Republic of the Philippines In her Complaint in Civil Case No.
In her Complaint in Civil Case No. 10467, Manantan prayed that respondent, Tavera, and all persons
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 145867 April 7, 2009
ESTATE OF SOLEDAD MANANTAN, herein represented by GILBERT MANANTAN, Petitioner,
vs.
ANICETO SOMERA, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse
the Decision2 dated 10 May 2000 and Resolution 3 dated 18 October 2000 of the Court of Appeals in CA-
G.R. SP No. 55891.
The facts gathered from the records are as follows:
On 10 March 1998, Soledad Manantan filed with the Municipal Trial Court in Cities (MTCC), Baguio City,
Branch 1, a Complaint for ejectment and damages against respondent Aniceto Somera and a certain
Presentacion Tavera (Tavera),4 docketed as Civil Case No. 10467.
Manantan alleged in her Complaint that she was the owner of a 214- square meter parcel of land
located in Fairview Subdivision, Baguio City (subject property), as evidenced by Transfer Certificate of
Title No. 54672, issued in her name by the Registry of Deeds of Baguio City. After causing a relocation
survey of the subject property, she discovered that respondent and Tavera occupied certain portions
thereof [disputed portions]. Manantan advised respondent and Tavera to vacate the disputed portions
as soon as she would decide to sell the subject property to an interested buyer. Later, a prospective
buyer approached Manantan about the subject property. However, upon learning that respondent and
Tavera occupied some portions of the subject property, the prospective buyer decided not to proceed
with the sale until after respondent and Tavera vacated the same. Manantan repeatedly requested
respondent and Tavera to abandon the disputed portions of the subject property, but the two refused.
Hence, Manantan hired the services of a lawyer who immediately sent a formal letter of demand to
respondent and Tavera requesting them to leave the disputed portions. Respondent and Tavera,
however, ignored the demand letter. Manantan submitted the matter before the barangay justice
system of Fairview Subdivision, Baguio City, but the parties failed to reach a settlement. Upon issuance
by the barangay secretary of a Certificate to File Action, Manantan instituted Civil Case No. 10467.
claiming rights under them, be ordered to vacate the portions of the subject property they were
occupying; that respondent and Tavera be directed to pay her P600.00 and P400.00, respectively, every
month, as reasonable compensation for the use and occupation of the disputed portions of the subject
property, computed from the filing of the Complaint until possession of the said portions has been
restored to her; that respondent and Tavera be instructed to pay her P30,000.00 as actual
damages, P20,000.00 as attorneys fees, litigation expenses, and costs of suit.5
Respondent and Tavera filed a Joint Answer to Manantans Complaint in Civil Case No. 10467. In their
Joint Answer, respondent and Tavera averred that the MTCC had no jurisdiction over Civil Case No.
10467, because it was neither an action for forcible entry nor for unlawful detainer. The Complaint did
not allege that Manantan was deprived of possession of the disputed portions by force, intimidation,
threat, strategy, or stealth, which would make a case for forcible entry. It also did not state that
respondent and Tavera withheld possession of the disputed portions from Manantan after expiration or
termination of the right to hold possession of the same by virtue of an express or implied contract,
which would build a case for unlawful detainer. Respondent and Tavera argued that even if there was
dispossession, it was evident from the face of the Complaint that it was not committed through any of
the means enumerated under Rule 70 of the Rules of Court and, thus, forcible entry or unlawful
detainer could not be the proper remedy for Manantan.6
Respondent claimed in the Joint Answer that he and his family had been using one of the disputed
portions of the subject property as driveway since the latter part of 1970. The said portion was the only
means by which he and his family could gain access to their residence. He even caused the
improvement and cementing of the same a long time ago. Tavera also explained in the Joint Answer
that she had been utilizing the other disputed portion of the subject property as an access road to her
residence. Her tenement, which consisted of concrete and permanent structures, bore witness to the
fact that her occupancy of the portion in dispute was continuous and uninterrupted. 7
Respondent and Tavera additionally asseverated in their Joint Answer that it would be unjust to
prohibit them from using the disputed portions which serve as their only means of ingress or egress to
or from their respective residences from or to the main road. Their use of said portions had been
recognized by the Bayot family, Manantans predecessors-in-interest. It was only in 1997, after
Manantan bought the subject property from the Bayot family, that Manantan started to claim
ownership even of the portions they had been using. Respondent and Tavera contended that they
could not just relinquish their right to the disputed portions and yield to Manantans demand,
considering that the latters claim was based merely on a relocation survey. "[J]ust to buy peace of
mind and maintain cordial relations" with Mananatan, respondent and Tavera alleged that they
"walked the proverbial mile and show[ed] their interest to pay" Manantan the equivalent amount of
the disputed portions, but Manantan ignored their proposal and insisted that they buy the whole of
the subject property.
Respondent and Tavera alternatively argued in their Joint Answer that in case Manantan would be
declared as the lawful owner of the subject property, the MTCC should not disregard the fact that they
were "builders in good faith." As builders in good faith, they should be allowed to pay a reasonable
price for the portions of the subject property on which their driveway/access road, and other
improvements were situated.
At the end of their Joint Answer, respondent and Tavera asked the MTCC to dismiss Manantans
Complaint; or in case their driveway/access road and other improvements were found to be
encroaching on Manantans property, to declare them builders in good faith who should be allowed to
purchase the portions on which their driveway/access road and other improvements were located and
to award them their counterclaims for moral damages and P35,000.00 attorneys fees.8
After submission of the parties respective position papers and other pleadings, the MTCC rendered a
Decision9 in Civil Case No. 10467 on 21 May 1999, favoring Manantan. The MTCC ruled that it had
jurisdiction over the case and that respondent and Tavera were not builders in good faith. It ordered
respondent and Tavera to pay Manantan the amount of P600.00 and P400.00, respectively, per month,
as reasonable compensation for the use and occupancy of the disputed portions of the subject
property, counted from the date of the filing of the Complaint up to the time respondent and Tavera
would actually vacate the same. It further ordered respondent and Tavera to jointly and severally pay
Manantan the amount of P20,000.00 as attorneys fees and litigation expenses.
Respondent and Tavera appealed the MTCC Decision before the Regional Trial Court (RTC), Baguio City,
Branch 5. Their appeal was docketed as Civil Case No. 4435-R. On 29 October 1999, the RTC
promulgated its Decision10affirming in toto the appealed MTCC Decision. Only respondent elevated the
case to the Court of Appeals since Tavera opted not to appeal anymore.
Respondents appeal before the Court of Appeals was docketed as CA-G.R. SP No. 55891. During its
pendency, Manantan died on 20 January 2000.11 Almost four months later, on 10 May 2000, the Court
of Appeals rendered its Decision setting aside the Decisions of both the RTC and the MTCC and
dismissing Manantans Complaint in Civil Case No. 10467. The appellate court held that Manantans
Complaint before the MTCC failed to allege facts constitutive of forcible entry or unlawful detainer. The
allegations in the Complaint merely presented a controversy arising from a boundary dispute, in which
case, the appropriate remedy available to Manantan should have been the plenary action for recovery
of possession within the jurisdiction of the RTC. Consequently, the Court of Appeals concluded that the
MTCC had no jurisdiction over the Complaint in Civil Case No. 10467.12
The fallo of the Court of Appeals Decision reads:
WHEREFORE, prescinding from the foregoing disquisition, the petition for review is hereby GIVEN DUE
COURSE. The assailed Decision dated October 29, 1999 which was rendered by Branch 5 of the
Regional Trial Court of Baguio City, in Civil Case No. 4435-R, affirming in toto the other assailed Decision
dated May 21, 1999 rendered by the First Branch of the Municipal Trial Court in Cities of Baguio City in
Civil Case No. 10467, entitled "SOLEDAD MANANTAN v. ANICETO SOMERA and PRESENTACION TAVERA,
and all persons claiming rights under them," are hereby both REVERSED AND SET ASIDE and another
one entered DISMISSING said Civil Case No. 10467.
Accordingly, let a writ of injunction issue permanently enjoining public respondent Judge Antonio M.
Esteves and all persons acting in his behalf or orders to cease and desist from further enforcing the
assailed decisions.
Manantans counsel filed a Motion for Reconsideration13 of the afore-mentioned Decision of the Court
of Appeals but it was denied by the same court in the Resolution dated 18 October 2000.
Hence, herein petitioner, Gilbert Manantan, representing the Estate of the late Soledad Manantan,
filed the instant Petition for Review14 before us raising the following issues:
I.
WHETHER OR NOT THE MUNICIPAL TRIAL COURT IN CITIES, BAGUIO CITY, BRANCH 1, HAD THE
JURISDICTION OVER THE ACTION - EJECTMENT AND DAMAGES ENTITLED "SOLEDAD MANANTAN,
PLAINTIFF, V. ANICETA SOMERA AND PRESENTACION TAVERA, AND ALL PERSONS CLAIMING RIGHTS
UNDER THEM, DEFENDANTS;
II.
WHETHER A PORTION OF PETITIONERS LAND ENCROACHED BY RESPONDENT CAN BE RECOVERED
THROUGH AN ACTION [FOR] EJECTMENT.
In the main, petitioner argues that the Complaint is in the nature of an action for unlawful detainer
over which the MTCC had jurisdiction.15
An action for forcible entry or unlawful detainer is governed by Rule 70 of the Rules of Court, Section 1
of which provides:
SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force, intimidation,
threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of
any land or building is unlawfully withheld after the expiration or termination of the right to hold
possession by virtue of any contract, express or implied, or the legal representatives or assigns of any
such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful
deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against
the person or persons unlawfully withholding or depriving of possession, or any person or persons
claiming under them, for the restitution of such possession, together with damages and costs.
(Emphasis ours.)
Unlawful detainer is a summary action for the recovery of possession of real property. 16 This action may
be filed by a lessor, vendor, vendee, or other person against whom the possession of any land or
building is unlawfully withheld after the expiration or termination of the right to hold possession by
virtue of any contract, express or implied.17
In unlawful detainer cases, the possession of the defendant was originally legal, as his possession was
permitted by the plaintiff on account of an express or implied contract between them. However,
defendants possession became illegal when the plaintiff demanded that defendant vacate the subject
property due to the expiration or termination of the right to possess under their contract, and
defendant refused to heed such demand.18
A case for unlawful detainer must be instituted before the proper municipal trial court or metropolitan
trial court within one year from unlawful withholding of possession. Such one year period should be
counted from the date of plaintiffs last demand on defendant to vacate the real property, because only
upon the lapse of that period does the possession become unlawful. 19
Well-settled is the rule that the jurisdiction of the court, as well as the nature of the action, are
determined by the allegations in the complaint. 20 To vest the court with the jurisdiction to effect the
ejectment of an occupant from the land in an action for unlawful detainer, it is necessary that the
complaint should embody such a statement of facts clearly showing attributes of unlawful detainer
cases, as this proceeding is summary in nature. 21 The complaint must show on its face enough ground
to give the court jurisdiction without resort to parol testimony.22
Thus, in order that a municipal trial court or metropolitan trial court may acquire jurisdiction in an
action for unlawful detainer, it is essential that the complaint specifically allege the facts constitutive of
unlawful detainer.23 The jurisdictional facts must appear on the face of the complaint. When the
complaint fails to aver facts constitutive of unlawful detainer, an action for unlawful detainer is not a
proper remedy and, thus, the municipal trial court or metropolitan trial court has no jurisdiction over
the case.24
The pertinent allegations in Manantans Complaint before the MTCC are faithfully reproduced below:
3. That [Manantan] is the owner in fee simple of that parcel of land, situated in Res. Section
"K," Baguio City, with an area of 214 square meters, designated as Lot 7, Pcs-CAR-000062,
and which may be more particularly described in and evidenced by Transfer Certificate of
Title No. T-54672 of the Registry of Deeds for the City of Baguio;
4. That when she caused the relocation survey of her said property above-mentioned, she
discovered that the [herein respondent and Tavera] had occupied portions thereof, by
reason of which she called their attention with a request that they vacate their respective
areas as soon as she would have need of the same, or when she decides to sell the same to
any interested buyer;
5. That only recently, she wanted to sell her property above-mentioned to an interested
buyer, but that upon knowing of the [respondent and Taveras] encroachments, the
prospective buyer decided not to proceed with the sale until after the property shall have
been first vacated by the [respondent and Tavera];
6. That she asked the [respondent and Tavera] to vacate her property, but that they refused
to do so, and that after making more demands which were all ignored by the [respondent
and Tavera], [Manantan] was forced to consult her lawyer, who immediately wrote them a
final formal demand to vacate her land, but to no avail;
7. That [Manantan] also brought her problem to the attention of the Barangay Captain of
Fairview Subdivision Barangay, by way of a letter, dated January 21 1998, copy of which is
attached hereto and made part hereof as Annex "A," the same being self-explanatory;
8. That despite efforts at the Barangay level of justice, no amicable settlement or
compromise agreement was arrived at, as may be evidenced by a Certification to File
Action, dated February 8, 1998, signed and issued by the Pangkat Secretary Shirley
Pagkangan and duly attested by the Pangkat Chairman Rogelio Laygo, copy of which is
hereto attached and made part hereof as Annex "B."25
Noticeably, the Complaint does not allege facts showing compliance with the prescribed one year
period to file an action for unlawful detainer. It does not state the material dates that would have
established that it was filed within one year from the date of Manantans last demand upon
respondent to vacate the disputed portion of land. Such allegations are jurisdictional and crucial,
because if the complaint was filed beyond the prescribed one year period, then it cannot properly
qualify as an action for unlawful detainer over which the MTCC can exercise jurisdiction. It may be an
accion publiciana or accion reivindicatoria.
Accion publiciana is the plenary action to recover the right of possession, which should be brought
before the proper regional trial court when dispossession has lasted for more than one year. It is an
ordinary civil proceeding to determine the better right of possession of realty independently of title. In
other words, if at the time of the filing of the complaint, more than one year has lapsed since
defendant unlawfully withheld possession from plaintiff, the action will not be for illegal detainer, but
an accion publiciana. Accion reivindicatoria, meanwhile, is an action to recover ownership, as well as
possession, which should also be brought before the proper regional trial court in an ordinary civil
proceeding.26
Further, it appears from the allegations in the Complaint that the respondent was already in possession
of the disputed portion at the time Manantan bought the subject property from the Bayot family, and it
was only after the conduct of a relocation survey, which supposedly showed that respondent was
encroaching on the subject property, did Manantan begin asserting her claim of ownership over the
portion occupied and used by respondent. Clearly, respondents possession of the disputed portion
was not pursuant to any contract, express or implied, with Manantan, and, resultantly, respondents
right of possession over the disputed portion is not subject to expiration or termination. At no point
can it be said that respondents possession of the disputed portion ceased to be legal and became an
unlawful withholding of the property from Manantan.271avvphi1
Since the Complaint in Civil Case No. 10467 failed to satisfy on its face the jurisdictional requirements
for an action for unlawful detainer, the Court of Appeals was correct in holding that the MTCC had no
jurisdiction over the said Complaint and should have dismissed the same. There is no possible
Republic of the Philippines
argument around the lack of jurisdiction of MTCC over Civil Case No. 10467. In Laresma v.
SUPREME COURT
Abellana,28 the Court pronounced:
Manila

It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined by the
FIRST DIVISION
material allegations of the complaint and the law at the time the action was commenced. Jurisdiction
of the tribunal over the subject matter or nature of an action is conferred only by law and not by the
consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or G.R. No. 164277 October 8, 2014
nature of an action. Lack of jurisdiction of the court over an action or the subject matter of an action
cannot be cured by the silence, acquiescence, or even by express consent of the parties. If the court
FE U. QUIJANO, Petitioner,
has no jurisdiction over the nature of an action, it may dismiss the same ex mero motu or motu
vs.
proprio. A decision of the court without jurisdiction is null and void; hence, it could never logically
ATTY. DARYLL A. AMANTE, Respondent.
become final and executory. Such a judgment may be attacked directly or collaterally.

DECISION
Petitioner raises a second issue before us: whether petitioner Estate of the late Soledad Manantan can
recover the portion of the subject property by an action for ejectment.29 It bears to stress that
Manantans Complaint is dismissed herein for its defects, i.e., its failure to allege vital facts in an action BERSAMIN, J.:
for unlawful detainer over which the MTCC has jurisdiction. Since Civil Case No. 10467 is already
dismissible upon this ground, it is no longer necessary to discuss whether petitioner availed itself of the Where the plaintiff does not prove her alleged tolerance of the defendant's occupation, the possession
proper remedy to recover the disputed portion of land from respondent. Resolving the second issue is deemed illegal from the beginning. Hence, the action for unlawful detainer is an improper remedy.
shall be a mere surplusage and obiter dictum. If petitioner seeks an answer to said issue as reference But the action cannot be considered as one for forcible entry without any allegation in the complaint
for its future action, suffice it to say that we do not render advisory opinions. The determination of the that the entry of the defendant was by means of force, intimidation, threats, strategy or stealth.
remedy to avail itself of must be done by petitioner with the guidance of its counsel, they being fully
cognizant of the facts giving rise to the controversy and the evidence on hand.
Antecedents

WHEREFORE, the Decision dated 10 May 2000 and Resolution dated 18 October 2000 of the Court of
Appeals in CA-G.R. SP No. 55891 are hereby AFFIRMED in toto. No cost. The petitioner and her siblings, namely: Eliseo, Jose and Gloria, inherited from their father, the late
Bibiano Quijano, the parcel of land registered in the latter's name under Original Certificate of Title
(OCT) No. 0-188 of the Registry of Deeds in Cebu City with an area of 15,790 square meters, more or
SO ORDERED. less.1 On April 23, 1990, prior to any partition among the heirs, Eliseo sold a portion of his share,
measuring 600 square meters, to respondent Atty. Daryll A. Amante (respondent), with the affected
MINITA V. CHICO-NAZARIO portion being described in the deed of absolute sale Eliseo executed in the following manner:

A portion of a parcel of land located at the back of the Pleasant Homes Subdivision and also at the back
of Don Bosco Seminary, Punta Princesa, Cebu City, to be taken from my share of the whole lot; the
portion sold to Atty. Amante is only 600 square meters which is the area near the boundary facing the
Pleasant Homes Subdivision, Cebu City.2

On July 25, 1991, Eliseo, sickly and in need of money, sold an additional 1/3 portion of his share inthe
property to the respondent, with their deed of absolute sale stating that the sale was with the approval
of Eliseos siblings, and describing the portion subject of the sale as:
That the portion covered under this transaction is Specifically located right at the back of the seminary
facing Japer Memorial School and where the fence and house of Atty. Amante is located. 3
On September 30, 1992, Fe, Eliseo, Jose and Gloria executed a deed of extrajudicial partition to divide
their fathers estate (consisting of the aforementioned parcel of land) among themselves. 4 Pursuant to
the deed extrajudicial partition, OCT No. O-188 was cancelled, and on July 12, 1994 the Register of
Deeds issued TransferCertificate of Title (TCT) No. 6555, TCT No. 6556, TCT No. 6557 and TCT No.
65585 to the petitioner, Gloria, Jose, and Eliseo, respectively. The partition resulted in the portions
earlier sold by Eliseo to the respondent being adjudicated to the petitioner instead of to Eliseo. 6
Due to the petitioners needing her portion that was then occupied by the respondent, she demanded
that the latter vacate it. Despite several demands, the last of which was by the letter dated November
4, 1994,7 the respondent refused to vacate, prompting her to file against him on February 14, 1995 a
complaint for ejectment and damages in the Municipal Trial Court in Cities of Cebu City (MTCC),
docketed as Civil Case No. R-34426.8 She alleged therein that she was the registered owner of the
parcel of land covered by TCT No. 6555, a portion of which was being occupied by the respondent, who
had constructed a residential building thereon by the mere tolerance of Eliseo when the property she
and her siblings had inherited from their father had not yet been subdivided, and was thus still co-
owned by them; and that the respondents occupation had become illegal following his refusal to
vacate despite repeated demands.
The respondent denied that his possession of the disputed portion had been by mere tolerance of
Eliseo. He even asserted that he was in fact the owner and lawful possessor of the property, having
bought it from Eliseo; that the petitioner and her siblings could not deny knowing about the sale in his
favor because they could plainly see his house from the road; and that the deed of absolute sale itself
stated that the sale to him was with their approval, and that they had already known that his house
and fence were existing; that before he purchased the property, Eliseo informed him that he and his co-
heirs had already orally partitioned the estate of their father, and that the portion being sold to him
was Eliseos share; and that with his having already purchased the property before the petitioner
acquired it under the deed of extrajudicial partition, she should respect his ownership and possession
of it.9
Judgment of the MTCC
On February 5, 1996, the MTCC rendered its decision in favor of the petitioner,10 ruling that the deeds
of sale executed by Eliseo in favor of the respondent did not have the effect of conveying the disputed
property to him inasmuch as at the time of the sale, the parcel of land left by their father, which
included the disputed property, had not yet been partitioned, rendering Eliseo a mere co-owner of the
undivided estate who had no right to dispose of a definite portion thereof; that as a co-owner, Eliseo
effectively conveyed to the respondent only the portion that would ultimately be allotted to him once
the property would be subdivided; that because the disputed property was adjudicated to the
petitioner under the deed of extrajudicial settlement and partition, she was its owner with the
consequent right of possession; and that, as such, she had the right to demand that the respondent
vacate the land.
The MTCC disposed as follows:
WHEREFORE, in view of all the foregoing premises, and on the basis thereof, judgment is hereby
rendered in favor of the plaintiff and against the defendant, ordering the defendant; to:
1) vacate from the portion, presently occupied by him and whereon his building stands, of
that parcel of land locatedin Cebu City covered by TCT No. 6555 and registered in the
nameof the plaintiff; and to remove and/or demolish the building and all the structures that
may have been built on said portion;
2) pay the plaintiff the rentalof P1,000.00 a month for the portion in litigation from
November 21, 1994 until such time that the defendant shall have vacated, and have
removed all structures from said portion, and have completely restored possession thereof
to the plaintiff; and
3) pay unto the plaintiff the sum of P10,000.00 as attorneys fees; and the sum of P5,000.00
for litigation expenses; and
4) to pay the costs of suit.
SO ORDERED.11
Decision of the RTC
On appeal, the Regional Trial Court (RTC) reversed the judgment of the MTCC, and dismissed the
complaint,12holding that the summary proceeding for ejectment was not proper because the serious
question of ownership of the disputed property was involved, viz:
In the case at bar, by virtue of the deed of absolute sale executed by Eliseo Quijano, one of the co-heirs
of Fe Quijano, in 1990 and 1991, the defendant Atty. Amante took possession of the portion in question
and built his residential house thereat. Itwas only in 1992 that the heirs of Bibiano Quijano executed
the deed of extrajudicial partition, and instead of giving to Eliseo Quijano the portion that he already
sold to the defendant, the same was adjudicated toplaintiff, Fe Quijano to the great prejudice of the
defendant herein who had been in possession of the portion in question since 1990 and which
possession is notpossession de facto but possession de jure because it is based on 2 deeds of
conveyances executed by Eliseo Quijano. There is, therefore, a serious question of ownership involved
which cannot be determined in a summary proceeding for ejectment. Since the defendantis in
possession of the portion in question where his residential house is built for several years, and before
the extrajudicial partition, the possession of the defendant, to repeat, is one of possession de jure and
the plaintiff cannot eject the defendant in a summary proceeding for ejectment involving only
possession de facto. What the plaintiff should have done was to file an action publiciana or action
reinvindicatoria before the appropriate court for recovery of possession and ownership. However, since
there is a pending complaint for quieting of title filed by the defendant against the plaintiff herein
before the Regional Trial Court, the matter of ownership should be finally resolved in said
proceedings.13Undaunted, the petitioner moved for reconsideration, but the RTC denied her motion on
November 13, 1996.14
Decision of the CA
The petitioner appealed to the CA by petition for review.
On May 26, 2004, the CA promulgated its decision,15 affirming the decision of the RTC, and dismissing
the case for ejectment, but on the ground that the respondent was either a co-owner or an assignee
holding the right of possession over the disputed property.
The CA observed that the RTC correctly dismissed the ejectment case because a question of ownership
over the disputed property was raised; that the rule that inferior courts could pass upon the issue of
ownership to determine the question of possession was well settled; that the institution of a separate
action for quieting of title by the respondent did not divest the MTCC of its authority to decide the
ejectment case; that Eliseo, as a coowner, had no right to sell a definite portion of the undivided estate;
that the deeds of sale Eliseo executed in favor of the respondent were valid only with respect to the
alienation of Eliseos undivided share; that after the execution of the deeds of sale, the respondent
became a co-owner along with Eliseo and his co-heirs, giving him the right toparticipate in the partition
of the estate owned in common by them; that because the respondent was not given any notice of the
project of partition or of the intention to effect the partition, the partition made by the petitioner and
her co-heirs did not bind him; and that, as to him, the entire estate was still co-owned by the heirs,
giving him the right to the co-possession of the estate, including the disputed portion.
Issues
The petitioner has come to the Court on appeal by certiorari, 16 contending that the CA grossly erred in
holding that the respondent was either a co-owner or an assignee with the right of possession over the
disputed property.17
The petitioner explains that the respondent, being a lawyer, knew that Eliseo could not validly transfer
the ownership of the disputed property to him because the disputed property was then still a part of
the undivided estate co-owned by all the heirs of the late Bibiano Quijano; that the respondents
knowledge of the defect in Eliseos title and his failure to get the co-heirs consent to the sale in a
registrable document tainted his acquisition with bad faith; that being a buyer in bad faith, the
respondent necessarily became a possessor and builder in bad faith; that she was not aware of the sale
to the respondent, and it was her ignorance of the sale that led her to believe that the respondent was
occupying the disputed property by the mere tolerance of Eliseo; thatthe partition was clearly done in
good faith; and that she was entitled to the possession of the disputed property as its owner,
consequently giving her the right to recover it from the respondent. 18
To be resolved is the issue ofwho between the petitioner and the respondent had the better right to
the possession of the disputed property.
Ruling
The petition for review on certiorarilacks merit.
An ejectment case can be eitherfor forcible entry or unlawful detainer. It is a summary proceeding
designed to provide expeditious means to protect the actual possession or the right to possession of
the property involved.19 The sole question for resolution in the case is the physical or material
possession (possession de facto)of the property in question, and neither a claim of juridical possession
(possession de jure)nor an averment of ownership by the defendant can outrightly deprive the trial
court from taking due cognizance of the case. Hence,even if the question of ownership is raised in the
pleadings, like here, the court may pass upon the issue but only to determine the question of
possession especially if the question of ownership is inseparably linked with the question of
possession.20 The adjudication of ownership in that instance is merely provisional, and will not bar or
prejudice an action between the same parties involving the title to the property. 21
Considering that the parties are both claiming ownership of the disputed property, the CA properly
ruled on the issue of ownership for the sole purpose of determining who between them had the better
right to possess the disputed property.
The disputed property originally formed part of the estate of the late Bibiano Quijano, and passed on
to his heirs by operation of law upon his death.22 Prior to the partition, the estate was owned in
common by the heirs, subject to the payment of the debts of the deceased. 23 In a co-ownership, the
undivided thing or right belong to different persons, with each of them holding the property pro
indivisoand exercising her rights over the whole property. Each co-owner may use and enjoy the
property with no other limitation than that he shall not injure the interests of his co-owners. The
underlying rationale is that until a division is actually made, the respective share of each cannot be
determined, and every co-owner exercises, together with his co-participants, joint ownership of the pro
indiviso property, in addition to his use and enjoyment of it.24
Even if an heirs right in the estate of the decedent has not yet been fully settled and partitioned and is
thus merely inchoate, Article 49325 of the Civil Codegives the heir the right to exercise acts of
ownership. Accordingly, when Eliseo sold the disputed property to the respondent in 1990 and 1991,
he was only a co-owner along with his siblings, and could sell only that portion that would beallotted to
him upon the termination of the co-ownership. The sale did not vest ownership of the disputed
property in the respondent but transferred only the sellers pro indiviso share to him, consequently
making him, as the buyer, a co-owner of the disputed property until it is partitioned.26
As Eliseos successor-in-interest or assignee, the respondent was vested with the right under Article
497 of the Civil Codeto take part in the partition of the estate and to challenge the partition undertaken
without his consent.27 Article 497 states:
Article 497. The creditors or assignees of the co-owners may take part in the division of the thing
owned in common and object to its being effected without their concurrence. But they cannot impugn
any partition already executed, unless there has been fraud, or in case it was made notwithstanding a
formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to
maintain its validity.
The respondent could not deny that at the time of the sale he knew that the property he was buying
was notexclusively owned by Eliseo.1wphi1 He knew, too, that the co-heirs had entered into an oral
agreement of partition vis--vis the estate, such knowledge being explicitly stated in his answer to the
complaint, to wit:
12. That defendant, before he acquired the land from Eliseo Quijano was informed by the latter that
the portion sold to him was his share already; that they have orally partitioned the whole lot before
defendant acquired the portion from him.28
His knowledge of Eliseos co-ownership with his co-heirs, and of their oral agreement of partition
notwithstanding, the respondent still did not exercise his right under Article 497. Although Eliseo made
it appear to the respondent that the partition had already been completed and finalized, the co-heirs
had not taken possession yet oftheir respective shares to signify that they had ratified their agreement,
if any. For sure, the respondent was no stranger to the Quijanos, because he himself had served as the
lawyer of Eliseo and the petitioner herself. 29 In that sense, it would have been easy for him to ascertain
whether the representation of Eliseo to him was true. As it turned out, there had been no prior oral
agreement among the heirs to partition the estate; otherwise, Eliseo would have questioned the deed
of extrajudicial partition because it did not conform to what they had supposedly agreed upon. Had the
respondent been vigilant in protecting his interest, he could have availed himself of the rights reserved
to him by law, particularly the right to take an active part in the partition and to object to the partition
if he wanted to. It was only on September 30, 1992, or two years and five months from the time of the
first sale transaction, and a year and two months from the time of the second sale transaction, that the
co-heirs executed the deed of extrajudicial partition. Having been silent despite his ample opportunity
to participate in or toobject to the partition of the estate, the respondent was bound by whatever was
ultimately agreed upon by the Quijanos.
least, the petitioner should show the overt acts indicative of her or her predecessors tolerance, or her
co-heirs permission for him to occupy the disputed property.31 But she did not adduce such evidence.
Instead, she appeared to be herself not clear and definite as to his possession of the disputed property
being merely tolerated by Eliseo, as the following averment of her petition for review indicates:
6.9. Their ignorance of the said transaction of sale, particularly the petitioner, as they were not duly
informed by the vendor-co[-]owner Eliseo Quijano, [led] them to believe that the respondents
occupancy of the subject premises was by mere tolerance of Eliseo, so that upon partition of the whole
property,said occupancy continued to be under tolerance of the petitioner when the subject premises
became a part of the land adjudicated to the latter;32(emphasis supplied) In contrast, the respondent
consistently stood firm on his assertion that his possession of the disputed property was in the concept
of an owner, not by the mere tolerance of Eliseo, and actually presented the deeds of sale transferring
ownership of the property to him.33
Considering that the allegation ofthe petitioners tolerance of the respondents possession of the
disputed property was not established, the possession could very well be deemed illegal from the
beginning. In that case, her action for unlawful detainer has to fail.34 Even so, the Court would not be
justified to treat this ejectment suit as one for forcible entry because the complaint contained no
allegation thathis entry in the property had been by force, intimidation, threats, strategy or stealth.
Regardless, the issue of possession between the parties will still remain. To finally resolve such
issue,they should review their options and decide on their proper recourses. In the meantime, it is wise
for the Court to leave the door open to them in that respect. For now, therefore, this recourse of the
petitioner has to be dismissed.
WHEREFORE, the Court AFFIRMS the decision promulgated on May 26, 2004 subject to the
MODIFICATION that the unlawful detainer action is dismissed for being an improper remedy; and
ORDERS the petitioner to pay the costs of suit.
SO ORDERED.

There is no question that the holder of a Torrens title is the rightful owner of the property thereby LUCAS P. BERSAMIN
covered and is entitled to its possession. 30 However, the Court cannot ignore thatthe statements in the Associate Justice
petitioners complaint about the respondents possession of the disputed property being by the mere
tolerance of Eliseo could be the basis for unlawful detainer. Unlawful detainer involves the defendants
withholding of the possession of the property to which the plaintiff is entitled, after the expiration or
termination of the formers right tohold possession under the contract, whether express or implied. A
requisite for a valid cause of action of unlawful detainer is that the possession was originally lawful, but
turned unlawful only upon the expiration of the right to possess.

To show that the possession was initially lawful, the basis of such lawful possession must then be
established. With the averment here that the respondents possession was by mere tolerance of the
petitioner, the acts of tolerance must be proved, for bare allegation of tolerance did not suffice. At
Republic of the Philippines Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus:
SUPREME COURT
Manila
WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered
quieting the title of plaintiffs over and/or recover possession of their said property in the
FIRST DIVISION name of deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of the
Register of Deeds at Quezon City and that:
G.R. No. 168943 October 27, 2006
1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register of
Deeds of Quezon City;
IGLESIA NI CRISTO, petitioner,
vs.
HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge, Regional Trial Court, Br. 104, 2. The defendant be ordered to pay plaintiffs claims for actual damages in the
Quezon City, and HEIRS OF ENRIQUE G. SANTOS, respondents sum of P100,000.00;

DECISION 3. The defendant be ordered to pay plaintiffs claims for compensatory damages
in the sum of at least P1,000,000.00;
CALLEJO, SR, J.:
4. The defendant be ordered to pay plaintiffs claims for reimbursement of the
lawyers professional fees consisting of the aforesaid P50,000.00 acceptance fee
This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No.
and reimbursement of the said success fee in par. 10 above; and lawyers
72686 and its Resolution2 denying the motion for reconsideration of the said decision.
expenses of P2,000.00 for each hearing in this case;

On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and Sonia
5. The defendant be ordered to pay expenses and costs of litigation in the sum of
Santos-Wallin, represented by Enrique G. Santos, filed a complaint 3 for Quieting of Title and/or Accion
at least P200,000.00.
Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City against the Iglesia Ni Cristo (INC),
defendant therein.
Other reliefs that are just and equitable in the premises are, likewise, prayed for. 4
Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the owner of a 936-square-meter
parcel of land located in Tandang Sora, Quezon City covered by Transfer Certificate of Title (TCT) No. As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos,
57272 issued by the Register of Deeds on July 27, 1961 which cancelled TCT No. 57193-289. He had represented by Enrique G. Santos. The latter signed the Verification and Certificate of Non-Forum
been in possession of the owners duplicate of said title and had been in continuous, open, adverse and Shopping which reads:
peaceful possession of the property. He died on February 9, 1970 and was survived by his wife, Alicia
Santos, and other plaintiffs, who were their children. Thereafter, plaintiffs took peaceful and adverse
I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of the
possession of the property, and of the owners duplicate of said title. When the Office of the Register of
late Enrique Santos and I represent the heirs of said Enrique Santos who are my co-plaintiffs
Deeds of Quezon City was burned on June 11, 1988, the original copy of said title was burned as well.
in the above-captioned case and that I directed the preparation of the instant complaint,
The Register of Deeds had the title reconstituted as TCT No. RT-110323, based on the owners duplicate
the contents of which are true and correct to the best of my knowledge and the
of TCT No. 57272. Sometime in February 1996, plaintiffs learned that defendant was claiming
attachments are faithful reproductions of the official copies in my possession.
ownership over the property based on TCT No. 321744 issued on September 18, 1984 which, on its
face, cancelled TCT No. 320898, under the name of the Philippine National Bank, which allegedly
cancelled TCT No. 252070 in the names of the spouses Marcos and Romana dela Cruz. They insisted I hereby certify that I have not commenced any other action or proceeding involving the
that TCT Nos. 321744, 320898 and 252070 were not among the titles issued by the Register of Deeds of same issues in the Supreme Court, the Court of Appeals, or different Divisions thereof, or
Quezon City and even if the Register of Deeds issued said titles, it was contrary to law. Enrique Santos, any other tribunal or agency, and to the best of my knowledge, no such action or
during his lifetime, and his heirs, after his death, never encumbered or disposed the property. In 1996, proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions
plaintiffs had the property fenced but defendant deprived them of the final use and enjoyment of their thereof, or any other tribunal or agency, and that I shall notify this Commission within three
property. days from notice that a similar action or proceeding has been filed or is pending thereat.
 IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at Pasig In their Comment9 on the motion, plaintiffs averred that the relationship of a co-owner to the other co-
City, Metro Manila. owners is fiduciary in character; thus, anyone of them could effectively act for another for the benefit
of the property without need for an authorization. Consequently, Enrique Santos had the authority to
represent the other heirs as plaintiffs and to sign the verification and certification against forum
(Sgd.)
shopping.10 On the issue of prescription, plaintiffs argued that the prescriptive period for the actions
should be reckoned from 1996, when defendant claimed ownership over the property and barred
ENRIQUE G. SANTOS plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was issued by the Register of
Deeds in the name of defendant as owner.
SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City, affiant
exhibiting to me his CTC No. 07303074 issued at Sta. Cruz, Laguna on April 16, 2001. In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must
implead them as plaintiffs as they are indispensable parties. In response, plaintiffs aver that a co-owner
(Sgd.) of a property can execute an action for quieting of title without impleading the other co-owners.

PETER FRANCIS G. ZAGALA The trial court issued an Order11 denying defendants motion to dismiss. It declared that since Enrique
Notary Public Santos was one of the heirs, his signature in the verification and certification constitutes substantial
Until December 31, 2002 compliance with the Rules. The court cited the ruling of this Court in Dar v. Alonzo-Legasto.12 The court,
PTR No. 0287069 likewise, held that prescription had not set in and that failure to state the address of plaintiffs in the
Issued on 1-10-01 complaint does not warrant the dismissal of the complaint.
At Pasig City5
Defendant filed a motion for reconsideration, which the court likewise denied in an Order13 dated July
Defendant moved to dismiss plaintiffs complaint on the following grounds: (1) plaintiffs failed to 10, 2002.
faithfully comply with the procedural requirements set forth in Section 5, Rule 7 of the 1997 Rules of
Civil Procedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria) had prescribed, the Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer for the
same having been filed only on October 24, 2001 beyond the statutory ten-year period therefor; and Issuance of a Temporary Restraining Order and/or Preliminary Injunction14 before the CA, raising the
(3) that the complaint is defective in many respects.6 following issues:

Defendant asserted that the case involved more than one plaintiff but the verification and certification I.
against forum shopping incorporated in the complaint was signed only by Enrique Santos. Although the
complaint alleges that plaintiffs are represented by Enrique Santos, there is no showing that he was,
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION
indeed, authorized to so represent the other plaintiffs to file the complaint and to sign the verification
WHEN SHE HELD THAT THE CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY ENRIQUE
and certification of non-forum shopping.7 Thus, plaintiffs failed to comply with Section 5, Rule 7 of the
G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997
Rules of Court. Defendant cited the ruling of this Court in Loquias v. Office of the Ombudsman.8
RULES OF CIVIL PROCEDURE, IN CLEAR CONTRAVENTION OF THE RULES OF COURT, AND THE
RULING IN LOQUIAS V. OFFICE OF THE OMBUDSMAN, G.R. NO. 1399396 (SIC), AUGUST 16,
Defendant maintained that the complaint is defective in that, although there is an allegation that 2000, 338 SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO. 127393, 299 SCRA 708
Enrique Santos represents the other heirs, there is nothing in the pleading to show the latters (DECEMBER 4, 1998).
authority to that effect; the complaint fails to aver with particularity the facts showing the capacity of
defendant corporation to sue and be sued; and the pleading does not state the address of plaintiffs.
II.
Defendant likewise averred that the complaint should be dismissed on the ground of prescription. It
argued that plaintiffs anchor their claim on quieting of title and considering that they are not in
possession of the land in question, their cause of action prescribed after ten years. On the other hand, WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION IN
if the supposed right of plaintiffs is based on accion reinvindicatoria, prescription would set in after 10 APPLYING THE RULING IN DAR, ET. AL. V. HON. ROSE MARIE ALONZO-LEGASTO, ET. AL., G.R.
years from dispossession. In both cases, defendant asserts, the reckoning point is 1984 when NO. 143016, AUGUST 30, 2000 TO THE INSTANT CASE.
defendant acquired TCT No. 321744 and possession of the land in question.
 III.
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION
WHEN SHE HELD THAT THE AUTHORITY OF ENRIQUE G. SANTOS TO REPRESENT HIS CO-
HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE "INC" IS A MATTER OF EVIDENCE.
IV.
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION
WHEN SHE HELD THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION
REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED. 15
Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the verification and
certification of non-forum shopping. Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, all
the plaintiffs must sign, unless one of them is authorized by a special power of attorney to sign for and
in behalf of the others. Petitioner argues that the bare claim of Enrique Santos that he signed the
verification and certification in his behalf and of the other plaintiffs who are his co-heirs/co-owners of
the property does not even constitute substantial compliance of the rule. Contrary to the ruling of the
trial court, the absence or existence of an authority of Enrique Santos to sign the verification and
certification for and in behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the
complaint of respondents and cannot be cured by an amendment of the complaint. The trial court
erred in applying the ruling of this Court in Dar v. Alonzo-Legasto.16
Petitioner maintained that the action of respondents, whether it be one for quieting of title or an
accion reinvindicatoria, had prescribed when the complaint was filed on October 24, 2001. Petitioner
asserts that this is because when respondents filed their complaint, they were not in actual or physical
possession of the property, as it (petitioner) has been in actual possession of the property since 1984
when TCT No. 321744 was issued to it by the Register of Deeds. This is evident from the nature of a
reinvindicatory action itself which is an action whereby plaintiff alleges ownership over the subject
parcel of land and seeks recovery of its full possession. By their action, respondents thereby admitted
that petitioner was in actual possession of the property, and as such, respondents action for quieting
of title or accion reinvindicatoria may prescribe in ten (10) years from 1984 or in 1994, it appearing that
it acted in good faith when it acquired the property from the registered owner, conformably with
Article 555(4) of the New Civil Code.
On April 7, 2005, the CA rendered the assailed decision 17 dismissing the petition, holding that the RTC
did not commit grave abuse of its discretion amounting to lack or excess of jurisdiction in denying
petitioners motion to dismiss. As the Court held in DAR v. Alonzo-Legasto 18 and in Gudoy v.
Guadalquiver,19 the certification signed by one with respect to a property over which he shares a
common interest with the rest of the plaintiffs (respondents herein) substantially complied with the
Rules. As to the issue of prescription, the appellate court held that the prescriptive period should be
reckoned from 1996, when petitioner claimed ownership and barred respondents from fencing the
property.
Petitioner is now before this Court on petition for review on certiorari, raising the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE CERTIFICATION OF NON-
FORUM SHOPPING SIGNED BY RESPONDENT ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL
COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE AND IN APPLYING
THE CASE OF GUDOY V. GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE RECENT
JURISPRUDENCE.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE AUTHORITY OF
RESPONDENT ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT
AGAINST THE PETITIONER IS A MATTER OF EVIDENCE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FOR QUIETING OF
TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED. 20
Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support of its
petition in the present case.
Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against forum
shopping read:
Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based on "information and belief" or
upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an
unsigned pleading.
Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in
the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or
filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best
of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending
action or claim, a complete statement of the present status thereof; and (c) if he should thereafter
learn that the same or similar action or claim has been filed or is pending, he shall report that fact
within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has
been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing. The submission of a false certification or
non-compliance with any of the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal actions. If the acts of the party or
his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions.
The purpose of verification is simply to secure an assurance that the allegations of the petition (or
complaint) have been made in good faith; or are true and correct, not merely speculative. This
requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does
not necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional
requirement.21
The issue in the present case is not the lack of verification but the sufficiency of one executed by only
one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo,22 that the verification
requirement is deemed substantially complied with when, as in the present case, only one of the heirs-
plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the
petition (complaint), signed the verification attached to it. Such verification is deemed sufficient
assurance that the matters alleged in the petition have been made in good faith or are true and
correct, not merely speculative.
The same liberality should likewise be applied to the certification against forum shopping. The general
rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of
them is insufficient. However, the Court has also stressed in a number of cases that the rules on forum
shopping were designed to promote and facilitate the orderly administration of justice and thus should
not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate
objective. The rule of substantial compliance may be availed of with respect to the contents of the
certification. This is because the requirement of strict compliance with the provisions merely
underscores its mandatory nature in that the certification cannot be altogether dispensed with or its
requirements completely disregarded.23
The substantial compliance rule has been applied by this Court in a number of cases: Cavile v. Heirs of
Cavile,24where the Court sustained the validity of the certification signed by only one of petitioners
because he is a relative of the other petitioners and co-owner of the properties in dispute; Heirs of
Agapito T. Olarte v. Office of the President of the Philippines,25 where the Court allowed a certification
signed by only two petitioners because the case involved a family home in which all the petitioners
shared a common interest; Gudoy v. Guadalquiver,26 where the Court considered as valid the
certification signed by only four of the nine petitioners because all petitioners filed as co-owners pro
indiviso a complaint against respondents for quieting of title and damages, as such, they all have joint
interest in the undivided whole; and Dar v. Alonzo-Legasto,27 where the Court sustained the
certification signed by only one of the spouses as they were sued jointly involving a property in which
they had a common interest.
It is noteworthy that in all of the above cases, the Court applied the rule on substantial compliance
because of the commonality of interest of all the parties with respect to the subject of the controversy.
Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err in
affirming the application of the rule on substantial compliance. In the instant case, the property
involved is a 936-square-meter real property. Both parties have their respective TCTs over the property.
Respondents herein who are plaintiffs in the case below have a common interest over the property
being the heirs of the late Enrique Santos, the alleged registered owner of the subject property as
shown in one of the TCTs. As such heirs, they are considered co-owners pro indiviso of the whole
property since no specific portion yet has been adjudicated to any of the heirs. Consequently, as one of
the heirs and principal party, the lone signature of Enrique G. Santos in the verification and certification
is sufficient for the RTC to take cognizance of the case. The commonality of their interest gave Enrique
G. Santos the authority to inform the RTC on behalf of the other plaintiffs therein that they have not
commenced any action or claim involving the same issues in another court or tribunal, and that there is
no other pending action or claim in another court or tribunal involving the same issues. Hence, the RTC
correctly denied the motion to dismiss filed by petitioner.
Considering that at stake in the present case is the ownership and possession over a prime property in
Quezon City, the apparent merit of the substantive aspects of the case should be deemed as a special
circumstance or compelling reason to allow the relaxation of the rule.
Time and again, this Court has held that rules of procedure are established to secure substantial justice.
Being instruments for the speedy and efficient administration of justice, they may be used to achieve
such end, not to derail it. In particular, when a strict and literal application of the rules on non-forum
shopping and verification will result in a patent denial of substantial justice, these may be liberally
construed.28 The ends of justice are better served when cases are determined on the merits after all
parties are given full opportunity to ventilate their causes and defenses rather than on technicality or
some procedural imperfections.29
Indeed, this Court strictly applied the rules on verification and certification against forum shopping as
in the cases of Loquias v. Office of the Ombudsman 30 and Tolentino v. Rivera.31 However, in both cases,
the commonality of interest between or among the parties is wanting. In Loquias, the co-parties were
being sued in their individual capacities as mayor, vice mayor and members of the municipal board.
In Tolentino, the lone signature of Tolentino was held insufficient because he had no authority to sign in
behalf of the Francisco spouses. In such case, the Court concluded that Tolentino merely used the
spouses names for whatever mileage he thought he could gain. It is thus clear from these cases that
the commonality of interest is material in the relaxation of the Rules.
Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no
necessity to show such authority. Respondents herein are co-owners of the subject property. As such
co-owners, each of the heirs may properly bring an action for ejectment, forcible entry and detainer, or
any kind of action for the recovery of possession of the subject properties. Thus, a co-owner may bring
such an action, even without joining all the other co-owners as co-plaintiffs, because the suit is deemed
to be instituted for the benefit of all.32
We uphold the validity of the complaint because of the following circumstances: (1) the caption of the
instant case is Heirs of Enrique Santos v. Iglesia ni Cristo;33 (2) the opening statement of the complaint
states that plaintiffs are the heirs of Enrique Santos and likewise names the particular heirs of the latter
who instituted the complaint below;34 (3) the case involves a property owned by the predecessor-in-
interest of plaintiffs therein;35 and (4) the verification signed by Enrique G. Santos clearly states that he
is one of the children of the late Enrique Santos and that he represents the heirs of said Enrique
Santos.36
On the issue of prescription of action, petitioner avers that the action of respondents is one to quiet
title and/or accion reinvindicatoria, and that respondents asserted ownership over the property and
sought the recovery of possession of the subject parcel of land. It insists that the very nature of the
action presupposes that respondents had not been in actual and material possession of the property,
and that it was petitioner which had been in possession of the property since 1984 when it acquired
title thereon. The action of respondent prescribed in ten years from 1984 when petitioner allegedly
dispossessed respondents, in accordance with Article 555(4) of the New Civil Code.
The contention of petitioner has no merit. The nature of an action is determined by the material
allegations of the complaint and the character of the relief sought by plaintiff, and the law in effect
when the action was filed irrespective of whether he is entitled to all or only some of such relief. 37 As
gleaned from the averments of the complaint, the action of respondents was one for quieting of title
under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil Code. The latter provision
reads:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in
truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.
A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land
appearing in some legal form but which is, in fact, unfounded, or which it would be inequitable to
enforce.38 An action for quieting of title is imprescriptible until the claimant is ousted of his
possession.39
The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time
of the commencement of his action, he was not in actual possession of real property. After all, under
Article 477 of the New Civil Code, the owner need not be in possession of the property. If on the face of
TCT No. 321744 under the name of plaintiff, its invalidity does not appear but rests partly in pais, an
action for quieting of title is proper. 40
In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their father,
Enrique Santos, was the owner of the property based on TCT No. 57272 issued on July 27, 1961; and
that, after his death on February 9, 1970, they inherited the property; Enrique Santos, during his
lifetime, and respondents, after the death of the former, had been in actual, continuous and peaceful
possession of the property until 1994 when petitioner claimed ownership based on TCT No. 321744
issued on September 18, 1984 and barred respondents from fencing their property.
Petitioners claim that it had been in actual or material possession of the property since 1984 when TCT
No. 321744 was issued in its favor is belied by the allegations in the complaint that respondents had
been in actual and material possession of the property since 1961 up to the time they filed their
complaint on October 24, 2001. Admittedly, respondents interposed the alternative
reinvindicatory action against petitioner. An accion reinvindicatoria does not necessarily presuppose
that the actual and material possession of the property is on defendant and that plaintiff seeks the
recovery of such possession from defendant. It bears stressing that an accion reinvindicatoria is a
remedy seeking the recovery of ownership and includes jus possidendi, jus utendi, and jus fruendi as
well. It is an action whereby a party claims ownership over a parcel of land and seeks recovery of its full
possession.41 Thus, the owner of real property in actual and material possession thereof may file
an accion reinvindicatoria against another seeking ownership over a parcel of land including jus
vindicandi, or the right to exclude defendants from the possession thereof. In this case, respondents
filed an alternative reinvindicatory action claiming ownership over the property and the cancellation of
TCT No. 321744 under the name of petitioner. In fine, they sought to enforce their jus utendi and jus
vindicandi when petitioner claimed ownership and prevented them from fencing the property.
Since respondents were in actual or physical possession of the property when they filed
their complaint against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory
action had not even commenced to run, even if petitioner was able to secure TCT No. 321744 over the
property in 1984. The reason for this is thatx x x one who is in actual possession of a piece of land
claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession
gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature
of the adverse claim of a third party and its effect on his own title, which right can be claimed only by
one who is in possession.42IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of
the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against petitioner.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-34915 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch
XVIII; HIMLAYANG PILIPINO, INC., respondents.
City Fiscal for petitioners.
Manuel Villaruel, Jr. and Feliciano Tumale for respondents.
GUTIERREZ, JR., J.:
This is a petition for review which seeks the reversal of the decision of the Court of First Instance of
Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null and
void.
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT,
MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN
THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF"
provides:
Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for
charity burial of deceased persons who are paupers and have been residents of Quezon City for at least
5 years prior to their death, to be determined by competent City Authorities. The area so designated
shall immediately be developed and should be open for operation not later than six months from the
date of approval of the application.
For several years, the aforequoted section of the Ordinance was not enforced by city authorities but
seven years after the enactment of the ordinance, the Quezon City Council passed the following
resolution:
RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer,
Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where
the owners thereof have failed to donate the required 6% space intended for paupers burial.
Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in
writing that Section 9 of Ordinance No. 6118, S-64 would be enforced
Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at
Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction
(Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent
alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act,
and the Revised Administrative Code.
There being no issue of fact and the questions raised being purely legal both petitioners and
respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore,
rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void.
A motion for reconsideration having been denied, the City Government and City Council filed the
instant petition.
Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of
police power and that the land is taken for a public use as it is intended for the burial ground of
paupers. They further argue that the Quezon City Council is authorized under its charter, in the exercise
of local police power, " to make such further ordinances and resolutions not repugnant to law as may
be necessary to carry into effect and discharge the powers and duties conferred by this Act and such as
it shall deem necessary and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort and convenience of the city and the inhabitants
thereof, and for the protection of property therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of
property is obvious because the questioned ordinance permanently restricts the use of the property
such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of
his property.
The respondent also stresses that the general welfare clause is not available as a source of power for
the taking of the property in this case because it refers to "the power of promoting the public welfare
by restraining and regulating the use of liberty and property." The respondent points out that if an
owner is deprived of his property outright under the State's police power, the property is generally not
taken for public use but is urgently and summarily destroyed in order to promote the general welfare.
The respondent cites the case of a nuisance per se or the destruction of a house to prevent the spread
of a conflagration.
We find the stand of the private respondent as well as the decision of the respondent Judge to be well-
founded. We quote with approval the lower court's ruling which declared null and void Section 9 of the
questioned city ordinance:
The issue is: Is Section 9 of the ordinance in question a valid exercise of the police power?
An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that
would justify the ordinance in question except the provision granting police power to the City. Section 9
cannot be justified under the power granted to Quezon City to tax, fix the license fee,
and regulate such other business, trades, and occupation as may be established or practised in the
City.' (Subsections 'C', Sec. 12, R.A. 537).
The power to regulate does not include the power to prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs.
Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to
regulate does not include the power to confiscate. The ordinance in question not only confiscates but
also prohibits the operation of a memorial park cemetery, because under Section 13 of said ordinance,
'Violation of the provision thereof is punishable with a fine and/or imprisonment and that upon
conviction thereof the permit to operate and maintain a private cemetery shall be revoked or
cancelled.' The confiscatory clause and the penal provision in effect deter one from operating a
memorial park cemetery. Neither can the ordinance in question be justified under sub- section "t",
Section 12 of Republic Act 537 which authorizes the City Council to-
'prohibit the burial of the dead within the center of population of the city and provide for their burial in
such proper place and in such manner as the council may determine, subject to the provisions of the
general law regulating burial grounds and cemeteries and governing funerals and disposal of the dead.'
(Sub-sec. (t), Sec. 12, Rep. Act No. 537).
There is nothing in the above provision which authorizes confiscation or as euphemistically termed by
the respondents, 'donation'
We now come to the question whether or not Section 9 of the ordinance in question is a valid exercise
of police power. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537
which reads as follows:
(00) To make such further ordinance and regulations not repugnant to law as may be necessary to carry
into effect and discharge the powers and duties conferred by this act and such as it shall deem
necessary and proper to provide for the health and safety, promote, the prosperity, improve the
morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the
protection of property therein; and enforce obedience thereto with such lawful fines or penalties as
the City Council may prescribe under the provisions of subsection (jj) of this section.
We start the discussion with a restatement of certain basic principles. Occupying the forefront in the
bill of rights is the provision which states that 'no person shall be deprived of life, liberty or property
without due process of law' (Art. Ill, Section 1 subparagraph 1, Constitution).
On the other hand, there are three inherent powers of government by which the state interferes with
the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said to exist
independently of the Constitution as necessary attributes of sovereignty.
Police power is defined by Freund as 'the power of promoting the public welfare by restraining and
regulating the use of liberty and property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50).
It is usually exerted in order to merely regulate the use and enjoyment of property of the owner. If he is
deprived of his property outright, it is not taken for public use but rather to destroy in order to
promote the general welfare. In police power, the owner does not recover from the government for
injury sustained in consequence thereof (12 C.J. 623). It has been said that police power is the most
essential of government powers, at times the most insistent, and always one of the least limitable of
the powers of government (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May
31, 1957). This power embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL
104). The Supreme Court has said that police power is so far-reaching in scope that it has almost
become impossible to limit its sweep. As it derives its existence from the very existence of the state
itself, it does not need to be expressed or defined in its scope. Being coextensive with self-preservation
and survival itself, it is the most positive and active of all governmental processes, the most essential
insistent and illimitable Especially it is so under the modern democratic framework where the demands
of society and nations have multiplied to almost unimaginable proportions. The field and scope of
police power have become almost boundless, just as the fields of public interest and public welfare
have become almost all embracing and have transcended human foresight. Since the Courts cannot
foresee the needs and demands of public interest and welfare, they cannot delimit beforehand the
extent or scope of the police power by which and through which the state seeks to attain or achieve
public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).
The police power being the most active power of the government and the due process clause being the
broadest station on governmental power, the conflict between this power of government and the due
process clause of the Constitution is oftentimes inevitable.
It will be seen from the foregoing authorities that police power is usually exercised in the form of mere
regulation or restriction in the use of liberty or property for the promotion of the general welfare. It
does not involve the taking or confiscation of property with the exception of a few cases where there is
a necessity to confiscate private property in order to destroy it for the purpose of protecting the peace
and order and of promoting the general welfare as for instance, the confiscation of an illegally
possessed article, such as opium and firearms.
It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere
police regulation but an outright confiscation. It deprives a person of his private property without due
process of law, nay, even without compensation.
In sustaining the decision of the respondent court, we are not unmindful of the heavy burden
shouldered by whoever challenges the validity of duly enacted legislation whether national or local As
early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every
presumption in favor of validity and, more so, where the ma corporation asserts that the ordinance was
enacted to promote the common good and general welfare.
In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of
Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice
Enrique M. Fernando stated
Primarily what calls for a reversal of such a decision is the a of any evidence to offset the presumption Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as
of validity that attaches to a statute or ordinance. As was expressed categorically by Justice Malcolm prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to
'The presumption is all in favor of validity. ... The action of the elected representatives of the people buy or expropriate private properties to construct public cemeteries. This has been the law and
cannot be lightly set aside. The councilors must, in the very nature of things, be familiar with the practise in the past. It continues to the present. Expropriation, however, requires payment of just
necessities of their particular ... municipality and with all the facts and lances which surround the compensation. The questioned ordinance is different from laws and regulations requiring owners of
subject and necessitate action. The local legislative body, by enacting the ordinance, has in effect given subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from
notice that the regulations are essential to the well-being of the people. ... The Judiciary should not the land they sell to buyers of subdivision lots. The necessities of public safety, health, and convenience
lightly set aside legislative action when there is not a clear invasion of personal or property rights under are very clear from said requirements which are intended to insure the development of communities
the guise of police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation with salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are made to
of the presumption of validity of municipal ordinance as announced in the leading Salaveria decision in pay by the subdivision developer when individual lots are sold to home-owners.
Ebona v. Daet, [1950]85 Phil. 369.)
As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of the
We have likewise considered the principles earlier stated in Case v. Board of Health supra : municipal corporation, not on any express provision of law as statutory basis of their exercise of power.
The clause has always received broad and liberal interpretation but we cannot stretch it to cover this
particular taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino, Inc. had
... Under the provisions of municipal charters which are known as the general welfare clauses, a city, by
incorporated. received necessary licenses and permits and commenced operating. The sequestration of
virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and
six percent of the cemetery cannot even be considered as having been impliedly acknowledged by the
highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-
private respondent when it accepted the permits to commence operations.
ordered and society, that every holder of property, however absolute and may be his title, holds it
under the implied liability that his use of it shall not be injurious to the equal enjoyment of others
having an equal right to the enjoyment of their property, nor injurious to the rights of the community. WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is
An property in the state is held subject to its general regulations, which are necessary to the common affirmed.
good and general welfare. Rights of property, like all other social and conventional rights, are subject to
such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such
SO ORDERED.
reasonable restraints and regulations, established by law, as the legislature, under the governing and
controlling power vested in them by the constitution, may think necessary and expedient. The state,
under the police power, is possessed with plenary power to deal with all matters relating to the general
health, morals, and safety of the people, so long as it does not contravene any positive inhibition of the
organic law and providing that such power is not exercised in such a manner as to justify the
interference of the courts to prevent positive wrong and oppression.

but find them not applicable to the facts of this case.

