G.R. NO. 170923 JANUARY 20, 2009 1.
1. Petitioners Ismael and Teresita Macasaet and Respondents Vicente and Rosario
SULO SA NAYON, INC. VS NAYONG PILIPINO FOUNDATION
FACTS:
In 1975, respondent leased a portion of the Nayong Pilipino Complex, to petitioner
Sulo sa Nayon, Inc. for the construction and operation of a hotel building, to be known as the
Philippine Village Hotel. The lease was for an initial period of 21 years, or until May 1996. It is
renewable for a period of 25 years under the same terms and conditions upon due notice in
writing to respondent of the intention to renew.
In 1995, petitioners sent respondent a letter notifying the latter of their intention to
renew the contract for another. July of the same year, parties agreed to the renewal of the
contract for another 25 years, or until 2021. Under the new agreement, petitioner PVHI was
bound to pay the monthly rentals
Beginning January 2001, petitioners defaulted in the payment of their monthly
rental. Respondent repeatedly demanded petitioners to pay the arrears and vacate the
premises.
MeTC rendered its decision in favor of respondent
RTC which modified the ruling of the MeTC.
CA which held that the RTC erroneously applied the rules on accession, as found in
Articles 448 and 546 of the Civil Code
ISSUE:
WON Sulo sa Nayon as builders have acted in good faith in order for Art. 448 in
relation to Art. 546 of the Civil Code may apply with respect to their rights over improvements.
HELD:
Article 448 is manifestly intended to apply only to a case where one builds, plants,
or sows on land in which he believes himself to have a claim of title, and not to lands where
the only interest of the builder, planter or sower is that of a holder, such as a tenant.
In the case at bar, petitioners have no adverse claim or title to the land. In fact, as
lessees, they recognize that the respondent is the owner of the land. What petitioners insist
is that because of the improvements, which are of substantial value, that they have introduced
on the leased premises with the permission of respondent, they should be considered builders
in good faith who have the right to retain possession of the property until reimbursement by
respondent.
We affirm the ruling of the CA that introduction of valuable improvements on the leased
premises does not give the petitioners the right of retention and reimbursement which
rightfully belongs to a builder in good faith. Otherwise, such a situation would allow the
lessee to easily "improve" the lessor out of its property. We reiterate the doctrine that a
lessee is neither a builder in good faith nor in bad faith that would call for the application of
Articles 448 and 546 of the Civil Code. His rights are governed by Article 1678 of the Civil
Code.
Macasaet vs Macasaet G.R. 154391 92 September 30, 2004
Issues and Ruling:
Facts:
Macasaet are first-degree relatives. Ismael is the son of respondents, and Teresita
is his wife.
2. The parents alleged that they were the owners of two (2) parcels of land covered by
Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141, situated in Banay-
banay, Lipa City; that by way of a verbal lease agreement, their son and his wife
occupied these lots in March 1992 and used them as their residence and the situs of
their construction business.
3. Ismael and Teresita denied the existence of any verbal lease agreement. They
claimed that their parents had invited them to construct their residence and business
on the subject lots. They added that it was the policy of their parents to allot the the
land owned as an advance grant of inheritance in favor of their children. Thus, they
contended that the lot covered by TCT no. T-103141 had been allotted to Ismael as
advance inheritance. On the other hand, the lot covered by TCT-78521 was allegedly
given to petitioners as payment for construction materials used in the renovation of
their parents house.
4. On December 10, 1997, the parents filed with the MTCC of Lipa City an ejectment
suit against their children for failure to pay the agreed rental despite repeated
demands.
5. The MTCC ruled in favor of the parents and ordered the children to vacate the
premises. It opined that the children had occupied the lots, not by virtue of a verbal
lease agreement but by tolerance of the parents. As their stay was by mere
tolerance, the children were necessarily bound by an implied promise to vacate the
lots upon demand. The MTCC dismissed their contention that one lot had been
allotted as an advance inheritance, on the ground that succcesional rights were
inchoate. It disbelieved that the other parcel had been given as payment for
construction material.
6. On appeal, the RTC upheld the findings of the MTCC. RTC allowed the parents to
appropriate the building and other improvements introduced by the children, after
payment by indemnity provided for bt Article 448 in relation to Article 546 and 548
of the Civil Code.
7. On an appeal by both parties to the CA which were consolidated, the CA sustained
the finding of the lower courts that the children had been occupying the subject lots
only by the tolerance of their parent. Thus, possession of the subject lots by the
children became illegal upon their receipt of letter to vacate it. The CA modified the
RTC Decision by declaring that Article 448 of the Civil Code was inapplicable. The CA
opined that under Article 1678 of the same Code, the children had the right to be
reimbursed for one half of the value of the improvements made.
8. Not satisfied with the CAs ruling, the children brought the case to the Supreme
Court.
1. WON the children can be ejected

