BACHRACH V.

SEIFERT digested by: Johnrod Abrazaldo

G.R. No. L-2659 October 12, 1950

In the matter of the testate estate of Emil Maurice Bachrach, deceased. MARY McDONALD
BACHRACH, petitioner-appellee,
vs.
SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-appellants.

OZAETA, J.:

FACTS:

The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge
Mining Co., Inc., received from the company 54,000 shares representing 50 per cent stock
dividend on the said 108,000 shares. On June 10, 1948, Mary McDonald Bachrach, as
usufructuary or life tenant of the estate, petitioned the lower court to authorize the Peoples Bank
and Trust Company as administrator of the estate of E. M. Bachrach, to her the said 54,000
share of stock dividend by endorsing and delivering to her the corresponding certificate of stock.
Bachrach claims that said dividend, although paid out in the form of stock, is fruit or income and
therefore belonged to her as usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal
heirs of the deceased, opposed said petition on the ground that the stock dividend in question
was not income but formed part of the capital and therefore belonged not to the usufructuary but
to the remainderman. The court ruled in favor of Petitioner Bachrach. Hence, this appeal.

ISSUE:

Whether a stock dividend is a fruit or income, which belongs to the usufructuary? YES.

RULING:

We think the Pennsylvania rule is more in accord with our statutory laws than the Massachusetts
rule. Under section 16 of our Corporation Law, no corporation may make or declare any
dividend except from the surplus profits arising from its business. Any dividend,
therefore, whether cash or stock, represents surplus profits. Article 471 of the Civil Code
provides that the usufructuary shall be entitled to receive all the natural, industrial, and
civil fruits of the property in usufruct. And articles 474 and 475 provide as follows:

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

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

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

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

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

NOTES:

Massachusetts rule: It regards cash dividends, however large, as income, and stock dividends,
however made, as capital. It holds that a stock dividend is not in any true sense any true sense
any dividend at all since it involves no division or severance from the corporate assets of the
dividend; that it does not distribute property but simply dilutes the shares as they existed before;
and that it takes nothing from the property of the corporation, and nothing to the interests of the
shareholders.

Pennsylvania rule: This rule declares that all earnings of the corporation made prior to the death
of the testator stockholder belong to the corpus of the estate, and that all earnings, when
declared as dividends in whatever form, made during the lifetime of the usufructuary or life
tenant.

BACHRACH V. TALISAY-SILAY digested by: Lhorilie Sison

BERNARDO V. BATACLAN digested by: Panfilo Gevera

IGNACIO V. HILARIO digested by: John Mark Haban

G.R. No. L-175 [76 Phil 605] April 30, 1946

DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,

vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First
Instance of Pangasinan, respondents.

FACTS:

This is a civil suit between Elias Hilario and his wife Dionisia Dres, RESPONDENTS, and
Damian Ignacio, Francisco Ignacio and Luis Ignacio, PETITIONERS, concerning the
ownership of a parcel of land, partly rice-land and partly residential.
After trial, Hon. Alfonso Felix rendered a JUDGMENT, holding Hilario as the legal owners of
the whole property (owner in good faith) and conceding to Ignacio the ownership of the houses
and granaries built by them on the residential portion with the rights of a possessor in good faith
(builder in good faith) in accordance with article 361 of the Civil Code.
Subsequently, the plaintiffs (Hilarios) filed a motion in the same Court of First Instance, now
presided over by Judge Felipe Natividad, praying for an order of execution alleging that since
they chose neither to pay defendants for the buildings nor to sell to them the residential lot, said
defendants should be ordered to remove the structure at their own expense and to restore
plaintiffs in the possession of said lot.
Defendants (Ignacios) objected to this motion but was still GRANTED by Judge Natividad.
Hence, this petition by defendants.
ISSUE:

W/N owner in good faith may eject a builder in good faith without choosing either to appropriate
the building for himself after payment of its value or to sell his land to the builder in good faith.
RULING:
NO. The owner in good faith has to make a choice. He CANNOT DISPENSE with the options
under the law and then eject the builder in good faith. This is because both are in good faith.
Under article 453 of the Civil Code, 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.
On the other hand, under article 361 of the Civil Code, the OWNER of the land has the option
either (1) to PAY for the building or (2) to SELL his land to the owner of the building. But he
CANNOT 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.

SARMIENTO V. AGANA digested by: Juan Miguel Villaseran

G.R. No. L-57288 April 30, 1984

LEONILA SARMINETO, petitioner,

vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh
Judicial District, Branch XXVIII, Pasay City, and SPOUSES ERNESTO VALENTINO and
REBECCA LORENZO-VALENTINO, respondents

Article 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to
pay the price of the land, and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof. (361a)
Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in
good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof. (453a)

FACTS:
When Ernesto is courting his wife, his mother told them they could build a house on a lot in the
subdivision in Paranaque.
Eventually Ernesto did build and construct their residential house on the said lot.
The lot was found to be owned by spouses Santos, and the spouses has sold the lot to
Sarmiento.
In a ejectment suit, Sarmiento asked Ernesto to vacate the property.
MTC :
Sarmiento showed deed of sale in favor of him.
Ernesto said his residential house cost around 30k-40k pesos
MTC ruled that the house was constructed in good faith, ordered Ernesto to vacate the
property and ordered Sarmiento to pay 20k pesos to Ernesto for the house.
CFI:
Court rendered decision under article 448.

Sarmiento was ordered within 60 days to have an option of reimbursement of 40k pesos
to Ernesto OR allow Ernesto to purchase the land for 25k pesos
Sarmiento did not agree on any of the 2 options.

Ernesto was asked to deposit 25k pesos with the court for the purchase of the land. This is the
hub of the controversy.
Sarmiento then instituted and instant certiorari proceedings.

SC:
COURT HAS GRANTED THE HOUSE WAS BUILD IN GOOD FAITH.
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."
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.
The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not have been
very much more than that amount during the following January when ERNESTO and wife were
asked to vacate. However, ERNESTO and wife have not questioned the P25,000.00 valuation
determined by the Court of First Instance.
"The owner of the building erected in good faith on a land owned by another, is entitled to retain
the possession of the land until he is paid the value of his building, under article 453 (now Article
546). The owner of the land, upon the other hand, has the option, under article 361 (now Article
448), either to pay for the building or to sell his land to the owner of the building. But he cannot
as respondents here did, refuse both to pay for the building and to sell the land and compel the
owner of the building to remove it from the land where it is erected. He is entitled to such
remotion only when, after having chosen to sell his land, the other party fails to pay for the same.
(emphasis supplied).
"We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to
remove their buildings from the land belonging to plaintiffs-respondents only because the latter
chose neither to pay for such buildings nor to sell the land, is null and void, for it amends
substantially the judgment sought to be executed and is, furthermore, offensive to articles 361
(now Article 448) and 453 (now Article 546) of the Civil Code." (Ignacio vs. Hilario, 76 Phil. 605,
608 [1946]).
WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without pronouncement as
to costs.

