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G.R. No.

160453
12, 2012

November

REPUBLIC OF THE
PHILIPPINES, Petitioner,
vs.
ARCADIO IVAN A. SANTOS III, and
ARCADIO C. SANTOS, JR., Respondents.
DECISION
BERSAMIN, J.:
By law, accretion - the gradual and
imperceptible deposit made through the
effects of the current of the water- belongs
to the owner of the land adjacent to the
banks of rivers where it forms. The drying
up of the river is not accretion. Hence, the
dried-up river bed belongs to the State as
property of public dominion, not to the
riparian owner, unless a law vests the
ownership in some other person.
Antecedents
Alleging continuous and adverse
possession of more than ten years,
respondent Arcadio Ivan A. Santos III
(Arcadio Ivan) applied on March 7, 1997
for the registration of Lot 4998-B (the
property) in the Regional Trial Court (RTC)
in Parafiaque City. The property, which had
an area of 1,045 square meters, more or
less, was located in Barangay San
Dionisio, Paraaque City, and was
bounded in the Northeast by Lot 4079
belonging to respondent Arcadio C.
Santos, Jr. (Arcadio, Jr.), in the Southeast

by the Paraaque River, in the Southwest


by an abandoned road, and in the
Northwest by Lot 4998-A also owned by
Arcadio Ivan.1
On May 21, 1998, Arcadio Ivan amended
his application for land registration to
include Arcadio, Jr. as his co-applicant
because of the latters co-ownership of the
property. He alleged that the property had
been formed through accretion and had
been in their joint open, notorious, public,
continuous and adverse possession for
more than 30 years.2
The City of Paraaque (the City) opposed
the application for land registration,
stating that it needed the property for its
flood control program; that the property
was within the legal easement of 20
meters from the river bank; and that
assuming that the property was not
covered by the legal easement, title to the
property could not be registered in favor
of the applicants for the reason that the
property was an orchard that had dried up
and had not resulted from accretion.3
Ruling of the RTC
On May 10, 2000,4 the RTC granted the
application for land registration, disposing:
WHEREFORE, the Court hereby declares
the applicants, ARCADIO IVAN A. SANTOS,
III and ARCADIO C. SANTOS, JR., both
Filipinos and of legal age, as the TRUE and
ABSOLUTE OWNERS of the land being
applied for which is situated in the
Barangay of San Dionisio, City of

Paraaque with an area of one thousand


forty five (1045) square meters more or
less and covered by Subdivision Plan Csd00-000343, being a portion of Lot 4998,
Cad. 299, Case 4, Paraaque Cadastre,
LRC Rec. No. and orders the registration of
Lot 4998-B in their names with the
following technical description, to wit:
xxxx
Once this Decision became (sic) final and
executory, let the corresponding Order for
the Issuance of the Decree be issued.
SO ORDERED.
The Republic, through the Office of the
Solicitor General (OSG), appealed.
Ruling of the CA
In its appeal, the Republic ascribed the
following errors to the RTC,5 to wit:
I
THE TRIAL COURT ERRED IN RULING THAT
THE PROPERTY SOUGHT TO BE
REGISTERED IS AN ACCRETION TO THE
ADJOINING PROPERTY OWNED BY
APPELLEES DESPITE THE ADMISSION OF
APPELLEE ARCADIO C. SANTOS JR. THAT
THE SAID PROPERTY WAS NOT FORMED AS
A RESULT OF THE GRADUAL FILLING UP OF
SOIL THROUGH THE CURRENT OF THE
RIVER.
II

THE TRIAL COURT ERRED IN GRANTING


THE APPLICATION FOR LAND
REGISTRATION DESPITE APPELLEES
FAILURE TO FORMALLY OFFER IN
EVIDENCE AN OFFICIAL CERTIFICATION
THAT THE SUBJECT PARCEL OF LAND IS
ALIENABLE AND DISPOSABLE.

ASSUMING THAT THE LAND SOUGHT TO


BE REGISTERED WAS "PREVIOUSLY A PART
OF THE PARAAQUE RIVER WHICH
BECAME AN ORCHARD AFTER IT DRIED
UP," THE REGISTRATION OF SAID
PROPERTY IN FAVOR OF RESPONDENTS
CANNOT BE ALTERNATIVELY JUSTIFIED
UNDER ARTICLE 461 OF THE CIVIL CODE.

III
III
THE TRIAL COURT ERRED IN RULING THAT
APPELLEES HAD SUFFICIENTLY
ESTABLISHED THEIR CONTINUOUS, OPEN,
PUBLIC AND ADVERSE OCCUPATION OF
THE SUBJECT PROPERTY FOR A PERIOD OF
MORE THAN THIRTY (30) YEARS.
On May 27, 2003, the CA affirmed the
RTC.6
The Republic filed a motion for
reconsideration, but the CA denied the
motion on October 20, 2003.7
Issues
Hence, this appeal, in which the Republic
urges that:8

THE COURT OF APPEALS COMMITTED


REVERSIBLE ERROR IN NOT RULING THAT
THE FAILURE OF RESPONDENTS TO
FORMALLY OFFER IN EVIDENCE AN
OFFICIAL CERTIFICATION THAT THE
SUBJECT PROPERTY IS ALIENABLE AND
DISPOSABLE IS FATAL TO THEIR
APPLICATION FOR LAND REGISTRATION.
IV
THE FINDING OF THE COURT OF APPEALS
THAT RESPONDENTS HAVE
CONTINUOUSLY, OPENLY, PUBLICLY AND
ADVERSELY OCCUPIED THE SUBJECT
PROPERTY FOR MORE THAN THIRTY (30)
YEARS IS NOT SUPPORTED BY WELL-NIGH
INCONTROVERTIBLE EVIDENCE.

I
RESPONDENTS CLAIM THAT THE SUBJECT
PROPERTY IS AN ACCRETION TO THEIR
ADJOINING LAND THAT WOULD ENTITLE
THEM TO REGISTER IT UNDER ARTICLE
457 OF THE NEW CIVIL CODE IS
CONTRADICTED BY THEIR OWN EVIDENCE.

To be resolved are whether or not Article


457 of the Civil Code was applicable
herein; and whether or not respondents
could claim the property by virtue of
acquisitive prescription pursuant to
Section 14(1) of Presidential Decree No.
1529 (Property Registration Decree).

II

Ruling

The appeal is meritorious.


I.
The CA grossly erred in applying Article
457 of the Civil Code to respondents
benefit
Article 457 of the Civil Code provides that
"(t)o the owners of lands adjoining the
banks of rivers belong the accretion which
they gradually receive from the effects of
the currents of the waters."
In ruling for respondents, the RTC
pronounced as follows:
On the basis of the evidence presented by
the applicants, the Court finds that
Arcadio Ivan A. Santos III and Arcadio C.
Santos, Jr., are the owners of the land
subject of this application which was
previously a part of the Paraaque River
which became an orchard after it dried up
and further considering that Lot 4 which
adjoins the same property is owned by
applicant, Arcadio C. Santos, Jr., after it
was obtained by him through inheritance
from his mother, Concepcion Cruz, now
deceased. Conformably with Art. 457 of
the New Civil Code, it is provided that:
"Article 457. To the owners of the lands
adjoining the bank of rivers belong the
accretion which they gradually receive
from the effects of the current of the
waters."9

The CA upheld the RTCs pronouncement,


holding:
It could not be denied that "to the owners
of the lands adjoining the banks of rivers
belong the accretion which they gradually
receive from the effects of the current of
the waters" (Article 457 New Civil Code) as
in this case, Arcadio Ivan Santos III and
Arcadio Santos, Jr., are the owners of the
land which was previously part of the
Paraaque River which became an orchard
after it dried up and considering that Lot 4
which adjoins the same property is owned
by the applicant which was obtained by
the latter from his mother (Decision, p. 3;
p. 38 Rollo).10

Accretion is the process whereby the soil


is deposited along the banks of
rivers.12 The deposit of soil, to be
considered accretion, must be: (a) gradual
and imperceptible; (b) made through the
effects of the current of the water; and (c)
taking place on land adjacent to the banks
of rivers.13
Accordingly, respondents should establish
the concurrence of the elements of
accretion to warrant the grant of their
application for land registration.

The Republics submission is correct.

However, respondents did not discharge


their burden of proof. They did not show
that the gradual and imperceptible
deposition of soil through the effects of
the current of the river had formed Lot
4998-B. Instead, their evidence revealed
that the property was the dried-up river
bed of the Paraaque River, leading both
the RTC and the CA to themselves hold
that Lot 4998-B was "the land which was
previously part of the Paraaque River xxx
(and) became an orchard after it dried
up."

Respondents as the applicants for land


registration carried the burden of proof to
establish the merits of their application by
a preponderance of evidence, by which is
meant such evidence that is of greater
weight, or more convincing than that
offered in opposition to it.11 They would be
held entitled to claim the property as their
own and apply for its registration under
the Torrens system only if they established
that, indeed, the property was an
accretion to their land.

Still, respondents argue that considering


that Lot 4998-B did not yet exist when the
original title of Lot 4 was issued in their
mothers name in 1920, and that Lot
4998-B came about only thereafter as the
land formed between Lot 4 and the
Paraaque River, the unavoidable
conclusion should then be that soil and
sediments had meanwhile been deposited
near Lot 4 by the current of the Paraaque
River, resulting in the formation of Lot
4998-B.

The Republic submits, however, that the


application by both lower courts of Article
457 of the Civil Code was erroneous in the
face of the fact that respondents
evidence did not establish accretion, but
instead the drying up of the Paraaque
River.

The argument is legally and factually


groundless. For one, respondents thereby
ignore that the effects of the current of the
river are not the only cause of the
formation of land along a river bank. There
are several other causes, including the
drying up of the river bed. The drying up
of the river bed was, in fact, the uniform
conclusion of both lower courts herein. In
other words, respondents did not establish
at all that the increment of land had
formed from the gradual and
imperceptible deposit of soil by the effects
of the current. Also, it seems to be highly
improbable that the large volume of soil
that ultimately comprised the dry land
with an area of 1,045 square meters had
been deposited in a gradual and
imperceptible manner by the current of
the river in the span of about 20 to 30
years the span of time intervening
between 1920, when Lot 4 was registered
in the name of their deceased parent (at
which time Lot 4998-B was not yet in
existence) and the early 1950s (which
respondents witness Rufino Allanigue
alleged to be the time when he knew them
to have occupied Lot 4988-B). The only
plausible explanation for the substantial
increment was that Lot 4988-B was the
dried-up bed of the Paraaque River.
Confirming this explanation was Arcadio,
Jr.s own testimony to the effect that the
property was previously a part of the
Paraaque River that had dried up and
become an orchard.
We observe in this connection that even
Arcadio, Jr.s own Transfer Certificate of
Title No. 44687 confirmed the uniform

conclusion of the RTC and the CA that Lot


4998-B had been formed by the drying up
of the Paraaque River. Transfer Certificate
of Title No. 44687 recited that Lot 4 of the
consolidated subdivision plan Pcs-13002563, the lot therein described, was
bounded "on the SW along line 5-1 by
Dried River Bed."14
That boundary line of "SW along line 5-1"
corresponded with the location of Lot
4998-B, which was described as "bounded
by Lot 4079 Cad. 299, (Lot 1, Psu-10676),
in the name of respondent Arcadio Santos,
Jr. (Now Lot 4, Psd-13-002563) in the
Northeast."15
The RTC and the CA grossly erred in
treating the dried-up river bed as an
accretion that became respondents
property pursuant to Article 457 of the
Civil Code. That land was definitely not an
accretion. The process of drying up of a
river to form dry land involved the
recession of the water level from the river
banks, and the dried-up land did not
equate to accretion, which was the
gradual and imperceptible deposition of
soil on the river banks through the effects
of the current. In accretion, the water level
did not recede and was more or less
maintained. Hence, respondents as the
riparian owners had no legal right to claim
ownership of Lot 4998-B. Considering that
the clear and categorical language of
Article 457 of the Civil Code has confined
the provision only to accretion, we should
apply the provision as its clear and
categorical language tells us to. Axiomatic
it is, indeed, that where the language of

the law is clear and categorical, there is no


room for interpretation; there is only room
for application.16 The first and
fundamental duty of courts is then to
apply the law.17
The State exclusively owned Lot 4998-B
and may not be divested of its right of
ownership. Article 502 of the Civil Code
expressly declares that rivers and their
natural beds are public dominion of the
State.18 It follows that the river beds that
dry up, like Lot 4998-B, continue to belong
to the
State as its property of public dominion,
unless there is an express law that
provides that the dried-up river beds
should belong to some other person.19
II
Acquisitive prescription was
not applicable in favor of respondents
The RTC favored respondents application
for land registration covering Lot 4998-B
also because they had taken possession of
the property continuously, openly, publicly
and adversely for more than 30 years
based on their predecessor-in-interest
being the adjoining owner of the parcel of
land along the river bank. It rendered the
following ratiocination, viz:20
In this regard, the Court found that from
the time the applicants became the
owners thereof, they took possession of

the same property continuously, openly,


publicly and adversely for more than thirty
(30) years because their predecessors-ininterest are the adjoining owners of the
subject parcel of land along the river bank.
Furthermore, the fact that applicants paid
its realty taxes, had it surveyed per
subdivision plan Csd-00-000343 (Exh. "L")
which was duly approved by the Land
Management Services and the fact that
Engr. Chito B. Cainglet, OICChief, Surveys
Division Land Registration Authority, made
a Report that the subject property is not a
portion of the Paraaque River and that it
does not fall nor overlap with Lot 5000,
thus, the Court opts to grant the
application.
Finally, in the light of the evidence
adduced by the applicants in this case and
in view of the foregoing reports of the
Department of Agrarian Reforms, Land
Registration Authority and the Department
of Environment and Natural Resources, the
Court finds and so holds that the
applicants have satisfied all the
requirements of law which are essential to
a government grant and is, therefore,
entitled to the issuance of a certificate of
title in their favor. So also, oppositor failed
to prove that the applicants are not
entitled thereto, not having presented any
witness.
In fine, the application is GRANTED.
As already mentioned, the CA affirmed the
RTC.
Both lower courts erred.

The relevant legal provision is Section


14(1) of Presidential Decree No. 1529
(Property Registration Decree), which
pertinently states:
Section 14. Who may apply. The
following persons may file in the proper
[Regional Trial Court] an application for
registration of title to land, whether
personally or through their duly authorized
representatives:
(1) Those who by themselves or through
their predecessors-in-interest have been in
open, continuous, exclusive and notorious
possession and occupation of alienable
and disposable lands of the public domain
under a bona fide claim of ownership since
June 12, 1945, or earlier.
xxxx
Under Section 14(1), then, applicants for
confirmation of imperfect title must prove
the following, namely: (a) that the land
forms part of the disposable and alienable
agricultural lands of the public domain;
and (b) that they have been in open,
continuous, exclusive, and notorious
possession and occupation of the land
under a bona fide claim of ownership
either since time immemorial or since June
12, 1945.21
The Republic assails the findings by the
lower courts that respondents "took
possession of the same property
continuously, openly, publicly and
adversely for more than thirty (30)
years."22

Although it is well settled that the findings


of fact of the trial court, especially when
affirmed by the CA, are accorded the
highest degree of respect, and generally
will not be disturbed on appeal, with such
findings being binding and conclusive on
the Court,23 the Court has consistently
recognized exceptions to this rule,
including the following, to wit: (a) when
the findings are grounded entirely on
speculation, surmises, or conjectures; (b)
when the inference made is manifestly
mistaken, absurd, or impossible; (c) when
there is grave abuse of discretion; (d)
when the judgment is based on a
misapprehension of facts; (e) when the
findings of fact are conflicting; (f) when in
making its findings the CA went beyond
the issues of the case, or its findings are
contrary to the admissions of both the
appellant and the appellee; (g) when the
findings are contrary to those of the trial
court; (h) when the findings are
conclusions without citation of specific
evidence on which they are based; (i)
when the facts set forth in the petition as
well as in the petitioners main and reply
briefs are not disputed by respondent; and
(j) when the findings of fact are premised
on the supposed absence of evidence and
contradicted by the evidence on record.24
Here, the findings of the RTC were
obviously grounded on speculation,
surmises, or conjectures; and that the
inference made by the RTC and the CA
was manifestly mistaken, absurd, or
impossible. Hence, the Court should now
review the findings.

