1.G.R. No.

L-2659 October 12, 1950

In the matter of the testate estate of Emil a!rice "achrach, #ecease#.
$R% c&ON$L& "$'(R$'(,petitioner-appellee,
vs.
)O*(IE )EI+ER, an# ELI)$ ELI$NO++, oppositors-appellants.
O-$E,$, J.:
Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital
or part of the corpus of the estate, which pertains to the remainderman? That is the
question raised in the appeal.
The deceased E. . !achrach, who left no forced heir e"cept his widow ary
c#onald !achrach, in his last will and testament made various legacies in cash
and willed the remainder of his estate as follows$
Sixth: It is my will and do herewith bequeath and devise to my beloved wife
ary c#onald !achrach for life all the fruits and usufruct of the remainder
of all my estate after payment of the legacies, bequests, and gifts provided
for above% and she may en&oy said usufruct and use or spend such fruits as
she may in any manner wish.
The will further provided that upon the death of ary c#onald !achrach, one-half
of the all his estate 'shall be divided share and share alike by and between my legal
heirs, to the e"clusion of my brothers.'
The estate of E. . !achrach, as owner of ()*,))) shares of stock of the +tok-!ig
,edge ining -o., Inc., received from the latter ./,))) shares representing .) per
cent stock dividend on the said ()*,))) shares. 0n 1une (), (2/*, ary c#onald
!achrach, as usufructuary or life tenant of the estate, petitioned the lower court to
authori3e the 4eoples !ank and Trust -ompany as administrator of the estate of E.
. !achrach, to her the said ./,))) share of stock dividend by endorsing and
delivering to her the corresponding certi5cate of stock, claiming that said dividend,
although paid out in the form of stock, is fruit or income and therefore belonged to
her as usufructuary or life tenant. 6ophie 6iefert and Elisa Eliano7, 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. +nd they have appealed from the order
granting the petition and overruling their ob&ection.
,hile appellants admits that a cash dividend is an income, they contend that a
stock dividend is not, but merely represents an addition to the invested capital. The
so-called assachusetts rule, which prevails in certain &urisdictions in the 8nited
6tates, supports appellants9 contention . It regards cash dividends, however large,
as income, and stock dividends, however made, as capital. :inot vs. 4aine, 22
ass., ()(% 2; +m. #ec., <)..= 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 e"isted before% and that it takes nothing from the
property of the corporation, and nothing to the interests of the shareholders.
0n the other hand, so called 4ennsylvania rule, which prevails in various other
&urisdictions in the 8nited 6tates, supports appellee9s contention. This rule declares
that all earnings of the corporation made prior to the death of the testator
stockholder belong to the corpus of the estate, and that all earnings, when declared
as dividends in whatever form, made during the lifetime of the usufructuary or life
tenant. :Earp9s +ppeal, >* 4a., ?;*.=
. . . It is clear that testator intent the remaindermen should have only the
corpus of the estate he left in trust, and that all dividends should go the life
tenants. It is true that pro5ts reali3ed are not dividends until declared by the
proper o@cials of the corporation, but distribution of pro5ts, however made,
in dividends, and the form of the distribution is immaterial. :In re Thompson9s
Estate, >;> 4a., ><*% (). +tl. ><?, ></.=
In Aite vs. Aite :2? By., >.<% >) 6. ,., <<*, <*)=, the -ourt of +ppeals of Bentucky,
speaking thru its -hief 1ustice, said$
. . . ,here a dividend, although declared in stock, is based upon the earnings
of the company, it is in reality, whether called by one name or another, the
income of the capital invested in it. It is but a mode of distributing the pro5t.
If it be not income, what is it? If it is, then it is rightfully and equitably the
property of the life tenant. If it be really pro5t, then he should have it,
whether paid in stock or money. + stock dividend proper is the issue of new
shares paid for by the transfer of a sum equal to their par value from the
pro5ts and loss account to that representing capital stock% and really a
corporation has no right to a dividend, either in cash or stock, e"cept from its
earnings% and a singular state of case C it seems to us, an unreasonable one
C is presented if the company, although it rests with it whether it will declare
a dividend, can bind the courts as to the proper ownership of it, and by the
mode of payment substitute its will for that of that of the testator, and favor
the life tenants or the remainder-men, as it may desire. It cannot, in reason,
be considered that the testator contemplated such a result. The law regards
substance, and not form, and such a rule might result not only in a violation
of the testator9s intention, but it would give the power to the corporation to
beggar the life tenants, who, in this case, are the wife and children of the
testator, for the bene5t of the remainder-men, who may perhaps be unknown
to the testator, being unborn when the will was e"ecuted. ,e are unwilling to
adopt a rule which to us seems so arbitrary, and devoid of reason and &ustice.
If the dividend be in fact a pro5t, although declared in stock, it should be held
to be income. It has been so held in 4ennsylvania and many other states, and
we think it the correct rule. Earp9s +ppeal, >* 4a. 6t. ?;*% -ook, 6tocks D 6.
sec. ../. . . .
,e think the 4ennsylvania rule is more in accord with our statutory laws than the
assachusetts rule. 8nder section (; of our -orporation Eaw, no corporation may
make or declare any dividend e"cept from the surplus pro5ts arising from its
business. +ny dividend, therefore, whether cash or stock, represents surplus pro5ts.
+rticle /<( of the -ivil -ode provides that the usufructuary shall be entitled to
receive all the natural, industrial, and civil fruits of the property in usufruct. +nd
articles /</ and /<. provide as follows$
+FT. /</. -ivil fruits are deemed to accrue day by day, and belong to the
usufructuary in proportion to the time the usufruct may last.
+FT. /<.. ,hen 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.
,hen it consists of the en&oyment of the bene5ts arising from an interest in
an industrial or commercial enterprise, the pro5ts of which are not distributed
at 5"ed periods, such pro5ts 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 ne"t preceding article.
The ()*,))) shares of stock are part of the property in usufruct. The ./,))) shares
of stock dividend are civil fruits of the original investment. They represent pro5ts,
and the delivery of the certi5cate of stock covering said dividend is equivalent to
the payment of said pro5ts. 6aid shares may be sold independently of the original
shares, &ust as the o7spring of a domestic animal may be sold independently of its
mother.
The order appealed from, being in accordance with the above-quoted provisions of
the -ivil -ode, his hereby a@rmed, with costs against the appellants.
2.G.R. No. .522. )e/tember 10, 19.1
,(E "$'(R$'( O,OR 'O., IN'., plainti7-appellee,
vs.
,$LI)$%-)IL$% ILLING 'O., E, $L., defendants-appellees.
,(E *(ILI**INE N$,ION$L "$N1, intervenor-appellant.
RO2$L&E-, J.:
This proceeding originated in a complaint 5led by the !achrach otor -o., Inc.,
against the Talisay-6ilay illing -o., Inc., for the delivery of the amount 4(?,*.) or
promissory notes or other instruments or credit for that sum payable on 1une ?),
(2?), as bonus in favor of ariano Eacson Eedesma% the complaint further prays
that the sugar central be ordered to render an accounting of the amounts it owes
ariano Eacson Eedesma by way of bonus, dividends, or otherwise, and to pay the
plainti7 a sum su@cient to satisfy the &udgment mentioned in the complaint, and
that the sale made by said ariano Eacson Eedesma be declared null and void.
The 4hilippine Gational !ank 5led a third party claim alleging a preferential right to
receive any amount which ariano Eacson Eedesma might be entitled to from the
Talisay-6ilay illing -o. as bonus, because that would be civil fruits of the land
mortgaged to said bank by said debtor for the bene5t of the central referred to, and
by virtue of a deed of assignment, and praying that said central be ordered to
delivered directly to the intervening bank said sum on account of the latter9s credit
against the aforesaid ariano Eacson Eedesma.
The corporation Talisay-6ilay illing -o., Inc., answered the complaint stating that of
ariano Eacson Eedesma9s credit, 4<,.)) belonged to -esar Eedesma because he
had purchased it, and praying that it be absolved from the complaint and that the
proper party be named so that the remainder might be delivered.
-esar Eedesma, in turn, claiming to be the owner by purchase in good faith an for a
reconsideration of the 4<,.)) which is a part of the credit referred to above,
answered praying that he be absolved from the complaint.
The plainti7 !achrach otor -o., Inc., answered the third party claim alleging that
its credit against ariano Eacson Eedesma was prior and preferential to that of the
intervening bank, and praying that the latter9s complaint be dismissed.
+t the trial all the parties agreed to recogni3e and respect the sale made in favor of
-esar Eedesma of the 4<,.)) part of the credit in question, for which reason the
trial court dismissed the complaint and cross-complaint against -esar Eedesma
authori3ing the defendant central to deliver to him the aforementioned sum of
4<,.)). +nd upon conclusion of the hearing, the court held that the !achrach otor
-o., Inc., had a preferred right to receive the amount of 4((,)<;.)> which was
ariano Eacson Eedesma9s bonus, and it ordered the defendant central to deliver
said sum to the plainti7.
The 4hilippine Gational !ank appeals, assigning the following alleged errors as
committed by the trial court$
(. In holding that the bonus which the Talisay-6ilay illing -o., Inc., bound
itself to pay the planters who had mortgaged their land to the 4hilippine
Gational !ank to secure the payment of the debt of said central to said bank
is not civil fruits of said land.
>. In not holding that said bonus became sub&ect to the mortgage e"ecuted
by the defendant ariano Eacson Eedesma to the 4hilippine Gational !ank to
secure the payment of his personal debt to said bank when it fell due.
?. In holding that the assignment :E"hibit 2, 4.G.!.= of said bonus made on
arch <, (2?), by ariano Eacson Eedesma to the 4hilippine Gational !ank to
be applied to the payment of his debt to said 4hilippine Gational !ank is
fraudulent.
/. In holding that the !achrach otor -o. Inc., in civil case Go. ?(.2< of the
-ourt of Hirst Instance of anila levied a valid attachment upon the bonus in
question.
.. In admitting and considering the supplementary complaint 5led by the
!achrach otor -o., Inc., alleging as a cause of action the attachment of the
bonus in question which said !achrach otor -o., Inc., in civil case Go. ?(*>(
of the -ourt of Hirst Instance of anila levied after the 5ling of the original
complaint in this case, and after ariano Eacson Eedesma in this case had
been declared in default.
;. In holding that the !achrach otor -o., Inc., has a preferential right to
receive from the Talisay-6ilay illing -o., Inc., the amount of 4((,)<;.)>
which is in the possession of said corporation as the bonus to be paid to
ariano Eacson Eedesma, and in ordering the Talisay-6ilay illing -o., Inc., to
deliver said amount to the !achrach otor -o., Inc.
<. In not holding that the 4hilippine Gational !ank has a preferential right to
receive from the Talisay-6ilay illing -o., Inc., the amount of 4((,)<;.)> held
by said corporation as ariano Eacson Eedesma9s bonus, and in not ordering
said Talisay-6ilay illing -o., Inc., to deliver said amount to the 4hilippine
Gational !ank.
*. In not holding that the amended complaint and the supplementary
complaint of the !achrach otor -o., Inc., do not state facts su@cient to
constitute a cause of action in favor of the !achrach otor -o., Inc., and
against the Talisay-6ilay illing -o., Inc., or against the 4hilippine Gational
!ank.
The appellant bank bases its preferential right upon the contention that the bonus in
question is civil fruits of the lands which the owners had mortgaged for the bene5t
of the central giving the bonus, and that, as civil fruits of said land, said bonus was
assigned by ariano Eacson Eedesma on arch <, (2?), by virtue of the document
E"hibit 2 of said intervening institution, which admitted in its brief that 'if the bonus
in question is not civil fruits or rent which became sub&ect to the mortgage in favor
of the 4hilippine Gational !ank when ariano Eacson Eedesma9s personal obligation
fell due, the assignment of arch <, (2?) :E"hibit 2, 4.G.!.=, is null and void, not
because it is fraudulent, for there was no intent of fraud in e"ecuting the deed, but
that the cause or consideration of the assignment was erroneous, for it was based
upon the proposition that the bonus was civil fruits of the land mortgaged to the
4hilippine Gational !ank.' :4. ?(.=
The fundamental question, then, submitted to our consideration is whether or not
the bonus in question is civil fruits.
This is how the bonus came to be granted$ 0n #ecember >>, (2>?, the Talisay-6ilay
illing -o., Inc., was indebted to the 4hilippine Gational !ank. To secure the
payment of its debt, it succeeded in inducing its planters, among whom was
ariano Eacson Eedesma, to mortgage their land to the creditor bank. +nd in order
to compensate those planters for the risk they were running with their property
under the mortgage, the aforesaid central, by a resolution passed on that same
date, i.e., #ecember >>, (2>?, undertook to credit the owners of the plantation thus
mortgaged every year with a sum equal to two per centum of the debt secured
according to yearly balance, the payment of the bonus being made at once, or in
part from time to time, as soon as the central became free of its obligations to the
aforesaid bank, and of those contracted by virtue of the contract of supervision, and
had funds which might be so used, or as soon as it obtained from said bank
authority to make such payment. :E"hibits ., ;% 4.G.!.=
+rticle ?.. of the -ivil -ode considers three things as civil fruits$ Hirst, the rents of
buildings% second, the proceeds from leases of lands% and, third, the income from
perpetual or life annuities, or other similar sources of revenue. It may be noted that
according to the conte"t of the law, the phrase "u otras analogas" refers only to rent
or income, for the ad&ectives "otras" and "analogas" agree with the
noun "rentas," as do also the other ad&ectives"perpetuas" and "vitalicias." That is
why we say that by 'civil fruits' the -ivil -ode understands one of three and only
three things, to wit$ the rent of a building, the rent of land, and certain kinds of
income.
+s the bonus in question is not rent of a building or of land, the only meaning of
'civil fruits' left to be e"amined is that of 'income.'
+ssuming that in broad &uridical sense of the word 'income' it might be said that
the bonus in question is 'income' under article ?.. of the -ivil -ode, it is obvious to
inquire whether it is derived from the land mortgaged by ariano Eacson Eedesma
to the appellant bank for the bene5t of the central% for it is not obtained from that
land but from something else, it is not civil fruits of that land, and the bank9s
contention is untenable.
It is to be noted that the said bonus bears no immediate, but only a remote
accidental relation to the land mentioned, having been granted as compensation for
the risk of having sub&ected one9s land to a lien in favor of the bank, for the bene5t
of the entity granting said bonus. If this bonus be income or civil fruits of anything,
it is income arising from said risk, or, if one chooses, from ariano Eacson
Eedesma9s generosity in facing the danger for the protection of the central, but
certainly it is not civil fruits or income from the mortgaged property, which, as far as
this case is concerned, has nothing to do with it. Aence, the amount of the bonus,
according to the resolution of the central granting it, is not based upon the value,
importance or any other circumstance of the mortgaged property, but upon the
total value of the debt thereby secured, according to the annual balance, which is
something quite distinct from and independent of the property referred to.
Hinding no merit in this appeal, the &udgment appealed from is a@rmed, without
e"press 5nding as to costs. 6o ordered.
..G.R. No. 33606
4I'EN,E ),O. &OINGO "ERN$R&O, plainti7-appellant,
vs.
'$,$LINO "$,$'L$N, defendant-appellant.
,ORI"IO ,EO&ORO, purchaser-appellee.
L$2REL, J.:
This is an appeal taken by both the plainti7 and the defendant from the order of
6eptember >;, (2?., hereinabove referred to, of the -ourt of Hirst Instance of -avite
in -ivil -ase Go. >/>*.
There is no controversy as to the facts. !y a contract of sale e"ecuted from 4astor
6amonte and others ownership of a parcel of land of about 2) hectares situated in
sitio !alayunan, 6ilang, -avite. To secure possession of the land from the vendors
the said plainti7, on 1uly >), (2>2, instituted -ivil -ase Go. (2?. in the -ourt of Hirst
Instance of -avite. The trial court found for the plainti7 in a decision which was
a@rmed by this 6upreme -ourt on appeal :I.F. Go. ??)(<=.
JJ
(
KK
,hen plainti7
entered upon the premises, however, he found the defendant herein, -atalino
!ataclan, who appears to have been authori3ed by former owners, as far back as
(2>>, to clear the land and make improvements thereon. +s !ataclan was not a
party in -ase Go. (2?., plainti7, on 1une ((, (2?(, instituted against him, in the
-ourt of Hirst Instance of -avite, -ivil -ase Go. >/>*. In this case, plainti7 was
declared owner but the defendant was held to be a possessor in good faith, entitled
to reimbursement in the total sum of 4(,;/>, for work done and improvements
made. The dispositive part of the decision reads$
4or las consideraciones e"puestas, se declara al demandante Licente 6anto
#omingo !ernardo dueMo con derecho a la posesion del terreno que se describe en
la demanda, y al demandado -atalino !ataclan con derecho a que del demandante
le pague la suma de 4(,;/> por gastos utiles hechos de buena fe en el terreno, y
por el cerco y ponos de coco y abaca e"istentes en el mismo, y con derecho,
ademas a retener la posesion del terreno hasta que se le pague dicha cantidad. +l
demandante puede optar, en el pla3o de treinta dias, a partir de la fecha en que
fuere noti5cado de la presente, por pagar esa suma al demandado, haciendo asi
suyos el cerco y todas las plantaciones e"istentes en el terreno, u obligar al
demandado a pagarle el precio terreno, a ra3on de trescientos pesos la hectarea. En
el caso de que el demandante optara por que el demandado le pagara el precio del
terreno, el demandado efectuara el pago en el pla3o convenientes por las partes o
que sera 5&ado por el 1u3gado. 6in costas.
!oth parties appealed to this court :I. F. Go. ?<?(2=.
JJ
>
KK
The decision appealed from
was modi5ed by allowing the defendant to recover compensation amounting to
4>,>(> and by reducing the price at which the plainti7 could require the defendant
to purchase the land in question from 4?)) to 4>)) per hectare. 4lainti7 was given
by this court ?) days from the date when the decision became 5nal within which to
e"ercise his option, either to sell the land to the defendant or to buy the
improvements from him. 0n 1anuary 2, (2?/, the plainti7 manifested to the lower
court his desire 'to require the defendant to pay him the value of the land at the
rate of 4>)) per hectare or a total price of 4(*,))) for the whole tract of land.' The
defendant informed the lower court that he was unable to pay the land and, on
1anuary >/, (2?/, an order was issued giving the plainti7 ?) days within which to
pay the defendant the sum of 4>,>(> stating that, in the event of failure to make
such payment, the land would be ordered sold at public auction 'Para hacer pago al
demandante de la suma de P2,212 y el remanente despues de deducidos los gastos
legales de la venta en publica subasta sera entregado al demandante.' 0n Hebruary
>(, (2?/, plainti7 moved to reconsider the foregoing order so that he would have
preference over the defendant in the order of payment. The motion was denied on
arch (, (2?/ but on arch (; following the court below, motu proprio modi5ed its
order of 1anuary >/, 'en el sentido de ue el demandante tiene derecho pre!erente
al importe del terreno no se vendiere en publica subasta, a ra"on de P2## por
hectares y el remanente, si acaso lo hubiere se entregara al demandado en pago
de la cantidad de P2,212 por la limpie"a del terreno y las me$oras introducidas en el
mismo por el citado demandado.' 0n +pril >/, (2?/, the court below, at the
instance of the plainti7 and without ob&ection on the part of the defendant, ordered
the sale of the land in question at public auction. The land was sold on +pril ., (2?.
to Toribio Teodoro, the highest bidder, for 4*,))). In the certi5cate of sale issued to
said purchaser on the very day of sale, it was stated that the period of redemption
of the land sold was to e"pire on +pril ., (2?;. 8pon petition of Toribio Teodoro the
court below ordered the provincial sheri7 to issue another certi5cate not quali5ed
by any equity of redemption. This was complied with by the sheri7 on 1uly ?), (2?..
0n 6eptember (*, (2?., Teodoro moved that he be placed in possession of the land
purchased by him. The motion was granted by order of 6eptember >;, (2?., the
dispositive part of which is as follows$
4or tanto, se ordena al 6heri7 4rovincial de -avite ponga a Toribio Teodoro en
posesion del terreno comprado por el en subasta publica y por el cual se le e"pidio
certi5cado de venta de5nitiva, reservando al demandado su derecho de e&ercitar
una accion ordinaria para reclamar del demandante la cantidad de 4>,>(> a que
tiene derecho por la limpie3a y me&oras del terreno y cuya suma, en &usticia y
equidad, debe ser descontada y deducida de la suma de 4*,))) que ya ha recibido
el demandante.
The -ivil -ode con5rms certain time-honored principles of the law of property. 0ne
of these is the principle of accession whereby the owner of property acquires not
only that which it produces but that which is united to it either naturally or
arti5cially. :+rt. ?.?.= ,hatever is built, planted or sown on the land of another, and
the improvements or repairs made thereon, belong to the owner of the land :art.
?.*=. ,here, however, the planter, builder, or sower has acted in good faith, a
conNict of rights arises between the owners and it becomes necessary to protect the
owner of the improvements without causing in&ustice to the owner of the land. In
view of the impracticability of creating what anresa calls a state of 'forced
coownership' :vol. ?, /th ed., p. >(?=, the law has provided a &ust and equitable
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 :art. ?;(=. It is the owner of the land
who is allowed to e"ercise the option because his right is older and because, by the
principle of accession, he is entitled to the ownership of the accessory thing :?
anresa, /th ed., p. >(?=. In the case before us, the plainti7, as owner of the land,
chose to require the defendant, as owner of the improvements, to pay for the land.
The defendant states that he is a possessor in good faith and that the amount of
4>,>(> to which he is entitled has not yet been paid to him. Therefore, he says, he
has a right to retain the land in accordance with the provisions of article /.? of the
-ivil -ode. ,e do not doubt the validity of the premises stated. '%onsidera la ley
tan saarada y legitima la deuda, ue, hasta ue sea pagada, no consiente ue la
cosa se restituya all vencedor.' :/ anresa, /th ed, p., ?)/.= ,e 5nd, however, that
the defendant has lost his right of retention. In obedience to the decision of this
court in I.F. Go. ?<?(2, the plainti7 e"pressed his desire to require the defendant
to pay for the value of the land. The said defendant could have become owner of
both land and improvements and continued in possession thereof. !ut he said he
could not pay and the land was sold at public auction to Toribio Teodoro. The law, as
we have already said, requires no more than that the owner of the land should
choose between indemnifying the owner of the improvements or requiring the latter
to pay for the land. ,hen he failed to pay for the land, the defendant herein lost his
right of retention.
The sale at public auction having been asked by the plainti7 himself :p. >>, bill of
e"ceptions= and the purchase price of 4*,))) received by him from Toribio Teodoro,
we 5nd no reason to &ustify a rapture of the situation thus created between them,
the defendant-appellant not being entitled, after all, to recover from the plainti7 the
sum of 4>,>(>.
The &udgment of the lower court is accordingly modi5ed by eliminating therefrom
the reservation made in favor of the defendant-appellant to recover from the
plainti7 the sum of 4>,>(>. In all the respects, the same is a@rmed, without
pronouncement regarding costs. 6o ordered.
+pril ?), (2/;
3.G.R. No. L-105
&$I$N IGN$'IO, +R$N'I)'O IGN$'IO an# L2I) IGN$'IO, petitioners,
vs.
ELI$) (IL$RIO an# his 5ife &IONI)I$ &RE), an# +ELI*E N$,I4I&$&, 6!#7e
of +irst Instance of *an7asinan, respondents.
OR$N, C.J.8
This is a petition for certiorari arising from a case in the -ourt of Hirst Instance of
4angasinan between the herein respondents Elias Ailario and his wife #ionisia #res
as plainti7s, and the herein petitioners #amian, Hrancisco and Euis, surnamed
Ignacio, as defendants, concerning the ownership of a parcel of land, partly rice-
land and partly residential. +fter the trial of the case, the lower court, presided over
by Aon. +lfonso Heli", rendered &udgment holding plainti7s as the legal owners of
the whole property but conceding to defendants the ownership of the houses and
granaries built by them on the residential portion with the rights of a possessor in
good faith, in accordance with article ?;( of the -ivil -ode. The dispositive part of
the decision, hub of this controversy, follows$
,herefore, &udgment is hereby rendered declaring$
:(= That the plainti7s are the owners of the whole property described in transfer
certi5cate of title Go. (>*<> :E"hibit += issued in their name, and entitled to the
possession of the same%
:>= That the defendants are entitled to hold the position of the residential lot until
after they are paid the actual market value of their houses and granaries erected
thereon, unless the plainti7s prefer to sell them said residential lot, in which case
defendants shall pay the plainti7s the proportionate value of said residential lot
taking as a basis the price paid for the whole land according to E"hibit !% and
:?= That upon defendant9s failure to purchase the residential lot in question, said
defendants shall remove their houses and granaries after this decision becomes
5nal and within the period of si"ty :;)= days from the date that the court is informed
in writing of the attitude of the parties in this respect.
Go pronouncement is made as to damages and costs.
0nce this decision becomes 5nal, the plainti7s and defendants may appear again
before this court for the purpose of determining their respective rights under article
?;( of the -ivil -ode, if they cannot come to an e"tra-&udicial settlement with
regard to said rights.
6ubsequently, in a motion 5led in the same -ourt of Hirst Instance but now presided
over by the herein respondent 1udge Aon. Helipe Gatividad, the plainti7s prayed for
an order of e"ecution 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 e"pense and to restore plainti7s in the
possession of said lot. #efendants ob&ected to this motion which, after hearing, was
granted by 1udge Gatividad. Aence, this petition by defendants praying for :a= a
restraint and annulment of the order of e"ecution issued by 1udge Gatividad% :b= an
order to compel plainti7s to pay them the sum of 4>,))) for the buildings, or sell to
them the residential lot for 4/.% or :c=, a rehearing of the case for a determination of
the rights of the parties upon failure of e"tra-&udicial settlement.
The &udgment rendered by 1udge Heli" is founded on articles ?;( and /.? of the -ivil
-ode which are as follows$
+FT. ?;(. The owner of land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the work, sowing or
planting, after the payment of the indemnity stated in articles /.? and /./, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent.
+FT. /.?. Gecessary e"penses shall be refunded to every possessor% but only the
possessor in good faith may retain the thing until such e"penses are made good to
him.
8seful e"penses shall be refunded to the possessor in good faith with the same right
of retention, the person who has defeated him in the possession having the option
of refunding the amount of the e"penses or paying the increase in value which the
thing may have acquired in consequence thereof.
The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his building,
under article /.?. The owner of the land, upon the other hand, has the option,
under article ?;(, either to pay for the building or to sell his land to the owner of the
building. !ut 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. Ae is entitled to such remotion only when, after having chosen
to sell his land, the other party fails to pay for the same. !ut this is not the case
before us.
,e hold, therefore, that the order of 1udge Gatividad compelling defendants-
petitioners to remove their buildings from the land belonging to plainti7s-
respondents only because the latter chose neither to pay for such buildings not to
sell the land, is null and void, for it amends substantially the &udgment sought to be
e"ecuted and is, furthermore, o7ensive to articles ?;( and /.? of the -ivil -ode.
There is, however, in the decision of 1udge Heli" a question of procedure which calls
for the clari5cation, to avoid uncertainty and delay in the disposition of cases. In
that decision, the rights of both parties are well de5ned under articles ?;( and /.?
of the -ivil -ode, but it fails to determine the value of the buildings and of the lot
where they are erected as well as the periods of time within which the option may
be e"ercised and payment should be made, these particulars having been left for
determination apparently after the &udgment has become 5nal. This procedure is
erroneous, for after the &udgment has become 5nal, no additions can be made
thereto and nothing can be done therewith e"cept its e"ecution. +nd e"ecution
cannot be had, the sheri7 being ignorant as to how, for how much, and within what
time may the option be e"ercised, and certainly no authority is vested in him to
settle these matters which involve e"ercise of &udicial discretion. Thus the &udgment
rendered by 1udge Heli" has never become 5nal, it having left matters to be settled
for its completion in a subsequent proceeding, matters which remained unsettled up
to the time the petition is 5led in the instant case.
