DIGEST BANK

RULING: IN VIEW OF ALL THE ABOVE CONSIDERATIONS, We find no reversible error in the decision under
review and We AFFIRM the same.

For case titles, use the style named heading for, alternatively you may just select the case title and
RATIO: Finding no reversible error, Supreme Court affirmed the judgment under review with costs against
press ctrl+alt+4. Make sure that the style, the drop down box left of the font style drop box,
petitioners. The claim of private respondents that they are the owners of the land in dispute must be
is set to “Heading 4” to assure that the case is outlined for ease of navigation along the
upheld on the ground that they were in actual and continuous possession of the land, openly, adversely,
document.
and in the concept of owners thereof since 1927 thereby acquiring ownership of the land through
acquisitive prescription. Possession is an indicium of ownership of the thing possessed and to the
Normal Text possessor goes the presumption that he holds the thing under a claim of ownership. Article 433 of the
Civil Code provides that "(A)ctual possession under claim of ownership raises a disputable presumption
of ownership. The true owner must resort to judicial process for the recovery of the property."
Perez v. Mendoza
Article 538 of the Civil Code provides that possession as a fact cannot be recognized at the same time in
FACTS: In 1922, Felisa Montalbo-Ortega exchanged the land she inherited from her father with the land two different personalities except in the cases of co-possession. Should a question arise regarding the
of her aunt, Andrea Montalbo, because the latter wanted to donate a piece of land to the municipality of fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in
Taysan, Batangas, to be used as a school site and the municipality preferred the land belonging to Felisa possession; if the dates of possession are the same, the one who presents a title; and if all these
as it was adjacent to the other properties of the municipality. After the exchange, Andrea donated almost conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession
one-half of the land to the municipality and gave the other to her daughter Margarita when the latter or ownership through proper proceedings
married Nicolas Mendoza in 1972. Since then, Margarita and Nicolas possessed and occupied the land
continuously, in the concept of owners. When Nicolas sought the transfer of the property in their names Dizon v. CA
he submitted the deed of exchange of property executed by Felisa and Andrea in the presence of, and
witnessed by the Municipal Secretary, Rafael Manahan. When Basilio Perez came to know of the alleged FACTS: On August 21, 1984 Aureo Reyes, et al. (Respondents) filed an amended complaint before the RTC
deed of exchange, he had it investigated and found that the signature of the municipal secretary was of San Fernando, Pampanga for the annulment of an (CoA) extrajudicial settlement and partition of the
forged. Accused of falsification of private document, Mendoza was convicted; but the Court of Appeals estate of Dionisio Galang, claiming to have been deprived thereby of their shares, as co-owners and that
acquitted him for insufficiency of evidence. the OCTs (Original Certificate of Titles) in Galang's name are fraudulent and should therefore be annulled
and cancelled.
On March 20, 1959, petitioner Basilio and his wife Petra brought an action against respondent spouses
Margarita and Nicolas for quieting of title, alleging that the land in dispute was inherited by Petra and Respondents alleged that Galang redeemed these lots (Lot No. 3548 and No. 3562) which were
Felisa from Estanislao Montalbo who died in 1918; that the heirs partitioned said land in 1934 and the mortgaged and while the funds used came from his sisters, he registered and was issued these lots in his
share of Felisa, the land in question, was sold by her husband, Jose Ortega, and her children to own name (was not objected for 61 years). Respondents, who are heirs of Galang's sisters claim that
petitioners; that they leased the said parcel of land to respondents in 1946, but that when the lease Galang and his sisters partitioned the lots in 1920, constructing houses on one of the lots. The structures
expired in 1951, the latter refused to return the land prompting the former to file an unlawful detainer were passed on from generation to generation. No one questioned or disturbed them until the
action which was still pending during the trial of this case. The trial court dismissed the complaint and Petitioners informed them that the lots in question were titled in Galang's name and had been
declared respondents with a better right over the property in litigation. The Court of Appeals affirmed partitioned to his three children and that Petitioners succeeded in subdividing the lots and obtained TCTs
the decision of the trial court in toto. in their name despite the Respondents earlier demands for an extrajudicial settlement.

ISSUE: Whether or not the trial court erred in its decision.