In finding that respondents had been in


continuous, open, public and adverse
possession of the land for more than 30
years, the RTC declared:
In this regard, the Court found that from
the time the applicant became the owners
thereof, they took possession of the same
property continuously, openly, publicly
and adversely for more than thirty years
because their predecessor in interest are
the adjoining owners of the subject parcel
of land along the river banks. Furthermore,
the fact that the applicant paid its realty
taxes, had it surveyed per subdivision plan
Csd-00-000343 (Exh. "L") which was duly
approved by the Land Management
Services and the fact that Engr. Chito B.
Cainglet, OIC Chief, Surveys Division
Land Registration Authority, made a
Report that the subject property is not a
portion of the Paraaque River and that it
does not fall nor overlap with Lot 5000,
thus, the Court opts to grant the
application.
The RTC apparently reckoned respondents
period of supposed possession to be
"more than thirty years" from the fact that
"their predecessors in interest are the
adjoining owners of the subject parcel of
land." Yet, its decision nowhere indicated
what acts respondents had performed
showing their possession of the property
"continuously, openly, publicly and
adversely" in that length of time. The
decision mentioned only that they had
paid realty taxes and had caused the
survey of the property to be made. That,
to us, was not enough to justify the

foregoing findings, because, firstly, the


payment of realty taxes did not
conclusively prove the payors ownership
of the land the taxes were paid for,25 the
tax declarations and payments being mere
indicia of a claim of ownership;26 and,
secondly, the causing of surveys of the
property involved was not itself an of
continuous, open, public and adverse
possession.
The principle that the riparian owner
whose land receives the gradual deposits
of soil does not need to make an express
act of possession, and that no acts of
possession are necessary in that instance
because it is the law itself that pronounces
the alluvium to belong to the riparian
owner from the time that the deposit
created by the current of the water
becomes manifest27 has no applicability
herein. This is simply because Lot 4998-B
was not formed through accretion. Hence,
the ownership of the land adjacent to the
river bank by respondents predecessor-ininterest did not translate to possession of
Lot 4998-B that would ripen to acquisitive
prescription in relation to Lot 4998-B.
On the other hand, the claim of thirty
years of continuous, open, public and
adverse possession of Lot 4998-B was not
even validated or preponderantly
established. The admission of respondents
themselves that they declared the
property for taxation purposes only in
1997 and paid realty taxes only from
199928 signified that their alleged
possession would at most be for only nine

years as of the filing of their application


for land registration on March 7, 1997.

dried-up portion of the natural bed of a


creek. There the Court held:

Yet, even conceding, for the sake of


argument, that respondents possessed Lot
4998-B for more than thirty years in the
character they claimed, they did not
thereby acquire the land by prescription or
by other means without any competent
proof that the land was already declared
as alienable and disposable by the
Government. Absent that declaration, the
land still belonged to the State as part of
its public dominion.

As for petitioners 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.

Article 419 of the Civil Code distinguishes


property as being either of public
dominion or of private ownership. Article
420 of the Civil Code lists the properties
considered as part of public dominion,
namely: (a) those intended for public use,
such as roads, canals, rivers, torrents,
ports and bridges constructed by the
State, banks, shores, roadsteads, and
others of similar character; and (b) those
which belong to the State, without being
for public use, and are intended for some
public service or for the development of
the national wealth. As earlier mentioned,
Article 502 of the Civil Code declares that
rivers and their natural beds are of public
dominion.
Whether the dried-up river bed may be
susceptible to acquisitive prescription or
not was a question that the Court resolved
in favor of the State in Celestial v.
Cachopero,29 a case involving the
registration of land found to be part of a

Since property of public dominion is


outside the commerce 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.
A creek, like the Salunayan Creek, is a
recess or arm extending from a river and
participating in the ebb and flow of the
sea. As such, under Articles 420(1) and
502(1) of the Civil Code, the Salunayan
Creek, including its natural bed, is
property of the public domain which is not
susceptible to private appropriation and
acquisitive prescription. And, absent any

declaration by the government, that a


portion of the creek has dried-up does not,
by itself, alter its inalienable character.
xxxx
Had the disputed portion of the Salunayan
Creek dried up after the present Civil Code
took effect, the subject land would clearly
not belong to petitioner or her
predecessor-in-interest since under the
aforementioned provision of Article 461,
"river beds which are abandoned through
the natural change in the course of the
waters ipso facto belong to the owners of
the land occupied by the new course," and
the owners of the adjoining lots have the
right to acquire them only after paying
their value.
And both Article 370 of the Old Code and
Article 461 of the present Civil Code are
applicable only when "river beds are
abandoned through the natural change in
the course of the waters." It is
uncontroverted, however, that, as found
by both the Bureau of Lands and the DENR
Regional Executive Director, the subject
land became dry as a result of the
construction an irrigation canal by the
National Irrigation Administration. Thus, in
Ronquillo v. Court of Appeals, this Court
held:
The law is clear and unambiguous. It
leaves no room for interpretation. Article
370 applies only if there is a natural
change in the course of the waters. The
rules on alluvion do not apply to manmade or artificial accretions nor to

accretions to lands that adjoin canals or


esteros or artificial drainage systems.
Considering our earlier finding that the
dried-up portion of Estero Calubcub was
actually caused by the active intervention
of man, it follows that Article 370 does not
apply to the case at bar and, hence, the
Del Rosarios cannot be entitled thereto
supposedly as riparian owners.
The dried-up portion of Estero Calubcub
should thus be considered as forming part
of the land of the public domain which
cannot be subject to acquisition by private
ownership. xxx (Emphasis supplied)
Furthermore, both provisions pertain to
situations where there has been a change
in the course of a river, not where the
river simply dries up. In the instant
Petition, it is not even alleged that the
Salunayan Creek changed its course. In
such a situation, commentators are of the
opinion that the dry river bed remains
property of public dominion. (Bold
emphases supplied)
Indeed, under the Regalian doctrine, all
lands not otherwise appearing to be
clearly within private ownership are
presumed to belong to the State.30 No
public land can be acquired by private
persons without any grant, express or
implied, from the Government. It is
indispensable, therefore, that there is a
showing of a title from the
State.31Occupation of public land in the
concept of owner, no matter how long,
cannot ripen into ownership and be
registered as a title.32

Subject to the exceptions defined in Article


461 of the Civil Code (which declares river
beds that are abandoned through the
natural change in the course of the waters
as ipso facto belonging to the owners of
the land occupied by the new course, and
which gives to the owners of the adjoining
lots the right to acquire only the
abandoned river beds not ipso facto
belonging to the owners of the land
affected by the natural change of course
of the waters only after paying their
value), all river beds remain property of
public dominion and cannot be acquired
by acquisitive prescription unless
previously declared by the Government to
be alienable and disposable. Considering
that Lot 4998-B was not shown to be
already declared to be alienable and
disposable, respondents could not be
deemed to have acquired the property
through prescription.
Nonetheless, respondents insist that the
property was already classified as
alienable and disposable by the
Government. They cite as proof of the
classification as alienable and disposable
the following notation found on the survey
plan, to wit:33
NOTE
ALL CORNERS NOT OTHERWISE
DESCRIBED ARE OLD BL CYL. CONC. MONS
15 X 60CM
All corners marked PS are cyl. conc. mons
15 x 60 cm

Surveyed in accordance with Survey


Authority NO. 007604-48 of the Regional
Executive Director issued by the CENROFFICER dated Dec. 2, 1996.
This survey is inside L.C. Map No. 2623,
Proj. No. 25 classified as
alienable/disposable by the Bureau of
Forest Devt. on Jan. 3, 1968.
Lot 4998-A = Lot 5883} Cad 299
Lot 4998-B = Lot 5884} Paranaque
Cadastre.
Was the notation on the survey plan to the
effect that Lot 4998-B was "inside" the
map "classified as alienable/disposable by
the Bureau of Forest Development on 03
Jan. 1968" sufficient proof of the
propertys nature as alienable and
disposable public land?
To prove that the land subject of an
application for registration is alienable, an
applicant must conclusively establish the
existence of a positive act of the
Government, such as a presidential
proclamation, executive order,
administrative action, investigation
reports of the Bureau of Lands
investigator, or a legislative act or statute.
Until then, the rules on confirmation of
imperfect title do not apply.
As to the proofs that are admissible to
establish the alienability and disposability
of public land, we said in Secretary of the

Department of Environment and Natural


Resources v. Yap34 that:
The burden of proof in overcoming the
presumption of State ownership of the
lands of the public domain is on the
person applying for registration (or
claiming ownership), who must prove that
the land subject of the application is
alienable or disposable. To overcome this
presumption, incontrovertible evidence
must be established that the land subject
of the application (or claim) is alienable or
disposable.There must still be a positive
act declaring land of the public domain as
alienable and disposable. To prove that the
land subject of an application for
registration is alienable, the applicant
must establish the existence of a positive
act of the government such as a
presidential proclamation or an executive
order; an administrative action;
investigation reports of Bureau of Lands
investigators; and a legislative act or a
statute. The applicant may also secure a
certification from the government that the
land claimed to have been possessed for
the required number of years is alienable
and disposable.
In the case at bar, no such proclamation,
executive order, administrative action,
report, statute, or certification was
presented to the Court. The records are
bereft of evidence showing that, prior to
2006, the portions of Boracay occupied by
private claimants were subject of a
government proclamation that the land is
alienable and disposable. Absent such
well-nigh incontrovertible evidence, the

Court cannot accept the submission that


lands occupied by private claimants were
already open to disposition before 2006.
Matters of land classification or
reclassification cannot be assumed. They
call for proof." (Emphasis supplied)
In Menguito v. Republic,35 which we
reiterated in Republic v. Sarmiento, 36 we
specifically resolved the issue of whether
the notation on the survey plan was
sufficient evidence to establish the
alienability and disposability of public
land, to wit:
To prove that the land in question formed
part of the alienable and disposable lands
of the public domain, petitioners relied on
the printed words which read: "This survey
plan is inside Alienable and Disposable
Land Area, Project No. 27-B as per L.C.
Map No. 2623, certified by the Bureau of
Forestry on January 3, 1968," appearing on
Exhibit "E" (Survey Plan No. Swo-13000227).
This proof is not sufficient. Section 2,
Article XII of the 1987 Constitution,
provides: "All lands of the public domain,
waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential
energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural
resources are owned by the State. x x x."
For the original registration of title, the
applicant (petitioners in this case) must
overcome the presumption that the land
sought to be registered forms part of the
public domain. Unless public land is shown

to have been reclassified or alienated to a


private person by the State, it remains
part of the inalienable public domain.
Indeed, "occupation thereof in the concept
of owner, no matter how long, cannot
ripen into ownership and be registered as
a title." To overcome such presumption,
incontrovertible evidence must be shown
by the applicant. Absent such evidence,
the land sought to be registered remains
inalienable.
In the present case, petitioners cite a
surveyor-geodetic engineers notation in
Exhibit "E" indicating that the survey was
inside alienable and disposable land. Such
notation does not constitute a positive
government act validly changing the
classification of the land in question.
Verily, a mere surveyor has no authority to
reclassify lands of the public domain. By
relying solely on the said surveyors
assertion, petitioners have not sufficiently
proven that the land in question has been
declared alienable. (Emphasis supplied)
In Republic v. T.A.N. Properties, Inc.,37 we
dealt with the sufficiency of the
certification by the Provincial
Environmental Officer (PENRO) or
Community Environmental Officer
(CENRO) to the effect that a piece of
public land was alienable and disposable
in the following manner, viz:
x x x it is not enough for the PENRO or
CENRO to certify that a land is alienable
and disposable. The applicant for land
registration must prove that the DENR
Secretary had approved the land

classification and released the land of the


public domain as alienable and disposable,
and that the land subject of the
application for registration falls within the
approved area per verification through
survey by the PENRO or CENRO. In
addition, the applicant for land registration
must present a copy of the original
classification approved by the DENR
Secretary and certified as a true copy by
the legal custodian of the official records.
These facts must be established to prove
that the land is alienable and disposable.
Respondent failed to do so because the
certifications presented by respondent do
not, by themselves, prove that the land is
alienable and disposable.
Only Torres, respondents Operations
Manager, identified the certifications
submitted by respondent.1wphi1 The
government officials who issued the
certifications were not presented before
the trial court to testify on their contents.
The trial court should not have accepted
the contents of the certifications as proof
of the facts stated therein. Even if the
certifications are presumed duly issued
and admissible in evidence, they have no
probative value in establishing that the
land is alienable and disposable.
xxxx
The CENRO and Regional Technical
Director, FMS-DENR, certifications do not
prove that Lot 10705-B falls within the
alienable and disposable land as
proclaimed by the DENR Secretary. Such
government certifications do not, by their

mere issuance, prove the facts stated


therein. Such government certifications
may fall under the class of documents
contemplated in the second sentence of
Section 23 of Rule 132. As such, the
certifications are prima facie evidence of
their due execution and date of issuance
but they do not constitute prima facie
evidence of the facts stated therein.
(Emphasis supplied)
These rulings of the Court indicate that
the notation on the survey plan of Lot
4998-B, Cad-00-000343 to the effect that
the "survey is inside a map classified as
alienable/disposable by the Bureau of
Forest Devt" did not prove that Lot 4998-B
was already classified as alienable and
disposable. Accordingly, respondents
could not validly assert acquisitive
prescription of Lot 4988-B.
WHEREFORE, the Court REVERSES and
SETS ASIDE the decision of the Court of
Appeals promulgated on May 27, 2003;
DISMISSES the application for registration
of Arcadio C. Santos, Jr. and Arcadio Ivan
S. Santos III respecting Lot 4998-B with a
total area of 1,045 square meters, more or
less, situated in Barangay San Dionisio,
Paraaque City, Metro Manila; and
DECLARES Lot 4998-B as exclusively
belonging to the State for being part of
the dried--up bed of the Parat1aque River.
Respondents shall pay the costs of suit.
SO ORDERED.

G.R. No. 176791


November
14, 2012
COMMUNITIES CAGAYAN,
INC., Petitioner,
vs.
SPOUSES ARSENIO (Deceased) and
ANGELES NANOL AND ANYBODY
CLAIMING RIGHTS UNDER
THEM,Respondents.
DECISION

executed by petitioner in favor of


respondent-spouses.11 Accordingly, titles
were transferred in the names of
respondent-spouses under Transfer
Certificates of Title (TCT) Nos. 105202 and
105203, and submitted to Capitol
Development Bank for loan
processing.12 Unfortunately, the bank
collapsed and closed before it could
release the loan.13

2160, against respondent-spouses.21 When


the case was referred for mediation,
respondent Angeles offered to pay
P220,000.00 to settle the case but
petitioner refused to accept the
payment.22 The case was later withdrawn
and consequently dismissed because the
judge found out that the titles were
already registered under the names of
respondent-spouses.23

Thus, on November 30, 1997, respondentspouses entered into another Contract to


Sell14 with petitioner over the same
property for the same price of
P368,000.00.15 This time, respondentspouses availed of petitioners in-house
financing16thus, undertaking to pay the
loan over four years, from 1997 to 2001.17

Unfazed by the unfortunate turn of events,


petitioner, on July 27, 2005, filed before
Branch 18 of the RTC, Cagayan de Oro
City, a Complaint for Cancellation of Title,
Recovery of Possession, Reconveyance
and Damages,24 docketed as Civil Case No.
2005-158, against respondent-spouses
and all persons claiming rights under
them. Petitioner alleged that the transfer
of the titles in the names of respondentspouses was made only in compliance
with the requirements of Capitol
Development Bank and that respondentspouses failed to pay their monthly
amortizations beginning January
2000.25 Thus, petitioner prayed that TCT
Nos. T-105202 and T-105203 be cancelled,
and that respondent Angeles be ordered
to vacate the subject property and to pay
petitioner reasonable monthly rentals from
January 2000 plus damages.26

DEL CASTILLO, J.:


LAWS fill the gap in a contract.
This Petition for Review
on Certiorari1 under Rule 45 of the Rules of
Court assails the December 29. 2006
Decision2 and the February 12, 2007
Order3 of the Regional Trial Court (RTC),
Cagayan De Oro City, Branch 18, in Civil
Case No. 2005-158.
Factual Antecedents
Sometimes in 1994, respondent-spouses
Arsenio and Angeles Nanol entered into a
Contract to Sell4 with petitioner
Communities Cagayan, Inc.,5 whereby the
latter agreed to sell to respondent-spouses
a house and Lots 17 and 196 located at
Block 16, Camella Homes Subdivision,
Cagayan de Oro City, 7 for the price of
P368,000.00.8 Respondent-spouses,
however, did not avail of petitioners
inhouse financing due to its high interest
rates.9 Instead, they obtained a loan from
Capitol Development Bank, a sister
company of petitioner, using the property
as collateral.10 To facilitate the loan, a
simulated sale over the property was

Sometime in 2000, respondent Arsenio


demolished the original house and
constructed a three-story house allegedly
valued at P3.5 million, more or less.18
In July 2001, respondent Arsenio died,
leaving his wife, herein respondent
Angeles, to pay for the monthly
amortizations.19
On September 10, 2003, petitioner sent
respondent-spouses a notarizedNotice of
Delinquency and Cancellation of Contract
to Sell20 due to the latters failure to pay
the monthly amortizations.
In December 2003, petitioner filed before
Branch 3 of the Municipal Trial Court in
Cities of Cagayan de Oro City, an action
for unlawful detainer, docketed as C3-Dec-

In her Answer,27 respondent Angeles


averred that the Deed of Absolute Sale is
valid, and that petitioner is not the proper
party to file the complaint because
petitioner is different from Masterplan
Properties, Inc.28 She also prayed for

10

damages by way of compulsory


counterclaim.29
In its Reply,30 petitioner attached a copy of
its Certificate of Filing of Amended Articles
of Incorporation31 showing that Masterplan
Properties, Inc. and petitioner are one and
the same. As to the compulsory
counterclaim for damages, petitioner
denied the same on the ground of "lack of
knowledge sufficient to form a belief as to
the truth or falsity of such allegation."32
Respondent Angeles then moved for
summary judgment and prayed that
petitioner be ordered to return the owners
duplicate copies of the TCTs.33
Pursuant to Administrative Order No. 592005, the case was referred for
mediation.34 But since the parties failed to
arrive at an amicable settlement, the case
was set for preliminary conference on
February 23, 2006.35
On July 7, 2006, the parties agreed to
submit the case for decision based on the
pleadings and exhibits presented during
the preliminary conference.36
Ruling of the Regional Trial Court
On December 29, 2006, the RTC rendered
judgment declaring the Deed of Absolute
Sale invalid for lack of
consideration.37 Thus, it disposed of the
case in this wise:

WHEREFORE, the Court hereby declares


the Deed of Absolute Sale VOID.
Accordingly, Transfer Certificates of Title
Nos. 105202 and 105203 in the names of
the [respondents], Arsenio (deceased) and
Angeles Nanol, are ordered CANCELLED.
The [respondents] and any person
claiming rights under them are directed to
turn-over the possession of the house and
lot to [petitioner], Communities Cagayan,
Inc., subject to the latters payment of
their total monthly installments and the
value of the new house minus the cost of
the original house.
SO ORDERED.38
Not satisfied, petitioner moved for
reconsideration of the Decision but the
Motion39 was denied in an Order40dated
February 12, 2007.

