CASES IN PROPERTY BATCH 3 (DIGEST)

1) Felicidad Javier vs. Regino Veridiano and Reino Rosete G.R. No. L-48050. October
10, 1994 (237 SCRA 565)
Doctrine: A judgment in forcible entry or detainer case disposes of no other issue than
possession and declares only who has the right of possession, but by no means constitutes a bar
to an action for determination of who has the right or title of ownership.
Facts:
On January 1963, Javier filed a Miscellaneous Sales Application for Lot No. 1641, Ts 308 of
Olongapo Townsite Subdivision in Olongapo City. On December 1970, Javier filed Civil Case no.
926 (CC 926) for forcible entry against Ben Babol for entering a portion of the southwestern part
of Lot 1641, Ts 308. The case was dismissed since the court considered the portion outside Lot
1461. The case became final and executory on April 1973. Subsequently, Javier was granted
Miscellaneous Sales Patent and an Original Certificate of Title was issued in her favor. Meanwhile,
Babol who was the defendant in CC 926 had sold the portion he was occupying to Rosete. 4
years after the finality of CC 926, Javier instituted a Civil Case No. 2203-0 (CC 2203-0) for
quieting of title and recovery of possession. Rosete moved to dismiss on the ground of res
judicata. The CFI of Zambales dismissed the case.
Issue:
Whether res judicata is applicable in the case.
Held:
No. The following are the requisites of res judicata: a) there is final judgment or order; b)
the court have jurisdiction over the subject matter; c) former judgment is a judgment on merits;
and d) identity of parties, of subject matter, and of causes of action. The first three are present.
There is identity of parties in the case. What is required is not absolute but substantial identity of
parties. In the case, Rosete is a successor in interest of Babol by title. Nevertheless, there is no
identity of cause of action. CC 926 is a complaint of forcible entry or accion interdictal where the
issue is physical or material possession of real property. In this case, Javier merely claimed a
better right or prior possession over the land without asserting title. CC 2203-0 is an action to
recover a parcel of land or accion reivindicatori. In this case, Javier expressly alleged ownership
(by virtue of the Original Certificate of Title issued) and specifically prayed that she be declared
the rightful owner and be given possession of the disputed portion. A judgement in forcible entry
or detainer case disposes of no other issue than possession and declares only who has the right
of possession, but by no means constitutes a bar to an action for determination of who has the
right or title of ownership.

2) Abejaron vs. Nabasa G.R. No. 84831, June 20, 2001 (359 SCRA 47)
Doctrine: For an action for reconveyance based on fraud to prosper, it is essential for the party
seeking reconveyance to prove by clear and convincing evidence his title to the property and the
fact of fraud.
Facts:
Petitioner Abejaron avers that he is the actual and lawful possessor and claimant of a 118square meter portion of a 175-square meter residential lot in Silway, General Santos City. In
1945, petitioner Abejaron and his family started occupying the 118-square meter land. At that
time, the land had not yet been surveyed. They fenced the area and built thereon a family home
with nipa roofing and a small store. In 1949, petitioner improved their abode to become a twostorey house made of round wood and nipa roofing. Abejaron also introduced several
improvements on the land including a store, 5 coconut trees on the property of controversy, and
avocado and banana trees. All this time that the Abejarons introduced these improvements on
the land in controversy, respondent Nabasa did not oppose or complain about the improvements.
Knowing that the disputed land was public in character, petitioner declared only his house, and
not the disputed land, for taxation purposes.
Petitioner stated that beginning 1955, respondent Nabasa resided on the remaining 57square meter portion of Lot 1, Block 5, Psu-154953. Nabasa built his house about four (4) meters
away from petitioner Abejarons house.
Before 1974, employees of the Bureau of Lands surveyed the area in controversy. Abejaron
merely watched them do the survey and did not thereafter apply for title of the land on the belief
that he could not secure title over it as it was government property. Without his (Abejaron)
knowledge and consent, however, Nabasa clandestinely, willfully, fraudulently, and unlawfully
applied for and caused the titling in his name of the entire Lot 1, Block 5, Psu-154953, including
petitioner Abejarons 118-square meter portion. Petitioner imputes bad faith and fraud on the
part of Nabasa because in applying for and causing the titling in his name of Lot 1, Block 5, Psu154953, Nabasa represented himself to be the actual and lawful possessor of the entire Lot 1,
Block 5, including petitioner Abejarons 118-square meter portion despite knowledge of
Abejarons actual occupation and possession of said portion.
On September 24, 1974, Nabasa was issued Original Certificate of Title No. P-4140
pursuant to Free Patent No. (XI-4) 2877 covering Lot 1, Block 5, Psu-154953 including therein the
lot occupied by the petitioner.
On March 12, 1982 an action for reconveyance with damages against respondent Nabasa
before Branch 22, Regional Trial Court of General Santos City.