a. Based on the parents love reasons for gratuitously allowing the children to use
the lots, it can be safely concluded that the agreement subsisted as long as the
parents and the children benefitted from the arrangement. Effectively, there is
a resolutory condition existing between the parties occurs like a change of
ownership, necessity, death of either party or unresolved conflict or animosity
the agreement maybe deemed terminated. When persistent conflict and
animosity overtook the love and solidarity between the parents and the children,
the purpose of the agreement ceased. The children had any cause for continued
possession of the lots. Their right to use became untenable. It ceased upon
their receipt of the notice to vacate. And because they refused to heed the
demand, ejectment was the proper remedy against them.
b. The children had no right to retain possession. The right of the children to
inherit from their parents is merely inchoate and is vested only upon the latters
demise. Rights of succession are transmitted only from the moment of death of
the decedent. Assuming that there was an allotment of inheritance,
ownership nonetheless remained with the parents.
c. The childrens allegation that the indebtness of their parent to them has been
paid through dation cannot be given credence as there were no sufficient proof
of a settlement or contract of dation to settle the alleged debt, and is
inconsistent of the separate action by the children to recover the same debt.
d. As a rule, the right of ownership carries with it the right of possession.
2. Rights of a Builder in Good faith
a. As applied to the present case, accession refers to the right of owner to
everything that is incorporated or attached to the property. Accession industrial
building, planting and sowing on an immovable is governed by Articles 445
to 456 of the Civil Code.
b. As the court found that the children possession of the two lots was not by mere
tolerance, the applicable rule would be Article 448. This article has been applied
to cases wherein a builder had constructed improvements with the consent of
the owner.
[G.R. No. 149295. September 23, 2003]
PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS
FACTS:
Respondent filed a complaint against petitioner before the Regional Trial Court of Occidental
Mindoro for recovery of ownership and possession, with damages, over the questioned
property. On 26 March 1993, he had caused a verification survey of the property and
discovered that the northern portion of the lot was being encroached upon by a building of
petitioner to the extent of 124 square meters. Despite two letters of demand sent by
respondent, petitioner failed and refused to vacate the area.
Petitioner asserted that when it acquired the lot and the building sometime in 1981 from then
Mayor Bienvenido Ignacio, the encroachment already was in existence and to remedy the
situation, Mayor Ignacio offered to sell the area in question (which then also belonged to
Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed to have
accepted. The sale, however, did not materialize when, without the knowledge and consent
of petitioner, Mayor Ignacio later mortgaged the lot to the Development Bank of the
Philippines.
The trial court decided the case in favor of respondent declaring him to be the rightful owner.
The Court of Appeals sustained the trial court.
ISSUE: W/N PETITIONER IS A BUILDER IN GOOD FAITH
HELD:
In reference to Article 448, et seq., of the Civil Code, a builder in good faith is one who, not
being the owner of the land, builds on that land believing himself to be its owner and unaware
of any defect in his title or mode of acquisition.
The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a
superior claim, and absence of intention to overreach another. Applied to possession, one is
considered in good faith if he is not aware that there exists in his title or mode of acquisition
any flaw which invalidates it. Evidently, petitioner was quite aware, and indeed advised, prior
to its acquisition of the land and building from Ignacio that a part of the building sold to it
stood on the land not covered by the land conveyed to it.
Equally significant is the fact that the building, constructed on the land by Ignacio, has in
actuality been part of the property transferred to petitioner. Article 448, of the Civil Code refers
to a piece of land whose ownership is claimed by two or more parties, one of whom has built
some works (or sown or planted something) and not to a case where the owner of the land is
the builder, sower, or planter who then later loses ownership of the land by sale or otherwise
for, elsewise stated, where the true owner himself is the builder of works on his own land, the
issue of good faith or bad faith is entirely irrelevant.
In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil
Code.
PLEASANTVILLE DEVELOPMENT CORPORATION VS. COURT OF APPEALS
G.R. NO. 79688 253 SCRA 10 FEBRUARY 1, 1996
PONENTE: PANGANIBAN, J.
Doctrine: Good faith consists in the belief of the builder that he land he is building on is his
and his ignorance of any defect or flaw in his title. The burden of proving bad faith belongs to
the one asserting it.
Facts: Edith Robillo purchased from Pleasantville Development Corporation, herein petitioner
a parcel of land at Pleasantville Subdivision, Bacolod City. The property was designated as Lot
9, Phase II. In 1975, herein respondent Eldred Jardinico bought the said subject lot from the
former purchaser. Eldred later discovered that the property he purchased had improvements
introduced therein by respondent Wilson Kee.
Keep on the other hand bought on installments Lot 8 of the same subdivision from
C.T. Torres Enterprises, Inc. (CTTEI) which is the exclusive real estate agent of the petitioner.
Under the contract Kee was allowed to take possession of the property even before full
payment of the price. CTTEI through an employee, Zenaida Octaviano accompanied Kees wife
Donabelle to inspect Lot No. 8. Octaviano however mistakenly pointed towards Lot 9. Hence
