NPC Vs.
Ibrahim Ibrahim could have dug upon their property and built
Facts:
Ibrahim owns a parcel of land located in Lanao del
Norte.
In 1978, NAPOCOR took possession of the sub-terrain
area of the land and constructed underground tunnels
on the said property.
The tunnels were apparently being used by NAPOCOR in
siphoning the water of Lake Lanao and in the operation
of NAPOCORs Agus projects.
In 1991, Maruhom (one of the co-heirs of Ibrahim)
requested Marawi City Water District for a permit to
construct or install a motorized deep well on the parcel
of land but it was rejected on the grounds that the
construction would cause danger to lives and property
by reason of the presence of the underground tunnels.
Maruhom demanded NAPOCOR to pay damages and to
vacate the sub-terrain portion of the land.
Issue: WON Ibrahim is the rightful owner of the sub-
terrain area of the land.
If yes, are they entitled to the payment of just
compensation.
Held: YES. The sub-terrain portion of the property
belongs to Ibrahim.
The Supreme Court cited Article 437 of the Civil Code
which provides that: The owner of a parcel of land is the
owner of its surface and of everything under it, and he
can construct thereon any works or make any
plantations and excavations which he may deem
proper, without detriment to servitudes and subject to
special laws and ordinances. xxx
Hence, the ownership of land extends to the surface as
well as to the subsoil under it. Therefore, Ibrahim owns
the property as well as the sub-terrain area of the land
where the underground tunnels were constructed.
On the issue of just compensation, the Supreme Court
also said that Ibrahim should be paid a just
compensation.
1
motorized deep wells but was prevented from doing so
by the authorities because of the construction of the
tunnels underneath the surface of the land.
Ibrahim still had a legal interest in the sub-terrain
portion insofar as they could have excavated the same
for the construction of the deep wells. It has been
shown that the underground tunnels have deprived the
plaintiffs of the lawful use of the land and considerably
reduced its value.
It was held that: If the government takes property
without expropriation and devotes the property to
public use, after many years, the property owner may
demand payment of just compensation in the event
restoration of possession is neither convenient nor
feasible. This is in accordance with the principle that
persons shall not be deprived of their property except
by competent authority and for public use and always
upon payment of just compensation.
EQUATORIAL V. MAYFAIR- Sale of Land
While execution of a public instrument of sale is
recognized by law as equivalent to the delivery of the
thing sold, such constructive or symbolic delivery is
merely presumptive. It is nullified by the failure of the
vendee to take actual possession of the land sold.
FACTS:
Carmelo & Bauermann, Inc. owned a land, together
with two 2-storey buildings at Claro M. Recto Avenue,
Manila, and covered by TCT No. 18529.
On June 1, 1967, Carmelo entered into a Contract of
Lease with Mayfair Theater Inc. fpr 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 Maxim Theater.
Two years later, on March 31, 1969, Mayfair entered
into a second Lease with Carmelo for another portion of
the latters property this time, a part of the second floor
of the two-storey building, and two store spaces on the
ground floor. 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 clause giving Mayfair a right of
first refusal to purchase the subject properties. Sadly,
on July 30, 1978 - within the 20-year-lease term -- the
subject properties were sold by Carmelo to Equatorial
Realty Development, Inc. for eleven million smackers,
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 for the recission of the
Deed of Absolute Sale between Carmelo and Equatorial,
specific performance, and damages. RTC decided for
Carmelo and Equatorial. Tsk tsk.
CA reversed and ruled for Mayfair. The SC denied a
petition questioning the CA decision. What happened is
that the contract did get rescinded, Equatorial got its
money back and asserted that Mayfair have the right to
purchase the lots for 11 million bucks.
Decision became final and executory, so Mayfair
deposited with the clerk the 11M (less 847grand
withholding) payment for the properties (Carmelo
somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after
Mayfair submitted its Motion for Execution, Equatorial
demanded from Mayfair backrentals and reasonable
compensation for the Mayfairs continued use of the
subject premises after its lease contracts expired.
Remember that Mayfair was still occupying the
premises during all this hullabaloo.
ISSUE:
Whether or not Equatorial was the owner of the subject
property and could thus enjoy the fruits and rentals.
HELD:NO.
Nor right of ownership was transferred from Carmelo to
Equatorial since there was failure to deliver the
property to the buyer. Compound this with the fact that
the sale was even rescinded.
2
The court went on to assert that rent is a civil fruit that
belonged to the owner of the property producing it by
right of accession. Hence, 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.
We remember from SALES that in 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.
Ownership of the thing sold is a real right, 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. This right is transferred, not by contract alone,
but by tradition or delivery. There is delivery if and
when the thing sold is placed in the control and
possession of the vendee.
While execution of a public instrument of sale is
recognized by law as equivalent to the delivery of the
thing sold, such constructive or symbolic delivery is
merely presumptive. It is nullified by the failure of the
vendee to take actual possession of the land sold.
For property to be delivered, we need two things.
Delivery of property or title, and transfer of control or
custody to the buyer.
Possession was never acquired by the petitioner. It
therefore had no rights to rent.
GABOYA V. CUI 38 SCRA 85
FACTS:
Don Mariano Cui, widower, as owner of 3 lots situated
in the City of Cebu, sold said three lots to three of his
children named Rosario C. de Encarnacion, Mercedes C.
de Ramas and Antonio Ma. Cui, pro indiviso for the sum
of P64,000. However one-third of the property
corresponding to Rosario C. de Encarnacion was
returned to the vendor because she was not able to pay
for the purchase price which resulted to the
cancellation of the 1/3 sale. Because of the sale of these
lots pro indiviso and because of the cancellation of the
sale to one of the three original vendees, Don Mariano
and his children Mercedes and Antonio became co-
owners of the whole mass in equal portions. In the deed
of sale vendor Don Mariano retained for himself the
usufruct of the property. Subsequently, a building was
erected on a portion of this mass facing Calderon street
and was occupied by a Chinese businessman for which
he paid Don Mariano P600 a month as rental. The date
when the building, was constructed and by whom do
not appear in the record.
Sometime after the sale to Mercedes and Antonio the
two applied to the Rehabilitation Finance Corporation
(RFC) for a loan of P130,000 with which to construct a
12-door commercial building presumably on a portion
of the entire parcel corresponding to their share. On
January 7, 1947 Don Mariano, executed an authority to
mortgage authorizing his two children co-owners to
mortgage his share. The loan was eventually granted
and was secured by a mortgage on the three lots in
question, Don Mariano being included as one of the
three mortgagors and signing the corresponding
promissory note with his two co-owners. He did not
however, join in the construction of the 12-door
commercial building.
The 12-door commercial building was eventually
constructed and the builder-owners thereof Mercedes
and Antonio received and continued to receive the
rents thereof amounting to P4,800 a month and paying
therefrom the installments due for payment on the loan
to the Rehabilitation Finance Corporation.
The complaint alleges that the usufructuary right
reserved in favor of Don Mariano Cui extends to and
includes the rentals of the building constructed by
Antonio Cui and Mercedes Cui on the land sold to them
by their father; that the defendants retained those
rentals for themselves; that the usufructuary rights of
3
the vendor were of the essence of the sale, and their
violation entitled him to rescind (or resolve) the sale. It
prayed either for rescission with accounting, or for
delivery of the rentals of the building with interests,
attorneys fees and costs.