Issue:
Whether the allegation of fraud has been proven for the action for reconveyance to
prosper.

Held:

No. An action for reconveyance of a property is the sole remedy of a landowner whose
property has been wrongfully or erroneously registered in anothers name after one year from
the date of the decree so long as the property has not passed to an innocent purchaser for value.
The action does not seek to reopen the registration proceeding and set aside the decree of
registration but only purports to show that the person who secured the registration of the
property in controversy is not the real owner thereof. Fraud is a ground for reconveyance. For an
action for reconveyance based on fraud to prosper, it is essential for the party seeking
reconveyance to prove by clear and convincing evidence his title to the property and the fact of
fraud. Such was not performed by the petitioner.

Abejarons 30-year period of possession and occupation required by the Public Land Act, as
amended by R.A. 1942 ran from 1945 to 1975, prior to the effectivity of P.D. No. 1073 in 1977,
the requirement of said P.D. that occupation and possession should have started on June 12,
1945 or earlier, does not apply to him. Petitioner claims that he started occupying the disputed
land in 1945. At that time, he built a nipa house, a small store, and a fence made of wood to
delineate his area. This nipa house was improved in 1949 into a two-storey house. The small
store was also made bigger in 1950. The wooden fence was also changed to a fence made of
hollow blocks. The two-storey house, bigger store, and hollow-block fence all stand to this day. In
1951, petitioner planted coconut trees near his house. While the petitioner has shown continued
existence of these improvements on the disputed land, they were introduced later than January
24, 1947. He has failed to establish the portion of the disputed land that his original nipa house,
small store and wooden fence actually occupied as of January 24, 1947. In the absence of this
proof, we cannot determine the land he actually possessed and occupied for thirty years which
he may acquire under Sec. 48(b) of the Public Land Act. Worthy of notice is the fact that the
disputed land was surveyed, subdivided into and identified by lots only in the 1970s. Therefore,
prior to the survey, it would be difficult to determine the metes and bounds of the land petitioner
claims to have occupied since 1947 in the absence of specific and incontrovertible proof.
Also, as admitted by the petitioner, he has never declared the disputed land for taxation
purposes. While tax receipts and tax declarations are not incontrovertible evidence of ownership,
they become strong evidence of ownership acquired by prescription when accompanied by proof
of actual possession of the property or supported by other effective proof. Even the tax
declarations and receipts covering his house do not bolster his case as the earliest of these was
dated 1950.
Petitioners evidence does not constitute the well-nigh incontrovertible evidence
necessary to acquire title through possession and occupation of the disputed land at least since
January 24, 1947 as required by Sec. 48(b) of the Public Land Act, as amended by R.A. 1942. The
basic presumption is that lands of whatever classification belong to the State and evidence of a
land grant must be well-nigh incontrovertible. As petitioner Abejaron has not adduced any
evidence of title to the land in controversy, whether by judicial confirmation of title, or
homestead, sale, or free patent, he cannot maintain an action for reconveyance.