SO ORDERED.

DEPRA V. DUMLAO digested by: Jayson Dimarucut

G.R. No. L-57348 May 16, 1985

FRANCISCO DEPRA, plaintiff-appellee,

vs.
AGUSTIN DUMLAO, defendant-appellant.

FACTS:
Depra is the owner of a parcel of land to which Dumlao, living in an adjoining lot, had built a
kitchen that encroached an area of 34 square meters. The encroachment was discovered in a
relocation survey of Depra’s property. Upon discovery, Depra’s mother wrote a demand letter
asking Dumlao to move back from his encroachment. She then filed a case of Unlawful Detainer
against Dumlao.
In the trial court it was proven that Dumlao was a builder in good faith; thus the Municipal Court
rendered it judgment that reads: Ordering that a forced lease is created between the parties with
the plaintiffs, as lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month, payable by the
lessee to the lessors within the first five (5) days of the month the rent is due; and the lease shall
commence on the day that this decision shall have become final.
Neither party appealed. However, Depra did not accept the payment of rentals so that Dumlao
deposited such rentals with the Municipal Court.Depra then filed a Complaint for Quieting of Title
against Dumlao, the latter admitted the encroachment but alleged, that the present suit us barred
by res judicate by virtue of the decision of the Municipal Court. DEPRA claims that the Decision
of the Municipal Court was null and void ab initio because its jurisdiction is limited to the sole
issue of possession, whereas decisions affecting lease, which is an encumbrance on real
property, may only be rendered by Courts of First Instance.
ISSUE:
I. Whether or not the Municipal Court’s decision was null and void ab initio because it has no
jurisdiction over the case?
II. Whether or not the factual situations of DUMLAO and DEPRA conform to the juridical
positions respectively defined by law, for a "builder in good faith" under Article 448, a "possessor
in good faith" under Article 526 and a "landowner in good faith' under Article 448?
HELD:
I. Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold
the same to be null and void. The judgment in a detainer case is effective in respect of
possession only (Sec. 7, Rule 70, Rules of Court). The Municipal Court over-stepped its bounds
when it imposed upon the parties a situation of "forced lease", which like "forced co-ownership" is
not favored in law. Furthermore, a lease is an interest in real property, jurisdiction over which
belongs to Courts of First Instance (now Regional Trial Courts) (Sec. 44(b), Judiciary Act of
1948; Sec. 19 (2) Batas Pambansa Blg. 129). Since the Municipal Court, acted without
jurisdiction, its Decision was null and void and cannot operate as res judicata to the subject
complaint for Queting of Title. Besides, even if the Decision were valid, the rule on res judicata
would not apply due to difference in cause of action. In the Municipal Court, the cause of action
was the deprivation of possession, while in the action to quiet title, the cause of action was based
on ownership. Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly provides that
judgment in a detainer case "shall not bar an action between the same parties respecting title to
the land. "
II. ART. 448. The owner of the land on which anything has been built sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to
pay the price of the land, and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity.
The parties shall agree upon the terms of the lease and in case of disagreement, the court shall
fix the terms thereof (Paragraphing supplied). Pursuant to the foregoing provision, DEPRA has
the option either to pay for the encroaching part of DUMLAO's kitchen, or to sell the encroached
34 square meters of his lot to DUMLAO. He cannot refuse to pay for the encroaching part of the
building, and to sell the encroached part of his land, 5 as he had manifested before the Municipal
Court. But that manifestation is not binding because it was made in a void proceeding.
However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First
Instance. It was thus error for the Trial Court to have ruled that DEPRA is "entitled to
possession," without more, of the disputed portion implying thereby that he is entitled to have the
kitchen removed. He is entitled to such removal only when, after having chosen to sell his
encroached land, DUMLAO fails to pay for the same.
In this case, DUMLAO had expressed his willingness to pay for the land, but DEPRA refused to
sell.

TECHNOGAS PHIL V. CA digested by: Daryoush Madadi

G.R. No. 108894 February 10, 1997

TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner,

vs.
COURT OF APPEALS (FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO
UY, respondents.

FACTS:
Technogas purchased a parcel of land from Pariz Industries, Inc. In the same
year, Eduardo Uy purchased the land adjacent to it. The following year, Uy bought another lot
adjoining the lot of Technogas. It was discovered in a survey, that a portion of a building of
Technogas, which was presumably constructed by its predecessor-in-interest, encroached on a
portion of the lot owned by private respondent Edward Uy. Upon learning of the encroachment or
occupation by its buildings and wall of a portion of private respondent’s land, the petitioner
offered to buy from defendant that particular portion of Uy’s land occupied by portions of its
buildings and wall with an area of 770 sqm, more or less, but the latter, however, refused the
offer.
The parties entered into a private agreement before a certain Col. Rosales in Malacañang,
wherein petitioner agreed to demolish the wall at the back portion of its land thus giving to the
private respondent possession of a portion of his land previously enclosed by petitioner’s wall.
Uy later filed a complaint before the office of Municipal Engineer of Parañaque, Metro Manila as
well as before the Office of the Provincial Fiscal of Rizal against Technogas in connection with
the encroachment or occupation by plaintiff’s buildings and walls of a portion of its land but said
complaint did not prosper; so Uy dug or caused to be dug a canal along Technogas’ wall, a
portion of which collapsed in June, 1980, and led to the filing by the petitioner of the
supplemental complaint in the above-entitled case and a separate criminal complaint for
malicious mischief against Uy and his wife which ultimately resulted into the conviction in court
Uy’s wife for the crime of malicious mischief;

ISSUES:
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad
faith because it is “presumed to know the metes and bounds of his property.”
HELD:
No. No one can determine the precise extent or location of his property by merely examining his
paper title unless one is versed in the science of surveying. There is no question in that when
Technogas purchased the land from Pariz Industries, the buildings and other structures were
already in existence. Furthermore, it is not clear as to who actually built these structures but it
can be assumed that the predecessor-ininterest of Technogas, Pariz Industries, did so.

Article 527 of the New Civil Code presumes good faith. Since no proof exists to show that the
builder built the encroaching structures in bad faith, the structures should be presumed to have
been built in good faith. Good faith consists in the belief of the builder that the land he is building
on is his, and his ignorance of any defect or flaw in his title. Furthermore, possession acquired in
good faith does not lose this character except in case and from the moment facts exist which
show that the possessor is not aware that he possesses the thing improperly or wrongfully. The
good faith ceases from the moment the defects in the title are made known to the possessor, by
extraneous evidence or by suit for recovery of the property of the true owner.
In view of the good faith of both petitioner and private respondent, their rights and obligations are
to be governed by Art. 448. The essential fairness of this codal provision has been pointed out by
Mme. Justice Ameurfina Melencio-Herrera, citing Manresa and applicable precedents, in the
case of Depra vs. Dumlao, to wit:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticality of creating a state of forced co-
ownership, the law has provided a just solution by giving the owner of the land the option to
acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower to pay the proper rent. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213; Bernardo vs.
Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Article
applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off.
Gaz. 2050).
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticality of creating a state of forced co-
ownership, the law has provided a just solution by giving the owner of the land the option to
acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower to pay the proper rent. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213; Bernardo vs.
Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Article
applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off.
Gaz. 2050).

