Republic of the Philippines land to the municipality for use as a school site and the land of Felisa was
school site and the land of Felisa was what the municipality
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-22006 July 28, 1975
BASILIO PEREZ and PETRA MONTALBO, petitioners,
vs.
NICOLAS MENDOZA, MARGARITA MACALALAD and the HONORABLE COURT OF
APPEALS, respondents.
Pedro T. Panganiban for petitioners.
Julio D. Enriquez, Sr. for respondents.
MUNOZ PALMA, J.:
Civil Case 689 of the Court of First Instance of Batangas was an action to quiet title over a piece
of land filed on March 20, 1959, by spouses Basilio Perez and Petra Montalbo with spouses
Nicolas Mendoza and Margarita Macalalad as defendants. According to the complaint, the land in
controversy is located in barrio Dagatan, municipality of Taysan, Batangas, with an area of
approximately 4,765 sq. meters, declared for taxation purposes in the name of the "Heirs of
Estanislao Montalbo", and is "bounded on the north by a school site, on the east by Calixto Flores,
on the south by a creek, and on the west by a creek and the land of Gregorio Mendoza." On the
basis of evidence adduced by the parties, the trial court then presided by Hon. Lorenzo Relova
rendered judgment on February 19, 1962, dismissing the complaint and declaring the spouses
Mendoza "to have a better right to the property in question."1
Spouses Perez elevated the Relova decision to the Court of Appeals which, however, affirmed in
toto the findings of the court a quo, and declared that "upon the evidence it has been shown by a
great preponderance that the land in question belongs to the defendants."2
The case is now before Us on a petition for certiorari filed by spouses Perez.
The findings of fact both of the trial court and the Court of Appeals may be briefly summarized as
follows:
The litigated parcel of land was originally part of a bigger tract owned by Estanislao Montalbo.
When Estanislao died in 1918, his properties passed on to his children Petra, Felisa, and Pedro all
surnamed Montalbo, and because Pedro died single the two women remained as the only heirs.
By mutual agreement Petra and Felisa divided between themselves the lands of their father and
the parcel of which the litigated land was a part was assigned to Felisa. Sometime in 1922 Felisa
exchanged the above-mentioned parcel with a land belonging to her aunt. Andrea Montalbo, a
sister of her father. The reason for the exchange was that Andrea wanted to donate a piece of
preferred as it was adjacent to other properties of the municipality. (Exh. 5 for defendants
Mendoza) Upon her acquisition of Felisa's aforementioned land, Andrea donated to the
municipality the northern portion thereof which constituted almost one-half of the entire parcel, and
since then that portion was declared for taxation purposes by the municipality together with its
adjoining properties (Exhs. 6, 6-A, 6-B).1äwphï1.ñët In 1927 the remainder of the lot was given by
Andrea Montalbo to her daughter Margarita Macalalad on the occasion of her marriage to Nicolas
Mendoza, and from the time of their marriage the couple possessed the said property. That
donation was confirmed subsequently in a public instrument dated August 15, 1951 (Exh. 2 for the
Mendozas). Nicolas Mendoza sought to transfer the tax declaration of the property to his name
and of his wife and for that purpose he submitted a deed of exchange of property dated January
14, 1922, allegedly executed by Felisa Montalbo and Andrea Montalbo in the presence of the
municipal secretary Rafael Manahan (Exh. 5). When Basilio Perez came to know about the
supposed deed of exchange, he had it investigated and upon discovering that the signature of
Rafael Manahan appearing on the document was forged, he filed a criminal complaint before the
Fiscal's office which led to an accusation for falsification of private document against Andrea
Montalbo and Nicolas Mendoza. Only Nicolas Mendoza was arraigned and tried and was
convicted by the Court of First Instance of Batangas, but on appeal he was acquitted by the Court
of Appeals for insufficiency of evidence to show that he participated in affixing the signature of
Rafael Manahan or that he was aware of the falsity of the document in question when he
presented it to the tax assessor's office.3 Notwithstanding the forged signature of Rafael Manahan
on the document Exhibit 5, there is sufficient evidence to prove that an exchange of property did in
fact occur in 1922 between Andrea and Felisa Montalbo, and that Felisa's land passed on to
Andrea who in turn gave part of it to the municipality and part to her daughter, Margarita; hence,
the decision in favor of the spouses Mendoza.
On the other hand, petitioners contend that the disputed property was inherited by Petra and
Felisa Montalbo from their father Estanislao who died in 1918 and since that date the two sisters
were in possession of said land. In 1934 a deed of partition of the various properties of Estanislao
was executed between Petra and the heirs of Felisa, and the land in question was divided equally,
between them; among those who signed as witnesses to that agreement was Andrea
Montalbo(Exh. D for petitioners). In 1952 Felisa's husband, Jose Ortega, and children sold their
one-half share to spouses Petra Montalbo and Basilio Perez, now petitioners, but the deed of sale
was lost a year after. Sometime in 1946 petitioners leased the property to the Mendozas and
when the lease expired in 1951 they demanded for the return of the land but the Mendozas
refused and so petitioners had to file an ejectment suit before the justice of the peace court of
Taysan which was still pending at the time of the trial of the civil case in 1960. (tsn. witness Basilio
Perez, December 15, 1960, pp. 16-34)
For not giving credit to the foregoing evidence, petitioners now assail the adverse decision of
respondent court on four assigned errors.
1. Petitioners contend that respondent court erred in considering the criminal case for
falsification res adjudicata on the matter of ownership of the land in litigation when the "question of
ownership was not actually and directly in issue in the criminal case and the latter was not the
proper vehicle for the determination of the ownership of the land." (p. 9, petitioners brief)
Petitioners refer to portions in the decision of respondent court, viz:
 The land in question, together with that portion that was acquired by the
municipality of Taysan, the identity of which is admitted by the parties, belonged
to Felisa Montalbo, as held in the decision of the Court of Appeals, thus — "The
said parcel of land previously belonged to Felisa Montalbo (married to Jose
Ortega), who inherited it from her deceased father, the aforecited Estanislao
Montalbo;", and the land in question was donated propter nuptias by Andrea
Montalbo to Margarita Macalalad and Nicolas Mendoza, the defendants,
(Margarita Macalalad is the daughter of Andrea Montalbo) on the occasion of
their marriage on February 27, 1927, as found and held in the decision of the
Court of Appeals, thus — "and this land was acquired by the donor (Andrea
Montalbo) by means of a barter with her own parcel of land planted with
bamboos and mango trees"
Upon the basis of the findings of fact and conclusion arrived at in the decision of
the Court of Appeals, it clearly appears that although the document of exchange
of the lands was found to be falsified, nevertheless the Court found upon the
facts as demonstrated by the evidence that the land in question "previously
belonged to Felisa Montalbo (married to Jose Ortega), who inherited it from her
deceased father, the aforesaid Estanislao Montalbo ..."; that said land was
donated propter nuptias by Andrea Montalbo to the defendants on the occasion
of their marriage on February 27, 1927; and that "this land was acquired by the
donor by means of a barter with her own parcel of land planted with bamboos
and mango trees". From the context of the decision the natural and logical
inference is that factually the exchange of the lands had been consummated....
(pp. 6-7, CA decision at pp. 20-21, rollo; emphasis supplied to indicate disputed
statements)
Undoubtedly, there is merit to the contention of petitioners that the pronouncements or findings of
fact made by the Court of Appeals in the criminal case concerning the possession and ownership
of the land now in litigation in the civil case, do not constitute the law on the matter and cannot be
taken or adopted as a basis for deciding the question of ownership of said land in this civil case.
Since there is no identity of parties in the two cases — the petitioners here not being parties in the
criminal case — and the object or subject matter in the criminal prosecution is different, the latter
being concerned with the guilt or innocence of accused Nicolas Mendoza for falsification of private
document, it follows that the judgment in the criminal action cannot be used as evidence in the
civil case where the issue is ownership of a piece of land. It is the rule that the plea of res
judicata generally cannot be interposed except where the parties, facts, and questions are the
same,4 hence, the judgment in a criminal case cannot be pleaded as res judicata in a civil action.5
But whatever error was committed by respondent court in this regard, the same is not sufficient to
nullify the appealed decision.
Analyzing the decision of respondent court. We see that the latter made its own appraisal and
evaluation of the evidence existing in the record relative to the possession and ownership of the
land in question. Thus it said that the conclusions arrived at by the Court of Appeals in the criminal
case to wit(1) that there was an exchange of lands consummated between Andrea and Felisa and
(2) that the exchanged land was later donated by Andrea to her daughter Margarita in 1927, "can
hardly be doubted if we take account of the undisputed fact that the defendants have been in
possession of the land since 1927, and the plaintiffs (meaning spouses Perez) have not attempted
to disturb defendants' possession of the land until 1952 when said plaintiffs filed an action of
unlawful detainer against the defendants." (p. 7 of appealed decision at p. 21, SC rollo; emphasis
supplied) Continuing, respondent court expounded:
Contrary to the allegation in the complaint — "That plaintiffs were in possession
of the land prior and up to January, 1946, when the same was leased to the
defendants ...", and the testimony of Basilio Perez to the same tenor, the
evidence has conclusively shown that the defendants have been in continuous
possession of the land since 1927 to the present time, and they have built a
house on the land in 1928 where they have resided and lived to the present, as
testified to by the defendant Mendoza, ....
The plaintiffs have contended, however, with the support of the testimony of
Basilio Perez, that the possession of the defendants since 1946 was that of a
mere lessee of the land. On this matter, the trial court said, "the records do not
show any documentary evidence to support such contention. Nor is any
document, say receipts of payment of rentals presented to bolster their theory.
On the contrary their averment has been strongly denied by the defendants and
the records show that it was only in 1952 that a civil action was instituted by the
plaintiffs against the defendants in the Justice of the Peace Court of Taysan,
Batangas, for detainer and damages", and said allegation of possession of the
defendants as lessees of the land "is not supported by positive and convincing
evidence". We find no reason to disagree with the foregoing findings of fact and
conclusion of the trial court because the same is supported by the
preponderance of evidence, and the plaintiffs have not pointed to us any fact of
significance or influence which have been disregarded by the court, other than
the testimony of Basilio Perez who testified about the supposed contract of lease.
(pp. 21-22, 23, ibid.; emphasis supplied)
Digging further into the evidence of herein petitioners, respondent court found for itself that the
agreement of partition dated May 27, 1934, Exhibit D, is not incontrovertible proof that in 1934 the
litigated property belonged in common to Petra and the heirs of Felisa Montalbo both of whom
may have been guided by the fact that the property was still declared for taxation purposes in the
name of Estanislao Montalbo, and that the document of partition "did not overcome the evidence
on record that Andrea Montalbo became the owner of the land, and that since 1927 the
defendants have been in continuous possession of the land, openly, adversely and in the concept
of owners thereby acquiring ownership of the land through acquisitive prescription." (p. 10 of CA
decision at p. 24, SC rollo)
Independently therefore of the pronouncements of the Court of Appeals in the criminal case,
respondent court examined the evidence in this civil case and made its own findings of fact on the
basis of which it affirmed the decision of the trial court.
We could have stopped here and resolved this petition under well-entrenched precepts in
Philippine jurisprudence that findings of fact of the Court of Appeals are as a rule conclusive and
binding upon this Court;6 nonetheless, to set our mind at rest that the conclusions of respondent
court were not grounded on speculation, surmises or conjectures,7 We went over the evidence
before Us.
Certain salient facts strongly support the claim of respondents Mendoza over the property in
dispute:
First, the northern boundary of the land in controversy is undisputably a school site which originally
was part of a bigger tract belonging to Estanislao Montalbo. This is admitted by petitioner Basilio
Perez who to a question propounded by his counsel, Atty. Panganiban, declared:
Mr. Panganiban: (Counsel of petitioners)
Q. According to these tax declarations which you said covers
the land in question, the boundaries on the north, school site; on
the east, land of Calixto Flores; on the south, estero; and on the
west, estero and Gregoria Mendoza, why is it that there is a
discrepancy?
A. Because from the whole parcel of land a portion was taken
for the school site, and that which remains now is the land in
question, sir. (tsn December 15, 1960, pp. 22-23)
No explanation however was offered by Perez as to how that portion became a school site. On the
other hand, there is evidence of respondent Mendoza that because Andrea Montalbo wanted to
donate a piece of land to be used as a school site and the municipality preferred the location of
the land inherited by Felisa from her father, the two women exchanged lands after which Andrea
gave one-half of the property to the municipality while the remaining portion which is the land now
in litigation was donated propter nuptias to her daughter Margarita way back in 1927. (tsn October
24, 1961, pp. 14-18) This donation of Andrea was not disproved by any evidence of petitioners.
On the part of respondents Mendoza, their documentary evidence, Exhibits 6, 6-A and 6-B, show
that the municipality of Taysan declared the donated property in its name as early as July, 1925,
which supports respondents' claim that the exchange of properties between Andrea and Felisa
Montalbo took place sometime in 1922.
Second, the provincial authorities authorities dealt with the Mendozas for the widening of the
provincial road which traverses the land in question. Nicolas Mendoza testified that the land
covered by the complaint actually consists of two lots which he described in his sketch, Exhibit 1,
with letters "A" and "B" respectively, separated by a provincial road leading to the municipality of
Lobo; that lot "A" which is the bigger parcel is the one donated to his wife, Margarita, by Andrea
Montalbo on the occasion of their marriage in 1927 (Exh. 2); while lot "B" was bought from Donata
Mendoza in 1951 as shown by the deed of sale, Exhibit 7; that sometime in 1937-38, the province
widened the provincial road traversing the two lots, and he and his wife were approached by the
provincial authorities more particularly, Engineer Ramirez, for them to give without compensation
from lot "A" a stretch of land of one meter in width to widen said road, and they agreed. At that
time Donata Mendoza still owned lot "B" and she was also asked to give part of her land for the
road but she was paid for the value of the plants destroyed in the process.(tsn October 24, 1961,
pp. 32-34) For his part, petitioner Perez admitted during the cross-examination conducted by the
opposite counsel, Atty. Julio Enriquez, that the provincial authorities did not deal with him at all
during the widening of that particular road. (tsn September 25, 1961, p. 34) This is of marked
significance, because if it were true as claimed by petitioners that they were in possession of the
property since the death of Estanislao Montalbo in 1918 or even after the deed of partition in 1934,
they would have been the persons approached by the authorities for the widening of the road. The
fact that the Mendozas were the ones who gave away part of the land for the widening of the Lobo
road shows that they were in possession of the property and were living there at the time.
Third, respondents Mendoza have been in possession of the property since 1927 in concept of
owners thereof. We have the testimony of respondent Nicolas Mendoza that after the land was
donated to his wife in 1927 they built a house on it and lived there continuously, witness referring
particularly to what he described as lot "A" in his sketch Exhibit 1. (tsn October 24, 1961, pp. 7,
.30-31) Respondent's testimony was found both by the trial and appellate courts credible because
(1) petitioner Basilio Perez himself admitted during cross-examination that even before the last
world war the Mendozas had constructed a house on the land in litigation (tsn September 25,
1971, pp. 37-39; see Exh. E-3) which admission disproves the allegation in the complaint and
Perez' testimony that it was only in 1946 when the Mendozas occupied the property as lessees;
(2) the testimony of Nicolas Mendoza was corroborated by witness Adriano Gonzales, a retired
justice of the peace of Taysan, Batangas, who declared that he knew the Mendozas since 1937
and he saw them living on the land in question and they have not changed residence at all since
he had known them (tsn December 6, 1961, pp. 5-6); and (3) the respondents Mendoza were the
ones who were living on the property and not the petitioners at the time the provincial government
in 1937 widened the Lobo road which crosses said land.
The court a quo and the respondent appellate court did not err when they upheld the claim of
ownership of the Mendozas principally on the ground that the latter were in actual possession of
the property since 1927 and were sought to be dispossessed by petitioners herein only in 1952
when an ejectment suit was filed against them.
Possession is an indicium of ownership of the thing possessed and to the possessor goes the
presumption that he holds the thing under a claim of ownership.8 Article 433 of the Civil Code
provides that "(A)ctual possession under claim of ownership raises a disputable presumption of
ownership. The true owner must resort to judicial process for the recovery of the property." In
Chan vs. Court of Appeals, et al., L-27488, June 30, 1970, 33 SCRA 737, this Court upheld the
finding of the Court of Appeals that the litigated property belonged to the private respondents
therein based on their possession of the property, not only because such findings of fact of the
appellate court are conclusive and binding on this Court but because the conclusion is in
accordance with Articles 433 and 531 of the Civil Code. 9
As we have here conflicting claims of possession by the parties over the land in controversy and
because the fact of possession cannot be recognized at the same time in two different
personalities except in cases of co-possession, the present possessor is to be preferred pursuant
to Article 538 of the Civil Code which We quote:
Possession as a fact cannot be recognized at the same time in two different
personalities except in the cases of co-possession. Should a question arise
regarding the fact of possession, the present possessor shall be preferred; if
there are two possessors, the one longer in possession; if the dates of the
 possession are the same, the one who presents a title; and if all these conditions
are equal, the thing shall be placed in judicial deposit pending determination of its
possession or ownership through proper proceedings." 10
The pretension of petitioners that the possession of the Mendozas is that of a mere lessee was
not believed by the trial judge and the appellate court not only because of the absence of any
written or oral evidence on the matter other than the bare testimony of petitioner Basilio Perez, but
also due to the circumstances present in the case which We indicated and enumerated at pages 7
to 9 of this decision. In fine, it is a fact that the Mendozas are presently in possession of the
property and the presumption of ownership in their favor has not been successfully rebutted by
evidence that they are mere lessees of the land in their possession as claimed by petitioners.
2. In their second assigned error, petitioners contend that respondent court should not have given
weight to the evidence of respondent Mendoza because the latter's Exhibit 5 was proven to be a
falsified document.
To recall, Exhibit 5 is the alleged deed of exchange or barter of lands between Andrea and Felisa
Montalbo dated January 14, 1922. On this point, petitioners overlook the fact that Exhibit 5 was
made the basis of a criminal accusation of falsification of private document solely on the allegation
that the signature of Rafael Manahan, the person before whom the parties to the document
allegedly appeared, was not his. There was no finding in that criminal case as per decision
rendered therein that the barter or exchange of lands between Andrea and Felisa Montalbo did not
in effect take place. On the contrary, what appears in said decision offered by petitioners as their
Exhibit J are the following findings of the Court of Appeals, viz: that the land donated by Andrea
Montalbo to her daughter Margarita Macalalad "was acquired by the donor by means of a barter
with her own parcel of land planted with bamboos and mango trees"; that while it is true that
because of this presentation of the falsified document appellant (now respondent Nicolas
Mendoza) was able to secure the declaration of the property donated in his name, no criminal
liability should be imposed upon him in the absence of any evidence that he presented said exhibit
with the knowledge that it was forged "especially if we take into consideration the fact that he and
his wife were and are still in possession of the land donated since 1927"; that in fact, the color and
appearance of the document in question show that it is not a new document but an old one thus
confirming Mendoza's theory that it was executed in or about the year 1922 as appearing in the
document or five years before his marriage. (pp. 1, 5, 6 of Exh. J, folder of exhibits) Thus, if the
document Exhibit 5 was held to be forged, it was simply because the municipal secretary, Rafael
Manahan, did not sign it and not for any other reason. What is material and relevant to the civil
case is that both the trial court and respondent appellate court found for a fact that there was an
exchange of lands between Andrea and Felisa Montalbo on the basis of evidence other than the
disputed Exhibit 5. As to what the evidence is, has been discussed above.
Petitioners cite Gonzales vs. Mauricio, 53 Phil. 728 where this Court stated inter alia that the
introduction of a forged instrument by a witness renders the testimony of the latter practically
worthless. That statement however is not applicable to the situation before Us because
in Gonzalez the particular document or receipt referred to was found to be entirely false as to its
contents, handwriting, and signature, whereas here all that was found to be false is the signature
of a witnessing official.
3. The last argument of petitioners is the object of the third assigned error. It is contended that the
appellate court erred in not giving effect to the deed of partition, Exhibit D, notwithstanding the fact
that the name of Andrea Montalbo appears in the document as one of the witnesses thereto.
Exhibit D appears to be a document dated May 27, 1934, wherein certain properties allegedly
belonging to Estanislao Montalbo were divided between Petra Montalbo and Jose Ortega,
husband of deceased Felisa Montalbo. Petitioner Basilio Perez declared that one of the parcels of
land mentioned in the document is the land now in litigation which is particularly marked as Exhibit
D-1. He also testified that Exhibit D was signed by him and his wife, Petra Montalbo, by Jose
Ortega, husband of deceased Felisa Montalbo, and thumbmarked by the latter's children all in his
presence. (tsn December 15,1960, pp. 19-24) Surprisingly, however, Basilio Perez did not at all
mention during the course of his testimony that the old woman, Andrea Montalbo, signed the deed
of partition as a witness. We have gone over the transcript of Basilio Perez' declaration on direct
and cross-examination (tsn December 15, 1960, pp. 15-34; September 25, 1961, pp. 3-40) and at
no instance did he ever state that Andrea Montalbo was present during the preparation of the
document, that she read or knew the contents thereof which by the way consists of six handwritten
pages, and that she signed her name on the document. It was incumbent upon petitioners to
identify the signature of Andrea Montalbo on the document if her signature was truly there. As a
matter of fact, examining the document Exhibit D We entertain doubts whether the name referred
to by petitioners is "Andrea Montalbo", for, as written, it also can read "Maria Montalbo". At any
rate, whatever is the import of said deed of partition, the same binds only the parties thereto but
does not affect third persons such as Andrea Montalbo or the herein Mendozas in the absence of
proof that they participated in one way or another in the preparation and execution of
thedocument. As it is, Andrea Montalbo was a stranger to that deed of partition and any recital
therein concerning the property under litigation cannot be used as evidence to prejudice her and
her successors-in-interest or place her in estoppel as to her claims over the property. Res inter
alios acta alteri nocere non debet. A transaction between two parties ought not to operate to the
prejudice of a third person or stranger. 11
4. In the fourth assignment of error, petitioners claim that the appellate court should have rendered
a decision in their favor. That both the trial court and respondent appellate court have correctly
evaluated the evidence, has been clearly demonstrated by Us.
IN VIEW OF ALL THE ABOVE CONSIDERATIONS, We find no reversible error in the decision
under review and We AFFIRM the same with costs against petitioners.
So Ordered.
Castro (Chairman), Makasiar, Esguerra and Martin, JJ., concur.
Teehankee, J., is on leave.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-2659 October 12, 1950
In the matter of the testate estate of Emil Maurice Bachrach, deceased. MARY McDONALD
BACHRACH,petitioner-appellee,
vs.
SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-appellants.
Ross, Selph, Carrascoso and Janda for appellants.
Delgado and Flores for appellee.
OZAETA, J.:
Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or part of the
corpus of the estate, which pertains to the remainderman? That is the question raised in the
appeal.
The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald
Bachrach, in his last will and testament made various legacies in cash and willed the remainder of
his estate as follows:
Sixth: It is my will and do herewith bequeath and devise to my beloved wife Mary
McDonald Bachrach for life all the fruits and usufruct of the remainder of all my estate
after payment of the legacies, bequests, and gifts provided for above; and she may enjoy
said usufruct and use or spend such fruits as she may in any manner wish.
The will further provided that upon the death of Mary McDonald Bachrach, one-half of the all his
estate "shall be divided share and share alike by and between my legal heirs, to the exclusion of
my brothers."
The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge Mining
Co., Inc., received from the latter 54,000 shares representing 50 per cent stock dividend on the
said 108,000 shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant
of the estate, petitioned the lower court to authorize the Peoples Bank and Trust Company as
administrator of the estate of E. M. Bachrach, to her the said 54,000 share of stock dividend by
endorsing and delivering to her the corresponding certificate of stock, claiming that said dividend,
although paid out in the form of stock, is fruit or income and therefore belonged to her as
usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the deceased, opposed
said petition on the ground that the stock dividend in question was not income but formed part of
the capital and therefore belonged not to the usufructuary but to the remainderman. And they have
appealed from the order granting the petition and overruling their objection.
While appellants admits that a cash dividend is an income, they contend that a stock dividend is
not, but merely represents an addition to the invested capital. The so-called Massachusetts rule,
which prevails in certain jurisdictions in the United States, supports appellants' contention . It
regards cash dividends, however large, as income, and stock dividends, however made, as
capital. (Minot vs. Paine, 99 Mass., 101; 96 Am. Dec., 705.) It holds that a stock dividend is not in
any true sense any true sense any dividend at all since it involves no division or severance from
the corporate assets of the dividend; that it does not distribute property but simply dilutes the
shares as they existed before; and that it takes nothing from the property of the corporation, and
nothing to the interests of the shareholders.
On the other hand, so called Pennsylvania rule, which prevails in various other jurisdictions in the
United States, supports appellee's contention. This rule declares that all earnings of the
corporation made prior to the death of the testator stockholder belong to the corpus of the estate,
and that all earnings, when declared as dividends in whatever form, made during the lifetime of
the usufructuary or life tenant. (Earp's Appeal, 28 Pa., 368.)
. . . It is clear that testator intent the remaindermen should have only the corpus of the
estate he left in trust, and that all dividends should go the life tenants. It is true that profits
realized are not dividends until declared by the proper officials of the corporation, but
distribution of profits, however made, in dividends, and the form of the distribution is
immaterial. (In re Thompson's Estate, 262 Pa., 278; 105 Atl. 273, 274.)
In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the Court of Appeals of Kentucky, speaking thru
its Chief Justice, said:
. . . Where a dividend, although declared in stock, is based upon the earnings of the
company, it is in reality, whether called by one name or another, the income of the capital
invested in it. It is but a mode of distributing the profit. If it be not income, what is it? If it is,
then it is rightfully and equitably the property of the life tenant. If it be really profit, then he
should have it, whether paid in stock or money. A stock dividend proper is the issue of
new shares paid for by the transfer of a sum equal to their par value from the profits and
loss account to that representing capital stock; and really a corporation has no right to a
dividend, either in cash or stock, except from its earnings; and a singular state of case —
it seems to us, an unreasonable one — is presented if the company, although it rests with
it whether it will declare a dividend, can bind the courts as to the proper ownership of it,
and by the mode of payment substitute its will for that of that of the testator, and favor the
life tenants or the remainder-men, as it may desire. It cannot, in reason, be considered
that the testator contemplated such a result. The law regards substance, and not form,
and such a rule might result not only in a violation of the testator's intention, but it would
give the power to the corporation to beggar the life tenants, who, in this case, are the wife
and children of the testator, for the benefit of the remainder-men, who may perhaps be
unknown to the testator, being unborn when the will was executed. We are unwilling to
adopt a rule which to us seems so arbitrary, and devoid of reason and justice. If the
dividend be in fact a profit, although declared in stock, it should be held to be income. It
has been so held in Pennsylvania and many other states, and we think it the correct rule.
Earp's Appeal, 28 Pa. St. 368; Cook, Stocks & S. sec. 554. . . .
We think the Pennsylvania rule is more in accord with our statutory laws than the Massachusetts
rule. Under section 16 of our Corporation Law, no corporation may make or declare any dividend
except from the surplus profits arising from its business. Any dividend, therefore, whether cash or
stock, represents surplus profits. Article 471 of the Civil Code provides that the usufructuary shall
be entitled to receive all the natural, industrial, and civil fruits of the property in usufruct. And
articles 474 and 475 provide as follows:

ART. 474. Civil fruits are deemed to accrue day by day, and belong to the usufructuary in
proportion to the time the usufruct may last.

ART. 475. When a usufruct is created on the right to receive an income or periodical
revenue, either in money or fruits, or the interest on bonds or securities payable to bearer,
each matured payment shall be considered as the proceeds or fruits such right.

When it consists of the enjoyment of the benefits arising from an interest in an industrial
or commercial enterprise, the profits of which are not distributed at fixed periods, such
profits shall have the same consideration.lawphil.net

In either case they shall be distributed as civil fruits, and shall be applied in accordance
with the rules prescribed by the next preceding article.

The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares of stock
dividend are civil fruits of the original investment. They represent profits, and the delivery of the
certificate of stock covering said dividend is equivalent to the payment of said profits. Said shares
may be sold independently of the original shares, just as the offspring of a domestic animal may
be sold independently of its mother.

The order appealed from, being in accordance with the above-quoted provisions of the Civil Code,
his hereby affirmed, with costs against the appellants.

Moran, C. J., Paras, Feria, Pablo, Bengzon, Tuason, Montemayor and Reyes, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 35223 September 17, 1931
THE BACHRACH MOTOR CO., INC., plaintiff-appellee,
vs.
TALISAY-SILAY MILLING CO., ET AL., defendants-appellees.
THE PHILIPPINE NATIONAL BANK, intervenor-appellant.
Roman J. Lacson for intervenor-appellant.
Mariano Ezpeleta for plaintiff-appellee.
Nolan and Hernaez for defendants-appellees Talisay-Silay Milling Co. and Cesar Ledesma.
ROMUALDEZ, J.:
This proceeding originated in a complaint filed by the Bachrach Motor Co., Inc., against the
Talisay-Silay Milling Co., Inc., for the delivery of the amount P13,850 or promissory notes or other
instruments or credit for that sum payable on June 30, 1930, as bonus in favor of Mariano Lacson
Ledesma; the complaint further prays that the sugar central be ordered to render an accounting of
the amounts it owes Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to
pay the plaintiff a sum sufficient to satisfy the judgment mentioned in the complaint, and that the
sale made by said Mariano Lacson Ledesma be declared null and void.
The Philippine National Bank filed a third party claim alleging a preferential right to receive any
amount which Mariano Lacson Ledesma might be entitled to from the Talisay-Silay Milling Co. as
bonus, because that would be civil fruits of the land mortgaged to said bank by said debtor for the
benefit of the central referred to, and by virtue of a deed of assignment, and praying that said
central be ordered to delivered directly to the intervening bank said sum on account of the latter's
credit against the aforesaid Mariano Lacson Ledesma.
The corporation Talisay-Silay Milling Co., Inc., answered the complaint stating that of Mariano
Lacson Ledesma's credit, P7,500 belonged to Cesar Ledesma because he had purchased it, and
praying that it be absolved from the complaint and that the proper party be named so that the
remainder might be delivered.
Cesar Ledesma, in turn, claiming to be the owner by purchase in good faith an for a
reconsideration of the P7,500 which is a part of the credit referred to above, answered praying that
he be absolved from the complaint.
The plaintiff Bachrach Motor Co., Inc., answered the third party claim alleging that its credit against
Mariano Lacson Ledesma was prior and preferential to that of the intervening bank, and praying
that the latter's complaint be dismissed.
At the trial all the parties agreed to recognize and respect the sale made in favor of Cesar
Ledesma of the P7,500 part of the credit in question, for which reason the trial court dismissed the
complaint and cross-complaint against Cesar Ledesma authorizing the defendant central to deliver
to him the aforementioned sum of P7,500. And upon conclusion of the hearing, the court held that
the Bachrach Motor Co., Inc., had a preferred right to receive the amount of P11,076.02 which
was Mariano Lacson Ledesma's bonus, and it ordered the defendant central to deliver said sum to
the plaintiff.
The Philippine National Bank appeals, assigning the following alleged errors as committed by the
trial court:
1. In holding that the bonus which the Talisay-Silay Milling Co., Inc., bound itself to pay
the planters who had mortgaged their land to the Philippine National Bank to secure the
payment of the debt of said central to said bank is not civil fruits of said land.
2. In not holding that said bonus became subject to the mortgage executed by the
defendant Mariano Lacson Ledesma to the Philippine National Bank to secure the
payment of his personal debt to said bank when it fell due.
3. In holding that the assignment (Exhibit 9, P.N.B.) of said bonus made on March 7,
1930, by Mariano Lacson Ledesma to the Philippine National Bank to be applied to the
payment of his debt to said Philippine National Bank is fraudulent.
4. In holding that the Bachrach Motor Co. Inc., in civil case No. 31597 of the Court of First
Instance of Manila levied a valid attachment upon the bonus in question.
5. In admitting and considering the supplementary complaint filed by the Bachrach Motor
Co., Inc., alleging as a cause of action the attachment of the bonus in question which said
Bachrach Motor Co., Inc., in civil case No. 31821 of the Court of First Instance of Manila
levied after the filing of the original complaint in this case, and after Mariano Lacson
Ledesma in this case had been declared in default.
6. In holding that the Bachrach Motor Co., Inc., has a preferential right to receive from the
Talisay-Silay Milling Co., Inc., the amount of P11,076.02 which is in the possession of
said corporation as the bonus to be paid to Mariano Lacson Ledesma, and in ordering the
Talisay-Silay Milling Co., Inc., to deliver said amount to the Bachrach Motor Co., Inc.
7. In not holding that the Philippine National Bank has a preferential right to receive from
the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 held by said corporation as
Mariano Lacson Ledesma's bonus, and in not ordering said Talisay-Silay Milling Co., Inc.,
to deliver said amount to the Philippine National Bank.
8. In not holding that the amended complaint and the supplementary complaint of the
Bachrach Motor Co., Inc., do not state facts sufficient to constitute a cause of action in
favor of the Bachrach Motor Co., Inc., and against the Talisay-Silay Milling Co., Inc., or
against the Philippine National Bank.
The appellant bank bases its preferential right upon the contention that the bonus in question is
civil fruits of the lands which the owners had mortgaged for the benefit of the central giving the
bonus, and that, as civil fruits of said land, said bonus was assigned by Mariano Lacson Ledesma
on March 7, 1930, by virtue of the document Exhibit 9 of said intervening institution, which
admitted in its brief that "if the bonus in question is not civil fruits or rent which became subject to
the mortgage in favor of the Philippine National Bank when Mariano Lacson Ledesma's personal
obligation fell due, the assignment of March 7, 1930 (Exhibit 9, P.N.B.), is null and void, not
because it is fraudulent, for there was no intent of fraud in executing the deed, but that the cause
or consideration of the assignment was erroneous, for it was based upon the proposition that the
bonus was civil fruits of the land mortgaged to the Philippine National Bank." (P. 31.)
income or civil fruits of anything, it is income arising from said risk, or, if one chooses, from
Mariano Lacson Ledesma's generosity in facing the danger for the protection of the central, but
certainly it is not civil fruits or income from the mortgaged property, which, as far as this case is
concerned, has nothing to do with it. Hence, the amount of the bonus, according to the resolution
of the central granting it, is not based upon the value, importance or any other circumstance of the
mortgaged property, but upon the total value of the debt thereby secured, according to the annual
balance, which is something quite distinct from and independent of the property referred to.
Finding no merit in this appeal, the judgment appealed from is affirmed, without express finding as
to costs. So ordered.

The fundamental question, then, submitted to our consideration is whether or not the bonus in Johnson, Street, Malcolm, Villamor, Ostrand, Villa-Real, and Imperial, JJ., concur.
question is civil fruits.

This is how the bonus came to be granted: On December 22, 1923, the Talisay-Silay Milling Co.,
Inc., was indebted to the Philippine National Bank. To secure the payment of its debt, it succeeded
in inducing its planters, among whom was Mariano Lacson Ledesma, to mortgage their land to the
creditor bank. And in order to compensate those planters for the risk they were running with their
property under the mortgage, the aforesaid central, by a resolution passed on that same date, i.e.,
December 22, 1923, undertook to credit the owners of the plantation thus mortgaged every year
with a sum equal to two per centum of the debt secured according to yearly balance, the payment
of the bonus being made at once, or in part from time to time, as soon as the central became free
of its obligations to the aforesaid bank, and of those contracted by virtue of the contract of
supervision, and had funds which might be so used, or as soon as it obtained from said bank
authority to make such payment. (Exhibits 5, 6; P.N.B.)

Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings;
second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities,
or other similar sources of revenue. It may be noted that according to the context of the law, the
phrase "u otras analogas" refers only to rent or income, for the
adjectives "otras" and "analogas" agree with the noun "rentas," as do also the other
adjectives "perpetuas"and "vitalicias." That is why we say that by "civil fruits" the Civil Code
understands one of three and only three things, to wit: the rent of a building, the rent of land, and
certain kinds of income.

As the bonus in question is not rent of a building or of land, the only meaning of "civil fruits" left to
be examined is that of "income."

Assuming that in broad juridical sense of the word "income" it might be said that the bonus in
question is "income" under article 355 of the Civil Code, it is obvious to inquire whether it is
derived from the land mortgaged by Mariano Lacson Ledesma to the appellant bank for the benefit
of the central; for it is not obtained from that land but from something else, it is not civil fruits of that
land, and the bank's contention is untenable.