spouses Kee had their residence, an auto repair shop, a store and other improvements
constructed on the wrong lot.
Upon discovery of the blunder both Kee and Jardinico tried to reach an amicable settlement
but they failed. Jardinico demanded that the improvements be removed but as Kee refused,
Jardinico filed a complaint for ejectment with damages against Kee at the Municipal Trial Court
in Cities (MTCC) of Bacolod City. Kee filed a third-party complaint against herein petitioner
and CTTEI.
The MTCC found that the error was attributable to CTTEI also since at present the contract
with Kee has rescinded for Kees failure to pay installments. Kee no longer had any right over
the subject property and must pay rentals for its use. The Regional Trial Court (RTC) of
Bacolod City ruled that petitioner and CTTEI were not at fault or were not negligent. It argued
that Kee was a builder in bad faith. Even if assuming that he was in good faith, he was no
longer so and must pay rentals from the time that he was given notice to vacate the lot. The
Court of Appeals ruled that Kee was a builder in good faith as he was unaware of the mix-up
when he constructed the improvements. It was in fact due to the negligence and wrongful
delivery of CTTEI which included its principal the herein petitioner. It further ruled that the
award of rental was without basis.
Pending the resolution of the case at the Court of Appeals Jardinico and Kee entered into a
deed of sale, wherein Lot 9 was sold to Kee. In the said deed a provision stating that regardless
of the outcome of the decision, such shall not be pursued by the parties and shall be
considered dismissed and without effect. The appellate court was not informed of this deal.
Issue: Whether or not a lot buyer who constructs improvements on the wrong property
erroneously delivered by the owners agent, a builder in good faith?
Held: Yes. Article 527 of the Civil Code provides the presumption that petitioner has the
burden of proving that Kee was a builder in bad faith. Kee may be made liable for the violation
of the contract with CTTEI but this may not be used as a basis of bad faith and as a sufficient
ground to negate the presumption of good faith. Jardinico is presently only allowed to file a
complaint for unlawful detainer. Good faith is based on the belief of the builder that the land
he is building on is his and his ignorance of any flaw or defect in is title. Since at the time
when Kee constructed his improvements on Lot 8, he was not aware that it was actually Lot
9 that was delivered to him. Petitioner further contends that Kee was negligent as a provision
in the Contract of Sale on Installment stated that the vendee must have personally examined
the property and shall bear on his own the consequential expenses in the changes that may
happen thereon. The court held that such provision cannot be interpreted as a waiver of the
vendees right to recover damages resulting from petitioners negligence. Such interpretation
of the waiver is contrary to law and public policy and cannot be allowed. Petitioner cannot
claim and excuse itself from liability by claiming that it was not directly involved in the delivery
of the property. The principal must be responsible for the acts of the agent done within the
scope of his authority. CTTEI was the sole real estate representative of the petitioner when
the delivery was made. Wilson Kee is therefore declared a builder in good faith. Petitioner and
respondent CTTEI are declared solidarily liable for damages due to negligence. The award of
rentals to Jardinico is dispensed with.
Agustin v IAC
Facts:
In 1919, Cagayan river separated the land of Pablo binayug, maria melad. The
western part is the Solana where binayug and meladas lots were located (corn, and tobacco
were planted) and the eastern part is the tuguegarao where the lots of agustin is situated. As
the years went by, the Cagayan River moved gradually eastward, depositing silt on the western
bank. The shifting of the river and the siltation continued until 1968. Through the years, the
river eroded the lands of agustin and deposited alluvium to the lands of melad and binayug.
However, in 1968, after a big flood, the Cagayan River changed its course, returned
to its 1919 bed, and, in the process, cut across the lands of Maria Melad, Timoteo Melad, and
the spouses Pablo Binayug and Geronima Ubina whose lands were transferred on the eastern,
or Tuguegarao, side of the river. To cultivate those lots they had to cross the river. In April,
1969, while the private respondents and their tenants were planting corn on their lots located
on the eastern side of the Cagayan River, the petitioners, accompanied by the mayor and
some policemen of Tuguegarao, claimed the same lands as their own and drove away the
private respondents from the premises.
Issue: who owns the land deposited to the eastern part after the flood.
Held:
Same; Same; Same; Essential requisites before accretion benefits a riparian owner.Accretion
benefits a riparian owner when the following requisites are present: (1) that the deposit be
gradual and imperceptible; (2) that it resulted from the effects of the current of the water;
and (3) that the land where accretion takes place is adjacent to the bank of a river.
Same; Same; Same; Accretions belong to the riparian owners upon whose lands the alluvial
deposits were made, reason.These accretions belong to riparian owners upon whose lands
the alluvial deposits were made (Roxas vs. Tuason, 9 Phil. 408; Director of Lands vs. Rizal, 87
Phil. 806). The reason for this principle is because, if lands bordering on streams are exposed
to floods and other damage due to the destructive force of the waters, and if by virtue of law
they are subject to encumbrances and various kinds of easements, it is only just that such
risks or dangers as may prejudice the owners thereof should in some way be compensated by
the right of accretion.
Art. 459. Whenever the current of a river, creek or torrent segregates from an estate on its
