Republic vs. Ballocanag

9/2/2016
SUPREME COURT REPORTS ANNOTATED VOLUME 572
G.R. No. 163794. November 28, 2008.*
REPUBLIC OF THE PHILIPPINES, represented by

Romeo T. Acosta (formerly Jose D. Malvas), Director of
Forest Management Bureau, Department of Environment
and
Natural
Resources,
petitioners,
vs.
HON.
NORMELITO J. BALLOCANAG, Presiding Judge, Branch
41, Regional Trial Court, Pinamalayan, Oriental Mindoro
and DANILO REYES, respondents.
Civil Law; Property; Builder in Good Faith; Words and
Phrases; A builder or planter in good faith is one who builds or
plants on land with the belief that he is the owner thereof,
unaware of any flaw in his title to the land at the time he builds or
plants on it.The courts in the reversion case overlooked the
issue of whether Reyes, visvis his improvements, is a builder or
planter in good faith. In the instant case, the issue assumes full
significance, because Articles 448 and 546 of the Civil Code grant
the builder or planter in good faith full reimbursement of useful
improvements and retention of the premises until reimbursement
is made. A builder or planter in good faith is one who builds or
plants on land with the belief that he is the owner thereof,
unaware of any flaw in his title to the land at the time he builds
or plants on it.
Same; Same; Same; To order Reyes to simply surrender all of
the fruitbearing trees in favor of the State would inequitably
result in unjust enrichment of the State at the expense of Reyes, a
planter in good faith.We are disposed to agree with the CA that
Reyes was a planter in good faith. Reyes was of the belief that he
was the owner of the subject land; in fact, a TCT over the property
was issued in his name. He tilled the land, planted fruit trees
thereon, and invested money from 1970. He received notice of the
Republics claim only when the reversion case was filed on May
13, 1987. The trees are now fullgrown and fruitbearing. To order
Reyes to simply surrender all of these fruitbearing trees in favor
of the Statebecause the decision in the reversion case declaring
that the land is part of inalienable forest land and belongs to the
State is already final and
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*THIRD DIVISION.
437
VOL. 572, NOVEMBER 28, 2008
437
Republic vs. Ballocanag
immutablewould inequitably result in unjust enrichment of the

State at the expense of Reyes, a planter in good faith.
Same; Same; Same; Unjust Enrichment; There is unjust
enrichment when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good
conscience.Nemo cum alterius detrimento locupletari potest.
This basic doctrine on unjust enrichment simply means that a
person shall not be allowed to profit or enrich himself inequitably
at anothers expense. There is unjust enrichment when a person
unjustly retains a benefit to the loss of another, or when a person
retains money or property of another against the fundamental
principles of justice, equity and good conscience.
Same; Same; Same; Same; Options that Reyes may exercise
under Articles 448 and 546 of the Civil Code have been restricted
by the terms of AgroForestry Farm Lease Agreement [AFFLA];
The only equitable alternative would be to order the Republic to
pay Reyes the value of the improvements he introduced on the
property.The options that Reyes may exercise under Articles
448 and 546 of the Civil Code have been restricted. It is no longer
feasible to permit him to remove the trees he planted. The only
equitable alternative would be to order the Republic to pay Reyes
the value of the improvements he introduced on the property.
This is only fair because, after all, by the terms of the AFFLA,
upon the expiration of the lease or upon its cancellation if there be
any violation or breach of its terms, all permanent improvements
on the land shall pass to the ownership of the Republic without
any obligation on its part to indemnify the lessee.
Remedial Law; Judgments; Court is not precluded from rectifying
errors of judgment if blind and stubborn adherence to the doctrine
of immutability of final judgments would involve the sacrifice of
justice for technicality.In the exercise of our mandate as a court
of justice and equity, we rule in favor of Reyes pro hac vice. We
reiterate that this Court is not precluded from rectifying errors of
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judgment if blind and stubborn adherence to the doctrine of

immutability of final judgments would involve the sacrifice of
justice for technicality. Indubitably, to order the reversion of the
subject land without payment of just compensation, in absolute
disregard of the rights of
438
438
SUPREME COURT REPORTS ANNOTATED

