, nor the
mortgage a personal security had been stipulated between the junior mortgagee and debtor himself, is in possession of the property mortgaged, which is, and since the
the debtor, because the second mortgage cannot be given effect as of the date the registration of the mortgage has been, legally in possession of the Fidelity & Surety
personal security was stipulated. Co. (Sec. 4, Act No. 1508; Meyers vs. Thein, 15 Phil., 303.)
In no way can the mortgage executed in favor of the appellant on September 22,
APPEAL from a judgment of the Court of First Instance of Manila. Concepcion, J. 1919, be given effect as of February 15, 1919, the date of the sale of the drug store in
The facts are stated in the opinion of the court. question. On the 15th of February of that year, there was
Lim & Lim f or -appellant. 936
Ross & Lawrence and Antonio T. Carrascoso, jr., for the Fidelity & Surety Co. 936 PHILIPPINE REPORTS ANNOTATED
Involuntary Insolvency of Strochecker vs. Ramirez
ROMUALDEZ, J.:
a stipulation about a personal security, but not a mortgage upon any property, and
much less upon the property in question.
The question at issue in this appeal is, which of the two mortgages here in question Moreover, the appellant cannot deny the preferential character of the mortgage
must be given preference? Is it the one in favor of the Fidelity & Surety Co., or that in favor of the Fidelity & Surety Co. because in the very document executed in his
in favor of Ildefonso Ramirez. The first was declared by the trial court to be entitled favor it was stated that his mortgage was a second mortgage, subordinate to the one
to preference. made in favor of the Fidelity &Surety Co.
In the lower court there were three mortgagees each of whom claimed pref The judgment appealed from is affirmed with costs against the appellant. So
erence. They were the two above mentioned and Concepcion Ayala. The latter's claim ordered.
was rejected by the trial court, and from that ruling she did not appeal. Araullo, C. J., Street, Malcolm, Avanceña, Villamor, Ostrand, and Johns,
There is no question as to the priority in time of the mortgage in favor of the JJ., concur.
Fidelity & Surety Co. which was executed on March 10, 1919, and registered in due Judgment affirmed.
time in the registry of property, that in favor of the appellant being dated September 937
22, 1919, and registered also in the registry. © Copyright 2019 Central Book Supply, Inc. All rights reserved.
The appellant claims preference on these grounds: (a)That the first mortgage
above-mentioned is not valid because the property which is the subject-matter
thereof is not capable of being mortgaged, and the description of said property is not
[No. 26278. August 4, 1927] value of palay harvested by him in the two parcels above-mentioned, with interest
LEON SIBAL 1.°, plaintiff and appellant, vs. EMILIANO J. VALDEZ ET AL., and costs.
defendants. EMILIANO J. VALDEZ, appellee. On December 27, 1924, the court, after hearing both parties and upon approval of
ATTACHMENT; GROWING CROPS, REAL OR PERSONAL PROPERTY.— the bond for P6,000 filed by the plaintiff, issued the writ of preliminary injunction
Held: Under the facts of the record, notwithstanding the provisions of paragraph 2 of article prayed for in the complaint.
334 of the Civil Code, that growing sugar cane is considered personal property and not real The defendant Emiliano J. Valdez, in his amended answer, denied generally and
property and is subject to attachment and sale. Act No. 1508, the Chattel Mortgage Law, specifically each and every allegation of the complaint and set up the f ollowing def
provides that all personal property shall be subject to mortgage. At common law all annual enses:
crops which are raised by yearly manurance and labor and essentially owe their existence to
cultivation may be levied on as personal property. Paragraph 2 of article 334 of the Civil
Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508 in 1. (a)That the sugar cane in question had the nature of personal property and
the sense that, for the purpose of attachment and execution and for the purposes of the was not, therefore, subject to redemption;
Chattel Mortgage Law, "ungathered products" have the nature of personal property. 2. (b)That he was the owner of parcels 1, 2 and 7 described in the first cause of
APPEAL from a judgment of the Court of First Instance of Tarlac. Lukban, J. action of the complaint;
The facts are stated in the opinion of the court. 3. (c)That he was the owner of the palay in parcels 1, 2 and 7; and
J. E. Blanco for appellant. 4. (d)That he never attempted to harvest the palay in par-cels 4 and 5.
Felix B. Bautista and Santos & Benitez for appellee.
513
The defendant Emiliano J. Valdez, by way of counterclaim, alleged that by reason of
VOL. 50, AUGUST 4, 1927 513 the preliminary injunction he was unable to gather the sugar cane, sugar-cane
Sibal 1.° vs. Valdez shoots (puntas de caña dulce) and palay in said parcels of land, representing a loss to
JOHNSON, J.: him of P8,375.20 and that, in addition thereto, he suffered damages amounting to
This action was commenced in the Court of First Instance of the Province of P3,458.56. He prayed for a judgment (1) absolving him from all liability under the
Tarlac on the 14th day of December, 1924. The facts are about as conflicting as it is complaint; (2) declaring him to be the absolute owner of the sugar cane in question
possible for facts to be, in the trial of causes. and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the
As a first cause of action the plaintiff alleged that the defendant Vitaliano sum of P11,833.76, representing the value of the sugar cane and palay in question,
Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution including damages.
issued by the Court of First Instance of Pampanga, attached and sold to the Upon the issue thus presented by the pleadings the cause was brought on for
defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants trial. After hearing the evidence, and
515
on seven parcels of land described in the complaint, in the third paragraph of the first
cause of action; that within one year from the date of the attachment and sale the VOL. 50, AUGUST 4, 1927 515
plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the Sibal 1.° vs: Valdez
amount sufficient to cover the price paid by the latter, the interest thereon and any on April 28, 1926, the Honorable Cayetano Lukban, judge, rendered a judgment
assessments or taxes which he may have paid thereon after the purchase, and the against the plaintiff and in favor of the defendants—
interest corresponding thereto and that Valdez refused to accept the money and to
return the sugar cane to the plaintiff.
As a second cause of action, the plaintiff alleged that the defendant Emiliano J. 1. (1)Holding that the sugar cane in question was personal property and, as
Valdez was attempting to harvest the palay planted in four of the seven parcels such, was not subject to redemption;
mentioned in the first cause of action; that he had harvested and taken possession of 2. (2)Absolving the defendants from all liability under the complaint; and
the palay in one of said seven parcels and in another parcel described in the second 3. (3)Condemning the plaintiff and his sureties Cenon de la Cruz, Juan
cause of action, amounting to 300 cavans; and that all of said palay belonged to the Sangalang and Marcos Sibal to jointly and severally pay to the defendant
plaintiff. Emiliano J. Valdez the sum of P9,439.08 as follows:
Plaintiff prayed that a writ of preliminary injunction be issued against the
defendant Emiliano J. Valdez, his attorneys and agents, restraining them (1) from (a) P6,757.40, the value of the sugar cane;
disturbing him in the possession of the parcels of land described in the complaint; (2)
(b) 1,435.68, the value of the sugar-cane shoots;
from taking possession of, or harvesting the sugar cane in question; and (3) from
taking possession, or harvesting the palay in said parcels of land. Plaintiff (c) 646.00, the value of palay harvested by plaintiff;
514
(d) 600.00, the value of 150 cavans of palay which the defendant was not able
514 PHILIPPINE REPORTS ANNOTATED
9,439.08 to raise by reason of the injunction, at P4 cavan.
Sibal 1.° vs. Valdez From that judgment the plaintiff appealed and in his assignments of error contends
also prayed that a judgment be rendered in his favor and against the defendants, that the lower court erred:
ordering them to consent to the redemption of the sugar cane in question, and that
the defendant Valdez be condemned to pay to the plaintiff the sum of P1,056, the
1. (1)In holding that the sugar cane in question was per-sonal property and, The record further shows:
therefore, not subject to redemption;
2. (2)In holding that parcels 1 and 2 of the complaint belonged to Valdez, as 1. (1)That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff
well as parcels 7 and 8, and that the palay therein was planted by Valdez; of the Province of Tarlac, by virtue of a writ of execution in civil case No.
3. (3)In holding that Valdez, by reason of the preliminary injunction failed to 1301 of the Province
realize P6,757.40 from the sugar cane and P1,435.68 from sugar-cane
shoots (puntas de caña, dulce); 517
4. (4)In holding that, for failure of plaintiff to gather the sugar cane on time,
the defendant was unable to raise palay on the land, which would have VOL. 50, AUGUST 4, 1927 517
netted .him the sum of P600; and Sibal 1.° vs. Valdez
5. (5)In condemning the plaintiff and his sureties to pay to the defendant the
sum of P9,439.08.
1. of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1.º—the same parties in the
present case), attached the personal property of said Leon Sibal located in
516
Tarlac, among which was included the sugar cane now in question in the
516 PHILIPPINE REPORTS ANNOTATED seven parcels of land described in the complaint (Exhibit A).
Sibal 1.° vs. Valdez 2. (2)That on May 9 and 10, 1924, said deputy sheriff sold at public auction
It appears from the record: said personal properties of Leon Sibal, including the sugar cane in
question, to Emiliano J. Valdez, who paid therefor the sum of P1,550, of
which P600 was for the sugar cane (Exhibit A).
1. (1)That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by 3. (3)That on April .29, 1924, said deputy sheriff, by virtue of said writ of
virtue of a writ of execution in civil case No. 20203 of the Court of First execution, also attached the real property of said Leon Sibal in Tarlac,
Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal), levied an including all of his rights, interest and participation therein, which real
attachment on eight parcels of land belonging to said Leon Sibal, situated property consisted of eleven parcels of land and a house and camarin
in the Province of Tarlac, designated in the record of attachment as parcels situated in one of said parcels (Exhibit A).
1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A). 4. (4)That on June 25, 1924, eight of said eleven parcels, including the house
2. (2)That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of and the camarín, were bought by Emiliano J. Valdez at the auction held by
land, at the auction held by the sheriff of the Province of Tarlac, for the the sheriff for the sum of P12,200. Said eight parcels were designated in
sum of P4,273.93, having paid for the said parcels separately as follows the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and
(Exhibits C and 2-A): camarin were situated on parcel 7 (Exhibit A).
5. (5)That the remaining.three parcels, indicated in the certificate of the sheriff
Parcel 1 ................................................................................................ P1.00 as parcels 2, 12 and 13, were released from the attachment by virtue of
claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A).
2 ............................................................................................................ 2,000.00 6. (6)That on the same date, June 25, 1924, Macondray & Co. sold and
3 ............................................................................................................ 120.93 conveyed to Emiliano J. Valdez for P2,579.97 all of its rights and interest
4 ............................................................................................................ 1,000.00 in the eight parcels of land acquired by it at public auction held by the
deputy sheriff of Tarlac in connection with civil case No. 20203 of the Court
5 ............................................................................................................ 1.00 of First Instance of Manila, as stated above. Said amount represented the
6 ............................................................................................................ 1.00 unpaid balance of the redemption price of said eight parcels, after payment
7 with the house thereon........................................................................ 150.00 by Leon Sibal of P2,000 on September 24, 1923, for the account of the
redemption price, as stated above. (Exhibits C and 2.)
8 ............................................................................................................ 1,000.00
4,273.93
518
518 PHILIPPINE REPORTS ANNOTATED
1. (3)That within one year from the sale of said parcels of land, and on the 24th
Sibal 1.° vs. Valdez
day of September, 1923, the judgment debtor, Leon Sibal, paid ?2,000, to
Macondray & Co., Inc., for the account of the redemption price of said The foregoing statement of facts shows:
parcels of land, without specifying the particular parcels to which said
amount was to be applied. The redemption price of said eight parcels was 1. (1)That Emiliano J. Valdez bought the sugar cane in question, located in the
reduced, by virtue of said transaction, to P2,579.97, including interest seven parcels of land described in the first cause of action of the complaint
(Exhibits C and 2). at public auction on May 9 and 10, 1924, for P600.
2. (2)That on July 30, 1923, Macondray & Co. became the owner of eight From the foregoing it appears (1) that, under Spanish authorities, pending fruits
parcels of land situated in the Province of Tarlac belonging to Leon Sibal and ungathered products may be sold and transferred as personal property; (2) that
and that on September 24, 1923, Leon Sibal paid to Macondray & Co. the Supreme Court of Spain, in a case of ejectment of a lessee
P2000 for the account of the redemption price of said parcels. 520
3. (3)That on June 25, 1924, Emiliano J. Valdez acquired from Macondray & 520 PHILIPPINE REPORTS ANNOTATED
Co. all of its rights and interest in the said eight parcels of land.
Sibal 1.° vs. Valdez
4. (4)That on the same date (June 25, 1924) Emiliano J. Valdez also acquired
all of the rights and interest which Leon Sibal had or might have had on of an agricultural land, held that the lessee was entitled to gather the products
said eight parcels by virtue of the P2,000 paid by the latter to Macondray. corresponding to the agricultural year, because said fruits did not go with the land
5. (5)That Emiliano J. Valdez became the absolute owner of said eight parcels but belonged separately to the lessee; and (3) that under the Spanish Mortgage Law
of land. of 1909, as amended, the mortgage of a piece of land does not include the fruits and
products existing thereon, unless the contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give us
The first question raised by the appeal is, whether the sugar cane in question is some light on the question which we are discussing. Article 465 of the Civil Code of
personal or real property. It is contended that sugar cane comes under the Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code,
classification of real property as "ungathered products" in paragraph 2 of article 334 provides: "Standing crops and the fruits of trees not gathered, and trees before they
of the Civil Code. Said paragraph 2 of article 334 enumerates as real property the are cut down, are likewise immovable, and are considered as part of the land to
following: "Trees, plants, and ungathered products, while they are annexed to the which they are attached."
land or form an integral part of any immovable property." That article, however, has The Supreme Court of Louisiana having occasion to interpret that provision, held
received in recent years an interpretation by the Tribunal Supremo de that in some cases "standing crops" may be considered and dealt with as personal
España, which holds that, under certain conditions, growing crops may be considered property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the
as personal property. (Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Supreme Court said: "True, by article 465 of the Civil Code it is provided that
Spain.) 'standing crops and the fruits of trees not gathered and trees before they are cut
Manresa, the eminent commentator of the Spanish Civil Code, in discussing down * * * are considered as part of the land to which they are attached/ but the
section 334 of the Civil Code, in view of the recent decisions of the Supreme Court of immovability provided for is only one in abstracto and without reference to rights on
Spain, ad- or to the crop acquired by others than the owners of the property to which the crop is
519
attached. * * * The existence 'of a right on the growing crop is a mobilization by
VOL. 50, AUGUST 4, 1927 519 anticipation, a gathering as it were in advance, rendering the crop movable quoad
Sibal 1? vs. Valdez the right acquired therein. Our jurisprudence recognizes the possible mobilization of
mits that growing crops are sometimes considered and treated as personal property. the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28
He says: La. Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann.,
"No creemos, sin embargo, que esto excluya la excepción que muchos autores 267.)
hacen tocante a la venta de toda cosecha o de parte de ella cuando aún no está cogida "It is true," as the Supreme Court of Louisiana said in the case
(cosa frecuente con la uva y la naranja), y a la de leñas, considerando ambas of Porche vs. Bodin (28 La. An., 761) that "article 465 of the Revised Code says that
como muebles. El Tribunal Supremo, en sentencia de 18 de marzo de 1904, al standing crops are con-
521
entender sobre un contrato de arrendamiento de un predio rústico, resuelve que su
terminación por desahucio no extingue los derechos del arrendatario, para recolectar VOL. 50, AUGUST 4, 1927 521
o percibir los frutos correspondientes al año agrícola, dentro del que nacieron aquellos Sibal 1.° vs. Valdez
derechos, cuando el arrendador ha percibido a su vez el importe de la renta íntegra sidered .as immovable and as part of the land to which they are attached, and article
correspondiente, aun cuando lo haya sido por precepto legal durante el curso del 466 declares that the fruits of an immovable gathered or produced while it is under
juicio, fundándose para ello, no solo en que de otra suerte se daría al desahucio un seizure are considered as making part thereof, and inure to the benefit of the person
alcance que no tiene, sino en que, y esto es lo interesante a nuestro propósito, la making the seizure. But the evident meaning of these articles is, where the crops
consideración de inmuebles que el artículo 334 del Códiga Civil atribuye a los frutos belong to the owner of the plantation, they form part of the immovable, and where it
pendientes, no les priva, del carácter de productos pertenecientes, como tales, a quienes is seized, the fruits gathered or produced inure to the benefit of the seizing creditor.
a, ellos tenga, derecho, llegado el momento de su recolección. "A crop raised on leased premises in no sense forms part of the immovable. It
* * * * * * * belongs to the lessee, .and may be sold by him, whether it be gathered or not, and it
"Mas actualmente y por virtud de la nueva edición de la Ley Hipotecaria, may be sold by his judgment creditors. If it necessarily forms part of the leased
publicada en 16 de diciembre de 1909, con las reformas introducidas por la de 21 de premises the result would be that it could not be sold under execution separate and
abril anterior, la hipoteca, salvo pacto expreso que disponga lo contrario, y cualquiera apart from the land. If a lessee obtain supplies to make his crop, the factor's lien
que sea la naturaleza y forma de la obligación que garantice, no comprende los would not attach to the crop as a separate thing belonging to his debtor, but the land
frutos cualquiera que sea la situación en que se encuentre." (3 Manresa, 5.a edición, belonging to the lessor would be affected with the recorded -privilege. The law cannot
págs. 22, 23.) be construed so as to result in such absurd consequences."
In the case of Citizens' Bank vs. Wiltz (31 La. Ann., 244) the court said: It is contended on the part of the appellee that paragraph 2 of article 334 of the
"If the crop quoad the pledge thereof under the act of 1874 was an immovable, it Civil Code has been modified by section 450 of the Code of Civil Procedure as well as
would be destructive of the very objects of the act, it would render the pledge of the by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the
crop impossible, for if the crop was an inseparable part of the realty possession of the property of a judgment debtor which may be subjected to execution. The pertinent
latter would be necessary to that of the former; but such is not the case. True, by portion of said section reads as follows: "All goods, chattels, moneys, and other
article 465 C. C. it is provided that 'standing crops and the fruits of trees not property, both- real and personal, * * * shall be liable to execution." Said section 450
gathered and trees before they are cut down are likewise immovable and are and most of the other sections of the Code of Civil Procedure relating to the execution
considered as part of the land to which they are attached;' but the immovability of judgments were taken from the Code of Civil Procedure of California. The Supreme
provided for is only one in abstracto and without reference to rights on or to the crop Court of California, under section 688 of the Code of Civil Procedure of that state
acquired by other than the owners of the property to which the crop was attached. (Pomeroy, p. 424) has held, without variation, that growing crops were personal
The immovability of a growing crop is in the order of things property and subject to execution.
522 Act No. 1508, the Chattel Mortgage Law, fully recognizes that growing crops are
522 PHILIPPINE REPORTS ANNOTATED personal property. Section 2 of said Act provides: "All personal property shall be
subject to mortgage, agreeably to the provisions of this Act, and a mortgage executed
Sibal 1.° vs. Valdez
in pursuance thereof shall be termed a chattel mortgage." Section 7 in part provides:
temporary, for the crop passes from the state of a growing to that of a gathered one, "If growing crops be mortgaged the mortgage may contain an agreement stipulating
from an immovable to a movable. The existence of a right on the growing crop is a
that the mortgagor binds himself properly to tend, care for and protect the crop while
mobilization by anticipation, a gathering as it were in advance, rendering the crop growing '* * *."
movable quoad the right acquired thereon. The provision of our Code is identical with It is clear from the foregoing provisions that Act No. 1508 was enacted on the
the Napoleon Code, 520, and we may therefore obtain light by an examination of the assumption that "growing crops" are personal property. This consideration tends to
jurisprudence of France." support
The rule above announced, not only by the Tribunal Supremo de España but by 524
the Supreme Court of Louisiana, is followed in practically every state of the Union.
524 PHILIPPINE REPORTS ANNOTATED
From an examination of the reports and codes of the State of California and other
states we find that the settled doctrine followed in said states in connection with the Sibal 1.° vs. Valdez
attachment of property and execution of judgment is, that growing crops raised by the conclusion hereinbefore stated, that paragraph 2 of article 334 of the Civil Code
yearly labor and cultivation are considered personal property. (6 Corpus Juris, p. 197; has been modified by section 450 of Act No. 190 and by Act No. 1508 in the sense that
17 Corpus Juris, p. 879; 23 Corpus Juris, p. 329; Raventas vs.Green, 57 Cal., "ungathered products" as mentioned in said article of the Civil Code have the nature
254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 of personal property. In other words, the phrase "personal property" should be
Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs.Tifts and understood to include "ungathered products."
Co., 65 Ga., 644'; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; "At common law, and generally in the United States, all annual crops which are
Freeman on Execution, vol. 1, p. 438; Drake on Attachment,, sec. 249; Mechem on raised by yearly manurance and labor, and essentially owe their annual existence to
Sales, secs. 200 and 763.) cultivation by man, * * * may be levied on as personal property." (23 C. J., p. 329.) On
Mr. Mechem says that a valid sale may be made of a thing, which though not yet this question Freeman, in his treatise on the Law of Executions, says: "Crops,
actually in existence, is reasonably certain to come into existence as the natural whether growing or standing in the field ready to be harvested, are, when produced
increment or usual incident of something already in existence, and then belonging to by annual cultivation, no part of the realty. They are, therefore, liable to voluntary
the vendor, and the title will vest in the buyer the moment the thing comes into transfer as chattels. It is equally well settled that they may be seized and sold under
existence. (Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers execution." (Freeman on Executions, vol. 1, p. 438.)
Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a potential We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has
existence. A man may sell property of which he is potentially and not actually been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in
possessed. He may make a valid sale of the wine that a vineyard is expected to the sense that, for the purposes of attachment and execution, and for the purposes of
produce; or the grain a field may grow in a the Chattel Mortgage Law, "ungathered products" have the nature of personal
523 property. The lower court, therefore, committed no error in holding that the sugar
VOL. 50, AUGUST 4, 1927 523 cane in question was personal property and, as such, was not subject to redemption.
All the other assignments of error made by the appellant, as above stated, relate
Sibal 1.° vs. Valdez
to questions of fact only. Before entering upon a discussion of said assignments of
given time; or the milk a cow may yield during the coming year; or the wool that shall error, we deem it opportune to take special notice of the failure of the plaintiff to
thereafter grow upon sheep; or what may be taken at the next cast of a fisherman's appear at the trial during the presentation of evidence by the defendant. His absence
net; or fruits to grow; or young animals not yet in existence; or the good will of a from the trial and his failure to cross-examine the defendant have lent considerable
trade and the like. The thing sold, however, must be specific and identified. They weight to the evidence then presented for the defense.
must be also owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. 525
Rep., 165].)
VOL. 50, AUGUST 4, 1927 525
Sibal 1.° vs. Valdez It appears, however, that the plaintiff planted the palay in said parcels and
Coming now to the ownership of parcels 1 and 2 described in the first cause of action harvested therefrom 190 cavans. There being no evidence of bad faith on his part, he
of the complaint, the plaintiff made a futile attempt to show that said two parcels is therefore entitled to one-half of the crop, or 95 cavans. He should therefore be
belonged to Agustin Cuyugan and were the identical parcel 2 which was excluded condemned to pay to the defendant for 95 cavans only, at P3.40 a cavan, or the sum
from the attachment and sale of real property of Sibal to Valdez on June 25, 1924, as of P323, and not for the total of 190 cavans as held by the lower court.
stated above. A comparison of the description of parcel 2 in the certificate of sale by As to the ownership of parcel 7 of the complaint, the evidence shows that said
the sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will parcel corresponds to parcel 1 of the deed of sale of Macondray & Co. to Valdez
readily show that they are not the same. (Exhibits B and 2), and to parcel 4 in the certificate of sale to Valdez of real property
The description of the parcels in the complaint is as follows: belonging to Sibal, executed by the sheriff as above stated (Exhibit A). Valdez is
therefore the absolute owner of said parcel, having acquired the interest of both
Macondray and Sibal in said parcel.
1. "1.La caña dulce sembrada por los inquilinos del ejecutado León Sibal 1.° en 527
una parcela de terreno de la pertenencia del citado ejecutado, situada en
VOL. 50, AUGUST 4, 1927 527
Libutad, Culubasa, Bamban, Tárlac, de unas dos hectáreas poco más o
menos de superficie. Sibal 1.° vs. Valdez
2. "2.La caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1.°, With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of
llamado Alejandro Policarpio, en una parcela de terreno de la pertenencia the second cause of action, it appears from the testimony of the plaintiff himself that
del ejecutado, situada en Dalayap, Culubasa, Bamban, Tárlac de unas dos said parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez
hectáreas de superficie poco más o menos." The description of parcel 2 (Exhibits B and 2) and to parcel 10 in the deed of sale executed by the sheriff in favor
given in the certificate of sale (Exhibit A) is as follows: of Valdez (Exhibit A). Valdez is therefore the absolute owner of said parcel, having
3. "2.aTerreno palayero situado en Culubasa, Bamban, Tár-lac, de 177,090 acquired the interest of both Macondray and Sibal therein.
metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban In this connection the following facts are worthy of mention:
Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mañu and Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were
others; al S. con Alejandro Dayrit, Isidoro Santos and Melecio Mañu; y al attached under said execution. Said parcels of land were sold to Macondray & Co. on
O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, valor the 30th day of July, 1923. Rice paid P4,273.93. On September 24, 1923, Leon Sibal
amillarado P4,200 pesos." paid to Macondray & Co. P2,000 on the redemption of said parcels of
land. (See Exhibits B and C.)
On the other hand the evidence for the defendant purported to show that parcels 1 Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was
and 2 of the complaint were included among the parcels bought by Valdez from attached, including the sugar cane in question. (Exhibit A.) The said personal
Macondray on June 25, 1924, and corresponded to parcel 4 in the deed of sale property so attached, sold at public auction May 9 and 10, 1924. April 29, 1924, the
(Exhibits B and 2), and were also included among the parcels bought by Valdez at the real property of Sibal was attached under the execution in favor of Valdez (Exhibit
auction of the real property of Leon Sibal on June 25, 1924, and corre- A). June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).
526 June 25, 1924, Macondray & Co. sold all of the land which they had purchased at
public auction on the 30th day of July, 1923, to Valdez.
526 PHILIPPINE REPORTS ANNOTATED
As to the loss of the defendant in sugar cane by reason of the injunction, the
Sibal 1.° vs. Valdez evidence shows that the sugar cane in question covered an area of 22 hectares and 60
sponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The ares (Exhibits 8, 8-b and 8-c); that said area would have yielded an average crop of
description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows: 1039 picos and 60 cates; that one-half of that quantity, or 519 picos and 80 cates
"Parcela No. 4.—Terreno palayero, ubicado en el barrio de Culubasa, Bamban, would have corresponded to the defendant, as owner; that during the season the
Tárlac, I. F. de 145,000 metros cuadrados de superficie, lindante al Norte con Road of sugar was selling at P13 a pico (Exhibits 5
the barrio of Culubasa that goes to Concepcion; al Este con Juan Dizon; al Sur con 528
Lucio Maño y Canuto Sibal y al Oeste con Esteban Lazatin, su valor amillarado 528 PHILIPPINE REPORTS ANNOTATED
asciende a la suma de P2,990. Tax No. 2856."
Sibal 1.° vs. Valdez
As will be noticed, there is hardly any relation between parcels 1 and 2 of the
complaint and parcel 4 (Exhibits 2 and B) and parcel 3 (Exhibit A). But, inasmuch as and 5-A). Therefore, the defendant, as owner, would have netted P6,757.40 from the
the plaintiff did not care to appear at the trial when the defendant offered his sugar cane in question. The evidence also shows that the defendant could have taken
evidence, we are inclined to give more weight to the evidence adduced by him than to from the sugar cane 1,017,000 sugar-cane shoots (puntas de caña) and not 1,170,000
the evidence adduced by the plaintiff, with respect to the ownership of parcels 1 and as computed by the lower court. During the season the shoots were selling at P1.20 a
2 of the complaint. We, therefore, conclude that parcels 1 and 2 of the complaint thousand (Exhibits 6 and 7). The defendant therefore would have netted P1,220.40
belong to the defendant, having acquired the same from Macondray & Co. on June from sugar-cane shoots and not P1,435.68 as allowed by the lower court.
25, 1924, and from the plaintiff Leon Sibal on the same date. As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint,
amounting to 190 cavans, one-half of said quantity should belong to the plaintiff, as
stated above, and the other half to the defendant. The court erred in awarding the
whole crop to the defendant. The plaintiff should therefore pay the defendant for 95
cavans only, at P3.40 a cavan, or P323 instead of P646 as allowed by the lower court.
The evidence also shows that the defendant was prevented by the acts of the
plaintiff from cultivating about 10 hectares of the land involved in the litigation. He
expected to have raised about 600 cavans of palay, 300 cavans of which would have
corresponded to him as owner. The lower court has wisely reduced his share to 150
cavans only. At P4 a cavan, the palay would have netted him P600.
In view of the foregoing, the judgment appealed from is hereby modified. The
plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are
hereby ordered to pay to the defendant jointly and severally the sum of P8,900.80,
instead of P9,439.08 allowed by the lower court, as follows:
P6,757.40 for the sugar cane;
1,220.40 for the sugar cane shoots;
323.00 for the palay harvested by plaintiff in parcels 1 and 2;
600.00 for the palay which defendant could have raised.
8,900.80
529

