Tan Queto v. CA [G.R. No. L-35648. February 27, 1987.

Facts: Restituta Tagalinar Guangco de Pombuena received the questioned lot (Lot 304-B of the
Cadastre Survey of the Municipality of Centro, Misamis Occidental) either as a purported donation
or by way of purchase on 11 February 1927 for P50.00 as the alleged consideration thereof. The
transaction took place during her mother’s lifetime (her father having predeceased the mother) and
consummated while Restituta was already married to her husband Juan Pombuena. On 22 January
1935, Juan filed an application of Torrens title over the land for himself and his supposed co-owner
Restituta. On 22 November 1938, a decision was promulgated (GLRC 1638, Cadastral Case 12)
pronouncing Juan (married to Restituto) as the owner of the land. On 22 September 1949 a contract
of lease over the lot was entered into between Pershing Tan Queto and Restituta (with the consent of
her husband) for a period of 10 years.
Meanwhile, On 27 December 1960 Restituta sued Tan Queto for unlawful detainer (the lease contract
having expired) before the Municipal Court of Ozamis City.
On 22 April 1962, as a consequence of the cadastral case, an OCT was issued in Juan’s name. On 10
October 1962, Tan Queto and Juan entered into a barter agreement whereby Tan Queto became the
owner of the disputed lot, and the spouses in turn became the owners of a parcel of land with the
house constructed thereon previously owned (that is, before the barter) by Tan Queto. Thereafter, Tan
Queto constructed on the disputed land a concrete building, without any objection on the part of
Restituta.
The Municipal court ruled in favor of the spouses in the unlawful detainer case; but on appeal in the
CFI, the entire case was dismissed because of an understanding (barter) entered into by Juan and Tan
Queto.
Restituta sued both Juan and Tan Queto for reconveyance of the title over the registered but disputed
lot, for annulment of the barter, and for recovery of the land with damages. The CFI and the Court of
Appeals found the disputed lot as paraphernal and that Tan Queto was a builder in bad faith. These
findings were regarded by the Supreme Court as findings of facts and thus ordinarily conclusive
upon the Court. Tan Queto filed for a motion for reconsideration of the Supreme Court decision
dated 16 May 1983.
The Supreme Court set aside its decision promulgated on 16 May 1983, and rendered a new one
declaring the questioned lot together with the building thereon, as Tan Queto’s exclusive property;
without costs.
1. Findings of the lower courts ordinary conclusive upon the Court; exception, if erroneous
The findings of the Court of First Instance and the Court of Appeals were regarded by the Supreme
Court as findings of facts and thus ordinarily conclusive upon the Court. Assuming they are factual
findings, still if they are erroneous inferences from certain facts, they cannot bind the Court.
2. Land not transferred to Restituta by donation, for it to be paraphernal
The oral donation of the lot cannot be a valid donation inter-vivos because it was not executed in a
public instrument (Art. 749, Civil Code), nor as a valid donation mortis causa for the formalities of a
will were not complied with. The allegation that the transfer was a conveyance to Restituta of her
hereditary share in the estate of her mother (or parents) cannot be sustained for the contractual
transmission of future inheritance is generally prohibited.
3. Land is conjugal, not paraphernal; Ownership by tradition
The land is conjugal, not paraphernal. Ownership was acquired by the spouses by tradition (delivery)
as a consequence of the contract of sale (See Art. 712, Civil Code) with P50.00 (then a considerable
amount) as the cause or consideration of the transaction. The lot is therefore conjugal, having been
acquired by the spouses thru onerous title (the money used being presumably conjugal, there being
no proof that Restituta had paraphernal funds of her own).
4. Sale not fictitious nor simulated; Allegation of simulation cannot prejudice a stranger
The sale cannot be said to be fictitious or simulated (and therefore void) as there was a valid
consideration therefor. Assuming that there had indeed been a simulation, the parties thereto cannot
use said simulation to prejudice a stranger to said strategem (like petitioner herein).
5. Tan Queto recognized Restituta as an owner, not the owner
Tan Queto admitted Restituta was “an owner” (not the owner) of the lot in his Answer, and this is
true, for she was a co-owner (with Juan, and therefore “an owner.”) There is no admission of
Restituta’s exclusive ownership.
6. Assuming Tan Queto recognized Restituta as the owner; bad faith of one neutralizes the bad
faith of the other
Even assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that the lot
was actually Restituta’s (making him in bad faith), still Restituta’s failure to prohibit him from
building despite her knowledge that construction was actually being done, makes her also in bad
faith. The net resultant of mutual bad faith would entitle Tan Qyeto to the rights of a builder in good
faith (Art. 448, Civil Code), ergo, reimbursement should be given him if Restituta decides to
appropriate the building for herself (Art. 448, Civil Code).
7. Tan Queto an owner-possessor
Tan Queto having bartered his own lot and small house with the questioned lot with Juan (who has
been adverted to by a court decision and by the OCT a conjugal owner) may be said to be the owner-
possessor of the lot. Certainly he is not merely a possessor or builder in good faith (this phrase
presupposes ownership in another); much less is he a builder in bad faith. He is a builder-possessor
(jus possidendi) because he is the owner himself.
8. Jus possessionis, jus possidendi; good faith and bad faith
The Chapter on Possession (jus possessionis, not jus possidendi) in the Civil Code refers to a
possessor other than the owner. The difference between a builder (or possessor) in good faith and one
in bad faith is that the former is not aware of the defect or flaw in his title or mode of acquisition
while the latter is aware of such defect or flaw (Art. 526, Civil Code). But in either case there is a
flaw or defect. In the present case, there is no such flaw or defect because it is Tan Queto himself
(not somebody else) who is the owner of the property.
Tan Queto v. CA [G.R. No. L-35648. February 27, 1987.]
232 Phil. 57

PARAS, J.:
This is a Motion for Reconsideration of the decision dated May 16, 1983 of this Court[*] in the above-
entitled case, asking for the reversal of said decision on the following grounds:

1. The Decision erred in disregarding the fact that Lot No. 304-B was registered in the name of
the husband, Juan Pombuena, as per OCT No. 0-1160 issued pursuant to the November
22, 1938 Decision (Exh. 3) of the Cadastral Court in Cadastral Case No. 12, G.L.R.O. Cad.
Rec. No. 1638, and that petitioner had the right to rely on said OCT;

2. The Decision erred in misinterpreting the admission in Answer of petitioner to the complaint
in the unlawful detainer Case No. 448 (City Court of Ozamiz City) as his admission that Lot
304-B is the paraphernal property of the wife, Restituta Tacalinar;
 3. The Decision erred in reforming the Contract of Sale (Exh. B) of Lot 304-B
from Basilides Tacalinar (mother) to the
respondent, Restituta Tacalinar Guangco de Pombuena, from a sale to a conveyance of
the share of the wife Restituta Tacalinar (daughter) in the future hereditary estate of her
parents;

4. The Decision erred in overlooking that the barter agreement is an onerous contract of
exchange, whereby private respondents-spouses received valuable consideration, concessions
and other benefits therefor and in concluding that 'the barter agreement has no effect';

5. The Decision erred in disregarding the fact that petitioner constructed his concrete building
on Lot No. 304-B in good faith relying OCT No. 0-1160, after the dismissal of
the ejectment case and only after the execution of said barter agreement;

6. The Decision erred in confusing the conclusion of law that petitioner is a builder in bad faith
with a finding of fact. The rule is that questions of law are reviewable on appeal or
by certiorari. Moreover, the rule on finding of fact is subject to well-settled exceptions. (pp.
257-258, Rollo)
It will be recalled that the undisputed relevant facts indicate:
(1) that Restituta Tagalinar Guangco de Pombuena (RESTITUTA, for short) received the
questioned lot (no. 304-B), of the Cadastre Survey of the Municipality of
Centro, Misamis Occidental, either as a purported donation or by way of purchase on (February
11, 1927) (with P50.00) as the alleged consideration thereof;
(2) that the transaction took place during her mother's lifetime, her father having predeceased the
mother;
(3) that the donation or sale was consummated while RESTITUTA was already married to her
husband Juan Pombuena (JUAN, for short);
(4) that on January 22, 1935, JUAN filed for himself and his supposed co-owner RESTITUTA an
application for a Torrens Title over the land;
(5) that under date of November 22, 1938 a decision was promulgated in G. L. R. C. No. 1638
(Cadastral Case No. 12) pronouncing JUAN ('married to RESTITUTA') as the owner of the land;
(6) that on September 22, 1949 a contract of lease over the lot was entered into between Pershing
Tan Queto (TAN QUETO, for short, the herein petitioner) and RESTITUTA (with the consent of her
husband JUAN) for a period of ten (10) years;
(7) that on December 27, 1960 RESTITUTA sued TAN QUETO for unlawful detainer (the lease
contract having expired) before the Municipal Court of Ozamis City;
(8) that as a consequence of the cadastral case, an Original Certificate of Title (Exh. 10) was issued
in JUAN's name ("married to RESTITUTA") on April 23, 1962;
(9) that the unlawful detainer case was won by the spouses in the Municipal Court; but on appeal in
the Court of First Instance, the entire case was DISMISSED because of an understanding (barter)
whereby TAN QUETO became the owner of the disputed lot, and the spouses RESTITUTA and
JUAN in turn became the owners of a parcel of land (with the house constructed thereon) previously
owned (that is, before the barter) by TAN QUETO;
(10) that after the barter agreement dated October 10, 1962 between JUAN and TAN QUETO, the
latter constructed (See p. 257, Rollo, Vol. II) on the disputed land a concrete building, without any
objection on the part of RESTITUTA;
(11) that later, RESTITUTA sued both JUAN and TAN QUETO for reconveyance of the title over
the registered but disputed lot, for annulment of the barter, and for recovery of the land with
damages.
The two principal issues are clearly the following:
(1) Is the questioned lot paraphernal or conjugal?
(2) In having constructed the building on the lot, should TAN QUETO be regarded as a builder
in good faith (and hence entitled to reimbursement) or a builder in bad faith (with no right to
reimbursement)?
The finding by both the Court of First Instance and the Court of Appeals that the disputed lot
is paraphernal and that TAN QUETO is a builder in bad faith were regarded by Us in Our assailed
decision as findings of facts and thus ordinarily conclusive on Us. Assuming they are factual
findings, still if they are erroneous inferences from certain facts, they cannot bind this Court.
A second hard look at the circumstances of the case has constrained Us to rule as follows:
(1) The land is conjugal, not paraphernal. How was ownership transferred, if at all, from her mother
to RESTITUTA? The oral donation of the lot cannot be a valid donation intervivos because it was
not executed in a public instrument (Art. 749, Civil Code), nor as a valid donation mortis causa for
the formalities of a will were not complied with. The allegation that the transfer was a conveyance
to RESTITUTA of her hereditary share in the estate of her mother (or parents) cannot be sustained
for the contractual transmission of futureinheritance is generally prohibited.
The fact is ownership was acquired by both JUAN and RESTITUTA by tradition (delivery) as a
consequence of the contract of sale (See Art. 712, Civil Code) with P50.00 (then a considerable
amount) as the cause or consideration of the transaction. The lot is therefore conjugal, having been
acquired by the spouses thru onerous title (the money used being presumably conjugal, there being
no proof that RESTITUTA had paraphernal funds of her own). The contention that the sale was
fictitious or simulated (and therefore void) is bankrupt. Firstly, there was a valid
consideration therefor. Secondly, assuming that there had indeed been a simulation, the parties
thereto cannot use said simulation to prejudice a stronger to said strategem (like petitioner herein).
One nagging question has been posed. But did not TAN QUETO admit in his Answer that
RESTITUTA was the owner of the lot. This is not so. He admitted RESTITUTA was "an owner"
(not the owner) of the lot, and this is true, for she was a co-owner (with JUAN, and therefore
"an owner". Surely, there is no admission of RESTITUTA's exclusive ownership. And yet this is the
basis of the trial court's conclusion that the lot was indeed paraphernal.
(2) Was Tan Queto a possessor and builder in good faith or in bad faith?
Even assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that the lot
was actually RESTITUTA's (making him in bad faith), still RESTITUTA's failure to prohibit him
from building despite her knowledge that construction was actually being done, makes her also in
bad faith. The net resultant of mutual bad faith would entitle TAN QUETO to the rights of a builder
in good faith (Art. 448, Civil Code), ergo, reimbursement should be given him if RESTITUTA
decides to appropriate the building for herself (Art. 448, Civil Code).
However, as already previously intimated, TAN QUETO having bartered his own lot and small house
with the questioned lot with JUAN (who has been adverted to by a court decision and by the OCT
a conjugal owner) may be said to be the OWNER-POSSESSOR of the lot. Certainly he is not merely
a possessor or builder in good faith (this phrase presupposes ownership in another); much less is he a
builder in bad faith. He is a builder-possessor (jus possidendi) because he is the OWNER
himself. Please note that the Chapter on Possession (jus possessionis, not jus possidendi) in the Civil
Code refers to a possessor other than the owner. Please note further that the difference between a
builder (or possessor) in good faith and one in bad faith is that the former is NOT AWARE of the
defect or flaw in his title or mode of acquisition while the latter is AWARE of such defect or flaw
(Art. 526, Civil Code). But in either case there is a flaw or defect. In the case of TAN QUETO there
is no such flaw or defect because it is he himself (not somebody else) who is the owner of the
property.
WHEREFORE, Our decision promulgated on May 16, 1983 is hereby SET ASIDE, and a new one
is hereby rendered declaring the questioned lot together with the building thereon, as
TAN QUETO's exclusive property. No costs.
G.R. No. L-21921 October 4, 1924
ATKINS, KROLL & COMPANY, INC., plaintiff-appellant,
vs.
SANTIAGO DOMINGO, defendant-appellee.
W. A. Armstrong for appellant.
Pablo Lorenzo and Laurel, Alas & De la Rosa for appellee.