The RTC upheld Galang's title over the lots, further more, held that the Respondent's action had long Respondents have been using the building as a warehouse. On the same year, he informed the
prescribed. The petitioners were also unable to establish their relationship to Galang's five sisters. On Respondents that the building occupies a portion of his land. He allowed them to continue using the
appeal the CA reversed the trial court by upholding Respondent's rights. building (allegation #4, at the time he had no need of the property), until 1996 when he needed the
entire portion of his lot. He demanded that Respondents demolish and remove the part of the building
ISSUE: Whether or not the properties were owned in common by the predecessors-in-interest. encroaching his property and turnover to him their possession, the latter refused (allegation #5). They
continued occupying the contested portion and made improvements on the building. Respondents
RULING: WHEREFORE, the petition is GRANTED. The appealed decision of the Court of Appeals is hereby sought a dismissal on the ground that the court has no jurisdiction over it since there is no lessor-lessee
SET ASIDE and the decision of the trial court dated 3 October 1986 in Civil Case No. 6752 is hereby relationship between the parties. Respondents denied they were occupying petitioners property by mere
REINSTATED tolerance, claiming they own the contested portion and have been occupying the same long before
petitioner acquired his lots in 1985.
RATIO: Galang's ownership over the lots had been judicially confirmed in a cadastral case, whis is a
proceeding in rem and hence binding "on the whole world." None of the Galang's co-heirs objected to or CoA - Unlawful detainer
protested their issuance. These titles became indefeasible and incontrovertible.
MTCC - judgment in favor of the plaintiff, respondents to vacate the portion of the subject properties
It is true that Galang executed an affidavit, not notarized at that, on 27 June 1920 which states in part as
follows (per English translation: RTC - affirmed MTCC, occupation of the contested portion was by mere tolerance. When petitioner
needed the same, he has the right to eject them through court action.
That on this date, I have received from all my sisters and nephews who are my co-heirs, namely Potenciana Galang,
Flaviana Galang, Gertrudes Galang, who are my sisters, and Silverio Garcia and Hilarion Samia, in their own names CA - petitioner's proper remedy should have been an accion publicana before the RTC, not an action for
and for their brothers and sisters who are also co-heirs, the sum of ONE HUNDRED AND SIX PESOS (P106.00), unlawful detainer.
Philippine Currency, as complete payment for the discharge of the land we co-inherited, which is the one we
partitioned this date also, which was mortgaged to the Angeles family.
ISSUE: Whether or not the Court of Appeals committed a reversible error of law in holding that
petitioners complaint is within the competence of the RTC, not the MTCC.
However, as can be gleaned from the foregoing, there is no reference to Lot Nos. 3548 and 3562. Said
affidavit is not therefore a sufficient basis or support for what is alleged by respondents as a partition
RULING: Decision of the CA reversed and set aside, affirming the decision of the MTCC.
among Dionisio and his now deceased sisters. It does not, as correctly stated by the trial court, amount to
anything insofar as the two (2) lots involved in this case are concerned:
RATIO: Petitioner contends that it is not necessary that he has prior physical possession of the
questioned property before he could file an action for unlawful detainer. He stresses that he tolerated
Even their presentation of the document purportedly executed by Dionisio Galang on June 27, 1910 where the latter
acknowledges that he and his co-heirs named therein as co-owners of a certain property which they had mortgaged respondents occupancy of the portion in controversy until he needed it. After his demand that they
to a certain family surnamed Angeles does not amount to anything for nothing in this document shows that it vacate, their continued possession became illegal. Hence, his action for unlawful detainer before the
pertains to the two lots involved herein. It merely referred to a certain "land" which Dionisio Galang and his co-heirs MTCC is proper.
"co-inherited" and partitioned without any indication as to which property is being referred to.
Respondents, in their comment, insisted that they have been in possession of the disputed property even
Santos v. Ayon before petitioner purchased the same on April 10, 1985. Hence, he cannot claim that they were
occupying the property by mere tolerance because they were ahead in time in physical possession.
FACTS: Ruben Santos (petitioner) bought the 3 lots in Lanzona Subdivision, Matina, Davao City on 1985.
Spouses Tony and Mercy Ayon (Respondents) are the registered owners of an adjacent parcel of land. The It is an elementary rule that the jurisdiction of a court over the subject matter is determined by the
previous occupant of this property built a building which straddled both the lots of the herein parties. allegations of the complaint and cannot be made to depend upon the defenses set up in the answer or
pleadings filed by the defendant. This rule is no different in an action for forcible entry or unlawful It bears stressing that possession by tolerance is lawful, but such possession becomes unlawful when the
detainer. All actions for forcible entry or unlawful detainer shall be filed with the proper Metropolitan possessor by tolerance refuses to vacate upon demand made by the owner. Our ruling in Roxas vs. Court
Trial Courts, the Municipal Trial Courts and the Municipal Circuit Trial Courts, which actions shall include of Appeals[13] is applicable in this case: A person who occupies the land of another at the latters
not only the plea for restoration of possession but also all claims for damages and costs arising tolerance or permission, without any contract between them, is necessarily bound by an implied promise
therefrom. The said courts are not divested of jurisdiction over such cases even if the defendants therein that he will vacate upon demand, failing which, a summary action for ejectment is the proper remedy
raises the question of ownership over the litigated property in his pleadings and the question of against him.
possession cannot be resolved without deciding the issue of ownership.
Ganila v. CA
Section 1, Rule 70 on forcible entry and unlawful detainer of the 1997 Rules of Civil Procedure, as FACTS: Violeta Herrera filed 21 ejectment complaints alleging that she owns Lot 1227 of Jordan,
amended, reads: Guimaras and that she tolerated Ganila et al (18 persons and the Baptist Christian Learning Center) to
construct residential houses or other improvements on certain portions of the lot without rental. When
Section 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, a
she asked Ganila et al to vacate, they refused. Barangay conciliation failed; hence, she filed the
person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a
complaints.
lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld
Eight claimed that Lot 1227 was formerly a shoreline. Eight maintained that their houses stood
after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee or other person may, at any time within one (1) on Lot 1229. Three asserted that Lot 1227 is a social forest area. At the preliminary conference, the
year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court parties agreed to designate two geodetic engineers as commissioners of the MCTC to conduct a
against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming relocation survey of Lot 1227 and to identify who among the petitioners have houses within the lot.[9]
under them, for the restitution of such possession, together with damages and costs.
The commissioners reported that: (1) the house of Henry Gabasa, defendant in Civil Case No. 288-J, is
Under the above provision, there are two entirely distinct and different causes of action, to wit: (1) a case almost outside Lot 1227; (2) the house of Ludovico Amatorio, defendant in Civil Case No. 289-J,
for forcible entry, which is an action to recover possession of a property from the defendant whose diagonally traversed the boundary; and (3) the houses of the 19 petitioners are inside Lot 1227. MCTC
occupation thereof is illegal from the beginning as he acquired possession by force, intimidation, threat, rendered decision in favor of Herrera and ordered Ganila et al to vacate. RTC All the cases were affirmed
strategy or stealth; and (2) a case for unlawful detainer, which is an action for recovery of possession except for No. 288-J and No. 289-J which were set aside and dismissed (since their houses occupy only a
from defendant whose possession of the property was upon inception lawful by virtue of a contract small area), and the CA affirmed the denial.
(express or implied) with the plaintiff, but became illegal when he continued his possession despite the
termination of his right thereunder. ISSUE: Whether or not MCTC erred in taking jurisdiction over and deciding the case and whether or not
the RTC and CA erred in sustaining the MCTC’s judgment.
Petitioners complaint for unlawful detainer is properly within the competence of the MTCC.
RULING: No. CA affirmed.
Verily, petitioners allegations in his complaint clearly make a case for an unlawful detainer. We find no
error in the MTCC assuming jurisdiction over petitioners complaint. A complaint for unlawful detainer is RATION: Ganila et al. insist that Herrera should have filed an action to recover possession de jure, not a
sufficient if it alleges that the withholding of the possession or the refusal to vacate is unlawful without mere complaint for ejectment because (1) they possessed Lot 1227 in good faith for more than 30 years
necessarily employing the terminology of the law. Here, there is an allegation in petitioners complaint and (2) there was no withholding of possession since Herrera was not in prior possession of the lot. The
that respondents occupancy on the portion of his property is by virtue of his tolerance. Petitioners cause SC agrees with Herrera that there was no error in her choice of remedy. The complaint itself is defined by
of action for unlawful detainer springs from respondents failure to vacate the questioned premises upon the allegations therein, not the allegations of Ganila et al. Besides, Ganila et al have admitted in their
his demand sometime in 1996. Within one (1) year therefrom, or on November 6, 1996, petitioner filed preliminary statement that the complaints filed are indeed for unlawful detainer, and that the only issue
the instant complaint. to be determined is mere physical possession and not juridical possession.
 While petitioners assert that this case involves only deprivation of possession, they confuse the provisions for renewal until June 30, 1967, or six months after the end of the national emergency,
remedy of an action for forcible entry with that of unlawful detainer. In unlawful detainer, prior physical whichever is earlier. The United States’ four motored bombers make loud noises when flying above the
possession by the plaintiff is not necessary. It is enough that plaintiff has a better right of possession. property, and have very bright lights. Respondents’ chicken farm production had to stop, because 150
Actual, prior physical possession of a property by a party is indispensable only in forcible entry cases. chickens were killed by flying into walls from fright. In the Court of Claims, it was found that the United
Also, the defendant is necessarily in prior lawful possession of the property but his possession eventually States had taken an easement over the property on June 1, 1942, and that the val
becomes unlawful upon termination or expiration of his right to possess. Thus, the fact that petitioners ue of the property depreciation as the result of the easement was $2,000.00. The United States
are in possession of the lot does not automatically entitle them to remain in possession. And the issue of petitioned for certiorari, which was granted.
prior lawful possession by the defendants does not arise at all in a suit for unlawful detainer, simply
because prior lawful possession by virtue of contract or other reasons is given or admitted. Unlike in ISSUE: Whether or not the Respondents’ property has been taken within the meaning of the Fifth
forcible entry where defendants, by force, intimidation, threat, strategy or stealth, deprive the plaintiff or Amendment.
the prior physical possessor of possession. Here there is no evidence to show that petitioners entered
the lot by any of these acts. RULING: The United States Supreme Court rejected the government's claim to 'possess' the space down
An unlawful detainer is different from a possessory action and from a reivindicatoria action in to ground level. The Court held low altitude flights to be "a direct invasion of the landowner's] domain",
that the first is limited to the question of possession de facto. Aside from the summary action of and that a "servitude has been imposed upon the land" by the occupancy of the private space. The Court
ejectment, accion publiciana or the plenary action to recover the right of possession and accion also recognized that a claim of property ownership indefinitely upward "has no place in the modern
reivindicatoria or the action to recover ownership which includes recovery of possession, make up three world." Thereby rejecting "ad coelum"
kinds of actions to judicially recover possession.
Herrera’s allegations sufficiently present a case of unlawful detainer: (1) she owns Lot 1227, (2) she RATIO: Yes. But the case is remanded for a determination of the value of the easement and whether the
tolerated Ganila et al to construct houses, (3) she withdrew her tolerance, and (4) Ganila et refused to easement was permanent or temporary. The court noted the common law doctrine of ownership of land
heed her demand. The suit was well-within the jurisdiction of MCTC. Besides, Ganila et al raised their extending to the sky above the land. However, the court notes that an act of Congress had given the
opposition only for the first time in their appeal, they are now stopped from doing so. United States exclusive national sovereignty over the air space. The court noted that common sense
made the common law doctrine inapplicable.
However, the court found that the common law doctrine did not control the present case. The United
US v. Causby States had conceded in oral argument that if flights over the Respondents’ property rendered it
uninhabitable then there would be a taking compensable under the Fifth Amendment. The measure of
Brief Fact Summary. Respondents claim that their property was taken, within the meaning of the Fifth the value of the property taken is the owner’s loss, not the taker’s gain.
Amendment, by the regular army and navy aircraft flights over their house and chicken farm. The airspace is a public highway. But it is obvious that if the landowner is to have the full enjoyment of
his land, he must have exclusive control of the immediate reaches of the enveloping atmosphere. If this
Synopsis of Rule of Law. The airspace is a public highway, but if the landowner is to have the full were not true then landowners could not build buildings, plant trees or run fences.
enjoyment of his land, he must have exclusive control over the immediate reaches of the enveloping The airspace, apart from the immediate reaches above the land, is part of the public domain. The court
atmosphere. does not set the precise limits of the line of demarcation. Flights over private land are not a taking,
unless, like here, they are so low and frequent as to be a direct and immediate interference with the
enjoyment of the land. The Court of Claims must, upon remand, determine the value of the easement
FACTS: Respondents own 2.8 acres near an airport outside of Greensboro, North Carolina. Respondents’ and whether it is a temporary or permanent easement.
property contained a house and a chicken farm. The end of one of the runways of the airport was 2,220
feet from Respondents’ property, and the glide path passed over the property at 83 feet, which is 67 feet Dissent. The dissent would reverse the decision of the Court of Claims and hold that there has been no
above the house, 63 feet above the barn, and 18 feet above the highest tree. The use by the United taking within the meaning of the Fifth Amendment. This is because of the modern nature of the airplane,
States of this airport is pursuant to a lease beginning June 1, 1942, and ending June 30, 1942, with and the desire to avoid confusion.
 agreement between the interested parties; it is of a statutory nature, and the law had imposed it for the
Discussion. The national emergency, World War II, meant that the airport, which was not previously used common public utility in view of the difference in the altitude of the lands in the barrio Bambang.
by large planes, would be the home to large bombers. The use of the airspace above Respondents’ home
and farm was not a problem previously, because the flights were sporadic and not nearly as loud as the Article 552 of the Civil code provides:
bombers.
Lower estates must receive the waters which naturally and without the intervention of man descend from the higher
estates, as well as the stone or earth which they carry with them.

