Right of Accession (Arts.
440-475 NCC) While appellants admits that a cash dividend is an income, they contend that a stock
Concept/Definition
Kinds of Accession
1) Discreta (fruits)
Bachrach v Seifert; G.R. No. L-2659. October 12, 1950.
G.R. No. L-2659 October 12, 1950
In the matter of the testate estate of Emil Maurice Bachrach, deceased. MARY
McDONALD BACHRACH, petitioner-appellee,
vs.
SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-appellants.
Ross, Selph, Carrascoso and Janda for appellants.
Delgado and Flores for appellee.
OZAETA, J.:
Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or
part of the corpus of the estate, which pertains to the remainderman? That is the
question raised in the appeal.
The deceased E. M. Bachrach, who left no forced heir except his widow Mary
McDonald Bachrach, in his last will and testament made various legacies in cash and
willed the remainder of his estate as follows:
Sixth: It is my will and do herewith bequeath and devise to my beloved wife Mary
McDonald Bachrach for life all the fruits and usufruct of the remainder of all my estate
after payment of the legacies, bequests, and gifts provided for above; and she may
enjoy said usufruct and use or spend such fruits as she may in any manner wish.
The will further provided that upon the death of Mary McDonald Bachrach, one-half of
the all his estate "shall be divided share and share alike by and between my legal
heirs, to the exclusion of my brothers."
The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big
Wedge Mining Co., Inc., received from the latter 54,000 shares representing 50 per
cent stock dividend on the said 108,000 shares. On June 10, 1948, Mary McDonald
Bachrach, as usufructuary or life tenant of the estate, petitioned the lower court to
authorize the Peoples Bank and Trust Company as administrator of the estate of E.
M. Bachrach, to her the said 54,000 share of stock dividend by endorsing and
delivering to her the corresponding certificate of stock, claiming that said dividend,
although paid out in the form of stock, is fruit or income and therefore belonged to her
as usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the
deceased, opposed said petition on the ground that the stock dividend in question
was not income but formed part of the capital and therefore belonged not to the
usufructuary but to the remainderman. And they have appealed from the order
granting the petition and overruling their objection.
dividend is not, but merely represents an addition to the invested capital. The so-
called Massachusetts rule, which prevails in certain jurisdictions in the United States,
supports appellants' contention . It regards cash dividends, however large, as income,
and stock dividends, however made, as capital. (Minot vs. Paine, 99 Mass., 101; 96
Am. Dec., 705.) It holds that a stock dividend is not in any true sense any true sense
any dividend at all since it involves no division or severance from the corporate assets
of the dividend; that it does not distribute property but simply dilutes the shares as
they existed before; and that it takes nothing from the property of the corporation, and
nothing to the interests of the shareholders.
On the other hand, so called Pennsylvania rule, which prevails in various other
jurisdictions in the United States, supports appellee's contention. This rule declares
that all earnings of the corporation made prior to the death of the testator stockholder
belong to the corpus of the estate, and that all earnings, when declared as dividends
in whatever form, made during the lifetime of the usufructuary or life tenant. (Earp's
Appeal, 28 Pa., 368.)
. . . It is clear that testator intent the remaindermen should have only the corpus of the
estate he left in trust, and that all dividends should go the life tenants. It is true that
profits realized are not dividends until declared by the proper officials of the
corporation, but distribution of profits, however made, in dividends, and the form of
the distribution is immaterial. (In re Thompson's Estate, 262 Pa., 278; 105 Atl. 273,
274.)
In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the Court of Appeals of Kentucky,
speaking thru its Chief Justice, said:
. . . Where a dividend, although declared in stock, is based upon the earnings of the
company, it is in reality, whether called by one name or another, the income of the
capital invested in it. It is but a mode of distributing the profit. If it be not income, what
is it? If it is, then it is rightfully and equitably the property of the life tenant. If it be
really profit, then he should have it, whether paid in stock or money. A stock dividend
proper is the issue of new shares paid for by the transfer of a sum equal to their par
value from the profits and loss account to that representing capital stock; and really a
corporation has no right to a dividend, either in cash or stock, except from its
earnings; and a singular state of case it seems to us, an unreasonable one is
presented if the company, although it rests with it whether it will declare a dividend,
can bind the courts as to the proper ownership of it, and by the mode of payment
substitute its will for that of that of the testator, and favor the life tenants or the
remainder-men, as it may desire. It cannot, in reason, be considered that the testator
contemplated such a result. The law regards substance, and not form, and such a
rule might result not only in a violation of the testator's intention, but it would give the
power to the corporation to beggar the life tenants, who, in this case, are the wife and
children of the testator, for the benefit of the remainder-men, who may perhaps be
unknown to the testator, being unborn when the will was executed. We are unwilling
to adopt a rule which to us seems so arbitrary, and devoid of reason and justice. If the
dividend be in fact a profit, although declared in stock, it should be held to be income.
It has been so held in Pennsylvania and many other states, and we think it the correct
rule. Earp's Appeal, 28 Pa. St. 368; Cook, Stocks & S. sec. 554. . . .
We think the Pennsylvania rule is more in accord with our statutory laws than the
Massachusetts rule. Under section 16 of our Corporation Law, no corporation may
make or declare any dividend except from the surplus profits arising from its
business. Any dividend, therefore, whether cash or stock, represents surplus profits.
Article 471 of the Civil Code provides that the usufructuary shall be entitled to receive
all the natural, industrial, and civil fruits of the property in usufruct. And articles 474
and 475 provide as follows:
ART. 474. Civil fruits are deemed to accrue day by day, and belong to the
usufructuary in proportion to the time the usufruct may last.
ART. 475. When a usufruct is created on the right to receive an income or periodical
revenue, either in money or fruits, or the interest on bonds or securities payable to
bearer, each matured payment shall be considered as the proceeds or fruits such
right.
When it consists of the enjoyment of the benefits arising from an interest in an
industrial or commercial enterprise, the profits of which are not distributed at fixed
periods, such profits shall have the same consideration.lawphil.net
In either case they shall be distributed as civil fruits, and shall be applied in
accordance with the rules prescribed by the next preceding article.
The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares of
stock dividend are civil fruits of the original investment. They represent profits, and
the delivery of the certificate of stock covering said dividend is equivalent to the
payment of said profits. Said shares may be sold independently of the original shares,
just as the offspring of a domestic animal may be sold independently of its mother.
The order appealed from, being in accordance with the above-quoted provisions of
the Civil Code, his hereby affirmed, with costs against the appellants.
Bachrach Motor v Talisay-Silay; G.R. No. 35223. September 17,
1931.
[G.R. No. 35223. September 17, 1931.]
THE BACHRACH MOTOR CO., INC., Plaintiff-Appellee, v. TALISAY- SILAY
MILLING CO. ET AL., Defendants-Appellees. THE PHILIPPINE NATIONAL BANK,
Intervenor-Appellant.
Ramon J. Lacson for Intervenor-Appellant.
Mariano Ezpeleta for Plaintiff-Appellee.
Nolan & Hernaez for defendants-appellees Talisay-Silay Milling Co. and Cesar
Ledesma.
SYLLABUS
1. REAL PROPERTY; CIVIL FRUITS. The bonus which the Talisay-Silay Milling
Co., Inc., had to pay the planters who had mortgaged their lands to the Philippine
National Bank in order to secure the payment of the companys debt to the bank, is
not a civil fruit of the mortgaged property.
2. ID.; ID. Article 355 of the Civil Code considers three things as civil truths; (1)
rents from building, (2) proceeds from leases of lands, and (3) the income from
perpetual or life annuities or similar sources of revenue. The phrase "u otras
analogas" used (in the original Spanish, art. 355, last paragraph, Civil Code) in the
following context: "Y el importe de las rentas perpetuas, vitalicias u otras analogas,"
refers to "rentas," for the adjectives "otras" and "analogas" agree with the noun
"rentas," as do also the other adjectives "perpetuas" and "vitalicias."
DECISION
ROMUALDEZ, J.:
This proceeding originated in a complaint filed by the Bachrach Motor Co., Inc.
against the Talisay-Silay Milling Co., Inc., for the delivery of the amount of P13,850 or
promissory notes or other instruments of credit for that sum payable on June 30,
1930, as bonus in favor of Mariano Lacson Ledesma; the complaint further prays that
the sugar central be ordered to render an accounting of the amounts it owes Mariano
Lacson Ledesma by way of bonus, dividends, or otherwise, and to pay the plaintiff a
sum sufficient to satisfy the judgment mentioned in the complaint, and that the sale
made by said Mariano Lacson Ledesma be declared null and void.
The Philippine National Bank filed a third party claim alleging a preferential right to
receive any amount which Mariano Lacson Ledesma might be entitled to from the
Talisay-Silay Milling Co. as bonus, because that would be civil fruits of the land
mortgaged to said bank by said debtor for the benefit of the central referred to, and by
virtue of a deed on assignment, and praying that said central be ordered to deliver
directly to the intervening bank said sum on account of the latters credit against the
aforesaid Mariano Lacson Ledesma.
The corporation Talisay-Silay Milling Co., Inc., answered the complaint stating that of
Mariano Lacson Ledesmas credit, P7,500 belonged to Cesar Ledesma because he
had purchased it, and praying that it be absolved from the complaint and that the
proper party be named so that the remainder might be delivered.
Cesar Ledesma, in turn, claiming to be the owner by purchase in good faith and for a
consideration of the P7,500 which is a part of the credit referred to above, answered
praying that he be absolved from the complaint.
The plaintiff Bachrach Motor Co., Inc., answered the third party claim alleging that its
credit against Mariano Lacson Ledesma was prior and preferential to that of the
intervening bank, and praying that the latters complaints be dismissed.
At the trial all the parties agreed to recognize and respect the sale made in Favor of
Cesar Ledesma of the P7,500 part of the credit in question, for which reason the trial
court dismissed the complaint and cross-complaint against Cesar Ledesma
authorizing the defendant central to deliver to him the aforementioned sum of P7,500.
And upon conclusion of the hearing, the court held that the Bachrach Motor Co., Inc.,
had a preferred right to receive the amount of P11,076.02 which was Mariano Lacson
Ledesmas bonus, and it ordered the defendant central to deliver said sum to the
plaintiff.
The Philippine National Bank appeals, assigning the following alleged errors as
committed by the trial court:jgc:chanrobles.com.ph
"1. In holding that the bonus which the Talisay-Silay Milling Co., Inc., bound itself to
pay the planters who had mortgaged their land to the Philippine National Bank to
secure the payment of the debt of said central to said bank is not civil fruits of said
land.
"2. In not holding that said bonus became subject to the mortgage executed by the
defendant Mariano Lacson Ledesma to the Philippine National Bank to secure the
payment of his personal debt to said bank when it fell due.
"3. In holding that the assignment (Exhibit 9, P. N. B.) of said bonus made on March
7, 1930, by Mariano Lacson Ledesma to the Philippine National Bank to be applied to
the payment of his debt to said Philippine National Bank is fraudulent.
"4. In holding that the Bachrach Motor Co., Inc., in civil case No. 31597 of the Court of
First Instance of Manila levied a valid attachment upon the bonus in question.
"5. In admitting and considering the supplementary complaint filed by the Bachrach
Motor Co., Inc., alleging as a cause of action the attachment of the bonus in question
which said Bachrach Motor Co., Inc., in civil case No. 31821 of the Court of First
Instance of Manila levied after the filing of the original complaint in this case, and after
Mariano Lacson Ledesma in this case had been declared in default.
"6. In holding that the Bachrach Motor Co., Inc., has a preferential right to receive
from the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 which is in the
possession of said corporation as the bonus to be paid to Mariano Lacson Ledesma,
and in ordering the Talisay-Silay Milling Co., Inc., to deliver said amount to the
Bachrach Motor Co., Inc.
"7. In not holding that the Philippine National Bank has a preferential right to receive
from the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 held by said
corporation as Mariano Lacson Ledesmas bonus, and in not ordering said Talisay-
Silay Milling Co., Inc., to deliver said amount to the Philippine National Bank.
"8. In not holding that the amended complaint and the supplementary complaint of the
Bachrach Motor Co., Inc., do not state facts sufficient to constitute a cause of action
in favor of the Bachrach Motor Co., Inc., and against the Talisay-Silay Milling Co.,
Inc., or against the Philippine National Bank."cralaw virtua1aw library
The appellant bank bases its preferential right upon the contention that the bonus in
question is civil fruits of the land which the owners had mortgaged for the benefit of
the central giving the bonus, and that, a civil fruits of said land, said bonus was
assigned by Mariano Lacson Ledesma on March 7, 1930, by virtue of the document
Exhibit 9 of said intervening institution, which admitted in its brief that "if the bonus in
question is not civil fruits or rent which became subject to the mortgage in favor of the
Philippine National Bank when Mariano Lacson Ledesmas personal obligation fell
due, the assignment of March 7, 1930 (Exhibit 9, P. N. B.) , is null and void, not
because it is fraudulent, for there was no intent of fraud in executing the deed, that
the cause or consideration of the assignment was erroneous, for it was based upon
the proposition that the bonus was civil fruits of the land mortgaged to the Philippine
National Bank." (P. 31.)
The fundamental question, then, submitted to our consideration is whether or not the
bonus in question is civil fruits.
This is how that bonus came to be granted: On December 22, 1923, the Talisay-Silay
Milling Co., Inc., was indebted to the Philippine National Bank. To secure the payment
of its debt, it succeeded in inducing its planters, among whom was Mariano Lacson
Ledesma, to mortgage their land to the creditor bank. And in order to compensate
those planters for the risk they were running with their property under that mortgage,
the aforesaid central, by a resolution passed on that same date, i.e., December 22,
1923, and amended on March 23, 1928, undertook to credit the owners of the
plantation thus mortgaged every year with a sum equal to two per centum of the debt
secured according to the yearly balance, the payment of the bonus being made at
once, or in part from time to time, as soon as the central became free of its
obligations to the aforesaid bank, and of those contracted by virtue of the contract of
supervision, and had funds which might be so used, or as soon as it obtained from
said bank authority to make such payment. (Exhibits 5, 6; P. N. B.)
Article 355 of the Civil Code considers three things as civil fruits: First, the rents of
buildings; second, the proceeds from leases of lands; and, third, the income from
perpetual or life annuities, or other similar sources of revenue. It may be noted that
according to the context of the law, the phrase "u otras analogas" refers only to rents
or income, for the adjectives "otras" and "analogas" agree with the noun "rentas," as
do also the other adjectives "perpetuas" and "vitalicias." That is why we say that by
"civil fruits" the Civil Code understands one of three and only three things, to wit: the
rent of a building, the rent of land, and certain kinds of income. As the bonus in
question is not the rent of a building or of land, the only meaning of "civil fruits" left to
be examined is that of "income."cralaw virtua1aw library
Assuming that in the broad juridical sense of the word "income" it might be said that
the bonus in question is "income" under article 355 of the Civil Code, it is obvious to
inquire whether it is derived from the land mortgaged by Mariano Lacson Ledesma to
the appellant bank for the benefit of the central; for if it is not obtained from that land
but from something else, it is not civil fruits of that land, and the banks contention is
untenable.
It is to be noted that the said bonus bears no immediate, but only a remote and
accidental relation to the land mentioned, having been granted as compensation for
the risk of having subjected ones land to a lien in favor of the bank, for the benefit of
the entity granting said bonus. If this bonus be income or civil fruits of anything, it is
income arising from said risk, or, if one chooses, from Mariano Lacson Ledesmas
generosity in facing the danger for the protection of the central, but certainly it is not
civil fruits or income from the mortgaged property, which, as far as this case is
concerned, has nothing to do with it. Hence, the amount of the bonus, according to
the resolution of the central granting it, is not based upon the value, importance or
any other circumstance of the mortgaged property, but upon the total value of the
debt thereby secured, according to the annual balance, which is something quite
distinct from and independent of the property referred to.
Finding no merit in this appeal, the judgment appealed from is affirmed, without
express finding as to costs. So ordered.
Equatorial v Mayfair; G.R. No. 133879. November 21, 2001.
G.R. No. 133879 November 21, 2001
EQUATORIAL REALTY DEVELOPMENT, INC., petitioner,
vs.
MAYFAIR THEATER, INC., respondent.
PANGANIBAN, J.:
General propositions do not decide specific cases. Rather, laws are interpreted in the
context of the peculiar factual situation of each proceeding. Each case has its own
flesh and blood and cannot be ruled upon on the basis of isolated clinical classroom
principles.
While we agree with the general proposition that a contract of sale is valid until
rescinded, it is equally true that ownership of the thing sold is not acquired by mere
agreement, but by tradition or delivery. The peculiar facts of the present controversy
as found by this Court in an earlier relevant Decision show that delivery was not
actually effected; in fact, it was prevented by a legally effective impediment. Not
having been the owner, petitioner cannot be entitled to the civil fruits of ownership like
rentals of the thing sold. Furthermore, petitioner's bad faith, as again demonstrated by
the specific factual milieu of said Decision, bars the grant of such benefits. Otherwise,
bad faith would be rewarded instead of punished.
The Case
Filed before this Court is a Petition for Review1 under Rule 45 of the Rules of Court,
challenging the March 11, 1998 Order2 of the Regional Trial Court of Manila (RTC),
Branch 8, in Civil Case No. 97-85141. The dispositive portion of the assailed Order
reads as follows:
"WHEREFORE, the motion to dismiss filed by defendant Mayfair is hereby
GRANTED, and the complaint filed by plaintiff Equatorial is hereby DISMISSED."3
Also questioned is the May 29, 1998 RTC Order4 denying petitioner's Motion for
Reconsideration.
The Facts
The main factual antecedents of the present Petition are matters of record, because it
arose out of an earlier case decided by this Court on November 21, 1996, entitled
Equatorial Realty Development, Inc. v. Mayfair Theater, Inc.5 (henceforth referred to
as the "mother case"), docketed as G.R No. 106063.
Carmelo & Bauermann, Inc. ("Camelo" ) used to own a parcel of land, together with
two 2-storey buildings constructed thereon, located at Claro M. Recto Avenue,
Manila, and covered by TCT No. 18529 issued in its name by the Register of Deeds
of Manila.
On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc.
("Mayfair") for a period of 20 years. The lease covered a portion of the second floor
and mezzanine of a two-storey building with about 1,610 square meters of floor area,
which respondent used as a movie house known as Maxim Theater.
Two years later, on March 31, 1969, Mayfair entered into a second Contract of Lease
with Carmelo for the lease of another portion of the latter's property namely, a part
of the second floor of the two-storey building, with a floor area of about 1,064 square
meters; and two store spaces on the ground floor and the mezzanine, with a
combined floor area of about 300 square meters. In that space, Mayfair put up
another movie house known as Miramar Theater. The Contract of Lease was likewise
for a period of 20 years.
Both leases contained a provision granting Mayfair a right of first refusal to purchase
the subject properties. However, on July 30, 1978 within the 20-year-lease term
the subject properties were sold by Carmelo to Equatorial Realty Development, Inc.
("Equatorial") for the total sum of P11,300,000, without their first being offered to
Mayfair.
As a result of the sale of the subject properties to Equatorial, Mayfair filed a
Complaint before the Regional Trial Court of Manila (Branch 7) for (a) the annulment
of the Deed of Absolute Sale between Carmelo and Equatorial, (b) specific
performance, and (c) damages. After trial on the merits, the lower court rendered a
Decision in favor of Carmelo and Equatorial. This case, entitled "Mayfair" Theater,
Inc. v. Carmelo and Bauermann, Inc., et al.," was docketed as Civil Case No. 118019.
On appeal (docketed as CA-GR CV No. 32918), the Court of Appeals (CA)
completely reversed and set aside the judgment of the lower court.
The controversy reached this Court via G.R No. 106063. In this mother case, it
denied the Petition for Review in this wise:
"WHEREFORE, the petition for review of the decision of the Court of Appeals, dated
June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of
Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo
& Bauermann, Inc. is hereby deemed rescinded; Carmelo & Bauermann is ordered to
return to petitioner Equatorial Realty Development the purchase price. The latter is
directed to execute the deeds and documents necessary to return ownership to
Carmelo & Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow
Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00."6
The foregoing Decision of this Court became final and executory on March 17, 1997.
On April 25, 1997, Mayfair filed a Motion for Execution, which the trial court granted.
However, Carmelo could no longer be located. Thus, following the order of execution
of the trial court, Mayfair deposited with the clerk of court a quo its payment to
Carmelo in the sum of P11,300,000 less; P847,000 as withholding tax. The lower
court issued a Deed of Reconveyance in favor of Carmelo and a Deed of Sale in
favor of Mayfair. On the basis of these documents, the Registry of Deeds of Manila
canceled Equatorial's titles and issued new Certificates of Title7 in the name of
Mayfair.
Ruling on Equatorial's Petition for Certiorari and Petition contesting the foregoing
manner of execution, the CA in its Resolution of November 20, 1998, explained that
Mayfair had no right to deduct the P847,000 as withholding tax. Since Carmelo could
no longer be located, the appellate court ordered Mayfair to deposit the said sum with
the Office of the Clerk of Court, Manila, to complete the full amount of P11,300,000 to
be turned over to Equatorial.
Equatorial questioned the legality of the above CA ruling before this Court in G.R No.
136221 entitled "Equatorial Realty Development, Inc. v. Mayfair Theater, Inc." In a
Decision promulgated on May 12, 2000,8 this Court directed the trial court to follow
strictly the Decision in GR. No. 106063, the mother case. It explained its ruling in
these words:
"We agree that Carmelo and Bauermann is obliged to return the entire amount of
eleven million three hundred thousand pesos (P11,300,000.00) to Equatorial. On the
other hand, Mayfair may not deduct from the purchase price the amount of eight
hundred forty-seven thousand pesos (P847,000.00) as withholding tax. The duty to
withhold taxes due, if any, is imposed on the seller Carmelo and Bauermann, Inc."9
Meanwhile, on September 18, 1997 barely five months after Mayfair had submitted
its Motion for Execution before the RTC of Manila, Branch 7 Equatorial filed with
the Regional Trial Court of Manila, Branch 8, an action for the collection of a sum of
money against Mayfair, claiming payment of rentals or reasonable compensation for
the defendant's use of the subject premises after its lease contracts had expired. This
action was the progenitor of the present case.
In its Complaint, Equatorial alleged among other things that the Lease Contract
covering the premises occupied by Maxim Theater expired on May 31, 1987, while
the Lease Contract covering the premises occupied by Miramar Theater lapsed on
March 31, 1989.10 Representing itself as the owner of the subject premises by
reason of the Contract of Sale on July 30, 1978, it claimed rentals arising from
Mayfair's occupation thereof.
Ruling of the RTC Manila, Branch 8
As earlier stated, the trial court dismissed the Complaint via the herein assailed Order
and denied the Motion for Reconsideration filed by Equatorial.11
The lower court debunked the claim of petitioner for unpaid back rentals, holding that
the rescission of the Deed of Absolute Sale in the mother case did not confer on
Equatorial any vested or residual proprietary rights, even in expectancy.
In granting the Motion to Dismiss, the court a quo held that the critical issue was
whether Equatorial was the owner of the subject property and could thus enjoy the
fruits or rentals therefrom. It declared the rescinded Deed of Absolute Sale as avoid
at its inception as though it did not happen."
The trial court ratiocinated as follows:
"The meaning of rescind in the aforequoted decision is to set aside. In the case of
Ocampo v. Court of Appeals, G.R. No. 97442, June 30, 1994, the Supreme Court
held that, 'to rescind is to declare a contract void in its inception and to put an end as
though it never were. It is not merely to terminate it and release parties from further
obligations to each other but to abrogate it from the beginning and restore parties to
relative positions which they would have occupied had no contract ever been made.'
"Relative to the foregoing definition, the Deed of Absolute Sale between Equatorial
and Carmelo dated July 31, 1978 is void at its inception as though it did not happen.
"The argument of Equatorial that this complaint for back rentals as 'reasonable
compensation for use of the subject property after expiration of the lease contracts
presumes that the Deed of Absolute Sale dated July 30, 1978 from whence the
fountain of Equatorial's all rights flows is still valid and existing.
xxx xxx xxx
"The subject Deed of Absolute Sale having been rescinded by the Supreme Court,
Equatorial is not the owner and does not have any right to demand backrentals from
the subject property. . .12
The trial court added: "The Supreme Court in the Equatorial case, G.R No. 106063,
has categorically stated that the Deed of Absolute Sale dated July 31, 1978 has been
rescinded subjecting the present complaint to res judicata."13
Hence, the present recourse.14
Issues
Petitioner submits, for the consideration of this Court, the following issues:15
"A
The basis of the dismissal of the Complaint by the Regional Trial Court not only
disregards basic concepts and principles in the law on contracts and in civil law,
especially those on rescission and its corresponding legal effects, but also ignores the
dispositive portion of the Decision of the Supreme Court in G.R. No. 106063 entitled
'Equatorial Realty Development, Inc. & Carmelo & Bauermann, Inc. vs. Mayfair
Theater, Inc.'
"B.
The Regional Trial Court erred in holding that the Deed of Absolute Sale in favor of
petitioner by Carmelo & Bauermann, Inc., dated July 31, 1978, over the premises
used and occupied by respondent, having been 'deemed rescinded' by the Supreme
Court in G.R. No. 106063, is 'void at its inception as though it did not happen.'
"C.
The Regional Trial Court likewise erred in holding that the aforesaid Deed of Absolute
Sale, dated July 31, 1978, having been 'deemed rescinded' by the Supreme Court in
G.R. No. 106063, petitioner 'is not the owner and does not have any right to demand
backrentals from the subject property,' and that the rescission of the Deed of Absolute
Sale by the Supreme Court does not confer to petitioner 'any vested right nor any
residual proprietary rights even in expectancy.'
"D.
The issue upon which the Regional Trial Court dismissed the civil case, as stated in
its Order of March 11, 1998, was not raised by respondent in its Motion to Dismiss.
"E.
The sole ground upon which the Regional Trial Court dismissed Civil Case No. 97-
85141 is not one of the grounds of a Motion to Dismiss under Sec. 1 of Rule 16 of the
1997 Rules of Civil Procedure."
Basically, the issues can be summarized into two: (1) the substantive issue of
whether Equatorial is entitled to back rentals; and (2) the procedural issue of whether
the court a quo's dismissal of Civil Case No. 97-85141 was based on one of the
grounds raised by respondent in its Motion to Dismiss and covered by Rule 16 of the
Rules of Court.
This Court's Ruling
The Petition is not meritorious.
First Issue:
Ownership of Subject Properties
We hold that under the peculiar facts and circumstances of the case at bar, as found
by this Court en banc in its Decision promulgated in 1996 in the mother case, no right
of ownership was transferred from Carmelo to Equatorial in view of a patent failure to
deliver the property to the buyer.
Rental a Civil
Fruit of Ownership
To better understand the peculiarity of the instant case, let us begin with some basic
parameters. Rent is a civil fruit16 that belongs to the owner of the property producing
it17 by right of accession.18 Consequently and ordinarily, the rentals that fell due
from the time of the perfection of the sale to petitioner until its rescission by final
judgment should belong to the owner of the property during that period.
By a contract of sale, "one of the contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the other to pay therefor a price
certain in money or its equivalent."19
Ownership of the thing sold is a real right,20 which the buyer acquires only upon
delivery of the thing to him "in any of the ways specified in articles 1497 to 1501, or in
any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee."21 This right is transferred, not merely by contract, but also by
tradition or delivery.22 Non nudis pactis sed traditione dominia rerum transferantur.
And there is said to be delivery if and when the thing sold "is placed in the control and
possession of the vendee."23 Thus, it has been held that while the execution of a
public instrument of sale is recognized by law as equivalent to the delivery of the thing
sold,24 such constructive or symbolic delivery, being merely presumptive, is deemed
negated by the failure of the vendee to take actual possession of the land sold.25
Delivery has been described as a composite act, a thing in which both parties must
join and the minds of both parties concur. It is an act by which one party parts with the
title to and the possession of the property, and the other acquires the right to and the
possession of the same. In its natural sense, delivery means something in addition to
the delivery of property or title; it means transfer of possession.26 In the Law on
Sales, delivery may be either actual or constructive, but both forms of delivery
contemplate "the absolute giving up of the control and custody of the property on the
part of the vendor, and the assumption of the same by the vendee."27
Possession Never
Acquired by Petitioner
Let us now apply the foregoing discussion to the present issue. From the peculiar
facts of this case, it is clear that petitioner never took actual control and possession of
the property sold, in view of respondent's timely objection to the sale and the
continued actual possession of the property. The objection took the form of a court
action impugning the sale which, as we know, was rescinded by a judgment rendered
by this Court in the mother case. It has been held that the execution of a contract of
sale as a form of constructive delivery is a legal fiction. It holds true only when there is
no impediment that may prevent the passing of the property from the hands of the
vendor into those of the vendee.28 When there is such impediment, "fiction yields to
reality the delivery has not been effected."29
Hence, respondent's opposition to the transfer of the property by way of sale to
Equatorial was a legally sufficient impediment that effectively prevented the passing
of the property into the latter's hands.
This was the same impediment contemplated in Vda. de Sarmiento v. Lesaca,30 in
which the Court held as follows:
"The question that now arises is: Is there any stipulation in the sale in question from
which we can infer that the vendor did not intend to deliver outright the possession of
the lands to the vendee? We find none. On the contrary, it can be clearly seen therein
that the vendor intended to place the vendee in actual possession of the lands
immediately as can be inferred from the stipulation that the vendee 'takes actual
possession thereof . . . with full rights to dispose, enjoy and make use thereof in such
manner and form as would be most advantageous to herself.' The possession
referred to in the contract evidently refers to actual possession and not merely
symbolical inferable from the mere execution of the document.
"Has the vendor complied with this express commitment? she did not. As provided in
Article 1462, the thing sold shall be deemed delivered when the vendee is placed in
the control and possession thereof, which situation does not here obtain because
from the execution of the sale up to the present the vendee was never able to take
possession of the lands due to the insistent refusal of Martin Deloso to surrender
them claiming ownership thereof. And although it is postulated in the same article that
the execution of a public document is equivalent to delivery, this legal fiction only
holds true when there is no impediment that may prevent the passing of the property
from the hands of the vendor into those of the vendee. x x x."31
The execution of a public instrument gives rise, therefore, only to a prima facie
presumption of delivery. Such presumption is destroyed when the instrument itself
expresses or implies that delivery was not intended; or when by other means it is
shown that such delivery was not effected, because a third person was actually in
possession of the thing. In the latter case, the sale cannot be considered
consummated.
However, the point may be raised that under Article 1164 of the Civil Code, Equatorial
as buyer acquired a right to the fruits of the thing sold from the time the obligation to
deliver the property to petitioner arose.32 That time arose upon the perfection of the
Contract of Sale on July 30, 1978, from which moment the laws provide that the
parties to a sale may reciprocally demand performance.33 Does this mean that
despite the judgment rescinding the sale, the right to the fruits34 belonged to, and
remained enforceable by, Equatorial?
Article 1385 of the Civil Code answers this question in the negative, because
"[r]escission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest; x x x" Not only the
land and building sold, but also the rental payments paid, if any, had to be returned by
the buyer.
