FRANCISCO DEPRA VS.

AGUSTIN DUMLAO
Fact: The properties of Francisco Depra and Agustin Dumlao were adjoining each
other. In 1972, Dumlao built his house however, he unwittingly built the kitchen portion
of his house on Depras land. Depra then sued Dumlao for unlawful detainer. During
pre-trial, the parties agreed that Dumlao was a builder in good faith.
Eventually, the trial court ruled that both parties were in good faith but then a forced
lease was ordered whereby Dumlao retains the kitchen but he shall pay a rental to
Depra at P5.00 per month. But Depra refused to receive the rental payments from
Dumlao, instead, Depra filed an action for quieting of title against Dumlao. In his
defense, Dumlao raised the defense of res judicata considering that the nature and
purpose of the initial unlawful detainer case and that of the subsequent quieting of title
case is ejectment.
ISSUES:
1. Whether or not the order of forced lease decreed in the unlawful detainer case is
valid.
2. Whether or not the subsequent case of res judicata is barred by prescription due to
the prior case of unlawful detainer.
HELD:
1. No. The judgment of forced lease is improper. A forced lease, just like co-ownership
is not favored. It should be considered that the parties themselves stipulated that
Dumlao, the builder, was in good faith and it was later found that Depra, the owner, was
also in good faith. Hence, what applies is the provisions of Article 448 of the Civil Code,
which provides in sum that:
a. Builder in good faith entitled to retain the possession of the land on which he built
in good faith until he is paid the value of the building he built in good faith;
b. Owner in good faith has the option to either (i) pay for the building OR (ii) sell his
land to the builder in good faith but builder cannot be forced to buy said land if the same
is considerably more than the value of the building.

Forced rent only comes in if the owner exercises his right to sell the land but the builder
rejects it by reason of the price thereof being considerably more than the value of the
building in such case, the parties shall agree to the terms of the lease, if they cant
agree then they may bring the issue to court.
2. No. The action for quieting of title is not barred by reason of res judicata. The cause
of action in the unlawful detainer case involves possession while the cause of action in
the quieting of title case involves ownership. Furthermore, the Rules of Court explicitly
provides that judgment in a detainer case shall not bar an action between the same
parties respecting title to the land.

SARMIENTO VS. AGANA

Facts:
ERNESTO was still courting his wife, the latter's mother had told him the couple
could build a RESIDENTIAL HOUSE whom Ernesto did construct a RESIDENTIAL
HOUSE on the LAND at a cost of P8,000.00 to P10,000.00 who probably assumed that
the wife's mother was the owner of the LAND and that, it would be transferred to the
spouses. Subsequently turned out that the LAND had been titled in the name of Mr. &
Mrs. Jose C. Santo, Jr. who, sold the same to petitioner SARMIENTO. SARMIENTO
filed an Ejectment suit against them. In the evidentiary hearings before the Municipal
Court, SARMIENTO submitted the deed of sale of the LAND in her favor, which showed
the price to be P15,000.00. On the other hand, ERNESTO testified that the then cost of
the RESIDENTIAL HOUSE would be from P30,000.00 to P40,000.00.Sarmiento refuse
to pay and give option to buy the property.
Issue: 1.Whether or not Ernesto was in good faith.
2.Whether or not Sarmiento could exercise both refusal to pay the spouses and
give option to purchase.
Held:
1.Yes. We agree that ERNESTO and wife were builders in good faith in view of
the peculiar circumstances under which they had constructed the RESIDENTIAL
HOUSE. As far as they knew, the LAND was owned by ERNESTO's mother-in-law who,
having stated they could build on the property, could reasonably be expected to later on
give them the LAND.
In regards to builders in good faith, Article 448 of the Code provides:

ART. 448. The owner of the land on which anything has been built, sown
or planted in good faith,shall have the rightto appropriate as his own the
works, sowing or planting, after payment of the indemnity provided for in
articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent.However, the
builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.
2.No. The owner of the building erected in good faith on a land owned by
another, is entitled to retain the possession of the land until he is paid the value of his
building, under article 453 (now Article 546). The owner, of the land. upon, the other
hand, has the option, under article 361 (now Article 448), either to pay for the building or
to sell his land to the owner of the building. But he cannot, as respondents here did,
refuse both to pay for the building and to sell the land and compel the owner of the
building to remove it from the land where it is erected. He is entitled to such remotion
only when, after having chosen to sell his land, the other party fails to pay for the same.
We hold, therefore, that the order of Judge Natividad compelling
defendants-petitioners to remove their buildings from the land belonging to
plaintiffs-respondents only because the latter chose neither to pay for such
buildings nor to sell the land, is null and void, for it amends substantially
the judgment sought to be executed and is, furthermore, offensive to
articles 361 (now Article 448) and 453 (now Article 546) of the Civil Code.
(Ignacio vs. Hilario, 76 Phil. 605, 608 [1946]).
Disposition: WHEREFORE, the Petition for Certiorari is hereby ordered dismissed,
without pronouncement as to costs.

IGNAO v. INTERMEDIATE APPELLATE COURT

Facts:Petitioner Florencio Ignao and his uncles Private Respondents Juan Ignao and
Isidro Ignao were co-owners of a parcel of land with an area of 534 sq.m. Petitioner filed
for an action for partition and in February 1975, the court ruled allotting 133.5 sq.m. or
2/8 of the land to private respondents Juan and Isidro, and giving the remaining portion

of 266.5 sq.m. (6/8) to petitioner Florencio. However, no actual partition was ever
effected.
In 1978, petitioner filed a complaint for recovery of possession of real property
against respondents alleging that the are occupied by the 2 houses built by respondents
exceeded the 133.5 sq.m. previously allotted to them. After an ocular inspection and
survey, it was disclosed that the house of Juan occupied 42 sq.m. while that of Isidro
occupied 59 sq.m. of Florencios land or a total of 101 sq.m. The court ruled that
pursuant to Art. 448 of the Civil Code, the owner of the land (Florencio) should have the
choice to either appropriate that part of the house standing on his land after payment of
indemnity to respondents for the improvements (houses), or oblige the builders in good
faith to pay the price of the encroached land. However, the court observed that it would
be useless and unsuitable for Florencio to appropriate since this would render the
houses of Juan and Isidro worthless it effected a workable solution (based on Grana v.
CA) ordering Florencio to sell to Juan and Isidro those portions of the land occupied by
them for P40.00 per sq.m. On appeal, the IAC (now CA) affirmed the decision of the
lower court.
Hence, this petition for review filed by Florencio.
Issues:
1. The CA erred in considering respondents as builders in good faith thus
applying Art. 448 of the Civil Code although the land is still owned by the parties
in co-ownership hence the applicable provision is Art. 486 but it was not applied.
2. That granting that Art 448 is applicable, the Court wrongly applied the
workable solution in Grana v. CA, which was just an opinion in said case, and not the
judgment rendered therein.
3. That granting respondents could buy the portion of the land occupied by them,
the priced fixed by the court is unrealistic and pre-war price.
The Courts Ruling: MODIFIED.
The records reveal that the land originally belonged to Baltazar Ignao who
married twice. In the first marriage, he had 4 children: Justo (father of petitioner
Florencio), Leon, and respondents Juan and Isidro. In the second marriage, he also had
4 children but the latter waived their rights over the controverted land in favor of Justo.
Thus Justo owned 4/8 (waived by other 4 children) plus his 1/8 share making 5/8. He
then acquired Leons share of 1/8 for P500 which he later sold to Florencio for the same
amount. Justo died and Florencio inherited the 5/8 share of Justo plus the share he
bought making it 6/8. Juan and Isidro have 1/8 share each. Before the February 1975
decision in the partition case was promulgated, Florencio sold 134 sq.m. of his share to
Victa in January 1975.
1. Prior to the partition, all the co-owners hold the property in common dominion but at
the same time, each is an owner of a share which is abstract and undetermined until
partition is effected. As co-owners, the parties may have unequal shares in the

common property, quantitatively speaking. But in a qualitative sense, each co-owner

has the same right as any one of the other co-owners. Art. 448 is applicable to land
co-owned as in this case when the co-ownership was terminated by a partition and it
appears that the house of an erstwhile co-owner has encroached upon a portion
pertaining to another co-owner which was however made in good faith.
2. The lower courts erred in adopting the workable solution in Grana v. CA because it
deprived Florencio, the landowner, of the right to choose between appropriating the
land or obliging the builder to buy the land.
3. The question on the price is premature since Florencio has yet to exercise his option
as owner of the land.

EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,

vs. HONORABLE COURT OF APPEALS
Facts:
In this petition for review on certiorari, petitioners assail the decision 1of the Court of
Appeals dated April 8, 1994 which affirmed the decision of the lower court ordering
petitioners to peacefully vacate and surrender the possession of the disputed properties
to the private respondents.
On April 1, 1950, Victoria Tinagan purchased from Mauro Tinagan2 parcels of land. One
parcel of land contains an area of 5,704 square meters, more or less; while the other
contains 10,860 square meters. Thereafter, Victoria and her son Agustin, took
possession of said parcels of land.
Sometime in 1960, petitioners occupied portions thereof whereat they built a copra
dryer and put up a store wherein they engaged in the business of buying and selling
copra.
On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by herein
private respondents.
On December 24, 1976, petitioner Editha assisted by her husband filed a complaint for
partition and damages, claiming to be an acknowledged natural child of deceased
Agustin Tinagan and demanding the delivery of her shares in the properties left by the
deceased.This case was dismissed by the trial court on the ground that recognition of
natural children may be brought only during the lifetime of the presumed parent and

petitioner Editha did not fall in any of the exceptions enumerated in Article 285 of the
Civil Code.
On March 29, 1988, private respondents filed a complaint for recovery of possession
against Edithaand her husband Porferio, praying, among others, that they be declared
absolute owners of the said parcels of land, and that petitioners be ordered to vacate
the same, to remove their copra dryer and store, to pay actual damages (in the form of
rentals), moral and punitive damages, litigation expenses and attorney's fees.
In their answer, petitioners contend that they own the improvements in the disputed
properties which are still public land; that they are qualified to be beneficiaries of the
comprehensive agrarian reform program and that they are rightful possessors by
occupation of the said properties for more than twenty years.
After trial, the lower court rendered judgment in favor of the private respondents. CA
affirmed. Hence, this petition.
Issue: W/N the lands in question are public lands and W/N the petitioners are rightful
possessors by occupation for more than 20 year.
Held: No
Ratio:
Petitioners aver that respondent court erred in declaring private respondents the owners
of the disputed properties. They contend that ownership of a public land cannot be
declared by the courts but by the Executive Department; and that the respondent court
erred in not considering that private respondents' predecessor-in-interest, Victoria
Tinagan, during her lifetime, ceded her right to the disputed properties in favor of
petitioners.
Moreover, petitioners maintain that the respondent court erred in holding that they were
in bad faith in possessing the disputed properties and in ruling that the improvements
thereon are transferable. They claim that the copra dryer and the store are permanent
structures, the walls thereof being made of hollow-blocks and the floors made of
cement.
Private respondents counter that the question of whether or not the disputed properties
are public land has been resolved by overwhelming evidence showing ownership and
possession by the Tinagans and their predecessors-in-interest prior to 1949. They
further aver that they merely tolerated petitioners' possession of the disputed properties
for a period which was less than that required for extraordinary prescription.

The petition must fail.