VOL. 50, AUGUST 4, 1927 529


Gov't. of the P. I. and Natividad vs. Chua Cho Pack & Co.
In all other respects, the judgment appealed from is hereby affirmed, with costs. So
ordered.
Street, Malcolm, Villamor, Romualdez, and Villa-Real, JJ., concur.
Judgment modified.

_______________

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[No. 41506. March 25, 1935] perils of the sea, and does not, therefore, confer admiralty jurisdiction.
PHILIPPINE REFINING Co., INC., plaintiff and appellant, vs. FRANCISCO (Bogart vs. Steamboat John Jay [1854], 17 How., 399.)
231
JARQUE, JOSE COROMINAS, and ABOITIZ & Co., defendants. JOSE
COROMINAS, in his capacity as assignee of the estate of the insolvent Francisco VOL. 61, MARCH 25, 1935 231
Jarque, appellee. Philippine Refining Co. vs. Jarque
Coming now to the merits, it appears that on varying dates the Philippine Refining
1. 1.COURTS; JURISDICTION ; ADMIRALTY.—The mere mortgage of a ship does not Co., Inc., and Francisco Jarque executed three mortgages on the motor
confer admiralty jurisdiction. vessels Pandan and Zaragoza. These documents were recorded in the record of
transfers and incumbrances of vessels for the port of Cebu and each was therein
1. 2.SHIPS AND SHIPPING; PROPERTY; CHATTEL MORTGAGES; VESSELS, denominated a "chattel mortgage". Neither of the first two mortgages had appended
NATURE OF.—Vessels are considered personal property under the civil law and the an affidavit of good faith. The third mortgage contained such an affidavit, but this
common law. mortgage was not registered in the customs house until May 17, 1932, or within the
period of thirty days prior to the commencement of insolvency proceedings against
1. 3.ID.; ID.; ID. ; ID.—Vessels are subject to mortgage agreeably to the provisions of the Francisco Jarque; also, while the last mentioned mortgage was subscribed by
Chattel Mortgage Law. Francisco Jarque and M. N. Brink, there was nothing to disclose in what capacity the
said M. N. Brink signed. A fourth mortgage was executed by Francisco Jarque and
230 Ramon Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage
23 PHILIPPINE REPORTS ANNOTATED registry of the register of deeds on May 12, 1932, or again within the thirty-day
period before the institution of insolvency proceedings. These proceedings were begun
0
on June 2, 1932, when a petition was filed with the Court of First Instance of Cebu in
Philippine Refining Co. vs, Jarque which it was prayed that Francisco Jarque be declared an insolvent debtor, which
soon thereafter was granted, with the result that an assignment of all the properties
1. 4.ID.; ID.; ID.; ID.—The only difference between a chattel mortgage of a vessel and a of the insolvent was executed in favor of Jose Corominas.
chattel mortgage of other personalty is that it is not now necessary for a chattel On these f acts, Judge Jose M. Hontiveros declined to order the foreclosure of the
mortgage of a vessel to be noted in the registry of the register of deeds, but it is mortgages, but on the contrary sustained the special defenses of fatal defectiveness of
essential that a record of documents affecting the title to a vessel be entered in the the mortgages, In so doing we believe that the trial judge acted advisedly.
record of the Collector of Customs at the port of entry. Otherwise a mortgage on a Vessels are considered personal property under the civil law. (Code of Commerce,
vessel is generally like other chattel mortgages as to its requisites and validity.
article 585.) Similarly under the common law, vessels are personal property although
occasionally referred to as a peculiar kind of personal property.
1. 5.ID. ; ID. ; ID. ; ID. ; EFFECT OF ABSENCE OF AFFIDAVIT OF GOOD FAITH.— (Reynolds vs. Nielson [1903], 96 Am. Rep., 1000; Atlantic Maritime Co. vs. City of
The Chattel Mortgage Law, in its section 5, in describing what shall be deemed Gloucester [1917], 117
sufficient to constitute a good chattel mortgage, includes the requirement of an 232
affidavit of good faith appended to the mortgage and recorded therewith. The
absence of the affidavit vitiates a mortgage as against creditors and subsequent 232 PHILIPPINE REPORTS ANNOTATED
encumbrancers. As a consequence a chattel mortgage of a vessel wherein the Philippine Refining Co. vs. Jarque
affidavit of good faith required by the Chattel Mortgage Law is lacking, is
unenforceable against third persons.
N. E., 924.) Since the term "personal property" includes vessels, they are subject to
mortgage agreeably to the provisions of the Chattel Mortgage Law. (Act No. 1508,
section 2.) Indeed, it has heretofore been accepted without discussion that a mortgage
APPEAL from a judgment of the Court of First Instance of Cebu. Hontiveros, J. on a vessel is in nature a chattel mortgage. (McMicking vs. Banco Español-
The facts are stated in the opinion of the court. Filipino[1909], 13 Phil., 429; Arroyo vs. Yu de Sane [1930], 54 Phil, 511.) The only
Thos. G. Ingalls, Vicente Pelaez and DeWitt, Perkins & Brady for appellant. difference between a chattel mortgage of a vessel and a chattel mortgage of other
D. G. McVean and Vicente L. Faelnar for appellee. personalty is that it is not now necessary for a chattel mortgage of a vessel to be
noted in the registry of the register of deeds, but it is essential that a record of
MALCOLM, J.; documents affecting the title to a vessel be entered in the record of the Collector of
Customs at the port of entry. (Rubiso and Gelito vs. Rivera [1917], 37 Phil.,
First of all the reason why this case has been decided by the court in banc needs 72; Arroyo vs. Yu de Sane, supra.) Otherwise a mortgage on a vessel is generally like
explanation. A motion was presented by counsel for the appellant in which it was other chattel mortgages as to its requisites and validity. (58 C. J., 92.)
asked that the case be heard and determined by the court sitting in banc because the The Chattel Mortgage Law in its section 5, in describing what shall be deemed
admiralty jurisdiction of the court was involved, and this motion was granted in sufficient to constitute a good chattel mortgage, includes the requirement of an
regular course. affidavit of good faith appended to the mortgage and recorded therewith. The absence
On further investigation it appears that this was error. The mere mortgage of a of the affidavit vitiates a mortgage as against creditors and subsequent
ship is a contract entered into by the parties to it without reference to navigation or encumbrancers. (Giberson vs. A. N. Jureidini Bros. [1922], 44 Phil., 216; Benedicto de
Tarrosa vs. F. M. Yap Tico & Co. and Provincial Sheriff of Occidental
Negros [1923], 46 Phil., 753.) As a consequence a chattel mortgage of a vessel
wherein the affidavit of good faith required by the Chattel Mortgage Law is lacking,
is unenforceable against third persons.
In effect appellant asks us to find that the documents appearing in the record do
not constitute chattel mortgages or at least to gloss over the failure to include the
affidavit of good faith made a requisite for a good chattel mortgage by the Chattel
Mortgage Law. Counsel would f urther have us disregard article 585 of the Code of
Commerce, but no reason is shown for holding this article not in force. Counsel would
further have us revise doctrines heretofore announced in a series of cases, which it is
not desirable to do
233

VOL. 61, MARCH 25, 1935 233


People vs. Aglahi
since those principles were confirmed after due deliberation and constitute a part of
the commercial law of the Philippines. And finally counsel would have us make
rulings on points entirely foreign to the issues of the case. As neither the facts nor the
law remains in doubt, the seven assigned errors will be overruled.
Judgment affirmed, the costs of this instance to be paid by the appellant.
Avanceña, C. J., Street, Villa-Real, Abad
Santos, Hull,Vickers, Imperial, Butte, and Goddard, JJ., concur.
Judgment affirmed.

________________

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[No. 28379. March 27, 1929] A preponderance of the evidence in the record which may properly be taken into
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicant and consideration in deciding the case, proves the following facts:
appellant, vs. CONSORCIA CABAÑGIS ET AL., claimants and appellees. Lots 36, 39 and 40, block 3035 of cadastral proceeding No. 71 of the City of
LAND REGISTRATION ; LAND DISAPPEARING INTO SEA; PUBLIC DOMAIN.— Manila, G. L. R. O. Record No. 373, were formerly a part of a large parcel of land
As the lots in question disappeared by natural erosion due to the ebb and flow of the tide, belonging to the predecessor of the herein claimants and appellees. From the year
and as they remained in that condition until reclaimed from the sea by the filling in done by 1896 said land began to wear away, due to the action of the waves of Manila Bay,
the Government, they belong to the public domain for public use. (Aragon vs. Insular until the year 1901 when the said lots became completely submerged in water in
Government, 19 Phil., 223; Francisco vs. Government of the Philippine Islands, 28 Phil., ordinary tides, and remained in such a state until 1912 when the Government
505.) undertook the dredging of Vitas Estuary in order to facilitate navigation, depositing
113
all the sand and silt taken from the bed of the estuary on the low lands which were
VOL. 53, MARCH 27, 1929 113 completely covered with water, surrounding that belonging to the Philippine
Government of the Philippine Islands vs. Cabangis Manufacturing Company, thereby slowly and gradually forming the lots, the subject
APPEAL from a judgment of the Court of First Instance of Manila. Imperial, J. matter of this proceeding.
The facts are stated in the opinion of the court. Up to the month of February, 1927 nobody had declared lot 39 for the purposes of
Attorney-General Jaranilla, for appellant. taxation, and it was only in the year 1926 that Dr. Pedro Gil, in behalf of the
Abad Santos, Camus & Delgado for appellees. claimants and appellees, declared lot No. 40 for such purpose.
In view of the facts just stated, as proved by a preponderance of the evidence, the
VILLA-REAL, J.: question arises: Who owns lots 86, 39 and 40 in question?
The claimants-appellees contend that inasmuch as the said lots once formed a
part of a large parcel of land belonging to their predecessors, whom they succeeded,
The Government of the Philippine Islands appeals to this court from the judgment of
and their immediate predecessor in interest, Tomas Cabangis, having taken
the Court of First Instance of Manila in cadastral proceeding No. 373 of the Court of
possession thereof as soon as they were reclaimed, giving his permission to some
First Instance of Manila, G. L. R. O. Cadastral Record No. 373, adjudicating the title
fishermen to dry their fishing nets and deposit their bancas thereon, said lots belong
and decreeing the registration of lots Nos. 36, 39 and 40, block 3055 of the cadastral
to them.
survey of the City of Manila in f avor of Consuelo, Consorcia, Elvira and Tomas, 115
surnamed Cabangis, in equal parts, and dismissing the claims presented by the
Government of the Philippine Islands and the City of Manila. VOL. 53, MARCH 27, 1929 115
In support of its appeal, the appellant assigns the following alleged errors as Government of the Philippine Islands vs. Cabangis
committed by the trial court in its judgment, to wit: Article 339, subsection 1, of the Civil Code, reads:
"Art. 339. Property of public ownership is—
1. "1.The lower court erred in not holding that the lots in question are of the "1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar character."
public domain, the same having been gained from the sea (Manila Bay) by
accession, by fillings made by the Bureau of Public Works and by the
* * * * * * *
construction of the break-water (built by the Bureau of Navigation) near
the mouth of Vitas Estero.
2. "2.The lower court erred in holding that the lots in question formed part of Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:
"ARTICLE 1. The following are part of the national domain open to public use:
the big parcel of land belonging to the spouses Maximo Cabangis and Tita
Andres, and in holding that these spouses and their successors in interest
* * * * * * *
have been in continuous, public, peaceful, and uninterrupted possession of
said lots up to the time this case came up.
"3. The Shores. By the shore is understood that space covered and uncovered by the
3. "3.The lower court erred in holding that said lots existed before, but that due movement of the tide. Its interior or terrestrial limit is the line reached by the highest
to the current of the Pasig River and to the action of the big waves in equinoctial tides. Where the tides are not appreciable, the shore begins on the land side at the
Manila Bay during south-west monsoons, the same disappeared. line reached by the sea during ordinary storms or tempests."
In the case of Aragon vs. Insular Government (19 Phil., 223), with reference to article
114 339 of the Civil Code just quoted, this court said:
114 PHILIPPINE REPORTS ANNOTATED "We should not be understood, by this decision, to hold that in a case of gradual encroachment
or erosion by the ebb and flow of the tide, private property may not become 'property of public
Government of the Philippine Islands vs. Cabangis ownership/ as defined in article 339 of the code, where it appears that the owner has to all
intents and purposes abandoned it and permitted it to be totally destroyed, so as to become a
part of the 'playa' (shore of the sea), 'rada' (roadstead), or the like. * * *"
1. "4.The lower court erred in adjudicating the registration of the lands in
In the Enciclopedia Jurídica Española, volume XII, page 558, we read the following:
question in the name of the appellees, and in denying the appellant's
motion for a new trial."
"With relative frequency the opposite phenomenon occurs; that is, the sea advances and private In the case of Director of Lands vs. Aguilar (G. R. No. 22034) , also cited by the
1

