Property Cases Midterm Digests

8/12/2019 Property Cases Midterm Digests

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1. LOPEZ V. OROSA

ACTS:

1. Lopez was engaged in business under the name Lopez-Castelo Sawmill.

2. Orosa, who lived in the same province as Lopez, one dayapproached

Lopez and invited the latter to make an investment inthe theatre business.

3. Orosa, his family and close friends apparently were forming acorporation

named Plaza Theatre.

4. Lopez expressed his unwillingness to invest. Nonetheless, therewas an

oral agreement between Lopez and Orosa that Lopezwould be supplying the

lumber for the construction of the theatre.The terms were the following:

one, Orosa would be personallyliable for any account that the said

construction would incur; two,payment would be by demand and not by

cash on delivery.

5. Pursuant to the agreement, Lopez delivered the lumber for

theconstruction. Lopez was only paid one-third of the total cost.

6. The land on which the building has been erected was previously owned

by Orosa, which was later on purchased by the corporation.

7. Due to the incessant demands of Lopez, the corporation mortgaged its

properties.

8. On an earlier relevant date, the corporation obtained a loan with LuzonSurety Company as surety and in turn, the corporation executed a mortgage

over the land and building. In the registration of the land under Act 496,

such mortgage wasnt revealed.

9. Also due to the demands of Lopez, Orosa issued a deed of assignment

over his shares of stock in the corporation.

10. As there was still an unpaid balance, Lopez filed a case against Orosa

and Plaza theatre. He asked that Orosa and Plaza theatre be held liable

solidarily for the unpaid balance; and in case defendants failed to pay, the

land and building should be sold in public auction with the proceeds to be

applied to the balance; or

that the shares of stock be sold in public auction. Lopez also had lis pendens

be annotated in the OCT.

11. The trial court decided that there was joint liability between defendants

and that the materialmans lien was only confined tothe building.

ISSUES:

W/N the materialmens lien for the value of the materials used in the

construction of the building attaches to said structure alone and doesnt

extend to the land on which the building is adhered to?

HELD:

The contention that the lien executed in favor of the furnisher of materials

used for the construction and repair of a building is also extended to land on

which the building was constructed is without merit. For while it is true that

generally, real estate connotes the land and the building constructed

thereon, it is obvious that the inclusion of the building in the enumeration

of what may constitute real properties could only mean one thingthat a

building is by itself an immovable property. Moreover, in the absence of

any specific provision to the contrary, a building is an immovable property

irrespective of whether or not said structure and the land on which it is

adhered to belong to the same owner.

Appelant invoked Article 1923 of the Spanish Civil Code, which provides

With respect to determinate real property and real rights of the debtor,

the following are preferred: xxx Credits for reflection, not entered or

recorded, and only with respect to other credits different from thosementioned in four next preceding paragraphs. Close examination of the

abovementioned provision reveals that the law gives preference to

unregistered refectionary credits only with respect to the real estate upon

which the refectionary or work was made. This being so, the inevitable

conclusion must be that the lien so created attaches merely to the

immovable property for the construction or repair of which the obligation

was incurred. Therefore, the lien in favor of appellant for the unpaid value

of the lumber used in the construction of the building attaches only to said

structure and to no other property of the obligors.


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2. PUNSALAN VS. LACSAMANAFacts:

Antonio Punsalan, Jr. (petitioner), was the former registered owner ofa parcel of land consisting of 340 square meters situated in Tarlac. Petitionermortgaged said land to respondent PNB, but for failure to pay said amount,the property was foreclosed. Respondent PNB was the highest bidder in saidforeclosure proceedings. In the meantime, while the properly was still in thepossession of petitioner, and upon securing a permit from the Municipal

Mayor, petitioner constructed a warehouse on said property. Petitionerdeclared said warehouse for tax purposes.A Deed of Sale was executed between respondent PNB and

respondent Lacsamana over the said property. This contract was amended,particularly to include in the sale, the building and improvement thereon.Petitioner then sought for the annulment of the deed of sale. Among hisallegations was that the bank did not own the building and thus, it should notbe included in the said deed.

Petitioners complaint was dismissed for improper venue. The trialcourt held that the action being filed in actuality by petitioner is a real actioninvolving his right over a real property.

ISSUE:

Whether or not the trial court erred in dismissing the case on theground of improper venue.

Whether not the warehouse is an immovable and must be tried in theprovince where the property lies.

RULING:The warehouse claimed to be owned by petitioner is an immovable

or real property as provided in article 415(l) of the Civil Code. Buildings arealways immovable under the Code. A building treated separately from theland on which it stood is immovable property and the mere fact that theparties to a contract seem to have dealt with it separate and apart from theland on which it stood in no wise changed its character as immovableproperty.

While it is true that petitioner does not directly seek the recovery oftitle or possession of the property in question, his action for annulment ofsale and his claim for damages are closely intertwined with the issue ofownership of the building which, under the law, is considered immovableproperty, the recovery of which is petitioner's primary objective. Theprevalent doctrine is that an action for the annulment or rescission of a saleof real property does not operate to efface the fundamental and primeobjective and nature of the case, which is to recover said real property. It is areal action. Petitioner's other contention that the case should proceed in sofar as respondent Lacsamana is concerned as she had already filed an

Answer, which did not allege improper venue and, therefore, issues hadalready been joined, is likewise untenable. Respondent PNB is an

indispensable party as the validity of the Amended Contract of Sale betweenthe former and respondent Lacsamana is in issue. It would, indeed, be futileto proceed with the case against respondent Lacsamana alone.

Hence, the SC denied the petition without prejudice to the refiling ofthe case by petitioner Antonio Punsalan, Jr. in the proper forum.

3. ASS. INSURANCE V. IYA

FACTS:Adriano Valino and Lucia A. Valino, husband and wife, were the

owners and possessors of a house of strong materials constructed on LotNo. 3, Block No. 80 of the Grace Park Subdivision in Caloocan, Rizal, whichthey purchased on installment basis from the Philippine Realty Corporation.On November 6, 1951, to enable her to purchase on credit rice from theNARIC, Lucia A. Valino filed a bond in the sum of P11,000.00 (AISCO BondNo. G-971) subscribed by the Associated Insurance and Surety Co., Inc.,and as counter-guaranty therefor, the spouses Valino executed an allegedchattel mortgage on the aforementioned house in favor of the suretycompany, which encumbrance was duly registered with the Chattel MortgageRegister of Rizal on December 6, 1951 . however, or on October 24, 1952,the Valinos, to secure payment of an indebtedness in the amount ofP12,000.00, executed a real estate mortgage over the lot and the house.Sometime in July, 1953, the surety company learned of the existence of thereal estate mortgage over the lot covered by T.C.T. No. 26884 together withthe improvements thereon.

Defendant surety company, in answer to this complaint insisted onits right over the building, arguing that as the lot on which the house wasconstructed did not belong to the spouses at the time the chattel mortgagewas executed, the house might be considered only as a personal propertyand that the encumbrance thereof and the subsequent foreclosureproceedings made pursuant to the provisions of the Chattel Mortgage Lawwere proper and legal. Defendant therefore prayed that said building beexcluded from the real estate mortgage and its right over the same bedeclared superior to that of plaintiff, for damages, attorney's fees and costs.

ISSUE:As the building constructed thereon has been the subject of 2

mortgages; controversy arise as to which of these encumbrances shouldreceive preference over the other?

HELD:The decisive factor in resolving the issue presented by this appeal is

the determination of the nature of the structure litigated upon, for where it be

considered a personality, the foreclosure of the chattel mortgage and the


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subsequent sale thereof at public auction, made in accordance with theChattel Mortgage Law would be valid and the right acquired by the suretycompany therefrom would certainly deserve prior recognition; otherwise,appellant's claim for preference must be granted.

A building certainly cannot be divested of its character of a realty bythe fact that the land on which it is constructed belongs to another. To hold itthe other way, the possibility is not remote that it would result in confusion,for to cloak the building with an uncertain status made dependent on the

ownership of the land, would create a situation where a permanent fixturechanges its nature or character as the ownership of the land changes hands.In the case at bar, as personal properties could only be the subject of achattel mortgage (Section 1, Act 3952) and as obviously the structure inquestion is not one, the execution of the chattel mortgage covering saidbuilding is clearly invalid and a nullity. While it is true that said document wascorrespondingly registered in the Chattel Mortgage Register of Rizal, this actproduced no effect whatsoever for where the interest conveyed is in thenature of a real property, the registration of the document in the registry ofchattels is merely a futile act.

A building is an immovable property irrespective of whether or notsaid structure and the land on which it is adhered to belong to the sameowner. It cannot be divested of its character of a realty by the fact that theland on which it is constructed belongs to another. If the status of the buildingwere to depend on the ownership of the land, a situation would be createdwhere a permanent fixture changes its nature or character as the ownershipof the land changes hands.

