Meralco vs City Assessor

Facts:

MERALCO is a private corporation organized and existing under Philippine laws to operate as a public
utility engaged in electric distribution. MERALCO has been successively granted franchises to operate in
Lucena City beginning 1922 until present time, particularly, by: (1) Resolution No. 366 dated May 15,
1922 of the Municipal Council of Lucena; (2) Resolution No. 1087 dated July 1, 1957 of the Municipal
Council of Lucena; (3) Resolution No. 26798 dated June 13, 1972 of the Municipal Board of Lucena City;9
(4) Certificate of Franchise10 dated October 28, 1993 issued by the National Electrification Commission;
and (5) Republic Act No. 920911 approved on June 9, 2003 by Congress.12

October 29, 1997, MERALCO received a letter19 dated October 16, 1997 from the City Treasurer of
Lucena, which stated that the company was being assessed real property tax delinquency on its
machineries beginning 1990, in the total amount of P17,925,117.34,

The City Treasurer of Lucena requested that MERALCO settle the payable amount soon to avoid
accumulation of penalties. Attached to the letter were the following documents: (a) Notice of
Assessment20 dated October 20, 1997 issued by the City Assessor of Lucena, pertaining to Tax
Declaration No. 019-7394, which increased the market value and assessed value of the machinery; (b)
Property Record Form;21 and (c) Tax Declaration No. 019-6500.22

MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 before the LBAA of Lucena City on
December 23, 1997 and posted a surety bond23 dated December 10, 1997 to guarantee payment of its
real property tax delinquency. MERALCO asked the LBAA to cancel and nullify the Notice of Assessment
dated October 20, 1997 and declare the properties covered by Tax Declaration Nos. 019-6500 and 019-
7394 exempt from real property tax.

In its Decision dated June 17, 1998 regarding Tax Declaration Nos. 019-6500 and 019-7394, the LBAA
declared that Sections 234 and 534(f) of the Local Government Code repealed the provisions in the
franchise of MERALCO and Presidential Decree No. 55124 pertaining to the exemption of MERALCO
from payment of real property tax on its poles, wires, insulators, transformers, and meters. The LBAA
refused to apply as res judicata its earlier judgment in LBAA-89-2, as affirmed by the CBAA, because it
involved collection of taxes from 1985 to 1989, while the present case concerned the collection of taxes
from 1989 to 1997; and LBAA is only an administrative body, not a court or quasi-judicial body. The LBAA
though instructed that the computation of the real property tax for the machineries should be based on
the prevailing 1991 Schedule of Market Values, less the depreciation cost allowed by law.

MERALCO went before the CBAA on appeal, which was docketed as CBAA Case No. L-20-98. The CBAA,
in its Decision dated May 3, 2001, agreed with the LBAA that MERALCO could no longer claim exemption
from real property tax on its machineries with the enactment of Republic Act No. 7160, otherwise
known as the Local Government Code of 1991,
Disgruntled, MERALCO sought recourse from the Court of Appeals by filing a Petition for Review under
Rule 43 of the Rules of Court, which was docketed as CA-G.R. SP No. 67027.

The Court of Appeals rendered a Decision on May 13, 2004 rejecting all arguments proffered by
MERALCO. The appellate court found no deficiency in the Notice of Assessment issued by the City
Assessor of Lucena.

ISSUE: WON MERALCO’S transformers, electric posts, transmission lines, insulators, and electric
meters are not subject to real property tax, for they are not considered as real property

HELD:

NO. The last paragraph of Section 234 had unequivocally withdrawn, upon the effectivity of the Local
Government Code, exemptions from payment of real property taxes granted to natural or juridical
persons, including government-owned or controlled corporations, except as provided in the same
section.

The Court highlights that under Section 199(o) of the Local Government Code, machinery, to be deemed
real property subject to real property tax, need no longer be annexed to the land or building as these
"may or may not be attached, permanently or temporarily to the real property," and in fact, such
machinery may even be "mobile."55 The same provision though requires that to be machinery subject
to real property tax, the physical facilities for production, installations, and appurtenant service facilities,
those which are mobile, self-powered or self-propelled, or not permanently attached to the real
property (a) must be actually, directly, and exclusively used to meet the needs of the particular industry,
business, or activity; and (2) by their very nature and purpose, are designed for, or necessary for
manufacturing, mining, logging, commercial, industrial, or agricultural purposes. Thus, Article 290(o) of
the Rules and Regulations Implementing the Local Government Code of 1991

While the Local Government Code still does not provide for a specific definition of "real property,"
Sections 199(o) and 232 of the said Code, respectively, gives an extensive definition of what constitutes
"machinery" and unequivocally subjects such machinery to real property tax. The Court reiterates that
the machinery subject to real property tax under the Local Government Code "may or may not be
attached, permanently or temporarily to the real property;" and the physical facilities for production,
installations, and appurtenant service facilities, those which are mobile, self-powered or self-propelled,
or are not permanently attached must (a) be actually, directly, and exclusively used to meet the needs
of the particular industry, business, or activity; and (2) by their very nature and purpose, be designed
for, or necessary for manufacturing, mining, logging, commercial, industrial, or agricultural purposes.

Article 415, paragraph (1) of the Civil Code declares as immovables or real properties "[l]and, buildings,
roads and constructions of all kinds adhered to the soil." The land, buildings, and roads are immovables
by nature "which cannot be moved from place to place," whereas the constructions adhered to the soil
are immovables by incorporation "which are essentially movables, but are attached to an immovable in
such manner as to be an integral part thereof."57 Article 415, paragraph (3) of the Civil Code, referring
to "[ejverything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object," are likewise immovables by
incorporation. In contrast, the Local Government Code considers as real property machinery which "may
or may not be attached, permanently or temporarily to the real property," and even those which are
"mobile."

Article 415, paragraph (5) of the Civil Code considers as immovables or real properties "[machinery,
receptacles, instruments or implements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of
the said industry or works." The Civil Code, however, does not define "machinery."

The properties under Article 415, paragraph (5) of the Civil Code are immovables by destination, or
"those which are essentially movables, but by the purpose for which they have been placed in an
immovable, partake of the nature of the latter because of the added utility derived therefrom."58 These
properties, including machinery, become immobilized if the following requisites concur: (a) they are
placed in the tenement by the owner of such tenement; (b) they are destined for use in the industry or
work in the tenement; and (c) they tend to directly meet the needs of said industry or works.59 The first
two requisites are not found anywhere in the Local Government Code.

MERALCO insists on harmonizing the aforementioned provisions of the Civil Code and the Local
Government Code. The Court disagrees, however, for this would necessarily mean imposing additional
requirements for classifying machinery as real property for real property tax purposes not provided for,
or even in direct conflict with, the provisions of the Local Government Code.

A general law and a special law on the same subject are statutes in pah materia and should, accordingly,
be read together and harmonized, if possible, with a view to giving effect to both. The rule is that where
there are two acts, one of which is special and particular and the other general which, if standing alone,
would include the same matter and thus conflict with the special act, the special law must prevail since
it evinces the legislative intent more clearly than that of a general statute and must not be taken as
intended to affect the more particular and specific provisions of the earlier act, unless it is absolutely
necessary so to construe it in order to give its words any meaning at all.

Therefore, for determining whether machinery is real property subject to real property tax, the
definition and requirements under the Local Government Code are controlling
Davao Sawmill vs Castillo

Facts:

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao,
Province of Davao. However, the land upon which the business was conducted belonged to another
person. On the land the sawmill company erected a building which housed the machinery used by it.
Some of the implements thus used were clearly personal property, the conflict concerning machines
which were placed and mounted on foundations of cement.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao Saw Mill
Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the
defendant in that action; a writ of execution issued thereon, and the properties now in question were
levied upon as personalty by the sheriff. No third party claim was filed for such properties at the time of
the sales thereof as is borne out by the record made by the plaintiff herein. Indeed the bidder, which
was the plaintiff in that action, and the defendant herein having consummated the sale, proceeded to
take possession of the machinery and other properties described in the corresponding certificates of
sale executed in its favor by the sheriff of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a
number of occasions treated the machinery as personal property by executing chattel mortgages in
favor of third persons. One of such persons is the appellee by assignment from the original mortgagees.

Issue: WON the properties in question owned by Davao Sawmill is personal in nature?

Held:

Yes. It is personal in nature. It is, however, not necessary to spend overly much time in the resolution of
this appeal on side issues. It is machinery which is involved; moreover, machinery not intended by the
owner of any building or land for use in connection therewith, but intended by a lessee for use in a
building erected on the land by the latter to be returned to the lessee on the expiration or
abandonment of the lease. A similar question arose in Puerto Rico, and on appeal being taken to the
United States Supreme Court, it was held that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a
tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the
agent of the owner.
Tsai v. CA

Facts:

Respondent Ever Textile Mills, Inc. (Evertex) obtained two loans from petitioner Philippine Bank of
Communications (PBCom). As security for the first loan, Evertex executed a deed of Real and Chattel
Mortgage over the lot where its factory stands, and the chattels located therein as enumerated in a
schedule attached to the mortgage contract. The second loan was secured by a chattel mortgage over
personal properties enumerated in a list attached thereto. Due to business reverses, Evertex filed
insolvency proceeding, where it was declared insolvent by the then Court of First Instance. All its assets
were taken into the custody of the insolvency court, including the collateral, real and personal, securing
the two mortgages. Upon Evertex's failure to meet its obligation to PBCom, the latter commenced
extrajudicial foreclosure proceedings. PBCom was the highest bidder on the two public auctions held.
PBCom consolidated its ownership over the lot and all the properties in it. It leased the entire factory
premises to petitioner Ruby L. Tsai, and subsequently sold it to her, including the contested machineries.
Evertex filed a complaint for annulment of sale, reconveyance, and damages with the Regional Trial
Court against PBCom, alleging that the extrajudicial foreclosure of subject mortgage was in violation of
the Insolvency Law. Evertex claimed that PBCom, without any legal or factual basis, appropriated the
contested properties, which were not included in the real and chattel mortgage and neither were those
properties included in the notice of sheriff's sale. The RTC agreed with Evertex and ruled that the lease
and sale of said personal properties were irregular and illegal. Dissatisfied, both PBCom and Tsai
appealed to the Court of Appeals. The CA affirmed the judgment appealed from and denied the motion
for reconsideration. PBCom and Tsai filed their separate petitions for review with the Supreme Court.

Issue: WON the properties in question are real or immovable properties?

Held:

No. It is considered personal property. According to the Supreme Court, while it was true that the
controverted properties appeared to be immobile, a perusal of the contract executed by the parties
herein intended to treat the subject machinery and equipment as chattels. The Court previously ruled
that an immovable may be considered a personal property if there is a stipulation as when it is used as
security in the payment of an obligation where a chattel mortgage is executed over it, as in the case at
bar. Accordingly, the Court found no reversible error in the respondent appellate court's ruling that
inasmuch as the subject mortgages were intended by the parties to involve chattels, insofar as
equipment and machinery were concerned, the Chattel Mortgage Law applies. The law provides that a
chattel mortgage shall be deemed to cover only the property described therein and not like or
substituted property thereafter acquired by the mortgagor and placed in the same depository as the
property originally mortgaged, anything in the mortgage to the contrary notwithstanding. Since the
disputed machineries were acquired in 1981 and could not have been involved in the 1975 or 1979
chattel mortgages, the petitions were denied.
Caltex vs Board of Assessment Appeals

Fact:

Petitioner installed underground tanks, elevated tanks, elevated water tanks, water tanks, gasoline and
computing pumps, car washers, car and tire hoists, air compressors and tireflators in its gasoline stations
located on leased land. They were attached to the pavement covering the entire lot. The said machines
were loaned by petitioner to gas station operators under lease contracts to be returned to petitioner
upon demand. The city assessor of Pasay City treated the said machines as taxable realty and imposed
real tax thereon. The city board of tax appeals ruled that they are personality not subject to realty tax,
but the Central Board of Assessment Appeals reversed the ruling and found that the machines and
equipment were real property within the meaning of Section 3(k) and (m) and 38 of the Real Property
Tax Code, Presidential Decree 464, and that the definitions of real property and personal property in
Articles 415 and 416 of the Civil Code are not applicable to this case.

Hence, this petition

Issue: WON pieces of gas station equipment and machinery already enumerated are subject to realty tax

Held:

Yes. We hold that the said equipment and machinery, as appurtenances to the gas station building or
shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be useless, and which have been
attached or affixed permanently to the gas station site or embedded therein, are taxable improvements
and machinery within the meaning of the Assessment Law and the Real Property Tax Code.

The said equipment and machinery, as appurtenances to the gas station building or shed owned by
Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the gas station, for
without them the gas station would be useless, and which have been attached or affixed permanently to
the gas station site or embedded therein, are taxable improvements and machinery within the meaning
of the Assessment Law and the Real Property Tax Code.
Benguet Corp vs Central Board of Assess Appeals

Facts:

The realty tax assessment involved in this case amounts to P11,319,304.00. It has been imposed on the
petitioner's tailings dam and the land thereunder over its protest.

The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said properties as
taxable improvements. The assessment was appealed to the Board of Assessment Appeals of the
Province of Zambales. On August 24, 1988, the appeal was dismissed mainly on the ground of the
petitioner's "failure to pay the realty taxes that fell due during the pendency of the appeal.

Issue: WON the tailings dam is considered as a real property as such is subjected to real estate tax

Held:

Yes. From the definitions and the cases cited above, it would appear that whether a structure
constitutes an improvement so as to partake of the status of realty would depend upon the degree of
permanence intended in its construction and use. The expression "permanent" as applied to an
improvement does not imply that the improvement must be used perpetually but only until the purpose
to which the principal realty is devoted has been accomplished. It is sufficient that the improvement is
intended to remain as long as the land to which it is annexed is still used for the said purpose.

The Court is convinced that the subject dam falls within the definition of an "improvement" because it is
permanent in character and it enhances both the value and utility of petitioner's mine. Moreover, the
immovable nature of the dam defines its character as real property under Article 415 of the Civil Code
and thus makes it taxable under Section 38 of the Real Property Tax Code.
Navy Officers Village Association Inc vs Republic of thePhilippines

Facts:

TCT No. T-15387, 5 issued in NOVAI's name, covers a 475,009 square-meter parcel of land (the
property) 6 situated inside the former Fort Andres Bonifacio Military Reservation (FBMR) in Taguig,
Metro Manila.

The property previously formed part of a larger 15,812,684 square-meter parcel of land situated at the
former Fort William McKinley, Rizal, which was covered by TCT No. 61524 issued in the name of the
Republic of the Philippines.

On July 12, 1957, then President Carlos P. Garcia issued Proclamation No. 423 7 "reserving for military
purposes certain parcels of the public domain situated in the municipalities of Pasig, Taguig, Parañaque,
province of Rizal, and Pasay City," which included the 15,812,684 square-meter parcel of land covered
by TCT No. 61524.

On September 29, 1965, then Pres. Diosdado Macapagal issued Proclamation No. 461 8 which excluded
from Fort McKinley "a certain portion of land embraced therein, situated in the municipalities of Taguig
and Parañaque, Province of Rizal, and Pasay City," with an area of 2,455,310 square meters, and
declared the excluded area as "AFP Officers' Village" to be disposed of under the provisions of Republic
Act Nos. 274 9 and 730. 10

Barely a month after, or on October 25, 1965, Pres. Macapagal issued Proclamation No. 478 11
"reserving for the veterans rehabilitation, medicare and training center site purposes" an area of
537,520 square meters of the land previously declared as AFP Officers' Village under Proclamation No.
461, and placed the reserved area under the administration of the Veterans Federation of the
Philippines (VFP).

The property is within the 537,520 square-meter parcel of land reserved in VFP's favor.

On November 15, 1991, the property was the subject of a Deed of Sale 12 between the Republic of the
Philippines, through former Land Management Bureau (LMB) Director Abelardo G. Palad, Jr., (Dir. Palad)
and petitioner NOVAI. The deed of sale was subsequently registered and from which TCT No. T-15387
was issued in NOVAI's name.

The Republic's Complaint for Cancellation of Title

In its complaint 13 filed with the RTC on December 23, 1993, the Republic sought to cancel NOVAI's title
based on the following grounds: (a) the land covered by NOVAI's title is part of a military reservation; (b)
the deed of sale conveying the property to NOVAI, which became the basis for the issuance of TCT No.
15387, is fictitious; (c) the LMB has no records of any application made by NOVAI for the purchase of the
property, and of the NOVAI's alleged payment of P14,250,270.00 for the property; and (d) the
presidential proclamation, i.e., Proclamation No. 2487, claimed to have been issued by then President
Corazon C. Aquino in 1991 that authorized the transfer and titling of the property to NOVAI, is fictitious.
NOVAI's Answer to the Complaint

In its answer (which was later amended) to the Republic's complaint, NOVAI counter-argued that the
property was no longer part of the public dominion, as the land had long been segregated from the
military reservation pursuant to Proclamation No. 461.

RTC DECISION

In its decision, the RTC ruled that: (a) the property is alienable and disposable in character, as the land
falls within the area segregated from the FBMR pursuant to Proclamation No. 461; (b) the subject deed
of sale should be presumed valid on its face, as it was executed with all the formalities of a notarial
certification; (c) notwithstanding the claims of forgery, the signature of Dir. Palad on the deed of sale
appeared genuine and authentic; and (d) NOVAI's title to the property had attained indefeasibility since
the Republic's action for cancellation of title was filed close to two (2) years from the issuance of the
title.

CA DECISION

The CA reversed and set aside the RTC's decision. It ruled that the property is inalienable land of the
public domain; thus, it cannot be disposed of or be the subject of a sale. It pointed out that, since NOVAI
failed to discharge its burden of proving the existence of Proclamation No. 2487 — the positive
governmental act that would have removed the property from the public domain — the property
remained reserved for veterans rehabilitation purposes under Proclamation No. 478, the latest
executive issuance affecting the property

Issue: WON the property is inalienable land of the public domain?

Held:

Yes, it is still part of public domain. We agree with the CA that the property remains a part of the public
domain that could not have been validly disposed of in NOVAI's favor. NOVAI failed to discharge its
burden of proving that the property was withdrawn from the intended public or quasi-public use or
purpose.

Lands of the public domain classified as alienable and disposable are further classified, under Section 9
of C.A. No. 141, according to their use or purpose into: (1) agricultural; (2) residential, commercial,
industrial, or for similar productive purposes; (3) educational, charitable, or other similar purposes; and
(4) reservations for townsites and for public and quasi-public uses. Section 9 also authorizes the
President to make the classifications and, at any time, transfer lands from one class to another.

Section 83 of C.A. No. 141 defines public domain lands classified as reservations for public and quasi-
public uses as "any tract or tracts of land of the public domain" which the President, by proclamation
and upon recommendation of the Secretary of Agriculture and Natural Resources, may designate "as
reservations for the use of the Republic of the Philippines or any of its branches, or of the inhabitants
thereof" or "for quasi-public uses or purposes when the public interest requires it." 34 Under Section 88
of the same Act, these "reserved tract or tracts of lands shall be non-alienable and shall not be subject
to occupation, entry, sale, lease or other disposition until again declared alienable under the provisions
of [CA No. 141] or by proclamation of the President

Article 419 of the Civil Code classifies property as either of public dominion or of private ownership.
Article 420 37 defines property of the public dominion as those which are intended for public use or,
while not intended for public use, belong to the State and are intended for some public service. Article
421, on the other hand, defines patrimonial property as all other property of the State which is not of
the character stated in Article 420. While Article 422 states that public dominion property which is no
longer intended for public use or service shall form part of the State's patrimonial property. EcTCAD

Thus, from the perspective of the general Civil Code provisions on Property, lands which are intended
for public use or public service such as reservations for public or quasi-public uses are property of the
public dominion and remain to be so as long as they remain reserved.

As property of the public dominion, public lands reserved for public or quasi-public uses are outside the
commerce of man. 38 They cannot be subject to sale, disposition or encumbrance; any sale, disposition
or encumbrance of such property of the public dominion is void for being contrary to law and public
policy. 39

To be subject to sale, occupation or other disposition, lands of the public domain designated as
reservations must first be withdrawn, by act of Congress or by proclamation of the President, from the
public or quasi-public use for which it has been reserved or otherwise positively declared to have been
converted to patrimonial property, pursuant to Sections 8 and 88 of C.A. No. 141 and Article 422 of the
Civil Code.40 Without such express declaration or positive governmental act, the reserved public
domain lands remain to be public dominion property of the State.
Manila International Airport Authority vs City of Pasay

Facts:

Petitioner Manila International Airport Authority (MIAA) operates and administers the Ninoy Aquino
International Airport (NAIA) Complex under Executive Order No. 903 (EO 903),3 otherwise known as the
Revised Charter of the Manila International Airport Authority. EO 903 was issued on 21 July 1983 by
then President Ferdinand E. Marcos. Under Sections 34 and 225 of EO 903, approximately 600 hectares
of land, including the runways, the airport tower, and other airport buildings, were transferred to MIAA.
The NAIA Complex is located along the border between Pasay City and Parañaque City.

On 28 August 2001, MIAA received Final Notices of Real Property Tax Delinquency from the City of Pasay
for the taxable years 1992 to 2001. MIAA’s real property tax delinquency for its real properties located
in NAIA Complex, Ninoy Aquino Avenue, Pasay City (NAIA Pasay properties)

On 24 August 2001, the City of Pasay, through its City Treasurer, issued notices of levy and warrants of
levy for the NAIA Pasay properties. MIAA received the notices and warrants of levy on 28 August 2001.
Thereafter, the City Mayor of Pasay threatened to sell at public auction the NAIA Pasay properties if the
delinquent real property taxes remain unpaid.

On 29 October 2001, MIAA filed with the Court of Appeals a petition for prohibition and injunction with
prayer for preliminary injunction or temporary restraining order. The petition sought to enjoin the City
of Pasay from imposing real property taxes on, levying against, and auctioning for public sale the NAIA
Pasay properties.

On 30 October 2002, the Court of Appeals dismissed the petition and upheld the power of the City of
Pasay to impose and collect realty taxes on the NAIA Pasay properties. MIAA filed a motion for
reconsideration, which the Court of Appeals denied. Hence, this petition

Issue: WON NAIA Pasay properties of MIAA are exempt from real property tax.

Held:

Yes. Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of
public dominion. Properties of public dominion are owned by the State or the Republic. Article 420 of
the Civil Code provides:Art. 420. The following things are property of public dominion:(1) Those
intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;(2) Those which belong to the State,
without being for public use, and are intended for some public service or for the development of the
national wealth. Furthermore, the airport lands and buildings of MIAA are properties of public dominion
intended for public use, and as such are exempt from real property tax under Section 234(a) of the Local
Government Code. However, under the same provision, if MIAA leases its real property to a taxable
person, the specific property leased becomes subject to real property tax.12 In this case, only those
portions of the NAIA Pasay properties which are leased to taxable persons like private parties are
subject to real property tax by the City of Pasay.
Manila International Airport Authority vs CA

Facts:

Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International
Airport (NAIA) Complex in Parañaque City under Executive Order No. 903, otherwise known as the
Revised Charter of the Manila International Airport Authority ("MIAA Charter"). Executive Order No. 903
was issued on 21 July 1983 by then President Ferdinand E. Marcos. Subsequently, Executive Order Nos.
9091 and 2982 amended the MIAA Charter.

As operator of the international airport, MIAA administers the land, improvements and equipment
within the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of land,3
including the runways and buildings ("Airport Lands and Buildings") then under the Bureau of Air
Transportation.4 The MIAA Charter further provides that no portion of the land transferred to MIAA
shall be disposed of through sale or any other mode unless specifically approved by the President of the
Philippines.

On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061.
The OGCC opined that the Local Government Code of 1991 withdrew the exemption from real estate tax
granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with respondent City of
Parañaque to pay the real estate tax imposed by the City. MIAA then paid some of the real estate tax
already due.

On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque
for the taxable years 1992 to 2001.

Issue: WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws?

Held:

Yes. The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by
the State or the Republic of the Philippines. The Civil Code provides:ARTICLE 419. Property is either of
public dominion or of private ownership.

ARTICLE 420. The following things are property of public dominion:(1) Those intended for public use,
such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;(2) Those which belong to the State, without being for public
use, and are intended for some public service or for the development of the national wealth. (Emphasis
supplied)

ARTICLE 421. All other property of the State, which is not of the character stated in the preceding article,
is patrimonial property.

ARTICLE 422. Property of public dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State.No one can dispute that properties of public
dominion mentioned in Article 420 of the Civil Code, like "roads, canals, rivers, torrents, ports and
bridges constructed by the State," are owned by the State. The term "ports" includes seaports and
airports.