properties are permanently invaded by the waves, and in this case they become part of the claimants-appellees, wherein the Government adduced no evidence in support of its
shore or beach. They then pass to the contention, the lower court said in part:
116
"The contention of the claimants Cabangis is to the effect that said lots are a part of the
116 PHILIPPINE REPORTS ANNOTATED adjoining land adjudicated to their deceased father, Don Tomas Cabangis, which, for over fifty
years had belonged to their deceased grandmother, Tita Andres, and that, due to certain
Government of the Philippine Islands vs. Cabangis
improvements made in Manila Bay, the waters of the sea covered a large part of the lots herein
public domain, but the owner thus dispossessed does not retain any right to the natural claimed.
products resulting from their new nature; it is a de facto case of eminent domain, and not
subject to indemnity."
________________
Now then, when said land was reclaimed, did the claimants-appellees. or their
predecessors recover it as their original property? 1Promulgated October 23, 1924, not reported.
As we have seen, the land belonging to the predecessors of the herein claimants- 118
appellees began to wear away in 1896, owing to the gradual erosion caused by the 118 PHILIPPINE REPORTS ANNOTATED
ebb and flow of the tide, until the year 1901, when the waters of Manila Bay
completely submerged a portion of it, included within lots 36, 39 and 40 here in Government of the Philippine Islands vs. Cabangis
question, remaining thus under water until reclaimed as a result of certain work "The Government of the Philippine Islands also claims the ownership of said lots, because, at
done by the Government in 1912. According to the above-cited authorities said ordinary high tide, they are covered by the sea.
"Upon petition of the parties, the lower court made an ocular inspection of said lots on
portion of land, that is, lots 36, 39 and 40, which was private property, became a part
September 12, 1923, and on said inspection found some light material houses built thereon, and
of the public domain. The predecessors of the herein claimants-appellees could have that on that occasion the waters of the sea did not reach the aforesaid lots.
protected their land by building a retaining wall, with the consent of competent "From the evidence adduced at the trial of this cause, it may be inferred that Tita Andres,
authority, in 1896 when the waters of the sea began to wear it away, in accordance during her lifetime, was the owner of a rather large parcel of land which was adjudicated by a
with the provisions of article 29 of the aforecited Law of Waters of August 3, 1866, decree to her son Tomas Cabangis; the lots now in question are contiguous to that land and are
and their failure to do so until 1901, when a portion of the same became completely covered by the waters of the sea at extraordinary high tide; some 50 years before the sea did not
covered by said waters, remaining thus submerged until 1912, constitutes reach said strip of land, and on it were constructed, for the most part, light material houses,
abandonment. occupied by the tenants of Tita Andres, to whom they paid rent. Upon her death, her son Tomas
Cabangis succeeded to the possession, and his children succeeded him, they being the present
Now then: The lots under discussion having been reclaimed from the sea as a
claimants, Consuelo, Jesus, Tomas, and Consorcia Cabangis.
result of certain work done by the Government, to whom do they belong? "The Government of the Philippine Islands did not adduce any evidence in support of its
The answer to this question is found in article 5 of the aforementioned Law of contention, with the exception of registry record No. 8147, to show that the lots here in question
Waters, which is as follows: were not excluded f rom the application presented in said proceeding."
"ART. 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by It will be seen that in the case of Buzon vs. Insular Government and City of Manila,
the provinces, pueblos, or private persons, with proper permission, shall become the property of cited above, the rise of the waters of the sea that covered the lands there in dispute,
the party constructing such works, unless otherwise provided by the terms of the grant of
was due not to the action of the tide but to the fact that a large quantity of sand was
authority."
117 taken from the sea at the side of said land in order to fill in Cervantes Street, and
this court properly held that because of this act, entirely independent of the will of
VOL. 53, MARCH 27, 1929 117
the owner of said land, the latter could not lose the ownership thereof, and the mere
Government of the Philippine Islands vs. Cabangis fact that the waters of the sea covered it as a result of said act, is not
The fact that from 1912 some fishermen had been drying their fishing nets and 119
depositing their bancas on lots 36, 39 and 40, by permission of Tomas Cabangis, does VOL. 53, MARCH 27, 1929 119
not confer on the latter or his successors the ownership of said lots, because, as they
Government of the Philippine Islands vs. Cabangis
were converted into public land, no private person could acquire title thereto except
sufficient to convert it into public land, especially, as the land was high and
in the form and manner established by the law.
appropriate for building purposes.
In the case of Buzon vs. Insular Government and City of Manila (13 Phil., 324),
In the case of the Director of Lands vs. Aguilar also cited by the claimants-
cited by the claimants-appellees, this court, admitting the findings and holdings of
appellees, the Insular Government did not present any evidence in support of its
the lower court, said the following:
"If we heed the parol evidence, we find that the seashore was formerly about one contention,. thus leaving uncontradicted the evidence adduced by the claimants
hundred brazas distant from the land in question; that, in the course of time, and by the Aguilar et al., as to the ownership, possession and occupation of said lots.
removal of a considerable quantity of sand from the shore at the back of the land for the use of In the instant case the evidence shows that from 1896, the waves of Manila Bay
the street car company in filling in Calle Cervantes, the sea water in ordinary tides now covers had been gradually and constantly washing away the sand that f ormed the lots here
part of the land described in the petition. in question, until 1901, when the sea water completely covered them, and thus they
"The fact that certain land, not the bed of a river or of the sea, is covered by sea water remained until the year 1912. In the latter year they were reclaimed from the sea by
during the period of ordinary high tide, is not a reason established by any law to cause the loss filling in with sand and silt extracted from the bed of Vitas Estuary when the
thereof, especially when, as in the present case, it becomes covered by water owing to
circumstances entirely independent of the will of the owner."
Government dredged said estuary in order to facilitate navigation. Neither the herein
claimants-appellees nor their predecessors did anything to prevent their destruction.
In conclusion, then, we hold that the lots in question having disappeared on
account of the gradual erosion due to the ebb and flow of the tide, and having
remained in such a state until they were reclaimed from. the sea by the filling in
done by the Government, they are public land. (Aragon vs. Insular Government, 19
Phil., 223; Francisco vs. Government of the Philippine Islands, 28 Phil., 505.)
By virtue whereof, the judgment appealed from is reversed and lots Nos. 36, 39
and 40 of cadastral proceeding No. 373 of the City of Manila are held to be public
land belonging to the Government of the United States under the administration and
control of the Government of the Philippine Islands. So ordered.
Johnson, Street, Malcolm, Ostrand, Johns, and Romual-dez, JJ., concur.
Judgment reversed.
120
120 PHILIPPINE REPORTS ANNOTATED
Castillo vs, Valdez
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
VOL. 5, JANUARY 24, 1906 567 "Every coöwner shall have full ownership of his part and in the fruits and
benefits derived therefrom, and he therefore may alienate, assign, or mortgage it,
Lopez vs. Ilustre and even substitute another person in its enjoyment, unless personal rights are in
[No. 2426. January 24, 1906.] question. But the effect of the alienation or mortgage, with regard to the coöwners,
FERNANDO MONTAÑO LOPEZ, plaintiff and appellee, vs. PEDRO MARTINEZ shall be limited to the share which may be awarded him in the division on the
ILUSTRE, defendant and appellant. dissolution of the community."
REALTY; TENANTS IN COMMON; SALE OF UNDIVIDED This article gives the owner of an undivided interest in the property the right to
INTEREST; PARTITION.—M. and the defendant were owners as tenants in common of freely sell and dispose of it—that is, of his undivided interest. He has no right to sell
twenty-eight separate tracts of land. M. sold to the plaintiff his undivided one-half interest a divided part of the real estate. If he is the owner of an undivided half of a tract of
in two of these tracts by contract with pacto de retro. Before the right to repurchase had land, he has a right to sell and convey an undivided half, but he has no right to divide
expired M. and the defendant made a voluntary partition between themselves of the 569
twenty-eight tracts, by which partition the two tracts in which the plaintiff was interested
fell to the defendant. M. did not exercise his right of repurchase. Held, That the partition VOL. 5, JANUARY 24, 1906 569
between M. and the defendant did not affect the plaintiff, and that he was the owner of an Lopez vs. Ilustre
undivided one-half of the two lots in question.
the lot into two parts, and convey the whole of one part by metes and bounds. All that
APPEAL from a judgment of the Court of First Instance of Manila.
Francisco Martinez undertook to do in this case was to convey his undivided interest
The facts are stated in the opinion of the court.
in these two properties. This he had a perfect right to do, in accordance with the
Hartigan, Marple, Rohde & Gutierrez, for appellant.
terms of said article. There is nothing in the last clause of the article inconsistent
Carlos Casademunt, for appellee.
with this position. That declares simply that when the property is divided the
purchaser gets an interest only in that part which may be assigned to him. For the
WILLARD, J.: purposes of this case we see no difference between it and a case in which the tenant
in common makes an absolute conveyance of his undivided interest in the property,
On the 26th day of December, 1902, Francisco Martinez and the defendant, Pedro without reserving the right to repurchase. In the case of an absolute conveyance of
Martinez, his son, were the owners as tenants in common of two separate parcels of that character, the relation between the grantor in the deed and his cotenant is
land in Calle Dulumbayan, in the city of Manila, each being the owner of an terminated. They are no longer cotenants. The grantee in the deed takes the place of
undivided one-half of each of said tracts of land. On the 26th day of December, 1902, the grantor, and he and the other owner of the property become cotenants. In such a
Francisco Martinez conveyed to the plaintiff his undivided half interest in both said case the grantor loses all interest in the property, and of course has no right to take
tracts of land. This deed contained a clause giving Martinez the right to repurchase any part in th partition of it. It would be absurd to say that after such conveyance the
the property within one year from December 26, 1902. He did not repurchase it, and grantor, who had lost all his interest in the property, could by agreement with the
on the 28th of December, 1903, the plaintiff caused the proper marginal entry to be other owner make a partition of property in which he had no interest that would be
made upon the books in the registry of property in which registry the conveyance had binding upon his grantee.
been recorded, and afterwards brought this action in March, 1904, asking for a We do not see how the fact that Francisco Martinez and his son were the owners
partition of the two lots of land, between himself and the defendant, and that of other pieces of property as tenants in common can affect the question presented in
defendant account for and pay to the plaintiff this case. Each tract was separate and distinct from all the others. The parties had a
568
right to deal with one lot without any reference to the other twenty-seven. The fact
his part of the rents of the said properties from the 26th day of December, 1903.
that the defendant acquired title to all of them by inheritance from his mother did
It appeared that Francisco Martinez and the defendant, his son, were the owners
not make them physically one tract of land, so that a conveyance by the son of
as tenants in common of twentysix other parcels of land; that in June, 1903, before
his undivided, half interest in one of these lots would amount to a conveyance of a
the expiration of the year in which Francisco Martinez had the right to repurchase
divided part of a tract of land held by him in common with his father.
the property so conveyed to the plaintiff, he and the defendant, his son, made a
The judgment of the court below is affirmed, with the costs of this instance
voluntary partition of these twenty-eight tracts of land, which partition was approved
against the appellant, and after the expiration of twenty days judgment should be
by the Court of First Instance of Manila on the 15th day of June, 1903. These twenty-
entered
eight tracts of land had been acquired by Francisco Martinez during his marriage 570
with his wife, Doña Germana Ilustre. The wife having died, her estate was in process in accordance herewith and the case remanded to the court below for execution. So
of administration in the Court of First Instance of Manila, and the partition above ordered.
mentioned was made on the theory that these lands were the property of the conjugal Arellano, C. J., Mapa, Johnson, and Carson, JJ.,concur.
partnership existing between Francisco Martinez and his wife. In this partition the Judgment affirmed.
two parcels of land in question in this case fell to the defendant, and his claim is that
by this partition plaintiff lost all his interest in the property. Judgment was entered _______________
in the court below in favor of plaintiff as prayed for in his complaint, and the
defendant has brought the case here by bill of exceptions. © Copyright 2019 Central Book Supply, Inc. All rights reserved.
Article 399 of the Civil Code is as follows:
VOL. 452, FEBRUARY 23, 2005 243 Appeals in CA-G.R. SP No. 32679 and the Order dated November 15, 1993, of the
RTC of Quezon City, Branch 101 and remanded the case to the trial court for the
Nuguid vs. Court of Appeals determination of the current market value of the four-door two-storey apartment
G.R. No. 151815. February 23, 2005. * building on the 256-square meter commercial lot.
SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners, vs. HON. The antecedent facts in this case are as follows:
COURT OF APPEALS AND PEDRO P. PECSON, respondents. Pedro P. Pecson owned a commercial lot located at 27 Kamias Road, Quezon City,
Civil Law; Property; A builder in good faith cannot be compelled to pay rentals during the on which he built a four-door two-storey apartment building. For failure to pay realty
period of retention nor be disturbed in his possession by ordering him to vacate; The owner of the taxes, the lot was sold at public auction by the City Treasurer of Quezon City to
land is prohibited from offsetting or compensating the necessary and useful expenses with the Mamerto Nepomuceno, who in turn sold it for P103,000 to the spouses Juan and
fruits received by the builder-possessor in good faith.—While the law aims to concentrate in one Erlinda Nuguid.
person the ownership of the land and the improvements thereon in view of the impracticability
of creating a state of forced co-ownership, it guards against unjust enrichment insofar as the
_______________
good-faith builder’s improvements are concerned. The right of retention is considered as one of
the measures devised by the law for the protection of builders in good faith. Its object is to
Rollo, pp. 6-17. Penned by Associate Justice Fermin A. Martin, Jr., with Associate Justices Portia Aliño-
guarantee full and prompt reimbursement as it permits the actual possessor to remain in
1

Hormachuelos, and Mercedes Gozo-Dadole concurring.


possession while he has not been reimbursed (by the person who defeated him in the case for Id., at pp. 19-20. Penned by Associate Justice Mercedes Gozo-Dadole, with Associate Justices Portia
2

possession of the property) for those necessary expenses and useful improvements made by him Aliño-Hormachuelos, and Rebecca de Guia-Salvador concurring.
on the thing possessed. Accordingly, a builder in good faith cannot be compelled to pay rentals 245
during the period of retention nor be disturbed in his possession by ordering him to vacate. In
VOL. 452, FEBRUARY 23, 2005 245
addition, as in this case, the owner of the land is prohibited from offsetting or compensating the
necessary and useful expenses with the fruits received by the builder-possessor in good faith. Nuguid vs. Court of Appeals
Otherwise, the security provided by law would be impaired. This is so because the right to the Pecson challenged the validity of the auction sale before the RTC of Quezon City in
expenses and the right to the fruits both pertain to the possessor, making compensation
Civil Case No. Q-41470. In its Decision, dated February 8, 1989, the RTC upheld the
juridically impossible; and one cannot be used to reduce the other.
3

spouses’ title but declared that the four-door two-storey apartment building was not
included in the auction sale. This was affirmed in toto by the Court of Appeals and
PETITION for review on certiorari of the decision and resolution of the Court of
4

thereafter by this Court, in its Decision dated May 25, 1993, in G.R. No. 105360
5

Appeals.
entitled Pecson v. Court of Appeals.
On June 23, 1993, by virtue of the Entry of Judgment of the aforesaid decision in
The facts are stated in the opinion of the Court. G.R. No. 105360, the Nuguids became the uncontested owners of the 256-square
Benjamin C. Reyes for petitioners. meter commercial lot.
Manuel T. Molina for respondent. As a result, the Nuguid spouses moved for delivery of possession of the lot and
the apartment building.
_______________
In its Order of November 15, 1993, the trial court, relying upon Article 546 of the
6 7

Civil Code, ruled that the Spouses Nuguid were to reimburse Pecson for his
*FIRST DIVISION.
244 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. In the
244 SUPREME COURT REPORTS ANNOTATED
same order the RTC also directed Pecson to pay the same amount of monthly rentals
Nuguid vs. Court of Appeals to the Nuguids as paid by the tenants occupying the apartment units or P21,000 per
month from June 23, 1993, and allowed the offset of the amount of P53,000 due from
QUISUMBING, J.: the Nuguids against the amount

This is a petition for review on certiorari of the Decision dated May 21, 2001, of the
1
_______________

Court of Appeals in CA-G.R. CV No. 64295, which modified the Order dated July 31,
Records, Vol. 1, pp. 501-510.
1998 of the Regional Trial Court (RTC) of Quezon City, Branch 101 in Civil Case No.
3

4Ibid.
Q-41470. The trial court ordered the defendants, among them petitioner herein Juan 5222 SCRA 580-586.
Nuguid, to pay respondent herein Pedro P. Pecson, the sum of P1,344,000 as 6Records, Vol. 2, pp. 578-580.
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith
reimbursement of unrealized income for the period beginning November 22, 1993 to 7

may retain the thing until he has been reimbursed therefor.


December 1997. The appellate court, however, reduced the trial court’s award in Useful expenses shall be refunded only to the possessor in good faith with the same right of retention,
favor of Pecson from the said P1,344,000 to P280,000. Equally assailed by the the person who has defeated him in the possession having the option of refunding the amount of the expenses
petitioners is the appellate court’s Resolution dated January 10, 2002, denying the
2
or of paying the increase in value which the thing may have acquired by reason thereof.
246
motion for reconsideration.
It may be recalled that relatedly in our Decision dated May 26, 1995, in G.R. No. 246 SUPREME COURT REPORTS ANNOTATED
115814, entitled Pecson v. Court of Appeals, we set aside the decision of the Court of Nuguid vs. Court of Appeals
of rents collected by Pecson from June 23, 1993 to September 23, 1993 from the _______________
tenants of the apartment. 8

Pecson duly moved for reconsideration, but on November 8, 1993, the RTC issued Records, Vol. 2, p. 744.
11

Pecson v. Court of Appeals, G.R. No. 115814, 26 May 1995, 244 SCRA 407, 416-417.
12

a Writ of Possession, directing the deputy sheriff to put the spouses Nuguid in
9
248
possession of the subject property with all the improvements thereon and to eject all
248 SUPREME COURT REPORTS ANNOTATED
the occupants therein.
Aggrieved, Pecson then filed a special civil action for certiorari and prohibition Nuguid vs. Court of Appeals
docketed as CA-G.R. SP No. 32679 with the Court of Appeals. for the rentals of the apartment building from June 23, 1993 to September 23, 1993.
In its decision of June 7, 1994, the appellate court, relying upon Article 448 of 10
On the basis of this Court’s decision in G.R. No. 115814, Pecson filed a Motion to
the Civil Code, affirmed the order of payment of construction costs but rendered the Restore Possession and a Motion to Render Accounting, praying respectively for
issue of possession moot on appeal, thus: restoration of his possession over the subject 256-square meter commercial lot and for
“WHEREFORE, while it appears that private respondents [spouses Nuguid] have not yet the spouses Nuguid to be directed to render an accounting under oath, of the income
indemnified petitioner [Pecson] with the cost of the improvements, since Annex I shows that the derived from the subject four-door apartment from November 22, 1993 until
Deputy Sheriff has enforced the Writ of Possession and the premises have been turned over to possession of the same was restored to him.
the possession of private respondents, the quest of petitioner that he be restored in possession of
In an Order dated January 26, 1996, the RTC denied the Motion to Restore
the premises is rendered moot and academic, although it is but fair and just that private
13

respondents pay petitioner the construction cost of P53,000.00; and that petitioner be ordered to Possession to the plaintiff averring that the current market value of the building
account for any and all fruits of the should first be determined. Pending the said determination, the resolution of the
Motion for Accounting was likewise held in abeyance.
_______________ With the submission of the parties’ assessment and the reports of the subject
realty, and the reports of the Quezon City Assessor, as well as the members of the
8 Records, Vol. 2, p. 580. duly constituted assessment committee, the trial court issued the following
9 Id., at p. 587.
10 Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to Order dated October 7, 1997, to wit:
14

appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to “On November 21, 1996, the parties manifested that they have arrived at a compromise
oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he
agreement that the value of the said improvement/building is P400,000.00 The Court notes that
shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. the plaintiff has already received P300,000.00. However, when defendant was ready to pay the
The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. balance of P100,000.00, the plaintiff now insists that there should be a rental to be paid by
247 defendants. Whether or not this should be paid by defendants, incident is hereby scheduled for
VOL. 452, FEBRUARY 23, 2005 247 hearing on November 12, 1997 at 8:30 a.m.
Meantime, defendants are directed to pay plaintiff the balance of P100,000.00.
Nuguid vs. Court of Appeals SO ORDERED.” 15

improvements received by him starting on June 23, 1993, with the amount of P53,000.00 to be
offset therefrom. IT IS SO ORDERED.” [Italics supplied.]
11
_______________
Frustrated by this turn of events, Pecson filed a petition for review docketed as G.R.
No. 115814 before this Court. Records, Vol. 2, pp. 706-707.
13

On May 26, 1995, the Court handed down the decision in G.R. No 115814, to wit: Id., at p. 824.
14

“WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of Ibid.
15

15 November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q- 249
41470 are hereby SET ASIDE. VOL. 452, FEBRUARY 23, 2005 249
The case is hereby remanded to the trial court for it to determine the current market value
of the apartment building on the lot. For this purpose, the parties shall be allowed to adduce Nuguid vs. Court of Appeals
evidence on the current market value of the apartment building. The value so determined shall On December 1997, after paying the said P100,000 balance to Pedro Pecson the
be forthwith paid by the private respondents [Spouses Juan and Erlinda Nuguid] to the spouses Nuguid prayed for the closure and termination of the case, as well as the
petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the possession of the cancellation of the notice of lis pendens on the title of the property on the ground that
apartment building until payment of the required indemnity. Pedro Pecson’s claim for rentals was devoid of factual and legal bases. 16

No costs. After conducting a hearing, the lower court issued an Order dated July 31, 1998,
SO ORDERED.” [Emphasis supplied.]
directing the spouses to pay the sum of P1,344,000 as reimbursement of the
12

In so ruling, this Court pointed out that: (1) Article 448 of the Civil Code is not
unrealized income of Pecson for the period beginning November 22, 1993 up to
apposite to the case at bar where the owner of the land is the builder, sower, or
December 1997. The sum was based on the computation of P28,000/month rentals of
planter who then later lost ownership of the land by sale, but may, however, be
the four-door apartment, thus:
applied by analogy; (2) the current market value of the improvements should be The Court finds plaintiff’s motion valid and meritorious. The decision of the Supreme Court in
made as the basis of reimbursement; (3) Pecson was entitled to retain ownership of the aforesaid case [Pecson vs. Court of Appeals, 244 SCRA 407] which set aside the Order of this
the building and, necessarily, the income therefrom; (4) the Court of Appeals erred Court of November 15, 1993 has in effect upheld plaintiff’s right of possession of the building for
not only in upholding the trial court’s determination of the indemnity, but also in as long as he is not fully paid the value thereof. It follows, as declared by the Supreme Court in
ordering Pecson to account said decision that the plaintiff is entitled to the income derived therefrom, thus—
...
Records show that the plaintiff was dispossessed of the premises on November 22, 1993 and could not be the subject of execution. He points out that in moving for an accounting,
that he was fully paid the value of his building in December 1997. Therefore, he is entitled to all he asked was that the value of the fruits of the property during the period he was
the income thereof beginning on November 22, 1993, the time he was dispossessed, up to the dispossessed be accounted for, since this Court explicitly recognized in G.R. No.
time of said full payment, in December 1997, or a total of 48 months.
115814, he was entitled to the property. He points out that this Court ruled that
The only question left is the determination of income of the four units of apartments per
month. But as correctly pointed out by plaintiff, the defendants have themselves submitted “[t]he petitioner [Pecson] not having been so paid, he was entitled to retain
their affidavits attesting that the income derived from three of the four units of the apartment ownership of the building and, necessarily, the income therefrom.” In other words,
22

building is P21,000.00 or P7,000.00 each per month, or P28,000.00 per month for the whole four says respondent, accounting was necessary. For accordingly, he was entitled to rental
units. Hence, at P28,000.00 per month, multiplied by 48 months, plaintiff is entitled to be paid income from the property. This should be given effect. The Court could have very well
by defendants the amount of P1,344,000.00. 17
specifically included rent (as fruit or income of the property), but could not have done
so at the time the Court pronounced judgment because its value had yet to be
_______________ determined, according to him. Additionally, he faults the appellate court for
modifying the order of the RTC, thus defeating his right as a builder in good faith
Id., at pp. 832-833.
16
entitled to rental from the period of his dispossession to full payment of the price of
Rollo, pp. 74-75; CA Rollo, pp. 25-26; Records, Vol. 2, pp. 836-837.
17

250 his improvements, which spans from November 22, 1993 to December 1997, or a
period of more than four years.
250 SUPREME COURT REPORTS ANNOTATED
It is not disputed that the construction of the four-door two-storey apartment,
Nuguid vs. Court of Appeals subject of this dispute, was undertaken at the time when Pecson was still the owner
The Nuguid spouses filed a motion for reconsideration but this was denied for lack of of the lot. When the Nuguids became the uncontested owner of the lot on June 23,
merit. 18 1993, by virtue of entry of judgment of the Court’s decision, dated May 25, 1993, in
The Nuguid couple then appealed the trial court’s ruling to the Court of Appeals, G.R. No. 105360, the apartment building was already in existence and occupied by
their action docketed as CA-G.R. CV No. 64295. tenants. In its decision dated May 26, 1995 in G.R. No. 115814, the Court declared
In the Court of Appeals, the order appealed from in CA-G.R. CV No. 64295, was the rights and obligations of the litigants in accordance with Articles 448 and 546 of
modified. The CA reduced the rentals from P1,344,000 to P280,000 in favor of the the Civil Code. These provisions of the Code are directly applicable to the instant
appellee. The said amount represents accrued rentals from the determination of the
19 case.
current market value on January 31, 1997 until its full payment on December 12,
20

1997. _______________
Hence, petitioners state the sole assignment of error now before us as follows:
THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE TO PAY RENT Supra, note 12 at p. 416.
22

OVER AND ABOVE THE CURRENT MARKET VALUE OF THE IMPROVEMENT WHEN 252
SUCH WAS NOT PROVIDED FOR IN THE DISPOSITIVE PORTION OF THE SUPREME 252 SUPREME COURT REPORTS ANNOTATED
COURT’S RULING IN G.R. No. 115814.
Petitioners call our attention to the fact that after reaching an agreed price of Nuguid vs. Court of Appeals
P400,000 for the improvements, they only made a partial payment of P300,000. Thus, Under Article 448, the landowner is given the option, either to appropriate the
they contend that their failure to pay the full price for the improvements will, at improvement as his own upon payment of the proper amount of indemnity or to sell
most, entitle respondent to be restored to possession, but not to collect any rentals. the land to the possessor in good faith. Relatedly, Article 546 provides that a builder
Petitioners insist that this is the proper interpretation of the dispositive portion of in good faith is entitled to full reimbursement for all the necessary and useful
the decision in G.R. No. 115814, which states in part that “[t]he value so determined expenses incurred; it also gives him right of retention until full reimbursement is
shall be forthwith paid by the private respondents [Spouses Juan and Erlinda made.
Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to While the law aims to concentrate in one person the ownership of the land and
the possession of the apartment building until payment of the required indemnity.” 21
the improvements thereon in view of the impracticability of creating a state of forced
co-ownership, it guards against unjust enrichment insofar as the good-faith builder’s
23

_______________ improvements are concerned. The right of retention is considered as one of the
measures devised by the law for the protection of builders in good faith. Its object is
Records, Vol. 2, p. 861.
18 to guarantee full and prompt reimbursement as it permits the actual possessor to
Rollo, p. 44.
19
remain in possession while he has not been reimbursed (by the person who defeated
Records, Vol. 2, p. 805.
him in the case for possession of the property) for those necessary expenses and
20