It is to be noted that the said bonus bears no immediate, but only a remote accidental relation to
the land mentioned, having been granted as compensation for the risk of having subjected one's
land to a lien in favor of the bank, for the benefit of the entity granting said bonus. If this bonus be
 Republic of the Philippines
SUPREME COURT
Manila
IN BANC
GR No. L-44606 November 28, 1938
VICENTE STO. DOMINGO BERNARDO, plaintiff-appellant,
vs.
CATALINO BATACLAN, defender -appellant.
TORIBIO TEODORO, purchaser-appellee.
Pedro de Leon for plaintiff-appellant.
Angel H. Mojica and Francisco Lavides for defendant appellant.
Jose Y. Garde for appellee.
LAUREL, J .:
This is an appeal taken by both the plaintiff and the defendant from the order of September 26,
1935, hereinabove referred to, of the Court of First Instance of Cavite in Civil Case No. 2428.
There is no controversy as to the facts. By a contract of sale executed from Pastor Samonte and
others ownership of a land of about 90 hectares situated in site Balayunan, Silang, Cavite. To
secure possession of the land from the vendors of the said plaintiff, on July 20, 1929, instituted
Civil Case No. 1935 in the Court of First Instance of Cavite. The trial court found for the plaintiff in
a decision which was affirmed by this Supreme Court on appeal (GR No. 33017). 1When plaintiff
entered upon the premises, however, I found the defender here, Catalina Bataclan, who appears
to have been authorized by former owners, as far back as 1922, to clear the land and make
improvements thereon. As Bataclan was not a party in Case No. 1935, plaintiff, on June 11, 1931,
instituted against him, in the Court of First Instance of Cavite, Civil Case No. 2428. In this case,
plaintiff was declared owner but the defendant was held to be a possessor in good faith, entitled to
reimbursement in the total sum of P1,642, for work done and improvements made. The dispositive
part of the decision reads:
For the above considerations, is declared to the claimant Vicente Santo Domingo
Bernardo owner with the right to the possession of the land described in the lawsuit, and
the defendant Catalina Bataclan with the right to the plaintiff of the amount of P1,642 for
useful expenses made in good faith in the land, and by the fence and ponchos of coconut
and abaca existing in the same, and with the right, in addition to retain the possession of
the land until such amount is paid. The plaintiff may choose, within thirty days, from the
date on which he was notified of this, to pay that sum to the defendant, thereby making
the purse seizure and all existing plantations on the land, or compel the defendant to pay
the land price, at the rate of three hundred pesos per hectare. In the event that the
plaintiff opts for the defendant to pay him the price of the land, the defendant will make
the payment within the period of time convenient by the parties or that will be fixed by the
Court. Without costs.
Both parties appealed to this court (GR No. 37319). 2The decision appealed from was modified by
allowing the defendant to recover compensation amounting to P2,212 and by reducing the price at
which the plaintiff could require the defendant to purchase the land in question from P300 to P200
per hectare. Plaintiff was given by this court 30 days from the date when the decision became final
within which to exercise his option, either to sell the land to the defendant or to buy the
improvements from him. On January 9, 1934, the plaintiff manifested to the lower court his desire
"to require the defendant to pay him the value of the land at the rate of P200 per hectare or to a
total price of P18,000 for the whole tract of land. " The defendant informed the lower court that he
was unable to pay the land and, on January 24, 1934,To make payment to the plaintiff of the sum
of P2,212 and the remainder after deduction of the legal expenses of the sale in public auction will
be delivered to the plaintiff . "On February 21, 1934, plaintiff moved to reconsider the foregoing
order so that he would have preference over the defendant in the order of payment. The motion
was denied on March 1, 1934 but on March 16 following the court below, motu propriomodified its
order of January 24, " in the sense that the claimant has a preferential right to amount of the land
will not be sold in public auction, at the rate of P200 per hectare and the remainder, if any, will be
delivered to the defendant in payment of the amount of P2,212 for the cleaning of the land and the
improvements introduced in it by the aforementioned defendant"On April 24, 1934, the court
below, at the instance of the plaintiff and without objection on the part of the defendant, ordered
the sale of the land in question at the public auction." The land was sold on April 5, 1935 Toribio
Teodoro, the highest bidder, for P8,000. In the certificate of sale issued to said purchaser on the
very day of sale, it was stated that the period of redemption of the land was sold to expire on April
5, 1936. Upon petition of Toribio Teodoro the court below ordered the provincial sheriff to issue
another certificate not qualified by any equity of redemption This was complied with by the sheriff
on July 30, 1935. On September 18, 1935, Theodore moved that he was placed in possession of
the land purchased by him. The motion was granted by order of September 26, 1935, the
dispositive part of which is as follows:
Therefore, the Provincial Sheriff of Cavite is ordered to place Toribio Teodoro in
possession of the land purchased by him at public auction and for which he was issued a
definitive sale certificate, reserving to the defendant his right to exercise an ordinary
action to claim from the plaintiff the amount of P2,212 to which he is entitled for the
cleaning and improvement of the land and whose sum, in fairness and equity, must be
discounted and deducted from the sum of P8,000 that the plaintiff has already received.
The Civil Code confirms certain time-honored principles of the law of property. One of these is the
principle of accession whereby the owner of property acquires not only that which is produced but
that is naturally or artificially. (Article 353.) Whatever is built, planted or on the land of another, and
the improvements or repairs made thereon, belong to the owner of the land (Article 358). Where,
however, the planter, builder, or sower has acted in good faith, a conflict of rights arises between
the owners and it becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticability of creating what Manresa calls a
state of "forced coownership" (vol.3, 4th ed., P.213), the law you have provided to just and
equitable solution by giving the owner of the land the option to acquire the improvements after
payment of the proper indemnity or to the oblige the builder or planter to pay for the land and the
sower to pay the proper rent (art 361). It is the owner of the land who is allowed to exercise the
option because his right is older and because, by the principle of accession, he is entitled to the
ownership of the accessory thing (3 Manresa, 4th ed., P. 213) . In the case before us, the plaintiff,
as owner of the land, chose to require the defendant, as owner of the improvements, to pay for the
land. It is the owner of the land who is allowed to exercise the option because his right is older and
because, by the principle of accession, he is entitled to the ownership of the accessory thing (3
Manresa, 4th ed., P. 213) . In the case before us, the plaintiff, as owner of the land, chose to
require the defendant, as owner of the improvements, to pay for the land. It is the owner of the
land who is allowed to exercise the option because his right is older and because, by the principle
of accession, he is entitled to the ownership of the accessory thing (3 Manresa, 4th ed., P. 213)
. In the case before us, the plaintiff, as owner of the land, chose to require the defendant, as
owner of the improvements, to pay for the land.

The defendant states that he is a possessor in good faith and that the amount of P2,212 to which
he has not yet been paid to him. Therefore, he says, he has a right to retain the land in
accordance with the provision of article 453 of the Civil Code. We do not doubt the validity of the
stated premises. "It considers the law so sane and legitimizes the debt, which, until it is paid, does
not allow the thing to be restored to the winner"(4 Manresa, 4th ed., P., 304.) We find, however,
that the defendant has lost his right of retention. In obedience to the decision of this court in GR
No. 37319, the plaintiff expressed his desire to The defendant could have become owner of both
land and improvements and continued in possession of the land, but he said he could not pay and
the land was sold to Toribio Teodoro. law, as we have already said, requires no more than that the
owner of the land should choose between indemnifying the owner of the improvements or
requiring the latter to pay for the land. his right of retention.

The sale at the public auction having been requested by the plaintiff himself (page 22, bill of
exceptions) and the purchase price of P8,000 received by him from Toribio Teodoro, we find no
reason to justify a rapture of the situation thus created between them, the defendant-appellant not
being entitled, after all, to recover from the plaintiff the sum of P2,212. lawphi1.net

The judgment of the lower court is accordingly modified by eliminating therefrom the reservation
made in favor of the defendant-appellant to recover from the plaintiff the sum of P2,212. In all the
respects, the same is affirmed, without pronouncement regarding costs. So ordered.

Avanceña, CJ, Villa-Real, Imperial and Diaz, JJ., Concur.

 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-175 April 30, 1946
DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,
vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First
Instance of Pangasinan, respondents.
Leoncio R. Esliza for petitioners.
Mauricio M. Monta for respondents.
MORAN, C.J.:
This is a petition for certiorari arising from a case in the Court of First Instance of Pangasinan
between the herein respondents Elias Hilario and his wife Dionisia Dres as plaintiffs, and the
herein petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning the
ownership of a parcel of land, partly rice-land and partly residential. After the trial of the case, the
lower court, presided over by Hon. Alfonso Felix, rendered judgment holding plaintiffs as the legal
owners of the whole property but conceding to defendants the ownership of the houses and
granaries built by them on the residential portion with the rights of a possessor in good faith, in
accordance with article 361 of the Civil Code. The dispositive part of the decision, hub of this
controversy, follows:
Wherefore, judgment is hereby rendered declaring:
(1) That the plaintiffs are the owners of the whole property described in transfer certificate
of title No. 12872 (Exhibit A) issued in their name, and entitled to the possession of the
same;
(2) That the defendants are entitled to hold the position of the residential lot until after
they are paid the actual market value of their houses and granaries erected thereon,
unless the plaintiffs prefer to sell them said residential lot, in which case defendants shall
pay the plaintiffs the proportionate value of said residential lot taking as a basis the price
paid for the whole land according to Exhibit B; and
(3) That upon defendant's failure to purchase the residential lot in question, said
defendants shall remove their houses and granaries after this decision becomes final and
within the period of sixty (60) days from the date that the court is informed in writing of the
attitude of the parties in this respect.
No pronouncement is made as to damages and costs.
Once this decision becomes final, the plaintiffs and defendants may appear again before
this court for the purpose of determining their respective rights under article 361 of the
Civil Code, if they cannot come to an extra-judicial settlement with regard to said rights.
Subsequently, in a motion filed in the same Court of First Instance but now presided over by the
herein respondent Judge Hon. Felipe Natividad, the plaintiffs prayed for an order of execution
alleging that since they chose neither to pay defendants for the buildings nor to sell to them the
residential lot, said defendants should be ordered to remove the structure at their own expense
and to restore plaintiffs in the possession of said lot. Defendants objected to this motion which,
after hearing, was granted by Judge Natividad. Hence, this petition by defendants praying for (a) a
restraint and annulment of the order of execution issued by Judge Natividad; (b) an order to
compel plaintiffs to pay them the sum of P2,000 for the buildings, or sell to them the residential lot
for P45; or (c), a rehearing of the case for a determination of the rights of the parties upon failure
of extra-judicial settlement.
The judgment rendered by Judge Felix is founded on articles 361 and 453 of the Civil Code which
are as follows:
ART. 361. The owner of land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the work, sowing or planting, after the
payment of the indemnity stated in articles 453 and 454, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper rent.
ART. 453. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until such expenses are made good to him.
Useful expenses shall be refunded to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of
refunding the amount of the expenses or paying the increase in value which the thing may
have acquired in consequence thereof.
The owner of the building erected in good faith on a land owned by another, is entitled to retain the
possession of the land until he is paid the value of his building, under article 453. The owner of the
land, upon the other hand, has the option, under article 361, either to pay for the building or to sell
his land to the owner of the building. But he cannot, as respondents here did, refuse both to pay
for the building and to sell the land and compel the owner of the building to remove it from the land
where it is erected. He is entitled to such remotion only when, after having chosen to sell his land,
the other party fails to pay for the same. But this is not the case before us.
We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to remove
their buildings from the land belonging to plaintiffs-respondents only because the latter chose
neither to pay for such buildings not to sell the land, is null and void, for it amends substantially the
judgment sought to be executed and is, furthermore, offensive to articles 361 and 453 of the Civil
Code.
There is, however, in the decision of Judge Felix a question of procedure which calls for the
clarification, to avoid uncertainty and delay in the disposition of cases. In that decision, the rights
of both parties are well defined under articles 361 and 453 of the Civil Code, but it fails to
determine the value of the buildings and of the lot where they are erected as well as the periods of
time within which the option may be exercised and payment should be made, these particulars
having been left for determination apparently after the judgment has become final. This procedure
is erroneous, for after the judgment has become final, no additions can be made thereto and
nothing can be done therewith except its execution. And execution cannot be had, the sheriff
being ignorant as to how, for how much, and within what time may the option be exercised, and
certainly no authority is vested in him to settle these matters which involve exercise of judicial
discretion. Thus the judgment rendered by Judge Felix has never become final, it having left
matters to be settled for its completion in a subsequent proceeding, matters which remained
unsettled up to the time the petition is filed in the instant case.

For all the foregoing, the writ of execution issued by Judge Natividad is hereby set aside and the
lower court ordered to hold a hearing in the principal case wherein it must determine the prices of
the buildings and of the residential lot where they are erected, as well as the period of time within
which the plaintiffs-respondents may exercise their option either to pay for the buildings or to sell
their land, and, in the last instance, the period of time within which the defendants-petitioners may
pay for the land, all these periods to be counted from the date the judgment becomes executory or
unappealable. After such hearing, the court shall render a final judgment according to the
evidence presented by the parties.

The costs shall be paid by plaintiffs-respondents.

Ozaeta, Paras, Jaranilla, Feria, De Joya, Pablo, Perfecto, Hilado, Bengzon and Briones,
JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-57348 May 16, 1985
FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.
Roberto D. Dineros for plaintiff-appellee.
Veil D. Hechanova for defendant-appellant.
MELENCIO-HERRERA, J.:
This is an appeal from the Order of the former Court of First Instance of Iloilo to the then Court of
Appeals, which the latter certified to this instance as involving pure questions of law
Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under Transfer
Certificate of Title No. T3087, known as Lot No. 685, situated in the municipality of Dumangas,
Iloilo, with an area of approximately 8,870 square meters. Agustin Dumlao, defendant-appellant,
owns an adjoining lot, designated as Lot No. 683, with an approximate area of 231 sq. ms.
Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen thereof had
encroached on an area of thirty four (34) square meters of DEPRA's property, After the
encroachment was discovered in a relocation survey of DEPRA's lot made on November 2,1972,
his mother, Beatriz Depra after writing a demand letter asking DUMLAO to move back from his
encroachment, filed an action for Unlawful Detainer on February 6,1973 against DUMLAO in the
Municipal Court of of Dumangas, docketed as Civil Case No 1, Said complaint was later amended
to include DEPRA as a party plain. plaintiff.
After trial, the Municipal Court found that DUMLAO was a builder in good faith, and applying
Article 448 of the Civil Code, rendered judgment on September 29, 1973, the dispositive portion of
which reads:
Ordering that a forced lease is created between the parties with the plaintiffs, as
lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month,
payable by the lessee to the lessors within the first five (5) days of the month the
rent is due; and the lease shall commence on the day that this decision shall
have become final.
From the foregoing judgment, neither party appeal so that, ff it were a valid judgment, it would
have ordinarily lapsed into finality, but even then, DEPRA did not accept payment of rentals so
that DUMLAO deposited such rentals with the Municipal Court.
On July 15,1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO before the then
Court of First Instance of Iloilo, Branch IV (Trial Court), involving the very same 34 square meters,
which was the bone of contention in the Municipal Court. DUMLAO, in his Answer, admitted the
encroachment but alleged, in the main, that the present suit is barred by res judicata by virtue of
the Decision of the Municipal Court, which had become final and executory.
After the case had been set for pre-trial, the parties submitted a Joint Motion for Judgment based
on the Stipulation of Facts attached thereto. Premised thereon, the Trial Court on October 31,
1974, issued the assailed Order, decreeing:
WHEREFORE, the Court finds and so holds that the thirty four (34) square
meters subject of this litigation is part and parcel of Lot 685 of the Cadastral
Survey of Dumangas of which the plaintiff is owner as evidenced by Transfer
Certificate of Title No. 3087 and such plaintiff is entitled to possess the same.
Without pronouncement as to costs.
SO ORDERED.
Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that the Decision
of the Municipal Court was null and void ab initio because its jurisdiction is limited to the sole issue
of possession, whereas decisions affecting lease, which is an encumbrance on real property, may
only be rendered by Courts of First Instance.
Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold the
same to be null and void. The judgment in a detainer case is effective in respect of possession
only (Sec. 7, Rule 70, Rules of Court). 1The Municipal Court over-stepped its bounds when it
imposed upon the parties a situation of "forced lease", which like "forced co-ownership" is not
favored in law. Furthermore, a lease is an interest in real property, jurisdiction over which belongs
to Courts of First Instance (now Regional Trial Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19
(2) Batas Pambansa Blg. 129). 3 Since the Municipal Court, acted without jurisdiction, its Decision
was null and void and cannot operate as res judicata to the subject complaint for Queting of Title.
Besides, even if the Decision were valid, the rule on res judicata would not apply due to difference
in cause of action. In the Municipal Court, the cause of action was the deprivation of possession,
while in the action to quiet title, the cause of action was based on ownership. Furthermore, Sec. 7,
Rule 70 of the Rules of Court explicitly provides that judgment in a detainer case "shall not bar an
action between the same parties respecting title to the land. " 4
Conceded in the Stipulation of Facts between the parties is that DUMLAO was a builder in good
faith. Thus,
 8. That the subject matter in the unlawful detainer case, Civil Case No. 1, before
the Municipal Court of Dumangas, Iloilo involves the same subject matter in the
present case, the Thirty-four (34) square meters portion of land and built thereon
in good faith is a portion of defendant's kitchen and has been in the possession
of the defendant since 1952 continuously up to the present; ... (Emphasis ours)
Consistent with the principle that our Court system, like any other, must be a dispute resolving
mechanism, we accord legal effect to the agreement of the parties, within the context of their
mutual concession and stipulation. They have, thereby, chosen a legal formula to resolve their
dispute to appeal ply to DUMLAO the rights of a "builder in good faith" and to DEPRA those of a
"landowner in good faith" as prescribed in Article 448. Hence, we shall refrain from further
examining whether the factual situations of DUMLAO and DEPRA conform to the juridical
positions respectively defined by law, for a "builder in good faith" under Article 448, a "possessor
in good faith" under Article 526 and a "landowner in good faith' under Article 448.
In regards to builders in good faith, Article 448 of the Civil Code provides:
ART. 448. The owner of the land on which anything has been built sown or planted in good faith,
shall have the right
to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land, and the one
who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof
(Paragraphing supplied)
Pursuant to the foregoing provision, DEPRA has the option either to pay for the encroaching part
of DUMLAO's kitchen, or to sell the encroached 34 square meters of his lot to DUMLAO. He
cannot refuse to pay for the encroaching part of the building, and to sell the encroached part of his
land, 5 as he had manifested before the Municipal Court. But that manifestation is not binding
because it was made in a void proceeding.
However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First
Instance. It was thus error for the Trial Court to have ruled that DEPRA is "entitled to possession,"
without more, of the disputed portion implying thereby that he is entitled to have the kitchen
removed. He is entitled to such removal only when, after having chosen to sell his encroached
land, DUMLAO fails to pay for the same. 6 In this case, DUMLAO had expressed his willingness to
pay for the land, but DEPRA refused to sell.
The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his
building, under article 453 (now Article 546). The owner of the land, upon the
other hand, has the option, under article 361 (now Article 448), either to pay for
the building or to sell his land to the owner of the building. But he cannot as
respondents here did refuse both to pay for the building and to sell the land and
compel the owner of the building to remove it from the land where it erected. He
is entitled to such remotion only when, after having chosen to sell his land. the
other party fails to pay for the same (italics ours).
We hold, therefore, that the order of Judge Natividad compelling defendants-
petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor
to sell the land, is null and void, for it amends substantially the judgment sought
to be executed and is. furthermore, offensive to articles 361 (now Article 448)
and 453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605,
608[1946]).
A word anent the philosophy behind Article 448 of the Civil rode.
The original provision was found in Article 361 of the Spanish Civil Code; which provided:
ART. 361. The owner of land on which anything has been built, sown or planted
in good faith, shall have the right to appropriate as his own the work, sowing or
planting, after the payment of the indemnity stated in Articles 453 and 454, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent.
As will be seen, the Article favors the owner of the land, by giving him one of the two options
mentioned in the Article. Some commentators have questioned the preference in favor of the
owner of the land, but Manresa's opinion is that the Article is just and fair.
. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en
el caso de edificacion o plantacion? Algunos comentaristas la conceptuan
injusta, y como un extraordinario privilegio en favor de la propiedad territorial.
Entienden que impone el Codigo una pena al poseedor de buena fe y como
advierte uno de los comentaristas aludidos 'no se ve claro el por que de tal pena
. . . al obligar al que obro de buena fe a quedarse con el edificio o plantacion,
previo el pago del terreno que ocupa, porque si bien es verdad que cuando
edifico o planto demostro con este hecho, que queria para si el edificio o plantio
tambien lo es que el que edifico o planto de buena fe lo hizo en la erronea
inteligencia de creerse dueno del terreno Posible es que, de saber lo contrario, y
de tener noticia de que habia que comprar y pagar el terreno, no se hubiera
decidido a plantar ni a edificar. La ley obligandole a hacerlo fuerza su voluntad, y
la fuerza por un hecho inocente de que no debe ser responsable'. Asi podra
suceder pero la realidad es que con ese hecho voluntario, aunque sea inocente,
 se ha enriquecido torticeramente con perjuicio de otro a quien es justo
indemnizarle,
En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y
equitativa y respetando en lo possible el principio que para la accesion se
establece en el art. 358. 7
Our own Code Commission must have taken account of the objections to Article 361 of the
Spanish Civil Code. Hence, the Commission provided a modification thereof, and Article 448 of
our Code has been made to provide:
ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in articles 546
and 548, or to oblige the one who built or planted to pay the price of the land, and
the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.
Additional benefits were extended to the builder but the landowner retained his options.
The fairness of the rules in Article 448 has also been explained as follows:
Where the builder, planter or sower has acted in good faith, a conflict of rights
arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-ownership, the law has provided a
just solution by giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower to pay for the proper rent. It is the owner
of the land who is authorized to exercise the option, because his right is older,
and because, by the principle of accession, he is entitled to the ownership of the
accessory thing. (3 Manresa 213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co
Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Article applied: see Cabral,
et al vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz.
2050). 8
WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is hereby ordered
remanded to the Regional Trial Court of Iloilo for further proceedings consistent with Articles 448
and 546 of the Civil Code, as follows:
1. The trial Court shall determine
a) the present fair price of DEPRA's 34 square meter area of land;
b) the amount of the expenses spent by DUMLAO for the building of the kitchen;
c) the increase in value ("plus value") which the said area of 34 square meters
may have acquired by reason thereof, and
d) whether the value of said area of land is considerably more than that of the
kitchen built thereon.
2. After said amounts shall have been determined by competent evidence, the Regional, Trial
Court shall render judgment, as follows:
a) The trial Court shall grant DEPRA a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to appropriate
the kitchen as his own by paying to DUMLAO either the amount of tile expenses
spent by DUMLAO f or the building of the kitchen, or the increase in value ("plus
value") which the said area of 34 square meters may have acquired by reason
thereof, or to oblige DUMLAO to pay the price of said area. The amounts to be
respectively paid by DUMLAO and DEPRA, in accordance with the option thus
exercised by written notice of the other party and to the Court, shall be paid by
the obligor within fifteen (15) days from such notice of the option by tendering the
amount to the Court in favor of the party entitled to receive it;
b) The trial Court shall further order that if DEPRA exercises the option to oblige
DUMLAO to pay the price of the land but the latter rejects such purchase
because, as found by the trial Court, the value of the land is considerably more
than that of the kitchen, DUMLAO shall give written notice of such rejection to
DEPRA and to the Court within fifteen (15) days from notice of DEPRA's option
to sell the land. In that event, the parties shall be given a period of fifteen (15)
days from such notice of rejection within which to agree upon the terms of the
lease, and give the Court formal written notice of such agreement and its
provisos. If no agreement is reached by the parties, the trial Court, within fifteen
(15) days from and after the termination of the said period fixed for negotiation,
shall then fix the terms of the lease, provided that the monthly rental to be fixed
by the Court shall not be less than Ten Pesos (P10.00) per month, payable within
the first five (5) days of each calendar month. The period for the forced lease
shall not be more than two (2) years, counted from the finality of the judgment,
considering the long period of time since 1952 that DUMLAO has occupied the
subject area. The rental thus fixed shall be increased by ten percent (10%) for
the second year of the forced lease. DUMLAO shall not make any further
constructions or improvements on the kitchen. Upon expiration of the two-year
period, or upon default by DUMLAO in the payment of rentals for two (2)
consecutive months, DEPRA shall be entitled to terminate the forced lease, to
recover his land, and to have the kitchen removed by DUMLAO or at the latter's
expense. The rentals herein provided shall be tendered by DUMLAO to the Court
 for payment to DEPRA, and such tender shall constitute evidence of whether or
not compliance was made within the period fixed by the Court.

c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten Pesos
(P10.00) per month as reasonable compensation for the occupancy of DEPRA's
land for the period counted from 1952, the year DUMLAO occupied the subject
area, up to the commencement date of the forced lease referred to in the
preceding paragraph;

d) The periods to be fixed by the trial Court in its Precision shall be inextendible,
and upon failure of the party obliged to tender to the trial Court the amount due to
the obligee, the party entitled to such payment shall be entitled to an order of
execution for the enforcement of payment of the amount due and for compliance
with such other acts as may be required by the prestation due the obligee.

No costs,

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-57288 April 30, 1984
LEONILA SARMINETO, petitioner,
vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh Judicial
District, Branch XXVIII, Pasay City, and SPOUSES ERNESTO VALENTINO and REBECCA
LORENZO-VALENTINO, respondents.
Mercedes M. Respicio for petitioner.
Romulo R. Bobadilla for private respondents.
MELENCIO-HERRERA, J.:ñé+.£ªwph!1
This Petition for certiorari questions a March 29, 1979 Decision rendered by the then Court of First
Instance of Pasay City. The Decision was one made on memoranda, pursuant to the provisions of
RA 6031, and it modified, on October 17, 1977, a judgment of the then Municipal Court of
Paranaque, Rizal, in an Ejectment suit instituted by herein petitioner Leonila SARMIENTO against
private respondents, the spouses ERNESTO Valentino and Rebecca Lorenzo. For the facts,
therefore, we have to look to the evidence presented by the parties at the original level.
It appears that while ERNESTO was still courting his wife, the latter's mother had told him the
couple could build a RESIDENTIAL HOUSE on a lot of 145 sq. ms., being Lot D of a subdivision in
Paranaque (the LAND, for short). In 1967, ERNESTO did construct a RESIDENTIAL HOUSE on
the LAND at a cost of P8,000.00 to P10,000.00. It was probably assumed that the wife's mother
was the owner of the LAND and that, eventually, it would somehow be transferred to the spouses.
It subsequently turned out that the LAND had been titled in the name of Mr. & Mrs. Jose C. Santo,
Jr. who, on September 7 , 1974, sold the same to petitioner SARMIENTO. The following January
6, 1975, SARMIENTO asked ERNESTO and wife to vacate and, on April 21, 1975, filed an
Ejectment suit against them. In the evidentiary hearings before the Municipal Court, SARMIENTO
submitted the deed of sale of the LAND in her favor, which showed the price to be P15,000.00. On
the other hand, ERNESTO testified that the then cost of the RESIDENTIAL HOUSE would be from
P30,000.00 to P40,000.00. The figures were not questioned by SARMIENTO.
The Municipal Court found that private respondents had built the RESIDENTIAL HOUSE in good
faith, and, disregarding the testimony of ERNESTO, that it had a value of P20,000.00. It then
ordered ERNESTO and wife to vacate the LAND after SARMIENTO has paid them the mentioned
sum of P20,000.00.
The Ejectment suit was elevated to the Court of First Instance of Pasay where, after the
submission of memoranda, said Court rendered a modifying Decision under Article 448 of the Civil
Code. SARMIENTO was required, within 60 days, to exercise the option to reimburse ERNESTO
and wife the sum of 40,000.00 as the value of the RESIDENTIAL HOUSE, or the option to allow
them to purchase the LAND for P25,000.00. SARMIENTO did not exercise any of the two options
within the indicated period, and ERNESTO was then allowed to deposit the sum of P25,000.00
with the Court as the purchase price for the LAND. This is the hub of the controversy.
SARMIENTO then instituted the instant certiorari proceedings.
We agree that ERNESTO and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the RESIDENTIAL HOUSE. As far as they knew,
the LAND was owned by ERNESTO's mother-in-law who, having stated they could build on the
property, could reasonably be expected to later on give them the LAND.
In regards to builders in good faith, Article 448 of the Code provides:têñ.£îhqwâ£
ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith,
shall have the right
to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land, and the one
who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
(Paragraphing supplied)
The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not have been
very much more than that amount during the following January when ERNESTO and wife were
asked to vacate. However, ERNESTO and wife have not questioned the P25,000.00 valuation
determined by the Court of First Instance.
In regards to the valuation of the RESIDENTIAL HOUSE, the only evidence presented was the
testimony of ERNESTO that its worth at the time of the trial should be from P30,000.00 to
P40,000.00. The Municipal Court chose to assess its value at P20,000.00, or below the minimum
testified by ERNESTO, while the Court of First Instance chose the maximum of P40,000.00. In the
latter case, it cannot be said that the Court of First Instance had abused its discretion.
The challenged decision of respondent Court, based on valuations of P25,000.00 for the LAND
and P40,000.00 for the RESIDENTIAL HOUSE, cannot be viewed as not supported by the
evidence. The provision for the exercise by petitioner SARMIENTO of either the option to
indemnify private respondents in the amount of P40,000.00, or the option to allow private
respondents to purchase the LAND at P25,000.00, in our opinion, was a correct
decision.têñ.£îhqwâ£

The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his
building, under article 453 (now Article 546). The owner, of the land. upon, the
other hand, has the option, under article 361 (now Article 448), either to pay for
the building or to sell his land to the owner of the building. But he cannot, as
respondents here did, refuse both to pay for the building and to sell the land and
compel the owner of the building to remove it from the land where it is erected.
He is entitled to such remotion only when, after having chosen to sell his land,
the other party fails to pay for the same. (Emphasis ours)

We hold, therefore, that the order of Judge Natividad compelling defendants-

petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor
to sell the land, is null and void, for it amends substantially the judgment sought
to be executed and is, furthermore, offensive to articles 361 (now Article 448)
and 453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608
[1946]).

WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without pronouncement as
to costs.

SO ORDERED.1äwphï1.ñët
 Republic of the Philippines (1) Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses
SUPREME COURT Timbang in and to lot No. 2-a mentioned above and in consideration thereof, Filipinas
Manila Colleges, Inc., was ordered to pay the spouses Timbang the amount of P15,807.90 plus
such other amounts which said spouses might have paid or had to pay after February,
EN BANC 1953, to Hoskins and Co. Inc., agent of the Urban Estates, Inc., original vendor of the lot.
Filipinas Colleges, Inc. original vendor of the total amount with the court within 90 days
after the decision shall have become final.
G.R. No. L-12812 September 29, 1959

FILIPINAS COLLEGES, INC., plaintiff-appellee,
vs.
MARIA GARCIA TIMBANG, ET AL., defendants.
------------------------------
G.R. No. L-12813 September 29, 1959
MARIA GARCIA TIMBANG, ET AL., plaintiffs.
MARIA GARICA TIMBANG, plaintiff-appellant,
vs.
MARIA GERVACIO BLAS, defendant-appellee.
De Guzman and Fernandez for appellee Filipinas Colleges, Inc.
San Huan, Africa and Benedicto for appellant Maria Garcia Timbang.
Nicanor S. Sison for appellee Maria Gervacio Blas.
BARRERA, J.:
This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957
(a) declaring the Sheriff's certificate of sale covering a school building sold at public auction null
and void unless within 15 days from notice of said order the successful bidders, defendants-
appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to, appellee Maria
Gervacio Blas directly or through the Sheriff of Manila the sum of P5,750.00 that the spouses
Timbang had bid for the building at the Sheriff's sale; (b) declaring the other appellee Filipinas
Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of
tile No 45970, on which the building sold in the auction sale is situated; and (c) ordering the sale in
public auction of the said undivided interest of the Filipinas Colleges, Inc., in lot No. 2-a
aforementioned to satisfy the unpaid portion of the judgment in favor of appellee Blas and against
Filipinas Colleges, Inc. in the amount of P8,200.00 minus the sum of P5,750.00 mentioned in (a)
above.
(2) Maria Gervacio Blas was declared to be a builder in good faith of the school building
constructed on the lot in question and entitled to be paid the amount of P19,000.00 for the
same. Filipinas Colleges, Inc., purchaser of the said building was ordered to deliver to
Blas stock certificate (Exh. C) for 108 shares of Filipinas Colleges, Inc. with a par value of
P10,800.00 and to pay Blas the sum of P8,200.00 of the house.
(3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which after
liquidation was fixed at P32,859.34, within the 90-day period set by the court, Filipinas
Colleges would lose all its rights to the land and the spouses Timbang would then
become the owners thereof. In that eventuality, the Timbangs would make known to the
court their option under Art. 448 of the Civil Code whether they would appropriate the
building in question, in which even they would have to pay Filipinas Colleges, Inc. the
sum of P19,000.00, or would compel the latter to acquire the land and pay the price
thereof.
Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time
prescribed, the spouses Timbang, in compliance with the judgment of the Court of Appeals, on
September 28, 1956, made known to the court their decision that they had chosen not of
appropriate the building but to compel Filipinas Colleges, Inc., for the payment of the sum of
P32,859,34. The motion having been granted, a writ of execution was issued on January 8, 1957.
On January 16, 1957, appellee Blas in turn filed a motion for execution of her judgment of
P8,200.00 representing the unpaid portion of the price of the house sold to Filipinas Colleges, Inc.
Over the object of the Timbangs, the court grated the motion and the corresponding writ of
execution was issued on January 30, 1957, date of the granting of the motion for execution, Blas
through counsel, sent a letter to the Sheriff of Manila advising him of her preferential claim or lien
on the house to satisfy the unpaid balance of the purchase price thereof under Article 2242 of the
Civil Code, and to withhold from the proceed of the auction sale the sum of P8,200.00. Levy
having been made on the house in virtue of the writs of execution, the Sheriff of Manila on March
5, 1957, sold the building in public auction in favor of the spouses Timbang, as the highest
bidders, in the amount of P5,750.00. Personal properties of Filipinas Colleges, Inc. were also
auctioned for P245.00 in favor of the spouses Timbang.