Hor all the foregoing, the writ of e"ecution issued by 1udge Gatividad is hereby set
aside and the lower court ordered to hold a hearing in the principal case wherein it
must determine the prices of the buildings and of the residential lot where they are
erected, as well as the period of time within which the plainti7s-respondents may
e"ercise their option either to pay for the buildings or to sell their land, and, in the
last instance, the period of time within which the defendants-petitioners may pay
for the land, all these periods to be counted from the date the &udgment becomes
e"ecutory or unappealable. +fter such hearing, the court shall render a 5nal
&udgment according to the evidence presented by the parties.
The costs shall be paid by plainti7s-respondents.
5.G.R. No. L-50299 $/ril .0, 1993
LEONIL$ )$RINE,O, petitioner,
vs.
(ON. ENRI:2E $. $G$N$, &istrict 6!#7e, 'o!rt of +irst Instance of Ri;al,
)e<enth 6!#icial &istrict, "ranch ==4III, *asa> 'it>, an# )*O2)E) ERNE),O
4$LEN,INO an# RE"E''$ LOREN-O-4$LEN,INO,respondents.
ELEN'IO-(ERRER$,
This 4etition for certiorari questions a arch >2, (2<2 #ecision rendered by the then
-ourt of Hirst Instance of 4asay -ity. The #ecision was one made on memoranda,
pursuant to the provisions of F+ ;)?(, and it modi5ed, on 0ctober (<, (2<<, a
&udgment of the then unicipal -ourt of 4aranaque, Fi3al, in an E&ectment suit
instituted by herein petitioner Eeonila 6+FIEGT0 against private respondents, the
spouses EFGE6T0 Lalentino and Febecca Eoren3o. Hor the facts, therefore, we have
to look to the evidence presented by the parties at the original level.
It appears that while EFGE6T0 was still courting his wife, the latter9s mother had
told him the couple could build a FE6I#EGTI+E A086E on a lot of (/. sq. ms., being
Eot # of a subdivision in 4aranaque :the E+G#, for short=. In (2;<, EFGE6T0 did
construct a FE6I#EGTI+E A086E on the E+G# at a cost of 4*,))).)) to 4(),))).)).
It was probably assumed that the wife9s mother was the owner of the E+G# and
that, eventually, it would somehow be transferred to the spouses.
It subsequently turned out that the E+G# had been titled in the name of r. D rs.
1ose -. 6anto, 1r. who, on 6eptember < , (2</, sold the same to petitioner
6+FIEGT0. The following 1anuary ;, (2<., 6+FIEGT0 asked EFGE6T0 and wife to
vacate and, on +pril >(, (2<., 5led an E&ectment suit against them. In the
evidentiary hearings before the unicipal -ourt, 6+FIEGT0 submitted the deed of
sale of the E+G# in her favor, which showed the price to be 4(.,))).)). 0n the
other hand, EFGE6T0 testi5ed that the then cost of the FE6I#EGTI+E A086E would
be from 4?),))).)) to 4/),))).)). The 5gures were not questioned by 6+FIEGT0.
The unicipal -ourt found that private respondents had built the FE6I#EGTI+E
A086E in good faith, and, disregarding the testimony of EFGE6T0, that it had a
value of 4>),))).)). It then ordered EFGE6T0 and wife to vacate the E+G# after
6+FIEGT0 has paid them the mentioned sum of 4>),))).)).
The E&ectment suit was elevated to the -ourt of Hirst Instance of 4asay where, after
the submission of memoranda, said -ourt rendered a modifying #ecision under
+rticle //* of the -ivil -ode. 6+FIEGT0 was required, within ;) days, to e"ercise
the option to reimburse EFGE6T0 and wife the sum of /),))).)) as the value of the
FE6I#EGTI+E A086E, or the option to allow them to purchase the E+G# for
4>.,))).)). 6+FIEGT0 did not e"ercise any of the two options within the indicated
period, and EFGE6T0 was then allowed to deposit the sum of 4>.,))).)) with the
-ourt as the purchase price for the E+G#. This is the hub of the controversy.
6+FIEGT0 then instituted the instant certiorari proceedings.
,e agree that EFGE6T0 and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the FE6I#EGTI+E A086E. +s far as
they knew, the E+G# was owned by EFGE6T09s mother-in-law who, having stated
they could build on the property, could reasonably be e"pected to later on give
them the E+G#.
In regards to builders in good faith, +rticle //* of the -ode provides$t&'.()hw*(
+FT. //*. 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 ./; and ./*, or
to oblige the one who built or planted to pay the price of the land, and
the one who sowed, the proper rent.
Aowever, 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 5" the terms thereof. :4aragraphing
supplied=
The value of the E+G#, purchased for 4(.,))).)) on 6eptember <, (2</, could not
have been very much more than that amount during the following 1anuary when
EFGE6T0 and wife were asked to vacate. Aowever, EFGE6T0 and wife have not
questioned the 4>.,))).)) valuation determined by the -ourt of Hirst Instance.
In regards to the valuation of the FE6I#EGTI+E A086E, the only evidence presented
was the testimony of EFGE6T0 that its worth at the time of the trial should be from
4?),))).)) to 4/),))).)). The unicipal -ourt chose to assess its value at
4>),))).)), or below the minimum testi5ed by EFGE6T0, while the -ourt of Hirst
Instance chose the ma"imum of 4/),))).)). In the latter case, it cannot be said
that the -ourt of Hirst Instance had abused its discretion.
The challenged decision of respondent -ourt, based on valuations of 4>.,))).)) for
the E+G# and 4/),))).)) for the FE6I#EGTI+E A086E, cannot be viewed as not
supported by the evidence. The provision for the e"ercise by petitioner 6+FIEGT0
of either the option to indemnify private respondents in the amount of 4/),))).)),
or the option to allow private respondents to purchase the E+G# at 4>.,))).)), in
our opinion, was a correct decision.t&'.()hw*(
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 /.? :now +rticle ./;=. The
owner, of the land. upon, the other hand, has the option, under article
?;( :now +rticle //*=, either to pay for the building or to sell his land
to the owner of the building. +ut he cannot, as respondents here
did, re!use both to pay !or the building and to sell the land and compel
the owner of the building to remove it from the land where it is
erected. Ae is entitled to such remotion only when, after having chosen
to sell his land, the other party fails to pay for the same. :Emphasis
ours=
,e hold, therefore, that the order of 1udge Gatividad compelling
defendants-petitioners to remove their buildings from the land
belonging to plainti7s-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 &udgment sought to be e"ecuted and is,
furthermore, o7ensive to articles ?;( :now +rticle //*= and /.? :now
+rticle ./;= of the -ivil -ode. :Ignacio vs. Ailario, <; 4hil. ;)., ;)*
J(2/;K=.
,AEFEH0FE, the 4etition for -ertiorari is hereby ordered dismissed, without
pronouncement as to costs.
60 0F#EFE#.1,wph-1.'.t
6.G.R. No. L-50.39 a> 16, 1995
+R$N'I)'O &E*R$, plainti7-appellee,
vs.
$G2),IN &2L$O, defendant-appellant.
ELEN'IO-(ERRER$, J.:
This is an appeal from the 0rder of the former -ourt of Hirst Instance of Iloilo to the
then -ourt of +ppeals, which the latter certi5ed to this instance as involving pure
questions of law
4lainti7-appellee, Hrancisco #epra, is the owner of a parcel of land registered under
Transfer -erti5cate of Title Go. T?)*<, known as Eot Go. ;*., situated in the
municipality of #umangas, Iloilo, with an area of appro"imately *,*<) square
meters. +gustin #umlao, defendant-appellant, owns an ad&oining lot, designated as
Eot Go. ;*?, with an appro"imate area of >?( sq. ms.
6ometime in (2<>, when #8E+0 constructed his house on his lot, the kitchen
thereof had encroached on an area of thirty four :?/= square meters of #E4F+9s
property, +fter the encroachment was discovered in a relocation survey of #E4F+9s
lot made on Govember >,(2<>, his mother, !eatri3 #epra after writing a demand
letter asking #8E+0 to move back from his encroachment, 5led an action for
8nlawful #etainer on Hebruary ;,(2<? against #8E+0 in the unicipal -ourt of of
#umangas, docketed as -ivil -ase Go (, 6aid complaint was later amended to
include #E4F+ as a party plain. plainti7.
+fter trial, the unicipal -ourt found that #8E+0 was a builder in good faith, and
applying +rticle //* of the -ivil -ode, rendered &udgment on 6eptember >2, (2<?,
the dispositive portion of which reads$
0rdering that a forced lease is created between the parties with the
plainti7s, as lessors, and the defendants as lessees, over the disputed
portion with an area of thirty four :?/= square meters, the rent to be
paid is 5ve :4..))= pesos a month, payable by the lessee to the lessors
within the 5rst 5ve :.= days of the month the rent is due% and the lease
shall commence on the day that this decision shall have become 5nal.
Hrom the foregoing &udgment, neither party appeal so that, 7 it were a valid
&udgment, it would have ordinarily lapsed into 5nality, but even then, #E4F+ did not
accept payment of rentals so that #8E+0 deposited such rentals with the
unicipal -ourt.
0n 1uly (.,(2</, #E4F+ 5led a -omplaint for Ouieting of Title against #8E+0
before the then -ourt of Hirst Instance of Iloilo, !ranch IL :Trial -ourt=, involving the
very same ?/ square meters, which was the bone of contention in the unicipal
-ourt. #8E+0, in his +nswer, admitted the encroachment but alleged, in the main,
that the present suit is barred by res $udicata by virtue of the #ecision of the
unicipal -ourt, which had become 5nal and e"ecutory.
+fter the case had been set for pre-trial, the parties submitted a 1oint otion for
1udgment based on the 6tipulation of Hacts attached thereto. 4remised thereon, the
Trial -ourt on 0ctober ?(, (2</, issued the assailed 0rder, decreeing$
,AEFEH0FE, the -ourt 5nds and so holds that the thirty four :?/=
square meters sub&ect of this litigation is part and parcel of Eot ;*. of
the -adastral 6urvey of #umangas of which the plainti7 is owner as
evidenced by Transfer -erti5cate of Title Go. ?)*< and such plainti7 is
entitled to possess the same.
,ithout pronouncement as to costs.
60 0F#EFE#.
Febutting the argument of res $udicata relied upon by #8E+0, #E4F+ claims that
the #ecision of the unicipal -ourt was null and void ab initio because its
&urisdiction is limited to the sole issue of possession, whereas decisions a7ecting
lease, which is an encumbrance on real property, may only be rendered by -ourts of
Hirst Instance.
+ddressing out selves to the issue of validity of the #ecision of the unicipal -ourt,
we hold the same to be null and void. The &udgment in a detainer case is e7ective in
respect of possession only :6ec. <, Fule <), Fules of -ourt=.
1
The unicipal -ourt
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. Hurthermore, a lease
is an interest in real property, &urisdiction over which belongs to -ourts of Hirst
Instance :now Fegional Trial -ourts= :6ec. //:b=, 1udiciary +ct of (2/*%
2
6ec. (2 :>=
!atas 4ambansa !lg. (>2=.
.
6ince the unicipal -ourt, acted without &urisdiction, its
#ecision was null and void and cannot operate as res $udicata to the sub&ect
complaint for Oueting of Title. !esides, even if the #ecision were valid, the rule
on res $udicata would not apply due to di7erence in cause of action. In the unicipal
-ourt, the cause of action was the deprivation of possession, while in the action to
quiet title, the cause of action was based on ownership. Hurthermore, 6ec. <, Fule
<) of the Fules of -ourt e"plicitly provides that &udgment in a detainer case 'shall
not bar an action between the same parties respecting title to the land. '
3
-onceded in the 6tipulation of Hacts between the parties is that #8E+0 was a
builder in good faith. Thus,
*. That the sub&ect matter in the unlawful detainer case, -ivil -ase Go.
(, before the unicipal -ourt of #umangas, Iloilo involves the same
sub&ect matter in the present case, the Thirty-four :?/= square meters
portion of land and built thereon in good faith is a portion of
defendant9s kitchen and has been in the possession of the defendant
since (2.> continuously up to the present% ... :Emphasis ours=
-onsistent with the principle that our -ourt system, like any other, must be a
dispute resolving mechanism, we accord legal e7ect to the agreement of the
parties, within the conte"t of their mutual concession and stipulation. They have,
thereby, chosen a legal !ormula to resolve their dispute to appeal ply to #8E+0
the rights of a 'builder in good faith' and to #E4F+ those of a 'landowner in good
faith' as prescribed in +rticle //*. Aence, we shall refrain from further e"amining
whether the factual situations of #8E+0 and #E4F+ conform to the &uridical
positions respectively de5ned by law, for a 'builder in good faith' under +rticle //*,
a 'possessor in good faith' under +rticle .>; and a 'landowner in good faith9 under
+rticle //*.
In regards to builders in good faith, +rticle //* of the -ivil -ode provides$
+FT. //*. 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 ./; and ./*, or
to oblige the one who built or planted to pay the price of the land, and
the one who sowed, the proper rent.
Aowever, 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 5" the terms thereof :4aragraphing
supplied=
4ursuant to the foregoing provision, #E4F+ has the option either to pay for the
encroaching part of #8E+09s kitchen, or to sell the encroached ?/ square meters
of his lot to #8E+0. Ae 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 unicipal -ourt. !ut that manifestation is not binding because it was made in a
void proceeding.
Aowever, the good faith of #8E+0 is part of the 6tipulation of Hacts in the -ourt of
Hirst Instance. It was thus error for the Trial -ourt to have ruled that #E4F+ is
'entitled to possession,' without more, of the disputed portion implying thereby that
he is entitled to have the kitchen removed. Ae is entitled to such removal only
when, after having chosen to sell his encroached land, #8E+0 fails to pay for the
same.
6
In this case, #8E+0 had e"pressed his willingness to pay for the land, but
#E4F+ refused to sell.
The owner of the building erected in good faith on a land owned by
another, is entitled to retain the possession of the land until he is paid
the value of his building, under article /.? :now +rticle ./;=. The
owner of the land, upon the other hand, has the option, under article
?;( :now +rticle //*=, either to pay for the building or to sell his land
to the owner of the building. +ut he cannot as respondents here
did re!use both to pay !or the building and to sell the land and compel
the owner of the building to remove it from the land where it erected.
Ae is entitled to such remotion only when, after having chosen to sell
his land. the other party fails to pay for the same :italics ours=.
,e hold, therefore, that the order of 1udge Gatividad compelling
defendants-petitioners to remove their buildings from the land
belonging to plainti7s-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 &udgment sought to be e"ecuted and is.
furthermore, o7ensive to articles ?;( :now +rticle //*= and /.? :now
+rticle ./;= of the -ivil -ode. :Ignacio vs. Ailario, <; 4hil. ;).,
;)*J(2/;K=.
+ word anent the philosophy behind +rticle //* of the -ivil rode.
The original provision was found in +rticle ?;( of the 6panish -ivil -ode% which
provided$
+FT. ?;(. The owner of land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the
work, sowing or planting, after the payment of the indemnity stated in
+rticles /.? and /./, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent.
+s will be seen, the +rticle favors the owner of the land, by giving him one of the
two options mentioned in the +rticle. 6ome commentators have questioned the
preference in favor of the owner of the land, but anresa9s opinion is that the +rticle
is &ust and fair.
. . . es &usta la facultad que el codigo da al dueno del suelo en el
articulo ?;(, en el caso de edi5cacion o plantacion? +lgunos
comentaristas la conceptuan in&usta, y como un e"traordinario
privilegio en favor de la propiedad territorial. Entienden que impone el
-odigo una pena al poseedor de buena fe y como advierte uno de los
comentaristas aludidos 9no se ve claro el por que de tal pena . . . al
obligar al que obro de buena fe a quedarse con el edi5cio o plantacion,
previo el pago del terreno que ocupa, porque si bien es verdad que
cuando edi5co o planto demostro con este hecho, que queria para si el
edi5cio o plantio tambien lo es que el que edi5co o planto de buena fe
lo hi3o en la erronea inteligencia de creerse dueno del terreno 4osible
es que, de saber lo contrario, y de tener noticia de que habia que
comprar y pagar el terreno, no se hubiera decidido a plantar ni a
edi5car. Ea ley obligandole a hacerlo fuer3a su voluntad, y la fuer3a por
un hecho inocente de que no debe ser responsable9. +si podra suceder
pero la realidad es que con ese hecho voluntario, aunque sea inocente,
se ha enriquecido torticeramente con per&uicio de otro a quien es &usto
indemni3arle,
En nuestra opinion, el -odigo ha resuelto el conNicto de la manera mas
&usta y equitativa y respetando en lo possible el principio que para la
accesion se establece en el art. ?.*.
0
0ur own -ode -ommission must have taken account of the ob&ections to +rticle ?;(
of the 6panish -ivil -ode. Aence, the -ommission provided a modi5cation thereof,
and +rticle //* of our -ode has been made to provide$
+FT. //*. 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 ./; and ./*, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the
proper rent. Aowever, 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 5" the terms thereof.
+dditional bene5ts were e"tended to the builder but the landowner retained his
options.
The fairness of the rules in +rticle //* has also been e"plained as follows$
,here the builder, planter or sower has acted in good faith, a conNict
of rights arises between the owners, and it becomes necessary to
protect the owner of the improvements without causing in&ustice to the
owner of the land. In view of the impracticability of creating a state of
forced co-ownership, the law has provided a &ust solution by giving the
owner of the land the option to acquire the improvements after
payment of the proper indemnity, or to oblige the builder or planter to
pay for the land and the sower to pay for the proper rent. It is the
owner of the land who is authori3ed to e"ercise the option, because his
right is older, and because, by the principle of accession, he is entitled
to the ownership of the accessory thing. :? anresa >(?% !ernardo vs.
!ataclan, ?< 07. Ia3. (?*>% -o Tao vs. -han -hico, I.F. Go. /2(;<,
+pril ?), (2/2% +rticle applied$ see -abral, et al vs. Ibane3 J6.-.K .> 07.
Ia3. >(<% arfori vs. Lelasco, J-.+.K .> 07. Ia3. >).)=.
9
,AEFEH0FE, the &udgment of the trial -ourt is hereby set aside, and this case is
hereby ordered remanded to the Fegional Trial -ourt of Iloilo for further proceedings
consistent with +rticles //* and ./; of the -ivil -ode, as follows$
(. The trial -ourt shall determine
a= the present fair price of #E4F+9s ?/ square meter area of land%
b= the amount of the e"penses spent by #8E+0 for the building of
the kitchen%
c= the increase in value :'plus value'= which the said area of ?/ square
meters may have acquired by reason thereof, and
d= whether the value of said area of land is considerably more than
that of the kitchen built thereon.
>. +fter said amounts shall have been determined by competent evidence, the
Fegional, Trial -ourt shall render &udgment, as follows$
a= The trial -ourt shall grant #E4F+ a period of 5fteen :(.= days within
which to e"ercise his option under the law :+rticle //*, -ivil -ode=,
whether to appropriate the kitchen as his own by paying to #8E+0
either the amount of tile e"penses spent by #8E+0 f or the building
of the kitchen, or the increase in value :'plus value'= which the said
area of ?/ square meters may have acquired by reason thereof, or to
oblige #8E+0 to pay the price of said area. The amounts to be
respectively paid by #8E+0 and #E4F+, in accordance with the
option thus e"ercised by written notice of the other party and to the
-ourt, shall be paid by the obligor within 5fteen :(.= days from such
notice of the option by tendering the amount to the -ourt in favor of
the party entitled to receive it%
b= The trial -ourt shall further order that if #E4F+ e"ercises the option
to oblige #8E+0 to pay the price of the land but the latter re&ects
such purchase because, as found by the trial -ourt, the value of the
land is considerably more than that of the kitchen, #8E+0 shall give
written notice of such re&ection to #E4F+ and to the -ourt within 5fteen
:(.= days from notice of #E4F+9s option to sell the land. In that event,
the parties shall be given a period of 5fteen :(.= days from such notice
of re&ection within which to agree upon the terms of the lease, and give
the -ourt formal written notice of such agreement and its provisos. If
no agreement is reached by the parties, the trial -ourt, within 5fteen
:(.= days from and after the termination of the said period 5"ed for
negotiation, shall then 5" the terms of the lease, provided that the
monthly rental to be 5"ed by the -ourt shall not be less than Ten 4esos
:4().))= per month, payable within the 5rst 5ve :.= days of each
calendar month. The period for the forced lease shall not be more than
two :>= years, counted from the 5nality of the &udgment, considering
the long period of time since (2.> that #8E+0 has occupied the
sub&ect area. The rental thus 5"ed shall be increased by ten percent
:()P= for the second year of the forced lease. #8E+0 shall not make
any further constructions or improvements on the kitchen. 8pon
e"piration of the two-year period, or upon default by #8E+0 in the
payment of rentals for two :>= consecutive months, #E4F+ shall be
entitled to terminate the forced lease, to recover his land, and to have
the kitchen removed by #8E+0 or at the latter9s e"pense. The rentals
herein provided shall be tendered by #8E+0 to the -ourt for
payment to #E4F+, and such tender shall constitute evidence of
whether or not compliance was made within the period 5"ed by the
-ourt.
c= In any event, #8E+0 shall pay #E4F+ an amount computed at Ten
4esos :4().))= per month as reasonable compensation for the
occupancy of #E4F+9s land for the period counted from (2.>, the year
#8E+0 occupied the sub&ect area, up to the commencement date of
the forced lease referred to in the preceding paragraph%
d= The periods to be 5"ed by the trial -ourt in its 4recision shall be
ine"tendible, and upon failure of the party obliged to tender to the trial
-ourt the amount due to the obligee, the party entitled to such
payment shall be entitled to an order of e"ecution for the enforcement
of payment of the amount due and for compliance with such other acts
as may be required by the prestation due the obligee.
Go costs,
60 0F#EFE#.
0.?G.R. No. 109993. +ebr!ar> 10, 1990@
,E'NOG$) *(ILI**INE) $N2+$',2RING 'OR*OR$,ION, petitioner,
vs. 'O2R, O+ $**E$L) A+ORER )*E'I$L )E4EN,EEN,( &I4I)IONB
an# E&2$R&O 2%, respondents.
& E ' I ) I O N
*$NG$NI"$N, J.8
The parties in this case are owners of ad&oining lots in 4araMaque, etro
anila. It was discovered in a survey that a portion of a building of petitioner, which
was presumably constructed by its predecessor-in-interest, encroached on a portion
of the lot owned by private respondent. ,hat are the rights and obligations of the
parties? Is petitioner considered a builder in bad faith because, as held by
respondent -ourt, he is Qpresumed to know the metes and bounds of his property
as described in his certi5cate of titleR? #oes petitioner succeed into the good faith
or bad faith of his predecessor-in-interest which presumably constructed the
building?
These are the questions raised in the petition for review of the #ecision
J(K
dated
+ugust >*, (22>, in -+-I.F. -L Go. >*>2? of respondent -ourt
J>K
where the
disposition reads$
J?K
Q,AEFEH0FE, premises considered, the #ecision of the Fegional Trial -ourt is
hereby reversed and set aside and another one entered -
(. #ismissing the complaint for lack of cause of action%
>. 0rdering Tecnogas to pay the sum of 4>,))).)) per month as reasonable rental
from 0ctober /, (2<2 until appellee vacates the land%
?. To remove the structures and surrounding walls on the encroached area%
/. 0rdering appellee to pay the value of the land occupied by the two-storey
building%
.. 0rdering appellee to pay the sum of 4>),))).)) for and as attorneySs fees%
;. -osts against appellee.R
+cting on the motions for reconsideration of both petitioner and private
respondent, respondent -ourt ordered the deletion of paragraph / of the dispositive
portion in an +mended #ecision dated Hebruary 2, (22?, as follows$
J/K
Q,AEFEH0FE, premises considered, our decision of +ugust >*, (22> is hereby
modi5ed deleting paragraph / of the dispositive portion of our decision which reads$
T/. 0rdering appellee to pay the value of the land occupied by the two-storey
building.S
The motion for reconsideration of appellee is hereby #EGIE# for lack of merit.R
The foregoing +mended #ecision is also challenged in the instant petition.
,he +acts
The facts are not disputed. Fespondent -ourt merely reproduced the factual
5ndings of the trial court, as follows$
J.K
QThat plainti7 :herein petitioner= which is a corporation duly organi3ed and e"isting
under and by virtue of 4hilippine laws is the registered owner of a parcel of land
situated in !arrio 6an #ionisio, 4araMaque, etro anila known as Eot /??(-+
:should be /.?(-+= of Eot /.?( of the -adastral 6urvey of 4araMaque, etro anila,
covered by Transfer -erti5cate of Title Go. /)2?(; of the Fegistry of #eeds of the
4rovince of Fi3al% that said land was purchased by plainti7 from 4ari3 Industries, Inc.
in (2<), together with all the buildings and improvements including the wall
e"isting thereon% that the defendant :herein private respondent= is the registered
owner of a parcel of land known as Eot Go. /.?(-! of Eot /.?( of the -adastral
6urvey of 4araMaque, EF- :IEF0= Fec. Go. (2;/. covered by Transfer -erti5cate of
Title Go. ><2*?*, of the Fegistry of #eeds for the 4rovince of Fi3al% that said land
which ad&oins plainti7Ss land was purchased by defendant from a certain Enrile
+ntonio also in (2<)% that in (2<(, defendant purchased another lot also ad&oining
plainti7Ss land from a certain iguel Fodrigue3 and the same was registered in
defendantSs name under Transfer -erti5cate of Title Go. ?(?2), of the Fegistry of
#eeds for the 4rovince of Fi3al% that portions of the buildings and wall bought by
plainti7 together with the land from 4ari3 Industries are occupying a portion of
defendantSs ad&oining land% that upon learning of the encroachment or occupation
by its buildings and wall of a portion of defendantSs land, plainti7 o7ered to buy
from defendant that particular portion of defendantSs land occupied by portions of
its buildings and wall with an area of <<) square meters, more or less, but
defendant, however, refused the o7er. In (2<?, the parties entered into a private
agreement before a certain -ol. Fosales in alacaMang, wherein plainti7 agreed to
demolish the wall at the back portion of its land thus giving to defendant possession
of a portion of his land previously enclosed by plainti7Ss wall% that defendant later
5led a complaint before the o@ce of unicipal Engineer of 4araMaque, etro anila
as well as before the 0@ce of the 4rovincial Hiscal of Fi3al against plainti7 in
connection with the encroachment or occupation by plainti7Ss buildings and walls of
a portion of its land but said complaint did not prosper% that defendant dug or
caused to be dug a canal along plainti7Ss wall, a portion of which collapsed in 1une,
(2*), and led to the 5ling by plainti7 of the supplemental complaint in the above-
entitled case and a separate criminal complaint for malicious mischief against
defendant and his wife which ultimately resulted into the conviction in court of
defendantSs wife for the crime of malicious mischief% that while trial of the case was
in progress, plainti7 5led in -ourt a formal proposal for settlement of the case but
said proposal, however, was ignored by defendant.R
+fter trial on the merits, the Fegional Trial -ourt
J;K
of 4asay -ity, !ranch ((<, in
-ivil -ase Go. 4O-<;?(-4, rendered a decision dated #ecember /, (2*2 in favor of
petitioner who was the plainti7 therein. The dispositive portion reads$
J<K
R,AEFEH0FE, &udgment is hereby rendered in favor of plainti7 and against
defendant and ordering the latter to sell to plainti7 that portion of land owned by
him and occupied by portions of plainti7Ss buildings and wall at the price
of4>,))).)) per square meter and to pay the former$
(. The sum of 4//,))).)) to compensate for the losses in materials and properties
incurred by plainti7 through thievery as a result of the destruction of its wall%
>. The sum of 4<,.)).)) as and by way of attorneySs fees% and
?. The costs of this suit.R
+ppeal was duly interposed with respondent -ourt, which as previously stated,
reversed and set aside the decision of the Fegional Trial -ourt and rendered the
assailed #ecision and +mended #ecision. Aence, this recourse under Fule /. of the
Fules of -ourt.