STREET, J.:
This action was instituted in the Court of First Instance of Zamboanga by Atkins, Kroll & Company,
Inc., against Santiago Domingo, for the purpose of enforcing recognition of its alleged right of
ownership over lot No. thirty-eight (38) of the cadastral plan of the Zamboanga
townsite, expediente No. 7880, and to recover possession of the same from the defendant, and at the
same time to secure a partition of lots Nos. 36 and 55 in the same plan, according to the proportional
interests pertaining to the plaintiff and defendant as joint owners thereof. Upon hearing the cause the
trial court entered a judgment recognizing the rights of the plaintiff as tenant in common with the
defendant in respect to the land in all of said lots to the full extent claimed by the plaintiff and made
an appropriate order for a division thereof, but the court at the same time held that the buildings on
lots Nos. 36 and 38 are of the exclusive ownership of the defendant, Santiago Domingo, and that
before the plaintiff can obtain possession of said buildings the defendant is entitled to be reimbursed
for their value, which the court fixed at P18,000, in accordance with article 361 of the Civil Code. At
the same time the court denied the right of the plaintiff to recover any part of the rents received by
the defendant for said houses, though it recognized the obligation of the defendant to reimburse the
plaintiff for the defendant's share of the taxes paid by the plaintiff on all of the properties. From this
judgment the plaintiff appealed, and under its assignment of error so much of the decision is called in
question as relates to the title to the buildings on lost Nos. 36 and 38 and to the right of the plaintiff
to an accounting for rents which have been collected exclusively by the defendant on all of the lots.
The appeal is concerned principally with the question of the title to the improvements on lots Nos. 36
and 38, as distinguished from the title to the land, and the manner in which this question arises can
be most readily exhibited in brief history of the registered title.
On June 24, 1912, the Court of Land Registration, sitting in the Province of Zamboanga, adjudicated
the three lots already mentioned, Nos. 36, 38, and 55, to Buenaventura Domingo. No mention was
made in the decision of the improvements on said lots, but when the corresponding decrees of
registration were issued on October 4, thereafter, the words "with all the improvements existing
thereon" were inserted, as is the common practice in cases where the improvements have not been
expressly declared by the court to belong to some other person than the owner of the land. The same
phrase appeared in the respective certificates of title covering the lots, with the result that according
to the Torrens certificates Buenaventura Domingo was the owner not only of each of said lots but
also of the improvements existing thereon.
Buenaventura Domingo died intestate on October 21, 1912, leaving a widow and a number of
children and grandchildren as heirs. One of his sons, namely, Santiago Domingo, the defendant in
this case, qualified on October 29, 1914, as administrator of his estate. Another son, named Leon
Domingo, died on August 21, 1913, and Santiago Domingo likewise qualified as administrator of
Leon's estate. In the course of the administration of the estate of Buenaventura Domingo, the
defendant, as his administrator, submitted a project of partition to the court, in which lots Nos. 36, 38
and 55 are mentioned as properties pertaining to the decedent. In this project no mention was made
of improvements on any of said lots with the exception of a small house of strong materials on lot
No. 38, the title to which is not in question and may be dismissed from consideration. On August 8,
1918, the court duly approved the project of partition. No objection to this action appears to have
been made by any person interested in the estate.
The share of Santiago Domingo in his father's estate, so far as affects lots Nos. 36 and 55, has
remained undisturbed and said interest is still vested in him. It is different with lot No. 38, for on
February 17, 1922, the said Santiago Domingo sold his entire interest in lot No. 38, "with all the
improvements existing thereon," by contract of sale with pacto de retro to one Ong Kong. The
interest thus sold was subject to repurchase within the period of one year, but redemption was never
effected; and on February 17, 1923, the property was duly consolidated in Ong Kong. On February
19, 1923, Ong Kong sold his entire interest in the lot and improvements thereon to the present
plaintiff, Atkins, Kroll & Co.
The shares pertaining to the other heirs in lots Nos. 36, 38, and 55 suffered a number of mutations as
to ownership; but in the end, through various transactions, the authenticity, legality, and good faith of
which are not questioned either in the pleadings or in the proof, all of said interests came to rest in
the plaintiff, Atkins, Kroll & Co. Each step in all of these mutations of title was accompanied by the
corresponding proper changes in the Torrens certificates of title Nos. 3433, 3843, 3435, showing the
present ownership of the lots and improvements. From these certificates it appears that the plaintiff,
Atkins, Kroll & Co. is the owner of three-fourths of lot No. 36, with the improvements thereon; of
the whole of lot No. 38, with the improvements thereon; and of three-fourths of lot No. 55, excluding
the improvements.
It appears that the defendant, Santiago Domingo, is now in possession of said property and has at all
times been in possession since the plaintiff acquired its interest therein, and he has during the same
period exclusively enjoyed the use of all the lots, with the income derived from the buildings
thereon. This circumstance, coupled with this refusal to admit the plaintiff's claim as coowner,
resulted, as already stated, in the institution of the present action by the plaintiff, for the purpose of
recovering possession of lot No. 38 and to secure a partition of lots Nos. 36 and 55, with an
accounting for the plaintiff's proper proportion of the profits. This brings us to consider the origin
and nature of the defendant's claim to the exclusive ownership of the buildings on lots Nos. 36 and
38. 1awph!l.net
In this connection it appears that the buildings referred to were erected in the latter months of the
year 1912 and first half of 1913, and the defendant asserts that they were built by him with his own
money and with the consent of his father. Upon this circumstance in connection with article 361 and
related provisions of the Civil Code, the defendant bases his claim to the exclusive ownership of said
buildings.
We note that this claim was first put forth by the defendant in what he called an explanatory report
submitted to the court in the administration of the estate of Buenaventura Domingo on February 1,
1919. In that writing the defendant asked that the buildings on lots Nos. 36 and 38 be segregated
from the mass of the property left by his father and that he himself be declared to be the exclusive
owner of the buildings. This move was opposed by Zoila Domingo, a daughter and sole heir of Leon
Domingo. In the end the court, upon July 19, 1922, entered a resolution ignoring the defendant's
claim and ordering that the project of partition be carried into effect. If it be true, as the defendant
claims, that the houses referred to were built with his money, it must strike one as remarkably strange
that he should have waited for nearly seven years, or until February 1, 1919, before formulating his
claim or taking any step whatever to protect his title to said buildings.
But assuming, as we may, that the buildings in question were in fact constructed by the defendant
with his own money, and with the consent of his father as owner of the land, it is clear that the
defendant's right to the buildings in controversy has been lost, except in so far as he is owner of an
undivided one-fourth interest by inheritance; and the interests of the two parties to this litigation in
the properties in question must be taken to be exactly as they are stated in the existing certificates of
title. This results from the fact that the plaintiff is a purchaser for value who has acquired the
interests shown on the existing Torrens certificates upon the faith of the registered title, and the
defendant is in no position to arrest the effect of these documents.
But is it insisted that the plaintiff has been affected with the notice of the defendant's right by the
filing of a lis pendens. This requires a few words of explanation. Going back to August 18, 1920, we
find that on said date the defendant filed with the register of deeds a notice of lis pendens, setting
forth his claim of ownership as to the improvements in question, and referring to the controversy
planted in his explanatory report in the administration proceedings. Notice of said lis pendens was
noted on the back of the corresponding certificates of title. Upon the date stated the plaintiff had
already acquired a mortgage upon the interest of Zoila Domingo in the estate of her grandfather,
Buenaventura Domingo; and by the foreclosure of that mortgage all of her interest in lots Nos. 36
and 38 became vested in the plaintiff as purchaser. The remaining interests acquired by the plaintiff
in the same properties appear to have been acquired by it after the notice of lis pendens was filed.
As will be seen, the filing of the lis pendens was intended to affect third persons with notice of the
claim which the defendant had asserted in his explanatory report in the proceedings over the state of
Buenaventura Domingo. But it will be remembered that the efforts of the defendant to get his claim
recognized in those proceedings completely failed of effect. For this reason the lis pendens must be
considered to have lost its efficacy. The effect of notice by lis pendens is, of course, to charge the
stranger with notice of the particular litigation referred to in the notice, and, if the notice is effective,
the stranger who acquires the property affected by the lis pendens takes subject to the eventuality of
the litigation. But when the adverse right fails in such litigation, the lis pendens becomes innocuous.
It should be noted that the defendant, supposing his claim to have been made in good faith, might
have protected it, at any time before the property had passed into the hands of a third person, by a
proceeding under section 112 of Act No. 496. Said section declares that any person may at any time
apply by petition to the court, where "new interests have arisen or been created which do not appear
upon the certificate," and procure such interests to be noted. Such a petition must be filed and
entitled in the original case in which the decree of registration was entered. (Sec. 112, par. 2, Act No.
496.)
In Blass vs. De la Cruz and Melendres (37 Phil., 1), this court held that the registration of land in the
name of a particular person vests in him not only the title to the land but also the title to the
improvements thereon, unless special reservation is noted with respect to the improvements. In that
case the improvements which became the subject of controversy had been placed on the land before
it was registered and the decree of registration was res judicata as to the improvements. In the case
before us the buildings which are the subject of controversy were placed on the land after the decree
of registration. This circumstance made a proceeding under section 12 of Act No. 496 all the more
necessary in order to protect the new interest thus created. So far as registered land is concerned, the
right recognized in article 361 and related provisions of the Civil Code is subject to the contingency
that it shall be noted in the registered title before the property passes into the hand of a purchaser for
value.
The considerations so far adduced apply alike to the improvements on lots Nos. 36 and 38, but there
is another circumstance which is fatal to the defendant's claim to any of the improvements on lot No.
38. This is found in the fact that he sold his interest in said lot, including the improvements, to Ong
Kong, the plaintiff's predecessor in interest. It is evident that the defendant is estopped by his own
deed from claiming any interest in the buildings on this lot, whatever might have been the law
governing his claim to the buildings on the other lot.
From what has been said it is evidence that the trial court was in error in declaring the defendant to
be the owner of the buildings on lots Nos. 36 and 38 and in failing to require the defendant to
account; and in order to clarify the situation we declare: (1) That the ownership of the lots Nos. 36,
38, and 55, is as stated in the Torrens certificates of title Nos. 3433, 3843, and 3435 (Exhibits A, B,
and C of the plaintiff); (2) that the plaintiff is entitled to possession of lot No. 38 and that partition
must be made of lots Nos. 36 and 55 in the manner provided by law; (3) the plaintiff is further
entitled to recover of the defendant such portion of the defendant and which shall have been paid by
the plaintiff; (4) the plaintiff shall also recover of the defendant such portion of the rents of said
properties as correspond to the interests of the plaintiff since its acquisition of the same.
The judgment will be reversed and the cause remanded for further proceedings in conformity with
this opinion, without express pronouncement as to costs. So ordered.
 G.R. No. L-25450 January 31, 1969
LEONARDO SANTOS, Petitioner, vs. HON. ANGEL H. MOJICA, Judge, Court of First
Instance of Rizal, Pasay City Branch,
THE PROVINCIAL SHERIFF of Rizal, Pasay City Branch, TEODORICO, CARMEN,
ANTERO, VIDAL, CATALINA, MELANIO, MANUEL, FFLICIDAD, AURELIO, PACITA,
and ELEUTERIA, all surnamed ALLANIGUE, Respondents.
Lupino A. Lazaro for petitioner.
D. A. Rodriguez for respondents.
CAPISTRANO, J.:chanrobles virtual law library
On March 19, 1959, in the Court of First Instance of Rizal, eleven brothers and sisters, all surnamed
Allanigue, brought an action (Civil Case No. 217-R) against their sister, Lorenza Allanigue, her
husband, Simeon Santos, Maria San Agustin and Felicidad San Agustin, for partition of a 360-
square-meter lot situated at San Dionisio, Parañaque, Rizal, and for the annulment of certain
conveyances involving the same. Defendants having been declared in default, the trial court, after
hearing the plaintiffs' evidence, rendered judgment ordering the partition of the lot among the eleven
plaintiffs and the defendant Lorenza Allanigue. In a subsequent order the court set off Lorenza
Allanigue's share against the amount that she had failed to pay as rents to the plaintiffs as directed in
the decision.chanroblesvirtualawlibrarychanrobles virtual law library
A writ of execution was issued on the judgment ordering the defendants to vacate the lot and deliver
its possession to the plaintiffs. Leonardo Santos, not a party defendant but a son of defendants
Simeon Santos and Lorenza Allanigue, owned a house standing on the lot. He filed with the sheriff a
third-party claim, and with the court, a motion to recall the writ of execution insofar as his house was
concerned. The motion was denied. On March 15, 1962, the defendants and movant Leonardo Santos
having failed to remove their houses from the lot within the period given them, the court ordered the
sheriff to demolish said houses.chanroblesvirtualawlibrarychanrobles virtual law library
On April 2, 1962, Leonardo Santos and the defendants in the case as petitioners, filed in the Supreme
Court a petition for certiorari and prohibition, G.R. No. L-19618, against Judge Angel H. Mojica, the
Provincial Sheriff of Rizal and the plaintiffs in the case, as respondents. Among the issues raised
therein was whether or not the lower court had jurisdiction to order the demolition of petitioners'
houses in that special civil action. In its decision of February 28, 1964, the Supreme Court denied the
petition after finding that Leonardo Santos, who claimed to be the owner of a house and the portion
of land on which it stood by purchase from his parents, did not follow the procedure sanctioned by
law in vindicating his alleged ownership, i.e., he should have filed an ordinary civil action to
vindicate his alleged ownership of the house and the portion of land on which it was
built.chanroblesvirtualawlibrarychanrobles virtual law library
After the said decision of the Supreme Court had become final, the respondent Judge, Angel H.
Mojica, on motion of the plaintiffs in the same Civil Case No. 217-R, ordered the demolition of the
defendants' houses. The defendants having voluntarily removed their houses, the only house that
remained standing on the lot was that belonging to Leonardo Santos. Subsequently, the respondent
Judge, on motion of the plaintiffs, issued an order dated December 9, 1965, directing the sheriff to
demolish the house of Leonardo Santos. Hence, the present petition for certiorari and prohibition in
this Court where Leonardo Santos, petitioner, questions the jurisdiction of the respondent Judge in
issuing the order of demolition of his house.chanroblesvirtualawlibrarychanrobles virtual law library
The instant petition for certiorari and prohibition should be denied in view of the following
considerations:chanrobles virtual law library
1. Petitioner Leonardo Santos is bound by the judgment in Civil Case No. 217-R because he is a
successor-in-interest of his parents, Simeon Santos and Lorenza Allanigue, defendants in Civil Case
No. 217-R, and his right, if any, is claimed under them. Hence, the judgment in said civil case binds
not only Simeon Santos and Lorenzo Allanigue but also their son, Leonardo Santos, who is their
successor-in-interest and who claims under them. The fact that the sale to Leonardo Santos from his
parents was registered, is of no moment because, as pointed out, he is bound by the judgment against
them.chanroblesvirtualawlibrarychanrobles virtual law library
Leonardo Santos' house having been built and reconstructed (after March, 1962) into a bigger one
after his predecessors-in-interest, his parents, had been summoned in 1959 in Civil Case No. 217-R,
he must be deemed a builder in bad faith. As builder in bad faith he lost the improvement made by
him consisting of the reconstructed house to the owners of the land without right to indemnity,
pursuant to Article 449 of the Civil Code, which provides:
ART. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built,
planted or sown without right to indemnity.
The Allanigue brothers and sisters therefore become owners of the improvement consisting of the
house built in bad faith by Leonardo Santos if they chose to appropriate the accession. (Articles 445
and 449, Civil Code.) However, said owners could choose instead the demolition of the improvement
or building at the expense of the builder, pursuant to Article 450 of the Civil Code, which, in part,
provides:
ART. 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed....
It is of record in Civil Case No. 217-R that the owners of the land chose to have the house or
improvement demolished pursuant to their motion for demolition which was granted by respondent
Judge Mojica on December 9, 1965.chanroblesvirtualawlibrarychanrobles virtual law library
2. The present petition is barred by the prior judgment of this Court in G.R. No. L-19618. Herein
petitioner, Leonardo Santos, was one of the petitioners in that case against the same official and
private respondents in the instant petition. In the two cases there is identity of subject matter, namely,
the portion of the lot and the house standing on said portion alleged by petitioner to belong to him.
There is also identity of cause of action, to wit: the order of the respondent Judge for the removal or
demolition of the houses standing on the lot. In the previous case this Court had jurisdiction, and its
decision, which was on the merits, had become final. It is evident that the judgment of this Court in
G.R. No. L-19618 is res adjudicata in the instant case on the question of the validity of the order of
demolition of December 9, 1965.chanroblesvirtualawlibrarychanrobles virtual law library
PREMISES CONSIDERED, the petition is denied, with treble costs against the petitioner. The writ
of preliminary injunction issued by this Court is hereby
dissolved.chanroblesvirtualawlibrarychanrobles virtual law libra
REX DACLISON vs EDUARDO BAYTION
April 6, 2016; J. Mendoza
On January 27, 2009, respondent Baytion filed a complaint for Forcible Entryand Damages
with Prayer for Issuance of Preliminary Mandatory Injunction with MeTC Quezon City
against petitioner Daclison. Respondent alleges that he was a co-owner of a parcel of land consisting
of 1,500 sq.m. This property was inherited by himand his siblings from their parents, and as agreed
upon, it was to be administered by him. As administrator, he leased portions of the property
to third persons. Erected onthe property was a one story building divided into seven units or
stalls. One stall wasoccupied by Leonida Dela Cruz who used it for
selling rocks, pebbles and similarconstruction materials. ACCORDING TO BAYTION: In May 2008
, Leonida’s lease expired. Daclison tookpossession of the portion leased and occupied by Leonida
without the prior knowledge and consent of Baytion. Daclison used it for his business of selling
marble
and otherfinishing materials without paying anything to Baytion. Upon learning of this fact,sometime
in June 2008, Baytion demanded Daclison to vacate it. Oral and written
demands to vacate were given. Daclison refused prompting Baytion to file the abovementioned
complaint. ACCORDING TO DACLISON: Baytion leased the subject portion to Antonio DelaCruz
(sometime in 1978) where the latter started a business. 10 or 15 years later, a stone walling called a
riprap, was erected at the creek lying beside Baytion’s property,leaving a deep down-sloping
area; and that Antonio negotiated with an engineer so he could be in possession of the said down-
slope; and that Antonio
had it filled up until it was leveled with the lease portion and he paid for the right to possess the same
. In2000, Leonida took over the business because Antonio had a stroke. Ernanie DelaCruz took over
when Leonida died. In February 2008, Daclison and Ernanie entered into a business venture
together. Daclison took over the management of the business.Baytion sent Letters to vacate
addressed to Ernanie. Baytion and Ernanie came to an agreement that the latter would continue
to lease the property and issued a checkP100,000 therefore. After two weeks, Baytion returned the
check and promised
that he would no longer bother them if they would just transfer to the filled up and plane-levelled pro
perty. On account of that promise, Ernanie vacated the leased area and transferred their
business to the filled up portion. Baytion, however, still filed a complaint in the barangay
and eventually, in the MeTC. The MeTC dismissed Baytion’ spetition for
failing to include his siblings or his co-owners as plaintiffs in the case.Both the RTC and the
C.A. ruled in favor of respondent.
WHETHER RESPONDENT BAYTION HAS A BETTER RIGHT AGAINST PETITIONER
DACLISON ON THE SUBJECT PROPERTY I.E. THE FILLED UP PORTION

