PRUDENTIAL BANK V.

PANIS 153 SCRA 390

FACTS:

Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed
a real estate mortgage over a residential building. The mortgage included also the right to
occupy the lot and the information about the sales patent applied for by the spouses for the lot
to which the building stood. After securing the first loan, the spouses secured another from
the same bank. To secure payment, another real estate mortgage was executed over the
same properties.

The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was
later on mortgaged to the bank.

The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold
in public auction despite opposition from the spouses. The respondent court held that the REM
was null and void.

HELD:

A real estate mortgage can be constituted on the building erected on the land belonging to
another.

The inclusion of building distinct and separate from the land in the Civil Code can only
mean that the building itself is an immovable property.

While it is true that a mortgage of land necessarily includes in the absence of stipulation of the
improvements thereon, buildings, still a building in itself may be mortgaged by itself apart
from the land on which it is built. Such a mortgage would still be considered as a REM for the
building would still be considered as immovable property even if dealt with separately and
apart from the land.

The original mortgage on the building and right to occupancy of the land was executed before
the issuance of the sales patent and before the government was divested of title to the
land. Under the foregoing, it is evident that the mortgage executed by private respondent
on his own building was a valid mortgage.

As to the second mortgage, it was done after the sales patent was issued and thus prohibits
pertinent provisions of the Public Land Act.
LEUNG YEE V. F.L STRONG MACHINERY CO. AND WILLIAMSON

37 SCRA 644

FACTS:

1. First mortgage: Compania Agricola Filipina bought rice-cleaning machinery from the machinery
company and this was secured by a chattel mortgage on the machinery and the building to which it

1
was installed. Upon failure to pay, the chattel mortgage was foreclosed, the building and
machinery sold in public auction and bought by the machinery company.

2. Days after, the Compania Agricola Filipina executed a deed of sale over the land to which the
building stood in favor of the machinery company. This was done to cure any defects that may arise in
the

machinery company’s ownership of the building.

3. Second mortgage: on or about the date to which the chattel mortgage was excecuted,
Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and

separate from the land. This is to secure payment for its indebtedness for the construction of the
building. Upon failure to pay, the mortgage was foreclosed.

4. The machinery company then filed a case, demanding that it be declared the rightful owner
of the building. The trial court held that it was the machinery company which was the rightful owner

as it had its title before the building was registered prior to the date of registry of Leung Yee’s
certificate.

HELD:

The building in which the machinery was installed was real property, and the mere fact that the
parties seem to have dealt with it separate and apart from the land on which it stood in no wise
changed the character as real property.

It follows that neither the original registry in the chattel mortgage registry of the instrument purporting
to be a chattel mortgage of the building and the machinery installed therein, nor the annotation in
the registry of the sale of the mortgaged property, had any effect whatever so far as the building
is concerned. *LANDMARK CASE

G.R. No. L-32917 July 18, 1988

JULIAN S. YAP, petitioner,

vs.
HON. SANTIAGO O. TAÑADA, etc., and GOULDS PUMPS INTERNATIONAL (PHIL.),
INC., respondents.

Facts:

The case began in the City Court of Cebu. Goulds Pumps International (Phil.), Inc. filed
a complaint against Yap and his wife seeking recovery of P1,459.30 representing the
balance of the price and installation cost of a water pump in the latter's premises.

The court renders judgment against Yap which the latter appealed to the CFI.

The appeal was assigned to the sala of respondent Judge Tañada for failure to appear
for pre-trial. Yap was declared in default by Order of Judge Tañada dated August 28,
1969 and requiring Yap to pay to Goulds (1) Pl,459.30 representing the unpaid balance
of the pump purchased by him; (2) interest of 12% per annum thereon until fully paid;

2
and (3) a sum equivalent to 25% of the amount due as attorney's fees and costs and
other expenses in prosecuting the action. Notice of the judgment was served to Yap.

On May 9, 1970 Judge Tañada ordered the issuance of an alias writ of execution on
Gould's ex parte motion therefor. Yap received notice of the Order on June 11. Twelve
(12) days later, he filed a "Motion to Set Aside Execution Sale and to Quash Alias Writ
of Execution."

On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to appeal
to the Supreme Court on certiorari only on questions of law.

Issue: Whether the water pump become immovable property after it is installed in
a residence.

Ruling: No. Yap's argument that the water pump had become immovable property by its
being installed in his residence is untenable.

The Civil Code considers as immovable property, among others, anything "attached to
an immovable in a fixed manner, in such a way that it cannot be separated therefrom
without breaking the material or deterioration of the object."

The pump does not fit this description. It could be, and was in fact separated from Yap's
premises without being broken or suffering deterioration. Obviously the separation or
removal of the pump involved nothing more complicated than the loosening of bolts or
dismantling of other fasteners.

Yap's last claim is that in the process of the removal of the pump from his house,
Goulds' men had trampled on the plants growing there, destroyed the shed over the
pump, plugged the exterior casings with rags and cut the electrical and conduit pipes;
that he had thereby suffered actual-damages in an amount of not less than P 2,000.00,
as well as moral damages in the sum of P 10,000.00 resulting from his deprivation of
the use of his water supply; but the Court had refused to allow him to prove these acts
and recover the damages rightfully due him. Now, as to the loss of his water supply,
since this arose from acts legitimately done, the seizure on execution of the water pump
in enforcement of a final and executory judgment, Yap most certainly is not entitled to
claim moral or any other form of damages therefor.

Yap's answer put up the defense that the purchase document did not reflect his real
agreement with Goulds, and he had made several complaints about the pump to no
avail. Gould'sclaim is that the examination of the pump showed it to be in good working
order, but the Yaps had refused to attest thereto despite being present during the
examination.

NAVARRO V. PINEDA
9 SCRA 631

3
FACTS:
Pineda and his mother executed real estate and chattel mortgages in favor of Navarro,
to secure a loan they got from the latter. The REM covered a parcel of land owned by
the mother while the chattel mortgage covered a residential house. Due to the
failure to pay the loan, they asked for
extensions to pay for the loan. On the second extension, Pineda executed a PROMISE
wherein in case of default in payment, he wouldn’t ask for any additional extension and
there would be no need for any formal demand. In spite of this, they still failed to pay.
Navarro then filed for the foreclosure of the mortgages. The court decided in his favor.
HELD:
Where a house stands on a rented land belonging to another person, it may be
the subject matter of a chattel mortgage as personal property if so stipulated in the
document of mortgage, and in an action by the mortgagee for the foreclosure, the
validity of the chattel mortgage cannot be assailed
by one of the parties to the contract of mortgage.
Furthermore, although in some instances, a house of mixed materials has been
considered as a chattel between the parties and that the validity of the contract
between them, has been recognized, it has been a constant criterion that with
respect to third persons, who are not parties to the
contract, and specially in execution proceedings, the house is considered as immovable
property.

G.R. No. L-4637 June 30, 1952

JOSE A. LUNA, petitioner,
vs.
DEMETRIO B. ENCARNACION, Judge of First Instance of Rizal, TRINIDAD REYES
and THE PROVINCIAL SHERIFF OF RIZAL, respondents.
Facts:
On September 25, 1948, a deed designated as chattel mortgage was executed by Jose
A. Luna in favor of Trinidad Reyes whereby the former conveyed by way of mortgage to
the latter a certain house of mixed materials in barrio San Nicolas, municipality of Pasig,
Province of Rizal, to secure the payment of P1,500, with interest at 12 per cent per
annum. The document was registered in the office of the register of deeds for the
Province of Rizal. The mortgagor having failed to pay the promissory note when it fell
due, the mortgagee requested the sheriff to sell the house at public auction so that with
its proceeds the amount indebted may be paid the mortgagor.
The sheriff acceded to the request and sold the property to the mortgagee for the
amount covering the whole indebtedness with interest and costs. The certificate of sale
was issued by the sheriff .

4
After the period for the redemption of the property had expired without the mortgagor
having exercised his right to repurchase, the mortgagee demanded mortgagor to
surrender the possession of the property, but the later refused, thus, she filed a petition
in the CFI praying that the provincial sheriff be authorized to place her in possession of
the property invoking in her favor the provisions of Act No. 3135, as amended by Act
No. 4118.
Jose A. Luna, the mortgagor, opposed the petition on the following grounds: (1) that Act
No. 3135 as amended by Act No. 4118 is applicable only to a real estate mortgage; (2)
that the mortgage involved herein is a chattel mortgage; and (3) that even if the
mortgage executed by the parties herein be considered as real estate mortgage, the
extra-judicial sale made by the sheriff of the property in question was invalid because
the mortgage does not contain an express stipulation authorizing the extra-judicial sale
of the property.
Respondent judge, then presiding the court, overruled the opposition and granted the
petition ordering petitioner in possession of the property in question while at the same
time directing the mortgagor Jose A. Luna to vacate it and relinquish it in favor of
petitioner.
Issue: Whether the subject property in a chattel mortgage is validly be extra judicially
sale.
Ruling: No. It is contended that said extra-judicial sale having been conducted under
the provisions of Act No. 3135, as amended by Act No. 4118, is invalid because the
mortgage in question is not a real estate mortgage and, besides, it does not contain an
express stipulation authorizing the mortgagee to foreclose the mortgage extra-judicially.
As may be gleaned from a perusal of the deed signed by the parties, the understanding
executed by them is a chattel mortgage, as the parties have so expressly designated,
and not a real estate mortgage, specially when it is considered that the property given
as security is a house of mixed materials which by its very nature is considered as
personal property. Such being the case, it is indeed a mistake for the mortgagee to
consider this transaction in the light of Act No. 3135, as amended by Act No. 4118, as
was so considered by her when she requested to provincial sheriff to sell it extra-
judicially in order to secure full satisfaction of the indebtedness still owed her by the
mortgagor. It is clear that Act No. 3135, as amended, only covers real estate mortgages
and is intended merely to regulate the extra-judicial sale of the property mortgaged if
and when the mortgagee is given a special power or express authority to do so in the
deed itself, or in a document annexed thereto. The mortgage before us is not a real
estate mortgage nor does it contain an express authority or power to sell the property
extra-judicially.
The remedy of the purchaser according to the authorities, is to bring an ordinary action
for recovery of possession. The purchaser cannot take possession of the property by
force either directly or through the sheriff. And the reason for this is "that the creditor's
right of possession is conditioned upon the fact of default, and the existence of this fact
may naturally be the subject of controversy". The creditor cannot merely file a petition

5
for a writ of possession as was done by Trinidad Reyes in this case. Her remedy is to
file an ordinary action for recovery of possession in ordered that the debtor may be
given an opportunity to be heard not only in regarding possession but also regarding the
obligation covered by the mortgage.

MANILA ELECTRIC CO. V. CENTRAL BOARD OF ASSESSMENT APPEALS

114 SCRA 273
FACTS:
Petitioner owns two oil storage tanks, made of steel plates wielded and
assembled on the spot. Their bottoms rest on a foundation consisted of
compacted earth, sand pad as immediate layer, and asphalt stratum as top layer. The
tanks merely sit on its foundation.
The municipal treasurer of Batangas made an assessment for realty tax on the two
tanks, based on the report of the Board of Assessors. MERALCO wished to oppose this
assessment as they averred that the tanks are not real properties.
HELD:
While the two storage tanks are not embodied in the land, they may
nevertheless be considered as improvements in the land, enhancing its utility and
rendering it useful to the oil industry.
For purposes of taxation, the term real property may include things, which should
generally be considered as personal property. it is familiar phenomenon to see
things classified as real property for purposes of taxation which on general
principle may be considered as personal property.

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER
CO., INC. G.R. No. L-40411 August 7, 1935
Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of
the Philippine Islands. However, the land upon which the business was conducted
belonged to another person. On the land the sawmill company erected a building which
housed the machinery used by it. Some of the implements thus used were clearly
personal property, the conflict concerning machines which were placed and mounted on
foundations of cement. In the contract of lease between the sawmill company and the
owner of the land there appeared the following provision: That on the expiration of the
period agreed upon, all the improvements and buildings introduced and erected by the
party of the second part shall pass to the exclusive ownership of the lessor without any

6
obligation on its part to pay any amount for said improvements and buildings; which do
not include the machineries and accessories in the improvements.
In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the
Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the
plaintiff in that action against the defendant; a writ of execution issued thereon, and the
properties now in question were levied upon as personalty by the sheriff. No third party
claim was filed for such properties at the time of the sales thereof as is borne out by the
record made by the plaintiff herein
It must be noted also that on number of occasion, Davao Sawmill treated the machinery
as personal property by executing chattel mortgages in favor of third persons. One of
such is the appellee by assignment from the original mortgages.
The lower court rendered decision in favor of the defendants herein. Hence, this instant
appeal.

Issue:
whether or not the machineries and equipments were personal in nature.
Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.
Machinery which is movable in its nature only becomes immobilized when placed in a
plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as
the agent of the owner.

PASTOR AGO V COURT OF APPEALS

GR NO. 17898 (1962)
Facts:
Pastor Ago bought saw mill machineries and equipment from Grace Park Engineering,
executing a chattel mortgage to pay for the unpaid balance
The parties arrived at a compromise agreement after Ago defaulted in his payment.
With both parties in attendance, Judge Montano Ortiz dictated a decision in open court.
Ago defaulted in his payment anew. Grace Park motioned for execution and was later
granted a writ of execution.
Provincial Sheriff of Siargao acted on the Writ of Execution, levied upon and ordered the
sale of machineries and equipment in question

7
Machineries and equipment were now owned by Golden Pacific Sawmill after Ago sold
it to them, a day after court decision but before levying of property)
Issues:
WoN the decision made in open court constitutes a notice of final judgment
WoN the sale of the Provincial Sheriff was valid without prior publication
Ruling:

Issue #1: No, it does not constitute a notice of final judgment.

Section 1 of Rule 35 states:
How judgment rendered. — All judgments determining the merits of cases shall be in
writing personally and directly prepared by the judge, and signed by him, stating clearly
and distinctly the facts and the law on which it is based, filed with the clerk of the court.
Section 7 of Rule 27 states:
Service of final orders or judgments. — Final orders or judgments shall be served either
personally or by registered mail.
Issue #2: No, it is not valid.
Requisites of a valid publication as provided by Section 16 of Rule 39 of the Rules of
Court:
Posted for 20 days
Displayed in 3 public places where property is situated and sold
If property is > Php 400, publish a copy of the notice once a week, in some newspaper
of general circulation in the province.
Machineries and equipment became necessary parts of the building or real estate.
Ago assigned the machinery and equipment to Golden Pacific Sawmill after acquiring it
from Grace Park
Golden installed the machinery and equipment on the property they owned
Art. 415 makes machinery and equipment real property because it was installed by the
owner of the property and it is essential to the industry.

BOARD OF ASSESSMENT APPEALS OF QUEZON CITY

vs.

8
MANILA ELECTRIC COMPANY
GR No. L-15344, January 31, 1964
FACTS:
The Philippine Commission enacted Act No. 484 which authorized the Municipal Board
of Manila to grant a franchise to any person or persons making the most favorable bid to
construct, maintain and operate an electric street railway and electric light, heat and
power system in the City of Manila. The said franchise was awarded to Charles M.
Swift, which was then transferred and owned by respondent Manila Electric Company
(Meralco).
Meralco’s electric power is generated by its hydro-electric plant located at Botocan
Falls, Laguna and is transmitted to the City of Manila by means of electric transmission
wires, running from the province of Laguna to the said city. These electric transmission
wires which carry high voltage current are fastened to insulators attached on steel
towers, 40 of which are constructed by the respondent in Quezon City, on land
belonging to it.
Petitioner City Assessor of Quezon City declared Meralco’s steel towers subject to real
property tax. After denying respondent’s petition to cancel the declaration, an appeal
was taken to the Quezon City Board of Assessment, which then required respondent to
pay the amount of P11,651.86 as real property tax for the years 1952 to 1956.
Respondent paid the amount under protest, and filed a petition for review in the Court of
Tax Appeals (CTA) which ordered the cancellation of the said tax declarations and the
petitioner to refund to the respondent the amount which it paid.
ISSUE: Whether or not Meralco’s steel towers are considered real properties for
the purposes of real property tax.
HELD: NO.
Art. 415 of the Civil Code states the following are immovable properties:
“(1) Land, building, roads, and constructions of all kinds adhered to the soil;
xxx
(3) Everything attached to an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without breaking the material or
deterioration of the object;
xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works, which may be carried in a
building or on a piece of land, and which tends directly to meet the needs
of the said industry or works;”

9
 The steel towers in question do not come within the objects mentioned in Art.
415. Applying the paragraphs mentioned in the provision to the case at bar, the Court
held that:
The steel towers do not constitute buildings or constructions adhered to the soil
because these towers, as described by the lower court, are removable and merely
attached to a square metal frame by means of bolts, which when unscrewed could
easily be dismantled and moved from place to place.
The steel towers are not attached to an immovable in a fixed manner, and they can be
separated without breaking the material or causing deterioration upon the object to
which they are attached. The towers can be disassembled by unscrewing the bolts and
reassembled by screwing the same.
The steel towers are not machineries, receptacles, instruments or implements intended
for industry or works on the land. The petitioner is not engaged in an industry or works
on the land in which the steel towers are constructed.
The decision of the Court of Tax Appeals, which ordered the cancellation of the tax
declarations, was affirmed by the Supreme Court.

Makati Leasing and Finance Corp. v. Wearever Textile Mills, Inc.

GR No. L-58469
Property Law: Immovable Property
Facts:
In order to obtain financial accommodations from petitioner Makati Leasing and Finance
Corporation, the private respondent Wearever Textile Mills, Inc., discounted and
assigned several receivables with the former under a Receivable Purchase Agreement.
To secure the collection of the receivables assigned, private respondent executed a
Chattel Mortgage over certain raw materials inventory as well as machinery described
as an Artos Aero Dryer Stentering Range.
Upon default, petitioner filed a petition for extrajudicial foreclosure of the properties
mortgage to it. Acting on petitioner’s application for replevin, the lower court issued a
writ of seizure. Then after, the sheriff enforcing the seizure order repaired to the
premises of private respondent and removed the main drive motor of the subject
machinery.
The Court of Appeals, in certiorari and prohibition proceedings ordered the return of the
seized drive motor, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to
Article 415 of the New Civil Code, the same being attached to the ground by means of
bolts and the only way to remove it from respondent’s plant would be to drill out or
destroy the concrete floor, the reason why all that the sheriff could do to enforce the writ
was to take the main drive motor of said machinery.

10
Issue:
Whether the seized drive motor cannot be a subject of chattel mortgage, because
it is a real property pursuant to Article 415 of the new Civil Code
Held:
No. The seized drive motor can be a subject of chattel mortgage.
Examining the records of the instance case, the Supreme Court found no logical
justification to exclude and rule out, as the appellate court did, the present case from the
application of the pronouncement in the TUMALAD v. VICENCIO CASE (41 SCRA 143)
where a similar, if not identical issue was raised. If a house of strong materials, like what
was involved in the Tumalad case may be considered as personal property for purposes
of executing a chattel mortgage thereon as long as the parties to the contract so agree
and no innocent third party will be prejudiced thereby, there is absolutely no reason why
a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because one
who has so agreed is estopped from denying the existence of the chattel mortgage.

In rejecting petitioner’s assertion on the applicability of the Tumalad doctrine, the Court
of Appeals lays stress on the fact that the house involved therein was built on a land
that did not belong to the owner of such house. But the law makes no distinction with
respect to the ownership of the land on which the house is built and we should not lay
down distinctions not contemplated by law.

Private respondent contends that estoppel cannot apply against it because it had never
represented nor agreed that the machinery in suit be considered as personal property
but was merely required and dictated on by herein petitioner to sign a printed form of
chattel mortgage which was in a blank form at the time of signing. This contention lacks
persuasiveness. As aptly pointed out by petitioner and not denied by the respondent,
the status of the subject machinery as movable or immovable was never placed in issue
before the lower court and the Court of Appeals except in a supplemental memorandum
in support of the petition filed in the appellate court.

Serg’s Products, Inc. Vs. PCI Leasing and Finance, Inc. GR No. 137705. August 22,
2000

Facts:
Respondent PCI Leasing and Finance, Inc, filed with the RTC-QC a complaint for a sum
of money with an application for a writ of replevin.
Respondent Judge issued a writ of replevin directing its sheriff to seize and deliver the
machineries and equipment to PCI after 5 days and upon the payment of the necessary
expenses.

11
In the implementation of the said writ, the sheriff proceeded to petitioner’s factory,
seized one machinery with word that he would return for the other.
Petitioners filed a motion for special protective order, invoking the power of the court to
control the conduct of its officers and amend and control its processes, praying for a
directive for the sheriff to defer enforcement of the writ of replevin.
The motion was opposed by PCI Leasing, on the ground that the properties were still
personal and therefore still subject to seizure and a writ of replevin.
The sheriff again sought to enforce the writ of seizure and take possession of the
remaining properties. He was able to take two more, but was prevented by the workers
from taking the rest.
Issue:
1. Whether or not the machineries purchased and imported by Serg’s became real
property by virtue of immobilization.
2. Whether or not the contract between the parties is valid.
Ruling:
The petition is not meritorious.
1. No.
The machines that were subjects of the Writ of seizure were placed by petitioners in the
factory built on their own land. Indisputably, they were essential and principal elements
of their chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become immobilized by destination
because they are essential and principal elements in the industry. In that sense
petitioners are correct in arguing that the said machines are real property pursuant to
Article 415 (5) of the Civil Code.
But the Court disagrees with the submission of the petitioners that the said machines
are not proper subject of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be
considered as personal. After agreeing to such stipulation, they are consequently
stopped from claiming otherwise. Under the principle of estoppels, a party to a contract
is ordinarily precluded from denying the truth of any material fact found therein.
Clearly then, petitioners are stopped from denying the characterization of the subject
machines as personal property. Under circumstances, they are proper subjects of the
Writ of Seizure.
It should be stressed, however, that the Court’s holding-that the machines should be
deemed personal property pursuant to the Lease Agreement-is good only insofar as the
contracting parties are concerned. Hence, while the parties are bound by the
Agreement, third persons acting in good faith are not affected by its stipulation
characterizing the subject machinery as personal. In any event, there is no showing that
any specific third party would be adversely affected.
2. Yes.

12
It should be pointed out that the Court may rely on the Lease Agreement, for nothing on
the record shows that it has been nullified or annulled. In fact, petitioners assailed it first
only in the RTC proceedings, which had ironically been instituted by respondent.
Accordingly, it must be presumed valid and binding as the law between the parties.
Petition denied. Judgment affirmed.
Note: Article 415. The following are immovable property:
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works.

TUMALAD V. VICENCIO
Although a building is an immovable; the parties to a contract may by agreement treat
as personal property that which by nature is a real property however they are estopped
from subsequently claiming otherwise.
FACTS:
Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino and
Generosa Tumalad. To guaranty said loan, Vicencio executed a chattel mortgage in
favor of Tumalad over their house of strong materials which stood on a land which was
rented from the Madrigal & Company, Inc. When Vicencio defaulted in paying, the
house was extrajudicially foreclosed, pursuant to their contract. It was sold to Tumalad
and they instituted a Civil case in the Municipal Court of Manila to have Vicencio vacate
the house and pay rent.
The MTC decided in favor of Tumalad ordering Vicencio to vacate the house and pay
rent until they have completely vacated the house. Vicencio is questioning the legality of
the chattel mortgage on the ground that 1) the signature on it was obtained thru fraud
and 2) the mortgage is a house of strong materials which is an immovable therefore can
only be the subject of a REM. On appeal, the CFI found in favor of Tumalad, and since
the Vicencio failed to deposit the rent ordered, it issued a writ of execution, however the
house was already demolished pursuant to an order of the court in an ejectment suit
against Vicencio for non-payment of rentals. Thus the case at bar.
ISSUE:
Whether or not the chattel mortgage is void since its subject is an immovable
HELD:
NO.
Although a building is by itself an immovable property, parties to a contract may treat as
personal property that which by nature would be real property and it would be valid and
good only insofar as the contracting parties are concerned. By principle of estoppel, the
owner declaring his house to be a chattel may no longer subsequently claim otherwise.
When Vicencio executed the Chattel Mortgage, it specifically provides that the
mortgagor cedes, sells and transfers by way of Chattel mortgage. They intended to treat
it as chattel therefore are now estopped from claiming otherwise. Also the house stood

13
on rented land which was held in previous jurisprudence to be personalty since it was
placed on the land by one who had only temporary right over the property thus it does
not become immobilized by attachment.
[Vicencio though was not made to pay rent since the action was instituted during the
period of redemption therefore Vicencio still had a right to remain in possession of the
property]

Lopez vs. Orosa., Jr. and Plaza Theatre, Inc.

Facts:
Sometime in May, 1946, Vicente Orosa, Jr., invited Lopez to make an investment in the
theatre business. Although Lopez expressed his unwillingness to invest of the same, he
agreed to supply the lumber necessary for the construction of the proposed theatre, and
at Orosa's request and assurance that the latter would be personally liable for any
account that the said construction might incur, Lopez further agreed that payment
therefore would be on demand and not cash on delivery basis. With this, Lopez
delivered the lumber which was used for the construction of the Plaza Theatre on May
17, 1946, up to December 4 of the same year. The total cost of materials amounted to
P62,255.85 but Lopez was only paid P20,848.50, thus leaving a balance of P41,771.35.
Orosa and Rustia, corporation president, promised Lopez to obtain a bank loan to
satisfy the balance, to which assurance Lopez had to accede. Unknown to Lopez,
Orosa and Rustia already secured a loan for P30,000 from the PNB with the Luzon
Surety Company as surety, and the corporation in turn executed a mortgage on the land
and building in favor of said company as counter-security. As the land at that time was
not yet brought under the operation of the Torrens System, the mortgage on the same
was registered on 16 November 1946, under Act 3344. Subsequently, when the
corporation applied for the registration of the land under Act 496, such mortgage was
not revealed and thus OCT O-391 was correspondingly issued on October 25, 1947,
without any encumbrance appearing thereon.
Persistent demand from Lopez caused Vicente Orosa, Jr. to execute, on 17 March
1947, an alleged "deed of assignment" of his 420 shares of stock of the Plaza Theater,
Inc., at P100 per share or with a total value of P42,000 in favor of the creditor, and as
the obligation still remained unsettled, Lopez filed on 12 November 1947, a complaint
with the CFI Batangas against Vicente Orosa Jr. and Plaza Theatre, Inc., praying that
defendants be sentenced to pay him jointly and severally the sum of P41,771.35 with
legal interest from the filing of the action; that in case defendants fail to pay the same,
that the building and the land owned by the corporation be sold at public auction and the
proceeds thereof be applied to said indebtedness. Plaintiff also caused the annotation
of a notice of lis pendens on said properties with the Register of Deeds.
The surety company upon discovery that the land was already registered under the
Torrens System and that there was a notice of lis pendens thereon, filed a petition for
review of the decree of the land registration court in order to annotate the lights and
interests of the surety company over said properties. Lopez opposed by asserting that

14
the amount demanded by him constituted a preferred lien over the properties of the
obligors; that the surety company was guilty of negligence when it failed to present an
opposition to the application for registration of the property; and that if any annotation of
the rights and interest of said surety would ever be made, same must be subject to the
lien in his favor. The court ruled that Orosa and the Plaza Theatre, Inc., were jointly
liable for the unpaid balance of the cost of lumber used in the construction of the
building and the plaintiff thus acquired the materialman's lien over the same; the lien
being merely confined to the building and did not extend to the land on which the
construction was made.
Issue
1. Whether materialman’s lien for the value of the materials used in the construction of a
building attaches to the building alone and does not extend to the land on which the
building is adhered to.

Held: YES. While it is true that generally, real estate connotes the land and the building
constructed thereon, it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties could mean
only one thing — that a building is by itself an immovable property (cf. Leung Yee v.
Strong Machinery). In the absence of any specific provision of law to the contrary, a
building is an immovable property, irrespective of whether or not said structure and the
land on which it is adhered to belong to the same owner.

Issue2. Whether the lower court and the CA erred in not providing that the
materialman’s lien is superior to the mortgage executed in favor of the surety company
not only on the building but also on the land.

Held:

No. A close examination of Article 1923 (5) of the Civil Code reveals that the law gives
preference to unregistered refectionary credits only with respect to the real estate upon
which the refection or work was made.
ART. 1923. With respect to determinate real property and real rights of the
debtor, the following are preferred:
xxx xxx xxx
5. Credits for refection, not entered or recorded, with respect to the estate upon
which the refection was made, and only with respect to other credits different
from those mentioned in four preceding paragraphs.
This being so, the inevitable conclusion must be that the lien so created attaches merely
to the immovable property for the construction or repair of which the obligation was
incurred. In the case at bar, the lien for the unpaid value of the lumber used in the

15
construction of the building attaches only to said structure and to no other property of
the obligors. Thus, the materialman's lien could be charged only to the building for
which the credit was made or which received the benefit of refection, the interest of the
mortgagee over the land is superior and cannot be made subject to the said
materialman's lien.
Materialman’s lien-A type of lien that gives a security interest in property to someone
who supplies materials used during work performed on that property. Essentially, a
mechanic's lien by another name.

FELS ENERGY, INC. V THE PROVINCE OF BATANGAS and THE OFFICE OF THE PROVINCIAL ASSESSOR OF
BATANGAS

G.R. No. 168557 February 16, 2007

FACTS

Two consolidated cases were filed by FELS Energy, Inc. (FELS) and National Power Corporation (NPC),
respectively.