Issue: Whether or not the usufruct reserved by the
vendor in the deed of sale, over the lots in question that
were at the time vacant and unoccupied, gave the
usufructuary the right to receive the rentals of the
commercial building constructed by the vendees with
funds borrowed from the Rehabilitation and Finance
Corporation, the loan being secured by a mortgage over
the lots sold.
Whether or not the failure of the vendees to pay over
its rentals to the usufructuary entitled the latter to
rescind, or more properly, resolve the contract of sale.
Whether the action for rescission due to breach of the
contract could still be enforced and was not yet barred.
Held: Under the articles of the Civil Code on industrial
accession by modification on the principal land (Articles
445 to 456 of the Civil Code) such accession is limited
either to buildings erected on the land of another, or
buildings constructed by the owner of the land with
materials owned by someone else.
Thus, Article 445, establishing the basic rule of industrial
accession, prescribes that
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 subject to the
provisions of the following articles.
while Article 449 states:
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. (Emphasis supplied)
Articles 447 and 445, in turn, treat of accession
produced by the landowners building, planting and
sowing with the materials of another and when the
materials, plants or seeds belong to a third person other
than the landowner or the builder, planter or sower.
Nowhere in these articles on industrial accession is
there any mention of the case of landowner building on
his own land with materials owned by himself (which is
the case of appellees Mercedes and Antonio Cui).
The Civil Code itself limits the cases of industrial
accession to those involving land and materials
belonging to different owners
The usufruct over the land did not entitle the
usufructuary to either the gross or the net income of
the building erected by the vendees, but only to the
rental value of the portion of the land occupied by the
structure (in so far as the usufructuary was prevented
from utilizing said portion), and that rental value was
not liquidated when the complaints were filed in the
court below, hence, there was no default in its
payment. Actually, this theory of appellants fails to take
into account that Don Mariano could not retain
ownership of the land and, at the same time, be the
usufructuary thereof. His intention of the usufructuary
rights in itself imports that he was no longer its owner.
For usufruct is essentially jus in re aliena; and to be a
usufructuary of ones own property is in law a
contradiction in terms, and a conceptual absurdity.
LIWANAG v YU-SONGQUIAN
FACTS: Yu-Chiocco leased a land on Calle Lemery, Tondo
in 1901. The property, however, was later claimed by
Leoncia Liuanag, on behalf of the estate of Yu-Chingco,
who had died in China on Oct. 30 1901. Yu-Chiocco
himself died in August 1902.
The lower court found that Yu-Chiocco contributed the
labor, while the materials used belonged to the estate
of Yu-Chingco, and ruled that the estate of Yu-Chingco
owned half of the buildings.
The Supreme Court overturned the ruling, saying that
even if the materials belonged to Yu-Chingco, it does
4
not follow, as a conclusion of law, that the owner of the
material thereby became the owner of any part of the
buildings.
Instead, Liuanag should be paid for the materials that
were used to construct the building.
It cited Art. 360 of the Civil Code, which says that a
landowner who builds on his land using the materials of
another is obliged to pay for the value of the material.
Saying that the provision would also apply to a
leasehold in real estate, the Court said Liuanag has a
claim for the value of the materials that were used in
the construction of the building.
Judgment: Ruling REVERSED. Case remanded to lower
court with directions to enter judgment in favor of
defendant, without prejudice to present claim against
the person or estate bound to pay it.
J.M. TUASON and CO., INC. V ESTRELLA VDA. DE
LUMANLAN and CA
FACTS
J.M. Tuason & Co Inc (Tuason) filed a case against
Lumanlan after the latter unlawfully entered into its
property known as Santa Mesa Heights Subdivision
(situated at Barrio North Tatalon, Quezon City).
Lumanlan took possession of 800 sq m land and
constructed her house on the said land. Tuason prays
for ejectment and damages for occupancy.
Lumanlan argues that she had brought the property
from one Pedro Deudor and that there is a Compromise
Agreement between Deudor and Tuason stating that
she was one of the buyers recognized therein.
CFI: Lower Court ruled in favor of Tuason, holding that it
is the registered owner and the question being purely
one of possession. Lumanlans evidence (Compromise
Agreement) was completely immaterial.
Upon appeal, CA ruled in favor of Lumanlan, holding
that the Compromise Agreement was a valid defense
against the possessory action filed by Tuason. Under
paragraph 7 of the said agreement, Tuason bound and
committed itself to sell to Lumanlan the lot occupied by
her at a reasonable price. Lumanlan has the right to
compel Tuason to accept payment for the lot in
question and that the agreement legalized the
possession of Lumanlan.
ISSUE
Whether or not J.M. Tuason and Co., Inc is the rightful
owner of the said land? YES
HELD
1. A careful analysis of the compromise agreement will
show that in no way did it obligate Tuason to sell to
those buyers the lots occupied by them at the price
stipulated by the Deudors, but at the current prices
and terms specified by the OWNERS (Tuason) in their
sales of lots. (See notes for paragraph 7 of compromise
agreement)
2. Paragraph 7 also imports that these buyers of the
Deudors must (1) recognize the title of the OWNERS
(Tuason) over the property purportedly bought by
them and from the Deudors, and (2) sign, whenever
possible, new contracts of purchase for said property.
The agreement also states that the sums paid by them
to the Deudors...shall be credited to the buyers.
3. All that Tuason agreed to was to grant the Deudor
buyers preferential right to purchase at current prices
and terms upon recognizing the title of Tuason and
signing new contracts and to credit to them for the
amounts they had paid to the Deudors.
4. Lumanlan never claimed that she had signed a new
contract with Tuason for the puchase of the lot
occupied. Instead of recognizing the title of Tuason as
required by the agreement, she used paragraph 6 of the
agreement for her special defense, arguing that Deudor
and Tuason entered into the compromise agreement
where Deudor and his co-owners renouced, ceded,
waived, and quitclaimed all their rights in the property
in favor of Tuason without her knowledge and consent.
Now she does not rely on the compromise agreement
but she assails it. -_-
5
5. Without the compromise agreement, Lumanlan must
justify her possession on the basis of a pretended
superiority of the Deudors old Spanish nformacion
posesoria over Tuasons Certificate of Title No. 1267.
But the Court has already ruled in previous cases that
Lumanlan is barred from assailing the decree of
registration in favor of Tuasons predecessors 20 years
after its issuance.
6. The agreement provides that the Deudor buyers
should sign new contracts with it at current prices
specified for the sales of lots. Article 1474 of the Civil
Code does not apply in this case because Lumanlan is
not a buyer from Tuason since there is no contract
between the two.
7. Lumanlans argument that she should be deemed a
builder in good faith does not hold water. In a related
case (Tuason v Macalindong), the Court ruled that there
being a presumptive knowledge of the Torrents titles
issued to Tuason, the buyer from the Deudors cannot
say now that she believer her vendor had rights of
ownership over the lot purchaser. She had chose to
ignore the Torrens title of Tuason and relied instead
upon the Deudors claim of ownership, perhaps because
such course appeared to her as more advantageous;
hence, she has only herself to blame for the
consequences now that the Deudors' claim has been
abandoned by the Deudors themselves, and can not
pretend good faith.
8. Lumanlan could have asked that she recover or be
credited with the amounts paid by her to the Deudors.
Equity demands, however, that her right to claim such
return, or to have the amount offset against the sums
she was sentenced to pay should be reserved.