BETWEEN THE RIPRAP CONSTRUCTED BY THE GOVERNMENT AND THELEASED

PROPERTY ON THE GROUND OF ACCRETION?No.
Baytion does not have a better right over
the contested portion. Baytion’scontention that he owns that portion by reason of
accretion is misplaced. Ascontemplated in Article 457 of the NCC, the following
Requisites must concur in orderfor accretion to be considered, namely:(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 the
rivers. There is no accretion here. To begin with, the land came about not by reason of agradual and i
mperceptible deposit. The deposits were artificial and man-made and not the exclusive result of the
current from the creek adjacent to his property.
Baytionfailed to prove the attendance of the indispensable requirement that the
deposit was due to the effect of the current of the river or creek.
Alluvion must be theexclusive work of nature and not as a result of human intervention.
Art. 445 ofthe NCC also uses the word “thereon” (see provision): which is simply defined as “onthe
thing that has been mentioned”.
The supposed improvement must be made,constructed, or introduced within or
on the property and not outside so as toqualify as an improvement contemplated by law.
Baytion is not the owner of thecontested portion, therefore he does not have a better right to possess
the same. Hedoes not have a cause of action against Daclison. Petition Granted
[ GR No. 219811, Apr 06, 2016 ]

REX DACLISON v. EDUARDO BAYTION

Assailed in this petition for review[1] are the February 5, 2015 Decision[2] and the August 3, 2015
Resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 99627, which affirmed in toto the
April 27, 2012 Decision[4] rendered by the Regional Trial Court, Branch 224, Quezon City (RTC) in
Civil Case No. Q-09-66145, a case for forcible entry.