bank a known portion of land and transfers it to another estate, the owner of the land to which
the segregated portion belonged retains the ownership of it, provided that he removes the
same within two years.
Art. 463. Whenever the current of a river divides itself into branches, leaving a piece of land
or part thereof isolated, the owner of the land retains his ownership. He also retains it if a
portion of land is separated from the estate by the current. (Emphasis supplied).
In the case at bar, the sudden change of course of the Cagayan River as a result of a strong
typhoon in 1968 caused a portion of the lands of the private respondents to be separated
from the estate by the current. The private respondents have retained the ownership of the
portion that was transferred by avulsion to the other side of the river.
JAGUALING vs. CA
GR No. 94283 March 4, 1991
SUBJECT: Accession; Art. 465
FACTS:
Private respondent Janita Eduave claims that she inherited the disputed land from
his father, Felomino Factura, and acquired sole ownership of the property by virtue
of a Deed of Extra Judicial Partition with sale. Also, the land is declared for tax
purposes.
In 1964, the land was eroded due to typhoon Ineng, destroying the bigger portion
and the improvements leaving only a coconut tree.
In 1966, due to the movement of the river deposits on the land that was not eroded
increased the area to almost half a hectare.
In 1970, the appellant started to plant bananas.
In 1973, the petitioners asked petitioners permission to plant corn and bananas
provided that they prevent squatters to come to the area.
The PR engaged the services of a surveyor who conducted a survey and placed
concrete monuments over the land. She also paid taxes on the disputed land, and
mortgaged the land to the Luzon Surety and Co.. Also, an application for concession
with the Bureau of Mines to extract gravel was granted to the PR.
PR filed with the RTC an action to quiet title and/or remove a cloud over the property
in question against petitioners.
RTC: dismissed the complaint. Ruled that the island is a delta forming part of the river bed
which the government may use to reroute, redirect or control the course of the Tagaloan
River, hence, outside the commerce of man and part of the public domain (Art. 420.)
CA: reversed the RTCs decision. Ruled that the island was formed by the branching off of the
Tagoloan River and subsequent thereto the accumulation of alluvial deposits. Declared PR as
the lawful and true owners of the disputed land and ordered petitioner to vacate.
ISSUE: Whether the one who has actual possession of an island that forms in a non-navigable
and non-floatable river and the owner of the land along the margin nearest the island had a
better right of ownership.
HELD: The owner of the land along the margin nearest the island had a better right.
The trial court disregarded the testimony of the private respondents (payment of land taxes,
monuments places by the surveyor, agreement entered into to extract gravel and sand,
presentation in evidence the testimony of 2 witnesses) without explaining why it doubted their
credibility and instead merely relied on the self-serving denial of petitioners.
The CA properly applied Art. 463 of the Civil Code which allows the ownership over a portion
of land separated or isolated by river movement to be retained by the owner thereof prior to
such separation or isolation.
- It is clear petitioners do not dispute that the land in litigation is an island that appears in a
non-flotable and non-navigable river; they instead anchor their claim on adverse possession
for about 15 years. It is not even controverted that PR are the owners of a parcel of land along
the margin of the river and opposite the island. On the other hand, private respondents do
not dispute that the island in question has been in the actual physical possession of petitioners;
private respondents insist only that such possession by petitioners is in the concept of
caretakers thereof with the permission of private respondents.
Art. 465 of the Civil Code apply in the case. Under this provision, the island belongs to the
owner of the land along the nearer margin as sole owner thereof; or more accurately, because
the island is longer than the property of private respondent, they are ipso jure to be the
owners of that portion which corresponds to the length of their property along the margin of
the river.
It is well-settled that lands formed by accretion belong to the riparian owner. This preferential
right is, under Art. 465, also granted the owners of the land located in the margin nearest the
formed island for the reason that they are in the best position to cultivate and attend to the
exploitation of the same. In fact, no specific possession over the accretion is required. If
however, the riparian owner fails to assert his claim thereof, the same may yield to the adverse
possession of 3rd parties.
- the petitioners, however, cannot acquire the said property by adverse possession for the
required number of years under the doctrine of acquisitive prescription because the latter is
not in good faith in occupying the land. Hence, not qualifying as possessors in good faith, they
may acquire ownership over the island only through uninterrupted adverse possession for a
period of 30 years. By their own admission, petitioners have been in possession of the property
for only about 15 years. Thus, the island cannot be adjudicated in their favor.
Since the case is not between parties as opposing riparian owners contesting ownership over
an accession but rather between a riparian owner and the one in possession of the island,
there is no need to make final determination regarding the origins of the island.
 OFFICE OF THE CITY MAYOR OF PARAAQUE CITY v. MARIO D. EBIO AND HIS ART. 84. Accretions deposited gradually upon lands contiguous to creeks, streams, rivers, and
CHILDREN/HEIRS lakes, by accessions or sediments from the waters thereof, belong to the owners of such lands.