,he Iss!es
The petition raises the following issues$
J*K
CA$B
,hether or not the respondent -ourt of +ppeals erred in holding the petitioner a
builder in bad faith because it is Tpresumed to know the metes and bounds of
his property.S
A"B
,hether or not the respondent -ourt of +ppeals erred when it used the
amicable settlement between the petitioner and the private respondent, where
both parties agreed to the demolition of the rear portion of the fence, as
estoppel amounting to recognition by petitioner of respondentSs right over his
property including the portions of the land where the other structures and the
building stand, which were not included in the settlement.
A'B
,hether or not the respondent -ourt of +ppeals erred in ordering the removal of the
Tstructures and surrounding walls on the encroached areaS and in withdrawing its
earlier ruling in its +ugust >*, (22> decision for the petitioner Tto pay for the value
of the land occupiedS by the building, only because the private respondent has
Tmanifested its choice to demolishS it despite the absence of compulsory sale where
the builder fails to pay for the land, and which TchoiceS private respondent
deliberately deleted from its 6eptember (, (2*) answer to the supple-mental
complaint in the Fegional Trial -ourt.R
In its emorandum, petitioner poses the following issues$
C$
The time when to determine the good faith of the builder under +rticle //* of the
Gew -ivil -ode, is reckoned during the period when it was actually being built% and
in a case where no evidence was presented nor introduced as to the good faith or
bad faith of the builder at that time, as in this case, he must be presumed to be a
Tbuilder in good faith,S since Tbad faith cannot be presumed.S
J2K
".
In a speci5c Tboundary overlap situationS which involves a builder in good faith, as in
this case, it is now well settled that the lot owner, who builds on the ad&acent lot
is not charged with Tconstructive noticeS of the technical metes and bounds
contained in their torrens titles to determine the e"act and precise e"tent of his
boundary perimeter.
J()K
'.
The respondent courtSs citation of the twin cases of Tuason D -o. v.
Eumanlan and Tuason D -o. v. acalindong is not the T&udicial authorityS for a
boundary dispute situation between ad&acent torrens titled lot owners, as the facts
of the present case do not fall within nor square with the involved principle of a
dissimilar case.
J((K
&.
Ouite contrary to respondent 8ySs reasoning, petitioner Tecnogas continues to be a
builder in good faith, even if it subsequently builtUrepaired the wallsUother
permanent structures thereon while the case a uo was pending and even while
respondent sent the petitioner many lettersU5led cases thereon.
J(>K
&. AE.B
The amicable settlement between the parties should be interpreted as a contract
and enforced only in accordance with its e"plicit terms, and not over and beyond
that agreed upon% because the courts do not have the power to create a
contract nor e"pand its scope.
J(?K
E. A+.B
+s a general rule, although the landowner has the option to choose between$ :(=
Tbuying the building built in good faithS, or :>= Tselling the portion of his land on
which stands the buildingS under +rticle //* of the -ivil -ode% the 5rstoption is not
absolute, because an e"ception thereto, once it would be impractical for the
landowner to choose to e"ercise the 5rst alternative, i.e. buy that portion of the
house standing on his land, for the whole building might be rendered useless. The
workable solution is for him to select the second alternative, namely, to sell to the
builder that part of his land on which was constructed a portion of the house.R
J(/K
4rivate respondent, on the other hand, argues that the petition is Qsu7ering
from the following Naws$
J(.K
(. It did not give the e"act citations of cases decided by the Aonorable
6upreme -ourt that allegedly contradicts the ruling of the Aon. -ourt of
+ppeals based on the doctrine laid down in Tuason vs. Eumanlan case citing
also Tuason vs. acalindong case :6upra=.
>. +ssuming that the doctrine in the alleged -o Tao vs. -hico case is
contradictory to the doctrine in Tuason vs. Eumanlan and Tuason vs.
acalindong, the two cases being more current, the same should prevail.R
Hurther, private respondent contends that the following QunmistakablyR point to the
bad faith of petitioner$ :(= private respondentSs purchase of the two lots, Qwas
ahead of the purchase by petitioner of the building and lot from 4ari3 IndustriesR%
:>= the declaration of the Ieneral anager of Tecnogas that the sale between
petitioner and 4ari3 Industries Qwas not registeredR because of some problems with
-hina !anking -orporation% and :?= the #eed of 6ale in favor of petitioner was
registered in its name only in Qthe month of ay (2<?.R
J(;K
,he 'o!rtDs R!lin7
The petition should be granted.
Goo# +aith or "a# +aith
Fespondent -ourt, citing the cases of 1. . Tuason D -o., Inc. vs. Lda. de
Eumanlan
J(<K
and 1. . Tuason D -o., Inc. vs. acalindong,
J(*K
ruled that petitioner
Qcannot be considered in good faithR because as a land owner, it is Qpresumed to
know the metes and bounds of his own property, specially if the same are reNected
in a properly issued certi5cate of title. 0ne who erroneously builds on the ad&oining
lot should be considered a builder in :b=ad :f=aith, there being presumptive
knowledge of the Torrens title, the area, and the e"tent of the boundaries.R
J(2K
,e disagree with respondent -ourt. The two cases it relied upon do not support
its main pronouncement that a registered owner of land has presumptive knowledge
of the metes and bounds of its own land, and is therefore in bad faith if he
mistakenly builds on an ad&oining land. +side from the fact that those cases had
factual moorings radically di7erent from those obtaining here, there is nothing in
those cases which would suggest, however remotely, that bad faith is imputable to
a registered owner of land when a part of his building encroaches upon a neighborSs
land, simply because he is supposedly presumed to know the boundaries of his land
as described in his certi5cate of title. Go such doctrinal statement could have been
made in those cases because such issue was not before the 6upreme -ourt. Ouite
the contrary, we have re&ected such a theory in -o Tao vs. -hico,
J>)K
where we held
that unless one is versed in the science of surveying, Qno one can determine the
precise e"tent or location of his property by merely e"amining his paper title.R
There is no question that when petitioner purchased the land from 4ari3
Industries, the buildings and other structures were already in e"istence. The record
is not clear as to who actually built those structures, but it may well be assumed
that petitionerSs predecessor-in-interest, 4ari3 Industries, did so. +rticle .>< of the
-ivil -ode presumes good faith, and since no proof e"ists to show that the
encroachment over a narrow, needle-shaped portion of private respondentSs land
was done in bad faith by the builder of the encroaching structures, the latter should
be presumed to have built them in good faith.
J>(K
It is presumed that possession
continues to be en&oyed in the same character in which it was acquired, until the
contrary is proved.
J>>K
Iood faith consists in the belief of the builder that the land he
is building on is his, and his ignorance of any defect or Naw in his title.
J>?K
Aence,
such good faith, by law, passed on to 4ari3Ss successor, petitioner in this
case. Hurther, Q:w=here one derives title to 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.R
J>/K
+nd possession acquired in good faith
does not lose this character e"cept in case and from the moment facts e"ist which
show that the possessor is not unaware that he possesses the thing improperly or
wrongfully.
J>.K
The good faith ceases from the moment defects in the title are made
known to the possessor, by e"traneous evidence or by suit for recovery of the
property by the true owner.
J>;K
Fecall that the encroachment in the present case was caused by a very slight
deviation of the erected wall :as fence= which was supposed to run in a straight line
from point 2 to point ( of petitionerSs lot. It was an error which, in the conte"t of the
attendant facts, was consistent with good faith. -onsequently, the builder, if sued
by the aggrieved landowner for recovery of possession, could have invoked the
provisions of +rt. //* of the -ivil -ode, which reads$
RThe 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 ./; and ./*, or to oblige the
one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. Aowever, 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 5" the terms thereof.R
The obvious bene5t to the builder under this article is that, instead of being
outrightly e&ected from the land, he can compel the landowner to make a choice
between the two options$ :(= to appropriate the building by paying the indemnity
required by law, or :>= sell the land to the builder. The landowner cannot refuse to
e"ercise either option and compel instead the owner of the building to remove it
from the land.
J><K
The question, however, is whether the same bene5t can be invoked by
petitioner who, as earlier stated, is not the builder of the o7ending structures but
possesses them as buyer.
,e answer such question in the a@rmative.
In the 5rst place, there is no su@cient showing that petitioner was aware of the
encroachment at the time it acquired the property from 4ari3 Industries. ,e agree
with the trial court that various factors in evidence adequately show petitionerSs
lack of awareness thereof. In any case, contrary proof has not overthrown the
presumption of good faith under +rticle .>< of the -ivil -ode, as already stated,
taken together with the disputable presumptions of the law on evidence. These
presumptions state, under 6ection ? :a= of Fule (?( of the Fules of -ourt, that the
person is innocent of a crime or wrong% and under 6ection ? :7= of Fule (?(, that the
law has been obeyed. In fact, private respondent Eduardo 8y himself was unaware
of such intrusion into his property until after (2<( when he hired a surveyor,
following his purchase of another ad&oining lot, to survey all his newly acquired
lots. 8pon being apprised of the encroachment, petitioner immediately o7ered to
buy the area occupied by its building -- a species of conduct consistent with good
faith.
In the second place, upon delivery of the property by 4ari3 Industries, as seller,
to the petitioner, as buyer, the latter acquired ownership of the
property. -onsequently and as earlier discussed, petitioner is deemed to have
stepped into the shoes of the seller in regard to all rights of ownership over the
immovable sold, including the right to compel the private respondent to e"ercise
either of the two options provided under +rticle //* of the -ivil -ode.
Estoppel
Fespondent -ourt ruled that the amicable settlement entered into between
petitioner and private respondent estops the former from questioning the private
respondentSs QrightR over the disputed property. It held that by undertaking to
demolish the fence under said settlement, petitioner recogni3ed private
respondentSs right over the property, and Qcannot later on compelR private
respondent Qto sell to it the land sinceR private respondent Qis under no obligation
to sell.R
J>*K
,e do not agree. 4etitioner cannot be held in estoppel for entering into the
amicable settlement, the pertinent portions of which read$
J>2K
RThat the parties hereto have agreed that the rear portion of the fence that
separates the property of the complainant and respondent shall be demolished up
to the back of the building housing the machineries which demolision :sic= shall be
undertaken by the complainant at anytime.
That the fence which serve:s= as a wall housing the electroplating machineries shall
not be demolished in the mean time which portion shall be sub&ect to negotiation by
herein parties.R
Hrom the foregoing, it is clear that petitioner agreed only to the demolition of a
portion of the wall separating the ad&oining properties of the parties -- i.e. Qup to the
back of the building housing the machineries.R !ut that portion of the fence which
served as the wall housing the electroplating machineries was not to be
demolished. Father, it was to Qbe sub&ect to negotiation by herein parties.R The
settlement may have recogni3ed the ownership of private respondent but such
admission cannot be equated with bad faith. 4etitioner was only trying to avoid a
litigation, one reason for entering into an amicable settlement.
+s was ruled in 0smeMa vs. -ommission on +udit,
J?)K
Q+ compromise is a bilateral act or transaction that is e"pressly acknowledged as a
&uridical agreement by the -ivil -ode and is therein dealt with in some detail. V+
compromise,S declares +rticle >>)* of said -ode, Vis a contract whereby the parties,
by making reciprocal concessions, avoid a litigation or put an end to one already
commenced.S
""" """ """
The -ivil -ode not only de5nes and authori3es compromises, it in fact encourages
them in civil actions. +rt. >)>2 states that VThe -ourt shall endeavor to persuade
the litigants in a civil case to agree upon some fair compromise.S " " ".R
In the conte"t of the established facts, we hold that petitioner did not lose its
rights under +rticle //* of the -ivil -ode on the basis merely of the fact that some
years after acquiring the property in good faith, it learned about -- and aptly
recogni3ed -- the right of private respondent to a portion of the land occupied by its
building. The supervening awareness of the encroachment by petitioner does not
militate against its right to claim the status of a builder in good faith. In fact, a
&udicious reading of said +rticle //* will readily show that the landownerSs e"ercise
of his option can only take place after the builder shall have come to know of the
intrusion -- in short, when both parties shall have become aware of it. 0nly then will
the occasion for e"ercising the option arise, for it is only then that both parties will
have been aware that a problem e"ists in regard to their property rights.
O/tions of *ri<ate Res/on#ent
,hat then is the applicable provision in this case which private respondent may
invoke as his remedy$ +rticle //* or +rticle /.)
J?(K
of the -ivil -ode?
In view of the good faith of both petitioner and private respondent, their rights
and obligations are to be governed by +rt. //*. The essential fairness of this codal
provision has been pointed out by me. 1ustice +meur5na elencio-Aerrera, citing
anresa and applicable precedents, in the case of #epra vs. #umlao,
J?>K
to wit$
Q,here the builder, planter or sower has acted in good faith, a conNict of rights
arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing in&ustice to the owner of the land. In view of the
impracticality of creating a state of forced co-ownership, the law has provided a &ust
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
authori3ed to e"ercise the option, because his right is older, and because, by the
principle of accession, he is entitled to the ownership of the accessory thing. :?
anresa >(?% !ernardo vs. !ataclan, ?< 07. Ia3. (?*>% -o Tao vs. -han -hico, I. F.
Go. /2(;<, +pril ?), (2/2% +rticle applied% see -abral, et al. vs. Ibane3 J6.-.K .> 07.
Ia3. >(<% arfori vs. Lelasco, J-.+.K .> 07. Ia3. >).)=.R
The private respondentSs insistence on the removal of the encroaching
structures as the proper remedy, which respondent -ourt sustained in its assailed
#ecisions, is thus legally Nawed. This is not one of the remedies bestowed upon
him by law. It would be available only if and when he chooses to compel the
petitioner to buy the land at a reasonable price but the latter fails to pay such price.
J??K
This has not taken place. Aence, his options are limited to$ :(= appropriating the
encroaching portion of petitionerSs building after payment of proper indemnity, or
:>= obliging the latter to buy the lot occupied by the structure. Ae cannot e"ercise a
remedy of his own liking.
Geither is petitionerSs prayer that private respondent be ordered to sell the
land
J?/K
the proper remedy. ,hile that was dubbed as the Qmore workable solutionR
in Irana and Torralba vs. The -ourt of +ppeals, et al.,
J?.K
it was not the relief granted
in that case as the landowners were directed to e"ercise Qwithin ?) days from this
decision their option to either buy the portion of the petitionersS house on their land
or sell to said petitioners the portion of their land on which it stands.R
J?;K
oreover,
in Irana and Torralba, the area involved was only *< square meters while this case
involves .>) square meters
J?<K
. In line with the case of #epra vs. #umlao,
J?*K
this
case will have to be remanded to the trial court for further proceedings to fully
implement the mandate of +rt. //*. It is a rule of procedure for the 6upreme -ourt
to strive to settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds of future litigation.
J?2K
4etitioner, however, must also pay the rent for the property occupied by its
building as prescribed by respondent -ourt from 0ctober /, (2<2, but only up to the
date private respondent serves notice of its option upon petitioner and the trial
court% that is, if such option is for private respondent to appropriate the encroaching
structure. In such event, petitioner would have a right of retention which negates
the obligation to pay rent.
J/)K
The rent should however continue if the option chosen
is compulsory sale, but only up to the actual transfer of ownership.
The award of attorneySs fees by respondent -ourt against petitioner is
unwarranted since the action appears to have been 5led in good faith. !esides,
there should be no penalty on the right to litigate.
J/(K
E(ERE+ORE, premises considered, the petition is hereby IF+GTE# and the
assailed #ecision and the +mended #ecision are FELEF6E# and 6ET +6I#E. In
accordance with the case of #epravs. #umlao,
J/>K
this case is FE+G#E# to the
Fegional Trial -ourt of 4asay -ity, !ranch ((<, for further proceedings consistent
with +rticles //* and ./;
J/?K
of the -ivil -ode, as follows$
The trial court shall determine$
a= the present fair price of private respondentSs .>) square-meter area of
land%
b= the increase in value :Qplus valueR= which the said area of .>) square
meters may have acquired by reason of the e"istence of the portion of
the building on the area%
c= the fair market value of the encroaching portion of the building% and
d= whether the value of said area of land is considerably more than the
fair market value of the portion of the building thereon.
>. +fter said amounts shall have been determined by competent evidence, the
regional trial court shall render &udgment as follows$
a= The private respondent shall be granted a period of 5fteen :(.= days
within which to e"ercise his option under the law :+rticle //*, -ivil
-ode=, whether to appropriate the portion of the building as his own by
paying to petitioner its fair market value, or to oblige petitioner to pay the
price of said area. The amounts to be respectively paid by petitioner and
private respondent, in accordance with the option thus e"ercised by
written notice of the other party and to the court, shall be paid by the
obligor within 5fteen :(.= days from such notice of the option by
tendering the amount to the trial court in favor of the party entitled to
receive it%
b= If private respondent e"ercises the option to oblige petitioner to pay the
price of the land but the latter re&ects such purchase because, as found
by the trial court, the value of the land is considerably more than that of
the portion of the building, petitioner shall give written notice of such
re&ection to private respondent and to the trial court within 5fteen :(.=
days from notice of private respondentSs option to sell the land. In that
event, the parties shall be given a period of 5fteen :(.= days from such
notice of re&ection within which to agree upon the terms of the lease, and
give the trial court formal written notice of the agreement and
its provisos. If no agreement is reached by the parties, the trial court,
within 5fteen :(.= days from and after the termination of the said period
5"ed for negotiation, shall then 5" the terms of the lease provided that
the monthly rental to be 5"ed by the -ourt shall not be less than two
thousand pesos :4>,))).))= per month, payable within the 5rst 5ve :.=
days of each calendar month. The period for the forced lease shall not be
more than two :>= years, counted from the 5nality of the &udgment,
considering the long period of time since (2<) that petitioner has
occupied the sub&ect area. The rental thus 5"ed shall be increased by ten
percent :()P= for the second year of the forced lease. 4etitioner shall not
make any further constructions or improvements on the building. 8pon
e"piration of the two-year period, or upon default by petitioner in the
payment of rentals for two :>= consecutive months, private respondent
shall be entitled to terminate the forced lease, to recover his land, and to
have the portion of the building removed by petitioner or at latterSs
e"pense. The rentals herein provided shall be tendered by petitioner to
the trial court for payment to private respondent, and such tender shall
constitute evidence of whether or not compliance was made within the
period 5"ed by the said court.
c= In any event, petitioner shall pay private respondent an amount
computed at two thousand pesos :4>,))).))= per month as reasonable
compensation for the occupancy of private respondentSs land for the
period counted from 0ctober /, (2<2, up to the date private respondent
serves notice of its option to appropriate the encroaching structures,
otherwise up to the actual transfer of ownership to petitioner or, in case a
forced lease has to be imposed, up to the commencement date of the
forced lease referred to in the preceding paragraph%
d= The periods to be 5"ed by the trial court in its decision shall be non-
e"tendible, and upon failure of the party obliged to tender to the trial
court the amount due to the obligee, the party entitled to such payment
shall be entitled to an order of e"ecution for the enforcement of payment
of the amount due and for compliance with such other acts as may be
required by the prestation due the obligee.
Go costs.
)O OR&ERE&.
9.G.R. No. L-.2903 6!l> .0, 1909
"$R,OLOE OR,I-, petitioner,
vs.
(ON. 2NION '. 1$%$N$N, in his ca/acit> as 6!#7e of the 'o!rt of +irst
Instance of :!e;on, "ranch I4F ELE2,ERIO -$OR$, :2IRINO 'OIN,$N,
4I'EN,E +ERRO, $N& GREGORIO *$I)$R$N, respondents.
$N,ONIO, J
4etition for certiorari and 4rohibition with 4reliminary In&unction to nullify the 0rder
of respondent 1udge directing the e"ecution of the 5nal &udgment in -ivil -ase Go.
--2), entitled '+artolome /rti" vs. Secretary o! 0griculture and 1atural 2esources,
et al.,' and the ,rit of E"ecution issued to implement said 0rder, allegedly for being
inconsistent with the &udgment sought to be enforced.
-ivil -ase Go. --2) was 5led by !artolome 0rti3 who sought the review andUor
annulment of the decision of the 6ecretary of +griculture and Gatural Fesources,
giving preference to the sales applications of private respondents Ouirino -omintan
and Eleuterio Wamora over Eot Go. .<*., 4E6-/., located at !arrio -abuluan,
-alauag, Oue3on.
I
The factual background of the case, as found by respondent -ourt, is as follows$t&'.
()hw*(
... The lot in controversy was formerly the sub&ect of Aomestead
+pplication Go. (>>/(< of artin #olorico II, plainti79s ward who died
on +ugust >), (2?(% that since then it was plainti7 who continued the
cultivation and possession of the property, without however 5ling any
application to acquire title thereon% that in the Aomestead +pplication
Go. (>>/(<, artin #olorico II named his uncle, artin #olorico I as his
heir and successor in interest, so that in (2.( artin #olorico I
e"ecuted an a@davit relinquishing his rights over the property in favor
of defendants Ouirino -omintan and Eleuterio Wamora, his grandson
and son-in-law, respectively, and requested the #irector of Eands to
cancel the homestead application% that on the strength of the a@davit,
Aomestead +pplication Go. (>>/(< was cancelled and thereafter,
defendants -omintan and Wamora 5led their respective sales
applications Gos. */?? and 2>.*% that plainti7 5led his protest on
Govember >;, (2.( alleging that he should be given preference to
purchase the lot inasmuch as he is the actual occupant and has been
in continuous possession of the same since (2?(% and inspite of
plainti79s opposition, '4ortion +' of the property was sold at public
auction wherein defendant -omintan was the only bidder% that on 1une
*, (2.<, investigation was conducted on plainti79s protest by +ssistant
4ublic Eands Inspector 6erapion !au3on who submitted his report to
the Fegional Eand 0@cer, and who in turn rendered a decision on +pril
2, (2.*, dismissing plainti79s claim and giving due course to
defendants9 sales applications on the ground that the relinquishment of
the homestead rights of artin #olorico I in favor of -omintan and
Wamora is proper, the former having been designated as successor in
interest of the original homestead applicant and that because plainti7
failed to participate in the public auction, he is forever barred to claim
the property% that plainti7 5led a motion for reconsideration of this
decision which was denied by the #irector of Eands in his order dated
1une (), (2.2% that, 5nally, on appeal to the 6ecretary of +griculture
and Gatural Fesources, the decision rendered by the Fegional Eand
0@cer was a@rmed in toto.
1
0n arch >>, (2;;, respondent -ourt rendered &udgment in the afore-mentioned
civil case, the dispositive portion of which reads as follows$t&'.()hw*(
IG LIE, 0H TAE H0FEI0IGI -0G6I#EF+TI0G6, &udgment is hereby
rendered awarding Eot Go. .<*.-+ of 4E6-/., :-alauag 4ublic Eand
6ubdivision= one-half portion of the property in litigation located at !o.
-abuluan, -alauag, Oue3on, in favor of defendant O8IFIG0 -0IGT+G,
being the successful bidder in the public auction conducted by the
bureau of Eands on +pril (*, (2.., and hereby giving due course to the
6ales +pplication Go. 2>.* of defendant Eleuterio Wamora over the
other half, Eot Go. .<*.-! of 4E6-/., -alauag, without pre&udice to the
right of plainti7 !+FT0E0E 0FTIW to participate in the public bidding
of the same to be announced by the !ureau of Eands, anila.
Aowever, should plainti3 +artolome /rti" be not declared the
success!ul bidder thereo!, de!endants 4uirino %omintan and 5leuterio
6amora are ordered to reimburse $ointly said plainti3 the
improvements he has introduced on the whole property in the amount
o! 78I27551 78/9S01: SI; 891:25: 78I27<=7>/ ?P1@,A@2.##B
P5S/S, the latter having the right to retain the property until a!ter he
has been !ully paid there!or, without interest since he en$oys the !ruits
o! the property in uestion, with pre&udice and with costs again the
plainti7.
2
4lainti7 appealed the decision to the -ourt of +ppeals.
Two :>= years after the rendition of the &udgment by the court a uo, while the case
was pending appeal and upon petition of private respondents Ouirino -omintan and
Eleuterio Wamora, respondent -ourt appointed respondent Licente Herro, -lerk of
-ourt, as Feceiver to collect tolls on a portion of the property used as a diversion
road. 0n +ugust (2, (2;2, the -ourt of +ppeals issued a Fesolution annulling the
0rder appointing the Feceiver. 6ubsequently, on Hebruary (2, (2<), the +ppellate
-ourt a@rmed the decision of the trial court. + petition for review on certiorari of
the decision of the -ourt of +ppeals was denied by this -ourt on +pril ;, (2<). +t
this point, private respondents 5led a petition for appointment of a new receiver
with the court a uo. This petition was granted and the receiver was reappointed.
4etitioner sought the annulment of this 0rder with the -ourt of +ppeals, but said
-ourt ruled that its decision had already become 5nal and that the records of the
case were to be remanded to the trial court.
Got satis5ed with such denial, petitioner 5led a petitioner for certiorari, prohibition
and mandamus with preliminary in&unction before this -ourt,
.
praying for the
annulment of the 0rder reappointing the Feceiver. 0n 1uly (?, (2<), the petition
was dismissed by this -ourt on the ground of insu@cient showing of grave abuse of
discretion.
II
The &udgment having become 5nal and e"ecutory private respondents 5led a
motion for the e"ecution of the same, praying as follows$t&'.()hw*(
,AEFEH0FE, it is respectfully prayed of this Aonorable -ourt to order
the issuance of a writ of e"ecution in accordance with the &udgment of
this Aonorable -ourt, con5rmed by the -ourt of +ppeals and the
6upreme -ourt, commanding any lawful o@cer to deliver to
defendants -omintan and Wamora the land sub&ect of the decision in
this case but allowing defendants to 5le a bond in such amount as this
Aonorable -ourt may 5", in lieu of the 4(?,;?>.)) required to be paid
to plainti7, conditioned that after the accounting of the tools collected
by plainti7, there is still an amount due and payable to said plainti7,
then if such amount is not paid on demand, including the legal
interests, said bond shall be held answerable.
0rdering further the plainti7 to render an accounting of the tolls he
collected from arch of (2;< to #ecember ?(, (2;* and from
6eptember (2;2 to arch ?(, (2<), and deliver said tolls collected to
the receiver and if &udgment is already e"ecuted, then to Ouirino
-omintan and Eleuterio Wamora% and,
Hinally, to condemn plainti7 to pay moral damages for withholding the
tools which belong to your movant in an amount this -ourt may deem
&ust in the premises.
3
+cting upon the foregoing motion, respondent 1udge issued an 0rder, dated
6eptember >?, (2<), stating, among others, the following$ t&'.()hw*(
The records further disclosed that from arch (2;< to #ecember ?(,
(2;*, piainti7 !artolome 0rti3 collected tolls on a portion of the
propertv in question wherein he has not introduced anv improvement
particularlv on Eot Go. .<*.-+% 4E6-/. awarded to defendant Ouirino
-omintan, thru which vehicular tra@c was detoured or diverted, and
again from 6eptember (2;2 to arch ?(, (2<), the plainti7 resumed
the collection of tools on the same portion without rendering any
accounting on said tolls to the Feceiver, who, was reappointed after
submitting the required bond and speci5cally authori3ed only to collect
tolls leaving the harvesting of the improvements to the plainti7.
