Professional Documents
Culture Documents
TORRES
ENTERPRISES, INC et al
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and
located at Taculing Road, Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred
Jardinico bought the rights to the lot from Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the ROD of Bacolod City on December
19, 1978 TCTNo. 106367 in his name. It was then that he discovered that improvements had
been intROD uced on Lot 9 by respondent Wilson Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision
from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner. Under
the Contract to Sell on Installment, Kee could possess the lot even before the completion of all
installment payments. On January 20, 1975, Kee paid CTTEI the relocation fee and another, for
the preparation of the lot plan. These amounts were paid prior to Kee's taking actual possession
of Lot 8. After the preparation of the lot plan and a copy thereof given to Kee, CTTEI through
its employee, Zenaida Octaviano, accompanied Kee's wife, Donabelle Kee, to inspect Lot 8.
Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to
construct his residence, a store, an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to
reach an amicable settlement, but failed.
On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the latter remove all
improvements and vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed with the MTC
in Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment with damages against Kee.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI.
It further ruled that petitioner and CTTEI could not successfully invoke as a defense the failure
of Kee to give notice of his intention to begin construction required under paragraph 22 of the
Contract to Sell on Installment and his having built a sari-sari store without the prior approval of
petitioner required under paragraph 26 of said contract, saying that the purpose of these
requirements was merely to regulate the type of improvements to be constructed on the Lot. 3
However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8
for the latter's failure to pay the installments due, and that Kee had not contested the
rescission. The rescission was effected in 1979, before the complaint was instituted. The MTCC
concluded that Kee no longer had any right over the lot subject of the contract between him
and petitioner. Consequently, Kee must pay reasonable rentals for the use of Lot 9, and,
furthermore, he cannot claim reimbursement for the improvements he intROD uced on said lot.
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P15.00 a
day computed from the time this suit was filed on March 12, 1981 until he actually
vacates the premises. This amount shall bear interests ( sic) at the rate of 12 per cent
(sic) per annum.
3. Third-Party Defendant C.T. Torres Enterprises, Inc. and Pleasantville Subdivision are
ordered to pay the plaintiff jointly and severally the sum of P3,000.00 as attorney's fees
and P700.00 as cost and litigation expenses.4
On appeal, the RTC Bacolod City ruled that petitioner and CTTEI were not at fault or were
not negligent, there being no preponderant evidence to show that they directly participated in
the delivery of Lot 9 to Kee 5. It found Kee a builder in bad faith. It further ruled that even
assuming arguendo that Kee was acting in good faith, he was, nonetheless, guilty of unlawfully
usurping the possessory right of Jardinico over Lot 9 from the time he was served with notice to
vacate said lot, and thus was liable for rental.
Following the denial of his motion for reconsideration, Kee appealed directly to the
Supreme Court, which referred the matter to the CA.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of the
"mix-up" when he began construction of the improvements on Lot 8. It further ruled that the
erroneous delivery was due to the negligence of CTTEI, and that such wrong delivery was
likewise imputable to its principal, petitioner herein. The appellate court also ruled that the
award of rentals was without basis.
Furthermore, the case is REMANDED to the court of origin for the determination of the actual
value of the improvements and the property (Lot 9), as well as for further proceedings in
conformity with Article 448 of the NCC.7
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres
Enterprises, Inc.? and
Petitioner fails to persuade this Court to abandon the findings and conclusions of the CA that
Kee was a builder in good faith. We agree with the following observation of the CA:
The roots of the controversy can be traced directly to the errors committed by CTTEI,
when it pointed the wrong property to Wilson Kee and his wife. It is highly improbable
that a purchaser of a lot would knowingly and willingly build his residence on a lot
owned by another, deliberately exposing himself and his family to the risk of being
ejected from the land and losing all improvements thereon, not to mention the social
humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining
the identity of his property. Lot 8 is covered by TCTNo. T-69561, while Lot 9 is identified
in TCTNo. T-106367. Hence, under the Torrens system of land registration, Kee is
presumed to have knowledge of the metes and bounds of the property with which he is
dealing. . . .
But as Kee is a layman not versed in the technical description of his property, he had
to find a way to ascertain that what was described in TCT No. 69561 matched Lot 8.
Thus, he went to the subdivision developer's agent and applied and paid for the
relocation of the lot, as well as for the pROD uction of a lot plan by CTTEI's geodetic
engineer. Upon Kee's receipt of the map, his wife went to the subdivision site
accompanied by CTTEI's employee, Octaviano, who authoritatively declared that the
land she was pointing to was indeed Lot 8. Having full faith and confidence in the
reputation of CTTEI, and because of the company's positive identification of the
property, Kee saw no reason to suspect that there had been a misdelivery. The steps
Kee had taken to protect his interests were reasonable. There was no need for him to
have acted ex-abundantia cautela, such as being present during the geodetic
engineer's relocation survey or hiring an independent geodetic engineer to countercheck
for errors, for the final delivery of subdivision lots to their owners is part of the regular
course of everyday business of CTTEI. Because of CTTEI's blunder, what Kee had hoped
to forestall did in fact transpire.8
Good faith consists in the belief of the builder that the land he is building on is his and his
ignorance of any defect or flaw in his title 9. And as good faith is presumed, petitioner has the
burden of proving bad faith on the part of Kee .
At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from
petitioner. He was not aware that the lot delivered to him was not Lot 8. Thus, Kee's good faith.
Petitioner failed to prove otherwise.
To demonstrate Kee's bad faith, petitioner points to Kee's violation of paragraphs 22 and 26 of
the Contract of Sale on Installment. We disagree. Such violations have no bearing whatsoever
on whether Kee was a builder in good faith, that is, on his state of mind at the time he
built the improvements on Lot 9. These alleged violations may give rise to petitioner's
cause of action against Kee under the said contract (contractual breach), but may not be bases
to negate the presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on
Installment covering Lot 8 between it and Kee was rescinded long before the present
action was instituted. This has no relevance on the liability of petitioner, as such fact does
not negate the negligence of its agent in pointing out the wrong lot. to Kee. Such circumstance
is relevant only as it gives Jardinico a cause of action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot "claim that another lot was erroneously pointed out to
him" because the latter agreed to the following provision in the Contract of Sale on installment,
WHERE, The Vendee hereby declares that prior to the execution of his contract he/she has
personally examined or inspected the property made subject-matter hereof, as to its location,
contours, as well as the natural condition of the lots
The subject matter of this provision of the contract is the change of the location, contour and
condition of the lot due to erosion. It merely provides that the vendee, having examined the
property prior to the execution of the contract, agrees to shoulder the expenses resulting from
such change.
We do not agree with the interpretation of petitioner that Kee contracted away his right to
recover damages resulting from petitioner's negligence. Such waiver would be contrary to
public policy and cannot be allowed. "Rights may be waived, unless the waiver is contrary to
law, public order, public policy, morals, or good customs, or prejudicial to a third person with a
right recognized by law." 12
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC
after ruling that there was no evidence from which fault or negligence on the part of petitioner
and CTTEI can be inferred. The CA disagreed and found CTTEI negligent for the erroneous
delivery of the lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the
erroneous delivery of Lot 9 to Kee was an act which was clearly outside the scope of its
authority, and consequently, CTTEI I alone should be liable. It asserts that "while [CTTEI] was
authorized to sell the lot belonging to the herein petitioner, it was never authorized to deliver
the wrong lot to Kee" 13.
The rule is that the principal is responsible for the acts of the agent, done within the scope of
his authority, and should bear the damage caused to third persons. On the other hand, the
agent who exceeds his authority is personally liable for the damage.
CTTEI was acting within its authority as the sole real estate representative of petitioner when it
made the delivery to Kee. In acting within its scope of authority, it was, however,
negligent. It is this negligence that is the basis of petitioner's liability, as principal of CTTEI,
per Articles 1909 and 1910 of the CC.
Pending resolution of the case before the CA, Jardinico and Kee on July 24, 1987 entered into a
deed of sale, wherein the former sold Lot 9 to Kee. Jardinico and Kee did not inform the CA of
such deal. The deed of sale contained the provision regardless of the outcome of the decision
shall be mutually disregarded and shall not be pursued by the parties herein and shall be
considered dismissed and without effect whatsoever.
Kee asserts though that the "terms and conditions in said deed of sale are strictly for the parties
thereto" and that "(t)here is no waiver made by either of the parties in said deed of whatever
favorable judgment or award the honorable respondent CA may make in their favor against
herein petitioner Pleasantville Development Corporation and/or private respondent C.T. Torres
Enterprises; Inc."
Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier
stated, petitioner's liability is grounded on the negligence of its agent. On the other hand, what
the deed of sale regulates are the reciprocal rights of Kee and Jardinico; it stressed that they
had reached an agreement independent of the outcome of the case.
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall
answer for the amount representing the value of Lot 9 that Kee should pay to
Jardinico.
Petitioner contends that if the above holding would be carried out, Kee would be unjustly
enriched at its expense. In other words, Kee would be able to own the lot, as buyer, without
having to pay anything on it, because the aforequoted portion of respondent Court's Decision
would require petitioner and CTTEI jointly and solidarily to "answer" or reimburse Kee therefor.
Petitioner' s liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner
should be held liable for damages. Now, the extent and/or amount of damages to be awarded
is a factual issue which should be determined after evidence is adduced. However, there is no
showing that such evidence was actually presented in the trial court; hence no damages could
flow be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good
faith, respectively, are regulated by law ( i.e., Arts. 448, 546 and 548 of the CC). It was error for
the CA to make a "slight modification" in the application of such law, on the ground of "equity".
At any rate, as it stands now, Kee and Jardinico have amicably settled through their deed of
sale their rights and obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of
the dispositive portion of the CA' Decision [as repROD uced above] holding petitioner and
CTTEI solidarily liable.
The MTCC awarded Jardinico attorney's fees and costs in the amount of P3,000.00 and
P700.00, respectively, as prayed for in his complaint. The RTC deleted the award, consistent
with its ruling that petitioner was without fault or negligence. The CA, however, reinstated the
award of attorney's fees after ruling that petitioner was liable for its agent's negligence.
The award of attorney's fees lies within the discretion of the court and depends upon the
circumstances of each case 19. We shall not interfere with the discretion of the CA. Jardinico was
compelled to litigate for the protection of his interests and for the recovery of damages
sustained as a result of the negligence of petitioner's agent 20.
In sum, we rule that Kee is a builder in good faith. The disposition of the CA that Kee "is
entitled to the rights granted him under Articles 448, 546 and 548 of the NCC" is deleted, in
view of the deed of sale entered into by Kee and Jardinico, which deed now governs the rights
of Jardinico and Kee as to each other. There is also no further need, as ruled by the appellate
Court, to remand the case to the court of origin "for determination of the actual value of the
improvements and the property (Lot 9), as well as for further proceedings in conformity with
Article 448 of the NCC."
WHEREFORE , the petition is partially GRANTED. The Decision of the CA is hereby MODIFIED as
follows:
On January 14, 1983, private respondent Ricardo Ramos filed, a Complaint 5 against the herein
petitioners for recovery of property with damages before the said court of origin. On June
29, an Amended Complaint 6 was presented the pertinent portion of which alleged:
2. That the plaintiff is the legal and absolute owner of a certain parcel of land
known as Lot 2, H-4-617, and containing an area of 3,670 square meters his title
thereto being evidenced by OCT No. P-5619 of the ROD of Isabela;
4. That the plaintiff has demanded that the defendants remove their
improvement thereon and vacate the said portion, . . . but the defendants have
refused and failed, without any just or lawful cause to do so, to the present time;
In their Answer, the herein petitioners theorized, inter alia, that they have been in possession
not only of 22 square meters but 70 square meters of land through their predecessor-in-
interest, Teodoro de la Cruz (husband of defendant-appellant Agueda De Vera and father of the
rest of the defendants-appellants) and subsequently by themselves, as owners, before 1956;
over which their predecessor-in-interest, Teodoro de la Cruz, had, during his lifetime, a pending
Miscellaneous Sales Application (MSA) which was given due course and favorably
recommended by the District Land Officer for Isabela to the Director of Lands; that Teodoro de
la Cruz also declared the said land for taxation purposes and after his death, by his heirs, and
that plaintiff-appellee's cause of action is already barred by prescription and/or laches.