Another point. The Decision in the mother case stated that "Equatorial x x x has
received rents" from Mayfair "during all the years that this controversy has been
litigated." The Separate Opinion of Justice Teodoro Padilla in the mother case also
said that Equatorial was "deriving rental income" from the disputed property. Even
herein ponente's Separate Concurring Opinion in the mother case recognized these
rentals. The question now is: Do all these statements concede actual delivery?
The answer is "No." The fact that Mayfair paid rentals to Equatorial during the
litigation should not be interpreted to mean either actual delivery or ipso facto
recognition of Equatorial's title.
The CA Records of the mother case 35 show that Equatorial as alleged buyer of
the disputed properties and as alleged successor-in-interest of Carmelo's rights as
lessor submitted two ejectment suits against Mayfair. Filed in the Metropolitan Trial
Court of Manila, the first was docketed as Civil Case No. 121570 on July 9, 1987; and
the second, as Civil Case No. 131944 on May 28, 1990. Mayfair eventually won them
both. However, to be able to maintain physical possession of the premises while
awaiting the outcome of the mother case, it had no choice but to pay the rentals.
The rental payments made by Mayfair should not be construed as a recognition of
Equatorial as the new owner. They were made merely to avoid imminent eviction. It is
in this context that one should understand the aforequoted factual statements in the
ponencia in the mother case, as well as the Separate Opinion of Mr. Justice Padilla
and the Separate Concurring Opinion of the herein ponente.
At bottom, it may be conceded that, theoretically, a rescissible contract is valid until
rescinded. However, this general principle is not decisive to the issue of whether
Equatorial ever acquired the right to collect rentals. What is decisive is the civil law
rule that ownership is acquired, not by mere agreement, but by tradition or delivery.
Under the factual environment of this controversy as found by this Court in the mother
case, Equatorial was never put in actual and effective control or possession of the
property because of Mayfair's timely objection.
As pointed out by Justice Holmes, general propositions do not decide specific cases.
Rather, "laws are interpreted in the context of the peculiar factual situation of each
case. Each case has its own flesh and blood and cannot be decided on the basis of
isolated clinical classroom principles."36
In short, the sale to Equatorial may have been valid from inception, but it was
judicially rescinded before it could be consummated. Petitioner never acquired
ownership, not because the sale was void, as erroneously claimed by the trial court,
but because the sale was not consummated by a legally effective delivery of the
property sold.
Benefits Precluded by
Petitioner's Bad Faith
Furthermore, assuming for the sake of argument that there was valid delivery,
petitioner is not entitled to any benefits from the "rescinded" Deed of Absolute Sale
because of its bad faith. This being the law of the mother case decided in 1996, it
may no longer be changed because it has long become final and executory.
Petitioner's bad faith is set forth in the following pertinent portions of the mother case:
"First and foremost is that the petitioners acted in bad faith to render Paragraph 8
'inutile.'
xxx xxx xxx
"Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the
property in question rescissible. We agree with respondent Appellate Court that the
records bear out the fact that Equatorial was aware of the lease contracts because its
lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot
tenably claim to be a purchaser in good faith, and, therefore, rescission lies.
xxx xxx xxx
"As also earlier emphasized, the contract of sale between Equatorial and Carmelo is
characterized by bad faith, since it was knowingly entered into in violation of the rights
of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of
Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to
the sale. Equatorial's knowledge of the stipulations therein should have cautioned it to
look further into the agreement to determine if it involved stipulations that would
prejudice its own interests.
xxx xxx xxx
"On the part of Equatorial, it cannot be a buyer in good faith because it bought the
property with notice and full knowledge that Mayfair had a right to or interest in the
property superior to its own. Carmelo and Equatorial took unconscientious advantage
of Mayfair."37 (Italics supplied)
Thus, petitioner was and still is entitled solely to he return of the purchase price it paid
to Carmelo; no more, no less. This Court has firmly ruled in the mother case that
neither of them is entitled to any consideration of equity, as both "took
unconscientious advantage of Mayfair."38
In the mother case, this Court categorically denied the payment of interest, a fruit of
ownership. By the same token, rentals, another fruit of ownership, cannot be granted
without mocking this Court's en banc Decision, which has long become final.
Petitioner's claim of reasonable compensation for respondent's use and occupation of
the subject property from the time the lease expired cannot be countenanced. If it
suffered any loss, petitioner must bear it in silence, since it had wrought that loss
upon itself. Otherwise, bad faith would be rewarded instead of punished.@lawphil.net
We uphold the trial court's disposition, not for the reason it gave, but for (a) the patent
failure to deliver the property and (b) petitioner's bad faith, as above discussed.
Second Issue:itc-alf
Ground in Motion to Dismiss
Procedurally, petitioner claims that the trial court deviated from the accepted and
usual course of judicial proceedings when it dismissed Civil Case No. 97-85141 on a
ground not raised in respondent's Motion to Dismiss. Worse, it allegedly based its
dismissal on a ground not provided for in a motion to dismiss as enunciated in the
Rules of Court.@lawphil.net
We are not convinced A review of respondent's Motion to Dismiss Civil Case No. 97-
85141 shows that there were two grounds invoked, as follows:
"(A)
Plaintiff is guilty of forum-shopping.itc-alf
"(B)
Plaintiff's cause of action, if any, is barred by prior judgment."39
The court a quo ruled, inter alia, that the cause of action of petitioner plaintiff in the
case below) had been barred by a prior judgment of this Court in G.R No. 106063, the
mother case.
Although it erred in its interpretation of the said Decision when it argued that the
rescinded Deed of Absolute Sale was avoid," we hold, nonetheless, that petitioner's
cause of action is indeed barred by a prior judgment of this Court. As already
discussed, our Decision in G.R No. 106063 shows that petitioner is not entitled to
back rentals, because it never became the owner of the disputed properties due to a
failure of delivery. And even assuming arguendo that there was a valid delivery,
petitioner's bad faith negates its entitlement to the civil fruits of ownership, like interest
and rentals.
Under the doctrine of res judicata or bar by prior judgment, a matter that has been
adjudicated by a court of competent jurisdiction must be deemed to have been finally
and conclusively settled if it arises in any subsequent litigation between the same
parties and for the same cause.40 Thus, "[a] final judgment on the merits rendered by
a court of competent jurisdiction is conclusive as to the rights of the parties and their
privies and constitutes an absolute bar to subsequent actions involving the same
claim, demand, or cause of action."41 Res judicata is based on the ground that the
"party to be affected, or some other with whom he is in privity, has litigated the same
matter in a former action in a court of competent jurisdiction, and should not be
permitted to litigate it again.42
It frees the parties from undergoing all over again the rigors of unnecessary suits and
repetitive trials. At the same time, it prevents the clogging of court dockets. Equally
important, it stabilizes rights and promotes the rule of law.@lawphil.net
We find no need to repeat the foregoing disquisitions on the first issue to show
satisfaction of the elements of res judicata. Suffice it to say that, clearly, our ruling in
the mother case bars petitioner from claiming back rentals from respondent. Although
the court a quo erred when it declared "void from inception" the Deed of Absolute
Sale between Carmelo and petitioner, our foregoing discussion supports the grant of
the Motion to Dismiss on the ground that our prior judgment in G.R No. 106063 has
already resolved the issue of back rentals.
On the basis of the evidence presented during the hearing of Mayfair's Motion to
Dismiss, the trial court found that the issue of ownership of the subject property has
been decided by this Court in favor of Mayfair. We quote the RTC:
"The Supreme Court in the Equatorial case, G.R. No. 106063 has categorically stated
that the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting
the present complaint to res judicata."43 (Emphasis in the original)
Hence, the trial court decided the Motion to Dismiss on the basis of res judicata, even
if it erred in interpreting the meaning of "rescinded" as equivalent to "void" In short, it
ruled on the ground raised; namely, bar by prior judgment. By granting the Motion, it
disposed correctly, even if its legal reason for nullifying the sale was wrong. The
correct reasons are given in this Decision.
WHEREFORE, the Petition is hereby DENIED. Costs against petitioner.itc-alf
SO ORDERED.
2) Continua.
a) Over immovables.
i) Artificial/industrial BPS
Bernardo v Bataclan; G.R. No. 44606. November 28,
1938.
[G.R. No. 44606. November 28, 1938.]
VICENTE STO. DOMINGO BERNARDO, Plaintiff-Appellant, v. CATALINO
BATACLAN, Defendant-Appellant. TORIBIO TEODORO, purchaser-appellee.
Pedro de Leon,, for Plaintiff-Appellant.
Angel H. Mojica and Francisco Lavides,, for Defendant-Appellant.
Jose Y. Garde, for Appellee.
SYLLABUS
1. OWNERSHIP; ACCESSION; LAND AND IMPROVEMENTS. The Civil Code
confirms certain time-honored principles of the law of property. One of these is the
principle of accession whereby the owner of property acquires not only that which it
produces but that which is united to it either naturally or artificially. Whatever is built,
planted or sown on the land of another, and the improvements or repairs made
thereon, belong to the owner of the land. Where, however, the planter, builder, or
sewer has acted in good faith, a conflict of rights arises between the owners and it
becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land.
2. ID.; ID.; ID.; OPTION GRANTED TO OWNER OF LAND. In view of the
impracticability of creating what Manresa calls a state of "forced coownership" (vol. 3,
4th ed., p. 213), the law has provided a just and equitable solution by giving the
owner of the land the option to acquire the improvements after payment of the proper
indemnity or to oblige the builder or planter to pay for the land and the sewer to pay
the proper rent. It is the owner of the land who is allowed to exercise the option
because his right is older and because, by the principle of accession, he is entitled to
the ownership of the accessory thing. The plaintiff, as owner of the land, chose to
require the defendant, as owner of the improvements, to pay for the land. When the
latter failed to pay for the land, he lost his right of retention.
DECISION
LAUREL, J.:
This is an appeal taken by both the plaintiff and the defendant from the order of
September 26, 1935, hereinbelow referred to, of the Court of First Instance of Cavite
in Civil Case No. 2428.
There is no controversy as to the facts. By a contract of sale executed on July 17,
1920, the plaintiff herein acquired from Pastor Samonte and others ownership of the
parcel of land of about 90 hectares situated in sitio Balayunan, Silang Cavite. To
secure possession of the land from the vendors the said plaintiff, on July 20, 1929,
instituted Civil Case No. 1935 in the Court of First Instance of Cavite. The trial court
found for the plaintiff in a decision which was affirmed by this Supreme Court on
appeal (G. R. No. 33017). 1 When plaintiff entered upon the premises, however, he
found the defendant herein, Catalino Bataclan, who appears to have been authorized
by former owners, as far back as 1922, to clear the land and make improvements
thereon, As Bataclan, who appears to have been authorized by former owners, as far
bank as 1922, to clear the land and make improvements thereon. As Bataclan was
not a party in Case No. 1935, plaintiff, on June 11, 1931, instituted against him, in the
Court of First Instance of Cavite, Civil Case No. 2428. In this case, plaintiff was
declared owner but the defendant was held to be possessor in good faith, entitled to
reimbursement in the total sum of P1,642, for work done and improvements made.
The dispositive part of the decision reads:jgc:chanrobles.com.ph
"Por las consideraciones expuestas, se declara al demandante Vicente Santo
Domingo Bernardo dueo con derecho a la posesion del terreno que se describe en
la demanda, y al demandado Catalino Bataclan con derecho a que el demandante le
pague la suma de P1,642 por gastos utiles hechos de buena fe en el terreno, y por el
cerco y ponos de coco y abaca existentes en el mismo, y con derecho, ademas a
retener la posesion del terreno hasta que se le pague dicha cantidad. Al demandante
puede optar, en el plazo de treinta dias, a partir de la fecha en que fuere notificado de
la presente, por pagar esa suma al demandado, haciendo asi suyos el cerco y todas
las plantaciones existentes en el terreno, a razon de trescientos pesos la hectarea.
En el caso de que el demandante optara por que el demandado le pagara el precio
del terreno, el demandado efectuara el pago en el plazo conveniente por las partes o
que sera fijado por el Juzgado. Sin costas."cralaw virtua1aw library
Both parties appealed to this court (G. R. No. 37319). 1 The decision appealed from
was modified by allowing the defendant to recover compensation amount to P2,212
and by reducing the price at which the plaintiff could require the defendant to
purchase the land in question from P300 to P200 per hectare. Plaintiff was given by
this court 30 days from the date when the decision became final within which to
exercise his option, either to sell the land to the defendant or to buy the improvements
from him. On January 9, 1934, the plaintiff manifested to the lower court his desire "to
require the defendant to pay him the value of the land at the rate of P200 per hectare
or a total price of P18,000 for the whole tract of land." The defendant informed the
lower court that he was unable to pay for the land and, on January 24, 1934, an order
was issued giving the plaintiff 30 days within which to pay the defendant the sum of
P2,212 stating that, in the event of failure to make such payment, the land would be
ordered sold at public auction "Para hacer pago al demandante de la suma de P2,212
y el remanente despus de deducidos los gastos legales de la venta en publica
subasta sera entregado al demandante." On February 21, 1934, plaintiff moved to
reconsider the foregoing order so that he would have preference over the defendant
in the order of payment. The motion was denied on March 1, 1934 but on March 16
following the court below, muto proprio, modified its order of January 24, "en el
sentido de que el demandante tiene derecho preferente al importe del terreno no se
vendiere en publica subasta, a razon de P200 por hecatarea y el remanente, si acaso
o hubiere se entregara el demandado en pago de la cantidad de P2,212 por la
limpieza del terreno y las mejoras introducidas en el mismo por el citado
demandado." On April 24, 1934, the court below, at the instance of the plaintiff and
without objection on the part of the defendant, ordered the sale of the land in question
at public auction. The land was sold on April 5, 1935 to Toribio Teodoro, the highest
bidder, for P8,000. In the certificate of sale issued to said purchaser on the very day
of sale, it was stated that the period of redemption of the land sold was to expire on
April 5, 1936. Upon petition of Toribio Teodoro the court below ordered the provincial
sheriff to issue another certificate not qualified by any equity of redemption. This was
complied with by the sheriff on July 30, 1935. On September 18, 1935, Teodoro
moved that he be placed in possession of the land purchased by him. The motion
was granted by order of September 26, 1935, the dispositive part of which is as
follows:jgc:chanrobles.com.ph
"Por tanto, se ordena al Shriff Provincial de Cavite ponga a Toribio Teodoro en
posesion del terreno comprado por el en subasta publica y por el cual se le expidio
certificado de vente definitiva, reservando al demandado su derecho de ejercitar una
accion ordinaria para reclamar del demandante la cantidad de P2,212 a que tiene
derecho por la limpieza y mejoras del terreno y cuya suma, en justicia y equidad,
debe ser descontada y deducida de la suma de P8,000 que ya ha recibido el
demandante."cralaw virtua1aw library
The Civil Code confirms certain time-honored principles of the law of property. One of
these is the principle of accession whereby the owner of property acquires not only
that which it produces but that which is united to it either naturally or artificially. (Art.
353.) Whatever is built, planted or sown on the land of another, and the
improvements or repairs made thereon, belong to the owner of the land (art. 358).
Where, however, the planter, builder, or sower has acted in good faith, a conflict of
rights arises between the owners and it becomes necessary to protect the owner of
the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating what Manresa calls a state of "forced coownership" (vol. 3,
4th ed., p. 213), the law has provided a just and equitable solution by giving the
owner of the land the option to acquire the improvements after payment of the proper
indemnity or to oblige the builder or planter to pay for the land and the sower to pay
the proper rent (art. 361). It is the owner of the land who is allowed to exercise the
option because his right is older and because, by the principle of accession, he is
entitled to the ownership of the accessory thing (3 Manresa, 4th ed., p. 213). In the
case before us, the plaintiff, as owner of the land, chose to require the defendant, as
owner of the improvements, to pay for the land.
The defendant states that he is a possessor in good faith and that the amount of
P2,212 to which he is entitled has not yet been paid to him. Therefore, he says, he
has a right to retain the land in accordance with the provisions of article 453 of the
Civil Code. We do not doubt the validity of the premises stated. "Considera la ley tan
sagrada y legitima la deuda, que, hasta que sea pagada, no consiente que la cosa se
restituya al vencedor." (4 Manresa, 4th ed., p., 304.) We find, however, that the
defendant has lost his right to retention. In obedience to the decision of his right to
retention. In obedience to the decision of this court in G. R. No. 37319, the plaintiff
expressed his desire to require the defendant to pay for the value of the land. The
said defendant could have become owner of both land and improvements and
continued in possession thereof. But he said he could not pay and the land was sold
at public auction to Toribio Teodoro. The law, as we have already said, requires no
more than that the owner of the land should choose between indemnifying the owner
of the improvements or requiring the latter to pay for the land. When he failed to pay
for the land, the defendant herein lost his right of retention.
The sale at public auction having been asked by the plaintiff himself (p. 22, bill of
exceptions) and the purchase price of P8,000 received by him from Toribio Teodoro,
we find no reason to justify a rupture of the situation has created between them, the
defendant- appellant not being entitled, after all, to recover from the plaintiff the sum
of P2,212.
The judgment of the lower court is accordingly modified by eliminating therefrom the
reservation made in favor of the defendant- appellant to recover from the plaintiff the
sum of P2,212. In all other respects, the same is affirmed, without pronouncement
regarding costs. So ordered.
Avancea, C.J., Villa-Real, Imperial and Diaz, JJ., concur.
Ignacio v Hilario; G.R. No. L-175. April 30, 1946.
G.R. No. L-175 April 30, 1946
DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,
vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of
First Instance of Pangasinan, respondents.
Leoncio R. Esliza for petitioners.
Mauricio M. Monta for respondents.
MORAN, C.J.:
This is a petition for certiorari arising from a case in the Court of First Instance of
Pangasinan between the herein respondents Elias Hilario and his wife Dionisia Dres
as plaintiffs, and the herein petitioners Damian, Francisco and Luis, surnamed
Ignacio, as defendants, concerning the ownership of a parcel of land, partly rice-land
and partly residential. After the trial of the case, the lower court, presided over by
Hon. Alfonso Felix, rendered judgment holding plaintiffs as the legal owners of the
whole property but conceding to defendants the ownership of the houses and
granaries built by them on the residential portion with the rights of a possessor in
good faith, in accordance with article 361 of the Civil Code. The dispositive part of the
decision, hub of this controversy, follows:
Wherefore, judgment is hereby rendered declaring:
(1) That the plaintiffs are the owners of the whole property described in transfer
certificate of title No. 12872 (Exhibit A) issued in their name, and entitled to the
possession of the same;
(2) That the defendants are entitled to hold the position of the residential lot until after
they are paid the actual market value of their houses and granaries erected thereon,
unless the plaintiffs prefer to sell them said residential lot, in which case defendants
shall pay the plaintiffs the proportionate value of said residential lot taking as a basis
the price paid for the whole land according to Exhibit B; and
(3) That upon defendant's failure to purchase the residential lot in question, said
defendants shall remove their houses and granaries after this decision becomes final
and within the period of sixty (60) days from the date that the court is informed in
writing of the attitude of the parties in this respect.
No pronouncement is made as to damages and costs.
Once this decision becomes final, the plaintiffs and defendants may appear again
before this court for the purpose of determining their respective rights under article
361 of the Civil Code, if they cannot come to an extra-judicial settlement with regard
to said rights.
Subsequently, in a motion filed in the same Court of First Instance but now presided
over by the herein respondent Judge Hon. Felipe Natividad, the plaintiffs prayed for
an order of execution alleging that since they chose neither to pay defendants for the
buildings nor to sell to them the residential lot, said defendants should be ordered to
remove the structure at their own expense and to restore plaintiffs in the possession
of said lot. Defendants objected to this motion which, after hearing, was granted by
Judge Natividad. Hence, this petition by defendants praying for (a) a restraint and
annulment of the order of execution issued by Judge Natividad; (b) an order to
compel plaintiffs to pay them the sum of P2,000 for the buildings, or sell to them the
residential lot for P45; or (c), a rehearing of the case for a determination of the rights
of the parties upon failure of extra-judicial settlement.
The judgment rendered by Judge Felix is founded on articles 361 and 453 of the Civil
Code which are as follows:
ART. 361. The owner of land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the work, sowing or planting,
after the payment of the indemnity stated in articles 453 and 454, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper
rent.
ART. 453. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until such expenses are made good to
him.
Useful expenses shall be refunded 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 paying the increase in value which the thing
may have acquired in consequence thereof.
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. The owner of the land, upon the other hand, has the option, under article
361, 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. But this is not the case before us.
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 not 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 and 453 of the Civil Code.
There is, however, in the decision of Judge Felix a question of procedure which calls
for the clarification, to avoid uncertainty and delay in the disposition of cases. In that
decision, the rights of both parties are well defined under articles 361 and 453 of the
Civil Code, but it fails to determine the value of the buildings and of the lot where they
are erected as well as the periods of time within which the option may be exercised
and payment should be made, these particulars having been left for determination
apparently after the judgment has become final. This procedure is erroneous, for after
the judgment has become final, no additions can be made thereto and nothing can be
done therewith except its execution. And execution cannot be had, the sheriff being
ignorant as to how, for how much, and within what time may the option be exercised,
and certainly no authority is vested in him to settle these matters which involve
exercise of judicial discretion. Thus the judgment rendered by Judge Felix has never
become final, it having left matters to be settled for its completion in a subsequent
proceeding, matters which remained unsettled up to the time the petition is filed in the
instant case.
For all the foregoing, the writ of execution issued by Judge Natividad is hereby set
aside and the lower court ordered to hold a hearing in the principal case wherein it
must determine the prices of the buildings and of the residential lot where they are
erected, as well as the period of time within which the plaintiffs-respondents may
exercise their option either to pay for the buildings or to sell their land, and, in the last
instance, the period of time within which the defendants-petitioners may pay for the
land, all these periods to be counted from the date the judgment becomes executory
or unappealable. After such hearing, the court shall render a final judgment according
to the evidence presented by the parties.
The costs shall be paid by plaintiffs-respondents.
Sarmiento v Agana; G.R. No. 57288. April 30, 1984.
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.
Mercedes M. Respicio for petitioner.
Romulo R. Bobadilla for private 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 null and void, for it amends substantially the judgment sought to be executed and is,
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
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.t
Depra v Dumlao; G.R. No. L-57348. May 16, 1985.
G.R. No. L-57348 May 16, 1985
FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.
Roberto D. Dineros for plaintiff-appellee.
Veil D. Hechanova for defendant-appellant.
MELENCIO-HERRERA, J.:
This is an appeal from the Order of the former Court of First Instance of Iloilo to the
then Court of Appeals, which the latter certified to this instance as involving pure
questions of law
Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under
Transfer Certificate of Title No. T3087, known as Lot No. 685, situated in the
municipality of Dumangas, Iloilo, with an area of approximately 8,870 square meters.
Agustin Dumlao, defendant-appellant, owns an adjoining lot, designated as Lot No.
683, with an approximate area of 231 sq. ms.
Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen
thereof had encroached on an area of thirty four (34) square meters of DEPRA's
property, After the encroachment was discovered in a relocation survey of DEPRA's
lot made on November 2,1972, his mother, Beatriz Depra after writing a demand
letter asking DUMLAO to move back from his encroachment, filed an action for
Unlawful Detainer on February 6,1973 against DUMLAO in the Municipal Court of of
Dumangas, docketed as Civil Case No 1, Said complaint was later amended to
include DEPRA as a party plain. plaintiff.
After trial, the Municipal Court found that DUMLAO was a builder in good faith, and
applying Article 448 of the Civil Code, rendered judgment on September 29, 1973, the
dispositive portion of which reads:
Ordering that a forced lease is created between the parties with the plaintiffs, as
lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month,
payable by the lessee to the lessors within the first five (5) days of the month the rent
is due; and the lease shall commence on the day that this decision shall have
become final.
From the foregoing judgment, neither party appeal so that, ff it were a valid judgment,
it would have ordinarily lapsed into finality, but even then, DEPRA did not accept
payment of rentals so that DUMLAO deposited such rentals with the Municipal Court.
On July 15,1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO
before the then Court of First Instance of Iloilo, Branch IV (Trial Court), involving the
very same 34 square meters, which was the bone of contention in the Municipal
Court. DUMLAO, in his Answer, admitted the encroachment but alleged, in the main,
that the present suit is barred by res judicata by virtue of the Decision of the Municipal
Court, which had become final and executory.
After the case had been set for pre-trial, the parties submitted a Joint Motion for
Judgment based on the Stipulation of Facts attached thereto. Premised thereon, the
Trial Court on October 31, 1974, issued the assailed Order, decreeing:
WHEREFORE, the Court finds and so holds that the thirty four (34) square meters
subject of this litigation is part and parcel of Lot 685 of the Cadastral Survey of
Dumangas of which the plaintiff is owner as evidenced by Transfer Certificate of Title
No. 3087 and such plaintiff is entitled to possess the same.
Without pronouncement as to costs.
SO ORDERED.
Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that
the Decision of the Municipal Court was null and void ab initio because its jurisdiction
is limited to the sole issue of possession, whereas decisions affecting lease, which is
an encumbrance on real property, may only be rendered by Courts of First Instance.
Addressing out selves to the issue of validity of the Decision of the Municipal Court,
we hold the same to be null and void. The judgment in a detainer case is effective in
respect of possession only (Sec. 7, Rule 70, Rules of Court). 1 The Municipal Court
over-stepped its bounds when it imposed upon the parties a situation of "forced
lease", which like "forced co-ownership" is not favored in law. Furthermore, a lease is
an interest in real property, jurisdiction over which belongs to Courts of First Instance
(now Regional Trial Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2) Batas
Pambansa Blg. 129). 3 Since the Municipal Court, acted without jurisdiction, its
Decision was null and void and cannot operate as res judicata to the subject
complaint for Queting of Title. Besides, even if the Decision were valid, the rule on res
judicata would not apply due to difference in cause of action. In the Municipal Court,
the cause of action was the deprivation of possession, while in the action to quiet title,
the cause of action was based on ownership. Furthermore, Sec. 7, Rule 70 of the
Rules of Court explicitly provides that judgment in a detainer case "shall not bar an
action between the same parties respecting title to the land. " 4
Conceded in the Stipulation of Facts between the parties is that DUMLAO was a
builder in good faith. Thus,
8. That the subject matter in the unlawful detainer case, Civil Case No. 1,
before the Municipal Court of Dumangas, Iloilo involves the same subject matter in
the present case, the Thirty-four (34) square meters portion of land and built thereon
in good faith is a portion of defendant's kitchen and has been in the possession of the
defendant since 1952 continuously up to the present; ... (Emphasis ours)
Consistent with the principle that our Court system, like any other, must be a dispute
resolving mechanism, we accord legal effect to the agreement of the parties, within
the context of their mutual concession and stipulation. They have, thereby, chosen a
legal formula to resolve their dispute to appeal ply to DUMLAO the rights of a "builder
in good faith" and to DEPRA those of a "landowner in good faith" as prescribed in
Article 448. Hence, we shall refrain from further examining whether the factual
situations of DUMLAO and DEPRA conform to the juridical positions respectively
defined by law, for a "builder in good faith" under Article 448, a "possessor in good
faith" under Article 526 and a "landowner in good faith' under Article 448.
In regards to builders in good faith, Article 448 of the Civil Code provides:
ART. 448. The owner of the land on which anything has been built sown or planted in
good faith,
shall have the right
to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building
or trees after proper indemnity. The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the terms thereof (Paragraphing
supplied)
Pursuant to the foregoing provision, DEPRA has the option either to pay for the
encroaching part of DUMLAO's kitchen, or to sell the encroached 34 square meters of
his lot to DUMLAO. He cannot refuse to pay for the encroaching part of the building,
and to sell the encroached part of his land, 5 as he had manifested before the
Municipal Court. But that manifestation is not binding because it was made in a void
proceeding.
However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of
First Instance. It was thus error for the Trial Court to have ruled that DEPRA is
"entitled to possession," without more, of the disputed portion implying thereby that he
is entitled to have the kitchen removed. He is entitled to such removal only when,
after having chosen to sell his encroached land, DUMLAO fails to pay for the same. 6
In this case, DUMLAO had expressed his willingness to pay for the land, but DEPRA
refused to sell.
The owner of the building erected in good faith on a land owned by another, is entitled
to retain the possession of the land until he is paid the value of his building, under
article 453 (now Article 546). The owner of the land, upon the other hand, has the
option, under article 361 (now Article 448), either to pay for the building or to sell his
land to the owner of the building. But he cannot as respondents here did refuse both
to pay for the building and to sell the land and compel the owner of the building to
remove it from the land where it erected. He is entitled to such remotion only when,
after having chosen to sell his land. the other party fails to pay for the same (italics
ours).
We hold, therefore, that the order of Judge Natividad compelling 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]).
A word anent the philosophy behind Article 448 of the Civil rode.
The original provision was found in Article 361 of the Spanish Civil Code; which
provided:
ART. 361. The owner of land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the work, sowing or planting,
after the payment of the indemnity stated in Articles 453 and 454, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper
rent.
As will be seen, the Article favors the owner of the land, by giving him one of the two
options mentioned in the Article. Some commentators have questioned the
preference in favor of the owner of the land, but Manresa's opinion is that the Article
is just and fair.
. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en el
caso de edificacion o plantacion? Algunos comentaristas la conceptuan injusta, y
como un extraordinario privilegio en favor de la propiedad territorial. Entienden que
impone el Codigo una pena al poseedor de buena fe y como advierte uno de los
comentaristas aludidos 'no se ve claro el por que de tal pena . . . al obligar al que
obro de buena fe a quedarse con el edificio o plantacion, previo el pago del terreno
que ocupa, porque si bien es verdad que cuando edifico o planto demostro con este
hecho, que queria para si el edificio o plantio tambien lo es que el que edifico o planto
de buena fe lo hizo en la erronea inteligencia de creerse dueno del terreno Posible es
que, de saber lo contrario, y de tener noticia de que habia que comprar y pagar el
terreno, no se hubiera decidido a plantar ni a edificar. La ley obligandole a hacerlo
fuerza su voluntad, y la fuerza por un hecho inocente de que no debe ser
responsable'. Asi podra suceder pero la realidad es que con ese hecho voluntario,
aunque sea inocente, se ha enriquecido torticeramente con perjuicio de otro a quien
es justo indemnizarle,
En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y
equitativa y respetando en lo possible el principio que para la accesion se establece
en el art. 358. 7
Our own Code Commission must have taken account of the objections to Article 361
of the Spanish Civil Code. Hence, the Commission provided a modification thereof,
and Article 448 of our Code has been made to provide:
ART. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case,
he shall pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
Additional benefits were extended to the builder but the landowner retained his
options.
The fairness of the rules in Article 448 has also been explained as follows:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises
between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-ownership, the law has provided a just
solution by giving the owner of the land the option to acquire the improvements after
payment of the proper indemnity, or to oblige the builder or planter to pay for the land
and the sower to pay for the proper rent. It is the owner of the land who is authorized
to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213;
Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167,
April 30, 1949; Article applied: see Cabral, et al vs. Ibanez [S.C.] 52 Off. Gaz. 217;
Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050). 8
WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is
hereby ordered remanded to the Regional Trial Court of Iloilo for further proceedings
consistent with Articles 448 and 546 of the Civil Code, as follows:
1. The trial Court shall determine
a) the present fair price of DEPRA's 34 square meter area of land;
b) the amount of the expenses spent by DUMLAO for the building of the
kitchen;
c) the increase in value ("plus value") which the said area of 34 square meters
may have acquired by reason thereof, and
d) whether the value of said area of land is considerably more than that of the
kitchen built thereon.