""" """ """
ln virtue of he 5ndings of this -ourt as contained in the dispositive
portion of its decision, the defendants are &ointly obligated to pay the
plainti7 in the amount of 4(?,;?>.)) as reasonable value of the
improvements he introduced on the whole property in question, and
that he has the right of retention until fully paid. It can be gleaned from
the motion of the defendants that if plainti7 submits an accounting of
the tolls he collected during the periods above alluded to, their
damages of about 4>.,))).)) can more than o7set their obligation of
4(?,?;>.)) in favor of the plainti7, thereafter the possession of the
land be delivered to the defendants since the decision of the 6upreme
-ourt has already become 5nal and e"ecutory, but in the interregnum
pending such accounting and recovery by the Feceiver of the tolls
collected by the plainti7, the defendants pray that they allowed to put
up a bond in lieu of the said 4(?,;?>.)) to answer for damages of the
former, if any.
0n the other hand, plainti7 contends in his opposition, admitting that
the decision of the 6upreme -ourt has become 5nal and e"ecutory% :(=
the o7er of a bond in lieu of payment of 4(?,;?>.)) does not, and
cannot, satisfy the condition imposed in the decision of this -ourt
which was a@rmed in totoC:>= the public sale of 4ortion '!' of the land
has still to take place as ordained before the decision could be
e"ecuted% and, :?= that whatever sums plainti7 may derive from the
property cannot be set o7 against what is due him for the
improvements he made, for which he has to be reimbursed as ordered.
""" """ """
Eet it be known that plainti7 does not dispute his having collected tolls
during the periods from arch (2;< to #ecember ?(, (2;* and from
6eptember (2;2 to arch ?(, (2<). The 6upreme -ourt a@rmed the
decision of this -ourt its 5ndings that said tolls belong to the
defendant, considering that the same were collected on a portion of
the land question where the plainti7 did not introduce any
improvement. The reimbursement to the plainti7 pertains only to the
value of the improvements, like coconut trees and other plants which
he introduced on the whole property. The tolls collected by the plainti7
on an unimproved portion naturally belong to the defendants, following
the doctrine on accretion. Hurther, the reappointment of a Feceiver by
this -ourt was upheld by the 6upreme -ourt when it denied the
petition for certiorari 5led by the plainti7, bolstering the legal claim of
defendants over said tolls. Thus, the decision of the 6upreme -ourt
rendered the decision of this -ourt retroactive from arch >>, (2;;
although pending accounting of the tolls collected by the plainti7 is
&usti5ed and will not pre&udice anybody, but certainly would
substantially satisfy the conditions imposed in the decision. Aowever,
insofar as the one-half portion '!' of the property, the decision may be
e"ecuted only after public sale by the !ureau of Eands shall be
accomplished.
,AEFEH0FE, 5nding the otion for E"ecution 5led by the defendants
to be meritorious, the same is granted% provided, however, that they
put up a bond equal the ad&udicated amount of 4(?,;?>.)) accruing in
favor of the plainti7, from a reputable or recogni3ed bonding or surety
company, conditioned that after an accounting of the tolls collected by
the plainti7 should there be found out any balance due and payable to
him after reckoning said obligation of 4(?,;?>.)) the bond shall be
held answerable therefor.
5
+ccordingly, a ,rit of E"ecution was issued after private respondent Ouirino
-omintan had 5led the required bond. The writ directed the 6heri7 to enforce the
decision of the -ourt, and stated, part in, the following$t&'.()hw*(
!ut should there be found any amount collectible after accounting and
deducting the amount of 4?,;?>.)), you are hereby ordered that of the
goods and chattels of !artolome 0rti3 of !o. Babuluan, -alauag,
Oue3on, be caused to be made any e"cess in the above-metioned
amount together with your lawful fees and that you render same to
defendant Ouirino -omintan. If su@cient personal property cannot be
found thereof to satisfy this e"ecution and lawful fees thereon, then
you are commanded that of the lands and buildings of the said
!+FT0E0E 0FTIW you make the said e"cess amount in the manner
required by the Fules of -ourt, and make return of your proceedings
within this -ourt within si"ty :;)= days from date of service.
Xou are also ordered to cause !artolome 0rti3 to vacate the property
within 5fteen :(.= days after service thereof the defendant Ouirino
-omintan having 5led the required bond in the amount of TAIFTEEG
TA086+G# 6IY A8G#FE# TAIFTX-T,0 :4(?,;?>.))= 4E606.
6
0n 0ctober (>, (2<), petitioner 5led a otion for Feconsideration of the aforesaid
0rder and ,rit of E"ecution, alleging$t&'.()hw*(
:a= That the respondent &udge has no authority to place respondents in
possession of the property%
:b= That the 6upreme -ourt has never a@rmed any decision of the trial
court that tolls collected from the diversionary road on the property,
which is public land, belong to said respondents%
:c= That to assess petitioner a 4>.,))).)) liability for damages is
purely punitive imposition without factual or legal &usti5cation.
The foregoing otion for Feconsideration was denied by respondent 1udge per 0rder
dated Govember (*, (2<). 6aod 0rder states, in part$t&'.()hw*(
It goes without saying that defendant -omintan is entitled to be placed
in possession of lot Go. .<*.-+ of 4E6-/. :-alauag 4ublic Eand
6ubdivision= and en&oyment of the tolls from arch, (2;< to arch,
(2;* and from 6eptember, (2;2 to arch ?(, l2<) which were
received by plainti7 !artolome 0rti3, collected from the property by
reason of the diversion road where vehicular tra@c was detoured. To
defendant -omintan belongs the tolls thus collected from a portion of
the land awarded to him used as a diversionary road by the doctrine of
accretion and his right over the same is ipso $ure, there being no need
of any action to possess said addition. It is so because as consistently
maintained by the 6upreme -ourt, an applicant who has complied with
all the terms and conditions which entitle him to a patent for a
particular tract of publlic land, acquires a vested right therein and is to
be regarded as equitable owner thereof so that even without a patent,
a perfected homestead or sales application is a property right in the
fullest sense, una7ectcd by the fact that the paramount title is still in
the Iovernment and no subsequent law can deprive him of that vested
right The question of the actual damages su7ered by defendant
-omintan by reason of the unaccounted tolls received by plainti7 had
already been fully discussed in the order of 6eptember >?, (2<) and
the -ourt is honestly convinced and believes it to be proper and
regular under the circumstances.
Incidentally, the -ourt stands to correct itself when in the same order,
it directed the e"ecution of he decision with respect to the one-half
portion '!' of the property only after the public sale by the !ureau of
Eands, the same being an oversight, it appearing that the 6ales
+pplication of defendant Eleuterio Wamora had already been
recogni3ed and full con5rmed by the 6upreme -ourt.
In view thereof, 5nding the motion 5led by plainti7 to be without merit,
the -ourt hereby denies the same and the order of 6eptember >?,
(2<) shall remain in full force sub&ect to the amendment that the
e"ecution of the decision with respect to the one-half portion '!' shall
not be conditioned to the public sale by the !ureau of Eands.
60 0F#EFE#.
0
III
4etitioner thus 5led the instant petition, contending that in having issued the 0rder
and ,rit of E"ecution, respondent -ourt 'acted without or in e"cess of &urisdiction,
andUor with grave abuse of discretion, because the said order and writ in e7ect vary
the terms of the &udgment they purportedly seek to enforce.' Ae argued that since
said &udgment declared the petitioner a possessor in good faith, he is entitled to the
payment of the value of the improvements introduced by him on the whole
property, with right to retain the land until he has been fully paid such value. Ae
likewise averred that no payment for improvements has been made and, instead, a
bond therefor had been 5led by defendants :private respondents=, which, according
to petitioner, is not the payment envisaged in the decision which would entitle
private respondents to the possession of the property. Hurthermore, with respect to
portion '!', petitioner alleges that, under the decision, he has the right to retain the
same until after he has participated and lost in the public bidding of the land to be
conducted by the !ureau of Eands. It is claimed that it is only in the event that he
loses in the bidding that he can be legally dispossessed thereof.
It is the position of petitioner that all the fruits of the property, including the tolls
collected by him from the passing vehicles, which according to the trial court
amounts to 4>.,))).)), belongs to petitioner and not to defendantUprivate
respondent Ouirino -omintan, 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. +ny contrary opinion, in his view,
would be tantamount to an amendment of a decision which has long become 5nal
and e"ecutory and, therefore, cannot be lawfully done.
4etitioner, therefore, prayed that$ :(= a ,rit of 4reliminary In&unction be issued
en&oining the enforcement of the 0rders of 6eptember >?, (2<) and Govember (*,
(2<), and the ,rit of E"ecution issued thereto, or restoring to petitioner the
possession of the property if the private respondents had been placed in possession
thereof% :>= annulling said 0rders as well as the ,rit of E"ecution, dissolving the
receivership established over the property% and :?= ordering private respondents to
account to petitioner all the fruits they may have gathered or collected from the
property in question from the time of petitioiier9s illegal dispossession thereof.
0n 1anuary >2, (2<(, this -ourt issued the ,rit of 4reliminary In&unction. 0n 1anuary
?), (2<(, private respondents 5led a otion for Feconsideration andUor odi5cation
of the 0rder dated 1anuary >2, (2<(. This was followed by a 6upplemental otion
for Feconsideration and anifestation on Hebruary ?, (2<(. In the latter motion,
private respondents manifested that the amount of 4(/,)/).2;, representing the
amount decreed in the &udgment as reimbursement to petitioner for the
improvements, plus interest for si" months, has already been deposited by them in
court, 'with the understanding that said amount shall be turned over to the plainti7
after the court a uo shall have determined the improvement on Eot .<*.-+, and
subsequently the remaining balance of the deposit shall be delivered to the
petitioner :plainti7 therein= in the event he loses the bid for Eot .<*.-! in favor of
private respondent Eleuterio Wamora.'
9
The deposit is evidenced by a certi5cation
made by the -lerk of the -ourt a uo.
9
-ontending that said deposit was a faithful
compliance with the &udgment of the trial court, private respondent Ouirino
-omintan prayed for the dissolution of the ,rit of In&unction.
It appears that as a consequence of the deposit made by private respondents, the
#eputy, 6heri7 of -alauag, Oue3on ousted petitioner9s representative from the land
in question and put private respondents in possession thereof.
10
0n arch (), (2<(, petitioner 5led a '-omment on Fespondents9 9otion for
Feconsideration9 dated 1anuary >2, (2<(9 and 96upplemental otion for
Feconsideration and anifestation,9' contending that the tender of deposit
mentioned in the 6uplemental otion was not really and o@cially made, 'inasmuch
as the same is not supported by any o@cial receipt from the lower court, or from its
clerk or cashier, as required by law%' that said deposit does not constitute su@cient
compliance with the &udgment sought to be enforced, neither was it legally and
validly made because the requisites for consignation had not been complied with%
that the tender of legal interest for si" months cannot substitute petitioner9s
en&oyment of the fruits of the property as long as the &udgment in -ivil -ase Go. --
2) has not been implemented in the manner decreed therein% that contrary to the
allegations of private respondents, the value of the improvements on the whole
property had been determined by the lower court, and the segregation of the
improvements for each lot should have been raised by them at the opportune
moment by asking for the modi5cation of the decision before it became 5nal and
e"ecutory% and that the tolls on the property constituted 'civil fruits' to which the
petitioner is entitled under the terms of the decision.
IL
The issue decisive of the controvery isCafter the rendition by the trial court of its
&udgment in -ivil -ase Go. --2) on arch >>, (2;; con5rming the award of one-half
of the property to Ouirino -omintanCwhether or not petitioner is still entitled to
retain for his own e"clusive bene5t all the fruits of the property, such as the tolls
collected by him from arch (2;< to #ecember (2;*, and 6eptember (2;2 to
arch ?(, (2<), amounting to about 4>.,))).)). In other words, petitioner
contends that so long as the aforesaid amount of 4(?,;?>,)) decreed in the
&udgment representing the e"penses for clearing the land and the value of the
coconuts and fruit trees planted by him remains unpaid, he can appropriate for his
e"clusive bene5t all the fruits which he may derive from the property, without any
obligation to apply any portion thereof to the payment of the interest and the
principal of the debt.
,e 5nd this contention untenable.
There is no question that a possessor in good faith is entitled to the fruits received
before the possession is legally interrupted.
11
4ossession in good faith ceases or is
legally interrupted from the moment defects in the title are made known to the
possessor, by e"traneous evidence or by the 5ling of an action in court by the true
owner for the recovery of the property.
12
Aence, 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.
1.
Aowever, even after his good faith ceases, the possessor in fact can still retain the
property, pursuant to +rticle ./; of the Gew -ivil -ode, until he has been fully
reimbursed for all the necessary and useful e"penses made by him on the property.
This right of retention has been considered as one of the conglomerate of measures
devised by the law for the protection of the possessor in good faith. Its ob&ect is to
guarantee the reimbursement of the e"penses, such as those for the preservation of
the property,
13
or for the enhancement of its utility or productivity.
15
It permits the
actual possessor to remain in possession while he has not been reimbursed by the
person who defeated him in the possession for those necessary e"penses and
useful improvements made by him on the thing possessed. The principal
characteristic of the right of retention is its accessory character. It is accessory to a
principal obligation. -onsidering 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 utili3ing its proceeds for the payment of the
interest as well as the principal of the debt while he remains in possession. This
right of retention of the property by the creditor, according to 6caevola, in the light
of the provisions of +rticle .)> of the 6panish -ivil -ode,
16
is considered not a
coercive measure to oblige the debtor to pay, depriving him temporarily of the
en&oyment of the fruits of his property, but as a means of obtainitig compensation
for the debt. The right of retention in this case is analogous to a contract of
antichresis and it cati be considered as a means of e"tinguishing the obligation,
inasmuch as the right to retain the thing lasts only for the period necessary to
enable the creditor to be reimbursed from the fruits for the necessary and useful
e"penses.
10
+ccording to anresa, the right of retention is, therefore, analogous to that of a
pledge, if the property retained is a movable, and to that of antichresis, if the
property held is immovable.
19
This construction appears to be in harmony with
similar provisions of the civil law which employs the right of retention as a means or
device by which a creditor is able to obtain the payment of a debt. Thus, under
+rticle (<?( of the Gew -ivil -ode, any person who has performed work upon a
movable has a right to retain it by way of pledge until he is paid. 6imilarly, under
+rticle (2(/ of the same -ode, the agent may retain in pledge the things which are
the ob&ect of the agency until the principal e7ects reimbursement of the funds
advanced by the former for the e"ecution of the agency, or he is indemni5ed for all
damages which he may have su7ered as a consequence of the e"ecution of the
agency, provided he is free from fault. To the same e7ect, the depositary, under
+rticle (22/ of the same -ode, may retain the thing in pledge until the full payment
of what may be due him by reason of the deposit. The usufructuary, pursuant to
+rticle ;(> of the same -ode, may retain the property until he is reimbursed for the
amount paid for ta"es levied on the capital :+rticle .2<= and tor e"traordinary
repairs :+rticle .2/=.
In all of these cases, the right of retention is used as a means of e"tinguishing the
obligation. +s amply observed by anresa$ 'El derecho de retencion, lo hemos
dicho, es el derecho de prenda o el de anticresis constituido por la ley con
independencia de las partes.'
19
In a pledge, if the thing pledged earns or produces
fruits, income, dividends or interests, the creditor shall compensate what he
receives with those which are owing him.
20
In the same manner, in a contract of
antichresis, the creditor acquires the right to receive the fruits of an immovable of
his debtor with the obligation to apply them to payment of the interest, if owing,
and thereafter to the principal of his credit.
21
The debtor can not reacquire
en&oyment of the immovable until he has actually paid what he owes the creditor.
22
+pplying the afore-cited principles to the case at bar, petitioner cannot appropriate
for his own e"clusive bene5t the tolls which he collected from the property retained
by him. It was his duty under the law, after deducting the necessary e"penses for
his administration, to apply such amount collected to the payment of the interest,
and the balance to the payment of the obligation.
,e hold, therefore, that the disputed tolls, after deducting petitioner9s e"penses for
administration, belong to Ouirino -omintan, owner of the land through which the toll
road passed, further considering that the same was on portions of the property on
which petitioner had not introduced any improvement. The trial court itself clari5ed
this matter when it placed the toll road under receivership. The omission of any
mention of the tolls in the decision itself may be attributed to the fact that the tolls
appear to have been collected after the rendition of the &udgment of the trial court.
The records further reveal that earnest e7orts have been made by private
respondents to have the &udgment e"ecuted in the most practicable manner. They
deposited in court the amount of the &udgment in the sum of 4(?,;?>.)) in cash,
sub&ect only to the accounting of the tolls collected by the petitioner so that
whatever is due from him may be set o7 with the amount of reimbursement. This is
&ust and proper under the circumstances and, under the law, compensation or set
o7 may take place, either totally or partially. -onsidering that petitioner is the
creditor with respect to the &udgment obligation and the debtor with respect to the
tolls collected, -omintan being the owner thereof, the trial court9s order for an
accounting and compensation is in accord with law.
2.
,ith respect to the amount of reimbursement to be paid by -omintan, it appears
that the dispositive portion of the decision was lacking in speci5city, as it merely
provided that -omintan and Wamora are &ointly liable therefor. ,hen two persons
are liable under a contract or under a &udgment, and no words appear in the
contract or &udgment to make each liable for the entire obligation, the presumption
is that their obligation is &oint or mancomunada, and each debtor is liable only for a
proportionate part of the obligation.
23
The &udgment debt of 4(?,;?>.)) should,
therefore, be pro-rated in equal shares to -omintan and Wamora.
Fegarding Eot .<*.-!, it appears that no public sale has yet been conducted by the
!ureau of Eands and, therefore, petitioner is entitled to remain in possession
thereof. This is not disputed by respondent Eleuterio Wamora.
25
+fter public sale is
had and in the event that 0rti3 is not declared the successful bidder, then he should
be reimbursed by respondent Wamora in the corresponding amount for the
improvements on Eot .<*.-!.
,AEFEH0FE, in view hereof, the 0rder of respondent -ourt of Govember (*, (2<)
is hereby modi5ed to conform to the foregoing &udgment. The ,rit of 4reliminary
In&unction, dated 1anuary >2, (2<(, is hereby dissolved. ,ithout special
pronouncement as to costs.
9.?G.R. No. 120.0.. 6!l> 23, 1996@
+E&ERI'O GEINI$NO, $RI$ GEINI$NO, ERNE),O GEINI$NO,
$)2N'ION GEINI$NO, L$RR% GEINI$NO, an# $RL%N
GEINI$NO, petitioners, vs. 'O2R, O+ $**E$L), &OIN$&OR
NI'OL$), an# $R% $. NI'OL$), respondents.
& E ' I ) I O N
&$4I&E, 6R., J.8
This petition for review on certiorari has its origins in -ivil -ase Go. 2>(/ of
!ranch ? of the unicipal Trial -ourt in -ities :T--= in #agupan -ity for unlawful
detainer and damages. The petitioners ask the -ourt to set aside the decision of
the -ourt of +ppeals a@rming the decision of !ranch /) of the Fegional Trial -ourt
:FT-= of #agupan -ity, which, in turn, reversed the T--% ordered the petitioners to
reimburse the private respondents the value of the house in question and other
improvements% and allowed the latter to retain the premises until reimbursement
was made.
It appears that Eot Go. ?<;.-!-( containing an area of ?(/ square meters was
originally owned by the petitioners9 mother, 4aulina +mado vda. de Ieminiano. 0n
a (>-square-meter portion of that lot stood the petitioners9 un5nished bungalow,
which the petitioners sold in Govember (2<* to the private respondents for the sum
of 4;,))).)), with an alleged promise to sell to the latter that portion of the lot
occupied by the house. 6ubsequently, the petitioners9 mother e"ecuted a contract
of lease over a (>; square-meter portion of the lot, including that portion on which
the house stood, in favor of the private respondents for 4/).)) per month for a
period of seven years commencing on (. Govember (2<*.
J(K
The private
respondents then introduced additional improvements and registered the house in
their names. +fter the e"piration of the lease contract in Govember (2*., however,
the petitioners9 mother refused to accept the monthly rentals.
It turned out that the lot in question was the sub&ect of a suit, which resulted in
its acquisition by one aria Eee in (2<>. In (2*>, Eee sold the lot to Eily 6alcedo,
who in turn sold it in (2*/ to the spouses +gustin and Ester #ionisio.
0n (/ Hebruary (22>, the #ionisio spouses e"ecuted a #eed of Ouitclaim over
the said property in favor of the petitioners.
J>K
+s such, the lot was registered in the
latter9s names.
J?K
0n 2 Hebruary (22?, the petitioners sent, via registered mail, a letter addressed
to private respondent ary Gicolas demanding that she vacate the premises and
pay the rentals in arrears within twenty days from notice.
J/K
8pon failure of the private respondents to heed the demand, the petitioners
5led with the T-- of #agupan -ity a complaint for unlawful detainer and damages.
#uring the pre-trial conference, the parties agreed to con5ne the issues to$ :(=
whether there was an implied renewal of the lease which e"pired in Govember
(2*.% :>= whether the lessees were builders in good faith and entitled to
reimbursement of the value of the house and improvements% and :?= the value of
the house.
The parties then submitted their respective position papers and the case was
heard under the Fule on 6ummary 4rocedure.
0n the 5rst issue, the court held that since the petitioners9 mother was no
longer the owner of the lot in question at the time the lease contract was e"ecuted
in (2<*, in view of its acquisition by aria Eee as early as (2<>, there was no lease
to speak of, much less, a renewal thereof. +nd even if the lease legally e"isted, its
implied renewal was not for the period stipulated in the original contract, but only
on a month-to-month basis pursuant to +rticle (;*< of the -ivil -ode. The refusal of
the petitioners9 mother to accept the rentals starting 1anuary (2*; was then a clear
indication of her desire to terminate the monthly lease. +s regards the petitioners9
alleged failed promise to sell to the private respondents the lot occupied by the
house, the court held that such should be litigated in a proper case before the
proper forum, not an e&ectment case where the only issue was physical possession
of the property.
The court resolved the second issue in the negative, holding that +rticles //*
and ./; of the -ivil -ode, which allow possessors in good faith to recover the value
of improvements and retain the premises until reimbursed, did not apply to lessees
like the private respondents, because the latter knew that their occupation of the
premises would continue only during the life of the lease. !esides, the rights of the
private respondents were speci5cally governed by +rticle (;<*, which allows
reimbursement of up to one-half of the value of the useful improvements, or
removal of the improvements should the lessor refuse to reimburse.
0n the third issue, the court deemed as conclusive the private respondents9
allegation that the value of the house and improvements was 4(*),))).)), there
being no controverting evidence presented.
The trial court thus ordered the private respondents to vacate the premises, pay
the petitioners 4/).)) a month as reasonable compensation for their stay thereon
from the 5ling of the complaint on (/ +pril (22? until they vacated, and to pay the
sum of 4(,))).)) as attorney9s fees, plus costs.
J.K
0n appeal by the private respondents, the FT- of #agupan -ity reversed the
trial court9s decision and rendered a new &udgment$ :(= ordering the petitioners to
reimburse the private respondents for the value of the house and improvements in
the amount of 4(*),))).)) and to pay the latter 4(),))).)) as attorney9s fees and
4>,))).)) as litigation e"penses% and :>= allowing the private respondents to remain
in possession of the premises until they were fully reimbursed for the value of the
house.
J;K
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 reimbursement of the value of
the house and improvements with the right of retention until reimbursement had
been made.
0n appeal, this time by the petitioners, the -ourt of +ppeals a@rmed the
decision of the FT-
J<K
and denied
J*K
the petitioners9 motion for
reconsideration. Aence, the present petition.
The -ourt is confronted with the issue of which provision of law governs the
case at bench$ +rticle //* or +rticle (;<* of the -ivil -ode? The said articles read
as follows$
+rt. //*. 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 ./; and ./*, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. Aowever, 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 5" the
terms thereof.
""" """ """
+rt. (;<*. 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 one-half of the value of the improvements at that time. 6hould the
lessor refuse to reimburse said amount, the lessee may remove the improvements,
even though the principal thing may su7er damage thereby. Ae shall not, however,
cause any more impairment upon the property leased than is necessary.
,ith regard to ornamental e"penses, the lessee shall not be entitled to any
reimbursement, but he may remove the ornamental ob&ects, provided no damage is
caused to the principal thing, and the lessor does not choose to retain them by
paying their value at the time the lease is e"tinguished.
The cru" of the said issue then is whether the private respondents are builders
in good faith or mere lessees.
The private respondents claim they are builders in good faith, hence, +rticle //*
of the -ivil -ode should apply. They rely on the lack of title of the petitioners9
mother at the time of the e"ecution of the contract of lease, as well as the alleged
assurance made by the petitioners that the lot on which the house stood would be
sold to them.
It has been said that while the right to let property is an incident of title and
possession, a person may be a lessor and occupy the position of a landlord to the
tenant although he is not the owner of the premises let.
J2K
+fter all, ownership of the
property is not being transferred,
J()K
only the temporary use and en&oyment thereof.
J((K
In this case, both parties admit that the land in question was originally owned
by the petitioners9 mother. The land was allegedly acquired later by one aria Eee
by virtue of an e"tra&udicial foreclosure of mortgage. Eee, however, never sought a
writ of possession in order that she gain possession of the property in question.
J(>K
The petitioners9 mother therefore remained in possession of the lot.
It is undisputed that the private respondents came into possession of a (>;
square-meter portion of the said lot by virtue of a contract of lease e"ecuted by the
petitioners9 mother in their favor. The &uridical relation between the petitioners9
mother as lessor, and the private respondents as lessees, is therefore well-
established, and carries with it a recognition of the lessor9s title.
J(?K
The private
respondents, as lessees who had undisturbed possession for the entire term under
the lease, are then estopped to deny their landlord9s title, or to assert a better title
not only in themselves, but also in some third person while they remain in
possession of the leased premises and until they surrender possession to the
landlord.
J(/K
This estoppel applies even though the lessor had no title at the time the
relation of lessor and lessee was created,
J(.K
and may be asserted not only by the
original lessor, but also by those who succeed to his title.
J(;K
!eing mere lessees, the private respondents knew that their occupation of the
premises would continue only for the life of the lease. 4lainly, they cannot be
considered as possessors nor builders in good faith.
J(<K
In a plethora of cases,
J(*K
this -ourt has held that +rticle //* of the -ivil -ode, in
relation to +rticle ./; of the same -ode, 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 one9s 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.
+nent the alleged promise of the petitioners to sell the lot occupied by the
private respondents9 house, the same was not substantiated by convincing
evidence. Geither the deed of sale over the house nor the contract of lease
contained an option in favor of the respondent spouses to purchase the said
lot. +nd even if the petitioners indeed promised to sell, it would not make the
private respondents possessors or builders in good faith so as to be covered by the
provisions of +rticle //* of the -ivil -ode. The latter cannot raise the mere
e"pectancy of ownership of the aforementioned lot because the alleged promise to
sell was not ful5lled nor its e"istence even proven. The 5rst thing that the private
respondents should have done was to reduce the alleged promise into writing,
because under +rticle (/)? of the -ivil -ode, an agreement for the sale of real
property or an interest therein is unenforceable, unless some note or memorandum
thereof be produced. Got having taken any steps in order that the alleged promise
to sell may be enforced, the private respondents cannot bank on that promise and
profess any claim nor color of title over the lot in question.
There is no need to apply by analogy the provisions of +rticle //* on indemnity
as was done in Pecson vs. %ourt o! 0ppeals,
J(2K
because the situation sought to be
avoided and which would &ustify the application of that provision, is not present in
this case. 6u@ce it to say, 'a state of forced co-ownership' would not be created
between the petitioners and the private respondents. Hor, as correctly pointed out
by the petitioners, the rights of the private respondents as lessees are governed by
+rticle (;<* of the -ivil -ode which allows reimbursement to the e"tent of one-half
of the value of the useful improvements.