ORTIZ V. KAYANAN digested by: Jiana Quitlong

G.R. No. L-32974 July 30, 1979

BARTOLOME ORTIZ, petitioner,

vs.
HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of
Quezon, Branch IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE FERRO, AND
GREGORIO PAMISARAN, respondents.

FACTS
Plaintiff (Bartolome Ortiz) used to be the legal guardian of Martin Dolorico II. When his ward died,
he continued to cultivate and possess the Martin Dolorico II’s property, which was formerly a
subject of homestead application. In the homestead application, the ward’s uncle (Martin
Dolorico I) was named as his heir and successor in interest. In 1952, Martin Dolorico I executed
an affidavit relinquishing his rights over the property in favor of Quirino Comintan and Eleuterio
Zamora, his grandson and son-in-law respectively, and requested the Director of Lands to cancel
the homestead application.

The homestead application was cancelled which was protested by Ortiz saying that he should be
given preference to purchase the lot inasmuch as he is the actual occupant and has been in
continuous possession of the same. Still, the lot in question was sold at a public auction wherein
Quirino Comintan was the only bidder.
Ortiz’s protest was investigated upon but his claim was not given due course on the ground that
because he failed to participate in the public auction, he is forever barred to claim the property.
On appeal, respondent court ruled that half of the portion of land should be given to the
defendant, being the successful bidder. The other half should be awarded to Zamora without
prejudice to the right of Ortiz to participate in the public bidding of the lot. If Ortiz is to be not
declared the successful bidder, defendants should reimburse jointly said plaintiff for the
improvements introduced on the land, with him, having the right to retain the property until after
he has been paid for.

Ortiz appealed the judgment. It was later found out that Ortiz collected tolls on a portion of the
property wherein he has not introduced any improvement.
The judgment became final and executory. Comintan and Zamora filed a motion for its execution
requesting that they file a bond in lieu of the amount that should be paid to Ortiz, on the condition
that after the accounting of the tolls he collected, and there is still and amount due and payable
to him, the bond shall be held answerable.
Ortiz then filed the instant petition.

His contentions:
 - that since said judgment declared him a possessor in good faith, he is entitled to the
payment of the value of the improvements introduced by him on the whole property, with
right to retain the land until he has been fully paid such value.
- no payment for improvements has been made and, instead, a bond therefor had been
filed by the defendants (Comintan and Zamora) which, according to Ortiz, is not the
payment envisaged in the decision which would entitle private respondents to the
possession of the property.
- under the decision, he has the right to retain the same until after he has participated and
lost in the bidding and that he can be legally dispossessed thereof.
- all the fruits of the property, including the tolls collected by him from the passing vehicles
belongs to petitioner and not to defendant/private respondent (Quirino Comintan), in
accordance with the decision itself, which decreed that the fruits of the property shall be
in lieu of interest on the amount to be paid to petitioner as reimbursement for
improvements.
- Any contrary opinion, in his view, would be tantamount to an amendment of a decision
which has long become final and executory and, therefore, cannot be lawfully done.
ISSUE:
Whether or not petitioner (Ortiz) is still entitled to retain for his own exclusive benefit all the fruits
of the property.
RULING:
NO. It was his duty under the law, after deducting the necessary expenses for his administration,
to apply such amount collected to the payment of the interest, and the balance to the payment of
the principal of the obligation.

There is no question that a possessor in good faith is entitled to the fruits received before the
possession is legally interrupted. However, possession in good faith ceases or is legally
interrupted from the moment defects in the title are made known to the possessor, by extraneous
evidence or by the filing of an action in court by the true owner for the recovery of the property.
Hence, all the fruits that the possessor may receive from the time he is summoned in court, or
when he answers the complaint, must be delivered and paid by him to the owner or lawful
possessor.
However, even after his good faith ceases, the possessor can still retain the property (Art 546)
until he has been fully reimbursed for all the necessary and useful expenses made by him on the
property. The principal characteristic of the right of retention is its accessory character. It is
accessory to a principal obligation. Considering that the right of the possessor to receive the
fruits terminates when his good faith ceases, it is necessary, in order that this right to retain may
be useful, to concede to the creditor the right to secure reimbursement from the fruits of the
property by utilizing its proceeds for the payment of the interest as well as the principal of the
debt while he remains in possession.
Ortiz cannot appropriate for his own exclusive benefit the tolls which he collected from the
property retained by him. It was his duty under the law, after deducting the necessary expenses
for his administration, to apply such amount collected to the payment of the interest, and the
balance to the payment of the obligation.
It was held that the disputed tolls, after deducting petitioner’s (Ortiz) expenses for administration,
belong to private respondent (Comintan), owner of the land through which the toll road passed,
further considering that the same was on portions of the property on which petitioner had not
introduced any improvement.
As to the other lot, it appears that no public sale has yet been conducted by the Bureau of Lands
and, therefore, Ortiz is entitled to remain in possession thereof. This is not disputed by
respondent Eleuterio Zamora. After public sale is had and in the event that Ortiz is not declared
the successful bidder, then he should be reimbursed by respondent Zamora in the corresponding
amount for the improvements on Lot 5785-B.
DISPOSITVE:

WHEREFORE, in view hereof, the Order of respondent Court of November 18, 1970 is hereby
modified to conform to the foregoing judgment. The Writ of Preliminary Injunction, dated January
29, 1971, is hereby dissolved. Without special pronouncement as to costs.
NOTES:
Even after his good faith ceases, the possessor can still retain the property (Art 546) until he has
been fully reimbursed for all the necessary and useful expenses made by him on the property.

GEMINIANO V. CA digested by: Shella Mae Masanque

G.R. No. 120303 July 24, 1996

FEDERICO GEMINIANO, MARIA GEMINIANO, ERNESTO GEMINIANO, ASUNCION

GEMINIANO, LARRY GEMINIANO and MARLYN GEMINIANO, petitioners,
vs.
COURT OF APPEALS, DOMINADOR NICOLAS, and MARY A. NICOLAS, respondents.