Petitioner seeks to delete from the


dispositive portion the order requiring
petitioner to reimburse respondentspouses the total monthly installments
they had paid and the value of the new
house minus the cost of the original
house.42 Petitioner claims that there is no
legal basis for the RTC to require petitioner
to reimburse the cost of the new house
because respondent-spouses were in bad
faith when they renovated and improved
the house, which was not yet their
own.43 Petitioner further contends that
instead of ordering mutual restitution by
the parties, the RTC should have applied
Republic Act No. 6552, otherwise known
as the Maceda Law,44 and that instead of
awarding respondent-spouses a refund of
all their monthly amortization payments,
the RTC should have ordered them to pay
petitioner monthly rentals.45

Issue
Respondent Angeles Arguments
Instead of appealing the Decision to the
Court of Appeals (CA), petitioner opted to
file the instant petition directly with this
Court on a pure question of law, to wit:
WHETHER X X X THE ACTION OF THE RTC
BRANCH 18 X X X IN ORDERING THE
RECOVERY OF POSSESSION BY PETITIONER
subject to the latters payment of their
total monthly installments and the value
of the new house minus the cost of the
original house IS CONTRARY TO LAW AND
JURISPRUDENCE X X X.41
Petitioners Arguments

Instead of answering the legal issue raised


by petitioner, respondent Angeles asks for
a review of the Decision of the RTC by
interposing additional issues.46 She
maintains that the Deed of Absolute Sale
is valid.47 Thus, the RTC erred in cancelling
TCT Nos. 105202 and 105203.
Our Ruling
The petition is partly meritorious.
At the outset, we must make it clear that
the issues raised by respondent Angeles

11

may not be entertained. For failing to file


an appeal, she is bound by the Decision of
the RTC. Well entrenched is the rule that
"a party who does not appeal from a
judgment can no longer seek modification
or reversal of the same. He may oppose
the appeal of the other party only on
grounds consistent with the
judgment."48 For this reason, respondent
Angeles may no longer question the
propriety and correctness of the
annulment of the Deed of Absolute Sale,
the cancellation of TCT Nos. 105202 and
105203, and the order to vacate the
property.
Hence, the only issue that must be
resolved in this case is whether the RTC
erred in ordering petitioner to reimburse
respondent-spouses the "total monthly
installments and the value of the new
house minus the cost of the original
house."49 Otherwise stated, the issues for
our resolution are:
1) Whether petitioner is obliged to
refund to respondent-spouses all
the monthly installments paid; and
2) Whether petitioner is obliged to
reimburse respondent-spouses the
value of the new house minus the
cost of the original house.
Respondent-spouses are entitled to
the
cash surrender value of the
payments
on the property equivalent to 50% of

the
total payments made.
Considering that this case stemmed from
a Contract to Sell executed by the
petitioner and the respondent-spouses, we
agree with petitioner that the Maceda
Law, which governs sales of real estate on
installment, should be applied.
Sections 3, 4, and 5 of the Maceda Law
provide for the rights of a defaulting
buyer, to wit:
Section 3. In all transactions or contracts
involving the sale or financing of real
estate on installment payments, including
residential condominium apartments but
excluding industrial lots, commercial
buildings and sales to tenants under
Republic Act Numbered Thirty-eight
hundred forty-four, as amended by
Republic Act Numbered Sixty-three
hundred eighty-nine, where the buyer has
paid at least two years of installments, the
buyer is entitled to the following rights in
case he defaults in the payment of
succeeding installments:
(a) To pay, without additional interest, the
unpaid installments due within the total
grace period earned by him which is
hereby fixed at the rate of one month
grace period for every one year of
installment payments made: Provided,
That this right shall be exercised by the
buyer only once in every five years of the
life of the contract and its extensions, if
any.

(b) If the contract is canceled, the


seller shall refund to the buyer the
cash surrender value of the payments
on the property equivalent to fifty
percent of the total payments made,
and, after five years of installments, an
additional five per cent every year but not
to exceed ninety per cent of the total
payments made: Provided, That the actual
cancellation of the contract shall take
place after thirty days from receipt by the
buyer of the notice of cancellation or the
demand for rescission of the contract by a
notarial act and upon full payment of the
cash surrender value to the buyer.
Down payments, deposits or options on
the contract shall be included in the
computation of the total number of
installment payments made. (Emphasis
supplied.)
Section 4. In case where less than two
years of installments were paid, the seller
shall give the buyer a grace period of not
less than sixty days from the date the
installment became due.
If the buyer fails to pay the installments
due at the expiration of the grace period,
the seller may cancel the contract after
thirty days from receipt by the buyer of
the notice of cancellation or the demand
for rescission of the contract by a notarial
act.
Section 5. Under Sections 3 and 4, the
buyer shall have the right to sell his rights
or assign the same to another person or to
reinstate the contract by updating the

12

account during the grace period and


before actual cancellation of the contract.
The deed of sale or assignment shall be
done by notarial act.
In this connection, we deem it necessary
to point out that, under the Maceda Law,
the actual cancellation of a contract to sell
takes place after 30 days from receipt by
the buyer of the notarized notice of
cancellation,50 and upon full payment of
the cash surrender value to the buyer.51 In
other words, before a contract to sell can
be validly and effectively cancelled, the
seller has (1) to send a notarized notice of
cancellation to the buyer and (2) to refund
the cash surrender value.52 Until and
unless the seller complies with these twin
mandatory requirements, the contract to
sell between the parties remains valid and
subsisting.53 Thus, the buyer has the right
to continue occupying the property
subject of the contract to sell,54 and may
"still reinstate the contract by updating
the account during the grace period and
before the actual cancellation"55 of the
contract.
In this case, petitioner complied only with
the first condition by sending a notarized
notice of cancellation to the respondentspouses. It failed, however, to refund the
cash surrender value to the respondentspouses. Thus, the Contract to Sell
remains valid and subsisting and
supposedly, respondent-spouses have the
right to continue occupying the subject
property. Unfortunately, we cannot reverse
the Decision of the RTC directing
respondent-spouses to vacate and

turnover possession of the subject


property to petitioner because
respondent-spouses never appealed the
order. The RTC Decision as to respondentspouses is therefore considered final.
In addition, in view of respondent-spouses
failure to appeal, they can no longer
reinstate the contract by updating the
account. Allowing them to do so would be
unfair to the other party and is offensive
to the rules of fair play, justice, and due
process. Thus, based on the factual milieu
of the instant case, the most that we can
do is to order the return of the cash
surrender value. Since respondentspouses paid at least two years of
installment,56 they are entitled to receive
the cash surrender value of the payments
they had made which, under Section 3(b)
of the Maceda Law, is equivalent to 50%
of the total payments made.
Respondent-spouses are entitled to
reimbursement of the improvements
made on the property.
Petitioner posits that Article 448 of the
Civil Code does not apply and that
respondent-spouses are not entitled to
reimbursement of the value of the
improvements made on the property
because they were builders in bad faith. At
the outset, we emphasize that the issue of
whether respondent-spouses are builders
in good faith or bad faith is a factual
question, which is beyond the scope of a
petition filed under Rule 45 of the Rules of
Court.57 In fact, petitioner is deemed to
have waived all factual issues since it

appealed the case directly to this


Court,58 instead of elevating the matter to
the CA. It has likewise not escaped our
attention that after their failed preliminary
conference, the parties agreed to submit
the case for resolution based on the
pleadings and exhibits presented. No trial
was conducted. Thus, it is too late for
petitioner to raise at this stage of the
proceedings the factual issue of whether
respondent-spouses are ilders in bad faith.
Hence, in view of the special
circumstances obtaining in this case, we
are constrained to rely on the presumption
of good faith on the part of the
respondent-spouses which the petitioner
failed to rebut. Thus, respondent-spouses
being presumed builders in good faith, we
now rule on the applicability of Article 448
of the Civil Code.
As a general rule, Article 448 on builders
in good faith does not apply where there is
a contractual relation between the
parties,59 such as in the instant case. We
went over the records of this case and we
note that the parties failed to attach a
copy of the Contract to Sell. As such, we
are constrained to apply Article 448 of the
Civil Code, which provides viz:
ART. 448. The owner of the land on which
anything has been built, sown or planted
in good faith, shall have the right to
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.

13

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.
Article 448 of the Civil Code applies when
the builder believes that he is the owner of
the land or that by some title he has the
right to build thereon,60 or that, at least,
he has a claim of title
thereto.61 Concededly, this is not present
in the instant case. The subject property is
covered by a Contract to Sell hence
ownership still remains with petitioner
being the seller. Nevertheless, there were
already instances where this Court applied
Article 448 even if the builders do not
have a claim of title over the property.
Thus:
This Court has ruled that this provision
covers only cases in which the builders,
sowers or planters believe themselves to
be owners of the land or, at least, to have
a claim of title thereto. It does not apply
when the interest is merely that of a
holder, such as a mere tenant, agent or
usufructuary. From these pronouncements,
good faith is identified by the belief that
the land is owned; or that by some title
one has the right to build, plant, or sow
thereon.

However, in some special cases, this Court


has used Article 448 by recognizing good
faith beyond this limited definition. Thus,
in Del Campo v. Abesia, this provision was
applied to one whose house despite
having been built at the time he was still
co-owner overlapped with the land of
another. This article was also applied to
cases wherein a builder had constructed
improvements with the consent of the
owner. The Court ruled that the law
deemed the builder to be in good faith. In
Sarmiento v. Agana, the builders were
found to be in good faith despite their
reliance on the consent of another, whom
they had mistakenly believed to be the
owner of the land.62
The Court likewise applied Article 448 in
Spouses Macasaet v. Spouses
Macasaet63 notwithstanding the fact that
the builders therein knew they were not
the owners of the land. In said case, the
parents who owned the land allowed their
son and his wife to build their residence
and business thereon. As found by this
Court, their occupation was not by mere
tolerance but "upon the invitation of and
with the complete approval of (their
parents), who desired that their children
would occupy the premises. It arose from
familial love and a desire for family
solidarity x x x."64 Soon after, conflict
between the parties arose. The parents
demanded their son and his wife to vacate
the premises. The Court thus ruled that as
owners of the property, the parents have
the right to possession over it. However,
they must reimburse their son and his wife
for the improvements they had introduced

on the property because they were


considered builders in good faith even if
they knew for a fact that they did not own
the property, thus:
Based on the aforecited special cases,
Article 448 applies to the present factual
milieu. The established facts of this case
show that respondents fully consented to
the improvements introduced by
petitioners. In fact, because the children
occupied the lots upon their invitation, the
parents certainly knew and approved of
the construction of the improvements
introduced thereon. Thus, petitioners may
be deemed to have been in good faith
when they built the structures on those
lots.
The instant case is factually similar to
Javier v. Javier. In that case, this Court
deemed the son to be in good faith for
building the improvement (the house) with
the knowledge and consent of his father,
to whom belonged the land upon which it
was built. Thus, Article 448 was applied.65
In fine, the Court applied Article 448 by
construing good faith beyond its limited
definition. We find no reason not to apply
the Courts ruling in Spouses Macasaet v.
Spouses Macasaet in this case. We thus
hold that Article 448 is also applicable to
the instant case. First, good faith is
presumed on the part of the respondentspouses. Second, petitioner failed to rebut
this presumption. Third, no evidence was
presented to show that petitioner opposed
or objected to the improvements
introduced by the respondent-spouses.

14

Consequently, we can validly presume


that petitioner consented to the
improvements being constructed. This
presumption is bolstered by the fact that
as the subdivision developer, petitioner
must have given the respondent-spouses
permits to commence and undertake the
construction. Under Article 453 of the Civil
Code, "it is understood that there is bad
faith on the part of the landowner
whenever the act was done with his
knowledge and without opposition on his
part."
In view of the foregoing, we find no error
on the part of the RTC in requiring
petitioner to pay respondent-spouses the
value of the new house minus the cost of
the old house based on Article 448 of the
Civil Code, subject to succeeding
discussions.
Petitioner has two options under
Article
448 and pursuant to the ruling in
Tuatis v. Escol.66
In Tuatis, we ruled that the seller (the
owner of the land) has two options under
Article 448: (1) he may appropriate the
improvements for himself after
reimbursing the buyer (the builder in good
faith) the necessary and useful expenses
under Articles 54667 and 54868 of the Civil
Code; or (2) he may sell the land to the
buyer, unless its value is considerably
more than that of the improvements, in
which case, the buyer shall pay
reasonable rent.69 Quoted below are the

pertinent portions of our ruling in that


case:
Taking into consideration the provisions of
the Deed of Sale by Installment and Article
448 of the Civil Code, Visminda has the
following options:
Under the first option, Visminda may
appropriate for herself the building
on the subject property after
indemnifying Tuatis for the necessary
and useful expenses the latter
incurred for said building, as
provided in Article 546 of the Civil
Code.
It is worthy to mention that in Pecson v.
Court of Appeals, the Court
pronounced that the amount to be
refunded to the builder under Article
546 of the Civil Code should be the
current market value of the
improvement, thus:
xxxx
Until Visminda appropriately indemnifies
Tuatis for the building constructed by the
latter, Tuatis may retain possession of the
building and the subject property.
Under the second option, Visminda may
choose not to appropriate the
building and, instead, oblige Tuatis to
pay the present or current fair value
of the land. The P10,000.00 price of the
subject property, as stated in the Deed of
Sale on Installment executed in November

1989, shall no longer apply, since


Visminda will be obliging Tuatis to pay for
the price of the land in the exercise of
Vismindas rights under Article 448 of the
Civil Code, and not under the said Deed.
Tuatis obligation will then be statutory,
and not contractual, arising only when
Visminda has chosen her option under
Article 448 of the Civil Code.
Still under the second option, if the
present or current value of the land,
the subject property herein, turns out
to be considerably more than that of
the building built thereon, Tuatis
cannot be obliged to pay for the
subject property, but she must pay
Visminda reasonable rent for the
same. Visminda and Tuatis must
agree on the terms of the lease;
otherwise, the court will fix the
terms.
Necessarily, the RTC should conduct
additional proceedings before ordering the
execution of the judgment in Civil Case
No. S-618. Initially, the RTC should
determine which of the aforementioned
options Visminda will choose.
Subsequently, the RTC should ascertain:
(a) under the first option, the amount of
indemnification Visminda must pay Tuatis;
or (b) under the second option, the value
of the subject property vis--vis that of the
building, and depending thereon, the price
of, or the reasonable rent for, the subject
property, which Tuatis must pay Visminda.
The Court highlights that the options
under Article 448 are available to

15

Visminda, as the owner of the subject


property. There is no basis for Tuatis
demand that, since the value of the
building she constructed is considerably
higher than the subject property, she may
choose between buying the subject
property from Visminda and selling the
building to Visminda for P502,073.00.
Again, the choice of options is for
Visminda, not Tuatis, to make. And,
depending on Vismindas choice, Tuatis
rights as a builder under Article 448 are
limited to the following: (a) under the first
option, a right to retain the building and
subject property until Visminda pays
proper indemnity; and (b) under the
second option, a right not to be obliged to
pay for the price of the subject property, if
it is considerably higher than the value of
the building, in which case, she can only
be obliged to pay reasonable rent for the
same.
The rule that the choice under Article 448
of the Civil Code belongs to the owner of
the land is in accord with the principle of
accession, i.e., that the accessory follows
the principal and not the other way
around. Even as the option lies with the
landowner, the grant to him, nevertheless,
is preclusive. The landowner cannot refuse
to exercise either option and compel
instead the owner of the building to
remove it from the land.
The raison detre for this provision has
been enunciated thus: Where the builder,
planter or sower has acted in good faith, a
conflict of rights arises between the
owners, and it becomes necessary to

protect the owner of the improvements


without causing injustice to the owner of
the land. In view of the impracticability of
creating a state of forced co-ownership,
the law has provided a just solution by
giving the owner of the land the option to
acquire the improvements after payment
of the proper indemnity, or to oblige the
builder or planter to pay for the land and
the sower the proper rent. He cannot
refuse to exercise either option. It is the
owner of the land who is authorized to
exercise the option, because his right is
older, and because, by the principle of
accession, he is entitled to the ownership
of the accessory thing.
Vismindas Motion for Issuance of Writ of
Execution cannot be deemed as an
expression of her choice to recover
possession of the subject property under
the first option, since the options under
Article 448 of the Civil Code and their
respective consequences were also not
clearly presented to her by the 19 April
1999 Decision of the RTC. She must then
be given the opportunity to make a choice
between the options available to her after
being duly informed herein of her rights
and obligations under both.70 (Emphasis
supplied.)
In conformity with the foregoing
pronouncement, we hold that petitioner,
as landowner, has two options. It may
appropriate the new house by reimbursing
respondent Angeles the current market
value thereof minus the cost of the old
house. Under this option, respondent
Angeles would have "a right of retention

which negates the obligation to pay


rent."71 In the alternative, petitioner may
sell the lots to respondent Angeles at a
price equivalent to the current fair value
thereof. However, if the value of the lots is
considerably more than the value of the
improvement, respondent Angeles cannot
be compelled to purchase the lots. She
can only be obliged to pay petitioner
reasonable rent.
In view of the foregoing disquisition and in
accordance with Depra v. Dumlao72 and
Technogas Philippines Manufacturing
Corporation v. Court of Appeals,73 we find
it necessary to remand this case to the
court of origin for the purpose of
determining matters necessary for the
proper application of Article 448, in
relation to Articles 546 and 548 of the Civil
Code.
WHEREFORE, the petition is
hereby PARTIALLY GRANTED. The
assailed Decision dated December 29,
2006 and the Order dated February 12,
2007 of the Regional Trial Court, Cagayan
de Oro City, Branch 18, in Civil Case No.
2005-158 are
hereby AFFIRMED with MODIFICATION t
hat petitioner Communities Cagayan, Inc.
is hereby ordered to RETURN the cash
surrender value of the payments made by
respondent-spouses on the properties,
which is equivalent to 50% of the total
payments made, in ccordance with
Section 3(b) of Republic Act No. 6552,
otherwise known as the Maceda Law.