It must be stressed, however, that the right to indemnity under +rticle (;<* of
the -ivil -ode arises only if the lessor opts to appropriate the improvements. 6ince
the petitioners refused to e"ercise that option,
J>)K
the private respondents cannot
compel them to reimburse the one-half value of the house and
improvements. Geither can they retain the premises until reimbursement is
made. The private respondents9 sole right then is to remove the improvements
without causing any more impairment upon the property leased than is necessary.
J>(K
E(ERE+ORE, &udgment is hereby rendered IF+GTIGI the instant petition%
FELEF6IGI and 6ETTIGI +6I#E the decision of the -ourt of +ppeals of >< 1anuary
(22. in -+-I.F. 64 Go. ?/??<% and FEIG6T+TIGI the decision of !ranch ? of the
unicipal Trial -ourt in -ities of #agupan -ity in -ivil -ase Go. 2>(/ entitled
'Dederico Eeminiano, et al. vs. :ominador 1icolas, et al.'
-osts against the private respondents.
)O OR&ERE&.
10.?G.R. No. 09699. +ebr!ar> 1, 1996@
*LE$)$N,4ILLE &E4ELO*EN, 'OR*OR$,ION, petitioner, vs. 'O2R, O+
$**E$L), EIL)ON 1EE, '.,. ,ORRE) EN,ER*RI)E), IN'. an# EL&RE&
6$R&INI'O, respondents.
& E ' I ) I O N
*$NG$NI"$N, J.8
Is a lot buyer who constructs improvements on the wrong property erroneously
delivered by the ownerSs agent, a builder in good faith? This is the main issue
resolved in this petition for review on certiorari to reverse the #ecision
J(K
of the
-ourt of +ppeals
J>K
in -+-I.F. 64 Go. (()/), promulgated on +ugust >), (2*<.
!y resolution dated Govember (?, (22., the Hirst #ivision of this -ourt resolved
to transfer this case :along with several others= to the Third #ivision. +fter due
deliberation and consultation, the -ourt assigned the writing of this #ecision to the
undersigned ponente.
The Facts
The facts, as found by respondent -ourt, are as follows$
Edith Fobillo purchased from petitioner a parcel of land designated as Eot 2,
4hase II and located at Taculing Foad, 4leasantville 6ubdivision, !acolod -ity. In
(2<., respondent Eldred 1ardinico bought the rights to the lot from Fobillo. +t that
time, Eot 2 was vacant.
8pon completing all payments, 1ardinico secured from the Fegister of #eeds of
!acolod -ity on #ecember (2, (2<* Transfer -erti5cate of Title Go. ();?;< in his
name. It was then that he discovered that improvements had been introduced
on Eot 2 by respondent ,ilson Bee, who had taken possession thereof.
It appears that on arch >;, (2</, Bee bought on installment Eot * of the same
subdivision from -.T. Torres Enterprises, Inc. :-TTEI=, the e"clusive real estate agent
of petitioner. 8nder the -ontract to 6ell on Installment, Bee could possess the lot
even before the completion of all installment payments. 0n 1anuary >), (2<., Bee
paid -TTEI the relocation fee of 4.).)) and another 4.).)) on 1anuary ><, (2<., for
the preparation of the lot plan. These amounts were paid prior to BeeSs taking
actual possession of Eot *. +fter the preparation of the lot plan and a copy thereof
given to Bee, -TTEI through its employee, Wenaida 0ctaviano, accompanied BeeSs
wife, #onabelle Bee, to inspect Eot *. 8nfortunately, the parcel of land pointed by
0ctaviano was Eot 2. Thereafter, Bee proceeded to construct his residence, a store,
an auto repair shop and other improvements on the lot.
+fter discovering that Eot 2 was occupied by Bee, 1ardinico confronted him. The
parties tried to reach an amicable settlement, but failed.
0n 1anuary ?), (2*(, 1ardinicoSs lawyer wrote Bee, demanding that the latter
remove all improvements and vacate Eot 2. ,hen Bee refused to vacate Eot 2,
1ardinico 5led with the unicipal Trial -ourt in -ities, !ranch ?, !acolod -ity :T--=,
a complaint for e&ectment with damages against Bee.
Bee, in turn, 5led a third-party complaint against petitioner and -TTEI.
The T-- held that the erroneous delivery of Eot 2 to Bee was attributable to
-TTEI. It further ruled that petitioner and -TTEI could not successfully invoke as a
defense the failure of Bee to give notice of his intention to begin construction
required under paragraph >> of the -ontract to 6ell on Installment and his having
built a sari-sari store without. the prior approval of petitioner required under
paragraph >; of said contract, saying that the purpose of these requirements was
merely to regulate the type of improvements to be constructed on the lot
J?K
.
Aowever, the T-- found that petitioner had already rescinded its contract with
Bee over Eot * for the latterSs failure to pay the installments due, and that Bee had
not contested the rescission. The rescission was e7ected in (2<2, before the
complaint was instituted. The T-- concluded that Bee no longer had any right
over the lot sub&ect of the contract between him and petitioner. -onsequently, Bee
must pay reasonable rentals for the use of Eot 2, and, furthermore, he cannot claim
reimbursement for the improvements he introduced on said lot.
The T-- thus disposed$
QIG LIE, 0H +EE TAE H0FEI0IGI, &udgment is hereby rendered as follows$
(. #efendant ,ilson Bee is ordered to vacate tithe premises of Eot 2, covered by
T-T Go. ();?;< and to remove all structures and improvements he introduced
thereon%
>. #efendant ,ilson Bee is ordered to pay to the plainti7 rentals at the rate of 4
(..)) a day computed from the time this suit was 5led on arch (>, (2*( until he
actually vacates the premises. This amount shall bear interests :sic= at the rate of
(> per cent :sic= per annum.
?. Third-4arty #efendant -T. Torres Enterprises, Inc. and 4leasantville 6ubdivision
are ordered to pay the plainti7 &ointly and severally the sum of 4?,))).)) as
attorneySs fees and 4<)).)) as cost and litigation e"penses.R
J/K
0n appeal, the Fegional Trial -ourt, !ranch /*, !acolod -ity :FT-= ruled that
petitioner and -TTEI were not at fault or were not negligent, there being no
preponderant evidence to show that they directly participated in the delivery
of Eot 2 to Bee.
J.K
It found Bee a builder in bad faith. It further ruled that even
assuming arguendo that Bee was acting in good faith, he was, nonetheless, guilty of
unlawfully usurping the possessory right of 1ardinico over Eot 2 from the time he
was served with notice to vacate said lot, and thus was liable for rental.
The FT- thus disposed$
Q,AEFEH0FE, the decision appealed from is a@rmed with respect to the order
against the defendant to vacate the premises of Eot Go. 2 covered by Transfer
-erti5cate of Title Go. T-();?;< of the land records of !acolod -ity% the removal of
all structures and improvements introduced thereon at his e"pense and the
payment to plainti7 :sic= the sum of Hifteen :4 (..))= 4esos a day as reasonable
rental to be computed from 1anuary ?), (2*(, the date of the demand, and not from
the date of the 5ling of the complaint, until he had vacated :sic= the premises, with
interest thereon at (>P per annum. This -ourt further renders &udgment against
the defendant to pay the plainti7 the sum of Three Thousand :4?,))).))= 4esos as
attorneySs fees, plus costs of litigation.
QThe third-party complaint against Third-4arty #efendants 4leasantville
#evelopment -orporation and -.T. Torres Enterprises, Inc. is dismissed. The order
against Third-4arty #efendants to pay attorneySs fees to plainti7 and costs of
litigation is reversed.R
J;K
Hollowing the denial of his motion for reconsideration on 0ctober >), (2*;, Bee
appealed directly to the 6upreme -ourt, which referred the matter to the -ourt of
+ppeals.
The appellate court ruled that Bee was a builder in good faith, as he was
unaware of the Qmi"-upR when he began construction of the improvements on Eot *.
It further ruled that the erroneous delivery was due to the negligence of -TTEI, and
that such wrong delivery was likewise imputable to its principal, petitioner
herein. The appellate court also ruled that the award of rentals was without basis.
Thus, the -ourt of +ppeals disposed$
Q,AEFEH0FE, the petition is IF+GTE#, the appealed decision is FELEF6E#, and
&udgment is rendered as follows$
(. ,ilson Bee is declared a builder in good faith with respect to the
improvements he introduced on Eot 2, and is entitled to the rights
granted him under +rticles //*, ./; and ./* of the Gew -ivil -ode.
>. Third-party defendants -.T. Torres Enterprises, Inc. and 4leasantville
#evelopment -orporation are solidarily liable under the following
circumstances$
a. If Eldred 1ardinico decides to appropriate the improvements and,
thereafter, remove these structures, the third-party defendants shall
answer for all demolition e"penses and the value of the improvements
thus destroyed or rendered useless%
b. If 1ardinico prefers that Bee buy the land, the third-party defendants
shall answer for the amount representing the value of Eot 2 that Bee
should pay to 1ardinico.
?. Third-party defendants -.T. Torres Enterprises, Inc. and 4leasantville
#evelopment -orporation are ordered to pay in solidum the amount of
4?,))).)) to 1ardinico as attorneySs fees, as well as litigation e"penses.
/. The award of rentals to 1ardinico is dispensed with.
QHurthermore, the case is FE+G#E# to the court of origin for the determination of
the actual value of the improvements and the property :Eot 2=, as well as for further
proceedings in conformity with +rticle //* of the Gew -ivil -ode.R
J<K
4etitioner then 5led the instant petition against Bee, 1ardinico and -TTEI.
The Issues
The petition submitted the following grounds to &ustify a review of the
respondent -ourtSs #ecision, as follows$
Q(. The -ourt of +ppeals has decided the case in a way probably not in accord with
law or the the :sic= applicable decisions of the 6upreme -ourt on third-party
complaints, by ordering third-party defendants to pay the demolition e"penses
andUor price of the land%
Q>. The -ourt of +ppeals has so far departed from the accepted course of &udicial
proceedings, by granting to private respondent-Bee the rights of a builder in good
faith in e"cess of what the law provides, thus enriching private respondent Bee at
the e"pense of the petitioner%
Q?. In the light of the subsequent events or circumstances which changed the rights
of the parties, it becomes imperative to set aside or at least modify the &udgment of
the -ourt of +ppeals to harmoni3e with &ustice and the facts%
Q/. 4rivate respondent-Bee in accordance with the 5ndings of facts of the lower
court is clearly a builder in bad faith, having violated several provisions of the
contract to sell on installments%
Q.. The decision of the -ourt of +ppeals, holding the principal, 4leasantville
#evelopment -orporation :liable= for the acts made by the agent in e"cess of its
authority is clearly in violation of the provision of the law%
Q;. The award of attorneySs fees is clearly without basis and is equivalent to putting
a premium in :sic= court litigation.R
Hrom these grounds, the issues could be re-stated as follows$
:(= ,as Bee a builder in good faith?
:>= ,hat is the liability, if any, of petitioner and its agent, -.T. Torres Enterprises,
Inc.? and
:?= Is the award of attorneySs fees proper?
The First Issue: Good Faith
4etitioner contends that the -ourt of +ppeals erred in reversing the FT-Ss ruling
that Bee was a builder in bad faith.
4etitioner fails to persuade this -ourt to abandon the 5ndings and conclusions of
the -ourt of +ppeals that Bee was a builder in good faith. ,e agree with the
following observation of the -ourt of +ppeals$
QThe roots of the controversy can be traced directly to the errors committed by
-TTEI, when it pointed the wrong property to ,ilson Bee and his wife. It is highly
improbable that a purchaser of a lot would knowingly and willingly build his
residence on a lot owned by another, deliberately e"posing himself and his family to
the risk of being e&ected from the land and losing all improvements thereon, not to
mention the social humiliation that would follow.
Q8nder the circumstances, Bee had acted in the manner of a prudent man in
ascertaining the identity of his property. Eot * is covered by Transfer -erti5cate of
Title Go. T-;2.;(, while Eot 2 is identi5ed in Transfer -erti5cate of Title Go. T-
();?;<. Aence, under the Torrens system of land registration, Bee is presumed to
have knowledge of the metes and bounds of the property with which he is dealing. "
" "
""" """ """
Q!ut as Bee is a layman not versed in the technical description of his property, he
had to 5nd a way to ascertain that what was described in T-T Go. ;2.;(
matched Eot *. Thus, he went to the subdivision developerSs agent and applied and
paid for the relocation of the lot, as well as for the production of a lot plan by
-TTEISs geodetic engineer. 8pon BeeSs receipt of the map, his wife went to the
subdivision site accompanied by -TTEISs employee, 0ctaviano, who authoritatively
declared that the land she was pointing to was indeed Eot *. Aaving full faith and
con5dence in the reputation of -TTEI, and because of the companySs positive
identi5cation of the property, Bee saw no reason to suspect that there had been a
misdelivery. The steps Bee had taken to protect his interests were
reasonable. There was no need for him to have acted ex=abundantia cautela, such
as being present during the geodetic engineerSs relocation survey or hiring an
independent geodetic engineer to countercheck for errors, for the 5nal delivery of
subdivision lots to their owners is part of the regular course of everyday business of
-TTEI. !ecause of -TTEISs blunder, what Bee had hoped to forestall did in fact
transpire. BeeSs e7orts all went to naught.R
J*K
Iood faith consists in the belief of the builder that the land he is building on is
his and his ignorance of any defect or Naw in his title.
J2K
+nd as good faith is
presumed, petitioner has the burden of proving bad faith on the part of Bee.
J()K
+t the time he built improvements on Eot *, Bee believed that said lot was what
he bought from petitioner. Ae was not aware that the lot delivered to him was
not Eot *. Thus, BeeSs good faith. 4etitioner failed to prove otherwise.
To demonstrate BeeSs bad faith, petitioner points to BeeSs violation of
paragraphs >> and >; of the -ontract of 6ale on Installment.
,e disagree. 6uch violations have no bearing whatsoever on whether Bee was a
builder in good faith, that is, on his state of mind at the time he built the
improvements on Eot 2. These alleged violations may give rise to petitionerSs cause
of action against Bee under the said contract :contractual breach=, but may not be
bases to negate the presumption that Bee was a builder in good faith.
4etitioner also points out that, as found by the trial court, the -ontract of 6ale
on Installment covering Eot * between it and Bee was rescinded long before the
present action was instituted. This has no relevance on the liability of petitioner, as
such fact does not negate the negligence of its agent in pointing out the wrong lot
to Bee. 6uch circumstance is relevant only as it gives 1ardinico a cause of action for
unlawful detainer against Bee.
4etitioner ne"t contends that Bee cannot Qclaim that another lot was
erroneously pointed out to himR because the latter agreed to the following provision
in the -ontract of 6ale on Installment, to wit$
Q(?. The Lendee hereby declares that prior to the e"ecution of his contract heUshe
has personally e"amined or inspected the property made sub&ect-matter hereof, as
to its location, contours, as well as the natural condition of the lots and from the
date hereof whatever consequential change therein made due to erosion, the said
Lendee shall bear the e"penses of the necessary 5llings, when the same is so
desired by himUher.R
J((K
The sub&ect matter of this provision of the contract is the change of the location,
contour and condition of the lot due to erosion. It merely provides that the vendee,
having e"amined the property prior to the e"ecution of the contract, agrees to
shoulder the e"penses resulting from such change.
,e do not agree with the interpretation of petitioner that Bee contracted away
his right to recover damages resulting from petitionerSs negligence. 6uch waiver
would be contrary to public policy and cannot be allowed. QFights may be waived,
unless the waiver is contrary to law, public order, public policy, morals, or good
customs, or pre&udicial to a third person with a right recogni3ed by law.R
J(>K
The Second Issue: Petitioners Liabilit
Bee 5led a third-party complaint against petitioner and -TTEI, which was
dismissed by the FT- after ruling that there was no evidence from which fault or
negligence on the part of petitioner and -TTEI can be inferred. The -ourt of
+ppeals disagreed and found -TTEI negligent for the erroneous delivery of the lot by
0ctaviano, its employee.
4etitioner does not dispute the fact that -TTEI was its agent. !ut it contends
that the erroneous delivery of Eot 2 to Bee was an act which was clearly outside the
scope of its authority, and consequently, -TTEI alone should be liable. It asserts
that Qwhile J-TTEIK was authori3ed to sell the lot belonging to the herein petitioner,
it was never authori3ed to deliver the wrong lot to Bee.R
J(?K
4etitionerSs contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within
the scope of his authority, and should bear the damage caused to third persons.
J(/K
0n the other hand, the agent who e"ceeds his authority is personally liable for
the damage.
J(.K
-TTEI was acting within its authority as the sole real estate representative of
petitioner when it made the delivery to Bee. In acting within its scope of authority, it
was, however, negligent. It is this negligence that is the basis of petitionerSs
liability, as principal of -TTEI, per +rticles (2)2 and (2() of the -ivil -ode.
4ending resolution of the case before the -ourt of +ppeals, 1ardinico and Bee
on 1uly >/, (2*< entered into a deed of sale, wherein the former sold Eot 2 to
Bee. 1ardinico and Bee did not inform the -ourt of +ppeals of such deal.
The deed of sale contained the following provision$
Q(. That -ivil -ase Go. ?*(. entitled Q1ardinico vs. BeeR which is now pending
appeal with the -ourt of +ppeals, regardless of the outcome of the decision shall be
mutually disregarded and shall not be pursued by the parties herein and shall be
considered dismissed and without e7ect whatsoever%
J(;K
Bee asserts though that the Qterms and conditions in said deed of sale are
strictly for the parties theretoR and that Q:t=here is no waiver made by either of the
parties in said deed of whatever favorable &udgment or award the honorable
respondent -ourt of +ppeals may make in their favor against herein petitioner
4leasantville #evelopment -orporation andUor private respondent -.T. Torres
Enterprises, Inc.R
J(<K
0bviously, the deed of sale can have no e7ect on the liability of petitioner. +s
we have earlier stated, petitionerSs liability is grounded on the negligence of its
agent. 0n the other hand, what the deed of sale regulates are the reciprocal rights
of Bee and 1ardinico% it stressed that they had reached an agreement independent of
the outcome of the case.
4etitioner further assails the following holding of the -ourt of +ppeals$
Q>. Third-party defendants -.T. Torres Enterprises, Inc. and 4leasantville
#evelopment -orporation are solidarily liable under the following circumstances$
Qa. If Eldred 1ardinico decides to appropriate the improvements and,
thereafter, remove these structures, the third-party defendants shall
answer for all demolition e"penses and the value of the improvements
thus destroyed or rendered useless%
Qb. If 1ardinico prefers that Bee buy the land, the third-party defendants
shall answer for the amount representing the value of Eot 2 that Bee
should pay to 1ardinico.R
J(*K
4etitioner contends that if the above holding would be carried out, Bee would be
un&ustly enriched at its e"pense. In other words, Bee would be -able to own the lot,
as buyer, without having to pay anything on it, because the aforequoted portion of
respondent -ourtSs #ecision would require petitioner and -TTEI &ointly and solidarily
to QanswerR or reimburse Bee there for.
,e agree with petitioner.
4etitionerSs liability lies in the negligence of its agent -TTEI. Hor such
negligence, the petitioner should be held liable for damages. Gow, the e"tent
andUor amount of damages to be awarded is a factual issue which should be
determined after evidence is adduced. Aowever, there is no showing that such
evidence was actually presented in the trial court% hence no damages could now be
awarded.
The rights of Bee and 1ardinico vis=a=vis each other, as builder in good faith and
owner in good faith, respectively, are regulated by law ?i.e., +rts. //*, ./; and ./*
of the -ivil -ode=. It was error for the -ourt of +ppeals to make a Qslight
modi5cationR in the application of such law, on the ground of QequityR. +t any rate,
as it stands now, Bee and 1ardinico have amicably settled through their deed of sale
their rights and obligations with regards to Eot 2. Thus, we delete items > :a= and
:b= of the dispositive portion of the -ourt of +ppealsS #ecision Jas reproduced
aboveK holding petitioner and -TTEI solidarily liable.
The Third Issue: !ttornes Fees
The T-- awarded 1ardinico attorneySs fees and costs in the amount of
4?,))).)) and 4<)).)), respectively, as prayed for in his complaint. The FT-
deleted the award, consistent with its ruling that petitioner was without fault or
negligence. The -ourt of +ppeals, however, reinstated the award of attorneySs fees
after ruling that petitioner was liable for its agentSs negligence.
The award of attorneySs fees lies within the discretion of the court and depends
upon the circumstances of each case.
J(2K
,e shall not interfere with the discretion of
the -ourt of +ppeals. 1ardinico was compelled to litigate for the protection of his
interests and for the recovery of damages sustained as a result of the negligence of
petitionerSs agent.
J>)K
In sum, we rule that Bee is a builder in good faith. The disposition of the -ourt
of +ppeals that Bee Qis entitled to the rights granted him under +rticles //*, ./;
and FGH of the Gew -ivil -odeR is deleted, in view of the deed of sale entered into
by Bee and 1ardinico, which deed now governs the rights of 1ardinico and Bee as to
each other. There is also no further need, as ruled by the appellate -ourt, to
remand the case to the court of origin Qfor determination of the actual value of the
improvements and the property :Eot 2=, as well as for further proceedings in
conformity with +rticle //* of the Gew -ivil %ode.I
E(ERE+ORE, the petition is partially IF+GTE#. The #ecision of the -ourt of
+ppeals is hereby 0#IHIE# as follows$
:(= ,ilson Bee is declared a builder in good faith%
:>= 4etitioner 4leasantville #evelopment -orporation and respondent -.T.
Tones Enterprises, Inc. are declared solidarily liable for damages due to
negligence% however, since the amount andUor e"tent of such damages
was not proven during the trial, the same cannot now be quanti5ed
and awarded%
:?= 4etitioner 4leasantville #evelpment -orporation and respondent -.T.
Torres Enterprises, Inc. are ordered to pay in solidum the amount of
4?,))).)) to 1ardinico as attorneySs fees, as well as litigation e"penses%
and
:/= The award of rentals to 1ardinico is dispensed with.
)O OR&ERE&.
11.G.R. No. 115913 a> 26, 1995
*E&RO *. *E')ON, petitioner,
vs.
'O2R, O+ $**E$L), )*O2)E) 62$N N2G2I& an# ERLIN&$
N2G2I&, respondents.

&$4I&E, 6R., J.:
This petition for review on certiorari seeks to set aside the decision
1
of the -ourt of
+ppeals in -+-I.F. 64 Go. ?>;<2 a@rming in part the order
2
of the Fegional Trial
-ourt :FT-= of Oue3on -ity, !ranch ()(, in -ivil -ase Go. O-/(/<).
The factual and procedural antecedents of this case as gathered from the record are
as follows$
4etitioner 4edro 4. 4ecson was the owner of a commercial lot located in Bamias
6treet, Oue3on -ity, on which he built a four-door two-storey apartment building.
Hor his failure to pay realty ta"es amounting to twelve thousand pesos :4(>,))).))=,
the lot was sold at public auction by the city Treasurer of Oue3on -ity to amerto
Gepomuceno who in turn sold it on (> 0ctober (2*? to the private respondents, the
spouses 1uan Guguid and Erlinda Tan-Guguid, for one hundred three thousand pesos
:4()?,))).))=.
The petitioner challenged the validity of the auction sale in -ivil -ase Go. O-/(/<)
before the FT- of Oue3on -ity. In its decision of * Hebruary (2*2, the FT- dismissed
the complaint, but as to the private respondents9 claim that the sale included the
apartment building, it held that the issue concerning it was 'not a sub&ect of the . . .
litigation.' In resolving the private respondents9 motion to reconsider this issue, the
trial court held that there was no legal basis for the contention that the apartment
building was included in the sale.
.
!oth parties then appealed the decision to the -ourt of +ppeals. The case was
docketed as -+-I.F. -L Go. >2?(. In its decision of ?) +pril (22>,
3
the -ourt of
+ppeals a@rmed in toto the assailed decision. It also agreed with the trial court that
the apartment building was not included in the auction sale of the commercial lot.
Thus$
Indeed, examining the record we are !ully convinced that it was only
the land J without the apartment building J which was sold at the
auction sale, !or plainti3Ks !ailure to pay the taxes due thereon. Thus,
in the -erti5cate of 6ale of #elinquent 4roperty To 4urchaser :E"h. B, p.
?.>, Fecord= the property sub&ect of the auction sale at which amerto
Gepomuceno was the purchaser is referred to as Eot Go. >(-+, !lock
Go. B-?/, at Bamias, !arangay 4iMahan, with an area of >.;.? sq. m.,
with no mention whatsoever, of the building thereon. The same
description of the sub&ect property appears in the Hinal Gotice To
E"ercise The Fight of Fedemption :over sub&ect property= dated
6eptember (/, (2*( :E"h. E, p. ?.?, Fecord= and in the Hinal !ill of 6ale
over the same property dated +pril (2, (2*> :E"h. 4, p. ?.<, Fecord=.
Geedless to say, as it was only the land without any building which
Gepomuceno had acquired at the auction sale, it was also only that
land without any building which he could have legally sold to the
Guguids. Lerily, in the :eed o! 0bsolute Sale o! 2egistered Mand
executed by Namerto 1epomuceno in !avor o! the 1uguids on /ctober
2F, 1OH@ ?5xh. 9, p. @AA, 2ecordB it clearly appears that the property
sub$ect o! the sale !or P1#@,###.## was only the parcel o! land, Mot 21=
0, +lP. Q=@G containing an area o! 2FA.@ s. meters, without any
mention o! any improvement, much less any building thereon.
:emphases supplied=
The petition to review the said decision was subsequently denied by this
-ourt.
5
Entry of &udgment was made on >? 1une (22?.
6
0n Govember (22?, the private respondents 5led with the trial court a motion for
delivery of possession of the lot and the apartment building, citing article ./; of the
-ivil -ode.
0
+cting thereon, the trial court issued on (. Govember (22? the
challenged order
9
which reads as follows$
6ubmitted for resolution before this -ourt is an uncontroverted JsicK for
the #elivery of 4ossession 5led by defendants Erlinda Tan, 1uan Guguid,
et al. considering that despite personal service of the 0rder for plainti7
to 5le within 5ve :.= days his opposition to said motion, he did not 5le
any.
In support of defendant9s motion, movant cites the law in point as
+rticle ./; of the -ivil -ode . . .
ovant agrees to comply with the provisions of the law considering
that plainti7 is a builder in good faith and he has in fact, opted to pay
the cost of the construction spent by plainti7. Hrom the complaint itself
the plainti7 stated that the construction cost of the apartment is much
more than the lot, which apartment he constructed at a cost of
4.?,))).)) in (2;. :par. * complaint=. This amount of 4.?,))).)) is
what the movant is supposed to pay under the law before a writ of
possession placing him in possession of both the lot and apartment
would be issued.
Aowever, the complaint alleges in paragraph 2 that three doors of the
apartment are being leased. This is further con5rmed by the a@davit
of the movant presented in support of the motion that said three doors
are being leased at a rental of 4<,))).)) a month each. The movant
further alleges in his said a@davit that the present commercial value of
the lot is 4(),))).)) per square meter or 4>,.)),))).)) and the
reasonable rental value of said lot is no less than 4>(,))).)) per
month.
The decision having become 5nal as per Entry of 1udgment dated 1une
>?, (22? and from this date on, being the uncontested owner of the
property, the rents should be paid to him instead of the plainti7
collecting them. Hrom 1une >?, (22?, the rents collected by plainti7
amounting to more than 4.?,))).)) from tenants should be o7set
from the rents due to the lot which according to movant9s a@davit is
more than 4>(,))).)) a month.
,AEFEH0FE, 5nding merit in the otion, the -ourt hereby grants the
following prayer that$
(. The movant shall reimburse plainti7 the construction
cost of 4.?,))).)).