The rights of the surety company, over the building superior to that ofIsabel Iya and excluding the building from the foreclosure prayed for by thelatter is reversed and appellant Isabel Iya's right to foreclose not only theland but also the building erected thereon is hereby recognized, and theproceeds of the sale thereof at public auction (if the land has not yet beensold), shall be applied to the unsatisfied judgment in favor of Isabel Iya. Thisdecision however is without prejudice to any right that the AssociatedInsurance and Surety Co., Inc., may have against the spouses Adriano andLucia Valino on account of the mortgage of said building they executed infavor of said surety company.

4. TUMALAD V. VICENCIOFACTS:

Vicencio and Simeon executed a chattel mortgage in favor ofplaintiffs Tumalad over their house, which was being rented by Madrigal andcompany. This was executed to guarantee a loan, payable in one year with a12% per annum interest. The mortgage was extrajudicially foreclosed uponfailure to pay the loan. The house was sold at a public auction and theplaintiffs were the highest bidder. A corresponding certificate of sale was

issued. Thereafter, the plaintiffs filed an action for ejectment against the

defendants, praying that the latter vacate the house as they were the properowners.

ISSUE:Whether or not the subject matter of the mortgage, a house of strong

materials, be the object of a chattel mortgage?

HELD:

Certain deviations have been allowed from the general doctrine thatbuildings are immovable property such as when through stipulation, partiesmay agree to treat as personal property those by their nature would be realproperty. This is partly based on the principle of estoppel wherein theprinciple is predicated on statements by the owner declaring his house aschattel, a conduct that may conceivably stop him from subsequently claimingotherwise.

In the case at bar, though there be no specific statement referring tothe subject house as personal property, yet by ceding, selling or transferringa property through chattel mortgage could only have meant that defendantconveys the house as chattel, or at least, intended to treat the same as such,so that they should not now be allowed to make an inconsistent stand byclaiming otherwise.

MANILA ELECTRIC COMPANY vs CBAA

Facts:Pursuant to a pipeline concession issued under the Petroleum Act of

1949, Republic Act No.387, Meralco Securities installed from Batangas toManila a pipeline system consisting of cylindrical steel pipes joined togetherand buried not less than one meter below the surface along the shoulder ofthe public highway.

The pipes are embedded in the soil while the valves are welded tothe pipes so as to make the pipeline system one single piece of propertyfrom end to end.

Pursuant to the Assessment Law, Commonwealth Act No. 470, theprovincial assessor of Laguna treated the pipeline as real property andissued Tax Declarations

ISSUE:Whether or not the Meralco Securities Pipeline System in Laguna is

realty property? Is it subject to realty tax?

RULING:While the two storage tanks are not embedded in the land, they may,

nevertheless, be considered as improvements on the land, enhancing its

utility and rendering it useful to the oil industry, it is undeniable that the two


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tanks have been installed with some degree of permanence as receptaclesfor the considerable quantities of oil needed by meralco for its operations.

The pipes are machinery or improvements and regarded as realtybecause they are constructions adhered to the soil. It is attached to the landin such away that it cannot be separated there from without dismantling thesteel pipes which are welded to the pipeline. In so far as the pipeline usesvalves, pumps and control devices to maintain the flow of the oil, it is in asense a machinery within the meaning of the Real Property Tax Code.

For purposes of taxation, the term real property may include thingswhich should generally be regarded as personal property. It is a familiarphenomenon to see things classed as real property for purposed of taxationwhich on general principle might be considered personal property.

6. MERALCOversusCBAA

FACTS:Meralco Securities installed from Batangas to Manila a pipeline

system consisting of cylindrical steel pipes joined together and buried notless than one meter below the surface along the shoulder of the publichighway. The pipes are embedded in the soil and are firmly and solidlywelded together so as to preclude breakage or damage thereto and preventleakage or seepage of the oil. The valves are welded to the pipes so as tomake the pipeline system one single piece of property from end to end.

Pursuant to the Assessment Law, Commonwealth Act No. 470, theprovincial assessor of Laguna treated the pipeline as real property andissued Tax. Meralco Securities brought the case to the Central Board of

Assessment Appeals which ruled that the pipeline is subject to realty tax.The Central Board of Assessment Appeals, in confirming the ruling

of the provincial assessor and the provincial board of assessment appealsthat Meralco Securities' pipeline is subject to realty tax, reasoned out that thepipes are machinery or improvements, as contemplated in the AssessmentLaw and the Real Property Tax Code; that they do not fall within the categoryof property exempt from realty tax under those laws; that articles 415 and416 of the Civil Code, defining real and personal property, have noapplication to this case; that even under article 415, the steel pipes can beregarded as realty because they are constructions adhered to the soil andthings attached to the land in a fixed mannerMeralco Securities insists that its pipeline is not subject to realty tax becauseit is not real property within the meaning of article 415.

ISSUE:Whether or not the pipelines are real property within the meaning of

Article 415.

RULING:Article 415[l] and [3] provides that real property may consist of

constructions of all kinds adhered to the soil and everything attached to animmovable in a fixed manner, in such a way that it cannot be separatedtherefrom without breaking the material or deterioration of the object.

The pipeline system in question is indubitably a constructionadhering to the soil. It is attached to the land in such a way that it cannot be

separated therefrom without dismantling the steel pipes which were weldedto form the pipeline. It should be borne in mind that what are beingcharacterized as real property are not the steel pipes but the pipeline systemas a whole.

A pipeline for conveying petroleum has been regarded as real property fortax purposes .

7. CBAA v. MANILA ELECTRIC

FACTS:Petitioner owns two oil storage tanks, made of steel plates wieldedand assembled on the spot. Their bottoms rest on a foundationconsisted of compacted earth, sand pad as immediate layer, and asphaltstratum as top layer. The tanks merely sit on its foundation.

The municipal treasurer of Batangas made an assessment for realty tax onthe two tanks, based on the report of the Board of Assessors. MERALCOwished to oppose this assessment as they averred that the tanks are not realproperties.

HELD:While the two storage tanks are not embodied in the land, they maynevertheless be considered as improvements in the land, enhancing itsutility and rendering it useful to the oil industry.

For purposes of taxation, the term real property may include things, whichshould generally be considered as personal property. it is familiarphenomenon to see things classified as real property for purposes oftaxation which on general principle may be considered as personalproperty.


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8. CALTEX (PHIL.) INC. VS. CENTRAL BOARD OF ASSESSMENT

APPEALS

FACTSThis case is about the realty tax on machinery and equipment

installed by Caltex (Philippines) Inc. in its gas stations located on leasedland. The machines and equipment consists of underground tanks, elevatedtank, elevated water tanks, water tanks, gasoline pumps, computing pumps,water pumps, car washer, car hoists, truck hoists, air compressors andtireflators. The said machines and equipment are loaned by Caltex to gasstation operators under an appropriate lease agreement or receipt. It isstipulated in the lease contract that the operators, upon demand, shall returnto Caltex the machines and equipment in good condition as when received,ordinary wear and tear excepted.

The lessor of the land, where the gas station is located, does notbecome the owner of the machines and equipment installed therein. Caltexretains the ownership thereof during the term of the lease. The city assessorof Pasay City characterized the said items of gas station equipment andmachinery as taxable realty. The assessor appealed to the Central Board of

Assessment Appeals. The Board held that the said machines and equipmentare real property. The decision was reiterated by the Board denying Caltex'smotion for reconsideration. Caltex filed this certiorari petition wherein itprayed for the setting aside of the Board's decision and for a declaration thatt he said machines and equipment are personal property not subject to realtytax. Consequently, the only remedy available for seeking a review by thisCourt of the decision of the Central Board of Assessment Appeals is thespecial civil action of certiorari, the recourse resorted to herein by Caltex.

Issue:Whether the pieces of gas station equipment and machinery already

enumerated are subject to realty tax.

Ruling:said equipment and machinery, as appurtenances to the gas station

building or shed owned by Caltex (as to which it is subject to realty tax) andwhich fixtures are necessary to the operation of the gas station, for withoutthem the gas station would be useless, and which have been attached oraffixed permanently to the gas station site or embedded therein, are taxableimprovements and machinery within the meaning of the Assessment Lawand the Real Property Tax Code.

Improvements on land are commonly taxed as realty even though for somepurposes they might be considered personalty. "It is a familiar phenomenonto see things classed as real property for purposes of taxation which ongeneral principle might be considered personal property.