16

The case is hereby REMANDED to the


Regional Trial Court, Cagayan de Oro City,
Branch 18, for further proceedings
consistent with the proper application of
Articles 448, 546 and 548 of the Civil
Code, as follows:
1. The trial court shall determine:
a) the present or current fair value of the
lots;
b) the current market value of the new
house;
c) the cost of the old house; and
d) whether the value of the lots is
considerably more than the current
market value of the new house minus the
cost of the old house.
2. After said amounts shall have been
determined by competent evidence, the
trial court shall render judgment as
follows:
a) Petitioner shall be granted a period of
15 days within which to exercise its option
under the law (Article 448, Civil Code),
whether to appropriate the new house by
paying to respondent Angeles the current
market value of the new house minus the
cost of the old house, or to oblige
respondent Angeles to pay the price of the
lots. The amounts to be respectively paid
by the parties, in accordance with the
option thus exercised by written notice to
the other party and to the court, shall be

paid by the obligor within 15 days from


such notice of the option by tendering the
amount to the trial court in favor of the
party entitled to receive it.
b) If petitioner exercises the option to
oblige respondent Angeles to pay the price
of the lots but the latter rejects such
purchase because, as found by the trial
court, the value of the lots is considerably
more than the value of the new house
minus the cost of the old house,
respondent Angeles shall give written
notice of such rejection to petitioner and
to the trial court within 15 days from
notice of petitioners option to sell the
land. In that event, the parties shall be
given a period of 15 days from such notice
of rejection within which to agree upon the
terms of the lease, and give the trial court
formal written notice of the agreement
and its provisos. If no agreement is
reached by the parties, the trial court,
within 15 days from and after the
termination of the said period fixed for
negotiation, shall then fix the period and
terms of the lease, including the monthly
rental, which shall be payable within the
first five days of each calendar month.
Respondent Angeles shall not make any
further constructions or improvements on
the building. Upon expiration of the
period, or upon default by respondent
Angeles in the payment of rentals for two
consecutive months, petitioner shall be
entitled to terminate the forced lease, to
recover its land, and to have the new
house removed by respondent Angeles or
at the latters expense.

c) In any event, respondent Angeles shall


pay petitioner reasonable compensation
for the occupancy of the property for the
period counted from the time the Decision
dated December 29, 2006 became final as
to respondent Angeles or 15 days after
she received a copy of the said Decision
up to the date petitioner serves notice of
its option to appropriate the encroaching
structures, otherwise up to the actual
transfer of ownership to respondent
Angeles or, in case a forced lease has to
be imposed, up to the commencement
date of the forced lease referred to in the
preceding paragraph.1wphi1
d) The periods to be fixed by the trial court
in its decision shall be nonextendible, and
upon failure of the party obliged to tender
to the trial court the amount due to the
obligee, the party entitled to such
payment shall be entitled to an order of
execution for the enforcement of payment
of the amount due and for compliance
with such other acts as may be required
by the prestation due the obligee.
SO ORDERED.

17

G.R. No. 179754


21, 2012

November

JOAQUIN G. CHUNG, JR., PAZ


ROYERAZ-SOLER, and MANSUETO
MACEDA, Petitioners,
vs.
JACK DANIEL MONDRAGON,
(deceased), substituted by his sisters
namely: TEOTIMA M. BOURBON,
EMMA M. MILLAN, EUGENIA M. RAMA
and ROSARIO M. CABALLES;
CLARINDA REGIS-SCHMITZ and MARIA
LINA MALMISA, Respondents.
DECISION

Factual Antecedents
Petitioners Joaquin G. Chung, Jr., Paz
Royeras-Soler, and Mansueto Maceda are
descendants of Rafael Mondragon (Rafael)
by his first wife, Eleuteria Calunia
(Eleuteria), while respondent Jack Daniel
Mondragon5(Jack Daniel) is Rafaels
descendant by his second wife, Andrea
Baldos (Andrea).
Original Certificate of Title (OCT) No.
224476 is registered in the name of "Heirs
of Andrea Baldos represented by Teofila G.
Maceda" and covers 16,177 square meters
of land in Macrohon, Southern Leyte (the
land).

DEL CASTILLO, J.:


In making the indictment that a courts
decision fails in the fundamental mandate
that no decision shall be rendered without
expressing therein clearly and distinctly
the facts and the law on which it is based,
the demurring party should not mistake
brevity for levity.
This Petition for Review on
Certiorari1 assails 1) the November 23,
2006 Decision2 of the Court of Appeals
(CA) in CA-G.R. CV No. 79615, which
affirmed the May 19, 2003 Decision3 of the
Regional Trial Court (RTC), Br. 24, Maasin
City, Southern Leyte in Civil Case No. R3248, which in turn dismissed the herein
petitioners Complaint for quieting of title,
and 2) the September 2, 2007 CA
Resolution4 denying reconsideration
thereof.

Petitioners claim that from 1921 up to


2000, Rafael appeared as owner of the
land in its tax declaration, and that a free
patent was issued in 1987 in the name of
Andreas heirs upon application of Teofila
G. Maceda (Teofila), who is petitioners
sister.
On the other hand, respondents claim that
Andrea is the exclusive owner of the land,
having inherited the same from her father
Blas Baldos. They add that during
Andreas lifetime, she was in lawful,
peaceful and continuous possession
thereof in the concept of owner; that in
1954, Andrea conveyed a portion thereof
to one Crispina Gloria de Cano via a
document written in the vernacular
wherein she categorically stated that she
inherited the land from her father and she
was the true and exclusive owner of the
land; that after Andrea died in 1955, her

son Fortunato Mondragon took over,


paying taxes thereon religiously; and when
Fortunato died, his son Jack Daniel (herein
respondent) came into possession and
enjoyment thereof.
On August 18, 2000, Jack Daniel sold a
1,500-square meter portion of the land to
his co-respondent Clarinda Regis-Schmitz
(Regis-Schmitz).
On the claim that Jack Daniel had no right
to sell a portion of the land and that the
sale to Regis Schmitz created a cloud upon
their title, petitioners filed Civil Case No.
R-3248, with a prayer that Jack Daniel be
declared without right to sell the land or a
portion thereof; that their rights and those
belonging to the legitimate heirs of Rafael
and Eleuteria be declared valid and
binding against the whole world; that the
respondents be restrained from creating a
cloud upon OCT No. 22447; and that Jack
Daniels sale to Regis-Schmitz be declared
null and void.
After respondents filed their Answer,
petitioners moved for judgment on the
pleadings. In an October 16, 2002
Order,7 the trial court denied the motion.
Notably, during proceedings taken on the
motion, petitioners made an admission in
open court that respondent Jack Daniel is
Andreas grandson and heir.8
At the pre-trial conference, it was mutually
agreed by the parties that the sole issue
to be resolved is whether Jack Daniel
possessed the right to dispose a portion of
the land.9

18

Ruling of the Regional Trial Court


After trial, the court a quo rendered its
May 19, 2003 Decision10 dismissing the
case. It held that with the admission that
Jack Daniel is an heir of Andrea, he being
the latters grandson and therefore her
heir, he is thus a co-owner of the land
which forms part of Andreas estate, and
thus possesses the right to dispose of his
undivided share therein. The trial court
held that petitioners remedy was to seek
partition of the land in order to obtain title
to determinate portions thereof.
Ruling of the Court of Appeals
Petitioners appealed the dismissal,
claiming that the trial courts Decision
violated the constitutional requirement
that no decision shall be rendered without
expressing therein clearly and distinctly
the facts and the law on which it is
based.11 They continued to question Jack
Daniels sale to Regis-Schmitz, who they
claim was married to a foreign national
and thus disqualified from purchasing a
portion of the land; the non-registration of
the sale; the alleged false claim on the
deed of sale by Jack Daniel that he is the
exclusive owner of the land; and the lack
of authority of the notary public who
notarized the sale.
The respondents countered that the sole
issue that required resolution was, as
circumscribed by the trial court, the
capacity of Jack Daniel to dispose of a
portion of the land, and nothing more.

The CA sustained the trial court. It held


that petitioners were bound by the
agreement during pre-trial and by the pretrial order to limit the determination of the
case to the sole issue of whether Jack
Daniel possessed the capacity to dispose a
portion of the land. Since they did not
object to the trial courts pre-trial order,
petitioners are bound to abide by the
same. It concluded that the other issues
which were not related to Jack Daniels
capacity to dispose deserved no
consideration, citing the pronouncement
in Philippine Ports Authority v. City of
Iloilo12 that "the determination of issues at
a pre-trial conference bars the
consideration of other questions on
appeal."
The CA further ruled that contrary to
petitioners submission, Civil Case No. R3248 was decided on the merits, as the
trial court squarely addressed the issues
and the evidence; that it having been
discovered through petitioners own
admission in court that Jack Daniel was a
co-heir, and thus co-owner, of the land, all
questions relative to his capacity to
convey a portion thereof have therefore
been resolved in the affirmative.
On the other hand, the CA noted that
while Jack Daniel is admittedly a direct
descendant of Rafael by his second wife
Andrea, petitioners do not appear to be
her heirs and instead are descendants of
Rafael by his first wife Eleuteria which
thus puts their claimed title to the land in
doubt; and that although OCT No. 22447
cites Teofila, petitioners sister, it includes

her in the title merely as the purported


"representative" of Andreas heirs and
does not indicate her as an owner of the
land. Finally, the CA observed that it was
Jack Daniel, and not the petitioners, who
occupied the land. Nevertheless, it
affirmed the trial courts Decision.
Issues
The instant petition now raises the
following issues for resolution:
1. NON-COMPLIANCE WITH RULE VIII, SEC.
14, CONSTITUTION AND RULE 36 TO
DECLARE THE DECISION NULL AND VOID.
2. MISAPPREHENSION OF [SIC] TO THE
TRUE AWARDEE OF OCT NO. 22447
TANTAMOUNT TO LACK OF JURISDICTION
OVER THE CASE.
3. FAILURE TO ACQUIRE JURISDICTION
OVER THE PERSON OF RESPONDENT
CLARINDA REGIS SCHMITZ.
4. FAILURE TO DECLARE THE ORDER
DENYING THE MOTION FOR JUDGMENT ON
THE PLEADINGS AND DECISION AS NULL
AND VOID FOR FAILING TO ESTABLISH THE
CONDITIONS SINE QUA NON TO SUPPORT
THE ORDER AND DECISION OF THE TRIAL
COURT TO DISMISS THE CASE.
5. WHETHER X X X ATTY. PATERNO A.
GONZALEZ WAS A DULY AUTHORIZED
NOTARY PUBLIC; PURPORTED COPY OF
APPOINTMENT BEARS NO COURT SEAL, AS
COURT EVIDENCE.13

19

Petitioners Arguments
In their Petition, the petitioners, speaking
through their counsel and co-petitioner
Chung, persistently argue, as they did in
the CA, that the trial courts Decision
violated the constitutional requirement
that no decision shall be rendered without
expressing therein clearly and distinctly
the facts and the law on which it is based.
They claim that it is not true that Andrea is
the owner of the land; that Jack Daniels
sale to Regis-Schmitz is null and void
because she is disqualified from owning
land in the Philippines; that he had no
right to sell the said portion, and the sale
deprived them of their supposed legitime;
that their admission made in open court to
the effect that Jack Daniel is an heir of
Andrea cannot supplant a declaration of
heirship that may be issued by a proper
testate or intestate court; that the claim
that Andrea is the true and lawful owner of
the land is false; that when their motion
for judgment on the pleadings was denied,
their judicial admission that Jack Daniel
was Andreas grandson and heir was
expunged; and that Jack Daniels deed of
sale with Regis-Schmitz was a falsity for
lack of authority of the notarizing officer.

Daniel to Regis-Schmitz be declared null


and void; and that the Court award them
P50,000.00 moral damages, P10,000.00
exemplary damages, and P30,000.00
attorneys fees.
Respondents Arguments
Respondents point out a defective
verification in the Petition, and add that
petitioners continue to raise irrelevant
issues such as the capacity of RegisSchmitz to acquire a portion of the land
and the commission of the notary public
which the CA properly disregarded. They
point out that the CA is correct in its
observation that petitioners apparently do
not possess the required title to maintain
a suit for quieting of title, they being
strangers to OCT No. 22447 as they
proceed from Eleuteria, Rafaels first wife,
and not his second wife Andrea, who in
fact owns the land and in whose name it is
titled.

petitioners claim that the notary public,


Atty. Paterno Gonzalez, possessed the
authority to notarize documents at the
time. They direct the Courts attention to
the appointment issued by Executive
Judge Fernando Campilan, Jr., the
testimony of the latters clerk of court
confirming the issuance of the notarial
commission, and Atty. Gonzalezs oath of
office as notary during the period in
question.
Finally, on the issue that the trial court did
not acquire jurisdiction over the person of
Regis-Schmitz, respondents point to the
fact that since Regis-Schmitz appointed
Jack Daniel as her attorney-in-fact to
represent her in Civil Case No. R-3248, no
authority from her was required in order
that Jack Daniels counsel may represent
her.
Our Ruling
The petition lacks merit.

Petitioners likewise argue that the trial


court did not acquire jurisdiction over the
person of Regis-Schmitz because her
counsel did not possess the appropriate
authority to represent her.

Respondents echo the trial court and the


CAs common pronouncement that on
account of petitioners admission that Jack
Daniel is an heir of Andrea, this makes him
a co-owner of the land, and as such, he
possessed the capacity to dispose of his
undivided share to Regis-Schmitz. This
admission, they argue, thus settled the
lone issue in Civil Case No. R-3248 of
whether Jack Daniel may validly dispose of
a portion of the land.