Reyes over the improvements which he, in good faith, introduced

therein, would not only be unjust and inequitable but cruel as
well.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Miguel J. Lagman for respondent.
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1
under Rule 45 of the Rules of Civil Procedure seeking the
reversal of the Court of Appeals (CA) Decision2 dated June
4, 2004, in CAG.R. SP No. 52261, which affirmed the Joint
Order3 of the Regional Trial Court (RTC) of Pinamalayan,
Oriental Mindoro, Branch 41, dated December 28, 1998.
The facts, as summarized by the CA, are as follows:
Sometime in 1970, [private respondent Danilo] Reyes bought the
subject 182,941squaremeter land at Bgy. Banus, Pinamalayan,
Oriental Mindoro [subject land] from one Regina Castillo (or
Castillo) in whose name it was titled under Original Transfer
Certificate of Title No. P2388 issued pursuant to Free Patent No.
V79606. Right after his purchase, Reyes introduced
improvements and planted the land with fruit trees, including
about a thousand mango[es], more than a hundred Mandarin
citrus, and more than a hundred guyabanos. He also had the title
transferred in his name and was issued TCT No. 45232.
Reyes so prized this land which he bought in good faith.
Unfortunately, it turned out that about 162,500 square meters of
this land is part of the timberland of Oriental Mindoro and,
therefore, cannot
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1Rollo, pp. 2651.

2 Penned by Associate Justice Roberto A. Barrios (now deceased), with
Associate Justices Mariano C. Del Castillo and Magdangal M. De Leon,
concurring; id., at pp. 5366.
3Penned by public respondent Judge Normelito J. Ballocanag; id., at pp. 115
118.
439
439
be subject to any disposition or acquisition under any existing

law, and is not registrable.
Thus, in the Complaint (Annex A, pp. 15 to 21, Rollo) for
Cancellation of Title and/or Reversion filed by the Office of the
Solicitor General (or OSG) in behalf of the Republic [petitioner],
as represented by the Bureau of Forest Development (or BFD), it
was explained that the source[,] Original Transfer Certificate of
Title No. P2388 of Castillo, issued pursuant to Free Patent No. V
79606, is spurious, fictitious and irregularly issued on account of:
a) ONE HUNDRED SIXTYTWO THOUSAND FIVE
HUNDRED (162,500) SQUARE METERS, more or less, of
the land covered by OCT No. P2388 was, at the time it was
applied for patent and or titling, a part of the timberland of
Oriental Mindoro, per BFD Land Classification Map Nos.
2319 and 1715. Copy of said maps are attached hereto as
Annexes B and C;
b) The 162,500 square meters covered by OCT No. P
2388 are entirely inside the 140 hectares AgroForestry
Farm Lease Agreement No. 175 in favor of Atty. Augusto D.
Marte4 [Atty. Marte], copy of the Map of AFFLA No. 175
and AFFLA No. 175 are attached hereto as Annexes D
and E;
c) Neither the private defendant nor his predecessors
ininterest have been in possession of the property because
the rightful occupant is Atty. Augusto D. Marte by virtue of
the AgroForestry Farm Lease Agreement [AFFLA] No. 175,
issued to him by the Ministry of Natural Resources in 1986
to expire on December 21, 2011;
d) Since the parcel of land covered by TCT No. 45232,
in the name of defendant Danilo Reyes, is a part of the
timberland of Oriental Mindoro, per BFD Land
Classification Map Nos. 2319 & 1715, the same cannot be
the subject of any disposition or acquisition under any
existing law (Li Hong Giap vs. Director of Lands, 55 Phil.
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693; Veno vs. Govt of P.I., 41 Phil. 161; Director of Lands vs.
Abanzado, 65 SCRA 5). (pp. 18 to 19, Rollo)
_______________
4 Also referred to as Atty. Augusto Sarte in other pleadings and
documents.
440
440