DISPO
Petition granted. Decision of CA reversed. Decision of
CFI reinstated. Costs against Lumanlan.
NOTES
Paragraph 7 of the Compromise Agreement:
That the sales of the possessory rights claimed
by the DEUDORS, are described in the lists
 submitted by them to the OWNERS which are
attached hereto marked Annexes "B" and "C"
and made part hereof. Whatever amounts may
have been collected by the DEUDORS on
account thereof, shall be deducted from the
total sum of P1,201,063.00 to be paid to them.
It shall be the joint and solidary obligation of
the DEUDORS to make the buyer of the lots
purportedly sold by them to recognize the title
of the OWNERS over the property purportedly
bought by them, and to make them sign,
whenever possible, new contracts of purchase
for said property at the current paces and terms
specified by the OWNERS in their sales of lots in
their subdivision known at "Sta. Mesa Heights
Subdivision." The DEUDORS HEREBY advised the
OWNERS that the buyer listed in Annex "B"
herein with the annotation "continue" shall buy
the lots respectively occupied by them and shall
sign contracts, but the sums already paid by
them to the DEUDORS amounting to
P134,922.84 (subject to verification by the
Court) shall be credited to the buyers and shall
be deducted from the sums to be paid to the
DEUDORS by the OWNERS. The DEUDORS also
advise the OWNERS that, the buyers listed in
Annex "C" herein with the annotation "Refund"
have decided not to continue with their former
contracts or purchases with the DEUDORS and
the sums already paid by them to the DEUDORS
TOTALLING P101,182.42 (subject to verification
by the Court) shall be refunded to them by the
OWNERS and deducted from the sums that may
be due to the DEUDORS from the OWNERS (J.M.
Tuason & Co., Inc. vs. Jaramillo, L-18932, Sept.
30, 1963);
Article 1474 of the Civil Code:
Where the price cannot be determined in
accordance with the preceding articles, or in
any other manner, the contract is inefficacious.
However, if the thing or any part thereof has
been delivered to and appropriated by the
buyer, he must pay a reasonable price therefor.
What is a reasonable price is a question of fact
6
dependent on the circumstances of each
particular case.
PLEASANTVILLE DEVELOPMENT CORPORATION VS.
COURT OF APPEALS
Doctrine: Good faith consists in the belief of the builder
that he land he is building on is his and his ignorance of
any defect or flaw in his title. The burden of proving bad
faith belongs to the one asserting it.
Facts: Edith Robillo purchased from Pleasantville
Development Corporation, herein petitioner a parcel of
land at Pleasantville Subdivision, Bacolod City. The
property was designated as Lot 9, Phase II. In 1975,
herein respondent Eldred Jardinico bought the said
subject lot from the former purchaser. Eldred later
discovered that the property he purchased had
improvements introduced therein by respondent
Wilson Kee.
Kee on the other hand bought on installments
Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI) which is the exclusive real
estate agent of the petitioner. Under the contract Kee
was allowed to take possession of the property even
before full payment of the price. CTTEI through an
employee, Zenaida Octaviano accompanied Kees wife
Donabelle to inspect Lot No. 8. Octaviano however
mistakenly pointed towards Lot 9. Hence spouses Kee
had their residence, an auto repair shop, a store and
other improvements constructed on the wrong lot.
Upon discovery of the blunder both Kee and
Jardinico tried to reach an amicable settlement but they
failed. Jardinico demanded that the improvements be
removed but as Kee refused, Jardinico filed a complaint
for ejectment with damages against Kee at the
Municipal Trial Court in Cities (MTCC) of Bacolod City.
Kee filed a third-party complaint against herein
petitioner and CTTEI.
The MTCC found that the error was attributable
to CTTEI also since at present the contract with Kee has
rescinded for Kees failure to pay installments. Kee no
longer had any right over the subject property and must
pay rentals for its use. The Regional Trial Court (RTC) of
Bacolod City ruled that petitioner and CTTEI were not at
fault or were not negligent. It argued that Kee was a
builder in bad faith. Even if assuming that he was in
good faith, he was no longer so and must pay rentals
from the time that he was given notice to vacate the
lot. The Court of Appeals ruled that Kee was a builder in
good faith as he was unaware of the mix-up when he
constructed the improvements. It was in fact due to the
negligence and wrongful delivery of CTTEI which
included its principal the herein petitioner. It further
ruled that the award of rental was without basis.
Pending the resolution of the case at the Court
of Appeals Jardinico and Kee entered into a deed of
sale, wherein Lot 9 was sold to Kee. In the said deed a
provision stating that regardless of the outcome of the
decision, such shall not be pursued by the parties and
shall be considered dismissed and without effect. The
appellate court was not informed of this deal.
Issue: Whether or not a lot buyer who constructs
improvements on the wrong property erroneously
delivered by the owners agent, a builder in good faith?
Held: Yes. Article 527 of the Civil Code provides the
presumption that petitioner has the burden of proving
that Kee was a builder in bad faith. Kee may be made
liable for the violation of the contract with CTTEI but
this may not be used as a basis of bad faith and as a
sufficient ground to negate the presumption of good
faith. Jardinico is presently only allowed to file a
complaint for unlawful detainer. Good faith is based on
the belief of the builder that the land he is building on is
his and his ignorance of any flaw or defect in is title.
Since at the time when Kee constructed his
improvements on Lot 8, he was not aware that it was
actually Lot 9 that was delivered to him. Petitioner
further contends that Kee was negligent as a provision
in the Contract of Sale on Installment stated that the
vendee must have personally examined the property
and shall bear on his own the consequential expenses in
the changes that may happen thereon. The court held
that such provision cannot be interpreted as a waiver of
the vendees right to recover damages resulting from
7
petitioners negligence. Such interpretation of the
waiver is contrary to law and public policy and cannot
be allowed. Petitioner cannot claim and excuse itself
from liability by claiming that it was not directly
involved in the delivery of the property. The principal
must be responsible for the acts of the agent done
within the scope of his authority. CTTEI was the sole
real estate representative of the petitioner when the
delivery was made. Wilson Kee is therefore declared a
builder in good faith. Petitioner and respondent CTTEI
are declared solidarily liable for damages due to
negligence. The award of rentals to Jardinico is
dispensed with.
Manotok Realty v. Tecson [G.R. No. L-47475. August 19,
1988.] Third Division, Gutierrez Jr. (J): 4 concur
Facts: Manotok Realty filed a complaint against Nilo
Madlangawa for recovery of possession and damages
with the then CFI Manila. Said court rendered
judgment, declaring Madlangawa as a builder or
possessor in good faith; ordering the company to
recognize the right of Madlangawa to remain in Lot 345,
Block 1, of the Clara Tambunting Subdivision until after
he shall have been reimbursed by the company the sum
of P7,500.00, without pronouncement as to costs. Not
satisfied with the trial courts decision, the company
appealed to the Court of Appeals and upon affirmance
by the latter of the decision below, the company
elevated its case to the Supreme Court.
On 13 July 1977, the Supreme Court issued a resolution
dated 11 July 1977 denying the companys petition for
lack of merit. On 5 August 1977, the company filed with
the trial court (Judge Jose H. Tecson), a motion for the
approval of the companys exercise of option and for
satisfaction of judgment, praying that the court issue an
order: a) approving the exercise of the companys
option to appropriate the improvements introduced by
Madlangawa on the property; b) thereafter,
Madlangawa be ordered to deliver possession of the
property in question to the company. On 7 October
1977, the judge held that in view of peculiar
circumstances which supervened the institution of the
case, e.g. the introduction of certain repairs of and
other substantial improvements on the controverted
property, the motion for approval was denied.