The Antecedents

On January 27, 2009, respondent Eduardo Baytion (Baytion) filed a complaint[5] for Forcible Entry
and Damages with Prayer for Issuance of Preliminary Mandatory Injunction with the Metropolitan
Trial Court, Branch 43, Quezon City (MeTC) against petitioner Rex Daclison (Daclison), which was
docketed as Civil Case No. 39225.

In the complaint, Baytion alleged that he was a co-owner of a parcel of land consisting of 1,500
square meters, covered by Transfer Certificate Title (TCT) No. 221507. The said property was
inherited by him and his siblings from their parents and, as agreed upon, was being administered by
him. As administrator, he leased portions of the property to third persons.

Erected on the said property was a one-storey building which was divided into seven units or stalls.
One of the stalls was leased to a certain Leonida Dela Cruz (Leonida) who used it for her business of
selling rocks, pebbles and similar construction materials.

When the lease of Leonida expired sometime in May 2008, Daclison and other persons acting under
her took possession of the portion leased and occupied by Leonida without the prior knowledge and
consent of Baytion. Since then, Daclison had been occupying the contested portion and using it for
his business of selling marble and other finishing materials without paying anything to Baytion.

Upon learning of Daclison's unauthorized entry into the subject portion of the property, sometime in
June 2008, Baytion demanded that he vacate it. Despite oral and written demands to vacate, Daclison
refused to do so. This prompted Baytion to file the complaint for forcible entry and damages.

Daclison, in his answer, averred that sometime in 1978, Baytion leased the subject portion to Antonio
dela Cruz (Antonio) where the latter started a business; that ten or fifteen years later, a stone walling,
called a riprap, was erected at the creek lying beside Baytion's property, leaving a deep down-
sloping area; that Antonio negotiated with a certain engineer so he could be in possession of the said
down-slope; that Antonio had the down-slope filled up until it was leveled with the leased portion;
that Antonio paid for the right to possess the same; that in 2000, Antonio's business was taken over
by Leonida, who suffered a stroke in December 2007; that after her death, the business was taken
over by Ernanie Dela Cruz (Ernanie); that in February 2008, he (Daclison) entered into a business
venture with Ernanie in the same leased property and he took over the management of the business;
that he received a letter from Baytion addressed to Ernanie requesting the latter to vacate the subject
premises; that Baytion and Ernanie came to an agreement that the latter would continue the lease of
the property; that he issued a check in the amount of P100,000.00 as payment for the rental arrears;
that two weeks thereafter, Baytion returned the check and demanded that Ernanie vacate the
property; that Baytion promised that he would no longer bother them if they would just transfer to
the filled-up and plane-leveled property; that on account of the said promise, he and Ernanie vacated
the leased area and transferred their business to the filled-up portion; that despite the fact that they
already vacated the leased portion of the property, Baytion still filed a complaint with the barangay
claiming that the filled-up portion was part. of his property; that the executive officer of the barangay
who conducted the investigation made a report indicating that a mojon was placed by him (Daclison)
which showed the boundary of Baytion's property; that Baytion acknowledged the said report and
agreed to put an end to the controversy; and that despite Baytion's agreement to put an end to the
dispute, he still sent a demand letter to vacate.[6]

On August 25, 2009, the MeTC dismissed the case on the ground that Baytion failed to include his
siblings or his co-owners, as plaintiffs in the case. The dismissal, however, was without prejudice.

Baytion appealed the case to the RTC, which ruled that the MeTC lacked jurisdiction to decide the
case because the allegations in the complaint failed to constitute a case of forcible entry. Pursuant to
Section 8, Rule 40 of the Rules of Court, however, the RTC did not dismiss the case and, instead,
exercised its original jurisdiction over the same.

The RTC then decided that Baytion had a better right of possession over the property. The dispositive
portion of its decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering:

1) The defendant and other persons claiming under him to vacate and to turn over the possession of
the subject property to the plaintiff; and,

2) The defendant to pay plaintiff the amount of P20,000.00/monthly for the use of the premises
commencing from May 2008 until the subject premises is vacated.

SO ORDERED.[7]
Aggrieved, Daclison filed an appeal with the CA.

The CA tackled two issues, namely: a) whether the RTC committed a reversible-error when it
exercised original jurisdiction of the case and decided the same on its merits pursuant to Section 8,
Rule 40 of the Rules of Court; and, b) who, between Baytion and Daclison, had a better right to
possess the subject property.

The CA ruled that the MeTC had no jurisdiction to hear and decide the case in a summary
proceeding for forcible entry because Baytion failed to allege that he was in prior physical
possession of the property and that he was deprived of his possession under Section 1, Rule 70 of the
Revised Rules of Court. It was of the view that the present action for forcible entry had actually
ripened into one for recovery of the right to possess or accion publiciana, which was an action in an
ordinary civil proceeding in the Regional Trial Court. The action was aimed at determining who
among the parties had a better right of possession of realty independent of the issue of ownership or
title. It was an ejectment suit filed after the expiration of one year from the accrual of the cause of
action or from the unlawful withholding of possession of the realty.[8] Thus, it agreed with the RTC
when the latter correctly assumed jurisdiction over the case following the mandate of Section 8, Rule
40 of the Revised Rules of Court.[9]

As to the issue of possession, the CA concluded that Baytion, as co-owner of the subject property,
had a better right to possess. It wrote:

Xxx, it is clear that Antonio, Leonida and Ernanie were all lessees of the subject property and its
improvements owned by the plaintiff. Ernanie, who is a sub-lessee of the subject property, again sub-
leased the same to appellant, without authority or consent from appellee. Thus, since appellant have
been possessing the subject property in his capacity as a mere sub-lessee, he cannot own the subject
property and its improvements through open, continuous and adverse possession of the property. It
follows then that appellee has the right to repossess the subject property.[10]
On February 5, 2015, the CA rendered the.assailed decision, disposing in this wise:

WHEREFORE, the instant appeal is hereby DISMISSED for lack of merit, and the Decision 27
April 2012 rendered by Branch 224 of the RTC of Quezon City in Civil Case No. Q-09-66145
is AFFIRMED in toto.

SO ORDERED.[11]
Daclison filed a motion for reconsideration but it was denied by the CA in the assailed resolution.

Hence, the present petition for review raising the following

ISSUES

I.

THE HONORABLE COURT A QUO GRAVELY ERRED WHEN IT HELD THAT THE
INSTANT CASE IS AN ACCION PUBLICIANA, MORE SIGNIFICANTLY [WITH]
RESPECT TO THE LAND OUTSIDE TCT NO. 221507; THAT, EFFECTIVELY, THE
RESPONDENT HAS PRIOR POSSESSION OF THE PROPERTY OUTSIDE TCT NO.
221507.

II.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT
RULED THAT THE PETITIONER WAS A LESSEE OF THE SECOND PROPERTY.

III.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT
RULED THAT THE SECOND PROPERTY OR LAND WAS AN IMPROVEMENT ON THE
PROPERTY OF THE RESPONDENT.

IV.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT
RULED THAT THE RESPONDENT HAS LEGAL CAPACITY TO SUE.
 V.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT
RULED THAT THE PETITIONER SHOULD PAY THE [RESPONDENT] THE AMOUNT
OF P20,000 MONTHLY FOR THE USE OF THE PREMISES.[12]
Daclison insists that what is really in dispute in the present controversy is the filled-up portion
between the riprap constructed by the government and the property of Baytion and,[13] therefore,
outside of the land co-owned by Baytion. Accordingly, the RTC and the CA should have dismissed
the case because the leased property was already surrendered to its owner, thereby, mooting the
complaint.[14]

Daclison insists that Antonio, from whom he derived his right over the contested portion, made an
open, continuous and adverse possession and use of the property when the latter extended his place
of business to the filled-up portion.[15] He claims that the filled-up portion is not an improvement on
the leased property as found by the RTC and the court a quo. It is a property separate and distinct
from the leased property.[16]

The Respondent's Position

Baytion basically posits that although the disputed portion is outside the description of the property
covered by TCT No. 221507, it forms an integral part of the latter because it is an accretion,
construction, or improvement on the property and, under the law, any accretion or anything built
thereon belongs to him and his co-owners.[17]

The Court's Ruling

At the .outset, it was clear that the disputed property was the filled-up portion between
the riprap constructed by the government and the property covered by TCT No. 221507. According
to Daclison, the property covered by TCT No. 221507 had already been surrendered to Baytion
which the latter never disputed. As such, the Court is now confronted with the question as to who
between the parties has a better right over this contested portion between the land co-owned by
Baytion and the constructed riprap.

Baytion does not have a better right over the contested portion

The RTC and the CA erred in holding that Baytion has a better right to possess the contested portion.

Baytion's contention that he owns that portion by reason of accretion is misplaced. Article 457 of the
New Civil Code provides:

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.
In other words, the following requisites must concur in order for an accretion to be considered,
namely:

(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.[18]
In the case at bench, this contested portion cannot be considered an accretion. To begin with, the land
came about not by reason of a gradual and imperceptible deposit. The deposits were artificial and
man-made and not the exclusive result of the current from the creek adjacent to his property. Baytion
failed to prove the attendance of the indispensable requirement that the deposit was due to the effect
of the current of the river or creek. Alluvion must be the exclusive work of nature and not a result of
human intervention.[19]

Furthermore, the disputed property cannot also be considered an improvement or accession. Article
445 of the Civil Code provides:

Art. 445. 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.

[Emphases supplied]
It must be noted that Article 445 uses the adverb "thereon" which is simply defined as "on the thing
that has been mentioned."[20] In other words, the supposed improvement must be made, constructed
or introduced within or on the property and not outside so as to qualify as an improvement
contemplated by law. Otherwise, it would just be very convenient for land owners to expand or
widen their properties in the guise of improvements.

In view of all the foregoing, it is the opinion of this Court that Baytion, not being the owner of the
contested portion, does not have a better right to possess the same. In fact, in his initiatory pleading,
he never claimed to have been in prior possession of this piece of property. His claim of ownership is
without basis. As earlier pointed out, the portion is neither an accretion nor an accession. That being
said, it is safe to conclude that he does not have any cause of action to eject Daclison.

WHEREFORE, the petition is GRANTED. The February 5, 2015 Decision and the August 3, 2015
Resolution of the Court of Appeals in CA-G.R. CV No. 99627 are REVERSED and SET ASIDE.
The complaint for possession is hereby ordered DISMISSED.

SO ORDERED.
Republic vs Hon Ballocanag and Reyes
Before this Court is a Petition for Review on Certiorari[1] under Rule
45 of the Rules of Civil Procedure seeking the reversal of the Court of

Appeals (CA) Decision[2] dated June 4, 2004, in CA-G.R. SP No. 52261, which affirmed the Joint
Order[3] of the Regional Trial Court (RTC) of Pinamalayan, Oriental Mindoro, Branch 41,
dated December 28, 1998.