Lunod v. Meneses
Neither may the owner of the lower estates construct works preventing this easement, nor the one of
the higher estate works increasing the burden.
FACTS: Lunod et al., residents of Bulacan, filed a complaint against Meneses alleging they each owned
and possessed farm lands in Maytunas and Balot near lake Calalaran, that the defendant is the owner of Article 563 of the said code reads also:
a fishpond and a strip of land located in Paraanan, adjoining the said lake on one side, and the River
Taliptip on the other. Twenty years before 1901 to present, there exists a statutory easement permitting The establishment, extent, form, and conditions of the easements of waters to which this section refers shall be
flow of water to said land in Paraanan. Plaintiffs enjoyed the easement until 1901, that the water governed by the special law relating thereto in everything not provided for in this code.
collected up to their land.
The special law cited in the Law of Waters of August 3, 1866, article 111 of which, treating of natural
From 1901, defendant, without right or reason converted the strip of land into a fishpond and by means easements relating to waters, provides:
of a dam and bamboo net, prevented the free passage of water. As a consequence, the lands of the
plaintiffs became flooded and damaged by the stagnant waters, there being no outlet except through the Lands situated at a lower level are subject to receive the waters that flow naturally, without the work of man, from
the higher lands together with the stone or earth which they carry with them.
land in Paraanan. Which damage or loss will continue if the obstructions are allowed to remain.

Hence, the owner of the lower lands can not erect works that will impede or prevent such an easement
CoA - to have the said tract of land subject to statutory easement, and have defendant remove and
or charge, constituted and imposed by the law upon his estate for the benefit of the higher lands
destroy the obstructions and abstain from closing said land in the future.
belonging to different owners; neither can the latter do anything to increase or extend the easement.

Lower Court - rendered judgment in favor of plaintiffs.

ISSUE: Whether or not there was statutory easement.
RULING: Yes. According to the provisions of law, the defendant, Meneses, had no right to construct the
works, nor the dam which blocks the passage, through his lands and the outlet to the Taliptip River, of the
waters which flood the higher lands of the plaintiffs; and having done so, to the detriment of the
easement charged on his estate
The defendant Meneses might have constructed the works necessary to make and maintain a fish pond
within his own land, but he was always under the strict and necessary obligation to respect the statutory
easement of waters charged upon his property, and had no right to close the passage and outlet of the
waters flowing from the lands of the plaintiffs and the lake of Calalaran into the Taliptip River.
Note: Easement - the right to use the real property of another for a specific purpose. The easement is itself a real
property interest, but legal title to the underlying land is retained by the original owner for all other purposes.

RATIO: According to article 530 of the Civil Code, an easement is charge imposed upon one estate for the Bachrach v. Seifert
benefit of another estate belonging to a different owner, and the realty in favor of which the easement is
established is called the dominant estate, and the one charged with it the servient estate.
FACTS: The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald Bachrach,
in his last will and testament made various legacies in cash and willed the remainder of his estate. The
The lands of Paraanan being the lower are subject to the easement of receiving and giving passage to the
estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge Mining Co., Inc.,
waters proceeding from the higher lands and the lake of Calalaran; this easement was not constituted by
received from the latter 54,000 shares representing 50 per cent stock dividend on the said 108,000
shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant of the estate,
petitioned the lower court to authorize the Peoples Bank and Trust Company, as administrator of the
estate of E. M. Bachrach, to transfer to her the said 54,000 shares of stock dividend by indorsing and
delivering to her the corresponding certificate of stock, claiming that said dividend, although paid out in
the form of stock, is fruit or income and therefore belonged to her as usufructuary or life tenant. Sophie
Siefert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the ground that the stock
dividend in question was not income but formed part of the capital and therefore belonged not to the
usufructuary but to the remainderman. While appellants admit that a cash dividend is an income, they
contend that a stock dividend is not, but merely represents an addition to the invested capital.
FACTS: On 22 December 1923, the Talisay-Silay Milling Co., Inc., was indebted to the PNB. To secure the
payment of its debt, it succeeded in inducing its planters, among whom was Mariano Lacson Ledesma, to
mortgage their land to the bank. And in order to compensate those planters for the risk they were
running with their property under that mortgage, the aforesaid central, by a resolution passed on the
same date, and amended on 23 March 1928, undertook to credit the owners of the plantation thus
mortgaged every year with a sum equal to 2% of the debt secured according to the yearly balance, the
payment of the bonus being made at once, or in part from time to time, as soon as the central became
free of its obligations to the bank, and of those contracted by virtue of the contract of supervision, and
had funds which might be so used, or as soon as it obtained from said bank authority to make such
payment.

ISSUE: Whether or not a stock dividend is an income and whether it should go to the usufructuary. <It seems Mariano Lacson Ledesma is indebted from Bachrach Motor; the circumstance of which is not
found in the case facts.>
RULING: The stock dividend is an income. Lower court decision affirmed.
Bachrach Motor Co., Inc. filed a (CoA)complaint against the Talisay-Silay Milling Co., Inc., for the delivery
RATIO: The usufructuary shall be entitled to receive all the natural, industrial, and civil fruits of the
of the amount of P13,850 or promissory notes or other instruments of credit for that sum payable on 30
property in usufruct. The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares
June 1930, as bonus in favor of Mariano Lacson Ledesma. The complaint further prays that the sugar
of stock dividend are civil fruits of the original investment. They represent profits, and the delivery of the
central be ordered to render an accounting of the amounts it owes Mariano Lacson Ledesma by way of
certificate of stock covering said dividend is equivalent to the payment of said profits. Said shares may be
bonus, dividends, or otherwise, and to pay Bachrach Motors a sum sufficient to satisfy the judgment
sold independently of the original shares, just as the offspring of a domestic animal may be sold mentioned in the complaint, and that the sale made by said Mariano Lacson Ledesma be declared null
independently of its mother. If the dividend be in fact a profit, although declared in stock, it should be
and void. The PNB filed a third party claim alleging a preferential right to receive any amount which
held to be income. A dividend, whether in the form of cash or stock, is income and, consequently, should
Mariano Lacson Ledesma might be entitled from Talisay-Silay Milling as bonus. Talisay-Silay answered the
go to the usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be
complaint that Mariano Lacson Ledesma’s credit (P7,500) belonged to Cesar Ledesma because he had
declared only out of profits of the corporation, for if it were declared out of the capital it would be a
purchase it. Cesar Ledesma claimed to be an owner by purchase in good faith. At the trial all the parties
serious violation of the law. agreed to recognize and respect the sale made in favor of Cesar Ledesma of the P7,500 part of the credit
in question, for which reason the trial court dismissed the complaint and cross-complaint against Cesar
Under the Massachusetts rule, a stock dividend is considered part of the capital and belongs to the Ledesma authorizing the central to deliver to him the sum of P7,500. And upon conclusion of the hearing,
remainderman; while under the Pennsylvania rule, all earnings of a corporation, when declared as the (Lower)court held that the Bachrach Motor Co., Inc., had a preferred right to receive the amount of
dividends in whatever form, made during the lifetime of the usufructuary, belong to the latter. The P11,076.02 which was Mariano Lacson Ledesma’s bonus, and it ordered the central to deliver said sum to
Pennsylvania rule is more in accord with our statutory laws than the Massachusetts rule. Bachrach Motors. PNB appealed.

ISSUE: Whether or not the bonus in question is civil fruits.

Note: Usufruct - referring to the right of one individual to use and enjoy the property of another, provided its
substance is neither impaired nor altered. RULING: Not civil fruits. Finding no merit in this appeal, the judgment appealed from is affirmed, without
express finding as to costs.

