Lao Chit V Security Bank & Trust Co. and Consolidated Investment, Inc. (17 April 1959)

Lao Chit v Security Bank & Trust Co.
and Consolidated
Investment, Inc. (17 April 1959)
Concepcion, J.
FACTS:
Consolidated Investments (lessor), leaser to Domingo Dikit part of the
lobby of the Consolidated Building at Plaza Goiti, Manila to be used
as offices for a proposed Bank of Manila to be organized by Dikit and
Jose Silva.
The lessee undertook to construct walls, partitions, and other
improvements; such improvements shall become the property of the
lessor upon the termination and/or rescission of the lease contract.
Dikit and Silva entered into a contract with plaintiff Lao Chit for the
latter to furnish the materials and the work for the improvements at a
total cost of P59,365 payable as soon as the Bank of Manila opens for
business, and is given permit by the Central Bank. The permit was
never issued.
The rentals for the lease of the space were also not paid. The lessor
then instituted an unlawful detainer action.
Municipal Court of Manila: rendered judgment sentencing Dikit.
Dikit appealed to the CFI and eventually the Supreme Court.
The cases were soon dismissed upon agreement of the parties that
Dikit will relinquish whatever rights he might have to the possession
of the leased premises and disclaimed all rights to and over any and all
improvements introduced therein.
Lao filed a separate civil action against Dikit and Silva for recovery of
whatever was due from them.
CFI of Manila: ruled in favor of Lao and sentenced Dikit and Silva as
solidarily liable for the sum of P59,365.
A writ of execution was issued but remained unsatisfied. Dikit nor
Silva had any properties registered in their respective names and Silva
was nowhere to be found.
Lao Chit then brought the present action against Security Bank and
(Bank) to which lessor had leased the property, together with the
improvements. He demanded a payment of P1,000/month by way of
rentals.
In its answer, the Bank alleged that it used the improvements pursuant
to its contract of lease with the lessor.
Soon after, Lao demanded the amount of the improvements plus
P1000/month from the lessor, which did not heed said demand.
According to the lessor, it had no contractual or juridical relation with
Lao and that the improvements belonged to it and not to Lao.
CFI of Manila: sentenced Consolidated Investments and Security
Bank solidarily to pay P59,365 and rentals at the rate of P1,000/mo.
Defendants filed a motion for reconsideration and new trial, but were
denied. Hence, this appeal.
ISSUES + RULING:
WoN the lower court erred in rendering judgment against the Bank. YES.
It is clear that the Bank entered into the premises in question pursuant
to a lease contract with the lessor.
The Bank paid the rentals and fulfilled its obligations under the
contract.
It cannot be denied that the improvements introduced became property
of the lessor pursuant to the provision in the contract between it and
Dikit and Silva that the former shall own said improvements upon
expiration and/or rescission of the contract.
Although Lao Chit was not a party to said contract, this stipulation is
binding upon him, he having introduced said improvements pursuant
to his contract with Dikit, from whom he derived, therefore, his right
to enter the building and make the improvements.
o In short, insofar as the construction thereof, Lao Chit was, visa-vis the lessor, a mere agent or representative of Dikit and, as
such, was privy to the undertakings of Dikit under his contract

of lease with the lessor.
WoN the lessor is liable to Lao Chit for the improvements. NO.
The lower court held the lessor liable to Lao upon the ground that he
was a builder in good faith, and under the theory of unjust enrichment.
Art. 361 (now 448) of the [Old] Civil Code provides:
o The owner of land on which anything has been built, sown, or
planted, in good faith, shall be entitled to appropriate the thing
so built, sown, or planted, upon paying the compensation
mentioned in Articles 453 and 454, or to compel the person
who has built or planted to pay him the value of the land, and
the person who sowed thereon to pay the proper rent therefor.
However, this provision refers to one who builds upon a land which he
believes to be his property. Neither Lao nor Dikit claimed the building
as their own.
Moreover, the provision is limited in its application to buddings
constructed on anothers land, and not to partitions, railing, counters,
shelves, and the like.
Moreover, there was no bad faith on the part of the lessor since it was
bound to permit Dikit and Lao as his agent to construct improvements.
The lower court also relied on Art. 356 (now 443) in ruling that there
should be no unjust enrichment:
o He who receives fruits is obliged to pay any expenses which
may have been incurred by another in the production,
gathering, and preservation thereof.
The Supreme Court ruled, however, that the provision is not on point
since it refers to "expenses" of production, gathering and preservation"
of fruits received by the owner of a property, not to improvements,
whereas the claim of Lao Chit is based upon "improvements"
introduced, not "expenses" incurred by him for the "production,
gathering and preservation" of fruits.
The provision on quasi-contracts (Art. 2142) of the Civil Code cannot

likewise be applied. It provides:
o Certain lawful, voluntary and unilateral acts give rise to the
juridical relation of quasi-contract to the end that no one shall
be unjustly enriched or benefited at the expense of another.
The construction of the improvements in question was not a "purely
voluntary act" or "unilateral act" of Lao Chit.
He introduced them in compliance with a bilateral "obligation" he
undertook under his contract with Dikit.
For the principle of undue enrichment to apply, there must be
"enrichment" and the same must be "undue" or "unjust".
In the case at bar, Dikit failed to pay the agreed monthly rental of
P5,000 from October, 1949. Up to July 1, 1951, when the premises in
question were leased to the Bank, the rentals due from Dikit
aggregated, therefore, P105,000.
Thus, despite the fact that the lessor had become the owner of the
improvements in question, worth P59,365.00, it still suffered a loss of
over P45,000.00. Such "loss" negates the idea of "enrichment".
Had he been reasonably vigilant, Lao Chit could have demanded from
Dikit a mortgage, or a bond, or some other security, for the protection
of his rights, yet he did not do so.
Should the lessor be required to pay Lao Chit what he is entitled to
recover from Dikit, but which he (Lao Chit) cannotdue to his
oversight, carelessness or negligencecollect from Dikit, the effect
would be to relieve Lao Chit of the consequences of his own
inadvertence or negligence, and hold the lessor responsible therefor.
RACHEL C. CELESTIAL v. JESSE CACHOPERO