3) Garcia vs. Court of Appeals G.R. No. 133140, August 10, 1999 (312 SCRA 180)

Doctrine: Possession and ownership are distinct legal concepts. Ownership exists when a thing
pertaining to one person is completely subjected to his will in a manner not prohibited by law
and consistent with the rights of others. Ownership confers certain rights to the owner, one of
which is the right to dispose of the thing by way of sale.
Literally, to possess means to actually and physically occupy a thing with or without right.
Possession may be had in one of two ways: possession in the concept of an owner and
possession of a holder. A possessor in the concept of an owner may be the owner himself or one
who claims to be so. On the other hand, one who possesses as a mere holder acknowledges in
another a superior right which he believes to be ownership, whether his belief be right or wrong.
Facts:
Atty. Pedro V. Garcia, in whose name TCT No. S-31269 covering a parcel of land identified
as Lot 17 situated at Bel Air II Village, Makati, was registered, sold with the consent of his wife
Remedios T. Garcia, the same to their daughter Ma. Luisa Magpayo and her husband Luisito
Magpayo (the Magpayos). On March 5, 1981, the Magpayos mortgaged the land to the Philippine
Bank of Communications (PBCom) to secure a loan. On March 9, 1981, Atty. Garcias Title was
cancelled and in its stead Transfer Certificate of Title No. S-108412/545 was issued in the name
of the Magpayos. The Deed of Real Estate Mortgage was registered at the Makati Register of
Deeds and annotated on the Magpayos title. The redemption period of the foreclosed mortgage
expired without the Magpayos redeeming the same, hence, title over the land was consolidated
in favor of PBCom which cancelled the Magpayos title and Transfer Certificate of Title No.
138233 was issued in its name. The Magpayos failed to pay their loan upon its maturity, hence,
the mortgage was extrajudicially foreclosed and at the public auction sale, PBCom which was the
highest bidder bought the land. On October 4, 1985, the Magpayos filed at the RTC of Makati a
complaint seeking the nullification of the extrajudicial foreclosure of mortgage, public auction
sale, and PBComs title docketed as Civil Case No. 11891. This complaint was dismissed for
failure to prosecute. On October 15, 1985, PBCom filed at the Regional Trial Court (RTC) of Makati
a petition for the issuance of a writ of possession over the land which was granted. Upon service
of the writ of possession, Mrs. Magpayos brother, Jose Ma. T. Garcia (Garcia), who was in
possession of the land, refused to honor it and filed a motion for Intervention in the above-said
PBCom petition, which motion was denied.
Garcia thereupon filed against PBCom, the Magpayos, and the RTC Sheriff the instant suit
for recovery of realty and damages wherein he alleged, inter alia, that he inherited the land as
one of the heirs of his mother Remedios T. Garcia, and that PBCom acquired no right thereover. In

its summary judgment, the lower court held that the mortgage executed by the Magpayo
spouses in favor of PBCom was void. The Magpayo spouses could not have acquired the said
property merely by the execution of the Deed of Sale because the property was in the possession
of the plaintiff. The vendor, Pedro V. Garcia, was not in possession and hence could not deliver
the property merely by the execution of the document.
On appeal, CA held that Garcias assertion that ownership over the disputed property was
not transmitted to his sister and her husband-Magpayo spouses at the time of the execution of
the Deed of Sale as he was still in actual and adverse possession thereof does not lie. Since the
execution of the deed of sale by Atty. Pedro V. Garcia in favor of the Magpayos took place earlier
or on August 1, 1980, then contrary to his claim, Garcia was not in possession of the property at
the time of the execution of said public instrument. Furthermore, it appearing that the vendor
Atty. Garcia had control of the property which was registered in his name and that the deed of
sale was likewise registered, then the sale was consummated and the Magpayos were free to
exercise the attributes of ownership including the right to mortgage the land.
When the land is registered in the vendors name, and the public instrument of sale is also
registered, the sale may be considered consummated and the buyer may exercise the actions of
an owner. That the Magpayos title, TCT No. S-108412, was issued four (4) days following the
execution of the deed of real estate mortgage is of no moment, for registration under the Torrens
system does not vest ownership but is intended merely to confirm and register the title which
one may already have on the land.
Issue:
Whether Garcias possession is in a concept of an owner.