Bachrach v. Talisay-Silay RATIO: Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings;
second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities, or
other similar sources of revenue. It may be noted that according to the context of the law, the phrase "u The plaintiff chose to sell the land to the defendant at P200 per hectare or a total of P18,000. The
otras analogas" refers only to rent or income, for the adjectives "otras" and "analogas" agree with the defendant informed the lower court that he is unable to pay and hence the plaintiff was given 30 days to
noun "rentas," as do also the other adjectives "perpetuas" and "vitalicias." That is why we say that by pay the defendant for the improvements. On April 24, 1934, the court below, at the instance of the
"civil fruits" the Civil Code understands one of three and only three things, to wit: the rent of a building, plaintiff and without objection on the part of the defendant, ordered the sale of the land in question at
the rent of land, and certain kinds of income. public auction. The land was sold on April 5, 1935 to Toribio Teodoro, the highest bidder, for P8,000. The
sale had a period of redemption which was to expire on April 5, 1936. Upon petition of Toribio Teodoro
As the bonus in question is not rent of a building or of land, the only meaning of "civil fruits" left to be the court below ordered the provincial sheriff to issue another certificate not qualified by any equity of
examined is that of "income." redemption. This was complied with by the sheriff on July 30, 1935. On September 18, 1935, Teodoro
moved that he be placed in possession of the land purchased by him.
Assuming that in broad juridical sense of the word "income" it might be said that the bonus in question is
"income" under article 355 of the Civil Code, it is obvious to inquire whether it is derived from the land ISSUE: Whether or not Bataclan has the right to retain the land pending indemnity for his improvements
mortgaged by Mariano Lacson Ledesma to the appellant bank for the benefit of the central; for it is not on the land.
obtained from that land but from something else, it is not civil fruits of that land, and the bank's
contention is untenable. RULING: The judgment of the lower court is accordingly modified by eliminating therefrom the
reservation made in favor of the defendant-appellant to recover from the plaintiff the sum
It is to be noted that the said bonus bears no immediate, but only a remote accidental relation to the
land mentioned, having been granted as compensation for the risk of having subjected one's land to a RATIO: The Civil Code confirms certain time-honored principles of the law of property. One of these is the
lien in favor of the bank, for the benefit of the entity granting said bonus. principle of accession whereby the owner of property acquires not only that which it produces but that
which is united to it either naturally or artificially. (Art. 353.) Whatever is built, planted or sown on the
Bernardo v. Bataclan land of another, and the improvements or repairs made thereon, belong to the owner of the land (art.
358). Where, however, the planter, builder, or sower has acted in good faith, a conflict of rights arises
FACTS: By a contract of sale executed from Pastor Samonte and others ownership of a parcel of land of between the owners and it becomes necessary to protect the owner of the improvements without
about 90 hectares situated in sitio Balayunan, Silang, Cavite. To secure possession of the land from the causing injustice to the owner of the land. In view of the impracticability of creating what Manresa calls a
vendors the said plaintiff, on July 20, 1929, instituted Civil Case No. 1935 in the Court of First Instance of state of "forced co-ownership" (vol. 3, 4th ed., p. 213), the law has provided a just and equitable solution
Cavite. The trial court found for the plaintiff in a decision which was affirmed by this Supreme Court on by giving the owner of the land the option to acquire the improvements after payment of the proper
appeal. When plaintiff entered upon the premises, however, he found the defendant herein, Catalino indemnity or to oblige the builder or planter to pay for the land and the sower to pay the proper rent
Bataclan, who appears to have been authorized by former owners, as far back as 1922, to clear the land (art. 361). It is the owner of the land who is allowed to exercise the option because his right is older and
and make improvements thereon. As Bataclan was not a party in the case, plaintiff, on June 11, 1931, because, by the principle of accession, he is entitled to the ownership of the accessory thing (3 Manresa,
instituted against him, in the Court of First Instance of Cavite. In this case, plaintiff was declared owner 4th ed., p. 213). In the case before us, the plaintiff, as owner of the land, chose to require the defendant,
but the defendant was held to be a possessor in good faith, entitled to reimbursement in the total sum of as owner of the improvements, to pay for the land.
P1,642, for work done and improvements made.
The defendant states that he is a possessor in good faith and that the amount of P2,212 to which he is
Both parties appealed (G.R. 37319). The decision appealed from was modified by allowing the defendant entitled has not yet been paid to him. Therefore, he says, he has a right to retain the land in accordance
to recover compensation amounting to P2,212 and by reducing the price at which the plaintiff could with the provisions of article 453 of the Civil Code. We do not doubt the validity of the premises stated.
require the defendant to purchase the land in question from P300 to P200 per hectare. Plaintiff was given
by this court 30 days from the date when the decision became final within which to exercise his option, We find, however, that the defendant has lost his right of retention. In obedience to the decision of this
either to sell the land to the defendant or to buy the improvements from him. court in G.R. No. 37319, the plaintiff expressed his desire to require the defendant to pay for the value of
the land. The said defendant could have become owner of both land and improvements and continued in
possession thereof. But he said he could not pay and the land was sold at public auction to Toribio
Teodoro. The law, as we have already said, requires no more than that the owner of the land should This is only available if after the owner in good faith chose to sell his land to the builder in good faith and
choose between indemnifying the owner of the improvements or requiring the latter to pay for the land. the latter fails to pay the value of the land within the agreed period. Only then can the owner in good
When he failed to pay for the land, the defendant herein lost his right of retention. faith compel the builder in good faith to remove the building he erected.

The judgment rendered by Judge Felix is founded on articles 361 (now 448) and 453 (now 546) of the
Ignacio v. Hilario Civil Code which are as follows:

FACTS: This is a petition for certiorari arising from a case in the Court of First Instance of Pangasinan
between the herein respondents Elias Hilario and his wife Dionisia Dres as plaintiffs, and the herein
petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning the ownership of a
parcel of land, partly rice-land and partly residential. After the trial of the case, the lower court, presided
over by Hon. Alfonso Felix, rendered judgment holding plaintiffs as the legal owners of the whole
property but conceding to defendants the ownership of the houses and granaries built by them on the
residential portion with the rights of a possessor in good faith, in accordance with article 361 (now 448)
of the Civil Code. The dispositive portion is, among others, That the defendants are entitled to hold the
position of the residential lot until after they are paid the actual market value of their houses and
granaries erected thereon, unless the plaintiffs prefer to sell them said residential lot, in which case
defendants shall pay the plaintiffs the proportionate value of said residential lot taking as a basis the
price paid for the whole land. That upon defendant's failure to purchase the residential lot in question,
said defendants shall remove their houses and granaries after this decision becomes final and within the
period of sixty (60) days from the date that the court is informed in writing of the attitude of the parties
in this respect.
ART. 361. The owner of land on which anything has been built, sown or planted in good faith, shall have the right to
appropriate as his own the work, sowing or planting, after the payment of the indemnity stated in articles 453 and
454, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent.
ART. 453. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain
the thing until such expenses are made good to him.
Useful expenses shall be refunded to the possessor in good faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the amount of the expenses or paying the increase in
value which the thing may have acquired in consequence thereof.
Sarmiento v. Agana
FACTS: In 1967, Ernesto while still courting his wife (Rebecca), was advised to construct their residential
house by the mother of Rebecca. It was probably assumed that he land was owned by the mother.

CoA - Plaintiff prayed for an order of execution for defendants to remove the structure at the latter’s Subsequently, it turned out that the land was owned by Mr. & Mrs. Santo and in 1974 was sold
expense and restore the possession to the former. to Sarmiento. 1975, Sarmiento asked Ernesto and his wife to vacate and an ejectment case was filed
against them.
CFI - Defendants objected to this motion which, after hearing, was granted by Judge Natividad.
MTC – Ernesto is built the residential house in good faith. Ordered them to vacate after Sarmiento has
ISSUE: Whether or not Hilario, the owner in good faith, may eject a builder in good faith without paid them the sum of P20,000.00
choosing either to appropriate the building for himself after payment of its value or to sell his land to the
builder in good faith. CFI – modified the MTC decision based on Article 488. The court ordered:

RULING: No. The owner in good faith has to make a choice. He cannot dispense the options under the Sarmiento to exercise the option to reimburse ERNESTO and wife the sum of 40,000.00 as the value of
law and then eject the builder in good faith. This is because both are in good faith. the RESIDENTIAL HOUSE, or the option to allow them to purchase the LAND for P25,000.00 within 60
days. Sarmiento did not exercise his option. Ernesto was allowed to deposit the sum of P25,000.00 as
RATIO: But when can the owner in good faith compel the builder in good faith to remove the building he purchase price of the land.
erected?
ISSUE: Whether or not Sarmiento could exercise both refusal to pay the spouses and give option to
purchase. The respondent court’s decision which later on was affirmed by the Supreme court led to the reformation
of the Contract of Sale of the disputed lot from Basilides to Restituta from a sale to a conveyance of the
RULING: No. The Petition for Certiorari is hereby ordered dismissed, without pronouncement as to costs. share of Restituta in the future hereditary estate of her parents. Hence, this petition for a motion for
reconsideration.
RATIO: The owner of the building erected in good faith on a land owned by another, is entitled to retain
the possession of the land until he is paid the value of his building, under article 453 (now Article 546). ISSUE: Whether or not Tan Queto was a possessor and builder in good faith or in bad faith.
The owner, of the land. upon, the other hand, has the option, under article 361 (now Article 448), either
to pay for the building or to sell his land to the owner of the building. But he cannot, as respondents here RULING: No. The questioned lot together with the building thereon, as Tan Queto's exclusive property.
did, refuse both to pay for the building and to sell the land and compel the owner of the building to
remove it from the land where it is erected. He is entitled to such remotion only when, after having RATIO: Even assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that
chosen to sell his land, the other party fails to pay for the same. the lot was actually RESTITUTA's (making him in bad faith), still RESTITUTA's failure to prohibit him from
building despite her knowledge that construction was actually being done, makes her also in bad faith.
We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to remove their The net resultant of mutual bad faith would entitle TAN QUETO to the rights of a builder in good faith
buildings from the land belonging to plaintiffs-respondents only because the latter chose neither to pay for (Art. 448, Civil Code), ergo, reimbursement should be given him if RESTITUTA decides to appropriate the
such buildings nor to sell the land, is null and void, for it amends substantially the judgment sought to be building for herself (Art. 448, Civil Code).
executed and is, furthermore, offensive to articles 361 (now Article 448) and 453 (now Article 546) of the
Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608 [1946]).
However, as already previously intimated, TAN QUETO having bartered his own lot and small house with
the questioned lot with JUAN (who has been adverted to by a court decision and by the OCT a conjugal
owner) may be said to be the OWNER-POSSESSOR of the lot. Certainly he is not merely a possessor or
Pershing Tan Queto v. CA
builder in good faith (this phrase presupposes ownership in another); much less is he a builder in bad
faith. He is a builder-possessor jus possidendi because he is the OWNER himself. Please note that the
FACTS: Herein private respondent Restituta Tacalinar Guangco de Pombuena received the questioned lot Chapter on Possession (jus possesionis, not jus possidendi) in the Civil Code refers to a possessor other
from her mother Basilides Tacalinar either as a purported donation or by way of purchase with P50 as the than the owner. Please note further that the difference between a builder (or possessor) in good faith
alleged consideration thereof. The donation or sale was consummated while Restituta was already and one in bad faith is that the former is NOT AWARE of the defect or flaw in his title or mode of
married to her husband Juan Pombuena. Juan then filed for himself and his supposed co-owner Restituta acquisition while the latter is AWARE of such defect or flaw (Art. 526, Civil Code). But in either case there
an application for a Torrens Title over the land which was later on granted pronouncing him (‘married to is a flaw or defect. In the case of TAN QUETO there is no such flaw or defect because it is he himself (not
Restituta’) as the owner of the land. somebody else) who is the owner of the property.

A contract of lease over the lot was entered into between petitioner, Pershing Tan Queto and Restituta
with the consent of her husband for a period of 10 years. The lease of contract having expired, Restituta Pecson v. CA
filed for unlawful detainer against Tan Queto. The unlawful detainer case was won by the spouses in the
Municipal Court but on appeal in the CFI the entire case was dismissed because of a barter agreement
FACTS: Antecedents - [Petitioner Pedro Pecson, owner of a commercial lot in Quezon City, built on it a
whereby Tan Queto became the owner of the disputed lot and the spouses became the owners of a
four-door two-storey apartment. He failed to pay realty taxes at P12,000, the lot was sold at a public
parcel of land with the house thereon previously owned before the barter by Tan Queto. After the barter
auction, which was sold to the Respondents Juan Nuguid and Erlinda Tan-Nuguid for P103,000. Petitioner
agreement, Tan Queto constructed on the disputed land a concrete building without any objection from
challenged the validity of the auction sale before the RTC.
Restituta. Afterwards Restituta sued both Juan and Tan Queto for reconveyance of the title over the
registered but disputed lot, for annulment of the barter, and for recovery of the land with damages.
RTC - Dismissed, held that the issue concerning the apartment was not a subject of the litigation.
CA - Both appealed. Affirmed, only the land without the apartment - was auctioned.] Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain
the thing until he has been reimbursed therefor.
CoA - Nov. 1993, Respondents filed with the trial court a motion for delivery of possession of the lot and
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person
the apartment building, citing Art. 546 of the Civil Code.
who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by reason thereof.
Respondent agreed to comply with the provisions of the law considering that plaintiff is a builder in good
faith and he has in fact, opted to pay the cost of the construction spent by plaintiff. From the complaint By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one
itself the plaintiff stated that the construction cost of the apartment is much more than the lot, which of whom has built some works, or sown or planted something. The building, sowing or planting may have
apartment he constructed at a cost of P53,000.00 in 1965. This amount of P53,000.00 is what the movant been made in good faith or in bad faith. The rule on good faith laid down in Article 526 of the Civil Code
is supposed to pay under the law before a writ of possession placing him in possession of both the lot shall be applied in determining whether a builder, sower or planter had acted in good faith.
and apartment would be issued.
Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who
RTC - Respondent must reimburse Plaintiff P53,000 for construction costs, which is hereby offset against then later loses ownership of the land by sale or donation.
the amount of rents collected by the latter. Plaintiff should pay rent to Respondents.
Elsewise stated, where the true owner himself is the builder of works on his own land, the issue of good
CA - Affirmed in part, premises having been turned over to the Respondents quest is moot and academic, faith or bad faith is entirely irrelevant.
they must pay Petitioner the construction cost of P53,000. Instead of paying rent, Petitioner must
account for any and all fruits of the improvements received by him. Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe that the
provision therein on indemnity may be applied by analogy considering that the primary intent of Article
ISSUE: Whether or not CA erred in setting the amount of reimbursement for cost and holding that Pecson 448 is to avoid a state of forced co-ownership and that the parties, including the two courts below, in the
account for the rent on the property. main agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for the
improvements may be paid although they differ as to the basis of the indemnity.
RULING: RTC and CA decision set aside. The market value so determined shall be forthwith paid by the
private respondents to the petitioner otherwise the petitioner shall be restored to the possession of the Article 546 does not specifically state how the value of the useful improvements should be determined.
apartment building until payment of the required indemnity. The respondent court and the private respondents espouse the belief that the cost of construction of the
apartment building in 1965, and not its current market value, is sufficient reimbursement for necessary
RATIO: The trial court and the Court of Appeals, as well as the parties, concerned themselves with the and useful improvements made by the petitioner.
application of Articles 448 and 546 of the Civil Code. These articles read as follows:
The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila 17 that the said
to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546
provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece
and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper
of land, to administer complete justice to both of them in such a way as neither one nor the other may
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 shall pay reasonable rent, if the owner of the land does not choose to enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in market value of the improvements which should be made the basis of reimbursement.
case of disagreement, the court shall fix the terms thereof.
The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentals
xxx xxx xxx paid by the lessees of the apartment building. Since the private respondents have opted to appropriate
the apartment building, the petitioner is thus entitled to the possession and enjoyment of the apartment Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of
building, until he is paid the proper indemnity, as well as of the portion of the lot where the building has Execution, respondent Court "acted without or in excess of jurisdiction, and/or with grave abuse of
been constructed. This is so because the right to retain the improvements while the corresponding discretion, because the said order and writ in effect vary the terms of the judgment they purportedly
indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or seek to enforce." He argued that since said judgment declared the petitioner a possessor in good faith,
sown. 18 The petitioner not having been so paid, he was entitled to retain ownership of the building and, he is entitled to the payment of the value of the improvements introduced by him on the whole property,
necessarily, the income therefrom. with right to retain the land until he has been fully paid such value. He likewise averred that no payment
for improvements has been made and, instead, a bond therefor had been filed by defendants (private
It follows, too, that the Court of Appeals erred not only in upholding the trial court's determination of the respondents), which, according to petitioner, is not the payment envisaged in the decision which would
indemnity, but also in ordering the petitioner to account for the rentals of the apartment building. entitle private respondents to the possession of the property. Furthermore, with respect to portion "B",
petitioner alleges that, under the decision, he has the right to retain the same until after he has
participated and lost in the public bidding of the land to be conducted by the Bureau of Lands. It is
Ortiz v. Kayanan claimed that it is only in the event that he loses in the bidding that he can be legally dispossessed thereof.