9. MAKATI LEASING v. WEAREVER TEXTILE MILSS

FACTS:It appears that in order to obtain financial accommodations from

herein petitioner Makati Leasing and Finance Corporation, the privaterespondent Wearever Textile Mills, Inc., discounted and assigned severalreceivables with the former under a Receivable Purchase Agreement. Tosecure the collection of the receivables assigned, private respondentexecuted a Chattel Mortgage over certain raw materials inventory as well asa machinery described as an Artos Aero Dryer Stentering Range. Uponprivate respondent's default, petitioner filed a petition for extrajudicialforeclosure of the properties mortgage to it. Acting on petitioner's applicationfor replevin, the lower court issued a writ of seizure. On July 13, 1981, thesheriff enforcing the seizure order, repaired to the premises of privaterespondent and removed the main drive motor of the subject machineryThe Court of Appeals, in certiorari and prohibition proceedings subsequentlyfiled by herein private respondent, set aside the Orders of the lower courtand ordered the return of the drive motor seized by the sheriff pursuant tosaid Orders, after ruling that the machinery in suit cannot be the subject ofreplevin, much less of a chattel mortgage, because it is a real propertypursuant to Article 415 of the new Civil Code, the same being attached to theground by means of bolts and the only way to remove it from respondent'splant would be to drill out or destroy the concrete floor, the reason why allthat the sheriff could do to enfore the writ was to take the main drive motor ofsaid machinery. The appellate court rejected petitioner's argument thatprivate respondent is estopped from claiming that the machine is realproperty by constituting a chattel mortgage thereon.

ISSUE:Whether the machinery is real or personal property.

RULING:Citing the case of Tumulad vs Vicencio where a house subjected to a

chatted mortgage was treated as personal property, We find no logicaljustification to exclude the rule out, as the appellate court did, the presentcase from the application of the abovequoted pronouncement. If a house ofstrong materials, like what was involved in the above Tumalad case, may beconsidered as personal property for purposes of executing a chattelmortgage thereon as long as the parties to the contract so agree and noinnocent third party will be prejudiced thereby, there is absolutely no reasonwhy a machinery, which is movable in its nature and becomes immobilizedonly by destination or purpose, may not be likewise treated as such. This isreally because one who has so agreed is estopped from denying theexistence of the chattel mortgage.

It must be pointed out that the characterization of the subject

machinery as chattel by the private respondent is indicative of intention and


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impresses upon the property the character determined by the parties. Asstated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it isundeniable that the parties to a contract may by agreement treat as personalproperty that which by nature would be real property, as long as no interestof third parties would be prejudiced thereby

10. BERKENKOTTER V. CU UNJIENG

Facts:Mabalacat Sugar Co. obtained from defendant a loan secured by the

a first mortgage constituted on 2 parcels of land with all its building,improvements, etc.

The company decided to buy additional machinery and equipment toincrease the capacity of the sugar central. Green, president of MabalacatSugar Co., proposed to petitioner Berkenkotter to advance the amount forthe purchase of the machinery and equipment, promising to reimburse himas soon as he could obtain the additional loan from defendant. Petitioneragreed. Green applied to defendant additional loan offering as security theadditional machinery and equipment acquired by Green and installed in thesugar central after the execution of the original mortgage deed. However,Green failed to obtain said loan.

Issue:What is the nature of the machinery and equipment incorporated in

the sugar central?

Ruling:The installation of a machinery and equipment in a mortgaged sugar

central, in lieu of another of less capacity, for the purpose of carrying out theindustrial functions of the latter and increasing production, constitutes apermanent improvement on said sugar central and subjects said machinery

and equipment to the mortgage constituted thereon.The fact that the purchaser of the new machinery and equipment has

bound himself to the person supplying him the purchase money to hold themas security for the payment of the latters creditor, and to refrain frommortgaging or otherwise encumbering them does not alter the permanentcharacter of the incorporation of said machinery and equipment with thecentral.

The sale of the machinery and equipment in question by thepurchaser who was supplied the purchase money, as a loan, to the personwho supplied the money, after the incorporation thereof with the mortgagedsugar central, does not vest the creditor with ownership of said machineryand equipment but simply with the r ight of redemption.

11. DAVAO SAW MILL VS CASTILLO

Facts:The Davao Saw Mill Co., Inc., is the holder of a lumber concession.

However, the land upon which the business was conducted belonged toanother person. On the land the sawmill company erected a building whichhoused the machinery used by it. Some of the implements thus used wereclearly personal property, the conflict concerning machines which wereplaced and mounted on foundations of cement. Stipulated in the contract oflease between the sawmill company and the owner of the land, that on theexpiration of the period agreed upon, all buildings and improvements wouldpass to the ownership of the lessor, which would not include machineries andaccessories.

In another action, wherein the Davao Light & Power Co., Inc., wasthe plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a

judgment was rendered in favor of the plaintiff in that action against thedefendant in that action; a writ of execution issued thereon, and theproperties now in question were levied upon as personalty by the sheriff. Nothird party claim was filed for such properties at the time of the sales thereofas is borne out by the record made by the plaintiff herein. It must be notedthat Davao Saw Mill Co., Inc., has on a number of occasions treated themachinery as personal property by executing chattel mortgages in favor ofthird persons.

Issue:WON the machineries and equipment were personal in nature.WON the machineries and equipment are subject to real property

tax?Held:

Yes. It was held that machinery which is movable in its nature onlybecomes immobilized when placed in a plant by the owner of the property orplant, but not when so placed by a tenant, a usufructuary, or any personhaving only a temporary right, unless such person acted as the agent of the

owner.The said machineries and equipment, as appurtenances to the gas

station building or shed owned by Caltex and which fixtures are necessary tothe operation of the gas station, for without them the gas station would beuseless, and which have been attached or affixed permanently to the gasstation site or embedded therein, are taxable improvements and machinerywithin the meaning of the assessment law and the real property tax code.

12. US VS CARLOS

Facts:


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Ignacio Carlos has been a consumer of electricity furnished by theManila Electric Railroad and Light Company for a building containing theresidence of the accused and 3other residences. Representatives of thecompany believing that more light is consumed than what is shown in themeter installed an additional meter on the pole outside Carlos house tocompare the actual consumption and found out that the latter used a jumper.Further, a jumper was found in a drawer of a small cabinet in the room of thedefendants house were the meter was installed. In the absence of anyexplanation for Carlos possession of said device, the presumption raisedwas that Carlos was the owner of the device whose only use was to deflectthe current from the meter. Thus he was charged with the crime of theftamounting to 2,273KW of electric power worth909.20 pesos.

Issue:Whether or not the court erred in declaring that the electrical energy

may be stolen.

Held:It is true that electricity is no longer, as formerly, regarded by

electricians as a fluid, but its manifestation and effects, like those of gas, maybe seen and felt. The true test of what is a proper subject of larceny seems tobe not whether the subject is corporeal, but whether it is capable ofappropriation by another than the owner. The court ruled that electricity, thesame as gas, is a valuable article of merchandise, bought and sold like otherpersonal property and is capable of appropriation by another. It is alsosusceptible of being severed from a mass or larger quantity, and of beingtransported from place to place. So no error was committed by the trial courtin holding that electricity is a subject of larceny.

13. FELS ENERGY V. PROV. OF BATANGAS

Doctrine: In Consolidated Edison Company of New York, Inc., et al. v. TheCity of New York, et al., a power company brought an action to reviewproperty tax assessment. On the citys motion to dismiss, the Supreme Courtof New York held that the barges on which were mounted gas turbine powerplants designated to generate electrical power, the fuel oil barges whichsupplied fuel oil to the power plant barges, and the accessory equipmentmounted on the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that docks andstructures which, though floating, are intended by their nature and object toremain at a fixed place on a river, lake, or coast are considered immovableproperty. Thus, power barges are categorized as immovable property by

destination, being in the nature of machinery and other implements intended

by the owner for an industry or work which may be carried on in a building oron a piece of land and which tend directly to meet the needs of said industryor work.

Facts: On January 18, 1993, NPC entered into a lease contract with PolarEnergy, Inc. over 330 MW diesel engine power barges moored at BalayanBay in Calaca, Batangas. The contract, denominated as an EnergyConversion Agreement, was for a period of five years. Article 10 states thatNPC shall be responsible for the payment of taxes. (other than (i) taxesimposed or calculated on the basis of the net income of POLAR andPersonal Income Taxes of its employees and (ii) construction permit fees,environmental permit fees and other similar fees and charges. Polar Energythen assigned its rights under the Agreement to Fels despite NPCs initialopposition.

FELS received an assessment of real property taxes on the power bargesfrom Provincial Assessor Lauro C. Andaya of Batangas City. FELS referredthe matter to NPC, reminding it of its obligation under the Agreement to payall real estate taxes. It then gave NPC the full power and authority torepresent it in any conference regarding the real property assessment of theProvincial Assessor. NPC filed a petition with the LBAA. The LBAA orderedFels to pay the real estate taxes. The LBAA ruled that the power plantfacilities, while they may be classified as movable or personal property, arenevertheless considered real property for taxation purposes because theyare installed at a specific location with a character of permanency. The LBAAalso pointed out that the owner of the bargesFELS, a private corporationisthe one being taxed, not NPC. A mere agreement making NPC responsiblefor the payment of all real estate taxes and assessments will not justify theexemption of FELS; such a privilege can only be granted to NPC and cannotbe extended to FELS. Finally, the LBAA also ruled that the petition was filedout of time.

Fels appealed to the CBAA. The CBAA reversed and ruled that the power

barges belong to NPC; since they are actually, directly and exclusively usedby it, the power barges are covered by the exemptions under Section 234(c)of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled thatprescription did not preclude the NPC from pursuing its claim for taxexemption in accordance with Section 206 of R.A. No. 7160. Upon MR, theCBAA reversed itself.