The MIAA Airport Lands and Buildings constitute a "port" constructed by the State. Under Article 420 of
the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus owned
by the State or the Republic of the Philippines.The Airport Lands and Buildings are devoted to public use
because they are used by the public for international and domestic travel and transportation. The fact
that the MIAA collects terminal fees and other charges from the public does not remove the character of
the Airport Lands and Buildings as properties for public use. The operation by the government of a
tollway does not change the character of the road as one for public use. Someone must pay for the
maintenance of the road, either the public indirectly through the taxes they pay the government, or only
those among the public who actually use the road through the toll fees they pay upon using the road.
The tollway system is even a more efficient and equitable manner of taxing the public for the
maintenance of public roads.
Government vs Cabangis

Facts:

Lots 36, 39 and 40, block 3035 of cadastral proceeding No. 71 of the City of Manila, G. L. R. O. Record
No. 373, were formerly a part of a large parcel of land belonging to the predecessor of the herein
claimants and appellees. From the year 1896 said land began to wear away, due to the action of the
waves of Manila Bay, until the year 1901 when the said lots became completely submerged in water in
ordinary tides, and remained in such a state until 1912 when the Government undertook the dredging of
Vitas Estuary in order to facilitate navigation, depositing all the sand and silt taken from the bed of the
estuary on the low lands which were completely covered with water, surrounding that belonging to the
Philippine Manufacturing Company, thereby slowly and gradually forming the lots, the subject matter of
this proceeding.

Up to the month of February, 1927 nobody had declared lot 39 for the purposes of taxation, and it was
only in the year 1926 that Dr. Pedro Gil, in behalf of the claimants and appellees, declared lot No. 40 for
such purpose.

Issue: WHO owns the land?

Held:

The Government, for the lot in question is considered as property of Public Domain. It will be seen that
in the case of Buzon vs. Insular Government and City of Manila, cited above, the rise of the waters of the
sea that covered the lands there in dispute, was due not to the action of the tide but to the fact that a
large quantity of sand was taken from the sea at the side of said land in order to fill in Cervantes Street,
and this court properly held that because of this act, entirely independent of the will of the owner of
said land, the latter could not lose the ownership thereof, and the mere fact that the waters of the sea
covered it as a result of said act, is not sufficient to convert it into public land, especially, as the land was
high and appropriate for building purposes.

In the case of the Director of Lands vs. Aguilar also cited by the claimants-appellees, the Insular
Government did not present any evidence in support of its contention, thus leaving uncontradicted the
evidence adduced by the claimants Aguilar et al., as to the ownership, possession and occupation of said
lots.

In the instant case the evidence shows that from 1896, the waves of Manila Bay had been gradually and
constantly washing away the sand that formed the lots here in question, until 1901, when the sea water
completely covered them, and thus they remained until the year 1912. In the latter year they were
reclaimed from the sea by filling in with sand and silt extracted from the bed of Vitas Estuary when the
Government dredged said estuary in order to facilitate navigation. Neither the herein claimants-
appellees nor their predecessors did anything to prevent their destruction.
In conclusion, then, we hold that the lots in question having disappeared on account of the gradual
erosion due to the ebb and flow of the tide, and having remained in such a state until they were
reclaimed from the sea by the filling in done by the Government, they are public land
CEBU OXYGEN & ACETYLENE CO., INC., petitioner, vs. HON. PASCUAL A. BERCILLES, Presiding Judge,
Branch XV, 14th Judicial District, and JOSE L. ESPELETA, Assistant Provincial Fiscal, Province of Cebu,
representing the Solicitor General's Office and the Bureau of Lands, respondents.

Facts: Petitioner applied for registration of title over a portion of M. Gorces Street in Cebu City. Said
portion was declared an abandoned road by the City Council of Cebu the same not being included in the
Cebu Development Plan, and later, by authority of the City Council, was sold by the Acting Mayor to
petitioner who was the highest bidder at a public bidding. The trial court dismissed petitioner's
application on motion of the Assistant Provincial Fiscal on the ground that the property sought to be
registered being a public road intended of public use is considered part of the public domain and
therefore outside the commerce of men. On petition for review, the Supreme Court set aside the trial
court's order the directed the latter to proceed with the hearing of petition's application for registration
of title.

This is a petition for the review of the order of the Court of First Instance of Cebu dismissing petitioner's
application for registration of title over a parcel of land situated in the City of Cebu.

The parcel of land sought to be registered was originally a portion of M. Borces Street, Mabolo, Cebu
City. On September 23, 1968, the City Council of Cebu, through Resolution No. 2193, approved on
October 3, 1968, declared the terminal portion of M. Borces Street, Mabolo, Cebu City, as an abandoned
road, the same not being included in the City Development Plan. 1 Subsequently, on December 19,
1968, the City Council of Cebu passed Resolution No. 2755, authorizing the Acting City Mayor to sell the
land through a public bidding. 2 Pursuant thereto, the lot was awarded to the herein petitioner being
the highest bidder and on March 3, 1969, the City of Cebu, through the Acting City Mayor, executed a
deed of absolute sale to the herein petitioner for a total consideration of P10,800.00. 3 By virtue of the
aforesaid deed of absolute sale, the petitioner filed an application with the Court of First Instance of
Cebu to have its title to the land registered. 4

On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the application on the
ground that the property sought to be registered being a public road intended for public use is
considered part of the public domain and therefore outside the commerce of man, Consequently, it
cannot be subject to registration by any private individual. After hearing the parties, on October 11,
1914 the trial court issued an order dismissing the petitioner's application for registration of title.
Hence, the instant petition for review.

Issue: (1) Does the City Charter of Cebu City (Republic Act No. 3857) under Section 31, paragraph 34,
give the City of Cebu the valid right to declare a road as abandoned? And

(2) Does the declaration of the road, as abandoned, make it the patrimonial property of the City of
Cebu which may be the object of a common contract?

Held: The pertinent portions of the Revised Charter of Cebu City provides:
"Section 31. Legislative Powers. Any provision of law and executive order to the contrary
notwithstanding, the City Council shall have the following legislative powers: (34) . . . ; to close any
city road, street or alley, boulevard, avenue, park or square. Property thus withdrawn from public
servitude may be used or conveyed for any purpose for which other real property belonging to the City
may be lawfully used or conveyed."

From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city road or
street. In the case of Favis vs. City of Baguio, 7 where the power of the city Council of Baguio City to
close city streets and to vacate or withdraw the same from public use was similarly assailed, this court
said: "5. So it is, that appellant may not challenge the city council's act of withdrawing a strip of Lapu-
Lapu Street at its dead end from public use and converting the remainder thereof into an alley. These
are acts well within the ambit of the power to close a city street. The city council, it would seem to us, is
the authority competent to determine whether or not a certain property is still necessary for public use.

"Such power to vacate a street or alley is discretionary, And the discretion will not ordinarily be
controlled or interfered with by the courts, absent a plain case of abuse or fraud or collusion.
Faithfulness to the public trust will be presumed. So the fact that some private interests may be served
incidentally will not invalidate the vacation ordinance."

(2) Since that portion of the city street subject of petitioner's application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property which
can be the object of an ordinary contract.

Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the State."

Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal terms,
states that: "Property thus withdrawn from public servitude may be used or conveyed for any purpose
for which other real property belonging to the City may be lawfully used or conveyed." Accordingly,
withdrawal of the property in question from public use and its subsequent sale to the petitioner is valid.
Hence, the petitioner has a registerable title over the lot in question.
Suarez vs Emboy

Facts:

At the center of the dispute is a 222-square meter parcel of land, designated as Lot No. 1907-A-2
(subject lot) of the subdivision plan Psd-165686, situated in Barangay Duljo, Cebu City, and covered by
Transfer Certificate of Title (TCT) No. T-174880 issued in the name of Carmencita on February 9, 2005.
The subject lot used to be a part of Lot No. 1907-A, 8 which was partitioned in the following manner
among the heirs of Spouses Carlos Padilla (Carlos) and Asuncion Pacres (Asuncion

A house, which is occupied by respondents Felix and Marilou, stands in the subject lot. The respondents
claim that their mother, Claudia, had occupied the subject lot during her lifetime and it was earmarked
to become her share in Lot No. 1907-A. They had thereafter stayed in the subject lot for decades after
inheriting the same from Claudia, who had in turn succeeded her own parents, Carlos and Asuncion. 11

In 2004, respondents Felix and Marilou were asked by their cousins, who are the Heirs of Vicente, to
vacate the subject lot and to transfer to Lot No. 1907-A-5, a landlocked portion sans a right of way. They
refused to comply insisting that Claudia's inheritance pertained to Lot No. 1907-A-2. 12

Not long after, the respondents received from Carmencita's counsel, Atty. Jufelenito R. Pareja (Atty.
Pareja), a demand letter, dated February 23, 2004, requiring them to vacate the subject lot. They were
informed that Carmencita had already purchased on February 12, 2004 the subject lot from the former's
relatives. However, the respondents did not heed the demand. Instead, they examined the records
pertaining to the subject lot and uncovered possible anomalies, i.e., forged signatures and alterations, in
the execution of a series of deeds of partition relative to Lot No. 1907-A. On August 13, 2004, they filed
before the RTC of Cebu City a complaint 13 for nullification of the partition and for the issuance of new
TCTs covering the heirs' respective portions of Lot No. 1907-A. 14 DaTICE

On December 8, 2004, Carmencita filed before the MTCC and against the respondents a complaint for
unlawful detainer, the origin of the instant petition. She alleged that she bought the subject lot from
Remedios, Moreno, Veronica and Dionesia, 15 the registered owners thereof and the persons who
allowed the respondents to occupy the same by mere tolerance. As their successor-in-interest, she
claimed her entitlement to possession of the subject lot and the right to demand from the respondents
to vacate the same. 16

The MTCC upheld Carmencita's claims in its decision rendered on September 25, 2006. The
respondents were ordered to vacate the subject lot and remove at their expense all the
improvements they had built thereon. They were likewise made solidarily liable to pay Carmencita
Php20,000.00 as attorney's fees.

In the Decision dated February 26, 2008, the RTC affirmed in its entirety the MTCC ruling
CA Decision

On March 19, 2009, the CA rendered the herein assailed Decision reversing the disquisitions of the
courts a quo and dismissing Carmencita's complaint for unlawful detainer.

ISSUE: WON Carmencita's complaint against the respondents had sufficiently alleged and proven a cause
of action for unlawful detainer.

HELD:

NO. "Without a doubt, the registered owner of real property is entitled to its possession. However, the
owner cannot simply wrest possession thereof from whoever is in actual occupation of the property. To
recover possession, he must resort to the proper judicial remedy and, once he chooses what action to
file, he is required to satisfy the conditions necessary for such action to prosper.

Accion publiciana is the plenary action to recover the right of possession which should be brought in the
proper regional trial court when dispossession has lasted for more than one year. It is an ordinary civil
proceeding to determine the better right of possession of realty independently of title. In other words, if
at the time of the filing of the complaint more than one year had elapsed since defendant had turned
plaintiff out of possession or defendant's possession had become illegal, the action will be, not one of
the forcible entry or illegal detainer, but an accion publiciana. On the other hand, accion reivindicatoria
is an action to recover ownership also brought in the proper regional trial court in an ordinary civil
proceeding||| (Suarez v. Emboy, Jr., G.R. No. 187944, [March 12, 2014])

In a complaint for unlawful detainer, the following key jurisdictional facts must be alleged and
sufficiently established:

(1) initially, possession of property by the defendant was by contract with or by tolerance of the
plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to defendant of the termination
of the latter's right of possession;

(3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the
enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the plaintiff instituted
the complaint for ejectment. 40

In the case at bar, the first requisite mentioned above is markedly absent. Carmencita failed to clearly
allege and prove how and when the respondents entered the subject lot and constructed a house upon
it. 41 Carmencita was likewise conspicuously silent about the details on who specifically permitted the
respondents to occupy the lot, and how and when such tolerance came about. 42 Instead, Carmencita
cavalierly formulated a legal conclusion, sans factual substantiation, that (a) the respondents' initial
occupation of the subject lot was lawful by virtue of tolerance by the registered owners, and (b) the
respondents became deforciants unlawfully withholding the subject lot's possession after Carmencita,
as purchaser and new registered owner, had demanded for the former to vacate the property. 43 It is
worth noting that the absence of the first requisite assumes even more importance in the light of the
respondents' claim that for decades, they have been occupying the subject lot as owners thereof.

Again, this Court stresses that to give the court jurisdiction to effect the ejectment of an occupant or
deforciant on the land, it is necessary that the complaint must sufficiently show such a statement of
facts as to bring the party clearly within the class of cases for which the statutes provide a remedy,
without resort to parol testimony, as these proceedings are summary in nature. In short, the
jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver facts
constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or
how and when dispossession started, the remedy should either be an accion publiciana or accion
reivindicatoria.||| (Suarez v. Emboy, Jr., G.R. No. 187944, [March 12, 2014])

All told, we find no reversible error committed by the CA in dismissing Carmencita's complaint for
unlawful detainer. As discussed above, the jurisdictional requirement of possession by mere tolerance of
the owners had not been amply alleged and proven. Moreover, circumstances exist which justify the
abatement of the ejectment proceedings. Carmencita can ventilate her ownership claims in an action
more suited for the purpose. The respondents, on other hand, need not be exposed to the risk of having
their house demolished pending the resolution of their petition for nullification of the partition of Lot
No. 1907-A, where ownership over the subject lot is likewise presented as an issue.||| (Suarez v.
Emboy, Jr., G.R. No. 187944, [March 12, 2014])
PIO MODESTO and CIRILA RIVERA-MODESTO, petitioners, vs. CARLOS URBINA, substituted by the
heirs of OLYMPIA MIGUEL VDA. DE URBINA (Surviving Spouse) and children, namely: ESCOLASTICA M.
URBINA, ET AL., respondents

Facts: This case stems from a complaint for recovery of possession filed by respondent Carlos Urbina
(Urbina) against the petitioners with the Regional Trial Court of Pasig (RTC). In his complaint, Urbina
alleged that he is the owner of a parcel of land situated at Lower Bicutan, Taguig. According to Urbina,
the Modestos, through stealth, scheme, and machination, were able to occupy a portion of this
property. Thereafter, the Modestos negotiated with Urbina for the sale of this lot. However, before the
parties could finalize the sale, the Modestos allegedly cancelled the transaction and began claiming
ownership over the lot. Urbina made several demands on the Modestos to vacate the property, the last
of which was through a demand letter. When the Modestos still refused to vacate, Urbina filed the
present action against them.

In their answer, the Modestos claimed that Urbina could not be the lawful owner of the property
because it was still government property, being a part of the Fort Bonifacio Military Reservation.

The RTC noted that the petitioners recognized Urbina's possessory rights over the property when they
entered into a negotiated contract of sale with him for the property. Thus, the Modestos were estopped
from subsequently assailing or disclaiming Urbina's possessory rights over this lot.

The petitioners subsequently filed a petition for review on certiorari with this Court, asserting that the
CA committed reversible error in finding that Urbina had possessory rights over the property. The
property was thus not alienable and disposable, and could not legally be possessed by a private
individual. Accordingly, Urbina could not use the MSA and the tax declarations as proof of a better right
to possess the property as against the Modestos.

The Modestos further claimed that the CA committed grievous error when it held that they were
estopped from challenging Urbina's right to possess the subject property. While they admitted to
negotiating with Urbina for the sale of the property, they alleged that they did so based on Urbina's
misrepresentation that he had a legal claim of ownership over the property. Since their offer to buy the
property from Urbina was based on his false assertions, the principle of estoppel cannot apply.

Issue: WON Modestos can claim ownership over the parcel of land

Held: Yes. It appears that the parcel of land subject of this case (Lot 356) which is located in Barangay
Lower Bicutan, City of Taguig is covered by Proclamation No. 172 issued by President Corazon C. Aquino,
and hence, the same only became alienable and disposable to qualified applicants after October 16,
1987, the date of its issuance, contrary to what is believed in the assailed Order of this Office. Unless a
public land is shown to have been reclassified as alienable or actually alienated by the State to a private
person, that piece of land remains part of the public domain, and its occupation in the concept of
owner, no matter how long, cannot confer ownership or possessory rights. It is only after the property
has been declared alienable and disposable that private persons can legally claim possessory rights over
it.
Accordingly, even if we recognize that Urbina had been in possession of the property as early as July 21,
1966, when he filed his Miscellaneous Sales Application, his occupation was unlawful and could not be
the basis of possessory rights, in keeping with Section 88 of the Public Land Act, that states:

Section 88.The tract or tracts of land reserved under the provisions of section eighty-three shall be non-
alienable and shall not be subject to occupation, entry, sale, lease, or other disposition until again
declared alienable under the provisions of this Act or by proclamation of the President.

The different land investigators sent by the LMB to survey the subject property have consistently held
that the Modestos are the actual occupants of the lot in question. This actual occupation is not denied
by Urbina. As a matter of fact, we know from Urbina's final demand letter that the Modestos have been
in open and continuous possession of the property since July 22, 1983. 22 We also consider established
that the Modestos built a house on the subject property, a fact that Urbina affirmed in his testimony
before the RTC. 23 From these circumstances, we consider as settled the fact that the Modestos were
the actual possessors of the property when it was declared alienable and disposable on October 16,
1987, and continued to possess the property until the present time.

In any case, even if we consider this certification as sufficient proof that Urbina declared the subject
property for tax declaration purposes, it must be stressed that the mere declaration of land for taxation
purposes does not constitute possession thereof nor is it proof of ownership in the absence of the
claimant's actual possession. And in light of our categorical finding that the Modestos actually occupied
the property in question from the time that it was declared alienable and disposable until the present
time, the tax declaration fails to convince us that Urbina has a right to legally possess it.

For these reasons, we find that Urbina utterly failed to prove that he has a better right to possess the
property. Thus, we cannot sustain his complaint for ejectment against the Modestos and, perforce, must
dismiss the same for lack of merit.
Francisco Madrid vs Spouses Mapoy

Facts:

The spouses Bonifacio and Felicidad Mapoy (respondents-plaintiffs) are the absolute owners of two
parcels of land (the properties) known as Lot Nos. 79 and 80 of Block No. 27 of the Rizal Park
Subdivision, located at No. 1400 Craig Street corner Maria Clara Street, Sampaloc, Manila, under
Transfer Certificate of Title (TCT) Nos. 130064 and 130065 of the Registry of Deeds of Manila. The
properties have a combined area of two-hundred seventy (270) square meters/

The respondents-plaintiffs alleged that they acquired the properties from the spouses Procopio and
Encarnacion Castelo under a Deed of Absolute Sale dated June 20, 1978. They merely tolerated the
petitioners-defendants' continued occupancy and possession until their possession became illegal when
demands to vacate the properties were made. Despite the demands, the petitioners-defendants
continued to occupy and unlawfully withhold possession of the properties from the respondents-
plaintiffs, to their damage and prejudice. Efforts to amicably settle the case proved futile, leaving the
respondents-plaintiffs no recourse but to file a complaint for ejectment which the lower court dismissed
because the respondents-plaintiffs should have filed an accion publiciana. Thus, they filed their
complaint for accion publiciana, praying for recovery of possession of the properties and the payment of
P1,000.00 as monthly rental for the use of the properties from January 1987 until the petitioners-
defendants vacate the properties, plus P50,000.00 as moral and exemplary damages, and P30,000.00 as
attorney's fees.

The Mirandas countered that Gregorio Miranda owned the properties by virtue of an oral sale made in
his favor by the original owner, Vivencio Antonio (Antonio). They claimed that in 1948, Gregorio
Miranda was Antonio's carpenter, and they had a verbal contract for Miranda to stay in, develop, fix and
guard the properties; in 1972, Antonio gave the properties to Gregorio Miranda in consideration of his
more than twenty (20) years of loyal service.

Petitioner-defendant Bernardo also asserted ownership over the portion he occupies based on an oral
sale to him by Antonio. He alleged that he became a ward of Gregorio Miranda in 1965 when he was 10
years old and helped in the development of the properties; he helped construct a bodega and a house
within the properties. He and Antonio met in 1975, and Antonio promised that the bodega would be
given to him in gratitude for his work. CASaEc

Petitioner-defendant Madrid, for his part, claimed that he started occupying a portion of the properties
in 1974, and constructed a house on this portion in 1989 with the permission of Bernardo, the son of
Gregorio Miranda.

RTC RULING

The RTC upheld the respondents-plaintiffs' right of possession as registered owners of the properties. It
found no merit in the petitioners-defendants' claims of ownership via an oral sale given the absence of
any public instrument or at least a note or memorandum supporting their claims||| (Madrid v. Spouses
Mapoy, G.R. No. 150887, [August 14, 2009], 612 PHIL 920-936)

CA RULING

The CA dismissed the appeal in its decision 7 of July 16, 2001, affirming as a consequence the RTC
decision of July 21, 1994. The CA held that the certificate of title in the name of the respondents-
plaintiffs serves as evidence of an indefeasible and incontrovertible title to the properties. The CA found
that the petitioners-defendants never submitted any proof of ownership. Also, their reliance on their
alleged continuous occupation is misplaced since petitioner-defendant Bernardo's occupation in the
concept of owner started only in 1975 when Antonio allegedly gave him a portion of the properties as a
gift, while petitioner-defendant Madrid's occupation could not have been in the concept of an owner, as
he recognized Gregorio Miranda as the owner and paid him rents

Issue: WHO ARE THE OWNERS OF THE PROPERTY IN QUESTION?

Held:

Spouses Bonifacio and Felicidad Mapoy (respondents-plaintiffs) The objective of the plaintiffs in accion
publiciana is to recover possession only, not ownership. 13 However, where the parties raise the issue of
ownership, the courts may pass upon the issue to determine who between or among the parties has the
right to possess the property. This adjudication, however, is not a final and binding determination of the
issue of ownership; it is only for the purpose of resolving the issue of possession, where the issue of
ownership is inseparably linked to the issue of possession. The adjudication of the issue of ownership,
being provisional, is not a bar to an action between the same parties involving title to the property. 14
The adjudication, in short, is not conclusive on the issue of ownership.

As a matter of law, a Torrens Certificate of Title is evidence of indefeasible title of property in favor of
the person in whose name the title appears. The title holder is entitled to all the attributes of ownership
of the property, including possession, subject only to limits imposed by law. 19 In the present case, the
respondents-plaintiffs are indisputably the holders of a certificate of title against which the petitioners-
defendants' claim of oral sale cannot prevail. As registered titleholders, they are entitled to possession
of the properties.
SPOUSES JONEL PADILLA and SARAH PADILLA, petitioners, vs. ISAURO A. VELASCO, TEODORA A.
VELASCO, DELIA A. VELASCO, VALERIANO A. VELASCO, JR., IDA A. VELASCO, AMELITA C. VELASCO,
ERIBERTO C. VELASCO, JR., and CELIA C. VELASCO, respondents

FACTS: Respondents are the heirs of Dr. Artemio A. Velasco (Artemio), who died single and without any
issue on January 22, 1949. During his lifetime, Artemio acquired Lot No. 2161 consisting of 7,791 square
meters situated at Barangay Pinagsanjan, Pagsanjan, Laguna, covered by Tax Declaration No. 4739.
Artemio acquired the lot from spouses Brigido Sacluti and Melitona Obial, evidenced by a deed of sale
dated February 14, 1944. Petitioners entered the property as trustees by virtue of a deed of sale
executed by the Rural Bank of Pagsanjan in favor of spouses Bartolome Solomon, Jr. and Teresita Padilla
(Solomon spouses).

Respondents demanded that petitioners vacate the property, but the latter refused. The matter was
referred to the barangay for conciliation; however, the parties failed to reach an amicable settlement.
Thereafter, petitioners caused the cutting of trees in the area, fenced it and built a house thereon. They
harvested the crops and performed other acts of dominion over the property. Respondents filed a
complaint for accion publiciana, accounting and damages against petitioners before the Regional Trial
Court (RTC) of Santa Cruz, Laguna. They asked the court to order petitioners to vacate the property and
to pay moral and exemplary damages, attorney's fees and cost of suit.

Isauro A. Velasco (Isauro), the brother of the deceased Artemio, as administrator of the property, was
presented as a witness. He testified that Artemio owned the property. As evidence thereof, he
presented the Kasulatan ng Bilihang Tuluyan executed by spouses Brigido Sacluti and Melitona Obial in
favor of Artemio, and declared that he (Isauro) was present during the signing of the instrument. He
offered in evidence tax declarations and tax receipts covering Lot No. 2161 which were all in the name
of Artemio. A certification from the Land Registration Authority (LRA) was likewise presented by Isauro.
Rolando R. Flores, a geodetic engineer, also testified that he conducted a survey of the land based on
the technical description of the property and the map from the Bureau of Lands. The purpose of the
survey was to verify if the area occupied by petitioners was Lot No. 2161. Upon his examination and
based on his survey, he concluded that the land occupied by petitioners was Lot No. 2161.

On the other hand, petitioners averred that the Solomon spouses owned the property; that the said
spouses bought it from the Rural Bank of Pagsanjan as evidenced by a deed of sale; that the land was
identified as Lot No. 76-pt, consisting of 10,000 square meters, located at Pinagsanjan, Pagsanjan,
Laguna; and that the spouses authorized petitioners to occupy the land and introduce improvements
thereon. Petitioners further claimed that subsequent to the sale of the property to the Solomon
spouses, Lot No. 76-pt. was levied on in Civil Case No. 320 under the jurisdiction of the Municipal Trial
Court of Pagsanjan, Laguna. The case was entitled "Rural Bank of Pagsanjan, Inc. v. Spouses Hector and
Emma Velasco, Valeriano Velasco and Virginia Miso." Petitioners alleged that Valeriano Velasco
obtained a loan from the Rural Bank of Pagsanjan, with Hector Velasco as co-maker, and the land was
mortgaged by Valeriano as collateral. Valeriano's failure to pay the loan caused the foreclosure of the
land, and was sold at a public auction by the Provincial Sheriff. The Rural Bank of Pagsanjan was the
highest bidder. Pedro Zalameda Trinidad, Jr. (Pedro), as a witness for the petitioners, testified that he
was born in Barangay Pinagsanjan, Pagsanjan, Laguna, and had been residing there since birth. He said
that based on his knowledge, the land belonged to Nonong (Valeriano) Velasco because he used to buy
coconuts harvested from the said land and it was Nonong Velasco who caused the gathering of coconuts
thereon.