FACTS: Plaintiff used to be the legal guardian of Martin Dolorico II. When his ward died, plaintiff It is the position of petitioner that all the fruits of the property, including the tolls collected by him from
continued to cultivate and possess the latter’s property, which was formerly a subject of homestead the passing vehicles, which according to the trial court amounts to P25,000.00, belongs to petitioner and
application. In the said application, the ward’s uncle was named as his heir and successor in interest. not to defendant/private respondent Quirino Comintan, in accordance with the decision itself, which
Thus, the uncle executed an affidavit relinquishing his rights over the property in favor of Comintan and decreed that the fruits of the property shall be in lieu of interest on the amount to be paid to petitioner
Zamora, his grandson and son-in-law and requested the Director of Lands to cancel the homestead as reimbursement for improvements. Any contrary opinion, in his view, would be tantamount to an
application. The homestead application was cancelled to the protest of Ortiz saying that he should be amendment of a decision which has long become final and executory and, therefore, cannot be lawfully
given preference to purchase the lot inasmuch as he is the actual occupant and has been in continuous done.
possession of the same. Still, the lot in question was sold at a public auction wherein defendant
Comintan was the only bidder. ISSUE: Whether or not petitioner is still entitled to retain for his own exclusive benefit all the fruits of the
property, such as the tolls collected by him from March 1967 to December 1968, and September 1969 to
The plaintiff’s protest was investigated upon but his claim was not given due course. On appeal, March 31, 1970, amounting to about P25,000.00.
respondent court rules that half of the portion of land should be given to the defendant, being the
successful bidder. The other half should be awarded to Zamora without prejudice to the right of Ortiz to RULING: Negative
participate in the public bidding of the lot. If Ortiz is to be not declared the successful bidder, defendants
should reimburse jointly said plaintiff for the improvements introduced on the land, with him, having the RATIO: No contention that the possessor in good faith is entitled to the fruits received before the
right to retain the property until after he has been paid for. possession is legally interrupted. Possession in good faith ceases or is legally interrupted from the
moment defects in the title are made known to the possessor, by extraneous evidence or by the filing of
Plaintiff appealed the judgment. It was later found out that Ortiz collected tolls on a portion of the an action in court by the true owner for the recovery of the property. Hence, all the fruits that the
property wherein he has not introduced any improvement. possessor may receive from the time he is summoned in court, or when he answers the complaint, must
be delivered and paid by him to the owner or lawful possessor.
The judgment became final and executory. Private respondents filed a motion for its execution requesting
that they file a bond in lieu of the amount that should be paid to Ortiz, on the condition that after the However, even after his good faith ceases, the possessor can still retain the property (Art 546) until he
accounting of the tolls collected by plaintiff, there is still and amount due and payable to the said plaintiff, has been fully reimbursed for all the necessary and useful expenses made by him on the property. he
the bond shall be held answerable. principal characteristic of the right of retention is its accessory character. It is accessory to a principal
obligation. Considering that the right of the possessor to receive the fruits terminates when his good
faith ceases, it is necessary, in order that this right to retain may be useful, to concede to the creditor the Upon failure of the private respondents to heed the demand, the petitioners filed a complaint for
right to secure reimbursement from the fruits of the property by utilizing its proceeds for the payment of unlawful detainer and damages.
the interest as well as the principal of the debt while he remains in possession.
ISSUE: Whether or not the respondents are builders in good faith (Art. 448).
Petitioner cannot appropriate for his own exclusive benefit the tolls which he collected from the property
retained by him. It was his duty under the law, after deducting the necessary expenses for his RULING: NO. They are lessees in good faith.
administration, to apply such amount collected to the payment of the interest, and the balance to the
payment of the obligation. RATIO: The private respondents claim they are builders in good faith, hence, Article 448 of the Civil Code
should apply. They rely on the lack of title of the petitioners' mother at the time of the execution of the
We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for administration, contract of lease, as well as the alleged assurance made by the petitioners that the lot on which the
belong to Quirino Comintan, owner of the land through which the toll road passed, further considering house stood would be sold to them.
that the same was on portions of the property on which petitioner had not introduced any improvement. But being mere lessees, the private respondents knew that their occupation of the premises would
The trial court itself clarified this matter when it placed the toll road under receivership. The omission of continue only for the life of the lease. Plainly, they cannot be considered as possessors nor builders in
any mention of the tolls in the decision itself may be attributed to the fact that the tolls appear to have good faith.
been collected after the rendition of the judgment of the trial court. Article 448 of the Civil Code, in relation to Article 546 of the same Code, which allows full reimbursement
of useful improvements and retention of the premises until reimbursement is made, applies only to a
As to the other lot, it appears that no public sale has yet been conducted by the Bureau of Lands and, possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does
therefore, petitioner is entitled to remain in possession thereof. This is not disputed by respondent not apply where one's only interest is that of a lessee under a rental contract; otherwise, it would always
Eleuterio Zamora. After public sale is had and in the event that Ortiz is not declared the successful bidder, be in the power of the tenant to "improve" his landlord out of his property.
then he should be reimbursed by respondent Zamora in the corresponding amount for the improvements And even if the petitioners indeed promised to sell, it would not make the private respondents
on Lot 5785-B. possessors or builders in good faith so as to be covered by the provisions of Article 448 of the Civil Code.
The latter cannot raise the mere expectancy of ownership of the aforementioned lot because the alleged
promise to sell was not fulfilled nor its existence even proven.
Geminiano v. CA
FACTS: It appears that subject lot was originally owned by the petitioners' mother, Paulina Amado vda. de
Geminiano. On a 12-square-meter portion of that lot stood the petitioners' unfinished bungalow, which Pleasantville Dev’t Corp. v. CA
the petitioners sold to the private respondents, with an alleged promise to sell to the latter that portion
of the lot occupied by the house. Subsequently, the petitioners' mother executed a contract of lease Doctrine: Good faith consists in the belief of the builder that he land he is building on is his and his
over a 126 square-meter portion of the lot, including that portion on which the house stood, in favor of ignorance of any defect or flaw in his title. The burden of proving bad faith belongs to the one asserting
the private respondents for P40.00 per month for a period of 7 years. it.
The private respondents then introduced additional improvements and registered the house in their
names. After the expiration of the lease contract, however, the petitioners' mother refused to accept the FACTS: Edith Robillo purchased from Pleasantville Development Corporation, herein petitioner a parcel of
monthly rentals. land at Pleasantville Subdivision, Bacolod City. The property was designated as Lot 9, Phase II. In 1975,
It turned out that the lot in question was the subject of a suit, which resulted in its acquisition by one herein respondent Eldred Jardinico bought the said subject lot from the former purchaser. Eldred later
Maria Lee in 1972. Lee sold the lot to Lily Salcedo, who in turn sold it to the spouses Dionisio. Spouses discovered that the property he purchased had improvements introduced therein by respondent Wilson
Dionisio executed a Deed of Quitclaim over the said property in favor of the petitioners. Kee.
The petitioners sent a letter addressed to private respondent Mary Nicolas demanding that she vacate Kee on the other hand bought on installments Lot 8 of the same subdivision from C.T. Torres
the premises and pay the rentals in arrears within twenty days from notice. Enterprises, Inc. (CTTEI) which is the exclusive real estate agent of the petitioner. Under the contract Kee
was allowed to take possession of the property even before full payment of the price. CTTEI through an
vendee’s right to recover damages resulting from petitioner’s negligence. Such interpretation of the
employee, Zenaida Octaviano accompanied Kee’s wife Donabelle to inspect Lot No. 8. Octaviano howeverwaiver is contrary to law and public policy and cannot be allowed. Petitioner cannot claim and excuse
mistakenly pointed towards Lot 9. Hence spouses Kee had their residence, an auto repair shop, a store
itself from liability by claiming that it was not directly involved in the delivery of the property. The
and other improvements constructed on the wrong lot. principal must be responsible for the acts of the agent done within the scope of his authority. CTTEI was
the sole real estate representative of the petitioner when the delivery was made. Wilson Kee is therefore
Upon discovery of the blunder both Kee and Jardinico tried to reach an amicable settlement but they declared a builder in good faith. Petitioner and respondent CTTEI are declared solidarily liable for
failed. Jardinico demanded that the improvements be removed but as Kee refused, Jardinico filed a damages due to negligence. The award of rentals to Jardinico is dispensed with.
complaint for ejectment with damages against Kee at the Municipal Trial Court in Cities (MTCC) of
Bacolod City. Kee filed a third-party complaint against herein petitioner and CTTEI.