Aside from the documentary evidence presented to support

these allegations, the Republic presented as well and called to the
witness stand:
a) Armando Cruz, the supervising cartographer of the DENR,
who explained that based on Land Classification Map No. 1715
(Exh. A) which was later amended to LC Map No. 2319 (Exh.
B), the plotting shows that the 162,000 square meters covered
by OCT No. 2388 are entirely inside the 140 hectares of the Agro
Forestry Farm Lease Agreement No. 175 in favor of Atty. Marte
and the alienable and disposable area of Castillos land is only
around two (2) hectares;
b) Alberto Cardio, an employee of the DENR who conducted
the survey on the land under litigation, corroborated the
testimony of Cruz that only two hectares is alienable and
disposable land; and
c) Vicente Mendoza, a Geodetic Engineer, who expounded on
the procedure before the title could be issued to an applicant for a
disposable and alienable public land. He clarified that he did not
make the survey for Castillo but upon presentation to him of the
carpeta in open court he noticed that, while it appears to be valid,
it however has no certification of the Bureau of Forestryan
essential requirement before title could be issued.
For his side, Reyes presented evidence showing his extensive
development of and investment in the land, but however failed to
traverse squarely the issue raised by the Republic against the
inalienability and indisposability of his acquired land. His lame
argument that the absence of the Certification by the Bureau of
Forestry on his carpeta does not necessarily mean that there was
none issued, failed to convince the court a quo.
Hence, Judge Edilberto Ramos, the then Presiding Judge of
Branch 41 of the Regional Trial Court of Pinamalayan, Oriental
Mindoro, held5 that:
The defendants in this case did not assail the evidence of the
plaintiff but concentrated itself to the expenses incurred in the
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cultivation and in the planting of trees in that disputed areas.

Aside thereto, the plaintiff cited that it is elementary principle of
law that said areas not being capable of registration their
inclusion in a certi
_______________
5RTC Decision dated April 13, 1992; Rollo, pp. 8083.
441
441
fication of ownership or confer title on the registrant. (Republic of

the Philippines, et al. vs. Hon. Judge Jaime de los Angeles of the
Court of First Instance of Balayan, Batangas, et al., G.R. No. L
30240) It is also a matter of principle that public forest [are non
alienable public lands. Accession of public forests] on the part of
the claimant, however long, cannot convert the same into private
property. (Vano v. Government of PI, 41 Phil. 161)
In view thereof, it appears that the preponderance of
evidence is in favor of the plaintiff and against the
defendants and therefore it is hereby declared that Free
Patent No. V79606 issued on July 22, 1957 with Psu No.
155088 and OCT No. P2388 in the name of Regina Castillo
and its derivative TCT No. 45232 in the name of Danilo
Reyes is hereby declared null and void; and the defendant
Danilo Reyes is hereby ordered to surrender the owners
duplicate copy of TCT No. 45232 and to vacate the
premises and directing the defendant Register of Deeds of
Calapan, Oriental Mindoro, to cancel the title as null and
void ab initio; and declaring the reversion of the land in
question to the government subject to the AgroForestry
Farm Lease Agreement No. 175, to form part of the public
domain in the province of Oriental Mindoro.
The twohectare lot, which appears disposable and
alienable, is declared null and void for failure to secure
certification from the Bureau of Forest Development.
The counterclaim of the defendant is hereby denied for
lack of merit, with cost against the defendant.6
Reyes appealed the aforementioned RTC Decision to the

CA. In its Decision7 dated September 16, 1996, the CA
affirmed the RTC Decision. His motion for reconsideration
was denied.8
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_______________
6Rollo, pp. 5457. (Emphasis supplied)
7Particularly docketed as CAG.R. CV No. 39105; penned by Associate
Justice Cancio C. Garcia (a retired member of this Court), with Associate
Justices Eugenio S. Labitoria and Artemio G. Tuquero, concurring; id., at
pp. 8498.
8CA Resolution dated January 24, 1997; id., at pp. 102104.
442
442

Thus, Reyes sought relief from this Court via a petition

for review on certiorari. But in our Resolution9 dated June
23, 1997, we resolved to deny his petition for failure to
sufficiently show that the CA had committed any reversible
error in the questioned judgment. On November 24, 1997,
this Court denied with finality Reyes motion for
reconsideration.10
On February 4, 1998, Reyes filed a Motion11 to Remove
Improvements Introduced by Defendant Danilo D. Reyes on
the Property which is the Subject of Execution in
Accordance with Rule 39, Section 10, paragraph (d) of the
1997 Rules of Civil Procedure (motion).12 There he averred
that: he occupied in good faith the subject land for around
thirty years; he had already spent millions of pesos in
planting fruitbearing trees thereon; and he employed
many workers who regularly took care of the trees and
other plants. Reyes prayed that he and/or his agents be
given at least one (1) year from the issuance of the
corresponding order to remove his mango, citrus and
guyabano trees, and that they be allowed to stay in the
premises within that period to work on the cutting and
removal of the said trees. He also asked the RTC that in
the meantime that these trees are not yet removed, all the
unharvested fruits be appropriated by him, as provided for
by law, to the exclusion of all other persons who may take
advantage of the situation and harvest said fruits.
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9 Id., at p. 105.
10Id., at p. 106.
11Id., at pp. 107110.
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12SEC. 10. Execution of judgments for specific act.