After a denial of its motion for reconsideration, the
company filed the present petition for mandamus
alleging that the judge committed grave abuse of
discretion in denying his motion to exercise option and
for execution of judgment on the grounds that under
Articles 448 and 546 of the Civil Code, the exercise of
option belongs to the owner of the property and that
upon finality of judgment, the prevailing party is
entitled, as a matter of right, to its execution which is
only a ministerial act on the part of the judge. On 28
December 1980, PD 1669 was issued providing for the
expropriation of the Tambunting Estate. However, this
decree was challenged before the Supreme Court in GR
55166 (Elisa R. Manotok, et al. v. National Housing
Authority, et al.). On 21 May 1987, the Court rendered a
decision in the Elisa Manotok case ruling that PD 1669 is
unconstitutional for being violative of the due process
clause. Thus, the present petition has not been
rendered moot and academic by the decision in
Manotok v. NHA.
The Supreme Court granted the petition and ordered
Judge Tecson to immediately issue a writ of execution
ordering the Madlangawa to vacate the disputed
premises and deliver possession of the same to the
company, Manotok Realty.
1. When decision becomes final and executory, judge
incumbent to issue necessary writ of execution When
the decision of the trial court became final and
executory, it became incumbent upon the trial court
judge to issue the necessary writ for the execution of
the same. There is no basis for the judge to deny the
petitioners motion to avail of its option to appropriate
the improvements made on its property.
2. When decision becomes final, no addition can be
made thereto In Duenas v. Mandi (151 SCRA 530, 545),
it was held that after a judgment has become final, no
additions can be made thereto, and nothing can be
done therewith except its execution, otherwise there
would be no end to legal processes. (Fabular v. Court of
8
Appeals, 119 SCRA 329) The judge cannot deny the
issuance of a writ of execution because the
Madlangawa was adjudged a builder in good faith or on
the ground of peculiar circumstances which
supervened after the institution of this case, like, for
instance, the introduction of certain major repairs of
and other substantial improvements because the
option given by law either to retain the premises and
pay for the improvements thereon or to sell the said
premises to the builder in good faith belongs to the
owner of the property.
3. Options available to the parties In Queme v. Olaes (1
SCRA 1159, 1163), it was held that under Article 448,
the right to appropriate the works or improvements or
to oblige the one who built or planted to pay the price
of the land belongs to the owner of the land. The only
right given to the builder in good faith is the right to
reimbursement for the improvements; the builder,
cannot compel the owner of the land to sell such land
to the former.
4. Builder in good faith In Paz Mercado, et al. v. Hon.
Court of Appeals, et al., (GR L-44001, 10 June 1988), it
was held that to be deemed a builder in good faith, it is
essential that a person assert title to the land on which
he builds; i.e., that he be a possessor in concept of
owner, (Art. 525, Civil Code; Lopez, Inc. v. Phil. Eastern
Trading Co., Inc., 98 Phil. 348) and that he be unaware
that there exists in his title or mode of acquisition any
flaw which invalidates it. (Art. 526, Civil Code;
Granados v. Monton, 86 Phil. 42; Arriola v. Gomez de la
Serna, 14 Phil. 627; See also Manotok Realty, Inc. v.
C.A., 134 SCRA 329, citing Caram v. Laureta, 103 SCRA 7)
It is such a builder in good faith who is given the right to
retain the thing, even as against the real owner, until he
has been reimbursed in full not only for the necessary
expenses but also for useful expenses. (Art. 546, Civil
Code; Policarpio v. CA., 129 SCRA 51; Sarmiento v.
Agana, 129 SCRA 122; cf, Queto v. C.A. ,122 SCRA 206)
5. Good faith cease after filing of the complaint
Property, 2003 ( 126 ) Haystacks (Berne Guerrero) In
Mindanao Academy, Inc. v. Yap (13 SCRA 190, 196), it
was held that although the bad faith of one party
neutralizes that of the other and hence as between
themselves their rights would be as if both of them had
acted in good faith at the time of the transaction, this
legal fiction of (Yap)s good faith ceased when the
complaint against him was filed, and consequently the
courts declaration of liability for the rents thereafter is
correct and proper. A possessor in good faith is entitled
to the fruits only so long as his possession is not legally
interrupted, and such interruption takes place upon
service of judicial summons (Arts. 544 and 1123, Civil
Code).
6. Repairs and improvements introduced after the filing
of the complaint in bad faith The repairs and
improvements introduced by the builder after the
complaint was filed cannot be considered to have been
built in good faith, much less, justify the denial of the
landowners exercise of option. 7. Improvements gutted
by fire, builders right to retain extinguished Since the
improvements have been gutted by fire, and therefore,
the basis for the builders right to retain the premises
has already been extinguished without the fault of the
landowner, there is no other recourse for the builder
but to vacate the premises and deliver the same to the
landowner.
EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,
vs. HONORABLE COURT OF APPEALS, FORENCIA
BULING Vda de TINAGAN, DEMOSTHENES TINAGAN,
JESUS TINAGAN, ZENAIDA T., JOSEP and JOSEPHINE
TINAGAN, respondents.
Facts:
In this petition for review on certiorari, petitioners assail
the decision 1 of the Court of Appeals dated April 8,
1994 which affirmed the decision of the lower court
ordering petitioners to peacefully vacate and surrender
the possession of the disputed properties to the private
respondents.
On April 1, 1950, Victoria Tinagan purchased from
Mauro Tinagan 2 parcels of land. One parcel of land
contains an area of 5,704 square meters, more or less;
while the other contains 10,860 square meters.
9
Thereafter, Victoria and her son Agustin, took
possession of said parcels of land.
Sometime in 1960, petitioners occupied portions
thereof whereat they built a copra dryer and put up a
store wherein they engaged in the business of buying
and selling copra.
On June 23, 1975, Victoria died. On October 26, 1975,
Agustin died, survived by herein private respondents.
On December 24, 1976, petitioner Editha assisted by
her husband filed a complaint for partition and
damages, claiming to be an acknowledged natural child
of deceased Agustin Tinagan and demanding the
delivery of her shares in the properties left by the
deceased. This case was dismissed by the trial court on
the ground that recognition of natural children may be
brought only during the lifetime of the presumed
parent and petitioner Editha did not fall in any of the
exceptions enumerated in Article 285 of the Civil Code.
On March 29, 1988, private respondents filed a
complaint for recovery of possession against Editha and
her husband Porferio, praying, among others, that they
be declared absolute owners of the said parcels of land,
and that petitioners be ordered to vacate the same, to
remove their copra dryer and store, to pay actual
damages (in the form of rentals), moral and punitive
damages, litigation expenses and attorney's fees.
In their answer, petitioners contend that they own the
improvements in the disputed properties which are still
public land; that they are qualified to be beneficiaries of
the comprehensive agrarian reform program and that
they are rightful possessors by occupation of the said
properties for more than twenty years.
After trial, the lower court rendered judgment in favor
of the private respondents. CA affirmed. Hence, this
petition.
Issue: W/N the lands in question are public lands and
W/N the petitioners are rightful possessors by
occupation for more than 20 year.

