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ART 415

G.R. No. L-50008 August 31, 1987


PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First
Instance of Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA
BALUYUT-MAGCALE, respondents.
PARAS, J.:
This is a petition for review on certiorari of the November 13, 1978 Decision * of the
then Court of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0
entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon.
Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate
mortgage executed by respondent spouses in favor of petitioner bank are null and
void.
The undisputed facts of this case by stipulation of the parties are as follows:
... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and
Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from
the defendant Prudential Bank. To secure payment of this loan, plaintiffs
executed in favor of defendant on the aforesaid date a deed of Real
Estate Mortgage over the following described properties:
l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse
spaces containing a total floor area of 263 sq. meters, more or less,
generally constructed of mixed hard wood and concrete materials,
under a roofing of cor. g. i. sheets; declared and assessed in the name
of FERNANDO MAGCALE under Tax Declaration No. 21109, issued by
the Assessor of Olongapo City with an assessed value of P35,290.00.
This building is the only improvement of the lot.
2. THE PROPERTY hereby conveyed by way of MORTGAGE includes
the right of occupancy on the lot where the above property is erected,
and more particularly described and bounded, as follows:

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A first class residential land Identffied as Lot No. 720, (Ts308, Olongapo Townsite Subdivision) Ardoin Street, East
Bajac-Bajac, Olongapo City, containing an area of 465 sq.
m. more or less, declared and assessed in the name of
FERNANDO MAGCALE under Tax Duration No. 19595
issued by the Assessor of Olongapo City with an
assessed value of P1,860.00; bounded on the
NORTH: By No. 6, Ardoin
Street
SOUTH: By No. 2, Ardoin
Street
EAST: By 37 Canda Street,
and
WEST: By Ardoin Street.
All corners of the lot marked by conc.
cylindrical monuments of the Bureau of
Lands as visible limits. ( Exhibit "A, " also
Exhibit "1" for defendant).
Apart from the stipulations in the printed portion of the
aforestated deed of mortgage, there appears a rider typed
at the bottom of the reverse side of the document under
the lists of the properties mortgaged which reads, as
follows:
AND IT IS FURTHER AGREED that in the
event the Sales Patent on the lot applied for
by the Mortgagors as herein stated is
released or issued by the Bureau of Lands,
the Mortgagors hereby authorize the
Register of Deeds to hold the Registration of
same until this Mortgage is cancelled, or to
annotate this encumbrance on the Title upon
authority from the Secretary of Agriculture

and Natural Resources, which title with


annotation, shall be released in favor of the
herein Mortgage.
From the aforequoted stipulation, it is obvious that the
mortgagee (defendant Prudential Bank) was at the outset
aware of the fact that the mortgagors (plaintiffs) have
already filed a Miscellaneous Sales Application over the
lot, possessory rights over which, were mortgaged to it.
Exhibit "A" (Real Estate Mortgage) was registered under
the Provisions of Act 3344 with the Registry of Deeds of
Zambales on November 23, 1971.
On May 2, 1973, plaintiffs secured an additional loan from
defendant Prudential Bank in the sum of P20,000.00. To
secure payment of this additional loan, plaintiffs executed
in favor of the said defendant another deed of Real Estate
Mortgage over the same properties previously mortgaged
in Exhibit "A." (Exhibit "B;" also Exhibit "2" for defendant).
This second deed of Real Estate Mortgage was likewise
registered with the Registry of Deeds, this time in
Olongapo City, on May 2,1973.
On April 24, 1973, the Secretary of Agriculture issued Miscellaneous
Sales Patent No. 4776 over the parcel of land, possessory rights over
which were mortgaged to defendant Prudential Bank, in favor of
plaintiffs. On the basis of the aforesaid Patent, and upon its
transcription in the Registration Book of the Province of Zambales,
Original Certificate of Title No. P-2554 was issued in the name of
Plaintiff Fernando Magcale, by the Ex-Oficio Register of Deeds of
Zambales, on May 15, 1972.
For failure of plaintiffs to pay their obligation to defendant Bank after it
became due, and upon application of said defendant, the deeds of Real
Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed.
Consequent to the foreclosure was the sale of the properties therein
mortgaged to defendant as the highest bidder in a public auction sale
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conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E").
The auction sale aforesaid was held despite written request from
plaintiffs through counsel dated March 29, 1978, for the defendant City
Sheriff to desist from going with the scheduled public auction sale
(Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).
Respondent Court, in a Decision dated November 3, 1978 declared the deeds of
Real Estate Mortgage as null and void (Ibid., p. 35).
On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 4153), opposed by private respondents on January 5, 1979 (Ibid., pp. 54-62), and in an
Order dated January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration was
denied for lack of merit. Hence, the instant petition (Ibid., pp. 5-28).
The first Division of this Court, in a Resolution dated March 9, 1979, resolved to
require the respondents to comment (Ibid., p. 65), which order was complied with the
Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its Reply on June
2,1979 (Ibid., pp. 101-112).
Thereafter, in the Resolution dated June 13, 1979, the petition was given due course
and the parties were required to submit simultaneously their respective memoranda.
(Ibid., p. 114).
On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private
respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-155).
In a Resolution dated August 10, 1979, this case was considered submitted for
decision (Ibid., P. 158).
In its Memorandum, petitioner raised the following issues:
1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID;
AND
2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE
RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24,
1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF
TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE
DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p. 122).

This petition is impressed with merit.


The pivotal issue in this case is whether or not a valid real estate mortgage can be
constituted on the building erected on the land belonging to another.
The answer is in the affirmative.
In the enumeration of properties under Article 415 of the Civil Code of the Philippines,
this Court ruled that, "it is obvious that the inclusion of "building" separate and distinct
from the land, in said provision of law can only mean that a building is by itself an
immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958;
Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).
Thus, while it is true that a mortgage of land necessarily includes, in the absence of
stipulation of the improvements thereon, buildings, still a building by itself may be
mortgaged apart from the land on which it has been built. Such a mortgage would be
still a real estate mortgage for the building would still be considered immovable
property even if dealt with separately and apart from the land (Leung Yee vs. Strong
Machinery Co., 37 Phil. 644). In the same manner, this Court has also established
that possessory rights over said properties before title is vested on the grantee, may
be validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs.
Marcos, 3 SCRA 438 [1961]).
Coming back to the case at bar, the records show, as aforestated that the original
mortgage deed on the 2-storey semi-concrete residential building with warehouse
and on the right of occupancy on the lot where the building was erected, was
executed on November 19, 1971 and registered under the provisions of Act 3344 with
the Register of Deeds of Zambales on November 23, 1971. Miscellaneous Sales
Patent No. 4776 on the land was issued on April 24, 1972, on the basis of which OCT
No. 2554 was issued in the name of private respondent Fernando Magcale on May
15, 1972. It is therefore without question that the original mortgage was executed
before the issuance of the final patent and before the government was divested of its
title to the land, an event which takes effect only on the issuance of the sales patent
and its subsequent registration in the Office of the Register of Deeds (Visayan Realty
Inc. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of
Lands vs. Jurado, L-14702, May 23, 1961; Pena "Law on Natural Resources", p. 49).
Under the foregoing considerations, it is evident that the mortgage executed by

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private respondent on his own building which was erected on the land belonging to
the government is to all intents and purposes a valid mortgage.
As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554,
it will be noted that Sections 121, 122 and 124 of the Public Land Act, refer to land
already acquired under the Public Land Act, or any improvement thereon and
therefore have no application to the assailed mortgage in the case at bar which was
executed before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a
restriction appearing on the face of private respondent's title has likewise no
application in the instant case, despite its reference to encumbrance or alienation
before the patent is issued because it refers specifically to encumbrance or alienation
on the land itself and does not mention anything regarding the improvements existing
thereon.
But it is a different matter, as regards the second mortgage executed over the same
properties on May 2, 1973 for an additional loan of P20,000.00 which was registered
with the Registry of Deeds of Olongapo City on the same date. Relative thereto, it is
evident that such mortgage executed after the issuance of the sales patent and of the
Original Certificate of Title, falls squarely under the prohibitions stated in Sections
121, 122 and 124 of the Public Land Act and Section 2 of Republic Act 730, and is
therefore null and void.
Petitioner points out that private respondents, after physically possessing the title for
five years, voluntarily surrendered the same to the bank in 1977 in order that the
mortgaged may be annotated, without requiring the bank to get the prior approval of
the Ministry of Natural Resources beforehand, thereby implicitly authorizing
Prudential Bank to cause the annotation of said mortgage on their title.
However, the Court, in recently ruling on violations of Section 124 which refers to
Sections 118, 120, 122 and 123 of Commonwealth Act 141, has held:
... Nonetheless, we apply our earlier rulings because we believe that as
in pari delicto may not be invoked to defeat the policy of the State
neither may the doctrine of estoppel give a validating effect to a void
contract. Indeed, it is generally considered that as between parties to a
contract, validity cannot be given to it by estoppel if it is prohibited by
law or is against public policy (19 Am. Jur. 802). It is not within the
competence of any citizen to barter away what public policy by law was

to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and
Alino supra). ... (Arsenal vs. IAC, 143 SCRA 54 [1986]).
This pronouncement covers only the previous transaction already alluded to and
does not pass upon any new contract between the parties (Ibid), as in the case at
bar. It should not preclude new contracts that may be entered into between petitioner
bank and private respondents that are in accordance with the requirements of the
law. After all, private respondents themselves declare that they are not denying the
legitimacy of their debts and appear to be open to new negotiations under the law
(Comment; Rollo, pp. 95-96). Any new transaction, however, would be subject to
whatever steps the Government may take for the reversion of the land in its favor.
PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales &
Olongapo City is hereby MODIFIED, declaring that the Deed of Real Estate Mortgage
for P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage for an
additional loan of P20,000.00 is null and void, without prejudice to any appropriate
action the Government may take against private respondents.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.
EN BANC
G.R. No. L-11658

February 15, 1918

LEUNG YEE, plaintiff-appellant,


vs.
FRANK L. STRONG MACHINERY COMPANY and J. G.
WILLIAMSON, defendants-appellees.
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.
CARSON, J.:
The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning
machinery company from the defendant machinery company, and executed a chattel
mortgage thereon to secure payment of the purchase price. It included in the
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mortgage deed the building of strong materials in which the machinery was installed,
without any reference to the land on which it stood. The indebtedness secured by this
instrument not having been paid when it fell due, the mortgaged property was sold by
the sheriff, in pursuance of the terms of the mortgage instrument, and was bought in
by the machinery company. The mortgage was registered in the chattel mortgage
registry, and the sale of the property to the machinery company in satisfaction of the
mortgage was annotated in the same registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia
Agricola Filipina" executed a deed of sale of the land upon which the building stood to
the machinery company, but this deed of sale, although executed in a public
document, was not registered. This deed makes no reference to the building erected
on the land and would appear to have been executed for the purpose of curing any
defects which might be found to exist in the machinery company's title to the building
under the sheriff's certificate of sale. The machinery company went into possession of
the building at or about the time when this sale took place, that is to say, the month of
December, 1913, and it has continued in possession ever since.
At or about the time when the chattel mortgage was executed in favor of the
machinery company, the mortgagor, the "Compaia Agricola Filipina" executed
another mortgage to the plaintiff upon the building, separate and apart from the land
on which it stood, to secure payment of the balance of its indebtedness to the plaintiff
under a contract for the construction of the building. Upon the failure of the mortgagor
to pay the amount of the indebtedness secured by the mortgage, the plaintiff secured
judgment for that amount, levied execution upon the building, bought it in at the
sheriff's sale on or about the 18th of December, 1914, and had the sheriff's certificate
of the sale duly registered in the land registry of the Province of Cavite.
At the time when the execution was levied upon the building, the defendant
machinery company, which was in possession, filed with the sheriff a sworn
statement setting up its claim of title and demanding the release of the property from
the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an indemnity
bond in favor of the sheriff in the sum of P12,000, in reliance upon which the sheriff
sold the property at public auction to the plaintiff, who was the highest bidder at the
sheriff's sale.
This action was instituted by the plaintiff to recover possession of the building from
the machinery company.

The trial judge, relying upon the terms of article 1473 of the Civil Code, gave
judgment in favor of the machinery company, on the ground that the company had its
title to the building registered prior to the date of registry of the plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees, the ownership
shall be transfer to the person who may have the first taken possession
thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the person acquiring it who first
recorded it in the registry.
Should there be no entry, the property shall belong to the person who first took
possession of it in good faith, and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it must be
apparent that the annotation or inscription of a deed of sale of real property in a
chattel mortgage registry cannot be given the legal effect of an inscription in the
registry of real property. By its express terms, the Chattel Mortgage Law
contemplates and makes provision for mortgages of personal property; and the sole
purpose and object of the chattel mortgage registry is to provide for the registry of
"Chattel mortgages," that is to say, mortgages of personal property executed in the
manner and form prescribed in the statute. The building of strong materials in which
the rice-cleaning machinery was installed by the "Compaia Agricola Filipina" was
real property, and the mere fact that the parties seem to have dealt with it separate
and apart from the land on which it stood in no wise changed its character as real
property. It follows that neither the original registry in the chattel mortgage of the
building and the machinery installed therein, not the annotation in that registry of the
sale of the mortgaged property, had any effect whatever so far as the building was
concerned.
We conclude that the ruling in favor of the machinery company cannot be sustained
on the ground assigned by the trial judge. We are of opinion, however, that the
judgment must be sustained on the ground that the agreed statement of facts in the
court below discloses that neither the purchase of the building by the plaintiff nor his
inscription of the sheriff's certificate of sale in his favor was made in good faith, and
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that the machinery company must be held to be the owner of the property under the
third paragraph of the above cited article of the code, it appearing that the company
first took possession of the property; and further, that the building and the land were
sold to the machinery company long prior to the date of the sheriff's sale to the
plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil Code
require "good faith," in express terms, in relation to "possession" and "title," but
contain no express requirement as to "good faith" in relation to the "inscription" of the
property on the registry, it must be presumed that good faith is not an essential
requisite of registration in order that it may have the effect contemplated in this
article. We cannot agree with this contention. It could not have been the intention of
the legislator to base the preferential right secured under this article of the code upon
an inscription of title in bad faith. Such an interpretation placed upon the language of
this section would open wide the door to fraud and collusion. The public records
cannot be converted into instruments of fraud and oppression by one who secures an
inscription therein in bad faith. The force and effect given by law to an inscription in a
public record presupposes the good faith of him who enters such inscription; and
rights created by statute, which are predicated upon an inscription in a public registry,
do not and cannot accrue under an inscription "in bad faith," to the benefit of the
person who thus makes the inscription.
Construing the second paragraph of this article of the code, the supreme court of
Spain held in its sentencia of the 13th of May, 1908, that:
This rule is always to be understood on the basis of the good faith mentioned
in the first paragraph; therefore, it having been found that the second
purchasers who record their purchase had knowledge of the previous sale, the
question is to be decided in accordance with the following paragraph. (Note 2,
art. 1473, Civ. Code, Medina and Maranon [1911] edition.)
Although article 1473, in its second paragraph, provides that the title of
conveyance of ownership of the real property that is first recorded in the
registry shall have preference, this provision must always be understood on
the basis of the good faith mentioned in the first paragraph; the legislator could
not have wished to strike it out and to sanction bad faith, just to comply with a
mere formality which, in given cases, does not obtain even in real disputes

between third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers
of the La Revista de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he bought the
building at the sheriff's sale and inscribed his title in the land registry, was duly
notified that the machinery company had bought the building from plaintiff's judgment
debtor; that it had gone into possession long prior to the sheriff's sale; and that it was
in possession at the time when the sheriff executed his levy. The execution of an
indemnity bond by the plaintiff in favor of the sheriff, after the machinery company
had filed its sworn claim of ownership, leaves no room for doubt in this regard.
Having bought in the building at the sheriff's sale with full knowledge that at the time
of the levy and sale the building had already been sold to the machinery company by
the judgment debtor, the plaintiff cannot be said to have been a purchaser in good
faith; and of course, the subsequent inscription of the sheriff's certificate of title must
be held to have been tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of the sheriff's
certificate of sale to the plaintiff was not made in good faith, we should not be
understood as questioning, in any way, the good faith and genuineness of the
plaintiff's claim against the "Compaia Agricola Filipina." The truth is that both the
plaintiff and the defendant company appear to have had just and righteous claims
against their common debtor. No criticism can properly be made of the exercise of the
utmost diligence by the plaintiff in asserting and exercising his right to recover the
amount of his claim from the estate of the common debtor. We are strongly inclined to
believe that in procuring the levy of execution upon the factory building and in buying
it at the sheriff's sale, he considered that he was doing no more than he had a right to
do under all the circumstances, and it is highly possible and even probable that he
thought at that time that he would be able to maintain his position in a contest with
the machinery company. There was no collusion on his part with the common debtor,
and no thought of the perpetration of a fraud upon the rights of another, in the
ordinary sense of the word. He may have hoped, and doubtless he did hope, that the
title of the machinery company would not stand the test of an action in a court of law;
and if later developments had confirmed his unfounded hopes, no one could question
the legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's claim of
ownership when he executed the indemnity bond and bought in the property at the
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sheriff's sale, and it appearing further that the machinery company's claim of
ownership was well founded, he cannot be said to have been an innocent purchaser
for value. He took the risk and must stand by the consequences; and it is in this
sense that we find that he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith as against the true
owner of the land or of an interest therein; and the same rule must be applied to one
who has knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of his
vendor. A purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the belief that
there was no defect in the title of the vendor. His mere refusal to believe that such
defect exists, or his willful closing of his eyes to the possibility of the existence of a
defect in his vendor's title, will not make him an innocent purchaser for value, if
afterwards develops that the title was in fact defective, and it appears that he had
such notice of the defects as would have led to its discovery had he acted with that
measure of precaution which may reasonably be acquired of a prudent man in a like
situation. Good faith, or lack of it, is in its analysis a question of intention; but in
ascertaining the intention by which one is actuated on a given occasion, we are
necessarily controlled by the evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be determined. So it is that "the honesty of
intention," "the honest lawful intent," which constitutes good faith implies a "freedom
from knowledge and circumstances which ought to put a person on inquiry," and so it
is that proof of such knowledge overcomes the presumption of good faith in which the
courts always indulge in the absence of proof to the contrary. "Good faith, or the want
of it, is not a visible, tangible fact that can be seen or touched, but rather a state or
condition of mind which can only be judged of by actual or fancied tokens or signs."
(Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La.
Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part of the decision
and judgment entered in the court below should be affirmed with costs of this
instance against the appellant. So ordered.
Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.
Torres, Avancea and Fisher, JJ., took no part.

G.R. No. L-32917 July 18, 1988


JULIAN S. YAP, petitioner,
vs.
HON. SANTIAGO O. TAADA, etc., and GOULDS PUMPS INTERNATIONAL
(PHIL.), INC., respondents.
Paterno P. Natinga for private respondent.
NARVASA, J.:
The petition for review on certiorari at bar involves two (2) Orders of respondent
Judge Taada 1 in Civil Case No. 10984. The first, dated September 16, 1970, denied
petitioner Yap's motion to set aside execution sale and to quash alias writ of
execution. The second, dated November 21, 1970, denied Yap's motion for
reconsideration. The issues concerned the propriety of execution of a judgment
claimed to be "incomplete, vague and non-final," and the denial of petitioner's
application to prove and recover damages resulting from alleged irregularities in the
process of execution.
The antecedents will take some time in the telling. The case began in the City Court
of Cebu with the filing by Goulds Pumps International (Phil.), Inc. of a
complaint 2 against Yap and his wife 3 seeking recovery of P1,459.30 representing the
balance of the price and installation cost of a water pump in the latter's
premises. 4 The case resulted in a judgment by the City Court on November 25,
1968, reading as follows:
When this case was called for trial today, Atty. Paterno Natinga
appeared for the plaintiff Goulds and informed the court that he is ready
for trial. However, none of the defendants appeared despite notices
having been served upon them.
Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its
evidence ex-parte.
After considering the evidence of the plaintiff, the court hereby renders
judgment in favor of the plaintiff and against the defendant (Yap),
ordering the latter to pay to the former the sum of Pl,459.30 with interest
at the rate of 12% per annum until fully paid, computed from August 12,
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1968, date of the filing of the complaint; to pay the sum of P364.80 as
reasonable attorney's fees, which is equivalent " to 25% of the unpaid
principal obligation; and to pay the costs, if any.
Yap appealed to the Court of First Instance. The appeal was assigned to the sala of
respondent Judge Taada. For failure to appear for pre-trial on August 28, 1968, this
setting being intransferable since the pre-trial had already been once postponed at
his instance, 5 Yap was declared in default by Order of Judge Taada dated August
28, 1969, 6 reading as follows:
When this case was called for pre-trial this morning, the plaintiff and
counsel appeared, but neither the defendants nor his counsel appeared
despite the fact that they were duly notified of the pre-trial set this
morning. Instead he filed an Ex-Parte Motion for Postponement which
this Court received only this morning, and on petition of counsel for the
plaintiff that the Ex-Parte Motion for Postponement was not filed in
accordance with the Rules of Court he asked that the same be denied
and the defendants be declared in default; .. the motion for the plaintiff
being well- grounded, the defendants are hereby declared in default
and the Branch Clerk of Court ..is hereby authorized to receive
evidence for the plaintiff and .. submit his report within ten (10) days
after reception of evidence.
Goulds presented evidence ex parte and judgment by default was rendered the
following day by Judge Taada requiring Yap to pay to Goulds (1) Pl,459.30
representing the unpaid balance of the pump purchased by him; (2) interest of 12%
per annum thereon until fully paid; and (3) a sum equivalent to 25% of the amount
due as attorney's fees and costs and other expenses in prosecuting the action.
Notice of the judgment was served on Yap on September 1, 1969. 7
On September 16, 1969 Yap filed a motion for reconsideration. 8 In it he insisted that
his motion for postponement should have been granted since it expressed his desire
to explore the possibility of an amicable settlement; that the court should give the
parties time to arrive at an amicable settlement failing which, he should be allowed to
present evidence in support of his defenses (discrepancy as to the price and breach
of warranty). The motion was not verified or accompanied by any separate affidavit.
Goulds opposed the motion. Its opposition 9 drew attention to the eleventh-hour
motion for postponement of Yap which had resulted in the cancellation of the prior

hearing of June 30, 1969 despite Goulds' vehement objection, and the re-setting
thereof on August 28, 1969 with intransferable character; it averred that Yap had
again sought postponement of this last hearing by another eleventh-hour motion on
the plea that an amicable settlement would be explored, yet he had never up to that
time ever broached the matter, 10 and that this pattern of seeking to obtain last-minute
postponements was discernible also in the proceedings before the City Court. In its
opposition, Goulds also adverted to the examination made by it of the pump, on
instructions of the City Court, with a view to remedying the defects claimed to exist by
Yap; but the examination had disclosed the pump's perfect condition. Yap's motion for
reconsideration was denied by Order dated October 10, 1969, notice of which was
received by Yap on October 4, 1969. 11
On October 15, 1969 Judge Taada issued an Order granting Goulds' Motion for
Issuance of Writ of Execution dated October 14, 1969, declaring the reasons therein
alleged to be meritorious. 12 Yap forthwith filed an "Urgent Motion for Reconsideration
of Order" dated October 17, 1969, 13 contending that the judgment had not yet
become final, since contrary to Goulds' view, his motion for reconsideration was
not pro forma for lack of an affidavit of merit, this not being required under Section 1
(a) of Rule 37 of the Rules of Court upon which his motion was grounded. Goulds
presented an opposition dated October 22, 1969. 14 It pointed out that in his motion
for reconsideration Yap had claimed to have a valid defense to the action, i.e., "..
discrepancy as to price and breach of seller's warranty," in effect, that there was fraud
on Goulds' paint; Yap's motion for reconsideration should therefore have been
supported by an affidavit of merit respecting said defenses; the absence thereof
rendered the motion for reconsideration fatally defective with the result that its filing
did not interrupt the running of the period of appeal. The opposition also drew
attention to the failure of the motion for reconsideration to specify the findings or
conclusions in the judgment claimed to be contrary to law or not supported by the
evidence, making it a pro forma motion also incapable of stopping the running of the
appeal period. On October 23, 1969, Judge Taada denied Yap's motion for
reconsideration and authorized execution of the judgment. 15 Yap sought
reconsideration of this order, by another motion dated October 29, 1969. 16 This
motion was denied by Order dated January 26, 1970. 17 Again Yap moved for
reconsideration, and again was rebuffed, by Order dated April 28, 1970. 18
In the meantime the Sheriff levied on the water pump in question, 19 and by notice
dated November 4, 1969, scheduled the execution sale thereof on November 14,
DONT WORRY BE HAPPY.

1969. 20 But in view of the pendency of Yap's motion for reconsideration of October
29, 1969, suspension of the sale was directed by Judge Taada in an order dated
November 6, 1969. 21
Counsel for the plaintiff is hereby given 10 days time to answer the
Motion, dated October 29, 1969, from receipt of this Order and in the
meantime, the Order of October 23, 1969, insofar as it orders the sheriff
to enforce the writ of execution is hereby suspended.
It appears however that a copy of this Order was not transmitted to the Sheriff
"through oversight, inadvertence and pressure of work" of the Branch Clerk of
Court. 22 So the Deputy Provincial Sheriff went ahead with the scheduled auction sale
and sold the property levied on to Goulds as the highest bidder. 23 He later submitted
the requisite report to the Court dated November 17, 1969, 24 as well as the "Sheriffs
Return of Service" dated February 13, 1970, 25 in both of which it was stated that
execution had been "partially satisfied." It should be observed that up to this time,
February, 1970, Yap had not bestirred himself to take an appeal from the judgment of
August 29, 1969.
On May 9, 1970 Judge Taada ordered the issuance of an alias writ of execution on
Gould's ex parte motion therefor. 26 Yap received notice of the Order on June 11.
Twelve (1 2) days later, he filed a "Motion to Set Aside Execution Sale and to
Quash Alias Writ of Execution." 27 As regards the original, partial execution of the
judgment, he argued that
1) "the issuance of the writ of execution on October 16, 1969 was contrary to law, the
judgment sought to be executed not being final and executory;" and
2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New
Rules of Court," i.e., notice by publication in case of execution sale of real property,
the pump and its accessories being immovable because attached to the ground with
character of permanency (Art. 415, Civil Code).
And with respect to the alias writ, he argued that it should not have issued because

1) "the judgment sought to be executed is null and void" as "it deprived the defendant
of his day in court" and "of due process;"

2) "said judgment is incomplete and vague" because there is no starting point for
computation of the interest imposed, or a specification of the "other expenses
incurred in prosecuting this case" which Yap had also been ordered to pay;
3) "said judgment is defective because it contains no statement of facts but a mere
recital of the evidence; and
4) "there has been a change in the situation of the parties which makes execution
unjust and inequitable" because Yap suffered damages by reason of the illegal
execution.
Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by
Order dated September 16, 1970. Judge Taada pointed out that the motion had
"become moot and academic" since the decision of August 29, 1969, "received by the
defendant on September 1, 1969 had long become final when the Order for the
Issuance of a Writ of Execution was promulgated on October 15, 1969." His Honor
also stressed that
The defendant's Motion for Reconsideration of the Courts decision was
in reality one for new trial. Regarded as motion for new trial it should
allege the grounds for new trial, provided for in the Rules of Court, to be
supported by affidavit of merits; and this the defendant failed to do. If
the defendant sincerely desired for an opportunity to submit to an
amicable settlement, which he failed to do extra judicially despite the
ample time before him, he should have appeared in the pre- trial to
achieve the same purpose.
Judge Taada thereafter promulgated another Order dated September 21, 1970
granting a motion of Goulds for completion of execution of the judgment of August 29,
1969 to be undertaken by the City Sheriff of Cebu. Once more, Yap sought
reconsideration. He submitted a "Motion for Reconsideration of Two Orders" dated
October 13, 1970, 28 seeking the setting aside not only of this Order of September 21,
1970 but also that dated September 16, 1970, denying his motion to set aside
execution dated June 23, 1970. He contended that the Order of September 21, 1970
(authorizing execution by the City Sheriff) was premature, since the 30-day period to
appeal from the earlier order of September 16, 1970 (denying his motion to set aside)
had not yet expired. He also reiterated his view that his motion for reconsideration
dated September 15, 1969 did not require that it be accompanied by an affidavit of
DONT WORRY BE HAPPY.

merits. This last motion was also denied for "lack of merits," by Order dated
November 21, 1970. 29
On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to
appeal to the Supreme Court on certiorari only on questions of law, "from the Order ...
of September 16, 1970 ... and from the Order ... of November 21, 1970, ... pursuant
to sections 2 and 3 of Republic Act No. 5440." He filed his petition for review with this
Court on January 5, 1971, after obtaining an extension therefor. 30
The errors of law he attributes to the Court a quo are the following: 31
1) refusing to invalidate the execution pursuant to its Order of October 16, 1969
although the judgment had not then become final and executory and despite its being
incomplete and vague;
2) ignoring the fact that the execution sale was carried out although it (the Court) had
itself ordered suspension of execution on November 6, 1969;
3) declining to annul the execution sale of the pump and accessories subject of the
action although made without the requisite notice prescribed for the sale of
immovables; and
4) refusing to allow the petitioner to prove irregularities in the process of execution
which had resulted in damages to him.
Notice of the Trial Court's judgment was served on Yap on September 1, 1969. His
motion for reconsideration thereof was filed 15 days thereafter, on September 16,
1969. Notice of the Order denying the motion was received by him on October 14,
1969. The question is whether or not the motion for reconsideration which was not
verified, or accompanied by an affidavit of merits (setting forth facts constituting his
meritorious defenses to the suit) or other sworn statement (stating facts excusing his
failure to appear at the pre-trial was pro forma and consequently had not interrupted
the running of the period of appeal. It is Yap's contention that his motion was notpro
forma for lack of an affidavit of merits, such a document not being required by Section
1 (a) of Rule 37 of the Rules of Court upon which his motion was based. This is
incorrect.
Section 2, Rule 37 precisely requires that when the motion for new trial is founded on
Section 1 (a), it should be accompanied by an affidavit of merit.

xxx xxx xxx


When the motion is made for the causes mentioned in subdivisions (a)
and (b) of the preceding section, it shall be proved in the manner
provided for proof of motions. Affidavit or affidavits of merits shall also
be attached to a motion for the cause mentioned in subdivision
(a) which may be rebutted by counter-affidavits.
xxx xxx xxx 32
Since Yap himself asserts that his motion for reconsideration is grounded on Section
1 (a) of Rule 37, 33 i.e., fraud, accident, mistake or excusable negligence which
ordinary prudence could not have guarded against and by reason of which ... (the)
aggrieved party has probably been impaired in his rights" this being in any event
clear from a perusal of the motion which theorizes that he had "been impaired in his
rights" because he was denied the right to present evidence of his defenses
(discrepancy as to price and breach of warranty) it was a fatal omission to fail to
attach to his motion an affidavit of merits, i.e., an affidavit "showing the facts (not
conclusions) constituting the valid x x defense which the movant may prove in case a
new trial is granted." 34 The requirement of such an affidavit is essential because
obviously "a new trial would be a waste of the court's time if the complaint turns out to
be groundless or the defense ineffective." 35
In his motion for reconsideration, Yap also contended that since he had expressed a
desire to explore the possibility of an amicable settlement, the Court should have
given him time to do so, instead of declaring him in default and thereafter rendering
judgment by default on Gould's ex parte evidence.
The bona fides of this desire to compromise is however put in doubt by the attendant
circumstances. It was manifested in an eleventh-hour motion for postponement of the
pre-trial which had been scheduled with intransferable character since it had already
been earlier postponed at Yap's instance; it had never been mentioned at any prior
time since commencement of the litigation; such a possible compromise (at least in
general or preliminary terms) was certainly most appropriate for consideration at the
pre-trial; in fact Yap was aware that the matter was indeed a proper subject of a pretrial agenda, yet he sought to avoid appearance at said pre-trial which he knew to be
intransferable in character. These considerations and the dilatory tactics thus far
attributable to him-seeking postponements of hearings, or failing to appear therefor
DONT WORRY BE HAPPY.

despite notice, not only in the Court of First Instance but also in the City Court
proscribe belief in the sincerity of his avowed desire to negotiate a compromise.
Moreover, the disregard by Yap of the general requirement that "(n)otice of a motion
shall be served by the applicant to all parties concerned at least three (3) days before
the hearing thereof, together with a copy of the motion, and of any affidavits and
other papers accompanying it," 36 for which no justification whatever has been
offered, also militates against the bona fides of Yap's expressed wish for an amicable
settlement. The relevant circumstances do not therefore justify condemnation, as a
grave abuse of discretion, or a serious mistake, of the refusal of the Trial Judge to
grant postponement upon this proferred ground.
The motion for reconsideration did not therefore interrupt the running of the period of
appeal. The time during which it was pending before the court from September 16,
1969 when it was filed with the respondent Court until October 14, 1969 when notice
of the order denying the motion was received by the movant could not be
deducted from the 30-day period of appeal. 37 This is the inescapable conclusion from
a consideration of Section 3 of Rule 41 which in part declares that, "The "time during
which a motion to set aside the judgment or order or for a new trial has been pending
shall be deducted, unless such motion fails to satisfy the requirements of Rule 37. 38
Notice of the judgment having been received by Yap on September 1, 1969, and the
period of appeal therefrom not having been interrupted by his motion for
reconsideration filed on September 16, 1969, the reglementary period of appeal
expired thirty (30) days after September 1, 1969, or on October 1, 1969, without an
appeal being taken by Yap. The judgment then became final and executory; Yap
could no longer take an appeal therefrom or from any other subsequent orders; and
execution of judgment correctly issued on October 15, 1969, "as a matter of right." 39
The next point discussed by Yap, that the judgment is incomplete and vague, is not
well taken. It is true that the decision does not fix the starting time of the computation
of interest on the judgment debt, but this is inconsequential since that time is easily
determinable from the opinion, i.e., from the day the buyer (Yap) defaulted in the
payment of his obligation, 40 on May 31, 1968. 41 The absence of any disposition
regarding his counterclaim is also immaterial and does not render the judgment
incomplete. Yap's failure to appear at the pre-trial without justification and despite
notice, which caused the declaration of his default, was a waiver of his right to
controvert the plaintiff s proofs and of his right to prove the averments of his answer,

inclusive of the counterclaim therein pleaded. Moreover, the conclusion in the


judgment of the merit of the plaintiff s cause of action was necessarily and at the
same time a determination of the absence of merit of the defendant's claim of
untenability of the complaint and of malicious prosecution.
Yap's next argument that the water pump had become immovable property by its
being installed in his residence is also untenable. The Civil Code considers as
immovable property, among others, anything "attached to an immovable in a fixed
manner, in such a way that it cannot be separated therefrom without breaking the
material or deterioration of the object." 42 The pump does not fit this description. It
could be, and was in fact separated from Yap's premises without being broken or
suffering deterioration. Obviously the separation or removal of the pump involved
nothing more complicated than the loosening of bolts or dismantling of other
fasteners.
Yap's last claim is that in the process of the removal of the pump from his house,
Goulds' men had trampled on the plants growing there, destroyed the shed over the
pump, plugged the exterior casings with rags and cut the electrical and conduit pipes;
that he had thereby suffered actual-damages in an amount of not less than P
2,000.00, as well as moral damages in the sum of P 10,000.00 resulting from his
deprivation of the use of his water supply; but the Court had refused to allow him to
prove these acts and recover the damages rightfully due him. Now, as to the loss of
his water supply, since this arose from acts legitimately done, the seizure on
execution of the water pump in enforcement of a final and executory judgment, Yap
most certainly is not entitled to claim moral or any other form of damages therefor.
WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders
of September 16, 1970 and November 21, 1970 subject thereof, AFFIRMED in
toto. Costs against petitioner.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

DONT WORRY BE HAPPY.

G.R. No. L-18456

November 30, 1963

CONRADO P. NAVARRO, plaintiff-appellee,


vs.
RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.
Deogracias Taedo, Jr. for plaintiff-appellee.
Renato A. Santos for defendants-appellants.
PAREDES, J.:
On December 14, 1959, defendants Rufino G. Pineda and his mother Juana
Gonzales (married to Gregorio Pineda), borrowed from plaintiff Conrado P. Navarro,
the sum of P2,500.00, payable 6 months after said date or on June 14, 1959. To
secure the indebtedness, Rufino executed a document captioned "DEED OF REAL
ESTATE and CHATTEL MORTGAGES", whereby Juana Gonzales, by way of Real
Estate Mortgage hypothecated a parcel of land, belonging to her, registered with the
Register of Deeds of Tarlac, under Transfer Certificate of Title No. 25776, and Rufino
G. Pineda, by way of Chattel Mortgage, mortgaged his two-story residential house,
having a floor area of 912 square meters, erected on a lot belonging to Atty. Vicente
Castro, located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in
his name, under Motor Vehicle Registration Certificate No. A-171806. Both
mortgages were contained in one instrument, which was registered in both the Office
of the Register of Deeds and the Motor Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the defendants, after demands
made on them, failed to pay. They, however, asked and were granted extension up to
June 30, 1960, within which to pay. Came June 30, defendants again failed to pay
and, for the second time, asked for another extension, which was given, up to July
30, 1960. In the second extension, defendant Pineda in a document entitled
"Promise", categorically stated that in the remote event he should fail to make good
the obligation on such date (July 30, 1960), the defendant would no longer ask for
further extension and there would be no need for any formal demand, and plaintiff
could proceed to take whatever action he might desire to enforce his rights, under the
said mortgage contract. In spite of said promise, defendants, failed and refused to
pay the obligation.

On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage and for
damages, which consisted of liquidated damages in the sum of P500.00 and 12% per
annum interest on the principal, effective on the date of maturity, until fully paid.
Defendants, answering the complaint, among others, stated
Defendants admit that the loan is overdue but deny that portion of paragraph 4
of the First Cause of Action which states that the defendants unreasonably
failed and refuse to pay their obligation to the plaintiff the truth being the
defendants are hard up these days and pleaded to the plaintiff to grant them
more time within which to pay their obligation and the plaintiff refused;
WHEREFORE, in view of the foregoing it is most respectfully prayed that this
Honorable Court render judgment granting the defendants until January 31,
1961, within which to pay their obligation to the plaintiff.
On September 30, 1960, plaintiff presented a Motion for summary Judgment,
claiming that the Answer failed to tender any genuine and material issue. The motion
was set for hearing, but the record is not clear what ruling the lower court made on
the said motion. On November 11, 1960, however, the parties submitted a Stipulation
of Facts, wherein the defendants admitted the indebtedness, the authenticity and due
execution of the Real Estate and Chattel Mortgages; that the indebtedness has been
due and unpaid since June 14, 1960; that a liability of 12% per annum as interest was
agreed, upon failure to pay the principal when due and P500.00 as liquidated
damages; that the instrument had been registered in the Registry of Property and
Motor Vehicles Office, both of the province of Tarlac; that the only issue in the case is
whether or not the residential house, subject of the mortgage therein, can be
considered a Chattel and the propriety of the attorney's fees.
On February 24, 1961, the lower court held
... WHEREFORE, this Court renders decision in this Case:
(a) Dismissing the complaint with regard to defendant Gregorio Pineda;
(b) Ordering defendants Juana Gonzales and the spouses Rufino Pineda and
Ramon Reyes, to pay jointly and severally and within ninety (90) days from the
receipt of the copy of this decision to the plaintiff Conrado P. Navarro the
principal sum of P2,550.00 with 12% compounded interest per annum from
DONT WORRY BE HAPPY.

June 14, 1960, until said principal sum and interests are fully paid, plus
P500.00 as liquidated damages and the costs of this suit, with the warning that
in default of said payment of the properties mentioned in the deed of real
estate mortgage and chattel mortgage (Annex "A" to the complaint) be sold to
realize said mortgage debt, interests, liquidated damages and costs, in
accordance with the pertinent provisions of Act 3135, as amended by Act
4118, and Art. 14 of the Chattel Mortgage Law, Act 1508; and
(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to deliver
immediately to the Provincial Sheriff of Tarlac the personal properties
mentioned in said Annex "A", immediately after the lapse of the ninety (90)
days above-mentioned, in default of such payment.
The above judgment was directly appealed to this Court, the defendants therein
assigning only a single error, allegedly committed by the lower court, to wit
In holding that the deed of real estate and chattel mortgages appended to the
complaint is valid, notwithstanding the fact that the house of the defendant
Rufino G. Pineda was made the subject of the chattel mortgage, for the reason
that it is erected on a land that belongs to a third person.
Appellants contend that article 415 of the New Civil Code, in classifying a house as
immovable property, makes no distinction whether the owner of the land is or not the
owner of the building; the fact that the land belongs to another is immaterial, it is
enough that the house adheres to the land; that in case of immovables by
incorporation, such as houses, trees, plants, etc; the Code does not require that the
attachment or incorporation be made by the owner of the land, the only criterion
being the union or incorporation with the soil. In other words, it is claimed that "a
building is an immovable property, irrespective of whether or not said structure and
the land on which it is adhered to, belong to the same owner" (Lopez v. Orosa, G.R.
Nos. L-10817-8, Feb. 28, 1958). (See also the case of Leung Yee v. Strong
Machinery Co., 37 Phil. 644). Appellants argue that since only movables can be the
subject of a chattel mortgage (sec. 1, Act No. 3952) then the mortgage in question
which is the basis of the present action, cannot give rise to an action for foreclosure,
because it is nullity. (Citing Associated Ins. Co., et al. v. Isabel Iya v. Adriano Valino,
et al., L-10838, May 30, 1958.)

The trial court did not predicate its decision declaring the deed of chattel mortgage
valid solely on the ground that the house mortgaged was erected on the land which
belonged to a third person, but also and principally on the doctrine of estoppel, in that
"the parties have so expressly agreed" in the mortgage to consider the house as
chattel "for its smallness and mixed materials of sawali and wood". In construing arts.
334 and 335 of the Spanish Civil Code (corresponding to arts. 415 and 416, N.C.C.),
for purposes of the application of the Chattel Mortgage Law, it was held that under
certain conditions, "a property may have a character different from that imputed to it
in said articles. It is undeniable that the parties to a contract may by agreement, treat
as personal property that which by nature would be real property" (Standard Oil Co.
of N.Y. v. Jaranillo, 44 Phil. 632-633)."There can not be any question that a building of
mixed materials may be the subject of a chattel mortgage, in which case, it is
considered as between the parties as personal property. ... The matter depends on
the circumstances and the intention of the parties". "Personal property may retain its
character as such where it is so agreed by the parties interested even though
annexed to the realty ...". (42 Am. Jur. 209-210, cited in Manarang, et al. v. Ofilada, et
al., G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, p. 3954.) The view that parties to
a deed of chattel mortgagee may agree to consider a house as personal property for
the purposes of said contract, "is good only insofar as the contracting parties are
concerned. It is based partly, upon the principles of estoppel ..." (Evangelista v. Alto
Surety, No. L-11139, Apr. 23, 1958). In a case, a mortgage house built on a rented
land, was held to be a personal property, not only because the deed of mortgage
considered it as such, but also because it did not form part of the land (Evangelista v.
Abad [CA];36 O.G. 2913), for it is now well settled that an object placed on land by
one who has only a temporary right to the same, such as a lessee or usufructuary,
does not become immobilized by attachment (Valdez v. Central Altagracia, 222 U.S.
58, cited in Davao Sawmill Co., Inc. v. Castillo, et al., 61 Phil. 709). Hence, if a house
belonging to a person stands on a rented land belonging to another person, it may be
mortgaged as a personal property is so stipulated in the document of mortgage.
(Evangelista v. Abad, supra.) It should be noted, however, that the principle is
predicated on statements by the owner declaring his house to be a chattel, a conduct
that may conceivably estop him from subsequently claiming otherwise (Ladera, et al..
v. C. N. Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore, gathered from
these cases is that although in some instances, a house of mixed materials has been
considered as a chattel between them, has been recognized, it has been a constant
criterion nevertheless that, with respect to third persons, who are not parties to the
DONT WORRY BE HAPPY.

contract, and specially in execution proceedings, the house is considered as an


immovable property (Art. 1431, New Civil Code).
In the case at bar, the house in question was treated as personal or movable
property, by the parties to the contract themselves. In the deed of chattel mortgage,
appellant Rufino G. Pineda conveyed by way of "Chattel Mortgage" "my personal
properties", a residential house and a truck. The mortgagor himself grouped the
house with the truck, which is, inherently a movable property. The house which was
not even declared for taxation purposes was small and made of light construction
materials: G.I. sheets roofing, sawali and wooden walls and wooden posts; built on
land belonging to another.
The cases cited by appellants are not applicable to the present case. The Iya cases
(L-10837-38, supra), refer to a building or a house of strong materials, permanently
adhered to the land, belonging to the owner of the house himself. In the case
of Lopez v. Orosa, (L-10817-18), the subject building was a theatre, built of materials
worth more than P62,000, attached permanently to the soil. In these cases and in the
Leung Yee case, supra, third persons assailed the validity of the deed of chattel
mortgages; in the present case, it was one of the parties to the contract of mortgages
who assailed its validity.
CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should
be, as it is hereby affirmed, with costs against appellants.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Dizon, Regala, and
Makalintal, JJ., concur.

G.R. No. L-4367

May 2, 1952

GENEROSA TORREFIEL and JUAN TORREFIEL, plaintiffs-appellants,


vs.
ANASTACIO TORIANO, ET ALS., defendants-appellees;
PAULINA TORREFIEL, intervenor and appellant.
Antonio Lozada for appellants.
Jose Ur. Carbonnel for appellees.

TUASON, J.:
This is an appeal from an order of Honorable Jose Teodoro, Judge of the Court of
First Instance of Negros Occidental, dismissing the case and a complaint in
intervention. The action was for partition of a lot and was filed on May 19, 1949. After
the defendants answered with counterclaims, Paulina Torrefiel filed a complaint in
intervention claiming compensation for alleged services rendered to the defendants.

The case was more than one year old, and no reason other than that Generosa
Torrefiel "would not be able to attend the trial" was alleged in the support of the
plaintiffs' motion. Why this plaintiff was not able to come was not revealed, and
neither did the motion say that her attendance was necessary. If Generosa Torrefiel
was sick it should have been shown by affidavit that her presence was indispensable
and that the character of her illness was such as to make her attendance impossible.
(Rule 31, Section 3, of the Rules of Court.)

The case having been set for September 20, 1950, Attorney Lozada for the plaintiffs
and intervenor on September 16 filed a motion for indefinite postponement, with the
conformity of the defendants' counsel, on the grounds that Generosa Torrefiel, one of
the plaintiffs, "would not be able to attend the trial." Taking for Granted, so it seems,
that the motion would be granted, none of the parties, except plaintiffs' and
intervenor's counsel, were on hand when the case was called at the scheduled hour.
Attorney Lozada must have called the court's attention to this motion but the court
refused to postpone the hearing beyond 10:00 o'clock a.m. of that day. Taken aback,
counsel for plaintiffs notified the opposing counsel by telephone of the court's
unwillingness to continue the case, and Attorney Carbonel rushed to the court. In the
meantime Attorney Lozada had gone out to look for and bring his clients, and come
back at 10:20 with the intervenor, but then the case had already been dismissed,
"due to non-appearance of the plaintiffs and their counsel when the case was
called . . . at 10:10."

Inasmuch, however, as it did not appear that the motion for postponement was due to
any deliberate desire on the part of the plaintiffs and intervenor to delay the
proceedings, or that the action was frivolous, at least as far as Juan Torrefiel was
concerned, and inasmuch, moreover, as defendants' attorney had expressly agreed
to plaintiffs' motion, the interest of justice and of the court could have been served
with a dismissal of the case without prejudice.

On September 26, Attorney Lozada filed "a motion for reconsideration, new trial and
relief from the court's order dated September 20, 1950, " in which he recited the
above facts and stated that Juan Torrefiel was sick and Generosa Torrefiel "busy".
The court would not judge from its previous order, hence this appeal.

FERIA, J., dissenting:

The matter of adjournments and postponement of trials lies within the sound
discretion of the courts, and such discretion will not be interfered with unless with a
grave abuse thereof is shown. (Pellicena Camacho vs. Gonzales Liquete, 6 Phil., 50;
Olsen vs. Fressel & Co., 37 Phil., 121; Samson vs Naval, 41, Phil., 838; 1 Moran's
Comments on the Rules of Court, 528.) Upon the facts above stated we cannot say
that the lower court's action was arbitrary. The adverse party's conformity was not
binding on the court. The trial of cases with reasonable dispatch is as much the
concern of the judges as of the parties'.
DONT WORRY BE HAPPY.

The appealed order will be affirmed with the modification that the dismissal will not be
a bar to the filing of a new action and a new complaint in intervention upon the same
subject matters, with out special finding as to costs.
Paras, C.J., Pablo, Montemayor, Reyes and Labrador, JJ., concur.
Separate Opinions

I am sorry to dissent from the majority.


The granting or denial of a motion for adjournment or postponement or for a new trial
lies within the sound discretion of the courts. (Section 4, Rule 31 and Sec. 3,) Rule
37; Quiros vs. Carman, 4 Phil., 722; Estrella vs. Zamora, 5 Phil., 415; U.S. vs.
Raymundo, 14 Phil., 416; Muerteguy & Aboitiz vs. Delgado, 22 Phil., 109; Soriano vs.
Aquino, 31 Phil., 176; Lavitoria vs. Judge of Court of First Instance of Tayabas, 32
Phil., 204; Cordovero vs. Villaruz, 46 Phil., 473; Tan Sen Guan vs. Go Siu Sam 47
Phil., 109; Villegas vs. Roldan, 76 Phil., 549). And such discretion will not be
interfered with in appeal unless a grave abuse of discretion is shown (Pellicena vs.
Camacho, 6 Phil., 50 Olsen vs. Tressel & Co., 37 Phil., 121 Samson vs. Naval, 41
Phil., 838).

The question whether or not the court a quo in the present case has abused its
discretion in dismissing the case plaintiffs' complaint and the complaint in intervention
of the intervenor, is a question of fact, and therefore the court having appellate
jurisdiction over this appeal is the Court of Appeals and not this Supreme Court.
Discretion of Lower Court. I Power to Review. (a) In General . . . In a legal
sense, discretion is abused whenever, in its exercise, a court exceeds the
bounds of reason, all the circumstances before it being considered. (13
C.J., pp. 796-798.)

In view of the foregoing, it is obvious that this Court has no appellate jurisdiction over
this case, and the same should be certified to the Court of Appeals for proper action
in accordance with the provision of Section 3, Rule 52 of the Rules of Court. The fact
that the appeal to this Supreme Court was erroneously given due course, cannot
confer appellate jurisdiction upon this court to affirm with modification the lower
court's order appealed from. So ordered.
Bengzon and Bautista Angelo, JJ., concur.
G.R. No. L-47943 May 31, 1982

Footnote 16. . . . (b). In Massachussetts a distinction is drawn between


legal and equitable actions. (1) All appeal on the law side of the court brings
before the appellate court only questions of law. Questions of direction are not
reviewable. Goss Printing Press Co., v. Todd, 202 Mass. 248, 87 NE 590;
Electric Welding Co. v. Prince, 200 Mass. 386, 86 NE 497, 128 A.S.R. 434. (2)
Questions of discretion are essence, questions of fact, and in an action at a
common law judge of the Superior Court or a single justice of this court has no
authority under the statute to report to this court a question of fact or a
question of discretion . . . (4 C.J., p. 797.)
In the case of Zasi vs. Santos, G.R. No. L-5608 in which the appellant assigned that
the trial court erred in denying the petition of the attorney for the appellant to set
aside the lower court's order dismissing the plaintiff's complaint and declaring plaintiff
in default on defendants' counterclaim, because of his failure to appear at the trial
and produce evidence in support of the facts alleged in the complaint on the ground
of a slight shock of influenza, and the lower court denied the appellants' petition for
relief, on appeal, this Supreme Court, to which the Court of Appeals certified the case
as in involving a question purely at law, remanded the case tot the Court of Appeals
for further proceedings for the reason that the question involve in the appeal is not
purely of law but of fact.
The same rulings were laid down in the case of Santos vs. Rustia, G.R. No. 4917-R,
promulgated on October 31, 1951 and of Ciriaca Canlas vs. Severino David, G.R. No.
L-4003, promulgated on April 17, 1952, both of which were also return to the Court of
Appeals which erroneously certified the case to this Court on the ground that the
question involving the appeal was purely of law.
DONT WORRY BE HAPPY.

MANILA ELECTRIC COMPANY, petitioner,


vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF BATANGAS and PROVINCIAL ASSESSOR OF
BATANGAS, respondents.
AQUINO, J.:
This case is about the imposition of the realty tax on two oil storage tanks installed in
1969 by Manila Electric Company on a lot in San Pascual, Batangas which it leased
in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex refinery compound.
They have a total capacity of 566,000 barrels. They are used for storing fuel oil for
Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and
assembled on the spot. Their bottoms rest on a foundation consisting of compacted
earth as the outermost layer, a sand pad as the intermediate layer and a two-inch
thick bituminous asphalt stratum as the top layer. The bottom of each tank is in
contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall made
of concrete, eighteen inches thick, to prevent the tank from sliding. Hence, according
to Meralco, the tank is not attached to its foundation. It is not anchored or welded to
the concrete circular wall. Its bottom plate is not attached to any part of the
foundation by bolts, screws or similar devices. The tank merely sits on its foundation.
Each empty tank can be floated by flooding its dike-inclosed location with water four
feet deep. (pp. 29-30, Rollo.)

On the other hand, according to the hearing commissioners of the Central Board of
Assessment Appeals, the area where the two tanks are located is enclosed with
earthen dikes with electric steel poles on top thereof and is divided into two parts as
the site of each tank. The foundation of the tanks is elevated from the remaining area.
On both sides of the earthen dikes are two separate concrete steps leading to the
foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch
thick. Pipelines were installed on the sides of each tank and are connected to the
pipelines of the Manila Enterprises Industrial Corporation whose buildings and
pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the
foundation itself and the walls, dikes and steps, which are integral parts of the tanks,
are affixed to the land while the pipelines are attached to the tanks. (pp. 60-61,
Rollo.) In 1970, the municipal treasurer of Bauan, Batangas, on the basis of an
assessment made by the provincial assessor, required Meralco to pay realty taxes on
the two tanks. For the five-year period from 1970 to 1974, the tax and penalties
amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax
and penalties as a condition for entertaining its appeal from the adverse decision of
the Batangas board of assessment appeals.
The Central Board of Assessment Appeals (composed of Acting Secretary of Finance
Pedro M. Almanzor as chairman and Secretary of Justice Vicente Abad Santos and
Secretary of Local Government and Community Development Jose Roo as
members) in its decision dated November 5, 1976 ruled that the tanks together with
the foundation, walls, dikes, steps, pipelines and other appurtenances constitute
taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth day,
it filed a motion for reconsideration which the Board denied in its resolution of
November 25, 1977, a copy of which was received by Meralco on February 28, 1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the
Board's decision and resolution. It contends that the Board acted without jurisdiction
and committed a grave error of law in holding that its storage tanks are taxable real
property.

DONT WORRY BE HAPPY.

Meralco contends that the said oil storage tanks do not fall within any of the kinds of
real property enumerated in article 415 of the Civil Code and, therefore, they cannot
be categorized as realty by nature, by incorporation, by destination nor by analogy.
Stress is laid on the fact that the tanks are not attached to the land and that they were
placed on leased land, not on the land owned by Meralco.
This is one of those highly controversial, borderline or penumbral cases on the
classification of property where strong divergent opinions are inevitable. The issue
raised by Meralco has to be resolved in the light of the provisions of the Assessment
Law, Commonwealth Act No. 470, and the Real Property Tax Code, Presidential
Decree No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax is due "on real property,
including land, buildings, machinery, and other improvements" not specifically
exempted in section 3 thereof. This provision is reproduced with some modification in
the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. They shall be levied,
assessed and collected in all provinces, cities and municipalities an
annual ad valorem tax on real property, such as land, buildings,
machinery and other improvements affixed or attached to real property
not hereinafter specifically exempted.
The Code contains the following definition in its section 3:
k) Improvements is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance
its value, beauty or utility or to adapt it for new or further purposes.
We hold that while the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its utility and
rendering it useful to the oil industry. It is undeniable that the two tanks have been
installed with some degree of permanence as receptacles for the considerable
quantities of oil needed by Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs.
Atlantic City, 15 Atl. 2nd 271.

For purposes of taxation, the term "real property" may include things which should
generally be regarded as personal property(84 C.J.S. 171, Note 8). It is a familiar
phenomenon to see things classed as real property for purposes of taxation which on
general principle might be considered personal property (Standard Oil Co. of New
York vs. Jaramillo, 44 Phil. 630, 633).

The issue in this case, as announced in the opening sentence of the decision in the
trial court and as set forth by counsel for the parties on appeal, involves the
determination of the nature of the properties described in the complaint. The trial
judge found that those properties were personal in nature, and as a consequence
absolved the defendants from the complaint, with costs against the plaintiff.

The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil.
328, wherein Meralco's steel towers were held not to be subject to realty tax, is not in
point because in that case the steel towers were regarded as poles and under its
franchise Meralco's poles are exempt from taxation. Moreover, the steel towers were
not attached to any land or building. They were removable from their metal frames.

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. It has operated a sawmill in the sitio of Maa,
barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon
which the business was conducted belonged to another person. On the land the
sawmill company erected a building which housed the machinery used by it. Some of
the implements thus used were clearly personal property, the conflict concerning
machines which were placed and mounted on foundations of cement. In the contract
of lease between the sawmill company and the owner of the land there appeared the
following provision:

Nor is there any parallelism between this case and Mindanao Bus Co. vs. City
Assessor, 116 Phil. 501, where the tools and equipment in the repair, carpentry and
blacksmith shops of a transportation company were held not subject to realty tax
because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and
resolution are affirmed. No costs.
SO ORDERED.
Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
Concepcion, Jr., J., is on leave.
Justice Abad Santos, J., took no part.
G.R. No. L-40411

August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant,


vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendantsappellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for
appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
DONT WORRY BE HAPPY.

That on the expiration of the period agreed upon, all the improvements and
buildings introduced and erected by the party of the second part shall pass to
the exclusive ownership of the party of the first part without any obligation on
its part to pay any amount for said improvements and buildings; also, in the
event the party of the second part should leave or abandon the land leased
before the time herein stipulated, the improvements and buildings shall
likewise pass to the ownership of the party of the first part as though the time
agreed upon had expired: Provided, however, That the machineries and
accessories are not included in the improvements which will pass to the party
of the first part on the expiration or abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and
the Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor
of the plaintiff in that action against the defendant in that action; a writ of execution
issued thereon, and the properties now in question were levied upon as personalty by
the sheriff. No third party claim was filed for such properties at the time of the sales
thereof as is borne out by the record made by the plaintiff herein. Indeed the bidder,
which was the plaintiff in that action, and the defendant herein having consummated
the sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the sheriff
of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw
Mill Co., Inc., has on a number of occasions treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such
persons is the appellee by assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code,
real property consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx

xxx

xxx

5. Machinery, liquid containers, instruments or implements intended by the


owner of any building or land for use in connection with any industry or trade
being carried on therein and which are expressly adapted to meet the
requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned
paragraph. We entertain no doubt that the trial judge and appellees are right in their
appreciation of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the appellant should have
registered its protest before or at the time of the sale of this property. It must further
be pointed out that while not conclusive, the characterization of the property as
chattels by the appellant is indicative of intention and impresses upon the property
the character determined by the parties. In this connection the decision of this court in
the case of Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil., 630),
whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal
on side issues. It is machinery which is involved; moreover, machinery not intended
by the owner of any building or land for use in connection therewith, but intended by a
lessee for use in a building erected on the land by the latter to be returned to the
lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United
States Supreme Court, it was held that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or plant,
but not when so placed by a tenant, a usufructuary, or any person having only a
DONT WORRY BE HAPPY.

temporary right, unless such person acted as the agent of the owner. In the opinion
written by Chief Justice White, whose knowledge of the Civil Law is well known, it
was in part said:
To determine this question involves fixing the nature and character of the
property from the point of view of the rights of Valdes and its nature and
character from the point of view of Nevers & Callaghan as a judgment creditor
of the Altagracia Company and the rights derived by them from the execution
levied on the machinery placed by the corporation in the plant. Following the
Code Napoleon, the Porto Rican Code treats as immovable (real) property, not
only land and buildings, but also attributes immovability in some cases to
property of a movable nature, that is, personal property, because of the
destination to which it is applied. "Things," says section 334 of the Porto Rican
Code, "may be immovable either by their own nature or by their destination or
the object to which they are applicable." Numerous illustrations are given in
the fifth subdivision of section 335, which is as follows: "Machinery, vessels,
instruments or implements intended by the owner of the tenements for the
industrial or works that they may carry on in any building or upon any land and
which tend directly to meet the needs of the said industry or works." (See
also Code Nap., articles 516, 518 et seq. to and inclusive of article 534,
recapitulating the things which, though in themselves movable, may be
immobilized.) So far as the subject-matter with which we are dealing
machinery placed in the plant it is plain, both under the provisions of the
Porto Rican Law and of the Code Napoleon, that machinery which is movable
in its nature only becomes immobilized when placed in a plant by the owner of
the property or plant. Such result would not be accomplished, therefore, by the
placing of machinery in a plant by a tenant or a usufructuary or any person
having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit.
2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in FuzierHerman ed. Code Napoleon under articles 522 et seq.) The distinction rests,
as pointed out by Demolombe, upon the fact that one only having a temporary
right to the possession or enjoyment of property is not presumed by the law to
have applied movable property belonging to him so as to deprive him of it by
causing it by an act of immobilization to become the property of another. It
follows that abstractly speaking the machinery put by the Altagracia Company
in the plant belonging to Sanchez did not lose its character of movable
property and become immovable by destination. But in the concrete

immobilization took place because of the express provisions of the lease under
which the Altagracia held, since the lease in substance required the putting in
of improved machinery, deprived the tenant of any right to charge against the
lessor the cost such machinery, and it was expressly stipulated that the
machinery so put in should become a part of the plant belonging to the owner
without compensation to the lessee. Under such conditions the tenant in
putting in the machinery was acting but as the agent of the owner in
compliance with the obligations resting upon him, and the immobilization of the
machinery which resulted arose in legal effect from the act of the owner in
giving by contract a permanent destination to the machinery.
xxx

xxx

xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was
placed in the plant by the Altagracia Company, being, as regards Nevers &
Callaghan, movable property, it follows that they had the right to levy on it
under the execution upon the judgment in their favor, and the exercise of that
right did not in a legal sense conflict with the claim of Valdes, since as to him
the property was a part of the realty which, as the result of his obligations
under the lease, he could not, for the purpose of collecting his debt, proceed
separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed,
the costs of this instance to be paid by the appellant.
Villa-Real, Imperial, Butte, and Goddard, JJ., concur.
G.R. No. L-17898

October 31, 1962

PASTOR D. AGO, petitioner,


vs.
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court
of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and
GRACE PARK ENGINEERING, INC., respondents.
Jose M. Luison for petitioner.
Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.
DONT WORRY BE HAPPY.