G.R. No. 178411 June 23, 2010 Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.
FACTS:
It is therefore explicit from the foregoing provisions that alluvial deposits along the
Respondents claim to be absolute owners of a 406 sqm. parcel of land in Paraaque City banks of a creek do not form part of the public domain as the alluvial property automatically
covered by Tax in the name of respondent Mario D. Ebio. Said land was an accretion of Cut- belongs to the owner of the estate to which it may have been added. The only restriction
cut creek. provided for by law is that the owner of the adjoining property must register the same under
the Torrens system; otherwise, the alluvial property may be subject to acquisition through
Respondents assert that the original occupant and possessor land was their great grandfather,
prescription by third persons.
Jose Vitalez, which was given to his son, Pedro Valdez, in 1930. From then on, Pedro
continuously and exclusively occupied and possessed the said lot. In 1966, after executing an In contrast, properties of public dominion cannot be acquired by prescription. No matter how
affidavit declaring possession and occupancy. He also paid taxes for the land. long the possession of the properties has been, there can be no prescription against the State
regarding property of public domain. Even a city or municipality cannot acquire them by
Meanwhile, in 1961, respondent Mario Ebio married Pedros daughter, Zenaida. In April
prescription as against the State.
1964 and in October 1971, Mario Ebio secured building permits from the Paraaque municipal
office for the construction of their house within the land. On April 21, 1987, Pedro transferred Hence, while it is true that a creek is a property of public dominion, the land which is
his rights over the land in favor of Ebio. formed by the gradual and imperceptible accumulation of sediments along its banks does not
form part of the public domain by clear provision of law.
On March 30, 1999, the Office of the Sangguniang Barangay of Vitalez passed
Resolution No. 08, series of 1990 seeking assistance from the City Government of Paraaque
for the construction of an access road along Cut-cut Creek located in the said barangay. The
proposed road will run from Urma Drive to the main road of Vitalez Compound traversing the
lot occupied by the respondents. Respondents immediately opposed and the project was
suspended.

In January 2003, however, respondents were surprised when several officials from the
barangay and the city planning office proceeded to cut eight (8) coconut trees planted on the
said lot.

On March 28, 2005, the City Administrator sent a letter to the respondents ordering
them to vacate the area within the next thirty (30) days, or be physically evicted from the said
property. Respondents sent a reply, asserting their claim over the subject property and
expressing intent for a further dialogue. The request remained unheeded.

Threatened of being evicted, respondents went to the RTC of Paraaque City on April
21, 2005 and applied for a writ of preliminary injunction against petitioners.

ISSUE:

Whether or not the State may build on the land in question.

HELD:

No.

It is an uncontested fact that the subject land was formed from the alluvial deposits
that have gradually settled along the banks of Cut-cut creek. This being the case, the law that
governs ownership over the accreted portion is Article 84 of the Spanish Law of Waters of
1866, which remains in effect, in relation to Article 457 of the Civil Code.