Petitioner Jonel Padilla also testified that Pedro was occupying the land when he initially visited it. A
representative of the Rural Bank of Pagsanjan disclosed to him that the land previously belonged to
Valeriano. He verified from the Municipal Assessor the technical description of the land, but no longer
verified from the Bureau of Lands because he trusted the bank. Upon his recommendation, his sister
and his brother-in-law purchased the property after verifying the supporting documents. It was his
brother-in-law who went to the Bureau of Lands and found that it was Lot No. 2161. The RTC rendered a
Decision, ordering [petitioners] to vacate the land presently occupied by them and restore possession
thereof to the [respondents], to render an accounting of the proceeds from the crop harvested
therefrom starting September 1987 up to the time the property is returned to the [respondents], and to
remove at their expense all the structures they constructed thereon.

Petitioners filed an appeal before the CA, but the CA issued the assailed decision affirming the decision
of the RTC. They consequently filed a motion for reconsideration. However, the same was denied in the
assailed resolution dated October 4, 2005.

ISSUE: I. Who, as between the parties, have a better right of possession of Lot No. 2161;

II. Whether the complaint for accion publiciana has already prescribed; and

III. Whether the negligence of respondent's counsel entitles them to a new trial.

HELD:

I: Accion publiciana is also used to refer to an ejectment suit where the cause of dispossession is not
among the grounds for forcible entry and unlawful detainer, or when possession has been lost for more
than one year and can no longer be maintained under Rule 70 of the Rules of Court. The objective of the
plaintiffs in accion publiciana is to recover possession only, not ownership.

Based on the findings of facts of the RTC which were affirmed by the CA, respondents were able to
establish lawful possession of Lot No. 2161 when the petitioners occupied the property. Lot No. 2161
was the subject of Decree No. 403348 based on the decision dated October 10, 1930 in Cadastre (Cad.)
Case No. 11, LRC Record No. 208. The Original Certificate of Title to the land was issued to Brigido Sacluti
and Melitona Obial. On February 14, 1944, the original owners of the land sold the same to Artemio.
From the date of sale, until Artemio's death on January 22, 1949, he was in continuous possession of the
land. When Artemio died, Isauro acted as administrator of the land with Tomas Vivero as caretaker. In
1987, petitioners occupied the property by virtue of a deed of sale between the Rural Bank of Pagsanjan
and the Solomon spouses. The land bought by the Solomon spouses from the Bank is denominated as
Lot No. 76-pt and previously owned by Valeriano. However, it was proved during trial that the land
occupied by petitioners was Lot No. 2161 in the name of Artemio, whereas the land sold by the bank to
the petitioners was Lot No. 76-pt. Given this factual milieu, it can readily be deduced that respondents
are legally entitled to the possession of Lot No. 2161.

II: The case filed by respondents for accion publiciana has not prescribed. The action was filed with the
RTC on October 14, 1991. Petitioners dispossessed respondents of the property in October 1987. At the
time of the filing of the complaint, only four (4) years had elapsed from the time of dispossession.

Under Article 555 (4) of the Civil Code of the Philippines, the real right of possession is not lost till after
the lapse of ten years. It is settled that the remedy of accion publiciana prescribes after the lapse of ten
years. 21 Thus, the instant case was filed within the allowable period.

III: It may be reiterated that mistakes of counsel as to the competency of witnesses, the sufficiency and
relevancy of evidence, the proper defense, or the burden of proof, as well as his failure to introduce
certain evidence or to summon witnesses and to argue the case, are not proper grounds for a new trial,
unless the incompetence of counsel be so great that his client is prejudiced and prevented from fairly
presenting his case. In this case, the illness of petitioners' counsel and his alleged failure to present
additional evidence during the trial of the case do not constitute sufficient ground for a new trial.

Assuming that Atty. Asinas failed to perform the imputed acts by reason of his ailments, still, the same is
insufficient ground to grant a new trial. The evidence on record established the fact that [respondents]
and their predecessors-in-interest have been in possession of the subject realty for a long time. Their
possession was interrupted by [petitioners] who entered the property in [1987] pursuant to a deed of
sale between the Rural Bank of Pagsanjan and spouses Bartolome C. Solomon and Teresita Padilla.
Considering that this is an accion publiciana and [respondents'] earlier rightful possession of the subject
parcel of land has been adequately established, the testimonial and documentary evidence sought to be
adduced in a new trial would not adversely affect the findings of the Court. The ownership and
possession of the property purchased by the Solomon spouses from the Rural Bank of Pagsanjan could
be the subject of an appropriate action.
Canezo vs Bautista

Facts:

Spouses Elegio and Dolia Caezo (hereafter appellees) are the registered owner[s] of a parcel of land with
an area of One Hundred Eighty Six (186) square meters, covered by Transfer Certificate of Title (TCT) No.
32911.

Spouses Apolinario and Consorcia Bautista (hereafter appellants) are the registered owners of a parcel
of land, containing an area of One Hundred Eighty One (181) square meters, covered by Transfer
Certificate of Title (TCT) No. 31727. Both parcels of land are located at Coronado Heights, Barangka
Ibaba, Mandaluyong City and registered with the Registry of Deeds of Mandaluyong City. Appellants lot
is adjacent to that of appellees [sic].

Sometime in 1995, appellees started the construction of a building on their lot. During the construction,
appellees discovered that their lot was encroached upon by the structures built by appellants without
appellees knowledge and consent.

The three (3) surveys conducted confirmed the fact of encroachment. However, despite oral and written
demands, appellants failed and refused to remove the structures encroaching appellees lot.

Attempts were made to settle their dispute with the barangay lupon, but to no avail. Appellees initiated
a complaint with the RTC for the issuance of a writ of demolition.

For failure to file an Answer within the extended period granted by the court, appellants were declared
in default. Appellees were allowed to present their evidence ex parte before an appointed
commissioner. Thereafter the RTC rendered the assailed decision in the terms earlier set forth.[4]

The spouses Caezo filed their complaint for the issuance of a writ of demolition with damages on 13
April 2000. In an Order dated 15 August 2000, the trial court declared the spouses Bautista in default for
failure to answer within the reglementary period. The Public Attorneys Office, which represented the
spouses Bautista at the time, filed a Motion to Admit Answer dated 15 June 2000. The trial court denied
the motion in its Decision.

Trial’s Court Ruling

The trial court found that the spouses Bautista built structures encroaching on the land owned by the
spouses Caezo. The spouses Bautista also refused to remove the structures and respect the boundaries
as established by the various surveyors. A referral to the Barangay Lupon failed to settle the controversy
amicably. The trial court thus ruled that the spouses Bautista are builders in bad faith, such that the
spouses Caezo are entitled to an issuance of a writ of demolition with damages.

Appellate Court Ruling

The appellate court ruled that since the last demand was made on 27 March 2000, or more than a year
before the filing of the complaint, the spouses Caezo should have filed a suit for recovery of possession
and not for the issuance of a writ of demolition. A writ of demolition can be granted only as an effect of
a final judgment or order, hence the spouses Caezos complaint should be dismissed. The spouses Caezo
failed to specify the assessed value of the encroached portion of their property. Because of this failure,
the complaint lacked sufficient basis to constitute a cause of action. Finally, the appellate court ruled
that should there be a finding of encroachment in the action for recovery of possession and that the
encroachment was built in good faith, the market value of the encroached portion should be proved to
determine the appropriate indemnity.

ISSUE: WON Spoues Canezo could recover the encroach land made by the spouses Bautista?

Held:

Yes. Article 434 of the Civil Code reads: In an action to recover, the property must be identified, and the
plaintiff must rely on the strength of his title and not on the weakness of the defendants claim. Accion
reivindicatoria seeks the recovery of ownership and includes the jus utendi and the jus fruendi brought
in the proper regional trial court. Accion reivindicatoria is an action whereby plaintiff alleges ownership
over a parcel of land and seeks recovery of its full possession.[8]

In order that an action for the recovery of title may prosper, it is indispensable, in accordance with the
precedents established by the courts, that the party who prosecutes it must fully prove, not only his
ownership of the thing claimed, but also the identity of the same.[9] However, although the identity of
the thing that a party desires to recover must be established, if the plaintiff has already proved his right
of ownership over a tract of land, and the defendant is occupying without right any part of such tract, it
is not necessary for plaintiff to establish the precise location and extent of the portions occupied by the
defendant within the plaintiffs property.[10]

The spouses Caezo were able to establish their ownership of the encroached property. Aside from
testimonial evidence, the spouses Caezo were also able to present documentary and object evidence
which consisted of photographs,[11] transfer certificates of title,[12] and a relocation survey plan.[13]

The relocation survey plan also corroborated Elegio Caezos testimony on the reason for the spouses
Bautistas attitude regarding the encroached property. The relocation survey plan showed that the
spouses Bautistas property encroached upon that of the spouses Caezo by 0.97 centimeters, while the
spouses Bautistas property was encroached upon by 1.01 centimeters by another landowner.

Given the efforts made by the spouses Caezo to settle the present issue prior to the filing of a
Complaint, the trial court was justified in ruling that the spouses Bautista were in default and in not
admitting their Answer. The Complaint was not the spouses Bautistas first encounter with the present
issue. Moreover, the spouses Bautista failed to file their Answer even after the expiry of the motion of
extension granted to them.
Ibot vs Heirs of Tayco

Facts:

The dispute centers on the ownership of a residential land denominated as Lot No. 299, Bsd-101505
situated at Poblacion 2, Pigcawayan, Province of Cotabato, measuring 536 square meters, more or less,
and covered by Original Certificate of Title (OCT) No. P-62053. 5

The respondents are the heirs of deceased Francisco Tayco (Francisco) who presently occupy Lot No.
299, while the petitioner is the registered owner of Lot No. 299 in whose name OCT No. P-62053 was
issued by the Register of Deeds of the Province of Cotabato on October 23, 1997. 6

On September 23, 1999, a complaint for reconveyance of real property, damages and attorney's fees
was filed before the RTC by the respondents against the petitioner grounded on their claim as owners of
Lot No. 299 because of their actual, continuous, exclusive and notorious possession thereof since 1964
through their predecessor-in-interest, Francisco. 7

The respondents alleged that: in 1960, spouses Francisco and Flora Tayco (spouses Tayco) purchased Lot
No. 299 from Amelita Ibot (Amelita) for a consideration of P1,200.00 which was set forth in a Deed of
Sale that was prepared by an attorney's clerk named Fe Clamor; 8 Francisco commenced his Sales
Application of Lot No. 299 with the Bureau of Lands (Bureau) but it was discontinued due to his sickness;
Francisco lost the documents necessary for his sales application including the Deed of Sale; 9 their open,
continuous, exclusive, and notorious possession since 1964 and the introduction of improvements on
Lot No. 299 entitles them to its reconveyance as owners; and fraud attended the issuance of the
petitioner's OCT in 1998. 10

In his answer, 11 the petitioner denied the allegations and unequivocally declared that the respondents
cannot become owners of Lot No. 299 because his predecessor-in-interest, Amelita, merely tolerated
their occupation; that Calixta Tayco (Calixta), mother of Francisco, sought permission for them to be
allowed to relocate their nipa hut on Lot No. 299 due to the construction of Pigcawayan's public market;
that despite Francisco's marriage, Amelita continuously allowed them to stay on the lot with his family;
12 that in 1997, Amelita ceded to him all her rights on Lot No. 299; that his Free Patent application to
the Bureau was not fraudulent; that after complying with all legal requisites imposed by law, he was
issued OCT No. P-62053 by the Register of Deeds, Province of Cotabato on October 23, 1997; 13 that the
respondents were allowed to remain in Lot No. 299 despite the death of Calixta and Francisco; that
upon learning about the respondents' sale of a portion of Lot No. 299 to Freddie Rizardo, the petitioner
formally demanded them to vacate Lot No. 299; that the respondents did not heed his demand for them
to vacate; that on August 20, 1999, the petitioner filed a complaint for unlawful detainer against the
respondents but it was dismissed due to lack of jurisdiction.

RTC Decision:

The RTC rendered Judgment 17 upholding the petitioner's ownership of the subject property

CA Decision:
On appeal, the CA reversed 21 the judgment of the RTC

Issue: WON the respondents are the owners of the property in question?

Held:

No, the decision on the property in question should be in favor of the petitioner. Generally, "in civil
cases, the burden of proof is on the plaintiff to establish his case by a preponderance of evidence. If the
plaintiff claims a right granted or created by law, the same must be proven by competent evidence. The
plaintiff must rely on the strength of his own evidence," 36 "or evidence which is of greater weight or
more convincing than that which is offered in opposition to it. Hence, parties who have the burden of
proof must produce such quantum of evidence, with plaintiffs having to rely on the strength of their
own evidence, not on the weakness of the defendant's." 37 In an action for reconveyance, however, a
party seeking it should establish not merely by a preponderance of evidence but by clear and convincing
evidence that the land sought to be reconveyed is his. 38

In the case at bar, the respondents failed to dispense their burden of proving by clear and convincing
evidence that they are entitled to the reconveyance of Lot No. 299.

Requisites for the reconveyance of property

Article 434 of the Civil Code provides:

Art. 434. In an action to recover, the property must be identified, and the plaintiff must rely on the
strength of his title and not on the weakness of the defendant's claim.

In order to successfully maintain an action to recover the ownership of a real property, the person who
claims a better right to it must prove two things: first, the identity of the land claimed; and second, his
title thereto. 39

As to the first requisite, there is no doubt that the land sought to be reconveyed is Lot No. 299, a
residential lot located at Pigcawayan, Province of Cotabato. As to the second requisite on title of
ownership, the claims of the parties conflict.

The petitioner, on the other hand, unequivocally dispensed his burden of proving that the respondents'
occupation of Lot No. 299 was through the mere tolerance of his aunt Amelita. Tolerance must be
shown by some overt act such as the permission accorded by the petitioner and his predecessors-in-
interest to occupy the disputed property in order for it to be well-taken. Mere tolerance always carries
with it "permission" and not merely silence or inaction for silence or inaction is negligence, not
tolerance. 44 It must also be shown "that the supposed acts of tolerance have been present right from
the very start of the possession — from entry to the property." 45 cSEDTC

To support his claim of ownership, the petitioner presented the following pieces of evidence, to wit: (1)
OCT No. P-62053 46 dated October 23, 1997; (2) Tax Declaration No. 11-002-96-00778 47 dated in 1998;
(3) demand letter 48 to vacate dated May 25, 1999; (4) Barangay Certification to file action; 49 (5)
application 50 and notice 51 to file for Free Patent dated July 7, and 24, 1987, respectively; (6) the Order
of the DENR 52 dated December 11, 1996 wherein Amelita requested for the rejection of her free patent
application in favor of the petitioner; and the testimony of his aunt Amelita on how the respondents and
their predecessors-in-interest started to occupy Lot No. 299 and her acquiescence to their occupation
until she transferred all her rights over Lot No. 299 in favor of the petitioner. Hence, as compared to the
evidence of the respondents, the evidence of the petitioner clearly and convincingly prove his exercise
of ownership over the disputed property.

Prescinding from the foregoing, it is clear mere claim of ownership will not suffice. An action for
reconveyance should be maintained by the true owner. It will not suffice that the respondents are in
possession of the land subject thereof. 53 Thus, the scale of justice should tilt in favor of the petitioner
and not the respondents
Aneco Realty & Devt Corp vs Landex Corp

Facts:

Fernandez Hermanos Development, Inc. (FHDI) is the original owner of a tract of land in San Francisco
Del Monte, Quezon City. FHDI subdivided the land into thirty-nine (39) lots. 3 It later sold twenty-two
(22) lots to petitioner Aneco and the remaining seventeen (17) lots to respondent Landex. 4

The dispute arose when Landex started the construction of a concrete wall on one of its lots. To restrain
construction of the wall, Aneco filed a complaint for injunction 5 with the RTC in Quezon City. Aneco
later filed two (2) supplemental complaints seeking to demolish the newly-built wall and to hold Landex
liable for two million pesos in damages. 6 DASEac

Landex filed its Answer 7 alleging, among others, that Aneco was not deprived access to its lots due to
the construction of the concrete wall. Landex claimed that Aneco has its own entrance to its property
along Miller Street, Resthaven Street, and San Francisco del Monte Street. The Resthaven access,
however, was rendered inaccessible when Aneco constructed a building on said street. Landex also
claimed that FHDI sold ordinary lots, not subdivision lots, to Aneco based on the express stipulation in
the deed of sale that FHDI was not interested in pursuing its own subdivision project.

ISSUE: WON ANECO can enjoin/prevent Landex Corp from constructing a concrete wall on its own
property?

Held:

No. We agree with the RTC and the CA that the complaint for injunction against Landex should be
dismissed for lack of merit. What is involved here is an undue interference on the property rights of a
landowner to build a concrete wall on his own property. It is a simple case of a neighbor, petitioner
Aneco, seeking to restrain a landowner, respondent Landex, from fencing his own land. ECaSIT

Article 430 of the Civil Code gives every owner the right to enclose or fence his land or tenement by
means of walls, ditches, hedges or any other means. The right to fence flows from the right of
ownership. As owner of the land, Landex may fence his property subject only to the limitations and
restrictions provided by law. Absent a clear legal and enforceable right, as here, We will not interfere
with the exercise of an essential attribute of ownership.

Well-settled is the rule that factual findings and conclusions of law of the trial court when affirmed by
the CA are accorded great weight and respect. Here, We find no cogent reason to deviate from the
factual findings and conclusion of law of the trial court and the appellate court. We have meticulously
reviewed the records and agree that Aneco failed to prove any clear legal right to prevent, much less
restrain, Landex from fencing its own property. TaCIDS

Aneco cannot rely on the road lot under the old subdivision project of FHDI because it knew at the time
of the sale that it was buying ordinary lots, not subdivision lots, from FHDI. This is clear from the deed of
sale between FHDI and Aneco where FHDI manifested that it was no longer interested in pursuing its
own subdivision project. If Aneco wants to transform its own lots into a subdivision project, it must
make its own provision for road lots. It certainly cannot piggy back on the road lot of the defunct
subdivision project of FHDI to the detriment of the new owner Landex. The RTC and the CA correctly
dismissed the complaint for injunction of Aneco for lack of merit.
NATIONAL POWER CORPORATION, petitioner, vs. LUCMAN G. IBRAHIM, OMAR G. MARUHOM, ELIAS
G. MARUHOM, BUCAY G. MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G.
MARUHOM, POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G.
MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, and CAIRONESA M. IBRAHIM,
respondents

Facts: On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf of
his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G.
Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom,
Sinab G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa
M. Ibrahim, instituted an action against petitioner National Power Corporation (NAPOCOR) for recovery
of possession of land and damages before the Regional Trial Court (RTC) of Lanao del Sur.

In their complaint, Ibrahim and his co-heirs claimed that they were owners of several parcels of land
described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into three (3) lots,
i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each respectively. Sometime
in 1978, NAPOCOR, through alleged stealth and without respondents' knowledge and prior consent,
took possession of the sub-terrain area of their lands and constructed therein underground tunnels. The
existence of the tunnels was only discovered sometime in July 1992 by respondents and then later
confirmed on November 13, 1992 by NAPOCOR itself through a memorandum issued by the latter's
Acting Assistant Project Manager. The tunnels were apparently being used by NAPOCOR in siphoning the
water of Lake Lanao and in the operation of NAPOCOR's Agus II, III, IV, V, VI, VII projects located in
Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City.

On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water District for a
permit to construct and/or install a motorized deep well in Lot 3 located in Saduc, Marawi City but his
request was turned down because the construction of the deep well would cause danger to lives and
property. On October 7, 1992, respondents demanded that NAPOCOR pay damages and vacate the sub-
terrain portion of their lands but the latter refused to vacate much less pay damages. Respondents
further averred that the construction of the underground tunnels has endangered their lives and
properties as Marawi City lies in an area of local volcanic and tectonic activity. Further, these illegally
constructed tunnels caused them sleepless nights, serious anxiety and shock thereby entitling them to
recover moral damages and that by way of example for the public good, NAPOCOR must be held liable
for exemplary damages.

Disputing respondents' claim, NAPOCOR filed an answer with counterclaim denying the material
allegations of the complaint and interposing affirmative and special defenses, namely that (1) there is a
failure to state a cause of action since respondents seek possession of the sub-terrain portion when they
were never in possession of the same, (2) respondents have no cause of action because they failed to
show proof that they were the owners of the property, and (3) the tunnels are a government project for
the benefit of all and all private lands are subject to such easement as may be necessary for the same.
Issue: WON RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT PROPERTIES
TO ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES.

Held: No. Just compensation has been understood to be the just and complete equivalent of the loss
and is ordinarily determined by referring to the value of the land and its character at the time it was
taken by the expropriating authority. There is a "taking" in this sense when the owners are actually
deprived or dispossessed of their property, where there is a practical destruction or a material
impairment of the value of their property, or when they are deprived of the ordinary use thereof. There
is a "taking" in this context when the expropriator enters private property not only for a momentary
period but for more permanent duration, for the purpose of devoting the property to a public use in
such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof. Moreover,
"taking" of the property for purposes of eminent domain entails that the entry into the property must
be under warrant or color of legal authority.

In the present case, petitioner failed to point to any evidence demonstrating grave abuse of discretion
on the part of the CA or to any other circumstances which would call for the application of the
exceptions to the above rule. Consequently, the CA's findings which upheld those of the trial court that
respondents owned and possessed the property and that its substrata was possessed by petitioner since
1978 for the underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the
lower courts that the sub-terrain portion of the property similarly belongs to respondents. This
conclusion is drawn from Article 437 of the Civil Code which provides: ART. 437. The owner of a parcel
of land is the owner of its surface and of everything under it, and he can construct thereon any works or
make any plantations and excavations which he may deem proper, without detriment to servitudes and
subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial
navigation.

This Court has defined the elements of "taking" as the main ingredient in the exercise of power of
eminent domain, in the following words:

"A number of circumstances must be present in "taking" of property for purposes of eminent domain:
(1) the expropriator must enter a private property; (2) the entrance into private property must be for
more than a momentary period; (3) the entry into the property should be under warrant or color of legal
authority; (4) the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust
the owner and deprive him of all beneficial enjoyment of the property." (Italics supplied) AECcTS

In this case, the petitioner's entrance in 1978 was without intent to expropriate or was not made under
warrant or color of legal authority, for it believed the property was public land covered by Proclamation
No. 1354. When the private respondent raised his claim of ownership sometime in 1979, the petitioner
flatly refused the claim for compensation, nakedly insisted that the property was public land and
wrongly justified its possession by alleging it had already paid "financial assistance" to Marawi City in
exchange for the rights over the property. Only in 1990, after more than a decade of beneficial use, did
the petitioner recognize private respondent's ownership and negotiate for the voluntary purchase of
the property. A Deed of Sale with provisional payment and subject to negotiations for the correct price
was then executed. Clearly, this is not the intent nor the expropriation contemplated by law. This is a
simple attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or refused to
exercise the power of eminent domain.

Only in 1992, after the private respondent sued to recover possession and petitioner filed its Complaint
to expropriate, did petitioner manifest its intention to exercise the power of eminent domain.
Sio Tat King vs Lim

Facts:

Civil Case No. 94-71083, the Spouses Victoriano and Evelyn Calidguid (Spouses Calidguid) executed a
Compromise Agreement 1 binding themselves to pay the amount of P2,520,000.00 to the Spouses Jaime
Lee (Jaime) and Lim Dechu (collectively, Spouses Lee), which was approved by the Regional Trial Court
(RTC) of Manila, Branch 4 in its Decision 2 dated April 24, 1995. However, the Spouses Calidguid failed to
comply with the terms of the said decision, leading the Spouses Lee to avail of the remedy of execution.
A Writ of Execution 3 was issued on August 2, 1995 to satisfy the compromise judgment and a property
belonging to the Spouses Calidguid covered by Transfer Certificate of Title (TCT) No. 85561 was levied on
execution. During its sale at a public auction, the judgment creditor, Jaime emerged as the highest
bidder and a corresponding Certificate of Sale 4 was issued in his favor.

As an assignee of the Spouses Calidguid, Sio Tiat King (King) redeemed the subject property on October
30, 1996, before the expiration of the one-year period of right of redemption. Hence, the sheriff
executed a Certificate of Redemption. 5

More than 11 years after the redemption of the subject property, King filed a motion for the issuance of
a writ of possession, which was granted by the RTC in its Order 6 dated January 22, 2008. A Writ of
Possession 7 was thereafter issued on January 25, 2008. Pursuant to this, Sheriff Cesar Javier served a
Notice to Vacate 8 addressed to the Spouses Calidguid, their agents and all other persons claiming rights
under them at 109 P. Florentino Street corner Araneta Avenue, Sto. Domingo, Quezon City, which is the
location of the subject property.