The MTCC found that the error was attributable to CTTEI also since at present the contract with Kee has Baltazar v. Caridad
rescinded for Kee’s failure to pay installments. Kee no longer had any right over the subject property and
must pay rentals for its use. The Regional Trial Court (RTC) of Bacolod City ruled that petitioner and CTTEI FACTS: This is an appeal against an order issued by the CFI compelling Respondents Caridad to remove
were not at fault or were not negligent. It argued that Kee was a builder in bad faith. Even if assuming their respective houses built in Lot No. 8864 within 30 days from receipt of said order.
that he was in good faith, he was no longer so and must pay rentals from the time that he was given In the cadastral proceeding, the trial court rendered decision, dated January 23, 1941, awarding said Lot
notice to vacate the lot. The Court of Appeals ruled that Kee was a builder in good faith as he was No. 8864 cadastre to the spouses Julio Baltazar and Constancia Valencia as their conjugal partnership
unaware of the mix-up when he constructed the improvements. It was in fact due to the negligence and property.
wrongful delivery of CTTEI which included its principal the herein petitioner. It further ruled that the On Dec. 6, 1961, Julio Baltazar surviving wife and children file a motion praying for writ of possession of
award of rental was without basis. the southern portion of the said Lot against respondents who had been in possession of the lot since
1931 before the cadastral case and the decision was rendered and decree being issued in 1941.
Pending the resolution of the case at the Court of Appeals Jardinico and Kee entered into a deed of sale, On Jan. 23, 1962, petitioners presented a motion to compel respondent to remove their respective house
wherein Lot 9 was sold to Kee. In the said deed a provision stating that regardless of the outcome of the which was built in 1958 and 1959, respectively. Failure to do so, will lead to demolition of the said
decision, such shall not be pursued by the parties and shall be considered dismissed and without effect. houses.
The appellate court was not informed of this deal. Respondents-appellants question the power or jurisdiction of the trial court to order the removal of their
respective houses and insisted that they are builders in good faith of the houses in question, and, as such,
ISSUE: Whether or not a lot buyer who constructs improvements on the wrong property erroneously they are accorded rights under Art. 488 of the New Civil Code, which rights cause conflict of interest
delivered by the owner’s agent, a builder in good faith. between petitioners and respondents as registered owners and builders in good faith, respectively.
Moreso, respondents insisted that the controversy is cognizable only by a court exercising general
HELD: Yes. Article 527 of the Civil Code provides the presumption that petitioner has the burden of jurisdiction and the only remedy available to petitioners is to file an ordinary action for ejectment and
proving that Kee was a builder in bad faith. Kee may be made liable for the violation of the contract with recovery of possession.
CTTEI but this may not be used as a basis of bad faith and as a sufficient ground to negate the
presumption of good faith. Jardinico is presently only allowed to file a complaint for unlawful detainer. ISSUE: WON the trial court has the jurisdiction for the issuance of the said order.
Good faith is based on the belief of the builder that the land he is building on is his and his ignorance of
any flaw or defect in is title. Since at the time when Kee constructed his improvements on Lot 8, he was RULING:
not aware that it was actually Lot 9 that was delivered to him. Petitioner further contends that Kee was The above contentions of respondents are without merit. It is to be noted that respondents do not
negligent as a provision in the Contract of Sale on Installment stated that the vendee must have dispute that during the pendency of the cadastral proceeding were in possession of the southern portion
personally examined the property and shall bear on his own the consequential expenses in the changes of undisputed lot; and that respondent claims right and title thereto as a mere heir and successor-in-
that may happen thereon. The court held that such provision cannot be interpreted as a waiver of the interest of said Andres Caridad. Neither do respondents dispute the propriety and validity of the order of
the cadastral court, granting the writ of possession in favor of petitioners as well as its enforcement. CFI of Cebu. Plaintiffs and defendants are co-owners pro indiviso of this lot in the proportion of and 1/3
Under these circumstances, we hold that the order, dated March 20, 1962, of the cadastral court, share each, respectively.
granting petitioner's' motion to compel respondents to remove their respective houses from the The trial court appointed a commissioner in accordance with the agreement of the parties. ,the Id
disputed lot, is valid and enforceable against respondents. Citing the case of Marcelo vs. Mencias, etc., et commissioner conducted a survey, prepared a sketch plan and submitted a report to the trial court on
al., L-15609, April 29, 1960, this Court had already upheld the jurisdiction or authority of the court of first May 29, 1976, recommending that the property be divided into two lots: Lot 1161-A with an area of 30
instance, sitting as a land registration court, to order, as a consequence of the writ of possession issued square meters for plaintiffs and Lot No. 1161-B with an area of 15 square meters for the defendants. The
by it, the demolition of improvements introduced by the successor-in-interest of a defeated oppositor in house of defendants occupied the portion with an area of 5 square meters of Lot 1161-A of plaintiffs. The
the land registration case. parties manifested their conformity to the report and asked the trial court to finally settle and adjudicate
Furthermore, Section 6, Rule 124, of the Rules of Court states that — who among the parties should take possession of the 5 square meters of the land in question.
"When by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other The trial court rendered judgment assigning Lot 1161-A with an area of 30 sq. meters to the plaintiffs.
means necessary to carry it into effect may be employed by such court or officer and if the procedure to Further, ordered defendants at their expense to remove and demolish part of their house which has
be followed in the exercise of such jurisdiction is not specifically pointed out by these rules, any suitable encroached an area of 5 meters from the plaintiffs lot within 60 days from date hereof and delivered the
process or mode of proceeding may be adopted which appears most conformable to the spirit of said posseion to plaintiffs.
rules."
As already stated, provisions of the Rules of Court are applicable to land registration cases in a suppletory ISSUE: WON the trial court erred in not applying the rights of a builder in good faith under Art. 488 of the
character. Pursuant to the provision just quoted, respondent Judge has the power to issue all auxiliary New Civil Code to defendants-appelant with respect to that part of their house occupying a portion of
writs, including the writ of demolition sought by petitioner, processes and other means necessary to the lot of the plaintiffs-appellees.
carry into effect the jurisdiction conferred upon it by law in land registration cases to issue a writ of
possession to the successful litigant, the petitioner herein. RULING:
Lastly, in the case of Shoiji vs. Harvey, 43 Phil. 333, we pointed out that "Independent of any statutoryThe court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds,
provision, ... every court has inherent power to do all things reasonably necessary for the administration
plants or sows on the land owned in common for then he did not build, plant or sow upon land that
of justice within the scope of its jurisdiction." exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under
Appellants can not be regarded as builders in good faith because they are bound by the 1941 decree of the circumstances, and the situation is governed by the rules of co-ownership. 1
registration that obligated their parents and predecessors-in-interest. Good faith must rest on a colorable
However, when, as in this case, the co-ownership is terminated by the partition and it appears that the
right in the builder, beyond a mere stubborn belief in one's title despite judicial adjudication. The fact
house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs
that in 1959 appellants demolished and replaced their old house with new and bigger ones can not which the defendants obviously built in good faith, then the provisions of Article 448 of the new Civil
enervate the rights of the registered owners. Otherwise, the rights of the latter to enjoy full possession of
Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may
their registered property could be indefinitely defeated by an unsuccessful opponent through the simple apply even when there was co-ownership if good faith has been established. 2
subterfuge of replacing his old house with a new one from time to time. Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said portion
Wherefore, the appealed order should be, as it is hereby affirmed. With costs against respondents- of the house of defendants upon payment of indemnity to defendants as provided for in Article 546 of
appellants. the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of the land occupied
by their house. However, if the price asked for is considerably much more than the value of the portion of
the house of defendants built thereon, then the latter cannot be obliged to buy the land. The defendants
SPOUSES DEL CAMPO v. ABESIA shall then pay the reasonable rent to the plaintiff upon such terms and conditions that they may agree. In
case of disagreement, the trial court shall fix the terms thereof. Of course, defendants may demolish or
FACTS: remove the said portion of their house, at their own expense, if they so decide.
This case involves a parcel of land, Lot No. 1161 of the Cadastral Survey of Cebu, with an area of only WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiff to indemnify
about 45 square meters, covered by TCT No. 61850. An action for partition was filed by plaintiffs in the defendants for the value of the Id portion of the house of defendants in accordance with Article 546 of
the Civil Code, if plaintiffs elect to appropriate the same. Otherwise, the defendants shall pay the value of
the 5 square meters of land occupied by their house at such price as may be agreed upon with plaintiffs RULING:
and if its value exceeds the portion of the house that defendants built thereon, the defendants may The SC agreed with the appellate court, ruled that factual matters are best evaluated by trial courts. Only