xxxx
(d) Removal of improvements on property subject of execution.When
the property subject of execution contains improvements constructed or
planted by the judgment obligor or his agent, the officer shall not destroy,
demolish or remove said improvements, except upon special order of the
court, issued upon motion of the judgment obligee after due hearing and
after the former has failed to remove the same within a reasonable time
fixed by the court.
443
443
Petitioner opposed the motion, citing the principle of

accession under Article 44013 of the Civil Code. It further
argued that the subject land, being timber land, is property
of public dominion and, therefore, outside the commerce of
man and cannot be leased, donated, sold, or be the object of
any contract. This being the case, there are no
improvements to speak of, because the land in question
never ceased to be a property of the Republic, even if Reyes
claimed that he was a purchaser for value and in good faith
and was in possession for more than thirty (30) years.
Moreover, petitioner averred that, assuming Reyes was
initially a planter/sower in good faith, Article 448 of the
Civil Code cannot be of absolute application since from the
time the reversion case was filed by the petitioner on May
13, 1987, Reyes ceased to be a planter/sower in good faith
and had become a planter/sower in bad faith.14
Meanwhile, on March 2, 1998, Atty. Marte filed a
Complaint for Injunction With an Ancillary Prayer for the
Immediate Issuance of a Temporary Restraining Order
against Reyes for allegedly encroaching upon and taking
possession by stealth, fraud and strategy some 16 hectares
of his leased area without his permission or acquiescence
and planted trees thereon in bad faith despite the fact that
the area is nondisposable and part of the public domain,
among others.
But the respondent RTC dismissed the said complaint in
the assailed Joint Order and ruled in favor of Reyes,
finding Rule 39, Section 10, paragraph (d) of the 1997
Rules of Civil Procedure, applicable. The RTC ratiocinated:
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Under the circumstance, it is but just and fair and equitable

that Danilo Reyes be given the opportunity to enjoy the fruits of
his labor on the land which he honestly believes was legally his.
He was
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13 ART. 440. The ownership of property gives the right of accession to
everything which is produced thereby, or which is incorporated or attached
thereto, either naturally or artificially.
14OSG Comment dated August 11, 1998; Rollo, pp. 111114.
444
444

not aware that his certificate of title which was derived from OCT
No. P2388 issued in 1957 by the government itself in the name of
Regina Castillo contained legal infirmity, otherwise he would not
have expoused (sic) himself from the risk of being ejected from the
land and losing all improvements thereon. Any way, if the court
will grant the motion for the defendants (sic) Danilo Reyes to
remove his improvements on the disputed property, it will not
prejudice Augusto Marte, otherwise, as the court sees it, he will
immensely [benefit] from the toils of Danilo Reyes.
and then disposed, as follows:

WHEREFORE, premises considered, the motion to remove
improvements filed by defendant Danilo Reyes dated January 28,
1998 is hereby GRANTED pursuant to the provisions of Section
10, paragraph (d) of Rule 39 of the 1997 Rules of Civil Procedure
and he is given a period of one (1) year from the issuance of this
ORDER to remove, cut and appropriate the fruitbearing trees
which he had planted in the property in disputes (sic).
The COMMENT filed by the Office of the Solicitor General
dated August 11, 1998 is hereby denied for lack of merit.
The [C]omplaint for Injunction filed by Augusto D. Marte on
March 2, 1998 against Danilo Reyes is hereby ordered dismissed
for lack of merit.
Petitioner, through the OSG, filed its Motion for

Reconsideration15 which was denied by the RTC.16
Aggrieved, petitioner went to the CA via Certiorari under
Rule 65 of the Rules of Civil Procedure17 ascribing to the
RTC grave abuse of discretion and acting without
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jurisdiction in granting Reyes motion to remove

improvements.
However, the CA dismissed the petition for certiorari,
and affirmed the ruling of the RTC, in this wise:
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15Id., at pp. 119130.
16RTC Order dated February 17, 1999; id., at p. 131.
17Petition for Certiorari dated April 5, 1999; id., at pp. 132144.
445
445