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of
an private cemeteries for charity burial grounds of deceased paupers and the promotion of health,
morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking
without compensation of a certain area from a private cemetery to benefit paupers who are charges of
the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the
city passes the burden to private cemeteries.
Republic of the Philippines
SUPREME COURT
The expropriation without compensation of a portion of private cemeteries is not covered by Section Manila
12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to
prohibit the burial of the dead within the center of population of the city and to provide for their burial
in a proper place subject to the provisions of general law regulating burial grounds and cemeteries. EN BANC
When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a
G.R. No. 118127 April 12, 2005 The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure
seeking the reversal of the Decision2 in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of
Manila, Branch 18 (lower court),3 is the validity of Ordinance No. 7783 (the Ordinance) of the City of
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON. JOSELITO L.
Manila.4
ATIENZA, in his capacity as Vice-Mayor of the City of Manila and Presiding Officer of the City Council
of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO S. CAILIAN, HON.
ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U. LOPEZ, HON. FRANCISCO G. The antecedents are as follows:
VARONA, JR., HON. ROMUALDO S. MARANAN, HON. NESTOR C. PONCE, JR., HON. HUMBERTO B.
BASCO, HON. FLAVIANO F. CONCEPCION, JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL,
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
HON. PEDRO S. DE JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y.
business of operating hotels, motels, hostels and lodging houses.5 It built and opened Victoria Court in
LOPEZ, HON. CHIKA G. GO, HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON.
Malate which was licensed as a motel although duly accredited with the Department of Tourism as a
ROLANDO P. NIETO, HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ E.
hotel.6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of
HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, HON.
Preliminary Injunction and/or Temporary Restraining Order 7 (RTC Petition) with the lower court
ROGELIO P. DELA PAZ, HON. BERNARDO D. RAGAZA, HON. MA. CORAZON R. CABALLES, HON.
impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L.
CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON. MA. LOURDES M. ISIP, HON.
Atienza, and the members of the City Council of Manila (City Council). MTDC prayed that
ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON. LEONARDO L. ANGAT, and HON. JOCELYN
the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be
B. DAWIS, in their capacity as councilors of the City of Manila,Petitioner,
declared invalid and unconstitutional.8
vs.
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST
DEVELOPMENT CORPORATION, Respondents. Enacted by the City Council9 on 9 March 1993 and approved by petitioner City Mayor on 30 March
1993, the said Ordinance is entitled
DECISION
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING
CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
TINGA, J.:
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES. 10

I know only that what is moral is what you feel good after and what is immoral is what you feel bad
The Ordinance is reproduced in full, hereunder:
after.

SECTION 1. Any provision of existing laws and ordinances to the contrary notwithstanding, no person,
Ernest Hermingway
partnership, corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr.
Death in the Afternoon, Ch. 1
Street in the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the
West, pursuant to P.D. 499 be allowed or authorized to contract and engage in, any business
It is a moral and political axiom that any dishonorable act, if performed by oneself, is less immoral than providing certain forms of amusement, entertainment, services and facilities where women are used
if performed by someone else, who would be well-intentioned in his dishonesty. as tools in entertainment and which tend to disturb the community, annoy the inhabitants, and
adversely affect the social and moral welfare of the community, such as but not limited to:
J. Christopher Gerald
Bonaparte in Egypt, Ch. I 1. Sauna Parlors

The Court's commitment to the protection of morals is secondary to its fealty to the fundamental law 2. Massage Parlors
of the land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it
need be, the Court will not hesitate to "make the hammer fall, and heavily" in the words of Justice
3. Karaoke Bars
Laurel, and uphold the constitutional guarantees when faced with laws that, though not lacking in zeal
to promote morality, nevertheless fail to pass the test of constitutionality.
4. Beerhouses
5. Night Clubs 8. Flower shops

6. Day Clubs 9. Music lounge and sing-along restaurants, with well-defined activities for wholesome family
entertainment that cater to both local and foreign clientele.
7. Super Clubs
10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural shows, stage
and theatrical plays, art exhibitions, concerts and the like.
8. Discotheques

11. Businesses allowable within the law and medium intensity districts as provided for in the zoning
9. Cabarets
ordinances for Metropolitan Manila, except new warehouse or open-storage depot, dock or yard,
motor repair shop, gasoline service station, light industry with any machinery, or funeral
10. Dance Halls establishments.

11. Motels
12. Inns
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said officials are
prohibited from issuing permits, temporary or otherwise, or from granting licenses and accepting
payments for the operation of business enumerated in the preceding section.
SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction, be punished by
imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion
of the Court, PROVIDED, that in case of juridical person, the President, the General Manager, or person-
in-charge of operation shall be liable thereof; PROVIDED FURTHER, that in case of subsequent
violation and conviction, the premises of the erring establishment shall be closed and padlocked
permanently.
SEC. 5. This ordinance shall take effect upon approval.

SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the businesses
enumerated in Section 1 hereof are hereby given three (3) months from the date of approval of this
ordinance within which to wind up business operations or to transfer to any place outside of the
Ermita-Malate area or convert said businesses to other kinds of business allowable within the
area, such as but not limited to:
1. Curio or antique shop
2. Souvenir Shops
3. Handicrafts display centers
Enacted by the City Council of Manila at its regular session today, March 9, 1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDC's Victoria Court considering
that these were not establishments for "amusement" or "entertainment" and they were not "services
or facilities for entertainment," nor did they use women as "tools for entertainment," and neither did
they "disturb the community," "annoy the inhabitants" or "adversely affect the social and moral
welfare of the community." 11

MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons:
4. Art galleries (1) The City Council has no power to prohibit the operation of motels as Section 458 (a) 4 (iv) 12 of the
Local Government Code of 1991 (the Code) grants to the City Council only the power to regulate the
5. Records and music shops establishment, operation and maintenance of hotels, motels, inns, pension houses, lodging houses and
other similar establishments; (2) The Ordinance is void as it is violative of Presidential Decree (P.D.) No.
49913 which specifically declared portions of the Ermita-Malate area as a commercial zone with certain
6. Restaurants restrictions; (3) The Ordinance does not constitute a proper exercise of police power as the compulsory
closure of the motel business has no reasonable relation to the legitimate municipal interests sought to
7. Coffee shops be protected; (4) The Ordinance constitutes an ex post facto law by punishing the operation of Victoria
Court which was a legitimate business prior to its enactment; (5) The Ordinanceviolates MTDC's Section 18. Legislative powers. The Municipal Board shall have the following legislative powers:
constitutional rights in that: (a) it is confiscatory and constitutes an invasion of plaintiff's property
rights; (b) the City Council has no power to find as a fact that a particular thing is a nuisance per se nor
(kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the
does it have the power to extrajudicially destroy it; and (6) The Ordinance constitutes a denial of equal
furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort,
protection under the law as no reasonable basis exists for prohibiting the operation of motels and inns,
convenience, and general welfare of the city and its inhabitants, and such others as may be necessary
but not pension houses, hotels, lodging houses or other similar establishments, and for prohibiting said
to carry into effect and discharge the powers and duties conferred by this chapter; and to fix penalties
business in the Ermita-Malate area but not outside of this area. 14
for the violation of ordinances which shall not exceed two hundred pesos fine or six months'
imprisonment, or both such fine and imprisonment, for a single offense.
In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim maintained that the City
Council had the power to "prohibit certain forms of entertainment in order to protect the social and
Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private
moral welfare of the community" as provided for in Section 458 (a) 4 (vii) of the Local Government
respondent had the burden to prove its illegality or unconstitutionality. 21
Code,16 which reads, thus:

Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as the
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to remain a
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
commercial zone.22 The Ordinance, the petitioners likewise claimed, cannot be assailed as ex post
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
facto as it was prospective in operation.23 The Ordinance also did not infringe the equal protection
exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
clause and cannot be denounced as class legislation as there existed substantial and real differences
between the Ermita-Malate area and other places in the City of Manila. 24
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to
promote the general welfare and for said purpose shall:
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte
temporary restraining order against the enforcement of the Ordinance.25 And on 16 July 1993, again in
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement an intrepid gesture, he granted the writ of preliminary injunction prayed for by MTDC.26
facilities, including theatrical performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for entertainment or amusement; regulate
After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the
such other events or activities for amusement or entertainment, particularly those which tend to
petitioners from implementing the Ordinance. The dispositive portion of said Decision reads:27
disturb the community or annoy the inhabitants, or require the suspension or suppression of the same;
or, prohibit certain forms of amusement or entertainment in order to protect the social and moral
welfare of the community. WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of 1993, of the City
of Manila null and void, and making permanent the writ of preliminary injunction that had been issued
by this Court against the defendant. No costs.
Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of regulation spoken of in the
above-quoted provision included the power to control, to govern and to restrain places of exhibition
and amusement.18 SO ORDERED.28

Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect
the social and moral welfare of the community in conjunction with its police power as found in Article
III, Section 18(kk) of Republic Act No. 409,19 otherwise known as the Revised Charter of the City of
Manila (Revised Charter of Manila)20 which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994, manifesting that they
are elevating the case to this Court under then Rule 42 on pure questions of law. 30
On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were
committed by the lower court in its ruling: (1) It erred in concluding that the subject ordinance is ultra
vires, or otherwise, unfair, unreasonable and oppressive exercise of police power; (2) It erred in holding
that the questioned Ordinancecontravenes P.D. 49931 which allows operators of all kinds of commercial
establishments, except those specified therein; and (3) It erred in declaring the Ordinance void and
unconstitutional.32
In the Petition and in its Memorandum,33 petitioners in essence repeat the assertions they made before
the lower court. They contend that the assailed Ordinance was enacted in the exercise of the inherent
and plenary power of the State and the general welfare clause exercised by local government units
provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458 (a) 4
(vii) of the Code.34 They allege that the Ordinance is a valid exercise of police power; it does not
contravene P.D. 499; and that it enjoys the presumption of validity. 35
In its Memorandum36 dated 27 May 1996, private respondent maintains that the Ordinance is ultra
vires and that it is void for being repugnant to the general law. It reiterates that the
questioned Ordinance is not a valid exercise of police power; that it is violative of due process,
confiscatory and amounts to an arbitrary interference with its lawful business; that it is violative of the
equal protection clause; and that it confers on petitioner City Mayor or any officer unregulated
discretion in the execution of the Ordinance absent rules to guide and control his actions.
This is an opportune time to express the Court's deep sentiment and tenderness for the Ermita-Malate
area being its home for several decades. A long-time resident, the Court witnessed the area's many
turn of events. It relished its glory days and endured its days of infamy. Much as the Court harks back to
the resplendent era of the Old Manila and yearns to restore its lost grandeur, it believes that
the Ordinance is not the fitting means to that end. The Court is of the opinion, and so holds, that the
lower court did not err in declaring the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates a
constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of
persons enshrined by the Constitution. The Court is called upon to shelter these rights from attempts at
rendering them worthless.
The tests of a valid ordinance are well established. A long line of decisions has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to
enact and must be passed according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must
not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.37
Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution
and to the laws.38 The Ordinance must satisfy two requirements: it must pass muster under the test of
constitutionality and the test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The requirement that the
enactment must not violate existing law gives stress to the precept that local government units are able
to legislate only by virtue of their derivative legislative power, a delegation of legislative power from
the national legislature. The delegate cannot be superior to the principal or exercise powers higher
than those of the latter.39
This relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The
national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it.40
The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the
City Council acting as agent of Congress. Local government units, as agencies of the State, are endowed
with police power in order to effectively accomplish and carry out the declared objects of their
creation.41 This delegated police power is found in Section 16 of the Code, known as the general
welfare clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units shall ensure and
support, among other things, the preservation and enrichment of culture, promote health and safety,
enhance the right of the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents, maintain
peace and order, and preserve the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective legislative bodies; in this case,
the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to "enact
ordinances, approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper
exercise of the corporate powers of the province/city/ municipality provided under the Code.42 The
inquiry in this Petition is concerned with the validity of the exercise of such delegated power.
The Ordinance contravenes
the Constitution
The police power of the City Council, however broad and far-reaching, is subordinate to the
constitutional limitations thereon; and is subject to the limitation that its exercise must be reasonable
and for the public good.43 In the case at bar, the enactment of the Ordinance was an invalid exercise of
delegated power as it is unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and the
promotion of the general welfare are essential for the enjoyment by all the people of the blessings of
democracy.44
SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental
equality before the law of women and men.45
SEC. 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any
person be denied the equal protection of laws. 46
Sec. 9. Private property shall not be taken for public use without just compensation. 47
A. The Ordinance infringes
the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat "(N)o person shall be deprived of
life, liberty or property without due process of law. . . ."48
There is no controlling and precise definition of due process. It furnishes though a standard to which
governmental action should conform in order that deprivation of life, liberty or property, in each
appropriate case, be valid. This standard is aptly described as a responsiveness to the supremacy of
reason, obedience to the dictates of justice,49and as such it is a limitation upon the exercise of the
police power.50
The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and
property of individuals; to secure the individual from the arbitrary exercise of the powers of the
government, unrestrained by the established principles of private rights and distributive justice; to
protect property from confiscation by legislative enactments, from seizure, forfeiture, and destruction
without a trial and conviction by the ordinary mode of judicial procedure; and to secure to all persons
equal and impartial justice and the benefit of the general law.51
The guaranty serves as a protection against arbitrary regulation, and private corporations and
partnerships are "persons" within the scope of the guaranty insofar as their property is concerned.52
This clause has been interpreted as imposing two separate limits on government, usually called
"procedural due process" and "substantive due process."
Procedural due process, as the phrase implies, refers to the procedures that the government must
follow before it deprives a person of life, liberty, or property. Classic procedural due process issues are
concerned with what kind of notice and what form of hearing the government must provide when it
takes a particular action.53
Substantive due process, as that phrase connotes, asks whether the government has an adequate
reason for taking away a person's life, liberty, or property. In other words, substantive due process
looks to whether there is a sufficient justification for the government's action. 54 Case law in the United
States (U.S.) tells us that whether there is such a justification depends very much on the level of
scrutiny used.55 For example, if a law is in an area where only rational basis review is applied,
substantive due process is met so long as the law is rationally related to a legitimate government
purpose. But if it is an area where strict scrutiny is used, such as for protecting fundamental rights,
then the government will meet substantive due process only if it can prove that the law is necessary to
achieve a compelling government purpose.56
The police power granted to local government units must always be exercised with utmost observance
of the rights of the people to due process and equal protection of the law. Such power cannot be
exercised whimsically, arbitrarily or despotically57 as its exercise is subject to a qualification, limitation
or restriction demanded by the respect and regard due to the prescription of the fundamental law,
particularly those forming part of the Bill of Rights. Individual rights, it bears emphasis, may be
adversely affected only to the extent that may fairly be required by the legitimate demands of public
interest or public welfare. 58 Due process requires the intrinsic validity of the law in interfering with the
rights of the person to his life, liberty and property.59
Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the enactment of
the Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear
that the interests of the public generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals. 60 It must be evident that
no other alternative for the accomplishment of the purpose less intrusive of private rights can work. A
reasonable relation must exist between the purposes of the police measure and the means employed
for its accomplishment, for even under the guise of protecting the public interest, personal rights and
those pertaining to private property will not be permitted to be arbitrarily invaded. 61
Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary
intrusion into private rights62 a violation of the due process clause.
The Ordinance was enacted to address and arrest the social ills purportedly spawned by the
establishments in the Ermita-Malate area which are allegedly operated under the deceptive veneer of
legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels
and motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of Manila 63 had already taken judicial notice of the "alarming
increase in the rate of prostitution, adultery and fornication in Manila traceable in great part to
existence of motels, which provide a necessary atmosphere for clandestine entry, presence and exit
and thus become the ideal haven for prostitutes and thrill-seekers." 64
The object of the Ordinance was, accordingly, the promotion and protection of the social and moral
values of the community. Granting for the sake of argument that the objectives of the Ordinance are
within the scope of the City Council's police powers, the means employed for the accomplishment
thereof were unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable
regulations looking to the promotion of the moral and social values of the community. However, the
worthy aim of fostering public morals and the eradication of the community's social ills can be achieved
through means less restrictive of private rights; it can be attained by reasonable restrictions rather than
by an absolute prohibition. The closing down and transfer of businesses or their conversion into
businesses "allowed" under the Ordinance have no reasonable relation to the accomplishment of its
purposes. Otherwise stated, the prohibition of the enumerated establishments will not per seprotect
and promote the social and moral welfare of the community; it will not in itself eradicate the alluded
social ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and
establishments of the like which the City Council may lawfully prohibit, 65 it is baseless and
insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night
clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated establishments are lawful
pursuits which are not per se offensive to the moral welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and as venues to further the illegal
prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a human
frailty, may take place in the most innocent of places that it may even take place in the substitute
establishments enumerated under Section 3 of the Ordinance. If the flawed logic of
the Ordinance were to be followed, in the remote instance that an immoral sexual act transpires in a
church cloister or a court chamber, we would behold the spectacle of the City of Manila ordering the
closure of the church or court concerned. Every house, building, park, curb, street or even vehicles for
that matter will not be exempt from the prohibition. Simply because there are no "pure" places where
there are impure men. Indeed, even the Scripture and the Tradition of Christians churches continually
recall the presence and universality of sin in man's history. 66
The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to
be injurious to the health or comfort of the community and which in itself is amoral, but the deplorable
human activity that may occur within its premises. While a motel may be used as a venue for immoral
sexual activity, it cannot for that reason alone be punished. It cannot be classified as a house of ill-
repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were so and if that
were allowed, then the Ermita-Malate area would not only be purged of its supposed social ills, it
would be extinguished of its soul as well as every human activity, reprehensible or not, in its every
nook and cranny would be laid bare to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as
the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man out
of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The City
Council instead should regulate human conduct that occurs inside the establishments, but not to the
detriment of liberty and privacy which are covenants, premiums and blessings of democracy.
While petitioners' earnestness at curbing clearly objectionable social ills is commendable, they
unwittingly punish even the proprietors and operators of "wholesome," "innocent" establishments. In
the instant case, there is a clear invasion of personal or property rights, personal in the case of those
individuals desirous of owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City of Manila so
desires to put an end to prostitution, fornication and other social ills, it can instead impose reasonable
regulations such as daily inspections of the establishments for any violation of the conditions of their
licenses or permits; it may exercise its authority to suspend or revoke their licenses for these
violations;67 and it may even impose increased license fees. In other words, there are other means to
reasonably accomplish the desired end.
Means employed are
constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars, beerhouses,
night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns in the Ermita-
Malate area. In Section 3 thereof, owners and/or operators of the enumerated establishments are
given three (3) months from the date of approval of the Ordinance within which "to wind up business
operations or to transfer to any place outside the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area." Further, it states in Section 4 that in cases of
subsequent violations of the provisions of the Ordinance, the "premises of the erring establishment
shall be closed and padlocked permanently."
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes,
the governmental interference itself, infringes on the constitutional guarantees of a person's
fundamental right to liberty and property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to exist
and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into mere
freedom from physical restraint of the person of the citizen, but is deemed to embrace the right of man
to enjoy the facilities with which he has been endowed by his Creator, subject only to such restraint as
are necessary for the common welfare." 68 In accordance with this case, the rights of the citizen to be
free to use his faculties in all lawful ways; to live and work where he will; to earn his livelihood by any
lawful calling; and to pursue any avocation are all deemed embraced in the concept of liberty. 69
The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to clarify the meaning of
"liberty." It said:
While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the Fifth and
Fourteenth Amendments], the term denotes not merely freedom from bodily restraint but also the
right of the individual to contract, to engage in any of the common occupations of life, to acquire useful
knowledge, to marry, establish a home and bring up children, to worship God according to the dictates
of his own conscience, and generally to enjoy those privileges long recognizedas essential to the
orderly pursuit of happiness by free men. In a Constitution for a free people, there can be no doubt
that the meaning of "liberty" must be broad indeed.
In another case, it also confirmed that liberty protected by the due process clause includes personal
decisions relating to marriage, procreation, contraception, family relationships, child rearing, and
education. In explaining the respect the Constitution demands for the autonomy of the person in
making these choices, the U.S. Supreme Court explained:
These matters, involving the most intimate and personal choices a person may make in a lifetime,
choices central to personal dignity and autonomy, are central to the liberty protected by the
Fourteenth Amendment. At the heart of liberty is the right to define one's own concept of existence, of
meaning, of universe, and of the mystery of human life. Beliefs about these matters could not define
the attributes of personhood where they formed under compulsion of the State. 71
Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of
the Ordinancemay seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their
bonds in intimate sexual conduct within the motel's premisesbe it stressed that their consensual
sexual behavior does not contravene any fundamental state policy as contained in the Constitution.72
Adults have a right to choose to forge such relationships with others in the confines of their own
private lives and still retain their dignity as free persons. The liberty protected by the Constitution
allows persons the right to make this choice.73 Their right to liberty under the due process clause gives
them the full right to engage in their conduct without intervention of the government, as long as they
do not run afoul of the law. Liberty should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it
must include privacy as well, if it is to be a repository of freedom. The right to be let alone is the
beginning of all freedomit is the most comprehensive of rights and the right most valued by civilized
men.74
The concept of liberty compels respect for the individual whose claim to privacy and interference
demands respect. As the case of Morfe v. Mutuc,75 borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that they are the basis on which his civic obligations are
built. He cannot abandon the consequences of his isolation, which are, broadly speaking, that his
experience is private, and the will built out of that experience personal to himself. If he surrenders his
will to others, he surrenders himself. If his will is set by the will of others, he ceases to be a master of
himself. I cannot believe that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which
should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal life of the citizen. 76
There is a great temptation to have an extended discussion on these civil liberties but the Court
chooses to exercise restraint and restrict itself to the issues presented when it should. The previous
pronouncements of the Court are not to be interpreted as a license for adults to engage in criminal
conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and
guarantees their right to make this choice. Should they be prosecuted for their illegal conduct, they
should suffer the consequences of the choice they have made. That, ultimately, is their choice.
Modality employed is
unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of
the beneficial use of its property.77 The Ordinance in Section 1 thereof forbids the running of the
enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to
wind up business operations or to transfer outside the area or convert said businesses into allowed
businesses. An ordinance which permanently restricts the use of property that it can not be used for
any reasonable purpose goes beyond regulation and must be recognized as a taking of the property
without just compensation.78 It is intrusive and violative of the private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken for
public use without just compensation." The provision is the most important protection of property
rights in the Constitution. This is a restriction on the general power of the government to take property.
The constitutional provision is about ensuring that the government does not confiscate the property of
some to give it to others. In part too, it is about loss spreading. If the government takes away a person's
property to benefit society, then society should pay. The principal purpose of the guarantee is "to bar
the Government from forcing some people alone to bear public burdens which, in all fairness and
justice, should be borne by the public as a whole.79
There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property. 80
In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking also could be found if
government regulation of the use of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation
to support the act. While property may be regulated to a certain extent, if regulation goes too far it will
be recognized as a taking.82
No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and therefore
cannot be disposed of by general propositions." On many other occasions as well, the U.S. Supreme
Court has said that the issue of when regulation constitutes a taking is a matter of considering the facts
in each case. The Court asks whether justice and fairness require that the economic loss caused by
public action must be compensated by the government and thus borne by the public as a whole, or
whether the loss should remain concentrated on those few persons subject to the public action.83
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if
it leaves no reasonable economically viable use of property in a manner that interferes with reasonable
expectations for use.84A regulation that permanently denies all economically beneficial or productive
use of land is, from the owner's point of view, equivalent to a "taking" unless principles of nuisance or
property law that existed when the owner acquired the land make the use prohibitable. 85 When the
owner of real property has been called upon to sacrifice all economically beneficial uses in the name of
the common good, that is, to leave his property economically idle, he has suffered a taking.86
A regulation which denies all economically beneficial or productive use of land will require
compensation under the takings clause. Where a regulation places limitations on land that fall short of
eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on a
complex of factors including the regulation's economic effect on the landowner, the extent to which
the regulation interferes with reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the takings clause which is to
prevent the government from forcing some people alone to bear public burdens which, in all fairness
and justice, should be borne by the public as a whole.87
A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner.88
The Ordinance gives the owners and operators of the "prohibited" establishments three (3) months
from its approval within which to "wind up business operations or to transfer to any place outside of
the Ermita-Malate area or convert said businesses to other kinds of business allowable within the
area." The directive to "wind up business operations" amounts to a closure of the establishment, a
permanent deprivation of property, and is practically confiscatory. Unless the owner converts his
establishment to accommodate an "allowed" business, the structure which housed the previous
business will be left empty and gathering dust. Suppose he transfers it to another area, he will likewise
leave the entire establishment idle. Consideration must be given to the substantial amount of money
invested to build the edifices which the owner reasonably expects to be returned within a period of
time. It is apparent that the Ordinance leaves no reasonable economically viable use of property in a
manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the Ermita-Malate area or to convert
into allowed businessesare confiscatory as well. The penalty of permanent closure in cases of
subsequent violations found in Section 4 of the Ordinance is also equivalent to a "taking" of private
property.
The second option instructs the owners to abandon their property and build another one outside the
Ermita-Malate area. In every sense, it qualifies as a taking without just compensation with an
additional burden imposed on the owner to build another establishment solely from his coffers. The
proffered solution does not put an end to the "problem," it merely relocates it. Not only is this
impractical, it is unreasonable, onerous and oppressive. The conversion into allowed enterprises is just
as ridiculous. How may the respondent convert a motel into a restaurant or a coffee shop, art gallery or
music lounge without essentially destroying its property? This is a taking of private property without
due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that should be compensated by the
government. The burden on the owner to convert or transfer his business, otherwise it will be closed
permanently after a subsequent violation should be borne by the public as this end benefits them as a
whole.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance,
although a valid exercise of police power, which limits a "wholesome" property to a use which can not
reasonably be made of it constitutes the taking of such property without just compensation. Private
property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed
without compensation. Such principle finds no support in the principles of justice as we know them.
The police powers of local government units which have always received broad and liberal
interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent domain. It needs
restating that the property taken in the exercise of police power is destroyed because it is noxious or
intended for a noxious purpose while the property taken under the power of eminent domain is
intended for a public use or purpose and is therefore "wholesome." 89 If it be of public benefit that a
"wholesome" property remain unused or relegated to a particular purpose, then certainly the public
should bear the cost of reasonable compensation for the condemnation of private property for public
use.90
Further, the Ordinance fails to set up any standard to guide or limit the petitioners' actions. It in no way
controls or guides the discretion vested in them. It provides no definition of the establishments covered
by it and it fails to set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted power to close down
establishments. Ordinances such as this, which make possible abuses in its execution, depending upon
no conditions or qualifications whatsoever other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested, are unreasonable and invalid.
The Ordinance should have established a rule by which its impartial enforcement could be secured. 91
Ordinances placing restrictions upon the lawful use of property must, in order to be valid and
constitutional, specify the rules and conditions to be observed and conduct to avoid; and must not
admit of the exercise, or of an opportunity for the exercise, of unbridled discretion by the law enforcers
in carrying out its provisions.92
Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the U.S. Supreme Court struck
down an ordinance that had made it illegal for "three or more persons to assemble on any sidewalk
and there conduct themselves in a manner annoying to persons passing by." The ordinance was
nullified as it imposed no standard at all "because one may never know in advance what 'annoys some
people but does not annoy others.' "
Similarly, the Ordinance does not specify the standards to ascertain which establishments "tend to
disturb the community," "annoy the inhabitants," and "adversely affect the social and moral welfare of
the community." The cited case supports the nullification of the Ordinance for lack of comprehensible
standards to guide the law enforcers in carrying out its provisions.
which could encourage vice and immorality. Necessarily, there was no valid objection on due process or
equal protection grounds as the ordinance did not prohibit motels. The Ordinance in this case however
is not a regulatory measure but is an exercise of an assumed power to prohibit. 97
The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of
property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it
cannot, even under the guise of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause

Petitioners cannot therefore order the closure of the enumerated establishments without infringing
Equal protection requires that all persons or things similarly situated should be treated alike, both as to
the due process clause. These lawful establishments may be regulated, but not prevented from
rights conferred and responsibilities imposed. Similar subjects, in other words, should not be treated
carrying on their business. This is a sweeping exercise of police power that is a result of a lack of
differently, so as to give undue favor to some and unjustly discriminate against others. 98 The guarantee
imagination on the part of the City Council and which amounts to an interference into personal and
means that no person or class of persons shall be denied the same protection of laws which is enjoyed
private rights which the Court will not countenance. In this regard, we take a resolute stand to uphold
by other persons or other classes in like circumstances. 99 The "equal protection of the laws is a pledge
the constitutional guarantee of the right to liberty and property.
of the protection of equal laws."100 It limits governmental discrimination. The equal protection clause
extends to artificial persons but only insofar as their property is concerned.101
Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from
the ill-considered Ordinance enacted by the City Council.
The Court has explained the scope of the equal protection clause in this wise:

In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive ordinance regulating "sexually
What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration: "The ideal
oriented businesses," which are defined to include adult arcades, bookstores, video stores, cabarets,
situation is for the law's benefits to be available to all, that none be placed outside the sphere of its
motels, and theaters as well as escort agencies, nude model studio and sexual encounter centers.
coverage. Only thus could chance and favor be excluded and the affairs of men governed by that serene
Among other things, the ordinance required that such businesses be licensed. A group of motel owners
and impartial uniformity, which is of the very essence of the idea of law." There is recognition, however,
were among the three groups of businesses that filed separate suits challenging the ordinance. The
in the opinion that what in fact exists "cannot approximate the ideal. Nor is the law susceptible to the
motel owners asserted that the city violated the due process clause by failing to produce adequate
reproach that it does not take into account the realities of the situation. The constitutional guarantee
support for its supposition that renting room for fewer than ten (10) hours resulted in increased crime
then is not to be given a meaning that disregards what is, what does in fact exist. To assure that the
and other secondary effects. They likewise argued than the ten (10)-hour limitation on the rental of
general welfare be promoted, which is the end of law, a regulatory measure may cut into the rights to
motel rooms placed an unconstitutional burden on the right to freedom of association. Anent the first
liberty and property. Those adversely affected may under such circumstances invoke the equal
contention, the U.S. Supreme Court held that the reasonableness of the legislative judgment combined
protection clause only if they can show that the governmental act assailed, far from being inspired by
with a study which the city considered, was adequate to support the city's determination that motels
the attainment of the common weal was prompted by the spirit of hostility, or at the very least,
permitting room rentals for fewer than ten (10 ) hours should be included within the licensing scheme.
discrimination that finds no support in reason." Classification is thus not ruled out, it being sufficient to
As regards the second point, the Court held that limiting motel room rentals to ten (10) hours will have
quote from the Tuason decision anew "that the laws operate equally and uniformly on all persons
no discernible effect on personal bonds as those bonds that are formed from the use of a motel room
under similar circumstances or that all persons must be treated in the same manner, the conditions not
for fewer than ten (10) hours are not those that have played a critical role in the culture and traditions
being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue
of the nation by cultivating and transmitting shared ideals and beliefs.
preference cannot be allowed. For the principle is that equal protection and security shall be given to
every person under circumstances which, if not identical, are analogous. If law be looked upon in terms
The ordinance challenged in the above-cited case merely regulated the targeted businesses. It imposed of burden or charges, those that fall within a class should be treated in the same fashion, whatever
reasonable restrictions; hence, its validity was upheld. restrictions cast on some in the group equally binding on the rest.102

The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,96 it Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable,
needs pointing out, is also different from this case in that what was involved therein was a measure the law may operate only on some and not all of the people without violating the equal protection
which regulated the mode in which motels may conduct business in order to put an end to practices
clause.103 The classification must, as an indispensable requisite, not be arbitrary. To be valid, it must
conform to the following requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.104
In the Court's view, there are no substantial distinctions between motels, inns, pension houses, hotels,
lodging houses or other similar establishments. By definition, all are commercial establishments
providing lodging and usually meals and other services for the public. No reason exists for prohibiting
motels and inns but not pension houses, hotels, lodging houses or other similar establishments. The
classification in the instant case is invalid as similar subjects are not similarly treated, both as to rights
conferred and obligations imposed. It is arbitrary as it does not rest on substantial distinctions bearing
a just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and operation of motels in the
Ermita-Malate area but not outside of this area. A noxious establishment does not become any less
noxious if located outside the area.
The standard "where women are used as tools for entertainment" is also discriminatory as
prostitutionone of the hinted ills the Ordinance aims to banishis not a profession exclusive to
women. Both men and women have an equal propensity to engage in prostitution. It is not any less
grave a sin when men engage in it. And why would the assumption that there is an ongoing immoral
activity apply only when women are employed and be inapposite when men are in harness? This
discrimination based on gender violates equal protection as it is not substantially related to important
government objectives.105 Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with
prevailing laws.
C. The Ordinance is repugnant
to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers local government units to
regulate, and not prohibit, the establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the establishment, operation, and
maintenance of motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv), which
provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
. . .
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to
promote the general welfare and for said purpose shall:
. . .
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels,
motels, inns, pension houses, lodging houses, and other similar establishments, including tourist guides
and transports . . . .
While its power to regulate the establishment, operation and maintenance of any entertainment or
amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under
Section 458 (a) 4 (vii) of the Code, which reads as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to
promote the general welfare and for said purpose shall:
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement
facilities, including theatrical performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for entertainment or amusement; regulate
such other events or activities for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants, or require the suspension or suppression of the same;
or, prohibit certain forms of amusement or entertainment in order to protect the social and moral
welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, the only power of the City Council to legislate relative
thereto is to regulate them to promote the general welfare. The Code still withholds from cities the
power to suppress and prohibit altogether the establishment, operation and maintenance of such
establishments. It is well to recall the rulings of the Court in Kwong Sing v. City of Manila106 that:
The word "regulate," as used in subsection (l), section 2444 of the Administrative Code, means and
includes the power to control, to govern, and to restrain; but "regulate" should not be construed as
synonymous with "suppress" or "prohibit." Consequently, under the power to regulate laundries, the
municipal authorities could make proper police regulations as to the mode in which the employment or
business shall be exercised.107
And in People v. Esguerra,108 wherein the Court nullified an ordinance of the Municipality of Tacloban
which prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is
empowered only to regulate the same and not prohibit. The Court therein declared that:
(A)s a general rule when a municipal corporation is specifically given authority or power to regulate or
to license and regulate the liquor traffic, power to prohibit is impliedly withheld.109
These doctrines still hold contrary to petitioners' assertion110 that they were modified by the Code
vesting upon City Councils prohibitory powers.
Similarly, the City Council exercises regulatory powers over public dancing schools, public dance halls,
sauna baths, massage parlors, and other places for entertainment or amusement as found in the first
clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and suspend "such other events or
activities for amusement or entertainment, particularly those which tend to disturb the community or
annoy the inhabitants" and to "prohibit certain forms of amusement or entertainment in order to
protect the social and moral welfare of the community" are stated in the second and third clauses,
respectively of the same Section. The several powers of the City Council as provided in Section 458 (a)
4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;), the use of which
indicates that the clauses in which these powers are set forth are independent of each other albeit
closely related to justify being put together in a single enumeration or paragraph. 111 These powers,
therefore, should not be confused, commingled or consolidated as to create a conglomerated and
unified power of regulation, suppression and prohibition.112
The Congress unequivocably specified the establishments and forms of amusement or entertainment
subject to regulation among which are beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public dance
halls, sauna baths, massage parlors, and other places for entertainment or amusement (Section 458 (a)
4 (vii)). This enumeration therefore cannot be included as among "other events or activities for
amusement or entertainment, particularly those which tend to disturb the community or annoy the
inhabitants" or "certain forms of amusement or entertainment" which the City Council may suspend,
suppress or prohibit.
The rule is that the City Council has only such powers as are expressly granted to it and those which are
necessarily implied or incidental to the exercise thereof. By reason of its limited powers and the nature
thereof, said powers are to be construed strictissimi juris and any doubt or ambiguity arising out of the
terms used in granting said powers must be construed against the City Council. 113 Moreover, it is a
general rule in statutory construction that the express mention of one person, thing, or consequence is
tantamount to an express exclusion of all others. Expressio unius est exclusio alterium. This maxim is
based upon the rules of logic and the natural workings of human mind. It is particularly applicable in
the construction of such statutes as create new rights or remedies, impose penalties or punishments,
or otherwise come under the rule of strict construction.114
The argument that the City Council is empowered to enact the Ordinance by virtue of the general
welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise
without merit. On the first point, the ruling of the Court in People v. Esguerra, 115 is instructive. It held
that:
The powers conferred upon a municipal council in the general welfare clause, or section 2238 of the
Revised Administrative Code, refers to matters not covered by the other provisions of the same Code,
and therefore it can not be applied to intoxicating liquors, for the power to regulate the selling, giving
away and dispensing thereof is granted specifically by section 2242 (g) to municipal councils. To hold
that, under the general power granted by section 2238, a municipal council may enact the ordinance
in question, notwithstanding the provision of section 2242 (g), would be to make the latter superfluous
and nugatory, because the power to prohibit, includes the power to regulate, the selling, giving away
and dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later expression of the legislative will must
necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis posteriores priores
contrarias abrogant, or later statute repeals prior ones which are repugnant thereto. As between two
laws on the same subject matter, which are irreconcilably inconsistent, that which is passed later
prevails, since it is the latest expression of legislative will. 116 If there is an inconsistency or repugnance
between two statutes, both relating to the same subject matter, which cannot be removed by any fair
and reasonable method of interpretation, it is the latest expression of the legislative will which must
prevail and override the earlier.117
Implied repeals are those which take place when a subsequently enacted law contains provisions
contrary to those of an existing law but no provisions expressly repealing them. Such repeals have been
divided into two general classes: those which occur where an act is so inconsistent or irreconcilable
with an existing prior act that only one of the two can remain in force and those which occur when an
act covers the whole subject of an earlier act and is intended to be a substitute therefor. The validity of
such a repeal is sustained on the ground that the latest expression of the legislative will should
prevail.118
In addition, Section 534(f) of the Code states that "All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly."
Thus, submitting to petitioners' interpretation that the Revised Charter of Manila empowers the City
Council to prohibit motels, that portion of the Charter stating such must be considered repealed by the
Code as it is at variance with the latter's provisions granting the City Council mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a
nuisance per se, or one which affects the immediate safety of persons and property and may be
summarily abated under the undefined law of necessity. It can not be said that motels are injurious to
the rights of property, health or comfort of the community. It is a legitimate business. If it be a
nuisance per accidens it may be so proven in a hearing conducted for that purpose. A motel is not per
se a nuisance warranting its summary abatement without judicial intervention. 119
Notably, the City Council was conferred powers to prevent and prohibit certain activities and
establishments in another section of the Code which is reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government,
and in this connection, shall:
(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual
drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of
houses of ill repute, gambling and other prohibited games of chance, fraudulent devices and ways
to obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile
delinquency, the printing, distribution or exhibition of obscene or pornographic materials or
publications, and such other activities inimical to the welfare and morals of the inhabitants of the city;
If it were the intention of Congress to confer upon the City Council the power to prohibit the
establishments enumerated in Section 1 of the Ordinance, it would have so declared in uncertain terms
by adding them to the list of the matters it may prohibit under the above-quoted Section.
The Ordinance now vainly attempts to lump these establishments with houses of ill-repute and expand
the City Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of the Code in an
effort to overreach its prohibitory powers. It is evident that these establishments may only be
regulated in their establishment, operation and maintenance.
It is important to distinguish the punishable activities from the establishments themselves. That these
establishments are recognized legitimate enterprises can be gleaned from another Section of the Code.
Section 131 under the Title on Local Government Taxation expressly mentioned proprietors or
operators of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses as
among the "contractors" defined in paragraph (h) thereof. The same Section also defined
"amusement" as a "pleasurable diversion and entertainment," "synonymous to relaxation, avocation,
pastime or fun;" and "amusement places" to include "theaters, cinemas, concert halls, circuses and
other places of amusement where one seeks admission to entertain oneself by seeing or viewing the
show or performances." Thus, it can be inferred that the Code considers these establishments as
legitimate enterprises and activities. It is well to recall the maxim reddendo singula singulis which
means that words in different parts of a statute must be referred to their appropriate connection,
giving to each in its place, its proper force and effect, and, if possible, rendering none of them useless
or superfluous, even if strict grammatical construction demands otherwise. Likewise, where words
under consideration appear in different sections or are widely dispersed throughout an act the same
principle applies.120
Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D. 499.
As correctly argued by MTDC, the statute had already converted the residential Ermita-Malate area into
a commercial area. The decree allowed the establishment and operation of all kinds of commercial
establishments except warehouse or open storage depot, dump or yard, motor repair shop, gasoline
service station, light industry with any machinery or funeral establishment. The rule is that for an
ordinance to be valid and to have force and effect, it must not only be within the powers of the council
to enact but the same must not be in conflict with or repugnant to the general law. 121 As succinctly
illustrated in Solicitor General v. Metropolitan Manila Authority:122
The requirement that the enactment must not violate existing law explains itself. Local political
subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the
national legislature (except only that the power to create their own sources of revenue and to levy
taxes is conferred by the Constitution itself). They are mere agents vested with what is called the power
of subordinate legislation. As delegates of the Congress, the local government units cannot contravene
but must obey at all times the will of their principal. In the case before us, the enactment in question,
which are merely local in origin cannot prevail against the decree, which has the force and effect of a
statute.123
Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule,
it has already been held that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be set aside when the invalidity
or unreasonableness appears on the face of the ordinance itself or is established by proper evidence.
The exercise of police power by the local government is valid unless it contravenes the fundamental
law of the land, or an act of the legislature, or unless it is against public policy or is unreasonable,
oppressive, partial, discriminating or in derogation of a common right.124
Conclusion
All considered, the Ordinance invades fundamental personal and property rights and impairs personal
privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and
unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the
enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power to
enact the Ordinance and is therefore ultra vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of motives and shares the concern of
the public for the cleansing of the Ermita-Malate area of its social sins. Police power legislation of such
character deserves the full endorsement of the judiciary we reiterate our support for it. But inspite
of its virtuous aims, the enactment of the Ordinance has no statutory or constitutional authority to
stand on. Local legislative bodies, in this case, the City Council, cannot prohibit the operation of the
enumerated establishments under Section 1 thereof or order their transfer or conversion without
infringing the constitutional guarantees of due process and equal protection of laws not even under
the guise of police power.
The Senate Committee on Trade and Commerce found that the collection of parking fees by shopping
malls is contrary to National Building Code and figuratively speaking, the Code has expropriated the
land for parking. Also, Committee stated that the collection of parking fees would be against Article II of
RA 9734 (Consumer Act of the Philippines) as to the States policy of protecting the interest of
consumers. Moreover, Section 201 of the National Building Code gives the responsibility for the
administration and enforcement of the provisions of the Code, including the imposition of penalties for
administrative violations thereof to the Secretary of Public Works. This is not being strictly followed as
the LGUs are tasked to discharge the regulatory powers of DPWH instead of DPWH instead.

WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring
the Ordinancevoid is AFFIRMED. Costs against petitioners.
SO ORDERED.
As such, Senate Committee recommended that: 1) Office of Solicitor General should institute the action
to enjoin the collction of parking fees and enforce the sanctions for violation of National Building Code;
2) DTI pursuant to RA 7394 should enforce the provisions of Code relative to parking; and 3) Congress
should amend and update the National Building Code to prohibit the collection of parking fees and its
waiver of liability.

Respondent SM Prime assailed the recommendation of the Committee and filed a Petition for
Declaratory Relief under Rule 63 of the Revised Rules of Court against DPWH and local building
officials, contending that: 1) Rule XIX of Implementing Rules and Regulations of National Building Code
is unconstitutional and void; 2) respondent has the legal right to lease parking spaces; and 3) National
Building Code IRR is ineffective as it was not published for 3 consecutive weeks in newspaper of general
circulation as mandated by Section 211 of PD 1096.

OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary Restraining
Order and Writ of Preliminary Injunction) to the RTC against respondents, prohibiting them from
collecting parking fees and contending that their practice of charging parking fees is violative of
National Building Code.

The RTC held that: 1) OSG has the capacity to institute the proceeding it being a controversy of public
welfare; 2) a petition for declaratory relief is proper since all the requisites are present; 3) the Building
Code with its IRR does not necessarily impose that parking spaces shall be free of charge and providing
parking spaces for free can be considered as unlawful taking of property right without just
G.R. No. 177056 September 18, 2009 compensation; and 4) there was no sufficient evidence to justify any award for damages. They deemed
THE OFFICE OF THE SOLICITOR GENERAL, Petitioner, that the respondents are not obligated to provide parking spaces free of charge.
vs.
AYALA LAND INCORPORATED, ROBINSONS LAND CORPORATION, SHANGRI-LA PLAZA CORPORATION OSG appealed the decision to CA, saying that RTC erred in holding that the National Building Code did
and SM PRIME HOLDINGS, INC., Respondents. not intend the parking spaces to be free of charge. On the otherhand, respondent SM filed a separate
Facts: appeal to the CA, contending that: 1) RTC erred in failing to declare Rule XIX of IRR as unconstitutional;
This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, filed by 2) RTC erred in failing to declare IRR ineffective for not having been published as required by law; 3)
petitioner seeking the reversal and setting aside of the decision of CA which affirmed the decision of RTC erred in dismissing the OSGs petition for failure to exhaust administrative remedies; and 4) RTC
RTC, which denied the Motion for Reconsideration of OSG. The RTC adjudged that respondents Ayala erred in failing to declare that OSG has no legal standing as it is not a real party-in-interest.
Land Incorporated (Ayala Land), Robinsons Land Corporation (Robinsons), Shangri-la Plaza Corporation
(Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not be obliged to provide free parking
spaces in their malls to their patrons and the general public. CA denied the appeals of both petitioners and respondents on the following grounds: 1) OSG did not
fail to exhaust administrative remedies and that an administrative review is not a condition precedent
to judicial relief where the question in dispute is purely a legal one and nothing of an administrative
nature is to be or can be done; 2) the validity of National Building Code IRR cannot be proceeded as it
was not discussed in RTC and the controversy could be settled on other grounds without touching the
issue of validity since the courts should refrain from passing upon the constitutionality of a law; and 3)
Section 803 of National Building Code and Rule XIX of IRR are clear that they are only intended to
control the occupancy of areas and structures, and in the absence of provision of law, respondents
could not be obliged to provide parking spaces free of charge.
As such, OSG presented itself to SC for the instant Petition for Review.
Issues:
1. Whether the CA erred in affirming the ruling of RTC that respondents are not obliged to provide free
parking spaces to their customers or the public.
2. Whether the petition of OSG for prohibiting the collection of parking fees is a valid exercise of the
police power of State.
Held:
1. No. The CA was correct in affirming the ruling of RTC, and the respondents are not obliged to provide
free parking spaces. SC found no merit in the OSGs petition:
Sec 803 of National Building Code.
Percentage of Site Occupancy states that maximum site occupancy shall be governed by the use, type
of construction, and height of the building and the use, area, nature, and location of the site; and
subject to the provisions of the local zoning requirements and in accordance with the rules and
regulations promulgated by the Secretary.
RULE XIX PARKING AND LOADING SPACE REQUIREMENTS
Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site
occupancy, the following provisions on parking and loading space requirements shall be observed:
1. The parking space ratings listed below are minimum off-street requirements for specific
uses/occupancies for buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00 meters for
perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel parking. A truck or bus
parking/loading slot shall be computed at a minimum of 3.60 meters by 12.00 meters. The parking slot
shall be drawn to scale and the total number of which shall be indicated on the plans and specified
whether or not parking accommodations, are attendant-managed. (See Section 2 for computation of
parking requirements).
x x x x
1.7 Neighborhood shopping center 1 slot/100 sq. m. of shopping floor area
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare,
consistent with the principles of sound environmental management and control; and to this end, make
it the purpose of this Code to provide for all buildings and structures, a framework of minimum
standards and requirements to regulate and control their location, site, design, quality of materials,
construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of
safeguarding life, health, property, and public welfare, consistent with the principles of sound
environmental management and control. Adequate parking spaces would contribute greatly to
alleviating traffic congestion when complemented by quick and easy access thereto because of free-
charge parking. Moreover, the power to regulate and control the use, occupancy, and maintenance of
buildings and structures carries with it the power to impose fees and, conversely, to control partially
or, as in this case, absolutely the imposition of such fees.
The explicit directive of the above is that respondents, as operators/lessors of neighborhood shopping
centers, should provide parking and loading spaces with the minimum ratio of one slot per 100 square
meters of shopping floor area. There is nothing therein pertaining to the collection (or non-collection)
of parking fees by respondents. In fact, the term parking fees cannot even be found at all in the
entire National Building Code and its IRR. One rule of statutory construction is that if a statute is clear
and unequivocal, it must be given its literal meaning and applied without any attempt at interpretation.
Since Section 803 of the National Building Code and Rule XIX of its IRR do not mention parking fees,
then simply, said provisions do not regulate the collection of the same
The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section
803 of the same Code and Rule XIX of the IRR, so as to include the regulation of parking fees. The OSG
limits its citation to the first part of Section 102 of the National Building Code declaring the policy of
the State to safeguard life, health, property, and public welfare, consistent with the principles of
sound environmental management and control; but totally ignores the second part of said provision,
which reads, and to this end, make it the purpose of this Code to provide for all buildings and
structures, a framework of minimum standards and requirements to regulate and control their
location, site, design, quality of materials, construction, use, occupancy, and maintenance. While the
first part of Section 102 of the National Building Code lays down the State policy, it is the second part
thereof that explains how said policy shall be carried out in the Code. Section 102 of the National
Building Code is not an all-encompassing grant of regulatory power to the DPWH Secretary and local
building officials in the name of life, health, property, and public welfare. On the contrary, it limits the
regulatory power of said officials to ensuring that the minimum standards and requirements for all
buildings and structures, as set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking
spaces for buildings, Rule XIX of the IRR also mandates that such parking spaces be provided by
building owners free of charge. If Rule XIX is not covered by the enabling law, then it cannot be added
to or included in the implementing rules. The rule-making power of administrative agencies must be
confined to details for regulating the mode or proceedings to carry into effect the law as it has been
enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace
matters not covered by the statute. Administrative regulations must always be in harmony with the
provisions of the law because any resulting discrepancy between the two will always be resolved in
favor of the basic law.
2. No. The petition of OSG to prohibit collection of parking fees is not a valid exercise of the police
power of State.
It is not sufficient for the OSG to claim that the power to regulate and control the use, occupancy, and
maintenance of buildings and structures carries with it the power to impose fees and, conversely, to
control, partially or, as in this case, absolutely, the imposition of such fees. Firstly, the fees within the
power of regulatory agencies to impose are regulatory fees. It has been settled law in this jurisdiction
that this broad and all-compassing governmental competence to restrict rights of liberty and property
carries with it the undeniable power to collect a regulatory fee. It looks to the enactment of specific
measures that govern the relations not only as between individuals but also as between private parties
and the political society. True, if the regulatory agencies have the power to impose regulatory fees,
then conversely, they also have the power to remove the same. Even so, it is worthy to note that the
present case does not involve the imposition by the DPWH Secretary and local building officials of
regulatory fees upon respondents; but the collection by respondents of parking fees from persons who
use the mall parking facilities. Secondly, assuming arguendo that the DPWH Secretary and local
building officials do have regulatory powers over the collection of parking fees for the use of privately
owned parking facilities, they cannot allow or prohibit such collection arbitrarily or whimsically.
Whether allowing or prohibiting the collection of such parking fees, the action of the DPWH Secretary
and local building officials must pass the test of classic reasonableness and propriety of the measures
or means in the promotion of the ends sought to be accomplished.
Without using the term outright, the OSG is actually invoking police power to justify the regulation by
the State, through the DPWH Secretary and local building officials, of privately owned parking facilities,
including the collection by the owners/operators of such facilities of parking fees from the public for
the use thereof. The Court finds, however, that in totally prohibiting respondents from collecting
parking fees, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and regulating the use of
liberty and property. It is usually exerted in order to merely regulate the use and enjoyment of the
property of the owner. The power to regulate, however, does not include the power to prohibit. A
fortiori, the power to regulate does not include the power to confiscate. Police power does not involve
the taking or confiscation of property, with the exception of a few cases where there is a necessity to
confiscate private property in order to destroy it for the purpose of protecting peace and order and of
promoting the general welfare; for instance, the confiscation of an illegally possessed article, such as
opium and firearms.
When there is a taking or confiscation of private property for public use, the State is no longer
exercising police power, but another of its inherent powers, namely, eminent domain. Eminent domain
enables the State to forcibly acquire private lands intended for public use upon payment of just
compensation to the owner.
Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and
possession of, the expropriated property; but no cogent reason appears why the said power may not
be availed of only to impose a burden upon the owner of condemned property, without loss of title and
possession. It is a settled rule that neither acquisition of title nor total destruction of value is essential
to taking. It is usually in cases where title remains with the private owner that inquiry should be made
to determine whether the impairment of a property is merely regulated or amounts to a compensable
taking. A regulation that deprives any person of the profitable use of his property constitutes a taking
and entitles him to compensation, unless the invasion of rights is so slight as to permit the regulation to
be justified under the police power. Similarly, a police regulation that unreasonably restricts the right to
use business property for business purposes amounts to a taking of private property, and the owner
may recover therefor.
Although in the present case, title to and/or possession of the parking facilities remain/s with
respondents, the prohibition against their collection of parking fees from the public, for the use of said
facilities, is already tantamount to a taking or confiscation of their properties. The State is not only
requiring that respondents devote a portion of the latters properties for use as parking spaces, but is
also mandating that they give the public access to said parking spaces for free. Such is already an
excessive intrusion into the property rights of respondents. Not only are they being deprived of the
right to use a portion of their properties as they wish, they are further prohibited from profiting from
its use or even just recovering therefrom the expenses for the maintenance and operation of the
required parking facilities.
In conclusion, the total prohibition against the collection by respondents of parking fees from persons
who use the mall parking facilities has no basis in the National Building Code or its IRR. The State also
cannot impose the same prohibition by generally invoking police power, since said prohibition amounts
to a taking of respondents property without payment of just compensation.
WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 25
January 2007 and Resolution dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298,
affirming in toto the Joint Decision dated 29 May 2002 of the Regional Trial Court of Makati City,
Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are hereby AFFIRMED. No costs.
Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
METROPOLITAN MANILA G.R. No. 179554
DEVELOPMENT AUTHORITY,
Petitioner, Present:
PUNO, C.J., Chairperson,
-versus- CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
TRACKWORKS RAIL TRANSIT
ADVERTISING, VENDING Promulgated:
AND PROMOTIONS, INC.,
Respondent. December 16, 2009
x-----------------------------------------------------------------------------------------x the air space above the Stations (the space not needed for all or any portion of the
operation of the LRTS) for all or any portion of the Development Rights Period.
RESOLUTION
BERSAMIN, J.: In 1998, respondent Trackworks Rail Transit Advertising, Vending & Promotions, Inc. (Trackworks)

This case concerns whether the Metropolitan Manila Development Authority (MMDA) could entered into a contract for advertising services with MRTC. Trackworks thereafter installed commercial

unilaterally dismantle the billboards, signages and other advertizing media in the structures of the billboards, signages and other advertizing media in the different parts of the MRT3. In 2001, however,

Metro Rail Transit 3 (MRT3) installed by respondent advertising company by virtue of its existing MMDA requested Trackworks to dismantle the billboards, signages and other advertizing media

contract with the owner of the MRT3. pursuant to MMDA Regulation No. 96-009, whereby MMDA prohibited the posting, installation and

The trial and appellate courts ruled that MMDA did not have the authority to dismantle. MMDA is now display of any kind or form of billboards, signs, posters, streamers, in any part of the road, sidewalk,

before the Court to assail such adverse ruling. center island, posts, trees, parks and open space. After Trackworks refused the request of MMDA,

Antecedents MMDA proceeded to dismantle the formers billboards and similar forms of advertisement.