Rollo, p. 37.
21

251 useful improvements made by him on the thing possessed. Accordingly, a builder in
24

good faith cannot be compelled to pay rentals during the period of retention nor be
25

VOL. 452, FEBRUARY 23, 2005 251


disturbed in his possession by ordering him to vacate. In addition, as in this case, the
Nuguid vs. Court of Appeals owner of the land is prohibited from offsetting or compensating the necessary and
Now herein respondent, Pecson, disagrees with herein petitioners’ contention. He useful expenses with the fruits received by the builder-possessor in good faith.
argues that petitioners are wrong in claiming that inasmuch as his claim for rentals Otherwise, the security provided by law would be impaired. This is so because the
was not determined in the dispositive portion of the decision in G.R. No. 115814, it
right to the expenses and the right to the fruits both pertain to the possessor, making during said period, without paying any amount to the latter as reimbursement for his
compensation juridically impossible; and one cannot be used to reduce the other. 26 construction costs and expenses. They should account and pay for such benefits.
We need not belabor now the appellate court’s recognition of herein respondent’s
_______________ entitlement to rentals from the date of the determination of the current market value
until its full payment. Respondent is clearly entitled to payment by virtue of his right
2 EDGARDO L. PARAS, CIVIL CODE OF THE PHILIPPINES ANNOTATED 205 (1999 ed.) citing 3
23
of retention over the said improvement.
Manresa 213 (4th Ed).
Ortiz v. Kayanan, No. L-32974, 30 July 1979, 92 SCRA 146, 159.
24
WHEREFORE, the instant petition is DENIED for lack of merit. The Decision
San Diego v. Hon. Montesa, No. L-17985, 29 September 1962, 116 Phil. 512, 515; 6 SCRA 208, 210.
25 dated May 21, 2001 of the Court of Appeals in CA-G.R. CV No. 64295 is SET ASIDE
2 ARTURO M. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF
26
and the Order dated July 31, 1998, of the Regional Trial Court, Branch 101, Quezon
THE PHILIPPINES 261 (1983 ed.) citing 4 Manresa 290. City, in Civil Case No. Q-41470 ordering the herein petitioners, Spouses Juan and
253
Erlinda Nuguid, to account for the rental income of the four-door two-storey
VOL. 452, FEBRUARY 23, 2005 253 apartment building from November 1993 until December 1997, in the amount of
Nuguid vs. Court of Appeals P1,344,000, computed on the basis of Twenty-eight Thousand (P28,000.00) pesos
As we earlier held, since petitioners opted to appropriate the improvement for monthly, for a period of 48 months, is hereby REINSTATED. Until fully paid, said
themselves as early as June 1993, when they applied for a writ of execution despite amount of rentals should bear the legal rate of interest set at six percent (6%) per
knowledge that the auction sale did not include the apartment building, they could annum computed from the date of RTC judgment. If any portion thereof shall
not benefit from the lot’s improvement, until they reimbursed the improver in full, thereafter remain unpaid, despite notice of finality of this Court’s judgment, said
based on the current market value of the property. remaining unpaid amount shall bear the rate of interest set at twelve percent
Despite the Court’s recognition of Pecson’s right of ownership over the apartment (12%) per annum computed from the date of said notice. Costs against petitioners.
255
building, the petitioners still insisted on dispossessing Pecson by filing for a Writ of
Possession to cover both the lot and the building. Clearly, this resulted in a violation VOL. 452, FEBRUARY 23, 2005 255
of respondent’s right of retention. Worse, petitioners took advantage of the situation Macasaet vs. People
to benefit from the highly valued, income-yielding, four-unit apartment building by SO ORDERED.
collecting rentals thereon, before they paid for the cost of the apartment building. It Davide, Jr. (C.J., Chairman), Ynares-Santiago, Carpio and Azcuna,
was only four years later that they finally paid its full value to the respondent. JJ., concur.
Petitioners’ interpretation of our holding in G.R. No. 115814 has neither factual Petition denied, judgment set aside.
nor legal basis. The decision of May 26, 1995, should be construed in connection with Note.—A lessee is undoubtedly a builder in bad faith if despite the absence of
the legal principles which form the basis of the decision, guided by the precept that perfected contract of lease and in utter disregard of the lessor’s numerous protests,
judgments are to have a reasonable intendment to do justice and avoid wrong. 27

he continued his construction activities upon the latter’s land. (Bugatti vs. Court of
The text of the decision in G.R. No. 115814 expressly exempted Pecson from Appeals, 343 SCRA 335 [2000])
liability to pay rentals, for we found that the Court of Appeals erred not only in
upholding the trial court’s determination of the indemnity, but also in ordering him
——o0o——
to account for the rentals of the apartment building from June 23, 1993 to September
23, 1993, the period from entry of judgment until Pecson’s dispossession. As pointed
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
out by Pecson, the dispositive portion of our decision in G.R. No. 115814 need not
specifically include the income derived from the improvement in order to entitle him,
as a builder in good

_______________

See Republic of the Philippines v. Hon. De Los Angeles, G.R. No. L-26112, 4 October 1971, 148-B Phil.
27

902, 924; 41 SCRA 422, 443.


254

254 SUPREME COURT REPORTS ANNOTATED


Nuguid vs. Court of Appeals
faith, to such income. The right of retention, which entitles the builder in good faith
to the possession as well as the income derived therefrom, is already provided for
under Article 546 of the Civil Code.
Given the circumstances of the instant case where the builder in good faith has
been clearly denied his right of retention for almost half a decade, we find that the
increased award of rentals by the RTC was reasonable and equitable. The petitioners
had reaped all the benefits from the improvement introduced by the respondent
G.R. No. 156360. January 14, 2005.* in cadastral cases are actual possessors of the lots or lands subject thereof.—We note that in the
CESAR SAMPAYAN, petitioner, vs. THE HONORABLE COURT OF APPEALS, herein assailed decision, the Court of Appeals attached much significance to the fact that
CRISPULO VASQUEZ and FLORENCIA VASQUEZ GILSANO, respondents. private respondents’ mother Cristita Quita was an oppositor in Cadastral Case No. 149. We rule
Actions; Ejectment; Forcible Entry; In an action for forcible entry, the plaintiff must prove and so hold that the mother’s being an oppositor in said
222
that he was in prior possession of the land or building and that he was deprived thereof by
means of force, intimidation, threat, strategy or stealth.—The arguments put forward by the 2 SUPREME COURT REPORTS ANNOTATED
petitioner crystallize to one pivotal question: will the complaint for forcible entry in this case 22
prosper? To resolve this, however, we must first determine as to who between the herein parties
was in prior actual physical possession of the subject lot at the time the complaint was filed in Sampayan vs. Court of Appeals
the MCTC. For, as we have said in Gaza vs. Lim, “x x x In an action for forcible entry, the cadastral case does not, by itself, establish prior physical possession because not all
plaintiff must prove that he was in prior possession of the land or building and that he was oppositors in cadastral cases are actual possessors of the lots or lands subject thereof.
deprived thereof by means of force, intimidation, threat, strategy or stealth. x x x” We PETITION for review on certiorari of the decision and resolution of the Court of
emphasize, absence of prior physical possession by the plaintiff in a forcible entry case warrants Appeals.
the dismissal of his complaint. The facts are stated in the opinion of the Court.
Same; Same; Same; The Supreme Court is not a trier of facts and does not
Rafael V. Ybanez for petitioner.
normally embark on a re-examination of the evidence adduced by the parties during the trial;
Exceptions.—The issue of prior physical possession is one of fact, and settled is the rule that this Dollfuss R. Go & Associates Law Office for respondents.
Court is not a trier of facts and does not normally embark on a re-examination of the evidence
adduced by the parties during trial. Of course, the rule admits of exceptions. So it is that GARCIA, J.:
in Insular Life Assurance Company, Ltd. vs. CA, we wrote: “[i]t is a settled rule that in the
exercise of the Supreme Court’s power of review, the Court is not a trier of facts and does not In this verified petition for review on certiorari under Rule 45 of the Rules of
normally undertake the re-examination of the evidence presented by the contending parties’
Court, petitioner Cesar Sampayan seeks the annulment and setting aside of the
during the trial of the case considering that the findings of facts of the CA are conclusive and
binding on the Court. However, the Court had recognized several exceptions to this rule, to wit: following issuances of the Court of Appeals in CA-G.R. SP No. 43557, to wit:
(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when 1. Decision dated May 16, 2002, denying his petition for review and affirming an earlier
the inference made is manifestly mistaken, absurd or decision of the Regional Trial Court at Agusan del Sur, Branch VII, which in turn reversed on
appeal a favorable judgment of the Municipal Circuit Trial Court (MCTC) of Bayugan and
_______________
Sibagat, Agusan del Sur in a forcible entry case thereat commenced against him by herein
private respondents, the brother-and-sister Crispulo Vasquez and Florencia Vasquez-Gilsano;
and
* THIRD DIVISION. 2. Resolution dated November 7, 2002, which denied his motion for reconsideration.
221 From the pleadings and memoranda respectively filed by the parties, the Court
VOL. 448, JANUARY 14, 2005 221 gathers the following factual antecedents:
On July 8, 1992, in the MCTC of Bayugan and Sibagat, Agusan del Sur, the
Sampayan vs. Court of Appeals
siblings Crispulo Vasquez and Florencia Vasquez-Gilsano filed complaint for forcible
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on
a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its entry against Cesar Sampayan for allegedly having entered and occupied a parcel of
findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to land, identified as Lot No. 1959, PLS-225, and built a house thereon without their
the admissions of both the appellant and the appellee; (7) when the findings are contrary to the knowledge, consent or author-
trial court; (8) when the findings are conclusions without citation of specific evidence on which 223
they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and VOL. 448, JANUARY 14, 2005 223
reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on
the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Sampayan vs. Court of Appeals
Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, ity, the entry having been supposedly effected through strategy and stealth.
which, if properly considered, would justify a different conclusion.” To our mind, exceptions (5) In their complaint, the plaintiffs (now private respondents), substantially alleged
and (11) are present in this case. that their mother Cristita Quita was the owner and actual possessor of Lot No. 1959;
Same; Same; Same; Jurisdictions; Pleadings and Practice; For the Municipal Circuit that after their mother’s death on January 11, 1984, they became co-owners pro-
Trial Court (MCTC) to acquire jurisdiction over a forcible entry case, it is enough that the
indiviso and lawful possessors of the same lot; that on June 1, 1992, while they were
complaint avers the jurisdictional facts—the irrelevant circumstance that the evidence adduced
during the hearing rendered improper an action for forcible entry is of no moment and cannot temporarily absent from the lot in question, defendant Cesar Sampayan, through
deprive the MCTC of its jurisdiction over the case.—For the MCTC to acquire jurisdiction over a strategy and stealth, entered the lot and built a house thereon, to their exclusion; and
forcible entry case, it is enough that the complaint avers the jurisdictional facts, i.e. that the that, despite their repeated demands for Sampayan to vacate the lot and surrender
plaintiff had prior physical possession and that he was deprived thereof by the defendant the possession thereof to them, the latter failed and refused to do so.
through force, intimidation, threats, strategy and stealth. The complaint in this case makes In his answer, defendant Sampayan denied the material allegations of the
such an averment. Hence, the irrelevant circumstance that the evidence adduced during the complaint and averred that neither the plaintiffs nor their mother have ever been in
hearing rendered improper an action for forcible entry is of no moment and cannot deprive the possession of Lot No. 1959 and that he does not even know plaintiffs’ identities or
MCTC of its jurisdiction over the case. The MCTC continues to have that jurisdiction.
their places of residence. He claimed that he did not enter the subject lot by stealth or
Same; Same; Same; Land Registration; The fact that a party’s mother was an oppositor in
a cadastral case does not, by itself, establish prior physical possession because not all oppositors strategy because he asked and was given permission therefor by Maria Ybañez, the
overseer of the lot’s true owners, Mr. and Mrs. Anastacio Terrado who were then further strengthen the transfer of possession and whatever possessory rights the
temporarily residing in Cebu City for business purposes. In the same answer, Oriols had in the lot in question;
Sampayan alleged that the plaintiffs’ claim has long prescribed for the reason that 5. Deed of Absolute Sale of Land executed by Concordia Balida-Oriol with the
the lot in dispute had been possessed and declared for taxation purposes by the conformity of Teodosio Mosquito (another claimant), to prove that the other half of
spouses Felicisimo Oriol and Concordia Balida-Oriol in 1960, and that in 1978, the Lot No. 1959 was sold in 1978 to Mr. and Mrs. Anastacio Terrado whose overseer
Oriol spouses sold one-half (1/2) of the lot to the spouses Mr. and Mrs. Anastacio allowed Sampayan to enter and occupy the premises;
Terrado, while the other half, to the couple Manolito Occida and Juliana Sambale- 6. Protest filed with the CENRO, Agusan del Sur by the vendee Juliana
Occida in 1979. Both vendees, so Sampayan averred, have actually possessed the Sambale-Occida against the Miscellaneous Sales Application of Cristita Quita;
respective portions purchased by them up to the present. He thus prayed for the 7. Affidavit of Dionesia Noynay attesting to the fact that she is residing in Lot
dismissal of the complaint. No. 1957, a lot adjacent to the lot in question, since 1960 up to the present. In the
In the ensuing proceedings following the joinder of issues, the plaintiffs, to prove same affidavit, Dionisia claimed that neither Cristita Quita, much less the plaintiffs,
that they have been in actual posses- had ever possessed Lot No. 1959. She claimed that it was the Occida couple who
224 possessed said lot and introduced improvements thereon; and
224 SUPREME COURT REPORTS ANNOTATED 8. Affidavit of Juliana Occida and Maria Ybañez to show the impossibility of
plaintiffs’ possession of the same lot.
Sampayan vs. Court of Appeals
Meanwhile, on March 21, 1996, while the case was pending with the MCTC, the
sion of Lot No. 1959 when defendant Sampayan effected his entry thereto, submitted
presiding judge thereof personally conducted an ocular inspection of the contested lot
in evidence the following documents:
in the presence of the parties and/or their counsels. Among those found in the area
1. Tax Declaration No. 3180 in the name of Cristita Quita; during the inspection are: the house of defendant Sampayan; the dilapidated house of
2. Certificate of Death showing the date of death of Cristita Quita on January a certain Peter Siscon; and a portion of the house of Macario Noynay, husband of
11, 1984; Dionisia Noynay, one of Sampayan’s witnesses.
3. Certificate issued by Fermina R. Labonete, Land Management Officer-III of Based on his ocular findings, the judge concluded that the improvements he saw
CENRO X-3-E, DENR-X-3-9, Bayugan, Agusan del Sur showing that Lot 1959, PLS-
in the premises could never have been
225 is covered by a Miscellaneous Sales Application of Cristita Quita; 226
4. Affidavit of one Emiliano G. Gatillo to the effect that he was the one who gave
226 SUPREME COURT REPORTS ANNOTATED
the lot in question to Cristita Quita sometime in 1957 and that since then the latter
had been occupying the lot; Sampayan vs. Court of Appeals
Plaintiffs also filed a Supplemental Position Paper dated July 13, 1994 for the introduced by the plaintiffs nor by their mother Cristita Quita but by the vendees of
purpose of showing that Cristita Quita is one of the oppositors in Cadastral Case No. the same lot. Reproduced by petitioner Jose Sampayan in the instant petition as well
149. Together with said position paper, they submitted a copy of the as in the Memorandum he subsequently filed with this Court, the MCTC judge’s
Answer/Opposition earlier filed in Cadastral Case No. 149. In said cadastral case, findings and observations during the ocular inspection, about which the herein
Cristita Quita was claiming Lot 1959, thus her name appeared in the list of private respondents took no exception whatsoever, are hereunder quoted, as follows:
oppositors therein. “Noted inside the land are the house of the defendant, Cesar Sampayan, of Peter Siscon,
5. The decision in the said Cadastral Case No. 149 showing that the then Court which appears to be dilapidated, and part of the house of Macario Noynay which encroached to
of First Instance of Agusan del Sur declared Lot No. 1959 as one of the lots subject of the land in question. Planted on the land are five (5) coconut trees, fruit bearing, three (3) not
fruit bearing coconut trees, and three (3) star apple or caimito trees. Defendant Sampayan
the same cadastral case.
admitted that he started occupying the land since 1992. It is admitted by the parties during the
For his part, defendant Sampayan, to prove the allegations in his answer, offered ocular inspection that one-half (1/2) portion of the land was bought by a certain Occida from
in evidence the following: certain Mr. and Mrs. Felicisimo Oriol.
1. Tax Declaration No. A-11698 in the name of Felicisimo Oriol, which cancels The findings in the ocular inspection have confirmed the allegation of the
Tax Declaration 8103; defendant that his predecessors-in-interest have introduced improvements by
2. Tax Declaration No. GRB-01-930 in the name of Felicisimo Oriol which planting caimito trees, coconut trees, and others on the land in question.
cancels Tax Declaration No. A-11698; Nothing can be seen on the land that plaintiffs had once upon a time been in
3. Deed of Absolute Sale of Portion of Land, dated April 30, 1979, executed by possession of the land. The allegation that Cristita Quita, the predecessor-in-interest
of the plaintiffs had been in possession of the said property since 1957, openly,
Jesus Oriol for and in behalf of the spouses Felicisimo Oriol and Concordia Balida-
exclusively, continuously, adversely and in the concept of an owner is a naked claim,
Oriol, conveying the one-half (1/2) portion of Lot No. 1959 to the couple unsupported by any evidence.
225
Clearly, from the appearance of the improvements introduced by the predecessors-in-
VOL. 448, JANUARY 14, 2005 225 interest of the defendant, it is showed that they have been in possession of the land for more
than one (1) year. Hence, the action of the plaintiffs, if any, is accion publiciana or plenaria de
Sampayan vs. Court of Appeals
possession” (Emphasis supplied).
1

Manolito Occida and Juliana Sambale-Occida who possessed the one-half (1/2) In time, the MCTC rendered judgment dismissing the compliant “for lack of
portion and introduced improvements thereon, such as coconut and caimito trees; merit.”
4. Deed of Relinquishment of Rights of Portion of Land, executed by the spouses
Oriol in favor of the same couple Manolito Occida and Juliana Sambale-Occida, to _______________
“x x x In an action for forcible entry, the plaintiff must prove that he was in prior possession
1 Petition, p. 3; Rollo, p. 14; Petitioner’s Memorandum, pp. 7-8; Rollo, pp. 65-66. of the land or building and that he was deprived thereof by means of force, intimidation, threat,
227 strategy or stealth. x x x”
VOL. 448, JANUARY 14, 2005 227 We emphasize, absence of prior physical possession by the plaintiff in a forcible
Sampayan vs. Court of Appeals
entry case warrants the dismissal of his complaint.
Undoubtedly, the issue of prior physical possession is one of fact, and settled is
Therefrom, the plaintiffs appealed to the Regional Trial Court (RTC) at Agusan
the rule that this Court is not a trier of facts and does not normally embark on a re-
del Sur, which appeal was raffled to Branch VII thereof. In a decision dated
examination of the evidence adduced by the parties during trial. Of course,
December 5, 1996, said court reversed that of the MCTC, taking note of the fact that
Cristita Quita was among the oppositors in Cadastral Case No. 149 and that she filed
_______________
a Miscellaneous Sales Application over the lot. On the basis of such finding, the RTC
concluded that it was Cristita Quita, predecessor-in-interest of the herein private
respondents, who was in actual prior physical possession of Lot No. 1959. 4 Petitioner’s Memorandum, Rollo, pp. 60, et seq., at pp. 74-75.
Unable to accept the RTC judgment, Sampayan went to the Court of Appeals on a 5 395 SCRA 261, 269 (2003), citing Sps. Benitez vs. Court of Appeals, 334 Phil. 216, 222; 266 SCRA 242,
249 (1997).
petition for review, thereat docketed as CA-G.R. SP No. 43557.
229
As stated at the threshold hereof, the Court of Appeals, in the herein
assailed Decision dated May 16, 2002,2 denied Sampayan’s petition. His motion for VOL. 448, JANUARY 14, 2005 229
reconsideration having been similarly denied by that court in its Resolution of Sampayan vs. Court of Appeals
November 7, 2002,3 Sampayan is now with us via the present recourse, it being his the rule admits of exceptions. So it is that in Insular Life Assurance Company, Ltd.
submissions— vs. CA,6 we wrote:
“I. “[i]t is a settled rule that in the exercise of the Supreme Court’s power of review, the Court is
THAT THE COURT OF APPEALS ERRED IN RULING THAT THE MUNICIPAL CIRCUIT not a trier of facts and does not normally undertake the re-examination of the evidence
TRIAL COURT OF BAYUGAN, AGUSAN DEL SUR, HAS JURISDICTION OVER THE CASE, presented by the contending parties’ during the trial of the case considering that the findings of
CONSIDERING THAT DURING THE HEARING THEREOF IT WAS FOUND OUT BY THE facts of the CA are conclusive and binding on the Court. However, the Court had recognized
SAID MUNICIPAL COURT THAT ACCION PUBLICIANA OR PLENARIA DE POSESION, several exceptions to this rule, to wit: (1) when the findings are grounded entirely on
AND NOT FORCIBLE ENTRY, IS THE PROPER ACTION; speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken,
II. absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
THAT THE CONCLUSION OF THE HONORABLE COURT OF APPEALS THAT PRIVATE based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
RESPONDENTS HAVE BEEN IN PRIOR ACTUAL POSSESSION IS CONTRADICTED BY making its findings the Court of Appeals went beyond the issues of the case, or its findings are
EVIDENCE ON RECORD, AND CONSIDERING THAT THE POSSES- contrary to the admissions of both the appellant and the appellee; (7) when the findings are
contrary to the trial court; (8) when the findings are conclusions without citation of specific
_______________ evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of
fact are premised on the supposed absence of evidence and contradicted by the evidence on
2 Annex “A”, Petition; Rollo, pp. 26-34.
3 Annex “C”, Petition, Rollo, p. 41. record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not
228 disputed by the parties, which, if properly considered, would justify a different conclusion.”
228 SUPREME COURT REPORTS ANNOTATED To our mind, exceptions (5) and (11) are present in this case.
However, before delving into the question of who as between the petitioner and
Sampayan vs. Court of Appeals private respondents had prior physical possession of the subject lot, we deem it best
SION TO BE LEGALLY SUFFICIENT, CONSIST (SIC) IN THE EXERCISE OF DOMINIUM to first re-
OVER IT, SUCH AS FENCING, CULTIVATING OR OTHER UNMISTAKABLE ACTS OF
EXCLUSIVE CUSTODY AND CONTROL—FACTS WHICH THE PRIVATE RESPONDENTS
_______________
HAVE NEVER DONE—IS CONTRARY TO LAW.” 4

In the main, petitioner maintains that based on the pieces of evidence on record,
he had sufficiently proven his prior physical possession of the subject lot. Upon this 6 G.R. No. 126850, April 28, 2004, 428 SCRA 79, citing Langkaan Realty Development, Inc. vs. United
premise, he argues that private respondents’ complaint for forcible entry has no leg to Coconut Planters Bank, 347 SCRA 542, 549 (2000), Nokom vs. National Labor Relations Commission, 390
stand on, adding that the proper remedy available to the latter is accion Phil. 1228, 1242; 336 SCRA 97, 110 (2000), Commissioner of Internal Revenue vs. Embroidery and Garments
Industries (Phil.), Inc., 363 Phil. 541, 546; 305 SCRA 70, 74 (1999), Sta. Maria vs. Court of Appeals, 349 Phil.
publiciana or plenaria de posesion which falls under the original jurisdiction of 275, 282-283; 285 SCRA 351, 357 (1998).
Regional Trial Courts and not of Municipal Circuit Trial Courts. 230
As we see it, the arguments put forward by the petitioner crystallize to one 230 SUPREME COURT REPORTS ANNOTATED
pivotal question: will the complaint for forcible entry in this case prosper? To resolve
this, however, we must first determine as to who between the herein parties was in Sampayan vs. Court of Appeals
prior actual physical possession of the subject lot at the time the complaint was filed solve the issue of whether or not the MCTC had jurisdiction over the complaint filed
in the MCTC. For, as we have said in Gaza vs. Lim,5 in this case, an issue also raised by the petitioner.
Relying on the conclusion of the MCTC that private respondents’ proper remedy 232 SUPREME COURT REPORTS ANNOTATED
is accion publiciana or plenaria de posesion, and not forcible entry, petitioner would
deny the MCTC’s jurisdiction over the case. Sampayan vs. Court of Appeals
Petitioner is in error. WHEREFORE, the instant petition is hereby GRANTED and the Decision and
In Sarmiento vs. CA,7 we held: Resolution, respectively dated May 16, 2002 and November 7, 2002, of the Court of
“[t]o give the court jurisdiction to effect the ejectment of an occupant or deforciant on the land, it Appeals REVERSED and SET ASIDE.
is necessary that the complaint should embody such a statement of facts as brings the party SO ORDERED.
clearly within the class of cases for which the statutes provide a remedy, as these proceedings Panganiban (Chairman), Sandoval-Gutierrez, Corona and Carpio-Morales,
are summary in nature. The complaint must show enough on its face to give the court JJ., concur.
jurisdiction without resort to parol testimony. The jurisdictional facts must appear on the face
of the complaint. x x x”
Petition granted, judgment and resolution reversed and set aside.
Clear it is from the above that for the MCTC to acquire jurisdiction over a forcible
Notes.—A judgment rendered in a case for recovery of possession is conclusive
entry case, it is enough that the complaint avers the jurisdictional facts, i.e. that the
only on the question of possession and not on the ownership. (Javier vs. Veridiano,
plaintiff had prior physical possession and that he was deprived thereof by the
237 SCRA 565 [1994])
defendant through force, intimidation, threats, strategy and stealth.8 The complaint
In an action for forcible entry, the only issue involved is mere physical possession
in this case makes such an averment. Hence, the irrelevant circumstance that the
(possession de facto) and not juridical possession (possession de jure) nor ownership—
evidence adduced during the hearing rendered improper an action for forcible entry is
the judgment rendered in the ejectment case is effective only with respect to
of no moment and cannot deprive the MCTC of its jurisdiction over the case. The
possession and “in no wise bind the title or affect the ownership of the land.”
MCTC continues to have that jurisdiction.
(Cagayan De Oro City Landless Residents Association, Inc. [COCLAI] vs. Court of
We shall now address the more decisive question of prior physical possession.
Appeals, 254 SCRA 220 [1996])
——o0o——
_______________

7 320 Phil. 146, 156; 250 SCRA 108, 116-117 [1995].