NPC entered into a lease contract with Polar Energy, Inc. over diesel engine power barges moored at
Batangas. The contract, denominated as an Energy Conversion Agreement, was for a period of five years
wherein, NPC shall be responsible for the payment of:

(a) all taxes, import duties, fees, charges and other levies imposed by the National Government

(b) all real estate taxes and assessments, rates and other charges in respect of the Power Barges

Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. Thereafter, FELS
received an assessment of real property taxes on the power barges. The assessed tax, which likewise
covered those due for 1994, amounted to P56,184,088.40 per annum. FELS referred the matter to NPC,
reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full
power and authority to represent it in any conference regarding the real property assessment of the
Provincial Assessor.

NPC sought reconsideration of the Provincial Assessor’s decision to assess real property taxes on the
power barges. However, the motion was denied. The Local Board of Assessment Appeals (LBAA) ruled
that the power plant facilities, while they may be classified as movable or personal property, are
nevertheless considered real property for taxation purposes because they are installed at a specific
location with a character of permanency.

FELS appealed the LBAA’s ruling to the Central Board of Assessment Appeals (CBAA). The CBAA rendered
a Decision finding the power barges exempt from real property tax.

It was later reversed by the cbaa upon reconsideration and affirmed by the CA

ISSUE

16
Whether power barges, which are floating and movable, are personal properties and therefore, not
subject to real property tax.

RULING

No. Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which, though floating,
are intended by their nature and object to remain at a fixed place on a river, lake, or coast" are
considered immovable property. Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other implements intended by the owner for an
industry or work which may be carried on in a building or on a piece of land and which tend directly to
meet the needs of said industry or work.

The findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS is the
entity being taxed by the local government. As stipulated under the Agreement:

OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings,
machinery and equipment on the Site used in connection with the Power Barges which have been
supplied by it at its own cost. POLAR shall operate, manage and maintain the Power Barges for the
purpose of converting Fuel of NAPOCOR into electricity.

It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its
exemption in Section 234 (c) of R.A. No. 7160,

…the law states that the machinery must be actually, directly and exclusively used by the government
owned or controlled corporation;

The agreement POLAR undertakes that until the end of the Lease Period, it will operate the Power
Barges to convert such Fuel into electricity. Therefore, FELS shall be liable for the realty taxes and not
the NPC who is not actually, directly and exclusively using the same. It is a basic rule that obligations
arising from a contract have the force of law between the parties. CONCLUSION. Petitions are DENIED.

VILLANUEVA v. CASTAÑEDA, JR.

FACTS

Petitioners are owners of stalls in a talipapa located in a land owned by the municipal government. They
were ed to lease the said land through a municipal council resolution in 1961.

The municipal government demolished the the stalls and subsequently issued a new resolution revoking
the right previously granted to the vendor. Said resolution indicated that the said area will be a parking
space for the town plaza.

Petitioners brought an action against the municipal government alleging that they have the right to use
the said lang because the resolution allowing them to use the area constitutes a contract between them
(vendors) and the municipal government.

CFI dismissed the petition and ordered the petitioners to be evicted from the area. But such eviction was
not enforced and the number of stall owners even grew.

After a few years, the municipal again resolved to demolish the stalls

ISSUE:

17
1. Whether or not the resolution in 1961 conferred contractual rights to the stall owners making them
lawful lessees of the land

2. Whether or not the said area are dedicated for public use

HELD:

1. There was no dispute that the land occupied by the petitioners was previously used as a town plaza
and being such it is considered as beyond the commerce of man and cannot be the subject of lease or
any contractual undertaking. The petitioners had no right in the first place to occupy the disputed
premises.

2. The proliferation of the stalls caused several repercussions to the area such as
> the makeshift and flammable materials has made the area susceptible of fire
endangering public safety
> said stalls have obstructed the way going to the real public market
> the filthy conditions of the stalls has aggravated health and sanitation problems
> the area has contributed to the obstruction of the flow of traffic
3. Assuming that there was a valid contract (and that the land is not for public use), the
petitioners must yield to the police power exercised by the municipal government. It is a
well settled rule that any valid contract may be cancelled if it causes danger to the
public.

Maneclang v. Intermediate Appellate Court

GR L-66575 24May1988
FACTS
Petitioners Adriano Maneclang et.al. filed with the CFI a complaint for quieting of title
over a certain fishpond located within the 4 parcels of land belonging to them situated in
Bugallon, Pangasinan. The trial court dismissed the complaint upon a finding that the
body of water traversing their land is a creek constituting a tributary to Agno River and
hence public in nature and not subject to private appropriation. The Maneclangs
appealed the decision to the IAC but the IAC affirmed the trial court decision. Hence,
this instant petition for review on certiorari. However, after having been asked by the
Court to comment to the case, Petitioners manifested that for lack of interest on the part
of the awardee in the public bidding, Maza, they desire to amicably settle the case by
submitting a Compromise Agreement praying that judgment be rendered recognizing
their ownership over the land and the body of water found within their titled properties.
Petitioners state that there would be no benefit on their part, but to the advantage of the
municipality instead, since it is clear that after the National Irrigation Authority built the
dike over the land, no water gets in or out of the land.

18
ISSUE
Whether the stipulations in the Compromise Agreement adjudicating ownership
over the questioned fishpond in favor of the Maneclangs are valid.
HELD/RATIO
NO, the stipulations in the Compromise Agreement are null and void and have no legal
effect for being contrary to law and public policy. The stipulations partake of the nature
of an adjudication of ownership in favor of the Maneclangs of the questioned fishpond
that was clearly found to be originally a creek forming a tributary of the Agno River,
which belongs to the public domain and is thus not susceptible to private appropriation
and acquisitive prescription.
A creek, defined as a recess or arm extending from a river and participating in the ebb
and flow of the sea, is a property belonging to the public domain which is not
susceptible to private appropriation and acquisitive prescription, and as a public water, it
cannot be registered under the Torrens System in the name of any individual and
considering further that neither the mere construction of irrigation dikes by the National
Irrigation Administration which prevented the water from flowing in and out of the subject
fishpond, nor its conversion into a fishpond, alter or change the nature of the creek as a
property of the public domain.
The finding that the subject body of water is a creek belonging to the public domain is a
factual determination binding upon the Supreme Court. The Municipality of Bugallon,
acting thru its duly-constituted municipal council is clothed with authority to pass, as it
did,the two resolutions dealing with its municipal waters, and it cannot be said that
petitioners were deprived of their right to due process as mere publication of the notice
of the public bidding suffices as a constructive notice to the whole world.

LAUREL V. GARCIA
187 SCRA 797
FACTS:
The subject Roppongi property is one of the properties acquired by the
Philippines from Japan pursuant to a Reparations Agreement. The property is where
the Philippine Embassy was once located, before it transferred to the Nampeidai
property. It was decided that the properties would be
available to sale or disposition. One of the first properties opened up for public auction
was the Roppongi property, despite numerous oppositions from different sectors.
HELD:
The Roppongi property was acquired together with the other properties through
reparation agreements. They were assigned to the government sector and that

19
the Roppongi property was specifically designated under the agreement to house
the Philippine embassy.
It is of public dominion unless it is convincingly shown that the property has
become patrimonial. The respondents have failed to do so.
As property of public dominion, the Roppongi lot is outside the commerce of man. It
cannot be alienated. Its ownership is a special collective ownership for general
use and payment, in application to the satisfaction of collective needs, and resides in
the social group. The purpose is not to serve the State as the juridical person but
the citizens; it is intended for the common and public welfare and cannot be the object
of appropriation.
The fact that the Roppongi site has not been used for a long time for actual Embassy
service doesn’t automatically convert it to patrimonial property. Any such
conversion happens only if the property is withdrawn from public use. A property
continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such.

CEBU OXYGEN AND ACETYLENE CO. V. BERCILLES

66 SCRA 431
FACTS:
The land sought to be registered in this case was formerly a part of a street.
Through a resolution, it was declared to be an abandoned road and not part of the City
development plan. Thereafter, it was sold through a public bidding and petitioner
was the highest bidder. He then sought to register said land but his application
was dismissed.
HELD:
The portion of the city street subject to petitioner’s application for registration of
title was withdrawn from public use. Then it follows that such withdrawn portion
becomes patrimonial property of the State. It is also very clear from the Charter
that property thus withdrawn from public servitude may be used or conveyed for
any purpose for which other real property belonging to the City may be lawfully used
or conveyed.

VILLARICO V. COURT OF APPEALS 309 SCRA 193

FACTS

20
Sps. Teofilo and Maxima Villarico, filed an application for confirmation of the title over a
parcel of land which they allege they bought from Teofilo’s father. Said application was
opposed by the Director of Forestry contending that the said land forms part of the
public domain as it is within the unclassified area in Meycauayan and is not available for
private appropriation. The TC dismissed the case since the property forms part of the
public domain therefore the certificate of title is void. The CA affirmed the findings of the
Trial Court, thus the case at bar.

ISSUE:
Whether or not the property still forms part of the public domain
HELD: YES
> The SC held that both the TC and the appellate court correctly adjudged the area to
be within the unclassified forest zone therefore incapable of private appropriation.
> There has been no showing that a declassification has been made declaring the said
lands as disposable or alienable and the spouses have not showed evidence to lead to
the court to rule otherwise.
> Thus, if the land in question still forms part of the public forest, then possession
thereof, however long, cannot convert it into private property as it is beyond the power
and jurisdiction of the cadastral court to register under the Torrens System.
G.R. No. L-57461 September 11, 1987
THE DIRECTOR OF LANDS, petitioner,
vs.
MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERA, as
Presiding Judge, Court of First Instance of Rizal, Pasig, Branch XXIII, respondents.

Facts: Manila Electric Company filed an amended application for registration of a parcel
of land located in Taguig, Metro Manila. Applicant acquired the land applied for
registration by purchase from Ricardo Natividad who in turn acquired the same from his
father Gregorio Natividad as evidenced by a Deed of Original Absolute Sale executed.
Applicant's predecessors-in-interest have possessed the property under the concept of
an owner for more than 30 years. The property was declared for taxation purposes
under the name of the applicant and the taxes due thereon have been paid. The
Director of Lands interposed this petition raising the issue of whether or not a
corporation may apply for registration of title to land.

The legal issue raised by the petitioner Director of Lands has been squarely dealt with
in two recent cases (The Director of Lands v. Intermediate Appellate Court and Acme
Plywood & Veneer and The Director of Lands v. Hon. Bengzon and Dynamarine
Corporation which was resolved in the affirmative. There can be no different answer in
the case at bar.

In the Acme decision, this Court upheld the doctrine that open, exclusive and
undisputed possession of alienable public land for the period prescribed by law creates

21
the legal fiction whereby the land, upon completion of the requisite period ipso jure and
without the need of judicial or other sanction, ceases to be public land and becomes
private property.

As the Court said in that case: Nothing can more clearly demonstrate the logical
inevitability of considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant from the State than
the dictum of the statute itself that the possessor(s) "... shall be conclusively presumed
to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title .... " No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would in truth be little more than a formality, at
the most limited to ascertaining whether the possession claimed is of the required
character and length of time; and registration thereunder would not confer title, but
simply recognize a title already vested. The proceedings would not originally convert
the land from public to private land, but only confirm such a conversion already affected
(sic) from the moment the required period of possession became complete.

Coming to the case at bar, if the land was already private at the time Meralco
bought it from Natividad, then the prohibition in the 1973 Constitution against
corporations holding alienable lands of the public domain except by lease (1973
Const., Art. XIV, See. 11) does not apply.

Petitioner, however, contends that a corporation is not among those that may apply for
confirmation of title under Section 48 of Commonwealth Act No. 141, the Public Land
Act.

As ruled in the Acme case, the fact that the confirmation proceedings were instituted by
a corporation is simply another accidental circumstance, "productive of a defect hardly
more than procedural and in nowise affecting the substance and merits of the right of
ownership sought to be confirmed in said proceedings." Considering that it is not
disputed that the Natividads could have had their title confirmed, only a rigid
subservience to the letter of the law would deny private respondent the right to
register its property which was validly acquired.

IGNACIO V. DIRECTOR OF LANDS AND VALERIANO

108 SCRA 335

FACTS

Faustino Ignacio filed an application to register a parcel of land (mangrove) which he

alleged he acquired by right of accretion since it adjoins a parcel of land owned by the
Ignacio. His application is opposed by the Director of Lands, Laureano Valeriano,
contending that said land forms part of the public domain. The Trial Court dismissed the

22
application holding that said land formed part of the public domain. Thus the case at
bar.

ISSUE:

Whether or not the land forms part of the public domain

HELD: YES

1. The law on accretion cited by Ignacio in inapplicable in the present case because it
refers to accretion or deposits on the banks of rivers while this refers to action in the
Manila Bay, which is held to be part of the sea.

2. Although it is provided for by the Law of Waters that lands added to shores by
accretions caused by actions of the sea form part of the pubic domain when they are no
longer necessary for purposes of public utility, only the executive and the legislative
departments have the authority and the power to make the declaration that any said
land is no longer necessary for public use. Until such declaration is made by said
departments, the lot in question forms part of the public domain, not available for private
appropriation or ownership.

G.R. No. L-19570 April 27, 1967

JOSE V. HILARIO, JR., plaintiff-appellant,
vs.
THE CITY OF MANILA, defendant-appellee,
DIRECTOR OF PUBLIC WORKS, CITY ENGINEER OF MANILA, FERNANDO
BUSUEGO and EUGENIO SESE,defendants-appellants,
MAXIMO CALALANG, intervenor;
DIRECTOR OF MINES, intervenor.

Facts: Dr. Jose Hilario was the registered owner of a large tract of land — around 49
hectares located at Barrio Guinayang, San Mateo, Rizal. Upon his death, this property
was inherited by his son, Jose Hilario, Jr., to whom a new certificate of title was issued.
During the lifetime of plaintiff's father, the Hilario estate was bounded on the western
side by the San Mateo River. 3To prevent its entry into the land, a bamboo and lumber
post dike or ditch was constructed. This was further fortified by a stone wall built on the
northern side. However, in 1937, a great and extraordinary flood occurred which
destroyed the dike on the northwest, left its original bed and meandered into the Hilario
estate, segregating from the rest thereof a lenticular place of land. In 1945 the U.S.
Army opened a sand and gravel plant within the premises and started scraping,
excavating and extracting soil, gravel and sand from the nearby areas the River. The
operations eventually extended northward into this strip of land. Consequently, a claim
for damages was filed with the U.S. War Department by Luis Hilario, the then
administrator of Dr. Hilario's estate. The U.S. Army paid. 6 In 1947, the plant was turned

23
over to herein defendants-appellants and appellee who took over its operations and
continued the extractions and excavations of gravel and sand from the strip of land
along an area near the River. Plaintiff filed his complaint 7 for injunction and damages
against the defendants City Engineer of Manila, District Engineer of Rizal, the Director
of Public Works, and Engr. Busuego, the Engineer-in-charge of the plant. It was prayed
that the latter be restrained from excavating, bulldozing and extracting gravel, sand and
soil from his property and that they solidarily pay to him P5, 000.00 as damages.
Defendants' answer alleged, in affirmative defense, that the extractions were made from
the riverbed while counterclaiming with a prayer for injunction against plaintiff—who, it
was claimed, was preventing them from their operations.

The lower court rendered judgment against the defendants City of Manila and the
Director of Public Works, to pay solidarily the herein plaintiff the sum of P376,989.60, as
the cost of gravel and sand extracted from plaintiff's land, plus costs. Judgment is
likewise rendered against the defendant Provincial Treasurer of Rizal, ordering him to
reimburse to intervenor Maximo Calalang the amount of P236.80 representing gravel
fees illegally collected. Finally, defendants are perpetually enjoined from extracting any
sand or gravel from plaintiff's property which is two-fifths northern portion. Hence, this
appeal.

Issue: when a river, leaving its old bed, changes its original course and opens a
new one through private property, would the new riverbanks lining said course
be of public ownership also?18

Ruling: We agree with defendants that under the cited laws, all riverbanks are of public
ownership — including those formed when a river leaves its old bed and opens a new
course through a private estate. Art. 339 of the old Civil Code is very clear. Without any
qualifications, it provides:

Property of public ownership is —

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a
similar character; (Emphasis supplied)

Moreover, as correctly contended by defendants, the riverbank is part of the riverbed.

Art. 73 of the Law of Waters which defines the phrase "banks of a river" provides:

By the phrase "banks of a river" is understood those lateral strips or zones of its
bed which are washed by the stream only during such high floods as do not
cause inundations. ... (Emphasis supplied)

The use the of words "of its bed [de sus alveos]" clearly indicates the intent of the
law to consider the banks — for all legal purposes — as part of the riverbed. The
lower court also ruled — correctly — that the banks of the River are paint of its

24
 bed.20 Since undeniably all beds of rivers are of public ownership, 21 it follows that
the banks, which form part of them, are also of public ownership.

Plaintiff's contention that Arts. 70 and 73 of the Law of Waters cannot apply because Art.
312 of the old Civil Code mentions only the new bed but omits the banks, and that said
articles only apply to natural — meaning original — bed and banks is untenable. Art. 70,
which defines beds of rivers and creeks, provides:

The natural bed or channel of a creek or river is the ground covered by its waters
during the highest [ordinary] floods.22 (Emphasis supplied)

Art. 372 of the old Civil Code which provides that —

Whenever a navigable or floatable river changes its course from natural causes
and opens a new bed through a private estate, the new bed shall be of public
ownership, but the owner of the estate shall recover it in the event that the waters
leave it dry again either naturally or as the result of any work legally authorized
for this purpose. (Emphasis supplied)

did not have to mention the banks because it was unnecessary. The nature of the
banks always follows that of the bed and the running waters of the river. A river is
a compound concept consisting of three elements: (1) the running waters, (2) the
bed and (3) the banks. 23 All these constitute the river. American authorities are
in accord with this view:

'River' consists of water, a bed and banks.24

A "river" consists of water, a bed and banks, these several parts constituting the
river, the whole river. It is a compound idea; it cannot exist without all its paints.
Evaporate the water, and you have a dry hollow. If you could sink the bed,
instead of a river, you would have a fathomless gulf. Remove the banks, and you
have a boundless flood.25

Since a river is but one compound concept, it should have only one nature, i.e., it should
either be totally public or completely private. And since rivers are of public ownership, 26
it is implicit that all the three component elements be of the same nature also. As
Manresa commented:

However, to dispel all possible doubts, the law expressly makes all three elements
public. Thus, riverbanks and beds are public under Arts. 339 and 407, respectively, of
the Code, while the flowing waters are declared so under Art. 33, par. 2 of the Law of
Waters of 1866.

Articles 70, 72 and 73 of the Law of Waters speak of natural beds and their banks.
Plaintiff now equates the term "natural" with the word "original" so that a change in the
course of a river would render those articles inapplicable. However, the premise is

25
incorrect. Diccionario De La Real Academia Española defines the word "natural" as
follows:

"Natural" is not made synonymous to "original" or "prior condition". On the contrary,

even if a river should leave its original bed so long as it is due to the force of nature, the
new course would still fall within the scope of the definition provided above. Hence, the
law must have used the word "natural" only because it is in keeping with the ordinary
nature and concept of a river always to have a bed and banks.

Plaintiff's third point is not lightly to be taken. Indeed, it would seem possible to acquire
private ownership of banks under Art. 553 of the old Civil Code which provides:

A study of the history of Art. 553 will however reveal that it was never intended to
authorize the private acquisition of riverbanks. That could not have been legally possible
in view of the legislative policy clearly enunciated in Art. 339 of the Code that all
riverbanks were of public ownership. The article merely recognized and preserved the
vested rights of riparian owners who, because of prior law or custom, were able to
acquire ownership over the banks. This was possible under the Siete Partidas which
was promulgated in 1834 yet. 29 Under Law 6, Title 28, Partidas 3, the banks of rivers
belonged to the riparian owners, following the Roman Law rule. 30 In other words, they
were privately owned then. But subsequent legislation radically changed this rule. By
the Law of Waters of August 3, 1866, riverbanks became of public ownership, albeit
impliedly only because considered part of the bed — which was public — by statutory
definition.31 But this law, while expressly repealing all prior inconsistent laws, left
undisturbed all vested rights then existing. 32 So privately owned banks then continued to
be so under the new law, but they were subjected by the latter to an easement for public
use. As Art. 73 provides:

Se entienden por riberas de un rio las fajas o zonis laterales de sus alveos que
solamente sor bañadas por las aguas en las crecidas que no causan inundacion.
El dominio privado de las riberas esta suieto a la survidumbre de tres metros de
zona para uso publico, en el interest general de la navegacion, la flotacion, la
pesca y el salvamento. ... (Emphasis supplied).1äwphï1.ñët

This was perhaps the reconciliation effected between the private ownership of the
banks, on the one hand, and the policy of the law on the other hand, to devote all banks
to public use.33 The easement would preserve the private ownership of the banks and
still effectuate the policy of the law. So, the easement in Art. 73 only recognized and
preserved existing privately owned banks; it did not authorize future private
appropriation of riverbanks.

The foregoing observation is confirmed by the still subsequent Law of Waters of June
13, 1879, which was principally based on the Law of August 3, 1865. 34 Art. 36 of the
new law, which was a substantial reenactment of Art. 73 of the Law of Waters of August
3, 1866, reads:

26
 Las riberas, aun cuando sean de dominio privado en virtud de antigue ley o de
costumbre, estan sujetas en toda su extension las margenes en una zona de
tres metros, a la servidumbre de uso publico en interes general de la
navegacion, la flotacion la pesca y el salvamento. ... (Emphasis supplied)

The new law also affirmed the public ownership of rivers and their beds, and the
treatment of the banks as part of the bed. 35 But nowhere in the law was there any
provision authorizing the private appropriation of the banks. What it merely did was to
recognize the fact that at that time there were privately owned banks pursuant to the
SietePartidas, and to encumber these with an easement for public use.

However, the public nature of riverbanks still obtained only by implication. But with the
promulgation of the Civil Code of 1889, this fact was finally made explicit in Art. 339
thereof. Riverbanks were declared as public property since they were destined for
public use. And the first paragraph of Art. 36 of the Law of Waters of 1879 was
substantially reenacted in Art. 553 of the Code. 36 Hence, this article must also be
understood not as authorizing the private acquisition of riverbanks but only as
recognizing the vested titles of riparian owners who already owned the banks.

The authority, then, for the private ownership of the banks is neither the old Civil Code
nor the Law of Waters of 1866 but the Siete Partidas. Unfortunately, plaintiff cannot
invoke it. Law 6, Title 28, Partida 3, which provides for private ownership of banks,
ceased to be of force in this jurisdiction as of 1871 yet when the Law of Waters of
August 3, 1866, took effect. 37 Since the change in the course of the River took place in
1937, the new banks which were formed could not have been subjected to the
provisions of the Siete Partidas which had already been superseded by then.

Coming to the factual issues: both parties assail the conclusion made by the lower court
that only the northern two-fifths of the disputed area remained as plaintiff's private
property. This conclusion was apparently based on the findings that the portion where
rice and corn were found38 in the ocular inspection of June 15, 1951, was on the
northern two-fifths of the disputed area; that this cannot be a part of the bed because of
the existence of vegetation which could not have grown underwater, and that this
portion is man-made. However, there is no evidentiary basis for these findings. The area
indicated by Nos. 1 and 2 in Exh. D-1 where no excavations had been made, appears to
be more on the south-western one-fourth of the disputed area. The American cases 39
cited by the lower court cannot apply here. Our Law of Waters, in defining "beds" and
considers the latter is part of the former. Those cited cases did not involve a similar
statutory provision. That plants can and do grow on the banks which otherwise could
not have grown in the bed which is constantly subjected to the flow of the waters proves
the distinction between "beds" and "banks" in the physical order. However, We are
dealing with the legal order where legal definitions prevail. And apart from these
considerations, We also note the considerable difficulty which would attend the
execution of the ruling of the lower court. The latter failed to indicate fixed markers from
which an exact delimitation of the boundaries of the portion could be made. This flaw is
conducive to future litigations.

27
Plaintiff's theory is that the disputed area, although covered at times by flood waters,
cannot be considered as within the banks of the River because: (1) such floods are only
accidental, and (2) even if they are regular, the flooding of the area is due to the
excavations and extractions made by defendants which have caused the widening of
the channel.40 Defendants claim, however, that the area is always covered by the
normal yearly floods and that the widening of the channel is due to natural causes.

There is a gravel pit41 located along the west side of the River. This is about 500 meters
long.42 A greater part of this pit occupies a portion of the strip of land that was sliced by
the River from the rest of the Hilario estate. As shown in Exhs. D and D-1, this strip of
land is that western segment of the Hilario estate bounded on the west by the same
lines connecting stakes 23 through 27, which form part of the western boundary of the
estate, and on the east, bounded by the western waterline of the River.

Now, the disputed area, generally speaking, 43 is only that part of the gravel pit which is
within the strip of land. Its northern tip is that point where the so-called "secondary
bank" line intersects the west River waterline up north; its southern boundary is along
the line connecting stakes 23 and 24. From these two ends, the disputed area
measures approximately 250 meters long. The eastern boundary is the western River
waterline at low tide and the western boundary is the "secondary bank" line, a line
passing near stake 24 and running almost parallel to the line connecting stakes 25 and
26. Around the later part of 1949, the disputed area was about 150 to 160 meters
wide.44This increased to about 175 to 180 meters by the later part of 1950. And by
January, 1953, the distance from the "secondary bank" line to the west waterline was
about 230 meters.45

This increasing width of the disputed area could be attributed to the gradual movement
of the River to the east. Since it entered into the Hilario estate, the River has not stayed
put.46 Vicente Vicente, plaintiff's witness declared 47that after the River changed its
course in 1937, the distance between the old and the new river sites was about 100
meters. Exh. D-2 shows that in 1943, the south end of the River was about 5 meters
southeast of stake 24.48Honorato Sta. Maria, another witness for plaintiff, indicated the
flow of this course with a blue line in Exh. D-1. 49 This blue line is about 100 meters from
the line connecting stakes 25 and 26, which was also the east boundary of the old
River.50 Around 1945 to 1949, the River was about 193 meters 51 east of this line. This
measurement is based on the testimonies of two defense witnesses 52 and stated that
during that period, the River passed along the Excavated Area and the New Accretion
Area53 sites, as shown in Exh. 54. By the later part of 1949 up to November 1950, the
west waterline was from 248 to 270 meters 54 east of the aforesaid boundary line. And
finally in January, 1953, based on the scale in Exh. 3-Calalang, the west waterline was
from 300 to 305 meters away already. Hence, from 100 meters in 1937, the River had
moved to 305 meters eastward in 1953.

There are two questions to be resolved here. First, where on the strip of land are the
lateral borders of the western riverbank? And second, where have defendants made
their extractions?

28
Anent the first question, the key is supplied by Art. 73 of the Law of Waters which
defines the limits of banks of rivers —

By the phrase "banks of a river" is understood those lateral strips or zones of its
bed which are washed by the stream only during such high floods as do not
cause in inundations. ... (Emphasis supplied)

The farthest extremity of the bank on the west side would, therefore, be that
lateral line or strip which is reached by the waters during those high floods that
do not cause inundations. In other words, the extent reached by the waters when
the River is at high tide.

However, there is a difference between the topography of the two sides immediately
adjoining the River. The line indicated as "primary bank" 55 in Exh. 3-Calalang, which is
on the east, is about 3 meters high and has a steep grade right at the edge where it
drops almost vertically to the watercourse level. The precipice here, which is near the
east waterline, is very easily detectible. But the opposite side has no such steep activity.
In fact, it is almost flat with the bed of the River, especially near the water edge, where it
is about 30 to 50 cms. high only. But it gradually slopes up to a height of about 2 to 2-½
meters along the line indicated as "secondary bank", which is quite far from the
waterline. This "bank" line is about 1-½ meters higher than the level of the gravel pit and
there are erosions here. This is about 175 meters west from the November 1950
waterline, and about 100 meters west from the camachile tree. 56

During the dry season, the waterlevel of the River is quite low — about knee-deep only.
However, during the rainy season, the River generally becomes swollen, and the
waterlevel rises, reaching up to the neck. 57 However, considering the peculiar
characteristics of the two sides banking the river, the rise in the waterlevel would not
have the same effect on the two sides. Thus, on the east, the water would rise vertically,
until the top of the "primary bank" is reached, but on the west, there would be a low-
angled inclined rise, the water covering more ground until the "secondary bank" line is
reached. In other words, while the water expansion on the east is vertical, that on the
west is more or less lateral, or horizontal.

The evidence also shows that there are two types of floods in the area during the rainy
season.58 One is the so-called "ordinary" flood, when the river is swollen but the flowing
water is kept within the confines, of the "primary" and "secondary" banks. This occurs
annually, about three to four times during the period. Then there is the "extraordinary"
flood, when the waters overflow beyond the said banks, and even inundate the
surrounding areas. However, this flood does not happen regularly. From 1947 to 1955,
there were only three such floods.59 Now, considering that the "ordinary" flood easily
cover the west side — since any vertical rise of the waterlevel on the east would
necessarily be accompanied by a lateral water expansion on the west — the
"inundations" which the law mentions must be those caused by the "extraordinary"
floods which reach and overflow beyond both "primary" and "secondary" banks. And
since the "primary" bank is higher than the "secondary" bank, it is only when the former

29
is reached and overflowed that there can be an inundation of the banks — the two
banks. The question therefore, may be stated thus: up to what extent on the west side
do the highest flood waters reach when the "primary" bank is not overflowed?