FACTS:
This case involves a land in question which was originally owned by the petitioners' mother.
Paulina Amado vda. de Geminiano. On the 12-square-meter portion of that lot stood the
petitioners' unfinished bungalow, which the petitioners sold in November 1978 to the private
respondents for the sum of P6,000.00, with an alleged promise to sell to the latter that portion of
the lot occupied by the house. Subsequently, the petitioners' mother executed a contract of lease
over a 126 square-meter portion of the lot, including that portion on which the house stood, in
favor of the private respondents for P40.00 per month for a period of seven years commencing
on 15 November 1978.1 The private respondents then introduced additional improvements and
registered the house in their names. After the expiration of the lease contract in November 1985,
however, the petitioners' mother refused to accept the monthly rentals.
It turned out that the lot in question was the subject of a suit, which resulted in its acquisition by
one Maria Lee in 1972. It was allegedly acquired by virtue of an extrajudicial foreclosure of
mortgage. In 1982, Lee sold the lot to Lily Salcedo, who in turn sold it in 1984 to the spouses
Agustin and Ester Dionisio. However on 14 February 1992, the Dionisio spouses executed a
Deed of Quitclaim over the said property in favor of the petitioners. As such, the lot was
registered in the latter's name.
On 9 February 1993, the petitioners sent, via registered mail, a letters addressed to private
respondent Mary Nicolas demanding that she vacate the premises and pay the rentals in arrears
within twenty days from notice. Upon failure of the private respondents to heed the demand, the
petitioners filed with the MTCC of Dagupan City a complaint for unlawful detainer and damages.
The trial court thus ordered the private respondents to vacate the premises, pay the petitioners
P40.00 a month as reasonable compensation for their stay thereon from the filing of the
complaint on 14 April 1993 until they vacated.
On appeal by the private respondents, the RTC of Dagupan City reversed the trial court's
decision. It ruled that since the private respondents were assured by the petitioners that the lot
they leased would eventually be sold to them, they could be considered builders in good faith,
and as such, were entitled to reimbursed of the value of the house and improvements with the
right of retention until reimbursement and had been made.
The Court of Appeals affirmed the decision of the RTC. Hence, this petition.
ISSUE:
Whether or not a person may be a lessor and occupy the position of landlord although he is not
the owner of the premises.
HELD:
Yes. The Court held that it has been said in some cases that while the right to let property is an
incident of title and possession, a person may be lessor and occupy the position of a landlord to
the tenant although he is not the owner of the premises let. After all, ownership of the property is
not being transferred, only the temporary use and enjoyment thereof.
It is undisputed that the private respondents came into possession of 126 square-meter portion
of the said lot by virtue of contract of lease executed by the petitioners' mother as lessor, and the
private respondents as lessees, is therefore well-established, and carries with it a recognition of
the lessor's title. The private respondents, as lessees who had undisturbed possession for the
entire term under the lease, are then estopped to deny their landlord's title. This estoppel applies
even though the lessor had no title at the time the relation of lessor and lessee was created, by
reason that Maria Lee never sought a writ of possession in order that she gain possession of the
property in question. The petitioners' mother therefore remained in possession of the lot.
Being mere lessees, the private respondents knew that their occupation of the premises would
continue only for the life of the lease. Plainly, they cannot be considered as possessors nor
builders in good faith.
The Court has held that Article 448 of the Civil Code, in relation to Article 546 of the same Code,
which allows full reimbursement of useful improvements and retention of the premises until
reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land
with the belief that he is the owner thereof. It does not apply where one's only interest is that of a
lessee under a rental contract; otherwise, it would always be in the power of the tenant to
"improve" his landlord out of his property.
Anent the alleged promise of the petitioners to sell the lot occupied by the private respondents'
house, the same was not substantiated by convincing evidence. And even if the petitioners
indeed promised to sell, it would not make the private respondents possessors or builders in
good faith. They cannot raise the mere expectancy or ownership of the aforementioned lot.
because the alleged promise to sell was not fulfilled nor its existence even proven. The first thing
that the private respondents should have done was to reduce the alleged promise into writing,
because under Article 1403 of the Civil Code, an agreement for the sale of real property or an
interest therein is unenforceable, unless some note or memorandum thereof be produced.

The Court granted the petition.

PLEASANTVILLE DEVELOPTMENT CORP. V. CA digested by: Daryoush Madadi

G.R. No. 79688 February 1, 1996

PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED
JARDINICO, respondents.
FACTS:
Edith Robillo purchased a land from Pleasantville Development Corporation, designated as Lot 9.
In 1975, respondent Eldred Jardinico brought the rights of the lot from Robillo. During the
purchase, the lot was empty. On March 26, 1974, Wilson Kee brought Lot No. 8 of the same
subdivision from CT Torres Enterprises (CTTEI). One of CTTEI’s employees, Zenaida Octaviano,
accompanied Kee and his wife to the site and mistakenly pointed to Lot 9 instead of Lot 8.
Afterwards, Kee made improvements on Lot 9, constructing a residence, a store, etc. In the
contract of sale on installment signed by Kee, it is provided that the vendee shall bear the
expenses of whatever consequential change made in the property

ISSUE:
Did Kee waive his rights against recovering damages resulting from the company’s negligence
by signing the contract?

RULING:
No. Such waiver would be contrary to public policy and could not be allowed. Kee was a builder
in good faith, honestly thinking that he was making improvements on his own property. Article 6
of the Civil Code provides that “rights may be waived unless the waiver is contrary to law, public,
order, public policy, morals, or good customs or prejudicial to a third person with a right
recognized by law.”

FELICES V. IRIOLA digested by: Clyde Aquino

G.R. No. 11269 February 28, 1958

SILVERIO FELICES, plaintiff-appellee,

vs.
MAMERTO IRIOLA, defendant-appellant.

FACTS:
Silverio Felices was the grantee of a homestead of over eight hectares located in barrio Curry,
Municipality of Pili, Province of Camarines Sur. He conveyed a conditional sale to Mamerto Iriola
a portion of his homestead of more than four hectares, for the consideration of P1,700. The
conveyance expressly stipulates that the sale was subject to the provisions of Sec. 119 of Act
141 and to the prohibitions spread on the vendor’s patent; and that after the lapse of five years or
as soon as may be allowed by law, the vendor or his successors would execute in vendee’s favor
a deed of absolute sale over the land in question. Two years after the sale, Felices tried to
recover the land in question from appellant, but Irola refused to allow it unless he was paid the
amount of P2,000 as the alleged value of improvements he had introduced on the property.
In the court below, appellant, while recognizing appellee’s right to "redeem", insisted that he must
first be reimbursed the value of his improvements. Whereupon, the court appointed a
commissioner to ascertain the nature and value of the alleged improvements, and thereafter
found that said improvements were made by defendant either after plaintiff had informed him of
his intention to recover the land, or after the complaint had been filed.
At the outset, it must be made clear that as the sale in question was executed by the parties
within the five-year prohibitive period under section 118 of the Public Land Law, the same is
absolutely null and void and ineffective from its inception. Consequently, Felices never lost his
title or ownership over the land in question, and there was no need either for him to repurchase
the same from Iriola, or for the latter to execute a deed of reconveyance in his favor. The case is
actually for mutual restitution, incident to the nullity ab initio of the conveyance.
ISSUE:
May appellant recover or be reimbursed the value of his improvements on the land in question,
on the theory that as both he and appellee knew that their sale was illegal and void, they were
both in bad faith and consequently, Art. 453 of the Civil Code applies in that "the rights of one
and the other shall be the same as though both had acted in good faith”?
RULING:
No. The rule of Art. 453 of the Civil Code invoked by Iriola cannot be applied to the instant case
for the reason that the lower court found that the improvements in question were made on the
premises only after Felices had tried to recover the land in question from Iriola, and even during
the pendency of this action in the court below.