Held: No
Ratio:
Petitioners aver that respondent court erred in
declaring private respondents the owners of the
disputed properties. They contend that ownership of a
public land cannot be declared by the courts but by the
Executive Department; and that the respondent court
erred in not considering that private respondents'
predecessor-in-interest, Victoria Tinagan, during her
lifetime, ceded her right to the disputed properties in
favor of petitioners.
Moreover, petitioners maintain that the respondent
court erred in holding that they were in bad faith in
possessing the disputed properties and in ruling that
the improvements thereon are transferable. They claim
that the copra dryer and the store are permanent
structures, the walls thereof being made of hollow-
blocks and the floors made of cement.
Private respondents counter that the question of
whether or not the disputed properties are public land
has been resolved by overwhelming evidence showing
ownership and possession by the Tinagans and their
predecessors-in-interest prior to 1949. They further
aver that they merely tolerated petitioners' possession
of the disputed properties for a period which was less
than that required for extraordinary prescription.
The petition must fail.
The private respondents adduced overwhelming
evidence to prove their ownership and possession of
the two (2) parcels of land. Private respondents' tax
declarations and receipts of payment of real estate
taxes, as well as other related documents, prove their
ownership of the disputed properties. Moreover, the
realty taxes on the two lots have always been paid by
the private respondents. There can be no doubt,
therefore, that the two parcels of land are owned by
the private respondents.
The record further discloses that Victoria and her son,
Agustin, took possession of the said properties in 1950,
introduced improvements thereon, and for more than
10
40 years, have been in open, continuous, exclusive and
notorious occupation thereof in the concept of owners.
Petitioners' own evidence recognized the ownership of
the land in favor of Victoria Tinagan. In their tax
declarations, petitioners stated that the house and
copra dryer are located on the land of Victoria S.
Tinagan/Agustin Tinagan. By acknowledging that the
disputed portions belong to Victoria/Agustin Tinagan in
their tax declarations, petitioners' claim as owners
thereof must fail.
Petitioners contend that while the 2 parcels of land are
owned by private respondents, the portions wherein
the copra dryers and store stand were ceded to them by
Victoria S. Tinagan in exchange for an alleged
indebtedness of Agustin in the sum of P7,602.04.
This claim of the petitioners was brushed aside by the
respondent court as merely an afterthought, thus
Appellant testified that the areas on which their
store and dryer were located were exchanged for
the amount of P7,602.04 owed to them by Agustin
in 1967; that he did not bother to execute a
document reflecting such agreement "because they
were our parents and we had used the land for
quite sometime already they had also sold their
copra to us for a long time." Yet, as earlier
discussed, the tax declarations in appellants' answer
show that even after 1967, they expressly declared
that the parcels of land on which their store and
dryer were constructed, belonged to Victoria and
Agustin. If appellants really believed that they were
in possession of the said particular areas in the
concept of owners, they could have easily declared
it in said tax declarations.
Concededly, petitioners have been on the disputed
portions since 1961. However, their stay thereon was
merely by tolerance on the part of the private
respondents and their predecessor-in-interest. The
evidence shows that the petitioners were permitted by
Victoria to build a copra dryer on the land when they
got married. Subsequently, petitioner Editha Alviola,
claiming to be the illegitimate daughter of Agustin, filed
a petition for partition demanding her share in the
estate of the deceased Agustin. However, the petition
was dismissed since it was brought only after the death
of Agustin Tinagan. Considering that the petitioners'
occupation of the properties in dispute was merely
tolerated by private respondents, their posture that
they have acquired the property by "occupation" for 20
years does not have any factual or legal foundation.
As correctly ruled by the respondent court, there was
bad faith on the part of the petitioners when they
constructed the copra dryer and store on the disputed
portions since they were fully aware that the parcels of
land belonged to Victoria Tinagan. And, there was
likewise bad faith on the part of the private
respondents, having knowledge of the arrangement
between petitioners and Victoria Tinagan relative to the
construction of the copra dryer and store. Thus, for
purposes of indemnity, Article 448 of the New Civil
Code should be applied. However, the copra dryer and
the store, as determined by the trial court and
respondent court, are transferable in nature. Thus, it
would not fall within the coverage of Article 448. To fall
within the provision of this Article, the construction
must be of permanent character, attached to the soil
with an idea of perpetuity; but if it is of a transitory
character or is transferable, there is no accession, and
the builder must remove the construction. The proper
remedy of the landowner is an action to eject the
builder from the land.
The private respondents' action for recovery of
possession was the suitable solution to eject petitioners
from the premises.
MWSS v. CA [G.R. No. L-54526. August 25, 1986.]
Second Division, Feria (J): 4 concur, 1 took no part
Facts: The City of Dagupan filed a complaint against the
former National Waterworks and Sewerage Authority
(NAWASA), now the Metropolitan Waterworks and
Sewerage System (MWSS), for recovery of the
ownership and possession of the Dagupan Waterworks
System. NAWASA interposed as one of its special
defenses RA 1383 which vested upon it the ownership,
possession and control of all waterworks systems
throughout the Philippines and as one of its
11
counterclaims the reimbursement of the expenses it
had incurred for necessary and useful improvements
amounting to P255,000.00.
Judgment was rendered by the trial court in favor of the
city on the basis of a stipulation of facts. The trial court
found NAWASA to be a possessor in bad faith and
hence not entitled to the reimbursement claimed by it.
NAWASA appealed to the then Court of Appeals and
argued in its lone assignment of error that the city
should have been held liable for the amortization of the
balance of the loan secured by NAWASA for the
improvement of the Dagupan Waterworks System.
The appellate court affirmed the judgment of the trial
court. MWSS, successor-ininterest of the NAWASA,
appealed (petition for review on certiorari) to the
Supreme Court raising the sole issue of whether or not
it has the right to remove all the useful improvements
introduced by NAWASA to the Dagupan Waterworks
System, notwithstanding the fact that NAWASA was
found to be a possessor in bad faith.
The Supreme Court affirmed the decision of the
appellate court, with costs against MWSS.
1. Practice; Common error in joining the court as party
respondent in an appeal under Rule 45 of the Rules of
Court It is a common error of joining the court (be it a
Regional Trial Court, the Intermediate Appellate Court,
or the Sandiganbayan) as a party respondent in an
appeal by certiorari to this Court under Rule 45 of the
Rules of Court. The only parties in an appeal by
certiorari are the appellant as petitioner and the
appellee as respondent. (Cf. Elks Club vs. Rovira, 80 Phil.
272) The court which rendered the judgment appealed
from is not a party in said appeal. It is in the special civil
action of certiorari under Section 5 of Rule 65 of the
Rules of Court where the court or judge is required to
be joined as party defendant or respondent. The joinder
of the Intermediate Appellate Court or the
Sandiganbayan as party respondent in an appeal by
certiorari is necessary in cases where the petitioner-
appellant claims that said court acted without or in
excess of its jurisdiction or with grave abuse of
discretion.
An example of this is a case where the petitioner-
appellant claims that the Intermediate Appellate Court
or the Sandiganbayan acted with grave abuse of
discretion in making its findings of fact, thus justifying
the review by this court of said findings of fact. (See the
exceptions to the rule of conclusiveness of the findings
of fact of the Intermediate Appellate Court or the
Sandiganbayan in the case of Sacay vs. Sandiganbayan,
G.R. Nos. 66497-98, July 10, 1986.) In such a case, the
petition for review on certiorari under Rule 45 of the
Rules of Court is at the same time a petition for
certiorari under Rule 65, and the joinder of the
Intermediate Appellate Court or the Sandiganbayan
becomes necessary. (Cf. Lianga Lumber Company vs.
Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197).
2. Removability of useful improvement should have in
the counterclaim; Pleadings could not be deemed
amended to conform to the evidence The procedural
objection of the City is technically correct, as that
assuming that MWSS (NAWASA) has the right to
remove the useful improvements, such improvements
were not actually identified, and hence a rehearing
would be required which is improper at the current
stage of the proceedings; and finally, that such
improvements, even if they could be identified, could
not be separated without causing substantial injury or
damage to the Dagupan Waterworks System; NAWASA
should have alleged its additional counterclaim in the
alternative - for the reimbursement of the expenses it
had incurred for necessary and useful improvements or
for the removal of all the useful improvements it had
introduced.
In the present case, no evidence whatsoever had been
introduced by MWSS on the issue of removability of the
improvements and the case was decided on a
stipulation of facts. Consequently, the pleadings could
not be deemed amended to conform to the evidence.
3. Possessor in bad faith does not have the right to
remove useful improvements Article 449 of the Civil
12
Code of the Philippines provides that 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. As a builder in bad faith, NAWASA lost
whatever useful improvements it had made without
right to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26
SCRA 703).
4. Only possessor in good faith has right to be refunded
for useful expenses with right of retention until
reimbursed; or removal of useful improvements
without damage to the principal thing Under Article 546
of said code, only a possessor in good faith shall be
refunded for useful expenses with the right of retention
until reimbursed; and under Article 547 thereof, only a
possessor in good faith may remove useful
improvements if the can be done without damage to
the principal thing and if the person who recovers the
possession does not exercise the option of reimbursing
the useful expenses.
5. Possessor in bad faith has right to remove
improvements for pure luxury or mere pleasure,
Property, 2003 ( 140 ) Haystacks (Berne Guerrero)
provided such suffers no injury thereby The right given
a possessor in bad faith is to remove improvements
applies only to improvements for pure luxury or mere
pleasure, provided the thing suffers no injury thereby
and the lawful possessor does not prefer to retain them
by paying the value they have at the time he enters into
possession (Article 549, Id.).
FLOREZA v EVANGELISTA
[96 SCRA 130 (February 21, 1980)]
Nature: Petition for review on certiorari of the decision
of the CA.Ponente: J. Melencio-Herrera
Facts:
The Evangelistas were the owner of a residential lot in
Rizal with an area of 204.08 sq. m. assessed at P410.
May 1945: Evangelistas borrowed P100 from Floreza.
November 1945: Floreza occupied the residential lot
and built a house of light material (barong-barong) with
the consent of the Evangelistas.
 Additional Loans made by the Evangelistas: Sept. 1946
P100, August 1947 P200, January 1949 P200, April
1949 P140. TOTAL = P740 (including first loan)
January 1949: Floreza demolished the house of light
material and constructed one of strong material
assessed at P1400. Floreza has not been paying any
rentals since the beginning of their transactions.
August 1949: Evangelistas sold, with a right to
repurchase within 6 years, their land to Floreza for
P1000.
Seven months before the expiry of the repurchase
period, the Evangelistas were able to pay in full.
Floreza refused to vacate the lot unless he was first
reimbursed for the value of the house he built.
Evangelistas filed a complaint. CFI ruled based on Art,
448 of the Civil Code saying that Evangelistas have the
choice between purchasing the house or selling the land
to Floreza.
CA ruled that Art. 448 was inapplicable and that
Floreza was not entiled to the reimbursement of his
house and could remove the same at his ownexpense.
Issue:
1.WON Floreza was entitled to reimbursement of the
cost of his house. NO.
2.WON he (his heirs who replaced him) should pay
rental of the land. YES.
Held/Ratio:
1. Issue of reimbursement is not moot because if
Floreza has no right of retention, then he must pay
damages in the form of rentals. Agree with CA that Art.
448 is inapplicable because it applies only when the
builder is in good faith (he believed he had a right to
build).Art. 453 is also not applicable because it requires
both of the parties to be in bad faith. Neither is Art.
1616 applicable because Floreza is not a vendee a retro.
The house was already constructed in 1945 (light
materials) even before the pacto de retro was entered
into in 1949. Floreza cannot be classified as a builder in
good faith nor a vendee a retro, who made useful
improvements during the pacto de retro, he has no
right to reimbursement of the value of the house, much
less to the retention of the premises until he is paid.
13
His rights are more akin to a usufructury under Art. 579,
who may make on the property useful improvements
but with no right to be indemnified thereof, He may,
however, remove such improvements should it be
possible to do so without damage to the
property.2.From the time the redemption price was
paid in January 3, 1955, Florezas right to use the
residential lot without rent ceased. He should be held
liable for damages in the form of rentals for the
continued use of the lot for P10monthly from January 3,
1955 until the house was removed and the property
vacated by Floreza or his heirs. Judgment affirmed with
modification.
Cortes v City of Manila
IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO
Case Doctrine: Article 457 of the New Civil Code (Article
366, Old Civil Code), which provides that: To the owners
of lands adjoining the banks of rivers belongs the
accretion which they gradually receive from the effects
of the current of the waters. The article cited is clearly
inapplicable because it refers to accretion or deposits
on the banks of rivers, while the accretion in the
present case was caused by action of the Manila Bay.
FACTS: Ignacio applied for registration of a parcel of
land adjacent to his land, claiming that he has acquired
the land by right of accretion. Director of Lands,
Valeriano opposed, instead it avers that portion sought
to be registered is property of public domain.
ARGUMENTS:
1. Appellant contends that the parcel belongs to him by
the law of accretion, having been formed by gradual
deposit by action of the Manila Bay, and he cites Article
457 of the New Civil Code
2. Appellant next contends that Articles 1, 4 and 5 of
the Law of Waters are not applicable because they refer
to accretions formed by the sea, and that Manila Bay
cannot be considered as a sea. ISSUE/S:WON the land
subject of the dispute can be acquired by right of
accretion of Ignacio.

HELD: NO. The land cannot be acquired by right of
accretion. Article 457 is not applicable. The article cited
is clearly inapplicable because it refers to accretion or
deposits on the banks of rivers, while the accretion in
the present case was caused by action of the Manila
Bay. Manila bay is not a river. A bay is a part of the sea,
being a mere indentation of the same: Bay. An
opening into the land where the water is shut in on all
sides except at the entrance; an inlet of the sea; an arm
of the sea, distinct from a river, a bending or curbing of
the shore of the sea or of a lake. 7 C.J. 1013-1014 (Cited
in Francisco, Philippine Law of Waters and Water Rights
p. 6)
116 Phil. 647
PADILLA, J.:
It appears that Juliana Zapata owns two parcels of land
situated in the municipality of Santo Tomas, province of
Pampanga, adjoining a non-navigable and non-floatable
river called the Candalaga Creek. The two parcels are
designated as Lot No. 25 and the northern part of Lot
No. 16 of the Cadastral Survey of San Fernando,
Pampanga.[1] The first lot contains a superficial area of
6,592 square meters and is registered in her name, as
shown by transfer certificate of title No. 12907 issued
by the Registrar of Deeds in and for the province of
Pampanga (Exhibit A). Her ownership or title to a part of
Lot No. 16 was confirmed by a decree entered on 21
November 1955 by the Court of First Instance of
Pampanga ordering that the "remaining portion of Lot
No. 16 with an area of 474 square meters" be registered
"in the name of Juliana Zapata" (Exhibit A-1); Cad. case
No. 1, G.L.R.O. Cad. Record No. 137).