The facts, as summarized by the CA, are as follows:

Sometime in 1970, [private respondent Danilo] Reyes bought the subject 182,941-
square-meter land at Bgy. Banus, Pinamalayan, Oriental Mindoro [subject land] from
one Regina Castillo (or Castillo) in whose name it was titled under Original Transfer
Certificate of Title No. P-2388 issued pursuant to Free Patent No. V-79606. Right
after his purchase, Reyes introduced improvements and planted the land with fruit
trees, including about a thousand mango[es], more than a hundred Mandarin citrus,
and more than a hundred guyabanos. He also had the title transferred in his name and
was issued TCT No. 45232.

Reyes so prized this land which he bought in good faith. Unfortunately, it turned out
that about 162,500 square meters of this land is part of the timberland of Oriental
Mindoro and, therefore, cannot be subject to any disposition or acquisition under any
existing law, and is not registrable.

Thus, in the Complaint (Annex A, pp. 15 to 21, rollo) for Cancellation of Title and/or
Reversion filed by the Office of the Solicitor General (or OSG) in behalf of the
Republic [petitioner], as represented by the Bureau of Forest Development (or BFD),
it was explained that the source[,] Original Transfer Certificate of Title No. P-2388 of
Castillo, issued pursuant to Free Patent No. V-79606, is spurious, fictitious and
irregularly issued on account of:

a) ONE HUNDRED SIXTY-TWO THOUSAND FIVE HUNDRED

(162,500) SQUARE METERS, more or less, of the land covered by
OCT No. P-2388 was, at the time it was applied for patent and or
titling, a part of the timberland of Oriental Mindoro, per BFD Land
Classification Map Nos. 2319 and 1715. Copy of said maps are
attached hereto as Annexes B and C;

b) The 162,500 square meters covered by OCT No. P-2388 are entirely
inside the 140 hectares Agro-Forestry Farm Lease Agreement No. 175
in favor of Atty. Augusto D. Marte[4] [Atty. Marte], copy of the Map of
AFFLA No. 175 and AFFLA No. 175 are attached hereto as Annexes
D and E;

c) Neither the private defendant nor his predecessors-in-interest have

been in possession of the property because the rightful occupant is
 Atty. Augusto D. Marte by virtue of the Agro-Forestry Farm Lease
Agreement [AFFLA] No. 175, issued to him by the Ministry of Natural
Resources in 1986 to expire on December 21, 2011;

d) Since the parcel of land covered by TCT No. 45232, in the name of
defendant Danilo Reyes, is a part of the timberland of Oriental
Mindoro, per BFD Land Classification Map Nos. 2319 & 1715, the
same cannot be the subject of any disposition or acquisition under any
existing law (Li Hong Giap vs. Director of Lands, 55 Phil. 693; Veno
vs. Govt of P.I. 41 Phil. 161; Director of Lands vs. Abanzado, 65
SCRA 5). (pp. 18 to 19, rollo)

Aside from the documentary evidence presented to support these allegations, the
Republic presented as well and called to the witness stand:

a) Armando Cruz, the supervising cartographer of the DENR, who explained that
based on Land Classification Map No. 1715 (Exh. A) which was later amended to LC
Map No. 2319 (Exh. B), the plotting shows that the 162,000 square meters covered by
OCT No. 2388 are entirely inside the 140 hectares of the Agro-Forestry Farm Lease
Agreement No. 175 in favor of Atty. Marte and the alienable and disposable area of
Castillos land is only around two (2) hectares;

b) Alberto Cardio, an employee of the DENR who conducted the survey on the land
under litigation, corroborated the testimony of Cruz that only two hectares is alienable
and disposable land; and

c) Vicente Mendoza, a Geodetic Engineer, who expounded on the procedure before

the title could be issued to an applicant for a disposable and alienable public land. He
clarified that he did not make the survey for Castillo but upon presentation to him of
the carpeta in open court he noticed that, while it appears to be valid, it however has
no certification of the Bureau of Forestry - an essential requirement before title could
be issued.

For his side, Reyes presented evidence showing his extensive development of and
investment in the land, but however failed to traverse squarely the issue raised by the
Republic against the inalienability and indisposability of his acquired land. His lame
argument that the absence of the Certification by the Bureau of Forestry on
his carpeta does not necessarily mean that there was none issued, failed to convince
the court a quo.

Hence, Judge Edilberto Ramos, the then Presiding Judge of Branch 41 of the Regional
Trial Court of Pinamalayan, Oriental Mindoro, held[5] that:

The defendants in this case did not assail the evidence of the plaintiff but concentrated
itself to the expenses incurred in the cultivation and in the planting of trees in that
 disputed areas. Aside thereto, the plaintiff cited that it is elementary principle of law
that said areas not being capable of registration their inclusion in a certification of
ownership or confer title on the registrant.(Republic of the Philippines, et al. vs. Hon.
Judge Jaime de los Angeles of the Court of First Instance of Balayan, Batangas, et al.,
G.R. No. L-30240) It is also a matter of principle that public forest [are non-alienable
public lands. Accession of public forests] on the part of the claimant, however long,
cannot convert the same into private property. (Vano v. Government of PI, 41 Phils.
161)

In view thereof, it appears that the preponderance of evidence is in favor of the

plaintiff and against the defendants and therefore it is hereby declared that Free
Patent No. V-79606 issued on July 22, 1957 with Psu No. 155088 and OCT No. P-
2388 in the name of Regina Castillo and its derivative TCT No. 45232 in the
name of Danilo Reyes is hereby declared null and void; and the defendant Danilo
Reyes is hereby ordered to surrender the owners duplicate copy of TCT No.
45232 and to vacate the premises and directing the defendant Register of Deeds
of Calapan, Oriental Mindoro, to cancel the title as null and void ab initio; and
declaring the reversion of the land in question to the government subject to the
Agro-Forestry Farm Lease Agreement No. 175, to form part of the public
domain in the province of Oriental Mindoro.

The two-hectare lot, which appears disposable and alienable, is declared null and
void for failure to secure certification from the Bureau of Forest Development.

The counter-claim of the defendant is hereby denied for lack of merit, with cost
against the defendant.[6]

Reyes appealed the aforementioned RTC Decision to the CA. In its Decision[7] dated September 16,
1996, the CA affirmed the RTC Decision. His motion for reconsideration was denied.[8]

Thus, Reyes sought relief from this Court via a petition for review on certiorari. But in our
Resolution[9] dated June 23, 1997, we resolved to deny his petition for failure to sufficiently show
that the CA had committed any reversible error in the questioned judgment. On November 24, 1997,
this Court denied with finality Reyes' motion for reconsideration.[10]

On February 4, 1998, Reyes filed a Motion [11] to Remove Improvements Introduced by Defendant
Danilo D. Reyes on the Property which is the Subject of Execution in Accordance with Rule 39,
Section 10, paragraph (d) of the 1997 Rules of Civil Procedure (motion). [12] There he averred that: he
occupied in good faith the subject land for around thirty years; he had already spent millions of pesos
in planting fruit-bearing trees thereon; and he employed many workers who regularly took care of
the trees and other plants. Reyes prayed that he and/or his agents be given at least one (1) year from
the issuance of the corresponding order to remove his mango, citrus and guyabano trees, and that
they be allowed to stay in the premises within that period to work on the cutting and removal of the
said trees. He also asked the RTC that in the meantime that these trees are not yet removed, all the
unharvested fruits be appropriated by him, as provided for by law, to the exclusion of all other
persons who may take advantage of the situation and harvest said fruits.
Petitioner opposed the motion, citing the principle of accession under Article 440 [13] of the Civil
Code. It further argued that the subject land, being
timber land, is property of public dominion and, therefore, outside the commerce of man and cannot
be leased, donated, sold, or be the object of any contract. This being the case, there are no
improvements to speak of, because the land in question never ceased to be a property of the
Republic, even if Reyes claimed that he was a purchaser for value and in good faith and was in
possession for more than thirty (30) years. Moreover, petitioner averred that, assuming Reyes was
initially a planter/sower in good faith, Article 448 of the Civil Code cannot be of absolute application
since from the time the reversion case was filed by the petitioner on May 13, 1987, Reyes ceased to
be a planter/sower in good faith and had become a planter/sower in bad faith.[14]

Meanwhile, on March 2, 1998, Atty. Marte filed a Complaint for Injunction With an Ancillary Prayer
for the Immediate Issuance of a Temporary Restraining Order against Reyes for allegedly
encroaching upon and taking possession by stealth, fraud and strategy some 16 hectares of his leased
area without his permission or acquiescence and planted trees thereon in bad faith despite the fact
that the area is non-disposable and part of the public domain, among others.

But the respondent RTC dismissed the said complaint in the assailed Joint Order and ruled in favor of
Reyes, finding Rule 39, Section 10, paragraph (d) of the 1997 Rules of Civil Procedure, applicable.
The RTC ratiocinated:

Under the circumstance, it is but just and fair and equitable that Danilo Reyes be
given the opportunity to enjoy the fruits of his labor on the land which he honestly
believes was legally his. He was not aware that his certificate of title which was
derived from OCT No. P-2388 issued in 1957 by the government itself in the name of
Regina Castillo contained legal infirmity, otherwise he would not have expoused
(sic) himself from the risk of being ejected from the land and losing all improvements
thereon. Any way, if the court will grant the motion for the defendants (sic) Danilo
Reyes to remove his improvements on the disputed property, it will not prejudice
Augusto Marte, otherwise, as the court sees it, he will immensely [benefit] from the
toils of Danilo Reyes.

and then disposed, as follows:

WHEREFORE, premises considered, the motion to remove improvements filed by

defendant Danilo Reyes dated January 28, 1998 is hereby GRANTED pursuant to the
provisions of section 10, paragraph (d) of Rule 39 of the 1997 Rules of Civil
Procedure and he is given a period of one (1) year from the issuance of this ORDER
 to remove, cut and appropriate the fruit-bearing trees which he had planted in the
property in disputes (sic).

The COMMENT filed by the Office of the Solicitor General dated August 11, 1998 is
hereby denied for lack of merit.

The [C]omplaint for Injunction filed by Augusto D. Marte on March 2, 1998 against
Danilo Reyes is hereby ordered dismissed for lack of merit.

Petitioner, through the OSG, filed its Motion for Reconsideration [15] which was denied by the RTC.
[16]
Aggrieved, petitioner went to the CA via Certiorari under Rule 65 of the Rules of Civil
Procedure[17] ascribing to the RTC grave abuse of discretion and acting without jurisdiction in
granting Reyes' motion to remove improvements.

However, the CA dismissed the petition for certiorari, and affirmed the ruling of the RTC, in this
wise:

It is notable that in the course of the suit for Cancellation of Title and/or
Reversion there was not an iota of evidence presented on record that Reyes was in bad
faith in acquiring the land nor in planting thereon perennial plants. So it could never
be said and held that he was a planter/sower in bad faith. Thus, this Court holds that
Reyes sowed and planted in good faith, and that being so the appropriate provisions
on right accession are Articles 445 and 448 also of the Civil Code.[18]

Hence, this Petition based on the sole ground that:

THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE

TRIAL COURT HOLDING THAT THE MOTION TO REMOVE
IMPROVEMENTS FILED BY PRIVATE RESPONDENT IS BUT AN INCIDENT
OF THE REVERSION CASE OVER WHICH THE TRIAL COURT STILL HAS
JURISDICTION DESPITE THE FACT THAT THE DECISION IN THE
REVERSION CASE HAD LONG BECOME FINAL AND EXECUTORY.[19]

The OSG posits that Reyes' assailed motion is barred by prior judgment under Section 47, Rule 39
of the 1997 Rules of Civil Procedure because said motion merely sprang from the civil case of
reversion tried and decided on the merits by the RTC, and the decision is already final, after it was
duly affirmed by the CA and by this Court. The OSG stresses that one of Reyes' assigned errors in
the reversion case before the CA was that the RTC erred in not granting his (Reyes') counterclaims
as well as his claims for improvements. The OSG claims that such assigned error was duly resolved
by the CA when it held, to wit:
 The non-award of appellant's counterclaims is understandable.