The private respondents adduced overwhelming evidence to prove their ownership and
possession of the two (2) parcels of land. Private respondents' tax declarations and
receipts of payment of real estate taxes, as well as other related documents, prove their
ownership of the disputed properties. Moreover, the realty taxes on the two lots have
always been paid by the private respondents. There can be no doubt, therefore, that the
two parcels of land are owned by the private respondents.
The record further discloses that Victoria and her son, Agustin, took possession of the
said properties in 1950, introduced improvements thereon, and for more than 40 years,
have been in open, continuous, exclusive and notorious occupation thereof in the
concept of owners.
Petitioners' own evidence recognized the ownership of the land in favor of Victoria
Tinagan. In their tax declarations,petitioners stated that the house and copra dryer are
located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging that the
disputed portions belong to Victoria/Agustin Tinagan in their tax declarations, petitioners'
claim as owners thereof must fail.
Petitioners contend that while the 2 parcels of land are owned by private respondents,
the portions wherein the copra dryers and store stand were ceded to them by Victoria S.
Tinagan in exchange for an alleged indebtedness of Agustin in the sum of P7,602.04.
This claim of the petitioners was brushed aside by the respondent court as merely an
afterthought, thus
Appellant testified that the areas on which their store and dryer were
located were exchanged for the amount of P7,602.04 owed to them by
Agustin in 1967; that he did not bother to execute a document reflecting
such agreement "because they were our parents and we had used the
land for quite sometime already they had also sold their copra to us for a
long time." Yet, as earlier discussed, the tax declarations in appellants'
answer show that even after 1967, they expressly declared that the
parcels of land on which their store and dryer were constructed, belonged
to Victoria and Agustin. If appellants really believed that they were in
possession of the said particular areas in the concept of owners, they
could have easily declared it in said tax declarations.
Concededly, petitioners have been on the disputed portions since 1961. However, their
stay thereon was merely by tolerance on the part of the private respondents and their

predecessor-in-interest. The evidence shows that the petitioners were permitted by

Victoria to build a copra dryer on the land when they got married. Subsequently,
petitioner EdithaAlviola, claiming to be the illegitimate daughter of Agustin, filed a
petition for partition demanding her share in the estate of the deceased Agustin.
However, the petition was dismissed since it was brought only after the death of Agustin
Tinagan. Considering that the petitioners' occupation of the properties in dispute was
merely tolerated by private respondents, their posture that they have acquired the
property by "occupation" for 20 years does not have any factual or legal foundation.
As correctly ruled by the respondent court, there was bad faith on the part of the
petitioners when they constructed the copra dryer and store on the disputed portions
since they were fully aware that the parcels of land belonged to Victoria Tinagan. And,
there was likewise bad faith on the part of the private respondents, having knowledge of
the arrangement between petitioners and Victoria Tinagan relative to the construction of
the copra dryer and store. Thus, for purposes of indemnity, Article 448 of the New Civil
Code should be applied. However, the copra dryer and the store, as determined by the
trial court and respondent court, are transferable in nature. Thus, it would not fall within
the coverage of Article 448. To fall within the provision of this Article, the construction
must be of permanent character, attached to the soil with an idea of perpetuity; but if it is
of a transitory character or is transferable, there is no accession, and the builder must
remove the construction. The proper remedy of the landowner is an action to eject the
builder from the land.
The private respondents' action for recovery of possession was the suitable solution to
eject petitioners from the premises.

Kilario v. CA
G.R. No. 134329. January 19, 2000
Respondent Silverio Pada filed an ejectment case against sps. Kilario. The latter
occupies a portion of the intestate estate of Jacinto Pada, Grandfather of Silverio. The
Kilarios have been living therein since 1960 by sheer tolerance. When Jacinto Pada
dies, his heirs entered into extrajudicial partition of his estate in 1951. As a result
thereof, lot 5581 was allocated to Ananias and Marciano who became co-owners of said
lot.

Ananias died and his daughter succeeded in his right as co-owner. Eventually,
Juanita sold her right in the co-ownership to Engr. Paderes. Mariaon the other hand,
heir of Marciano, sold her share to her cousin respondent Silverio Pada. The latter
demanded sps. Kilario to vacate but the sps. refused.On June 1995, a complaint for
ejectment was filed against sps. Kilario. On July1995 a deed of donation in their favor
was executed by heirs of Amador Pada.
ISSUE: Whether or not the partition was valid
The extrajudicial partition of the estate of Jacinto Pada among his heirs made in
1951 is valid, albeit executed in an unregistered private document. No law requires
partition among heirs to be in writing and be registered in order to be valid. The object
of registration is to serve as constructive notice to others. It follows then that
theintrinsic validity of partition not executed with the prescribed formalities is not
undermined when no creditors are involved. Without creditors to take into consideration,
it is competent for the heirs of an estate to enter into an agreement for distribution
thereof in a manner and upon a plan different from those provided by the rules from
which, in the first place, nothing can be inferred that a writing or otherformality is
essential for the partition to be valid. The partition of inherited property need not be
embodied in a public document so as to be effective as regards the heirs that
participated therein. The extrajudicial partition which the heirs of Jacinto Pada executed
voluntarily and spontaneously in 1951 has produced a legal status. When they
discussed and agreed on the division of the estate of Jacinto Pada, it is presumed that
they did so in furtherance of their mutual interests. As such, their division is conclusive,
unless and until it is shown that there were debts existing against the estate which had
not been paid. No showing, however, has been made of any unpaid charges against the
estate of Jacinto Pada. Thus, there is no reason why the heirs should not be bound by
their voluntary acts.