LABRABOR, J.:
Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R.
No. 26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al."
which in part reads:
In this case for certiorari and prohibition with preliminary injunction, it appears
from the records that the respondent Judge of the Court of First Instance of
Agusan rendered judgment (Annex "A") in open court on January 28, 1959,
basing said judgment on a compromise agreement between the parties.
On August 15, 1959, upon petition, the Court of First Instance issued a writ of
execution.
Petitioner's motion for reconsideration dated October 12, 1959 alleges that he,
or his counsel, did not receive a formal and valid notice of said decision, which
motion for reconsideration was denied by the court below in the order of
November 14, 1959.
Petitioner now contends that the respondent Judge exceeded in his jurisdiction
in rendering the execution without valid and formal notice of the decision.
A compromise agreement is binding between the parties and becomes the law
between them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81
Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .
It is a general rule in this jurisdiction that a judgment based on a compromise
agreement is not appealable and is immediately executory, unless a motion is
filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil.
505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957)
Petitioner's claim that he was not notified or served notice of the decision is
untenable. The judgment on the compromise agreement rendered by the court
below dated January 28, 1959, was given in open court. This alone is a
substantial compliance as to notice. (De los Reyes vs. Ugarte, supra)
IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse
its jurisdiction in ordering the execution of the judgment. The petition

for certiorari is hereby dismissed and the writ of preliminary injunction


heretofore dissolved, with costs against the petitioner.
IT IS SO ORDERED.
The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D.
Ago bought sawmill machineries and equipments from respondent Grace Park
Engineer domineering, Inc., executing a chattel mortgage over said machineries and
equipments to secure the payment of balance of the price remaining unpaid of
P32,000.00, which petitioner agreed to pay on installment basis.
Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park
Engineering, Inc. instituted extra-judicial foreclosure proceedings of the mortgage. To
enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53 in the
Court of First Instance of Agusan. The parties to the case arrived at a compromise
agreement and submitted the same in court in writing, signed by Pastor D. Ago and
the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of
First Instance of Agusan, then presiding, dictated a decision in open court on January
28, 1959.
Petitioner continued to default in his payments as provided in the judgment by
compromise, so Grace Park Engineering, Inc. filed with the lower court a motion for
execution, which was granted by the court on August 15, 1959. A writ of execution,
dated September 23, 1959, later followed.
The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution
issued by the lower court, levied upon and ordered the sale of the sawmill
machineries and equipments in question. These machineries and equipments had
been taken to and installed in a sawmill building located in Lianga, Surigao del Sur,
and owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had
sold them on February 16, 1959 (a date after the decision of the lower court but
before levy by the Sheriff).
Having been advised by the sheriff that the public auction sale was set for December
4, 1959, petitioner, on December 1, 1959, filed the petition for certiorari and
prohibition with preliminary injunction with respondent Court of Appeals, alleging that
a copy of the aforementioned judgment given in open court on January 28, 1959 was
served upon counsel for petitioner only on September 25, 1959 (writ of execution is
DONT WORRY BE HAPPY.

dated September 23, 1959); that the order and writ of execution having been issued
by the lower court before counsel for petitioner received a copy of the judgment, its
resultant last order that the "sheriff may now proceed with the sale of the properties
levied constituted a grave abuse of discretion and was in excess of its jurisdiction;
and that the respondent Provincial Sheriff of Surigao was acting illegally upon the
allegedly void writ of execution by levying the same upon the sawmill machineries
and equipments which have become real properties of the Golden Pacific sawmill,
Inc., and is about to proceed in selling the same without prior publication of the notice
of sale thereof in some newspaper of general circulation as required by the Rules of
Court.
The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction
against the sheriff but it turned out that the latter had already sold at public auction
the machineries in question, on December 4, 1959, as scheduled. The respondent
Grace Park Engineering, Inc. was the only bidder for P15,000.00, although the
certificate sale was not yet executed. The Court of Appeals constructed the sheriff to
suspend the issuance of a certificate of sale of the said sawmill machineries and
equipment sold by him on December 4, 1959 until the final decision of the case. On
November 9, 1960 the Court of Appeals rendered the aforequoted decision.
Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that
the rendition of judgment on compromise in open court on January 1959 was a
sufficient notice; and (2) in not resolving the other issues raised before it, namely, (a)
the legality of the public auction sale made by the sheriff, and (b) the nature of the
machineries in question, whether they are movables or immovables.
The Court of Appeals held that as a judgment was entered by the court below in open
court upon the submission of the compromise agreement, the parties may be
considered as having been notified of said judgment and this fact constitutes due
notice of said judgment. This raises the following legal question: Is the order dictated
in open court of the judgment of the court, and is the fact the petitioner herein was
present in open court was the judgment was dictated, sufficient notice thereof? The
provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the
manner in which judgment shall be rendered, thus:
SECTION 1. How judgment rendered. All judgments determining the merits
of cases shall be in writing personally and directly prepared by the judge, and

signed by him, stating clearly and distinctly the facts and the law on which it is
based, filed with the clerk of the court.
The court of first instance being a court of record, in order that a judgment may be
considered as rendered, must not only be in writing, signed by the judge, but it must
also be filed with the clerk of court. The mere pronouncement of the judgment in open
court with the stenographer taking note thereof does not, therefore, constitute a
rendition of the judgment. It is the filing of the signed decision with the clerk of court
that constitutes rendition. While it is to be presumed that the judgment that was
dictated in open court will be the judgment of the court, the court may still modify said
order as the same is being put into writing. And even if the order or judgment has
already been put into writing and signed, while it has not yet been delivered to the
clerk for filing it is still subject to amendment or change by the judge. It is only when
the judgment signed by the judge is actually filed with the clerk of court that it
becomes a valid and binding judgment. Prior thereto, it could still be subject to
amendment and change and may not, therefore, constitute the real judgment of the
court.
Regarding the notice of judgment, the mere fact that a party heard the judge dictating
the judgment in open court, is not a valid notice of said judgment. If rendition thereof
is constituted by the filing with the clerk of court of a signed copy (of the judgment), it
is evident that the fact that a party or an attorney heard the order or judgment being
dictated in court cannot be considered as notice of the real judgment. No judgment
can be notified to the parties unless it has previously been rendered. The notice,
therefore, that a party has of a judgment that was being dictated is of no effect
because at the time no judgment has as yet been signed by the judge and filed with
the clerk.
Besides, the Rules expressly require that final orders or judgments be served
personally or by registered mail. Section 7 of Rule 27 provides as follows:
SEC. 7. Service of final orders or judgments. Final orders or judgments
shall be served either personally or by registered mail.
In accordance with this provision, a party is not considered as having been served
with the judgment merely because he heard the judgment dictating the said judgment
in open court; it is necessary that he be served with a copy of the signed judgment

DONT WORRY BE HAPPY.

that has been filed with the clerk in order that he may legally be considered as having
been served with the judgment.
For all the foregoing, the fact that the petitioner herein heard the trial judge dictating
the judgment in open court, is not sufficient to constitute the service of judgement as
required by the above-quoted section 7 of Rule 2 the signed judgment not having
been served upon the petitioner, said judgment could not be effective upon him
(petitioner) who had not received it. It follows as a consequence that the issuance of
the writ of execution null and void, having been issued before petitioner her was
served, personally or by registered mail, a copy of the decision.
The second question raised in this appeal, which has been passed upon by the Court
of Appeals, concerns the validity of the proceedings of the sheriff in selling the
sawmill machineries and equipments at public auction with a notice of the sale having
been previously published.
The record shows that after petitioner herein Pastor D. Ago had purchased the
sawmill machineries and equipments he assigned the same to the Golden Pacific
Sawmill, Inc. in payment of his subscription to the shares of stock of said corporation.
Thereafter the sawmill machinery and equipments were installed in a building and
permanently attached to the ground. By reason of such installment in a building, the
said sawmill machineries and equipment became real estate properties in
accordance with the provision of Art. 415 (5) of the Civil Code, thus:
ART. 415. The following are immovable property:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements tended by the owner of


the tenement for an industry or works which may be carried on in a building or
on a piece of land, and which tend directly to meet the needs of the said
industry or works;
This Court in interpreting a similar question raised before it in the case
of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation of the
machine and equipment in the central of the Mabalacat Sugar Co., Inc. for use in
connection with the industry carried by the company, converted the said machinery
and equipment into real estate by reason of their purpose. Paraphrasing language of
said decision we hold that by the installment of the sawmill machineries in the

building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in
said building, the same became a necessary and permanent part of the building or
real estate on which the same was constructed, converting the said machineries and
equipments into real estate within the meaning of Article 415(5) above-quoted of the
Civil Code of the Philippines.
Considering that the machineries and equipments in question valued at more than
P15,000.00 appear to have been sold without the necessary advertisement of sale by
publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court,
which is as follows:
SEC. 16. Notice of sale of property on execution. Before the sale of
property on execution, notice thereof must be given as follows:
xxx

xxx

xxx

(c) In case of real property, by posting a similar notice particularly describing


the property for twenty days in three public places in the municipality or city
where the property is situated, and also where the property is to be sold, and,
if the assessed value of the property exceeds four hundred pesos, by
publishing a copy of the notice once a week, for the same period, in some
newspaper published or having general circulation in the province, if there be
one. If there are newspapers published in the province in both the English and
Spanish languages, then a like publication for a like period shall be made in
one newspaper published in the English language, and in one published in the
Spanish language.
the sale made by the sheriff must be declared null and void.
WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby
set aside and We declare that the issuance of the writ of execution in this case
against the sawmill machineries and equipments purchased by petitioner Pastor D.
Ago from the Grace Park Engineering, Inc., as well as the sale of the same by the
Sheriff of Surigao, are null and void. Costs shall be against the respondent Grace
Park Engineering, Inc.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala and Makalintal, JJ.,concur.
Padilla, J., took no part.
DONT WORRY BE HAPPY.

G.R. No. L-15334

January 31, 1964

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER


OF QUEZON CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Assistant City Attorney Jaime R. Agloro for petitioners.
Ross, Selph and Carrascoso for respondent.
PAREDES, J.:
From the stipulation of facts and evidence adduced during the hearing, the following
appear:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which
authorized the Municipal Board of Manila to grant a franchise to construct, maintain
and operate an electric street railway and electric light, heat and power system in the
City of Manila and its suburbs to the person or persons making the most favorable
bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and
conditions of which were embodied in Ordinance No. 44 approved on March 24,
1903. Respondent Manila Electric Co. (Meralco for short), became the transferee and
owner of the franchise.
Meralco's electric power is generated by its hydro-electric plant located at Botocan
Falls, Laguna and is transmitted to the City of Manila by means of electric
transmission wires, running from the province of Laguna to the said City. These
electric transmission wires which carry high voltage current, are fastened to insulators
attached on steel towers constructed by respondent at intervals, from its hydroelectric plant in the province of Laguna to the City of Manila. The respondent Meralco
has constructed 40 of these steel towers within Quezon City, on land belonging to it.
A photograph of one of these steel towers is attached to the petition for review,
marked Annex A. Three steel towers were inspected by the lower court and parties
and the following were the descriptions given there of by said court:
The first steel tower is located in South Tatalon, Espaa Extension, Quezon
City. The findings were as follows: the ground around one of the four posts
was excavated to a depth of about eight (8) feet, with an opening of about one
(1) meter in diameter, decreased to about a quarter of a meter as it we deeper

until it reached the bottom of the post; at the bottom of the post were two
parallel steel bars attached to the leg means of bolts; the tower proper was
attached to the leg three bolts; with two cross metals to prevent mobility; there
was no concrete foundation but there was adobe stone underneath; as the
bottom of the excavation was covered with water about three inches high, it
could not be determined with certainty to whether said adobe stone was
placed purposely or not, as the place abounds with this kind of stone; and the
tower carried five high voltage wires without cover or any insulating materials.
The second tower inspected was located in Kamuning Road, K-F, Quezon
City, on land owned by the petitioner approximate more than one kilometer
from the first tower. As in the first tower, the ground around one of the four legs
was excavate from seven to eight (8) feet deep and one and a half (1-)
meters wide. There being very little water at the bottom, it was seen that there
was no concrete foundation, but there soft adobe beneath. The leg was
likewise provided with two parallel steel bars bolted to a square metal frame
also bolted to each corner. Like the first one, the second tower is made up of
metal rods joined together by means of bolts, so that by unscrewing the bolts,
the tower could be dismantled and reassembled.
The third tower examined is located along Kamias Road, Quezon City. As in
the first two towers given above, the ground around the two legs of the third
tower was excavated to a depth about two or three inches beyond the outside
level of the steel bar foundation. It was found that there was no concrete
foundation. Like the two previous ones, the bottom arrangement of the legs
thereof were found to be resting on soft adobe, which, probably due to high
humidity, looks like mud or clay. It was also found that the square metal frame
supporting the legs were not attached to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared the
aforesaid steel towers for real property tax under Tax declaration Nos. 31992 and
15549. After denying respondent's petition to cancel these declarations, an appeal
was taken by respondent to the Board of Assessment Appeals of Quezon City, which
required respondent to pay the amount of P11,651.86 as real property tax on the said
steel towers for the years 1952 to 1956. Respondent paid the amount under protest,
and filed a petition for review in the Court of Tax Appeals (CTA for short) which
rendered a decision on December 29, 1958, ordering the cancellation of the said tax
DONT WORRY BE HAPPY.

declarations and the petitioner City Treasurer of Quezon City to refund to the
respondent the sum of P11,651.86. The motion for reconsideration having been
denied, on April 22, 1959, the instant petition for review was filed.
In upholding the cause of respondents, the CTA held that: (1) the steel towers come
within the term "poles" which are declared exempt from taxes under part II paragraph
9 of respondent's franchise; (2) the steel towers are personal properties and are not
subject to real property tax; and (3) the City Treasurer of Quezon City is held
responsible for the refund of the amount paid. These are assigned as errors by the
petitioner in the brief.
The tax exemption privilege of the petitioner is quoted hereunder:
PAR 9. The grantee shall be liable to pay the same taxes upon its real estate,
buildings, plant (not including poles, wires, transformers, and insulators),
machinery and personal property as other persons are or may be hereafter
required by law to pay ... Said percentage shall be due and payable at the time
stated in paragraph nineteen of Part One hereof, ... and shall be in lieu of all
taxes and assessments of whatsoever nature and by whatsoever authority
upon the privileges, earnings, income, franchise, and poles, wires,
transformers, and insulators of the grantee from which taxes and assessments
the grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484
Respondent's Franchise; emphasis supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical piece of
wood or timber, as typically the stem of a small tree stripped of its branches; also by
extension, a similar typically cylindrical piece or object of metal or the like". The term
also refers to "an upright standard to the top of which something is affixed or by
which something is supported; as a dovecote set on a pole; telegraph poles; a tent
pole; sometimes, specifically a vessel's master (Webster's New International
Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen
cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which are
made of two steel bars joined together by an interlacing metal rod. They are called
"poles" notwithstanding the fact that they are no made of wood. It must be noted from
paragraph 9, above quoted, that the concept of the "poles" for which exemption is
granted, is not determined by their place or location, nor by the character of the
electric current it carries, nor the material or form of which it is made, but the use to
which they are dedicated. In accordance with the definitions, pole is not restricted to a

long cylindrical piece of wood or metal, but includes "upright standards to the top of
which something is affixed or by which something is supported. As heretofore
described, respondent's steel supports consists of a framework of four steel bars or
strips which are bound by steel cross-arms atop of which are cross-arms supporting
five high voltage transmission wires (See Annex A) and their sole function is to
support or carry such wires.
The conclusion of the CTA that the steel supports in question are embraced in the
term "poles" is not a novelty. Several courts of last resort in the United States have
called these steel supports "steel towers", and they denominated these supports or
towers, as electric poles. In their decisions the words "towers" and "poles" were used
interchangeably, and it is well understood in that jurisdiction that a transmission tower
or pole means the same thing.
In a proceeding to condemn land for the use of electric power wires, in which the law
provided that wires shall be constructed upon suitable poles, this term was construed
to mean either wood or metal poles and in view of the land being subject to overflow,
and the necessary carrying of numerous wires and the distance between poles, the
statute was interpreted to include towers or poles. (Stemmons and Dallas Light Co.
(Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used by
an association used to convey its electric power furnished to subscribers and
members, constructed for the purpose of fastening high voltage and dangerous
electric wires alongside public highways. The steel supports or towers were made of
iron or other metals consisting of two pieces running from the ground up some thirty
feet high, being wider at the bottom than at the top, the said two metal pieces being
connected with criss-cross iron running from the bottom to the top, constructed like
ladders and loaded with high voltage electricity. In form and structure, they are like
the steel towers in question. (Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd,
249-250.)
The term "poles" was used to denote the steel towers of an electric company
engaged in the generation of hydro-electric power generated from its plant to the
Tower of Oxford and City of Waterbury. These steel towers are about 15 feet square
at the base and extended to a height of about 35 feet to a point, and are embedded in
the cement foundations sunk in the earth, the top of which extends above the surface
of the soil in the tower of Oxford, and to the towers are attached insulators, arms, and
DONT WORRY BE HAPPY.

other equipment capable of carrying wires for the transmission of electric power
(Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on which a certain person met his
death was built for the purpose of supporting a transmission wire used for carrying
high-tension electric power, but claimed that the steel towers on which it is carried
were so large that their wire took their structure out of the definition of a pole line. It
was held that in defining the word pole, one should not be governed by the wire or
material of the support used, but was considering the danger from any elevated wire
carrying electric current, and that regardless of the size or material wire of its
individual members, any continuous series of structures intended and used solely or
primarily for the purpose of supporting wires carrying electric currents is a pole line
(Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated
in the petitioner's franchise, should not be given a restrictive and narrow
interpretation, as to defeat the very object for which the franchise was granted. The
poles as contemplated thereon, should be understood and taken as a part of the
electric power system of the respondent Meralco, for the conveyance of electric
current from the source thereof to its consumers. If the respondent would be required
to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then
one should admit that the Philippines is one century behind the age of space. It
should also be conceded by now that steel towers, like the ones in question, for
obvious reasons, can better effectuate the purpose for which the respondent's
franchise was granted.
Granting for the purpose of argument that the steel supports or towers in question are
not embraced within the term poles, the logical question posited is whether they
constitute real properties, so that they can be subject to a real property tax. The tax
law does not provide for a definition of real property; but Article 415 of the Civil Code
does, by stating the following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
xxx

xxx

xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that


it cannot be separated therefrom without breaking the material or deterioration
of the object;
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner


of the tenement for an industry or works which may be carried in a building or
on a piece of land, and which tends directly to meet the needs of the said
industry or works;
xxx

xxx

xxx

The steel towers or supports in question, do not come within the objects mentioned in
paragraph 1, because they do not constitute buildings or constructions adhered to the
soil. They are not construction analogous to buildings nor adhering to the soil. As per
description, given by the lower court, they are removable and merely attached to a
square metal frame by means of bolts, which when unscrewed could easily be
dismantled and moved from place to place. They can not be included under
paragraph 3, as they are not attached to an immovable in a fixed manner, and they
can be separated without breaking the material or causing deterioration upon the
object to which they are attached. Each of these steel towers or supports consists of
steel bars or metal strips, joined together by means of bolts, which can be
disassembled by unscrewing the bolts and reassembled by screwing the same.
These steel towers or supports do not also fall under paragraph 5, for they are not
machineries, receptacles, instruments or implements, and even if they were, they are
not intended for industry or works on the land. Petitioner is not engaged in an industry
or works in the land in which the steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City
to refund the sum of P11,651.86, despite the fact that Quezon City is not a party to
the case. It is argued that as the City Treasurer is not the real party in interest, but
Quezon City, which was not a party to the suit, notwithstanding its capacity to sue
and be sued, he should not be ordered to effect the refund. This question has not
been raised in the court below, and, therefore, it cannot be properly raised for the first
time on appeal. The herein petitioner is indulging in legal technicalities and niceties
which do not help him any; for factually, it was he (City Treasurer) whom had insisted
that respondent herein pay the real estate taxes, which respondent paid under
DONT WORRY BE HAPPY.

protest. Having acted in his official capacity as City Treasurer of Quezon City, he
would surely know what to do, under the circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against
the petitioners.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,
Barrera and Regala, JJ., concur.
Makalintal, J., concurs in the result.
Dizon, J., took no part.
G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF
APPEALS, respondents.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.
Jose V. Mancella for respondent.
DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court of Appeals (now
Intermediate Appellate Court) promulgated on August 27, 1981 in CA-G.R. No. SP12731, setting aside certain Orders later specified herein, of Judge Ricardo J.
Francisco, as Presiding Judge of the Court of First instance of Rizal Branch VI,
issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981
of the said appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein petitioner
Makati Leasing and Finance Corporation, the private respondent Wearever Textile
Mills, Inc., discounted and assigned several receivables with the former under a
Receivable Purchase Agreement. To secure the collection of the receivables
assigned, private respondent executed a Chattel Mortgage over certain raw materials
inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.

Upon private respondent's default, petitioner filed a petition for extrajudicial


foreclosure of the properties mortgage to it. However, the Deputy Sheriff assigned to
implement the foreclosure failed to gain entry into private respondent's premises and
was not able to effect the seizure of the aforedescribed machinery. Petitioner
thereafter filed a complaint for judicial foreclosure with the Court of First Instance of
Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of seizure,
the enforcement of which was however subsequently restrained upon private
respondent's filing of a motion for reconsideration. After several incidents, the lower
court finally issued on February 11, 1981, an order lifting the restraining order for the
enforcement of the writ of seizure and an order to break open the premises of private
respondent to enforce said writ. The lower court reaffirmed its stand upon private
respondent's filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of
private respondent and removed the main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by
herein private respondent, set aside the Orders of the lower court and ordered the
return of the drive motor seized by the sheriff pursuant to said Orders, after ruling that
the machinery in suit cannot be the subject of replevin, much less of a chattel
mortgage, because it is a real property pursuant to Article 415 of the new Civil Code,
the same being attached to the ground by means of bolts and the only way to remove
it from respondent's plant would be to drill out or destroy the concrete floor, the
reason why all that the sheriff could do to enfore the writ was to take the main drive
motor of said machinery. The appellate court rejected petitioner's argument that
private respondent is estopped from claiming that the machine is real property by
constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been
denied, petitioner has brought the case to this Court for review by writ of certiorari. It
is contended by private respondent, however, that the instant petition was rendered
moot and academic by petitioner's act of returning the subject motor drive of
respondent's machinery after the Court of Appeals' decision was promulgated.
The contention of private respondent is without merit. When petitioner returned the
subject motor drive, it made itself unequivocably clear that said action was without
DONT WORRY BE HAPPY.

prejudice to a motion for reconsideration of the Court of Appeals decision, as shown


by the receipt duly signed by respondent's representative. 1 Considering that
petitioner has reserved its right to question the propriety of the Court of Appeals'
decision, the contention of private respondent that this petition has been mooted by
such return may not be sustained.
The next and the more crucial question to be resolved in this Petition is whether the
machinery in suit is real or personal property from the point of view of the parties, with
petitioner arguing that it is a personality, while the respondent claiming the contrary,
and was sustained by the appellate court, which accordingly held that the chattel
mortgage constituted thereon is null and void, as contended by said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143
where this Court, speaking through Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by
way of chattel mortgage defendants-appellants could only have meant
to convey the house as chattel, or at least, intended to treat the same
as such, so that they should not now be allowed to make an
inconsistent stand by claiming otherwise. Moreover, the subject house
stood on a rented lot to which defendants-appellants merely had a
temporary right as lessee, and although this can not in itself alone
determine the status of the property, it does so when combined with
other factors to sustain the interpretation that the parties, particularly the
mortgagors, intended to treat the house as personality. Finally, unlike in
the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee
vs. F.L. Strong Machinery & Williamson, wherein third persons assailed
the validity of the chattel mortgage, it is the defendants-appellants
themselves, as debtors-mortgagors, who are attacking the validity of the
chattel mortgage in this case. The doctrine of estoppel therefore applies
to the herein defendants-appellants, having treated the subject house
as personality.
Examining the records of the instant case, We find no logical justification to exclude
the rule out, as the appellate court did, the present case from the application of the
abovequoted pronouncement. If a house of strong materials, like what was involved
in the above Tumalad case, may be considered as personal property for purposes of

executing a chattel mortgage thereon as long as the parties to the contract so agree
and no innocent third party will be prejudiced thereby, there is absolutely no reason
why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because
one who has so agreed is estopped from denying the existence of the chattel
mortgage.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the
Court of Appeals lays stress on the fact that the house involved therein was built on a
land that did not belong to the owner of such house. But the law makes no distinction
with respect to the ownership of the land on which the house is built and We should
not lay down distinctions not contemplated by law.
It must be pointed out that the characterization of the subject machinery as chattel by
the private respondent is indicative of intention and impresses upon the property the
character determined by the parties. As stated inStandard Oil Co. of New York v.
Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by
agreement treat as personal property that which by nature would be real property, as
long as no interest of third parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it had
never represented nor agreed that the machinery in suit be considered as personal
property but was merely required and dictated on by herein petitioner to sign a
printed form of chattel mortgage which was in a blank form at the time of signing. This
contention lacks persuasiveness. As aptly pointed out by petitioner and not denied by
the respondent, the status of the subject machinery as movable or immovable was
never placed in issue before the lower court and the Court of Appeals except in a
supplemental memorandum in support of the petition filed in the appellate court.
Moreover, even granting that the charge is true, such fact alone does not render a
contract void ab initio, but can only be a ground for rendering said contract voidable,
or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in
court. There is nothing on record to show that the mortgage has been annulled.
Neither is it disclosed that steps were taken to nullify the same. On the other hand, as
pointed out by petitioner and again not refuted by respondent, the latter has
indubitably benefited from said contract. Equity dictates that one should not benefit at
the expense of another. Private respondent could not now therefore, be allowed to
impugn the efficacy of the chattel mortgage after it has benefited therefrom,
DONT WORRY BE HAPPY.

From what has been said above, the error of the appellate court in ruling that the
questioned machinery is real, not personal property, becomes very apparent.
Moreover, the case of Machinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70,
heavily relied upon by said court is not applicable to the case at bar, the nature of the
machinery and equipment involved therein as real properties never having been
disputed nor in issue, and they were not the subject of a Chattel Mortgage.
Undoubtedly, the Tumalad case bears more nearly perfect parity with the instant case
to be the more controlling jurisprudential authority.
WHEREFORE, the questioned decision and resolution of the Court of Appeals are
hereby reversed and set aside, and the Orders of the lower court are hereby
reinstated, with costs against the private respondent.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.
Abad Santos, J., concurs in the result.
ART. 418
[G.R. No. 137705. August 22, 2000]
SERGS
PRODUCTS,
INC.,
and
SERGIO
T.
GOQUIOLAY, petitioners, vs. PCI
LEASING
AND
FINANCE,
INC., respondent.
DECISION
PANGANIBAN, J.:
After agreeing to a contract stipulating that a real or immovable property
be considered as personal or movable, a party is estopped from
subsequently claiming otherwise.Hence, such property is a proper subject of
a writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6,
1999 Decision[1] of the Court of Appeals (CA)[2] in CA-GR SP No. 47332 and

its February 26, 1999 Resolution [3] denying reconsideration. The decretal
portion of the CA Decision reads as follows:
WHEREFORE, premises considered, the assailed Order dated February 18, 1998
and Resolution dated March 31, 1998 in Civil Case No. Q-98-33500 are
hereby AFFIRMED. The writ of preliminary injunction issued on June 15, 1998 is
hereby LIFTED.[4]
In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of
Quezon City (Branch 218)[6] issued a Writ of Seizure.[7] The March 18, 1998
Resolution[8] denied petitioners Motion for Special Protective Order, praying
that the deputy sheriff be enjoined from seizing immobilized or other real
properties in (petitioners) factory in Cainta, Rizal and to return to their original
place whatever immobilized machineries or equipments he may have
removed.[9]
The Facts
The undisputed facts are summarized by the Court of Appeals as follows:
[10]

On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for
short) filed with the RTC-QC a complaint for [a] sum of money (Annex E), with an
application for a writ of replevin docketed as Civil Case No. Q-98-33500.
On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge
issued a writ of replevin (Annex B) directing its sheriff to seize and deliver the
machineries and equipment to PCI Leasing after 5 days and upon the payment of the
necessary expenses.
On March 24, 1998, in implementation of said writ, the sheriff proceeded to
petitioners factory, seized one machinery with [the] word that he [would] return for the
other machineries.
On March 25, 1998, petitioners filed a motion for special protective order (Annex C),
invoking the power of the court to control the conduct of its officers and amend and
control its processes, praying for a directive for the sheriff to defer enforcement of the
writ of replevin.

This motion was opposed by PCI Leasing (Annex F), on the ground that the
properties [were] still personal and therefore still subject to seizure and a writ of
replevin.
In their Reply, petitioners asserted that the properties sought to be seized [were]
immovable as defined in Article 415 of the Civil Code, the parties agreement to the
contrary notwithstanding. They argued that to give effect to the agreement would be
prejudicial to innocent third parties. They further stated that PCI Leasing [was]
estopped from treating these machineries as personal because the contracts in which
the alleged agreement [were] embodied [were] totally sham and farcical.
On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take
possession of the remaining properties. He was able to take two more, but was
prevented by the workers from taking the rest.
On April 7, 1998, they went to [the CA] via an original action for certiorari.
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the
subject machines were personal property, and that they had only been
leased, not owned, by petitioners. It also ruled that the words of the contract
are clear and leave no doubt upon the true intention of the contracting
parties. Observing that Petitioner Goquiolay was an experienced
businessman who was not unfamiliar with the ways of the trade, it ruled that
he should have realized the import of the document he signed. The CA
further held:
Furthermore, to accord merit to this petition would be to preempt the trial court in
ruling upon the case below, since the merits of the whole matter are laid down before
us via a petition whose sole purpose is to inquire upon the existence of a grave
abuse of discretion on the part of the [RTC] in issuing the assailed Order and
Resolution. The issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is being enforced
by one, and [its] validity is attacked by the other a matter x x x which respondent
court is in the best position to determine.
Hence, this Petition.[11]
The Issues

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In their Memorandum, petitioners submit the following issues for our


consideration:
A. Whether or not the machineries purchased and imported by SERGS became real
property by virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease. [12]
In the main, the Court will resolve whether the said machines are
personal, not immovable, property which may be a proper subject of a writ of
replevin. As a preliminary matter, the Court will also address briefly the
procedural points raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly
whether it was being filed under Rule 45 or Rule 65 of the Rules of Court. It
further alleges that the Petition erroneously impleaded Judge Hilario Laqui as
respondent.
There is no question that the present recourse is under Rule 45. This
conclusion finds support in the very title of the Petition, which is Petition for
Review on Certiorari.[13]
While Judge Laqui should not have been impleaded as a respondent,
substantial justice requires that such lapse by itself should not warrant the
dismissal of the present Petition. In this light, the Court deems it proper to
remove, motu proprio, the name of Judge Laqui from the caption of the
present case.
[14]

Main Issue: Nature of the Subject Machinery


Petitioners contend that the subject machines used in their factory were
not proper subjects of the Writ issued by the RTC, because they were in fact
real property. Serious policy considerations, they argue, militate against a
contrary characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for
the recovery of personal property only.[15] Section 3 thereof reads:
DONT WORRY BE HAPPY.

SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court
shall issue an order and the corresponding writ of replevin describing the personal
property alleged to be wrongfully detained and requiring the sheriff forthwith to take
such property into his custody.
On the other hand, Article 415 of the Civil Code enumerates immovable
or real property as follows:
ART. 415. The following are immovable property:
x x x....................................x x x....................................x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a piece
of land, and which tend directly to meet the needs of the said industry or works;
x x x....................................x x x....................................x x x
In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own
land. Indisputably, they were essential and principal elements of their
chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become immobilized by
destination because they are essential and principal elements in the industry.
[16]
In that sense, petitioners are correct in arguing that the said machines are
real, not personal, property pursuant to Article 415 (5) of the Civil Code. [17]
Be that as it may, we disagree with the submission of the petitioners that
the said machines are not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a
real property be considered as personal.[18] After agreeing to such stipulation,
they are consequently estopped from claiming otherwise. Under the principle
of estoppel, a party to a contract is ordinarily precluded from denying the
truth of any material fact found therein.
Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the
parties to treat a house as a personal property because it had been made the
subject of a chattel mortgage. The Court ruled:

x x x. Although there is no specific statement referring to the subject house as


personal property, yet by ceding, selling or transferring a property by way of chattel
mortgage defendants-appellants could only have meant to convey the house as
chattel, or at least, intended to treat the same as such, so that they should not now
be allowed to make an inconsistent stand by claiming otherwise.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v.
Wearever Textile Mills[20] also held that the machinery used in a factory and
essential to the industry, as in the present case, was a proper subject of a
writ of replevin because it was treated as personal property in a
contract. Pertinent portions of the Courts ruling are reproduced hereunder:
x x x. If a house of strong materials, like what was involved in the above Tumalad
case, may be considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no innocent
third party will be prejudiced thereby, there is absolutely no reason why a machinery,
which is movable in its nature and becomes immobilized only by destination or
purpose, may not be likewise treated as such. This is really because one who has so
agreed is estopped from denying the existence of the chattel mortgage.
In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property. Specifically,
Section 12.1 of the Agreement reads as follows:[21]
12.1 The PROPERTY is, and shall at all times be and remain, personal property
notwithstanding that the PROPERTY or any part thereof may now be, or hereafter
become, in any manner affixed or attached to or embedded in, or permanently resting
upon, real property or any building thereon, or attached in any manner to what is
permanent.
Clearly then, petitioners are estopped from denying the characterization
of the subject machines as personal property. Under the circumstances, they
are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines
should be deemed personal property pursuant to the Lease Agreement is
good only insofar as the contracting parties are concerned. [22] Hence, while
the parties are bound by the Agreement, third persons acting in good faith
are not affected by its stipulation characterizing the subject machinery as
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personal.[23] In any event, there is no showing that any specific third party
would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan
and not a lease.[24] Submitting documents supposedly showing that they own
the subject machines, petitioners also argue in their Petition that the
Agreement suffers from intrinsic ambiguity which places in serious doubt the
intention of the parties and the validity of the lease agreement itself. [25] In their
Reply to respondents Comment, they further allege that the Agreement is
invalid.[26]
These arguments are unconvincing. The validity and the nature of the
contract are the lis mota of the civil action pending before the RTC. A
resolution of these questions, therefore, is effectively a resolution of the
merits of the case. Hence, they should be threshed out in the trial, not in the
proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the
policy under Rule 60 was that questions involving title to the subject property
questions which petitioners are now raising -- should be determined in the
trial. In that case, the Court noted that the remedy of defendants under Rule
60 was either to post a counter-bond or to question the sufficiency of the
plaintiffs bond. They were not allowed, however, to invoke the title to the
subject property. The Court ruled:
In other words, the law does not allow the defendant to file a motion to dissolve or
discharge the writ of seizure (or delivery) on ground of insufficiency of the complaint
or of the grounds relied upon therefor, as in proceedings on preliminary attachment or
injunction, and thereby put at issue the matter of the title or right of possession over
the specific chattel being replevied, the policy apparently being that said matter
should be ventilated and determined only at the trial on the merits. [28]
Besides, these questions require a determination of facts and a
presentation of evidence, both of which have no place in a petition for
certiorari in the CA under Rule 65 or in a petition for review in this Court
under Rule 45.[29]
Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease
Agreement, for nothing on record shows that it has been nullified or
annulled. In fact, petitioners assailed it first only in the RTC proceedings,
which had ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation [30] is also instructive on this
point. In that case, the Deed of Chattel Mortgage, which characterized the
subject machinery as personal property, was also assailed because
respondent had allegedly been required to sign a printed form of chattel
mortgage which was in a blank form at the time of signing. The Court
rejected the argument and relied on the Deed, ruling as follows:
x x x. Moreover, even granting that the charge is true, such fact alone does not
render a contract void ab initio, but can only be a ground for rendering said contract
voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper
action in court. There is nothing on record to show that the mortgage has been
annulled. Neither is it disclosed that steps were taken to nullify the same. x x x
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that if the Court allows these machineries to be
seized, then its workers would be out of work and thrown into the streets.
[31]
They also allege that the seizure would nullify all efforts to rehabilitate the
corporation.
Petitioners arguments do not preclude the implementation of the Writ. As
earlier discussed, law and jurisprudence support its propriety. Verily, the
above-mentioned consequences, if they come true, should not be blamed on
this Court, but on the petitioners for failing to avail themselves of the remedy
under Section 5 of Rule 60, which allows the filing of a counter-bond. The
provision states:
SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the
applicants bond, or of the surety or sureties thereon, he cannot immediately require
the return of the property, but if he does not so object, he may, at any time before the
delivery of the property to the applicant, require the return thereof, by filing with the
court where the action is pending a bond executed to the applicant, in double the
value of the property as stated in the applicants affidavit for the delivery thereof to the
applicant, if such delivery be adjudged, and for the payment of such sum to him as
DONT WORRY BE HAPPY.

may be recovered against the adverse party, and by serving a copy bond on the
applicant.
WHEREFORE, the Petition is DENIED and the assailed Decision of the
Court of Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
EN BANC
G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees,
vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.
Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants.
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the
reason that only questions of law are involved.
This case was originally commenced by defendants-appellants in the municipal court
of Manila in Civil Case No. 43073, for ejectment. Having lost therein, defendantsappellants appealed to the court a quo (Civil Case No. 30993) which also rendered a
decision against them, the dispositive portion of which follows:
WHEREFORE, the court hereby renders judgment in favor of the
plaintiffs and against the defendants, ordering the latter to pay jointly
and severally the former a monthly rent of P200.00 on the house,
subject-matter of this action, from March 27, 1956, to January 14, 1967,
with interest at the legal rate from April 18, 1956, the filing of the
complaint, until fully paid, plus attorney's fees in the sum of P300.00
and to pay the costs.

It appears on the records that on 1 September 1955 defendants-appellants executed


a chattel mortgage in favor of plaintiffs-appellees over their house of strong materials
located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and
7-B, Block No. 2554, which were being rented from Madrigal & Company, Inc. The
mortgage was registered in the Registry of Deeds of Manila on 2 September 1955.
The herein mortgage was executed to guarantee a loan of P4,800.00 received from
plaintiffs-appellees, payable within one year at 12% per annum. The mode of
payment was P150.00 monthly, starting September, 1955, up to July 1956, and the
lump sum of P3,150 was payable on or before August, 1956. It was also agreed that
default in the payment of any of the amortizations, would cause the remaining unpaid
balance to becomeimmediately due and Payable and
the Chattel Mortgage will be enforceable in accordance with the
provisions of Special Act No. 3135, and for this purpose, the Sheriff of
the City of Manila or any of his deputies is hereby empowered and
authorized to sell all the Mortgagor's property after the necessary
publication in order to settle the financial debts of P4,800.00, plus 12%
yearly interest, and attorney's fees... 2
When defendants-appellants defaulted in paying, the mortgage was extrajudicially
foreclosed, and on 27 March 1956, the house was sold at public auction pursuant to
the said contract. As highest bidder, plaintiffs-appellees were issued the
corresponding certificate of sale. 3 Thereafter, on 18 April 1956, plaintiffs-appellant
commenced Civil Case No. 43073 in the municipal court of Manila, praying, among
other things, that the house be vacated and its possession surrendered to them, and
for defendants-appellants to pay rent of P200.00 monthly from 27 March 1956 up to
the time the possession is surrendered. 4 On 21 September 1956, the municipal court
rendered its decision
... ordering the defendants to vacate the premises described in the
complaint; ordering further to pay monthly the amount of P200.00 from
March 27, 1956, until such (time that) the premises is (sic) completely
vacated; plus attorney's fees of P100.00 and the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court and court a
quo impugned the legality of the chattel mortgage, claiming that they are still the
owners of the house; but they waived the right to introduce evidence, oral or
documentary. Instead, they relied on their memoranda in support of their motion to
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dismiss, predicated mainly on the grounds that: (a) the municipal court did not have
jurisdiction to try and decide the case because (1) the issue involved, is ownership,
and (2) there was no allegation of prior possession; and (b) failure to prove prior
demand pursuant to Section 2, Rule 72, of the Rules of Court. 6
During the pendency of the appeal to the Court of First Instance, defendantsappellants failed to deposit the rent for November, 1956 within the first 10 days of
December, 1956 as ordered in the decision of the municipal court. As a result, the
court granted plaintiffs-appellees' motion for execution, and it was actually issued on
24 January 1957. However, the judgment regarding the surrender of possession to
plaintiffs-appellees could not be executed because the subject house had been
already demolished on 14 January 1957 pursuant to the order of the court in a
separate civil case (No. 25816) for ejectment against the present defendants for nonpayment of rentals on the land on which the house was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas
bond and withdrawal of deposited rentals was denied for the reason that the liability
therefor was disclaimed and was still being litigated, and under Section 8, Rule 72,
rentals deposited had to be held until final disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance rendered its decision, the
dispositive portion of which is quoted earlier. The said decision was appealed by
defendants to the Court of Appeals which, in turn, certified the appeal to this Court.
Plaintiffs-appellees failed to file a brief and this appeal was submitted for decision
without it.
Defendants-appellants submitted numerous assignments of error which can be
condensed into two questions, namely: .
(a) Whether the municipal court from which the case originated had
jurisdiction to adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to pay
rentals to the plaintiffs during the period of one (1) year provided by law
for the redemption of the extrajudicially foreclosed house.
We will consider these questions seriatim.

(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court


from which the case originated, and consequently, the appellate jurisdiction of the
Court of First Instance a quo, on the theory that the chattel mortgage is void ab initio;
whence it would follow that the extrajudicial foreclosure, and necessarily the
consequent auction sale, are also void. Thus, the ownership of the house still
remained with defendants-appellants who are entitled to possession and not
plaintiffs-appellees. Therefore, it is argued by defendants-appellants, the issue of
ownership will have to be adjudicated first in order to determine possession. lt is
contended further that ownership being in issue, it is the Court of First Instance which
has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel mortgage on two
grounds, which are: (a) that, their signatures on the chattel mortgage were obtained
through fraud, deceit, or trickery; and (b) that the subject matter of the mortgage is a
house of strong materials, and, being an immovable, it can only be the subject of a
real estate mortgage and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance found
defendants-appellants' contentions as not supported by evidence and accordingly
dismissed the charge, 8 confirming the earlier finding of the municipal court that "the
defense of ownership as well as the allegations of fraud and deceit ... are mere
allegations." 9
It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that "the answer is a
mere statement of the facts which the party filing it expects to prove, but it is not
evidence; 11 and further, that when the question to be determined is one of title, the
Court is given the authority to proceed with the hearing of the cause until this fact is
clearly established. In the case of Sy vs. Dalman, 12 wherein the defendant was also a
successful bidder in an auction sale, it was likewise held by this Court that in detainer
cases the aim of ownership "is a matter of defense and raises an issue of fact which
should be determined from the evidence at the trial." What determines jurisdiction are
the allegations or averments in the complaint and the relief asked for. 13
Moreover, even granting that the charge is true, fraud or deceit does not render a
contract void ab initio, and can only be a ground for rendering the contract voidable or
annullable pursuant to Article 1390 of the New Civil Code, by a proper action in
court. 14 There is nothing on record to show that the mortgage has been annulled.
Neither is it disclosed that steps were taken to nullify the same. Hence, defendantsDONT WORRY BE HAPPY.

appellants' claim of ownership on the basis of a voidable contract which has not been
voided fails.
It is claimed in the alternative by defendants-appellants that even if there was no
fraud, deceit or trickery, the chattel mortgage was still null and void ab initio because
only personal properties can be subject of a chattel mortgage. The rule about the
status of buildings as immovable property is stated in Lopez vs. Orosa, Jr. and Plaza
Theatre Inc., 15 cited in Associated Insurance Surety Co., Inc. vs. Iya, et al. 16 to the
effect that
... it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties
(art. 415, New Civil Code) could only mean one thing that a building
is by itself an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same
owner.
Certain deviations, however, have been allowed for various reasons. In the case
of Manarang and Manarang vs. Ofilada, 17 this Court stated that "it is undeniable that
the parties to a contract may by agreement treat as personal property that which by
nature would be real property", citing Standard Oil Company of New York vs.
Jaramillo. 18 In the latter case, the mortgagor conveyed and transferred to the
mortgagee by way of mortgage "the following described personal property."19 The
"personal property" consisted of leasehold rights and a building. Again, in the case
of Luna vs. Encarnacion, 20 the subject of the contract designated as Chattel
Mortgage was a house of mixed materials, and this Court hold therein that it was a
valid Chattel mortgage because it was so expressly designated and specifically that
the property given as security "is a house of mixed materials, which by its very nature
is considered personal property." In the later case of Navarro vs. Pineda, 21 this Court
stated that
The view that parties to a deed of chattel mortgage may agree to
consider a house as personal property for the purposes of said contract,
"is good only insofar as the contracting parties are concerned. It is
based, partly, upon the principle of estoppel" (Evangelista vs. Alto
Surety, No. L-11139, 23 April 1958). In a case, a mortgaged house built
on a rented land was held to be a personal property, not only because
the deed of mortgage considered it as such, but also because it did not

form part of the land (Evangelists vs. Abad, [CA]; 36 O.G. 2913), for it is
now settled that an object placed on land by one who had only a
temporary right to the same, such as the lessee or usufructuary, does
not become immobilized by attachment (Valdez vs. Central Altagracia,
222 U.S. 58, cited in Davao Sawmill Co., Inc. vs. Castillo, et al., 61 Phil.
709). Hence, if a house belonging to a person stands on a rented land
belonging to another person, it may be mortgaged as a personal
property as so stipulated in the document of mortgage. (Evangelista vs.
Abad, Supra.) It should be noted, however that the principle is
predicated on statements by the owner declaring his house to be a
chattel, a conduct that may conceivably estop him from subsequently
claiming otherwise. (Ladera vs. C.N. Hodges, [CA] 48 O.G. 5374): 22
In the contract now before Us, the house on rented land is not only expressly
designated as Chattel Mortgage; it specifically provides that "the mortgagor ...
voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage 23 the
property together with its leasehold rights over the lot on which it is constructed and
participation ..." 24Although there is no specific statement referring to the subject
house as personal property, yet by ceding, selling or transferring a property by way of
chattel mortgage defendants-appellants could only have meant to convey the house
as chattel, or at least, intended to treat the same as such, so that they should not now
be allowed to make an inconsistent stand by claiming otherwise. Moreover, the
subject house stood on a rented lot to which defendats-appellants merely had a
temporary right as lessee, and although this can not in itself alone determine the
status of the property, it does so when combined with other factors to sustain the
interpretation that the parties, particularly the mortgagors, intended to treat the house
as personalty. Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre,
Inc. 25 and Leung Yee vs. F. L. Strong Machinery and Williamson, 26 wherein third
persons assailed the validity of the chattel mortgage, 27 it is the defendants-appellants
themselves, as debtors-mortgagors, who are attacking the validity of the chattel
mortgage in this case. The doctrine of estoppel therefore applies to the herein
defendants-appellants, having treated the subject house as personalty.
(b) Turning to the question of possession and rentals of the premises in question. The
Court of First Instance noted in its decision that nearly a year after the foreclosure
sale the mortgaged house had been demolished on 14 and 15 January 1957 by
virtue of a decision obtained by the lessor of the land on which the house stood. For
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this reason, the said court limited itself to sentencing the erstwhile mortgagors to pay
plaintiffs a monthly rent of P200.00 from 27 March 1956 (when the chattel mortgage
was foreclosed and the house sold) until 14 January 1957 (when it was torn down by
the Sheriff), plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were entitled to remain
in possession without any obligation to pay rent during the one year redemption
period after the foreclosure sale, i.e., until 27 March 1957. On this issue, We must
rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No.
1508. 28 Section 14 of this Act allows the mortgagee to have the property mortgaged
sold at public auction through a public officer in almost the same manner as that
allowed by Act No. 3135, as amended by Act No. 4118, provided that the
requirements of the law relative to notice and registration are complied with. 29 In the
instant case, the parties specifically stipulated that "the chattel mortgage will
be enforceable in accordance with the provisions of Special Act No.
3135 ... ." 30 (Emphasis supplied).
Section 6 of the Act referred to 31 provides that the debtor-mortgagor (defendantsappellants herein) may, at any time within one year from and after the date of the
auction sale, redeem the property sold at the extra judicial foreclosure sale. Section 7
of the same Act 32 allows the purchaser of the property to obtain from the court the
possession during the period of redemption: but the same provision expressly
requires the filing of a petition with the proper Court of First Instance and the
furnishing of a bond. It is only upon filing of the proper motion and the approval of the
corresponding bond that the order for a writ of possession issues as a matter of
course. No discretion is left to the court. 33 In the absence of such a compliance, as in
the instant case, the purchaser can not claim possession during the period of
redemption as a matter of right. In such a case, the governing provision is Section 34,
Rule 39, of the Revised Rules of Court 34 which also applies to properties purchased
in extrajudicial foreclosure proceedings. 35 Construing the said section, this Court
stated in the aforestated case of Reyes vs. Hamada.
In other words, before the expiration of the 1-year period within which
the judgment-debtor or mortgagor may redeem the property, the
purchaser thereof is not entitled, as a matter of right, to possession of
the same. Thus, while it is true that the Rules of Court allow the

purchaser to receive the rentals if the purchased property is occupied


by tenants, he is, nevertheless, accountable to the judgment-debtor
or mortgagor as the case may be, for the amount so received and the
same will be duly credited against the redemption price when the said
debtor or mortgagor effects the redemption.Differently stated, the
rentals receivable from tenants, although they may be collected by the
purchaser during the redemption period, do not belong to the latter but
still pertain to the debtor of mortgagor. The rationale for the Rule, it
seems, is to secure for the benefit of the debtor or mortgagor, the
payment of the redemption amount and the consequent return to him of
his properties sold at public auction. (Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan vs. Espe.

36

Since the defendants-appellants were occupying the house at the time of the auction
sale, they are entitled to remain in possession during the period of redemption or
within one year from and after 27 March 1956, the date of the auction sale, and to
collect the rents or profits during the said period.
It will be noted further that in the case at bar the period of redemption had not yet
expired when action was instituted in the court of origin, and that plaintiffs-appellees
did not choose to take possession under Section 7, Act No. 3135, as amended, which
is the law selected by the parties to govern the extrajudicial foreclosure of the chattel
mortgage. Neither was there an allegation to that effect. Since plaintiffs-appellees'
right to possess was not yet born at the filing of the complaint, there could be no
violation or breach thereof. Wherefore, the original complaint stated no cause of
action and was prematurely filed. For this reason, the same should be ordered
dismissed, even if there was no assignment of error to that effect. The Supreme
Court is clothed with ample authority to review palpable errors not assigned as such if
it finds that their consideration is necessary in arriving at a just decision of the
cases. 37
It follows that the court below erred in requiring the mortgagors to pay rents for the
year following the foreclosure sale, as well as attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed from is reversed and
another one entered, dismissing the complaint. With costs against plaintiffsappellees.
DONT WORRY BE HAPPY.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee,


Barredo, Villamor and Makasiar, JJ., concur.
ART. 419
G.R. No. L-24950

March 25, 1926

VIUDA DE TAN TOCO, plaintiff-appellant,


vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.
Arroyo & Evangelista for appellant.
Provincial Fiscal Borromeo Veloso for appelle.
VILLAMOR, J.:
It appears from the record that the widow of Tan Toco had sued the municipal council
of Iloilo for the amount of P42,966.40, being the purchase price of two strips of land,
one on Calle J. M. Basa consisting of 592 square meters, and the other on Calle
Aldiguer consisting of 59 square meters, which the municipality of Iloilo had
appropriated for widening said street. The Court of First Instance of Iloilo sentenced
the said municipality to pay the plaintiff the amount so claimed, plus the interest, and
the said judgment was on appeal affirmed by this court. 1
On account of lack of funds the municipality of Iloilo was unable to pay the said
judgment, wherefore plaintiff had a writ of execution issue against the property of the
said municipality, by virtue of which the sheriff attached two auto trucks used for
street sprinkling, one police patrol automobile, the police stations on Mabini street,
and in Molo and Mandurriao and the concrete structures, with the corresponding lots,
used as markets by Iloilo, Molo, and Mandurriao.
After notice of the sale of said property had been made, and a few days before the
sale, the provincial fiscal of Iloilo filed a motion which the Court of First Instance
praying that the attachment on the said property be dissolved, that the said
attachment be declared null and void as being illegal and violative of the rights of the
defendant municipality.

Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12,
1925, declared the attachment levied upon the aforementioned property of the
defendant municipality null and void, thereby dissolving the said attachment.
From this order the plaintiff has appealed by bill of exceptions. The fundamental
question raised by appellant in her four assignments of error is whether or not the
property levied upon is exempt from execution.
The municipal law, section 2165 of the Administrative Code, provides that:
Municipalities are political bodies corporate, and as such are endowed with the
faculties of municipal corporations, to be exercised by and through their
respective municipal government in conformity with law.
It shall be competent for them, in their proper corporate name, to sue and be
sued, to contract and be contracted with, to acquire and hold real and personal
property for municipal purposes, and generally to exercise the powers
hereinafter specified or otherwise conferred upon them by law.
For the purposes of the matter here in question, the Administrative Code does not
specify the kind of property that a municipality may acquire. However, article 343 of
the Civil Code divides the property of provinces and towns (municipalities) into
property for public use and patrimonial property. According to article 344 of the same
Code, provincial roads and foot-path, squares, streets, fountains and public waters,
drives and public improvements of general benefit built at the expense of the said
towns or provinces, are property for public use.
All other property possessed by the said towns and provinces is patrimonial and shall
be subject to the provisions of the Civil Code except as provided by special laws.
Commenting upon article 344, Mr. Manresa says that "In accordance with
administrative legislation" (Spanish) we must distinguish, as to the patrimonial
property of the towns, "between that a common benefit and that which is private
property of the town. The first differs from property for public use in that generally its
enjoyment is less, as it is limited to neighbors or to a group or class thereof; and,
furthermore, such use, more or less general, is not intrinsic with this kind of property,
for by its very nature it may be enjoyed as though it were private property. The third
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group, that is, private property, is used in the name of the town or province by the
entities representing it and, like and private property, giving a source of revenue."
Such distinction, however, is of little practical importance in this jurisdiction in view of
the different principles underlying the functions of a municipality under the American
rule. Notwithstanding this, we believe that the principle governing property of the
public domain of the State is applicable to property for public use of the municipalities
as said municipal is similar in character. The principle is that the property for public
use of the State is not within the commerce of man and, consequently, is inalienable
and not subject to prescription. Likewise, property for public of the municipality is not
within the commerce of man so long as it is used by the public and, consequently,
said property is also inalienable.
The American Law is more explicit about this matter as expounded by Mcquilin in
Municipal Corporations, volume 3, paragraph 1160, where he says that:
States statutes often provide the court houses, jails and other buildings owned
by municipalities and the lots on which they stand shall be exempt from
attachment and execution. But independent of express statutory exemption, as
a general proposition, property, real and personal, held by municipal
corporations, in trust for the benefit of their inhabitants, and used for public
purposes, is exempt.
For example, public buildings, school houses, streets, squares, parks,
wharves, engines and engine houses, and the like, are not subject to
execution. So city waterworks, and a stock of liquors carried in a town
dispensary, are exempt. The reason for the exemption is obvious. Municipal
corporations are created for public purposes and for the good of the citizens in
their aggregate or public capacity. That they may properly discharge such
public functions corporate property and revenues are essential, and to deny
them these means the very purpose of their creation would be materially
impeded, and in some instances practically destroy it. Respecting this subject
the Supreme Court of Louisiana remarked: "On the first view of this question
there is something very repugnant to the moral sense in the idea that a
municipal corporation should contract debts, and that, having no resources but
the taxes which are due to it, these should not be subjected by legal process
to the satisfaction of its creditors. This consideration, deduced from the

principles of moral equity has only given way to the more enlarged
contemplation of the great and paramount interests of public order and the
principles of government."
It is generally held that property owned by a municipality, where not used for a
public purpose but for quasi private purposes, is subject to execution on a
judgment against the municipality, and may be sold. This rule applies to shares
of stock owned by a municipal corporation, and the like. But the mere fact that
corporate property held for public uses is being temporarily used for private
purposes does not make it subject execution.
If municipal property exempt from execution is destroyed, the insurance
money stands in lieu thereof and is also exempt.
The members or inhabitants of a municipal corporation proper are not
personally liable for the debts of the municipality, except that in the New
England States the individual liability of the inhabitant is generally maintained.
In Corpus Juris, vol 23, page 355, the following is found:
Where property of a municipal or other public corporation is sough to be
subjected to execution to satisfy judgments recovered against such
corporation, the question as to whether such property is leviable or not is to be
determined by the usage and purposes for which it is held. The rule is that
property held for public uses, such as public buildings, streets, squares parks,
promenades, wharves, landing places fire engines, hose and hose carriages,
engine houses, public markets, hospitals, cemeteries, and generally
everything held for governmental purposes, is not subject to levy and sale
under execution against such corporation. The rule also applies to funds in the
hands of a public officer. Likewise it has been held that taxes due to a
municipal corporation or country cannot be seized under execution by a
creditor of such corporation. But where a municipal corporation or country
owns in its proprietary, as distinguished from its public or governmental
capacity, property not useful or used for a public purpose but for quasi private
purposes, the general rule is that such property may be seized and sold under
execution against the corporation, precisely as similar property of individuals is
seized and sold. But property held for public purposes is not subject to
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execution merely because it is temporarily used for private purposes, although


if the public use is wholly abandoned it becomes subject to execution. Whether
or not property held as public property is necessary for the public use is a
political, rather than a judicial question.
In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S.,
654; 35 Law. ed., 556), it was held that a wharf for unloading sugar and molasses,
open to the public, was property for the public use of the City of New Orleans and
was not subject to attachment for the payment of the debts of the said city.
In that case it was proven that the said wharf was a parcel of land adjacent to the
Mississippi River where all shipments of sugar and molasses taken to New Orleans
were unloaded.
That city leased the said wharf to the Louisiana Construction Company, Ltd., in order
that it might erect warehouses so that the merchandise upon discharge might not be
spoiled by the elements. The said company was given the privilege of charging
certain fees for storing merchandise in the said warehouses and the public in general
had the right to unload sugar and molasses there by paying the required fees, 10 per
cent of which was turned over to the city treasury.
The United States Supreme Court on an appeal held that the wharf was public
property, that it never ceased to be such in order to become private property of the
city; wherefore the company could not levy execution upon the wharf in order to
collect the amount of the judgment rendered in favor thereof.
In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the
Supreme Court of the United States that a public wharf on the banks of the
Mississippi River was public property and not subject to execution for the payment of
a debt of the City of New Orleans where said wharf was located.
In this case a parcel of land adjacent to the Mississippi River, which formerly was the
shore of the river and which later enlarged itself by accession, was converted into a
wharf by the city for public use, who charged a certain fee for its use.
It was held that the land was public property as necessary as a public street and was
not subject to execution on account of the debts of the city. It was further held that the

fees collected where also exempt from execution because they were a part of the
income of the city.
In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil.,
654), the question raised was whether for the payment of a debt to a third person by
the concessionaire of a public market, the said public market could be attached and
sold at public auction. The Supreme Court held that:
Even though a creditor is unquestionably entitled to recover out of his debtor's
property, yet when among such property there is included the special right
granted by the Government of usufruct in a building intended for a public
service, and when this privilege is closely related to a service of a public
character, such right of the creditor to the collection of a debt owed him by the
debtor who enjoys the said special privilege of usufruct in a public market is
not absolute and may be exercised only through the action of court of justice
with respect to the profits or revenue obtained under the special right of
usufruct enjoyed by debtor.
The special concession of the right of usufruct in a public market cannot be
attached like any ordinary right, because that would be to permit a person who
has contracted with the state or with the administrative officials thereof to
conduct and manage a service of a public character, to be substituted, without
the knowledge and consent of the administrative authorities, by one who took
no part in the contract, thus giving rise to the possibility of the regular course of
a public service being disturbed by the more or less legal action of a grantee,
to the prejudice of the state and the public interests.
The privilege or franchise granted to a private person to enjoy the usufruct of a
public market cannot lawfully be attached and sold, and a creditor of such
person can recover his debt only out of the income or revenue obtained by the
debtor from the enjoyment or usufruct of the said privilege, in the same
manner that the rights of such creditors of a railroad company can be
exercised and their credit collected only out of the gross receipts remaining
after deduction has been made therefrom of the operating expenses of the
road. (Law of November 12, 1896, extended to the overseas provinces by the
royal order of August 3, 1886.)
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For the reasons contained in the authorities above quoted we believe that this court
would have reached the same conclusion if the debtor had been municipality of
Guinobatan and the public market had been levied upon by virtue of the execution.
It is evident that the movable and immovable property of a municipality, necessary for
governmental purpose, may not be attached and sold for the payment of a judgment
against the municipality. The supreme reason for this rule is the character of the
public use to which such kind of property is devoted. The necessity for government
service justifies that the property of public of the municipality be exempt from
execution just as it is necessary to exempt certain property of private individuals in
accordance with section 452 of the Code of Civil Procedure.
Even the municipal income, according to the above quoted authorities, is exempt
from levy and execution. In volume 1, page 467, Municipal Corporations by Dillon we
find that:
Municipal corporations are instituted by the supreme authority of a state for the
public good. They exercise, by delegation from the legislature, a portion of the
sovereign power. The main object of their creation is to act as administrative
agencies for the state, and to provide for the police and local government of
certain designated civil divisions of its territory. To this end they are invested
with certain governmental powers and charged with civil, political, and
municipal duties. To enable them beneficially to exercise these powers and
discharge these duties, they are clothed with the authority to raise revenues,
chiefly by taxation, and subordinately by other modes as by licenses, fines,
and penalties. The revenue of the public corporation is the essential means by
which it is enabled to perform its appointed work. Deprived of its regular and
adequate supply of revenue, such a corporation is practically destroyed and
the ends of its erection thwarted. Based upon considerations of this character,
it is the settled doctrine of the law that only the public property but also the
taxes and public revenues of such corporations cannot be seized under
execution against them, either in the treasury or when in transit to it.
Judgments rendered for taxes, and the proceeds of such judgments in the
hands of officers of the law, are not subject to execution unless so declared by
statute. The doctrine of the inviolability of the public revenues by the creditor is
maintained, although the corporation is in debt, and has no means of payment
but the taxes which it is authorized to collect.