In 1997, the Government, through the Department of Transportation and Communications, entered On March 1, 2002, Trackworks filed against MMDA in the Regional Trial Court (RTC) in Pasig City an
into a build-lease-transfer agreement (BLT agreement) with Metro Rail Transit Corporation, Limited
injunction suit (with prayer for the issuance of a temporary restraining order [TRO] and preliminary
(MRTC) pursuant to Republic Act No. 6957 (Build, Operate and Transfer Law), under which MRTC
injunction), docketed as Civil Case No. 68864.
undertook to build MRT3 subject to the condition that MRTC would own MRT3 for 25 years, upon the
On March 6, 2002, the RTC (Branch 155) issued a TRO, enjoining MMDA from dismantling or destroying
expiration of which the ownership would transfer to the Government.
The BLT agreement stipulated, among others, that MRTC could build and develop commercial premises Trackworks billboards, signages and other advertizing media. On March 25, 2002, the RTC issued a writ

in the MRT3 structures, or obtain advertising income therefrom, viz: of preliminary injunction for the same purpose.
16.1. Details of Development Rights. DOTC hereby confirms and awards to Metro Rail the
rights to (a) develop commercial premises in the Depot and the air space above the
Stations, which shall be allowed to such height as is legally and technically feasible, (b) lease
or sub-lease interests or assign such interests in the Depot and such air space and (c) obtain
Without filing a motion for reconsideration to challenge the RTCs issuances, MMDA brought a petition
any advertising income from the Depot and such air space and LRTS Phase I.
for certiorari and prohibition before the Court of Appeals (CA), docketed as C.A.-G.R. SP No. 70932, but
LRTS Phase I means the rail transport system comprising about 16.9 line kilometers
extending from Taft Avenue, Pasay City, to North Avenue, Quezon City, occupying a strip in the CA denied the petition and affirmed the RTC on August 31, 2004. The CA ultimately denied
the center of EDSA approximately 10.5 meters wide (approximately 12 meters wide at or
around the Boni Avenue, Santolan and Buendia Stations), plus about 0.1 to 0.2 line MMDAs motion for reconsiderationthrough its resolution issued on March 14, 2005.
kilometers extending from the North Avenue Station to the Depot, together with the
Stations, 73 Light Rail Vehicles and all ancillary plant, equipment and facilities, as more Thence, MMDA appealed to this Court (G.R. No. 167514), which denied MMDAs petition for review
particularly detailed in the Specifications.
on October 25, 2005.[1]
16.2. Assignment of Rights. During the Development Rights Period, Metro Rail shall be
entitled to assign all or any of its rights, titles and interests in the Development Rights to Ruling of the RTC
bona fide real estate developers. In this connection, Metro Rail may enter into such
development, lease, sub-lease or other agreements or contracts relating to the Depot and
In the meanwhile, on October 10, 2005, the RTC (Branch 155) rendered its decision permanently indiscriminately and without due regard to safety, and as such might be classified as obstructions and

enjoining MMDA from dismantling, removing or destroying the billboards, signages and other distractions to the motorists traversing EDSA;[10] and that the interests of a few should not prevail over

advertizing media installed by Trackworks on the interior and exterior structures of the MRT3.[2] the good of the greater number in the community whose safety and general welfare MMDA was

mandated to protect.[11]
Ruling of the CA
Trackworks maintains, on the other hand, that MMDAs petition was defective for its failure to raise any
MMDA appealed the RTCs decision to the CA.
genuine question of law; and that the CAs decision dated April 30, 2007was valid and correct.[12]
On April 30, 2007, the CA denied the MMDAs appeal,[3] holding that Trackworks right to install

billboards, signages and other advertizing media on the interior and exterior structures of the MRT3 Ruling of the Court

must be protected by a writ of permanent injunction; and that MMDA had no power to dismantle, The petition has no merit.

remove or destroy Trackworks billboards, signages and other advertizing media. [4] That Trackworks derived its right to install its billboards, signages and other advertizing media in the

MMDA moved for reconsideration, but the CA resolution denied the motion for MRT3 from MRTCs authority under the BLT agreement to develop commercial premises in the MRT3

reconsideration on September 3, 2007.[5] Hence, this appeal by petition for review. structure or to obtain advertising income therefrom is no longer debatable. Under the BLT agreement,
Issues
indeed, MRTC owned the MRT3 for 25 years, upon the expiration of which MRTC would transfer
MMDA claims that its mandate under its charter[6] of formulating, coordinating and monitoring of
ownership of the MRT3 to the Government.
policies, standards, progress and projects for the use of thoroughfares and the promotion of safe and
Considering that MRTC remained to be the owner of the MRT3 during the time material to this case,
convenient movement of persons and goods prompted its issuance of MMDA Regulation No. 96-009,
and until this date, MRTCs entering into the contract for advertising services with Trackworks was a
which reads in part:
h. ) It is unlawful for any person/s, private or public corporations, advertising and valid exercise of ownership by the former. In fact, in Metropolitan Manila Development Authority v.
promotions companies, movie producers, professionals and service contractors to post,
install, display any kind or form of billboards, signs, posters, streamers, professional service Trackworks Rail Transit Advertising, Vending & Promotions, Inc.,[13] this Court expressly recognized
advertisements and other visual clutters in any part of the road, sidewalk, center island,
Trackworks right to install the billboards, signages and other advertising media pursuant to said
posts, trees parks and open space.
contract. The latters right should, therefore, be respected.
MMDA avers that the conversion of the center island of Epifanio Delos Santos Avenue (EDSA) into the
It is futile for MMDA to simply invoke its legal mandate to justify the dismantling of Trackworks
carriageway of the MRT3 line did not exempt the EDSA center island from the coverage of the MMDA
billboards, signages and other advertising media. MMDA simply had no power on its own to dismantle,
regulation;[7] that the Governments grant of development rights to MRTC was not an abdication of its
remove, or destroy the billboards, signages and other advertising media installed on the MRT3
right to regulate, and, therefore, the development of the MRT3 remained subject to all existing and
structure by Trackworks. In Metropolitan Manila Development Authority v. Bel-Air Village
applicable national and local laws, ordinances, rules and regulations;[8] that MMDA was merely
Association, Inc.,[14] Metropolitan Manila Development Authority v. Viron Transportation Co., Inc.,
implementing existing and applicable laws;[9] that Trackworks advertising materials were placed
 Sec. 201. Responsibility for Administration and Enforcement.
[15]
and Metropolitan Manila Development Authority v. Garin,[16] the Court had the occasion to rule that The administration and enforcement of the provisions of this Code including the imposition
of penalties for administrative violations thereof is hereby vested in the Secretary of Public
MMDAs powers were limited to the formulation, coordination, regulation, implementation, Works, Transportation and Communications, hereinafter referred to as the Secretary.
preparation, management, monitoring, setting of policies, installing a system, and administration. There is also no evidence showing that MMDA had been delegated by DPWH to implement
[17]
Nothing in Republic Act No. 7924 granted MMDA police power, let alone legislative power. the Building Code.
Clarifying the real nature of MMDA, the Court held:
xxx The MMDA is, as termed in the charter itself, a development authority. It is an agency
created for the purpose of laying down policies and coordinating with the various national WHEREFORE, we deny the petition for review, and affirm the decision dated April 30,
government agencies, peoples organizations, non-governmental organizations and the
private sector for the efficient and expeditious delivery of basic services in the vast 2007 and the resolution dated September 3, 2007.
metropolitan area. All its functions are administrative in nature and these are actually
summed up in the charter itself, viz:

Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.

Costs against the petitioner.
The MMDA shall perform planning, monitoring and coordinative functions, and in the
process exercise regulatory and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy of local
government units concerning purely local matters.[18]

The Court also agrees with the CAs ruling that MMDA Regulation No. 96-009 and MMC Memorandum

Circular No. 88-09 did not apply to Trackworks billboards, signages and other advertising media. The

prohibition against posting, installation and display of billboards, signages and other advertising media

applied only to public areas, but MRT3, being private property pursuant to the BLT agreement between

the Government and MRTC, was not one of the areas as to which the prohibition applied. Moreover,

MMC Memorandum Circular No. 88-09 did not apply to Trackworks billboards, signages and other

advertising media in MRT3, because it did not specifically cover MRT3, and because it was issued a year SECOND DIVISION

prior to the construction of MRT3 on the center island of EDSA. Clearly, MMC Memorandum Circular [G.R. No. 158563. June 30, 2005]

No. 88-09 could not have included MRT3 in its prohibition.

MMDAs insistence that it was only implementing Presidential Decree No. 1096 (Building Code) and its
AIR TRANSPORTATION OFFICE (ATO) and MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY
implementing rules and regulations is not persuasive. The power to enforce the provisions of (MCIAA), petitioners, vs. APOLONIO GOPUCO, JR., respondent.

the Building Code was lodged in the Department of Public Works and Highways (DPWH), not in MMDA, DECISION

considering the laws following provision, thus: CHICO-NAZARIO, J.:

When private land is expropriated for a particular public use, and that particular public use is
abandoned, does its former owner acquire a cause of action for recovery of the property?
The trial courts ruling in the negative was reversed by the Court of Appeals in its Decision [1] of 28
February 2001. Hence this petition for review under Rule 45 of the 1997 Rules of Civil Procedure of the
said Decision of the court a quo, and its Resolution[2] of 22 May 2003 dismissing petitioners motion for
reconsideration.
The facts, as adduced from the records, are as follows:
Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72 consisting of 995 square
meters located in the vicinity of the Lahug Airport in Cebu City covered by Transfer Certificate of Title
(TCT) No. 13061-T.
The Lahug Airport had been turned over by the Unites States Army to the Republic of the Philippines
sometime in 1947 through the Surplus Property Commission, which accepted it in behalf of the
Philippine Government. In 1947, the Surplus Property Commission was succeeded by the Bureau of
Aeronautics, which office was supplanted by the National Airport Corporation (NAC). The NAC was in
turn dissolved and replaced with the Civil Aeronautics Administration (CAA).[3]
Sometime in 1949, the NAC informed the owners of the various lots surrounding the Lahug Airport,
including the herein respondent, that the government was acquiring their lands for purposes of
expansion. Some landowners were convinced to sell their properties on the assurance that they would
be able to repurchase the same when these would no longer be used by the airport. Others, including
Gopuco, refused to do so.
Thus, on 16 April 1952, the CAA filed a complaint with the Court of First Instance (CFI) of Cebu for the
expropriation of Lot No. 72 and its neighboring realties, docketed as Civil Case No. R-1881.
On 29 December 1961, the CFI promulgated a Decision,
1. Declaring the expropriation of [the subject lots, including Lot No. 72] justified and in lawful exercise
of the right of eminent domain;
2. Declaring . a balance of P1,990 in favor of Apolonio Go Puco, Jr. with legal interest from November
16, 1947 until fully paid. ;
3. After the payment of the foregoing financial obligation to the landowners, directing the latter to
deliver to the plaintiff the corresponding Transfer Certificates of Title to their respective lots; and upon
the presentation of the said titles to the Register of Deeds, ordering the latter to cancel the same and
to issue, in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff. [4]
No appeal was taken from the above Decision on Lot No. 72, and the judgment of condemnation
became final and executory. Thereafter, on 23 May 1962, absolute title to Lot No. 72 was transferred to
the Republic of the Philippines under TCT No. 25030.[5]
Subsequently, when the Mactan International Airport commenced operations, the Lahug Airport was
ordered closed by then President Corazon C. Aquino in a Memorandum of 29 November 1989.[6] Lot
No. 72 was thus virtually abandoned.[7]
On 16 March 1990, Gopuco wrote[8] the Bureau of Air Transportation, through the manager of the
Lahug Airport, seeking the return of his lot and offering to return the money previously received by him
as payment for the expropriation. This letter was ignored.[9]
In the same year, Congress passed Republic Act No. 6958 creating the Mactan-Cebu International
Airport Authority (MCIAA) and in part providing for the transfer of the assets of the Lahug Airport
thereto. Consequently, on 08 May 1992, ownership of Lot No. 72 was transferred to MCIAA under TCT
No. 120356.[10]
On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint [11] for recovery of ownership of
Lot No. 72 against the Air Transportation Office[12] and the Province of Cebu with the Regional Trial
Court (RTC) of Cebu, Branch X, docketed as Civil Case No. CEB-11914. He maintained that by virtue of
the closure of the Lahug Airport, the original purpose for which the property was expropriated had
ceased or otherwise been abandoned, and title to the property had therefore reverted to him.
Gopuco further alleged that when the original judgment of expropriation had been handed down, and
before they could file an appeal thereto, the CAA offered them a compromise settlement whereby they
were assured that the expropriated lots would be resold to them for the same price as when it was
expropriated in the event that the Lahug Airport would be abandoned. Gopuco claims to have accepted
this offer.[13] However, he failed to present any proof on this matter, and later admitted that insofar as
the said lot was concerned, no compromise agreement was entered into by the government and the
previous owners.[14]
Lastly, Gopuco asserted that he had come across several announcements in the papers that the Lahug
Airport was soon to be developed into a commercial complex, which he took to be a scheme of the
Province of Cebu to make permanent the deprivation of his property.
On 20 May 1994, the trial court rendered a Decision[15] dismissing the complaint and directing the
herein respondent to pay the MCIAA exemplary damages, litigation expenses and costs.
Aggrieved by the holding of the trial court, Gopuco appealed to the Court of Appeals, which
overturned the RTC decision, ordered the herein petitioners to reconvey Lot No. 72 to Gopuco upon
payment of the reasonable price as determined by it, and deleted the award to the petitioners of
exemplary damages, litigation expenses and costs.
The Motion for Reconsideration was denied[16] on 22 May 2003, hence this petition, which raises the
following issues:
WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT HAS THE RIGHT TO
RECLAIM OWNERSHIP OVER THE SUBJECT EXPROPRIATED LOT BASED ON THE IMPORT OF THE
DECEMBER 29, 1961 DECISION IN CIVIL CASE NO. 1881.
WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF LITIGATION EXPENSES AND
COSTS IN FAVOR OF PETITIONERS.
In deciding the original expropriation case that gave rise to the present controversy, Civil Case No. R-
1881, the CFI reasoned that the planned expansion of the airport justified the exercise of eminent
domain, thus:
As for the public purpose of the expropriation proceeding, it cannot be doubted. Although the Mactan
Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug
Airport; it is handling the air traffic both civilian and military. From it aircrafts fly to Mindanao and
Visayas and pass thru it on their return flights to the North and Manila. Then, no evidence was adduced
to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will
be closed immediately thereafter. It is for the other departments of the Government to determine said
matters. The Court cannot substitute its judgment for those of the said departments or agencies. In the
absence of such a showing, the Court will presume that the Lahug Airport will continue to be in
operation.[17] (emphasis supplied)
By the time Gopuco had filed his action for recovery of ownership of Lot No. 72, Lahug Airport had
indeed ceased to operate. Nevertheless, the trial court held:
The fact of abandonment or closure of the Lahug Airport admitted by the defendant did not by itself,
result in the reversion of the subject property back to the plaintiff. Nor did it vest in the plaintiff the
right to demand reconveyance of said property.
When real property has been acquired for public use unconditionally, either by eminent domain or by
purchase, the abandonment or non-use of the real property, does not ipso facto give to the previous
owner of said property any right to recover the same (Fery vs. Municipality of Cabanatuan, 42 Phil. 28).
[18]
In reversing the trial court, the Court of Appeals called attention to the fact that both parties cited Fery
v. Municipality of Cabanatuan,[19] which the trial court also relied on in its Decision. The court a
quo agreed in Gopucos interpretation of Fery that when the CFI in Civil Case No. R-1881 held that,
. . . [T]hen, no evidence was adduced to show how soon is the Mactan Airport to be placed in operation
and whether the Lahug Airport will be closed immediately thereafter.In the absence of such a showing,
the Court will presume that the Lahug Airport will continue to be in operation, . . . .[20]
the expropriation of the property was conditioned on its continued devotion to its public purpose.
Thus, although the MCIAA stressed that nothing in the judgment of expropriation expressly stated that
the lands would revert to their previous owners should the public use be terminated or abandoned,
the Court of Appeals nevertheless ruled that,
. . . [W]hile, there is no explicit statement that the land is expropriated with the condition that when
the purpose is ended the property shall return to its owner, the full import of the decision (in Civil Case
No. R-1881) suggests that the expropriation was granted because there is no clear showing that Lahug
Airport will be closed, the moment Mactan International Airport is put to operation. It stands to reason
that should that public use be abandoned, then the expropriated property should revert back to its
former owner.
Moreover, the foundation of the right to exercise the power of eminent domain is genuine necessity.
Condemnation is justified only if it is for the public good and there is genuine necessity of a public
character. Thus, when such genuine necessity no longer exists as when the State abandons the
property expropriated, government interest must yield to the private right of the former land owner,
whose property right was disturbed as a consequence of the exercise of eminent domain.
Justice, equity and fair play demand that the property should revert back to plaintiff-appellant upon
paying the reasonable value of the land to be based on the prevailing market value at the time of
judicial demand to recover the property. If the State expects landowners to cooperate in its bid to take
private property for its public use, so must it apply also the same standard, to allow the landowner to
reclaim the property, now that the public use has been abandoned. [21]
In this petition, the MCIAA reiterates that the Republic of the Philippines validly expropriated Lot No.
72 through the proceedings in Civil Case No. R-1881, the judgment of which had long become final and
executory. It further asserts that said judgment vested absolute and unconditional title in the
government, specifically on the petitioners, there having been no condition whatsoever that the
property should revert to its owners in case the Lahug Airport should be abandoned.
On the other hand, the respondent would have us sustain the appellate courts interpretation of Fery as
applied to the original judgment of expropriation, to the effect that this was subject to the condition
that the Lahug Airport will continue to be in operation.
We resolve to grant the petition.
In Fery, the Court asked and answered the same question confronting us now: When private land is
expropriated for a particular public use, and that particular public use is abandoned, does the land so
expropriated return to its former owner?[22]
The answer to that question depends upon the character of the title acquired by the expropriator,
whether it be the State, a province, a municipality, or a corporation which has the right to acquire
property under the power of eminent domain. If, for example, land is expropriated for a particular
purpose, with the condition that when that purpose is ended or abandoned the property shall return
to its former owner, then, of course, when the purpose is terminated or abandoned the former
owner reacquires the property so expropriated. If, for example, land is expropriated for a public street
and the expropriation is granted upon condition that the city can only use it for a public street, then, of
course, when the city abandons its use as a public street, it returns to the former owner, unless there is
some statutory provision to the contrary. . . If upon the contrary, however, the decree of expropriation
gives to the entity a fee simple title, then of course, the land becomes the absolute property of the
expropriator, whether it be the State, a province, or municipality, and in that case the non-user does
not have the effect of defeating the title acquired by the expropriation proceedings. (10 R.C.L., 240, sec.
202; 20 C.J. 1234, secs. 593-599 and numerous cases cited; Reichling vs. Covington Lumber Co., 57
Wash., 225; 135 Am. St. Rep., 976; McConihay vs. Wright, 121 U.S., 201.)
When land has been acquired for public use in fee simple, unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and the public use
may be abandoned or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner. (Fort Wayne vs. Lake Shore, etc. Ry. Co.,
132 Ind., 558; 18 L.R.A., 367.) (Emphases Supplied)[23]
Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and unconditional title in the
government? We have already had occasion to rule on this matter in Mactan-Cebu International
Airport Authority v. Court of Appeals,[24] which is a related action for reconveyance of a parcel of land
also subject of the expropriation proceedings in Civil Case No. R-1881. One of the landowners affected
by the said proceeding was Virginia Chiongbian, to whom the CFI ordered the Republic of the
Philippines to pay P34,415.00, with legal interest computed from the time the government began using
her land. Like the herein respondent, she did not appeal from the CFIs judgment. Also like Gopuco, she
eventually filed for the reconveyance of her property when the airport closed. Although she was
upheld by both the RTC of Cebu and the Court of Appeals, on appeal we held that the terms of the
judgment (in Civil Case No. R-1881) are clear and unequivocal and granted title to Lot No. 941 in fee
simple to the Republic of the Philippines. There was no condition imposed to the effect that the lot
would return to CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose
for which it was expropriated is ended or abandoned or if the property was to be used other than as
the Lahug Airport.[25] Moreover, we held that although other lot owners were able to successfully
reacquire their lands by virtue of a compromise agreement, since CHIONGBIAN was not a party to any
such agreement, she could not validly invoke the same.
The respondent would have us revisit this ruling for three reasons. First, because he claims there is no
showing that the government benefited from entering into compromise agreements with the other lot
owners; second, because such a doctrine supposedly discriminates against those who have neither the
werewithal nor the savvy to contest the expropriation, or agree to modify the judgment; and third,
because there exists between the government and the owners of expropriated realty an implied
contract that the properties involved will be used only for the public purpose for which they were
acquired in the first place.
As to respondents first and second arguments, we have time and again ruled that a compromise
agreement, when not contrary to law, public order, public policy, morals, or good customs, is a valid
contract which is the law between the parties.[26] It is a contract perfected by mere consent,[27] whereby
the parties, making reciprocal concessions, avoid litigation or put an end to one already commenced. It
has the force of law and is conclusive between the parties,[28] and courts will not relieve parties from
obligations voluntarily assumed, simply because their contracts turned out to be unwise. [29] Note that
respondent has not shown that any of the compromise agreements were in any way tainted with
illegality, irregularity or imprudence. Indeed, anyone who is not a party to a contract or agreement
cannot be bound by its terms, and cannot be affected by it.[30] Since Gopuco was not a party to the
compromise agreements, he cannot legally invoke the same. [31]
Lastly, Gopuco argues that there is present, in cases of expropriation, an implied contract that the
properties will be used only for the public purpose for which they were acquired. No such contract
exists.
Eminent domain is generally described as the highest and most exact idea of property remaining in the
government that may be acquired for some public purpose through a method in the nature of a forced
purchase by the State.[32] Also often referred to as expropriation and, with less frequency, as
condemnation, it is, like police power and taxation, an inherent power of sovereignty and need not be
clothed with any constitutional gear to exist; instead, provisions in our Constitution on the subject are
meant more to regulate, rather than to grant, the exercise of the power. It is a right to take
or reassert dominion over property within the state for public use or to meet a public exigency and is
said to be an essential part of governance even in its most primitive form and thus inseparable from
sovereignty.[33] In fact, all separate interests of individuals in property are held of the government under
this tacit agreement or implied reservation. Notwithstanding the grant to individuals, the eminent
domain, the highest and most exact idea of property, remains in the government, or in the aggregate
body of people in their sovereign capacity; and they have the right to resume the possession of the
property whenever the public interest so requires it.[34]
The ubiquitous character of eminent domain is manifest in the nature of the expropriation
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the
condemning authority is not required to assert any conflicting interest in the property. Thus, by filing
the action, the condemnor in effect merely serves notice that it is taking title and possession of the
property, and the defendant asserts title or interest in the property, not to prove a right to possession,
but to prove a right to compensation for the taking.[35]
The only direct constitutional qualification is thus that private property shall not be taken for public use
without just compensation.[36] This prescription is intended to provide a safeguard against possible
abuse and so to protect as well the individual against whose property the power is sought to be
enforced.[37]
In this case, the judgment on the propriety of the taking and the adequacy of the compensation
received have long become final. We have also already held that the terms of that judgment granted
title in fee simple to the Republic of the Philippines. Therefore, pursuant to our ruling in Fery, as
recently cited in Reyes v. National Housing Authority,[38] no rights to Lot No. 72, either express or
implied, have been retained by the herein respondent.
We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu International Airport
Authority,[39] concerning still another set of owners of lots declared expropriated in the judgment in
Civil Case No. R-1881. As with Chiongbian and the herein respondent, the owners of the lots therein
did not appeal the judgment of expropriation, but subsequently filed a complaint for reconveyance. In
ordering MCIAA to reconvey the said lots in their favor, we held that the predicament of petitioners
therein involved a constructive trust akin to the implied trust referred to in Art. 1454[40] of the Civil
Code.[41] However, we qualified our Decision in that case, to the effect that,
We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport Authority,
and do not overrule them. Nonetheless the weight of their import, particularly our ruling as regards the
properties of respondent Chiongbian in Mactan-Cebu International Airport Authority, must be
commensurate to the facts that were established therein as distinguished from those extant in the case
at bar. Chiongbian put forth inadmissible and inconclusive evidence, while in the instant case we
have preponderant proof as found by the trial court of the existence of the right of repurchase in
favor of petitioners.
Neither has Gopuco, in the present case, adduced any evidence at all concerning a right of repurchase
in his favor. Heirs of Moreno is thus not in point.
The trial court was thus correct in denying Gopucos claim for the reconveyance of Lot No. 72 in his
favor. However, for failure of the petitioners to present any proof that this case was clearly unfounded
or filed for purposes of harassment, or that the herein respondent acted in gross and evident bad faith,
the reimposition of litigation expenses and costs has no basis. It is not sound public policy to set a
premium upon the right to litigate where such right is exercised in good faith, as in the present case.[42]
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 49898
dated 28 February 2001, and its Resolution of 22 May 2003 are hereby REVERSED and SET ASIDE. The
Decision of RTC-Branch X of Cebu dated 20 May 1994 in Civil Case No. CEB-11914 is REINSTATED with
the modification that the award of exemplary damages, litigation expenses and costs are DELETED.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
SECOND DIVISION
[G.R. No. 156273. October 15, 2003]
HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely: ESPERANZA R. EDJEC, BERNARDA R.
SUELA, RUBY C. ROTEA, BERNARDA R. ROTEA, ELIA R. VDA. DE LIMBAGA, VIRGINIA R.
ARBON, ROSALINDA R. ARQUISOLA, CORAZON ROTEA, FE R. EBORA, CARIDAD ROTEA,
ANGELES VDA. DE RENACIA, JORGE ROTEA, MARIA LUISA ROTEA-VILLEGAS, ALFREDO R.
ROTEA, represented by his heirs LIZBETH ROTEA and ELEPETH ROTEA; LUIS ROTEA,
represented by his heir JENNIFER ROTEA; and ROLANDO R. ROTEA, represented by his heir
ROLANDO R. ROTEA JR., petitioners, vs. MACTAN - CEBU INTERNATIONAL AIRPORT
AUTHORITY, respondent.
DECISION
BELLOSILLO, J.:
THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners herein, are the successors-in-
interest of the former registered owners of two (2) parcels of land situated in Lahug, Cebu City,
designated as Lot No. 916 with an area of 2,355 square meters under TCT No. RT-7543 (106) T-13694,
and Lot No. 920 consisting of 3,097 square meters under TCT No. RT-7544 (107) T-13695.[1]
In 1949 the National Airport Corporation as the predecessor agency of respondent Mactan-
Cebu International Airport Authority (MCIAA) wanted to acquire Lots Nos. 916 and 920 above
described among other parcels of land for the proposed expansion of Lahug Airport.[2] To entice the
landowners to cede their properties, the government assured them that they could repurchase their
lands once Lahug Airport was closed or its operations transferred to Mactan Airport.[3] Some of the
landowners executed deeds of sale with right of repurchase in favor of the government but many
others, including the owners of Lots Nos. 916 and 920 herein mentioned, refused the offer because the
payment was perceived to be way below the market price.[4]
On 16 April 1952, as the negotiations for the purchase of the lots necessary for the expansion
and improvement of Lahug Airport irredeemably broke down, the Civil Aeronautics Administration as
the successor agency of the National Airport Corporation filed a complaint with the Court of First
Instance of Cebu, for the expropriation of Lots Nos. 916 and 920 and other subject realties, docketed as
Civil Case No. R-1881.
On 29 December 1961 the trial court promulgated its Decision in Civil Case No. R-1881
condemning Lots Nos. 916 and 920 and other lots for public use upon payment of just compensation.
[5]
Petitioners predecessors were paid P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with
consequential damages by way of legal interest from 16 November 1947.No appeal was taken from
the Decision on Lots Nos. 916 and 920, and the judgment of condemnation became final and executory.
[6]
Thereafter, the certificates of title for these parcels of land were issued in the name of the Republic
of the Philippines under TCT No. 58691 for Lot No. 916 and TCT No. 58692 for Lot No. 920, which under
RA 6958 (1990) were subsequently transferred in favor of respondent MCIAA. [7]
At the end of 1991, or soon after the transfer of Lots Nos. 916 and 920 to
MCIAA, Lahug Airport ceased operations as the Mactan Airport was opened for incoming and outgoing
flights.[8] Lots Nos. 916 and 920 which had been expropriated for the extension of Lahug Airport were
not utilized.[9] In fact, no expansion of Lahug Airport was undertaken by MCIAA and its predecessors-in-
interest.[10] Hence, petitioners wrote then President Fidel V. Ramos and the airport manager begging
them for the exercise of their alleged right to repurchase Lots Nos. 916 and 920.[11] Their pleas were not
heeded.[12]
On 11 March 1997 petitioners filed a complaint for reconveyance and damages with RTC
of Cebu City against respondent MCIAA to compel the repurchase of Lots Nos. 916 and 920, docketed
as Civil Case No. CEB-20015. In the main, petitioners averred that they had been convinced by the
officers of the predecessor agency of respondent MCIAA not to oppose the expropriation proceedings
since in the future they could repurchase the properties if the airport expansion would not push
through. MCIAA did not object to petitioners evidence establishing these allegations.
When the civil case was pending, one Richard E. Enchuan filed a Motion for Transfer of
Interest alleging that he acquired through deeds of assignment the rights of some of herein petitioners
over Lots Nos. 916 and 920.[13] The Department of Public Works and Highways (DPWH) also sought to
intervene in the civil case claiming that it leased in good faith Lot No. 920 from the predecessor
agencies of respondent MCIAA and that it built thereon its Regional Equipment Services and its Region
7 Office.[14]
On 12 April 1999 the trial court found merit in the claims of petitioners and granted them the
right to repurchase the properties at the amount pegged as just compensation in Civil Case No. R-1881
but subject to the alleged property rights of Richard E. Enchuan and the leasehold of DPWH.[15] The trial
court opined that the expropriation became illegal or functus officio when the purpose for which it was
intended was no longer there.[16]
Respondent MCIAA appealed the Decision of the trial court to the Court of Appeals, docketed as
CA-G.R. CV No. 64456.
On 20 December 2001 the Court of Appeals reversed the assailed Decision on the ground that
the judgment of condemnation in Civil Case No. R-1881 was unconditional so that the rights
gained therefrom by respondent MCIAA were indicative of ownership in fee simple.[17] The appellate
court cited Fery v. Municpality of Cabanatuan[18] which held that mere deviation from the public
purpose for which the power of eminent domain was exercised does not justify the reversion of the
property to its former owners, and Mactan-Cebu International Airport Authority v. Court of
Appeals[19] which is allegedly stare decisis to the instant case to prevent the exercise of the right of
repurchase as the former dealt with a parcel of land similarly expropriated under Civil Case No. R-1881.
[20]
On 28 November 2002 reconsideration of the Decision was denied. [21] Hence, this petition for
review.
Petitioners argue that Fery v. Municpality of Cabanatuan does not apply to the case at bar since
what was involved therein was the right of reversion and not the right of repurchase which they are
invoking. They also differentiate Mactan-Cebu International Airport Authority v. Court of
Appeals[22] from the instant case in that the landowners in the MCIAA case offered inadmissible
evidence to show their entitlement to a right of repurchase, while petitioners herein offered evidence
based on personal knowledge for which reason MCIAA did not object and thus waived whatever
objection it might have had to the admissibility thereof. Finally, petitioners allege that their right to
equal protection of the laws would be infringed if some landowners are given the right to repurchase
their former properties even as they are denied the exercise of such prerogative.
On the other hand, respondent MCIAA clings to our decisions
in Fery v. Municpality of Cabanatuan and Mactan-Cebu International Airport Authority v. Court of
Appeals. According to respondent MCIAA there is only one instance when expropriated land may be
repurchased by its previous owners, and that is, if the decision of expropriation itself provides [the]
condition for such repurchase. Respondent asserts that the Decision in Civil Case No. R-1881 is absolute
and without conditions, thus, no repurchase could be validly exercised.
This is a difficult case calling for a difficult but just solution. To begin with, there exists an
undeniable historical narrative that the predecessors of respondent MCIAA had suggested to the
landowners of the properties covered by the Lahug Airport expansion scheme that they could
repurchase their properties at the termination of the airports venture. [23] Some acted on this assurance
and sold their properties;[24] other landowners held out and waited for the exercise of eminent domain
to take its course until finally coming to terms with respondents predecessors that they would not
appeal nor block further the judgment of condemnation if the same right of repurchase was extended
to them.[25] A handful failed to prove that they acted on such assurance when they parted with the
ownership of their lands.[26]
In resolving this dispute, we must reckon with the rulings of this Court
in Fery v. Municpality of Cabanatuan and Mactan-Cebu International Airport Authority v. Court of
Appeals, which define the rights and obligations of landowners whose properties were expropriated
when the public purpose for which eminent domain was exercised no longer subsists. In Fery, which
was cited in the recent case of Reyes v. Court of Appeals,[27] we declared that the government acquires
only such rights in expropriated parcels of land as may be allowed by the character of its title over the
properties -
If x x x land is expropriated for a particular purpose, with the condition that when that purpose is
ended or abandoned the property shall return to its former owner, then, of course, when the purpose
is terminated or abandoned the former owner reacquires the property so expropriated. If x x x land is
expropriated for a public street and the expropriation is granted upon condition that the city can only
use it for a public street, then, of course, when the city abandons its use as a public street, it returns to
the former owner, unless there is some statutory provision to the contrary x x x x If, upon the contrary,
however, the decree of expropriation gives to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator, whether it be the State, a province, or municipality,
and in that case the non-user does not have the effect of defeating the title acquired by the
expropriation proceedings x x x x When land has been acquired for public use in fee simple,
unconditionally, either by the exercise of eminent domain or by purchase, the former owner retains no
rights in the land, and the public use may be abandoned, or the land may be devoted to a different use,
without any impairment of the estate or title acquired, or any reversion to the former owner x x x x[28]
In Mactan-Cebu International Airport Authority, respondent Chiongbian sought to enforce an
alleged right of repurchase over her properties that had been expropriated in Civil Case No. R-
1881. This Court did not allow her to adduce evidence of her claim, for to do so would unsettle as to
her properties the judgment of condemnation in the eminent domain proceedings. We also held
therein that Chiongbians evidence was both inadmissible and lacking in probative value -
The terms of the judgment are clear and unequivocal and grant title to Lot No. 941 in fee simple to the
Republic of the Philippines. There was no condition imposed to the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be used other than as
the Lahug Airport.CHIONGBIAN cannot rely on the ruling in Mactan-Cebu International Airport vs.
Court of Appeals wherein the presentation of parol evidence was allowed to prove the existence of a
written agreement containing the right to repurchase. Said case did not involve expropriation
proceedings but a contract of sale x x x x To permit CHIONGBIAN to prove the existence of a
compromise settlement which she claims to have entered into with the Republic of the Philippines
prior to the rendition of judgment in the expropriation case would result in a modification of the
judgment of a court which has long become final and executory x x x x And even assuming for the sake
of argument that CHIONGBIAN could prove the existence of the alleged written agreement
acknowledging her right to repurchase Lot No. 941 through parol evidence, the Court of Appeals erred
in holding that the evidence presented by CHIONGBIAN was admissible x x x x Aside from being
inadmissible under the provisions of the Statute of Frauds, [the] testimonies are also inadmissible for
being hearsay in nature x x x x[29]
We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport
Authority, and do not overrule them. Nonetheless the weight of their import, particularly our ruling as
regards the properties of respondent Chiongbian in Mactan-Cebu International Airport Authority, must
be commensurate to the facts that were established therein as distinguished from those extant in the
case at bar. Chiongbian put forth inadmissible and inconclusive evidence, while in the instant case we
have preponderant proof as found by the trial court of the existence of the right of repurchase in favor
of petitioners.
Moreover, respondent MCIAA has brought to our attention a significant and telling portion in
the Decision in Civil Case No. R-1881 validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running impression that Lahug Airport would
continue in operation -
As for the public purpose of the expropriation proceeding, it cannot now be
doubted. Although Mactan Airport is being constructed, it does not take away the actual usefulness
and importance of the LahugAirport: it is handling the air traffic both civilian and military. From it
aircrafts fly to Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no
evidence was adduced to show how soon is the Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed immediately thereafter. It is up to the other departments of
the Government to determine said matters. The Court cannot substitute its judgment for those of the
said departments or agencies. In the absence of such showing, the Court will presume that
the Lahug Airport will continue to be in operation (emphasis supplied).[30]
While the trial court in Civil Case No. R-1881 could have simply acknowledged the presence of
public purpose for the exercise of eminent domain regardless of the survival of LahugAirport, the trial
court in its Decision chose not to do so but instead prefixed its finding of public purpose upon its
understanding that Lahug Airport will continue to be in operation. Verily, these meaningful statements
in the body of the Decision warrant the conclusion that the expropriated properties would remain to be
so until it was confirmed that Lahug Airport was no longer in operation. This inference further implies
two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the expropriated lots
were not being used for any airport expansion project, the rights vis--vis the expropriated Lots Nos. 916
and 920 as between the State and their former owners, petitioners herein, must be equitably adjusted;
and, (b) the foregoing unmistakable declarations in the body of the Decision should merge with and
become an intrinsic part of the fallo thereof which under the premises is clearly inadequate since
the dispositive portion is not in accord with the findings as contained in the body thereof.[31]
Significantly, in light of the discussion above, the admission of petitioners during the pre-trial of
Civil Case No. CEB-20015 for reconveyance and damages that respondent MCIAA was the absolute
owner of Lots Nos. 916 and 920 does not prejudice petitioners interests. This is as it should be not only
because the admission concerns a legal conclusion fiercely debated by the parties[32] but more so since
respondent was truly the absolute owner of the realties until it was apparent that Lahug Airport had
stopped doing business.
To sum up what we have said so far, the attendance in the case at bar of standing admissible
evidence validating the claim of petitioners as well as the portions above-quoted of the Decision in the
expropriation case volunteered no less than by respondent itself, takes this case away from the ambit
of Mactan-Cebu International Airport Authority v. Court of Appeals [33]but within the principles
enunciated in Fery as mentioned earlier. In addition, there should be no doubt that our present reading
of the fallo of the Decision in Civil Case No. R-1881 so as to include the statements in the body thereof
afore-quoted is sanctioned by the rule that a final and executory judgment may nonetheless be
clarified by reference to other portions of the decision of which it forms a part. In Republic v. De Los
Angeles[34] we ruled -
This Court has promulgated many cases x x x wherein it was held that a judgment must not be read
separately but in connection with the other portions of the decision of which it forms a part. Hence
x x x the decision of the court below should be taken as a whole and considered in its entirety to get
the true meaning and intent of any particular portion thereof x x x x Neither is this Court inclined to
confine itself to a reading of the said fallo literally. On the contrary, the judgment portion of a decision
should be interpreted and construed in harmony with the ratio decidendi thereof x x x x As stated in
the case of Policarpio vs. Philippine Veterans Board, et al., supra, to get the true intent and meaning of
a decision, no specific portion thereof should be resorted to but the same must be considered in its
entirety. Hence, a resolution or ruling may and does appear in other parts of the decision and not
merely in the fallo thereof x x x x The foregoing pronouncements find support in the case of Locsin, et
al. vs. Paredes, et al., 63 Phil., 87, 91-92, wherein this Court allowed a judgment that had become final
and executory to be clarified by supplying a word which had been inadvertently omitted and which,
when supplied, in effect changed the literal import of the original phraseology x x x x This is so because,
in the first place, if an already final judgment can still be amended to supply an omission committed
through oversight, this simply means that in the construction or interpretation of an already final
decision, the fallo or dispositive portion thereof must be correlated with the body of such final decision
x x x x [I]f an amendment may be allowed after a decision has already become final x x x such
amendment may consist x x x either in the x x x interpretation of an ambiguous phrase therein in
relation to the body of the decision which gives it life.[35]
We now resolve to harmonize the respective rights of the State and petitioners to the
expropriated Lots Nos. 916 and 920.
Mactan-Cebu International Airport Authority[36] is correct in stating that one would not find an
express statement in the Decision in Civil Case No. R-1881 to the effect that the [condemned] lot would
return to [the landowner] or that [the landowner] had a right to repurchase the same if the purpose for
which it was expropriated is ended or abandoned or if the property was to be used other than as
the Lahug Airport. This omission notwithstanding, and while the inclusion of this pronouncement in the
judgment of condemnation would have been ideal, such precision is not absolutely necessary nor is it
fatal to the cause of petitioners herein. No doubt, the return or repurchase of the condemned
properties of petitioners could be readily justified as the manifest legal effect or consequence of the
trial courts underlying presumption that Lahug Airport will continue to be in operation when it granted
the complaint for eminent domain and the airport discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin [37] to the implied
trust referred to in Art. 1454 of the Civil Code, If an absolute conveyance of property is made in order to
secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is
established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may
demand the reconveyance of the property to him. In the case at bar, petitioners conveyed Lots Nos. 916
and 920 to the government with the latter obliging itself to use the realties for the expansion
of Lahug Airport; failing to keep its bargain, the government can be compelled by petitioners
to reconvey the parcels of land to them, otherwise, petitioners would be denied the use of their
properties upon a state of affairs that was not conceived nor contemplated when the expropriation was
authorized.
Although the symmetry between the instant case and the situation contemplated by Art. 1454 is
not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of
trusts: The only problem of great importance in the field of constructive trusts is to decide whether in
the numerous and varying fact situations presented to the courts there is a wrongful holding of
property and hence a threatened unjust enrichment of the defendant.[38] Constructive trusts are fictions
of equity which are bound by no unyielding formula when they are used by courts as devices to remedy
any situation in which the holder of the legal title may not in good conscience retain the beneficial
interest.[39]
In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty
is to transfer the title and possession over the property to the plaintiff-beneficiary. [40] Of course,
the wronged party seeking the aid of a court of equity in establishing a constructive trust must himself
do equity.[41] Accordingly, the court will exercise its discretion in deciding what acts are required of the
plaintiff-beneficiary as conditions precedent to obtaining such decree and has the obligation to
reimburse the trustee the consideration received from the latter just as the plaintiff-beneficiary would
if he proceeded on the theory of rescission.[42] In the good judgment of the court, the trustee may also
be paid the necessary expenses he may have incurred in sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his services in managing the property to the extent
that plaintiff-beneficiary will secure a benefit from his acts.[43]
The rights and obligations between the constructive trustee and the beneficiary, in this case,
respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil
Code, When the conditions have for their purpose the extinguishment of an obligation to give, the
parties, upon the fulfillment of said conditions, shall return to each other what they have received
x x x x In case of the loss, deterioration or improvement of the thing, the provisions which, with respect
to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return
xxxx
Hence, respondent MCIAA as representative of the State is obliged to reconvey Lots Nos. 916
and 920 to petitioners who shall hold the same subject to existing liens thereon, i.e., leasehold right of
DPWH. In return, petitioners as if they were plaintiff-beneficiaries of a constructive trust must restore
to respondent MCIAA what they received as just compensation for the expropriation of Lots Nos. 916
and 920 in Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with
consequential damages by way of legal interest from 16 November 1947. Petitioners must likewise pay
respondent MCIAA the necessary expenses it may have incurred in sustaining the properties and the
monetary value of its services in managing them to the extent that petitioners will be benefited
thereby. The government however may keep whatever income or fruits it may have obtained from the
parcels of land, in the same way that petitioners need not account for the interests that the amounts
they received as just compensation may have earned in the meantime. As a matter of justice and
convenience, the law considers the fruits and interests as the equivalent of each other. [44]
Under Art. 1189 of the Civil Code, If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor x x x, the creditor being the person who stands to
receive something as a result of the process of restitution. Consequently, petitioners as creditors do not
have to settle as part of the process of restitution the appreciation in value of Lots Nos. 916 and 920
which is the natural consequence of nature and time.
Petitioners need not also pay for improvements introduced by third parties, i.e., DPWH, as the
disposition of these properties is governed by existing contracts and relevant provisions of law. As for
the improvements that respondent MCIAA may have made on Lots Nos. 916 and 920, if any, petitioners
must pay respondent their prevailing free market price in case petitioners opt to buy them and
respondent decides to sell. In other words, if petitioners do not want to appropriate such
improvements or respondent does not choose to sell them, the improvements would have to be
removed without any obligation on the part of petitioners to pay any compensation to respondent
MCIAA for whatever it may have tangibly introduced therein.[45]
The medium of compensation for the restitution shall be ready money or cash payable within a
period of three hundred sixty five (365) days from the date that the amount to be returned by
petitioners is determined with finality, unless the parties herein stipulate and agree upon a different
scheme, medium or schedule of payment. If after the period of three hundred sixty five (365) days or
the lapse of the compromise scheme or schedule of payment such amount owed is not settled, the
right of repurchase of petitioners and the obligation of respondent MCIAA to reconvey Lots Nos. 916
and 920 and/or the latters improvements as set forth herein shall be deemed forfeited and the
ownership of those parcels of land shall vest absolutely upon respondent MCIAA.
Finally, we delete the award of P60,000.00 for attorneys fees and P15,000.00 for litigation
expenses in favor of petitioners as decreed in the assailed Decision of 12 April 1999 of the trial court. It
is not sound public policy to set a premium upon the right to litigate where such right is exercised in
good faith, as in the present case, albeit the decision to resist the claim is erroneous. [46]
The rule on awards of attorneys fees and litigation expenses is found in Art. 2208 of the Civil
Code -
In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interests;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's valid
and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
[47]
As noted in Mirasol v. De la Cruz, Art. 2208 intends to retain the award of attorneys fees as the
exception in our law and the general rule remains that attorneys fees are not recoverable in the
absence of a stipulation thereto.
In the case at bar, considering the established absence of any stipulation regarding attorneys
fees, the trial court cannot base its award on any of the exceptions enumerated in Art. 2208. The
records of the instant case do not disclose any proof presented by petitioners to substantiate that the
actuations of respondent MCIAA were clearly unfounded or purely for the purpose of harassment;
neither does the trial court make any finding to that effect in its appealed Decision.
While Art. 2208, par. (4), allows attorneys fees in cases of clearly unfounded civil actions, this
exception must be understood to mean those where the defenses are so untenable as to amount to
gross and evident bad faith. Evidence must be presented to the court as to the facts and circumstances
constituting the alleged bad faith, otherwise, the award of attorneys fees is not justified where there is
no proof other than the bare statement of harassment that a party to be so adjudged had acted in bad
faith. The exercise of judicial discretion in the award of attorneys fees under Art. 2208, par. (11),
demands a factual, legal or equitable justification that would bring the case within the exception and
justify the grant of such award.
WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals in
CA-G.R. CV No. 64456 dated 20 December 2001 and its Resolution of 28 November 2002 denying
reconsideration of the Decision are REVERSED and SET ASIDE.
The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil Case No. CEB-20015
is MODIFIED IN PART by -
(a) ORDERING respondent Mactan-Cebu International Airport Authority (MCIAA) TO
RECONVEY to petitioner Heirs of Timoteo Moreno and Maria Rotea, namely: Esperanza
R. Edjec, Bernarda R. Suela, Ruby C. Rotea, Bernarda R. Rotea, Elia R. Vda De Limbaga, Virginia R. Arbon,
Rosalinda R. Arquisola, Corazon Rotea, Fe R. Ebora, Caridad Rotea, Angeles Vda. De Renacia,
Jorge Rotea, Maria Luisa Rotea-Villegas, Alfredo R. Rotea, represented by his heirs,
namely: Lizbeth Rotea and Elepeth Rotea; Luis Rotea, represented by his heir Jennifer Rotea; and
Rolando R. Rotea, represented by his heir Rolando R. Rotea Jr., Lot No. 916 with an area of 2,355
square meters and Lot No. 920 consisting of 3,097 square meters in Lahug, Cebu City, with all the
improvements thereon evolving through nature or time, but excluding those that were introduced by
third parties, i.e., DPWH, which shall be governed by existing contracts and relevant provisions of law;
(b) ORDERING petitioner Heirs of Timoteo Moreno and Maria Rotea TO PAY respondent MCIAA
what the former received as just compensation for the expropriation of Lots Nos. 916 and 920 in Civil
Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential
damages by way of legal interest from 16 November 1947. Petitioners must likewise PAY respondent
MCIAA the necessary expenses that the latter may have incurred in sustaining the properties and the
monetary value of its services in managing the properties to the extent that petitioners will secure a
benefit from such acts. Respondent MCIAA however may keep whatever income or fruits it may have
obtained from the parcels of land, in the same way that petitioners need not account for the interests
that the amounts they received as just compensation may have earned in the meantime;
(c) ORDERING respondent MCIAA TO CONVEY to petitioners the improvements it may have built
on Lots Nos. 916 and 920, if any, in which case petitioners SHALL PAY for these improvements at the
prevailing free market price, otherwise, if petitioners do not want to appropriate such improvements,
or if respondent does not choose to sell them, respondent MCIAA SHALL REMOVE these
improvements WITHOUT ANY OBLIGATION on the part of petitioners to pay any compensation to
respondent MCIAA for them;
(d) ORDERING petitioners TO PAY the amount so determined under letter (b) of
this dispositive portion as consideration for the reconveyance of Lots Nos. 916 and 920, as well as the
prevailing free market price of the improvements built thereon by respondent MCIAA, if any and
desired to be bought and sold by the parties, in ready money or cash PAYABLE within a period of three
hundred sixty five (365) days from the date that the amount under letter (b) above is determined with
finality, unless the parties herein stipulate a different scheme or schedule of payment, otherwise, after
the period of three hundred sixty five (365) days or the lapse of the compromise scheme or schedule of
payment and the amount so payable is not settled, the right of repurchase of petitioners and the
obligation of respondent MCIAA to so reconvey Lots Nos. 916 and 920 and/or the improvements shall
be DEEMED FORFEITED and the ownership of those parcels of land shall VEST ABSOLUTELY upon HEIRS OF ROSARIO MERCADO, namely, VICENTE LOZADA, MARIO M. ABAD,
respondent MCIAA; LOZADA, MARCIA L. GODINEZ, VIRGINIA L. FLORES, BERNARDO LOZADA, JR., VILLARAMA, JR.,
DOLORES GACASAN, SOCORRO CAFARO and ROSARIO LOZADA, represented PEREZ, and
(e) REMANDING the instant case to RTC-Br. 19 of Cebu City for purposes of determining the by MARCIA LOZADA GODINEZ, MENDOZA, JJ.
amount of compensation for Lots Nos. 916 and 920 to be paid by petitioners as mandated in letter (b) Respondents.
hereof, and the value of the prevailing free market price of the improvements built thereon by Promulgated:
respondent MCIAA, if any and desired to be bought and sold by the parties, and in general, securing
the immediate execution of this Decision under the premises; February 25, 2010
(f) ORDERING petitioners to respect the right of the Department of Public Works and Highways
x------------------------------------------------------------------------------------x
to its lease contract until the expiration of the lease period; and

(g) DELETING the award of P60,000.00 for attorneys fees and P15,000.00 for litigation expenses
against respondent MCIAA and in favor of petitioners. DECISION

This Decision is without prejudice to the claim of intervenor one Richard E. Enchuan on his NACHURA, J.:
allegation that he acquired through deeds of assignment the rights of some of herein petitioners over
Lots Nos. 916 and 920.
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse, annul,
No costs.
and set aside the Decision[1] dated February 28, 2006 and the Resolution[2] dated February 7, 2007 of
SO ORDERED.
the Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV No. 65796.
Quisumbing, Austria-Martinez, Callejo, and Tinga, JJ., concur.

The antecedent facts and proceedings are as follows:

Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square meters, more

or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine when the same was
EN BANC
subject to expropriation proceedings, initiated by the Republic of the Philippines (Republic),
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR G.R. No. 176625 represented by the then Civil Aeronautics Administration (CAA), for the expansion and improvement of
TRANSPORTATION OFFICE,
Petitioners, Present: the Lahug Airport. The case was filed with the then Court of First Instance of Cebu, Third Branch, and

PUNO, C.J., docketed as Civil Case No. R-1881.

CARPIO,
CORONA,
- versus - CARPIO MORALES,VELASCO, JR.,
As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to the
NACHURA, LEONARDO-DE CASTRO,
BRION,
Surplus Property Commission, the Bureau of Aeronautics, the National Airport Corporation and then to
PERALTA,*
BERSAMIN, the CAA.
BERNARDO L. LOZADA, SR., and the DEL CASTILLO,
 an airport, then the policy of this Office is to give priority to the former owners subject to the approval

During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr. acquired Lot of the President.

No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045 was issued in Lozadas

name. On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the Department

of Transportation, directing the transfer of general aviation operations of the Lahug Airport to

On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered the the Mactan International Airport before the end of 1990 and, upon such transfer, the closure of

latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square meter, with the Lahug Airport.

consequential damages by way of legal interest computed from November 16, 1947the time when the

lot was first occupied by the airport. Lozada received the amount of P3,018.00 by way of payment. Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958, entitled An Act

Creating the Mactan-Cebu International Airport Authority, Transferring Existing Assets of the Mactan

The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO), formerly CAA, International Airport and the Lahug Airport to the Authority, Vesting the Authority with Power to

proposed a compromise settlement whereby the owners of the lots affected by the expropriation Administer and Operate the Mactan International Airport and the Lahug Airport, and For Other

proceedings would either not appeal or withdraw their respective appeals in consideration of a Purposes.

commitment that the expropriated lots would be resold at the price they were expropriated in the

event that the ATO would abandon the Lahug Airport, pursuant to an established policy involving From the date of the institution of the expropriation proceedings up to the present, the public purpose

similar cases. Because of this promise, Lozada did not pursue his appeal. Thereafter, Lot No. 88 was of the said expropriation (expansion of the airport) was never actually initiated, realized, or

transferred and registered in the name of the Republic under TCT No. 25057. implemented. Instead, the old airport was converted into a commercial complex. Lot No. 88 became

the site of a jail known as Bagong Buhay Rehabilitation Complex, while a portion thereof was occupied

The projected improvement and expansion plan of the old Lahug Airport, however, was not pursued. by squatters.[3] The old airport was converted into what is now known as the Ayala I.T. Park, a

commercial area.

Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting to

repurchase the lots, as per previous agreement. The CAA replied that there might still be a need for Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and

the Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the assurance that reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB-18823 and was

should this Office dispose and resell the properties which may be found to be no longer necessary as raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint substantially alleged as

follows:

(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No.
88 covered by TCT No. 9045;
(b) In the early 1960s, the Republic sought to acquire by expropriation Lot No.
88, among others, in connection with its program for the improvement
and expansion of the Lahug Airport;
(c) A decision was rendered by the Court of First Instance in favor of the
Government and against the land owners, among whom was Bernardo
Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the parties entered into a compromise
settlement to the effect that the subject property would be resold to the
original owner at the same price when it was expropriated in the event
that the Government abandons the Lahug Airport;
(e) Title to Lot No. 88 was subsequently transferred to the Republic of
the Philippines (TCT No. 25057);
(f) The projected expansion and improvement of the Lahug Airport did not
materialize;
(g) Plaintiffs sought to repurchase their property from then CAA Director Vicente
Rivera. The latter replied by giving as assurance that priority would be
given to the previous owners, subject to the approval of the President,
should CAA decide to dispose of the properties;
(h) On November 29, 1989, then President Corazon C. Aquino, through a
Memorandum to the Department of Transportation and
Communications (DOTC), directed the transfer of general aviation
operations at the Lahug Airport to the Mactan-Cebu International
Airport Authority;
(i) Since the public purpose for the expropriation no longer exists, the property
must be returned to the plaintiffs. [4]
In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically
denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the event
that the property would no longer be needed for airport operations. Petitioners instead asserted that
the judgment of condemnation was unconditional, and respondents were, therefore, not entitled to
recover the expropriated property notwithstanding non-use or abandonment thereof.
After pretrial, but before trial on the merits, the parties stipulated on the following set of facts:
(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in
the City of Cebu, containing an area of One Thousand Seventeen (1,017)
square meters, more or less;
(2) The property was expropriated among several other properties in Lahug in
favor of the Republic of the Philippines by virtue of a Decision dated
December 29, 1961 of the CFI of Cebu in Civil Case No. R-1881;
(3) The public purpose for which the property was expropriated was for the
purpose of the Lahug Airport;
(4) After the expansion, the property was transferred in the name of MCIAA;
[and]
(5) On November 29, 1989, then President Corazon C. Aquino directed the
Department of Transportation and Communication to transfer general
aviation operations of the Lahug Airport to the Mactan-Cebu
International Airport Authority and to close the Lahug Airport after such
transfer[.][5]
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in
favor of the plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado,
namely, Vicente M. Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M.
Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada,
represented by their attorney-in-fact Marcia Lozada Godinez, and against
 defendants Cebu-Mactan International Airport Authority (MCIAA) and Air
Transportation Office (ATO):
1. ordering MCIAA and ATO to restore to plaintiffs the possession and
ownership of their land, Lot No. 88 Psd-821 (SWO-23803), upon payment of the
expropriation price to plaintiffs; and
2. ordering the Register of Deeds to effect the transfer of the Certificate
of Title from defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No. 20357
in the name of defendant MCIAA and to issue a new title on the same lot in the
name of Bernardo L. Lozada, Sr. and the heirs of Rosario Mercado, namely:
Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M.
Lozada.
No pronouncement as to costs.
SO ORDERED.[6]
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate briefs,
the CA rendered its assailed Decision dated February 28, 2006, denying petitioners appeal and
affirming in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners motion for reconsideration
was, likewise, denied in the questioned CA Resolution dated February 7, 2007.
Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a
repurchase agreement or compromise settlement between them and the Government; (2) the
judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to the
Republic; and (3) the respondents claim of verbal assurances from government officials violates the
Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted property on the supposition that the Decision in the
pertinent expropriation proceedings did not provide for the condition that should the intended use of
Lot No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the property would revert
to respondents, being its former owners.Petitioners cite, in support of this position, Fery v. Municipality
of Cabanatuan,[7] which declared that the Government acquires only such rights in expropriated parcels
of land as may be allowed by the character of its title over the properties
If x x x land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former
owner, then, of course, when the purpose is terminated or abandoned the
former owner reacquires the property so expropriated. If x x x land is
expropriated for a public street and the expropriation is granted upon condition
that the city can only use it for a public street, then, of course, when the city
abandons its use as a public street, it returns to the former owner, unless there is
some statutory provision to the contrary. x x x. If, upon the contrary, however,
the decree of expropriation gives to the entity a fee simple title, then, of course,
the land becomes the absolute property of the expropriator, whether it be the
State, a province, or municipality, and in that case the non-user does not have
the effect of defeating the title acquired by the expropriation proceedings. x x x.
When land has been acquired for public use in fee simple,
unconditionally, either by the exercise of eminent domain or by purchase, the
former owner retains no right in the land, and the public use may be abandoned,
or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner. x x x.[8]
Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo
Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority,[9] thus
Moreover, respondent MCIAA has brought to our attention a significant and
telling portion in the Decision in Civil Case No. R-1881 validating our discernment
that the expropriation by the predecessors of respondent was ordered under the
running impression that Lahug Airport would continue in operation
As for the public purpose of the expropriation proceeding,
it cannot now be doubted. Although Mactan Airport is
being constructed, it does not take away the actual
usefulness and importance of the Lahug Airport: it is
handling the air traffic both civilian and military. From it
aircrafts fly to Mindanao and Visayas and pass thru it on
their flights to the North and Manila. Then, no evidence
was adduced to show how soon is the Mactan Airport to
be placed in operation and whether the Lahug Airport will
be closed immediately thereafter. It is up to the other
departments of the Government to determine said
matters. The Court cannot substitute its judgment for
 those of the said departments or agencies.In the absence
of such showing, the Court will presume that Covington Lumber Co.,[14] all uniformly holding that the transfer to a third party of the expropriated real
the Lahug Airport will continue to be in operation
(emphasis supplied). property, which necessarily resulted in the abandonment of the particular public purpose for which the

property was taken, is not a ground for the recovery of the same by its previous owner, the title of the
While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged
the presence of public purpose for the exercise of eminent domain regardless of expropriating agency being one of fee simple.
the survival of Lahug Airport, the trial court in its Decision chose not to do so but
instead prefixed its finding of public purpose upon its understanding
that Lahug Airport will continue to be in operation. Verily, these meaningful
statements in the body of the Decision warrant the conclusion that the Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that private
expropriated properties would remain to be so until it was confirmed
that Lahug Airport was no longer in operation. This inference further implies two property shall not be taken for public use without just compensation.[15] It is well settled that the taking
(2) things: (a) after the Lahug Airport ceased its undertaking as such and the
expropriated lots were not being used for any airport expansion project, the of private property by the Governments power of eminent domain is subject to two mandatory
rights vis--vis the expropriated Lots Nos. 916 and 920 as between the State and
their former owners, petitioners herein, must be equitably adjusted; and (b) the requirements: (1) that it is for a particular public purpose; and (2) that just compensation be paid to
foregoing unmistakable declarations in the body of the Decision should merge
the property owner. These requirements partake of the nature of implied conditions that should be
with and become an intrinsic part of the fallo thereof which under the premises
is clearly inadequate since the dispositive portion is not in accord with the complied with to enable the condemnor to keep the property expropriated. [16]
findings as contained in the body thereof. [10]

Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is apparent that More particularly, with respect to the element of public use, the expropriator should commit to use the

the acquisition by the Republic of the expropriated lots was subject to the condition that property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should

the Lahug Airport would continue its operation. The condition not having materialized because the file another petition for the new purpose. If not, it is then incumbent upon the expropriator to return

airport had been abandoned, the former owner should then be allowed to reacquire the expropriated the said property to its private owner, if the latter desires to reacquire the same. Otherwise, the
[11]
property. judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the

On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation suit proper exercise of the power of eminent domain, namely, the particular public purpose for which the

commenced upon parcels of land to be used as a site for a public market.Instead of putting up a public property will be devoted. Accordingly, the private property owner would be denied due process of law,

market, respondent Cabanatuan constructed residential houses for lease on the area. Claiming that the and the judgment would violate the property owners right to justice, fairness, and equity.

municipality lost its right to the property taken since it did not pursue its public purpose, petitioner

Juan Fery, the former owner of the lots expropriated, sought to recover his properties. However, as he In light of these premises, we now expressly hold that the taking of private property, consequent to the

had admitted that, in 1915, respondent Cabanatuan acquired a fee simple title to the lands in question, Governments exercise of its power of eminent domain, is always subject to the condition that the

judgment was rendered in favor of the municipality, following American jurisprudence, particularly City property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular
[12] [13]
of Fort Wayne v. Lake Shore & M.S. RY. Co., McConihay v. Theodore Wright, and Reichling v. purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former
 agreement,[18] he nevertheless adduced sufficient evidence to support his claim.
owners, if they so desire, may seek the reversion of the property, subject to the return of the amount [19]

of just compensation received. In such a case, the exercise of the power of eminent domain has
As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of Appeals,
become improper for lack of the required factual justification.[17]
[20]
cited by petitioners, where respondent therein offered testimonies which were hearsay in nature,
Even without the foregoing declaration, in the instant case, on the question of whether
the testimony of Lozada was based on personal knowledge as the assurance from the government was
respondents were able to establish the existence of an oral compromise agreement that entitled them
personally made to him. His testimony on cross-examination destroyed neither his credibility as a
to repurchase Lot No. 88 should the operations of the Lahug Airport be abandoned, we rule in the
witness nor the truthfulness of his words.
affirmative.
Verily, factual findings of the trial court, especially when affirmed by the CA, are binding and
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this
conclusive on this Court and may not be reviewed. A petition for certiorariunder Rule 45 of the Rules of
factual issue and have declared, in no uncertain terms, that a compromise agreement was, in fact,
Court contemplates only questions of law and not of fact.[21] Not one of the exceptions to this rule is
entered into between the Government and respondents, with the former undertaking to resell Lot No.
present in this case to warrant a reversal of such findings.
88 to the latter if the improvement and expansion of the Lahug Airport would not be pursued. In
As regards the position of petitioners that respondents testimonial evidence violates the
affirming the factual finding of the RTC to this effect, the CA declared
Lozadas testimony is cogent. An octogenarian widower-retiree and a resident Statute of Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory
of Moon Park, California since 1974, he testified that government
representatives verbally promised him and his late wife while the expropriation contracts, and does not apply to contracts which have been completely or partially performed, the
proceedings were on-going that the government shall return the property if the
purpose for the expropriation no longer exists. This promise was made at the rationale thereof being as follows:
premises of the airport. As far as he could remember, there were no In executory contracts there is a wide field for fraud because unless they be in
expropriation proceedings against his property in 1952 because the first notice of writing there is no palpable evidence of the intention of the contracting
expropriation he received was in 1962.Based on the promise, he did not hire a parties. The statute has precisely been enacted to prevent fraud. However, if a
lawyer. Lozada was firm that he was promised that the lot would be reverted to contract has been totally or partially performed, the exclusion of parol evidence
him once the public use of the lot ceases. He made it clear that the verbal would promote fraud or bad faith, for it would enable the defendant to keep the
promise was made in Lahug with other lot owners before the 1961 decision was benefits already delivered by him from the transaction in litigation, and, at the
handed down, though he could not name the government representatives who same time, evade the obligations, responsibilities or liabilities assumed or
made the promise. It was just a verbal promise; nevertheless, it is binding. The contracted by him thereby.[22]
fact that he could not supply the necessary details for the establishment of his
assertions during cross-examination, but that When it will not be used as In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the
intended, it will be returned back, we just believed in the government, does not
reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially
dismantle the credibility and truthfulness of his allegation. This Court notes that
he was 89 years old when he testified in November 1997 for an incident which performed. By reason of such assurance made in their favor, respondents relied on the same by not
happened decades ago. Still, he is a competent witness capable of perceiving and
making his perception known. The minor lapses are immaterial. The decision of pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact of Lozadas
the competency of a witness rests primarily with the trial judge and must not be
disturbed on appeal unless it is clear that it was erroneous. The objection to his eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of a clerical error in
competency must be made before he has given any testimony or as soon as the
incompetency becomes apparent. Though Lozada is not part of the compromise the judgment as to the true area of Lot No. 88 do not conclusively establish that respondents
absolutely parted with their property. To our mind, these acts were simply meant to cooperate with the
government, particularly because of the oral promise made to them.
The right of respondents to repurchase Lot No. 88 may be enforced based on a
constructive trust constituted on the property held by the government in favor of the former. On this
note, our ruling in Heirs of Timoteo Moreno is instructive, viz.:
Mactan-Cebu International Airport Authority is correct in stating that one would
not find an express statement in the Decision in Civil Case No. R-1881 to the
effect that the [condemned] lot would return to [the landowner] or that [the
landowner] had a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be used other than
as the Lahug Airport. This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have been ideal,
such precision is not absolutely necessary nor is it fatal to the cause of
petitioners herein. No doubt, the return or repurchase of the condemned
properties of petitioners could be readily justified as the manifest legal effect or
consequence of the trial courts underlying presumption that Lahug Airport will
continue to be in operation when it granted the complaint for eminent domain
and the airport discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin to
the implied trust referred to in Art. 1454 of the Civil Code, If an absolute
conveyance of property is made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by virtue of law is
established. If the fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property to him. In the
case at bar, petitioners conveyed Lots No. 916 and 920 to the government with
the latter obliging itself to use the realties for the expansion of Lahug Airport;
failing to keep its bargain, the government can be compelled by petitioners to
reconvey the parcels of land to them, otherwise, petitioners would be denied the
use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.
Although the symmetry between the instant case and the situation
contemplated by Art. 1454 is not perfect, the provision is undoubtedly
applicable. For, as explained by an expert on the law of trusts: The only problem
of great importance in the field of constructive trust is to decide whether in the
numerous and varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of the
defendant. Constructive trusts are fictions of equity which are bound by no
unyielding formula when they are used by courts as devices to remedy any
situation in which the holder of legal title may not in good conscience retain the
beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which the
trustees sole duty is to transfer the title and possession over the property to the
plaintiff-beneficiary. Of course, the wronged party seeking the aid of a court of
equity in establishing a constructive trust must himself do equity. Accordingly, the
court will exercise its discretion in deciding what acts are required of the
plaintiff-beneficiary as conditions precedent to obtaining such decree and has
the obligation to reimburse the trustee the consideration received from the
latter just as the plaintiff-beneficiary would if he proceeded on the theory of
rescission. In the good judgment of the court, the trustee may also be paid the
necessary expenses he may have incurred in sustaining the property, his fixed
costs for improvements thereon, and the monetary value of his services in
managing the property to the extent that plaintiff-beneficiary will secure a
benefit from his acts.
The rights and obligations between the constructive trustee and the beneficiary,
in this case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are
echoed in Art. 1190 of the Civil Code, When the conditions have for their purpose
the extinguishment of an obligation to give, the parties, upon the fulfillment of
said conditions, shall return to each other what they have received x x x In case
of the loss, deterioration or improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding article shall be applied to
the party who is bound to return x x x.[23]
On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former what they received as just compensation for the
expropriation of the property, plus legal interest to be computed from default, which in this case runs
from the time petitioners comply with their obligation to respondents.
Respondents must likewise pay petitioners the necessary expenses they may have incurred in
maintaining Lot No. 88, as well as the monetary value of their services in managing it to the extent that
respondents were benefited thereby.
Following Article 1187[24] of the Civil Code, petitioners may keep whatever income or fruits they may
have obtained from Lot No. 88, and respondents need not account for the interests that the amounts
they received as just compensation may have earned in the meantime.
In accordance with Article 1190[25] of the Civil Code vis--vis Article 1189, which provides that (i)f a thing

is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x,

respondents, as creditors, do not have to pay, as part of the process of restitution, the appreciation in

value of Lot No. 88, which is a natural consequence of nature and time.[26]

WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals, affirming

the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and its February 7,

2007 Resolution are AFFIRMED with MODIFICATION as follows:

1. Respondents are ORDERED to return to petitioners the just compensation they received for the

expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from the time

petitioners comply with their obligation to reconvey Lot No. 88 to them;

2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in

maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents were

benefited thereby;

3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained

from Lot No. 88; and

4. Respondents are also ENTITLED to keep whatever interests the amounts they received as just

compensation may have earned in the meantime, as well as the appreciation in value of Lot No. 88,

which is a natural consequence of nature and time;

In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court, Branch

57, Cebu City, only for the purpose of receiving evidence on the amounts that respondents will have to

pay petitioners in accordance with this Courts decision. No costs.

SO ORDERED.
SUPREME COURT In view of the demurrer interposed by the plaintiffs to the answer of the defendant, the latter, on the
29th of August, 1904, filed an amended answer, denying each and everyone of the allegations of the
Manila complaint, and alleged that no statutory easement existed nor could exist in favor of the lands
described in the complaint, permitting the waters to flow over the fish pond that he, together with his
EN BANC brothers, owned in the sitio of Bambang, the area and boundaries of which were stated by him, and
which he and his brothers had inherited from their deceased mother.
G.R. No. 4223 August 19, 1908
Apolinara de Leon; that the same had been surveyed by a land surveyor in September, 1881, he also
denied that he had occupied or converted any land in the barrio of Bambang into a fishpond; therefore,
NICOLAS LUNOD, ET AL., plaintiffs-appellees,
and to sentence the plaintiffs to pay the costs and corresponding damages.
vs.
HIGINO MENESES, defendant-appellant.
Upon the evidence adduced by both parties to the suit, the court, on the 13th of March, 1907, entered
judgment declaring that the plaintiffs were entitled to a decision in their favor, and sentenced the
T. Icasiano, for appellant.
defendant to remove the dam placed on the east of the Paraanan passage on the side of the Taliptip
R. Salinas, for appellee.
River opposite the old dam in the barrio of Bambang, as well as to remove and destroy the obstacles to
the free passage of the waters through the strip of land in Paraanan; to abstain in future, and forever,
TORRES, J.: from obstructing or closing in any manner the course of the waters through the said strip of land. The
request that the defendant be sentenced to pay an indemnity was denied, and no ruling was made as
On the 14th of March, 1904, Nicolas Lunod, Juan de la Vega, Evaristo Rodriguez, Fernando Marcelo, to costs.
Esteban Villena, Benito Litao, Ventura Hernandez, and Casimiro Pantanilla, residents of the town of
Bulacan, province of the same name, filed a written complaint against Higino Meneses, alleging that The defendant excepted to the above judgment and furthermore asked for a new trial which was
they each owned and possessed farm lands, situated in the places known as Maytunas and Balot, near denied and also excepted to, and, upon approval of the bill of exceptions, the question was submitted
a small lake named Calalaran; that the defendant is the owner of a fish-pond and a strip of land to this court.
situated in Paraanan, adjoining the said lake on one side, and the River Taliptip on the other; that from
time immemorial, and consequently for more than twenty years before 1901, there existed and still
Notwithstanding the defendant's denial in his amended answer, it appears to have been clearly proven
exists in favor of the rice fields of the plaintiffs a statutory easement permitting the flow of water over
in this case that the lands owned by the plaintiffs in the aforesaid barrio, as well as the small adjoining
the said land in Paraanan, which easement the said plaintiffs enjoyed until the year 1901 and consisted
lake, named Calalaran, are located in places relatively higher than the sitio called Paraanan where the
in that the water collected upon their lands and in the Calalaran Lake flow through Paraanan into the
land and fish pond of the defendant are situated, and which border on the Taliptip River; that during
Taliptip River. From that year however, the defendant, without any right or reason, converted the land
the rainy season the rain water which falls on he land of the plaintiffs, and which flows toward the
in Paraanan into a fishpond and by means of a dam and a bamboo net, prevented the free passage of
small Calalaran Lake at flood time, has no outlet to the Taliptip River other than through the low land of
the water through said place into the Taliptip River, that in consequence the lands of the plaintiff
Paraanan: that the border line between Calalaran and Paraanan there has existed from time
became flooded and damaged by the stagnant waters, there being no outlet except through the land in
immemorial a dam, constructed by the community for the purpose of preventing the salt waters from
Paraanan; that their plantation were destroyed, causing the loss and damages to the extent of about
the Taliptip River, at high tide, from flooding the land in Calalaran, passing through the lowlands of
P1,000, which loss and damage will continue if the obstructions to the flow of the water are allowed to
Paraanan; but when rainfall was abundant, one of the residents was designated in his turn by the
remain, preventing its passage through said land and injuring the rice plantations of the plaintiffs. They
lieutenant or justice of the barrio to open the sluice gate in order to let out the water that flooded the
therefore asked that judgment be entered against the defendant, declaring that the said tract of land in
rice fields, through the land of Paraanan to the above-mentioned river, that since 1901, the defendant
Paraanan is subject to a statutory easement permitting the flow of water from the property of the
constructed another dam along the boundary of this fishpond in Paraanan, thereby impeding the
plaintiffs, and that, without prejudice to the issuing of a preliminary injunction, the defendant be
outlet of the waters that flood the fields of Calalaran, to the serious detriment of the growing crops.
ordered to remove and destroy the obstructions that impede the passage of the waters through
Paraanan, and that in future, and forever, he abstain from closing in any manner the aforesaid tract of
land; that, upon judgment being entered, the said injunction be declared to be final and that the According to article 530 of the Civil Code, an easement is charge imposed upon one estate for the
defendant be sentenced to pay to the plaintiffs an indemnity of P1,000, and the costs in the benefit of another estate belonging to a different owner, and the realty in favor of which the easement
proceedings; that they be granted any other and further equitable or proper remedy in accordance is established is called the dominant estate, and the one charged with it the servient estate.
with the facts alleged and proven.
The lands of Paraanan being the lower are subject to the easement of receiving and giving passage to
the waters proceeding from the higher lands and the lake of Calalaran; this easement was not
constituted by agreement between the interested parties; it is of a statutory nature, and the law had
imposed it for the common public utility in view of the difference in the altitude of the lands in the
barrio Bambang.
Article 552 of the Civil code provides:
Lower estates must receive the waters which naturally and without the intervention of man
descend from the higher estates, as well as the stone or earth which they carry with them.
Neither may the owner of the lower estates construct works preventing this easement, nor
the one of the higher estate works increasing the burden.
Article 563 of the said code reads also:
The establishment, extent, form, and conditions of the easements of waters to which this
section refers shall be governed by the special law relating thereto in everything not
provided for in this code.
The special law cited in the Law of Waters of August 3, 1866, article 111 of which, treating of natural
easements relating to waters, provides:
Lands situated at a lower level are subject to receive the waters that flow naturally, without
the work of man, from the higher lands together with the stone or earth which they carry
with them.
Hence, the owner of the lower lands can not erect works that will impede or prevent such an easement
or charge, constituted and imposed by the law upon his estate for the benefit of the higher lands
belonging to different owners; neither can the latter do anything to increase or extend the easement.
According to the provisions of law above referred to, the defendant, Meneses, had no right to construct
the works, nor the dam which blocks the passage, through his lands and the outlet to the Taliptip River,
of the waters which flood the higher lands of the plaintiffs; and having done so, to the detriment of the
easement charged on his estate, he has violated the law which protects and guarantees the respective
rights and regulates the duties of the owners of the fields in Calalaran and Paraanan.
It is true that article 388 of said code authorizes every owner to enclose his estate by means of walls,
ditches fences or any other device, but his right is limited by the easement imposed upon his estate.
The defendant Meneses might have constructed the works necessary to make and maintain a fish pond
within his own land, but he was always under the strict and necessary obligation to respect the
statutory easement of waters charged upon his property, and had no right to close the passage and
outlet of the waters flowing from the lands of the plaintiffs and the lake of Calalaran into the Taliptip
River. He could not lawfully injure the owners of the dominant estates by obstructing the outlet to the
Taliptip River of the waters flooding the upper lands belonging to the plaintiffs.
It is perhaps useful and advantageous to the plaintiffs and other owners of high lands in Calalaran, in
addition to the old dike between the lake of said place and the low lands in Paraanan, to have another
made by the defendant at the border of Paraanan adjoining the said river, for the purpose of
preventing the salt waters of the Taliptip River flooding, at high tide, not only the lowlands in Paraanan
but also the higher ones of Calalaran and its lake, since the plaintiffs can not prevent the defendant
from protecting his lands against the influx of salt water; but the defendant could never be permitted
to obstruct the flow of the waters through his lands to the Taliptip River during the heavy rains, when
the high lands in Calalaran and the lake in said place are flooded, thereby impairing the right of the
owners of the dominant estates.
For the above reasons, and accepting the findings of the court below in the judgment appealed from in
so far as they agree with the terms of this decision, we must and do hereby declare that the defendant,
Higino Meneses, as the owner of the servient estate, is obliged to give passage to and allow the flow of
the waters descending from the Calalaran Lake and from the land of the plaintiffs through his lands in
Paraanan for their discharge into the Taliptip River; and he is hereby ordered to remove any obstacle
that may obstruct the free passage of the waters whenever there may be either a small or large volume
of running water through his lands in the sitio of Paraanan for their discharge into the Taliptip River;
and in future to abstain from impeding, in any manner, the flow of the waters coming from the higher
lands. The judgment appealed from is affirmed, in so far as it agrees with decision, and reversed in
other respects, with the costs of this instance against the appellants. So ordered.
Carson, Willard and Tracey, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-37409 May 23, 1988
NICOLAS VALISNO, plaintiff-appellant,
vs.
FELIPE ADRIANO, defendant-appellee.
Honorio Valisno Garcia I for plaintiff-appelant.
Felipe K Medina for defendant-appellee.
GRIO-AQUINO, J.:
This case was certified to this Court by the Court of Appeals in a resolution dated August 10, 1973, the
sole issue being a question of law and beyond its jurisdiction. to decide.
Admitted by the parties in their pleading and established during the trial on the merits are the
following material facts:
On June 20, 1960, 'the plaintiff-appellant file against the defendant-appellee an action for damages
docketed as Civil Case No. 3472 in the Court of First Instance of Nueva Ecija. The complaint alleged that
the plaintiff is the absolute owner and actual possessor of a 557,949-square-meter parcel of land in La
Fuente, Santa Rosa, Nueva Ecija, and more particularly described in his Transfer Certificate of Title No.
NT-16281. The plaintiff-appellant Valisno bought the land from the defendant-appellees sister,
Honorata Adriano Francisco, on June 6,1959. (Deed of Absolute Sale, Exh. "A".) The land which is
planted with watermelon, peanuts, corn, tobacco, and other vegetables adjoins that of the appellee
Felipe Adriano on the bank of the Pampanga River. Both parcels of land had been inherited by
Honorata Adriano Francisco and her brother, Felipe Adriano, from their father, Eladio Adriano. At the
time of the sale of the land to Valisno, the land was irrigated by water from the Pampanga River
through a canal about seventy (70) meters long, traversing the appellee's land.
On December 16, 1959, the appellee levelled a portion of the irrigation canal so that the appellant was
deprived of the irrigation water and prevented from cultivating his 57-hectare land.
The appellant filed in the Bureau of Public Works and Communications a complaint for deprivation of
water rights. A decision was rendered on March 22, 1960 ordering Adriano to reconstruct the irrigation
canal, "otherwise judicial action shall be taken against him under the provisions of Section 47 of Act
2152 (the Irrigation Act), as amended." Instead of restoring the irrigation canal, the appellee asked for
a reinvestigation of the case by the Bureau of Public Works and Communications. A reinvestigation was
granted.
In the meantime, plaintiff Valisno rebuilt the irrigation canal at his own expense because his need for
water to irrigate his watermelon fields was urgent.
On June 20, 1960, he filed a complaint for damages in the Court of First Instance (now Regional Trial
Court) of Nueva Ecija (Civil Case No. 3472) claiming that he suffered damages amounting to P8,000
when he failed to plant his fields that year (1960) for lack of irrigation water, P800 to reconstruct the
canal on defendant Adriano's land, and P1,500 for attorney's fees and the costs of suit.
On October 25, 1961, the Secretary of Public Works and Communications reversed the Bureau's
decision by issuing a final resolution dismissing Valisno's complaint. The Secretary held that Eladio
Adriano's water rights which had been granted in 1923 ceased to be enjoyed by him in 1936 or 1937,
when his irrigation canal collapsed. His non-use of the water right since then for a period of more than
five years extinguished the grant by operation of law, hence the water rights did not form part of his
hereditary estate which his heirs partitioned among themselves. Valisno, as vendee of the land which
Honorata received from her father's estate did not acquire any water rights with the land purchased.
In his answer to the damage suit (Civil Case No. 3472), the defendant Felipe Adriano admitted that he
levelled the irrigation canal on his land, but he averred: that neither his late father nor his sister
Honorata possessed water rights for the land which she sold to the appellant; that he (the appellee)
applied for water rights for his land in 1956 and obtained the same in 1958; and that he had a perfect
right to level his land for his own use because he merely allowed his sister to use his water rights when
she still owned the adjacent land. He set up a counterclaim for P3,000 as damages incurred by him in
levelling the land on which the appellant dug an irrigation canal, P2,000 as actual damages, P3,000 as
attorney's fees, and expenses of litigation.
In a decision dated April 21, 1966, the trial court held that the plaintiff had no right to pass through the
defendant's land to draw water from the Pampanga River. It pointed out that under Section 4 of the
Irrigation Law, controversies between persons claiming a right to water from a stream are within the
jurisdiction of the Secretary of Public Works and his decision on the matter is final, unless an appeal is
taken to the proper court within thirty days. The court may not pass upon the validity of the decision of
the Public Works Secretary collaterally. Furthermore, there was nothing in the plaintiff 's evidence to
show that the resolution was not valid. It dismissed the complaint and counterclaim.
The plaintiff's motion for reconsideration of the decision was denied by the trial court. The plaintiff
appealed to the Court of Appeals which certified the case to Us upon the legal question of whether the
provisions of the Irrigation Act (Act No. 2152) or those of the Civil Code should apply to this case.
The plaintiff-appellant argues that while the trial court correctly held that the Secretary of Public Works may legally
decide who between the parties is entitled to apply for water rights under the Irrigation Act, it erred in ruling that the
Secretary has authority to hear and decide the plaintiff 's claim for damages for the defendant's violation of his
(plaintiff's) right to continue to enjoy the easement of aqueduct or water through the defendant's land under Articles
642, 643, and 646 of the Civil Code, which provide:
Article 642. Any person who may wish to use upon his own estate any water of which he can
dispose shall have the right to make it flow through the intervening estates, with the
obligation to indemnify their owners, as well as the owners of the lower estates upon which
the waters may filter or descend.
Article 643. One desiring to make use of the right granted inthe preceding article is obliged:
(1) To prove that he can dispose of the water and that it is sufficient for the use for which it is
intended;
(2) To show that the proposed right of way is the most convenient and the least onerous to
third persons;
(3) To indemnify the owner of the servient estate in the manner determined by the laws and
regulations.
Article 646. For legal purposes, the easement of aqueduct shall be considered as continuous
and apparent, even though the flow of the water may not be continuous, or its use depends
upon the needs of the dominant estate, or upon a schedule of alternate days or hours.
The existence of the irrigation canal on defendant's land for the passage of water from the Pampanga River to
Honorata's land prior to and at the time of the sale of Honorata's land to the plaintiff was equivalent to a title for the
vendee of the land to continue using it as provided in Article 624 of the Civil Code:
Article 624. The existence of an apparent sign of easement between two estates, established
or maintained by the owner of both shall be considered, should either of them be
alienated, as a title in order that he easement may continue actively and passively, unless at
the time, theownership of the two estates is divided, the contrary should be provided in the
title of conveyance of either of them, or the sign aforesaid should be removed before the
execution of the deed.
This provision shall also apply in case of the division of a thing owned in common on by two or more persons (Civil
Code)
This provision was lifted from Article 122 of the Spanish Law of Waters which provided:
Article 122. Whenever a tract of irrigated land which previously received its waters from a
single point is divided through inheritance, sale or by virtue of some other title, between
two or more owners, the owners of the higher estates are under obligation to give free
passage to the water as an easement of conduit for the irrigation of the lower estates, and
without right to any compensation therefore unless otherwise stipulated in the deed of
conveyance. (Art. 122, Spanish Law of Waters of August 3, 1866.)
No enlightened concept of ownership can shut out the Idea of restrictions thereon, such as easements. Absolute and
unlimited dominion is unthinkable, inasmuch as the proper enjoyment of property requires mutual service and
forbearance among adjoining estates (Amor vs. Florentino, 74 Phil. 403).
As indicated in the decision dated March 22, 1960 of the Bureau of Works "the principal issue involved in this case
falls under the subject of servitude of waters which are governed by Article 648 of the new Civil Code and the
suppletory laws mentioned in the cases of Lunod vs. Meneses 11 Phil. 128) and Osmena vs. Camara (C.A. 380 62773)
which are the irrigation law and the Spanish Law of Waters of August 3, 1866, specifically Article 122 thereof.
The deed of sale in favor of Valisno included the "conveyance and transfer of the water rights and improvements"
appurtenant to Honorata Adriano's property. By the terms of the Deed of Absolute Sale, the vendor Honorata Adriano
Francisco sold, ceded, conveyed and transferred to Dr. Nicolas Valisno all "rights, title, interest and participations over
the parcel of land above- described, together with one Berkely Model 6 YRF Centrifugal Pump G" suction, 6" discharge
500-1500 GPM, with Serial No. 5415812 and one (1) set of suction pipe and discharge of pipe with elbow, nipples,
flanges and footvalves," and the water rights and such other improvements appertaining to the property subject of
this sale. According to the appellant, the water right was the primary consideration for his purchase of Honorata's
property, for without it the property would be unproductive.
Water rights, such as the right to use a drainage ditch for irrigation purposes, which are appurtenant to a parcel of
land, pass with the conveyance of the land, although not specifically mentioned in the conveyance. The purchaser's
easement of necessity in a water ditch running across the grantor's land cannot be defeated even if the water is
supplied by a third person (Watson vs. French, 112 Me 371 19 C.J. 868-897). The fact that an easement by grant may
also have qualified as an easement of necessity does detract from its permanency as property right, which survives
the determination of the necessity (Benedicto vs. CA, 25 SCRA 145).<re||an1w>
As an easement of waters in favor of the appellant has been established, he is entitled to enjoy it free
from obstruction, disturbance or wrongful interference (19 CJ 984), such as the appellee's act of
levelling the irrigation canal to deprive him of the use of water from the Pampanga River.
WHEREFORE, the appealed decision is set aside, and a new one is entered ordering the appellee to
grant the appellant continued and unimpeded use of the irrigation ditch traversing his land in order to
obtain water from the Pampanga River to irrigate appellant's land. Let the records of this case be
remanded to the court a quo for the reception of evidence on the appellant's claim for damages.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 77425 June 19, 1991
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the
SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA
RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.
G.R. No. 77450 June 19, 1991
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the
SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA
RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.
Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite.
Dolorfino and Dominguez Law Offices for Sps. Ignao.
Joselito R. Enriquez for private respondents
REGALADO, J.:
These two petitions for review on certiorari1 seek to overturn the decision of the Court of Appeals in
CA-G.R. CV No. 054562 which reversed and set aside the order of the Regional Trial Court of Imus,
Cavite dismissing Civil Case No. 095-84, as well as the order of said respondent court denying
petitioner's motions for the reconsideration of its aforesaid decision.
On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of
donation, rescission of contract and reconveyance of real property with damages against petitioners
Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the
Roman Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and
which was docketed as Civil Case No. 095-84 therein.3
In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro
and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant
Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral Survey of Kawit),
located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation
allegedly provides that the donee shall not dispose or sell the property within a period of one hundred
(100) years from the execution of the deed of donation, otherwise a violation of such condition would
render ipso facto null and void the deed of donation and the property would revert to the estate of the
donors.
It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to
dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all
properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred
on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of
petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000. 00. As a
consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of
Cavite on November 15, 1980 in the name of said petitioner spouses.
What transpired thereafter is narrated by respondent court in its assailed decision. 4
On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss
based on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to
sue; and (2) the complaint states no cause of action.
On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on
three (3) grounds, the first two (2) grounds of which were identical to that of the motion to dismiss
filed by the Ignao spouses, and the third ground being that the cause of action has prescribed.
On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the
ground that he is not a real party in interest and, therefore, the complaint does not state a cause of
action against him.
After private respondents had filed their oppositions to the said motions to dismiss and the petitioners
had countered with their respective replies, with rejoinders thereto by private respondents, the trial
court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of
action has prescribed.5
Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or
not the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b)
whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of
sale) on the ground of prescription carries with it the dismissal of the main action for reconveyance of
real property.6
On December 23, 1986, respondent Court of Appeals, holding that the action has not yet prescibed,
rendered a decision in favor of private respondents, with the following dispositive portion:
 WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE
and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court
for further proceedings. No Costs.7
Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for
reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6,
1987,8 hence, the filing of these appeals by certiorari.
It is the contention of petitioners that the cause of action of herein private respondents has already
prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked
at the instance of the donor, when the donee fails to comply with any of the conditions which the
former imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-
compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised
against the donee's heirs.
We do not agree.
Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation
must be brought within four (4) years from the non-compliance of the conditions of the donation, the
same is not applicable in the case at bar. The deed of donation involved herein expressly provides for
automatic reversion of the property donated in case of violation of the condition therein, hence a
judicial declaration revoking the same is not necessary, As aptly stated by the Court of Appeals:
By the very express provision in the deed of donation itself that the violation of the
condition thereof would render ipso facto null and void the deed of donation, WE are of the
opinion that there would be no legal necessity anymore to have the donation judicially
declared null and void for the reason that the very deed of donation itself declares it so. For
where (sic) it otherwise and that the donors and the donee contemplated a court action
during the execution of the deed of donation to have the donation judicially rescinded or
declared null and void should the condition be violated, then the phrase reading "would
render ipso facto null and void"would not appear in the deed of donation.9
In support of its aforesaid position, respondent court relied on the rule that a judicial action for
rescission of a contract is not necessary where the contract provides that it may be revoked and
cancelled for violation of any of its terms and conditions.10 It called attention to the holding that there
is nothing in the law that prohibits the parties from entering into an agreement that a violation of the
terms of the contract would cause its cancellation even without court intervention, and that it is not
always necessary for the injured party to resort to court for rescission of the contract.11 It reiterated the
doctrine that a judicial action is proper only when there is absence of a special provision granting the
power of cancellation.12
It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason
why the same should not apply to the donation in the present case. Article 732 of the Civil Code
provides that donations inter vivosshall be governed by the general provisions on contracts and
obligations in all that is not determined in Title III, Book III on donations. Now, said Title III does not
have an explicit provision on the matter of a donation with a resolutory condition and which is subject
to an express provision that the same shall be considered ipso facto revoked upon the breach of said
resolutory condition imposed in the deed therefor, as is the case of the deed presently in question. The
suppletory application of the foregoing doctrinal rulings to the present controversy is consequently
justified.
The validity of such a stipulation in the deed of donation providing for the automatic reversion of the
donated property to the donor upon non-compliance of the condition was upheld in the recent case
of De Luna, et al. vs. Abrigo, et al.13 It was held therein that said stipulation is in the nature of an
agreement granting a party the right to rescind a contract unilaterally in case of breach, without need
of going to court, and that, upon the happening of the resolutory condition or non-compliance with the
conditions of the contract, the donation is automatically revoked without need of a judicial declaration
to that effect. While what was the subject of that case was an onerous donation which, under Article
733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also
subject to the same rules because of its provision on automatic revocation upon the violation of a
resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply.
The rationale for the foregoing is that in contracts providing for automatic revocation, judicial
intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract
already deemed rescinded by virtue of an agreement providing for rescission even without judicial
intervention, but in order to determine whether or not the rescission was proper. 14
When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of
the property donated, the rules on contract and the general rules on prescription should apply, and not
Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to
establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs,
public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties
providing for automatic revocation of the deed of donation, without prior judicial action for that
purpose, is valid subject to the determination of the propriety of the rescission sought. Where such
propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is
not in itself the revocatory act.
On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of
action of herein private respondents has not yet prescribed since an action to enforce a written
contract prescribes in ten (10) years. 15 It is our view that Article 764 was intended to provide a judicial
remedy in case of non-fulfillment or contravention of conditions specified in the deed of donation if
and when the parties have not agreed on the automatic revocation of such donation upon the
occurrence of the contingency contemplated therein. That is not the situation in the case at bar.
Nonetheless, we find that although the action filed by private respondents may not be dismissed by
reason of prescription, the same should be dismissed on the ground that private respondents have no
cause of action against petitioners.
The cause of action of private respondents is based on the alleged breach by petitioners of the
resolutory condition in the deed of donation that the property donated should not be sold within a
period of one hundred (100) years from the date of execution of the deed of donation. Said condition,
in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and
is, therefore, contrary to public policy.
motion was sustained by the trial court and set aside by respondent court, both on the issue of
prescription. That ruling of respondent court interpreting said provision was assigned as an error in the
present petition. While the issue of the validity of the same provision was not squarely raised, it is
ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and
refer to the very same provision.

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property
from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of
the property donated. Although the donor may impose certain conditions in the deed of donation, the
same must not be contrary to law, morals, good customs, public order and public policy. The condition
imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue
restriction on the right of the donee to dispose of the property donated, which right is an indispensable
attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be
perpetual or for an unreasonable period of time.
Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by
analogy.1wphi1Under the third paragraph of Article 494, a donor or testator may prohibit partition for
a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions
of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void.
This Court is clothed with ample authority to review matters, even if they are not assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a just decision of the case: 16 Thus,
we have held that an unassigned error closely related to an error properly assigned, 17 or upon which
the determination of the question properly assigned is dependent, will be considered by the appellate
court notwithstanding the failure to assign it as error.18
Additionally, we have laid down the rule that the remand of the case to the lower court for further
reception of evidence is not necessary where the Court is in a position to resolve the dispute based on
the records before it. On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of remanding them to the trial
court for further proceedings, such as where the ends of justice, would not be subserved by the
remand of the case.19 The aforestated considerations obtain in and apply to the present case with
respect to the matter of the validity of the resolutory condition in question.

It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered
devolution of property by gratuitous title hence, as is generally the case of donations, being an act of DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite.
liberality, the imposition of an unreasonable period of prohibition to alienate the property should be
deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the
SO ORDERED.
regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the
normative policy expressed in the aforesaid Articles 494 and 870 of the Code.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the
property for an entire century, being an unreasonable emasculation and denial of an integral attribute
of ownership, should be declared as an illegal or impossible condition within the contemplation of
Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such
condition shall be considered as not imposed. No reliance may accordingly be placed on said
prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed
of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not
in truth violative of the latter hence, for lack of cause of action, the case for private respondents must
fail.
Republic of the Philippines
It may be argued that the validity of such prohibitory provision in the deed of donation was not SUPREME COURT
specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction Manila THIRD DIVISION
does not prevent this Court from passing upon and resolving the same.
G.R. No. 76217 September 14, 1989
It will readily be noted that the provision in the deed of donation against alienation of the land for one
hundred (100) years was the very basis for the action to nullify the deed of d donation. At the same
time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which
GERMAN MANAGEMENT & SERVICES, INC., petitioner,
vs.
HON. COURT OF APPEALS and ERNESTO VILLEZA, respondents.
G.R. No. L-76216 September 14, 1989
GERMAN MANAGEMENT & SERVICES, INC., petitioner,
vs.
HON. COURT OF APPEALS and ORLANDO GERNALE, respondents.
FERNAN, C.J.:
Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of Pennsylvania, Philadelphia, USA
are the owners of a parcel of land situated in Sitio Inarawan, San Isidro, Antipolo, Rizal, with an area of 232,942 square
meters and covered by TCT No. 50023 of the Register of Deeds of the province of Rizal issued on September 11, 1980
which canceled TCT No. 56762/ T-560. The land was originally registered on August 5, 1948 in the Office of the
Register of Deeds of Rizal as OCT No. 19, pursuant to a Homestead Patent granted by the President of the Philippines
on July 27, 1948, under Act No. 141.
On February 26, 1982, the spouses Jose executed a special power of attorney authorizing petitioner German
Management Services to develop their property covered by TCT No. 50023 into a residential subdivision.
Consequently, petitioner on February 9,1983 obtained Development Permit No. 00424 from the Human Settlements
Regulatory Commission for said development. Finding that part of the property was occupied by private respondents
and twenty other persons, petitioner advised the occupants to vacate the premises but the latter refused.
Nevertheless, petitioner proceeded with the development of the subject property which included the portions
occupied and cultivated by private respondents.
Private respondents filed an action for forcible entry against petitioner before the Municipal Trial Court of Antipolo,
Rizal, alleging that they are mountainside farmers of Sitio Inarawan, San Isidro, Antipolo, Rizal and members of the
Concerned Citizens of Farmer's Association; that they have occupied and tilled their farmholdings some twelve to
fifteen years prior to the promulgation of P.D. No. 27; that during the first week of August 1983, petitioner, under a
permit from the Office of the Provincial Governor of Rizal, was allowed to improve the Barangay Road at Sitio
Inarawan, San Isidro, Antipolo, Rizal at its expense, subject to the condition that it shag secure the needed right of way
from the owners of the lot to be affected; that on August 15, 1983 and thereafter, petitioner deprived private
respondents of their property without due process of law by: (1) forcibly removing and destroying the barbed wire
fence enclosing their farmholdings without notice; (2) bulldozing the rice, corn fruit bearing trees and other crops of
private respondents by means of force, violence and intimidation, in violation of P.D. 1038 and (3) trespassing,
coercing and threatening to harass, remove and eject private respondents from their respective farmholdings in
violation of P.D. Nos. 316, 583, 815, and 1028. 1
On January 7,1985, the Municipal Trial Court dismissed private respondents' complaint for forcible entry. 2 On appeal,
the Regional Trial Court of Antipolo, Rizal, Branch LXXI sustained the dismissal by the Municipal Trial Court. 3
Private respondents then filed a petition for review with the Court of Appeals. On July 24,1986, said court gave due
course to their petition and reversed the decisions of the Municipal Trial Court and the Regional Trial Court. 4
The Appellate Court held that since private respondents were in actual possession of the property at the time they
were forcibly ejected by petitioner, private respondents have a right to commence an action for forcible entry
regardless of the legality or illegality of possession. 5 Petitioner moved to reconsider but the same was denied by the
Appellate Court in its resolution dated September 26, 1986. 6 Hence, this recourse.
The issue in this case is whether or not the Court of Appeals denied due process to petitioner when it reversed the
decision of the court a quo without giving petitioner the opportunity to file its answer and whether or not private
respondents are entitled to file a forcible entry case against petitioner. 7
We affirm. The Court of Appeals need not require petitioner to file an answer for due process to exist. The comment
filed by petitioner on February 26, 1986 has sufficiently addressed the issues presented in the petition for review filed
by private respondents before the Court of Appeals. Having heard both parties, the Appellate Court need not await or
require any other additional pleading. Moreover, the fact that petitioner was heard by the Court of Appeals on its
motion for reconsideration negates any violation of due process.
Notwithstanding petitioner's claim that it was duly authorized by the owners to develop the subject property, private
respondents, as actual possessors, can commence a forcible entry case against petitioner because ownership is not in
issue. Forcible entry is merely a quieting process and never determines the actual title to an estate. Title is not
involved. 8
In the case at bar, it is undisputed that at the time petitioner entered the property, private respondents were already
in possession thereof . There is no evidence that the spouses Jose were ever in possession of the subject property. On
the contrary, private respondents' peaceable possession was manifested by the fact that they even planted rice, corn
and fruit bearing trees twelve to fifteen years prior to petitioner's act of destroying their crops.
Although admittedly petitioner may validly claim ownership based on the muniments of title it presented, such
evidence does not responsively address the issue of prior actual possession raised in a forcible entry case. It must be
stated that regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall
not be turned out by a strong hand, violence or terror. 9 Thus, a party who can prove prior possession can recover
such possession even against the owner himself. Whatever may be the character of his prior possession, if he has in
his favor priority in time, he has the security that entitles him to remain on the property until he is lawfully ejected by
a person having a better right by accion publiciana or accion reivindicatoria. 10
Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioner's drastic action of bulldozing
and destroying the crops of private respondents on the basis of the doctrine of self-help enunciated in Article 429 of
the New Civil Code. 11 Such justification is unavailing because the doctrine of self-help can only be exercised at the
time of actual or threatened dispossession which is absent in the case at bar. When possession has already been lost,
the owner must resort to judicial process for the recovery of property. This is clear from Article 536 of the Civil Code
which states, "(I)n no case may possession be acquired through force or intimidation as long as there is a possessor
who objects thereto. He who believes that he has an action or right to deprive another of the holding of a thing, must
invoke the aid of the competent court, if the holder should refuse to deliver the thing."
WHEREFORE, the Court resolved to DENY the instant petition. The decision of the Court of Appeals dated July 24,1986
is hereby AFFIRMED. Costs against petitioner.SO ORDERED.
FIRST DIVISION
 Caironesa M. Ibrahim, instituted an action against petitioner National Power Corporation (NAPOCOR)
NATIONAL POWER G.R. No. 168732
CORPORATION, for recovery of possession of land and damages before the Regional Trial Court (RTC) of Lanao del Sur.
Petitioner,
Present:
In their complaint, Ibrahim and his co-heirs claimed that they were owners of several
-versus-

LUCMAN G. IBRAHIM, OMAR PUNO, C.J., Chairperson, parcels of land described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into
G. MARUHOM, ELIAS G. SANDOVAL-GUTIERREZ,*
MARUHOM, BUCAY G. CORONA, three (3) lots, i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each
MARUHOM, FAROUK G. AZCUNA, and
MARUHOM, HIDJARA G. GARCIA, JJ. respectively. Sometime in 1978, NAPOCOR, through alleged stealth and without respondents
MARUHOM, ROCANIA G.
MARUHOM, POTRISAM G. knowledge and prior consent, took possession of the sub-terrain area of their lands and constructed
MARUHOM, LUMBA G. Promulgated:
MARUHOM, SINAB G. therein underground tunnels. The existence of the tunnels was only discovered sometime in July 1992
MARUHOM, ACMAD G.
MARUHOM, SOLAYMAN G. June 29, 2007 by respondents and then later confirmed on November 13, 1992 by NAPOCOR itself through a
MARUHOM, MOHAMAD M.
IBRAHIM, and CAIRONESA M.
memorandum issued by the latters Acting Assistant Project Manager. The tunnels were apparently
IBRAHIM,
Respondents.
X----------------------------------------------------------------------------------------X being used by NAPOCOR in siphoning the water of Lake Lanao and in the operation of NAPOCORs Agus
DECISION
II, III, IV, V, VI, VII projects located in Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and
AZCUNA, J.:
Ditucalan and Fuentes in Iligan City.
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water
annul the Decision[1] dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No.
District for a permit to construct and/or install a motorized deep well in Lot 3 located in Saduc, Marawi
57792.
The facts are as follows: City but his request was turned down because the construction of the deep well would cause danger to

On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in lives and property. On October 7, 1992, respondents demanded that NAPOCOR pay damages and

behalf of his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, vacate the sub-terrain portion of their lands but the latter refused to vacate much less pay damages.

Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Respondents further averred that the construction of the underground tunnels has endangered their

Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and lives and properties as Marawi City lies in an area of local volcanic and tectonic activity. Further, these

illegally constructed tunnels caused them sleepless nights, serious anxiety and shock thereby entitling
them to recover moral damages and that by way of example for the public good, NAPOCOR must be On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for Execution of Judgment

held liable for exemplary damages. Pending Appeal. On the other hand, NAPOCOR filed a Notice of Appeal by registered mail on August 19,

Disputing respondents claim, NAPOCOR filed an answer with counterclaim denying the material 1996. Thereafter, NAPOCOR filed a vigorous opposition to the motion for execution of judgment

allegations of the complaint and interposing affirmative and special defenses, namely that (1) there is a pending appeal with a motion for reconsideration of the Decision which it had received on August 9,

failure to state a cause of action since respondents seek possession of the sub-terrain portion when 1996.

they were never in possession of the same, (2) respondents have no cause of action because they On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of

failed to show proof that they were the owners of the property, and (3) the tunnels are a government Appeal purposely to give way to the hearing of its motion for reconsideration.

project for the benefit of all and all private lands are subject to such easement as may be necessary for On August 28, 1996, the RTC issued an Order granting execution pending appeal and

the same.[2] denying NAPOCORs motion for reconsideration, which Order was received by NAPOCOR on September

On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as follows: 6, 1996.
WHEREFORE, judgment is hereby rendered:
1. Denying plaintiffs [private respondents] prayer for On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which was
defendant [petitioner] National Power Corporation to dismantle the
underground tunnels constructed between the lands of plaintiffs in Lots 1, 2, and denied by the RTC on the ground of having been filed out of time. Meanwhile, the Decision of the RTC
3 of Survey Plan FP (VII-5) 2278;
2. Ordering defendant to pay to plaintiffs the fair market
was executed pending appeal and funds of NAPOCOR were garnished by respondents Ibrahim and his
value of said 70,000 square meters of land covering Lots 1, 2, and 3 as described
in Survey Plan FP (VII-5) 2278 less the area of 21,995 square meters at P1,000.00
per square meter or a total of P48,005,000.00 for the remaining unpaid portion co-heirs.
of 48,005 square meters; with 6% interest per annum from the filing of this case
until paid; On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G.
3. Ordering defendant to pay plaintiffs a reasonable monthly
rental of P0.68 per square meter of the total area of 48,005 square meters Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara
effective from its occupancy of the foregoing area in 1978 or a total
of P7,050,974.40. G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom asserting as follows:
1) they did not file a motion to reconsider or appeal the decision within
4. Ordering defendant to pay plaintiffs the sum the reglementary period of fifteen (15) days from receipt of judgment
of P200,000.00 as moral damages; and because they believed in good faith that the decision was for
damages and rentals and attorneys fees only as prayed for in the
5. Ordering defendant to pay the further sum complaint:
of P200,000.00 as attorneys fees and the costs. 2) it was only on August 26, 1996 that they learned that the amounts
SO ORDERED.[3] awarded to the plaintiffs represented not only rentals, damages and
attorneys fees but the greatest portion of which was payment of just
compensation which in effect would make the defendant NPC the
owner of the parcels of land involved in the case;
 3) when they learned of the nature of the judgment, the period of
appeal has already expired;
4) they were prevented by fraud, mistake, accident, or excusable
negligence from taking legal steps to protect and preserve their rights
over their parcels of land in so far as the part of the decision
decreeing just compensation for petitioners properties;
5) they would never have agreed to the alienation of their property in
favor of anybody, considering the fact that the parcels of land
involved in this case were among the valuable properties they
inherited from their dear father and they would rather see their land
crumble to dust than sell it to anybody.[4]
The RTC granted the petition and rendered a modified judgment dated September 8, 1997,
thus:
WHEREFORE, a modified judgment is hereby rendered:
1) Reducing the judgment award of plaintiffs for the fair
market value of P48,005,000.00 by 9,526,000.00 or for a
difference by P38,479,000.00 and by the further sum
of P33,603,500.00 subject of the execution pending appeal
leaving a difference of 4,878,500.00 which may be the
subject of execution upon the finality of this modified
judgment with 6% interest per annum from the filing of
the case until paid.
2) Awarding the sum of P1,476,911.00 to herein petitioners
Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom,
Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G.
Maruhom, Portrisam G. Maruhom and Lumba G.
Maruhom as reasonable rental deductible from the
awarded sum of P7,050,974.40 pertaining to plaintiffs.
3) Ordering defendant embodied in the August 7, 1996
decision to pay plaintiffs the sum of P200,000.00 as moral
damages; and further sum of P200,000.00 as attorneys
fees and costs.
SO ORDERED.[5]
Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.
In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated
the original Decision dated August 7, 1996, amending it further by deleting the award of moral
damages and reducing the amount of rentals and attorneys fees, thus:
WHEREFORE, premises considered, herein Appeals are hereby
partially GRANTED, the Modified Judgment is ordered SET ASIDE and rendered
of no force and effect and the original Decision of the court a quo dated 7 August
1996 is hereby RESTORED with the MODIFICATION that the award of moral
damages is DELETED and the amounts of rentals and attorneys fees
are REDUCED to P6,888,757.40 and P50,000.00, respectively.
In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to
reassess and determine the additional filing fee that should be paid by Plaintiff-
Appellant IBRAHIM taking into consideration the total amount of damages
sought in the complaint vis--vis the actual amount of damages awarded by this
Court. Such additional filing fee shall constitute a lien on the judgment.
SO ORDERED.[6]
Hence, this petition ascribing the following errors to the CA:
(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR
SUBJECT PROPERTIES TO ENTITLE THEM TO JUST COMPENSATION BY
WAY OF DAMAGES;
(b) ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST
COMPENSATION BY WAY OF DAMAGES, NO EVIDENCE WAS
PRESENTED ANENT THE VALUATION OF RESPONDENTS PROPERTY AT
THE TIME OF ITS TAKING IN THE YEAR 1978 TO JUSTIFY THE AWARD
OF ONE THOUSAND SQUARE METERS (P1000.00/SQ. M.) EVEN AS
PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.
This case revolves around the propriety of paying just compensation to respondents, and, by extension,
the basis for computing the same. The threshold issue of whether respondents are entitled to just
compensation hinges upon who owns the sub-terrain area occupied by petitioner.
Petitioner maintains that the sub-terrain portion where the underground tunnels were
constructed does not belong to respondents because, even conceding the fact that respondents owned
the property, their right to the subsoil of the same does not extend beyond what is necessary to enable
them to obtain all the utility and convenience that such property can normally give. In any case,
petitioner asserts that respondents were still able to use the subject property even with the existence
of the tunnels, citing as an example the fact that one of the respondents, Omar G. Maruhom, had
established his residence on a part of the property. Petitioner concludes that the underground tunnels

115 meters below respondents property could not have caused damage or prejudice to respondents
and their claim to this effect was, therefore, purely conjectural and speculative. [7]
The contention lacks merit.
Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not pass upon
questions of fact. Absent any showing that the trial and appellate courts gravely abused their
discretion, the Court will not examine the evidence introduced by the parties below to determine if
they correctly assessed and evaluated the evidence on record. [8] The jurisdiction of the Court in cases
brought to it from the CA is limited to reviewing and revising the errors of law imputed to it, its findings
of fact being as a rule conclusive and binding on the Court.
In the present case, petitioner failed to point to any evidence demonstrating grave abuse of
discretion on the part of the CA or to any other circumstances which would call for the application of
the exceptions to the above rule. Consequently, the CAs findings which upheld those of the trial court
that respondents owned and possessed the property and that its substrata was possessed by petitioner
since 1978 for the underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding
of the lower courts that the sub-terrain portion of the property similarly belongs to respondents. This
conclusion is drawn from Article 437 of the Civil Code which provides:
ART. 437. The owner of a parcel of land is the owner of its surface and
of everything under it, and he can construct thereon any works or make any
plantations and excavations which he may deem proper, without detriment to
servitudes and subject to special laws and ordinances. He cannot complain of the
reasonable requirements of aerial navigation.
Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic of the
Philippines v. Court of Appeals,[9] this principle was applied to show that rights over lands are indivisible
and, consequently, require a definitive and categorical classification, thus:
The Court of Appeals justified this by saying there is no conflict of interest
between the owners of the surface rights and the owners of the sub-surface
rights. This is rather strange doctrine, for it is a well-known principle that the
owner of a piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. Under the
aforesaid ruling, the land is classified as mineral underneath and agricultural on
the surface, subject to separate claims of title. This is also difficult to
understand, especially in its practical application.
Under the theory of the respondent court, the surface owner will be
planting on the land while the mining locator will be boring tunnels
underneath. The farmer cannot dig a well because he may interfere with the
mining operations below and the miner cannot blast a tunnel lest he destroy
the crops above. How deep can the farmer, and how high can the miner go
without encroaching on each others rights? Where is the dividing line between
the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that
the land itself cannot be half agricultural and half mineral. The classification must
be categorical; the land must be either completely mineral or completely
agricultural.
Registered landowners may even be ousted of ownership and possession of their properties
in the event the latter are reclassified as mineral lands because real properties are characteristically
indivisible. For the loss sustained by such owners, they are entitled to just compensation under the
Mining Laws or in appropriate expropriation proceedings.[10]
Moreover, petitioners argument that the landowners right extends to the sub-soil insofar as
necessary for their practical interests serves only to further weaken its case. The theory would limit the
right to the sub-soil upon the economic utility which such area offers to the surface
owners. Presumably, the landowners right extends to such height or depth where it is possible for them
to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there would be no
more interest protected by law. [11]
In this regard, the trial court found that respondents could have dug upon their property
motorized deep wells but were prevented from doing so by the authorities precisely because of the
 existing encumbrance cannot be considered neither
construction and existence of the tunnels underneath the surface of their property. Respondents, accepted as collateral for a loan.
All the foregoing evidence and findings convince this Court that
therefore, still had a legal interest in the sub-terrain portion insofar as they could have excavated the preponderantly plaintiffs have established the condemnation of their land
covering an area of 48,005 sq. meters located at Saduc, Marawi City by the
defendant National Power Corporation without even the benefit of expropriation
same for the construction of the deep well. The fact that they could not was appreciated by the RTC as
proceedings or the payment of any just compensation and/or reasonable
monthly rental since 1978.[12]
proof that the tunnels interfered with respondents enjoyment of their property and deprived them of
In the past, the Court has held that if the government takes property without expropriation and
its full use and enjoyment, thus:
Has it deprived the plaintiffs of the use of their lands when from the
devotes the property to public use, after many years, the property owner may demand payment of just
evidence they have already existing residential houses over said tunnels and it
was not shown that the tunnels either destroyed said houses or disturb[ed] the
possession thereof by plaintiffs? From the evidence, an affirmative answer seems compensation in the event restoration of possession is neither convenient nor feasible. [13] This is in
to be in order. The plaintiffs and [their] co-heirs discovered [these] big
underground tunnels in 1992. This was confirmed by the defendant accordance with the principle that persons shall not be deprived of their property except by competent
on November 13, 1992 by the Acting Assistant Project Manager, Agus 1 Hydro
Electric Project (Exh. K). On September 16, 1992, Atty. Omar Maruhom (co-heir) authority and for public use and always upon payment of just compensation.[14]
requested the Marawi City Water District for permit to construct a motorized
deep well over Lot 3 for his residential house (Exh. Q). He was refused the permit Petitioner contends that the underground tunnels in this case constitute an easement upon
because the construction of the deep well as (sic) the parcels of land will cause
danger to lives and property. He was informed that beneath your lands are the property of respondents which does not involve any loss of title or possession. The manner in
constructed the Napocor underground tunnel in connection with Agua
Hydroelectric plant (Exh. Q-2). There in fact exists ample evidence that this
which the easement was created by petitioner, however, violates the due process rights of respondents
construction of the tunnel without the prior consent of plaintiffs beneath the
latters property endangered the lives and properties of said plaintiffs. It has been
proved indubitably that Marawi City lies in an area of local volcanic and tectonic as it was without notice and indemnity to them and did not go through proper expropriation
activity. LakeLanao has been formed by extensive earth movements and is
considered to be a drowned basin of volcano/tectonic origin. In Marawi City, proceedings. Petitioner could have, at any time, validly exercised the power of eminent domain to
there are a number of former volcanoes and an extensive amount of faulting.
Some of these faults are still moving. (Feasibility Report on Marawi City Water acquire the easement over respondents property as this power encompasses not only the taking or
District by Kampsa-Kruger, Consulting Engineers, Architects and Economists, Exh.
R). Moreover, it has been shown that the underground tunnels [have] deprived appropriation of title to and possession of the expropriated property but likewise covers even the
the plaintiffs of the lawful use of the land and considerably reduced its value.
On March 6, 1995, plaintiffs applied for a two-million peso loan with the Amanah imposition of a mere burden upon the owner of the condemned property.[15] Significantly, though,
Islamic Bank for the expansion of the operation of the Ameer Construction and
Integrated Services to be secured by said land (Exh. N), but the application was landowners cannot be deprived of their right over their land until expropriation proceedings are
disapproved by the bank in its letter of April 25, 1995 (Exh. O) stating that:
Apropos to this, we regret to inform you that we cannot
instituted in court. The court must then see to it that the taking is for public use, that there is payment
consider your loan application due to the following
reasons, to wit:
That per my actual ocular inspection and verification, subject of just compensation and that there is due process of law. [16]
property offered as collateral has an existing underground
tunnel by the NPC for the Agus I Project, which tunnel is In disregarding this procedure and failing to recognize respondents ownership of the sub-
traversing underneath your property, hence, an
encumbrance. As a matter of bank policy, property with an terrain portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It
must be emphasized that the acquisition of the easement is not without expense. The underground was taken by the expropriating authority.[22] There is a taking in this sense when the owners are actually

tunnels impose limitations on respondents use of the property for an indefinite period and deprive deprived or dispossessed of their property, where there is a practical destruction or a material

them of its ordinary use. Based upon the foregoing, respondents are clearly entitled to the payment of impairment of the value of their property, or when they are deprived of the ordinary use thereof. There

just compensation.[17]Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is a taking in this context when the expropriator enters private property not only for a momentary

is liable to pay not merely an easement fee but rather the full compensation for land. This is so because period but for more permanent duration, for the purpose of devoting the property to a public use in

in this case, the nature of the easement practically deprives the owners of its normal beneficial such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof. [23] Moreover,

use. Respondents, as the owners of the property thus expropriated, are entitled to a just compensation taking of the property for purposes of eminent domain entails that the entry into the property must be

which should be neither more nor less, whenever it is possible to make the assessment, than the under warrant or color of legal authority. [24]

money equivalent of said property.[18] Under the factual backdrop of this case, the last element of taking mentioned, i.e., that the

The entitlement of respondents to just compensation having been settled, the issue now is entry into the property is under warrant or color of legal authority, is patently lacking. Petitioner

on the manner of computing the same. In this regard, petitioner claims that the basis for the justified its nonpayment of the indemnity due respondents upon its mistaken belief that the property

computation of the just compensation should be the value of the property at the time it was taken in formed part of the public dominion.

1978. Petitioner also impugns the reliance made by the CA upon National Power Corporation v. Court This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took

of Appeals and Macapanton Mangondato[19] as the basis for computing the amount of just the property of therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project,

compensation in this action. The CA found that the award of damages is not excessive because without paying any compensation, allegedly under the mistaken belief that it was public land. It was

the P1000 per square meter as the fair market value was sustained in a case involving a lot adjoining only in 1990, after more than a decade of beneficial use, that NAPOCOR recognized therein

the property in question which case involved an expropriation by [petitioner] of portion of Lot 1 of the respondents ownership and negotiated for the voluntary purchase of the property.

subdivision plan (LRC) PSD 116159 which is adjacent to Lots 2 and 3 of the same subdivision plan which In Mangondato, this Court held:
The First Issue: Date of Taking or Date of Suit?
is the subject of the instant controversy. [20] The general rule in determining just compensation in eminent
domain is the value of the property as of the date of the filing of the complaint,
Just compensation has been understood to be the just and complete equivalent of the as follows:

Sec. 4. Order of Condemnation. When such a motion is overruled or when any

loss[21] and is ordinarily determined by referring to the value of the land and its character at the time it
party fails to defend as required by this rule, the court may enter an order of
condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint. x x x (Italics supplied).
Normally, the time of the taking coincides with the filing of the complaint for
expropriation. Hence, many ruling of this Court have equated just compensation
with the value of the property as of the time of filing of the complaint consistent
with the above provision of the Rules. So too, where the institution of the action
precedes entry to the property, the just compensation is to be ascertained as of
the time of filing of the complaint.
The general rule, however, admits of an exception: where this Court fixed the
value of the property as of the date it was taken and not the date of the
commencement of the expropriation proceedings.
In the old case of Provincial Government of Rizal vs. Caro de Araullo, the Court
ruled that x x x the owners of the land have no right to recover damages for this
unearned increment resulting from the construction of the public improvement
(lengthening of Taft Avenue from Manila to Pasay) from which the land was
taken. To permit them to do so would be to allow them to recover more than the
value of the land at the time it was taken, which is the true measure of the
damages, or just compensation, and would discourage the construction of
important public improvements.
In subsequent cases, the Court, following the above doctrine, invariably held
that the time of taking is the critical date in determining lawful or just
compensation. Justifying this stance, Mr. Justice (later Chief Justice) Enrique
Fernando, speaking for the Court in Municipality of La Carlota vs. The Spouses
Felicidad Baltazar and Vicente Gan, said, x x x the owner as is the constitutional
intent, is paid what he is entitled to according to the value of the property so
devoted to public use as of the date of taking. From that time, he had been
deprived thereof. He had no choice but to submit. He is not, however, to be
despoiled of such a right. No less than the fundamental law guarantees just
compensation. It would be injustice to him certainly if from such a period, he
could not recover the value of what was lost. There could be on the other hand,
injustice to the expropriator if by a delay in the collection, the increment in
price would accrue to the owner. The doctrine to which this Court has been
committed is intended precisely to avoid either contingency fraught with
unfairness.
Simply stated, the exception finds the application where the owner would be
given undue incremental advantages arising from the use to which the
government devotes the property expropriated -- as for instance, the extension
of a main thoroughfare as was in the case in Caro de Araullo. In the instant case,
however, it is difficult to conceive of how there could have been an extra-
ordinary increase in the value of the owners land arising from the
expropriation, as indeed the records do not show any evidence that the
valuation of P1,000.00 reached in 1992 was due to increments directly caused
by petitioners use of the land. Since the petitioner is claiming an exception to
Rule 67, Section 4, it has the burden in proving its claim that its occupancy and
use -- not ordinary inflation and increase in land values -- was the direct cause of
the increase in valuation from 1978 to 1992.
Side Issue: When is there Taking of Property?
But there is yet another cogent reason why this petition should be denied and
why the respondent Court should be sustained. An examination of the
undisputed factual environment would show that the taking was not really made
in 1978.
This Court has defined the elements of taking as the main ingredient in the
exercise of power of eminent domain, in the following words:
A number of circumstances must be present in taking of property for purposes of
eminent domain: (1) the expropriator must enter a private property; (2) the
entrance into private property must be for more than a momentary period;
(3) the entry into the property should be under warrant or color of legal
authority; (4) the property must be devoted to a public use or otherwise
informally appropriated or injuriously affected; and (5) the utilization of the
property for public use must be in such a way to oust the owner and deprive him
of all beneficial enjoyment of the property.(Italics supplied)
In this case, the petitioners entrance in 1978 was without intent to expropriate
or was not made under warrant or color of legal authority, for it believed the
property was public land covered by Proclamation No. 1354. When the private
respondent raised his claim of ownership sometime in 1979, the petitioner flatly
refused the claim for compensation, nakedly insisted that the property was
public land and wrongly justified its possession by alleging it had already paid
financial assistance to Marawi City in exchange for the rights over the
property. Only in 1990, after more than a decade of beneficial use, did the
petitioner recognize private respondents ownership and negotiate for the
voluntary purchase of the property. A Deed of Sale with provisional payment and
subject to negotiations for the correct price was then executed. Clearly, this is
not the intent nor the expropriation contemplated by law. This is a simple
attempt at a voluntary purchase and sale. Obviously, the petitioner neglected
and/or refused to exercise the power of eminent domain.
Only in 1992, after the private respondent sued to recover possession and petitioner filed its
Complaint to expropriate, did petitioner manifest its intention to exercise the power of
eminent domain. Thus the respondent Court correctly held:
If We decree that the fair market value of the land be determined as of 1978, then We
would be sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than
for eminent domain would occupy anothers property and when later pressed for
payment, first negotiate for a low price and then conveniently expropriate the property
 when the land owner refuses to accept its offer claiming that the taking of the property for
the purpose of the eminent domain should be reckoned as of the date when it started to
The Second Issue: Valuation
occupy the property and that the value of the property should be computed as of the date
We now come to the issue of valuation.
of the taking despite the increase in the meantime in the value of the property.
The fair market value as held by the respondent Court, is the amount of P1,000.00 per
square meter. In an expropriation case where the principal issue is the determination of just
In Noble vs. City of Manila, the City entered into a lease-purchase agreement of a building
compensation, as is the case here, a trial before Commissioners is indispensable to allow the
constructed by the petitioners predecessor-in-interest in accordance with the specifications
parties to present evidence on the issue of just compensation. Inasmuch as the
of the former. The Court held that being bound by the said contract, the City could not
determination of just compensation in eminent domain cases is a judicial function and
expropriate the building. Expropriation could be resorted to only when it is made necessary
factual findings of the Court of Appeals are conclusive on the parties and reviewable only
by the opposition of the owner to the sale or by the lack of any agreement as to the
when the case falls within the recognized exceptions, which is not the situation obtaining in
price. Said the Court:
this petition, we see no reason to disturb the factual findings as to valuation of the subject
property. As can be gleaned from the records, the court-and-the-parties-appointed
The contract, therefore, in so far as it refers to the purchase of the building, as we have
commissioners did not abuse their authority in evaluating the evidence submitted to them
interpreted it, is in force, not having been revoked by the parties or by judicial decision. This
nor misappreciate the clear preponderance of evidence. The amount fixed and agreed to by
being the case, the city being bound to buy the building at an agreed price, under a valid and
the respondent appellate Court is not grossly exorbitant. To quote:
subsisting contract, and the plaintiff being agreeable to its sale, the expropriation thereof, as
sought by the defendant, is baseless. Expropriation lies only when it is made necessary by
Commissioner Ali comes from the Office of the Register of Deeds who may well be
the opposition of the owner to the sale or by the lack of any agreement as to the price. There
considered an expert, with a general knowledge of the appraisal of real estate and the
being in the present case a valid and subsisting contract, between the owner of the building
prevailing prices of land in the vicinity of the land in question so that his opinion on the
and the city, for the purchase thereof at an agreed price, there is no reason for the
valuation of the property cannot be lightly brushed aside.
expropriation. (Italics supplied)
The prevailing market value of the land is only one of the determinants used by the
In the instant case, petitioner effectively repudiated the deed of sale it entered into with the
commissioners report the other being as herein shown:
private respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its
xxx
president to negotiate, inter alia, that payment shall be effective only after Agus I HE project
Commissioner Doromals report, recommending P300.00 per square meter, differs from the 2
has been placed in operation. It was only then that petitioners intent to expropriate became
commissioners only because his report was based on the valuation as of 1978 by the City
manifest as private respondent disagreed and, barely a month, filed suit. [25]
Appraisal Committee as clarified by the latters chairman in response to NAPOCORs general
counsels query.
In the present case, to allow petitioner to use the date it constructed the tunnels as the date of valuation
In sum, we agree with the Court of Appeals that petitioner has failed to show why it should
be granted an exemption from the general rule in determining just compensation provided
would be grossly unfair. First, it did not enter the land under warrant or color of legal authority or with intent to
under Section 4 of Rule 67. On the contrary, private respondent has convinced us that,
indeed, such general rule should in fact be observed in this case. [27]
expropriate the same. In fact, it did not bother to notify the owners and wrongly assumed it had the right to dig those
Petitioner has not shown any error on the part of the CA in reaching such a valuation. Furthermore, these
tunnels under their property. Secondly, the improvements introduced by petitioner, namely, the tunnels, in no way
are factual matters that are not within the ambit of the present review. WHEREFORE, the petition is DENIED and the
contributed to an increase in the value of the land. The trial court, therefore, as affirmed by the CA, rightly computed
Decision of the Court of Appeals in C.A.-G.R. CV No. 57792 dated June 8, 2005 is AFFIRMED. No costs. SO ORDERED.
the valuation of the property as of 1992, when respondents discovered the construction of the huge underground

Republic of the Philippines

tunnels beneath their lands and petitioner confirmed the same and started negotiations for their purchase but no
SUPREME COURT
Manila
agreement could be reached.[26] As to the amount of the valuation, the RTC and the CA both used as basis the value of

FIRST DIVISION
the adjacent property, Lot 1 (the property involved herein being Lots 2 and 3 of the same subdivision plan), which was

valued at P1,000 per sq. meter as of 1990, as sustained by this Court in Mangondato, thus: G.R. No. L-43938 April 15, 1988
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST DEVELOPMENT), petitioner,
vs.
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA ROSA, respondents.
G.R. No. L-44081 April 15, 1988
BENGUET CONSOLIDATED, INC., petitioner,
vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and EDUARDO, all surnamed DE
LA ROSA, represented by their father JOSE Y. DE LA ROSA, respondents.
G.R. No. L-44092 April 15, 1988
ATOK-BIG WEDGE MINING COMPANY, petitioner,
vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and EDUARDO, all surnamed DE
LA ROSA, represented by their father, JOSE Y. DE LA ROSA, respondents.
CRUZ, J.:
The Regalian doctrine reserves to the State all natural wealth that may be found in the bowels of the
earth even if the land where the discovery is made be private. 1 In the cases at bar, which have been
consolidated because they pose a common issue, this doctrine was not correctly applied.
These cases arose from the application for registration of a parcel of land filed on February 11, 1965, by
Jose de la Rosa on his own behalf and on behalf of his three children, Victoria, Benjamin and Eduardo.
The land, situated in Tuding, Itogon, Benguet Province, was divided into 9 lots and covered by plan Psu-
225009. According to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to his children
by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2
The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big Wedge
Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the Philippines,
through the Bureau of Forestry Development, as to lots 1-9. 3
In support of the application, both Balbalio and Alberto testified that they had acquired the subject
land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father shortly after
the Liberation. She testified she was born in the land, which was possessed by her parents under claim
of ownership. 4 Alberto said he received Lots 6-9 in 1961 from his mother, Bella Alberto, who declared
that the land was planted by Jaime and his predecessors-in-interest to bananas, avocado, nangka and
camote, and was enclosed with a barbed-wire fence. She was corroborated by Felix Marcos, 67 years
old at the time, who recalled the earlier possession of the land by Alberto's father. 5 Balbalio presented
her tax declaration in 1956 and the realty tax receipts from that year to 1964, 6 Alberto his tax
declaration in 1961 and the realty tax receipts from that year to 1964. 7
Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it on
September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in September
1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet had been in actual,
continuous and exclusive possession of the land in concept of owner, as evidenced by its construction
of adits, its affidavits of annual assessment, its geological mappings, geological samplings and trench
side cuts, and its payment of taxes on the land. 8
For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma and
Fredia mineral claims located by Harrison and Reynolds on December 25, 1930, and recorded on
January 2, 1931, in the office of the mining recorder of Baguio. These claims were purchased from
these locators on November 2, 1931, by Atok, which has since then been in open, continuous and
exclusive possession of the said lots as evidenced by its annual assessment work on the claims, such as
the boring of tunnels, and its payment of annual taxes thereon. 9
The location of the mineral claims was made in accordance with Section 21 of the Philippine Bill of
1902 which provided that:
SEC. 21. All valuable mineral deposits in public lands in the philippine Islands
both surveyed and unsurveyed are hereby declared to be free and open to
exploration, occupation and purchase and the land in which they are found to
occupation and purchase by the citizens of the United States, or of said islands.
The Bureau of Forestry Development also interposed its objection, arguing that the land sought to be
registered was covered by the Central Cordillera Forest Reserve under Proclamation No. 217 dated
February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation under the
Constitutions of 1935 and 1973. 10
The trial court * denied the application, holding that the applicants had failed to prove their claim of
possession and ownership of the land sought to be registered. 11 The applicants appealed to the
respondent court, * which reversed the trial court and recognized the claims of the applicant, but
subject to the rights of Benguet and Atok respecting their mining claims. 12 In other words, the Court of
Appeals affirmed the surface rights of the de la Rosas over the land while at the same time reserving
the sub-surface rights of Benguet and Atok by virtue of their mining claims.
Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership. The
Republic has filed its own petition for review and reiterates its argument that neither the private
respondents nor the two mining companies have any valid claim to the land because it is not alienable
and registerable.
It is true that the subject property was considered forest land and included in the Central Cordillera
Forest Reserve, but this did not impair the rights already vested in Benguet and Atok at that time. The
Court of Appeals correctly declared that:
There is no question that the 9 lots applied for are within the June Bug mineral
claims of Benguet and the "Fredia and Emma" mineral claims of Atok. The June
Bug mineral claim of plaintiff Benguet was one of the 16 mining claims of James
E. Kelly, American and mining locator. He filed his declaration of the location of
the June Bug mineral and the same was recorded in the Mining Recorder's Office
on October 14, 1909. All of the Kelly claims ha subsequently been acquired by
Benguet Consolidated, Inc. Benguet's evidence is that it had made improvements
on the June Bug mineral claim consisting of mine tunnels prior to 1935. It had
submitted the required affidavit of annual assessment. After World War II,
Benguet introduced improvements on mineral claim June Bug, and also
conducted geological mappings, geological sampling and trench side cuts. In
1948, Benguet redeclared the "June Bug" for taxation and had religiously paid
the taxes.
The Emma and Fredia claims were two of the several claims of Harrison
registered in 1931, and which Atok representatives acquired. Portions of Lots 1
to 5 and all of Lots 6 to 9 are within the Emma and Fredia mineral claims of Atok
Big Wedge Mining Company.
The June Bug mineral claim of Benguet and the Fredia and Emma mineral claims
of Atok having been perfected prior to the approval of the Constitution of the
Philippines of 1935, they were removed from the public domain and had become
private properties of Benguet and Atok.
It is not disputed that the location of the mining claim
under consideration was perfected prior to November 15,
1935, when the Government of the Commonwealth was
inaugurated; and according to the laws existing at that
time, as construed and applied by this court in McDaniel v.
Apacible and Cuisia (42 Phil. 749), a valid location of a
mining claim segregated the area from the public domain.
Said the court in that case: The moment the locator
discovered a valuable mineral deposit on the lands
located, and perfected his location in accordance with law,
the power of the United States Government to deprive
him of the exclusive right to the possession and enjoyment
of the located claim was gone, the lands had become
mineral lands and they were exempted from lands that
could be granted to any other person. The reservations of
public lands cannot be made so as to include prior mineral
perfected locations; and, of course, if a valid mining
location is made upon public lands afterwards included in
a reservation, such inclusion or reservation does not affect
the validity of the former location. By such location and
perfection, the land located is segregated from the public
domain even as against the Government. (Union Oil Co. v.
Smith, 249 U.S. 337; Van Mess v. Roonet, 160 Cal. 131; 27
Cyc. 546).
"The legal effect of a valid location of a mining claim is not
only to segregate the area from the public domain, but to
grant to the locator the beneficial ownership of the claim
and the right to a patent therefor upon compliance with
the terms and conditions prescribed by law. Where there
is a valid location of a mining claim, the area becomes
segregated from the public domain and the property of
the locator." (St. Louis Mining & Milling Co. v. Montana
Mining Co., 171 U.S. 650; 655; 43 Law ed., 320, 322.)
"When a location of a mining claim is perfected it has the
effect of a grant by the United States of the right of
present and exclusive possession, with the right to the
exclusive enjoyment of all the surface ground as well as of
all the minerals within the lines of the claim, except as
limited by the extralateral right of adjoining locators; and
this is the locator's right before as well as after the
issuance of the patent. While a lode locator acquires a
vested property right by virtue of his location made in
compliance with the mining laws, the fee remains in the
government until patent issues."(18 R.C.L. 1152) (Gold
Creek Mining Corporation v. Hon. Eulogio Rodriguez, Sec.
of Agriculture and Commerce, and Quirico Abadilla,
Director of the Bureau of Mines, 66 Phil. 259, 265-266)
It is of no importance whether Benguet and Atok had secured a patent for as
held in the Gold Creek Mining Corp. Case, for all physical purposes of ownership,
the owner is not required to secure a patent as long as he complies with the
provisions of the mining laws; his possessory right, for all practical purposes of
ownership, is as good as though secured by patent.
We agree likewise with the oppositors that having complied with all the
requirements of the mining laws, the claims were removed from the public
domain, and not even the government of the Philippines can take away this right
from them. The reason is obvious. Having become the private properties of the
oppositors, they cannot be deprived thereof without due process of law. 13
Such rights were not affected either by the stricture in the Commonwealth Constitution against the
alienation of all lands of the public domain except those agricultural in nature for this was made
subject to existing rights. Thus, in its Article XIII, Section 1, it was categorically provided that:
SEC. 1. All agricultural, timber and mineral lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy
and other natural resources of the Philipppines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens of
the Philippines or to corporations or associations at least 60% of the capital of
which is owned by such citizens, subject to any existing right, grant, lease or
concession at the time of the inauguration of the government established under
this Constitution. Natural resources with the exception of public agricultural
lands, shall not be alienated, and no license, concession, or lease for the
exploitation, development or utilization of any of the natural resources shall be
granted for a period exceeding 25 years, except as to water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of water
power, in which case beneficial use may be the measure and the limit of the
grant.
Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:
Any provision of existing laws, executive order, proclamation to the contrary
notwithstanding, all locations of mining claim made prior to February 8, 1935
within lands set apart as forest reserve under Sec. 1826 of the Revised
Administrative Code which would be valid and subsisting location except to the
existence of said reserve are hereby declared to be valid and subsisting locations
as of the date of their respective locations.
The perfection of the mining claim converted the property to mineral land and under the laws then in
force removed it from the public domain. 14 By such act, the locators acquired exclusive rights over the
land, against even the government, without need of any further act such as the purchase of the land or
the obtention of a patent over it. 15 As the land had become the private property of the locators, they
had the right to transfer the same, as they did, to Benguet and Atok.
It is true, as the Court of Appeals observed, that such private property was subject to the "vicissitudes
of ownership," or even to forfeiture by non-user or abandonment or, as the private respondents aver,
by acquisitive prescription. However, the method invoked by the de la Rosas is not available in the case
at bar, for two reasons.
First, the trial court found that the evidence of open, continuous, adverse and exclusive possession
submitted by the applicants was insufficient to support their claim of ownership. They themselves had
acquired the land only in 1964 and applied for its registration in 1965, relying on the earlier alleged
possession of their predecessors-in-interest. 16The trial judge, who had the opportunity to consider the
evidence first-hand and observe the demeanor of the witnesses and test their credibility was not
convinced. We defer to his judgment in the absence of a showing that it was reached with grave abuse
of discretion or without sufficient basis. 17
Second, even if it be assumed that the predecessors-in-interest of the de la Rosas had really been in
possession of the subject property, their possession was not in the concept of owner of the mining
claim but of the property as agricultural land, which it was not. The property was mineral land, and
they were claiming it as agricultural land. They were not disputing the lights of the mining locators nor
were they seeking to oust them as such and to replace them in the mining of the land. In fact, Balbalio
testified that she was aware of the diggings being undertaken "down below" 18 but she did not mind,
much less protest, the same although she claimed to be the owner of the said land.
The Court of Appeals justified this by saying there is "no conflict of interest" between the owners of the
surface rights and the owners of the sub-surface rights. This is rather doctrine, for it is a well-known
principle that the owner of piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. 19 Under the aforesaid ruling, the land
is classified as mineral underneath and agricultural on the surface, subject to separate claims of title.
This is also difficult to understand, especially in its practical application.
Under the theory of the respondent court, the surface owner will be planting on the land while the
mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may
interfere with the operations below and the miner cannot blast a tunnel lest he destroy the crops
above. How deep can the farmer, and how high can the miner, go without encroaching on each other's
rights? Where is the dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either completely
mineral or completely agricultural. In the instant case, as already observed, the land which was
originally classified as forest land ceased to be so and became mineral and completely mineral
once the mining claims were perfected. 20 As long as mining operations were being undertaken
thereon, or underneath, it did not cease to be so and become agricultural, even if only partly so,
because it was enclosed with a fence and was cultivated by those who were unlawfully occupying the
surface.
What must have misled the respondent court is Commonwealth Act No. 137, providing as follows:
Sec. 3. All mineral lands of the public domain and minerals belong to the State,
and their disposition, exploitation, development or utilization, shall be limited to
citizens of the Philippines, or to corporations, or associations, at least 60% of the
capital of which is owned by such citizens, subject to any existing right, grant,
lease or concession at the time of the inauguration of government established
under the Constitution.
 SEC. 4. The ownership of, and the right to the use of land for agricultural,
industrial, commercial, residential, or for any purpose other than mining does
not include the ownership of, nor the right to extract or utilize, the minerals
which may be found on or under the surface.

SEC. 5. The ownership of, and the right to extract and utilize, the minerals
included within all areas for which public agricultural land patents are granted
are excluded and excepted from all such patents.

SEC. 6. The ownership of, and the right to extract and utilize, the minerals
included within all areas for which Torrens titles are granted are excluded and
excepted from all such titles.

This is an application of the Regalian doctrine which, as its name implies, is intended for the benefit of
the State, not of private persons. The rule simply reserves to the State all minerals that may be found in
public and even private land devoted to "agricultural, industrial, commercial, residential or (for) any
purpose other than mining." Thus, if a person is the owner of agricultural land in which minerals are
discovered, his ownership of such land does not give him the right to extract or utilize the said minerals
without the permission of the State to which such minerals belong.

The flaw in the reasoning of the respondent court is in supposing that the rights over the land could be
used for both mining and non-mining purposes simultaneously. The correct interpretation is that once
minerals are discovered in the land, whatever the use to which it is being devoted at the time, such use
may be discontinued by the State to enable it to extract the minerals therein in the exercise of its
sovereign prerogative. The land is thus converted to mineral land and may not be used by any private
party, including the registered owner thereof, for any other purpose that will impede the mining
operations to be undertaken therein, For the loss sustained by such owner, he is of course entitled to
just compensation under the Mining Laws or in appropriate expropriation proceedings. 21

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

WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET ASIDE and that of the
trial court dated March 11, 1969, is REINSTATED, without any pronouncement as to costs.

SO ORDERED. Republic of the Philippines

SUPREME COURT
Teehankee, C.J., Narvasa, Gancayco and Grio-Aquino, JJ., concur. Manila
EN BANC
G.R. No. L-7726 November 6, 1913
MARIANO RIOSA, plaintiff-appellant,
vs.
CLARO VERZOSA and CIRIACO BULAN, defendants-appellees.
Albert E. Somersille, for appellant.
Sulpicio V. Cea, for appellees.
JOHNSON, J.:
On the 25th of January, 1910, the plaintiff commenced an action against the defendants, the purpose
of which was to secure an injunction against the defendants to prevent them from harvesting and
destroying the growing hemp upon a certain parcel of land, more particularly described in the first
paragraph of the complaint, and to recover damages in the sum of P500, for injuries already committed
upon such land, and to require the defendants to deposit the hemp already harvested with the deputy
sheriff of the pueblo of Malinao.
Upon the presentation of said petition, the Honorable Vicente Nepomuceno, judge, granted a
temporary injunction in conformity with the prayer of the petition. The defendants were duly served
with a summons and a copy of the petition, as well as with a copy of the injunction granted by the
court. The defendants failed to appear and answer the complaint within the time prescribed by law and
the rules of the court. By reason of the failure of the defendants to appeal, the plaintiff, on the 21st of
March, 1910, presented a motion asking that a judgment by default be rendered against them, which
motion was granted on the 2d of April, 1910.
On the 15th of April, the defendants appeared by their attorney. The cause was duly brought to trial, by
notice to all of the parties, on the 20th of April, 1910. After hearing the evidence, the Honorable
Vicente Nepomuceno, judge, granted a permanent injunction against the defendants, restraining them
from cultivating or harvesting the crops upon the said land or from doing anything thereon which
would tend to injure its value, and also found that the defendants had caused damages to the plaintiff
in the sum of P300.
It appears from the record that the attorney for the defendants was present in court during the trial of
the cause, but by reason of the fact that the defendants had presented no answer, no defense
whatever was made during the trial of the cause.
On the 21st of April, 1910, the defendants, by their attorney, presented a motion, asking that the
judgment by default be set aside and that they be permitted to present their defense. It appears from
the record that the present cause in the lower court was numbered 1206 and that there was pending in
the lower court at the same time cause No. 1207, in which the present plaintiff was the plaintiff and
the said Claro Verzosa was the defendant. The record does not fully disclose what the real purpose of
cause No. 1207 was. It may be gathered, however, from some things which appear in the record, that
cause No. 1207 related to a mortgage with Claro Verzosa had executed and delivered to the present
plaintiff, upon the same parcel of land described in the first paragraph of the complaint.
Upon a consideration of the motion to have the judgment by default set aside, the Honorable Percy M.
Moir, judge, after a consideration of the arguments of the respective parties, denied the same in the
following language:
The court does not consider the facts set out herein sufficient to warrant the setting aside of
the judgment herein mentioned. It does seem to the court, from a study solely of the
record, that the damages given are excessive, but the court does not consider that the
defendant in this case has any right to ask the setting aside of a judgment which was
rendered in his presence and in his presence and in the presence of his attorneys. If the
defendant had redeemed the land or should redeem the land in the time allowed by law, a
motion then for relief from the judgment will be considered.
At this juncture, by reason of the ruling of Judge Moir upon the motion to dismiss, it becomes
important to examine the particular facts, in order to fully understand Judge Moir's conclusions. The
facts involved in the present case seem to be as follows:
Some time prior to the 1st day of December, 1909, a judgment was rendered against the defendant,
Claro Verzosa, for the sum of P320.87. Upon said judgment an execution was issued and was levied
upon the land described in the first paragraph of the complaint. Upon the 1st day of December, 1909,
said land was sold at public auction, under said execution, and was purchased by the plaintiff also held
a mortgage upon said land which was due on the 1st day of January, 1910. It will be remembered that
the present action was commenced on the 25th of January, 1910. The record does not clearly disclose
what action the plaintiff had taken to protect his interest in the land under his mortgage. The present
action was brought to protect the plaintiff's interest in the land, by virtue of his purchase of the same
under said execution on the 1st of December, 1909. It will be remembered that the law permits the
owner of land which has been sold under an execution to redeem the same within a period of twelve
months. The question then arises, in view of that right of the owner of the land, What interest has the
purchaser of the land sold under execution in the same during said twelve months? What right has he
to interfere with the owner in the management and control of such land? Is he entitled to the rents and
profits during the twelve months? Can he eject the owner from the possession of the same? We
believe that the weight of authority is to the effect that the purchaser of lands sold at public auction
under a writ of execution only has an inchoate right in the property, subject to be defeated and
terminated within a period of twelve months from the date of sale, by a redemption on the part of the
owner. (Sections 464, 465, 468, and 469, Act No. 190.) We have already held, in the case of De la
Rosa vs. Santos (10 Phil. Rep., 148), that the purchaser, where the land was in possession of the owner
and not a tenant, was not entitled to recover the rents and profits of the land sold during the period
within which the owner might redeem. By virtue of said section 469, where the land is in possession of
a tenant, a different rule prevails. In the present case the property was in the possession of the owner,
and the inchoate right of the purchaser was subject to be defeated at any moment during the period of
redemption. The owner was entitled to remain in the possession of the land sold for the statutory term the sentence of the 20th of April did not become final. On the 11th of September, 1910, the
of twelve months, and she might at any time defeat the inchoate right obtained by the purchaser by defendants having presented satisfactory proof that they had redeemed the land in question, again
proper redemption within that period. (Sections 463 and 464, Act No. 190; De la asked the court to consider their motion of the 21st of April.
Rosa vs. Santos, supra; In re Ceballos, 12 Phil. Rep., 271.) There would seem, therefore, to be much
reason in the conclusion of Judge Moir that he would consider the motion to set aside the judgment by
On the 17th of September, 1910, Judge Moir, upon a reconsideration of the motion (of the 21st of
default, if the defendant should redeem the land in question within the time allowed by law. Under the
April, 1910) in relation with the proof presented on the 11th of September, 1910, by the defendants,
law it would seem to be difficult to fully understand the right of the plaintiff to interfere in the manner
entered an order declaring it without effect and nullifying the sentence of the 20th of April, 1910. To
in which he has attempted to interfere with the owner of the land before the expiration of the twelve
this ruling the plaintiff excepted and gave notice of his intention to appeal the cause to the Supreme
months within which the owner had a right to redeem the land.
Court, which notice of appeal was later withdrawn.

On the 11th of September, 1910, the defendants, having redeemed the land in the manner provided
After certain proceedings, which we deem it unnecessary here to relate, the lower court on the 24th of
for by laws, renewed their motion to have the judgment by default set aside. This motion was duly
September, 1910, as well as by an order of the 25th of February, 1911, modified said order of the 17th
brought on for trial on the 17th of September, 1910, and Judge Moir thereupon set aside the judgment
of September, 1910. The cause was thereafter tried upon its merits and Judge Moir rendered a
therefore rendered by the Honorable Vicente Nepomuceno, in which he granted a permanent
sentence deciding that the plaintiff was without right in the premises against the defendants, with
injunction and allowed damages against the defendants. Later the defendants presented an answer
costs against the defendants, and final decision was rendered upon the 10th of April, 1911.
and the cause was duly brought to trial on its merits.

After hearing the evidence, the Honorable Percy M. Moir, judge, on the 3d of April, 1911, rendered a
judgment in which he held that the plaintiff was not entitled to the remedy prayed for in his petition,
and dismissed the cause of action with costs against the defendants. From that judgment the plaintiff
appealed and in this court made the following assignments of error:
The Court of First Instance erred:
As we said above, Judge Moir had jurisdiction to make any order in the premises which the former
judge might have made. An examination of the record shows that every order which was made after
the sentence of the 20th of April, 1910, until final judgment was rendered on the 10th of April, 1911,
was made at the special instance and request of either the plaintiff or the defendant. No objection was
made to the jurisdiction of the court in consideration of the questions presented to it. From a careful
examination of all the orders made by the lower court, the Honorable Percy M. Moir, they seem to be
fully justified and we find no reason for modifying or reversing them.

1. In setting aside the judgment rendered in this case on September 17, 1910. With reference to the third assignment of error, it may be said:

2. In assuming jurisdiction to annul said judgment.
3. In not allowing the plaintiffs damages, after assuming jurisdiction.
The first and second assignments of error we think may properly be considered together. The appellee
presents no brief.
1. That the defendants were in possession of the land at the time it was sold at public sale under
execution on the 1st of December, 1909, and continued in the possession of said land.
2. The plaintiff, by virtue of the purchase under the execution sale, acquired no right, except a mere
inchoate right in the land, until after the expiration of the period within which the defendants had right
to redeem. lawph!1.net

In the first place Judge Percy M. Moir succeeded Vicente Nepomuceno as judge of the Court of First
Instance of the Province of Albay and therefore had a right to do, in relation with the sentence in the
present case, whatever the former judge might have done. It will be remembered that after Judge
Nepomuceno rendered his judgment of the 20th of April, 1910, in which a permanent injunction was
granted and damages allowed to the plaintiff, a motion by the defendant was made on the 21st of
April, 1910, which prevented the judgment of the 20th of April, 1910, from becoming final until said
motion had been finally disposed of. It will be noted also that the order of Judge Moir of the 9th of
June, 1910, did not finally dispose of said motion. Said order gave the defendants the right to have the
question presented in their motion considered again when they redeemed the land in question.
Inasmuch, therefore, as the judge had left the motion of the defendants of the 21st of April undecided,
3. The defendants redeemed the land in accordance with the provisions of law within the legal period.
It must follow, therefore, that the plaintiff was not entitled to the remedy prayed for in his petition and
is, therefore, not entitled to damages resulting from the use and occupation by the defendants.
We find no reason in the record for reversing or modifying the conclusions of the lower court. The
judgment of the lower court is, therefore, hereby affirmed with the costs of this instanc
Republic of the Philippines
SUPREME COURT
Manila FIRST DIVISION
G.R. No. L-57288 April 30, 1984
LEONILA SARMINETO, petitioner,
vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh Judicial District, Branch XXVIII,
Pasay City, and SPOUSES ERNESTO VALENTINO and REBECCA LORENZO-VALENTINO, respondents.
MELENCIO-HERRERA, J.:+.wph!1
This Petition for certiorari questions a March 29, 1979 Decision rendered by the then Court of First Instance of Pasay
City. The Decision was one made on memoranda, pursuant to the provisions of RA 6031, and it modified, on October
17, 1977, a judgment of the then Municipal Court of Paranaque, Rizal, in an Ejectment suit instituted by herein
petitioner Leonila SARMIENTO against private respondents, the spouses ERNESTO Valentino and Rebecca Lorenzo. For
the facts, therefore, we have to look to the evidence presented by the parties at the original level.
It appears that while ERNESTO was still courting his wife, the latter's mother had told him the couple could build a
RESIDENTIAL HOUSE on a lot of 145 sq. ms., being Lot D of a subdivision in Paranaque (the LAND, for short). In 1967,
ERNESTO did construct a RESIDENTIAL HOUSE on the LAND at a cost of P8,000.00 to P10,000.00. It was probably
assumed that the wife's mother was the owner of the LAND and that, eventually, it would somehow be transferred to
the spouses.
It subsequently turned out that the LAND had been titled in the name of Mr. & Mrs. Jose C. Santo, Jr. who, on
September 7 , 1974, sold the same to petitioner SARMIENTO. The following January 6, 1975, SARMIENTO asked
ERNESTO and wife to vacate and, on April 21, 1975, filed an Ejectment suit against them. In the evidentiary hearings
before the Municipal Court, SARMIENTO submitted the deed of sale of the LAND in her favor, which showed the price
to be P15,000.00. On the other hand, ERNESTO testified that the then cost of the RESIDENTIAL HOUSE would be from
P30,000.00 to P40,000.00. The figures were not questioned by SARMIENTO.
The Municipal Court found that private respondents had built the RESIDENTIAL HOUSE in good faith, and, disregarding
the testimony of ERNESTO, that it had a value of P20,000.00. It then ordered ERNESTO and wife to vacate the LAND
after SARMIENTO has paid them the mentioned sum of P20,000.00.
The Ejectment suit was elevated to the Court of First Instance of Pasay where, after the submission of memoranda,
said Court rendered a modifying Decision under Article 448 of the Civil Code. SARMIENTO was required, within 60
days, to exercise the option to reimburse ERNESTO and wife the sum of 40,000.00 as the value of the RESIDENTIAL
HOUSE, or the option to allow them to purchase the LAND for P25,000.00. SARMIENTO did not exercise any of the two
options within the indicated period, and ERNESTO was then allowed to deposit the sum of P25,000.00 with the Court
as the purchase price for the LAND. This is the hub of the controversy. SARMIENTO then instituted the instant
certiorari proceedings.
We agree that ERNESTO and wife were builders in good faith in view of the peculiar circumstances under which they
had constructed the RESIDENTIAL HOUSE. As far as they knew, the LAND was owned by ERNESTO's mother-in-law
who, having stated they could build on the property, could reasonably be expected to later on give them the LAND.
In regards to builders in good faith, Article 448 of the Code provides:t.hqw
ART. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is considerably
more than that of the building or trees. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement,
the court shall fix the terms thereof. (Paragraphing supplied)
The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not have been very much more than
that amount during the following January when ERNESTO and wife were asked to vacate. However, ERNESTO and wife
have not questioned the P25,000.00 valuation determined by the Court of First Instance.
In regards to the valuation of the RESIDENTIAL HOUSE, the only evidence presented was the testimony of ERNESTO
that its worth at the time of the trial should be from P30,000.00 to P40,000.00. The Municipal Court chose to assess
its value at P20,000.00, or below the minimum testified by ERNESTO, while the Court of First Instance chose the
maximum of P40,000.00. In the latter case, it cannot be said that the Court of First Instance had abused its discretion.
The challenged decision of respondent Court, based on valuations of P25,000.00 for the LAND and P40,000.00 for the
RESIDENTIAL HOUSE, cannot be viewed as not supported by the evidence. The provision for the exercise by petitioner
SARMIENTO of either the option to indemnify private respondents in the amount of P40,000.00, or the option to
allow private respondents to purchase the LAND at P25,000.00, in our opinion, was a correct decision.t.hqw
The owner of the building erected in good faith on a land owned by another, is entitled to
retain the possession of the land until he is paid the value of his building, under article 453
(now Article 546). The owner, of the land. upon, the other hand, has the option, under
article 361 (now Article 448), either to pay for the building or to sell his land to the owner of
the building. But he cannot, as respondents here did, refuse both to pay for the building and
to sell the land and compel the owner of the building to remove it from the land where it is
erected. He is entitled to such remotion only when, after having chosen to sell his land, the
other party fails to pay for the same. (Emphasis ours)
We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to
remove their buildings from the land belonging to plaintiffs-respondents only because the
latter chose neither to pay for such buildings nor to sell the land, is null and void, for it
amends substantially the judgment sought to be executed and is, furthermore, offensive to
articles 361 (now Article 448) and 453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario,
76 Phil. 605, 608 [1946]).
WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without pronouncement as to costs.
SO ORDERED.1wph1.tTeehankee (Chairman), Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-33422 May 30, 1983
ROSENDO BALUCANAG, petitioner,
vs.
HON. JUDGE ALBERTO J. FRANCISCO and RICHARD STOHNER, respondents.
Alfredo C. Estrella for petitioner.
Pascual C. Garcia for respondents.
ESCOLIN, J.:
This petition for review of the decision of the Court of First Instance of Manila in Civil Case No. 67503
calls for a determination of the respective rights of the lessor and the lessee over the improvements
introduced by the latter in the leased premises.
Cecilia dela Cruz Charvet was the owner of a 177.50 square meter lot located in Zamora Street,
Pandacan, Manila, covered by Transfer Certificate of Title No. 25664. On August 31, 1952, Mrs. Charvet
leased said lot to respondent Richard Stohner for a period of five [5] years at the monthly rental of
2140.00, payable in advance within the first ten [10] days of each month. The lease contract 1 provided,
among others, that:
IV. The lessee may erect such buildings upon and make such improvements to
the leased land as he shag see fit. All such buildings and improvements shall
remain the property of the lessee and he may remove them at any nine, it being
agreed, however, that should he not remove the said buildings and
improvements within a period of two months after the expiration of this
Agreement, the Lessor may remove the said buildings and improvements or
cause them to be removed at the expense of the Lessee.
During the existence of the lease, Stohner made fillings on the land and constructed a house thereon,
said improvements being allegedly valued at P35,000.00.
On March 8, 1966, Mrs. Charvet sold the said lot to petitioner Rosendo Balucanag. 2
For Stohner's failure to pay the rents, Balucanag, thru counsel, wrote Stohner a letter demanding that
he vacate the premises. 3 In reply thereto, Stohner, also thru counsel, claimed that he was a builder in
good faith of the residential house erected in the land. He offered the following proposals for a possible
compromise, to wit:
[a] Mr. Stohner will purchase the said lot from your client with the interest of
12% per annum on the value, or
[b] Your client Mr. Rosendo Balucanag will reimburse our client in the total
amount of P35,000.00 for the improvements and construction he has made on
the lot in question.
As no agreement was reached, Balucanag instituted in the City Court of Manila an ejectment suit
against Stohner and, after due trial, the court rendered a decision, the decretal portion of which reads
as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered,
ordering the defendant to pay the plaintiff the sum of P360.00 as back rentals
from December, 1965 to August 1966 at the rate of P40.00 a month and to
vacate the premises. The defendant is further ordered to pay the sum of P100.00
as Attomey's fees which is considered reasonable within the premises.
On appeal, the Court of First Instance of Manila, Branch IX, presided by respondent Judge Alberto J.
Francisco, after conducting a trial de novo, rendered a decision, setting aside the judgment of the city
court and dismissing the petitioner's complaint. Respondent judge held that Stohner was a builder in
good faith because he had constructed the residential house with the consent of the original lessor,
Mrs. Charvet, and also because the latter, after the expiration of the lease contract on August 31, 1957,
had neither sought Stohner's ejectment from the premises, nor the removal of his house therefrom.
Invoking Articles 448 and 546 of the Civil Code. 4 respondent judge concluded that Stohner, being a
builder in good faith, cannot be ejected until he is reimbursed of the value of the improvements.
Frustrated in his effort to have the decision reconsidered, Balucanag filed the instant petition for
review.
We find the petition impressed with merit. Paragraph IV of the lease contract entered into by Stohner
with Mrs. Charvet specifically provides that "... such buildings and improvements shan remain the
property of the lessee and he may remove them at any time, it being agreed, however, that should he
not remove the said buildings and improvements within a period of two months after the expiration of
this Agreement, the Lessor may remove the said buildings and improvements or cause them to be
removed at the expense of the Lessee." Respondent Stohner does not assail the validity of this
stipulation, Neither has he advanced any reason why he should not be bound by it.
But even in the absence of said stipulation, respondent Stohner cannot be considered a builder in good lease after each month with due notice upon the lessee. After such notice, the lessee's right to
faith. Article 448 of the Civil Code, relied upon by respondent judge, applies only to a case where one continue in possession ceases and his possession becomes one of detainer. Furthermore, Stohner's
builds on land in the belief that he is the owner thereof and it does not apply where one's only interest failure to pay the stipulated rentals entities petitioner to recover possession of the premises.
in the land is that of a lessee under a rental contract. In the case at bar, there is no dispute that the
relation between Balucanag and Stohner is that of lessor and lessee, the former being the successor in
WHEREFORE, the decision in Civil Case No. 67503 is hereby set aside, with costs against respondent
interest of the original owner of the lot. As we ruled in Lopez, Inc. vs. Phil. and Eastern Trading Co.,
Stohner. The latter is ordered to vacate the premises in question and to pay Rogelio Balucanag the
Inc., 5 "... the principle of possessor in good faith refers only to a party who occupies or possess
rentals due from March 1969 up to the time he surrenders the premises, at the rate of P40.00 a month.
property in the belief that he is the owner thereof and said good faith ends only when he discovers a
flaw in his title so as to reasonably advise or inform him that after all he may not be the legal owner of
said property. It cannot apply to a lessee because as such lessee he knows that he is not the owner of SO ORDERED.
he leased premises. Neither can he deny the ownership or title of his lessor. ... A lessee who introduces
improvements in the leased premises, does so at his own risk in the sense that he cannot recover their Makasiar (Chairman), Aquino, Concepcion, Jr., and Guerrero, JJ., concur.
value from the lessor, much less retain the premises until such reimbursement. ..."

De Castro, J., took no part.

The law applicable to the case at bar is Article 1678 of the Civil Code, which We quote:

Art. 1678. If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the form or
substance of the property leased, the lessor upon the termination of the lease
shall pay the lessee one-half of the value of the improvements at the time.
Should the lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage thereby. He
shall not, however, cause any more impairment upon the property leased than is
necessary. ...

This article gives the lessor the option to appropriate the useful improvements by paying one-half of
their value, 6And the lessee cannot compel the lessor to appropriate the improvements and make
reimbursement, for the lessee's right under the law is to remove the improvements even if the leased
premises may suffer damage thereby. But he shall not cause any more damage upon the property than
is necessary.

One last point. It appears that while the lease contract entered into by Stohner and Mrs. Charvet had
expired on August 31, 1957, he nevertheless continued in possession of the premises with the
acquiescence of Mrs. Charvet and later, of Balucanag. An implied new lease or tacita reconduccion was
thus created between the parties, the period of which is established by Article 1687 of the Civil Code
thus:

Art. 1687. If the period for the lease has not been fixed, it is understood to be
from year to year, if the rent agreed upon is annual; from month to month, if it is
monthly: from week to week, if the rent is weekly: and from day to day, if the
rent is to be paid daily. ...