To begin with, no evidence whatsoever was presented by the appellant to sustain his
plea for damages. In fact, appellant never testified to prove his allegations as regards
his counterclaims.

Then, too, there is no showing that appellant paid the docket fees for the court to
acquire jurisdiction over his purported counterclaims (Metal Engineering Resources
Corp. vs. Court of Appeals, 203 SCRA 273).

Lastly, the allegations made in the Answer in support of the so-called counterclaims
clearly negate the nature of the claims as compulsory counterclaim like that of
reimbursement of the useful expenses (Cabangis vs. Court of Appeals, 200 SCRA
414).[20]

Thus, the OSG posits that the issue of the improvements cannot be made the subject of the assailed
motion on the pretext that such removal of improvements is merely incidental to the reversion case.
The OSG submits that the consideration of the issue is now barred by res judicata. Lastly, the OSG
argues that: the RTC and CA cannot vary a decision which has already attained finality; for purposes
of execution, what is controlling is the dispositive portion of the decision; the RTC, except to order
the execution of a decision which had attained finality, had long lost jurisdiction over the case; and
the RTC erred and acted without jurisdiction when it granted Reyes' motion to remove the
improvements when the dispositive portion of the decision in the reversion case did not provide for
the removal of the same.[21]

In his Comment[22] on the OSG petition, Reyes avers that the points raised by the OSG are merely
rehashed arguments which were adequately passed upon by the CA. He fully agrees with the ruling
of the CA that: he is a planter/sower in good faith, as such, Articles 445 and 448 of the New Civil
Code are applicable; his motion is not entirely a new case, but merely an incident to the reversion
case, a consequence of its grant and a legal solution to an important issue overlooked, if not ignored
by the State and by the courts in their decisions in the reversion case; under Section 10, Rule 39 of
the 1997 Rules of Civil Procedure, he is allowed to remove the improvements; and the instant
Petition failed to abide with the proper manner as to the proof of service required under Section 13,
Rule 13 of the
1997 Rules of Civil Procedure. Most importantly, Reyes avers that the land on which about 1,000
mango trees, 100 mandarin citrus trees and 100 guyabano trees are planted, was leased by the
government to Atty. Marte, who entered into the possession of the subject land when the trees were
already bearing fruits. Thus, if said trees are not removed, Atty. Marte would be unduly enriched as
the beneficiary of these fruits without even spending a single centavo, at the expense of Reyes. Reyes
posits that it is a well-established fact, unrebutted by the petitioner, that he planted these trees and to
deny him the right to remove them would constitute a grave injustice and amount to confiscation
without just compensation which is violative of the Constitution.

The OSG counters that copies of the instant Petition were properly served as shown by the
photocopies of the registry return cards. Moreover, the OSG avers that granting, without admitting,
that another person would stand to be benefited by the improvements that Reyes introduced on the
land is beside the point and is not the fault of the petitioner because the particular issue of the
improvements was already resolved with finality in the reversion case. The OSG claims that a lower
court cannot reverse or set aside decisions or orders of a superior court, for to do so will negate the
principle of hierarchy of courts and nullify the essence of review - a final judgment, albeit erroneous,
is binding on the whole world.[23]

The instant Petition lacks merit.

In an action for reversion, the pertinent allegations in the complaint would admit State ownership of
the disputed land.[24] Indeed, the ownership over the subject land reverted to the State by virtue of the
decisions of the
RTC and CA and our Resolution on the matter. But these decisions simply ordered the reversion of
the property to the State, and did not consider the improvements that Reyes had introduced on the
property or provide him with any remedy relative thereto. Thus, Reyes was left out
in the cold, faced with the prospect of losing not only the land which he thought he owned, but also
of forfeiting the improvements that he painstakingly built with his effort, time and money.

We cannot agree with the OSG that the denial by the CA of Reyes counterclaim in the reversion case
had the effect of completely foreclosing whatever rights Reyes may have over these
improvements. We note that the counterclaim was denied because Reyes failed to prove that it was in
the nature of a compulsory counterclaim, and he did not pay docket fees thereon, even as the CA
found that Reyes never testified to prove his allegations as regards his counterclaims. Yet, the records
of the reversion case reveal that Reyes adduced ample evidence of the extent of the improvements he
introduced and the expenses he incurred therefor. This is reflected in the findings of the CA in the
case at bench, and we concur with the appellate court when it said:
But this Court notes that while Reyes was half-hearted in his opposition to the
reversion, he instead focused on proving the improvements he has introduced on the
land, its extent and his expenses. Despite these proofs, the Decision of April 13,
1992 made no mention nor provision for the improvements on the land. With this
legal vacuum, Reyes could not exercise the options allowed the sower and planter in
good faith. This thus left him no other alternative but to avail of Paragraph (d) of
Section 10 of Rule 39 of the 1997 Rules of Civil Procedure in order to collect or get a
 return of his investment as allowed to a sower and planter in good faith by the Civil
Code.
Correlatively, the courts in the reversion case overlooked the issue of whether Reyes, vis--vis his
improvements, is a builder or planter in good faith. In the instant case, the issue assumes full
significance, because Articles 448[25] and 546[26] of the Civil Code grant the builder or planter in good
faith full reimbursement of useful improvements and retention of the premises until reimbursement is
made. A builder or planter in good faith is one who builds or plants on land with the belief that he is
the owner thereof, unaware of any flaw in his title to the land at the time he builds or plants on it. [27]

On this issue, we are disposed to agree with the CA that Reyes was a planter in good faith. Reyes
was of the belief that he was the owner of the subject land; in fact, a TCT over the property was
issued in his name. He tilled the land, planted fruit trees thereon, and invested money from 1970. He
received notice of the Republics claim only when the reversion case was filed on May 13, 1987. The
trees are now full-grown and fruit-bearing.

To order Reyes to simply surrender all of these fruit-bearing trees in favor of the State -- because the
decision in the reversion case declaring that the land is part of inalienable forest land and belongs to
the State is already final and immutable -- would inequitably result in unjust enrichment of the State
at the expense of Reyes, a planter in good faith.

Nemo cum alterius detrimento locupletari potest.[28] This basic doctrine on unjust enrichment simply
means that a person shall not be allowed to profit or enrich himself inequitably at anothers expense.
[29]
There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when
a person retains money or property of another against the fundamental principles of justice, equity
and good conscience.[30] Article 22 of the Civil Code states the rule in this wise:

ART. 22. Every person who, through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him.

The requisites for the application of this doctrine are present in the instant case. There is enrichment
on the part of the petitioner, as the State would come into possession of -- and may technically
appropriate -- the more than one thousand fruit-bearing trees planted by the private
respondent. There is impoverishment on the part of Reyes, because he stands to lose the
improvements he had painstakingly planted and invested in. There is lack of valid cause for the State
to acquire these improvements, because, as discussed above, Reyes introduced the improvements in
good faith. Thus, the Court of Appeals did not commit any error in ruling that Reyes is entitled to the
benefits of Articles 448 and 546 of the Civil Code.

Thus, even if we accept the OSGs submission that Reyes entitlement to these benefits is not absolute
because he can no longer claim good faith after the filing of the reversion case in 1987, still, there is
no gainsaying that prior to that ― all the way back to 1970 ― he had possessed the land and
introduced improvements thereon in good faith. At the very least, then, Reyes is entitled to these
benefits for the 17 years that he had been a planter in good faith.

However, we are mindful of the fact that the subject land is currently covered by Agro-Forestry Farm
Lease Agreement (AFFLA) No. 175 issued by the Ministry of (now Department of Environment
and) Natural Resources in favor of Atty. Augusto D. Marte, which will expire on December 21,
2011. By the terms of the AFFLA, the lessee shall, among others, do all in his power to suppress
fires, cooperate with the Bureau of Forest Development (BFD) in the protection and conservation of
the forest growth in the area and undertake all possible measures to insure the protection of
watershed and environmental values within the leased area and areas adjacent thereto. This
obligation to prevent any damage to the land subject of the lease is consonant with fundamental
principles and state policies set forth in Section 16, [31] Article II and Section 4,[32] Article XII of the
Constitution.

To allow Reyes to remove the fruit-bearing trees now full-grown on the subject land, even if he is
legally entitled to do so, would be risking substantial damage to the land. It would negate the policy
consideration underlying the AFFLA -- to protect and preserve the biodiversity and the environment,
and to prevent any damage to the land. Further, it would violate the implicit mandate of Article 547
of the Civil Code which provides:

ART. 547. If the useful improvements can be removed without damage to the
principal thing, the possessor in good faith may remove them unless the person who
recovers the possession exercises the option under paragraph 2 of the preceding
article.

In this light, the options that Reyes may exercise under Articles 448 and 546 of the Civil Code have
been restricted. It is no longer feasible to permit him to remove the trees he planted. The only
equitable alternative would be to order the Republic to pay Reyes the value of the improvements he
introduced on the property. This is only fair because, after all, by the terms of the AFFLA, upon the
expiration of the lease or upon its cancellation if there be any violation or breach of its terms, all
permanent improvements on the land shall pass to the ownership of the Republic without any
obligation on its part to indemnify the lessee.

However, the AFFLA is not due to expire until December 21, 2011. In the interim, it is logical to
assume that the lessee, Atty. Augusto D. Marte, will derive financial gain from the fruits that the trees
planted by Reyes would yield. In fact, Atty. Marte may already have profited therefrom in the past
several years. It is, therefore, reasonable to grant the Republic the right of subrogation against the
lessee who may have benefited from the improvements. The Republic may, thus, demand
reimbursement from Atty. Marte for whatever amount it will have to pay Reyes for these
improvements.

As to the OSGs insistent invocation of res judicata and the immutability of final judgments, our
ruling in Temic Semiconductors, Inc. Employees Union (TSIEU)-FFW, et al. v. Federation of Free
Workers (FFW), et al.[33] is instructive:

It is axiomatic that a decision that has acquired finality becomes immutable and
unalterable. A final judgment may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusions of fact and law; and whether it
be made by the court that rendered it or by the highest court in the land. Any act which
violates such principle must immediately be struck down. Indeed, the principle of
conclusiveness of prior adjudications is not confined in its operation to the judgments
of what are ordinarily known as courts, but it extends to all bodies upon which judicial
powers had been conferred.
The only exceptions to the rule on the immutability of a final judgment are: (1) the
correction of clerical errors; (2) the so-called nunc pro tunc entries which cause no
prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire
after the finality of the decision rendering its execution unjust and inequitable.

In the exercise of our mandate as a court of justice and equity, [34] we rule in favor of Reyes pro hac
vice. We reiterate that this Court is not precluded from rectifying errors of judgment if blind and
stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of
justice for technicality.[35] Indubitably, to order the reversion of the subject land without payment of
just compensation, in absolute disregard of the rights of Reyes over the improvements which he, in
good faith, introduced therein, would not only be unjust and inequitable but cruel as well.