Defendants have presented several witnesses who testified on the extent reached by
the ordinary flood waters. David Ross, a bulldozer operator at the plant since 1945,
testified60 that from 1945 to 1949, when the River was still passing along the site where
the camachile tree is located, the annual flood waters reached up to the "secondary
bank" line. These floods usually took from 3 to 5 days to recede, during which time their
work was suspended. Corroboration is supplied by Macario Suiza, a crane operator in
the plant since 1945, and by Fidel Villafuerte, a plant employee since 1946. Suiza
stated61 that from 1947 to 1949, the area enclosed within the blue lines and marked as
Exh. 54-B — which includes the New Accretion Area was always covered by water
when it rained hard and they had to stop work temporarily. The western extremity of this
area reaches up to the "secondary bank" line. Villafuerte stated 62 that in the ordinary
floods when the water was just 50 cm. below the top of the "primary bank", the waters
would go beyond the camachile tree by as much as 100 meters westward and just
about reach the "secondary bank" line. Further corroboration is supplied by plaintiff's
own evidence. Exh. 1-Calalang states that from 1947 to 1949, based on the casual
observations made by geologist David Cruz, the area between the "primary" and
"secondary" banks were always covered by the non-inundating ordinary floods.

From 1950 to 1952, We have the testimony of Ross who stated 63 that there were still
floods but they were not as big anymore, except one flood in 1952, since the River had
already moved to the east. Engr. Ricardo Pacheco, who made a survey of the disputed
area in November 1952, and who conducted actual observations of the extent of the
water reach when the river was swollen, testified 64 that the non-inundating flood
regularly reached up to the blue zigzag line along the disputed area, as shown in Exh. I-
City Engineer Manila. This blue line, at the point where it intersects line BB, 65 is about
140 meters west of the waterline and about 20 meters west of the camachile tree. His
testimony was based on three floods66 which he and his men actually recorded.
Corroboration is again supplied by Exh. 1-Calalang. According to Cruz' report, the floods
in 1950 and 1951 barely covered the disputed area. During the normal days of the rainy
season, the waters of the swollen river did not reach the higher portions of the gravel pit
which used to be submerged. One cause for this was the lesser amount of rainfall from
1949 to 1951. But two floods occurred from October 16 to 28, 1952, which overflowed
the whole area and inundated the banks. From 1953 to 1955, when the River was
farther away to the east, the flood waters still covered the west side. 67 Testifying on the
extent reached by the water during the rainy season in 1954, Ross stated 68 that it
reached up to the camachile tree only. The last and latest data comes from Engr.
Magbayani Leaño, the Engineer-in-charge of the plant from August 1954. He testified 69
that as of December 1955, when the disputed area was underwater, the water reach
was about 20 meters or less to the east from the camachile tree.

From all the foregoing, it can be safely concluded: (1) that from 1945 to 1949, the west
bank of the River extended westward up to the "secondary bank" line; (2) that from

30
1950 to 1952, this bank had moved, with the River, to the east its lateral borders running
along a line just 20 meters west of the camachile tree; and (3) that from 1953 to 1955,
the extremities of the west bank further receded eastward beyond the camachile tree,
until they lay just about 20 meters east of said tree.

To counteract the testimonies of the defense witnesses, plaintiff presented two rebuttal
witnesses70 who told a somewhat different story. However, their testimonies are not
convincing enough to offset the dovetailing testimonies of the defense witnesses who
were much better qualified and acquainted with the actual situs of the floods. And said
defense witnesses were corroborated by plaintiffs' own evidence which contradicts the
aforesaid rebuttal witnesses.

However, plaintiff maintains that the floods which cover the area in question are merely
accidental and hence, under Art. 77 of the Law of Waters, 71 and following the ruling in
Government vs. Colegio de San Jose,72 he is deemed not to have lost the inundated
area. This is untenable. Plaintiff's own evidence 73 shows that the river floods with annual
regularity during the rainy season. These floods can hardly be called "accidental." The
Colegio de San Jose case is not exactly in point. What was mainly considered there
was Art. 74 of the Law of Waters relating to lakes, ponds and pools. In the case at bar,
none of these is involved.

Also untenable is plaintiff's contention that the regular flooding of the disputed area was
due to the continuous extraction of materials by defendants which had lowered the level
of said area and caused the consequent widening of the channel and the river itself.
The excavations and extractions of materials, even from the American period, have
been made only on the strip of land west of the River. 74 Under the "following-the-nature-
of-things" argument advanced by plaintiff, the River should have moved westward,
where the level of the ground had been lowered. But the movement has been in the
opposite direction instead. Therefore, it cannot be attributed to defendants' operation.
Moreover, plaintiff's own evidence indicates that the movement eastward was all due to
natural causes. Thus, Exh. 1-Calalang shows that the movement eastward of the
channel by as much as 31 meters, from 1950 to 1953, was due to two typhoons which
caused the erosion of the east bank and the depositing of materials on the west side
which increased its level from as much as .93 to 2 meters.

Plaintiff's assertion that the defendants also caused the unnatural widening of the River
is unfounded. Reliance is made on the finding by the lower court that in 1943, the River
was only 60 meters wide as shown in Exh. D-2, whereas in 1950, it was already 140
meters wide as shown in Exh. D. However, Exh. D-2 only shows the width of the River
near the southwestern boundary of the Hilario estate. It does not indicate how wide it
was in the other parts, especially up north. And Eligio Lorenzo, plaintiff's own witness,
admitted75 on cross-examination that the width of the new river was not uniform. This is
confirmed by Exhs. D and D-1 which show that the new river was wider by as much as
50% up north than it was down south. The 140-meter distance in Exh. D was at the
widest part up north whereas down south, near the mouth of the Bulobok River, it was

31
only 70 meters wide. Lastly, the scale in Exh. 3-Calalang will show that in January 1953,
the River, near the same point also, was less than 50 meters wide.

The only remaining question now is to determine if the defendants have really confined
their operations within the banks of the River as alleged by them. To resolve this, We
have to find out from what precise portion in the disputed area the defendants have
extracted gravel and sand since they did not extract indiscriminately from within the
entire area. None of the parties' briefs were very helpful but the evidence on record
discloses that defendants made their extractions only within specified areas during
definite periods.

From 1947 to the early part of 1949, the defendants conducted their operations only in
the New Accretion Area along a narrow longitudinal zone contiguous to the watercourse
then. This zone, marked as Exh. 2-City Engineer Manila, is about one (1) km. long and
extends northward up to pt. 50.35 in Exh. 54. However, no extractions nor excavations
were undertaken west of this zone, i.e., above the "temporary bank" line. 76 These facts
are corroborated by plaintiff's witnesses. That the extractions were near the river then
finds support in Vicente's testimony 77 while Leon Angeles and Mrs. Salud Hilario confirm
the fact that defendants have not gone westward beyond the "temporary bank" line. 78
This line is located east of the "secondary bank" line, the lateral extremity of the west
bank then.

In the later part of 1949, plaintiff prohibited the defendants from extracting along the
New Accretion Area and constructed a fence across the same. This forced the
defendants to go below southeast of — the "Excavated Area" and the New Accretion
Area sites in Exh. 54.79 Engr. Busuego, testifying80 in 1952, indicated their are of
extraction as that enclosed within the red dotted line in Exh. D-1 which lies on the south
end of the strip of land. Only a small portion of the southeastern boundary of the
disputed area is included. The ocular inspection conducted on June 15, 1951, confirms
this.81 Exh. 4-Calalang shows the total amount of materials taken from within the area
from 1949 to 1951.82 Thus, from 1950 up to 1953, although the defendants were able to
continue their operations because of the agreement between the plaintiff and the
Director of Public Works,83 they were confined only to the southeastern portion of the
disputed area. On the other hand, the lateral extremities of the west bank then ran along
a line about 20 meters west of the camachile tree in the New Accretion Area.

From 1954 to 1955, defendants' area of operation was still farther near of the New
Accretion Area. They were working within a confined area along the west waterline, the
northern and western boundaries of which were 20 meters away east from the
camachile tree.84 Ross indicated85 this zone in Exh. 54 as that portion on the southern
end of the disputed area between the blue lines going through the words "Marikina
River Bed" and the red zigzag line indicating the watercourse then. Engr. Leaño even
stated, 86 that they got about 80% of the materials from the river itself and only 20%
from the dry bed. The sand and gravel covered by Exhs. LL to LL-55 were all taken from
here. The foregoing facts are not only corroborated by Mrs. Hilario 87 but even admitted
by the plaintiff in his opposition 88 to defendants' petition to extend their area of operation

32
west of the camachile tree. And because their petition was denied, defendants could
not, and have not,89 gone beyond the lateral line about 20 meters east from said tree,
which has already been established as the lateral extremity of the west bank during the
period.

It appears sufficiently established, therefore, that defendants have not gone beyond the
receding western extremities of the west riverbank. They have confined their extraction
of gravel and sand only from within the banks of the river which constitute part of the
public domain — wherein they had the right to operate. Plaintiff has not presented
sufficient evidence that defendants have gone beyond the limits of the west bank, as
previously established, and have invaded his private estate. He cannot, therefore,
recover from them.

As a parting argument, plaintiff contends that to declare the entire disputed area as part
of the riverbanks would be tantamount to converting about half of his estate to public
ownership without just compensation. He even adds that defendants have already
exhausted the supply in that area and have unjustly profited at his expense. These
arguments, however, do not detract from the above conclusions.

First of all, We are not declaring that the entire channel, i.e., all that space between the
"secondary bank" line and the "primary bank" line, has permanently become part of the
riverbed. What We are only holding is that at the time the defendants made their
extractions, the excavations were within the confines of the riverbanks then. The
"secondary bank" line was the western limit of the west bank around 1945 to 1949 only.
By 1955, this had greatly receded to the line just 20 meters east of the camachile tree in
the New Accretion Area. All that space to the west of said receding line 90 would still be
part of plaintiff's property — and also whatever portion adjoining the river is, at present,
no longer reached by the non-inundating ordinary floods.

Secondly, it is not correct to say that plaintiff would be deprived of his property without
any compensation at all. Under Art. 370 of the old Civil Code, the abandoned bed of the
old river belongs to the riparian owners either fully or in part with the other riparian
owners. And had the change occurred under the Civil Code of the Philippines, plaintiff
would even be entitled to all of the old bed in proportion to the area he has lost. 91

And, lastly, defendants cannot be accused of unjustly profiting at plaintiff's expense.

They were not responsible for the shifting of the River. It was due to natural causes for
which no one can be blamed. And defendants were extracting from public property then,
under proper authorization. The government, through the defendants, may have been
enriched by chance, but not unjustly.

Considering the conclusions We have thus reached, the other questions involved in the
remaining assignments of errors — particularly those apropos the doctrine of state
immunity from suit and the liability of defendant City of Manila — are rendered moot.

33
REPUBLIC V. CA
FACTS:
Respondent Morato filed a free patent application on a parcel of land, which was
approved and issued an original certificate of title. Both the free patent and title
specifically mandate that the land shall not be alienated nor encumbered within 5
years from the date of the issuance of the patent. The District Land Officer, acting
upon reports that Morato had encumbered the land and upon finding that the
subject land is submerged in water during high tide and low tide, filed a
complaint for cancellation of the title and reversion of the parcel of land to the
public domain. RTC dismissed the complaint. CA affirmed.
ISSUE:
1. Whether or not respondent violated the free patent condition prohibiting
encumbering the land within the 5-year period?
2. Whether or not the land is of public domain?
HELD
1. Yes. Public Land Act Sec. 18 provides that…lands acquired under free patent or
homestead provisions shall not be subject to encumbrance or alienation from the
date of approval of the application and for a term of 5 years from and after the
date of issuance of the patent or grant…The contracts of lease and mortgage
executed by Morato constitute an encumbrance as contemplated by section 18 of
the Public Land Act because such contracts impair the use of the property.
2. Yes. Based from the facts, the land is clearly foreshore as it is subject to the
ebb and flow of the tide. When the sea moved towards the estate and the tide
invaded it, the invaded property became foreshore land and passed to the realm
of the public domain. In Government v. Cabangis, the Court annulled the
registration of land subject of cadastral proceedings when the parcel
subsequently became foreshore land. In another case, the Court voided the
registration decree of a trial court and held that said court had no jurisdiction to
award foreshore land to any private person or entity. The subject land in this
case, being foreshore land should therefor be returned to the public domain.

DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners,

vs.
THE COURT OF APPEALS, MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO
RABAYA, AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I. IGNACIO,
ALBERTO M. GILLERA and HON. ABELARDO G. PALAD, JR., in their official
and/or private capacities, respondents.

ROMERO, J.:p

Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the
decision of the Court of Appeals which affirmed the dismissal of petitioners' complaint by

34
the Regional Trial Court of Misamis Oriental, Branch 22. The complaint was for
annulment of the verification, report and recommendation, decision and order of the
Bureau of Lands regarding a parcel of public land.

The only issue involved in this petition is whether or not petitioners exhausted
administrative remedies before having recourse to the courts.

The subject of this controversy is a parcel of land situated in Telegrapo, Puntod,

Cagayan de Oro City. Said land was formed as a result of sawdust dumped into the
dried-up Balacanas Creek and along the banks of the Cagayan river.

Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the
subject lots on which their houses stood from one Antonio Nazareno, petitioners'
predecessor-in-interest. In the latter part of 1982, private respondents allegedly stopped
paying rentals. As a result, Antonio Nazareno and petitioners filed a case for ejectment
with the Municipal Trial Court of Cagayan de Oro City, Branch 4. A decision was
rendered against private respondents, which decision was affirmed by the Regional Trial
Court of Misamis Oriental, Branch 20.

The case was remanded to the municipal trial court for execution of judgment after the
same became final and executory. Private respondents filed a case for annulment of
judgment before the Regional Trial Court of Misamis Oriental, Branch 24 which
dismissed the same. Antonio Nazareno and petitioners again moved for execution of
judgment but private respondents filed another case for certiorari with prayer for
restraining order and/or writ of preliminary injunction with the Regional Trial Court of
Misamis Oriental, Branch 25 which was likewise dismissed. The decision of the lower
court was finally enforced with the private respondents being ejected from portions of
the subject lots they occupied..

Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the
survey plan designated as Plan Csd-106-00571 with a view to perfecting his title over
the accretion area being claimed by him. Before the approved survey plan could be
released to the applicant, however, it was protested by private respondents before the
Bureau of Lands.

In compliance with the order of respondent District Land Officer Alberto M. Gillera,
respondent Land Investigator Avelino G. Labis conducted an investigation and rendered
a report to the Regional Director recommending that Survey Plan No. MSI-10-06-
000571-D (equivalent to Lot No. 36302, Cad. 237) in the name of Antonio Nazareno, be
cancelled and that private respondents be directed to file appropriate public land
applications.

Based on said report, respondent Regional Director of the Bureau of Lands Roberto
Hilario rendered a decision ordering the amendment of the survey plan in the name of
Antonio Nazareno by segregating therefrom the areas occupied by the private

35
respondents who, if qualified, may file public land applications covering their respective
portions.

Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio,
Undersecretary of the Department of Natural Resources and Officer-in-Charge of the
Bureau of Lands who denied the motion. Respondent Director of Lands Abelardo Palad
then ordered him to vacate the portions adjudicated to private respondents and remove
whatever improvements they have introduced thereon. He also ordered that private
respondents be placed in possession thereof.

Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners
Desamparado Vda. de Nazareno and Leticia Tapia Nazareno, filed a case before the
RTC, Branch 22 for annulment of the following: order of investigation by respondent
Gillera, report and recommendation by respondent Labis, decision by respondent
Hilario, order by respondent Ignacio affirming the decision of respondent Hilario and
order of execution by respondent Palad. The RTC dismissed the complaint for failure to
exhaust administrative remedies which resulted in the finality of the administrative
decision of the Bureau of Lands.

On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the
complaint. Applying Section 4 of C.A. No. 141, as amended, it contended that the
approval of the survey plan belongs exclusively to the Director of Lands. Hence, factual
findings made by the Metropolitan Trial Court respecting the subject land cannot be held
to be controlling as the preparation and approval of said survey plans belong to the
Director of Lands and the same shall be conclusive when approved by the Secretary of
Agriculture and Natural resources. 1

Furthermore, the appellate court contended that the motion for reconsideration filed by
Antonio Nazareno cannot be considered as an appeal to the Office of the Secretary of
Agriculture and Natural Resources, as mandated by C.A. No. 141 inasmuch as the
same had been acted upon by respondent Undersecretary Ignacio in his capacity as
Officer-in-charge of the Bureau of Lands and not as Undersecretary acting for the
Secretary of Agriculture and Natural Resources. For the failure of Antonio Nazareno to
appeal to the Secretary of Agriculture and Natural Resources, the present case does
not fall within the exception to the doctrine of exhaustion of administrative remedies. It
also held that there was no showing of oppressiveness in the manner in which the
orders were issued and executed..

Hence, this petition.

Petitioners assign the following errors:

I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,

ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION
OF THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING
FACTS AND THE LAW ON THE MATTER;

36
 II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,
ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION
OF THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH
FAILED TO CONSIDER THAT THE EXECUTION ORDER OF PUBLIC
RESPONDENT ABELARDO G. PALAD, JR., DIRECTOR OF LANDS,
MANILA, PRACTICALLY CHANGED THE DECISION OF PUBLIC
RESPONDENT ROBERTO HILARIO, REGIONAL DIRECTOR, BUREAU
OF LANDS, REGION 10, THUS MAKING THE CASE PROPER SUBJECT
FOR ANNULMENT WELL WITHIN THE JURISDICTION OF THE LOWER
COURT.

The resolution of the above issues, however, hinges on the question of whether or not
the subject land is public land. Petitioners claim that the subject land is private land
being an accretion to his titled property, applying Article 457 of the Civil Code which
provides:

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.

In the case of Meneses v. CA, 2 this Court held that accretion, as a mode of acquiring
property under Art. 457 of the Civil Code, requires the concurrence of these requisites :
(1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the
result of the action of the waters of the river (or sea); and (3) that the land where
accretion takes place is adjacent to the banks of rivers (or the sea coast). These are
called the rules on alluvion which if present in a case, give to the owners of lands
adjoining the banks of rivers or streams any accretion gradually received from the
effects of the current of waters.

For petitioners to insist on the application of these rules on alluvion to their case, the
above-mentioned requisites must be present. However, they admit that the accretion
was formed by the dumping of boulders, soil and other filling materials on portions of the
Balacanas Creek and the Cagayan River bounding their land. 3 It cannot be claimed,
therefore, that the accumulation of such boulders, soil and other filling materials was
gradual and imperceptible, resulting from the action of the waters or the current of the
Balacanas Creek and the Cagayan River. In Hilario v. City of Manila, 4 this Court held
that the word "current" indicates the participation of the body of water in the ebb and
flow of waters due to high and low tide. Petitioners' submission not having met the first
and second requirements of the rules on alluvion, they cannot claim the rights of a
riparian owner.

In any case, this court agrees with private respondents that petitioners are estopped
from denying the public character of the subject land, as well as the jurisdiction of the
Bureau of Lands when the late Antonio Nazareno filed his Miscellaneous Sales
Application MSA (G-6) 571. 5 The mere filing of said Application constituted an
admission that the land being applied for was public land, having been the subject of
Survey Plan No. MSi-10-06-000571-D (Equivalent to Lot No. 36302, Cad-237) which

37
was conducted as a consequence of Antonio Nazareno's Miscellaneous Sales
Application wherein said land was described as an orchard. Said description by Antonio
Nazareno was, however, controverted by respondent Labis in his investigation report to
respondent Hilario based on the findings of his ocular inspection that said land actually
covers a dry portion of Balacanas Creek and a swampy portion of Cagayan River. The
investigation report also states that, except for the swampy portion which is fully planted
to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of
petitioners and several residential houses made of light materials, including those of
private respondents which were erected by themselves sometime in the early part of
1978. 6

Furthermore, the Bureau of Lands classified the subject land as an accretion area which
was formed by deposits of sawdust in the Balacanas Creek and the Cagayan river, in
accordance with the ocular inspection conducted by the Bureau of Lands. 7 This Court
has often enough held that findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific matters are generally
accorded not only respect but even finality. 8 Again, when said factual findings are
affirmed by the Court of Appeals, the same are conclusive on the parties and not
reviewable by this Court. 9

It is this Court's irresistible conclusion, therefore, that the accretion was man-made or
artificial. In Republic v. CA, 10this Court ruled that 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 Civil Code all deposits caused by human intervention. Putting it
differently, alluvion must be the exclusive work of nature. Thus, in Tiongco v. Director of
Lands, et al., 11 where the land was not formed solely by the natural effect of the water
current of the river bordering said land but is also the consequence of the direct and
deliberate intervention of man, it was deemed a man-made accretion and, as such, part
of the public domain.

In the case at bar, the subject land was the direct result of the dumping of sawdust by
the Sun Valley Lumber Co. consequent to its sawmill
12
operations. Even if this Court were to take into consideration petitioners' submission
that the accretion site was the result of the late Antonio Nazareno's labor consisting in
the dumping of boulders, soil and other filling materials into the Balacanas Creek and
Cagayan River bounding his land, 13 the same would still be part of the public domain.

Having determined that the subject land is public land, a fortiori, the Bureau of Lands,
as well as the Office of the Secretary of Agriculture and Natural Resources have
jurisdiction over the same in accordance with the Public Land Law. Accordingly, the
court a quo dismissed petitioners' complaint for non-exhaustion of administrative
remedies which ruling the Court of Appeals affirmed.

However, this Court agrees with petitioners that administrative remedies have been
exhausted. Petitioners could not have intended to appeal to respondent Ignacio as an
Officer-In-Charge of the Bureau of Lands. The decision being appealed from was the

38
decision of respondent Hilario who was the Regional Director of the Bureau of Lands.
Said decision was made "for and by authority of the Director of Lands". 14 It would be
incongruous to appeal the decision of the Regional Director of the Bureau of Lands
acting for the Director of the Bureau of Lands to an Officer-In-Charge of the Bureau of
Lands.

In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the
Department of Agriculture and Natural Resources." He was only an "Officer-In-Charge"
of the Bureau of Lands. When he acted on the late Antonio Nazareno's motion for
reconsideration by affirming or adopting respondent Hilario's decision, he was acting on
said motion as an Undersecretary on behalf of the Secretary of the Department. In the
case of Hamoy v. Secretary of Agriculture and Natural Resources, 15 this Court held that
the Undersecretary of Agriculture and Natural Resources may modify, adopt, or set
aside the orders or decisions of the Director of Lands with respect to questions involving
public lands under the administration and control of the Bureau of Lands and the
Department of Agriculture and Natural Resources. He cannot, therefore, be said to have
acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5 of Commonwealth
Act No. 141 16

As borne out by the administrative findings, the controverted land is public land, being
an artificial accretion of sawdust. As such, the Director of Lands has jurisdiction,
authority and control over the same, as mandated under Sections 3 and 4 of the Public
Land Law (C.A. No. 141) which states, thus:

Sec. 3. The Secretary of Agriculture and Natural Resources shall be the

exclusive officer charged with carrying out the provisions of this Act
through the Director of Lands who shall act under his immediate control.

Sec. 4. Subject to said control, the Director of Lands shall have direct
executive control of the survey, classification, lease, sale or any other form
of concession or disposition and management of the lands of the public
domain, and his decisions as to questions of fact shall be conclusive when
approved by the Secretary of Agriculture and Natural Resources.

In connection with the second issue, petitioners ascribe whim, arbitrariness or

capriciousness in the execution order of public respondent Abelardo G. Palad, the
Director of Lands. This Court finds otherwise since said decision was based on the
conclusive finding that the subject land was public land. Thus, this Court agrees with the
Court of Appeals that the Director of Lands acted within his rights when he issued the
assailed execution order, as mandated by the aforecited provisions.

Petitioners' allegation that respondent Palad's execution order directing them to vacate
the subject land practically changed respondent Hilario's decision is baseless. It is
incorrect for petitioners to assume that respondent Palad awarded portions of the
subject land to private respondents Salasalans and Rabayas as they had not yet been
issued patents or titles over the subject land. The execution order merely directed the

39
segregation of petitioners' titled lot from the subject land which was actually being
occupied by private respondents before they were ejected from it. Based on the finding
that private respondents were actually in possession or were actually occupying the
subject land instead of petitioners, respondent Palad, being the Director of Lands and in
the exercise of his administrative discretion, directed petitioners to vacate the subject
land on the ground that private respondents have a preferential right, being the
occupants thereof.

While private respondents may not have filed their application over the land occupied by
them, they nevertheless filed their protest or opposition to petitioners' Miscellaneous
Sales Application, the same being preparatory to the filing of an application as they
were in fact directed to do so. In any case, respondent Palad's execution order merely
implements respondent Hilario's order. It should be noted that petitioners' own
application still has to be given due course. 17

As Director of Lands, respondent Palad is authorized to exercise executive control over

any form of concession, disposition and management of the lands of the public domain.
18
He may issue decisions and orders as he may see fit under the circumstances as
long as they are based on the findings of fact.

In the case of Calibo v. Ballesteros, 19 this Court held that where, in the disposition of
public lands, the Director of Lands bases his decision on the evidence thus presented,
he clearly acts within his jurisdiction, and if he errs in appraising the evidence, the error
is one of judgment, but not an act of grave abuse of discretion annullable by certiorari.
Thus, except for the issue of non-exhaustion of administrative remedies, this Court finds
no reversible error nor grave abuse of discretion in the decision of the Court of Appeals.

WHEREFORE, the petition is DISMISSED for lack of merit.

LANZAR V. DIRECTOR OF LANDS

FACTS:
Petitioner Ramon Lanzar filed an application for registration of title to a parcel of land,
alleging that he is the owner in fee simple of the lad in question and asking that the title
thereto be registered in his name. The Director of Lands filed an opposition on the
ground that the land is a foreshore which forms a part of public domain. RTC decided in
favor of Lanzar holding that the property in question has been possessed by the
applicant publicly, continuously and adversely for more that 30 years. CA reversed,
holding that the land, being an accretion formed by the action of sea, is property of
public domain and not susceptible of appropriation.
ISSUE:
Whether or not the title to the land may be registered on the basis of adverse
possession for over 30 years?
HELD:

40
No. The shores and lands reclaimed from the sea, while they continue to be devoted to
public uses and no grant whatever has been made of any portion of them to private
persons, remain part of the public domain and are of public uses, and, until they are
converted to patrimonial property of the State, such lands, thrown up by the action of
the sea, and the shores adjacent thereto, are not susceptible of prescription, inasmuch
as, being dedicated to the public uses, they are not subject of commerce among men, in
accordance with the provisions of article 1936 of the civil code.

CHAVEZ V. PUBLIC ESTATE AUTHORITY

FACTS:
From the time of Marcos until Estrada, portions of Manila Bay were being reclaimed. A
law was passed creating the Public Estate Authority which was granted with the power
to transfer reclaimed lands. Now in this case, PEA entered into a Joint Venture
Agreement with AMARI, a private corporation. Under the Joint Venture Agreement
between AMARI and PEA, several hectares of reclaimed lands comprising the Freedom
Islands and several portions of submerged areas of Manila Bay were going to be
transferred to AMARI .
ISSUE:
Whether or not the stipulations in the Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution.
RULING: YES!
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as
alienable and disposable lands of the public domain Section 3 of the Constitution:
Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain
except by lease The 157.84 hectares of reclaimed lands comprising the Freedom
Islands, now covered by certificates of title in the name of PEA, are alienable lands of
the public domain. PEA may lease these lands to private corporations but may not sell
or transfer ownership of these lands to private corporations. PEA may only sell these
lands to Philippine
citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409 of the Civil Code, contracts whose “object or purpose is
contrary to law,” or whose “object is outside the commerce of men,” are “inexistent and
void from the beginning.” The Court must perform its duty to defend and uphold the
Constitution, and therefore declares the Amended JVA null and void ab initio.

Caltex v. Central Board of Assesment

Caltex (Philippines) Inc., vs. Central Board of Assessment Appeals and City
Assessor of Pasay
Facts:

41
This case is about the realty tax on machinery and equipment installed by Caltex
(Philippines) Inc. in its gas stations located on leased land. The machines and
equipment consists of underground tanks, elevated tank, elevated water tanks, water
tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck
hoists, air compressors and tireflators. The city assessor of Pasay City characterized
the said items of gas station equipment and machinery as taxable realty. The realty tax
on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax
appeals ruled that they are personalty. The assessor appealed to the Central Board of
Assessment Appeals. The Board, which was in its decision of June 3, 1977 that the said
machines and equipment are real property under the Real Property Tax Code,
Presidential Decree No. 464, which took effect on June 1, 1974. The decision was
reiterated by the Board in its resolution of January 12, 1978, denying Caltex's motion for
reconsideration, a copy of which was received by its lawyer on April 2, 1979.On May 2,
1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the
Board's decision and for a declaration that t he said machines and equipment are
personal property not subject to realty tax. We hold that the said equipment and
machinery, as appurtenances to the gas station building or shed owned by Caltex (as to
which it is subject to realty tax) and which fixtures are necessary to the operation of the
gas station, for without them the gas station would be useless, and which have been
attached or affixed permanently to the gas station site or embedded therein, are taxable
improvements and machinery within the meaning of the Assessment Law and the Real
Property Tax Code. Caltex invokes the rule that machinery which is movable in its
nature only becomes immobilized when placed in a plant by the owner of the property or
plant but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner (Davao Saw Mill
Co. vs. Castillo, 61 Phil 709).