Petitioners thus pray that the CA Decision


be set aside; that the Court quiet title to
OCT No. 22447; that the sale by Jack

On the question of the notary publics


commission, respondents argue that they
have adduced sufficient evidence to refute

The constitutional requirement that every


decision must state distinctly and clearly
the factual and legal bases therefor should
indeed be the primordial concern of courts
and judges. Be that as it may, there
should not be a mechanical reliance on
this constitutional provision. The courts
and judges should be allowed to
synthesize and to simplify their decisions
considering that at present, courts are
harassed by crowded dockets and time
constraints. Thus, the Court held in Del
Mundo v. Court of Appeals:

20

It is understandable that courts with heavy


dockets and time constraints, often find
themselves with little to spare in the
preparation of decisions to the extent
most desirable. We have thus pointed out
that judges might learn to synthesize and
to simplify their pronouncements.
Nevertheless, concisely written such as
they may be, decisions must still distinctly
and clearly express at least in minimum
essence its factual and legal
bases.14 (Emphasis supplied)
The Court finds in this case no breach of
the constitutional mandate that decisions
must express clearly and distinctly the
facts and the law on which they are based.
The trial courts Decision is complete,
clear, and concise. Petitioners should be
reminded that in making their indictment
that the trial courts Decision fails to
express clearly and distinctly the facts and
the law on which it is based, they should
not mistake brevity for levity.
The issues in a case for quieting of title
are fairly simple; the plaintiff need to
prove only two things, namely: "(1) the
plaintiff or complainant has a legal or an
equitable title to or interest in the real
property subject of the action; and (2) that
the deed, claim, encumbrance or
proceeding claimed to be casting a cloud
on his title must be shown to be in fact
invalid or inoperative despite its prima
facie appearance of validity or legal
efficacy. Stated differently, the plaintiff
must show that he has a legal or at least
an equitable title over the real property in
dispute, and that some deed or

proceeding beclouds its validity or


efficacy."15
This case does not involve complex issues
that require extensive disquisition. Quite
the contrary, it could have been resolved
on a simple motion to dismiss. The trial
court apparently was satisfied that the
first requisite, possession by petitioners of
a legal or equitable title to the land, was
complied with; it concluded that
petitioners held equitable title, being
descendants of Rafael, albeit by his first
marriage to Eleuteria. The trial court
assumed that although the land was titled
in the name of "Heirs of Andrea Baldos
represented by Teofila G. Maceda", Rafael
had a share therein on account of his
marriage to Andrea. From this assumption,
the trial court then concluded that
petitioners must at least have a right to
Rafaels share in the land, which right
grants them the equitable title required to
maintain a suit for quieting of title. This
assumption, nevertheless, is decidedly
erroneous.
It is evident from the title that the land
belongs to no other than the heirs of
Andrea Baldos, Rafaels second wife. The
land could not have belonged to Rafael,
because he is not even named in OCT No.
22447. With greater reason may it be said
that the land could not belong to
petitioners, who are Rafaels children by
his first wife Eleuteria. Unless Eleuteria
and Andrea were related by blood such
fact is not borne out by the record they
could not be heirs to each other. And if
indeed Eleuteria and Andrea were blood

relatives, then petitioners would have so


revealed at the very first opportunity.
Moreover, the fact that Rafael died ahead
of Andrea, and that he is not even named
in the title, give the impression that the
land belonged solely to the heirs of
Andrea, to the exclusion of Rafael. If this
were not true, then the title should have
as registered owners the "Heirs of Rafael
and Andrea Mondragon", in which case the
petitioners certainly would possess
equitable title, they being descendantsheirs of Rafael. Yet OCT No. 22447 is not
so written.
Add to this is the fact that petitioners are
not in possession of the land. A different
view would have been taken if they were.
Indeed, not even the fact that their sister
Teofila Macedas name appears in OCT No.
22447 could warrant a different
conclusion. Her name appears therein only
a representative of Andreas heirs. As
mere representative, she could have no
better right.16
On the basis of the foregoing
considerations, Civil Case No. R-3248
deserved no greater treatment than
dismissal. Petitioners do not possess legal
or equitable title to be land, such that the
only recourse left for the trial court was to
dismiss the case. Thus, said although they
both arrived at the correct conclusion, the
trial court and the CA did so by an
erroneous appreciation of the facts and
evidence.
Petitioners cannot, on the pretext of
maintaining a suit for quieting of title.,

21

have themselves declared as Andreas


heirs so that they may claim a share in the
land. If they truly believe that they are
entitled to a share in the land, they may
avail of the remedies afforded to excluded
heirs under the Rules of Court, or sue for
the annulment of OCT No. 22447 and seek
the issuance of new titles in their name, or
recover damages in the event prescription
has sent.17
With these findings, the Court finds no
need to consider the parties other
arguments, founded as they are on the
erroneous pronouncements of the trial
court and the CA.
WHEREFORE, premises considered, the
Petition is DENIED. Civil Case No. R-3248 is
accordingly DISMISSED.
SO ORDERED.

22

Davao City with an area of six thousand


seventy-four square meters (6,074 sq. m.).
G.R. No. 174191
2013

January 30,

NENITA QUALITY FOODS


CORPORATION, Petitioner,
vs.
CRISOSTOMO GALABO, ADELAIDA
GALABO, and ZENAIDA GALABOALMACBAR, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on
certiorari1 of petitioner Nenita Quality
Foods Corporation (NQFC) to nullity the
February 22, 2006 Decision2 and the July
13, 2006 resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 77006. The
CA reversed the decision4 of the Regional
Trial Court (RTC) of Davao City, Branch 17,
which affirmed in toto the decision5 of the
Municipal Trial Court in Cities (MTCC),
Davao City, Branch 5, in Civil Case No.
10,958-E-01. The MTCC dismissed the
complaint for forcible entry and damages,
which respondents Crisostomo Galabo,
Adelaida Galabo, and Zenaida GalaboAlmachar filed against NQFC.
The Factual Antecedents
The dispute in the case relates to the
possession of a parcel of land described as
Lot No. 102, PSD-40060, the former
Arakaki Plantation in Marapangi, Toril,

As the CA summarized in the assailed


decision, the respondents are the heirs of
Donato Galabo. In 1948, Donato obtained
Lot No. 722, Cad-102, a portion of the
Arakaki Plantation in Marapangi, Toril,
Davao City, owned by National Abaca and
Other Fibers Corporation. Donato and the
respondents assumed that Lot No. 722
included Lot No. 102, per the original
survey of 1916 to 1920.
When the Board of Liquidators (BOL) took
over the administration of the Arakaki
Plantation in the 1950s, it had Lot No. 722
resurveyed. Allegedly, the resurvey did
not include Lot No. 102; thus, when
Donato acquired Transfer Certificate of
Title No. T-214966 for Lot No. 722 on April
26, 1953, Lot No. 102 was not included.
The respondents, however, continue to
posses, occupy and cultivate Lot No. 102.
When NQFC opened its business in
Marapangi, Toril, Davao City in the late
1950s, it allegedly offered to buy Lot No.
102. Donato declined and to ward off
further offers, put up "Not For Sale" and
"No Trespassing" signs on the property. In
the 1970s, Crisostomo fenced off the
entire perimeter of Lot No. 102 and built
his house on it.
On August 19, 1994, the respondents
received a letter from Santos Nantin
demanding that they vacate Lot No. 102.
Santos claimed ownership of this lot per
the Deed of Transfer of Rights (Deed of

Transfer)7 dated July 10, 1972, which the


respondents and their mother allegedly
executed in Santos favor. The
respondents denied this claim and
maintained that they had been occupying
Lot No. 102, which the BOL itself
recognized per its letters8and the
Certification9 dated April 12, 2000
confirming Donato as the long-time
occupant and awardee of the property. To
perfect their title, the respondents applied
for free patent over Lot No. 102 on
September 6, 2000.
On January 3, 2001 and again on a later
date, NQFCs workers, with armed
policemen of Toril, Davao City, entered by
force Lot No. 102 to fence it. The
respondents reported the entry to the
authorities. On April 16, 2001, Crisostomo
received a letter from NQFCs counsel
demanding that he remove his house from
Lot No. 102. NQFC subsequently removed
the existing fence and cut down various
trees that the respondents had planted on
the property.
NQFC, for its part, claimed that Santos
immediately occupied and possessed Lot
No. 102 after he purchased it from the
respondents in 1972 and declared it under
his name for taxation purposes. Santos
was also granted Free Patent over the
property by the Bureau of Lands, and
obtained Original Certificate of Title No.
(OCT) P-403510 on June 18, 1974. On
December 29, 2000, the heirs of Santos
conveyed Lot No. 102 to NQFC via the
Deed of Absolute Sale11 of even date.
NQFC then filed a petition for cancellation

23

of the respondents patent application


over Lot No. 102, which the BOL-Manila
granted on April 19, 2001, on the ground
that Donato failed to perfect his title over
Lot No. 102 which has long been titled in
Santos name.
When conciliation failed, the respondents
filed on September 17, 2001 a
complaint12 for forcible entry with
damages before the MTCC against NQFC,
alleging that: (1) they had been in prior
physical possession of Lot No. 102; and (2)
NQFC deprived them of possession
through force, intimidation, strategy,
threats and stealth.
The Ruling of the MTCC
Relying on the ruling of the BOL-Manila,
the MTCC dismissed the respondents
complaint,13 explaining that the questions
raised before it required technical
determination by the administrative
agency with the expertise to determine
such matters, which the BOL-Manila did in
this case.14
The MTCC held that the pieces of evidence
NQFC presented the Deed of Transfer the
respondents executed in Santos favor,
Santos OCT P-4035 over Lot No. 102, the
Deed of Absolute Sale in NQFCs favor,
and the findings of the BOL-Manila
established NQFCs rightful possession
over the property. It further held that: (1)
the respondents relinquished their rights
over Lot No. 102 when they executed the
Deed of Transfer in Santos favor; (2) the
certificate of title over Lot No. 102 in

Santos name shows that he was in actual


physical possession since actual
occupation is required before an
application for free patent can be
approved; and (3) NQFC validly acquired
ownership over Lot No. 102 when it
purchased it from Santos, entitling it to
the right, among others, to possess the
property as ancillary to such ownership.
The Ruling of the RTC
The respondents appealed the MTCC
decision to the RTC but the latter court
denied the appeal.15 As the MTCC did, the
RTC relied on the findings of the BOLManila. It held that: (1) the respondents
failed to perfect whatever right they might
have had over Lot No. 102; and (2) they
are estopped from asserting any right over
Lot No. 102 since they have long
transferred the property and their right
thereto, to Santos in 1972.
In resolving the issue of possession of Lot
No. 102, the RTC also resolved the
question of ownership, as justified under
the Rules, explaining that the NQFCs
possession of Lot No. 102 was anchored
on a Deed of Absolute Sale, while that of
the respondents was based merely on the
allegation of possession and occupation by
Donato, and not on any title.16
Thus, the question of concurrent
possession of Lot No. 102 between NQFC
and the respondents should tilt in NQFCs
favor.

When the RTC denied the respondents


motion for reconsideration in an
order17 dated March 5, 2003, the
respondents elevated their case to the CA
via a petition for review.18
The Ruling of the CA
The respondents claimed before the CA
that the RTC erred when it held that NQFC
had prior possession of Lot No. 102, based
solely on its Deed of Absolute Sale. They
argued, among others, that: (1) Santos
should have taken the necessary steps to
oust the respondents had he been in
possession of Lot No. 102 beginning 1972;
(2) Santos could not have validly obtained
title over Lot No. 102 since it was still in
the name of the Republic of the Philippines
(Republic) as of 1980;19 and (3) NQFC no
longer had to forcibly evict the
respondents in January 2001 if it had been
in possession of Lot No. 102 after it bought
this land from Santos in 2000.
The CA found reversible error in the RTCs
decision; thus, it granted the respondents
petition and ordered NQFC to vacate Lot
No. 102. The CA explained that a plaintiff,
in a forcible entry case, only has to prove
prior material and physical possession of
the property in litigation and undue
deprivation of it by means of force,
intimidation, threat, strategy or stealth.
These, the respondents averred in the
complaint and sufficiently proved, thus
entitling them to recover possession of Lot
No. 102. Relying on the doctrine of
presumption of regularity in the
performance of official duty, the CA

24

especially took note of the letters and the


Certification which the BOL sent to the
respondents acknowledging Donato as the
awardee of Lot No. 102 and the
respondents as the actual occupants and
possessors.
In brushing aside the RTCs findings, the
CA ruled that: (1) Donatos failure to
perfect his title over Lot No. 102 should
not weigh against the respondents as the
issue in a forcible entry case is one of
possession de facto and not of possession
de jure; and (2) NQFCs ownership of Lot
No. 102 is beside the point as ownership is
beyond the purview of an ejectment case.
The title or right of possession, it stressed,
is never an issue in a forcible entry suit.
The CA, however, denied the respondents
prayer for moral damages and attorneys
fees, and rejected the other issues raised
for being irrelevant.
In its July 13, 2006 resolution,20 the CA
denied NQFCs motion for reconsideration,
prompting the NQFCs present recourse.
The Petition
NQFC argues that the CA erred in holding
that the respondents had prior physical
possession of Lot No. 102.21 It claims that,
first, in reversing the RTC findings, the CA
relied solely on the letters and the
Certification of the BOL,22 which has been
controverted by the following pieces of
evidence, among others: (1) the Deed of
Transfer that the respondents executed in
favor of Santos; (2) the order of the
Bureau of Lands approving Santos patent

application; (3) Santos OCT P-4035; and


(4) the Deed of Absolute Sale that Santos
executed in favor of NQFC.
NQFC maintains that the Bureau of Lands
would not have granted Santos free
patent application had he not been in
possession of Lot No. 102 because
continued occupation and cultivation,
either by himself or by his predecessor-ininterest, of the property is a requirement
for such grant under the Public Land Act.
By the very definition of "occupy," Santos
is therefore deemed to have possessed Lot
No. 102 prior to 1974, the year his free
patent application was granted,23 and
under the principle of tacking of
possession, he is deemed to have had
possession of Lot No. 102 not only from
1972, when the respondents transferred it
to him, but also from the time Donato
acquired the lot in 1948. Thus, Santos had
no reason to oust the respondents since
he had been in possession of Lot No. 102
beginning 1972, by virtue of the transfer.24
Second, the respondents had no
documents to prove that they were in
actual occupation and cultivation of Lot
No. 102 the reason they did not heed the
BOLs request to perfect their title over it.
Finally, citing jurisprudence,25 NQFC
argues that the RTC rightly ruled on the
issue of its ownership over Lot No. 102 in
deciding the issue of prior physical
possession as the Rules allow this, by way
of exception.26
The Case for Respondents

The respondents arguments closely


adhere to the CAs ruling. They argue that
NQFC, rather than meeting the issues,
focused on its alleged ownership of Lot No.
102 and the possession flowing out of its
ownership. They deny ever meeting
Santos and they maintain that their
continued possession and occupation of
Lot No. 102 belie this supposed sale. Even
granting that this sale occurred, Santos
could still not have acquired any right over
Lot No. 102 for as of 1980, it was still in
the name of the Republic.27 Thus, they
could not have transferred ownership of
Lot No. 102 to Santos, and he cannot
claim ownership of Lot No. 102 by reason
of this sale.28
On the other hand, the respondents open,
continuous, exclusive, notorious and
adverse possession of Lot No. 102 for
three decades, coupled by a claim of
ownership, gave them vested right or
interest over the property.29This vested
right is equivalent to an actually issued
certificate of title so that the execution
and delivery of the title is a mere
formality. To say the least, NQFC did not
have to send them a formal demand to
vacate30 and violently oust them from the
premises had it been in actual possession
of the property as claimed.31
Lastly, the respondents invoked the
settled rule that the Courts jurisdiction in
a Rule 45 petition is limited only to
reviewing errors of law. NQFC failed to
show misapprehension of facts in the CAs
findings to justify a departure from this
rule.32

25

The Courts Ruling


We first address the procedural issue
raised. Resolving the contentions raised
necessarily requires us to delve into
factual issues, a course not proper in a
petition for review on certiorari, for a Rule
45 petition resolves only questions of law,
not questions of fact.33 This rule is read
with the equally settled dictum that
factual findings of the CA are generally
conclusive on the parties and are
therefore not reviewable by this
Court.34 By way of exception, we resolve
factual issues when, as here, conflict
attended the findings of the MTCC and of
the RTC, on one hand, and of the CA, on
the other. Of minor note, but which we
deem important to point, the petition
needlessly impleaded the CA, in breach of
Section 4, Rule 45 of the Rules of Court.35
Substantively, the key issue this case
presents is prior physical possession
whether NQFC had been in prior physical
possession of Lot No. 102.
We rule in the negative.
First, on the reliance on the BOL letters
and Certification and the CAs alleged
disregard of NQFCs evidence. To prove
prior physical possession of Lot No. 102,
NQFC presented the Deed of Transfer,
Santos OCT P-4035, the Deed of Absolute
Sale, and the Order of the Bureau of Lands
approving Santos free patent application.
In presenting these pieces of evidence,
NQFC is apparently mistaken as it may
have equated possession that is at issue

as an attribute of ownership to actual


possession. The latter type of possession
is, however, different from and has
different legal implications than the
former. While these documents may bear
weight and are material in contests over
ownership of Lot No. 102, they do not per
se show NQFCs actual possession of this
property.
We agree that ownership carries the right
of possession, but the possession
contemplated by the concept of ownership
is not exactly the same as the possession
in issue in a forcible entry case. Possession
in forcible entry suits refers only to
possession de facto, or actual or material
possession, and not possession flowing
out of ownership; these are different legal
concepts36 for which the law provides
different remedies for recovery of
possession.37 As we explained in Pajuyo v.
Court of Appeals,38 and again in the more
recent cases of Gonzaga v. Court of
Appeals,39 De Grano v. Lacaba,40 and
Lagazo v. Soriano,41 the word "possession"
in forcible entry suits refers to nothing
more than prior physical possession or
possession de facto, not possession de
jure42 or legal possession in the sense
contemplated in civil law.43 Title is not the
issue,44 and the absence of it "is not a
ground for the courts to withhold relief
from the parties in an ejectment case."45
Thus, in a forcible entry case, "a party who
can prove prior possession can recover
such possession even against the owner
himself. Whatever may be the character of
his possession, if he has in his favor prior

possession in time, he has the security


that entitles him to remain on the property
until a person with a better right lawfully
ejects him."46 He cannot be ejected by
force, violence or terror -- not even by its
owners.47 For these reasons, an action for
forcible entry is summary in nature aimed
only at providing an expeditious means of
protecting actual possession.48 Ejectment
suits are intended to "prevent breach of x
x x peace and criminal disorder and to
compel the party out of possession to
respect and resort to the law alone to
obtain what he claims is his."49 Thus, lest
the purpose of these summary
proceedings be defeated, any discussion
or issue of ownership is avoided unless it
is necessary to resolve the issue of de
facto possession.
We agree with the respondents that
instead of squarely addressing the issue of
possession and presenting evidence
showing that NQFC or Santos had been in
actual possession of Lot No. 102, the
former merely narrated how it acquired
ownership of Lot No. 102 and presented
documents to this effect. Its allegation
that Santos occupied Lot No. 102 in 1972
is uncorroborated. Even the tax
declarations under Santos name are
hardly of weight; "tax declarations and
realty tax payments are not conclusive
proof of possession. They are merely good
indicia of possession in the concept of
owner"50 but not necessarily of the actual
possession required in forcible entry
cases.