2. After said amounts shall have been determined by competent evidence, the
Regional, Trial Court shall render judgment, as follows:
a) The trial Court shall grant DEPRA a period of fifteen (15) days within which
to exercise his option under the law (Article 448, Civil Code), whether to appropriate
the kitchen as his own by paying to DUMLAO either the amount of tile expenses
spent by DUMLAO f or the building of the kitchen, or the increase in value ("plus
value") which the said area of 34 square meters may have acquired by reason
thereof, or to oblige DUMLAO to pay the price of said area. The amounts to be
respectively paid by DUMLAO and DEPRA, in accordance with the option thus
exercised by written notice of the other party and to the Court, shall be paid by the
obligor within fifteen (15) days from such notice of the option by tendering the amount
to the Court in favor of the party entitled to receive it;
b) The trial Court shall further order that if DEPRA exercises the option to
oblige DUMLAO to pay the price of the land but the latter rejects such purchase
because, as found by the trial Court, the value of the land is considerably more than
that of the kitchen, DUMLAO shall give written notice of such rejection to DEPRA and
to the Court within fifteen (15) days from notice of DEPRA's option to sell the land. In
that event, the parties shall be given a period of fifteen (15) days from such notice of
rejection within which to agree upon the terms of the lease, and give the Court formal
written notice of such agreement and its provisos. If no agreement is reached by the
parties, the trial Court, within fifteen (15) days from and after the termination of the
said period fixed for negotiation, shall then fix the terms of the lease, provided that the
monthly rental to be fixed by the Court shall not be less than Ten Pesos (P10.00) per
month, payable within the first five (5) days of each calendar month. The period for
the forced lease shall not be more than two (2) years, counted from the finality of the
judgment, considering the long period of time since 1952 that DUMLAO has occupied
the subject area. The rental thus fixed shall be increased by ten percent (10%) for the
second year of the forced lease. DUMLAO shall not make any further constructions or
improvements on the kitchen. Upon expiration of the two-year period, or upon default
by DUMLAO in the payment of rentals for two (2) consecutive months, DEPRA shall
be entitled to terminate the forced lease, to recover his land, and to have the kitchen
removed by DUMLAO or at the latter's expense. The rentals herein provided shall be
tendered by DUMLAO to the Court for payment to DEPRA, and such tender shall
constitute evidence of whether or not compliance was made within the period fixed by
the Court.
c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten
Pesos (P10.00) per month as reasonable compensation for the occupancy of
DEPRA's land for the period counted from 1952, the year DUMLAO occupied the
subject area, up to the commencement date of the forced lease referred to in the
preceding paragraph;
d) The periods to be fixed by the trial Court in its Precision shall be
inextendible, and upon failure of the party obliged to tender to the trial Court the
amount due to the obligee, the party entitled to such payment shall be entitled to an
order of execution for the enforcement of payment of the amount due and for
compliance with such other acts as may be required by the prestation due the
obligee.
No costs,
SO ORDERED.
Tecnogas Phil v CA; G.R. No. 108894. February 10,
1997.
[G.R. No. 108894. February 10, 1997]
TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner, vs.
COURT OF APPEALS (FORMER SPECIAL SEVENTEENTH DIVISION) and
EDUARDO UY, respondents.
DECISION
PANGANIBAN, J.:
The parties in this case are owners of adjoining lots in Paraaque, Metro Manila. It was
discovered in a survey that a portion of a building of petitioner, which was presumably
constructed by its predecessor-in-interest, encroached on a portion of the lot owned
by private respondent. What are the rights and obligations of the parties? Is petitioner
considered a builder in bad faith because, as held by respondent Court, he is
presumed to know the metes and bounds of his property as described in his
certificate of title? Does petitioner succeed into the good faith or bad faith of his
predecessor-in-interest which presumably constructed the building?
These are the questions raised in the petition for review of the Decision[1] dated
August 28, 1992, in CA-G.R. CV No. 28293 of respondent Court[2] where the
disposition reads:[3]
WHEREFORE, premises considered, the Decision of the Regional Trial Court is
hereby reversed and set aside and another one entered -
1. Dismissing the complaint for lack of cause of action;
2. Ordering Tecnogas to pay the sum of P2,000.00 per month as reasonable rental
from October 4, 1979 until appellee vacates the land;
3. To remove the structures and surrounding walls on the encroached area;
4. Ordering appellee to pay the value of the land occupied by the two-storey building;
5. Ordering appellee to pay the sum of P20,000.00 for and as attorneys fees;
6. Costs against appellee.
Acting on the motions for reconsideration of both petitioner and private respondent,
respondent Court ordered the deletion of paragraph 4 of the dispositive portion in an
Amended Decision dated February 9, 1993, as follows:[4]
WHEREFORE, premises considered, our decision of August 28, 1992 is hereby
modified deleting paragraph 4 of the dispositive portion of our decision which reads:
4. Ordering appellee to pay the value of the land occupied by the two-storey building.
The motion for reconsideration of appellee is hereby DENIED for lack of merit.
The foregoing Amended Decision is also challenged in the instant petition.
The Facts
The facts are not disputed. Respondent Court merely reproduced the factual findings
of the trial court, as follows:[5]
That plaintiff (herein petitioner) which is a corporation duly organized and existing
under and by virtue of Philippine laws is the registered owner of a parcel of land
situated in Barrio San Dionisio, Paraaque, Metro Manila known as Lot 4331-A (should
be 4531-A) of Lot 4531 of the Cadastral Survey of Paraaque, Metro Manila, covered
by Transfer Certificate of Title No. 409316 of the Registry of Deeds of the Province of
Rizal; that said land was purchased by plaintiff from Pariz Industries, Inc. in 1970,
together with all the buildings and improvements including the wall existing thereon;
that the defendant (herein private respondent) is the registered owner of a parcel of
land known as Lot No. 4531-B of Lot 4531 of the Cadastral Survey of Paraaque, LRC
(GLRO) Rec. No. 19645 covered by Transfer Certificate of Title No. 279838, of the
Registry of Deeds for the Province of Rizal; that said land which adjoins plaintiffs land
was purchased by defendant from a certain Enrile Antonio also in 1970; that in 1971,
defendant purchased another lot also adjoining plaintiffs land from a certain Miguel
Rodriguez and the same was registered in defendants name under Transfer
Certificate of Title No. 31390, of the Registry of Deeds for the Province of Rizal; that
portions of the buildings and wall bought by plaintiff together with the land from Pariz
Industries are occupying a portion of defendants adjoining land; that upon learning of
the encroachment or occupation by its buildings and wall of a portion of defendants
land, plaintiff offered to buy from defendant that particular portion of defendants land
occupied by portions of its buildings and wall with an area of 770 square meters,
more or less, but defendant, however, refused the offer. In 1973, the parties entered
into a private agreement before a certain Col. Rosales in Malacaang, wherein plaintiff
agreed to demolish the wall at the back portion of its land thus giving to defendant
possession of a portion of his land previously enclosed by plaintiffs wall; that
defendant later filed a complaint before the office of Municipal Engineer of Paraaque,
Metro Manila as well as before the Office of the Provincial Fiscal of Rizal against
plaintiff in connection with the encroachment or occupation by plaintiffs buildings and
walls of a portion of its land but said complaint did not prosper; that defendant dug or
caused to be dug a canal along plaintiffs wall, a portion of which collapsed in June,
1980, and led to the filing by plaintiff of the supplemental complaint in the above-
entitled case and a separate criminal complaint for malicious mischief against
defendant and his wife which ultimately resulted into the conviction in court of
defendants wife for the crime of malicious mischief; that while trial of the case was in
progress, plaintiff filed in Court a formal proposal for settlement of the case but said
proposal, however, was ignored by defendant.
After trial on the merits, the Regional Trial Court[6] of Pasay City, Branch 117, in Civil
Case No. PQ-7631-P, rendered a decision dated December 4, 1989 in favor of
petitioner who was the plaintiff therein. The dispositive portion reads:[7]
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against
defendant and ordering the latter to sell to plaintiff that portion of land owned by him
and occupied by portions of plaintiffs buildings and wall at the price of P2,000.00 per
square meter and to pay the former:
1. The sum of P44,000.00 to compensate for the losses in materials and properties
incurred by plaintiff through thievery as a result of the destruction of its wall;
2. The sum of P7,500.00 as and by way of attorneys fees; and
3. The costs of this suit.
Appeal was duly interposed with respondent Court, which as previously stated,
reversed and set aside the decision of the Regional Trial Court and rendered the
assailed Decision and Amended Decision. Hence, this recourse under Rule 45 of the
Rules of Court.
The Issues
The petition raises the following issues:[8]
(A)
Whether or not the respondent Court of Appeals erred in holding the petitioner a
builder in bad faith because it is presumed to know the metes and bounds of his
property.
(B)
Whether or not the respondent Court of Appeals erred when it used the amicable
settlement between the petitioner and the private respondent, where both parties
agreed to the demolition of the rear portion of the fence, as estoppel amounting to
recognition by petitioner of respondents right over his property including the portions
of the land where the other structures and the building stand, which were not included
in the settlement.
(C)
Whether or not the respondent Court of Appeals erred in ordering the removal of the
structures and surrounding walls on the encroached area and in withdrawing its
earlier ruling in its August 28, 1992 decision for the petitioner to pay for the value of
the land occupied by the building, only because the private respondent has
manifested its choice to demolish it despite the absence of compulsory sale where
the builder fails to pay for the land, and which choice private respondent deliberately
deleted from its September 1, 1980 answer to the supple-mental complaint in the
Regional Trial Court.
In its Memorandum, petitioner poses the following issues:
A doctrine laid down in Tuason vs. Lumanlan case citing also Tuason vs. Macalindong
The time when to determine the good faith of the builder under Article 448 of the New
Civil Code, is reckoned during the period when it was actually being built; and in a
case where no evidence was presented nor introduced as to the good faith or bad
faith of the builder at that time, as in this case, he must be presumed to be a builder in
good faith, since bad faith cannot be presumed.[9]
B.
In a specific boundary overlap situation which involves a builder in good faith, as in
this case, it is now well settled that the lot owner, who builds on the adjacent lot is not
charged with constructive notice of the technical metes and bounds contained in their
torrens titles to determine the exact and precise extent of his boundary perimeter.[10]
C.
The respondent courts citation of the twin cases of Tuason & Co. v. Lumanlan and
Tuason & Co. v. Macalindong is not the judicial authority for a boundary dispute
situation between adjacent torrens titled lot owners, as the facts of the present case
do not fall within nor square with the involved principle of a dissimilar case.[11]
D.
Quite contrary to respondent Uys reasoning, petitioner Tecnogas continues to be a
builder in good faith, even if it subsequently built/repaired the walls/other permanent
structures thereon while the case a quo was pending and even while respondent sent
the petitioner many letters/filed cases thereon.[12]
D. (E.)
The amicable settlement between the parties should be interpreted as a contract and
enforced only in accordance with its explicit terms, and not over and beyond that
agreed upon; because the courts do not have the power to create a contract nor
expand its scope.[13]
E. (F.)
As a general rule, although the landowner has the option to choose between: (1)
buying the building built in good faith, or (2) selling the portion of his land on which
stands the building under Article 448 of the Civil Code; the first option is not absolute,
because an exception thereto, once it would be impractical for the landowner to
choose to exercise the first alternative, i.e. buy that portion of the house standing on
his land, for the whole building might be rendered useless. The workable solution is
for him to select the second alternative, namely, to sell to the builder that part of his
land on which was constructed a portion of the house.[14]
Private respondent, on the other hand, argues that the petition is suffering from the
following flaws:[15]
1. It did not give the exact citations of cases decided by the Honorable Supreme
Court that allegedly contradicts the ruling of the Hon. Court of Appeals based on the
case (Supra).
2. Assuming that the doctrine in the alleged Co Tao vs. Chico case is contradictory to
the doctrine in Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases
being more current, the same should prevail.
Further, private respondent contends that the following unmistakably point to the bad
faith of petitioner: (1) private respondents purchase of the two lots, was ahead of the
purchase by petitioner of the building and lot from Pariz Industries; (2) the declaration
of the General Manager of Tecnogas that the sale between petitioner and Pariz
Industries was not registered because of some problems with China Banking
Corporation; and (3) the Deed of Sale in favor of petitioner was registered in its name
only in the month of May 1973.[16]
The Courts Ruling
The petition should be granted.
Good Faith or Bad Faith
Respondent Court, citing the cases of J. M. Tuason & Co., Inc. vs. Vda. de
Lumanlan[17] and J. M. Tuason & Co., Inc. vs. Macalindong,[18] ruled that petitioner
cannot be considered in good faith because as a land owner, it is presumed to know
the metes and bounds of his own property, specially if the same are reflected in a
properly issued certificate of title. One who erroneously builds on the adjoining lot
should be considered a builder in (b)ad (f)aith, there being presumptive knowledge of
the Torrens title, the area, and the extent of the boundaries.[19]
We disagree with respondent Court. The two cases it relied upon do not support its
main pronouncement that a registered owner of land has presumptive knowledge of
the metes and bounds of its own land, and is therefore in bad faith if he mistakenly
builds on an adjoining land. Aside from the fact that those cases had factual moorings
radically different from those obtaining here, there is nothing in those cases which
would suggest, however remotely, that bad faith is imputable to a registered owner of
land when a part of his building encroaches upon a neighbors land, simply because
he is supposedly presumed to know the boundaries of his land as described in his
certificate of title. No such doctrinal statement could have been made in those cases
because such issue was not before the Supreme Court. Quite the contrary, we have
rejected such a theory in Co Tao vs. Chico,[20] where we held that unless one is
versed in the science of surveying, no one can determine the precise extent or
location of his property by merely examining his paper title.
There is no question that when petitioner purchased the land from Pariz Industries,
the buildings and other structures were already in existence. The record is not clear
as to who actually built those structures, but it may well be assumed that petitioners
predecessor-in-interest, Pariz Industries, did so. Article 527 of the Civil Code
presumes good faith, and since no proof exists to show that the encroachment over a
narrow, needle-shaped portion of private respondents land was done in bad faith by
the builder of the encroaching structures, the latter should be presumed to have built
them in good faith.[21] It is presumed that possession continues to be enjoyed in the
same character in which it was acquired, until the contrary is proved.[22] Good faith
consists in the belief of the builder that the land he is building on is his, and his
ignorance of any defect or flaw in his title.[23] Hence, such good faith, by law, passed
on to Parizs successor, petitioner in this case. Further, (w)here one derives title to
property from another, the act, declaration, or omission of the latter, while holding the
title, in relation to the property, is evidence against the former.[24] And possession
acquired in good faith does not lose this character except in case and from the
moment facts exist which show that the possessor is not unaware that he possesses
the thing improperly or wrongfully.[25] The good faith ceases from the moment
defects in the title are made known to the possessor, by extraneous evidence or by
suit for recovery of the property by the true owner.[26]
Recall that the encroachment in the present case was caused by a very slight
deviation of the erected wall (as fence) which was supposed to run in a straight line
from point 9 to point 1 of petitioners lot. It was an error which, in the context of the
attendant facts, was consistent with good faith. Consequently, the builder, if sued by
the aggrieved landowner for recovery of possession, could have invoked the
provisions of Art. 448 of the Civil Code, which reads:
The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to oblige the
one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. However, the builder or planter cannot be obliged to buy the land if its
value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.
The obvious benefit to the builder under this article is that, instead of being outrightly
ejected from the land, he can compel the landowner to make a choice between the
two options: (1) to appropriate the building by paying the indemnity required by law, or
(2) sell the land to the builder. The landowner cannot refuse to exercise either option
and compel instead the owner of the building to remove it from the land.[27]
The question, however, is whether the same benefit can be invoked by petitioner
who, as earlier stated, is not the builder of the offending structures but possesses
them as buyer.
We answer such question in the affirmative.
In the first place, there is no sufficient showing that petitioner was aware of the
encroachment at the time it acquired the property from Pariz Industries. We agree
with the trial court that various factors in evidence adequately show petitioners lack of
awareness thereof. In any case, contrary proof has not overthrown the presumption of
good faith under Article 527 of the Civil Code, as already stated, taken together with
the disputable presumptions of the law on evidence. These presumptions state, under
Section 3 (a) of Rule 131 of the Rules of Court, that the person is innocent of a crime
or wrong; and under Section 3 (ff) of Rule 131, that the law has been obeyed. In fact,
private respondent Eduardo Uy himself was unaware of such intrusion into his
property until after 1971 when he hired a surveyor, following his purchase of another
adjoining lot, to survey all his newly acquired lots. Upon being apprised of the
encroachment, petitioner immediately offered to buy the area occupied by its building
-- a species of conduct consistent with good faith.
In the second place, upon delivery of the property by Pariz Industries, as seller, to the
petitioner, as buyer, the latter acquired ownership of the property. Consequently and
as earlier discussed, petitioner is deemed to have stepped into the shoes of the seller
in regard to all rights of ownership over the immovable sold, including the right to
compel the private respondent to exercise either of the two options provided under
Article 448 of the Civil Code.
Estoppel
Respondent Court ruled that the amicable settlement entered into between petitioner
and private respondent estops the former from questioning the private respondents
right over the disputed property. It held that by undertaking to demolish the fence
under said settlement, petitioner recognized private respondents right over the
property, and cannot later on compel private respondent to sell to it the land since
private respondent is under no obligation to sell.[28]
We do not agree. Petitioner cannot be held in estoppel for entering into the amicable
settlement, the pertinent portions of which read:[29]
That the parties hereto have agreed that the rear portion of the fence that separates
the property of the complainant and respondent shall be demolished up to the back of
the building housing the machineries which demolision (sic) shall be undertaken by
the complainant at anytime.
That the fence which serve(s) as a wall housing the electroplating machineries shall
not be demolished in the mean time which portion shall be subject to negotiation by
herein parties.
From the foregoing, it is clear that petitioner agreed only to the demolition of a portion
of the wall separating the adjoining properties of the parties -- i.e. up to the back of
the building housing the machineries. But that portion of the fence which served as
the wall housing the electroplating machineries was not to be demolished. Rather, it
was to be subject to negotiation by herein parties. The settlement may have
recognized the ownership of private respondent but such admission cannot be
equated with bad faith. Petitioner was only trying to avoid a litigation, one reason for
entering into an amicable settlement.
As was ruled in Osmea vs. Commission on Audit,[30]
A compromise is a bilateral act or transaction that is expressly acknowledged as a
juridical agreement by the Civil Code and is therein dealt with in some detail. `A
compromise, declares Article 2208 of said Code, `is a contract whereby the parties,
by making reciprocal concessions, avoid a litigation or put an end to one already
commenced.
xxx xxx xxx
The Civil Code not only defines and authorizes compromises, it in fact encourages
them in civil actions. Art. 2029 states that `The Court shall endeavor to persuade the
litigants in a civil case to agree upon some fair compromise. x x x.
In the context of the established facts, we hold that petitioner did not lose its rights
under Article 448 of the Civil Code on the basis merely of the fact that some years
after acquiring the property in good faith, it learned about -- and aptly recognized --
the right of private respondent to a portion of the land occupied by its building. The
supervening awareness of the encroachment by petitioner does not militate against
its right to claim the status of a builder in good faith. In fact, a judicious reading of said
Article 448 will readily show that the landowners exercise of his option can only take
place after the builder shall have come to know of the intrusion -- in short, when both
parties shall have become aware of it. Only then will the occasion for exercising the
option arise, for it is only then that both parties will have been aware that a problem
exists in regard to their property rights.
Options of Private Respondent
What then is the applicable provision in this case which private respondent may
invoke as his remedy: Article 448 or Article 450[31] of the Civil Code?
In view of the good faith of both petitioner and private respondent, their rights and
obligations are to be governed by Art. 448. The essential fairness of this codal
provision has been pointed out by Mme. Justice Ameurfina Melencio-Herrera, citing
Manresa and applicable precedents, in the case of Depra vs. Dumlao,[32] to wit:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises
between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the
impracticality of creating a state of forced co-ownership, the law has provided a just
solution by giving the owner of the land the option to acquire the improvements after
payment of the proper indemnity, or to oblige the builder or planter to pay for the land
and the sower to pay the proper rent. It is the owner of the land who is authorized to
exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213;
Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G. R. No. 49167,
April 30, 1949; Article applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217;
Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050).
The private respondents insistence on the removal of the encroaching structures as
the proper remedy, which respondent Court sustained in its assailed Decisions, is
thus legally flawed. This is not one of the remedies bestowed upon him by law. It
would be available only if and when he chooses to compel the petitioner to buy the
land at a reasonable price but the latter fails to pay such price.[33] This has not taken
place. Hence, his options are limited to: (1) appropriating the encroaching portion of
petitioners building after payment of proper indemnity, or (2) obliging the latter to buy
the lot occupied by the structure. He cannot exercise a remedy of his own liking.
Neither is petitioners prayer that private respondent be ordered to sell the land[34] the
proper remedy. While that was dubbed as the more workable solution in Grana and
Torralba vs. The Court of Appeals, et al.,[35] it was not the relief granted in that case
as the landowners were directed to exercise within 30 days from this decision their
option to either buy the portion of the petitioners house on their land or sell to said
petitioners the portion of their land on which it stands.[36] Moreover, in Grana and
Torralba, the area involved was only 87 square meters while this case involves 520
square meters[37]. In line with the case of Depra vs. Dumlao,[38] this case will have
to be remanded to the trial court for further proceedings to fully implement the
mandate of Art. 448. It is a rule of procedure for the Supreme Court to strive to settle
the entire controversy in a single proceeding leaving no root or branch to bear the
seeds of future litigation.[39]
Petitioner, however, must also pay the rent for the property occupied by its building as
prescribed by respondent Court from October 4, 1979, but only up to the date private
respondent serves notice of its option upon petitioner and the trial court; that is, if
such option is for private respondent to appropriate the encroaching structure. In such
event, petitioner would have a right of retention which negates the obligation to pay
rent.[40] The rent should however continue if the option chosen is compulsory sale,
but only up to the actual transfer of ownership.
The award of attorneys fees by respondent Court against petitioner is unwarranted
since the action appears to have been filed in good faith. Besides, there should be no
penalty on the right to litigate.[41]
WHEREFORE, premises considered, the petition is hereby GRANTED and the
assailed Decision and the Amended Decision are REVERSED and SET ASIDE. In
accordance with the case of Depra vs. Dumlao,[42] this case is REMANDED to the
Regional Trial Court of Pasay City, Branch 117, for further proceedings consistent
with Articles 448 and 546 [43] of the Civil Code, as follows:

The trial court shall determine:
a) the present fair price of private respondents 520 square-meter area of land;
b) the increase in value (plus value) which the said area of 520 square meters may
have acquired by reason of the existence of the portion of the building on the area;
c) the fair market value of the encroaching portion of the building; and
d) whether the value of said area of land is considerably more than the fair market
value of the portion of the building thereon.
2. After said amounts shall have been determined by competent evidence, the
regional trial court shall render judgment as follows:
a) The private respondent shall be granted a period of fifteen (15) days within which
to exercise his option under the law (Article 448, Civil Code), whether to appropriate
the portion of the building as his own by paying to petitioner its fair market value, or to
oblige petitioner to pay the price of said area. The amounts to be respectively paid by
petitioner and private respondent, in accordance with the option thus exercised by
written notice of the other party and to the court, shall be paid by the obligor within
fifteen (15) days from such notice of the option by tendering the amount to the trial
court in favor of the party entitled to receive it;
b) If private respondent exercises the option to oblige petitioner to pay the price of the
land but the latter rejects such purchase because, as found by the trial court, the
value of the land is considerably more than that of the portion of the building,
petitioner shall give written notice of such rejection to private respondent and to the
trial court within fifteen (15) days from notice of private respondents option to sell the
land. In that event, the parties shall be given a period of fifteen (15) days from such
notice of rejection within which to agree upon the terms of the lease, and give the trial
court formal written notice of the agreement and its provisos. If no agreement is
reached by the parties, the trial court, within fifteen (15) days from and after the
termination of the said period fixed for negotiation, shall then fix the terms of the lease
provided that the monthly rental to be fixed by the Court shall not be less than two
thousand pesos (P2,000.00) per month, payable within the first five (5) days of each
calendar month. The period for the forced lease shall not be more than two (2) years,
counted from the finality of the judgment, considering the long period of time since
1970 that petitioner has occupied the subject area. The rental thus fixed shall be
increased by ten percent (10%) for the second year of the forced lease. Petitioner
shall not make any further constructions or improvements on the building. Upon
expiration of the two-year period, or upon default by petitioner in the payment of
rentals for two (2) consecutive months, private respondent shall be entitled to
terminate the forced lease, to recover his land, and to have the portion of the building
removed by petitioner or at latters expense. The rentals herein provided shall be
tendered by petitioner to the trial court for payment to private respondent, and such
tender shall constitute evidence of whether or not compliance was made within the
period fixed by the said court.
c) In any event, petitioner shall pay private respondent an amount computed at two
thousand pesos (P2,000.00) per month as reasonable compensation for the
occupancy of private respondents land for the period counted from October 4, 1979,
up to the date private respondent serves notice of its option to appropriate the
encroaching structures, otherwise up to the actual transfer of ownership to petitioner
or, in case a forced lease has to be imposed, up to the commencement date of the
forced lease referred to in the preceding paragraph;
d) The periods to be fixed by the trial court in its decision shall be non-extendible, and
upon failure of the party obliged to tender to the trial court the amount due to the
obligee, the party entitled to such payment shall be entitled to an order of execution
for the enforcement of payment of the amount due and for compliance with such other
acts as may be required by the prestation due the obligee.
No costs.
SO ORDERED.
Ortiz v Kayanan; G.R. No. L-32974. July 30, 1979.
G.R. No. L-32974 July 30, 1979
BARTOLOME ORTIZ, petitioner,
vs.
HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of
Quezon, Branch IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE
FERRO, AND GREGORIO PAMISARAN, respondents.
Salonga, Ordo;ez, Yap, Sicat & Associates and Salvador, Ulgado & Carbon for
petitioner.
Jose A. Cusi for private respondents.
ANTONIO, J.:1wph1.t
Petition for certiorari and Prohibition with Preliminary Injunction to nullify the Order of
respondent Judge directing the execution of the final judgment in Civil Case No. C-90,
entitled "Bartolome Ortiz vs. Secretary of Agriculture and Natural Resources, et al.,"
and the Writ of Execution issued to implement said Order, allegedly for being
inconsistent with the judgment sought to be enforced.
Civil Case No. C-90 was filed by Bartolome Ortiz who sought the review and/or
annulment of the decision of the Secretary of Agriculture and Natural Resources,
giving preference to the sales applications of private respondents Quirino Comintan
and Eleuterio Zamora over Lot No. 5785, PLS-45, located at Barrio Cabuluan,
Calauag, Quezon.
I
The factual background of the case, as found by respondent Court, is as
follows:t.hqw
... The lot in controversy was formerly the subject of Homestead Application No.
122417 of Martin Dolorico II, plaintiff's ward who died on August 20, 1931; that since
then it was plaintiff who continued the cultivation and possession of the property,
without however filing any application to acquire title thereon; that in the Homestead
Application No. 122417, Martin Dolorico II named his uncle, Martin Dolorico I as his
heir and successor in interest, so that in 1951 Martin Dolorico I executed an affidavit
relinquishing his rights over the property in favor of defendants Quirino Comintan and
Eleuterio Zamora, his grandson and son-in-law, respectively, and requested the
Director of Lands to cancel the homestead application; that on the strength of the
affidavit, Homestead Application No. 122417 was cancelled and thereafter,
defendants Comintan and Zamora filed their respective sales applications Nos. 8433
and 9258; that plaintiff filed his protest on November 26, 1951 alleging that he should
be given preference to purchase the lot inasmuch as he is the actual occupant and
has been in continuous possession of the same since 1931; and inspite of plaintiff's
opposition, "Portion A" of the property was sold at public auction wherein defendant
Comintan was the only bidder; that on June 8, 1957, investigation was conducted on
plaintiff's protest by Assistant Public Lands Inspector Serapion Bauzon who submitted
his report to the Regional Land Officer, and who in turn rendered a decision on April
9, 1958, dismissing plaintiff's claim and giving due course to defendants' sales
applications on the ground that the relinquishment of the homestead rights of Martin
Dolorico I in favor of Comintan and Zamora is proper, the former having been
designated as successor in interest of the original homestead applicant and that
because plaintiff failed to participate in the public auction, he is forever barred to claim
the property; that plaintiff filed a motion for reconsideration of this decision which was
denied by the Director of Lands in his order dated June 10, 1959; that, finally, on
appeal to the Secretary of Agriculture and Natural Resources, the decision rendered
by the Regional Land Officer was affirmed in toto. 1
On March 22, 1966, respondent Court rendered judgment in the afore-mentioned civil
case, the dispositive portion of which reads as follows:t.hqw legal interests, said bond shall be held answerable.
IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered
awarding Lot No. 5785-A of PLS-45, (Calauag Public Land Subdivision) one-half
portion of the property in litigation located at Bo. Cabuluan, Calauag, Quezon, in favor
of defendant QUIRINO COMINTAN, being the successful bidder in the public auction
conducted by the bureau of Lands on April 18, 1955, and hereby giving due course to
the Sales Application No. 9258 of defendant Eleuterio Zamora over the other half, Lot
No. 5785-B of PLS-45, Calauag, without prejudice to the right of plaintiff
BARTOLOME ORTIZ to participate in the public bidding of the same to be announced
by the Bureau of Lands, Manila. However, should plaintiff Bartolome Ortiz be not
declared the successful bidder thereof, defendants Quirino Comintan and Eleuterio
Zamora are ordered to reimburse jointly said plaintiff the improvements he has
introduced on the whole property in the amount of THIRTEEN THOUSAND SIX
HUNDRED THIRTY-TWO (P13,632.00) PESOS, the latter having the right to retain
the property until after he has been fully paid therefor, without interest since he enjoys
the fruits of the property in question, with prejudice and with costs again the plaintiff.2
Plaintiff appealed the decision to the Court of Appeals.
Two (2) years after the rendition of the judgment by the court a quo, while the case
was pending appeal and upon petition of private respondents Quirino Comintan and
Eleuterio Zamora, respondent Court appointed respondent Vicente Ferro, Clerk of
Court, as Receiver to collect tolls on a portion of the property used as a diversion
road. On August 19, 1969, the Court of Appeals issued a Resolution annulling the
Order appointing the Receiver. Subsequently, on February 19, 1970, the Appellate
Court affirmed the decision of the trial court. A petition for review on certiorari of the
decision of the Court of Appeals was denied by this Court on April 6, 1970. At this
point, private respondents filed a petition for appointment of a new receiver with the
court a quo. This petition was granted and the receiver was reappointed. Petitioner
sought the annulment of this Order with the Court of Appeals, but said Court ruled
that its decision had already become final and that the records of the case were to be
remanded to the trial court.