During the pre-trial conference, as agreed upon by the parties, the trial court appointed the
Chief of the Survey Party of the Bureau of Lands in Cauayan, Isabela, as Commissioner of the
court to conduct a relocation survey of subject property WON the land in dispute forms part of
the property and road-right-of-way of the private respondent.
On April 30, 1984, the said Commissioner submitted his Report on the Result of the Relocation
Survey, 8relevant portion of which, stated:
Attached herewith, which is made part of this report, is a Relocation Survey Plan
No. 2-02-000160 duly approved by the Regional Director, showing the result of
the relocation survey, to wit;
4. Area designated as portions "A," "B" and "C," represent the land in question
between the parties which portions are respectively describes, to wit:
a. Portion "A" with an area of 51 Square Meters represents the land being
claimed by the defendants Agueda de Vera, Et al, said area allegedly being
covered by MSA of their predecessor-in-interest the late Teodoro de la Cruz;
b. Portion "B" with an area of 5 Square Meters represents that part of Lot of
Ricardo Ramos being occupied by the house of defendants Agueda de Vera, Et
al;
c. Portion "C" with an area of 18 Square Meters, represents that part of Lot of
Ricardo Ramos, being occupied by the house of defendants, Agueda de Vera, Et
al;
On October 24, 1984, the private respondent sent in his Opposition 9 to the aforesaid Report,
branding the same as erroneous. On March 4, 1985, the court of origin issued an
Order, holding thus:
After trial on the merits, the same trial court promulgated its Decision:
(1) DECLARING the plaintiff the owner of all lands adjoining Lot 9841-A, and
ORDERING the defendants, their agents, representatives, or any person or
persons acting on their authority, to vacate the same and to deliver the
possession thereof to the plaintiff;
(3) ORDERING the defendants, jointly and severally, to pay the plaintiff a
monthly rent of P273.70 from 1981 and an additional P724.70 from receipt of
this decision until the possession of said land is delivered to the plaintiff;
(4) ORDERING the defendants, jointly and severally, to pay the plaintiff the sum
of P5,000.00 as attorney's fees and to pay the costs.
Petitioners elevated the case to the CA, arguing, among others, that: (1) the trial court erred in
not dismissing the complaint on the ground of laches; (2) the trial court erred in holding that
defendants-appellants are possessors in bad faith and (3) that defendants-appellants cannot be
made liable to plaintiff-appellee for rental payments for the use of the disputed property, for
attorney's fees and the costs of suit.
On March 21, 1991, the CA MODIFIED the Decision below and consequently deleting the
monthly rents decreed by the lower court in favor of plaintiff-appellee as regards said portion,
and are AFFIRMED in all other respects.
Petitioners have come to SC via the present petition with the pivotal issue for determination
here is: WON the CA erred in adjudging the herein petitioners as possessors and
builders in bad faith of Portions "B" and "C" of the property under controversy.
Germane records on hand disclose that on September 20, 1947, private respondent Ricardo
Ramos filed a homestead application for the parcel of land in litigation here. His Homestead
Application was approved by the District Land Officer on November 22, 1947. In 1949, the said
private respondent had fully complied with the cultivation and residence requirements of the
public Land Act. Thus, on December 15, 1955, HP was issued to Ricardo Ramos, on the basis of
which OCT No. P-5619 was issued by the ROD of Isabela, covering an area of 9 hectares, 28
acres and 20 centares.
After the issuance of his HP, Ricardo Ramos brought a complaint for recovery of possession
against several people before the then CFI of Isabela, entitled "Ricardo Ramos vs. Eleuterio
Viernes, et al." Therein, a decision for the ejectment of the said defendants was rendered. 16
However, a protracted litigation between Ricardo Ramos and the defendants in CC led by Jose
Ganadin, ensued with the latter averring that HP No V-62617 and OC No. P-5619 were obtained
in violation of Section 19 of the Public Land Law, and consequently, null and void. The case
eventually reached this Court which, on January 27, 1981, came out with a decision adjudging
the validity of the title of the private respondent, Ricardo Ramos. 17
On April 27, 1981, private respondent wrote petitioners reminding them that their house is on
his titled property, and asking them, (de Veras) whether they were going to buy the portion
occupied by them (de Veras) or to lease the same on a yearly or monthly basis; otherwise, he
(Ricardo Ramos) would be constrained to proper legal action against them. But the letter of
private respondent was ignored by petitioners.
In light of the factual background of the case, the Court concludes that the principle of laches
finds no application under the premises.
Laches is "the failure of or neglect for an unreasonable and unexplained length of time to do
that which by exercising due diligence, could or should have been done earlier, or to assert a
right within reasonable time, warranting a presumption that the party entitled thereto has either
abandoned it or declined to assert it. 18
Under the factual milieu of the case at bar, private respondent's failure to assert his rights over
subject parcel of land 23 years (1958-81) was due to the prolonged litigation. Therefore, the
delay is reasonable and considering that the essence of laches is the unreasonableness of the
delay in the prosecution or institution of a case, the principle of laches finds no room for
application here
In theorizing that their possession of the land in litigation could not have been in bad faith,
petitioners alleged that their possession over Portions "B" and "C" was by virtue of a valid
title, viz: the MSA , and in possessing the said Portions "B" and "C", they honestly believed that
the same formed part of the lot with an area of 70 square meters covered by their MSA ;
private respondent's knowledge that they (petitioners) had been occupying the said portions for
several years prior to his filing of the application for a homestead patent, opens to question
the validity of his HP and the title derived therefrom; petitioners reasoned out.
Art. 526 He is deemed a possessor in good faith who is not aware that there exist in
his title or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the
foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
In his Commentaries and Jurisprudence on the CC of the Philippines, Vol. II, 1993 ed., Dr.
Arturo Tolentino opines:
In distinguishing good faith and bad faith possession, the Code refers to the manner of
acquisition in general. A possessor in good faith is one who is unaware that there
exists a flaw which invalidates his acquisition of the thing, Good faith consists in the
possessor's belief that the persons from whom he received a thing was the owner of the
same and could convey his title. It consists in an honest intention to abstain from taking
any unconscientious advantage of another, and is the opposite of fraud. Since good faith
is a state of the mind, and is not a visible, tangible fact that can be seen or touched, it
can only be determined by outward acts and proven conduct . It implies freedom from
knowledge and circumstances which ought to put a person on inquiry
Records disclose that prior to the construction in 1983 of petitioners' house on the land under
controversy (Portions "B" and "C'), a demand letter dated April 27, 1981 was sent by private
respondent to the petitioners, informing them that the land they were possessing and
occupying is within his (private respondent's) titled property.
In the same letter, the private respondent gave petitioner Agueda de Vera the option to
either 1) pay him the value of the property or 2) lease the same on a yearly or monthly basis.
However, the contending parties failed to reach a compromise agreement.
The facts and circumstances aforestated are "outward acts and proven conduct" indicating
bad faith of petitioners as possessor and builder.
Art. 450 The owner of the land of which anything has been built, . . . in bad faith may
demand the demolition of the work, . . . in order to replace things in their former
condition at the expense of the former condition at the expense of the person who
built . . . or he may comple the builder . . . to pay the price of the land, . . .
Art. 451 In the cases of the two preceding articles, the landowner is entitled to
damages from the builder . . .
Under the aforecited Articles 449 and 450, the landowner has three alternative rights, either:
1. to appropriate what has been built without any obligation to pay indemnity therefor;
or
In the case under consideration, private respondent Ricardo Ramos availed of the second
alternative, which option is legally feasible under the attendant facts and circumstances.
Lastly, the land titles relied upon by herein petitioners do not suffice to establish good faith on
their part. Even the action on their public land application is only recommendatory and not yet
final, as it was still subject to the approval of the Director of Lands. The tax declarations prove
only the de Veras' claim of ownership, and when not supported by other effective evidence, are
no proof of the right of possession of subject realty. 25
In contrast, Portions "B" and "C" are covered by OCT No P-5619 and Transfer CTC No. T-
133705, issued in the name of private respondent Ricardo Ramos, which is conclusive as to all
matters therein contained, particularly, the identity of the owner of the land covered thereby.
The antecedents of this case may be traced as far back as August 1970; it involves a 128-
hectare parcel of land located in the barrios of Dunga and Cahumayhumayan, Danao City. On
December 27, 1973, the late Congressman Durano, Sr., together with his son Durano III, and
the latters wife, Elizabeth Hotchkiss (petitioners in the herein case), instituted an action for
damages against SPS Uy, et.al before the then CFI of Cebu, Danao City.
In that case, petitioners accused respondents of officiating a "hate campaign" against them by
lodging complaints in the Police Department of Danao City, over petitioners so-called "invasion"
of respondents alleged properties in Cahumayhumayan, Danao City. This was followed by
another complaint sent by respondents to the President of the Philippines in 1971, which
depicted petitioners as "oppressors", "landgrabbers" and "usurpers" of respondents alleged
rights. Upon the direction of the President, the DOJ through City Fiscal Jesus Navarro and the
Philippine Constabulary of Cebu simultaneously conducted investigations on the matter.
Respondents complaints were dismissed as "baseless", and they appealed the same to the SOJ
who called for another investigation to be jointly conducted by the Special Prosecutor and the
Office of the City Fiscal of Danao City. During the course of said joint investigation, respondents
Hermogenes Tito and Salvador Dayday again lodged a complaint with the Office of the
President, airing the same charges of "landgrabbing". The investigations on this new complaint,
jointly conducted by the 3rd Philippine Constabulary Zone and the Citizens Legal Assistance
Office resulted in the finding that "(petitioners) should not be held answerable therefor." 2
Petitioners further alleged in their complaint before the CFI that during the course of the above
investigations, respondents kept spreading false rumors and damaging tales which put
petitioners into public contempt and ridicule. 3
In their Answer, respondents lodged their affirmative defenses, demanded the return of their
respective properties, and made counterclaims for actual, moral and exemplary damages.
Respondents stated that sometime in the early part of August 1970 and months thereafter they
received mimeographed notices dated August 2, 1970 and signed by the late Ramon Durano,
Sr., informing them that the lands which they are tilling and residing in, formerly owned by the
Cebu Portland Cement Company (Cepoc), had been purchased by Durano & Co., Inc. The
notices also declared that the lands were needed by Durano & Co. for planting to sugar and for
roads or residences, and directed respondents to immediately turn over the said lands to the
representatives of the company. Simultaneously, tall bamboo poles with pennants at the tops
thereof were planted in some areas of the lands and metal sheets bearing the initials "RMD"
were nailed to posts.
As early as the first week of August 1970, and even before many of the respondents received
notices to vacate, men identified with Durano & Co proceeded to bulldoze the lands occupied by
various respondents, destroying in their wake the made by the respondents. On some
occasions, respondents alleged, these men fired shots in the air, purportedly acting upon the
instructions of petitioners.
On September 15, 1970, Durano & Co. sold the disputed property to petitioner Ramon Durano
III, who procured the registration of these lands in his name under two TCTs.
This notwithstanding, the bulldozing operations continued until the City Fiscal was requested by
the DOJ to conduct an investigation on the matter. When, on July 27, 1971, the City Fiscal
announced that he would be unable to conduct a preliminary investigation, respondents urged
the DOJ to conduct the preliminary investigation. This was granted, and the investigations
which spanned the period March 1972 to April 1973 led to the conclusion that respondents
complaint was untenable.4
In their counterclaim, respondents alleged that petitioners acts deprived most of them of their
independent source of income and have made destitutes of some of them. Also, petitioners
have done serious violence to respondents spirit, as citizens and human beings, to the extent
that one of them had been widowed by the emotional shock that the damage and dispossession
has caused.5 Thus, in addition to the dismissal of the complaint, respondents demanded actual
damages for the cost of the improvements they made on the land, together with the damage
arising from the dispossession itself; moral damages for the anguish they underwent as a result
of the high-handed display of power by petitioners in depriving them of their possession and
property; as well as exemplary damages, attorneys fees and expenses of litigation.
On April 22, 1975, petitioners moved to dismiss their complaint with the trial court. The trial
court granted the motion to dismiss, without prejudice to respondents right to proceed with
their counterclaim.
On September 23, 1980, this Court issued a resolution changing the venue of trial in Civil Case
to the RTC of Cebu City mainly in line with the transfer of Judge Salas, who presided over the
case in Danao City, to Cebu City.