Another error assigned by counsel for appellant is the holding of the court a quo that
the proper remedy for collecting the judgment in favor of the plaintiff was by way or
mandamus.
While this question is not necessarily included in the one which is the subject of this
appeal, yet we believe that the holding of the court, assigned as error by appellant's
counsel, is true when, after a judgment is rendered against a municipality, it has no
property subject to execution. This doctrine is maintained by Dillon (Municipal
Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of several States of
the Union upholding the same principle and which are cited on page 2679 of the
aforesaid work. In this sense this assignment of error, we believe, is groundless.
By virtue of all the foregoing, the judgment appealed from should be and is hereby
affirmed with costs against the appellant. So ordered.
Avancea, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ.,
concur.
G.R. No. L-61311 September 2l, 1987
FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG, FELINA
MIRANDA, RICARDO PUNO, FLORENCIO LAXA, and RENE
OCAMPO, petitioners,
vs.
HON. MARIANO CASTAEDA, JR., Presiding Judge of the Court of First
Instance of Pampanga, Branch III, VICENTE A. MACALINO, Officer-in-Charge,
Office of the Mayor, San Fernando, Pampanga, respondents.

authorization granted to them by the municipal government. The respondents deny


this and justify the demolition of their stalls as illegal constructions on public property.
At the petitioners' behest, we have issued a temporary restraining order to preserve
the status quobetween the parties pending our decision. 1 Now we shall rule on the
merits.
This dispute goes back to November 7, 1961, when the municipal council of San
Fernando adopted Resolution No. 218 authorizing some 24 members of the
Fernandino United Merchants and Traders Association to construct permanent stags
and sell in the above-mentioned place. 2 The action was protested on November 10,
1961, in Civil Case No. 2040, where the Court of First Instance of Pampanga, Branch
2, issued a writ of preliminary injunction that prevented the defendants from
constructing the said stalls until final resolution of the controversy. 3 On January 18,
1964, while this case was pending, the municipal council of San Fernando adopted
Resolution G.R. No. 29, which declared the subject area as "the parking place and as
the public plaza of the municipality, 4 thereby impliedly revoking Resolution No. 218,
series of 1961. Four years later, on November 2, 1968, Judge Andres C. Aguilar
decided the aforesaid case and held that the land occupied by the petitioners, being
public in nature, was beyond the commerce of man and therefore could not be the
subject of private occupancy. 5 The writ of preliminary injunction was made
permanent. 6

CRUZ, J.:

The decision was apparently not enforced, for the petitioners were not evicted from
the place; in fact, according to then they and the 128 other persons were in 1971
assigned specific areas or space allotments therein for which they paid daily fees to
the municipal government. 7 The problem appears to have festered for some more
years under a presumably uneasy truce among the protagonists, none of whom
made any move, for some reason that does not appear in the record. Then, on
January 12, 1982, the Association of Concerned Citizens and Consumers of San
Fernando filed a petition for the immediate implementation of Resolution No. 29, to
restore the subject property "to its original and customary use as a public plaza. 8

There is in the vicinity of the public market of San Fernando, Pampanga, along
Mercado Street, a strip of land measuring 12 by 77 meters on which stands a
conglomeration of vendors stalls together forming what is commonly known as
a talipapa. This is the subject of the herein petition. The petitioners claim they have a
right to remain in and conduct business in this area by virtue of a previous

Acting thereon after an investigation conducted by the municipal


attorney, 9 respondent Vicente A. Macalino, as officer-in-charge of the office of the
mayor of San Fernando, issued on June 14, 1982, a resolution requiring the
municipal treasurer and the municipal engineer to demolish the stalls in the subject
place beginning July 1, 1982. 10 The reaction of the petitioners was to file a petition

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for prohibition with the Court of First Instance of Pampanga, docketed as Civil Case
No. 6470, on June 26, 1982. The respondent judge denied the petition on July 19,
1982, 11 and the motion for reconsideration on August 5, 1982, 12 prompting the
petitioners to come to this Court on certiorari to challenge his decision. 13
As required, respondent Macalino filed his comment 14 on the petition, and the
petitioners countered with their reply. 15 In compliance with our resolution of
February 2, 1983, the petitioners submitted their memorandum 16 and respondent
Macalino, for his part, asked that his comment be considered his
memorandum. 17 On July 28, 1986, the new officer-in-charge of the office of the
mayor of San Fernando, Paterno S. Guevarra, was impleaded in lieu of Virgilio
Sanchez, who had himself earlier replaced the original respondent Macalino. 18
After considering the issues and the arguments raised by the parties in their
respective pleadings, we rule for the respondents. The petition must be dismissed.
There is no question that the place occupied by the petitioners and from which they
are sought to be evicted is a public plaza, as found by the trial court in Civil Case No.
2040. This finding was made after consideration of the antecedent facts as especially
established by the testimony of former San Fernando Mayor Rodolfo Hizon, who later
became governor of Pampanga, that the National Planning Commission had
reserved the area for a public plaza as early as 1951. This intention was reiterated in
1964 through the adoption of Resolution No. 29. 19
It does not appear that the decision in this case was appealed or has been reversed.
In Civil Case G.R. No. 6740, which is the subject of this petition, the respondent
judge saw no reason to disturb the finding in Civil Case No. 2040 and indeed used it
as a basis for his own decision sustaining the questioned order. 20
The basic contention of the petitioners is that the disputed area is under lease to
them by virtue of contracts they had entered into with the municipal government, first
in 1961 insofar as the original occupants were concerned, and later with them and
the other petitioners by virtue of the space allocations made in their favor in 1971 for
which they saw they are paying daily fees. 21 The municipal government has denied
making such agreements. In any case, they argue, since the fees were collected
daily, the leases, assuming their validity, could be terminated at will, or any day, as
the claimed rentals indicated that the period of the leases was from day to day. 22
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The parties belabor this argument needlessly.


A public plaza is beyond the commerce of man and so cannot be the subject of lease
or any other contractual undertaking. This is elementary. Indeed, this point was
settled as early as in Municipality of Cavite vs. Rojas, 23decided in 1915, where the
Court declared as null and void the lease of a public plaza of the said municipality in
favor of a private person.
Justice Torres said in that case:
According to article 344 of the Civil Code: "Property for public use in
provinces and in towns comprises the provincial and town roads, the
squares, streets, fountains, and public waters, the promenades, and
public works of general service supported by said towns or provinces.
The said Plaza Soledad being a promenade for public use, the
municipal council of Cavite could not in 1907 withdraw or exclude from
public use a portion thereof in order to lease it for the sole benefit of the
defendant Hilaria Rojas. In leasing a portion of said plaza or public
place to the defendant for private use the plaintiff municipality exceeded
its authority in the exercise of its powers by executing a contract over a
thing of which it could not dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not
outside the commerce of man may be the object of a contract, and
plazas and streets are outside of this commerce, as was decided by the
supreme court of Spain in its decision of February 12, 1895, which
says: "communal things that cannot be sold because they are by their
very nature outside of commerce are those for public use, such as the
plazas, streets, common lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract, Exhibit C, whereby
the municipality of Cavite leased to Hilaria Rojas a portion of the Plaza
Soledad is null and void and of no force or effect, because it is contrary
to the law and the thing leased cannot be the object of a was held that
the City of contract.

In Muyot vs. de la Fuente, 24 it was held that the City of Manila could not lease a
portion of a public sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce
of man.
Echoing Rojas, the decision said:
Appellants claim that they had obtained permit from the present of the
City of Manila, to connect booths Nos. 1 and 2, along the premises in
question, and for the use of spaces where the booths were constructed,
they had paid and continued paying the corresponding rentals. Granting
this claim to be true, one should not entertain any doubt that such
permit was not legal, because the City of Manila does not have any
power or authority at all to lease a portion of a public sidewalk. The
sidewalk in question, forming part of the public plaza of Sta. Cruz, could
not be a proper subject matter of the contract, as it was not within the
commerce of man (Article 1347, new Civil Code, and article 1271, old
Civil Code). Any contract entered into by the City of Manila in
connection with the sidewalk, is ipso facto null and ultra
vires. (Municipality of Cavite vs. Roxas, et a1, 30 Phil. 603.) The
sidewalk in question was intended for and was used by the public, in
going from one place to another. "The streets and public places of the
city shall be kept free and clear for the use of the public, and the
sidewalks and crossings for the pedestrians, and the same shall only be
used or occupied for other purpose as provided by ordinance or
regulation; ..." (Sec. 1119, Revised Ordinances of the City of Manila.)
The booths in question served as fruit stands for their owners and often,
if not always, blocked the fire passage of pedestrians who had to take
the plaza itself which used to be clogged with vehicular traffic.
Exactly in point is Espiritu vs. Municipal Council of Pozorrubio,
Court declared:

25

where the Supreme

There is absolutely no question that the town plaza cannot be used for
the construction of market stalls, specially of residences, and that such
structures constitute a nuisance subject to abatement according to law.
Town plazas are properties of public dominion, to be devoted to public
use and to be made available to the public in general They are outside
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the common of man and cannot be disposed of or even leased by the


municipality to private parties.
Applying this well-settled doctrine, we rule that the petitioners had no right in the first
place to occupy the disputed premises and cannot insist in remaining there now on
the strength of their alleged lease contracts. They should have realized and accepted
this earlier, considering that even before Civil Case No. 2040 was decided, the
municipalcouncil of San Fernando had already adopted Resolution No. 29, series of
1964, declaring the area as the parking place and public plaza of the municipality.
It is the decision in Civil Case No. 2040 and the said resolution of the municipal
council of San Fernando that respondent Macalino was seeking to enforce when he
ordered the demolition of the stags constructed in the disputed area. As officer-incharge of the office of the mayor, he had the duty to clear the area and restore it to its
intended use as a parking place and public plaza of the municipality of San
Fernando, conformably to the aforementioned orders from the court and the council.
It is, therefore, not correct to say that he had acted without authority or taken the law
into his hands in issuing his order.
Neither can it be said that he acted whimsically in exercising his authority for it has
been established that he directed the demolition of the stalls only after, upon his
instructions, the municipal attorney had conducted an investigation, to look into the
complaint filed by the Association of Concerned Citizens and Consumers of San
Fernando. 26 There is evidence that the petitioners were notified of this
hearing, 27which they chose to disregard. Photographs of the disputed area, 28 which
does look congested and ugly, show that the complaint was valid and that the area
really needed to be cleared, as recommended by the municipal attorney.
The Court observes that even without such investigation and recommendation, the
respondent mayor was justified in ordering the area cleared on the strength alone of
its status as a public plaza as declared by the judicial and legislative authorities. In
calling first for the investigation (which the petitioner saw fit to boycott), he was just
scrupulously paying deference to the requirements of due process, to remove an taint
of arbitrariness in the action he was caged upon to take.
Since the occupation of the place in question in 1961 by the original 24 stallholders
(whose number later ballooned to almost 200), it has deteriorated increasingly to the

great prejudice of the community in general. The proliferation of stags therein, most
of them makeshift and of flammable materials, has converted it into a veritable fire
trap, which, added to the fact that it obstructs access to and from the public market
itself, has seriously endangered public safety. The filthy condition of
the talipapa, where fish and other wet items are sold, has aggravated health and
sanitation problems, besides pervading the place with a foul odor that has spread into
the surrounding areas. The entire place is unsightly, to the dismay and
embarrassment of the inhabitants, who want it converted into a showcase of the town
of which they can all be proud. The vendors in the talipapa have also spilled into the
street and obstruct the flow of traffic, thereby impairing the convenience of motorists
and pedestrians alike. The regular stallholders in the public market, who pay
substantial rentals to the municipality, are deprived of a sizable volume of business
from prospective customers who are intercepted by the talipapa vendors before they
can reach the market proper. On top of all these, the people are denied the proper
use of the place as a public plaza, where they may spend their leisure in a relaxed
and even beautiful environment and civic and other communal activities of the town
can be held.
The problems caused by the usurpation of the place by the petitioners are covered by
the police power as delegated to the municipality under the general welfare
clause. 29 This authorizes the municipal council "to enact such ordinances and make
such regulations, not repugnant to law, as may be necessary to carry into effect and
discharge the powers and duties conferred upon it by law and such as shall seem
necessary and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort, and convenience of the municipality
and the inhabitants thereof, and for the protection of property therein." This authority
was validly exercised in this casethrough the adoption of Resolution No. 29, series of
1964, by the municipal council of San Fernando.
Even assuming a valid lease of the property in dispute, the resolution could have
effectively terminated the agreement for it is settled that the police power cannot be
surrendered or bargained away through the medium of a contract. 30 In fact, every
contract affecting the public interest suffers a congenital infirmity in that it contains an
implied reservation of the police power as a postulate of the existing legal
order. 31 This power can be activated at any time to change the provisions of the
contract, or even abrogate it entirely, for the promotion or protection of the general
DONT WORRY BE HAPPY.

welfare. Such an act will not militate against the impairment clause, which is subject
to and limited by the paramount police power.32
We hold that the respondent judge did not commit grave abuse of discretion in
denying the petition for prohibition. On the contrary, he acted correctly in sustaining
the right and responsibility of the mayor to evict the petitioners from the disputed area
and clear it of an the structures illegally constructed therein.
The Court feels that it would have been far more amiable if the petitioners
themselves, recognizing their own civic duty, had at the outset desisted from their
original stance and withdrawn in good grace from the disputed area to permit its
peaceful restoration as a public plaza and parking place for the benefit of the whole
municipality. They owned this little sacrifice to the community in general which has
suffered all these many years because of their intransigence. Regrettably, they have
refused to recognize that in the truly democratic society, the interests of the few
should yield to those of the greater number in deference to the principles that the
welfare of the people is the supreme law and overriding purpose. We do not see any
altruism here. The traditional ties of sharing are absent here. What we find, sad to
say, is a cynical disdaining of the spirit of "bayanihan," a selfish rejection of the
cordial virtues of "pakikisama " and "pagbibigayan" which are the hallmarks of our
people.
WHEREFORE, the petition is DISMISSED. The decision dated July 19, 1982, and the
order-dated August 5, 1982, are AFFIRMED. The temporary restraining order dated
August 9, 1982, is LIFTED. This decision is immediately executory. Costs against the
petitioners.
SO ORDERED.
Teehankee, C.J., Narvasa and Paras, JJ., concur.
G.R. No. L-66575 September 30, 1986
ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES,
TEODORO and MYRNA, all surnamed MANECLANG, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO

CASTRO, SALOME RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA,


MARIANO GABRIEL, NICOMEDES CORDERO, CLETO PEDROZO, FELIX
SALARY and JOSE PANLILIO, respondents.
Loreto Novisteros for petitioners.
Corleto R. Castro for respondents.
FERNAN, J.:
Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of
Pangasinan, Branch XI a complaint for quieting of title over a certain fishpond located
within the four [41 parcels of land belonging to them situated in Barrio Salomague,
Bugallon, Pangasinan, and the annulment of Resolutions Nos. 38 and 95 of the
Municipal Council of Bugallon Pangasinan. The trial court dismissed the complaint in
a decision dated August 15, 1975 upon a finding that the body of water traversing the
titled properties of petitioners is a creek constituting a tributary of the Agno River;
therefore public in nature and not subject to private appropriation. The lower court
likewise held that Resolution No. 38, ordering an ocular inspection of the Cayangan
Creek situated between Barrios Salomague Sur and Salomague Norte, and
Resolution No. 95 authorizing public bidding for the lease of all municipal ferries and
fisheries, including the fishpond under consideration, were passed by respondents
herein as members of the Municipal Council of Bugallon, Pangasinan in the exercise
of their legislative powers.
Petitioners appealed said decision to the Intermediate Appellate Court, which
affirmed the same on April 29, 1983. Hence, this petition for review on certiorari.
Acting on the petition, the Court required the respondents to comment thereon.
However, before respondents could do so, petitioners manifested that for lack of
interest on the part of respondent Alfredo Maza, the awardee in the public bidding of
the fishpond, the parties desire to amicably settle the case by submitting to the Court
a Compromise Agreement praying that judgment be rendered recognizing the
ownership of petitioners over the land the body of water found within their titled
properties, stating therein, among other things, that "to pursue the case, the same will
not amount to any benefit of the parties, on the other hand it is to the advantage and
benefit of the municipality if the ownership of the land and the water found therein
belonging to petitioners be recognized in their favor as it is now clear that after the
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National Irrigation Administration [NIA] had built the dike around the land, no water
gets in or out of the land. 1
The stipulations contained in the Compromise Agreement partake of the nature of an
adjudication of ownership in favor of herein petitioners of the fishpond in dispute,
which, as clearly found by the lower and appellate courts, was originally a creek
forming a tributary of the Agno River. Considering that as held in the case of Mercado
vs. Municipal President of Macabebe, 59 Phil. 592 [1934], a creek, defined as a
recess or arm extending from a river and participating in the ebb and flow of the sea,
is a property belonging to the public domain which is not susceptible to private
appropriation and acquisitive prescription, and as a public water, it cannot be
registered under the Torrens System in the name of any individual [Diego v. Court of
Appeals, 102 Phil. 494; Mangaldan v. Manaoag, 38 Phil. 4551; and considering
further that neither the mere construction of irrigation dikes by the National Irrigation
Administration which prevented the water from flowing in and out of the subject
fishpond, nor its conversion into a fishpond, alter or change the nature of the creek as
a property of the public domain, the Court finds the Compromise Agreement null and
void and of no legal effect, the same being contrary to law and public policy.
The finding that the subject body of water is a creek belonging to the public domain is
a factual determination binding upon this Court. The Municipality of Bugallon, acting
thru its duly-constituted municipal council is clothed with authority to pass, as it did
the two resolutions dealing with its municipal waters, and it cannot be said that
petitioners were deprived of their right to due process as mere publication of the
notice of the public bidding suffices as a constructive notice to the whole world.
IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise
Agreement and declare the same null and void for being contrary to law and public
policy. The Court further resolved to DISMISS the instant petition for lack of merit.
SO ORDERED.
Feria (Chairman), Alampay, Gutierrez, Jr. and Paras, JJ., concur.
G.R. No. L-57461 September 11, 1987
THE DIRECTOR OF LANDS, petitioner,
vs.
MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERA, as

Presiding Judge, Court of First Instance of Rizal, Pasig, Branch


XXIII, respondents.
CORTES, J.:
This is an appeal by certiorari of a decision of the respondent Judge in Land
Registration Case No. N-10317 LRC Record No. N-54803 entitled "In Re: Application
for Registration of Title, Manila Electric Company, applicant," dated May 29, 1981.
The facts are not disputed. Manila Electric Company filed an amended application for
registration of a parcel of land located in Taguig, Metro Manila on December 4, 1979.
On August 17, 1976, applicant acquired the land applied for registration by purchase
from Ricardo Natividad (Exhibit E) who in turn acquired the same from his father
Gregorio Natividad as evidenced by a Deed of Original Absolute Sale executed on
December 28, 1970 (Exhibit E). Applicant's predecessors-in-interest have possessed
the property under the concept of an owner for more than 30 years. The property was
declared for taxation purposes under the name of the applicant (Exhibit 1) and the
taxes due thereon have been paid (Exhibits J and J-1).
On May 29, 1981 respondent Judge rendered a decision ordering the registration of
the property in the name of the private respondent. The Director of Lands interposed
this petition raising the issue of whether or not a corporation may apply for
registration of title to land. After comments were filed by the respondents, the Court
gave the petition due course. The legal issue raised by the petitioner Director of
Lands has been squarely dealt with in two recent cases (The Director of Lands v.
Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc., etc., No. L73002 (December 29, 1986), 146 SCRA 509. The Director of Lands v. Hon. Bengzon
and Dynamarine Corporation, etc., No. 54045 (July 28, 1987)], and resolved in the
affirmative. There can be no different answer in the case at bar.
In the Acme decision, this Court upheld the doctrine that open, exclusive and
undisputed possession of alienable public land for the period prescribed by law
creates the legal fiction whereby the land, upon completion of the requisite
period ipso jure and without the need of judicial or other sanction, ceases to be public
land and becomes private property.
As the Court said in that case:

DONT WORRY BE HAPPY.

Nothing can more clearly demonstrate the logical inevitability of


considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant
from the State than the dictum of the statute itself that the possessor(s)
"... shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of
title .... " No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would in truth be little more than
a formality, at the most limited to ascertaining whether the possession
claimed is of the required character and length of time; and registration
thereunder would not confer title, but simply recognize a title already
vested. The proceedings would not originally convert the land from
public to private land, but only confirm such a conversion already
affected (sic) from the moment the required period of possession
became complete.
Coming to the case at bar, if the land was already private at the time Meralco bought
it from Natividad, then the prohibition in the 1973 Constitution against corporations
holding alienable lands of the public domain except by lease (1973 Const., Art. XIV,
See. 11) does not apply.
Petitioner, however, contends that a corporation is not among those that may apply
for confirmation of title under Section 48 of Commonwealth Act No. 141, the Public
Land Act.
As ruled in the Acme case, the fact that the confirmation proceedings were instituted
by a corporation is simply another accidental circumstance, "productive of a defect
hardly more than procedural and in nowise affecting the substance and merits of the
right of ownership sought to be confirmed in said proceedings." Considering that it is
not disputed that the Natividads could have had their title confirmed, only a rigid
subservience to the letter of the law would deny private respondent the right to
register its property which was validly acquired.
WHEREFORE, the petition is DENIED. The questioned decision of the respondent
Judge is AFFIRMED.
SO ORDERED.

Fernan (Chairman), Feliciano and Bidin JJ., concur.


Separate Opinions GUTIERREZ, JR., J.:, dissenting.
It is my view that Article XII, Section 3 of the Constitution which prohibits private
corporations or associations from holding alienable lands of the public domain except
by lease is circumvented when we allow corporations to apply for judicial confirmation
of imperfect titles to public land. I, therefore, reiterate my vote in Meralco v. Castro
Bartolome, (114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA
875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and
accordingly, dissent from the majority opinion in this case.
Separate Opinions
GUTIERREZ, JR., J.:, dissenting.
It is my view that Article XII, Section 3 of the Constitution which prohibits private
corporations or associations from holding alienable lands of the public domain except
by lease is circumvented when we allow corporations to apply for judicial confirmation
of imperfect titles to public land. I, therefore, reiterate my vote in Meralco v. Castro
Bartolome, (114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA
875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and
accordingly, dissent from the majority opinion in this case.
G.R. No. L-12958

May 30, 1960

On January 25, 1950, Ignacio filed an application for the registration of a parcel of
land (mangrove), situated in barrio Gasac, Navotas, Rizal, with an area of 37,877
square meters. Later, he amended his application by alleging among others that he
owned the parcel applied for by right of accretion. To the application, the Director of
Lands, Laureano Valeriano and Domingo Gutierrez filed oppositions. Gutierrez later
withdrew his opposition. The Director of Lands claimed the parcel applied for as a
portion of the public domain, for the reason that neither the applicant nor his
predecessor-in-interest possessed sufficient title thereto, not having acquired it either
by composition title from the Spanish government or by possessory information title
under the Royal Decree of February 13, 1894, and that he had not possessed the
same openly, continuously and adversely under a bona fide claim of ownership since
July 26, 1894. In his turn, Valeriano alleged he was holding the land by virtue of a
permit granted him by the Bureau of Fisheries, issued on January 13, 1947, and
approved by the President.
It is not disputed that the land applied for adjoins a parcel owned by the applicant
which he had acquired from the Government by virtue of a free patent title in 1936. It
has also been established that the parcel in question was formed by accretion and
alluvial deposits caused by the action of the Manila Bay which boarders it on the
southwest. Applicant Ignacio claims that he had occupied the land since 1935,
planting it with api-api trees, and that his possession thereof had been continuous,
adverse and public for a period of twenty years until said possession was distributed
by oppositor Valeriano.

FAUSTINO IGNACIO, applicant-appellant,


vs.
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositors-appellees.

On the other hand, the Director of Lands sought to prove that the parcel is foreshore
land, covered by the ebb and flow of the tide and, therefore, formed part of the public
domain.

Acting Assistant Solicitor General Pacifico P. de Castro and Solicitor Crispin V.


Bautista for appellee Director of Lands.
Benjamin H. Aquino for appellee Laureano Veleriano.

After hearing, the trial court dismissed the application, holding that the parcel formed
part of the public domain. In his appeal, Ignacio assigns the following errors:

MONTEMAYOR, J.:
Faustino Ignacio is appealing the decision of the Court of First Instance of Rizal,
dismissing his application for the registration of a parcel of land.
DONT WORRY BE HAPPY.

I. The lower court erred in holding that the land in question, altho an accretion
to the land of the applicant-appellant, does not belong to him but forms part of
the public domain.
II. Granting that the land in question forms part of the public domain, the lower
court nevertheless erred in not declaring the same to be the necessary for any

public use or purpose and in not ordering in the present registration


proceedings.

Government of the P.I., 28 Phil., 505, involving a land claimed by a private person
and subject to the ebb and flow of the tides of the Manila Bay).

III. The lower court erred in not holding that the land in question now belongs
to the applicant-appellant by virtue of acquisitive prescription, the said land
having ceased to be of the public domain and became the private or
patrimonial property of the State.

Then the applicant argues that granting that the land in question formed part of the
public domain, having been gained from the sea, the trial court should have declared
the same no longer necessary for any public use or purpose, and therefore, became
disposable and available for private ownership. Article 4 of the Law of Waters of 1866
reads thus:

IV. The lower court erred in not holding that the oppositor Director of Lands is
now in estoppel from claiming the land in question as a land of the public
domain.
Appellant contends that the parcel belongs to him by the law of accretion, having
been formed by gradual deposit by action of the Manila Bay, and he cites Article 457
of the New Civil Code (Article 366, Old Civil Code), which provides that:
To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.
The article cited is clearly inapplicable because it refers to accretion or deposits on
the banks of rivers, while the accretion in the present case was caused by action of
the Manila Bay.
Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not
applicable because they refer to accretions formed by the sea, and that Manila Bay
cannot be considered as a sea. We find said contention untenable. A bay is a part of
the sea, being a mere indentation of the same:
Bay. An opening into the land where the water is shut in on all sides except
at the entrance; an inlet of the sea; an arm of the sea, distinct from a river, a
bending or curbing of the shore of the sea or of a lake. 7 C.J. 1013-1014
(Cited in Francisco, Philippine Law of Waters and Water Rights p. 6)
Moreover, this Tribunal has some cases applied the Law of Waters on Lands
bordering Manila Bay. (See the cases of Ker & Co. vs. Cauden, 6 Phil., 732, involving
a parcel of land bounded on the sides by Manila Bay, where it was held that such
land formed by the action of the sea is property of the State; Francisco vs.
DONT WORRY BE HAPPY.

ART. 4. Lands added to the shores by accretions and alluvial deposits caused
by the action of the sea, form part of the public domain. When they are no
longer washed by the waters of the sea and are not necessary for purposes of
public utility, or for the establishment of special industries, or for the
coastguard service, the Government shall declare them to be the property of
the owners of the estates adjacent thereto and as increment thereof.
Interpreting Article 4 of the Law of Waters of 1866, in the case of Natividad vs.
Director of Lands, (CA) 37 Off. Gaz., 2905, it was there held that:
Article 4 of the Law of Waters of 1866 provides that when a portion of the
shore is no longer washed by the waters of the sea and is not necessary for
purposes of public utility, or for the establishment of special industries, or for
coastguard service, the government shall declare it to be the property of the
owners of the estates adjacent thereto and as an increment thereof. We
believe that only the executive and possibly the legislative departments have
the authority and the power to make the declaration that any land so gained by
the sea, is not necessary for purposes of public utility, or for the establishment
of special industries, on for coast-guard service. If no such declaration has
been made by said departments, the lot in question forms part of the public
domain. (Natividad vs. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case of Vicente
Joven y Monteverde vs. Director of Lands, 93 Phil., 134, (cited in Velayo's Digest, VI.
I, p. 52).

. . . is undoubtedly that the courts are neither primarily called upon, nor indeed
in a position to determine whether any public land are to be used for the
purposes specified in Article 4 of the Law of Waters.
Consequently, until a formal declaration on the part of the Government, through the
executive department or the Legislature, to the effect that the land in question is no
longer needed for coast guard service, for public use or for special industries, they
continue to be part of the public domain, not available for private appropriation or
ownership.
Appellant next contends that he had acquired the parcel in question through
acquisitive prescription, having possessed the same for over ten years. In answer,
suffice it to say that land of the public domain is not subject to ordinary prescription.
In the case of Insular Government vs. Aldecoa & Co., 19 Phil., 505 this Court said:
The occupation or material possession of any land formed upon the shore by
accretion, without previous permission from the proper authorities, although
the occupant may have held the same as owner for seventeen years and
constructed a wharf on the land, is illegal and is a mere detainer, inasmuch as
such land is outside of the sphere of commerce; it pertains to the national
domain; it is intended for public uses and for the benefit of those who live
nearby.
We deem it unnecessary to discuss the other points raised in the appeal.
In view of the foregoing, the appealed decision is hereby affirmed, with costs.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, and
Gutierrez David, JJ., concur.
G.R. No. L-19570

April 27, 1967

JOSE V. HILARIO, JR., plaintiff-appellant,


vs.
THE CITY OF MANILA, defendant-appellee,
DIRECTOR OF PUBLIC WORKS, CITY ENGINEER OF MANILA, FERNANDO
BUSUEGO and EUGENIO SESE,defendants-appellants,
DONT WORRY BE HAPPY.

MAXIMO CALALANG, intervenor;


DIRECTOR OF MINES, intervenor.
Maximo Calalang for plaintiff and appellant.
Gregorio Ejercito and Leandro L. Arguelles for defendant-appellee City of Manila.
Office of the Solicitor General for other defendants and appellants.
BENGZON, J.P., J.:
Dr. Jose Hilario was the registered owner of a large tract of land around 49
hectares in area located at Barrio Guinayang, in San Mateo, Rizal. 1 Upon his
death, this property was inherited by his son, herein plaintiff-appellant Jose Hilario,
Jr., to whom a new certificate of title2 was issued.
During the lifetime of plaintiff's father, the Hilario estate was bounded on the western
side by the San Mateo River.3 To prevent its entry into the land, a bamboo and lumber
post dike or ditch was constructed on the northwestern side. This was further fortified
by a stonewall built on the northern side. For years, these safeguards served their
purpose. However, in 1937, a great and extraordinary flood occurred which inundated
the entire place including the neighboring barrios and municipalities. The river
destroyed the dike on the northwest, left its original bed and meandered into the
Hilario estate, segregating from the rest thereof a lenticular place of land. The
disputed area is on the eastern side of this lenticular strip which now stands between
the old riverbed site and the new course.4
In 1945 the U.S. Army opened a sand and gravel plant within the premises 5 and
started scraping, excavating and extracting soil, gravel and sand from the nearby
areas the River. The operations eventually extended northward into this strip of land.
Consequently, a claim for damages was filed with the U.S. War Department by Luis
Hilario, the then administrator of Dr. Hilario's estate. The U.S. Army paid. 6 In 1947,
the plant was turned over to herein defendants-appellants and appellee who took
over its operations and continued the extractions and excavations of gravel and sand
from the strip of land along an area near the River.
On October 22, 1949, plaintiff filed his complaint 7 for injunction and damages against
the defendants City Engineer of Manila, District Engineer of Rizal, the Director of
Public Works, and Engr. Busuego, the Engineer-in-charge of the plant. It was prayed

that the latter be restrained from excavating, bulldozing and extracting gravel, sand
and soil from his property and that they solidarily pay to him P5,000.00 as damages.
Defendants' answer alleged, in affirmative defense, that the extractions were made
from the riverbed while counterclaiming with a prayer for injunction against plaintiff
who, it was claimed, was preventing them from their operations.
Subsequently, the Bureau of Mines and Atty. Maximo Calalang were respectively
allowed to join the litigation as intervenors. The former complained that the disputed
area was within the bed of the river so that plaintiff should not only be enjoined from
making extractions therefrom but should also be ordered to pay the fees and
penalties for the materials taken by him. On the other hand, the latter claimed that he
was authorized by plaintiff to extract materials from the disputed area but this
notwithstanding, the Provincial Treasurer of Rizal collected from him a sand and
gravel fee which would be an illegal exaction if the disputed area turns out to be of
private ownership. Answers to the two complaints in intervention were duly filed by
the affected parties.
On March 14, 1954, defendants filed a petition for injunction against plaintiff and
intervenor Calalang in the same case, alleging that the latter have fenced off the
disputed area in contravention of an agreement 8 had between the latter and the
Director of Public Works wherein he defendants were allowed to continue their
operations but subject to the final outcome of the pending suit. It was prayed that
plaintiff and intervenor Calalang be ordered to remove the fence and allow
defendants' men to continue their operations unhampered. Opposition to this petition
was filed by the other side, with a prayer for counter injunction. On March 23, 1954,
the lower court issued an order maintaining the status quo and allowing the
defendants to continue their extractions from the disputed area provided a receipt 9 in
plaintiff's favor be issued for all the materials taken.
On May 13, 1954, plaintiff amended his complaint. Impleaded as additional
defendants were the City of Manila, 10the Provincial Treasurer of Rizal,11 and Engr.
Eugenio Sese, the new Engineer-in-charge of the plant. Plaintiff also converted his
claim to one purely for damages directed against the City of Manila and the Director
of Public Works, solidarily, in the amount of P1,000,000.00, as the cost of materials
taken since 1949, as well as those to be extracted therefrom until defendants stop
their operations.
DONT WORRY BE HAPPY.

Came the separate amended answers of the several defendants. Manila City denied
ownership of the plant and claimed that the City Engineer, acted merely as a deputy
of the Public Works Director. The other defendants 12 put up, as special defense, the
agreement between plaintiff and the Public Works Director, and asserted a P1.2
million counterclaim for damages against plaintiff. The rest 13 renewed the same
defense; that the disputed area was part of the public domain, since it was situated
on the riverbanks.
On November 3, 1954, the defendant City Engineer of Manila filed a petition to delimit
the area of excavation and asked the lower court to authorize his men to extend their
operations west of the camachile tree in the disputed area. This met vigorous
opposition from plaintiff and intervenor Calalang. On May 27, 1955, the petition was
denied.
Finally, on December 21, 1956, the lower court rendered its decision on the merits.
The dispositive portion provided:14
WHEREFORE, judgment is hereby rendered against the defendants City of
Manila and the Director of Public Works, to pay solidarily the herein plaintiff the
sum of P376,989.60, as the cost of gravel and sand extracted from plaintiff's
land, plus costs. Judgment is likewise hereby rendered against the defendant
Provincial Treasurer of Rizal, ordering him to reimburse to intervenor Maximo
Calalang the amount of P236.80 representing gravel fees illegally collected.
Finally, defendants herein are perpetually enjoined from extracting any sand or
gravel from plaintiff's property which is two-fifths northern portion of the
disputed area.
It is so ordered.
None of the parties litigants seemed satisfied with this decision and they all sought a
reconsideration of the same. On August 30, 1957, the lower court resolved the
motions to reconsider with an order, the dispositive portion of which provided: 15
WHEREFORE, the court hereby denies the motion for reconsideration filed by
plaintiff and intervenor Calalang; dismisses the complaint with respect to
defendant City of Manila; holds that the northern two-fifths portion of the area
in controversy belongs to the plaintiff with right to the immediate possession

thereof and hereby enjoins the defendants and intervenor Bureau of Mines to
vacate the same and to stop from extracting gravel thereon. The Court
however hereby dismisses the case against the defendant Bureau of Public
Works and its agents and employees insofar as the claim for money is
concerned without prejudice to plaintiffs taking such action as he may deem
proper to enforce said claim against the proper party in accordance with law.
It is so ordered.
Still unsatisfied, plaintiff and intervenor Calalang filed a second motion for
reconsideration. The lower court stood firm on its ruling of August 30, 1957. 16
Hence, this appeal.17 The defendants Director of Public Works, City Engineer of
Manila, and Engrs. Busuego and Sese have also appealed from the declaration
made by the lower court that the northern two-fifths of the disputed area belongs to
plaintiff Hilario.
The parties herein have presented before this Court mixed questions of law and fact
for resolution and adjudication. Foremost among them is this legal query; when a
river, leaving its old bed, changes its original course and opens a new one through
private property, would the new riverbanks lining said course be of public ownership
also?18
The defendants answer in the affirmative. They claim that under the Law of Waters of
August 3, 1866, the riverbanks are, by definition, considered part of the riverbed
which is always of public ownership. On the other hand, plaintiff would have the
question resolved in the negative. He maintains that not all riverbanks are of public
ownership because: (1) Art. 372 of the old Civil Code, which governs this particular
case, speaks only of the new bed; nothing is said about the new banks; (2) Art. 73 of
the Law of Waters which defines the phrase "banks of a river" cannot be applied in
the case at bar in conjunction with the other articles cited by defendants since that
article applies only to banks of natural riverbeds and the present, River is not in
its natural bed; and (3) if all banks were of public ownership, then Art. 553 of the old
Civil Code and the second sentence, first paragraph of Art. 73 of the Law of Waters
can never have any application.

Since the change in the course of the River took place in 1937, long before the
present Civil Code took effect,19the question before Us should be determined in
accordance with the provisions of the old Civil Code and those of the Law of Waters
of August 3, 1866.
We agree with defendants that under the cited laws, all riverbanks are of public
ownership including those formed when a river leaves its old bed and opens a new
course through a private estate. Art. 339 of the old Civil Code is very clear. Without
any qualifications, it provides:
Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a
similar character; (Emphasis supplied)
Moreover, as correctly contended by defendants, the riverbank is part of the riverbed.
Art. 73 of the Law of Waters which defines the phrase "banks of a river" provides:
By the phrase "banks of a river" is understood those lateral strips or zones of
its bed which are washed by the stream only during such high floods as do not
cause inundations. ... (Emphasis supplied)
The use the of words "of its bed [de sus alveos]" clearly indicates the intent of
the law to consider the banks for all legal purposes as part of the
riverbed. The lower court also ruled correctly that the banks of the River
are paint of its bed.20 Since undeniably all beds of rivers are of public
ownership,21 it follows that the banks, which form part of them, are also of
public ownership.
Plaintiff's contention that Arts. 70 and 73 of the Law of Waters cannot apply because
Art. 312 of the old Civil Code mentions only the new bed but omits the banks, and
that said articles only apply to natural meaning original bed and banks is
untenable. Art. 70, which defines beds of rivers and creeks, provides:
The natural bed or channel of a creek or river is the ground covered by its
waters during the highest [ordinary] floods. 22 (Emphasis supplied)

DONT WORRY BE HAPPY.

Art. 372 of the old Civil Code which provides that


Whenever a navigable or floatable river changes its course from natural
causes and opens a new bedthrough a private estate, the new bed shall be of
public ownership, but the owner of the estate shall recover it in the event that
the waters leave it dry again either naturally or as the result of any work legally
authorized for this purpose. (Emphasis supplied)
did not have to mention the banks because it was unnecessary. The nature of
the banks always follows that of the bed and the running waters of the river. A
river is a compound concept consisting of three elements: (1) the running
waters, (2) the bed and (3) the banks. 23 All these constitute the river.
American authorities are in accord with this view:
'River' consists of water, a bed and banks.24
A "river" consists of water, a bed and banks, these several parts constituting
the river, the whole river. It is a compound idea; it cannot exist without all its
paints. Evaporate the water, and you have a dry hollow. If you could sink the
bed, instead of a river, you would have a fathomless gulf. Remove the banks,
and you have a boundless flood.25
Since a river is but one compound concept, it should have only one nature, i.e., it
should either be totally public or completely private. And since rivers are of public
ownership,26 it is implicit that all the three component elements be of the same nature
also. As Manresa commented:
Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al
decir el Codigo Civil que los rios son de dominio publico, parece que debe ir
implicito el dominio publico de anquellos tres elementos que integran el rio. 27
However, to dispel all possible doubts, the law expressly makes all three elements
public. Thus, riverbanks and beds are public under Arts. 339 and 407, respectively, of
the Code, while the flowing waters are declared so under Art. 33, par. 2 of the Law of
Waters of 1866.

Articles 70, 72 and 73 of the Law of Waters speak of natural beds and their banks.
Plaintiff now equates the term "natural" with the word "original" so that a change in
the course of a river would render those articles inapplicable. However, the premise is
incorrect. Diccionario De La Real Academia Espaola defines the word "natural" as
follows:
NATURAL perteneciente a la naturaleza o conforme a la calidad o
propriedad de las cosas; nativo, originario de un pueblo o nacion; hecho con
verdad, ni artificio, mezcla ni composicion alguna; ingenuo y sin doblez en su
modo de proceder; diceze tambien de las cosas que imitar a la naturaleza con
propiedad; regular y que comunmente sucede, y por eso, facilmente
creible; que se produce por solas las fuerzas de la naturaleza, como
contrapuesto a sobre natural y milagroso, (Emphasis supplied)
"Natural" is not made synonymous to "original" or "prior condition". On the contrary,
even if a river should leave its original bed so long as it is due to the force of nature,
the new course would still fall within the scope of the definition provided above.
Hence, the law must have used the word "natural" only because it is in keeping with
the ordinary nature and concept of a river always to have a bed and banks.
Plaintiff's third point is not lightly to be taken. Indeed, it would seem possible to
acquire private ownership of banks under Art. 553 of the old Civil Code which
provides:
Las riberas de los rios, aun cuando sean de dominio privado, estan sujetas en
toda su extension y en sus margenes, en una zona de tres metros, a la
servidumbre de uso publico en interes general de la navegacion, la flotacion,
la pesca y el salvamento. (Emphasis supplied) .
And plaintiff is not without jurisprudential backing for in Commonwealth vs.
Gungun,28 it was said that the private ownership of the banks was not
prohibited. His point is then neatly brought home with the proposition that it is
precisely when a river changes its course and opens a new bed through a
private estate that there can be private ownership of the banks.
A study of the history of Art. 553 will however reveal that it was never intended to
authorize the private acquisition of riverbanks. That could not have been legally

DONT WORRY BE HAPPY.

possible in view of the legislative policy clearly enunciated in Art. 339 of the Code that
all riverbanks were of public ownership. The article merely recognized and preserved
the vested rights of riparian owners who, because of prior law or custom, were able to
acquire ownership over the banks. This was possible under the Siete Partidas which
was promulgated in 1834 yet.29 Under Law 6, Title 28, Partidas 3, the banks of rivers
belonged to the riparian owners, following the Roman Law rule.30 In other words, they
were privately owned then. But subsequent legislation radically changed this rule. By
the Law of Waters of August 3, 1866, riverbanks became of public ownership, albeit
impliedly only because considered part of the bed which was public by statutory
definition.31 But this law, while expressly repealing all prior inconsistent laws, left
undisturbed all vested rights then existing.32 So privately owned banks then continued
to be so under the new law, but they were subjected by the latter to an easement for
public use. As Art. 73 provides:
Se entienden por riberas de un rio las fajas o zonis laterales de sus alveos
que solamente sor baadas por las aguas en las crecidas que no causan
inundacion. El dominio privado de las riberas esta suieto a la survidumbre de
tres metros de zona para uso publico, en el interest general de la navegacion,
la flotacion, la pesca y el salvamento. ... (Emphasis supplied).1wph1.t
This was perhaps the reconciliation effected between the private ownership of the
banks, on the one hand, and the policy of the law on the other hand, to devote all
banks to public use.33 The easement would preserve the private ownership of the
banks and still effectuate the policy of the law. So, the easement in Art. 73 only
recognized and preserved existing privately owned banks; it did not authorize future
private appropriation of riverbanks.
The foregoing observation is confirmed by the still subsequent Law of Waters of June
13, 1879, which was principally based on the Law of August 3, 1865. 34 Art. 36 of the
new law, which was a substantial reenactment of Art. 73 of the Law of Waters of
August 3, 1866, reads:
Las riberas, aun cuando sean de dominio privado en virtud de antigue ley o de
costumbre, estan sujetas en toda su extension las margenes en una zona de
tres metros, a la servidumbre de uso publico en interes general de la
navegacion, la flotacion la pesca y el salvamento. ... (Emphasis supplied)
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The new law also affirmed the public ownership of rivers and their beds, and the
treatment of the banks as part of the bed.35 But nowhere in the law was there any
provision authorizing the private appropriation of the banks. What it merely did was to
recognize the fact that at that time there were privately owned banks pursuant to
theSiete Partidas, and to encumber these with an easement for public use.
However, the public nature of riverbanks still obtained only by implication. But with
the promulgation of the Civil Code of 1889, this fact was finally made explicit in Art.
339 thereof. Riverbanks were declared as public property since they were destined
for public use. And the first paragraph of Art. 36 of the Law of Waters of 1879 was
substantially reenacted in Art. 553 of the Code. 36 Hence, this article must also be
understood not as authorizing the private acquisition of riverbanks but only as
recognizing the vested titles of riparian owners who already owned the banks.
The authority, then, for the private ownership of the banks is neither the old Civil
Code nor the Law of Waters of 1866 but the Siete Partidas. Unfortunately, plaintiff
cannot invoke it. Law 6, Title 28, Partida 3, which provides for private ownership of
banks, ceased to be of force in this jurisdiction as of 1871 yet when the Law of
Waters of August 3, 1866, took effect.37 Since the change in the course of the River
took place in 1937, the new banks which were formed could not have been subjected
to the provisions of the Siete Partidas which had already been superseded by then.
Coming to the factual issues: both parties assail the conclusion made by the lower
court that only the northern two-fifths of the disputed area remained as plaintiff's
private property. This conclusion was apparently based on the findings that the
portion where rice and corn were found38 in the ocular inspection of June 15, 1951,
was on the northern two-fifths of the disputed area; that this cannot be a part of the
bed because of the existence of vegetation which could not have grown underwater,
and that this portion is man-made. However, there is no evidentiary basis for these
findings. The area indicated by Nos. 1 and 2 in Exh. D-1 where no excavations had
been made, appears to be more on the south-western one-fourth of the disputed
area. The American cases39cited by the lower court cannot apply here. Our Law of
Waters, in defining "beds" and considers the latter is part of the former. Those cited
cases did not involve a similar statutory provision. That plants can and do grow on
the banks which otherwise could not have grown in the bed which is constantly
subjected to the flow of the waters proves the distinction between "beds" and "banks"
in the physical order. However, We are dealing with the legal order where legal

definitions prevail. And apart from these considerations, We also note the
considerable difficulty which would attend the execution of the ruling of the lower
court. The latter failed to indicate fixed markers from which an exact delimitation of
the boundaries of the portion could be made. This flaw is conducive to future
litigations.
Plaintiff's theory is that the disputed area, although covered at times by flood waters,
cannot be considered as within the banks of the River because: (1) such floods are
only accidental, and (2) even if they are regular, the flooding of the area is due to the
excavations and extractions made by defendants which have caused the widening of
the channel.40 Defendants claim, however, that the area is always covered by the
normal yearly floods and that the widening of the channel is due to natural causes.
There is a gravel pit41 located along the west side of the River. This is about 500
meters long.42 A greater part of this pit occupies a portion of the strip of land that was
sliced by the River from the rest of the Hilario estate. As shown in Exhs. D and D-1,
this strip of land is that western segment of the Hilario estate bounded on the west by
the same lines connecting stakes 23 through 27, which form part of the western
boundary of the estate, and on the east, bounded by the western waterline of the
River.
Now, the disputed area, generally speaking, 43 is only that part of the gravel pit which
is within the strip of land. Its northern tip is that point where the so-called "secondary
bank" line intersects the west River waterline up north; its southern boundary is along
the line connecting stakes 23 and 24. From these two ends, the disputed area
measures approximately 250 meters long. The eastern boundary is the western River
waterline at low tide and the western boundary is the "secondary bank" line, a line
passing near stake 24 and running almost parallel to the line connecting stakes 25
and 26. Around the later part of 1949, the disputed area was about 150 to 160 meters
wide.44 This increased to about 175 to 180 meters by the later part of 1950. And by
January, 1953, the distance from the "secondary bank" line to the west waterline was
about 230 meters.45
This increasing width of the disputed area could be attributed to the gradual
movement of the River to the east. Since it entered into the Hilario estate, the River
has not stayed put.46 Vicente Vicente, plaintiff's witness declared 47 that after the River
changed its course in 1937, the distance between the old and the new river sites was
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about 100 meters. Exh. D-2 shows that in 1943, the south end of the River was about
5 meters southeast of stake 24.48 Honorato Sta. Maria, another witness for plaintiff,
indicated the flow of this course with a blue line in Exh. D-1. 49 This blue line is about
100 meters from the line connecting stakes 25 and 26, which was also the east
boundary of the old River.50 Around 1945 to 1949, the River was about 193
meters51 east of this line. This measurement is based on the testimonies of two
defense witnesses52 and stated that during that period, the River passed along the
Excavated Area and the New Accretion Area53 sites, as shown in Exh. 54. By the later
part of 1949 up to November 1950, the west waterline was from 248 to 270
meters54 east of the aforesaid boundary line. And finally in January, 1953, based on
the scale in Exh. 3-Calalang, the west waterline was from 300 to 305 meters away
already. Hence, from 100 meters in 1937, the River had moved to 305
meters eastwardin 1953.
There are two questions to be resolved here. First, where on the strip of land are the
lateral borders of the western riverbank? And second, where have defendants made
their extractions?
Anent the first question, the key is supplied by Art. 73 of the Law of Waters which
defines the limits of banks of rivers
By the phrase "banks of a river" is understood those lateral strips or zones of
its bed which are washed by the stream only during such high floods as do not
cause in inundations. ... (Emphasis supplied)
The farthest extremity of the bank on the west side would, therefore, be that
lateral line or strip which is reached by the waters during those high floods that
do not cause inundations. In other words, the extent reached by the waters
when the River is at high tide.
However, there is a difference between the topography of the two sides immediately
adjoining the River. The line indicated as "primary bank" 55 in Exh. 3-Calalang, which
is on the east, is about 3 meters high and has a steep grade right at the edge where it
drops almost vertically to the watercourse level. The precipice here, which is near the
east waterline, is very easily detectible. But the opposite side has no such steep
activity. In fact, it is almost flat with the bed of the River, especially near the water
edge, where it is about 30 to 50 cms. high only. But it gradually slopes up to a height

of about 2 to 2- meters along the line indicated as "secondary bank", which is quite
far from the waterline. This "bank" line is about 1- meters higher than the level of
the gravel pit and there are erosions here. This is about 175 meters west from the
November 1950 waterline, and about 100 meters west from the camachile tree. 56
During the dry season, the waterlevel of the River is quite low about knee-deep
only. However, during the rainy season, the River generally becomes swollen, and
the waterlevel rises, reaching up to the neck.57 However, considering the peculiar
characteristics of the two sides banking the river, the rise in the waterlevel would not
have the same effect on the two sides. Thus, on the east, the water would rise
vertically, until the top of the "primary bank" is reached, but on the west, there would
be a low-angled inclined rise, the water covering more ground until the "secondary
bank" line is reached. In other words, while the water expansion on the east is
vertical, that on the west is more or less lateral, or horizontal.
The evidence also shows that there are two types of floods in the area during the
rainy season.58 One is the so-called "ordinary" flood, when the river is swollen but the
flowing water is kept within the confines, of the "primary" and "secondary" banks. This
occurs annually, about three to four times during the period. Then there is the
"extraordinary" flood, when the waters overflow beyond the said banks, and even
inundate the surrounding areas. However, this flood does not happen regularly. From
1947 to 1955, there were only three such floods. 59 Now, considering that the
"ordinary" flood easily cover the west side since any vertical rise of the waterlevel
on the east would necessarily be accompanied by a lateral water expansion on the
west the "inundations" which the law mentions must be those caused by the
"extraordinary" floods which reach and overflow beyond both "primary" and
"secondary" banks. And since the "primary" bank is higher than the "secondary"
bank, it is only when the former is reached and overflowed that there can be an
inundation of the banks the two banks. The question therefore, may be stated
thus: up to what extent on the west side do the highest flood waters reach when the
"primary" bank is not overflowed?
Defendants have presented several witnesses who testified on the extent reached by
the ordinary flood waters. David Ross, a bulldozer operator at the plant since 1945,
testified60 that from 1945 to 1949, when the River was still passing along the site
where the camachile tree is located, the annual flood waters reached up to the
"secondary bank" line. These floods usually took from 3 to 5 days to recede, during
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which time their work was suspended. Corroboration is supplied by Macario Suiza, a
crane operator in the plant since 1945, and by Fidel Villafuerte, a plant employee
since 1946. Suiza stated61 that from 1947 to 1949, the area enclosed within the blue
lines and marked as Exh. 54-B which includes the New Accretion Area was always
covered by water when it rained hard and they had to stop work temporarily. The
western extremity of this area reaches up to the "secondary bank" line. Villafuerte
stated62 that in the ordinary floods when the water was just 50 cm. below the top of
the "primary bank", the waters would go beyond the camachile tree by as much as
100 meters westward and just about reach the "secondary bank" line. Further
corroboration is supplied by plaintiff's own evidence. Exh. 1-Calalang states that from
1947 to 1949, based on the casual observations made by geologist David Cruz, the
area between the "primary" and "secondary" banks were always covered by the noninundating ordinary floods.
From 1950 to 1952, We have the testimony of Ross who stated 63 that there were still
floods but they were not as big anymore, except one flood in 1952, since the River
had already moved to the east. Engr. Ricardo Pacheco, who made a survey of the
disputed area in November 1952, and who conducted actual observations of the
extent of the water reach when the river was swollen, testified 64 that the noninundating flood regularly reached up to the blue zigzag line along the disputed area,
as shown in Exh. I-City Engineer Manila. This blue line, at the point where it
intersects line BB,65 is about 140 meters west of the waterline and about 20 meters
west of the camachile tree. His testimony was based on three floods 66 which he and
his men actually recorded. Corroboration is again supplied by Exh. 1-Calalang.
According to Cruz' report, the floods in 1950 and 1951 barely covered the disputed
area. During the normal days of the rainy season, the waters of the swollen river did
not reach the higher portions of the gravel pit which used to be submerged. One
cause for this was the lesser amount of rainfall from 1949 to 1951. But two floods
occurred from October 16 to 28, 1952, which overflowed the whole area and
inundated the banks. From 1953 to 1955, when the River was farther away to the
east, the flood waters still covered the west side. 67 Testifying on the extent reached by
the water during the rainy season in 1954, Ross stated 68 that it reached up to the
camachile tree only. The last and latest data comes from Engr. Magbayani Leao, the
Engineer-in-charge of the plant from August 1954. He testified 69 that as of December
1955, when the disputed area was underwater, the water reach was about 20 meters
or less to the east from the camachile tree.