Under the above article, the duration of the new lease must be deemed from month to month, the
agreed rental in the instant case being payable on a monthly basis. The lessor may thus terminate the
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-25462 February 21, 1980
MARIANO FLOREZA, petitioner,
vs.
MARIA D. de EVANGELISTA and SERGIO EVANGELISTA, respondents.
R.D. Hipolito & B. P. Fabir for petitioner.
E.G. Tanjuatco & Associates for respondents.
MELENCIO-HERRERA, J:
This is a Petition for Review on certiorari of the Decision of the Court of Appeals (CA-G.R. No. 23516-R)
promulgated on November 4, 1965, entitled "Maria de Evangelista and Sergio Evangelists, (now the
respondents) vs. Mariano Floreza (petitioner herein)," reversing the judgment of the Court of First
Instance of Rizal rendered on July 17, 1957, and instead ordering petitioner to vacate respondents'
residential lot, to remove his house at his own expenses and to pay rental from May 5, 1956.
Plaintiffs Maria de Evangelista and Sergio Evangelista, who are mother and son, (the EVANGELISTAS, for
short) are the owners of a residential lot located at Sumilang St., Tanay, Rizal, with an area of 204.08 sq.
ms., assessed at P410.00. In May 1945, the EVANGELISTAS borrowed from FLOREZA the amount of
P100.00. On or about November 1945, with the consent of the EVANGELISTAS, FLOREZA occupied the
above residential lot and built thereon a house of light materials (barong- barong) without any
agreement as to payment for the use of said residential lot owing to the fact that the EVANGELISTAS
has then a standing loan of P100.00 in favor of FLOREZA. 1
On the following dates, the EVANGELISTAS again borrowed the indicated amounts: September 16, 1946
P100.00; 2 August 17, 1947 P200,00; 3 January 30, 1949 P200.00; 4 April 1, 1949 P140.00, 5 or
a total of P740.00 including the first loan. The last three items are evidenced by private documents
stating that the residential lot stands as security therefor and that the amounts covered thereunder are
payable within six years from date, without mention of interest. The document executed on September
16, 1946 stated specifically that the loan was without interest "walang anumang patubo."
On January 10, 1949, FLOREZA demolished this house of light materials and in its place constructed one
of strong materials assessed in his name at P1,410.00 under Tax Declaration No. 4448. FLOREZA paid no
rental as before. 6
On August 1, 1949, the EVANGELISTAS, for and in consideration of P1,000.00 representing the total
outstanding loan of P740.00 plus P260.00 in cash, sold their residential lot to FLOREZA, with a right to
repurchase within a period of 6 years from date, or up to August 1, 1955, as evidenced by a notarial
document, Exh. B, registered under Act 3344 on December 6, 1949, as Inscription No. 2147. 7
On January 2, 1955, or seven months before the expiry of the repurchase period, the EVANGELISTAS
paid in full the repurchase price of P1,000.00.
On April 25, 1956, the EVANGELISTAS, through their counsel, wrote FLOREZA a letter 8 asking him to
vacate the premises as they wanted to make use of their residential lot besides the fact that FLOREZA
had already been given by them more than one year within which to move his house to another site.
On May 4, 1956, the EVANGELISTAS made a formal written demand to vacate, within five days from
notice, explaining that they had already fully paid the consideration for the repurchase of the
lot. 9 FLOREZA refused to vacate unless he was first reimbursed the value of his house. Hence, the filing
of this Complaint on May 18, 1956 by the EVANGELISTAS.
The EVANGELISTAS prayed that: 1) they be declared the owners of the house of strong materials built
by FLOREZA on their residential lot, without payment of indemnity; or, in the alternative to order
FLOREZA to remove said house; 2) that FLOREZA pay them the sum of P10.00 per month as the
reasonable value for the use and occupation of the same from January 2, 1955 (the date the
repurchase price was paid) until FLOREZA removes the house and delivers the lot to them; and 3) to
declare the transaction between them and FLOREZA as one of mortgage and not of pacto de retro.
In his Answer, FLOREZA admitted the repurchase but controverted by stating that he would execute a
deed of repurchase and leave the premises upon payment to him of the reasonable value of the house
worth P7,000.00.
In a Decision dated July 17, 1957, the Court of First Instance of Rizal opined that the question of
whether the transaction between the parties is one of mortgage or pacto de retro is no longer material
as the indebtedness of P1,000.00 of the EVANGELISTAS to FLOREZA had already been fully paid. And,
applying Article 448 of the Civil Code, 10 it rendered a decision dispositively decreeing:
FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment
granting the plaintiffs the right to elect, as owners of the land, to purchase the
house built, on the said lot in question by the defendant for P2,500 or to sell
their said land to e defendant for P1,500. In the event that the plaintiffs shall
decide not to purchase the house in question the defendant should be allowed
to remain in plaintiffs' premises by, paying a monthly rental of P10.00 which is
the reasonable value for the use of the same per month as alleged by plaintiffs in
their complaint. The Court also orders the defendant to pay a monthly rental of
P10.00 for the use of the land in question from May 18, 1956, the date of the
commencement of this action. The counterclaim of the defendant is hereby
ordered dismissed. Without pronouncement as to costs.
 SO ORDERED. 11
Both parties appealed to the Court of Appeals.
On November 4, 1965, the Court of Appeals concluded that Article 448 of the Civil Code, supra, was
inapplicable; that FLOREZA was not entitled to reimbursement for his house but that he could remove
the same at his expense; and accordingly rendered judgment thus:
WHEREFORE, judgment is hereby rendered: (1) adjudging the defendant-
appellant Mariano Floreza to vacate plaintiffs' residential lot described in the
complaint and to pay rental of P10.00 a month from May 5, 1956, until he
(defendant) shall have vacated the premises; (2) ordering defendant to remove
his house from the land in question within 30 days from the time this decision
becomes final and executory; (3) ordering the Register of Deeds of Rizal to cancel
inscription No. 2147, Page 210, Vol. 36, in the Registration Book under Act 3344
upon payment of his lawful fees; and (4) taxing the costs in both instances
against defendant-appellant Mariano Floreza. 12
Hence, this Petition for Review on certiorari by FLOREZA, seeking a reversal of the aforestated
judgment and ascribing the following errors:
1) That the Court of Appeals erred in holding that petitioner Floreza was a
builder in bad faith without likewise holding that respondents as owners of the
land in dispute, were likewise in bad faith and therefore both parties should in
accordance with Art. 453 of the New Civil Code be considered as having acted in
good faith.
2) That the Court of Appeals erred in completely ignoring the issue raised on
appeal as to whether or not respondents as owners of the questioned lot, were
in bad faith in the sense that they had knowledge of and acquiseced to the
construction of the house of petitioner on their lot.
3) That the Court of Appeals erred in not applying Art. 448 of the New Civil Code
in the adjudication of the rights of petitioner and respondent.
4) That the Court of Appeals erred in declaring that petitioner is not entitled to
reimbursement for the value of his house and that he should instead remove the
same at his expense.
5) That the Court of Appeals erred in adjudging petitioner to vacate respondents'
lot in question and to pay rentals commencing from May 5, 1956, until he shall
have vacated the premises, notwithstanding that petitioner is entitled under
Arts. 448 and 546 of the New Civil Code, to retention without payment of rental
while the corresponding indemnity of his house had not been paid.
6) That the Court of Appeals erred in taxing costs against petitioner.
7) That the Court of Appeals erred in not awarding petitioner's counterclaim.
During the pendency of this appeal, petitioner Maria D. de Evangelista died and was ordered
substituted by her son, petitioner Sergio, as her legal representative, in a Resolution dated May 14,
1976.
On October 20, 1978. the EVANGELISTAS filed a Motion to Dismiss stating that FLOREZA had since died
and that his heirs had voluntarily vacated the residential lot in question. The date FLOREZA passed
away and the date his heirs had voluntarily vacated the property has not been stated. Required to
comment, "petitioner (represented by his heirs)", through counsel, confirmed his death and the
removal of the house and manifested that thereby the question of reimbursement had moot and
academic. He objected to the dismissal of the case, however, on the ground that the issue of rentals
still pends. On January 21, 1980, complying with a Resolution of 'his Court, the EVANGELISTAS clarified
that the dismissal they were praying for was not of the entire case but only of this Petition for Review
on Certiorari.
We are not in agreement that the question of reimbursement of the value of the improvement erected
on the subject property has become moot. Petitioner's right of retention of subject property until he is
reimbursed for the value of his house, as he had demanded, is inextricably linked with the question of
rentals. For if petitioner has the right to indemnity, he has the right of retention and no rentals need be
paid. Conversely, if no right of retention exists, damages in the form of rentals for the continued use
and occupation of the property should be allowed.
We uphold the Court of Appeals in its conclusion that Article 448 of the Civil Code is inapplicable to the
factual milieu herein. Said codal provision applies only when the builder, planter, or sower believes he
had the right so to build, plant or sow because he thinks he owns the land or believes himself to have a
claim of title. 13 In this case, petitioner makes no pretensions of ownership whatsoever.
Petitioner concedes that he was a builder in bad faith but maintains that' the EVANGELISTAS should
also be held in bad faith, so that both of them being in bad faith, Article 453 of the Civil Code 14 should
apply. By the same token, however, that Article 448 of the same Code is not applicable, neither is
Article 453 under the ambiance of this case.
Would petitioner, as vendee a retro, then be entitled to the rights granted iii Article 1616 of the Civil
Code (Art. 1518 of the old Code)? To quote:
 Art. 1616. The vendor cannot avail himself of the right of repurchase without
returning to the vendee the price of the sale, and in addition:

(1) The expenses of the contract, and any other legitimate payments made by
reason of the sale;

(2) The necessary and useful expenses made on the thing sold.

The question again calls for a negative answer. It should be noted that petitioner did not construct his
house as a vendee a retro. The house had already been constructed as far back as 1949 (1945 for the
house of light materials) even before the pacto de retro sale in 1949. Petitioner incurred no useful
expense, therefore, after that sale. The house was already there at the tolerance of the EVANGELISTAS
in consideration of the several loans extended to them. Since petitioner cannot be classified as a
builder in good faith within the purview of Article 448 of the Civil Code, nor as a vendee a retro, who
made useful improvements during the lifetime of the pacto de retro, petitioner has no right to
reimbursement of the value of the house which he had erected on the residential lot of the
EVANGELISTAS, much less to retention of the premises until he is reimbursed.The rights of petitioner
are more akin to those of a usufructuary who, under Article 579 of the Civil (Art. 487 of the old Code),
may make on the property useful improvements but with no right to be indemnified therefor. He may,
however, remove such improvements should it be possible to do so without damage to the property:
For if the improvements made by the usufructuary were subject to indemnity, we would have a
dangerous and unjust situation in which the usufructuary could dispose of the owner's funds by
compelling him to pay for improvements which perhaps he would not have made. 15

We come now to the issue of rentals. It is clear that from the date that the redemption price had been
paid by the EVANGELISTAS on January 2, 1955, petitioner's right to the use of the residential lot
without charge had ceased. Having retained the property although a redemption had been made, he
should be held liable for damages in the form of rentals for the continued use of the subject residential
lot 16 at the rate of P10.00 monthly from January 3, 1955, and not merely from the date of demand on
May 4, 1956, as held by the Court of Appeals, until the house was removed and the property vacated
by petitioner or his heirs.

WHEREFORE, the judgment appealed from is hereby affirmed, with the modification that payment of
rentals by the heir, of Mariano Floreza, who are hereby ordered substituted for him, shall commence
on January 3, 1955 until the date that the residential lot in question was vacated.

Costs against petitioner.

SO ORDERED.
FIRST DIVISION [G.R. No. 149295. September 23, 2003]

Teehankee (Chairman), Makasiar, Fernandez, Guerrero, and De Castro, JJ., concur. PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS, represented by his Attorney-in-Fact, CHRISTIAN
DE JESUS, respondent.
D E C I S I O N VITUG, J.:
Petitioner Philippine National Bank disputes the decision handed down by the Court of Appeals promulgated
on 23 March 2001 in CA-G.R. CV No. 56001, entitled Generoso De Jesus, represented by his Attorney-in-Fact, Christian
De Jesus, versus Philippine National Bank. The assailed decision has affirmed the judgment rendered by the Regional
Trial Court, Branch 44, of Mamburao, Occidental Mindoro, declaring respondent Generoso de Jesus as being the true
and lawful owner of the 124-square-meter portion of the land covered by Transfer Certificate of Title (TCT) No. T-
17197 and ordering petitioner bank to vacate the premises, to deliver possession thereof to respondent, and to
remove the improvement thereon.
It would appear that on 10 June 1995, respondent filed a complaint against petitioner before the Regional Trial
Court of Occidental Mindoro for recovery of ownership and possession, with damages, over the questioned
property. In his complaint, respondent stated that he had acquired a parcel of land situated in Mamburao, Occidental
Mindoro, with an area of 1,144 square meters covered by TCT No. T-17197, and that on 26 March 1993, he had
caused a verification survey of the property and discovered that the northern portion of the lot was being encroached
upon by a building of petitioner to the extent of 124 square meters. Despite two letters of demand sent by
respondent, petitioner failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the lot and the building sometime in 1981 from then
Mayor Bienvenido Ignacio, the encroachment already was in existence and to remedy the situation, Mayor Ignacio
offered to sell the area in question (which then also belonged to Ignacio) to petitioner at P100.00 per square meter
which offer the latter claimed to have accepted. The sale, however, did not materialize when, without the knowledge
and consent of petitioner, Mayor Ignacio later mortgaged the lot to the Development Bank of the Philippines.
The trial court decided the case in favor of respondent declaring him to be the rightful owner of the disputed
124-square-meter portion of the lot and ordering petitioner to surrender possession of the property to respondent
and to cause, at its expense, the removal of any improvement thereon.
The Court of Appeals, on appeal, sustained the trial court but it ordered to be deleted the award to
respondent of attorneys fees, as well as moral and exemplary damages, and litigation expenses.
Petitioner went to this Court, via a petition for review, after the appellate court had denied the banks motion
for reconsideration, here now contending that -
1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A BUILDER IN BAD FAITH OVER THE
ENCROACHED PROPERTY IN QUESTION;
2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN FAVOR OF PNB THE PROVISION OF ARTICLE
448 OF THE CIVIL CODE AND THE RULING IN TECNOGAS PHILIPPINES MANUFACTURING CORP. VS. COURT OF APPEALS,
G.R. No. 108894, February 10, 1997, 268 SCRA 7.[1]
The Regional Trial Court and the Court of Appeals have both rejected the idea that petitioner can be
considered a builder in good faith. In the context that such term is used in particular reference to Article 448, et seq.,
of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land believing
himself to be its owner and unaware of any defect in his title or mode of acquisition.
The various provisions of the Civil Code, pertinent to the subject, read:
Article 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles
546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than
that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.
Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown
without right to indemnity.
Article 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.
A builder in good faith can, under the foregoing provisions, compel the landowner to make a choice between
appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The
choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory
follows the principal and not the other way around.[2] Even as the option lies with the landowner, the grant to him,
nevertheless, is preclusive. He much choose one. He cannot, for instance, compel the owner of the building to instead
remove it from the land.[3] In order, however, that the builder can invoke that accruing benefit and enjoy his
corresponding right to demand that a choice be made by the landowner, he should be able to prove good faith on his
part.
Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory
definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design
to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind
and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and
freedom from knowledge of circumstances which ought to put the holder upon inquiry. [4] The essence of good faith
lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to
overreach another.[5] Applied to possession, one is considered in good faith if he is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it.[6]
Given the findings of both the trial court and the appellate court, it should be evident enough that petitioner
would fall much too short from its claim of good faith. Evidently, petitioner was quite aware, and indeed advised, prior
to its acquisition of the land and building from Ignacio that a part of the building sold to it stood on the land not
covered by the land conveyed to it.
Equally significant is the fact that the building, constructed on the land by Ignacio, has in actuality been part of
the property transferred to petitioner. Article 448, of the Civil Code refers to a piece of land whose ownership is
claimed by two or more parties, one of whom has built some works (or sown or planted something) and not to a case
where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or
otherwise for, elsewise stated, where the true owner himself is the builder of works on his own land, the issue of
good faith or bad faith is entirely irrelevant. [7]
In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil Code. The Court
commiserates with petitioner in its present predicament; upon the other hand, respondent, too, is entitled to his
rights under the law, particularly after having long been deprived of the enjoyment of his property. Nevertheless, the
Court expresses hope that the parties will still be able to come up with an arrangement that can be mutually suitable
and acceptable to them.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is AFFIRMED. No costs.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 193517 January 15, 2014
THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A. SARILI,* MELENCIA** S. MAXIMO, ALBERTO A.
SARILI, IMELDA S. HIDALGO, all herein represented by CELSO A. SARILI, Petitioners,
vs.
PEDRO F. LAGROSA, represented in this act by his Attorney-in-Fact LOURDES LABIOS
MOJICA,Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on Certiorari1 are the Decision2 dated May 20, 2010 and
Resolution3 dated August 26, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 76258 which: (a) set
aside the Decision4 dated May 27, 2002 of the Regional Trial Court of Caloocan City, Branch 131 (RTC) in
Civil Case No. C-19152; (b) cancelled Transfer Certificate of Title (TCT) No. 262218 5 in the name of
Victorino Sarili (Victorino) married to Isabel Amparo (Sps. Sarili); (c) reinstated TCT No. 55979 6 in the
name of respondent Pedro F. Lagrosa (respondent); and (d) awarded respondent moral damages,
attorneys fees and litigation expenses.
The Facts
On February 17, 2000, respondent, represented by his attorney-in-fact Lourdes Labios Mojica (Lourdes)
via a special power of attorney dated November 25, 19997 (November 25, 1999 SPA), filed a
complaint8 against Sps. Sarili and the Register of Deeds of Caloocan City (RD) before the RTC, alleging,
among others, that he is the owner of a certain parcel of land situated in Caloocan City covered by TCT
No. 55979 (subject property) and has been religiously paying the real estate taxes therefor since its
acquisition on November 29, 1974. Respondent claimed that he is a resident of California, USA, and
that during his vacation in the Philippines, he discovered that a new certificate of title to the subject
property was issued by the RD in the name of Victorino married to Isabel Amparo (Isabel), i.e., TCT No.
262218, by virtue of a falsified Deed of Absolute Sale9 dated February 16, 1978 (February 16, 1978
deed of sale) purportedly executed by him and his wife, Amelia U. Lagrosa (Amelia). He averred that
the falsification of the said deed of sale was a result of the fraudulent, illegal, and malicious acts
committed by Sps. Sarili and the RD in order to acquire the subject property and, as such, prayed for
the annulment of TCT No. 262218, and that Sps. Sarili deliver to him the possession of the subject
property, or, in the alternative, that Sps. Sarili and the RD jointly and severally pay him the amount
of P1,000,000.00, including moral damages as well as attorneys fees.10
In their answer,11 Sps. Sarili maintained that they are innocent purchasers for value, having purchased
the subject property from Ramon B. Rodriguez (Ramon), who possessed and presented a Special Power
of Attorney12 (subject SPA) to sell/dispose of the same, and, in such capacity, executed a Deed of
Absolute Sale13 dated November 20, 1992 (November 20, 1992 deed of sale) conveying the said
property in their favor. In this relation, they denied any participation in the preparation of the February
16, 1978 deed of sale, which may have been merely devised by the "fixer" they hired to facilitate the
issuance of the title in their names.14 Further, they interposed a counterclaim for moral and exemplary
damages, as well as attorneys fees, for the filing of the baseless suit.15
During the pendency of the proceedings, Victorino passed away 16 and was substituted by his heirs,
herein petitioners.17
The RTC Ruling
On May 27, 2002, the RTC rendered a Decision18 finding respondents signature on the subject SPA as
"the same and exact replica" 19 of his signature in the November 25, 1999 SPA in favor of
Lourdes.20 Thus, with Ramons authority having been established, it declared the November 20, 1992
deed of sale21 executed by the latter as "valid, genuine, lawful and binding"22 and, as such, had validly
conveyed the subject property in favor of Sps. Sarili. It further found that respondent "acted with
evident bad faith and malice" and was, therefore, held liable for moral and exemplary
damages.23 Aggrieved, respondent appealed to the CA.
The CA Ruling
In a Decision24 dated May 20, 2010, the CA granted respondents appeal and held that the RTC erred in
its ruling since the November 20, 1992 deed of sale, which the RTC found "as valid and genuine," was
not the source document for the transfer of the subject property and the issuance of TCT No. 262218 in
the name of Sps. Sarili25but rather the February 16, 1978 deed of sale, the fact of which may be
gleaned from the Affidavit of Late Registration26 executed by Isabel (affidavit of Isabel). Further, it found
that respondent w as "not only able to preponderate his claim over the subject property, but [has]
likewise proved that his and his wifes signatures in the [February 16, 1978 deed of sale] x x x were
forged."27 "[A] comparison by the naked eye of the genuine signature of [respondent] found in his
[November 25, 1999 SPA] in favor of [Lourdes], and those of his falsified signatures in [the February 16,
1978 deed of sale] and [the subject SPA] shows that they are not similar." 28 It also observed that "[t]he
testimony of [respondent] denying the authenticity of his purported signature with respect to the
[February 16, 1978 deed of sale] was not rebutted x x x."29 In fine, the CA declared the deeds of sale
dated February 16, 1978 and November 20, 1992, as well as the subject SPA as void, and consequently
ordered the RD to cancel TCT No. 262218 in the name of Victorino married to Isabel, and consequently
reinstate TCT No. 55979 in respondents name. Respondents claims for moral damages and attorneys
fees/litigation expenses were also granted by the CA.30
Dissatisfied, petitioners moved for reconsideration which was, however, denied in a Resolution 31 dated
August 26, 2010, hence, the instant petition.
The Issues Before the Court
The main issue in this case is whether or not there was a valid conveyance of the subject property to
Sps. Sarili. The resolution of said issue would then determine, among others, whether or not: (a) TCT
No. 262218 in the name of Victorino married to Isabel should be annulled; and (b) TCT No. 55979 in
respondents name should be reinstated.
The Courts Ruling
The petition lacks merit.
Petitioners essentially argue that regardless of the fictitious February 16, 1978 deed of sale, there was
still a valid conveyance of the subject property to Sps. Sarili who relied on the authority of Ramos (as
per the subject SPA) to sell the same. They posit that the due execution of the subject SPA between
respondent and Ramon and, subsequently, the November 20, 1992 deed of sale between Victorino and
Ramon were duly established facts and that from the authenticity and genuineness of these
documents, a valid conveyance of the subject land from respondent to Victorino had leaned upon.32
The Court is not persuaded.
It is well-settled that even if the procurement of a certificate of title was tainted with fraud and
misrepresentation, such defective title may be the source of a completely legal and valid title in the
hands of an innocent purchaser for value. Where innocent third persons, relying on the correctness of
the certificate of title thus issued, acquire rights over the property, the court cannot disregard such
rights and order the total cancellation of the certificate. The effect of such an outright cancellation
would be to impair public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance whether the title has been
regularly or irregularly issued. This is contrary to the evident purpose of the law. 33
The general rule is that every person dealing with registered land may safely rely on the correctness of
the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate
to determine the condition of the property. Where there is nothing in the certificate of title to indicate
any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the Torrens Title upon its face indicates in quest for any hidden
defects or inchoate right that may subsequently defeat his right thereto. 34
However, a higher degree of prudence is required from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered. In such a case, the buyer is
expected to examine not only the certificate of title but all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor. 35 The buyer also has the duty to ascertain
the identity of the person with whom he is dealing with and the latters legal authority to convey the
property.36
The strength of the buyers inquiry on the sellers capacity or legal authority to sell depends on the
proof of capacity of the seller. If the proof of capacity consists of a special power of attorney duly
notarized, mere inspection of the face of such public document already constitutes sufficient inquiry. If
no such special power of attorney is provided or there is one but there appears to be flaws in its
notarial acknowledgment, mere inspection of the document will not do; the buyer must show that his
investigation went beyond the document and into the circumstances of its execution. 37
In the present case, it is undisputed that Sps. Sarili purchased the subject property from Ramos on the
strength of the latters ostensible authority to sell under the subject SPA. The said document, however,
readily indicates flaws in its notarial acknowledgment since the respondents community tax certificate
(CTC) number was not indicated thereon. Under the governing rule on notarial acknowledgments at
that time,38 i.e., Section 163(a) of Republic Act No. 7160, otherwise known as the "Local Government
Code of 1991," when an individual subject to the community tax acknowledges any document before a
notary public, it shall be the duty of the administering officer to require such individual to exhibit the
community tax certificate.39 Despite this irregularity, however, Sps. Sarili failed to show that they
conducted an investigation beyond the subject SPA and into the circumstances of its execution as
required by prevailing jurisprudence. Hence, Sps. Sarili cannot be considered as innocent purchasers for
value.
The defective notarization of the subject SPA also means that the said document should be treated as a
private document and thus examined under the parameters of Section 20, Rule 132 of the Rules of
Court which provides that "before any private document offered as authentic is received in evidence,
its due execution and authenticity must be proved either: (a) by anyone who saw the document
executed or written; or (b) by evidence of the genuineness of the signature or handwriting of the
maker x x x." Settled is the rule that a defective notarization will strip the document of its public
character and reduce it to a private instrument, and the evidentiary standard of its validity shall be
based on preponderance of evidence.40
The due execution and authenticity of the subject SPA are of great significance in determining the
validity of the sale entered into by Victorino and Ramon since the latter only claims to be the agent of
the purported seller (i.e., respondent). Article 1874 of the Civil Code provides that "[w]hen a sale of a
piece of land or any interest therein is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void." In other words, if the subject SPA was not proven to be duly
executed and authentic, then it cannot be said that the foregoing requirement had been complied
with; hence, the sale would be void.
After a judicious review of the case, taking into consideration the divergent findings of the RTC and the
CA on the matter,41 the Court holds that the due execution and authenticity of the subject SPA were not
sufficiently established under Section 20, Rule 132 of the Rules of Court as above-cited.
While Ramon identified the signature of respondent on the subject SPA based on his alleged familiarity
with the latters signature,42 he, however, stated no basis for his identification of the signatures of
respondents wife Amelia and the witness, Evangeline F. Murral, 43 and even failed to identify the other
witness,44 who were also signatories to the said document. In other words, no evidence was presented
to authenticate the signatures of the other signatories of the subject SPA outside from respondent. 45
Besides, as the CA correctly observed, respondents signature appearing on the subject SPA is not
similar46 to his genuine signature appearing in the November 25, 1999 SPA in favor of
Lourdes,47 especially the signature appearing on the left margin of the first page. 48
Unrebutted too is the testimony of respondent who, during trial, attested to the fact that he and his
wife, Amelia, had immigrated to the USA since 1968 and therefore could not have signed the subject
SPA due to their absence.49
Further, records show that the notary public, Atty. Ramon S. Untalan, failed to justify why he did not
require the presentation of respondents CTC or any other competent proof of the identity of the
person who appeared before him to acknowledge the subject SPA as respondents free and voluntary
act and deed despite the fact that he did not personally know the latter and that he met him for the
first time during the notarization.50 He merely relied on the representations of the person before
him51 and the bank officer who accompanied the latter to his office,52 and further explained that the
reason for the omission of the CTC was "because in [a] prior document, [respondent] has probably
given us already his residence certificate."53 This "prior document," was not, however, presented during
the proceedings below, nor the CTC number ever identified.
Thus, in light of the totality of evidence at hand, the Court agrees with the CAs conclusion that
respondent was able to preponderate his claims of forgery against the subject SPA. 54 In view of its
invalidity, the November 20, 1992 sale relied on by Sps. Sarili to prove their title to the subject property
is therefore void.1wphi1
At this juncture, it is well to note that it was, in fact, the February 16, 1978 deed of sale which as the
CA found was actually the source of the issuance of TCT No. 262218. Nonetheless, this document was
admitted to be also a forgery.55 Since Sps. Sarilis claim over the subject property is based on forged
documents, no valid title had been transferred to them (and, in turn, to petitioners). Verily, when the
instrument presented is forged, even if accompanied by the owners duplicate certificate of title, the
registered owner does not thereby lose his title, and neither does the assignee in the forged deed
acquire any right or title to the property. 56 Accordingly, TCT No. 262218 in the name of Victorino
married to Isabel should be annulled, while TCT No. 55979 in the name of respondent should be
reinstated. Anent the award of moral damages, suffice it to say that the dispute over the subject
property had caused respondent serious anxiety, mental anguish and sleepless nights, thereby
justifying the aforesaid award.57 Likewise, since respondent was constrained to engage the services of
counsel to file this suit and defend his interests, the awards of attorneys fees and litigation expenses
are also sustained.58
The Court, however, finds a need to remand the case to the court a quo in order to determine the
rights and obligations of the parties with respect to the house Sps. Sarili had built 59 on the subject
property in bad faith in accordance with Article 449 in relation to Articles 450, 451, 452, and the first
paragraph of Article 546 of the Civil Code which respectively read as follows:
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 to 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.
ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary
expenses of preservation of the land.
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor. (Emphases and underscoring
supplied)
To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he
builds, i.e. , that he be a possessor in concept of owner, and that he be unaware that there exists in his
title or mode of acquisition any flaw which invalidates it.60 Good faith is an intangible and abstract
quality with no technical meaning or statutory definition, and it encompasses, among other things, an
honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable
advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought
to put the holder upon inquiry.61 As for Sps. Sarili, they knew or at the very least, should have known
from the very beginning that they were dealing with a person who possibly had no authority to sell
the subject property considering the palpable irregularity in the subject SPAs acknowledgment. Yet,
relying solely on said document and without any further investigation on Ramoss capacity to sell Sps.
Sarili still chose to proceed with its purchase and even built a house thereon. Based on the foregoing it
cannot be seriously doubted that Sps. Sarili were actually aware of a flaw or defect in their title or
mode of acquisition and have consequently built the house on the subject property in bad faith under
legal contemplation. The case is therefore remanded to the court a quo for the proper application of
the above-cited Civil Code provisions.
WHEREFORE, the petition is DENIED. The Decision dated May 20, 2010 and Resolution dated August 26,
2010 of the Court of Appeals in CA-G.R. CV No. 76258 are AFFIRMED. However the case is REMANDED
to the court a quo for the proper application of Article 449 in relation to Articles 450 451 452 and the
first paragraph of Article 546 of the Civil Code with respect to the house Spouses Victorino Sarili and
Isabel Amparo had built on the subject property as herein discussed.
SO ORDERED.
SECOND DIVISION
[G.R. No. 125683. March 2, 1999]
EDEN BALLATAN and SPS. BETTY MARTINEZ and CHONG CHY LING, petitioners, vs. COURT OF
APPEALS, GONZALO GO, WINSTON GO, LI CHING YAO, ARANETA INSTITUTE OF
AGRICULTURE and JOSE N. QUEDDING, respondents.
DECISION
PUNO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals dated March 25,
1996 in CA-G.R. CV No. 32472 entitled "Eden Ballatan, et. al., plaintiffs-appellees v. Gonzalo Go and
Winston Go, appellants and third-party plaintiffs-appellants v. Li Ching Yao, et.al., third-party
defendants."[1]
The instant case arose from a dispute over forty-two (42) square meters of residential land
belonging to petitioners. The parties herein are owners of adjacent lots located at Block No. 3,
Poinsettia Street, Araneta University Village, Malabon, Metro Manila. Lot No. 24, 414 square meters in
area, is registered in the name of petitioners Eden Ballatan and spouses Betty Martinez and Chong Chy
Ling.[2] Lots Nos. 25 and 26, with an area of 415 and 313 square meters respectively, are registered in
the name of respondent Gonzalo Go, Sr.[3] On Lot No. 25, respondent Winston Go, son of Gonzalo Go,
Sr., constructed his house. Adjacent to Lot No. 26 is Lot No. 27, 417 square meters in area, and is
registered in the name of respondent Li Ching Yao. [4]
In 1985, petitioner Ballatan constructed her house on Lot No. 24. During the construction, she
noticed that the concrete fence and side pathway of the adjoining house of respondent Winston Go
encroached on the entire length of the eastern side of her property. [5] Her building contractor informed
her that the area of her lot was actually less than that described in the title. Forthwith, Ballatan
informed respondent Go of this discrepancy and his encroachment on her property. Respondent Go,
however, claimed that his house, including its fence and pathway, were built within the parameters of
his father's lot; and that this lot was surveyed by Engineer Jose Quedding, the authorized surveyor of
the Araneta Institute of Agriculture (AIA), the owner-developer of the subdivision project.
Petitioner Ballatan called the attention of the AIA to the discrepancy of the land area in her title
and the actual land area received from them. The AIA authorized another survey of the land by
Engineer Jose N. Quedding.
In a report dated February 28, 1985, Engineer Quedding found that the lot area of petitioner
Ballatan was less by a few meters and that of respondent Li Ching Yao, which was three lots away,
increased by two (2) meters. Engineer Quedding declared that he made a verification survey of Lots
Nos. 25 and 26 of respondents Go in 1983 and allegedly found the boundaries to have been in their
proper position.He, however, could not explain the reduction in Ballatan's area since he was not
present at the time respondents Go constructed their boundary walls. [6]
On June 2, 1985, Engineer Quedding made a third relocation survey upon request of the
parties. He found that Lot No. 24 lost approximately 25 square meters on its eastern boundary, that Lot
No. 25, although found to have encroached on Lot No. 24, did not lose nor gain any area; that Lot No.
26 lost some three (3) square meters which, however, were gained by Lot No. 27 on its western
boundary.[7] In short, Lots Nos. 25, 26 and 27 moved westward to the eastern boundary of Lot No. 24.
On the basis of this survey, on June 10, 1985, petitioner Ballatan made a written demand on
respondents Go to remove and dismantle their improvements on Lot No. 24. Respondents Go
refused. The parties, including Li Ching Yao, however, met several times to reach an agreement on the
matter.
Failing to agree amicably, petitioner Ballatan brought the issue before the
barangay. Respondents Go did not appear. Thus, on April 1, 1986, petitioner Ballatan instituted against
respondents Go Civil Case No. 772-MN for recovery of possession before the Regional Trial Court,
Malabon, Branch 169. The Go's filed their "Answer with Third-Party Complaint" impleading as third-
party defendants respondents Li Ching Yao, the AIA and Engineer Quedding.
On August 23, 1990, the trial court decided in favor of petitioners. It ordered the Go's to vacate
the subject portion of Lot No. 24, demolish their improvements and pay petitioner Ballatan actual
damages, attorney's fees and the costs of the suit. It dismissed the third-party complaint against: (1)
AIA after finding that the lots sold to the parties were in accordance with the technical description and
verification plan covered by their respective titles; (2) Jose N. Quedding, there being no privity of
relation between him and respondents Go and his erroneous survey having been made at the instance
of AIA, not the parties; and (3) Li Ching Yao for failure to prove that he committed any wrong in the
subject encroachment.[8] The court made the following disposition:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants,
ordering the latter:
1. To demolish and remove all improvements existing and encroaching on plaintiff's lot;
2. To clear, vacate and deliver possession of the encroached area to the plaintiffs;
3. To pay plaintiffs jointly and severally the following:
a) P7,800.00 for the expenses paid to the surveyors;
b) P5,000.00 for plaintiffs' transportation;
4. To pay plaintiffs, jointly and severally, attorney's fees equivalent to 25% of the current market value
of the subject matter in litigation at the time of execution; and
5. To pay the costs of suit.
The third-party complaint filed by third-party plaintiff Gonzalo Go and Winston Go against third-party
defendants Araneta Institute of Agriculture, Jose N. Quedding and Li Ching Yao is hereby DISMISSED,
without pronouncement as to costs.
SO ORDERED."
Respondents Go appealed. On March 25, 1996, the Court of Appeals modified the decision of
the trial court. It affirmed the dismissal of the third-party complaint against the AIA but reinstated the
complaint against Li Ching Yao and Jose Quedding. Instead of ordering respondents Go to demolish
their improvements on the subject land, the appellate court ordered them to pay petitioner Ballatan,
and respondent Li Ching Yao to pay respondents Go, a reasonable amount for that portion of the lot
which they encroached, the value to be fixed at the time of taking. It also ordered Jose Quedding to pay
respondents Go attorney's fees of P5,000.00 for his erroneous survey. The dispositive portion of the
decision reads:
"WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED insofar as the
dismissal of the third-party complaint against Araneta Institute of Agriculture is concerned but
modified in all other aspects as follows:
1) Defendants-appellants are hereby ordered to pay plaintiffs-appellees the reasonable value of the
forty-two (42) square meters of their lot at the time of its taking;
2) Third-party defendant Li Ching Yao is hereby ordered to pay defendants-appellants the reasonable
value of the thirty-seven (37) square meters of the latter's lot at the time of its taking; and
3) Third-party defendant Jose N. Quedding is hereby ordered to pay to defendants-appellants the
amount of P5,000.00. as attorney's fees.
LET THE RECORD of the case be remanded to the Regional Trial Court of Malabon for further
proceedings and reception of evidence for the determination of the reasonable value of Lots Nos. 24
and 26.
SO ORDERED."[9]
Hence, this petition. Petitioners allege that:
"RESPONDENT COURT OF APPEALS ERRED ON QUESTIONS OF LAW AND GRAVELY ABUSED ITS
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN:
1. IT APPLIED EQUITY OR EQUITABLE SOLUTIONS TO THE INSTANT CASE IN UTTER DISREGARD AND IN
VIOLATION OR GROSS IGNORANCE OF EXISTING LAWS AND JURISPRUDENCE VESTING BASIC PROPERTY
RIGHTS TO HEREIN PETITIONERS. RESPONDENT COURT HAS NO POWER TO APPLY/USE EQUITY IN THE
PRESENCE OF EXISTING LAWS TO THE CONTRARY.
2. UNDER THE GUISE OF APPLYING EQUITY BUT IN EFFECT A VERY APPARENT PARTIALITY AND FAVOR
TO RESPONDENTS GO, IT ORDERED PAYMENT OF THE ENCROACHED AREA AT THE VALUE AT THE TIME
OF ITS TAKING AND NOT THE VALUE AT THE TIME OF PAYMENT, THEREBY ENRICHING THE GO'S BUT
DEPRIVING PETITIONERS OF THE FRUITS OR INCREASE IN VALUE OF THEIR PROPERTY TO WHICH THEY
ARE ENTITLED UNDER THE LAW AS THE REGISTERED OWNERS WITH TORRENS TITLE IN THEIR NAMES.
3. WHEN IT DID NOT DISMISS THE THIRD-PARTY COMPLAINT DUE TO NON-PAYMENT OF ANY FILING OR
DOCKET FEE.
4. WHEN IT DENIED PETITIONERS THE RECOVERY OF THE NECESSARY EXPENSES IN PROTECTING THEIR
RIGHTS IN THIS CASE."[10]
Petitioners question the admission by respondent Court of Appeals of the third-party complaint
by respondents Go against the AIA, Jose Quedding and Li Ching Yao. Petitioners claim that the third-
party complaint should not have been considered by the Court of Appeals for lack of jurisdiction due to
third-party plaintiffs' failure to pay the docket and filing fees before the trial court.
The third-party complaint in the instant case arose from the complaint of petitioners against
respondents Go. The complaint filed was for accion publiciana, i.e., the recovery of possession of real
property which is a real action. The rule in this jurisdiction is that when an action is filed in court, the
complaint must be accompanied by the payment of the requisite docket and filing fees. [11] In real
actions, the docket and filing fees are based on the value of the property and the amount of damages
claimed, if any.[12] If the complaint is filed but the fees are not paid at the time of filing, the court
acquires jurisdiction upon full payment of the fees within a reasonable time as the court may grant,
barring prescription.[13] Where the fees prescribed for the real action have been paid but the fees of
certain related damages are not, the court, although having jurisdiction over the real action, may not
have acquired jurisdiction over the accompanying claim for damages. [14] Accordingly, the court may
expunge those claims for damages, or allow, on motion, a reasonable time for amendment of the
complaint so as to allege the precise amount of damages and accept payment of the requisite legal
fees.[15] If there are unspecified claims, the determination of which may arise after the filing of the
complaint or similar pleading, the additional filing fee thereon shall constitute a lien on the judgment
award.[16] The same rule also applies to third-party claims and other similar pleadings.[17]
In the case at bar, the third-party complaint filed by respondents Go was incorporated in their
answer to the complaint. The third-party complaint sought the same remedy as the principal complaint
but added a prayer for attorney's fees and costs without specifying their amounts, thus:
"ON THE THIRD PARTY COMPLAINT
1. That summons be issued against Third-Party Defendants Araneta Institute of Agriculture, Jose N.
Quedding and Li Ching Yao;
2. That after hearing, they be sentenced to indemnify the Third-Party Plaintiffs for whatever is
adjudged against the latter in favor of the Plaintiffs;
3. That Third-Party Defendants be ordered to pay attorney's fees as may be proved during trial;
4. That Third-Party Defendants be ordered to pay the costs.
Other just and equitable reliefs are also prayed for."[18]
The Answer with Third-Party Complaint was admitted by the trial court without the requisite
payment of filing fees, particularly on the Go's prayer for damages. [19] The trial court did not award the
Go's any damages. It dismissed the third-party complaint. The Court of Appeals, however, granted the
third-party complaint in part by ordering third-party defendant Jose N. Quedding to pay the Go's the
sum of P5,000.00 as attorney's fees.
Contrary to petitioners' claim, the Court of Appeals did not err in awarding damages despite the
Go's failure to specify the amount prayed for and pay the corresponding additional filing fees
thereon. The claim for attorney's fees refers to damages arising after the filing of the complaint against
the Go's. The additional filing fee on this claim is deemed to constitute a lien on the judgment award. [20]
The Court of Appeals found that the subject portion is actually forty-two (42) square meters in
area, not forty-five (45), as initially found by the trial court; that this forty-two (42) square meter
portion is on the entire eastern side of Lot No. 24 belonging to petitioners; that on this said portion is
found the concrete fence and pathway that extends from respondent Winston Go's house on adjacent
Lot No. 25; that inclusive of the subject portion, respondents Go did not gain nor lose any portion of
Lots Nos. 25 and 26; that instead, Lot No. 27, on which respondent Li Ching Yao built his
house, encroached on the land of respondents Go, gaining in the process thirty-seven (37) square
meters of the latter's land.[21]
We hold that the Court of Appeals correctly dismissed the third-party complaint against AIA. The
claim that the discrepancy in the lot areas was due to AIA's fault was not proved. The appellate court,
however, found that it was the erroneous survey by Engineer Quedding that triggered these
discrepancies. And it was this survey that respondent Winston Go relied upon in constructing his house
on his father's land. He built his house in the belief that it was entirely within the parameters of his
father's land. In short, respondents Go had no knowledge that they encroached on petitioners'
lot. They are deemed builders in good faith[22] until the time petitioner Ballatan informed them of their
encroachment on her property. [23]
Respondent Li Ching Yao built his house on his lot before any of the other parties did. [24] He
constructed his house in 1982, respondents Go in 1983, and petitioners in 1985.[25] There is no
evidence, much less, any allegation that respondent Li Ching Yao was aware that when he built his
house he knew that a portion thereof encroached on respondents Go's adjoining land. Good faith is
always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of
proof.[26]
All the parties are presumed to have acted in good faith. Their rights must, therefore, be
determined in accordance with the appropriate provisions of the Civil Code on property.
Article 448 of the Civil Code provides:
"Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548,[27] or to oblige the one who built or planted to pay the price of the
land, and the one who sowed the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the
court shall fix the terms thereof."
The 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 building, planting or sowing, after payment to the builder,
planter or sower of the necessary and useful expenses, and in the proper case, expenses for pure
luxury or mere pleasure. The owner of the land may also oblige the builder, planter or sower to
purchase and pay the price of the land. If the owner chooses to sell his land, the builder, planter or
sower must purchase the land, otherwise the owner may remove the improvements thereon. The
builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more
than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the
owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must
fix the terms thereof. The right to choose between appropriating the improvement or selling the land
on which the improvement stands to the builder, planter or sower, is given to the owner of the land. [28]
Article 448 has been applied to improvements or portions of improvements built by mistaken
belief on land belonging to the adjoining owner.[29] The facts of the instant case are similar to those
inCabral v. Ibanez,[30] to wit:
"[P]laintiffs Geronima Zabala and her husband Justino Bernardo, constructed their house in the belief
that it was entirely within the area of their own land without knowing at that time that part of their
house was occupying a 14-square meter portion of the adjoining lot belonging to the defendants, and
that the defendants Bernardo M. Cabral and Mamerta M. Cabral were likewise unaware of the fact that
a portion of plaintiff's house was extending and occupying a portion of their lot with an area of 14
square meters. The parties came to know of the fact that part of the plaintiff's house was occupying
part of defendant's land when the construction of plaintiff's house was about to be finished, after a
relocation of the monuments of the two properties had been made by the U.S. Army through the
Bureau of Lands, according to their 'Stipulation of Facts,' dated August 17, 1951.
On the basis of these facts, we held that:
"The Court, therefore, concludes that the plaintiffs are builders in good faith and the relative rights of
the defendant Mamerta Cabral as owner of the land and of the plaintiffs as owners of the building is
governed by Article 361 of the Civil Code (Co Tao v. Joaquin Chan Chico, 46 Off. Gaz.5514). Article 361
of the old Civil Code has been reproduced with an additional provision in Article 448 of the new Civil
Code, approved June 18, 1949."[31]
Similarly, in Grana and Torralba v. Court of Appeals,[32] we held that:
"Although without any legal and valid claim over the land in question, petitioners, however, were found
by the Court of Appeals to have constructed a portion of their house thereon in good faith. Under
Article 361 of the old Civil Code (Article 448 of the new), the owner of the land on which anything has
been built in good faith shall have the right to appropriate as his own the building, after payment to the
builder of necessary or useful expenses, and in the proper case, expenses for pure luxury or mere
pleasure, or to oblige the builder to pay the price of the land. Respondents, as owners of the land,
have therefore the choice of either appropriating the portion of petitioners' house which is on their
land upon payment of the proper indemnity to petitioners, or selling to petitioners that part of their
land on which stands the improvement. It may here be pointed out that it would be impractical for
respondents to choose to exercise the first alternative, i.e., buy that portion of the house standing on
their land, for in that event the whole building might be rendered useless. The more workable
solution, it would seem, is for respondents to sell to petitioners that part of their land on which was
constructed a portion of the latter's house. If petitioners are unwilling or unable to buy, then they
must vacate the land and must pay rentals until they do so. Of course, respondents cannot oblige
petitioners to buy the land if its value is considerably more than that of the aforementioned portion
of the house. If such be the case, then petitioners must pay reasonable rent. The parties must come
to an agreement as to the conditions of the lease, and should they fail to do so, then the court shall
fix the same."[33]
In light of these rulings, petitioners, as owners of Lot No. 24, may choose to purchase the
improvement made by respondents Go on their land, or sell to respondents Go the subject portion. If
buying the improvement is impractical as it may render the Go's house useless, then petitioners may
sell to respondents Go that portion of Lot No. 24 on which their improvement stands. If the Go's are
unwilling or unable to buy the lot, then they must vacate the land and, until they vacate, they must pay
rent to petitioners. Petitioners, however, cannot compel respondents Go to buy the land if its value is
considerably more than the portion of their house constructed thereon. If the value of the land is much
more than the Go's improvement, then respondents Go must pay reasonable rent. If they do not agree
on the terms of the lease, then they may go to court to fix the same.
In the event that petitioners elect to sell to respondents Go the subject portion of their lot, the
price must be fixed at the prevailing market value at the time of payment. The Court of Appeals erred
in fixing the price at the time of taking, which is the time the improvements were built on the land. The
time of taking is determinative of just compensation in expropriation proceedings. The instant case is
not for expropriation. It is not a taking by the state of private property for a public purpose upon
payment of just compensation. This is a case of an owner who has been paying real estate taxes on his
land but has been deprived of the use of a portion of this land for years. It is but fair and just to fix
compensation at the time of payment.[34]
Article 448 and the same conditions abovestated also apply to respondents Go as owners and
possessors of their land and respondent Li Ching Yao as builder of the improvement that encroached
on thirty-seven (37) square meters of respondents Go's land.
IN VIEW WHEREOF, the decision of respondent Court of Appeals is modified as follows:
(1) Petitioners are ordered to exercise within thirty (30) days from finality of this decision their
option to either buy the portion of respondents Go's improvement on their Lot No. 24, or sell to said
respondents the portion of their land on which the improvement stands. If petitioners elect to sell the
land or buy the improvement, the purchase price must be at the prevailing market price at the time of
payment. If buying the improvement will render respondents Go's house useless, then petitioners
should sell the encroached portion of their land to respondents Go. If petitioners choose to sell the
land but respondents Go are unwilling or unable to buy, then the latter must vacate the subject portion
and pay reasonable rent from the time petitioners made their choice up to the time they actually
vacate the premises. But if the value of the land is considerably more than the value of the
improvement, then respondents Go may elect to lease the land, in which case the parties shall agree
upon the terms of the lease.Should they fail to agree on said terms, the court of origin is directed to fix
the terms of the lease.
From the moment petitioners shall have exercised their option, respondents Go shall pay
reasonable monthly rent up to the time the parties agree on the terms of the lease or until the court
fixes such terms.
(2) Respondents Go are likewise directed to exercise their rights as owners of Lots Nos. 25 and
26, vis-a-vis respondent Li Ching Yao as builder of the improvement that encroached on thirty seven
(37) square meters of respondents Go's land in accordance with paragraph one abovementioned.
(3) The Decision of the Court of Appeals ordering Engineer Quedding, as third-party defendant,
to pay attorney's fees of P5,000.00 to respondents Go is affirmed. The additional filing fee on the
damages constitutes a lien on this award.
(4) The Decision of the Court of Appeals dismissing the third-party complaint against Araneta
Institute of Agriculture is affirmed.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.
Republic of the Philippines WHEREFORE, the Court hereby renders judgment as follows:
SUPREME COURT
Manila
On the Complaint:

FIRST DIVISION
1. Ordering the defendant to return and surrender the portion of 116 sq. meters which
lawfully belongs to the plaintiff being a portion of Lot 19;
G.R. No. 182378 March 6, 2013
2. Ordering defendant to demolish whatever structure constructed [sic] thereon and to
MERCY VDA. DE ROXAS, represented by ARLENE C. ROXAS-CRUZ, in her capacity as substitute remove the same at his own expense;
appellant-petitioner, Petitioner,
vs.
3. Ordering defendant to. reimburse plaintiff the amount of P1,500.00 for the expenses in
OUR LADY'S FOUNDATION, INC., Respondent.
the relocation survey;

DECISION
4. Ordering the dismissal of the counter claim.

SERENO, CJ.:
On the 3rd Party Complaint:

Before this Court is a Rule 45 Petition, seeking a review of the Court of Appeals (CA) 25 September
2007 Decision1and 11 March 2008 Resolution 2 in CA-G.R. SP No. 88622, which nullified the (1) Notices
of Garnishment directed against the bank accounts of petitioner's general manager; and (2) the 2
December 2004 Order3 in Civil Case No. 5403 of the Regional Trial Court (RTC) of Sorsogon City, Branch
52. The Order required respondent to reimburse petitioner Pl ,800 per square meter of the 92-square-
meter property it had encroached upon.
The antecedent facts are as follows:
On 1 September 1988, Salve Dealca Latosa filed before the RTC a Complaint for the recovery of
ownership of a portion of her residential land located at Our Ladys Village, Bibincahan, Sorsogon,
Sorsogon, docketed as Civil Case No. 5403. According to her, Atty. Henry Amado Roxas (Roxas),
represented by petitioner herein, encroached on a quarter of her property by arbitrarily extending his
concrete fence beyond the correct limits.
In his Answer, Roxas imputed the blame to respondent Our Ladys Village Foundation, Inc., now Our
Ladys Foundation, Inc. (OLFI). He then filed a Third-Party Complaint against respondent and claimed
that he only occupied the adjoining portion in order to get the equivalent area of what he had lost
when OLFI trimmed his property for the subdivision road. The RTC admitted the Third-Party Complaint
and proceeded to trial on the merits.
After considering the evidence of all the parties, the trial court held that Latosa had established her
claim of encroachment by a preponderance of evidence. It found that Roxas occupied a total of 112
square meters of Latosas lots, and that, in turn, OLFI trimmed his property by 92 square meters. The
dispositive portion of the Decision4 reads:
1. Ordering the 3rd Party Defendant to reimburse 3rd Party Plaintiff the value of 92 sq.
meters which is a portion of Lot 23 of the def-3rd Party Plaintiff plus legal interest to be
reckoned from the time it was paid to the 3rd Party Defendant;
2. 3rd Party Defendant is ordered to pay the 3rd Party Plaintiff the sum of P10,000.00 as
attorney's fees and P5,000 as litigation expenses;
3. 3rd Party Defendant shall pay the cost of suit.
SO ORDERED.5
Subsequently, Roxas appealed to the CA, which later denied the appeal. Since the Decision had become
final, the RTC issued a Writ of Execution6 to implement the ruling ordering OLFI to reimburse Roxas for
the value of the 92-square-meter property plus legal interest to be reckoned from the time the amount
was paid to the third-party defendant. The trial court then approved the Sheriffs Bill, 7 which valued the
subject property at P2,500 per square meter or a total of P230,000. Adding the legal interest of 12%
per annum for 10 years, respondents judgment obligations totaled P506,000.
Opposing the valuation of the subject property, OLFI filed a Motion to Quash the Sheriffs Bill and a
Motion for Inhibition of the RTC judge. It insisted that it should reimburse Roxas only at the rate of P40
per square meter, the same rate that Roxas paid when the latter first purchased the property.
Nevertheless, before resolving the Motions filed by OLFI, the trial court approved an Amended Sheriffs
Bill,8 which reduced the valuation to P1,800 per square meter.
Eventually, the RTC denied both the Motion for Inhibition and the Motion to Quash the Sheriffs Bill. It
cited fairness to justify the computation of respondents judgment obligation found in the Amended
Sheriffs Bill. In its 2 December 2004 Order, the trial court explained:
Although it might be true that the property was originally purchased at P40.00 per square meter, the
value of the Philippine Peso has greatly devaluated since then P40.00 may be able to purchase a square
meter of land twenty (20) or more years ago but it could only buy two (2) kilos of rice today. It would
be most unfair to the defendants-third party plaintiff if the third party defendant would only be made
to reimburse the purchase price at P40.00 per square meter. Anyway, this Court is in the best position
to determine what amount should be reimbursed since it is the one who rendered the decision which
was affirmed in toto by the Appellate Court and this Court is of the opinion and so holds that that
amount should be P1,800.00 per square meter.9
To collect the aforementioned amount, Notices of Garnishment 10 were then issued by the sheriff to the
managers of the Development Bank of the Philippines and the United Coconut Planters Bank for them
to garnish the account of Bishop Robert Arcilla-Maullon (Arcilla-Maullon), OLFIs general manager.
Refusing to pay P1,800 per square meter to Roxas, OLFI filed a Rule 65 Petition before the
CA.11 Respondent asserted that since the dispositive portion of the Decision ordered it to reimburse
Roxas, it should only be made to return the purchase price that he had originally paid, which was P40
per square meter for the 92-square-meter property.
Petitioner argues otherwise. Roxas first clarified that the dispositive portion of the Decision is silent as
to the value of the subject property whether the value is to be reckoned from the date of purchase or
from the date of payment after the finality of judgment.12 Following this clarification, petitioner pointed
out that the valuation of the subject property was for the trial court to undertake, and that the
reimbursement contemplated referred to the repayment of all the expenses, damages, and losses.
Roxas ultimately argued that the payment for the property encroached upon must not be absurd and
must take into consideration the devaluation of the Philippine peso.
The arguments of Roxas did not persuade the CA. It construed reimbursement as an obligation to pay
back what was previously paid and thus required OLFI to merely reimburse him at the rate of P40 per
square meter, which was the consideration respondent had received when Roxas purchased the
subdivision lots. Therefore, for changing the tenor of the RTC Decision by requiring the reimbursement
of P1,800 per square meter, both the Amended Sheriffs Bill and the 2 December 2004 Order of the RTC
were considered null and void.
Further, the CA nullified the Notices of Garnishment issued against the bank accounts of Arcilla-
Maullon. It noted that since the general manager of OLFI was not impleaded in the proceedings, he
could not be held personally liable for the obligation of the corporation.
Before this Court, petitioner maintains that OLFI should be made to pay P1,800, and not P40 per
square meter as upheld in the 2 December 2004 Order of the RTC. 13 For the immediate enforcement of
the Order, petitioner further argues that because OLFI is a dummy corporation, the bank accounts of its
general manager can be garnished to collect the judgment obligation of respondent. 14
Hence, the pertinent issue in this case requires the determination of the correct amount to be
reimbursed by OLFI to Roxas. As a corollary matter, this Court also resolves the propriety of issuing the
Notices of Garnishment against the bank accounts of Arcilla-Maullon as OLFIs general manager.
RULING OF THE COURT
Based on the dispositive portion of the RTC Decision, OLFI was ordered to reimburse Roxas for the
value of the 92-square-meter property plus legal interest to be reckoned from the time it was paid to
the third-party defendant.
In interpreting this directive, both the trial and the appellate courts differed in interpreting the amount
of reimbursement payable by respondent to petitioner. The RTC pegged the reimbursable amount
at P1,800 per square meter to reflect the current value of the property, while the CA maintained the
original amount of the lot at P40 per square meter.
To settle the contention, this Court resorts to the provisions of the Civil Code governing encroachment
on property. Under Article 448 pertaining to encroachments in good faith, as well as Article 450
referring to encroachments in bad faith, the owner of the land encroached upon petitioner herein
has the option to require respondent builder to pay the price of the land.
Although these provisions of the Civil Code do not explicitly state the reckoning period for valuing the
property, Ballatan v. Court of Appeals15 already specifies that in the event that the seller elects to sell
the lot, "the price must be fixed at the prevailing market value at the time of payment." More recently,
Tuatis v. Spouses Escol16 illustrates that the present or current fair value of the land is to be reckoned at
the time that the landowner elected the choice, and not at the time that the property was purchased.
We quote below the relevant portion of that Decision: 17
Under the second option, Visminda may choose not to appropriate the building and, instead, oblige
Tuatis to pay the present or current fair value of the land. The P10,000.00 price of the subject property,
as stated in the Deed of Sale on Installment executed in November 1989, shall no longer apply, since
Visminda will be obliging Tuatis to pay for the price of the land in the exercise of Vismindas rights
under Article 448 of the Civil Code, and not under the said Deed. Tuatis obligation will then be
statutory, and not contractual, arising only when Visminda has chosen her option under Article 448 of
the Civil Code.
Still under the second option, if the present or current value of the land, the subject property herein,
turns out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to
pay for the subject property, but she must pay Visminda reasonable rent for the same. Visminda and
Tuatis must agree on the terms of the lease; otherwise, the court will fix the terms. (Emphasis supplied)
In Sarmiento v. Agana, 18 we reckoned the valuation of the property at the time that the real owner of In any event, in order for us to hold Arcilla-Maullon personally liable alone for the debts of the
the land asked the builder to vacate the property encroached upon. Moreover, the oft-cited case Depra corporation and thus pierce the veil of corporate fiction, we have required that the bad faith of the
v. Dumlao19 likewise ordered the courts of origin to compute the current fair price of the land in cases officer must first be established clearly and convincingly.27 Petitioner, however, has failed to include any
of encroachment on real properties. submission pertaining to any wrongdoing of the general manager. Necessarily, it would be unjust to
hold the latter personally liable.
From these cases, it follows that the CA incorrectly pegged the reimbursable amount at the old market
value of the subject property P40 per square meter as reflected in the Deed of Absolute Therefore, we refuse to allow the execution of a corporate judgment debt against the general manager
Sale20 between the parties. On the other hand, the RTC properly considered in its 2 December 2004 of the corporation, since in no legal sense is he the owner of the corporate property. 28 Consequently,
Order the value of the lot at P1,800 per square meter, the current fair price as determined in the this Court sustains the CA in nullifying the Notices of Garnishment against his bank accounts.
Amended Sheriffs Bill. Thus, we reverse the ruling of the CA and reinstate the 2 December 2004 Order
of the RTC directing OLFI to reimburse petitioner at P1,800 per square meter.
IN VIEW THEREOF, the 25 September 2007 Decision and 11 March 2008 Resolution of the Court of
Appeals in CA-GR SP No. 88622 are AFFIRMED with MODIFICATION in that the value of the 92-square-
Nevertheless, with regard to the issue pertaining to the Notices of Garnishment issued against the bank meter property for which respondent should reimburse petitioner, as determined by the 2 December
accounts of Arcilla-Maullon, we affirm the ruling of the CA. 2004 Order of the Regional Trial Court in Civil Case No. 5403, is hereby reinstated at P1,800 per square
meter.
The appellate court appreciated that in the main case for the recovery of ownership before the court of
origin, only OLFI was named as respondent corporation, and that its general manager was never SO ORDERED.
impleaded in the proceedings a quo.
MARIA LOURDES P. A. SERENO
Given this finding, this Court holds that since OLFIs general manager was not a party to the case, the Chief Justice, Chairperson
CA correctly ruled that Arcilla-Maullon cannot be held personally liable for the obligation of the
corporation. In Santos v. NLRC,21this Court upholds the doctrine of separate juridical personality of
corporate entities. The case emphasizes that a corporation is a juridical entity with a legal personality
separate and distinct from those acting for and on its behalf and, in general, of the people comprising
it.22 Hence, the obligations incurred by the corporation, acting through its officers such as in this case,
are its sole liabilities.23

To hold the general manager of OLFI liable, petitioner claims that it is a mere business conduit of
Arcilla-Maullon, hence, the corporation does not maintain a bank account separate and distinct from
the bank accounts of its members. In support of this claim, petitioner submits that because OLFI did
not rebut the attack on its legal personality, as alleged in petitioners Opposition and Comments on the
Motion to Quash Notice/Writ of Garnishment dated 15 March 2005,24 respondent effectively admitted
by its silence that it was a mere dummy corporation.