The parties agreed to dispense with pre-trial, and for the evidence-in-chief to be submitted by
way of affidavits together with a schedule of documentary exhibits, subject to additional direct
examination, cross examination and presentation of rebuttal evidence by the parties.
The trial court and later, the CA, took note of the following portions of affidavits submitted by
petitioners:
xxx City Fiscal Jesus Navarro said that in August, 1967, he issued subpoenas to several tenants
in Cahumayhumayan upon representation by Cepoc, the latter protesting failure by the tenants
to continue giving Cepoc its share of the corn produce. He learned from the tenants that the
reason why they were reluctant and as a matter of fact some defaulted in giving Cepoc its
share, was that Uy Bing Sepulveda made similar demands to them for his share in the produce,
and that they did not know to whom the shares should be given.
Jesus Capitan said that he is familiar with the place Cahumayhumayan and that the properties
in said locality were formerly owned by Cepoc.
When the properties of R Durano were cultivated, the owners of the plants requested him that
they be given something for their effort even if the properties do not belong to them but to
Cepoc, and that he was directed by R Durano to do a listing of the improvements as well as the
owners. After he made a listing, this was given to R who directed Benedicto Ramos to do
payment.
When he was preparing the list, they did not object to the removal of the plants because the
counterclaimants understood that the lands did not belong to them, but later and because of
politics a complaint was filed, and finally that when he was doing the listing, the improvements
were even pointed to him by the counterclaimants themselves.
Ruperto Rom said that he had an occasion to work at Cepoc from 1947 to 1950 together with
Benedicto and Tomas Ramos, the latter a capataz of the Durano Sugar Mills. Owner of the
properties, subject of the complaint, was Cepoc.
The persons who eventually tilled the Cepoc properties were merely allowed to do cultivation if
planted to corn, and for Cepoc to be given a share, which condition was complied with by all
including the counterclaimants. He even possessed one parcel which he planted to coconuts,
jackfruit trees and other plants.
Co-defendant Ramon Durano III said that he agreed with the dismissal of the complaint
because his fathers wish was reconciliation with the defendants following the death of Pedro
Sepulveda, father of Angeles Sepulveda Uy, but inspite of the dismissal of the complaint, the
defendants still prosecuted their counterclaim.
The disputed properties were owned formerly by Cepoc, and then of the latter selling the
properties to Durano and Company and then by the latter to him as of September 15, 1970. As
a matter of fact, TCT T-103 and T-104 were issued to him and that from that time on, he paid
the taxes.
At the time he purchased the properties, they were not occupied by the defendants. The first
time he learned about the alleged bulldozing of the improvements was when the defendants
filed the complaint of land grabbing against their family with the Office of the President and the
attendant publicity. Precisely his family filed the complaint against them. (Exh. 57, Records, pp.
723-730)
Congressman Ramon Durano said he is familiar with the properties, being owned originally by
Cepoc. Thereafter they were purchased by Durano and Company and then sold to Ramon
Durano III, the latter now the owner. He filed a motion to dismiss the case against Angeles
Sepulveda et al. as a gesture of respect to the deceased Pedro Sepulveda, father of Angeles
Sepulveda, and as a Christian, said Pedro Sepulveda being the former Mayor of Danao, if only
to stop all misunderstanding between their families.
He was the one who did the discovery of the properties that belonged to Cepoc, which
happened when he was doing mining work near Cahumayhumayan and without his knowledge
extended his operation within the area belonging to Cepoc. After Cepoc learned of the
substantial coal deposits, the property was claimed by Cepoc and then a survey was made to
relocate the muniments. Eventually he desisted doing mining work and limited himself within
the confines of his property that was adjacent to Cepocs property. All the claimants except
Sepulveda Uy were occupants of the Cepoc properties. Durano and Company purchased the
property adjacent to Cepoc, developed the area, mined the coal and had the surveyed area
planted with sugar cane, and finally the notices to the occupants because of their intention to
plant sugar cane and other crops (T.S. N. December 4, 1985, pp. 31-32, 44-54, RTC Decision,
pp. 16-19, Records, pp. 842-845).7
Petitioners also presented Court Commissioner, Engineer Leonidas Gicain, who was directed by
the trial court to conduct a field survey of the disputed property. Gicain conducted surveys on
the areas subjected to bulldozing, including those outside the Cepoc properties. The survey ---
which was based on TCT No. T-103 and TCT No. T-104, titled in the name of Ramon Durano
III, and TCT No. 35, in the name of respondent Emigdio Bing Sing Uy --- was paid for by
petitioners.8
Respondents, for their part, also presented their affidavits and supporting documentary
evidence, including tax declarations covering such portions of the property as they formerly
inhabited and cultivated.
Return of the properties to Venancia Repaso, Hermogenes Tito and Marcelino Gonzales
is hereby directed.
With respect to counter claimant Angeles Sepulveda Uy, return of the property to her
should be with respect to the areas outside of the Cepoc property, as mentioned in the
sketch, Exhibit 56-A.
The RTC found that the case preponderated in favor of respondents, who all possessed their
respective portions of the property thinking that they were the absolute owners thereof. A
number of these respondents alleged that they inherited these properties from their parents,
who in turn inherited them from their own parents. They and their predecessors were
responsible for the plantings and improvements on the property. They were the ones who
sought for the properties to be tax-declared in their respective names, and they continually paid
the taxes thereto. Respondents maintained that they were unaware of anyone claiming adverse
possession or ownership of these lands until the bulldozing operations in 1970.
As for Venancia Repaso, Hermogenes Tito and Marcelino Gonzales, the Court found that the
properties they laid claim to were not part of the land that was purchased by Durano & Co.
from Cepoc. Thus, it found the bulldozing of these lands by petitioners totally unjustified and
ordered not only the total reimbursement of useful and necessary expenses on the
properties but also the return of these properties to Repaso, Tito and Gonzales,
respectively. As for all the other respondents, the RTC found their possession of the
properties to be in the concept of owner and adjudged them to be builders in good faith.
Considering that petitioners in the instant case appropriated the improvements on the areas
overran by the bulldozers, the RTC ruled that "the right of retention to the improvements
necessarily should be secured (in favor of respondents) until reimbursed not only of the
necessary but also useful expenses."10
On the matter of litigation expenses and attorneys fees, the RTC observed that the trial period
alone consisted of forty (40) trial dates spread over a period of sixteen (16) years. At the time,
respondents were represented by counsel based in Manila, and the trial court took into
consideration the expenses of their lawyer that respondents must have shouldered during the
trial of the case.
Dissatisfied, petitioners appealed the RTC decision to the CA, which, in turn, affirmed the said
decision and ordered the return of the property to all the respondents-claimants, in effect
modifying the RTC decision which allowed return only in favor of respondents Repaso, Tito and
Gonzales.
In its decision, the CA upheld the factual findings and conclusions of the RTC, including the
awards for actual damages, attorneys fees and litigation expenses, and found additionally that
the issuance of TCTs in the name of Ramon Durano III was attended by fraud. Evaluating
the evidence before it, the CA observed that the alleged reconstituted titles of Cepoc over the
properties, which were claimed to be the derivative titles of TCT Nos. T-103 and T-104, were
not submitted in evidence before the RTC. Thus, in an Order dated June 15, 1988, the RTC
ordered Exhibits "19" and "20" deleted from petitioners Offer of Exhibits. The CA further noted
that even among the exhibits subsequently pRODuced by petitioners before the RTC, said
Exhibits "19" and "20" were still not submitted. 11 Moreover, Cepoc had no registered title over
the disputed property as indicated in TCT Nos. T-103 and T-104.
From the foregoing, the CA concluded that the issuance of the TCT Nos. T-103 and T-104 in
favor of petitioner Ramon Durano III was attended by fraud; hence, petitioners could not
invoke the principle of indefeasibility of title. Additionally, the CA found that the alleged
Deed of Absolute Sale, undated, between Cepoc Industries, Inc. and Durano & Co. was not
notarized and thus, unregistrable.
The CA went on to state that while admittedly had no registered titles in their names --- were
able to demonstrate possession that was public, continuous and adverse --- or possession in the
concept of owner, and which was much prior one or two generations back for many of
respondents as against to the claim of ownership of petitioners.
Thus, the CA ordered the return of the properties covered by TCTs to all respondents.
Corollarily, CA declared that petitioners were possessors in bad faith, and were not
entitled to reimbursement for useful expenses incurred in the conversion of the property into
sugarcane lands. It also gave no merit to petitioners allegation that the actual damages
awarded by the trial court were excessive, or to petitioners argument that they should not have
been held personally liable for any damages imputable to Durano & Co.
1. The CA erred in granting relief to the respondents who did not appeal the decision of
the lower court.
2. The CA erred in collaterally attacking the validity of the title of petitioner Ramon
Durano III.
3. The respondents should not have been adjudged builders in good faith.
4. The petitioners should not be held personally liable for damages because of the
doctrine of separate corporate personality.
5. It was an error to hold that the respondents had proved the existence of
improvements on the land by preponderance of evidence, and in awarding excessive
damages therefor.
6. It was error to direct the return of the properties to respondents Venancia Repaso,
Hermogenes Tito and Marcelino Gonzales.
On their first assignment of error, petitioners contend that before the CA, they only questioned
that portion of the RTC decision which directed the return of the properties to respondents
Repaso, Tito and Gonzales. They argued that the return of the properties to all the other
respondents by the CA was erroneous because it was not among the errors assigned or argued
by petitioners on appeal. Besides, since respondents themselves did not appeal from the RTC
decision on the issue of return of the physical possession of the property, it is understood that
judgment as to them has already become final by operation of law. To support its argument,
petitioners cited the cases of Madrideo vs. CA14 and Medida vs. CA15 , which held that
"whenever an appeal is taken in a CC an appellee who has not himself appealed cannot obtain
from the appellate court any affirmative relief other than the ones granted in the decision of the
court below."
Sec. 8. Questions that may be decided. --- No error which does not affect the jurisdiction over
the subject matter or the validity of the judgment appealed from or the proceedings therein will
be considered unless stated in the assignment of errors, or closely related to or dependent on
an assigned error and properly argued in the brief, save as the court may pass upon plain
errors and clerical errors.
Plaintiffs-appellants have to return possession of the subject property, not only to defendants-
appellees Venancia Repaso, Hermogenes Tito and Marcelino Gonzales but to all other
defendants-appellees herein, by virtue of the latters priority in time of declaring the
corresponding portions of the subject properties in their name and/or their predecessors-in-
interest coupled with actual possession of the same property through their predecessors-in-
interest in the concept of an owner. Plaintiffs-appellants who had never pROD uced in court a
valid basis by which they are claiming possession or ownership over the said property cannot
have a better right over the subject properties than defendants-appellees. 17
Meanwhile, in the Medida case, petitioners (who were the appellees before the CA) sought the
reversal of a finding of the RTC before the Supreme Court. The Court explained that since
petitioners failed to appeal from the RTC decision, they --- as appellees before the CA --- could
only argue for the purpose of sustaining the judgment in their favor, and could not ask for any
affirmative relief other than that granted by the court below. The factual milieu in Medida is
different from that of the instant case, where the return of the properties to respondents was
not an "affirmative relief" sought by respondents but an independent determination of the CA
proceeding from its findings that respondents were long-standing possessors in the concept of
owner while petitioners were builders in bad faith. Certainly, under such circumstances, the CA
is not precluded from modifying the decision of the RTC in order to accord complete relief to
respondents.
Moving now to the other errors assigned in the petition, the return of the properties to
respondents Repaso, Tito and Gonzales was premised upon the factual finding that these lands
were outside the properties claimed by petitioners under TCT Nos. T-103 and T-104. Such
factual finding of the RTC, sustained by the CA, is now final and binding upon this Court.
In respect of the properties supposedly covered by TCT Nos. T-103 and T-104, the CA basically
affirmed the findings of the RTC that respondents have shown prior and actual possession
thereof in the concept of owner, whereas petitioners failed to substantiate a valid and
legitimate acquisition of the property --- considering that the alleged titles of Cepoc from which
TCT Nos. T-103 and T-104 were supposed to have derived title were not pROD uced, and the
deed of sale between Cepoc and Durano & Co. was unregistrable.
The records clearly bear out respondents prior and actual possession; more exactly, the
records indicate that respondents possession has ripened into ownership by acquisitive
prescription.
