Bartolome Ortiz v. Hon.

Kayanan, Euleterio Zamora, Quirino Comintan, Vicente Fero, and Gregorio Pamisaran
Antonio, J. July 30, 1979 G.R. No. L-32974
Doctrine
Voluntary Deposit Right of Retention: The object of right of retention is to guarantee the reimbursement of
the expenses, such as those for the preservation of the property, or for the enhancement of its utility or
productivity. It is a means or device by which a creditor is able to obtain the payment of a debt. It is analogous
to that of a pledge and the depository, which under Article 1994 of the same Code, may retain the thing in
pledge until the full payment of what may be due him by reason of the deposit.

Summary Petitioner and private respondents were in dispute over a parcel of land which was the subject of the latters
sales applications that were approved by the Director of Land. Ortiz, the one in possession of the property and
who introduced improvements to the same, sued the private respondents because he claimed preferential right.
The trial court ruled that he could participate in the public bidding over one half of the property and in the
event that he lost, the private respondents would pay him for the improvements he made, giving him the right
to retain the property until hes paid. It turned out that he was collecting the toll in the part of the property
wherein he made no improvements. Complying with the court order, private respondents deposited the said
amount with the trial court and as a result, he was ousted by the sheriff from the property. Before the Supreme
Court, on the issue of his right to retain all the fruits of the property pending the payment for the
improvements he made, it ruled against him. It was his duty under the law, after deducting the necessary
expenses for his administration, to apply such amount collected to the payment of the interest, and the balance
to the payment of the obligation. Thus, the tolls belong to the private respondents as owners of the land.
Facts - The property was the subject of the homestead application in the name of Martin Dolorico II and upon
his death in 1931, petitioner began occupying and cultivating the lot. It turned out, however, that
Martin left behind his rights over the property to his uncle, who then assigned his rights to private
respondents.
- Due to the assignment of rights, private respondents had the homestead application cancelled and then
filed sales applications with the Director of Lands who gave due course to these.
- Ortiz contested this but after failing to get a favourable decision from the Secretary of Agriculture and
Natural Resources, he filed a civil case to assail the same decision before the trial court. He claimed
preferential right over the sale of the property.
- The trial court awarded one half of the lot to private respondent Comintan and gave due course to
Zamoras sales application over the other half without prejudice to Ortizs right to participate in the
public bidding over the same. In the event that he lost, private respondents were ordered to pay him
P13, 632 for the improvements he introduced in the property with the right of retention.
- Ortiz appealed this decision before the CA and pending its resolution, (or 2 years thereafter), private
respondents petitioned for the appointment of a receiver to collect tolls on a portion of the property
used as a diversion road which was granted. Ortiz wanted to have the order for the appointment of a
receiver annulled, but his petition was denied.
- Private respondents moved for the issuance of a writ of execution before the trial court and for the
delivery to them of the possession of the property after they have issued a bond to answer for the
amounts due and payable to petitioner. They alleged that Ortiz collected the tolls from March of 1967
to December 31, 1968 and from September 1969 to March 31, 1970 which were worth P25,000/
- This was granted by the trial court, conditioned that after an accounting of the tolls collected by the
plaintiff should there be found out any balance due and payable to him after reckoning said obligation
of P13,632.00 the bond shall be held answerable. The trial court took note of the fact that Ortizs filed
an MR, but it was denied by the court wherein it was held that the tolls belong to Comintan as the
owner of the property where the diversion road is located.
- He filed a petition for certiorari and prohibition with preliminary injunction before the Supreme
Court, which granted the relief prayed for. Private respondents filed an MR, informing the Court that
they have already deposited the sum of P14, 040 (interest included) with the court. Due to this, his
 representative was removed from the property.
- Hence, this petition before the Court.
Ratio/Issue 1. Whether or not petitioner is still entitled to retain for his own exclusive benefit all the fruits of
s the property, such as the tolls, so long as the amount due him remains unpaid (NO)
Petitioner: I can appropriate for my exclusive benefit all the fruits which I may derive from the property,
without any obligation to apply any portion thereof to the payment of the interest and the principal of the debt.
COURT: a) A possessor in good faith is entitled to the fruits received before the possession is legally
interrupted. Possession in good faith ceases or is legally interrupted from the moment defects in the title are
made known to the possessor, by extraneous evidence or by the filing of an action in court by the true owner
for the recovery of the property.
b) Even after his good faith ceases, the possessor in fact can still retain the property, pursuant to Article 546 of
the New Civil Code, until he has been fully reimbursed for all the necessary and useful expenses made by him
on the property.
c) It permits the actual possessor to remain in possession while he has not been reimbursed by the person who
defeated him in the possession for those necessary expenses and useful improvements made by him on the
thing possessed. The principal characteristic of the right of retention is its accessory character. It is accessory
to a principal obligation.
d) According to Manresa, the right of retention is analogous to that of a pledge, if the property retained is a
movable, and to that of antichresis, if the property held is immovable.
Similar provisions of the civil law which employ the right of retention as a means or device by which
a creditor is able to obtain the payment of a debt. In all of these cases, the right of retention is used as
a means of extinguishing the obligation:
o Article 1731: Any person who has performed work upon a movable has a right to retain it by
way of pledge until he is paid.
o Article 1914: The agent may retain in pledge the things which are the object of the agency
until the principal effects reimbursement of the funds advanced
e) Petitioner cannot appropriate for his own exclusive benefit the tolls which he collected from the property
retained by him. The disputed tolls, after deducting petitioner's expenses for administration, belong to Quirino
Comintan, owner of the land through which the toll road passed, further considering that the same was on
portions of the property on which petitioner had not introduced any improvement.
f) Earnest efforts have been made by private respondents to have the judgment executed in the most
practicable manner. They deposited in court the amount of the judgment in the sum of P13,632.00 in cash,
subject only to the accounting of the tolls.
g) It appears that the dispositive portion of the decision was lacking in specificity, as it merely provided that
Comintan and Zamora are 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 each liable for the entire obligation, the presumption
is that their obligation is joint.

HELD Order of respondent Court is modified to conform to the foregoing judgment. The Writ of Preliminary
Injunction is hereby dissolved

Prepared by: Eunice V Guadalope [Credit Transactions| Prof. Vasquez]