From all the foregoing, it can be safely concluded: (1) that from 1945 to 1949, the
west bank of the River extended westward up to the "secondary bank" line; (2) that
from 1950 to 1952, this bank had moved, with the River, to the east its lateral borders
running along a line just 20 meters west of the camachile tree; and (3) that from 1953
to 1955, the extremities of the west bank further receded eastward beyond the
camachile tree, until they lay just about 20 meters east of said tree.
To counteract the testimonies of the defense witnesses, plaintiff presented two
rebuttal witnesses70 who told a somewhat different story. However, their testimonies
are not convincing enough to offset the dovetailing testimonies of the defense
witnesses who were much better qualified and acquainted with the actual situs of the
floods. And said defense witnesses were corroborated by plaintiffs' own evidence
which contradicts the aforesaid rebuttal witnesses.
However, plaintiff maintains that the floods which cover the area in question are
merely accidental and hence, under Art. 77 of the Law of Waters, 71 and following the
ruling in Government vs. Colegio de San Jose,72 he is deemed not to have lost the
inundated area. This is untenable. Plaintiff's own evidence 73 shows that the river
floods with annual regularity during the rainy season. These floods can hardly be
called "accidental." The Colegio de San Jose case is not exactly in point. What was
mainly considered there was Art. 74 of the Law of Waters relating to lakes, ponds and
pools. In the case at bar, none of these is involved.
Also untenable is plaintiff's contention that the regular flooding of the disputed area
was due to the continuous extraction of materials by defendants which had lowered
the level of said area and caused the consequent widening of the channel and the
river itself. The excavations and extractions of materials, even from the American
period, have been made only on the strip of land west of the River. 74 Under the
"following-the-nature-of-things" argument advanced by plaintiff, the River should have
moved westward, where the level of the ground had been lowered. But the movement
has been in the opposite direction instead. Therefore, it cannot be attributed to
defendants' operation. Moreover, plaintiff's own evidence indicates that the
movement eastward was all due to natural causes. Thus, Exh. 1-Calalang shows that
the movement eastward of the channel by as much as 31 meters, from 1950 to 1953,
was due to two typhoons which caused the erosion of the east bank and the
depositing of materials on the west side which increased its level from as much as .
93 to 2 meters.
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Plaintiff's assertion that the defendants also caused the unnatural widening of the
River is unfounded. Reliance is made on the finding by the lower court that in 1943,
the River was only 60 meters wide as shown in Exh. D-2, whereas in 1950, it was
already 140 meters wide as shown in Exh. D. However, Exh. D-2 only shows the
width of the River near the southwestern boundary of the Hilario estate. It does not
indicate how wide it was in the other parts, especially up north. And Eligio Lorenzo,
plaintiff's own witness, admitted75 on cross-examination that the width of the new river
was not uniform. This is confirmed by Exhs. D and D-1 which show that the new river
was wider by as much as 50% up north than it was down south. The 140-meter
distance in Exh. D was at the widest part up north whereas down south, near the
mouth of the Bulobok River, it was only 70 meters wide. Lastly, the scale in Exh. 3Calalang will show that in January 1953, the River, near the same point also, was
less than 50 meters wide.
The only remaining question now is to determine if the defendants have really
confined their operations within the banks of the River as alleged by them. To resolve
this, We have to find out from what precise portion in the disputed area the
defendants have extracted gravel and sand since they did not extract indiscriminately
from within the entire area. None of the parties' briefs were very helpful but the
evidence on record discloses that defendants made their extractions only within
specified areas during definite periods.
From 1947 to the early part of 1949, the defendants conducted their operations only
in the New Accretion Area along a narrow longitudinal zone contiguous to the
watercourse then. This zone, marked as Exh. 2-City Engineer Manila, is about one
(1) km. long and extends northward up to pt. 50.35 in Exh. 54. However, no
extractions nor excavations were undertaken west of this zone, i.e., above the
"temporary bank" line.76 These facts are corroborated by plaintiff's witnesses. That the
extractions were near the river then finds support in Vicente's testimony77 while Leon
Angeles and Mrs. Salud Hilario confirm the fact that defendants have not gone
westward beyond the "temporary bank" line. 78 This line is located east of the
"secondary bank" line, the lateral extremity of the west bank then.
In the later part of 1949, plaintiff prohibited the defendants from extracting along the
New Accretion Area and constructed a fence across the same. This forced the
defendants to go below southeast of the "Excavated Area" and the New Accretion
Area sites in Exh. 54.79 Engr. Busuego, testifying80 in 1952, indicated their are of

extraction as that enclosed within the red dotted line in Exh. D-1 which lies on the
south end of the strip of land. Only a small portion of the southeastern boundary of
the disputed area is included. The ocular inspection conducted on June 15, 1951,
confirms this.81 Exh. 4-Calalang shows the total amount of materials taken from within
the area from 1949 to 1951.82 Thus, from 1950 up to 1953, although the defendants
were able to continue their operations because of the agreement between the plaintiff
and the Director of Public Works,83 they were confined only to the southeastern
portion of the disputed area. On the other hand, the lateral extremities of the west
bank then ran along a line about 20 meters west of the camachile tree in the New
Accretion Area.
From 1954 to 1955, defendants' area of operation was still farther near of the New
Accretion Area. They were working within a confined area along the west waterline,
the northern and western boundaries of which were 20 meters away east from the
camachile tree.84 Ross indicated85 this zone in Exh. 54 as that portion on the southern
end of the disputed area between the blue lines going through the words "Marikina
River Bed" and the red zigzag line indicating the watercourse then. Engr. Leao even
stated, 86 that they got about 80% of the materials from the river itself and only 20%
from the dry bed. The sand and gravel covered by Exhs. LL to LL-55 were all taken
from here. The foregoing facts are not only corroborated by Mrs. Hilario 87 but even
admitted by the plaintiff in his opposition88 to defendants' petition to extend their area
of operation west of the camachile tree. And because their petition was denied,
defendants could not, and have not, 89 gone beyond the lateral line about 20 meters
east from said tree, which has already been established as the lateral extremity of the
west bank during the period.
It appears sufficiently established, therefore, that defendants have not gone beyond
the receding western extremities of the west riverbank. They have confined their
extraction of gravel and sand only from within the banks of the river which constitute
part of the public domain wherein they had the right to operate. Plaintiff has not
presented sufficient evidence that defendants have gone beyond the limits of the
west bank, as previously established, and have invaded his private estate. He
cannot, therefore, recover from them.
As a parting argument, plaintiff contends that to declare the entire disputed area as
part of the riverbanks would be tantamount to converting about half of his estate to
public ownership without just compensation. He even adds that defendants have
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already exhausted the supply in that area and have unjustly profited at his expense.
These arguments, however, do not detract from the above conclusions.
First of all, We are not declaring that the entire channel, i.e., all that space between
the "secondary bank" line and the "primary bank" line, has permanently become part
of the riverbed. What We are only holding is that at the time the defendants made
their extractions, the excavations were within the confines of the riverbanks then. The
"secondary bank" line was the western limit of the west bank around 1945 to 1949
only. By 1955, this had greatly receded to the line just 20 meters east of the
camachile tree in the New Accretion Area. All that space to the west of said receding
line90 would still be part of plaintiff's property and also whatever portion adjoining
the river is, at present, no longer reached by the non-inundating ordinary floods.
Secondly, it is not correct to say that plaintiff would be deprived of his property
without any compensation at all. Under Art. 370 of the old Civil Code, the abandoned
bed of the old river belongs to the riparian owners either fully or in part with the other
riparian owners. And had the change occurred under the Civil Code of the
Philippines, plaintiff would even be entitled to all of the old bed in proportion to the
area he has lost.91
And, lastly, defendants cannot be accused of unjustly profiting at plaintiff's expense.
They were not responsible for the shifting of the River. It was due to natural causes
for which no one can be blamed. And defendants were extracting from public property
then, under proper authorization. The government, through the defendants, may have
been enriched by chance, but not unjustly.
Considering the conclusions We have thus reached, the other questions involved in
the remaining assignments of errors particularly those apropos the doctrine of
state immunity from suit and the liability of defendant City of Manila are rendered
moot.
Wherefore, the decision and orders appealed from are hereby set aside and another
judgment is hereby entered as follows:
(1) Defendants City of Manila and the Director of Public Works and his agents
and employees are hereby absolved from liability to plaintiff since they did not
extract materials from plaintiff's property but from the public domain.

(2) All that portion within the strip of land in question, starting from the line
running parallel to the western waterline of the river and twenty meters east
from the camachile tree in the New Accretion Area measured along line AA in
Exhs. 3-Calalang, 13 and 54, and going to the west up to the western
boundaries of the Hilario estate, is hereby declared as not part of the public
domain and confirmed as part of plaintiff's private property. No costs. So
ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and
Castro, JJ., concur.

G.R. No. L-61647 October 12, 1984


REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner,
vs.
THE HON. COURT OF APPEALS, BENJAMIN TANCINCO, AZUCENA TANCINCO
REYES, MARINA TANCINCO IMPERIAL and MARIO C. TANCINCO, respondents.

Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be


"Maria") Tancinco Imperial and Mario C. Tancinco are registered owners of a parcel of
land covered by Transfer Certificate of Title No. T-89709 situated at Barrio Ubihan,
Meycauayan, Bulacan bordering on the Meycauayan and Bocaue rivers.
On June 24, 1973, the private respondents filed an application for the registration of
three lots adjacent to their fishpond property and particularly described as
follows: t.hqw
Lot 1-Psu-131892
(Maria C. Tancinco)
A parcel of land (lot 1 as shown on plan Psu-131892), situated in the
Barrio of Ubihan, Municipality of Meycauayan, Province of Bulacan.
Bounded on the NE., along line 1-2, by Lot 3 of plan Psu-131892; on
the SE., along lines 2-3-4, by Meycauayan River; on the S.W., along
fines 4-5-6-7-8-9, by Bocaue River; on the NE., along line 9-10, by
property of Joaquina Santiago; on the E., NE., and NW., along lines 1011-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
containing an area of THIRTY THREE THOUSAND NINE HUNDRED
THIRTY SEVEN (33,937) SQUARE METERS. ...
Lot 2-Psu-131892
(Maria C. Tancinco)

The Solicitor General for petitioner.


Martin B. Laurea for respondents.
GUTIERREZ, JR., J.:+.wph!1
This is a petition for certiorari to set aside the decision of the respondent Court of
Appeals (now Intermediate Appellate Court) affirming the decision of the Court of
First Instance of Bulacan, Fifth Judicial District, Branch VIII, which found that Lots 1
and 2 of Plan Psu-131892 are accretion to the land covered by Transfer Certificate of
Title No. 89709 and ordered their registration in the names of the private
respondents.
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A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the


Barrio of Ubihan, Municipality of Meycauayan, Province of Bulacan.
Bounded on the E., along line 1-2, by property of Rafael Singson; on
the S., along line 2-3, by Meycauayan River; on the SW., along line 3-4,
by Lot 3 of plan Psu-131892; and on the N., along line 4-1, by property
of Mariano Tancinco (Lot 1, Psu-111877). ... containing an area of FIVE
THOUSAND FOUR HUNDRED FIFTY THREE (5,453) SQUARE
METERS. ...
Lot 3-Psu-131892
(Maria C. Tancinco)

A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the


Barrio of Ubihan, Municipality of Meycauayan, Province of Bulacan.
Bounded on the NE., along line 1-2, by property of Mariano Tancinco
(Lot 1, Psu-111877); and along line 2-3, by Lot 2 of plan Psu-131892;
on the S., along line 3-4, by Meycauayan River, on the SW., along line
4-5, by Lot 1 of plan Psu-131892; and along line 5-6 by property of
Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line 6-1,
by property of Joaquina Santiago. ... containing an area of ONE
THOUSAND NINE HUNDRED EIGHTY FIVE (1,985) SQUARE
METERS. ...
On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of
the Bureau of Lands filed a written opposition to the application for registration.
On March 6, 1975, the private respondents filed a partial withdrawal of the application
for registration with respect to Lot 3 of Plan Psu-131892 in line with the
recommendation of the Commissioner appointed by the Court.
On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial
proceeded only with respect to Lots 1 and 2 covered by Plan Psu-131892.
On June 26, 1976, the lower court rendered a decision granting the application on the
finding that the lands in question are accretions to the private respondents' fishponds
covered by Transfer Certificate of Title No. 89709. The dispositive portion of the
decision reads: t.hqw
WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh.
H) are accretions to the land covered by Transfer Certificate of Title No.
89709 of the Register of Deeds of Bulacan, they belong to the owner of
said property. The Court, therefore, orders the registration of lots 1 & 2
situated in the barrio of Ubihan, municipality of Meycauayan, province
of Bulacan, and more particularly described in plan Psu-131892 (Exh.
H) and their accompanying technical descriptions (Exhs. E, E-1) in favor
of Benjamin Tancinco, married to Alma Fernandez and residing at 3662
Heatherdown, Toledo, Ohio 43614 U.S.A.; Azucena Tancinco Reyes,
married to Alex Reyes, Jr., residing at 4th St., New Manila, Quezon City;
Marina Tancinco Imperial, married to Juan Imperial, residing at Pasay
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Road, Dasmarias Village, Makati, Rizal; and Mario C. Tancinco,


married to Leticia Regidor, residing at 1616 Cypress St., Dasmarias
Village, Makati, Rizal, all of legal age, all Filipino citizens.
On July 30, 1976, the petitioner Republic appealed to the respondent Court of
Appeals.
On August, 19, 1982, the respondent Court rendered a decision affirming in toto the
decision of the lower court. The dispositive portion of the decision reads: t.hqw
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay
sa kanyang kabuuan nang walang bayad.
The rule that the findings of fact of the trial court and the Court of Appeals are binding
upon this Court admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS
Stock Brokerage, Inc. (97 SCRA 734) we held that this Court retains the power to
review and rectify the findings of fact of said courts when (1) the conclusion is a
finding grounded entirely on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd, and impossible; (3) where there is
grave abuse of discretion, (4) when the judgment is based on a misapprehension of
facts; and (5) when the court, in making its findings, went beyond the issues of the
case and the same are contrary to the admissions of both appellant and appellee.
There are facts and circumstances in the record which render untenable the findings
of the trial court and the Court of Appeals that the lands in question are accretions to
the private respondents' fishponds.
The petitioner submits that there is no accretion to speak of under Article 457 of the
New Civil Code because what actually happened is that the private respondents
simply transferred their dikes further down the river bed of the Meycauayan River,
and thus, if there is any accretion to speak of, it is man-made and artificial and not the
result of the gradual and imperceptible sedimentation by the waters of the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia
Acua to the effect that: t.hqw
xxx xxx xxx

... when witness first saw the land, namely, Lots 1 & 2, they were
already dry almost at the level of the Pilapil of the property of Dr.
Tancinco, and that from the boundaries of the lots, for about two (2)
arms length the land was still dry up to the edge of the river; that
sometime in 1951, a new Pilapil was established on the boundaries of
Lots 1 & 2 and soil from the old Pilapil was transferred to the new Pilapil
and this was done sometime in 1951; that the new lots were then
converted into fishpond, and water in this fishpond was two (2) meters
deep on the side of the Pilapil facing the fishpond ... .
The private respondents submit that the foregoing evidence establishes the fact of
accretion without human intervention because the transfer of the dike occurred after
the accretion was complete.
We agree with the petitioner.
Article 457 of the New Civil Code provides: t.hqw
To the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of
the waters.
The above-quoted article requires the concurrence of three requisites before an
accretion covered by this particular provision is said to have taken place. They are (1)
that the deposit be gradual and imperceptible; (2) that it be made through the effects
of the current of the water; and (3) that the land where accretion takes place is
adjacent to the banks of rivers.
The requirement that the deposit should be due to the effect of the current of the river
is indispensable. This excludes from Art. 457 of the New Civil Code all deposits
caused by human intervention. Alluvion must be the exclusive work of nature. In the
instant case, there is no evidence whatsoever to prove that the addition to the said
property was made gradually through the effects of the current of the Meycauayan
and Bocaue rivers. We agree with the observation of the Solicitor General that it is
preposterous to believe that almost four (4) hectares of land came into being because
of the effects of the Meycauayan and Bocaue rivers. The lone witness of the private
respondents who happens to be their overseer and whose husband was first cousin
DONT WORRY BE HAPPY.

of their father noticed the four hectare accretion to the twelve hectare fishpond only in
1939. The respondents claim that at this point in time, accretion had already taken
place. If so, their witness was incompetent to testify to a gradual and imperceptible
increase to their land in the years before 1939. However, the witness testified that in
that year, sheobserved an increase in the area of the original fishpond which is now
the land in question. If she was telling the truth, the accretion was sudden. However,
there is evidence that the alleged alluvial deposits were artificial and man-made and
not the exclusive result of the current of the Meycauayan and Bocaue rivers. The
alleged alluvial deposits came into being not because of the sole effect of the current
of the rivers but as a result of the transfer of the dike towards the river and
encroaching upon it. The land sought to be registered is not even dry land cast
imperceptibly and gradually by the river's current on the fishpond adjoining it. It is
under two meters of water. The private respondents' own evidence shows that the
water in the fishpond is two meters deep on the side of the pilapil facing the fishpond
and only one meter deep on the side of the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion
deposited by a river is to compensate him for the danger of loss that he suffers
because of the location of his land. If estates bordering on rivers are exposed to
floods and other evils produced by the destructive force of the waters and if by virtue
of lawful provisions, said estates are subject to incumbrances and various kinds of
easements, it is proper that the risk or danger which may prejudice the owners
thereof should be compensated by the right of accretion. (Cortes v. City of Manila, 10
Phil. 567). Hence, the riparian owner does not acquire the additions to his land
caused by special works expressly intended or designed to bring about accretion.
When the private respondents transferred their dikes towards the river bed, the dikes
were meant for reclamation purposes and not to protect their property from the
destructive force of the waters of the river.
We agree with the submission of the Solicitor General that the testimony of the
private respondents' lone witness to the effect that as early as 1939 there already
existed such alleged alluvial deposits, deserves no merit. It should be noted that the
lots in question were not included in the survey of their adjacent property conducted
on May 10, 1940 and in the Cadastral Survey of the entire Municipality of
Meycauayan conducted between the years 1958 to 1960. The alleged accretion was
declared for taxation purposes only in 1972 or 33 years after it had supposedly
permanently formed. The only valid conclusion therefore is that the said areas could

not have been there in 1939. They existed only after the private respondents
transferred their dikes towards the bed of the Meycauayan river in 1951. What private
respondents claim as accretion is really an encroachment of a portion of the
Meycauayan river by reclamation.
The lower court cannot validly order the registration of Lots 1 & 2 in the names of the
private respondents. These lots were portions of the bed of the Meycauayan river and
are therefore classified as property of the public domain under Article 420 paragraph
1 and Article 502, paragraph 1 of the Civil Code of the Philippines. They are not open
to registration under the Land Registration Act. The adjudication of the lands in
question as private property in the names of the private respondents is null and void.
WHEREFORE, the instant petition is GRANTED. The decision appealed from is
hereby REVERSED and SET ASIDE. The private respondents are ordered to move
back the dikes of their fishponds to their original location and return the disputed
property to the river to which it belongs.
SO ORDERED.1wph1.t
Teehankee, Actg. C.J., Melencio-Herrera, Plana, Relova and De la Fuente, JJ.,
concur

[G.R. No. 98045. June 26, 1996]


DESAMPARADO
VDA.
DE
NAZARENO
and
LETICIA NAZARENO
TAPIA, petitioners, vs. THE COURT OF APPEALS, MR. & MRS. JOSE
SALASALAN, MR. & MRS. LEO RABAYA, AVELINO LABIS, HON.
ROBERTO G. HILARIO, ROLLEO I. IGNACIO, ALBERTO M. GILLERA and
HON. ABELARDO G. PALAD, JR., in their official and/or private
capacities, respondents.
DONT WORRY BE HAPPY.

SYLLABUS
1. CIVIL LAW; OWNERSHIP; RIGHTS OF ACCESSION WITH RESPECT TO
IMMOVABLE PROPERTY; ARTICLE 457; REQUISITES.- In the case
of Meneses vs. CA, this Court held that accretion, as a mode of acquiring
property under Art. 457 of the Civil Code, requires the concurrence of these
requisites: (1) that the deposition of soil or sediment be gradual and
imperceptible; (2) that it be the result of the action of the waters of the river (or
sea); and (3) that the land where accretion takes place is adjacent to the banks of
rivers (or the sea coast). These are called the rules on alluvion which if present in
a case, give to the owners of lands adjoining the banks of rivers or streams any
accretion gradually received from the effects of the current of waters.
2. ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR.- Where the accretion was
formed by the dumping of boulders, soil and other filling materials on portions of
the Balacanas Creek and the Cagayan River bounding petitioner's land, it cannot
be claimed that the accumulation was gradual and imperceptible, resulting from
the action of the waters or the current of the creek and the river. In Hilario vs. City
of Manila, this Court held that the word current indicates the participation of the
body of water in the ebb and flow of waters due to high and low tide. Not having
met the first and second requirements of the rules of alluvion, petitioners cannot
claim the rights of a riparian owner.
3. ID.; ID.; ID.; ID.; ID.; THAT DEPOSIT IS DUE TO THE CURRENT OF THE
RIVER, MANDATORY.- In Republic vs. CA, this Court ruled that the requirement
that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the Civil Code all deposits caused
by human intervention. Putting it differently, alluvion must be the exclusive work
of nature. Thus, in Tiongco vs. Director of Lands, et al., where the land was not
formed solely by the natural effect of the water current of the river bordering said
land but is also the consequence of the direct and deliberate intervention of man,
it was deemed a man-made accretion and, as such, part of the public domain. In
the case at bar, the subject land was the direct result of the dumping of sawdust
by the Sun Valley Lumber Co. consequent to its sawmill operations.
4. ID.; PUBLIC LANDS; FINDINGS AS SUCH BY THE BUREAU OF LANDS,
RESPECTED.- The mere filing of the Miscellaneous Sales Application constituted
an admission that the land being applied for was public land, having been the
subject of a Survey Plan wherein said land was described as an

orchard. Furthermore, the Bureau of Lands classified the subject land as an


accretion area which was formed by deposits of sawdust in the Balacanas Creek
and the Cagayan river, in accordance with the ocular inspection conducted by the
Bureau of Lands. This Court has often enough held that findings of administrative
agencies which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but even finality. Again,
when said factual findings are affirmed by the Court of Appeals, the same are
conclusive on the parties and not reviewable by this Court.
5. ID.; PUBLIC LAND LAW; JURISDICTION OVER PUBLIC LANDS.- Having
determined that the subject land is public land, a fortiori, the Bureau of Lands, as
well as the Office of the Secretary of Agriculture and Natural Resources have
jurisdiction over the same in accordance with the Public Land Law. Under
Sections 3 and 4 thereof, the Director of Lands has jurisdiction, authority and
control over public lands. Here respondent Palad as Director of Lands, is
authorized to exercise executive control over any form of concession, disposition
and management of the lands of the public domain. He may issue decisions and
orders as he may see fit under the circumstances as long as they are based on
the findings of fact. In the case of Calibo vs. Ballesteros, this Court held that
where, in the disposition of public lands, the Director of Lands bases his decision
on the evidence thus presented, he clearly acts within his jurisdiction, and if he
errs in appraising the evidence, the error is one of judgment, but not an act of
grave abuse of discretion annullable by certiorari.
6. ADMINISTRATIVE LAW; ADMINISTRATIVE REMEDIES; EXHAUSTED IN CASE
AT BAR.- The administrative remedies have been exhausted. Petitioners could
not have intended to appeal to respondent Ignacio as an Officer-In-Charge of the
Bureau of Lands. The decision being appealed from was the decision of
respondent Hilario who was the Regional Director of the Bureau of Lands. Said
decision was made "for and by authority of the Director of Lands." It would be
incongruous to appeal the decision of the Regional Director of the Bureau of
Lands acting for the Director of the Bureau of Lands to an Officer-In-Charge of
the Bureau of Lands. In any case, respondent Ignacio's official designation was
"Undersecretary of the Department of Agriculture and Natural Resources." He
was only an "Officer-In-Charge" of the Bureau of Lands. When he acted on the
late Antonio Nazareno's motion for reconsideration by affirming or adopting
respondent Hilario's decision, he was acting on said motion as an Undersecretary
on behalf of the Secretary of the Department. In the case ofHamoy vs. Secretary
DONT WORRY BE HAPPY.

of Agriculture and Natural Resources, this Court held that the Undersecretary of
Agriculture and Natural Resources may modify, adopt, or set aside the orders or
decisions of the Director of Lands with respect to questions involving public lands
under the administration and control of the Bureau of Lands and the Department
of Agriculture and Natural Resources. He cannot, therefore, be said to have
acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5 of
Commonwealth Act No. 141.
APPEARANCES OF COUNSEL
Manolo L. Tagarda, Sr. for petitioners.
Arturo R. Legaspi for private respondents.
DECISION
ROMERO, J.:
Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia
challenge the decision of the Court of Appeals which affirmed the dismissal of
petitioners' complaint by the Regional Trial Court of Misamis Oriental, Branch 22. The
complaint was for annulment of the verification, report and recommendation, decision
and order of the Bureau of Lands regarding a parcel of public land.
The only issue involved in this petition is whether or not petitioners exhausted
administrative remedies before having recourse to the courts.
The subject of this controversy is a parcel of land situated in Telegrapo, Puntod,
Cagayan de Oro City. Said land was formed as a result of sawdust dumped into the
dried-up Balacanas Creek and along the banks of the Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased
the subject lots on which their houses stood from one Antonio Nazareno, petitioners'
predecessor-in-interest. In the latter part of 1982, private respondents allegedly
stopped paying rentals. As a result, Antonio Nazareno and petitioners filed a case for
ejectment with the Municipal Trial Court of Cagayan de Oro City, Branch 4. A decision
was rendered against private respondents, which decision was affirmed by the
Regional Trial Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of judgment
after the same became final and executory. Private respondents filed a case for
annulment of judgment before the Regional Trial Court of Misamis Oriental, Branch

24 which dismissed the same. Antonio Nazareno and petitioners again moved for
execution of judgment but private respondents filed another case for certiorari with
prayer for restraining order and/or writ of preliminary injunction with the Regional Trial
Court of Misamis Oriental, Branch 25 which was likewise dismissed. The decision of
the lower court was finally enforced with the private respondents being ejected from
portions of the subject lots they occupied.
Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of
the survey plan designated as Plan Csd-106-00571 with a view to perfecting his title
over the accretion area being claimed by him. Before the approved survey plan could
be released to the applicant, however, it was protested by private respondents before
the Bureau of Lands.
In compliance with the order of respondent District Land Officer Alberto M.
Gillera, respondent Land Investigator Avelino G. Labis conducted an investigation
and rendered a report to the Regional Director recommending that Survey Plan No.
MSI-10-06-000571-D (equivalent to Lot No. 36302, Cad. 237) in the name of Antonio
Nazareno, be cancelled and that private respondents be directed to file appropriate
public land applications.
Based on said report, respondent Regional Director of the Bureau of Lands
Roberto Hilario rendered a decision ordering the amendment of the survey plan in the
name of Antonio Nazareno by segregating therefrom the areas occupied by the
private respondents who, if qualified, may file public land applications covering their
respective portions.
Antonio Nazareno filed a motion for reconsideration with respondent Rolleo
Ignacio, Undersecretary of the Department of Natural Resources and Officer-inCharge of the Bureau of Lands who denied the motion. Respondent Director of Lands
Abelardo Palad then ordered him to vacate the portions adjudicated to private
respondents and remove whatever improvements they have introduced thereon. He
also ordered that private respondents be placed in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration,
petitioners Desamparado Vda. de Nazareno and Leticia Tapia Nazareno, filed a case
before the RTC, Branch 22 for annulment of the following: order of investigation by
respondent Gillera, report and recommendation by respondent Labis, decision by
respondent Hilario, order by respondent Ignacio affirming the decision of respondent
Hilario and order of execution by respondent Palad. The RTC dismissed the
DONT WORRY BE HAPPY.

complaint for failure to exhaust administrative remedies which resulted in the finality
of the administrative decision of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the
complaint. Applying Section 4 of C.A. No. 141, as amended, it contended that the
approval of the survey plan belongs exclusively to the Director of Lands. Hence,
factual findings made by the Metropolitan Trial Court respecting the subject land
cannot be held to be controlling as the preparation and approval of said survey plans
belong to the Director of Lands and the same shall be conclusive when approved by
the Secretary of Agriculture and Natural Resources. [1]
Furthermore, the appellate court contended that the motion for reconsideration
filed by Antonio Nazareno cannot be considered as an appeal to the Office of the
Secretary of Agriculture and Natural Resources, as mandated by C.A. No. 141
inasmuch as the same had been acted upon by respondent Undersecretary Ignacio
in his capacity as Officer-in-Charge of the Bureau of Lands and not as
Undersecretary acting for the Secretary of Agriculture and Natural Resources. For the
failure of Antonio Nazareno to appeal to the Secretary of Agriculture and Natural
Resources, the present case does not fall within the exception to the doctrine of
exhaustion of administrative remedies. It also held that there was no showing of
oppressiveness in the manner in which the orders were issued and executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,
ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION
OF THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING
FACTS AND THE LAW ON THE MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,
ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION
OF THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH
FAILED TO CONSIDER THAT THE EXECUTION ORDER OF PUBLIC
RESPONDENT ABELARDO G. PALAD, JR., DIRECTOR OF LANDS,
MANILA, PRACTICALLY CHANGED THE DECISION OF PUBLIC
RESPONDENT ROBERTO HILARIO, REGIONAL DIRECTOR, BUREAU
OF LANDS, REGION 10, THUS MAKING THE CASE PROPER SUBJECT

FOR ANNULMENT WELL WITHIN THE JURISDICTION OF THE LOWER


COURT.
The resolution of the above issues, however, hinges on the question of whether
or not the subject land is public land. Petitioners claim that the subject land is private
land being an accretion to his titled property, applying Article 457 of the Civil Code
which provides:
"To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters."
In the case of Meneses v. CA,[2] this Court held that accretion, as a mode of
acquiring property under Art. 457 of the Civil Code, requires the concurrence of these
requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2)
that it be the result of the action of the waters of the river (or sea); and (3) that the
land where accretion takes place is adjacent to the banks or rivers (or the sea
coast). These are called the rules on alluvion which if present in a case, give to the
owners of lands adjoining the banks of rivers or streams any accretion gradually
received from the effects of the current of waters.
For petitioners to insist on the application of these rules on alluvion to their case,
the above-mentioned requisites must be present. However, they admit that the
accretion was formed by the dumping of boulders, soil and other filling materials on
portions of the Balacanas Creek and the Cagayan River bounding their land. [3] It
cannot be claimed, therefore, that the accumulation of such boulders, soil and other
filling materials was gradual and imperceptible, resulting from the action of the waters
or the current of the Balacanas Creek and the Cagayan River. In Hilario v. City of
Manila,[4] this Court held that the word "current" indicates the participation of the body
of water in the ebb and flow of waters due to high and low tide. Petitioners'
submission not having met the first and second requirements of the rules on alluvion,
they cannot claim the rights of a riparian owner.
In any case, this court agrees with private respondents that petitioners are
estopped from denying the public character of the subject land, as well as the
jurisdiction of the Bureau of Lands when the late Antonio Nazareno filed his
Miscellaneous Sales Application MSA (G-6) 571. [5] The mere filing of said Application
constituted an admission that the land being applied for was public land, having been
the subject of Survey Plan No. MSI-10-06-000571-D (Equivalent to Lot No. 36302,
Cad-237) which was conducted as a consequence of Antonio Nazareno's
DONT WORRY BE HAPPY.

Miscellaneous Sales Application wherein said land was described as an


orchard. Said description by Antonio Nazareno was, however, controverted by
respondent Labis in his investigation report to respondent Hilario based on the
findings of his ocular inspection that said land actually covers a dry portion of
Balacanas Creek and a swampy portion of Cagayan River. The investigation report
also states that except for the swampy portion which is fully planted to nipa palms,
the whole area is fully occupied by a part of a big concrete bodega of petitioners and
several residential houses made of light materials, including those of private
respondents which were erected by themselves sometime in the early part of 1978. [6]
Furthermore, the Bureau of Lands classified the subject land as an accretion
area which was formed by deposits of sawdust in the Balacanas Creek and the
Cagayan river, in accordance with the ocular inspection conducted by the Bureau of
Lands.[7] This Court has often enough held that findings of administrative agencies
which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even finality. [8] Again, when said
factual findings are affirmed by the Court of Appeals, the same are conclusive on the
parties and not reviewable by this Court. [9]
It is this Court's irresistible conclusion, therefore, that the accretion was manmade or artificial. In Republic v. CA,[10] this Court ruled that the requirement that the
deposit should be due to the effect of the current of the river is indispensable. This
excludes from Art. 457 of the Civil Code all deposits caused by human
intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus,
in Tiongco v. Director of Lands, et al., [11] where the land was not formed solely by the
natural effect of the water current of the river bordering said land but is also the
consequence of the direct and deliberate intervention of man, it was deemed a manmade accretion and, as such, part of the public domain.
In the case at bar, the subject land was the direct result of the dumping of
sawdust by the Sun Valley Lumber Co. consequent to its sawmill operations. [12] Even
if this Court were to take into consideration petitioners' submission that the accretion
site was the result of the late Antonio Nazareno's labor consisting in the dumping of
boulders, soil and other filling materials into the Balacanas Creek and Cagayan River
bounding his land,[13] the same would still be part of the public domain.
Having determined that the subject land is public land, a fortiori, the Bureau of
Lands, as well as the Office of the Secretary of Agriculture and Natural Resources
have Jurisdiction over the same in accordance with the Public Land Law. Accordingly,

the court a quo dismissed petitioners' complaint for non-exhaustion of administrative


remedies which ruling the Court of Appeals affirmed.
However, this Court agrees with petitioners that administrative remedies have
been exhausted. Petitioners could not have intended to appeal to respondent Ignacio
as an Officer-in-Charge of the Bureau of Lands. The decision being appealed from
was the decision of respondent Hilario who was the Regional Director of The Bureau
of Lands. Said decision was made "for and by authority of the Director of Lands." [14] It
would be incongruous to appeal the decision of the Regional Director of the Bureau
of Lands acting for the Director of the Bureau of Lands to an Officer-In-Charge of the
Bureau of Lands.
In any case, respondent Rolleo Ignacio's official designation was "Undersecretary
of the Department of Agriculture and Natural Resources." He was only an "Officer-InCharge" of the Bureau of Lands. When he acted on the late Antonio Nazareno's
motion for reconsideration by affirming or adopting respondent's Hilario's decision, he
was acting on said motion as an Undersecretary on behalf of the Secretary of the
Department. In the case of Hamoy v. Secretary of Agriculture and Natural Resources,
[15]
This Court held that the Undersecretary of Agriculture and Natural Resources may
modify, adopt, or set aside the orders or decisions of the Director of Lands with
respect to questions involving public lands under the administration and control of the
Bureau of Lands and the Department of Agriculture and Natural Resources. He
cannot therefore, be said to have acted beyond the bounds of his jurisdiction under
Sections 3, 4 and 5 of Commonwealth Act No. 141.[16]
As borne out by the administrative findings, the controverted land is public land,
being an artificial accretion of sawdust. As such, the Director of Lands has
jurisdiction, authority and control over the same, as mandated under Sections 3 and 4
of the Public Land Law (C.A. No. 141) which states, thus:
"Sec. 3. The Secretary of Agriculture and Natural Resources shall be the exclusive officer
charged with carrying out the provisions of this Act through the Director of Lands who shall
act under his immediate control.
Sec. 4. Subject to said control, the Director of Lands shall have direct executive control of the
survey, classification, lease, sale or any other form of concession or disposition and
management of the lands of the public domain, and his decisions as to questions of fact shall
be conclusive when approved by the Secretary of Agriculture and Natural Resources."
DONT WORRY BE HAPPY.

In connection with the second issue, petitioners ascribe whim, arbitrariness or


capriciousness in the execution order of public respondent Abelardo G. Palad, the
Director of Lands. This Court finds otherwise since said decision was based on the
conclusive finding that the subject land was public land. Thus, this Court agrees with
the Court of Appeals that the Director of Lands acted within his rights when he issued
the assailed execution order, as mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order directing them to
vacate the subject land practically changed respondent Hilario's decision is
baseless. It is incorrect for petitioners to assume that respondent Palad awarded
portions of the subject land to private respondents Salasalans and Rayabas as they
had not yet been issued patents or titles over the subject land. The execution order
merely directed the segregation of petitioners' titled lot from the subject land which
was actually being occupied by private respondents before they were ejected from
it. Based on the finding that private respondents were actually in possession or were
actually occupying the subject land instead of petitioners, respondent Palad, being
the Director of Lands and in the exercise of this administrative discretion, directed
petitioners to vacate the subject land on the ground that private respondents have a
preferential right, being the occupants thereof.
While private respondents may not have filed their application over the land
occupied by them, they nevertheless filed their protest or opposition to petitioners'
Miscellaneous Sales Application, the same being preparatory to the filing of an
application as they were in fact directed to do so. In any case, respondent Palad's
execution order merely implements respondent Hilario's order. It should be noted that
petitioners' own application still has to be given due course. [17]
As Director of lands, respondent Palad is authorized to exercise executive control
over any form of concession, disposition and management of the lands of the public
domain.[18] He may issue decisions and orders as he may see fit under the
circumstances as long as they are based on the findings of fact.
In the case of Calibo v. Ballesteros,[19] this Court held that where, in the
disposition of public lands, the Director of Lands bases his decision on the evidence
thus presented, he clearly acts within his jurisdiction, and if he errs in appraising the
evidence, the error is one of judgment, but not an act or grave abuse of discretion
annullable by certiorari. Thus, except for the issue of non-exhaustion of administrative
remedies, this Court finds no reversible error nor grave abuse of discretion in the
decision of the Court of Appeals.

WHEREFORE, the petition is DISMISSED for lack of merit.


SO ORDERED.
Regalado (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.
G.R. No. L-31934 July 29, 1977
RAMON LANZAR, petitioner
vs.
DIRECTOR OF LANDS and CITY OF ILOILO, respondents.
Ramon A. Gonzales for petitioner.
Solicitor General Felix Q. Antonio, Assistant Solicitor General Bernardo P. Pardo and
Solicitor Jose A. Janolo for respondents.
FERNANDEZ, J.:
This is a petition to review on certiorari the decision of the Court of Appeals in CA-G.
R. No. 34333-R entitled "Ramon Lanzar, Applicant-Appellee, versus The Director of
Lands and The City of Iloilo, Oppositors-Appellants", declaring the property sought to
be registered as the property of the public domain devoted to public use not
susceptible of private appropriation.

predecessors-in-interest, publicly, continuously and adversely for more than 30 years,


the same was adjudicated to the petitioner, it appearing that no proof had been
adduced that the said land is necessary for public utility or establishment of special
industries (Record on Appeal, pp. 30-37).
The Director of Lands and the City of Iloilo appealed to the Court of Appeals which on
March 24, 1970 reversed the decision of the Court of First Instance of Iloilo and held
that the land in question, being an accretion formed by the action of the sea, is
property of the public domain and not susceptible of private appropriation.
Hence, the applicant-appellee, Ramon Lanzar, filed this petition for certiorari to
review the aforesaid decision of the Court of Appeals. The petitioner assigns the
following errors:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT LANDS
FORMED BY ACTION OF THE SEA AS ACCRETION TO THE
SHORES ARE PROPERTY OF PUBLIC DOMINION, ON THE
AUTHORITY OF ART. 4, LAW OF WATERS, KER & CO. VS GAUDEN
AND GOVERNMENT VS. ALDECOA.
II

In May 1960, the petitioner, Ramon Lanzar, filed an application for registration of title
to a parcel of land located in the District of Molo, Iloilo City in the Court of First
Instance of Iloilo alleging that he is the owner in fee simple of the land in question and
asking that the title thereto be registered in his name.
In August 1961, the Director of Lands and the City of Iloilo filed an opposition to the
application on the ground that the land in question a foreshore land which forms part
of the public domain and is needed by the City of Iloilo as a road right of way of the
Molo Arevalo Boulevard, and that the applicant had not possessed the property in
such a manner as to warrant an implied grant entitled him to confirmation of his title
thereto.
After trial, the Court of First Instance of Iloilo rendered a decision in March 1963
holding that the property in question, having been possessed by the applicant and his
DONT WORRY BE HAPPY.

THE COURT OF APPEALS ERRED IN RELYING ON MONTEVERDE


VS. DIRECTOR OF LANDS, 93 PHIL. 134 HOLDING THAT ONLY THE
EXECUTIVE OR LEGISLATURE CAN DECLARE THE LAND AS NO
LONGER INTENDED FOR PUBLIC USE AND SO SHALL BELONG TO
THE ADJACENT OWNER.
III
THE COURT OF APPEALS ERRED IN HOLDING THAT SINCE ART.
422 OF THE NEW CIVIL CODE PROVIDES THAT PROPERTY OF
PUBLIC DOMAIN WHEN NO LONGER INTENDED FOR PUBLIC USE,
SUCH INTENTION CAN ONLY BE SPELLED OUT BY THE
EXECUTIVE OR LEGISLATURE, NOT BY THE COURTS.

IV
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
PETITIONER HAS ACQUIRED THE PROPERTY THRU ACQUISITIVE
PRESCRIPTION.
(Petitioner's Brief, pp. 1-2)
The pertinent facts are not disputed.
The petitioner has applied for the registration of his title to a parcel of land which is
admittedly an accretion of Lot No. 1899 of the Cadastral Survey of Iloilo, it having
been formed by the gradual action of the sea before 1,922. Ignacio Arroyo, the
registered owner of Lot 1899, leased in 19M the property to Maximo Tonogbanua
who possessed the whole of Lot 1899 and its accretion. In 1927, Ignacio Arroyo
donated Lot 1899 of the Cadastral Survey of Iloilo, together with its accretion, to
Beaterio de Santissimo Rosario de Molo, which in turn the property to the applicant,
Ramon Lanzar. The lessee planted coconuts and bananas on the land and a portion
thereof was devoted to palay. A verification of Lot 1899 by the Bureau of Lands
disclosed that the portion of land applied for and described in the plan, Exhibit A, and
in its technical description, is outside of Lot 1899, the same being an accretion
thereto formed by the action of the sea. Beaterio de Santissimo Rosario de Molo and
the applicant entered into an agreement, Exhibit 1, on August 13,1959, under which
Beaterio de Santissimo Rosario de Molo assigned all its rights to the accretion, the
title to which is sought to be registered by the applicant. Beaterio de Santissimo
Rosario de Molo had possessed Lot 1899 and its accretion through its lessee, openly,
publicly, uninterruptedly and adversely to all claimants and under claim of ownership.
The Beaterio had declared Lot 1899 for taxation and when it assigned the rights to
the applicant, he caused the tax declaration to be transferred to his name in May
1960, Exhibit J.
During the Cadastral Survey of 1911-1912, the lot in question was non-existent
(Exhibit 2, Director of Lands). Hence, said land as an accretion to Lot 1899 must
have gradually developed from 1912 to 1922 and thereafter. It is now separated by
the Arevalo-Molo Boulevard from the sea.

The only issue to be resolved is whether or not the title to the land in question which
was formed by action of the sea as an accretion to Lot 1899 may be registered in the
name of the applicant on the basis of adverse possession for over 30 years.
Article 4 of the Law of Waters provides:
ART. 4. Lands added to the shores by accretions and alluvium deposits
caused by the action of the sea, form part of the public domain. When
they are no longer washed by the waters of the sea, and are not
necessary for the purposes of public utility, or for the establishment of
special industries, or for the coastguard service, the Government shall
declare them to be the property of the owners of the estates adjacent
thereto and as an increment thereof.
In Ker & Co. vs. Cauden, 6 Phil. 732, this Court said:
This case is directly covered by the first part of said article 4. There is
therein an express declaration that land formed in the way this land was
formed is public property. Nothing could be more explicit and the effect
of this declaration is not in any way limited by the subsequent
provisions of the same article. The claim of the appellants that these
subsequent provisions indicate that the ownership of such land is in the
private persons who own the adjoining property, and that the
declaration which is spoken of is simply proof of that ownership, can not
be sustained. It is in direct conflict with the statement made in the first
part of the article. The true construction of the article is that when these
lands which belong to the State are not needed for the purposes
mentioned therein, then the State shall grant them to the adjoining
owners. No attempt was made by the appellants to prove any such
grant or concession in this case and, in fact, it is apparent from the
evidence that the conditions upon which the adjoining owners would be
entitled to such a grant have never existed because for a long time the
property was by the Spanish navy and it is now occupied by the present
government as a naval station, and works costing more than $500,000,
money of the United States, have been erected thereon. (Idem. p. 736)
It is contended by the petitioner that:

DONT WORRY BE HAPPY.

As found by the Court of Appeals, the accretion began before 1922, but
after 1912, as shown by the undisputed evidence, hence, during the
regime of the Spanish Civil Code, which became effective on December
8, 1889, and consequently, its nature shall be determined by the said
code. Now, the said code provides:
ARTICLE 399. The following are property of public
domain:
l. Those things intended for public use, as roads, canals,
rivers, torrents, ports and bridges constructed by the
State, riverbanks, shores, roadsteads and others of a like
nature.
(Brief for Petitioner-Appellant, pp. 10-11)
However, in Insular Government vs. Aldecoa and Company, 19 Phil. 505, this Court
held:
The Civil Code, which went into effect in these Islands on December 7,
1889, the twentieth day of its publication in the Gaceta de Manila of the
17th of November of the same year, confirms the provisions of the said
Law of Waters, since, in its article 339, it prescribes that:
Property of public ownership is
l. That destined to the public use, such as roads, canals, rivers, torrents,
ports, and bridges constructed by the State, and banks, shores,
roadsteads, and that of a similar character.
Article 341 of the same code provides:
Property of public ownership, when no longer devoted to general uses
or to the requirements of the defense of the territory, shall become a
part of the State property.

DONT WORRY BE HAPPY.

The shores and the lands reclaimed from the sea, while they continue
to be devoted to public uses and no grant whatever has been made of
any portion of them to private persons, remain a part of the public
domain and are for public uses, and, until they are converted into
patrimonial property of the State, such lands, thrown up by the action of
the sea, and the shores adjacent thereto, are not susceptible of
prescription, inasmuch as, being dedicated to the public uses, they are
not subject of commerce among men, in accordance with the provision
of article 1936 of the Civil Code.
The occupation or material possession of any land formed upon the
shore by accretions and alluvium deposits occasioned by the sea,
where the occupant or possessor is a private person and holds without
previous permission or authorization from the Government, granted in
due form, although he may have had the intention to hold it for the
purpose of making it his own, is illegal possession on his part and
amounts to nothing more than a mere detainer of the land, which is out
of the sphere of the commerce of men, as belonging to the public
domain and being alloted to public uses and for the use of all persons
who live at the place where it is situated. (Idem, pp. 514-515)
It is thus seen that the petitioner could not acquire the land in question by
prescription.
The contention of the petitioner-appellant that by "thus expanding the meaning of
shores to include inland property formed by the action of the sea, Government vs.
Aldecoa is guilty of judicial legislation ..." (Brief of Petitioner-Appellant, p. 15) has no
merit.
Articles 339 and 340 of the Spanish Civil Code are not repugnant to Article 4 of the
Spanish Law of Waters of 1866. The said provisions of the said Spanish Code did not
provide that lands added to the shores by action of the sea form part of the
patrimonial property of the State.
As stated by this Court in Insular Government vs. Aldecoa, supra, p. 541, the Civil
Code of Spain confirms the provisions of Article 4 of the Law of Waters, citing Article
339 of said code. This Court has been consistent in ruling that lands formed by the

action of the sea belong to the public domain. Thus in Monteverde vs. Director of
Lands, 93 Phil. 134, it was held:
Lots Nos. 1 and 2 were admittedly formed and added to the shores by
the natural. action of the sea, and the petitioners herein have claimed
title thereto as accretion to their adjoining lots, in accordance with article
4 of the Law of Waters of August 3, 1966, which provides as follows:

ATOK-BIG WEDGE MINING COMPANY, INC., petitioner,


vs.
COURT OF APPEALS, and LIWAN CONSI, respondents.
Mario C.V. Jalandoni for petitioner.
Joy B. Labiaga for private respondent.
PARAS, J.:

'Lands added to the shores by accretion and alluvial


deposits caused by action of the sea, form part of the
public domain. When they are no longer washed by the
water of the sea and are not necessary for purposes of
public utility, or for the establishment of special industries,
or for coast-guard service, the Government shall declare
them to be property of the owners of the estates adjacent
thereto and as increment thereof.'
(Idem. pp. 135-136)
In view of the foregoing, the Court of Appeals did not err in declaring the property
sought to be registered as part of the public domain devoted to public use not
susceptible of private appropriation. The land in question is needed by the City of
Iloilo for the expansion of the Arevalo-Molo Boulevard.
WHEREFORE, the petition for review is hereby dismissed and the decision of the
Court of Appeals sought to be reviewed is affirmed, without pronouncement as to
costs.

This is a petition for review on certiorari which seeks to annul and set aside; (a) the
decision* of the Court of Appeals dated March 13, 1989 in CA-G.R. No. SP No.
13528 entitled "Liwan Consi vs. Hon. Judge Ruben C. Ayson, et al." declaring that
both the petitioner and private respondent hold possessory titles to the land in
question, and (b) the resolution denying the motion for reconsideration.
The facts of the case are as follows:
Fredia Mineral claim of about nine (9) hectares situated in Tuding, Itogon, Benguet,
was located sometime between December 25, 1930 and December 31, 1930, a
period of six (6) days, by A.I. Reynolds in accordance with the provisions of the Act of
Congress of July 1, 1902, better known as the Philippine Bill of 1902, in a so-called
Declaration of Location. The said Declaration of Location of mineral claim was duly
recorded in the Office of the Mining Recorder sometime on January 2, 1931. Fredia
mineral claim, together with other mineral claims, was sold by A.I. Reynolds to Big
Wedge Mining Company, the earlier corporate name of Atok Big Wedge Mining
Company, Inc. (Atok for short; herein petitioner) in a Deed of Sale executed on
November 2, 1931. Since then petitioner Atok has been in continuous and exclusive
ownership and possession of said claim up to the present (Rollo, Annex "B", p. 21).

SO ORDERED.
Teehankee (Chairman), Makasiar, Muoz Palma, Martin and Guerrero, JJ., concur.
ART. 437
G.R. No. 88883

Atok has paid the realty taxes and occupation fees for the Fredia mineral claim. The
Fredia mineral claim together with other mineral claims owned by Atok has been
declared under Tax Declaration No. 9535 and that in view of Presidential Decree No.
1214 an application for lease was filed by Atok covering the Fredia mineral claim
(Rollo,Ibid., p. 22).

January 18, 1991


On the other hand, private respondent Liwan Consi has a lot below the land of a
certain Mr. Acay at Tuding Slide, Itogon, Benguet. He constructed a house thereon

DONT WORRY BE HAPPY.

sometime in 1964. The lot is covered by Tax Declaration No. 9462. When he first
constructed his house below the lot of Mr. Acay he was told that it was not necessary
for him to obtain a building permit as it was only a nipa hut. And no one prohibited
him from entering the land so he was constructing a house thereon. It was only in
January 1984 when private respondent Consi repaired the said house that people
came to take pictures and told him that the lot belongs to Atok. Private respondent
Consi has been paying taxes on said land which his father before him had occupied
(Rollo, Ibid., p. 22).
On January 1984, the security guards of Atok informed Feliciano Reyes, Security
Officer of Atok, that a construction was being undertaken at the area of the Fredia
mineral claim by private respondent Liwan Consi. Feliciano Reyes instructed the
cashier to go and take pictures of the construction. Feliciano Reyes himself and other
security guards went to the place of the construction to verify and then to the police to
report the matter (Rollo, Ibid.).
On March 1, 1984, Atok filed a complaint for forcible entry and detainer against Liwan
Consi (Rollo, Annex "C", p. 32).
On January 29, 1987, after due hearing, the Municipal Trial Court of Itogon, presided
over by Judge Irving rendered a decision, the dispositive portion of which reads:
WHEREFORE, this case against Liwan Consi is hereby ordered dismissed.
(Rollo, Annex "A", p. 20).
Petitioner ATOK appealed the decision to the Regional Trial Court (RTC) of Baguio
and Benguet, Branch VI, presided over by Judge Ruben Ayson (Rollo, Petition, p. 3).
On December 5, 1987, the RTC rendered its decision, the dispositive portion of which
reads:
WHEREFORE, in view of all the foregoing the decision of the Municipal Trial
Court of Itogon dated January 29, 1987 appealed from is hereby reversed and
set aside and a new one entered in its place ordering the defendant Liwan
Consi and all those claiming under him to vacate the premises of the Fredia
Mineral claim at Tuding, Itogon, Benguet immediately, and to restore
possession thereof to the plaintiff Atok Big Wedge Mining Company.
DONT WORRY BE HAPPY.

The defendant, Liwan Consi, is further ordered to remove and demolish his
house constructed in the premises of the land of Fredia mineral claim at
Tuding, Benguet, and to pay the costs.
SO ORDERED. (Rollo, p. 30).
From said decision, Liwan Consi filed with the Court of Appeals a petition for review
(Rollo, Petition, p. 4). On March 13, 1989, the Court of Appeals rendered its decision,
the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered dismissing the subject forcible
entry action. Costs against private respondent.
SO ORDERED. (Rollo, Annex "C" p. 48).
The Court of Appeals further ruled in part to wit:
The determination of whether the subject lot is mineral land or agricultural
awaits the decision of the Secretary of Natural Resources in a proceeding
called for that purpose. Thus, there is a chance that the subject property may
be classified as alienable agricultural land. At any rate, the mining company
may not so readily describe Liwan Consi as a "squatter" he also has
possessory rights over the property. Such rights may mature into ownership on
the basis of long-term possession under the Public Land Law,
Thus it is Our holding, that both Consi and ATOK are of equal legal footing with
regards the subject lot. Both hold possessory titles to the land in question
the petitioner through his long term occupancy of the same; the respondent
mining firm by virtue of its being the claim locator and applicant for a lease on
the mineral claim within which the subject lot is found. But it was established
that the petitioner has been in actual and beneficial possession of the subject
lot since before the Second World War in the concept of owner and in good
faith. (Rollo, Annex "C", pp. 47-48).
On June 16, 1989, the Court of Appeals denied the motion for reconsideration filed by
petitioner ATOK (Rollo, Annex "D", p. 50).

Hence, the petition.


The main issue in this case is whether or not an individual's long term occupation of
land of the public domain vests him with such rights over the same as to defeat the
rights of the owner of that claim.

all the minerals within the lines of the claim, except as limited by the
extralateral right of adjoining locators; and this is the locator's right before as
well as after the issuance of the patent. While a lode locator acquires a vested
right by virtue of his location made in compliance with the mining laws, the fee
remains in the government until patent issues. (St. Louis Mining & Mineral Co.
v. Montana Mining Co., 171 U.S. 605, 655; 43 Law ed., 320, 322)

The petition is impressed with merit.


It is of no importance whether Benguet and Atok had secured a patent for as held in
the Gold Creek Mining Corporation case, for all physical purposes of ownership, the
owner is not required to secure a patent as long as he complies with the provisions of
the mining laws; his possessory right, for all practical purposes of ownership, is as
good as though secured by patent (Republic v. Court of Appeals, 160 SCRA 228
[1988]).

It is, therefore, evident that Benguet and Atok have exclusive rights to the property in
question by virtue of their respective mining claims which they validly acquired before
the Constitution of 1935 prohibited the alienation of all lands of the public domain
except agricultural lands, subject to vested rights existing at the time of its adoption.
The land was not and could not have been transferred to the private respondents by
virtue of acquisitive prescription, nor could its use be shared simultaneously by them
and the mining companies for agricultural and mineral purposes (Ibid).

In the case at bar, the evidence on record pointed that the petitioner Atok has
faithfully complied with all the requirements of the law regarding the maintenance of
the said Fredia Mineral Claim.

On the matter of possession, private respondent contends that his predecessor-ininterest has been in possession of said lot even before the war and has in fact
cultivated the same.

The perfection of the mining claim converted the property to mineral land and under
the laws then in force removed it from the public domain. By such act, the locators
acquired exclusive rights over the land, against even the government, without need of
any further act such as the purchase of the land or the obtention of a patent over it.
As the land had become the private property of the locators, they had the right to
transfer the same, as they did, to Benguet and Atok (Ibid.).

In the case of Republic v. Court of Appeals, 160 SCRA 288 1988, this Court held:

As in the instant petition, the record shows that the lot in question was acquired
through a Deed of Sale executed between Atok and Fredia Mineral Claim.
The legal effect of a valid location of a mining claim is not only to segregate
the area from the public domain, but to grant to the locator the beneficial
ownership of the claim and the right to a patent therefor upon compliance with
the terms and conditions prescribed by law. Where there is a valid location of
mining claim, the area becomes segregated from the public and the property
of the locator. When a location of a mining claim is perfected it has the effect of
a grant by the United States of the right of present and exclusive possession,
with the right to the exclusive enjoyment of all the surface ground as well as of
DONT WORRY BE HAPPY.

. . . even if it be assumed that the predecessor-in-interest of the de la Rosas


had already been in possession of the subject property, their possession was
not in the concept of owner of the mining claim but of the property as
agricultural land, which it was not. The property was mineral land, and they are
claiming it as agricultural land. They were not disputing the rights of the mining
locators nor where they seeking to oust them as such and to replace them in
the mining of the land. . . .
Since the subject lot is mineral land, private respondent's possession of the subject
lot no matter how long did not confer upon him possessory rights over the same.
Furthermore, Article 538 of the New Civil Code provides:
Art. 538. Possession as a fact cannot be recognized at the same time in two
different personalities except in the cases of co-possession. Should a question
arise regarding the fact of possession, the present possessor shall be

preferred; if there are two possessors, the one longer in possession; if the
dates of the possession are the same, the one who presents a title; and if all
these conditions are equal, the thing shall be placed in judicial deposit pending
determination of its possession or ownership through proper proceedings.
Since 1931 up to the present, petitioner ATOK has been in continuous and exclusive
possession of the Frediamineral claim while private respondent's possession started
only sometime in 1964 when he constructed a house thereon. Clearly, ATOK has
superior possessory rights than private respondent, Liwan Consi, the former being
"the one longer in possession."
It is therefore clear that from the legal viewpoint it was really petitioner who was in
actual physical possession of the property. Having been deprived of this possession
by the private respondent, petitioner has every right to sue for ejFectment.
With this ruling enunciated by the Court, it can further be declared and held that
petitioner Atok has the exclusive right to the property in question.
PREMISES CONSIDERED, the petition is GRANTED and the questioned decision of
the Court of Appeals dated March 13, 1989 is REVERSED and SET ASIDE and the
decision of the Regional Trial Court of Baguio and Benguet dated June 16, 1989 is
REINSTATED.
SO ORDERED.
Melencio-Herrera, Padilla and Regalado, JJ., concur.
Sarmiento, J., took no part

ART. 448
[G.R. No. L-11028. April 17, 1959.]
LAO CHIT, Plaintiff-Appellee, v. SECURITY BANK & TRUST CO. and
CONSOLIDATED INVESTMENT, INC., Defendants-Appellants.
DONT WORRY BE HAPPY.

Nicetas A. Suanes for Appellee.


Augusto S. Francisco for appellant Security Bank & Trust Co.
Jesus S. Nava for appellant Consolidated Investments, Inc.
SYLLABUS
1. LEASE; IMMOVABLE PROPERTY; PERMANENT IMPROVEMENTS
INTRODUCED BY LESSEE; LIABILITY OF LESSOR FOR VALUE OF
IMPROVEMENTS. Pursuant to the lease contract between the parties,
the lessee undertook to construct at his expense such improvements as
may be necessary to make the leased premises suitable for banking
purposes, and such improvements shall become the property of the lessor
upon the termination and/or rescission of said contract. It appears that,
pursuant to another contract, entered into between the lessee and
plaintiff, the latter furnished the materials and the work for said
improvements. For failure of the lessee to pay the rents the lease contract
was rescinded. Unable to collect the cost of the improvements from the
lessee, the plaintiff demanded payment thereof, as well as rents for the
use of said improvements, from the lessor. Held: The improvement in the
question became the property of the lessor not only by operation of law,
as accession to the building, but also by specific stipulation in the lease
contract. Although plaintiff was not a party to said contract, this stipulation
is binding upon him, he having introduced said improvements pursuant to
his contract with the lessee form whom he derived, therefore, his right to
enter the building and make the improvements. In short, insofar as the
construction thereof, plaintiff was, vis-a-vis the lessor, a mere agent or
representative of the lessee and, as such was privy to the undertakings of
the lessee under his contract of lease with the lessor.

DECISION

costs of this suit." (Exhibit 3.)


CONCEPCION, J.:

In May, 1949, the Consolidated Investments, Inc., hereafter referred to as


the lessor, leased to Domingo T. Dikit part of the lobby, on the ground floor
of the Consolidated Building, at Plaza Goiti, Manila, to be used as offices of
a proposed Bank of Manila, then being organized by said Dikit and one
Jose Silva. Pursuant to the lease contract between the parties (Exhibit 2,
2-A and 2-B), the lessee undertook to construct, at the expense thereof,
such walls, partitions and other improvements as may be necessary to
make the leased premises suitable for banking purposes, and such
partitions and improvements "shall become the property" of the lessor
"upon the termination and/or rescission" of said contract. It appears that,
pursuant to another contract, entered into in June, 1949, between Dikit
and Silva on the one hand, and plaintiff Lao Chit, on the other (Exhibit A1, A-2 and A-3), the latter furnished the materials and the work for said
walls, partitions and improvements, at a total cost of P59,365, payable "as
soon as the Bank of Manila opens for business, and is given a permit by
the Central Bank." This permit, however, was never issued. The proposed
Bank of Manila did not open for business, and the rentals due under said
lease contract, at the rate of P5,000 a month, beginning from October,
1949, were not paid. On December 3, 1949, the lessor instituted Civil
Case No. 9708 of the Municipal Court of Manila, against Dikit, for unlawful
detainer. After appropriate proceedings, said court rendered judgment on
March 27, 1950, sentencing Dikit.
". . . to vacate the premises described in the complaint, and to pay the
plaintiff the sum of P10,000.00, under the first cause of action,
corresponding rentals due from October to November, 1949, plus the sum
of P227.80, under the second cause of action, for electric consumption up
to November 30, 1949; plus the rents that will become due from
December 1, 1949, at the rate of P5,000.00 per month until the date said
defendant finally vacates and surrenders possession to the plaintiff and
DONT WORRY BE HAPPY.