8 Spouses Tirona vs. Hon. Alejo, 419 Phil. 285; 367 SCRA 17 [2001]. © Copyright 2019 Central Book Supply, Inc. All rights reserved.
231

VOL. 448, JANUARY 14, 2005 231


Sampayan vs. Court of Appeals
After a careful evaluation of the evidence at hand, we find for the petitioner.
To begin with, we are at once confronted by the uncontested findings of the
MCTC judge himself during his ocular inspection of the premises in dispute that
what he saw thereat “confirmed the allegations of the defendant [now petitioner
Sampayan] that his predecessors-in-interest have introduced improvements by
planting caimito trees, coconut trees, and others on the land in question,” adding that
“[N]othing can be seen on the land that plaintiff had once upon a time been in
possession of the land,” and categorically stating that “[T]he allegation that Cristita
Quita, the predecessor-in-interest of the plaintiffs had been in possession of the said
property since 1957, openly, exclusively, continuously, adversely and in the concept of
an owner is a naked claim, unsupported by any evidence.”
Then, too, there is the sworn affidavit of Dionesia Noynay to the effect that she
had been residing since 1960 onward on Lot No. 1957, the lot adjacent to Lot No.
1959, and that neither the private respondents nor their mother had ever possessed
Lot No. 1959. Coming as it does from an immediate neighbor, Dionesia’s statement
commands great weight and respect. Incidentally, the MCTC judge himself found
during the ocular inspection that a portion of the house of Macario Noynay, husband
of Dionesia, protruded on Lot No. 1959.
We note that in the herein assailed decision, the Court of Appeals attached much
significance to the fact that private respondents’ mother Cristita Quita was an
oppositor in Cadastral Case No. 149. We rule and so hold that the mother’s being an
oppositor in said cadastral case does not, by itself, establish prior physical possession
because not all oppositors in cadastral cases are actual possessors of the lots or lands
subject thereof.232
against him.—The status of petitioner spouses is akin to that of a lessee or a tenant whose term
VOL.340,SEPTEMBER18,2000 525
of lease has expired but whose occupancy has continued by tolerance of the owner. A person who
Jimenez vs. Patricia, Inc. occupies the land of another at the latter’s forbearance or permission without any contract
between them is necessarily bound by an implied promise that he will vacate upon demand
G.R. No. 134651. September 18, 2000. *

failing which a summary action for ejectment is the proper remedy against him. The present
SPOUSES VIRGILIO and JOSIE JIMENEZ, petitioners, vs.PAT-RICIA, INC., action being for unlawful detainer, it is well within the exclusive original jurisdiction of the
respondent. metropolitan trial courts.
Jurisdiction; The rule is settled that a question of jurisdiction may be raised at any time, Same; Same; Appeals; Estoppel; Any issue raised for the first time on appeal and not
even on appeal, provided that its application does not result in a mockery of the tenets of fair timely raised in the proceedings in the lower court is barred by estoppel; Sublessees, in an action
play.—The rule is settled that a question of jurisdiction may be raised at any time, even on involving possession of the leased premises, cannot controvert the title of the lessor, or assert any
appeal, provided that its application does not result in a mockery of the tenets of fair play. In right adverse to the title of the latter.—Petitioners contend that respondent has no
the instant case, the jurisdictional issue was raised by petitioners for the first time only in the 527
instant Petition for Review. However, it should be noted that they did so only after an adverse VOL.340,SEPTEMBER18,2000 527
decision was rendered by the Court of Appeals. Despite several opportunities in the RTC, which
ruled in their favor, and in the Court of Appeals, petitioners never advanced the question of Jimenez vs. Patricia, Inc.
jurisdiction of the MeTC. Additionally, petitioners participated actively in the proceedings cause of action against them since, as proved by Transfer Certificate of Title No. T-44247,
before the MeTC and invoked its jurisdiction with the filing of their answer, in seeking the property is in the name of the City of Manila and not of respondent PATRICIA. Records
affirmative relief from it, in subsequently filing a notice of appeal before the RTC, and later, however show that this issue has not been raised in the proceedings below, hence, will not be
aPetition for Review with the Court of Appeals. Upon these premises, petitioners cannot now be ruled upon by this Court. Any issue raised for the first time on appeal and not timely raised in
allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to the proceedings in the lower court is barred by estoppel. Moreover, being mere sublessees of the
which they had submitted themselves voluntarily. Laches now bars them from doing so. property in question, petitioners cannot in an action involving possession of the leased premises
Actions; Ejectment; Unlawful Detainer; Pleadings and Practice; A complaint for unlawful controvert the title of PATRICIA, or assert any right adverse to its title. It is the Manila City
detainer is sufficient if it alleges that the withholding of possession or the refusal to vacate is Government, not the Jimenez spouses, that is the proper party to dispute the ownership of
unlawful without necessarily employing the terminology of the law.—Be that as it may, we find PATRICIA.
no error in the MeTC assuming jurisdiction over the subject matter. A complaint for unlawful Same; Same; Same; A Motion for Clarificatory Judgment is not in the character of a
detainer is sufficient if it alleges that the withholding of possession or the refusal to vacate is motion for reconsideration does not toll the reglementary period for filing a petition for review
unlawful without necessarily employing the terminology of the law. As correctly found by the with the Court of Appeals.—The Petition for Review filed by respondent with the Court of
appellate Appeals was not prematurely filed. It should be borne in mind that a Motion for Clarificatory
Judgment not being in the character of a motion for reconsideration does not toll the
_______________ reglementary period for filing a petition for review with the Court of Appeals. Its filing will not
bar the judgment from attaining finality, nor will its resolution amend the decision to be
*SECOND DIVISION. reviewed. Thus, when respondent filed a Petition for Review before the Court of Appeals, there
526 was already a final judgment that could properly be the subject of a petition for review.
5 SUPREME COURT REPORTS ANNOTATED Same; Builders in Good Faith; Lessees, much less, sublessees, are not possessors of
builders in good faith over rented land because they know that their occupancy of the premises
26 continues only during the life of the lease, or sublease as the case may be; and, they cannot as a
Jimenez vs. Patricia, Inc. matter of right recover the value of their improvements from the lessor, much less retain the
court, to which we agree, the allegations in the complaint sufficiently established a cause premises until they are reimbursed—their rights are governed by Art. 1678 of the Civil Code.—As
of action for unlawful detainer. The complaint clearly stated how entry was effected and how to the house built by petitioners on the property, this Court has previously ruled that lessees,
and when dispossession started—petitioners were able to enter the subject premises as much less, sublessees, are not possessors or builders in good faith over rented land because they
sublessees of Puri-sima Salazar who, despite the termination of her lease with respondent, know that their occupancy of the premises continues only during the life of the lease, or
continued to occupy the subject premises without any contract with it; thus, their stay was by sublease as the case may be; and, they cannot as a matter of right recover the value of their
tolerance of respondent. improvements from the lessor, much less retain the premises until they are reimbursed.
Same; Same; Same; Forcible Entry; Prior physical possession is indispensable only in Instead, their rights are governed by Art. 1678 of the Civil Code which allows reimbursement of
actions for forcible entry but not in unlawful de-tainer.—The fact that the complaint failed to lessees up to one-half (1/2) of the value of their improvements if the lessor so elects.
state that respondent was in prior possession of the property before it was unlawfully withheld
by petitioner spouses is of no moment. Prior physical possession is indispensable only in actions SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
for forcible entry but not in unlawful detainer.
Lease; A sublessee derives his right from the sublessor whose termination of contract with 528
the lessor necessarily also ends the sublease con-tract.—Petitioner spouses, as mere sublessees of
528 SUPREME COURT REPORTS ANNOTATED
Purisima Salazar, derive their right from the sublessor whose termination of contract with the
lessor necessarily also ends the sublease contract. Thus, when the contract of lease of Purisima Jimenez vs. Patricia, Inc.
Salazar with respondent was terminated the contract of sublease of petitioners with the former The facts are stated in the opinion of the Court.
also necessarily ended and petitioners cannot insist on staying on the premises. Petitioners can
Rico B. Bolongaita for petitioners.
invoke no right superior to that of their sublessor.
Same; Ejectment; A person who occupies the land of another at the latter’s forbearance or Ramon I. Rana for respondent.
permission without any contract between them is necessarily bound by an implied promise that
he will vacate upon demand failing which a summary action for ejectment is the proper remedy BELLOSILLO,J.:
The Joint Decision of the Court of Appeals (dismissing the petition for review filed by
1 new lease contract existed between the Jimenez spouses and PATRICIA in view of
spouses Virgilio and Josie Jimenez in CA-G.R. SP No. 43185 and giving due course to the latter’s acceptance of rentals from the former. Thus the RTC extended the term of
the petition for review filed by Patricia, Inc., in CA-G.R. SP No. 43179), in effect the lease between the parties for a period of one (1) year from date of decision, and
reversing the decision of the Regional Trial Court and reinstating that of the ordered PATRICIA to reimburse the Jimenez
Metropolitan Trial Court, is assailed in the instant petition.
Petitioners Virgilio and Josie Jimenez, spouses, are sublessees of a lot and ________________
building located at 2853 Juan Luna Street, Tondo, Ma-nila, owned by respondent
Patricia, Inc. (PATRICIA for brevity), a domestic corporation duly organized and Records, pp. 27-32.
4

Decision penned by Judge Jose V. Latayan, MeTC-Br. 3, Manila, Civil Case No. 148128-CV, dated 9
existing under Philippine laws. The Jimenez spouses subleased the property in 1980
5

October 1996.
from a certain Purisima Salazar who had been leasing the property from PATRICIA Docketed as Civil Case No. 95-75996, raffled to RTC-Br. 44, Manila, presided over by Judge Lolita O.
6

since 1970. Gal-lang.


Sometime in 1995 Purisima Salazar abandoned the property thus incurring back 530

rentals dating back to January 1992. Hence, by reason of her non-payment of the 530 SUPREME COURT REPORS ANNOTATED
monthly rentals, her contract of lease with PATRICIA was terminated. Jimenez vs. Patricia, Inc.
On 29 March 1995 PATRICIA sent a letter to the Jimenez spouses informing
spouses the expenses incurred in the construction of the house built on the property
them of the termination of the lease and demanding that they vacate the premises
and/or for the Jimenez spouses to remove the improvements thereon.
within fifteen (15) days from notice since they had no existing lease contract with
7

On 20 January 1997 PATRICIA filed a Motion for Clarificatory Judgment and


it. But the spouses refused to leave.
later added a Supplement to the Motion for Clarificatory Judgment.
2

Thus, on 5 May 1995 PATRICIA filed a complaint for unlawful detainer against
On 27 January 1997 PATRICIA, without waiting for the resolution of its Motion
3

the Jimenez spouses alleging, among others, that


for Clarificatory Judgment as well as its supplement thereto, filed a Petition for
Review of the RTC decision with the Court of Appeals, docketed as CA-G.R. SP No.
________________
43179.
Decision penned by Associate Justice Angelina Sandoval Gutierrez, and concurred in by Associate
1
On 13 February 1997 the Jimenez spouses filed their own Petition for
Justices Romeo G. Callejo and Omar U. Amin, dated 30 January 1998. Review, docketed as CA-G.R. SP No. 43185. Subsequently, this petition was
Rollo, p. 49.
2
consolidated with PATRICIA’S Petition for Review since it involved the same parties,
Docketed as Civil Case No. 148128, subsequently raffled to MeTC-Br. 3, Manila.
facts, and issues.
3

529
The Court of Appeals in due course rendered a Joint Decision dismissing
VOL.340,SEPTEMBER18,2000 529 the Petition for Review filed by the Jimenez spouses while giving due course to the
Jimenez vs. Patricia, Inc. petition of PATRICIA. The Court of Appeals held that there was no implied renewal
the lessee Purisima Salazar subleased the premises to the Jimenezes; that Purisima of the lease contract between the parties since, to begin with, there was no lease
Salazar no longer occupied the premises; that this notwithstanding, the Jimenez contract between them; hence, the Jimenez spouses could not have tendered payment
spouses continued to occupy the premises without any contract with PATRICIA, its of rentals to PATRICIA. Instead, it declared the status of the Jimenez spouses as
owner, hence, their stay was merely being tolerated by the latter; and, that despite being analogous to that of a lessee or tenant whose lease has expired but whose
demands made upon them, they refused to vacate the premises thereby unlawfully occupancy has been continued by mere tolerance of the owner, and hence, bound by
and illegally withholding the property to the damage and prejudice of PATRICIA. an implied promise that he would vacate the premises upon demand. Thus, the
In their Answer, the Jimenez spouses claimed that they occupied the premises as appellate court reversed and set aside the decision of the RTC and reinstated the
sublessees of Purisima Salazar with the knowledge of PATRICIA; that the building decision of the MeTC which, among others, ordered the Jimenez spouses to vacate
originally found on the lot was owned by Purisima Salazar which she sold to them in the premises.
1984 with notice and without any objection from PATRICIA; that, when the building Petitioners now assail the jurisdiction of the MeTC contending that the failure of
was gutted by fire in 1987 they constructed a new house on the lot worth the complaint to allege the character of the sub-lease or entry of the Jimenez spouses
P1,500,000.00 with the knowledge and without any objection from PATRICIA; and, into the property, whether legal or illegal, automatically classified it into an accion
that PATRICIA never collected any rental for the land but they nevertheless publiciana
voluntarily paid the amount of P23,537.25 as rent corresponding to the period of
September 1979 to 31 December 1991. 4
_______________

The MeTC ruled in favor of PATRICIA and ordered the Jimenez spouses to
CA Rollo, pp. 29-32.
vacate the premises, to pay PATRICIA the sum of P3,000.00 a month as reasonable
7

531
rental and/or compensation for the use of the premises beginning April 1995 until
they finally vacated the premises, and to pay PATRICIA the sum of P5,000.00 as VOL.340,SEPTEMBER18,2000 531
reasonable attorney’s fees, plus costs of suit. 5
Jimenez vs. Patricia, Inc.
The Jimenez spouses appealed the MeTC decision to the RTC. On 2 January 6
or reinvindicatoria cognizable by the RTC and not by the MeTC; thus, the action 8

1997 the RTC modified the decision in favor of the spouses holding that an implied should have been dismissed.
The rule is settled that a question of jurisdiction may be raised at any time, even be asserted where entry was illegal from the start. It appears however that
on appeal, provided that its application does not result in a mockery of the tenets of respondent did not expressly and equivocally prohibit the subleasing of the property.
fair play. In the instant case, the jurisdictional issue was raised by petitioners for the Although the attached contracts of lease state that the lessee cannot sublease the
first time only in the instant Petition for Review. However, it should be noted that prop-
they did so only after an adverse decision was rendered by the Court of Appeals.
Despite several opportunities in the RTC, which ruled in their favor, and in the Court __________________
of Appeals, petitioners never advanced the question of jurisdiction of the MeTC.
Additionally, petitioners participated actively in the proceedings before the Javelosa v. Court of Appeals, G.R. No. 124292, 10 December 1996, 265 SCRA 493.
11

Duellome v. Gotico, No. L-17846, 29 April 1963, 7 SCRA 841.


MeTC and invoked its jurisdiction with the filing of their answer, in seeking
12
9

Sec.4.Assignment of Lease or Subleasing.—Assignment of lease or subleasing of the whole or any


13

affirmative relief from it, in subsequently filing a notice of appeal before the RTC, portion of the residential unit, including the acceptance of boarders or bedspacers, without the written
and later, a Petition for Review with the Court of Appeals. Upon these premises, consent of the owner/lessor is prohibited (Batas Pambansa Blg. 887).
petitioners cannot now be allowed belatedly to adopt an inconsistent posture by 533

attacking the jurisdiction of the court to wnich they had submitted themselves VOL.340,SEPTEMBER18,2000 533
voluntarily. Laches now bars them from doing so. Jimenez vs. Patricia, Inc.
Be that as it may, we find no error in the MeTC assuming jurisdiction over the
erty, none of those contracts pertain to the contract of lease between Purisima
subject matter. A complaint for unlawful detainer is sufficient if it alleges that the
Salazar and respondent PATRICIA. In any event, the fact that PATRICIA sent a
withholding of possession or the refusal to vacate is unlawful without necessarily
14

letter to the Jimenez spouses informing them of the termination of the lease of
employing the terminology of the law. As correctly found by the appellate court,
Purisima Salazar shows that they recognize and acknowledge their stay in the
10

premises as sublessees of Salazar. However, after the termination of the contract of


_________________
lease of Purisima Salazar with PATRICIA, any right of the Jimenez spouses to stay
Petitioners cited Muñoz v. CA where the Court held that “when the complaint fails to aver facts
8
in the premises, although previously recognized, then and there ended. After the
constitutive of forcible entry and unlawful detainer, as where it does not state how entry was effected or how termination of the contract of lease of Salazar the continued stay of the Jimenez
and when dispossession started, the action should be accion publiciana or reinvindicatoria in the Court of spouses thereat was merely by tolerance of PATRICIA and it became unlawful after
First Instance (now, Regional Trial Court),” as basis for their contention. (G.R. No. 102693, 23 September they ignored the lessor’s demand to leave.
1992, 214 SCRA 216).
Refugia v. Court of Appeals, G.R. No. 118284, 5 July 1996, 258 SCRA 347, citing Rodriguez v. Court of
9
The status of petitioner spouses is akin to that of a lessee or a tenant whose term
Appeals, No. L-29264, 29 August 1969, 29 SCRA 419; Navoa v. Court of Appeals, G.R. No. 59255, 29 De- of lease has expired but whose occupancy has continued by tolerance of the owner. A
cember 1995, 251 SCRA 545. person who occupies the land of another at the latter’s forbearance or permission
Sumulong v. Court of Appeals, G.R. No. 108817, 10 May 1994, 232 SCRA 372; Pangilinan v.
without any contract between them is necessarily bound by an implied promise that
10

Aguilar, No. L-29275, 31 January 1972, 43 SCRA 136.


532 he will vacate upon demand failing which a summary action for ejectment is the
532 SUPREME COURT REPORTS ANNOTATED
proper remedy against him. The present action being for unlawful detainer, it is well
15

within the exclusive original jurisdiction of the metropolitan trial courts.


Jimenez vs. Patricia, Inc. Petitioners contend that respondent has no cause of action against them since, as
to which we agree, the allegations in the complaint sufficiently established a cause of proved by Transfer Certificate of Title No. T-44247, the property is in the name of the
action for unlawful detainer. The complaint clearly stated how entry was effected and City of Manila and not of respondent PATRICIA.
how and when dispossession started—petitioners were able to enter the subject Records however show that this issue has not been raised in the proceedings
premises as sublessees of Purisima Salazar who, despite the termination of her lease below, hence, will not be ruled upon by this Court. Any issue raised for the first time
with respondent, continued to occupy the subject premises without any contract with on appeal and not timely raised in the proceedings in the lower court is barred by
it; thus, their stay was by tolerance of respondent. estoppel. Moreover, being mere sublessees of the property in question, petitioners
The fact that the complaint failed to state that respondent was in prior possession can-
of the property before it was unlawfully withheld by petitioner spouses is of no
moment. Prior physical possession is indispensable only in actions for forcible entry _________________
but not in unlawful detainer. 11

Petitioner spouses, as mere sublessees of Purisima Salazar, derive their right Attached Contracts of Lease pertain to those between Patricia, Inc., and Renato Establecida, Patricia,
14

from the sublessor whose termination of contract with the lessor necessarily also Inc., and Augusto Tortosa, and not Patricia, Inc., and herein petitioners; Rollo, pp. 109-114.
Vda. de Catchuela v. Francisco, No. L-31985, 25 June 1980, 98 SCRA 172, citing Calubayan v.
15

ends the sublease contract. Thus, when the contract of lease of Purisima Salazar with Pascual, No. L-22645, 18 September 1967, 21 SCRA 146; Yu v. de Lara, No. L-16084, 30 November 1962, 6
respondent was terminated the contract of sublease of petitioners with the former SCRA 785.
also necessarily ended and petitioners cannot insist on staying on the premises. 534
Petitioners can invoke no right superior to that of their sublessor. 12
534 SUPREME COURT REPORTS ANNOTATED
It is not correct to say that petitioners could not have occupied the property by
Jimenez vs. Patricia, Inc.
tolerance of respondent as their entry into the premises was inceptively illegal, the
not in an action involving possession of the leased premises contro-vert the title of
sublease being entered into without the consent of the owner. Petitioners argue that
13

PATRICIA, or assert any right adverse to its title. It is the Manila City Government,
tolerance is only available in cases where entry was lawful from the start and cannot
not the Jimenez spouses, that is the proper party to dispute the ownership of petitioner spouses Virgilio and Josie Jimenez should also remove the house they have
PATRICIA. constructed on the lot at their own expense. Thus, petitioner spouses and all persons
Petitioners argue that the Petition for Review of respondent should have been claiming title under them are ordered: (a) to vacate the premises described in the
dismissed for being premature in view of the pendency of its Motion for Clarificatory complaint located at 2853 Juan Luna Street, Tondo, Manila; (b) to remove at their
Judgment and Supplement to the Motion for Clarificatory Judgment which remained own ex-pense within sixty (60) days from finality of this Decision the house they have
unresolved by the RTC. They assert that because of the pendency of its motion, there constructed thereon; (c) to pay respondent Patricia, Inc., the sum of P3,000.00 a
was no final judgment or decision that could properly be the subject of a petition for month as reasonable rental/compensation for the use of the premises beginning April
review before the Court of Appeals. 1995 until they finally
We do not agree. The Petition for Review filed by respondent with the Court of
Appeals was not prematurely filed. It should be borne in mind that a Motion for __________________
Clarificatory Judgment not being in the character of a motion for reconsideration
does not toll the reglementary period for filing a petition for review with the Court of Gabrito v. Court of Appeals, G.R. No. 77976, 24 November 1988, 167 SCRA 771, citing Vda. de Bacaling
17

v. Laguna, No. L-26694, 18 De-cember 1973, 54 SCRA 243, 250.