MUNICIPALITY OF OAS V. ROA

7 PHIL. 20
FACTS:
The Municipality brought the action for the recovery of a tract of land in the
pueblo of Oas, claiming that it was a part of the public square of said town, while Roa
alleged that he was the owner of the property. The defendant admitted in writing that he
knew that the land is owned by the Municipality and that Jose Castillo, whom he bought

the property did not own the land. When Roa constructed a substantial building on the
property in question after he acquired the property from Castillo, the Municipality did
not oppose the construction.
ISSUE:
Whether or not the municipality owns the land.
HELD:
Yes. The defendant was not a purchaser in good faith. The plaintiff, having
permitted the erection by the defendant of a building on the land without objection,
acted in bad faith. The rights of the parties must, therefore, be determined as if they
both had acted in good faith. To the case are applicable those provisions of the Civil
Code which relate to the construction by one person of a building upon land belonging
to another. Article 364 (now Art.453) of the Civil Code is as follows: "When there has
been bad faith, not only on the part of the person who built, sowed, or planted on
another's land, but also on the part of the owner of the latter, the rights of both shall be
the same as if they had acted in good faith. The Supreme declared that the Municipality
is the owner of the land and that it has the option of buying the building thereon, which
is the property of the defendant, or of selling to him the land on which it stands.

METROPOLITAN
WATERWORKS
&
SEWERAGE
SYSTEM, petitioner, vs. COURT OF APPEALS & PNB, respondents.

FACTS: MWSS is a GOCC as the successor-in- interest of the defunct NWSA. PNB is
the depository bank of MWSS and its predecessor-in-interest NWSA (Account No. 6).
The authorized signatories were MWSS Treasurer, auditor, and its acting GM with
respective specimen signatures on file with PNB. By special arrangement with PNB,
MWSS used personalized checks in drawing from this account, printed for MWSS by its
printer, F. Mesina Enterprises.

During March, April and May 1969, 23 checks were prepared, processed, issued and
released by NWSA, all of which were paid and cleared by PNB and debited by PNB
against NWSA and another set of checks bearing the same numbers were also paid
and cleared by PNB. The checks were deposited by payees Raul Dizon, Arturo Sison
and Antonio Mendoza in their respective current accounts with PCIB and PBC. Thru
Central Bank Clearing, these checks were presented for payment by PBC and PCIB to
the PNB and paid. At the time of their presentation to PNB these checks bear standard
indorsement which reads 'all prior indorsement and/or lack of endorsement guaranteed.'

Investigation by NBI showed that payees were all fictitious. NWSA requested immediate
restoration to its account the total amount of checks claimed by NWSA to be forged
and/or spurious checks. "In view of the refusal of PNB to credit back, MWSS filed the
instant complaint.

PNB contended that the checks in question were regular on its face in all respects,
including the genuineness of the signatures of authorized NWSA signing officers and
there was nothing on its face that could have aroused any suspicion as to its
genuineness and due execution and; that NWSA was guilty of negligence which was the
proximate cause of the loss. PNB also filed a third party complaint against the
negotiating banks PBC and PCIB on the ground that they failed to ascertain the Identity
of the payees and their title to the checks which were deposited in the respective new
accounts of the payees with them. CFI rendered judgment in favor of MWSS. The Court
of Appeals reversed it. On THIRD PARTY COMPLAINT, Court rendered judgment in
favor of third party.