Ordinary acquisitive prescription, in the case of immovable property, requires possession of the
thing in good faith and with just title,18 for a period of ten years.19 A possessor is deemed to be
"in good faith" when he is not aware of any flaw in his title or mode of acquisition of the
property.20 On the other hand, there is "just title" when the adverse claimant came into
possession of the property through one of the modes for acquiring ownership recognized by
law, but the grantor was not the owner or could not transmit any right. 21 The claimant by
prescription may compute the ten-year period by tacking his possession to that of his grantor or
predecessor-in-interest.22
The evidence shows that respondents successfully complied with all the requirements for
acquisitive prescription to set in. The properties were conveyed to respondents by purchase or
inheritance, and in each case the respondents were in actual, continuous, open and adverse
possession of the properties. They exercised rights of ownership over the lands, including the
regular payment of taxes and intROD uction of plantings and improvements. They were
unaware of anyone claiming to be the owner of these lands other than themselves until the
notices of demolition in 1970 --- and at the time each of them had already completed the ten-
year prescriptive period either by their own possession or by obtaining from the possession of
their predecessors-in-interest. Contrary to the allegation of petitioners that the claims of all
twenty-two (22) respondents were lumped together and indiscriminately sustained, the lower
courts (especially the RTC) took careful consideration of the claims individually, taking note of
the respective modes and dates of acquisition. Whether respondents predecessors-in-interest in
fact had title to convey is irrelevant under the concept of just title and for purposes of
prescription.
Thus, respondents counterclaim for reconveyance and damages before the RTC was premised
upon a claim of ownership as indicated by the following allegations:
(Y)our defendants are owners and occupants of different parcels of land located in Barrio
Cahumayhumayan, your defendants having occupied these parcels of land for various periods
by themselves or through their predecessors-in-interest, some for over fifty years, and some
with titles issued under the Land Registration Act; xxxxx 23
It is true that fraud in the issuance of a certificate of title may be raised only in an action
expressly instituted for that purpose,25 and not collaterally as in the instant case which is an
action for reconveyance and damages. While we cannot sustain the CA finding of fraud
because of this jurisdictional impediment, we observe that the above-enumerated
circumstances indicate none too clearly the weakness of petitioners evidence on their claim of
ownership. For instance, the non-pROD uction of the alleged reconstituted titles of Cepoc
despite demand therefor gives rise to a presumption (unrebutted by petitioners) that such
evidence, if pROD uced, would be adverse to petitioners. 26 Also, the unregistrability of the deed
of sale is a serious defect that should affect the validity of the certificates of title. Notarization
of the deed of sale is essential to its registrability, 27 and the action of the ROD in allowing the
registration of the unacknowledged deed of sale was unauthorized and did not render validity to
the registration of the document.28
Furthermore, a purchaser of a parcel of land cannot close his eyes to facts which should put a
reasonable man upon his guard, such as when the property subject of the purchase is in the
possession of persons other than the seller. 29 A buyer who could not have failed to know or
discover that the land sold to him was in the adverse possession of another is a buyer in bad
faith.30 In the herein case, respondents were in open possession and occupancy of the
properties when Durano & Co. supposedly purchased the same from Cepoc. Petitioners made
no attempt to investigate the nature of respondents possession before they ordered demolition
in August 1970.
In the same manner, the purchase of the property by petitioner Ramon Durano III from Durano
& Co. could not be said to have been in good faith. It is not disputed that Durano III acquired
the property with full knowledge of respondents occupancy thereon. There even appears to be
undue haste in the conveyance of the property to Durano III, as the bulldozing operations by
Durano & Co. were still underway when the deed of sale to Durano III was executed on
September 15, 1970. There is not even an indication that Durano & Co. attempted to transfer
registration of the property in its name before it conveyed the same to Durano III.
In the light of these circumstances, petitioners could not justifiably invoke the defense of
indefeasibility of title to defeat respondents claim of ownership by prescription. The rule on
indefeasibility of title, i.e., that Torrens titles can be attacked for fraud only within one year
from the date of issuance of the decree of registration, does not altogether deprive an
aggrieved party of a remedy at law. As clarified by the Court in Javier vs. CA31 ---
The decree (of registration) becomes incontrovertible and can no longer be reviewed after one
(1) year from the date of the decree so that the only remedy of the landowner whose property
has been wrongfully or erroneously registered in anothers name is to bring an ordinary action
in court for reconveyance, which is an action in personam and is always available as long as the
property has not passed to an innocent third party for value. If the property has passed into the
hands of an innocent purchaser for value, the remedy is an action for damages.
In the instant case, respondents action for reconveyance will prosper, it being clear that the
property, wrongfully registered in the name of petitioner Durano III, has not passed to an
innocent purchaser for value.
Since petitioners knew fully well the defect in their titles, they were correctly held by the CA to
be builders in bad faith.
The CC provides:
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built,
planted or sown without right of indemnity.
Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith
may demand the demolition of the work, or that the planting or sowing be removed, in order to
replace things in their former condition at the expense of the person who built, planted or
sowed; or he may compel the builder or planter to pay the price of the land, and the sower the
proper rent.
Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from
the builder, planter or sower.
Based on these provisions, the owner of the land has three alternative rights: (1) to appropriate
what has been built without any obligation to pay indemnity therefor, or (2) to demand that the
builder remove what he had built, or (3) to compel the builder to pay the value of the land. 32 In
any case, the landowner is entitled to damages under Article 451, abovecited.
We sustain the return of the properties to respondents and the payment of indemnity as being
in accord with the reliefs under the CC.
On petitioners fifth assignment of error that respondents had not proved the existence of
improvements on the property by preponderance of evidence, and that the damages awarded
by the lower courts were excessive and not actually proved, the Court notes that the issue is
essentially factual. Petitioners, however, invoke Article 2199 of the CC which requires actual
damages to be duly proved. Passing upon this matter, the CA cited with approval the decision
of the RTC which stated:
The counter claimants made a detail of the improvements that were damaged. 1wphi1 Then
the query, how accurate were the listings, supposedly representing damaged improvements.
The Court notes, some of the counter claimants improvements in the tax declarations did not
tally with the listings as mentioned in their individual affidavits. Also, others did not submit tax
declarations supporting identity of the properties they possessed. The disparity with respect to
the former and absence of tax declarations with respect to the latter, should not be a
justification for defeating right of reimbursement. As a matter of fact, no controverting evidence
was presented by the plaintiffs that the improvements being mentioned individually in the
affidavits did not reflect the actual improvements that were overran by the bulldozing
operation. Aside from that, the City Assessor, or any member of his staff, were not presented
as witnesses. Had they been presented by the plaintiffs, the least that can be expected is that
they would have enlightened the Court the extent of their individual holdings being developed
in terms of existing improvements. This, the plaintiffs defaulted. It might be true that there
were tax declarations, then presented as supporting documents by the counter claimants, but
then mentioning improvements but in variance with the listings in the individual affidavits. This
disparity similarly cannot be accepted as a basis for the setting aside of the listing of
improvements being adverted to by the counter claimants in their affidavits. This Court is not
foreclosing the possibility that the tax declarations on record were either table computations by
the Assessor or his deputy, or tax declarations whose entries were merely copied from the old
tax declarations during the period of revision. (RTC Decision, p. 36, Records, p. 862) 33
The right of the owner of the land to recover damages from a builder in bad faith is clearly
provided for in Article 451 of the CC. Although said Article 451 does not elaborate on the basis
for damages, the Court perceives that it should reasonably correspond with the value of the
properties lost or destroyed as a result of the occupation in bad faith, as well as the fruits
(natural, industrial or civil) from those properties that the owner of the land reasonably
expected to obtain. We sustain the view of the lower courts that the disparity between
respondents affidavits and their tax declarations on the amount of damages claimed should not
preclude or defeat respondents right to damages, which is guaranteed by Article 451.
Moreover, under Article 2224 of the CC:
Temperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty.
We also uphold the award of litigation expenses and attorneys fees, it being clear that
petitioners acts compelled respondents to litigate and incur expenses to regain rightful
possession and ownership over the disputed property. 34
The last issue presented for our resolution is whether petitioners could justifiably invoke the
doctrine of separate corporate personality to evade liability for damages. The CA applied the
well-recognized principle of "piercing the corporate veil", i.e., the law will regard the act of the
corporation as the act of its individual stockholders when it is shown that the corporation was
used merely as an alter ego by those persons in the commission of fraud or other illegal acts.
The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is
as follows:
1. Control, not mere majority or complete stock control, but complete domination, not
only of finances but of policy and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction had at the time no separate
mind, will or existence of its own;
2. Such control must have been used by the defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other positive legal duty, or dishonest and
unjust acts in contravention of plaintiffs legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust
loss complained of.
The absence of any one of these elements prevents "piercing the corporate veil". In applying
the "instrumentality" or "alter ego" doctrine, the courts are concerned with reality and not form,
with how the corporation operated and the individual defendants relationship to that
operation.35
The question of whether a corporation is a mere alter ego is purely one of fact. 36 The Court
sees no reason to reverse the finding of the CA. The facts show that shortly after the purported
sale by Cepco to Durano & Co., the latter sold the property to petitioner Ramon Durano III,
who immediately procured the registration of the property in his name. Obviously, Durano &
Co. was used by petitioners merely as an instrumentality to appropriate the disputed property
for themselves.
WHEREFORE, the instant petition is DENIED. The decision of the CA is MODIFIED to declare
respondents with claims to the properties covered by TCTNos. T-103 and T-104 owners by
acquisitive prescription to the extent of their respective claims. In all other respects, the
decision of the CA is AFFIRMED.
This petition for review on certiorari has its origins in CC No. 9214 of Branch 3 of the MTC in
Cities (MTCC) in Dagupan City for unlawful detainer and damages. The petitioners ask the Court
to set aside the decision of the CA affirming the decision of Branch 40 of the RTC (RTC) of
Dagupan City, which, in turn, reversed the MTCC; ordered the petitioners to reimburse the
private respondents the value of the house in question and other improvements; and allowed
the latter to retain the premises until reimbursement was made.
It appears that Lot No. 3765-B-1 containing an area of 314 square meters was originally owned
by the petitioners' mother, Paulina Amado vda. de Geminiano. On a 12-square-meter portion of
that lot stood the petitioners' unfinished bungalow, which the petitioners sold in November
1978 to the private respondents for the sum of P6,000.00, with an alleged promise to sell to the
latter that portion of the lot occupied by the house. Subsequently, the petitioners' mother
executed a contract of lease over a 126 square-meter portion of the lot, including that portion
on which the house stood, in favor of the private respondents for P40.00 per month for a period
of seven years commencing on 15 November 1978. 1 The private respondents then intROD uced
additional improvements and registered the house in their names. After the expiration of the
lease contract in November 1985, however, the petitioners' mother refused to accept the
monthly rentals.
It turned out that the lot in question was the subject of a suit, which resulted in its acquisition
by one Maria Lee in 1972. In 1982, Lee sold the lot to Lily Salcedo, who in turn sold it in 1984
to the spouses Agustin and Ester Dionisio.
On 14 February 1992, the Dionisio spouses executed a Deed of Quitclaim over the said property
in favor of the petitioners. 2 As such, the lot was registered in the latter's name. 3
On 9 February 1993, the petitioners sent, via registered mail, a letters addressed to private
respondent Mary Nicolas demanding that she vacate the premises and pay the rentals in arrears
within twenty days from notice. 4
Upon failure of the private respondents to heed the demand, the petitioners filed with the MTCC
of Dagupan City a complaint for unlawful detainer and damages.
During the pre-trial conference, the parties agreed to confine the issues to: (1) whether there
was an implied renewal of the lease which expired in November 1985; (2) whether the lessees
were builders in good faith and entitled to reimbursement of the value of the house and
improvements; and (3) the value of the house.
The parties then submitted their respective position papers and the case was heard under the
Rule on Summary Procedure.
On the first issue, the court held that since the petitioners' mother was no longer the owner of
the lot in question at the time the lease contract was executed in 1978, in view of its acquisition
by Maria Lee as early as 1972, there was no lease to speak of, much less, a renewal thereof.