Not satisfied with such denial, petitioner filed a petitioner for certiorari, prohibition and
mandamus with preliminary injunction before this Court, 3 praying for the annulment
of the Order reappointing the Receiver. On July 13, 1970, the petition was dismissed
by this Court on the ground of insufficient showing of grave abuse of discretion.
II
The judgment having become final and executory private respondents filed a motion
for the execution of the same, praying as follows:t.hqw
WHEREFORE, it is respectfully prayed of this Honorable Court to order the issuance
of a writ of execution in accordance with the judgment of this Honorable Court,
confirmed by the Court of Appeals and the Supreme Court, commanding any lawful
officer to deliver to defendants Comintan and Zamora the land subject of the decision
in this case but allowing defendants to file a bond in such amount as this Honorable
Court may fix, in lieu of the P13,632.00 required to be paid to plaintiff, conditioned
that after the accounting of the tools collected by plaintiff, there is still an amount due
and payable to said plaintiff, then if such amount is not paid on demand, including the
Ordering further the plaintiff to render an accounting of the tolls he collected from
March of 1967 to December 31, 1968 and from September 1969 to March 31, 1970,
and deliver said tolls collected to the receiver and if judgment is already executed,
then to Quirino Comintan and Eleuterio Zamora; and,
Finally, to condemn plaintiff to pay moral damages for withholding the tools which
belong to your movant in an amount this Court may deem just in the premises.4
Acting upon the foregoing motion, respondent Judge issued an Order, dated
September 23, 1970, stating, among others, the following: t.hqw
The records further disclosed that from March 1967 to December 31, 1968, piaintiff
Bartolome Ortiz collected tolls on a portion of the propertv in question wherein he has
not introduced anv improvement particularlv on Lot No. 5785-A; PLS-45 awarded to
defendant Quirino Comintan, thru which vehicular traffic was detoured or diverted,
and again from September 1969 to March 31, 1970, the plaintiff resumed the
collection of tools on the same portion without rendering any accounting on said tolls
to the Receiver, who, was reappointed after submitting the required bond and
specifically authorized only to collect tolls leaving the harvesting of the improvements
to the plaintiff.
xxx xxx xxx
ln virtue of he findings of this Court as contained in the dispositive portion of its
decision, the defendants are jointly obligated to pay the plaintiff in the amount of
P13,632.00 as reasonable value of the improvements he introduced on the whole
property in question, and that he has the right of retention until fully paid. It can be
gleaned from the motion of the defendants that if plaintiff submits an accounting of the
tolls he collected during the periods above alluded to, their damages of about
P25,000.00 can more than offset their obligation of P13,362.00 in favor of the plaintiff,
thereafter the possession of the land be delivered to the defendants since the
decision of the Supreme Court has already become final and executory, but in the
interregnum pending such accounting and recovery by the Receiver of the tolls
collected by the plaintiff, the defendants pray that they allowed to put up a bond in lieu
of the said P13,632.00 to answer for damages of the former, if any.
On the other hand, plaintiff contends in his opposition, admitting that the decision of
the Supreme Court has become final and executory; (1) the offer of a bond in lieu of
payment of P13,632.00 does not, and cannot, satisfy the condition imposed in the
decision of this Court which was affirmed in toto; (2) the public sale of Portion "B" of
the land has still to take place as ordained before the decision could be executed;
and, (3) that whatever sums plaintiff may derive from the property cannot be set off
against what is due him for the improvements he made, for which he has to be
reimbursed as ordered.
xxx xxx xxx
Let it be known that plaintiff does not dispute his having collected tolls during the
periods from March 1967 to December 31, 1968 and from September 1969 to March
31, 1970. The Supreme Court affirmed the decision of this Court its findings that said
tolls belong to the defendant, considering that the same were collected on a portion of
the land question where the plaintiff did not introduce any improvement. The
reimbursement to the plaintiff pertains only to the value of the improvements, like
coconut trees and other plants which he introduced on the whole property. The tolls
collected by the plaintiff on an unimproved portion naturally belong to the defendants,
following the doctrine on accretion. Further, the reappointment of a Receiver by this
Court was upheld by the Supreme Court when it denied the petition for certiorari filed
by the plaintiff, bolstering the legal claim of defendants over said tolls. Thus, the
decision of the Supreme Court rendered the decision of this Court retroactive from
March 22, 1966 although pending accounting of the tolls collected by the plaintiff is
justified and will not prejudice anybody, but certainly would substantially satisfy the
conditions imposed in the decision. However, insofar as the one-half portion "B" of the
property, the decision may be executed only after public sale by the Bureau of Lands
shall be accomplished.
WHEREFORE, finding the Motion for Execution filed by the defendants to be
meritorious, the same is granted; provided, however, that they put up a bond equal
the adjudicated amount of P13,632.00 accruing in favor of the plaintiff, from a
reputable or recognized bonding or surety company, conditioned that after an
accounting of the tolls collected by the plaintiff should there be found out any balance
due and payable to him after reckoning said obligation of P13,632.00 the bond shall
be held answerable therefor.5
Accordingly, a Writ of Execution was issued after private respondent Quirino
Comintan had filed the required bond. The writ directed the Sheriff to enforce the
decision of the Court, and stated, part in, the following:t.hqw
But should there be found any amount collectible after accounting and deducting the
amount of P3,632.00, you are hereby ordered that of the goods and chattels of
Bartolome Ortiz of Bo. Kabuluan, Calauag, Quezon, be caused to be made any
excess in the above-metioned amount together with your lawful fees and that you
render same to defendant Quirino Comintan. If sufficient personal property cannot be
found thereof to satisfy this execution and lawful fees thereon, then you are
commanded that of the lands and buildings of the said BARTOLOME ORTIZ you
make the said excess amount in the manner required by the Rules of Court, and
make return of your proceedings within this Court within sixty (60) days from date of
service.
You are also ordered to cause Bartolome Ortiz to vacate the property within fifteen
(15) days after service thereof the defendant Quirino Comintan having filed the
required bond in the amount of THIRTEEN THOUSAND SIX HUNDRED THIRTY-
TWO (P13,632.00) PESOS. 6
On October 12, 1970, petitioner filed a Motion for Reconsideration of the aforesaid
Order and Writ of Execution, alleging:t.hqw
(a) That the respondent judge has no authority to place respondents in
possession of the property;
(b) That the Supreme Court has never affirmed any decision of the trial court
that tolls collected from the diversionary road on the property, which is public land,
belong to said respondents;
(c) That to assess petitioner a P25,000.00 liability for damages is purely punitive
imposition without factual or legal justification.
The foregoing Motion for Reconsideration was denied by respondent Judge per Order
dated November 18, 1970. Saod Order states, in part:t.hqw
It goes without saying that defendant Comintan is entitled to be placed in possession
of lot No. 5785-A of PLS-45 (Calauag Public Land Subdivision) and enjoyment of the
tolls from March, 1967 to March, 1968 and from September, 1969 to March 31, l970
which were received by plaintiff Bartolome Ortiz, collected from the property by
reason of the diversion road where vehicular traffic was detoured. To defendant
Comintan belongs the tolls thus collected from a portion of the land awarded to him
used as a diversionary road by the doctrine of accretion and his right over the same is
ipso jure, there being no need of any action to possess said addition. It is so because
as consistently maintained by the Supreme Court, an applicant who has complied
with all the terms and conditions which entitle him to a patent for a particular tract of
publlic land, acquires a vested right therein and is to be regarded as equitable owner
thereof so that even without a patent, a perfected homestead or sales application is a
property right in the fullest sense, unaffectcd by the fact that the paramount title is still
in the Government and no subsequent law can deprive him of that vested right The
question of the actual damages suffered by defendant Comintan by reason of the
unaccounted tolls received by plaintiff had already been fully discussed in the order of
September 23, 1970 and the Court is honestly convinced and believes it to be proper
and regular under the circumstances.
Incidentally, the Court stands to correct itself when in the same order, it directed the
execution of he decision with respect to the one-half portion "B" of the property only
after the public sale by the Bureau of Lands, the same being an oversight, it
appearing that the Sales Application of defendant Eleuterio Zamora had already been
recognized and full confirmed by the Supreme Court.
In view thereof, finding the motion filed by plaintiff to be without merit, the Court
hereby denies the same and the order of September 23, 1970 shall remain in full
force subject to the amendment that the execution of the decision with respect to the
one-half portion "B" shall not be conditioned to the public sale by the Bureau of
Lands.
SO ORDERED.7
III
Petitioner thus filed the instant petition, contending that in having issued the Order
and Writ of Execution, respondent Court "acted without or in excess of jurisdiction,
and/or with grave abuse of discretion, because the said order and writ in effect vary
the terms of the judgment they purportedly seek to enforce." He argued that since
said judgment declared the petitioner a possessor in good faith, he is entitled to the
payment of the value of the improvements introduced by him on the whole property,
with right to retain the land until he has been fully paid such value. He likewise
averred that no payment for improvements has been made and, instead, a bond
therefor had been filed by defendants (private respondents), which, according to
petitioner, is not the payment envisaged in the decision which would entitle private
respondents to the possession of the property. Furthermore, with respect to portion
"B", petitioner alleges that, under the decision, he has the right to retain the same
until after he has participated and lost in the public bidding of the land to be
conducted by the Bureau of Lands. It is claimed that it is only in the event that he
loses in the bidding that he can be legally dispossessed thereof.
It is the position of petitioner that all the fruits of the property, including the tolls
collected by him from the passing vehicles, which according to the trial court amounts
to P25,000.00, belongs to petitioner and not to defendant/private respondent Quirino
Comintan, in accordance with the decision itself, which decreed that the fruits of the
property shall be in lieu of interest on the amount to be paid to petitioner as
reimbursement for improvements. Any contrary opinion, in his view, would be
tantamount to an amendment of a decision which has long become final and
executory and, therefore, cannot be lawfully done.
Petitioner, therefore, prayed that: (1) a Writ of Preliminary Injunction be issued
enjoining the enforcement of the Orders of September 23, 1970 and November 18,
1970, and the Writ of Execution issued thereto, or restoring to petitioner the
possession of the property if the private respondents had been placed in possession
thereof; (2) annulling said Orders as well as the Writ of Execution, dissolving the
receivership established over the property; and (3) ordering private respondents to
account to petitioner all the fruits they may have gathered or collected from the
property in question from the time of petitioiier's illegal dispossession thereof.
On January 29, 1971, this Court issued the Writ of Preliminary Injunction. On January
30, 1971, private respondents filed a Motion for Reconsideration and/or Modification
of the Order dated January 29, 1971. This was followed by a Supplemental Motion for
Reconsideration and Manifestation on February 3, 1971. In the latter motion, private
respondents manifested that the amount of P14,040.96, representing the amount
decreed in the judgment as reimbursement to petitioner for the improvements, plus
interest for six months, has already been deposited by them in court, "with the
understanding that said amount shall be turned over to the plaintiff after the court a
quo shall have determined the improvement on Lot 5785-A, and subsequently the
remaining balance of the deposit shall be delivered to the petitioner (plaintiff therein)
in the event he loses the bid for Lot 5785-B in favor of private respondent Eleuterio
Zamora."8 The deposit is evidenced by a certification made by the Clerk of the Court
a quo.9 Contending that said deposit was a faithful compliance with the judgment of
the trial court, private respondent Quirino Comintan prayed for the dissolution of the
Writ of Injunction.
It appears that as a consequence of the deposit made by private respondents, the
Deputy, Sheriff of Calauag, Quezon ousted petitioner's representative from the land in
question and put private respondents in possession thereof. 10
On March 10, 1971, petitioner filed a "Comment on Respondents' 'Motion for
Reconsideration' dated January 29, 1971' and 'Supplemental Motion for
Reconsideration and Manifestation,'" contending that the tender of deposit mentioned
in the Suplemental Motion was not really and officially made, "inasmuch as the same
is not supported by any official receipt from the lower court, or from its clerk or
cashier, as required by law;" that said deposit does not constitute sufficient
compliance with the judgment sought to be enforced, neither was it legally and validly
made because the requisites for consignation had not been complied with; that the
tender of legal interest for six months cannot substitute petitioner's enjoyment of the
fruits of the property as long as the judgment in Civil Case No. C-90 has not been
implemented in the manner decreed therein; that contrary to the allegations of private
respondents, the value of the improvements on the whole property had been
determined by the lower court, and the segregation of the improvements for each lot
should have been raised by them at the opportune moment by asking for the
modification of the decision before it became final and executory; and that the tolls on
the property constituted "civil fruits" to which the petitioner is entitled under the terms
of the decision.
IV
The issue decisive of the controvery isafter the rendition by the trial court of its
judgment in Civil Case No. C-90 on March 22, 1966 confirming the award of one-half
of the property to Quirino Comintanwhether or not petitioner is still entitled to retain
for his own exclusive benefit all the fruits of the property, such as the tolls collected by
him from March 1967 to December 1968, and September 1969 to March 31, 1970,
amounting to about P25,000.00. In other words, petitioner contends that so long as
the aforesaid amount of P13,632,00 decreed in the judgment representing the
expenses for clearing the land and the value of the coconuts and fruit trees planted by
him remains unpaid, he can appropriate for his exclusive benefit all the fruits which he
may derive from the property, without any obligation to apply any portion thereof to
the payment of the interest and the principal of the debt.
We find this contention untenable.
There is no question that a possessor in good faith is entitled to the fruits received
before the possession is legally interrupted. 11 Possession in good faith ceases or is
legally interrupted from the moment defects in the title are made known to the
possessor, by extraneous evidence or by the filing of an action in court by the true
owner for the recovery of the property.12 Hence, all the fruits that the possessor may
receive from the time he is summoned in court, or when he answers the complaint,
must be delivered and paid by him to the owner or lawful possessor. 13
However, even after his good faith ceases, the possessor in fact can still retain the
property, pursuant to Article 546 of the New Civil Code, until he has been fully
reimbursed for all the necessary and useful expenses made by him on the property.
This right of retention has been considered as one of the conglomerate of measures
devised by the law for the protection of the possessor in good faith. Its object is to
guarantee the reimbursement of the expenses, such as those for the preservation of
the property,14 or for the enhancement of its utility or productivity.15 It permits the
actual possessor to remain in possession while he has not been reimbursed by the
person who defeated him in the possession for those necessary expenses and useful
improvements made by him on the thing possessed. The principal characteristic of
the right of retention is its accessory character. It is accessory to a principal
obligation. Considering that the right of the possessor to receive the fruits terminates
when his good faith ceases, it is necessary, in order that this right to retain may be
useful, to concede to the creditor the right to secure reimbursement from the fruits of
the property by utilizing its proceeds for the payment of the interest as well as the
principal of the debt while he remains in possession. This right of retention of the
property by the creditor, according to Scaevola, in the light of the provisions of Article
502 of the Spanish Civil Code,16 is considered not a coercive measure to oblige the
debtor to pay, depriving him temporarily of the enjoyment of the fruits of his property,
but as a means of obtainitig compensation for the debt. The right of retention in this
case is analogous to a contract of antichresis and it cati be considered as a means of
extinguishing the obligation, inasmuch as the right to retain the thing lasts only for the
period necessary to enable the creditor to be reimbursed from the fruits for the
necessary and useful expenses. 17
According to Manresa, the right of retention is, therefore, analogous to that of a
pledge, if the property retained is a movable, and to that of antichresis, if the property
held is immovable.18 This construction appears to be in harmony with similar
provisions of the civil law which employs the right of retention as a means or device
by which a creditor is able to obtain the payment of a debt. Thus, under Article 1731
of the New Civil Code, any person who has performed work upon a movable has a
right to retain it by way of pledge until he is paid. Similarly, under Article 1914 of the
same Code, the agent may retain in pledge the things which are the object of the
agency until the principal effects reimbursement of the funds advanced by the former
for the execution of the agency, or he is indemnified for all damages which he may
have suffered as a consequence of the execution of the agency, provided he is free
from fault. To the same effect, the depositary, under Article 1994 of the same Code,
may retain the thing in pledge until the full payment of what may be due him by
reason of the deposit. The usufructuary, pursuant to Article 612 of the same Code,
may retain the property until he is reimbursed for the amount paid for taxes levied on
the capital (Article 597) and tor extraordinary repairs (Article 594).
In all of these cases, the right of retention is used as a means of extinguishing the
obligation. As amply observed by Manresa: "El derecho de retencion, lo hemos dicho,
es el derecho de prenda o el de anticresis constituido por la ley con independencia
de las partes." 19 In a pledge, if the thing pledged earns or produces fruits, income,
dividends or interests, the creditor shall compensate what he receives with those
which are owing him.20 In the same manner, in a contract of antichresis, the creditor
acquires the right to receive the fruits of an immovable of his debtor with the
obligation to apply them to payment of the interest, if owing, and thereafter to the
principal of his credit. 21 The debtor can not reacquire enjoyment of the immovable
until he has actually paid what he owes the creditor. 22
Applying the afore-cited principles to the case at bar, petitioner cannot appropriate for
his own exclusive benefit the tolls which he collected from the property retained by
him. It was his duty under the law, after deducting the necessary expenses for his
administration, to apply such amount collected to the payment of the interest, and the
balance to the payment of the obligation.
We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for
administration, belong to Quirino Comintan, owner of the land through which the toll
road passed, further considering that the same was on portions of the property on
which petitioner had not introduced any improvement. The trial court itself clarified
this matter when it placed the toll road under receivership. The omission of any
mention of the tolls in the decision itself may be attributed to the fact that the tolls
appear to have been collected after the rendition of the judgment of the trial court.
The records further reveal that earnest efforts have been made by private
respondents to have the judgment executed in the most practicable manner. They
deposited in court the amount of the judgment in the sum of P13,632.00 in cash,
subject only to the accounting of the tolls collected by the petitioner so that whatever
is due from him may be set off with the amount of reimbursement. This is just and
proper under the circumstances and, under the law, compensation or set off may take
place, either totally or partially. Considering that petitioner is the creditor with respect
to the judgment obligation and the debtor with respect to the tolls collected, Comintan
being the owner thereof, the trial court's order for an accounting and compensation is
in accord with law. 23
With respect to the amount of reimbursement to be paid by Comintan, it appears that
the dispositive portion of the decision was lacking in specificity, as it merely provided
that Comintan and Zamora are jointly liable therefor. When two persons are liable
under a contract or under a judgment, and no words appear in the contract or
judgment to make each liable for the entire obligation, the presumption is that their
obligation is joint or mancomunada, and each debtor is liable only for a proportionate
part of the obligation. 24 The judgment debt of P13,632.00 should, therefore, be pro-
rated in equal shares to Comintan and Zamora.
Regarding Lot 5785-B, it appears that no public sale has yet been conducted by the
Bureau of Lands and, therefore, petitioner is entitled to remain in possession thereof.
This is not disputed by respondent Eleuterio Zamora. 25 After public sale is had and
in the event that Ortiz is not declared the successful bidder, then he should be
reimbursed by respondent Zamora in the corresponding amount for the improvements
on Lot 5785-B.

WHEREFORE, in view hereof, the Order of respondent Court of November 18, 1970
is hereby modified to conform to the foregoing judgment. The Writ of Preliminary
Injunction, dated January 29, 1971, is hereby dissolved. Without special
pronouncement as to costs.
Geminiano v CA; G.R. No. 120303. July 24, 1996.
[G.R. No. 120303. July 24, 1996]
FEDERICO GEMINIANO, MARIA GEMINIANO, ERNESTO GEMINIANO,
ASUNCION GEMINIANO, LARRY GEMINIANO, and MARLYN GEMINIANO,
petitioners, vs. COURT OF APPEALS, DOMINADOR NICOLAS, and MARY A.
NICOLAS, respondents.
DECISION
DAVIDE, JR., J.:
This petition for review on certiorari has its origins in Civil Case No. 9214 of Branch 3
of the Municipal Trial Court in Cities (MTCC) in Dagupan City for unlawful detainer
and damages. The petitioners ask the Court to set aside the decision of the Court of
Appeals affirming the decision of Branch 40 of the Regional Trial Court (RTC) of
Dagupan City, which, in turn, reversed the MTCC; ordered the petitioners to
reimburse the private respondents the value of the house in question and other
improvements; and allowed the latter to retain the premises until reimbursement was
made.
It appears that Lot No. 3765-B-1 containing an area of 314 square meters was
originally owned by the petitioners' mother, Paulina Amado vda. de Geminiano. On a
12-square-meter portion of that lot stood the petitioners' unfinished bungalow, which
the petitioners sold in November 1978 to the private respondents for the sum of
P6,000.00, with an alleged promise to sell to the latter that portion of the lot occupied
by the house. Subsequently, the petitioners' mother executed a contract of lease over
a 126 square-meter portion of the lot, including that portion on which the house stood,
in favor of the private respondents for P40.00 per month for a period of seven years
commencing on 15 November 1978.[1] The private respondents then introduced
additional improvements and registered the house in their names. After the expiration
of the lease contract in November 1985, however, the petitioners' mother refused to
accept the monthly rentals.
It turned out that the lot in question was the subject of a suit, which resulted in its
acquisition by one Maria Lee in 1972. In 1982, Lee sold the lot to Lily Salcedo, who in
turn sold it in 1984 to the spouses Agustin and Ester Dionisio.
On 14 February 1992, the Dionisio spouses executed a Deed of Quitclaim over the
said property in favor of the petitioners.[2] As such, the lot was registered in the
latter's names.[3]
On 9 February 1993, the petitioners sent, via registered mail, a letter addressed to
private respondent Mary Nicolas demanding that she vacate the premises and pay
the rentals in arrears within twenty days from notice.[4]
Upon failure of the private respondents to heed the demand, the petitioners filed with
the MTCC of Dagupan City a complaint for unlawful detainer and damages.
During the pre-trial conference, the parties agreed to confine the issues to: (1)
whether there was an implied renewal of the lease which expired in November 1985;
(2) whether the lessees were builders in good faith and entitled to reimbursement of
the value of the house and improvements; and (3) the value of the house.
The parties then submitted their respective position papers and the case was heard
under the Rule on Summary Procedure.
On the first issue, the court held that since the petitioners' mother was no longer the
owner of the lot in question at the time the lease contract was executed in 1978, in
view of its acquisition by Maria Lee as early as 1972, there was no lease to speak of,
much less, a renewal thereof. And even if the lease legally existed, its implied
renewal was not for the period stipulated in the original contract, but only on a month-
to-month basis pursuant to Article 1687 of the Civil Code. The refusal of the
petitioners' mother to accept the rentals starting January 1986 was then a clear
indication of her desire to terminate the monthly lease. As regards the petitioners'
alleged failed promise to sell to the private respondents the lot occupied by the
house, the court held that such should be litigated in a proper case before the proper
forum, not an ejectment case where the only issue was physical possession of the
property.
The court resolved the second issue in the negative, holding that Articles 448 and 546
of the Civil Code, which allow possessors in good faith to recover the value of
improvements and retain the premises until reimbursed, did not apply to lessees like
the private respondents, because the latter knew that their occupation of the premises
would continue only during the life of the lease. Besides, the rights of the private
respondents were specifically governed by Article 1678, which allows reimbursement
of up to one-half of the value of the useful improvements, or removal of the
improvements should the lessor refuse to reimburse.
On the third issue, the court deemed as conclusive the private respondents' allegation
that the value of the house and improvements was P180,000.00, there being no
controverting evidence presented.
The trial court thus ordered the private respondents to vacate the premises, pay the
petitioners P40.00 a month as reasonable compensation for their stay thereon from
the filing of the complaint on 14 April 1993 until they vacated, and to pay the sum of
P1,000.00 as attorney's fees, plus costs.[5]
On appeal by the private respondents, the RTC of Dagupan City reversed the trial
court's decision and rendered a new judgment: (1) ordering the petitioners to
reimburse the private respondents for the value of the house and improvements in the
amount of P180,000.00 and to pay the latter P10,000.00 as attorney's fees and
P2,000.00 as litigation expenses; and (2) allowing the private respondents to remain
in possession of the premises until they were fully reimbursed for the value of the
house.[6] It ruled that since the private respondents were assured by the petitioners
that the lot they leased would eventually be sold to them, they could be considered
builders in good faith, and as such, were entitled to reimbursement of the value of the
house and improvements with the right of retention until reimbursement had been
made.
On appeal, this time by the petitioners, the Court of Appeals affirmed the decision of
the RTC[7] and denied[8] the petitioners' motion for reconsideration. Hence, the
present petition.
The Court is confronted with the issue of which provision of law governs the case at
bench: Article 448 or Article 1678 of the Civil Code? The said articles read as follows:
Art. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or 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.
xxx xxx xxx
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.
With regard to ornamental expenses, the lessee shall not be entitled to any
reimbursement, but he may remove the ornamental objects, provided no damage is
caused to the principal thing, and the lessor does not choose to retain them by paying
their value at the time the lease is extinguished.
The crux of the said issue then is whether the private respondents are builders in
good faith or mere lessees.
The private respondents claim they are builders in good faith, hence, Article 448 of
the Civil Code should apply. They rely on the lack of title of the petitioners' mother at
the time of the execution of the contract of lease, as well as the alleged assurance
made by the petitioners that the lot on which the house stood would be sold to them.
It has been said that while the right to let property is an incident of title and
possession, a person may be a lessor and occupy the position of a landlord to the
tenant although he is not the owner of the premises let.[9] After all, ownership of the
property is not being transferred,[10] only the temporary use and enjoyment
thereof.[11]
In this case, both parties admit that the land in question was originally owned by the
petitioners' mother. The land was allegedly acquired later by one Maria Lee by virtue
of an extrajudicial foreclosure of mortgage. Lee, however, never sought a writ of
possession in order that she gain possession of the property in question.[12] The
petitioners' mother therefore remained in possession of the lot.
It is undisputed that the private respondents came into possession of a 126 square-
meter portion of the said lot by virtue of a contract of lease executed by the
petitioners' mother in their favor. The juridical relation between the petitioners' mother
as lessor, and the private respondents as lessees, is therefore well-established, and
carries with it a recognition of the lessor's title.[13] The private respondents, as
lessees who had undisturbed possession for the entire term under the lease, are then
estopped to deny their landlord's title, or to assert a better title not only in themselves,
but also in some third person while they remain in possession of the leased premises
and until they surrender possession to the landlord.[14] This estoppel applies even
though the lessor had no title at the time the relation of lessor and lessee was
created,[15] and may be asserted not only by the original lessor, but also by those
who succeed to his title.[16]
Being mere lessees, the private respondents knew that their occupation of the
premises would continue only for the life of the lease. Plainly, they cannot be
considered as possessors nor builders in good faith.[17]
In a plethora of cases,[18] this Court has held that Article 448 of the 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.
Anent the alleged promise of the petitioners to sell the lot occupied by the private
respondents' house, the same was not substantiated by convincing evidence. Neither
the deed of sale over the house nor the contract of lease contained an option in favor
of the respondent spouses to purchase the said lot. And even if the petitioners indeed
promised to sell, it would not make the private respondents possessors or builders in
good faith so as to be covered by the provisions of Article 448 of the Civil Code. The
latter cannot raise the mere expectancy of ownership of the aforementioned lot
because the alleged promise to sell was not fulfilled nor its existence even proven.
The first thing that the private respondents should have done was to reduce the
alleged promise into writing, because under Article 1403 of the Civil Code, an
agreement for the sale of real property or an interest therein is unenforceable, unless
some note or memorandum thereof be produced. Not having taken any steps in order
that the alleged promise to sell may be enforced, the private respondents cannot
bank on that promise and profess any claim nor color of title over the lot in question.
There is no need to apply by analogy the provisions of Article 448 on indemnity as
was done in Pecson vs. Court of Appeals,[19] because the situation sought to be
avoided and which would justify the application of that provision, is not present in this
case. Suffice it to say, "a state of forced co-ownership" would not be created between
the petitioners and the private respondents. For, as correctly pointed out by the
petitioners, the rights of the private respondents as lessees are governed by Article
1678 of the Civil Code which allows reimbursement to the extent of one-half of the
value of the useful improvements.
It must be stressed, however, that the right to indemnity under Article 1678 of the Civil
Code arises only if the lessor opts to appropriate the improvements. Since the
petitioners refused to exercise that option,[20] the private respondents cannot compel
them to reimburse the one-half value of the house and improvements. Neither can
they retain the premises until reimbursement is made. The private respondents' sole
right then is to remove the improvements without causing any more impairment upon
the property leased than is necessary.[21]
WHEREFORE, judgment is hereby rendered GRANTING the instant petition;
REVERSING and SETTING ASIDE the decision of the Court of Appeals of 27
January 1995 in CA-G.R. SP No. 34337; and REINSTATING the decision of Branch 3
of the Municipal Trial Court in Cities of Dagupan City in Civil Case No. 9214 entitled
"Federico Geminiano, et al. vs. Dominador Nicolas, et al."
Costs against the private respondents.
SO ORDERED.
Pleasantville Devt Corp v CA; G.R. No. 79688;
February 1, 1996.
[G.R. No. 79688. February 1, 1996]
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF
APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED
JARDINICO, respondents.
DECISION
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property erroneously
delivered by the owners agent, a builder in good faith? This is the main issue resolved
in this petition for review on certiorari to reverse the Decision[1] of the Court of
Appeals[2] in CA-G.R. SP No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court resolved to
transfer this case (along with several others) to the Third Division. After due
deliberation and consultation, the Court assigned the writing of this Decision to the
undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II
and located at Taculing Road, Pleasantville Subdivision, Bacolod City. In 1975,
respondent Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot
9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of
Bacolod City on December 19, 1978 Transfer Certificate of Title No. 106367 in his
name. It was then that he discovered that improvements had been introduced on Lot
9 by respondent Wilson Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same
subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent
of petitioner. Under the Contract to Sell on Installment, Kee could possess the lot
even before the completion of all installment payments. On January 20, 1975, Kee
paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for
the preparation of the lot plan. These amounts were paid prior to Kees taking actual
possession of Lot 8. After the preparation of the lot plan and a copy thereof given to
Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kees wife,
Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by
Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store,
an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The
parties tried to reach an amicable settlement, but failed.
On January 30, 1981, Jardinicos lawyer wrote Kee, demanding that the latter remove
all improvements and vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed
with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC), a complaint
for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI.
It further ruled that petitioner and CTTEI could not successfully invoke as a defense
the failure of Kee to give notice of his intention to begin construction required under
paragraph 22 of the Contract to Sell on Installment and his having built a sari-sari
store without. the prior approval of petitioner required under paragraph 26 of said
contract, saying that the purpose of these requirements was merely to regulate the
type of improvements to be constructed on the lot[3].
However, the MTCC found that petitioner had already rescinded its contract with Kee
over Lot 8 for the latters failure to pay the installments due, and that Kee had not
contested the rescission. The rescission was effected in 1979, before the complaint
was instituted. The MTCC concluded that Kee no longer had any right over the lot
subject of the contract between him and petitioner. Consequently, Kee must pay
reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim
reimbursement for the improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate tithe premises of Lot 9, covered by TCT
No. 106367 and to remove all structures and improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P 15.00
a day computed from the time this suit was filed on March 12, 1981 until he actually
vacates the premises. This amount shall bear interests (sic) at the rate of 12 per cent
(sic) per annum.