It is notable that in the course of the suit for Cancellation of
Title and/or Reversion there was not an iota of evidence
presented on record that Reyes was in bad faith in acquiring the
land nor in planting thereon perennial plants. So it could never be
said and held that he was a planter/sower in bad faith. Thus, this
Court holds that Reyes sowed and planted in good faith, and that
being so the appropriate provisions on right accession are Articles
445 and 448 also of the Civil Code.18
Hence, this Petition based on the sole ground that:

THE COURT OF APPEALS ERRED IN AFFIRMING THE
DECISION OF THE TRIAL COURT HOLDING THAT THE
MOTION TO REMOVE IMPROVEMENTS FILED BY PRIVATE
RESPONDENT IS BUT AN INCIDENT OF THE REVERSION
CASE OVER WHICH THE TRIAL COURT STILL HAS
JURISDICTION DESPITE THE FACT THAT THE DECISION
IN THE REVERSION CASE HAD LONG BECOME FINAL AND
EXECUTORY.19
The OSG posits that Reyes assailed motion is barred by

prior judgment under Section 47, Rule 39 of the 1997 Rules
of Civil Procedure because said motion merely sprang from
the civil case of reversion tried and decided on the merits
by the RTC, and the decision is already final, after it was
duly affirmed by the CA and by this Court. The OSG
stresses that one of Reyes assigned errors in the reversion
case before the CA was that the RTC erred in not granting
his (Reyes) counterclaims as well as his claims for
improvements. The OSG claims that such assigned error
was duly resolved by the CA when it held, to wit:
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The
nonaward
of
appellants
counterclaims
is
understandable.
To begin with, no evidence whatsoever was presented by the
appellant to sustain his plea for damages. In fact, appellant never
testified to prove his allegations as regards his counterclaims.
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18Rollo, p. 63.
19Id., at p. 36.
446
446

Then, too, there is no showing that appellant paid the docket

fees for the court to acquire jurisdiction over his purported
counterclaims (Metal Engineering Resources Corp. vs. Court of
Appeals, 203 SCRA 273).
Lastly, the allegations made in the Answer in support of the so
called counterclaims clearly negate the nature of the claims as
compulsory counterclaim like that of reimbursement of the useful
expenses (Cabangis vs. Court of Appeals, 200 SCRA 414).20
Thus, the OSG posits that the issue of the improvements

cannot be made the subject of the assailed motion on the
pretext that such removal of improvements is merely
incidental to the reversion case. The OSG submits that the
consideration of the issue is now barred by res judicata.
Lastly, the OSG argues that: the RTC and CA cannot vary
a decision which has already attained finality; for purposes
of execution, what is controlling is the dispositive portion of
the decision; the RTC, except to order the execution of a
decision which had attained finality, had long lost
jurisdiction over the case; and the RTC erred and acted
without jurisdiction when it granted Reyes motion to
remove the improvements when the dispositive portion of
the decision in the reversion case did not provide for the
removal of the same.21
In his Comment22 on the OSG petition, Reyes avers that
the points raised by the OSG are merely rehashed
arguments which were adequately passed upon by the CA.
He fully agrees with the ruling of the CA that: he is a
planter/sower in good faith, as such, Articles 445 and 448 of
the New Civil Code are applicable; his motion is not
entirely a new case, but merely an incident to the reversion
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case, a consequence of its grant and a legal solution to an

important issue overlooked, if not ignored by the State and
by the courts in their decisions in the reversion case; under
Section 10, Rule 39 of the 1997
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20Supra note 7, at pp. 9798.
21Supra note 1.
22Rollo, pp. 195200.
447
447
Rules of Civil Procedure, he is allowed to remove the