Issue: Whether or not the petitioner may be assessed of real property taxes.

Held: YES. The CBAA and LBAA power barges are real property and arethus subject to real property tax. This is also the inevitable conclusion,considering that G.R. No. 165113 was dismissed for failure to sufficiently

show any reversible error. Tax assessments by tax examiners are presumed


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correct and made in good faith, with the taxpayer having the burden ofproving otherwise. Besides, factual findings of administrative bodies, whichhave acquired expertise in their field, are generally binding and conclusiveupon the Court; we will not assume to interfere with the sensible exercise ofthe judgment of men especially trained in appraising property. Where the

judicial mind is left in doubt, it is a sound policy to leave the assessmentundisturbed. We find no reason to depart from this rule in this case.

In Consolidated Edison Company of New York, Inc., et al. v. The City of NewYork, et al., a power company brought an action to review property taxassessment. On the citys motion to dismiss, the Supreme Court of New Yorkheld that the barges on which were mounted gas turbine power plantsdesignated to generate electrical power, the fuel oil barges which suppliedfuel oil to the power plant barges, and the accessory equipment mounted onthe barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that docks andstructures which, though floating, are intended by their nature and object toremain at a fixed place on a river, lake, or coast are considered immovableproperty. Thus, power barges are categorized as immovable property bydestination, being in the nature of machinery and other implements intendedby the owner for an industry or work which may be carried on in a building oron a piece of land and which tend directly to meet the needs of said industryor work.

Petitioners maintain nevertheless that the power barges are exempt from realestate tax under Section 234 (c) of R.A. No. 7160 because they are actually,directly and exclusively used by petitioner NPC, a government- owned andcontrolled corporation engaged in the supply, generation, and transmission ofelectric power.

We affirm the findings of the LBAA and CBAA that the owner of the taxableproperties is petitioner FELS, which in fine, is the entity being taxed by the

local government. As stipulated under Section 2.11, Article 2 of theAgreement:

OWNERSHIP OF POWER BARGES. POLAR shall own the Power Bargesand all the fixtures, fittings, machinery and equipment on the Site used inconnection with the Power Barges which have been supplied by it at its owncost. POLAR shall operate, manage and maintain the Power Barges for thepurpose of converting Fuel of NAPOCOR into electricity.

It follows then that FELS cannot escape liability from the payment of realtytaxes by invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed,the law states that the machinery must be actually, directly and exclusively

used by the government owned or controlled corporation; nevertheless,

petitioner FELS still cannot find solace in this provision because Section 5.5,Article 5 of the Agreement provides:

OPERATION. POLAR undertakes that until the end of the Lease Period,subject to the supply of the necessary Fuel pursuant to Article 6 and to theother provisions hereof, it will operate the Power Barges to convert such Fuelinto electricity in accordance with Part A of Article 7.

It is a basic rule that obligations arising from a contract have the force of lawbetween the parties. Not being contrary to law, morals, good customs, publicorder or public policy, the parties to the contract are bound by its terms andconditions.

Time and again, the Supreme Court has stated that taxation is the rule andexemption is the exception. The law does not look with favor on taxexemptions and the entity that would seek to be thus privileged must justify itby words too plain to be mistaken and too categorical to be misinterpreted.Thus, applying the rule of strict construction of laws granting tax exemptions,and the rule that doubts should be resolved in favor of provincialcorporations, we hold that FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of theAgreement, that it shall be responsible for the payment of all real estatetaxes and assessments, does not justify the exemption. The privilege grantedto petitioner NPC cannot be extended to FELS. The covenant is betweenFELS and NPC and does not bind a third person not privy thereto, in thiscase, the Province of Batangas.

It must be pointed out that the protracted and circuitous litigation hasseriously resulted in the local governments depriva tion of revenues. Thepower to tax is an incident of sovereignty and is unlimited in its magnitude,acknowledging in its very nature no perimeter so that security against itsabuse is to be found only in the responsibility of the legislature which

imposes the tax on the constituency who are to pay for it. The right of localgovernment units to collect taxes due must always be upheld to avoid severetax erosion. This consideration is consistent with the State policy toguarantee the autonomy of local governments and the objective of the LocalGovernment Code that they enjoy genuine and meaningful local autonomy toempower them to achieve their fullest development as self-reliantcommunities and make them effective partners in the attainment of nationalgoals.

In conclusion, we reiterate that the power to tax is the most potent instrumentto raise the needed revenues to finance and support myriad activities of thelocal government units for the delivery of basic services essential to the


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promotion of the general welfare and the enhancement of peace, progress,and prosperity of the people.

14. GOVERNMENT V. CABANGIS

FACTS: In 1896, A owned a parcel of land, but because of the action of the

waves of Manila Bay, part of said land was gradually submerged in the sea.It remained submerged until 1912 when the government decided to make

the necessary dredging to reclaim the land from the sea. As soon as the land

had been recovered A took possession of it.

Issue: the ownership of the reclaimed land.

HELD: The government owns the reclaimed land in the

sense that it has become property of public dominion, because

in letting it remain submerged, A may be said to have abandoned

the same. Having become part of the sea or the seashore,

it became property for public use. When the government took

steps to make it land again, its status as public dominion remained

unchanged; therefore, A is not entitled to the land.

15. CEBU OXYGEN AND ACETYLENE CO. V. BERCILLES

FACTS:The land sought to be registered in this case was formerly a part of

M. Borces Street, Mabolo, Cebu City. Through a resolution, it was declared

as an abandoned road, the same not being included in the City DevelopmentPlan. another resolution was passed which authorized the mayor to sell theland through a public bidding wherein the petitioner I this case was thehighest bidder. Thus, an execution of a deed of absolute sale was executedand the petitioner filed an application with the Court of First instance of Cebuto have its title to the land registered. However, On June 26, 1974, the

Assistant Provincial Fiscal of Cebu filed a motion to dismiss the applicationon the ground that the property sought to be registered being a public roadintended for public use is considered part of the public domain and thereforeoutside the commerce of man. Consequently, it cannot be subject toregistration by any private individual.

ISSUE:

WON Cebu oxygen can validly own said land.

RULING:Yes. Since that portion of the city street subject of petitioner's

application for registration of title was withdrawn from public use, it followsthat such withdrawn portion becomes patrimonial property which can be theobject of an ordinary contract. Article 422 of the Civil Code expresslyprovides that "Property of public dominion, when no longer intended forpublic use or for public service, shall form part of the patrimonial property ofthe State." "Property thus withdrawn from public servitude may be used orconveyed for any purpose for which other real property belonging to the Citymay be lawfully used or conveyed." Hence, the withdrawal of the property inquestion from public use and its subsequent sale to the petitioner is valid.

16.Viuda de Tan Toco v. Mun. Council of Iloilo49 Phil. 52FACTS: The municipality of Iloilo bought from the widow of Tan Toco aparcel of land for P42,966.40 which was used for street purposes. For failureof the municipality to pay the debt, the widow obtained a writ of executionagainst the municipal properties, and by virtue of such writ was able to obtainthe attachment of two auto trucks used for street sprinkling, one police patrolautomobile, two police stations, and two markets, including the lots on whichthey had been constructed. The issue is the validity of the attachment.

HELD: The attachment is not proper because municipal-owned real andpersonal properties devoted to public or governmental purposes may not beattached and sold for the payment of a judgment against a municipality. Justas it is essential to exempt certain properties of individuals (like the bareessentials) from execution, so it is also essential and justifi able to exemptproperty for public use from execution, otherwise governmental servicewould be jeopardized. [NOTE: Had the properties been patrimonial, theycould have been levied upon or attached. (See Mun. of Pasay v. Manaois, et

al., L-3485, June 30, 1950).].

-

(1) Properties in Political Subdivisions

Art. 424 enumerates the various kinds of properties of political subdivisions,and classifi es them into:

(a) property for public use

(b) patrimonial property


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[NOTE: In the case of STATE properties, properties for public service are ofpublic dominion; this is not so in the case of provinces, cities, etc., saidproperties for public service are patrimonial (since they are not for publicuse). (Prov. of Zamboanga del Norte v. City of Zamboanga, et al., L-24440,Mar. 28, 1968).].

17. PROVINCE OF ZAMBOANGA DEL NORTE VS ZAMBOANGACITY

FACTS: After Zamboanga Province was divided into two (Zamboanga delNorte and Zamboanga del Sur), Republic Act 3039 was passed providingthat All buildings, properties, and assets belonging to the former provinceof Zamboanga and located within the City of Zamboanga are herebytransferred free of charge in favor of the City of Zamboanga. Suit wasbrought alleging that this grant without just compensation wasunconstitutional because it deprived the province of property without dueprocess. Included in the properties were the capital site and capitol building,certain school sites, hospital and leprosarium sites, and high schoolplaygrounds.