And even if the lease legally existed, its implied renewal was not for the period stipulated in the
original contract, but only on a month-to-month basis pursuant to Article 1687 of the CC. The
refusal of the petitioners' mother to accept the rentals starting January 1986 was then a clear
indication of her desire to terminate the monthly lease. As regard the petitioners' alleged failed
promise to sell to the private respondents the lot occupied by the house, the court held that
such should be litigated in a proper case before the proper forum, not an ejectment case where
the only issue was physical possession of the property.
The court resolved the second issue in the negative, holding that Articles 448 and 546 of the
CC, which allow possessors in good faith to recover the value of improvements and retain the
premises until reimbursed, did not apply to lessees like the private respondents, because the
latter knew that their occupation of the premises would continue only during the life of the
lease. Besides, the rights of the private respondents were specifically governed by Article 1678,
which allow reimbursement of up to one-half of the value of the useful improvements, or
removal of the improvements should the lessor refuse to reimburse.
On the third issue, the court deemed as conclusive the private respondents' allegation that the
value of the house and improvements was P180,000.00, there being no controverting evidence
presented.
The trial court thus ordered the private respondents to vacate the premises, pay the petitioners
P40.00 a month as reasonable compensation for their stay thereon from the filing of the
complaint on 14 April 1993 until they vacated, and to pay the sum of P1,000.00 as attorney's
fees, plus costs. 5
On appeal by the private respondents, the RTC of Dagupan City reversed the trial court's
decision and rendered a new judgment: (1) ordering the petitioners to reimburse the private
respondents for the value of the house and improvements in the amount of P180,000.00 and to
pay the latter P10,000.00 as attorney's fees and P2,000.00 as litigation expenses; and (2)
allowing the private respondents to remain in possession of the premises until they were fully
reimbursed for the value of the house. 6 It ruled that since the private respondents were
assured by the petitioners that the lot they leased would eventually be sold to them, they could
be considered builders in good faith, and as such, were entitled to reimbursed of the value of
the house and improvements with the right of retention until reimbursement and had been
made.
On appeal, this time by the petitioners, the CA affirmed the decision of the RTC 7 and
denied 8the petitioners' motion for reconsideration. Hence, the present petition.
The Court is confronted with the issue of which provision of law governs the case at bench:
Article 448 or Article 1678 of the CC? The said articles read 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 plantercannot
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 if disagreement,
the court shall fix the terms thereof.
Art 1678. If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the form or
substance of the property leased, the lessor upon the termination of the lease
shall pay the lessee one-half of the value of the improvements at that time.
Should the lessor refuse to reimburse said amount, the lessee may remover 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.
With regard to ornamental expenses, the lessee shall not be entitled to any
reimbursed, but he may remove the ornamental objects, provided no damage is
caused to the principal thing, and the lessor does not choose to retain them by
paying their value at the time the lease is extinguished.
The crux of the said issue then is whether the private respondents are builder in good faith or
mere lessees.
The private respondents claim they are builders in good faith, hence, Article 448 of the CC
should apply. They rely on the lack of title of the petitioners' mother at the time of the
execution of the contract of lease, as well as the alleged assurance made by the petitioners that
the lot on which the house stood would be sold to them.
It has been said that while the right to let property is an incident of title and possession, a
person may be lessor and occupy the position of a landlord to the tenant although he is not the
owner of the premises let. 9After all, ownership of the property is not being transferred, 10 only
the temporary use and enjoyment thereof. 11
In this case, both parties admit that the land in question was originally owned by the
petitioners' mother. The land was allegedly acquired later by one Maria Lee by virtue of an
extrajudicial foreclosure of mortage. Lee, however, never sought a writ of possession in order
that she gain possession of the property in question. 12 The petitioners' mother therefore
remained in possession of the lot.
It is undisputed that the private respondents came into possession of 126 square-meter portion
of the said lot by virtue of contract of lease executed by the petitioners' mother as lessor, and
the private respondents as lessees, is therefore well-established, and carries with it a
recognition of the lessor's title. 13 The private respondents, as lessees who had undisturbed
possession for the entire term under the lease, are then estopped to deny their landlord's title,
or to assert a better title not only in themselves, but also in some third person while they
remain in possession of the leased premises and until they surrender possession to the
landlord. 14 This estoppel applies even though the lessor had no title at the time the relation of
lessor and lessee was created, 15 and may be asserted not only by the original lessor, but also
by those who succeed to his title. 16
Being mere lessees, the private respondents knew that their occupation of the premises would
continue only for the life of the lease. Plainly, they cannot be considered as possessors nor
builders in good faith. 17
In a plethora of cases, 18 this Court has held that Article 448 of the CC, in relation to Article 546
of the same Code, which allows full reimbursement of useful improvements and retention of the
premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who
builds on land with the belief that he is the owner thereof. It does not apply where one's only
interest is that of a lessee under a rental contract; otherwise, it would always be in the power
of the tenant to "improve" his landlord out of his property.
Anent the alleged promise of the petitioners to sell the lot occupied by the private respondents'
house, the same was not substantiated by convincing evidence. Neither the deed of sale over
the house nor the contract of lease contained an option in favor of the respondent spouses to
purchase the said lot. And even if the petitioners indeed promised to sell, it would not make the
private respondents possessors or builders in good faith so as to covered by the provision of
Article 448 of the CC. The latter cannot raise the mere expectancy or ownership of the
aforementioned lot because the alleged promise to sell was not fulfilled nor its existence even
proven. The first thing that the private respondents should have done was to reduce the alleged
promise into writing, because under Article 1403 of the CC, an agreement for the sale of real
property or an interest therein is unenforceable, unless some note or memorandum thereof be
pROD uced. Not having taken any steps in order that the alleged promise to sell may be
enforced, the private respondents cannot bank on the promise and profess any claim nor color
of title over the lot in question.
There is no need to apply by analogy the provisions of Article 448 on indemnity as was done
in Pecson vs. CA, 19 because the situation sought to be avoided and which would justify the
application of that provision, is not present in this case. Suffice it to say, "a state of forced
coownership" would not be created between the petitioners and the private respondents. For,
as correctly pointed out by the petitioners, the right of the private respondents as lessees are
governed by Article 1678 of the CC which allows reimbursement to the extent of one-half of the
value of the useful improvements.
It must be stressed, however, that the right to indemnity under Article 1678 of the CC arises
only if the lessor opts to appropriate the improvements. Since the petitioners refused to
exercise that option, 20 the private respondents cannot compel them to reimburse the one-half
value of the house and improvements. Neither can they retain the premises until
reimbursement is made. The private respondents' sole right then is to remove the
improvements without causing any more impairment upon the property leased than is
necessary. 21
WHEREFORE, judgment is hereby rendered GRANTING the instant petition, REVERSING and
SETTING ASIDE the decision of the CA of 27 January 1995 in CA-G.R. SP No. 34337; and
REINSTATING the decision of Branch 3 of the MTC in Cities of Dagupan City in CC No. 9214
entitled "Federico Geminiano, et al. vs. Dominador Nicolas, et al."
Petitioner, The Congregation Of The Religious Of The Virgin Mary, has filed this petition for
review on certiorari, urging us to reverse the decision 1 of the CA dated September 12, 1996, in
CA-G.R. CV No. 43311, entitled "SPS. JEROME and TERESA PROTASIO, Plaintiffs-Appellees,
versus, THE RELIGIOUS OF THE VIRGIN MARY, Defendant-Appellant." The decision affirmed
the judgment of the RTC of Davao City in CC No. 29,960-91, ordering the petitioner to return
the possession of the disputed land to the respondents-spouses and to pay them damages.
The facts of this case, as found by the respondent court, 2 are as follows:
In October of 1989, respondents-spouses purchased Lot No. 5-B from the heirs of Gervacio
Serapio. Accordingly, TCT No. 148595 was issued in their name. Sometime in November of
1989, respondents-spouses had the subject Lot No. 5-B surveyed and they discovered that 664
square meters of their 858 square meters property was fenced and occupied by petitioner. They
also found out that a building for the boys' quarters and a portion of petitioner's gymnasium
were constructed inside Lot No. 5-B. The encroachment by petitioner on respondents-spouses
land was made without the latter's knowledge and consent. Despite repeated demands by
respondents-spouses, petitioner failed and refused to (1) restore to the spouses possession of
the encroached property; (2) demolish the improvements constructed thereon, and (3) pay
damages and back rentals. Thus, on September 23, 1991, a complaint for recovery of
possession of real property damages, back rentals and attorney's fees was filed by respondents-
spouses against the petitioner. The complaint was docketed as CC No. 20,960-91 of the RTC of
Davao City, Branch 15. In answer to the complaint, petitioner admitted that it occupies part of
the litigated property but averred that Lot No. 5-B was supposed to be a road lot that would
give their Lots 5-A and 5-C means of entry and egress to the public road and, therefore, was
beyond the commerce of man. Petitioner further claims that respondents-spouses, as
successors-in-interest of Gervacio Serapio, have the obligation to respect the perpetual use of
Lot No. 5-B ceded to it by Serapio.
After trial on the merits, the trials court rendered judgment in favor of respondents-spouses and
against the petitioner. It rejected petitioner's claim of being a builder in good faith of the
improvements it intROD uced on the disputed lot of respondents-spouses. The dispositive
portion of the decision dated July 30, 1993 reads:
2. To demolish the buildings and improvements it intROD uced on the lot of the
plaintiffs at its own expense.
SO ORDERED. 3
Upon appeal by petitioner to the respondent court, the latter affirmed in toto the judgment of
the trial court.
Still dissatisfied, petitioner now comes to us via the present petition, assailing the respondent
court's decision on the following grounds:
(A) IN THE ABSENCE OF A PRAYER FOR THE AWARD NOR PROOF OF THE
SAME.
The above-quoted errors allegedly committed by the respondent court call for a review of its
findings of facts. As a general rule, the re-examination of the evidence submitted by the
contending parties during the trial of case is not a function that this Court normally undertakes
inasmuch as the findings of facts of the respondent court are generally binding and conclusive
on the Supreme Court. 5 The jurisdiction of this Court in a petition for review on certiorari under
Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, 6 not of fact,
unless the factual findings complained of are devoid of support by the evidence on record or
the assailed judgment is based on misapprehension of facts. 7
Petitioner contends that its case should be treated as an exception to the said general rule since
the respondent court "overlooked certain relevant facts not disputed by the parties, which if
properly considered, would justify a different conclusion." 8
Let us examine these "relevant facts" which the respondent court allegedly overlooked when it
rendered the assailed decision.
First. Petitioner maintains that Gervacio Serapio, the original owner of the land in question (Lot
5-B), had in his lifetime represented, committed and warranted that the said lot would be for
petitioner's perpetual use as a road lot, it being the only access to the public road for Lot 5-A
and 5-C, and to each other. 9
In support of this posture, petitioner cited the document entitled "Agreement Of Purchase And
Sale" 10dated July 8, 1959, executed between Gervacio Serapio and petitioner, which Agreement
shows a sketch attached thereto as Annex "A" 11 indicating the locating of the two (2) lots
subject of the Agreement and two (2) proposed roads, the Simeon de Jesus St. and Padre
Faura St. (which is the disputed Lot B). Petitioner argues that "without that map (sketch) and
the implicit assurance that goes with it, there could not have been a sale." 12
There is nothing significant in the said sketch which would justify a reversal of the findings and
conclusions reached by the respondent court. It is merely a sketch of the location of the two (2)
lots subject of the sale. There is no express or implied agreement in said annex containing the
sketch which would confirm petitioner's claim that Geronimo Serapio "had ceded to the
petitioner the perpetual use of Lot 5-B." If petitioner's claim was true, then the same could
have easily been inserted as an additional agreement between the parties. That it was not
made so, only shows that petitioner's claim is nothing but a mere conjecture, which has zero
evidentiary weight. Section 9, Rule 130 of the Revised Rules of Court provides in part that
where, as here, "the terms of an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents of the written
agreement." Simply put, any oral evidence of an agreement should be excluded when after all,
the existing agreement is already in writing. 13 Thus, we are not prepared to disturb the
following findings and conclusions of the respondent court:
Appellant first argues that the original owner of the subject land, Gervacio
Serapio, had intended, represented and warranted that the same would be for its
perpetual; use as a road lot. Involving as it does a transmission of real rights,
this claim should be based on something more concrete than bare allegations
and speculations. In the instant case, however, there is notably no concrete
evidence supporting appellant's claim.