improvements; and the instant Petition failed to abide with
the proper manner as to the proof of service required
under Section 13, Rule 13 of the 1997 Rules of Civil
Procedure. Most importantly, Reyes avers that the land on
which about 1,000 mango trees, 100 mandarin citrus trees
and 100 guyabano trees are planted, was leased by the
government to Atty. Marte, who entered into the
possession of the subject land when the trees were already
bearing fruits. Thus, if said trees are not removed, Atty.
Marte would be unduly enriched as the beneficiary of these
fruits without even spending a single centavo, at the
expense of Reyes. Reyes posits that it is a wellestablished
fact, unrebutted by the petitioner, that he planted these
trees and to deny him the right to remove them would
constitute a grave injustice and amount to confiscation
without just compensation which is violative of the
Constitution.
The OSG counters that copies of the instant Petition
were properly served as shown by the photocopies of the
registry return cards. Moreover, the OSG avers that
granting, without admitting, that another person would
stand to be benefited by the improvements that Reyes
introduced on the land is beside the point and is not the
fault of the petitioner because the particular issue of the
improvements was already resolved with finality in the
reversion case. The OSG claims that a lower court cannot
reverse or set aside decisions or orders of a superior court,
for to do so will negate the principle of hierarchy of courts
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and nullify the essence of reviewa final judgment, albeit

erroneous, is binding on the whole world.23
The instant Petition lacks merit.
In an action for reversion, the pertinent allegations in
the complaint would admit State ownership of the disputed
_______________
23 OSGs Reply dated March 21, 2005; id., at 207213, citing Manila
Electric Co. v. Philippine Consumers Foundation, Inc., 374 SCRA 262
(2002).
448
448

land.24 Indeed, the ownership over the subject land

reverted to the State by virtue of the decisions of the RTC
and CA and our Resolution on the matter. But these
decisions simply ordered the reversion of the property to
the State, and did not consider the improvements that
Reyes had introduced on the property or provide him with
any remedy relative thereto. Thus, Reyes was left out in
the cold, faced with the prospect of losing not only the land
which he thought he owned, but also of forfeiting the
improvements that he painstakingly built with his effort,
time and money.
We cannot agree with the OSG that the denial by the CA
of Reyes counterclaim in the reversion case had the effect
of completely foreclosing whatever rights Reyes may have
over these improvements. We note that the counterclaim
was denied because Reyes failed to prove that it was in the
nature of a compulsory counterclaim, and he did not pay
docket fees thereon, even as the CA found that Reyes
never testified to prove his allegations as regards his
counterclaims. Yet, the records of the reversion case reveal
that Reyes adduced ample evidence of the extent of the
improvements he introduced and the expenses he incurred
therefor. This is reflected in the findings of the CA in the
case at bench, and we concur with the appellate court when
it said:
But this Court notes that while Reyes was halfhearted in his
opposition to the reversion, he instead focused on proving the
improvements he has introduced on the land, its extent and his
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expenses. Despite these proofs, the Decision of April 13, 1992

made no mention nor provision for the improvements on the land.
With this legal vacuum, Reyes could not exercise the options
allowed the sower and planter in good faith. This thus left him no
other alternative but to avail of Paragraph (d) of Section 10 of
Rule 39 of the 1997 Rules of Civil Procedure in order to collect or
get a return of his investment as allowed to a sower and planter
in good faith by the Civil Code.
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24Evangelista v. Santiago, G.R. No. 157447, April 29, 2005, 457 SCRA
744, 764, citing Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut,
378 SCRA 206, 214215 (2002).
449
449
Correlatively, the courts in the reversion case overlooked

the issue of whether Reyes, visvis his improvements, is a
builder or planter in good faith. In the instant case, the
issue assumes full significance, because Articles 44825 and
54626 of the Civil Code grant the builder or planter in good
faith full reimbursement of useful improvements and
retention of the premises until reimbursement is made. A
builder or planter in good faith is one who builds or plants
on land with the belief that he is the owner thereof,
unaware of any flaw in his title to the land at the time he
builds or plants on it.27
On this issue, we are disposed to agree with the CA that
Reyes was a planter in good faith. Reyes was of the belief
that he was the owner of the subject land; in fact, a TCT
over the property was issued in his name. He tilled the
land, planted fruit trees thereon, and invested money from
1970. He re
_______________
25Art. 448. The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate as his
own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to buy the land if
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its value is considerably more than that of the building or trees. In such a
case, he shall pay reasonable rent, if the owner of the land does not choose
to appropriate the building or trees after the proper indemnity. The
parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
26 Art.
546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain the thing until
he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith
with the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason
thereof.
27Florentino v. Supervalue, Inc., G.R. No. 172384, September 12, 2007,
533 SCRA 156, 171, citing Lopez v. Sarabia, 439 SCRA 35, 49 (2004).
450
450