In 1915, when the cadastral survey of San Fernando was
begun, the width of the Candalaga Creek adjoining the
two parcels of land owned by Juliana Zapata was about
90 or 100 meters. At present, the width is 15 meters,
because soil had been accumulated by the water
current of the river on the banks of Lot No. 25 and of
that part of Lot No. 16 owned by Juliana Zapata. The
accreted land is delimited in plan Psu-140515 and
14
designated as Lots 1, 2 and 3, the first containing an
area of 6,260 square meters, the second, 449 and the
third, 2,238 (Exhibit B) and described in the technical
descriptions (Exhibit C).
In a verified petition filed on 16 June 1956 in the Court
of First Instance of Pampanga, Juliana Zapata claims
that the aforesaid three lots belong to her by accretion,
as provided for in article 457 of the Civil Code, and
prays that the same be registered in her name under
the Land Registration Act (Land Reg. Case No. N-273,
L.R.C. rec. No. 1167). On 19 October 1956 on her
motion the court entered an order of general default
against all persons except the Director of Lands. On 24
October 1956 the Director of Lands objected to the
petition and prayed that the registration of the three
lots in the name of Juliana Zapata be denied and that
they be declared to form part of the public domain.
After trial, on 26 December 1956 the court rendered
judgment, as follows:
WHEREFORE, the Court, overrulling the opposition of
the Director of Lands; and confirming the order of
general default herein entered, and the applicant's title
to the aforesaid Lots Nos. 1, 2 and 3, referred to plan
Psu-140515, aforecited, hereby orders that the same be
registered in the name of Juliana Zapata, the herein
applicant * * *. Once this decision becomes final, let the
corresponding decree issue.
The Court of Appeals certified to this Court the appeal
taken by the Director of Lands because only questions
of law are involved.
The appellant contends that article 457 of the Civil Code
providing that
To the owners of lands adjoining the banks of river
belong the accretion which they gradually receive from
the effects of the current of the waters.
cannot apply and does not support the appellee's claim
that the accretion or deposit of alluvial soil, which is
delimited in plan Psu-140515 and designated as Lots 1,
2 and 3, belongs to her as riparian owner, because such
accretion "was not due to the natural effect of the
current but was artificially induced on account of the
erection of the fish traps on the creek." The contention
cannot be sustained. The appellant does not dispute
that the accreted land delimited in plan Psu-140515 and
designated as Lots 1, 2 and 3 adjoining Lot No. 25 and
that part of Lot No. 16, both owned by the appellee,
had been formed gradually due to the effect of the
water current of the Candalaga Creek, but claims that
the accretion was artificially brought about by the
setting up of fish traps, such as salag net, bunuan
(bamboo trap), sabat (cutting of channels) and fencing
that the fishermen had built in the stream. True, those
fish traps might have slowed down the current of the
Candalaga Creek and might have brought about or
caused the accretion, but as there is no evidence to
show that the setting up or erection of the fish traps
was expressly intended or designed to cause or bring
about the accretion, the appellee may still invoke the
benefit of the provisions of article 457 of the Civil Code
to support her claim of title thereto. Moreover, the
fishermen who since 1894 used to set up fish traps in
the creek (p. 7, t.s.n.), later on secured permit from the
Government that auctioned off the right or license to
set up fish traps in the creek (p. 6, t.s.n.), and the
setting up of such fish traps stopped or was
discontinued even before 1926 (p. 7, t.s.n.), all go to
show that the alluvial accretion was not entirely due to
the setting up of such fish traps.
The decree appealed from is affirmed, without
pronouncement as to costs.
DESAMPARADO VDA. DE NAZARENO vs. C.A
Facts: Sometimes in 1979, PR Salasalan and Rabaya
leased the subject lots on which their houses stood
from one Antonio Nazareno, petitioners predecessor-
in-interest. In the latter part of 1982, PR allegedly
stopped paying rentals. As a result, petitioners filed a
case for ejectment with the MTC of CDO. A decision was
rendered against PR, which decision was affirmed by
the RTC of Misamis Oriental, before he died, Antonio
Nazareno caused the approval by the Bureau of Lands
of the Survey plan with a view of perfecting his title
over the accretion are being claimed by him. Before the
15
approved survey plan could be released to the
applicant, however it was protested by PR before the
Bureau of Land. Upon investigating of the RD of Bureau
of Land, it was recommended that Survey Plan in the
name of Antonio Nazareno who denied the motion,
Respondent Director of Land then ordered him to
vacate the portion adjudicated to private respondent be
placed in possession thereof. Upon the denial of the
late Antonio Nazareno's motion for reconsideration,
petitioners Desamparado Vda. de Nazareno and Leticia
Tapia Nazareno, filed a case before the RTC, Branch22
for annulment of the following: order of investigation
by respondent Gillera, report and recommendation by
respondent Labis, decision by respondent Hilario, order
by respondent Ignacio affirming the decision of
respondent Hilario and order of execution by
respondent Palad. The RTC dismissed the complaint for
failure to exhaust administrative remedies which
resulted in the finality of the administrative decision of
the Bureau of Lands, On Appeal, the CA affirmed the
decision of the RTC dismissing the complaint.
Issue: W/N the subject land is public land.
Ruling:Petitioners claim that the subject land is private
land being an accretion to his titled property, applying
Art. 457 of the Civil Code which provides: To the
owner of lands adjoining the banks of river belong the
accretion which they gradually receive from the effect
of the current of the water. In the case of Meneses v.
CA, 2 this Court held that accretion, as a mode of
acquiring property under Art. 457 of the Civil Code,
requires the concurrence of these requisites.
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).
c. That the land where takes place is adjacent to the
bank of river (or the sea cost).These are called the rules
on alluvion which if present in a case, give to the owner
of lands adjoining the bank of rivers or stream any
accretion gradually received from the effect of the
current of waters.
Furthermore, the Bureau of Lands, classified the subject
land as an accretion are which was formed by deposits
of sawdust in Balacanas Creek and the Cagayan river, in
accordance with the ocular inspection conducted by the
Bureau of Land.
Hilario v. City of Manila [GR No. L-19570 April 27, 1967]
Facts: Dr. Jose Hilario was the registered owner of a
large tract of land around 49 hectares in area (Barrio
Guinayang, San Mateo, Rizal). Upon his death this
property was inherited by his son, Jose Hilario, Jr., to
whom a new certificate of title was issued. During the
lifetime of plaintiffs father, the Hilario estate was
bounded on the western side by the San Mateo River.3
To prevent its entry into the land, a bamboo and lumber
post dike or ditch was constructed on the northwestern
side. This was further fortified by a stonewall built on
the northern side. For years, these safeguards served
their purpose. However, in 1937, a great and
extraordinary flood occurred which inundated the
entire place including the neighboring barrios and
municipalities. The River destroyed the dike on the
northwest, left its original bed and meandered into the
Hilario estate, segregating from the rest thereof a
lenticular piece of land. The disputed area is on the
eastern side of this lenticular strip which now stands
between the old riverbed site and the new course. In
1945, the US Army opened a sand and gravel plant
within the premises, and started scraping, excavating
and extracting soil, gravel and sand from the nearby
areas along the River. The operations eventually
extended northward into the strip of land.