On February 19, 2008, Michael George O. Lim, Mathew Vincent O. Lim, Mel Patrick O. Lim, Moises
Francis W. Lim and Marvin John W. Lim (Lims) filed a Joint Affidavit of Third Party Claim, 9 alleging that
they are the registered owners of the property situated at 109 P. Florentino Street corner Araneta
Avenue, Sto. Domingo, Quezon City under TCT No. 122207.

On February 21, 2008, the Lims filed an Entry of Appearance with Motion to Quash Writ of Execution. 10
On March 14, 2008, the RTC issued an Order setting the case for preliminary conference on April 11,
2008. On March 18, 2008, the actual and physical possession of a part of the subject property was
turned over to King, prompting the Lims to file an Extremely Urgent Motion to Issue Status Quo Ante
Order. 11 On April 4, 2008, the motion filed by the Lims was granted but to last only until April 11, 2008.
12 CAIHTE

The Lims filed a Petition for Certiorari 13 before the Court of Appeals (CA), alleging among others, that
the RTC judge committed grave abuse of discretion when they were ousted from their property by
virtue of the writ of possession, without a separate and independent action to resolve the issue of
ownership. 14
Subsequently on April 11, 2008, the RTC issued an Order 15 commanding the sheriff to defer completion
of the implementation of the writ of possession while the resolution of the motion to quash the writ of
execution is pending.

The RTC issued an Order 16 dated April 28, 2008, denying the motion to quash of the Lims. The RTC also
resolved that the TCT of the Spouses Calidguid was issued at an earlier date; therefore it shall prevail
over the TCT of the Lims. This led the Lims to file a Motion to Admit the Attached Supplemental Petition,
17 which the CA granted in its Resolution 18 dated May 28, 2008. The CA also issued a temporary
restraining order to preserve the rights of both parties while awaiting resolution of the petition. 19 On
June 4, 2008, the RTC issued an Order 20 suspending the execution of its Order dated April 28, 2008 and
all allied processes pertinent to the case.

On July 22, 2008, the CA rendered a Decision, 21 annulling the Order dated April 28, 2008 of the RTC

King’s motion for reconsideration was denied and filed the present petition.

ISSUE: WON the LIMS may be evicted from the property by virtue of a writ of possession issued in
favor of King.

Held:

No. The Lims are considered as a third party, whose possession over the subject property may not be
defeated summarily. "The third party's possession of the property is legally presumed to be based on a
just title, a presumption which may be overcome by the purchaser in a judicial proceeding for recovery
of the property. Through such a judicial proceeding, the nature of the adverse possession by the third
party may be determined, after such third party is accorded due process and the opportunity to be
heard. The third party may be ejected from the property only after he has been given an opportunity to
be heard, conformably with the time-honored principle of due process." 28

Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The
true owner must resort to judicial process for the recovery of the property.

While King and the Lims are contending for the possession and ownership of the same property, which
has been the subject of levy and execution in Civil Case No. 94-71083, an ejectment suit should have
been filed by King before the Lims could be evicted from the property. This is due to the existence of
their ostensibly conflicting titles coupled with the Lims' actual possession over the property. "One who
claims to be the owner of a property possessed by another must bring the appropriate judicial action for
its physical recovery. The 'judicial process' could mean no less than an ejectment suit or a reivindicatory
action, in which the ownership claims of the contending parties may be properly heard and
adjudicated." 29

King took a procedural shortcut when he applied for the issuance of a writ of possession instead of filing
a suit to recover possession of the property against the Lims. Besides, as the CA had espoused, the
issuance of the writ of possession produced a peculiar situation in which the writ sought by King was
directed against himself as the assignee of the judgment debtors.
Villasi vs Garcia

Facts:

Sometime in 1990, petitioner Magdalena T. Villasi (Villasi) engaged the services of respondent Fil-Garcia
Construction, Inc. (FGCI) to construct a seven-storey condominium building located at Aurora Boulevard
corner N. Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the contract price
despite several demands, FGCI initiated a suit for collection of sum of money before the RTC of Quezon
City, Branch 77. In its action docketed as Civil Case No. Q-91-8187, FGCI prayed, among others, for the
payment of the amount of P2,865,000.00, representing the unpaid accomplishment billings. Served with
summons, Villasi filed an answer specifically denying the material allegations of the complaint.
Contending that FGCI has no cause of action against her, Villasi averred that she delivered the total
amount of P7,490,325.10 to FGCI but the latter accomplished only 28% of the project. After the pre-trial
conference was terminated without the parties having reached an amicable settlement, trial on the
merits ensued.

To satisfy the judgment, the sheriff levied on a building located at No. 140 Kalayaan Avenue, Quezon
City, covered by Tax Declaration No. D-021-01458, and built in the lots registered under Transfer
Certificates of Title (TCT) Nos. 379193 and 379194. While the building was declared for taxation
purposes in the name of FGCI, the lots in which it was erected were registered in the names of the
Spouses Filomeno Garcia and Ermelinda Halili-Garcia (Spouses Garcia). After the mandatory posting and
publication of notice of sale on execution of real property were complied with, a public auction was
scheduled on 25 January 2006.

To forestall the sale on execution, the Spouses Garcia filed an Affidavit of Third Party Claim 10 and a
Motion to Set Aside Notice of Sale on Execution, 11 claiming that they are the lawful owners of the
property which was erroneously levied upon by the sheriff. To persuade the court a quo to grant their
motion, the Spouses Garcia argued that the building covered by the levy was mistakenly assessed by the
City Assessor in the name of FGCI. The motion was opposed by Villasi who insisted that its ownership
belongs to FGCI and not to the Spouses Garcia as shown by the tax declaration.

After weighing the arguments of the opposing parties, the RTC issued on 24 February 2005 an Order 12
directing the Sheriff to hold in abeyance the conduct of the sale on execution, to wit:

ISSUE: WON the Spouses Garcia being owners of the land are also owners of the building?

Held:

No. Our perusal of the record shows that, as the party asserting their title, the Spouses Garcia failed to
prove that they have a bona fide title to the building in question. Aside from their postulation that as
title holders of the land, the law presumes them to be owners of the improvements built thereon, the
Spouses Garcia were unable to adduce credible evidence to prove their ownership of the property. In
contrast, Villasi was able to satisfactorily establish the ownership of FGCI thru the pieces of evidence she
appended to her opposition. Worthy to note is the fact that the building in litigation was declared for
taxation purposes in the name of FGCI and not in the Spouses Garcias'. While it is true that tax receipts
and tax declarations are not incontrovertible evidence of ownership, they constitute credible proof of
claim of title over the property. 23 In Buduhan v. Pakurao, 24 we underscored the significance of a tax
declaration as proof that a holder has claim of title, and, we gave weight to the demonstrable interest of
the claimant holding a tax receipt:

Although tax declarations or realty tax payment of property are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind
would be paying taxes for a property that is not in his actual or at least constructive possession. They
constitute at least proof that the holder has a claim of title over the property. The voluntary declaration
of a piece of property for taxation purposes manifests not only one's sincere and honest desire to obtain
title to the property and announces his adverse claim against the State and all other interested parties,
but also the intention to contribute needed revenues to the Government. Such an act strengthens one's
bona fide claim of acquisition of ownership. 25

It likewise failed to escape our attention that FGCI is in actual possession of the building and as the
payment of taxes coupled with actual possession of the land covered by tax declaration strongly
supports a claim of ownership. 26 Quite significantly, all the court processes in an earlier collection suit
between FGCI and Villasi were served, thru the former's representative Filomeno Garcia, at No. 140
Kalayaan Avenue, Quezon City, where the subject property is located. This circumstance is consistent
with the tax declaration in the name of FGCI.

While it is a hornbook doctrine that the accessory follows the principal, 31 that is, the ownership of the
property gives the right by accession to everything which is produced thereby, or which is incorporated
or attached thereto, either naturally or artificially, 32 such rule is not without exception. In cases where
there is a clear and convincing evidence to prove that the principal and the accessory are not owned by
one and the same person or entity, the presumption shall not be applied and the actual ownership shall
be upheld. In a number of cases, we recognized the separate ownership of the land from the building
and brushed aside the rule that accessory follows the principal.

The rule on accession is not an iron-clad dictum. On instances where this Court was confronted with
cases requiring judicial determination of the ownership of the building separate from the lot, it never
hesitated to disregard such rule. The case at bar is of similar import. When there are factual and
evidentiary evidence to prove that the building and the lot on which it stands are owned by different
persons, they shall be treated separately. As such, the building or the lot, as the case may be, can be
made liable to answer for the obligation of its respective owner.
Bachrach vs Talisay-Silay

Facts:

This proceeding originated in a complaint filed by the Bachrach Motor Co., Inc. against the Talisay-Silay
Milling Co., Inc., for the delivery of the amount of P13,850 or promissory notes or other instruments of
credit for that sum payable on June 30, 1930, as bonus in favor of Mariano Lacson Ledesma; the
complaint further prays that the sugar central be ordered to render an accounting of the amounts it
owes Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to pay the plaintiff a sum
sufficient to satisfy the judgment mentioned in the complaint, and that the sale made by said Mariano
Lacson Ledesma be declared null and void.

The Philippine National Bank filed a third party claim alleging a preferential right to receive any amount
which Mariano Lacson Ledesma might be entitled to from the Talisay-Silay Milling Co. as bonus, because
that would be civil fruits of the land mortgaged to said bank by said debtor for the benefit of the central
referred to, and by virtue of a deed on assignment, and praying that said central be ordered to deliver
directly to the intervening bank said sum on account of the latter's credit against the aforesaid Mariano
Lacson Ledesma.

The corporation Talisay-Silay Milling Co., Inc., answered the complaint stating that of Mariano Lacson
Ledesma's credit, P7,500 belonged to Cesar Ledesma because he had purchased it, and praying that it be
absolved from the complaint and that the proper party be named so that the remainder might be
delivered.

Cesar Ledesma, in turn, claiming to be the owner by purchase in good faith and for a consideration of
the P7,500 which is a part of the credit referred to above, answered praying that he be absolved from
the complaint.

The plaintiff Bachrach Motor Co., Inc., answered the third party claim alleging that its credit against
Mariano Lacson Ledesma was prior and preferential to that of the intervening bank, and praying that the
latter's complaints be dismissed.

At the trial all the parties agreed to recognize and respect the sale made in Favor of Cesar Ledesma of
the P7,500 part of the credit in question, for which reason the trial court dismissed the complaint and
cross-complaint against Cesar Ledesma authorizing the defendant central to deliver to him the
aforementioned sum of P7,500. And upon conclusion of the hearing, the court held that the Bachrach
Motor Co., Inc., had a preferred right to receive the amount of P11,076.02 which was Mariano Lacson
Ledesma's bonus, and it ordered the defendant central to deliver said sum to the plaintiff.
Issue: WON the bonus in question is civil fruits

Held:

No. It is not civil fruits. Article 355 of the Civil Code considers three things as civil fruits: First, the rents of
buildings; second, the proceeds from leases of lands; and, third, the income from perpetual or life
annuities, or other similar sources of revenue. It may be noted that according to the context of the law,
the phrase "u otras analogas" refers only to rents or income, for the adjectives "otras" and "analogas"
agree with the noun "rentas," as do also the other adjectives "perpetuas" and "vitalicias." That is why
we say that by "civil fruits" the Civil Code understands one of three and only three things, to wit: the
rent of a building, the rent of land, and certain kinds of income. As the bonus in question is not the rent
of a building or of land, the only meaning of "civil fruits" left to be examined is that of "income”.

It is to be noted that the said bonus bears no immediate, but only a remote and accidental relation to
the land mentioned, having been granted as compensation for the risk of having subjected one's land to
a lien in favor of the bank, for the benefit of the entity granting said bonus. If this bonus be income or
civil fruits of anything, it is income arising from said risk, or, if one chooses, from Mariano Lacson
Ledesma's generosity in facing the danger for the protection of the central, but certainly it is not civil
fruits or income from the mortgaged property, which, as far as this case is concerned, has nothing to do
with it. Hence, the amount of the bonus, according to the resolution of the central granting it, is not
based upon the value, importance or any other circumstance of the mortgaged property, but upon the
total value of the debt thereby secured, according to the annual balance, which is something quite
distinct from and independent of the property referred to.
Bliss Development Corp vs Diaz

Facts:

Petitioner Bliss Development Corporation (BDC) (subsequently reorganized as Home Guaranty

On May 7, 1991, a certain Rodolfo Nacua (Nacua) sent a letter to BDC, saying that Sps. Melgazo
transferred to him their rights over the property. He further expressed willingness to pay the
outstanding obligations of Sps. Melgazo to BDC. Before the property was fully paid, however, Nacua sold
his rights to Olivia Garcia (Garcia), through a Deed of Transfer of Rights. Later, Garcia transferred her
rights to Elizabeth Reyes (Reyes). Reyes then transferred her rights to Domingo Tapay (Tapay), who then
later sold his rights to herein respondent Montano Diaz (Diaz) for Six Hundred Thousand Pesos
(P600,000.00). Diaz then paid BDC the amortizations due on the property, amounting to P406,915.15,
and BDC issued a permit to occupy the property in favor of Diaz. Diaz then introduced improvements on
the property, amounting to P700,000.00.

On April 14, 1992, BDC executed a Contract to Sell in favor of Diaz. 3 On April 15, 1994, however, BDC
informed Diaz that respondent Edgar Arreza (Arreza) was claiming that the heirs of Sps. Melgazo sold to
him the rights over the property. 4 BDC then placed Diaz's account in "inactive status." To resolve the
conflicting claims of Arreza and Diaz, BDC filed a complaint for Interpleader against them, before the
RTC, Makati City, Branch 146. On March 27, 1996, the Makati City RTC Branch 146 ruled that the
signatures of Sps. Melgazo transferring their rights to Nacua were mere forgeries. Thus, it ruled that
Arreza lead a better right over the property. This decision became final and executory. 5

On August 27, 1996, Diaz filed the present complaint for sum of money against BDC before the RTC,
Makati City, Branch 59. 6 This was later amended to include Arreza and Tapay as defendants. Diaz
argued that BDC and Tapay's representations led him to believe that he had a good title over the
property, but due to the court's ruling in the interpleader case, he was constrained to transfer the
property to Arreza

RTC Decision

RTC rendered its Decision on November 21, 2011, finding that Diaz failed to prove that he is an
assignee in good faith, and thus dismissed the complaint for lack of merit

CA Decision

CA reversed the ruling of the RTC and, instead, ruled that Diaz is entitled to be paid reimbursement
and damages. The CA anchored its ruling on its finding that Diaz is both a buyer in good faith and a
builder in good faith
The Court finds that Respondent Diaz is not a purchaser for value and in good faith

A careful review of the records of this case reveals that Diaz, in fact, failed to diligently inquire into the
title of his predecessor before entering into the contract of sale. As such, he cannot be considered a
buyer in good faith. There is no issue that despite the several transfers of rights from Nacua to Garcia to
Reyes to Tapay to Diaz, title over the property remained in BDC's name. When Diaz transacted with
Tapay, it was also clear that what was being transferred was merely rights to purchase the property, and
not title over the lot itself; if it were, the sale would have been void because Tapay never had ownership
over the subject property. As the buyer in such a transaction, it was incumbent upon Diaz not only to
inquire as to the right of Tapay to transfer his rights, but also to trace the source of that right to
purchase the property. Had he discharged this duty diligently, he would have found out that Nacua's
right was without basis, because it was founded on a forged deed. For his failure to inquire diligently and
trace the source of the right to purchase the property, Diaz cannot claim to be a purchaser in good faith
and for value

ISSUE: WON Both parties being in bad faith,BDC is liable to Diaz for the value of the improvements he
introduced on the subject property

HELD:

Yes. Art. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on
the land of another, but also on the part of the owner of such land, the rights of one and the other shall
be the same as though both had acted in good faith.

he CA may have made the erroneous conclusion that Diaz acted in good faith, but because BDC equally
acted in bad faith, Art. 453 of the Civil Code commands that the rights of one and the other shall be the
same as though both had acted in good faith. The CA made the correct observation then, when it said:

Under Article 448, the landowner is given the option, either to appropriate the improvement as his own
upon payment of the proper amount of indemnity or to sell the land to the possessor in good faith.
Relatedly Article 546 provides that a builder in good faith is entitled to full reimbursement for all the
necessary and useful expenses incurred. In this case, however, the option of selling the land to the
builder in good faith is no longer viable in light of the ruling in the interpleader case. Hence, there is only
one thing left for [BDC] to do: indemnify Diaz for the improvements introduced on the property. 23

Nevertheless, because the law treats both parties as if they acted in good faith, the CA committed
reversible error in awarding moral and exemplary damages, there being no basis therefor. We find it
proper to delete the award of P100,000.00 as moral damages, P50,000.00 as exemplary damages, and
P25,000.00 as attorney's fees.

In sum, the CA correctly reversed the ruling of the RTC, and ordered BDC to pay Diaz the amount he paid
as amortizations, as well as the value of the improvements that he introduced on the subject property.
However, because both parties acted in bad faith, there is no basis for the award of moral and
exemplary damages, as well as attorney's fees.
Heirs of Victorino Sarili vs Lagrosa

Facts:

On February 17, 2000, respondent, represented by his attorney-in-fact Lourdes Labios Mojica (Lourdes)
via a special power of attorney dated November 25, 1999 7 (November 25, 1999 SPA), filed a complaint
8 against Sps. Sarili and the Register of Deeds of Caloocan City (RD) before the RTC, alleging, among
others, that he is the owner of a certain parcel of land situated in Caloocan City covered by TCT No.
55979 (subject property) and has been religiously paying the real estate taxes therefor since its
acquisition on November 29, 1974. Respondent claimed that he is a resident of California, USA, and that
during his vacation in the Philippines, he discovered that a new certificate of title to the subject property
was issued by the RD in the name of Victorino married to Isabel Amparo (Isabel), i.e., TCT No. 262218, by
virtue of a falsified Deed of Absolute Sale 9 dated February 16, 1978 (February 16, 1978 deed of sale)
purportedly executed by him and his wife, Amelia U. Lagrosa (Amelia). He averred that the falsification
of the said deed of sale was a result of the fraudulent, illegal, and malicious acts committed by Sps. Sarili
and the RD in order to acquire the subject property and, as such, prayed for the annulment of TCT No.
262218, and that Sps. Sarili deliver to him the possession of the subject property, or, in the alternative,
that Sps. Sarili and the RD jointly and severally pay him the amount of P1,000,000.00, including moral
damages as well as attorney's fees. 10 EHcaDT

In their answer, 11 Sps. Sarili maintained that they are innocent purchasers for value, having purchased
the subject property from Ramon B. Rodriguez (Ramon), who possessed and presented a Special Power
of Attorney 12 (subject SPA) to sell/dispose of the same, and, in such capacity, executed a Deed of
Absolute Sale 13 dated November 20, 1992 (November 20, 1992 deed of sale) conveying the said
property in their favor. In this relation, they denied any participation in the preparation of the February
16, 1978 deed of sale, which may have been merely devised by the "fixer" they hired to facilitate the
issuance of the title in their names. 14 Further, they interposed a counterclaim for moral and exemplary
damages, as well as attorney's fees, for the filing of the baseless suit. 15

During the pendency of the proceedings, Victorino passed away 16 and was substituted by his heirs,
herein petitioners.

RTC Decision

RTC rendered a Decision 18 finding respondent's signature on the subject SPA as "the same and exact
replica" 19 of his signature in the November 25, 1999 SPA in favor of Lourdes. 20 Thus, with Ramon's
authority having been established, it declared the November 20, 1992 deed of sale 21 executed by the
latter as "valid, genuine, lawful and binding" 22 and, as such, had validly conveyed the subject
property in favor of Sps. Sarili

CA Decision

CA granted respondent's appeal and held that the RTC erred in its ruling since the November 20, 1992
deed of sale, which the RTC found "as valid and genuine," was not the source document for the
transfer of the subject property and the issuance of TCT No. 262218 in the name of Sps. Sarili 25 but
rather the February 16, 1978 deed of sale, the fact of which may be gleaned from the Affidavit of Late
Registration 26 executed by Isabel (affidavit of Isabel). Further, it found that respondent was "not
only able to preponderate his claim over the subject property, but [has] likewise proved that his and
his wife's signatures in the [February 16, 1978 deed of sale] . . . were forged." 27 "[A] comparison by
the naked eye of the genuine signature of [respondent] found in his [November 25, 1999 SPA] in favor
of [Lourdes], and those of his falsified signatures in [the February 16, 1978 deed of sale] and [the
subject SPA] shows that they are not similar

ISSUE: WON there was a valid conveyance/ transfer of the subject property to Sps. Sarili

Held:

No. The Court, however, finds a need to remand the case to the court a quo in order to determine the
rights and obligations of the parties with respect to the house Sps. Sarili had built 59 on the subject
property in bad faith in accordance with Article 449 in relation to Articles 450, 451, 452, and the first
paragraph of Article 546 of the Civil Code which respectively read as follows:

ART. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted
or sown without right to indemnity.

ART. 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent. IETCAS

ART. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the
builder, planter or sower.

ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary
expenses of preservation of the land.

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. (Emphases and underscoring supplied)

To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he
builds, i.e., that he be a possessor in concept of owner, and that he be unaware that there exists in his
title or mode of acquisition any flaw which invalidates it. 60 Good faith is an intangible and abstract
quality with no technical meaning or statutory definition, and it encompasses, among other things, an
honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable
advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought
to put the holder upon inquiry. 61 As for Sps. Sarili, they knew — or at the very least, should have known
— from the very beginning that they were dealing with a person who possibly had no authority to sell
the subject property considering the palpable irregularity in the subject SPA's acknowledgment. Yet,
relying solely on said document and without any further investigation on Ramos's capacity to sell, Sps.
Sarili still chose to proceed with its purchase and even built a house thereon. Based on the foregoing, it
cannot be seriously doubted that Sps. Sarili were actually aware of a flaw or defect in their title or mode
of acquisition and have consequently built the house on the subject property in bad faith under legal
contemplation. The case is therefore remanded to the court a quo for the proper application of the
above-cited Civil Code provisions.
Benedicto vs Villaflores

Facts:

Maria Villaflores (Maria) was the owner of Lot 2-A, with an area of 277 square meters, in Poblacion,
Meycauayan, Bulacan, covered by Transfer Certificate of Title (TCT) No. T-84.761 (M). In 1980, Maria
sold a portion of Lot 2-A to her nephew, respondent Antonio Villaflores (Antonio). Antonio then took
possession of the portion sold to him and constructed a house thereon. Twelve (12) years later, or on
August 15, 1992, Maria executed in favor of Antonio a Kasulatan ng Bilihang Tuluyan 3 covering the
entire Lot 2-A. However, Antonio did not register the sale or pay the real property taxes for the subject
land.

On August 31, 1994, Maria sold the same Lot 2-A to Filomena, evidenced by a Kasulatan ng Bilihang
Tuluyan. 4 Filomena registered the sale with the Registry of Deeds of Meycauayan on September 6,
1994. Consequently, TCT No. T-84.761 (M) in the name of Maria was cancelled and TCT No. T-208265
(M) was issued in the name of Filomena. Since then Filomena paid the real property taxes for the subject
parcel of land.

On September 28, 2000, Filomena filed a case for Accion Publiciana with Cancellation of Notice of
Adverse Claim, Damages and Attorney's Fees 5 against Antonio. She alleged that she acquired Lot 2-A in
1994 from her grandaunt Maria by virtue of the Kasulatan ng Bilihang Tuluyan. At the time of the sale,
she was not aware that Antonio had any claim or interest over the subject property. Antonio assured
her that there was no impediment to her acquisition of the land, and promised to vacate the property
five (5) years after the sale. In August 1999, Antonio requested an extension of one (1) year, and offered
to pay a monthly rental of P2,000.00, which she granted. However, in 2000, Antonio refused to vacate
the property and, instead, claimed absolute ownership of Lot 2-A.

Antonio traversed the complaint, asserting absolute ownership over Lot 2-A. He alleged that he
purchased the subject property from Maria in 1980; and that he took possession of the same and
constructed his house thereon. He came to know of the sale in favor of Filomena only in 2000 when the
latter demanded that he vacate the property. He averred that Filomena was aware of the sale; hence,
the subsequent sale in favor of Filomena was rescissible, fraudulent, fictitious, or simulated

RTC RULING

RTC rendered a decision 7 sustaining Filomena's ownership. According to the RTC, Filomena was the one
who registered the sale in good faith; as such, she has better right than Antonio. It rejected Antonio's
allegation of bad faith on the part of Filomena because no sufficient evidence was adduced to prove it.
Likewise, the RTC found Antonio's evidence of ownership questionable. Nevertheless, it declared
Antonio a builder in good faith.
CA RULING

Antonio Villaflores, being a builder in good faith, is entitled to reimbursement of the necessary and
useful expense with the right of retention until reimbursement of said expenses in full.