The order appealed from is the result of three motions filed in the court a quo in the course of the
execution of a final judgment of the Court of Appeals rendered in 2 cases appealed to it in which
the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the parties. IN
that judgment of the Court of Appeals, the respective rights of the litigants have been adjudicated
as follows:1âwphïl.nêt
As a result of these actuation, three motion were subsequently filed before the lower court:
(1) By appellee Blas, praying that the Sheriff of Manila and/or the Timbang spouses be
ordered to pay and deliver to her the sum of P5,750.00 representing the proceeds of the
auction sale of the building of Filipinas Colleges, Inc. over which she has a lien of
P8,200.00 for the unpaid balance of the purchase price thereof;.
 (2) Also by the appellee Bals, praying that there being still two unsatisfied executions, one
for the sum of P32,859.34 in favor the land involved, Lot No. 2-a, be sold at public
auction; and (3) By Filipinas Colleges, Inc. praying that because its properties, the house
and some personal properties, have been auctioned for P5,750.00 and P245.00
respectively in favor of the Timbang spouses who applied the proceeds to the partial
payment of the sum of P32,859.34 value of the land, Lot No. 2-a, it (Filipinas Colleges,
Inc.) be declared part owner of said lot to the extent of the total amount realized from the
execution sale of its properties.1âwphïl.nêt
The Timbang spouses presented their opposition to each and all of these motion. After due
hearing the lower court rendered its resolution in the manner indicated at the beginning of this
decision, from which the Timbangs alone have appealed.
In assailing the order of the court a quo directing the appellants to pay appellee Blas the amount
of their bid (P5,750.00) made at the public auction, appellants' counsel has presented a novel,
albeit ingenious, argument. It is contended that because the builder in good faith has failed to pay
the price of the land after the owners thereof exercised their option under Article 448 of the Civil
Code, the builder lost his right of retention provided in Article 546 and by operation of Article 445,
the appellants as owners of the land automatically became the owners ipso facto, the execution
sale of the house in their favor was superfluous. Consequently, they are not bound to make good
their bid of P5,750.00 as that would be to make goods to pay for their own property. By the same
token, Blas claim for preference on account of the unpaid balance of the purchase price of the
house does not apply because preference applies only with respect to the property of the debtor,
and the Timbangs, owners of the house, are not the debtors of Blas.
This Court cannot accept this oversimplification of appellants' position. Article 448 and 546 of the
Civil Code defining the right of the parties in case a person in good faith builds, sows or plants on
the land of another, respectively provides:
ART. 448. The owner of the land on which anything has been built, sown or plated in
good faith shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnify provided for in article 546 and 548, or to obligate the one
who built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.
ART. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right
of retention the person who has defeated him in the possession having to option of
refunding the amount of expenses or of paying the case in value which thing may have
acquired by reason thereof.
Under the terms of these article, it is true that the owner of the land has the right to choose
between appropriating the building by reimbursing the builder of the value thereof or compelling
the builder in good faith to pay for his land. Even this second right cannot be exercised if the value
of the land is considerably more than that of the building. In addition to the right of the builder to be
paid the value of his improvement, Article 546 gives him the corollary right of retention of the
property until he is indemnified by the owner of the land. There is nothing in the language of these
two article, 448 and 546, which would justify the conclusion of appellants that, upon the failure of
the builder to pay the value of the land, when such is demanded by the land-owner, the latter
becomes automatically the owner of the improvement under Article 445. The case of
Bernardo vs. Bataclan, 66 Phil., 590 cited by appellants is no authority for this conclusion.
Although it is true it was declared therein that in the event of the failure of the builder to pay the
land after the owner thereof has chosen this alternative, the builder's right of retention provided in
Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder
loses entirely all rights over his own building. The question is; what is the recourse or remedy left
to the parties in such eventuality where the builder fails to pay the value of the land? While the
Code is silent on this Court in the cases of Miranda vs. Fadullon, et al., 97 Phil., 801; 51 Off. Gaz.,
[12] 6226; Ignacio vs. Hilario, 76 Phil., 605 and the cited case of Bernardo vs. Bataclan, supra.
In the first case, this Court has said:
A builder in good faith not be required to pay rentals. he has right to retain the land on
which he has built in good faith until he is reimbursed the expenses incurred by
him. Possibly he might be made to pay rental only when the owner of the land chooses
not to appropriate the improvement and requires the builder in good faith to pay for the
land but that the builder is unwilling or unable to pay the land, and then they decide to
leave things as they are and assume the relation of lessor and lessee, and should they
disagree as to the amount of rental then they can go to the court to fix that amount.
(Emphasis supplied)
Should the parties not agree to leave things as they are and to assume the relation of lessor and
lessee, another remedy is suggested in the case of Ignacio vs. Hilario, supra, wherein the court
has ruled that the owner of the land in entitled to have the improvement removed when after
having chosen to sell his land to the other party, i.e., the builder in good faith fails to pay for the
same.
A further remedy is indicated in the case of Bernardo vs. Bataclan, supra, where this Court
approved the sale of the land and the improvement in a public auction applying the proceeds
thereof first to the payment of the value of the land and the excess, if any, to be delivered to the
owner of the house in payment thereof.
The appellants herein, owners o the land, instead of electing any of the alternative above indicated
chose to seek recovery of the value of their land by asking for a writ of execution; levying on the
house of the builder; and selling the same in public auction. Sand because they are the highest
bidder in their own auction sale, they now claim they acquired title to the building without necessity
of paying in cash on account of their bid. In other words, they in effect pretend to retain their land
and acquire the house without paying a cent therefor.
This contention is without merit. This Court has already held in Matias vs. The Provincial Sheriff of
Nueva Ecija (74 Phil., 326) that while it is the inveriable practice, dictated by common sense, that
where the successful bidder is the execution creditor himself, he need not pay down the amount of
the bid if it does not exceed the amount of his judgement, nevertheless, when their is a claim by a
third-party, to the proceeds of the sale superior to his judgment credit, the execution creditor, as
successful bidder, must pay in cash the amount of his bid as a condition precedent to the issuance
to him of the certificate of sale. In the instant case, the Court of Appeals has already adjudged that
appellee Blas is entitled to the payment of the unpaid balance of the purchase price of the school
building. Blas is actually a lien on the school building are concerned. The order of the lower court
directing the Timbang spouses, as successful bidders, to pay in cash the amount of their bid in the
sum of P5,750.00 is therefore correct.

With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of the
land to the extent of the value of its personal properties sold at public auction in favor of the
Timbang, this Court Likewise finds the same as justified, for such amount represents, in effect, a
partial payment of the value of the land. If this resulted in the continuation of the so-called
involuntary partnership questioned by the difference between P8,200.00 — the unpaid balance of
the purchase price of the building and the sum of P5,750.00 — amount to be paid by the
Timbangs, the order of the court directing the sale of such undivided interest of the Filipinas
Colleges, Inc. is likewise justified to satisfy the claim of the appellee Blas.

Considering that the appellant spouses Marcelino Timbang and Maria Garcia Timbang may not
voluntarily pay the sum of P5,750.00 as ordered, thereby further delaying the final termination of
this case, the first part of the dispositive portion of the order appealed from is modified in the
sense that upon failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas
said sum of P5,750.00 within fifteen (15) days from notice of the final judgment, an order of
execution shall issue in favor of Maria Gervasio Blas to be levied upon all properties of the
Timbang spouses not exempt from execution for the satisfaction of the said amount.

In all other respects, the appealed order of the court a quo is hereby affirmed, with costs against
the appellants.

It is so ordered.

Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion and
Endencia, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-32974 July 30, 1979
BARTOLOME ORTIZ, petitioner,
vs.
HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of
Quezon, Branch IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE FERRO, AND
GREGORIO PAMISARAN, respondents.
Salonga, Ordoñ;ez, Yap, Sicat & Associates and Salvador, Ulgado & Carbon for petitioner.
Jose A. Cusi for private respondents.
ANTONIO, J.:1äwphï1.ñët
Petition for certiorari and Prohibition with Preliminary Injunction to nullify the Order of respondent
Judge directing the execution of the final judgment in Civil Case No. C-90, entitled "Bartolome
Ortiz vs. Secretary of Agriculture and Natural Resources, et al.," and the Writ of Execution issued
to implement said Order, allegedly for being inconsistent with the judgment sought to be enforced.
Civil Case No. C-90 was filed by Bartolome Ortiz who sought the review and/or annulment of the
decision of the Secretary of Agriculture and Natural Resources, giving preference to the sales
applications of private respondents Quirino Comintan and Eleuterio Zamora over Lot No. 5785,
PLS-45, located at Barrio Cabuluan, Calauag, Quezon.
I reimburse jointly said plaintiff the improvements he has introduced on the whole
The factual background of the case, as found by respondent Court, is as follows:têñ.£îhqwâ£
... The lot in controversy was formerly the subject of Homestead Application No.
122417 of Martin Dolorico II, plaintiff's ward who died on August 20, 1931; that
since then it was plaintiff who continued the cultivation and possession of the
property, without however filing any application to acquire title thereon; that in the
Homestead Application No. 122417, Martin Dolorico II named his uncle, Martin
Dolorico I as his heir and successor in interest, so that in 1951 Martin Dolorico I
executed an affidavit relinquishing his rights over the property in favor of
defendants Quirino Comintan and Eleuterio Zamora, his grandson and son-in-
law, respectively, and requested the Director of Lands to cancel the homestead
application; that on the strength of the affidavit, Homestead Application No.
122417 was cancelled and thereafter, defendants Comintan and Zamora filed
their respective sales applications Nos. 8433 and 9258; that plaintiff filed his
protest on November 26, 1951 alleging that he should be given preference to
purchase the lot inasmuch as he is the actual occupant and has been in
continuous possession of the same since 1931; and inspite of plaintiff's
opposition, "Portion A" of the property was sold at public auction wherein
defendant Comintan was the only bidder; that on June 8, 1957, investigation was
conducted on plaintiff's protest by Assistant Public Lands Inspector Serapion
Bauzon who submitted his report to the Regional Land Officer, and who in turn
rendered a decision on April 9, 1958, dismissing plaintiff's claim and giving due
course to defendants' sales applications on the ground that the relinquishment of
the homestead rights of Martin Dolorico I in favor of Comintan and Zamora is
proper, the former having been designated as successor in interest of the original
homestead applicant and that because plaintiff failed to participate in the public
auction, he is forever barred to claim the property; that plaintiff filed a motion for
reconsideration of this decision which was denied by the Director of Lands in his
order dated June 10, 1959; that, finally, on appeal to the Secretary of Agriculture
and Natural Resources, the decision rendered by the Regional Land Officer was
affirmed in toto. 1
On March 22, 1966, respondent Court rendered judgment in the afore-mentioned civil case, the
dispositive portion of which reads as follows:têñ.£îhqwâ£
IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby
rendered awarding Lot No. 5785-A of PLS-45, (Calauag Public Land Subdivision)
one-half portion of the property in litigation located at Bo. Cabuluan, Calauag,
Quezon, in favor of defendant QUIRINO COMINTAN, being the successful
bidder in the public auction conducted by the bureau of Lands on April 18, 1955,
and hereby giving due course to the Sales Application No. 9258 of defendant
Eleuterio Zamora over the other half, Lot No. 5785-B of PLS-45, Calauag,
without prejudice to the right of plaintiff BARTOLOME ORTIZ to participate in the
public bidding of the same to be announced by the Bureau of Lands, Manila.
However, should plaintiff Bartolome Ortiz be not declared the successful bidder
thereof, defendants Quirino Comintan and Eleuterio Zamora are ordered to
property in the amount of THIRTEEN THOUSAND SIX HUNDRED THIRTY-
TWO (P13,632.00) PESOS, the latter having the right to retain the property until
after he has been fully paid therefor, without interest since he enjoys the fruits of
the property in question, with prejudice and with costs again the plaintiff.2
Plaintiff appealed the decision to the Court of Appeals.
Two (2) years after the rendition of the judgment by the court a quo, while the case was pending
appeal and upon petition of private respondents Quirino Comintan and Eleuterio Zamora,
respondent Court appointed respondent Vicente Ferro, Clerk of Court, as Receiver to collect tolls
on a portion of the property used as a diversion road. On August 19, 1969, the Court of Appeals
issued a Resolution annulling the Order appointing the Receiver. Subsequently, on February 19,
1970, the Appellate Court affirmed the decision of the trial court. A petition for review on certiorari
of the decision of the Court of Appeals was denied by this Court on April 6, 1970. At this point,
private respondents filed a petition for appointment of a new receiver with the court a quo. This
petition was granted and the receiver was reappointed. Petitioner sought the annulment of this
Order with the Court of Appeals, but said Court ruled that its decision had already become final
and that the records of the case were to be remanded to the trial court.
Not satisfied with such denial, petitioner filed a petitioner for certiorari, prohibition and mandamus
with preliminary injunction before this Court, 3 praying for the annulment of the Order reappointing
the Receiver. On July 13, 1970, the petition was dismissed by this Court on the ground of
insufficient showing of grave abuse of discretion.
II
The judgment having become final and executory private respondents filed a motion for the
execution of the same, praying as follows:têñ.£îhqwâ£
WHEREFORE, it is respectfully prayed of this Honorable Court to order the
issuance of a writ of execution in accordance with the judgment of this Honorable
Court, confirmed by the Court of Appeals and the Supreme Court, commanding
any lawful officer to deliver to defendants Comintan and Zamora the land subject
of the decision in this case but allowing defendants to file a bond in such amount
as this Honorable Court may fix, in lieu of the P13,632.00 required to be paid to
plaintiff, conditioned that after the accounting of the tools collected by plaintiff,
there is still an amount due and payable to said plaintiff, then if such amount is
not paid on demand, including the legal interests, said bond shall be held
answerable.
Ordering further the plaintiff to render an accounting of the tolls he collected from
March of 1967 to December 31, 1968 and from September 1969 to March 31,
1970, and deliver said tolls collected to the receiver and if judgment is already
executed, then to Quirino Comintan and Eleuterio Zamora; and,
Finally, to condemn plaintiff to pay moral damages for withholding the tools which
belong to your movant in an amount this Court may deem just in the premises.4
Acting upon the foregoing motion, respondent Judge issued an Order, dated September 23, 1970,
stating, among others, the following: têñ.£îhqwâ£
The records further disclosed that from March 1967 to December 31, 1968,
piaintiff Bartolome Ortiz collected tolls on a portion of the propertv in question
wherein he has not introduced anv improvement particularlv on Lot No. 5785-A;
PLS-45 awarded to defendant Quirino Comintan, thru which vehicular traffic was
detoured or diverted, and again from September 1969 to March 31, 1970, the
plaintiff resumed the collection of tools on the same portion without rendering any
accounting on said tolls to the Receiver, who, was reappointed after submitting
the required bond and specifically authorized only to collect tolls leaving the
harvesting of the improvements to the plaintiff.
xxx xxx xxx
ln virtue of he findings of this Court as contained in the dispositive portion of its
decision, the defendants are jointly obligated to pay the plaintiff in the amount of
P13,632.00 as reasonable value of the improvements he introduced on the whole
property in question, and that he has the right of retention until fully paid. It can
be gleaned from the motion of the defendants that if plaintiff submits an
accounting of the tolls he collected during the periods above alluded to, their
damages of about P25,000.00 can more than offset their obligation of
P13,362.00 in favor of the plaintiff, thereafter the possession of the land be
delivered to the defendants since the decision of the Supreme Court has already
become final and executory, but in the interregnum pending such accounting and
recovery by the Receiver of the tolls collected by the plaintiff, the defendants pray
that they allowed to put up a bond in lieu of the said P13,632.00 to answer for
damages of the former, if any.
On the other hand, plaintiff contends in his opposition, admitting that the decision
of the Supreme Court has become final and executory; (1) the offer of a bond in
lieu of payment of P13,632.00 does not, and cannot, satisfy the condition
imposed in the decision of this Court which was affirmed in toto; (2) the public
sale of Portion "B" of the land has still to take place as ordained before the
decision could be executed; and, (3) that whatever sums plaintiff may derive from
the property cannot be set off against what is due him for the improvements he
made, for which he has to be reimbursed as ordered.
xxx xxx xxx
Let it be known that plaintiff does not dispute his having collected tolls during the
periods from March 1967 to December 31, 1968 and from September 1969 to
March 31, 1970. The Supreme Court affirmed the decision of this Court its
findings that said tolls belong to the defendant, considering that the same were
collected on a portion of the land question where the plaintiff did not introduce
any improvement. The reimbursement to the plaintiff pertains only to the value of
the improvements, like coconut trees and other plants which he introduced on the
whole property. The tolls collected by the plaintiff on an unimproved portion
naturally belong to the defendants, following the doctrine on accretion. Further,
the reappointment of a Receiver by this Court was upheld by the Supreme Court
when it denied the petition for certiorari filed by the plaintiff, bolstering the legal
claim of defendants over said tolls. Thus, the decision of the Supreme Court
rendered the decision of this Court retroactive from March 22, 1966 although
pending accounting of the tolls collected by the plaintiff is justified and will not
prejudice anybody, but certainly would substantially satisfy the conditions
imposed in the decision. However, insofar as the one-half portion "B" of the
property, the decision may be executed only after public sale by the Bureau of
Lands shall be accomplished.
WHEREFORE, finding the Motion for Execution filed by the defendants to be
meritorious, the same is granted; provided, however, that they put up a bond
 equal the adjudicated amount of P13,632.00 accruing in favor of the plaintiff,
from a reputable or recognized bonding or surety company, conditioned that after
an accounting of the tolls collected by the plaintiff should there be found out any
balance due and payable to him after reckoning said obligation of P13,632.00 the
bond shall be held answerable therefor.5
Accordingly, a Writ of Execution was issued after private respondent Quirino Comintan had filed
the required bond. The writ directed the Sheriff to enforce the decision of the Court, and stated,
part in, the following:têñ.£îhqwâ£
But should there be found any amount collectible after accounting and deducting
the amount of P3,632.00, you are hereby ordered that of the goods and chattels
of Bartolome Ortiz of Bo. Kabuluan, Calauag, Quezon, be caused to be made
any excess in the above-metioned amount together with your lawful fees and that
you render same to defendant Quirino Comintan. If sufficient personal property
cannot be found thereof to satisfy this execution and lawful fees thereon, then
you are commanded that of the lands and buildings of the said BARTOLOME
ORTIZ you make the said excess amount in the manner required by the Rules of
Court, and make return of your proceedings within this Court within sixty (60)
days from date of service.
You are also ordered to cause Bartolome Ortiz to vacate the property within
fifteen (15) days after service thereof the defendant Quirino Comintan having
filed the required bond in the amount of THIRTEEN THOUSAND SIX HUNDRED
THIRTY-TWO (P13,632.00) PESOS. 6
On October 12, 1970, petitioner filed a Motion for Reconsideration of the aforesaid Order and Writ
of Execution, alleging:têñ.£îhqwâ£
(a) That the respondent judge has no authority to place respondents in
possession of the property;
(b) That the Supreme Court has never affirmed any decision of the trial court that
tolls collected from the diversionary road on the property, which is public land,
belong to said respondents;
(c) That to assess petitioner a P25,000.00 liability for damages is purely punitive
imposition without factual or legal justification.
The foregoing Motion for Reconsideration was denied by respondent Judge per Order dated
November 18, 1970. Saod Order states, in part:têñ.£îhqwâ£
It goes without saying that defendant Comintan is entitled to be placed in
possession of lot No. 5785-A of PLS-45 (Calauag Public Land Subdivision) and
enjoyment of the tolls from March, 1967 to March, 1968 and from September,
1969 to March 31, l970 which were received by plaintiff Bartolome Ortiz,
collected from the property by reason of the diversion road where vehicular traffic
was detoured. To defendant Comintan belongs the tolls thus collected from a
portion of the land awarded to him used as a diversionary road by the doctrine of
accretion and his right over the same is ipso jure, there being no need of any
action to possess said addition. It is so because as consistently maintained by
the Supreme Court, an applicant who has complied with all the terms and
conditions which entitle him to a patent for a particular tract of publlic land,
acquires a vested right therein and is to be regarded as equitable owner thereof
so that even without a patent, a perfected homestead or sales application is a
property right in the fullest sense, unaffectcd by the fact that the paramount title
is still in the Government and no subsequent law can deprive him of that vested
right The question of the actual damages suffered by defendant Comintan by
reason of the unaccounted tolls received by plaintiff had already been fully
discussed in the order of September 23, 1970 and the Court is honestly
convinced and believes it to be proper and regular under the circumstances.
Incidentally, the Court stands to correct itself when in the same order, it directed
the execution of he decision with respect to the one-half portion "B" of the
property only after the public sale by the Bureau of Lands, the same being an
oversight, it appearing that the Sales Application of defendant Eleuterio Zamora
had already been recognized and full confirmed by the Supreme Court.
In view thereof, finding the motion filed by plaintiff to be without merit, the Court
hereby denies the same and the order of September 23, 1970 shall remain in full
force subject to the amendment that the execution of the decision with respect to
the one-half portion "B" shall not be conditioned to the public sale by the Bureau
of Lands.
SO ORDERED.7
III
Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of
Execution, respondent Court "acted without or in excess of jurisdiction, and/or with grave abuse of
discretion, because the said order and writ in effect vary the terms of the judgment they
purportedly seek to enforce." He argued that since said judgment declared the petitioner a
possessor in good faith, he is entitled to the payment of the value of the improvements introduced
by him on the whole property, with right to retain the land until he has been fully paid such value.
He likewise averred that no payment for improvements has been made and, instead, a bond
therefor had been filed by defendants (private respondents), which, according to petitioner, is not
the payment envisaged in the decision which would entitle private respondents to the possession
of the property. Furthermore, with respect to portion "B", petitioner alleges that, under the decision,
he has the right to retain the same until after he has participated and lost in the public bidding of
the land to be conducted by the Bureau of Lands. It is claimed that it is only in the event that he
loses in the bidding that he can be legally dispossessed thereof.
It is the position of petitioner that all the fruits of the property, including the tolls collected by him
from the passing vehicles, which according to the trial court amounts to P25,000.00, belongs to
petitioner and not to defendant/private respondent Quirino Comintan, in accordance with the
decision itself, which decreed that the fruits of the property shall be in lieu of interest on the
amount to be paid to petitioner as reimbursement for improvements. Any contrary opinion, in his
view, would be tantamount to an amendment of a decision which has long become final and
executory and, therefore, cannot be lawfully done.
Petitioner, therefore, prayed that: (1) a Writ of Preliminary Injunction be issued enjoining the
enforcement of the Orders of September 23, 1970 and November 18, 1970, and the Writ of
Execution issued thereto, or restoring to petitioner the possession of the property if the private
respondents had been placed in possession thereof; (2) annulling said Orders as well as the Writ
of Execution, dissolving the receivership established over the property; and (3) ordering private
respondents to account to petitioner all the fruits they may have gathered or collected from the
property in question from the time of petitioiier's illegal dispossession thereof.
On January 29, 1971, this Court issued the Writ of Preliminary Injunction. On January 30, 1971,
private respondents filed a Motion for Reconsideration and/or Modification of the Order dated
January 29, 1971. This was followed by a Supplemental Motion for Reconsideration and
Manifestation on February 3, 1971. In the latter motion, private respondents manifested that the
amount of P14,040.96, representing the amount decreed in the judgment as reimbursement to
petitioner for the improvements, plus interest for six months, has already been deposited by them
in court, "with the understanding that said amount shall be turned over to the plaintiff after the
court a quo shall have determined the improvement on Lot 5785-A, and subsequently the
remaining balance of the deposit shall be delivered to the petitioner (plaintiff therein) in the event
he loses the bid for Lot 5785-B in favor of private respondent Eleuterio Zamora."8 The deposit is
evidenced by a certification made by the Clerk of the Court a quo.9 Contending that said deposit
was a faithful compliance with the judgment of the trial court, private respondent Quirino Comintan
prayed for the dissolution of the Writ of Injunction.
It appears that as a consequence of the deposit made by private respondents, the Deputy, Sheriff
of Calauag, Quezon ousted petitioner's representative from the land in question and put private
respondents in possession thereof. 10
On March 10, 1971, petitioner filed a "Comment on Respondents' 'Motion for Reconsideration'
dated January 29, 1971' and 'Supplemental Motion for Reconsideration and Manifestation,'"
contending that the tender of deposit mentioned in the Suplemental Motion was not really and
officially made, "inasmuch as the same is not supported by any official receipt from the lower
court, or from its clerk or cashier, as required by law;" that said deposit does not constitute
sufficient compliance with the judgment sought to be enforced, neither was it legally and validly
made because the requisites for consignation had not been complied with; that the tender of legal
interest for six months cannot substitute petitioner's enjoyment of the fruits of the property as long
as the judgment in Civil Case No. C-90 has not been implemented in the manner decreed therein;
that contrary to the allegations of private respondents, the value of the improvements on the whole
property had been determined by the lower court, and the segregation of the improvements for
each lot should have been raised by them at the opportune moment by asking for the modification
of the decision before it became final and executory; and that the tolls on the property constituted
"civil fruits" to which the petitioner is entitled under the terms of the decision.
IV
The issue decisive of the controvery is—after the rendition by the trial court of its judgment in Civil
Case No. C-90 on March 22, 1966 confirming the award of one-half of the property to Quirino
Comintan—whether or not petitioner is still entitled to retain for his own exclusive benefit all the
fruits of the property, such as the tolls collected by him from March 1967 to December 1968, and
September 1969 to March 31, 1970, amounting to about P25,000.00. In other words, petitioner
contends that so long as the aforesaid amount of P13,632,00 decreed in the judgment
representing the expenses for clearing the land and the value of the coconuts and fruit trees
planted by him remains unpaid, he can appropriate for his exclusive benefit all the fruits which he
may derive from the property, without any obligation to apply any portion thereof to the payment of
the interest and the principal of the debt.
We find this contention untenable.
There is no question that a possessor in good faith is entitled to the fruits received before the
possession is legally interrupted. 11 Possession in good faith ceases or is legally interrupted from
the moment defects in the title are made known to the possessor, by extraneous evidence or by
the filing of an action in court by the true owner for the recovery of the property. 12 Hence, all the
fruits that the possessor may receive from the time he is summoned in court, or when he answers
the complaint, must be delivered and paid by him to the owner or lawful possessor. 13
However, even after his good faith ceases, the possessor in fact can still retain the property,
pursuant to Article 546 of the New Civil Code, until he has been fully reimbursed for all the
necessary and useful expenses made by him on the property. This right of retention has been
considered as one of the conglomerate of measures devised by the law for the protection of the
possessor in good faith. Its object is to guarantee the reimbursement of the expenses, such as
those for the preservation of the property,14 or for the enhancement of its utility or productivity.15 It
permits the actual possessor to remain in possession while he has not been reimbursed by the
person who defeated him in the possession for those necessary expenses and useful
improvements made by him on the thing possessed. The principal characteristic of the right of
retention is its accessory character. It is accessory to a principal obligation. Considering that the
right of the possessor to receive the fruits terminates when his good faith ceases, it is necessary,
in order that this right to retain may be useful, to concede to the creditor the right to secure
reimbursement from the fruits of the property by utilizing its proceeds for the payment of the
interest as well as the principal of the debt while he remains in possession. This right of retention
of the property by the creditor, according to Scaevola, in the light of the provisions of Article 502 of
the Spanish Civil Code,16 is considered not a coercive measure to oblige the debtor to pay,
depriving him temporarily of the enjoyment of the fruits of his property, but as a means of obtainitig
compensation for the debt. The right of retention in this case is analogous to a contract of
antichresis and it cati be considered as a means of extinguishing the obligation, inasmuch as the
right to retain the thing lasts only for the period necessary to enable the creditor to be reimbursed
from the fruits for the necessary and useful expenses. 17
According to Manresa, the right of retention is, therefore, analogous to that of a pledge, if the
property retained is a movable, and to that of antichresis, if the property held is immovable. 18 This
construction appears to be in harmony with similar provisions of the civil law which employs the
right of retention as a means or device by which a creditor is able to obtain the payment of a debt.
Thus, under Article 1731 of the New Civil Code, any person who has performed work upon a liable only for a proportionate part of the obligation. 24 The judgment debt of P13,632.00 should,
movable has a right to retain it by way of pledge until he is paid. Similarly, under Article 1914 of therefore, be pro-rated in equal shares to Comintan and Zamora.
the same Code, the agent may retain in pledge the things which are the object of the agency until
the principal effects reimbursement of the funds advanced by the former for the execution of the Regarding Lot 5785-B, it appears that no public sale has yet been conducted by the Bureau of
agency, or he is indemnified for all damages which he may have suffered as a consequence of the Lands and, therefore, petitioner is entitled to remain in possession thereof. This is not disputed by
execution of the agency, provided he is free from fault. To the same effect, the depositary, under respondent Eleuterio Zamora. 25 After public sale is had and in the event that Ortiz is not declared
Article 1994 of the same Code, may retain the thing in pledge until the full payment of what may the successful bidder, then he should be reimbursed by respondent Zamora in the corresponding
be due him by reason of the deposit. The usufructuary, pursuant to Article 612 of the same Code, amount for the improvements on Lot 5785-B.
may retain the property until he is reimbursed for the amount paid for taxes levied on the capital
(Article 597) and tor extraordinary repairs (Article 594).
WHEREFORE, in view hereof, the Order of respondent Court of November 18, 1970 is hereby
modified to conform to the foregoing judgment. The Writ of Preliminary Injunction, dated January
In all of these cases, the right of retention is used as a means of extinguishing the obligation. As 29, 1971, is hereby dissolved. Without special pronouncement as to costs.
amply observed by Manresa: "El derecho de retencion, lo hemos dicho, es el derecho de prenda o
el de anticresis constituido por la ley con independencia de las partes." 19 In a pledge, if the thing
Barredo (Chairman), Concepcion, Jr. and Guerrero, JJ., concur.1äwphï1.ñët
pledged earns or produces fruits, income, dividends or interests, the creditor shall compensate
what he receives with those which are owing him.20 In the same manner, in a contract of
antichresis, the creditor acquires the right to receive the fruits of an immovable of his debtor with Aquino, J., concurs in the result.
the obligation to apply them to payment of the interest, if owing, and thereafter to the principal of
his credit. 21 The debtor can not reacquire enjoyment of the immovable until he has actually paid Santos and Abad Santos, JJ., are on leave.
what he owes the creditor. 22
Guerrero, J., was designated to sit in the Second Division
Applying the afore-cited principles to the case at bar, petitioner cannot appropriate for his own
exclusive benefit the tolls which he collected from the property retained by him. It was his duty
under the law, after deducting the necessary expenses for his administration, to apply such
amount collected to the payment of the interest, and the balance to the payment of the obligation.

We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for administration,
belong to Quirino Comintan, owner of the land through which the toll road passed, further
considering that the same was on portions of the property on which petitioner had not introduced
any improvement. The trial court itself clarified this matter when it placed the toll road under
receivership. The omission of any mention of the tolls in the decision itself may be attributed to the
fact that the tolls appear to have been collected after the rendition of the judgment of the trial
court.

The records further reveal that earnest efforts have been made by private respondents to have the
judgment executed in the most practicable manner. They deposited in court the amount of the
judgment in the sum of P13,632.00 in cash, subject only to the accounting of the tolls collected by
the petitioner so that whatever is due from him may be set off with the amount of reimbursement.
This is just and proper under the circumstances and, under the law, compensation or set off may
take place, either totally or partially. Considering that petitioner is the creditor with respect to the
judgment obligation and the debtor with respect to the tolls collected, Comintan being the owner
thereof, the trial court's order for an accounting and compensation is in accord with law. 23

With respect to the amount of reimbursement to be paid by Comintan, it appears that the
dispositive portion of the decision was lacking in specificity, as it merely provided that Comintan
and Zamora are jointly liable therefor. When two persons are liable under a contract or under a
judgment, and no words appear in the contract or judgment to make each liable for the entire
obligation, the presumption is that their obligation is joint or mancomunada, and each debtor is
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-25462 February 21, 1980
MARIANO FLOREZA, petitioner,
vs.
MARIA D. de EVANGELISTA and SERGIO EVANGELISTA, respondents.
R.D. Hipolito & B. P. Fabir for petitioner.
E.G. Tanjuatco & Associates for respondents.
MELENCIO-HERRERA, J:
This is a Petition for Review on certiorari of the Decision of the Court of Appeals (CA-G.R. No.
23516-R) promulgated on November 4, 1965, entitled "Maria de Evangelista and Sergio
Evangelists, (now the respondents) vs. Mariano Floreza (petitioner herein)," reversing the
judgment of the Court of First Instance of Rizal rendered on July 17, 1957, and instead ordering
petitioner to vacate respondents' residential lot, to remove his house at his own expenses and to
pay rental from May 5, 1956.
Plaintiffs Maria de Evangelista and Sergio Evangelista, who are mother and son, (the
EVANGELISTAS, for short) are the owners of a residential lot located at Sumilang St., Tanay,
Rizal, with an area of 204.08 sq. ms., assessed at P410.00. In May 1945, the EVANGELISTAS
borrowed from FLOREZA the amount of P100.00. On or about November 1945, with the consent
of the EVANGELISTAS, FLOREZA occupied the above residential lot and built thereon a house of
light materials (barong- barong) without any agreement as to payment for the use of said
residential lot owing to the fact that the EVANGELISTAS has then a standing loan of P100.00 in
favor of FLOREZA. 1
On the following dates, the EVANGELISTAS again borrowed the indicated amounts: September
16, 1946 — P100.00; 2 August 17, 1947 — P200,00; 3 January 30, 1949 — P200.00; 4 April 1,
1949 — P140.00, 5 or a total of P740.00 including the first loan. The last three items are evidenced
by private documents stating that the residential lot stands as security therefor and that the
amounts covered thereunder are payable within six years from date, without mention of interest.
The document executed on September 16, 1946 stated specifically that the loan was without
interest "walang anumang patubo."
On January 10, 1949, FLOREZA demolished this house of light materials and in its place
constructed one of strong materials assessed in his name at P1,410.00 under Tax Declaration No.
4448. FLOREZA paid no rental as before. 6
On August 1, 1949, the EVANGELISTAS, for and in consideration of P1,000.00 representing the
total outstanding loan of P740.00 plus P260.00 in cash, sold their residential lot to FLOREZA, with
a right to repurchase within a period of 6 years from date, or up to August 1, 1955, as evidenced
by a notarial document, Exh. B, registered under Act 3344 on December 6, 1949, as Inscription
No. 2147. 7
On January 2, 1955, or seven months before the expiry of the repurchase period, the
EVANGELISTAS paid in full the repurchase price of P1,000.00.
On April 25, 1956, the EVANGELISTAS, through their counsel, wrote FLOREZA a letter 8 asking
him to vacate the premises as they wanted to make use of their residential lot besides the fact that
FLOREZA had already been given by them more than one year within which to move his house to
another site. On May 4, 1956, the EVANGELISTAS made a formal written demand to vacate,
within five days from notice, explaining that they had already fully paid the consideration for the
repurchase of the lot. 9 FLOREZA refused to vacate unless he was first reimbursed the value of
his house. Hence, the filing of this Complaint on May 18, 1956 by the EVANGELISTAS.
The EVANGELISTAS prayed that: 1) they be declared the owners of the house of strong materials
built by FLOREZA on their residential lot, without payment of indemnity; or, in the alternative to
order FLOREZA to remove said house; 2) that FLOREZA pay them the sum of P10.00 per month
as the reasonable value for the use and occupation of the same from January 2, 1955 (the date
the repurchase price was paid) until FLOREZA removes the house and delivers the lot to them;
and 3) to declare the transaction between them and FLOREZA as one of mortgage and not
of pacto de retro.
In his Answer, FLOREZA admitted the repurchase but controverted by stating that he would
execute a deed of repurchase and leave the premises upon payment to him of the reasonable
value of the house worth P7,000.00.
In a Decision dated July 17, 1957, the Court of First Instance of Rizal opined that the question of
whether the transaction between the parties is one of mortgage or pacto de retro is no longer
material as the indebtedness of P1,000.00 of the EVANGELISTAS to FLOREZA had already been
fully paid. And, applying Article 448 of the Civil Code, 10 it rendered a decision dispositively
decreeing:
FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby renders
judgment granting the plaintiffs the right to elect, as owners of the land, to
purchase the house built, on the said lot in question by the defendant for P2,500
or to sell their said land to e defendant for P1,500. In the event that the plaintiffs
shall decide not to purchase the house in question the defendant should be
allowed to remain in plaintiffs' premises by, paying a monthly rental of P10.00
which is the reasonable value for the use of the same per month as alleged by
plaintiffs in their complaint. The Court also orders the defendant to pay a monthly
rental of P10.00 for the use of the land in question from May 18, 1956, the date
of the commencement of this action. The counterclaim of the defendant is hereby
ordered dismissed. Without pronouncement as to costs.
 SO ORDERED. 11
Both parties appealed to the Court of Appeals.
On November 4, 1965, the Court of Appeals concluded that Article 448 of the Civil Code, supra,
was inapplicable; that FLOREZA was not entitled to reimbursement for his house but that he could
remove the same at his expense; and accordingly rendered judgment thus:
WHEREFORE, judgment is hereby rendered: (1) adjudging the defendant-
appellant Mariano Floreza to vacate plaintiffs' residential lot described in the
complaint and to pay rental of P10.00 a month from May 5, 1956, until he
(defendant) shall have vacated the premises; (2) ordering defendant to remove
his house from the land in question within 30 days from the time this decision
becomes final and executory; (3) ordering the Register of Deeds of Rizal to
cancel inscription No. 2147, Page 210, Vol. 36, in the Registration Book under
Act 3344 upon payment of his lawful fees; and (4) taxing the costs in both
instances against defendant-appellant Mariano Floreza. 12
Hence, this Petition for Review on certiorari by FLOREZA, seeking a reversal of the aforestated
judgment and ascribing the following errors:
1) That the Court of Appeals erred in holding that petitioner Floreza was a builder
in bad faith without likewise holding that respondents as owners of the land in
dispute, were likewise in bad faith and therefore both parties should in
accordance with Art. 453 of the New Civil Code be considered as having acted in
good faith.
2) That the Court of Appeals erred in completely ignoring the issue raised on
appeal as to whether or not respondents as owners of the questioned lot, were in
bad faith in the sense that they had knowledge of and acquiseced to the
construction of the house of petitioner on their lot.
3) That the Court of Appeals erred in not applying Art. 448 of the New Civil Code
in the adjudication of the rights of petitioner and respondent.
4) That the Court of Appeals erred in declaring that petitioner is not entitled to
reimbursement for the value of his house and that he should instead remove the
same at his expense.
5) That the Court of Appeals erred in adjudging petitioner to vacate respondents'
lot in question and to pay rentals commencing from May 5, 1956, until he shall
have vacated the premises, notwithstanding that petitioner is entitled under Arts.
448 and 546 of the New Civil Code, to retention without payment of rental while
the corresponding indemnity of his house had not been paid.
6) That the Court of Appeals erred in taxing costs against petitioner.
7) That the Court of Appeals erred in not awarding petitioner's counterclaim.
During the pendency of this appeal, petitioner Maria D. de Evangelista died and was ordered
substituted by her son, petitioner Sergio, as her legal representative, in a Resolution dated May
14, 1976.
On October 20, 1978. the EVANGELISTAS filed a Motion to Dismiss stating that FLOREZA had
since died and that his heirs had voluntarily vacated the residential lot in question. The date
FLOREZA passed away and the date his heirs had voluntarily vacated the property has not been
stated. Required to comment, "petitioner (represented by his heirs)", through counsel, confirmed
his death and the removal of the house and manifested that thereby the question of
reimbursement had moot and academic. He objected to the dismissal of the case, however, on the
ground that the issue of rentals still pends. On January 21, 1980, complying with a Resolution of
'his Court, the EVANGELISTAS clarified that the dismissal they were praying for was not of the
entire case but only of this Petition for Review on Certiorari.
We are not in agreement that the question of reimbursement of the value of the improvement
erected on the subject property has become moot. Petitioner's right of retention of subject property
until he is reimbursed for the value of his house, as he had demanded, is inextricably linked with
the question of rentals. For if petitioner has the right to indemnity, he has the right of retention and
no rentals need be paid. Conversely, if no right of retention exists, damages in the form of rentals
for the continued use and occupation of the property should be allowed.
We uphold the Court of Appeals in its conclusion that Article 448 of the Civil Code is inapplicable
to the factual milieu herein. Said codal provision applies only when the builder, planter, or sower
believes he had the right so to build, plant or sow because he thinks he owns the land or believes
himself to have a claim of title. 13 In this case, petitioner makes no pretensions of ownership
whatsoever.
Petitioner concedes that he was a builder in bad faith but maintains that' the EVANGELISTAS
should also be held in bad faith, so that both of them being in bad faith, Article 453 of the Civil
Code 14 should apply. By the same token, however, that Article 448 of the same Code is not
applicable, neither is Article 453 under the ambiance of this case.
Would petitioner, as vendee a retro, then be entitled to the rights granted iii Article 1616 of the
Civil Code (Art. 1518 of the old Code)? To quote:
Art. 1616. The vendor cannot avail himself of the right of repurchase without
returning to the vendee the price of the sale, and in addition:
(1) The expenses of the contract, and any other legitimate payments made by
reason of the sale;
(2) The necessary and useful expenses made on the thing sold.
The question again calls for a negative answer. It should be noted that petitioner did not construct
his house as a vendee a retro. The house had already been constructed as far back as 1949
(1945 for the house of light materials) even before the pacto de retro sale in 1949. Petitioner
incurred no useful expense, therefore, after that sale. The house was already there at the
tolerance of the EVANGELISTAS in consideration of the several loans extended to them. Since
petitioner cannot be classified as a builder in good faith within the purview of Article 448 of the
Civil Code, nor as a vendee a retro, who made useful improvements during the lifetime of
the pacto de retro, petitioner has no right to reimbursement of the value of the house which he had
erected on the residential lot of the EVANGELISTAS, much less to retention of the premises until
he is reimbursed.The rights of petitioner are more akin to those of a usufructuary who, under
Article 579 of the Civil (Art. 487 of the old Code), may make on the property useful improvements
but with no right to be indemnified therefor. He may, however, remove such improvements should
it be possible to do so without damage to the property: For if the improvements made by the
usufructuary were subject to indemnity, we would have a dangerous and unjust situation in which
the usufructuary could dispose of the owner's funds by compelling him to pay for improvements
which perhaps he would not have made. 15

We come now to the issue of rentals. It is clear that from the date that the redemption price had
been paid by the EVANGELISTAS on January 2, 1955, petitioner's right to the use of the
residential lot without charge had ceased. Having retained the property although a redemption had
been made, he should be held liable for damages in the form of rentals for the continued use of
the subject residential lot16 at the rate of P10.00 monthly from January 3, 1955, and not merely
from the date of demand on May 4, 1956, as held by the Court of Appeals, until the house was
removed and the property vacated by petitioner or his heirs.