3. Third-Party Defendant CT. Torres Enterprises, Inc. and Pleasantville Subdivision
are ordered to pay the plaintiff jointly and severally the sum of P3,000.00 as attorneys
fees and P700.00 as cost and litigation expenses.[4]
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that
petitioner and CTTEI were not at fault or were not negligent, there being no
preponderant evidence to show that they directly participated in the delivery of Lot 9
to Kee.[5] It found Kee a builder in bad faith. It further ruled that even assuming
arguendo that Kee was acting in good faith, he was, nonetheless, guilty of unlawfully
usurping the possessory right of Jardinico over Lot 9 from the time he was served
with notice to vacate said lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to the order
against the defendant to vacate the premises of Lot No. 9 covered by Transfer
Certificate of Title No. T-106367 of the land records of Bacolod City; the removal of all
structures and improvements introduced thereon at his expense and the payment to
plaintiff (sic) the sum of Fifteen (P 15.00) Pesos a day as reasonable rental to be
computed from January 30, 1981, the date of the demand, and not from the date of
the filing of the complaint, until he had vacated (sic) the premises, with interest
thereon at 12% per annum. This Court further renders judgment against the
defendant to pay the plaintiff the sum of Three Thousand (P3,000.00) Pesos as
attorneys fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants Pleasantville Development
Corporation and C.T. Torres Enterprises, Inc. is dismissed. The order against Third-
Party Defendants to pay attorneys fees to plaintiff and costs of litigation is
reversed.[6]
Following the denial of his motion for reconsideration on October 20, 1986, Kee
appealed directly to the Supreme Court, which referred the matter to the Court of
Appeals.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of
the mix-up when he began construction of the improvements on Lot 8. It further ruled
that the erroneous delivery was due to the negligence of CTTEI, and that such wrong
delivery was likewise imputable to its principal, petitioner herein. The appellate court
also ruled that the award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and
judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to the improvements he
introduced on Lot 9, and is entitled to the rights granted him under Articles 448, 546
and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable under the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter,
remove these structures, the third-party defendants shall answer for all demolition
expenses and the value of the improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer
for the amount representing the value of Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are ordered to pay in solidum the amount of P3,000.00 to
Jardinico as attorneys fees, as well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for the determination of
the actual value of the improvements and the property (Lot 9), as well as for further
proceedings in conformity with Article 448 of the New Civil Code.[7]
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the respondent
Courts Decision, as follows:
1. The Court of Appeals has decided the case in a way probably not in accord with
law or the the (sic) applicable decisions of the Supreme Court on third-party
complaints, by ordering third-party defendants to pay the demolition expenses and/or
price of the land;
2. The Court of Appeals has so far departed from the accepted course of judicial
proceedings, by granting to private respondent-Kee the rights of a builder in good
faith in excess of what the law provides, thus enriching private respondent Kee at the
expense of the petitioner;
3. In the light of the subsequent events or circumstances which changed the rights of
the parties, it becomes imperative to set aside or at least modify the judgment of the
Court of Appeals to harmonize with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts of the lower court
is clearly a builder in bad faith, having violated several provisions of the contract to
sell on installments;
5. The decision of the Court of Appeals, holding the principal, Pleasantville
Development Corporation (liable) for the acts made by the agent in excess of its
authority is clearly in violation of the provision of the law;
6. The award of attorneys fees is clearly without basis and is equivalent to putting a
premium in (sic) court litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?

(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises,
Inc.? and
(3) Is the award of attorneys fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTCs ruling that
Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and conclusions of the
Court of Appeals that Kee was a builder in good faith. We agree with the following
observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors committed by CTTEI,
when it pointed the wrong property to Wilson Kee and his wife. It is highly improbable
that a purchaser of a lot would knowingly and willingly build his residence on a lot
owned by another, deliberately exposing himself and his family to the risk of being
ejected from the land and losing all improvements thereon, not to mention the social
humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in
ascertaining the identity of his property. Lot 8 is covered by Transfer Certificate of
Title No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-
106367. Hence, under the Torrens system of land registration, Kee is presumed to
have knowledge of the metes and bounds of the property with which he is dealing. x x
x whatever consequential change therein made due to erosion, the said Vendee shall
xxx xxx xxx
But as Kee is a layman not versed in the technical description of his property, he had
to find a way to ascertain that what was described in TCT No. 69561 matched Lot 8.
Thus, he went to the subdivision developers agent and applied and paid for the
relocation of the lot, as well as for the production of a lot plan by CTTEIs geodetic
engineer. Upon Kees receipt of the map, his wife went to the subdivision site
accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the
land she was pointing to was indeed Lot 8. Having full faith and confidence in the
reputation of CTTEI, and because of the companys positive identification of the
property, Kee saw no reason to suspect that there had been a misdelivery. The steps
Kee had taken to protect his interests were reasonable. There was no need for him to
have acted ex-abundantia cautela, such as being present during the geodetic
engineers relocation survey or hiring an independent geodetic engineer to
countercheck for errors, for the final delivery of subdivision lots to their owners is part
of the regular course of everyday business of CTTEI. Because of CTTEIs blunder,
what Kee had hoped to forestall did in fact transpire. Kees efforts all went to
naught.[8]
Good faith consists in the belief of the builder that the land he is building on is his and
his ignorance of any defect or flaw in his title.[9] And as good faith is presumed,
petitioner has the burden of proving bad faith on the part of Kee.[10]
At the time he built improvements on Lot 8, Kee believed that said lot was what he
bought from petitioner. He was not aware that the lot delivered to him was not Lot 8.
Thus, Kees good faith. Petitioner failed to prove otherwise.
To demonstrate Kees bad faith, petitioner points to Kees violation of paragraphs 22
and 26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee was a
builder in good faith, that is, on his state of mind at the time he built the improvements
on Lot 9. These alleged violations may give rise to petitioners cause of action against
Kee under the said contract (contractual breach), but may not be bases to negate the
presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on
Installment covering Lot 8 between it and Kee was rescinded long before the present
action was instituted. This has no relevance on the liability of petitioner, as such fact
does not negate the negligence of its agent in pointing out the wrong lot to Kee. Such
circumstance is relevant only as it gives Jardinico a cause of action for unlawful
detainer against Kee.
Petitioner next contends that Kee cannot claim that another lot was erroneously
pointed out to him because the latter agreed to the following provision in the Contract
of Sale on Installment, to wit:
13. The Vendee hereby declares that prior to the execution of his contract he/she has
personally examined or inspected the property made subject-matter hereof, as to its
location, contours, as well as the natural condition of the lots and from the date hereof
bear the expenses of the necessary fillings, when the same is so desired by
him/her.[11]
The subject matter of this provision of the contract is the change of the location,
contour and condition of the lot due to erosion. It merely provides that the vendee,
having examined the property prior to the execution of the contract, agrees to
shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted away his
right to recover damages resulting from petitioners negligence. Such waiver would be
contrary to public policy and cannot be allowed. Rights may be waived, unless the
waiver is contrary to law, public order, public policy, morals, or good customs, or
prejudicial to a third person with a right recognized by law.[12]
The Second Issue: Petitioners Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed
by the RTC after ruling that there was no evidence from which fault or negligence on
the part of petitioner and CTTEI can be inferred. The Court of Appeals disagreed and
found CTTEI negligent for the erroneous delivery of the lot by Octaviano, its
employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the
erroneous delivery of Lot 9 to Kee was an act which was clearly outside the scope of
its authority, and consequently, CTTEI alone should be liable. It asserts that while
[CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was never
authorized to deliver the wrong lot to Kee.[13]
Petitioners contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within the
scope of his authority, and should bear the damage caused to third persons.[14] On
the other hand, the agent who exceeds his authority is personally liable for the
damage.[15]
CTTEI was acting within its authority as the sole real estate representative of
petitioner when it made the delivery to Kee. In acting within its scope of authority, it
was, however, negligent. It is this negligence that is the basis of petitioners liability, as
principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July
24, 1987 entered into a deed of sale, wherein the former sold Lot 9 to Kee. Jardinico
and Kee did not inform the Court of Appeals of such deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled Jardinico vs. Kee which is now pending appeal
with the Court of Appeals, regardless of the outcome of the decision shall be mutually
disregarded and shall not be pursued by the parties herein and shall be considered
dismissed and without effect whatsoever;[16]
Kee asserts though that the terms and conditions in said deed of sale are strictly for
the parties thereto and that (t)here is no waiver made by either of the parties in said
deed of whatever favorable judgment or award the honorable respondent Court of
Appeals may make in their favor against herein petitioner Pleasantville Development
Corporation and/or private respondent C.T. Torres Enterprises, Inc.[17]
Obviously, the deed of sale can have no effect on the liability of petitioner. As we
have earlier stated, petitioners liability is grounded on the negligence of its agent. On
the other hand, what the deed of sale regulates are the reciprocal rights of Kee and
Jardinico; it stressed that they had reached an agreement independent of the
outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable under the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter,
remove these structures, the third-party defendants shall answer for all demolition
expenses and the value of the improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer
for the amount representing the value of Lot 9 that Kee should pay to Jardinico.[18]
Petitioner contends that if the above holding would be carried out, Kee would be
unjustly enriched at its expense. In other words, Kee would be -able to own the lot, as
buyer, without having to pay anything on it, because the aforequoted portion of
respondent Courts Decision would require petitioner and CTTEI jointly and solidarily
to answer or reimburse Kee there for.
We agree with petitioner.
Petitioners liability lies in the negligence of its agent CTTEI. For such negligence, the
petitioner should be held liable for damages. Now, the extent and/or amount of
damages to be awarded is a factual issue which should be determined after evidence
is adduced. However, there is no showing that such evidence was actually presented
in the trial court; hence no damages could now be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and
owner in good faith, respectively, are regulated by law (i.e., Arts. 448, 546 and 548 of
the Civil Code). It was error for the Court of Appeals to make a slight modification in
the application of such law, on the ground of equity. At any rate, as it stands now, Kee
and Jardinico have amicably settled through their deed of sale their rights and
obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the dispositive
portion of the Court of Appeals Decision [as reproduced above] holding petitioner and
CTTEI solidarily liable.
The Third Issue: Attorneys Fees
The MTCC awarded Jardinico attorneys fees and costs in the amount of P3,000.00
and P700.00, respectively, as prayed for in his complaint. The RTC deleted the
award, consistent with its ruling that petitioner was without fault or negligence. The
Court of Appeals, however, reinstated the award of attorneys fees after ruling that
petitioner was liable for its agents negligence.
The award of attorneys fees lies within the discretion of the court and depends upon
the circumstances of each case.[19] We shall not interfere with the discretion of the
Court of Appeals. Jardinico was compelled to litigate for the protection of his interests
and for the recovery of damages sustained as a result of the negligence of petitioners
agent.[20]
In sum, we rule that Kee is a builder in good faith. The disposition of the Court of
Appeals that Kee is entitled to the rights granted him under Articles 448, 546 and 548
of the New Civil Code is deleted, in view of the deed of sale entered into by Kee and
Jardinico, which deed now governs the rights of Jardinico and Kee as to each other.
There is also no further need, as ruled by the appellate Court, to remand the case to
the court of origin for determination of the actual value of the improvements and the
property (Lot 9), as well as for further proceedings in conformity with Article 448 of the
New Civil Code.
WHEREFORE, the petition is partially GRANTED. The Decision of the Court of
Appeals is hereby MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and respondent C.T. Tones
Enterprises, Inc. are declared solidarily liable for damages due to negligence;
however, since the amount and/or extent of such damages was not proven during the
trial, the same cannot now be quantified and awarded;
(3) Petitioner Pleasantville Develpment Corporation and respondent C.T. Torres
Enterprises, Inc. are ordered to pay in solidum the amount of P3,000.00 to Jardinico
as attorneys fees, as well as litigation expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.
Felices v Iriola; G.R. No. L-11269. February 28, 1958.
[G.R. No. L-11269. February 28, 1958.]
SILVERIO FELICES, Plaintiff-Appellee, v. MAMERTO IRIOLA, Defendant-Appellant.
Ezekiel S. Grageda for Appellant.
Reyes & Dy-Liaco for Appellee.
SYLLABUS
1. PUBLIC LANDS; HOMESTEAD; SALE WITHIN PROHIBITIVE PERIOD, NULL
AND VOID; EFFECT ON TITLE OF GRANTEE. A sale of homestead executed
within the five-year prohibitive period under Section 118 of the Public Land Law is null
and void ab initio. Consequently, the grantee- vendor never lost his title or ownership
over the homestead, and there is no need for him to repurchase the same from the
vendee, or for the latter to execute a deed of reconveyance in his favor. The case is
actually for mutual restitution, incident to the nullity of the conveyance.
2. ID.; ID.; ID.; FORFEITURE OF IMPROVEMENTS MADE IN BAD FAITH. While
both grantee and vendee acted in bad faith because they knew that the sale was
illegal and void, and consequently, under Art. 453 of the Civil Code, their rights should
be the same as though both had acted in good faith, however, the vendee in the case
at bar, can not recover the value of the improvements introduced by him because
they were made on the premises only after the grantee had tried to recover the land
in question from him. By so doing, he acted in bad faith and as a penalty therefor, he
must forfeit his improvements without any right to reimbursement. "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. 449, New Civil Code).
DECISION
REYES, J. B. L., J.:
Originally brought to the Court of Appeals, this appeal was certified to us by that
Court on the ground that it does not raise any genuine issue of fact.
It appears that plaintiff and appellee Silverio Felices was the grantee of a homestead
of over eight hectares located in barrio Curry, Municipality of Pili, Province of
Camarines Sur, under Homestead Patent No. V-2117 dated January 26, 1949, and
by virtue of which he was issued Original Certificate of Title No. 104 over said
property. The month following the issuance of his patent, on February 24, 1949,
appellee conveyed in conditional sale to defendant and appellant Mamerto Iriola a
portion of his homestead of more than four hectares, for the consideration of P1,700.
The conveyance (Exh. 1) expressly stipulates that the sale was subject to the
provisions of Sec. 119 of Act 141, as amended, and to the prohibitions spread on the
vendors patent; and that after the lapse of five years or as soon as may be allowed
by law, the vendor or his successors would execute in vendees favor a deed of
absolute sale over the land in question.
Two years after the sale, on April 19, 1951, appellee tried to recover the land in
question from appellant, but the latter refused to allow it unless he was paid the
amount of P2,000 as the alleged value of improvements he had introduced on the
property. In view of appellants persistent refusal, plaintiff deposited the received price
in court and filed this action on October 4, 1951.
In the court below, appellant, while recognizing appellees right to "redeem", insisted
that he must first be reimbursed the value of his improvements. Whereupon, the court
appointed a commissioner to ascertain the nature and value of the alleged
improvements, and thereafter found that said improvements were made by defendant
either after plaintiff had informed him of his intention to recover the land, or after the
complaint had been filed; some of the improvements were even introduced after a
commissioner had already been appointed to appraise their value. Wherefore, the
lower court held defendant in bad faith and not entitled to reimbursement for his
improvements. Defendant was, likewise, ordered to accept the amount of P1,700
deposited by plaintiff in court, to execute in favor of the latter the corresponding deed
of reconveyance, and to restore him in possession of the land in question.
At the outset, it must be made clear that as the sale in question was executed by the
parties within the five-year prohibitive period under section 118 of the Public Land
Law, the same is absolutely null and void and ineffective from its inception.
Consequently, appellee never lost his title or ownership over the land in question, and
there was no need either for him to repurchase the same from appellant, or for the
latter to execute a deed of reconveyance in his favor. The case is actually for mutual
restitution, incident to the nullity ab initio of the conveyance.
The question now is: May appellant recover or be reimbursed the value of his
improvements on the land in question, on the theory that as both he and appellee
knew that their sale was illegal and void, they were both in bad faith and
consequently, Art. 453 of the Civil Code applies in that "the rights of one and the other
shall be the same as though both had acted in good faith" ?
The rule of Art. 453 of the Civil Code invoked by appellant 1 can not be applied to the
instant case for the reason that the lower court found, and appellant admits, that the
improvements in question were made on the premises only after appellee had tried to
recover the land in question from appellant, and even during the pendency of this
action in the court below. After appellant had refused to restore the land to the
appellee, to the extent that the latter even had to resort to the present action to
recover his property, appellee could no longer be regarded as having impliedly
assented or conformed to the improvements thereafter made by appellant on the
premises. Upon the other hand, appellant, recognizing as he does appellees right to
get back his property, continued to act in bad faith when he made improvements on
the land in question after he had already been asked extra-judicially and judicially, to
surrender and return its possession to appellee; and as a penalty for such bad faith,
he must forfeit his improvements without any right to reimbursement therefor. "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. 449, New Civil Code).
Wherefore, the judgment appealed from is affirmed, with the sole modification that
appellant need not execute a deed of reconveyance in appellees favor, the original
conveyance being hereby declared void ab initio. Costs against appellant Mamerto
Iriola. So ordered.
Sps Nuguid v CA (2005); G.R. No. 151815. February
23, 2005.
[G.R. No. 151815. February 23, 2005]
SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners, vs. HON. COURT
OF APPEALS AND PEDRO P. PECSON, respondents.
DECISION
QUISUMBING, J.:
This is a petition for review on certiorari of the Decision[1] dated May 21, 2001, of the
Court of Appeals in CA-G.R. CV No. 64295, which modified the Order dated July 31,
1998 of the Regional Trial Court (RTC) of Quezon City, Branch 101 in Civil Case No.
Q-41470. The trial court ordered the defendants, among them petitioner herein Juan
Nuguid, to pay respondent herein Pedro P. Pecson, the sum of P1,344,000 as
reimbursement of unrealized income for the period beginning November 22, 1993 to
December 1997. The appellate court, however, reduced the trial courts award in favor
of Pecson from the said P1,344,000 to P280,000. Equally assailed by the petitioners
is the appellate courts Resolution[2] dated January 10, 2002, denying the motion for
reconsideration.
It may be recalled that relatedly in our Decision dated May 26, 1995, in G.R. No.
115814, entitled Pecson v. Court of Appeals, we set aside the decision of the Court of
Appeals in CA-G.R. SP No. 32679 and the Order dated November 15, 1993, of the
RTC of Quezon City, Branch 101 and remanded the case to the trial court for the
determination of the current market value of the four-door two-storey apartment
building on the 256-square meter commercial lot.
The antecedent facts in this case are as follows:
Pedro P. Pecson owned a commercial lot located at 27 Kamias Road, Quezon City,
on which he built a four-door two-storey apartment building. For failure to pay realty
taxes, the lot was sold at public auction by the City Treasurer of Quezon City to
Mamerto Nepomuceno, who in turn sold it for P103,000 to the spouses Juan and
Erlinda Nuguid.
Pecson challenged the validity of the auction sale before the RTC of Quezon City in
Civil Case No. Q-41470. In its Decision,[3] dated February 8, 1989, the RTC upheld
the spouses title but declared that the four-door two-storey apartment building was
not included in the auction sale.[4] This was affirmed in toto by the Court of Appeals
and thereafter by this Court, in its Decision[5] dated May 25, 1993, in G.R. No.
105360 entitled Pecson v. Court of Appeals.
On June 23, 1993, by virtue of the Entry of Judgment of the aforesaid decision in G.R.
No. 105360, the Nuguids became the uncontested owners of the 256-square meter
commercial lot.
As a result, the Nuguid spouses moved for delivery of possession of the lot and the
apartment building.
In its Order[6] of November 15, 1993, the trial court, relying upon Article 546[7] of the
Civil Code, ruled that the Spouses Nuguid were to reimburse Pecson for his
construction cost of P53,000, following which, the spouses Nuguid were entitled to
immediate issuance of a writ of possession over the lot and improvements. In the
same order the RTC also directed Pecson to pay the same amount of monthly rentals
to the Nuguids as paid by the tenants occupying the apartment units or P21,000 per
month from June 23, 1993, and allowed the offset of the amount of P53,000 due from
the Nuguids against the amount of rents collected by Pecson from June 23, 1993 to
September 23, 1993 from the tenants of the apartment.[8]
Pecson duly moved for reconsideration, but on November 8, 1993, the RTC issued a
Writ of Possession,[9] directing the deputy sheriff to put the spouses Nuguid in
possession of the subject property with all the improvements thereon and to eject all
the occupants therein.
Aggrieved, Pecson then filed a special civil action for certiorari and prohibition
docketed as CA-G.R. SP No. 32679 with the Court of Appeals.
In its decision of June 7, 1994, the appellate court, relying upon Article 448[10] of the
Civil Code, affirmed the order of payment of construction costs but rendered the issue
of possession moot on appeal, thus:
WHEREFORE, while it appears that private respondents [spouses Nuguid] have not
yet indemnified petitioner [Pecson] with the cost of the improvements, since Annex I
shows that the Deputy Sheriff has enforced the Writ of Possession and the premises
have been turned over to the possession of private respondents, the quest of
petitioner that he be restored in possession of the premises is rendered moot and
academic, although it is but fair and just that private respondents pay petitioner the
construction cost of P53,000.00; and that petitioner be ordered to account for any and
all fruits of the improvements received by him starting on June 23, 1993, with the
amount of P53,000.00 to be offset therefrom.
IT IS SO ORDERED.[11] [Underscoring supplied.]
Frustrated by this turn of events, Pecson filed a petition for review docketed as G.R.
No. 115814 before this Court.
On May 26, 1995, the Court handed down the decision in G.R. No 115814, to wit:
WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and
the Order of 15 November 1993 of the Regional Trial Court, Branch 101, Quezon City
in Civil Case No. Q-41470 are hereby SET ASIDE.
The case is hereby remanded to the trial court for it to determine the current market
value of the apartment building on the lot. For this purpose, the parties shall be
allowed to adduce evidence on the current market value of the apartment building.
The value so determined shall be forthwith paid by the private respondents [Spouses
Juan and Erlinda Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner
shall be restored to the possession of the apartment building until payment of the
required indemnity.
No costs.
SO ORDERED.[12] [Emphasis supplied.]
In so ruling, this Court pointed out that: (1) Article 448 of the Civil Code is not
apposite to the case at bar where the owner of the land is the builder, sower, or
planter who then later lost ownership of the land by sale, but may, however, be
applied by analogy; (2) the current market value of the improvements should be made
as the basis of reimbursement; (3) Pecson was entitled to retain ownership of the
building and, necessarily, the income therefrom; (4) the Court of Appeals erred not
only in upholding the trial courts determination of the indemnity, but also in ordering
Pecson to account for the rentals of the apartment building from June 23, 1993 to
September 23, 1993.
On the basis of this Courts decision in G.R. No. 115814, Pecson filed a Motion to
Restore Possession and a Motion to Render Accounting, praying respectively for
restoration of his possession over the subject 256-square meter commercial lot and
for the spouses Nuguid to be directed to render an accounting under oath, of the
income derived from the subject four-door apartment from November 22, 1993 until
possession of the same was restored to him.
In an Order[13] dated January 26, 1996, the RTC denied the Motion to Restore
Possession to the plaintiff averring that the current market value of the building should
first be determined. Pending the said determination, the resolution of the Motion for
Accounting was likewise held in abeyance.
With the submission of the parties assessment and the reports of the subject realty,
and the reports of the Quezon City Assessor, as well as the members of the duly
constituted assessment committee, the trial court issued the following Order[14] dated
October 7, 1997, to wit:
On November 21, 1996, the parties manifested that they have arrived at a
compromise agreement that the value of the said improvement/building is
P400,000.00 The Court notes that the plaintiff has already received P300,000.00.
However, when defendant was ready to pay the balance of P100,000.00, the plaintiff
now insists that there should be a rental to be paid by defendants. Whether or not this
should be paid by defendants, incident is hereby scheduled for hearing on November
12, 1997 at 8:30 a.m.
Meantime, defendants are directed to pay plaintiff the balance of P100,000.00.
SO ORDERED.[15]
On December 1997, after paying the said P100,000 balance to Pedro Pecson the
spouses Nuguid prayed for the closure and termination of the case, as well as the
cancellation of the notice of lis pendens on the title of the property on the ground that
Pedro Pecsons claim for rentals was devoid of factual and legal bases.[16]
After conducting a hearing, the lower court issued an Order dated July 31, 1998,
directing the spouses to pay the sum of P1,344,000 as reimbursement of the
unrealized income of Pecson for the period beginning November 22, 1993 up to
December 1997. The sum was based on the computation of P28,000/month rentals of
the four-door apartment, thus:
The Court finds plaintiffs motion valid and meritorious. The decision of the Supreme
Court in the aforesaid case [Pecson vs. Court of Appeals, 244 SCRA 407] which set
aside the Order of this Court of November 15, 1993 has in effect upheld plaintiffs right
of possession of the building for as long as he is not fully paid the value thereof. It
follows, as declared by the Supreme Court in said decision that the plaintiff is entitled
to the income derived therefrom, thus
...
Records show that the plaintiff was dispossessed of the premises on November 22,
1993 and that he was fully paid the value of his building in December 1997.
Therefore, he is entitled to the income thereof beginning on November 22, 1993, the
time he was dispossessed, up to the time of said full payment, in December 1997, or
a total of 48 months.
The only question left is the determination of income of the four units of apartments
per month. But as correctly pointed out by plaintiff, the defendants have themselves
submitted their affidavits attesting that the income derived from three of the four units
of the apartment building is P21,000.00 or P7,000.00 each per month, or P28,000.00
per month for the whole four units. Hence, at P28,000.00 per month, multiplied by 48
months, plaintiff is entitled to be paid by defendants the amount of P1,344,000.00.[17]
The Nuguid spouses filed a motion for reconsideration but this was denied for lack of
merit.[18]
The Nuguid couple then appealed the trial courts ruling to the Court of Appeals, their
action docketed as CA-G.R. CV No. 64295.
In the Court of Appeals, the order appealed from in CA-G.R. CV No. 64295, was
modified. The CA reduced the rentals from P1,344,000 to P280,000 in favor of the
appellee.[19] The said amount represents accrued rentals from the determination of
the current market value on January 31, 1997[20] until its full payment on December
12, 1997.
Hence, petitioners state the sole assignment of error now before us as follows:
THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE TO PAY
RENT OVER AND ABOVE THE CURRENT MARKET VALUE OF THE
IMPROVEMENT WHEN SUCH WAS NOT PROVIDED FOR IN THE DISPOSITIVE
PORTION OF THE SUPREME COURTS RULING IN G.R. No. 115814.
Petitioners call our attention to the fact that after reaching an agreed price of
P400,000 for the improvements, they only made a partial payment of P300,000. Thus,
they contend that their failure to pay the full price for the improvements will, at most,
entitle respondent to be restored to possession, but not to collect any rentals.
Petitioners insist that this is the proper interpretation of the dispositive portion of the
decision in G.R. No. 115814, which states in part that [t]he value so determined shall
be forthwith paid by the private respondents [Spouses Juan and Erlinda Nuguid] to
the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the
possession of the apartment building until payment of the required indemnity.[21]
Now herein respondent, Pecson, disagrees with herein petitioners contention. He
argues that petitioners are wrong in claiming that inasmuch as his claim for rentals
was not determined in the dispositive portion of the decision in G.R. No. 115814, it
could not be the subject of execution. He points out that in moving for an accounting,
all he asked was that the value of the fruits of the property during the period he was
dispossessed be accounted for, since this Court explicitly recognized in G.R. No.
115814, he was entitled to the property. He points out that this Court ruled that [t]he
petitioner [Pecson] not having been so paid, he was entitled to retain ownership of the
building and, necessarily, the income therefrom.[22] In other words, says respondent,
accounting was necessary. For accordingly, he was entitled to rental income from the
property. This should be given effect. The Court could have very well specifically
included rent (as fruit or income of the property), but could not have done so at the
time the Court pronounced judgment because its value had yet to be determined,
according to him. Additionally, he faults the appellate court for modifying the order of
the RTC, thus defeating his right as a builder in good faith entitled to rental from the
period of his dispossession to full payment of the price of his improvements, which
spans from November 22, 1993 to December 1997, or a period of more than four
years.
It is not disputed that the construction of the four-door two-storey apartment, subject
of this dispute, was undertaken at the time when Pecson was still the owner of the lot.
When the Nuguids became the uncontested owner of the lot on June 23, 1993, by
virtue of entry of judgment of the Courts decision, dated May 25, 1993, in G.R. No.
105360, the apartment building was already in existence and occupied by tenants. In
its decision dated May 26, 1995 in G.R. No. 115814, the Court declared the rights
and obligations of the litigants in accordance with Articles 448 and 546 of the Civil
Code. These provisions of the Code are directly applicable to the instant case.
Under Article 448, the landowner is given the option, either to appropriate the
improvement as his own upon payment of the proper amount of indemnity or to sell
the land to the possessor in good faith. Relatedly, Article 546 provides that a builder
in good faith is entitled to full reimbursement for all the necessary and useful
expenses incurred; it also gives him right of retention until full reimbursement is
made.
While the law aims to concentrate in one person the ownership of the land and the
improvements thereon in view of the impracticability of creating a state of forced co-
ownership,[23] it guards against unjust enrichment insofar as the good-faith builders
improvements are concerned. The right of retention is considered as one of the
measures devised by the law for the protection of builders in good faith. Its object is to
guarantee full and prompt reimbursement as it permits the actual possessor to remain
in possession while he has not been reimbursed (by the person who defeated him in
the case for possession of the property) for those necessary expenses and useful
improvements made by him on the thing possessed.[24] Accordingly, a builder in
good faith cannot be compelled to pay rentals during the period of retention[25] nor
be disturbed in his possession by ordering him to vacate. In addition, as in this case,
the owner of the land is prohibited from offsetting or compensating the necessary and
useful expenses with the fruits received by the builder-possessor in good faith.
Otherwise, the security provided by law would be impaired. This is so because the
right to the expenses and the right to the fruits both pertain to the possessor, making
compensation juridically impossible; and one cannot be used to reduce the other.[26]
As we earlier held, since petitioners opted to appropriate the improvement for
themselves as early as June 1993, when they applied for a writ of execution despite
knowledge that the auction sale did not include the apartment building, they could not
benefit from the lots improvement, until they reimbursed the improver in full, based on
the current market value of the property.
Despite the Courts recognition of Pecsons right of ownership over the apartment
building, the petitioners still insisted on dispossessing Pecson by filing for a Writ of
Possession to cover both the lot and the building. Clearly, this resulted in a violation
of respondents right of retention. Worse, petitioners took advantage of the situation to
benefit from the highly valued, income-yielding, four-unit apartment building by
collecting rentals thereon, before they paid for the cost of the apartment building. It
was only four years later that they finally paid its full value to the respondent.
Petitioners interpretation of our holding in G.R. No. 115814 has neither factual nor
legal basis. The decision of May 26, 1995, should be construed in connection with the
legal principles which form the basis of the decision, guided by the precept that
judgments are to have a reasonable intendment to do justice and avoid wrong.[27]
The text of the decision in G.R. No. 115814 expressly exempted Pecson from liability
to pay rentals, for we found that the Court of Appeals erred not only in upholding the
trial courts determination of the indemnity, but also in ordering him to account for the
rentals of the apartment building from June 23, 1993 to September 23, 1993, the
period from entry of judgment until Pecsons dispossession. As pointed out by
Pecson, the dispositive portion of our decision in G.R. No. 115814 need not
specifically include the income derived from the improvement in order to entitle him,
as a builder in good faith, to such income. The right of retention, which entitles the
builder in good faith to the possession as well as the income derived therefrom, is
already provided for under Article 546 of the Civil Code.