Dikit appealed from this decision to the Court of First Instance of Manila,
where the case was docketed as Civil Case No. 11214 of said court. He,
likewise, applied, in the Supreme Court in Case G. R. No. L-3621,
entitled "Domingo Dikit v. Hon. Ramon Ino" for writ of certiorari against
the municipal judge who had rendered the aforementioned decision in the
ejectment case. Said cases No. 11214 and L-3621 were soon dismissed,
however, upon agreement of the parties, dated May 22, 1951, whereby
Dikit, among other things, relinquished whatever rights he might have to
the possession of the leased premises and disclaimed all rights to and over
any and all improvement introduced therein while he was in possession
thereof.
Prior to said decision, but after the commencement of said Case No. 9708,
Lao Chit had filed Civil Case No. 10178 of the Court of First Instance of
Manila, against Dikit and Silva, for the recovery of what was due from
them by reason of the aforementioned improvements introduced by Lao
Chit. On June 30, 1953, judgment was rendered in said Case No. 10178
the dispositive part of which reads as follows:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and
against the defendants, sentencing the latter to pay the former, jointly and
severally, the sum of P59,365.00, which is the total of the claim under the
second, third and fourth causes of action, the same to be paid within 15
days from notice, with legal interest from the date of the filing of the
complaint until its full payment; and in the event the defendants fail to
pay within the period of grace herein fixed, the fixtures herein referred to
(which by express agreement of the parties shall remain the plaintiffs
property until are fully paid for) shall return to the plaintiff. The
defendants shall also pay jointly and severally the plaintiff by way of
damages an amount equivalent to 12% of the aforementioned sum of
P59,365.00. The defendants shall likewise pay the plaintiff, jointly and
severally, another sum equivalent to 25% of the amounts claimed in the
first and sixth causes of action, besides the equivalent to six (6%) of the

sums due and payable under the second and third causes of action as
attorneys fees, with costs against them." (Exhibit A.)
In due course, the corresponding writ of execution (Exhibit D-1 and D-3)
of this judgment was subsequently issued. Later on it was returned by the
sheriff unsatisfied, with the statement that neither Dikit nor Silva had any
property registered in their respective names, and that the whereabouts of
Silva was known (Exhibits D-2 and D-4). Meanwhile, or on September 10,
1953, Lao Chit brought the present action against the Security Bank and
Trust Company (Hereafter referred to as the Bank), to which the lessor
had, since July 1, 1951, leased the premises in question (after it had been
vacated by Silva), together with the fixtures and improvements introduced
therein by Lao Chit. In its complaint, Lao Chit demanded payment of
P1,000 a month, by way of rental for the use of said fixtures and
improvement by the Bank, in addition to expenses of litigation, attorneys
fees and costs. In its answer, the Bank alleged that it held and used said
improvements pursuant to its contract of lease with the lessor and that it
had paid the rentals due and complied with its other obligations under said
contract, and set up a counterclaim for damages. Soon thereafter, or on
November 5, 1953, Lao Chit demanded payment of the aforementioned
sum of P59,365, plus P1,000 a month from June, 1951, from the lessor,
which did not heed the demand whereupon the complaint herein was, on
December 18, 1953, amended to include said lessor as one of the
defendants. The latter alleged, in its answer, that the improvements in
question were introduced at the initiative and expense of Dikit and Silva,
as lessees of the premises above referred to, and that, as permanent
fixtures, said improvement form an integral part of the Consolidated
Investments Building, and belong to the lessor and owner juridical relation
with the lessor. The lessor, likewise, sought to recover, by way of
counterclaim, the sum of P50,000, as damages for its inclusion as
defendant herein, aside from attorneys fees and costs. In due course, the
Court of First Instance of Manila rendered judgment on December 28,
1955, the dispositive part of which reads:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered, sentencing the defendant,
DONT WORRY BE HAPPY.

Consolidated Investments, Inc., to pay to the plaintiff the value of the


permanent improvement in the sum of P59,365.00, and, together with the
defendant, Security Bank and Trust Company, to pay, jointly and severally,
for the use of the permanent improvements, at the rate of P1,000.00
monthly from June, 1951 to July 31, 1954, and thereafter, until January,
1955, by the defendant, Consolidated Investments, Inc., alone, at the
same rate, and in both instances, plus legal interest until full payment
thereof; in addition, the defendant, Consolidated Investments, Inc., is
further ordered to pay to the plaintiff the amount equivalent to 80% of
whatever amount is due from it, as reimbursement for plaintiffs litigation
expenses, including attorneys contingent fees, aside from moral, nominal,
moderate and exemplary damages in the amount of P2,000.00, and the
costs of suit.
"Defendants counterclaims are hereby both dismissed for lack of merits
and in view of the above conclusion of the Court."cralaw virtua1aw library
Their respective motions for reconsideration and new trial having been
denied, the defendants have appealed from this decision.
It is apparent to us that the lower court erred in rendering judgment
against the Bank. This defendant had occupied and used the premises in
question, including the partitions, fixtures and other improvements made
therein by Lao Chit, pursuant to a contract of lease entered into with the
lessor, the right of which to enter into said contract is not disputed.
Moreover, the Bank had paid the rentals and fulfilled its other obligations
under said contract. Again, it cannot be denied that the improvements
introduced by Lao Chit became property of the lessor, not only because
such improvements are permanent in nature and cannot be removed
without impairing the building to which they were attacked, but also,
because the contract of lease between Dikit and Silva on the one hand,
and the lessor, on the other improvements "upon the expiration and/or
rescission" of said contract, and the same has already been resolved.
Although Lao Chit was not a party to said contract, this stipulation is
binding upon him, he having introduced said improvements pursuant to

his right to enter the building and make the improvements. In short,
insofar as the construction thereof, Lao Chit was, vis-a-vis the lessor, a
mere agent or representative of Dikit and, as such was privy to the
undertakings of Dikit under his contract of lease with the lessor.
The lower court held the latter liable to Lao Chit upon the ground that Lao
Chit was a builder in good faith, under the provisions of the Old Civil Code,
and under the theory of undue enrichment.
As regards the first ground, Article 361 of the Civil Code of Spain, on
which the lower court relied, provides:jgc:chanrobles.com.ph
"The owner of land on which anything has been built, sown, or planted, in
good faith, shall be entitled to appropriate the thing so built, sown, or
planted, upon paying the compensation mentioned in Article 453 and 454,
or to compel the person who has built or planted to pay him the value of
the land, and the person who sowed thereon to pay the proper rent
therefor."cralaw virtua1aw library
It is well settled, however, that this provisions refers to one who builds
upon a land which he believes to be his property (Alburo v. Villanueva, 7
Phil., 277; Cortes v. Ramos, 46 Phil., Rivera v. Trinidad, 48 Phil., 396;
Fojas v. Velasco, 51 Phil., 520; Montinola v. Bantug, 71 Phil., 499-450;
Lopez Inc. v. Philippines & Eastern Trading Co., Inc., 98 Phil., 348; 52 Off.
Gaz., 1452). Neither Lao Chit, nor Dikit, claimed the Consolidated
Investments Building as his own. Dikit was a mere lessee and Lao Chit
was his agent, as such, in the construction of the improvement under
consideration. In any event, the Spanish text of said Article 361, which is
the original, reads:jgc:chanrobles.com.ph
"El dueno del terreno en que se edificare, sembrane o plantare de buena
fe, tendra derecho a hacer suya la obra, siembra o plantacion, previa la
indemnizacion establecida en los articulous 453 y 454, o a obligar al que
edifico o planto a pagar el precio del terreno, y al que sembro, la renta
correspondiente." (Emphasis supplied.)
DONT WORRY BE HAPPY.

Clearly this provision is limited in its application to "buildings" constructed


on anothers land or "terreno", not to partitions, railings, counters, shelves
and other fixtures made in a building belonging to the owner of the land.
although the verb "edificar" in Spanish is roughly synonymous with "build"
in English, the latter is broader in its connotation than the former. Literally
"edificar" is to undertake the construction of an edifice, such as a fort,
castle, house, church, market, tower, stadium, barrack, stable or other
similar structure. Upon the other hand, one may build a house, as well as
a fence, partition, window, door, or even a desk or a chair, but, it would be
improper to use the verb "edificar" to describe the making of such fense,
partition, window, door, desk or chair. It is apparent, therefore, that Lao
Chit is not entitled to the benefits of said Article 361.
The lower court, moreover, said:jgc:chanrobles.com.ph
". . . convincing evidence abounds, to wit: that the improvements were
made in presence of, and with the knowledge and consent, and even
under the personal supervision, on the part of Investments, Inc., which
owns the building. Thus, it may even be said that it was the defendant,
Consolidated Investments Inc., which had acted in a bad faith." (Record on
Appeal of Consolidated Investments, Inc., p. 56.)
and quoted, in support thereof, the second paragraph of Article 364 of the
Spanish Civil Code, reading:jgc:chanrobles.com.ph
"Bad faith on the part of the owner is deemed to exist whenever the act
had been done in his presence, with his knowledge and tolerance, and
without opposition on his part."cralaw virtua1aw library
The foregoing view is, likewise, untenable. To begin with, this Article 364,
like Article 361, involves a person who builds, plants or sows upon a land
not knowing that it belongs to another. Inasmuch as, there is no
contractual relation between them, their rights are governed by law, not
by contract.

Secondly, under his contract of lease with the lessor, Dikit had a legal right
to make the improvements in question and the lessor was legally bound to
permit Dikit and his agent Lao Chit to enter the leased premises and
construct said improvements. Surely, compliance with this valid
contractual obligation does not, and cannot, constituted bad faith on the
part of the lessor. Upon the other hand, the lessor could not legally object
to, or obstruct, the work done by Lao Chit, without being chargeable with
bad faith in the performance of said contractual obligation with Dikit.
In order to justify the application of the principle that no one should be
permitted to unjustly enrich himself at the expense of another, His Honor
the Trial Judge cited Article 356 of the Civil Code of Spain, which
provides:jgc:chanrobles.com.ph
"He who receives fruits is obliged to pay any expense which may have
been incurred by another in the production, gathering, and gathering, and
preservation thereof."cralaw virtua1aw library
We agree with the lessor that this Article is not in point for:chanrob1es
virtual 1aw library
(a) Said provision is part of Section I, Chapter II, Title II, Book II, of the
Spanish Civil Code, which section regulates the "right of accession with
respect to the products of property," and the work done and the
improvements introduced by Lao Chit are not "products" of the lessors
property.
(b) Said Article 356 refers to "expenses" of production, gathering and
preservation" of fruits received by the owner of a property, not to
improvements, whereas the claim of Lao Chit is based upon
"improvements" introduced, not "expenses" incurred by him for the
"production, gathering and preservation" of fruits. In the language of
Manresa:jgc:chanrobles.com.ph

DONT WORRY BE HAPPY.

". . . el Codigo exige que el propietario pague al tercer poseedor que fue
de la cosa los gastos de produccion, y en su caso los de recoleccion y
conservacion. El propietario no puede excusarse alegando la mal fe del
tercero, porque sea de buena o de mala fe, lo cierto es que este ha hecho
un gastto, no solo util para el propietario, sino necesario, y sin el cual el
propietario no hubiera obtenido frutos de su fundo, resultando ademas
que, de no mediar indemnizacio, se consagraria el injusto principio de uno
puede enriquecerse a costa y con dano de otro. Para afirmarse por
completo en esta opinion debe concotdarse el articulo que comentamos
con los 452 a 456, relavitos a los efectos de la posesion de buena y mala
fe, y que no examinamos ahora porque el asunto se trata luego con mas
detalles.
"Los gastos de produccion y demas, para que puedan conceptuarse
reembolsables por el propietario en el caso que suponemos, deben tener
dos caracteres: primero, que enten dedicados a la produccion annual; es
decir, que no se trata en este supuesto de la bonificaciones generales del
fundo. Semejantes bonificaciones entran en la categoria de las mejoras,
que se regulan en otro lugar del Codigo (al tratar de la posesion), y
segundo, que no sean superfluous, excesivos o de puro lujo, sino que
deben ser hechos en aquella medida natural que la condicion del cultivo o
trabajo de que se trata exige." (3 Manresa [6th ed. ], 196; Emphasis
supplied.)
(c) The right to recover under the principle of undue enrichments in
justifiable under Article 1887 of the Spanish Civil Code,
reading:jgc:chanrobles.com.ph
"Quasi contracts are licit and purely voluntary acts which create an
obligation on the part of the actor in favor of a third person and, at times,
a reciprocal obligation between the parties concerned."cralaw virtua1aw
library
Its counterpart in the Civil Code of the Philippines is Article 2142, which
we quote:jgc:chanrobles.com.ph

"Certain lawful, voluntary and unilateral acts give rise to the juridical
relation of quasi-contract to the end that no one shall be unjustly enriched
or benefited at the expense of another."cralaw virtua1aw library
The former is part of Title XVI, Book IV of the Civil Code of the Philippines,
regulating "extra-contractual obligations" or obligations beyond, outside
of, or outside the scope of, a contract. The constructions of the
improvements in question was not a "purely voluntary act" or "unilateral
act" of Lao Chit. He introduced them in compliance with a bilateral
"obligation" he undertook under his contract with Dikit. The right of Dikit
to enter into such contract, in turn, sprang from his lease contract with the
lessor. As a privy to Dikits rights under this contract, insofar as said
improvement are concerned, Lao Chits title thereto, as against the lessor,
is governed, therefore, by such contract of lease, not by any quasicontract, or by the principles of equity, as distinguished from law,
contracts or quasi-contracts.
(d) For the principle of undue enrichment to apply, there must be
"enrichment" and the same must be "undue" or "unjust."
In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000
from October, 1949. Up to July 1, 1951, when the premises in question
were leased to the Bank, the rentals due from Dikit aggregated, therefore,
P105,000. Thus, despite the fact that the lessor had become the owner of
the improvements in question, worth P59,365.00, it still suffered a loss of
over P45,000.00. Such "loss" negates the idea of "enrichment." Neither
may the latter be deemed to have taken place in the sense that said
improvements had increased the productive capacity of the leased
premises, for, despite said improvements, the Bank agreed to pay,
beginning from July 1, 1951, only P4,000 a month, or P1,000 a month less
than the rental stipulated with Dikit.
Regardless of the foregoing, Lao Chit had no reason to believe and he
does not claim to have acted under the belief that Dikit owned the
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leased premises. In fact, the circumstances surrounding the case are such
such as to leave no room for doubt that Lao Chit knew that Dikit was not
the owner of said property and that the same belonged to the lessor.
Besides, Lao Chit should have known that, as Dikits agent, in the
construction of the improvements, he (Lao Chit) was subject to the
limitations imposed upon Dikit by his contract with the lessor and that the
improvements in question became property of the owner of the building,
not only by operation of law, as accessions to said building, but, also, by
specific stipulation in the contract of lease between Dikit and the lessor.
Inasmuch as the acquisition of said improvements by the owner of the
building and lessor is ordained by law and provided for by said contract,
which is admittedly valid, the resulting enrichment if any by said
owner and lessor, is neither "undue" nor "unjustly."
Upon the other hand, had been reasonably vigilant, Lao Chit could have
demanded from Dikit a mortgage, or a bond, or some other security, for
the protection of his rights, yet he (Lao Chit) did not do so. Should the
lessor be required to pay Lao Chit what he is entitled to recover from
Dikit, but which he (Lao Chit) cannot due to his oversight, carelessness
or negligence collect from Dikit, the effect would be to relieve Lao Chit
of the consequences of his own inadvertence or negligence, and hold the
lessor responsible therefor. This would be neither fair, nor just, nor
equitable.
Lastly, the lower court declared that the improvements in question belong
to Lao Chit, because it had been so held in Case No. 10718 instituted by
him against Dikit and Silva. Obviously, however, the proceedings in that
case and the decision therein rendered are not binding upon the lessor,
the same being neither a party in said case, nor a successor to the
interest of the defendants therein. Besides, the aforementioned finding is
not borne out by Lao Chits contract with Dikit and Silva (Exhibits A-1, A-2,
A-2-a and A-3). Indeed, even if Dikit and Silva had agreed with Lao Chit
and they had no such agreement that he would own the improvements
until payment of the price thereof, the stipulation would be, neither valid,
nor binding upon the lessor, for Dikit and Silva had not authority

whatsoever to waive the statutory right of accession of the lessor to and


over said improvements (Arts. 353 and 358, Civil Code of Spain; Arts. 440
and 445, Civil Code of the Philippines).
Wherefore, the decision appealed from is hereby reversed and another one
shall be entered dismissing the complaint, with costs against plaintiffappellee Lao Chit. It is so ordered.
G.R. No. L-57348
May 16, 1985
FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.
Roberto D. Dineros for plaintiff-appellee.
Veil D. Hechanova for defendant-appellant.
DECISION
MELENCIO-HERRERA, J.:
This is an appeal from the Order of the former Court of First Instance of Iloilo to the
then Court of Appeals, which the latter certified to this instance as involving pure
questions of law.
Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under
Transfer Certificate of Title No. T3087, known as Lot No. 685, situated in the
municipality of Dumangas, Iloilo, with an area of approximately 8,870 square meters.
Agustin Dumlao, defendant-appellant, owns an adjoining lot, designated as Lot No.
683, with an approximate area of 231 sq. ms.
Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen
thereof had encroached on an area of thirty four (34) square meters of DEPRAs
property. After the encroachment was discovered in a relocation survey of DEPRAs
lot made on November 2, 1972, his mother, Beatriz Depra after writing a demand
letter asking DUMLAO to move back from his encroachment, filed an action for
Unlawful Detainer on February 6, 1973 against DUMLAO in the Municipal Court of of

DONT WORRY BE HAPPY.

Dumangas, docketed as Civil Case No. 1. Said complaint was later amended to
include DEPRA as a party plaintiff.
After trial, the Municipal Court found that DUMLAO was a builder in good faith, and
applying Article 448 of the Civil Code, rendered judgment on September 29, 1973,
the dispositive portion of which reads:
Ordering that a forced lease is created between the parties with the plaintiffs, as
lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month,
payable by the lessee to the lessors within the first five (5) days of the month the rent
is due; and the lease shall commence on the day that this decision shall have
become final.
From the foregoing judgment, neither party appeal so that, if it were a valid judgment,
it would have ordinarily lapsed into finality, but even then, DEPRA did not accept
payment of rentals so that DUMLAO deposited such rentals with the Municipal Court.
On July 15,1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO
before the then Court of First Instance of Iloilo, Branch IV (Trial Court), involving the
very same 34 square meters, which was the bone of contention in the Municipal
Court. DUMLAO, in his Answer, admitted the encroachment but alleged, in the main,
that the present suit is barred by res judicata by virtue of the Decision of the
Municipal Court, which had become final and executory.
After the case had been set for pre-trial, the parties submitted a Joint Motion for
Judgment based on the Stipulation of Facts attached thereto. Premised thereon, the
Trial Court on October 31, 1974, issued the assailed Order, decreeing:
WHEREFORE, the Court finds and so holds that the thirty four (34) square meters
subject of this litigation is part and parcel of Lot 685 of the Cadastral Survey of
Dumangas of which the plaintiff is owner as evidenced by Transfer Certificate of Title
No. 3087 and such plaintiff is entitled to possess the same.
Without pronouncement as to costs.

SO ORDERED.
Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that
the Decision of the Municipal Court was null and void ab initio because its jurisdiction
is limited to the sole issue of possession, whereas decisions affecting lease, which is
an encumbrance on real property, may only be rendered by Courts of First Instance.
Addressing ourselves to the issue of validity of the Decision of the Municipal Court,
we hold the same to be null and void. The judgment in a detainer case is effective in
respect of possession only (Sec. 7, Rule 70, Rules of Court). 1 The Municipal Court
over-stepped its bounds when it imposed upon the parties a situation of forced
lease, which like forced co-ownership is not favored in law. Furthermore, a lease is
an interest in real property, jurisdiction over which belongs to Courts of First Instance
(now Regional Trial Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2) Batas
Pambansa Blg. 129). 3 Since the Municipal Court, acted without jurisdiction, its
Decision was null and void and cannot operate as res judicata to the subject
complaint for Queting of Title. Besides, even if the Decision were valid, the rule
on res judicata would not apply due to difference in cause of action. In the Municipal
Court, the cause of action was the deprivation of possession, while in the action to
quiet title, the cause of action was based on ownership. Furthermore, Sec. 7, Rule 70
of the Rules of Court explicitly provides that judgment in a detainer case shall not bar
an action between the same parties respecting title to the land. 4
Conceded in the Stipulation of Facts between the parties is that DUMLAO was a
builder in good faith. Thus,
8. That the subject matter in the unlawful detainer case, Civil Case No. 1, before the
Municipal Court of Dumangas, Iloilo involves the same subject matter in the present
case, the Thirty-four (34) square meters portion of land and built thereon in good faith
is a portion of defendants kitchen and has been in the possession of the defendant
since 1952 continuously up to the present; (Emphasis ours)
Consistent with the principle that our Court system, like any other, must be a dispute
resolving mechanism, we accord legal effect to the agreement of the parties, within
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the context of their mutual concession and stipulation. They have, thereby, chosen
a legal formula to resolve their dispute to apply to DUMLAO the rights of a builder
in good faith and to DEPRA those of a landowner in good faith as prescribed in
Article 448. Hence, we shall refrain from further examining whether the factual
situations of DUMLAO and DEPRA conform to the juridical positions respectively
defined by law, for a builder in good faith under Article 448, a possessor in good
faith under Article 526 and a landowner in good faith under Article 448.
In regards to builders in good faith, Article 448 of the Civil Code provides:
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.
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 (Paragraphing
supplied)
Pursuant to the foregoing provision, DEPRA has the option either to pay for the
encroaching part of DUMLAOs kitchen, or to sell the encroached 34 square meters
of his lot to DUMLAO. He cannot refuse to pay for the encroaching part of the
building, and to sell the encroached part of his land, 5 as he had manifested before
the Municipal Court. But that manifestation is not binding because it was made in a
void proceeding.

However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of
First Instance. It was thus error for the Trial Court to have ruled that DEPRA is
entitled to possession, without more, of the disputed portion implying thereby that
he is entitled to have the kitchen removed. He is entitled to such removal only when,
after having chosen to sell his encroached land, DUMLAO fails to pay for the
same. 6 In this case, DUMLAO had expressed his willingness to pay for the land, but
DEPRA refused to sell.
The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his building,
under Article 453 (now Article 546). The owner of the land, upon the other hand, has
the option, under article 361 (now Article 448), either to pay for the building or to sell
his land to the owner of the building. But he cannot as respondents here did refuse
both to pay for the building and to sell the land and compel the owner of the building
to remove it from the land where it erected. He is entitled to such remotion only when,
after having chosen to sell his land. The other party fails to pay for the same (italics
ours).
We hold, therefore, that the order of Judge Natividad compelling defendantspetitioners to remove their buildings from the land belonging to plaintiffs-respondents
only because the latter chose neither to pay for such buildings nor to sell the land, is
null and void, for it amends substantially the judgment sought to be executed and is.
furthermore, offensive to articles 361 (now Article 448) and 453 (now Article 546) of
the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608[1946]).
A word anent the philosophy behind Article 448 of the Civil rode.
The original provision was found in Article 361 of the Spanish Civil Code; which
provided:
ART. 361. The owner of land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the work, sowing or planting,
after the payment of the indemnity stated in Articles 453 and 454, or to oblige the one

DONT WORRY BE HAPPY.

who built or planted to pay the price of the land, and the one who sowed, the proper
rent.
As will be seen, the Article favors the owner of the land, by giving him one of the two
options mentioned in the Article. Some commentators have questioned the
preference in favor of the owner of the land, but Manresas opinion is that the Article
is just and fair.
. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en el
caso de edificacion o plantacion? Algunos comentaristas la conceptuan injusta, y
como un extraordinario privilegio en favor de la propiedad territorial. Entienden que
impone el Codigo una pena al poseedor de buena fe y como advierte uno de los
comentaristas aludidos no se ve claro el por que de tal pena . . . al obligar al que
obro de buena fe a quedarse con el edificio o plantacion, previo el pago del terreno
que ocupa, porque si bien es verdad que cuando edifico o planto demostro con este
hecho, que queria para si el edificio o plantio tambien lo es que el que edifico o
planto de buena fe lo hizo en la erronea inteligencia de creerse dueno del terreno
Posible es que, de saber lo contrario, y de tener noticia de que habia que comprar y
pagar el terreno, no se hubiera decidido a plantar ni a edificar. La ley obligandole a
hacerlo fuerza su voluntad, y la fuerza por un hecho inocente de que no debe ser
responsable. Asi podra suceder pero la realidad es que con ese hecho voluntario,
aunque sea inocente, se ha enriquecido torticeramente con perjuicio de otro a quien
es justo indemnizarle,
En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y
equitativa y respetando en lo possible el principio que para la accesion se establece
en el art. 358. 7
Our own Code Commission must have taken account of the objections to Article 361
of the Spanish Civil Code. Hence, the Commission provided a modification thereof,
and Article 448 of our Code has been made to provide:
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. 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.

c) the increase in value (plus value) which the said area of 34 square meters may
have acquired by reason thereof, and

Additional benefits were extended to the builder but the landowner retained his
options.

a) The trial Court shall grant DEPRA a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to appropriate the
kitchen as his own by paying to DUMLAO either the amount of the expenses spent by
DUMLAO f or the building of the kitchen, or the increase in value (plus value) which
the said area of 34 square meters may have acquired by reason thereof, or to oblige
DUMLAO to pay the price of said area. The amounts to be respectively paid by
DUMLAO and DEPRA, in accordance with the option thus exercised by written notice
of the other party and to the Court, shall be paid by the obligor within fifteen (15) days
from such notice of the option by tendering the amount to the Court in favor of the
party entitled to receive it;

The fairness of the rules in Article 448 has also been explained as follows:
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 to pay for the proper rent. 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. (3 Manresa
213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No.
49167, April 30, 1949; Article applied: see Cabral, et al vs. Ibanez [S.C.] 52 Off. Gaz.
217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050). 8
WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is
hereby ordered remanded to the Regional Trial Court of Iloilo for further proceedings
consistent with Articles 448 and 546 of the Civil Code, as follows:
1. The trial Court shall determine
a) the present fair price of DEPRAs 34 square meter area of land;
b) the amount of the expenses spent by DUMLAO for the building of the kitchen;
DONT WORRY BE HAPPY.

d) whether the value of said area of land is considerably more than that of the kitchen
built thereon.
2. After said amounts shall have been determined by competent evidence, the
Regional, Trial Court shall render judgment, as follows:

b) The trial Court shall further order that if DEPRA exercises the option to oblige
DUMLAO to pay the price of the land but the latter rejects such purchase because, as
found by the trial Court, the value of the land is considerably more than that of the
kitchen, DUMLAO shall give written notice of such rejection to DEPRA and to the
Court within fifteen (15) days from notice of DEPRAs option to sell the land. In that
event, the parties shall be given a period of fifteen (15) days from such notice of
rejection within which to agree upon the terms of the lease, and give the Court formal
written notice of such agreement and its provisos. If no agreement is reached by the
parties, the trial Court, within fifteen (15) days from and after the termination of the
said period fixed for negotiation, shall then fix the terms of the lease, provided that
the monthly rental to be fixed by the Court shall not be less than Ten Pesos (P10.00)
per month, payable within the first five (5) days of each calendar month. The period
for the forced lease shall not be more than two (2) years, counted from the finality of

the judgment, considering the long period of time since 1952 that DUMLAO has
occupied the subject area. The rental thus fixed shall be increased by ten percent
(10%) for the second year of the forced lease. DUMLAO shall not make any further
constructions or improvements on the kitchen. Upon expiration of the two-year
period, or upon default by DUMLAO in the payment of rentals for two (2) consecutive
months, DEPRA shall be entitled to terminate the forced lease, to recover his land,
and to have the kitchen removed by DUMLAO or at the latters expense. The rentals
herein provided shall be tendered by DUMLAO to the Court for payment to DEPRA,
and such tender shall constitute evidence of whether or not compliance was made
within the period fixed by the Court.

G.R. No. L-57288 April 30, 1984

c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten Pesos
(P10.00) per month as reasonable compensation for the occupancy of DEPRAs land
for the period counted from 1952, the year DUMLAO occupied the subject area, up to
the commencement date of the forced lease referred to in the preceding paragraph;

This Petition for certiorari questions a March 29, 1979 Decision rendered by the then
Court of First Instance of Pasay City. The Decision was one made on memoranda,
pursuant to the provisions of RA 6031, and it modified, on October 17, 1977, a
judgment of the then Municipal Court of Paranaque, Rizal, in an Ejectment suit
instituted by herein petitioner Leonila SARMIENTO against private respondents, the
spouses ERNESTO Valentino and Rebecca Lorenzo. For the facts, therefore, we
have to look to the evidence presented by the parties at the original level.

d) The periods to be fixed by the trial Court in its Precision shall be inextendible, 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.
No costs,
SO ORDERED.
Teehankee, Actg. C.J., Plana, Relova, De la Fuente and Alampay, JJ., concur.
Gutierrez, Jr., * J., took no part.

DONT WORRY BE HAPPY.

LEONILA SARMINETO, petitioner,


vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal,
Seventh Judicial District, Branch XXVIII, Pasay City, and SPOUSES ERNESTO
VALENTINO and REBECCA LORENZO-VALENTINO,respondents.
Mercedes M. Respicio for petitioner.
Romulo R. Bobadilla for private respondents.
MELENCIO-HERRERA, J.:+.wph!1

It appears that while ERNESTO was still courting his wife, the latter's mother had told
him the couple could build a RESIDENTIAL HOUSE on a lot of 145 sq. ms., being Lot
D of a subdivision in Paranaque (the LAND, for short). In 1967, ERNESTO did
construct a RESIDENTIAL HOUSE on the LAND at a cost of P8,000.00 to
P10,000.00. It was probably assumed that the wife's mother was the owner of the
LAND and that, eventually, it would somehow be transferred to the spouses.
It subsequently turned out that the LAND had been titled in the name of Mr. & Mrs.
Jose C. Santo, Jr. who, on September 7 , 1974, sold the same to petitioner
SARMIENTO. The following January 6, 1975, SARMIENTO asked ERNESTO and
wife to vacate and, on April 21, 1975, filed an Ejectment suit against them. In the
evidentiary hearings before the Municipal Court, SARMIENTO submitted the deed of
sale of the LAND in her favor, which showed the price to be P15,000.00. On the other
hand, ERNESTO testified that the then cost of the RESIDENTIAL HOUSE would be
from P30,000.00 to P40,000.00. The figures were not questioned by SARMIENTO.

The Municipal Court found that private respondents had built the RESIDENTIAL
HOUSE in good faith, and, disregarding the testimony of ERNESTO, that it had a
value of P20,000.00. It then ordered ERNESTO and wife to vacate the LAND after
SARMIENTO has paid them the mentioned sum of P20,000.00.
The Ejectment suit was elevated to the Court of First Instance of Pasay where, after
the submission of memoranda, said Court rendered a modifying Decision under
Article 448 of the Civil Code. SARMIENTO was required, within 60 days, to exercise
the option to reimburse ERNESTO and wife the sum of 40,000.00 as the value of the
RESIDENTIAL HOUSE, or the option to allow them to purchase the LAND for
P25,000.00. SARMIENTO did not exercise any of the two options within the indicated
period, and ERNESTO was then allowed to deposit the sum of P25,000.00 with the
Court as the purchase price for the LAND. This is the hub of the controversy.
SARMIENTO then instituted the instant certiorari proceedings.
We agree that ERNESTO and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the RESIDENTIAL HOUSE. As far
as they knew, the LAND was owned by ERNESTO's mother-in-law who, having
stated they could build on the property, could reasonably be expected to later on give
them the LAND.
In regards to builders in good faith, Article 448 of the Code provides:t.hqw
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.
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
DONT WORRY BE HAPPY.

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. (Paragraphing
supplied)
The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not
have been very much more than that amount during the following January when
ERNESTO and wife were asked to vacate. However, ERNESTO and wife have not
questioned the P25,000.00 valuation determined by the Court of First Instance.
In regards to the valuation of the RESIDENTIAL HOUSE, the only evidence
presented was the testimony of ERNESTO that its worth at the time of the trial should
be from P30,000.00 to P40,000.00. The Municipal Court chose to assess its value at
P20,000.00, or below the minimum testified by ERNESTO, while the Court of First
Instance chose the maximum of P40,000.00. In the latter case, it cannot be said that
the Court of First Instance had abused its discretion.
The challenged decision of respondent Court, based on valuations of P25,000.00 for
the LAND and P40,000.00 for the RESIDENTIAL HOUSE, cannot be viewed as not
supported by the evidence. The provision for the exercise by petitioner SARMIENTO
of either the option to indemnify private respondents in the amount of P40,000.00, or
the option to allow private respondents to purchase the LAND at P25,000.00, in our
opinion, was a correct decision.t.hqw
The owner of the building erected in good faith on a land owned by
another, is entitled to retain the possession of the land until he is paid
the value of his building, under article 453 (now Article 546). The owner,
of the land. upon, the other hand, has the option, under article 361 (now
Article 448), either to pay for the building or to sell his land to the owner
of the building. But he cannot, as respondents here did, refuse both to
pay for the building and to sell the land and compel the owner of the
building to remove it from the land where it is erected. He is entitled to
such remotion only when, after having chosen to sell his land, the other
party fails to pay for the same. (Emphasis ours)
We hold, therefore, that the order of Judge Natividad compelling
defendants-petitioners to remove their buildings from the land belonging

to plaintiffs-respondents only because the latter chose neither to pay for


such buildings nor to sell the land, is null and void, for it amends
substantially the judgment sought to be executed and is, furthermore,
offensive to articles 361 (now Article 448) and 453 (now Article 546) of
the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608 [1946]).
WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without
pronouncement as to costs.

the trial court on May 29, 1976, recommending that the property be divided into two
lots: Lot 1161-A with an area of 30 square meters for plaintiffs and Lot No. 1161-B
with an area of 15 square meters for the defendants. The houses of plaintiffs and
defendants were surveyed and shown on the sketch plan. The house of defendants
occupied the portion with an area of 5 square meters of Lot 1161-A of plaintiffs. The
parties manifested their conformity to the report and asked the trial court to finally
settle and adjudicate who among the parties should take possession of the 5 square
meters of the land in question.

SO ORDERED.1wph1.t

In solving the issue the trial court held as follows:

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.
G.R. No. L-49219 April 15, 1988
SPOUSES CONCEPCION FERNANDEZ DEL CAMPO and ESTANISLAO DEL
CANTO, plaintiffs-appellees,
vs.
BERNARDA FERNANDEZ ABESIA, defendant-appellant.
Geronimo Creer, Jr. for plaintiffs-appellees.
Benedicto G. Cobarde for defendant, defendant-appellant
GANCAYCO, J.:
In this appeal from the decision of the Court of First Instance (CFI) of Cebu, certified
to this Court by the Court of Appeals on account of the question of law involved, the
sole issue is the applicability of the provisions of Article 448 of the Civil Code relating
to a builder in good faith when the property involved is owned in common.
This case involves a parcel of land, Lot No. 1161 of the Cadastral Survey of Cebu,
with an area of only about 45 square meters, situated at the corner of F. Flores and
Cavan Streets, Cebu City covered by TCT No. 61850. An action for partition was filed
by plaintiffs in the CFI of Cebu. Plaintiffs and defendants are co-owners pro
indiviso of this lot in the proportion of and 1/3 share each, respectively. The trial court
appointed a commissioner in accordance with the agreement of the parties. ,the Id
commissioner conducted a survey, prepared a sketch plan and submitted a report to
DONT WORRY BE HAPPY.

The Court believed that the plaintiffs cannot be obliged to pay for the
value of the portion of the defendants' house which has encroached an
area of five (5) sq. meters of the land alloted to them. The defendants
cannot also be obliged to pay for the price of the said five (5) square
meters. The rights of a builder in good faith under Article 448 of the New
Civil Code does (sic) not apply to a case where one co-owner has built,
planted or sown on the land owned in common. "Manresa agreeing with
Sanchez Roman, says that as a general rule this article is not
applicable because the matter should be governed more by the
provisions on co-ownership than on accession. Planiol and Ripert are
also of the opinion that this article is not applicable to a co-owner who
constructs, plants or sows on the community property, even if the land
where the construction, planting or sowing is made is a third person
under the circumstances, and the situation is governed by the rules of
co-ownership. Our Court of Appeals has held that this article cannot be
invoked by one co-owner against another who builds, plants or sows
upon their land, since the latter does not do so on land not belonging to
him. (C.A.), O.G. Supp., Aug. 30, 194, p. 126). In the light of the
foregoing authorities and considering that the defendants have
expressed their conformity to the partition that was made by the
commissioner as shown in the sketch plan attached to the
commissioner's report, said defendants have no other alternative
except to remove and demolish part of their house that has encroached
an area of five (5) sq. meters of the land allotted to the plaintiffs.

WHEREFORE, judgment is hereby rendered assigning Lot 1161-A with


an area of thirty (30) sq. meters to the plaintiffs spouses Concepcion
Fernandez Abesia, Lourdes Fernandez Rodil, Genaro Fernandez and
Dominga A. Fernandez, in the respective metes and bounds as shown
in the subdivision sketch plan attached to the Commissioner's Report
dated may 29, 1976 prepared by the Commissioner, Geodetic Engineer
Espiritu Bunagan. Further, the defendants are hereby ordered at their
expense to remove and demolish part of their house which has
encroached an area of five (5) square meters from Lot 1161-A of the
plaintiffs; within sixty (60) days from date hereof and to deliver the
possession of the same to the plaintiffs. For the Commissioner's fee of
P400.00, the defendants are ordered to pay, jointly and severally, the
sum of P133.33 and the balance thereof to be paid by the plaintiffs. The
costs of suit shall be paid by the plaintiffs and the defendants in the
proportion of two-thirds (2/3) and one-third (1/3) shares respectively. A
certified copy of this judgment shall be recorded in the office of the
Register of Deeds of the City of Cebu and the expense of such
recording shall be taxed as a part of the costs of the action.
Hence, this appeal interposed by the defendants with the following assignments of
errors:
I
THE TRIAL COURT ERRED IN NOT APPLYING THE RIGHTS OF A
BUILDER IN GOOD FAITH UNDER ART. 448 OF THE NEW CIVIL
CODE TO DEFENDANTS-APPELLANTS WITH RESPECT TO THAT
PART OF THEIR HOUSE OCCUPYING A PROTION OF THE LOT
ASSIGNED TO PLAINTIFFS-APPELLEES.
II
THE TRIAL COURT ERRED IN ORDERING DEFENDANTSAPPELLANTS TO REMOVE AND DEMOLISH AT THEIR EXPENSE,
THAT PART OF THEIR HOUSE WHICH HAS ENCROACHED ON AN
AREA OF FIVE SQUARE METERS OF LOT 1161-A OF PLAINTIFFSAPPELLEES.
DONT WORRY BE HAPPY.

Article 448 of the New Civil Code provides as follows:


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.
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.
The court a quo correctly held that Article 448 of the Civil Code cannot apply where a
co-owner builds, plants or sows on the land owned in common for then he did not
build, plant or sow upon land that exclusively belongs to another but of which he is a
co-owner. The co-owner is not a third person under the circumstances, and the
situation is governed by the rules of co-ownership. 1
However, when, as in this case, the co-ownership is terminated by the partition and it
appears that the house of defendants overlaps or occupies a portion of 5 square
meters of the land pertaining to plaintiffs which the defendants obviously built in good
faith, then the provisions of Article 448 of the new Civil Code should apply. Manresa
and Navarro Amandi agree that the said provision of the Civil Code may apply even
when there was co-ownership if good faith has been established. 2
Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to
appropriate said portion of the house of defendants upon payment of indemnity to
defendants as provided for in Article 546 of the Civil Code. Otherwise, the plaintiffs
may oblige the defendants to pay the price of the land occupied by their house.
However, if the price asked for is considerably much more than the value of the
portion of the house of defendants built thereon, then the latter cannot be obliged to
buy the land. The defendants shall then pay the reasonable rent to the plaintiff upon
such terms and conditions that they may agree. In case of disagreement, the trial
court shall fix the terms thereof. Of course, defendants may demolish or remove the
said portion of their house, at their own expense, if they so decide.

WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiff


to indemnify defendants for the value of the Id portion of the house of defendants in
accordance with Article 546 of the Civil Code, if plaintiffs elect to appropriate the
same. Otherwise, the defendants shall pay the value of the 5 square meters of land
occupied by their house at such price as may be agreed upon with plaintiffs and if its
value exceeds the portion of the house that defendants built thereon, the defendants
may choose not to buy the land but defendants must pay a reasonable rental for the
use of the portion of the land of plaintiffs As may be agreed upon between the parties.
In case of disagreement, the rate of rental shall be determined by the trial court.
Otherwise, defendants may remove or demolish at their own expense the said portion
of their house. No costs.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Grio-Aquino, JJ., concur.
G.R. No. 72876

January 18, 1991

FLORENCIO IGNAO, petitioner,


vs.
HON. INTERMEDIATE APPELLATE COURT, JUAN IGNAO, substituted by his
Legal Heirs, and ISIDRO IGNAO, respondents.
Dolorfino and Dominguez Law Offices for petitioner.
Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.
FERNAN, C.J.:
In this petition for review by certiorari, petitioner seeks the reversal of the decision of
the Intermediate Appellate Court (now Court of Appeals) affirming in toto the decision
of the Court of First Instance of Cavite, ordering petitioner Florencio Ignao to sell to
private respondents Juan and Isidro Ignao, that part of his property where private
respondents had built a portion of their houses.
The antecedent facts are as follows:

DONT WORRY BE HAPPY.

Petitioner Florencio Ignao and his uncles private respondents Juan Ignao and Isidro
Ignao were co-owners of a parcel of land with an area of 534 square meters situated
in Barrio Tabon, Municipality of Kawit, Cavite. Pursuant to an action for partition filed
by petitioner docketed as Civil Case No. N-1681, the then Court of First Instance of
Cavite in a decision dated February 6, 1975 directed the partition of the aforesaid
land, alloting 133.5 square meters or 2/8 thereof to private respondents Juan and
Isidro, and giving the remaining portion with a total area of 266.5 square meters to
petitioner Florencio. However, no actual partition was ever effected. 1
On July 17, 1978, petitioner instituted a complaint for recovery of possession of real
property against private respondents Juan and Isidro before the Court of First
Instance of Cavite, docketed as Civil Case No. 2662. In his complaint petitioner
alleged that the area occupied by the two (2) houses built by private respondents
exceeded the 133.5 square meters previously alloted to them by the trial court in Civil
Case No. N-1681.
Consequently, the lower court conducted an ocular inspection. It was found that the
houses of Juan and Isidro actually encroached upon a portion of the land belonging
to Florencio. Upon agreement of the parties, the trial court ordered a licensed
geodetic engineer to conduct a survey to determine the exact area occupied by the
houses of private respondents. The survey subsequently disclosed that the house of
Juan occupied 42 square meters while that of Isidro occupied 59 square meters of
Florencio's land or a total of 101 square meters.
In its decision, the trial court (thru Judge Luis L. Victor) ruled that although private
respondents occupied a portion of Florencio's property, they should be considered
builders in good faith. The trial court took into account the decision of the Court of
First Instance of Cavite in the action for partition 2 and quoted:
. . . . Hence, it is the well-considered opinion of the Court that although it
turned out that the defendants had, before partition, been in possession of
more than what rightfully belongs to them, their possession of what is in
excess of their rightful share can at worst be possession in good faith which
exempts them from being condemned to pay damages by reason thereof. 3
Furthermore, the trial court stated that pursuant to Article 448 of the Civil Code, the
owner of the land (Florencio) should have the choice to either appropriate that part of

the house standing on his land after payment of indemnity or oblige the builders in
good faith (Juan and Isidro) to pay the price of the land. However, the trial court
observed that based on the facts of the case, it would be useless and unsuitable for
Florencio to exercise the first option since this would render the entire houses of Juan
and Isidro worthless. The trial court then applied the ruling in the similar case
of Grana vs. Court of Appeals, 4 where the Supreme Court had advanced a more
"workable solution". Thus, it ordered Florencio to sell to Juan and Isidro those
portions of his land respectively occupied by the latter. The dispositive portion of said
decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the defendants and
(a) Ordering the plaintiff Florencio Ignao to sell to the defendants Juan and
Isidro Ignao that portion of his property with an area of 101 square meters at
P40.00 per square meter, on which part the defendants had built their houses;
and
(b) Ordering the said plaintiff to execute the necessary deed of conveyance to
the defendants in accordance with paragraph (a) hereof.
Without pronouncement as to costs.

Petitioner Florencio Ignao appealed to the Intermediate Appellate Court. On August


27, 1985, the Appellate Court, Second Civil Cases Division, promulgated a
decision, 6 affirming the decision of the trial court.
Hence the instant petition for review which attributes to the Appellate Court the
following errors:
1. That the respondent Court has considered private respondents builders in
good faith on the land on question, thus applying Art. 448 of the Civil Code,
although the land in question is still owned by the parties in co-ownership,
hence, the applicable provision is Art. 486 of the Civil Code, which was not
applied.
2. That, granting for the sake of argument that Art. 448 . . . is applicable, the
respondent Court has adjudged the working solution suggested in Grana and
DONT WORRY BE HAPPY.

Torralba vs. CA. (109 Phil. 260), which is just an opinion by way of passing,
and not the judgment rendered therein, which is in accordance with the said
provision of the Civil Code, wherein the owner of the land to buy (sic) the
portion of the building within 30 days from the judgment or sell the land
occupied by the building.
3. That, granting that private respondents could buy the portion of the land
occupied by their houses, the price fixed by the court is unrealistic and pre-war
price. 7
The records of the case reveal that the disputed land with an area of 534 square
meters was originally owned by Baltazar Ignao who married twice. In his first
marriage, he had four children, namely Justo (the father of petitioner Florencio), Leon
and private respondents Juan and Isidro. In his second marriage, Baltazar had also
four children but the latter waived their rights over the controverted land in favor of
Justo. Thus, Justo owned 4/8 of the land which was waived by his half-brothers and
sisters plus his 1/8 share or a total of 5/8. Thereafter, Justo acquired the 1/8 share of
Leon for P500.00 which he later sold to his son Florencio for the same amount. When
Justo died, Florencio inherited the 5/8 share of his father Justo plus his 1/8 share of
the land which he bought or a total of 6/8 (representing 400.5 square meters). Private
respondents, Juan and Isidro, on the other hand, had 1/8 share (66.75 square
meters) each of the land or a total of 133.5 square meters.
Before the decision in the partition case was promulgated, Florencio sold 134 square
meters of his share to a certain Victa for P5,000.00 on January 27, 1975. When the
decision was handed down on February 6,1975, the lower court alloted 2/8 of the
land to private respondents Juan and Isidro, or a total of 133.5 square meters.
It should be noted that prior to partition, all the co-owners hold the property in
common dominion but at the same time each is an owner of a share which is abstract
and undetermined until partition is effected. As cited in Eusebio vs. Intermediate
Appellate Court, 8 "an undivided estate is co-ownership by the heirs."
As co-owners, the parties may have unequal shares in the common property,
quantitatively speaking. But in a qualitative sense, each co-owner has the same right
as any one of the other co-owners. Every co-owner is therefore the owner of the
whole, and over the whole he exercises the right of dominion, but he is at the same

time the owner of a portion which is truly abstract, because until division is effected
such portion is not concretely determined. 9
Petitioner Florencio, in his first assignment of error, asseverates that the court a
quo erred in applying Article 448 of the Civil Code, since this article contemplates a
situation wherein the land belongs to one person and the thing built, sown or planted
belongs to another. In the instant case, the land in dispute used to be owned in
common by the contending parties.
Article 448 provides:
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. 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.
Whether or not the provisions of Article 448 should apply to a builder in good faith on
a property held in common has been resolved in the affirmative in the case
of Spouses del Campo vs. Abesia, 10 wherein the Court ruled that:
The court a quo correctly held that Article 448 of the Civil Code cannot apply
where a co-owner builds, plants or sows on the land owned in common for
then he did not build, plant or sow upon land that exclusively belongs to
another but of which he is a co-owner. The co-owner is not a third person
under the circumstances, and the situation is governed by the rules of coownership.
However, when, as in this case, the ownership is terminated by the partition
and it appears that the home of defendants overlaps or occupies a portion of 5
square meters of the land pertaining to plaintiffs which the defendants
obviously built in good faith, then the provisions of Article 448 of the new Civil
DONT WORRY BE HAPPY.

Code should apply. Manresa and Navarro Amandi agree that the said
provision of the Civil Code may apply even when there is a co-ownership if
good faith has been established. 11
In other words, when the co-ownership is terminated by a partition and it appears that
the house of an erstwhile co-owner has encroached upon a portion pertaining to
another co-owner which was however made in good faith, then the provisions of
Article 448 should apply to determine the respective rights of the parties.
Petitioner's second assigned error is however well taken. Both the trial court and the
Appellate Court erred when they peremptorily adopted the "workable solution" in the
case of Grana vs. Court of appeals, 12 and ordered the owner of the land, petitioner
Florencio, to sell to private respondents, Juan and Isidro, the part of the land they
intruded upon, thereby depriving petitioner of his right to choose. Such ruling
contravened the explicit provisions of Article 448 to the effect that "(t)he owner of the
land . . . shall have the right to appropriate . . .or to oblige the one who built . . . to pay
the price of the land . . . ." The law is clear and unambiguous when it confers the right
of choice upon the landowner and not upon the builder and the courts.
Thus, in Quemuel vs. Olaes, 13 the Court categorically ruled that the right to
appropriate the works or improvements or to oblige the builder to pay the price of the
land belongs to the landowner.
As to the third assignment of error, the question on the price to be paid on the land
need not be discussed as this would be premature inasmuch as petitioner Florencio
has yet to exercise his option as the owner of the land.
WHEREFORE, the decision appealed from is hereby MODIFIED as follows:
Petitioner Florencio Ignao is directed within thirty (30) days from entry of judgment to
exercise his option to either appropriate as his own the portions of the houses of Juan
and Isidro Ignao occupying his land upon payment of indemnity in accordance with
Articles 546 and 548 of the Civil Code, or sell to private respondents the 101 square
meters occupied by them at such price as may be agreed upon. Should the value of
the land exceed the value of the portions of the houses that private respondents have
erected thereon, private respondents may choose not to buy the land but they must
pay reasonable rent for the use of the portion of petitioner's land as may be agreed
upon by the parties. In case of disagreement, the rate of rental and other terms of the

lease shall be determined by the trial court. Otherwise, private respondents may
remove or demolish at their own expense the said portions of their houses
encroaching upon petitioner's land. 14 No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
G.R. No. 117642 April 24, 1998
EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,
vs.
HONORABLE COURT OF APPEALS, FORENCIA BULING Vda de TINAGAN,
DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T., JOSEP and
JOSEPHINE TINAGAN, respondents.
MARTINEZ, J.:
In this petition for review on certiorari, petitioners assail the decision 1 of the Court of
Appeals dated April 8, 1994 which affirmed the decision of the lower court ordering
petitioners to peacefully vacate and surrender the possession of the disputed
properties to the private respondents.
Culled from the record are the following antecedent facts of this case to wit:
On April 1, 1950, Victoria Sonjaconda Tinagan purchased from Mauro Tinagan two
(2) parcels of land situated at Barangay Bongbong, Valencia, Negros Oriental. 2 One
parcel of land contains an area of 5,704 square meters, more or less; 3 while the
other contains 10,860 square meters. 4 Thereafter, Victoria and her son Agustin
Tinagan, took possession of said parcels of land.
Sometime in 1960, petitioners occupied portions thereof whereat they built a copra
dryer and put up a store wherein they engaged in the business of buying and selling
copra.
On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by
herein private respondents, namely his wife, Florencia Buling Vda. de Tinagan and
their children Demosthenes, Jesus, Zenaida and Josephine, all surnamed Tinagan.
DONT WORRY BE HAPPY.

On December 24, 1976, petitioner Editha assisted by her husband filed a complaint
for partition and damages before the then Court of First Instance of Negros Oriental,
Branch 1, Dumaguete City, docketed as Civil Case No. 6634, claiming to be an
acknowledged natural child of deceased Agustin Tinagan and demanding the delivery
of her shares in the properties left by the deceased. 5
On October 4, 1979, the aforesaid case was dismissed by the trial court on the
ground that recognition of natural children may be brought only during the lifetime of
the presumed parent and petitioner Editha did not fall in any of the exceptions
enumerated in Article 285 of the Civil Code. 6
Petitioners assailed the order of dismissal by filing a petition
for certiorari and mandamus before this Court. 7 On August 9, 1982, this Court
dismissed the petition for lack of merit. 8 Petitioners filed a motion for reconsideration
but the same was denied on October 19, 1982. 9
On March 29, 1988, private respondents filed a complaint for recovery of possession
against Editha and her husband Porferio Alviola before the Regional Trial Court of
Negros Oriental, Branch 35, Dumaguete City, docketed as Civil Case No. 9148,
praying, among others, that they be declared absolute owners of the said parcels of
land, and that petitioners be ordered to vacate the same, to remove their copra dryer
and store, to pay actual damages (in the form of rentals), moral and punitive
damages, litigation expenses and attorney's fees. 10
In their answer, petitioners contend that they own the improvements in the disputed
properties which are still public land; that they are qualified to be beneficiaries of the
comprehensive agrarian reform program and that they are rightful possessors by
occupation of the said properties for more than twenty years. 11
After trial, the lower court rendered judgment in favor of the private respondents, the
dispositive portion of which reads:
WHEREFORE, premises considered, in Civil Case No. 9148, for
Recovery of Property, the court hereby renders judgment:
a) Declaring plaintiffs as the absolute owners of the land in question
including the portion claimed and occupied by defendants;

b) Ordering defendants Editha Alviola and her husband Porfirio Alviola


to peacefully vacate and to surrender the possession of the premises in
question to plaintiffs; Defendants may remove their store and dryer on
the premises without injury and prejudice to the plaintiffs;
c) Ordering defendants to pay the following amounts to the plaintiffs:
1. P150.00 monthly rentals from April 1988 up to the time the
improvements in the questioned portions are removed;
2. P5,000.00 for attorney's fees;
3. P3,000.00 for litigation expenses and to pay the costs.
SO ORDERED. 12
Petitioners appealed to the Court of Appeals. On April 8, 1994, the respondent court
rendered its decision, 13 affirming the judgment of the lower court. Petitioners filed a
motion for reconsideration 14 but the same was denied by the respondent court in an
order dated October 6, 1994. 15
Hence, this petition.
Petitioners aver that respondent court erred in declaring private respondents the
owners of the disputed properties. They contend that ownership of a public land
cannot be declared by the courts but by the Executive Department of the
Government, citing the case of Busante vs. Hon. Court of Appeals, Oct. 20, 1992,
214 SCRA 774; and that the respondent court erred in not considering that private
respondents' predecessor-in-interest, Victoria Sonjaco Tinagan, during her lifetime,
ceded her right to the disputed properties in favor of petitioners.
Moreover, petitioners maintain that the respondent court erred in holding that they
were in bad faith in possessing the disputed properties and in ruling that the
improvements thereon are transferable. They claim that the copra dryer and the store
are permanent structures, the walls thereof being made of hollow-blocks and the
floors made of cement.
DONT WORRY BE HAPPY.

Private respondents counter that the question of whether or not the disputed
properties are public land has been resolved by overwhelming evidence showing
ownership and possession by the Tinagans and their predecessors-in-interest prior to
1949. They further aver that they merely tolerated petitioners' possession of the
disputed properties for a period which was less than that required for extraordinary
prescription.
The petition must fail.
Petitioners claim that the disputed properties are public lands. This is a factual issue.
The private respondents adduced overwhelming evidence to prove their ownership
and possession of the two (2) parcels of land on portions of which petitioners built the
copra dryer and a store. Private respondents' tax declarations and receipts of
payment of real estate taxes, as well as other related documents, prove their
ownership of the disputed properties. As stated previously in the narration of facts,
these two (2) parcels of land were originally owned by Mauro Tinagan, who sold the
same to Victoria S. Tinagan on April 1, 1950, as evidenced by a Deed of
Sale, 16wherein the two (2) lots, Parcels 1 and 2, are described. 17 Anent Parcel 1, tax
declarations indicate that the property has always been declared in the name of the
Tinagans. The first, Tax Declaration No. 3335 18 is in the name of Mauro Tinagan. It
was thereafter cancelled by Tax Declaration No. 19534 effective 1968, 19 still in the
name of Mauro. This declaration was cancelled by Tax Declaration No. 016740 now
in the name of Agustin Tinagan, 20 effective 1974, followed by Tax Declaration No. 08421 in the name of Jesus Tinagan, effective 1980; 21 and finally by Tax Declaration
No. 08-816 in the name of Jesus Tinagan, effective 1985. 22
With regard to Parcel 2, private respondents presented Tax Declaration No. 20973 in
the name of Mauro Tinagan, effective 1959, 23 Tax Declaration No. 016757, effective
1974; 24 Tax Declaration No. 08-405-C in the name of Agustin Tinagan, effective
1980 25 and Tax Declaration No. 08-794 in the name of Agustin Tinagan, effective
1985. 26 Moreover, the realty taxes on the two lots have always been paid by the
private respondents. 27 There can be no doubt, therefore, that the two parcels of land
are owned by the private respondents.
The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan,
took possession of the said properties in 1950, introduced improvements thereon,

and for more than 40 years, have been in open, continuous, exclusive and notorious
occupation thereof in the concept of owners.
Petitioners' own evidence recognized the ownership of the land in favor of Victoria
Tinagan. In their tax declarations, 28 petitioners stated that the house and copra dryer
are located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging
that the disputed portions belong to Victoria/Agustin Tinagan in their tax declarations,
petitioners' claim as owners thereof must fail.
The assailed decision of the respondent court states that "Appellants do not dispute
that the two parcels of land subject matter of the present complaint for recovery of
possession belonged to Victoria S. Tinagan, the grandmother of herein plaintiffsappellees; that Agustin Tinagan inherited the parcels of land from his mother Victoria;
and that plaintiffs-appellees, in turn, inherited the same from Agustin." 29
Taking exception to the aforequoted finding, petitioners contend that while the 2
parcels of land are owned by private respondents, the portions wherein the copra
dryers and store stand were ceded to them by Victoria S. Tinagan in exchange for an
alleged indebtedness of Agustin Tinagan in the sum of P7,602.04. 30
This claim of the petitioners was brushed aside by the respondent court as merely an
afterthought, thus
Appellants' claim that they have acquired ownership over the floor
areas of the store and dryer "in consideration of the account of Agustin
Tinagan in the sum of P7,602.04" is not plausible. It is more of an "afterthought" defense which was not alleged in their answer. Although the
evidence presented by them in support of this particular claim was not
duly objected to by counsel for appellees at the proper time and
therefore deemed admissible in evidence, an examination of the oral
and documentary evidence submitted in support thereof, reveals the
weakness of their claim.
Appellant testified that the areas on which their store and dryer were
located were exchanged for the amount of P7,602.04 owed to them by
Agustin in 1967 (TSN, Hearing of April 14, 1989, p. 9); that he did not
bother to execute a document reflecting such agreement "because they
DONT WORRY BE HAPPY.

were our parents and we had used the land for quite sometime already
they had also sold their copra to us for a long time." (id.) Yet, as earlier
discussed, the tax declarations in appellants' answer show that even
after 1967, they expressly declared that the parcels of land on which
their store and dryer were constructed, belonged to Victoria and Agustin
(Exhs. 2-A, 2-B, 2-C, 3-A, 3-B). If appellants really believed that they
were in possession of the said particular areas in the concept of
owners, they could have easily declared it in said tax declarations. 31
Concededly, petitioners have been on the disputed portions since 1961. However,
their stay thereon was merely by tolerance on the part of the private respondents and
their predecessor-in-interest. The evidence shows that the petitioners were permitted
by Victoria Sanjoco Tinagan to build a copra dryer on the land when they got married.
Subsequently, petitioner Editha Alviola, claiming to be the illegitimate daughter of
Agustin Tinagan, filed a petition for partition demanding her share in the estate of the
deceased Agustin Tinagan on December 6, 1976. However, the petition was
dismissed since it was brought only after the death of Agustin Tinagan. This Court
dismissed the petition for certiorari and mandamus filed by petitioner Editha Alviola
on August 9, 1982. It was on March 29, 1988, when private respondents filed this
complaint for recovery of possession against petitioners. Considering that the
petitioners' occupation of the properties in dispute was merely tolerated by private
respondents, their posture that they have acquired the property by "occupation" for
20 years does not have any factual or legal foundation.
As correctly ruled by the respondent court, there was bad faith on the part of the
petitioners when they constructed the copra dryer and store on the disputed portions
since they were fully aware that the parcels of land belonged to Victoria Tinagan.
And, there was likewise bad faith on the part of the private respondents, having
knowledge of the arrangement between petitioners and Victoria Tinagan relative to
the construction of the copra dryer and store. Thus, for purposes of indemnity, Article
448 of the New Civil Code should be applied. 32 However, the copra dryer and the
store, as determined by the trial court and respondent court, are transferable in
nature. Thus, it would not fall within the coverage of Article 448. As the noted civil law
authority, Senator Arturo Tolentino, aptly explains: "To fall within the provision of this
Article, the construction must be of permanent character, attached to the soil with an
idea of perpetuity; but if it is of a transitory character or is transferable, there is no

accession, and the builder must remove the construction. The proper remedy of the
landowner is an action to eject the builder from the land." 33
The private respondents' action for recovery of possession was the suitable solution
to eject petitioners from the premises.

and improvements shall remain the property of the lessee and he may
remove them at any nine, it being agreed, however, that should he not
remove the said buildings and improvements within a period of two
months after the expiration of this Agreement, the Lessor may remove
the said buildings and improvements or cause them to be removed at
the expense of the Lessee.