ISSUE: WON Antonio is a builder in good faith and entitled to reimbursement

Held:

Yes. Under Article 448, a landowner is given the option to either appropriate the improvement as his
own upon payment of the proper amount of indemnity, or sell the land to the possessor in good faith.
Relatedly, Article 546 provides that a builder in good faith is entitled to full reimbursement for all the
necessary and useful expenses incurred; it also gives him right of retention until full reimbursement is
made.

The pronouncement of this Court in Pecson v. CA, 15 which was reiterated in Tuatis v. Escol, 16 is
instructive,viz.:

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this
regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila [40 Phil. 717
(1920)] that the said provision was formulated in trying to adjust the rights of the owner and possessor
in good faith of a piece of land, to administer complete justice to both of them in such a way as neither
one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is
therefore the current market value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise
be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly amount.
Consequently, the parties should therefore be allowed to adduce evidence on the present market value
of the apartment building upon which the trial court should base its finding as to the amount of
reimbursement to be paid by the landowner.
LUCIANO BRIONES and NELLY BRIONES, petitioners, vs. JOSE MACABAGDAL, FE D. MACABAGDAL and
VERGON REALTY INVESTMENTS CORPORATION, respondents

Facts: Respondent-spouses purchased from Vergon Realty Investments Corporation (Vergon) Lot No.
2-R, a 325-square-meter land located in Vergonville Subdivision No. 10 at Las Piñas City, Metro Manila
and covered by Transfer Certificate of Title No. 62181 of the Registry of Deeds of Pasay City. On the
other hand, petitioners are the owners of Lot No. 2-S, which is adjacent to Lot No. 2-R.

Sometime in 1984, after obtaining the necessary building permit and the approval of Vergon, petitioners
constructed a house on Lot No. 2-R which they thought was Lot No. 2-S. After being informed of the mix
up by Vergon's manager, respondent-spouses immediately demanded petitioners to demolish the house
and vacate the property. Petitioners, however, refused to heed their demand. Thus, respondent-spouses
filed an action to recover ownership and possession of the said parcel of land with the RTC of Makati
City.

Petitioners insisted that the lot on which they constructed their house was the lot which was
consistently pointed to them as theirs by Vergon's agents over the seven (7)-year period they were
paying for the lot. They interposed the defense of being buyers in good faith and impleaded Vergon as
third-party defendant claiming that because of the warranty against eviction, they were entitled to
indemnity from Vergon in case the suit is decided against them. The RTC ruled in favor of respondent-
spouses and found that petitioners' house was undoubtedly built on Lot No. 2-R.

On appeal, the CA affirmed the RTC's finding that the lot upon which petitioners built their house was
not the one (1) which Vergon sold to them. Based on the documentary evidence, such as the titles of the
two (2) lots, the contracts to sell, and the survey report made by the geodetic engineer, petitioners'
house was built on the lot of the respondent-spouses. There was no basis to presume that the error was
Vergon's fault. Also the warranty against eviction under Article 1548 of the Civil Code was not applicable
as there was no deprivation of property: the lot on which petitioners built their house was not the lot
sold to them by Vergon, which remained vacant and ready for occupation. The CA further ruled that
petitioners cannot use the defense of allegedly being a purchaser in good faith for wrongful occupation
of land.

Issue: WON the petioners were buyers in good faith

Held: Yes. Article 527 14 of the Civil Code presumes good faith, and since no proof exists to show that
the mistake was done by petitioners in bad faith, the latter should be presumed to have built the house
in good faith. When a person builds in good faith on the land of another, Article 448 of the Civil Code
governs. Said article provides, “ART. 448. The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.”

The above-cited article covers cases in which the builders, sowers or planters believe themselves to be
owners of the land or, at least, to have a claim of title thereto. The builder in good faith can compel the
landowner to make a choice between appropriating the building by paying the proper indemnity or
obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that
accords with the principle of accession, i.e., that the accessory follows the principal and not the other
way around. However, even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove
the building from the land without first exercising either option. It is only if the owner chooses to sell his
land, and the builder or planter fails to purchase it where its value is not more than the value of the
improvements, that the owner may remove the improvements from the land. The owner is entitled to
such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.
Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may
have made on the subject property.
Tuatis vs Spouses Escol

Facts:

On 18 June 1996, Tuatis filed a Complaint for Specific Performance with Damages 6 against herein
respondent Visminda Escol (Visminda) before the RTC, docketed as Civil Case No. S-618.

Tuatis alleged in her Complaint that sometime in November 1989, Visminda, as seller, and Tuatis, as
buyer, entered into a Deed of Sale of a Part of a Registered Land by Installment 7 (Deed of Sale by
Installment). The subject matter of said Deed was a piece of real property situated in Poblacion,
Sindangan, Zamboanga del Norte and more particularly described as "[a] part of a registered land being
known as Lot No. 251, Pls-66 covered under OCT [Original Certificate of Title] No. P-5421; . . . with an
area of THREE HUNDRED (300) square meters, more or less" (subject property).

Tuatis claimed that of the entire purchase price of P10,000.00, she had paid Visminda P3,000.00 as
downpayment. The exact date of said payment was not, however, specified. Subsequently, Tuatis paid
P3,000.00 as installment on 19 December 1989, and another P1,000.00 installment on 17 February
1990. Tuatis averred that she paid Visminda the remaining P3,000.00 on 27 February 1990 in the
presence of Eric Selda (Eric), a clerk in the law office of one Atty. Alanixon Selda. In support of this
averment, Tuatis attached to her Complaint a certification 10 executed by Eric on 27 May 1996.

In the meantime, Tuatis already took possession of the subject property and constructed a residential
building thereon.

In 1996, Tuatis requested Visminda to sign a prepared absolute deed of sale covering the subject
property, but the latter refused, contending that the purchase price had not yet been fully paid. The
parties tried to amicably settle the case before the Lupon Barangay, to no avail. 11

Tuatis contended that Visminda failed and refused to sign the absolute deed of sale without any valid
reason. Thus, Tuatis prayed that the RTC order Visminda to do all acts for the consummation of the
contract sale, sign the absolute deed of sale and pay damages, as well as attorney's fees.

In her Answer, 12 Visminda countered that, except for the P3,000.00 downpayment and P1,000.00
installment paid by Tuatis on 19 December 1989 and 17 February 1990, 13 respectively, Tuatis made no
other payment to Visminda. Despite repeated verbal demands, Tuatis failed to comply with the
conditions that she and Visminda agreed upon in the Deed of Sale by Installment for the payment of the
balance of the purchase price for the subject property. Visminda asked that the RTC dismiss Tuatis'
Complaint, or in the alternative, order Tuatis to return the subject property to Visminda after Visminda's
reimbursement of the P4,000.00 she had received from Tuatis.

ISSUE: What Visminda as an owner in good faith and what are her options?
Held:

The Court highlights that the options under Article 448 are available to Visminda, as the owner of the
subject property. There is no basis for Tuatis' demand that, since the value of the building she
constructed is considerably higher than the subject property, she may choose between buying the
subject property from Visminda and selling the building to Visminda for P502,073.00. Again, the choice
of options is for Visminda, not Tuatis, to make. And, depending on Visminda's choice, Tuatis' rights as a
builder under Article 448 are limited to the following: (a) under the first option, a right to retain the
building and subject property until Visminda pays proper indemnity; and (b) under the second option, a
right not to be obliged to pay for the price of the subject property, if it is considerably higher than the
value of the building, in which case, she can only be obliged to pay reasonable rent for the same. CHaDIT

The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord
with the principle of accession, i.e., that the accessory follows the principal and not the other way
around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. 54 The
landowner cannot refuse to exercise either option and compel instead the owner of the building to
remove it from the land. 55

The raison d'etre for this provision has been enunciated thus: Where the builder, planter or sower has
acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect
the owner of the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving
the owner of the land the option to acquire the improvements after payment of the proper indemnity,
or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to
exercise either option. It is the owner of the land who is authorized to exercise the option, because his
right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory
thing. 56

Visminda's Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to
recover possession of the subject property under the first option, since the options under Article 448 of
the Civil Code and their respective consequences were also not clearly presented to her by the 19 April
1999 Decision of the RTC. She must then be given the opportunity to make a choice between the
options available to her after being duly informed herein of her rights and obligations under both.
SPS. DOMINADOR R. NARVAEZ and LILIA W. NARVAEZ, petitioners, vs. SPS. ROSE OGAS ALCISO and
ANTONIO ALCISO, respondents.

Facts: Larry A. Ogas (Ogas) owned a 1,329-square meter parcel of land situated in Pico, La
Trinidad, Benguet. The property was covered by Transfer Certificate of Title (TCT) No. T-1068, and a
portion was subject to a 30-year lease agreement 4 with Esso Standard Eastern, Inc. Ogas sold the
property to his daughter Rose O. Alciso (Alciso).

On 25 August 1979, Alciso entered into a Deed of Sale with Right to Repurchase, 6 selling the property
to Jaime Sansano (Sansano) for P10,000. Alciso later repurchased the property from Sansano and, on 28
March 1980, she entered into another Deed of Absolute Sale, this time selling the property to Celso S.
Bate (Bate) for P50,000. The Deed stated that: The SELLER warrants that her title to and ownership of
the property herein conveyed are free from all liens and encumbrances except those as appear on the
face of the title, specifically, that lease over the said property in favor of ESSO STANDARD EASTERN,
INC., the rights over which as a lessor the SELLER likewise hereby transfers in full to the buyer

TCT No. T-12422 was cancelled and TCT No. T-16066 9 was issued in the name of Bate. On 14 August
1981, Bate entered into a Deed of Sale of Realty, 10 selling the property to the spouses Dominador R.
Narvaez and Lilia W. Narvaez (Spouses Narvaez) for P80,000. TCT No. T-16066 was cancelled and TCT
No. T-16528 11 was issued in the name of the Spouses Narvaez. In 1982, the Spouses Narvaez built a
commercial building on the property amounting to P300,000. Alciso demanded that a stipulation be
included in the 14 August 1981 Deed of Sale of Realty allowing her to repurchase the property from the
Spouses Narvaez. In compliance with Alciso's demand, the Deed stated that, "The SELLER (Bate) carries
over the manifested intent of the original SELLER of the property (Alciso) to buy back the same at a price
under such conditions as the present BUYERS (Spouses Narvaez) may impose." The Spouses Narvaez
furnished Alciso with a copy of the Deed. Alciso alleged that she informed the Spouses Narvaez that she
wanted to repurchase the property. The Spouses Narvaez demanded P300,000, but Alciso was willing to
pay only P150,000. Alciso and the Spouses Narvaez failed to reach an agreement on the repurchase
price.

In a Complaint 12 dated 15 June 1984 and filed with the RTC, Alciso prayed that (1) the 25 August 1979
Deed of Sale with Right to Repurchase, the 28 March 1980 Deed of Absolute Sale, and the 14 August
1981 Deed of Sale of Realty be annulled; (2) the Register of Deeds be ordered to cancel TCT Nos. T-
16066 and T-16528; (3) the Spouses Narvaez be ordered to reconvey the property; and (4) Sansano,
Bate, and the Spouses Narvaez be ordered to pay damages, attorney's fees and expenses of litigation.
Alciso claimed that the intention of the parties was to enter into a contract of real estate mortgage and
not a contract of sale with right of repurchase.

RTC RULING:

RTC held that (1) the 25 August 1979 Deed of Sale with Right to Repurchase became functus officio
when Alciso repurchased the property; (2) the action to annul the 28 March 1980 Deed of Absolute Sale
had prescribed; (3) Alciso had no legal personality to annul the 14 August 1981 Deed of Sale of Realty;
(4) the 14 August 1981 Deed of Sale of Realty contained a stipulation pour autrui in favor of Alciso —
Alciso could repurchase the property; (5) Alciso communicated to the Spouses Narvaez her acceptance
of the favor contained in the stipulation pour autrui; (6) the repurchase price was P80,000; (7) Alciso
could either appropriate the commercial building after payment of the indemnity equivalent to one-half
of its market value when constructed or sell the land to the Spouses Narvaez; and (8) Alciso was entitled
to P100,000 attorney's fees and P20,000 nominal damages.

CA RULING:

Court of Appeals held that (1) the 14 August 1981 Deed of Sale of Realty contained a stipulation pour
autrui; (2) Alciso accepted the favor contained in the stipulation pour autrui; (3) the RTC erred in setting
the repurchase price at P80,000; (4) the 14 August 1981 Deed of Sale of Realty involved a contract of
sale with right of repurchase and not real estate mortgage; (5) the Spouses Narvaez were builders in
good faith; and (6) Alciso could either appropriate the commercial building after payment of the
indemnity or oblige the Spouses Narvaez to pay the price of the land, unless the price was considerably
more than that of the building. The Court of Appeals remanded the case to the RTC for determination of
the property's reasonable repurchase price.

Issue: WON Alciso did not communicate her acceptance of the favor contained in the stipulation
pour autrui; thus, she could not repurchase the property.

Held: The factual findings of the trial court, especially when affirmed by the Court of Appeals, are
binding on the Court. In its 6 April 1998 Decision, the RTC found that Alciso communicated to the
Spouses Narvaez her acceptance of the favor contained in the stipulation pour autrui. The RTC stated
that: Rose Alciso communicated her acceptance of such favorable stipulation when she went to see
defendant Lillia Narvaez in their house. Under the foregoing circumstances, there is no question that
plaintiff Rose Alciso can maintain her instant action for the enforcement and/or fulfillment of the
aforestated stipulation in her favor to by back the property in question.

Article 448 is inapplicable in cases involving contracts of sale with right of repurchase — it is inapplicable
when the owner of the land is the builder, sower, or planter. In Pecson v. Court of Appeals, 26 the Court
held that: Article 448 does not apply to a case where the owner of the land is the builder, sower,
or planter who then later loses ownership of the land by sale or donation. This Court said so in
Coleongco v. Regalado:

“Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the house on his
own land before he sold said land to Coleongco. Article 361 applies only in cases where a person
constructs a building on the land of another in good or in bad faith, as the case may be. It does not apply
to a case where a person constructs a building on his own land, for then there can be no question as to
good or bad faith on the part of the builder. where the true owner himself is the builder of the works on
his own land, the issue of good faith or bad faith is entirely irrelevant.

Article 448 is inapplicable in the present case because the Spouses Narvaez built the commercial
building on the land that they own. Besides, to compel them to buy the land, which they own, would be
absurd.
As the Court of Appeals correctly observed, the terms of the 14 August 1981 Deed of Sale of Realty show
that Bate and the Spouses Narvaez entered into a sale with right of repurchase, where Bate transferred
his right of repurchase to Alciso. The Deed states that, "The SELLER (Bate) carries over the manifested
intent of the original SELLER of the property (Alciso) to buy back the same at a price under such
conditions as the present BUYERS (Spouses Narvaez) may impose." Article 1601 of the Civil Code states
that, "Conventional redemption shall take place when the vendor reserves the right to repurchase the
thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which
may have been agreed upon." In Gallar v. Husain the Court held that "the right of repurchase may be
exercised only by the vendor in whom the right is recognized by contract or by any person to whom the
right may have been transferred."
HEIRS OF MARCELINO CABAL, represented by VICTORIA CABAL, petitioner, vs. SPOUSES LORENZO
CABAL 1 and ROSITA CABAL, respondents.

Facts: During his lifetime, Marcelo Cabal (Marcelo) was the owner of a 4,234-square meter parcel of
land situated at Barrio Palanginan, Iba, Zambales, described as Lot G. Sometime in August 1954, 4
Marcelo died, survived by his wife Higinia Villanueva (Higinia) and his children: Marcelino, Daniel,
Cecilio, Natividad, Juan, Margarita, Lorenzo, Lauro and Anacleto. 5 It appears that sometime in 1949,
five years before he died, Marcelo allowed his son, Marcelino, to build his house on a portion of Lot G,
now the southernmost portion of Lot 1-E. Since then, Marcelino resided thereon. Later, Marcelino's son
also built his house on the disputed property. On August 17, 1964, Marcelo's heirs extra-judicially
settled among themselves Lot G into undivided equal shares of 423.40-square meters each. In the
interim, based on consolidated subdivision plan (LRC) Pcd-24078, Lot G-2 was further subdivided and the
remaining portion, known as Lot 1 of the subdivision plan, comprising 3387.20 square meters, became
subject of TCT No. T-24533 with Higinia, Margarita, Natividad, Lorenzo, Daniel, Oscar Merete, Cecilio,
Carmelita C. Pagar, and Anacleto as co-owners. On August 3, 1978, the co-owners of Lot 1 executed a
Deed of Agreement of Partition with Sale. Lot 1 was subdivided among the co-owners with Higinia,
Margarita, Natividad, Lorenzo, Cecilio, Carmelita C. Pagar and Anacleto, receiving 423.40 square meters
each.

On January 13, 1982, a land survey was conducted on Lot 1 by Geodetic Engineer Dominador L. Santos
and Junior Geodetic Engineer Eufemio A. Abay and based on the survey, they submitted subdivision
survey plan (LRC) Psd-307100, designating the shares of Carmelita C. Pagar, Marcela B. Francia, spouses
Oscar Merete and Clarita Ebue, Anacleto, and Lorenzo as Lots 1-A, 1-B, 1-C, 1-D and 1-E, respectively. 18
The subdivision survey plan of Lot 1 was approved by the Director of the Bureau of Lands on May 7,
1982. 19 On June 7, 1990, the co-owners of Lot 1 executed a Subdivision Agreement designating their
shares based on the approved subdivision plan. In the meantime, since the subdivision plan revealed
that Marcelino and his son occupied and built their houses on a 423-square meter area located on the
southern most portion of Lot 1-E and not the adjacent lot designated as Lot G-1 under TCT No. T-22656,
22 the spouses Lorenzo and Rosita Cabal (respondents) confronted Marcelino on this matter which
resulted to an agreement on March 1, 1989 to a re-survey and swapping of lots for the purpose of
reconstruction of land titles. However, the agreed resurvey and swapping of lots did not materialize and
efforts to settle the dispute in the barangay level proved futile. Hence, on August 10, 1994, respondents
filed a complaint for Recovery of Possession with Damages against Marcelino before the Municipal Trial
Court of Iba, Zambales.

The MTC reasoned that prescription or the length of time by which Marcelino has held or possessed the
property has barred the respondents from filing a claim. In reversing the MTC, the RTC held that
Marcelino's possession was in the concept of a co-owner and therefore prescription does not run in his
favor; that his possession, which was tolerated by his co-owners, does not ripen into ownership. In
sustaining the RTC, the CA held that Marcelino may have been in good faith when he started to occupy
the disputed portion in 1949 but his occupation in good faith diminished after Lot G was surveyed when
he was apprised of the fact that the portion he was occupying was not the same as the portion titled in
his name; that from the tenor of the petition for review Marcelino would like to hold on to both the lot
he occupies and Lot G-1, which cannot be allowed since it will double his inheritance to the detriment of
his brother Lorenzo.

Issue: WON Marcelino is a builder in good faith

Held: Yes. It has been said that good faith is always presumed, and upon him who alleges bad faith on
the part of the possessor rests the burden of proof. The essence of good faith lies in an honest belief in
the validity of one's right, ignorance of a superior claim, and absence of intention to overreach another.
Applied to possession, one is considered in good faith if he is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it.

In the present case, Marcelino's possession of the disputed lot was based on a mistaken belief that Lot
G-1 is the same lot on which he has built his house with the consent of his father. There is no evidence,
other than bare allegation, that Marcelino was aware that he intruded on respondents' property when
he continued to occupy and possess the disputed lot after partition was effected in 1976. Moreover, the
fact that in 1977 Marcelino mortgaged Lot G-1 subject of TCT No. 22656 is not an indication of bad faith
since there is no concrete evidence that he was aware at that time that the property covered by the title
and the one he was occupying were not the same. There is also no evidence that he introduced
improvements on Lot G-1. In fact, the agreement on March 1, 1989 to a resurvey and swapping of lots
for the purpose of reconstructing the land titles is substantial proof of Marcelino's good faith, sincerity
of purpose and lack of intention to hold on to two lots. Thus, the CA's conclusion that Marcelino
intended to hold on to both the disputed lot and Lot G-1 is pure speculation, palpably unsupported by
the evidence on record. Marcelino is deemed a builder in good faith at least until the time he was
informed by respondents of his encroachment on their property. When a person builds in good faith on
the land of another, the applicable provision is Article 448, which reads: “Article 448. The owner of the
land on which anything has been built, sown or planted in good faith, shall have the right to appropriate
as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546
and 548 or to oblige the one who built or planted to pay the price of the land, and the one who sowed,
the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof.”

Thus, 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 building, planting or sowing, after payment to the builder,
planter or sower of the necessary and useful expenses, and in the proper case, expenses for pure luxury
or mere pleasure. The owner of the land may also oblige the builder, planter or sower to purchase and
pay the price of the land. If the owner chooses to sell his land, the builder, planter or sower must
purchase the land, otherwise the owner may remove the improvements thereon. The builder, planter or
sower, however, is not obliged to purchase the land if its value is considerably more than the building,
planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land. If
the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof.
The right to choose between appropriating the improvement or selling the land on which the
improvement stands to the builder, planter or sower, is given to the owner of the land.

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

FACTS: It appears that while ERNESTO was still courting his wife, the latter's mother had told him the
couple could build a RESIDENTIAL HOUSE on a lot of 145 sq. ms., being Lot D of a subdivision in
Parañaque (the LAND, for short). In 1967, ERNESTO did construct a RESIDENTIAL HOUSE on the LAND at
a cost of P8,000.00 to P10,000.00. It was probably assumed that the wife's mother was the owner of the
LAND and that, eventually, it would somehow be transferred to the spouses. It subsequently turned out
that the LAND had been titled in the name of Mr. & Mrs. Jose C. Santos, Jr. who, on September 7, 1974,
sold the same to petitioner SARMIENTO. The following January 6, 1975, SARMIENTO asked ERNESTO
and wife to vacate and, on April 21, 1975, filed an Ejectment suit against them. In the evidentiary
hearings before the Municipal Court, SARMIENTO submitted the deed of sale of the LAND in her favor,
which showed the price to be P15,000.00. On the other hand, ERNESTO testified that the then cost of
the RESIDENTIAL HOUSE would be from P30,000.00 to P40,000.00. The figures were not questioned by
SARMIENTO.

The Municipal Court found that private respondents had built the RESIDENTIAL HOUSE in good faith,
and, disregarding the testimony of ERNESTO, that it had a value of P20,000.00. It then ordered ERNESTO
and wife to vacate the LAND after SARMIENTO has paid them the mentioned sum of P20,000.00. The
Ejectment suit was elevated to the Court of First Instance of Pasay where, after the submission of
memoranda, said Court rendered a modifying Decision under Article 448 of the Civil Code. SARMIENTO
was required, within 60 days, to exercise the option to reimburse ERNESTO and wife the sum of
P40,000.00 as the value of the RESIDENTIAL HOUSE, or the option to allow them to purchase the LAND
for P25,000.00. SARMIENTO did not exercise any of the two options within the indicated period, and
ERNESTO was then allowed to deposit the sum of P25,000.00 with the Court as the purchase price for
the LAND. This is the hub of the controversy. SARMIENTO then instituted the instant Certiorari
proceedings.

ISSUE: (1) Whether or not Ernesto and his wife were builders in good faith.

(2) W hether or not the land owner Sarmiento can be compelled to exercise either option: to buy the
building or to sell the land.

HELD: (1) We agree that ERNESTO and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the RESIDENTIAL HOUSE. As far as they knew, the
LAND was owned by ERNESTO's mother-in-law who, having stated they could build on the property,
could reasonably be expected to later on give them the LAND.
In regards to builders in good faith, Article 448 of the Code provides:

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

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

"We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to remove
their buildings from the land belonging to plaintiffs-respondents only because the latter chose neither to
pay for such buildings nor to sell the land, is null and void, for it amends substantially the judgment
sought to be executed and is, furthermore, offensive to articles 361 (now Article 448) and 453 (now
Article 546) of the Civil Code.
Depra vs Dumalo

Facts:

Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under Transfer Certificate
of Title No. T-3087, known as Lot No. 685, situated in the municipality of Dumangas, Iloilo, with an area
of approximately 8,870 square meters. Agustin Dumlao, defendant-appellant, owns an adjoining lot,
designated as Lot No. 683, with an approximate area of 231 sq. ms.

Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen thereof had encroached
on an area of thirty four (34) square meters of DEPRA's property. After the encroachment was
discovered in a relocation survey of DEPRA's lot made on November 2, 1972, his mother, Beatriz Derla,
after writing a demand letter asking DUMLAO to move back from his encroachment, filed an action for
Unlawful Detainer on February 6, 1973 against DUMLAO in the Municipal Court of Dumangas, docketed
as Civil Case No. I. Said complaint was later amended to include DEPRA as a party plaintiff.

After trial the Municipal Court found that DUMLAO was a builder in good faith, and applying Article 448
of the Civil Code. The dispositive portions reads:

"Ordering that a forced lease is created between the parties with the plaintiffs, as lessors, and the
defendants as lessees, over the disputed portion with an area of thirty four (34) square meters, the rent
to be paid is five (P5.00) pesos a month, payable by the lessee to the lessors within the first five (5) days
of the month the rent is due; and the lease shall commence on that day that this decision shall have
become final."