Given the circumstances of the instant case where the builder in good faith has been
clearly denied his right of retention for almost half a decade, we find that the
increased award of rentals by the RTC was reasonable and equitable. The petitioners
had reaped all the benefits from the improvement introduced by the respondent
during said period, without paying any amount to the latter as reimbursement for his
construction costs and expenses. They should account and pay for such benefits.
We need not belabor now the appellate courts recognition of herein respondents
entitlement to rentals from the date of the determination of the current market value
until its full payment. Respondent is clearly entitled to payment by virtue of his right of
retention over the said improvement.
WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated
May 21, 2001 of the Court of Appeals in CA-G.R. CV No. 64295 is SET ASIDE and
the Order dated July 31, 1998, of the Regional Trial Court, Branch 101, Quezon City,
in Civil Case No. Q-41470 ordering the herein petitioners, Spouses Juan and Erlinda
Nuguid, to account for the rental income of the four-door two-storey apartment
building from November 1993 until December 1997, in the amount of P1,344,000,
computed on the basis of Twenty-eight Thousand (P28,000.00) pesos monthly, for a
period of 48 months, is hereby REINSTATED. Until fully paid, said amount of rentals
should bear the legal rate of interest set at six percent (6%) per annum computed
from the date of RTC judgment. If any portion thereof shall thereafter remain unpaid,
despite notice of finality of this Courts judgment, said remaining unpaid amount shall
bear the rate of interest set at twelve percent (12%) per annum computed from the
date of said notice. Costs against petitioners.
SO ORDERED.
ii) Natural.
Alluvium.
Republic v CA; G.R. No. L-61647. October 12, 1984.
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 private respondents.
Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be
"Maria") Tancinco Imperial and Mario C. Tancinco are registered owners of a parcel
of land covered by Transfer Certificate of Title No. T-89709 situated at Barrio Ubihan,
Meycauayan, Bulacan bordering on the Meycauayan and Bocaue rivers.
On June 24, 1973, the private respondents filed an application for the registration of
three lots adjacent to their fishpond property and particularly described as follows:
t.hqw
Lot 1-Psu-131892
(Maria C. Tancinco)
A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along fines 4-5-6-7-8-9, by Bocaue River; on the
NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW.,
along lines 10-11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
containing an area of THIRTY THREE THOUSAND NINE HUNDRED THIRTY
SEVEN (33,937) SQUARE METERS. ...
Lot 2-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the E., along
line 1-2, by property of Rafael Singson; on the S., along line 2-3, by Meycauayan
River; on the SW., along line 3-4, by Lot 3 of plan Psu-131892; and on the N., along
line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877). ... containing an area
of FIVE THOUSAND FOUR HUNDRED FIFTY THREE (5,453) SQUARE METERS.
...
Lot 3-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along line 2-
3, by Lot 2 of plan Psu-131892; on the S., along line 3-4, by Meycauayan River, on
the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6 by property
of Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line 6-1, by property
of Joaquina Santiago. ... containing an area of ONE THOUSAND NINE HUNDRED
EIGHTY FIVE (1,985) SQUARE METERS. ...
On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of
the Bureau of Lands filed a written opposition to the application for registration.
On March 6, 1975, the private respondents filed a partial withdrawal of the application
for registration with respect to Lot 3 of Plan Psu-131892 in line with the
recommendation of the Commissioner appointed by the Court.
On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial
proceeded only with respect to Lots 1 and 2 covered by Plan Psu-131892.
On June 26, 1976, the lower court rendered a decision granting the application on the
finding that the lands in question are accretions to the private respondents' fishponds
covered by Transfer Certificate of Title No. 89709. The dispositive portion of the
decision reads: t.hqw river; that sometime in 1951, a new Pilapil was established on the boundaries of Lots
WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are
accretions to the land covered by Transfer Certificate of Title No. 89709 of the
Register of Deeds of Bulacan, they belong to the owner of said property. The Court,
therefore, orders the registration of lots 1 & 2 situated in the barrio of Ubihan,
municipality of Meycauayan, province of Bulacan, and more particularly described in
plan Psu-131892 (Exh. H) and their accompanying technical descriptions (Exhs. E, E-
1) in favor of Benjamin Tancinco, married to Alma Fernandez and residing at 3662
Heatherdown, Toledo, Ohio 43614 U.S.A.; Azucena Tancinco Reyes, married to Alex
Reyes, Jr., residing at 4th St., New Manila, Quezon City; Marina Tancinco Imperial,
married to Juan Imperial, residing at Pasay Road, Dasmarias Village, Makati, Rizal;
and Mario C. Tancinco, married to Leticia Regidor, residing at 1616 Cypress St.,
Dasmarias Village, Makati, Rizal, all of legal age, all Filipino citizens.
On July 30, 1976, the petitioner Republic appealed to the respondent Court of
Appeals.
On August, 19, 1982, the respondent Court rendered a decision affirming in toto the
decision of the lower court. The dispositive portion of the decision reads: t.hqw that the deposit be gradual and imperceptible; (2) that it be made through the effects
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang
kabuuan nang walang bayad.
The rule that the findings of fact of the trial court and the Court of Appeals are binding
upon this Court admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS
Stock Brokerage, Inc. (97 SCRA 734) we held that this Court retains the power to
review and rectify the findings of fact of said courts when (1) the conclusion is a
finding grounded entirely on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd, and impossible; (3) where there is
grave abuse of discretion, (4) when the judgment is based on a misapprehension of
facts; and (5) when the court, in making its findings, went beyond the issues of the
case and the same are contrary to the admissions of both appellant and appellee.
There are facts and circumstances in the record which render untenable the findings
of the trial court and the Court of Appeals that the lands in question are accretions to
the private respondents' fishponds.
The petitioner submits that there is no accretion to speak of under Article 457 of the
New Civil Code because what actually happened is that the private respondents
simply transferred their dikes further down the river bed of the Meycauayan River,
and thus, if there is any accretion to speak of, it is man-made and artificial and not the
result of the gradual and imperceptible sedimentation by the waters of the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia
Acua to the effect that: t.hqw water in the fishpond is two meters deep on the side of the pilapil facing the fishpond
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
1 & 2 and soil from the old Pilapil was transferred to the new Pilapil and this was done
sometime in 1951; that the new lots were then converted into fishpond, and water in
this fishpond was two (2) meters deep on the side of the Pilapil facing the fishpond ...
.
The private respondents submit that the foregoing evidence establishes the fact of
accretion without human intervention because the transfer of the dike occurred after
the accretion was complete.
We agree with the petitioner.
Article 457 of the New Civil Code provides: t.hqw
To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.
The above-quoted article requires the concurrence of three requisites before an
accretion covered by this particular provision is said to have taken place. They are (1)
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 effect of the current
of the rivers but as a result of the transfer of the dike towards the river and
encroaching upon it. The land sought to be registered is not even dry land cast
imperceptibly and gradually by the river's current on the fishpond adjoining it. It is
under two meters of water. The private respondents' own evidence shows that the
and only one meter deep on the side of the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion
deposited by a river is to compensate him for the danger of loss that he suffers
because of the location of his land. If estates bordering on rivers are exposed to
floods and other evils produced by the destructive force of the waters and if by virtue
of lawful provisions, said estates are subject to incumbrances and various kinds of
easements, it is proper that the risk or danger which may prejudice the owners
thereof should be compensated by the right of accretion. (Cortes v. City of Manila, 10
Phil. 567). Hence, the riparian owner does not acquire the additions to his land
caused by special works expressly intended or designed to bring about accretion.
When the private respondents transferred their dikes towards the river bed, the dikes
were meant for reclamation purposes and not to protect their property from the
destructive force of the waters of the river.
We agree with the submission of the Solicitor General that the testimony of the
private respondents' lone witness to the effect that as early as 1939 there already
existed such alleged alluvial deposits, deserves no merit. It should be noted that the
lots in question were not included in the survey of their adjacent property conducted
on May 10, 1940 and in the Cadastral Survey of the entire Municipality of
Meycauayan conducted between the years 1958 to 1960. The alleged accretion was
declared for taxation purposes only in 1972 or 33 years after it had supposedly
permanently formed. The only valid conclusion therefore is that the said areas could
not have been there in 1939. They existed only after the private respondents
transferred their dikes towards the bed of the Meycauayan river in 1951. What private
respondents claim as accretion is really an encroachment of a portion of the
Meycauayan river by reclamation.
The lower court cannot validly order the registration of Lots 1 & 2 in the names of the
private respondents. These lots were portions of the bed of the Meycauayan river and
are therefore classified as property of the public domain under Article 420 paragraph
1 and Article 502, paragraph 1 of the Civil Code of the Philippines. They are not open
to registration under the Land Registration Act. The adjudication of the lands in
question as private property in the names of the private respondents is null and void.
WHEREFORE, the instant petition is GRANTED. The decision appealed from is
hereby REVERSED and SET ASIDE. The private respondents are ordered to move
back the dikes of their fishponds to their original location and return the disputed
property to the river to which it belongs.
SO ORDERED.1wph1.t to pay to the latter P250.00 as damages and costs. Said decision, in part, reads:
Grande v CA; G.R. No. L-17652. June 30, 1962.
G.R. No. L-17652 June 30, 1962
IGNACIO GRANDE, ET AL., petitioners,
vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN CALALUNG,
respondents.
Bartolome Guirao and Antonio M. Orara for petitioners.
Gonzales and Fernandez for respondents.
BARRERA, J.:
This is an appeal taken by petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia
Grande, from the decision of the Court of Appeals (CA-G.R. No. 25169-R) reversing
that of the Court of First Instance of Isabela (Civil Case No. 1171), and dismissing
petitioners' action against respondents Domingo and Esteban Calalung, to quiet title
to and recover possession of a parcel of land allegedly occupied by the latter without
petitioners' consent.
The facts of the case, which are undisputed, briefly are: Petitioners are the owners of
a parcel of land, with an area of 3.5032 hectares, located at barrio Ragan,
municipality of Magsaysay (formerly Tumauini), province of Isabela, by inheritance
from their deceased mother Patricia Angui (who inherited it from her parents Isidro
Angui and Ana Lopez, in whose name said land appears registered, as shown by
Original Certificate of Title No. 2982, issued on June 9, 1934). Said property is
identified as Lot No. 1, Plan PSU-83342. When it was surveyed for purposes of
registration sometime in 1930, its northeastern boundary was the Cagayan River (the
same boundary stated in the title). Since then, and for many years thereafter, a
gradual accretion on the northeastern side took place, by action of the current of the
Cagayan River, so much so, that by 1958, the bank thereof had receded to a distance
of about 105 meters from its original site, and an alluvial deposit of 19,964 square
meters (1.9964 hectares), more or less, had been added to the registered area (Exh.
C-1).
On January 25, 1958, petitioners instituted the present action in the Court of First
Instance of Isabela against respondents, to quiet title to said portion (19,964 square
meters) formed by accretion, alleging in their complaint (docketed as Civil Case No.
1171) that they and their predecessors-in-interest, were formerly in peaceful and
continuous possession thereof, until September, 1948, when respondents entered
upon the land under claim of ownership. Petitioners also asked for damages
corresponding to the value of the fruits of the land as well as attorney's fees and
costs. In their answer (dated February 18, 1958), respondents claim ownership in
themselves, asserting that they have been in continuous, open, and undisturbed
possession of said portion, since prior to the year 1933 to the present.
After trial, the Court of First Instance of Isabela, on May 4, 1959, rendered a decision
adjudging the ownership of the portion in question to petitioners, and ordering
respondents to vacate the premises and deliver possession thereof to petitioners, and
It is admitted by the parties that the land involved in this action was formed by the
gradual deposit of alluvium brought about by the action of the Cagayan River, a
navigable river. We are inclined to believe that the accretion was formed on the
northeastern side of the land covered by Original Certificate of Title No. 2982 after the
survey of the registered land in 1931, because the surveyors found out that the
northeastern boundary of the land surveyed by them was the Cagayan River, and not
the land in question. Which is indicative of the fact that the accretion has not yet
started or begun in 1931. And, as declared by Pedro Laman, defendant witness and
the boundary owner on the northwest of the registered land of the plaintiffs, the
accretion was a little more than one hectare, including the stony portion, in 1940 or
1941. Therefore, the declarations of the defendant Domingo Calalung and his
witness, Vicente C. Bacani, to the effect that the land in question was formed by
accretion since 1933 do not only contradict the testimony of defendants' witness
Pedro Laman, but could not overthrow the incontestable fact that the accretion with
an area of 4 hectare more or less, was formed in 1948, reason for which, it was only
declared in that same year for taxation purposes by the defendants under Tax Dec.
No. 257 (Exh. "2") when they entered upon the land. We could not give credence to
defendants' assertion that Tax Dec. No. 257 (Exh. "2") cancelled Tax Dee. No. 28226
(Exh. "1"), because Exh. "2" says that "tax under this declaration begins with the year
1948. But, the fact that defendants declared the land for taxation purposes since
1948, does not mean that they become the owner of the land by mere occupancy, for
it is a new provision of the New Civil Code that ownership of a piece of land cannot be
acquired by occupation (Art. 714, New Civil Code). The land in question being an
accretion to the mother or registered land of the plaintiffs, the accretion belongs to the
plaintiffs (Art. 457, New Civil Code; Art. 366, Old Civil Code). Assuming arguendo,
that the accretion has been occupied by the defendants since 1948, or earlier, is of no
moment, because the law does not require any act of possession on the part of the
owner of the riparian owner, from the moment the deposit becomes manifest (Roxas
v. Tuason, 9 Phil. 408; Cortez v. City of Manila, 10 Phil. 567). Further, no act of
appropriation on the part of the reparian owner is necessary, in order to acquire
ownership of the alluvial formation, as the law does not require the same (3 Manresa,
C.C., pp. 321-326).
This brings us now to the determination of whether the defendants, granting that they
have been in possession of the alluvium since 1948, could have acquired the property
by prescription. Assuming that they occupied the land in September, 1948, but
considering that the action was commenced on January 25, 1958, they have not been
in possession of the land for ten (10) years; hence, they could not have acquired the
land by ordinary prescription (Arts. 1134 and 1138, New Civil Code). Moreover, as the
alluvium is, by law, part and parcel of the registered property, the same may be
considered as registered property, within the meaning of Section 46 of Act No. 496:
and, therefore, it could not be acquired by prescription or adverse possession by
another person.
Unsatisfied, respondents appealed to the Court of Appeals, which rendered, on
September 14, 1960, the decision adverted to at the beginning of this opinion, partly
stating:
That the area in controversy has been formed through a gradual process of alluvium,
which started in the early thirties, is a fact conclusively established by the evidence
for both parties. By law, therefore, unless some superior title has supervened, it
should properly belong to the riparian owners, specifically in accordance with the rule
of natural accession in Article 366 of the old Civil Code (now Article 457), which
provides that "to the owner of lands adjoining the banks of rivers, belongs the
accretion which they gradually receive from the effects of the current of the waters."
The defendants, however, contend that they have acquired ownership through
prescription. This contention poses the real issue in this case. The Court a quo, has
resolved it in favor of the plaintiffs, on two grounds: First, since by accession, the land
in question pertains to the original estate, and since in this instance the original estate
is registered, the accretion, consequently, falls within the purview of Section 46 of Act
No. 496, which states that "no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession"; and,
second, the adverse possession of the defendant began only in the month of
September, 1948, or less than the 10-year period required for prescription before the
present action was instituted.
As a legal proposition, the first ground relied upon by the trial court, is not quite
correct. An accretion to registered land, while declared by specific provision of 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 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.
The next issue is, did respondents acquire said alluvial property through acquisitive
prescription? This is a question which requires determination of facts: physical
possession and dates or duration of such possession. The Court of Appeals, after
analyzing the evidence, found that respondents-appellees were in possession of the
alluvial lot since 1933 or 1934, openly, continuously and adversely, under a claim of
ownership up to the filing of the action in 1958. This finding of the existence of these
facts, arrived at by the Court of Appeals after an examination of the evidence
presented by the parties, is conclusive as to them and can not be reviewed by us.
The law on prescription applicable to the case is that provided in Act 190 and not the
provisions of the Civil Code, since the possession started in 1933 or 1934 when the
pertinent articles of the old Civil Code were not in force and before the effectivity of
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.
Republic v Meneses; G.R. No. L-61647. October 12,
1984.
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 private respondents.
Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be
"Maria") Tancinco Imperial and Mario C. Tancinco are registered owners of a parcel
of land covered by Transfer Certificate of Title No. T-89709 situated at Barrio Ubihan,
Meycauayan, Bulacan bordering on the Meycauayan and Bocaue rivers.
On June 24, 1973, the private respondents filed an application for the registration of
three lots adjacent to their fishpond property and particularly described as follows:
t.hqw
Lot 1-Psu-131892
(Maria C. Tancinco)
A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along fines 4-5-6-7-8-9, by Bocaue River; on the
NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW.,
along lines 10-11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
containing an area of THIRTY THREE THOUSAND NINE HUNDRED THIRTY
SEVEN (33,937) SQUARE METERS. ...
Lot 2-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the E., along
line 1-2, by property of Rafael Singson; on the S., along line 2-3, by Meycauayan
River; on the SW., along line 3-4, by Lot 3 of plan Psu-131892; and on the N., along
line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877). ... containing an area
of FIVE THOUSAND FOUR HUNDRED FIFTY THREE (5,453) SQUARE METERS.
...
Lot 3-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along line 2-
3, by Lot 2 of plan Psu-131892; on the S., along line 3-4, by Meycauayan River, on
the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6 by property
of Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line 6-1, by property
of Joaquina Santiago. ... containing an area of ONE THOUSAND NINE HUNDRED
EIGHTY FIVE (1,985) SQUARE METERS. ...
On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of
the Bureau of Lands filed a written opposition to the application for registration.
On March 6, 1975, the private respondents filed a partial withdrawal of the application
for registration with respect to Lot 3 of Plan Psu-131892 in line with the
recommendation of the Commissioner appointed by the Court.
On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial
proceeded only with respect to Lots 1 and 2 covered by Plan Psu-131892.
On June 26, 1976, the lower court rendered a decision granting the application on the
finding that the lands in question are accretions to the private respondents' fishponds
covered by Transfer Certificate of Title No. 89709. The dispositive portion of the
decision reads: t.hqw river; that sometime in 1951, a new Pilapil was established on the boundaries of Lots
WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are
accretions to the land covered by Transfer Certificate of Title No. 89709 of the
Register of Deeds of Bulacan, they belong to the owner of said property. The Court,
therefore, orders the registration of lots 1 & 2 situated in the barrio of Ubihan,
municipality of Meycauayan, province of Bulacan, and more particularly described in
plan Psu-131892 (Exh. H) and their accompanying technical descriptions (Exhs. E, E-
1) in favor of Benjamin Tancinco, married to Alma Fernandez and residing at 3662
Heatherdown, Toledo, Ohio 43614 U.S.A.; Azucena Tancinco Reyes, married to Alex
Reyes, Jr., residing at 4th St., New Manila, Quezon City; Marina Tancinco Imperial,
married to Juan Imperial, residing at Pasay Road, Dasmarias Village, Makati, Rizal;
and Mario C. Tancinco, married to Leticia Regidor, residing at 1616 Cypress St.,
Dasmarias Village, Makati, Rizal, all of legal age, all Filipino citizens.
On July 30, 1976, the petitioner Republic appealed to the respondent Court of
Appeals.
On August, 19, 1982, the respondent Court rendered a decision affirming in toto the
decision of the lower court. The dispositive portion of the decision reads: t.hqw
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang
kabuuan nang walang bayad.
The rule that the findings of fact of the trial court and the Court of Appeals are binding
upon this Court admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS
Stock Brokerage, Inc. (97 SCRA 734) we held that this Court retains the power to
review and rectify the findings of fact of said courts when (1) the conclusion is a
finding grounded entirely on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd, and impossible; (3) where there is
grave abuse of discretion, (4) when the judgment is based on a misapprehension of
facts; and (5) when the court, in making its findings, went beyond the issues of the
case and the same are contrary to the admissions of both appellant and appellee.
There are facts and circumstances in the record which render untenable the findings
of the trial court and the Court of Appeals that the lands in question are accretions to
the private respondents' fishponds.
The petitioner submits that there is no accretion to speak of under Article 457 of the
New Civil Code because what actually happened is that the private respondents
simply transferred their dikes further down the river bed of the Meycauayan River,
and thus, if there is any accretion to speak of, it is man-made and artificial and not the
result of the gradual and imperceptible sedimentation by the waters of the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia
Acua to the effect that: t.hqw
xxx xxx xxx
... when witness first saw the land, namely, Lots 1 & 2, they were already dry almost
at the level of the Pilapil of the property of Dr. Tancinco, and that from the boundaries
of the lots, for about two (2) arms length the land was still dry up to the edge of the
1 & 2 and soil from the old Pilapil was transferred to the new Pilapil and this was done
sometime in 1951; that the new lots were then converted into fishpond, and water in
this fishpond was two (2) meters deep on the side of the Pilapil facing the fishpond ...
.
The private respondents submit that the foregoing evidence establishes the fact of
accretion without human intervention because the transfer of the dike occurred after
the accretion was complete.

We agree with the petitioner.
Article 457 of the New Civil Code provides: t.hqw lots in question were not included in the survey of their adjacent property conducted
To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.
The above-quoted article requires the concurrence of three requisites before an
accretion covered by this particular provision is said to have taken place. They are (1)
that the deposit be gradual and imperceptible; (2) that it be made through the effects
of the current of the water; and (3) that the land where accretion takes place is
adjacent to the banks of rivers.
The requirement that the deposit should be due to the effect of the current of the river
is indispensable. This excludes from Art. 457 of the New Civil Code all deposits
caused by human intervention. Alluvion must be the exclusive work of nature. In the
instant case, there is no evidence whatsoever to prove that the addition to the said
property was made gradually through the effects of the current of the Meycauayan
and Bocaue rivers. We agree with the observation of the Solicitor General that it is
preposterous to believe that almost four (4) hectares of land came into being because
of the effects of the Meycauayan and Bocaue rivers. The lone witness of the private
respondents who happens to be their overseer and whose husband was first cousin
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 effect of the current
of the rivers but as a result of the transfer of the dike towards the river and
encroaching upon it. The land sought to be registered is not even dry land cast
imperceptibly and gradually by the river's current on the fishpond adjoining it. It is
under two meters of water. The private respondents' own evidence shows that the
water in the fishpond is two meters deep on the side of the pilapil facing the fishpond
and only one meter deep on the side of the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion
deposited by a river is to compensate him for the danger of loss that he suffers
because of the location of his land. If estates bordering on rivers are exposed to
floods and other evils produced by the destructive force of the waters and if by virtue
of lawful provisions, said estates are subject to incumbrances and various kinds of
easements, it is proper that the risk or danger which may prejudice the owners
thereof should be compensated by the right of accretion. (Cortes v. City of Manila, 10
Phil. 567). Hence, the riparian owner does not acquire the additions to his land
caused by special works expressly intended or designed to bring about accretion.
When the private respondents transferred their dikes towards the river bed, the dikes
were meant for reclamation purposes and not to protect their property from the
destructive force of the waters of the river.
We agree with the submission of the Solicitor General that the testimony of the
private respondents' lone witness to the effect that as early as 1939 there already
existed such alleged alluvial deposits, deserves no merit. It should be noted that the
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.
Avulsion.
Heirs of Navarro v IAC; G.R. No. 68166. February 12,
1997.
[G.R. No. 68166. February 12, 1997]
HEIRS OF EMILIANO NAVARRO, petitioner, vs. INTERMEDIATE APPELLATE
COURT AND HEIRS OF SINFOROSO PASCUAL, respondents.
DECISION
HERMOSISIMA, JR., J.:
Unique is the legal question visited upon the claim of an applicant in a Land
Registration case by oppositors thereto, the Government and a Government lessee,
involving as it does ownership of land formed by alluvium.
The applicant owns the property immediately adjoining the land sought to be
registered. His registered property is bounded on the east by the Talisay River, on the
west by the Bulacan River, and on the north by the Manila Bay. The Talisay River and
the Bulacan River flow down towards the Manila Bay and act as boundaries of the
applicant's registered land on the east and on the west.
The land sought to be registered was formed at the northern tip of the applicant's
land. Applicant's registered property is bounded on the north by the Manila Bay.
The issue: May the land sought to be registered be deemed an accretion in the sense
that it naturally accrues in favor of the riparian owner or should the land be
considered as foreshore land?
Before us is a petition for review of: (1) the decision[1] and (2) two subsequent
resolutions[2] of the Intermediate Appellate Court[3] (now the Court of Appeals) in
Land Registration Case No. N-84,[4] the application over which was filed by private
respondents' predecessor-in-interest, Sinforoso Pascual, now deceased, before the
Court of First Instance[5] (now the Regional Trial Court) of Balanga, Bataan.
There is no dispute as to the following facts:
On October 3, 1946, Sinforoso Pascual, now deceased, filed an application for
foreshore lease covering a tract of foreshore land in Sibocon, Balanga, Bataan,
having an area of approximately seventeen (17) hectares. This application was
denied on January 15, 1953. So was his motion for reconsideration.
Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano
Navarro, filed a fishpond application with the Bureau of Fisheries covering twenty five
(25) hectares of foreshore land also in Sibocon, Balanga, Bataan. Initially, such
application was denied by the Director of Fisheries on the ground that the property
formed part of the public domain. Upon motion for reconsideration, the Director of
Fisheries, on May 27, 1988, gave due course to his application but only to the extent
of seven (7) hectares of the property as may be certified by the Bureau of Forestry as
suitable for fishpond purposes.
The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's
application. Aggrieved by the decision of the Director of Fisheries, it appealed to the
Secretary of Natural Resources who, however, affirmed the grant. The then Executive
Secretary, acting in behalf of the President of the Philippines, similarly affirmed the
grant.
On the other hand, sometime in the early part of 1960, Sinforoso Pascual filed an
application to register and confirm his title to a parcel of land, situated in Sibocon,
Balanga, Bataan, described in Plan Psu-175181 and said to have an area of 146,611
square meters. Pascual claimed that this land is an accretion to his property, situated
in Barrio Puerto Rivas, Balanga, Bataan, and covered by Original Certificate of Title
No. 6830. It is bounded on the eastern side by the Talisay River, on the western side
by the Bulacan River, and on the northern side by the Manila Bay. The Talisay River
as well as the Bulacan River flow downstream and meet at the Manila Bay thereby
depositing sand and silt on Pascual's property resulting in an accretion thereon.
Sinforoso Pascual claimed the accretion as the riparian owner.
On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor
General, filed an opposition thereto stating that neither Pascual nor his predecessors-
in-interest possessed sufficient title to the subject property, the same being a portion
of the public domain and, therefore, it belongs to the Republic of the Philippines. The
Director of Forestry, through the Provincial Fiscal, similarly opposed Pascual's
application for the same reason as that advanced by the Director of Lands. Later on,
however, the Director of Lands withdrew his opposition. The Director of Forestry
become the sole oppositor.
On June 2, 1960, the court a quo issued an order of general default excepting the
Director of Lands and the Director of Forestry.
Upon motion of Emiliano Navarro, however, the order of general default was lifted
and, on February 13, 1961, Navarro thereupon filed an opposition to Pascual's
application. Navarro claimed that the land sought to be registered has always been
part of the public domain, it being a part of the foreshore of Manila Bay; that he was a
lessee and in possession of a part of the subject property by virtue of a fishpond
permit issued by the Bureau of Fisheries and confirmed by the Office of the President;
and that he had already converted the area covered by the lease into a fishpond.
During the pendency of the land registration case, that is, on November 6, 1960,
Sinforoso Pascual filed a complaint for ejectment against Emiliano Navarro, one
Marcelo Lopez and their privies, alleged by Pascual to have unlawfully claimed and
possessed, through stealth, force and strategy, a portion of the subject property
covered by Plan Psu-175181. The defendants in the case were alleged to have built a
provisional dike thereon: thus they have thereby deprived Pascual of the premises
sought to be registered. This, notwithstanding repeated demands for defendants to
vacate the property.
The case was decided adversely against Pascual. Thus, Pascual appealed to the
Court of First Instance (now Regional Trial Court) of Balanga, Bataan, the appeal
having been docketed as Civil Case No. 2873. Because of the similarity of the parties
and the subject matter, the appealed case for ejectment was consolidated with the
land registration case and was jointly tried by the court a quo.
During the pendency of the trial of the consolidated cases, Emiliano Navarro died on
November 1, 1961 and was substituted by his heirs, the herein petitioners.
Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs, the
herein private respondents.
On November 10, 1975, the court a quo rendered judgment finding the subject
property to be foreshore land and, being a part of the public domain, it cannot be the
subject of land registration proceedings.
The decision's dispositive portion reads:
"WHEREFORE, judgment is rendered:
(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's complaint for
ejectment in Civil Case No. 2873;
(2) Denying the application of Sinforoso Pascual for land registration over the land in
question; and
(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in Civil Case No.
2873 and as applicant in Land Registration Case No. N-84 to pay costs in both
instances."[6]
The heirs of Pascual appealed and, before the respondent appellate court, assigned
the following errors:
"1. The lower court erred in not finding the land in question as an accretion by the
action of the Talisay and Bulacan Rivers to the land admittedly owned by applicants-
appellants [private respondents].
2. The lower court erred in holding that the land in question is foreshore land.
3. The lower court erred in not ordering the registration of the and is controversy in
favor of applicants-appellants [private respondents].
4. The lower court erred in not finding that the applicants-appellants [private
respondents] are entitled to eject the oppositor-appellee [petitioners]."[7]
On appeal, the respondent court reversed the findings of the court a quo and granted
the petition for registration of the subject property but excluding therefrom fifty (50)
meters from corner 2 towards corner 1; and fifty meters (50) meters from corner 5
towards corner 6 of the Psu-175181.
The respondent appellate court explained the reversal in this wise:
"The paramount issue to be resolved in this appeal as set forth by the parties in their
respective briefs is whether or not the land sought to be registered is accretion or
foreshore land, or, whether or not said land was formed by the action of the two rivers
of Talisay and Bulacan or by the action of the Manila Bay. If formed by the action of
the Talisay and Bulacan rivers, the subject land is accretion but if formed by the
action of the Manila Bay then it is foreshore land.
xxx
It is undisputed that applicants-appellants [private respondents] owned the land
immediately adjoining the land sought to be registered. Their property which is
covered by OCT No. 6830 is bounded on the east by the Talisay River, on the west
by the Bulacan River, and on the north by the Manila Bay. The Talisay and Bulacan
rivers come from inland flowing downstream towards the Manila Bay. In other words,
between the Talisay River and the Bulacan River is the property of applicants with
both rivers acting as the boundary to said land and the flow of both rivers meeting and
emptying into the Manila Bay. The subject land was formed at the tip or apex of
appellants' [private respondents'] land adding thereto the land now sought to be
registered.