PECSON V. CA digested by: Jan Pauline Aquino

G.R. No. 115814 May 26, 1995

PEDRO P. PECSON, petitioner,

vs.
COURT OF APPEALS, SPOUSES JUAN NUGUID and ERLINDA NUGUID, respondents.

FACTS:
Pecson was an owner of a commercial lot on which he built 4-door 2-story apartment building.
For failure to pay realty taxes, the lot was sold at a public auction by the City Treasurer of
Quezon City and eventually sold it to Spouses Nuguid for 103K. Pecson challenged the auction
sale saying that the sale did not include the apartment building.
The RTC ruled that the apartment building is not included in the auction sale and CA affirmed the
same decision. Spouses Nuguit filed another motion in the trial court for the delivery of
possession of the lot and the apartment building.
For said motion, RTC ruled declaring Sps. Nugiud the owner of the lot and the apartment building
but payment of construction costs to Pecson for the apartment must be first delivered for writ of
possession to be issued to the spouses and that from that point forward, Pecson will pay rent to
the spouses. The RTC, after Pecson’s motion for reconsideration, issued the writ of possession
to the spouses to which the CA affirmed in part declaring that the cost of construction can be
offset from the amounts of rents to be collected. The CA also made mention that since Sps.
Nuguid opted to appropriate the apartment, Pecson is entitled to be reimbursed of the cost of
construction in the year the apartment was built on 1965 for 53K pesos.

ISSUE:
Whether the provisions on indemnity in Articles 448 and 546 of the Civil Code applicable in the
case at bar.

RULING:
Yes, the following articles applies in the case.
The provision on indemnity in Art. 448 which states that whoever the owner of the land is may
appropriate whatever that has been built, planted or sown after paying indemnity. In the case at
bar, Sps. Nuguid may appropriate said apartment building built in the land they own provided that
they pay indemnity to the builder of the said improvement.
The provisions of Art. 546 which states that necessary and useful expenses shall be refunded to
the possessor in good faith with right of redemption is applicable in the case at bar. However, the
article does not specifically state the value of the useful improvements which should be
determined. The court finds the belief of the CA erroneous in stating that the cost of the
construction of the apartment is computed from the the year it was built in 1965, and not its
current market value. The Supreme Court remanded the trial court to determine the current
market value of the apartment building in the lot.

SPOUSES NUGUID V. CA AND PECSON digested by: George Lungay

G.R. No. 151815 February 23, 2005

SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners,

vs.
HON. COURT OF APPEALS AND PEDRO P. PECSON, respondents.

FACTS:
Respondent, Pedro P. Pecson owned a commercial lot on which he built a four-door two-storey
apartment building. For failure to pay realty taxes, the lot was sold at public auction by the City
Treasurer of Quezon City to Mamerto Nepomuceno, who in turn sold it to the spouses Juan and
Erlinda Nuguid. Pecson challenged the validity of the auction sale before the RTC
In its Decision, the RTC upheld the spouses' title but declared that the four-door two-storey
apartment building was not included in the auction sale. This was affirmed in toto by the Court of
Appeals and thereafter by this Court. As a result, the Nuguid spouses moved for delivery of
possession of the lot and the apartment building. The trial court ruled that the Spouses Nuguid
were to reimburse Pecson for his construction cost following which, the spouses Nuguid were
entitled to immediate issuance of a writ of possession over the lot and improvements. In the
same order the RTC also directed Pecson to pay the same amount of monthly rentals to the
Nuguids as paid by the tenants occupying the apartment units.
Aggrieved, Pecson then filed a special civil action for certiorari and prohibition with the Court of
Appeals.
The appellate court affirmed the order of payment of construction costs but rendered the issue of
possession moot on appeal. Frustrated by this turn of events, Pecson filed a petition for review
the Court handed down the decision the decision of the Court of Appeals and the Order of the
Regional Trial Court are hereby SET ASIDE.
On the basis of this Court's decision, Pecson filed a Motion to Restore Possession and a Motion
to Render Accounting, praying respectively for restoration of his possession and for the spouses
Nuguid to be directed to render an accounting under oath, of the income derived from the subject
four-door apartment until possession of the same was restored to him. The RTC denied the
Motion to Restore Possession to the plaintiff averring that the current market value of the building
should first be determined.
Pending the said determination, the resolution of the Motion for accounting was likewise held in
abeyance. With the submission of the parties' assessment and the reports of the subject realty
the trial court issued the following Order the parties manifested that they have arrived at a
compromise agreement that the value of the said improvement/building is P400,000.00 The
Court notes that the plaintiff has already received P300,000.00. However, when defendant was
ready to pay the balance of P100,000.00, the plaintiff now insists that there should be a rental to
be paid by defendants. Defendants are directed to pay plaintiff the balance of P100,000.00. After
paying the said P100,000 balance to Pedro Pecson the spouses Nuguid prayed for the closure
and termination of the case, as well as the cancellation of the notice of lis pendens on the title of
the property on the ground that Pedro Pecson's claim for rentals was devoid of factual and legal
bases.
After conducting a hearing, the lower court issued an Order directing the spouses to pay the sum
of P1,344,000 as reimbursement of the unrealized income of Pecson. The Nuguid couple then
appealed the trial court's ruling to the Court of Appeals

In the Court of Appeals, the order appealed from was modified. The CA reduced the rentals from
P1,344,000 to P280,000 in favor of the appellee. The said amount represents accrued rentals
from the determination of the current... market value
ISSUES:
Whether or not, the petitioners liable to pay rent over and above the current market value of the
improvement
RULING:
The construction of the four-door two-storey apartment, subject of this dispute, was undertaken
at the time when Pecson was still the owner of the lot. When the Nuguids became the
uncontested owner of the lot by virtue of entry of judgment of the Court's decision the apartment
building was already in existence and occupied by tenants.
The Court declared the rights and obligations of the litigants in accordance with Articles 448 and
546 of the Civil Code. These provisions of the Code are directly applicable to the instant case.
Under Article 448, the landowner is given the option, either to appropriate the improvement as
his own upon payment of the proper amount of indemnity or to sell the land to the possessor in
good faith.

Relatedly, Article 546 provides that a builder in good faith is entitled to full reimbursement for all
the necessary and useful expenses incurred; it also gives him right of retention until full
reimbursement is made.The right of retention is considered as one of the measures devised by
the law for the protection of builders in good faith. Its object is to guarantee full and prompt
reimbursement as it permits the actual possessor to remain in possession while he has not been
reimbursed for those necessary expenses and useful improvements made by him on the thing
possessed. Accordingly, a builder in good faith cannot be compelled to pay rentals during the
period of retention nor be disturbed in his possession by ordering him to vacate.
In addition, as in this case, the owner of the land is prohibited from offsetting or compensating
the necessary and useful expenses with the fruits... received by the builder-possessor in good
faith.
Since petitioners opted to appropriate the improvement for themselves they could not benefit
from the lot's improvement, until they reimbursed the improver in full, based on the current
market value of the property.