26

Section 1, Rule 70 of the Rules of Court


provides when an action for forcible entry,
and unlawful detainer, is proper:
SECTION 1. Who may institute
proceedings, and when. Subject to the
provisions of the next succeeding section,
a person deprived of the possession of any
land or building by force, intimidation,
threat, strategy, or stealth, or a lessor,
vendor, vendee, or other person against
whom the possession of any land or
building is unlawfully withheld after the
expiration or termination of the right to
hold possession, by virtue of any contract,
express or implied, or the legal
representatives or assigns of any such
lessor, vendor, vendee, or other person
may at any time within one (1) year after
such unlawful deprivation or withholding
of possession, bring an action in the
proper Municipal Trial Court against the
person or persons unlawfully withholding
or depriving of possession, or any person
or persons claiming under them, for the
restitution of such possession, together
with damages and costs. [emphasis ours;
italics supplied]
Under this provision, for a forcible entry
suit to prosper, the plaintiff must allege
and prove: (1) prior physical possession of
the property; and (2) unlawful deprivation
of it by the defendant through force,
intimidation, strategy, threat or
stealth.51 As in any civil case, the burden
of proof lies with the complainants (the
respondents in this case) who must
establish their case by preponderance of
evidence. In the present case, the

respondents sufficiently alleged and


proved the required elements.
To support its position, NQFC invokes the
principle of tacking of possession, that is,
when it bought Lot No. 102 from Santos on
December 29, 2000, its possession is, by
operation of law, tacked to that of Santos
and even earlier, or at the time Donato
acquired Lot No. 102 in 1948.
NQFCs reliance on this principle is
misplaced. True, the law52 allows a present
possessor to tack his possession to that of
his predecessor-in-interest to be deemed
in possession of the property for the
period required by law. Possession in this
regard, however, pertains to possession
de jure and the tacking is made for the
purpose of completing the time required
for acquiring or losing ownership through
prescription. We reiterate possession in
forcible entry suits refers to nothing more
than physical possession, not legal
possession.
The CA brushed aside NQFCs argument
on the respondents failure to perfect their
title over Lot No. 102. It held that the issue
in this case is not of possession de jure, let
alone ownership or title, but of possession
de facto.1wphi1 We agree with the CA;
the discussions above are clear on this
point.

the Rules of Court53 provides that the issue


of ownership shall be resolved in deciding
the issue of possession if the question of
possession is intertwined with the issue of
ownership. But this provision is only an
exception and is allowed only in this
limited instance-- to determine the issue
of possession and only if the question of
possession cannot be resolved without
deciding the issue of ownership.54 Save for
this instance, evidence of ownership is not
at all material, as in the present case.55
As a final reiterative note, this Decision
deals only with de facto possession and is
without prejudice to an appropriate action
for recovery of possession based on
ownership.
WHEREFORE, in light of these
considerations, we hereby DENY the
petition; the decision dated February 22,
2006 and the resolution dated July 13,
2006 of the Court of Appeals in CA-G.R. SP
No. 77006 are hereby AFFIRMED.
SO ORDERED.

We agree, too, as we have indicated in


passing above, that the issue of ownership
can be material and relevant in resolving
the issue of possession. The Rules in fact
expressly allow this: Section 16, Rule 70 of

27

G.R. No. 151815


2005

February 23,

SPOUSES JUAN NUGUID AND ERLINDA


T. NUGUID, petitioners,
vs.
HON. COURT OF APPEALS AND PEDRO
P. PECSON, respondents.

of the RTC of Quezon City, Branch 101 and


remanded the case to the trial court for
the determination of the current market
value of the four-door two-storey
apartment building on the 256-square
meter commercial lot.
The antecedent facts in this case are as
follows:

DECISION
QUISUMBING, J.:
This is a petition for review on certiorari of
the Decision1 dated May 21, 2001, of the
Court of Appeals in CA-G.R. CV No. 64295,
which modified the Order dated July 31,
1998 of the Regional Trial Court (RTC) of
Quezon City, Branch 101 in Civil Case No.
Q-41470. The trial court ordered the
defendants, among them petitioner herein
Juan Nuguid, to pay respondent herein
Pedro P. Pecson, the sum of P1,344,000 as
reimbursement of unrealized income for
the period beginning November 22, 1993
to December 1997. The appellate court,
however, reduced the trial courts award
in favor of Pecson from the
said P1,344,000 to P280,000. Equally
assailed by the petitioners is the appellate
courts Resolution2 dated January 10,
2002, denying the motion for
reconsideration.
It may be recalled that relatedly in our
Decision dated May 26, 1995, in G.R. No.
115814, entitled Pecson v. Court of
Appeals, we set aside the decision of the
Court of Appeals in CA-G.R. SP No. 32679
and the Order dated November 15, 1993,

Pedro P. Pecson owned a commercial lot


located at 27 Kamias Road, Quezon City,
on which he built a four-door two-storey
apartment building. For failure to pay
realty taxes, the lot was sold at public
auction by the City Treasurer of Quezon
City to Mamerto Nepomuceno, who in turn
sold it for P103,000 to the spouses Juan
and Erlinda Nuguid.
Pecson challenged the validity of the
auction sale before the RTC of Quezon City
in Civil Case No. Q-41470. In its
Decision,3 dated February 8, 1989, the RTC
upheld the spouses title but declared that
the four-door two-storey apartment
building was not included in the auction
sale.4 This was affirmed in toto by the
Court of Appeals and thereafter by this
Court, in its Decision5 dated May 25, 1993,
in G.R. No. 105360 entitled Pecson v. Court
of Appeals.
On June 23, 1993, by virtue of the Entry of
Judgment of the aforesaid decision in G.R.
No. 105360, the Nuguids became the
uncontested owners of the 256-square
meter commercial lot.

As a result, the Nuguid spouses moved for


delivery of possession of the lot and the
apartment building.
In its Order6 of November 15, 1993, the
trial court, relying upon Article 5467 of the
Civil Code, ruled that the Spouses Nuguid
were to reimburse Pecson for his
construction cost of P53,000, following
which, the spouses Nuguid were entitled
to immediate issuance of a writ of
possession over the lot and
improvements. In the same order the RTC
also directed Pecson to pay the same
amount of monthly rentals to the Nuguids
as paid by the tenants occupying the
apartment units or P21,000 per month
from June 23, 1993, and allowed the offset
of the amount of P53,000 due from the
Nuguids against the amount of rents
collected by Pecson from June 23, 1993 to
September 23, 1993 from the tenants of
the apartment.8
Pecson duly moved for reconsideration,
but on November 8, 1993, the RTC issued
a Writ of Possession,9directing the deputy
sheriff to put the spouses Nuguid in
possession of the subject property with all
the improvements thereon and to eject all
the occupants therein.
Aggrieved, Pecson then filed a special civil
action for certiorari and prohibition
docketed as CA-G.R. SP No. 32679 with
the Court of Appeals.
In its decision of June 7, 1994, the
appellate court, relying upon Article
44810 of the Civil Code, affirmed the order

28

of payment of construction costs but


rendered the issue of possession moot on
appeal, thus:
WHEREFORE, while it appears that private
respondents [spouses Nuguid] have not
yet indemnified petitioner [Pecson] with
the cost of the improvements, since Annex
I shows that the Deputy Sheriff has
enforced the Writ of Possession and the
premises have been turned over to the
possession of private respondents, the
quest of petitioner that he be restored in
possession of the premises is rendered
moot and academic, although it is but fair
and just that private respondents pay
petitioner the construction cost of
P53,000.00; and that petitioner be ordered
to account for any and all fruits of the
improvements received by him starting on
June 23, 1993, with the amount of
P53,000.00 to be offset therefrom.
IT IS SO ORDERED.11 [Underscoring
supplied.]
Frustrated by this turn of events, Pecson
filed a petition for review docketed as G.R.
No. 115814 before this Court.
On May 26, 1995, the Court handed down
the decision in G.R. No 115814, to wit:
WHEREFORE, the decision of the Court of
Appeals in CA-G.R. SP No. 32679 and the
Order of 15 November 1993 of the
Regional Trial Court, Branch 101, Quezon
City in Civil Case No. Q-41470 are hereby
SET ASIDE.

The case is hereby remanded to the trial


court for it to determine the current
market value of the apartment building on
the lot. For this purpose, the parties shall
be allowed to adduce evidence on the
current market value of the apartment
building. The value so determined shall be
forthwith paid by the private respondents
[Spouses Juan and Erlinda Nuguid] to the
petitioner [Pedro Pecson] otherwise the
petitioner shall be restored to the
possession of the apartment building until
payment of the required indemnity.
No costs.
SO ORDERED.12 [Emphasis supplied.]
In so ruling, this Court pointed out that: (1)
Article 448 of the Civil Code is not
apposite to the case at bar where the
owner of the land is the builder, sower, or
planter who then later lost ownership of
the land by sale, but may, however, be
applied by analogy; (2) the current market
value of the improvements should be
made as the basis of reimbursement; (3)
Pecson was entitled to retain ownership of
the building and, necessarily, the income
therefrom; (4) the Court of Appeals erred
not only in upholding the trial courts
determination of the indemnity, but also in
ordering Pecson to account for the rentals
of the apartment building from June 23,
1993 to September 23, 1993.
On the basis of this Courts decision in
G.R. No. 115814, Pecson filed a Motion to
Restore Possession and a Motion to Render
Accounting, praying respectively for

restoration of his possession over the


subject 256-square meter commercial lot
and for the spouses Nuguid to be directed
to render an accounting under oath, of the
income derived from the subject four-door
apartment from November 22, 1993 until
possession of the same was restored to
him.
In an Order13 dated January 26, 1996, the
RTC denied the Motion to Restore
Possession to the plaintiff averring that the
current market value of the building
should first be determined. Pending the
said determination, the resolution of the
Motion for Accounting was likewise held in
abeyance.
With the submission of the parties
assessment and the reports of the subject
realty, and the reports of the Quezon City
Assessor, as well as the members of the
duly constituted assessment committee,
the trial court issued the following
Order14 dated October 7, 1997, to wit:
On November 21, 1996, the parties
manifested that they have arrived at a
compromise agreement that the value of
the said improvement/building
is P400,000.00 The Court notes that the
plaintiff has already receivedP300,000.00.
However, when defendant was ready to
pay the balance of P100,000.00, the
plaintiff now insists that there should be a
rental to be paid by defendants. Whether
or not this should be paid by defendants,
incident is hereby scheduled for hearing
on November 12, 1997 at 8:30 a.m.

29

Meantime, defendants are directed to pay


plaintiff the balance of P100,000.00.
SO ORDERED.15
On December 1997, after paying the
said P100,000 balance to Pedro Pecson the
spouses Nuguid prayed for the closure and
termination of the case, as well as the
cancellation of the notice of lis pendens on
the title of the property on the ground that
Pedro Pecsons claim for rentals was
devoid of factual and legal bases.16
After conducting a hearing, the lower court
issued an Order dated July 31, 1998,
directing the spouses to pay the sum
of P1,344,000 as reimbursement of the
unrealized income of Pecson for the period
beginning November 22, 1993 up to
December 1997. The sum was based on
the computation of P28,000/month rentals
of the four-door apartment, thus:
The Court finds plaintiffs motion valid and
meritorious. The decision of the Supreme
Court in the aforesaid case [Pecson vs.
Court of Appeals, 244 SCRA 407] which set
aside the Order of this Court of November
15, 1993 has in effect upheld plaintiffs
right of possession of the building for as
long as he is not fully paid the value
thereof. It follows, as declared by the
Supreme Court in said decision that the
plaintiff is entitled to the income derived
therefrom, thus
...

Records show that the plaintiff was


dispossessed of the premises on
November 22, 1993 and that he was fully
paid the value of his building in December
1997. Therefore, he is entitled to the
income thereof beginning on November
22, 1993, the time he was dispossessed,
up to the time of said full payment, in
December 1997, or a total of 48 months.

In the Court of Appeals, the order


appealed from in CA-G.R. CV No. 64295,
was modified. The CA reduced the rentals
from P1,344,000 to P280,000 in favor of
the appellee.19 The said amount
represents accrued rentals from the
determination of the current market value
on January 31, 199720 until its full payment
on December 12, 1997.

The only question left is the determination


of income of the four units of apartments
per month. But as correctly pointed out by
plaintiff, the defendants have themselves
submitted their affidavits attesting that
the income derived from three of the four
units of the apartment building is
P21,000.00 or P7,000.00 each per month,
or P28,000.00 per month for the whole
four units. Hence, at P28,000.00 per
month, multiplied by 48 months, plaintiff
is entitled to be paid by defendants the
amount of P1,344,000.00.17

Hence, petitioners state the sole


assignment of error now before us as
follows:

The Nuguid spouses filed a motion for


reconsideration but this was denied for
lack of merit.18
The Nuguid couple then appealed the trial
courts ruling to the Court of Appeals, their
action docketed as CA-G.R. CV No. 64295.

THE COURT OF APPEALS ERRED IN


HOLDING PETITIONERS LIABLE TO PAY
RENT OVER AND ABOVE THE CURRENT
MARKET VALUE OF THE IMPROVEMENT
WHEN SUCH WAS NOT PROVIDED FOR IN
THE DISPOSITIVE PORTION OF THE
SUPREME COURTS RULING IN G.R. No.
115814.
Petitioners call our attention to the fact
that after reaching an agreed price
of P400,000 for the improvements, they
only made a partial payment of P300,000.
Thus, they contend that their failure to
pay the full price for the improvements
will, at most, entitle respondent to be
restored to possession, but not to collect
any rentals. Petitioners insist that this is
the proper interpretation of the dispositive
portion of the decision in G.R. No. 115814,
which states in part that "[t]he value so
determined shall be forthwith paid by the
private respondents [Spouses Juan and
Erlinda Nuguid] to the petitioner [Pedro
Pecson] otherwise the petitioner shall be
restored to the possession of the

30

apartment building until payment of the


required indemnity."21
Now herein respondent, Pecson, disagrees
with herein petitioners contention. He
argues that petitioners are wrong in
claiming that inasmuch as his claim for
rentals was not determined in the
dispositive portion of the decision in G.R.
No. 115814, it could not be the subject of
execution. He points out that in moving for
an accounting, all he asked was that the
value of the fruits of the property during
the period he was dispossessed be
accounted for, since this Court explicitly
recognized in G.R. No. 115814, he was
entitled to the property. He points out that
this Court ruled that "[t]he petitioner
[Pecson] not having been so paid, he was
entitled to retain ownership of the building
and, necessarily, the income
therefrom."22 In other words, says
respondent, accounting was necessary. For
accordingly, he was entitled to rental
income from the property. This should be
given effect. The Court could have very
well specifically included rent (as fruit or
income of the property), but could not
have done so at the time the Court
pronounced judgment because its value
had yet to be determined, according to
him. Additionally, he faults the appellate
court for modifying the order of the RTC,
thus defeating his right as a builder in
good faith entitled to rental from the
period of his dispossession to full payment
of the price of his improvements, which
spans from November 22, 1993 to
December 1997, or a period of more than
four years.