WHEREFORE, this petition should be, as it is hereby, DISMISSED.


The assailed decision is hereby AFFIRMED.
SO ORDERED.
Regalado, Melo, Puno and Mendoza, JJ., concur.
G.R. No. L-33422 May 30, 1983
ROSENDO BALUCANAG, petitioner,
vs.
HON. JUDGE ALBERTO J. FRANCISCO and RICHARD STOHNER, respondents.
Alfredo C. Estrella for petitioner.
Pascual C. Garcia for respondents.
ESCOLIN, J.:

During the existence of the lease, Stohner made fillings on the land and constructed
a house thereon, said improvements being allegedly valued at P35,000.00.
On March 8, 1966, Mrs. Charvet sold the said lot to petitioner Rosendo Balucanag. 2
For Stohner's failure to pay the rents, Balucanag, thru counsel, wrote Stohner a letter
demanding that he vacate the premises. 3 In reply thereto, Stohner, also thru counsel,
claimed that he was a builder in good faith of the residential house erected in the
land. He offered the following proposals for a possible compromise, to wit:
[a] Mr. Stohner will purchase the said lot from your client with the
interest of 12% per annum on the value, or
[b] Your client Mr. Rosendo Balucanag will reimburse our client in the
total amount of P35,000.00 for the improvements and construction he
has made on the lot in question.

This petition for review of the decision of the Court of First Instance of Manila in Civil
Case No. 67503 calls for a determination of the respective rights of the lessor and the
lessee over the improvements introduced by the latter in the leased premises.

As no agreement was reached, Balucanag instituted in the City Court of Manila an


ejectment suit against Stohner and, after due trial, the court rendered a decision, the
decretal portion of which reads as follows:

Cecilia dela Cruz Charvet was the owner of a 177.50 square meter lot located in
Zamora Street, Pandacan, Manila, covered by Transfer Certificate of Title No. 25664.
On August 31, 1952, Mrs. Charvet leased said lot to respondent Richard Stohner for
a period of five [5] years at the monthly rental of 2140.00, payable in advance within
the first ten [10] days of each month. The lease contract 1 provided, among others,
that:

IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is


hereby rendered, ordering the defendant to pay the plaintiff the sum of
P360.00 as back rentals from December, 1965 to August 1966 at the
rate of P40.00 a month and to vacate the premises. The defendant is
further ordered to pay the sum of P100.00 as Attomey's fees which is
considered reasonable within the premises.

IV. The lessee may erect such buildings upon and make such
improvements to the leased land as he shag see fit. All such buildings
DONT WORRY BE HAPPY.

On appeal, the Court of First Instance of Manila, Branch IX, presided by respondent
Judge Alberto J. Francisco, after conducting a trial de novo, rendered a decision,

setting aside the judgment of the city court and dismissing the petitioner's complaint.
Respondent judge held that Stohner was a builder in good faith because he had
constructed the residential house with the consent of the original lessor, Mrs.
Charvet, and also because the latter, after the expiration of the lease contract on
August 31, 1957, had neither sought Stohner's ejectment from the premises, nor the
removal of his house therefrom. Invoking Articles 448 and 546 of the Civil
Code. 4respondent judge concluded that Stohner, being a builder in good faith,
cannot be ejected until he is reimbursed of the value of the improvements.
Frustrated in his effort to have the decision reconsidered, Balucanag filed the instant
petition for review.
We find the petition impressed with merit. Paragraph IV of the lease contract entered
into by Stohner with Mrs. Charvet specifically provides that "... such buildings and
improvements shan remain the property of the lessee and he may remove them at
any time, it being agreed, however, that should he not remove the said buildings and
improvements within a period of two months after the expiration of this Agreement,
the Lessor may remove the said buildings and improvements or cause them to be
removed at the expense of the Lessee." Respondent Stohner does not assail the
validity of this stipulation, Neither has he advanced any reason why he should not be
bound by it.
But even in the absence of said stipulation, respondent Stohner cannot be
considered a builder in good faith. Article 448 of the Civil Code, relied upon by
respondent judge, applies only to a case where one builds on land in the belief that
he is the owner thereof and it does not apply where one's only interest in the land is
that of a lessee under a rental contract. In the case at bar, there is no dispute that the
relation between Balucanag and Stohner is that of lessor and lessee, the former
being the successor in interest of the original owner of the lot. As we ruled inLopez,
Inc. vs. Phil. and Eastern Trading Co., Inc., 5 "... the principle of possessor in good
faith refers only to a party who occupies or possess property in the belief that he is
the owner thereof and said good faith ends only when he discovers a flaw in his title
so as to reasonably advise or inform him that after all he may not be the legal owner
of said property. It cannot apply to a lessee because as such lessee he knows that he
is not the owner of he leased premises. Neither can he deny the ownership or title of
his lessor. ... A lessee who introduces improvements in the leased premises, does so
DONT WORRY BE HAPPY.

at his own risk in the sense that he cannot recover their value from the lessor, much
less retain the premises until such reimbursement. ..."
The law applicable to the case at bar is Article 1678 of the Civil Code, which We
quote:
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 the 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. ...
This article gives the lessor the option to appropriate the useful improvements by
paying one-half of their value, 6And the lessee cannot compel the lessor to
appropriate the improvements and make reimbursement, for the lessee's right under
the law is to remove the improvements even if the leased premises may suffer
damage thereby. But he shall not cause any more damage upon the property than is
necessary.
One last point. It appears that while the lease contract entered into by Stohner and
Mrs. Charvet had expired on August 31, 1957, he nevertheless continued in
possession of the premises with the acquiescence of Mrs. Charvet and later, of
Balucanag. An implied new lease or tacita reconduccion was thus created between
the parties, the period of which is established by Article 1687 of the Civil Code thus:
Art. 1687. If the period for the lease has not been fixed, it is understood
to be from year to year, if the rent agreed upon is annual; from month to
month, if it is monthly: from week to week, if the rent is weekly: and from
day to day, if the rent is to be paid daily. ...
Under the above article, the duration of the new lease must be deemed from month
to month, the agreed rental in the instant case being payable on a monthly basis. The
lessor may thus terminate the lease after each month with due notice upon the
lessee. After such notice, the lessee's right to continue in possession ceases and his

possession becomes one of detainer. Furthermore, Stohner's failure to pay the


stipulated rentals entities petitioner to recover possession of the premises.
WHEREFORE, the decision in Civil Case No. 67503 is hereby set aside, with costs
against respondent Stohner. The latter is ordered to vacate the premises in question
and to pay Rogelio Balucanag the rentals due from March 1969 up to the time he
surrenders the premises, at the rate of P40.00 a month.

The above-quoted stipulation has the force of law between the parties (Art. 1159,
Civil Code) and supersedes Art. 1678 of the Civil Code. Accordingly, the judgment
with respect to the house which was constructed by Stohner should be in line with the
contract of lease.
Separate Opinions
ABAD SANTOS, J., concurring and dissenting:

SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion, Jr., and Guerrero, JJ., concur.
De Castro, J., took no part.
Separate Opinions
ABAD SANTOS, J., concurring and dissenting:
I concur in setting aside the decision in Civil Case No. 67503 of the defunct Court of
First Instance of Manila; and in ordering the respondent Stohner to pay the costs, to
vacate the premises in question, and to pav the petitioner the rentals due from March
1969 to the time he surrenders the premises at the rate of P40.00 monthly. However,
I cannot give my assent to that portion of the judgment with respect to the house
constructed by Stohner.

I concur in setting aside the decision in Civil Case No. 67503 of the defunct Court of
First Instance of Manila; and in ordering the respondent Stohner to pay the costs, to
vacate the premises in question, and to pav the petitioner the rentals due from March
1969 to the time he surrenders the premises at the rate of P40.00 monthly. However,
I cannot give my assent to that portion of the judgment with respect to the house
constructed by Stohner.
Stohner as a lessee is not a builder in good faith. This is elementary in property law.
Article 1678 of the Civil Code concerning improvements made by the lessee on the
leased premises applies only in the absence of stipulation on the matter between the
lessor and the lessee. In the instant case theres such a stipulation. A copy of the
Lease Agreement which is found on page 13 of the Rollo reads:

Stohner as a lessee is not a builder in good faith. This is elementary in property law.
Article 1678 of the Civil Code concerning improvements made by the lessee on the
leased premises applies only in the absence of stipulation on the matter between the
lessor and the lessee. In the instant case theres such a stipulation. A copy of the
Lease Agreement which is found on page 13 of the Rollo reads:
IV. The lessee may erect such buildings upor and make such
improvements to the leased land as he shall see fit. AR such buildings
and improvements shall remain the property of the lessee and he may
remove them at any nine, it being agreed, however, that should he not
remove the 96d buildings and improvements within a period of two
months after the expiration of this Agreement, the Lessor may remove
the said buildings and improvements or cause them to be removed at
the expense of the Lessee.
DONT WORRY BE HAPPY.

IV. The lessee may erect such buildings upor and make such
improvements to the leased land as he shall see fit. AR such buildings
and improvements shall remain the property of the lessee and he may
remove them at any nine, it being agreed, however, that should he not
remove the 96d buildings and improvements within a period of two
months after the expiration of this Agreement, the Lessor may remove
the said buildings and improvements or cause them to be removed at
the expense of the Lessee.
The above-quoted stipulation has the force of law between the parties (Art. 1159,
Civil Code) and supersedes Art. 1678 of the Civil Code. Accordingly, the judgment
with respect to the house which was constructed by Stohner should be in line with the
contract of lease.

2 p. 68, Rollo.

The victory1 of petitioner spouses Ricardo and Verona Kilario in the Municipal Circuit
Trial Court2 in an ejectment suit3 filed against them by private respondent Silverio
Pada, was foiled by its reversal4 by the Regional Trial Court5 on appeal. They
elevated their cause6 to respondent Court of Appeals7 which, however, promulgated a
Decision8 on May 20, 1998, affirming the Decision of the Regional Trial Court.

3 p. 72, Rollo.

The following facts are undisputed:

4 "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. 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."

One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador, Higino,
Valentina and Ruperta. He died intestate. His estate included a parcel of land of
residential and coconut land located at Poblacion, Matalom, Leyte, denominated as
Cadastral Lot No. 5581 with an area of 1,301.92 square meters. It is the northern
portion of Cadastral Lot No. 5581 which is the subject of the instant controversy.

"Art. 546. Necessary expenses shall be refunded to everv pnssessor:


but only the possessor in good faith mav retain the thing until he has
been reimbursed thereof. ...

Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-judicial
partition of his estate. For this purpose, they executed a private document which they,
however, never registered in the Office of the Registrar of Deeds of Leyte.

5 98 Phil. 348.

At the execution of the extra-judicial partition, Ananias was himself present while his
other brothers were represented by their children. Their sisters, Valentina and
Ruperta, both died without any issue. Marciano was represented by his daughter,
Maria; Amador was represented by his daughter, Concordia; and Higina was
represented by his son, Silverio who is the private respondent in this case. It was to
both Ananias and Marciano, represented by his daughter, Maria, that Cadastral Lot
No. 5581 was allocated during the said partition. When Ananias died, his daughter,
Juanita, succeeded to his right as co-owner of said property.

Footnotes
1 Annex B, p. 13, Rollo.

6 Lapea vs. Judge Morfe, et al., 101 Phil. 997.


G.R. No. 134329

January 19, 2000

VERONA PADA-KILARIO and RICARDO KILARIO, petitioners,


vs.
COURT OF APPEALS and SILVERIO PADA, respondents.
DE LEON, JR., J.:

DONT WORRY BE HAPPY.

During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained
permission from him to build a house on the northern portion of Cadastral Lot No.
5581. When Feliciano died, his son, Pastor, continued living in the house together
with his eight children. Petitioner Verona Pada-Kilario, one of Pastor's children, has
been living in that house since 1960.

On June 14, 1978, Juanita Pada sold to Engr. Ernesto Paderes, the right of his father,
Ananias, as co-owner of Cadastral Lot No. 5881.

On November 17, 1993, it was the turn of Maria Pada to sell the co-ownership right of
his father, Marciano. Private respondent, who is the first cousin of Maria, was the
buyer.
Thereafter, private respondent demanded that petitioner spouses vacate the northern
portion of Cadastral Lot No. 5581 so his family can utilize the said area. They went
through a series of meetings with the barangay officials concerned for the purpose of
amicable settlement, but all earnest efforts toward that end, failed.
On June 26, 1995, private respondent filed in the Municipal Circuit Trial Court of
Matalom, Leyte, a complaint for ejectment with prayer for damages against petitioner
spouses.
On July 24, 1995, the heirs of Amador Pada, namely, Esperanza Pada-Pavo,
Concordia Pada-Bartolome, and Angelito Pada, executed a Deed of
Donation9 transferring to petitioner Verona Pada-Kilario, their respective shares as
co-owners of Cadastral Lot No. 5581.
On February 12, 1996, petitioner spouses filed their Answer averring that the northern
portion of Cadastral Lot No. 5581 had already been donated to them by the heirs of
Amador Pada. They contended that the extra-judicial partition of the estate of Jacinto
Pada executed in 1951 was invalid and ineffectual since no special power of attorney
was executed by either Marciano, Amador or Higino in favor of their respective
children who represented them in the extra-judicial partition. Moreover, it was
effectuated only through a private document that was never registered in the office of
the Registrar of Deeds of Leyte.
The Municipal Circuit Trial Court rendered judgment in favor of petitioner spouses. It
made the following findings:
After a careful study of the evidence submitted by both parties, the court finds
that the evidence adduced by plaintiff failed to establish his ownership over . . .
Cadastral Lot No. 5581 . . . while defendants has [sic] successfully proved by
preponderance of evidence that said property is still under a community of
ownership among the heirs of the late Jacinto Pada who died intestate. If there
was some truth that Marciano Pada and Ananias Pada has [sic] been
adjudicated jointly of [sic] the above-described residential property . . . as their
DONT WORRY BE HAPPY.

share of the inheritance on the basis of the alleged extra judicial settlement,
how come that since 1951, the date of partition, the share of the late Marciano
Pada was not transferred in the name of his heirs, one of them Maria PadaPavo and still remain [sic] in the name of Jacinto Pada up to the present while
the part pertaining to the share of Ananias Pada was easily transferred in the
name of his heirs . . ..
The alleged extra judicial settlement was made in private writing and the
genuineness and due execution of said document was assailed as doubtful
and it appears that most of the heirs were not participants and signatories of
said settlement, and there was lack of special power of attorney to [sic] those
who claimed to have represented their co-heirs in the participation [sic] and
signing of the said extra judicial statement.
Defendants were already occupying the northern portion of the abovedescribed property long before the sale of said property on November 17,
1993 was executed between Maria Pada-Pavo, as vendor and the plaintiff, as
vendee. They are in possession of said portion of the above-described
property since the year 1960 with the consent of some of the heirs of Jacinto
Pada and up to the [sic] present some of the heirs of Jacinto Pada has [sic]
donated . . . their share of [sic] the above-described property to them, virtually
converting defendants' standing as co-owners of the land under controversy.
Thus, defendants as co-owners became the undivided owners of the whole
estate . . . . As co-owners of . . . Cadastral Lot No. 5581 . . . their possession in
the northern portion is being [sic] lawful.10
From the foregoing decision, private respondent appealed to the Regional Trial Court.
On November 6, 1997, it rendered a judgment of reversal. It held:
. . . [T]he said conveyances executed by Juanita Pada and Maria Pada Pavo
were never questioned or assailed by their co-heirs for more than 40 years,
thereby lending credence on [sic] the fact that the two vendors were indeed
legal and lawful owners of properties ceded or sold. . . . At any rate, granting
that the co-heirs of Juanita Pada and Maria Pada Pavo have some interests
on the very lot assigned to Marciano and Ananias, nevertheless, said interests
had long been sadly lost by prescription, if not laches or estoppel.

It is true that an action for partition does not prescribe, as a general rule, but
this doctrine of imprescriptibility cannot be invoked when one of the heirs
possessed the property as an owner and for a period sufficient to acquire it by
prescription because from the moment one of the co-heirs claim [sic] that he is
the absolute owner and denies the rest their share of the community property,
the question then involved is no longer one for partition but of ownership. . . .
Since [sic] 1951 up to 1993 covers a period of 42 long years. Clearly, whatever
right some of the co-heirs may have, was long extinguished by laches,
estoppel or prescription.
xxx

xxx

5. Taxing defendants to pay the costs of suit.12


Petitioners filed in the Court of Appeals a petition for review of the foregoing decision
of the Regional Trial Court.
On May 20, 1998, respondent Court of Appeals rendered judgment dismissing said
petition. It explained:

xxx

. . . [T]he deed of donation executed by the Heirs of Amador Pada, a brother of


Marciano Pada, took place only during the inception of the case or after the
lapse of more than 40 years reckoned from the time the extrajudicial partition
was made in 1951. Therefore, said donation is illegal and invalid [sic] the
donors, among others, were absolutely bereft of any right in donating the very
property in question.11
The dispositive portion of the decision of the Regional Trial Court reads as follows:
WHEREFORE, a judgment is hereby rendered, reversing the judgment earlier
promulgated by the Municipal Circuit Trial Court of Matalom, Leyte, [sic]
consequently, defendants-appellees are hereby ordered:
1. To vacate the premises in issue and return peaceful possession to the
appellant, being the lawful possessor in concept of owner;
2. To remove their house at their expense unless appellant exercises the
option of acquiring the same, in which case the pertinent provisions of the New
Civil Code has to be applied;
3. Ordering the defendants-appellees to pay monthly rental for their occupancy
and use of the portion of the land in question in the sum of P100.00
commencing on June 26, 1995 when the case was filed and until the
termination of the present case;
DONT WORRY BE HAPPY.

4. Ordering the defendants to pay to the appellant the sum of P5,000.00 as


moral damages and the further sum of P5,000.00 as attorney's fees;

Well-settled is the rule that in an ejectment suit, the only issue is


possession de facto or physical or material possession and not de jure. Hence,
even if the question of ownership is raised in the pleadings, the court may
pass upon such issue but only to determine the question of possession,
specially if the former is inseparably linked with the latter. It cannot dispose
with finality the issue of ownership, such issue being inutile in an ejectment
suit except to throw light on the question of possession . . . .
Private respondent Silverio Pada anchors his claim to the portion of the land
possessed by petitioners on the Deed of Sale executed in his favor by vendor
Maria Pada-Pavo, a daughter of Marciano, son of Jacinto Pada who was the
registered owner of the subject lot. The right of vendee Maria Pada to sell the
property was derived from the extra-judicial partition executed in May 1951
among the heirs of Jacinto Pada, which was written in a Bisayan dialect signed
by the heirs, wherein the subject land was adjudicated to Marciano, Maria
Pavo's father, and Ananias Pada. Although the authenticity and genuineness
of the extra-judicial partition is now being questioned by the heirs of Amador
Pada, no action was ever previously filed in court to question the validity of
such partition.1wphi1.nt
Notably, petitioners in their petition admitted among the antecedent facts that
Maria Pavo is one of the co-owners of the property originally owned by Jacinto
Pada . . . and that the disputed lot was adjudicated to Marciano (father of
Maria Pavo) and Ananias, and upon the death of Marciano and Ananias, their
heirs took possession of said lot, i.e. Maria Pavo the vendor for Marciano's
share and Juanita for Ananias' share . . . . Moreover, petitioners do not dispute

the findings of the respondent court that during the cadastral survey of
Matalom, Leyte, the share of Maria Pada Pavo was denominated as Lot No.
5581, while the share of Juanita Pada was denominated as Lot No. 6047, and
that both Maria Pada Pavo and Juanita were in possession of their respective
hereditary shares. Further, petitioners in their Answer admitted that they have
been occupying a portion of Lot No. 5581, now in dispute without paying any
rental owing to the liberality of the plaintiff . . . . Petitioners cannot now impugn
the aforestated extrajudicial partition executed by the heirs in 1951. As owner
and possessor of the disputed property, Maria Pada, and her vendee, private
respondent, is entitled to possession. A voluntary division of the estate of the
deceased by the heirs among themselves is conclusive and confers upon said
heirs exclusive ownership of the respective portions assigned to them . . ..
The equally belated donation of a portion of the property in dispute made by
the heirs of Amador Pada, namely, Concordia, Esperanza and Angelito, in
favor of petitioner Verona Pada is a futile attempt to confer upon the latter the
status of co-owner, since the donors had no interest nor right to transfer. . . .
This gesture appears to be a mere afterthought to help petitioners to prolong
their stay in the premises. Furthermore, the respondent court correctly pointed
out that the equitable principle of laches and estoppel come into play due to
the donors' failure to assert their claims and alleged ownership for more than
forty (40) years . . . . Accordingly, private respondent was subrogated to the
rights of the vendor over Lot No. 5581 which include [sic] the portion occupied
by petitioners.13
Petitioner spouses filed a Motion for Reconsideration of the foregoing decision.
On June 16, 1998, respondent Court of Appeals issued a Resolution denying said
motion.
Hence this petition raising the following issues:
I.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT
PETITIONERS, AS CO-OWNERS, CANNOT BE EJECTED FROM THE
PREMISES CONSIDERING THAT THE HEIRS OF JACINTO PADA
DONT WORRY BE HAPPY.

DONATED TO THEM THEIR UNDIVIDED INTEREST IN THE PROPERTY IN


DISPUTE.
II.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT
WHAT MARIA PADA SOLD WAS HER UNDIVIDED SHARE IN THE
PROPERTY IN DISPUTE.
III.
WHETHER OR NOT THE PETITIONERS ARE BUILDERS IN GOOD FAITH.14
There is no merit to the instant petition.
First. We hold that the extrajudicial partition of the estate of Jacinto Pada among his
heirs made in 1951 is valid, albeit executed in an unregistered private document. No
law requires partition among heirs to be in writing and be registered in order to be
valid.15 The requirement in Sec. 1, Rule 74 of the Revised Rules of Court that a
partition be put in a public document and registered, has for its purpose the protection
of creditors and the heirs themselves against tardy claims. 16 The object of registration
is to serve as constructive notice to others. It follows then that the intrinsic validity of
partition not executed with the prescribed formalities is not undermined when no
creditors are involved.17 Without creditors to take into consideration, it is competent
for the heirs of an estate to enter into an agreement for distribution thereof in a
manner and upon a plan different from those provided by the rules from which, in the
first place, nothing can be inferred that a writing or other formality is essential for the
partition to be valid.18 The partition of inherited property need not be embodied in a
public document so as to be effective as regards the heirs that participated
therein.19 The requirement of Article 1358 of the Civil Code that acts which have for
their object the creation, transmission, modification or extinguishment of real rights
over immovable property, must appear in a public instrument, is only for convenience,
non-compliance with which does not affect the validity or enforceability of the acts of
the parties as among themselves.20 And neither does the Statute of Frauds under
Article 1403 of the New Civil Code apply because partition among heirs is not legally
deemed a conveyance of real property, considering that it involves not a transfer of
property from one to the other but rather, a confirmation or ratification of title or right

of property that an heir is renouncing in favor of another heir who accepts and
receives the inheritance.21 The 1951 extrajudicial partition of Jacinto Pada's estate
being legal and effective as among his heirs, Juanita and Maria Pada validly
transferred their ownership rights over Cadastral Lot No. 5581 to Engr. Paderes and
private respondent, respectively.22
Second. The extrajudicial partition which the heirs of Jacinto Pada executed
voluntarily and spontaneously in 1951 has produced a legal status. 23 When they
discussed and agreed on the division of the estate Jacinto Pada, it is presumed that
they did so in furtherance of their mutual interests. As such, their division is
conclusive, unless and until it is shown that there were debts existing against the
estate which had not been paid.24 No showing, however, has been made of any
unpaid charges against the estate of Jacinto Pada. Thus, there is no reason why the
heirs should not be bound by their voluntary acts.
The belated act of Concordia, Esperanza and Angelito, who are the heirs of Amador
Pada, of donating the subject property to petitioners after forty four (44) years of
never having disputed the validity of the 1951 extrajudicial partition that allocated the
subject property to Marciano and Ananias, produced no legal effect. In the said
partition, what was allocated to Amador Pada was not the subject property which was
a parcel of residential land in Sto. Nino, Matalom, Leyte, but rather, one-half of a
parcel of coconut land in the interior of Sto. Nino St., Sabang, Matalom, Leyte and
one-half of a parcel of rice land in Itum, Sta. Fe, Matalom, Leyte. The donation made
by his heirs to petitioners of the subject property, thus, is void for they were not the
owners thereof. At any rate it is too late in the day for the heirs of Amador Pada to
repudiate the legal effects of the 1951 extrajudicial partition as prescription and
laches have equally set in.

terminated any time. Persons who occupy the land of another at the latter's tolerance
or permission, without any contract between them, is necessarily bound by an implied
promise that they will vacate the same upon demand, failing in which a summary
action for ejectment is the proper remedy against them. 26 Thus, they cannot be
considered possessors nor builders in good faith. It is well-settled that both Article
44827 and Article 54628 of the New Civil Code which allow full reimbursement of useful
improvements and retention of the premises until reimbursement is made, apply only
to a possessor in good faith,i.e., one who builds on land with the belief that he is the
owner thereof.29 Verily, persons whose occupation of a realty is by sheer tolerance of
its owners are not possessors in good faith. Neither did the promise of Concordia,
Esperanza and Angelito Pada that they were going to donate the premises to
petitioners convert them into builders in good faith for at the time the improvements
were built on the premises, such promise was not yet fulfilled, i.e., it was a mere
expectancy of ownership that may or may not be realized. 30 More importantly, even
as that promise was fulfilled, the donation is void for Concordia, Esperanza and
Angelito Pada were not the owners of Cadastral Lot No. 5581. As such, petitioners
cannot be said to be entitled to the value of the improvements that they built on the
said lot.
WHEREFORE, the petition for review is HEREBY DENIED.
Costs against petitioners.
SO ORDERED.
Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.
G.R. No. L-25359

Third. Petitioners are estopped from impugning the extrajudicial partition executed by
the heirs of Jacinto Pada after explicitly admitting in their Answer that they had been
occupying the subject property since 1960 without ever paying any rental as they only
relied on the liberality and tolerance of the Pada family. 25 Their admissions are
evidence of a high order and bind them insofar as the character of their possession of
the subject property is concerned.
Considering that petitioners were in possession of the subject property by sheer
tolerance of its owners, they knew that their occupation of the premises may be
DONT WORRY BE HAPPY.

September 28, 1968

ARADA LUMUNGO, JUHURI DAWA, ET AL., petitioners,


vs.
ASAAD USMAN, JOSE ANGELES and DOMINGA USMAN, ET AL., respondents.
Dominador Sobrevias for petitioners.
Marciano Almario for respondents.
CONCEPCION, C.J.:

Review on certiorari of a decision of the Court of Appeals, on appeal from a decision


of the Court of First Instance of Sulu in Civil Cases Nos. 155 and 156 of said court,
both instituted by plaintiffs herein, Arada Lumungo (deceased), substituted by her
heirs, Juhuri Dawa, Kayajuja, Sadatul, Sarapatul, Jaramatul, Alma, Kalukasa and
Vicente, all surnamed Juhuri to recover the possession of lot No. 871 of the Siasi
Cadastre, in the first case, and in the second, of lots Nos. 892, 893, 894 and 1121 of
the same cadastre. The defendants in case No. 155 are Asaad Usman, Akmadul and
Hada, whereas those in case No. 156 are Asaad Usman, Fatima Angeles, Hadjaratul
Julkanain, Inkiran and Sitti Haridja, who were subsequently joined by Dominga
Usman and Jose Angeles, as defendants-intervenors.
After a joint trial of the two (2) cases, the Court of First Instance of Sulu rendered a
decision, the dispositive part of which reads as follows:
WHEREFORE, judgment is hereby rendered declaring plaintiffs to have a
better right to the possession of Lots Nos. 892, 893, 894, 1121 and 871, Siasi
and Lapak Cadastral Survey, located at Lapak, Siasi, Sulu and described in
Transfer Certificates of Title Nos. T-419, T-422, T-420 and T-421 and Original
Certificate of Title No. 8023. The defendants are ordered to vacate said lots in
favor of the plaintiffs if they have not already done so.
On the other hand, the plaintiffs are ordered to reimburse to the defendantintervenor, JOSE ANGELES, the sum of P4,500.00 representing the value of
the 3,000 coconut trees introduced by him and his predecessors in interest on
Lots 892, 893 and 894. Should plaintiffs fail to do so within ninety (90) days
from the date this decision becomes final, the three lots shall be ordered sold
at public auction, the proceeds of which shall be applied to the P4,500.00
herein adjudged to Jose Angeles, and the balance to be delivered to the
plaintiffs.
Both parties appealed from this decision to the Court of Appeals, but, later, the
defendants withdrew their appeal, which, accordingly, was dismissed. Thus the only
question left for determination by the Court of Appeals was plaintiffs' appeal from the
trial court's decision, insofar as it sentenced them to pay P4,500.00 to intervenor
Jose Angeles. After appropriate proceedings, the Court of Appeals reduced this
amount to P2,500.00 and affirmed the decision of the Court of First Instance in all
DONT WORRY BE HAPPY.

other respects, with costs against defendants-intervenors. The case is now before us
upon petition for review on certiorari filed by the plaintiffs.
The pertinent facts are set forth in the decision of the trial court, which were adopted
in that of the Court of Appeals, from which we quote:
It ... appears that, having allegedly collaborated with the enemy during the
Japanese Occupation of Sulu, Datu Idiris Amilhussin was arrested and
detained when the American Liberation Forces came to Sulu in the year 1945.
On March 1, 1946, Datu Idiris was prosecuted for Treason before the People's
Court, docketed as Criminal Case No. 1334 in said Court. Justice of the Peace
Asaad Usman of Siasi and his wife Dominga Usman, became interested in
Lots Nos. 892, 893, 894, 1121 and 871. Jamasali Usman, brother of Atty.
Asaad Usman, also became interested in Lot No. 1226(?). Datu Idiris was
desperately in need of money to pay his attorney's fees and the premium on
his bailbond. He sent his wife to Jamasali for money. Jamasali proposed to
buy Lot No. 1227(?). Upon the execution of a Pacto de Retro sale (Exhibit
"DDD"), Jamasali gave Datu Idiris partial payments of the P3,000.00
mentioned in the document. Sometime in the year 1946, Atty. Usman visited
Datu Idiris in the Provincial jail and promised to help him in his case and to
secure his bailbond for his temporary liberty. But Atty. Usman asked Datu Idiris
to sell to his wife, Dominga Miranda Usman, the five lots in question. Datu
Idiris agreed.
Through the help of Atty. Usman, the bailbond of Datu Idiris was perfected.
Consequently, on January 11, 1947, he was released from the Provincial Jail.
True to his word, on March 14, 1947, Datu Idiris executed an agreement with
Dominga Usman (Exhibit "33"). He also caused Datu Amirul Amilhussin,
brother of Datu Idiris, to sign a similar document, being one of the co-owners
of said lots (Exh. "34"). Upon execution of the agreement, Dominga Usman
paid Datu Idiris P300.00; subsequently, Atty. Usman paid him P500.00 and
P10.00. Thus, Datu Idiris received all in all from the spouses, P810.00 in
consideration of the tenor stated in the document, Exhibit "33". In the
meantime, Atty. Usman took possession of the five lots in question and
cultivated the same.

As the whole amount of P3,000.00 mentioned in the sale of Pacto de


Retro executed by Datu Idiris in favor of Jamasali Usman was not fully paid,
Datu Idiris upon his being released from confinement, demanded from
Jamasali to complete payment. He also demanded from Atty. Usman
the payment of the balance of the purchase price of the lots described in
Exhibit "33". After Datu Idiris had been repeatedly refused said payments
by both Jamasali and Atty. Usman, he became exasperated. He wrote two
complaints, one to the Secretary of Justice, dated June 15, 1946, and the
other, to the President of the Philippines, dated March 8, 1948, complaining
against Justice of the Peace Asaad Usman and Jamasali Usman. After filing
these complaints, Justice of the Peace Usman immediately caused the
revocation of the bailbond of Datu Idiris before the People's Court. On March
31, 1948, he was rearrested and committed to the Provincial Jail again. A
serious misunderstanding developed between Datu Idiris on one hand and
Atty. Usman and Jamasali Usman on the other. Several complaints for murder
were caused to be filed before the Court of Justice of the Peace Usman
against Datu Idiris. In the meantime, Atty. Usman wrote letters of demand upon
Datu Idiris asking him to produce the titles to the above five lots to enable him
to have a sufficient deed of sale conveying the said five lots in favor of his wife.
Datu Idiris on the other hand, had been demanding from Atty. Usman to pay
the balance of the purchase price of the land. Despite those mutual
demands, no one complied therewith. On December 10, 1951, Datu Idiris
proposed, thru Atty. Flor, to call off the deal, stated in documents, Exhibits "33"
and "34", promising to return the P810.00 which he received from the spouses.
Dominga Usman and Atty. Usman agreed to call off the deal. Datu Idiris
however, never paid the P810.00. Despite this. Dominga Usman and Atty.
Usman never went to Court to file an action to compel Datu Idiris either to
comply with his obligation to execute and deliver a good and sufficient deed
conveying titles to the five lots in question, or to pay back the P810.00. What
Dominga Usman did when Datu Idiris failed to pay her the P810.00 was to sell
lots 892, 893 and 894 to Jose Angeles for P1,000.00. Jose Angeles, upon
taking possession of the land, planted same with coconuts, which, together
with those already planted by Dominga Usman, numbered about 3,000, most
of which are now fruit-bearing.
On Feb. 2, 1962, Datu Idiris filed a civil complaint against Atty. Asaad Usman for
recovery of possession of the five lots in question which was docketed as Civil Case
DONT WORRY BE HAPPY.

No. 87 of this Court. Atty. Usman, instead of informing the Court that he and his wife
had the legal right to possess those lots by virtue of the agreement had between Datu
Idiris and his wife embodied in Exhibit "33", manifested in open Court on September
26, 1952, that he was not interested in the posession or ownership of the land, and
that he did not buy the land from Datu Idiris. So, on said date, this Court dictated an
order as follows:
"In Open Court, when this case was called for hearing, the defendant Attorney
Asaad Usman manifested that he does not claim ownership nor possession to
the two parcels of land described in paragraph 2 of the complaint of the
plaintiff. Thereupon, the plaintiff (moved) the Court to enter judgment, to which
motion the defendant interposed no objection. Such being the case, the Court
has no alternative but to enter judgment as it is hereby entered in favor of the
plaintiff Datu Idiris Amilhussin, and against the defendant declaring the
plaintiff the owner and possessor of the two parcels of land above mentioned,
and inasmuch as the defendant is not in possession of the land, the Court
finds it unnecessary to enter an order ejecting the said defendant from the two
parcels of land, without prejudice to any claim of any other third party, without
pronouncement as to costs.
On the other hand, the defendant moved for the dismissal of his counterclaim.
The Court orders the dismissal of the same, also without pronouncement as to
cost."1awphl.nt
Upon the promulgation of the above-quoted judgment, Datu Idiris, who was badly in
need of money, went around, offering to sell the land to another. Spouses Juhuri
Dawa and Arada Lumungo being interested in acquiring those lots, asked Atty.
Dominador Sobrevias to verify if they could buy the same. Atty. Sobrevias went to
the Office of the Register of Deeds and found no annotation of encumbrances on the
Original Certificates of Title of the five lots. Besides, since the Court had already
adjudged in the above-quoted order that Atty. Usman did not have any claim of
possession or ownership over the land, and that he did not buy the land from Datu
Idiris, Atty. Sobrevias advised his clients that they may buy the lots. Accordingly, a
deed of sale, Exhibits "L" to "L-2", was executed. Upon presentation of this deed of
sale to the Register of Deeds, Original Certificates of Title Nos. 8986, 8123, 8087 and
8122 were cancelled and in lieu thereof, Transfer Certificates of Title Nos. T-419, T420, T-422, and T-421 were issued in the names of the plaintiffs. Plaintiffs took

possession of the property, but they were allegedly driven from the land. About three
years ago, the defendants left Lots Nos. 892, 893, 894 and 1121. Plaintiffs took
possession thereof. The defendants are still in possession of Lot No. 871. 1
Defendants maintained in the Court of Appeals that the sale made by Datu Idiris
Amilhussin to plaintiffs Arada Lumungo and Juhuri Dawa, on September 30, 1952, is
null and void because the lots thus sold had previously been conveyed by Datu Idiris
and Datu Amirul Amilhussin to intervenor Dominga Usman, wife of defendant Asaad
Usman, and because the sale to said plaintiffs was not approved by the provincial
governor of Sulu, as required by the Administrative Code of Mindanao and Sulu. The
Court of Appeals overruled these objections upon the ground that the sale to
Dominga Usman "did not materialize" and was "called off" by mutual agreement of
the vendors and the vendee, and that said lack of approval by the provincial governor
is a defense available to the contracting parties only, not to the defendants herein
who are not parties to said transaction. Then the Court of Appeals went on to say:
Upon the other hand, it is to be noted that when intervenor Dominga Usman
who claimed to have purchased the lots in question from one of the original
owners, sold and transferred her alleged ownership over the same to her cointervenor Jose Angeles, the latter made the purchase with the knowledge that
the property subject matter of the sale was already in dispute by and between
herein defendants, one of whom is the husband of intervener Dominga
Usman, on the one hand, and herein plaintiffs on the other. Nevertheless, as
well stated by the court a quo, equity should come in to protect the rights of
intervenor Jose Angeles who introduced some improvements on three of the
lots subject-matter of the litigation, namely, lots Nos. 892, 893 and 894.
The Court found for a fact that around 3,000 coconut trees were planted on
those lots aforementioned, some of them already fruit-bearing. It appears from
the records that not all, but a portion, of the 3,000 were planted by intervenor
Jose Angeles. The value placed by the lower court of P1.50 per fruit-bearing
coconut tree is reasonable enough, inasmuch as the lower court was in a
better position to make the assessment, it being more closely in contact with
the conditions and circumstances of the locality. We are not prepared to
disturb such finding for lack of evidence to warrant such an action on our part.

DONT WORRY BE HAPPY.

IN VIEW OF THE FOREGOING CONSIDERATIONS, with the only


modification that the amount of indemnity should be reduced from P4,500.00
to P2,500.00, the rest of the judgment appealed from is hereby affirmed with
costs against defendants-intervenors.2
The only issue posed by plaintiffs' petition for review is whether or not Jose Angeles
is entitled to reimbursement for the coconut trees planted by him on the property in
litigation. In this connection, it should be noted that said trees are improvements, not
"necessary expenses of preservation," which a builder, planter or sower in bad faith
may recover under Arts. 452 and 546, first paragraph, of the Civil Code.
Upon the other hand, the Court of Appeals found as a fact that when Dominga
Usman sold and transferred her rights in and to the property in question to Jose
Angeles "the latter made the purchase with the knowledge that the property subject
matter of the sale was already in dispute by and between herein defendants, one of
whom is the husband of intervenor Dominga Usman, on the one hand, and herein
plaintiffs on the other." Angeles was, therefore, aware of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title to the property in
question, which was an easy matter for him to ascertain, said property being
registered under the Torrens System. 3
Indeed, Jose Angeles is a nephew of defendant Asaad Usman, and the controversy
between the latter and Datu Idiris was a matter of public knowledge, for Usman was a
justice of the peace, and Datu Idiris had filed charges against him, as such, with the
Department of Justice and the Office of the President, to which Usman countered by
causing the bail bond of Datu Idiris to be cancelled and his corresponding
reincarceration, as well as the filing of complaints for murder against him. Besides, on
February 2, 1952, or several months prior to the sale to Angeles on September 30,
1952, Datu Idiris had filed Civil Case No. 87 of the Court of First Instance of Sulu
against Asaad Usman to recover the lots in question, and the latter stated in that
case, on September 26, 1952, or four (4) days before the aforementioned sale, that
he was not interested in either the possession or the ownership of said lots and
that he had not bought the same from the former. It may not be amiss to note, also,
that at the time of the alleged sale in his favor, Jose Angeles was a law student; that,
in fact, on August 9, 1957, he entered his appearance as counsel for the defendants,
in collaboration with Asaad Usman; and that the consideration for said sale, involving
a land of 46 hectares, was only P1,000.

In short, the foregoing facts, and the above-quoted findings of both the trial court and
the Court of Appeals, leave no room for doubt that Jose Angeles was a purchaser
and a builder in bad faith. 4 The provision applicable to this case is, accordingly, Article
449 of the Civil Code, which provides that, "(h)e who builds, plants or sows in bad
faith on the land of another, loses what is built, planted or sown without right to
indemnity."
Obviously, the alleged equity in favor of Jose Angeles, on which the lower courts
have relied, cannot prevail over the aforementioned express statutory provision to the
contrary, 5 apart from the fact that he who seeks equity must come with clean hands. 6
WHEREFORE, the decision of the Court of Appeals should be as it is hereby
modified by eliminating therefrom the contested award of P2,500.00 in favor of Jose
Angeles, and, thus modified, said decision is hereby affirmed in all other respects,
with the costs. It is so ordered.
Reyes, J.B.L., Makalintal, Sanchez, Castro, Angeles, Fernando and Capistrano, JJ.,
concur.
Dizon and Zaldivar, JJ., took no part.
[G.R. No. L-2017. November 24, 1906. ]
THE MUNICIPALITY OF OAS, Plaintiff-Appellee, v. BARTOLOME
ROA, Defendant-Appellant.
Del-Pan, Ortigas & Fisher, for Appellant.
Enrique Llopiz for Appellee.
SYLLABUS
1. REALTY; EVIDENCE; OWNERSHIP. The defendant in 1892 signed a
resolution of a municipality which recited that the latter was the owner of
the land in question, it being a part of the public square. In 1804 the
defendant bought the land from the person then in possession thereof.
Held, That in subsequent litigation between the municipality and the
defendant this resolution was competent evidence against him upon the
DONT WORRY BE HAPPY.

question of the ownership of the land.


2. ID; ID.; ESTOPPEL. Under the evidence, however, the defendant was
not estopped from presenting proof to overcome this admission. (Code of
Civil Procedure, sec. 333.)
3. CIVIL PROCEDURE; ADMISSION. As a general rule an admission of a
material fact made by a party to a suit is competent evidence against
him.
4. ID.; ID. Section 278 of the Code of Civil Procedure refers to
admission made by one not a party to the suit.
5. REALTY; MUNICIPAL PATRIMONIAL PROPERTY. The land having been
devoted by the municipality to other public uses than that of a square
became a part of its bienes patrimoniales.
6. ID., ACCESSION; GOOD FAITH. The defendant was not a purchaser
in good faith. The plaintiff, having permitted the erection by the defendant
of a building on the land without objection, acted in bad faith. To the case
applicable articles 361 and 364 of the Civil Code, and the plaintiff must
either buy the building or sell the land.
DECISION
WILLARD, J. :
The plaintiff brought this action for the recovery of a tract of land in the
pueblo of Oas, claiming that it was a part of the public square of said
town. The defendant in his answer alleged that he was the owner of the
property. Judgment was rendered in favor of the plaintiff and the
defendant has brought the case here by bill of exceptions.

As we look at the case, the only question involved is one of fact. Was the
property in question a part of the public square of the town of Oas? The
testimony upon this point in favor of the plaintiff consisted of statements
made by witnesses to the effect that this land had always been a part of
the public square, and of certain resolutions adopted by the principalia of
the pueblo reciting the same fact, the most important of these being the
minutes of the meeting of the 27th of February, 1892. In that document it
is expressly stated that this land was bought in 1832 by the then parish
priest for the benefit of the pueblo. It recites various proceedings taken
thereafter in connection with this ownership, including among them an
order of the corregidor of Nueva Caceres prohibiting the erection of houses
upon the land by reason of the fact above recited namely, that the land
belonged to the pueblo. This resolution terminated with an order to the
occupant of the building then standing upon the property that he should
not repair it. The defendant signed this resolution.
It further appears that the same building was almost entirely destroyed by
a baguio on the 13th and 14th of May, 1893, and that the authorities of
the puebo ordered the complete demolition thereof. The resolution of the
31st of May, 1893, declared that the then owner of the building, Jose
Castillo, had no right to reconstruct it because it was situated upon land
which did not belong to him. This resolution was also signed by the
defendant.
The evidence on the part of the defendant tends to show that in 1876
Juana Ricarte and Juana Riquiza sold the land in question to Juan Roco,
and that on the 17th day of December, 1894, Jose Castillo sold it to the
defendant. No deed of conveyance from Juan Roco to Jose Castillo was
presented in evidence, but Castillo, testifying as a witness, said that he
had bought the property by verbal contract from Roco, his father-in-law.
The defendant, after his purchase in 1894, procured a possessory of
information which was allowed by an order of the justice of the peace of
Oas on the 19th day of January, 1895, and recorded in the Registry of
Property on the 28th of March of the same year.

DONT WORRY BE HAPPY.

In this state of the evidence, we can not say that the proof is plainly and
manifestly against the decision of the court below. Unless it is so, the
finding of fact made by that court can not be reversed. (De la Rama v. De
la Rama, 201 U. S., 303.)
The two statements signed by Roa, one in 1892 and the other in 1893, are
competent evidence against him. They are admissions by him to the effect
that at that time the pueblo was the owner of the property in question.
They are, of course, not conclusive against him. He was entitled to, and
did present evidence to overcome the effect of these admissions. The
evidence does not make out a case of estoppel against him. (sec. 333,
par. 1, Code of Civil Procedure.)
The admissibility of these statements made by Roa do not rest upon
section 278 of the Code of Civil Procedure, which relates to declarations or
admissions made by persons not a party to the suit, but it rests upon the
principle that when the defendant in a suit has himself made an admission
of any fact pertinent to issue involved, it can be received against him.
This action was commenced on the 17th of December, 1902. There is no
evidence of any adverse occupation of this land for thirty years,
consequently the extraordinary period of prescription does not apply. The
defendant can not rely upon the ordinary period of prescription of ten
years because he was not a holder in good faith. He knew at that time of
his purchase in 1894, and had so stated in writing, that the pueblo was
the owner of the property. So that, even if the statute of limitations ran
against a municipality in reference to a public square, it could not avail the
defendant in this case.
It appears that Roa has constructed upon the property, and that there now
stands thereon, a substantial building. As early as 1852 this land had been
used by the municipality constructed thereon buildings for the storage of
property of the State, quarters for the cuadrilleros, and others of a like
character. It therefore had ceased to be property used by the public and
had become a part of the bienes patrimoniales of the pueblo. (Civil Code,
arts. 341, 344.) To the case are applicable those provisions of the Civil

Code which relate to the construction by one person of a building upon


land belonging to another. Article 364 of the Civil Code is as
follows:jgc:chanrobles.com.ph

After the expiration of twenty days let judgment be entered in accordance


herewith and at the proper time thereafter let the record be remanded to
the court below for proper action. So ordered.

"Where there has been bad faith, not only on the part of the person who
built, sowed, or planted on anothers land, but also on the part of the
owner of the latter, the rights of both shall be the same as if they had
acted in good faith.

Johnson, Carson, and Tracey, JJ., concur.

"Bad faith on the part of the owner is understood whenever the act has
been executed in his presence with his knowledge and tolerance and
without objection."cralaw virtua1aw library

G.R. No. 126000 October 7, 1998


METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS), petitioner,
vs.
COURT OF APPEALS, HON. PERCIVAL LOPEZ, AYALA CORPORATION and
AYALA LAND, INC.,respondents.

The defendant constructed the building in bad faith for, as we have said,
he had knowledge of the fact that his grantor was not the owner thereof.
There was a bad faith also on the part of the plaintiff in accordance with
the express provisions of article 364 since it allowed Roa to construct the
building without any opposition on its part and to so occupy it for eight
years. The rights of the parties must, therefore, be determined as if they
both had acted in good faith. Their rights in such cases are governed by
article 361 of the Civil Code, which is as follows:jgc:chanrobles.com.ph

G.R. No. 128520 october 7, 1998

"The owner of the land on which the building, sowing, or planting is done
in good faith shall have a right to appropriate as his own the work, sowing,
or planting after the indemnity mentioned in articles 453 and 454, or, to
oblige the person who has built or planted, to pay him the value of the
land and to force the person who sowed to pay the proper rent."cralaw
virtua1aw library

These are consolidated petitions for review emanating from Civil Case No. Q-9315266 of the Regional Trial Court of Quezon City, Branch 78, entitled "Metropolitan
Waterworks and Sewerage System (hereafter MWSS) vs. Capitol Hills Golf & Country
Club Inc. (hereafter, CHGCCI), STC (hereafter, SILHOUETTE), Ayala Corporation,
Ayala Land, Inc. (hereafter AYALA) Pablo Roman, Jr., Josefina A. Roxas, Jesus
Hipolito, Alfredo Juinito, National Treasurer of the Philippines and the Register of
Deeds of Quezon City."

The judgment of the court below is so modified as to declare that the


plaintiff is the owner of the land and that it has the option of buying the
building thereon, which is the property of the defendant, or of selling to
him the land on which it stands. The plaintiff is entitled to recover the
costs of both instances.

DONT WORRY BE HAPPY.

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,


vs.
HON. PERCIVAL MANDAP LOPEZ, CAPITOL HILLS GOLF AND COUNTRY CLUB
INC., SILHOUETTE TRADING CORPORATION, and PABLO ROMAN
JR., respondents.
MARTINEZ, J.:

From the voluminous pleadings and other documents submitted by the parties and
their divergent styles in the presentation of the facts, the basic antecedents attendant
herein are as follows:

Sometime in 1965, petitioner MWSS (then known as NAWASA) leased around one
hundred twenty eight (128) hectares of its land (hereafter, subject property) to
respondent CHGCCI (formerly the International Sports Development Corporation) for
twenty five (25) years and renewable for another fifteen (15) years or until the year
2005, with the stipulation allowing the latter to exercise a right of first refusal should
the subject property be made open for sale. The terms and conditions of respondent
CHGCCI's purchase thereof shall nonetheless be subject to presidential approval.
Pursuant to Letter of instruction (LOI) No. 440 issued on July 29,1976 by then
President Ferdinand E. Marcos directing petitioner MWSS to negotiate the
cancellation of the MWSS-CHGCCI lease agreement for the disposition of the subject
property, Oscar Ilustre, then General Manager of petitioner MWSS, sometime in
November of 1980 informed respondent CHGCCI, through its president herein
respondent Pablo Roman, Jr., of its preferential right to buy the subject property
which was up for sale. Valuation thereof was to be made by an appraisal company of
petitioner MWSS' choice, the Asian Appraisal Co., Inc. which, on January 30, 1981,
pegged a fair market value of P40.00 per square meter or a total of P53,800,000.00
for the subject property.
Upon being informed that petitioner MWSS and respondent CHGCCI had already
agreed in principle on the purchase of the subject property, President Marcos
expressed his approval of the sale as shown in his marginal note on the letter sent by
respondents Jose Roxas and Pablo Roman, Jr. dated December 20, 1982.
The Board of Trustees of petitioner MWSS thereafter passed Resolution 36-83,
approving the sale of the subject property in favor of respondent SILHOUETTE, as
assignee of respondent CHGCCI, at the appraised value given by Asian Appraisal
Co., Inc. Said Board Resolution reads:
NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved, that in
accordance with Section 3, Par. (g) of the MWSS Charter and subject to
the approval of the President of the Philippines, the sale of a parcel of
land located in Balara, Quezon City, covered by TCT No. 36069 of the
Registry of Deeds of Quezon City, containing an area of ONE
HUNDRED TWENTY SEVEN (127.313) hectares more or less, which is
the remaining portion of the area under lease after segregating a
BUFFER ZONE already surveyed along the undeveloped area near the
DONT WORRY BE HAPPY.

treatment plant and the developed portion of the CHGCCI golf course,
to SILHOUETTE TRADING CORPORATION as Assignee of Capitol
Hills Golf & Country Club, Inc., at FORTY (P40.00) PESOS per square
meter, be and is hereby approved.
BE IT RESOLVED FURTHER, that the General Manager be authorized,
as he is hereby authorized to sign for and in behalf of the MWSS the
contract papers and other pertinent documents relative thereto.
The MWSS-SILHOUETTE sales agreement eventually pushed through. Per the
Agreement dated May 11, 1983 covering said purchase, the total price for the subject
property is P50,925,200, P25 Million of which was to be paid upon President Marcos'
approval of the contract and the balance to be paid within one (1) year from the
transfer of the title to respondent SILHOUETTE as vendee with interest at 12% per
annum. The balance was also secured by an irrevocable letter of credit. A
Supplemental Agreement was forged between petitioner MWSS and respondent
SILHOUETTE on August 11, 1983 to accurately identify the subject property.
Subsequently, respondent SILHOUETTE, under a deed of sale dated July 26, 1984,
sold to respondent AYALA about sixty-seven (67) hectares of the subject property at
P110.00 per square meter. Of the total price of around P74 Million, P25 Million was to
be paid by respondent AYALA directly to petitioner MWSS for respondent
SILHOUETTE's account and P2 Million directly to respondent SILHOUETTE.
P11,600,000 was to be paid upon the issuance of title in favor of respondent AYALA,
and the remaining balance to be payable within one (1) year with 12% per annum
interest.
Respondent AYALA developed the land it purchased into a prime residential area now
known as the Ayala Heights Subdivision.
Almost a decade later, petitioner MWSS on March 26, 1993 filed an action against all
herein named respondents before the Regional Trial Court of Quezon City seeking for
the declaration of nullity of the MWSS-SILHOUETTE sales agreement and all
subsequent conveyances involving the subject property, and for the recovery thereof
with damages.

Respondent AYALA filed its answer pleading the affirmative defenses of (1)
prescription, (2) laches, (3) waiver/estoppel/ratification, (4) no cause of action, (5)
non-joinder of indispensable parties, and (6) non-jurisdiction of the court for nonspecification of amount of damages sought.
On June 10, 1993; the trial court issued an Order dismissing the complaint of
petitioner MWSS on grounds of prescription, laches, estoppel and non-joinder of
indispensable parties.
Petitioner MWSS's motion for reconsideration of such Order was denied, forcing it to
seek relief from the respondent Court where its appeal was docketed as CA-G.R. CV
No. 50654. It assigned as errors the following:
I. The court a quo committed manifest serious error and
gravely abused its discretion when it ruled that plaintiffs
cause of action is for annulment of contract which has
already prescribed in the face of the clear and
unequivocal recitation of six causes of action in the
complaint, none of which is for annulment.
II. The lower court erred and exceeded its jurisdiction
when, contrary to the rules of court and jurisprudence, it
treated and considered the affirmative defenses of Ayalas
defenses not categorized by the rules as grounds for a
motion to dismiss as grounds of a motion to dismiss
which justify the dismissal of the complaint.

the Ayalas in the absence of any evidence presented by


the parties.
V. The court a quo erred when, contrary to the rules and
jurisprudence, it prematurely ruled that laches and
estoppel bar the complaint as against Ayalas or that
otherwise the alleged failure to implead indispensable
parties dictates the dismissal of the complaint.
In the meantime, respondents CHGCCI and Roman filed their own motions to hear
their affirmative defenses which were identical to those adduced by respondent
AYALA. For its part, respondent SILHOUETTE filed a similarly grounded motion to
dismiss.
Ruling upon these motions, the trial court issued an order dated December 13, 1993
denying all of them. The motions for reconsideration of the respondents concerned
met a similar fate in the May 9, 1994 Order of the trial court. They thus filed special
civil actions for certiorari before the respondent Court which were docketed as CAG.R. SP Nos. 34605, 34718 and 35065 and thereafter consolidated with CA-G.R. CV
No. 50694 for disposition.
Respondent court, on August 19, 1996, rendered the assailed decision, the
dispositive portion of which reads:
WHEREFORE, judgment is rendered:
1.) DENYING the petitions for writ of certiorari for lack of merit; and

III. The lower court abused its discretion and exceeded its
jurisdiction when it favorably acted on Ayala's motion for
preliminary hearing of affirmative defenses (motion to
dismiss) by dismissing the complaint without conducting a
hearing or otherwise requiring the Ayalas to present
evidence on the factual moorings of their motion.
IV. The lower court acted without jurisdiction and
committed manifest error when it resolved factual issues
and made findings and conclusions of facts all in favor of
DONT WORRY BE HAPPY.

2.) AFFIRMING the order of the lower court dismissing the complaint
against the appellees Ayalas.
SO ORDERED.
Petitioner MWSS appealed to this Court that portion of the respondent Court's
decision affirming the trial court's dismissal of its complaint against respondent
AYALA, docketed as G.R. No. 126000. The portion dismissing the petition
for certiorari (CA-GR Nos. 34605, 347718 and 35065) of respondents Roman,

CHGCCI and SILHOUETTE, however, became final and executory for their failure to
appeal therefrom. Nonetheless, these respondents were able to thereafter file before
the trial court another motion to dismiss grounded, again, on prescription which the
trial court in an Order of October 1996 granted.
This prompted petitioner MWSS to file another petition for review of said trial court
Order before this Court and docketed as G.R. No. 128520. On motion of petitioner
MWSS, this Court in a Resolution dated December 3, 1997 directed the consolidation
of G.R. Nos. 126000 and 128520.
The errors assigned by petitioner MWSS in CA-GR No. 126000 are:

for preliminary hearing of affirmative defense / motion to dismiss. These


previous motions were denied by the lower court, which denial the
respondents raised to the Court of Appeals by way of perfection
for certiorari, which petitions in turn were dismissed for lack of merit by
the latter court. The correctness and validity of the lower court's
previous orders denying movant's motion for preliminary hearing of
affirmative defense / motion to dismiss has accordingly been settled
already with finality and cannot be disturbed or challenged anew at this
instance of defendant's new but similarly anchored motions to dismiss,
without committing procedural heresy causative of miscarriage of
justice.

I.

II.

In holding, per the questioned Decision dated 19 August 1996, that


plaintiffs cause of action is for annulment of contract which has already
prescribed in the face of the clear and unequivocal recitation of six
causes of action in the complaint, none of which is for annulment, and
in effect affirming the dismissal by the respondent judge of the
complaint against respondent Ayalas. This conclusion of respondent CH
is, with due respect, manifestly mistaken and legally absurd.

The lower court erred in not implementing correctly the decision of the
Court of Appeal. After all, respondents' own petitions
for certiorari questioning the earlier denial of their motion for preliminary
hearing of affirmative defense / motion to dismiss were dismissed by
the Court of Appeal, in the process of affirming the validity and legality
of such denial by the court a quo. The dismissal of the respondents'
petitions are embodied in the dispositive portion of the said decision of
the Court of Appeals dated 19 August 1996. The lower court cannot
choose to disregard such decretal aspect of the decision and instead
implement an obiter dictum.

II.
In failing to consider that the complaint recited six alternative causes of
action, such that the insufficiency of one cause assuming there is
such insufficiency does not render insufficient the other causes and
the complaint itself. The contrary ruling in this regard by respondent CA
is founded entirely on speculation and conjecture and is constitutive of
grave abuse of discretion.
In G.R. No. 128520, petitioner MWSS avers that:
I.
The court of origin erred in belatedly granting respondent's motions to
dismiss which are but a rehash, a disqualification, of their earlier motion
DONT WORRY BE HAPPY.

III.
That part of the decision of the decision of the Court of Appeals
resolving the issue of prescription attendant to the appeal of plaintiff
against the Ayalas, has been appealed by plaintiff to the Supreme Court
by way of a petition for review on certiorari. Not yet being final and
executory, the lower court erred in making capital out of the same to
dismiss the case against the other defendants, who are the
respondents herein.
IV.