Held:
No. Garcias possession which started only in 1986 could not ripen into ownership. He has
no valid title thereto. His possession in fact was that of an intruder, one done in bad faith (to
defeat PBComs Writ of Possession). His possession is certainly not in the concept of an owner.
This is so because as early as 1981, title thereto was registered in the name of the Magpayo
Spouses which title was subsequently cancelled when the property was purchased by PBCom in a
public auction sale resulting in the issuance of title in favor of the latter in 1985.
The Court stressed that possession and ownership are distinct legal concepts. Ownership
exists when a thing pertaining to one person is completely subjected to his will in a manner not
prohibited by law and consistent with the rights of others. Ownership confers certain rights to the
owner, one of which is the right to dispose of the thing by way of sale. Atty. Pedro Garcia and his
wife Remedios exercised their right to dispose of what they owned when they sold the subject
property to the Magpayo spouses. On the other hand, possession is defined as the holding of a
thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a
thing with or without right. Possession may be had in one of two ways: possession in the concept
of an owner and possession of a holder. A possessor in the concept of an owner may be the
owner himself or one who claims to be so. On the other hand, one who possesses as a mere
holder acknowledges in another a superior right which he believes to be ownership, whether his
belief be right or wrong.
The records show that petitioner occupied the property not in the concept of an owner for
his stay was merely tolerated by his parents. Consequently, it is of no moment that petitioner
was in possession of the property at the time of the sale to the Magpayo spouses. It was not a
hindrance to a valid transfer of ownership. On the other hand, petitioners subsequent claim of
ownership as successor to his mothers share in the conjugal asset is belied by the fact that the

property was not included in the inventory of the estate submitted by his father to the intestate
court. This buttresses the ruling that indeed the property was no longer considered owned by
petitioners parents.
The Court upheld the Court of Appeals in holding that the mortgage to PBCom by the
Magpayo spouses is valid notwithstanding that the transfer certificate of title over the property
was issued to them after the mortgage contract was entered into. Registration does not confer
ownership, it is merely evidence of such ownership over a particular property. The deed of sale
operates as a formal or symbolic delivery of the property sold and authorizes the buyer to use
the document as proof of ownership. All said, the Magpayo spouses were already the owners
when they mortgaged the property to PBCom.

4) Rodil Enterprises, Inc. VS CA (371 SCRA 7)

Doctrine: The owner has a right to enjoy and dispose of a thing, without other limitations than
those established by law. Every owner has the freedom of disposition over his property. This is an
attribute of ownership.
In an action for unlawful detainer, the plaintiff need not have been in prior physical possession.
FACTS:
Petitioner Rodil Enterprises is the lessee of the Ides ORacca building (ORACCA) since
1959. It was a former alien property over which the Republic acquired ownership by virtue of RA
477. Rodil entered into a sublease contract with respondents Bondoc, Bondoc-Esto, Divisoria
Footware and Chua Huay Soon, members of Oracca Building Tenants Association, Inc.
(ASSOCIAION). On January 8, 1987, Rodil offered to purchase the property. On July 22, 1998, the
Association also offered to lease the same building through DGSREPM. Pending action on the
purchase offer of Rodil, the Republic granted Rodils request for the renewal of the lease contract
on Sept. 23, 1987 for 5 more years. The renewal contract however was disapproved by the
DGSREPM secretary. On October 1987, Rodil filed an action to enjoin the Association from
collecting rentals from the occupants of Oracca. This was granted by the trial court and upheld
by CA. On May 18, 1992 Rodil signed a renewal contract for 10 more years of lease, which was
approved by the DENR Secretary. The Association filed a case to set aside the renewal contract,
but the same was denied by the trial court. Rodil then filed an action for unlawful detainer
against herein respondents. The MTC upheld Rodils right to eject, which was then upheld by the
RTC. While the consolidated appeals were pending, the CA 2nd Division declared the renewal
contract between Rodil and the Republic as null and void. Rodil moved for reconsideration but
the same was denied which prompted it to file an action for certiorari. The CA 4th division
likewise set aside the MTC and the RTCs decision and dismissed the action of Rodil for unlawful
detainer.

ISSUE:
Was the renewal contract between Rodil and the Republic is valid?
May Rodil validly eject herein respondents even though the former is not in actual
possession of the property?

HELD:
Yes. The Owner has a right to enjoy and dispose of a thing, without other limitations than
those established by law. Every owner has the freedom of disposition over his property. This is an
attribute of ownership. The Republic being the owner of the disputed property enjoys the
prerogative to enter into a lease contract with Rodil in the exercise of its jus disponendi.