It is not disputed that the construction of


the four-door two-storey apartment,
subject of this dispute, was undertaken at
the time when Pecson was still the owner
of the lot. When the Nuguids became the
uncontested owner of the lot on June 23,
1993, by virtue of entry of judgment of the
Courts decision, dated May 25, 1993, in
G.R. No. 105360, the apartment building
was already in existence and occupied by
tenants. In its decision dated May 26,
1995 in G.R. No. 115814, the Court
declared the rights and obligations of the
litigants in accordance with Articles 448
and 546 of the Civil Code. These
provisions of the Code are directly
applicable to the instant case.
Under Article 448, the landowner is given
the option, either to appropriate the
improvement as his own upon payment of
the proper amount of indemnity or to sell
the land to the possessor in good faith.
Relatedly, Article 546 provides that a
builder in good faith is entitled to full
reimbursement for all the necessary and
useful expenses incurred; it also gives him
right of retention until full reimbursement
is made.
While the law aims to concentrate in one
person the ownership of the land and the
improvements thereon in view of the
impracticability of creating a state of
forced co-ownership,23 it guards against
unjust enrichment insofar as the goodfaith builders improvements are
concerned. The right of retention is
considered as one of the measures
devised by the law for the protection of

builders in good faith. Its object is to


guarantee full and prompt reimbursement
as it permits the actual possessor to
remain in possession while he has not
been reimbursed (by the person who
defeated him in the case for possession of
the property) for those necessary
expenses and useful improvements made
by him on the thing
possessed.24 Accordingly, a builder in good
faith cannot be compelled to pay rentals
during the period of retention25 nor be
disturbed in his possession by ordering
him to vacate. In addition, as in this case,
the owner of the land is prohibited from
offsetting or compensating the necessary
and useful expenses with the fruits
received by the builder-possessor in good
faith. Otherwise, the security provided by
law would be impaired. This is so because
the right to the expenses and the right to
the fruits both pertain to the possessor,
making compensation juridically
impossible; and one cannot be used to
reduce the other.26
As we earlier held, since petitioners opted
to appropriate the improvement for
themselves as early as June 1993, when
they applied for a writ of execution despite
knowledge that the auction sale did not
include the apartment building, they could
not benefit from the lots improvement,
until they reimbursed the improver in full,
based on the current market value of the
property.
Despite the Courts recognition of Pecsons
right of ownership over the apartment
building, the petitioners still insisted on

31

dispossessing Pecson by filing for a Writ of


Possession to cover both the lot and the
building. Clearly, this resulted in a
violation of respondents right of retention.
Worse, petitioners took advantage of the
situation to benefit from the highly valued,
income-yielding, four-unit apartment
building by collecting rentals thereon,
before they paid for the cost of the
apartment building. It was only four years
later that they finally paid its full value to
the respondent.
Petitioners interpretation of our holding in
G.R. No. 115814 has neither factual nor
legal basis. The decision of May 26, 1995,
should be construed in connection with
the legal principles which form the basis of
the decision, guided by the precept that
judgments are to have a reasonable
intendment to do justice and avoid
wrong.27
The text of the decision in G.R. No. 115814
expressly exempted Pecson from liability
to pay rentals, for we found that the Court
of Appeals erred not only in upholding the
trial courts determination of the
indemnity, but also in ordering him to
account for the rentals of the apartment
building from June 23, 1993 to September
23, 1993, the period from entry of
judgment until Pecsons dispossession. As
pointed out by Pecson, the dispositive
portion of our decision in G.R. No. 115814
need not specifically include the income
derived from the improvement in order to
entitle him, as a builder in good faith, to
such income. The right of retention, which
entitles the builder in good faith to the

possession as well as the income derived


therefrom, is already provided for under
Article 546 of the Civil Code.
Given the circumstances of the instant
case where the builder in good faith has
been clearly denied his right of retention
for almost half a decade, we find that the
increased award of rentals by the RTC was
reasonable and equitable. The petitioners
had reaped all the benefits from the
improvement introduced by the
respondent during said period, without
paying any amount to the latter as
reimbursement for his construction costs
and expenses. They should account and
pay for such benefits.

Twenty-eight Thousand (P28,000.00)


pesos monthly, for a period of 48 months,
is hereby REINSTATED. Until fully paid,
said amount of rentals should bear the
legal rate of interest set at six percent
(6%) per annum computed from the date
of RTC judgment. If any portion thereof
shall thereafter remain unpaid, despite
notice of finality of this Courts judgment,
said remaining unpaid amount shall bear
the rate of interest set at twelve percent
(12%) per annum computed from the date
of said notice. Costs against petitioners.
SO ORDERED.

We need not belabor now the appellate


courts recognition of herein respondents
entitlement to rentals from the date of the
determination of the current market value
until its full payment. Respondent is
clearly entitled to payment by virtue of his
right of retention over the said
improvement.
WHEREFORE, the instant petition is
DENIED for lack of merit. The Decision
dated May 21, 2001 of the Court of
Appeals in CA-G.R. CV No. 64295 is SET
ASIDE and the Order dated July 31, 1998,
of the Regional Trial Court, Branch 101,
Quezon City, in Civil Case No. Q-41470
ordering the herein petitioners, Spouses
Juan and Erlinda Nuguid, to account for
the rental income of the four-door twostorey apartment building from November
1993 until December 1997, in the amount
of P1,344,000, computed on the basis of

32

G.R. No. 156360


2005

January 14,

CESAR SAMPAYAN, petitioner,


vs.
The HONORABLE COURT OF APPEALS,
CRISPULO VASQUEZ and FLORENCIA
VASQUEZ GILSANO,respondents.
DECISION
GARCIA, J.:
In this verified petition for review
on certiorari under Rule 45 of the Rules of
Court, petitioner Cesar Sampayan seeks
the annulment and setting aside of the
following issuances of the Court of Appeals
in CA-G.R. SP No. 43557, to wit:
1. Decision dated May 16,
2002, denying his petition for review and
affirming an earlier decision of the
Regional Trial Court at Agusan del Sur,
Branch VII, which in turn reversed on
appeal a favorable judgment of the
Municipal Circuit Trial Court (MCTC) of
Bayugan and Sibagat, Agusan del Sur in a
forcible entry case thereat commenced
against him by herein private
respondents, the brother-and-sister
Crispulo Vasquez and Florencia VasquezGilsano; and
2. Resolution dated November 7,
2002, which denied his motion for
reconsideration.

From the pleadings and memoranda


respectively filed by the parties, the Court
gathers the following factual antecedents:
On July 8, 1992, in the MCTC of Bayugan
and Sibagat, Agusan del Sur, the siblings
Crispulo Vasquez and Florencia VasquezGilsano filed complaint for forcible entry
against Cesar Sampayan for allegedly
having entered and occupied a parcel of
land, identified as Lot No. 1959, PLS-225,
and built a house thereon without their
knowledge, consent or authority, the entry
having been supposedly effected through
strategy and stealth.
In their complaint, the plaintiffs (now
private respondents), substantially alleged
that their mother Cristita Quita was the
owner and actual possessor of Lot No.
1959; that after their mothers death on
January 11, 1984, they became co-owners
pro-indiviso and lawful possessors of the
same lot; that on June 1, 1992, while they
were temporarily absent from the lot in
question, defendant Cesar Sampayan,
through strategy and stealth, entered the
lot and built a house thereon, to their
exclusion; and that, despite their repeated
demands for Sampayan to vacate the lot
and surrender the possession thereof to
them, the latter failed and refused to do
so.
In his answer, defendant Sampayan
denied the material allegations of the
complaint and averred that neither the
plaintiffs nor their mother have ever been
in possession of Lot No. 1959 and that he
does not even know plaintiffs identities or

their places of residence. He claimed that


he did not enter the subject lot by stealth
or strategy because he asked and was
given permission therefor by Maria
Ybaez, the overseer of the lots true
owners, Mr. and Mrs. Anastacio Terrado
who were then temporarily residing in
Cebu City for business purposes. In the
same answer, Sampayan alleged that the
plaintiffs claim has long prescribed for the
reason that the lot in dispute had been
possessed and declared for taxation
purposes by the spouses Felicisimo Oriol
and Concordia Balida-Oriol in 1960, and
that in 1978, the Oriol spouses sold onehalf (1/2) of the lot to the spouses Mr. and
Mrs. Anastacio Terrado, while the other
half, to the couple Manolito Occida and
Juliana Sambale-Occida in 1979. Both
vendees, so Sampayan averred, have
actually possessed the respective portions
purchased by them up to the present. He
thus prayed for the dismissal of the
complaint.
In the ensuing proceedings following the
joinder of issues, the plaintiffs, to prove
that they have been in actual possession
of Lot No. 1959 when defendant
Sampayan effected his entry thereto,
submitted in evidence the following
documents:
1. Tax Declaration No. 3180 in the name of
Cristita Quita;
2. Certificate of Death showing the date of
death of Cristita Quita on January 11,
1984;

33

3. Certificate issued by Fermina R.


Labonete, Land Management Officer-III of
CENRO X-3-E, DENR-X-3-9, Bayugan,
Agusan del Sur showing that Lot 1959,
PLS-225 is covered by a Miscellaneous
Sales Application of Cristita Quita;
4. Affidavit of one Emiliano G. Gatillo to
the effect that he was the one who gave
the lot in question to Cristita Quita
sometime in 1957 and that since then the
latter had been occupying the lot;
Plaintiffs also filed a Supplemental Position
Paper dated July 13, 1994 for the purpose
of showing that Cristita Quita is one of the
oppositors in Cadastral Case No. 149.
Together with said position paper, they
submitted a copy of the
Answer/Opposition earlier filed in
Cadastral Case No. 149. In said cadastral
case, Cristita Quita was claiming Lot 1959,
thus her name appeared in the list of
oppositors therein.
5. The decision in the said Cadastral Case
No. 149 showing that the then Court of
First Instance of Agusan del Sur declared
Lot No. 1959 as one of the lots subject of
the same cadastral case.
For his part, defendant Sampayan, to
prove the allegations in his answer,
offered in evidence the following:
1. Tax Declaration No. A-11698 in the
name of Felicisimo Oriol, which cancels
Tax Declaration 8103;

2. Tax Declaration No. GRB-01-930 in the


name of Felicisimo Oriol which cancels Tax
Declaration No. A-11698;
3. Deed of Absolute Sale of Portion of
Land, dated April 30, 1979, executed by
Jesus Oriol for and in behalf of the spouses
Felicisimo Oriol and Concordia BalidaOriol, conveying the one-half (1/2) portion
of Lot No. 1959 to the couple Manolito
Occida and Juliana Sambale-Occida who
possessed the one-half (1/2) portion and
introduced improvements thereon, such as
coconut and caimito trees;
4. Deed of Relinquishment of Rights of
Portion of Land, executed by the spouses
Oriol in favor of the same couple Manolito
Occida and Juliana Sambale-Occida, to
further strengthen the transfer of
possession and whatever possessory
rights the Oriols had in the lot in question;
5. Deed of Absolute Sale of Land executed
by Concordia Balida-Oriol with the
conformity of Teodosio Mosquito (another
claimant), to prove that the other half of
Lot No. 1959 was sold in 1978 to Mr. and
Mrs. Anastacio Terrado whose overseer
allowed Sampayan to enter and occupy
the premises;
6. Protest filed with the CENRO, Agusan
del Sur by the vendee Juliana SambaleOccida against the Miscellaneous Sales
Application of Cristita Quita;
7. Affidavit of Dionesia Noynay attesting to
the fact that she is residing in Lot No.
1957, a lot adjacent to the lot in question,

since 1960 up to the present. In the same


affidavit, Dionisia claimed that neither
Cristita Quita, much less the plaintiffs, had
ever possessed Lot No. 1959. She claimed
that it was the Occida couple who
possessed said lot and introduced
improvements thereon; and
8. Affidavit of Juliana Occida and Maria
Ybaez to show the impossibility of
plaintiffs possession of the same lot.
Meanwhile, on March 21, 1996, while the
case was pending with the MCTC, the
presiding judge thereof personally
conducted an ocular inspection of the
contested lot in the presence of the
parties and/or their counsels. Among
those found in the area during the
inspection are: the house of defendant
Sampayan; the dilapidated house of a
certain Peter Siscon; and a portion of the
house of Macario Noynay, husband of
Dionisia Noynay, one of Sampayans
witnesses.
Based on his ocular findings, the judge
concluded that the improvements he saw
in the premises could never have been
introduced by the plaintiffs nor by their
mother Cristita Quita but by the vendees
of the same lot. Reproduced by petitioner
Jose Sampayan in the instant petition as
well as in the Memorandum he
subsequently filed with this Court, the
MCTC judges findings and observations
during the ocular inspection, about which
the herein private respondents took no
exception whatsoever, are hereunder
quoted, as follows:

34

"Noted inside the land are the house of


the defendant, Cesar Sampayan, of Peter
Siscon, which appears to be dilapidated,
and part of the house of Macario Noynay
which encroached to the land in question.
Planted on the land are five (5) coconut
trees, fruit bearing, three (3) not fruit
bearing coconut trees, and three (3) star
apple or caimito trees. Defendant
Sampayan admitted that he started
occupying the land since 1992. It is
admitted by the parties during the ocular
inspection that one-half (1/2) portion of
the land was bought by a certain Occida
from certain Mr. and Mrs. Felicisimo Oriol.
The findings in the ocular inspection
have confirmed the allegation of the
defendant that his predecessors-ininterest have introduced
improvements by planting caimito
trees, coconut trees, and others on
the land in question.
Nothing can be seen on the land that
plaintiffs had once upon a time been
in possession of the land. The
allegation that Cristita Quita, the
predecessor-in-interest of the
plaintiffs had been in possession of
the said property since 1957, openly,
exclusively, continuously, adversely
and in the concept of an owner is a
naked claim, unsupported by any
evidence.
Clearly, from the appearance of the
improvements introduced by the
predecessors-in-interest of the defendant,
it is showed that they have been in

possession of the land for more than one


(1) year. Hence, the action of the plaintiffs,
if any, is accion publiciana or plenaria de
possession"1 (Emphasis supplied).
In time, the MCTC rendered judgment
dismissing the compliant "for lack of
merit".
Therefrom, the plaintiffs appealed to the
Regional Trial Court (RTC) at Agusan del
Sur, which appeal was raffled to Branch VII
thereof. In a decision dated December 5,
1996, said court reversed that of the
MCTC, taking note of the fact that Cristita
Quita was among the oppositors in
Cadastral Case No. 149 and that she filed
a Miscellaneous Sales Application over the
lot. On the basis of such finding, the RTC
concluded that it was Cristita Quita,
predecessor-in-interest of the herein
private respondents, who was in actual
prior physical possession of Lot No. 1959.
Unable to accept the RTC judgment,
Sampayan went to the Court of Appeals on
a petition for review, thereat docketed
as CA-G.R. SP No. 43557.
As stated at the threshold hereof, the
Court of Appeals, in the herein
assailed Decision dated May 16,
2002,2denied Sampayans petition. His
motion for reconsideration having been
similarly denied by that court in
itsResolution of November 7,
2002,3 Sampayan is now with us via the
present recourse, it being his submissions
-

"I.
THAT THE COURT OF APPEALS ERRED IN
RULING THAT THE MUNICIPAL CIRCUIT
TRIAL COURT OF BAYUGAN, AGUSAN DEL
SUR, HAS JURISDICTION OVER THE CASE,
CONSIDERING THAT DURING THE HEARING
THEREOF IT WAS FOUND OUT BY THE SAID
MUNICIPAL COURT THAT ACCION
PUBLICIANA OR PLENARIA DE POSESION,
AND NOT FORCIBLE ENTRY, IS THE
PROPER ACTION;
II.
THAT THE CONCLUSION OF THE
HONORABLE COURT OF APPEALS THAT
PRIVATE RESPONDENTS HAVE BEEN IN
PRIOR ACTUAL POSSESSION IS
CONTRADICTED BY EVIDENCE ON
RECORD, AND CONSIDERING THAT THE
POSSESSION TO BE LEGALLY SUFFICIENT,
CONSIST (SIC) IN THE EXERCISE OF
DOMINIUM OVER IT, SUCH AS FENCING,
CULTIVATING OR OTHER UNMISTAKABLE
ACTS OF EXCLUSIVE CUSTODY AND
CONTROL FACTS WHICH THE PRIVATE
RESPONDENTS HAVE NEVER DONE - IS
CONTRARY TO LAW".4
In the main, petitioner maintains that
based on the pieces of evidence on record,
he had sufficiently proven his prior
physical possession of the subject lot.
Upon this premise, he argues that private
respondents complaint for forcible entry
has no leg to stand on, adding that the
proper remedy available to the latter
is accion publiciana or plenaria de
posesion which falls under the original