On July 15, 1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO before the then Court of
First Instance of Iloilo, Branch IV (Trial Court), involving the very same 34 square meters, which was the
bone of contention in the Municipal Court. DUMLAO, in his Answer, admitted the encroachment but
alleged, in the main, that the present suit is barred by res judicata by virtue of the Decision of the
Municipal Court, which had become final and executor.

Trial Court’s Ruling:

"WHEREFORE, the Court finds and so holds that the thirty four (34) square meters subject of this
litigation is part and parcel of Lot 685 of the Cadastral Survey of Dumangas of which the plaintiff is
owner as evidenced by Transfer Certificate of Title No. 3087 and such plaintiff is entitled to possess the
same.

Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that the Decision of the
Municipal Court was null and void ab initio because its jurisdiction is limited to the sole issue of
possession, whereas decisions affecting lease, which is an encumbrance on real property, may only be
rendered by Courts of First Instance.
Issues:

1) WON the Municipal Court overstepped its jurisdiction?

2) WHO has the better right?

Held:

1. Yes. The Municipal Court overstepped its bounds when it imposed upon the parties a situation of
"forced lease", which like "forced co-ownership" is not favored in law. Furthermore, a lease is an
interest in real property, jurisdiction over which belongs to Courts of First Instance (now Regional Trial
Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2) Batas Pambansa Blg. 129). 3 Since the Municipal
Court, acted without jurisdiction, its Decision was null and void and cannot operate as res judicata to the
subject complaint for Queting of Title. Besides, even if the Decision were valid, the rule on res judicata
would not apply due to difference in cause of action. In the Municipal Court, the cause of action was the
deprivation of possession, while in the action to quiet title, the cause of action was based on ownership.
Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly provides that judgment in a detainer case
"shall not bar an action between the same parties respecting title to the land.

2. The owner of the land. Our own Code Commission must have taken account of the objections to
Article 361 of the Spanish Civil Code. Hence, the Commission provided a modification thereof, and
Article 448 of our Code has been made to provide:

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

Additional benefits were extended to the builder but the landowner retained his options.

The fairness of the rules in Article 448 has also been explained as follows:

"Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the owner of the improvements without causing injustice
to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the
law has provided a just solution by giving the owner of the land the option to acquire the improvements
after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the
sower to pay for the proper rent. It is the owner of the land who is authorized to exercise the option,
because his right is older, and because, by the principle of accession, he is entitled to the ownership of
the accessory thing. (3 Manresa 213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico,
G.R. No. 49167, April 30, 1949; Article applied: see Cabral, et al vs. Ibañez [
Bernardo vs Bataclan

Facts:

here is no controversy as to the facts. By a contract of sale executed on July 17, 1920, the plaintiff herein
acquired from Pastor Samonte and others ownership of the parcel of land of about 90 hectares situated
in sitio Balayunan, Silang Cavite. To secure possession of the land from the vendors the said plaintiff, on
July 20, 1929, instituted Civil Case No. 1935 in the Court of First Instance of Cavite. The trial court found
for the plaintiff in a decision which was affirmed by this Supreme Court on appeal (G. R. No. 33017). 1
When plaintiff entered upon the premises, however, he found the defendant herein, Catalino Bataclan,
who appears to have been authorized by former owners, as far back as 1922, to clear the land and make
improvements thereon, As Bataclan, who appears to have been authorized by former owners, as far
bank as 1922, to clear the land and make improvements thereon. As Bataclan was not a party in Case
No. 1935, plaintiff, on June 11, 1931, instituted against him, in the Court of First Instance of Cavite, Civil
Case No. 2428. In this case, plaintiff was declared owner but the defendant was held to be possessor in
good faith, entitled to reimbursement in the total sum of P1,642, for work done and improvements
made.

Both parties appealed to this court (G. R. No. 37319). 1 The decision appealed from was modified by
allowing the defendant to recover compensation amount to P2,212 and by reducing the price at which
the plaintiff could require the defendant to purchase the land in question from P300 to P200 per
hectare. Plaintiff was given by this court 30 days from the date when the decision became final within
which to exercise his option, either to sell the land to the defendant or to buy the improvements from
him. On January 9, 1934, the plaintiff manifested to the lower court his desire "to require the defendant
to pay him the value of the land at the rate of P200 per hectare or a total price of P18,000 for the whole
tract of land." The defendant informed the lower court that he was unable to pay for the land and, on
January 24, 1934, an order was issued giving the plaintiff 30 days within which to pay the defendant the
sum of P2,212 stating that, in the event of failure to make such payment, the land would be ordered
sold at public auction.

On April 24, 1934, the court below, at the instance of the plaintiff and without objection on the part of
the defendant, ordered the sale of the land in question at public auction. The land was sold on April 5,
1935 to Toribio Teodoro, the highest bidder, for P8,000. In the certificate of sale issued to said purchaser
on the very day of sale, it was stated that the period of redemption of the land sold was to expire on
April 5, 1936. Upon petition of Toribio Teodoro the court below ordered the provincial sheriff to issue
another certificate not qualified by any equity of redemption. This was complied with by the sheriff on
July 30, 1935. On September 18, 1935, Teodoro moved that he be placed in possession of the land
purchased by him. The motion was granted by order of September 26, 1935.

ISSUE: WON the Defendant Bataclan is entitled for payment for the improvements.
Held:

Yes. The Civil Code confirms certain time-honored principles of the law of property. One of these is the
principle of accession whereby the owner of property acquires not only that which it produces but that
which is united to it either naturally or artificially. (Art. 353.) Whatever 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.
358). Where, however, the planter, builder, or sower has acted in good faith, a conflict of rights arises
between the owners and it becomes necessary to protect the owner of the improvements without
causing injustice to the owner of the land. In view of the impracticability of creating what Manresa calls
a state of "forced coownership" (vol. 3, 4th ed., p. 213), the law has provided a just and equitable
solution by giving the owner of the land the option to acquire the improvements after payment of the
proper indemnity or to oblige the builder or planter to pay for the land and the sower to pay the proper
rent (art. 361). It is the owner of the land who is allowed to exercise the option because his right is older
and because, by the principle of accession, he is entitled to the ownership of the accessory thing (3
Manresa, 4th ed., p. 213). In the case before us, the plaintiff, as owner of the land, chose to require the
defendant, as owner of the improvements, to pay for the land.

However The defendant states that he is a possessor in good faith and that the amount of P2,212 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 453 of the Civil Code. We do not doubt the validity of the
premises stated. "Considera la ley tan sagrada y legitima la deuda, que, hasta que sea pagada, no
consiente que la cosa se restituya al vencedor." (4 Manresa, 4th ed., p., 304.) We find, however, that the
defendant has lost his right to retention. In obedience to the decision of his right to retention. In
obedience to the decision of this court in G. R. No. 37319, the plaintiff expressed 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. But 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. When 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 plaintiff himself (p. 22, bill of exceptions) and the
purchase price of P8,000 received by him from Toribio Teodoro, we find no reason to justify a rupture of
the situation has created between them, the defendant- appellant not being entitled, after all, to
recover from the plaintiff the sum of P2,212.
Mores vs Yu-Go

Facts:

On January 21, 1998, plaintiffs-appellants Shirley M. Yu-Go, Ma. Victoria M. Yu-Lim and Ma. Estrella M.
Yu ("appellants") filed a Complaint for Injunction and Damages with Prayer for Issuance of a Temporary
Restraining Order and Preliminary Injunction before the Regional Trial Court in Naga City against
defendants-appellees, spouses Antonio and Alida Mores ("appellees"). Appellants alleged that they co-
owned a parcel of land located in Sto. Tomas, Magarao, Camarines Sur on which a building of strong
materials ("subject property") was built. In March 1983, appellees pleaded to appellants that they be
allowed to stay in the subject property in the meantime that they did not own a house yet. Since
appellee Antonio Mores used to be an errand boy of appellants' family, they readily agreed without
asking for any rental but subject only to the condition that the said stay would last until anyone of
appellants would need the subject property. Forthwith, appellees and their children occupied the same
as agreed upon.

In November 1997, appellants made known to appellees that they were already in need of the subject
property. They explained that appellant Shirley Yu-Go needed the same and, besides, appellees already
have their own house in Villa Grande Homes, Naga City. Yet, appellees begged that they be given a 6-
month extension to stay thereat or until May 1998. However, even after May 1998, appellees failed to
make good their promise and even further asked that they be allowed to stay therein until October
1998, which was again extended until the end of the same year. Thus, sometime in the first week of
January 1999, appellants gave their final demand for appellees to vacate the subject property. However,
instead of heeding such demand, appellees hired some laborers and started demolishing the
improvements on the subject property on January 20, 1999.

Appellants' protest fell on deaf ears because appellees continued their demolition and even took away
and appropriated for themselves the materials derived from such unlawful demolition. Consequently,
appellants instituted the said action for injunction where they also prayed for the reimbursement of the
value of the residential building illegally demolished as well as for the payment of moral damages,
attorney's fees, litigation expenses and costs of suit. AIHaCc

On February 5, 1999, appellees filed their Answer where they denied the material averments of the
complaint. They claimed that appellee Antonio Mores, who was appellants' uncle, used to be the
assistant manager and cashier of appellants' father at their Caltex Service Station until the later's death
sometime in 1980. Appellants' Caltex Filling Station had stopped operation and was just rented out to
Herce Trucking Service. Upon the expiration of such lease contract, appellees were allowed to occupy
the subject property as their dwelling places. They were the ones who caused its renovation consisting
of a 3-bedroom annex, a covered veranda and a concrete hollow block fence, at their own expense, and
with appellants' consent, which renovation was made without altering the form and substance of the
subject property. They denied that appellants made a demand for them to vacate the subject property,
insisting that it was merely a sort of reminder that sooner or later appellees should yield possession
thereof since, after all, they had already bought a second-hand house which was undergoing repair.
Appellees argued that what they removed was merely the improvements made on the subject property,
which removal had not caused any substantial damage thereto as, in fact, it remained intact. By way of
counterclaims, they demanded payment of actual damages, attorney's fees and litigation expenses

ISSUE: WON can the Mores remove the improvements made on the property?

Held:

Yes. There is thus no reason for the appellate court's award of moral damages to the Yu siblings. We
agree with the trial court's finding that the spouses Mores "removed only the improvements they
introduced without destroying the principal building, after the [Yu siblings] refused to pay them the
reasonable value of the improvements." 14 When the spouses Mores demanded reimbursement, the Yu
siblings should have offered to pay the spouses Mores one-half of the value of the improvements. Since
the Yu siblings failed to make such offer, the spouses Mores had the right to remove the improvements.
(Refer to ART. 447)

Narvasa Sr. vs Imbornal

Facts:

Basilia Imbornal10 of Alejandra, while petitioner Petra Imbornal (Petra) was the daughter of Balbina. 11
Petitioners are the heirs and successors-in-interest of Francisco, Pedro, and Petra (Francisco, et al.). On
the other hand, respondents Emiliana, Victoriano, Felipe, Mateo, Raymundo, Maria, and Eduardo, all
surnamed Imbornal, are the descendants of Pablo. 12

During her lifetime, Basilia owned a parcel of land situated at Sabangan, Barangay Nibaliw West, San
Fabian, Pangasinan with an area of 4,144 square meters (sq.m.), more or less (Sabangan property),
which she conveyed to her three (3) daughters Balbina, Alejandra, and Catalina (Imbornal sisters)
sometime in 1920.

Meanwhile, Catalina's husband, Ciriaco Abrio (Ciriaco), applied for and was granted a homestead patent
over a 31,367-sq.m. riparian land (Motherland) adjacent to the Cayanga River in San Fabian, Pangasinan.
14 He was eventually awarded Homestead Patent No. 24991 15 therefor, and, on December 5, 1933,
OCT No. 1462 was issued in his name. Later, or on May 10, 1973, OCT No. 1462 was cancelled, and
Transfer Certificate of Title (TCT) No. 101495 16 was issued in the name of Ciriaco's heirs, namely:
Margarita Mejia; Rodrigo Abrio, married to Rosita Corpuz; Antonio Abrio, married to Crisenta Corpuz;
Remedios Abrio, married to Leopoldo Corpuz; Pepito Abrio; Dominador Abrio; Francisca Abrio; Violeta
Abrio; and Perla Abrio (Heirs of Ciriaco).

Ciriaco and his heirs had since occupied the northern portion of the Motherland, while respondents
occupied the southern portion. 17

Sometime in 1949, the First Accretion, approximately 59,772 sq.m. in area, adjoined the southern
portion of the Motherland. On August 15, 1952, OCT No. P-318 was issued in the name of respondent
Victoriano, married to Esperanza Narvarte, covering the First Accretion.

Decades later, or in 1971, the Second Accretion, which had an area of 32,307 sq.m., more or less,
abutted the First Accretion on its southern portion. 19 On November 10, 1978, OCT No. 21481 was
issued in the names of all the respondents covering the Second Accretion. TaDSCA

Claiming rights over the entire Motherland, Francisco, et al., as the children of Alejandra and Balbina,
filed on February 27, 1984 an Amended Complaint 20 for reconveyance, partition, and/or damages
against respondents, docketed as Civil Case No. D-6978. They anchored their claim on the allegation that
Ciriaco, with the help of his wife Catalina, urged Balbina and Alejandra to sell the Sabangan property,
and that Ciriaco used the proceeds therefrom to fund his then-pending homestead patent application
over the Motherland. In return, Ciriaco agreed that once his homestead patent is approved, he will be
deemed to be holding the Motherland — which now included both accretions — in trust for the
Imbornal sisters. 21

Likewise, Francisco, et al. alleged that through deceit, fraud, falsehood, and misrepresentation,
respondent Victoriano, with respect to the First Accretion, and the respondents collectively, with regard
to the Second Accretion, had illegally registered the said accretions in their names, notwithstanding the
fact that they were not the riparian owners (as they did not own the Motherland to which the accretions
merely formed adjacent to). In this relation, Francisco, et al. explained that they did not assert their
inheritance claims over the Motherland and the two (2) accretions because they respected respondents'
rights, until they discovered in 1983 that respondents have repudiated their (Francisco, et al.'s) shares
thereon. 22 Thus, bewailing that respondents have refused them their rights not only with respect to
the Motherland, but also to the subsequent accretions, Francisco, et al. prayed for the reconveyance of
said properties, or, in the alternative, the payment of their value, as well as the award of moral damages
in the amount of PhP100,000.00, actual damages in the amount of PhP150,000.00, including attorney's
fees and other costs.

ISSUE: WON Francisco Narvasa et all are the owners of the accretion?

Held:

No. In this case, Francisco, et al. and, now, their heirs, i.e., herein petitioners, are not the riparian
owners of the Motherland to which the First Accretion had attached, hence, they cannot assert
ownership over the First Accretion. Consequently, as the Second Accretion had merely attached to the
First Accretion, they also have no right over the Second Accretion. Neither were they able to show that
they acquired these properties through prescription as it was not established that they were in
possession of any of them. Therefore, whether through accretion or, independently, through
prescription, the discernible conclusion is that Francisco, et al. and/or petitioners' claim of title over the
First and Second Accretions had not been substantiated, and, as a result, said properties cannot be
reconveyed in their favor. This is especially so since on the other end of the fray lie respondents armed
with a certificate of title in their names covering the First and Second Accretions coupled with their
possession thereof, both of which give rise to the superior credibility of their own claim. Hence,
petitioners' action for reconveyance with respect to both accretions must altogether fail.

Office of the City Mayor of Paranaque vs Ebio

Facts

Respondents claim that they are the absolute owners of a parcel of land consisting of 406 square
meters, more or less, located at 9781 Vitalez Compound in Barangay Vitalez, Parañaque City and
covered by Tax Declaration Nos. 01027 and 01472 in the name of respondent Mario D. Ebio. Said land
was an accretion of Cut-cut creek. Respondents assert that the original occupant and possessor of the
said parcel of land was their great grandfather, Jose Vitalez. Sometime in 1930, Jose gave the land to his
son, Pedro Vitalez. From then on, Pedro continuously and exclusively occupied and possessed the said
lot. In 1966, after executing an affidavit declaring possession and occupancy, 4 Pedro was able to obtain
a tax declaration over the said property in his name. 5 Since then, respondents have been religiously
paying real property taxes for the said property

Meanwhile, in 1961, respondent Mario Ebio married Pedro's daughter, Zenaida. Upon Pedro's advice,
the couple established their home on the said lot. In April 1964 and in October 1971, Mario Ebio secured
building permits from the Parañaque municipal office for the construction of their house within the said
compound. 7 On April 21, 1987, Pedro executed a notarized Transfer of Rights 8 ceding his claim over
the entire parcel of land in favor of Mario Ebio. Subsequently, the tax declarations under Pedro's name
were cancelled and new ones were issued in Mario Ebio's name. 9

On March 30, 1999, the Office of the Sangguniang Barangay of Vitalez passed Resolution No. 08, series
of 1999 10 seeking assistance from the City Government of Parañaque for the construction of an access
road along Cut-cut Creek located in the said barangay. The proposed road, projected to be eight (8)
meters wide and sixty (60) meters long, will run from Urma Drive to the main road of Vitalez Compound
11 traversing the lot occupied by the respondents. When the city government advised all the affected
residents to vacate the said area, respondents immediately registered their opposition thereto. As a
result, the road project was temporarily suspended. 12 aTAEHc
In January 2003, however, respondents were surprised when several officials from the barangay and the
city planning office proceeded to cut eight (8) coconut trees planted on the said lot. Respondents filed
letter-complaints before the Regional Director of the Bureau of Lands, the Department of Interior and
Local Government and the Office of the Vice Mayor. 13 On June 29, 2003, the Sangguniang Barangay of
Vitalez held a meeting to discuss the construction of the proposed road. In the said meeting,
respondents asserted their opposition to the proposed project and their claim of ownership over the
affected property. 14 On November 14, 2003, respondents attended another meeting with officials from
the city government, but no definite agreement was reached by and among the parties.

On March 28, 2005, City Administrator Noli Aldip sent a letter to the respondents ordering them to
vacate the area within the next thirty (30) days, or be physically evicted from the said property. 16
Respondents sent a letter to the Office of the City Administrator asserting, in sum, their claim over the
subject property and expressing intent for a further dialogue. 17 The request remained unheeded.

Threatened of being evicted, respondents went to the RTC of Parañaque City on April 21, 2005 and
applied for a writ of preliminary injunction against petitioners. 18 In the course of the proceedings,
respondents admitted before the trial court that they have a pending application for the issuance of a
sales patent before the Department of Environment and Natural Resources

RTC Ruling

On April 29, 2005, the RTC issued an Order 20 denying the petition for lack of merit. The trial court
reasoned that respondents were not able to prove successfully that they have an established right to
the property since they have not instituted an action for confirmation of title and their application for
sales patent has not yet been granted. Additionally, they failed to implead the Republic of the
Philippines, which is an indispensable party.

CA Ruling

The subject of acquisitive prescription in the instant case is the accreted portion which [was] duly
proven by the Appellants. It is clear that since 1930, Appellants together with their predecessor-in-
interest, PEDRO VITALEZ[,] have been in exclusive possession of the subject property and starting 1964
had introduced improvements thereon as evidenced by their construction permits. Thus, even by
extraordinary acquisitive prescription[,] Appellants have acquired ownership of the property in question
since 1930 even if the adjoining RL 8 was subsequently registered in the name of Guaranteed Homes.

ISSUE: WON the creek in question being a tributary of the river, is classified as part of the public
domain?

Held:

No. Art. 457.To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.
It is therefore explicit from the foregoing provisions that alluvial deposits along the banks of a creek do
not form part of the public domain as the alluvial property automatically belongs to the owner of the
estate to which it may have been added. The only restriction provided for by law is that the owner of the
adjoining property must register the same under the Torrens system; otherwise, the alluvial property
may be subject to acquisition through prescription by third persons. 28

In contrast, properties of public dominion cannot be acquired by prescription. No matter how long the
possession of the properties has been, there can be no prescription against the State regarding property
of public domain. 29 Even a city or municipality cannot acquire them by prescription as against the Stte.
30Hence, while it is true that a creek is a property of public dominion, 31 the land which is formed by
the gradual and imperceptible accumulation of sediments along its banks does not form part of the
public domain by clear provision of law.
New Regent Sources Inc vs Tanjuatco Jr and Cuevas

Facts:

Petitioner New Regent Sources, Inc. (NRSI) filed a Complaint 3 for Rescission/Declaration of Nullity of
Contract, Reconveyance and Damages against respondent Tanjuatco and the Register of Deeds of
Calamba before the RTC of Calamba, Laguna, Branch 37. NRSI alleged that in 1994, it authorized Vicente
P. Cuevas III, its Chairman and President, to apply on its behalf, for the acquisition of two parcels of land
by virtue of its right of accretion. Cuevas purportedly applied for the lots in his name by paying
P82,400.38 to the Bureau of Lands. On January 2, 1995, Cuevas and his wife executed a Voting Trust
Agreement 4 over their shares of stock in the corporation. Then, pending approval of the application
with the Bureau of Lands, Cuevas assigned his right to Tanjuatco for the sum of P85,000. 5 On March 12,
1996, the Director of Lands released an Order, 6 which approved the transfer of rights from Cuevas to
Tanjuatco. Transfer Certificates of Title Nos. T-369406 7 and T-369407 8 were then issued in the name of
Tanjuatco.

In his Answer with Counterclaim, 9 Tanjuatco advanced the affirmative defense that the complaint
stated no cause of action against him. According to Tanjuatco, it was Cuevas who was alleged to have
defrauded the corporation. He averred further that the complaint did not charge him with knowledge of
the agreement between Cuevas and NRSI.

Upon Tanjuatco's motion, the trial court conducted a preliminary hearing on the affirmative defense,
but denied the motion to dismiss, and ordered petitioner to amend its complaint and implead Cuevas as
a defendant.

RTC Ruling

After NRSI completed presenting evidence, Tanjuatco filed a Demurrer to Evidence, 13 which the RTC
granted in an Order dated February 12, 2005. In dismissing NRSI's complaint, 14 the RTC cited the Order
of the Director of Lands and certain insufficiencies in the allegations in the complaint. The trial court
further held that Tanjuatco is an innocent purchaser for value.

Issue: WON NRSI could lands the lands in question through accretion?

Held:

No, it must be stressed that accretion as a mode of acquiring property under Article 457 31 of the Civil
Code requires the concurrence of the following requisites: (1) that the deposition of soil or sediment be
gradual and imperceptible; (2) that it be the result of the action of the waters of the river; and (3) that
the land where accretion takes place is adjacent to the banks of rivers. 32 Thus, it is not enough to be a
riparian owner in order to enjoy the benefits of accretion. One who claims the right of accretion must
show by preponderant evidence that he has met all the conditions provided by law. Petitioner has
notably failed in this regard as it did not offer any evidence to prove that it has satisfied the foregoing
requisites.
Further, it is undisputed that Tanjuatco derived his title to the lands from Original Certificate of Title
(OCT) No. 245 registered in the name of the Republic of the Philippines. Said parcels of land formed part
of the Dried San Juan River Bed, 33 which under Article 502 (1) 34 of the Civil Code rightly pertains to
the public dominion. The Certification 35 issued by Forester III Emiliano S. Leviste confirms that said
lands were verified to be within the Alienable and Disposable Project No. 11-B of Calamba, Laguna per
BFD LC Map No. 3004, certified and declared as such on September 28, 1981. Clearly, the Republic is the
entity which had every right to transfer ownership thereof to respondent.

Republic vs CA

Facts:

More than 50 years ago, petitioner Jose Reynante was taken as tenant by the late Don Cosme Carlos,
owner and father-in-law of herein private respondents, over a fishpond located at Barrio Liputan,
Meycauayan, Bulacan with an area of 188.711 square meters, more or less and covered by Transfer
Certificate of Title No. 25618, Land Registry of Bulacan.

During the tenancy, petitioner Jose Reynante constructed a nipa hut where he and his family lived and
took care of the nipa palms (sasahan) he had planted on lots 1 and 2 covering an area of 5,096 square
meters and 6,011 square meters respectively. These lots are located between the fishpond covered by
TCT No. 25618 and the Liputan (formerly Meycauayan) River. Petitioner harvested and sold said nipa
palms without interference and prohibition from anybody. Neither did the late Don Cosme Carlos
question his right to plant the nipa palms near the fishpond or to harvest and appropriate them as his
own.

After the death of Don Cosme Carlos, his heirs (private respondents' predecessors-in-interest) entered
into a written agreement denominated as "SINUMPAANG SALAYSAY NG PAGSASAULI NG KARAPATAN"
dated November 29, 1984 with petitioner Jose Reynante whereby the latter for and in consideration of
the sum of P200,000.00 turned over the fishpond he was tenanting to the heirs of Don Cosme Carlos
and surrendered all his rights therein as caretaker or "bantay-kasama at tagapamahala" (Rollo, p. 77).
LLphil

Pursuant to the said written agreement, petitioner surrendered the fishpond and the two huts located
therein to private respondents. Private respondents thereafter leased the said fishpond to one Carlos de
la Cruz. Petitioner continued to live in the nipa hut constructed by him on lots 1 and 2 and to take care
of the nipa palms he had planted therein. llcd

On February 17, 1988, private respondents formally demanded that the petitioner vacate said portion
since according to them petitioner had already been indemnified for the surrender of his rights as a
tenant. Despite receipt thereof, petitioner refused and failed to relinquish possession of lots 1 and 2.
Hence, on April 22, 1988, private respondents filed a complaint for forcible entry with preliminary
mandatory injunction against petitioner alleging that the latter by means of strategy and stealth, took
over the physical, actual and material possession of lots 1 and 2 by residing in one of the kubos or huts
bordering the Liputan River and cutting off and/or disposing of the sasa or nipa palms adjacent thereto.