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

Costs against petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-49219 April 15, 1988
SPOUSES CONCEPCION FERNANDEZ DEL CAMPO and ESTANISLAO DEL
CANTO, plaintiffs-appellees,
vs.
BERNARDA FERNANDEZ ABESIA, defendant-appellant.
Geronimo Creer, Jr. for plaintiffs-appellees.
Benedicto G. Cobarde for defendant, defendant-appellant
GANCAYCO, J.:
In this appeal from the decision of the Court of First Instance (CFI) of Cebu, certified to this Court
by the Court of Appeals on account of the question of law involved, the sole issue is the
applicability of the provisions of Article 448 of the Civil Code relating to a builder in good faith
when the property involved is owned in common.
This case involves a parcel of land, Lot No. 1161 of the Cadastral Survey of Cebu, with an area of
only about 45 square meters, situated at the corner of F. Flores and Cavan Streets, Cebu City
covered by TCT No. 61850. An action for partition was filed by plaintiffs in the CFI of Cebu.
Plaintiffs and defendants are co-owners pro indiviso of this lot in the proportion of and 1/3 share
each, respectively. The trial court appointed a commissioner in accordance with the agreement of
the parties. ,the Id commissioner conducted a survey, prepared a sketch plan and submitted a
report to the trial court on May 29, 1976, recommending that the property be divided into two lots:
Lot 1161-A with an area of 30 square meters for plaintiffs and Lot No. 1161-B with an area of 15
square meters for the defendants. The houses of plaintiffs and defendants were surveyed and
shown on the sketch plan. The house of defendants occupied the portion with an area of 5 square
meters of Lot 1161-A of plaintiffs. The parties manifested their conformity to the report and asked
the trial court to finally settle and adjudicate who among the parties should take possession of the
5 square meters of the land in question.
In solving the issue the trial court held as follows:
The Court believed that the plaintiffs cannot be obliged to pay for the value of the
portion of the defendants' house which has encroached an area of five (5) sq.
meters of the land alloted to them. The defendants cannot also be obliged to pay
for the price of the said five (5) square meters. The rights of a builder in good
faith under Article 448 of the New Civil Code does (sic) not apply to a case where
one co-owner has built, planted or sown on the land owned in common.
"Manresa agreeing with Sanchez Roman, says that as a general rule this article
is not applicable because the matter should be governed more by the provisions
on co-ownership than on accession. Planiol and Ripert are also of the opinion
that this article is not applicable to a co-owner who constructs, plants or sows on
the community property, even if the land where the construction, planting or
sowing is made is a third person under the circumstances, and the situation is
governed by the rules of co-ownership. Our Court of Appeals has held that this
article cannot be invoked by one co-owner against another who builds, plants or
sows upon their land, since the latter does not do so on land not belonging to
him. (C.A.), O.G. Supp., Aug. 30, 194, p. 126). In the light of the foregoing
authorities and considering that the defendants have expressed their conformity
to the partition that was made by the commissioner as shown in the sketch plan
attached to the commissioner's report, said defendants have no other alternative
except to remove and demolish part of their house that has encroached an area
of five (5) sq. meters of the land allotted to the plaintiffs.
WHEREFORE, judgment is hereby rendered assigning Lot 1161-A with an area
of thirty (30) sq. meters to the plaintiffs spouses Concepcion Fernandez Abesia,
Lourdes Fernandez Rodil, Genaro Fernandez and Dominga A. Fernandez, in the
respective metes and bounds as shown in the subdivision sketch plan attached
to the Commissioner's Report dated may 29, 1976 prepared by the
Commissioner, Geodetic Engineer Espiritu Bunagan. Further, the defendants are
hereby ordered at their expense to remove and demolish part of their house
which has encroached an area of five (5) square meters from Lot 1161-A of the
plaintiffs; within sixty (60) days from date hereof and to deliver the possession of
the same to the plaintiffs. For the Commissioner's fee of P400.00, the defendants
are ordered to pay, jointly and severally, the sum of P133.33 and the balance
thereof to be paid by the plaintiffs. The costs of suit shall be paid by the plaintiffs
and the defendants in the proportion of two-thirds (2/3) and one-third (1/3) shares
respectively. A certified copy of this judgment shall be recorded in the office of
the Register of Deeds of the City of Cebu and the expense of such recording
shall be taxed as a part of the costs of the action.
Hence, this appeal interposed by the defendants with the following assignments of errors:
I
THE TRIAL COURT ERRED IN NOT APPLYING THE RIGHTS OF A BUILDER
IN GOOD FAITH UNDER ART. 448 OF THE NEW CIVIL CODE TO
DEFENDANTS-APPELLANTS WITH RESPECT TO THAT PART OF THEIR
HOUSE OCCUPYING A PROTION OF THE LOT ASSIGNED TO PLAINTIFFS-
APPELLEES.
II
THE TRIAL COURT ERRED IN ORDERING DEFENDANTS-APPELLANTS TO
REMOVE AND DEMOLISH AT THEIR EXPENSE, THAT PART OF THEIR
 HOUSE WHICH HAS ENCROACHED ON AN AREA OF FIVE SQUARE SO ORDERED.
METERS OF LOT 1161-A OF PLAINTIFFS-APPELLEES.
Teehankee, C.J., Narvasa, Cruz and Griño-Aquino, JJ., concur.
Article 448 of the New Civil Code provides as follows:

Art. 448. The owner of the land on which anything has been built, sown, or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in articles 546
and 548, or to oblige the one who built or planted to pay the price of the land, and
the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner
builds, plants or sows on the land owned in common for then he did not build, plant or sow upon
land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third
person under the circumstances, and the situation is governed by the rules of co-ownership. 1

However, when, as in this case, the co-ownership is terminated by the partition and it appears that
the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining
to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of
the new Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of
the Civil Code may apply even when there was co-ownership if good faith has been established. 2

Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said
portion of the house of defendants upon payment of indemnity to defendants as provided for in
Article 546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of
the land occupied by their house. However, if the price asked for is considerably much more than
the value of the portion of the house of defendants built thereon, then the latter cannot be obliged
to buy the land. The defendants shall then pay the reasonable rent to the plaintiff upon such terms
and conditions that they may agree. In case of disagreement, the trial court shall fix the terms
thereof. Of course, defendants may demolish or remove the said portion of their house, at their
own expense, if they so decide.

WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiff to indemnify
defendants for the value of the Id portion of the house of defendants in accordance with Article
546 of the Civil Code, if plaintiffs elect to appropriate the same. Otherwise, the defendants shall
pay the value of the 5 square meters of land occupied by their house at such price as may be
agreed upon with plaintiffs and if its value exceeds the portion of the house that defendants built
thereon, the defendants may choose not to buy the land but defendants must pay a reasonable
rental for the use of the portion of the land of plaintiffs As may be agreed upon between the
parties. In case of disagreement, the rate of rental shall be determined by the trial court.
Otherwise, defendants may remove or demolish at their own expense the said portion of their
house. No costs.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 72876 January 18, 1991
FLORENCIO IGNAO, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, JUAN IGNAO, substituted by his Legal Heirs,
and ISIDRO IGNAO, respondents.
Dolorfino and Dominguez Law Offices for petitioner.
Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.
FERNAN, C.J.:
In this petition for review by certiorari, petitioner seeks the reversal of the decision of the
Intermediate Appellate Court (now Court of Appeals) affirming in toto the decision of the Court of
First Instance of Cavite, ordering petitioner Florencio Ignao to sell to private respondents Juan and
Isidro Ignao, that part of his property where private respondents had built a portion of their houses.
The antecedent facts are as follows:
Petitioner Florencio Ignao and his uncles private respondents Juan Ignao and Isidro Ignao were
co-owners of a parcel of land with an area of 534 square meters situated in Barrio Tabon,
Municipality of Kawit, Cavite. Pursuant to an action for partition filed by petitioner docketed as Civil
Case No. N-1681, the then Court of First Instance of Cavite in a decision dated February 6, 1975
directed the partition of the aforesaid land, alloting 133.5 square meters or 2/8 thereof to private
respondents Juan and Isidro, and giving the remaining portion with a total area of 266.5 square
meters to petitioner Florencio. However, no actual partition was ever effected.1
On July 17, 1978, petitioner instituted a complaint for recovery of possession of real property
against private respondents Juan and Isidro before the Court of First Instance of Cavite, docketed
as Civil Case No. 2662. In his complaint petitioner alleged that the area occupied by the two (2)
houses built by private respondents exceeded the 133.5 square meters previously alloted to them
by the trial court in Civil Case No. N-1681.
Consequently, the lower court conducted an ocular inspection. It was found that the houses of
Juan and Isidro actually encroached upon a portion of the land belonging to Florencio. Upon
agreement of the parties, the trial court ordered a licensed geodetic engineer to conduct a survey
to determine the exact area occupied by the houses of private respondents. The survey
subsequently disclosed that the house of Juan occupied 42 square meters while that of Isidro
occupied 59 square meters of Florencio's land or a total of 101 square meters.
In its decision, the trial court (thru Judge Luis L. Victor) ruled that although private respondents
occupied a portion of Florencio's property, they should be considered builders in good faith. The
trial court took into account the decision of the Court of First Instance of Cavite in the action for
partition2 and quoted:
. . . . Hence, it is the well-considered opinion of the Court that although it turned out that
the defendants had, before partition, been in possession of more than what rightfully
belongs to them, their possession of what is in excess of their rightful share can at worst
be possession in good faith which exempts them from being condemned to pay damages
by reason thereof.3
Furthermore, the trial court stated that pursuant to Article 448 of the Civil Code, the owner of the
land (Florencio) should have the choice to either appropriate that part of the house standing on his
land after payment of indemnity or oblige the builders in good faith (Juan and Isidro) to pay the
price of the land. However, the trial court observed that based on the facts of the case, it would be
useless and unsuitable for Florencio to exercise the first option since this would render the entire
houses of Juan and Isidro worthless. The trial court then applied the ruling in the similar case
of Grana vs. Court of Appeals,4 where the Supreme Court had advanced a more "workable
solution". Thus, it ordered Florencio to sell to Juan and Isidro those portions of his land
respectively occupied by the latter. The dispositive portion of said decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the defendants and—
(a) Ordering the plaintiff Florencio Ignao to sell to the defendants Juan and Isidro Ignao
that portion of his property with an area of 101 square meters at P40.00 per square
meter, on which part the defendants had built their houses; and
(b) Ordering the said plaintiff to execute the necessary deed of conveyance to the
defendants in accordance with paragraph (a) hereof.
Without pronouncement as to costs.5
Petitioner Florencio Ignao appealed to the Intermediate Appellate Court. On August 27, 1985, the
Appellate Court, Second Civil Cases Division, promulgated a decision, 6 affirming the decision of
the trial court.
Hence the instant petition for review which attributes to the Appellate Court the following errors:
1. That the respondent Court has considered private respondents builders in good faith
on the land on question, thus applying Art. 448 of the Civil Code, although the land in
question is still owned by the parties in co-ownership, hence, the applicable provision is
Art. 486 of the Civil Code, which was not applied.
2. That, granting for the sake of argument that Art. 448 . . . is applicable, the respondent
Court has adjudged the working solution suggested in Grana and Torralba vs. CA. (109
Phil. 260), which is just an opinion by way of passing, and not the judgment rendered
 therein, which is in accordance with the said provision of the Civil Code, wherein the
owner of the land to buy (sic) the portion of the building within 30 days from the judgment
or sell the land occupied by the building.
3. That, granting that private respondents could buy the portion of the land occupied by
their houses, the price fixed by the court is unrealistic and pre-war price.7
The records of the case reveal that the disputed land with an area of 534 square meters was
originally owned by Baltazar Ignao who married twice. In his first marriage, he had four children,
namely Justo (the father of petitioner Florencio), Leon and private respondents Juan and Isidro. In
his second marriage, Baltazar had also four children but the latter waived their rights over the
controverted land in favor of Justo. Thus, Justo owned 4/8 of the land which was waived by his
half-brothers and sisters plus his 1/8 share or a total of 5/8. Thereafter, Justo acquired the 1/8
share of Leon for P500.00 which he later sold to his son Florencio for the same amount. When
Justo died, Florencio inherited the 5/8 share of his father Justo plus his 1/8 share of the land which
he bought or a total of 6/8 (representing 400.5 square meters). Private respondents, Juan and
Isidro, on the other hand, had 1/8 share (66.75 square meters) each of the land or a total of 133.5
square meters.
Before the decision in the partition case was promulgated, Florencio sold 134 square meters of his
share to a certain Victa for P5,000.00 on January 27, 1975. When the decision was handed down
on February 6,1975, the lower court alloted 2/8 of the land to private respondents Juan and Isidro,
or a total of 133.5 square meters.
It should be noted that prior to partition, all the co-owners hold the property in common dominion
but at the same time each is an owner of a share which is abstract and undetermined until
partition is effected. As cited in Eusebio vs. Intermediate Appellate Court,8 "an undivided estate is
co-ownership by the heirs."
As co-owners, the parties may have unequal shares in the common property, quantitatively
speaking. But in a qualitative sense, each co-owner has the same right as any one of the other co-
owners. Every co-owner is therefore the owner of the whole, and over the whole he exercises the
right of dominion, but he is at the same time the owner of a portion which is truly abstract, because
until division is effected such portion is not concretely determined.9
Petitioner Florencio, in his first assignment of error, asseverates that the court a quo erred in
applying Article 448 of the Civil Code, since this article contemplates a situation wherein the land
belongs to one person and the thing built, sown or planted belongs to another. In the instant case,
the land in dispute used to be owned in common by the contending parties.
Article 448 provides:
Art. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.
Whether or not the provisions of Article 448 should apply to a builder in good faith on a property
held in common has been resolved in the affirmative in the case of Spouses del Campo vs.
Abesia,10 wherein the Court ruled that:
The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-
owner builds, plants or sows on the land owned in common for then he did not build, plant
or sow upon land that exclusively belongs to another but of which he is a co-owner. The
co-owner is not a third person under the circumstances, and the situation is governed by
the rules of co-ownership.
However, when, as in this case, the ownership is terminated by the partition and it
appears that the home of defendants overlaps or occupies a portion of 5 square meters of
the land pertaining to plaintiffs which the defendants obviously built in good faith, then the
provisions of Article 448 of the new Civil Code should apply. Manresa and Navarro
Amandi agree that the said provision of the Civil Code may apply even when there is a
co-ownership if good faith has been established.11
In other words, when the co-ownership is terminated by a partition and it appears that the house of
an erstwhile co-owner has encroached upon a portion pertaining to another co-owner which was
however made in good faith, then the provisions of Article 448 should apply to determine the
respective rights of the parties.
Petitioner's second assigned error is however well taken. Both the trial court and the Appellate
Court erred when they peremptorily adopted the "workable solution" in the case of Grana vs. Court
of appeals,12 and ordered the owner of the land, petitioner Florencio, to sell to private respondents,
Juan and Isidro, the part of the land they intruded upon, thereby depriving petitioner of his right to
choose. Such ruling contravened the explicit provisions of Article 448 to the effect that "(t)he
owner of the land . . . shall have the right to appropriate . . .or to oblige the one who built . . . to
pay the price of the land . . . ." The law is clear and unambiguous when it confers the right of
choice upon the landowner and not upon the builder and the courts.
Thus, in Quemuel vs. Olaes,13 the Court categorically ruled that the right to appropriate the works
or improvements or to oblige the builder to pay the price of the land belongs to the landowner.
As to the third assignment of error, the question on the price to be paid on the land need not be
discussed as this would be premature inasmuch as petitioner Florencio has yet to exercise his
option as the owner of the land.
WHEREFORE, the decision appealed from is hereby MODIFIED as follows: Petitioner Florencio
Ignao is directed within thirty (30) days from entry of judgment to exercise his option to either
appropriate as his own the portions of the houses of Juan and Isidro Ignao occupying his land
upon payment of indemnity in accordance with Articles 546 and 548 of the Civil Code, or sell to
private respondents the 101 square meters occupied by them at such price as may be agreed
upon. Should the value of the land exceed the value of the portions of the houses that private
respondents have erected thereon, private respondents may choose not to buy the land but they
must pay reasonable rent for the use of the portion of petitioner's land as may be agreed upon by
the parties. In case of disagreement, the rate of rental and other terms of the lease shall be
determined by the trial court. Otherwise, private respondents may remove or demolish at their own
expense the said portions of their houses encroaching upon petitioner's land.14 No costs.

SO ORDERED.

Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 115814 May 26, 1995
PEDRO P. PECSON, petitioner,
vs.
COURT OF APPEALS, SPOUSES JUAN NUGUID and ERLINDA NUGUID, respondents.
DAVIDE, JR., J.:
This petition for review on certiorari seeks to set aside the decision1 of the Court of Appeals in CA-
G.R. SP No. 32679 affirming in part the order 2 of the Regional Trial Court (RTC) of Quezon City,
Branch 101, in Civil Case No. Q-41470.
The factual and procedural antecedents of this case as gathered from the record are as follows:
Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street, Quezon
City, on which he built a four-door two-storey apartment building. For his failure to pay realty taxes
amounting to twelve thousand pesos (P12,000.00), the lot was sold at public auction by the city
Treasurer of Quezon City to Mamerto Nepomuceno who in turn sold it on 12 October 1983 to the
private respondents, the spouses Juan Nuguid and Erlinda Tan-Nuguid, for one hundred three
thousand pesos (P103,000.00).
The petitioner challenged the validity of the auction sale in Civil Case No. Q-41470 before the
RTC of Quezon City. In its decision of 8 February 1989, the RTC dismissed the complaint, but as
to the private respondents' claim that the sale included the apartment building, it held that the
issue concerning it was "not a subject of the . . . litigation." In resolving the private respondents'
motion to reconsider this issue, the trial court held that there was no legal basis for the contention
that the apartment building was included in the sale.3
Both parties then appealed the decision to the Court of Appeals. The case was docketed as CA-
G.R. CV No. 2931. In its decision of 30 April 1992,4 the Court of Appeals affirmed in toto the
assailed decision. It also agreed with the trial court that the apartment building was not included in
the auction sale of the commercial lot. Thus:
Indeed, examining the record we are fully convinced that it was only the land —
without the apartment building — which was sold at the auction sale, for plaintiff's
failure to pay the taxes due thereon. Thus, in the Certificate of Sale of Delinquent
Property To Purchaser (Exh. K, p. 352, Record) the property subject of the
auction sale at which Mamerto Nepomuceno was the purchaser is referred to as
Lot No. 21-A, Block No. K-34, at Kamias, Barangay Piñahan, with an area of
256.3 sq. m., with no mention whatsoever, of the building thereon. The same
description of the subject property appears in the Final Notice To Exercise The
Right of Redemption (over subject property) dated September 14, 1981 (Exh. L,
p. 353, Record) and in the Final Bill of Sale over the same property dated April
19, 1982 (Exh. P, p. 357, Record). Needless to say, as it was only the land
without any building which Nepomuceno had acquired at the auction sale, it was
also only that land without any building which he could have legally sold to the
Nuguids. Verily, in the Deed of Absolute Sale of Registered Land executed by
Mamerto Nepomuceno in favor of the Nuguids on October 25, 1983 (Exh. U, p.
366, Record) it clearly appears that the property subject of the sale for
P103,000.00 was only the parcel of land, Lot 21-A, Blk. K-34 containing an area
of 256.3 sq. meters, without any mention of any improvement, much less any
building thereon. (emphases supplied)
The petition to review the said decision was subsequently denied by this Court. 5 Entry of judgment
was made on 23 June 1993.6
On November 1993, the private respondents filed with the trial court a motion for delivery of
possession of the lot and the apartment building, citing article 546 of the Civil Code. 7 Acting
thereon, the trial court issued on 15 November 1993 the challenged order8 which reads as follows:
Submitted for resolution before this Court is an uncontroverted [sic] for the
Delivery of Possession filed by defendants Erlinda Tan, Juan Nuguid, et al.
considering that despite personal service of the Order for plaintiff to file within five
(5) days his opposition to said motion, he did not file any.
In support of defendant's motion, movant cites the law in point as Article 546 of
the Civil Code . . .
Movant agrees to comply with the provisions of the law considering that plaintiff
is a builder in good faith and he has in fact, opted to pay the cost of the
construction spent by plaintiff. From the complaint itself the plaintiff stated that
the construction cost of the apartment is much more than the lot, which
apartment he constructed at a cost of P53,000.00 in 1965 (par. 8 complaint). This
amount of P53,000.00 is what the movant is supposed to pay under the law
before a writ of possession placing him in possession of both the lot and
apartment would be issued.
However, the complaint alleges in paragraph 9 that three doors of the apartment
are being leased. This is further confirmed by the affidavit of the movant
presented in support of the motion that said three doors are being leased at a
rental of P7,000.00 a month each. The movant further alleges in his said affidavit
that the present commercial value of the lot is P10,000.00 per square meter or
P2,500,000.00 and the reasonable rental value of said lot is no less than
P21,000.00 per month.
The decision having become final as per Entry of Judgment dated June 23, 1993
and from this date on, being the uncontested owner of the property, the rents
 should be paid to him instead of the plaintiff collecting them. From June 23, 1993,
the rents collected by plaintiff amounting to more than P53,000.00 from tenants
should be offset from the rents due to the lot which according to movant's
affidavit is more than P21,000.00 a month.
WHEREFORE, finding merit in the Motion, the Court hereby grants the following
prayer that:
1. The movant shall reimburse plaintiff the construction cost of
P53,000.00.
2. The payment of P53,000.00 as reimbursement for the
construction cost, movant Juan Nuguid is hereby entitled to
immediate issuance of a writ of possession over the Lot and
improvements thereon.
3. The movant having been declared as the uncontested owner
of the Lot in question as per Entry of Judgment of the Supreme
Court dated June 23, 1993, the plaintiff should pay rent to the
movant of no less than P21,000.00 per month from said date as
this is the very same amount paid monthly by the tenants
occupying the lot.
4. The amount of P53,000.00 due from the movant is hereby
offset against the amount of rents collected by the plaintiff from
June 23, 1993, to September 23, 1993.
SO ORDERED.
The petitioner moved for the reconsideration of the order but it was not acted upon by the trial
court. Instead, on 18 November 1993, it issued a writ of possession directing the deputy sheriff "to
place said movant Juan Nuguid in possession of subject property located at No. 79 Kamias Road,
Quezon City, with all the improvements thereon and to eject therefrom all occupants therein, their
agents, assignees, heirs and representatives."9
The petitioner then filed with the Court of Appeals a special civil action for certiorari and prohibition
assailing the order of 15 November 1993, which was docketed as CA-G.R. SP No. 32679. 10 In its
decision of 7 June 1994, the Court of Appeals affirmed in part the order of the trial court citing
Article 448 of the Civil Code. In disposing of the issues, it stated:
As earlier pointed out, private respondent opted to appropriate the improvement
introduced by petitioner on the subject lot, giving rise to the right of petitioner to
be reimbursed of the cost of constructing said apartment building, in accordance
with Article 546 of the . . . Civil Code, and of the right to retain the improvements
until he is reimbursed of the cost of the improvements, because, basically, the
right to retain the improvement while the corresponding indemnity is not paid
implies the tenancy or possession in fact of the land on which they are built . . . [2
TOLENTINO, CIVIL CODE OF THE PHILIPPINES (1992) p. 112]. With the facts
extant and the settled principle as guides, we agree with petitioner that
respondent judge erred in ordering that "the movant having been declared as the
uncontested owner of the lot in question as per Entry of Judgment of the
Supreme Court dated June 23, 1993, the plaintiff should pay rent to the movant
of no less than P21,000 per month from said date as this is the very same
amount paid monthly by the tenants occupying the lot.
We, however, agree with the finding of respondent judge that the amount of
P53,000.00 earlier admitted as the cost of constructing the apartment building
can be offset from the amount of rents collected by petitioner from June 23, 1993
up to September 23, 1993 which was fixed at P7,000.00 per month for each of
the three doors. Our underlying reason is that during the period of retention,
petitioner as such possessor and receiving the fruits from the property, is obliged
to account for such fruits, so that the amount thereof may be deducted from the
amount of indemnity to be paid to him by the owner of the land, in line with
Mendoza vs. De Guzman, 52 Phil. 164 . . . .
The Court of Appeals then ruled as follows:
WHEREFORE, while it appears that private respondents have not yet
indemnified petitioner with the cost of the improvements, since Annex I shows
that the Deputy Sheriff has enforced the Writ of Possession and the premises
have been turned over to the possession of private respondents, the quest of
petitioner that he be restored in possession of the premises is rendered moot and
academic, although it is but fair and just that private respondents pay petitioner
the construction cost of P53,000.00; and that petitioner be ordered to account for
any and all fruits of the improvements received by him starting on June 23, 1993,
with the amount of P53,000.00 to be offset therefrom.
IT IS SO ORDERED.11
Aggrieved by the Court of Appeals' decision, the petitioner filed the instant petition.
The parties agree that the petitioner was a builder in good faith of the apartment building on the
theory that he constructed it at the time when he was still the owner of the lot, and that the key
issue in this case is the application of Articles 448 and 456 of the Civil Code.
The trial court and the Court of Appeals, as well as the parties, concerned themselves with the
application of Articles 448 and 546 of the Civil Code. These articles read as follows:
Art. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in articles 546
and 548, or to oblige the one who built or planted to pay the price of the land, and
the one who sowed, the proper rent. However, the builder or planter cannot be
 obliged to buy the land if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof. (361a)
xxx xxx xxx
Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed
therefor.
Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession
having the option of refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by reason thereof. (453a)
By its clear language, Article 448 refers to a land whose ownership is claimed by two or more
parties, one of whom has built some works, or sown or planted something. The building, sowing or
planting may have been made in good faith or in bad faith. The rule on good faith laid down in
Article 526 of the Civil Code shall be applied in determining whether a builder, sower or planter
had acted in good faith. 12
Article 448 does not apply 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 donation. This Court said so in Coleongco
vs. Regalado: 13
Article 361 of the old Civil Code is not applicable in this case, for Regalado
constructed the house on his own land before he sold said land to Coleongco.
Article 361 applies only in cases where a person constructs a building on the
land of another in good or in bad faith, as the case may be. It does not apply to a
case where a person constructs a building on his own land, for then there can be
no question as to good or bad faith on the part of the builder.
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.
Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe
that the provision therein on indemnity may be applied by analogy considering that the primary
intent of Article 448 is to avoid a state of forced co-ownership and that the parties, including the
two courts below, in the main agree that Articles 448 and 546 of the Civil Code are applicable and
indemnity for the improvements may be paid although they differ as to the basis of the indemnity.
Article 546 does not specifically state how the value of the useful improvements should be
determined. The respondent court and the private respondents espouse the belief that the cost of
construction of the apartment building in 1965, and not its current market value, is sufficient
reimbursement for necessary and useful improvements made by the petitioner. This position is,
however, not in consonance with previous rulings of this Court in similar cases. In Javier
vs. Concepcion, Jr., 14 this Court pegged the value of the useful improvements consisting of
various fruits, bamboos, a house and camarin made of strong material based on the market value
of the said improvements. In Sarmiento vs. Agana, 15 despite the finding that the useful
improvement, a residential house, was built in 1967 at a cost of between eight thousand pesos
(P8,000.00) to ten thousand pesos(P10,000.00), the landowner was ordered to reimburse the
builder in the amount of forty thousand pesos (P40,000.00), the value of the house at the time of
the trial. In the same way, the landowner was required to pay the "present value" of the house, a
useful improvement, in the case of De Guzman vs. De la Fuente, 16 cited by the petitioner.
The objective of Article 546 of the Civil Code is to administer justice between the parties involved.
In this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of
Manila 17 that the said provision was formulated in trying to adjust the rights of the owner and
possessor in good faith of a piece of land, to administer complete justice to both of them in such a
way as neither one nor the other may enrich himself of that which does not belong to him. Guided
by this precept, it is therefore the current market value of the improvements which should be made
the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who
would otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building
for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence
on the present market value of the apartment building upon which the trial court should base its
finding as to the amount of reimbursement to be paid by the landowner.
The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate
rentals paid by the lessees of the apartment building. Since the private respondents have opted to
appropriate the apartment building, the petitioner is thus entitled to the possession and enjoyment
of the apartment building, until he is paid the proper indemnity, as well as of the portion of the lot
where the building has been constructed. This is so because the right to retain the improvements
while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land
on which it is built, planted or sown. 18 The petitioner not having been so paid, he was entitled to
retain ownership of the building and, necessarily, the income therefrom.
It follows, too, that the Court of Appeals erred not only in upholding the trial court's determination
of the indemnity, but also in ordering the petitioner to account for the rentals of the apartment
building from 23 June 1993 to 23 September 1993.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of 15
November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470
are hereby SET ASIDE.
The case is hereby remanded to the trial court for it to determine the current market value of the
apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on
the current market value of the apartment building. The value so determined shall be forthwith
paid by the private respondents to the petitioner otherwise the petitioner shall be restored to the
possession of the apartment building until payment of the required indemnity.
No costs.
SO ORDERED.

Padilla, Bellosillo and Kapunan, JJ., concur.

Quiason, J., is on leave.

 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-54526 August 25, 1986
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,
vs.
THE COURT OF APPEALS and THE CITY OF DAGUPAN, respondents.
Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of Dagupan.
FERIA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the
decision of the then Court of First Instance of Pangasinan. The lower court had declared
respondent City of Dagupan the lawful owner of the Dagupan Waterworks System and held that
the National Waterworks and Sewerage Authority, now petitioner Metropolitan Waterworks and
Sewerage System, was a possessor in bad faith and hence not entitled to indemnity for the useful
improvements it had introduced.
Before proceeding further, it may be necessary to invite attention to the common error of joining
the court (be it a Regional Trial Court, the Intermediate Appellate Court, or the Sandiganbayan) as
a party respondent in an appeal by certiorari to this Court under Rule 45 of the Rules of Court. The
only parties in an appeal by certiorari are the appellant as petitioner and the appellee as
respondent. (Cf. Elks Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment
appealed from is not a party in said appeal. It is in the special civil action of certiorari under
Section 5 of Rule 65 of the Rules of Court where the court or judge is required to be joined as
party defendant or respondent. The joinder of the Intermediate Appellate Court or the
Sandiganbayan as party respondent in an appeal by certiorari is necessary in cases where the
petitioner-appellant claims that said court acted without or in excess of its jurisdiction or with grave
abuse of discretion. An example of this is a case where the petitioner-appellant claims that the
Intermediate Appellate Court or the Sandiganbayan acted with grave abuse of discretion in
making its findings of fact, thus justifying the review by this court of said findings of fact. (See the
exceptions to the rule of conclusiveness of the findings of fact of the Intermediate Appellate Court
or the Sandiganbayan in the case of Sacay vs. Sandiganbayan, G.R. Nos. 66497-98, July 10,
1986.) In such a case, the petition for review on certiorari under Rule 45 of the Rules of Court is at
the same time a petition for certiorari under Rule 65, and the joinder of the Intermediate Appellate
Court or the Sandiganbayan becomes necessary. (Cf. Lianga Lumber Company vs. Lianga Timber
Co., Inc., March 31, 1977, 76 SCRA 197).
The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the former
National Waterworks and Sewerage Authority (hereinafter referred to as the NAWASA), now the
Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS), for recovery
of the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as
one of its special defenses R.A. 1383 which vested upon it the ownership, possession and control
of all waterworks systems throughout the Philippines and as one of its counterclaims the
reimbursement of the expenses it had incurred for necessary and useful improvements amounting
to P255,000.00. Judgment was rendered by the trial court in favor of the CITY on the basis of a
stipulation of facts. The trial court found NAWASA to be a possessor in bad faith and hence not
entitled to the reimbursement claimed by it. NAWASA appealed to the then Court of Appeals and
argued in its lone assignment of error that the CITY should have been held liable for the
amortization of the balance of the loan secured by NAWASA for the improvement of the Dagupan
Waterworks System. The appellate court affirmed the judgment of the trial court and ruled as
follows:
However, as already found above, these useful expenses were made in utter bad
faith for they were instituted after the complaint was filed and after numerous
Supreme Court decisions were promulgated declaring unconstitutional the taking
by NAWASA of the patrimonial waterworks systems of cities, municipalities and
provinces without just compensation.
Under Article 546 of the New Civil Code cited by the appellant, it is clear that a
builder or a possessor in bad faith is not entitled to indemnity for any useful
improvement on the premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In
fact, he is not entitled to any right regarding the useful expenses (II Paras (1971)
387). He shall not have any right whatsoever. Consequently, the owner shall be
entitled to all of the useful improvements without any obligation on his part
(Jurado, Civil Law Reviewer (1974) 223).
Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this Court raising
the sole issue of whether or not it has the right to remove all the useful improvements introduced
by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was
found to be a possessor in bad faith. In support of its claim for removal of said useful
improvements, MWSS argues that the pertinent laws on the subject, particularly Articles 546, 547
and 549 of the Civil Code of the Philippines, do not definitely settle the question of whether a
possessor in bad faith has the right to remove useful improvements. To bolster its claim MWSS
further cites the decisions in the cases of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) and
Carbonell vs. Court of Appeals (69 SCRA 99).
The CITY in its brief questions the raising of the issue of the removal of useful improvements for
the first time in this Court, inasmuch as it was not raised in the trial court, much less assigned as
an error before the then Court of Appeals. The CITY further argues that petitioner, as a possessor
in bad faith, has absolutely no right to the useful improvements; that the rulings in the cases cited
by petitioner are not applicable to the case at bar; that even assuming that petitioner has the right
to remove the useful improvements, such improvements were not actually identified, and hence a
rehearing would be required which is improper at this stage of the proceedings; and finally, that
such improvements, even if they could be identified, could not be separated without causing
substantial injury or damage to the Dagupan Waterworks System.
The procedural objection of the CITY is technically correct. NAWASA should have alleged its
additional counterclaim in the alternative-for the reimbursement of the expenses it had incurred for
necessary and useful improvements or for the removal of all the useful improvements it had were the equipment, books, furniture and fixtures brought in by him, because they were outside of
introduced. the scope of the judgment and may be retained by him.