>. The payment of 4.?,))).)) as reimbursement for the
construction cost, movant 1uan Guguid is hereby entitled
to immediate issuance of a writ of possession over the Eot
and improvements thereon.
?. The movant having been declared as the uncontested
owner of the Eot in question as per Entry of 1udgment of
the 6upreme -ourt dated 1une >?, (22?, the plainti7
should pay rent to the movant of no less than 4>(,))).))
per month from said date as this is the very same amount
paid monthly by the tenants occupying the lot.
/. The amount of 4.?,))).)) due from the movant is
hereby o7set against the amount of rents collected by the
plainti7 from 1une >?, (22?, to 6eptember >?, (22?.
60 0F#EFE#.
The petitioner moved for the reconsideration of the order but it was not acted upon
by the trial court. Instead, on (* Govember (22?, it issued a writ of possession
directing the deputy sheri7 'to place said movant 1uan Guguid in possession of
sub&ect property located at Go. <2 Bamias Foad, Oue3on -ity, with all the
improvements thereon and to e&ect therefrom all occupants therein, their agents,
assignees, heirs and representatives.'
9
The petitioner then 5led with the -ourt of +ppeals a special civil action
for certiorari and prohibition assailing the order of (. Govember (22?, which was
docketed as -+-I.F. 64 Go. ?>;<2.
10
In its decision of < 1une (22/, the -ourt of
+ppeals a@rmed in part the order of the trial court citing +rticle //* of the -ivil
-ode. In disposing of the issues, it stated$
+s earlier pointed out, private respondent opted to appropriate the
improvement introduced by petitioner on the sub&ect lot, giving rise to
the right of petitioner to be reimbursed of the cost of constructing said
apartment building, in accordance with +rticle ./; of the . . . -ivil
-ode, and of the right to retain the improvements until he is
reimbursed of the cost of the improvements, because, basically, the
right to retain the improvement while the corresponding indemnity is
not paid implies the tenancy or possession in fact of the land on which
they are built . . . J> T0EEGTIG0, -ILIE -0#E 0H TAE 4AIEI44IGE6
:(22>= p. ((>K. ,ith the facts e"tant and the settled principle as
guides, we agree with petitioner that respondent &udge erred in
ordering that 'the movant having been declared as the uncontested
owner of the lot in question as per Entry of 1udgment of the 6upreme
-ourt dated 1une >?, (22?, the plainti7 should pay rent to the movant
of no less than 4>(,))) per month from said date as this is the very
same amount paid monthly by the tenants occupying the lot.
,e, however, agree with the 5nding of respondent &udge that the
amount of 4.?,))).)) earlier admitted as the cost of constructing the
apartment building can be o7set from the amount of rents collected by
petitioner from 1une >?, (22? up to 6eptember >?, (22? which was
5"ed at 4<,))).)) per month for each of the three doors. 0ur
underlying reason is that during the period of retention, petitioner as
such possessor and receiving the fruits from the property, is obliged to
account for such fruits, so that the amount thereof may be deducted
from the amount of indemnity to be paid to him by the owner of the
land, in line with endo3a vs. #e Iu3man, .> 4hil. (;/ . . . .
The -ourt of +ppeals then ruled as follows$
,AEFEH0FE, while it appears that private respondents have not yet
indemni5ed petitioner with the cost of the improvements, since +nne"
I shows that the #eputy 6heri7 has enforced the ,rit of 4ossession and
the premises have been turned over to the possession of private
respondents, the quest of petitioner that he be restored in possession
of the premises is rendered moot and academic, although it is but fair
and &ust that private respondents pay petitioner the construction cost
of 4.?,))).))% and that petitioner be ordered to account for any and all
fruits of the improvements received by him starting on 1une >?, (22?,
with the amount of 4.?,))).)) to be o7set therefrom.
IT I6 60 0F#EFE#.
11
+ggrieved by the -ourt of +ppeals9 decision, the petitioner 5led the instant petition.
The parties agree that the petitioner was a builder in good faith of the apartment
building on the theory that he constructed it at the time when he was still the owner
of the lot, and that the key issue in this case is the application of +rticles //* and
/.; of the -ivil -ode.
The trial court and the -ourt of +ppeals, as well as the parties, concerned
themselves with the application of +rticles //* and ./; of the -ivil -ode. These
articles read as follows$
+rt. //*. 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 ./; and ./*, or to oblige the one who built or planted to
pay the price of the land, and the one who sowed, the proper rent.
Aowever, 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 5" the terms thereof. :?;(a=
""" """ """
+rt. ./;. Gecessary e"penses shall be refunded to every possessor%
but only the possessor in good faith may retain the thing until he has
been reimbursed therefor.
8seful e"penses 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
e"penses or of paying the increase in value which the thing may have
acquired by reason thereof. :/.?a=
!y its clear language, +rticle //* refers to a land whose ownership is claimed by
two or more parties, one of whom has built some works, or sown or planted
something. The building, sowing or planting may have been made in good faith or in
bad faith. The rule on good faith laid down in +rticle .>; of the -ivil -ode shall be
applied in determining whether a builder, sower or planter had acted in good
faith.
12
+rticle //* does not apply to a case where the owner of the land is the builder,
sower, or planter who then later loses ownership of the land by sale or donation.
This -ourt said so in %oleongco vs. 2egalado$
1.
+rticle ?;( of the old -ivil -ode is not applicable in this case, for
Fegalado constructed the house on his own land before he sold said
land to -oleongco. +rticle ?;( applies only in cases where a person
constructs a building on the land of another in good or in bad faith, as
the case may be. It does not apply to a case where a person constructs
a building on his own land, for then there can be no question as to
good or bad faith on the part of the builder.
Elsewise stated, where the true owner himself is the builder of works on his own
land, the issue of good faith or bad faith is entirely irrelevant.
Thus in strict point of law, +rticle //* is not apposite to the case at bar.
Gevertheless, we believe that the provision therein on indemnity may be applied by
analogy considering that the primary intent of +rticle //* is to avoid a state of
forced co-ownership and that the parties, including the two courts below, in the
main agree that +rticles //* and ./; of the -ivil -ode are applicable and indemnity
for the improvements may be paid although they di7er as to the basis of the
indemnity.
+rticle ./; does not speci5cally state how the value of the useful improvements
should be determined. The respondent court and the private respondents espouse
the belief that the cost of construction of the apartment building in (2;., and not its
current market value, is su@cient reimbursement for necessary and useful
improvements made by the petitioner. This position is, however, not in consonance
with previous rulings of this -ourt in similar cases. In Ravier vs. %oncepcion,
Rr.,
13
this -ourt pegged the value of the useful improvements consisting of various
fruits, bamboos, a house and camarin made of strong material based on the market
value of the said improvements. In Sarmiento vs. 0gana,
15
despite the 5nding that
the useful improvement, a residential house, was built in (2;< at a cost of between
eight thousand pesos :4*,))).))= to ten thousand pesos:4(),))).))=, the
landowner was ordered to reimburse the builder in the amount of forty thousand
pesos :4/),))).))=, the value of the house at the time of the trial. In the same way,
the landowner was required to pay the 'present value' of the house, a useful
improvement, in the case of :e Eu"man vs. :e la Duente,
16
cited by the petitioner.
The ob&ective of +rticle ./; of the -ivil -ode is to administer &ustice between the
parties involved. In this regard, this -ourt had long ago stated in 2ivera vs. 2oman
%atholic 0rchbishop o! Nanila
10
that the said provision was formulated in trying to
ad&ust the rights of the owner and possessor in good faith of a piece of land, to
administer complete &ustice to both of them in such a way as neither one nor the
other may enrich himself of that which does not belong to him. Iuided by this
precept, it is therefore the current market value of the improvements which should
be made the basis of reimbursement. + contrary ruling would un&ustly enrich the
private respondents who would otherwise be allowed to acquire a highly valued
income-yielding four-unit apartment building for a measly amount. -onsequently,
the parties should therefore be allowed to adduce evidence on the present market
value of the apartment building upon which the trial court should base its 5nding as
to the amount of reimbursement to be paid by the landowner.
The trial court also erred in ordering the petitioner to pay monthly rentals equal to
the aggregate rentals paid by the lessees of the apartment building. 6ince the
private respondents have opted to appropriate the apartment building, the
petitioner is thus entitled to the possession and en&oyment of the apartment
building, until he is paid the proper indemnity, as well as of the portion of the lot
where the building has been constructed. This is so because the right to retain the
improvements while the corresponding indemnity is not paid implies the tenancy or
possession in fact of the land on which it is built, planted or sown.
19
The petitioner
not having been so paid, he was entitled to retain ownership of the building and,
necessarily, the income therefrom.
It follows, too, that the -ourt of +ppeals erred not only in upholding the trial court9s
determination of the indemnity, but also in ordering the petitioner to account for the
rentals of the apartment building from >? 1une (22? to >? 6eptember (22?.
,AEFEH0FE, the decision of the -ourt of +ppeals in -+-I.F. 64 Go. ?>;<2 and the
0rder of (. Govember (22? of the Fegional Trial -ourt, !ranch ()(, Oue3on -ity in
-ivil -ase Go. O-/(/<) are hereby 6ET +6I#E.
The case is hereby remanded to the trial court for it to determine the current market
value of the apartment building on the lot. Hor this purpose, the parties shall be
allowed to adduce evidence on the current market value of the apartment building.
The value so determined shall be forthwith paid by the private respondents to the
petitioner otherwise the petitioner shall be restored to the possession of the
apartment building until payment of the required indemnity.
Go costs.
60 0F#EFE#.
12.?G.R. No. 151915. +ebr!ar> 2., 2005@
)*O2)E) 62$N N2G2I& $N& ERLIN&$ ,. N2G2I&, petitioners, vs. (ON.
'O2R, O+ $**E$L) $N& *E&RO *. *E')ON, respondents.
& E ' I ) I O N
:2I)2"ING, J.8
This is a petition for review on certiorari of the &ecision
J(K
dated ay >(, >))(,
of the -ourt of +ppeals in -+-I.F. -L Go. ;/>2., which modi5ed the 0rder
dated 1uly ?(, (22* of the Fegional Trial -ourt :FT-= of Oue3on -ity, !ranch ()( in
-ivil -ase Go. O-/(/<). The trial court ordered the defendants, among them
petitioner herein 1uan Guguid, to pay respondent herein 4edro 4. 4ecson, the sum
of 4(,?//,))) as reimbursement of unreali3ed income for the period beginning
Govember >>, (22? to #ecember (22<. The appellate court, however, reduced the
trial courtSs award in favor of 4ecson from the said 4(,?//,))) to 4>*),))). Equally
assailed by the petitioners is the appellate courtSs Resol!tion
J>K
dated 1anuary (),
>))>, denying the motion for reconsideration.
It may be recalled that relatedly in our #ecision dated ay >;, (22., in I.F. Go.
((.*(/, entitled Pecson v. %ourt o! 0ppeals, we set aside the decision of the -ourt
of +ppeals in -+-I.F. 64 Go. ?>;<2 and the 0rder dated Govember (., (22?, of the
FT- of Oue3on -ity, !ranch ()( and remanded the case to the trial court for the
determination of the current market value of the four-door two-storey apartment
building on the >.;-square meter commercial lot.
The antecedent facts in this case are as follows$
4edro 4. 4ecson owned a commercial lot located at >< Bamias Foad, Oue3on
-ity, on which he built a four-door two-storey apartment building. Hor failure to pay
realty ta"es, the lot was sold at public auction by the -ity Treasurer of Oue3on -ity
to amerto Gepomuceno, who in turn sold it for 4()?,))) to the spouses 1uan and
Erlinda Guguid.
4ecson challenged the validity of the auction sale before the FT- of Oue3on -ity
in -ivil -ase Go. O-/(/<). In its #ecision,
J?K
dated Hebruary *, (2*2, the FT- upheld
the spousesS title but declared that the four-door two-storey apartment building was
not included in the auction sale.
J/K
This was a@rmed in toto by the -ourt of +ppeals
and thereafter by this -ourt, in its #ecision
J.K
dated ay >., (22?, in I.F. Go.
().?;) entitled Pecson v. %ourt o! 0ppeals.
0n 1une >?, (22?, by virtue of the Entry of 1udgment of the aforesaid decision in
I.F. Go. ().?;), the Guguids became the uncontested owners of the >.;-square
meter commercial lot.
+s a result, the Guguid spouses moved for delivery of possession of the lot and
the apartment building.
In its 0rder
J;K
of Govember (., (22?, the trial court, relying upon +rticle ./;
J<K
of
the -ivil -ode, ruled that the 6pouses Guguid were to reimburse 4ecson for his
construction cost of 4.?,))), following which, the spouses Guguid were entitled to
immediate issuance of a writ of possession over the lot and improvements. In the
same order the FT- also directed 4ecson to pay the same amount of monthly
rentals to the Guguids as paid by the tenants occupying the apartment units
or 4>(,))) per month from 1une >?, (22?, and allowed the o7set of the amount
of 4.?,))) due from the Guguids against the amount of rents collected by 4ecson
from 1une >?, (22? to 6eptember >?, (22? from the tenants of the apartment.
J*K
4ecson duly moved for reconsideration, but on Govember *, (22?,
the FT- issued a ,rit of 4ossession,
J2K
directing the deputy sheri7 to put the spouses
Guguid in possession of the sub&ect property with all the improvements thereon and
to e&ect all the occupants therein.
+ggrieved, 4ecson then 5led a special civil action for certiorari and prohibition
docketed as -+-I.F. 64 Go. ?>;<2 with the -ourt of +ppeals.
In its decision of 1une <, (22/, the appellate court, relying upon +rticle //*
J()K
of
the -ivil -ode, a@rmed the order of payment of construction costs but rendered the
issue of possession moot on appeal, thus$
,AEFEH0FE, while it appears that private respondents Jspouses GuguidK have not
yet indemni5ed petitioner J4ecsonK with the cost of the improvements, since +nne" I
shows that the #eputy 6heri7 has enforced the ,rit of 4ossession and the premises
have been turned over to the possession of private respondents, the quest of
petitioner that he be restored in possession of the premises is rendered moot and
academic, although it is but fair and &ust that private respondents pay petitioner the
construction cost of 4.?,))).))% and that petitioner be ordered to account for any
and all fruits of the improvements received by him starting on 1une >?, (22?, with
the amount of 4.?,))).)) to be o7set therefrom.
IT I6 60 0F#EFE#.
J((K
J8nderscoring supplied.K
Hrustrated by this turn of events, 4ecson 5led a petition for review docketed as
I.F. Go. ((.*(/ before this -ourt.
0n ay >;, (22., the -ourt handed down the decision in I.F. Go ((.*(/, to
wit$
,AEFEH0FE, the decision of the -ourt of +ppeals in -+-I.F. 64 Go. ?>;<2 and the
0rder of (. Govember (22? of the Fegional Trial -ourt, !ranch ()(, Oue3on -ity in
-ivil -ase Go. O-/(/<) are hereby 6ET +6I#E.
The case is hereby remanded to the trial court for it to determine the current market
value of the apartment building on the lot. Hor this purpose, the parties shall be
allowed to adduce evidence on the current market value of the apartment
building. The value so determined shall be forthwith paid by the private
respondents J6pouses 1uan and Erlinda GuguidK to the petitioner J4edro
4ecsonK other5ise the petitioner shall be restored to the possession of the
apartment building until payment of the required indemnity.
Go costs.
60 0F#EFE#.
J(>K
JEmphasis supplied.K
In so ruling, this -ourt pointed out that$ :(= +rticle //* of the -ivil -ode is not
apposite to the case at bar where the owner of the land is the builder, sower, or
planter who then later lost ownership of the land by sale, but may, however, be
applied by analogy% :>= the current market value of the improvements should be
made as the basis of reimbursement% :?= 4ecson was entitled to retain ownership of
the building and, necessarily, the income therefrom% :/= the -ourt of +ppeals erred
not only in upholding the trial courtSs determination of the indemnity, but also in
ordering 4ecson to account for the rentals of the apartment building from 1une >?,
(22? to 6eptember >?, (22?.
0n the basis of this -ourtSs decision in I.F. Go. ((.*(/, 4ecson 5led a otion to
Festore 4ossession and a otion to Fender +ccounting, praying respectively for
restoration of his possession over the sub&ect >.;-square meter commercial lot and
for the spouses Guguid to be directed to render an accounting under oath, of the
income derived from the sub&ect four-door apartment from Govember >>, (22? until
possession of the same was restored to him.
In an 0rder
J(?K
dated 1anuary >;, (22;, the FT- denied the otion to Festore
4ossession to the plainti7 averring that the current market value of the building
should 5rst be determined. 4ending the said determination, the resolution of the
otion for +ccounting was likewise held in abeyance.
,ith the submission of the partiesS assessment and the reports of the sub&ect
realty, and the reports of the Oue3on -ity +ssessor, as well as the members of the
duly constituted assessment committee, the trial court issued the following
0rder
J(/K
dated 0ctober <, (22<, to wit$
0n Govember >(, (22;, the parties manifested that they have arrived at a
compromise agreement that the value of the said improvementUbuilding
is 4/)),))).)) The -ourt notes that the plainti7 has already
received 4?)),))).)). Aowever, when defendant was ready to pay the balance
of 4()),))).)), the plainti7 now insists that there should be a rental to be paid by
defendants. ,hether or not this should be paid by defendants, incident is hereby
scheduled for hearing on Govember (>, (22< at *$?) a.m.
eantime, defendants are directed to pay plainti7 the balance of 4()),))).)).
60 0F#EFE#.
J(.K
0n #ecember (22<, after paying the said 4()),))) balance to 4edro 4ecson the
spouses Guguid prayed for the closure and termination of the case, as well as the
cancellation of the notice of lis pendens on the title of the property on the ground
that 4edro 4ecsonSs claim for rentals was devoid of factual and legal bases.
J(;K
+fter conducting a hearing, the lower court issued an 0rder dated 1uly ?(, (22*,
directing the spouses to pay the sum of 4(,?//,))) as reimbursement of the
unreali3ed income of 4ecson for the period beginning Govember >>, (22? up to
#ecember (22<. The sum was based on the computation of 4>*,)))Umonth rentals
of the four-door apartment, thus$
The -ourt 5nds plainti7Ss motion valid and meritorious. The decision of the
6upreme -ourt in the aforesaid case JPecson vs. %ourt o! 0ppeals, >// 6-F+ /)<K
which set aside the 0rder of this -ourt of Govember (., (22? has in e7ect upheld
plainti7Ss right of possession of the building for as long as he is not fully paid the
value thereof. It follows, as declared by the 6upreme -ourt in said decision that the
plainti7 is entitled to the income derived therefrom, thus Z
. . .
Fecords show that the plainti7 was dispossessed of the premises on Govember >>,
(22? and that he was fully paid the value of his building in #ecember
(22<. Therefore, he is entitled to the income thereof beginning on Govember >>,
(22?, the time he was dispossessed, up to the time of said full payment, in
#ecember (22<, or a total of /* months.
The only question left is the determination of income of the four units of apartments
per month. !ut as correctly pointed out by plainti7, the defendants have
themselves submitted their a@davits attesting that the income derived from three
of the four units of the apartment building is 4>(,))).)) or 4<,))).)) each per
month, or 4>*,))).)) per month for the whole four units. Aence, at 4>*,))).)) per
month, multiplied by /* months, plainti7 is entitled to be paid by defendants the
amount of 4(,?//,))).)).
J(<K
The Guguid spouses 5led a motion for reconsideration but this was denied for
lack of merit.
J(*K
The Guguid couple then appealed the trial courtSs ruling to the -ourt of +ppeals,
their action docketed as -+-I.F. -L Go. ;/>2..
In the -ourt of +ppeals, the order appealed from in -+-I.F. -L Go. ;/>2., was
modi5ed. The -+ reduced the rentals from 4(,?//,))) to 4>*),))) in favor of the
appellee.
J(2K
The said amount represents accrued rentals from the determination of
the current market value on 1anuary ?(, (22<
J>)K
until its full payment on #ecember
(>, (22<.
Aence, petitioners state the sole assignment of error now before us as follows$
TAE -08FT 0H +44E+E6 EFFE# IG A0E#IGI 4ETITI0GEF6 EI+!EE T0 4+X FEGT
0LEF +G# +!0LE TAE -8FFEGT +FBET L+E8E 0H TAE I4F0LEEGT ,AEG
68-A ,+6 G0T 4F0LI#E# H0F IG TAE #I6406ITILE 40FTI0G 0H TAE 684FEE
-08FTS6 F8EIGI IG I.F. Go. ((.*(/.
4etitioners call our attention to the fact that after reaching an agreed price
of 4/)),))) for the improvements, they only made a partial payment
of 4?)),))). Thus, they contend that their failure to pay the full price for the
improvements will, at most, entitle respondent to be restored to possession, but not
to collect any rentals. 4etitioners insist that this is the proper interpretation of the
dispositive portion of the decision in I.F. Go. ((.*(/, which states in part that
QJtKhe value so determined shall be forthwith paid by the private respondents
J6pouses 1uan and Erlinda GuguidK to the petitioner J4edro 4ecsonKother5ise the
petitioner shall be restored to the possession of the apartment building until
payment of the required indemnity.R
J>(K
Gow herein respondent, 4ecson, disagrees with herein petitionersS
contention. Ae argues that petitioners are wrong in claiming that inasmuch as his
claim for rentals was not determined in the dispositive portion of the decision in I.F.
Go. ((.*(/, it could not be the sub&ect of e"ecution. Ae points out that in moving
for an accounting, all he asked was that the value of the fruits of the property
during the period he was dispossessed be accounted for, since this -ourt e"plicitly
recogni3ed in I.F. Go. ((.*(/, he was entitled to the property. Ae points out that
this -ourt ruled that QJtKhe petitioner J4ecsonK not having been so paid, he was
entitled to retain ownership of the building and, necessarily, the income
therefrom.R
J>>K
In other words, says respondent, accounting was necessary. Hor
accordingly, he was entitled to rental income from the property. This should be
given e7ect. The -ourt could have very well speci5cally included rent :as fruit or
income of the property=, but could not have done so at the time the -ourt
pronounced &udgment because its value had yet to be determined, according to
him. +dditionally, he faults the appellate court for modifying the order of the FT-,
thus defeating his right as a builder in good faith entitled to rental from the period
of his dispossession to full payment of the price of his improvements, which spans
from Govember >>, (22? to #ecember (22<, or a period of more than four years.
It is not disputed that the construction of the four-door two-storey apartment,
sub&ect of this dispute, was undertaken at the time when 4ecson was still the owner
of the lot. ,hen the Guguids became the uncontested owner of the lot on 1une >?,
(22?, by virtue of entry of &udgment of the -ourtSs decision, dated ay >., (22?, in
I.F. Go. ().?;), the apartment building was already in e"istence and occupied by
tenants. In its decision dated ay >;, (22. in I.F. Go. ((.*(/, the -ourt declared
the rights and obligations of the litigants in accordance with +rticles //* and ./; of
the -ivil -ode. These provisions of the -ode are directly applicable to the instant
case.
8nder +rticle //*, 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. Felatedly, +rticle ./; provides that a builder
in good faith is entitled to full reimbursement for all the necessary and useful
e"penses incurred% it also gives him right of retention until full reimbursement is
made.
,hile the law aims to concentrate in one person the ownership of the land and
the improvements thereon in view of the impracticability of creating a state of
forced co-ownership,
J>?K
it guards against un&ust enrichment insofar as the good-faith
builderSs improvements are concerned. The right of retention is considered as one
of the measures devised by the law for the protection of builders in good faith. Its
ob&ect is to guarantee full and prompt reimbursement as it permits the actual
possessor to remain in possession while he has not been reimbursed :by the person
who defeated him in the case for possession of the property= for those necessary
e"penses and useful improvements made by him on the thing possessed.
J>/K
+ccordingly, a builder in good faith cannot be compelled to pay rentals during
the period of retention
J>.K
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
o7setting or compensating the necessary and useful e"penses with the fruits
received by the builder-possessor in good faith. 0therwise, the security provided by
law would be impaired. This is so because the right to the e"penses and the right to
the fruits both pertain to the possessor, making compensation &uridically impossible%
and one cannot be used to reduce the other.
J>;K
+s we earlier held, since petitioners opted to appropriate the improvement for
themselves as early as 1une (22?, when they applied for a writ of e"ecution despite
knowledge that the auction sale did not include the apartment building, they could
not bene5t from the lotSs improvement, until they reimbursed the improver in full,
based on the current market value of the property.
#espite the -ourtSs recognition of 4ecsonSs right of ownership over the
apartment building, the petitioners still insisted on dispossessing 4ecson by 5ling for
a ,rit of 4ossession to cover both the lot and the building. -learly, this resulted in a
violation of respondentSs right of retention. ,orse, petitioners took advantage of
the situation to bene5t from the highly valued, income-yielding, four-unit apartment
building by collecting rentals thereon, before they paid for the cost of the apartment
building. It was only four years later that they 5nally paid its full value to the
respondent.
4etitionersS interpretation of our holding in I.F. Go. ((.*(/ has neither factual
nor legal basis. The decision of ay >;, (22., should be construed in connection
with the legal principles which form the basis of the decision, guided by the precept
that &udgments are to have a reasonable intendment to do &ustice and avoid wrong.
J><K
The te"t of the decision in I.F. Go. ((.*(/ e"pressly e"empted 4ecson from
liability to pay rentals, for we found that the -ourt of +ppeals erred not only in
upholding the trial courtSs determination of the indemnity, but also in ordering him
to account for the rentals of the apartment building from 1une >?, (22? to
6eptember >?, (22?, the period from entry of &udgment
until 4ecsonSs dispossession. +s pointed out by 4ecson, the dispositive portion of
our decision in I.F. Go. ((.*(/ need not speci5cally include the income derived
from the improvement in order to entitle him, as a builder in good faith, to such
income. 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
+rticle ./; of the -ivil -ode.
Iiven 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 5nd that the
increased award of rentals by the FT-was reasonable and equitable. The petitioners
had reaped all the bene5ts from the improvement introduced by the respondent
during said period, without paying any amount to the latter as reimbursement for
his construction costs and e"penses. They should account and pay for such
bene5ts.
,e need not belabor now the appellate courtSs recognition of herein
respondentSs entitlement to rentals from the date of the determination of the
current market value until its full payment. Fespondent is clearly entitled to
payment by virtue of his right of retention over the said improvement.
E(ERE+ORE, the instant petition is #EGIE# for lack of merit. The #ecision
dated ay >(, >))( of the -ourt of +ppeals in -+-I.F. -L Go. ;/>2. is 6ET +6I#E
and the 0rder dated 1uly ?(, (22*, of the Fegional Trial -ourt, !ranch ()(, Oue3on
-ity, in -ivil -ase Go. O-/(/<) ordering the herein petitioners, 6pouses 1uan and
Erlinda Guguid, to account for the rental income of the four-door two-storey
apartment building from Govember (22? until #ecember (22<, in the amount
of 4(,?//,))), computed on the basis of Twenty-eight Thousand :4>*,))).))= pesos
monthly, for a period of /* months, is hereby FEIG6T+TE#. 8ntil fully paid, said
amount of rentals should bear the legal rate of interest set at si" percent :;P= per
annum computed from the date of FT- &udgment. If any portion thereof shall
thereafter remain unpaid, despite notice of 5nality of this -ourtSs &udgment, said
remaining unpaid amount shall bear the rate of interest set at twelve percent :(>P=
per annum computed from the date of said notice. -osts against petitioners.
)O OR&ERE&.