Appeals. Its filing will not bar the judgment from attaining finality, nor will its 536
resolution amend the decision to be reviewed. Thus, when respondent filed a Petition
for Review before the Court of Appeals, there was already a final judgment that could 536 SUPREME COURT REPORTS ANNOTATED
properly be the subject of a petition for review. Jimenez vs. Patricia, Inc.
Moreover, under the Rules on Summary Procedure, the decision of the RTC in vacate the premises; and, (d) to pay respondent Patricia, Inc., the sum of P5,000.00
civil cases governed by this Rule, including forcible entry and unlawful detainer, is as attorney’s fees, plus costs of suit.
immediately executory without prejudice to a further appeal that may be taken SO ORDERED.
therefrom. The judgment of the RTC being final and executory the filing of Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.
the Petition for Review was proper. Judgment affirmed with modification.
As to the house built by petitioners on the property, this Court has previously Notes.—It is a well-settled rule in this jurisdiction that the sublessee can invoke
ruled that lessees, much less, sublessees, are not possessors or builders in good no right superior to that of his sublessor. (Heirs of Eugenio Sevilla, Inc. vs. Court of
faith over rented land because they know that their occupancy of the premises
16
Appeals, 206 SCRA 559 [1992])
continues only during the life of the lease, or sublease as the case may be; and, they The lessor of the property is a stranger in a contract of sublease between the
cannot as a matter of right recover the value of their improvements lessee/sublessor and the sublessee. (Rodriguez vs. Project 6 Market Service
Cooperative, Inc.,247 SCRA 528 [1995])
_________________

——o0o——
16 Art. 448 of the Civil Code applies only where one builds on land in the belief that he is the owner of the
land, but does not apply where one’s interest in the land is that of a lessee under a rental contract; Balucanag
v. Francisco, No. L-33422, 30 May 1983, 122 SCRA 498. 537
535 © Copyright 2019 Central Book Supply, Inc. All rights reserved.
VOL.340,SEPTEMBER18,2000 535
Jimenez vs. Patricia, Inc.
from the lessor, much less retain the premises until they are reim-bursed. Instead, 17

their rights are governed by Art. 1678 of the Civil Code which allows reimbursement
of lessees up to one-half (1/2) of the value of their improvements if the lessor so elects:
Art.1678.If the lessee makes, in good faith, useful improvements which are suitable to the use
for which the lease is intended, without altering the form or substance of the property leased,
the lessor upon the termination of the lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may suffer damage thereby. He shall
not, however, cause any more impairment upon the property leased than is necessary x x x
(New Civil Code).
Thus, applying the above rule, petitioners cannot recover full reimbursement of the
value spent for the construction of the house, but is limited only to one-half (1/2) of its
value at the election of the lessor. However, as PATRICIA has manifested its lack of
intention to do so, the Jimenez spouses have no recourse but to remove the house at
their own expense.
WHEREFORE, the assailed Joint Decision of the Court of Ap-peals reversing and
setting aside the decision of the Regional Trial Court and reinstating the decision of
the Metropolitan Trial Court is AFFIRMED, with the MODIFICATION that
"It is very clear from the allegations of the plaintiffs in their amended and supplemental
[No. L-10619. February 28, 1958]
complaint, that they claim to have acquired the easement of right of way over the land of the
LEOGARIO RONQUILLO, ET AL., plaintiffs and appellants, vs. JOSE Roco, as defendants and the latter's predecessors in interest, Vicente Roco, thru prescription by their
Administrator of VICENTE Roco Y DOMINGUEZ, ET AL., defendants and appellees. continuous and uninterrupted use of a narrow strip of land of the defendants as passage way or
road
1. 1.EASEMENTS; CLASSIFIED AND HOW THEY ARE ACQUIRED.—Under the Old 86
as well as the New Civil Code, easements may be continuous or discontinuous 86 PHILIPPINE REPORTS ANNOTATED
(intermittent), apparent or nonapparent, discontinuous being those used at more or
less long intervals and which depend upon acts of man (Articles 532 and 615 of the Ronquillo, et al. vs. Roco, et al.
Old and New Civil Codes, respectively). Continuous and apparent easements are in going to Igualdad Street and the public market of Naga City, from their residential land or
acquired either by title or prescription, continuous non-apparent easements and houses, and return.
discontinuous ones whether apparent or not, may be acquired only by virtue of a "The only question therefore to be determined in this case, is whether an easement of right
title. Articles 587 and 539, and 620 and 622 of the Old and New Civil Codes of way can be acquired thru prescription."
respectively.) The dismissal was based on the ground that an easement of right of way though it
may be apparent is, nevertheless, discontinuous or intermittent and, therefore,
1. 2.ID.; EASEMENT OF RIGHT OF WAY MAY NOT BE ACQUIRED THROUGH cannot be acquired through prescription, but only by virtue of a title. Under the Old
PRESCRIPTION.—Under the provisions of Articles 537 and 539, and 620 and 622 of as well as the New Civil Code, easements may be continuous or discontinuous
the Old and New Civil Codes, respectively, the easement of right of way may not be (intermittent), apparent or non-apparent, discontinuous being those used at more or
acquired through prescription. less long intervals and which depend upon acts of man (Articles 532 and 615 of the
Old and New Civil Codes, respectively). Continuous and apparent easements are
APPEAL from an order of the Court of First Instance of Camarines Sur. Palacio, J. acquired either by title or prescription, continuous non-apparent easements and
The f acts are stated in the opinion of the Court discontinuous ones whether apparent or not, may be acquired only by virtue of a title
Moises B. Cruz for appellants. (Articles 537 and 539, and 620 and 622 of the Old and New Civil Codes, respectively).
Vicente Roco, Jr. for appellees. Both Manresa and Sanchez Roman are of the opinion that the easement of right
85 of way is a discontinuous one:
"En cambio, las servidumbres discontinuas se ejercitan por un hecho del hombre, y
VOL. 103, FEBRUARY 28, 1958 85
precisamente por eso son y tienen que ser discontinuas, porque es imposible fisicamente que su
Ronquillo, et al. vs. Roco, et al. uso sea incesante. Asi, la servidumbre de paso es discontinua, porque no es posible que el
hombre esté pasando continuamente por el camino, vereda o senda de que se trate." (4
Manresa, Codigo Civil Español, 5th ed., p. 529).
MONTEMAYOR, J.:
* * * "5° Por razón de los modos de disfrutar las
servidumbres,en continuas y discontinuas (1). Las continuas son aquellas cuyo uso es ó puede
Involving as it does only a question of law, the present appeal from the order of the ser incesante, sin la intervención de ningún hecho del hombre, como son las de luces y otras de
Court of First Instance of Camarines Sur, dated March 6, 1955, dismissing the la misma especie; y las discontinuas, las que se usan a intervalos, más ó menos largos, y
amended and supplemental complaint of plaintiffs on motion of defendants that it did dependen de actos del hombre, como las de senda, carrera y otras de esta clase." (3 Sanchez
not state a cause of action, was taken directly to this Court. Roman, Derecho Civil, p. 488).
The facts and the issue involved in the appeal are well and correctly stated in the Under the provisions of the Civil Code, old and new, particularly the articles thereof
appealed order, the pertinent portion of which we are reproducing and making our aforecited, it would there-
87
own:
"The amended and supplemental complaint alleges that the plaintiffs have been in the VOL. 103, FEBRUARY 28, 1958 87
continuous and uninterrupted use of a road or passage way which traversed the land of the
Ronquillo, et al. vs. Roco, et al.
defendants and their predecessors in interest, in going to Igualdad Street and the market place
of Naga City, from their residential land and back, for more than 20 years; that the defendants fore appear that the easement of right of way may not be acquired through
and the tenants of Vicente Roco, the predecessors in interest of the said defendants have long prescription. Even Article 1959 of the Old Civil Code providing for prescription of
recognized and respected the private legal easement of road right of way of said plaintiffs; that ownership and other real rights in real property, excludes therefrom the exception
on May 12, 1953, the defendants Jose Roco thru his co-defendants, Raymundo Martinez and established by Article 539, referring to discontinuous easements, such as, easement
their men with malice aforethought and with a view to obstructing the plaintiffs' private legal of right of way. (Bargayo vs. Camumot, 40 Phil., 857, 867).
easement over the property of the late Vicente Roco, started constructing a chapel in the middle In the case of Cuayong vs. Benedicto, 37 Phil., 781 where the point in issue was
of the said right of way construction actually impeded, obstructed and disturbed the continuous
whether or not vested rights in a right of way can be acquired through user from time
exercise of the rights of the plaintiffs over said right of way; that on July 10, 1954 the new
defendants Natividad Roco and Gregorio Miras, Jr. with the approval of the defendant, Jose immemorial, this Court said:
Roco and with the help of their men and laborers, by means of force, intimidation, and threats, "It is evident, therefore, that no vested right by user from time immemorial had been acquired
illegally and violently planted wooden posts, fenced with barbed wire and closed hermitically by plaintiffs at the time the Civil Code took effect. Under that Code (Article 539) no
the road passage way and their right of way in question against their protests and opposition, discontinuous easement could be acquired by prescription in any event."
thereby preventing them from going to or coming from their homes to Igualdad Street and the However, in the case of Municipality of Dumangas vs.Bishop of Jaro, 34 Phil., 545,
public market of the City of Naga. this same Tribunal held that the continued use by the public of a path over land
adjoining the Catholic church in going to and from said church through its side door, Bengzon, Bautista Angelo, Labrador, Concepción, Endencia, and Felix,
has given the church the right to such use by prescription, and that because of said JJ., concur.
use by the public, an easement of right of way over said land has been acquired by Padilla, J., concurs in the result.
prescription, not only by the church, but also by the public, which without objection
or protest on the part of the owner of said land, had continually availed itself of the REYES, J. B. L., J., concurring:
easement.
The minority of which the writer of this opinion is a part, believes that the I would like to elaborate my reasons for concurring with the majority in declaring the
easement of right of way may now be acquired through prescription, at least since the easement of right of way not acquirable by prescription.
introduction into this jurisdiction of the special law on prescription through the Old The essence of this easement ("servidumbre de paso") lies in the power of the
Code of Civil Procedure, Act No. 190. Said law, particularly, Section 41 thereof, dominant owner to cross or traverse the servient tenement without being prevented
makes no distinction as to the real rights which are subject to prescription, and there or disturbed by its owner. As a servitude, it is a limitation on the servient owner's
would appear to be no valid reason, at least to the writer of this opinion, why the rights of ownership, because it restricts his right to exclude others from his property.
continued use of a path or a road or right of way by the party, specially by the public, But such limitation exists only when the dominant owner actually crosses or passes
for ten years or more, not over the servient estate; because when he does not, the servient owner's right of
88
exclusion is perfect and undisturbed. Since the dominant owner can not be
88 PHILIPPINE REPORTS ANNOTATED continually and uninterruptedly crossing the servient estate, but can do so only at
Ronquillo, et al. vs. Roco, et al. intervals, the easement is necessarily of an intermittent or discontinuous nature.
by mere tolerance of the owner of the land, but through adverse use of it, cannot give Because possession of a right consists in the enjoyment of that right (old Civil
said party a vested right to such right of way through prescription. Code, Art. 430; Art. 423, new Civil Code) and to enjoy a right is to exercise it, it
"The uninterrupted and continuous enjoyment of a right of way necessary to constitute adverse follows that the possession (enjoyment or exercise) of a right of way is intermittent
possession does not require the use thereof every day for the statutory period, but simply the and discontinuous. From this premise, it is inevitable to conclude, with Manresa and
exercise of the right more or less frequently according to the nature of the use. (17 Am. Jur. Sánchez Román, that such easement can not be acquired by acquisitive prescription
972)" (adverse possession)
Even under the case of Cuaycong vs. Benedicto (supra), this Tribunal insinuated that 90
the rule that no discontinuous easement, like an easement of right of way, may, 90 PHILIPPINE REPORTS ANNOTATED
under Article 539 of the Old Civil Code, be acquired, might possibly have been
Ronquillo, et al. vs. Roco, et al.
changed by the provisions of the Code of Civil Procedure relative to prescription.
* * * "Assuming, without deciding, that this rule has been changed by the provisions of the because the latter requires that the possession be continuous or uninterrupted (old
present Code of Civil Procedure relating to prescription, and that since its enactment Civil Code, Art. 1941; new Civil Code, Art. 1118).
discontinuous easement may be acquired by prescription, it is clear that this would not avail The Code of Civil Procedure (Act 190) did not change the situation. Observe that
plaintiffs. The Code of Civil Procedure went into effect on October 1, 1901. The term of its section 41, in conferring prescriptive title upon "ten years adverse possession"
prescription for the acquisition of rights in real estate is fixed by the Code (section 41) at ten qualifies it by the succeeding words "uninterruptedlycontinued for ten years", which
years. The evidence shows that in February, 1911, before the expiration of the term of ten years is the same condition of continuity that is exacted by the Civil Code.
since the time the Code of Civil Procedure took effect, the defendants interrupted the use of the "SEC. 41, Title to Land by Prescription.—Ten years actual adverse possession by any person
road by plaintiffs by constructing and maintaining a toll gate on it and collecting toll from claiming to be the owner for that time of any land or interest in land, uninterruptedly
persons making use of it with carts and continued to do so until they were enjoined by the continued for ten years by occupancy, descent, grants, or otherwise, in whatever way such
granting of the preliminary injunction by the trial court in December 1912." * * * occupancy may have commenced or continued, shall vest in every actual occupant or possessor
(Cuaycong vs. Benedicto, 37 Phil., 781, 796). of such land a full and complete title, saving to the persons under disabilities the rights secured
Professor Tolentino in his Commentaries and Jurisprudence on the Civil Code, Vol. I, by the next section. In order to constitute such title by prescription or adverse possession, the
p. 340, would appear to be of the opinion that under the provisions of the Code of possession by the claimant or by the person under or through whom he claims must have
Civil Procedure relative to prescription, even discontinuous easements, like the been actual, open, public, continuous,under a claim of title exclusive of any other right and
easement of right of way, may be acquired through prescription: adverse to all other claimants. But failure to occupy or cultivate land solely by reason of war
* * * "It is submitted that under Act No. 190, even discontinuous servitudes can be acquired by shall not be deemed to constitute an interruption of possession of the claimant, and his title by
prescription, provided it can be shown that the servitude was 'actual, open, public, continuous, prescription shall be complete, if in other respects perfect, notwithstanding such failure to
under a claim of title exclusive of any other right and adverse to all other claimants'." occupy or cultivate the land during the continuance of war."
89 The case of Municipality of Dumangas vs. Bishop of Jaro, 34 Phil. 541, does not, if
VOL. 103, FEBRUARY 28, 1953 89 properly analyzed, constitute authority to hold that the easement of right of way is
acquirable by prescription or adverse possession. The Court there said:
Ronquillo, et al. vs. Roco, et al. "The record shows that the church of the pueblo of Dumangas was constructed in or about the
However, the opinion of the majority must prevail, and it is held that under the year 1887; that its wall on the southeast side adjoins the building lot in question; and that since
present law, particularly, the provisions of the Civil Code, old and new, unless and the construction of the church there has been a side door in this wall through which the
until the same is changed or clarified, the easement of right of way may not be worshippers attending divine service enter and leave, they having to pass over and cross the
acquired through prescription. land in question. It is therefore to be presumed that the use of said side door also carries with it
In view of the foregoing, the order appealed from is hereby affirmed. No costs. the use by faithful Catholics of the municipal land
91 (Decisions, Supreme Court of Spain, 27 Oct. 1900, 1st February 1912; 11 May 1927,
VOL. 103, FEBRUARY 28, 1958 91 and 7 January 1920).
Parás, C. J., and Reyes A., J., concur.
Ronquillo, et al. vs. Roco, et al.
over which they have had to pass in order to gain access to said place of worship, and, as this
___________
use of the land has been continuous, it is evident that the Church has acquired a right to such
use by prescription, in view of the time that has elapsed since the church was built and
In fact, the Siete Partidas. (law 25, Title 31, of the Third Partida), in treating of this servitude declared
dedicated to religious worship, during which period the municipality has not prohibited the
1

that to gain this servitude by lapse of time "ha menester que aya usado dellas—tanto tiempo de que non se
passage over the land by the persons who attend services customarily held in said church. puedan acordar los omes quanto ha que lo comenzaron usar".
The record does not disclose the date when the Government ceded to the Church the land on 93
which the church building was afterwards erected, nor the date of the laying out of the adjacent
square that is claimed by the municipality and on which the side door of the church, which is VOL. 103, FEBRUARY 28, 1958 93
used as an entrance by the people who frequent this building, gives. There are good grounds for Collector of Int. Rev., et al. vs. Viduya, and Ct. of Appeals
presuming that in apportioning lands at the time of the establishment of the pueblo of
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
Dumangas and in designating the land adjacent to the church as a public square, this latter was
impliedly encumbered with the easement of a right of way to allow the public to enter and leave
the church—a case provided for by article 567 of the Civil Code—for the municipality has never
erected any building or executed any work which would have obstructed the passage and access
to the side door of the church, and the public has been enjoying the right of way over the land in
question for an almost immemorable length of time. Therefore an easement of right of way over
said land has been acquired by prescription, not only by the church, but also by the public
which, without objection or protest, has continually availed itself of the easement in question."
(34 Phil., pp. 545-546).
It will be seen that the ratio decidendi of that case lies in the application of Article
567 of the old Civil Code that provides as follows:
"ART. 567. When an estate acquired by purchase, exchange, or partition is enclosed by other
estates of the vendor, exchanger, or co-owner, the latter shall be obliged to grant a right of way
without indemnity, in the absence of an agreement to the contrary."
Bearing in mind the provisions of the article quoted in relation to the wording of the
decision in the Dumangas case, it can be seen that what the court had in mind is that
when the Spanish Crown apportioned the land occupied by the Church of Dumangas,
it impliedly burdened the neighboring public square (which was also Crown
92
92 PHILIPPINE REPORTS ANNOTATED
Ronquillo, et al. vs. Roco, et al.
property at the time) with an easement of right of way to allow the public to enter
and leave the church, because without such easement the grant in favor of
ecclesiastical authorities would be irrisory: what would be the use of constructing a
church if no one could enter it? Now, if there was an implied grant of the right of way
by the Spanish Crown, it was clearly unnecessary to justify the existence of the
easement through prescriptive acquisition. Why then does the decision repeatedly
speak of prescription? Plainly, the word "prescription" was used in the decision not in
the sense of adverse possession for ten or thirty years, but in the sense of
"immemorial usage" that under the law anterior to the Civil Code of 1889, was one of
the ways in which the servitude of right of way could be acquired. This view is 1

confirmed by the fact that throughout the passages hereinabove quoted, the court's
decision stresses that the people of Dumangas have been passing over the public
square to go to church since the town was founded and the church was built, an
"almost immemorable length of time." It would seem that the term "prescription"
used in said case was merely a loose expression that is apt to mislead unless the
court's reasoning is carefully analyzed.
Since 1889, however, the Civil Code repealed the prior. legislation; and thereafter
the right of way could only be acquired by title and not by adverse possession
(usucapio), saving those servitudes already acquired before the Code came into effect
VOL. 330, APRIL 6, 2000 145 his plantation increased because of the overflow of the water heavy with pig manure
from REMMAN’s piggery farm.
Remman Enterprises, Inc. vs. Court of Appeals REMMAN denied all the allegations of Lat and raised as an affirmative defense
G.R. No. 125018. April 6, 2000. * that measures such as the construction of additional lagoons were already adopted to
REMMAN ENTERPRISES, INC., petitioner, vs. COURT OF APPEALS and contain the waste water coming from its piggery to prevent any damage to the
CRISPIN E. LAT, respondents. adjoining estates.
Damages; Evidence; Income Tax Returns; The tax returns per se could not reflect the total After conducting an ocular inspection and evaluating the evidence of both parties
amount of damages suffered by a party, as income losses from a portion of his property could be the Regional Trial Court found that indeed REMMAN’s waste disposal lagoon
offset by any profit derived from the rest of said property or from other sources of income.— overflowed with the contaminated water flooding one (1) hectare of Lat’s plantation.
REMMAN argues that the trial court as well as the Court of Appeals should not have rejected The waste water was ankle-deep and caused death and destruction to one (1)
its request for the production of Lat’s income tax returns. According to REMMAN had Lat’s
jackfruit tree, fifteen (15) coconut trees, one hundred twenty-two (122) coffee trees,
income tax returns been produced, the issue of the alleged damages suffered by Lat would have
been settled. This argument is moot, if not trite. For this matter has been laid to rest when we
and an unspecified number of mango trees, bananas and vegetables. As a
affirmed the Court of Appeals’ decision in an earlier case involving the same parties. In consequence, the trial court ordered REMMAN to indemnify Lat
147
sustaining the trial court’s quashal of the subpoena duces tecum previously issued compelling
Lat to produce his income tax returns for the years 1982-1986, the appellate court explained VOL. 330, APRIL 6, 2000 147
that the production of the income tax returns would not necessarily serve to prove the special
and affirmative defenses set up by REMMAN nor rebut Lat’s testimony regarding the losses he Remman Enterprises, Inc. vs. Court of Appeals
sustained due to the piggery. The tax returns per se could not reflect the total amount of P186,975.00 for lost profits for three (3) crop years and P30,000.00 as attorney’s fees. 1

damages suffered by Lat, as income losses from a portion of the plantation could be offset by any The decision of the court a quo was affirmed in toto by the Court of Appeals. 2

profit derived from the rest of the plantation or from other sources of income. Conversely, losses In this Petition for Review on Certiorari REMMAN prays that we pass upon the
incurred from other sources of income would be totally unrelated to the income from the findings of the trial court as well as of the appellate court. REMMAN insists that
particular portion of the plantation flooded with waste matter coming from REMMAN’s piggery. factual findings of lower courts may be passed upon, reviewed and reversed: (a) when
the conclusion is a finding grounded entirely on speculation, surmises or conjectures;
PETITION for review on certiorari of a decision of the Court of Appeals. (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when
there is grave abuse of discretion; (d) when the judgment is based on a
The facts are stated in the opinion of the Court. misapprehension of facts; (e) when the Court of Appeals manifestly overlooked
Venice A. Andaya for petitioner. certain relevant facts not disputed by the parties and which, if properly considered,
Maronilla and Maronilla Law Offices for private respondent. would justify a different conclusion; (f) when the conclusions of the Court of Appeals
are not supported by the evidence on record; (g) when facts of substance were
_______________ overlooked which, if correctly considered, might have changed the outcome of the
case; and, (h) when the findings of the Court of Appeals are not in accord with what
SECOND DIVISION.
*
reasonable men would readily accept are the correct inferences from the evidence
146
extant in the records. 3

146 SUPREME COURT REPORTS ANNOTATED Indeed, in the abovementioned instances, the factual milieu of a particular case
Remman Enterprises, Inc. vs. Court of Appeals may be passed upon, reversed or modified’ by this Court. But examination of the
record reveals that all the above instances are unavailing. From this point of view
BELLOSILLO, J.: alone the instant petition is dismissible. Nevertheless, we shall discuss them
hereunder to dispose finally of the contentions of REMMAN.
First, REMMAN argues that its liability for the damages suffered by Lat was not
REMMAN ENTERPRISES, INC. (REMMAN), and CRISPIN E. LAT are adjoining
clearly established.
landowners in Barangay Bugtong Na Pulo, Lipa City. The land of Lat containing an
area of 1.8 hectares is agricultural and planted mostly with fruit trees while
_______________
REMMAN occupies a land area of fifteen (15) hectares six (6) hectares of which are
devoted to its piggery business. REMMAN’s land is one and a half (1 1/2) meters Decision penned by Judge Enrico A. Lanzanas, RTC-Br. 13, Lipa City, Civil Case No. V-408; RTC
1

higher in elevation than that of respondent Lat. Records, pp. 539-559.