Petitioner, however, argues that although such issue of removal was never pleaded as a
counterclaim nevertheless it was joined with the implied consent of the CITY, because the latter
never filed a counter-manifestation or objection to petitioner's manifestation wherein it stated that
the improvements were separable from the system, and quotes the first part of Sec. 5 of Rule 10
of the Rules of Court to support its contention. Said provision reads as follows:
SEC. 5. Amendment to conform to or authorize presentation of evidence.-When
issues not raised by the pleadings are tried by express or implied consent of the
parties, they shall be treated in all respects, as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause
them to conform to the evidence and to raise these issues may be made upon
motion of any party at any time, even after judgment; but failure so to amend
does not affect the result of the trial of these issues. ...
This argument is untenable because the above-quoted provision is premised on the fact that
evidence had been introduced on an issue not raised by the pleadings without any objection
thereto being raised by the adverse party. In the case at bar, no evidence whatsoever had been
introduced by petitioner on the issue of removability of the improvements and the case was
decided on a stipulation of facts. Consequently, the pleadings could not be deemed amended to
conform to the evidence.
Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA 99), also cited
by petitioner, be invoked to modify the clear provisions of the Civil Code of the Philippines that a
possessor in bad faith is not entitled to reimbursement of useful expenses or to removal of useful
improvements.
In said case, both the trial court and the Court of Appeals found that respondents Infantes were
possessors in good faith. On appeal, the First Division of this Court reversed the decision of the
Court of Appeals and declared petitioner Carbonell to have the superior right to the land in
question. On the question of whether or not respondents Infantes were possessors in good faith
four Members ruled that they were not, but as a matter of equity allowed them to remove the
useful improvements they had introduced on the land. Justice Teehankee (now Chief Justice)
concurred on the same premise as the dissenting opinion of Justice Munoz Palma that both the
conflicting buyers of the real property in question, namely petitioner Carbonell as the first buyer
and respondents Infantes as the second buyer, may be deemed purchasers in good faith at the
respective dates of their purchase. Justice Munoz Palma dissented on the ground that since both
purchasers were undoubtedly in good faith, respondents Infantes' prior registration of the sale in
good faith entitled them to the ownership of the land. Inasmuch as only four Members concurred in
ruling that respondents Infantes were possessors in bad faith and two Members ruled that they
were possessors in good faith said decision does not establish a precedent. Moreover, the
equitable consideration present in said case are not present in the case at bar.

However, We shall overlook this procedural defect and rule on the main issue raised in this WHEREFORE, the decision of the appellate court is affirmed with costs against petitioner.
appeal, to wit: Does a possessor in bad faith have the right to remove useful improvements? The
answer is clearly in the negative. Recognized authorities on the subject are agreed on this point. * SO ORDERED.

Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad Fernan, Gutierrez, Jr., Paras and Cruz, JJ., concur.
faith on the land of another, loses what is built, planted or sown without right to indemnity." As a
builder in bad faith, NAWASA lost whatever useful improvements it had made without right to Alampay, ** J., took no part.
indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703).

Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for
useful expenses with the right of retention until reimbursed; and under Article 547 thereof, only a
possessor in good faith may remove useful improvements if this can be done without damage to
the principal thing and if the person who recovers the possession does not exercise the option of
reimbursing the useful expenses. The right given a possessor in bad faith is to remove
improvements applies only to improvements for pure luxury or mere pleasure, provided the thing
suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the
value they have at the time he enters into possession (Article 549, Id.).

The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by petitioner
does not support its stand. On the contrary, this Court ruled in said case that "if the defendant
constructed a new building, as he alleges, he cannot recover its value because the construction
was done after the filing of the action for annulment, thus rendering him a builder in bad faith who
is denied by law any right of reimbursement." What this Court allowed appellant Yap to remove
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 73418 September 20, 1988
PELICULA SABIDO and MAXIMO RANCES, petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT and DOMINADOR STA.
ANA, respondents.
GUTIERREZ, JR., J.:
This petition for review on certiorari seeks to set aside the decision of the then Intermediate
Appellate Court which nullified the orders of the trial court for the issuance of the writs of execution
and demolition in favor of the petitioners and which ordered the trial court to assess the value of
the demolished properties of the private respondent for the purposes of set-off against
respondent's liability to the petitioners.
This case originated from an action for quieting of title which was filed by the spouses Victor Dasal
and Maria Pecunio against herein petitioners, Maximo Rances and Pelicula Sabido on the
question of ownership over two parcels of land otherwise known as Lots "B" and "D".
On October 7, 1969, the trial court presided by Judge Delfin Sunga declared the petitioners as
owners of Lots "B" and "D". The decision became final. However, when the decision was being
carried out to put the petitioners in possession of Lot "B", the Provincial Sheriff found three (3)
persons occupying portions of Lot "B". One of them was private respondent Dominador Sta. Ana.
The petitioners filed a motion to require the private respondent to show cause why he should not
be ejected from the portion of Lot "B". In his answer, Sta. Ana claimed ownership by purchase
from one Prudencio Lagarto, of a bigger area of which Lot "B" is a part. He stated that the two
other persons occupying the disputed portion are his tenants.
Subsequently, an order of demolition was issued by the trial court against the private respondent.
This order was challenged by the private respondent and upon his filing of certiorari proceedings,
this Court on November 26, 1973, set aside the order of the trial court and remanded the case to
the latter for further reception of evidence to determine: 1) Whether or not the private respondent
is privy to the spouses Victor Dasal and Maria Pecunio as the losing parties in the action below;
and 2) Whether or not the petitioners and the private respondent are litigating over the same
parcel of land or whether there is overlapping of boundaries of their respective lands.
On December 12, 1974, after conducting an ocular inspection and hearing, Judge Sunga issued
an order for the private respondent to vacate Lot "B" upon finding that there is no proof that what
the respondent allegedly purchased from Lagarto covers a portion of Lot "B" but on the contrary,
the deed of sale and tax declaration show that what was sold to the respondent was bounded on
the south by Tigman river and therefore, the respondent's ownership could not have extended to
Lot "B" which was separated by the Tigman river and mangrove swamps from the portion he
purchased.
Before the order of December 12, 1974, could be executed, however, Judge Sunga inhibited
himself from the case so the same was transferred to the then Court of First Instance (now Branch
M, Regional Trial Court) of Naga City presided by Judge Mericia B. Palma.
The execution of the order met with some further delay when the records were reconstituted.
Judge Palma, feeling the need for a clearer understanding of the facts and issues involved in the
case, proceeded to hear and received evidence.
On May 16, 1983, Judge Palma issued a resolution finding that there was privity between the
private respondent and the spouses Victor Dasal and Maria Pecunio as to the ownership of Lot
"C" and as to the possession over the western portion of the private road and the disputed Lot "B";
and that Lot "B" and the private road are not included in the land purchased by the respondent
from Lagarto.
According to the trial court, the private respondent was in the company of Dasal (from whom he
was renting Lot "C' and who was also the brother-in-law of Lagarto) and was present when
Commissioner Tubianosa inspected the land in question in 1953 supporting the claim that the
respondent knew that the land was already in dispute between Dasal and the petitioners; and if
the respondent really believed that he owns the entire Lot "B" and the private road, he should have
raised his claim of ownership when Tubianosa inspected the land. The respondent also failed to
include the land in dispute in the survey of his purchased lot with the flimsy excuse that the
surveyor failed to return to finish the survey and include the disputed land.
Before arriving at the above findings, however, the trial court clarified the issues involved in the
case. It said:
WE NOW come to the RESOLUTION OF THE TWO ISSUES: (1) Was there
privity between Petitioner Sta. Ana and Plaintiffs Dasal? and (2) Is the disputed
area Identified in paragraph 1 of the foregoing enumeration, part of the land
purchased by Petitioner from Prudencio Lagarto?
If there is a privity between the Petitioner and Dasal, then the Petitioner is bound
by the final decision in this CC No. R-396 (2040) against Dasal and therefore
Petitioner is subject to the order of execution and is bound to vacate the land in
question or subject a portion of his house and the surrounding walls to
demolition. If there is no privity then he is not bound by said final decision. (Rollo,
pp. 48-49).
In the dispositive portion, however, the trial court held:
WHEREFORE, premises considered, the Court finds:
 1.) That there is privity between the petitioner and the plaintiffs spouses Victor
Dasal and Maria Pecunio as to ownership of Lot C and as to the possession over
the western portion of the private road and the disputed Lot B as so Identified in
Exhibit 5;
2.) That the private road Identified as within points 1, 2, 3, 4, 5, 6 and 1 in Exh. 5
is owned by the respondents as already decided in CC No. 1103, and the same
private road and the Lot B in Exhibit 5 are both owned by the respondents as
already decided in this CC No. R-396 (2040);
3.) That the balcony of the present house of the petitioner is located in the
disputed Lot B and its southern (or southeastern) part of the western portion of
the 'private road';
xxx xxx xxx
6.) That therefore, this Court recommends to the Honorable Supreme Court, that
the petitioner be ordered to remove the entire balcony and the northern portion of
the main house to the extent of about one meter found to be standing on the
private road, as well as the northern extension of the hollow block walls on the
eastern boundary of Lot C that stand on the private road and to the northern end
of Lot B which wall measures to a total length of about 15 meters from the
northern boundary of Lot B to the southern edge of the private road; or in the
alternative to require the petitioner to pay the respondents the value of the
western portion of the disputed area which is now enclosed in the wall
constructed by the petitioner;
7.) And to hold the petitioner liable to the respondents for reasonable attorney's
fees and damages. (Rollo, p. 52)
On June 7, 1983, the private respondent filed with this Court a pleading captioned "Notice of
Appeal for Review." Said petition was denied in this Court's resolution on October 26,1983, to wit:
L-32642 (Dominador Sta. Ana v. Hon. Delfin Vir, Sunga, etc., et al.). Considering
the petition of petitioner for review of trial court resolution dated May 16, 1983,
the Court Resolved to DENY the petition, said resolution of May 16, 1983, being
in accord with the decision of November 26, 1973 (Rec., p. 438) and the
resolution of May 16, 1975 (idem, p. 595) as well as the order of December
12,1974 (idem, p. 500) which ordered the petitioner to vacate the premises
(which is presumably final). As stated in the aforesaid resolution of May 16, 1975,
any review has to be sought by timely appeal to the appellate court and cannot
be sought in this case. (Rollo, p. 65).
A series of resolutions were subsequently issued by this Court denying the private respondent's
motion to reconsider the above-quoted resolution. Finally, on February 27, 1984, this Court issued
a resolution ordering "the Chief of the Judgment Division of this Court to RETURN the records
thereof to the respondent court for execution of judgment."
On August 9, 1984, the petitioners filed motion for execution of judgment, accompanied by a bill of
costs, as follows: 1) Attorney's fees — P 25,000.00; 2) Cost of litigation — P7,000.00; 3)
Expenses for transcript of record — P600.00; 4) Expenses for xeroxing of important papers and
documents-P 500.00; 5) Accrued rentals for the lot in question P11,800.00 and 6) Legal interest of
accrued rentals at 12% a year — P1,436.00 for a total of P46,336.00.
On October 5, 1984, the trial court issued an order granting the petitioners' motion for execution
and application for a writ of attachment and approving the bill of costs. In said order, the trial court
ordered the demolition of any part of the private respondent's building and all other construction
within Lot "B" and the private road. The demolition was effected.
The private respondent appealed to the then Intermediate Appellate Court, contending that the
order of the trial court departed from the intention of the Supreme Court's resolution ordering
execution of the judgment, for it thereby deprived him of the alternative choice of paying the value
of the disputed area which was allowed in the trial court's resolution of May 16, 1983, which the
Supreme Court found to be in accord with, among others, its decision in G.R. No. L-32642 (Sta.
Ana v. Sunga, 54 SCRA 36).
On September 20, 1985, the appellate court rendered the assailed decision, the dispositive portion
of which provided;
WHEREFORE, the writs of certiorari and prohibition applied for are granted. The
Order of October 5, 1984 approving the bill of courts and granting execution of
'previous orders', as well as the order/writ of demolition are hereby set aside,
Respondent Court is ordered to forthwith determine the value of the demolished
portion of petition of petitioner's residential building and other structures affected
by the demolition and also, to assess the value of the disputed area for purposes
of set off and whatever is the excess in value should be paid to the party entitled
thereto. (Rollo, pp. 40-41)
In its decision, the appellate court explained the rationale behind the dispositive portion. It said:
xxx xxx xxx
The unqualified affirmance of said resolution of May 16, 1983, to Our Mind,
carried with it the approval of the above recommendation. The fact that the
Supreme Court was silent on the recommended alternative choice of demolition
and payment of the disputed area and merely returned the records for execution
of judgment, did not indicate that the recommended demolition was preferred.
The sufficiency and efficacy of the resolution of May 16, 1983, as the judgment to
be enforced or executed, cannot be doubted considering its substance rather
than its form. The aforequoted recommendation, itself the dispositive portion, can
be ascertained as to its meaning and operation. Thereby, the petitioner is given
the option to pay the value of the western portion of the disputed area which is
enclosed in the wall constructed by said petitioner. It is petitioner who is given the
alternative choice since if he does not pay, then he can be ordered to remove
whatever structure he had introduced in the questioned premises. Notably,
 petitioner indicated his willingness to pay the price of the disputed area or
otherwise exercised that option.
Respondent Court therefore acted with grave abuse of discretion tantamount to
lack or excess of jurisdiction in abandoning the alternative choice of payment of
the value of the area in dispute, which it authorized in its final resolution of May
16, 1983, when it ordered execution of its 'previous orders' for the petitioner to
vacate the land in question and for demolition, which was set aside when the
case was remanded for hearing pursuant to the Supreme Court decision of
November 26, 1973. The previous orders referred to have not been specified by
the respondent Court in its Order of October 6, 1984. If it is the Order of
December 12, 1974 which is being referred to by respondent Court, it should
have so specified; however, it did not presumably because it was reconsidered
as can be deduced from the fact that thereafter, respondent Court further heard
the parties and received their respective evidence in compliance with the
decision of November 26, 1973, or which proceedings, the respondent Court
issued its resolution of May 16, 1983. (Rollo, p. 38)
In the petition before us, the petitioners maintain that the appellate court committed grave abuse
of discretion when it granted the private respondent the option of exercising the alternative choice
of staying in the disputed land when it has been established that the private respondent was in
privy with the spouses Victor Dasal and Maria Pecunio and, therefore, he could not be considered
a builder in good faith as to entitle him to the alternative choice of retention; and that the
demolition of the private respondent's construction on Lot "B" and on the private road is a logical
consequence of the finding that he was privy to the losing parties who were also the adversaries
of the petitioners in the original case.
We agree.
When this Court ordered the remand of the case between the petitioners and the private
respondent in our decision of November 26, 1973 (see Sta. Ana v. Sunga, supra), it was precisely
to determine whether herein respondent was privy to the spouses Dasals as to make the decision
against the latter and in favor of the petitioners over Lot "B" binding upon him. And this fact was
clearly pointed out by Judge Palma in her resolution of May 16, 1983 stating that if there is privity
between the private respondent and the spouses Dasals, then the former is bound by the final
decision in CC No. R-396 (2040) which is the case between the Dasals and the petitioners.
However, an apparent confusion was brought about by the dispositive portion of the
aforementioned resolution when it recommended to this Court either to order the respondent to
remove all his constructions over Lot "B" or to require said respondent to pay the petitioners the
value of the disputed area which was already enclosed by a wall constructed by the respondent.
This, nevertheless, was rectified when we issued the series of resolutions denying the
respondent's petition and motions for reconsideration before this Court wherein we stated that the
resolution of May 16, 1983 was in accord, among others, with the order of December 12, 1974
"which ordered the petitioner (private respondent) to vacate the premises (which is presumably
final)."
Hence, it is clear that the private respondent has to remove all his constructions over Lot "B" and
vacate the premises. This is his only option. Being adjudged in privy with the spouses Dasals, he
cannot avail himself of the rights granted to a builder in good faith. He, therefore, must remove all
his useful improvements over Lot "B" at his own expense and if the same have already been
removed, he cannot be entitled to the right of retention or to any reimbursement. Thus, in the case
of Metropolitan Waterworks and Sewarage System v. Court of Appeals, (143 SCRA 623, 629), we
ruled:
Article 449 of the Civil Code of the Philippines provides that "he who builds,
plants or sows in bad faith on the land of another, loses what is built, planted or
sown without right to indemnity." As a builder in bad faith, NAWASA lost
whatever useful improvements it had made without right to indemnity (Santos v.
Mojica, Jan. 31, 1969, 26 SCRA 703)
Moreover, under Article 546 of said code, only a possessor in good faith shall be
refunded for useful expenses with the right of retention until reimbursed; and
under Article 547 thereof, only a possessor in good faith may remove useful
improvements if this can be done without damage to the principal thing and if the
person who recovers the possession does not exercise the option of reimbursing
the useful expenses. The right given a possessor in bad faith to remove
improvements applies only to improvements for pure luxury or mere pleasure,
provided the thing suffers no injury thereby and the lawful possessor does not
prefer to retain them by paying the value they have at the time he enters into
possession (Article 549, Id.).
We, therefore, find that the appellate court committed reversible error in holding that the private
respondent is entitled to exercise the option to pay the value of the disputed area of Lot "B" and to
reimbursement for the value of the demolished portion of his building. We, however, affirm its
ruling that the petitioner's bill of costs must be set aside and that while the resolution of May 16,
1983 included attorney's fees and damages, the necessity of proof cannot be dispensed with.
Since no proof was presented before the trial regarding any of these claims, they cannot be
awarded.
WHEREFORE, the petition is GRANTED and the decision of the court of Appeals dated
September 20, 1985 is ANNULED and SET ASIDE. The writ of attachment issued by the trial court
for the purpose of satisfying the award for damages and the bill of costs is, however, permanently
SET ASIDE.
SO ORDERED.
Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176791 November 14, 2012
COMMUNITIES CAGAYAN, INC., Petitioner,
vs.
SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS
UNDER THEM,Respondents.
DECISION
DEL CASTILLO, J.:
LAWS fill the gap in a contract.
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the December
29. 2006 Decision2and the February 12, 2007 Order3 of the Regional Trial Court (RTC), Cagayan
De Oro City, Branch 18, in Civil Case No. 2005-158.
Factual Antecedents
Sometimes in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to
Sell4 with petitioner Communities Cagayan, Inc.,5 whereby the latter agreed to sell to respondent-
spouses a house and Lots 17 and 196located at Block 16, Camella Homes Subdivision, Cagayan
de Oro City, 7 for the price of P368,000.00.8 Respondent-spouses, however, did not avail of
petitioner’s inhouse financing due to its high interest rates. 9 Instead, they obtained a loan from
Capitol Development Bank, a sister company of petitioner, using the property as collateral. 10 To
facilitate the loan, a simulated sale over the property was executed by petitioner in favor of
respondent-spouses.11Accordingly, titles were transferred in the names of respondent-spouses
under Transfer Certificates of Title (TCT) Nos. 105202 and 105203, and submitted to Capitol
Development Bank for loan processing.12 Unfortunately, the bank collapsed and closed before it
could release the loan.13
Thus, on November 30, 1997, respondent-spouses entered into another Contract to Sell14 with
petitioner over the same property for the same price of P368,000.00. 15 This time, respondent-
spouses availed of petitioner’s in-house financing16 thus, undertaking to pay the loan over four
years, from 1997 to 2001.17
Sometime in 2000, respondent Arsenio demolished the original house and constructed a three-
story house allegedly valued at P3.5 million, more or less.18
In July 2001, respondent Arsenio died, leaving his wife, herein respondent Angeles, to pay for the
monthly amortizations.19
On September 10, 2003, petitioner sent respondent-spouses a notarizedNotice of Delinquency
and Cancellation of Contract to Sell20 due to the latter’s failure to pay the monthly amortizations.
In December 2003, petitioner filed before Branch 3 of the Municipal Trial Court in Cities of
Cagayan de Oro City, an action for unlawful detainer, docketed as C3-Dec-2160, against
respondent-spouses.21 When the case was referred for mediation, respondent Angeles offered to
pay P220,000.00 to settle the case but petitioner refused to accept the payment. 22 The case was
later withdrawn and consequently dismissed because the judge found out that the titles were
already registered under the names of respondent-spouses.23
Unfazed by the unfortunate turn of events, petitioner, on July 27, 2005, filed before Branch 18 of
the RTC, Cagayan de Oro City, a Complaint for Cancellation of Title, Recovery of Possession,
Reconveyance and Damages,24docketed as Civil Case No. 2005-158, against respondent-
spouses and all persons claiming rights under them. Petitioner alleged that the transfer of the titles
in the names of respondent-spouses was made only in compliance with the requirements of
Capitol Development Bank and that respondent-spouses failed to pay their monthly amortizations
beginning January 2000.25 Thus, petitioner prayed that TCT Nos. T-105202 and T-105203 be
cancelled, and that respondent Angeles be ordered to vacate the subject property and to pay
petitioner reasonable monthly rentals from January 2000 plus damages.26
In her Answer,27 respondent Angeles averred that the Deed of Absolute Sale is valid, and that
petitioner is not the proper party to file the complaint because petitioner is different from
Masterplan Properties, Inc.28 She also prayed for damages by way of compulsory counterclaim.29
In its Reply,30 petitioner attached a copy of its Certificate of Filing of Amended Articles of
Incorporation31 showing that Masterplan Properties, Inc. and petitioner are one and the same. As
to the compulsory counterclaim for damages, petitioner denied the same on the ground of "lack of
knowledge sufficient to form a belief as to the truth or falsity of such allegation." 32
Respondent Angeles then moved for summary judgment and prayed that petitioner be ordered to
return the owner’s duplicate copies of the TCTs.33
Pursuant to Administrative Order No. 59-2005, the case was referred for mediation.34 But since the
parties failed to arrive at an amicable settlement, the case was set for preliminary conference on
February 23, 2006.35
On July 7, 2006, the parties agreed to submit the case for decision based on the pleadings and
exhibits presented during the preliminary conference.36
Ruling of the Regional Trial Court
On December 29, 2006, the RTC rendered judgment declaring the Deed of Absolute Sale invalid
for lack of consideration.37 Thus, it disposed of the case in this wise:
WHEREFORE, the Court hereby declares the Deed of Absolute Sale VOID. Accordingly, Transfer
Certificates of Title Nos. 105202 and 105203 in the names of the [respondents], Arsenio
(deceased) and Angeles Nanol, are ordered CANCELLED. The [respondents] and any person
claiming rights under them are directed to turn-over the possession of the house and lot to
[petitioner], Communities Cagayan, Inc., subject to the latter’s payment of their total monthly
installments and the value of the new house minus the cost of the original house.
SO ORDERED.38
39
Not satisfied, petitioner moved for reconsideration of the Decision but the Motion was denied in
an Order40 dated February 12, 2007.
Issue
Instead of appealing the Decision to the Court of Appeals (CA), petitioner opted to file the instant
petition directly with this Court on a pure question of law, to wit:
WHETHER X X X THE ACTION OF THE RTC BRANCH 18 X X X IN ORDERING THE
RECOVERY OF POSSESSION BY PETITIONER ‘subject to the latter’s payment of their total
monthly installments and the value of the new house minus the cost of the original house’ IS
CONTRARY TO LAW AND JURISPRUDENCE X X X.41
Petitioner’s Arguments
Petitioner seeks to delete from the dispositive portion the order requiring petitioner to reimburse
respondent-spouses the total monthly installments they had paid and the value of the new house
minus the cost of the original house.42 Petitioner claims that there is no legal basis for the RTC to
require petitioner to reimburse the cost of the new house because respondent-spouses were in
bad faith when they renovated and improved the house, which was not yet their own. 43 Petitioner
further contends that instead of ordering mutual restitution by the parties, the RTC should have
applied Republic Act No. 6552, otherwise known as the Maceda Law, 44 and that instead of
awarding respondent-spouses a refund of
all their monthly amortization payments, the RTC should have ordered them to pay petitioner
monthly rentals.45
Respondent Angeles’ Arguments
Instead of answering the legal issue raised by petitioner, respondent Angeles asks for a review of
the Decision of the RTC by interposing additional issues.46 She maintains that the Deed of
Absolute Sale is valid.47 Thus, the RTC erred in cancelling TCT Nos. 105202 and 105203.
Our Ruling
The petition is partly meritorious.
At the outset, we must make it clear that the issues raised by respondent Angeles may not be
entertained. For failing to file an appeal, she is bound by the Decision of the RTC. Well entrenched
is the rule that "a party who does not appeal from a judgment can no longer seek modification or
reversal of the same. He may oppose the appeal of the other party only on grounds consistent
with the judgment."48 For this reason, respondent Angeles may no longer question the propriety
and correctness of the annulment of the Deed of Absolute Sale, the cancellation of TCT Nos.
105202 and 105203, and the order to vacate the property.
Hence, the only issue that must be resolved in this case is whether the RTC erred in ordering
petitioner to reimburse respondent-spouses the "total monthly installments and the value of the
new house minus the cost of the original house."49 Otherwise stated, the issues for our resolution
are:
1) Whether petitioner is obliged to refund to respondent-spouses all the monthly
installments paid; and
2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new
house minus the cost of the original house.
Respondent-spouses are entitled to the
cash surrender value of the payments
on the property equivalent to 50% of the
total payments made.
Considering that this case stemmed from a Contract to Sell executed by the petitioner and the
respondent-spouses, we agree with petitioner that the Maceda Law, which governs sales of real
estate on installment, should be applied.
Sections 3, 4, and 5 of the Maceda Law provide for the rights of a defaulting buyer, to wit:
Section 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding industrial lots,
commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred
forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the
buyer has paid at least two years of installments, the buyer is entitled to the following rights in
case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him which is hereby fixed at the rate of one month grace period for
every one year of installment payments made: Provided, That this right shall be exercised
by the buyer only once in every five years of the life of the contract and its extensions, if
any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty percent of the
total payments made, and, after five years of installments, an additional five per cent
 every year but not to exceed ninety per cent of the total payments made: Provided, That
the actual cancellation of the contract shall take place after thirty days from receipt by the
buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the
total number of installment payments made. (Emphasis supplied.)
Section 4. In case where less than two years of installments were paid, the seller shall give the
buyer a grace period of not less than sixty days from the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.
Section 5. Under Sections 3 and 4, the buyer shall have the right to sell his rights or assign the
same to another person or to reinstate the contract by updating the account during the grace
period and before actual cancellation of the contract. The deed of sale or assignment shall be
done by notarial act.
In this connection, we deem it necessary to point out that, under the Maceda Law, the actual
cancellation of a contract to sell takes place after 30 days from receipt by the buyer of the
notarized notice of cancellation,50 and upon full payment of the cash surrender value to the
buyer.51 In other words, before a contract to sell can be validly and effectively cancelled, the seller
has (1) to send a notarized notice of cancellation to the buyer and (2) to refund the cash surrender
value.52 Until and unless the seller complies with these twin mandatory requirements, the contract
to sell between the parties remains valid and subsisting.53 Thus, the buyer has the right to continue
occupying the property subject of the contract to sell,54 and may "still reinstate the contract by
updating the account during the grace period and before the actual cancellation" 55 of the contract.
In this case, petitioner complied only with the first condition by sending a notarized notice of
cancellation to the respondent-spouses. It failed, however, to refund the cash surrender value to
the respondent-spouses. Thus, the Contract to Sell remains valid and subsisting and supposedly,
respondent-spouses have the right to continue occupying the subject property. Unfortunately, we
cannot reverse the Decision of the RTC directing respondent-spouses to vacate and turnover
possession of the subject property to petitioner because respondent-spouses never appealed the
order. The RTC Decision as to respondent-spouses is therefore considered final.
In addition, in view of respondent-spouses’ failure to appeal, they can no longer reinstate the
contract by updating the account. Allowing them to do so would be unfair to the other party and is
offensive to the rules of fair play, justice, and due process. Thus, based on the factual milieu of the
instant case, the most that we can do is to order the return of the cash surrender value. Since
respondent-spouses paid at least two years of installment,56 they are entitled to receive the cash
surrender value of the payments they had made which, under Section 3(b) of the Maceda Law, is
equivalent to 50% of the total payments made.
Respondent-spouses are entitled to
reimbursement of the improvements
made on the property.
Petitioner posits that Article 448 of the Civil Code does not apply and that respondent-spouses are
not entitled to reimbursement of the value of the improvements made on the property because
they were builders in bad faith. At the outset, we emphasize that the issue of whether respondent-
spouses are builders in good faith or bad faith is a factual question, which is beyond the scope of
a petition filed under Rule 45 of the Rules of Court.57 In fact, petitioner is deemed to have waived
all factual issues since it appealed the case directly to this Court,58 instead of elevating the matter
to the CA. It has likewise not escaped our attention that after their failed preliminary conference,
the parties agreed to submit the case for resolution based on the pleadings and exhibits
presented. No trial was conducted. Thus, it is too late for petitioner to raise at this stage of the
proceedings the factual issue of whether respondent-spouses are ilders in bad faith. Hence, in
view of the special circumstances obtaining in this case, we are constrained to rely on the
presumption of good faith on the part of the respondent-spouses which the petitioner failed to
rebut. Thus, respondent-spouses being presumed builders in good faith, we now rule on the
applicability of Article 448 of the Civil Code.
As a general rule, Article 448 on builders in good faith does not apply where there is a contractual
relation between the parties,59 such as in the instant case. We went over the records of this case
and we note that the parties failed to attach a copy of the Contract to Sell. As such, we are
constrained to apply Article 448 of the Civil Code, which provides viz:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot
be obliged to buy the land if its value is considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the terms thereof.
Article 448 of the Civil Code applies when the builder believes that he is the owner of the land or
that by some title he has the right to build thereon,60 or that, at least, he has a claim of title
thereto.61 Concededly, this is not present in the instant case. The subject property is covered by a
Contract to Sell hence ownership still remains with petitioner being the seller. Nevertheless, there
were already instances where this Court applied Article 448 even if the builders do not have a
claim of title over the property. Thus:
This Court has ruled that this provision covers only cases in which the builders, sowers or planters
believe themselves to be owners of the land or, at least, to have a claim of title thereto. It does not
apply when the interest is merely that of a holder, such as a mere tenant, agent or usufructuary.
From these pronouncements, good faith is identified by the belief that the land is owned; or that –
by some title – one has the right to build, plant, or sow thereon.
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond
this limited definition. Thus, in Del Campo v. Abesia, this provision was applied to one whose
house – despite having been built at the time he was still co-owner – overlapped with the land of
another. This article was also applied to cases wherein a builder had constructed improvements
with the consent of the owner. The Court ruled that the law deemed the builder to be in good faith.
In Sarmiento v. Agana, the builders were found to be in good faith despite their reliance on the
consent of another, whom they had mistakenly believed to be the owner of the land.62
The Court likewise applied Article 448 in Spouses Macasaet v. Spouses
Macasaet63 notwithstanding the fact that the builders therein knew they were not the owners of the
land. In said case, the parents who owned the land allowed their son and his wife to build their
residence and business thereon. As found by this Court, their occupation was not by mere
tolerance but "upon the invitation of and with the complete approval of (their parents), who desired
that their children would occupy the premises. It arose from familial love and a desire for family
solidarity x x x."64 Soon after, conflict between the parties arose. The parents demanded their son
and his wife to vacate the premises. The Court thus ruled that as owners of the property, the
parents have the right to possession over it. However, they must reimburse their son and his wife
for the improvements they had introduced on the property because they were considered builders
in good faith even if they knew for a fact that they did not own the property, thus:
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The
established facts of this case show that respondents fully consented to the improvements
introduced by petitioners. In fact, because the children occupied the lots upon their invitation, the
parents certainly knew and approved of the construction of the improvements introduced thereon.
Thus, petitioners may be deemed to have been in good faith when they built the structures on
those lots.
The instant case is factually similar to Javier v. Javier. In that case, this Court deemed the son to
be in good faith for building the improvement (the house) with the knowledge and consent of his
father, to whom belonged the land upon which it was built. Thus, Article 448 was applied. 65
In fine, the Court applied Article 448 by construing good faith beyond its limited definition. We find
no reason not to apply the Court’s ruling in Spouses Macasaet v. Spouses Macasaet in this case.
We thus hold that Article 448 is also applicable to the instant case. First, good faith is presumed
on the part of the respondent-spouses. Second, petitioner failed to rebut this presumption. Third,
no evidence was presented to show that petitioner opposed or objected to the improvements
introduced by the respondent-spouses. Consequently, we can validly presume that petitioner
consented to the improvements being constructed. This presumption is bolstered by the fact that
as the subdivision developer, petitioner must have given the respondent-spouses permits to
commence and undertake the construction. Under Article 453 of the Civil Code, "it is understood
that there is bad faith on the part of the landowner whenever the act was done with his knowledge
and without opposition on his part."
In view of the foregoing, we find no error on the part of the RTC in requiring petitioner to pay
respondent-spouses the value of the new house minus the cost of the old house based on Article
448 of the Civil Code, subject to succeeding discussions.
Petitioner has two options under Article
448 and pursuant to the ruling in
Tuatis v. Escol.66
In Tuatis, we ruled that the seller (the owner of the land) has two options under Article 448: (1) he
may appropriate the improvements for himself after reimbursing the buyer (the builder in good
faith) the necessary and useful expenses under Articles 54667 and 54868 of the Civil Code; or (2) he
may sell the land to the buyer, unless its value is considerably more than that of the
improvements, in which case, the buyer shall pay reasonable rent.69 Quoted below are the
pertinent portions of our ruling in that case:
Taking into consideration the provisions of the Deed of Sale by Installment and Article 448 of the
Civil Code, Visminda has the following options:
Under the first option, Visminda may appropriate for herself the building on the subject
property after indemnifying Tuatis for the necessary and useful expenses the latter
incurred for said building, as provided in Article 546 of the Civil Code.
It is worthy to mention that in Pecson v. Court of Appeals, the Court pronounced that the amount
to be refunded to the builder under Article 546 of the Civil Code should be the current
market value of the improvement, thus:
xxxx
Until Visminda appropriately indemnifies Tuatis for the building constructed by the latter, Tuatis
may retain possession of the building and the subject property.
Under the second option, Visminda may choose not to appropriate the building and, instead,
oblige Tuatis to pay the present or current fair value of the land. The P10,000.00 price of the
subject property, as stated in the Deed of Sale on Installment executed in November 1989, shall
no longer apply, since Visminda will be obliging Tuatis to pay for the price of the land in the
exercise of Visminda’s rights under Article 448 of the Civil Code, and not under the said Deed.
Tuatis’ obligation will then be statutory, and not contractual, arising only when Visminda has
chosen her option under Article 448 of the Civil Code.
Still under the second option, if the present or current value of the land, the subject property
herein, turns out to be considerably more than that of the building built thereon, Tuatis
cannot be obliged to pay for the subject property, but she must pay Visminda reasonable
rent for the same. Visminda and Tuatis must agree on the terms of the lease; otherwise, the
court will fix the terms.
Necessarily, the RTC should conduct additional proceedings before ordering the execution of the
judgment in Civil Case No. S-618. Initially, the RTC should determine which of the aforementioned
options Visminda will choose. Subsequently, the RTC should ascertain: (a) under the first option,
the amount of indemnification Visminda must pay Tuatis; or (b) under the second option, the value
of the subject property vis-à-vis that of the building, and depending thereon, the price of, or the
reasonable rent for, the subject property, which Tuatis must pay Visminda.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of
the subject property. There is no basis for Tuatis’ demand that, since the value of the building she
constructed is considerably higher than the subject property, she may choose between buying the
subject property from Visminda and selling the building to Visminda for P502,073.00. Again, the
choice of options is for Visminda, not Tuatis, to make. And, depending on Visminda’s choice,
Tuatis’ rights as a builder under Article 448 are limited to the following: (a) under the first option, a
right to retain the building and subject property until Visminda pays proper indemnity; and (b)
under the second option, a right not to be obliged to pay for the price of the subject property, if it is
considerably higher than the value of the building, in which case, she can only be obliged to pay
reasonable rent for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the
other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. The landowner cannot refuse to exercise either option and compel instead the owner
of the building to remove it from the land.
The raison d’etre for this provision has been enunciated thus: Where the builder, planter or sower
has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary
to protect the owner of the improvements without causing injustice to the owner of the land. In
view of the impracticability of creating a state of forced co-ownership, the law has provided a just
solution by giving the owner of the land the option to acquire the improvements after payment of
the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the
proper rent. He cannot refuse to exercise either option. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing.
Visminda’s Motion for Issuance of Writ of Execution cannot be deemed as an expression of her
choice to recover possession of the subject property under the first option, since the options under
Article 448 of the Civil Code and their respective consequences were also not clearly presented to
her by the 19 April 1999 Decision of the RTC. She must then be given the opportunity to make a
choice between the options available to her after being duly informed herein of her rights and
obligations under both.70 (Emphasis supplied.)
In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has two
options. It may appropriate the new house by reimbursing respondent Angeles the current market
value thereof minus the cost of the old house. Under this option, respondent Angeles would have
"a right of retention which negates the obligation to pay rent." 71 In the alternative, petitioner may
sell the lots to respondent Angeles at a price equivalent to the current fair value thereof. However,
if the value of the lots is considerably more than the value of the improvement, respondent
Angeles cannot be compelled to purchase the lots. She can only be obliged to pay petitioner
reasonable rent.
In view of the foregoing disquisition and in accordance with Depra v. Dumlao 72 and Technogas
Philippines Manufacturing Corporation v. Court of Appeals,73 we find it necessary to remand this
case to the court of origin for the purpose of determining matters necessary for the proper
application of Article 448, in relation to Articles 546 and 548 of the Civil Code.
WHEREFORE, the petition is hereby PARTIALLY GRANTED. The assailed Decision dated
December 29, 2006 and the Order dated February 12, 2007 of the Regional Trial Court, Cagayan
de Oro City, Branch 18, in Civil Case No. 2005-158 are
hereby AFFIRMED with MODIFICATION that petitioner Communities Cagayan, Inc. is hereby
ordered to RETURN the cash surrender value of the payments made by respondent-spouses on
the properties, which is equivalent to 50% of the total payments made, in ccordance with Section
3(b) of Republic Act No. 6552, otherwise known as the Maceda Law.
The case is hereby REMANDED to the Regional Trial Court, Cagayan de Oro City, Branch 18, for
further proceedings consistent with the proper application of Articles 448, 546 and 548 of the Civil
Code, as follows:
1. The trial court shall determine:
a) the present or current fair value of the lots;
b) the current market value of the new house;
c) the cost of the old house; and
d) whether the value of the lots is considerably more than the current market value of the
new house minus the cost of the old house.
2. After said amounts shall have been determined by competent evidence, the trial court shall
render judgment as follows:
a) Petitioner shall be granted a period of 15 days within which to exercise its option under
the law (Article 448, Civil Code), whether to appropriate the new house by paying to
respondent Angeles the current market value of the new house minus the cost of the old
house, or to oblige respondent Angeles to pay the price of the lots. The amounts to be
respectively paid by the parties, in accordance with the option thus exercised by written
notice to the other party and to the court, shall be paid by the obligor within 15 days from
such notice of the option by tendering the amount to the trial court in favor of the party
entitled to receive it.
b) If petitioner exercises the option to oblige respondent Angeles to pay the price of the
lots but the latter rejects such purchase because, as found by the trial court, the value of
the lots is considerably more than the value of the new house minus the cost of the old
house, respondent Angeles shall give written notice of such rejection to petitioner and to
the trial court within 15 days from notice of petitioner’s option to sell the land. In that
event, the parties shall be given a period of 15 days from such notice of rejection within
 which to agree upon the terms of the lease, and give the trial court formal written notice of
the agreement and its provisos. If no agreement is reached by the parties, the trial court,
within 15 days from and after the termination of the said period fixed for negotiation, shall
then fix the period and terms of the lease, including the monthly rental, which shall be
payable within the first five days of each calendar month. Respondent Angeles shall not
make any further constructions or improvements on the building. Upon expiration of the
period, or upon default by respondent Angeles in the payment of rentals for two
consecutive months, petitioner shall be entitled to terminate the forced lease, to recover
its land, and to have the new house removed by respondent Angeles or at the latter’s
expense.