1..G.R. No. , 1.2 )'R$ 513
Re/!blic of the *hili//ines
)2*REE 'O2R,
anila
EG !+G-
, J.8
This is a petition for certiorari to set aside the decision of the respondent -ourt of
+ppeals :now Intermediate +ppellate -ourt= a@rming the decision of the -ourt of
Hirst Instance of !ulacan, Hifth 1udicial #istrict, !ranch LIII, which found that Eots (
and > of 4lan 4su-(?(*2> are accretion to the land covered by Transfer -erti5cate of
Title Go. *2<)2 and ordered their registration in the names of the private
respondents.
Fespondents !en&amin Tancinco, +3ucena Tancinco Feyes, arina :should be
'aria'= Tancinco Imperial and ario -. Tancinco are registered owners of a parcel
of land covered by Transfer -erti5cate of Title Go. T-*2<)2 situated at +arrio 8bihan,
eycauayan, !ulacan bordering on the eycauayan and !ocaue rivers.
0n 1une >/, (2<?, the private respondents 5led an application for the registration of
three lots ad&acent to their 5shpond property and particularly described as follows$ ?
Eot (-4su-(?(*2>
:aria -. Tancinco=
+ parcel of land :lot ( as shown on plan 4su-(?(*2>=, situated in the +arrio of
8bihan, unicipality of eycauayan, 4rovince of !ulacan. !ounded on the GE.,
along line (->, by Eot ? of plan 4su-(?(*2>% on the 6E., along lines >-?-/, by
eycauayan Fiver% on the 6.,., along 5nes /-.-;-<-*-2, by !ocaue Fiver% on the
GE., along line 2-(), by property of 1oaquina 6antiago% on the E., GE., and G,.,
along lines ()-((-(>-(, by property of ariano Tancinco :Eot >, 4su-(((*<<=. ...
containing an area of TAIFTX TAFEE TA086+G# GIGE A8G#FE# TAIFTX 6ELEG
:??,2?<= 6O8+FE ETEF6. ...
Eot >-4su-(?(*2>
:aria -. Tancinco=
+ parcel of land :Eot > as shown on plan 4su-(?(*2>=, situated in the +arrio of
8bihan, unicipality of eycauayan, 4rovince of !ulacan. !ounded on the E., along
line (->, by property of Fafael 6ingson% on the 6., along line >-?, by eycauayan
Fiver% on the 6,., along line ?-/, by Eot ? of plan 4su-(?(*2>% and on the G., along
line /-(, by property of ariano Tancinco :Eot (, 4su-(((*<<=. ... containing an area
of HILE TA086+G# H08F A8G#FE# HIHTX TAFEE :.,/.?= 6O8+FE ETEF6. ...
Eot ?-4su-(?(*2>
:aria -. Tancinco=
+ parcel of land :Eot ? as shown on plan 4su-(?(*2>=, situated in the +arrio of
8bihan, unicipality of eycauayan, 4rovince of !ulacan. !ounded on the GE.,
along line (->, by property of ariano Tancinco :Eot (, 4su-(((*<<=% and along line
>-?, by Eot > of plan 4su-(?(*2>% on the 6., along line ?-/, by eycauayan Fiver, on
the 6,., along line /-., by Eot ( of plan 4su-(?(*2>% and along line .-; by property
of ariano Tancinco :Eot >, 4su-(((*<<=, and on the G,., along line ;-(, by property
of 1oaquina 6antiago. ... containing an area of 0GE TA086+G# GIGE A8G#FE#
EIIATX HILE :(,2*.= 6O8+FE ETEF6. ...
0n +pril ., (2</, +ssistant 4rovincial Hiscal +mando -. Licente, in representation of
the !ureau of Eands 5led a written opposition to the application for registration.
0n arch ;, (2<., the private respondents 5led a partial withdrawal of the
application for registration with respect to Eot ? of 4lan 4su-(?(*2> in line with the
recommendation of the -ommissioner appointed by the -ourt.
0n arch <, (2<., Eot ? was ordered withdrawn from the application and trial
proceeded only with respect to Eots ( and > covered by 4lan 4su-(?(*2>.
0n 1une >;, (2<;, the lower court rendered a decision granting the application on
the 5nding that the lands in question are accretions to the private respondents9
5shponds covered by Transfer -erti5cate of Title Go. *2<)2. The dispositive portion
of the decision reads$ ?
,AEFEH0FE, it appearing that Eots ( D > of plan 4su-(?(*2> :E"h. A= are
accretions to the land covered by Transfer -erti5cate of Title Go. *2<)2 of the
Fegister of #eeds of !ulacan, they belong to the owner of said property. The -ourt,
therefore, orders the registration of lots ( D > situated in the barrio of 8bihan,
municipality of eycauayan, province of !ulacan, and more particularly described in
plan 4su-(?(*2> :E"h. A= and their accompanying technical descriptions :E"hs. E, E-
(= in favor of !en&amin Tancinco, married to +lma Hernande3 and residing at ?;;>
Aeatherdown, Toledo, 0hio /?;(/ 8.6.+.% +3ucena Tancinco Feyes, married to +le"
Feyes, 1r., residing at /th 6t., Gew anila, Oue3on -ity% arina Tancinco Imperial,
married to 1uan Imperial, residing at 4asay Foad, #asmari?as Lillage, akati, Fi3al%
and ario -. Tancinco, married to Eeticia Fegidor, residing at (;(; -ypress 6t.,
#asmari?as Lillage, akati, Fi3al, all of legal age, all Hilipino citi3ens.
0n 1uly ?), (2<;, the petitioner Fepublic appealed to the respondent -ourt of
+ppeals.
0n +ugust, (2, (2*>, the respondent -ourt rendered a decision a@rming in toto the
decision of the lower court. The dispositive portion of the decision reads$ ?
#+AIE #IT0, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang
kabuuan nang walang bayad.
The rule that the 5ndings of fact of the trial court and the -ourt of +ppeals are
binding upon this -ourt admits of certain e"ceptions. Thus in -arolina Industries Inc.
v. -6 6tock !rokerage, Inc. :2< 6-F+ <?/= we held that this -ourt retains the
power to review and rectify the 5ndings of fact of said courts when :(= the
conclusion is a 5nding grounded entirely on speculations, surmises and con&ectures%
:>= when the inference made is manifestly mistaken, absurd, and impossible% :?=
where there is grave abuse of discretion, :/= when the &udgment is based on a
misapprehension of facts% and :.= when the court, in making its 5ndings, went
beyond the issues of the case and the same are contrary to the admissions of both
appellant and appellee.
There are facts and circumstances in the record which render untenable the 5ndings
of the trial court and the -ourt of +ppeals that the lands in question are accretions
to the private respondents9 5shponds.
The petitioner submits that there is no accretion to speak of under +rticle /.< of the
Gew -ivil -ode because what actually happened is that the private respondents
simply transferred their dikes further down the river bed of the eycauayan Fiver,
and thus, if there is any accretion to speak of, it is man-made and arti5cial and not
the result of the gradual and imperceptible sedimentation by the waters of the river.
0n the other hand, the private respondents rely on the testimony of rs. Lirginia
+cu?a to the e7ect that$ ?
""" """ """
... when witness 5rst saw the land, namely, Eots ( D >, they were already dry almost
at the level of the 4ilapil of the property of #r. Tancinco, and that from the
boundaries of the lots, for about two :>= arms length the land was still dry up to the
edge of the river% that sometime in (2.(, a new 4ilapil was established on the
boundaries of Eots ( D > and soil from the old 4ilapil was transferred to the new
4ilapil and this was done sometime in (2.(% that the new lots were then converted
into 5shpond, and water in this 5shpond was two :>= meters deep on the side of the
4ilapil facing the 5shpond ... .
The private respondents submit that the foregoing evidence establishes the fact of
accretion without human intervention because the transfer of the dike occurred
after the accretion was complete.
,e agree with the petitioner.
+rticle /.< of the Gew -ivil -ode provides$ ?
To the owners of lands ad&oining the banks of rivers belong the accretion which they
gradually receive from the e7ects of the current of the waters.
The above-quoted article requires the concurrence of three requisites before an
accretion covered by this particular provision is said to have taken place. They are
:(= that the deposit be gradual and imperceptible% :>= that it be made through the
e7ects of the current of the water% and :?= that the land where accretion takes place
is ad&acent to the banks of rivers.
The requirement that the deposit should be due to the e7ect of the current of the
river is indispensable. This e"cludes from +rt. /.< of the Gew -ivil -ode all deposits
caused by human intervention. +lluvion must be the e"clusive 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 e7ects of the current of the eycauayan
and !ocaue rivers. ,e agree with the observation of the 6olicitor Ieneral that it is
preposterous to believe that almost four :/= hectares of land came into being
because of the e7ects of the eycauayan and !ocaue rivers. The lone witness of
the private respondents who happens to be their overseer and whose husband was
5rst cousin of their father noticed the four hectare accretion to the twelve hectare
5shpond only in (2?2. The respondents claim that at this point in time, accretion
had already taken place. If so, their witness was incompetent to testify to a gradual
and imperceptible increase to their land in the years before (2?2. Aowever, the
witness testi5ed that in that year, she observed an increase in the area of the
original 5shpond which is now the land in question. If she was telling the truth, the
accretion was sudden. Aowever, there is evidence that the alleged alluvial deposits
were arti5cial and man-made and not the e"clusive result of the current of the
eycauayan and !ocaue rivers. The alleged alluvial deposits came into being not
because of the sole e7ect 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 river9s
current on the 5shpond ad&oining it. It is under two meters of water. The private
respondents9 own evidence shows that the water in the 5shpond is two meters deep
on the side of the pilapil facing the 5shpond and only one meter deep on the side of
the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion
deposited by a river is to compensate him for the danger of loss that he su7ers
because of the location of his land. If estates bordering on rivers are e"posed to
Noods and other evils produced by the destructive force of the waters and if by
virtue of lawful provisions, said estates are sub&ect to incumbrances and various
kinds of easements, it is proper that the risk or danger which may pre&udice the
owners thereof should be compensated by the right of accretion. :-ortes v. -ity of
anila, () 4hil. .;<=. Aence, the riparian owner does not acquire the additions to
his land caused by special works e"pressly intended or designed to bring about
accretion. ,hen the private respondents transferred their dikes towards the river
bed, the dikes were meant for reclamation purposes and not to protect their
property from the destructive force of the waters of the river.
,e agree with the submission of the 6olicitor Ieneral that the testimony of the
private respondents9 lone witness to the e7ect that as early as (2?2 there already
e"isted such alleged alluvial deposits, deserves no merit. It should be noted that the
lots in question were not included in the survey of their ad&acent property
conducted on ay (), (2/) and in the -adastral 6urvey of the entire unicipality of
eycauayan conducted between the years (2.* to (2;). The alleged accretion was
declared for ta"ation purposes only in (2<> or ?? years after it had supposedly
permanently formed. The only valid conclusion therefore is that the said areas could
not have been there in (2?2. They e"isted only after the private respondents
transferred their dikes towards the bed of the eycauayan river in (2.(. ,hat
private respondents claim as accretion is really an encroachment of a portion of the
eycauayan river by reclamation.
The lower court cannot validly order the registration of Eots ( D > in the names of
the private respondents. These lots were portions of the bed of the eycauayan
river and are therefore classi5ed as property of the public domain under +rticle />)
paragraph ( and +rticle .)>, paragraph ( of the -ivil -ode of the 4hilippines. They
are not open to registration under the Eand Fegistration +ct. The ad&udication of the
lands in question as private property in the names of the private respondents is null
and void.
,AEFEH0FE, the instant petition is IF+GTE#. The decision appealed from is hereby
FELEF6E# and 6ET +6I#E. The private respondents are ordered to move back the
dikes of their 5shponds to their original location and return the disputed property to
the river to which it belongs.
60 0F#EFE#.
13.G.R. No. L-10652 6!ne .0, 1962
IGN$'IO GR$N&E, E, $L., petitioners,
vs.
(ON. 'O2R, O+ $**E$L), &OINGO '$L$L2NG, an# E),E"$N
'$L$L2NG, respondents.
+artolome Euirao and 0ntonio N. /rara !or petitioners.
Eon"ales and Dernande" !or respondents.
"$RRER$, J.:
This is an appeal taken by petitioners Ignacio, Eulogia, +lfonso, Eulalia, and 6o5a
Irande, from the decision of the -ourt of +ppeals :-+-I.F. Go. >.(;2-F= reversing
that of the -ourt of Hirst Instance of Isabela :-ivil -ase Go. ((<(=, and dismissing
petitioners9 action against respondents #omingo and Esteban -alalung, to quiet title
to and recover possession of a parcel of land allegedly occupied by the latter
without petitioners9 consent.
The facts of the case, which are undisputed, brieNy are$ 4etitioners are the owners
of a parcel of land, with an area of ?..)?> hectares, located at barrio Fagan,
municipality of agsaysay :formerly Tumauini=, province of Isabela, by inheritance
from their deceased mother 4atricia +ngui :who inherited it from her parents Isidro
+ngui and +na Eope3, in whose name said land appears registered, as shown by
0riginal -erti5cate of Title Go. >2*>, issued on 1une 2, (2?/=. 6aid property is
identi5ed as Eot Go. (, 4lan 468-*??/>. ,hen it was surveyed for purposes of
registration sometime in (2?), its northeastern boundary was the -agayan Fiver
:the same boundary stated in the title=. 6ince then, and for many years thereafter, a
gradual accretion on the northeastern side took place, by action of the current of
the -agayan Fiver, so much so, that by (2.*, the bank thereof had receded to a
distance of about (). meters from its original site, and an alluvial deposit of (2,2;/
square meters :(.22;/ hectares=, more or less, had been added to the registered
area :E"h. --(=.
0n 1anuary >., (2.*, petitioners instituted the present action in the -ourt of Hirst
Instance of Isabela against respondents, to quiet title to said portion :(2,2;/ square
meters= formed by accretion, alleging in their complaint :docketed as -ivil -ase Go.
((<(= that they and their predecessors-in-interest, were formerly in peaceful and
continuous possession thereof, until 6eptember, (2/*, when respondents entered
upon the land under claim of ownership. 4etitioners also asked for damages
corresponding to the value of the fruits of the land as well as attorney9s fees and
costs. In their answer :dated Hebruary (*, (2.*=, respondents claim ownership in
themselves, asserting that they have been in continuous, open, and undisturbed
possession of said portion, since prior to the year (2?? to the present.
+fter trial, the -ourt of Hirst Instance of Isabela, on ay /, (2.2, rendered a decision
ad&udging the ownership of the portion in question to petitioners, and ordering
respondents to vacate the premises and deliver possession thereof to petitioners,
and to pay to the latter 4>.).)) as damages and costs. 6aid decision, in part, reads$
It is admitted by the parties that the land involved in this action was formed
by the gradual deposit of alluvium brought about by the action of the
-agayan Fiver, a navigable river. ,e are inclined to believe that the accretion
was formed on the northeastern side of the land covered by 0riginal
-erti5cate of Title Go. >2*> after the survey of the registered land in (2?(,
because the surveyors found out that the northeastern boundary of the land
surveyed by them was the -agayan Fiver, and not the land in question.
,hich is indicative of the fact that the accretion has not yet started or begun
in (2?(. +nd, as declared by 4edro Eaman, defendant witness and the
boundary owner on the northwest of the registered land of the plainti7s, the
accretion was a little more than one hectare, including the stony portion, in
(2/) or (2/(. Therefore, the declarations of the defendant #omingo -alalung
and his witness, Licente -. !acani, to the e7ect that the land in question was
formed by accretion since (2?? do not only contradict the testimony of
defendants9 witness 4edro Eaman, but could not overthrow the incontestable
fact that the accretion with an area of / hectare more or less, was formed in
(2/*, reason for which, it was only declared in that same year for ta"ation
purposes by the defendants under Ta" #ec. Go. >.< :E"h. '>'= when they
entered upon the land. ,e could not give credence to defendants9 assertion
that Ta" #ec. Go. >.< :E"h. '>'= cancelled Ta" #ee. Go. >*>>; :E"h. '('=,
because E"h. '>' says that 'ta" under this declaration begins with the year
(2/*. !ut, the fact that defendants declared the land for ta"ation purposes
since (2/*, does not mean that they become the owner of the land by mere
occupancy, for it is a new provision of the Gew -ivil -ode that ownership of a
piece of land cannot be acquired by occupation :+rt. <(/, Gew -ivil -ode=.
The land in question being an accretion to the mother or registered land of
the plainti7s, the accretion belongs to the plainti7s :+rt. /.<, Gew -ivil -ode%
+rt. ?;;, 0ld -ivil -ode=. +ssuming arguendo, that the accretion has been
occupied by the defendants since (2/*, or earlier, is of no moment, because
the law does not require any act of possession on the part of the owner of the
riparian owner, from the moment the deposit becomes manifest :Fo"as v.
Tuason, 2 4hil. /)*% -orte3 v. -ity of anila, () 4hil. .;<=. Hurther, no act of
appropriation on the part of the reparian owner is necessary, in order to
acquire ownership of the alluvial formation, as the law does not require the
same :? anresa, -.-., pp. ?>(-?>;=.
This brings us now to the determination of whether the defendants, granting
that they have been in possession of the alluvium since (2/*, could have
acquired the property by prescription. +ssuming that they occupied the land
in 6eptember, (2/*, but considering that the action was commenced on
1anuary >., (2.*, they have not been in possession of the land for ten :()=
years% hence, they could not have acquired the land by ordinary prescription
:+rts. ((?/ and ((?*, Gew -ivil -ode=. oreover, as the alluvium is, by law,
part and parcel of the registered property, the same may be considered as
registered property, within the meaning of 6ection /; of +ct Go. /2;$ and,
therefore, it could not be acquired by prescription or adverse possession by
another person.
8nsatis5ed, respondents appealed to the -ourt of +ppeals, which rendered, on
6eptember (/, (2;), the decision adverted to at the beginning of this opinion,
partly stating$
That the area in controversy has been formed through a gradual process of
alluvium, which started in the early thirties, is a fact conclusively established
by the evidence for both parties. !y law, therefore, unless some superior title
has supervened, it should properly belong to the riparian owners, speci5cally
in accordance with the rule of natural accession in +rticle ?;; of the old -ivil
-ode :now +rticle /.<=, which provides that 'to the owner of lands ad&oining
the banks of rivers, belongs the accretion which they gradually receive from
the e7ects of the current of the waters.' The defendants, however, contend
that they have acquired ownership through prescription. This contention
poses the real issue in this case. The -ourta uo, has resolved it in favor of
the plainti7s, on two grounds$ Hirst, 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 6ection /;
of +ct Go. /2;, which states that 'no title to registered land in derogation to
that of the registered owner shall be acquired by prescription or adverse
possession'% and, second, the adverse possession of the defendant began
only in the month of 6eptember, (2/*, or less than the ()-year period
required for prescription before the present action was instituted.
+s a legal proposition, the 5rst ground relied upon by the trial court, is not
quite correct. +n accretion to registered land, while declared by speci5c
provision of the -ivil -ode to belong to the owner of the land as a natural
accession thereof, does not ipso $ure become entitled to the protection of the
rule of imprescriptibility of title established by the Eand Fegistration +ct. 6uch
protection does not e"tend beyond the area given and described in the
certi5cate. To hold otherwise, would be productive of confusion. It would
virtually deprive the title, and the technical description of the land given
therein, of their character of conclusiveness as to the identity and area of the
land that is registered. 1ust as the 6upreme -ourt, albeit in a negative
manner, has stated that registration does not protect the riparian owner
against the erosion of the area of his land through gradual changes in the
course of the ad&oining stream :4ayatas Estate #evelopment -o. v. Tuason, .?
4hil. ..=, so registration does not entitle him to all the rights conferred by
Eand Fegistration +ct, in so far as the area added by accretion is concerned.
,hat rights he has, are declared not by said +ct, but by the provisions of the
-ivil -ode on accession$ and these provisions do not preclude acquisition of
the addition area by another person through prescription. This -ourt has held
as much in the case of Ealinde", et al. v. +aguisa, et al., -+-I.F. Go. (2>/2-F,
1uly (<, (2.2.
,e now proposed to review the second ground relied upon by the trial court,
regarding the length of time that the defendants have been in possession.
#omingo -alalung testi5ed that he occupied the land in question for the 5rst
time in (2?/, not in (2/* as claimed by the plainti7s. The area under
occupancy gradually increased as the years went by. In (2/;, he declared the
land for purposes of ta"ation :E"hibit (=. This ta" declaration was superseded
in (2/* by another :E"hibit >=, after the name of the municipality wherein it is
located was changed from Tumauini to agsaysay. -alalung9s testimony is
corroborated by two witnesses, both owners of properties nearby. 4edro
Eaman, <> years of age, who was unicipal president of Tumauini for three
terms, said that the land in question ad&oins his own on the south, and that
since (2/) or (2.(, he has always known it to be in the peaceful possession
of the defendants. Licente -. !acani testi5ed to the same e7ect, although, he
said that the defendants9 possession started sometime in (2?? or (2?/. The
area thereof, he said, was then less than one hectare.
,e 5nd the testimony of the said witnesses entitled to much greater weight
and credence than that of the plainti7 4edro Irande and his lone witness,
Eaureana Fodrigue3. The 5rst stated that the defendants occupied the land in
question only in (2/*% that he called the latter9s attention to the fact that the
land was his, but the defendants, in turn, claimed that they were the owners,
that the plainti7s did not 5le an action until (2.*, because it was only then
that they were able to obtain the certi5cate of title from the surveyor,
#omingo 4arlan% and that they never declared the land in question for
ta"ation purposes or paid the ta"es thereon. 4edro Irande admitted that the
defendants had the said land surveyed in +pril, (2.*, and that he tried to
stop it, not because he claimed the accretion for himself and his co-plainti7s,
but because the survey included a portion of the property covered by their
title. This last fact is conceded by the defendants who, accordingly,
relinquished their possession to the part thus included, containing an area of
some /.* square meters.1,wph-1.'.t
The oral evidence for the defendants concerning the period of their
possession C from (2?? to (2.* C is not only preponderant in itself, but is,
moreover, supported by the fact that it is they and not the plainti7s who
declared the disputed property for ta"ation, and by the additional
circumstance that if the plainti7 had really been in prior possession and were
deprived thereof in (2/*, they would have immediately taken steps to
recover the same. The e"cuse they gave for not doing so, namely, that they
did not receive their copy of the certi5cate of title to their property until (2.*
for lack of funds to pay the fees of the surveyor #omingo 4arlan, is too Nimsy
to merit any serious consideration. The payment of the surveyor9s fees had
nothing to do with their right to obtain a copy of the certi5cate. !esides, it
was not necessary for them to have it in their hands, in order to 5le an action
to recover the land which was legally theirs by accession and of which, as
they allege, they had been illegally deprived by the defendants. ,e are
convinced, upon consideration of the evidence, that the latter, were really in
possession since (2?/, immediately after the process of alluvion started, and
that the plainti7s woke up to their rights only when they received their copy
of the title in (2.*. !y then, however, prescription had already supervened in
favor of the defendants.
It is this decision of the -ourt of +ppeals which petitioners seek to be reviewed by
us.
The sole issue for resolution in this case is whether respondents have acquired the
alluvial property in question through prescription.
There can be no dispute that both under +rticle /.< of the Gew -ivil -ode and
+rticle ?;; of the old, petitioners are the lawful owners of said alluvial property, as
they are the registered owners of the land which it ad&oins. The question is whether
the accretion becomes automatically registered land &ust because the lot which
receives it is covered by a Torrens title thereby making the alluvial property
imprescriptible. ,e agree with the -ourt of +ppeals that it does not, &ust as an
unregistered land purchased by the registered owner of the ad&oining land does not,
by e"tension, become ipso !acto registered land. 0wnership of a piece of land is one
thing, and registration under the Torrens system of that ownership is quite another.
0wnership over the accretion received by the land ad&oining a river is governed by
the -ivil -ode. Imprescriptibility of registered land is provided in the registration
law. Fegistration under the Eand Fegistration and -adastral +cts does not vest or
give title to the land, but merely con5rms and thereafter protects the title already
possessed by the owner, making it imprescriptible by occupation of third parties.
!ut to obtain this protection, the land must be placed under the operation of the
registration laws wherein certain &udicial procedures have been provided. The fact
remain, however, that petitioners never sought registration of said alluvial property
:which was formed sometime after petitioners9 property covered by 0riginal
-erti5cate of Title Go. >2*> was registered on 1une 2, (2?/= up to the time they
instituted the present action in the -ourt of Hirst Instance of Isabela in (2.*. The
increment, therefore, never became registered property, and hence is not entitled
or sub&ect to the protection of imprescriptibility en&oyed by registered property
under the Torrens system. -onsequently, it was sub&ect to acquisition through
prescription by third persons.
The ne"t issue is, did respondents acquire said alluvial property through acquisitive
prescription? This is a question which requires determination of facts$ physical
possession and dates or duration of such possession. The -ourt of +ppeals, after
analy3ing the evidence, found that respondents-appellees were in possession of the
alluvial lot since (2?? or (2?/, openly, continuously and adversely, under a claim of
ownership up to the 5ling of the action in (2.*. This 5nding of the e"istence of
these facts, arrived at by the -ourt of +ppeals after an e"amination of the evidence
presented by the parties, is conclusive as to them and can not be reviewed by us.
The law on prescription applicable to the case is that provided in +ct (2) and not
the provisions of the -ivil -ode, since the possession started in (2?? or (2?/ when
the pertinent articles of the old -ivil -ode were not in force and before the
e7ectivity of the new -ivil -ode in (2.). Aence, the conclusion of the -ourt of
+ppeals that the respondents acquired alluvial lot in question by acquisitive
prescription is in accordance with law.
The decision of the -ourt of +ppeals under review is hereby a@rmed, with costs
against the petitioners. 6o ordered.
15.G.R. No. 109065 6!l> 6, 199.
)*O2)E) +ELI= "$E) $N& R$+$EL$ "$E), petitioners,
vs.
,(E 'O2R, O+ $**E$L) $N& RE*2"LI' O+ ,(E *(ILI**INE), respondents.
'R2-, J.:
This is an appeal by way of certiorari from the decision of the respondent -ourt of
+ppeals which a@rmed in totothe ruling of the trial court in -ivil -ase Go. )/;)-4,
the dispositive portion of which read thus$
,AEFEH0FE, &udgment is hereby rendered declaring null and void T-T
Gos. (//)., >2.2>, >2.2?, >2.2/, >2.2., and T-T Go. >2.2?9s
derivative titles T-T Gos. (>/<>., (>/<>;, (>/<>< and (>/<>2, and
ordering the Fegister of #eeds for 4asay -ity to cancel them and issue
new ones in their stead in the name of the plainti7 after segregating
from T-T Go. >2.2? /.> sq. m., the actual area of Eot >2.*-- :covered
by cancelled T-T Go. (()/?= belonging to defendant Heli" !aes. The
counterclaim is hereby dismissed.
Eet a copy of this #ecision be furnished the Fegister of #eeds for 4asay
-ity.
60 0F#EFE#.
The controversy began in (2;>, when the government dug a canal on a private
parcel of land, identi5ed as Eot >2.* and covering an area of 4??,2)> sq.m., to
streamline the Tripa de Iallina creek.
This lot was later acquired by Heli" !aes, who registered it in his name under T-T
Go. ()22) and then had it subdivided into three lots, namely$ :a= Eot >2.*-+, with
an area of >*,**2 sq.m.% :b= Eot >2.*-!, with an area of ?,.** sq.m.% and :c= Eot
>2.*--, with an area of /.> sq.m., covered by T-T Gos. (()/(, (()/> and (()/?,
respectively.
In e"change for Eot >2.*-!, which was totally occupied by the canal, the
government gave !aes a lot with e"actly the same area as Eot >2.*-! through a
#eed of E"change of Feal 4roperty dated 1une >), (2<).