Issue:
Whether the pieces of gas station equipment and machinery already enumerated are
subject to realty tax
Held:
Yes. This issue has to be resolved primarily under the provisions of the Assessment
Law and the Real Property Tax Code. Under, Sec. 38 of the said law: “Machinery shall
embrace machines, mechanical contrivances, instruments, appliances and apparatus
attached to the real estate. It includes the physical facilities available for production, as
well as the installations and appurtenant service facilities, together with all other
equipment designed for or essential to its manufacturing, industrial or agricultural
purposes.” The equipment and machinery, are considered as appurtenances to the gas
station building or shed owned by Caltex (as to which it is subject to realty tax) and
which fixtures are necessary to the operation of the gas station, for without them the gas
station would be useless, and which have been attached or affixed permanently to the
gas station site or embedded therein, are taxable improvements and machinery within
the meaning of the Assessment Law and the Real Property Tax Code. Improvements on
land are commonly taxed as realty even though for some purposes they might be
considered personalty. "It is a familiar phenomenon to see things classed as real
property for purposes of taxation which on general principle might be considered
personal property"

42
REPUBLIC V. CA
FACTS:
Respondent Morato filed a free patent application on a parcel of land, which was
approved and issued an original certificate of title. Both the free patent and title
specifically mandate that the land shall not be alienated nor encumbered within 5 years
from the date of the issuance of the patent. The District Land Officer, acting upon
reports that Morato had encumbered the land and upon finding that the subject land is
submerged in water during high tide and low tide, filed a complaint for cancellation of
the title and reversion of the parcel of land to the public domain. RTC dismissed the
complaint. CA affirmed.
ISSUE:
1. Whether or not respondent violated the free patent condition prohibiting encumbering
the land within the 5-year period?
2. Whether or not the land is of public domain?
HELD
1. Yes. Public Land Act Sec. 18 provides that…lands acquired under free patent or
homestead provisions shall not be subject to encumbrance or alienation from the date
of approval of the application and for a term of 5 years from and after the date of
issuance of the patent or grant…The contracts of lease and mortgage executed by
Morato constitute an encumbrance as contemplated by section 18 of the Public Land
Act because such contracts impair the use of the property.
2. Yes. Based from the facts, the land is clearly foreshore as it is subject to the ebb and
flow of the tide. When the sea moved towards the estate and the tide invaded it, the
invaded property became foreshore land and passed to the realm of the public domain.
In Government v. Cabangis, the Court annulled the registration of land subject of
cadastral proceedings when the parcel subsequently became foreshore land. In another
case, the Court voided the registration decree of a trial court and held that said court
had no jurisdiction to award foreshore land to any private person or entity. The subject
land in this case, being foreshore land should therefor be returned to the public domain.

Lao Chit v Security Bank

.FACTS:
Consolidated Investments (lessor), leaser to Domingo Dikit part of the lobby of the
Consolidated Building at Plaza Goiti, Manila to be used as offices for a proposed Bank
of Manila to be organized by Dikit and Jose Silva.
The lessee undertook to construct walls, partitions, and other improvements; such
improvements “shall become the property” of the lessor “upon the termination and/or
rescission” of the lease contract.
Dikit and Silva entered into a contract with plaintiff Lao Chit for the latter to furnish the
materials and the work for the improvements at a total cost of P59,365 payable “as

43
soon as the Bank of Manila opens for business, and is given permit by the Central
Bank.” The permit was never issued.
The rentals for the lease of the space were also not paid. The lessor then instituted an
unlawful detainer action.
Municipal Court of Manila: rendered judgment sentencing Dikit.
Dikit appealed to the CFI and eventually the Supreme Court.
The cases were soon dismissed upon agreement of the parties that Dikit will relinquish
whatever rights he might have to the possession of the leased premises and
disclaimed all rights to and over any and all improvements introduced therein.
Lao filed a separate civil action against Dikit and Silva for recovery of whatever was
due from them.
CFI of Manila: ruled in favor of Lao and sentenced Dikit and Silva as solidarily liable
for the sum of P59,365.
A writ of execution was issued but remained unsatisfied. Dikit nor Silva had any
properties registered in their respective names and Silva was nowhere to be found.
Lao Chit then brought the present action against Security Bank and (Bank) to which
lessor had leased the property, together with the improvements. He demanded a
payment of P1,000/month by way of rentals.
In its answer, the Bank alleged that it used the improvements pursuant to its contract of
lease with the lessor.
Soon after, Lao demanded the amount of the improvements plus P1000/month from
the lessor, which did not heed said demand.
According to the lessor, it had no contractual or juridical relation with Lao and that the
improvements belonged to it and not to Lao.
CFI of Manila: sentenced Consolidated Investments and Security Bank solidarily to
pay P59,365 and rentals at the rate of P1,000/mo.
Defendants filed a motion for reconsideration and new trial, but were denied. Hence,
this appeal.

ISSUES + RULING:
WoN the lower court erred in rendering judgment against the Bank. YES.
It is clear that the Bank entered into the premises in question pursuant to a lease
contract with the lessor.

44
The Bank paid the rentals and fulfilled its obligations under the contract.
It cannot be denied that the improvements introduced became property of the lessor
pursuant to the provision in the contract between it and Dikit and Silva that the former
shall own said improvements upon expiration and/or rescission of the contract.
Although Lao Chit was not a party to said contract, this stipulation is binding upon him,
he having introduced said improvements pursuant to his contract with Dikit, from whom
he derived, therefore, his right to enter the building and make the improvements.
In short, insofar as the construction thereof, Lao Chit was, vis-a-vis the lessor, a
mere agent or representative of Dikit and, as such, was privy to the undertakings
of Dikit under his contract of lease with the lessor.

WoN the lessor is liable to Lao Chit for the improvements. NO.
The lower court held the lessor liable to Lao upon the ground that he was a builder in
good faith, and under the theory of unjust enrichment.
Art. 361 (now 448) of the [Old] Civil Code provides:
The owner of land on which anything has been built, sown, or planted, in good
faith, shall be entitled to appropriate the thing so built, sown, or planted, upon
paying the compensation mentioned in Articles 453 and 454, or to compel the
person who has built or planted to pay him the value of the land, and the
person who sowed thereon to pay the proper rent therefor.
However, this provision refers to one who builds upon a land which he believes to be his
property. Neither Lao nor Dikit claimed the building as their own.
Moreover, the provision is limited in its application to “buddings” constructed on
another’s land, and not to partitions, railing, counters, shelves, and the like.
Moreover, there was no bad faith on the part of the lessor since it was bound to permit
Dikit and Lao as his agent to construct improvements.
The lower court also relied on Art. 356 (now 443) in ruling that there should be no unjust
enrichment:
He who receives fruits is obliged to pay any expenses which may have been incurred by
another in the production, gathering, and preservation thereof.
The Supreme Court ruled, however, that the provision is not on point since it refers to
"expenses" of production, gathering and preservation" of fruits received by the owner of
a property, not to improvements, whereas the claim of Lao Chit is based upon
"improvements" introduced, not "expenses" incurred by him for the "production,
gathering and preservation" of fruits.

45
The provision on quasi-contracts (Art. 2142) of the Civil Code cannot likewise be
applied. It provides:
Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-
contract to the end that no one shall be unjustly enriched or benefited at the expense of
another.
The construction of the improvements in question was not a "purely voluntary act" or
"unilateral act" of Lao Chit.
He introduced them in compliance with a bilateral "obligation" he undertook under his
contract with Dikit.
For the principle of undue enrichment to apply, there must be "enrichment" and the
same must be "undue" or "unjust".
In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000 from October,
1949. Up to July 1, 1951, when the premises in question were leased to the Bank, the
rentals due from Dikit aggregated, therefore, P105,000.
Thus, despite the fact that the lessor had become the owner of the improvements in
question, worth P59,365.00, it still suffered a loss of over P45,000.00. Such "loss"
negates the idea of "enrichment".
Had he been reasonably vigilant, Lao Chit could have demanded from Dikit a mortgage,
or a bond, or some other security, for the protection of his rights, yet he did not do so.
Should the lessor be required to pay Lao Chit what he is entitled to recover from Dikit,
but which he (Lao Chit) cannot—due to his oversight, carelessness or negligence—
collect from Dikit, the effect would be to relieve Lao Chit of the consequences of his own
inadvertence or negligence, and hold the lessor responsible therefor.

DEPRA vs. DUMLAO

FACTS:
Dumlao is the owner of a parcel of land in Iloilo, while Depra owns the lot adjoining his.
Dumlao built his house on his own land, but the kitchen encroached about 34 sq.m on
Depra’s property. Upon finding this, Depra’s mom ordered Dumlao to move back from
his encroachment, then subsequently filed an action for unlawful detainer against
Dumlao.

The lower court found that Dumlao was a builder in good faith, and ordered him to pay
rent (PhP5.00/month) – forced lease between the parties. Depra refused to accept the
rentals so Dumlao deposited this with the MTC. Neither party appealed judgment so this
became final and executory.

46
1 year later, though, Depra filed an complaint for Quieting of Title. Dumlao contested
this, stating that the suit is barred by res judicata. But Depra averred that the lower court
did not have jurisdiction to rule on encumbrances of real property – only the CFI has
jurisdiction. A case to quiet title was also instituted wherein Depra was held to be the
owner of the land.

ISSUE:
1. Whether or not res judicata would apply to the case at bar?
2. Whether or not the land owner can be compelled to accept rent payments by the
court (with both LO and BPS being in good faith)?

HELD:
In the first issue, res judicata would not apply should the first case be one for ejectment
and the other for quieting of title. Article 448 of the Civil Code provides that the land
owner has 2 options – to buy the building or to sell/rent his land. This is so because the
rights of the owner of the land is older, and by the principle of accession, he also has a
right to the accessories.

The Court remanded the case to the RTC to determine the fair price of the land, the
expenses incurred by the BPS (Dumlao), the increase in value of the land, and whether
the value of the land is considerably more than the value of the kitchen built on it. The
RTC shall then give Depra 15 days to exercise such option.

Sarmiento vs. Agana 129 scra 122

Facts:
ERNESTO was still courting his wife, the latter's mother had told him the couple could
build a RESIDENTIAL HOUSE whom Ernesto did construct a RESIDENTIAL HOUSE
on the LAND at a cost of P8,000.00 to P10,000.00 who probably assumed that the
wife's mother was the owner of the LAND and that, it would be transferred to the
spouses. Subsequently turned out that the LAND had been titled in the name of Mr. &
Mrs. Jose C. Santo, Jr. who, sold the same to petitioner SARMIENTO. SARMIENTO
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.Sarmiento refuse
to pay and give option to buy the property.
Issue: 1.Whether or not Ernesto was in good faith.
2.Whether or not Sarmiento could exercise both refusal to pay the spouses and
give option to purchase.

47
Held:
Yes. 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:
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.
2.No. 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.
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]).

TECHNOGAS PHIL. v. CA

FACTS

Petitioner bought a lot together with the building and improvements including the wall which
encroached that of the defendant. Upon learning of such encroachment, petitioner offered to buy the
land but defendant refused.

After 2 years, through an agreement, petitioner agreed to demolish the wall (but the case did not state
what happened to this agreement, my assumption is that it did not happen due to conflicts that arose
after)

48
Defendant dug a canal along the wall which caused a portion of it to collapse. Petitioner filed a
supplemental complaint re the action and a separate criminal action of malicious mischief (which the
wife was convicted of)

RTC decided for the petitioners and the CA reversed. Note that respondent wants to have the wall
demolished.

ISSUES:

A. Whether or not petitioner is a builder in bad faith because it is 'presumed to know the metes and
bounds of his property.'

B. Whether or not amicable settlement was a proper remedy

C. Whether or not respondent can opt to demolish the structure without exercising the option to sell the
land to the petitioner and the latter cannot do buy the same

RULING: Petition was granted.

Good faith or Bad Faith – No such doctrinal statement that supports that the knowledge of metes and
bounds of a land due to the Torrens system would amount to bad faith if there was encroachment on the
land of another.

A. When the petitioner purchased the lot, the wall was already built. Even the respondent did not knew
about the encroachment until he has hired a surveyor.

B. Where one derives title to the property from another, the act, declaration, or omission of the latter,
while holding the title, in relation to the property, is evidence against the former. And possession in good
faith does not lose this character except when the possessor is aware of this impropriety.

C. The encroachment was very narrow which can be considered as a mere error. Remedy – the
petitioner, despite being a purchaser of the original builder, can compel the landowner to either buy the
property or sell the piece of land because:

He was really unaware of the encroachment basing on the fact presented by both sides.

When the petitioner bought the land, he has stepped into the rights of the original owner (hence, the
right to compel the LO to buy or sell is also transferred)

Estoppel – Petitioner is not considered in estoppel only because it has previously agreed to demolish a
part of the wall. Rather, it was to be negotiated by the parties concern. In the meantime, petitioner has
to pay the rent for the property occupied by its building only up to the date when respondent serves
notice of their option. Case remanded back to the trial court for determination of the value of the land
and the number of days to allot for the respondent to choose an option.

DEL CAMPO V. ABESIA

When land is co-owned by two parties, but the co-ownership is terminated, Article 448 governs
in case real property (like a house) encroaches the land of another. This is provided that good
faith exists.

49
FACTS: The case involves two friendly parties who are co-owners of a corner lot at Flores and
Cavan Streets in Cebu City. Plaintiff owns 2/3 of the lot and Defendant owns 1/3 of the same.
The total size of the lot is 45 square meters (which is about the size of a typical Starbux café)
Later on, the two parties decided to divide the co-owned property into two lots. 30 square
meters went to the plaintiffs and 15 square meters went to the defendants. From the sketch
plan, both parties discovered that the house of the defendants occupied a portion of the
plaintiff’s adjacent lot, eating 5 sqm of it. The parties then requested the trial court to
adjudicate who should take possession of the encroached 5 sqm.
The trial court ruled that Art 448 does not apply. 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. Since art 448 does not apply, the Plaintiff cannot be obliged to
pay for the portion of defendant’s house that entered into the 30 sqm lot, AND Defendant
cannot be obliged to pay for the price of the 5 sqm their house occupied. Why? The RTC
believed the rules of co-ownership should govern, and not that of accession.
RTC then assigned the full 30sqm to Plaintiff and ordered Defendants to demolish the 5sqm part
of their house encroaching the 30sqm lot of the Plaintiffs. Defendants where aghast at having to
axe the family home, hence they appealed.
CA affirmed the decision. So we have the SC coming to the rescue.
ISSUE:
w/n the rules of accession applies (and not coownership) on property that used to be co-
owned, but was subdivided.
HELD:
The rule of accession applies because co-ownership was terminated upon the partitioning of the
lot. Art 448 therefore governs. The house of Defendant overlapped that of Plaintiff, but this was
built on good faith. Hence, the plaintiffs have the right to choose one of two options
> Appropriate the 5sqm portion of the house of Defendants after indemnifying the Defendants;
or
> Obliging the Defendants to pay a portion of the land on which their home rested. ( or they can
rent it)

FLORENCIO IGNAO, petitioner, vs. IAC

FACTS:

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.

50
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 directed the partition of the aforesaid land,
allotting 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.

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. 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. 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.

TRIAL COURT: 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.

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:

IAC: Petitioner Florencio Ignao appealed to the Intermediate Appellate Court. The Appellate Court,
promulgated a decision, affirming the decision of the trial court.

ISSUE:

W/O the respondent Court is correct in considering the 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.

HELD:

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 1/8share 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 (66.75sq)
each of the land or a total of 133.5square 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 allotted 2/8 of the land to private respondents Juan and Isidro, or a
total of 133.5 square meters.

51
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 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.

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.

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, 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.

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.

SPOUSES DEL CAMPO V. ABESIA 160

Facts:

This case involves a parcel of land, situated at the corner of F. Flores and Cavan
Streets, Cebu City. 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.

52
Issue: Whether or Not Article 448 of the Civil Code is applicable to a
builder in good faith when the property involved is owned in common.

Held: When 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.

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.

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.

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.:

53
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.

54
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,

55
 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."

56
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

57
 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

58
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.

Alviola v. CA

59
FACTS:

Victoria Tinagan bought two parcels of land in 1950. She and her son Agustin took possession of the
said land thereafter.

Sometime in 1960, petitioners occupied portions of the land whereat they built a copra dryer and put
up a store wherein they engaged in the business of buying and selling copra.

On 1975, Victoria and Agustin died, the latter survived by his wife and children who are the private
respondents in the instant case.

The private respondents filed a complaint for recovery of possession against the petitioners asking the
Regional Trial Court of Negros Oriental that they be declared the absolute owners of the said parcels of
land and that petitioners be ordered vacate the same, to remove their copra dryer and store, to pay
actual damages (in the form of rentals), moral and punitive damages, litigation expenses and
attorney's fees.

The trial court ruled in favour of the private respondents, hence this petition.

The petitioners put up the defense that the contested parcels of land are public lands, making them
qualify to become beneficiaries of the comprehensive agrarian reform program and rightful possessors
of the land in virtue of their occupation of the same for 20 years.

The petitioners also contend that the copra dryer and the store are permanent structures as they are
made of hollow blocks and cement.

Private respondents on the other hand offer overwhelming evidence of their ownership and possession
of the land and contended that they merely tolerated the petitioner’s occupation of the disputed
property.

ISSUE:

WON the petitioners have ownership over the portions of land where the copra dryer and store are
located.

HELD:

No. The petitioners’ defense that the said parcels of land are public lands is rebutted by the Private
respondents' tax declarations and receipts of payment of real estate taxes, as well as other related
documents which prove their ownership of the disputed properties.

The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan, took possession of
the said properties in 1950, introduced improvements thereon, and for more than 40 years, have been
in open, continuous, exclusive and notorious occupation thereof in the concept of owners.

The Court brushed as an afterthought the petitioners’ later defense that the portions where the copra
dryer and store are located were ceded to them by Victoria in exchange for a prior debt since it was
not supported by any document pointing to Victoria transferring the ownership of the said portion and
the lack of declaration on the part of the petitioners.

The Court also ruled that though the petitioners were in occupation of the portions of land in question
for 20 years, they were able to do so out of the tolerance of the private respondents and thus, their
posture that they have acquired the property by "occupation" for 20 years does not have any factual
or legal foundation.

60
As correctly ruled by the respondent court, there was bad faith on the part of the petitioners when they
constructed the copra dryer and store on the disputed portions since they were fully aware that the
parcels of land belonged to Victoria Tinagan.

But there was likewise bad faith on the part of the private respondents, having knowledge of
the arrangement between petitioners and Victoria Tinagan relative to the construction of the copra
dryer and store.

Thus, for purposes of indemnity, Article 448 of the New Civil Code should be applied. 32 However, the
copra dryer and the store, as determined by the trial court and respondent court, are
transferable in nature. Thus, it would not fall within the coverage of Article 448. As the
noted civil law authority, Senator Arturo Tolentino, aptly explains: "To fall within the provision of this
Article, the construction must be of permanent character, attached to the soil with an idea of
perpetuity; but if it is of a transitory character or is transferable, there is no accession, and the builder
must remove the construction. The proper remedy of the landowner is an action to eject the builder
from the land." 33

The private respondents' action for recovery of possession was the suitable solution to eject petitioners
from the premises.

Petition dismissed.

BALUCANAG VS. FRANCISCO

122 SCRA 344

FACTS: The petitioner bought a lot owned by Mrs. Charvet which was then previously leased by the
latter to one Richard Stohner. The said lease contract provided that the lessee may erect structures
and improvements which shall remain as lessee's property and he may remove them at any time. It
further provided that should the lessee fail to remove the same structures or improvements withing
two months after the expiration of the lease, the lessor may remove them or cause them to be
removed at the expense of the lessee. Stohner made fillings on the land and constructed a house.
When he failed to pay the rent, the petitioner, through counsel, sent Stohner a demand letter ordering
him to vacate the lot. The lessee contended that he is a 'builder in good faith.'

ISSUE:Is the lessee a builder in good faith?

HELD: No, the lessee cannot be considered a builder in good faith. The provision under Art. 448 of the
New Civil Code (Philippine) on a builder of good faith applies only to the owner of the land who
believes he is the rightful owner thereof, but not to a lessee who's interest in the land is derived only
from a rental contract. Neither can Stohner be considered a 'possessor in good faith'. A possessor in
good faith is a party who possesses property believing that he is its rightful owner but discovers later
on a flaw in his title that could indicate that he might not be its legal owner. It cannot apply to a lessee
because he knows right from the start that he is merely a lessee and not the owner of the premises.
As a mere lessee, he introduces improvements to the property at his own risk such that he
cannot recover from the owner the reimbursements nor he has any right to retain the premises until
reimbursements. What applies in this case is Art. 1678 (NCC) which provides that, " if the lessee,
makes, in good faith, useful improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property leased, the lessor upon the
termination of the lease shall pay the lessee 1/2 of the value of the improvements at the time. Should
the lessor refuse to reimburse said amount, the lessee may remove the improvements even though

61
the principal thing may suffer damage thereby. He shall not. however, cause any more impairment
upon the property leased than is necessary."

Kilario v. CA
G.R. No. 134329. January 19, 2000

Respondent Silverio Pada filed an ejectment case against sps. Kilario. The latter occupies a portion of
the intestate estate of Jacinto Pada, Grandfather of Silverio. The Kilario’s have been living therein since
1960 by sheer tolerance. When Jacinto Pada dies, his heirs entered into extrajudicial partition of his
estate in 1951. As a result
thereof, lot 5581 was allocated to Ananias and Marciano who became co-owners of said lot.

Ananias died and his daughter succeeded in his right as co-owner. Eventually, Juanita sold her right in
the co-ownership to Engr. Paderes. Mariaon the other hand, heir of Marciano, sold her share to her
cousin respondent Silverio Pada. The latter
demanded sps. Kilario to vacate but the sps. refused.On June 1995, a complaint for ejectment was filed
against sps. Kilario. On July1995 a deed of donation in their favor was executed by heirs of Amador
Pada.

ISSUE: Whether or not the partition was valid

The extrajudicial partition of the estate of Jacinto Pada among his heirs made in 1951 is valid, albeit
executed in an unregistered private document. No law requires partition among heirs to be in writing
and be registered in order to be valid. The object of registration is to serve as constructive notice to
others. It follows then that the intrinsic validity of partition not executed with the prescribed formalities
is not undermined when no creditors are involved. Without creditors to take into consideration, it is
competent for the heirs of an estate to enter into an agreement for distribution thereof in a manner
and upon a plan different from those provided by the rules from which, in the first place, nothing can
be inferred that a writing or other formality is essential for the partition to be valid. The partition of
inherited property need not be embodied in a public document so as to be effective as regards the
heirs that participated therein. The extrajudicial partition which the heirs of Jacinto Pada executed
voluntarily and spontaneously in 1951 has produced a legal status. When they discussed and agreed
on the division of the estate of Jacinto Pada, it is presumed that they did so in furtherance of their
mutual interests. As such, their division is conclusive, unless and until it is shown that there were debts
existing against the estate which had not been paid. No showing, however, has been made of any
unpaid charges against the estate of Jacinto Pada. Thus, there is no reason why the heirs should not be
bound by their voluntary acts.

The belated act of Concordia, Esperanza and Angelito, who are the heirs of
Amador Pada, of donating the subject property to petitioners after forty four (44) years
of never having disputed the validity of the 1951 extrajudicial partition that allocated the subject
property to Marciano and Ananias, produced no legal effect. The donation made by his heirs to
petitioners of the subject property, thus, is void for they were not the owners thereof. At any rate it is
too late in the day for the heirs of Amador Pada to repudiate the legal effects of the 1951 extrajudicial
partition as prescription and laches have equally set in.Petitioners are estopped from impugning the
extrajudicial partition executed by the heirs of Jacinto Pada after explicitly admitting in their Answer
that they had been occupying the subject property since 1960 without ever paying any rental as they
only relied on the liberality and tolerance of the Pada family. Their admissions are evidence of a high
order and bind them insofar as the character of their possession of the subject property is concerned.

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LUMUNGO V. USMAN

25 SCRA 255

FACTS:

Dominga Usman sold and transfers her rights in and to the 3 lots in question to Jose Angeles.
The latter made the purchase with the knowledge that the property was already in dispute by Atty.
Usman, husband of Dominga, and by the plaintiffs. Angeles, upon taking possession of the land,
planted the same with coconuts, which, together with those already planted by Dominga Usman,
numbered about 3,000, most of which are now fruit-bearing. In short, Angeles was a purchaser and a
builder in bad faith.

ISSUE:

Whether or not Angeles is entitled to reimbursement for the coconuts tree he planted on the property
in litigation.

HELD:

No. It should be noted that said trees are improvements, not "necessary expenses of
preservation," which a builder, planter or sower in bad faith may recover under Arts. 452 and 546, first
paragraph, of the Civil Code. The facts and findings of both the trial court and the Court of Appeals
leave no room for doubt that Jose Angeles was a purchaser and a builder in bad faith. The provision
applicable to this case is, accordingly, Article 449 of the Civil Code, which 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."

ART. 453

MUNICIPALITY OF OAS V. ROA

FACTS:

The Municipality brought the action for the recovery of a tract of land in the pueblo of Oas,
claiming that it was a part of the public square of said town, while Roa alleged that he was the owner
of the property. The defendant admitted in writing that he knew that the land is owned by the
Municipality and that Jose Castillo, whom he bought the property did not own the land. When Roa
constructed a substantial building on the property in question after he “acquired” the property from
Castillo, the Municipality did not oppose the construction.

ISSUE:

Whether or not the municipality owns the land.

HELD:

Yes. The defendant was not a purchaser in good faith. The plaintiff, having permitted the erection by
the defendant of a building on the land without objection, acted in bad faith. The rights of the parties
must, therefore, be determined as if they both had acted in good faith. To the case are applicable those
provisions of the Civil Code which relate to the construction by one person of a building upon land
belonging to another. Article 364 (now Art.453) of the Civil Code is as follows: "When there has been

63
bad faith, not only on the part of the person who built, sowed, or planted on another's land, but also on
the part of the owner of the latter, the rights of both shall be the same as if they had acted in good
faith.” The Supreme declared that the Municipality is the owner of the land and that it has the option of
buying the building thereon, which is the property of the defendant, or of selling to him the land on
which it stands.

MWSS V. CA, CITY OF DAGUPAN,

FACTS:

The City of Dagupan (CITY) filed a complaint against the former National Waterworks and Sewerage
Authority (NAWASA), now the Metropolitan Waterworks and Sewerage System (MWSS), for recovery of
the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as one of its
special defenses 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.

ISSUE:

Whether or not MWSS 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?

HELD: No. 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. 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).

FILIPINAS COLLEGES INC. vs. MARIA GARCIA TIMBANG, ET AL.

[G.R. No. L-1281, September 29, 1959]

FACTS:

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

64
of P5,750.00 mentioned in (a) above. 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. The Timbang spouses presented their opposition to each and all of this motion. 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. They contend that since 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
has lost his right and the appellants as owners of the land automatically became the owners ipso facto.

ISSUE/S:

Whether or not the contention of the appellants is valid. If not, what are the remedies left to the owner
of the land if the builder fails to pay?

Whether or not the appellants, as owner of the land, may seek recovery of the value of their land by a
writ of execution; levy the house of the builder and sell it in public auction.

RULING: NO, THE APPELLANTS CONTENTION IS SUPERFLUOUS. There is nothing in the language
of these two articles, 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. 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 remedy left to the parties in such eventuality where the builder fails to pay the value of
the land, though the Code is silent on this Court, 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.
This was ruled in the case of Miranda vs. Fadullon, et al., 97 Phil., 801. 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 second
contention was without merit. 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. 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. 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.

Heirs of Navarro v. IAC

Facts:

On October 3, 1946, Sinforoso Pascual filed an application for foreshore lease covering a tract of
foreshore land in Sibocon, Balanga, Bataan, having an area of approximately seventeen (17) hectares.
This application was denied on January 15, 1953. So was his motion for reconsideration. Subsequently,
petitioners' predecessor-in-interest, also now deceased, Emiliano Navarro, filed a fishpond application

65
with the Bureau of Fisheries covering twenty five (25) hectares of foreshore land also in Sibocon,
Balanga, Bataan. Initially the application was denied, eventually however the grant was given. Pascual
claimed that this land is an accretion to his property, The Talisay River as well as the Bulacan River
flow downstream and meet at the Manila Bay thereby depositing sand and silt on Pascual's property
resulting in an accretion thereon. Sinforoso Pascual claimed the accretion as the riparian owner. On
March 25, 1960, the Director of Lands, represented by the Assistant Solicitor General, filed an
opposition thereto stating that neither Pascual nor his predecessors-in-interest possessed sufficient
title to the subject property, the same being a portion of the public domain and, therefore, it belongs to
the Republic of the Philippines. On November 10, 1975, the courta quorendered judgment finding the
subject property to be foreshore land and, being a part of the public domain, it cannot be the subject
of land registration proceedings. On appeal, the respondent court reversed the findings of the courta
quoand granted the petition for registration of the subject property but excluding certain areas. A
motion for reconsideration was filed by in the CA but the same was denied. Anchoring their claim of
ownership on Article 457 of the Civil Code, petitioners vigorously argue that the disputed 14-hectare
land is an accretion caused by the joint action of the Talisay and Bulacan Rivers which run their course
on the eastern and western boundaries, respectively, of petitioners' own tract of land.