Appellant would have Us believe that the map attached to the Agreement of
Purchase and Sale between it and Gervacio Serapio, containing as it does the
proposed roads in the area, implicitly carries the assurance that Gervacio Serapio
had made with respect to said proposed roads.
Even the most careful perusal of the map attached to the Agreement of Purchase
and Sale between appellant and Gervacio Serapio, however, does not reveal
anything other than that it merely shows the location of the lots subject of such
Agreement. Indeed, from the Agreement itself, it is clear that said map was
attached simply to identify the location of the lots covered by the Agreement;
and that reference to the map was simply as follows
The rest of appellant's arguments in support of its claim regarding perpetual use
of the subject land as a road lot are nothing but mere speculations which, as We
have stressed, cannot suffice for Us to uphold any transmission of real rights.
Being painfully bereft of concrete evidence, said claim of appellant must be
brushed aside. 14
Even if we were to accept as true petitioner's stance that Lot 5-B was intended by Gervacio
Serapio as a road right of way for petitioner's perpetual use, still a grant of a right of way in
favor of petitioner does not legally entitle it to occupy part of the said lot which is registered in
repondents-spouses' name, more so to intROD uce permanent improvements thereon such as a
gymnasium and a boys' quarters/dormitory.
Thus, what is actually at issue here is not whether the petitioner could use Lot 5-B in question
as a road, but rather whether the petitioner could legally possess/occupy part of the said lot.
This is, in fact, the only issue as agreed upon by the contending parties during the pre-trial
conference of this case before the trial court. 15 As discussed earlier, petitioner has no right
whatsover to possess and construct permanent structures on the questioned land owned by
respondent-spouses. Petitioner admits in its answer to the complaint that it intROD uced
improvement on the subject lot without the consent and knowledge of respondent-spouses. 16 It
is thus a builder in bad faith. Again, we find no reversible error in the following ruling of the
respondent court:
Next, appellant claims that granting that it was in bad faith appellees and their
predecessors-in-interest were equally guilty of bad faith in allowing the
construction of the improvements. This bad faith on the part of the appellees
and their predecessors-in-interest should, however, have been proved at the
hearing below, for in the absence of such proof, it must be presumed that with
the unlawful trespass upon the subject land, the building were commenced
thereon without the knowledge and consent of the owners thereof (Rivera vs.
Archbishop of Manila, 40 Phil. 717). Again, We find such proof absent in the
instant case. 17
Second. Petitioner contends that the respondent court struck down its defense of laches "with a
grossly erroneous and unfair declaration that since the private respondents themselves did not
sleep on their rights, there could be no laches." 18 Suffice it to state that no evidence was
presented by petitioner during the trial to prove that the improvements constructed on the
subject property were made during the lifetime of Gervacio Serapio, nor that Serapio, his heirs
or respondents-spouses were aware of, much less tolerated, the said structures so as to make
them guilty of laches proper:
Neither are We convinced by appellant's argument that appellee's claim is barred
by laches. In Olizon vs. CA, 236 SCRA 148, the Supreme Court once again
defined laches
Third. Petitioner claims that the respondent court committed grave abuse of discretion when it
awarded respondents-spouses actual damages in the form of back rentals of P15,000.00 a
month, plus the legal rate of interest, to be reckoned from January, 1991, without proof to
support the same. We have examined the respondents-spouses' complaint and the testimony of
respondent Jerome Protasio on the matter of back rentals prayed for in the complaint, and we
find no factual basis how such award was arrived at. Thus, we have to discard such award of
damages. A party is entitled to an adequate compensation for such pecuniary loss actually
suffered by him as he has duly prove. 20 Such damages, to be recoverable, must not only be
capable of proof, but must actually be proved with a reasonable degree of certainty. 21 These
damages cannot be presumed, 22 and the courts in making such award of damages must point
out specific facts which could afford a basis for measuring whatever compensatory or actual
damages are borne. 23
Fourth. We also agree with the petitioner that the respondent court should not have awarded
respondents-spouses moral damages of P100,00.00 simply because their complaint did not
specifically ask for such relief. Moral damages must be disallowed when it is not specifically
prayed for in the complaint. 24 It is elementary that in order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental anguish, fright and the
like, 25 both of which are absent in this case.
Finally. We further agree with the petitioner that the award of attorney's fees of P100,000.00
should be eliminated for lack of factual basis and legal justification. The only evidence to
support respondents-spouses' claim for attorney's fees is the testimony of Jerome Protasio to
effect that his agreement with the law firm handling his case is that he is obligated to pay "25%
of the obligation receivable . . ." 26 That is all. Both the trial court and respondent CA likewise
did not cite specific factual basis to justify the award of attorney's fees, which is in violation of
the proscription against the imposition of a penalty on the right to litigate. 27 As we enunciated
in Refractories Corporation of the Philippines vs. Intermediate Appellate Court : 28
. . . The award of attorney's fees is the exception rather than the general rule
and counsel's fees is not to be awarded every time a party wins a suit. The
discretion of the court to award attorney's fees under Article 2208 of the CC
"demand factual, legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to speculation and
conjecture." In all events, the court must state the reason for the award of
attorney's fees.
WHEREFORE, the decision of the respondent CA dated September 12, 1996, in CA-G.R. CV No.
43311, is hereby MODIFIED in the sense that the awards of back rentals, moral damages and
attorney's fees are hereby DELETED. In all other respects, the assailed decision is AFFIRMED.
No pronouncement as to costs.
In this petition for review on certiorari, petitioners assail the decision 1 of the CA 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.
On December 24, 1976, petitioner Editha assisted by her husband filed a complaint for partition
and damages before the then CFI of Negros Oriental, Branch 1, Dumaguete City, docketed as
CC 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 CC. 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 RTC of Negros Oriental, Branch 35,
Dumaguete City, docketed as CC 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:
1. P150.00 monthly rentals from April 1988 up to the time the improvements in
the questioned portions are removed;
SO ORDERED. 12
Petitioners appealed to the CA. 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
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. CA, 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.
Private respondents counter that the question of WON 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.
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. 08-421 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, intROD uced 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 plaintiffs-appellees; 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 "after-thought" 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 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 NCC 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.
SO ORDERED.
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 RTC5 on appeal. They elevated their cause 6 to respondent CA7 which,
however, promulgated a Decision8 on May 20, 1998, affirming the Decision of the RTC.
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.
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.
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.
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 Donation 9 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 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
Pada-Pavo 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.
From the foregoing decision, private respondent appealed to the RTC. 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.
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 NCC 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;
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;
Petitioners filed in the CA a petition for review of the foregoing decision of the RTC.
On May 20, 1998, respondent CA rendered judgment dismissing said petition. It explained:
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
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 CC 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 NCC 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 pROD uced 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, pROD uced 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.
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 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 NCC 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.
Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the decision
of the CA which affirmed the dismissal of petitioners' complaint by the RTC 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 WON 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 MTC of Cagayan de Oro
City, Branch 4. A decision was rendered against private respondents, which decision was
affirmed by the RTC of Misamis Oriental, Branch 20.
The case was remanded to the MTC for execution of judgment after the same became final and
executory. Private respondents filed a case for annulment of judgment before the RTC 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 RTC 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-in-Charge 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 intROD uced 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 complaint for failure to exhaust administrative remedies which
resulted in the finality of the administrative decision of the Bureau of Lands.
On appeal, the CA 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..
The resolution of the above issues, however, hinges on the question of WON 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 CC 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 CC, 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.
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 MSA 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 MSA 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 CA, 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 man-made 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 CC 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 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. 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 CA
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-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 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.
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 CA 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 Rabayas 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 his 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' MSA , 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 of 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 CA.
Bounded on the NE., by Lots Nos. 419 and 416; on the SE by the Davao River; on the SE., (sic)
by Lots Nos. 1092 and 1091; and on the NW., by Lots Nos. 413 and 418 [1]
Respondent Leonor Lozano is the owner of a registered parcel of land located across and
opposite the southeast portion of petitioners lot facing the Davao River. Lozano acquired and
occupied her property in 1962 when his wife inherited the land from her father who died that
year.
On May 26, 1989, Bagaipo filed a complaint[2] for Recovery of Possession with Mandatory
Writ of Preliminary Injunction and Damages against Lozano for: (1) the surrender of possession
by Lozano of a certain portion of land measuring 29,162 square meters which is supposedly
included in the area belonging to Bagaipo under TCT No. T-15757; and (2) the recovery of a
land area measuring 37,901 square meters which Bagaipo allegedly lost when the Davao River
traversed her property. Bagaipo contended that as a result of a change in course of the said
river, her property became divided into three lots, namely: Lots 415-A, 415-B and 415-C.
In January 1988, Bagaipo commissioned a resurvey of Lot 415 and presented before the
trial court a survey plan [3] prepared by Geodetic Engineer Gersacio A. Magno. The survey plan
allegedly showed that: a) the area presently occupied by Bagaipo, identified as Lot 415-A, now
had an area of only 79,843 square meters; b) Lot 415-B, with an area measuring 37,901 square
meters, which cut across Bagaipos land was taken up by the new course of the Davao River;
and c) an area of 29,162 square meters designated as Lot 415-C was illegally occupied by
respondent Lozano. The combined area of the lots described by Engineer Magno in the survey
plan tallied with the technical description of Bagaipos land under TCT No. T-15757.Magno
concluded that the land presently located across the river and parallel to Bagaipos property still
belonged to the latter and not to Lozano, who planted some 350 fruit-bearing trees on Lot 415-
C and the old abandoned river bed.
Bagaipo also presented Godofredo Corias, a former barangay captain and long-time
resident of Ma-a to prove her claim that the Davao River had indeed changed its course. Corias
testified that the occurrence was caused by a big flood in 1968 and a bamboo grove which used
to indicate the position of the river was washed away. The river which flowed previously in front
of a chapel located 15 meters away from the riverbank within Bagaipos property now flowed
behind it. Corias was also present when Magno conducted the relocation survey in 1988.
For his part, Lozano insisted that the land claimed by Bagaipo is actually an accretion to
their titled property. He asserted that the Davao River did not change its course and that the
reduction in Bagaipos domain was caused by gradual erosion due to the current of the Davao
River. Lozano added that it is also because of the rivers natural action that silt slowly deposited
and added to his land over a long period of time. He further averred that this accretion
continues up to the present and that registration proceedings instituted by him over the alluvial
formation could not be concluded precisely because it continued to increase in size.
Lozano presented three witnesses: Atty. Pedro Castillo, his brother-in-law; Cabitunga
Pasanday, a tenant of Atty. Castillo; and Alamin Catucag, a tenant of the Lozanos.
Atty. Castillo testified that the land occupied by the Lozanos was transferred to his sister,
Ramona when they extra-judicially partitioned their parents property upon his fathers death. On
September 9, 1973, Atty. Castillo filed a land registration case involving the accretion which
formed on the property and submitted for this purpose, a survey plan [4] approved by the Bureau
of Lands as well as tax declarations[5] covering the said accretion. An Order of General
Default[6] was already issued in the land registration case on November 5, 1975, but the case
itself remained pending since the petition had to be amended to include the continuing addition
to the land area.
Mr. Cabitunga Pasanday testified that he has continuously worked on the land as tenant of
the Castillos since 1925, tilling an area of about 3 hectares. However, the land he tilled located
opposite the land of the Lozanos and adjacent to the Davao River has decreased over the years
to its present size of about 1 hectare. He said the soil on the bank of the river, as well as
coconut trees he planted would be carried away each time there was a flood. This similar
erosion occurs on the properties of Bagaipo and a certain Dr. ROD riguez, since the elevation of
the riverbank on their properties is higher than the elevation on Lozanos side.
Alamin Catucag testified that he has been a tenant of the Castillos since 1939 and that the
portion he occupies was given to Ramona, Lozanos wife. It was only 1 hectare in 1939 but has
increased to 3 hectares due to soil deposits from the mountains and river. Catucag said that
Bagaipos property was reduced to half since it is in the curve of the river and its soil eROD es
and gets carried away by river water.
On April 5, 1991, the trial court conducted an ocular inspection. It concluded that the
applicable law is Article 457[7]. 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.7 of the
NCC and not Art. 461[8] The reduction in the land area of plaintiff was caused by erosion and
not by a change in course of the Davao River. Conformably then, the trial court dismissed the
complaint.