Yes. In an action for unlawful detainer, the plaintiff need not have been in prior physical
possession. Respondents have admitted that they have not entered into any lease contract with
the Republic and that their continued occupation of the subject property was merely by virtue of
acquiescence. Since the occupation of respondents was merely tolerated by the Republic, the
right of possession of the latter remained uninterrupted. It could therefore alienate the same to
anyone it choose. Unfortunately for respondents, the Republic chose to alienate the subject
premises to Rodil by virtue of a contract of lease entered into on May 18, 1992. Resultantly, the
petitioner had the right to file the action for unlawful detainer against respondents as one from
whom possession of property has been unlawfully withheld.

5) Ruben Santos VS Spouses Tony Ayon (GR No. 137013)

FACTS:
Davao City: Ruben Santos filed a complaint for illegal detainer against sps. Ayon. Santos is
the registered owner of 3 lots situated at Lanzona Subd, Ayons are registered owners of adjacent
land. Previous occupant of the property built a building which straddled both the lots. Ayons
using the building as a warehouse. Santos informed respondents that the building occupies
portion of his lot, but he let them use it.
HELD:
A complaint for unlawful detainer is sufficient if it alleges that the withholding of the
possession or the refusal to vacate is unlawful without necessarily employing the terminology of
the law. Possession by tolerance is lawful, but such possession becomes unlawful when the
possessor by tolerance refuses tp vacate upon demand made by the owner.

6) Bustos VS CA (350 SCRA 155)

Doctrine: One of the essential attributes of ownership is possession. It follows that as owners of
the subject property, petitioners are entitled to possession of the same. An owner who cannot
exercise the seven (7) juses or attributes of ownershipthe right to possess, to use and enjoy,
to abuse or consume, to accessories, to dispose or alienate, to recover or vindicate and to the
fruitsis a crippled owner.

FACTS:
Paulino Fajardo died intestate in April 2, 1957. He had four children, Manuela, Trinidad,
Beatriz and Marcial. Subsequently, they instituted an extra-judicial partition of the estate of the
deceased. On the same day, Manuela sold her share to Moses G. Mendoza, husband of Beatriz,
by way of Deed of Absolute Sale. At the time of the sale, there was no cadastral survey in
Masantol, Pampanga. Later, the cadastre was conducted, and the property involved in the
partition case were specified as Lots 280, 283, 284, 1000-A and 1000-B. The share of Manuela,
which was sold to Moses, includes Lot 284 of the Masantol Cadastre and Lot 284 was subdivided
into Lots 284-A and 284-B. Trinidad was in physical possession of the land. She refused to
surrender the land to her brother-in-law Moses G. Mendoza, despite several demands. Mendoza
then filed a complaint. During the hearing, Trinidad died, and her heirs parted with her estate,
including the lot claiming by Mendoza. Lot 284-B was then sold to Spouses Viray, herein private
respondents. The trial court ruled in favor of Mendoza. He then sold the subject land to Spouses
Bustos, herein petitioners, who were actually lessees of the husband of Trinidad on the land in
question. Since Spouses Bustos were in actual possession of the land, Spouses Viray filed an
action for unlawful detainer against the Spouses Bustos.
ISSUE:
Could the petitioners be ejected from what is now their own land?
HELD:
No. Petitioners cannot be ejected from the subject land. The stay of execution is warranted
by the fact that petitioners are now legal owners of the land in question and are occupants
thereof. To execute the judgment by ejecting petitioners from the land that they owned would
certainly result in grave injustice. The issue of possession was rendered moot when the court
adjudicated ownership to the Spouses Bustos by virtue of a valid deed of sale. Placing petitioners
in possession of the land in question is the necessary and logical consequence of the decision
declaring them as the rightful owners of the property.