This argument does not persuade us, for any piercing of the corporate veil has to be done with
caution.25 Save for its rhetoric, petitioner fails to adduce any evidence that would prove OLFI's status as
a dummy corporation. In this regard, we recently explained in Sarona v. NLRC 26 as follows:

A court should be mindful of the milieu where it is to be applied.1wphi1 It must be certain that the
corporate fiction was misused to such an extent that injustice, fraud, or crime was committed against THIRD DIVISION
another, in disregard of rights. The wrongdoing must be clearly and convincingly established; it cannot
be presumed. Otherwise, an injustice that was never unintended may result from an erroneous [G.R. NO. 167680 : November 30, 2006]
application. (Citation omitted)
SAMUEL PARILLA, CHINITA PARILLA and DEODATO PARILLA, Petitioners, v. DR. PROSPERO On respondent's Petition for Review, the Court of Appeals set aside the questioned order for
PILAR, Respondent. respondent to reimburse petitioners Two Million Pesos.12 In setting aside the questioned order, the
appellate court, applying Article 546 of the New Civil Code which provides:
DECISION
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.
CARPIO MORALES, J.:

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention,
Assailed via Petition for Review on Certiorari is the Court of Appeals Decision1 of January 19, 2005
the person who has defeated him in the possession having the option of refunding the amount of the
reversing that of the Regional Trial Court (RTC) of Vigan City, Branch 202 which affirmed the Decision3 of
expenses or of paying the increase in value which the thing may have acquired by reason thereof[,]
February 3, 2003 of the Municipal Trial Court (MTC) of Bantay, Ilocos Sur.

held that "[herein petitioners]' tolerated occupancy . . . could not be interpreted to mean . . . that they
Petitioner-spouses Samuel and Chinita Parilla and their co-petitioner-son Deodato Parilla, as dealers 4 of
are builders or possessors in good faith"13 and that for one to be a builder in good faith, it is assumed
Pilipinas Shell Petroleum Corporation (Pilipinas Shell), have been in possession of a parcel of land (the
that he claims title to the property which is not the case of petitioners.
property) located at the poblacion of Bantay, Ilocos Sur which was leased to it by respondent Dr.
Prospero Pilar under a 10-year Lease Agreement5entered into in 1990.
Hence, the present petition which faults the appellate court to have erred
When the lease contract between Pilipinas Shell and respondent expired in 2000, petitioners remained
in possession of the property on which they built improvements consisting of a billiard hall and a I
restaurant, maintained a sari-sari store managed by Leonardo Dagdag, Josefina Dagdag and Edwin
Pugal, and allowed Flor Pelayo, Freddie Bringas and Edwin Pugal to use a portion thereof as parking
. . . WHEN IT SET ASIDE THE DECISIONS OF THE TRIAL COURTS WHICH ORDERED THE RESPONDENT TO
lot.6
REIMBURSE PETITIONERS THE AMOUNT OF TWO MILLION (P2,000,000.00) PESOS FOR THE
SUBSTANTIAL IMPROVEMENTS INTRODUCED BY THEM ON THE SUBJECT PREMISES.
Despite demands to vacate, petitioners7 and the other occupants8 remained in the property.
II
Hence, respondent who has been residing in the United States,9 through his attorney-in-fact Marivic
Paz Padre, filed on February 4, 2002 a complaint for ejectment before the Bantay MTC with prayer for
. . . IN NOT HOLDING THAT PETITIONERS ARE BUILDERS IN GOOD FAITH OF THE SUBSTANTIAL
the issuance of a writ of preliminary injunction with damages10against petitioners and the other
IMPROVEMENTS THEY HAD INTRODUCED ON THE PREMISES, HENCE, THEY ARE ENTITLED TO
occupants of the property.
REIMBURSEMENT OF SUCH IMPROVEMENTS.

After trial, the MTC, by Decision of February 3, 2003, ordered herein petitioners and their co-
III
defendants and all persons claiming rights under them to vacate the property and to pay the plaintiff-
herein respondent the amount of P50,000.00 as reasonable compensation for the use of the property
and P10,000.00 as attorney's fees and to pay the cost of suit. And it ordered the plaintiff-herein . . . IN NOT HOLDING THAT THE BUILDING WHICH PETITIONERS ERECTED ON THE PREMISES WAS
respondent to reimburse defendants Samuel Parilla, Chinita Parilla and Deodato Parilla the amount of WORTH, AND THAT THE PETITIONERS ACTUALLY SPENT, THE AMOUNT OF TWO MILLION
Two Million Pesos (P2,000,000.00) representing the value of the improvements introduced on the (P2,000,000.00) PESOS.
property.
IV
Respondent appealed to the RTC of Vigan City that portion of the trial court's decision ordering him to
reimburse petitioners the amount of Two Million Pesos. The RTC affirmed the MTC Decision, however. 11 . . . IN NOT HOLDING THAT PETITIONERS HAVE THE RIGHT OF RETENTION OF THE PREMISES UNTIL
THEY ARE REIMBURSED OF THE SAID AMOUNT ADJUDGED IN THEIR FAVOR BY THE COURTS A QUO. 14
Petitioners, proffering that neither respondent nor his agents or representatives performed any act to
prevent them from introducing the improvements, 15 contend that the appellate court should have
applied Article 453 of the New Civil Code which provides that "[i]f there was bad faith not only on the
part of the person who built, planted or sowed on the land of another, but also on the part of the
owner of such land, the rights of one and the other shall be the same as though both had acted in good
faith."16
Petitioners thus conclude that being builders in good faith, until they are reimbursed of the Two Million
Peso-value of the improvements they had introduced on the property, they have the right of retention
or occupancy thereof pursuant to Article 448, in relation to Article 546, of the New Civil
Code,17 otherwise, respondent would be unjustly enriched at their expense.
The petition fails in light of the following discussions.
As the law on lease under the New Civil Code has specific rules concerning useful improvements
introduced by a lessee on the property leased, it is erroneous on the part of petitioners to urge this
Court to apply Article 448, in relation to Article 546, regarding their claim for reimbursement and to
invoke the right of retention before reimbursement is made. Article 448 and Article 546 read:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the
court shall fix the terms thereof.

ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
The evidence shows that in 1960, a lease contract over the property was forged between Shell
faith may retain the thing until he has been reimbursed therefor.
Company of the Philippines Limited and respondent's predecessors-in-interest. In 1990, the lease
contract was renewed by Pilipinas Shell and respondent.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention,
the person who has defeated him in the possession having the option of refunding the amount of the
Petitioners, being dealers of Pilipinas Shell's petroleum products, were allowed to occupy the property.
expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Petitioners are thus considered agents18 of Pilipinas Shell. The factual milieu of the instant case calls
then for the application of the provisions on lease under the New Civil Code.
Jurisprudence is replete with cases21 which categorically declare that Article 448 covers only cases in
which the builders, sowers or planters believe themselves to be owners of the land or, at least, have a
The right of the lessor upon the termination of a lease contract with respect to useful improvements
claim of title thereto, but not when the interest is merely
introduced on the leased property by a lessee is covered by Article 1678 which reads:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for
which the lease is intended, without altering the form or substance of the property leased, the lessor
upon the termination of the lease shall pay the lessee one-half of the value of the improvements at
that time. Should the lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage thereby. He shall not, however,
cause any more impairment upon the property leased than is necessary.
x x x x (Emphasis supplied)cralawlibrary
that of a holder, such as a mere tenant, agent or usufructuary. A tenant cannot be said to be a builder
in good faith as he has no pretension to be owner. 22
In a plethora of cases,23 this Court has held that Articles 448 of the Civil Code, 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.24(Underscoring supplied)cralawlibrary

The foregoing provision is a modification of the old Code under which the lessee had no right at all to
Sia v. Court of Appeals,25 which cites Cabangis v. Court of Appeals,26 exhaustively explains the
be reimbursed for the improvements introduced on the leased property, he being entitled merely to
applicability of Article 1678 on disputes relating to useful improvements introduced by a lessee on
the rights of a usufructuary - right of removal and set-off, but not of reimbursement. 19
leased premises, viz:

The modification introduced in the above-quoted paragraph of Article 1678 on partial reimbursement
xxxx
was intended to prevent unjust enrichment of the lessor which now has to pay one-half of the value of
the improvements at the time the lease terminates because the lessee has already enjoyed the same,
whereas the lessor could enjoy them indefinitely thereafter. 20
Second. Petitioner stubbornly insists that he may not be ejected from private respondent's land thing (such as a wooden fence) has been introduced. There is no doubt that in a case involving such a
because he has the right, under Articles 448 and 546 of the New Civil Code, to retain possession of the detachable fence, the lessee can take the same away with him when the lease expires (5 E. Paras, Civil
leased premises until he is paid the full fair market value of the building constructed thereon by his Code of the Philippines Annotated 345 [11th ed., 1986]).'
parents. Petitioner is wrong, of course. The Regional Trial Court and the Court of Appeals correctly held
that it is Article 1678 of the New Civil Code that governs petitioner's right vis-a-vis the improvements
xxxx
built by his parents on private respondent's land.

Clearly, it is Article 1678 of the New Civil Code which applies to the present
In the 1991 case of Cabangis v. Court of Appeals where the subject of the lease contract was also a
case.rbl rl l lbrr
parcel of land and the lessee's father constructed a family residential house thereon, and the lessee
subsequently demanded indemnity for the improvements built on the lessor's land based on Articles
448 and 546 of the New Civil Code, we pointed out that reliance on said legal provisions was misplaced. Petitioners' claim for reimbursement of the alleged entire value of the improvements does not thus lie
under Article 1678. Not even for one-half of such alleged value, there being no substantial
evidence, e.g., receipts or other documentary evidence detailing costs of construction. Besides, by
"The reliance by the respondent Court of Appeals on Articles 448 and 546 of the Civil Code of the
petitioners' admission, of the structures they originally built - the billiard hall, restaurant, sari-sari store
Philippines is misplaced. These provisions have no application to a contract of lease which is the
and a parking lot, only the "bodega-like" sari-saristore and the parking lot now exist.27
subject matter of this controversy. Instead, Article 1678 of the Civil Code applies. . . .

xxxx
On the other hand, Article 448 governs the right of accession while Article 546 pertains to effects of
possession. The very language of these two provisions clearly manifest their inapplicability to lease
contracts. . . .
At all events, under Article 1678, it is the lessor who is given the option, upon termination of the lease
contract, either to appropriate the useful improvements by paying one-half of their value at that time,
or to allow the lessee to remove the improvements. This option solely belongs to the lessor as the law
is explicit that "[s]hould the lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage thereby." It appears that the lessor
has opted not to reimburse.

xxxx WHEREFORE, the petition is DENIED. The Court of Appeals Decision of January 19, 2005
is AFFIRMED in light of the foregoing discussions.
Thus, the improvements that the private respondent's father had introduced in the leased premises
were done at his own risk as lessee. The right to indemnity equivalent to one-half of the value of the Costs against petitioners.
said improvements ' the house, the filling materials, and the hollow block fence or wall - is governed, as
earlier adverted to, by the provisions of Art. 1678, first paragraph of the Civil Code above quoted.
SO ORDERED.
But this right to indemnity exists only if the lessor opts to appropriate the improvements (Alburo v.
Villanueva, supra, note 10 at 279-280; Valencia v. Ayala de Roxas, supra, note 10 at 46). The refusal of
the lessor to pay the lessee one-half of the value of the useful improvements gives rise to the right of
removal. On this score, the commentary of Justice Paras is enlightening.

'Note that under the 1st paragraph of Art. 1678, the law on the right of REMOVAL says that 'should the
lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the
principal thing may suffer thereby.' While the phrase 'even though' implies that Art. 1678 always
applies regardless of whether or not the improvements can be removed without injury to the leased
premises, it is believed that application of the Article cannot always be done. The rule is evidently
intended for cases where a true accession takes place as when part of the land leased is, say, converted
into a fishpond; and certainly not where as easily removable
THIRD DIVISION
[G.R. Nos. 154391-92. September 30, 2004]
Spouses ISMAEL and TERESITA MACASAET, petitioners, vs. Spouses VICENTE and ROSARIO
MACASAET, respondents.
DECISION
PANGANIBAN, J.:
The present case involves a dispute between parents and children. The children were invited by
the parents to occupy the latters two lots, out of parental love and a desire to foster family
solidarity. Unfortunately, an unresolved conflict terminated this situation. Out of pique, the parents
asked them to vacate the premises. Thus, the children lost their right to remain on the property. They
have the right, however, to be indemnified for the useful improvements that they constructed thereon
in good faith and with the consent of the parents. In short, Article 448 of the Civil Code applies.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the March 22,
2002 Decision[2] and the June 26, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR SP Nos.
56205 & 56467. The challenged Decision disposed as follows:
WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:
1. Vicente and Rosario should reimburse Ismael and Teresita one-half of the value of the
useful improvements introduced in the premises prior to demand, which is equivalent
to P475,000.00. In case the former refuse to reimburse the said amount, the latter
may remove the improvements, even though the land may suffer damage
thereby. They shall not, however, cause any more impairment upon the property
leased than is necessary.
2. The award of attorneys fees is DELETED.
3. The records of these consolidated cases are REMANDED to the Court of origin for
further proceedings to determine the option to be taken by Vicente and Rosario and
to implement the same with dispatch.[4]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts Petitioners Ismael and Teresita [5] Macasaet and Respondents Vicente and Rosario Macasaet
are first-degree relatives. Ismael is the son of respondents, and Teresita is his wife.[6]
On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC)
of Lipa City an ejectment suit against the children.[7] Respondents alleged that they were the owners of
two (2) parcels of land covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141,
situated at Banay-banay, Lipa City; that by way of a verbal lease agreement, Ismael and Teresita
occupied these lots in March 1992 and used them as their residence and the situs of their construction
business; and that despite repeated demands, petitioners failed to pay the agreed rental of P500 per
week.[8]
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that
respondents had invited them to construct their residence and business on the subject lots in order
that they could all live near one other, employ Marivic (the sister of Ismael), and help in resolving the
problems of the family.[9] They added that it was the policy of respondents to allot the land they owned
as an advance grant of inheritance in favor of their children. Thus, they contended that the lot covered
by TCT No. T-103141 had been allotted to Ismael as advance inheritance. On the other hand, the lot
covered by TCT No. T-78521 was allegedly given to petitioners as payment for construction materials
used in the renovation of respondents house.[10]
The MTCC[11] ruled in favor of respondents and ordered petitioners to vacate the premises. It
opined that Ismael and Teresita had occupied the lots, not by virtue of a verbal lease agreement, but by
tolerance of Vicente and Rosario. [12] As their stay was by mere tolerance, petitioners were necessarily
bound by an implied promise to vacate the lots upon demand.[13]The MTCC dismissed their contention
that one lot had been allotted as an advance inheritance, on the ground that successional rights were
inchoate. Moreover, it disbelieved petitioners allegation that the other parcel had been given as
payment for construction materials. [14]
On appeal, the regional trial court[15] (RTC) upheld the findings of the MTCC. However, the RTC
allowed respondents to appropriate the building and other improvements introduced by petitioners,
after payment of the indemnity provided for by Article 448 in relation to Articles 546 and 548 of the
Civil Code.[16] It added that respondents could oblige petitioners to purchase the land, unless its value
was considerably more than the building. In the latter situation, petitioners should pay rent if
respondents would not choose to appropriate the building.[17]
Upon denial of their individual Motions for Reconsideration, the parties filed with the CA
separate Petitions for Review, which were later consolidated. [18]
Ruling of the Court of Appeals
The CA sustained the finding of the two lower courts that Ismael and Teresita had been
occupying the subject lots only by the tolerance of Vicente and Rosario. [19] Thus, possession of the
subject lots by petitioners became illegal upon their receipt of respondents letter to vacate it. [20]
Citing Calubayan v. Pascual,[21] the CA further ruled that petitioners status was analogous to that
of a lessee or a tenant whose term of lease had expired, but whose occupancy continued by tolerance
of the owner.[22] Consequently, in ascertaining the right of petitioners to be reimbursed for the
improvements they had introduced on respondents properties,[23] the appellate court applied the Civil
Codes provisions on lease. The CA modified the RTC Decision by declaring that Article 448 of the Civil
Code was inapplicable. The CA opined that under Article 1678 of the same Code, Ismael and Teresita
had the right to be reimbursed for one half of the value of the improvements made.[24]
Not satisfied with the CAs ruling, petitioners brought this recourse to this Court. [25]
The Issues
Petitioners raise the following issues for our consideration:
1. a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment should apply in the
rendition of the decision in this case;
b) Whether or not the Complaint should have been dismissed;
c) Whether or not damages including attorneys fees should have been awarded to herein
petitioners;
2. a) Whether or not the rule on appearance of parties during the Pretrial should apply on appearance
of parties during Preliminary Conference in an unlawful detainer suit;
b) Whether or not the case of Philippine Pryce Assurance Corporation vs. Court of
Appeals (230 SCRA 164) is applicable to appearance of parties in an unlawful detainer suit;
3. Whether or not Article 1678 of the Civil Code should apply to the case on the matters of
improvements, or is it Article 447 of the Civil Code in relation to the Article 453 and 454 thereof that
should apply, if ever to apply the Civil Code;
4. Whether or not the [D]ecision of the Court of Appeals is supported by evidence, appropriate laws,
rules and jurisprudence;
5. Whether or not Assisting Judge Norberto Mercado of the MTCC Lipa City should be held accountable
in rendering the MTCC [D]ecision;
6. Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the same [l]aw office should be
held accountable for pursuing the [e]jectment case[.][26]
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Ejectment
Who is entitled to the physical or material possession of the premises? At the outset, we stress
that this is the main issue in ejectment proceedings.[27] In the present case, petitioners failed to justify
their right to retain possession of the subject lots, which respondents own. Since possession is one of
the attributes of ownership,[28] respondents clearly are entitled to physical or material possession.
Allegations of the Complaint
Petitioners allege that they cannot be ejected from the lots, because respondents based their
Complaint regarding the nonpayment of rentals on a verbal lease agreement, which the latter failed to
prove.[29] Petitioners contend that the lower courts erred in using another ground (tolerance of
possession) to eject them.
In actions for unlawful detainer, possession that was originally lawful becomes unlawful upon
the expiration or termination of the defendants right to possess, arising from an express or implied
contract.[30] In other words, the plaintiffs cause of action comes from the expiration or termination of
the defendants right to continue possession.[31] The case resulting therefrom must be filed within one
year from the date of the last demand.
To show a cause of action in an unlawful detainer, an allegation that the defendant is illegally
withholding possession from the plaintiff is sufficient. The complaint may lie even if it does not employ
the terminology of the law, provided the said pleading is couched in a language adequately stating that
the withholding of possession or the refusal to vacate has become unlawful. [32] It is equally settled that
the jurisdiction of the court, as well as the nature of the action, is determined from the averments of
the complaint.[33]
In the present case, the Complaint alleged that despite demands, petitioners refused to pay the
accrued rentals and [to] vacate the leased premises.[34] It prayed that judgment be rendered [o]rdering
[petitioners] and all those claiming rights under them to vacate the properties x x x and remove the
structures x x x constructed thereon.[35] Effectively then, respondents averred that petitioners original
lawful occupation of the subject lots had become unlawful.
The MTCC found sufficient cause to eject petitioners. While it disbelieved the existence of a
verbal lease agreement, it nevertheless concluded that petitioners occupation of the subject lots was
by mere tolerance of respondents. Basing its conclusion on the fact that the parties were close
relatives, the MTCC ruled thus:
x x x [T]he parties herein are first degree relatives. Because of this relationship, this Court takes judicial
notice of the love, care, concern and protection imbued upon the parents towards their [children], i.e.,
in the instant case, the love, care, concern and protection of the [respondents] to the
[petitioners]. With this in mind, this Court is inclined to believe the position of the [petitioners] that
there was no such verbal lease agreement between the parties herein that took place in 1992. x x x.
From the allegations of the [petitioners], this Court is convinced that their stay and occupancy of the
subject premises was by mere tolerance of the [respondents], and not by virtue of a verbal lease
agreement between them.[36]
Having found a cause of action for unlawful detainer, the MTCC (as well as the RTC and the CA)
did not err in ordering the ejectment of petitioners as prayed for by respondents. There was no
violation of Section 17 of Rule 70[37] of the Rules of Court. As earlier explained, unlawful detainer was
sufficiently alleged in the Complaint and duly proven during the trial.Significantly, the issue of whether
there was enough ground to eject petitioners was raised during the preliminary conference. [38]
Not Merely Tolerated
Possession
Petitioners dispute the lower courts finding that they occupied the subject lots on the basis of
mere tolerance. They argue that their occupation was not under such condition, since respondents had
invited, offered and persuaded them to use those properties.[39]
This Court has consistently held that those who occupy the land of another at the latters
tolerance or permission, without any contract between them, are necessarily bound by an implied
promise that the occupants will vacate the property upon demand.[40] A summary action for ejectment
is the proper remedy to enforce this implied obligation.[41] The unlawful deprivation or withholding of
possession is to be counted from the date of the demand to vacate. [42]
Toleration is defined as the act or practice of permitting or enduring something not wholly
approved of.[43] Sarona v. Villegas[44] described what tolerated acts means, in this language:
Professor Arturo M. Tolentino states that acts merely tolerated are those which by reason of
neighborliness or familiarity, the owner of property allows his neighbor or another person to do on the
property; they are generally those particular services or benefits which ones property can give to
another without material injury or prejudice to the owner, who permits them out of friendship or
courtesy. x x x. And, Tolentino continues, even though this is continued for a long time, no right will be
acquired by prescription. x x x. Further expounding on the concept, Tolentino writes: There is tacit
consent of the possessor to the acts which are merely tolerated. Thus, not every case of knowledge
and silence on the part of the possessor can be considered mere tolerance. By virtue of tolerance that is
considered as an authorization, permission or license, acts of possession are realized or performed. The
question reduces itself to the existence or non-existence of the permission. [45]
We hold that the facts of the present case rule out the finding of possession by mere
tolerance. Petitioners were able to establish that respondents had invited them to occupy the subject
lots in order that they could all live near one other and help in resolving family problems. [46] By
occupying those lots, petitioners demonstrated their acceptance of the invitation.Hence, there was a
meeting of minds, and an agreement regarding possession of the lots impliedly arose between the
parties.
The occupancy of the subject lots by petitioners was not merely something not wholly approved
of by respondents. Neither did it arise from what Tolentino refers to as neighborliness or familiarity. In
point of fact, their possession was upon the invitation of and with the complete approval of
respondents, who desired that their children would occupy the premises. It arose from familial love
and a desire for family solidarity, which are basic Filipino traits.
Right to Use the Lots Terminated
That Ismael and Teresita had a right to occupy the lots is therefore clear. The issue is the
duration of possession. In the absence of a stipulation on this point, Article 1197 of the Civil Code
allows the courts to fix the duration or the period.
Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be
inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case the courts shall determine such period as may under the circumstances have been
probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by
them.
Article 1197, however, applies to a situation in which the parties intended a period. Such
qualification cannot be inferred from the facts of the present case.
To repeat, when Vicente and Rosario invited their children to use the lots, they did so out of
parental love and a desire for solidarity expected from Filipino parents. No period was intended by the
parties. Their mere failure to fix the duration of their agreement does not necessarily justify or
authorize the courts to do so.[47]
Based on respondents reasons for gratuitously allowing petitioners to use the lots, it can be
safely concluded that the agreement subsisted as long as the parents and the children mutually
benefited from the arrangement. Effectively, there is a resolutory condition in such an agreement.
[48]
Thus, when a change in the condition existing between the parties occurs -- like a change of
ownership, necessity, death of either party or unresolved conflict or animosity -- the agreement may be
deemed terminated. Having been based on parental love, the agreement would end upon the
dissipation of the affection.
When persistent conflict and animosity overtook the love and solidarity between the parents
and the children, the purpose of the agreement ceased.[49] Thus, petitioners no longer had any cause
for continued possession of the lots. Their right to use the properties became untenable. It ceased
upon their receipt of the notice to vacate. And because they refused to heed the demand, ejectment
was the proper remedy against them. Their possession, which was originally lawful, became unlawful
when the reason therefor -- love and solidarity -- ceased to exist between them.
No Right to Retain
Possession
Petitioners have not given this Court adequate reasons to reverse the lower courts dismissal of
their contention that Lots T-78521 and T-103141, respectively, were allegedly allotted to them as part
of their inheritance and given in consideration for past debts.
The right of petitioners to inherit from their parents is merely inchoate and is vested only upon
the latters demise. Indisputably, rights of succession are transmitted only from the moment of death of
the decedent.[50] Assuming that there was an allotment of inheritance, ownership nonetheless
remained with respondents. Moreover, an intention to confer title to certain persons in the future is
not inconsistent with the owners taking back possession in the meantime for any reason deemed
sufficient.[51] Other than their self-serving testimonies and their affidavits, petitioners offered no
credible evidence to support their outlandish claim of inheritance allocation.
We also agree with the lower courts that petitioners failed to prove the allegation that, through
a dation in payment, Lot T-78521 had been transferred to the latter as payment for respondents debts.
[52]
The evidence presented by petitioners related only to the alleged indebtedness of the parents
arising from the latters purported purchases and advances.[53] There was no sufficient proof that
respondents had entered into a contract of dation to settle the alleged debt. Petitioners even stated
that there was a disagreement in the accounting of the purported debt, [54] a fact that disproves a
meeting of the minds with the parents.
Petitioners also admitted that a portion of the alleged debt is the subject matter of a collection
case against respondents (Civil Case No. 0594-96).[55] Thus, the formers allegation that the
indebtedness has been paid through a dation cannot be given credence, inconsistent as it is with their
action to recover the same debt.
Despite their protestations, petitioners recognized the right of the parents to recover the
premises when they admitted in their Position Paper filed with the MTCC that respondents had a title
to the lots.
The [respondents] want to get their property because the title is theirs, the [petitioners] do not object
but what is due the [petitioners] including the reparation for the tarnish of their dignity and honor
must be given the [petitioners] for the benefits of their children before the premises will be turned
over.[56]
As a rule, the right of ownership carries with it the right of possession.
Second Issue:
Appearance at the Preliminary Conference
Section 8 of Rule 70 of the Rules of Court requires the appearance of the plaintiff and the
defendant during the preliminary conference. On the basis of this provision, petitioners claim that the
MTCC should have dismissed the case upon the failure of respondents to attend the
conference. However, petitioners do not dispute that an attorney-in-fact with a written authorization
from respondents appeared during the preliminary conference.[57] The issue then is whether the rules
on ejectment allow a representative to substitute for a partys personal appearance.
Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial applies to the preliminary
conference.[58] Under Section 4 of this Rule, the nonappearance of a party may be excused by the
showing of a valid cause; or by the appearance of a representative, who has been fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and
to enter into stipulations or admissions of facts and of documents.[59]
Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit behind the exception
to personal appearance under the rules on pretrial is applicable to the preliminary conference. If there
are valid reasons or if a representative has a special authority, a partys appearance may be waived. As
petitioners are challenging only the applicability of the rules on pretrial to the rule on preliminary
conference, the written authorization from respondents can indeed be readily considered as a special
authorization.
Third Issue:
Rights of a Builder in Good Faith
As applied to the present case, accession refers to the right of the owner to everything that is
incorporated or attached to the property. [60] Accession industrial -- building, planting and sowing on an
immovable -- is governed by Articles 445 to 456 of the Civil Code.
Articles 447 and 1678 of the
Civil Code Inapplicable
To buttress their claim of reimbursement for the improvements introduced on the property,
petitioners cite Article 447.[61] They allege that the CA erred in applying Article 1678, since they had no
lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply when the
owner of the property uses the materials of another. It does not refer to the instance when a possessor
builds on the property of another, which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of petitioners regarding
the inapplicability of Article 1678 deserves attention. The CA applied the provisions on lease, because it
found their possession by mere tolerance comparable with that of a lessee, per the pronouncement
in Calubayan v. Pascual,[62] from which we quote:
x x x. It has been held that a person who occupies the land of another at the latters tolerance or
permission, without any contract between them, is necessarily bound by an implied promise that he
will vacate upon demand, failing which a summary action for ejectment is the proper remedy against
them. The status of defendant is analogous to that of a lessee or tenant whose term of lease has
expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful
deprivation or withholding of possession is to be counted from the date of the demand to vacate.
[63]
(Emphasis in the original.)
As explained earlier, Ismael and Teresitas possession of the two lots was not by mere tolerance, a
circumstance that negates the applicability of Calubayan.
Article 448 Applicable
On the other hand, when a person builds in good faith on the land of another, the applicable
provision is Article 448, which reads: [64]
Article 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such case,
he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
This Court has ruled that this provision covers only cases in which the builders, sowers or
planters believe themselves to be owners of the land or, at least, to have a claim of title thereto. [65] It
does not apply when the interest is merely that of a holder, such as a mere tenant, agent or
usufructuary.[66] From these pronouncements, good faith is identified by the belief that the land is
owned; or that -- by some title -- one has the right to build, plant, or sow thereon. [67]
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond
this limited definition. Thus, in Del Campo v. Abesia,[68] this provision was applied to one whose house --
despite having been built at the time he was still co-owner -- overlapped with the land of another.
[69]
This article was also applied to cases wherein a builder had constructed improvements with the
consent of the owner. The Court ruled that the law deemed the builder to be in good faith.
[70]
In Sarmiento v. Agana,[71] the builders were found to be in good faith despite their reliance on the
consent of another, whom they had mistakenly believed to be the owner of the land. [72]
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The
established facts of this case show that respondents fully consented to the improvements introduced
by petitioners. In fact, because the children occupied the lots upon their invitation, the parents
certainly knew and approved of the construction of the improvements introduced thereon. [73] Thus,
petitioners may be deemed to have been in good faith when they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. [74] In that case, this Court deemed the son
to be in good faith for building the improvement (the house) with the knowledge and consent of his
father, to whom belonged the land upon which it was built. Thus, Article 448[75] was applied.
Rule on Useful Expenses
The structures built by petitioners were useful improvements, because they augmented the
value or income of the bare lots.[76] Thus, the indemnity to be paid by respondents under Article 448 is
provided for by Article 546, which we quote:
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention,
the person who has defeated him in the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Consequently, respondents have the right to appropriate -- as their own -- the building and other
improvements on the subject lots, but only after (1) refunding the expenses of petitioners or (2) paying
the increase in value acquired by the properties by reason thereof. They have the option to oblige
petitioners to pay the price of the land, unless its value is considerably more than that of the structures
-- in which case, petitioners shall pay reasonable rent.
 In accordance with Depra v. Dumlao, [77] this case must be remanded to the trial court to
determine matters necessary for the proper application of Article 448 in relation to Article 546.Such
matters include the option that respondents would take and the amount of indemnity that they would
pay, should they decide to appropriate the improvements on the lots. We disagree with the CAs
computation of useful expenses, which were based only on petitioners bare allegations in their Answer.
[78]
a. Spouses Vicente and Rosario Macasaets option to appropriate -- as their own -- the improvements
on the lots, after paying the indemnity, as provided under Article 546 in relation to Article 448 of the
Civil Code; or in requiring Spouses Ismael and Rosita Macasaet to pay for the value of the lots, unless it
is considerably more than that of the improvements, in which case petitioners shall pay reasonable
rent based upon the terms provided under the Civil Code

b. The value of the useful expenses incurred by Spouses Ismael and Rosita Macasaet in the
construction of the improvements on the lots
Ruling on Improvement Justified
c. The increase in value acquired by the lots by reason of the useful improvements

While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the issue of d. Spouses Vicente and Rosario Macasaets choice of type of indemnity to be paid (whether b or c)
physical or material possession of the property in question, this Court finds it necessary to abbreviate
the issue on the improvements in relation to Article 448. First, the determination of the parties right to
e. Whether the value of the lots is considerably more than that of the improvements built thereon
those improvements is intimately connected with the MTCC proceedings in the light of the ejectment
of petitioners. Second, there is no dispute that while they constructed the improvements, respondents
owned the land. Third, both parties raised no objection when the RTC and the CA ruled accordingly on No pronouncement as to costs.
this matter.
SO ORDERED.
Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid
needless delay. Both parties have already been heard on this issue; to dillydally or equivocate would
not serve the cause of substantial justice.

Other Issues Raised

Given the foregoing rulings, it is no longer necessary to address petitioners allegation that the
MTCC judge and respondents lawyers should be respectively held personally accountable for the
Decision and for filing the case.[79] The insinuation of petitioners that the lawyers manipulated the
issuance of a false barangay certification is unavailing. [80] Their contention that respondents did not
attend the barangay conciliation proceedings was based solely on hearsay, which has little or no
probative value.[81]

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with
the following MODIFICATIONS:

1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse one half of the
value of the useful improvements, amounting to P475,000, and the right of Spouses Ismael and Rosita
Macasaet to remove those improvements (if the former refuses to reimburse) is DELETED.

2. The case is REMANDED to the court of origin for further proceedings to determine the facts
essential to the proper application of Articles 448 and 546 of the Civil Code, specifically to the following
matters:
SECOND DIVISION
[G.R. No. 134329. January 19, 2000]
VERONA PADA-KILARIO and RICARDO KILARIO petitioners, vs. COURT OF APPEALS and SILVERIO
PADA, respondents.
DECISION
DE LEON, JR., J.:
The victory[1] of petitioner spouses Ricardo and Verona Kilario in the Municipal Circuit Trial Court[2] in an
ejectment suit[3] filed against them by private respondent Silverio Pada, was foiled by its reversal [4]by
the Regional Trial Court[5] on appeal. They elevated their cause[6] to respondent Court of
Appeals[7] which, however, promulgated a Decision[8] on May 20, 1998, affirming the Decision of the
Regional Trial Court.
The following facts are undisputed:
One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador, Higino, Valentina and
Ruperta. He died intestate. His estate included a parcel of land of residential and coconut land located
at Poblacion, Matalom, Leyte, denominated as Cadastral Lot No. 5581 with an area of 1,301.92 square
meters. It is the northern portion of Cadastral Lot No. 5581 which is the subject of the instant
controversy.
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 Higino 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. Korte
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 x x x
Cadastral Lot No. 5581 x x x 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 x x x 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 x x x.
 "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. Sclaw
"Defendants were already occupying the northern portion of the above-
described property long before the sale of said property on November 17, 1993
was executed between Maria Pada-Pavo, as vendor and the plaintiff, as vendee.
They are in possession of said portion of the above-described property since the
year 1960 with the consent of some of the heirs of Jacinto Pada and up to the
[sic] present some of the heirs of Jacinto Pada has [sic] donated x x x their share
of [sic] the above-described property to them, virtually converting defendants'
standing as co-owners of the land under controversy. Thus, defendants as co-
owners became the undivided owners of the whole estate x x x. As co-owners of
x x x Cadastral Lot No. 5581 x x x their possession in the northern portion is being
[sic] lawful."[10]
From the foregoing decision, private respondent appealed to the Regional Trial Court. On November 6,
1997, it rendered a judgment of reversal. It held:
"x x x [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. x x x 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. x x x
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. Sc lex
"x x x
"x x x [T]he deed of donation executed by the Heirs of Amador Pada, a brother of
Marciano Pada, took place only during the inception of the case or after the
lapse of more than 40 years reckoned from the time the extrajudicial partition
was made in 1951. Therefore, said donation is illegal and invalid [sic] the donors,
among others, were absolutely bereft of any right in donating the very property
in question."[11]
The dispositive portion of the decision of the Regional Trial Court reads as follows:
"WHEREFORE, a judgment is hereby rendered, reversing the judgment earlier
promulgated by the Municipal Circuit Trial Court of Matalom, Leyte, [sic]
consequently, defendants-appellees are hereby ordered:
"1. To vacate the premises in issue and return peaceful possession to the
appellant, being the lawful possessor in concept of owner;
"2. To remove their house at their expense unless appellant exercises the option
of acquiring the same, in which case the pertinent provisions of the New Civil
Code has to be applied;
"3. Ordering the defendants-appellees to pay monthly rental for their occupancy
and use of the portion of the land in question in the sum of P100.00
commencing on June 26, 1995 when the case was filed and until the termination
of the present case;
"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;
"5. Taxing defendants to pay the costs of suit."[12]
Petitioners filed in the Court of Appeals a petition for review of the foregoing decision of the Regional
Trial Court.
On May 20, 1998, respondent Court of Appeals rendered judgment dismissing said petition. It
explained: x law
"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 x x x.
 "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.
"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 x x x 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 x x x. 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 x x x. 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 x x x.
"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. x x x 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
x x x. Accordingly, private respondent was subrogated to the rights of the vendor
over Lot No. 5581 which include [sic] the portion occupied by petitioners." [13] Sc
Petitioner spouses filed a Motion for Reconsideration of the foregoing decision.
On June 16, 1998, respondent Court of Appeals issued a Resolution denying said motion.
Hence this petition raising the following issues:
"I.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT PETITIONERS, AS
CO-OWNERS, CANNOT BE EJECTED FROM THE PREMISES CONSIDERING THAT
THE HEIRS OF JACINTO PADA DONATED TO THEM THEIR UNDIVIDED INTEREST IN
THE PROPERTY IN DISPUTE.
"II.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT WHAT MARIA
PADA SOLD WAS HER UNDIVIDED SHARE IN THE PROPERTY IN DISPUTE.
"III.
WHETHER OR NOT THE PETITIONERS ARE BUILDERS IN GOOD FAITH." [14]
There is no merit to the instant petition.
First. We hold that the extrajudicial partition of the estate of Jacinto Pada among his heirs made in
1951 is valid, albeit executed in an unregistered private document. No law requires partition among
heirs to be in writing and be registered in order to be valid. [15] The requirement in Sec. 1, Rule 74 of the
Revised Rules of Court that a partition be put in a public document and registered, has for its purpose
the protection of creditors and the heirs themselves against tardy claims. [16] The object of registration is
to serve as constructive notice to others. It follows then that the intrinsic validity of partition not
executed with the prescribed formalities is not undermined when no creditors are involved. [17] Without
creditors to take into consideration, it is competent for the heirs of an estate to enter into an
agreement for distribution thereof in a manner and upon a plan different from those provided by the
rules from which, in the first place, nothing can be inferred that a writing or other formality is essential
for the partition to be valid.[18] The partition of inherited property need not be embodied in a public
document so as to be effective as regards the heirs that participated therein. [19] The requirement of
Article 1358 of the Civil Code that acts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property, must appear in a public
instrument, is only for convenience, non-compliance with which does not affect the validity or
enforceability of the acts of the parties as among themselves. [20] And neither does the Statute of Frauds
under Article 1403 of the New Civil Code apply because partition among heirs is not legally deemed a
conveyance of real property, considering that it involves not a transfer of property from one to the
other but rather, a confirmation or ratification of title or right of property that an heir is renouncing in
favor of another heir who accepts and receives the inheritance.[21] The 1951 extrajudicial partition of
Jacinto Pada's estate being legal and effective as among his heirs, Juanita and Maria Pada validly
transferred their ownership rights over Cadastral Lot No. 5581 to Engr. Paderes and private respondent,
respectively.[22] Scmis
Second. The extrajudicial partition which the heirs of Jacinto Pada executed voluntarily and Costs against petitioners.
spontaneously in 1951 has produced a legal status.[23] When they discussed and agreed on the division
of the estate of Jacinto Pada, it is presumed that they did so in furtherance of their mutual interests. As
SO ORDERED.
such, their division is conclusive, unless and until it is shown that there were debts existing against the
estate which had not been paid.[24] No showing, however, has been made of any unpaid charges against
the estate of Jacinto Pada. Thus, there is no reason why the heirs should not be bound by their
voluntary acts.

The belated act of Concordia, Esperanza and Angelito, who are the heirs of Amador Pada, of donating
the subject property to petitioners after forty four (44) years of never having disputed the validity of
the 1951 extrajudicial partition that allocated the subject property to Marciano and Ananias, produced
no legal effect. In the said partition, what was allocated to Amador Pada was not the subject property
which was a parcel of residential land in Sto. Nino, Matalom, Leyte, but rather, one-half of a parcel of
coconut land in the interior of Sto. Nino St., Sabang, Matalom, Leyte and one-half of a parcel of rice
land in Itum, Sta. Fe, Matalom, Leyte. The donation made by his heirs to petitioners of the subject
property, thus, is void for they were not the owners thereof. At any rate it is too late in the day for the
heirs of Amador Pada to repudiate the legal effects of the 1951 extrajudicial partition as prescription
and laches have equally set in.

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 448 [27] and Article
546[28] of the New Civil Code which allow full reimbursement of useful improvements and retention of
the premises until reimbursement is made, apply only to a possessor in good faith, i.e., one who builds
on land with the belief that he is the owner thereof.[29] Verily, persons whose occupation of a realty is
by sheer tolerance of its owners are not possessors in good faith. Neither did the promise of Concordia,
Esperanza and Angelito Pada that they were going to donate the premises to petitioners convert them
into builders in good faith for at the time the improvements were built on the premises, such promise
was not yet fulfilled, i.e., it was a mere expectancy of ownership that may or may not be realized. Republic of the Philippines
[30]
More importantly, even as that promise was fulfilled, the donation is void for Concordia, Esperanza SUPREME COURT
and Angelito Pada were not the owners of Cadastral Lot No. 5581. As such, petitioners cannot be said Manila
to be entitled to the value of the improvements that they built on the said lot.

EN BANC
WHEREFORE, the petition for review is HEREBY DENIED.

G.R. No. L-12958 May 30, 1960

FAUSTINO IGNACIO, applicant-appellant,
vs.
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositors-appellees.
Acting Assistant Solicitor General Pacifico P. de Castro and Solicitor Crispin V. Bautista for appellee
Director of Lands.
Benjamin H. Aquino for appellee Laureano Veleriano.
MONTEMAYOR, J.:
Faustino Ignacio is appealing the decision of the Court of First Instance of Rizal, dismissing his
application for the registration of a parcel of land.
On January 25, 1950, Ignacio filed an application for the registration of a parcel of land (mangrove),
situated in barrio Gasac, Navotas, Rizal, with an area of 37,877 square meters. Later, he amended his
application by alleging among others that he owned the parcel applied for by right of accretion. To the
application, the Director of Lands, Laureano Valeriano and Domingo Gutierrez filed oppositions.
Gutierrez later withdrew his opposition. The Director of Lands claimed the parcel applied for as a
portion of the public domain, for the reason that neither the applicant nor his predecessor-in-interest
possessed sufficient title thereto, not having acquired it either by composition title from the Spanish
government or by possessory information title under the Royal Decree of February 13, 1894, and that
he had not possessed the same openly, continuously and adversely under a bona fide claim of
ownership since July 26, 1894. In his turn, Valeriano alleged he was holding the land by virtue of a
permit granted him by the Bureau of Fisheries, issued on January 13, 1947, and approved by the
President.
It is not disputed that the land applied for adjoins a parcel owned by the applicant which he had
acquired from the Government by virtue of a free patent title in 1936. It has also been established that
the parcel in question was formed by accretion and alluvial deposits caused by the action of the Manila
Bay which boarders it on the southwest. Applicant Ignacio claims that he had occupied the land since
1935, planting it with api-api trees, and that his possession thereof had been continuous, adverse and
public for a period of twenty years until said possession was distributed by oppositor Valeriano.
On the other hand, the Director of Lands sought to prove that the parcel is foreshore land, covered by
the ebb and flow of the tide and, therefore, formed part of the public domain.
After hearing, the trial court dismissed the application, holding that the parcel formed part of the
public domain. In his appeal, Ignacio assigns the following errors:
I. The lower court erred in holding that the land in question, altho an accretion to the land
of the applicant-appellant, does not belong to him but forms part of the public domain.
II. Granting that the land in question forms part of the public domain, the lower court
nevertheless erred in not declaring the same to be the necessary for any public use or
purpose and in not ordering in the present registration proceedings.
III. The lower court erred in not holding that the land in question now belongs to the
applicant-appellant by virtue of acquisitive prescription, the said land having ceased to be of
the public domain and became the private or patrimonial property of the State.
IV. The lower court erred in not holding that the oppositor Director of Lands is now in
estoppel from claiming the land in question as a land of the public domain.
Appellant contends that the parcel belongs to him by the law of accretion, having been formed by
gradual deposit by action of the Manila Bay, and he cites Article 457 of the New Civil Code (Article 366,
Old Civil Code), which provides that:
To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.
The article cited is clearly inapplicable because it refers to accretion or deposits on the banks of rivers,
while the accretion in the present case was caused by action of the Manila Bay.
Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not applicable because they
refer to accretions formed by the sea, and that Manila Bay cannot be considered as a sea. We find said
contention untenable. A bay is a part of the sea, being a mere indentation of the same:
Bay. An opening into the land where the water is shut in on all sides except at the
entrance; an inlet of the sea; an arm of the sea, distinct from a river, a bending or curbing of
the shore of the sea or of a lake. 7 C.J. 1013-1014 (Cited in Francisco, Philippine Law of
Waters and Water Rights p. 6)
Moreover, this Tribunal has some cases applied the Law of Waters on Lands bordering Manila Bay. (See
the cases of Ker & Co. vs. Cauden, 6 Phil., 732, involving a parcel of land bounded on the sides by
Manila Bay, where it was held that such land formed by the action of the sea is property of the State;
Francisco vs. Government of the P.I., 28 Phil., 505, involving a land claimed by a private person and
subject to the ebb and flow of the tides of the Manila Bay).
Then the applicant argues that granting that the land in question formed part of the public domain,
having been gained from the sea, the trial court should have declared the same no longer necessary for
any public use or purpose, and therefore, became disposable and available for private ownership.
Article 4 of the Law of Waters of 1866 reads thus:
 ART. 4. Lands added to the shores by accretions and alluvial deposits caused by the action of We deem it unnecessary to discuss the other points raised in the appeal.
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
In view of the foregoing, the appealed decision is hereby affirmed, with costs.
special industries, or for the coastguard service, the Government shall declare them to be
the property of the owners of the estates adjacent thereto and as increment thereof.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David,
JJ., concur.
Interpreting Article 4 of the Law of Waters of 1866, in the case of Natividad vs. Director of Lands, (CA)
37 Off. Gaz., 2905, it was there held that:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer
washed by the waters of the sea and is not necessary for purposes of public utility, or for the
establishment of special industries, or for coastguard service, the government shall declare
it to be the property of the owners of the estates adjacent thereto and as an increment
thereof. We believe that only the executive and possibly the legislative departments have
the authority and the power to make the declaration that any land so gained by the sea, is
not necessary for purposes of public utility, or for the establishment of special industries, on
for coast-guard service. If no such declaration has been made by said departments, the lot
in question forms part of the public domain. (Natividad vs. Director of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y
Monteverde vs. Director of Lands, 93 Phil., 134, (cited in Velayo's Digest, VI. I, p. 52).

. . . is undoubtedly that the courts are neither primarily called upon, nor indeed in a position
to determine whether any public land are to be used for the purposes specified in Article 4
of the Law of Waters.

Consequently, until a formal declaration on the part of the Government, through the executive
department or the Legislature, to the effect that the land in question is no longer needed for coast
guard service, for public use or for special industries, they continue to be part of the public domain, not
available for private appropriation or ownership.

Appellant next contends that he had acquired the parcel in question through acquisitive prescription, Republic of the Philippines
having possessed the same for over ten years. In answer, suffice it to say that land of the public domain SUPREME COURT
is not subject to ordinary prescription. In the case of Insular Government vs. Aldecoa & Co., 19 Phil., Manila
505 this Court said:
SECOND DIVISION
The occupation or material possession of any land formed upon the shore by accretion,
without previous permission from the proper authorities, although the occupant may have G.R. No. L-22763 March 18, 1983
held the same as owner for seventeen years and constructed a wharf on the land, is illegal
and is a mere detainer, inasmuch as such land is outside of the sphere of commerce; it
pertains to the national domain; it is intended for public uses and for the benefit of those BRUNA ARANAS DE BUYSER, plaintiff-appellant,
who live nearby. vs.
DIRECTOR OF LANDS, IGNACIO TANDAYAG and CANDIDA DE TANDAYAG, defendants-appellees.
Floripinas C. Bruper for plaintiff-appellant.
The Solicitor General for defendants-appellees.
ESCOLIN, J.:
This is an appeal, perfected before the effectivity of Republic Act 5440, from the decision of the Court
of First Instance of Surigao, declaring a parcel of land formed along the shore by the action of the sea
as part of the public domain.
Plaintiff-appellant is the registered owner of Lot No. 4217 of the Surigao Cadastre, which borders the
Surigao Strait. Contiguous to said lot is a parcel of land which was formed by accretion from the sea,
the subject- matter of this controversy. Defendants Ignacio Tandayag and his wife Candida Tandayag
have been occupying this foreshore land under a Revocable Permit issued by the Director of Lands. For
the use and occupation thereof, said spouses paid the Bureau of Lands the amount of P6.50 annually.
They have a house on said lot, which plaintiff alleged had been purchased by the Tandayags from one
Francisco Macalinao, a former lessee of the plaintiff.
Claiming ownership of the said land, plaintiff filed an action against the spouses Tandayag in the Court
of First Instance of Surigao to recover possession of this land as well as rents in arrears for a period of
six years. The complaint was subsequently amended to implead the Director of Land as defendant,
allegedly for having illegally issued a revocable permit to the Tandayags.
After due trial, the court a quo rendered a decision dismissing the complaint, as follows:
WHEREFORE, the court hereby renders judgment in favor of the defendants and
against the plaintiff, dismissing the complaint of the plaintiff for lack of cause of
action; declaring the defendants Ignacio Tandayag and his wife, Candida de
Tandayag as the lawful occupants of the land in question, which is part of the
public domain; condemning the plaintiff to pay to the defendant in concept of
damages in the amount of P250.00; plus the costs. (p. 67, Decision, Original
Records.)
From this judgment, plaintiff appealed directly to this Court on a pure question of law.
The plaintiff's claim of ownership over the land in question is bereft of legal basis. Such alluvial
formation along the seashore is part of the public domain and, therefore, not open to acquisition by
adverse possession by private persons. It is outside the commerce of man, unless otherwise declared
by either the executive or legislative branch of the government. 1
In asserting the right of ownership over the land, plaintiff invokes Article 4 of the Spanish Law of
Waters of August 3, 1866 which provides:
Art. 4. Lands added to the shore by accretion and alluvial deposits caused by the
action of the sea, form part of the public domain, when they are no longer
washed by the waters of the sea, and are not necessary for purposes of public
utility, or for the establishment of special industries, or for the coastguard
service, the Government shall declare them to be the property of the owners of
the estate adjacent thereto and as an increment thereof.
Plaintiff's reliance on the above article is quite misplaced. The true construction of the cited provision is
that the State shall grant these lands to the adjoining owners only when they are no longer needed for
the purposes mentioned therein. In the case at bar, the trial court found that plaintiff's evidence failed
to prove that the land in question is no longer needed by the government, or that the essential
conditions for such grant under Article 4 of the Spanish Law of Waters, exists.
Plaintiff, however, argues that the approval by the Director of Lands of the defendants' Revocable
Permit Application is tantamount to an implied declaration on the part of the Director of Lands of the
fact that the disputed lot is no longer needed for public use. We fail to see such implication.
In his letter, dated June 16, 1955, approving the defendants' Revocable Permit Application, the Director
of Lands did not declare the land as no longer needed for public use. Pertinent portions of said letter
reads: 2
With reference to your revocable permit application no. v-8040, I wish to inform
you that as the District Engineer of that province has in his 1st indorsement
dated July 7, 1954 certified that the land applied for by you is/may be needed by
the Government for future public improvements (Boulevard and seawall
protection purposes) you may be allowed to continue with your temporary
occupation and provisional use of the premises under a revocable permit
renewable every year in the meantime that the land is not actually needed by
the Government for the purposes aforestated, subject however to the following
conditions:
That no further structures shall be constructed on the land
and that any structure constructed thereon shall be
removed and/or by you at your expense upon thirty (30)
days notice if and when the Government is ready to
actually use the land for Boulevard and seawall protection
purposes. (p. 113, Exhibit 4.)
From the foregoing, it is clear that the State never relinquished ownership over the land.
Since the land is admittedly property of public dominion, its disposition falls under the exclusive The Secretary of Agriculture and Natural Resources may grant to qualified
supervision and control of the Bureau of Lands. 3 Under the Public Land Act, an application for the sale persons temporary permission upon the payment of a reasonable charge, for the
or lease of lands enumerated under Section 59 thereof, should be filed with the Bureau of Lands. 4 In use of any portion of the lands covered by this chapter for any lawful private
compliance therewith, the spouses Tandayag filed the appropriate application, while plaintiff did not. purpose, subject Lo revocation, at any time when, in his judgment the public
As pointed out by the Solicitor General, "like any other private party, she (plaintiff) must apply for a interest shall require.
permit to use the land, like what appellee spouses did. Not having submitted to the jurisdiction of the
Bureau of Lands which has administration and control over the area in question, by filing the
WHEREFORE, the decision appealed from is hereby affirmed with costs against the plaintiff-appellant.
corresponding application for permit, appellant has no right whatsoever in the foreshore land as to be
entitled to protection in the courts of justice." 5
SO ORDERED.
6
In Aldecoa vs. Insular Government, a case involving two parcels of land formed along the shore by the
action of the sea, this Court has this to say. Makasiar, Concepcion, Jr., Guerrero, Abad Santos and De Castro, JJ., concur.

The record does not disclose that Aldecoa & Co. had obtained from the Spanish
Government of the Philippines the requisite authorization legally to occupy the
said two parcels of land of which they now claim to be the owners; wherefore,
the occupation or possession which they allege they hold is a mere detainer that
can merit from the law no protection such as is afforded only to the person
legally in possession.

The rationale behind the grant of revocable permit was propounded by the Attorney General in his
opinion of July 24, 1920, in this wise:

The lease of reclaimed lands and of the foreshore was formerly provided by Act
No. 1654. Under said Act, said lands could only be leased in the manner and
under the conditions provided by the said law. No revocable permits were
allowed. Then Act No. 2570 was passed amending Sec. 5 of Act No. 1654 so as to
authorize the temporary use of the foreshore under a revocable permit. This Republic of the Philippines
measure was apparently deemed necessary as well as expedient in order to SUPREME COURT
legalize the habitual use of the coast and shores of these islands by the people, Manila
who had erected thereon light material houses and dwellings, temporary
structures used in connection with fishing and other maritime industries, as well EN BANC
as to authorize the provisional occupation and use contemplated by the law
providing for its format lease. The countless houses and provisional
G.R. No. L-17652 June 30, 1962
constructions that fringed the shores of the archipelago especially in Mindanao,
and the constant and every day use and occupation of the foreshore by the
people in fishing, salt and other industries common to the sea, as above stated, IGNACIO GRANDE, ET AL., petitioners,
evidently prompted the legislature to all the temporary use of the foreshore in vs.
this manner by means of revocable permit. HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN CALALUNG, respondents.