c) In any event, respondent Angeles shall pay petitioner reasonable compensation for the
occupancy of the property for the period counted from the time the Decision dated
December 29, 2006 became final as to respondent Angeles or 15 days after she received
a copy of the said Decision up to the date petitioner serves notice of its option to
appropriate the encroaching structures, otherwise up to the actual transfer of ownership
to respondent Angeles or, in case a forced lease has to be imposed, up to the
commencement date of the forced lease referred to in the preceding paragraph.1âwphi1

d) The periods to be fixed by the trial court in its decision shall be nonextendible, and
upon failure of the party obliged to tender to the trial court the amount due to the obligee,
the party entitled to such payment shall be entitled to an order of execution for the
enforcement of payment of the amount due and for compliance with such other acts as
may be required by the prestation due the obligee.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-43346 March 20, 1991
MARIO C. RONQUILLO, petitioner
vs.
THE COURT OF APPEALS, DIRECTOR OF LANDS, DEVELOPMENT BANK OF THE
PHILIPPINES, ROSENDO DEL ROSARIO, AMPARO DEL ROSARIO and FLORENCIA DEL
ROSARIO, respondents.*
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
REGALADO, J.:
This petition seeks the review of the decision1 rendered by respondent Court of Appeals on
September 25, 1975 in CA-G.R. No. 32479-R, entitled "Rosendo del Rosario, et al., Plaintiffs-
Appellees, versus Mario Ronquillo, Defendant-Appellant," affirming in toto the judgment of the trial
court, and its amendatory resolution2 dated January 28, 1976 the dispositive portion of which
reads:
IN VIEW OF THE FOREGOING, the decision of this Court dated September 25, 1975 is
hereby amended in the sense that the first part of the appealed decision is set aside,
except the last portion "declaring the plaintiffs to be the rightful owners of the dried-up
portion of Estero Calubcub which is abutting plaintiffs' property," which we affirm, without
pronouncement as to costs.
SO ORDERED.
The following facts are culled from the decision of the Court of Appeals:
It appears that plaintiff Rosendo del Rosario was a registered owner of a parcel of land
known as Lot 34, Block 9, Sulucan Subdivision, situated at Sampaloc, Manila and
covered by Transfer Certificate of Title No. 34797 of the Registry of Deeds of Manila
(Exhibit "A"). The other plaintiffs Florencia and Amparo del Rosario were daughters of
said Rosendo del Rosario. Adjoining said lot is a dried-up portion of the old Estero
Calubcub occupied by the defendant since 1945 which is the subject matter of the
present action.
Plaintiffs claim that long before the year 1930, when T.C.T. No. 34797 over Lot No. 34
was issued in the name of Rosendo del Rosario, the latter had been in possession of said
lot including the adjoining dried-up portion of the old Estero Calubcub having bought the
same from Arsenio Arzaga. Sometime in 1935, said titled lot was occupied by Isabel
Roldan with the tolerance and consent of the plaintiff on condition that the former will
make improvements on the adjoining dried-up portion of the Estero Calubcub. In the early
part of 1945 defendant occupied the eastern portion of said titled lot as well as the dried-
up portion of the old Estero Calubcub which abuts plaintiffs' titled lot. After a relocation
survey of the land in question sometime in 1960, plaintiffs learned that defendant was
occupying a portion of their land and thus demanded defendant to vacate said land when
the latter refused to pay the reasonable rent for its occupancy. However, despite said
demand defendant refused to vacate.
Defendant on the other hand claims that sometime before 1945 he was living with his
sister who was then residing or renting plaintiffs' titled lot. In 1945 he built his house on
the disputed dried-up portion of the Estero Calubcub with a small portion thereof on the
titled lot of plaintiffs. Later in 1961, said house was destroyed by a fire which prompted
him to rebuild the same. However, this time it was built only on the called up portion of the
old Estero Calubcub without touching any part of plaintiffs titled land. He further claims
that said dried-up portion is a land of public domain.3
Private respondents Rosendo, Amparo and Florencia, all surnamed del Rosario (Del Rosarios),
lodged a complaint with the Court of First Instance of Manila praying, among others, that they be
declared the rightful owners of the dried-up portion of Estero Calubcub. Petitioner Mario Ronquillo
(Ronquillo) filed a motion to dismiss the complaint on the ground that the trial court had no
jurisdiction over the case since the dried-up portion of Estero Calubcub is public land and, thus,
subject to the disposition of the Director of Lands. The Del Rosarios opposed the motion arguing
that since they are claiming title to the dried-up portion of Estero Calubcub as riparian owners, the
trial court has jurisdiction. The resolution of the motion to dismiss was deferred until after trial on
the merits.
Before trial, the parties submitted the following stipulation of facts:
1. That the plaintiffs are the registered owners of Lot 34, Block 9, Sulucan Subdivision
covered by Transfer Certificate of Title No. 34797;
2. That said property of the plaintiffs abuts and is adjacent to the dried-up river bed of
Estero Calubcub Sampaloc, Manila;
3. That defendant Mario Ronquillo has no property around the premises in question and is
only claiming the dried-up portion of the old Estero Calubcub, whereon before October
23, 1961, the larger portion of his house was constructed;
4. That before October 23, 1961, a portion of defendant's house stands (sic) on the
above-mentioned lot belonging to the plaintiffs;
5. That the plaintiffs and defendant have both filed with the Bureau of Lands
miscellaneous sales application for the purchase of the abandoned river bed known as
Estero Calubcub and their sales applications, dated August 5, 1958 and October 13,
1959, respectively, are still pending action before the Bureau of Lands;
 6. That the parties hereby reserve their right to prove such facts as are necessary to
support their case but not covered by this stipulation of facts.4
On December 26, 1962, the trial court rendered judgment the decretal portion of which provides:
WHEREFORE, judgment is hereby rendered ordering the defendant to deliver to the
plaintiffs the portion of the land covered by Transfer Certificate of title No. 34797 which is
occupied by him and to pay for the use and occupation of said portion of land at the rate
of P 5.00 a month from the date of the filing of the complaint until such time as he
surrenders the same to the plaintiffs and declaring plaintiffs to be the owners of the dried-
up portion of estero Calubcub which is abutting plaintiffs' property.
With costs to the defendant.
SO ORDERED.5
On appeal, respondent court, in affirming the aforequoted decision of the trial court, declared that
since Estero Calubcub had already dried-up way back in 1930 due to the natural change in the
course of the waters, under Article 370 of the old Civil Code which it considers applicable to the
present case, the abandoned river bed belongs to the Del Rosarios as riparian owners.
Consequently, respondent court opines, the dried-up river bed is private land and does not form
part of the land of the public domain. It stated further that "(e)ven assuming for the sake of
argument that said estero did not change its course but merely dried up or disappeared, said
dried-up estero would still belong to the riparian owner," citing its ruling in the case of Pinzon vs.
Rama.6
Upon motion of Ronquillo, respondent court modified its decision by setting aside the first portion
of the trial court's decision ordering Ronquillo to surrender to the Del Rosarios that portion of land
covered by Transfer Certificate of Title No. 34797 occupied by the former, based on the former's
representation that he had already vacated the same prior to the commencement of this case.
However, respondent court upheld its declaration that the Del Rosarios are the rightful owners of
the dried-up river bed. Hence, this petition.
On May 17, 1976, this Court issued a resolution7 requiring the Solicitor General to comment on the
petition in behalf of the Director of Lands as an indispensable party in representation of the
Republic of the Philippines, and who, not having been impleaded, was subsequently considered
impleaded as such in our resolution of September 10, 1976. 8In his Motion to Admit Comment,9 the
Solicitor General manifested that pursuant to a request made by this office with the Bureau of
Lands to conduct an investigation, the Chief of the Legal Division of the Bureau sent a
communication informing him that the records of his office "do not show that Mario Ronquillo,
Rosendo del Rosario, Amparo del Rosario or Florencia del Rosario has filed any public land
application covering parcels of land situated at Estero Calubcub Manila as verified by our Records
Division.
The position taken by the Director of Lands in his Comment 10 filed on September 3, 1978, which
was reiterated in the Reply dated May 4, 1989 and again in the Comment dated August 17, 1989,
explicates:
5. We do not see our way clear to subscribe to the ruling of the Honorable Court of
Appeals on this point for Article 370 of the Old Civil Code, insofar as ownership of
abandoned river beds by the owners of riparian lands are concerned, speaks only of a
situation where such river beds were abandoned because of a natural change in the
course of the waters. Conversely, we submit that if the abandonment was for some cause
other than the natural change in the course of the waters, Article 370 is not applicable and
the abandoned bed does not lose its character as a property of public dominion not
susceptible to private ownership in accordance with Article 502 (No. 1) of the New Civil
Code. In the present case, the drying up of the bed, as contended by the petitioner, is
clearly caused by human activity and undeniably not because of the natural change of the
course of the waters (Emphasis in the original text).
In his Comment11 dated August 17, 1989, the Director of Lands further adds:
8. Petitioner herein and the private respondents, the del Rosarios, claim to have pending
sales application(s) over the portion of the dried up Estero Calubcub, as stated in pages
4-5, of the Amended Petition.
9. However, as stated in the Reply dated May 4, 1989 of the Director of Lands, all sales
application(s) have been rejected by that office because of the objection interposed by the
Manila City Engineer's Office that they need the dried portion of the estero for drainage
purposes.
10. Furthermore, petitioner and private respondents, the del Rosarios having filed said
sales application(s) are now estopped from claiming title to the Estero Calubcub (by
possession for petitioner and by accretion for respondents del Rosarios) because for (sic)
they have acknowledged that they do not own the land and that the same is a public land
under the administration of the Bureau of Lands (Director of Lands vs. Santiago, 160
SCRA 186, 194).
In a letter dated June 29, 197912 Florencia del Rosario manifested to this Court that Rosendo,
Amparo and Casiano del Rosario have all died, and that she is the only one still alive among the
private respondents in this case.
In a resolution dated January 20, 1988,13 the Court required petitioner Ronquillo to implead one
Benjamin Diaz pursuant to the former's manifestation14 that the land adjacent to the dried up river
bed has already been sold to the latter, and the Solicitor General was also required to inquire into
the status of the investigation being conducted by the Bureau of Lands. In compliance therewith,
the Solicitor General presented a letter from the Director of Lands to the effect that neither of the
parties involved in the present case has filed any public land application.15
On April 3, 1989, petitioner filed an Amended Petition for Certiorari,16 this time impleading the
Development Bank of the Philippines (DBP) which subsequently bought the property adjacent to
the dried-up river bed from Benjamin Diaz. In its resolution dated January 10, 1990, 17 the Court
ordered that DBP be impleaded as a party respondent.
In a Comment18 filed on May 9, 1990, DBP averred that "[c]onsidering the fact that the petitioner in
this case claims/asserts no right over the property sold to Diaz/DBP by the del Rosarios; and
considering, on the contrary, that Diaz and DBP claims/asserts (sic) no right (direct or indirect)
over the property being claimed by Ronquillo (the dried-up portion of Estero Calubcub), it follows,
therefore, that the petitioner Ronquillo has no cause of action against Diaz or DBP. A fortiori from
the viewpoint of the classical definition of a cause of action, there is no legal justification to
implead DBP as one of the respondents in this petition." DBP thereafter prayed that it be dropped
in the case as party respondent.
On September 13, 1990, respondent DBP filed a Manifestation/Compliance19 stating that DBP's
interest over Transfer Certificate of Title No. 139215 issued in its name (formerly Transfer
Certificate of Title No. 34797 of the Del Rosarios and Transfer Certificate of Title No. 135170 of
Benjamin Diaz) has been transferred to Spouses Victoriano and Pacita A. Tolentino pursuant to a
Deed of Sale dated September 11, 1990.
Petitioner Ronquillo avers that respondent Court of Appeals committed an error of law and gross
abuse of discretion, acted arbitrarily and denied petitioner due process of law (a) when it declared
private respondents Del Rosarios the rightful owners of the dried-up portion of Estero Calubcub by
unduly relying upon decisional law in the case of Pinzon vs. Rama, ante, which case was decided
entirely on a set of facts different from that obtaining in this case; and (b) when it ignored the
undisputed facts in the present case and declared the dried-up portion of Estero Calubcub as a
private property.
The main issue posed for resolution in this petition is whether the dried-up portion of Estero
Calubcub being claimed by herein petitioner was caused by a natural change in the course of the
waters; and, corollary thereto, is the issue of the applicability of Article 370 of the old Civil Code.
Respondent court, in affirming the findings of the trial court that there was a natural change in the
course of Estero Calubcub declared that:
The defendant claims that Article 370 of the old Civil Code is not applicable to the instant
case because said Estero Calubcub did not actually change its course but simply dried
up, hence, the land in dispute is a land of public domain and subject to the disposition of
the Director of Land(s). The contention of defendant is without merit. As mentioned
earlier, said estero as shown by the relocation plan (Exhibit "D") did not disappear but
merely changed its course by a more southeasternly (sic) direction. As such, "the
abandoned river bed belongs to the plaintiffs-appellees and said land is private and not
public in nature. Hence, further, it is not subject to a Homestead Application by the
appellant." (Fabian vs. Paculan CA-G.R. Nos. 21062-63-64-R, Jan. 25 1962). Even
assuming for the sake of argument that said estero did not change its course but merely
dried up or disappeared, said dried-up estero would still belong to the riparian owner as
held by this Court in the case of Pinzon vs. Rama (CA-G.R. No. 8389, Jan. 8, 1943; 2
O.G. 307).20
Elementary is the rule that the jurisdiction of the Supreme Court in cases brought to it from the
Court of Appeals in a petition for certiorari under Rule 45 of the Rules of Court is limited to the
review of errors of law, and that said appellate court's finding of fact is conclusive upon this Court.
However, there are certain exceptions, such as (1) when the conclusion is a finding grounded
entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly
absurd, mistaken or impossible; (3) when there is grave abuse of discretion in the appreciation of
facts; (4) when the judgment is premised on a misapprehension of facts; (5) when the findings of
fact are conflicting; and (6) when the Court of Appeals in making its findings went beyond the
issues of the case and the same is contrary to the admissions of both appellant and
appellee.21
A careful perusal of the evidence presented by both parties in the case at bar will reveal that the
change in the course of Estero Calubcub was caused, not by natural forces, but due to the
dumping of garbage therein by the people of the surrounding neighborhood. Under the
circumstances, a review of the findings of fact of respondent court thus becomes imperative.
Private respondent Florencia del Rosario, in her testimony, made a categorical statement which in
effect admitted that Estero Calubcub changed its course because of the garbage dumped therein,
by the inhabitants of the locality, thus:
Q When more or less what (sic) the estero fully dried up?
A By 1960 it is (sic) already dried up except for a little rain that accumulates on the lot
when it rains.
Q How or why did the Estero Calubcub dried (sic) up?
A It has been the dumping place of the whole neighborhood. There is no street, they
dumped all the garbage there. It is the dumping place of the whole community, sir.22
In addition, the relocation plan (Exhibit "D") which also formed the basis of respondent court's
ruling, merely reflects the change in the course of Estero Calubcub but it is not clear therefrom as
to what actually brought about such change. There is nothing in the testimony of lone witness
Florencia del Rosario nor in said relocation plan which would indicate that the change in the
course of the estero was due to the ebb and flow of the waters. On the contrary, the aforequoted
testimony of the witness belies such fact, while the relocation plan is absolutely silent on the
matter. The inescapable conclusion is that the dried-up portion of Estero Calubcub was
occasioned, not by a natural change in the course of the waters, but through the active
intervention of man.
The foregoing facts and circumstances remove the instant case from the applicability of Article 370
of the old Civil Code which provides:
Art. 370. The beds of rivers, which are abandoned because of a natural change in the
course of the waters, belong to the owners of the riparian lands throughout the respective
length of each. If the abandoned bed divided tenements belonging to different owners the
new dividing line shall be equidistant from one and the other.
The law is clear and unambiguous. It leaves no room for interpretation.1âwphi1 Article 370 applies
only if there is a natural change in the course of the waters. The rules on alluvion do not apply to
man-made or artificial accretions23 nor to accretions to lands that adjoin canals or esteros or
artificial drainage systems.24 Considering our earlier finding that the dried-up portion of Estero
Calubcub was actually caused by the active intervention of man, it follows that Article 370 does
not apply to the case at bar and, hence, the Del Rosarios cannot be entitled thereto supposedly as
riparian owners.

The dried-up portion of Estero Calubcub should thus be considered as forming part of the land of
the public domain which cannot be subject to acquisition by private ownership. That such is the
case is made more evident in the letter, dated April 28, 1989, of the Chief, Legal Division of the
Bureau of Lands25 as reported in the Reply of respondent Director of Lands stating that "the
alleged application filed by Ronquillo no longer exists in its records as it must have already been
disposed of as a rejected application for the reason that other applications "covering Estero
Calubcub Sampaloc, Manila for areas other than that contested in the instant case, were all
rejected by our office because of the objection interposed by the City Engineer's office that they
need the same land for drainage purposes". Consequently, since the land is to be used for
drainage purposes the same cannot be the subject of a miscellaneous sales application.

Lastly, the fact that petitioner and herein private respondents filed their sales applications with the
Bureau of Lands covering the subject dried-up portion of Estero Calubcub cannot but be deemed
as outright admissions by them that the same is public land. They are now estopped from claiming
otherwise.

WHEREFORE, the decision appealed from, the remaining effective portion of which declares
private respondents Del Rosarios as riparian owners of the dried-up portion of Estero Calubcub is
hereby REVERSED and SET ASIDE.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 77294 December 12, 1988
ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-appellants,
vs.
COURT OF APPEALS, LEONOR P. LADRIDO, LOURDES LADRIDO IGNACIO, EUGENIO P.
LADRIDO and L P. LADRIDO, defendants-appellees.
Ramon A. Gonzales for petitioner.
Miraflores Law Offices for respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals dated December
29, 1986, in CA-G.R. CV No. 69942 entitled, "ANGELICA VIAJAR, et. al., Plaintiffs-Appellants,
versus LEONOR LADRIDO, et. al., Defendants-Appellees," affirming the decision of the Court of
First Instance (now Regional Trial Court) of Iloilo dated December 10, 1981.
The antecedent facts in the instant case are as follows: The spouses Ricardo Y. Ladrido and
Leonor P. Ladrido were the owners of Lot No. 7511 of the Cadastral Survey of Pototan situated in
barangay Cawayan, Pototan, Iloilo. This lot contained an area of 154,267 square meters and was
registered in the names of the spouses under Transfer Certificate of Title No. T-21940 of the
Register of Deeds of Iloilo.
Spouses Rosendo H. Te and Ana Te were also the registered owners of a parcel of land
described in their title as Lot No. 7340 of the Cadastral Survey of Pototan.
On September 6, 1973, Rosendo H. Te, with the conformity of Ana Te, sold this lot to Angelica F.
Viajar and Celso F. Viajar for P5,000. A Torrens title was later issued in the names of Angelica F.
Viajar and Celso F. Viajar.
Later, Angelica F. Viajar had Lot No. 7340 relocated and found out that the property was in the
possession of Ricardo Y. Ladrido. Consequently, she demanded its return but Ladrido refused.
On February 15, 1974, Angelica F. Viajar and Celso F. Viajar instituted a civil action for recovery
of possession and damages against Ricardo Y. Ladrido. This case was docketed as Civil Case
No. 9660 of the Court of First Instance of Iloilo. Summoned to plead, defendant Ladrido filed his
answer with a counterclaim. Plaintiffs filed their reply to the answer.
Subsequently, the complaint was amended to implead Rosendo H. Te as another defendant.
Plaintiffs sought the annulment of the deed of sale and the restitution of the purchase price with
interest in the event the possession of defendant Ladrido is sustained. Defendant Te filed his
answer to the amended complaint and he counter claimed for damages. Plaintiffs answered the
counterclaim.
During the pendency of the case, plaintiff Celso F. Viajar sold his rights over Lot No. 7340 to his
mother and co-plaintiff, Angelica F. Viajar. For this reason, plaintiff Angelica F. Viajar now appears
to be the sole registered owner of this lot.
On May 25, 1978, defendant Ladrido died. He was substituted in the civil action by his wife,
Leonor P. Ladrido, and children, namely: Lourdes Ladrido-Ignacio, Eugenio P. Ladrido and
Manuel P. Ladrido, as parties defendants.
The facts admitted by the parties during the pre-trial show that the piece of real property which
used to be Lot No. 7340 of the Cadastral Survey of Pototan was located in barangay
Guibuanogan Pototan, Iloilo; that it consisted of 20,089 square meters; that at the time of the
cadastral survey in 1926, Lot No. 7511 and Lot No. 7340 were separated by the Suague River;
that the area of 11,819 square meters of what was Lot No. 7340 has been in the possession of the
defendants; that the area of 14,036 square meters, which was formerly the river bed of the
Suague River per cadastral survey of 1926, has also been in the possession of the defendants;
and that the plaintiffs have never been in actual physical possession of Lot No. 7340.
After trial on the merits, a second amended complaint which included damages was admitted.
The plaintiffs raised the following issues to be resolved:
1. Whether the change in the course of the Suague River was
sudden as claimed by the plaintiffs or gradual as contended by
the defendants;
2. Assuming arguendo it was gradual, whether or not the
plaintiffs are still entitled to Lot "B' appearing in Exhibit "4" and
to one-half (½) of Lot "A," also indicated in Exhibit "4;" and
3. Damages (pp. 12-13, Rollo).
On December 10, 1981, the trial court rendered its decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the defendants and
against the plaintiffs:
1. Dismissing the complaint of plaintiffs Angelica F. Viajar and
Celso F. Viajar with costs against them;
 2. Declaring defendants Leonor P. Ladrido, Lourdes Ladrido-
Ignacio, Eugenio P. Ladrido and Manuel P. Ladrido as owner of
the parcel of land indicated as Lots A and B in the sketch plan
(Exhs. 'C' as well as '4,' '4-B' and '4-C') situated in barangays
Cawayan and Guibuanogan Pototan, Iloilo, and containing an
area of 25,855 square meters, more or less; and
3. Pronouncing that as owners of the land described in the
preceding paragraph, the defendants are entitled to the
possession thereof.
Defendants' claim for moral damages and attorney's fees are dismissed.
SO ORDERED (p. 36, Rollo).
Not satisfied with the decision, the plaintiffs appealed to the Court of Appeals and assigned the
following errors:
I.
THE LOWER COURT ERRED IN NOT HOLDING THAT PLAINTIFFS ARE
ENTITLED TO LOT B APPEARING IN EXHIBIT "4" AND TO ONE-HALF (½) OF
LOT A IN THE SAID EXHIBIT "4."
II
THE LOWER COURT ERRED IN NOT AWARDING DAMAGES TO PLAINTIFFS
(p. 42, Rollo).
As earlier stated, the Court of Appeals affirmed the decision of the court a quo. Plaintiffs (the
petitioners herein) now come to Us claiming that the Court of Appeals palpably erred in affirming
the decision of the trial court on the ground that the change in the course of the Suague River was
gradual and not sudden.
In the decision appealed from, the Court of Appeals held:
This appeal is not impressed with merit.
Article 457 of the New Civil Code provides that:
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.
The presumption is that the change in the course of the river was gradual and
caused by accretion and erosion (Martinez Canas vs. Tuason, 5 Phil. 668;
Payatas Estate Improvement Co. vs. Tuason, 53 Phil. 55; C.H. Hodges vs.
Garcia, 109 Phil. 133). In the case at bar, the lower court correctly found that the
evidence introduced by the plaintiff to show that the change in the course of the
Suague River was sudden or that it occurred through avulsion is not clear and
convincing.
Contrariwise, the lower court found that:
... the defendants have sufficiently established that for many years after 1926 a
gradual accretion on the eastern side of Lot No. 7511 took place by action of the
current of the Suague River so that in 1979 an alluvial deposit of 29,912 square
meters (2.9912 hectares), more or less, had been added to Lot No. 7511. (Exhs.
'1' as well as Exhs. 'C' and '4'). Apropos it should be observed that the accretion
consisted of Lot A with an area of 14,036 square meters; Lot B, 11,819 square
meters; and Lot C, 4,057 square meters. (Exhs. '4-B,' '4-C' and '4-D'). Only Lot C
is not involved in this litigation. (See Pre-trial Order, supra)
The established facts indicate that the eastern boundary of Lot No. 7511 was the
Suague River based on the cadastral plan. For a period of more than 40 years
(before 1940 to 1980) the Suague River overflowed its banks yearly and the
property of the defendant gradually received deposits of soil from the effects of
the current of the river. The consequent increase in the area of Lot No. 7511 due
to alluvion or accretion was possessed by the defendants whose tenants plowed
and planted the same with coin and tobacco.
The quondam river bed had been filled by accretion through the years. The land
is already plain and there is no indication on the ground of any abandoned river
bed. The river bed is definitely no longer discernible now.
What used to be the old river bed (Lot A) is in level with Lot No. 7511. So are the
two other areas to the East. (Lots B and C) Lots A, B and C are still being
cultivated.
Under the law, accretion which the banks or rivers may gradually receive from
the effects of the current of the waters becomes the property of the owners of the
lands adjoining the banks. (Art. 366, Old Civil Code; Art. 457, New Civil Code
which took effect on August 30, 1950 [Lara v. Del Rosario, 94 Phil. 778].
Therefore, the accretion to Lot No. 7511 which consists of Lots A and B (see
Exhs. 'C' and '4') belongs to the defendants (pp. 34-35, Record on Appeal).
We find no cogent reason to disturb the foregoing finding and conclusion of the
lower court.
The second assignment of error is a mere offshoot of the first assignment of error
and does not warrant further discussion (pp. 4244, Rollo).
The petition is without merit.
The petitioners contend that the first issue raised during the trial of the case on the merits in the
Court of First Instance, that is, "whether the change in the course of the Suague River was sudden
as claimed by the plaintiffs or gradual as contended by the defendants," was abandoned and
never raised by them in their appeal to the Court of Appeals. Hence, the Court of Appeals, in
holding that the appeal is without merit, because of the change of the Suague River was gradual
and not sudden, disposed of the appeal on an issue that was never raised and, accordingly, its
decision is void. In support of its contention, petitioners cite the following authorities:
It is a well-known principle in procedure that courts of justice have no jurisdiction
or power to decide a question not in issue (Lim Toco vs. Go Fay, 80 Phil. 166).
A judgment going outside the issues and purporting to adjudicate something
upon which the parties were not heard, is not merely irregular, but extra-judicial
and invalid ( Salvante vs. Cruz, 88 Phil. 236-244; Lazo vs. Republic Surety &
Insurance Co., Inc., 31 SCRA 329, 334).
The pivotal issue in the petitioners' appeal was whether the change in the course of the Suague
River was gradual or sudden because the trial court below resolved the same in its decision thus
subjecting the same to review by respondent appellate court. By simply abandoning this issue, the
petitioners cannot hope that the affirmance of the decision wherein this issue was resolved makes
the decision of the Court of Appeals void. In effect, the petitioners are expounding a new
procedural theory that to render a questioned decision void, all that has to be done is to simply
abandon on appeal the pivotal issue as resolved by the lower court and when its decision is
affirmed on appeal, attack the decision of the appellate court as void on the principle that a court
of justice has no jurisdiction or power to decide the question not in issue. This is not correct. Even
the authorities cited by the petitioners, more specifically the Salvante and Lazo cases, supra, do
not support their contention. They were heard in the trial court and they cannot complain that the
proceeding below was irregular and hence, invalid.
The trial court found that the change in the course of the Suague River was gradual and this
finding was affirmed by the respondent Court of Appeals. We do not find any valid reason to
disturb this finding of fact.
Article 457 of the New Civil Code (reproduced from Article 366 of the Old), the law applied by the
courts a quoprovides:
Art. 457. To the owners of the lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the
waters.
Petitioners contend that this article must be read together with Sections 45 an 46 of Act No. 496
which provides:
SEC. 45. 1 The obtaining of a decree of registration and the entry of a certificate
of title shall be regarded as an agreement running with the land, and binding
upon the applicant and all successors in title that the land shall be and always
remain registered land, and subject to the provisions of this Act and all Acts
amendatory thereof.
SEC. 46. 2 No title to registered land in derogation to that of the registered owner
shall be acquired by prescription or adverse possession.
As a result, petitioners contend, Article 457 of the New Civil Code must be construed to limit the
accretion mentioned therein as accretion of unregistered land to the riparian owner, and should
not extend to registered land. Thus, the lot in question having remained the registered land of the
petitioners, then the private respondents cannot acquire title there in derogation to that of the
petitioners, by accretion, for that will defeat the indefeasibility of a Torrens Title.
The rule that registration under the Torrens System does not protect the riparian owner against
the diminution of the area of his registered land through gradual changes in the course of an
adjoining stream is well settled. In Payatas Estate Improvement Co. vs. Tuason, 53 Phil. 55, We
ruled:
The controversy in the present cases seems to be due to the erroneous
conception that Art. 366 of the Civil Code does not apply to Torrens registered
land. That article provides that "any accretions which the banks of rivers may
gradually receive from the effects of the current belong to the owners of the
estates bordering thereon." Accretions of that character are natural incidents to
land bordering on running streams and are not affected by the registration laws.
It follows that registration does not protect the riparian owner against diminution
of the area of his land through gradual changes in the course of the adjoining
stream.
In C.N. Hodges vs. Garcia, 109 Phil. 133, We also ruled:
It clearly appearing that the land in question has become part of defendant's
estate as a result of accretion, it follows that said land now belongs to him. The
fact that the accretion to his land used to pertain to plaintiffs estate, which is
covered by a Torrens Certificate of Title, cannot preclude him (defendant) from
being the owner thereof. Registration does not protect the riparian owner against
the diminution of the area of his land through gradual changes in the course of
the adjoining stream. Accretions which the banks of rivers may gradually receive
from the effect of the current become the property of the owners of the banks
(Art. 366 of the Old Civil Code; Art. 457 of the New). Such accretions are natural
incidents to land bordering on running streams and the provisions of the Civil
Code in that respect are not affected by the Registration Act.
We find no valid reason to review and abandon the aforecited rulings.
As the private respondents are the owners of the premises in question, no damages are
recoverable from them.