Issue:

Whether or not the petitioners can rightfully claim the land under the principle of accretion

Held:

The petitioner’s claim is misplaced. The principle of accretion is only applicable to owners whose
estates are adjacent to rivers as stated in Article 457 of the Civil Code. The disputed land is an
accretion not on a river bank but on a sea bank, or on what used to be the foreshore of Manila Bay
which adjoined petitioners' own tract of land on the northern side. As such, the applicable law is not
Article 457 of to Civil Code but Article 4 of the Spanish Law of Waters of 1866. The disputed property is
an accretion on a sea bank, Manila Bay being an inlet or an arm of the sea; as such, the disputed
property is, under Article 4 of the Spanish Law of Waters of 1866, part of the public domain. As part of
the public domain, the herein disputed land is intended for public uses, and "so long as the land in
litigation belongs to the national domain and is reserved for public uses, it is not capable of being
appropriated by any private person, except through express authorization granted in due form by a
competent authority."Only the executive and possibly the legislative departments have the right and
the power to make the declaration that the lands so gained by action of the sea is no longer necessary
for purposes of public utility or for the cause of establishment of special industries or for coast guard
services.Petitioners utterly fail to show that either the executive or legislative department has already
declared the disputed land as qualified, under Article 4 of the Spanish Law of Waters of 1866, to be the
property of petitioners as owners of the estates adjacent thereto.

MENESES vs. CA et al
FACTS: On March 1, 1977, Darum, then the District Land Officer of Los Baños, Laguna, issued to
Pablito Meneses 2 Free Patent and 2 OCT covering lots located in Los Baños, Laguna.

Pablito acquired said property from Bautista through a Deed of Waiver and Transfer of Rights executed
in 1975 in consideration of Bautista’s “love and affection” for and “some monetary obligations” in
favor of Meneses. After the execution of said document, Meneses took possession of the land,
introduced improvements thereon, declared the land as his own for tax purposes and paid the
corresponding realty taxes. In turn, Bautista acquired the land from his aunt. He had been occupying
the land since 1956.

On the other hand, the Quisumbing family traces ownership of their land as far back as 1919 when
their matriarch was issued an OCT covering a lot, with the Laguna de Bay as its northwestern

66
boundary. The same parcel of land was registered on 1973 under a TCT in the names of her heirs, all
surnamed Quisumbing.

The Quisumbings applied for registration and confirmation of title over an additional area which had
gradually accrued to their property by the natural action of the waters of Laguna de Bay. The CFI of
Biñan confirmed the Quisumbings’ title thereto.

In 1979, the Quisumbings filed a case before the CFI of Calamba against Lorenzo and Pablito Meneses,
Darum and Almendral for nullification of the free patents and titles issued to Pablito Meneses. They
alleged that Lorenzo Menesis, then the Mayor of Los Baños, using his brother Pablito as a “tool and
dummy,” illegally occupied their “private accretion land” and confederating with District Land Officer
Darum and Land Inspector Almendral, obtained free patents and OCTs to the land.

In 1984, the trial court rendered the decision finding that the lands registered by the Meneses brothers
are accretion lands to which the Quisumbings have a valid right as owners of the riparian land to which
nature had gradually deposited the disputed lots. (The lots occupied by Meneses, as found by the
court, are to be accretion lands forming parts of the bigger accretion land owned by the Quisumbings. )

Meanwhile, the Meneses brothers and Darum appealed the to the CA, which affirmed in toto the lower
court’s decision.The defendants-appellants filed two MRs of the CA decision but it was denied, hence
this petition for review on certiorari.

ISSUE: WON

1. The lands in question were not accretion lands but lands of the public domain

2. Conspiracy to commit fraud, deceit and bad faith attended the issuance of the free patent and titles
to Pablito Meneses; and

HELD: WHEREFORE, the petition is DENIED. The Decision CA is AFFIRMED

While the lots occupied by Villamor and Lanuzo may not be the very same lots petitioners are claiming
here, the two cases refer to the same accretion lands northwest of the original land owned by the
Quisumbings.

The submersion in water of a portion of the land in question is due to the rains “falling directly on or
flowing into Laguna de Bay from different sources.” Since the inundation of a portion of the land is not
due to “flux and reflux of tides” it cannot be considered a foreshore land. The land sought to be
registered not being part of the bed or basin of Laguna de Bay, nor a foreshore land as claimed by the
Director of Lands, it is not a public land and therefore capable of registration as private property
provided that the applicant proves that he has a registerable title.

Additionally, the provision of the law on waters will govern in determining the natural bed or basin of
the lake. And accordingly, to Art. 84 of the Law of Waters of August 3, 1866:

Accretions deposited gradually upon land contiguous to creeks, streams, rivers and lakes by accessions
or sediments from the waters thereof, belong to the owners of such lands.

As pointed out by the lower court, no act of appropriation is necessary in order to acquire ownership of
the alluvial formation as the law does not require the same.

2. As found by the CA, petitioners conspired in the approval and grant of the free patents heirs
Quisumbing. Such fraud was confirmed by this Court in Meneses v. People, which held the petitioners
therein liable for violation of the Anti-Graft and Corrupt Practices Act in the issuance of the same free
patents and titles. In due course, the Sandiganbayan rendered a decision finding the defendants guilty
as charged. The judgment of conviction was affirmed.

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NOTES:

1. Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the
concurrence of these requisites:

(1) that the deposition of soil or sediment be gradual and imperceptible;

(2) that it be the result of the action of the waters of the river (or sea); and

(3) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast).

2. The task of fixing the amount of damages is primarily with the trial court. While it is the appellate
court’s duty to review the same, a reduction of the award of damages must pass the test of
reasonableness. The CA can only modify or change the amount awarded as damages when they are
palpably or scandalously and reasonably excessive.

3. A public official is by law not immune from damages in his personal capacity for acts done in bad
faith which, being outside the scope of his authority, are no longer protected by the mantle of
immunity for official actions.

Grande v. Court of Appeals

SUMMARY: Owners of a parcel of land filed a suit for quieting of title and recovery of
possession over a portion of property that was added to the original parcel of land via
accretion. The defendants claim ownership by acquisitive prescription, being in open,
continuous and undisturbed possession of the property for over 30 years prior to the filing
of this case.

DOCTRINE: Alluvial deposits become part of the property to which it becomes attached,
and ownership of the alluvial portion belongs to the owner of the attached property.
However, this land is not automatically covered by the Torrens title of the land owned prior
to the accretion, and is considered unregistered land, making it susceptible to acquisitive
prescription.

FACTS: Petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia Grande filed a suit for quieting of title
and recovery of possession over a parcel of land that came about through alluvial deposits from the
Cagayan River. Their original lot, defined in OCT No. 2982 (issued in 1934) provides their northeastern
boundary as the Cagayan River, from a survey conducted in 1930. It is to this boundary that the
accretion occurred. The Grandes allege that they have been in possession of this property until 1948,
when defendants Domingo and Esteban Calalung entered the land on a claim of ownership. On the
issue of filing the case only in 1958, the Grandes claim they could not acquire a copy of their title as
they could not afford a surveyor.

The Calalungs, on the other hand, claim to have been in open, continuous, and undisturbed possession
of the contested property since 1933, and argue that they are now the owners of the property through
acquisitive prescription, since the case was filed more than 30 years after they first took possession of
the property. The Calalungs had declared the property for taxation purposes in 1944, and again in
1948 when the municipality changed its name. The Calalungs allege that the only reason the Grandes
filed a case was because a survey commissioned by the Calalungs inadvertently included a part of the
property covered by OCT No. 2982 - property which they readily ceded back to the Grandes in 1958.
Two owners of adjoining lots, Laman and Bacani, both testified in support of the Calalungs.

68
The RTC ruled in favor of the Grandes, but the Court of Appeals reversed the decision below and
upheld the Calalungs’ argument on acquisitive prescription.

ISSUES/HELD: WON the contested property can be acquired by prescription

RATIO: The Supreme Court ruled in favor of the Calalungs and upheld the decision of the Court of
Appeals.

The Supreme Court acknowledged that by Article 457 of the New Civil Code and Article 366 of the Old
Civil Code, the Grandes are the owners of the alluvial property. However, this does not operate to
automatically include the alluvial property under OCT No. 2892. While ownership is governed by the
Civil Code, imprescriptibility of registered land is provided in the registration law. As the Grandes
never sought to have the alluvial property titled, it is considered unregistered land.

The Supreme Court upheld the findings of the Court of Appeals on the possession of the Calalungs of
the property since 1933-1934, openly, continuously and adversely, under a claim of ownership up to
the filing of the action in 1958. The Court pointed out that it is the provisions of Act No. 190,
particularly Sec. 41, that governs this case, since the provisions of the Old Civil Code were not yet in
effect. Sec. 41 provides an acquisitive prescriptive period of only ten years, meaning the Calalung
acquired ownership as early as 1943-1944.

JAGUALING V. COURT OF APPEALS

194 SCRA 607
Facts:
A certain parcel of land is located in Sta. Cruz, Tagoloan, Misamis Oriental with an area of 16,452 sq.
m., forming part of an island in a non-navigable river, bounded by the Tagoloan River on the north,
south, and east and by the portion belonging to Vicente Neri on the west.

Janita Eduave claims that she inherited the land from her father, Felomino Factura, together with his
co-heirs, Reneiro Factura and Aldenora Factura, and acquired sole ownership of the property by virtue
of a Deed of Extra Judicial Partition with sale. The land is declared for tax purposes under Tax
Declaration 26137 with an area of 16,452 sq. m. Since the death of her father on 5 May 1949, Eduave
had been in possession of the property although the tax declaration remains in the name of the
deceased father. The entire land had an area of 16,452 sq. m. appearing in the deed of extrajudicial
partition, while in tax declaration the area is only 4,937 sq. m., and she reasoned out that she included
the land that was under water.

The land was eroded sometime in November 1964 due to typhoon Ineng, destroying the bigger portion
and the improvements leaving only a coconut tree. In 1966 due to the movement of the river deposits
on the land that was not eroded increased the area to almost half a hectare and in 1970 Eduave
started to plant banana trees.

In 1973, Maximo and Anuncita Jagualing asked her permission to plant corn and bananas provided that
they prevent squatters to come to the area. Eduave engaged the services of a surveyor who conducted
a survey and placed concrete monuments over the land. Eduave also paid taxes on the land in
litigation, and mortgaged the land to the Luzon Surety and Co., for a consideration of P6,000.00.

The land was the subject of a reconveyance case between Janita Eduave vs. Heirs of Antonio Factura,
which was the subject of judgment by compromise in view of the amicable settlement of the parties.
The heirs of Antonio Factura had ceded a portion of the land with an area of 1,289 sq. m., to Janita
Eduave in a notarial document of conveyance, pursuant to the decision of the CFI, after a subdivision
of the lot 62 Pls-799, and containing 1,289 sq. m. was designated as Lot 62-A, and the subdivision plan
was approved.

69
Eduave also applied for concession with the Bureau of Mines to extract 200 m3 of grave, and after an
ocular inspection the permit was granted. Eduave, after permit was granted, entered into an
agreement with Tagoloan Aggregates to extract sand and gravel, which agreement was registered in
the office of the Register of Deeds. Maximo and Anuncita Jagualing assert that they are the real owners
of the land in litigation containing an area of 18,000 sq. m. During the typhoon Ineng in 1964 the river
control was washed away causing the formation of an island. Jagualing started occupying the land in
1969, paid land taxes as evidenced by tax declaration 26380 and tax receipts, and tax clearances.
Actual occupation of the land by Jagualing included improvements and the house.

Rudy Gondo and Janita Eduave filed with the RTC Misamis Oriental an action to quiet title and/or
remove a cloud over the property in question against Jagualing. On 17 July 1987 the trial court
dismissed the complaint for failure of Eduave to establish by preponderance of evidence their claim of
ownership over the land in litigation. The court found that the island is a delta forming part of the river
bed which the government may use to reroute, redirect or control the course of the Tagoloan River.
Accordingly, it held that it was outside the commerce of man and part of the public domain, citing
Article 420 of the Civil Code. As such it cannot be registered under the land registration law or be
acquired by prescription. The trial court, however, recognized the validity of Jagualing’s possession and
gave them preferential rights to use and enjoy the property. The trial court added that should the State
allow the island to be the subject of private ownership, the Jagualings have rights better than that of
Eduave.

On appeal to the CA, the court found that the island was formed by the branching off of the Tagoloan
River and subsequent thereto the accumulation of alluvial deposits. Basing its ruling on Articles 463
and 465 of the Civil Code, the CA reversed the decision of the trial court, declared Eduave as the lawful
and true owners of the land subject of the case and ordered Jagualing to vacate the premises and
deliver possession of the land to Eduave.
 
Issue:
Who between the one who has actual possession of an island that forms in a non-navigable and non-
floatable river and the owner of the land along the margin nearest the island, has the better right
thereto?
 
Held:
The parcel of land is part of an island that formed in a non-navigable and non-floatable river; from a
small mass of eroded or segregated outcrop of land, it increased to its present size due to the gradual
and successive accumulation of alluvial deposits. The CA did not err in applying Article 465 of the Civil
Code. Under this provision, the island belongs to the owner of the land along the nearer margin as sole
owner thereof; or more accurately, because the island is longer than the property of Eduave, they are
deemed ipso jure to be the owners of that portion which corresponds to the length of their property
along the margin of the river.

Lands formed by accretion belong to the riparian owner. This preferential right is, under Article 465,
also granted the owners of the land located in the margin nearest the formed island for the reason that
they are in the best position to cultivate and attend to the exploitation of the same. In fact, no specific
act of possession over the accretion is required. If, however, the riparian owner fails to assert his claim
thereof, the same may yield to the adverse possession of third parties, as indeed even accretion to
land titled under the Torrens system must itself still be registered.

There is no need to make a final determination regarding the origins of the island, i.e., whether the
island was initially formed by the branching off or division of the river and covered by Article 463 of the
Civil Code, in which case there is strictly no accession because the original owner retains ownership, or
whether it was due to the action of the river under Article 465, or whether it was caused by the abrupt
segregation and washing away of the stockpile of the river control, which makes it a case of avulsion

70
under Article 459, as the case is not between parties as opposing riparian owners contesting
ownership over an accession but rather between a riparian owner and the one in possession of the
island.

# 50. Cantoja vs Lim [G.R. No. 168386]

FACTS:
Respondent Roberto Cantoja Sr. filed an application for a Foreshore Lease
Contract over the foreshore area located in Makar, General Santos City in 1989. The
Lease contract was executed on November 23, 1990 and would expire on October 21,
2015. Five years after, petitioner Harry Lim filed a protest questioning the grant of FLA
to Cantoja since according to him, Cantoja has committed fraud and misrepresentation
in declaring in his application that the subject foreshore area adjoined his (Cantoja’s)
property.To prove this allegation, Lim presented a TCT over a lot which adjoins the
foreshore area subject of the lease. Upon ocular inspection, during which petitioner
failed to appear despite notice, a Special Investigator found that Cantoja was in actual
possession of the foreshore area which was utilized as “dock-board of the Cantoja’s
Fishing Business. It was ascertained that no portion has been occupied or possessed
by any other person or persons, nor was there any adverse claimant thereof. Like the
DENR Secretary, the Office of the President also relied on the findings of Special
Investigator that the petitioner’s titled land is an inalienable foreshore area which could
not be subject of a valid patent or title.
Aggrieved, respondent Harry Lim appealed to the Court of Appeals. The Court of
Appeals held that Cantoja committed misrepresentation amounting to fraud in his
application for lease when he declared in his application that his lot adjoins that of the
foreshore area sought to be leased.
ISSUE:
Whether the Court of Appeals erred in cancelling the Foreshore Lease Contract granted
to Cantoja covering the foreshore area
RULING:
No. It is undisputed that respondent is the registered owner of the land adjacent to the
foreshore area leased to Cantoja, Thus, prior to Cantoja’s foreshore lease application
in1989 and the grant of the foreshore lease contract on November 23, 1990; respondent
already owned the land adjacent to the foreshore land. The sketch plan submitted by
the Geodetic Engineer clearly shows that respondent’s property is in between the
foreshore land and Cantoja’s property. Being the owner of the land adjoining the
foreshore area, respondent is the riparian or littoral owner who has preferential right to
lease the foreshore area as provided under paragraph 32 of the Lands Administrative
Order No. 7-1, dated 30 April 1936.
Article 4 of the Spanish Law of Waters of 1866 provides that, while lands added to the
shore by accretions and alluvial deposits caused by the action of the sea form part of

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the public domain, such lands, “when they are no longer washed by the waters of the
sea and are not necessary for purposes of public utility, or for the established of special
industries, or for the coast guard service,” shall be declared by the Government “to be
the property of the owners of the estates adjacent thereto and as increment thereof.”

#51JULIAN SANTULAN VS. EXECUTIVE SECRETARY

Lease of a parcel land in Public domain- Doctrine of Reparian Rights

Facts:
Petitioner Julian Santulan and Antonio Lusin who have been succeeded by their
heirs were rival claimants with respect to the lease of a parcel of foreshore land of
public domain with an area of about 4 ½ hectares located at Barrio Kaingin, Kawit
Cavite. The Petitioner Santulan surveyed the land on December 5, 1942 and filed an
application on Dec. 29, 1942 to lease for five (5) years for agricultural purposes an area
of 36, 120 sq. meters and including the application for revocable permit to occupy the
said land for planting of Bakawan which later develop to fishpond seven years later after
acquiring ordinary fishpond permit from BFAR. On the other hand, private respondent
Lusin was reported and was being summoned that he was illegally entered the area
covered by the petitioners fishpond permit and was refrain from introducing
improvements.
However, private respondent Lusin filed applications 1n 1942 and 1945 for a
revocable-permit and a lease of a foreshore for the purpose of producing salt in the said
land. He also contends that he had been in the continues and exclusive possession of
the land since 1920 when it was still under water, and that he had used it as a site of his
fish corrals, and allegedly converted two (2) hectares into fishpond enclosed with mud
dikes and provided with a concrete sluice gate and another sluice gate made of wood.
On the northern part of the land bordering the bay were bamboo stakes placed at close
intervals to serve as water breakers to protect the mud dikes from being washed away
by the action of the sea. The private respondent said that he introduced the alleged
improvements from 1951 to 1953. The 1942 foreshore lease applications of Petitioner
Santulan and private respondent Lusin gave rise to Bureau of Lands Conflict.

Issue:
Whether or not the continues and exclusive possession of the private respondent could
nullify the petitioner’s preferential right to lease the land by reason of his riparian rights?

Ruling:
The Director of Land ruled that the disputed land was subject to “reparian rights”
which may he invoked by petitioner Julian Santulan as owner of the upland in
accordance with section 32 of Lands Administrative Order No. 7-1. It was found out that
the disputed land is foreshore land covered and uncovered by the flow and ebb of the
ordinary tides that is an extension of Santulan’s Lot No. 986 of the Kawit cadastre, with
an area of 17, 301 square meters, registered in his name in 1937 under Original
Certificate of Title No. 6 which was issued by virtue of a free patent, and the said

72
foreshore land was allegedly formed by soil deposits accumulated by the alluvial action
of the sea, and the petitioner was the first to enter the land and to make dikes thereon.
Private Respondent Antonio Lusin was found out to be possessor in bad faith,
and latter’s allegation with respect to the possession and improvements could not nullify
the petitioner’s preferential right to lease the land by reason of his riparian rights.
Therefore, the rejection of the private respondent’s revocable permit and foreshore
lease is proper.
________________________________________________________________
Lands Administrative Order No. 7-1 dated April 30. 1936
Preference of the Reparian Owner
The owner of the property adjoining foreshore lands, marshy lands or lands covered
with water bordering upon shores or banks of navigable lakes or rivers, shall be given
preference to apply for such lands adjoining his property as may not be needed for the
public service, subject to the laws and regulations governing lands of this nature,
provided that he applies therefore within sixty (60) days from the date he receives a
communication from the Director of Lands advising him of his preferential right.
Strictly speaking, "riparian" refers to rivers. A riparian owner is a person who owns land
situated on the bank of a river.
“Riparian owner" embraces not only the owners of lands on the banks of rivers but
also the littoral owners, meaning the owners of lands bordering the shore of the sea or
lake or other tidal waters. The littoral is the coastal region including both the land along
the coast and the water near the coast or the shore zone between the high and low
watermarks.

# 52 SIAIN ENTERPRISES vs F.F. CRUZ & CO.

FACTS:
Western Visayas Industrial Corporation (WESVICO) filed a foreshore lease application
over the foreshore land adjacent to certain lots registered in its name. It eventually
withdrew the application and filed a petition for registration over the same foreshore
land with the then Court of First Instance of Iloilo. The case was, however, archived as
WESVICO‘s representative could no longer be contacted, and later on, WESVICO has
ceased operations.

F.F. Cruz & Co. (F.F. Cruz) filed with the Bureau of Lands, Iloilo City a foreshore lease
application over a foreshore land, a portion of which is adjacent to the lot previously
occupied by WESVICO. Sian Enterprises Inc. (SIAIN) purchased the properties
previously owned by WESVICO from the Development Bank of the Philippines. It
subsequently filed a foreshore lease application over the foreshore land adjacent to the
properties it bought from DBP.

Upon learning that 130 linear meters of the foreshore land subject of F.F. Cruz's
foreshore lease application overlapped that covered by its foreshore lease application,
SIAIN filed a protest 8 alleging that it being the owner of the property adjoining the
overlapping area, it should be given preference in its lease.

73
F.F. Cruz, argued that SIAIN must not be given preferential right since the area in
dispute is classified as ―reclaimed‖ and that the ownership was not by means of
accretion. This argument has been sustained by the Land Management Bureau.

Upon appeal to the DENR Secretary, SIAIN was upheld, declaring that there was no
basis to declare the area as ―reclaime. F.F. Cruz however appealed to the Office of the
President which overturned the decision of the DENR Secretary and found that the area
is reclaimed. On appeal, the Court of Appeals affirmed the decision. Hence, the present
petition. SIAIN contends that the evidence overwhelmingly proves that the disputed
area is foreshore land and not reclaimed land.

ISSUES: Whether the disputed land is a ―foreshore or ―reclaimed area

HELD: That the foreshore area had been reclaimed does not remove it from its
classification of foreshore area subject to the preferential right to lease of the littoral
owner.

It bears noting that it was not the reclamation that brought the disputed foreshore area
into existence. Such foreshore area existed even before F.F. Cruz undertook its
reclamation. It was ―formed by accretions or alluvial deposits due to the action of the
sea.‖ Following Santulan, the littoral owner has preferential right to lease the same.

Contrary to the ruling of the Office of the President, as affirmed by the appellate court,
littoral owner WESVICO cannot be considered to have waived or abandoned its
preferential right to lease the disputed area when it subsequently filed an application for
registration thereover. For being a part of the public domain, ownership of the area
could not be acquired by WESVICO. Its preferential right remained, however. Its move
to have the contested land titled in its name, albeit a faux pas, in fact more than proves
its interest to utilize it.

As correctly argued by SIAIN, were WESVICO‘s petition for registration which, as stated
earlier, was archived by the trial court, pursued but eventually denied, WESVICO would
not have been barred from filing anew a foreshore lease application. Parenthetically, the
petition for registration of WESVICO was archived not on account of lack of interest but
because it ceased operations due to financial reasons.

#53 BRUNA ARANAS DE BUYSER, plaintiff-appellant,

vs.
DIRECTOR OF LANDS, IGNACIO TANDAYAG and CANDIDA DE TANDAYAG,
defendants-appellees.

This is an appeal, perfected before the effectivity of Republic Act 5440, from the
decision of the Court of First Instance of Surigao, declaring a parcel of land formed
along the shore by the action of the sea as part of the public domain.

74
Plaintiff-appellant is the registered owner of Lot No. 4217 of the Surigao Cadastre,
which borders the Surigao Strait. Contiguous to said lot is a parcel of land which was
formed by accretion from the sea, the subject- matter of this controversy. Defendants
Ignacio Tandayag and his wife Candida Tandayag have been occupying this foreshore
land under a Revocable Permit issued by the Director of Lands. For the use and
occupation thereof, said spouses paid the Bureau of Lands the amount of P6.50
annually. They have a house on said lot, which plaintiff alleged had been purchased by
the Tandayags from one Francisco Macalinao, a former lessee of the plaintiff.

Claiming ownership of the said land, plaintiff filed an action against the spouses
Tandayag in the Court of First Instance of Surigao to recover possession of this land as
well as rents in arrears for a period of six years. The complaint was subsequently
amended to implead the Director of Land as defendant, allegedly for having illegally
issued a revocable permit to the Tandayags.

After due trial, the court a quo rendered a decision dismissing the complaint, as follows:

WHEREFORE, the court hereby renders judgment in favor of the

defendants and against the plaintiff, dismissing the complaint of the
plaintiff for lack of cause of action; declaring the defendants Ignacio
Tandayag and his wife, Candida de Tandayag as the lawful occupants of
the land in question, which is part of the public domain; condemning the
plaintiff to pay to the defendant in concept of damages in the amount of
P250.00; plus the costs. (p. 67, Decision, Original Records.)

From this judgment, plaintiff appealed directly to this Court on a pure question of law.

The plaintiff's claim of ownership over the land in question is bereft of legal basis. Such
alluvial formation along the seashore is part of the public domain and, therefore, not
open to acquisition by adverse possession by private persons. It is outside the
commerce of man, unless otherwise declared by either the executive or legislative
branch of the government.1

In asserting the right of ownership over the land, plaintiff invokes Article 4 of the Spanish
Law of Waters of August 3, 1866 which provides:

Art. 4. Lands added to the shore by accretion and alluvial deposits caused
by the action of the sea, form part of the public domain, when they are no
longer washed by the waters of the sea, and are not necessary for
purposes of public utility, or for the establishment of special industries, or
for the coastguard service, the Government shall declare them to be the
property of the owners of the estate adjacent thereto and as an increment
thereof.

Plaintiff's reliance on the above article is quite misplaced. The true construction of the
cited provision is that the State shall grant these lands to the adjoining owners only

75
when they are no longer needed for the purposes mentioned therein. In the case at bar,
the trial court found that plaintiff's evidence failed to prove that the land in question is no
longer needed by the government, or that the essential conditions for such grant under
Article 4 of the Spanish Law of Waters, exists.

Plaintiff, however, argues that the approval by the Director of Lands of the defendants'
Revocable Permit Application is tantamount to an implied declaration on the part of the
Director of Lands of the fact that the disputed lot is no longer needed for public use. We
fail to see such implication.

In his letter, dated June 16, 1955, approving the defendants' Revocable Permit
Application, the Director of Lands did not declare the land as no longer needed for
public use. Pertinent portions of said letter reads: 2

With reference to your revocable permit application no. v-8040, I wish to

inform you that as the District Engineer of that province has in his 1st
indorsement dated July 7, 1954 certified that the land applied for by you
is/may be needed by the Government for future public improvements
(Boulevard and seawall protection purposes) you may be allowed to
continue with your temporary occupation and provisional use of the
premises under a revocable permit renewable every year in the meantime
that the land is not actually needed by the Government for the purposes
aforestated, subject however to the following conditions:

That no further structures shall be constructed on the land

and that any structure constructed thereon shall be removed
and/or by you at your expense upon thirty (30) days notice if
and when the Government is ready to actually use the land
for Boulevard and seawall protection purposes. (p. 113,
Exhibit 4.)

From the foregoing, it is clear that the State never relinquished ownership over the land.

Since the land is admittedly property of public dominion, its disposition falls under the
exclusive supervision and control of the Bureau of Lands. 3 Under the Public Land Act,
an application for the sale or lease of lands enumerated under Section 59 thereof,
should be filed with the Bureau of Lands. 4 In compliance therewith, the spouses
Tandayag filed the appropriate application, while plaintiff did not. As pointed out by the
Solicitor General, "like any other private party, she (plaintiff) must apply for a permit to
use the land, like what appellee spouses did. Not having submitted to the jurisdiction of
the Bureau of Lands which has administration and control over the area in question, by
filing the corresponding application for permit, appellant has no right whatsoever in the
foreshore land as to be entitled to protection in the courts of justice." 5

In Aldecoa vs. Insular Government, 6 a case involving two parcels of land formed along
the shore by the action of the sea, this Court has this to say.

76
 The record does not disclose that Aldecoa & Co. had obtained from the
Spanish Government of the Philippines the requisite authorization legally
to occupy the said two parcels of land of which they now claim to be the
owners; wherefore, the occupation or possession which they allege they
hold is a mere detainer that can merit from the law no protection such as
is afforded only to the person legally in possession.

The rationale behind the grant of revocable permit was propounded by the Attorney
General in his opinion of July 24, 1920, in this wise:

The lease of reclaimed lands and of the foreshore was formerly provided
by Act No. 1654. Under said Act, said lands could only be leased in the
manner and under the conditions provided by the said law. No revocable
permits were allowed. Then Act No. 2570 was passed amending Sec. 5 of
Act No. 1654 so as to authorize the temporary use of the foreshore under
a revocable permit. This measure was apparently deemed necessary as
well as expedient in order to legalize the habitual use of the coast and
shores of these islands by the people, who had erected thereon light
material houses and dwellings, temporary structures used in connection
with fishing and other maritime industries, as well as to authorize the
provisional occupation and use contemplated by the law providing for its
format lease. The countless houses and provisional constructions that
fringed the shores of the archipelago especially in Mindanao, and the
constant and every day use and occupation of the foreshore by the people
in fishing, salt and other industries common to the sea, as above stated,
evidently prompted the legislature to all the temporary use of the foreshore
in this manner by means of revocable permit.

In fine, the grant of a Revocable Permit to the defendants Tandayag for the temporary
use and occupation of the disputed land is valid, having been legally issued by the
Bureau of Lands, acting for and in behalf of the Secretary (now Minister) of Agriculture
and Natural Resources who is empowered to grant revocable permits under Section 68
of the Public land Act which we quote:

The Secretary of Agriculture and Natural Resources may grant to qualified

persons temporary permission upon the payment of a reasonable charge,
for the use of any portion of the lands covered by this chapter for any
lawful private purpose, subject Lo revocation, at any time when, in his
judgment the public interest shall require.