Despite the Court's recognition of Pecson's right of ownership over the apartment building, the
petitioners still insisted on dispossessing Pecson by filing for a Writ of Possession to cover both
the lot and the building. Clearly, this resulted in a violation of respondent's right of retention.
Worse, petitioners took advantage of the situation to benefit from the highly valued, income-
yielding, four-unit apartment building by collecting rentals thereon, before they paid for the cost of
the apartment building.
The text of the decision in G.R. No. 115814 expressly exempted Pecson from liability to pay
rentals, for we found that the Court of Appeals erred not only in upholding the trial court's
determination of the indemnity, but also in ordering him to account for the rentals of the
apartment building
The right of retention, which entitles the builder in good faith to the possession as well as the
income derived therefrom, is already provided for under Article 546 of the Civil Code
Given the circumstances of the instant case where the builder in good faith has been clearly
denied his right of retention for almost half a decade, we find that the increased award of rentals
by the RTC was reasonable and equitable.
The petitioners had reaped all the benefits... from the improvement introduced by the respondent
during said period, without paying any amount to the latter as reimbursement for his construction
costs and expenses. They should account and pay for such benefits.

WHEREFORE, the instant petition is DENIED for lack of merit.

COLEONGCO V. REGALADO digested by: Albretch Khan Anam

G.R. No. L-4529 December 29, 1952

VICENTE M. COLEONGCO, petitioner,

vs.
PEDRO F. REGALADO and LEONOR MONTILLA, respondents.

FACTS:
Regalado was the owner of lot situated at Bacolod, of which lot No. 157 of the subdivision plan
was a portion. There was erected a building which in 1944, was occupied by the Japanese Army.
Regalado sold lot No. 157 to Coleongco, covered by transfer certificate with the total area of
1,000 square meters, and the land occupied by the house was 245 square meters.
From the records that Coleongco contended that the house erected on lot 157 was included in
the sale. When Bacolod was liberated by the Americans, they occupied said house for about two
months. After the Americans vacated the house, Regalado occupied the same, so Coleongco
instituted a civil case of Ejectment.
The Court of First Instance ruled that the improvement of lot No. 157, consisting of a residential
house, was the property of. Regalado. From that decision Coleongco appealed to the Court of
Appeals, the tribunal declared the appeal abandoned.
On 1947, Regalado, in consideration of the sum of P3,500, sold said the house to Leonor
Montilla who was knowledgable of the present case that was pending against the vendor,
assumed whatever rights and obligations might arise with respect to such civil case, and freed
and liberated Regalado from the result of the case.
Coleongco prayed that: To order the defendants to remove or clear the house from the plaintiff's
premises; and pay rents as he was then paying rents for the lease of his residence at a rate
higher than the amount he is entitled to receive as rents from the portion of the land occupied by
the building of the defendants.
CA said that the house was formerly the property of Regalado, and that this was constructed in
Good Faith, and consequently, that the enjoyment and possession thereof must be considered to
have always been in Good Faith, as provided in Arts. 358, 361, 453, 454 of the Old Civil Code.
ISSUE:
WON Art. 361 of the Civil Code (Now Art. 448) applies in this case (because Coleongco is a
builder in good faith)
RULING:
NO.

"ART. 361. 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 456, or to compel the person who has built or
planned to pay him the value of the land, and the person who sowed thereon to pay the proper
rent therefor. “
Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the
house on his own land before he sold said land to Coleongco. Article 361 applies only in the
cases where a person constructs a building on the land of another in good or in bad faith, as the
case may be. It does not apply to a case where a person constructs a building on his own land,
for then there can be no question as to good or bad faith on the part of the builder.
In view of the foregoing, the decision of the Court of Appeals is modified by ordering Regalado
and his successor Leonor Montilla to remove the above-mentioned house from the lot of
Coleongco, without any obligation on the part of the latter to pay any compensation to Regalado
or his successor Montilla. In all other respects, the decision of the Court of Appeals is affirmed
with costs against respondents Regalado and Montilla.

REPUBLIC V. CA digested by: Jiana Quitlong

G.R. No. L-61647 October 12, 1984

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner,

vs.
THE HON. COURT OF APPEALS, BENJAMIN TANCINCO, AZUCENA TANCINCO REYES,
MARINA TANCINCO IMPERIAL and MARIO C. TANCINCO, respondents.

FACTS:
Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be "Maria")
Tancinco Imperial and Mario C. Tancinco are registered owners of a parcel of land situated at
Barrio Ubihan, Meycauayan, Bulacan bordering on the Meycauayan and Bocaue rivers.
In 1973, the private respondents (Benjamin Tancinco, Azucena Tancinco Reyes, Marina
Tancinco Imperial And Mario C. Tancinco) filed an application for the registration of three lots
adjacent to their fishpond property. On April 5, 1974, Assistant Provincial Fiscal Amando C.
Vicente, in representation of the Bureau of Lands filed a written opposition to the application for
registration.
In 1975, the private respondents filed a partial withdrawal of the application for registration with
respect to Lot 3 in line with the recommendation of the Commissioner appointed by the Court.
The next day, Lot 3 was ordered withdrawn from the application and trial proceeded only with
respect to Lots 1 and 2.
The lower court rendered a decision granting the application on the finding that the lands in
question are accretions to the private respondents' fishponds covered by Transfer Certificate.
The respondent Court rendered a decision affirming in toto the decision of the lower court. The
dispositive portion of the decision reads:
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang
kabuuan nang walang bayad.

Petitioner (Republic) submits that there is no accretion to speak of under Article 457 of the New
Civil Code because what actually happened is that the private respondents simply transferred
their dikes further down the river bed of the Meycauayan River, and thus, if there is any accretion
to speak of, it is man-made and artificial and not the result of the gradual and imperceptible
sedimentation by the waters of the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia Acuña to the
effect that:
... when witness first saw the land, namely, Lots 1 & 2, they were already dry almost at the level
of the Pilapil of the property of Dr. Tancinco, and that from the boundaries of the lots, for about
two (2) arms length the land was still dry up to the edge of the river; that sometime in 1951, a
new Pilapil was established on the boundaries of Lots 1 & 2 and soil from the old Pilapil was
transferred to the new Pilapil and this was done sometime in 1951; that the new lots were then
converted into fishpond, and water in this fishpond was two (2) meters deep on the side of the
Pilapil facing the fishpond ... .
They submit that the foregoing evidence establishes the fact of accretion without human
intervention because the transfer of the dike occurred after the accretion was complete.