Issues:

a) Are the properties mentioned, properties for public use or patrimonial?

b) Should the city pay for said properties?

HELD:

a) If we follow the Civil Code classifi cation, only the high school playgroundsare for public use (in the sense that generally, they are available to thegeneral public), and all the rest are PATRIMONIAL (since they are not

devoted to public use but to public service; since they are not for public use,under Art. 424 of the Civil Code, they are patrimonial. [NOTE: For public useif ANYBODY can use; for public service if only AUTHORIZED persons canuse.].

[NOTE: Had they been owned by the STATE, they would not have beenpatrimonial but would have been properties of public dominion for thiswould include public service, conformably with Art. 420, par. 2.].

BUT if we follow the law of Municipal Corporations (and not the Civil Code),as long as the purpose is for a public service (governmental service likepublic education, public health, local administration), the property should be

considered for PUBLIC USE.

b) If the Civil Code classifi cation is used, since almost all the propertiesinvolved are patrimonial, the law would be unconstitutional since the provincewould be deprived of its own property without just compensation.

If the law on Municipal Corporations would be followed, the properties wouldbe of public dominion, and therefore NO COMPENSATION would berequired. It is this law on Municipal Corporations that should be followed.Firstly, while the Civil Code may classify them as patrimonial, they should notbe regarded as ordinary private property. They should fall under the controlof the State, otherwise certain governmental activities would be impaired.Secondly, Art. 424, 2nd paragraph itself says without prejudice to theprovisions (or PRINCIPLES) of special laws.

18. Salas vs Jarencio

Facts:

On February 24, 1919, the 4th Branch of theCourt of First Instance of

Manila, acting as aland registration court, rendered judgmentdeclaring theCity of Manila the owner in feesimple of a parcel of land containing an area

of 9,689.8 square meters, more or less. On variousdates in 1924, the City of

Manila sold portionsof the aforementioned parcel of land in favor of Pura

Villanueva.On September 21, 1960, the Municipal Board of Manila, presided

by then Vice-Mayor Antono J.Villegas, adopted a resolution requesting

HisExcellency, the President of the Philippines toconsider the feasibility of

declaring the Cityproperty bounded by Florida, San Andres, andNebraska

Streets, containing a total area of 7,450 square meters as a patrimonial

propertyof the City of Manila for the purpose of resellingthese lots to theactual occupants thereof. There is therefore a precedent that this parcelof

land could be subdivided and sold to bonafide occupants. The bill was

passed by theSenate and approved by the President andbecame RA 4118.

Issue:

WON the property involved in RA 4118 i s aprivate or patrimonial property

of the City of Manila.

Ruling:


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The conclusion of the respondent court thatRepublic Act No. 4118

converted a patrimonialproperty of the City of Manila into a parcel of

disposable land of the State and took it awayfrom the City without

compensation is,therefore, unfounded. In the last analysis theland in

question pertains to the State and theCity of Manila merely acted as trustee

for thebenefit of the people therein for whom theState can legislate in the

exercise of itslegitimate powers.If it were its patrimonial property whyshouldthe City of Manila be requesting the Presidentto make representation

to the legislature todeclare it as such so it can be disposed of infavor of the

actual occupants? There could beno more blatant recognition of the fact

that saidland belongs to the State and was simplygranted in usufruct to the

City of Manila formunicipal purposes

19. AMUNATEGUI VS DIRECTOR OF FORESTRY

20. REPUBLIC V. BACUS

Facts:Francisco Bacus filed application for registration of a parcel of land.

The Republic of the Philippines filed an opposition on the application on theground that the property is part of public domain. The registration courtfavored the applicant. On appeal, the CA ruled that the subject land is stillpart of the public forest and so it cannot be subject to alienation. Perinvestigation by the District Forester, said land is still inside the timberlandproject.

Issue:Can the question land be subject to private ownership?

Ruling:NO. from the evidence of record, the subject property has not yet

been declassified as forest land and is not therefore susceptible of privateownership.

With regard to the imperfect title claimed by respondent, the courtsaid that there can be no imperfect title to be confirmed over lands not yetclassified as disposable. Declassification of forest land is an express andpositive act of government. It cannot be presumed; neither should it beignored or deemed waived.

21. TATTOC V. IAC

22. MUNICIPALITY OF SAN MIGUEL BULACAN VS FERNANDEZ

Facts:In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al.

vs. Municipal Government of San Miguel, Bulacan, et al.", the then Court ofFirst Instance of Bulacan, on April 28, 1978, rendered judgment holdingmunicipality liable, among others, to pay to the plaintiffs (herein privaterespondents) the sum of P64,440.00 corresponding to the rentals it hascollected from the occupants for their use and occupation of the premisesfrom 1970 up to and including 1975, plus interest thereon at the legal ratefrom January 1970 until fully paid, restoration of ownership and possessionover the five lots in question in favor of the plaintiffs in the same proportionaforementioned and to pay the plaintiffs (herein private respondents) the sumof P3,000.00 for attomey's fees; and to pay the cost of suit. The judgementbecame final, hence the order of writ of execution. Municipality of Bulacan(herein petitioner) moved to Quash the writ of execution on the ground thatthe municipality's property or funds are public funds exempt from execution.The motion was however denied by the respondent Judge. Hence thepresent petition.

Issue:Whether the funds of the Municipality of San Miguel, Bulacan, in the

hands of the provincial and municipal treasurers of Bulacan and San Miguel,respectively, are public funds which are exempt from execution for thesatisfaction of the money judgment in Civil Case No. 604-B.ch

Held:Well settled is the rule that public funds are not subject to levy and

execution. The reason for this was explained in the case of Municipality of

Paoay vs. Manaois, 86 Phil. 629 "that they are held in trust for the people,intended and used for the accomplishment of the purposes for whichmunicipal corporations are created, and that to subject said properties andpublic funds to execution would materially impede, even defeat and in someinstances destroy said purpose." And, in Tantoco vs. Municipal Council ofIloilo, 49 Phil. 52, it was held that "it is the settled doctrine of the law that notonly the public property but also the taxes and public revenues of suchcorporations Cannot be seized under execution against them, either in thetreasury or when in transit to it. Judgments rendered for taxes, and theproceeds of such judgments in the hands of officers of the law, are notsubject to execution unless so declared by statute." Thus, it is clear that allthe funds of petitioner municipality in the possession of the Municipal

Treasurer of San Miguel, as well as those in the possession of the Provincial


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Treasurer of Bulacan, are also public funds and as such they are exemptfrom execution.

23. LANZAR VS DIRECTOR OF LANDS

FACTS:Lanzar filed for application for registration of title over a parcel of land, towhich the Director of Lands objected to as the land in question, according tohim, was part of the foreshore lands. The trial court adjudicated theland to Lanzar as the said land wasnt necessary for public utility orestablishment of special industries.

The CA reversed the decision.

HELD:Lands added to the shore by accretion and alluvial deposits caused by theaction of the sea, form part of the public domain. When they are no longerwashed by the water of the sea and are not necessary for purposesof public utility, or for the establishment of special industries, or forcoastguard services, then the Government shall declare them to beproperty of the owners of the estate adjacent thereto and as incrementthereof.24.

25. YAP VS GRAGEDA

26. MERALCO v. BARTOLOME

FACTS:This is an application by MERALCO to the CA for land registration as

it was dismissed by the lower court.

This case involves the prohibition in section 11, Article XIV of theConstitution that "no private coporation or associaiton may hold alienablelands of the public domain except by lease not to exceed one thousandhectares in area".Manila Electric Company, filed on December 1, 1976 in theMakati branch of the Court of First Instance of Rizal, prayed for theconfirmation of its title to two lots with a total area of one hundred sixty-fivesquare meters.

Republic of the Philippines opposed the application on the groundsthat the applicant, as a private corporation,is disqualified to hold alienablepublic lands and that the applicant and its predecessors-in-interest have notbeen in the open, continuous, exclusive and notorious possession andoccupation of the land for at least thirty years immediately preceding the filing

of the application.

Lower court rendered a decision dismissing the application becausein its opinion the Meralco is not qualified to apply for the registration of thesaid land since under section 48(b) of the Public Land Law only Filipinocitizens or natural persons can apply for judicial confirmation of theirimperfect titles to public land. The Meralco is a juridical person.

MERALCO contends that the said land, after having been possessedin the concept of owner by Olimpia Ramos and the Piguing spouses for morethan thirty years, had become private land in the hands of the latter, and,therefore, the constitutional prohibition, banning a private corporation fromacquiring alienable public land, is not applicable to the said land. CA affirmsthe ruling of the lower court.

ISSUE:DID THE PIGUING SPOUSES (AS PREDECESSOR IN INTEREST)

ABLE TO QUALIFY TO CONVERT THE PUBLIC LAND TO PRIVATE LANDSO AS TO QUALIFY MERALCO TO REGISTER THE LAND?