7) Custodio VS CA (253 SCRA 483)

FACTS:
Mabasa owns a parcel of land with a 2 door apartment. The property is surrounded by
other immovables. When Mabasa bought the land, there were tenants who were occupying the
property. One of the tenants vacated the land. Mabasa saw that there had been built an adobe
fence in the apartment in the first passageway that made it narrower. The fence was constructed
by the Santoses. Morato constructed her fence and extended it to the entire passageway,
therefore, the passageway was enclosed. The case was brought to the trial court and ordered the
Custodios and the Santoses to give Mabasa a permanent ingress and eggress to the public street
and asked Mabasa to pay Custodios and Santoses for damages.
ISSUE:
Does Mabasa has the right to demand for a right of way?
HELD:
Yes, Mabasa has the right to demand for a right of way. A person has a right to the natural
use and enjoyment of his own property, according to his pleasure, for all the purposes to which
such property is usually applied. As a general rule, therefore, there is no cause of action for acts

done by one person upon his own property in a lawful and proper manner, although such acts
incidentally cause damage or an unavoidable loss to another, as such damage or loss is damnum
absque injuria. When the owner of property makes use thereof in the general and ordinary
manner in which the property is used, such as fencing or enclosing the same as in this case,
nobody can complain of having been injured, because the inconvenience arising from said use
can be considered as a mere consequence of community life.

8) Andamo VS IAC (191 SCRA195)

Doctrine: It must be stressed that the use of ones property is not without limitations. Article
431 of the Civil Code provides that the owner of a thing cannot make use thereof in such a
manner as to injure the rights of a third person. SIC UTERE TUO UT ALIENUM NON LAEDAS.
FACTS:
Petitioner spouses Andamo owned a parcel of land situated in Biga Silang, Cavite which is
adjacent to that of private respondent corporation, Missionaries of Our lady of La Salette, Inc.
Within the land of the latter, water paths and contrivances, including an artificial lake, were
constructed, which allegedly inundated and eroded petitioners land, caused a young man to
drown, damaged petitioners crops and plants, washed away costly fences, endangered the lives
of the petitioners and their laborers and some other destructions. This prompted petitioner
spouses to file a criminal action for destruction by means of inundation under Article 324 of the
RPC and a civil action for damages.
ISSUE:
Does spouses Andamo can claim damages for destruction caused by respondents water
paths and contrivances on the basis of Articles 2176 and 2177 of the Civil Code on quasi-delicts?

HELD:
Yes. A careful examination of the afore quoted complaint shows that the civil action is one
under Articles 2176 and 2177 of the Civil Code on quasi-delicts. All the elements of a quasi-delict
are present, to wit: (a) damages suffered by the plaintiff, (b) fault or negligence of the defendant,
or some other person for whose acts he must respond; and (c) the connection of cause and effect
between the fault or negligence of the defendant and the damages incurred by the plaintiff.

Clearly, from petitioners complaint, the water paths and contrivances built by respondent
corporation are alleged to have inundated the land of petitioners. There is therefore, an assertion
of a causal connection between the act of building these water paths and the damage sustained
by petitioners. Such action if proven constitutes fault or negligence which may be the basis for
the recovery of damages.
It must be stressed that the use of ones property is not without limitations. Article 431 of the
Civil Code provides that the owner of a thing cannot make use thereof in such a manner as to
injure the rights of a third person. SIC UTERE TUO UT ALIENUM NON LAEDAS. Moreover,
adjoining landowners have mutual and reciprocal duties which require that each must use his
own land in a reasonable manner so as not to infringe upon the rights and interests of others.
Although we recognize the right of an owner to build structures on his land, such structures must
be so constructed and maintained using all reasonable care so that they cannot be dangerous to
adjoining landowners and can withstand the usual and expected forces of nature. If the
structures cause injury or damage to an adjoining landowner or a third person, the latter can
claim indemnification for the injury or damage suffered.

9) Isaguirre VS De Lara (332 SCRA 803)