ACCORDINGLY, the petition is DISMISSED for lack of merit without pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-61647 October 12, 1984
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner,
vs.
THE HON. COURT OF APPEALS, BENJAMIN TANCINCO, AZUCENA TANCINCO REYES,
MARINA TANCINCO IMPERIAL and MARIO C. TANCINCO, respondents.
The Solicitor General for petitioner.
Martin B. Laurea for respondents.
GUTIERREZ, JR., J.:ñé+.£ªwph!1
This is a petition for certiorari to set aside the decision of the respondent Court of Appeals (now
Intermediate Appellate Court) affirming the decision of the Court of First Instance of Bulacan, Fifth
Judicial District, Branch VIII, which found that Lots 1 and 2 of Plan Psu-131892 are accretion to
the land covered by Transfer Certificate of Title No. 89709 and ordered their registration in the
names of the private respondents.
Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be "Maria") Tancinco
Imperial and Mario C. Tancinco are registered owners of a parcel of land covered by Transfer
Certificate of Title No. T-89709 situated at Barrio Ubihan, Meycauayan, Bulacan bordering on the
Meycauayan and Bocaue rivers.
On June 24, 1973, the private respondents filed an application for the registration of three lots
adjacent to their fishpond property and particularly described as follows: têñ.£îhqwâ£
Lot 1-Psu-131892
(Maria C. Tancinco)
A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along fines 4-5-6-7-8-9, by Bocaue River; on the
NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW.,
along lines 10-11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
containing an area of THIRTY THREE THOUSAND NINE HUNDRED THIRTY
SEVEN (33,937) SQUARE METERS. ...
Lot 2-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the E.,
along line 1-2, by property of Rafael Singson; on the S., along line 2-3, by
Meycauayan River; on the SW., along line 3-4, by Lot 3 of plan Psu-131892; and
on the N., along line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877).
... containing an area of FIVE THOUSAND FOUR HUNDRED FIFTY THREE
(5,453) SQUARE METERS. ...
Lot 3-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along
line 2-3, by Lot 2 of plan Psu-131892; on the S., along line 3-4, by Meycauayan
River, on the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6
by property of Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line
6-1, by property of Joaquina Santiago. ... containing an area of ONE
THOUSAND NINE HUNDRED EIGHTY FIVE (1,985) SQUARE METERS. ...
On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of the Bureau
of Lands filed a written opposition to the application for registration.
On March 6, 1975, the private respondents filed a partial withdrawal of the application for
registration with respect to Lot 3 of Plan Psu-131892 in line with the recommendation of the
Commissioner appointed by the Court.
On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial proceeded only with
respect to Lots 1 and 2 covered by Plan Psu-131892.
On June 26, 1976, the lower court rendered a decision granting the application on the finding that
the lands in question are accretions to the private respondents' fishponds covered by Transfer
Certificate of Title No. 89709. The dispositive portion of the decision reads: têñ.£îhqwâ£
WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are
accretions to the land covered by Transfer Certificate of Title No. 89709 of the
Register of Deeds of Bulacan, they belong to the owner of said property. The
Court, therefore, orders the registration of lots 1 & 2 situated in the barrio of
Ubihan, municipality of Meycauayan, province of Bulacan, and more particularly
described in plan Psu-131892 (Exh. H) and their accompanying technical
descriptions (Exhs. E, E-1) in favor of Benjamin Tancinco, married to Alma
Fernandez and residing at 3662 Heatherdown, Toledo, Ohio 43614 U.S.A.;
Azucena Tancinco Reyes, married to Alex Reyes, Jr., residing at 4th St., New
Manila, Quezon City; Marina Tancinco Imperial, married to Juan Imperial,
 residing at Pasay Road, Dasmariñas Village, Makati, Rizal; and Mario C.
Tancinco, married to Leticia Regidor, residing at 1616 Cypress St., Dasmariñas
Village, Makati, Rizal, all of legal age, all Filipino citizens.
On July 30, 1976, the petitioner Republic appealed to the respondent Court of Appeals.
On August, 19, 1982, the respondent Court rendered a decision affirming in toto the decision of
the lower court. The dispositive portion of the decision reads: têñ.£îhqwâ£
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa
kanyang kabuuan nang walang bayad.
The rule that the findings of fact of the trial court and the Court of Appeals are binding upon this
Court admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS Stock Brokerage,
Inc. (97 SCRA 734) we held that this Court retains the power to review and rectify the findings of
fact of said courts when (1) the conclusion is a finding grounded entirely on speculations, surmises
and conjectures; (2) when the inference made is manifestly mistaken, absurd, and impossible; (3)
where there is grave abuse of discretion, (4) when the judgment is based on a misapprehension of
facts; and (5) when the court, in making its findings, went beyond the issues of the case and the
same are contrary to the admissions of both appellant and appellee.
There are facts and circumstances in the record which render untenable the findings of the trial
court and the Court of Appeals that the lands in question are accretions to the private respondents'
fishponds.
The petitioner submits that there is no accretion to speak of under Article 457 of the New Civil
Code because what actually happened is that the private respondents simply transferred their
dikes further down the river bed of the Meycauayan River, and thus, if there is any accretion to
speak of, it is man-made and artificial and not the result of the gradual and imperceptible
sedimentation by the waters of the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia Acuña to the
effect that: têñ.£îhqwâ£
xxx xxx xxx
... when witness first saw the land, namely, Lots 1 & 2, they were already dry
almost at the level of the Pilapil of the property of Dr. Tancinco, and that from the
boundaries of the lots, for about two (2) arms length the land was still dry up to
the edge of the river; that sometime in 1951, a new Pilapil was established on the
boundaries of Lots 1 & 2 and soil from the old Pilapil was transferred to the new
Pilapil and this was done sometime in 1951; that the new lots were then
converted into fishpond, and water in this fishpond was two (2) meters deep on
the side of the Pilapil facing the fishpond ... .
The private respondents submit that the foregoing evidence establishes the fact of accretion
without human intervention because the transfer of the dike occurred after the accretion was
complete.
We agree with the petitioner.
Article 457 of the New Civil Code provides: têñ.£îhqwâ£
To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.
The above-quoted article requires the concurrence of three requisites before an accretion covered
by this particular provision is said to have taken place. They are (1) that the deposit be gradual
and imperceptible; (2) that it be made through the effects of the current of the water; and (3) that
the land where accretion takes place is adjacent to the banks of rivers.
The requirement that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the New Civil Code all deposits caused by human
intervention. Alluvion must be the exclusive work of nature. In the instant case, there is no
evidence whatsoever to prove that the addition to the said property was made gradually through
the effects of the current of the Meycauayan and Bocaue rivers. We agree with the observation of
the Solicitor General that it is preposterous to believe that almost four (4) hectares of land came
into being because of the effects of the Meycauayan and Bocaue rivers. The lone witness of the
private respondents who happens to be their overseer and whose husband was first cousin of
their father noticed the four hectare accretion to the twelve hectare fishpond only in 1939. The
respondents claim that at this point in time, accretion had already taken place. If so, their witness
was incompetent to testify to a gradual and imperceptible increase to their land in the years before
1939. However, the witness testified that in that year, she observed an increase in the area of the
original fishpond which is now the land in question. If she was telling the truth, the accretion was
sudden. However, there is evidence that the alleged alluvial deposits were artificial and man-made
and not the exclusive result of the current of the Meycauayan and Bocaue rivers. The alleged
alluvial deposits came into being not because of the sole effect of the current of the rivers but as a
result of the transfer of the dike towards the river and encroaching upon it. The land sought to be
registered is not even dry land cast imperceptibly and gradually by the river's current on the
fishpond adjoining it. It is under two meters of water. The private respondents' own evidence
shows that the water in the fishpond is two meters deep on the side of the pilapil facing the
fishpond and only one meter deep on the side of the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion deposited by
a river is to compensate him for the danger of loss that he suffers because of the location of his
land. If estates bordering on rivers are exposed to floods and other evils produced by the
destructive force of the waters and if by virtue of lawful provisions, said estates are subject to
incumbrances and various kinds of easements, it is proper that the risk or danger which may
prejudice the owners thereof should be compensated by the right of accretion. (Cortes v. City of
Manila, 10 Phil. 567). Hence, the riparian owner does not acquire the additions to his land caused
by special works expressly intended or designed to bring about accretion. When the private
respondents transferred their dikes towards the river bed, the dikes were meant for reclamation
purposes and not to protect their property from the destructive force of the waters of the river.

We agree with the submission of the Solicitor General that the testimony of the private
respondents' lone witness to the effect that as early as 1939 there already existed such alleged
alluvial deposits, deserves no merit. It should be noted that the lots in question were not included
in the survey of their adjacent property conducted on May 10, 1940 and in the Cadastral Survey of
the entire Municipality of Meycauayan conducted between the years 1958 to 1960. The alleged
accretion was declared for taxation purposes only in 1972 or 33 years after it had supposedly
permanently formed. The only valid conclusion therefore is that the said areas could not have
been there in 1939. They existed only after the private respondents transferred their dikes towards
the bed of the Meycauayan river in 1951. What private respondents claim as accretion is really an
encroachment of a portion of the Meycauayan river by reclamation.

The lower court cannot validly order the registration of Lots 1 & 2 in the names of the private
respondents. These lots were portions of the bed of the Meycauayan river and are therefore
classified as property of the public domain under Article 420 paragraph 1 and Article 502,
paragraph 1 of the Civil Code of the Philippines. They are not open to registration under the Land
Registration Act. The adjudication of the lands in question as private property in the names of the
private respondents is null and void.

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

SO ORDERED.1äwphï1.ñët
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 92161 March 18, 1991
SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO ROSALES,
GREGORIO ARGONZA, EUSTAQUIO BAUA, FLORENTINO ROSALES, TEODORO
MABBORANG, PATRICIO MABBORANG and FULGENCIO MORA, petitioners
vs.
GUILLERMO MANALO and COURT OF APPEALS, respondents.
Josefin De Alban Law Office for Petitioners.
FELICIANO, J.:
The late Judge Taccad originally owned a parcel of land situated in Tumauini, Isabela having an
estimated area of twenty (20) hectares. The western portion of this land bordering on the Cagayan
River has an elevation lower than that of the eastern portion which borders on the national road.
Through the years, the western portion would periodically go under the waters of the Cagayan
River as those waters swelled with the coming of the rains. The submerged portion, however,
would re-appear during the dry season from January to August. It would remain under water for
the rest of the year, that is, from September to December during the rainy season.
The ownership of the landholding eventually moved from one person to another. On 9 May 1959,
respondent Guillermo Manalo acquired 8.65 hectares thereof from Faustina Taccad, daughter of
Judge Juan Taccad. The land sold was described in the Deed of Absolute Sale1 as follows:
. . . a parcel of agricultural land in Balug, Tumauini, Isabela, containing an area of 8.6500
hectares, more or less; bounded on the North by Francisco Forto on the East by National
Road; on South by Julian Tumolva and on the West by Cagayan River; declared for
taxation under Tax Declaration No. 12681 in the name of Faustina Taccad, and assessed
at P 750.00. . . .
Later in 1964, respondent Manalo purchased another 1.80 hectares from Gregorio Taguba who
had earlier acquired the same from Judge Juan Taccad. The second purchase brought the total
acquisition of respondent Manalo to 10.45 hectares. The second piece of property was more
particularly described as follows:
. . . a piece of agricultural land consisting of tobacco land, and containing an area of
18,000 square meters, more or less, bounded on the North by Balug Creek; on the South,
by Faustina Taccad (now Guillermo R. Manalo); on the East, by a Provincial Road; and
on the West, by Cagayan River assessed at P 440.00, as tax Declaration No. 3152. . . .2
During the cadastral survey conducted at Balug, Tumauini, Isabela on 21 October 1969, the two
(2) parcels of land belonging to respondent Manalo were surveyed and consolidated into one lot,
designated as Lot No. 307, Pls-964. Lot 307 which contains 4.6489 hectares includes: (a) the
whole of the 1.80 hectares acquired from Gregorio Taguba; and (b) 2.8489 hectares out of the
8.65 hectares purchased from Faustina Taccad. As the survey was conducted on a rainy month, a
portion of the land bought from Faustina Taccad then under water was left unsurveyed and was
not included in Lot 307.
The Sketch Plan3 submitted during the trial of this case and which was identified by respondent
Manalo shows that the Cagayan River running from south to north, forks at a certain point to form
two (2) branches—the western and the eastern branches—and then unites at the other end,
further north, to form a narrow strip of land. The eastern branch of the river cuts through the land
of respondent Manalo and is inundated with water only during the rainy season. The bed of the
eastern branch is the submerged or the unsurveyed portion of the land belonging to respondent
Manalo. For about eight (8) months of the year when the level of water at the point where the
Cagayan River forks is at its ordinary depth, river water does not flow into the eastern branch.
While this condition persists, the eastern bed is dry and is susceptible to cultivation.
Considering that water flowed through the eastern branch of the Cagayan River when the
cadastral survey was conducted, the elongated strip of land formed by the western and the
eastern branches of the Cagayan River looked very much like an island. This strip of land was
surveyed on 12 December 1969.4
It was found to have a total area of 22.7209 hectares and was designated as Lot 821 and Lot 822.
The area of Lot 822 is 10.8122 hectares while Lot 821 has an area of 11.9087 hectares. Lot 821 is
located directly opposite Lot 307 and is separated from the latter only by the eastern branch of the
Cagayan River during the rainy season and, during the dry season, by the exposed, dry river bed,
being a portion of the land bought from Faustina Taccad. Respondent Manalo claims that Lot 821
also belongs to him by way of accretion to the submerged portion of the property to which it is
adjacent.
Petitioners who are in possession of Lot 821, upon the other hand, insist that they own Lot 821.
They occupy the outer edges of Lot 821 along the river banks, i.e., the fertile portions on which
they plant tobacco and other agricultural products. They also cultivate the western strip of the
unsurveyed portion during summer.5 This situation compelled respondent Manalo to file a case for
forcible entry against petitioners on 20 May 1969. The case was dismissed by the Municipal Court
of Tumauini, Isabela for failure of both parties to appear. On 15 December 1972, respondent
Manalo again filed a case for forcible entry against petitioners. The latter case was similarly
dismissed for lack of jurisdiction by the Municipal Court of Tumauini, Isabela.
On 24 July 1974, respondent Manalo filed a complaints 6 before the then Court of First Instance of
Isabela, Branch 3 for quieting of title, possession and damages against petitioners. He alleged
ownership of the two (2) parcels of land he bought separately from Faustina Taccad and Gregorio
Taguba for which reason he prayed that judgment be entered ordering petitioners to vacate the
western strip of the unsurveyed portion. Respondent Manalo likewise prayed that judgment be
entered declaring him as owner of Lot 821 on which he had laid his claim during the survey.
Petitioners filed their answer denying the material allegations of the complaint. The case was then
set for trial for failure of the parties to reach an amicable agreement or to enter into a stipulation of
facts.7 On 10 November 1982, the trial court rendered a decision with the following dispositive
portion:
WHEREFORE, in the light of the foregoing premises, the Court renders judgment against
the defendants and in favor of the plaintiff and orders:
1. That plaintiff, Guillermo Manalo, is declared the lawful owner of the land in question,
Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly described in
paragraph 2-b of the Complaint;
2. That the defendants are hereby ordered to vacate the premises of the land in question,
Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly described in
paragraph 2-b of the Complaint;
3. That the defendants are being restrained from entering the premises of the land in
question, Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint; and
4. That there is no pronouncement as to attorney's fees and costs.
SO ORDERED.8
Petitioners appealed to the Court of Appeals which, however, affirmed the decision of the trial
court. They filed a motion for reconsideration, without success.
While petitioners insist that Lot 821 is part of an island surrounded by the two (2) branches of the
Cagayan River, the Court of Appeals found otherwise. The Court of Appeals concurred with the
finding of the trial court that Lot 821 cannot be considered separate and distinct from Lot 307 since
the eastern branch of the Cagayan River substantially dries up for the most part of the year such
that when this happens, Lot 821 becomes physically (i.e., by land) connected with the dried up
bed owned by respondent Manalo. Both courts below in effect rejected the assertion of petitioners
that the depression on the earth's surface which separates Lot 307 and Lot 821 is, during part of
the year, the bed of the eastern branch of the Cagayan River.
It is a familiar rule that the findings of facts of the trial court are entitled to great respect, and that
they carry even more weight when affirmed by the Court of Appeals.9 This is in recognition of the
peculiar advantage on the part of the trial court of being able to observe first-hand the deportment
of the witnesses while testifying. Jurisprudence is likewise settled that the Court of Appeals is the
final arbiter of questions of fact.10 But whether a conclusion drawn from such findings of facts is
correct, is a question of law cognizable by this Court.11
In the instant case, the conclusion reached by both courts below apparently collides with their
findings that periodically at the onset of and during the rainy season, river water flows through the
eastern bed of the Cagayan River. The trial court held:
The Court believes that the land in controversy is of the nature and character of alluvion
(Accretion), for it appears that during the dry season, the body of water separating the
same land in controversy (Lot No. 821, Pls-964) and the two (2) parcels of land which the
plaintiff purchased from Gregorio Taguba and Justina Taccad Cayaba becomes a marshy
land and is only six (6) inches deep and twelve (12) meters in width at its widest in the
northern tip (Exhs. "W", "W-l", "W-2", "W-3" and "W-4"), It has been held by our Supreme
Court that "the owner of the riparian land which receives the gradual deposits of alluvion,
does not have to make an express act of possession. The law does not require it, and the
deposit created by the current of the water becomes manifest" (Roxas vs. Tuazon, 6 Phil.
408).12
The Court of Appeals adhered substantially to the conclusion reached by the trial court, thus:
As found by the trial court, the disputed property is not an island in the strict sense of the
word since the eastern portion of the said property claimed by appellants to be part of the
Cagayan River dries up during summer. Admittedly, it is the action of the heavy rains
which comes during rainy season especially from September to November which
increases the water level of the Cagayan river. As the river becomes swollen due to
heavy rains, the lower portion of the said strip of land located at its southernmost point
would be inundated with water. This is where the water of the Cagayan river gains its
entry. Consequently, if the water level is high the whole strip of land would be under
water.
In Government of the Philippine Islands vs. Colegio de San Jose, it was held that —
According to the foregoing definition of the words "ordinary" and "extra-ordinary," the
highest depth of the waters of Laguna de Bay during the dry season is the ordinary one,
and the highest depth they attain during the extra-ordinary one (sic); inasmuch as the
former is the one which is regular, common, natural, which occurs always or most of the
time during the year, while the latter is uncommon, transcends the general rule, order and
measure, and goes beyond that which is the ordinary depth. If according to the definition
given by Article 74 of the Law of Waters quoted above, the natural bed or basin of the
lakes is the ground covered by their waters when at their highest ordinary depth, the
natural bed or basin of Laguna de Bay is the ground covered by its waters when at their
highest depth during the dry season, that is up to the northeastern boundary of the two
parcels of land in question.
We find the foregoing ruling to be analogous to the case at bar. The highest ordinary level of the
waters of the Cagayan River is that attained during the dry season which is confined only on the
west side of Lot [821] and Lot [822]. This is the natural Cagayan river itself. The small residual of
water between Lot [821] and 307 is part of the small stream already in existence when the whole
of the late Judge Juan Taccad's property was still susceptible to cultivation and uneroded. 13
The Court is unable to agree with the Court of Appeals that Government of the Philippine Islands
vs. Colegio de San Jose 14 is applicable to the present case. That case involved Laguna de Bay;
since Laguna de Bay is a lake, the Court applied the legal provisions governing the ownership and
use of lakes and their beds and shores, in order to determine the character and ownership of the
disputed property. Specifically, the Court applied the definition of the natural bed or basin of lakes
found in Article 74 of the Law of Waters of 3 August 1866. Upon the other hand, what is involved
in the instant case is the eastern bed of the Cagayan River.
We believe and so hold that Article 70 of the Law of Waters of 3 August 1866 is the law applicable
to the case at bar:
Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters
during the highest floods. (Emphasis supplied)
We note that Article 70 defines the natural bed or channel of a creek or river as the ground
covered by its waters during the highest floods. The highest floods in the eastern branch of the
Cagayan River occur with the annual coming of the rains as the river waters in their onward
course cover the entire depressed portion. Though the eastern bed substantially dries up for the
most part of the year (i.e., from January to August), we cannot ignore the periodical swelling of the
waters ( i.e., from September to December) causing the eastern bed to be covered with flowing
river waters.
The conclusion of this Court that the depressed portion is a river bed rests upon evidence of
record.1âwphi1 Firstly, respondent Manalo admitted in open court that the entire area he bought
from Gregorio Taguba was included in Lot 307.15 If the 1.80 hectares purchased from Gregorio
Taguba was included in Lot 307, then the Cagayan River referred to as the western boundary in
the Deed of Sale transferring the land from Gregorio Taguba to respondent Manalo as well as the
Deed of Sale signed by Faustina Taccad, must refer to the dried up bed (during the dry months) or
the eastern branch of the river (during the rainy months). In the Sketch Plan attached to the
records of the case, Lot 307 is separated from the western branch of the Cagayan River by a large
tract of land which includes not only Lot 821 but also what this Court characterizes as the eastern
branch of the Cagayan River.
Secondly, the pictures identified by respondent Manalo during his direct examination depict the
depressed portion as a river bed. The pictures, marked as Exhibits "W" to "W-4", were taken in
July 1973 or at a time when the eastern bed becomes visible.16 Thus, Exhibit "W-2" which
according to respondent Manalo was taken facing the east and Exhibit "W-3" which was taken
facing the west both show that the visible, dried up portion has a markedly lower elevation than
Lot 307 and Lot 821. It has dike-like slopes on both sides connecting it to Lot 307 and Lot 821 that
are vertical upward and very prominent. This topographic feature is compatible with the fact that a
huge volume of water passes through the eastern bed regularly during the rainy season. In
addition, petitioner Ponciano Gannaban testified that one had to go down what he called a "cliff"
from the surveyed portion of the land of respondent Manalo to the depressed portion. The cliff, as
related by petitioner Gannaban, has a height of eight (8) meters.17
The records do not show when the Cagayan River began to carve its eastern channel on the
surface of the earth. However, Exhibit "E"18 for the prosecution which was the Declaration of Real
Property standing in the name of Faustina Taccad indicates that the eastern bed already existed
even before the sale to respondent Manalo. The words "old bed" enclosed in parentheses—
perhaps written to make legitimate the claim of private ownership over the submerged portion—is
an implied admission of the existence of the river bed. In the Declaration of Real Property made by
respondent Manalo, the depressed portion assumed the name Rio Muerte de Cagayan. Indeed,
the steep dike-like slopes on either side of the eastern bed could have been formed only after a
prolonged period of time.
Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private
ownership of the bed of the eastern branch of the river even if it was included in the deeds of
absolute sale executed by Gregorio Taguba and Faustina Taccad in his favor. These vendors
could not have validly sold land that constituted property of public dominion. Article 420 of the Civil
Code states:
The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth. (Emphasis supplied)
Although Article 420 speaks only of rivers and banks, "rivers" is a composite term which includes:
(1) the running waters, (2) the bed, and (3) the banks.19 Manresa, in commenting upon Article 339
of the Spanish Civil Code of 1889 from which Article 420 of the Philippine Civil Code was taken,
stressed the public ownership of river beds:
La naturaleza especial de los rios, en punto a su disfrute general, hace que sea
necesario considerar en su relacion de dominio algo mas que sus aguas corrientes. En
efecto en todo rio es preciso distinguir 1. esta agua corriente; 2. el alveo o cauce, y 3. las
riberas. Ahora bien: son estas dos ultimas cosas siempre de dominio publico, como las
aguas?
Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el
Codigo civil que los rios son de dominio publico, parece que debe ir implicito el dominio
publico de aquellos tres elementos que integran el rio. Por otra parte, en cuanto a los
alveos o cauces tenemos la declaracion del art. 407, num 1, donde dice: son de dominion
publico . . . los rios y sus cauces naturales; declaracion que concuerda con lo que
dispone el art. 34 de la ley de [Aguas], segun el cual, son de dominion publico: 1. los
alveos o cauces de los arroyos que no se hallen comprendidos en el art. 33, y 2. los
alveos o cauces naturales de los rios en la extension que cubran sus aguas en las
mayores crecidas ordinarias.20 (Emphasis supplied)
The claim of ownership of respondent Manalo over the submerged portion is bereft of basis even if
it were alleged and proved that the Cagayan River first began to encroach on his property after the
purchase from Gregorio Taguba and Faustina Taccad. Article 462 of the Civil Code would then
apply divesting, by operation of law, respondent Manalo of private ownership over the new river
bed. The intrusion of the eastern branch of the Cagayan River into his landholding obviously
prejudiced respondent Manalo but this is a common occurrence since estates bordering on rivers
are exposed to floods and other evils produced by the destructive force of the waters. That loss is
compensated by, inter alia, the right of accretion acknowledged by Article 457 of the Civil
Code.21 It so happened that instead of increasing the size of Lot 307, the eastern branch of the
Cagayan River had carved a channel on it.
We turn next to the issue of accretion. After examining the records of the case, the Court
considers that there was no evidence to prove that Lot 821 is an increment to Lot 307 and the bed
of the eastern branch of the river. Accretion as a mode of acquiring property under Article 457 of
the Civil Code requires the concurrence of three (3) requisites: (a) that the deposition of soil or
sediment be gradual and imperceptible; (b) that it be the result of the action of the waters of the
river (or sea); and (c) that the land where accretion takes place is adjacent to the banks of rivers
(or the sea coast).22 The Court notes that the parcels of land bought by respondent Manalo border
on the eastern branch of the Cagayan River. Any accretion formed by this eastern branch which
respondent Manalo may claim must be deposited on or attached to Lot 307. As it is, the claimed
accretion (Lot 821) lies on the bank of the river not adjacent to Lot 307 but directly opposite Lot
307 across the river.
Assuming (arguendo only) that the Cagayan River referred to in the Deeds of Sale transferring
ownership of the land to respondent Manalo is the western branch, the decision of the Court of
Appeals and of the trial court are bare of factual findings to the effect that the land purchased by
respondent Manalo received alluvium from the action of the aver in a slow and gradual manner.
On the contrary, the decision of the lower court made mention of several floods that caused the
land to reappear making it susceptible to cultivation. A sudden and forceful action like that of
flooding is hardly the alluvial process contemplated under Article 457 of the Civil Code. It is the
slow and hardly perceptible accumulation of soil deposits that the law grants to the riparian owner.
standing in their respective names. They claimed lawful, peaceful and adverse possession of Lot
821 since 1955.
If respondent Manalo had proved prior possession, it was limited physically to Lot 307 and the
depressed portion or the eastern river bed. The testimony of Dominga Malana who was a tenant
for Justina Taccad did not indicate that she was also cultivating Lot 821. In fact, the complaints for
forcible entry lodged before the Municipal Trial Court of Tumauini, Isabela pertained only to Lot
307 and the depressed portion or river bed and not to Lot 821. In the same manner, the tax
declarations presented by petitioners conflict with those of respondent Manalo. Under Article 477
of the Civil Code, the plaintiff in an action for quieting of title must at least have equitable title to or
interest in the real property which is the subject matter of the action. The evidence of record on
this point is less than satisfactory and the Court feels compelled to refrain from determining the
ownership and possession of Lot 821, adjudging neither petitioners nor respondent Manalo as
owner(s) thereof.
WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-GR CV No. 04892 are
hereby SET ASIDE. Respondent Manalo is hereby declared the owner of Lot 307. The regularly
submerged portion or the eastern bed of the Cagayan River is hereby DECLARED to be property
of public dominion. The ownership of Lot 821 shall be determined in an appropriate action that
may be instituted by the interested parties inter se. No pronouncement as to costs.
SO ORDERED.

Besides, it is important to note that Lot 821 has an area of 11.91 hectares. Lot 821 is the northern
portion of the strip of land having a total area of 22.72 hectares. We find it difficult to suppose that
such a sizable area as Lot 821 resulted from slow accretion to another lot of almost equal size.
The total landholding purchased by respondent Manalo is 10.45 hectares (8.65 hectares from
Faustina Taccad and 1.80 hectares from Gregorio Taguba in 1959 and 1964, respectively), in fact
even smaller than Lot 821 which he claims by way of accretion. The cadastral survey showing that
Lot 821 has an area of 11.91 hectares was conducted in 1969. If respondent Manalo's contention
were accepted, it would mean that in a span of only ten (10) years, he had more than doubled his
landholding by what the Court of Appeals and the trial court considered as accretion. As already
noted, there are steep vertical dike-like slopes separating the depressed portion or river bed and
Lot 821 and Lot 307. This topography of the land, among other things, precludes a reasonable
conclusion that Lot 821 is an increment to the depressed portion by reason of the slow and
constant action of the waters of either the western or the eastern branches of the Cagayan River.

We turn finally to the issue of ownership of Lot 821. Respondent Manalo's claim over Lot 821 rests
on accretion coupled with alleged prior possession. He alleged that the parcels of land he bought
separately from Gregorio Taguba and Faustina Taccad were formerly owned by Judge Juan
Taccad who was in possession thereof through his (Judge Taccad's) tenants. When ownership
was transferred to him, respondent Manalo took over the cultivation of the property and had it
declared for taxation purposes in his name. When petitioners forcibly entered into his property, he
twice instituted the appropriate action before the Municipal Trial Court of Tumauini, Isabela.
Against respondent Manalo's allegation of prior possession, petitioners presented tax declarations
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 95907 April 8, 1992
JOSE REYNANTE, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, THE HON. VALENTIN CRUZ, as Presiding Judge,
Regional Trial Court of Bulacan, Branch VIII, and the HEIRS OF LEONCIO CARLOS and
DOLORES A. CARLOS, and HEIRS OF GORGONIO CARLOS and CONCEPCION
CARLOS, respondents.
PARAS, J.:
This is a petition for review on certiorari which seeks the reversal of: a) decision 1 of the Court of
Appeals dated February 28, 1990 in CA-G.R. No. 1917 entitled "JOSE REYNANTE versus HON.
VALENTIN CRUZ, Judge, RTC of Malolos, Bulacan, and HEIRS OF LEONCIO AND DOLORES
CARLOS, et al.", affirming the decision 2 of the Regional Trial Court
of Malolos, Bulacan, Branch 8, Third Judicial Region which reversed the decision 3 of the
Municipal Trial Court of Meycauayan, Bulacan, Branch 1, Third Judicial Region in Civil Case No.
1526 entitled "HEIRS OF LEONCIO CARLOS & DOLORES A. CARLOS and HEIRS OF
GORGONIO A. CARLOS & CONCEPCION CARLOS versus JOSE REYNANTE: and b) the
resolution denying the motion for reconsideration.
The facts as culled from the records of the case are as follows:
More than 50 years ago, petitioner Jose Reynante was taken as tenant by the late Don Cosme
Carlos, owner and father-in-law of herein private respondents, over a fishpond located at Barrio
Liputan, Meycauayan, Bulacan with an area of 188.711 square meters, more or less and covered
by Transfer Certificate of Title No. 25618, Land Registry of Bulacan.
During the tenancy, petitioner Jose Reynante constructed a nipa hut where he and his family lived
and took care of the nipa palms (sasahan) he had planted on lots 1 and 2 covering an area of
5,096 square meters and 6,011 square meters respectively. These lots are located between the
fishpond covered by TCT No. 25618 and the Liputan (formerly Meycauayan) River. Petitioner
harvested and sold said nipa palms without interference and prohibition from anybody. Neither did
the late Don Cosme Carlos question his right to plant the nipa palms near the fishpond or to
harvest and appropriate them as his own.
After the death of Don Cosme Carlos, his heirs (private respondents' predecessors-in-interest)
entered into a written agreement denominated as "SINUMPAANG SALAYSAY NG PAGSASAULI
NG KARAPATAN" dated November 29, 1984 with petitioner Jose Reynante whereby the latter for
and in consideration of the sum of P200,000.00 turned over the fishpond he was tenanting to the
heirs of Don Cosme Carlos and surrendered all his rights therein as caretaker or "bantay-kasama
at tagapamahala" (Rollo, p. 77).
Pursuant to the said written agreement, petitioner surrendered the fishpond and the two huts
located therein to private respondents. Private respondents thereafter leased the said fishpond to
one Carlos de la Cruz. Petitioner continued to live in the nipa hut constructed by him on lots 1 and
2 and to take care of the nipa palms he had planted therein.
On February 17, 1988, private respondents formally demanded that the petitioner vacate said
portion since according to them petitioner had already been indemnified for the surrender of his
rights as a tenant. Despite receipt thereof, petitioner refused and failed to relinquish possession of
lots 1 and 2.
Hence, on April 22, 1988, private respondents filed a complaint for forcible entry with preliminary
mandatory injunction against petitioner alleging that the latter by means of strategy and stealth,
took over the physical, actual and material possession of lots 1 and 2 by residing in one of
the kubos or huts bordering the Liputan River and cutting off and/or disposing of the sasa or nipa
palms adjacent thereto.
On January 10, 1989, the trial court rendered its decision dismissing the complaint and finding that
petitioner had been in prior possession of lots 1
and 2.
Private respondents appealed to the Regional Trial Court and on August 8, 1989 it rendered its
decision, the dispositive portion of which reads as follows:
WHEREFORE, this Court renders judgment in favor of the plaintiffs and against
defendant and hereby reverses the decision of the Court a quo. Accordingly, the
defendant is ordered to restore possession of that piece of land particularly
described and defined as Lots 1 & 2 of the land survey conducted by Geodetic
Engineer Restituto Buan on March 2, 1983, together with the sasa or nipa palms
planted thereon. No pronouncement as to attorney's fees. Each party shall bear
their respective costs of the suit.
SO ORDERED. (Rollo, p. 55; Decision, p. 4).
From said decision, petitioner filed with the Court of Appeals a petition for review (Rollo, p. 30;
Annex "A"). On February 28, 1990, the Court of Appeals rendered its decision, the dispositive
portion of which reads as follows:
WHEREFORE, the decision of the court a quo, being consistent with law and
jurisprudence, is hereby AFFIRMED in toto. The instant petition seeking to issue
a restraining order is hereby denied.
SO ORDERED. (Rollo, p. 30; Decision, p. 3).
On November 5, 1990, the Court of Appeals denied the motion for reconsideration filed by
petitioner (Rollo, p. 35; Annex "B").
Hence, this petition.
In its resolution dated May 6, 1991, the Second Division of this court gave due course to the
petition and required both parties to file their respective memoranda (Rollo, p. 93).
The main issues to be resolved in this case are: a) who between the petitioner and private
respondents has prior physical possession of lots 1 and 2; and b) whether or not the disputed lots
belong to private respondents as a result of accretion.
An action for forcible entry is merely a quieting process and actual title to the property is never
determined. A party who can prove prior possession can recover such possession even against
the owner himself. Whatever may be the character of his prior possession, if he has in his favor
priority in time, he has the security that entitles him to remain on the property until he is lawfully
ejected by a person having a better right by accion publiciana or accion reivindicatoria (German
Management & Services, Inc. v. Court of Appeals, G.R. No. 76216, September 14, 1989, 177
SCRA 495, 498, 499). On the other hand, if a plaintiff cannot prove prior physical possession, he
has no right of action for forcible entry and detainer even if he should be the owner of the property
(Lizo v. Carandang, 73 Phil. 469 [1942]).
Hence, the Court of Appeals could not legally restore private respondents' possession over lots 1
and 2 simply because petitioner has clearly proven that he had prior possession over lots 1 and 2.
The evidence on record shows that petitioner was in possession of the questioned lots for more
than 50 years. It is undisputed that he was the caretaker of the fishpond owned by the late Don
Cosme Carlos for more than 50 years and that he constructed a nipa hut adjacent to the fishpond
and planted nipa palms therein. This fact is bolstered by the "SINUMPAANG SALAYSAY"
executed by Epifanio Lucero (Records, p. 66), Apolonio D. Morte (Records, p. 101) and Carling
Dumalay (Records, p. 103), all of whom are disinterested parties with no motive to falsify that can
be attributed to them, except their desire to tell the truth.
Moreover, an ocular inspection was conducted by the trial court dated December 2, 1988 which
was attended by the parties and their respective counsels and the court observed the following:
The Court viewed the location and the distance of the constructed nipa hut and
the subject "sasahan" which appears exists (sic) long ago, planted and stands
(sic) adjacent to the fishpond and the dikes which serves (sic) as passage way of
water river of lot 1 and lot 2. During the course of the hearing, both counsel
observed muniment of title embedded on the ground which is located at the inner
side of the "pilapil" separating the fishpond from the subject "sasa" plant with a
height of 20 to 25 feet from water level and during the ocular inspection it was
judicially observed that the controversial premises is beyond the titled property of
the plaintiffs but situated along the Liputan, Meycauayan River it being a part of
the public domain. (Rollo, p. 51; Decision, p. 12).
On the other hand, private respondents based their claim of possession over lots 1 and 2 simply
on the written agreement signed by petitioner whereby the latter surrendered his rights over the
fishpond.
Evidently, the trial court did not err when it ruled that:
An examination of the document signed by the defendant (Exhibit "B"), shows
that what was surrendered to the plaintiffs was the fishpond and not the
"sasahan" or the land on which he constructed his hut where he now lives. That
is a completely different agreement in which a tenant would return a farm or a
fishpond to his landlord in return for the amount that the landlord would pay to
him as a disturbance compensation. There is nothing that indicates that the
tenant was giving other matters not mentioned in a document like Exhibit "B".
Moreover, when the plaintiffs leased the fishpond to Mr. Carlos de La Cruz there
was no mention that the lease included the hut constructed by the defendant and
the nipa palms planted by him (Exhibit "1"), a circumstance that gives the
impression that the nipa hut and the nipa palms were not included in the lease to
Mr. de la Cruz, which may not belong to the plaintiffs. (Rollo, p. 49; Decision, p.
9).
With regard to the second issue, it must be noted that the disputed lots involved in this case
are not included in Transfer Certificate of Title No. 25618 as per verification made by the Forest
Management Bureau, Department of Environment and Natural Resources. That tract of land
situated at Barrio Liputan, Meycauayan, Bulacan containing an area of 1.1107 hectares as
described in the plan prepared and surveyed by Geodetic Engineer Restituto Buan for Jose
Reynante falls within Alienable and Disposable Land (for fishpond development) under Project No.
15 per B.F.L.C. Map No. 3122 dated May 8, 1987 (Rollo, p. 31; Decision, p. 2).
The respondent Court of Appeals ruled that lots 1 and 2 were created by alluvial formation and
hence the property of private respondents pursuant to Article 457 of the New Civil Code, to wit:
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.
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
(c) that the land where accretion takes place is adjacent to the bank of a river (Republic v. Court of
Appeals, G.R. No. L-61647, October 12, 1984, 132 SCRA 514, cited in Agustin v. Intermediate
Appellate Court, G.R. Nos. 66075-76, July 5, 1990, 187 SCRA 218).
Granting without conceding that lots 1 and 2 were created by alluvial formation and while it is true
that accretions which the banks of rivers may gradually receive from the effect of the current
become the property of the owner of the banks, such accretion to registered land does not
preclude acquisition of the additional area by another person through prescription.
This Court ruled in the case of Ignacio Grande, et al. v. Hon. Court of Appeals, et al., G.R. No. L-
17652, June 30, 1962, 115 Phil. 521 that:

An accretion does not automatically become registered land just because the lot
which receives such accretion is covered by a Torrens Title. Ownership of a
piece of land is one thing; registration under the Torrens system of that
ownership is another. Ownership over the accretion received by the land
adjoining a river is governed by the Civil Code. Imprescriptibility of registered
land is provided in the registration law. Registration under the Land Registration
and Cadastral Act does not vest or give title to the land, but merely confirms and,
thereafter, protects the title already possessed by the owner, making it
imprescriptible by occupation of third parties. But to obtain this protection, the
land must be placed under the operation of the registration laws, wherein certain
judicial procedures have beenprovided.