RULING:No, as reiterated in OH CHO case, the benefits provided in the

Public Land Act (meaning the confirmation of an imperfect title under section48[b]) for applicant's immediate predecessors-in-interest are or constitute agrant or concession by the State; and before they could acquire any rightunder such benefits, the applicant's immediate predecessors-in-interestshould comply with the condition precedent for the grant of such benefits.

The condition precedent is to apply for the registration of the land ofwhich they had been in possession at least since July 26, 1894. This theapplicant's immediate predecessors-in-interest (meaning the Piguingspouses in the instant case) failed to do.

They did not have any vested right in the lot amounting to title whichwas transmissible to the applicant. The only right, if it may thus be called, istheir possession of the lot which, tacked to that of their predecessors-in-interest, may be availed of by a qualified person to apply for its registrationbut not by a person as the applicant who is disqualified.

27. SUSI VS RAZON

Facts:On December 18, 1880, Nemesio Pinlac sold the land in question,

then a fish pond, tho Apolonio Garcia and Basilio Mendoza for the sum ofP12, reserving the right to repurchase the same. After having been inpossession thereof for about eight years, and the fish pond having beendestroyed, Apolonio Garcia and Basilio Mendoza, on September 5, 1899,sold it to Valentin Susi for the sum of P12, reserving the right to repurchase

it. Before the execution of the deed of sale, Valentin Susi had already paid its


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price and sown "bacawan" on said land, availing himself of the firewoodgathered thereon, with the proceeds of the sale of which he had paid theprice of the property. The possession and occupation of the land in question,first, by Apolonio Garcia and Basilio Mendoza, and then by Valentin Susi hasbeen open, continuous, adverse and public, without any interruption, exceptduring the revolution, or disturbance, except when Angela Razon, onSeptember 13, 1913, commenced an action in the Court of First Instance ofPampanga to recover the possession of said land, wherein after consideringthe evidence introduced at the trial, the court rendered judgment in favor ofValentin Susi and against Angela Razon, dismissing the complaint.

Having failed in her attempt to obtain possession of the land inquestion through the court, Angela Razon applied to the Director of Lands forthe purchase thereof on August 15, 1914. Having learned of said application,Valentin Susi filed and opposition thereto on December 6, 1915, asserting hispossession of the land for twenty-five years. After making the properadministrative investigation, the Director of Lands overruled the opposition ofValentin Susi and sold the land to Angela Razon. By virtue of said grant theregister of deeds of Pampanga, on August 31, 1921, issued the propercertificate of title to Angela Razon. Armed with said document, Angela Razonrequired Valentin Susi to vacate the land in question, and as he refused to doso, she brought and action for forcible entry and detainer in the justice of the

peace court of Guagua, Pampanga, which was dismissed for lack ofjurisdiction, the case being one of title to real property. Valentin Susi thenbrought this action.

Ruling:It clearly appears from the evidence that Valentin Susi has been in

possession of the land in question openly, continuously, adversely, andpublicly, personally and through his predecessors, since the year 1880, thatis, for about forty-five years. In favor of Valentin Susi, there is, moreover, thepresumption juris et de jure established in paragraph (b) of section 45 of ActNo. 2874, amending Act No. 926, that all the necessary requirements for agrant by the Government were complied with, for he has been in actual and

physical possession, personally and through his predecessors, of anagricultural land of the public domain openly, continuously, exclusively andpublicly since July 26, 1894, with a right to a certificate of title to said landunder the provisions of Chapter VIII of said Act. So that when Angela Razonapplied for the grant in her favor, Valentin Susi had already acquired, byoperation of law, not only a right to a grant, but a grant of the Government,for it is not necessary that certificate of title should be issued in order thatsaid grant may be sanctioned by the courts, an application therefore issufficient, under the provisions of section 47 of Act No. 2874. If by a legalfiction, Valentin Susi had acquired the land in question by a grant of theState, it had already ceased to be the public domain and had become privateproperty, at least by presumption, of Valentin Susi, beyond the control of the

Director of Lands. Consequently, in selling the land in question to Angela

Razon, the Director of Lands disposed of a land over which he had no longerany title or control, and the sale thus made was void and of no effect, and

Angela Razon did not thereby acquire any right.

28.

29. DACANAY VS ASISTIO

FACTS:On January 5, 1979, MMC Ordinance No. 79-02 was enacted by the

Metropolitan Manila Commission, designating certain city and municipalstreets, roads and open spaces as sites for flea markets. Pursuant, thereto,the Caloocan City mayor opened up seven (7) flea markets in that city. Oneof those streets was the "Heroes del '96" where the petitioner lives. Uponapplication of vendors the respondents city mayor and city engineer, issuedthem licenses to conduct vending activities on said street.

In 1987, Antonio Martinez, as OIC city mayor of Caloocan City,caused the demolition of the market stalls on Heroes del '96, V. Gozon andGonzales streets. To stop Mayor Martinez' efforts to clear the city streets,some vendors filed an action for prohibition against the City of Caloocanpraying the court to issue a writ of preliminary injunction ordering the city

officials to discontinue the demolition of their stalls during the pendency ofthe action. However, the court dismissed the petition ruling that Heroes del'96, Gozon and Gonzales streets are of public dominion, hence, outside thecommerce of man.

However, shortly after the decision came out, the city administrationin Caloocan City changed hands. City Mayor Macario Asistio, Jr., assuccessor of Mayor Martinez, did not pursue the latter's policy of clearingand cleaning up the city streets. Invoking the trial court's decision FranciscoU. Dacanay who resides on Heroes del '96 Street, one of the affected streetsfiled the present petition for mandamus praying that the public respondentsbe ordered to enforce the final decision.

ISSUE:Whether or not Heroes del 96 Street can be the subject to of a lease

contract.

RULING:There is no doubt that the disputed areas from which the private

respondents' market stalls are sought to be evicted are public streets. Apublic street is property for public use hence outside the commerce of man(Arts. 420, 424, Civil Code). Being outside the commerce of man, it may notbe the subject of lease or other contract

As the stallholders pay fees to the City Government for the right tooccupy portions of the public street, the City Government, contrary to law,

has been leasing portions of the streets to them. Such leases or licenses are


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null and void for being contrary to law. The right of the public to use the citystreets may not be bargained away through contract. The interests of a fewshould not prevail over the good of the greater number in the communitywhose health, peace, safety, good order and general welfare, the respondentcity officials are under legal obligation to protect. The Executive Order issuedby Acting Mayor Robles authorizing the use of Heroes del '96 Street as avending area for stallholders who were granted licenses by the citygovernment contravenes the general law that reserves city streets and roadsfor public use.

30.

31.

32. SIBAL VS VALDEZ

Facts:

Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriffof the Province of Tarlac, , attached and sold to the defendant Emiliano J.Valdez the sugar cane planted by the plaintiff and his tenants on parcels ofland.

Within one year from the date of the attachment and sale the plaintiffoffered to redeem said sugar cane and tendered to the defendant Valdez theamount sufficient to cover the price paid by the latter, the interest thereonand any assessments or taxes which he may have paid thereon after thepurchase, and the interest corresponding thereto and that Valdez refused toaccept the money and to return the sugar cane to the plaintiff.

Plaintiff alleged that the defendant Emiliano J. Valdez wasattempting to harvest the palay planted in four of the seven parcels of land

and that he had harvested and taken possession of the palay in one of saidseven parcels and in another parcel and that all of said palay belonged to theplaintiff.

Plaintiff prayed that a writ of preliminary injunction be issued againstthe defendant Emiliano J. Valdez his attorneys and agents, restraining them(1) from distributing him in the possession of the parcels of land described inthe complaint; (2) from taking possession of, or harvesting the sugar cane inquestion; and (3) from taking possession, or harvesting the palay in saidparcels of land.

Plaintiff also prayed that a judgment be rendered in his favor andagainst the defendants ordering them to consent to the redemption of thesugar cane in question, and that the defendant Valdez be condemned to pay

to the plaintiff the sum of P1,056 the value of palay harvested by him in thetwo parcels of land, with interest and costs.

The trial court rendered a judgment against the plaintiff and in favorof the defendants. It appeared that the eight parcels of land belonging toSibal were attached and Macondray Co., Inc. bought the eight parcels ofland. Within 1 year from the sale, Sibal paid Macondray Co., Inc. for theaccount of the redemption price.

The deputy sheriff attached the personal property of Sibal, whichincluded the sugar cane now in question in the seven parcels of land. Saidpersonal properties were sold to Valdez in a public auction. Real property ofSibal was also attached, consisting of 11 parcels of land, 8 of which werebought by Valdez in an auction held by the sheriff. The remaining 3 parcelswere released by virtue of claims of Cuyugan and Tizon.

On that same date, Macondray sold all of its rights to Valdez in theeight parcels of land acquired, for the unpaid balance of the redemption priceof said eight parcels of land. Valdez became the absolute owner of the land.

Meanwhile, defendant argued that the sugar cane was personalproperty hence not subject to redemption.