On appeal, the CA affirmed the decision of the trial court and decreed as follows:
WHEREFORE, the decision appealed from is hereby affirmed, with costs against the plaintiff-
appellant.[9]
....NOT FINDING THAT ASSUMING WITHOUT ADMITTING THAT THE QUESTIONED LOT
415-C (EXHIBIT B-1) OCCUPIED BY RESPONDENT LEONOR LOZANO WAS THE RESULT OF
AN ACCRETION, THE PRINCIPLE OF ACCRETION CANNOT AND DOES NOT APPLY IN THE
INSTANT CASE TO FAVOR SAID RESPONDENT BECAUSE SAID LOT 415-C IS WITHIN AND
FORM PART OF PETITIONERS LAND DESCRIBED IN TCT NO. 15757 (EXHIBIT A)
For this Courts resolution are the following issues: Did the trial court err in holding that
there was no change in course of the Davao River such that petitioner owns the abandoned
river bed pursuant to Article 461 of the CC? Did private respondent own Lot 415-C in
accordance with the principle of accretion under Article 457? Should the relocation survey
prepared by a licensed geodetic engineer be disregarded since it was not approved by the
Director of Lands? Is petitioners claim barred by laches?
On the first issue. The trial court and the appellate court both found that the decrease in
land area was brought about by erosion and not a change in the rivers course. This conclusion
was reached after the trial judge observed during ocular inspection that the banks located on
petitioners land are sharp, craggy and very much higher than the land on the other side of the
river. Additionally, the riverbank on respondents side is lower and gently sloping. The lower
land therefore naturally received the alluvial soil carried by the river current. [11] These findings
are factual, thus conclusive on this Court, unless there are strong and exceptional reasons, or
they are unsupported by the evidence on record, or the judgment itself is based on a
misapprehension of facts.[12] These factual findings are based on an ocular inspection of the
judge and convincing testimonies, and we find no convincing reason to disregard or disbelieve
them.
The decrease in petitioners land area and the corresponding expansion of respondents
property were the combined effect of erosion and accretion respectively. Art. 461 of the CC is
inapplicable. Petitioner cannot claim ownership over the old abandoned riverbed because the
same is inexistent. The riverbeds former location cannot even be pinpointed with particularity
since the movement of the Davao River took place gradually over an unspecified period of time,
up to the present.
The rule is well-settled that accretion benefits a riparian owner when the following
requisites are present: 1) That the deposit be gradual and imperceptible; 2) That it resulted
from the effects of the current of the water; and 3) That the land where accretion takes place is
adjacent to the bank of the river. [13] These requisites were sufficiently proven in favor of
respondents.In the absence of evidence that the change in the course of the river was sudden
or that it occurred through avulsion, the presumption is that the change was gradual and was
caused by alluvium and erosion.[14]
As to Lot 415-C, which petitioner insists forms part of her property under TCT No. T-15757,
it is well to recall our holding in C.N. Hodges vs. Garcia, 109 Phil. 133, 135:
The fact that the accretion to his land used to pertain to plaintiffs estate, which is covered by a
Torrens certificate of title, cannot preclude him (defendant) from being the owner
thereof.Registration does not protect the riparian owner against the diminution of the area of
his land through gradual changes in the course of the adjoining stream. Accretions which the
banks of rivers may gradually receive from the effect of the current become the property of the
owners of the banks (Art. 366 of the old CC; Art. 457 of the new). Such accretions are natural
incidents to land bordering on running streams and the provisions of the CC in that respect are
not affected by the Land Registration Act.[15]
Petitioner did not demonstrate that Lot 415-C allegedly comprising 29,162 square meters
was within the boundaries of her titled property. The survey plan commissioned by petitioner
which was not approved by the Director of Lands was properly discounted by the appellate
court. In Titong vs. CA[16] we affirmed the trial courts refusal to give probative value to a private
survey plan and held thus:
the plan was not verified and approved by the Bureau of Lands in accordance with Sec. 28,
paragraph 5 of Act No. 2259, the Cadastral Act, as amended by Sec. 1862 of Act No. 2711. Said
law ordains that private surveyors send their original field notes, computations, reports,
surveys, maps and plots regarding a piece of property to the Bureau of Lands for verification
and approval. A survey plan not verified and approved by said Bureau is nothing more than a
private writing, the due execution and authenticity of which must be proven in accordance with
Sec. 20 of Rule 132 of the Rules of Court. The circumstance that the plan was admitted in
evidence without any objection as to its due execution and authenticity does not signify that the
courts shall give probative value therefor. To admit evidence and not to believe it subsequently
are not contradictory to each other
In view of the foregoing, it is no longer necessary now to discuss the defense of laches. It
is mooted by the disquisition on the foregoing issues.
WHEREFORE, the assailed decision dated June 30, 1994, of the CA in C.A.-G. R. CV No.
37615, sustaining the judgment of the court a quo, is AFFIRMED. Costs against petitioner.
SO ORDERED.
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 IAC 3 (now the CA) 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 CFI 5 (now the RTC) of Balanga, Bataan.
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.
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 OCT 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 predecessors-in-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 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 fisHP ond 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 fisHP ond.
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 CFI (now RTC)
of Balanga, Bataan, the appeal having been docketed as CC 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.
(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 CC No.
2873 and as applicant in Land Registration Case No. N-84 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
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.
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 WON 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 . . . .
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.
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:
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 fisHP ond 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 fisHP ond 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
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.
Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition for review
entitled, "The Director of Forestry vs. the CA." 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
CA 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 CC No. 2873 of the CFI (now the RTC)
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 CC.
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 CC, 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
CC, 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 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:
"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." 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 CC 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 eROD ed 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' 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.
. . . . it is established that before 1948 sea water from the Manila Bay at high
tide could reach as far as the dike of appellants' fisHP ond 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 and bakawan 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.
In the cases of Government of the P.I v. Colegio de San Jose 21, Republic v. CA 22, Republic
v. Alagad 23, and Meneses v. Court of
Appeals , we categorically ruled that Laguna de Bay is a lake the accretion on which, by the
24
mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to the owner of the land
contiguous thereto.
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.
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 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.
The Cagayan River separates the towns of Solana on the west and Tuguegarao on the east in
the province of Cagayan. According to the unrebutted testimony of Romeo Rigor, Geodetic
Engineer of the Bureau of Lands, in 1919 the lands east of the river were covered by the
Tuguegarao Cadastre. In 1925, OCT No. 5472 was issued for land east of the Cagayan River
owned by defendant-petitioner Eulogio Agustin (Exh. 2-Agustin).
As the years went by, the Cagayan River moved gradually eastward, depositing silt on the
western bank. The shifting of the river and the siltation continued until 1968.
In 1950, all lands west of the river were included in the Solana Cadastre. Among these
occupying lands covered by the Solana Cadastre were plaintiffs-private respondents, namely,
Pablo Binayug, who has been in possession of Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881,
7882, 7883, 7884, 7885, 7891 and 7892, and Maria Melad, who owns Lot 3351 (Exh. 3-
Binayug; Exh. B-Melad). Pablo Binayug began his possession in 1947. An area of eight (8)
hectares was planted to tobacco and corn while 12 hectares were overgrown with talahib (Exh.
C-1 Binayug.) Binayug's Homestead Application No. W-79055 over this land was approved in
1959 (Exh. B-Binayug). Binayug's possession was recognized in the decision in CC No. 101
(Exh. F-Binayug). On the other hand, as a result of CC No. 343-T, Macario Melad, the
predecessor-in-interest of Maria Melad and Timoteo Melad, was issued OCT No. P-5026 for Lot
3351 of Cad. 293 on June 1, 1956.
Through the years, the Cagayan River eROD ed lands of the Tuguegarao Cadastre on its
eastern bank among which was defendant-petitioner Eulogio Agustin's Lot 8457 (Exh. E-Melad),
depositing the alluvium as accretion on the land possessed by Pablo Binayug on the western
bank.
However, in 1968, after a big flood, the Cagayan River changed its course, returned to its 1919
bed, and, in the process, cut across the lands of Maria Melad, Timoteo Melad, and the spouses
Pablo Binayug and Geronima Ubina whose lands were transferred on the eastern, or
Tuguegarao, side of the river. To cultivate those lots they had to cross the river.
In April, 1969, while the private respondents and their tenants were planting corn on their lots
located on the eastern side of the Cagayan River, the petitioners, accompanied by the mayor
and some policemen of Tuguegarao, claimed the same lands as their own and drove away the
private respondents from the premises.
On April 21, 1970, private respondents Maria Melad and Timoteo Melad filed a complaint (CC
No. 343-T) to recover Lot No. 3351 with an area of 5 hectares and its 6.6-hectare accretion. On
April 24, 1970, private respondent Pablo Binayug filed a separate complaint (CC No. 344-T) to
recover his lots and their accretions.
On June 16, 1975, the trial court rendered a decision, the dispositive portion of which reads:
SO ORDERED. (As amended by the order dated August 15, 1975.) (pp. 24-
25, Rollo.)
Only defendant-petitioner Eulogio Agustin appealed in CC No. 343-T, while in CC No. 344-T,
only defendants-petitioners Eulogio Agustin, Baldomero Cagurangan (substituted by his heir),
Arturo Balisi and Juan Langcay appealed. But upon motion of plaintiffs-private respondents, the
trial court ordered the execution pending appeal of the judgment in CC No. 344-T against
Cagurangan, Balisi and Langcay on the ground that their appeal was dilatory as they had not
presented evidence at the trial (Order dated August 15, 1975).
On November 29, 1983, the IAC rendered a decision affirming in toto the judgment of the trial
court, with costs against the defendants-appellants.
In their petition for review of that decision, the petitioners allege that the CA erred:
1. in declaring that the land in question had become part of private respondents'
estate as a result of accretion;
The finding of the CA that there had been accretions to the lots of the private respondents who
did not lose the ownership of such accretions even after they were separated from the principal
lots by the sudden change of course of the river, is a finding of fact which is conclusive on this
Court. That finding is supported by Art. 457 of the NCC which provides:
Art. 457. 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. (366)
Accretion benefits a riparian owner when the following requisites are present: (1) that the
deposit be gradual and imperceptible; (2) that it resulted from the effects of the current of the
water; and (3) that the land where accretion takes place is adjacent to the bank of a river
(Republic vs. CA, 132 SCRA 514).
All these requisites of accretion are present in this case for, as the trial court found:
. . . Cagayan River did move year by year from 1919 to 1968 or for a period of
49 years. Within this period, the alluvium ( sic) deposited on the other side has
become greater in area than the original lands of the plaintiffs in both cases. Still
the addition in every year is imperceptible in nature, one could not discern it but
can be measured after the lapse of a certain time. The testimonial evidence in
these cases that said Cagayan River moved eastward year by year is
overwhelming as against the denial of defendant Eulogio Agustin alone. Cesar
Caronan, one time mayor of Solana, Cagayan, said so. Arturo Taguian said so.
Timoteo Melad said so. Francisco Ubina said so. Geodetic Engineer Rigor
impliedly said so when he testified that when Solana Cadastre was executed in
1950 it overlapped portions of Tuguegarao Cadastre executed in 1919. This
could not have happened if that part of Tuguegarao Cadastre was not eROD ed
by the overflow of the Cagayan River. These testimonies cannot be destroyed by
the denials of Vicente Cauilan, Marcelo Agustin and Eulogio Agustin alone . . . .
(p. 27, Rollo.)
The appellate court confirmed that the accretion on the western bank of the Cagayan River had
been going on from 1919 up to 1968 or for a period of 49 years. It was gradual and
imperceptible. Only when Lot No. 3351, with an original area of 5 hectares described in the free
patent that was issued to Macario Melad in June 1956, was resurveyed in 1968 did it become
known that 6.6 hectares had been added to it. Lot No. 3351, covered by a HP issued in June,
1950 to Pablo Binayug, grew from its original area of 18 hectares, by an additional 50 hectares
through alluvium as the Cagayan River gradually moved to the east. These accretions belong to
riparian owners upon whose lands the alluvial deposits were made (Roxas vs. Tuason, 9 Phil.
408; Director of Lands vs. Rizal, 87 Phil. 806). The reason for this principle is because, if lands
bordering on streams are exposed to floods and other damage due to the destructive force of
the waters, and if by virtue of law they are subject to encumbrances and various kinds of
easements, it is only just that such risks or dangers as may prejudice the owners thereof should
in some way be compensated by the right of accretion (Cortes vs. City of Manila, 10 Phil.