Consequently, a claim for damages was filed with the
US War Department by Luis Hidalgo, the then
administrator of Dr. Hilarios estate. The US Army paid.
In 1947, the plant was turned over to herein
defendants-appellants and appellee who took over its
operations.
On 22 October 22, 1949, plaintiff filed his complaint for
injunction and damages against the defendants City
Engineer of Manila, District Engineer of Rizal, the
Director of Public Works, and Engr. Busuego, the
Engineer-in-charge of the plant. Subsequently, the
16
Bureau of Mines and Atty. Maximo Calalang were
respectively allowed to join the litigation as intervenors;
as per issue of fees and penalties for materials (sand
and gravel) extracted. On 14 March 1954, defendants
filed a petition for injunction against plaintiff and
intervenor Calalang in the same case, alleging that the
latter have fenced off the disputed area in
contravention of an agreement had between the latter
and the Director of Public Works wherein the
defendants were allowed to continue their operations
but subject to the final outcome of the pending suit. On
13 May 1954, plaintiff amended his complaint and
impleaded as additional defendants the City of Manila,
the Provincial Treasurer of Rizal, and Engr. Eulogio Sese,
the new Engineer-in-charge of the plant. Plaintiff also
converted his claim to one purely for damages directed
against the City of Manila and the Director of Public
Works, solidarily, in the amount of P1,000,000.00, as
the cost of materials taken since 1949, as well as those
to be extracted therefrom until defendants stop their
operations. On 21 December 1956, the lower court
rendered its decision, ordering the City of Manila and
Director of Public Works to pay Hilario in solidum the
sum of P376,989.60 as cost of gravel and sand extracted
from the plaintiffs land, plus costs; and ordering the
Provincial Treasurer of Rizal to reimburse intervenor
Calalang of P36.80 representing gravel fees illegally
collected. None of the parties litigants seemed satisfied
with this decision and they all sought a reconsideration
of the same. On August 30, 1957, the lower court
resolved the motions to reconsider with an order,
holding that the 2/5 portion of the area in controversy
to Hilario, and dismissing the case against the Bureau of
Public Works insofar as money claims are concerned
without prejudice to Hilario taking action against proper
party in such claim. Hilario and Calalang filed a second
motion for reconsideration, which the lower court
denied. Hence, the appeal.
The Supreme Court set aside the decision and orders
appealed from, and entered another judgment to the
effect that the City of Manila and the Director of Public
Works, and his agent and employees, are absolved of
liability from extracting materials from subject property
(of public domain); and the portion within the strip of
land question declared not part of public domain and
confirmed as part of Hilarios private property. No
Costs.
12. Ordinary and extraordinary flood
There are two types of floods in the area during the
rainy season. One is the so-called ordinary flood,
when the river is swollen but the flowing water is kept
within the confines of the primary and secondary
banks.
This occurs annually, about three to four times during
the period. Then there is the extraordinary flood,
when the waters overflow beyond the said banks, and
even inundate the surrounding areas. However, this
flood does not happen regularly. From 1947 to 1955,
there were only three such floods.
13. Movement of the river, west bank, from 1945-1955
From 1945 to 1949, the west bank of the River
extended westward up to the secondary bank line;
from 1950 to 1952, this bank had moved, with the
River, to the east, its lateral borders running along a line
just 20 meters west of the camachile tree; and from
1953 to 1955, the extremities of the west bank further
receded eastward beyond the camachile tree, until they
lay just about 20 meters east of said tree.
14. Floodings not accidental as they are annual;
Government v. Colegio de San Jose does not apply
Evidence shows that the River floods with annual
regularity during the rainy season. These floods can
hardly be called accidental. The Colegio de San Jose
case is not exactly in point. What was mainly considered
there was Article 74 of the Law of Waters relating to
lakes, ponds and pools. In the present case, none of
these is involved.
15. Movement of the river not due to excavation and
extraction of materials
17
The excavations and extractions of materials, even from
the American period, have been made only on the strip
of land west of the River. Under the following-the
nature-of-things argument advanced by plaintiff, the
River should have moved westward, where the level of
the ground had been lowered. But the movement has
been in the opposite direction instead. Therefore, it
cannot be attributed to defendants operations.
Moreover, Hilarios own evidence indicates that the
movement eastward was all due to natural causes. The
movement eastward of the channel by as much as 31
meters, from 1950 to 1953, was due to two typhoons
which caused the erosion of the east bank and the
depositing of materials on the west side which
increased its level from as much as .93 to 2 meters.
16. River of different width; claim of unnatural widening
unfounded
Reliance is made on the finding by the lower court that
in 1943, the river was only 60 meters wide, whereas in
1950, it was already 140 meters wide. Such area
sampled shows only the width of the River near the
southwestern boundary of the Hilario estate. It does not
indicate how wide it was in the other parts, especially
up north.
17. Extraction confined on the banks of the river and
not beyond limits of the west bank to invade his private
estate; Hilario cannot recover damages from
defendants
From 1947 to the early part of 1949, the defendants
conducted their operations only in the New Accretion
Area along a narrow longitudinal zone contiguous to the
watercourse then. This zone, City Engineer Manila, is
about 1 km. long and extends northward up to pt.
50.35. However, no extractions nor excavations were
undertaken west of this zone, i.e., above the
temporary bank line. This line is located east of the
secondary bank line, the lateral extremity of the west
bank then. In the latter part of 1949, plaintiff prohibited
the defendants from extracting along the New
Accretion Area and constructed a fence across the
same. This forced the defendants to go southeast of the
Excavated Area. From 1954 to 1955, defendants area Defendants cannot be accused of unjustly profiting at
of operation was still farther east of the New Accretion plaintiffs expense. They were not responsible for the
Area. They were. working within a confined area along shifting of the river. It was due to natural causes for
the west waterline, the northern and western which no one can be blamed. Further, defendants were
boundaries of which were 20 meters away east from extracting from public property then, under proper
the camachile tree. It appears sufficiently established, authorization. The government, through the
therefore, that defendants have not gone beyond the defendants, may have been enriched by chance, but not
receding western extremities of the west riverbank. unjustly.
They have confined their extraction of gravel and sand
only from which the banks of the River, which
constitute part of the public domain wherein they had
the right to operate. Plaintiff has not presented
sufficient evidence that defendants have gone beyond
the limits of the west bank, as previously established,
and have invaded his private estate. He cannot,
therefore, recover from

them.

18. Plaintiff not denied of property without just

compensation

The Court does not declare that the entire channel, i.e.,
all that space between the secondary bank line and
the primary bank line, has permanently become part
of the riverbed. What is held is that at the time the
defendants made their extractions, the excavations
were within the confines of the riverbanks then. All that
space to the west of said receding line would still be
part of plaintiffs property and also whatever portion
adjoining the river is, at present, no longer reached by
the non-inundating ordinary floods. Further, it is not
correct to say that plaintiff would be deprived of his
property without any compensation at all. Under Article
370 of the old Civil Code, the abandoned bed of the old
river belongs to the riparian owners either fully or in
part with the other riparian owners. And had the
change occurred under the Civil Code of the Philippines,
plaintiff would even be entitled to all of the old bed in
proportion to the area he has lost.

19. Defendants did not unjustly profit at plaintiffs

expense as they are not responsible for the shifting of
the river

18