ISSUE:
Whether or not the land in question is registrable as an accretion.
RULE:
NO. The Court agrees with the Republic. Article 457 of the New Civil Code requires the
concurrence of three requisites before an accretion covered by this particular provision is said to
have taken place. They are (1) that the deposit be gradual and imperceptible; (2) that it be made
through the effects of the current of the water; and (3) that the land where accretion takes place
is adjacent to the banks of rivers. The requirement that the deposit should be due to the effect of
the current of the river is indispensable. This excludes from Art. 457 of the New Civil Code all
deposits caused by human intervention.
Alluvion must be the exclusive work of nature. In the instant case, there is no evidence
whatsoever to prove that the addition to the said property was made gradually through the effects
of the current of the Meycauayan and Bocaue rivers.

There is evidence that the alleged alluvial deposits were artificial and man-made and not the
exclusive result of the current of the Meycauayan and Bocaue rivers. The alleged alluvial
deposits came into being not because of the sole effect of the current of the rivers but as a result
of the transfer of the dike towards the river and encroaching upon it. The land sought to be
registered is not even dry land cast imperceptibly and gradually by the river's current on the
fishpond adjoining it. It is under two meters of water.

The reason behind the law giving the riparian owner the right to any land or alluvion deposited by
a river is to compensate him for the danger of loss that he suffers because of the location of his
land.
DISPOSITIVE:
WHEREFORE, the instant petition is GRANTED. The decision appealed from is hereby
REVERSED and SET ASIDE. The private respondents are ordered to move back the dikes of
their shponds to their original location and return the disputed property to the river to which it
belongs.

GRANDE V. CA digested by: Faiza Sehla Ukkoh

G.R. No. L-17652 June 30, 1962

IGNACIO GRANDE, ET AL., petitioners,

vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN
CALALUNG, respondents.

FACTS:
Petitioners are the owners of a parcel of land, with an area of 3.5032 hectares, located at the
province of Isabela, by inheritance from their deceased mother • When it was surveyed for
purposes of registration sometime in 1930, its northeastern boundary was the Cagayan River
(the same boundary stated in the title). Since then, and for many years thereafter, a gradual
accretion on the northeastern side took place, by action of the current of the Cagayan River, so
much so, that by 1958, the bank thereof had receded to a distance of about 105 meters from its
original site, and an alluvial deposit of 19,964 square meters (1.9964 hectares), more or less,
had been added to the registered area.
Petitioners instituted the present action in the Court of First Instance of Isabela against
respondents, to quiet title to said portion formed by accretion, alleging in their complaint that they
and their predecessors-in-interest, were formerly in peaceful and continuous possession thereof,
until September, 1948, when respondents entered upon the land under claim of ownership.
Rrespondents claim ownership in themselves, asserting that they have been in continuous, open,
and undisturbed possession of said portion, since prior to the year 1933 to the present.
CFI: rendered a decision adjudging the ownership of the portion in question to petitioners, and
ordering respondents to vacate the premises and deliver possession thereof to petitioners.
The fact that defendants declared the land for taxation purposes since 1948, does not mean that
they become the owner of the land by mere occupancy, for it is a new provision of the New Civil
Code that ownership of a piece of land cannot be acquired by occupation (Art. 714, New Civil
Code). The land in question being an accretion to the mother or registered land of the plaintiffs,
the accretion belongs to the plaintiffs (Art. 457, New Civil Code; Art. 366, Old Civil Code). CA: in
favor of the plaintiffs. First, since by accession, the land in question pertains to the original
estate, and since in this instance the original estate is registered, the accretion, consequently,
falls within the purview of Section 46 of Act No. 496, which states that "no title to registered land
in derogation to that of the registered owner shall be acquired by prescription or adverse
possession"; Second, the adverse possession of the defendant began only in the month of
September, 1948, or less than the 10-year period required for prescription before the present
action was instituted.
ISSUE:
Whether or not respondents have acquired the alluvial property in question through prescription.
RULING:

YES. There can be no dispute that both under Article 457 of the New Civil Code and Article 366
of the old, petitioners are the lawful owners of said alluvial property, as they are the registered
owners of the land which it adjoins. The question is whether the accretion becomes automatically
registered land just because the lot which receives it is covered by a Torrens title thereby making
the alluvial property imprescriptible. We agree with the Court of Appeals that it does not, just as
an unregistered land purchased by the registered owner of the adjoining land does not, by
extension, become ipso facto registered land. Ownership of a piece of land is one thing, and
registration under the Torrens system of that ownership is quite another. Imprescriptibility of
registered land is provided in the registration law. Registration under the Land Registration and
Cadastral Acts does not vest or give title to the land, but merely confirms and thereafter protects
the title already possessed by the owner, making it imprescriptible by occupation of third parties.
But to obtain this protection, the land must be placed under the operation of the registration laws
wherein certain judicial procedures have been provided . The fact remain, however, that
petitioners never sought registration of said alluvial property up to the time they instituted the
present action in the Court of First Instance of Isabela in 1958. The increment, therefore, never
became registered property, and hence is not entitled or subject to the protection of
imprescriptibility enjoyed by registered property under the Torrens system. Consequently, it was
subject to acquisition through prescription by third persons. The Court of Appeals, after analyzing
the evidence, found that respondents-appellees were in possession of the alluvial lot since 1933
or 1934, openly, continuously and adversely, under a claim of ownership up to the filing of the
action in 1958. This finding of the existence of these facts, arrived at by the Court of Appeals
after an examination of the evidence presented by the parties, is conclusive as to them and
cannot be reviewed by us.

LUNOD V. MENESES digested by: Victor John Villaseran

G.R. No. 4223 August 19, 1908

NICOLAS LUNOD, ET AL., plaintiffs-appellees,

vs.
HIGINO MENESES, defendant-appellant.

FACTS:
Plaintiffs filed a complaint against Meneses (defendant) alleging that from time immemorial and
consequently for more than 20 years before 1901, there existed and still exists in favor of the rice
fields on the plaintiffs a statutory easement permitting the flow of water over the said land in
Paraanan which easement the said plaintiffs enjoyed until 1901. However, in the year 1901, the
defendant without any right or reason converted the land in Paraanan into a fish pond and by
means of a dam and a bamboo net that prevented the free passage of the water through said
place into the Taliptip River. As consequence thereof, the lands of the Plaintiffs became flooded
and damaged by the stagnant waters, there being no outlet except through the land in Paraanan.
Plantations were destroyed causing them loss & damage to the extent of about PHP1,000.00
which loss and damage will continue if the obstructions.
The plaintiffs prayed that judgment be entered against the defendant, to pay for damages
amounting to PhP1,000.00 and declaring that the said tract of land in Paraanan is subject to a
statutory easement permitting the flow of water from the property of the plaintiffs, and that,
without prejudice to the issuing of a preliminary injunction and the defendant be ordered to
remove and destroy the obstructions that impede the passage of the waters through Paraanan,
and that in future, and forever, he abstains from closing in any manner the aforesaid tract of land.
The defendant filed an answer denying all the allegations in the complaint and alleged that no
statutory easement existed nor could exist in favor of the lands described in the complaint,
permitting the waters to flow over his property. The defendant also denied that he had occupied
or converted any land in the barrio of Bambang into a fish pond therefore, he asked the court to
enter judgment in his favor and to sentence the plaintiffs to pay the costs and corresponding
damages.
The lower court ruled in favor of the plaintiffs and ordered the defendant to remove the dam
placed to the east of the Paraanan passage on the side of the Taliptip River opposite the old dam
in the barrio of Bambang, as well as to remove and destroy the obstacles to the free passage of
the waters through the strip of land in Paraanan; to abstain in future, and forever, from
obstructing or closing in any manner the course of the waters through the said strip of land. The
request that the defendant is sentenced to pay an indemnity was denied, and no ruling was
made as to costs.