WHEREFORE, the decision appealed from is hereby affirmed with costs against the
plaintiff-appellant.

Article 461

#54

77
AGNE VS DIRECTOR OF LANDS
Facts:
On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the Court
of First Instance of Pangasinan for recovery of possession and damages against
petitioners. Their complaint states that they are the registered owners under the
aforesaid Transfer Certificate of Title No. 32209 of the parcel of land situated in Barrio
Bantog, Asingan, Pangasinan which is now in the possession of petitioners.
Petitioners answered that the land which was formerly a part of the river is owned by
them by reason of accretion and accession due to the big flood that happened in 1920.
They contend that since 1920, they and their predecessors in interest occupied and
exercised dominion openly and adversely over said portion of the abandoned river bed
in question abutting their respective riparian lands continuously up to the present to the
exclusion of all other persons, particularly Herminigildo Agpoon and that they have
introduced improvements thereon by constructing irrigation canals and planting trees
and agricultural crops thereon 6 and converted the land into a productive area.
During the pendency of the said case, the petitioners filed a complaint (Case No. U-
2649 ) against the Director of Lands and Spouses Agpoon with the CFI of Pangasinan
for annulment of title, reconveyance of and/or action to clear title to a parcel of land.
They allege that the land in question belong to them. They further contend that it was
only on April 13, 1971, when respondent spouses filed a complaint against them, that
they found out that the said land was granted by the Government to Herminigildo
Agpoon under Free Patent No. 23263, pursuant to which Original Certificate of Title No.
2370 was issued in the latter's name and that the said patent and subsequent titles
issued pursuant thereto are null and void since the said land, an abandoned river bed,
is of private ownership and, therefore, cannot be the subject of a public land grant.
On June 21, 1974, the trial court rendered a decision in Civil Case U-2286 in favor of
the Respondents.
On June 24, 1974, Court of First Instance of Pangasinan, acting on the motion to
dismiss filed by respondents Director of Lands and spouses Agpoon, issued an order
dismissing Civil Case No. U-2649 for annulment of title by merely citing the statement in
the case of Antonio, et al. vs. Barroga, et al. 12 that an action to annul a free patent
many years after it had become final and indefeasible states no cause of action.

ISSUE: Whether the action to annul a free patent many years after it had become final
and indefeasible states no cause of action.
Ruling: No
The facts alleged in the complaint, which are deemed hypothetically admitted upon the
filing of the motion to dismiss, constitute a sufficient cause of action against private
respondents. In the case at bar, it was admitted in the stipulation of facts that the land

78
was formerly an abandoned river bed formed due to natural causes in 1920. It was
likewise admitted that the riparian owners of the lands abutting said abandoned river
bed were the plaintiffs and/or their predecessors in interest and that since then and up
to the present, they have been occupying and cultivating aliquot portions of the said
land proportionate to the respective lengths of their riparian lands and that they are the
real and lawful owners of the said land as decreed by Article 370 of the old Civil Code,
the law then in force that time. With that being said, then, the land in question was and
is of private ownership and, therefore, beyond the jurisdiction of the Director of Lands.
The free patent and subsequent title issued pursuant thereto are null and void. The
indefeasibility and imprescriptibility of a Torrens title issued pursuant to a patent may be
invoked only when the land involved originally formed part of the public domain. If it was
a private land, the patent and certificate of title issued upon the patent are a nullity.
The rule on the incontrovertibility of a certificate of title upon the expiration of one year,
after the entry of the decree, pursuant to the provisions of the Land Registration Act,
does not apply where an action for the cancellation of a patent and a certificate of title
issued pursuant thereto is instituted on the ground that they are null and void because
the Bureau of Lands had no jurisdiction to issue them at all, the land in question having
been withdrawn from the public domain prior to the subsequent award of the patent and
the grant of a certificate of title to another person. Such an action is different from a
review of the decree of title on the ground of fraud.
Although a period of one year has already expired from the time a certificate of title was
issued pursuant to a public grant, said title does not become incontrovertible but is null
and void if the property covered thereby is originally of private ownership, and an action
to annul the same does not prescribe. Moreover, since herein petitioners are in
possession of the land in dispute, an action to quiet title is imprescriptible. 20 Their action
for reconveyance which, in effect, seeks to quiet title to property in one's possession is
imprescriptible. Their undisturbed possession for a number of years gave them a
continuing right to seek the aid of a court of equity to determine the nature of the
adverse claims of a third party and the effect on her title.

Article 463.

#55. AGUSTIN V. IAC

FACTS:
Private respondents, Maria Melad and Pablo Binuyag are among those who are
occupying the western bank of the Cagayan River while on the eastern bank is owned
by petitioner Eulogio Agustin. From 1919 to 1968, the Cagayan river has eroded the
lands on the eastern bank including Agustin’s Lot depositing alluvium on the land
possessed by Pablo Binuyag. In 1968, after a typhoon which caused a big flood, the
Cagayan River changed its course and returned it to its 1919 bed and it cut through the

79
lands of respondents whose lands were transferred on the eastern side. To cultivate the
lands they had to cross the river. When they were cultivating said lands, (they were
planting corn) Agustin accompanied by the mayor and some policemen claimed the land
and drove them away. So Melad and Binuyag filed separate complaints for recovery of
their lots and its accretions. The Trial Court held ordered Agustin et. al to vacate the
lands and return them to respondents. On appeal, the IAC affirmed in toto the judgment
thus the case at bar.
ISSUE:
Whether or not private respondents own the accretion and such ownership is not
affected by the sudden and abrupt change in the course of the Cagayan River when it
reverted to its old bed

HELD: YES
Art. 457 states that the owner of the lands adjoining river banks own the accretion which
they gradually receive from the effects of the currents of the waters. Accretion benefits a
riparian owner provided that these elements are present: 1) deposit be gradual and
imperceptible 2) it resulted from the effects of the current of the water and 3) the land is
adjacent to the river bank. When the River moved from 1919 to 1968, there was
alluvium deposited and it was gradual and imperceptible.

Accretion benefits the riparian owner because these lands are exposed to floods and
other damage due to the destructive force of the waters, and if by virtue of law they are
subject to encumbrances and various kinds of easements, it is only just that such risks
or dangers should in some way be compensated by the right of accretion. Also,
respondent’s ownership over said lots was not removed when due to the sudden and
abrupt change in the course of the river; their accretions were transferred to the other
side. Art. 459 states when the current of a river x x x segregates from an estate on its
bank a known portion of land and transfers it to another estate, the owner of segregated
portion retains ownership provided he removes the same w/in 2 years. And Art. 463
states that whenever the current of a river divides itself into branches, leaving a piece of
land or part thereof isolated, the owner of the land retains ownership. He also retains it if
a portion of land is separated from the estate by the current.

56. RONQUILLO V. COURT OF APPEALS

FACTS:
Del Rosario owns a registered land adjacent to Estero Calubcub which is already dried
up due to the dumping of garbage by the sorrounding neighborhood and not by any
natural causes. Defendant now occupies said dried up land until Del Rosario, claiming
ownership over the same, required him to vacate on the basis of Article 370 of the Civil

80
Code which provides that riparian owner owns the dried up river bed abandoned by
natural changes.
ISSUE:
Whether or not Article 370 applies

RULING: No.
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.

57. VIAJAR v. CA
It is a well settled 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 or river.
FACTS:
Private respondents Spouses Ladrido are owners of Lot 7511 of the Cadastral Survey of
Pototan Iloilo. Petitioners are owners of the Lot 7340, which they bought from the Te.
Viajar had lot 7340 relocated and found out that the property was in the possession of
Ladrido. She demanded the return but the latter refused. She instituted a civil action for
recovery of possession and damages. She also impleaded Te as defedant for the
reason that if Ladrido is going to be favored then the sale was to be annulled and
plaintiff must be reimbursed. During the trial it was proven that during the cadastral
survey in 1926, the two lots were separated by the Suague River and that a part of the
land of Lot 7340 and the old river bed were in the possession of the defendants and that
the plaintiffs have never been in actual physical possession.

CFI ruled in favor of the defendants which the CA confirmed. There was a mention in
the case that the issue from which the decision of the CFI was not the issue appealed in
the CA so the affirmation made by the CA should be void.

ISSUES:

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1) Whether or not the change in the course of the Suague River was gradual or sudden
2) Whether or not the plaintiffs are protected by the Torrens System (in relation to the
dimunition of the area of their land because the plaintiffs are contending that Art 457
must be interpreted as applicable only to unregistered lands)

RULING:
It was established in the trial that for a period of 40 years 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.
It is a well settled rule that registration under the Torrens System does not protect the
riparian owner against the dimunition of the area of his registered land through gradual
changes in the course of an adjoining stream or river. Accretions which the banks of the
river may gradually receive from the effect of the current become the property of the
owners of the banks.

58. BINALAY VS. MANALO

A sudden and forceful action like that of flooding is not the alluvial process
contemplated in Art. 457. The accumulation of the soil deposits must be slow and hardly
imperceptible in order for the riparian owner to acquire ownership thereof. Also, the land
where the accretion takes place is adjacent to the banks of the rivers (or the sea coast).
FACTS
Manalo acquired 2 lots which were originally owned by Judge Taccad from 2 different
people (the latter’s daughter and from an earlier purchaser). These lots were later
consolidated into Lot 307, a total of 10.45 hectares. The lot was beside the Cagayan
River, which, due to flooding, would place a portion of the land underwater during the
rainy season (September to December). On sunny days, however, the land would be
dried up for the entire dry season (January to August). When a survey of the land was
conducted on a rainy month, a portion of the land that Manalo bought was then
underwater and was thus left unsurveyed and excluded from Lot 307.

The big picture is this: Cagayan River running from south to north, forks at a certain
point to form two braches (western and eastern) and then unites at the other end,
further north, to form a narrower strip of land. The eastern branch of the river cuts
through Lot 307, and is flooded during the rainy season. The unsurveyed portion, on the
other hand, is the bed of the eastern branch. Note that the fork exists only during the
rainy season while the “island”/elongated strip of land formed in the middle of the forks
becomes dry and perfect for cultivation when the Cagayan river is at its ordinary depth.
The strip of land in the middle of the fork totaled 22.7 hectares and was labeled Lot 821-
822. Lot 821 is directly opposite Lot 307 and is separated by the eastern branch of the
river’s fork.

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Manalo claims that Lot 821 belongs to him by way of accretion to the submerged portion
of the land to which it is adjacent. Petitioners (Binalay, et al) who possess the Lot 821,
on the other hand, insist that they own it. They occupy the other edges of the lot along
the river bank (i.e. the fertile portions on which they plant tobacco and other agricultural
products) and also cultivate the western strip during the summer.

Manalo filed 2 cases for forcible entry which were both dismissed. Later on, he filed a
complaint for quieting of title, possession, and damages against petitioner. The trial
court and the CA ruled in favor of Manalo, saying that Lot 821 and Lot 307 cannot be
considered separate and distinct from each other. They reasoned that when the land
dries up for the most part of the year, the two are connected. [Note: The CA applied the
ruling in Gov’t of the Phil Islands vs. Colegio de San Jose, which was actually
inappropriate because the subject matter in this case was a lake so that the definition of
a “bed” was different.]

ISSUE:
Whether or not Manalo owns Lot 821 by way of accretion

RULING: No.
The disputed property is not an accretion. It is the action of the heavy rains that cause
the highest ordinary level of waters of the Cagayan River during the rainy season. The
depressed portion is a river bed and is thus considered property of public domain.
The SC observed the following:
a) The pictures identified by Manalo during his direct examination depict the depressed
portion as a river bed. The dried up portion had dike-like slopes (around 8m) on both
sides connecting it to Lot 307 and Lot 821 that are vertical and very prominent.
b) The eastern bed already existed even before Manalo bought the land. It was called
“Rio Muerte de Cagayan.”
c) Manalo could not have acquire ownership of the land because article 420 of the civil
code states that rivers are property of public dominion. The word “river” includes the
running waters, the bed, and the banks. [The seller never actually owned that part of the
land since it was public property]
d) The submerged area (22.72 ha) is twice the area of the land he actually bought. It is
difficult to suppose that such a sizable area could have been brought about by
accretion.
More importantly, the requisites of accretion in article 457 were not satisfied. These are:
1) that the deposition of the soil or sediment be gradual and imperceptible; 2) that it be
the result of the action of the waters of the river (or sea); and 3) the land where the

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accretion takes place is adjacent to the banks of the rivers (or the sea coast). The
accretion should’ve been attached to Lot 307 for Manalo to acquire its ownership. BUT,
the claimed accretion lies on the bank of the river; not adjacent to Lot 307 but directly
opposite it – across the river. Aside from that, the dike-like slopes which were very steep
may only be formed by a sudden and forceful action like flooding. The steep slopes
could not have been formed by the river in a slow and gradual manner.

59. REYNANTE v. CA

FACTS:
More than 50 years ago, Reynante was taken as tenant by the late Don Cosme Carlos
over a fishpond in Meycauayan, Bulacan. Reynante subsequently built a nipa hut where
he and his family lived and took care of the nipa palms which they planted on lots 1 and
2, which was located between the fishpond and Liputan River. Reynante’s family sold
the nipa palms, and appropriated the fruits as his own, without interference or complaint
from Don Carlos.

Upon Don Carlos’ death, his heirs convinced Reynante to sign an affidavit, relinquishing
his rights as a caretaker of the fishpond. Reynante, however, continued to live in the
nipa hut he had built, and he still took care of the nipa palms, which he continued to sell.

This lead the heirs to file a complaint for forcible entry with preliminary injunction against
Reynante in the MTC. The MTC found for Reynante, but the heirs appealed to the RTC,
where the decision was reversed. The CA merely affirmed the decision of the RTC.

ISSUE:
Whether or not accretion automatically becomes registered land just because the
adjoining lot is registered in the Torrens System?

HELD:
While it is true that alluvial deposits shall belong to the owner of the lot adjoining such
accretion, it does not automatically bestow an imprescriptibility. If the owners of said
land have not registered this with the proper entity, said land will be subject to
acquisition by prescription, which was what occurred in this case.

Since the affidavits prove that Reynante has been in possession of these lands for more
than 50 years, the SC rightly held that the land belongs to him.

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Article 476

60. Heirs Uberas vs. CFI of Negros Occidental

FACTS: Siblings Segundo, Albino, Francisca, Pedro, and Alejandra Uberas inherited a
parcel of land from their parents. Petitioners (children and successors in interest of
Segundo Uberas and Albino Uberas) filed a complaint against respondents (surviving
spouse and children of Pedro Uberas and Alejandra Uberas) for quieting of title,
recovery of possession and ownership, partition, and reconveyance with damages of
the property in suit. Defendants sought for dismissal on the ground that the action is
barred by prescription. But plaintiffs argued that the action is imprescriptible because it
is to quiet the title to the property in question, for partition, and for declaring heirship and
deed of sale executed by defendants as void ab initio. The RTC dismissed the case on
the ground of prescription, holding that the action is essentially for reconveyance based
upon an implied trust resulting from fraud. In this case, plaintiffs aver that Pedro Uberas
executed the declaration of heirship with malice and bad faith to deprive the compulsory
heirs.

ISSUE: Whether the case is one for quieting of title and therefore imprescriptible.

RULING: This case is an action for quieting of title, which is imprescriptible. The
teaching in Faja vs. CA applies, that is, an action to quiet title to property in the
possession of plaintiff is imprescriptible and that where there are material facts to be
inquired into and resolved on the basis of evidence adduced by the parties which will
determine the legal precepts to be applied, as in this case, the complaining party should
be given full opportunity to prove his case. RTC should not have summarily dismissed
the case on the alleged ground of prescription notwithstanding contrary factual
averments in the complaint which would clearly rule out prescription. The SC set aside
respondent court’s order of dismissal and remanded the case to respondent court for
trial and determination on the merits.

61. DBT Mar-bay Construction, Inc. vs Ricaredo Panes, etc.

Facts:
A parcel of land was conveyed by Regalado to DBT through a dacion en pago for
services rendered. On June 24, 1992, the respondents Panes and his sons filed a
complaint for quieting of title with damages and petition for injunction against Regalado
and DBT.

In the complaint, Ricaredo alleged that he is the lawful owner of the land which he had
declared for taxation purposes in his name. Respondents alleged that per certificate
issued by the DENR the land was verified to be correct and on file.

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Respondents also claimed the Ricaredo and his immediate family had been and still are
in actual possession of the subject property, and their possession preceded the 2nd
world war. To perfect his title, Ricaredo filed with the RTC QC.

Respondents averred that in the process of complying with the registration, it was found
out that a portion of the land was with the subdivision plan of Regalado which was
conveyed by Regalado to DBT.

On December 28, 1993, then defendants Spouses Jaime and Rosario Tabangcura
(Spouses Tabangcura) filed their Answer with Counterclaim, claiming that they were
buyers in good faith and for value when they bought a house and lot covered by TCT
No. 211095 from B.C. Regalado, the latter being a subdivision developer and registered
owner thereof, on June 30, 1986. When respondent Abogado Mautin entered and
occupied the property, Spouses Tabangcura filed a case for Recovery of Property
before the RTC, Quezon City, Branch 97 which rendered a decision in their favor.

On its part, DBT, traversing the complaint, alleged that it is the legitimate owner and
occupant of the subject property pursuant to a dacion en pago executed by B.C.
Regalado in the former’s favor; that respondents were not real parties-in-interests
because Ricaredo was a mere claimant whose rights over the property had yet to be
determined by the RTC where he filed his application for registration; that the other
respondents did not allege matters or invoke rights which would entitle them to
the relief prayed for in their complaint; that the complaint was premature; and that the
action inflicted a chilling effect on the lot buyers of DBT.

RTC's Ruling:
The testimony of Ricaredo that he occupied the property since he was only 16 had not
been rebutted; Ricaredo's occupation and cultivation of the land for more than 30 years
vested him equitable ownership.

DBT filed a motion for reconsideration based on the grounds of prescription and laches.
While this motion was still pending, judge Bacalla died.

Then an intervenor claimed that portions of the subject land was part of the estate of
certain Don Jose de Ocampo.

CA's Ruling: CA reversed and set aside the RTC Orders dated November 8, 2001 and
June 17, 2002 and reinstated the RTC Decision dated June 15, 2000. The CA held that
the properties described and included in TCT No. 200519 are located in San Francisco
del Monte, San Juan del Monte, Rizal and Cubao, Quezon City while the subject
property is located in Brgy. Pasong Putik, Novaliches, Quezon City. Furthermore, the CA
held that Engr. Vertudazo's testimony that there is a gap of around 1,250 meters
between Lot 503 and Psu 123169 was not disproved or refuted. The CA found that
Judge Juanson committed a procedural infraction when he entertained issues and
admitted evidence presented by DBT in its Motion for Reconsideration which were
never raised in the pleadings and proceedings prior to the rendition of the RTC
Decision. The CA opined that DBT's claims of laches and prescription clearly appeared

86
to be an afterthought. Lastly, the CA held that DBT's Motion for Reconsideration was not
based on grounds enumerated in the Rules of Procedure.

Issues:
(1) Did the RTC err in upholding DBT's defenses of prescription and laches as raised in
the latter's Motion for Reconsideration? (2) Which between DBT and the respondents
have a better right over the subject property?

Held:
(1) Affirmative. The facts demonstrating the lapse of the prescriptive period be otherwise
sufficiently and satisfactorily apparent on the record; either in the averments of the
plaintiff's complaint, or otherwise established by the evidence. However, the conclusion
reached by the RTC in its assailed Order was erroneous. The RTC failed to consider
that the action filed before it was not simply for reconveyance but an action for quieting
of title which is imprescriptible.

Therefore, laches will not apply to this case, because respondents' possession of the
subject property has rendered their right to bring an action for quieting of title
imprescriptible and, hence, not barred by laches. Moreover, since laches is a creation of
equity, acts or conduct alleged to constitute the same must be intentional and
unequivocal so as to avoid injustice.

Thus, respondents' claim of acquisitive prescription over the subject property is

baseless. Under Article 1126 of the Civil Code, acquisitive prescription of ownership of
lands registered under the Land Registration Act shall be governed by special laws.
Correlatively, Act No. 496, as amended by PD No. 1529, provides that no title to
registered land in derogation of that of the registered owner shall be acquired by
adverse possession. Consequently, in the instant case, proof of possession by the
respondents is immaterial and inconsequential.

Note:

- action for reconveyance can be barred by prescription. When an action for

reconveyance is based on fraud, it must be filed within four (4) years from discovery of
the fraud, and such discovery is deemed to have taken place from the issuance of the
original certificate of title. On the other hand, an action for reconveyance based on an
implied or constructive trust prescribes in ten (10) years from the date of the issuance of
the original certificate of title or transfer certificate of title. The rule is that the registration
of an instrument in the Office of the RD constitutes constructive notice to the whole
world and therefore the discovery of the fraud is deemed to have taken place at the time
of registration.
62. Estate of Margarita D. Cabacungan vs. Laigo 655 SCRA 366

FACTS:

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Unknown to the other children of Margarita, the mother transferred the tax declarations
of her three (3) lands to her son, Roberto, to support his application for travel to the US.
Upon returning, Roberto married Estella and adopted her two children, Pedro and
Marilou. Sometime later, Roberto sold one of the lands to the spouses Campos, and
separately sold the two remaining lands to his two adopted children. Margarita came to
know of the sale during the wake of Roberto. Hence, Roberto’s siblings filed a complaint
for annulment of the said sales and for the recovery of ownership and possession of the
land.
The trial court ruled against the plaintiffs on the basis that there was no express trust
between Roberto and his mother. The Court of Appeals affirmed the decision of the trial
court.
ISSUE:
Whether the trial and appellate court’s ruling were correct.
RULING:
Yes. The Court held that “A trust is the legal relationship between one person having an
equitable ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter. Trusts are either express
or implied.”
The Court also held that “Express or direct trusts are created by the direct and positive
acts of the parties, by some writing or deed, or will, or by oral declaration in words
evincing an intention to create a trust.”
The Court, moreover, held that “Implied trusts—also called “trusts by operation of law,”
“indirect trusts” and “involuntary trusts”—arise by legal implication based on the
presumed intention of the parties or on equitable principles independent of the particular
intention of the parties. They are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent or, independently of the particular
intention of the parties, as being inferred from the transaction by operation of law
basically by reason of equity.”
In addition, the Court held that “Implied trusts are further classified into constructive
trusts and resulting trusts. Constructive trusts, on the one hand, come about in the main
by operation of law and not by agreement or intention. They arise not by any word or
phrase, either expressly or impliedly, evincing a direct intention to create a trust, but one
which arises in order to satisfy the demands of justice.”
The Court further held that “Resulting trusts arise from the nature or circumstances of
the consideration involved in a transaction whereby one person becomes invested with
legal title but is obligated in equity to hold his title for the benefit of another. This is
based on the equitable doctrine that valuable consideration and not legal title is
determinative of equitable title or interest and is always presumed to have been
contemplated by the parties.”

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Finally, the Court held that “A trust will follow the property—through all changes in its
state and form as long as such property, its products or its proceeds, are capable of
identification, even into the hands of a transferee other than a bona fide purchaser for
value, or restitution will be enforced at the election of the beneficiary through recourse
against the trustee or the transferee personally. This is grounded on the principle in
property law that ownership continues and can be asserted by the true owner against
any withholding of the object to which the ownership pertains, whether such object of
the ownership is found in the hands of an original owner or a transferee, or in a different
form, as long as it can be identified.”

63.

TOPIC: Marriage; Conjugal Partnership of Gains

MILAGROS JOAQUINO a.k.a. MILAGROS J. REYES, petitioner,

vs. LOURDES REYES, MERCEDES, MANUEL, MIRIAM and RODOLFO JR

FACTS
Lourdes Reyes is the widow of Rodolfo Reyes who died on September 12, 1981.
Lourdes and Rodolfo married in 1947 in Manila and have four (4) children: Mercedes,
Manuel, Miriam, and Rodolfo Jr. Rodolfo, in the course of their marriage, had illicit
relations with Milagros Joaquino with whom he also had three (3) children: Jose
Romillo, Imelda May and Charina. Rodolfo and Milagros decided to buy a house and lot
which executed in the name Milagros. Lourdes alleges that the funds used to purchase
this property were conjugal funds and earnings of the deceased. Aside from the house,
Rodolfo allegedly "put into custody" some of the couple's conjugal properties under the
care of his paramour. These properties include his earnings and retirement benefits
from working as the Vice President and Comptroller of Warner Barnes and Company
and two cars.

Lourdes prayed that the properties be declared conjugal, that Milagros

surrenders the possession thereof, and that damages be awarded. Milagros, on the
other hand, contends that she purchased the mentioned properties in her exclusive
capacity. She also contends that she had no knowledge of the Rodolfo's first marriage
was never a beneficiary of the latter's earnings, and that her living together with Rodolfo
for nineteen (19) years, along with the fact that she had children with him, be
considered by the court in rendering judgment. Lourdes, however, died and was later
represented by her children with Rodolfo. Subsequently, the trial court granted Lourdes'
complaint. Upon appeal to the Court of Appeals, Milagros reiterated her stand and
questioned the findings of the trial court. CA affirmed the ruling of the trial court and
likewise held that the property had been paid out of the conjugal funds of Rodolfo and
Lourdes, because the funds used to pay the house off was sourced from Rodolfo's
earnings as part of the conjugal partnership.

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ISSUES
Do the properties in question pertain to the conjugal partnership of gains?
Does the petitioner have the right of co-ownership with the deceased?

RULING
Yes. Under Article 145 thereof, a conjugal partnership of gains (CPG) is created upon
marriage end lasts until the legal union is dissolved by death, annulment, legal
separation or judicial separation of property. Conjugal properties are by law owned in
common by the husband and wife. As to what constitutes such properties are laid out in
Article 153 of the Code, which we quote:
"(1) That which is acquired by onerous title during the marriage at the expense of
the common fund, whether the acquisition be for the partnership, or for only one
of the spouses;
(2) That which is obtained by the industry, or work, or as salary of the spouses, or
of either of them;
(3) The fruits, rents or interests received or due during the marriage, coming from
the common property or from the exclusive property of each spouse."
Under Article 160 of the Code, all properties of the marriage, unless
proven to pertain to the husband or the wife exclusively, are presumed to belong
to the CPG. For the rebuttable presumption to arise, however, the properties
must first be proven to have been acquired during the existence of the marriage.
No. Article 144 of the Civil Code mandates a co-ownership between a man and a
woman who are living together but are not legally married. For Article 144 to apply, the
couple must not be incapacitated to contract marriage.
It has been held that the Article is inapplicable to common-law relations
amounting to adultery or concubinage, as in this case. The reason therefor is the
absurdity of creating a co-ownership in cases in which there exists a prior
conjugal partnership between the man and his lawful wife.
In default of Article 144 of the Civil Code, Article 148 of the Family Code
has been applied.The latter Article provides:
"Art. 148. In cases of cohabitation not falling under the preceding Article,
only the properties acquired by both of the parties through their actual joint
contribution of money, property, or industry shall be owned by them in common in
proportion to their respective contributions. In the absence of proof to the
contrary, their contributions and corresponding shares are presumed to be equal.
The same rule and presumption shall apply to joint deposits of money and
evidence of credit.

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 "If one of the parties is validly married to another, his or her share in the
co-ownership shall accrue to the absolute community or conjugal partnership
existing in such valid marriage. If the party which acted in bad faith is not validly
married to another, his or her share shall be forfeited in the manner provided in
the last paragraph of the preceding Article.
"The foregoing rules on forfeiture shall likewise apply even if both parties
are in bad faith."
Thus, when a common-law couple have a legal impediment to marriage,
only the property acquired by them -- through their actual joint contribution of
money, property or industry -- shall be owned by them in common and in
proportion to their respective contributions.
The present controversy hinges on the source of the funds paid for the
house and lot in question. Upon the resolution of this issue depends the
determination of whether the property is conjugal (owned by Rodolfo and
Lourdes) or exclusive (owned by Milagros) or co-owned by Rodolfo and Milagros.
All told, respondents have shown that the property was bought during the
marriage of Rodolfo and Lourdes, a fact that gives rise to the presumption that it
is conjugal. More important, they have established that the proceeds of the loan
obtained by Rodolfo were used to pay for the property; and that the loan was, in
turn, paid from his salaries and earnings, which were conjugal funds under the
Civil Code.
Under the circumstances, therefore, the purchase and the subsequent
registration of the realty in petitioner’s name was tantamount to a donation by
Rodolfo to Milagros. By express provision of Article 739(1) of the Civil Code, such
donation was void, because it was "made between persons who were guilty of
adultery or concubinage at the time of the donation."
Art. 87. Every donation or grant of gratuitous advantage, direct or indirect,
between the spouses during the marriage shall be void, except moderate gifts
which the spouses may give each other on the occasion of any family rejoicing.
The prohibition shall also apply to persons living together as husband and wife
without a valid marriage."
Hence, the property belongs to the conjugal partnership of gains and that the petitioner
paramour shall not be co-owners with the married deceased

64. VDA. DE AVILES v. CA

An action to quiet title or to remove cloud may not be brought for the purpose of settling
a boundary dispute.