The lower court erred in holding, per the questioned orders, that
plaintiff's cause of action is for annulment of contract which has already
prescribed in the face of the clear and unequivocal recitation of six
causes of action in the complaint, none of which is for annulment. This
conclusion of public respondent is manifestly mistaken and legally
absurd.
V.
The court a quo erred in failing to consider the complaint recites six
alternative causes of action, such that the insufficiency of one cause
assuming there is such insufficiency does not render insufficient the
other cause and the complaint itself. The contrary ruling in this regard
by public respondent is founded entirely on speculation and conjecture
and is constitutive of grave abuse of discretion.
In disposing of the instant petition, this Court shall dwell on the more crucial grounds
upon which the trial court and respondent based their respective rulings unfavorable
to petitioner MWSS; i.e., prescription, laches, estoppel/ratification and non-joinder of
indispensable parties.
RE: Prescription
Petitioner MWSS claims as erroneous both the lower courts' uniform finding that the
action has prescribed, arguing that its complaint is one to declare the MWSSSILHOUETTE sale, and all subsequent conveyances of the subject property, void
which is imprescriptible.
We disagree.
The very allegations in petitioner MWSS' complaint show that the subject property
was sold through contracts which, at most, can be considered only as voidable, and
not void. Paragraph 12 of the complaint reads in part:

The plaintiff has been in continuous, peaceful and public possession


and ownership of the afore-described properties, the title (TCT No.
[36069] 199170) thereto, including its derivative titles TCT Nos. 213872
and 307655, having been duly issued in its name. However, as a result
of fraudulent and illegal acts of herein defendants, as described in the
paragraphs hereinafter following, the original of said title/s were
cancelled and in lieu thereof new titles were issued to corporate
defendant/s covering subject 127.9271 hectares. . . . .
Paragraph 34 alleges:
34. Sometime thereafter, clearly influenced by the premature if not
questionable approval by Mr. Marcos of a non-existent agreement, and
despite full knowledge that both the assessed and market value of
subject property were much higher, the MWSS Board of Trusties
illegally passed an undated resolution ("Resolution No. 36-83"),
approving the "sale" of the property to CHGCCI at P40/sq.m. and
illegally authorizing General Manager Ilustre to sign the covering
contract.
This "resolution" was signed by Messrs. Jesus Hipolito as Chairman;
Oscar Ilustre, as Vice Chairman; Aflredo Junio, as Member; and
Silvestre Payoyo, as Member; . . . .
Paragraph 53 states:
53. Defendants Pablo Roman, Jr., Josefino Cenizal, and Jose Roxas as
well as defendant corporations (CHGCCI, STC and Ayala) who acted
through the former and their other principal officers, knowingly induced
and caused then President Marcos and the former officers of plaintiff
MWSS to enter into the aforesaid undated "Agreement" which are
manifestly and grossly disadvantageous to the government and which
gave the same defendants unwarranted benefits, i.e., the ownership
and dominion of the afore-described property of plaintiff.

12. . . . .
Paragraph 54 avers:
DONT WORRY BE HAPPY.

54. Defendants Jesus Hipolito and Alfredo Junio, then public officers,
together with the other public officers who are now deceased
(Ferdinand Marcos, Oscar Ilustre, and Sivestre Payoyo) knowingly
allowed themselves to be persuaded, induced and influenced to
approve and/or enter into the aforementioned "Agreements" which are
grossly and manifestly disadvantageous to the MWSS/government and
which bestowed upon the other defendants the unwarranted
benefit/ownership of subject property.
The three elements of a contract consent, the object, and the cause of
obligation 1 are all present. It cannot be otherwise argued that the contract had for its
object the sale of the property and the cause or consideration thereof was the price to
be paid (on the part of respondents CHGCCI/SILHOUETTE) and the land to be sold
(on the part of petitioner MWSS). Likewise, petitioner MWSS' consent to the May 11,
1983 and August 11, 1983 Agreements is patent on the face of these documents and
on its own resolution No. 36-83.
As noted by both lower courts, petitioner MWSS admits that it consented to the sale
of the property, with the qualification that such consent was allegedly unduly
influenced by the President Marcos. Taking such allegation to be hypothetically true,
such would have resulted in only voidable contracts because all three elements of a
contract, still obtained nonetheless. The alleged vitiation of MWSS' consent did not
make the sale null and void ab initio. Thus, "a contract where consent is given
through mistake, violence, intimidation, undue influence or fraud, is voidable" 2.
Contracts "where consent is vitiated by mistake, violence, intimidation, undue
influence or fraud" are voidable or annullable 3. These are not void as
Concepts of Voidable Contracts. Voidable or anullable contracts are
existent, valid, and binding, although they can be annulled because of
want of capacity or vitiated consent of the one of the parties, but before
annulment, they are effective and obligatory between parties. Hence, it
is valid until it is set aside and its validity may be assailed only in an
action for that purpose. They can be confirmed or ratified. 4
As the contracts were voidable at the most, the four year prescriptive period under
Art. 1391 of the New Civil Code will apply. This article provides that the prescriptive
period shall begin in the cases of intimidation, violence or undue influence, from the
DONT WORRY BE HAPPY.

time the defect of the consent ceases", and "in case of mistake or fraud, from the
time of the discovery of the same time".
Hypothetically admitting that President Marcos unduly influenced the sale, the
prescriptive period to annul the same would have begun on February 26, 1986 which
this Court takes judicial notice of as the date President Marcos was deposed.
Prescription would have set in by February 26, 1990 or more than three years before
petitioner MWSS' complaint was failed.
However, if petitioner MWSS' consent was vitiated by fraud, then the prescriptive
period commenced upon discovery. Discovery commenced from the date of the
execution of the sale documents as petitioner was party thereto. At the least,
discovery is deemed to have taken place on the date of registration of the deeds with
the register of Deeds as registration is constructive notice to the world. 5 Given these
two principles on discovery, the prescriptive period commenced in 1983 as petitioner
MWSS actually knew of the sale, or, in 1984 when the agreements were registered
and titles thereafter were issued to respondent SILHOUTTE. At the latest, the action
would have prescribed by 1988, or about five years before the complaint was
instituted. Thus, in Aznar vs. Bernard 6, this Court held that:
Lastly, even assuming that the petitioners had indeed failed to raise the
affirmative defense of prescription in a motion to dismiss or in an
appropriate pleading (answer, or amended or supplemental answer)
and an amendment would no longer be feasible, still prescription, if
apparent on the face of the complaint, may be favorably considered. In
the case at bar, the private respondents admit in their complaint that the
contract or real estate mortgage which they alleged to be fraudulent and
which had been foreclosed, giving rise to this controversy with the
petitioners, was executed on July 17, 1978, or more than eight long
years before the commencement of the suit in the court a quo, on
September 15, 1986. And an action declare a contract null and void on
the ground of fraud must be instituted within four years. Extinctive
prescription is thus apparent on the face of the complaint itself as
resolved by the Court.
Petitioner MWSS further contends that prescription does not apply as its complaint
prayed not for the nullification of voidable contracts but for the declaration of nullity of

void ab initio contracts which are imprescriptible. This is incorrect, as the prayers in a
complaint are not determinative of what legal principles will operate based on the
factual allegations of the complaint. And these factual allegations, assuming their
truth, show that MWSS consented to the sale, only that such consent was purportedly
vitiated by undue influence or fraud. Therefore, the rules on prescription will operate.
Even if petitioner MWSS asked for the declaration of nullity of these contracts, the
prayers will not be controlling as only the factual allegations in the complaint
determine relief. "(I)t is the material allegations of fact in the complaint, not the legal
conclusion made therein or the prayer that determines the relief to which the plaintiff
is entitled" 7. Respondent court is thus correct in holding that:
xxx xxx xxx
The totality then of those allegations in the complaint makes up a case
of a voidable contract of sale not a void one. The determinative
allegations are those that point out that the consent of MWSS in the
Agreement of Sale was vitiated either by fraud or undue for the
declaration of nullity of the said contract because the Complaint says
no. Basic is the rule however that it is the body and not the caption nor
the prayer of the Complaint that determines the nature of the action.
True, the caption and prayer of the Complaint state that the action is for
a judicial declaration of nullity of a contract, but alas, as already pointed
out, its body unmistakably alleges only a voidable contract. One cannot
change the real nature of an action adopting a different nomenclature
any more than one can change gin into whisky by just replacing the
label on the bottle with that of the latter's and calling it whisky. No matter
what, the liquid inside remains gin.
xxx xxx xxx
Petitioner MWSS also theorizes that the May 11, 1983 MWSS-SILHOUTTE
Agreement and the August 11, 1983 Supplemental Agreement were void ab
initio because the "initial agreement" from which these agreements emanated was
executed "without the knowledge, much less the approval" of petitioner MWSS
through its Board of Trustees. The "initial agreement" referred to in petitioner MWSS'
argument is the December 20, 1982 letter of respondents Roxas and Roman, Jr. to
President Marcos where the authors mentioned that they had reached an agreement
DONT WORRY BE HAPPY.

with petitioner's then general manager, Mr. Oscar Ilustre. Petitioner MWSS maintains
that Mr. Ilustre was not authorized to enter into such "initial agreement", contrary to
Art. 1874 of the New Civil Code which provides that "when a sale of a parcel of land
or any interest therein is through an agent, the authority of the latter shall be in writing
otherwise the sale shall be void." It then concludes that since its Res. No. 36-83 and
the May 11, 1983 and August 11, 1983 Agreements are "fruits" of the "initial
agreement" (for which Mr. Ilustre was allegedly not authorized in writing), all of these
would have been also void under Art. 1422 of NCC, which provides that a contract
which is the direct result of a pronounced illegal contract, is also void and inexistent."
The argument does not impress. The "initial agreement" reflected in the December
20, 1982 letter of respondent Roman to Pres. Marcos, is not a sale under Art. 1874.
Since the nature of the "initial agreement" is crucial, we
quotes 8 the letter in full:
We respectfully approach Your Excellency in all humility and in the spirit
of the Yuletide Season. We have explained to Your Excellency when
you allowed us the honor to see you, that the negotiations with MWSS
which the late Pablo R. Roman initiated way back in 1975, with your
kind approval, will finally be concluded.
We have agreed in principle with Mr. Oscar Ilustre on the terms of the
sale as evidenced by the following:
1. Our written agreement to hire Asian
Appraisal Company to appraise the entire
leased area which then be the basis for the
negotiations of the purchase price of the
property; and
2. Our exchange of communications wherein
made a counter-offer and our acceptance
counter-offer.
However, we were informed by Mr. Ilustre that only written instruction
from Your Excellency will allow us to finally sign the Agreement.

In sum, our Agreement is for the purchase price of FIFTY-SEVEN


MILLION TWO-HUNDRED-FORTY THOUSAND PESOS (P57,240,000)
for the entire leased area of 135 hectares; TWENTY-SEVEN MILLION
PESOS (P27,000,000) payable upon approval of the contract by Your
Excellency and the balance of THIRTY MILLION TWO HUNDRED
FORTY THOUSAND PESOS (P30,240,000) after one (1) year inclusive
of a 12% interest.
We believe that this arrangement is fair and equitable to both parties
considering that the value of the land was appraised by a reputable
company and independent appraisal company jointly commissioned by
both parties and considering further that Capitol Hills has still a 23-year
lien on the property by virtue of its existing lease contract with MWSS.
We humbly seek your instruction, Your Excellency and please accept
our families' sincere wish for a Merry Christmas and a Happy New Year
to you and the First Family.
The foregoing does not document a sale, but at most, only the conditions proposed
by respondent Roman to enter into one. By the terms thereof, it refers only to an
"agreement in principle". Reflecting a future consummation, the letter mentions
"negotiations with MWSS (which) with your (Marcos) kind approval, will finally be
concluded". It must likewise be noted that presidential approval had yet to be
obtained. Thus, the "initial agreement" was not a sale as it did not in any way transfer
ownership over the property. The proposed terms had yet to be approval by the
President and the agreement in principle still had to be formalized in a deed of sale.
Written authority as is required under Art. 1834 of the New Civil Code, was not
needed at the point of the "initial agreement".
Verily, the principle on prescription of actions is designed to cover situations such as
the case at bar, where there have been a series of transfers to innocent purchasers
for value. To set aside these transactions only to accommodate a party who has slept
on his rights is anathema to good order. 9
RE: Laches

DONT WORRY BE HAPPY.

Even assuming, for argument's sake, that the allegations in the complaint establish
the absolute nullity of the assailed contracts and hence imprescriptible, the complaint
can still be dismissed on the ground of laches which is different from prescription.
This Court, as early as 1966, has distinguished these two concepts in this wise:
. . . (T)he defense of laches applies independently of prescription.
Laches is different from the statute of limitations. Prescription is
concerned with the fact of delay, whereas laches, is concerned with the
effect of delay. Prescription is a matter of time; laches is principally a
question of inequity of permitting a claim to be enforced, this inequity
being founded on some change in the condition of the property or the
relation of the parties. Prescription is statutory; laches is not. Laches
applies in inequity, whereas prescription applies at law. Prescription is
based on fixed-time; laches is not. 10
Thus, the prevailing doctrine is that the right to have a contract declared
void ab initio may be barred by laches although not barred by prescription.

11

It has, for all its elements are present, viz:


(1) conduct on the part of the defendant, or
one under whom he claims, giving rise to the
situation that led to the complaint and for
which the complaint seeks a remedy;
(2) delay in asserting the complainant's
rights, having had knowledge or notice of the
defendant's conduct and having been
afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of
the defendant that the complainant would
assert the right on which he bases his suit;
and

(4) injury or prejudice to the defendant in the


event relief is accorded to the complainant,
or the suit is not held barred. 12
There is no question on the presence of the first element. the main thrust of petitioner
MWSS's complaint is to bring to the fore what it claims as fraudulent and/or illegal
acts of the respondents in the acquisition of the subject property.

Under these facts supplied by petitioner MWSS itself, respondents have every
good reason to believe that petitioner was honoring the validity of the
conveyances of the subject property, and that the sudden institution of the
complaint in 1993 alleging the nullity of such conveyances was surely an
unexpected turn of events for respondents. Hence, petitioner MWSS cannot
escape the effect of laches.
RE: Ratification

The second element of delay is evident from the fact that petitioner tarried for almost
ten (10) years from the conclusion of the sale sometime in 1983 before formally
laying claim to the subject property in 1993.
The third element is present as can be deduced from the allegations in the complaint
that petitioner MWSS (a) demanded for a downpayment for no less than three times;
(b) accepted downpayment for P25 Million; and (c) accepted a letter of credit for the
balance. The pertinent paragraphs in the complaint thus read:
38. In a letter dated September 19, 1983, for failure of CHGCCI to pay
on time, Mr. Ilustre demanded payment of the downpayment of P25
Million which was due as of 18 April 1983. A copy of this letter is hereto
attached as Annex "X";
39. Again, in a letter dated February 7, 1984, then MWSS Acting
General Manager Aber Canlas demanded payment from CHGCCI of
the purchase price long overdue. A copy of this letter is hereto attached
as Annex "Y";
40. Likewise, in a letter dated March 14, 1984, Mr. Canlas again
demanded from CHGCCI payment of the price. A copy of this demand
letter is hereto attached as Annex "Z";
41. Thereafter, in a letter dated July 27, 1984, another entity, defendant
Ayala Corporation, through SVP Renato de la Fuente, paid with a check
the long overdue downpayment of P25,000,000.00 of STC/CHGCCI.
Likewise a domestic stand-by letter of credit for the balance was issued
in favor of MWSS; Copies of the said letter, check and letter of credit
are hereto attached as Annexes "AA", "BB", and "CC", respectively.
DONT WORRY BE HAPPY.

Pertinent to this issue is the claim of petitioner MWSS that Mr. Ilustre was never given
the authority by its Board of Trustees to enter into the "initial agreement" of December
20, 1982 and therefore, the sale of the subject property is invalid.
Petitioner MWSS misses the paint. The perceived infirmity in the "initial agreement"
can be cured by ratification. So settled is the precept that ratification can be made by
the corporate board either expressly or impliedly. Implied ratification may take various
forms like silence or acquiescence; by acts showing approval or adoption of the
contract; or by acceptance and retention of benefits flowing therefrom. 13 Both modes
of ratification have been made in this case.
There was express ratification made by the Board of petitioner MWSS when it passed
Resolution No. 36-83 approving the sale of the subject property to respondent
SILHOUETTE and authorizing Mr. Ilustre, as General Manager, "to sign for and in
behalf of the MWSS the contract papers and other pertinent documents relative
thereto." Implied ratification by "silence or acquiescence" is revealed from the acts of
petitioner MWSS in (a) sending three (3) demand letters for the payment of the
purchase price, (b) accepting P25 Million as downpayment, and (c) accepting a letter
of credit for the balance, as hereinbefore mentioned. It may well be pointed out also
that nowhere in petitioner MWSS' complaint is it alleged that it returned the amounts,
or any part thereof, covering the purchase price to any of the respondents-vendees at
any point in time. This is only indicative of petitioner MWSS' acceptance and retention
of benefits flowing from the sales transactions which is another form of implied
ratification.
RE: Non-joinder of indispensable parties

There is no denying that petitioner MWSS' action against herein respondents for the
recovery of the subject property now converted into a prime residential subdivision
would ultimately affect the proprietary rights of the many lot owners to whom the land
has already been parceled out. They should have been included in the suit as
parties-defendants, for "it is well established that owners of property over which
reconveyance is asserted are indispensable parties without whom no relief is
available and without whom the court can render no valid judgment." 14 Being
indispensable parties, the absence of these lot-owners in the suit renders all
subsequent actions of the trial court null and void for want of authority to act, not only
as to the absent parties but even as to those present. 15Thus, when indispensable
parties are not before the court, the action should be dismissed. 16
WHEREFORE, in view of the foregoing, the consolidated petitions are hereby
DENIED.
SO ORDERED.
Regalado and Mendoza, JJ., concur.

De Guzman and Fernandez for appellee Filipinas Colleges, Inc.


San Huan, Africa and Benedicto for appellant Maria Garcia Timbang.
Nicanor S. Sison for appellee Maria Gervacio Blas.
BARRERA, J.:
This is an appeal taken from an order of the Court of First Instance of Manila dated
May 10, 1957 (a) declaring the Sheriff's certificate of sale covering a school building
sold at public auction null and void unless within 15 days from notice of said order the
successful bidders, defendants-appellants spouses Maria Garcia Timbang and
Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas directly or through the
Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the
building at the Sheriff's sale; (b) declaring the other appellee Filipinas Colleges, Inc.
owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of
tile No 45970, on which the building sold in the auction sale is situated; and (c)
ordering the sale in public auction of the said undivided interest of the Filipinas
Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the
judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in the amount
of P8,200.00 minus the sum of P5,750.00 mentioned in (a) above.

Melo and Puno, JJ., took no part.


G.R. No. L-12812

September 29, 1959

FILIPINAS COLLEGES, INC., plaintiff-appellee,


vs.
MARIA GARCIA TIMBANG, ET AL., defendants.
-----------------------------G.R. No. L-12813

September 29, 1959

MARIA GARCIA TIMBANG, ET AL., plaintiffs.


MARIA GARICA TIMBANG, plaintiff-appellant,
vs.
MARIA GERVACIO BLAS, defendant-appellee.

DONT WORRY BE HAPPY.

The order appealed from is the result of three motions filed in the court a quo in the
course of the execution of a final judgment of the Court of Appeals rendered in 2
cases appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and
Maria Gervacio Blas were the parties. IN that judgment of the Court of Appeals, the
respective rights of the litigants have been adjudicated as follows:1wphl.nt
(1) Filipinas Colleges, Inc. was declared to have acquired the rights of the
spouses Timbang in and to lot No. 2-a mentioned above and in consideration
thereof, Filipinas Colleges, Inc., was ordered to pay the spouses Timbang the
amount of P15,807.90 plus such other amounts which said spouses might
have paid or had to pay after February, 1953, to Hoskins and Co. Inc., agent of
the Urban Estates, Inc., original vendor of the lot. Filipinas Colleges, Inc.
original vendor of the total amount with the court within 90 days after the
decision shall have become final.
(2) Maria Gervacio Blas was declared to be a builder in good faith of the
school building constructed on the lot in question and entitled to be paid the

amount of P19,000.00 for the same. Filipinas Colleges, Inc., purchaser of the
said building was ordered to deliver to Blas stock certificate (Exh. C) for 108
shares of Filipinas Colleges, Inc. with a par value of P10,800.00 and to pay
Blas the sum of P8,200.00 of the house.
(3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which
after liquidation was fixed at P32,859.34, within the 90-day period set by the
court, Filipinas Colleges would lose all its rights to the land and the spouses
Timbang would then become the owners thereof. In that eventuality, the
Timbangs would make known to the court their option under Art. 448 of the
Civil Code whether they would appropriate the building in question, in which
even they would have to pay Filipinas Colleges, Inc. the sum of P19,000.00, or
would compel the latter to acquire the land and pay the price thereof.
Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within
the time prescribed, the spouses Timbang, in compliance with the judgment of the
Court of Appeals, on September 28, 1956, made known to the court their decision
that they had chosen not of appropriate the building but to compel Filipinas Colleges,
Inc., for the payment of the sum of P32,859,34. The motion having been granted, a
writ of execution was issued on January 8, 1957.
On January 16, 1957, appellee Blas in turn filed a motion for execution of her
judgment of P8,200.00 representing the unpaid portion of the price of the house sold
to Filipinas Colleges, Inc. Over the object of the Timbangs, the court grated the
motion and the corresponding writ of execution was issued on January 30, 1957, date
of the granting of the motion for execution, Blas through counsel, sent a letter to the
Sheriff of Manila advising him of her preferential claim or lien on the house to satisfy
the unpaid balance of the purchase price thereof under Article 2242 of the Civil Code,
and to withhold from the proceed of the auction sale the sum of P8,200.00. Levy
having been made on the house in virtue of the writs of execution, the Sheriff of
Manila on March 5, 1957, sold the building in public auction in favor of the spouses
Timbang, as the highest bidders, in the amount of P5,750.00. Personal properties of
Filipinas Colleges, Inc. were also auctioned for P245.00 in favor of the spouses
Timbang.
As a result of these actuation, three motion were subsequently filed before the lower
court:
DONT WORRY BE HAPPY.

(1) By appellee Blas, praying that the Sheriff of Manila and/or the Timbang
spouses be ordered to pay and deliver to her the sum of P5,750.00
representing the proceeds of the auction sale of the building of Filipinas
Colleges, Inc. over which she has a lien of P8,200.00 for the unpaid balance of
the purchase price thereof;.
(2) Also by the appellee Bals, praying that there being still two unsatisfied
executions, one for the sum of P32,859.34 in favor the land involved, Lot No.
2-a, be sold at public auction; and (3) By Filipinas Colleges, Inc. praying that
because its properties, the house and some personal properties, have been
auctioned for P5,750.00 and P245.00 respectively in favor of the Timbang
spouses who applied the proceeds to the partial payment of the sum of
P32,859.34 value of the land, Lot No. 2-a, it (Filipinas Colleges, Inc.) be
declared part owner of said lot to the extent of the total amount realized from
the execution sale of its properties.1wphl.nt
The Timbang spouses presented their opposition to each and all of these motion.
After due hearing the lower court rendered its resolution in the manner indicated at
the beginning of this decision, from which the Timbangs alone have appealed.
In assailing the order of the court a quo directing the appellants to pay appellee Blas
the amount of their bid (P5,750.00) made at the public auction, appellants' counsel
has presented a novel, albeit ingenious, argument. It is contended that because the
builder in good faith has failed to pay the price of the land after the owners thereof
exercised their option under Article 448 of the Civil Code, the builder lost his right of
retention provided in Article 546 and by operation of Article 445, the appellants as
owners of the land automatically became the owners ipso facto, the execution sale of
the house in their favor was superfluous. Consequently, they are not bound to make
good their bid of P5,750.00 as that would be to make goods to pay for their own
property. By the same token, Blas claim for preference on account of the unpaid
balance of the purchase price of the house does not apply because preference
applies only with respect to the property of the debtor, and the Timbangs, owners of
the house, are not the debtors of Blas.
This Court cannot accept this oversimplification of appellants' position. Article 448
and 546 of the Civil Code defining the right of the parties in case a person in good
faith builds, sows or plants on the land of another, respectively provides:

ART. 448. The owner of the land on which anything has been built, sown or
plated in good faith shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnify provided for in article 546
and 548, or to obligate the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of
the building or trees. In such case, he shall pay reasonable rent, if the owner
of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
ART. 546. Necessary expenses shall be refunded to every possessor; but only
the possessor in good faith may retain the thing until he has reimbursed
therefor.
Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention the person who has defeated him in the possession
having to option of refunding the amount of expenses or of paying the case in
value which thing may have acquired by reason thereof.
Under the terms of these article, it is true that the owner of the land has the right to
choose between appropriating the building by reimbursing the builder of the value
thereof or compelling the builder in good faith to pay for his land. Even this second
right cannot be exercised if the value of the land is considerably more than that of the
building. In addition to the right of the builder to be paid the value of his improvement,
Article 546 gives him the corollary right of retention of the property until he is
indemnified by the owner of the land. There is nothing in the language of these two
article, 448 and 546, which would justify the conclusion of appellants that, upon the
failure of the builder to pay the value of the land, when such is demanded by the
land-owner, the latter becomes automatically the owner of the improvement under
Article 445. The case of Bernardo vs. Bataclan, 66 Phil., 590 cited by appellants is no
authority for this conclusion. Although it is true it was declared therein that in the
event of the failure of the builder to pay the land after the owner thereof has chosen
this alternative, the builder's right of retention provided in Article 546 is lost,
nevertheless there was nothing said that as a consequence thereof, the builder loses
entirely all rights over his own building. The question is; what is the recourse or
remedy left to the parties in such eventuality where the builder fails to pay the value
DONT WORRY BE HAPPY.

of the land? While the Code is silent on this Court in the cases of Miranda vs.
Fadullon, et al., 97 Phil., 801; 51 Off. Gaz., [12] 6226; Ignacio vs. Hilario, 76 Phil.,
605 and the cited case of Bernardo vs. Bataclan, supra.
In the first case, this Court has said:
A builder in good faith not be required to pay rentals. he has right to retain the
land on which he has built in good faith until he is reimbursed the expenses
incurred by him. Possibly he might be made to pay rental only when the owner
of the land chooses not to appropriate the improvement and requires the
builder in good faith to pay for the land but that the builder is unwilling or
unable to pay the land, and then they decide to leave things as they are and
assume the relation of lessor and lessee, and should they disagree as to the
amount of rental then they can go to the court to fix that amount. (Emphasis
supplied)
Should the parties not agree to leave things as they are and to assume the relation of
lessor and lessee, another remedy is suggested in the case of Ignacio vs. Hilario,
supra, wherein the court has ruled that the owner of the land in entitled to have the
improvement removed when after having chosen to sell his land to the other party,
i.e., the builder in good faith fails to pay for the same.
A further remedy is indicated in the case of Bernardo vs. Bataclan, supra, where this
Court approved the sale of the land and the improvement in a public auction applying
the proceeds thereof first to the payment of the value of the land and the excess, if
any, to be delivered to the owner of the house in payment thereof.
The appellants herein, owners o the land, instead of electing any of the alternative
above indicated chose to seek recovery of the value of their land by asking for a writ
of execution; levying on the house of the builder; and selling the same in public
auction. Sand because they are the highest bidder in their own auction sale, they now
claim they acquired title to the building without necessity of paying in cash on account
of their bid. In other words, they in effect pretend to retain their land and acquire the
house without paying a cent therefor.
This contention is without merit. This Court has already held in Matias vs. The
Provincial Sheriff of Nueva Ecija(74 Phil., 326) that while it is the inveriable practice,

dictated by common sense, that where the successful bidder is the execution creditor
himself, he need not pay down the amount of the bid if it does not exceed the amount
of his judgement, nevertheless, when their is a claim by a third-party, to the proceeds
of the sale superior to his judgment credit, the execution creditor, as successful
bidder, must pay in cash the amount of his bid as a condition precedent to the
issuance to him of the certificate of sale. In the instant case, the Court of Appeals has
already adjudged that appellee Blas is entitled to the payment of the unpaid balance
of the purchase price of the school building. Blas is actually a lien on the school
building are concerned. The order of the lower court directing the Timbang spouses,
as successful bidders, to pay in cash the amount of their bid in the sum of P5,750.00
is therefore correct.

Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion


and Endencia, JJ., concur.

With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part
owner of the land to the extent of the value of its personal properties sold at public
auction in favor of the Timbang, this Court Likewise finds the same as justified, for
such amount represents, in effect, a partial payment of the value of the land. If this
resulted in the continuation of the so-called involuntary partnership questioned by the
difference between P8,200.00 the unpaid balance of the purchase price of the
building and the sum of P5,750.00 amount to be paid by the Timbangs, the order
of the court directing the sale of such undivided interest of the Filipinas Colleges, Inc.
is likewise justified to satisfy the claim of the appellee Blas.

HERMOSISIMA, JR., J.:

Considering that the appellant spouses Marcelino Timbang and Maria Garcia
Timbang may not voluntarily pay the sum of P5,750.00 as ordered, thereby further
delaying the final termination of this case, the first part of the dispositive portion of the
order appealed from is modified in the sense that upon failure of the Timbang
spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within
fifteen (15) days from notice of the final judgment, an order of execution shall issue in
favor of Maria Gervasio Blas to be levied upon all properties of the Timbang spouses
not exempt from execution for the satisfaction of the said amount.
In all other respects, the appealed order of the court a quo is hereby affirmed, with
costs against the appellants.
It is so ordered.

DONT WORRY BE HAPPY.

ART 457
G.R. No. 68166 February 12, 1997
HEIRS OF EMILIANO NAVARRO, petitioner,
vs.
INTERMEDIATE APPELLATE COURT & HEIRS OF SINFOROSO
PASCUAL, respondents.

Unique is the legal question visited upon the claim of an applicant in a Land
Registration case by oppositors thereto, the Government and a Government lessee,
involving as it does ownership of land formed by alluvium.
The applicant owns the property immediately adjoining the land sought to be
registered. His registered property is bounded on the east by the Talisay River, on the
west by the Bulacan River, and on the north by the Manila Bay. The Talisay River and
the Bulacan River flow down towards the Manila Bay and act as boundaries of the
applicant's registered land on the east and on the west.
The land sought to be registered was formed at the northern tip of the applicant's
land. Applicant's registered property is bounded on the north by the Manila Bay.
The issue: May the land sought to be registered be deemed an accretion in the sense
that it naturally accrues in favor of the riparian owner or should the land be
considered as foreshore land?
Before us is a petition for review of: (1) the decision 1 and (2) two subsequent
resolutions 2 of the Intermediate Appellate Court 3 (now the Court of Appeals) in Land
Registration Case No. N-84, 4 the application over which was filed by private
respondents' predecessor-in-interest, Sinforoso Pascual, now deceased, before the
Court of First Instance 5 (now the Regional Trial Court) of Balanga, Bataan.

There is no dispute as to the following facts:


On October 3, 1946, Sinforoso Pascual, now deceased, filed an application for
foreshore lease covering a tract of foreshore land in Sibocon, Balanga, Bataan,
having an area of approximately seventeen (17) hectares. This application was
denied on January 15, 1953. So was his motion for reconsideration.
Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano
Navarro, filed a fishpond application with the Bureau of Fisheries covering twenty five
(25) hectares of foreshore land also in Sibocon, Balanga, Bataan. Initially, such
application was denied by the Director of Fisheries on the ground that the property
formed part of the public domain. Upon motion for reconsideration, the Director of
Fisheries, on May 27, 1958, gave due course to his application but only to the extent
of seven (7) hectares of the property as may be certified by the Bureau of Forestry as
suitable for fishpond purposes.
The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's
application. Aggrieved by the decision of the Director of Fisheries, it appealed to the
Secretary of Natural Resources who, however, affirmed the grant. The then Executive
Secretary, acting in behalf of the President of the Philippines, similarly affirmed the
grant.
On the other hand, sometime in the early part of 1960, Sinforoso Pascual flied an
application to register and confirm his title to a parcel of land, situated in Sibocon,
Balanga, Bataan, described in Plan Psu-175181 and said to have an area of 146,611
square meters. Pascual claimed that this land is an accretion to his property, situated
in Barrio Puerto Rivas, Balanga, Bataan, and covered by Original Certificate of Title
No. 6830. It is bounded on the eastern side by the Talisay River, on the western side
by the Bulacan River, and on the northern side by the Manila Bay. The Talisay River
as well as the Bulacan River flow downstream and meet at the Manila Bay thereby
depositing sand and silt on Pascual's property resulting in an accretion thereon.
Sinforoso Pascual claimed the accretion as the riparian owner.
On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor
General, filed an opposition thereto stating that neither Pascual nor his predecessorsin-interest possessed sufficient title to the subject property, the same being a portion
of the public domain and, therefore, it belongs to the Republic of the Philippines. The
DONT WORRY BE HAPPY.

Director of Forestry, through the Provincial Fiscal, similarly opposed Pascual's


application for the same reason as that advanced by the Director of Lands. Later on,
however, the Director of Lands withdrew his opposition. The Director of Forestry
become the sole oppositor.
On June 2, 1960, the court a quo issued an order of general default excepting the
Director of Lands and the Director of Forestry.
Upon motion of Emiliano Navarro, however, the order of general default was lifted
and, on February 13, 1961, Navarro thereupon filed an opposition to Pascual's
application. Navarro claimed that the land sought to be registered has always been
part of the public domain, it being a part of the foreshore of Manila Bay; that he was a
lessee and in possession of a part of the subject property by virtue of a fishpond
permit issued by the Bureau of Fisheries and confirmed by the Office of the
President; and that be bad already converted the area covered by the lease into a
fishpond.
During the pendency of the land registration case, that is, on November 6, 1960,
Sinforoso Pascual filed a complaint for ejectment against Emiliano Navarro, one
Marcelo Lopez and their privies, alleged by Pascual to have unlawfully claimed and
possessed, through stealth, force and strategy, a portion of the subject property
covered by Plan Psu-175181. The defendants in the case were alleged to have built
a provisional dike thereon: thus they have thereby deprived Pascual of the premises
sought to be registered. This, notwithstanding repeated demands for defendants to
vacate the property.
The case was decided adversely against Pascual. Thus, Pascual appealed to the
Court of First Instance (now Regional Trial Court) of Balanga, Bataan, the appeal
having been docketed as Civil Case No. 2873. Because of the similarity of the parties
and the subject matter, the appealed case for ejectment was consolidated with the
land registration case and was jointly tried by the court a quo.
During the pendency of the trial of the consolidated cases, Emiliano Navarro died on
November 1, 1961 and was substituted by his heirs, the herein petitioners.
Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs, the
herein private respondents.

On November 10, 1975, the court a quo rendered judgment finding the subject
property to be foreshore land and, being a part of the public domain, it cannot be the
subject of land registration proceedings.

On appeal, the respondent court reversed the findings of the court a quo and granted
the petition for registration of the subject property but excluding therefrom fifty (50)
meters from corner 2 towards corner 1; and fifty meters (50) meters from corner 5
towards corner 6 of the Psu-175181.

The decision's dispositive portion reads:


The respondent appellate court explained the reversal in this wise:
WHEREFORE, judgment is rendered:
(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's
complaint for ejectment in Civil Case No. 2873;
(2) Denying the application of Sinforoso Pascual for land registration
over the land in question; and
(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in
Civil Case No. 2873 and as applicant in Land Registration Case No. N84 to pay costs in both instances." 6
The heirs of Pascual appealed and, before the respondent appellate court, assisted
the following errors:
1. The lower court erred in not finding the land in question as an
accretion by the action of the Talisay and Bulacan Rivers to the land
admittedly owned by applicants-appellants [private respondents].
2. The lower court erred in holding that the land in question is foreshore
land.
3. The lower court erred in not ordering the registration of the land in
controversy in favor of applicants-appellants [private respondents].
4. The lower court erred in not finding that the applicants-appellants
[private respondents] are entitled to eject the oppositor-appellee
[petitioners]. 7

DONT WORRY BE HAPPY.

The paramount issue to be resolved in this appeal as set forth by the


parties in their respective briefs is whether or not the land sought to
be registered is accretion or foreshore land, or, whether or not said land
was formed by the action of the two rivers of Talisay and Bulacan or by
the action of the Manila Bay. If formed by the action of the Talisay and
Bulacan rivers, the subject land is accretion but if formed by the action
of the Manila Bay then it is foreshore land.
xxx xxx xxx
It is undisputed that applicants-appellants [private respondents] owned
the land immediately adjoining the land sought to be registered. Their
property which is covered by OCT No. 6830 is bounded on the east by
the Talisay River, on the west by the Bulacan River, and on the north by
the Manila Bay. The Talisay and Bulacan rivers come from inland
flowing downstream towards the Manila Bay. In other words, between
the Talisay River and the Bulacan River is the property of applicants
with both rivers acting as the boundary to said land and the flow of both
rivers meeting and emptying into the Manila Bay. The subject land was
formed at the tip or apex of appellants' [private respondents'] land
adding thereto the land now sought to be registered.
This makes this case quite unique because while it is undisputed that
the subject land is immediately attached to appellants' [private
respondents'] land and forms the tip thereof, at the same time, said land
immediately faces the Manila Bay which is part of the sea. We can
understand therefore the confusion this case might have caused the
lower court, faced as it was with the uneasy problem of deciding
whether or not the subject land was formed by the action of the two
rivers or by the action of the sea. Since the subject land is found at the

shore of the Manila Bay facing appellants' [private respondents'] land, it


would be quite easy to conclude that it is foreshore and therefore part of
the patrimonial property of the State as the lower court did in fact rule . .
..
xxx xxx xxx
It is however undisputed that appellants' [private respondents'] land lies
between these two rivers and it is precisely appellants' [private
respondents'] land which acts as a barricade preventing these two
rivers to meet. Thus, since the flow of the two rivers is downwards to
the Manila Bay the sediments of sand and silt are deposited at their
mouths.
It is, therefore, difficult to see how the Manila Bay could have been the
cause of the deposit thereat for in the natural course of things, the
waves of the sea eat the land on the shore, as they suge [sic] inland. It
would not therefore add anything to the land but instead subtract from it
due to the action of the waves and the wind. It is then more logical to
believe that the two rivers flowing towards the bay emptied their cargo
of sand, silt and clay at their mouths, thus causing appellants' [private
respondents'] land to accumulate therein.
However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic]
not seem to accept this theory and stated that the subject land arose
only when . . . . Pascual planted "palapat" and "bakawan" trees thereat
to serve as a boundary or strainer. But we do not see how this act of
planting trees by Pascual would explain how the land mass came into
being. Much less will it prove that the same came from the sea.
Following Mr. Justice Serrano's argument that it were the few trees that
acted as strainers or blocks, then the land that grew would have
stopped at the place where the said trees were planted. But this is not
so because the land mass went far beyond the boundary, or where the
trees were planted.
On the other hand, the picture-exhibits of appellants [private
respondents] clearly show that the land that accumulated beyond the
DONT WORRY BE HAPPY.

so- called boundary, as well as the entire area being applied for is dry
land, above sea level, and bearing innumerable trees . . . The existence
of vegetation on the land could only confirm that the soil thereat came
from inland rather than from the sea, for what could the sea bring to the
shore but sand, pebbles, stones, rocks and corrals? On the other hand,
the two rivers would be bringing soil on their downward flow which they
brought along from the eroded mountains, the lands along their path,
and dumped them all on the northern portion of appellants' [private
respondents'] land.
In view of the foregoing, we have to deviate from the lower court's
finding. While it is true that the subject land is found at the shore of the
Manila Bay fronting appellants' [private respondents'] land, said land is
not foreshore but an accretion from the action of the Talisay and
Bulacan rivers. In fact, this is exactly what the Bureau of Lands found
out, as shown in the following report of the Acting Provincial Officer,
Jesus M. Orozco, to wit:
"Upon ocular inspection of the land subject of this
registration made on June 11, 1960, it was found out that
the said land is . . . . sandwitched [sic] by two big
rivers . . . . These two rivers bring down considerable
amount of soil and sediments during floods every year
thus raising the soil of the land adjoining the private
property of the applicant [private respondents]. About fourfifth [sic] of the area applied for is now dry land whereon
are planted palapat trees thickly growing thereon. It is the
natural action of these two rivers that has caused the
formation of said land . . . . subject of this registration
case. It has been formed, therefore, by accretion. And
having been formed by accretion, the said land may be
considered the private property of the riparian owner who
is the applicant herein [private respondents] . . . .
In view of the above, the opposition hereto filed by the
government should be withdrawn, except for the portion
recommended by the land investigator in his report dated

May 2, 1960, to be excluded and considered


foreshore. . . ."
Because of this report, no less than the Solicitor General representing
the Bureau of Lands withdrew his opposition dated March 25, 1960, and
limited "the same to the northern portion of the land applied for,
compromising a strip 50 meters wide along the Manila Bay, which
should be declared public land as part of the foreshore" . . . . 8
Pursuant to the aforecited decision, the respondent appellate court ordered the
issuance of the corresponding decree of registration in the name of private
respondents and the reversion to private respondents of the possession of the
portion of the subject property included in Navarro's fishpond permit.
On December 20, 1978, petitioners filed a motion for reconsideration of the aforecited
decision. The Director of Forestry also moved for the reconsideration of the same
decision. Both motions were opposed by private respondents on January 27, 1979.
On November 21, 1980, respondent appellate court promulgated a resolution denying
the motion for reconsideration filed by the Director of Forestry. It, however, modified
its decision, to read, viz:
(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that
portion included in their fishpond permit covered by Plan Psu-175181
and hand over possession of said portion to applicants-appellants, if the
said portion is not within the strip of land fifty (50) meters wide along
Manila Bay on the northern portion of the land subject of the registration
proceedings and which area is more particularly referred to as fifty (50)
meters from corner 2 towards corner 1; and fifty (50) meters from corner
5 towards corner 6 of Plan Psu-175181. . . . 9

Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition
for review entitled, "The Director of Forestry vs. the Court of Appeals." 10 We,
however, denied the same in a minute resolution dated July 20, 1981, such petition
having been prematurely filed at a time when the Court of Appeals was yet to resolve
petitioners' pending motion to set aside the resolution dated November 21, 1980.
On October 9, 1981, respondent appellate court denied petitioners' motion for
reconsideration of the decision dated November 29, 1978.
On October 17, 1981, respondent appellate court made an entry of judgment stating
that the decision dated November 29, 1978 had become final and executory as
against herein petitioners as oppositors in L.R.C. Case No. N-84 and Civil Case No.
2873 of the Court of First Instance (now the Regional Trial Court) of Balanga, Bataan.
On October 26, 1981, a second motion for reconsideration of the decision dated
November 29, 1978 was filed by petitioners' new counsel.
On March 26, 1982, respondent appellate court issued a resolution granting
petitioners' request for leave to file a second motion for reconsideration.
On July 13, 1984, after hearing, respondent appellate court denied petitioners'
second motion for reconsideration on the ground that the same was filed out of time,
citing Rule 52, Section 1 of the Rules of Court which provides that a motion for
reconsideration shall be made ex-parte and filed within fifteen (15) days from the
notice of the final order or judgment.
Hence this petition where the respondent appellate court is imputed to have palpably
erred in appreciating the fact of the case and to have gravely misapplied statutory
and case law relating to accretion, specifically, Article 457 of the Civil Code.
We find no merit in the petition.

On December 15, 1980, we granted the Solicitor General, acting as counsel for the
Director of Forestry, an extension of time within which to file in this court, a petition for
review of the decision dated November 29, 1978 of the respondent appellate court
and of the aforecited resolution dated November 21, 1980.

DONT WORRY BE HAPPY.

The disputed property was brought forth by both the withdrawal of the waters
of Manila Bay and the accretion formed on the exposed foreshore land by the
action of the sea which brought soil and sand sediments in turn trapped by the
palapat and bakawan trees planted thereon by petitioner Sulpicio Pascual in
1948

Anchoring their claim of ownership on Article 457 of the Civil Code, petitioners
vigorously argue that the disputed 14-hectare land is an accretion caused by the joint
action of the Talisay and Bulacan Rivers which run their course on the eastern and
western boundaries, respectively, of petitioners' own tract of land.
Accretion as a mode of acquiring property under said Article 457, requires the
concurrence of the following requisites: (1) that the accumulation of soil or sediment
be gradual and imperceptible; (2) that it be the result of the action of the waters of the
river; and (3) that the land where the accretion takes place is adjacent to the bank of
the river. 11 Accretion is the process whereby the soil is deposited, while alluvium is
the soil deposited on the estate fronting the river bank 12; the owner of such estate is
called the riparian owner. Riparian owners are, strictly speaking, distinct from littoral
owners, the latter being owners of lands bordering the shore of the sea or lake or
other tidal waters. 13The alluvium, by mandate of Article 457 of the Civil Code, is
automatically owned by the riparian owner from the moment the soil deposit can be
seen 14 but is not automatically registered property, hence, subject to acquisition
through prescription by third persons 15.
Petitioners' claim of ownership over the disputed property under the principle of
accretion, is misplaced.
First, the title of petitioners' own tract of land reveals its northeastern boundary to be
Manila Bay. Petitioners' land, therefore, used to adjoin, border or front the Manila Bay
and not any of the two rivers whose torrential action, petitioners insist, is to account
for the accretion on their land. In fact, one of the petitioners, Sulpicio Pascual,
testified in open court that the waves of Manila Bay used to hit the disputed land
being part of the bay's foreshore but, after he had planted palapat and bakawan trees
thereon in 1948, the land began to
rise. 16
Moreover, there is no dispute as to the location of: (a) the disputed land; (b)
petitioners' own tract of land; (c) the Manila Bay; and, (d) the Talisay and Bulacan
Rivers. Petitioners' own land lies between the Talisay and Bulacan Rivers; in front of
their land on the northern side lies now the disputed land where before 1948, there
lay the Manila Bay. If the accretion were to be attributed to the action of either or both
of the Talisay and Bulacan Rivers, the alluvium should have been deposited on either
or both of the eastern and western boundaries of petitioners' own tract of land, not on
DONT WORRY BE HAPPY.

the northern portion thereof which is adjacent to the Manila Bay. Clearly lacking, thus,
is the third requisite of accretion, which is, that the alluvium is deposited on the
portion of claimant's land which is adjacent to the river bank.
Second, there is no dispute as to the fact that petitioners' own tract of land adjoins
the Manila Bay. Manila Bay is obviously not a river, and jurisprudence is already
settled as to what kind of body of water the Manila Bay is. It is to be remembered that
we held that:
Appellant next contends that . . . . Manila Bay cannot be considered as
a sea. We find said contention untenable. A bay is part of the sea, being
a mere indentatiom of the same:
"Bay. An opening into the land where the water is shut
in on all sides except at the entrance; an inlet of the sea;
an arm of the sea, distinct from a river, a bending or
curbing of the shore of the sea or of a lake. " 7 C.J. 10131014." 17
The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on
what used to be the foreshore of Manila Bay which adjoined petitioners' own tract of
land on the northern side. As such, the applicable law is not Article 457 of to Civil
Code but Article 4 of the Spanish Law of Waters of 1866.
The process by which the disputed land was formed, is not difficult to discern from
the facts of the case. As the trial court correctly observed:
A perusal of the survey plan . . . . of the land subject matter of these
cases shows that on the eastern side, the property is bounded by
Talisay River, on the western side by Bulacan River, on the southern
side by Lot 1436 and on the northern side by Manila Bay. It is not
correct to state that the Talisay and Bulacan Rivers meet a certain
portion because the two rivers both flow towards Manila Bay. The
Talisay River is straight while the Bulacan River is a little bit meandering
and there is no portion where the two rivers meet before they end up at
Manila Bay. The land which is adjacent to the property belonging to

Pascual cannot be considered an accretion [caused by the action of the


two rivers].
Applicant Pascual . . . . has not presented proofs to convince the Court
that the land he has applied for registration is the result of the settling
down on his registered land of soil, earth or other deposits so as to be
rightfully be considered as an accretion [caused by the action of the two
rivers]. Said Art. 457 finds no applicability where the accretion must
have been caused by action of the bay. 18
The conclusion formed by the trial court on the basis of the aforegoing observation is
that the disputed land is part of the foreshore of Manila Bay and therefore, part of the
public domain. The respondent appellate court, however, perceived the fact that
petitioners' own land lies between the Talisay and Bulacan Rivers, to be basis to
conclude that the disputed land must be an accretion formed by the action of the two
rivers because petitioners' own land acted as a barricade preventing the two rivers to
meet and that the current of the two rivers carried sediments of sand and silt
downwards to the Manila Bay which accumulated somehow to a 14-hectare land.
These conclusions, however, are fatally incongruous in the light of the one
undisputed critical fact: the accretion was deposited, not on either the eastern or
western portion of petitioners' land where a river each runs, but on the northern
portion of petitioners' land which adjoins the Manila Bay. Worse, such conclusions are
further eroded of their practical logic and consonance with natural experience in the
light of Sulpicio Pascual's admission as to having planted palapat and bakawan trees
on the northern boundary of their own land. In amplification of this, plainly more
reasonable and valid are Justice Mariano Serrano's observations in his dissenting
opinion when he stated that:
As appellants' (titled) land . . . . acts as a barricade that prevents the
two rivers to meet, and considering the wide expanse of the boundary
between said land and the Manila Bay, measuring some 593.00
meters . . . . it is believed rather farfetched for the land in question to
have been formed through "sediments of sand and salt [sic] . . . .
deposited at their [rivers'] mouths." Moreover, if "since the flow of the
two rivers is downwards to the Manila Bay the sediments of sand and
silt are deposited at their mouths," why then would the alleged cargo of
sand, silt and clay accumulate at the northern portion of appellants'
DONT WORRY BE HAPPY.

titled land facing Manila Bay instead of merely at the mouths and banks
of these two rivers? That being the case, the accretion formed at said
portion of appellants' titled [land] was not caused by the current of the
two rivers but by the action of the sea (Manila Bay) into which the rivers
empty.
The conclusion . . . . is not supported by any reference to the evidence
which, on the contrary, shows that the disputed land was formed by the
action of the sea. Thus, no less than Sulpicio Pascual, one of the heirs
of the original applicant, testified on cross-examination that the land in
dispute was part of the shore and it was only in 1948 that he noticed
that the land was beginning to get higher after he had planted trees
thereon in
1948. . . . .
. . . . it is established that before 1948 sea water from the Manila Bay at
high tide could reach as far as the dike of appellants' fishpond within
their titled property, which dike now separates this titled property from
the land in question. Even in 1948 when appellants had already
planted palapat andbakawan trees in the land involved, inasmuch as
these trees were yet small, the waves of the sea could still reach the
dike. This must be so because in . . . . the survey plan of the titled
property approved in 1918, said titled land was bounded on the north by
Manila Bay. So Manila Bay was adjacent to it on the north. It was only
after the planting of the aforesaid trees in 1948 that the land in question
began to rise or to get higher in elevation.
The trees planted by appellants in 1948 became a sort of strainer of the
sea water and at the same time a kind of block to the strained
sediments from being carried back to the sea by the very waves that
brought them to the former shore at the end of the dike, which must
have caused the shoreline to recede and dry up eventually raising the
former shore leading to the formation of the land in question." 19
In other words, the combined and interactive effect of the planting of palapat
and bakawan trees, the withdrawal of the waters of Manila Bay eventually
resulting in the drying up of its former foreshore, and the regular torrential

action of the waters of Manila Bay, is the formation of the disputed land on the
northern boundary of petitioners' own tract of land.
The disputed property is an accretion on a sea bank, Manila Bay being an inlet
or an arm of the sea; as such, the disputed property is, under Article 4 of the
Spanish Law of Waters of 1866, part of the public domain
At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.
While we held in the case of Ignacio v. Director of Lands and
Valeriano 20 that Manila Bay is considered a sea for purposes of determining which
law on accretion is to be applied in multifarious situations, we have ruled differently
insofar as accretions on lands adjoining the Laguna de Bay are concerned.

domain, the herein disputed land is intended for public uses, and "so long as the land
in litigation belongs to the national domain and is reserved for public uses, it is not
capable of being appropriated by any private person, except through express
authorization granted in due form by a competent authority." 25 Only the executive and
possibly the legislative departments have the right and the power to make the
declaration that the lands so gained by action of the sea is no longer necessary for
purposes of public utility or for the cause of establishment of special industries or for
coast guard services. 26 Petitioners utterly fail to show that either the executive or
legislative department has already declared the disputed land as qualified, under
Article 4 of the Spanish Law of Waters of 1866, to be the property of petitioners as
owners of the estates adjacent thereto.
WHEREFORE, the instant Petition for Review is hereby DENIED and DISMISSED.

In the cases of Government of the P.I v. Colegio de San Jose 21, Republic v. Court of
Appeals 22, Republic v. Alagad23, and Meneses v. Court of
Appeals 24, we categorically ruled that Laguna de Bay is a lake the accretion on
which, by the mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to
the owner of the land contiguous thereto.

Costs against petitioners.

The instant controversy, however, brings a situation calling for the application of
Article 4 of the Spanish Law of Waters of 1866, the disputed land being an accretion
on the foreshore of Manila Bay which is, for all legal purposes, considered a sea.

Vitug, J., concuring:


I concur; the amandatory provisions of the Water Code (P.D. 1067) did not affect
Article 4 of the Spanish Law of Water of 1866.

Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:

Separate Opinions
Vitug, J., concuring:
I concur; the amandatory provisions of the Water Code (P.D. 1067) did not affect
Article 4 of the Spanish Law of Water of 1866.

Lands added to the shores by accretions and alluvial deposits caused


by the action of the sea, form part of the public domain. When they are
no longer washed by the waters of the sea and are not necessary for
purposes of public utility, or for the establishment of special industries,
or for the coast-guard service, the Government shall declare them to be
the property of the owners of the estates adjacent thereto and as
increment thereof.
In the light of the aforecited vintage but still valid law, unequivocal is the public nature
of the disputed land in this controversy, the same being an accretion on a sea bank
which, for all legal purposes, the foreshore of Manila Bay is. As part of the public
DONT WORRY BE HAPPY.

SO ORDERED.
Padilla, Bellosillo and Kapunan, JJ., concur.
Separate Opinions

G.R. No. 82220 July 14, 1995


PABLITO MENESES and LORENZO MENESES, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING, NORBERTO
QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all
surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING (Perla, Josefina,

Napoleon, Honorato, Remedios and Alfonso, all surnamed Quisumbing), HEIRS


OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and
Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO QUISUMBING (Fe,
Johnny, Ma. Luisa, Norberto, Jimmy, Ma. Victoria, Elsa and Oscar, all surnamed
Quisumbing), all represented by Atty. Galileo Brion, respondents.
G.R. No. 82251 July 14, 1995
CESAR ALMENDRAL, petitioner,
vs.
EDUARDO QUISUMBING, respondent.
G.R. No. 83059 July 14, 1995
EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO
QUISUMBING (Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF
FERNANDO QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios
and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR.
(Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing)
and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and
Oscar, all surnamed Quisumbing), petitioners,
vs.
HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and
BRAULIO C. DARUM,respondents.

QUIASON, J.:
For review in these consolidated petitions is the Decision dated August 31, 1987 of
the Court of Appeals in CA-G.R. CV No. 07049 affirming the Decision dated March
26, 1984 of the Regional Trial Court, Branch 37, Calamba, Laguna, in Civil Case No.
474-83-C which declared as null and void the original certificates of title and free
patents issued to Pablito Meneses over lots found by the court to be accretion lands
forming parts of the bigger accretion land owned by Ciriaca Arguelles Vda. de
Quisumbing.
DONT WORRY BE HAPPY.