ceived notice of the Republics claim only when the

reversion case was filed on May 13, 1987. The trees are
now fullgrown and fruitbearing.
To order Reyes to simply surrender all of these fruit
bearing trees in favor of the Statebecause the decision in
the reversion case declaring that the land is part of
inalienable forest land and belongs to the State is already
final and immutablewould inequitably result in unjust
enrichment of the State at the expense of Reyes, a planter
in good faith.
Nemo cum alterius detrimento locupletari potest.28 This
basic doctrine on unjust enrichment simply means that a
person shall not be allowed to profit or enrich himself
inequitably at anothers expense.29 There is unjust
enrichment when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property
of another against the fundamental principles of justice,
equity and good conscience.30 Article 22 of the Civil Code
states the rule in this wise:
ART. 22. Every person who, through an act of performance
by another, or any other means, acquires or comes into possession
of something at the expense of the latter without just or legal
ground, shall return the same to him.
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The requisites for the application of this doctrine are

present in the instant case. There is enrichment on the
part of the petitioner, as the State would come into
possession ofand may technically appropriatethe more
than one thousand fruitbearing trees planted by the
private respondent. There is impoverishment on the part of
Reyes, because he stands to lose the improvements he had
painstakingly
_______________
28No one shall enrich himself at the expense of another.
29 Almocera v. Ong, G.R. No. 170479, February 18, 2008, 546 SCRA
164, 176177.
30Allied Banking Corporation v. Li Sio Wan, G.R. No. 133179, March
27, 2008, 549 SCRA 504, 524, citing Reyes v. Lim, 408 SCRA 560 (2003).
451
451
planted and invested in. There is lack of valid cause for the
State to acquire these improvements, because, as discussed
above, Reyes introduced the improvements in good faith.
Thus, the Court of Appeals did not commit any error in
ruling that Reyes is entitled to the benefits of Articles 448
and 546 of the Civil Code.
Thus, even if we accept the OSGs submission that
Reyes entitlement to these benefits is not absolute because
he can no longer claim good faith after the filing of the
reversion case in 1987, still, there is no gainsaying that
prior to thatall the way back to 1970he had possessed
the land and introduced improvements thereon in good
faith. At the very least, then, Reyes is entitled to these
benefits for the 17 years that he had been a planter in good
faith.
However, we are mindful of the fact that the subject
land is currently covered by AgroForestry Farm Lease
Agreement (AFFLA) No. 175 issued by the Ministry of (now
Department of Environment and) Natural Resources in
favor of Atty. Augusto D. Marte, which will expire on
December 21, 2011. By the terms of the AFFLA, the lessee
shall, among others, do all in his power to suppress fires,
cooperate with the Bureau of Forest Development (BFD) in
the protection and conservation of the forest growth in the
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area and undertake all possible measures to insure the

protection of watershed and environmental values within
the leased area and areas adjacent thereto. This obligation
to prevent any damage to the land subject of the lease is
consonant with fundamental principles and state policies
set forth in Section 16,31 Article II and Section 4,32 Article
XII of the Constitution.
_______________
31 SEC. 16. The State shall protect and advance the right of the
people to a balanced and healthful ecology in accord with the rhythm and
harmony of nature.
32SEC. 4. The Congress shall, as soon as possible, determine by law
the specific limits of forest lands and national parks, marking clearly their
boundaries on the ground. Thereafter, such forest lands and national
parks shall be conserved and may not be increased or
452
452

To allow Reyes to remove the fruitbearing trees now

fullgrown on the subject land, even if he is legally entitled
to do so, would be risking substantial damage to the land.
It would negate the policy consideration underlying the
AFFLAto protect and preserve the biodiversity and the
environment, and to prevent any damage to the land.
Further, it would violate the implicit mandate of Article
547 of the Civil Code which provides:
ART. 547. If the useful improvements can be removed
without damage to the principal thing, the possessor in good faith
may remove them unless the person who recovers the possession
exercises the option under paragraph 2 of the preceding article.
In this light, the options that Reyes may exercise under