ISSUES:
I. IN NOT HOLDING THAT AS THE SIGNATURES ON THE CHECKS WERE FORGED,
THE DRAWEE BANK WAS LIABLE FOR THE LOSS UNDER SECTION 23 OF THE
NEGOTIABLE INSTRUMENTS LAW.
II. IN FAILING TO CONSIDER THE PROXIMATE NEGLIGENCE OF PNB IN
ACCEPTING THE SPURIOUS CHECKS DESPITE THE OBVIOUS IRREGULARITY OF
TWO SETS OF CHECKS BEARING IDENTICAL NUMBER BEING ENCASHED
WITHIN DAYS OF EACH OTHER.
III. IN NOT HOLDING THAT THE SIGNATURES OF THE DRAWEE MWSS BEING
CLEARLY FORGED, AND THE CHECKS SPURIOUS, SAME ARE INOPERATIVE AS
AGAINST THE ALLEGED DRAWEE.

The appellate court applied Section 24 of the NIL. The petitioner submits that the above
provision does not apply to the facts of the instant case because the questioned checks
were not those of the MWSS and neither were they drawn by its authorized signatories.
The petitioner states that granting that Section 24 of the NIL is applicable, the same
creates only a prima facie presumption which was overcome by the following

documents, to wit: (1) NBI Report; (2) the NBI Chemistry Report; (4) the Memorandum
of Mr. Juan Dino, 3rd Assistant Auditor of the respondent drawee bank; (5) the
admission of the respondent bank's counsel in open court that NBI found the signature
on checks in question to be forgeries; and (6) the admission of the respondent bank's
witness that the checks in question were not printed by his printing press. The petitioner
contends that since the signatures of the checks were forgeries, the respondent drawee
bank must bear the loss under the rulings of this Court.
A bank is bound to know the signatures of its customers; and if it pays a forged
check it must be considered as making the payment out of its obligation funds,
and cannot ordinarily charge the amount so paid to the account of the depositor
whose name was forged. xxx xxx xxx

After reviewing the documents cited by the petitioner, there is no express and
categorical finding that questioned checks were indeed signed by persons other than
the authorized MWSS signatories. On the contrary, the findings of the NBI show that the
MWSS fraud was an "inside job" and that the petitioner's delay in the reconciliation of
bank statements and the laxity and loose records control in the printing of its
personalized checks facilitated the fraud. Likewise, the questioned documents of NBI
dont declare or prove that the signatures appearing on the questioned checks are
forgeries. The report merely mentions the alleged differences in the type face,
checkwriting, and printing characteristics appearing in the standard or submitted models
and the questioned typewritings. The NBI Chemistry Report merely describes inks and
pens used in writing alleged forged signatures. It is clear that these NBI Reports relied
upon by petitioner are inadequate to sustain allegations of forgery. These reports did not
touch on the inherent qualities of the signatures which are indispensable in the
determination of the existence of forgery. There must be conclusive findings that there is
a variance in the inherent characteristics of the signatures and that they were written by
2/more different persons. Forgery cannot be presumed. It must be established by clear,
positive, and convincing evidence. This was not done in the present case.

Considering the absence of sufficient security in the printing of the checks and close
similarities between the genuine signatures and the alleged forgeries, the 23 checks in
question could have been presented to the petitioner's signatories without their knowing
that they were bogus checks. Indeed, the cashier of the petitioner whose signatures
were allegedly forged was unable to tell the difference between the allegedly forged

signature and his own genuine signature. MWSS officials admitted that these checks
could easily be passed on as genuine.

Moreover, the petitioner is barred from setting up the defense of forgery under Section
23 because it was guilty of negligence not only before the questioned checks were
negotiated but even after the same had already been negotiated. The records show that
at the time the 23 checks were prepared, negotiated, and encashed, the petitioner was
using its own personalized checks, instead of the official PNB Commercial blank
checks. In the exercise of this special privilege, however, the petitioner failed to provide
the needed security measures. That there was gross negligence in the printing of its
personalized checks is shown by (1) The petitioner failed to give its printer specific
instructions relative to the safekeeping and disposition of excess forms, check
vouchers, and safety papers; failed to retrieve from its printer all spoiled check forms;
failed to provide any control regarding the paper used in the printing of said checks;
failed to furnish the respondent drawee bank with samples of typewriting, cheek writing,
and print used by its printer in the printing of its checks and of the inks and pens used in
signing the same; and failed to send a representative to the printing office during the
printing of said checks.