This makes this case quite unique because while it is undisputed that the subject land
is immediately attached to appellants' [private respondents'] land and forms the tip
thereof, at the same time, said land immediately faces the Manila Bay which is part of
the sea. We can understand therefore the confusion this case might have caused the
lower court, faced as it was with the uneasy problem of deciding whether or not the
subject land was formed by the action of the two rivers or by the action of the sea.
Since the subject land is found at the shore of the Manila Bay facing appellants'
[private respondents'] land, it would be quite easy to conclude that it is foreshore and
therefore part of the patrimonial property of the State as the lower court did in fact rule
xxx.
xxx
It is however undisputed that appellants' [private respondents'] land lies between
these two rivers and it is precisely appellants' [private respondents'] land which acts
as a barricade preventing these two rivers to meet. Thus, since the flow of the two
rivers is downwards to the Manila Bay the sediments of sand and silt are deposited at
their mouths.
It is, therefore, difficult to see how the Manila Bay could have been the cause of the
deposit thereat for in the natural course of things, the waves of the sea eat the land
on the shore, as they suge [sic] inland. It would not therefore add anything to the land
but instead subtract from it due to the action of the waves and the wind. It is then
more logical to believe that the two rivers flowing towards the bay emptied their cargo
of sand, silt and clay at their mouths, thus causing appellants' [private respondents']
land to accumulate therein.
However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic] not seem to
accept this theory and stated that the subject land arose only when x x x Pascual
planted 'palapat' and 'bakawan' trees thereat to serve as a boundary or strainer. But
we do not see how this act of planting trees by Pascual would explain how the land
mass came into being. Much less will it prove that the same came from the sea.
Following Mr. Justice Serrano's argument that it were the few trees that acted as
strainers or blocks, then the land that grew would have stopped at the place where
the said trees were planted. But this is not so because the land mass went far beyond
the boundary, or where the trees were planted.
On the other hand, the picture-exhibits of appellants' [private respondents'] clearly
show that the land that accumulated beyond the so-called boundary, as well as the
entire area being applied for is dry land, above sea level, and bearing innumerable
trees x x x. The existence of vegetation on the land could only confirm that the soil
thereat came from inland rather than from the sea, for what could the sea bring to the
shore but sand, pebbles, stones, rocks and corrals? On the other hand, the two rivers
would be bringing soil on their downward flow which they brought along from the
eroded mountains, the lands along their path, and dumped them all on the northern
portion of appellants' [private respondents'] land.
In view of the foregoing, we have to deviate from the lower court's finding. While it is
true that the subject land is found at the shore of the Manila Bay fronting appellants'
[private respondents'] land, said land is not foreshore but an accretion from the action
of the Talisay and Bulacan rivers. In fact, this is exactly what the Bureau of Lands
found out, as shown in the following report of the Acting Provincial Officer, Jesus M.
Orozco, to wit:
'Upon ocular inspection of the land subject of this registration made on June 11, 1960,
it was found out that the said land is x x x sandwitched [sic] by two big rivers x x x
These two rivers bring down considerable amount of soil and sediments during floods
every year thus raising the soil of the land adjoining the private property of the
applicant [private respondents]. About four-fifth [sic] of the area applied for is now dry
land whereon are planted palapat trees thickly growing thereon. It is the natural action
of these two rivers that has caused the formation of said land x x x subject of this
registration case. It has been formed, therefore, by accretion. And having been
formed by accretion, the said land may be considered the private property of the
riparian owner who is the applicant herein [private respondents'] x x x .

In view of the above, the opposition hereto filed by the government should be
withdrawn, except for the portion recommended by the land investigator in his report
dated May 2, 1960, to be excluded and considered foreshore. x x x'
Because of this report, no less than the Solicitor General representing the Bureau of
Lands withdrew his opposition dated March 25, 1960, and limited 'the same to the
northern portion of the land applied for, compromising a strip 50 meters wide along
the Manila Bay, which should be declared public land as part of the foreshore' x x
x.[8]
Pursuant to the aforecited decision, the respondent appellate court ordered the
issuance of the corresponding decree of registration in the name of private
respondents and the reversion to private respondents of the possession of the portion
of the subject property included in Navarro's fishpond permit.
On December 20, 1978, petitioners filed a motion for reconsideration of the aforecited
decision. The Director of Forestry also moved for the reconsideration of the same
decision. Both motions were opposed by private respondents on January 27, 1979.
On November 21, 1980, respondent appellate court promulgated a resolution denying
the motion for reconsideration filed by the Director of Forestry. It, however, modified
its decision, to read, viz:
"(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that portion
included in their fishpond permit covered by Plan Psu-175181 and hand over
possession of said portion to applicants-appellants, if the said portion is not within the
strip of land fifty (50) meters wide along Manila Bay on the northern portion of the
land subject of the registration proceedings and which area is more particularly
referred to as fifty (50) meters from corner 2 towards corner 1; and fifty (50) meters
from corner 5 towards corner 6 of Plan Psu-175181. x x x[9]
On December 15, 1980, we granted the Solicitor General, acting as counsel for the
Director of Forestry, an extension of time within which to file in this court, a petition for
review of the decision dated November 29, 1978 of the respondent appellate court
and of the aforecited resolution dated November 21, 1980.
Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition
for review entitled, "The Director of Forestry vs. the Court of Appeals."[10] We,
however, denied the same in a minute resolution dated July 20, 1981, such petition
having been prematurely filed at a time when the Court of Appeals was yet to resolve
petitioners' pending motion to set aside the resolution dated November 21, 1980.
On October 9, 1981, respondent appellate court denied petitioners' motion for
reconsideration of the decision dated November 29, 1978.
On October 17, 1981, respondent appellate court made an entry of judgment stating
that the decision dated November 29, 1978 had become final and executory as
against herein petitioners as oppositors in L.R.C. Case No. N-84 and Civil Case No.
2873 of the Court of First Instance (now the Regional Trial Court) of Balanga, Bataan.
On October 26, 1981, a second motion for reconsideration of the decision dated
November 29, 1978 was filed by petitioners' new counsel.
On March 26, 1982, respondent appellate court issued a resolution granting
petitioners' request for leave to file a second motion for reconsideration.
On July 13, 1984, after hearing, respondent appellate court denied petitioners' second
motion for reconsideration on the ground that the same was filed out of time, citing
Rule 52, Section 1 of the Rules of Court which provides that a motion for
reconsideration shall be made ex-parte and filed within fifteen (15) days from the
notice of the final order or judgment.
Hence this petition where the respondent appellate court is imputed to have palpably
erred in appreciating the facts of the case and to have gravely misapplied statutory
and case law relating to accretion, specifically, Article 457 of the Civil Code.
We find merit in the petition.
The disputed property was brought forth by both the withdrawal of the waters of
Manila Bay and the accretion formed on the exposed foreshore land by the action of
the sea which brought soil and sand sediments in turn trapped by the palapat and
bakawan trees planted thereon by petitioner Sulpicio Pascual in 1948.
Anchoring their claim of ownership on Article 457 of the Civil Code, private
respondents vigorously argue that the disputed 14-hectare land is an accretion
caused by the joint action of the Talisay and Bulacan Rivers which run their course on
the eastern and western boundaries, respectively, of private respondents' own tract of
land.
Accretion as a mode of acquiring property under said Article 457, requires the
concurrence of the following requisites: (1) that the accumulation of soil or sediment
be gradual and imperceptible; (2) that it be the result of the action of the waters of the
river; and (3) that the land where the accretion takes place is adjacent to the bank of
the river.[11] Accretion is the process whereby the soil is deposited, while alluvium is
the soil deposited on the estate fronting the river bank;[12] the owner of such estate is
called the riparian owner. Riparian owners are, strictly speaking, distinct from littoral
owners, the latter being owners of lands bordering the shore of the sea or lake or
other tidal waters.[13] The alluvium, by mandate of Article 457 of the Civil Code, is
automatically owned by the riparian owner from the moment the soil deposit can be
seen[14] but is not automatically registered property, hence, subject to acquisition
through prescription by third persons.[15]
Private respondents' claim of ownership over the disputed property under the
principle of accretion, is misplaced.
First, the title of private respondents' own tract of land reveals its northeastern
boundary to be Manila Bay. Private respondents' land, therefore, used to adjoin,
border or front the Manila Bay and not any of the two rivers whose torrential action,
private respondents insist, is to account for the accretion on their land. In fact, one of
the private respondents, Sulpicio Pascual, testified in open court that the waves of
Manila Bay used to hit the disputed land being part of the bay's foreshore but, after he
had planted palapat and bakawan trees thereon in 1948, the land began to rise.[16]

Moreover, there is no dispute as to the location of: (a) the disputed land; (b) private
respondents' own tract of land; (c) the Manila Bay; and, (d) the Talisay and Bulacan
Rivers. Private respondents' own land lies between the Talisay and Bulacan Rivers; in
front of their land on the northern side lies now the disputed land where before 1948,
there lay the Manila Bay. If the accretion were to be attributed to the action of either
or both of the Talisay and Bulacan Rivers, the alluvium should have been deposited
on either or both of the eastern and western boundaries of private respondents' own
tract of land, not on the northern portion thereof which is adjacent to the Manila Bay.
Clearly lacking, thus, is the third requisite of accretion, which is, that the alluvium is
deposited on the portion of claimant's land which is adjacent to the river bank.
Second, there is no dispute as to the fact that private respondents' own tract of land
adjoins the Manila Bay. Manila Bay is obviously not a river, and jurisprudence is
already settled as to what kind of body of water the Manila Bay is. It is to be
remembered that we held that:
"Appellant next contends that x x x Manila Bay cannot be considered as a sea. We
find said contention untenable. A bay is 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."[17]
The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on
what used to be the foreshore of Manila Bay which adjoined private respindents' own
tract of land on the northern side. As such, the applicable law is not Article 457 of the
Civil Code but Article 4 of the Spanish Law of Waters of 1866.
The process by which the disputed land was formed, is not difficult to discern from the
facts of the case. As the trial court correctly observed:
"A perusal of the survey plan x x x of the land subject matter of these cases shows
that on the eastern side, the property is bounded by Talisay River, on the western
side by Bulacan River, on the southern side by Lot 1436 and on the northern side by
Manila Bay. It is not correct to state that the Talisay and Bulacan Rivers meet a
certain portion because the two rivers both flow towards Manila Bay. The Talisay
River is straight while the Bulacan River is a little bit meandering and there is no
portion where the two rivers meet before they end up at Manila Bay. The land which
is adjacent to the property belonging to Pascual cannot be considered an accretion
[caused by the action of the two rivers].
Applicant Pascual x x x has not presented proofs to convince the Court that the land
he has applied for registration is the result of the settling down on his registered land
of soil, earth or other deposits so as to be rightfully be considered as an accretion
[caused by the action of the two rivers]. Said Art. 457 finds no applicability where the
accretion must have been caused by action of the bay."[18]
The conclusion formed by the trial court on the basis of the foregoing observation is
that the disputed land is part of the foreshore of Manila Bay and therefore, part of the
public domain. The respondent appellate court, however, perceived the fact that
petitioners' own land lies between the Talisay and Bulacan Rivers, to be basis to
conclude that the disputed land must be an accretion formed by the action of the two
rivers because private respondents' own land acted as a barricade preventing the two
rivers to meet and that the current of the two rivers carried sediments of sand and silt
downwards to the Manila Bay which accumulated somehow to a 14-hectare land.
These conclusions, however, are fatally incongruous in the light of the one undisputed
critical fact: the accretion was deposited, not on either the eastern or western portion
of private respondents' land where a river each runs, but on the northern portion of
petitioners' land which adjoins the Manila Bay. Worse, such conclusions are further
eroded of their practical logic and consonance with natural experience in the light of
Sulpicio Pascual's admission as to having planted palapat and bakawan trees on the
northern boundary of their own land. In amplification of this, plainly more reasonable
and valid are Justice Mariano Serrano's observations in his dissenting opinion when
he stated that:
"As appellants' (titled) land x x x acts as a barricade that prevents the two rivers to
meet, and considering the wide expanse of the boundary between said land and the
Manila Bay, measuring some 593.00 meters x x x it is believed rather farfetched for
the land in question to have been formed through 'sediments of sand and salt [sic] . . .
deposited at their [rivers'] mouths.' Moreover, if 'since the flow of the two rivers is
downwards to the Manila Bay the sediments of sand and silt are deposited at their
mouths,' why then would the alleged cargo of sand, silt and clay accumulate at the
northern portion of appellants' titled land facing Manila Bay instead of merely at the
mouths and banks of these two rivers? That being the case, the accretion formed at
said portion of appellants' titled [land] was not caused by the current of the two rivers
but by the action of the sea (Manila Bay) into which the rivers empty.
The conclusion x x x is not supported by any reference to the evidence which, on the
contrary, shows that the disputed land was formed by the action of the sea. Thus, no
less than Sulpicio Pascual, one of the heirs of the original applicant, testified on
cross-examination that the land in dispute was part of the shore and it was only in
1948 that he noticed that the land was beginning to get higher after he had planted
trees thereon in 1948. x x x
x x x it is established that before 1948 sea water from the Manila Bay at high tide
could reach as far as the dike of appellants' fishpond within their titled property, which
dike now separates this titled property from the land in question. Even in 1948 when
appellants had already planted palapat and bakawan trees in the land involved,
inasmuch as these trees were yet small, the waves of the sea could still reach the
dike. This must be so because in x x x the survey plan of the titled property approved
in 1918, said titled land was bounded on the north by Manila Bay. So Manila Bay was
adjacent to it on the north. It was only after the planting of the aforesaid trees in 1948
that the land in question began to rise or to get higher in elevation.
The trees planted by appellants in 1948 became a sort of strainer of the sea water
and at the same time a kind of block to the strained sediments from being carried
back to the sea by the very waves that brought them to the former shore at the end of
the dike, which must have caused the shoreline to recede and dry up eventually
raising the former shore leading to the formation of the land in question."[19]
In other words, the combined and interactive effect of the planting of palapat and
bakawan trees, the withdrawal of the waters of Manila Bay eventually resulting in the
drying up of its former foreshore, and the regular torrential action of the waters of
Manila Bay, is the formation of the disputed land on the northern boundary of private
respondents' own tract of land.
The disputed property is an accretion on a sea bank, Manila Bay being an inlet or an
arm of the sea; as such, the disputed property is, under Article 4 of the Spanish Law
of Waters of 1866, part of the public domain.
At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.
While we held in the case of Ignacio v. Director of Lands and Valeriano[20] that
Manila Bay is considered a sea for purposes of determining which law on accretion is
to be applied in multifarious situations, we have ruled differently insofar as accretions
on lands adjoining the Laguna de Bay are concerned.
In the cases of Government of the P.I v. Colegio de San Jose,[21] Republic v. Court
of Appeals,[22] Republic v. Alagad[23], and Meneses v. Court of Appeals,[24] we
categorically ruled that Laguna de Bay is a lake the accretion on which, by the
mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to the owner of
the land contiguous thereto.
The instant controversy, however, brings a situation calling for the application of
Article 4 of the Spanish Law of Waters of 1866, the disputed land being an accretion
on the foreshore of Manila Bay which is, for all legal purposes, considered a sea.
Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:
"Lands added to the shores by accretions and alluvial deposits caused by the action
of the sea, form part of the public domain. When they are no longer washed by the
waters of the sea and are not necessary for purposes of public utility, or for the
establishment of special industries, or for the coast-guard service, the Government
shall declare them to be the property of the owners of the estates adjacent thereto
and as increment thereof."
In the light of the aforecited vintage but still valid law, unequivocal is the public nature
of the disputed land in this controversy, the same being an accretion on a sea bank
which, for all legal purposes, the foreshore of Manila Bay is. As part of the public
domain, the herein disputed land is intended for public uses, and "so long as the land
in litigation belongs to the national domain and is reserved for public uses, it is not
capable of being appropriated by any private person, except through express
authorization granted in due form by a competent authority."[25] Only the executive
and possibly the legislative departments have the right and the power to make the
declaration that the lands so gained by action of the sea is no longer necessary for
purposes of public utility or for the cause of establishment of special industries or for
coast guard services.[26] Petitioners utterly fail to show that either the executive or
legislative department has already declared the disputed land as qualified, under
Article 4 of the Spanish Law of Waters of 1866, to be the property of private
respondents as owners of the estates adjacent thereto.
WHEREFORE, the instant Petition for Review is hereby GRANTED.
The decision of the Intermediate Appellate Court (now Court of Appeals) in CA G.R.
No. 59044-R dated November 29, 1978 is hereby REVERSED and SET ASIDE. The
resolution dated November 21, 1980 and March 28, 1982, respectively, promulgated
by the Intermediate Appellate Court are likewise REVERSED and SET ASIDE.
The decision of the Court of First Instance (now the Regional Trial Court), Branch 1,
Balanga, Bataan, is hereby ORDERED REINSTATED.
Costs against private respondents.
SO ORDERED.
Change of course of river.
Baes v CA; G.R. No. 108065. July 6, 1993.
G.R. No. 108065 July 6, 1993
SPOUSES FELIX BAES AND RAFAELA BAES, petitioners,
vs.
THE COURT OF APPEALS AND REPUBLIC OF THE PHILIPPINES, respondents.
Lorenzo F. Miravite for petitioners.
The Solicitor General for respondents.
CRUZ, J.:
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.

Binalay v Manalo; G.R. No. 92161. March 18, 1991.
G.R. No. 92161 March 18, 1991
SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO
ROSALES, GREGORIO ARGONZA, EUSTAQUIO BAUA, FLORENTINO ROSALES,
TEODORO MABBORANG, PATRICIO MABBORANG and FULGENCIO MORA,
petitioners
vs.
GUILLERMO MANALO and COURT OF APPEALS, respondents.
Josefin De Alban Law Office for Petitioners.
FELICIANO, J.:
The late Judge Taccad originally owned a parcel of land situated in Tumauini, Isabela
having an estimated area of twenty (20) hectares. The western portion of this land
bordering on the Cagayan River has an elevation lower than that of the eastern
portion which borders on the national road. Through the years, the western portion
would periodically go under the waters of the Cagayan River as those waters swelled
with the coming of the rains. The submerged portion, however, would re-appear
during the dry season from January to August. It would remain under water for the
rest of the year, that is, from September to December during the rainy season.
The ownership of the landholding eventually moved from one person to another. On 9
May 1959, respondent Guillermo Manalo acquired 8.65 hectares thereof from
Faustina Taccad, daughter of Judge Juan Taccad. The land sold was described in the
Deed of Absolute Sale1 as follows:
. . . a parcel of agricultural land in Balug, Tumauini, Isabela, containing an area of
8.6500 hectares, more or less; bounded on the North by Francisco Forto on the East
by National Road; on South by Julian Tumolva and on the West by Cagayan River;
declared for taxation under Tax Declaration No. 12681 in the name of Faustina
Taccad, and assessed at P 750.00. . . .
Later in 1964, respondent Manalo purchased another 1.80 hectares from Gregorio
Taguba who had earlier acquired the same from Judge Juan Taccad. The second
purchase brought the total acquisition of respondent Manalo to 10.45 hectares. The
second piece of property was more particularly described as follows:
. . . a piece of agricultural land consisting of tobacco land, and containing an area of
18,000 square meters, more or less, bounded on the North by Balug Creek; on the
South, by Faustina Taccad (now Guillermo R. Manalo); on the East, by a Provincial
Road; and on the West, by Cagayan River assessed at P 440.00, as tax Declaration
No. 3152. . . .2
During the cadastral survey conducted at Balug, Tumauini, Isabela on 21 October
1969, the two (2) parcels of land belonging to respondent Manalo were surveyed and
consolidated into one lot, designated as Lot No. 307, Pls-964. Lot 307 which contains
4.6489 hectares includes: (a) the whole of the 1.80 hectares acquired from Gregorio
Taguba; and (b) 2.8489 hectares out of the 8.65 hectares purchased from Faustina
Taccad. As the survey was conducted on a rainy month, a portion of the land bought
from Faustina Taccad then under water was left unsurveyed and was not included in
Lot 307.
The Sketch Plan3 submitted during the trial of this case and which was identified by
respondent Manalo shows that the Cagayan River running from south to north, forks
at a certain point to form two (2) branchesthe western and the eastern branches
and then unites at the other end, further north, to form a narrow strip of land. The
eastern branch of the river cuts through the land of respondent Manalo and is
inundated with water only during the rainy season. The bed of the eastern branch is
the submerged or the unsurveyed portion of the land belonging to respondent
Manalo. For about eight (8) months of the year when the level of water at the point
where the Cagayan River forks is at its ordinary depth, river water does not flow into
the eastern branch. While this condition persists, the eastern bed is dry and is
susceptible to cultivation.
Considering that water flowed through the eastern branch of the Cagayan River when
the cadastral survey was conducted, the elongated strip of land formed by the
western and the eastern branches of the Cagayan River looked very much like an
island. This strip of land was surveyed on 12 December 1969.4
It was found to have a total area of 22.7209 hectares and was designated as Lot 821
and Lot 822. The area of Lot 822 is 10.8122 hectares while Lot 821 has an area of
11.9087 hectares. Lot 821 is located directly opposite Lot 307 and is separated from
the latter only by the eastern branch of the Cagayan River during the rainy season
and, during the dry season, by the exposed, dry river bed, being a portion of the land
bought from Faustina Taccad. Respondent Manalo claims that Lot 821 also belongs
to him by way of accretion to the submerged portion of the property to which it is
adjacent.
Petitioners who are in possession of Lot 821, upon the other hand, insist that they
own Lot 821. They occupy the outer edges of Lot 821 along the river banks, i.e., the
fertile portions on which they plant tobacco and other agricultural products. They also
cultivate the western strip of the unsurveyed portion during summer.5 This situation
compelled respondent Manalo to file a case for forcible entry against petitioners on 20
May 1969. The case was dismissed by the Municipal Court of Tumauini, Isabela for
failure of both parties to appear. On 15 December 1972, respondent Manalo again
filed a case for forcible entry against petitioners. The latter case was similarly
dismissed for lack of jurisdiction by the Municipal Court of Tumauini, Isabela.
On 24 July 1974, respondent Manalo filed a complaints6 before the then Court of
First Instance of Isabela, Branch 3 for quieting of title, possession and damages
against petitioners. He alleged ownership of the two (2) parcels of land he bought
separately from Faustina Taccad and Gregorio Taguba for which reason he prayed
that judgment be entered ordering petitioners to vacate the western strip of the
unsurveyed portion. Respondent Manalo likewise prayed that judgment be entered
declaring him as owner of Lot 821 on which he had laid his claim during the survey.
Petitioners filed their answer denying the material allegations of the complaint. The
case was then set for trial for failure of the parties to reach an amicable agreement or
to enter into a stipulation of facts.7 On 10 November 1982, the trial court rendered a
decision with the following dispositive portion:
WHEREFORE, in the light of the foregoing premises, the Court renders judgment
against the defendants and in favor of the plaintiff and orders:
1. That plaintiff, Guillermo Manalo, is declared the lawful owner of the land in
question, Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint;
2. That the defendants are hereby ordered to vacate the premises of the land
in question, Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more
particularly described in paragraph 2-b of the Complaint;
3. That the defendants are being restrained from entering the premises of the
land in question, Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more
particularly described in paragraph 2-b of the Complaint; and
4. That there is no pronouncement as to attorney's fees and costs.
SO ORDERED.8
Petitioners appealed to the Court of Appeals which, however, affirmed the decision of
the trial court. They filed a motion for reconsideration, without success.
While petitioners insist that Lot 821 is part of an island surrounded by the two (2)
branches of the Cagayan River, the Court of Appeals found otherwise. The Court of
Appeals concurred with the finding of the trial court that Lot 821 cannot be considered
separate and distinct from Lot 307 since the eastern branch of the Cagayan River
substantially dries up for the most part of the year such that when this happens, Lot
821 becomes physically (i.e., by land) connected with the dried up bed owned by
respondent Manalo. Both courts below in effect rejected the assertion of petitioners
that the depression on the earth's surface which separates Lot 307 and Lot 821 is,
during part of the year, the bed of the eastern branch of the Cagayan River.
It is a familiar rule that the findings of facts of the trial court are entitled to great
respect, and that they carry even more weight when affirmed by the Court of
Appeals.9 This is in recognition of the peculiar advantage on the part of the trial court
of being able to observe first-hand the deportment of the witnesses while testifying.
Jurisprudence is likewise settled that the Court of Appeals is the final arbiter of
questions of fact.10 But whether a conclusion drawn from such findings of facts is
correct, is a question of law cognizable by this Court.11
In the instant case, the conclusion reached by both courts below apparently collides
with their findings that periodically at the onset of and during the rainy season, river
water flows through the eastern bed of the Cagayan River. The trial court held:
The Court believes that the land in controversy is of the nature and character of
alluvion (Accretion), for it appears that during the dry season, the body of water
separating the same land in controversy (Lot No. 821, Pls-964) and the two (2)
parcels of land which the plaintiff purchased from Gregorio Taguba and Justina
Taccad Cayaba becomes a marshy land and is only six (6) inches deep and twelve
(12) meters in width at its widest in the northern tip (Exhs. "W", "W-l", "W-2", "W-3"
and "W-4"), It has been held by our Supreme Court that "the owner of the riparian
land which receives the gradual deposits of alluvion, does not have to make an
express act of possession. The law does not require it, and the deposit created by the
current of the water becomes manifest" (Roxas vs. Tuazon, 6 Phil. 408).12
The Court of Appeals adhered substantially to the conclusion reached by the trial
court, thus:
As found by the trial court, the disputed property is not an island in the strict sense of
the word since the eastern portion of the said property claimed by appellants to be
part of the Cagayan River dries up during summer. Admittedly, it is the action of the
heavy rains which comes during rainy season especially from September to
November which increases the water level of the Cagayan river. As the river becomes
swollen due to heavy rains, the lower portion of the said strip of land located at its
southernmost point would be inundated with water. This is where the water of the
Cagayan river gains its entry. Consequently, if the water level is high the whole strip
of land would be under water.
In Government of the Philippine Islands vs. Colegio de San Jose, it was held that
According to the foregoing definition of the words "ordinary" and "extra-ordinary," the
highest depth of the waters of Laguna de Bay during the dry season is the ordinary
one, and the highest depth they attain during the extra-ordinary one (sic); inasmuch
as the former is the one which is regular, common, natural, which occurs always or
most of the time during the year, while the latter is uncommon, transcends the
general rule, order and measure, and goes beyond that which is the ordinary depth. If
according to the definition given by Article 74 of the Law of Waters quoted above, the
natural bed or basin of the lakes is the ground covered by their waters when at their
highest ordinary depth, the natural bed or basin of Laguna de Bay is the ground
covered by its waters when at their highest depth during the dry season, that is up to
the northeastern boundary of the two parcels of land in question.
We find the foregoing ruling to be analogous to the case at bar. The highest ordinary
level of the waters of the Cagayan River is that attained during the dry season which
is confined only on the west side of Lot [821] and Lot [822]. This is the natural
Cagayan river itself. The small residual of water between Lot [821] and 307 is part of
the small stream already in existence when the whole of the late Judge Juan
Taccad's property was still susceptible to cultivation and uneroded.13
The Court is unable to agree with the Court of Appeals that Government of the
Philippine Islands vs. Colegio de San Jose 14 is applicable to the present case. That
case involved Laguna de Bay; since Laguna de Bay is a lake, the Court applied the
legal provisions governing the ownership and use of lakes and their beds and shores,
in order to determine the character and ownership of the disputed property.
Specifically, the Court applied the definition of the natural bed or basin of lakes found
in Article 74 of the Law of Waters of 3 August 1866. Upon the other hand, what is
involved in the instant case is the eastern bed of the Cagayan River.
We believe and so hold that Article 70 of the Law of Waters of 3 August 1866 is the
law applicable to the case at bar:
Art. 70. The natural bed or channel of a creek or river is the ground covered by its
waters during the highest floods. (Emphasis supplied)
We note that Article 70 defines the natural bed or channel of a creek or river as the
ground covered by its waters during the highest floods. The highest floods in the
eastern branch of the Cagayan River occur with the annual coming of the rains as the
river waters in their onward course cover the entire depressed portion. Though the
eastern bed substantially dries up for the most part of the year (i.e., from January to
August), we cannot ignore the periodical swelling of the waters ( i.e., from September
to December) causing the eastern bed to be covered with flowing river waters.
The conclusion of this Court that the depressed portion is a river bed rests upon
evidence of record.1wphi1 Firstly, respondent Manalo admitted in open court that
the entire area he bought from Gregorio Taguba was included in Lot 307.15 If the
1.80 hectares purchased from Gregorio Taguba was included in Lot 307, then the
Cagayan River referred to as the western boundary in the Deed of Sale transferring
the land from Gregorio Taguba to respondent Manalo as well as the Deed of Sale
signed by Faustina Taccad, must refer to the dried up bed (during the dry months) or
the eastern branch of the river (during the rainy months). In the Sketch Plan attached
to the records of the case, Lot 307 is separated from the western branch of the
Cagayan River by a large tract of land which includes not only Lot 821 but also what
this Court characterizes as the eastern branch of the Cagayan River.
Secondly, the pictures identified by respondent Manalo during his direct examination
depict the depressed portion as a river bed. The pictures, marked as Exhibits "W" to
"W-4", were taken in July 1973 or at a time when the eastern bed becomes visible.16
Thus, Exhibit "W-2" which according to respondent Manalo was taken facing the east
and Exhibit "W-3" which was taken facing the west both show that the visible, dried
up portion has a markedly lower elevation than Lot 307 and Lot 821. It has dike-like
slopes on both sides connecting it to Lot 307 and Lot 821 that are vertical upward and
very prominent. This topographic feature is compatible with the fact that a huge
volume of water passes through the eastern bed regularly during the rainy season. In
addition, petitioner Ponciano Gannaban testified that one had to go down what he
called a "cliff" from the surveyed portion of the land of respondent Manalo to the
depressed portion. The cliff, as related by petitioner Gannaban, has a height of eight
(8) meters.17
The records do not show when the Cagayan River began to carve its eastern channel
on the surface of the earth. However, Exhibit "E"18 for the prosecution which was the
Declaration of Real Property standing in the name of Faustina Taccad indicates that
the eastern bed already existed even before the sale to respondent Manalo. The
words "old bed" enclosed in parenthesesperhaps written to make legitimate the
claim of private ownership over the submerged portionis an implied admission of
the existence of the river bed. In the Declaration of Real Property made by
respondent Manalo, the depressed portion assumed the name Rio Muerte de
Cagayan. Indeed, the steep dike-like slopes on either side of the eastern bed could
have been formed only after a prolonged period of time.
Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not
acquire private ownership of the bed of the eastern branch of the river even if it was
included in the deeds of absolute sale executed by Gregorio Taguba and Faustina
Taccad in his favor. These vendors could not have validly sold land that constituted
property of public dominion. Article 420 of the Civil Code states:
The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth.