WHEREFORE, the instant Petition is DENIED. The Decision dated June 4, 2004 of the Court of
Appeals is AFFIRMED with MODIFICATION in that:
1) The Regional Trial Court of Pinamalayan, Oriental Mindoro, Branch 41, is hereby
DIRECTED to determine the actual improvements introduced on the subject land,
their current value and the amount of the expenses actually spent by private
respondent Danilo Reyes for the said improvements thereon from 1970 until May 13,
1987 with utmost dispatch.
2) The Republic, through the Bureau of Forest Development of the Department of
Environment and Natural Resources, is DIRECTED to pay private respondent Danilo
Reyes the value of such actual improvements
he introduced on the subject land as determined by the Regional Trial Court, with the
right of subrogation against Atty. Augusto D. Marte, the lessee in Agro-Forestry Farm
Lease Agreement No. 175.
G.R. No. 182754 June 29, 2015
SPOUSES CRISPIN AQUINO and TERESA V. AQUINO, herein represented by their
Attorney-in-Fact, AMADOR D. LEDESMA, Petitioners,
vs.
SPOUSES EUSEBIO AGUILAR and JOSEFINA V. AGUILAR, Respondents.
DECISION
SERENO, CJ:
In this Petition for Review on Certiorari1 filed under Rule 45 of the Rules of Court, Petitioner
spouses Crispin and Teresa Aquino (petitioners) assail the Court of Appeals (CA) Decision dated 25
April 20082 in CA-GR SP No. 92778. The CA modified the Decisions of both the Metropolitan Trial
Court (MeTC) and the Regional Trial Court (RTC). The CA ruled that although respondent spouses
Eusebio and Josefina Aguilar (respondents) cannot be considered builders in good faith, they should
still be reimbursed for the improvements they have introduced on petitioners' property.3
THE FACTS
Teresa Vela Aquino (Teresa) and her husband, Crispin Aquino, are the owners of a house and lot
located at No. 6948, Rosal Street, Guadalupe
Since 1981, this property has been occupied by Teresa's sister, Josefina Vela Aguilar; Josefina's
spouse Eusebio; and their family.5 It appears from the record that respondents stayed on the property
with the consent and approval of petitioners, who were then residing in the United States.6
While respondents were in possession of the property, the house previously constructed therein was
demolished, and a three-storey building built in its place.7 Respondents occupied half of the third
floor of this new building)for the next 20 years without payment of rental.8
On 22 September 2003, petitioners sent a letter to respondents informing them that an immediate
family member needed to use the premises and demanding the surrender of the property within 10
days from notice.9 Respondents failed to heed this demand, prompting petitioners to file a Complaint
for ejectment against them before the office of the barangay captain of Guadalupe Viejo.10 The
parties attempted to reach an amicable settlement in accordance with Section 412 of the Local
Government Code, but these efforts proved unsuccessful.11
On 19 November 2003, petitioner spouses Aquino filed a Complaint12 with the MeTC of Makati City
praying that respondents be ordered to (a) vacate the portion of the building they were then
occupying; and (b) pay petitioner a reasonable amount for the use and enjoyment of the premises
from the time the formal demand to vacate was made.13
In their Answer with Counterclaim,14 respondents claimed that they had contributed to the
improvement of the property and the construction of the building, both in terms of money and
management/supervision services. Petitioners purportedly agreed to let them contribute to the costs
of construction in exchange for the exclusive use of a portion of the building. Respondents averred:
2.3 That the construction of the three (3) storey building was also at the uncompensated
supervision of defendant Eusebio Aguilar, of which only r 2 Million was spent by plaintiffs
while defendants spent around r 1 Million as contribution to the construction cost. It was
defendants who introduced improvements on subject lot because at the time plaintiffs bought
the property it was marshy which was filled up by defendants (sic) truck load with builders,
adobe and scumbro that elevated the ground;
2.4 The original agreement was for my client to contribute his share so that they will have the
portion of the subject building for their own exclusive use. It turned out later that the
agreement they had was disowned by plaintiffs when they saw the totality of the building
constructed thereon coupled by the fact, that the value of the lot has tremendously
appreciated due to the commercialization of the vicinity which will command higher price
and windfall profits should plaintiffs sell the property which they are now contemplating on
(sic);
 2.5 The portion which plaintiffs want defendants to vacate is a portion which the latter built
with their own money upon your clients agreement and consent whom they built in good faith
knowing and hoping that later on the same will be theirs exclusively. It was never an act of
generosity, liberality and tolerance. Conversely, it was one of the implied co-ownership or
partnership, because aside from the fact that defendants, who were then peacefully residing in
Laguna, made unquantifiable contributions in terms of money and services arising from his
uncompensated management and supervision over the entire subject property while plaintiffs
are abroad. By legal implications he is an industrial partner responsible for the development
and improvements of the subject property. His contribution was never without the consent of
plaintiffs. Whatever contribution defendants introduced over the said property was made and
built in good faith;15
Since they were allegedly co-owners of the building and builders in good faith, respondents claimed
that they had the right to be compensated for the current value of their contribution.16 Accordingly,
they prayed for the dismissal of the Complaint and the award of ₱5 million as compensation for their
contributions to the construction of the building, as well as moral damages, attorney's fees and costs
of litigation.17
THE RULING OF THE METC
In a Decision18 dated 12 November 2004, the MeTC ruled in favor of petitioners, stating that they
had the right to enjoy possession of the property as the registered owners thereof.19 Since the case
was merely one for ejectment, the court held that it was no longer proper to resolve respondents'
claim of co-ownership over the building.20
The MeTC also declared that respondents were builders in bad faith who were not entitled to recover
their purported expenses for the construction of the building.21 It emphasized that their occupation of
the property was by mere tolerance of petitioners and, as such, could be terminated at any time.22 The
court further noted that in a letter dated 15 July 1983, petitioners had already asked respondents to
refrain from constructing improvements on the property because it was intended to be sold.23
The dispositive portion of the MeTC Decision, which ordered respondents to vacate the property,
reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants Eusebio &
Josefina Aguilar and all persons claiming rights under them to immediately vacate the subject
property, and deliver peaceful possession thereof to the plaintiffs. Defendants are likewise ordered to
pay plaintiffs ₱7,000.00 monthly rental commencing 22 October 2003 until such time that defendant
finally vacate the premises, ₱10,000.00 as and by way of attorney's fees, and the cost of suit.24
On 14 September 2005, respondents appealed the MeTC's Decision to the RTC.25
THE RULING OF THE RTC
In their Memorandum on Appeal26 before the R TC, respondents assailed the MeTC's finding that
petitioners, as the registered owners of the land, were also the owners of the improvement
constructed thereon.27 Respondents asserted that they were co-owners of the building since they built
a portion thereof using their own funds, as evidenced by various receipts they presented before the
MeTC.28
Respondents also maintained that they were builders in good faith. They pointed out that petitioners
never objected to the construction of the improvement on their property.29 According to respondents,
petitioners' letter dated 15 July 1983 was written at a time when an old dilapidated house was still
standing on the property.30 Subsequently however, the house was demolished and the new building
was constructed thereon by respondents, with petitioners' knowledge and consent.31
In a Decision32 dated 3 January 2006, the RTC denied the appeal and affirmed the MeTC's Decision.
According to the court, respondents did not become co-owners of the property although they may
have contributed to the construction of the building thereon.33 Hence, their stay in the premises
remained to be by mere tolerance of the petitioners.34
The RTC also ruled that respondents cannot be considered builders in good faith.35 The court found
that as early as 1983, petitioners had informed respondents of the intention to eventually dispose of
the property.36 The RTC concluded that petitioners never consented to the construction of any form
of structure on the property.37 Since respondents participated in the construction of the building even
after they had been notified that their occupation may be terminated anytime, the R TC ruled that
they did not build the structures in good faith.38 The RTC likewise noted that "the improvements in
question as well as other personal belongings of the appellants were removed from the premises
through a writ of demolition, and these properties are now in their possession."39
THE RULING OF THE CA
Aggrieved by the RTC Decision, respondents elevated the matter to the CA. They reiterated that they
owned one-half of the third floor of the building on the property, having spent their own funds for the
construction thereof. Respondents also asserted that because they built that portion in good faith,
with no objection from petitioners, they were entitled to reimbursement of all necessary and useful
expenses incurred in the construction.
On 25 April 2008, the CA affirmed the conclusion of the lower courts that respondents could not be
considered co-owners of the property or builders in good faith.40 According to the appellate court,
respondents were aware that their right to possess the property had a limitation, because they were
not the owners thereof. They knew that their occupation of the building was by mere tolerance or
permission of petitioners, who were the registered owners of the property. The CA likewise noted
that respondents failed to prove the alleged agreement between the parties with respect to the
ownership of one-half of the third floor of the improvement. There being no contract between them,
respondents are necessarily bound to vacate the property upon demand.41 The CA ruled:
The Supreme Court has consistently held that those who occupy the land of another at the latter's
tolerance or permission, without any contract between them, are necessarily bound by an implied
promise that the occupants will vacate the property upon demand. Based on the principles enunciated
in Calubayan v. Pascual, the status of petitioners is analogous to that of a lessee or a tenant whose
term of lease has expired but whose occupancy continued by tolerance of the owner. In such a case,
the unlawful deprivation or withholding of possession is to be reckoned from the date of the demand
to vacate.42 (Citations omitted)
Nevertheless, the CA declared that respondents should be reimbursed for the necessary and useful
expenses they had introduced on petitioners' property, pursuant to Articles 1678 and 548 of the Civil
Code.43 The dispositive portion of the CA Decision dated 25 April 200844 reads:
WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:
1. The case is REMANDED to the court of origin for further proceedings to determine the
facts essential to the application of Article 1678 and Article 546 of the Civil Code,
specifically on the following matters:
a) To determine the cost of necessary expenses incurred by petitioners during their
period of possession.
b) To determine the cost of useful improvements introduced by petitioners in the
construction of the building.
2. After said amounts shall have been determined by competent evidence:
a) Respondents Aquino are ordered to pay petitioners the costs of necessary
improvements incurred during the period of their occupation.
b) Petitioners Aguilar are to be reimbursed one half (1/2) of the amount they expended
on the construction of the building should respondents decided to appropriate the
same. Should respondents refuse to reimburse the costs of the improvements,
petitioners may remove the improvements even though the principal thing may suffer
damage thereby.
c) In both instances, petitioners shall have no right of retention over the subject
premises.
 d) In any event, petitioners shall pay respondents the amount of Php7,000.00 as
monthly rental commencing 22 October 2003 until such time that petitioners finally
vacate the premises. No pronouncement as to costs.
SO ORDERED.45
Respondents no longer appealed the Decision of the CA. This time, petitioners elevated the matter to
this Court through the instant Petition for Review46 under Rule 45 of the Rules of Court.
PROCEEDINGS BEFORE THIS COURT
In their Petition, petitioners allege that the CA seriously erred in remanding the case to the court of
origin for the purpose of ascertaining the right of respondents to be reimbursed for the improvements
introduced on the property.47 They emphasize that respondents were builders in bad faith, and, as
such, are not entitled to reimbursement under Articles 449, 450 and 451 of the Civil Code.
In their Comment,48 respondents assert that the CA correctly ruled that their status is akin to that of a
lessee or tenant whose term of lease has expired, but whose occupancy continues by virtue of the
tolerance of the owner. They aver that the CA properly upheld their entitlement to reimbursement
pursuant to Articles 167849 and 54650 of the Civil Code.51
In their Reply,52 petitioners argue against supposed improvements constructed by respondents from
1999 to 2003 amounting to ₱995,995.94. Petitioners say this claim is highly ridiculous and
unbelievable.53
OUR RULING
Since respondents no longer appealed the Decision of the CA,54 they are considered bound by its
findings and conclusions. These include its affirmation of the earlier findings of the MeTC and the
RTC that respondents cannot be considered builders in good faith:
Both the MeTC and the RTC have rejected the idea that petitioners are builders in good faith. We