Sometime in July 1984 Lat noticed that REMMAN’s waste disposal lagoon was Decision penned by Justice Oswaldo D. Agcaoili, concurred in by Justices Justo P. Torres, Jr., and
2

already overflowing and inundating one-fourth (1/4) of Lat’s plantation. He made Eubulo G. Verzola, CA-G.R. CV 37720; CA Records, pp. 144-162.
Petition; Rollo, pp. 6-7.
3

several representations with REMMAN but they fell on deaf ears. On 14 March 1985, 148
after almost one (1) hectare of Lat’s plantation was already inundated with water
148 SUPREME COURT REPORTS ANNOTATED
containing pig manure, as a result of which the trees growing on the flooded portion
started to wither and die, Lat filed a complaint for damages with preliminary Remman Enterprises, Inc. vs. Court of Appeals
mandatory injunction against REMMAN. Lat alleged that the acidity of the soil in We disagree. During the ocular inspection conducted by the lower court where
representatives of both parties were preent, it was established that the waste water
containing pig manure was continuously flowing from REMMAN’s piggery farm to Coming now to the issue of damages, We find appellant’s allegations not well-taken. Appellant
Lat’s plantation. The water was ankle-deep and flooded one (1) hectare of Lat’s contends that actual and compensatory damages require evidentiary proof, and there being no
plantation. The overflow of the “acidic, malodorous and polluted water” continued evi-
from June 1984 to March 1985 thus destroying one (1) jackfruit tree, fifteen (15)
_____________
coconut trees, one hundred and twenty-two (122) coffee trees, and an unspecified
number of mango trees, bananas and vegetables. 4
6See Resolution of the Third Division dated 14 January 1991 in G.R. No. 95561; RTC Records, pp. 496-497.
In addition, the appellate court found that there was indeed negligence on the 7Decision penned by Associate Justice Minerva P. Gonzaga-Reyes (now a Member of this Court), concurred in by Associate
Justices Ricardo J. Francisco (now retired Member of this Court) and Salome A. Montoya (now Presiding Justice of the Court of
part of REMMAN which directly caused the damage to the plantation of Lat. Thus— Appeals), CA-G.R. SP No. 20537, prom. 29 June 1990; id., pp. 487-490.
x x x Negligence was clearly established. It is uncontroverted that the land of appellee was 150
flooded on account of the overflow of acidic, malodorous and polluted water coming from the
adjacent piggery farm of appellant sometime in May 1984. This resulted in the impairment of 150 SUPREME COURT REPORTS ANNOTATED
the productivity of appellee’s land as well as the eventual destruction and death of several fruit Remman Enterprises, Inc. vs. Court of Appeals
trees, such as coconuts, coffee, jackfruits, bananas and other plants x x x x Appellant cannot dence presented as to the necessity of the award for damages, it was erroneous for the lower
avoid liability because their negligence was the proximate cause of the damage. Appellee’s court to have made such award. It must be remembered that after the ocular inspection, the
property was practically made a catch-basin of polluted water and other noxious substances court a quo rendered an inventory of dead and rotten trees and plants found in appellee’s
emptying from appellant’s piggery which could have been prevented had it not been for the property. Appellee also testified on the approximate annual harvest and fair market value
negligence of appellant arising from its: (a) failure to monitor the increases in the level of water thereof. Significantly, no opposition or controverting evidence was presented by appellant on the
in the lagoons before, during and after the heavy downpours which occurred during the rainy matter. Hence, appellant is bound thereby and cannot now be heard to complain. As correctly
months of 1984; (b) failure to augment the existing lagoons prior to the incident, held by the court a quo:
notwithstanding the fact that at the time of the flooding, the piggery had grown to a capacity of An ocular inspection has been conducted by the trial court. The inventory of the trees damaged and the
11,000 heads, and considering that it was reasonably forseeable that the existing waste disposal itemized valuation placed therein by private respondent after the ocular inspection which is not rebutted by
facilities were no longer adequate to accomodate the increasing volume of waste matters in such the petitioner, is the more accurate indicator of the said amount prayed for as damages. If the valuation is
a big farm; and more importantly, (c) the repeated failure to comply with their promise to indeed unreasonable, petitioner should present controverting evidence of the fair market value of the crops
appellee. 5
involved. The trial court held that the private respondent himself had been subjected to extensive cross and
re-cross examination by the counsel for the petitioner on the amount of damages. 8

Finally, REMMAN complains that the damages, if any, were due to a fortuitous
_______________
event.
4Original Records, p. 211.
Again, we cannot agree with petitioner. We defer instead to the findings opinions
5CA Records, p. 158. expressed by the lower courts—
149 Even assuming that the heavy rains constituted an act of God, by reason of their negligence, the
fortuitous event became humanized, rendering appellants liable for the ensuing damages.
VOL. 330, APRIL 6, 2000 149
In National Power Corporation v. Court of Appeals, 233 SCRA 649(1993), the Supreme Court
Remman Enterprises, Inc. vs. Court of Appeals held:
Second, REMMAN argues that the trial court as well as the Court of Appeals should Accordingly, petitioners cannot be heard to invoke the act of God or force majeure to escape liability for the
loss or damage sustained by private respondents since they, the petitioners, were guilty of negligence. This
not have rejected its request for the production of Lat’s income tax returns. According event then was not occasioned exclusively by an act of God or force majeure; a human factor—negligence or
to REMMAN had Lat’s income tax returns been produced, the issue of the alleged imprudence—had intervened. The effect then of the force majeure in question may be deemed to
damages suffered by Lat would have been settled.
This argument is moot, if not trite. For this matter has been laid to rest when we _____________
affirmed the Court of Appeals’ decision in an earlier case involving the same
parties. In sustaining the trial court’s quashal of the subpoena duces
6
8CA, Rollo, pp. 161-162.
151
tecum previously issued compelling Lat to produce his income tax returns for the
years 1982-1986, the appellate court explained that the production of the income tax VOL. 330, APRIL 6, 2000 151
returns would not necessarily serve to prove the special and affirmative defenses set Remman Enterprises, Inc. vs. Court of Appeals
up by REMMAN nor rebut Lat’s testimony regarding the losses he sustained due to have, even if only partly, resulted from the participation of man. Thus, the whole occurrence was thereby
the piggery. The tax returns per se could not reflect the total amount of damages humanized, as it were, and removed from the rules applicable to acts of God.
suffered by Lat, as income losses from a portion of the plantation could be offset by As regards the alleged natural easement imposed upon the property of appellee, resort to
any profit derived from the rest of the plantation or from other sources of income. pertinent provisions of applicable law is imperative. Under the Civil Code, it is provided:
Art. 637. Lower estates are obliged to receive the waters which naturally and without the intervention of man
Conversely, losses incurred from other sources of income would be totally unrelated descend from the higher estates, as well as the stones or earth which they carry with them.
to the income from the particular portion of the plantation flooded with waste matter The owner of the lower estate cannot construct works which will impede this easement; neither can the
coming from REMMAN’s piggery. 7 owner of the higher estate make works which will increase the burden.
Third, REMMAN contends that the damages allegedly sustained by Lat have not A similar provision is found in the Water Code of the Philippines (P.D. No. 1067), which
provides:
been satisfactorily established. Art. 50. Lower estates are obliged to receive the water which naturally and without the intervention of man
We are not convinced. The factual findings of the court a quo rightly support its flow from the higher estates, as well as the stone or earth which they carry with them.
conclusions on this respect—
The owner of the lower estate cannot construct works which will impede this natural flow, unless he
provides an alternative method of drainage; neither can the owner of the higher estate make works which will
increase this natural flow.
As worded, the two (2) aforecited provisions impose a natural easement upon the lower
estate to receive the waters which naturally and without the intervention of man descend from
higher estates. However, where the waters which flow from a higher estate are those which are
artificially collected in man-made lagoons, any damage occasioned thereby entitles the owner of
the lower or servient estate to compensation. 9

On the basis of the foregoing discussion, it is crystal clear that REMMAN is directly
accountable to Lat for the damages sustained by him. The negligence of REMMAN in
maintaining the level of waste water in its lagoons has been satisfacto-

______________

9Id., pp. 159-160.


152
152 SUPREME COURT REPORTS ANNOTATED
Remman Enterprises, Inc. vs. Court of Appeals
rily established. The extent of damages suffered by Lat remains unrebutted; in fact,
has been proved.
WHEREFORE, the petition is DENIED. The 19 October 1995 Decision of the
Court of Appeals affirming that of the Regional Trial Court-Br. 16, Lipa City, holding
petitioner Remman Enterprises, Inc (REMMAN) liable to private respondent Crispin
E. Lat for damages and to indemnify the latter P186,975.00 for lost profits for three
(3) crop years and P30,000.00 as attorney’s fees, is AFFIRMED. Costs against
petitioner.
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.
Petition denied, judgment affirmed.
Notes.—Income tax returns, being public documents, until controverted by
competent evidence, are prima faciecorrect with respect to the entries
therein. (Ropali Trading Corporation vs. National Labor Relations Commission, 296
SCRA 309 [1998])
Income tax returns are self-serving documents because they are generally filled
up by the taxpayer himself—they are still to be examined by the Bureau of Internal
Revenue for their correctness. (Favila vs. National Labor Relations Commission, 308
SCRA 303 [1999])

——o0o——

153
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VOL. 450, FEBRUARY 4, 2005 449 CHICO-NAZARIO, J.:

De la Cruz vs. Ramiscal


This petition for review assails (1) the Resolution dated 11 September 1998 of the
1

G.R. No. 137882. February 4, 2005. * Court of Appeals which dismissed the appeal filed by petitioners from the Decision
SPS. ELIZABETH DE LA CRUZ and ALFREDO DE LA CRUZ, dated 31 July 1997 of the Regional Trial Court (RTC), Branch 91, Quezon City, for
petitioners, vs. OLGA RAMISCAL represented by ENRIQUE MENDOZA, Demolition of Illegally Constructed Structure, and
respondent.
Remedial Law; Appeals; The right to appeal is not a constitutional, natural or inherent _______________
right—it is a statutory privilege and of statutory origin and, therefore, available only if granted
or provided by statute; The right to appeal may be exercised only in the manner prescribed by, Rollo, pp. 29-31. Penned by Associate Justice Quirino D. Abad Santos, Jr., with Associate Justices
1

and in accordance with, the provisions of the law.—Petitioners take the stand that even Roberto A. Barrios and Mariano M. Umali, concurring.
assuming the brief was filed late, the Court of Appeals still erred in dismissing their petition in 451
light of the rulings of this Court allowing delayed appeals on equitable grounds. Indeed, in VOL. 450, FEBRUARY 4, 2005 451
certain special cases and for compelling causes, the Court has disregarded similar technical
flaws so as to correct an obvious injustice made. In this case, petitioners, however, failed to De la Cruz vs. Ramiscal
demonstrate any justifiable reasons or meritorious grounds for a liberal application of the rules. (2) the Resolution dated 05 March 1999 denying the subsequent motion for
2

We must remind petitioners that the right to appeal is not a constitutional, natural or inherent reconsideration.
right—it is a statutory privilege and of statutory origin and, therefore, available only if granted The following facts, as recapitulated by the trial court, are undisputed.
or provided by statute. Thus, it may be exercised only in the manner prescribed by, and in
Respondent Olga Ramiscal is the registered owner of a parcel of land located at
accordance with, the provisions of the law.
Civil Law; Easements; An easement or servitude is a real right, constituted on the the corner of 18th Avenue and Boni Serrano Avenue, Murphy, Quezon City, covered
corporeal immovable property of another, by virtue of which the owner has to refrain from doing, by Transfer Certificate of Title (TCT) No. 300302 of the Register of Deeds for Quezon
or must allow someone to do, something on his property, for the benefit of another thing or City. Petitioners SPS. ELIZABETH and ALFREDO DE LA CRUZ are occupants of a
3

person.—An easement or servitude is a real right, constituted on the corporeal immovable parcel of land, with an area of eighty-five (85) square meters, located at the back of
property of another, by virtue of which the owner has to refrain from doing, or must allow Ramiscal’s property, and covered by TCT No. RT-56958 (100547) in the name of
someone to do, something on his property, for the benefit of another thing or person. The Concepcion de la Peña, mother of petitioner Alfredo de la Cruz. 4

statutory basis for this right is Article 613, in connection with Article 619, of the Civil Code. The subject matter of this case is a 1.10-meter wide by 12.60-meter long strip of
Same; Same; Requisites for the conferment of a legal easement of right of way under
land owned by respondent which is being used by petitioners as their pathway to and
Article 649.—The conferment of a legal ease-
from 18th Avenue, the nearest public highway from their property. Petitioners had
_______________ enclosed the same with a gate, fence, and roof. 5

In 1976, respondent leased her property, including the building thereon, to Phil.
*SECOND DIVISION. Orient Motors. Phil. Orient Motors also owned a property adjacent to that of
450 respondent’s. In 1995, Phil. Orient Motors sold its property to San Benito Realty.
4 SUPREME COURT REPORTS ANNOTATED After the sale, Engr. Rafael Madrid prepared a relocation survey and location plan
50 for both contiguous properties of respondent and San Benito Realty. It was only then
that respondent discovered that the aforementioned pathway being occupied by
De la Cruz vs. Ramiscal petitioners is part of her property. 6

ment of right of way under Article 649 is subject to proof of the following requisites: (1) it Through her lawyer, respondent immediately demanded that petitioners
is surrounded by other immovables and has no adequate outlet to a public highway; (2) payment
demolish the structure constructed by them
of proper indemnity; (3) the isolation is not the result of its own acts; (4) the right of way
claimed is at the point least prejudicial to the servient estate; and (5) to the extent consistent
_______________
with the foregoing rule, where the distance from the dominant estate to a public highway may
be the shortest.
Same; Actions; Laches; Essential Elements of Laches.—The essential elements of laches 2Rollo, pp. 33-34.
Rollo, p. 17.
are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the
3

4Rollo, p. 19.
situation complained of; (b) delay in asserting complainant’s rights after he had knowledge of 5Rollo, p. 19.
defendant’s acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by 6Rollo, pp. 18-19.
defendant that the complainant will assert the right on which he bases his suit; and (d) injury 452
or prejudice to the defendant in the event the relief is accorded to the complainant.
452 SUPREME COURT REPORTS ANNOTATED

PETITION for review on certiorari of the resolutions of the Court of Appeals. De la Cruz vs. Ramiscal
on said pathway without her knowledge and consent. As her letter dated 18 February
The facts are stated in the opinion of the Court. 1995 addressed to petitioners went unheeded, the former referred the matter to
Jose Reny T. Albarico for petitioners. the Barangay for conciliation proceedings, but the parties arrived at no settlement.
Arnel U. Torres for respondent. Hence, respondent filed this complaint with the RTC in Civil Case No. Q-95-25159,
seeking the demolition of the structure allegedly illegally constructed by petitioners _______________
on her property. Respondent asserted in her complaint that petitioners have an
existing right of way to a public highway other than the current one they are using, Rollo, pp. 19-20.
10

Also “Poleng” in other parts of the records.


11

which she owns. She prayed for the payment of damages. 7


Penned by then Judge Marina L. Buzon, now Associate Justice of the Court of Appeals.
12

In support of the complaint, respondent presented TCT No. RT-56958 (100547) 454
covering the property denominated as Lot 1-B in the name of Concepcion de la Peña, 454 SUPREME COURT REPORTS ANNOTATED
mother of petitioner herein Alfredo de la Cruz. The aforesaid TCT reveals that a
portion of Lot 1-B, consisting of 85 square meters and denominated as Lot 1-B-2, is De la Cruz vs. Ramiscal
being occupied by petitioners. To prove that petitioners have an existing right of way “Plaintiff’s claim for moral damages must be denied as no evidence in support thereof was
presented at all by her. Consequently, plaintiff is not entitled to exemplary damages. However,
to a public highway other than the pathway which respondent owns, the latter
13

for having been compelled to file this suit and incur expenses to protect her interest, plaintiff is
adduced in evidence a copy of the plan of a subdivision survey for Concepcion de la entitled to an attorney’s fees in the amount of P10,000.00.
Peña and Felicidad Manalo prepared in 1965 and subdivision plan for Concepcion de WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff
la Peña prepared in 1990. These documents establish an existing 1.50-meter wide and ordering the defendants to demolish the structure built by them along the pathway on the
alley, identified as Lot 1-B-1, on the lot of Concepcion de la Peña, which serves as eastern side of plaintiff’s property towards 18th Avenue, Murphy, Quezon City and to pay [the]
passageway from the lot being occupied by petitioners (Lot 1-B-2), to Boni Serrano plaintiff the amount of P10,000.00 as and by way of attorney’s fees.
Avenue. 8 Costs against the defendants.” 14

On the other hand, petitioners, in their Answer, admitted having used a 1.10- The Court of Appeals dismissed the appeal filed by petitioners from the RTC decision
meter wide by 12.60-meter long strip of land on the northern side of respondent’s for failure to file brief within the reglementary period. The fallo of the Court of
property as their pathway to and from 18th Avenue, the nearest public highway from Appeals decision, provides:
their property, but claimed that such use was with the knowledge of respondent. 9
“WHEREFORE, for failure of the defendants-appellants to file brief within the reglementary
period, the instant appeal is hereby DISMISSED pursuant to Section 1(e), Rule 50 of the 1997
Rules of Civil Procedure.
_______________
The Compliance/Explanation filed by defendants-appellants, submitting the Letter-
withdrawal of Atty. Judito Tadeo addressed to the said defendants-appellants is NOTED.
Rollo, p. 17.
Let a copy of this Resolution be likewise served on defendants-appellants themselves.”
7

Rollo, p. 19.
15

9Rollo, p. 17. The motion for reconsideration filed by petitioners met the same fate in the
453 Resolution of the Court of Appeals dated 05 March 1999.
VOL. 450, FEBRUARY 4, 2005 453 Petitioners now lay their cause before us through the present petition for review,
raising the following issues:
De la Cruz vs. Ramiscal
Petitioners alleged in their Answer that in 1976, respondent initiated the _______________
construction on her property of a motor shop known as Phil. Orient Motors and they,
as well as the other occupants of the property at the back of respondent’s land, Article 2234, Civil Code.
13

opposed the construction of the perimeter wall as it would enclose and render their Rollo, p. 26.
14

Rollo, p. 31.
property without any adequate ingress and egress. They asked respondent to give
15

455
them a 1.50-meter wide and 40.15-meter long easement on the eastern side of her
property, which would be reciprocated with an equivalent 1.50-meter wide easement VOL. 450, FEBRUARY 4, 2005 455
by the owner of another adjacent estate. Respondent did not want to give them the De la Cruz vs. Ramiscal
easement on the eastern side of her property, towards Boni Serrano Avenue but,
instead, offered to them the said 1.10-meter wide passageway along the northern side
1. A.WHETHER OR NOT THE DENIAL OF THE COURT OF APPEALS OF
of her property towards 18th Avenue, which offer they had accepted.
THE PETITIONERS’ MOTION FOR RECONSIDERATION OF ITS
10

Petitioners additionally averred in their Answer that they were made to sign a
RESOLUTION DATED SEPTEMBER 11, 1998 IS SANCTIONED BY THE
document stating that they waived their right to ask for an easement along the
RULINGS AND LEGAL PRONOUNCEMENTS OF THE HONORABLE
eastern side of respondent’s property towards Boni Serrano Avenue, which document
SUPREME COURT?
was among those submitted in the application for a building permit by a certain
2. B.WHETHER OR NOT THE PETITIONERS ARE NONETHELESS
“Mang Puling,” the person in charge of the construction of the motor shop. That was
ENTITLED TO A LEGAL EASEMENT OF RIGHT OF WAY, ASSUMING
11

why, according to petitioners, the perimeter wall on respondent’s property was


NO VOLUNTARY RIGHT OF WAY WAS GRANTED THEM BY THE
constructed at a distance of 1.10-meters offset and away from respondent’s property
RESPONDENT?
line to provide a passageway for them to and from 18th Avenue. They maintained in
3. C.WHETHER OR NOT OPERATIVE EQUITABLE PRINCIPLE OF
their Answer that respondent knew all along of the 1.10-meter pathway and had, in
LACHES TO BAR THE RESPONDENT FROM DEPRIVING THE
fact, tolerated their use thereof.
PETITIONERS CONTINUED USE OF THE SAID RIGHT OF WAY? 16

On 31 July 1997, the RTC handed down a decision, giving probative weight to the
12

evidence adduced by respondent. The decretal portion enunciates:


The issues rivet on the adjective as well as on the substantive law, specifically: (1) De la Cruz vs. Ramiscal
whether or not the Court Appeals erred in dismissing the appeal filed by petitioners system for the receipt of mail intended for them. Rules on procedure cannot be made
21

for failure to file appellants’ brief on time, (2) whether or not petitioners are entitled to depend on the singular convenience of a party.
to a voluntary or legal easement of right of way, and (3) whether or not respondent is Petitioners next take the stand that even assuming the brief was filed late, the
barred by laches from closing the right of way being used by petitioners. Court of Appeals still erred in dismissing their petition in light of the rulings of this
On the first issue, petitioners assert positively that the petition was filed on time Court allowing delayed appeals on equitable grounds. Indeed, in certain special
22

on 30 April 1998, which is well within the 45-day period reckoned from 17 March cases and for compelling causes, the Court has disregarded similar technical flaws so
1998, when the secretary of their former counsel received the notice to file appeal. as to correct an obvious injustice made. In this case, petitioners, however, failed to
23