Assuming private respondents had acquired the alluvial deposit (the lot in question), by accretion,
still their failure to register said accretion for a period of fifty (50) years subjected said accretion to
acquisition through prescription by third persons.

It is undisputed that petitioner has been in possession of the subject lots for more than fifty (50)
years and unless private respondents can show a better title over the subject lots, petitioner's
possession over the property must be respected.

PREMISES CONSIDERED, the decision of the respondent Court of Appeals dated February 28,
1990 is REVERSED and SET ASIDE and the decision of the Municipal Trial Court of Meycauayan,
Bulacan, Branch I, is hereby REINSTATED.

SO ORDERED.

Melencio-Herrera, Padilla, Regalado and Nocon, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 160453 November 12, 2012
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
ARCADIO IVAN A. SANTOS III, and ARCADIO C. SANTOS, JR., Respondents.
DECISION
BERSAMIN, J.:
By law, accretion - the gradual and imperceptible deposit made through the effects of the current
of the water- belongs to the owner of the land adjacent to the banks of rivers where it forms. The
drying up of the river is not accretion. Hence, the dried-up river bed belongs to the State as
property of public dominion, not to the riparian owner, unless a law vests the ownership in some
other person.
Antecedents
Alleging continuous and adverse possession of more than ten years, respondent Arcadio Ivan A.
Santos III (Arcadio Ivan) applied on March 7, 1997 for the registration of Lot 4998-B (the property)
in the Regional Trial Court (RTC) in Parafiaque City. The property, which had an area of 1,045
square meters, more or less, was located in Barangay San Dionisio, Parañaque City, and was
bounded in the Northeast by Lot 4079 belonging to respondent Arcadio C. Santos, Jr. (Arcadio,
Jr.), in the Southeast by the Parañaque River, in the Southwest by an abandoned road, and in the
Northwest by Lot 4998-A also owned by Arcadio Ivan.1
On May 21, 1998, Arcadio Ivan amended his application for land registration to include Arcadio,
Jr. as his co-applicant because of the latter’s co-ownership of the property. He alleged that the
property had been formed through accretion and had been in their joint open, notorious, public,
continuous and adverse possession for more than 30 years.2
WHEREFORE, the Court hereby declares the applicants, ARCADIO IVAN A. SANTOS, III and
ARCADIO C. SANTOS, JR., both Filipinos and of legal age, as the TRUE and ABSOLUTE
OWNERS of the land being applied for which is situated in the Barangay of San Dionisio, City of
Parañaque with an area of one thousand forty five (1045) square meters more or less and covered
by Subdivision Plan Csd-00-000343, being a portion of Lot 4998, Cad. 299, Case 4, Parañaque
Cadastre, LRC Rec. No. and orders the registration of Lot 4998-B in their names with the following
technical description, to wit:
xxxx
Once this Decision became (sic) final and executory, let the corresponding Order for the Issuance
of the Decree be issued.
SO ORDERED.
The Republic, through the Office of the Solicitor General (OSG), appealed.
Ruling of the CA
In its appeal, the Republic ascribed the following errors to the RTC,5 to wit:
I
THE TRIAL COURT ERRED IN RULING THAT THE PROPERTY SOUGHT TO BE
REGISTERED IS AN ACCRETION TO THE ADJOINING PROPERTY OWNED BY APPELLEES
DESPITE THE ADMISSION OF APPELLEE ARCADIO C. SANTOS JR. THAT THE SAID
PROPERTY WAS NOT FORMED AS A RESULT OF THE GRADUAL FILLING UP OF SOIL
THROUGH THE CURRENT OF THE RIVER.
II
THE TRIAL COURT ERRED IN GRANTING THE APPLICATION FOR LAND REGISTRATION
DESPITE APPELLEE’S FAILURE TO FORMALLY OFFER IN EVIDENCE AN OFFICIAL
CERTIFICATION THAT THE SUBJECT PARCEL OF LAND IS ALIENABLE AND DISPOSABLE.
III

The City of Parañaque (the City) opposed the application for land registration, stating that it
THE TRIAL COURT ERRED IN RULING THAT APPELLEES HAD SUFFICIENTLY
needed the property for its flood control program; that the property was within the legal easement
ESTABLISHED THEIR CONTINUOUS, OPEN, PUBLIC AND ADVERSE OCCUPATION OF THE
of 20 meters from the river bank; and that assuming that the property was not covered by the legal
SUBJECT PROPERTY FOR A PERIOD OF MORE THAN THIRTY (30) YEARS.
easement, title to the property could not be registered in favor of the applicants for the reason that
the property was an orchard that had dried up and had not resulted from accretion.3
On May 27, 2003, the CA affirmed the RTC.6
Ruling of the RTC
The Republic filed a motion for reconsideration, but the CA denied the motion on October 20,
4 2003.7
On May 10, 2000, the RTC granted the application for land registration, disposing:
Issues
Hence, this appeal, in which the Republic urges that:8
I was previously a part of the Parañaque River which became an orchard after it dried up and
RESPONDENTS’ CLAIM THAT THE SUBJECT PROPERTY IS AN ACCRETION TO THEIR
ADJOINING LAND THAT WOULD ENTITLE THEM TO REGISTER IT UNDER ARTICLE 457 OF
THE NEW CIVIL CODE IS CONTRADICTED BY THEIR OWN EVIDENCE.
II
ASSUMING THAT THE LAND SOUGHT TO BE REGISTERED WAS "PREVIOUSLY A PART OF
THE PARAÑAQUE RIVER WHICH BECAME AN ORCHARD AFTER IT DRIED UP," THE
REGISTRATION OF SAID PROPERTY IN FAVOR OF RESPONDENTS CANNOT BE
ALTERNATIVELY JUSTIFIED UNDER ARTICLE 461 OF THE CIVIL CODE.
III
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE
FAILURE OF RESPONDENTS TO FORMALLY OFFER IN EVIDENCE AN OFFICIAL
CERTIFICATION THAT THE SUBJECT PROPERTY IS ALIENABLE AND DISPOSABLE IS
FATAL TO THEIR APPLICATION FOR LAND REGISTRATION.
IV
THE FINDING OF THE COURT OF APPEALS THAT RESPONDENTS HAVE CONTINUOUSLY,
OPENLY, PUBLICLY AND ADVERSELY OCCUPIED THE SUBJECT PROPERTY FOR MORE
THAN THIRTY (30) YEARS IS NOT SUPPORTED BY WELL-NIGH INCONTROVERTIBLE
EVIDENCE.
To be resolved are whether or not Article 457 of the Civil Code was applicable herein; and
whether or not respondents could claim the property by virtue of acquisitive prescription pursuant
to Section 14(1) of Presidential Decree No. 1529 (Property Registration Decree).
Ruling
The appeal is meritorious.
I.
The CA grossly erred in applying Article 457 of the Civil Code to respondents’ benefit
Article 457 of the Civil Code provides that "(t)o the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects of the currents of the waters."
In ruling for respondents, the RTC pronounced as follows:
On the basis of the evidence presented by the applicants, the Court finds that Arcadio Ivan A.
Santos III and Arcadio C. Santos, Jr., are the owners of the land subject of this application which
further considering that Lot 4 which adjoins the same property is owned by applicant, Arcadio C.
Santos, Jr., after it was obtained by him through inheritance from his mother, Concepcion Cruz,
now deceased. Conformably with Art. 457 of the New Civil Code, it is provided that:
"Article 457. To the owners of the lands adjoining the bank of rivers belong the accretion which
they gradually receive from the effects of the current of the waters."9
The CA upheld the RTC’s pronouncement, holding:
It could not be denied that "to the owners of the lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the waters" (Article 457
New Civil Code) as in this case, Arcadio Ivan Santos III and Arcadio Santos, Jr., are the owners of
the land which was previously part of the Parañaque River which became an orchard after it dried
up and considering that Lot 4 which adjoins the same property is owned by the applicant which
was obtained by the latter from his mother (Decision, p. 3; p. 38 Rollo).10
The Republic submits, however, that the application by both lower courts of Article 457 of the Civil
Code was erroneous in the face of the fact that respondents’ evidence did not establish accretion,
but instead the drying up of the Parañaque River.
The Republic’s submission is correct.
Respondents as the applicants for land registration carried the burden of proof to establish the
merits of their application by a preponderance of evidence, by which is meant such evidence that
is of greater weight, or more convincing than that offered in opposition to it.11 They would be held
entitled to claim the property as their own and apply for its registration under the Torrens system
only if they established that, indeed, the property was an accretion to their land.
Accretion is the process whereby the soil is deposited along the banks of rivers. 12 The deposit of
soil, to be considered accretion, must be: (a) gradual and imperceptible; (b) made through the
effects of the current of the water; and (c) taking place on land adjacent to the banks of rivers. 13
Accordingly, respondents should establish the concurrence of the elements of accretion to warrant
the grant of their application for land registration.
However, respondents did not discharge their burden of proof. They did not show that the gradual
and imperceptible deposition of soil through the effects of the current of the river had formed Lot
4998-B. Instead, their evidence revealed that the property was the dried-up river bed of the
Parañaque River, leading both the RTC and the CA to themselves hold that Lot 4998-B was "the
land which was previously part of the Parañaque River xxx (and) became an orchard after it dried
up."
Still, respondents argue that considering that Lot 4998-B did not yet exist when the original title of
Lot 4 was issued in their mother’s name in 1920, and that Lot 4998-B came about only thereafter
as the land formed between Lot 4 and the Parañaque River, the unavoidable conclusion should
then be that soil and sediments had meanwhile been deposited near Lot 4 by the current of the
Parañaque River, resulting in the formation of Lot 4998-B.
The argument is legally and factually groundless. For one, respondents thereby ignore that the
effects of the current of the river are not the only cause of the formation of land along a river bank.
There are several other causes, including the drying up of the river bed. The drying up of the river
bed was, in fact, the uniform conclusion of both lower courts herein. In other words, respondents
did not establish at all that the increment of land had formed from the gradual and imperceptible
deposit of soil by the effects of the current. Also, it seems to be highly improbable that the large
volume of soil that ultimately comprised the dry land with an area of 1,045 square meters had
been deposited in a gradual and imperceptible manner by the current of the river in the span of
about 20 to 30 years – the span of time intervening between 1920, when Lot 4 was registered in
the name of their deceased parent (at which time Lot 4998-B was not yet in existence) and the
early 1950s (which respondents’ witness Rufino Allanigue alleged to be the time when he knew
them to have occupied Lot 4988-B). The only plausible explanation for the substantial increment
was that Lot 4988-B was the dried-up bed of the Parañaque River. Confirming this explanation
was Arcadio, Jr.’s own testimony to the effect that the property was previously a part of the
Parañaque River that had dried up and become an orchard.
We observe in this connection that even Arcadio, Jr.’s own Transfer Certificate of Title No. 44687
confirmed the uniform conclusion of the RTC and the CA that Lot 4998-B had been formed by the
drying up of the Parañaque River. Transfer Certificate of Title No. 44687 recited that Lot 4 of the
consolidated subdivision plan Pcs-13-002563, the lot therein described, was bounded "on the SW
along line 5-1 by Dried River Bed."14
That boundary line of "SW along line 5-1" corresponded with the location of Lot 4998-B, which was
described as "bounded by Lot 4079 Cad. 299, (Lot 1, Psu-10676), in the name of respondent
Arcadio Santos, Jr. (Now Lot 4, Psd-13-002563) in the Northeast."15
The RTC and the CA grossly erred in treating the dried-up river bed as an accretion that became
respondents’ property pursuant to Article 457 of the Civil Code. That land was definitely not an
accretion. The process of drying up of a river to form dry land involved the recession of the water
level from the river banks, and the dried-up land did not equate to accretion, which was the
gradual and imperceptible deposition of soil on the river banks through the effects of the current.
In accretion, the water level did not recede and was more or less maintained. Hence, respondents
as the riparian owners had no legal right to claim ownership of Lot 4998-B. Considering that the
clear and categorical language of Article 457 of the Civil Code has confined the provision only to
accretion, we should apply the provision as its clear and categorical language tells us to.
Axiomatic it is, indeed, that where the language of the law is clear and categorical, there is no
room for interpretation; there is only room for application.16 The first and fundamental duty of
courts is then to apply the law.17
The State exclusively owned Lot 4998-B and may not be divested of its right of ownership. Article
502 of the Civil Code expressly declares that rivers and their natural beds are public dominion of
the State.18 It follows that the river beds that dry up, like Lot 4998-B, continue to belong to the
State as its property of public dominion, unless there is an express law that provides that the
dried-up river beds should belong to some other person.19
II
Acquisitive prescription was
not applicable in favor of respondents
The RTC favored respondents’ application for land registration covering Lot 4998-B also because
they had taken possession of the property continuously, openly, publicly and adversely for more
than 30 years based on their predecessor-in-interest being the adjoining owner of the parcel of
land along the river bank. It rendered the following ratiocination, viz:20
In this regard, the Court found that from the time the applicants became the owners thereof, they
took possession of the same property continuously, openly, publicly and adversely for more than
thirty (30) years because their predecessors-in-interest are the adjoining owners of the subject
parcel of land along the river bank. Furthermore, the fact that applicants paid its realty taxes, had it
surveyed per subdivision plan Csd-00-000343 (Exh. "L") which was duly approved by the Land
Management Services and the fact that Engr. Chito B. Cainglet, OIC–Chief, Surveys Division Land
Registration Authority, made a Report that the subject property is not a portion of the Parañaque
River and that it does not fall nor overlap with Lot 5000, thus, the Court opts to grant the
application.
Finally, in the light of the evidence adduced by the applicants in this case and in view of the
foregoing reports of the Department of Agrarian Reforms, Land Registration Authority and the
Department of Environment and Natural Resources, the Court finds and so holds that the
applicants have satisfied all the requirements of law which are essential to a government grant
and is, therefore, entitled to the issuance of a certificate of title in their favor. So also, oppositor
failed to prove that the applicants are not entitled thereto, not having presented any witness.
In fine, the application is GRANTED.
As already mentioned, the CA affirmed the RTC.
Both lower courts erred.
The relevant legal provision is Section 14(1) of Presidential Decree No. 1529 (Property
Registration Decree), which pertinently states:
Section 14. Who may apply. — The following persons may file in the proper [Regional Trial Court]
an application for registration of title to land, whether personally or through their duly authorized
representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands
of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
xxxx
Under Section 14(1), then, applicants for confirmation of imperfect title must prove the following,
namely: (a) that the land forms part of the disposable and alienable agricultural lands of the public
domain; and (b) that they have been in open, continuous, exclusive, and notorious possession and
occupation of the land under a bona fide claim of ownership either since time immemorial or since
June 12, 1945.21
The Republic assails the findings by the lower courts that respondents "took possession of the
same property continuously, openly, publicly and adversely for more than thirty (30) years."22
Although it is well settled that the findings of fact of the trial court, especially when affirmed by the
CA, are accorded the highest degree of respect, and generally will not be disturbed on appeal,
with such findings being binding and conclusive on the Court,23 the Court has consistently
recognized exceptions to this rule, including the following, to wit: (a) when the findings are
grounded entirely on speculation, surmises, or conjectures; (b) when the inference made is
manifestly mistaken, absurd, or impossible; (c) when there is grave abuse of discretion; (d) when
the judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting;
(f) when in making its findings the CA went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the appellee; (g) when the findings are
contrary to those of the trial court; (h) when the findings are conclusions without citation of specific
evidence on which they are based; (i) when the facts set forth in the petition as well as in the
petitioner’s main and reply briefs are not disputed by respondent; and (j) when the findings of fact
are premised on the supposed absence of evidence and contradicted by the evidence on record.24
Here, the findings of the RTC were obviously grounded on speculation, surmises, or conjectures;
and that the inference made by the RTC and the CA was manifestly mistaken, absurd, or
impossible. Hence, the Court should now review the findings.
In finding that respondents had been in continuous, open, public and adverse possession of the
land for more than 30 years, the RTC declared:
In this regard, the Court found that from the time the applicant became the owners thereof, they
took possession of the same property continuously, openly, publicly and adversely for more than
thirty years because their predecessor in interest are the adjoining owners of the subject parcel of
land along the river banks. Furthermore, the fact that the applicant paid its realty taxes, had it
surveyed per subdivision plan Csd-00-000343 (Exh. "L") which was duly approved by the Land
Management Services and the fact that Engr. Chito B. Cainglet, OIC – Chief, Surveys Division
Land Registration Authority, made a Report that the subject property is not a portion of the
Parañaque River and that it does not fall nor overlap with Lot 5000, thus, the Court opts to grant
the application.
The RTC apparently reckoned respondents’ period of supposed possession to be "more than thirty
years" from the fact that "their predecessors in interest are the adjoining owners of the subject
parcel of land." Yet, its decision nowhere indicated what acts respondents had performed showing
their possession of the property "continuously, openly, publicly and adversely" in that length of
time. The decision mentioned only that they had paid realty taxes and had caused the survey of
the property to be made. That, to us, was not enough to justify the foregoing findings, because,
firstly, the payment of realty taxes did not conclusively prove the payor’s ownership of the land the
taxes were paid for,25 the tax declarations and payments being mere indicia of a claim of
ownership;26 and, secondly, the causing of surveys of the property involved was not itself an of
continuous, open, public and adverse possession.
The principle that the riparian owner whose land receives the gradual deposits of soil does not
need to make an express act of possession, and that no acts of possession are necessary in that
instance because it is the law itself that pronounces the alluvium to belong to the riparian owner
from the time that the deposit created by the current of the water becomes manifest 27 has no
applicability herein. This is simply because Lot 4998-B was not formed through accretion. Hence,
the ownership of the land adjacent to the river bank by respondents’ predecessor-in-interest did
not translate to possession of Lot 4998-B that would ripen to acquisitive prescription in relation to
Lot 4998-B.
On the other hand, the claim of thirty years of continuous, open, public and adverse possession of
Lot 4998-B was not even validated or preponderantly established. The admission of respondents
themselves that they declared the property for taxation purposes only in 1997 and paid realty
taxes only from 199928 signified that their alleged possession would at most be for only nine years
as of the filing of their application for land registration on March 7, 1997.
Yet, even conceding, for the sake of argument, that respondents possessed Lot 4998-B for more
than thirty years in the character they claimed, they did not thereby acquire the land by
prescription or by other means without any competent proof that the land was already declared as
alienable and disposable by the Government. Absent that declaration, the land still belonged to
the State as part of its public dominion.
Article 419 of the Civil Code distinguishes property as being either of public dominion or of private
ownership. Article 420 of the Civil Code lists the properties considered as part of public dominion,
namely: (a) those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character; and (b) those
which belong to the State, without being for public use, and are intended for some public service
or for the development of the national wealth. As earlier mentioned, Article 502 of the Civil Code
declares that rivers and their natural beds are of public dominion.
Whether the dried-up river bed may be susceptible to acquisitive prescription or not was a
question that the Court resolved in favor of the State in Celestial v. Cachopero,29 a case involving
the registration of land found to be part of a dried-up portion of the natural bed of a creek. There
the Court held:
As for petitioner’s claim of ownership over the subject land, admittedly a dried-up bed of the
Salunayan Creek, based on (1) her alleged long term adverse possession and that of her
predecessor-in-interest, Marcelina Basadre, even prior to October 22, 1966, when she purchased
the adjoining property from the latter, and (2) the right of accession under Art. 370 of the Spanish
Civil Code of 1889 and/or Article 461 of the Civil Code, the same must fail.
Since property of public dominion is outside the commerce of man and not susceptible to private
appropriation and acquisitive prescription, the adverse possession which may be the basis of a
grant of title in the confirmation of an imperfect title refers only to alienable or disposable portions
of the public domain. It is only after the Government has declared the land to be alienable and
disposable agricultural land that the year of entry, cultivation and exclusive and adverse
possession can be counted for purposes of an imperfect title.
A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in
the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the
Salunayan Creek, including its natural bed, is property of the public domain which is not
susceptible to private appropriation and acquisitive prescription. And, absent any declaration by
the government, that a portion of the creek has dried-up does not, by itself, alter its inalienable
character.
xxxx
Had the disputed portion of the Salunayan Creek dried up after the present Civil Code took effect,
the subject land would clearly not belong to petitioner or her predecessor-in-interest since under
the aforementioned provision of Article 461, "river beds which are abandoned through the natural
change in the course of the waters ipso facto belong to the owners of the land occupied by the
new course," and the owners of the adjoining lots have the right to acquire them only after paying
their value.
And both Article 370 of the Old Code and Article 461 of the present Civil Code are applicable only
when "river beds are abandoned through the natural change in the course of the waters." It is
uncontroverted, however, that, as found by both the Bureau of Lands and the DENR Regional
Executive Director, the subject land became dry as a result of the construction an irrigation canal
by the National Irrigation Administration. Thus, in Ronquillo v. Court of Appeals, this Court held:
The law is clear and unambiguous. It leaves no room for interpretation. Article 370 applies only if
there is a natural change in the course of the waters. The rules on alluvion do not apply to man-
made or artificial accretions nor to accretions to lands that adjoin canals or esteros or artificial
drainage systems. Considering our earlier finding that the dried-up portion of Estero Calubcub was
actually caused by the active intervention of man, it follows that Article 370 does not apply to the
case at bar and, hence, the Del Rosarios cannot be entitled thereto supposedly as riparian
owners.
The dried-up portion of Estero Calubcub should thus be considered as forming part of the land of
the public domain which cannot be subject to acquisition by private ownership. xxx (Emphasis
supplied)
Furthermore, both provisions pertain to situations where there has been a change in the course of
a river, not where the river simply dries up. In the instant Petition, it is not even alleged that the
Salunayan Creek changed its course. In such a situation, commentators are of the opinion that the
dry river bed remains property of public dominion. (Bold emphases supplied)
Indeed, under the Regalian doctrine, all lands not otherwise appearing to be clearly within private
ownership are presumed to belong to the State.30 No public land can be acquired by private
persons without any grant, express or implied, from the Government. It is indispensable, therefore,
that there is a showing of a title from the State.31Occupation of public land in the concept of owner,
no matter how long, cannot ripen into ownership and be registered as a title.32
Subject to the exceptions defined in Article 461 of the Civil Code (which declares river beds that
are abandoned through the natural change in the course of the waters as ipso facto belonging to
the owners of the land occupied by the new course, and which gives to the owners of the adjoining
lots the right to acquire only the abandoned river beds not ipso facto belonging to the owners of
the land affected by the natural change of course of the waters only after paying their value), all
river beds remain property of public dominion and cannot be acquired by acquisitive prescription
unless previously declared by the Government to be alienable and disposable. Considering that
Lot 4998-B was not shown to be already declared to be alienable and disposable, respondents
could not be deemed to have acquired the property through prescription.
Nonetheless, respondents insist that the property was already classified as alienable and
disposable by the Government. They cite as proof of the classification as alienable and disposable
the following notation found on the survey plan, to wit:33
NOTE
ALL CORNERS NOT OTHERWISE DESCRIBED ARE OLD BL CYL. CONC. MONS 15 X 60CM
All corners marked PS are cyl. conc. mons 15 x 60 cm
Surveyed in accordance with Survey Authority NO. 007604-48 of the Regional Executive Director
issued by the CENR-OFFICER dated Dec. 2, 1996.
This survey is inside L.C. Map No. 2623, Proj. No. 25 classified as alienable/disposable by the
Bureau of Forest Dev’t. on Jan. 3, 1968.
Lot 4998-A = Lot 5883} Cad 299
Lot 4998-B = Lot 5884} Paranaque Cadastre.
Was the notation on the survey plan to the effect that Lot 4998-B was "inside" the map "classified
as alienable/disposable by the Bureau of Forest Development on 03 Jan. 1968" sufficient proof of
the property’s nature as alienable and disposable public land?
To prove that the land subject of an application for registration is alienable, an applicant must
conclusively establish the existence of a positive act of the Government, such as a presidential
proclamation, executive order, administrative action, investigation reports of the Bureau of Lands
investigator, or a legislative act or statute. Until then, the rules on confirmation of imperfect title do
not apply.
As to the proofs that are admissible to establish the alienability and disposability of public land, we
said in Secretary of the Department of Environment and Natural Resources v. Yap34 that:
The burden of proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration (or claiming ownership), who must prove that the
land subject of the application is alienable or disposable. To overcome this presumption,
incontrovertible evidence must be established that the land subject of the application (or claim) is
alienable or disposable.There must still be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for registration is
alienable, the applicant must establish the existence of a positive act of the government such as a
presidential proclamation or an executive order; an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative act or a statute. The applicant may also secure a
certification from the government that the land claimed to have been possessed for the required
number of years is alienable and disposable.
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to
2006, the portions of Boracay occupied by private claimants were subject of a government
proclamation that the land is alienable and disposable. Absent such well-nigh incontrovertible
evidence, the Court cannot accept the submission that lands occupied by private claimants were
already open to disposition before 2006. Matters of land classification or reclassification cannot be
assumed. They call for proof." (Emphasis supplied)
In Menguito v. Republic,35 which we reiterated in Republic v. Sarmiento,36 we specifically resolved
the issue of whether the notation on the survey plan was sufficient evidence to establish the
alienability and disposability of public land, to wit:
To prove that the land in question formed part of the alienable and disposable lands of the public
domain, petitioners relied on the printed words which read: "This survey plan is inside Alienable
and Disposable Land Area, Project No. 27-B as per L.C. Map No. 2623, certified by the Bureau of
Forestry on January 3, 1968," appearing on Exhibit "E" (Survey Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the 1987 Constitution, provides: "All lands of the
public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. x x x."
For the original registration of title, the applicant (petitioners in this case) must overcome the
presumption that the land sought to be registered forms part of the public domain. Unless public
land is shown to have been reclassified or alienated to a private person by the State, it remains
part of the inalienable public domain. Indeed, "occupation thereof in the concept of owner, no
matter how long, cannot ripen into ownership and be registered as a title." To overcome such
presumption, incontrovertible evidence must be shown by the applicant. Absent such evidence,
the land sought to be registered remains inalienable.
In the present case, petitioners cite a surveyor-geodetic engineer’s notation in Exhibit "E"
indicating that the survey was inside alienable and disposable land. Such notation does not
constitute a positive government act validly changing the classification of the land in question.
Verily, a mere surveyor has no authority to reclassify lands of the public domain. By relying solely
on the said surveyor’s assertion, petitioners have not sufficiently proven that the land in question
has been declared alienable. (Emphasis supplied)
In Republic v. T.A.N. Properties, Inc.,37 we dealt with the sufficiency of the certification by the
Provincial Environmental Officer (PENRO) or Community Environmental Officer (CENRO) to the
effect that a piece of public land was alienable and disposable in the following manner, viz:
x x x it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable.
The applicant for land registration must prove that the DENR Secretary had approved the land
classification and released the land of the public domain as alienable and disposable, and that the
land subject of the application for registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the applicant for land registration must
present a copy of the original classification approved by the DENR Secretary and certified as a
true copy by the legal custodian of the official records. These facts must be established to prove
that the land is alienable and disposable. Respondent failed to do so because the certifications
presented by respondent do not, by themselves, prove that the land is alienable and disposable.
Only Torres, respondent’s Operations Manager, identified the certifications submitted by
respondent.1âwphi1 The government officials who issued the certifications were not presented
before the trial court to testify on their contents. The trial court should not have accepted the
contents of the certifications as proof of the facts stated therein. Even if the certifications are
presumed duly issued and admissible in evidence, they have no probative value in establishing
that the land is alienable and disposable.
xxxx
The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot
10705-B falls within the alienable and disposable land as proclaimed by the DENR Secretary.
Such government certifications do not, by their mere issuance, prove the facts stated therein.
Such government certifications may fall under the class of documents contemplated in the second
sentence of Section 23 of Rule 132. As such, the certifications are prima facie evidence of their
due execution and date of issuance but they do not constitute prima facie evidence of the facts
stated therein. (Emphasis supplied)
These rulings of the Court indicate that the notation on the survey plan of Lot 4998-B, Cad-00-
000343 to the effect that the "survey is inside a map classified as alienable/disposable by the
Bureau of Forest Dev’t" did not prove that Lot 4998-B was already classified as alienable and
disposable. Accordingly, respondents could not validly assert acquisitive prescription of Lot 4988-
B.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals
promulgated on May 27, 2003; DISMISSES the application for registration of Arcadio C. Santos,
Jr. and Arcadio Ivan S. Santos III respecting Lot 4998-B with a total area of 1,045 square meters,
more or less, situated in Barangay San Dionisio, Parañaque City, Metro Manila; and DECLARES
Lot 4998-B as exclusively belonging to the State for being part of the dried--up bed of the
Parat1aque River.

Respondents shall pay the costs of suit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-31163 November 6, 1929
URBANO SANTOS, plaintiff-appellee,
vs.
JOSE C. BERNABE, ET AL., defendants.
PABLO TIONGSON and THE PROVINCIAL SHERIFF OF BULACAN, appellants.
Arcadio Ejercito and Guevara, Francisco and Recto for appellants.
Eusebio Orense And Nicolas Belmonte for appellee.
VILLA-REAL, J.:
This appeal was taken by the defendants Pablo Tiongson and the Provincial Sheriff of Bulacan
from the judgment of the Court of First of said province, wherein said defendant Pablo Tiongson
was ordered to pay the plaintiff Urbano Santos the value of 778 cavans and 38 kilos of palay, at
the rate of P3 per cavan, without special pronouncement as to costs.
In support of their appeal, the appellants assign the following alleged errors committed by the
lower court in its judgment, to wit:
1. The court erred in holding that it has been proved that in the cavans of palay attached
by the herein defendant Pablo Tiongson from the defendant Jose C. Bernabe were
included those claimed by the plaintiff in this cause.
2. The court erred in ordering the defendant Pablo Tiongson to pay the plaintiff the value
of 778 cavans and 38 kilos of palay, the refund of which is claimed by said plaintiff.
3. The court erred in denying the defendants' motion for a new trial.1awphil.net
The following facts were conclusively proved at the trial:
On March 20, 1928, there were deposited in Jose C. Bernabe's warehouse by the plaintiff Urbano
Santos 778 cavans and 38 kilos of palay and by Pablo Tiongson 1,026 cavans and 9 kilos of the
same grain.
On said date, March 20, 1928, Pablo Tiongson filed with the Court of First Instance of Bulacan a
complaint against Jose C. Bernabe, to recover from the latter the 1,026 cavans and 9 kilos of
palay deposited in the defendant's warehouse. At the same time, the application of Pablo
Tiongson for a writ of attachment was granted, and the attachable property of Jose C. Bernabe,
including 924 cavans and 31 1/2 kilos of palay found by the sheriff in his warehouse, were
attached, sold at public auction, and the proceeds thereof delivered to said defendant Pablo
Tiongson, who obtained judgment in said case.
The herein plaintiff, Urbano Santos, intervened in the attachment of the palay, but upon Pablo
Tiongson's filing the proper bond, the sheriff proceeded with the attachment, giving rise to the
present complaint.
It does not appear that the sacks of palay of Urbano Santos and those of Pablo Tiongson,
deposited in Jose C. Bernabe's warehouse, bore any marks or signs, nor were they separated one
from the other.
The plaintiff-appellee Urbano Santos contends that Pablo Tiongson cannot claim the 924 cavans
and 31 ½ kilos of palay attached by the defendant sheriff as part of those deposited by him in Jose
C. Bernabe's warehouse, because, in asking for the attachment thereof, he impliedly
acknowledged that the same belonged to Jose C. Bernabe and not to him.
In the complaint filed by Pablo Tiongson against Jose C. Bernabe, civil case No. 3665 of the Court
of First Instance of Bulacan, it is alleged that said plaintiff deposited in the defendant's warehouse
1,026 cavans and 9 kilos of palay, the return of which, or the value thereof, at the rate of P3 per
cavan was claimed therein. Upon filing said complaint, the plaintiff applied for a preliminary writ of
attachment of the defendant's property, which was accordingly issued, and the defendant's
property, including the 924 cavans and 31 ½ kilos of palay found by the sheriff in his warehouse,
were attached.
It will be seen that the action brought by Pablo Tiongson against Jose C. Bernabe is that provided
in section 262 of the Code of Civil Procedure for the delivery of personal property. Although it is
true that the plaintiff and his attorney did not follow strictly the procedure provided in said section
for claiming the delivery of said personal property nevertheless, the procedure followed by him
may be construed as equivalent thereto, considering the provisions of section 2 of the Code of
Civil Procedure of the effect that "the provisions of this Code, and the proceedings under it, shall
be liberally construed, in order to promote its object and assist the parties in obtaining speedy
justice."
Liberally construing, therefore, the above cited provisions of section 262 of the Code of Civil
Procedure, the writ of attachment applied for by Pablo Tiongson against the property of Jose C.
Bernabe may be construed as a claim for the delivery of the sacks of palay deposited by the
former with the latter.
The 778 cavans and 38 kilos of palay belonging to the plaintiff Urbano Santos, having been mixed
with the 1,026 cavans and 9 kilos of palay belonging to the defendant Pablo Tiongson in Jose C.
Bernabe's warehouse; the sheriff having found only 924 cavans and 31 1/2 kilos of palay in said
warehouse at the time of the attachment thereof; and there being no means of separating form
said 924 cavans and 31 1/2 of palay belonging to Urbano Santos and those belonging to Pablo
Tiongson, the following rule prescribed in article 381 of the Civil Code for cases of this nature, is
applicable:
 Art. 381. If, by the will of their owners, two things of identical or dissimilar nature are
mixed, or if the mixture occurs accidentally, if in the latter case the things cannot be
separated without injury, each owner shall acquire a right in the mixture proportionate to
the part belonging to him, according to the value of the things mixed or commingled.

The number of kilos in a cavan not having been determined, we will take the proportion only of the
924 cavans of palay which were attached and sold, thereby giving Urbano Santos, who deposited
778 cavans, 398.49 thereof, and Pablo Tiongson, who deposited 1,026 cavans, 525.51, or the
value thereof at the rate of P3 per cavan.

Wherefore, the judgment appealed from is hereby modified, and Pablo Tiongson is hereby
ordered to pay the plaintiff Urbano Santos the value of 398.49 cavans of palay at the rate of P3 a
cavan, without special pronouncement as to costs. So ordered.

Avanceña, C.J., Street, Villamor and Ostrand, JJ., concur.

Johnson, J., reserves his vote.
Johns, J., dissents.