ISSUE:
Whether or not the defendant has the right to construct work or a dam that blocks the passage
through his land.

RULING:
NO, he could not lawfully injure the owners of the dominant estates by obstructing the outlet to
the river of the water flooding the upper land belonging to the plaintiff.
According to ART. 530 of the CC, an easement is a charge imposed upon one estate for the
benefit of another estate belonging to a different owner, and the realty in favor of which the
easement is established is called the dominant estate, and the one charged with it is the servient
estate.
Consequently, the lands of Paraanan being the lower are subject to the easement of receiving
and giving passage to the waters proceeding from the higher lands and the lake of Calalaran;
this easement was not constituted by agreement between the interested parties; it is of a
statutory nature, and the law has imposed it for the common public utility in view of the difference
in the altitude of the lands in the barrio of Bambang.
Under Art 388 of the said code, the owner is authorized to enclose his estate by means of walls,
ditches, fences or any other device but his right is limited by the easement imposed upon his
estate.

The defendant might have constructed the works necessary to make and maintain a fish pond
within his own land but he was always under the strict & necessary obligation to respect the
statutory easement of waters charged upon his property and had no right to close the passage &
outlet of the waters flowing from the lands of the plaintiffs.

The judgment appealed from is affirmed, in so far as it agrees with this decision, and reversed in
other respects, with the costs of this instance against the appellant.

NAVARRO V. IAC digested by: Junel Mario Lumagui

BAES V. CA digested by: Paula Barroga

BINALAY V. MANALO digested by: Charlene Cadano

G.R. No. 92161 March 18, 1991

SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO

ROSALES, GREGORIO ARGONZA, EUSTAQUIO BAUA, FLORENTINO ROSALES,
TEODORO MABBORANG, PATRICIO MABBORANG and FULGENCIO MORA, petitioners
vs.
GUILLERMO MANALO and COURT OF APPEALS, respondents.

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 branches (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.
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 acquired 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 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.

SIARI VALLEY ESTATES V. LUCASAN digested by: Keziah Rose Salvador-Seggay

G.R. No. L-11005 October 31, 1957

SIARI VALLEY ESTATES, INC., petitioner,

vs.
FILEMON LUCASAN and Hon. W. M. ORTEGA, Judge of the Court of First Instance of
Zamboanga del Norte, respondents.

FACTS:
The petitioner in this case filed an action to recover about 200 heads of cattle that wandered
on the adjoining ranch of the defendant. Although the defendant admitted the commixtion or
confusion, he said that the animals has already been retrieved by the petitioner. The lower
court ruled for the petitioner.
ISSUE:
Whether Siari Valley Estates have the right to recover the mentioned strayed animals.
RULING:
Yes. The Court ruled in favor of the petitioner, stating there is indeed no doubt that the
hundreds of cattle belonging to the petitioner has wandered to the defendant’s ranch.
The Court cited Art. 473 of the Civil Code which provided that if the commingling of two
things is made in bad faith, the one responsible for it will lose his share.
In the mentioned case, there was a mention of two cases wherein two of the defendant’s
men has driven away more than 30 heads of cattle, therefore establishing bad faith on the
part of the defendant.

SANTOS V. BERNABE digested by: Jefferson Roma

G.R. No. L-31163 November 6, 1929
URBANO SANTOS, plaintiff-appellee,
vs.
JOSE C. BERNABE, ET AL., defendants.
PABLO TIONGSON and THE PROVINCIAL SHERIFF OF BULACAN, appellants.
Facts:
On March 20, 1928, there were deposited in Jose C. Bernabe's warehouse by the plaintiff
Urbano Santos 778 cavans and 38 kilos of palay and by Pablo Tiongson 1,026 cavans and 9
kilos of the same grain.
On said date, March 20, 1928, Pablo Tiongson filed with the Court of First Instance of Bulacan a
complaint against Jose C. Bernabe, to recover from the latter the 1,026 cavans and 9 kilos of
palay deposited in the defendant's warehouse. At the same time, the application of Pablo
Tiongson for a writ of attachment was granted, and the attachable property of Jose C. Bernabe,
including 924 cavans and 31 1/2 kilos of palay found by the sheriff in his warehouse, were
attached, sold at public auction, and the proceeds thereof delivered to said defendant Pablo
Tiongson, who obtained judgment in said case.
The herein plaintiff, Urbano Santos, intervened in the attachment of the palay. Urbano Santos
contends that Pablo Tiongson cannot claim the 924 cavans and 31 ½ kilos of palay attached by
the defendant sheriff as part of those deposited by him in Jose C. Bernabe's warehouse,
because, in asking for the attachment thereof, he impliedly acknowledged that the same
belonged to Jose C. Bernabe and not to him.
Issue:
Whether or not Santos and Tiongson shall acquire right proportional to the value of their palay
Ruling:
The Supreme Court ruled the applicability of Article 381 when the 778 cavans and 38 kilos of
palay belonging to the plaintiff Urbano Santos, having been mixed with the 1,026 cavans and 9
kilos of palay belonging to the defendant Pablo Tiongson in Jose C. Bernabe's warehouse; the
sheriff having found only 924 cavans and 31 1/2 kilos of palay in said warehouse at the time of
the attachment thereof; and there being no means of separating form said 924 cavans and 31
1/2 of palay belonging to Urbano Santos and those belonging to Pablo Tiongson, the following
rule prescribed in article 381 of the Civil Code for cases of this nature, is applicable:
Art. 381. If, by the will of their owners, two things of identical or dissimilar nature are mixed, or if
the mixture occurs accidentally, if in the latter case the things cannot be separated without injury,
each owner shall acquire a right in the mixture proportionate to the part belonging to him,
according to the value of the things mixed or commingled.
The number of kilos in a cavan not having been determined, we will take the proportion only of
the 924 cavans of palay which were attached and sold, thereby giving Urbano Santos, who
deposited 778 cavans, 398.49 thereof, and Pablo Tiongson, who deposited 1,026 cavans,
525.51, or the value thereof at the rate of P3 per cavan.
Wherefore, the judgment appealed from is hereby modified, and Pablo Tiongson is hereby
ordered to pay the plaintiff Urbano Santos the value of 398.49 cavans of palay at the rate of P3 a
cavan, without special pronouncement as to costs. So ordered.