choose not to buy the land but defendants must pay a reasonable rental for the use of the portion of the questions of law are the proper subject of a petition for review on certiorari in this Court, unless any of
land of plaintiffs As may be agreed upon between the parties. In case of disagreement, the rate of rental the known exceptions is extant in this case.
shall be determined by the trial court. Otherwise, defendants may remove or demolish at their own The evidence clearly established respondents ownership of Piaza Hotel, as the title of the land was in the
expense the said portion of their house. No costs. SO ORDERED. name of respondent, Tax Declaration was in the name of respondent as owner as explicitly declared in
the Tax Declaration. Moreso, petitioner was doubtlessly just a lessee in the lease contract.
The Rules of Court states that [a]n admission, verbal or written, made by a party in the course of the
PROGRAMME INC. V. PROVINCE OF BATAAN proceedings in the same case, does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was made.
FACTS: Both the trial and appellate courts declared that the land as well as the improvement thereon (Piazza
Petitioner Programme Incorporated contests the Court of Appeals (CA) decision[2] and resolution[3] Hotel) belonged to respondent. We find no reason to overturn this factual conclusion.
upholding respondent Province of Bataans ownership of Piazza Hotel and the land on which it stands. The Since this petition for review on certiorari was clearly without legal and factual basis, petitioners counsel
assailed decision affirmed the decision of the Regional Trial Court (RTC), Branch 4, Balanga, Bataan in a should not have even filed this appeal. It is obvious that the intention was merely to delay the disposition
suit for preliminary injunction and sum of money filed by petitioner against Bataan Shipyard and of the case.
Engineering Co., Inc. (BASECO). WHEREFORE, the petition is hereby DENIED. The decision and resolution of the Court of Appeals in CA-
On May 14, 1986, BASECO (Owner of Pizza Hotel and Mariveles Lodge) granted petitioner a contract of G.R. CV No. 49135 are AFFIRMED.
lease over Piazza Hotel at a monthly rental of P6,500 for three years, i.e., from January 1, 1986 to January Costs against petitioner. Same costs against Atty. Benito R. Cuesta I, petitioners counsel, for filing this
1, 1989, subject to renewal by mutual agreement of the parties. After the expiration of the three-year flimsy appeal, payable within ten (10) days from finality of this decision. SO ORDERED.
lease period, petitioner was allowed to continue operating the hotel on monthly extensions of the lease.
In April 1989, however, the (PCGG) issued a sequestration order against BASECO pursuant to Executive
Order No. 1 of former President Corazon C. Aquino. Among the properties provisionally seized and taken SULO SA NAYON V. NAYONG FILIPINO FOUNDATION
over was the lot on which Piazza Hotel stood.
On July 19, 1989, however, Piazza Hotel was sold at a public auction for non-payment of taxes to FACTS: Respondent, a government-owned and controlled corporation, is the owner of a parcel of land in
respondent Province of Bataan. The title of the property was transferred to respondent. BASECOs Pasay City, known as the Nayong Pilipino Complex. Petitioner a domestic corporation duly organized and
Transfer Certificate of Title (TCT) No. T-59631 was cancelled and a new one, TCT No. T-128456, was issued
existing under Philippine laws.
to the Province of Bataan. On 1975, Respondent leased to petitioner Sulo sa Nayon a portion of land for the construction and
Petitioner filed a complaint for preliminary injunction and collection of sum of money against BASECO.
operation of a hotel building for an initial period of 21 years until May 1996 and renewable for 25 years
Respondent, as the new owner of the property, filed a motion for leave to intervene on Nov. 22, 1990.
upon due notice in writing to respondent at least 6months prior of the expiration of the lease. On March
Trial court rendered judgment in favor of the respondent. On appeal, the CA affirmed the trial court
1995, petitioners sent respondent letter notifying the latter’s intention to renew the contract from
ruling that respondent has established by preponderance of evidence its claim of ownership to the another 25 years and that they executed a Voluntary Addendum to the lease agreement.
subject matter while in fact petitioner has not presented evidence proving its ownership of the said
Beginning 2001, petitioners defaulted in the payment of their monthly rental so respondent demanded
buildings, whereas, respondent presented a tax declaration and CTC over which it now exercises full
petitioner to pay. On September 2001, respondent filed a complaint for unlawful detainer.
control and dominion. Petitioners insist that they should be considered builders in good faith who have the right of retention
until reimbursement by respondent is made and they also argue that to apply Art 1678 to their case
ISSUE: WON respondent province, as complainant-intervenor, was the legitimate owner of the Piazza would result to sheer injustice, as it would amount to giving away the hotel and its other structures at
Hotel and Mariveles Lodge. virtually bargain prices
 same. Respondent, however, claims that his house was built within the parameters of his father’s lot; and
ISSUE: whether the rules on accession, as found in Articles 448 and 546 of the Civil Code, apply to the that this lot was surveyed by engineer Jose Quedding, the authorized surveyor of Araneta Institute of
instant case? Agriculture (AIA). Petitioner called the attention of AIA on the matter and so the latter authorized
another survey of the land by Engineer Quedding. The latter then did the survey twice which led to the
RULING: No. In the case at bar, petitioners have no adverse claim or title to the land. In fact, as lessees, conclusion that Lots Nos 25, 26 (owned by respondent Go) and 27 (owned by Li Ching Yao) moved
they recognize that the respondent is the owner of the land. What petitioners insist is that because of the westward to the eastern boundary of Lot 24 (owned by petitioner Ballatan.) –(it was later on discovered
improvements, which are of substantial value, that they have introduced on the leased premises with the by the courts that Go encroached 42 square meters from the property of Ballatan and Yao encroached 37
permission of respondent, they should be considered builders in good faith who have the right to retain square meters on Go’s property, all of which were in GOOD FAITH) Ballatan made written demands to the
possession of the property until reimbursement by respondent. respondent to dismantle and move their improvements and since the latter wasn’t answering the
SC affirmed the ruling of the CA that introduction of valuable improvements on the leased premises does petitioner filed accion publiciana in court. Go’s filed their “Answer with Third-Party Complaint”
not give the petitioners the right of retention and reimbursement which rightfully belongs to a builder in impleading as third party defendants respondents Li Ching Yao, the AIA and Engineer Quedding.
good faith. Otherwise, such a situation would allow the lessee to easily improve the lessor out of its RTC ruled in favor of the petitioner ordering respondent Go to demolish their improvements and pay
property. We reiterate the doctrine that a lessee is neither a builder in good faith nor in bad faith[12] that damages to Petitioner but dismissing the third-party complaint. CA affirmed the dismissal of the third
would call for the application of Articles 448 and 546 of the Civil Code. His rights are governed by Article party-complaint as to AIA but reinstated the the complaint against Yao and the Engineer. CA also affirmed
1678 of the Civil Code, which reads: the demolition and damages awarded to petitioner and added that Yao should also pay respondent for
Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for his encroachment of respondent Go’s property. Jose Quedding was also ordered to pay attorney’s fees for
which the lease is intended, without altering the form or substance of the property leased, the lessor his negligence which caused all this fuzz.
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 ISSUE: What is the proper remedy in this situation (everyone was in good faith)?
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. RULING:
With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he Art 448 is the proper remedy (Lower Courts are wrong in awarding the damages). It was established in
may remove the ornamental objects, provided no damage is caused to the principal thing, and the the case that the parties had no knowledge of the encroachment until Ballatan noticed it there all of
lessor does not choose to retain them by paying their value at the time the lease is extinguished. them were builders in Good faith. In that scenario they have two options. 1st option is that the land
Under Article 1678, the lessor has the option of paying one-half of the value of the improvements which owner will buy the improvements and the 2nd option is to oblige the builders to buy the land given that
the lessee made in good faith, which are suitable for the use for which the lease is intended, and which the value of the land is not considerably more than the buildings or tree; otherwise the owner may
have not altered the form and substance of the land. On the other hand, the lessee may remove the remove the improvements thereon.
improvements should the lessor refuse to reimburse. The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably
more than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to
the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court
BALLATAN V. CA must fix the terms thereof. The right to choose between appropriating the improvement or selling the
land on which the improvement of the builder, planter or sower stands, is given to the owner. If the
FACTS: Eden Ballatan, together with other petitioners, is living in and registered owners of Lot No. 24. option chooses is to sell the lot, the price must be fixed at the prevailing market value at the time of
Respondent Winston Go is living in and registered owners of Lot No. 25 and 26. And Li Ching Yao is living payment.
in and the registered owner of Lot. 27. The Lots are adjacent to each other. Petitioner was given by SC 30 days to decide on what to do or which right to exercise. Likewise, Go was
When Ballatan constructed her house in her lot, she noticed that the concrete fence and side pathway of also given time to do the regarding Yao’s encroachment. Engineer Quedding was still asked to pay
the adjoining house of respondent Winston Go encroached on the entire length of the eastern side of her attorney’s fees.
property. She was informed by her contractor of this discrepancy, who then told respondent Go of the