(Emphasis supplied)
Although Article 420 speaks only of rivers and banks, "rivers" is a composite term
which includes: (1) the running waters, (2) the bed, and (3) the banks.19 Manresa, in
commenting upon Article 339 of the Spanish Civil Code of 1889 from which Article
420 of the Philippine Civil Code was taken, stressed the public ownership of river
beds:
La naturaleza especial de los rios, en punto a su disfrute general, hace que sea
necesario considerar en su relacion de dominio algo mas que sus aguas corrientes.
En efecto en todo rio es preciso distinguir 1. esta agua corriente; 2. el alveo o cauce,
y 3. las riberas. Ahora bien: son estas dos ultimas cosas siempre de dominio publico,
como las aguas?
Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el
Codigo civil que los rios son de dominio publico, parece que debe ir implicito el
dominio publico de aquellos tres elementos que integran el rio. Por otra parte, en
cuanto a los alveos o cauces tenemos la declaracion del art. 407, num 1, donde dice:
son de dominion publico . . . los rios y sus cauces naturales; declaracion que
concuerda con lo que dispone el art. 34 de la ley de [Aguas], segun el cual, son de
dominion publico: 1. los alveos o cauces de los arroyos que no se hallen
comprendidos en el art. 33, y 2. los alveos o cauces naturales de los rios en la
extension que cubran sus aguas en las mayores crecidas ordinarias.20 (Emphasis
supplied)
The claim of ownership of respondent Manalo over the submerged portion is bereft of
basis even if it were alleged and proved that the Cagayan River first began to
encroach on his property after the purchase from Gregorio Taguba and Faustina
Taccad. Article 462 of the Civil Code would then apply divesting, by operation of law,
respondent Manalo of private ownership over the new river bed. The intrusion of the
eastern branch of the Cagayan River into his landholding obviously prejudiced
respondent Manalo but this is a common occurrence since estates bordering on rivers
are exposed to floods and other evils produced by the destructive force of the waters.
That loss is compensated by, inter alia, the right of accretion acknowledged by Article
457 of the Civil Code.21 It so happened that instead of increasing the size of Lot 307,
the eastern branch of the Cagayan River had carved a channel on it.
We turn next to the issue of accretion. After examining the records of the case, the
Court considers that there was no evidence to prove that Lot 821 is an increment to
Lot 307 and the bed of the eastern branch of the river. Accretion as a mode of
acquiring property under Article 457 of the Civil Code requires the concurrence of
three (3) requisites: (a) that the deposition of soil or sediment be gradual and
imperceptible; (b) that it be the result of the action of the waters of the river (or sea);
and (c) that the land where accretion takes place is adjacent to the banks of rivers (or
the sea coast).22 The Court notes that the parcels of land bought by respondent
Manalo border on the eastern branch of the Cagayan River. Any accretion formed by
this eastern branch which respondent Manalo may claim must be deposited on or
attached to Lot 307. As it is, the claimed accretion (Lot 821) lies on the bank of the
river not adjacent to Lot 307 but directly opposite Lot 307 across the river.
Assuming (arguendo only) that the Cagayan River referred to in the Deeds of Sale
transferring ownership of the land to respondent Manalo is the western branch, the
decision of the Court of Appeals and of the trial court are bare of factual findings to
the effect that the land purchased by respondent Manalo received alluvium from the
action of the aver in a slow and gradual manner. On the contrary, the decision of the
lower court made mention of several floods that caused the land to reappear making
it susceptible to cultivation. A sudden and forceful action like that of flooding is hardly
the alluvial process contemplated under Article 457 of the Civil Code. It is the slow
and hardly perceptible accumulation of soil deposits that the law grants to the riparian
owner.
Besides, it is important to note that Lot 821 has an area of 11.91 hectares. Lot 821 is
the northern portion of the strip of land having a total area of 22.72 hectares. We find
it difficult to suppose that such a sizable area as Lot 821 resulted from slow accretion
to another lot of almost equal size. The total landholding purchased by respondent
Manalo is 10.45 hectares (8.65 hectares from Faustina Taccad and 1.80 hectares
from Gregorio Taguba in 1959 and 1964, respectively), in fact even smaller than Lot
821 which he claims by way of accretion. The cadastral survey showing that Lot 821
has an area of 11.91 hectares was conducted in 1969. If respondent Manalo's
contention were accepted, it would mean that in a span of only ten (10) years, he had
more than doubled his landholding by what the Court of Appeals and the trial court
considered as accretion. As already noted, there are steep vertical dike-like slopes
separating the depressed portion or river bed and Lot 821 and Lot 307. This
topography of the land, among other things, precludes a reasonable conclusion that
Lot 821 is an increment to the depressed portion by reason of the slow and constant
action of the waters of either the western or the eastern branches of the Cagayan
River.
We turn finally to the issue of ownership of Lot 821. Respondent Manalo's claim over
Lot 821 rests on accretion coupled with alleged prior possession. He alleged that the
parcels of land he bought separately from Gregorio Taguba and Faustina Taccad
were formerly owned by Judge Juan Taccad who was in possession thereof through
his (Judge Taccad's) tenants. When ownership was transferred to him, respondent
Manalo took over the cultivation of the property and had it declared for taxation
purposes in his name. When petitioners forcibly entered into his property, he twice
instituted the appropriate action before the Municipal Trial Court of Tumauini, Isabela.
Against respondent Manalo's allegation of prior possession, petitioners presented tax
declarations standing in their respective names. They claimed lawful, peaceful and
adverse possession of Lot 821 since 1955.
If respondent Manalo had proved prior possession, it was limited physically to Lot 307
and the depressed portion or the eastern river bed. The testimony of Dominga
Malana who was a tenant for Justina Taccad did not indicate that she was also
cultivating Lot 821. In fact, the complaints for forcible entry lodged before the
Municipal Trial Court of Tumauini, Isabela pertained only to Lot 307 and the
depressed portion or river bed and not to Lot 821. In the same manner, the tax
declarations presented by petitioners conflict with those of respondent Manalo. Under
Article 477 of the Civil Code, the plaintiff in an action for quieting of title must at least
have equitable title to or interest in the real property which is the subject matter of the
action. The evidence of record on this point is less than satisfactory and the Court
feels compelled to refrain from determining the ownership and possession of Lot 821,
adjudging neither petitioners nor respondent Manalo as owner(s) thereof.
WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-GR CV
No. 04892 are hereby SET ASIDE. Respondent Manalo is hereby declared the owner
of Lot 307. The regularly submerged portion or the eastern bed of the Cagayan River
is hereby DECLARED to be property of public dominion. The ownership of Lot 821
shall be determined in an appropriate action that may be instituted by the interested
parties inter se. No pronouncement as to costs.
SO ORDERED.
|||
Formation of islands.
iii) Reverse accession.
b) Over movables.
i) Conjunction and adjunction.
Inclusion or engraftment.
Soldadura.
Tejido.
Escritura.
Pintura.
ii) Commixion and confusion.
 Siari Valley Estates v Lucasan; 97 Phil 987. G.R. No.
L-7046; G.R. No. L-11005. October 31, 1957.
G.R. No. L-11005 October 31, 1957
SIARI VALLEY ESTATES, INC., petitioner,
vs.
FILEMON LUCASAN and Hon. W. M. ORTEGA, Judge of the Court of First Instance
of Zamboanga del Norte, respondents.
Orendain and Sarmiento for petitioner.
Hon. Wenceslao M. Ortega in his own behalf.
Barrios, Barrios and Lucasan for respondents.
BENGZON, J.:
This is an offshoot of our decision in G.R. No. L-7046, Siari Valley Estate Inc, vs.
Filemon Lucasan,1 wherein we affirmed, on appeal, the judgment of Hon. Patricio
Ceniza, of the Zamboanga court of first instance in its Civil Case No. 134. The
dispositive part of such affirmed judgment read as follows:
Valley Estate all the cattle that may be found in the cattle ranch ". . . judgment is
hereby rendered adjudicating to the Siari of Filemon Lucasan specially the 321 heads
that had been entrusted to his care as receiver or trustee of this Court and ordering
the defendant to deliver to the plaintiff all said cattle or their value amounting to
P40,000 to pay damages to the Siari Valley Estate for the 400 heads of cattle that he
sold since 1946 up to the date of the trial at the rate of P100 per head or P40,000
plus interest at the rate of 6 per cent from the date of the trial of this case in January,
1951 and to pay the cost of the proceeding. In addition, the defendant is hereby
ordered to allow the Siari Valley Estate to round up all the buffaloes that may be
found in his cattle ranch after the Siari Valley Estate shall have posted a bond in the
amount of P5,000 to answer for whatever damages the operation may cause to him.
With regard to the contempt proceedings, Filemon Lucasan is hereby found guilty of
the charges and he is hereby sentenced to pay a fine of P500 pursuant to section 6
Rule 64 of the Rules of Court or suffer subsidiary imprisonment in case of insolvency
at the rate of one day every P2.50 that he falls to pay.
With regard to the three causes of action the counter-claim of the defendant, all of
them are hereby dismissed for lack of merit.
Upon petition by the intervenors, the intervention had been dismissed in a previous
order of this Court, without prejudice to the filing of an independent action. (emphasis
ours.)
After our decision had become final, the expediente was returned to the court below
for execution. Thereupon a dispute arose whether we had affirmed also that part of
Judge Ceniza's judgement underlined in the above quotation (concerning buffaloes)
Lucasan pointed out that, in quoting the dispositive paragraphs of the appealed
judgment, our decision had omitted the underlined portion. Therefore, he argued, the
affirmance of the judgment did not include the directive about buffaloes. As the
respondent judge sustained Lucasan's contention, this petition for mandamus and
other auxiliary remedies was promptly filed.
Knowing the extent and scope of our decision in said appealed case, we issued a
preliminary injunction designed to protest petitioner's interests. And now, after the
parties have been heard, we turn to the principal question, which is: did we uphold the
right given to plaintiff by the court below "to round up the buffaloes"? The answer
must be: we did. In the concluding part of our decision we found the appealed
judgment to be substantially in accordance with the facts and the law; and then we
adjudged: "Therefore it is hereby affirmed with appellant."
Ordinarily the affirmed judgment is that contained in its dispositive part; in the said
Siari Valley appealed case, the above-quoted four paragraphs.
It is true that in the opening statements our decision quoted the dispositive part of the
appealed judgment as follows:
Premises considered, judgment is hereby rendered, adjudicating to the Siari Valley
Estate all the cattle that may be found in the cattle ranch of Filemon Lucasan,
specially the 321 heads that had been entrusted to his care as receiver or trustee of
this Court and ordering the defendant to deliver to the plaintiff all said cattle or their
value amounting to P40,000, to pay damages to the Siari Valley Estate for the 400
heads of cattle that he sold since 1946 up to the date of the trial at the rate of P100
per head or P40,000 plus interest at the rate of 6 per cent from the date of the trial of
this case in January, 1951 and to pay the costs of the proceeding.
With regard to the contempt proceedings, Filemon Lucasan is hereby found guilty of
the charges and he is hereby sentenced to pay a fine of P500 pursuant to section 6,
Rule 64, of the Rules of Court or suffer subsidiary imprisonment in case of insolvency
at the rate of one day for every P2.50 that he fails to pay.
thereby omitting the portion regarding buffaloes. But observe that we used elliptical
signs, i. e. several *'s which indicated the omission of some portion or portions. This
did not evince any intention to "modify" the judgment by eliminating the omitted
portion.2 The judgment, we decreed in concluding, "is hereby affirmed". We did not
say, it is hereby modified. Neither did we say, "the quoted portion of the judgment is
hereby affirmed". For that matter, would respondents maintain likewise the last two
paragraphs of the dispositive part of the appealed judgment (regarding the
counterclaim and the intervenors) were not equally affirmed, because they were not
quoted?
We explained in Contreras vs. Felix, 78 Phil., 570, 44 Off. Gaz., 4306 that "the final
judgment as rendered is the judgment of the court, irrespective of all seemingly
contrary statements in the decision", and that the judgement must be distinguished
from the opinion. Our decree was one affirming the appealed judgment. If any
statement in the opinion preceding the decree seemingly excluded a portion (which
we deny), it must be overlooked, because the judgment or the decree prevails over
the opinion.
In construing confirmatory decisions of appellate courts the practice is to regard the
whole of the appealed judgment to have been upheld3 even if several points thereof
have not been discussed "or touched upon such confirmatory decision."4

The truth is, as may be verified from our decision itself, our statement omitted the
portion concerning buffaloes because it was immaterial for the purpose of the appeal.
It was not a point necessary to understand or decide the questions then before us.5
Indeed the whole decision made no reference to the subject of buffaloes, even as
appellant's brief (Lucasan) failed to debate such aspect of the appealed judgment.
The argument is advanced that inasmuch as the plaintiff "never claimed the buffaloes
in its amended complaint (and) the (lower) court could not have granted that which
was not prayed", therefore the Supreme Court most probably had excluded the matter
(of buffaloes) from its confirmatory order. Such reasoning has no valid foundation
because Lucasan was not in default, there was trial, and under the circumstances the
plaintiff could be granted any relief that was supported by the evidence "although not
specified in his pleadings."6 The other argument addressed to the proposition that the
Court shouldn't have, and couldn't have affirmed that phase of the judgment is too
late, if not impertinent. The affirmance without modification of the judgment is final.
And the parties should realize that the matter of buffaloes was not such plain error
(supposing it was error) as to call for special consideration by this Court even if
ignored7 by appellant's counsel in his brief.
All the foregoing shows the respondent judge's mistake in declining to permit Siari
Valley Inc. to round up its buffaloes roaming on Lucasan's ranch. But the latter's
resistance to such rounding-up, founded on a rather technical plea, despite his
knowledge that he had complained of such buffaloes grazing on his land (R. A. in L-
7046 p. 140), was not a mere mistake but a rather sharp practice transcending the
limits of good faith. However-overruling petitioner's contention-Lucasan will not be
declared to have committed contempt of court considering on the one hand that his
ground of objection appeared to be not so flimsy8 as to make his conduct a "willful
disregard or disobedience"9 or a "clear and contumacious refusal to obey"10 and on
the other hand remembering that the power to punish for contempt should be
conservatively exercised.
Wherefore, the petition for mandamus is granted, the respondent judge, and whoever
may be acting in his place, is hereby ordered to enforce, and the other respondent
Filemon Lucasan is ordered to obey, the aforementioned judgment in full of Judge
Ceniza which was totally affirmed by this Court on appeal. Costs of this proceeding
shall be paid respondent Lucasan. So ordered.
Montelibano v Bacolod Murcia; G.R. No. L-5416; July
26, 1954.
[G.R. No. L-5416. July 26, 1954.]
ALFREDO MONTELIBANO, ET AL., Plaintiffs-Appellants, v. THE BACOLOD-
MURCIA MILLING CO., Defendants-Appellants.
San Juan, Africa, Yiguez & Benedicto and Abundio Z. Arrieta, for Plaintiffs-
Appellants.
Vicente Hilado and Nolan & Manoloto, for Defendants-Appellants.
SYLLABUS
1. COMMUNITY PROPERTY; PARTIAL SALE; BALANCE TO BE PRORATED
AMONG OWNERS ACCORDING TO ORIGINAL AMOUNT OWNED BY EACH. In
a sale of a mass of sugar stored together and belonging to different owners, where it
can not be determined whose sugar was withdrawn and whose was not, the mass
remaining must pertain to the original owners in the proportion of the original amounts
owned by each of them.
DECISION
LABRADOR, J.:
Parties plaintiffs and defendant appeal from a judgment of the Court of First Instance
of Negros Occidental dismissing plaintiffs complaint for the recovery of
P4,712,501.89, representing the value of sugar alleged to belong to them and existing
in defendants warehouse at the time of the liberation, and ordering plaintiff Alfredo
Montelibano to pay defendant the sum of P35,163.06, plus legal interest thereon from
April, 1945, until fully paid. Plaintiffs appeal from the judgment of dismissal, and
defendant from the judgment in so far as it fixes at P35,163.06 as the amount
defendant is entitled to recover from plaintiff Alfredo Montelibano.
Plaintiffs are sugar planters, members of the Bacolod-Murcia Planters Association,
Inc., or assignees of sugar planters. The former have contracts with the defendant
corporation, hereinafter known as the Central, for the delivery of their sugar cane to
the sugar mill of the defendant for milling and processing into sugar. In accordance
with the contracts, which the planters had signed with the defendant, the sugar
processed from the sugar cane delivered by each planter was to be divided between
the planter and the Central in the following proportion, namely, 60% for the planter
and 40% for the Central. The Central was to furnish the planter, from time to time as
the milling progressed, with information as to the share of sugar that the planter was
entitled to receive, furnishing the planter with quedans or warehouses receipts
therefor. After the milling, and for a period of 90 days, the Central was to keep the
sugar in its warehouse free of charge; thereafter the planter was to pay five centavos
per picul per month for storage,. aside from such expenses of conservation and
repacking as may be incurred in relation to the sugar upon presentation of his
warehouse receipt (Exhibit KK).
At the time of the occupation of Negros Occidental by the Japanese forces on May
21, 1942, there were on deposit at the Centrals warehouse 664,091.22 piculs of
sugar, of which 128,452.24 belonged to the plaintiffs, 284,425.81 to the defendant
Central, and the balance to planters not parties to the action (Exhibits C, C-l, C- 2,
and C-3. On February 10, 1943 (18th year of Showa February 10), the Japanese
Military Administration, Visayan Branch, designated Fidel Henares, president of the
Sugar Planters Association, with the following authority:chanrob1es virtual 1aw
library
. . . hereby authorized to sell and dispose of all sugar to the Mitsui Bussan Kaisha, the
authorized purchaser of the Philippine Military Administration, and in addition granting
the following powers:chanrob1es virtual 1aw library
To contract, deliver, to receive payments, to pay various accounts to the members of
the Planters Association; and to open accounts, to contract overdraft accounts with
the Bank of Taiwan, and perform such other powers as may be necessary in the
premises. (Exhibit RH, Annex A, Annex A-1, Exhibit 19)
Thereafter the Japanese Military Administration issued a regulation governing
purchases of sugar by the Military Administration (Exhibit JJ) by virtue of which, upon
purchase of sugar by the Military Administration, any claim of the Philippine National
Bank or of any other enemy corporation thereto shall be automatically cancelled, and
the sugar thus purchased deposited as new "Regenesis a/c" in the name of the
vendee, the Bank of Taiwan, Ltd. Planters or owners of the sugar were authorized, if
they chose, to borrow funds from the Bank of Taiwan, Ltd. According to regulations
issued by the Executive Commission under the Military Administration, the checks in
payment of the sugar purchased shall be Bank of Taiwan checks which, however,
were to be deposited with said bank and set-off against the mortgages on old crop
loans of the planters as Farmer Rehabilitation Funds. New crop loans could be
granted within the limits of the proceeds of their sugar sold (Exhibit 23).
As early as February 24, 1943, the Mitsui Bussan Kaisha, Ltd., notified the president
of the Planters Association that it was buying all the sugar of the planters, whether
they could be located or not (Exhibit II). Warehouse orders for release of sugar he
had sold were issued at the request of the president of the Planters Association on
the following dates and for the following amounts:chanrob1es virtual 1aw library
February 17, 1943 22,724.09 piculs (Exhibit 62)
March 6, 1943 275,580.35 piculs (Exhibit 22)
March 27, 1943 575.84 piculs (Exhibit 63)
April 20, 1943 14,105.92 piculs (Exhibit 54)
May 17, 1943 22,698.31 piculs (Exhibit 65 C)
May 18, 1943 6,240.92 piculs (Exhibit 6 B)
As for the share of the Central in the sugar, Exhibit E shows that as early as April 21,
1943, as much as a total of 272,601 piculs had been sold to the Mitsui Bussan
Kaisha, and by the end of December, 1943, a full total of 272,801.07 piculs. There
was, however, still a balance of 12,153.05 piculs as of December, 1943 (Exhibit 1, p.
3).
From the time of Mitsui Bussan Kaisha made purchases, it began withdrawing sugar
from the Central in sacks. Withdrawals were made during the years 1943 and 1944
(Exhibit 72, 73, 74), but without indication as to whose sugar each withdrawal was
being made. As the sugar belonging to the planters and that of the Central were
mixed up, and there being nothing to show what the vendee was withdrawing, it could
not be determined whose sugar had been actually sold or withdrawn. It is a fact
admitted by both parties, however, that at the time of the liberation, notwithstanding
the sales and withdrawals, there were around 150,000 piculs of sugar in the
warehouse of the Central. This sugar was impounded by the U. S. Enemy Property
Custodian, but upon representation of the parties the same was finally released. And
upon resolution of the majority of the planters, it was agreed that 60 per cent thereof
would be provisionally assigned to them, to be prorated among them according to the
sugar they had on deposit in the Central prior to the military occupation, irrespective
of whether they had been paid their sugar or not during the occupation, and the
balance of 40 per cent to be assigned to the Central to be disposed by it, but the
proceed were to be kept by it in trust subject to the results of this litigation. The share
of the defendant in this distribution was 93,663.60 piculs (Exhibit H) and that of the
plaintiffs 35,405.35 piculs.
After liberation (around March to June, 1945) and before the proration above set
forth, plaintiff Alfredo Montelibano withdrew from the warehouse some 12,789 piculs.
Of these around 5,115.60 piculs were the share of the defendant Central.
Montelibano received a bill of P45,273.06 for the value of this sugar, and he proposed
to pay the said amount in installments. A first payment of P10,000 was made. The
amount of the bill was based on a basic price of P8.85 per picul. The balance of the
price has not yet been paid by plaintiff Alfredo Montelibano.
The present action of plaintiffs is predicated on the claim that the defendant has
already been fully paid for its share of the sugar in the warehouse, as it had sold
during the period from April, 1943, to March, 1945, some 284,601 piculs, in excess of
around P175.19 piculs of its own share. and had received the total price of this
amount (P2,410,790.03), so that the sugar remaining at the time of the liberation
pertained and belonged exclusively to plaintiffs and the other planters It is contended
that of the 129,452.24 piculs that plaintiffs owned at the time of the military
occupation, only 35,405. 35 piculs had actually been taken advantage of by them
(that which they received by the proration), so that the remaining 94,046.89 piculs
should be charged against the balance of the sugar and which was adjudicated to the
Central as its share in the proration, the value of which was P4,712,501.89. Moral
justification for this claim of the plaintiffs is sought for in the fact that the defendant
Central had actually sold its share and received in full the price therefor, which is not
the case with the plaintiffs, who have not been paid for, or credited with, the value of
their own. The defense is that all the sugar that plaintiffs had in the Centrals
warehouse at the time of the military occupation was ordered by the Japanese
Military Administration to be sold by and through the president, which it did itself
appoint, in the same manner that the defendant was obliged to sell its own sugar to
the buyer of the Military Administration, and that all the sugar that plaintiffs had in the
warehouse had, therefore, been sold and delivered through said president of the
plaintiffs, so that the latter had no more sugar in the warehouse at the time of the
liberation. The defendant presented a counterclaim against plaintiff Alfredo
Montelibano for the value of the 5,115.60 piculs of the defendant which he
appropriated and which they claim to be valued at P248,337. The right of the
defendant to said sugar is denied, and instead plaintiff Montelibano demands the
return of the P10,000 which he claims was erroneously paid to defendant.
The trial court found that the sugar remaining in the centrals warehouse at the time of
the liberation was already purchased by the Military Administration, but it could not
withdraw the same by reason of the advent of the liberation; that as the sugar of the
parties were all mixed up, none of the owners could claim exclusive ownership of
those remaining in the warehouse, and their rights thereto should be governed by the
provision of Article 381 of the Spanish Civil Code. This, the court said, the parties had
already accepted and carried out by the proration. The court also held that the taking
of the sugar belonging to both plaintiffs and defendant was an act of confiscation by
the Japanese Military Government, which was legal and valid in accordance with the
ruling in the case of Hodges v. Lacson, 46 Official Gazette (No. 3) 1148, from which
no recourse may be had by the parties against the Japanese Government or against
the defendant. The plaintiffs action was, therefore, dismissed and the defendant
absolved therefrom.
As to the counterclaim, the court found the same to be justified, and it sentenced
Montelibano to pay for its value, which the court, however, fixed at P8.80 per picul
only. It, therefore, rendered judgment against Montelibano, ordering him to pay
defendant the balance of its value, i.e., P35,163.06.
Plaintiffs have appealed from the judgment dismissing their action, while defendant
has also appealed from the amount adjudged on its counterclaim, asserting that the
price of the sugar taken by Montelibano should have been fixed at P256,291.56 at the
rate of P50.10 per picul.
Plaintiffs-appellants rely on the following legal propositions: that the purchase of
plaintiffs sugar during the Japanese Military Occupation was neither an act of
confiscation nor of requisition, but a voluntary sale, but as there was no consent of
the plaintiffs thereto or consideration paid for the sugar, none of plaintiffs sugar
should be considered as sold; that, on the other hand, defendants sale of its sugar
was validly made and it had received in full the value thereof, hence the sugar
remaining in the Centrals warehouse at the time of the liberation should belong to
plaintiffs, to the exclusion of the Central.
In our opinion, the determination of the nature or validity of the act of the Japanese
Military Administration in purchasing plaintiffs sugar from the president of the
planters, whom it appointed without the planters or owners consent, is absolutely
immaterial; whether the act of purchase was an act of confiscation of enemy property
by the military occupant, or one of requisition, or one of voluntary sale, is beside the
fundamental issue, which we find to be: Who are the legal owners of the sugar
existing in the Centrals warehouse at the time of the liberation? Irrespective of the
legality or illegality of the purchase of plaintiffs sugar (by the Japanese Military
Administration, for which defendant may not certainly be made responsible, the fact
remains that in consequence thereof of warehouse orders for the release of plaintiffs
sugar were issued and sugar actually taken from the warehouse. Also by the sale of
defendants sugar, release were authorized to the purchaser and withdrawals made.
But evidently the delivery of all the sugar sold by both was not completed, as some
150,000 piculs remained thereafter. As to this sugar (remaining), we hold that title
thereto remained in the original owners, because ownership of personal property sold
is not transferred until actual delivery non nudis pactis, sed traditione dominia
rerum transferuntur. (Fidelity and Deposit Co. v. Wilson, 8 Phil., 51; Crusado v.
Bustos, 34 Phil., 17.)
It also follows that as the sugar of the plaintiffs and of the other planters and of the
Central were stored together in one single mass, without separation or identification,
and as it appears that the Mitsui Bussan Kaisha made withdrawals of sugar from the
Centrals warehouse without express statement as to whose sugar was being
withdrawn, whether the planters or the Centrals, it is absolutely impossible,
physically or legally, to determine whose sugar it was that remained after the
withdrawals. There is no legal basis for plaintiffs proposition that as the taking of their
sugar was without their consent, and that of the defendants with its consent, all that
remained is theirs. The only legal solution is, as the mass of sugar in the warehouse
was owned in common, and as it is not possible to determine whose sugar was
withdrawn and whose was not, the mass remaining must pertain to the original
owners in the proportion of the original amounts owned by each of them. This is the
solution expressly indicated by the law (article 381, Spanish Civil Code), and the one
most consistent with justice and equity.
ART. 381. If, by the will of their owners, two things of identical or dissimilar nature are
mixed, or if the mixture occurs accidentally, and in the latter case the things can not
be separated without injury each owner shall acquire a right in the mixture
proportionate to the part belonging to him, according to the value of the things mixed
or commingled. (Spanish Civil Code)
The 778 cavans and 38 kilos of palay belonging to the plaintiff Urbano Santos, having
been mixed with 1,026 cavans and 9 kilos of palay belonging to the defendant Pablo
Tiongson in Jose C. Bernabes warehouse; the sheriff having found only 924 cavans
and 31 1/2 kilos of palay in said warehouse at the time of the attachment thereof; and
there being no means of separating from 924 cavans and 31 1/2 kilos of palay
belonging to Urbano Santos and those belonging to Pablo Tiongson, the following
rule prescribed in article 381 of the Civil Code for cases of this nature, is applicable.
ART. 381. If, by the will of their owners, two things of identical or dissimilar nature are
mixed or if the mixture occurs accidentally, if in the latter case the things can not be
separated without injury, each owner shall acquire a right in the mixture proportionate
to the part belonging to him according to the value of the things mixed or commingled.
The number of kilos in a cavan not having been determined, we will take the
proportion only of the 924 cavans of palay which were attached and sold, thereby
giving Urbano Santos, who deposited 778 cavans, 398.49 thereof, and Pablo
Tiongson, who deposited 1,026 cavans, 525.51, or the value thereof at the rate of P3
per cavan. (Santos v. Bernabe, 54 Phil., 19, 22).
Lastly, article 393 of the Civil Code, referring to common owner- ship, provides that
the share of the participants in the benefits, as well as in the charges, shall be
proportionate to their respective interests.
This being the rule, it is obvious that whenever an undivided property gains an
increase in its area, all the co-owners shall be entitled to participate in the benefits to
be proportionate to their shares; if it suffers diminution they shall have to share, too,
the charges in accordance with their interests. (Tarnate v. Tarnate, 46 Off. Gaz. (No.
9) 4397, 4403-4404)
If goods of the same kind owned by various persons are so mixed with the mutual
consent of the owners that the portions or shares of the various owners in the mixture
are indistinguishable, the owners become tenants in common of the mixture, each
having an interest in common in proportion to his respective shares. This is the rule of
the civil law. The doctrine finds its most frequent application where several owners
deposit grain in a warehouse although it of course exists wherever the goods of two
or more parties are indistinguishably mingled by common consent, as where
quantities of oil belonging to different persons are stored in a tank. In such cases, in
the event of partial loss, there will be prorated distribution of the loss. Where such a
confusion arises it seldom causes inconvenience, embarrassment, or dispute, for the
separation of the intermingled goods into the aliquot shares of the owners is merely a
matter of measuring, weighing, counting, or selecting, and in all such cases it is
certain that he is entitled to receive back a like quantity. Since they are tenants in
common, however, the co-owners are subject to stand their pro rata share of any loss
which may accrue to the general property from diminution, decay, or other causes.
(11 Am. Jur. 532-533.)

There can be no doubt that, where the volume of grain, stored in an elevator, or of oil
stored in a tank, is made up of contributions from different owners, and becomes
"common stock." its partial destruction by fire, resulting from lightning or other
fortuitous cause must necessitate a pro rata distribution of the loss. . . . (Jennings-
Heywood Oil Syndicate v. Houssiere-Latrelle Oil Co., Et Al., Ann. Cas. 1913 E. 679,
690.)

With respect to defendants counterclaim, we agree with the trial court that the
evidence submitted shows that P8.85 is the fair price of the sugar taken by plaintiff
Alfredo Montelibano. Defendants own original bill fixed this as a price for said sugar
(Exhibit 49), and sales made to third persons at the time the sugar was withdrawn
were at prices fluctuating around this sum. We find no reason, therefore, for
disturbing the judgment in relation thereto.

For the foregoing considerations, the judgment appealed from is hereby affirmed,
both in so far as it dismisses the complaint and in so far as it awards the sum of
P35,163.06 on defendants counterclaim against plaintiff Alfredo Montelibano, with
costs against the plaintiffs-appellants.

Paras, C.J., Pablo, Bengzon, Montemayor, Reyes, A., Jugo and Bautista Angelo, JJ.,
concur.

iii) Specification.

(to be continued)