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FACTS:
Eduardo Aviles, the predecessor of the petitioners is the bother of defendant Camilo.
They inherited their lands from their parents and have agreed to subdivide the same
amongst themselves. The area alloted (sic) to Eduardo Aviles is 16,111 square meters
more or less, to Anastacio Aviles is 16,214 square meters more or less, while the area
alloted to defendant Camilo Aviles is 14,470 square meters more or less.
Defendant’s land composed of the riceland portion of his land is 13,290 square meters,
the fishpond portion is 500 square meters and the residential portion is 680 square
meters, or a total of 14,470 square meters.
The Petitioners claim that they are the owners of the fish pond which they claim is within
their area. Defendant Camilo Aviles asserted a color of title over the northern portion of
the property with an area of approximately 1,200 square meters by constructing a
bamboo fence (thereon) and moving the earthen dikes, thereby molesting and
disturbing the peaceful possession of the plaintiffs over said portion.

Petitioners say that the fences were created to unduly encroach to their property but the
defendant said that he merely reconstructed the same.
Petitioners brought an action to quiet title but were denied thus this case.

ISSUE: Whether or not Petitioners filed the right action

RULING:
No, Petitioners filed the wrong action. This is obviously a boundary dispute and as such
the action must fail.
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon a title to real
property or any interest therein.
Petitioners fail to point out any any instrument, record, claim, encumbrance or
proceeding that could been a “cloud” to their title. In fact, both plaintiffs and defendant
admitted the existence of the agreement of partition dated June 8, 1957 and in
accordance therewith, a fixed area was allotted to them and that the only controversy is
whether these lands were properly measured.
A special civil action for quieting of title is not the proper remedy for settling a boundary
dispute, and that petitioners should have instituted an ejectment suit instead. An action
for forcible entry, whenever warranted by the period prescribed in Rule 70, or for
recovery of possession de facto, also within the prescribed period, may be availed of by
the petitioners, in which proceeding the boundary dispute may be fully threshed out.

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65. FELIX BUCTON v. ZOSIMO GABAR

FACTS:

"Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the sister of
defendant Zosimo Gabar, husband of his co-defendant Josefina Llamoso Gabar.
"This action for specific performance prays, inter-alia, that defendants-spouses be
ordered to execute in favor of plaintiffs a deed of sale of the western half of a parcel of
land having an area of 728 sq. m. covered by TCT No. II (from OCT No. 6337) of the
office of the Register of Deeds of Misamis Oriental.
"Plaintiffs' evidence tends to show that sometime in 1946 defendant Josefina Llamoso
Gabar bought the above-mentioned land from the spouses Villarin on installment basis,
to wit, P500 down, the balance payable in installments. Josefina entered into a verbal
agreement with her sister-in-law, plaintiff Nicanora Gabar Bucton, that the latter would
pay one-half of the price (P3,000) and would then own one-half of the land. Pursuant to
this understanding Nicanora on January 19, 1946 gave her sister-in-law Josefina the
initial amount of P1,000, for which the latter signed a receipt marked as Exhibit A.
"Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later signed a
receipt marked as Exhibit B.
"On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for which
defendant Zosimo Gabar signed a receipt marked as Exhibit E.

"Meanwhile, after Josefina had received in January, 1946 the initial amount of P1,000
as above stated, plaintiffs took possession of the portion of the land indicated to them
by defendants and built a modest nipa house therein. About two years later plaintiffs
built behind the nipa house another house for rent. And, subsequently, plaintiffs
demolished the nipa house and in its place constructed a house of strong materials,
with three apartments in the lower portion for rental purposes. Plaintiffs occupied the
upper portion of this house as their residence, until July, 1969 when they moved to
another house, converting and leasing the upper portion as a dormitory.
"In January, 1947 the spouses Villarin executed the deed of sale of the land above-
mentioned in favor of defendant Josefina Llamoso Gabar, Exhibit I, to whom was issued
on June 20, 1947 TCT No. II, cancelling OCT No. 6337. Exhibit D.

"Plaintiffs then sought to obtain a separate title for their portion of the land in question.
Defendants repeatedly declined to accommodate plaintiffs. Their excuse: the entire
land was still mortgaged with the Philippine National Bank as guarantee for defendants'
loan of P3,500 contracted on June 16, 1947. Exhibit D-1.

"Plaintiffs continued enjoying their portion of the land, planting fruit trees and receiving
the rentals of their buildings. In 1953, with the consent of defendants (who were living
on their portion), plaintiffs had the entire land surveyed and subdivided preparatory to
obtaining their separate title to their portion. After the survey and the planting of the

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concrete monuments defendants erected a fence from point 2 to point 4 of the plan,
Exhibit I, which is the dividing line between the portion pertaining to defendants, Exhibit
I-1, and that pertaining to plaintiffs, Exhibit I-2.

"In the meantime, plaintiffs continued to insist on obtaining their separate title.
Defendants remained unmoved, giving the same excuse. Frustrated, plaintiffs were
compelled to employ Atty. Bonifacio Regalado to intercede; counsel tried but failed.
Plaintiffs persevered, this time employing Atty. Aquilino Pimentel, Jr. to persuade
defendants to comply with their obligation to plaintiffs; this, too, failed. Hence, this case,
which has cost plaintiffs P1,500 in attorney's fees.

"Defendants' evidence - based only on the testimony of defendant Josefina Llamoso

Gabar - denies agreement to sell to plaintiffs one-half of the land in litigation. She
declared that the amounts she had received from plaintiff Nicanora Gabar Bucton - first,
P1,000, then P400 - were loans, not payment of one-half of the price of the land (which
was P3,000). This defense is devoid of merit.

"When Josefina received the first amount of P1,000 the receipt she signed, Exhibit A,
reads:

'Cagayan, Mis. Or.

January 19, 1946.

'Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000) pesos, victory
currency, as part payment of the one thousand five hundred (P1,500.00) pesos, which
sum is one-half of the purchase value of Lot No. 337, under Torrens Certificate of Title
No. 6337, sold to me by Mrs. Carmen Roa Villarin.

''(Sgd.) Josefina Ll. Gabar'"

On the basis of the facts quoted above the trial court on February 14, 1970, rendered
judgment the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered for plaintiffs:

"1) Ordering defendants within thirty days from receipt hereof to execute a deed of
conveyance in favor of plaintiffs of the portion of the land covered by OCT No. II,
indicated as Lot 337-B in the Subdivision Plan, Exhibit I, and described in the Technical
Description, Exhibit I-2; should defendants for any reason fail to do so, the deed shall be
executed in their behalf by the Provincial Sheriff of Misamis Oriental or his Deputy;

"2) Ordering the Register of Deeds of Cagayan de Oro, upon presentation to him of the
above-mentioned deed of conveyance, to cancel TCT No. II and in its stead to issue
Transfer Certificates of Title, to wit, one to plaintiffs and another to defendants, based on
the subdivision Plan and Technical Description above-mentioned; and ordering
defendants to present and surrender to the Register of Deeds their TCT No. II so that
the same may be cancelled; and

94
"3) Ordering defendants to pay unto plaintiffs attorney's fees in the amount of P1,500
and to pay the costs.

'"SO ORDERED."
Appeal was interposed by private respondents with the Court of Appeals, which
reversed the judgment of the trial court and ordered petitioners' complaint dismissed, on
the following legal disquisition:

"Appellees' alleged right of action was based on the receipt (Exh. A) which was
executed way back on January 19, 1946. An action arising from a written contract does
not prescribe until after the lapse of ten (10) years from the date the action accrued.
This period of ten (10) years is expressly provided for in Article 1144 of the Civil Code.
"From January 19, 1946 to February 15, 1968, when the complaint was filed in this
case, twenty-two (22) years and twenty-six (26) days had elapsed. Therefore, the
plaintiffs' action to enforce the alleged written contract (Exh. A) was not brought within
the prescriptive period of ten (10) years from the time the cause of action accrued.
"The land in question is admittedly covered by a torrens title in the name of Josefina
Llamoso Gabar so that the alleged possession of the land by the plaintiffs since 1947 is
immaterial because ownership over registered realty may not be acquired by
prescription or adverse possession (Section 40 of Act 496).
"It is not without reluctance that in this case we are constrained to sustain the defense
of prescription, for we think that plaintiffs really paid for a portion of the lot in question
pursuant to their agreement with the defendants that they would then own one-half of
the land. But we cannot apply ethical principles in lieu of express statutory provisions.
It is by law provided that:

'ART. 1144. The following actions must be brought within ten years from the time the
right of action accrues:

Upon a written contract;

Upon an obligation created by law;

Upon a judgment.'
"If eternal vigilance is the price of safety, one cannot sleep on one's right and expect it to
be preserved in its pristine purity."

Petitioners' appeal is predicated on the proposition that as owners of the property by

purchase from private respondents, and being in actual, continuous and physical
possession thereof since the date of its purchase, their action to compel the vendors to
execute a formal deed of conveyance so that the fact of their ownership may be
inscribed in the corresponding certificate of title, had not yet prescribed when they
filed the present action.

We hold that the present appeal is meritorious.

95
1. There is no question that petitioner Nicanora Gabar Bucton paid P1,500.00 to
respondent Josefina Gabar as purchase price of one-half of the lot now covered by TCT
No. II, for respondent Court of Appeals found as a fact "that plaintiffs really paid for a
portion of the lot in question pursuant to their agreement with the defendants that they
would own one-half (1/2) of the land." That sale, although not consigned in a public
instrument or formal writing, is nevertheless valid and binding between petitioners and
private respondents, for the time-honored rule is that even a verbal contract of sale of
real estate produces legal effects between the parties. [1] Although at the time said
petitioner paid P1,000.00 as part payment of the purchase price on January 19, 1946,
private respondents were not yet the owners of the lot, they became such owners on
January 24, 1947, when a deed of sale was executed in their favor by the Villarin
spouses. In the premises, Article 1434 of the Civil Code, which provides that "[w]hen a
person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer
or grantee," is applicable.[2] Thus, the payment by petitioner Nicanora Gabar Bucton of
P1,000.00 on January 19, 1946, her second payment of P400.00 on May 2, 1948, and
the compensation, up to the amount of P100.00 (out of the P1,000.00-loan obtained by
private respondents from petitioners on July 30, 1951), resulted in the full payment of
the purchase price and the consequential acquisition by petitioners of ownership over
one-half of the lot. Petitioners therefore became owners of the one-half portion of the
lot in question by virtue of a sale which, though not evidenced by a formal deed, was
nevertheless proved by both documentary and parole evidence.

2. The error of respondent Court of Appeals in holding that petitioners' right of action
had already prescribed stems from its belief that the action of petitioners is based on the
receipt Exh. "A" which was executed way back on January 19, 1946, and, therefore, in
the view of said appellate court, since petitioners' action was filed on February 15, 1968,
or after the lapse of twenty-two (22) years and twenty-six (26) days from the date of said
document, the same is already barred according to the provisions of Article 1144 of the
New Civil Code. The aforecited document (Exh. "A"), as well as the other documents of
similar import (Exh. "B" and Exh. "E"), are the receipts issued by private respondents to
petitioners, evidencing payments by the latter of the purchase price of one-half of the
lot.

The real and ultimate basis of petitioners' action is their ownership of one-half of the lot
coupled with their possession thereof, which entitles them to a conveyance of the
property. In Sapto, et al. vs. Fabiana, [3] this Court, speaking thru Mr. Justice J. B. L.
Reyes, explained that under the circumstances no enforcement of the contract is
needed, since the delivery of possession of the land sold had consummated the sale
and transferred title to the purchaser, and that, actually, the action for conveyance is
one to quiet title, i.e., to remove the cloud upon the appellee's ownership by the refusal
of the appellants to recognize the sale made by their predecessors. We held therein
that" * * * it is an established rule of American jurisprudence (made applicable in this
jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the
possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 29 L.

96
R. A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14).

"The prevailing rule is that the right of a plaintiff to have his title to land quieted, as
against one who is asserting some adverse claim or lien thereon, is not barred while the
plaintiff or his grantors remain in actual possession of the land, claiming to be owners
thereof, the reason for this rule being that while the owner in fee continues liable to an
action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid
of a court of equity to ascertain and determine the nature of such claim and its effect on
his title, or to assert any superior equity in his favor. He may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right. But the rule
that the statute of limitations is not available as a defense to an action to remove a
cloud from title can only be invoked by a complainant when he is in possession. One
who claims property which is in the possession of another must, it seems, invoke his
remedy within the statutory period.' (44 Am. Jur., p. 47)"
The doctrine was reiterated recently in Gallar vs. Husain, et al., [4] where We ruled that
by the delivery of the possession of the land, the sale was consummated and title was
transferred to the appellee, that the action is actually not for specific performance, since
all it seeks is to quiet title, to remove the cloud cast upon appellee's ownership as a
result of appellant's refusal to recognize the sale made by his predecessor, and that as
plaintiff-appellee is in possession of the land, the action is imprescriptible. Considering
that the foregoing circumstances obtain in the present case, We hold that petitioners'
action has not prescribed.

WHEREFORE, the decision and resolution of respondent Court of Appeals appealed

from are hereby reversed.

66. Calacala vs RP
Facts:
Spouses Camilo Calacala and Conchita Calacala, predecessors-in-interest of the herein
petitioners, are the registered owners of a parcel of land situated at Barangay
Balincanaway, Rosales, Pangasinan and covered by Transfer Certificate of Title No. T-
21204 of the Registry of Deeds of Pangasinan.
To secure the provisional release of an accused in a criminal case then pending before
the then Court of First Instance (CFI) of Pangasinan, the spouses offered their
aforementioned parcel of land as a property bond in said case.
For failure of the accused to appear at his scheduled arraignment on 4 November 1981,
the CFI ordered the bond forfeited in favor of the government, and, following the
bondman's failure to produce in court the body of the accused, rendered judgment
against the bond in the amount of P3,500.00.
Thereafter, the court issued a Writ of Execution[1] directing the provincial sheriff to effect
a levy on the subject parcel of land and to sell the same at a public auction to satisfy the
amount of the bond. In compliance with the writ, the deputy provincial sheriff issued on

97
26 July 1982 a Notice of Levy[2] addressed to the Register of Deeds of Pangasinan
who, on 19 August 1982, caused the annotation thereof on TCT No. T-21204 as Entry
No. 83188.
Not long thereafter, a public auction of the subject parcel of land was held on 24
September 1982, at which respondent Republic submitted its bid for P3,500, which is
the amount of the judgment on the bond. Hence, on that same day, a Sheriff's
Certificate of Sale[3] was issued in favor of the Republic as the winning bidder.
On 5 October 1982, the same Certificate of Sale was registered and annotated on TCT
No. T-21204 as Entry No. 83793, thereby giving the spouses Calacala a period of one
(1) year therefrom within which to redeem their property. Unfortunately, they never did
up to the time of their respective deaths on 13 January 1988 and 8 January 1994.
Claiming ownership of the same land as legal heirs of the deceased spouses,
petitioners filed with the Regional Trial Court at Rosales, Pangasinan a complaint [4] for
Quieting of Title and Cancellation of Encumbrance on TCT No. T-21204 against
respondents Republic and Sheriff Juan C. Marquez. In their complaint, docketed as
Civil Case No. 1239-R and raffled to Branch 53 of the court, petitioners prayed, inter
alia, for the cancellation of Entries No. 83188 and 83793 on TCT No. T-21204 or the
declaration of said entries as null and void.
To the complaint, respondent Republic interposed a Motion to Dismiss[5] grounded on
the (1) complaint's failure to state a cause of action and (2) prescription of petitioners'
right to redeem.
Issue: whether the trial court's dismissal of petitioners' complaint for Quieting of Title
was proper
Held:
Under Article 476 of the New Civil Code, the remedy may be availed of only when, by
reason of any instrument, record, claim, encumbrance or proceeding, which appears
valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby
casts on the complainant's title to real property or any interest therein.
In turn, Article 477 of the same Code identifies the party who may bring an action to
quiet title, thus:
Article 477. The plaintiff must have legal or equitable title to, or interest in the real
property which is the subject-matter of the action. He need not be in possession of said
property.
Verily, for an action to quiet title to prosper, two (2) indispensable requisites must
concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim, encumbrance
or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid
or inoperative despite its prima facieappearance of validity or legal efficacy.
Unfortunately, the foregoing requisites are wanting in this case.

98
To start with, petitioners base their claim of legal title not on the strength of any
independent writing in their favor but simply and solely on respondent Republic's failure
to secure the Certificate of Final Sale, execute an Affidavit of Consolidation of
Ownership and obtain a writ of possession over the property in dispute within ten (10)
years from the registration of the Certificate of Sale.
Petitioners' reliance on the foregoing shortcomings or inactions of respondent Republic
cannot stand.
For one, it bears stressing that petitioners' predecessors-in-interest lost whatever right
they had over land in question from the very moment they failed to redeem it during the
1-year period of redemption. Certainly, the Republic's failure to execute the acts referred
to by the petitioners within ten (10) years from the registration of the Certificate of Sale
cannot, in any way, operate to restore whatever rights petitioners' predecessors-in-
interest had over the same. For sure, petitioners have yet to cite any provision of law or
rule of jurisprudence, and we are not aware of any, to the effect that the failure of a
buyer in a foreclosure sale to secure a Certificate of Final Sale, execute an Affidavit of
Consolidation of Ownership and obtain a writ of possession over the property thus
acquired, within ten (10) years from the registration of the Certificate of Sale will operate
to bring ownership back to him whose property has been previously foreclosed and
sold. As correctly observed by the trial court, the Republic's failure to do anything within
ten (10) years or more following the registration of the Sheriff's Certificate of Sale
cannot give rise to a presumption that it has thereby waived or abandoned its right of
ownership or that it has prescribed, 'for prescription does not lie against the
government', nor could it 'be bound or estopped by the negligence or mistakes of its
officials and employees' .
Moreover, with the rule that the expiration of the 1-year redemption period forecloses
the obligor's right to redeem and that the sale thereby becomes absolute, the issuance
thereafter of a final deed of sale is at best a mere formality and mere confirmation of the
title that is already vested in the purchaser.
With the reality that petitioners are not holders of any legal title over the property subject
of this case and are bereft of any equitable claim thereon, the very first requisite of an
action to quiet title, i.e., that the plaintiff or complainant has a legal or an equitable title
to or interest in the real property subject matter of the action, is miserably wanting in this
case.
For another, and worse, petitioners never put in issue, as in fact they admit in their
pleadings, the validity of the Sheriff's Certificate of Sale duly registered on 5 October
1982. On this score, the second requisite of an action to quiet title, namely, that the
deed, claim, encumbrance or proceeding alleged to cast cloud on a plaintiff's title is in
fact invalid or inoperative despite itsprima facie appearance of validity or legal efficacy,
is likewise absent herein.

67. Heirs of Jose Olviga vs CA

99
This is a petition to review the decision of the Court of Appeals in CA-G.R. CV No.
30542, affirming in toto the decision of the Regional Trial Court of Calauag, Quezon
ordering the defendants, heirs of Jose Olviga (petitioners herein), to reconvey the land
in dispute to the plaintiffs, heirs of Cornelia Glor (now private respondents),and to pay
attorney's fees and the costs of suit.chanroblesvirtualawlibrarychanrobles virtual law
library
This case started as an action (Civil Case No. C-883) filed in the Regional Trial Court of
Calauag, Quezon by Angelita Glor and her children against the heirs of Jose Olviga for
reconveyance of a parcel of land, measuring 54,406 square meters (5.44 has), more or
less, known as Lot 13, Pls-84 of the Guinayangan Public Land
Subdivision.chanroblesvirtualawlibrarychanrobles virtual law library
The court, after due trial, rendered judgment in favor of the private respondents, the
dispositive portion of which reads:
WHEREFORE, and considering the foregoing judgment is hereby rendered in favor of
the PLAINTIFFS and against the defendants as heirs of Jose Olviga to reconvey the
land in dispute to the plaintiffs as heirs of Cornelio Glor Sr.; condemning the defendants
jointly and severally to pay the plaintiffs attorneys fees of P5,000.00 plus the costs of
the suit. The counterclaim interposed by defendants is dismissed. ( p. 12, Rollo.)
The judgment was appealed to the Court of Appeals by the defendants who raised
several factual issues regarding possession and fraud, as well as legal issues involving
prescription and purchaser in good faith, but the appellate court dismissed the appeal
and affirmed in toto the decision of the trial court.chanroblesvirtualawlibrarychanrobles
virtual law library
It was established by the evidence on record that the land in question was, in 1950, still
forest land when Eutiquio Pureza, then only twelve years old, and his father cleared and
cultivated it. In 1954, they introduced improvements such as, coconut trees, jackfruit,
mangoes, avocado and bananas. When the area was released for disposition, the
Bureau of Lands surveyed the same in 1956 in the name of Eutiquio Pureza. Since
then, the land has been known as Lot 13, Pls-84 of the Guinayangan Public Land
Subdivision. Godofredo Olviga, a son of Jose Olviga then living with the latter, protested
the survey but without respect to a one-half-hectare portion "sa dakong panulukan ng
Amihanan-Silanganan." This protest or "tutol" (Exh. B) of Godofredo Olviga, brother of
petitioners Virgilio Olviga and Lolita Olviga Olila, is of public record in the Bureau of
Lands (Exh. B). In said document, Godofredo Olviga expressly admitted that the lot
belonged to Eutiquio Pureza, except the 1/2 hectare portion claimed by him (Godofredo)
which was included in the survey of Pureza's Lot
13.chanroblesvirtualawlibrarychanrobles virtual law library
In 1960, Eutiquio Pureza filed a homestead application over Lot 13. Without his
application having been acted upon, he transferred his rights in said lot to Cornelia Glor
in 1961. Neither the homestead application of Eutiquio nor the proposed transfer of his
rights to Cornelio Glor was acted upon by the Director of Lands for reasons that the

100
records of the Bureau of Lands do not disclose.chanroblesvirtualawlibrary chanrobles
virtual law library
In 1967, Jose Olviga obtained a registered title for said lot in a cadastral proceeding, in
fraud of the rights of Pureza and his transferee, Cornelio Glor and his family who were
the real and actual occupants of the land.chanroblesvirtualawlibrary chanrobles virtual
law library
What must have happened as found by the Court of Appeals, is that since Cornelio Glor,
Sr. was sickly, and his wife (now widowed) Angelita Glor, was unschooled, they failed to
follow up Pureza's homestead application over Lot 13 in the cadastral proceedings in
the Municipal Court of Guinayangan Public Land Subdivision, Pls-84, Case 1 (Philcusa-
Foa). In fact, they were not aware of the proceedings. Angelita Glor testified that no
notice was ever posted on Lot 13 about the proceedings nor did the barangay captain,
tell her about them. Neither did she receive any notice from the court sheriff or any court
employee. This non-posting of the hearing of the cadastral hearing on the land, or in the
barangay hall, was confirmed by petitioner Virgilio Olviga himself who testified that he
did not notice any papers posted on the property in question (tsn, October 18, 1990, pp.
83-84). On the other hand, petitioner's father Jose Olviga, claimed both Lots 12 and 13,
which are adjoining lots, in the same cadastral proceedings. He falsely omitted in his
answer mention of the fact that other persons were in possession of, and claiming
adverse interest in, Lot 13 and that the land had been surveyed for Eutiquio Pureza, the
former occupant who sold his interests to private respondents' parent. Cornelio Glor, in
1961. Glor was Olviga's neighbor. As a result, both Lots 12 and 13 were declared as
uncontested in the name of Jose Olviga (Exh. 7), and were registered in his name in
1967 in Original Certificate of Title, No. 0-12713 (Exh. 5). In 1971, Olviga requested that
OCT No. 0-12713 be split into two (2) TCT's, one each for the two (2) lots. TCT Nos. T-
103823 and T-103824 were issued for lots 12 and 13, respectively. Jose Olviga later
transferred Lot 13 to his son-in-law, Jaime Olila and daughter, Lolita Olviga resulting in
the cancellation of TCT. No. 241314 in the names of the spouses (Exh.
3).chanroblesvirtualawlibrarychanrobles virtual law library
It was also established that the spouses Jaime Olila and Lolita Olviga Olila, were not
innocent purchasers for value of the land from their father, and have never been in the
possession. The Glors and their predecessor-in-interest (Cornelio Glor Sr., and Eutiquio
Pureza) were the ones found to be in possession of the
property.chanroblesvirtualawlibrarychanrobles virtual law library
From said finding, and conclusions, the appellate court in its decision dated January 13,
1992, resolved the issues presented, thus:
. . ., whether or not plaintiffs' action is really one for quieting of title that does not
prescribe; or assuming that their demand for reconveyance of the lot in question
prescribes in ten years, being based on an implied trust, whether their cause of action
should be counted from the date of the issuance of the late Jose Olviga's title over said
lot in 1967 and has, therefore, already prescribed, or whether the prescriptive period
should be counted from the date plaintiffs acquired knowledge of said title sometime in
1988.chanroblesvirtualawlibrarychanrobles virtual law library

101
The first question should be answered in the affirmative. . . .
xxx xxx xxxchanrobles virtual law library
But even assuming that plaintiffs' action for reconveyance, being based on an implied or
constructive trust, prescribes in ten years, the lower court again correctly ruled that their
cause of action should be considered to have accrued not from the date of registration
of the title of Jose Olviga, defendants' predecessor-in-interest, over the lot in question in
1967, but only from the time the plaintiffs learned of such title in 1988. . . . .
xxx xxx xxxchanrobles virtual law library
All in all, therefore, the court a quo did not err in holding that plaintiffs' action against
defendants-appellants for the reconveyance of the lot in question filed on April 10, 1989,
or in less than a year after they learned of the issuance of a title over said lot to Jose
Olviga, predecessor-in-interest of defendants, has not yet
prescribed.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the decision appealed from herein is AFFIRMED in toto, with costs
against defendants-appellants. (pp. 48-51, Rollo.)
Petitioners now seek a review of the above decision. They allege that the present action
has already prescribed; (2) the Court of Appeals erred when it ruled that the private
respondents' cause of action accrued not in 1967 but in 1988; (3) that the Court of
Appeals erred when it failed to consider that private respondents as mere homestead
transferees cannot maintain an action for reconveyance; (4) that the Faja and Caragay-
Layno cases have no bearing and direct application to the case at bar; and (5) that
private respondents have not proven by preponderance of evidence their ownership and
possession of the disputed land.chanroblesvirtualawlibrarychanrobles virtual law library
With regard to the issue of prescription, this Court has ruled a number of times before
an action for reconveyance of a parcel of land based on implied or constructive trust
prescribes in ten years, the point of reference being the date of registration of the deed
of the date of the issuance of the certificate of title over the property (Vda. de Portugal
vs. IAC, 159 SCRA 178). But this rule applies only when the plaintiff is not in
possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, the right to seek reconveyance, which in effect seeks
to quiet title to the property, does not prescribe.chanroblesvirtualawlibrarychanrobles
virtual law library
In Sapto vs. Fabiana, 103 Phil. 683, 686-687, appellants' predecessors sold to
appellees in 1931 a parcel of land. The sale was approved by the Provincial Governor
of Davao but was never registered. Possession of the land was, however, transferred to
Fabiana and the latter has been in possession thereof from 1931 up to the present. The
widow and children of Samuel Sapto filed an action to recover the land. This Court in
affirming the validity of the sale in favor of appellee (Fabiana) held:
No enforcement of the contract is in fact needed, since the delivery of possession of the
land sold had consummated, the sale and transferred title to the purchaser, registration

102
of the contract not being indispensable as between the parties. Actually the action for
conveyance was one to quiet title, i.e., to remove the cloud cast upon appellee's
ownership by the refusal of the appellants to recognize the sale made by their
predecessors. This action accrued only when appellants initiated their suit to recover
the land in 1954. Furthermore, it is an established rule of American jurisprudence (made
applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title
to property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47;
Cooper vs. Rhea, 39 L.R.A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash.
439 245 Pac. 14).
In Faja vs. Court of Appeals, 75 SCRA 441, 446, this Court likewise reiterated the ruling
that:
. . . There is settled jurisprudence that one who is in actual possession of a piece of land
claiming to be owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity
to ascertain and determine the nature of the adverse claim of a third party and its effect
on his own title, which right can be claimed only by one who is in possession. No better
situation can be conceived at the moment for Us to apply this rule on equity than that of
herein petitioners whose mother, Felipa Faja, was in possession of the litigated property
for no less than 30 years and was suddenly confronted with a claim that the land she
had been occupying and cultivating all these years, was titled in the name of a third
person. We hold that in such situation the right to quiet title to the property, to seek its
reconveyance and annul any certificate of title covering it, accrued only from the time in
possession was made aware of a claim adverse to his own, and it is only then that the
statutory period of prescription commences to run against possessor.
In the case at bar, private respondents and their predecessors-in-interest were in actual
possession of the property since 1950. Their undisturbed possession gave them the
continuing right to seek the aid of a court of equity to determine the nature of the
adverse claim of petitioners, who in 198 disturbed their
possession.chanroblesvirtualawlibrarychanrobles virtual law library
The other issues raised in the petition are factual.chanroblesvirtualawlibrarychanrobles
virtual law library
The Court of Appeals and the trial court correctly based their findings of tact on the
testimonies of the parties and their witnessess. It can be said therefore that those
conclusions are based on substantial evidence. No cogent reason exists to disturb
them. As reiterated in a long line of decisions, it is beyond the province of this Court to
make its own findings of facts different from those of the trial court as affirmed by the
Court of Appeals (Vda. de Cailles vs. Mayuga 170 SCRA 347; New
Owners/Management of TML Garments, Inc. vs. Zaragosa, 170 SCRA 563). In petitions
for review of decisions of the Court of Appeals, the jurisdiction of this Court is confined
to a review of questions of law, except when the findings of fact are not supported by
the records or are so glaringly erroneous as to constitute a serious abuse of discretion
(Lim vs. Court of Appeals, 158 SCRA 307; Samson vs. CA, 141 SCRA 194; Republic vs.