agree. The resolution of the issues at bar calls for the application of the rules on accession under the
Civil Code. The term "builder in good faith" as used in reference to Article 448 of the Civil Code,
refers to one who, not being the owner of the land, builds on that land believing himself to be its
owner and unaware of the land, builds on that land, believing himself to be its owner and unaware of
the defect in h is title or mode of acquisition. The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and absence of intention to overreach another.
In the instant case, the Spouses Aguilar cannot be considered as builders in good faith on account of
their admission that the subject lot belonged to the Spouses Aquino when they constructed the
building. At the onset, petitioners were aware of a flaw in their title and a limit to their right to
possess the property. By law, one is considered in good faith if he is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it.55
Respondents are deemed to have acquiesced to the foregoing findings when they failed to appeal the
CA Decision. A party who does not appeal from a judgment can no longer seek the modification or
reversal thereof.56 Accordingly, the only issue left for this Court to determine is that which is now
raised by petitioners - whether the CA erred in remanding this case to the court of origin for the
determination of the necessary and useful expenses to be reimbursed to respondents pursuant to
Articles 1678 and 546 of the Civil Code.
We resolve to PARTLY GRANT the Petition and modify the ruling of the CA.
Article 1678 is not applicable to this case.
In its Decision, the CA found that respondents were occupants of the property by mere tolerance or
generosity of petitioners and were bound by an implied promise to vacate the premises upon
demand.57
Based on this finding, the CA held that "the status of petitioners is analogous to that of a lessee or a
tenant whose term of lease has expired but whose occupancy continued by tolerance of
owner"58 pursuant to this Court's ruling in Calubayan v. Pascual,59 As a result, the CA concluded that
Articles 1678 and 546 of the Civil Code must be applied to allow respondents to be reimbursed for
their necessary and useful expenses.
We disagree. By its express provision, Article 1678 of the Civil Code applies only to lessees who
build useful improvements on the leased property. It does not apply to those who possess property by
mere tolerance of the owners, without a contractual right.
A careful reading of the statement made by this Court in Calubayan would show that it did not, as it
could not, modify the express provision in Article 1678, but only noted an "analogous" situation.
According to the Court, the analogy between a tenant whose term of lease has expired and a person
who occupies the land of another at the latter's tolerance lies in their implied obligation to vacate the
premises upon demand of the owner. The Court stated:
To begin with, it would appear that although the defendant is regarded by the plaintiffs as a
"squatter" his occupancy of the questioned premises had been permitted or tolerated even before the
Philippine Realty Corporation sold the lots to the plaintiffs. Otherwise, the latter would not have
found him on the premises. It may be true that upon their acquisition of the parcels of land in 1957,
plaintiffs notified and .requested defendant to see them, but despite defendant's failure to heed these
requests, plaintiffs did not choose to bring an action in court but suffered the defendant instead to
remain in the premises for almost six years. Only on February 2, 1963, did the plaintiffs for the first
time notify the defendant that "they now need the two parcels of land in question" and requested him
to vacate the same. In allowing several years to pass without requiring the occupant to vacate the
premises nor filing an action to eject him, plaintiffs have acquiesced to defendant's possession and
use of the premises. It has been held that a person who occupies the land of another at the latter's
tolerance or permission, without any contract between them, is necessarily bound by an implied
promise that he will vacate upon demand, failing which a summary action for ejectment is the proper
remedy against them. The status of defendant is analogous to that of a lessee or tenant whose term of
lease has expired but whose occupancy continued by tolerance of the owner. In such a case, the
unlawful deprivation or withholding of possession is to be counted from the date of the demand to
vacate.60(Emphasis in the original)
It is clear from the above that Calubayan is not sufficient basis to confer the status and rights of a
lessee on those who occupy property by mere tolerance of the owner.
In this case, there is absolutely no evidence of any lease contract between the parties. In fact,
respondents themselves never alleged that they were lessees of the lot or the building in question.
Quite the opposite, they insisted that they were co-owners of the building and builders in good faith
under Article 448 of the Civil Code. For that reason, respondents argue that it was erroneous for the
CA to consider them as lessees and to determine their rights in accordance with Article 1678.
As builders in bad faith, respondents are
not entitled to reimbursement of useful expenses.
Furthermore, even if we were to subscribe to the CA' s theory that the situation of respondents is
"analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy
continued by tolerance," the absence of good faith on their part prevents them from invoking the
provisions of Article 1678.
As discussed above, the MeTC, the RTC and the CA all rejected the claims of respondents that they
were builders in good faith. This pronouncement is considered conclusive upon this Court, in view of
respondents' failure to appeal from the CA decision. This rule bars the application of Article 1678 as
well as Articles 448 and 576 of the Civil Code and all other provisions requiring good faith on the
part of the builder.
We are aware that in some instances, this Court has allowed the application of Article 448 to a
builder who has constructed improvements on the land of another with the consent of the owner.61 In
those cases, the Court found that the owners knew and approved of the construction of improvements
on the property. Hence, we ruled therein that the structures were built in good faith, even though the
builders knew that they were constructing the improvement on land owned by another.
Although the factual circumstances in the instant case are somewhat similar, there is one crucial
factor that warrants a departure from the above-described rulings: the presence of evidence that
petitioners prohibited respondents from building their own structure on a portion of the property.
Based on the findings of fact of the MeTC and the RTC, petitioners had already warned respondents
not to build a structure on the property as early as 1983. The MeTC explained: Likewise, in a letter
dated 15 July 1983 sent by plaintiffs to the defendants marked as Exhibit "2" of defendants' Position
Paper, Teresa Aquino made known to the defendants not to construct on the premises as she planned
to sell the same when the value of the property shall increase (sic). Defendants are undoubtedly
builders in bad faith for despite the prohibition made upon them, they continued their construction
activities upon respondents' property.62
This ruling was affirmed by the R TC in its Decision dated 3 January 2006, which reads:
An examination of appellants' Exhibit "2" which is a letter dated July 15, 1983, sent to appellant
Josefina Aguilar, the sister of appellee Teresa Aquino, abundantly shows that their occupancy of the
premises in question is by tolerance of the appellees. Thus, the letter expressly states that the
appellants are advised not to put up a shop, as the appellees had plan (sic) then of disposing the
property (the land) in question for a reasonable profit after a period of three or four years, thereby
placing on notice them (appellants) that their possession of the said property is temporary in nature
and by mere generosity of the appellees, they being sisters.
The letter likewise advised them to apply for a housing project so that by the time the property in
question is sold, they have a place to transfer to. All these undisputed antecedents which can be
considered as judicially admitted by the appellants being their own evidence marked as Exhibit "2",
coupled with the fact that since the time they occupied the premises in 1983 up to the time when the
complaint was filed, they were not asked to pay any monthly rental for the use, enjoyment and
occupancy of the said property, ineluctably established the fact that their possession of the said
property is by mere tolerance of the appellees.63
xxxx
Their contention that pursuant to Article 453 of the Civil Code, they should be considered builders in
good faith even if they have acted in bad faith, since their act of introducing improvements to one-
half of the third floor of the three storey building was with knowledge and without opposition on the
part of the appellants, cannot be sustained, principally on the ground that as stated earlier, their
Exhibit "2" is very limpid on the act that they were already forewarned as early as 1983 not to
introduce any improvements thereon as the property is slated to be sold as it was only bought for
investment purposes. The fact that the appellees did not thereafter remind them of this, is of no
moment, as this letter was not likewise withdrawn by a subsequent one or modified by the
appellees.64
We find no reason to depart from the conclusions of the trial courts. Respondents were evidently
prohibited by petitioners from building improvements on the land because the latter had every
intention of selling it. That this sale did not materialize is irrelevant. What is crucial is that petitioners
left respondents clear instructions not to build on the land.
We also agree with the RTC's ruling that the lack of constant reminders from petitioners about the
"prohibition" expressed in the 1983 letter was immaterial. The prohibition is considered extant and
continuing since there is no evidence that this letter was ever withdrawn or modified. Moreover, no
evidence was presented to show that petitioners were aware of what was happening: that respondents
were constructing a portion of the building with their own funds and for their exclusive use and
ownership. Neither were respondents able to present evidence that petitioners had agreed to share the
expenses with them, or that the former had given consent to the latter's contribution, if any.
In view of the foregoing, this Court's previous rulings on Article 448 cannot be applied to this case.
Hence, we hold that petitioners, as the owners of the land, have the right to appropriate what has
been built on the property, without any obligation to pay indemnity therefor;65 and that respondents
have no right to a refund of any improvement built therein,66 pursuant to Articles 449 and 450 of the
Civil Code:
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built,
planted or sown without right of indemnity.
Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.
Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the
builder, planter or sower.
Respondents may recover the
necessary expenses incurred for the
preservation of the property but
without the right of retention.
Pursuant to Article 452 of the Civil Code, a builder in bad faith is entitled to recoup the necessary
expenses incurred for the preservation of the land.67 The CA correctly ruled that respondents in this
case are similarly entitled to this reimbursement. However, being builders in bad faith, they do not
have the right of retention over the premises.68
While the evidence before this Court does not establish the amount of necessary expenses incurred
by respondents during their stay in the property, we note that even petitioners do not deny that such
expenses were incurred. In fact, in a letter dated 15 July 1983, petitioners acknowledged that
respondents had spent personal money for the maintenance of the property. Petitioners even
promised to reimburse them for those expenses.69 In this light, we find it proper to order the remand
of this case to the court a quo for the purpose of determining the amount of necessary expenses to be
reimbursed to respondents.
With respect to the award of actual damages to petitioners, we find no reason to reverse or modify
the ruling of the CA.1âwphi1 This Court has consistently held that those who occupy the land of
another at the latter's tolerance or permission, even without any contract between them, are
necessarily bound by an implied promise that the occupants would vacate the property upon
demand.70 Failure to comply with this demand renders the possession unlawful and actual damages
may be awarded to the owner from the date of the demand to vacate71 until the actual surrender of the
property.
Accordingly, we affirm the CA's award of actual damages to petitioners in the amount of ₱7 ,000 per
month from the date of demand (22 October 2003) until the subject properties are vacated. This
amount represents a reasonable compensation for the use and occupation of respondents'
property72 as determined by the RTC and the MeTC.
As to petitioners' prayer for attorney's fees, we find no cogent basis for the award. WHEREFORE,
the Petition is PARTLY GRANTED.
The Court of Appeals Decision dated 25 April 2008 is REVERSED insofar as it ordered: (a) the
reimbursement of the useful expenses incurred by respondents while in possession of the property;
and (b) the determination of the cost of these useful improvements by the court of origin. The rest of
the Decision of the Court of Appeals is hereby AFFIRMED.
Accordingly, this case is REMANDED to the court of origin for the determination of the necessary
expenses of preservation of the land, if any, incurred by respondent spouses Eusebio and Josefina
Aguilar while they were in possession of the property, which expenses shall be reimbursed to them
by petitioner spouses Crispin and Teresa Aquino.
On the other hand, respondents and all persons claiming rights under them are ordered, upon finality
of this Decision without awaiting the resolution of the matter of necessary expenses by the trial
court, to immediately VACATE the subject property and DELIVER its peaceful possession to
petitioners. Respondents are likewise ordered to PAY petitioners ₱7 ,000 as monthly rental plus
interest thereon at the rate of 6% per annum, to be computed from 22 October 2003 until the finality
of this Decision.
No pronouncement as to costs.