1
The property, which was
near but not contiguous to Eot >2.;--, was denominated as Eot ?><(-+ and later
registered in the name of Heli" !aes under T-T Go. >/?)). The soil displaced by the
canal was used to 5ll up the old bed of the creek.
eanwhile, !aes had Eot >2.*-- and a portion of Eot >2.*-+ designated as Eot (,
!lk., /, resurveyed and subdivided. 0n 1anuary (>, (2;*, he submitted a petition for
the approval of his resurvey and subdivision plans, claiming that after the said lots
were plotted by a competent surveyor, it was found that there were errors in
respect of their bearings and distances.
The resurvey-subdivision plan was approved by the -ourt of Hirst Instance of 4asay
-ity in an order dated 1anuary (., (2;*.
2
+s a result, the old T-Ts covering the said lots were canceled and new ones were
issued, to wit$ :a= Eot (-+, !lk. /, with ;<> sq.m., under T-T Go.
T-(//)/% :b= Eot (-!, with *>; sq.m., representing the increase in area after the
resurvey, under T-T Go. T-(//).% :c= Eot >2.*---(, with /.> sq.m., under T-T Go. T-
(//);% and :d= Eot >2.*--->, with >,<<) sq.m. representing the increase after
resurvey, under T-T Go. T-(//)<.
Eots >2.*---( and >2.*---> were later consolidated and this time further
subdivided into four :/= lots, namely, Eot (, with an area of (/< sq.m.% Eot >, with an
area of 2.) sq.m.% Eot ?, with an area of >.< sq.m.% and Eot /, with an area of (,*;*
sq.m., which were respectively issued T-T Gos. >2.2>, >2.2?, >2.2/, and >2.2..
In (2<*, the Fepublic of the 4hilippines discovered that Eot (-! :with T-T Go. (//).
and an area of *>; sq.m.=, on which the petitioners had erected an apartment
building, covered Eot ?;(( of the 4asay -adastre, which is a 5lled-up portion of the
Tripa de Iallina creek. oreover, Eot >2.*-- :covered by T-T Gos. >2.2> to >2.2.,
with an increased area of >,<<) after resurvey and subdivision= had been unlawfully
enlarged.
0n Govember (<, (2*>, it 5led a petition for cancellation of T-T Gos. (//). and
>2.2> to >2.2..
.
!aes did not ob&ect in his answer to the cancellation of T-T Gos. >2.2>, >2.2/ and
>2.2. and was notable to prove during the trial that the government utili3ed a
portion of Eot > under, T-T Go. >2.2?. The trial court therefore decreed :correctly=
that the original Eot >2.*-- :with an area of /.> sq.m.= be reverted to its status
before the resurvey-subdivision of Eot >2.*--.
The only remaining dispute relates to Eot (-! :T-T Go. (//).=, which the
petitioners, relying on +rticle /;( of the -ivil -ode, are claiming as their own. The
government re&ects this claim and avers that the petitioners had already been fully
compensated for it on 1une >), (2<) when they agreed to e"change their Eot >2.*-
! with Eot ?><(-+ belonging to the government.
+rticle /;( of the -ivil -ode states$
Fiver beds which are abandoned through the natural change in the
course of the waters ipso !actobelong to the owners whose lands are
occupied by the new course in proportion to the area lost. Aowever,
the owners of the land ad&oining the old bed shall have the right to
acquire the same by paying the value thereof, which value shall not
e"ceed the value of the area occupied by the new bed. :Emphasis
supplied=
+ portion of the Tripa de Iallina creek was diverted to a man-made canal which
totally occupied Eot >2.*-! :with an area of ?,.** sq.m.= belonging to Heli" !aes.
Thus, the petitioners claim that they became the owners of the old bed :which was
eventually 5lled up by soil e"cavated from Eot >2.*-!= by virtue of +rticle /;(.
The petitioners rely heavily on #r. +rturo . Tolentino9s interpretation of this +rticle,
to wit$
This article :/;(= refers to a natural change in the course of a stream.
If the change of the course is due to works constructed by
concessioners authori3ed by the government, the concession may
grant the abandoned river bed to the concessioners. If there is no such
grant, then, by analogy, the abandoned river bed will belong to the
owners of the land covered by the waters, as provided in this article,
without pre&udice to a superior right of third persons with su@cient
title. :%iting ? anresa >.(->.>% > Gavarro +mandi, ())-()(% ?
6anche3 Foman (/*=
,e agree.
If the riparian owner is entitled to compensation for the damage to or loss of his
property due to natural causes, there is all the more reason to compensate him
when the change in the course of the river is e7ected through arti5cial means. The
loss to the petitioners of the land covered by the canal was the result of a deliberate
act on the part of the government when it sought to improve the Now of the Tripa de
Iallina creek. It was therefore obligated to compensate the !aeses for their loss.
,e 5nd, however, that the petitioners have already been so compensated. Heli"
!aes was given Eot ?><(-+ in e"change for the a7ected Eot >2.*-! through the
#eed of E"change of Feal 4roperty dated 1une >), (2<). This was a fair e"change
because the two lots were of the same area and value and the agreement was
freely entered into by the parties. The petitioners cannot now claim additional
compensation because, as correctly observed by the 6olicitor Ieneral,
. . . to allow petitioners to acquire ownership of the dried-up portion of
the creek would be a clear case of double compensation and un&ust
enrichment at the e"pense of the state.
The e"change of lots between the petitioners and the Fepublic was the result of
voluntary negotiations. If these had failed, the government could still have taken Eot
>2.*-! under the power of eminent domain, upon payment of &ust compensation, as
the land was needed for a public purpose.
,AEFEH0FE, the petition is #EGIE#, with costs against the petitioners. It is so
ordered.
16.G.R. No. 92161 arch 19, 1991
)I*LI'IO "IN$L$%, *ON'I$NO G$NN$"$N, NI'$NOR $'2,$%, &OINGO
RO)$LE), GREGORIO $RGON-$, E2),$:2IO "$2$, +LOREN,INO RO)$LE),
,EO&ORO $""OR$NG, *$,RI'IO $""OR$NG an# +2LGEN'IO
OR$, petitioners
vs.
G2ILLERO $N$LO an# 'O2R, O+ $**E$L), respondents.
+ELI'I$NO, J.:p
The late 1udge Taccad originally owned a parcel of land situated in Tumauini, Isabela
having an estimated area of twenty :>)= hectares. The western portion of this land
bordering on the -agayan Fiver has an elevation lower than that of the eastern
portion which borders on the national road. Through the years, the western portion
would periodically go under the waters of the -agayan Fiver as those waters
swelled with the coming of the rains. The submerged portion, however, would re-
appear during the dry season from 1anuary to +ugust. It would remain under water
for the rest of the year, that is, from 6eptember to #ecember during the rainy
season.
The ownership of the landholding eventually moved from one person to another. 0n
2 ay (2.2, respondent Iuillermo analo acquired *.;. hectares thereof from
Haustina Taccad, daughter of 1udge 1uan Taccad. The land sold was described in the
#eed of +bsolute 6ale
1
as follows$
. . . a parcel of agricultural land in !alug, Tumauini, Isabela, containing
an area of *.;.)) hectares, more or less% bounded on the Gorth by
Hrancisco Horto on the East by Gational Foad% on 6outh by 1ulian
Tumolva and on the ,est by -agayan Fiver% declared for ta"ation
under Ta" #eclaration Go. (>;*( in the name of Haustina Taccad, and
assessed at 4 <.).)). . . .
Eater in (2;/, respondent analo purchased another (.*) hectares from Iregorio
Taguba who had earlier acquired the same from 1udge 1uan Taccad. The second
purchase brought the total acquisition of respondent analo to ()./. hectares. The
second piece of property was more particularly described as follows$
. . . a piece of agricultural land consisting of tobacco land, and
containing an area of (*,))) square meters, more or less, bounded on
the Gorth by !alug -reek% on the 6outh, by Haustina Taccad :now
Iuillermo F. analo=% on the East, by a 4rovincial Foad% and on the
,est, by -agayan Fiver assessed at 4 //).)), as ta" #eclaration Go.
?(.>. . . .
2
#uring the cadastral survey conducted at !alug, Tumauini, Isabela on >( 0ctober
(2;2, the two :>= parcels of land belonging to respondent analo were surveyed
and consolidated into one lot, designated as Eot Go. ?)<, 4ls-2;/. Eot ?)< which
contains /.;/*2 hectares includes$ :a= the whole of the (.*) hectares acquired from
Iregorio Taguba% and :b= >.*/*2 hectares out of the *.;. hectares purchased from
Haustina Taccad. +s the survey was conducted on a rainy month, a portion of the
land bought from Haustina Taccad then under water was left unsurveyed and was
not included in Eot ?)<.
The 6ketch 4lan
.
submitted during the trial of this case and which was identi5ed by
respondent analo shows that the -agayan Fiver running from south to north, forks
at a certain point to form two :>= branchesCthe western and the eastern branchesC
and then unites at the other end, further north, to form a narrow strip of land. The
eastern branch of the river cuts through the land of respondent analo and is
inundated with water only during the rainy season. The bed of the eastern branch is
the submerged or the unsurveyed portion of the land belonging to respondent
analo. Hor about eight :*= months of the year when the level of water at the point
where the -agayan Fiver forks is at its ordinary depth, river water does not Now into
the eastern branch. ,hile this condition persists, the eastern bed is dry and is
susceptible to cultivation.
-onsidering that water Nowed through the eastern branch of the -agayan Fiver
when the cadastral survey was conducted, the elongated strip of land formed by the
western and the eastern branches of the -agayan Fiver looked very much like an
island. This strip of land was surveyed on (> #ecember (2;2.
3
It was found to have
a total area of >>.<>)2 hectares and was designated as Eot *>( and Eot *>>. The
area of Eot *>> is ().*(>> hectares while Eot *>( has an area of ((.2)*< hectares.
Eot *>( is located directly opposite Eot ?)< and is separated from the latter only by
the eastern branch of the -agayan Fiver during the rainy season and, during the
dry season, by the e"posed, dry river bed, being a portion of the land bought from
Haustina Taccad. Fespondent analo claims that Eot *>( also belongs to him by way
of accretion to the submerged portion of the property to which it is ad&acent.
4etitioners who are in possession of Eot *>(, upon the other hand, insist that they
own Eot *>(. They occupy the outer edges of Eot *>( along the river banks, i.e., the
fertile portions on which they plant tobacco and other agricultural products. They
also cultivate the western strip of the unsurveyed portion during summer.
5
This
situation compelled respondent analo to 5le a case for forcible entry against
petitioners on >) ay (2;2. The case was dismissed by the unicipal -ourt of
Tumauini, Isabela for failure of both parties to appear. 0n (. #ecember (2<>,
respondent analo again 5led a case for forcible entry against petitioners. The
latter case was similarly dismissed for lack of &urisdiction by the unicipal -ourt of
Tumauini, Isabela.
0n >/ 1uly (2</, respondent analo 5led a complaints
6
before the then -ourt of
Hirst Instance of Isabela, !ranch ? for quieting of title, possession and damages
against petitioners. Ae alleged ownership of the two :>= parcels of land he bought
separately from Haustina Taccad and Iregorio Taguba for which reason he prayed
that &udgment be entered ordering petitioners to vacate the western strip of the
unsurveyed portion. Fespondent analo likewise prayed that &udgment be entered
declaring him as owner of Eot *>( on which he had laid his claim during the survey.
4etitioners 5led their answer denying the material allegations of the complaint. The
case was then set for trial for failure of the parties to reach an amicable agreement
or to enter into a stipulation of facts.
0
0n () Govember (2*>, the trial court
rendered a decision with the following dispositive portion$
,AEFEH0FE, in the light of the foregoing premises, the -ourt renders
&udgment against the defendants and in favor of the plainti7 and
orders$
(. That plainti7, Iuillermo analo, is declared the lawful owner of the
land in question, Eot Go. *>(, 4ls-2;/ of Tumauini -adastre, and which
is more particularly described in paragraph >-b of the -omplaint%
>. That the defendants are hereby ordered to vacate the premises of
the land in question, Eot Go. *>(, 4ls-2;/ of Tumauini -adastre, and
which is more particularly described in paragraph >-b of the -omplaint%
?. That the defendants are being restrained from entering the premises
of the land in question, Eot Go. *>(, 4ls-2;/ of Tumauini -adastre, and
which is more particularly described in paragraph >-b of the -omplaint%
and
/. That there is no pronouncement as to attorney9s fees and costs.
60 0F#EFE#.
9
4etitioners appealed to the -ourt of +ppeals which, however, a@rmed the decision
of the trial court. They 5led a motion for reconsideration, without success.
,hile petitioners insist that Eot *>( is part of an island surrounded by the two :>=
branches of the -agayan Fiver, the -ourt of +ppeals found otherwise. The -ourt of
+ppeals concurred with the 5nding of the trial court that Eot *>( cannot be
considered separate and distinct from Eot ?)< since the eastern branch of the
-agayan Fiver substantially dries up for the most part of the year such that when
this happens, Eot *>( becomes physically :i.e., by land= connected with the dried up
bed owned by respondent analo. !oth courts below in e7ect re&ected the assertion
of petitioners that the depression on the earth9s surface which separates Eot ?)<
and Eot *>( is, during part of the year, the bed of the eastern branch of the
-agayan Fiver.
It is a familiar rule that the 5ndings of facts of the trial court are entitled to great
respect, and that they carry even more weight when a@rmed by the -ourt of
+ppeals.
9
This is in recognition of the peculiar advantage on the part of the trial
court of being able to observe 5rst-hand the deportment of the witnesses while
testifying. 1urisprudence is likewise settled that the -ourt of +ppeals is the 5nal
arbiter of questions of fact.
10
!ut whether a conclusion drawn from such 5ndings of
facts is correct, is a question of law cogni3able by this -ourt.
11
In the instant case, the conclusion reached by both courts below apparently collides
with their 5ndings that periodically at the onset of and during the rainy season, river
water Nows through the eastern bed of the -agayan Fiver. The trial court held$
The -ourt believes that the land in controversy is of the nature and
character of alluvion :+ccretion=, for it appears that during the dry
season, the body of water separating the same land in controversy :Eot
Go. *>(, 4ls-2;/= and the two :>= parcels of land which the plainti7
purchased from Iregorio Taguba and 1ustina Taccad -ayaba becomes a
marshy land and is only si" :;= inches deep and twelve :(>= meters in
width at its widest in the northern tip :E"hs. ',', ',-l', ',->', ',-?'
and ',-/'=, It has been held by our 6upreme -ourt that 'the owner of
the riparian land which receives the gradual deposits of alluvion, does
not have to make an e"press act of possession. The law does not
require it, and the deposit created by the current of the water becomes
manifest' :Fo"as vs. Tua3on, ; 4hil. /)*=.
12
The -ourt of +ppeals adhered substantially to the conclusion reached by the trial
court, thus$
+s found by the trial court, the disputed property is not an island in the
strict sense of the word since the eastern portion of the said property
claimed by appellants to be part of the -agayan Fiver dries up during
summer. +dmittedly, it is the action of the heavy rains which comes
during rainy season especially from 6eptember to Govember which
increases the water level of the -agayan river. +s the river becomes
swollen due to heavy rains, the lower portion of the said strip of land
located at its southernmost point would be inundated with water. This
is where the water of the -agayan river gains its entry. -onsequently, if
the water level is high the whole strip of land would be under water.
In Eovernment o! the Philippine Islands vs. %olegio de San Rose, it was held that C
+ccording to the foregoing de5nition of the words
'ordinary' and 'e"tra-ordinary,' the highest depth of the
waters of Eaguna de !ay during the dry season is the
ordinary one, and the highest depth they attain during the
e"tra-ordinary one :sic=% inasmuch as the former is the
one which is regular, common, natural, which occurs
always or most of the time during the year, while the
latter is uncommon, transcends the general rule, order
and measure, and goes beyond that which is the ordinary
depth. If according to the de5nition given by +rticle </ of
the Eaw of ,aters quoted above, the natural bed or basin
of the lakes is the ground covered by their waters when at
their highest ordinary depth, the natural bed or basin of
Eaguna de !ay is the ground covered by its waters when
at their highest depth during the dry season, that is up to
the northeastern boundary of the two parcels of land in
question.
,e 5nd the foregoing ruling to be analogous to the case at bar. The
highest ordinary level of the waters of the -agayan Fiver is that
attained during the dry season which is con5ned only on the west side
of Eot J*>(K and Eot J*>>K. This is the natural -agayan river itself. The
small residual of water between Eot J*>(K and ?)< is part of the small
stream already in e"istence when the whole of the late 1udge 1uan
Taccad9s property was still susceptible to cultivation and uneroded.
1.
The -ourt is unable to agree with the -ourt of +ppeals that Eovernment o! the
Philippine Islands vs. %olegio de San Rose
13
is applicable to the present case. That
case involved Eaguna de !ay% since Eaguna de !ay is a lake, the -ourt applied the
legal provisions governing the ownership and use of lakes and their beds and
shores, in order to determine the character and ownership of the disputed property.
6peci5cally, the -ourt applied the de5nition of the natural bed or basin of lakes
found in +rticle </ of the Eaw of ,aters of ? +ugust (*;;. 8pon the other hand,
what is involved in the instant case is the eastern bed of the -agayan Fiver.
,e believe and so hold that +rticle <) of the Eaw of ,aters of ? +ugust (*;; is the
law applicable to the case at bar$
+rt. <). The natural bed or channel of a creek or river is the ground
covered by its waters during the highest Soods. :Emphasis supplied=
,e note that +rticle <) de5nes the natural bed or channel of a creek or river
as the ground covered by its waters during the highest Noods. The highest
Noods in the eastern branch of the -agayan Fiver occur with the annual
coming of the rains as the river waters in their onward course cover the
entire depressed portion. Though the eastern bed substantially dries up for
the most part of the year :i.e., from 1anuary to +ugust=, we cannot ignore the
periodical swelling of the waters : i.e., from 6eptember to #ecember= causing
the eastern bed to be covered with Nowing river waters.
The conclusion of this -ourt that the depressed portion is a river bed rests upon
evidence of record. Hirstly, respondent analo admitted in open court that the
entire area he bought from Iregorio Taguba was included in Eot ?)<.
15
If the (.*)
hectares purchased from Iregorio Taguba was included in Eot ?)<, then the
-agayan Fiver referred to as the western boundary in the #eed of 6ale transferring
the land from Iregorio Taguba to respondent analo as well as the #eed of 6ale
signed by Haustina Taccad, must refer to the dried up bed :during the dry months=
or the eastern branch of the river :during the rainy months=. In the 6ketch 4lan
attached to the records of the case, Eot ?)< is separated from the western branch of
the -agayan Fiver by a large tract of land which includes not only Eot *>( but also
what this -ourt characteri3es as the eastern branch of the -agayan Fiver.
6econdly, the pictures identi5ed by respondent analo during his direct
e"amination depict the depressed portion as a river bed. The pictures, marked as
E"hibits ',' to ',-/', were taken in 1uly (2<? or at a time when the eastern bed
becomes visible.
16
Thus, E"hibit ',->' which according to respondent analo was
taken facing the east and E"hibit ',-?' which was taken facing the west both show
that the visible, dried up portion has a markedly lower elevation than Eot ?)< and
Eot *>(. It has dike-like slopes on both sides connecting it to Eot ?)< and Eot *>(
that are vertical upward and very prominent. This topographic feature is compatible
with the fact that a huge volume of water passes through the eastern bed regularly
during the rainy season. In addition, petitioner 4onciano Iannaban testi5ed that one
had to go down what he called a 'cli7' from the surveyed portion of the land of
respondent analo to the depressed portion. The cli7, as related by petitioner
Iannaban, has a height of eight :*= meters.
10
The records do not show when the -agayan Fiver began to carve its eastern
channel on the surface of the earth. Aowever, E"hibit 'E'
19
for the prosecution
which was the #eclaration of Feal 4roperty standing in the name of Haustina Taccad
indicates that the eastern bed already e"isted even before the sale to respondent
analo. The words 'old bed' enclosed in parenthesesCperhaps written to make
legitimate the claim of private ownership over the submerged portionCis an implied
admission of the e"istence of the river bed. In the #eclaration of Feal 4roperty
made by respondent analo, the depressed portion assumed the name Fio uerte
de -agayan. Indeed, the steep dike-like slopes on either side of the eastern bed
could have been formed only after a prolonged period of time.
Gow, then, pursuant to +rticle />) of the -ivil -ode, respondent analo did not
acquire private ownership of the bed of the eastern branch of the river even if it was
included in the deeds of absolute sale e"ecuted by Iregorio Taguba and Haustina
Taccad in his favor. These vendors could not have validly sold land that constituted
property of public dominion. +rticle />) of the -ivil -ode states$
The following things are property of public dominion$
:(= Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the
6tate, banPs, shores, roadsteads, and others of similar character%
:>= Those which belong to the 6tate, without being for public use, and
are intended for some public service or for the development of the
national wealth. :Emphasis supplied=
+lthough +rticle />) speaks only of rivers and banks, 'rivers' is a composite term
which includes$ :(= the running waters, :>= the bed, and :?= the banks.
19
anresa,
in commenting upon +rticle ??2 of the 6panish -ivil -ode of (**2 from which +rticle
/>) of the 4hilippine -ivil -ode was taken, stressed the public ownership of river
beds$
Ea naturale3a especial de los rios, en punto a su disfrute general, hace
que sea necesario considerar en su relacion de dominio algo mas que
sus aguas corrientes. En efecto en todo rio es preciso distinguir (. esta
agua corriente% >. el alveo o cauce, y ?. las riberas. +hora bien$ son
estas dos ultimas cosas siempre de dominio publico, como las aguas?
2ealmente no puede imaginarse un rio sin alveo y sin riberaC de suerte
que al decir el %odigo civil ue los rios son de dominio publico, parece
ue debe ir implicito el dominio publico de auellos tres elementos
ue integran el rio. 4or otra parte, en cuanto a los alveos o cauces
tenemos la declaracion del art. G#T, num 1, donde dice$ son de
dominion publico . . . los rios y sus cauces naturales% declaracion que
concuerda con lo que dispone el art. @G de la ley de U0guasV, segun el
cual, son de dominion publico: (. los alveos o cauces de los
arroyos que no se hallen comprendidos en el art. ??, y >. los alveos o
cauces naturales de los rios en la e"tension que cubran sus aguas en
las mayores crecidas ordinarias.
20
:Emphasis supplied=
The claim of ownership of respondent analo over the submerged portion is bereft
of basis even if it were alleged and proved that the -agayan Fiver 5rst began to
encroach on his property after the purchase from Iregorio Taguba and Haustina
Taccad. +rticle /;> of the -ivil -ode would then apply divesting, by operation of law,
respondent analo of private ownership over the new river bed. The intrusion of the
eastern branch of the -agayan Fiver into his landholding obviously pre&udiced
respondent analo but this is a common occurrence since estates bordering on
rivers are e"posed to Noods and other evils produced by the destructive force of the
waters. That loss is compensated by, inter alia, the right of accretion acknowledged
by +rticle /.< of the -ivil -ode.
21
It so happened that instead of increasing the si3e
of Eot ?)<, the eastern branch of the -agayan Fiver had carved a channel on it.
,e turn ne"t to the issue of accretion. +fter e"amining the records of the case, the
-ourt considers that there was no evidence to prove that Eot *>( is an increment to
Eot ?)< and the bed of the eastern branch of the river. +ccretion as a mode of
acquiring property under +rticle /.< of the -ivil -ode requires the concurrence of
three :?= requisites$ :a= that the deposition of soil or sediment be gradual and
imperceptible% :b= that it be the result of the action of the waters of the river :or
sea=% and :c= that the land where accretion takes place is ad&acent to the banks of
rivers :or the sea coast=.
22
The -ourt notes that the parcels of land bought by
respondent analo border on the eastern branch of the -agayan Fiver. +ny
accretion formed by this eastern branch which respondent analo may claim must
be deposited on or attached to Eot ?)<. +s it is, the claimed accretion :Eot *>(= lies
on the bank of the river not ad$acent to Mot @#T but directly opposite Mot @#T across
the river.
+ssuming :arguendo only= that the -agayan Fiver referred to in the #eeds of 6ale
transferring ownership of the land to respondent analo is the western branch, the
decision of the -ourt of +ppeals and of the trial court are bare of factual 5ndings to
the e7ect that the land purchased by respondent analo received alluvium from the
action of the aver in a slow and gradual manner. 0n the contrary, the decision of the
lower court made mention of several Noods that caused the land to reappear
making it susceptible to cultivation. + sudden and forceful action like that of
Nooding is hardly the alluvial process contemplated under +rticle /.< of the -ivil
-ode. It is the slow and hardly perceptible accumulation of soil deposits that the law
grants to the riparian owner.
!esides, it is important to note that Eot *>( has an area of ((.2( hectares. Eot *>(
is the northern portion of the strip of land having a total area of >>.<> hectares. ,e
5nd it di@cult to suppose that such a si3able area as Eot *>( resulted from slow
accretion to another lot of almost equal si3e. The total landholding purchased by
respondent analo is ()./. hectares :*.;. hectares from Haustina Taccad and (.*)
hectares from Iregorio Taguba in (2.2 and (2;/, respectively=, in fact even smaller
than Eot *>( which he claims by way of accretion. The cadastral survey showing
that Eot *>( has an area of ((.2( hectares was conducted in (2;2. If respondent
analo9s contention were accepted, it would mean that in a span of only ten :()=
years, he had more than doubled his landholding by what the -ourt of +ppeals and
the trial court considered as accretion. +s already noted, there are steep vertical
dike-like slopes separating the depressed portion or river bed and Eot *>( and Eot
?)<. This topography of the land, among other things, precludes a reasonable
conclusion that Eot *>( is an increment to the depressed portion by reason of the
slow and constant action of the waters of either the western or the eastern
branches of the -agayan Fiver.
,e turn 5nally to the issue of ownership of Eot *>(. Fespondent analo9s claim over
Eot *>( rests on accretion coupled with alleged prior possession. Ae alleged that the
parcels of land he bought separately from Iregorio Taguba and Haustina Taccad
were formerly owned by 1udge 1uan Taccad who was in possession thereof through
his :1udge Taccad9s= tenants. ,hen ownership was transferred to him, respondent
analo took over the cultivation of the property and had it declared for ta"ation
purposes in his name. ,hen petitioners forcibly entered into his property, he twice
instituted the appropriate action before the unicipal Trial -ourt of Tumauini,
Isabela. +gainst respondent analo9s allegation of prior possession, petitioners
presented ta" declarations standing in their respective names. They claimed lawful,
peaceful and adverse possession of Eot *>( since (2...
If respondent analo had proved prior possession, it was limited physically to Eot
?)< and the depressed portion or the eastern river bed. The testimony of #ominga
alana who was a tenant for 1ustina Taccad did not indicate that she was also
cultivating Eot *>(. In fact, the complaints for forcible entry lodged before the
unicipal Trial -ourt of Tumauini, Isabela pertained only to Eot ?)< and the
depressed portion or river bed and not to Mot H21. In the same manner, the ta"
declarations presented by petitioners conNict with those of respondent analo.
8nder +rticle /<< of the -ivil -ode, the plainti7 in an action for quieting of title must
at least have equitable title to or interest in the real property which is the sub&ect
matter of the action. The evidence of record on this point is less than satisfactory
and the -ourt feels compelled to refrain from determining the ownership and
possession of Eot *>(, ad&udging neither petitioners nor respondent analo as
owner:s= thereof.
,AEFEH0FE, the #ecision and Fesolution of the -ourt of +ppeals in -+-IF -L Go.
)/*2> are hereby 6ET +6I#E. Fespondent analo is hereby declared the owner
of Mot @#T. The regularly submerged portion or the eastern bed of the -agayan
Fiver is hereby #E-E+FE# to be property of public dominion. The ownership of Eot
*>( shall be determined in an appropriate action that may be instituted by the
interested parties inter se. Go pronouncement as to costs.