Petitioner Rachel Celestial is the sister of defendantJesse Cachopero.
They had a dispute over a piece of land which was a dried-up creek, as
Cachopero was trying to obtain a Miscellaneous Sales Application (MSA) to
the Department of Environment and Natural Resources (DENR) alleging that
he had been the owner of that land whereon he built a house and other
improvements. However, Celestial protests that she has preferential right over
the land because it is adjacent to and is the only outlet from her house.
According to the Bureau of Land, the land in dispute was a creek and is
therefore outside the commerce of man. The first MSA was denied by the
Municipal Trial Court (MTC) prompting Cachopero to obtain another MSA
which was granted by the DENR. Due to conflicting interests of the parties,
the land in dispute must be sold in a public auction.
Cachopero then filed a petition for certiorari, prohibition and mandamus
against the DENR with the Regional Trial Court (RTC) but was denied.
On appeal, the Court of Appeals reversed and set aside the decision of the
RTC.
Celestial contends that the RTC had no jurisdiction over Cachoperos
petition for certiorari as it is in the nature of anappeal falling within the
jurisdiction of the CA and that the Cachopero has not exhausted all
administrative remedies.
ISSUE:
(a) Whether or not the RTC has jurisdiction over petition for certiorari,
mandamus and prohibition
(b) Whether or not the land in question owned by one of the parties when it is
classified as outside the commerceof man
HELD:
RTCs have concurrent jurisdiction with the CA and SC over original
petitions for certiorari, prohinition and mandamus.
Celestial has apparently confused the separate and distinct remedies of
an appeal (i.e. through a petition for review of a decision of a quasi judicial
agency under Rule 43 of the Rules of Court) and a special civil action for
certiorari (i.e. through a petition for review under Rule 65 of the Rules of
Court).
Concomitantly, appellate jurisdiction is separate and distinct from the
jurisdiction to issue the prerogative writ of certiorari. An appellate jurisdiction
refers to a process which is a continuation of the original suit and not a
commencement of a new action. In contrast, to invoke a courts jurisdiction to
issue the writ of certiorari requires the commencement of a new and original
action therefore, independent of the proceedings which gave rise to the
questioned decision or order. As correctly held by the Court of Appeals, the
RTCs have concurrentjurisdiction with the Court of Appeals and the Supreme
Court over original petitions for certiorari, prohibition and mandamus under
Section 21 of B.P. 129.
The Court finds no reason to disturb the Court of Appeals conclusion that the
instant case falls under the recognized exceptions to the rule on exhaustion of
administrative remedies, which provides that such is inapplicable if (1) it
should appear that an irreparable injury or damage will be suffered by a party
if he should await, before taking court action, the final action of the
administrative official concerned on the matter as a result of a patently illegal
order or (2) where appeal would not prove to be speedy and adequate
remedy.
This requirement of prior exhaustion of administrative remedies is not
absolute, there being instances when it may be dispensed with and judicial
action may be validly resorted to immediately, among which are: 1) when the
question raised is purely legal; 2) when the administrative body is in estoppel;
3) when the act complained of is patently illegal; 4) when there is urgent need
for judicial intervention; 5) when the claim involved is small; 6) when
irreparable damage will be suffered; 7) when there is no other plain, speedy
and adequate remedy; 8) when strong public interest is involved; and 9) in quo
warranto proceedings.
A dried up creek is property of public dominion and not susceptible to

acquisitive prescription
As for Celestials claim of ownership over the subject land, admittedly a
dried-up bed of the Salunayan Creek, based on (1) her alleged long term
adverse possession and that of her predecessor-in-interest, Marcelina Basadre,
even prior to October 22, 1966, when she purchased the adjoining property
from the latter, and (2) the right of accession under Art. 370 of the Spanish
Civil Code of 1889 and/or Article 461 of the Civil Code, the same must fail.
Since property of public dominion is outside thecommerce of man and not
susceptible to private appropriation and acquisitive prescription, the adverse
possession which may be the basis of a grant of title in the confirmation of an
imperfect title refers only to alienable or disposable portions of the public
domain. It is only after the Government has declared the land to be alienable
and disposable agricultural land that the year of entry, cultivation and
exclusive and adverse possession can be counted for purposes of an imperfect
title.

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Lao Chit V Security Bank & Trust Co. and Consolidated Investment, Inc. (17 April 1959)

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Lao Chit v Security Bank & Trust Co.

such, was privy to the undertakings of Dikit under his contract

The provision on quasi-contracts (Art. 2142) of the Civil Code cannot

RACHEL C. CELESTIAL v. JESSE CACHOPERO

A dried up creek is property of public dominion and not susceptible to

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