Issue:Whether or not the sugar cane is to be classified as personal

property

Ruling:It is contended on the part of the appellee that paragraph 2 of article

334 of the Civil Code has been modified by section 450 of the Code of CivilProcedure as well as by Act No. 1508, the Chattel Mortgage Law. Saidsection 450 enumerates the property of a judgment debtor which may besubjected to execution. The pertinent portion of said section reads as follows:"All goods, chattels, moneys, and other property, both real and personal, * * *shall be liable to execution. Said section 450 and most of the other sectionsof the Code of Civil Procedure relating to the execution of judgment weretaken from the Code of Civil Procedure of California. The Supreme Court of

California, under section 688 of the Code of Civil Procedure of that state(Pomeroy, p. 424) has held, without variation, that growing crops werepersonal property and subject to execution.

Act No. 1508, the Chattel Mortgage Law, fully recognized thatgrowing crops are personal property. Section 2 of said Act provides: "Allpersonal property shall be subject to mortgage, agreeably to the provisions ofthis Act, and a mortgage executed in pursuance thereof shall be termed achattel mortgage." Section 7 in part provides: "If growing crops be mortgagedthe mortgage may contain an agreement stipulating that the mortgagor bindshimself properly to tend, care for and protect the crop while growing.

It is clear from the foregoing provisions that Act No. 1508 wasenacted on the assumption that "growing crops" are personal property. This

consideration tends to support the conclusion hereinbefore stated, that


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paragraph 2 of article 334 of the Civil Code has been modified by section 450of Act No. 190 and by Act No. 1508 in the sense that "ungathered products"as mentioned in said article of the Civil Code have the nature of personalproperty. In other words, the phrase "personal property" should beunderstood to include "ungathered products."

33.

34.

35. LUNOD V. MENESES

Facts:Petitioner and defendant owned and possessed farm lands.

Petitioners farm land is located on a higher ground adjoining the Calalaranlake, which water from the lake passes through Ds land in flowing toward the

Taliptip River. However, defendant converted his farm land into a fish pondand had built his own dam to prevent sea water from the river flowing into hisfish pond. Now during rainy days, the farm land of petitioner would becomeflooded because the outlet of water from the higher ground to the river isimpeded by the construction of defendant. The dam caused serious damageto plaintiffs growing crops. With this, plaintiff filed a complaint againstdefendant.The lower court decided on plaintiffs favor and ordered defendant to removeor destroy the obstacles to the free passage of the waters through the strip ofland in Paraanan. The court rules that there exist a favor of the farm land ofplaintiff a statutory easement permitting the flow of water over the said landin Paraanan. This was denied by defendant.

Issue:Whether or not there exists a statutory easement in favor of plaintiffs

farm land?

Ruling:Yes. The court relied on article 552 of the civil code and the Laws of

Water. Under said provisions, owners of lower lands cannot erect works thatwill impede/prevent such an easement constituted and improved by the lawupon his estate for the benefit of the higher lands belonging to differentowners.

Thus defendant Meneses neither has a right to construct the worksnor the dams which blocks the passage of the waters through his lands andthe outlet to the Taliptip river which flood the lands of plaintiff.

Under art 338 of the Civil Code, the right of owners to enclose hisestate is limited by the easement imposed.

37. LALUAN V. MALPAYA


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2nd

BATCH

38. BACHRACH MOTOR CO. V. TALISAY-SILAY MILLING

FACTS:Talisay-Silay was indebted to PNB. To secure the loan, Talisay

induced its planters one of whom was Mariano LacsonLedesma to mortgagetheir land. The central undertook to credit the owners of the plantation tocompensate the planters for mortgaging their property which shall be everyyear with a sum equal to 2% of the debt secured according to the yearlybalance. Mariano sold his land to Cesar Ledesma for P7500. Bachrach onthe other hand was a creditor of Ledesma. When Mariano could no longerpay Bachrach, it went after Talisay (original complaint), praying for thedelivery of P13850 Talisay owed to Mariano as bonus, or any instrument ofcredit. It also prayed for accounting of whatever the central owed to Marianoby way of bonus, dividend, etc., as well as the nullification of the sale madeto Cesar.

PNB filed third party claim alleging a preferential right over Marianoscredit owed by Talisay as part of the civil fruits of the land mortgaged to the

bank. Bachrach contested this. Talisay prayed for the absolution of 7500 ofthe credit as it belonged to Cesar as buyer in good faith. All parties lateragreed to respect Cesars credit and absolved him from the complaint andordered delivery to him of P7500.

Trial court ruled in favor of Bachrach, awarding it P11,076.02 ofMarianos bonus from Talisay. Hence this appeal

ISSUES:Is the bonus a civil fruit which forms part of the mortgaged land?

RULING:NO. Article 442 of the New Civil Code considers three things as civil

fruits: rents of buildings, proceeds from leases of lands, and income fromperpetual of life annuities or other similar sources of revenue.

The bonus in question was neither rent of a building nor land. For itto come under the coverage of income, it must be obtained from the land. Inthis case however, the bonus bears no immediate but only a remote andaccidental relation to the land. The central granted it as compensation for therisk that the landowners entered in mortgaging their lands. If the bonus wasan income of any kind, it comes from the assumption of risk, and not from theland itself. Thus, it is distinct and independent from the property referred to inthe mortgage to the bank.

39. JOSEFINA S. DE LAUREANO vs. HON. MIDPANTAO L. ADIL

FactsJosefina S. de Laureano in this special civil action of certiorari

assails the interlocutory orders of the Court of First Instance of Iloilo, denyingher motions for execution and for a preliminary mandatory injunction in anejectment suit which was decided in her favor by the city court of Iloilo Cityand which was appealed by the lessee, Ong Cu (Civil Case No. 10370).

Mrs. Laureano is the registered owner of Lots 996 and 1004-B with atotal area of 3,107 square meters located at the corner of Iznart and SolisStreets, Iloilo City. The lots were leased to Ong Cu for fifteen year periodwhich allegedly expired on August 31, 1974.

In view of Ong Cus failure to vacate the lots and remove hisimprovements thereon. Mrs. Laureano filed against him an ejectment suit inOctober, 1974 in the city court of Iloilo City.

After trial, the city court on September 23, 1975 rendered a judgmentordering Ong Cu to vacate the lots, to restore their possession to Mrs.Laureano, to remove his buildings and other improvements thereon and topay P12,428 monthly as compensation for the use and occupation of the lotsfrom September 1, 1974 up to the time he vacates them, with interest attwelve percent per annum from the date of accrual plus P10,000 as moraland exemplary damages and attorneys fees.

Held:As a lessee, who constructed a building on the leased land, Ong Cu

cannot be characterized as a builder in good faith. Under article 448 of theCivil Code the owner of the land on which anything has been built in goodfaith may appropriate the building after payment of the indemnity provided inarticles 546 and 548 of the Civil Code.

Article 448 applies to a case where one builds on land of which hehonestly claims to be the owner and not to lands wherein ones only interestis that of a lessee under a rental contract. A contrary rule would place itwithin the power of the lessee to improve his landlord out of his property(Alburo vs. Villanueva, 7 Phil. 277, 280; Cortes vs. Ramos, 46 Phil. 184;

Fojas vs. Velasco, 51 Phil. 520; Bantug vs. Montinola, 73 Phil. 13).In other words, article 448 refers to a possessor who occupied the

land in the belief that he was the owner thereof. It does not apply to thelessee because the lessee knows at the outset that he is not the owner of theland (Lopez, Inc. vs. Philippine & Eastern Traiding Co., Inc., 98 Phil. 348).The tenant has no pretension to being the owner of the land (Rivera vs.Trinidad, 48 Phil. 396, 401).


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40. MARIANO FLOREZA VS EVANGELISTA

FACTS:This is a Petition for Review on certiorari of the Decision of the Court

of Appeals (CA-G.R. No. 23516-R) promulgated on November 4, 1965,entitled "Maria de Evangelista and Sergio Evangelists, (now therespondents) vs. Mariano Floreza (petitioner herein)," reversing the judgmentof the Court of First Instance of Rizal rendered on July 17, 1957, and insteadordering petitioner to vacate respondents' residential lot, to remove his houseat his own expenses and to pay rental from May 5, 1956. Plaintiffs Maria deEvangelista and Sergio Evangelista, who are mother and son, (theEVANGELISTAS, for short) are the owners of a residential lot located atSumilang St., Tanay, Rizal, with an area of 204.08 sq. ms. In May 1945, theEVANGELISTAS borrowed from FLOREZA the amount of P100.00. . On orabout November 1945, with the consent of the EVANGELISTAS, FLOREZAoccupied the above residential lot and built thereon a house of light materials(barong- barong) without any agreement as to payment for the use of saidresidential lot. On the following dates, the EVANGELISTAS again borrowed asum of money an d sums up to P740.00 including the first loan.

August 1, 1949, the EVANGELISTAS, for and in consideration ofP1,000.00 representing the total outstanding loan of P740.00 plus P260.00 in

cash, sold their residential lot to FLOREZA, with a right to repurchase withina period of 6 years from date, or up to August 1, 1955. Evangelistas made aformal written demand to vacate. FLOREZA refused to vacate unless he wasfirst reimbursed the value of his house. Hence, the filing of this Complaint onMay 18, 1956 by the EVANGELISTAS. CA ruled in favor of the Evangelista.Hence, this Petition for Review on certiorari by FLOREZA.

ISSUE:Does Floreza has the right to be reimbursed with the residential lot he builton the land owned by Evangelista?

RULING:

The house had already been constructed as far back as 1949 (1945for the house of light materials) even before the pacto de retro sale in 1949.Petitioner incurred no useful expense, therefore, after that sale. The housewas already there at the tolerance of the EVANGELISTAS in consideration ofthe several loans extended to them. Since petitioner cannot be classified asa builder in good faith within the purview of Article 448 of the Civil Code, noras a vendee a retro, who made useful improvements during the lifetime ofthe pacto de retro, petitioner has no right to reimbursement of the value ofthe house which he had erected on the residential lot of theEVANGELISTAS, much less to retention of the premises until he isreimbursed.

The rights of petitioner are more akin to those of a usufructuary who,

under Article 579 of the Civil (Art. 487 of the old Code), may make on the

property useful improvements but with no right to be indemnified therefor. Hemay, however, remove such improvements should it be possible to do sowithout damage to the property: For if the improvements made by theusufructuary were subject to indemnity, we would have a dangerous andunjust situation in which the usufructuary could dispose of the owner's fundsby compelling him to pay for improvements which perhaps he would not havemade.

41. INTER-REGIONAL DEVELOPMENT CORPORATION VS.COURT OF APPEALS

Facts:Ricardo Caballero owns an agricultural land and had leased it to

Inter-Regional Development Corp. represented by spouses Jose Baez andIsabel Baez. Conflict started when Caballero sold the land to Isidro Estradaeventhough there was still a standing crop to be harvested by the petitioner.Caballero's argument is that when he sold the land, it follows that what everwas planted there comes with it. The petitioner for this certiorari case arguesotherwise.

Issue:WON the standing crops is treated as part of a leased land if sold.

Held:No. True it is that under article 440 of the Civil Code the ownership of

property includes the right of accession to everything attached thereto eithernaturally or artificially, and that under article 415, trees, plants and growingfruits, while they are attached to the land, are immovable property; it isequally true that when a person plants in good faith on land belonging toanother, the landowner does not ipso facto acquire ownership of what hasbeen planted; he must first indemnify the planter before he can appropriatethe same. And so provides article 448: The owner of the land in which

anything has been built, sown or planted in good faith, shall have the right toappropriate as his own the works, sowing or planting, after payment of theindemnity provided for in articles 546 and 548 .

42. Ortiz vs Kayanan

Facts: Martin Dolorico I executed an affidavit relinquishing his rights over theproperty subject of Homestead in favor of defendants Quirino Comintan andEleuterio Zamora, his grandson and son-in-law, and requested the Directorof Lands to cancel the homestead application. On the strength of the

affidavit, Homestead Application was cancelled and Comintan and Zamora


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filed their respective sales applications. Plaintiff filed his protest alleging thathe should be given preference to purchase the lot inasmuch as he is theactual occupant and has been in continuous possession of the same since1931.

An investigation was conducted on plaintiff's protest by Assistant PublicLands Inspector Serapion Bauzon who rendered a decision dismissingplaintiff's claim and giving due course to defendants' sales applications onthe ground that the relinquishment of the homestead rights of Martin DoloricoI in favor of Comintan and Zamora is proper, the former having beendesignated as successor in interest of the original homestead applicant andthat because plaintiff failed to participate in the public auction, he is foreverbarred to claim the property.Pending appeal and upon petition of Comintan and Zamora, the Courtappointed Vicente Ferro, Clerk of Court, as Receiver to collect tolls on aportion of the property used as a diversion road. Petitioner sought theannulment of this Order with the Court of Appeals, but said Court ruled thatits decision had already become final and that the records of the case wereto be remanded to the trial court. Not satisfied with such denial, petitionerfiled a petition for certiorari, prohibition and mandamus with preliminaryinjunction before this Court, praying for the annulment of the Order

reappointing the Receiver but was dismissed on the ground of insufficientshowing of grave abuse of discretion.

Issue:Aafter the rendition by the trial court of its judgment confirming the award ofone-half of the property to Quirino Comintan whether or not petitioner is stillentitled to retain for his own exclusive benefit all the fruits of the property,such as the tolls collected by him?

Ruling:There is no question that a possessor in good faith is entitled to the fruitsreceived before the possession is legally interrupted. 11 Possession in good

faith ceases or is legally interrupted from the moment defects in the title aremade known to the possessor, by extraneous evidence or by the filing of anaction in court by the true owner for the recovery of the property. Hence, allthe fruits that the possessor may receive from the time he is summoned incourt, or when he answers the complaint, must be delivered and paid by himto the owner or lawful possessor.

However, even after his good faith ceases, the possessor in fact can stillretain the property, pursuant to Article 546 of the New Civil Code, until hehas been fully reimbursed for all the necessary and useful expenses madeby him on the property.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 administration, to apply suchamount collected to the payment of the interest, and the balance to thepayment of the principal of the obligation.We hold, therefore, that the disputed tolls, after deducting petitioner'sexpenses for administration, belong to Quirino Comintan, owner of the landthrough which the toll road passed, further considering that the same was onportions of the property on which petitioner had not introduced anyimprovement. The trial court itself clarified this matter when it placed the tollroad under receivership.

The records further reveal that earnest efforts have been made by privaterespondents to have the judgment executed in the most practicable manner.They deposited in court the amount of the judgment in the sum ofP13,632.00 in cash, subject only to the accounting of the tolls collected bythe petitioner so that whatever is due from him may be set off with theamount of reimbursement. With respect to the amount of reimbursement tobe paid by Comintan, it appears that the dispositive portion of the decisionwas lacking in specificity, as it merely provided that Comintan and Zamoraare jointly liable. When two persons are liable under a contract or under a

judgment, and no words appear in the contract or judgment to make eachliable for the entire obligation, the presumption is that their obligation is joint

or mancomunada, and each debtor is liable only for a proportionate part ofthe obligation. The judgment debt of P13,632.00 should, therefore, be pro-rated in equal shares to Comintan and Zamora.

43.

44. SARMIENTO V. AGANA

FACTS:Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccas

mother offered a lot in Paranaque that they could build their house on. In

1967, they finally built their home which cost about PhP8,000-10,000,thinking that someday, the lot would be transferred to them in their name. Itturns out, though, that the lot was owned by the Spouses Santos who , inturn, sold the same to Leonila Sarmiento in 1974. A year later, Sarmientoordered the Valentinos to vacate their lot, then eventually filed and EjectionSuit against them.

The lower court ruled in Sarmientos favor and ordered her to pay20,000 as the value of the house. But the case was then elevated to the CFIof Pasay (w/ Agana as Judge), and pursuant to Art.448 of the CC (March1979), the Court ordered Sarmiento to exercise the option in 60 days to payErnesto 40,000 as the value of the house or to let them purchase the land for25,000. Sarmiento was not able to exercise this option, and the CFI allowed

Ernesto to deposit the 25,000 purchase price with the Court.


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ISSUE:Whether or not the land owner is compelled to exercise either option: to buythe building or to sell the land?

HELD:Yes. The landowner on which a building has been constructed in

good faith by another has the option to buy the building or sell his land to thebuilder, he cannot refuse to exercise either option. The challenged decision

of respondent Court based on valuations of P25,000 for the land andP40,000 for the residential house cannot be viewed as not supported byevidence. The proivion for the exercise by petitioner Sarmiento of either theoption to indemnify private respondents in the amount of P40,000 or theoption to allow private respondents to purchase the land at P25,000 in ouropinion, was a correct decision. Respondents cannot refuse to both pay forthe building and to sell the land and compel the owner of the building toremove it from the land where it is erected. He is entitled to such remotiononly when after having chosen to sell his land, the other party fails to pay forthe same.

45. depra vs. Dumlao

Facts:Petitioner Depra, is the owner of a parcel of land, while Dumlao owns theland adjoining his. when Dumlao constructed his house in his lot, the kitchenthereof encroached on an area of 34 sq.m of Depra's property. Upon thediscovery of the encroachment through a relocation survey, Depra's motherwrote a demand letter asking Dumlao to move back from his encroachmentand filed a case of Unlawful Detainer against Dumlao. The Municipal Courtfound that Dumlao was a builder in good faith and ordered that a forced

lease be created between the parties with the plaintiffs as lessors anddefendants as lessees over the disputed portion of Depra's lot, the rent beingP5.00 a month. Neither party appealed, however, Depra did not acceptpayment of rentals so that Dumlao deposited such rentals with the MTC. Oneyear later, Depra filed a complaint for Quieting of Title against Dumlao beforethe Court of first Instance which held that plaintiff Depra is the owner of the34 sq.m disputed area

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