The NBI Report is even more explicit. Thus We observed some laxity and loose
control in the printing of NAWASA cheeks. We gathered from MESINA ENTERPRISES,
the printing firm that undertook the printing of the check vouchers of NAWASA that
NAWASA had no representative at the printing press during the process of the printing
and no particular security measure instructions adopted to safeguard the interest of the
government in connection with printing of this accountable form.

Another factor which facilitated the fraudulent encashment of the 23 checks in question
was the failure of the petitioner to reconcile the bank statements with its own records. It
is accepted banking procedure for the depository bank to furnish its depositors bank
statements and debt and credit memos through the mail. The records show that the
petitioner requested the respondent drawee bank to discontinue the practice of mailing
the bank statements, but to deliver it to Mr. Emiliano Zaporteza who was unreasonably
delayed in taking prompt deliveries of the said bank statements and credit and debit
memos and failed to reconcile the bank statements with the petitioner's records. If Mr.
Zaporteza had not been remiss in his duty the fraudulent encashments of the first

checks should have been discovered, and further frauds prevented. This negligence
was, therefore, the proximate cause of the failure to discover the fraud. Thus,
When a person opens a checking account with a bank, he is given blank checks
which he may fill out and use whenever he wishes. Each time he issues a check,
he should also fill out the check stub to which the check is usually attached. This
stub, if properly kept, will contain the number of the check, the date of its issue,
the name of the payee and the amount thereof. The drawer would therefore have
a complete record of the checks he issues. It is the custom of banks to send to its
depositors a monthly statement of the status of their accounts, together with all
the cancelled checks which have been cashed by their respective holders. If the
depositor has filled out his check stubs properly, a comparison between them
and the cancelled checks will reveal any forged check not taken from his
checkbook. It is the duty of a depositor to carefully examine the bank's statement,
his cancelled checks, his check stubs and other pertinent records within a
reasonable time, and to report any errors without unreasonable delay. If his
negligence should cause the bank to honor a forged check or prevent it from
recovering the amount it may have already paid on such check, he cannot later
complain should the bank refuse to recredit his account with the amount of such
check. (First Nat. Bank of Richmond v. Richmond Electric)

The records show that petitioner failed to provide appropriate security measures over its
own records thereby laying confidential records open to unauthorized persons. The
petitioner's own Fact Finding Committee underscored this laxity of records control. It
observed that the "office of Mr. Ongtengco (Cashier) is quite open to any person known
to him or his staff members and that the check writer is merely on top of his table." NBI
concluded that the fraudulent encashment was an "inside job". Thus-We have all the
reasons to believe that this fraudulent act was an inside job or one pulled with inside
connivance at NAWASA. As pointed earlier in this report, the serial numbers of these
checks in question conform with the numbers in current use of NAWASA, aside from the
fact that these fraudulent checks were found to be of the same kind and design as that
of NAWASA's own checks. While knowledge as to such facts may be obtained through
the possession of a NAWASA check of current issue, an outsider without information
from the inside cannot possibly pinpoint which of NAWASA's various accounts has
sufficient balance to cover all these fraudulent checks. None of these checks, it should
be noted, was dishonored for insufficiency of funds. . .Even if the checks in question are
considered forgeries, considering the petitioner's gross negligence, it is barred from
setting up the defense of forgery under Section 23 of the Negotiable Instruments Law.

Petitioner claims that it was the negligence of the PNB that was the proximate cause of
the loss relying on PNB v. CA - by not returning the check to PCIB, by thereby indicating
that the PNB had found nothing wrong with the check and would honor the same, and
by actually paying its amount to the PCIB, the PNB induced the latter, not only to
believe that the check was genuine and good in every respect, but, also, to pay its
amount to Lim. In other words, PNB was the primary or proximate cause of the loss,
and, hence, may not recover from PCIB. The argument has no merit. The records show
that the respondent drawee bank, had taken the necessary measures in the detection of
forged checks and the prevention of their fraudulent encashment. In fact, long before
the encashment of checks in question, the respondent Bank had issued constant
reminders to all Current Account Bookkeepers informing them of the activities of forgery
syndicates.