In fine, the grant of a Revocable Permit to the defendants Tandayag for the temporary use and Bartolome Guirao and Antonio M. Orara for petitioners.
occupation of the disputed land is valid, having been legally issued by the Bureau of Lands, acting for Gonzales and Fernandez for respondents.
and in behalf of the Secretary (now Minister) of Agriculture and Natural Resources who is empowered
to grant revocable permits under Section 68 of the Public land Act which we quote: BARRERA, J.:
This is an appeal taken by petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia Grande, from the area of 4 hectare more or less, was formed in 1948, reason for which, it was only declared in
decision of the Court of Appeals (CA-G.R. No. 25169-R) reversing that of the Court of First Instance of that same year for taxation purposes by the defendants under Tax Dec. No. 257 (Exh. "2")
Isabela (Civil Case No. 1171), and dismissing petitioners' action against respondents Domingo and when they entered upon the land. We could not give credence to defendants' assertion that
Esteban Calalung, to quiet title to and recover possession of a parcel of land allegedly occupied by the Tax Dec. No. 257 (Exh. "2") cancelled Tax Dee. No. 28226 (Exh. "1"), because Exh. "2" says
latter without petitioners' consent. that "tax under this declaration begins with the year 1948. But, the fact that defendants
declared the land for taxation purposes since 1948, does not mean that they become the
owner of the land by mere occupancy, for it is a new provision of the New Civil Code that
The facts of the case, which are undisputed, briefly are: Petitioners are the owners of a parcel of land,
ownership of a piece of land cannot be acquired by occupation (Art. 714, New Civil Code).
with an area of 3.5032 hectares, located at barrio Ragan, municipality of Magsaysay (formerly
The land in question being an accretion to the mother or registered land of the plaintiffs,
Tumauini), province of Isabela, by inheritance from their deceased mother Patricia Angui (who
the accretion belongs to the plaintiffs (Art. 457, New Civil Code; Art. 366, Old Civil Code).
inherited it from her parents Isidro Angui and Ana Lopez, in whose name said land appears registered,
Assuming arguendo, that the accretion has been occupied by the defendants since 1948, or
as shown by Original Certificate of Title No. 2982, issued on June 9, 1934). Said property is identified as
earlier, is of no moment, because the law does not require any act of possession on the part
Lot No. 1, Plan PSU-83342. When it was surveyed for purposes of registration sometime in 1930, its
of the owner of the riparian owner, from the moment the deposit becomes manifest (Roxas
northeastern boundary was the Cagayan River (the same boundary stated in the title). Since then, and
v. Tuason, 9 Phil. 408; Cortez v. City of Manila, 10 Phil. 567). Further, no act of appropriation
for many years thereafter, a gradual accretion on the northeastern side took place, by action of the
on the part of the reparian owner is necessary, in order to acquire ownership of the alluvial
current of the Cagayan River, so much so, that by 1958, the bank thereof had receded to a distance of
formation, as the law does not require the same (3 Manresa, C.C., pp. 321-326).
about 105 meters from its original site, and an alluvial deposit of 19,964 square meters (1.9964
hectares), more or less, had been added to the registered area (Exh. C-1).
This brings us now to the determination of whether the defendants, granting that they have
been in possession of the alluvium since 1948, could have acquired the property by
On January 25, 1958, petitioners instituted the present action in the Court of First Instance of Isabela
prescription. Assuming that they occupied the land in September, 1948, but considering that
against respondents, to quiet title to said portion (19,964 square meters) formed by accretion, alleging
the action was commenced on January 25, 1958, they have not been in possession of the
in their complaint (docketed as Civil Case No. 1171) that they and their predecessors-in-interest, were
land for ten (10) years; hence, they could not have acquired the land by ordinary
formerly in peaceful and continuous possession thereof, until September, 1948, when respondents
prescription (Arts. 1134 and 1138, New Civil Code). Moreover, as the alluvium is, by law,
entered upon the land under claim of ownership. Petitioners also asked for damages corresponding to
part and parcel of the registered property, the same may be considered as registered
the value of the fruits of the land as well as attorney's fees and costs. In their answer (dated February
property, within the meaning of Section 46 of Act No. 496: and, therefore, it could not be
18, 1958), respondents claim ownership in themselves, asserting that they have been in continuous,
acquired by prescription or adverse possession by another person.
open, and undisturbed possession of said portion, since prior to the year 1933 to the present.

Unsatisfied, respondents appealed to the Court of Appeals, which rendered, on September 14, 1960,
After trial, the Court of First Instance of Isabela, on May 4, 1959, rendered a decision adjudging the
the decision adverted to at the beginning of this opinion, partly stating:
ownership of the portion in question to petitioners, and ordering respondents to vacate the premises
and deliver possession thereof to petitioners, and to pay to the latter P250.00 as damages and costs.
Said decision, in part, reads: That the area in controversy has been formed through a gradual process of alluvium, which
started in the early thirties, is a fact conclusively established by the evidence for both
parties. By law, therefore, unless some superior title has supervened, it should properly
It is admitted by the parties that the land involved in this action was formed by the gradual
belong to the riparian owners, specifically in accordance with the rule of natural accession
deposit of alluvium brought about by the action of the Cagayan River, a navigable river. We
in Article 366 of the old Civil Code (now Article 457), which provides that "to the owner of
are inclined to believe that the accretion was formed on the northeastern side of the land
lands adjoining the banks of rivers, belongs the accretion which they gradually receive from
covered by Original Certificate of Title No. 2982 after the survey of the registered land in
the effects of the current of the waters." The defendants, however, contend that they have
1931, because the surveyors found out that the northeastern boundary of the land
acquired ownership through prescription. This contention poses the real issue in this case.
surveyed by them was the Cagayan River, and not the land in question. Which is indicative
The Court a quo, has resolved it in favor of the plaintiffs, on two grounds: First, since by
of the fact that the accretion has not yet started or begun in 1931. And, as declared by
accession, the land in question pertains to the original estate, and since in this instance the
Pedro Laman, defendant witness and the boundary owner on the northwest of the
original estate is registered, the accretion, consequently, falls within the purview of Section
registered land of the plaintiffs, the accretion was a little more than one hectare, including
46 of Act No. 496, which states that "no title to registered land in derogation to that of the
the stony portion, in 1940 or 1941. Therefore, the declarations of the defendant Domingo
registered owner shall be acquired by prescription or adverse possession"; and, second, the
Calalung and his witness, Vicente C. Bacani, to the effect that the land in question was
adverse possession of the defendant began only in the month of September, 1948, or less
formed by accretion since 1933 do not only contradict the testimony of defendants' witness
than the 10-year period required for prescription before the present action was instituted.
Pedro Laman, but could not overthrow the incontestable fact that the accretion with an
As a legal proposition, the first ground relied upon by the trial court, is not quite correct. An
accretion to registered land, while declared by specific provision of the Civil Code to belong
to the owner of the land as a natural accession thereof, does not ipso jure become entitled
to the protection of the rule of imprescriptibility of title established by the Land Registration
Act. Such protection does not extend beyond the area given and described in the certificate.
To hold otherwise, would be productive of confusion. It would virtually deprive the title, and
the technical description of the land given therein, of their character of conclusiveness as to
the identity and area of the land that is registered. Just as the Supreme Court, albeit in a
negative manner, has stated that registration does not protect the riparian owner against
the erosion of the area of his land through gradual changes in the course of the adjoining
stream (Payatas Estate Development Co. v. Tuason, 53 Phil. 55), so registration does not
entitle him to all the rights conferred by Land Registration Act, in so far as the area added by
accretion is concerned. What rights he has, are declared not by said Act, but by the
provisions of the Civil Code on accession: and these provisions do not preclude acquisition
of the addition area by another person through prescription. This Court has held as much in
the case of Galindez, et al. v. Baguisa, et al., CA-G.R. No. 19249-R, July 17, 1959.
We now proposed to review the second ground relied upon by the trial court, regarding the
length of time that the defendants have been in possession. Domingo Calalung testified that
he occupied the land in question for the first time in 1934, not in 1948 as claimed by the
plaintiffs. The area under occupancy gradually increased as the years went by. In 1946, he
declared the land for purposes of taxation (Exhibit 1). This tax declaration was superseded in
1948 by another (Exhibit 2), after the name of the municipality wherein it is located was
changed from Tumauini to Magsaysay. Calalung's testimony is corroborated by two
witnesses, both owners of properties nearby. Pedro Laman, 72 years of age, who was
Municipal president of Tumauini for three terms, said that the land in question adjoins his
own on the south, and that since 1940 or 1951, he has always known it to be in the peaceful
possession of the defendants. Vicente C. Bacani testified to the same effect, although, he
said that the defendants' possession started sometime in 1933 or 1934. The area thereof, he
said, was then less than one hectare.
We find the testimony of the said witnesses entitled to much greater weight and credence
than that of the plaintiff Pedro Grande and his lone witness, Laureana Rodriguez. The first
stated that the defendants occupied the land in question only in 1948; that he called the
latter's attention to the fact that the land was his, but the defendants, in turn, claimed that
they were the owners, that the plaintiffs did not file an action until 1958, because it was
only then that they were able to obtain the certificate of title from the surveyor, Domingo
Parlan; and that they never declared the land in question for taxation purposes or paid the
taxes thereon. Pedro Grande admitted that the defendants had the said land surveyed in
April, 1958, and that he tried to stop it, not because he claimed the accretion for himself
and his co-plaintiffs, but because the survey included a portion of the property covered by
their title. This last fact is conceded by the defendants who, accordingly, relinquished their
possession to the part thus included, containing an area of some 458 square
meters.1wph1.t The next issue is, did respondents acquire said alluvial property through acquisitive prescription? This is
The oral evidence for the defendants concerning the period of their possession from
1933 to 1958 is not only preponderant in itself, but is, moreover, supported by the fact
that it is they and not the plaintiffs who declared the disputed property for taxation, and by
the additional circumstance that if the plaintiff had really been in prior possession and were
deprived thereof in 1948, they would have immediately taken steps to recover the same.
The excuse they gave for not doing so, namely, that they did not receive their copy of the
certificate of title to their property until 1958 for lack of funds to pay the fees of the
surveyor Domingo Parlan, is too flimsy to merit any serious consideration. The payment of
the surveyor's fees had nothing to do with their right to obtain a copy of the certificate.
Besides, it was not necessary for them to have it in their hands, in order to file an action to
recover the land which was legally theirs by accession and of which, as they allege, they had
been illegally deprived by the defendants. We are convinced, upon consideration of the
evidence, that the latter, were really in possession since 1934, immediately after the process
of alluvion started, and that the plaintiffs woke up to their rights only when they received
their copy of the title in 1958. By then, however, prescription had already supervened in
favor of the defendants.
It is this decision of the Court of Appeals which petitioners seek to be reviewed by us.
The sole issue for resolution in this case is whether respondents have acquired the alluvial property in
question through prescription.
There can be no dispute that both under Article 457 of the New Civil Code and Article 366 of the old,
petitioners are the lawful owners of said alluvial property, as they are the registered owners of the land
which it adjoins. The question is whether the accretion becomes automatically registered land just
because the lot which receives it is covered by a Torrens title thereby making the alluvial property
imprescriptible. We agree with the Court of Appeals that it does not, just as an unregistered land
purchased by the registered owner of the adjoining land does not, by extension, become ipso
facto registered land. Ownership of a piece of land is one thing, and registration under the Torrens
system of that ownership is quite another. Ownership over the accretion received by the land adjoining
a river is governed by the Civil Code. Imprescriptibility of registered land is provided in the registration
law. Registration under the Land Registration and Cadastral Acts does not vest or give title to the land,
but merely confirms and thereafter protects the title already possessed by the owner, making it
imprescriptible by occupation of third parties. But to obtain this protection, the land must be placed
under the operation of the registration laws wherein certain judicial procedures have been provided.
The fact remain, however, that petitioners never sought registration of said alluvial property (which
was formed sometime after petitioners' property covered by Original Certificate of Title No. 2982 was
registered on June 9, 1934) up to the time they instituted the present action in the Court of First
Instance of Isabela in 1958. The increment, therefore, never became registered property, and hence is
not entitled or subject to the protection of imprescriptibility enjoyed by registered property under the
Torrens system. Consequently, it was subject to acquisition through prescription by third persons.
a question which requires determination of facts: physical possession and dates or duration of such
possession. The Court of Appeals, after analyzing the evidence, found that respondents-appellees were
in possession of the alluvial lot since 1933 or 1934, openly, continuously and adversely, under a claim
of ownership up to the filing of the action in 1958. This finding of the existence of these facts, arrived
at by the Court of Appeals after an examination of the evidence presented by the parties, is conclusive
as to them and can not be reviewed by us.

The law on prescription applicable to the case is that provided in Act 190 and not the provisions of the
Civil Code, since the possession started in 1933 or 1934 when the pertinent articles of the old Civil
Code were not in force and before the effectivity of the new Civil Code in 1950. Hence, the conclusion
of the Court of Appeals that the respondents acquired alluvial lot in question by acquisitive prescription
is in accordance with law.

The decision of the Court of Appeals under review is hereby affirmed, with costs against the
petitioners. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes and Dizon, JJ., concur.
Reyes, J.B.L., Regala and Makalintal, JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

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

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner,

vs.
THE HON. COURT OF APPEALS, BENJAMIN TANCINCO, AZUCENA TANCINCO REYES, MARINA
TANCINCO IMPERIAL and MARIO C. TANCINCO, respondents.

The Solicitor General for petitioner.

Martin B. Laurea for respondents.

GUTIERREZ, JR., J.:+.wph!1

This is a petition for certiorari to set aside the decision of the respondent Court of Appeals (now
Intermediate Appellate Court) affirming the decision of the Court of First Instance of Bulacan, Fifth
Judicial District, Branch VIII, which found that Lots 1 and 2 of Plan Psu-131892 are accretion to the land
covered by Transfer Certificate of Title No. 89709 and ordered their registration in the names of the 6-1, by property of Joaquina Santiago. ... containing an area of ONE THOUSAND
private respondents. NINE HUNDRED EIGHTY FIVE (1,985) SQUARE METERS. ...

Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be "Maria") Tancinco On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of the Bureau of
Imperial and Mario C. Tancinco are registered owners of a parcel of land covered by Transfer Certificate Lands filed a written opposition to the application for registration.
of Title No. T-89709 situated at Barrio Ubihan, Meycauayan, Bulacan bordering on the Meycauayan and
Bocaue rivers.
On March 6, 1975, the private respondents filed a partial withdrawal of the application for registration
with respect to Lot 3 of Plan Psu-131892 in line with the recommendation of the Commissioner
On June 24, 1973, the private respondents filed an application for the registration of three lots adjacent appointed by the Court.
to their fishpond property and particularly described as follows: t.hqw
On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial proceeded only with
Lot 1-Psu-131892 respect to Lots 1 and 2 covered by Plan Psu-131892.
(Maria C. Tancinco)
On June 26, 1976, the lower court rendered a decision granting the application on the finding that the
A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of lands in question are accretions to the private respondents' fishponds covered by Transfer Certificate of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE., Title No. 89709. The dispositive portion of the decision reads: t.hqw
along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along fines 4-5-6-7-8-9, by Bocaue River; on the
WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are
NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW.,
accretions to the land covered by Transfer Certificate of Title No. 89709 of the
along lines 10-11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
Register of Deeds of Bulacan, they belong to the owner of said property. The
containing an area of THIRTY THREE THOUSAND NINE HUNDRED THIRTY SEVEN
Court, therefore, orders the registration of lots 1 & 2 situated in the barrio of
(33,937) SQUARE METERS. ...
Ubihan, municipality of Meycauayan, province of Bulacan, and more particularly
described in plan Psu-131892 (Exh. H) and their accompanying technical
Lot 2-Psu-131892 descriptions (Exhs. E, E-1) in favor of Benjamin Tancinco, married to Alma
(Maria C. Tancinco) Fernandez and residing at 3662 Heatherdown, Toledo, Ohio 43614 U.S.A.;
Azucena Tancinco Reyes, married to Alex Reyes, Jr., residing at 4th St., New
Manila, Quezon City; Marina Tancinco Imperial, married to Juan Imperial,
A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of
residing at Pasay Road, Dasmarias Village, Makati, Rizal; and Mario C. Tancinco,
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the E.,
married to Leticia Regidor, residing at 1616 Cypress St., Dasmarias Village,
along line 1-2, by property of Rafael Singson; on the S., along line 2-3, by
Makati, Rizal, all of legal age, all Filipino citizens.
Meycauayan River; on the SW., along line 3-4, by Lot 3 of plan Psu-131892; and
on the N., along line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877). ...
containing an area of FIVE THOUSAND FOUR HUNDRED FIFTY THREE (5,453) On July 30, 1976, the petitioner Republic appealed to the respondent Court of Appeals.
SQUARE METERS. ...
On August, 19, 1982, the respondent Court rendered a decision affirming in toto the decision of the
Lot 3-Psu-131892 lower court. The dispositive portion of the decision reads: t.hqw
(Maria C. Tancinco)
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang
A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of kabuuan nang walang bayad.
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along
The rule that the findings of fact of the trial court and the Court of Appeals are binding upon this Court
line 2-3, by Lot 2 of plan Psu-131892; on the S., along line 3-4, by Meycauayan
admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS Stock Brokerage, Inc. (97 SCRA 734)
River, on the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6
we held that this Court retains the power to review and rectify the findings of fact of said courts when
by property of Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line
(1) the conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when
the inference made is manifestly mistaken, absurd, and impossible; (3) where there is grave abuse of
discretion, (4) when the judgment is based on a misapprehension of facts; and (5) when the court, in
making its findings, went beyond the issues of the case and the same are contrary to the admissions of
both appellant and appellee.
There are facts and circumstances in the record which render untenable the findings of the trial court
and the Court of Appeals that the lands in question are accretions to the private respondents'
fishponds.
The petitioner submits that there is no accretion to speak of under Article 457 of the New Civil Code
because what actually happened is that the private respondents simply transferred their dikes further
down the river bed of the Meycauayan River, and thus, if there is any accretion to speak of, it is man-
made and artificial and not the result of the gradual and imperceptible sedimentation by the waters of
the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia Acua to the effect
that: t.hqw effect of the current of the rivers but as a result of the transfer of the dike towards the river and
xxx xxx xxx
... when witness first saw the land, namely, Lots 1 & 2, they were already dry
almost at the level of the Pilapil of the property of Dr. Tancinco, and that from
the boundaries of the lots, for about two (2) arms length the land was still dry up
to the edge of the river; that sometime in 1951, a new Pilapil was established on
the boundaries of Lots 1 & 2 and soil from the old Pilapil was transferred to the
new Pilapil and this was done sometime in 1951; that the new lots were then
converted into fishpond, and water in this fishpond was two (2) meters deep on
the side of the Pilapil facing the fishpond ... .
The private respondents submit that the foregoing evidence establishes the fact of accretion without
human intervention because the transfer of the dike occurred after the accretion was complete.
imperceptible; (2) that it be made through the effects of the current of the water; and (3) that the land
where accretion takes place is adjacent to the banks of rivers.
The requirement that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the New Civil Code all deposits caused by human
intervention. Alluvion must be the exclusive work of nature. In the instant case, there is no evidence
whatsoever to prove that the addition to the said property was made gradually through the effects of
the current of the Meycauayan and Bocaue rivers. We agree with the observation of the Solicitor
General that it is preposterous to believe that almost four (4) hectares of land came into being because
of the effects of the Meycauayan and Bocaue rivers. The lone witness of the private respondents who
happens to be their overseer and whose husband was first cousin of their father noticed the four
hectare accretion to the twelve hectare fishpond only in 1939. The respondents claim that at this point
in time, accretion had already taken place. If so, their witness was incompetent to testify to a gradual
and imperceptible increase to their land in the years before 1939. However, the witness testified
that in that year, she observed an increase in the area of the original fishpond which is now the land in
question. If she was telling the truth, the accretion was sudden. However, there is evidence that the
alleged alluvial deposits were artificial and man-made and not the exclusive result of the current of the
Meycauayan and Bocaue rivers. The alleged alluvial deposits came into being not because of the sole
encroaching upon it. The land sought to be registered is not even dry land cast imperceptibly and
gradually by the river's current on the fishpond adjoining it. It is under two meters of water. The private
respondents' own evidence shows that the water in the fishpond is two meters deep on the side of the
pilapil facing the fishpond and only one meter deep on the side of the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion deposited by a
river is to compensate him for the danger of loss that he suffers because of the location of his land. If
estates bordering on rivers are exposed to floods and other evils produced by the destructive force of
the waters and if by virtue of lawful provisions, said estates are subject to incumbrances and various
kinds of easements, it is proper that the risk or danger which may prejudice the owners thereof should
be compensated by the right of accretion. (Cortes v. City of Manila, 10 Phil. 567). Hence, the riparian
owner does not acquire the additions to his land caused by special works expressly intended or
designed to bring about accretion. When the private respondents transferred their dikes towards the
river bed, the dikes were meant for reclamation purposes and not to protect their property from the
destructive force of the waters of the river.

We agree with the petitioner.
Article 457 of the New Civil Code provides: t.hqw
To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.
The above-quoted article requires the concurrence of three requisites before an accretion covered by
this particular provision is said to have taken place. They are (1) that the deposit be gradual and
We agree with the submission of the Solicitor General that the testimony of the private respondents'
lone witness to the effect that as early as 1939 there already existed such alleged alluvial deposits,
deserves no merit. It should be noted that the lots in question were not included in the survey of their
adjacent property conducted on May 10, 1940 and in the Cadastral Survey of the entire Municipality of
Meycauayan conducted between the years 1958 to 1960. The alleged accretion was declared for
taxation purposes only in 1972 or 33 years after it had supposedly permanently formed. The only valid
conclusion therefore is that the said areas could not have been there in 1939. They existed only after
the private respondents transferred their dikes towards the bed of the Meycauayan river in 1951. What
private respondents claim as accretion is really an encroachment of a portion of the Meycauayan river
by reclamation.
The lower court cannot validly order the registration of Lots 1 & 2 in the names of the private
respondents. These lots were portions of the bed of the Meycauayan river and are therefore classified
as property of the public domain under Article 420 paragraph 1 and Article 502, paragraph 1 of the Civil
Code of the Philippines. They are not open to registration under the Land Registration Act. The
adjudication of the lands in question as private property in the names of the private respondents is null
and void.

WHEREFORE, the instant petition is GRANTED. The decision appealed from is hereby REVERSED and SET
ASIDE. The private respondents are ordered to move back the dikes of their fishponds to their original
location and return the disputed property to the river to which it belongs.

SO ORDERED.1wph1.t

Teehankee, Actg. C.J., Melencio-Herrera, Plana, Relova and De la Fuente, JJ., concur.

SECOND DIVISION
[G.R. No. 98045. June 26, 1996]
DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners, vs. THE COURT OF
APPEALS, MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA, AVELINO LABIS, HON.
ROBERTO G. HILARIO, ROLLEO I. IGNACIO, ALBERTO M. GILLERA and HON. ABELARDO G.
PALAD, JR., in their official and/or private capacities, respondents.

DECISION

ROMERO, J.:

Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the decision of
the Court of Appeals which affirmed the dismissal of petitioners' complaint by the Regional Trial Court
of Misamis Oriental, Branch 22. The complaint was for annulment of the verification, report and
recommendation, decision and order of the Bureau of Lands regarding a parcel of public land.

The only issue involved in this petition is whether or not petitioners exhausted administrative
remedies before having recourse to the courts.

The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de Oro
City. Said land was formed as a result of sawdust dumped into the dried-up Balacanas Creek and along
the banks of the Cagayan river.

Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject lots on
which their houses stood from one Antonio Nazareno, petitioners' predecessor-in-interest. In the latter
part of 1982, private respondents allegedly stopped paying rentals. As a result, Antonio Nazareno and
petitioners filed a case for ejectment with the Municipal Trial Court of Cagayan de Oro City, Branch 4. A
decision was rendered against private respondents, which decision was affirmed by the Regional Trial
Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of judgment after the same
became final and executory. Private respondents filed a case for annulment of judgment before the
Regional Trial Court of Misamis Oriental, Branch 24 which dismissed the same. Antonio Nazareno and
petitioners again moved for execution of judgment but private respondents filed another case
for certiorari with prayer for restraining order and/or writ of preliminary injunction with the Regional
Trial Court of Misamis Oriental, Branch 25 which was likewise dismissed. The decision of the lower
court was finally enforced with the private respondents being ejected from portions of the subject lots
they occupied.
Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey plan
designated as Plan Csd-106-00571 with a view to perfecting his title over the accretion area being
claimed by him. Before the approved survey plan could be released to the applicant, however, it was
protested by private respondents before the Bureau of Lands.
In compliance with the order of respondent District Land Officer Alberto M. Gillera, respondent
Land Investigator Avelino G. Labis conducted an investigation and rendered a report to the Regional
Director recommending that Survey Plan No. MSI-10-06-000571-D (equivalent to Lot No. 36302, Cad.
237) in the name of Antonio Nazareno, be cancelled and that private respondents be directed to file
appropriate public land applications.
Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario
rendered a decision ordering the amendment of the survey plan in the name of Antonio Nazareno by
segregating therefrom the areas occupied by the private respondents who, if qualified, may file public
land applications covering their respective portions.
Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio,
Undersecretary of the Department of Natural Resources and Officer-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 introduced
thereon. He also ordered that private respondents be placed in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners
Desamparado Vda. de Nazareno and Leticia Tapia Nazareno, filed a case before the RTC, Branch 22 for
annulment of the following: order of investigation by respondent Gillera, report and recommendation
by respondent Labis, decision by respondent Hilario, order by respondent Ignacio affirming the decision
of respondent Hilario and order of execution by respondent Palad. The RTC dismissed the complaint for
failure to exhaust administrative remedies which resulted in the finality of the administrative decision
of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the
complaint. Applying Section 4 of C.A. No. 141, as amended, it contended that the approval of the
survey plan belongs exclusively to the Director of Lands. Hence, factual findings made by the
Metropolitan Trial Court respecting the subject land cannot be held to be controlling as the preparation
and approval of said survey plans belong to the Director of Lands and the same shall be conclusive
when approved by the Secretary of Agriculture and Natural Resources. [1]
Furthermore, the appellate court contended that the motion for reconsideration filed by
Antonio Nazareno cannot be considered as an appeal to the Office of the Secretary of Agriculture and
Natural Resources, as mandated by C.A. No. 141 inasmuch as the same had been acted upon by
respondent Undersecretary Ignacio in his capacity as Officer-in-Charge of the Bureau of Lands and not
as Undersecretary acting for the Secretary of Agriculture and Natural Resources. For the failure of
Antonio Nazareno to appeal to the Secretary of Agriculture and Natural Resources, the present case
does not fall within the exception to the doctrine of exhaustion of administrative remedies. It also held
that there was no showing of oppressiveness in the manner in which the orders were issued and
executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND
CAPRICIOUS MANNER AFFIRMED THE DECISION OF THE LOWER COURT WHICH IS
CONTRARY TO THE PREVAILING FACTS AND THE LAW ON THE MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND
CAPRICIOUS MANNER AFFIRMED THE DECISION OF THE LOWER COURT DISMISSING
THE ORIGINAL CASE WHICH FAILED TO CONSIDER THAT THE EXECUTION ORDER OF
PUBLIC RESPONDENT ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA,
PRACTICALLY CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO,
REGIONAL DIRECTOR, BUREAU OF LANDS, REGION 10, THUS MAKING THE CASE
PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE JURISDICTION OF THE LOWER
COURT.
The resolution of the above issues, however, hinges on the question of whether or not the
subject land is public land. Petitioners claim that the subject land is private land being an accretion to
his titled property, applying Article 457 of the Civil Code which provides:
"To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive
from the effects of the current of the waters."
In the case of Meneses v. CA,[2] this Court held that accretion, as a mode of acquiring property
under Art. 457 of the Civil Code, requires the concurrence of these requisites: (1) that the deposition of
soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the
river (or sea); and (3) that the land where accretion takes place is adjacent to the banks or rivers (or the
sea coast). These are called the rules on alluvion which if present in a case, give to the owners of lands
adjoining the banks of rivers or streams any accretion gradually received from the effects of the current
of waters.
For petitioners to insist on the application of these rules on alluvion to their case, the above-
mentioned requisites must be present. However, they admit that the accretion was formed by the
dumping of boulders, soil and other filling materials on portions of the Balacanas Creek and the
Cagayan River bounding their land.[3] It cannot be claimed, therefore, that the accumulation of such
boulders, soil and other filling materials was gradual and imperceptible, resulting from the action of the
waters or the current of the Balacanas Creek and the Cagayan River. In Hilario v. City of Manila,[4] this
Court held that the word "current" indicates the participation of the body of water in the ebb and flow
of waters due to high and low tide. Petitioners' submission not having met the first and second
requirements of the rules on alluvion, they cannot claim the rights of a riparian owner.
In any case, this court agrees with private respondents that petitioners are estopped from
denying the public character of the subject land, as well as the jurisdiction of the Bureau of Lands when
the late Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6) 571.[5] The mere filing of
said Application constituted an admission that the land being applied for was public land, having been
the subject of Survey Plan No. MSI-10-06-000571-D (Equivalent to Lot No. 36302, Cad-237) which was
conducted as a consequence of Antonio Nazareno's Miscellaneous Sales Application wherein said land
was described as an orchard. Said description by Antonio Nazareno was, however, controverted by
respondent Labis in his investigation report to respondent Hilario based on the findings of his ocular
inspection that said land actually covers a dry portion of Balacanas Creek and a swampy portion of
Cagayan River. The investigation report also states that except for the swampy portion which is fully
planted to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of petitioners
and several residential houses made of light materials, including those of private respondents which
were erected by themselves sometime in the early part of 1978.[6]
Furthermore, the Bureau of Lands classified the subject land as an accretion area which was
formed by deposits of sawdust in the Balacanas Creek and the Cagayan river, in accordance with the
ocular inspection conducted by the Bureau of Lands.[7] This Court has often enough held that findings of
administrative agencies which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even finality. [8] Again, when said factual findings
are affirmed by the Court of Appeals, the same are conclusive on the parties and not reviewable by this
Court.[9]
It is this Court's irresistible conclusion, therefore, that the accretion was 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 Civil Code all
deposits caused by human intervention. Putting it differently, alluvion must be the exclusive work of
nature. Thus, in Tiongco v. Director of Lands, et al.,[11] where the land was not formed solely by the
natural effect of the water current of the river bordering said land but is also the consequence of the
direct and deliberate intervention of man, it was deemed a 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 Court of Appeals affirmed.
However, this Court agrees with petitioners that administrative remedies have been
exhausted. Petitioners could not have intended to appeal to respondent Ignacio as an Officer-in-Charge
of the Bureau of Lands. The decision being appealed from was the decision of respondent Hilario who
was the Regional Director of The Bureau of Lands. Said decision was made "for and by authority of the
Director of Lands."[14] It would be incongruous to appeal the decision of the Regional Director of the
Bureau of Lands acting for the Director of the Bureau of Lands to an Officer-In-Charge of the Bureau of
Lands.
In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the
Department of Agriculture and Natural Resources." He was only an "Officer-In-Charge" of the Bureau of
Lands. When he acted on the late Antonio Nazareno's motion for reconsideration by affirming or
adopting respondent's Hilario's decision, he was acting on said motion as an Undersecretary on behalf
of the Secretary of the Department. In the case of Hamoy v. Secretary of Agriculture and Natural
Resources,[15] This Court held that the Undersecretary of Agriculture and Natural Resources may modify,
adopt, or set aside the orders or decisions of the Director of Lands with respect to questions involving
public lands under the administration and control of the Bureau of Lands and the Department of
Agriculture and Natural Resources. He cannot therefore, be said to have acted beyond the bounds of
his jurisdiction under Sections 3, 4 and 5 of Commonwealth Act No. 141.[16]
As borne out by the administrative findings, the controverted land is public land, being an
artificial accretion of sawdust. As such, the Director of Lands has jurisdiction, authority and control over
the same, as mandated under Sections 3 and 4 of the Public Land Law (C.A. No. 141) which states, thus:
"Sec. 3. The Secretary of Agriculture and Natural Resources shall be the exclusive officer charged with
carrying out the provisions of this Act through the Director of Lands who shall act under his immediate
control.
Sec. 4. Subject to said control, the Director of Lands shall have direct executive control of the survey,
classification, lease, sale or any other form of concession or disposition and management of the lands
of the public domain, and his decisions as to questions of fact shall be conclusive when approved by
the Secretary of Agriculture and Natural Resources."
In connection with the second issue, petitioners ascribe whim, arbitrariness or capriciousness in
the execution order of public respondent Abelardo G. Palad, the Director of Lands. This Court finds
otherwise since said decision was based on the conclusive finding that the subject land was public
land. Thus, this Court agrees with the Court of Appeals that the Director of Lands acted within his rights
when he issued the assailed execution order, as mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order directing them to vacate the
subject land practically changed respondent Hilario's decision is baseless. It is incorrect for petitioners
to assume that respondent Palad awarded portions of the subject land to private respondents
Salasalans and Rayabas as they had not yet been issued patents or titles over the subject land. The
execution order merely directed the segregation of petitioners' titled lot from the subject land which
was actually being occupied by private respondents before they were ejected from it. Based on the
finding that private respondents were actually in possession or were actually occupying the subject
land instead of petitioners, respondent Palad, being the Director of Lands and in the exercise of this
administrative discretion, directed petitioners to vacate the subject land on the ground that private
respondents have a preferential right, being the occupants thereof.

While private respondents may not have filed their application over the land occupied by them,
they nevertheless filed their protest or opposition to petitioners' Miscellaneous Sales Application, the
same being preparatory to the filing of an application as they were in fact directed to do so. In any case,
respondent Palad's execution order merely implements respondent Hilario's order. It should be noted
that petitioners' own application still has to be given due course. [17]

As Director of lands, respondent Palad is authorized to exercise executive control over any form
of concession, disposition and management of the lands of the public domain.[18] He may issue
decisions and orders as he may see fit under the circumstances as long as they are based on the
findings of fact.

In the case of Calibo v. Ballesteros,[19] this Court held that where, in the disposition of public
lands, the Director of Lands bases his decision on the evidence thus presented, he clearly acts within
his jurisdiction, and if he errs in appraising the evidence, the error is one of judgment, but not an act or
grave abuse of discretion annullable by certiorari. Thus, except for the issue of non-exhaustion of
administrative remedies, this Court finds no reversible error nor grave abuse of discretion in the G.R. No. 108065 July 6, 1993
decision of the Court of Appeals.
SPOUSES FELIX BAES AND RAFAELA BAES, petitioners,
WHEREFORE, the petition is DISMISSED for lack of merit.
vs.
SO ORDERED. THE COURT OF APPEALS AND REPUBLIC OF THE PHILIPPINES, respondents.

Regalado (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

Lorenzo F. Miravite for petitioners.

Republic of the Philippines

The Solicitor General for respondents.
SUPREME COURT
Manila
CRUZ, J.:
FIRST DIVISION
This is an appeal by way of certiorari from the decision of the respondent Court of Appeals which
affirmed in toto the ruling of the trial court in Civil Case No. 0460-P, the dispositive portion of which
read thus:

WHEREFORE, judgment is hereby rendered declaring null and void TCT Nos.
14405, 29592, 29593, 29594, 29595, and TCT No. 29593's derivative titles TCT
Nos. 124725, 124726, 124727 and 124729, and ordering the Register of Deeds
for Pasay City to cancel them and issue new ones in their stead in the name of
the plaintiff after segregating from TCT No. 29593 452 sq. m., the actual area of
Lot 2958-C (covered by cancelled TCT No. 11043) belonging to defendant Felix
Baes. The counterclaim is hereby dismissed.

Let a copy of this Decision be furnished the Register of Deeds for Pasay City.
 SO ORDERED.
The controversy began in 1962, when the government dug a canal on a private parcel of land, identified
as Lot 2958 and covering an area of P33,902 sq.m., to streamline the Tripa de Gallina creek.
This lot was later acquired by Felix Baes, who registered it in his name under TCT No. 10990 and then
had it subdivided into three lots, namely: (a) Lot 2958-A, with an area of 28,889 sq.m.; (b) Lot 2958-B,
with an area of 3,588 sq.m.; and (c) Lot 2958-C, with an area of 452 sq.m., covered by TCT Nos. 11041,
11042 and 11043, respectively.
In exchange for Lot 2958-B, which was totally occupied by the canal, the government gave Baes a lot
with exactly the same area as Lot 2958-B through a Deed of Exchange of Real Property dated June 20,
1970. 1 The property, which was near but not contiguous to Lot 2956-C, was denominated as Lot 3271-
A and later registered in the name of Felix Baes under TCT No. 24300. The soil displaced by the canal
was used to fill up the old bed of the creek.
Meanwhile, Baes had Lot 2958-C and a portion of Lot 2958-A designated as Lot 1, Blk., 4, resurveyed
and subdivided. On January 12, 1968, he submitted a petition for the approval of his resurvey and
subdivision plans, claiming that after the said lots were plotted by a competent surveyor, it was found
that there were errors in respect of their bearings and distances.
The resurvey-subdivision plan was approved by the Court of First Instance of Pasay City in an order
dated January 15, 1968. 2
As a result, the old TCTs covering the said lots were canceled and new ones were issued, to wit: (a) Lot
1-A, Blk. 4, with 672 sq.m., under TCT No.
T-14404; (b) Lot 1-B, with 826 sq.m., representing the increase in area after the resurvey, under TCT No.
T-14405; (c) Lot 2958-C-1, with 452 sq.m., under TCT No. T-14406; and (d) Lot 2958-C-2, with 2,770
sq.m. representing the increase after resurvey, under TCT No. T-14407.
Lots 2958-C-1 and 2958-C-2 were later consolidated and this time further subdivided into four (4) lots,
namely, Lot 1, with an area of 147 sq.m.; Lot 2, with an area of 950 sq.m.; Lot 3, with an area of 257
sq.m.; and Lot 4, with an area of 1,868 sq.m., which were respectively issued TCT Nos. 29592, 29593,
29594, and 29595.
In 1978, the Republic of the Philippines discovered that Lot 1-B (with TCT No. 14405 and an area of 826
sq.m.), on which the petitioners had erected an apartment building, covered Lot 3611 of the Pasay
Cadastre, which is a filled-up portion of the Tripa de Gallina creek. Moreover, Lot 2958-C (covered by
TCT Nos. 29592 to 29595, with an increased area of 2,770 after resurvey and subdivision) had been
unlawfully enlarged.
On November 17, 1982, it filed a petition for cancellation of TCT Nos. 14405 and 29592 to 29595. 3
Baes did not object in his answer to the cancellation of TCT Nos. 29592, 29594 and 29595 and was
notable to prove during the trial that the government utilized a portion of Lot 2 under, TCT No. 29593.
The trial court therefore decreed (correctly) that the original Lot 2958-C (with an area of 452 sq.m.) be
reverted to its status before the resurvey-subdivision of Lot 2958-C.
The only remaining dispute relates to Lot 1-B (TCT No. 14405), which the petitioners, relying on Article
461 of the Civil Code, are claiming as their own. The government rejects this claim and avers that the
petitioners had already been fully compensated for it on June 20, 1970 when they agreed to exchange
their Lot 2958-B with Lot 3271-A belonging to the government.
Article 461 of the Civil Code states:
River beds which are abandoned through the natural change in the course of the
waters ipso facto belong to the owners whose lands are occupied by the new
course in proportion to the area lost. However, the owners of the land adjoining
the old bed shall have the right to acquire the same by paying the value thereof,
which value shall not exceed the value of the area occupied by the new bed.
(Emphasis supplied)
A portion of the Tripa de Gallina creek was diverted to a man-made canal which totally occupied Lot
2958-B (with an area of 3,588 sq.m.) belonging to Felix Baes. Thus, the petitioners claim that they
became the owners of the old bed (which was eventually filled up by soil excavated from Lot 2958-B)
by virtue of Article 461.
The petitioners rely heavily on Dr. Arturo M. Tolentino's interpretation of this Article, to wit:
This article (461) refers to a natural change in the course of a stream. If the
change of the course is due to works constructed by concessioners authorized by
the government, the concession may grant the abandoned river bed to the
concessioners. If there is no such grant, then, by analogy, the abandoned river
bed will belong to the owners of the land covered by the waters, as provided in
this article, without prejudice to a superior right of third persons with sufficient
title. (Citing 3 Manresa 251-252; 2 Navarro Amandi, 100-101; 3 Sanchez Roman
148)
We agree.
If the riparian owner is entitled to compensation for the damage to or loss of his property due to
natural causes, there is all the more reason to compensate him when the change in the course of the
river is effected through artificial means. The loss to the petitioners of the land covered by the canal
was the result of a deliberate act on the part of the government when it sought to improve the flow of
the Tripa de Gallina creek. It was therefore obligated to compensate the Baeses for their loss.
We find, however, that the petitioners have already been so compensated. Felix Baes was given Lot
3271-A in exchange for the affected Lot 2958-B through the Deed of Exchange of Real Property dated
June 20, 1970. This was a fair exchange because the two lots were of the same area and value and the
agreement was freely entered into by the parties. The petitioners cannot now claim additional
compensation because, as correctly observed by the Solicitor General,

. . . to allow petitioners to acquire ownership of the dried-up portion of the creek

would be a clear case of double compensation and unjust enrichment at the
expense of the state.

The exchange of lots between the petitioners and the Republic was the result of voluntary
negotiations. If these had failed, the government could still have taken Lot 2958-B under the power of
eminent domain, upon payment of just compensation, as the land was needed for a public purpose.

WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.
Republic of the Philippines
SUPREME COURT
Grio-Aquino, Bellosillo and Quiason, JJ., concur. Manila

SECOND DIVISION

G.R. No. L-43346 March 20, 1991

MARIO C. RONQUILLO, petitioner

vs.
THE COURT OF APPEALS, DIRECTOR OF LANDS, DEVELOPMENT BANK OF THE PHILIPPINES, ROSENDO DEL ROSARIO,
AMPARO DEL ROSARIO and FLORENCIA DEL ROSARIO, respondents.*

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

REGALADO, J.:

This petition seeks the review of the decision 1 rendered by respondent Court of Appeals on September 25, 1975 in
CA-G.R. No. 32479-R, entitled "Rosendo del Rosario, et al., Plaintiffs-Appellees, versus Mario Ronquillo, Defendant-
Appellant," affirming in toto the judgment of the trial court, and its amendatory resolution 2 dated January 28, 1976
the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, the decision of this Court dated September 25, 1975 is hereby amended in
the sense that the first part of the appealed decision is set aside, except the last portion "declaring the
plaintiffs to be the rightful owners of the dried-up portion of Estero Calubcub which is abutting plaintiffs'
property," which we affirm, without pronouncement as to costs.

SO ORDERED.
The following facts are culled from the decision of the Court of Appeals:
It appears that plaintiff Rosendo del Rosario was a registered owner of a parcel of land known as Lot 34,
Block 9, Sulucan Subdivision, situated at Sampaloc, Manila and covered by Transfer Certificate of Title No.
34797 of the Registry of Deeds of Manila (Exhibit "A"). The other plaintiffs Florencia and Amparo del
Rosario were daughters of said Rosendo del Rosario. Adjoining said lot is a dried-up portion of the old
Estero Calubcub occupied by the defendant since 1945 which is the subject matter of the present action.
Plaintiffs claim that long before the year 1930, when T.C.T. No. 34797 over Lot No. 34 was issued in the
name of Rosendo del Rosario, the latter had been in possession of said lot including the adjoining dried-
up portion of the old Estero Calubcub having bought the same from Arsenio Arzaga. Sometime in 1935,
said titled lot was occupied by Isabel Roldan with the tolerance and consent of the plaintiff on condition
that the former will make improvements on the adjoining dried-up portion of the Estero Calubcub. In the
early part of 1945 defendant occupied the eastern portion of said titled lot as well as the dried-up
portion of the old Estero Calubcub which abuts plaintiffs' titled lot. After a relocation survey of the land in
question sometime in 1960, plaintiffs learned that defendant was occupying a portion of their land and
thus demanded defendant to vacate said land when the latter refused to pay the reasonable rent for its
occupancy. However, despite said demand defendant refused to vacate.
Defendant on the other hand claims that sometime before 1945 he was living with his sister who was
then residing or renting plaintiffs' titled lot. In 1945 he built his house on the disputed dried-up portion of
the Estero Calubcub with a small portion thereof on the titled lot of plaintiffs. Later in 1961, said house
was destroyed by a fire which prompted him to rebuild the same. However, this time it was built only on
the called up portion of the old Estero Calubcub without touching any part of plaintiffs titled land. He
further claims that said dried-up portion is a land of public domain.3
Private respondents Rosendo, Amparo and Florencia, all surnamed del Rosario (Del Rosarios), lodged a complaint with
the Court of First Instance of Manila praying, among others, that they be declared the rightful owners of the dried-up
portion of Estero Calubcub. Petitioner Mario Ronquillo (Ronquillo) filed a motion to dismiss the complaint on the
ground that the trial court had no jurisdiction over the case since the dried-up portion of Estero Calubcub is public
land and, thus, subject to the disposition of the Director of Lands. The Del Rosarios opposed the motion arguing that
since they are claiming title to the dried-up portion of Estero Calubcub as riparian owners, the trial court has
jurisdiction. The resolution of the motion to dismiss was deferred until after trial on the merits.
Before trial, the parties submitted the following stipulation of facts:
1. That the plaintiffs are the registered owners of Lot 34, Block 9, Sulucan Subdivision covered by Transfer
Certificate of Title No. 34797;
2. That said property of the plaintiffs abuts and is adjacent to the dried-up river bed of Estero Calubcub
Sampaloc, Manila;
3. That defendant Mario Ronquillo has no property around the premises in question and is only claiming
the dried-up portion of the old Estero Calubcub, whereon before October 23, 1961, the larger portion of
his house was constructed;
4. That before October 23, 1961, a portion of defendant's house stands (sic) on the above-mentioned lot
belonging to the plaintiffs;
5. That the plaintiffs and defendant have both filed with the Bureau of Lands miscellaneous sales
application for the purchase of the abandoned river bed known as Estero Calubcub and their sales
applications, dated August 5, 1958 and October 13, 1959, respectively, are still pending action before the
Bureau of Lands;
6. That the parties hereby reserve their right to prove such facts as are necessary to support their case
but not covered by this stipulation of facts. 4
On December 26, 1962, the trial court rendered judgment the decretal portion of which provides:
WHEREFORE, judgment is hereby rendered ordering the defendant to deliver to the plaintiffs the portion
of the land covered by Transfer Certificate of title No. 34797 which is occupied by him and to pay for the
use and occupation of said portion of land at the rate of P 5.00 a month from the date of the filing of the
complaint until such time as he surrenders the same to the plaintiffs and declaring plaintiffs to be the
owners of the dried-up portion of estero Calubcub which is abutting plaintiffs' property.
With costs to the defendant.
SO ORDERED. 5
On appeal, respondent court, in affirming the aforequoted decision of the trial court, declared that since Estero
Calubcub had already dried-up way back in 1930 due to the natural change in the course of the waters, under Article
370 of the old Civil Code which it considers applicable to the present case, the abandoned river bed belongs to the Del
Rosarios as riparian owners. Consequently, respondent court opines, the dried-up river bed is private land and does
not form part of the land of the public domain. It stated further that "(e)ven assuming for the sake of argument that
said estero did not change its course but merely dried up or disappeared, said dried-up estero would still belong to
the riparian owner," citing its ruling in the case of Pinzon vs. Rama. 6
Upon motion of Ronquillo, respondent court modified its decision by setting aside the first portion of the trial court's
decision ordering Ronquillo to surrender to the Del Rosarios that portion of land covered by Transfer Certificate of
Title No. 34797 occupied by the former, based on the former's representation that he had already vacated the same
prior to the commencement of this case. However, respondent court upheld its declaration that the Del Rosarios are
the rightful owners of the dried-up river bed. Hence, this petition.
On May 17, 1976, this Court issued a resolution 7 requiring the Solicitor General to comment on the petition in behalf
of the Director of Lands as an indispensable party in representation of the Republic of the Philippines, and who, not
having been impleaded, was subsequently considered impleaded as such in our resolution of September 10, 1976. 8In
his Motion to Admit Comment, 9 the Solicitor General manifested that pursuant to a request made by this office with
the Bureau of Lands to conduct an investigation, the Chief of the Legal Division of the Bureau sent a communication
informing him that the records of his office "do not show that Mario Ronquillo, Rosendo del Rosario, Amparo del
Rosario or Florencia del Rosario has filed any public land application covering parcels of land situated at Estero
Calubcub Manila as verified by our Records Division.
The position taken by the Director of Lands in his Comment 10 filed on September 3, 1978, which was reiterated in the
Reply dated May 4, 1989 and again in the Comment dated August 17, 1989, explicates:
5. We do not see our way clear to subscribe to the ruling of the Honorable Court of Appeals on this point
for Article 370 of the Old Civil Code, insofar as ownership of abandoned river beds by the owners of
riparian lands are concerned, speaks only of a situation where such river beds were abandoned because
of a natural change in the course of the waters. Conversely, we submit that if the abandonment was for
some cause other than the natural change in the course of the waters, Article 370 is not applicable and
the abandoned bed does not lose its character as a property of public dominion not susceptible to
private ownership in accordance with Article 502 (No. 1) of the New Civil Code. In the present case, the
drying up of the bed, as contended by the petitioner, is clearly caused by human activity and undeniably
not because of the natural change of the course of the waters (Emphasis in the original text).
In his Comment 11 dated August 17, 1989, the Director of Lands further adds:
8. Petitioner herein and the private respondents, the del Rosarios, claim to have pending sales
application(s) over the portion of the dried up Estero Calubcub, as stated in pages 4-5, of the Amended
Petition.
9. However, as stated in the Reply dated May 4, 1989 of the Director of Lands, all sales application(s) have
been rejected by that office because of the objection interposed by the Manila City Engineer's Office that
they need the dried portion of the estero for drainage purposes.
10. Furthermore, petitioner and private respondents, the del Rosarios having filed said sales
application(s) are now estopped from claiming title to the Estero Calubcub (by possession for petitioner
and by accretion for respondents del Rosarios) because for (sic) they have acknowledged that they do not
own the land and that the same is a public land under the administration of the Bureau of Lands (Director
of Lands vs. Santiago, 160 SCRA 186, 194).
In a letter dated June 29, 1979 12 Florencia del Rosario manifested to this Court that Rosendo, Amparo and Casiano del
Rosario have all died, and that she is the only one still alive among the private respondents in this case.
In a resolution dated January 20, 1988, 13 the Court required petitioner Ronquillo to implead one Benjamin Diaz
pursuant to the former's manifestation 14 that the land adjacent to the dried up river bed has already been sold to the
latter, and the Solicitor General was also required to inquire into the status of the investigation being conducted by
the Bureau of Lands. In compliance therewith, the Solicitor General presented a letter from the Director of Lands to
the effect that neither of the parties involved in the present case has filed any public land application. 15
On April 3, 1989, petitioner filed an Amended Petition for Certiorari, 16 this time impleading the Development Bank of
the Philippines (DBP) which subsequently bought the property adjacent to the dried-up river bed from Benjamin Diaz.
In its resolution dated January 10, 1990, 17 the Court ordered that DBP be impleaded as a party respondent.
In a Comment 18 filed on May 9, 1990, DBP averred that "[c]onsidering the fact that the petitioner in this case
claims/asserts no right over the property sold to Diaz/DBP by the del Rosarios; and considering, on the contrary, that
Diaz and DBP claims/asserts (sic) no right (direct or indirect) over the property being claimed by Ronquillo (the dried-
up portion of Estero Calubcub), it follows, therefore, that the petitioner Ronquillo has no cause of action against Diaz
or DBP. A fortiori from the viewpoint of the classical definition of a cause of action, there is no legal justification to
implead DBP as one of the respondents in this petition." DBP thereafter prayed that it be dropped in the case as party
respondent.
On September 13, 1990, respondent DBP filed a Manifestation/Compliance 19 stating that DBP's interest over Transfer
Certificate of Title No. 139215 issued in its name (formerly Transfer Certificate of Title No. 34797 of the Del Rosarios
and Transfer Certificate of Title No. 135170 of Benjamin Diaz) has been transferred to Spouses Victoriano and Pacita A.
Tolentino pursuant to a Deed of Sale dated September 11, 1990.
Petitioner Ronquillo avers that respondent Court of Appeals committed an error of law and gross abuse of discretion,
acted arbitrarily and denied petitioner due process of law (a) when it declared private respondents Del Rosarios the
rightful owners of the dried-up portion of Estero Calubcub by unduly relying upon decisional law in the case of Pinzon
vs. Rama, ante, which case was decided entirely on a set of facts different from that obtaining in this case; and (b)
when it ignored the undisputed facts in the present case and declared the dried-up portion of Estero Calubcub as a
private property.
The main issue posed for resolution in this petition is whether the dried-up portion of Estero Calubcub being claimed
by herein petitioner was caused by a natural change in the course of the waters; and, corollary thereto, is the issue of
the applicability of Article 370 of the old Civil Code.
Respondent court, in affirming the findings of the trial court that there was a natural change in the course of Estero
Calubcub declared that:
The defendant claims that Article 370 of the old Civil Code is not applicable to the instant case because
said Estero Calubcub did not actually change its course but simply dried up, hence, the land in dispute is a
land of public domain and subject to the disposition of the Director of Land(s). The contention of
defendant is without merit. As mentioned earlier, said estero as shown by the relocation plan (Exhibit
"D") did not disappear but merely changed its course by a more southeasternly (sic) direction. As such,
"the abandoned river bed belongs to the plaintiffs-appellees and said land is private and not public in
nature. Hence, further, it is not subject to a Homestead Application by the appellant." (Fabian vs. Paculan
CA-G.R. Nos. 21062-63-64-R, Jan. 25 1962). Even assuming for the sake of argument that said estero did
not change its course but merely dried up or disappeared, said dried-up estero would still belong to the
riparian owner as held by this Court in the case of Pinzon vs. Rama (CA-G.R. No. 8389, Jan. 8, 1943; 2 O.G.
307). 20
Elementary is the rule that the jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals in a
petition for certiorari under Rule 45 of the Rules of Court is limited to the review of errors of law, and that said
appellate court's finding of fact is conclusive upon this Court. However, there are certain exceptions, such as (1) when
the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) when the inference made is
manifestly absurd, mistaken or impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4)
when the judgment is premised on a misapprehension of facts; (5) when the findings of fact are conflicting; and (6)
when the Court of Appeals in making its findings went beyond the issues of the case and the same is contrary to the
admissions of both appellant and
appellee. 21
A careful perusal of the evidence presented by both parties in the case at bar will reveal that the change in the course
of Estero Calubcub was caused, not by natural forces, but due to the dumping of garbage therein by the people of the
surrounding neighborhood. Under the circumstances, a review of the findings of fact of respondent court thus
becomes imperative.
Private respondent Florencia del Rosario, in her testimony, made a categorical statement which in effect admitted that Lastly, the fact that petitioner and herein private respondents filed their sales applications with the Bureau of Lands
Estero Calubcub changed its course because of the garbage dumped therein, by the inhabitants of the locality, thus: covering the subject dried-up portion of Estero Calubcub cannot but be deemed as outright admissions by them that
the same is public land. They are now estopped from claiming otherwise.

Q When more or less what (sic) the estero fully dried up?
WHEREFORE, the decision appealed from, the remaining effective portion of which declares private respondents Del
Rosarios as riparian owners of the dried-up portion of Estero Calubcub is hereby REVERSED and SET ASIDE.
A By 1960 it is (sic) already dried up except for a little rain that accumulates on the lot when it rains.

SO ORDERED.
Q How or why did the Estero Calubcub dried (sic) up?

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

A It has been the dumping place of the whole neighborhood. There is no street, they dumped all the
garbage there. It is the dumping place of the whole community, sir. 22

In addition, the relocation plan (Exhibit "D") which also formed the basis of respondent court's ruling, merely reflects
the change in the course of Estero Calubcub but it is not clear therefrom as to what actually brought about such
change. There is nothing in the testimony of lone witness Florencia del Rosario nor in said relocation plan which
would indicate that the change in the course of the estero was due to the ebb and flow of the waters. On the contrary,
the aforequoted testimony of the witness belies such fact, while the relocation plan is absolutely silent on the matter.
The inescapable conclusion is that the dried-up portion of Estero Calubcub was occasioned, not by a natural change in
the course of the waters, but through the active intervention of man.

The foregoing facts and circumstances remove the instant case from the applicability of Article 370 of the old Civil
Code which provides:

Art. 370. The beds of rivers, which are abandoned because of a natural change in the course of the
waters, belong to the owners of the riparian lands throughout the respective length of each. If the
abandoned bed divided tenements belonging to different owners the new dividing line shall be
equidistant from one and the other.

The law is clear and unambiguous. It leaves no room for interpretation.1wphi1 Article 370 applies only if there is a
natural change in the course of the waters. The rules on alluvion do not apply to man-made or artificial
accretions 23 nor to accretions to lands that adjoin canals or esteros or artificial drainage systems. 24 Considering our
earlier finding that the dried-up portion of Estero Calubcub was actually caused by the active intervention of man, it
follows that Article 370 does not apply to the case at bar and, hence, the Del Rosarios cannot be entitled thereto
supposedly as riparian owners.

The dried-up portion of Estero Calubcub should thus be considered as forming part of the land of the public domain
which cannot be subject to acquisition by private ownership. That such is the case is made more evident in the letter,
dated April 28, 1989, of the Chief, Legal Division of the Bureau of Lands 25 as reported in the Reply of respondent
Director of Lands stating that "the alleged application filed by Ronquillo no longer exists in its records as it must have
already been disposed of as a rejected application for the reason that other applications "covering Estero Calubcub
Sampaloc, Manila for areas other than that contested in the instant case, were all rejected by our office because of
the objection interposed by the City Engineer's office that they need the same land for drainage purposes".
Consequently, since the land is to be used for drainage purposes the same cannot be the subject of a miscellaneous
sales application.