Petitioners’ arguments fail to persuade us. demonstrate any justifiable reasons or meritorious grounds for a liberal application of
Press earnestly as they would, the evidence on record, nevertheless, evinces the rules. We must remind petitioners that the right to appeal is not a constitutional,
contrariety to petitioners’ assertion that they have beat the 45-day period to file natural or inherent right—it is a statutory privilege and of statutory origin and,
appellants’ brief before the appellate court. It is clear from the registry return receipt therefore, available only if granted or provided by statute. Thus, it may be 24

card that the Notice to File Brief was received on 12 March 1998 by one May Tadeo
17

exercised only in the manner prescribed by, and in accordance with, the provisions of
from the Office of Atty. Judito Angelo C. Tadeo, petitioners’ previous counsel. Thus, the law. 25

on 30 Anent the second issue, an easement or servitude is a real right, constituted on


the corporeal immovable property of another, by virtue of which the owner has to
_______________
refrain from doing, or must allow someone to do, something on his property, for the
Rollo, p. 9.
16
benefit of another thing or person. The statutory basis for this right is Article 613, in
26

CA Rollo, p. 15.
17 connection with Article 619, of the Civil Code, which states:
456
_______________
456 SUPREME COURT REPORTS ANNOTATED
De la Cruz vs. Ramiscal Sps. Aguilar, et al. v. Court of Appeals, et al., G.R. No. 120972, 19 July 1999, 310 SCRA 393.
21

April 1998, when their new counsel entered his appearance and at the same time Rollo, p. 10.
22

NYK International v. National Labor Relations Commission, G.R. No. 146267, 17 February 2003, 397
filed an appellants’ brief, the 45 days have run out. For failure of petitioners to file
23

SCRA 607.
brief within the reglementary period, the Court of Appeals correctly dismissed said Republic v. Court of Appeals, G.R. No. 132425, 31 August 1999, 313 SCRA 376.
24

appeal pursuant to Section 1(b), Rule 50 of the 1997 Rules of Civil Procedure. 18 Antonio v. Commission on Elections, G.R. No. 135869, 22 September 1999, 315 SCRA 62; Lamzon v.
25

Neither can the members of this Court lend credence to petitioners’ contention National Labor Relations Commission,G.R. No. 113600, 28 May 1999, 307 SCRA 665.
Bogo-Medellin Milling Co., Inc. v. Court of Appeals, G.R. No. 124699, 31 July 2003, 407 SCRA 518.
that the written note of Atty. Tadeo’s office on the face of the Order reads that the
26

458
said office received it on 17 March 1998. 19

458 SUPREME COURT REPORTS ANNOTATED


It is a rule generally accepted that when the service is to be made by registered
mail, the service is deemed complete and effective upon actual receipt by the De la Cruz vs. Ramiscal
addressee as shown by the registry return card. Thus, between the registry return
20 Art. 613. An easement or servitude is an encumbrance imposed upon an immovable for the
card and said written note, the former commands more weight. Not only is the former benefit of another immovable belonging to a different owner.
considered as the official record of the court, but also as such, it is presumed to be The immovable in favor of which the easement is established is called the dominant estate;
accurate unless proven otherwise, unlike a written note or record of a party, which is that which is subject thereto, the servient estate.
Art. 619. Easements are established either by law or by the will of the owners. The former
often self-serving and easily fabricated. Further, this error on the part of the
are called legal and the latter voluntary easements.
secretary of the petitioners’ former counsel amounts to negligence or incompetence in Did respondent voluntarily accord petitioners a right of way?
record-keeping, which is not an excuse for the delay of filing. We rule in the negative. Petitioners herein failed to show by competent evidence
Petitioners’ justification that their former counsel belatedly transmitted said other than their bare claim that they and their tenants, spouses Manuel and Cecilia
order to them only on 20 March 1998 is not a good reason for departing from the Bondoc and Carmelino Masangkay, entered into an agreement with respondent,
established rule. It was the responsibility of petitioners and their counsel to devise a through her foreman, Mang Puling, to use the pathway to 18th Avenue, which would
be reciprocated with an equivalent 1.50-meter wide easement by the owner of
_______________
another adjacent estate. The hands of this Court are tied from giving credence to
SECTION 1. Grounds for dismissal of appeal.—An appeal may be dismissed by the Court of Appeals,
18
petitioners’ self-serving claim that such right of way was voluntarily given them by
on its own motion or on that of the appellee, on the following grounds: respondent for the following reasons:
(b) Failure to file the notice of appeal or the record on appeal within the period fixed by these Rules. . . . First, petitioners were unable to produce any shred of document evidencing such
Rollo, p. 28.
19
agreement. The Civil Code is clear that any transaction involving the sale or
Dela Cruz, et al. v. Dela Cruz, et al., G.R. No. L-48697, 15 April 1988, 160 SCRA 361.
disposition of real property must be in writing. Thus, the dearth of corroborative
20

457
27

evidence opens doubts on the veracity of the naked assertion of petitioners that
VOL. 450, FEBRUARY 4, 2005 457
indeed the subject easement of right of way was a voluntary grant from
respondent. Second, as admitted by the petitioners, it was only the foreman, Mang
_______________ towards Boni Serrano Avenue. The trial court, gave weight to TCT No. RT-56958
(100547) covering the property denominated as Lot 1-B in the name of Concepcion de
Art. 1358. The following must appear in a public document:
27
la Peña, mother of petitioner herein Alfredo de la Cruz. Said TCT indicates that a
(1) Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property; sales of real property or of an interest therein are portion of Lot 1-B, consisting of 85 square meters and denominated as Lot 1-B-2, is
governed by Articles 1403, No. 2 and 1405; . . . . the one being occupied by petitioners. In this connection, a copy of the plan of a
32

459 subdivision survey for Concepcion de la Peña and Felicidad Manalo prepared in 1965
VOL. 450, FEBRUARY 4, 2005 459 and subdivision plan for Concepcion de la Peña prepared in 1990 revealed an existing
1.50-meter wide alley, identified as Lot 1-B-1, on the lot of Concepcion de la Peña,
De la Cruz vs. Ramiscal
which serves as passageway from the lot being occupied by petitioners (Lot 1-B-2) to
Puling, who talked with them regarding said pathway on the northern side of Boni Serrano Avenue. During the trial, petitioner Elizabeth de la Cruz herself
33

respondent’s property. Thus, petitioner Elizabeth de la Cruz testified that she did not
admitted knowledge of the existence of the subdivision plan of Lot 1-B prepared for
talk to respondent regarding the arrangement proposed to them by Mang Puling
Concep-
despite the fact that she often saw respondent. It is, therefore, foolhardy for
28

petitioners to believe that the alleged foreman of respondent had the authority to _______________
bind the respondent relating to the easement of right of way. Third, their explanation
that said Mang Puling submitted said agreement to the Quezon City Engineer’s Villanueva v. Velasco, G.R. No. 130845, 27 November 2000, 346 SCRA 99.
31

Office, in connection with the application for a building permit but said office could Rollo, p. 19.
32

no longer produce a copy thereof, does not inspire belief. As correctly pointed out by Rollo, p. 19.
33

461
the trial court, petitioners should have requested a subpoena duces tecum from said
29

court to compel the Quezon City Engineer’s Office to produce said document or to VOL. 450, FEBRUARY 4, 2005 461
prove that such document is indeed not available. De la Cruz vs. Ramiscal
The fact that the perimeter wall of the building on respondent’s property was cion de la Peña by Engr. Julio Cudiamat in 1990. The Subdivision Plan subdivided
constructed at a distance of 1.10 meters away from the property line, does not by Lot 1-B into three portions, namely:
itself bolster the veracity of petitioners’ story that there was indeed such an
agreement. Further, as noted by the trial court, it was Atty. Federico R. Onandia,
counsel of Phil. Orient Motors, who wrote petitioners on 25 August 1994 advising 1. (1)Lot 1-B-1, which is an existing alley, consisting of 59.60 square meters,
them that his client would close the pathway along 18th Avenue, thereby implying towards Boni Serrano Avenue;
that it was Phil. Orient Motors, respondent’s lessee, which tolerated petitioners’ use 2. (2)Lot 1-B-2, consisting of 85.20 square meters, which is being occupied by
of said pathway. 30
petitioners; and
Likewise futile are petitioners’ attempts to show that they are legally entitled to 3. (3)Lot 1-B-3, consisting also of 85.20 square meters, which is being occupied
the aforesaid pathway under Article 649 of the Civil Code, to wit: by the sister of petitioner Alfredo dela Cruz. 34

Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any
immovable, which is surrounded by other immovables pertaining to other persons, and without From petitioner Elizabeth de la Cruz’s own admission, Lot 1-B-1 was intended by the
adequate owner, Concepcion de la Peña, to serve as an access to a public highway for the
occupants of the interior portion of her property. Inasmuch as petitioners have an
35

_______________
adequate outlet to a public highway (Boni Serrano Avenue), they have no right to
28 Rollo, p. 20.
insist on using a portion of respondent’s property as pathway towards 18th Avenue
29 Rollo, p. 21. and for which no indemnity was being paid by them.
Rollo, p. 21.
30
Petitioner Elizabeth de la Cruz claimed before the trial court that although there
460
was indeed a portion of land allotted by Concepcion de la Peña to serve as their
460 SUPREME COURT REPORTS ANNOTATED ingress and egress to Boni Serrano Avenue, petitioners can no longer use the same
De la Cruz vs. Ramiscal because de la Peña had constructed houses on it. As found by the trial court, the
outlet to a public highway, is entitled to demand a right of way through the neighboring estates, isolation of petitioners’ property was due to the acts of Concepcion de la Peña, who is
after payment of the proper indemnity. required by law to grant a right of way to the occupants of her property. In the trial
The conferment of a legal easement of right of way under Article 649 is subject to court’s rationale:
proof of the following requisites: (1) it is surrounded by other immovables and has no . . . Article 649 of the Civil Code provides that the easement of right of way is not compulsory if
adequate outlet to a public highway; (2) payment of proper indemnity; (3) the the isolation of the immovable is due to the proprietor’s own acts. To allow defendants access to
isolation is not the result of its own acts; (4) the right of way claimed is at the point plaintiff’s property towards 18th Avenue simply because it is a shorter route to a public
highway, despite the fact that a road right of way, which is even wider, although longer, was in
least prejudicial to the servient estate; and (5) to the extent consistent with the
fact provided for them by Concepcion de la Peña towards Boni Serrano Avenue would ig-
foregoing rule, where the distance from the dominant estate to a public highway may
be the shortest. The first three requisites are not obtaining in the instant case.
31
_______________
Contrary to petitioners’ contention, the trial court found from the records that
Concepcion de la Peña had provided petitioners with an adequate ingress and egress 34 Rollo, p. 23.
35 Rollo, p. 23. _______________
462
nore what jurisprudence has consistently maintained through the years regarding an easement Españo, Sr. v. Court of Appeals, G.R. No. 123823, 17 February 1997, 268 SCRA 511.
38

of right of way, that “mere convenience for the dominant estate is not enough to serve as its Avisado v. Rumbaua, G.R. No. 137306, 12 March 2001, 354 SCRA 245.
39

basis. To justify the imposition of this servitude, there must be a real, not a fictitious or 464
artificial necessity for it.” . . . In Francisco vs. Intermediate Appellate Court, 177 SCRA 527, it San Benito Realty were prepared. She immediately demanded petitioners to
40

was likewise held that a person who had been granted an access to the public highway through demolish the structure illegally constructed by them on her property without her
an adjacent estate cannot claim a similar easement in an alternative location if such existing
knowledge and consent. As her letter dated 18 February 1995 addressed to
easement was rendered unusable by the owner’s own act of isolating his property from a public
highway, such as what Concepcion de la Peña allegedly did to her property by constructing petitioners fell on deaf ears, and as no settlement was arrived at by the parties at
houses on the 1.50 meter wide alley leading to Boni Serrano Avenue. And, if it were true that the Barangaylevel, respondent seasonably filed her complaint with the RTC in the
defendants had already bought Lot 1-B-2, the portion occupied by them, from Concepcion de la same year. 41

Peña, then the latter is obliged to grant defendants a right of way without indemnity. 36 Respondent, in her Comment, brings the Court’s attention to petitioners’
42

We hasten to add that under the above-quoted Article 649 of the Civil Code, it is conversion of the pathway, subject matter of this case, into a canteen and videoke
the owner, or any person who by virtue of a real right may cultivate or use any bar, as shown by the pictures showing the property bearing the signage,
43

immovable surrounded by other immovable pertaining to other persons, who is “FRED’S CANTEEN/VIDEOKE KAMBINGAN.” Respondent, likewise, complains in
44

entitled to demand a right of way through the neighboring estates. In this case, her Comment about the structures installed by petitioners that encroached on
petitioners fell short of proving that they are the owners of the supposed dominant respondent’s property line as a result of the commercial activities by petitioners on
estate. Nor were they able to prove that they possess a real right to use such the disputed property. Petitioners have implicitly admitted this conversion of the
property. The petitioners claim to have acquired their property, denominated as Lot property’s use by their silence on the matter in their Reply and Memorandum. Such
45 46

1-B-2, from Concepcion de la Peña, mother of defendant Alfredo de la Cruz, who owns conversion is a telltale sign of petitioners’ veiled pecuniary interest in asserting a
Lot 1-B-3, an adjacent lot. However, as earlier noted, the trial court found that the right over the litigated property under the pretext of an innocuous claim for a right of
title to both lots is still registered in the name of Concepcion de la Peña under TCT way.
No. RT-56958 (100547). Neither were petitioners able to produce the Deed of Sale
37 Viewed from all angles, from the facts and the law, the Court finds no redeeming
evidencing their alleged purchase of the property from de la Peña. Hence, by the bulk value in petitioners’ asseverations that merit the reversal of the assailed resolutions.
of evidence, de la Peña, not petitioners, is the real party-in-interest to claim a right of WHEREFORE, the instant petition is DENIED. The Resolutions dated 11
way although, as explained earlier, any action to demand a right of September 1998 and 5 March 1999 of the Court of Appeals in CA-G.R. SP No. 68216
are AFFIRMED. The Decision dated 31 July 1997 of the Regional Trial Court is
_______________ likewise UPHELD. Costs against petitioners.

Rollo, pp. 23-24.


36
_______________
Rollo, p. 22.
37

463
Rollo, p. 19.
40

way from de la Peña’s part will not lie inasmuch as by her own acts of building Rollo, p. 17.
41

houses in the area allotted for a pathway in her property, she had caused the Rollo, pp. 67-79.
42

isolation of her property from any access to a public highway. Rollo, pp. 81-82.
43

Purportedly referring to petitioner Alfredo de la Cruz.


On the third issue, petitioners cannot find sanctuary in the equitable principle of
44

Rollo, pp. 88-93.


45

laches under the contention that by sleeping on her right to reclaim the pathway Rollo, pp. 105-115.
46

after almost twenty years, respondent has, in effect, waived such right over the same. 465
It is not just the lapse of time or delay that constitutes laches. The essence of laches SO ORDERED.
is the failure or neglect, for an unreasonable and unexplained length of time, to do Puno (Chairman), Austria-Martinez, Callejo, Sr.and Tinga, JJ., concur.
that which, through due diligence, could or should have been done earlier, thus Petition denied, resolutions affirmed.
giving rise to a presumption that the party entitled to assert it had either abandoned Note.—A simple right of way easement transmits no rights, except the easement.
or declined to assert it. 38 (Camarines Norte Electric Cooperative, Inc. vs. Court of Appeals, 345 SCRA
The essential elements of laches are: (a) conduct on the part of the defendant, or 85 [2000])
of one under whom he claims, giving rise to the situation complained of; (b) delay in
asserting complainant’s rights after he had knowledge of defendant’s acts and after ——o0o——
he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that
the complainant will assert the right on which he bases his suit; and (d) injury or © Copyright 2019 Central Book Supply, Inc. All rights reserved.
prejudice to the defendant in the event the relief is accorded to the complainant. 39

The second and third elements, i.e., knowledge of defendant's acts and delay in
the filing of such suit are certainly lacking here. As borne by the records, it was only
in 1995 that respondent found out that the pathway being used by petitioners was
part of her property when a relocation survey and location plan of her property and
the adjacent land bought by
[No. L-3422. June 13, 1952] The Court of Appeals, and the Court of First Instance of Laguna, took the view
HIDALGO ENTERPRISES, INC., petitioner, vs.GUILLERMO BALANDAN, that the petitioner maintained an attractive nuisance (the tanks), and neglected to
ANSELMA ANILA and THE COURT OF APPEALS, respondents. adopt the necessary precautions to avoid accident to persons entering its premises. It
applied the doctrine of attractive nuisance, of American origin, recognized in this
jurisdiction in Taylor vs. Manila Electric, 16 Phil., 8.
1. 1.ATTRACTIVE NUISANCE, WHAT CONSTITUTES; MAINTAINER LIABLE FOR
The doctrine may be stated, in short, as follows: One who maintains on his
INJURIES CAUSED TO CHILD.—One who maintains on his premises dangerous
instrumentalities or appliances of a character likely to attract children in play, and premises dangerous instrumentalities or appliances of a character likely to attract
who fails to children in play, and who fails to exercise ordinary care to prevent children from
playing therewith or resorting thereto, is liable to a child of tender years who is
489 injured thereby, even if the child is technically a trespasser in the premises. (See 65
C. J. S., p. 455.)
VOL. 91, JUNE 13, 1952 489
The principal reason for the doctrine is that the condition or appliance in
Hidalgo Enterprises, Inc., vs. Balandan, et al. question although its danger is apparent to those of age, is so enticing or alluring to
children of tender years as to induce them to approach, get on or use it, and this'
1. exercise ordinary care to prevent children from playing therewith or resorting thereto, attractiveness is an implied invitation to such children (65 C. J. S., p. 458).
is liable to a child of tender years who is injured thereby, even if the child is Now, is a swimming pool or water tank an instrumentality or appliance likely to
technically a trespasser in the premises. attract little children in play? In other words is the body of water an attractive
nuisance? The great majority of American decisions say no.
1. 2.ID.; DOCTRINE NOT APPLICABLE TO SWIMMING POOL OR WATER TANK.— "The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well
The attractive nuisance doctrine generally is not applicable to bodies of water, as natural, in the absence of some unusual condition or artificial feature other than the mere
artificial as well as natural, in the absence of some unusual condition or artificial water and its location."
feature other than the mere water and its location. "There are numerous cases in which the attractive nuisance doctrine has been held not to
be applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts,
drains, cesspools or sewer pools, * * *." (65 C. J. S., p. 476 et seg. citing decisions of California,
PETITION for review by certiorari of a decision of the Court of Appeals. Georgia, Idaho, Illinois, Kansas, lowa,
The facts are stated in the opinion of the Court. 491
Quisumbing, Sycip, Quisumbing & Salazar for petitioner. VOL. 91, JUNE 13, 1952 491
Antonio M. Moncado for respondents.
Hidalgo Enterprises, Inc., vs. Balandan, et al
Louisiana, Miss., Missouri, Montana, Oklahoma, Pennsylvania, Tennessee, Texas, Nebraska,
BENGZON, J.:
Wisconsin.)
ln fairness to the Court of Appeals it should be stated that the above volume of
This is an appeal by certiorari, from a decision of the Court of Appeals requiring Corpus Juris Secundum was published in 1950, whereas its decision was
Hidalgo Enterprises, Inc. to pay Guillermo Balandan and his wife, damages in the promulgated on September 30, 1949.
sum of P2,000 for the death of their son Mario. The reason why a swimming pool or pond or reservoir of water is not considered
It appears that the petitioner Hidalgo Enterprises, Inc. "was the owner of an ice- an attractive nuisance was lucidly explained by the Indiana Appellate Court as
plant factory in the City of San Pablo, Laguna, in whose premises were installed two follows:
tanks full of water, nine feet deep, for cooling purposes of its engine. While the "Nature has created streams, lakes and pools which attract children. Lurking in their waters is
factory compound was surrounded with fence, the tanks themselves were not always the danger of drowning. Against this danger children are early instructed so that they
provided with any kind of fence or top covers. The edges of the tanks were barely a are sufficiently presumed to know the danger; and if the owner of private property creates an
foot high from the surface of the ground. Through the wide gate entrance, which was artificial pool on his own property, merely duplicating the work of nature without adding any
continually open, motor vehicles hauling ice and persons buying said commodity new danger, * * * (he) is not liable because of having created an 'attractive
passed, and any one could easily enter the said factory, as he pleased. There was no nuisance.' Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 184, 185; 112 Ind. App.,
170.
guard assigned on the gate. At about noon of April 16, 1948, plaintiffs' son, Mario
Therefore, as petitioner's tanks are not classified as attractive nuisance, the question
Balandan, a boy barely 3, years old, while playing with and in company of other boys
whether the petitioner had taken reasonable precautions becomes immaterial. And
of his age, entered the factory premises through the gate, to take a bath in one of said
the other issue submitted by petitioner—that the parents of the boy were guilty of
tanks; and while thus bathing, Mario sank
490 contributory negligence precluding recovery, because they left for Manila on that
unlucky day leaving their son under the care of no responsible individual—needs no
490 PHILIPPINE REPORTS ANNOTATED
further discussion.
Hidalgo Enterprises, Inc., vs. Balandan, et al. The appealed decision is reversed and the Hidalgo Enterprises, Inc. is absolved
to the bottom of the tank, only to be fished out later, already a cadaver, having died from liability. No costs.
of 'asphyxia secondary to drowning.'" Feria, Padilla, Tuason, Montemayor, and Bautista Angelo, JJ., concur.
PABLO, M., disidente:

La recurrente tiene dos estanques de agua, de nueve pies de profundidad, como


anexos indispensables a su fábrica de hielo; están construídos dentro de un solar que
está cercado pero con una puerta de entrada siempre abierta en donde pasan
libremente los coches que distribuyen hielo
492
492 PHILIPPINE REPORTS ANNOTATED
Vidaurrazaga vs. Ct. of Appeals and Ruiz
y las personas que lo compran de la fábrica; cualquiera puede entrar sin distinción
alguna, no hay ningún guardia en la puerta que impida la entrada de cualquiera
persona. A dichos dos estanques tiene libre acceso el público.
Es evidente que la recurrente debió haber cercado dichos estanques como medida
ordinaria de precaución para que los niños de corta edad no puedan entrar, tanto más
cuanto que los bordes de esos estanques solo tienen un ple de altura sobre la
superficie del terreno. El cerco puesto en el perímetro del solar, con puerta
continuamente abierta, no es suficiente medida para impedir que los niños puedan
meterse en los estanques. Ese cerco con su puerta abierta es como un velo
transparente con que se cubre una mujer semidesnuda en un teatro, pica la
curiosidad y atrae la atención del público.
Los niños son curiosos por naturaleza y los de ocho años no tienen perfecto
conocimiento de las cosas. Alucinados por la natural atracción de las aguas, se
meterán en ellas con peligro de sus vidas, a menos que exista algo que les impida.
Voto por la confirmación de la decision apelada.
Judgment reversed, petitioner absolved from liability.

_______________

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