35

jurisdiction of Regional Trial Courts and not


of Municipal Circuit Trial Courts.
As we see it, the arguments put forward
by the petitioner crystallize to one pivotal
question: will the complaint for forcible
entry in this case prosper? To resolve this,
however, we must first determine as to
who between the herein parties was in
prior actual physical possession of the
subject lot at the time the complaint was
filed in the MCTC. For, as we have said
in Gaza vs. Lim 5 ,
"xxx In an action for forcible entry, the
plaintiff must prove that he was in prior
possession of the land or building and that
he was deprived thereof by means of
force, intimidation, threat, strategy or
stealth. xxx"
We emphasize, absence of prior physical
possession by the plaintiff in a forcible
entry case warrants the dismissal of his
complaint.1a\^/phi1.net
Undoubtedly, the issue of prior physical
possession is one of fact, and settled is
the rule that this Court is not a trier of
facts and does not normally embark on a
re-examination of the evidence adduced
by the parties during trial. Of course, the
rule admits of exceptions. So it is that
in Insular Life Assurance Company, Ltd.
vs. CA ,6 we wrote:
"[i]t is a settled rule that in the exercise of
the Supreme Court's power of review, the
Court is not a trier of facts and does not
normally undertake the re-examination of

the evidence presented by the contending


parties' during the trial of the case
considering that the findings of facts of
the CA are conclusive and binding on the
Court. However, the Court had recognized
several exceptions to this rule, to wit: (1)
when the findings are grounded entirely
on speculation, surmises or conjectures;
(2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when
there is grave abuse of discretion; (4)
when the judgment is based on a
misapprehension of facts; (5) when the
findings of facts are conflicting; (6) when
in making its findings the Court of Appeals
went beyond the issues of the case, or its
findings are contrary to the admissions of
both the appellant and the appellee; (7)
when the findings are contrary to the trial
court; (8) when the findings are
conclusions without citation of specific
evidence on which they are based; (9)
when the facts set forth in the petition as
well as in the petitioner's main and reply
briefs are not disputed by the respondent;
(10) when the findings of fact are
premised on the supposed absence of
evidence and contradicted by the
evidence on record; and (11) when the
Court of Appeals manifestly overlooked
certain relevant facts not disputed by the
parties, which, if properly considered,
would justify a different
conclusion."l^vvphi1.net
To our mind, exceptions (5) and (11) are
present in this case.
However, before delving into the question
of who as between the petitioner and

private respondents had prior physical


possession of the subject lot, we deem it
best to first resolve the issue of whether or
not the MCTC had jurisdiction over the
complaint filed in this case, an issue also
raised by the petitioner.
Relying on the conclusion of the MCTC that
private respondents proper remedy
is accion publiciana or plenaria de
posesion, and not forcible entry, petitioner
would deny the MCTCs jurisdiction over
the case.
Petitioner is in error.
In Sarmiento vs. CA7 , we held:
"[t]o give the court jurisdiction to effect
the ejectment of an occupant or deforciant
on the land, it is necessary that the
complaint should embody such a
statement of facts as brings the party
clearly within the class of cases for which
the statutes provide a remedy, as these
proceedings are summary in nature. The
complaint must show enough on its face
to give the court jurisdiction without resort
to parol testimony. The jurisdictional facts
must appear on the face of the complaint.
x x x"
Clear it is from the above that for the
MCTC to acquire jurisdiction over a forcible
entry case, it is enough that the complaint
avers the jurisdictional facts, i.e. that the
plaintiff had prior physical possession and
that he was deprived thereof by the
defendant through force, intimidation,
threats, strategy and stealth.8 The

36

complaint in this case makes such an


averment. Hence, the irrelevant
circumstance that the evidence adduced
during the hearing rendered improper an
action for forcible entry is of no moment
and cannot deprive the MCTC of its
jurisdiction over the case. The MCTC
continues to have that jurisdiction.
We shall now address the more decisive
question of prior physical possession.
After a careful evaluation of the evidence
at hand, we find for the petitioner.
To begin with, we are at once confronted
by the uncontested findings of the MCTC
judge himself during his ocular inspection
of the premises in dispute that what he
saw thereat "confirmed the allegations of
the defendant [now petitioner Sampayan]
that his predecessors-in-interest have
introduced improvements by planting
caimito trees, coconut trees, and others on
the land in question", adding that
"[N]othing can be seen on the land that
plaintiff had once upon a time been in
possession of the land", and categorically
stating that "[T]he allegation that Cristita
Quita, the predecessor-in-interest of the
plaintiffs had been in possession of the
said property since 1957, openly,
exclusively, continuously, adversely and in
the concept of an owner is a naked claim,
unsupported by any
evidence".1awphi1.nt

No. 1957, the lot adjacent to Lot No. 1959,


and that neither the private respondents
nor their mother had ever possessed Lot
No. 1959. Coming as it does from an
immediate neighbor, Dionesias statement
commands great weight and respect.
Incidentally, the MCTC judge himself found
during the ocular inspection that a portion
of the house of Macario Noynay, husband
of Dionesia, protruded on Lot No. 1959.
We note that in the herein assailed
decision, the Court of Appeals attached
much significance to the fact that private
respondents mother Cristita Quita was an
oppositor in Cadastral Case No. 149. We
rule and so hold that the mothers being
an oppositor in said cadastral case does
not, by itself, establish prior physical
possession because not all oppositors in
cadastral cases are actual possessors of
the lots or lands subject thereof.
WHEREFORE, the instant petition is
hereby GRANTED and the Decision and
Resolution, respectively dated May 16,
2002 and November 7, 2002, of the Court
of Appeals REVERSED and SET ASIDE.
SO ORDERED.

Then, too, there is the sworn affidavit of


Dionesia Noynay to the effect that she had
been residing since 1960 onward on Lot

37

G.R. No. 134651


18, 2000

September

SPOUSES VIRGILIO and JOSIE


JIMENEZ, petitioners,
vs.
PATRICIA, INC., respondent.
DECISION

the monthly rentals, her contract of lease


with PATRICIA was terminated.
On 29 March 1995 PATRICIA sent a letter
to the Jimenez spouses informing them of
the termination of the lease and
demanding that they vacate the premises
within fifteen (15) days from notice since
they had no existing lease contract with
it.2 But the spouses refused to leave.

BELLOSILLO, J.:
The Joint Decision of the Court of
Appeals1 (dismissing the petition for
review filed by spouses Virgilio and Josie
Jimenez in CA-G.R. SP No. 43185 and
giving due course to the petition for
review filed by Patricia, Inc., in CA-G.R. SP
No. 43179), in effect reversing the
decision of the Regional Trial Court and
reinstating that of the Metropolitan Trial
Court, is assailed in the instant petition.
Petitioners Virgilio and Josie Jimenez,
spouses, are sublessees of a lot and
building located at 2853 Juan Luna Street,
Tondo, Manila, owned by respondent
Patricia Inc. (PATRICIA for brevity), a
domestic corporation duly organized and
existing under Philippine laws. The
Jimenez spouses subleased the property in
1980 from a certain Purisima Salazar who
had been leasing the property from
PATRICIA since 1970.
Sometime in 1995 Purisima Salazar
abandoned the property thus incurring
back rentals dating back to January 1992.
Hence, by reason of her non-payment of

Thus, on 5 May 1995 PATRICIA filed a


complaint3 for unlawful detainer against
the Jimenez spouses alleging, among
others, that the lessee Purisima Salazar
subleased the premises to the Jimenezes;
that Purisima Salazar no longer occupied
the premises; that this notwithstanding,
the Jimenez spouses continued to occupy
the premises without any contract with
PATRICIA, its owner, hence, their stay was
merely being tolerated by the latter; and,
that despite demands made upon them,
they refused to vacate the premises
thereby unlawfully and illegally
withholding the property to the damage
and prejudice of PATRICIA.
In their Answer, the Jimenez spouses
claimed that they occupied the premises
as sublessees of Purisima Salazar with the
knowledge of PATRICIA; that the building
originally found on the lot was owned by
Purisima Salazar which she sold to them in
1984 with notice and without any
objection from PATRICIA; that, when the
building was gutted by fire in 1987 they
constructed a new house on the lot
worth P1,500,000.00 with the knowledge
and without any objection from PATRICIA;

and, that PATRICIA never collected any


rental for the land but they nevertheless
voluntarily paid the amount of P23,537.25
as rent corresponding to the period of
September 1979 to 31 December 1991.4
The MeTC ruled in favor of PATRICIA and
ordered the Jimenez spouses to vacate the
premises, to pay PATRICIA the sum
of P3,000.00 a month as reasonable rental
and/or compensation for the use of the
premises beginning April 1995 until they
finally vacated the premises, and to pay
PATRICIA the sum of P5,000.00 as
reasonable attorney's fees, plus costs of
suit.5
The Jimenez spouses appealed the MeTC
decision to the RTC.6 On 2 January 1997
the RTC modified the decision in favor of
the spouses holding that an implied new
lease contract existed between the
Jimenez spouses and PATRICIA in view of
the latter's acceptance of rentals from the
former. Thus the RTC extended the term of
the lease between the parties for a period
of one (1) year from date of decision, and
ordered PATRICIA to reimburse the Jimenez
spouses the expenses incurred in the
construction of the house built on the
property and/or for the Jimenez spouses to
remove the improvements thereon.7
On 20 January 1997 PATRICIA filed
a Motion for Clarificatory Judgment and
later added a Supplement to the Motion
for Clarificatory Judgment.
On 27 January 1997 PATRICIA, without
waiting for the resolution of its Motion for

38

Clarificatory Judgment as well as its


supplement thereto, filed a Petition for
Review of the RTC decision with the Court
of Appeals, docketed as CA-G.R. SP No.
43179.
On 13 February 1997 the Jimenez spouses
filed their own Petition for Review,
docketed as CA-G.R. SP No. 43185.
Subsequently, this petition was
consolidated with PATRICIA's Petition for
Review since it involved the same parties,
facts, and issues.

the complaint to allege the character of


the sublease or entry of the Jimenez
spouses into the property, whether legal
or illegal, automatically classified it into
an accion publiciana or
reinvindicatoria cognizable by the RTC and
not by the MeTC;8 thus, the action should
have been dismissed.

The Court of Appeals in due course


rendered a Joint Decision dismissing
the Petition for Review filed by the
Jimenez spouses while giving due course
to the petition of PATRICIA. The Court of
Appeals held that there was no implied
renewal of the lease contract between the
parties since, to begin with, there was no
lease contract between them; hence, the
Jimenez spouses could not have tendered
payment of rentals to PATRICIA. Instead, it
declared the status of the Jimenez spouses
as being analogous to that of a lessee or
tenant whose lease has expired but whose
occupancy has been continued by mere
tolerance of the owner, and hence, bound
by an implied promise that he would
vacate the premises upon demand. Thus,
the appellate court reversed and set aside
the decision of the RTC and reinstated the
decision of the MeTC which, among others,
ordered the Jimenez spouses to vacate the
premises.

The rule is settled that a question of


jurisdiction may be raised at any time,
even on appeal, provided that its
application does not result in a mockery of
the tenets of fair play. In the instant case,
the jurisdictional issue was raised by
petitioners for the first time only in the
instant Petition for Review. However, it
should be noted that they did so only after
an adverse decision was rendered by the
Court of Appeals. Despite several
opportunities in the RTC, which ruled in
their favor, and in the Court of Appeals,
petitioners never advanced the question
of jurisdiction of the MeTC. Additionally,
petitioners participated actively in the
proceedings before the MeTC9 and invoked
its jurisdiction with the filing of their
answer, in seeking affirmative relief from
it, in subsequently filing a notice of appeal
before the RTC, and later, a Petition for
Review with the Court of Appeals. Upon
these premises, petitioners cannot now be
allowed belatedly to adopt an inconsistent
posture by attacking the jurisdiction of the
court to which they had submitted
themselves voluntarily. Laches now bars
them from doing so.

Petitioners now assail the jurisdiction of


the MeTC contending that the failure of

Be that as it may, we find no error in the


MeTC assuming jurisdiction over the

subject matter. A complaint for unlawful


detainer is sufficient if it alleges that the
withholding of possession or the refusal to
vacate is unlawful without necessarily
employing the terminology of the law.10 As
correctly found by the appellate court, to
which we agree, the allegations in the
complaint sufficiently established a cause
of action for unlawful detainer. The
complaint clearly stated how entry was
effected and how and when dispossession
started - petitioners were able to enter the
subject premises as sublessees of
Purisima Salazar who, despite the
termination of her lease with respondent,
continued to occupy the subject premises
without any contract with it; thus, their
stay was by tolerance of respondent.
The fact that the complaint failed to state
that respondent was in prior possession of
the property before it was unlawfully
withheld by petitioner spouses is of no
moment. Prior physical possession is
indispensable only in actions for forcible
entry but not in unlawful detainer.11
Petitioner spouses, as mere sublessees of
Purisima Salazar, derive their right from
the sublessor whose termination of
contract with the lessor necessarily also
ends the sublease contract. Thus, when
the contract of lease of Purisima Salazar
with respondent was terminated the
contract of sublease of petitioners with the
former also necessarily ended and
petitioners cannot insist on staying on the
premises. Petitioners can invoke no right
superior to that of their sublessor.12

39

It is not correct to say that petitioners


could not have occupied the property by
tolerance of respondent as their entry into
the premises was inceptively illegal, the
sublease being entered into without the
consent of the owner.13Petitioners argue
that tolerance is only available in cases
where entry was lawful from the start and
cannot be asserted where entry was illegal
from the start. It appears however that
respondent did not expressly and
equivocally prohibit the subleasing of the
property. Although the attached contracts
of lease state that the lessee cannot
sublease the property, none of those
contracts pertain to the contract of lease
between Purisima Salazar and respondent
PATRICIA.14 In any event, the fact that
PATRICIA sent a letter to the Jimenez
spouses informing them of the termination
of the lease of Purisima Salazar shows that
they recognize and acknowledge their stay
in the premises as sublessees of Salazar.
However, after the termination of the
contract of lease of Purisima Salazar with
PATRICIA, any right of the Jimenez spouses
to stay in the premises, although
previously recognized, then and there
ended. After the termination of the
contract of lease of Salazar the continued
stay of the Jimenez spouses thereat was
merely by tolerance of PATRICIA and it
became unlawful after they ignored the
lessor's demand to leave.
The status of petitioner spouses is akin to
that of a lessee or a tenant whose term of
lease has expired but whose occupancy
has continued by tolerance of the owner. A
person who occupies the land of another

at the latter's forbearance or permission


without any contract between them is
necessarily bound by an implied promise
that he will vacate upon demand failing
which a summary action for ejectment is
the proper remedy against him.15 The
present action being for unlawful detainer,
it is well within the exclusive original
jurisdiction of the metropolitan trial courts.
Petitioners contend that respondent has
no cause of action against them since, as
proved by Transfer Certificate of Title No.
T-44247, the property is in the name of
the City of Manila and not of respondent
PATRICIA.
Records however show that this issue has
not been raised in the proceedings below,
hence, will not be ruled upon by this
Court.1wphi1 Any issue raised for the
first time on appeal and not timely raised
in the proceedings in the lower court is
barred by estoppel. Moreover, being mere
sublessees of the property in question,
petitioners cannot in an action involving
possession of the leased premises
controvert the title of PATRICIA, or assert
any right adverse to its title. It is the
Manila City Government, not the Jimenez
spouses, that is the proper party to
dispute the ownership of PATRICIA.
Petitioners argue that the Petition for
Review of respondent should have been
dismissed for being premature in view of
the pendency of its Motion for Clarificatory
Judgment and Supplement to the Motion
for Clarificatory Judgment which remained
unresolved by the RTC. They assert that

because of the pendency of its motion,


there was no final judgment or decision
that could properly be the subject of a
petition for review before the Court of
Appeals.
We do not agree. The Petition for
Review filed by respondent with the Court
of Appeals was not prematurely filed. It
should be borne in mind that a Motion for
Clarificatory Judgment not being in the
character of a motion for reconsideration
does not toll the reglementary period for
filing a petition for review with the Court of
Appeals. Its filing will not bar the judgment
from attaining finality, nor will its
resolution amend the decision to be
reviewed. Thus, when respondent filed
a Petition for Review before the Court of
Appeals, there was already a final
judgment that could properly be the
subject of a petition for review.
Moreover, under the Rules on Summary
Procedure, the decision of the RTC in civil
cases governed by this Rule, including
forcible entry and unlawful detainer, is
immediately executory without prejudice
to a further appeal that may be taken
therefrom. The judgment of the RTC being
final and executory the filing of
the Petition for Reviewwas proper.
As to the house built by petitioners on the
property, this Court has previously ruled
that lessees, much less, sublessees, are
not possessors or builders in good
faith16 over rented land because they
know that their occupancy of the premises
continues only during the life of the lease,

40

or sublease as the case may be; and, they


cannot as a matter of right recover the
value of their improvements from the
lessor, much less retain the premises until
they are reimbursed.17 Instead, their rights
are governed by Art. 1678 of the Civil
Code which allows reimbursement of
lessees up to one-half (1/2) of the value of
their improvements if the lessor so elects:
Art. 1678. If the lessee makes, in good
faith, useful improvements which are
suitable to the use for which the lease is
intended, without altering the form or
substance of the property leased, the
lessor upon the termination of the lease
shall pay the lessee one-half of the value
of the improvements at that time. Should
the lessor refuse to reimburse said
amount, the lessee may remove the
improvements, even though the principal
thing may suffer damage thereby. He shall
not, however, cause any more impairment

upon the property leased than is


necessary xxx (New Civil Code).
Thus, applying the above rule, petitioners
cannot recover full reimbursement of the
value spent for the construction of the
house, but is limited only to one-half (1/2)
of its value at the election of the lessor.
However, as PATRICIA has manifested its
lack of intention to do so, the Jimenez
spouses have no recourse but to remove
the house at their own expense.
WHEREFORE, the assailed Joint
Decision of the Court of Appeals reversing
and setting aside the decision of the
Regional Trial Court and reinstating the
decision of the Metropolitan Trial Court is
AFFIRMED, with the MODIFICATION that
petitioner spouses Virgilio and Josie
Jimenez should also remove the house
they have constructed on the lot at their
own expense. Thus, petitioner spouses

and all persons claiming title under them


are ordered: (a) to vacate the premises
described in the complaint located at 2853
Juan Luna Street, Tondo, Manila; (b) to
remove at their own expense within sixty
(60) days from finality of this Decision the
house they have constructed thereon; (c)
to pay respondent Patricia, Inc., the sum
of P3,000.00 a month as reasonable
rental/compensation for the use of the
premises beginning April 1995 until they
finally vacate the premises; and, (d) to
pay respondent Patricia, Inc., the sum
of P5,000.00 as attorney's fees, plus costs
of suit.
SO ORDERED.

41