RTC RULING

On January 10, 1989, the trial court rendered its decision dismissing the complaint and finding that
petitioner had been in prior possession of lots 1 and 2.

CA RULING

On November 5, 1990, the Court of Appeals denied the motion for reconsideration filed by petitioner

ISSUE: who owns the disputed lots?

Held:

Petitioner, Reynante owns the disputed lots 1 and 2. Accretion benefits a riparian owner when the
following requisites are present: (1) that the deposit be gradual and imperceptible; (2) that it resulted
from the effects of the current of the water; and (c) that the land where accretion takes place is
adjacent to the bank of a river.

Granting without conceding that lots 1 and 2 were created by alluvial formation and while it is true that
accretions which the banks of rivers may gradually receive from the effect of the current become the
property of the owner of the banks, such accretion to registered land does not preclude acquisition of
the additional area by another person through prescription.

This Court ruled in the case of Ignacio Grande, et al. v. Hon. Court of Appeals, et al., G.R. No. L-17652,
June 30, 1962, 115 Phil. 521 that:

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

Assuming private respondents had acquired the alluvial deposit (the lot in question), by accretion, still
their failure to register said accretion for a period of fifty (50) years subjected said accretion to
acquisition through prescription by third persons.
It is undisputed that petitioner has been in possession of the subject lots for more than fifty (50) years
and unless private respondent can show a better title over the subject lots, petitioner's possession over
the property must be respected.

Baes vs CA

Facts:

This lot was later acquired by Felix Baes, who registered it in his name under TCTl No. 10990 and then
had it subdivided into three lots, namely: (a) Lot 2958-A, with an area of 28,889 sq.m.; (b) Lot 2958-B,
with an area of 3,588 sq.m.; and (c) Lot 2958-C, with an area of 452 sq.m., covered by TCT Nos. 11041,
11042 and 11043, respectively.

In exchange for Lot 2958-B, which was totally occupied by the canal, the government gave Baes a lot
with exactly the same area as Lot 2958-B through a Deed of Exchange of Real Property dated June 20,
1970. 1 The property, which was near but not contiguous to Lot 2958-C, was denominated as Lot 3271-A
and later registered in the name of Felix Baes under TCT No. 24300. The soil displaced by the canal was
used to fill up the old bed of the creek.

Meanwhile, Baes had Lot 2958-C and a portion of Lot 2958-A designated as Lot 1, Blk. 4, resurveyed and
subdivided. On January 12, 1968, 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 Court of First Instance of Pasay City in an order
dated January 15, 1968.

As a result, the old TCTs covering the said lots were canceled and new ones were issued, to wit: (a) Lot
1-A, Blk. 4, with 672 sq.m., under TCT No. T-14404; (b) Lot 1-B, with 826 sq.m., representing the increase
in area after the resurvey, under TCT No. T-14405; (c) Lot 2958-C-1, with 452 sq.m., under TCT No. T-
14406; and (d) Lot 2958-C-2, with 2,770 sq.m. representing the increase after resurvey, under TCT No. T-
14407.

Lots 2958-C-1 and 2958-C-2 were later consolidated and this time further subdivided into four (4) lots,
namely, Lot 1, with an area of 147 sq.m.; Lot 2, with an area of 950 sq.m.; Lot 3, with an area of 257
sq.m.; and Lot 4, with an area of 1,868 sq.m., which were respectively issued TCT Nos. 29592, 29593,
29594, and 29595.

In 1978, the Republic of the Philippines discovered that Lot 1-B (with TCT No. 14405 and an area of 826
sq.m.), on which the petitioners had erected an apartment building, covered Lot 3611 of the Pasay
Cadastre, which is a filled-up portion of the Tripa de Gallina creek. Moreover, Lot 2958-C (covered by
TCT Nos. 29592 to 29595, with an increased area of 2,770 sq.m. after resurvey and subdivision) had
been unlawfully enlarged.
On November 17, 1982, it filed a petition for cancellation of TCT Nos. 14405 and 29592 to 29595. 3

Baes did not object in his answer to the cancellation of TCT Nos. 29592, 29594 and 29595 and was not
able to prove during the trial that the government utilized a portion of Lot 2 under TCT No. 29593.

RTC RULING

The trial court therefore decreed (correctly) that the original Lot 2958-C (with an area of 452 sq.m.) be
reverted to its status before the resurvey-subdivision of Lot 2958-C.

ISSUE: WON Lot 1-B (TCT No. 14405) belongs to the Petitioners?

Held:

Yes. Article 461 of the Civil Code states:

River beds which are abandoned through the natural change in the course of the waters ipso facto
belong to the owners whose lands are occupied by the new course in proportion to the area lost.
However, the owners of the lands adjoining the old bed shall have the right to acquire the same by
paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.

A portion of the Tripa de Gallina creek was diverted to a man-made canal which totally occupied Lot
2958-B (with an area of 3,588 sq.m.) belonging to Felix Baes. Thus, the petitioners claim that they
became the owners of the old bed (which was eventually filled up by soil excavated from Lot 2958-B) by
virtue of Article 461.

The petitioners rely heavily on Dr. Arturo M. Tolentino's interpretation of this Article, to wit:

This article (461) refers to a natural change in the course of a stream. If the change of the course is due
to works constructed by concessioners authorized 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
prejudice to a superior right of third persons with sufficient title. (Citing 3 Manresa 251-252; 2 Navarro
Amandi 100-101; 3 Sanchez Roman 148)

We 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 effected through artificial 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 flow of the
Tripa de Gallina creek. It was therefore obligated to compensate the Baeses for their loss.
CLT Realty Development Corporation vs Phil Ville Development and Housing Corporation

Facts:

This case started with a Complaint 6 for Quieting of Title, Damages and Injunction filed by respondent
Phil-Ville against petitioner and the Register of Deeds of Metro Manila District III on August 28, 1991
before the RTC of Caloocan City, Branch 122, docketed as Civil Case No. 15045. Both corporations are
domestic, duly organized and existing under and by virtue of the laws of the Republic of the Philippines.

Respondent Phil-Ville claims that it is the registered owner and actual possessor of sixteen (16) parcels
of land in Baesa, Caloocan City,

Respondent Phil-Ville claimed that it had been in "actual, open, notorious, public, physical and
continuous possession" of the 16 parcels of land "before 1980 up to [the] present." 8 It fenced said
parcels of land in 1980 and 1991. 9

Respondent Phil-Ville presented a chart 10 showing that the 16 parcels of land were derived from and
were part of Lot 26, Maysilo Estate originally covered by Original Certificate of Title (OCT) No. 994 issued
on May 3, 1917.

Respondent Phil-Ville alleged that based on official records of the office of respondent Register of Deeds
and the Land Registration Authority, petitioner was issued Transfer Certificate of Title (TCT) No. T-
177013, covering a parcel of land situated in Caloocan City, particularly described as follows:

A parcel of land (Lot 26, Maysilo Estate, LRC Swo-5268), situated in the Mun. of Malabon, Caloocan City,
Island of Luzon. Bounded on the NW along lines 1 to 19 by the Tullajan River; on the NE., along lines 19
to 24 by Piedad Estate; on the SE., along lines 24 to 37 by Lot 27 (LRC) SWO-5268; on the SW., along
lines 37 to 46 and 46 to 1 by Lot 25-A (LRC) SWO 5268 . . . containing an area of EIGHT HUNDRED
NINETY[-]ONE THOUSAND FIVE HUNDRED FORTY[-]SEVEN AND FORTY-THREE (891,547.43)

Respondent Phil-Ville further claimed that an actual plotting of the relative position of Lot 26 as
particularly described in petitioner's aforementioned TCT No. T-177013 in relation to the positions of all
the lots covered by respondent Phil-Ville's transfer certificates of title, respectively, proved positively
that said TCT No. T-177013 of petitioner overlaps respondent Phil-Ville's aforesaid parcels of land.
Respondent Phil-Ville contended that petitioner's TCT No. T-177013, although apparently valid or
effective, is in truth and in fact, invalid and ineffective, and unless declared as such by the court, will
inevitably prejudice respondent Phil-Ville's title over its 16 parcels of land, as said title of petitioner is a
potential cause of litigations between respondent Phil-Ville and petitioner, as in the present suit, as well
as suit/s involving respondent Phil-Ville and transferee/s of petitioner of the entire and/or a portion of
Lot 26 in question

RULING OF THE RTC

The RTC held that there was no doubt that the lots registered in respondent Phil-Ville's 16 titles subject-
matter of this case are clearly located within the large area or Lot 26 of the Maysilo Estate, supposedly
covered by petitioner's TCT No. T-177013. Thus, the titles overlapped, and this fact was not seriously
disputed by petitioner.

RULING OF THE CA

The Court of Appeals rendered its questioned Decision on February 27, 2003, which affirmed the factual
findings of the RTC.

Issue: WON

Held:

No. Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty
affecting title to real property. Whenever there is a cloud on title to real property or any interest in real
property by reason of any instrument, record, claim, encumbrance, or proceeding that is apparently
valid or effective, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. In such
action, the competent court is tasked to determine the respective rights of the complainant and the
other claimants, not only to place things in their proper places, and make the claimant, who has no
rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so
that whoever has the right will see every cloud of doubt over the property dissipated, and he can
thereafter fearlessly introduce any desired improvements, as well as use, and even abuse the property.

In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to
be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or proceeding; (2)
which is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or
unenforceable; and (4) may be prejudicial to the title sought to be quieted. . . . . (Citations omitted.)

The RTC and the Court of Appeals both arrived at the conclusion that respondent Phil-Ville had a valid
title to the 16 parcels of land subject of the complaint, and that petitioner's title is invalid despite its
prima facie appearance of validity. This conclusion was arrived at after a thorough study of the pieces of
evidence presented by both parties.

We see no cogent reason to reverse and disturb the factual findings of the Court of Appeals quoted
above, affirming the RTC Decision, likewise extensively quoted above, especially as they are supported
by the evidence on record. It has been held in a long string of cases that as a general rule, findings of fact
of the Court of Appeals are deemed final, conclusive, and binding on this Court.
Aquino vs Quiazon

Facts:

On December 16, 2005, a complaint for Annulment and Quieting of Title was filed before the RTC-
Branch 59 by the petitioners, namely, Leticia Naguit Aquino, Melvin Naguit, Rommel Naguit, Elma Naguit
Tayag, Yssel L. Naguit, Rosalina Naguit Aumentado, Rizel Naguit Cunanan, Caridad Naguit Parajas, Millie
Naguit Florendo, Marnel Naguit, Eduardo Naguit, Jose Naguit, Zoilo Naguit, and Amelia Naguit Dizon,
represented by Yssel L. Naguit (petitioners). They alleged that they were the heirs of the late Epifanio
Makam and Severina Bautista, who acquired a house and lot situated in Magalang, Pampanga,
consisting of 557 square meters, by virtue of a Deed of Sale, dated April 20, 1894; that since then, they
and their predecessors-in-interest had been in open, continuous, adverse, and notorious possession for
more than a hundred years, constructing houses and paying real estate taxes on the property; that
sometime in June 2005, they received various demand letters from the respondents, namely, Cesar B.
Quiazon, Amanda Quiazon, Jose B. Quiazon, and Reynaldo B. Quiazon, represented by Jaime B. Quiazon
(respondents), claiming ownership over the subject property and demanding that they vacate the same;
that upon inquiry with the Register of Deeds of San Fernando, Pampanga, they confirmed that the
property had been titled in the name of respondents under Transfer Certificate of Title (TCT) No.
213777-R; that the said title was invalid, ineffective, voidable or unenforceable; and that they were the
true owners of the property.

Hence, they prayed that the title be cancelled and a new title be issued in their favor.

In their Answer, 4 respondents asserted that they were the absolute owners of the subject land as per
TCT No. 213777-R; that they had inherited the same from their predecessor-in-interest, Fausta Baluyut,
one of the registered owners under Original Certificate of Title (OCT) No. RO-1138 (11376), as per the
Project of Partition and Deed of Agreement, dated January 2, 1974; and that petitioners had been
occupying the property by mere tolerance. They denied the allegations in the complaint and proffered
affirmative defenses with counterclaims.

They argued that: First, the petitioners "have no valid, legal and sufficient cause of action" 5 against
them, because their deed of sale was spurious and could not prevail over Land Registration Decree No.
122511 issued on June 28, 1919 in Land Registration Case No. 5, LRC Records No. 128, by the Court of
First Instance of Pampanga, in favor of their predecessor-in-interest. The predecessors-in-interest of
petitioners were among the oppositors in the land registration proceeding but, nevertheless, after the
trial, the subject lot was awarded, decreed and titled in favor of respondents' predecessor-in-interest, as
per OCT No. RO-1138 (11376) of the Registry of Deeds of Pampanga. Second, the action was barred by
prescription and that petitioners were guilty of laches in asserting their interest over the subject lot,
considering that Land Registration Decree No. 122511 was issued on June 28, 1919 and OCT No. RO-
1138 (11376) was issued on May 12, 1922. Hence, it was much too late for petitioners to institute the
action after more than 80 years. They also raised the settled rule that a title registered under the
Torrens system could not be defeated by adverse, open and notorious possession, or by prescription.
Third, the action was also barred by res judicata and violated the prohibition against forum shopping,
considering that petitioners had earlier filed a similar case for quieting of title against respondents,
docketed as Civil Case No. 5487, which the RTC-Br. 56 dismissed.

Petitioners filed their Comment to Defendant's Affirmative Defenses. 6 Anent the alleged lack of cause
of action due to the spurious deed of sale, petitioners argued that this contention was a matter of
evidence which might only be resolved in a full-blown trial. They insisted that the deed of sale was
genuine and authentic and was issued and certified by the Deputy Clerk of Court of the RTC. They added
that the settled rule was that to determine the sufficiency of the cause of action, only the facts alleged
in the complaint should be considered, and that the allegations in their complaint sufficiently stated a
cause of action.

As regards the allegation of prescription, the petitioners countered that an action to quiet title did not
prescribe if the plaintiffs were in possession of the property in question. They argued that they were
neither guilty of laches nor were they in possession of the property by mere tolerance, their possession
being in the concept of owner for more than a hundred years.

RTC RULING

On July 14, 2008, the RTC-Br. 59 issued the Order dismissing petitioners' complaint. It found that based
on the decision, dated June 28, 1919, in Cadastral Case No. 5, the Baluyut siblings, respondents'
predecessors-in-interest, were declared the absolute owners of the subject property, over the claim of
Jose Makam, the predecessor-in-interest of petitioners, who was one of the oppositors in the said case.

CA RULING

The CA gave credence to the evidence presented by respondents and noted that, except for petitioners'
bare allegation that respondents' title was invalid, there was nothing more to support the same. It
further noted that the deed of sale was written in a local dialect without the translation and with no
ascertainable reference to the area of the property being conveyed. The CA, therefore, found that
petitioners did not have the title required to avail of the remedy of quieting of title, while respondents
had sufficiently proven the validity of their Torrens title.

ISSUE: WON the quieting of title may prosper?

Held:

Yes. Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of
any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.
A "cloud on title" is an outstanding instrument, record, claim, encumbrance or proceeding which is
actually invalid or inoperative, but which may nevertheless impair or affect injuriously the title to
property. The matter complained of must have a prima facie appearance of validity or legal efficacy. The
cloud on title is a semblance of title which appears in some legal form but which is in fact unfounded.
The invalidity or inoperativeness of the instrument is not apparent on the face of such instrument, and it
has to be proved by extrinsic evidence. 23

In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to
be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

It is readily apparent from the complaint that petitioners alleged that (1) they had an interest over the
subject property by virtue of a Deed of Sale, dated April 20, 1894; and that (2) the title of respondents
under TCT No. 213777-R was invalid, ineffective, voidable or unenforceable. Hypothetically admitting
these allegations as true, as is required in determining whether a complaint fails to state a cause of
action, petitioners may be granted their claim. Clearly, the complaint sufficiently stated a cause of
action. In resolving whether or not the complaint stated a cause of action, the trial court should have
limited itself to examining the sufficiency of the allegations in the complaint. It was proscribed from
inquiring into the truth of the allegations in the complaint or the authenticity of any of the documents
referred or attached to the complaint, as these were deemed hypothetically admitted by the
respondents.
Syjuco vs Bonifacio

Facts:

Petitioners Imelda, Leonardo, Fidelino, Azucena, Anita, and Sisa, all surnamed Syjuco (collectively
referred to as petitioners) are the registered co-owners of the subject land, located in the then Barrio of
Balintawak, Municipality of Caloocan, Province of Rizal, under Transfer Certificate of Title (TCT) No. T-
108530 4 issPetitioners have been in open, continuous, and uninterrupted possession of the subject
land, by themselves or through their predecessors-in-interest, since 1926. Petitioners traced back their
title over the subject land to TCT No. 10301 issued on February 26, 1926 to Monica Jacinto Galauran.
Thereafter, TCT No. 10301 was replaced by TCT No. 8685 under the names of Avelina Baello, Felisa
Baello, Dolores Baello, Eduardo Mesina, and Fausto Galauran (Avelina Baello, et al.). TCT No. 8685 was
then replaced by TCT No. 12370 under the names of the brothers Martin V. Syjuco (Martin) and Manuel
V. Syjuco (Manuel) pursuant to a Deed of Sale of Real Estate 5 dated February 7, 1949 executed by
Avelina Baello, et al. in favor of the siblings Martin and Manuel. TCT No. 12370 was, in turn, replaced by
TCT No. 4856 6 issued on July 1, 1964 in Martin's name alone in accordance with a Partition Agreement
7 executed by the brothers on June 16, 1964. Upon Martin's death, petitioners inherited the subject
land, and following the extrajudicial partition they executed on June 27, 1976, they registered said land
in their names, as co-owners, under TCT No. T-108530 issued on March 26, 1984. Petitioners and their
predecessors-in-interest have been paying the real property taxes over the subject land since 1949. 8

Among the annotations on TCT No. T-108530 are two encumbrances constituted by petitioners and/or
their predecessors-in-interest on the subject land, particularly: (1) a lease agreement dated September
24, 1963, in favor of Manufacturer's Bank and Trust Company (Manufacturer's Bank), over a portion of
the subject land, with the condition that the buildings which the lessee had constructed thereon shall
become the property of the lessor/s after the expiration of the lease agreement; and (2) another lease
agreement dated December 20, 1971, in favor of a certain Chan Heng, over the remaining portion of the
subject land. 9

Sometime in 1994, however, petitioners learned that a broker named Exequiel Fajardo, through a Letter
10 dated March 9, 1994, offered for sale the subject land along with the improvements thereon to a
certain Luis Ong

Petitioners found out that the purported owner of the subject land, respondent Felisa D. Bonifacio
(Bonifacio), was the sub-lessee of Kalayaan Development Corporation, which, in turn, was the sub-lessee
of Manufacturer's Bank, which was the direct lessee of petitioners. Petitioners also learned that
respondent Bonifacio was able to register the subject land in her name under TCT No. 265778, which
was issued on March 29, 1993 by the Register of Deeds of Caloocan City

RULING OF THE RTC

RTC-Branch 126 also categorically upheld the validity of respondent Bonifacio's TCT No. 265778 as it was
issued pursuant to the Order dated October 8, 1992 of the Caloocan City RTC-Branch 125. RTC-Branch
126 said that it could not question the order of a co-equal court and brushed aside petitioners' claim of
continuous possession of the subject property because such fact alone could not defeat respondents'
title over said property registered under the Torrens system. Absent any showing by clear and
convincing proof that TCT No. 265778 of respondent Bonifacio, now TCT No. 285313 of respondent VSD
Realty, was irregularly issued, RTC-Branch 126 accorded said titles the conclusive presumption of validity

RULING OF THE CA

The Court of Appeals concluded that since respondent Bonifacio is the owner of the subject land, validly
registered in her name, she is within her rights in selling said property to respondent VSD Realty, making
the latter's TCT No. 285313 also valid

ISSUE: WON there is an action to quiet title of land of the petitioners?

Held:

Yes. The Court, at the outset, finds untenable the contention that the action instituted by petitioners is a
prohibited collateral attack on the certificate of title of respondents over the subject land.

Section 48 of Presidential Decree No. 1529 44 states:

Sec. 48. Certificate not subject to collateral attack. — A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance
with law.

To determine whether an attack on a certificate of title is direct or indirect, the relevance of the object
of the action instituted and the relief sought therein must be examined. The rule was explained in
Catores v. Afidchao 45 as follows:

When is an action an attack on a title? It is when the object of the action or proceeding is to nullify the
title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when
the object of an action or proceeding is to annul or set aside such judgment, or enjoin its enforcement.
On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an
attack on the judgment is nevertheless made as an incident thereof. (Emphasis supplied, citation
omitted.)

The instituted action in this case is clearly a direct attack on a certificate of title to real property.

In their complaint for quieting of title, petitioners specifically pray for the declaration of nullity and/or
cancellation of respondents' TCT Nos. 265778 and 285313 over the subject land. The relief sought by
petitioners is certainly feasible since the objective of an action to quiet title, as provided under Article
476 of the Civil Code of the Philippines, is precisely to quiet, remove, invalidate, annul, and/or nullify "a
cloud on title to real property or any interest therein by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid,
ineffective, voidable, or unenforceable, and may be prejudicial to said title."
The Court also finds bereft of merit the contentions that petitioners' action to quiet title had already
prescribed and/or that the titles of respondents over the subject land have already become
incontrovertible and indefeasible based on Section 32 of Presidential Decree No. 1529.

Section 32 of Presidential Decree No. 1529 states:

Section 32. Review of decree of registration; Innocent purchaser for value. — The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject,
however, to the right of any person, including the government and the branches thereof, deprived of
land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual
fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of
registration not later than one year from and after the date of the entry of such decree of registration,
but in no case shall such petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase
"innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to
include an innocent lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate of title
issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case
may pursue his remedy by action for damages against the applicant or any other persons responsible for
the fraud. (Emphases added.)

It is an established doctrine in land ownership disputes that the filing of an action to quiet title is
imprescriptible if the disputed real property is in the possession of the plaintiff. One who is in actual
possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the reason for the rule being that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on his own title, which right can
be claimed only by one who is in possession.
Heirs of Pacifico Pocdo vs Avilo

Facts:

Pocdo Pool, who died in 1942, began his occupation and claim on three lots that were eventually
surveyed in his name as Lot 43, TS 39-SWO-36431, Lot 44, TS 39-SWO-36420 and Lot 45 TS 39-SWO-
36429 with an area of 144,623 [sq.m.], 64,112 [sq.m.], and 9,427 square meters, respectively, and
situated at Residence Section 4, Baguio City. These lots were the subject of a petition to reopen judicial
proceedings filed by the Heirs of Pocdo Pool with the CFI of Baguio City in Civil Reservation Case No. 1,
LRC Case 211. The registration of the lots in the names of the petitioners were [sic] granted in October
1964, but since the decision was not implemented within the 10 years [sic] prescribed period, the Heirs
filed their ancestral land claims with the DENR. In August 1991, Certificates of Ancestral Lands Claims
(CALS) were issued by the DENR for Lots 44 and 45, but Lot 43 was not approved due to Memorandum
Order 98-15 issued by the DENR Secretary in September 199[8]. cCHETI

In the meantime, on September 14, 1960, Polon Pocdo, an heir of Pocdo Pool, ceded his rights over the
three lots to Pacifico Pocdo in exchange for a one hectare lot to be taken from Lot 43. However, Pacifico
entered into a contract with Florencio Pax and Braulio Yaranon on November 21, 1968 revoking the
agreement with Polon. In the contract, the 4,875 square meters where Polon's house was located
became part of the 1-hectare given to Pax and Yaranon in exchange for their services in the titling of
Pacifico's lands.

Polon filed a complaint in August 1980 [with] the Office of the Barangay Captain at Camp 7, Baguio City,
which was settled by an amicable settlement dated September 3, 1980 between Pacifico and Polon.
They agreed that Polon would again retain the 4,875 square meters and Pacifico would give the 5,125
square meter area, the remaining portion of the 1-hectare share of Polon, to be taken from Lot 43 after
a segregation.

On April 18, 1981, Polon entered into a Catulagan with Arsenia Avila authorizing the latter to undertake
the segregation of his one-hectare land from Lot 43 in accord with the amicable settlement of
September 3, 1980. In exchange, Polon would award to her 2,000 square meters from the 1-hectare lot.
After spending time, money and effort in the execution of the survey, Avila gave the survey results to
Polon prompting Polon to execute a Waiver of Rights dated January 21, 1987. Accordingly, the
subdivided lots were declared for tax purposes and the corresponding tax declaration issued to Polon
and Arsenia, with 8,010 square meters going to Polon and 1,993 square meters to Avila.