FACTS:
Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application
over a parcel of land identified as a portion of Lot 502, Guianga Cadastre, with an area of 2,342
square meters filed with the Bureau of Lands. Felicitas, his wife, succeeded Alejandro as claimant
after the latters death. By virtue of a subdivision survey, the area was reduced to 1,000 square
meters on which a two-story residential-commercial apartment stands, in the name of Felicitas
sons, Apolonio and Rodolfo de Lara. While encountering financial difficulties in 1953, Felicitas
approached Cornelio M. Isaguirre (who was married to her niece) and executed a document
denominated as "Deed of Sale and Special Cession of Rights and Interests" where she sold a 250
meter portion of Lot 502 with the two-story commercial-residential structure standing thereon,
for and in consideration of the sum of P5,000.00. On August 21, 1969, Cornelio filed a sales
application over the property based on the deed of sale, resulting in the issuance of an Original
Certificate of Title (OCT), in his name. Meanwhile, the sales application of Felicitas over the entire
1,000 square meter property (including the 250 meter portion claimed by Cornelio) was also

approved, and an OCT was issued in her name as well. Because of the overlap, Cornelio filed an
action for quieting of title in RTC Davao against Felicitas on May 1990. The trial court decided in
favor of Cornelio, which declared him as the lawful owner of the property. However, the Court of
Appeals reversed the decision holding that the transaction entered into by the parties was an
equitable mortgage, not a sale, due to the inadequacy of the consideration and because the
payment thereof was made in several installments of minimal amounts. The OCT in Cornelios
name was thereby declared null and void. Such decision was affirmed by the Supreme Court in
GR. No. 120823. Felicitas, then, sought for a writ of possession from the trial court. This was
opposed by Cornelio stating that he had the right of retention over the property until payment of
the loan and the value of the improvements he had introduced on the property. RTC Davao
granted the motion for writ of possession in favor of Felicitas. Upon appeal, the Court of Appeals
held that petitioner was not entitled to retain possession of the subject property, because the
agreement entered into by the parties was an equitable mortgage; as such, there is no necessity
for Cornelio to actually possess the property because, as the mortgagee, he only has to annotate
his claim at the back of the certificate of title in order to protect his rights against third persons
and secure the debt. Furthermore, the Court of Appeals remanded the case to RTC Davao for its
failure to specify the period within which the mortgagor (Felicitas) must pay the indebtedness
and the total amount thereof with interest, plus necessary expenses incurred by Cornelio over
the property. Cornelio appeals to the Supreme Court.
ISSUE:
Whether or not petitioner is entitled to retain possession of the property until the payment
of the loan and the value of necessary and useful improvements he made upon the property
HELD:
No. As a rule, mortgagor retains possession of the mortgaged property since a mortgage is
merely a lien and title to the property does not pass to the mortgagee. Even if a mortgagee does
not have the possession over the property, there is no impairment of his security since the
mortgage directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for whose security it was constituted. The
mortgage creditor may institute an action to foreclose the mortgage, if the debtor is unable to
pay, whether judicially or extrajudicially, through which the mortgaged property will be sold at a
public auction and the proceeds therefrom given to the creditor to the extent necessary to
discharge the mortgage loan. Furthermore, the Supreme Court cited Alvano v. Batoon, where it
was held that [a] simple mortgage does not give the mortgagee a right to the possession of the
property unless the mortgage should contain some special provision to that effect. Cornelio had
not presented any evidence to that effect. Also, the Court held that Cornelio was a possessor in
bad faith; thereby, he may only claim reimbursement for necessary expenses because he knew
from the very beginning that he held Felicitas property as mere security for the loan obligation.

10) Republic VS CA (160 SCRA 228)

Doctrine: The owner of a piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. The rights over the land are
indivisible and the land itself cannot be half agricultural and half mineral. The classification must
be categorical; the land must be either completely mineral or completely agricultural.
FACTS:

These cases arose from the application for registration of a parcel of land filed on
February 11, 1965, by Jose de la Rosa on his own behalf and on behalf of his three children,
Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was
divided into 9 lots and covered by plan Psu-225009. According to the application, Lots 1-5 were
sold to Jose de la Rosa and Lots 6-9 to his children by Mamaya Balbalio and Jaime Alberto,
respectively, in 1964. The application was separately opposed by Benguet Consolidated, Inc. as
to Lots 1-5, Atok Big Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the
Republic of the Philippines, through the Bureau of Forestry Development, as to lots 1-9.
In support of the application, both Balbalio and Alberto testified that they had acquired the
subject land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father
shortly after the Liberation.
Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it
on September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in
September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet
had been in actual, continuous and exclusive possession of the land in concept of owner, as
evidenced by its construction of adits, its affidavits of annual assessment, its geological
mappings, geological samplings and trench side cuts, and its payment of taxes on the land.
For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma
and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930, and
recorded on January 2, 1931, in the office of the mining recorder of Baguio. These claims were
purchased from these locators on November 2, 1931, by Atok, which has since then been in
open, continuous and exclusive possession of the said lots as evidenced by its annual
assessment work on the claims, such as the boring of tunnels, and its payment of annual taxes
thereon.
The Bureau of Forestry Development also interposed its objection, arguing that the land sought
to be registered was covered by the Central Cordillera Forest Reserve under Proclamation No.
217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation
under the Constitutions of 1935 and 1973.
The trial court denied the application, holding that the applicants had failed to prove their claim
of possession and ownership of the land sought to be registered.
The applicants appealed to the respondent court, which reversed the trial court and recognized
the claims of the applicant, but subject to the rights of Benguet and Atok respecting their mining
claims. In other words, the Court of Appeals affirmed the surface rights of the de la Rosas over
the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of
their mining claims. Both Benguet and Atok have appealed to this Court, invoking their superior
right of ownership.

ISSUE:
Whether respondent courts decision, i.e. the surface rights of the de la Rosas over the
land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of
their mining claim, is correct.

HELD:

No. Our holding is that Benguet and Atok have exclusive rights to the property in question
by virtue of their respective mining claims which they validly acquired before the Constitution of
1935 prohibited the alienation of all lands of the public domain except agricultural lands, subject
to vested rights existing at the time of its adoption. The land was not and could not have been
transferred to the private respondents by virtue of acquisitive prescription, nor could its use be
shared simultaneously by them and the mining companies for agricultural and mineral purposes.
It is true that the subject property was considered forest land and included in the Central
Cordillera Forest Reserve, but this did not impair the rights already vested in Benguet and Atok at
that time. Such rights were not affected either by the stricture in the Commonwealth Constitution
against the alienation of all lands of the public domain except those agricultural in nature for this
was made subject to existing rights. The perfection of the mining claim converted the property to
mineral land and under the laws then in force removed it from the public domain. By such act,
the locators acquired exclusive rights over the land, against even the government, without need
of any further act such as the purchase of the land or the obtention of a patent over it. As the
land had become the private property of the locators, they had the right to transfer the same, as
they did, to Benguet and Atok. The Court of Appeals justified this by saying there is no conflict
of interest between the owners of the surface rights and the owners of the sub-surface rights.
This is rather doctrine, for it is a well-known principle that the owner of piece of land has rights
not only to its surface but also to everything underneath and the airspace above it up to a
reasonable height. Under the aforesaid ruling, the land is classified as mineral underneath and
agricultural on the surface, subject to separate claims of title. This is also difficult to understand,
especially in its practical application.
The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural. In the instant case, as already observed, the land
which was originally classified as forest land ceased to be so and became mineral and
completely mineral once the mining claims were perfected. As long as mining operations were
being undertaken thereon, or underneath, it did not cease to be so and become agricultural,
even if only partly so, because it was enclosed with a fence and was cultivated by those who
were unlawfully occupying the surface.
This is an application of the Regalian doctrine which, as its name implies, is intended for the
benefit of the State, not of private persons. The rule simply reserves to the State all minerals that
may be found in public and even private land devoted to agricultural, industrial, commercial,
residential or (for) any purpose other than mining. Thus, if a person is the owner of agricultural
land in which minerals are discovered, his ownership of such land does not give him the right to
extract or utilize the said minerals without the permission of the State to which such minerals
belong.
The flaw in the reasoning of the respondent court is in supposing that the rights over the land
could be used for both mining and non-mining purposes simultaneously. The correct
interpretation is that once minerals are discovered in the land, whatever the use to which it is
being devoted at the time, such use may be discontinued by the State to enable it to extract the
minerals therein in the exercise of its sovereign prerogative. The land is thus converted to
mineral land and may not be used by any private party, including the registered owner thereof,
for any other purpose that will impede the mining operations to be undertaken therein, For the
loss sustained by such owner, he is of course entitled to just compensation under the Mining
Laws or in appropriate expropriation proceedings.