We cannot fault the respondent drawee Bank for not having detected the fraudulent
encashment of the checks because the printing of the petitioner's personalized checks
was not done under the supervision and control of the Bank. There is no evidence on
record indicating that because of this private printing the petitioner furnished the
respondent Bank with samples of checks, pens, and inks or took other precautionary
measures with the PNB to safeguard its interests. Under the circumstances, therefore,
the petitioner was in a better position to detect and prevent the fraudulent encashment
of its checks. WHEREFORE, the petition for review on certiorari is hereby DISMISSED
for lack of merit. The decision of the respondent Court of Appeals dated October 29,
1982 is AFFIRMED. SO ORDERED.

ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-appellants,

vs.

COURT OF APPEALS, LEONOR P. LADRIDO, LOURDES LADRIDO IGNACIO,

EUGENIO P. LADRIDO and L P. LADRIDO, defendants-appellees.
MEDIALDEA, J.:

Facts:
The spouses Ricardo Y. Ladrido and Leonor P. Ladrido were the owners of Lot No. 7511
containing an area of 154,267 square meters situated in barangay Cawayan, Pototan,
Iloilo.Spouses Rosendo H. Te and Ana Te were also the registered owners of a parcel of
land described in their title as Lot No. 7340. On September 6, 1973, Rosendo H. Te,
sold this lot to Angelica F. Viajar and Celso F. Viajar for P5,000. A Torrens title was later
issued in the names of Angelica F. Viajar and Celso F. Viajar.Later, Angelica F. Viajar
had Lot No. 7340 relocated and found out that the property was in the possession of
Ricardo Y. Ladrido. Consequently, she demanded its return but Ladridorefused.
On February 15, 1974, Angelica F. Viajar and Celso F. Viajar instituted a civil
action for recovery of possession and damages against Ricardo Y. Ladrido.
The facts admitted by the parties during the pre-trial show that the piece of real
property which used to be Lot No. 7340 of the Cadastral Survey of Pototan was located
in barangay GuibuanoganPototan, Iloilo; that it consisted of 20,089 square meters; that
at the time of the cadastral survey in 1926, Lot No. 7511 and Lot No. 7340 were
separated by the Suague River; that the area of 11,819 square meters of what was Lot
No. 7340 has been in the possession of the defendants; that the area of 14,036 square
meters, which was formerly the river bed of the Suague River per cadastral survey of
1926, has also been in the possession of the defendants; and that the plaintiffs have
never been in actual physical possession of Lot No. 7340.

Issue:Is registered land protected from ownership by accretion in accordance with Art.
457?
Doctrine and Held: No, even registered land is covered by Art 457. The trial court
found that the change in the course of the Suague River was gradual and this finding
was affirmed by the respondent Court of Appeals. As a result, petitioners contend,
Article 457 of the New Civil Code must be construed to limit the accretion mentioned
therein as accretion of unregistered land to the riparian owner, and should not extend to
registered land. Thus, the lot in question having remained the registered land of the
petitioners, then the private respondents cannot acquire title there in derogation to that
of the petitioners, by accretion, for that will defeat the indefeasibility of a Torrens Title.

The rule that registration under the Torrens System does not protect the riparian
owner against the diminution of the area of his registered land through gradual changes
in the course of an adjoining stream is well settled.It clearly appearing that the land in
question has become part of defendant's estate as a result of accretion, it follows that
said land now belongs to him. The fact that the accretion to his land used to pertain to
plaintiffs estate, which is covered by a Torrens Certificate of Title, cannot preclude him
(defendant) from being the owner thereof. Registration does not protect the riparian
owner against the diminution of the area of his land through gradual changes in the
course of the adjoining stream. Accretions which the banks of rivers may gradually
receive from the effect of the current become the property of the owners of the banks
(Art. 366 of the Old Civil Code; Art. 457 of the New). Such accretions are natural
incidents to land bordering on running streams and the provisions of the Civil Code in
that respect are not affected by the Registration Act.