Articles 448 and 546 of the Civil Code have been restricted.
It is no longer feasible to permit him to remove the trees he
planted. The only equitable alternative would be to order
the Republic to pay Reyes the value of the improvements
he introduced on the property. This is only fair because,
after all, by the terms of the AFFLA, upon the expiration of
the lease or upon its cancellation if there be any violation
or breach of its terms, all permanent improvements on the
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land shall pass to the ownership of the Republic without

any obligation on its part to indemnify the lessee.
However, the AFFLA is not due to expire until
December 21, 2011. In the interim, it is logical to assume
that the lessee, Atty. Augusto D. Marte, will derive
financial gain from the fruits that the trees planted by
Reyes would yield. In fact, Atty. Marte may already have
profited therefrom in the past several years. It is, therefore,
reasonable to grant the Republic the right of subrogation
against the lessee who may have benefited from the
improvements. The Republic may, thus,
_______________
diminished, except by law. The Congress shall provide, for such period as it
may determine, measures to prohibit logging in endangered forests and
watershed areas.
453
453
demand reimbursement from Atty. Marte for whatever

amount it will have to pay Reyes for these improvements.
As to the OSGs insistent invocation of res judicata and
the immutability of final judgments, our ruling in Temic
Semiconductors, Inc. Employees Union (TSIEU)FFW, et al.
v. Federation of Free Workers (FFW), et al.33 is instructive:
It is axiomatic that a decision that has acquired finality
becomes immutable and unalterable. A final judgment may no
longer be modified in any respect, even if the modification is
meant to correct erroneous conclusions of fact and law; and
whether it be made by the court that rendered it or by the highest
court in the land. Any act which violates such principle must
immediately be struck down. Indeed, the principle of
conclusiveness of prior adjudications is not confined in its
operation to the judgments of what are ordinarily known as
courts, but it extends to all bodies upon which judicial powers had
been conferred.
The only exceptions to the rule on the immutability of a final
judgment are: (1) the correction of clerical errors; (2) the socalled
nunc pro tunc entries which cause no prejudice to any party; (3)
void judgments; and (4) whenever circumstances transpire after
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the finality of the decision rendering its execution unjust and

inequitable.
In the exercise of our mandate as a court of justice and

equity,34 we rule in favor of Reyes pro hac vice. We
reiterate that this Court is not precluded from rectifying
errors of judgment if blind and stubborn adherence to the
doctrine of immutability of final judgments would involve
the sacrifice of justice for technicality.35 Indubitably, to
order the reversion of the sub
_______________
33G.R. No. 160993, May 20, 2008, 554 SCRA 122. (Citations omitted).
34Chieng v. Santos, G.R. No. 169647, August 31, 2007, 531 SCRA 730,
748, citing National Development Company v. Madrigal Wan Hai Lines
Corporation, 458 Phil. 1038, 1055; 412 SCRA 375, 382 (2003).
35Heirs of Maura So v. Obliosca, G.R. No. 147082, January 28, 2008,
542 SCRA 406, 421422.
454
454

ject land without payment of just compensation, in absolute

disregard of the rights of Reyes over the improvements
which he, in good faith, introduced therein, would not only
be unjust and inequitable but cruel as well.
WHEREFORE, the instant Petition is DENIED. The
Decision dated June 4, 2004 of the Court of Appeals is
AFFIRMED with MODIFICATION in that:
1) The Regional Trial Court of Pinamalayan,
Oriental Mindoro, Branch 41, is hereby DIRECTED
to determine the actual improvements introduced on
the subject land, their current value and the amount
of the expenses actually spent by private respondent
Danilo Reyes for the said improvements thereon from
1970 until May 13, 1987 with utmost dispatch.
2) The Republic, through the Bureau of Forest
Development of the Department of Environment and
Natural Resources, is DIRECTED to pay private
respondent Danilo Reyes the value of such actual
improvements he introduced on the subject land as
determined by the Regional Trial Court, with the
right of subrogation against Atty. Augusto D. Marte,
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the lessee in AgroForestry Farm Lease Agreement

No. 175.
No costs.
SO ORDERED.
YnaresSantiago
(Chairperson),
ChicoNazario and Reyes, JJ., concur.
AustriaMartinez,
Petition denied, judgment affirmed with modifications.

Note.There is unjust enrichment when (1) a person is
unjustly benefited, and (2) such benefit is derived at the
expense of or with damages to another. (Tamio vs. Ticson,
443 SCRA 44 [2004])
o0o
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9/2/2016

SUPREME COURT REPORTS ANNOTATED VOLUME 572

G.R. No. 163794. November 28, 2008.*

REPUBLIC OF THE PHILIPPINES, represented by

SUPREME COURT REPORTS ANNOTATED VOLUME 572

VOL. 572, NOVEMBER 28, 2008