I
On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baos,
Laguna, issued to Pablito Meneses Free Patent No. (IV-5) P-12807 and Original
Certificate of Title No. P-1268 covering Lot 1585 with an area of 417 square meters,
and Free Patent No (IV-5) 12808 and Original Certificate of Title No P-1269 for Lot
190 with an area of 515 square meters. Both lots are located in Los Baos, Laguna.
Pablito Meneses acquired said property from Silverio Bautista through a Deed of
Waiver and Transfer of Rights executed on May 5, 1975 in consideration of Bautista's
"love and affection" for and "some monetary obligations" in favor of Pablito Meneses
(Rollo, p. 45). After the execution of said document, Pablito Meneses took possession
of the land, introduced improvements thereon, declared the land as his own for tax
purposes and paid the corresponding realty taxes. In turn, Bautista acquired the 900square-meter land from his aunt, Sergia (Gliceria) M. Almeda. He had been
occupying the land since 1956.
On the other hand, the Quisumbing family traces ownership of the land as far back as
September 6, 1919 when their matriarch, Ciriaca Arguelles Vda. de Quisumbing was
issued Original Certificate of Title No. 989 covering a lot with an area of 859 square
meters located in Los Baos, Laguna with the Laguna de Bay as its northwestern
boundary. The same parcel of land was registered on August 14, 1973 under Transfer
Certificate of Title No. T-33393 in the names of Ciriaca's heirs: Emilio, Manuel,
Eduardo, Norberto, Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all
surnamed Quisumbing.
In 1962, the Quisumbing instituted and accion publiciana in the then Court of First
Instance of Bian, Laguna to recover possession over a portion of the property from
Dominga Villamor and Lorenzo Lanuzo docketed as Civil Case No. B-350. On
January 3, 1966, the case was decided in favor of the Quisumbings. On appeal, the
Court of Appeals sustained the Quisumbings' right over the property.
In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of
title over an additional area of 2,387 square meters which had gradually accrued to
their property by the natural action of the waters of Laguna de Bay. In its Decision of
September 28, 1978, the Court of First Instance of Bian confirmed the Quisumbings'
title thereto which, after it was duly surveyed, was identified as Psu-208327. The

additional area was divided into two lots in the survey plan approved by the Director
of Lands on November 16, 1964. In ordering the confirmation and registration of title
on favor of the Quisumbings, the land registration court said:
. . . There is no doubt that the applicants' right to the property was
bolstered by the unappealed decision of the Court of Appeals in Civil
Case No. B-350 of this Court when the properties applied for were
classified as accretions made by the waters of the Laguna Lake. . . .
(G.R. No. 82229, Rollo, p. 20).
On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of
First Instance of Laguna, Branch VI, Calamba against Lorenzo and Pablito Meneses,
Braulio C. Darum and Cesar B. Almendral for nullification of the free patents and titles
issued to Pablito Meneses. They alleged that Lorenzo Menesis, then the Mayor of
Los Baos, using his brother Pablito as a "tool and dummy," illegally occupied their
"private accretion land" an August 6, 1976, and, confederating with District Land
Officer Darum and Land Inspector Cesar Almendral, obtained free patents and
original certificates of title to the land.
On March 26, 1984, the trial court rendered the decision finding that the lands
registered by the Meneses brothers are accretion lands to which the Quisumbings
have a valid right as owners of the riparian land to which nature had gradually
deposited the disputed lots. In so holding, the trial court relied heavily on the decision
of the Court of Appeals in Civil Case No. B-350, and quoted the following portions of
the appellate court's decision:
Plaintiffs-appellees are titled owners of a (sic) 859 square meters of
land under TCT No. 25978 of the Laguna Land Registry, the northwest
boundary of which is the Laguna de Bay.
It is ascertained that the northwest portion of Quisumbing's lot is
bounded by the Laguna de Bay. The nature of the Laguna de Bay has
long been settled in the case of Government of the Philippines v.
Colegio de San Jose (55 Phil. 423) when it held that:
Laguna de Bay is a body of water formed in depression of
the earth; it contains fresh water coming from rivers and
DONT WORRY BE HAPPY.

brooks and springs, and is connected with Manila Bay by


the Pasig River. According to the definition first quoted,
Laguna de Bay is a lake.
Consequently, since Laguna de Bay is a lake, the authorities cited by
the appellants referring to seashore would not apply. The provision of
the law on waters will govern in determining the natural bed or basin of
the lake. And accordingly, to Art. 84 of the Law of Waters of August 3,
1866:
Accretions deposited gradually upon land contiguous to
creeks, streams, rivers andlakes by accessions or
sediments from the waters thereof, belong to the owners
of such lands.
Since the title indicate(s) that the northwest portion of the property is
bounded by Laguna de Bay, which is a lake, even if the area where
Lanuza's house and Villamor's house for that matter is located is not
included within the title, it must necessarily be an accretion upon
appellees' land by accessions or sediments from the waters thereof
which should belong to the owner of the adjacent land. The authorities
cited by the appellants treat of the ownership of accretions by water of
the sea under Title I. Lakewaters being terrestrial waters, their
ownership is governed by Title II of the Law of Waters. As held in the
Colegio de San Jose case, the provisions of the Law of Waters
regulating the ownership and use of sea water are not applicable to the
ownership and use of lakes which are governed by different provisions.
As pointed out by the lower court, no act of appropriation is necessary
in order to acquire ownership of the alluvial formation as the law does
not require the same (Ignacio Grande, et al. vs. Hon. Court of Appeals,
et al., G.R. No. L-17652, June 30, 1962 citing Roxas vs. Tuazon, 9 Phil.
408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C. pp.
321-326, pp. 4-5) (Records, pp. 80-84).
The trial court also found that the free patents issued to Pablito Meneses had been
procured through fraud, deceit and bad faith, citing the following facts as bases for its
conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly executed by

Silverio Bautista in favor of Pablito Meneses was a simulated contract for lack of
consideration; (2) The said instrument was sworn to before Mayor Lorenzo Meneses
who had no authority to notarize deeds of conveyances; (3) Although the lots subject
of the deed of conveyance were placed in his brother's name, Mayor Meneses
actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral
admitted having anomalously prepared the documents to support the free patent
applications of Pablito Meneses and, having personally filled up the blank forms,
signed them in the absence of the persons concerned; (5) Almendral kept the
documents in his possession from 1979 to 1980 despite orders from the Director of
Lands to produce and surrender the same; (6) District Land Officer Braulio Darum
approved the free patent applications and issued the questioned titles without the
required cadastral survey duly approved by the Director of Lands and despite the
pendency of LRC Case No. B-327 involving the contested lots; (7) Darum
represented the Bureau of Lands in LRC Case No. B-327 without authority from the
Director of Lands and after he had withdrawn his appearance in said case, persisted
in filing a motion to set aside the order for the issuance of a decree in favor of the
Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing
original records of the free patent applications and their supporting documents; and
(9) When Darum was not yet an oppositor in LRC Case No. B-327, he admitted in his
letter to the Land Registration Commission that the contested lots are portions of the
land being claimed by the Quisumbings contrary to his later representation in the joint
answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu208327 owned by the Quisumbings. Accordingly, the trial court disposed of the case
as follows:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the lands covered by Pablito Meneses' Original
Certificate of Title No. P-1268/Free Patent No. 12807 (Exh. "J"),
covering Lot No. 1585, consisting of 417 square meters and Original
Certificate of Title No. P-1269/Free Patent No. 12808 (Exh. "H"),
covering Lot No. 190, consisting of 515 square meters, both located at
Los Baos, Laguna, as accretion lands forming parts of a bigger
accretion land owned by plaintiffs as declared in a final judgment (Exh.
"A"), rendered by the Court of First Instance of Bian, Laguna, in LRC
Case No. B-327, which bigger accretion land is directly adjacent to or at
the back of plaintiffs' riparian land, and consequently, declaring as null
DONT WORRY BE HAPPY.

and void and cancelled Original Certificate of Title No. P-1268/Free


Patent No. 12807 and Original Certificate of Title No. P-1269/Free
Patent No. 12808;
2. Directing that the Register of Deeds of Laguna or his Deputy at
Calamba, Laguna, to make the corresponding entries of cancellation in
his Registry of the above mentioned Original Certificate of Titles/Free
Patents;
3. Directing defendants Lorenzo Meneses and Pablito Meneses and all
persons acting in their behalves to vacate the subject lands and
surrender the possession thereof to the plaintiffs immediately; and
4. Directing the defendants to pay jointly and severally, the plaintiffs the
sums of:
a) P20,000.00, plus P500.00 per month from January,
1977, until the subject property is completely vacated, as
actual and compensatory damages;
b) P350,000.00, as moral damages;
c) P70,000.00 as exemplary damages;
d) P40,000.00, as attorney's fees; and
e) the costs (Rollo, pp. 41-42).
Thereafter, the Quisumbings filed a motion for execution pending appeal which the
trial court granted in its Order of September 7, 1984 subject to the posting by the
Quisumbings of a bond in the amount of P500,000.00. The defendants
unsuccessfully moved for the reconsideration of said order.
The Quisumbings also filed before the Sandiganbayan a complaint against Pablito
Meneses, Silverio Bautista, Pablo Silva, Virgilio Cruz and Cesar Almendral for
violation of paragraphs (e) and (j), Section 3 of Republic Act No. 3019, for conspiring

in the approval and grant of the free patents over portions of Lots 1 & 2 of Psu208327 owned by the heirs of Ciriaca Arguelles Vda. de Quisumbing. In due course,
the Sandiganbayan rendered a decision finding the defendants guilty as charged.
The case was elevated to this Court but on August 27, 1987, the judgment of
conviction was affirmed (Meneses v. People, 153 SCRA 303 [1987]).
Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case
No. 07049 to the Court of Appeals. On August 31, 1987, the Court of Appeals found
the appeal to be without merit and affirmed in toto the lower court's decision.
The defendants-appellants filed two motions for the reconsideration of the appellate
court's decision but it was denied in the Resolution of February 23, 1988 which in
pertinent part stated:
However, for humanitarian considerations, and considering the appeal
of the defendants-appellants for a reduction of the moral and exemplary
damages, We favor the reduction of the moral damages from
P350,000.00 to P50,000.00 and the exemplary damages from
P70,000.00 to P5,000.00. In all other respects, We find no justification
for modifying the dispositive portion of the decision of the lower court
(G.R. No. 82220, Rollo, p. 67).
Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which
was docketed as G.R. No. 82220. Cesar Almendral filed a motion in G.R. No. 82251
for a 45-day extension within which to file a petition for review on certiorari. After this
Court had granted them a 30-day extension, Almendral still failed to file any petition.
The Quisumbings also filed a petition for review on certiorari, docketed as G.R. No.
83059, solely on the issue of the propriety of the reduction of the amount of damages
in the Court of Appeals' Resolution of February 23, 1988. Upon motion of petitioners
in G.R. No. 83059, the three petitions were consolidated in the Resolution of August
1, 1988.
Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court
of Appeals, contending in the main: (1) that the lands in question were not accretion
lands but lands of the public domain; (2) that no conspiracy to commit fraud, deceit
and bad faith attended the issuance of the free patent and titles to Pablito Meneses;
DONT WORRY BE HAPPY.

and (3) that the Deed of Waiver and Transfer of Rights was founded on a valid
consideration.
As regards the issue of whether the lands in question are accretion lands, petitioners
relied on the Decision of the Court of Appeals in Republic of the Philippines v. Braga,
CA-G.R. No. 55390-R, October 23, 1980, holding that the property involved therein
was part of the natural bed of the Laguna de Bay and therefore what had to be
determined was whether said property was covered by water when the lake was at its
highest depth.
Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which
have been thoroughly passed upon and settled both by the trial court and the
appellate court. Factual findings of the Court of Appeals are conclusive on the parties
and not reviewable by this Court (Coca-Cola Bottlers Philippines, Inc. v. Court of
Appeals, 229 SCRA 533 [1994]) and they carry even more weight when the Court of
Appeals affirms the factual findings of the trial court (Binalay v. Manalo, 195 SCRA
374 [1991]). The jurisdiction of this Court is thus limited to reviewing errors of law
unless there is a showing that the findings complained of are totally devoid of support
in the record or that they are so glaringly erroneous as to constitute serious abuse of
discretion (BA Finance Corporation v. Court of Appeals, 229 SCRA 566 [1941]). We
find no such showing in this case.
Petitioners' protestations notwithstanding the final decision of the Court of Appeals in
Civil Case No. B-350 has a bearing in the resolution of this case for while the lots
occupied by Villamor and Lanuzo may not be the very same lots petitioners are
claiming here, the two cases refer to the same accretion lands northwest of the
original land owned by the Quisumbings.
In the same vein, the decision of the land registration court in LRC Case No. B-327
ordering the confirmation and registration of title in favor of the Quisumbings over
2,387 square meters of accretion land is binding on petitioners in G.R. No. 82220. As
correctly pointed out by the Court of Appeals, said decision, being the result of a
proceeding in rem, binds the whole world, more so because it became final and
executory upon the Bureau of Lands' failure to interpose an appeal.
Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190
and 1585 are part of Laguna de Bay" and therefore the Quisumbings "have no legal

right to claim the same as accretion land," we quote the following pertinent portions of
the decision in Republic v. Court of Appeals, 131 SCRA 532 (1984) which, although
the case deals with the registration of a reclaimed land along the Laguna de Bay, is
nonetheless enlightening:
Laguna de Bay is a lake. While the waters of a lake are also subject to
the same gravitational forces that cause the formation of tides in seas
and oceans, this phenomenon is not a regular daily occurrence in the
case of lakes. Thus, the alternation of high tides and low tides, which is
an ordinary occurrence, could hardly account for the rise in the water
level of the Laguna de Bay as observed four to five months a year
during the rainy season. Rather, it is the rains which bring about the
inundation of a portion of the land in question. Since the rise in the
water level which causes the submersion of the land occurs during a
shorter period (four to five months a year) than the level of the water at
which the land is completely dry, the latter should be considered as the
"highest ordinary depth" of Laguna de Bay. Therefore, the land sought
to be registered is not part of the bed or basin of Laguna de Bay.
Neither can it be considered as foreshore land. The Brief for the
Petitioner Director of Lands cites an accurate definition of a foreshore
land, to wit:
. . . . that part of (the land) which is between high and low
water and left dry by the flux and reflux of the tides.
The strip of land that lies between the high and low water
marks and that is alternately wet and dry according to the
flow of the tide.
As aptly found by the Court a quo, the submersion in water of a portion
of the land in question is due to the rains "falling directly on or flowing
into Laguna de Bay from different sources." Since the inundation of a
portion of the land is not due to "flux and reflux of tides" it cannot be
considered a foreshore land within the meaning of the authorities cited
by petitioner Director of Lands. The land sought to be registered not
being part of the bed or basin of Laguna de Bay, nor a foreshore land
as claimed by the Director of Lands, it is not a public land and therefore
DONT WORRY BE HAPPY.

capable of registration as private property provided that the applicant


proves that he has a registerable title (at pp. 538-539).
Accretion as a mode of acquiring property under Article 457 of the Civil Code requires
the concurrence of these requisites: (1) that the deposition of soil or sediment be
gradual and imperceptible; (2) that it be the result of the action of the waters of the
river (or sea); and (3) that the land where accretion takes place is adjacent to the
banks of rivers (or the sea coast). While the trial court mainly relied on the findings in
Civil Case No. B-350 that the lands in controversy are accretion lands and it has not
determined on its own the presence of said requisites, it is too late now for petitioners
in G.R. No. 82220 to claim otherwise. Consequently, the lands held to be accretion
lands could only benefit the Quisumbings, who own the property adjacent to the lands
in controversy (Cruz v. Court of Appeals, 216 SCRA 350 [1992]).
Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title
should favor them as the one-year period provided for by law to impugn their title had
elapsed. They also urged that, having been granted by the state, their title is superior
to that of the Quisumbings. We hold, however, that in the light of the fraud attending
the issuance of the free patents and titles of Pablito Meneses, said assertions
crumble. Such fraud was confirmed by this Court in Meneses v. People, 153 SCRA
303 (1987) which held the petitioners therein liable for violation of the Anti-Graft and
Corrupt Practices Act in the issuance of the same free patents and titles.
Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the
reduction of the damages awarded to the Quisumbings by the Court of Appeals in the
Resolution of February 23, 1988) is meritorious. The task of fixing the amount of
damages is primarily with the trial court (Air France v. Carrascoso, 18 SCRA 155
[1966]). While it is the appellate court's duty to review the same, a reduction of the
award of damages must pass the test of reasonableness. The Court of Appeals can
only modify or change the amount awarded as damages when they are palpably or
scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of Appeals,
226 SCRA 423 [1993]; Prudenciano v. Alliance Transport System, Inc., 148 SCRA
440 [1987]).
There is no justification for the radical reduction by the Court of Appeals of the
damages awarded by the trial court. Its action was premise merely on "humanitarian
considerations" and the plea of the defendants-appellants. We may agree with the

Court of Appeals in reducing the award after scrutinizing its factual findings only if
such findings are diametrically opposed to that of the trial court (Prudenciado v.
Alliance Transport System, Inc., supra). But as it is, the Court of Appeals affirmed
point by point the factual findings if the lower court upon which the award of damages
had been based.
We, therefore, see no reason to modify the award of damages made by the trial
court. Respondent Braulio C. Darum in G.R. No. 83059 must also be solidarily liable
for said damages in his capacity as a public officer. A public official is by law not
immune from damages in his personal capacity for acts done in bad faith which,
being outside the scope of his authority, are no longer protected by the mantle of
immunity for official actions (Vidad v. RTC of Negros, Br. 42, 227 SCRA 271 [1993]).
WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R.
No. 83059 is GRANTED. The Decision dated August 31, 1987 of the Court of
Appeals is AFFIRMED while its Resolution of February 23, 1988 insofar as it reduces
the amount of damages awarded to the Quisumbing family is SET ASIDE. Costs
against petitioners in G.R. No. 82220 and respondent Braulio Darum in G.R. No.
83059.
SO ORDERED.
Padilla, Davide Jr., Bellosillo and Kapunan, JJ., concur.
G.R. No. L-17652

June 30, 1962

IGNACIO GRANDE, ET AL., petitioners,


vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN
CALALUNG, respondents.
Bartolome Guirao and Antonio M. Orara for petitioners.
Gonzales and Fernandez for respondents.
BARRERA, J.:

DONT WORRY BE HAPPY.

This is an appeal taken by petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia
Grande, from the decision of the Court of Appeals (CA-G.R. No. 25169-R) reversing
that of the Court of First Instance of Isabela (Civil Case No. 1171), and dismissing
petitioners' action against respondents Domingo and Esteban Calalung, to quiet title
to and recover possession of a parcel of land allegedly occupied by the latter without
petitioners' consent.
The facts of the case, which are undisputed, briefly are: Petitioners are the owners of
a parcel of land, with an area of 3.5032 hectares, located at barrio Ragan,
municipality of Magsaysay (formerly Tumauini), province of Isabela, by inheritance
from their deceased mother Patricia Angui (who inherited it from her parents Isidro
Angui and Ana Lopez, in whose name said land appears registered, as shown by
Original Certificate of Title No. 2982, issued on June 9, 1934). Said property is
identified as Lot No. 1, Plan PSU-83342. When it was surveyed for purposes of
registration sometime in 1930, its northeastern boundary was the Cagayan River (the
same boundary stated in the title). Since then, and for many years thereafter, a
gradual accretion on the northeastern side took place, by action of the current of the
Cagayan River, so much so, that by 1958, the bank thereof had receded to a distance
of about 105 meters from its original site, and an alluvial deposit of 19,964 square
meters (1.9964 hectares), more or less, had been added to the registered area (Exh.
C-1).
On January 25, 1958, petitioners instituted the present action in the Court of First
Instance of Isabela against respondents, to quiet title to said portion (19,964 square
meters) formed by accretion, alleging in their complaint (docketed as Civil Case No.
1171) that they and their predecessors-in-interest, were formerly in peaceful and
continuous possession thereof, until September, 1948, when respondents entered
upon the land under claim of ownership. Petitioners also asked for damages
corresponding to the value of the fruits of the land as well as attorney's fees and
costs. In their answer (dated February 18, 1958), respondents claim ownership in
themselves, asserting that they have been in continuous, open, and undisturbed
possession of said portion, since prior to the year 1933 to the present.
After trial, the Court of First Instance of Isabela, on May 4, 1959, rendered a decision
adjudging the ownership of the portion in question to petitioners, and ordering
respondents to vacate the premises and deliver possession thereof to petitioners,
and to pay to the latter P250.00 as damages and costs. Said decision, in part, reads:

It is admitted by the parties that the land involved in this action was formed by
the gradual deposit of alluvium brought about by the action of the Cagayan
River, a navigable river. We are inclined to believe that the accretion was
formed on the northeastern side of the land covered by Original Certificate of
Title No. 2982 after the survey of the registered land in 1931, because the
surveyors found out that the northeastern boundary of the land surveyed by
them was the Cagayan River, and not the land in question. Which is indicative
of the fact that the accretion has not yet started or begun in 1931. And, as
declared by Pedro Laman, defendant witness and the boundary owner on the
northwest of the registered land of the plaintiffs, the accretion was a little more
than one hectare, including the stony portion, in 1940 or 1941. Therefore, the
declarations of the defendant Domingo Calalung and his witness, Vicente C.
Bacani, to the effect that the land in question was formed by accretion since
1933 do not only contradict the testimony of defendants' witness Pedro
Laman, but could not overthrow the incontestable fact that the accretion with
an area of 4 hectare more or less, was formed in 1948, reason for which, it
was only declared in that same year for taxation purposes by the defendants
under Tax Dec. No. 257 (Exh. "2") when they entered upon the land. We could
not give credence to defendants' assertion that Tax Dec. No. 257 (Exh. "2")
cancelled Tax Dee. No. 28226 (Exh. "1"), because Exh. "2" says that "tax
under this declaration begins with the year 1948. But, the fact that defendants
declared the land for taxation purposes since 1948, does not mean that they
become the owner of the land by mere occupancy, for it is a new provision of
the New Civil Code that ownership of a piece of land cannot be acquired by
occupation (Art. 714, New Civil Code). The land in question being an accretion
to the mother or registered land of the plaintiffs, the accretion belongs to the
plaintiffs (Art. 457, New Civil Code; Art. 366, Old Civil Code). Assuming
arguendo, that the accretion has been occupied by the defendants since 1948,
or earlier, is of no moment, because the law does not require any act of
possession on the part of the owner of the riparian owner, from the moment
the deposit becomes manifest (Roxas v. Tuason, 9 Phil. 408; Cortez v. City of
Manila, 10 Phil. 567). Further, no act of appropriation on the part of the
reparian owner is necessary, in order to acquire ownership of the alluvial
formation, as the law does not require the same (3 Manresa, C.C., pp. 321326).

This brings us now to the determination of whether the defendants, granting


that they have been in possession of the alluvium since 1948, could have
acquired the property by prescription. Assuming that they occupied the land in
September, 1948, but considering that the action was commenced on January
25, 1958, they have not been in possession of the land for ten (10) years;
hence, they could not have acquired the land by ordinary prescription (Arts.
1134 and 1138, New Civil Code). Moreover, as the alluvium is, by law, part and
parcel of the registered property, the same may be considered as registered
property, within the meaning of Section 46 of Act No. 496: and, therefore, it
could not be acquired by prescription or adverse possession by another
person.
Unsatisfied, respondents appealed to the Court of Appeals, which rendered, on
September 14, 1960, the decision adverted to at the beginning of this opinion, partly
stating:
That the area in controversy has been formed through a gradual process of
alluvium, which started in the early thirties, is a fact conclusively established by
the evidence for both parties. By law, therefore, unless some superior title has
supervened, it should properly belong to the riparian owners, specifically in
accordance with the rule of natural accession in Article 366 of the old Civil
Code (now Article 457), which provides that "to the owner of lands adjoining
the banks of rivers, belongs the accretion which they gradually receive from
the effects of the current of the waters." The defendants, however, contend
that they have acquired ownership through prescription. This contention poses
the real issue in this case. The Courta quo, has resolved it in favor of the
plaintiffs, on two grounds: First, since by accession, the land in question
pertains to the original estate, and since in this instance the original estate is
registered, the accretion, consequently, falls within the purview of Section 46
of Act No. 496, which states that "no title to registered land in derogation to
that of the registered owner shall be acquired by prescription or adverse
possession"; and, second, the adverse possession of the defendant began
only in the month of September, 1948, or less than the 10-year period required
for prescription before the present action was instituted.
As a legal proposition, the first ground relied upon by the trial court, is not quite
correct. An accretion to registered land, while declared by specific provision of

DONT WORRY BE HAPPY.

the Civil Code to belong to the owner of the land as a natural accession
thereof, does not ipso jure become entitled to the protection of the rule of
imprescriptibility of title established by the Land Registration Act. Such
protection does not extend beyond the area given and described in the
certificate. To hold otherwise, would be productive of confusion. It would
virtually deprive the title, and the technical description of the land given
therein, of their character of conclusiveness as to the identity and area of the
land that is registered. Just as the Supreme Court, albeit in a negative manner,
has stated that registration does not protect the riparian owner against the
erosion of the area of his land through gradual changes in the course of the
adjoining stream (Payatas Estate Development Co. v. Tuason, 53 Phil. 55), so
registration does not entitle him to all the rights conferred by Land Registration
Act, in so far as the area added by accretion is concerned. What rights he has,
are declared not by said Act, but by the provisions of the Civil Code on
accession: and these provisions do not preclude acquisition of the addition
area by another person through prescription. This Court has held as much in
the case of Galindez, et al. v. Baguisa, et al., CA-G.R. No. 19249-R, July 17,
1959.

Laureana Rodriguez. The first stated that the defendants occupied the land in
question only in 1948; that he called the latter's attention to the fact that the
land was his, but the defendants, in turn, claimed that they were the owners,
that the plaintiffs did not file an action until 1958, because it was only then that
they were able to obtain the certificate of title from the surveyor, Domingo
Parlan; and that they never declared the land in question for taxation purposes
or paid the taxes thereon. Pedro Grande admitted that the defendants had the
said land surveyed in April, 1958, and that he tried to stop it, not because he
claimed the accretion for himself and his co-plaintiffs, but because the survey
included a portion of the property covered by their title. This last fact is
conceded by the defendants who, accordingly, relinquished their possession to
the part thus included, containing an area of some 458 square
meters.1wph1.t
The oral evidence for the defendants concerning the period of their possession
from 1933 to 1958 is not only preponderant in itself, but is, moreover,
supported by the fact that it is they and not the plaintiffs who declared the
disputed property for taxation, and by the additional circumstance that if the
plaintiff had really been in prior possession and were deprived thereof in 1948,
they would have immediately taken steps to recover the same. The excuse
they gave for not doing so, namely, that they did not receive their copy of the
certificate of title to their property until 1958 for lack of funds to pay the fees of
the surveyor Domingo Parlan, is too flimsy to merit any serious consideration.
The payment of the surveyor's fees had nothing to do with their right to obtain
a copy of the certificate. Besides, it was not necessary for them to have it in
their hands, in order to file an action to recover the land which was legally
theirs by accession and of which, as they allege, they had been illegally
deprived by the defendants. We are convinced, upon consideration of the
evidence, that the latter, were really in possession since 1934, immediately
after the process of alluvion started, and that the plaintiffs woke up to their
rights only when they received their copy of the title in 1958. By then, however,
prescription had already supervened in favor of the defendants.

We now proposed to review the second ground relied upon by the trial court,
regarding the length of time that the defendants have been in possession.
Domingo Calalung testified that he occupied the land in question for the first
time in 1934, not in 1948 as claimed by the plaintiffs. The area under
occupancy gradually increased as the years went by. In 1946, he declared the
land for purposes of taxation (Exhibit 1). This tax declaration was superseded
in 1948 by another (Exhibit 2), after the name of the municipality wherein it is
located was changed from Tumauini to Magsaysay. Calalung's testimony is
corroborated by two witnesses, both owners of properties nearby. Pedro
Laman, 72 years of age, who was Municipal president of Tumauini for three
terms, said that the land in question adjoins his own on the south, and that
since 1940 or 1951, he has always known it to be in the peaceful possession
of the defendants. Vicente C. Bacani testified to the same effect, although, he
said that the defendants' possession started sometime in 1933 or 1934. The
area thereof, he said, was then less than one hectare.

It is this decision of the Court of Appeals which petitioners seek to be reviewed by us.

We find the testimony of the said witnesses entitled to much greater weight
and credence than that of the plaintiff Pedro Grande and his lone witness,

The sole issue for resolution in this case is whether respondents have acquired the
alluvial property in question through prescription.

DONT WORRY BE HAPPY.

There can be no dispute that both under Article 457 of the New Civil Code and Article
366 of the old, petitioners are the lawful owners of said alluvial property, as they are
the registered owners of the land which it adjoins. The question is whether the
accretion becomes automatically registered land just because the lot which receives
it is covered by a Torrens title thereby making the alluvial property imprescriptible. We
agree with the Court of Appeals that it does not, just as an unregistered land
purchased by the registered owner of the adjoining land does not, by extension,
become ipso facto registered land. Ownership of a piece of land is one thing, and
registration under the Torrens system of that ownership is quite another. Ownership
over the accretion received by the land adjoining a river is governed by the Civil
Code. Imprescriptibility of registered land is provided in the registration law.
Registration under the Land Registration and Cadastral Acts does not vest or give
title to the land, but merely confirms and thereafter protects the title already
possessed by the owner, making it imprescriptible by occupation of third parties. But
to obtain this protection, the land must be placed under the operation of the
registration laws wherein certain judicial procedures have been provided. The fact
remain, however, that petitioners never sought registration of said alluvial property
(which was formed sometime after petitioners' property covered by Original
Certificate of Title No. 2982 was registered on June 9, 1934) up to the time they
instituted the present action in the Court of First Instance of Isabela in 1958. The
increment, therefore, never became registered property, and hence is not entitled or
subject to the protection of imprescriptibility enjoyed by registered property under the
Torrens system. Consequently, it was subject to acquisition through prescription by
third persons.
The next issue is, did respondents acquire said alluvial property through acquisitive
prescription? This is a question which requires determination of facts: physical
possession and dates or duration of such possession. The Court of Appeals, after
analyzing the evidence, found that respondents-appellees were in possession of the
alluvial lot since 1933 or 1934, openly, continuously and adversely, under a claim of
ownership up to the filing of the action in 1958. This finding of the existence of these
facts, arrived at by the Court of Appeals after an examination of the evidence
presented by the parties, is conclusive as to them and can not be reviewed by us.
The law on prescription applicable to the case is that provided in Act 190 and not the
provisions of the Civil Code, since the possession started in 1933 or 1934 when the
pertinent articles of the old Civil Code were not in force and before the effectivity of
DONT WORRY BE HAPPY.

the new Civil Code in 1950. Hence, the conclusion of the Court of Appeals that the
respondents acquired alluvial lot in question by acquisitive prescription is in
accordance with law.
The decision of the Court of Appeals under review is hereby affirmed, with costs
against the petitioners. So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes and Dizon,
JJ., concur.
Reyes, J.B.L., Regala and Makalintal, JJ., took no part.
G.R. No. 94283

March 4, 1991

MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS ORIENTAL


CONCRETE PRODUCTS, INC.,petitioners,
vs.
COURT OF APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and
RUDYGONDO EDUAVE, respondents.
Cabanlas, Resma & Cabanlas Law Offices for petitioners.
Jaime Y Sindiong for private respondents.
GANCAYCO, J.:
Between the one who has actual possession of an island that forms in a nonnavigable and non-flotable river and the owner of the land along the margin nearest
the island, who has the better right thereto? This is the issue to be resolved in this
petition.
The parties to this case dispute the ownership of a certain parcel of land located in
Sta. Cruz, Tagoloan, Misamis Oriental with an area of 16,452 square meters, more or
less, forming part of an island in a non-navigable river, and more particularly
described by its boundaries as follows:
North by the Tagoloan River,
South by the Tagoloan River,

East by the Tagoloan River and


West by the portion belonging to Vicente Neri.
Private respondents filed with the Regional Trial Court of Misamis Oriental 1 an action
to quiet title and/or remove a cloud over the property in question against petitioners.
Respondent Court of Appeals 2 summarized the evidence for the parties as follows:
The appellant [private respondent Janita Eduave] claims that she inherited the
land from his [sic] father, Felomino Factura, together with his co-heirs, Reneiro
Factura and Aldenora Factura, and acquired sole ownership of the property by
virtue of a Deed of Extra Judicial Partition with sale (Exh. D). The land is
declared for tax purposes under Tax Decl. No. 26137 (Exh. E) with an area of
16,452 square meters more or less (Exh. D). Since the death of her father on
May 5, 1949, the appellant had been in possession of the property although
the tax declaration remains in the name of the deceased father.
The appellants further state that the entire land had an area of 16,452 square
meters appearing in the deed of extrajudicial partition, while in [the] tax
declaration (Exh. E) the area is only 4,937 square meters, and she reasoned
out that she included the land that was under water. The land was eroded
sometime in November 1964 due to typhoon Ineng, destroying the bigger
portion and the improvements leaving only a coconut tree. In 1966 due to the
movement of the river deposits on the land that was not eroded increased the
area to almost half a hectare and in 1970 the appellant started to plant
bananas [sic].
In 1973 the defendants-appellees [petitioners herein] asked her permission to
plant corn and bananas provided that they prevent squatters to come to the
area.
The appellant engaged the services of a surveyor who conducted a survey
and placed concrete monuments over the land. The appellant also paid taxes
on the land in litigation, and mortgaged the land to the Luzon Surety and Co.,
for a consideration of P6,000.00.

DONT WORRY BE HAPPY.

The land was the subject of a reconveyance case, in the Court of First
Instance of Misamis Oriental, Branch V, at Cagayan de Oro City, Civil Case
No. 5892, between the appellant Janita Eduave vs. Heirs of Antonio
Factura which was the subject of judgment by compromise in view of the
amicable settlement of the parties, dated May 31, 1979. (Exh. R);
That the heirs of Antonio Factura, who are presently the defendants-appellees
in this case had ceded a portion of the land with an area of 1,289 square
meters more or less, to the appellant, Janita Eduave, in a notarial document of
conveyance, pursuant to the decision of the Court of First Instance, after a
subdivision of the lot No. 62 Pls-799, and containing 1,289 square meters
more or less was designated as Lot No. 62-A [sic], and the subdivision plan
was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and R-2);
The portion Lot No. 62-A, is described as follows:
A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62,
Pls-799, Tagoloan Public Land Subdivision) situated in Bo. Sta. Cruz,
Municipality of Tagoloan, Province of Misamis Oriental. Bounded on the
W, and on the N along lines 4-5-1 by Lot 62-B of the subdivision plan
10-001782; on the E by line 1-2 by Lot 64; Pls-799; on the S, along line
2-3-4 by Saluksok Creek, containing an area of one thousand two
hundred eighty nine (1,289) square meters more or less.
Appellant also applied for concession with the Bureau of Mines to extract 200
cubic meters of gravel (Exh. G & G-1); and after an ocular inspection the
permit was granted (Exh. K, and K-1 and K-2). That the appellant after permit
was granted entered into an agreement with Tagoloan Aggregates to extract
sand and gravel (Exh. L; L-1; and L-2), which agreement was registered in the
office of the Register of Deeds (Exh. M; M-1; and M-2);
The defendants-appellees [petitioners herein] denied the claim of ownership of
the appellant, and asserted that they are the real owners of the land in
litigation containing an area of 18,000 square meters more or less. During the
typhoon Ineng in 1964 the river control was washed away causing the
formation of an island, which is now the land in litigation. The defendants
started occupying the land in 1969, paid land taxes as evidenced by tax

declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and tax
clearances (Exhs. 8 & 9). Photographs showing the actual occupation of the
land by the defendants including improvements and the house were presented
as evidence (Exh. 11 to 11-E). The report of the Commissioner who conducted
the ocular inspection was offered as evidence of the defendants (Exh. G).
The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that the
plaintiffs' [private respondents'] land was across the land in litigation (Exh. 12A), and in going to the land of the plaintiff, one has to cross a distance of about
68 meters of the Tagoloan river to reach the land in litigation. 3
On 17 July 1987 the trial court dismissed the complaint for failure of private
respondents as plaintiffs therein to establish by preponderance of evidence their
claim of ownership over the land in litigation. The court found that the island is a delta
forming part of the river bed which the government may use to reroute, redirect or
control the course of the Tagoloan River. Accordingly, it held that it was outside the
commerce of man and part of the public domain, citing Article 420 of the Civil Code. 4
As such it cannot be registered under the land registration law or be acquired by
prescription. The trial court, however, recognized the validity of petitioners'
possession and gave them preferential rights to use and enjoy the property. The trial
court added that should the State allow the island to be the subject of private
ownership, the petitioners have rights better than that of private respondents. 5
On appeal to the Court of Appeals, respondent court found that the island was formed
by the branching off of the Tagoloan River and subsequent thereto the accumulation
of alluvial deposits. Basing its ruling on Articles 463 and 465 of the Civil Code 6 the
Court of Appeals reversed the decision of the trial court, declared private respondents
as the lawful and true owners of the land subject of this case and ordered petitioners
to vacate the premises and deliver possession of the land to private respondents. 7
In the present petition, petitioners raise the following as errors of respondent court, to
wit:
1. Whether [or not] respondent court correctly applied the provisions of Articles
463 and 465 of the new Civil Code to the facts of the case at bar; and
DONT WORRY BE HAPPY.

2. Whether [or not] respondent court gravely abused its discretion in the
exercise of its judicial authority in reversing the decision appealed from. 8
Petitioners point out as merely speculative the finding of respondent court that the
property of private respondents was split by the branching off or division of the river.
They argue that because, as held by the trial court, private respondents failed to
prove by preponderance of evidence the identity of their property before the same
was divided by the action of the river, respondent court erred in applying Article 463
of the Civil Code to the facts of this case.
It must be kept in mind that the sole issue decided by respondent court is whether or
not the trial court erred in dismissing the complaint for failure of private respondents
(plaintiffs below] to establish by preponderance of evidence their claim of ownership
over the island in question. Respondent court reversed the decision of the trial court
because it did not take into account the other pieces of evidence in favor of the
private respondents. The complaint was dismissed by the trial court because it did
not accept the explanation of private respondents regarding the initial discrepancy as
to the area they claimed: i.e., the prior tax declarations of private respondents refer to
an area with 4,937 square meters, white the Extra-judicial Partition with Sale, by
virtue of which private respondents acquired ownership of the property, pertains to
land of about 16,452 square meters.
The trial court favored the theory of petitioners that private respondents became
interested in the land only in 1979 not for agricultural purposes but in order to extract
gravel and sand. This, however, is belied by other circumstances tantamount to acts
of ownership exercised by private respondents over the property prior to said year as
borne out by the evidence, which apparently the trial court did not consider at all in
favor of private respondents. These include, among others, the payment of land taxes
thereon, the monuments placed by the surveyor whose services were engaged by
the private respondent, as evidenced by the pictures submitted as exhibits, and the
agreement entered into by private respondents and Tagoloan Aggregates to extract
gravel and sand, which agreement was duly registered with the Register of Deeds.
Private respondents also presented in evidence the testimony of two disinterested
witnesses: Gregorio Neri who confirmed the metes and bounds of the property of
private respondents and the effects of the typhoon on the same, and Candida Ehem
who related on the agreement between private respondents and petitioners for the

latter to act as caretakers of the former. 9 The trial court disregarded their testimony
without explaining why it doubted their credibility and instead merely relied on the
self-serving denial of petitioners.10

island is longer than the property of private respondents, they are deemed ipso
jure to be the owners of that portion which corresponds to the length of their property
along the margin of the river.

From the evidence thus submitted, respondent court had sufficient basis for the
finding that the property of private respondents actually existed and was Identified
prior to the branching off or division of the river. The Court of Appeals, therefore,
properly applied Article 463 of the Civil Code which allows the ownership over a
portion of land separated or isolated by river movement to be retained by the owner
thereof prior to such separation or isolation. 11

What then, about the adverse possession established by petitioners? Are their rights
as such not going to be recognized? It is well-settled that lands formed by accretion
belong to the riparian owner. 13 This preferential right is, under Article 465, also
granted the owners of the land located in the margin nearest the formed island for the
reason that they are in the best position to cultivate and attend to the exploitation of
the same.14 In fact, no specific act of possession over the accretion is required. 15 If,
however, the riparian owner fails to assert his claim thereof, the same may yield to
the adverse possession of third parties, as indeed even accretion to land titled under
the torrens system must itself still be registered. 16

Notwithstanding the foregoing and assuming arguendo as claimed by petitioners that


private respondents were not able to establish the existence and identity of the
property prior to the branching off or division of the Tagoloan River, and hence, their
right over the same, private respondents are nevertheless entitled under the law to
their respective portion of the island.
It is clear petitioners do not dispute that the land in litigation is an island that appears
in a non-flotable and non-navigable river; they instead anchor their claim on adverse
possession for about fifteen years. It is not even controverted that private
respondents are the owners of a parcel of land along the margin of the river and
opposite the island. On the other hand, private respondents do not dispute that the
island in question has been in the actual physical possession of petitioners; private
respondents insist only that such possession by petitioners is in the concept of
caretakers thereof with the permission of private respondents.
This brings Us, as phrased earlier in this opinion, to the underlying nature of the
controversy in this case: between the one who has actual possession of an island
that forms in a non-navigable and non-flotable river and the owner of the land along
the margin nearest the island, who has the better light thereto?
The parcel of land in question is part of an island that formed in a non-navigable and
non-flotable river; from a small mass of eroded or segregated outcrop of land, it
increased to its present size due to the gradual and successive accumulation of
alluvial deposits. In this regard the Court of Appeals also did not err in applying Article
465 of the Civil Code.12 Under this provision, the island belongs to the owner of the
land along the nearer margin as sole owner thereof; or more accurately, because the
DONT WORRY BE HAPPY.

Petitioners may therefore, acquire said property by adverse possession for the
required plumber of years under the doctrine of acquisitive prescription. Their
possession cannot be considered in good faith, however, because they are presumed
to have notice of the status of private respondents as riparian owners who have the
preferential right to the island as recognized and accorded by law; they may claim
ignorance of the law, specifically Article 465 of the Civil Code, but such is not, under
Articles 3 and 526 of the same code, an adequate and valid defense to support their
claim of good faith.17 Hence, not qualifying as possessors in good faith, they may
acquire ownership over the island only through uninterrupted adverse possession for
a period of thirty years.18 By their own admission, petitioners have been in possession
of the property for only about fifteen years. Thus, by this token and under the theory
adopted by petitioners, the island cannot be adjudicated in their favor.
This case is not between parties as opposing riparian owners contesting ownership
over an accession but rather between a riparian owner and the one in possession of
the island. Hence, there is no need to make a final determination regarding the
origins of the island, i.e., whether the island was initially formed by the branching off
or division of the river and covered by Article 463 of the Civil Code, in which case
there is strictly no accession because the original owner retains ownership, or
whether it was due to the action of the river under Article 465, or, as claimed by
petitioners, whether it was caused by the abrupt segregation and washing away of
the stockpile of the river control, which makes it a case of avulsion under Article
459. 19

We are not prepared, unlike the trial court, to concede that the island is a delta which
should be outside the commerce of man and that it belongs to the State as property
of the public domain in the absence of any showing that the legal requirements to
establish such a status have been satisfied, which duty properly pertains to the
State. 20 However, We are also well aware that this petition is an upshot of the action
to quiet title brought by the private respondents against petitioners. As such it is not
technically an action in rem or an action in personam, but characterized as quasi in
rem which is an action in personam concerning real property. 22 Thus, the judgment in
proceedings of this nature is conclusive only between the parties 23 and does not bind
the State or the other riparian owners who may have an interest over the island
involved herein.
WHEREFORE, We find no error committed by respondent court and DENY the
petition for lack of sufficient merit. The decision of respondent Court of Appeals is
hereby AFFIRMED, without pronouncement as to costs.

G.R. No. L-72255 February 6,1990


MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS (deceased),
represented by FLORENTINO C. TAGANAS, FELISA DICCION AGNE, HILARIO
ESCORPIZO, NICOLAS VILLANUEVA, ISABELO MAURICIO, ESTANISLAO
GOROSPE (deceased), represented by ELIZABETH G. BADUA and SILVINA G.
VALERIO, LIBRADO BADUA, JOSE ALSISTO, SERAPIO AGAPITO, NICOLASA
AGAPITO, JORGE DAMASO, ALEJANDRO DAMASO, ENCARNACION RAMOS,
DOMINGA RAMOS and CARLOS PALADO, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, PRESENTACION AGPOON GASCON
and JOAQUIN GASCON,respondents.
Espiritu Taganas for petitioners.
Adriatico T. Bruno for private respondents.

SO ORDERED.
REGALADO, J.:
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.
G.R. No. L-40399 February 6, 1990
MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS, HILARIO
ESCORPIZO, ISABELO MAURICIO, HEIRS OF ROMAN DAMASO, NAMELY:
JORGE DAMASO and ALEJANDRO DAMASO, HEIRS OF FRANCISCO RAMOS,
NAMELY: ENCARNACION R. LEANO and DOMINGA R. MEDRANO, HEIRS OF
SABINA GELACIO AGAPITO, NAMELY: SERAPIO AGAPITO, and NICOLASA
AGAPITO, FELISA DICCION AGNE, ESTANISLAO GOROSPE, LIBRADO BADUA,
NICOLAS VILLANUEVA, HEIRS OF CARLOS PALADO, NAMELY: FORTUNATA
PALADO and ISABELITA PALADO, PRIMITIVO TAGANAS, PANFILO SOINGCO,
BERNARDO PALATTAO, MARCELINO S. SANTOS and PAULINO D. AGNE JR.
(Minor), represented by his mother FELISA DICCION AGNE, petitioners,
vs.
THE DIRECTOR OF LANDS, PRESENTACION AGPOON GASCON, JOAQUIN
GASCON and HON. ROSALIO C. SEGUNDO, Presiding Judge, Court of First
Instance of Pangasinan, Branch V, respondents.
DONT WORRY BE HAPPY.

Before us are two separate petitions for review on certiorari of the order of the
defunct Court of First Instance of Pangasinan, Branch V, in Civil Case No. 2649,
entitled "Marcelino Agne et al. vs. The Director of Lands, et al.," dismissing the
complaint filed by herein petitioners in said case; 1 and the decision of the then
Intermediate Appellate Court in AC-G.R. CV No. 60388-R, entitled "Presentacion
Agpoon Gascon vs. Marcelino C. Agne et al.," promulgated on January 30, 1985,
affirming in toto the decision of the trial court in favor of herein private
respondents 2 which cases are docketed herein as G.R. No. L-40399 and G.R. No.
72255, respectively.
These two petitions, arising from the same facts and involving the same parties and
common questions of law, were ordered consolidated in our resolution of August 9,
1989.
As found by respondent court and disclosed by the records, the land subject matter of
this case was originally covered by Free Patent No. 23263 issued on April 17, 1937 in
the name of Herminigildo Agpoon. On May 21, 1937, pursuant to the said patent, the
Register of Deeds of Pangasinan issued to said Herminigildo Agpoon Original

Certificate of Title No. 2370. 3 Presentacion Agpoon Gascon inherited the said parcel
of land upon the death of her father, Herminigildo, and was issued Transfer Certificate
of Title No. 32209 on April 6,1960. Respondent Presentacion declared the said land
for taxation purposes in her name under Tax Declaration No. 11506 and taxes were
paid thereon in her name. 4
On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the then
Court of First Instance of Pangasinan for recovery of possession and damages
against petitioners. Their complaint states that they are the registered owners under
the aforesaid Transfer Certificate of Title No. 32209 of the parcel of land situated in
Barrio Bantog, Asingan, Pangasinan which is now in the possession of petitioners;
that during the Japanese occupation, petitioners, taking advantage of the abnormal
conditions then obtaining, took possession of said land by means of fraud, stealth,
strategy and intimidation; that private respondents repeatedly demanded the
surrender of the physical possession of said property but the latter refused. 5
Petitioners, in answer to said complaint, alleged that the land in question was
formerly a part of the river bed of the Agno-Chico River; that in the year 1920, a big
flood occurred which caused the said river to change its course and abandon its
original bed; that by virtue of the provisions of Article 370 of the Spanish Civil Code
which was then the law in force, petitioners, by operation of law, became the owners
by accession or accretion of the respective aliquot parts of said river bed bordering
their properties; that since 1920, they and their predecessors in interest occupied and
exercised dominion openly and adversely over said portion of the abandoned river
bed in question abutting their respective riparian lands continuously up to the present
to the exclusion of all other persons, particularly Herminigildo Agpoon; that they have
introduced improvements thereon by constructing irrigation canals and planting trees
and agricultural crops thereon 6 and converted the land into a productive area.
In their joint stipulation of facts, the parties agreed as follows:
1. That the parties admit the identity and area of the land in question,
which forms part of the river bed of the Agno-Chico River, and further
admit that the said river bed was abandoned as a result of a flood in
1920 and opened a new bed. The location and course of the aforesaid
abandoned river bed as well as the relative position of the lands
bordering the same can be gleaned from Cadastral Survey Plan of
DONT WORRY BE HAPPY.

Asingan, Pangasinan, Street No. 49 thereof, as approved by the


Director of Lands on October 12, 1912, a photostat copy of which is
hereto attached and made an integral part hereof a Annex "A".
2. That the parties admit that the defendants are the riparian owners of
the area in question and further admit that the defendants are in
possession thereof but that each of them is in possession only of an
aliquot part of the said area proportionate to the length of their
respective lands. (As amended).
3. That the parties likewise admit that a Free Patent No. 23263 in the
name of Herminigildo Agpoon covering the area in question was issued
on April 17, 1937 and that they admit O.C.T. No. 2370 of the Register of
Deeds of Pangasinan covering the same parcel of land was issued to
the same Herminigildo Agpoon on May 21, 1937, a photostat copy of
said O.C.T. is hereto attached as Annex "B".
4. That the parties admit that the property in controversy is now covered
by T.C.T. No. 32209 in the name of Presentacion Agpoon Gascon and
by Tax Declaration No. 11506 in the name of said Presentacion Agpoon
Gascon, a photostat reproduction of said T.C.T. No. and Tax Declaration
are hereto attached and marked as Annexes "C" and "F", respectively. 7
On March 6, 1974, while the above-mentioned case was still pending, petitioners filed
a complaint against the respondents Director of Lands and spouses Agpoon with the
former Court of First Instance of Pangasinan for annulment of title, reconveyance of
and/or action to clear title to a parcel of land, which action was docketed as Civil
Case No. U-2649. Petitioners alleged in their said complaint that the land in question,
which was formerly a portion of the bed of Agno-Chico river which was abandoned as
a result of the big flood in 1920, belongs to them pursuant to the provision of Article
370 of the old Civil Code; that it was only on April 13, 1971, when respondent
spouses filed a complaint against them, that they found out that the said land was
granted by the Government to Herminigildo Agpoon under Free Patent No. 23263,
pursuant to which Original Certificate of Title No. 2370 was issued in the latter's
name; and that the said patent and subsequent titles issued pursuant thereto are null
and void since the said land, an abandoned river bed, is of private ownership and,
therefore, cannot be the subject of a public land grant. 8

On June 21, 1974, the trial court rendered a decision in Civil Case No. U-2286, the
dispositive part of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court renders
judgment:
1. Ordering the defendants to surrender to the plaintiffs the physical
possession of the land in question described in paragraph 3 of the
amended complaint;
2. Ordering the defendants to pay jointly and severally to the plaintiff the
produce of the land in question in the total sum of P5,000.00 per year
from the date of the filing of the present action at the rate of 6%
interest per annum until fully paid;
3. Ordering the defendants to pay jointly and severally the amount of
P800.00 representing attorney's fees;
4. And to pay the costs.
SO ORDERED. 9
Not satisfied with said decision, petitioners appealed to respondent court. As earlier
stated, on January 30, 1985 the former Intermediate Appellate Court affirmed in
toto in AC-G.R. CV No. 60388-R the said decision of the courta quo, 10 and with the
denial of petitioner's motion for reconsideration, 11 the case came up to us as G.R.
No. 72255.
On June 24, 1974, the aforesaid Court of First Instance of Pangasinan, acting on the
motion to dismiss filed by respondents Director of Lands and spouses Agpoon,
issued an order dismissing Civil Case No. U-2649 for annulment of title by
merely citing the statement in the case of Antonio, et al. vs. Barroga, et al. 12 that an
action to annul a free patent many years after it had become final and indefeasible
states no cause of action . 13 Petitioners' motion for the reconsideration of said order
was denied on September 11, 1974, 14 hence the recourse to us in G.R. No. L-40399.
In these petitions, petitioners raise the following issues:
DONT WORRY BE HAPPY.

1. Whether or not the lower court is justified in dismissing the complaint by simply
invoking the ruling in the aforestated case of Antonio although the facts and
circumstances set forth in the complaint show that the land in question was private
land under Article 370 of the old Civil Code and that the subsequent derivative
certificates of title in question were null and void ab initio because the said land was
not within the authority of the government to dispose of in favor of any party and must
be ordered annulled, cancelled or rescinded; 15
2. Whether or not the trial court and the former Intermediate Appellate Court were
justified in not basing their judgments on the judicial admissions of private
respondents in the stipulation of facts of the parties, since such admissions have the
legal force and effect of precluding private respondents from disputing such
admission;
3. Whether or not respondent court can presume that private respondents or their
predecessor had prior possession of the land in dispute in the light of provisions of
law which oblige them to prove such possession, as well as the stipulated facts and
other facts and circumstances on record showing that private respondents or their
predecessor were not in actual occupancy of the said land, and without appreciating
the evidence put up by petitioners to prove their prior possession thereof;
4. Whether or not respondent court was justified in its application of Section 41 of the
Code of Civil Procedure in favor of private respondents, although the private
respondents did not invoke said law in this case and did not adduce any evidence or
proof that all the essential requisites of acquisitive prescription under the said law
were present in their favor;
5. Whether or not the Government had the right to convey by way of free patent to
any party the land in dispute which belonged to the riparian owners as decreed by
Article 370 of the old Civil Code, the law then in force, and despite the fact that the
patentee herein never occupied the said land during the period prescribed by Act No.
2874; and
6. Whether or not private respondents are guilty of laches for not having attempted to
file suit to recover the land in dispute during an interval of 50 or 30 years. 16
The issues and arguments raised by the proponents in these petitions are well taken.

We agree with petitioners that the lower court erred in ordering the dismissal of Civil
Case No. U-2649. The aforesaid case of Antonio relied upon by the lower court in its
dismissal order is not controlling. In that case, the complaint was dismissed for failure
to state a cause of action, not only because of the delay in the filing of the complaint
but specifically since the ground relied upon by the plaintiff therein, that is, that the
land was previously covered by a titulo real, even if true, would not warrant the
annulment of the free patent and the subsequent original certificate of title issued to
defendant. Thus:
It is true that by filing the application for a free patent Barroga impliedly
admitted either the invalidity or insufficiency of Titulo Real No. 12479
issued in the name of his predecessor in interest on July 22, 1894, but
neither the allegation made in his answer that his aforesaid predecessor
in interest was the absolute owner of the property covered by said Titulo
Real nor his implied admission of the latter's invalidity or insufficiency
are grounds for the annulment of the free patent and original certificate
of title in question. Evidently, it was Barroga's privilege to rely or not to
rely upon his claim of private ownership in favor of his predecessor in
interest and of whatever the latter's Titulo Real was worth. He
decided not to rely upon them and to consider that the property covered
by the Titulo Real was still part of the public domain. Acting accordingly
he applied for a free patent and was successful. It must be borne in
mind that the Titulo Real was not an indefeasible title and that its holder
still had to prove that he had possessed the land covered by it without
interruption during a period of ten years by virtue of a good title and in
good faith (Royal Decree of June 25,1880). We may well presume that
Barroga felt that he had no sufficient evidence to prove this, for which
reason he decided to acquire the land as part of the public domain.
In the case at bar, the facts alleged in the complaint, which are deemed hypothetically
admitted upon the filing of the motion to dismiss, constitute a sufficient cause of
action against private respondents. Petitioners in their complaint in Civil Case No. U2649 alleged, among others, that the disputed area was formerly an abandoned river
bed formed due to natural causes in 1920; that the riparian owners of the lands
abutting said abandoned river bed were the plaintiffs and/or their predecessors in
interest; that since then and up to the present, they have been occupying and
cultivating aliquot portions of the said land proportionate to the respective lengths of
DONT WORRY BE HAPPY.

their riparian lands; that they are the real and lawful owners of the said land as
decreed by Article 370 of the old Civil Code, the law then in force; that since the said
area was a private land, the same could not have been the subject matter of an
application for free patent; and that all these facts were known to the private
respondents and their predecessor in interest.
If the said averments are true, and the factual recitals thereon have been admitted in
the stipulation of facts hereinbefore quoted, then the land in question was and is of
private ownership and, therefore, beyond the jurisdiction of the Director of Lands. The
free patent and subsequent title issued pursuant thereto are null and void. The
indefeasibility and imprescriptibility of a Torrens title issued pursuant to a patent may
be invoked only when the land involved originally formed part of the public domain. If
it was a private land, the patent and certificate of title issued upon the patent are a
nullity. 17
The rule on the incontrovertibility of a certificate of title upon the expiration of one
year, after the entry of the decree, pursuant to the provisions of the Land Registration
Act, does not apply where an action for the cancellation of a patent and a certificate
of title issued pursuant thereto is instituted on the ground that they are null and void
because the Bureau of Lands had no jurisdiction to issue them at all, the land in
question having been withdrawn from the public domain prior to the subsequent
award of the patent and the grant of a certificate of title to another person. Such an
action is different from a review of the decree of title on the ground of fraud. 18
Although a period of one year has already expired from the time a certificate of title
was issued pursuant to a public grant, said title does not become incontrovertible but
is null and void if the property covered thereby is originally of private ownership, and
an action to annul the same does not prescribe. 19 Moreover, since herein petitioners
are in possession of the land in dispute, an action to quiet title is
imprescriptible. 20 Their action for reconveyance which, in effect, seeks to quiet title to
property in one's possession is imprescriptible. Their undisturbed possession for a
number of years gave them a continuing right to seek the aid of a court of equity to
determine the nature of the adverse claims of a third party and the effect on her
title. 21 As held in Caragay-Layno vs. Court of Appeals, et al., 22an adverse claimant of
a registered land, undisturbed in his possession thereof for a period of more than fifty
years and not knowing that the land he actually occupied had been registered in the
name of another, is not precluded from filing an action for reconveyance which, in

effect, seeks to quiet title to property as against the registered owner who was relying
upon a Torrens title which could have been fraudulently acquired. To such adverse
claimant, the remedy of an action to quiet title is imprescriptible. In actions for
reconveyance of property predicated on the fact that the conveyance complained of
was voidab initio, a claim of prescription of the action would be unavailing. 23
The resolution of the other assigned errors hinges on the issue of who, as between
the riparian owner presently in possession and the registered owner by virtue of a
free patent, has a better right over the abandoned river bed in dispute.
We rule in favor of petitioners.
The claim of ownership of herein petitioners is based on the old Civil Code, the law
then in force, which provides:
The beds of rivers which remain abandoned because the course of the
water has naturally changed belong to the owners of the riparian lands
throughout their respective lengths. If the abandoned bed divided
estates belonging to different owners, the new dividing line shall run at
equal distance therefrom. 24
It is thus clear under this provision that once the river bed has been abandoned, the
riparian owners become the owners of the abandoned bed to the extent provided by
this article. The acquisition of ownership is automatic. 25There need be no act on the
part of the riparian owners to subject the accession to their ownership, as it is subject
theretoipso jure from the moment the mode of acquisition becomes evident, without
the need of any formal act of acquisition. 26Such abandoned river bed had fallen to
the private ownership of the owner of the riparian land even without any formal act of
his will and any unauthorized occupant thereof will be considered as a trespasser.
The right in re to the principal is likewise a right in re to the accessory, as it is a mode
of acquisition provided by law, as the result of the right of accretion. Since the
accessory follows the nature of the principal, there need not be any tendency to the
thing or manifestation of the purpose to subject it to our ownership, as it is subject
thereto ipso jure from the moment the mode of acquisition becomes evident. 27
The right of the owner of land to additions thereto by accretion has been said to rest
in the law of nature, and to be analogous to the right of the owner of a tree to its
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fruits, and the owner of flocks and herds to their natural increase. 28 Petitioners herein
became owners of aliquot portions of said abandoned river bed as early as 1920,
when the Agno River changed its course, without the necessity of any action or
exercise of possession on their part, it being an admitted fact that the land in dispute,
prior to its registration, was an abandoned bed of the Agno River and that petitioners
are the riparian owners of the lands adjoining the said bed.
The failure of herein petitioners to register the accretion in their names and declare it
for purposes of taxation did not divest it of its character as a private property.
Although we take cognizance of the rule that an accretion to registered land is not
automatically registered and therefore not entitled or subject to the protection of
imprescriptibility enjoyed by registered property under the Torrens system. 29 The said
rule is not applicable to this case since the title claimed by private respondents is not
based on acquisitive prescription but is anchored on a public grant from the
Government, which presupposes that it was inceptively a public land. Ownership over
the accession is governed by the Civil Code. Imprescriptibility of registered land is a
concern of the Land Registration Act.
Under the provisions of Act No. 2874 pursuant to which the title of private
respondents' predecessor in interest was issued, the President of the Philippines or
his alter ego, the Director of Lands, has no authority to grant a free patent for land
that has ceased to be a public land and has passed to private ownership, and a title
so issued is null and void. 30 The nullity arises, not from the fraud or deceit, but from
the fact that the land is not under the jurisdiction of the Bureau of Lands. 31 The
jurisdiction of the Director of Lands is limited only to public lands and does not cover
lands privately owned. 32 The purpose of the Legislature in adopting the former Public
Land Act, Act No. 2874, was and is to limit its application to lands of the public
domain, and lands held in private ownership are not included therein and are not
affected in any manner whatsoever thereby. Land held in freehold or fee title, or of
private ownership, constitute no part of the public domain and cannot possibly come
within the purview of said Act No. 2874, inasmuch as the "subject" of such freehold or
private land is not embraced in any manner in the title of the Act 33 and the same are
excluded from the provisions or text thereof.
We reiterate that private ownership of land is not affected by the issuance of a free
patent over the same land because the Public Land Act applies only to lands of the
public domain. 34 Only public land may be disposed of by the Director of

Lands. 35 Since as early as 1920, the land in dispute was already under the private
ownership of herein petitioners and no longer a part of the lands of the public domain,
the same could not have been the subject matter of a free patent. The patentee and
his successors in interest acquired no right or title to the said land. Necessarily, Free
Patent No. 23263 issued to Herminigildo Agpoon is null and void and the subsequent
titles issued pursuant thereto cannot become final and indefeasible. Hence, we ruled
in Director of Lands vs. Sisican, et al. 36 that if at the time the free patents were
issued in 1953 the land covered therein were already private property of another and,
therefore, not part of the disposable land of the public domain, then applicants
patentees acquired no right or title to the land.
Now, a certificate of title fraudulently secured is null and void ab initio if the fraud
consisted in misrepresenting that the land is part of the public domain, although it is
not. As earlier stated, the nullity arises, not from the fraud or deceit but, from the fact
that the land is not under the jurisdiction of the Bureau of Lands. 37 Being null and
void, the free patent granted and the subsequent titles produce no legal effects
whatsoever. Quod nullum est, nullum producit effectum. 38
A free patent which purports to convey land to which the Government did not have
any title at the time of its issuance does not vest any title in the patentee as against
the true owner. 39 The Court has previously held that the Land Registration Act and
the Cadastral Act do not give anybody who resorts to the provisions thereof a better
title than what he really and lawfully has.
. . . The Land Registration Act as well as the Cadastral Act protects only
the holders of a title in good faith and does not permit its provisions to
be used as a shield for the commission of fraud, or that one should
enrich himself at the expense of another (Gustilo vs. Maravilla, 48 Phil.
838). The above-stated Acts do not give anybody, who resorts to the
provisions thereof, a better title than he really and lawfully has. If he
happened to obtain it by mistake or to secure, to the prejudice of his
neighbor, more land than he really owns, with or without bad faith on his
part, the certificate of title, which may have been issued to him under
the circumstances, may and should be cancelled or corrected (Legarda
and Prieto vs. Saleeby, 31 Phil., 590). . . . 40

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We have, therefore, to arrive at the unavoidable conclusion that the title of herein
petitioners over the land in dispute is superior to the title of the registered owner
which is a total nullity. The long and continued possession of petitioners under a valid
claim of title cannot be defeated by the claim of a registered owner whose title is
defective from the beginning.
The quality of conclusiveness of a Torrens title is not available for use to perpetrate
fraud and chicanery. To paraphrase from Angeles vs. Samia, supra, the Land
Registration Act does not create or vest title. It only confirms and records title already
existing and vested. It does not protect a usurper from the true owner. It cannot be a
shield for the commission of fraud. It does not permit one to enrich himself at the
expense of another. Stated elsewise, the Torrens system was not established as a
means for the acquisition of title to private land. It is intended merely to confirm and
register the title which one may already have on the land. Where the applicant
possesses no title or ownership over the parcel of land, he cannot acquire one under
the Torrens system of registration. 41 Resort to the provisions of the Land Registration
Act does not give one a better title than he really and lawfully has. 42 Registration
does not vest title. It is not a mode of acquiring property. It is merely evidence of such
title over a particular property. It does not give the holder any better title than what he
actually has, especially if the registration was done in bad faith. The effect is that it is
as if no registration was made at all. 43
Moreover, the failure of herein private respondents to assert their claim over the
disputed property for almost thirty 30 years constitute laches 44 and bars an action to
recover the same. 45 The registered owners' right to recover possession of the
property and title thereto from petitioners has, by long inaction or inexcusable
neglect, been converted into a stale demand. 46
Considering that petitioners were well within their rights in taking possession of the lot
in question, the findings of respondent court that herein petitioners took advantage of
the infirmities and weakness of the preceding claimant, Herminigildo Agpoon, in
taking possession of said land during the Japanese occupation is neither tenable in
law nor sustained by preponderant evidence in fact.
Where the evidence show that the plaintiff is the true owner of the land subject of the
free patent and title granted to another and that the defendant and his predecessor in
interest were never in possession thereof, the Court, in the exercise of its equity

jurisdiction and without ordering the cancellation of said title issued upon the patent,
may direct the defendant registered owner to reconvey the property to the
plaintiff. 47 Further, if the determinative facts are before the Court and it is in a position
to finally resolve the dispute, the expeditious administration of justice will be
subserved by such a resolution and thereby obviate the needless protracted
proceedings consequent to the remand of the case of the trial court. 48 On these
considerations, as well as the fact that these cases have been pending for a long
period of time, we see no need for remanding Civil Case No. 2649 for further
proceedings, and we hold that the facts and the ends of justice in this case require
the reconveyance by private respondents to petitioners of the disputed lot.
WHEREFORE, the assailed decision of respondent court in its AC-G.R. CV No.
60388-R and the questioned order of dismissal of the trial court in its Civil Case No.
2649 are hereby REVERSED and SET ASIDE and judgment is hereby rendered
ORDERING private respondents to reconvey the aforesaid parcel of land to
petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

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