567).itc-asl
The private respondents' ownership of the accretion to their lands was not lost upon the sudden
and abrupt change of the course of the Cagayan River in 1968 or 1969 when it reverted to its
old 1919 bed, and separated or transferred said accretions to the other side (or eastern bank)
of the river. Articles 459 and 463 of the NCC apply to this situation.
Art. 459. Whenever the current of a river, creek or torrent segregates from an
estate on its bank a known portion of land and transfers it to another estate, the
owner of the land to which the segregated portion belonged retains the
ownership of it, provided that he removes the same within two years.
Art. 463. Whenever the current of a river divides itself into branches, leaving a
piece of land or part thereof isolated, the owner of the land retains his
ownership. He also retains it if a portion of land is separated from the estate by
the current. (Emphasis supplied).
In the case at bar, the sudden change of course of the Cagayan River as a result of a
strong typhoon in 1968 caused a portion of the lands of the private respondents to be
"separated from the estate by the current." The private respondents have retained the
ownership of the portion that was transferred by avulsion to the other side of the river.
WHEREFORE, the petition is denied for lack of merit. The decision of the Intermediate Appellate
Court, now CA, is hereby affirmed. Costs against the petitioners.
This appeal was taken by the defendants Pablo Tiongson and the Provincial Sheriff of Bulacan
from the judgment of the Court of First of said province, wherein said defendant Pablo
Tiongson was ordered to pay the plaintiff Urbano Santos the value of 778 cavans and 38 kilos
of palay, at the rate of P3 per cavan, without special pronouncement as to costs.
In support of their appeal, the appellants assign the following alleged errors committed by the
lower court in its judgment, to wit:
1. The court erred in holding that it has been proved that in the cavans of palay
attached by the herein defendant Pablo Tiongson from the defendant Jose C. Bernabe
were included those claimed by the plaintiff in this cause.
2. The court erred in ordering the defendant Pablo Tiongson to pay the plaintiff the
value of 778 cavans and 38 kilos of palay, the refund of which is claimed by said
plaintiff.
3. The court erred in denying the defendants' motion for a new trial. 1awphil.net
On March 20, 1928, there were deposited in Jose C. Bernabe's warehouse by the plaintiff
Urbano Santos 778 cavans and 38 kilos of palay and by Pablo Tiongson 1,026 cavans and 9
kilos of the same grain.
On said date, March 20, 1928, Pablo Tiongson filed with the CFI of Bulacan a complaint against
Jose C. Bernabe, to recover from the latter the 1,026 cavans and 9 kilos of palay deposited in
the defendant's warehouse. At the same time, the application of Pablo Tiongson for a writ of
attachment was granted, and the attachable property of Jose C. Bernabe, including 924 cavans
and 31 1/2 kilos of palay found by the sheriff in his warehouse, were attached, sold at public
auction, and the proceeds thereof delivered to said defendant Pablo Tiongson, who obtained
judgment in said case.
The herein plaintiff, Urbano Santos, intervened in the attachment of the palay, but upon Pablo
Tiongson's filing the proper bond, the sheriff proceeded with the attachment, giving rise to the
present complaint.
It does not appear that the sacks of palay of Urbano Santos and those of Pablo Tiongson,
deposited in Jose C. Bernabe's warehouse, bore any marks or signs, nor were they separated
one from the other.
The plaintiff-appellee Urbano Santos contends that Pablo Tiongson cannot claim the 924 cavans
and 31 kilos of palay attached by the defendant sheriff as part of those deposited by him in
Jose C. Bernabe's warehouse, because, in asking for the attachment thereof, he impliedly
acknowledged that the same belonged to Jose C. Bernabe and not to him.
In the complaint filed by Pablo Tiongson against Jose C. Bernabe, CC No. 3665 of the CFI of
Bulacan, it is alleged that said plaintiff deposited in the defendant's warehouse 1,026 cavans
and 9 kilos of palay, the return of which, or the value thereof, at the rate of P3 per cavan was
claimed therein. Upon filing said complaint, the plaintiff applied for a preliminary writ of
attachment of the defendant's property, which was accordingly issued, and the defendant's
property, including the 924 cavans and 31 kilos of palay found by the sheriff in his
warehouse, were attached.
It will be seen that the action brought by Pablo Tiongson against Jose C. Bernabe is that
provided in section 262 of the Code of Civil Procedure for the delivery of personal property.
Although it is true that the plaintiff and his attorney did not follow strictly the procedure
provided in said section for claiming the delivery of said personal property nevertheless, the
procedure followed by him may be construed as equivalent thereto, considering the provisions
of section 2 of the Code of Civil Procedure of the effect that "the provisions of this Code, and
the proceedings under it, shall be liberally construed, in order to promote its object and assist
the parties in obtaining speedy justice."
Liberally construing, therefore, the above cited provisions of section 262 of the Code of Civil
Procedure, the writ of attachment applied for by Pablo Tiongson against the property of Jose C.
Bernabe may be construed as a claim for the delivery of the sacks of palay deposited by the
former with the latter.
The 778 cavans and 38 kilos of palay belonging to the plaintiff Urbano Santos, having been
mixed with the 1,026 cavans and 9 kilos of palay belonging to the defendant Pablo Tiongson in
Jose C. Bernabe's warehouse; the sheriff having found only 924 cavans and 31 1/2 kilos of
palay in said warehouse at the time of the attachment thereof; and there being no means of
separating form said 924 cavans and 31 1/2 of palay belonging to Urbano Santos and those
belonging to Pablo Tiongson, the following rule prescribed in article 381 of the CC for cases of
this nature, is applicable:
Art. 381. If, by the will of their owners, two things of identical or dissimilar nature are
mixed, or if the mixture occurs accidentally, if in the latter case the things cannot be
separated without injury, each owner shall acquire a right in the mixture proportionate
to the part belonging to him, according to the value of the things mixed or commingled.
The number of kilos in a cavan not having been determined, we will take the proportion only of
the 924 cavans of palay which were attached and sold, thereby giving Urbano Santos, who
deposited 778 cavans, 398.49 thereof, and Pablo Tiongson, who deposited 1,026 cavans,
525.51, or the value thereof at the rate of P3 per cavan.
Wherefore, the judgment appealed from is hereby modified, and Pablo Tiongson is hereby
ordered to pay the plaintiff Urbano Santos the value of 398.49 cavans of palay at the rate of P3
a cavan, without special pronouncement as to costs. So ordered.
On June 28, 1954, Vicente Aldaba and Teresa V. Aldaba sold to Jesus Aguirre a circular bolted
steel tank with a capacity of 5,000 gallons, for the sum of P900.00, for which the latter
delivered to the sellers duly endorsed, Security Bank & Trust Company check in the amount of
P900.00. Aguirre, however, failed to, take physical possession of the tank, having been
prevented from doing so by the municipal authorities of Los Baos, Laguna (where the tank
was located), in view of the claim of ownership being made by the Bureau of Public Highways.
It appears, however, that Vicente and Teresa Aldaba again sold the same tank to Zosimo
Gabriel, for P900.000. Gabriel, in turn, sold it to the Leonora & Company for P2,500.00. After
some alterations and improvements made on the tank, Leonora & Company was able to sell the
tank to National Shipyards & Steel Corporation (Nassco), for P14,500. 1
Aguirre immediately filed with Nassco a formal notice of his claim of ownership of the tank, as a
consequence of which, payment of the purchase price to Leonora & Company was suspended.
Then, Aguirre instituted Civil Case No. 24914 in the CFI of Manila, against Leonora & Company
and the Aldabas, for delivery to him of the tank, with damages. On the other hand, because of
the suspension of payment of the purchase price, Leonora & Company filed CC No. 27988,
against the Nassco, praying for the delivery of the purchase price of P14,500.00, or the
reimbursement of the sum of P2,299.00 allegedly representing the actual investment and
expenses made and incurred to put the tank in usable condition. Jesus Aguirre intervened in
this proceeding. These two cases were jointly heard by the trial court.
Thereafter, decision was rendered in CC No 24914, declaring Jesus Aguirre the absolute owner
of the property described in his complaint. The subsequent sale made by defendants Aldaba to
Zosimo Gabriel, the sale made by Zosimo Gabriel to defendant Leonora and Co.; and the sale
made by defendant Leonora and Co. to the National Shipyards and Steel Corporation, are
hereby declared null and void and of no effect. Defendants Aldaba and Leonora and Co. and the
National Shipyards and Steel Corporation, are hereby ordered to deliver to plaintiff Jesus
Aguirre the tank in question. Failure to make such delivery, defendant National Shipyards and
Steel Corporation, in whose possession the tank is at present, shall pay to the said Jesus
Aguirre the original purchase price of the tank in the amount of P900.00.
In CC No. 27988, the court rendered decision based on a stipulation of facts by the parties,
wherein the existence of CC No. 24914 was admitted, the dispositive portion of which provides
that Intervenor Jesus Aguirre, as we have already declared in CC No. 24914, is hereby
adjudged owner of the oil tank in question. Defendant National Shipyards and Steel
Corporation is hereby ordered to deliver to the said Jesus Aguirre such tank, but in the event
that delivery is not possible, to pay to Aguirre the purchase price of P900.00, and to Leonora
and Co. the amount of P11,299 which represents the costs of the improvements made by the
said Leonora & Co. In the event that the National Shipyards and Steel Corporation shall deliver
the oil tank to Jesus Aguirre as it is, the latter shall pay to Leonora and Co. the amount of
P11,299 which, as already stated, was spent by Leonora and Co. for the improvement of the
tank.
The present case.On January 9, 1963, the CA rendered decision affirming the judgment of the
lower court in CC No. 27988, to return to intervenor Aguirre the sum of P900.00 in case
delivery of the tank to him will not be possible. Because this was the entire amount that Aguirre
had parted with when he purchased said tank. It was Leonora & Co. who had spent the sum of
P11,299.00 for the rehabilitation of said tank and against this amount Aguirre has no rightful
claim whatsoever. Of course, in the event of delivery of the tank to Aguirre as improved, it
would be just for him to reimburse Leonora & Co. the sum of P11,299. The trial court,
therefore, acted properly in denying Aguirre's claim to be paid the fair and reasonable value of
the tank as improved in case the same could no longer be delivered to him.
Aguirre filed the present petition for review, alleging that the judgment of the CA, ordering the
return to him of the sum of P900.00 (when the value of the property is at least P14,500),
nullifies the declaration of his ownership of the tank. He contends that under Article 440 of the
CC, his ownership of the property entitles him to everything that is produced thereby, or is
incorporated or attached thereto, either naturally or artificially. Thus, he reiterates the claim to
the fair and reasonable value of the tank at the time of its delivery to Nassco which is P14,500.
It is clear that we have here a case of accession by specification: Leonora and Company, as
purchaser acting in good faith, spending P11,299 for the reconditioning of the tank which is
later adjudged to belong to petitioner Aguirre. There is no showing that without the works
made by Leonora & Company, the tank in its original condition when Aguirre paid P900.00
therefor, would command the price of P14,500 which Nassco was willing to pay. Although
ordinarily, therefore, Aguirre, as owner of the tank, would be entitled to any accession thereto,
the rule is different where the works or improvements or the accession was made on the
property by one who acted in good faith. 2 And, it is not contended that the making of the
improvements and incurring of expenses amounting to P11,299.00 by Leonora & Company was
done in bad faith. Furthermore, to uphold petitioner's contention that he is entitled to the sum
of P14,500 the price of the tank in its present condition, would be to allow him to enrich himself
at the expense of another. The lower courts, therefore, acted correctly in ordering the
reimbursement to Leonora & Company of the expenses it made on the tank. 1awphl.nt
It must also be remembered that the judgment in CC No. 24914 of the CFI of Manila, wherein
Nassco was directed to pay to Aguirre the of P900.00, in case delivery of the same tank is no
longer possible, has already become final. This ruling cannot be disregarded in the present
proceeding which involves the same parties and practically the same issue, arising from the
same set of facts.
Nassco cannot also be compelled to pay more than P14, 500.00 for the tank, the bid offered by
Leonora & Company and accepted by this buyer, and which must be the actual market value of
the property at the time of its delivery to the latter. It has nothing to do at all with the various
transactions or sales and the deprivation of Aguirre's right to possession of the tank, which
culminated in this legal suit.