103
IAC, 144 SCRA 705). The case at bar does not fall under the
exceptions.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, finding no reversible error in the decision of the Court of Appeals, the
petition for review is DENIED, with costs against the petitioners.c

68. Heirs of Domingo Valientes vs Ramas

FACTS:

Petitioners claim that they are the heirs of Domingo Valientes who, before his death,
was the owner of a parcel of land in Gabay, Margosatubig, Zamboanga del Sur.
Domingo Valientes mortgaged the subject property to secure his loan to the spouses
Leon Belen and Brigida Sescon. Through an allegedly forged document, the spouses
Belen obtained Transfer Certificate of Title (TCT) No. T-5,427 in their name. The
legitimate children of the late Domingo Valientes, had their Affidavit of Adverse Claim
duly entered in the Memorandum of Encumbrances at the back of TCT No. T-5,427.
Upon the death of the spouses Belen, their surviving heirs Brigida Sescon Belen and
Maria Lina Belen executed an extra-judicial settlement with partition and sale in favor of
private respondent Vilma Valencia-Minor, the present possessor of the subject property.
The action for reconveyance, sought for by the petitioners, was denied by the RTC. The
CA likewise denied the petition on the grounds of prescription and laches.

ISSUE:

WON the cancellation of transfer certificate of title no. T-5,427, reconveyance and etc. is
barred by prescription and laches.

RULING:

Yes. The case cannot prosper because an action for reconveyance is a legal remedy
granted to a landowner whose property has been wrongfully or erroneously registered in
another’s name, which must be filed within ten years from the issuance of the title since
such issuance operates as a constructive notice (Declaro vs. Court of Appeals, 346
SCRA 57). Where a party has neglected to assert his rights over a property in question
for an unreasonably long period, he is estopped from questioning the validity of another
person’s title to the property (Ibid.) Long inaction and passivity in asserting one’s rights
over a disputed property precludes him from recovering said property (Po Lam vs. Court
vs. Court of Appeals, 347 SCRA 86).

The cause of action of petitioners in Civil Case No. 98-021, wherein they claim that
private respondent Minor’s predecessor-in-interest acquired the subject property by
forgery, can indeed be considered as that of enforcing an implied trust. In particular,
Article 1456 of the Civil Code provides:

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Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes.

The right to seek reconveyance based on an implied or constructive trust is not absolute
nor is it imprescriptible. An action for reconveyance based on an implied or constructive
trust must prescribe in ten years from the issuance of the Torrens title over the property.
Furthermore, when the plaintiff in such action is not in possession of the subject
property, the action prescribes in ten years from the date of registration of the deed or
the date of the issuance of the certificate of title over the property. When the plaintiff is in
possession of the subject property, the action, being in effect that of quieting of title to
the property, does not prescribe. In the case at bar, petitioners (who are the plaintiffs in
Civil Case No. 98-021) are not in possession of the subject property. Civil Case No. 98-
021, if it were to be considered as that of enforcing an implied trust, should have
therefore been filed within ten years from the issuance of TCT No. T-5,427 on
December 22, 1969. Civil Case No. 98-021 was, however, filed on August 20, 1998,
which was way beyond the prescriptive period.

69. Walstrom vs MAPA

Facts:
Cacao Dianson, has a free patent application, he filed with the District Land Office in
Baguio City a letter protesting the construction in April, 1956 by Josefa Abaya Mapa of
on the parcel of land (described as "portion A") of one of the parcels of land covered by
his Free Patent Application.
The controversy was referred to Bureau of Lands Investigator Antonio Mejia. He found
that Josefa Abaya Mapa has filed a Miscellaneous Sales Application, the same was
awarded to her on May 12, 1934. The purchase price has been paid in full in 1943
evidenced by an Official Receipt. Cacao Dianson filed a Free Patent Application for the
same parcel of land on June 1, 1956, alleging that the said land was first occupied by
his father, Dianson, in 1884.
The regional land officer of Dagupan City decided that Free Patent Application of Cacao
Dianson should exclude Portion "A" which is covered by the Miscellaneous Sales
Application of Josefa Abaya Mapa. Two years after the death of Dianson, Walstrom filed
a motion for reconsideration, claiming that Dianson is her predecessor in interest, the
motion for reconsideration resulted in setting aside the decision of the Regional land
officer. Mapa then appealed to the Department of Agriculture and Natural Resources
reinstated the decision of the Regional land officer, then Gabriela Walstrom filed for
motion for reconsideration but was denied. While Walstrom filed for a second motion for
reconsideration of the order of DANR, Mapa filed a motion for execution. DANR granted
the motion for execution. Walstrom then filed a petition for relief with the DANR but then
pending the petition, she died. The heirs of Mapa pursued the case. This petition of
Walstrom remained unresolved, according to petitioner Hilda Walstrom, daughter of
Gabriela Walstrom, she was compelled to file an action in the court because the 1 year
prescriptive period provided for in Sec 38 of Land Registration act was about to lapse.

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Issues:
*Whether or not Walstrom’s civil complaint against the respondents praying for
nullification of the Mapa’s sales patent and certificates of title issued by the register of
deeds under Section 38 of Act 496 or the Land Registration Act is valid.
Ruling of the Court
SEC. 38 of Act 496 or the Land Registration Act provides that a decree of registration
may be reopened or reviewed by the proper Regional Trial Court upon the concurrence
of five essential requisites, to wit: (a) that the petitioner has a real and a dominical right;
(b) that he has been deprived thereof;(c) through fraud; (d) that the petition is filed within
one year from the issuance of the decree; and (e) that the property has not as yet been
transferred to an innocent purchaser for value.
An examination of the records of the case shows non-concurrence of the essential
elements enumerated above.
The first element is patently not present because the petitioner cannot allege that she
has already a real and dominical right to the piece of property in controversy since the
decision of the regional land officer was upheld by the DANR secretary. That the
petitioner's Free Patent Application shall exclude the disputed portion "A" of Lot No. 1,
which, instead, shall be included in the Mapas' Miscellaneous Sales Application.
The second element is also absent, the petitioner cannot aver that she was deprived of
property because she did not have a real right over portion "A".
As to the third element, the records are bereft of any indication that there was fraud in
the issuance of the certificates of title.
The court also finds that the lower court was correct in holding that the case does not
fall under any of the exceptions to the rule on exhaustion of administrative remedies.
Instead of invoking Section 38, the petitioner should have pressed for the speedy
resolution of her petition with the DANR. The petitioner’s fear that since the one-year
prescriptive period for seeking judicial relief provided for in Sec. 38 of the Land
Registration Act was about to lapse, she was compelled to file the action to nullify said
patent is not correct.
The court has ruled before in Amerol vs. Bagumbaran that notwithstanding the
irrevocability of the Torrens title already issued in the name of another person, he can
still be compelled under the law to reconvey the subject property to the rightful owner.
After all, the Torrens system was not designed to shield and protect one who had
committed fraud or misrepresentation and thus holds title in bad faith.
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, in this case the
title thereof, which has been wrongfully or erroneously registered in another person's
name, to its rightful and legal owner, or to one with a better right.
Yet, the right to seek reconveyance based on an implied or constructive trust is not
absolute nor is it imprescriptible. An action for reconveyance based on an implied or
constructive trust must perforce prescribe in ten years from the issuance of the Torrens
title over the property.

The court upheld the decision of the trial court.

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Art. 486
70. Pardell vs Bartolome
CASE DOCTRINES Hereditary succession gives rise to co-ownership
Co-ownership; extent
"Each co-owner may use the things owned in common, provided he uses them in
accordance with their object and in such manner as not to injure the interests of the
community nor prevent the co-owners from utilizing them according to their rights."
(Article 394 of the Civil Code, now Art. 486)
Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling,
in the house of joint ownership; but the record shows no proof that, by so doing, the said
Matilde occasioned any detriment to the interests of the community property, nor that
she prevented her sister Vicenta from utilizing the said upper story according to her
rights. It is to be noted that the stores of the lower floor were rented and an accounting
of the rents was duly made to the plaintiffs.
Each co-owner of realty held pro indiviso exercises his rights over the whole property
and may use and enjoy the same with no other limitation than that he shall not injure the
interests of his coowners, for the reason that, until a division be made, the respective
part of each holder can not be determined and every one of the coowners exercises
together with his other coparticipants, joint ownership over the pro indiviso property, in
addition to his use and enjoyment of the same.
Co-owner not required to pay rent upon using the co-owned property; stranger to
pay rent
Gaspar de Bartolome, occupied for four years a room or a part of the lower floor of the
same house on Calle Escolta, using it as an office for the justice of the peace, a position
which he held in the capital of that province, strict justice requires that he pay his sister-
in-law, the plaintiff, one-half of the monthly rent which the said quarters could have
produced, had they been leased to another person. Xxx even as the husband of the
defendant coowner of the property, he had no right to occupy and use gratuitously the
said part of the lower Notes (Case Digests Property) Page 7 floor of the house in
question, where he lived with his wife, to the detriment of the plaintiff Vicenta who did
not receive one-half of the rent which those quarters could and should have produced,
had they been occupied by a stranger, in the same manner that rent was obtained from
the rooms on the lower floor that were used as stores.
FACTS:
Appeal by bill of exceptions.
Spouses Miguel Ortiz and Calixta Felin died in Vigan, Ilocos Sur, in 1875 and 1882,
respectively. Prior to her death, Calixta, executed, on August 17, 1876, a nuncupative
will in Vigan, whereby she made her four children, named Manuel, Francisca, Vicenta,

107
and Matilde, surnamed Ortiz y Felin, her sole and universal heirs of all her property.
Manuel and Francisca were already deceased, leaving Vicenta and Matilda as heirs.
In 1888, the defendants (Matilde and Gaspar), without judicial authorization, nor
friendly or extrajudicial agreement, took upon themselves the administration and
enjoyment of the properties left by Calixta and collected the rents, fruits, and products
thereof, to the serious detriment of Vicenta’s interest. Despite repeated demands to
divide the properties and the fruits accruing therefrom, Sps Gaspar and Matilde had
been delaying the partition and delivery of the said properties by means of unkempt
promises and other excuses.
Vicenta filed a petition for partition with damages in the RTC.
RTC decision: absolved Matilde from payment of damages. It held that the revenues
and the expenses were compensated by the residence enjoyed by the defendant party,
that no losses or damages were either caused or suffered, nor likewise any other
expense besides those aforementioned,
Counsel for Matilde took an exception to the judgment and moved for a new trial on the
grounds that the evidence presented did not warrant the judgment rendered and that
the latter was contrary to law. That motion was denied by the lower court. Thus, this
petition.
ISSUE: WON a co-owner is required to pay for rent in exclusively using the co-owned
property.
RULING: Article 394 of the Civil Code prescribes:
"Each co-owner may use the things owned in common, provided he uses them in
accordance with their object and in such manner as not to injure the interests of the
community nor prevent the co-owners from utilizing them according to their rights."
Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling,
in the house of joint ownership; but the record shows no proof that, by so doing, the said
Matilde occasioned any detriment to the interests of the community property, nor that
she prevented her sister Vicenta from utilizing the said upper story according to her
rights. It is to be noted that the stores of the lower floor were rented and an accounting
of the rents was duly made to the plaintiffs.
Each co-owner of realty held pro indiviso exercises his rights over the whole property
and may use and enjoy the same with no other limitation than that he shall not injure the
interests of his coowners, for the reason that, until a division be made, the respective
part of each holder can not be determined and every one of the coowners exercises
together with his other coparticipants, joint ownership over the pro indiviso property, in
addition to his use and enjoyment of the same. As the hereditary properties of the joint
ownership of the two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz, defendant, were
situated in the Province of Ilocos Sur, and were in the care of the last named, assisted
by her husband, while the plaintiff Vicenta with her husband was residing outside of the
said province the greater part of the time between 1885 and 1905, when she left these

108
Islands for Spain, it is not at all strange that delays and difficulties should have attended
the efforts made to collect the rents and proceeds from the property held in common
and to obtain a partition of the latter, especially during several years when, owing to the
insurrection, the country was in a turmoil; and for this reason, aside from that founded
on the right of co-ownership of the defendants, who took upon themselves the
administration and care of the property of joint tenancy for purposes of their
preservation and improvement, these latter are not obliged to pay to the plaintiff Vicenta
one-half of the rents which might have been derived from the upper story of the said
house on Calle Escolta, and, much less, because one of the living rooms and the
storeroom thereof were used for the storage of some belongings and effects of common
ownership between the litigants. The defendant Matilde, therefore, in occupying with her
husband the upper floor of the said house, did not injure the interests of her coowner,
her sister Vicenta, nor did she prevent the latter from living therein, but merely exercised
a legitimate right pertaining to her as a co-owner of the property.
Notwithstanding the above statements relative to the joint-ownership rights which
entitled the defendants to live in the upper story of the said house, yet, in view of the
fact that the record shows it to have been proved that the defendant Matilde's husband,
Gaspar de Bartolome, occupied for four years a room or a part of the lower floor of the
same house on Calle Escolta, using it as an office for the justice of the peace, a position
which he held in the capital of that province, strict justice requires that he pay his sister-
in-law, the plaintiff, one-half of the monthly rent which the said quarters could have
produced, had they been leased to another person. The amount of such monthly rental
is fixed at P16 in appearance with the evidence shown in the record. This conclusion as
to Bartolome's liability results from the fact that, even as the husband of the defendant
coowner of the property, he had no right to occupy and use gratuitously the said part of
the lower floor of the house in question, where he lived with his wife, to the detriment of
the plaintiff Vicenta who did not receive one-half of the rent which those quarters could
and should have produced, had they been occupied by a stranger, in the same manner
that rent was obtained from the rooms on the lower floor that were used as stores.
Therefore, the defendant Bartolome must pay to the plaintiff Vicenta P384, that is, one-
half of P768, the total amount of the rents which should have been obtained during four
years from the quarters occupied as an office by the justice of the peace of Vigan.
HELD: partial reversal of RTC judgment. /

Art. 487
G.R. No. L-49731 September 29, 1988
ALFREDO SERING, petitioner,
vs.
RESTITUTO PLAZO and GERTRUDES SUAN, respondents.
Facts:

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Article 487 of the Civil Code provides that anyone of the co-owners of an immovable
may bring an action in ejectment. A co-owner may thus bring an ejectment action
without joining the other co-owners, the suit being deemed instituted for the benefit of
all. And the term, "action in ejectment," includes a suit of forcible entry (detentacion) or
unlawful detainer (desahucio).
The proceeding at bar had its inception in a forcible entry suit filed by petitioner Sering
against respondent Spouses Restituto Plazo and Gertrudes Suan with the then
Municipal Court of del Carmen, Surigao del Norte. The case resulted in a judgment
against the Plazos who thereupon appealed to the Court of First Instance of Surigao del
Norte. In the latter court the Plazos learned that the property subject of the suit was not
owned solely by Sering but was owned in common by him and others. This prompted
the Plazos to move for the impleading of the other co-owners as parties plaintiff, on the
theory that they were indispensable parties. The Court agreed and ordered Sering to
amend his complaint so as to include his co-owners as co-plaintiffs. Sering demurred
claiming that under the law anyone of the co-owners could bring suit for ejectment
without joining the others. The Plazos contended, on the other hand, that the
provision invoked by Sering had no application to forcible entry actions, but only
to suits of unlawful detainer. Because Sering failed to comply with the Courts order
for amendment of the complaint, the Trial Court dismissed his complaint. It also
thereafter denied his motion for reconsidereration. Sering has come to this Court
praying for the nullification and reversal of said order of dismissal and that denying his
plea for reconsideration.
Issue:
Whether or not an action of forcible entry and detainer should be brought in the name
of all co-owners.
Ruling:
No. Under Article 487 of the new Civil Code, any of the co-owners may bring the
action ... . In forcible entry and detainer action(s) the matter to be determined is
simply the question of prior physical possession. It having been alleged in the
complaint that the plaintiff was in actual possession of the properties, certainly the
plaintiff alone, who was in actual possession, could file the complaint.
The Court has been cited to no reason of substance for modifying or overruling this
doctrine.
WHEREFORE, the challenged Orders dismissing the petitioner's complaint for
ejectment and denying reconsideration of the dismissal decree are REVERSED AND
SET ASIDE, and the case is REMANDED to the Regional Trial Court for resolution, with
all deliberate dispatch, of the respondents' appeal from the judgment of the inferior
court. This Resolution is immediately executory.

FIRST DIVISION

110
[G.R. NO. 168943 : October 27, 2006]
IGLESIA NI CRISTO, Petitioner, v. HON. THELMA A. PONFERRADA, in her
capacity as Presiding Judge, Regional Trial Court, Br. 104, Quezon City, and
HEIRS OF ENRIQUE G. SANTOS, Respondents.

Facts:
On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed
Santos, and Sonia Santos-Wallin, represented by Enrique G. Santos, filed a complaint
for Quieting of Title and/or Accion Reinvindicatoria before the RTC of Quezon City
against the Iglesia Ni Cristo.
Plaintiffs alleged that, during his lifetime, Enrique Santos was the owner of a 936-
square-meter parcel of land located in Tandang Sora, Quezon City covered by TCT no.
57272 issued by the Register of Deeds on July 27, 196. He had been in possession of
the owner's duplicate of said title and had been in continuous, open, adverse and
peaceful possession of the property. He died on February 9, 1970 and was survived by
his wife, Alicia Santos, and other plaintiffs, who were their children. When the Office of
the Register of Deeds of Quezon City was burned, the original copy of said title was
burned as well. The Register of Deeds had the title reconstituted based on the owner's
duplicate of TCT No. 57272.
Sometime in February 1996, plaintiffs learned that defendant was claiming ownership
over the property, they insisted that TCT Nos. 321744, 320898 and 252070 were not
among the titles issued by the Register of Deeds of Quezon City and even if the
Register of Deeds issued said titles, it was contrary to law. Enrique Santos, during his
lifetime, and his heirs, and after his death, never encumbered or disposed the property.
Defendant asserted that the case involved more than one plaintiff but the verification
and certification against forum shopping incorporated in the complaint was signed only
by Enrique Santos. Although the complaint alleges that plaintiffs are represented by
Enrique Santos, there is no showing that he was, indeed, authorized to represent the
other plaintiffs. Thus, plaintiffs failed to comply with Section 5, Rule 7 of the Rules of
Court.
Defendant likewise averred that the complaint should be dismissed on the ground of
prescription. It argued that plaintiffs anchor their claim on quieting of title and
considering that they are not in possession of the land in question, their cause of action
prescribed after ten years. On the other hand, if the supposed right of plaintiffs is based
on accion reinvindicatoria, prescription would set in after 10 years from dispossession.
In both cases, defendant asserts, the reckoning point is 1984 when defendant acquired
TCT No. 321744 and possession of the land in question.
RTC denied defendant's motion to dismiss. It declared that since Enrique Santos was
one of the heirs, his signature in the verification and certification constitutes substantial
compliance with the Rules. Likewise, held that prescription had not set in and that

111
failure to state the address of plaintiffs in the complaint does not warrant the dismissal
of the complaint.
Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with
Prayer for the Issuance of a Temporary Restraining Order and/or Preliminary Injunction
before the CA, raising the following issues:
CA rendered the assailed decision dismissing the petition, holding that the RTC did not
commit grave abuse of its discretion amounting to lack or excess of jurisdiction in
denying petitioner's motion to dismiss.
Issue:
Whether or not certification against forum shopping incorporated in the
complaint signed only by one of the plaintiffs is sufficient.
Ruling:
This Court held in Ateneo de Naga University v. Manalo, that the verification
requirement is deemed substantially complied with when, as in the present case, only
one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth
of the allegations in the petition (complaint), signed the verification attached to it. Such
verification is deemed sufficient assurance that the matters alleged in the petition have
been made in good faith or are true and correct, not merely speculative.
The same liberality should likewise be applied to the certification against forum
shopping. The general rule is that the certification must be signed by all plaintiffs in a
case and the signature of only one of them is insufficient. However, the Court has also
stressed in a number of cases that the rules on forum shopping were designed to
promote and facilitate the orderly administration of justice and thus should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate
objective. The rule of substantial compliance may be availed of with respect to the
contents of the certification. This is because the requirement of strict compliance with
the provisions merely underscores its mandatory nature in that the certification cannot
be altogether dispensed with or its requirements completely disregarded.23
The substantial compliance rule has been applied by this Court in a number of cases:
Cavile v. Heirs of Cavile, where the Court sustained the validity of the certification
signed by only one of petitioners because he is a relative of the other petitioners and co-
owner of the properties in dispute; Heirs of Agapito T. Olarte v. Office of the President of
the Philippines, where the Court allowed a certification signed by only two petitioners
because the case involved a family home in which all the petitioners shared a common
interest; Gudoy v. Guadalquiver, where the Court considered as valid the certification
signed by only four of the nine petitioners because all petitioners filed as co-owners pro
indiviso a complaint against respondents for quieting of title and damages, as such, they
all have joint interest in the undivided whole; and Dar v. Alonzo-Legasto, where the
Court sustained the certification signed by only one of the spouses as they were sued
jointly involving a property in which they had a common interest.

112
It is noteworthy that in all of the above cases, the Court applied the rule on substantial
compliance because of the commonality of interest of all the parties with respect to the
subject of the controversy.
Applying the doctrines laid down in the above cases, we find and so hold that the CA did
not err in affirming the application of the rule on substantial compliance. In the instant
case, the property involved is a 936-square-meter real property. Both parties have their
respective TCTs over the property. Respondents herein who are plaintiffs in the case
below have a common interest over the property being the heirs of the late Enrique
Santos, the alleged registered owner of the subject property as shown in one of the
TCTs. As such heirs, they are considered co-owners pro indiviso of the whole property
since no specific portion yet has been adjudicated to any of the heirs. Consequently, as
one of the heirs and principal party, the lone signature of Enrique G. Santos in the
verification and certification is sufficient for the RTC to take cognizance of the case. The
commonality of their interest gave Enrique G. Santos the authority to inform the RTC on
behalf of the other plaintiffs therein that they have not commenced any action or claim
involving the same issues in another court or tribunal, and that there is no other pending
action or claim in another court or tribunal involving the same issues. Hence, the RTC
correctly denied the motion to dismiss filed by petitioner.
Considering that at stake in the present case is the ownership and possession over a
prime property in Quezon City, the apparent merit of the substantive aspects of the case
should be deemed as a special circumstance or compelling reason to allow the
relaxation of the rule.
Time and again, this Court has held that rules of procedure are established to
secure substantial justice. Being instruments for the speedy and efficient
administration of justice, they may be used to achieve such end, not to derail it. In
particular, when a strict and literal application of the rules on non-forum shopping and
verification will result in a patent denial of substantial justice, these may be liberally
construed. The ends of justice are better served when cases are determined on the
merits - after all parties are given full opportunity to ventilate their causes and defenses
- rather than on technicality or some procedural imperfections.
Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-
plaintiffs, we find no necessity to show such authority. Respondents herein are co-
owners of the subject property. As such co-owners, each of the heirs may properly bring
an action for ejectment, forcible entry and detainer, or any kind of action for the recovery
of possession of the subject properties. Thus, a co-owner may bring such an action,
even without joining all the other co-owners as co-plaintiffs, because the suit is deemed
to be instituted for the benefit of all.
On the issue of prescription of action, petitioner avers that the action of respondents is
one to quiet title and/or accion reinvindicatoria, and that respondents asserted
ownership over the property and sought the recovery of possession of the subject
parcel of land. It insists that the very nature of the action presupposes that respondents
had not been in actual and material possession of the property, and that it was petitioner
which had been in possession of the property since 1984 when it acquired title thereon.

113
The action of respondent prescribed in ten years from 1984 when petitioner allegedly
dispossessed respondents, in accordance with Article 555(4) of the New Civil Code.

The contention of petitioner has no merit. The nature of an action is determined by the
material allegations of the complaint and the character of the relief sought by plaintiff,
and the law in effect when the action was filed irrespective of whether he is entitled to all
or only some of such relief. As gleaned from the averments of the complaint, the action
of respondents was one for quieting of title under Rule 64 of the Rules of Court, in
relation to Article 476 of the New Civil Code. The latter provision reads:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.
A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an
interest in land appearing in some legal form but which is, in fact, unfounded, or which it
would be inequitable to enforce.38 An action for quieting of title is imprescriptible until
the claimant is ousted of his possession.39
The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if,
at the time of the commencement of his action, he was not in actual possession of real
property. After all, under Article 477 of the New Civil Code, the owner need not be in
possession of the property. If on the face of TCT No. 321744 under the name of plaintiff,
its invalidity does not appear but rests partly in pais, an action for quieting of title is
proper.40
In the present case, respondents herein, as plaintiffs below, alleged in their complaint,
that their father, Enrique Santos, was the owner of the property based on TCT No.
57272 issued on July 27, 1961; and that, after his death on February 9, 1970, they
inherited the property; Enrique Santos, during his lifetime, and respondents, after the
death of the former, had been in actual, continuous and peaceful possession of the
property until 1994 when petitioner claimed ownership based on TCT No. 321744
issued on September 18, 1984 and barred respondents from fencing their property.
Petitioner's claim that it had been in actual or material possession of the property since
1984 when TCT No. 321744 was issued in its favor is belied by the allegations in the
complaint that respondents had been in actual and material possession of the property
since 1961 up to the time they filed their complaint on October 24, 2001.
Admittedly, respondents interposed the alternative reinvindicatory action against
petitioner. An accion reinvindicatoria does not necessarily presuppose that the actual
and material possession of the property is on defendant and that plaintiff seeks the

114
recovery of such possession from defendant. It bears stressing that an accion
reinvindicatoria is a remedy seeking the recovery of ownership and includes jus
possidendi, jus utendi, and jus fruendi as well. It is an action whereby a party claims
ownership over a parcel of land and seeks recovery of its full possession.41 Thus, the
owner of real property in actual and material possession thereof may file an accion
reinvindicatoria against another seeking ownership over a parcel of land including jus
vindicandi, or the right to exclude defendants from the possession thereof. In this case,
respondents filed an alternative reinvindicatory action claiming ownership over the
property and the cancellation of TCT No. 321744 under the name of petitioner. In fine,
they sought to enforce their jus utendi and jus vindicandi when petitioner claimed
ownership and prevented them from fencing the property.
Since respondents were in actual or physical possession of the property when they filed
their complaint against petitioner on October 24, 2001, the prescriptive period for the
reinvindicatory action had not even commenced to run, even if petitioner was able to
secure TCT No. 321744 over the property in 1984. The reason for this is that
x x x one who is in actual possession of a piece of land claiming to be the owner thereof
may wait until his possession is disturbed or his title is attacked before taking steps to
vindicate his right, the reason for the rule being, that his undisturbed possession gives
him a continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his own title, which right can
be claimed only by one who is in possession.42
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court
of Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against petitioner.

GO ONG VS. CA
G.R. No. 75884
September 24, 1987
FACTS:
Parcels of land under 1 TCT are owned by alfredo and when he died, his wife julita go
ong was appointed administratrix of his estate. Julita thereafter mortgaged 1 lot to Allied
Banking Corp. to secure a loan obtained by JK Exports, annotated as a lien on the
original TCT, with the following notation: “mortgagee’s consent necessary in case of
subsequent alienation or encumbrance of the property…”
On the loan there was due a sum and Allied tried to collect it from Julita. Hence, the
complaint alleging nullity of the contract for lack of judicial approval which the bank had
allegedly promised to secure from the court. In response thereto, the bank averred that
it was Julita who promised to secure the court’s approval.
Trial court ruled for Julita, stating that the contract is valid. CA affirmed with modification
the lower court’s decision

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ISSUE: WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL
OF LAND UNDER PETITIONER’S ADMINISTRATION IS NULL AND VOID FOR WANT
OF JUDICIAL APPROVAL.
HELD: contract is valid
Petitioner, asserting that the mortgage is void for want of judicial approval, quoted
Section 7 of Rule 89 of the Rules of Court . The CA aptly ruled that Section 7 of Rule 89
of the Rules of Court is not applicable, since the mortgage was constituted in her
personal capacity and not in her capacity as administratrix of the estate of her husband.
Sec. 7, Art. 89 of the Civil Code applies in a case where judicial approval has to be
sought in connection with, for instance, the sale or mortgage of property under
administration for the payment, say of a conjugal debt, and even here, the conjugal and
hereditary shares of the wife are excluded from the requisite judicial approval for the
reason already adverted to hereinabove, provided of course no prejudice is caused
others, including the government.
Consequently, in the case at bar, the trial court and the CA cannot be faulted in ruling
that the questioned mortgage constituted on the property under administration, by
authority of the petitioner, is valid, notwithstanding the lack of judicial approval, with
respect to her conjugal share and to her hereditary rights.
Petitioner cited cases arguing that in the settlement proceedings of the estate of the
deceased spouse, the entire conjugal partnership property of the marriage is under
administration. While such may be in a sense true, that fact alone is not sufficient to
invalidate the whole mortgage, willingly and voluntarily entered into by the petitioner..
Under similar circumstances, this Court applied the provisions of Article 493 of the Civil
Code, where the heirs as co-owners shall each have the full ownership of his part and
the fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even effect of the alienation or mortgage, with respect to the co-
owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership
The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot
adversely affect the substantive rights of private respondent to dispose of her Ideal [not
inchoate, for the conjugal partnership ended with her husband’s death, and her
hereditary rights accrued from the moment of the death of the decedent (Art. 777, Civil
Code) share in the co-heirship and/or co-ownership formed between her and the other
heirs/co-owners (See Art. 493, Civil Code, supra.).

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