On March 10, 2000, finding the amicable settlement, the Catulagan and Waiver of Rights in order, the
CENRO of Baguio City issued in favor of Avila a Certificate of Exclusion of 993 square meters from the
Ancestral Land Claim of the Heirs of Pocdo Pool over Lot 43.

On April 27, 2000, however, the Heirs of Polon Pocdo and his wife Konon filed an affidavit of
cancellation with OIC-CENRO Teodoro Suaking and on that basis, Suaking cancelled the Certificate of
Exclusion. On May 8, 2000, Avila complained to the Regional Executive Director or RED the unlawful
cancellation of her Certificate of Exclusion, and on June 1, 2000, the RED issued a memorandum setting
aside the revocation and restoring the Certificate of Exclusion. On August 13, 2001, Avila filed an
administrative complaint against Suaking, and on July 16, 2002, the RED dismissed the letter-complaint
of Avila and referred the administrative complaint to the DENR Central Office.

Acting on the motion for reconsideration by Avila [against oppositors Pacifico Pocdo, et al.], the RED in
an Order on October 28, 2002 set aside the July 16, 2002 order. The Affidavit of Cancellation dated April
27, 2002 filed by the heirs of Polon Pocdo was dismissed for lack of jurisdiction and the validity of the
Amicable Settlement, Catulagan and Deed of Waiver of Rights were recognized. The letter dated April
28, 2000 and certification issued on May 31, 2000 by Suaking were ordered cancelled. Accordingly, the
RED held that the TSA applications of Arsenia Avila and others under TSA Application 15313, 15314,
15409 and 15410 should be given due course subject to compliance with existing laws and regulations.

The DENR Secretary affirmed his Order in [his] Decision of May 14, 2004 in DENR Case 5599, with the
modification that the TSAs fo[r] the appellee Avila could now be made the basis of disposition through
public bidding and the appellant may participate in the bidding if qualified.

Pacifico Pocdo, as the appellant, went on appeal to the Office of the President which resulted in an
affirmance of DENR Secretary's decision on April 19, 2005 in OP Case 04-H-360.

As mentioned, having exhausted administrative remedies, the Heirs of Pacifico Pocdo challenged the OP
resolution before the Court of Appeals, but this petition was dismissed for having been filed late. The
Supreme Court dismissed the Heirs' appeal from this decision.

RTC RULING

Regional Trial Court dismissed the case for lack of jurisdiction. The trial court held that the DENR had
already declared the disputed property as public land, which the State, through the DENR, has the sole
power to dispose. Thus, the claim of petitioners to quiet title is not proper since they do not have title
over the disputed property. The trial court agreed with the DENR Secretary's ruling that petitioner may
participate in the public bidding of the disputed property if qualified under applicable rules

CA RULING

The Court of Appeals ruled that petitioners, in raising the issue of quieting of title, failed to allege any
legal or equitable title to quiet. Under Article 477 of the Civil Code, in an action to quiet title, the
plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter
of the action. Instead of an action to quiet title or accion reivindicatoria, the Court of Appeals stated that
petitioners should have filed an accion publiciana based merely on the recovery of possession de jure

Issue: WON there can be an action to quiet of title over the petitioners?

Held:

No. In an action for quieting of title, the complainant is seeking for "an adjudication that a claim of title
or interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim,
and to remove a cloud upon or quiet title to land where stale or unenforceable claims or demands
exist." 10 Under Articles 476 11 and 477 12 of the Civil Code, the two indispensable requisites in an
action to quiet title are: (1) that the plaintiff has a legal or equitable title to or interest in the real
property subject of the action; and (2) that there is a cloud on his title by reason of any instrument,
record, deed, claim, encumbrance or proceeding, which must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity. 13

In this case, petitioners, claiming to be owners of the disputed property, allege that respondents are
unlawfully claiming the disputed property by using void documents, namely the "Catulagan" and the
Deed of Waiver of Rights. However, the records reveal that petitioners do not have legal or equitable
title over the disputed property, which forms part of Lot 43, a public land within the Baguio Townsite
Reservation. It is clear from the facts of the case that petitioners' predecessors-in-interest, the heirs of
Pocdo Pool, were not even granted a Certificate of Ancestral Land Claim over Lot 43, which remains
public land. Thus, the trial court had no other recourse but to dismiss the case.
Lucasan vs PDIC

FACTS:

Petitioner Inocencio Y. Lucasan (Lucasan) and his wife Julianita Sorbito (now deceased) were the owners
of Lot Nos. 1500-A and 229-E situated in Bacolod City, respectively covered by TCT Nos. T-68115 and T-
13816.

On August 3, 1972, Pacific Banking Corporation (PBC) extended a P5,000.00 loan to Lucasan, with Carlos
Benares as his co-maker. Lucasan and Benares failed to pay the loan when it became due and
demandable. Consequently, PBC filed a collection case with the RTC of Bacolod City, docketed as Civil
Case No. 12188.

On April 30, 1979, the RTC rendered a decision ordering Lucasan and Benares to jointly and severally pay
PBC P7,199.99 with interest at 14% per annum computed from February 7, 1979, until the full payment
of the obligation. Lucasan failed to pay the monetary award; thus, to satisfy the judgment, the RTC
issued a writ of execution directing the sheriff to effect a levy on the properties owned by Lucasan and
sell the same at public auction.

In compliance with the writ, the City Sheriff of Bacolod issued a Notice of Embargo on January 8, 1981,
which was annotated on Lucasan's TCT Nos. T-68115 and T-13816 as Entry No. 110107. Annotated as
prior encumbrances on the same titles were the mortgages in favor of Philippine National Bank (PNB)
and Republic Planter's Bank (RPB) executed to secure Lucasan's loans with the banks.

On May 13, 1981, the lots were sold at public auction and were awarded to PBC as the highest bidder. A
certificate of sale was executed in its favor and was registered and annotated on TCT Nos. T-68115 and
T-13816 as Entry No. 112552 on June 5, 1981. Neither PNB nor RPB, the mortgagees, assailed the
auction sale.

Lucasan, as well as the mortgagee banks, PNB and RPB, did not redeem the properties within the
redemption period. Nevertheless, PBC did not file a petition for consolidation of ownership. TcSICH

In January 1997, Lucasan, through counsel, wrote a letter to the Philippine Deposit Insurance
Corporation (PDIC), PBC's receiver and liquidator seeking the cancellation of the certificate of sale and
offering to pay PBC's claim against Lucasan. 4

Not long thereafter, Lucasan paid his loans with the PNB and RPB. Consequently, the mortgagee banks
executed their respective releases of mortgage, resulting in the cancellation of the prior encumbrances
in favor of PNB and RPB.

On August 13, 2001, PDIC denied Lucasan's request for the cancellation of the certificate of sale

Lucasan then filed a petition denominated as declaratory relief with the RTC of Bacolod City docketed as
Civil Case No. 02-11874. 6 He sought confirmation of his rights provided in the second paragraph of
Section 1, Rule 63 of the Rules of Court in relation to Section 75 of Presidential Decree (P.D.) No. 1529.
Lucasan also pleaded for the lifting and/or cancellation of the notice of embargo and the certificate of
sale annotated on TCT Nos. T-68115 and T-13816, and offered to pay P100,000.00 or such amount as
may be determined by the RTC, as consideration for the cancellation. DHESca

PDIC moved to dismiss the complaint for lack of cause of action. It averred that an action to quiet title
under Section 1 of Rule 63 may only be brought when there is a cloud on, or to prevent a cloud from
being cast upon, the title to real property. It asseverated that a cloud on the title is an outstanding
instrument record, claim, encumbrance or proceeding which is actually invalid or inoperative, but which
may nevertheless impair or affect injuriously the title to property. PDIC claimed that the notice of
embargo was issued pursuant to a writ of execution in Civil Case No. 12188, while the certificate of sale
was executed as a result of a public bidding. Thus, their annotations on the titles were valid, operative or
effective. PDIC asserted that Lucasan's petition is nothing but a disguised attempt to compel PDIC to
resell the properties at a reduced price of P100,000.00. Accordingly, it prayed for the dismissal of the
petition

RTC RULING

WHEREFORE, finding the claim of any cloud over the titles of [Lucasan] to be bereft of basis in fact and in
law, the Motion to Dismiss filed by [PDIC] is granted. Accordingly, this is hereby ordered DISMISSED.

CA RULING

WHEREFORE, in view of all the foregoing premises, the appeal is hereby DENIED. Accordingly, the
assailed Order of the Regional Trial Court of Bacolod City, Branch 43 dated 24 July 2003 dismissing
[Lucasan's] Petition for Declaratory Relief and the subsequent Order of the same Court dated 20
October 2003 denying [Lucasan's] motion for reconsideration from the Order of Denial (sic) are hereby
affirmed in toto.

ISSUE: WON LUCASAN’s petition for quieting of title could prosper?

Held:

No. Quieting of title is a common law remedy for the removal of any cloud of doubt or uncertainty with
respect to real property. The Civil Code authorizes the said remedy in the following language:

ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.
ART. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the
subject-matter of the action. He need not be in possession of said property.

To avail of the remedy of quieting of title, two (2) indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the
action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting a cloud on his title
must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy. 20 Stated differently, the plaintiff must show that he has a legal or at least an equitable title
over the real property in dispute, and that some deed or proceeding beclouds its validity or efficacy.

Unfortunately, the foregoing requisites are wanting in this case.

Admittedly, the subject parcels of land were levied upon by virtue of a writ of execution issued in Civil
Case No. 12188. On May 13, 1981, a public auction of the subject parcels of land was held and the lots
were awarded to PBC as the highest bidder. A certificate of sale in favor of PBC was issued on the same
day, and was registered and annotated on TCT Nos. T-68115 and T-13816 as Entry No. 112552 on June 5,
1981.

Certainly, Lucasan no longer possess any legal or equitable title to or interest over the subject parcels of
land; hence, he cannot validly maintain an action for quieting of title.

Furthermore, Lucasan failed to demonstrate that the notice of embargo and the certificate of sale are
invalid or inoperative. In fact, he never put in issue the validity of the levy on execution and of the
certificate of sale duly registered on June 5, 1981. It is clear, therefore, that the second requisite for an
action to quiet title is, likewise, absent.

Concededly, Lucasan can pursue all the legal and equitable remedies to impeach or annul the execution
sale prior to the issuance of a new certificate of title in favor of PBC. Unfortunately, the remedy he had
chosen cannot prosper because he failed to satisfy the requisites provided for by law for an action to
quiet title. Hence, the RTC rightfully dismissed Lucasan's complaint.

Lucasan tries to find solace in our ruling in Cometa v. Court of Appeals. Sadly for him, that case is not on
all fours with his case, for it was not for quieting of title but a petition for issuance of a writ of
possession and cancellation of lis pendens. Likewise, in Cometa the registered owner assailed the
validity of the levy and sale, which Lucasan failed to do.
Clado Reyes et al vs Spouses Limpe

Facts:

Subject of the present controversy is a 2,445-square meter portion of a certain lot in Guiguinto, Bulacan
covered by Transfer Certificate of Title (TCT) No. RT-32498 (T-199627), 4 having a total lot area of 20,431
square meters, more or less.

On February 1, 1995, 5 petitioners filed an action to quiet title, reconveyance and damages against
respondents and alleged that they have been occupying the disputed lot since 1945 through their
predecessor-in-interest, Mamerto B. Reyes. They claimed that during his lifetime, Mamerto had
accepted a verbal promise of the former lot owner, Felipe Garcia, to give the disputed lot to him in
exchange for the surrender of his tenancy rights as a tiller thereof. To prove that Mamerto was a former
tenant of Felipe; that during his lifetime he had worked on the lot; and that he owned and possessed the
same, 6 petitioners presented two documents, namely: (1) Certification 7 dated October 12, 1979 and
(2) "Pagpapatunay" 8 dated November 17, 1982 allegedly executed by Simeon I. Garcia, the eldest son
of Felipe, attesting to such facts. Petitioners also alleged that whenever respondents visited the lot,
respondent Julius Limpe would promise to deliver the certificate of title to them. However, sometime in
October 1994, petitioners received a letter 9 from respondents asserting ownership over the disputed
lot.

In their answer, respondents contended that they are the legal owners of the lot by virtue of a Deed of
Exchange of Real Estate 10 and Deed of Absolute Sale 11 executed on July 5, 1974 and February 28,
1974, respectively, between them and Farm-Tech Industries, Incorporated. To further assert ownership
over the lot, they presented TCT No. T-199627, Tax Declaration Nos. 15172 12 and 9529 13 and realty
tax receipts 14 of the lot, which were all registered and declared in their names.

RTC RULING

Trial court ruled in favor of respondents and held that the certificate of title, tax declarations and realty
tax receipts presented in court indisputably established respondents' ownership over the lot. The
certificate of title was registered in respondents' names and the realty tax receipts showed that
respondents consistently paid the corresponding real property taxes. These pieces of evidence, said the
trial court, prevail over petitioners' allegation of an "undocumented promise" by the former lot owner,
which in itself, is ineffective or unenforceable under the law. Accordingly, the trial court ordered
petitioners to reconvey the disputed lot to respondents.

CA RULING

On February 20, 2004, the Court of Appeals affirmed the trial court's ruling and held that petitioners
have no title whatsoever upon which respondents' title could cast a cloud, as they were the ones casting
doubt on respondents' title. 15 It held that the documents allegedly executed by Simeon I. Garcia
showed no indicia that the alleged owner, Felipe Garcia, donated the disputed lot to them. It further
held that Simeon I. Garcia was not the real owner of the lot; thus, he could not make an effective
conveyance thereof. Consequently, it upheld respondents' title over the disputed lot

Issue: WON THE [PETITIONERS] HAVE A CAUSE OF ACTION TO QUIET TITLE, RECONVEYANCE AND
DAMAGES AGAINST RESPONDENTS

HELD:

NO. Under Articles 476 22 and 477 23 of the New Civil Code, there are two indispensable requisites in
order that an action to quiet title could prosper: (1) that the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2) that the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy. 24

To prove their case, petitioners merely cited Section 4 of Article XIII of the 1987 Constitution and Section
2 of the Comprehensive Agrarian Reform Law and stated that their title was founded upon those
provisions. They hardly argued on the matter. Neither was there positive evidence (1) that their
predecessor had legal title, i.e., a certificate of land transfer; 25 (2) that the lot was an agricultural lot
and not a commercial one as contended by respondents; and (3) that they are qualified beneficiaries
under the Agrarian Reform Law. Time and again we have held that a mere allegation is not evidence,
and he who alleges has the burden of proving the allegation with the requisite quantum of evidence. 26

Next, the documentary evidence petitioners presented, namely, the "Certification" and "Pagpapatunay",
did not confirm their title over the disputed lot. First, original copies of those documents were not
presented in court. 27 Second, as the appellate court pointed out, Simeon I. Garcia, the declarant in
those documents, was not presented in court to prove the veracity of their contents. 28 Third, even a
cursory examination of those documents would not show any transfer or intent to transfer title or
ownership of the disputed lot from the alleged owner, Felipe Garcia, to petitioners or their predecessor-
in-interest, Mamerto B. Reyes. Fourth, petitioners did not bother to adduce evidence that Simeon I.
Garcia, as the eldest son of the late Felipe Garcia, inherited the entire lot as to effectively convey title or
ownership over the disputed lot, i.e. thru extrajudicial settlement of the estate of the late Felipe Garcia.
Accordingly, we agree that the documents allegedly executed by Simeon I. Garcia are purely hearsay and
have no probative value.

In contrast, respondents presented evidence which clearly preponderates in their favor. First, the
transfer certificate of title, tax declarations and realty tax receipts were all in their names. Second,
pursuant to the Torrens System, TCT No. RT-32498 (T-199627) enjoys the conclusive presumption of
validity and is the best proof of ownership of the lot. 29 Third, although tax declarations or realty tax
receipts are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in
the concept of an owner, for no one in his right mind would be paying taxes for a property that is not in
his actual or at least constructive possession. As we previously held, such realty tax payments constitute
proof that the holder has a claim of title over the property.
Worth stressing, in civil cases, the plaintiff must establish his cause of action by preponderance of
evidence; otherwise, his suit will not prosper. 31 After carefully considering the arguments of the
parties, as well as their respective evidence, we unanimously agree that the petitioners were not able to
prove that they have any legal or equitable title over the disputed lot. Thus, we find no reversible error
in the assailed decisions of the courts below.

Ragasa vs Roa

Facts:

On May 10, 1989, plaintiffs [petitioners here] entered into a contract with Oakland Development
Resources Corporation for the purchase in installments of a piece of property, with improvements,
located at No. 06, Garnet St., Prater Village II, Diliman, Q.C. covered by TCT No. 27946 of the Registry of
Deeds for Quezon City and more particularly described in a photocopy of TCT No. 27946 [. . .];

Immediately thereafter, plaintiffs took possession of the property covered by TCT No. 27946 of the
Registry of Deeds for Quezon City and resided thereat together with their relatives who continued to
occupy the same whenever the plaintiffs would leave for Italy where they both worked. Hence, from
May of 1989 up to the present date, plaintiffs were in continuous and notorious possession of the
property covered by TCT No. 27946 of the Registry of Deeds for Quezon City to the exclusion of others
and in the concept of an owner;

In March of 1992, plaintiffs were able to fully pay for the agreed purchase price of the property covered
by TCT No. 27946 of the Registry of Deeds for Quezon City and accordingly, a Deed of Absolute Sale
dated March 12, 1992 was executed by and between Oakland Development Resources Corporation [. . .]
and the original owner's copy of TCT No. 27946 of the Registry of Deeds for Quezon City accordingly
turned over to them;

However, despite the execution of the Deed of Absolute Sale, Oakland Development Resources
Corporation failed to cause the transfer of title to plaintiffs. On the part of plaintiffs, all the while they
thought that the Deed of Absolute Sale and possession of the original of the owner's copy of TCT No.
27946 of Registry of Deeds for Quezon City was more than sufficient to protect their rights and interests
over the property;

Sometime March of 1999, during one of the trips of plaintiff Consorcia Ragasa to the Philippines from
Italy, upon learning that Oakland Development Resources Corporation was no longer functional as a
corporate entity, she decided to cause the transfer of registration of TCT No. 27946 of Registry of Deeds
for Quezon City herself since the vendor thereof was apparently in no position to undertake the same;

She was thus surprised to learn from the Registry of Deeds for Quezon City that on April 14, 1995, the
property in question was sold by defendant Ex-Officio Sheriff of Quezon City [a respondent here] to
defendants Sps. Roa [respondents here] as the highest bidder for the price and consideration of
P511,000.00
Instead of filing an answer, private respondents moved for the dismissal of the complaint on the
grounds of prescription and laches. In an order 3 dated February 3, 2000, the RTC granted the motion.
Characterizing the suit as an action "upon an injury to the rights of the plaintiff" which, according to
Article 1146 of the Civil Code, 4 must be filed within four years, the RTC held that petitioners' action was
barred by prescription for having been filed more than four years after the registration of the execution
sale.

Seeking a reversal of the trial court's order dismissing their complaint, petitioners proceeded forthwith
to this Court with the present petition for review on certiorari 5 raising only a pure question of law

Issue: WON the action of quieting of title prescribes?

Held:

No. To make out an action to quiet title under the foregoing provision, the initiatory pleading has only to
set forth allegations showing that (1) the plaintiff has "title to real property or any interest therein" 7
and (2) the defendant claims an interest therein adverse to the plaintiff's arising from an "instrument,
record, claim, encumbrance, or proceeding which is apparently valid or effective but is in truth and in
fact invalid, ineffective, voidable, or unenforceable." 8 Thus, the averments in petitioners' complaint
that (1) they acquired ownership of a piece of land by tradition or delivery as a consequence of sale and
(2) private respondents subsequently purchased the same piece of land at an allegedly void execution
sale were sufficient to make out an action to quiet title under Article 476.

This being the case, Article 1146 (which refers to actions "upon an injury to the rights of the plaintiff"
and "upon a quasi-delict") 9 did not apply. Rather, considering petitioners' allegation in their complaint
that "from May of 1989 up to the present date, plaintiffs [had been] in continuous and notorious
possession of the property . . . to the exclusion of others and in the concept of owner[s]" 10 — an
assertion private respondents never bothered to dispute — our ruling in Sapto v. Fabiana 11 should
apply:

[I]t is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480 of
the New Civil Code) 12 that actions to quiet title to property in the possession of the plaintiff are
imprescriptible. EcICSA

"The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is
asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in
actual possession of the land, claiming to be owners thereof, the reason for this rule being that while
the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a
continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and
its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of
limitations is not available as a defense to an action to remove a cloud from title can only be invoked by
a complain[ant] when he is in possession. One who claims property which is in the possession of another
must, it seems, invoke his remedy within the statutory period." (citations omitted) 13
Accordingly, petitioners' action was not subject to prescription.

Olivaga vs Ca

Facts:

It was established by the evidence on record that the land in question was, in 1950, still forest land
when Eutiquio Pureza, then only twelve years old, and his father cleared and cultivated it. In 1954, they
introduced improvements such as, coconut trees, jackfruit, mangoes, avocado and bananas. When the
area was released for disposition, the Bureau of Lands surveyed the same in 1956 in the name of
Eutiquio Pureza. Since then, the land has been known as Lot 13, Pls-84 of the Guinayangan Public Land
Subdivision. Godofredo Olviga, a son of Jose Olviga then living with the latter, protested the survey but
only with respect to a one-half-hectare portion "sa dakong panulukan ng Amihanan-Silanganan." This
protest or "tutol" (Exh. B) of Godofredo Olviga, brother of petitioners Virgilio Olviga and Lolita Olviga
Olila, is of public record in the Bureau of Lands (Exh. B). In said document, Godofredo Olviga expressly
admitted that the lot belonged to Eutiquio Pureza, except the 1/2 hectare portion claimed by him
(Godofredo) which was included in the survey of Pureza's Lot 13.

In 1960, Eutiquio Pureza filed a homestead application over Lot 13. Without his application having been
acted upon, he transferred his rights in said lot to Cornelio Glor in 1961. Neither the homestead
application of Eutiquio nor the proposed transfer of his rights to Cornelio Glor was acted upon by the
Director of Lands for reasons that the records of the Bureau of Lands do not disclose. LLpr

In 1967, Jose Olviga obtained a registered title for said lot in a cadastral proceeding, in fraud of the
rights of Pureza and his transferee, Cornelio Glor and his family, who were the real and actual occupants
of the land.

What must have happened, as found by the Court of Appeals, is that since Cornelio Glor, Sr. was sickly,
and his wife (now widowed) Angelita Glor, was unschooled, they failed to follow up Pureza's homestead
application over Lot 13 in the cadastral proceedings in the Municipal Court of Guinayangan Public Land
Subdivision, Pls-84, Case 1 (Philcusa-Foa). In fact, they were not aware of the proceedings. Angelita Glor
testified that no notice was ever posted on Lot 13 about the proceedings nor did anyone, not even the
barangay captain, tell her about them. Neither did she receive any notice from the court sheriff or any
court employee. This non-posting of the notice of the cadastral hearing on the land, or in the barangay
hall, was confirmed by petitioner Virgilio Olviga himself who testified that he did not notice any papers
posted on the property in question (tsn., October 18, 1990, pp. 83-84). On the other hand, petitioners'
father, Jose Olviga, claimed both Lots 12 and 13, which are adjoining lots, in the same cadastral
proceedings. He falsely omitted in his answer mention of the fact that other persons were in possession
of, and claiming adverse interest in, Lot 13 and that the land had been surveyed for Eutiquio Pureza, the
former occupant who sold his interests to private respondents' parent, Cornelio Glor, in 1961. Glor was
Olvigas' neighbor. As a result, both Lots 12 and 13 were declared as uncontested in the name of Jose
Olviga (Exh. 7), and were registered in his name in 1967 in Original Certificate of Title, No. 0-12713 (Exh.
5). In 1971, Olviga requested that OCT No. 0-12713 be split into two (2) TCT's, one each for the two (2)
lots. TCT Nos. T-103823 and T-103824 were issued for lots 12 and 13, respectively. Jose Olviga later
transferred Lot 13 to his son-in-law, Jaime Olila and daughter, Lolita Olviga resulting in the cancellation
of TCT No. T-03824 and the issuance of TCT No. T-241314 in the names of the spouses (Exh. 3).

It was also established that the spouses Jaime Olila and Lolita Olviga Olila, were not innocent purchasers
for value of the land from their father, and have never been in possession. The Glors and their
predecessors-in-interest (Cornelio Glor Sr., and Eutiquio Pureza) were the ones found to be in
possession of the property.

ISSUE: WON the action prescribes?

Held:

No. this Court has ruled a number of times before that an action for reconveyance of a parcel of land
based on implied or constructive trust prescribes in ten years, the point of reference being the date of
registration of the deed or the date of the issuance of the certificate of title over the property (Vda. de
Portugal vs. IAC, 159 SCRA 178). But this rule applies only when the plaintiff is not in possession of the
property, since if a person claiming to be the owner thereof is in actual possession of the property, the
right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe